<SEC-DOCUMENT>0001471242-12-000380.txt : 20120330
<SEC-HEADER>0001471242-12-000380.hdr.sgml : 20120330
<ACCEPTANCE-DATETIME>20120330164623
ACCESSION NUMBER:		0001471242-12-000380
CONFORMED SUBMISSION TYPE:	10-K
PUBLIC DOCUMENT COUNT:		5
CONFORMED PERIOD OF REPORT:	20111230
FILED AS OF DATE:		20120330
DATE AS OF CHANGE:		20120330

FILER:

	COMPANY DATA:	
		COMPANY CONFORMED NAME:			TOMI Environmental Solutions, Inc.
		CENTRAL INDEX KEY:			0000314227
		STANDARD INDUSTRIAL CLASSIFICATION:	SERVICES-TO DWELLINGS & OTHER BUILDINGS [7340]
		IRS NUMBER:				591947988
		STATE OF INCORPORATION:			FL
		FISCAL YEAR END:			1231

	FILING VALUES:
		FORM TYPE:		10-K
		SEC ACT:		1934 Act
		SEC FILE NUMBER:	000-09908
		FILM NUMBER:		12729876

	BUSINESS ADDRESS:	
		STREET 1:		9454 WILSHIRE BLVD.
		STREET 2:		PENTHOUSE
		CITY:			BEVERLY HILLS
		STATE:			CA
		ZIP:			90212
		BUSINESS PHONE:		8005251698

	MAIL ADDRESS:	
		STREET 1:		9454 WILSHIRE BLVD.
		STREET 2:		PENTHOUSE
		CITY:			BEVERLY HILLS
		STATE:			CA
		ZIP:			90212

	FORMER COMPANY:	
		FORMER CONFORMED NAME:	Ozone Man, Inc.
		DATE OF NAME CHANGE:	20071130

	FORMER COMPANY:	
		FORMER CONFORMED NAME:	RPS GROUP INC
		DATE OF NAME CHANGE:	19940818

	FORMER COMPANY:	
		FORMER CONFORMED NAME:	DAUPHIN INC
		DATE OF NAME CHANGE:	19940818
</SEC-HEADER>
<DOCUMENT>
<TYPE>10-K
<SEQUENCE>1
<FILENAME>tomz10k0327.htm
<TEXT>
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<P STYLE="font: 4pt/1pt Times New Roman, Times, Serif; margin: 1pt 0 0; text-align: center; border-top: black 0.5pt solid">f&nbsp;</P>

<!-- Field: Rule-Page --><DIV STYLE="text-align: center; margin-top: 1pt; margin-bottom: 1pt"><DIV STYLE="font-size: 1pt; border-top: Black 1pt solid; width: 100%; text-align: center">&nbsp;</DIV></DIV><!-- Field: /Rule-Page -->

<P STYLE="font: 15pt Times New Roman, Times, Serif; margin-top: 1.5pt; margin-bottom: 0; text-align: center"><B>UNITED STATES SECURITIES AND EXCHANGE
COMMISSION </B></P>

<P STYLE="font: 9pt Times New Roman, Times, Serif; margin-top: 0; margin-bottom: 0; text-align: center"><B>WASHINGTON, D.C. 20549 </B></P>

<P STYLE="font: 15pt Times New Roman, Times, Serif; margin-top: 4.5pt; margin-bottom: 0; text-align: center"><B>FORM 10-K </B></P>

<TABLE CELLPADDING="0" CELLSPACING="0" WIDTH="100%" STYLE="font: 12pt Times New Roman, Times, Serif; margin-top: 4.5pt; margin-bottom: 0"><TR STYLE="vertical-align: top">
<TD STYLE="width: 0; text-align: center"></TD><TD STYLE="width: 30.6pt; text-align: center"><FONT STYLE="font: 9pt Wingdings">x</FONT></TD><TD STYLE="text-align: center"><FONT STYLE="font-size: 10pt"><B>ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934</B></FONT><B><FONT STYLE="font-size: 11pt">
</FONT></B></TD></TR></TABLE>

<P STYLE="font: 9pt Times New Roman, Times, Serif; margin-top: 9pt; margin-bottom: 0; text-align: center">FOR THE FISCAL YEAR ENDED DECEMBER 31,
2011</P>

<P STYLE="font: 9pt Times New Roman, Times, Serif; margin-top: 9pt; margin-bottom: 0; text-align: center">OR</P>

<TABLE CELLPADDING="0" CELLSPACING="0" WIDTH="100%" STYLE="font: 12pt Times New Roman, Times, Serif; margin-top: 9pt; margin-bottom: 0"><TR STYLE="vertical-align: top">
<TD STYLE="width: 0; text-align: center"></TD><TD STYLE="width: 30.6pt; text-align: center"><FONT STYLE="font: 9pt Wingdings">&uml;</FONT></TD><TD STYLE="text-align: center"><FONT STYLE="font-size: 10pt"><B>TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934</B></FONT><B><FONT STYLE="font-size: 11pt">
</FONT></B></TD></TR></TABLE>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 9pt; margin-bottom: 0; text-align: center">For the transition period from &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
to &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 9pt; margin-bottom: 0; text-align: center">Commission File Number 000-09908</P>

<P STYLE="font: 15pt Times New Roman, Times, Serif; margin-top: 4.5pt; margin-bottom: 0; text-align: center"><B>TOMI ENVIRONMENTAL SOLUTIONS, INC.
</B></P>

<P STYLE="font: 7.5pt Times New Roman, Times, Serif; margin-top: 0; margin-bottom: 0; text-align: center"><B>(Exact name of registrant as specified in
its charter) </B></P>

<P STYLE="font: 4.5pt Times New Roman, Times, Serif; margin-top: 0; text-align: center; margin-bottom: 0">&nbsp;</P>

<TABLE ALIGN="CENTER" CELLSPACING="0" CELLPADDING="0" STYLE="width: 100%; border-collapse: collapse">
<TR>
    <TD STYLE="width: 50%; font: 0.5pt Times New Roman, Times, Serif; text-align: center">&nbsp;</TD>
    <TD STYLE="width: 50%; font: 0.5pt Times New Roman, Times, Serif; text-align: center">&nbsp;</TD></TR>
<TR STYLE="vertical-align: top">
    <TD STYLE="font: bold 10pt Times New Roman, Times, Serif; text-align: center">FLORIDA</TD>
    <TD STYLE="font: bold 10pt Times New Roman, Times, Serif; text-align: center">59-1947988</TD></TR>
<TR STYLE="vertical-align: top">
    <TD STYLE="text-align: center">
        <P STYLE="font: 7.5pt Times New Roman, Times, Serif; margin-top: 0; margin-bottom: 0; text-align: center"><B>(State or other jurisdiction of</B></P>
        <P STYLE="font: 7.5pt Times New Roman, Times, Serif; margin-top: 0; margin-bottom: 0.75pt; text-align: center"><B>incorporation or organization)</B></P></TD>
    <TD STYLE="text-align: center">
        <P STYLE="font: 7.5pt Times New Roman, Times, Serif; margin-top: 0; margin-bottom: 0; text-align: center"><B>(I.R.S. Employer</B></P>
        <P STYLE="font: 7.5pt Times New Roman, Times, Serif; margin-top: 0; margin-bottom: 0.75pt; text-align: center"><B>Identification No.)</B></P></TD></TR>
<TR>
    <TD STYLE="font: 8pt Times New Roman, Times, Serif; text-align: center">&nbsp;</TD>
    <TD STYLE="font: 8pt Times New Roman, Times, Serif; text-align: center">&nbsp;</TD></TR>
<TR>
    <TD STYLE="vertical-align: top; text-align: center">
        <P STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0; margin-bottom: 0; text-align: center"><B>9454 Wilshire Blvd., R-1,</B></P>
        <P STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0; margin-bottom: 0.75pt; text-align: center"><B>Beverly Hills, California</B></P></TD>
    <TD STYLE="vertical-align: bottom; font: bold 10pt Times New Roman, Times, Serif; text-align: center">90212</TD></TR>
<TR STYLE="vertical-align: top">
    <TD STYLE="font: bold 7.5pt Times New Roman, Times, Serif; text-align: center">(Address of principal executive offices)</TD>
    <TD STYLE="font: bold 7.5pt Times New Roman, Times, Serif; text-align: center">(Zip Code)</TD></TR>
</TABLE>
<P STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 9pt; margin-bottom: 0; text-align: center">&nbsp;<B>Registrant&rsquo;s telephone
number, including area code: (800) 525-1698 </B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 9pt; margin-bottom: 0; text-align: center">&nbsp;</P>

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

<TABLE CELLPADDING="0" CELLSPACING="0" STYLE="width: 100%; font: 9pt Times New Roman, Times, Serif">
<TR STYLE="vertical-align: bottom">
    <TD STYLE="width: 70%; font-weight: bold; text-align: center; border-bottom: Black 1pt solid">Title of Each Class</TD>
    <TD STYLE="width: 70%; font-weight: bold; text-align: center; border-bottom: Black 1pt solid; padding-left: 10pt">Name of Each Exchange on Which Registered</TD>
    <TD STYLE="border-bottom: Black 1pt solid; text-align: center">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom">
    <TD STYLE="font-size: 4pt; padding-left: 5.4pt; text-align: center">CC</TD>
    <TD STYLE="text-align: center">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom">
    <TD STYLE="font-weight: bold; text-align: center; padding-left: 5.4pt">Common Stock, $0.01Par Value <BR>Cumulative Series A Preferred Stock, $0.01 Par Value</TD>
    <TD STYLE="font-weight: bold; text-align: center; padding-left: 10pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;OTC Bulletin Board</TD>
    <TD STYLE="text-align: center">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom">
    <TD STYLE="font-weight: bold; text-align: center">Cumulative Convertible Series B Preferred Stock, $1,000 Stated Value</TD>
    <TD STYLE="text-align: center">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom">
    <TD STYLE="font-weight: bold; text-align: center">&nbsp;</TD>
    <TD STYLE="text-align: center">&nbsp;</TD></TR>
</TABLE>

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

<P STYLE="font: 9pt Times New Roman, Times, Serif; margin-top: 0; text-align: center; margin-bottom: 0">Securities registered under Section 12(b) of the
Exchange Act: None</P>

<P STYLE="font: 9pt Times New Roman, Times, Serif; margin-top: 0; text-align: center; margin-bottom: 0">&nbsp;</P>

<P STYLE="font: 9pt Times New Roman, Times, Serif; margin-top: 0; text-align: center; margin-bottom: 0">Securities registered under Section 12(g) of the
Exchange Act: None</P>

<P STYLE="font: 9pt Times New Roman, Times, Serif; margin-top: 0; text-align: center; margin-bottom: 0">&nbsp;</P>

<P STYLE="font: 9pt Times New Roman, Times, Serif; margin-top: 0; text-align: center; margin-bottom: 0">Indicate by check mark if the registrant is a
well-known seasoned issuer, as defined in Rule 405 of the Securities Act. [ ]</P>

<P STYLE="font: 9pt Times New Roman, Times, Serif; margin-top: 0; text-align: center; margin-bottom: 0">&nbsp;</P>

<P STYLE="font: 9pt Times New Roman, Times, Serif; margin-top: 0; text-align: center; margin-bottom: 0">Indicate by check mark if the registrant is not
required to file reports pursuant to Section 13 or Section 15(d) of the Act. [ ]</P>

<P STYLE="font: 9pt Times New Roman, Times, Serif; margin-top: 0; text-align: center; margin-bottom: 0">&nbsp;</P>

<P STYLE="font: 9pt Times New Roman, Times, Serif; margin-top: 0; text-align: center; margin-bottom: 0">Indicate by check mark whether the registrant
(1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding
12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such
filing requirements for the past 90 days. Yes [X] No [ ]</P>

<P STYLE="font: 9pt Times New Roman, Times, Serif; margin-top: 0; text-align: center; margin-bottom: 0">&nbsp;</P>

<P STYLE="font: 9pt Times New Roman, Times, Serif; margin-top: 0; text-align: center; margin-bottom: 0">Indicate by check mark if disclosure of delinquent
filers pursuant to Item 405 of Regulation S-K (229.405 of this chapter) is not contained herein, and will not be contained, to
the best of registrant's knowledge, in definitive proxy or information statements incorporated by reference in Part III of this
Form 10-K or any amendment to this Form 10-K. [X]</P>

<P STYLE="font: 9pt Times New Roman, Times, Serif; margin-top: 0; text-align: center; margin-bottom: 0">&nbsp;</P>

<P STYLE="font: 9pt Times New Roman, Times, Serif; margin-top: 0; text-align: center; margin-bottom: 0">Indicate by check mark whether the registrant
is a large accelerated filer, an accelerated filer, a non-accelerated filer, or a smaller reporting company. See definitions of
&quot;large accelerated filer,&quot; &quot;accelerated filer&quot; and &quot;smaller reporting company&quot; in Rule 12b-2 of the
Exchange Act. (Check one):</P>

<P STYLE="font: 9pt Times New Roman, Times, Serif; margin-top: 4.75pt; margin-bottom: 0; text-align: center">Large Accelerated Filer&nbsp;&nbsp;<FONT STYLE="font-family: Wingdings">&uml;</FONT>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Accelerated
Filer&nbsp;&nbsp;<FONT STYLE="font-family: Wingdings">&uml;</FONT></P>

<P STYLE="font: 9pt Times New Roman, Times, Serif; margin-top: 4.75pt; margin-bottom: 0; text-align: center">Non-Accelerated Filer&nbsp;&nbsp;<FONT STYLE="font-family: Wingdings">&uml;</FONT>
&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Smaller Reporting Company&nbsp;&nbsp;<FONT STYLE="font-family: Wingdings">x</FONT></P>

<P STYLE="font: 9pt Times New Roman, Times, Serif; margin-top: 0; text-align: center; margin-bottom: 0">&nbsp;</P>

<P STYLE="font: 9pt Times New Roman, Times, Serif; margin-top: 0; text-align: center; margin-bottom: 0">Indicate by check mark whether the registrant
is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes [ ] No [X]</P>

<P STYLE="font: 9pt Times New Roman, Times, Serif; margin-top: 0; text-align: center; margin-bottom: 0">&nbsp;</P>

<P STYLE="font: 9pt Times New Roman, Times, Serif; margin-top: 0; text-align: center; margin-bottom: 0">The aggregate market value of the common stock
held by non-affiliates of the registrant as of the last business day of the Registrant's most recently completed second fiscal
quarter was approximately $1,686,515 based upon the closing price of registrant's common stock on that date.</P>

<P STYLE="font: 9pt Times New Roman, Times, Serif; margin-top: 0; text-align: center; margin-bottom: 0">&nbsp;</P>

<P STYLE="font: 9pt Times New Roman, Times, Serif; margin-top: 0; text-align: center; margin-bottom: 0; background-color: white">As of March 20, 2012
the registrant had 65,710,283  shares of common stock outstanding.</P>

<P STYLE="font: 9pt Times New Roman, Times, Serif; margin-top: 0; text-align: center; margin-bottom: 0">&nbsp;</P>

<P STYLE="font: 9pt Times New Roman, Times, Serif; margin-top: 0; margin-bottom: 0; text-align: center"><FONT STYLE="text-transform: uppercase"><B>Documents
incorporated by reference</B></FONT></P>

<P STYLE="font: 12pt Times New Roman, Times, Serif; margin-top: 0; border-bottom: Black 1.5pt double; margin-bottom: 0; text-align: center"><FONT STYLE="font-size: 9pt">None.</FONT>&nbsp;&nbsp;</P>

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

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 4.5pt 0 0; text-align: center"><B>FORM 10-K ANNUAL REPORT</B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 4.5pt 0 0; text-align: center"><B>FISCAL YEAR ENDED DECEMBER 31, 2011
</B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 4.5pt 0 0; text-align: center"><B>TABLE OF CONTENTS</B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 4.5pt 0 0; text-align: center"><B>&nbsp;</B></P>

<TABLE BORDER="0" CELLPADDING="0" CELLSPACING="0" STYLE="width: 100%; border-collapse: collapse; font: 11pt Calibri, Helvetica, Sans-Serif">
<TR STYLE="vertical-align: bottom">
    <TD STYLE="border-bottom: windowtext 2pt double; text-align: center">Items</TD>
    <TD STYLE="text-align: center">&nbsp;</TD>
    <TD STYLE="border-bottom: windowtext 2pt double; text-align: center">Page</TD></TR>
<TR STYLE="vertical-align: bottom">
    <TD>&nbsp;</TD>
    <TD STYLE="font-weight: bold; text-align: center">PART I</TD>
    <TD STYLE="text-align: center">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom">
    <TD STYLE="text-align: center">1</TD>
    <TD STYLE="font: 10pt Times New Roman, Times, Serif; text-align: center">Business</TD>
    <TD STYLE="text-align: center">1</TD></TR>
<TR STYLE="vertical-align: bottom">
    <TD STYLE="text-align: center">1A</TD>
    <TD STYLE="font: 10pt Times New Roman, Times, Serif; text-align: center">Risk Factors</TD>
    <TD STYLE="text-align: center">2</TD></TR>
<TR STYLE="vertical-align: bottom">
    <TD STYLE="text-align: center">1B</TD>
    <TD STYLE="font: 10pt Times New Roman, Times, Serif; text-align: center">Unresolved Staff Comments</TD>
    <TD STYLE="text-align: center">5</TD></TR>
<TR STYLE="vertical-align: bottom">
    <TD STYLE="text-align: center">2</TD>
    <TD STYLE="font: 10pt Times New Roman, Times, Serif; text-align: center">Properties</TD>
    <TD STYLE="text-align: center">5</TD></TR>
<TR STYLE="vertical-align: bottom">
    <TD STYLE="text-align: center">3</TD>
    <TD STYLE="font: 10pt Times New Roman, Times, Serif; text-align: center">Legal Proceedings</TD>
    <TD STYLE="text-align: center">5</TD></TR>
<TR STYLE="vertical-align: bottom">
    <TD STYLE="text-align: center">4</TD>
    <TD STYLE="font: 10pt Times New Roman, Times, Serif; text-align: center">Removed and Reserved</TD>
    <TD STYLE="text-align: center">5</TD></TR>
<TR STYLE="vertical-align: bottom">
    <TD STYLE="text-align: center">&nbsp;</TD>
    <TD STYLE="text-align: center">&nbsp;</TD>
    <TD STYLE="text-align: center">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom">
    <TD STYLE="text-align: center">&nbsp;</TD>
    <TD STYLE="font-weight: bold; text-align: center">PART II</TD>
    <TD STYLE="text-align: center">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom">
    <TD STYLE="text-align: center">5</TD>
    <TD STYLE="font: 10pt Times New Roman, Times, Serif; text-align: center">Market for Registrant&rsquo;s Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities</TD>
    <TD STYLE="text-align: center">5</TD></TR>
<TR STYLE="vertical-align: bottom">
    <TD STYLE="text-align: center">6</TD>
    <TD STYLE="font: 10pt Times New Roman, Times, Serif; text-align: center">Selected Financial Data</TD>
    <TD STYLE="text-align: center">6</TD></TR>
<TR STYLE="vertical-align: bottom">
    <TD STYLE="text-align: center">7</TD>
    <TD STYLE="font: 10pt Times New Roman, Times, Serif; text-align: center">Management&rsquo;s Discussion and Analysis of Financial Condition and Results of Operations</TD>
    <TD STYLE="text-align: center">6</TD></TR>
<TR STYLE="vertical-align: bottom">
    <TD STYLE="text-align: center">7A</TD>
    <TD STYLE="font: 10pt Times New Roman, Times, Serif; text-align: center">Quantitative and Qualitative Disclosures About Market Risk</TD>
    <TD STYLE="text-align: center">10</TD></TR>
<TR STYLE="vertical-align: bottom">
    <TD STYLE="text-align: center">8</TD>
    <TD STYLE="font: 10pt Times New Roman, Times, Serif; text-align: center">Financial Statements and Supplementary Information</TD>
    <TD STYLE="text-align: center">10</TD></TR>
<TR STYLE="vertical-align: bottom">
    <TD STYLE="text-align: center">9</TD>
    <TD STYLE="font: 10pt Times New Roman, Times, Serif; text-align: center">Changes in and Disagreements with Accountants on Accounting and Financial Disclosure</TD>
    <TD STYLE="text-align: center">10</TD></TR>
<TR STYLE="vertical-align: bottom">
    <TD STYLE="text-align: center">9A</TD>
    <TD STYLE="font: 10pt Times New Roman, Times, Serif; text-align: center">Controls and Procedures</TD>
    <TD STYLE="text-align: center">10</TD></TR>
<TR STYLE="vertical-align: bottom">
    <TD STYLE="text-align: center">9B</TD>
    <TD STYLE="font: 10pt Times New Roman, Times, Serif; text-align: center">Other Information</TD>
    <TD STYLE="text-align: center">11</TD></TR>
<TR STYLE="vertical-align: bottom">
    <TD STYLE="text-align: center">&nbsp;</TD>
    <TD STYLE="text-align: center">&nbsp;</TD>
    <TD STYLE="text-align: center">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom">
    <TD STYLE="text-align: center">&nbsp;</TD>
    <TD STYLE="font-weight: bold; text-align: center">PART III</TD>
    <TD STYLE="text-align: center">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom">
    <TD STYLE="text-align: center">10</TD>
    <TD STYLE="font: 10pt Times New Roman, Times, Serif; text-align: center">Directors, Executive Officers and Corporate Governance</TD>
    <TD STYLE="text-align: center">11</TD></TR>
<TR STYLE="vertical-align: bottom">
    <TD STYLE="text-align: center">11</TD>
    <TD STYLE="font: 10pt Times New Roman, Times, Serif; text-align: center">Executive Compensation</TD>
    <TD STYLE="text-align: center">12</TD></TR>
<TR STYLE="vertical-align: bottom">
    <TD STYLE="text-align: center">12</TD>
    <TD STYLE="font: 10pt Times New Roman, Times, Serif; text-align: center">Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters</TD>
    <TD STYLE="text-align: center">13</TD></TR>
<TR STYLE="vertical-align: bottom">
    <TD STYLE="text-align: center">13</TD>
    <TD STYLE="font: 10pt Times New Roman, Times, Serif; text-align: center">Certain Relationships and Related Transactions, and Director Independence</TD>
    <TD STYLE="text-align: center">14</TD></TR>
<TR STYLE="vertical-align: bottom">
    <TD STYLE="text-align: center">14</TD>
    <TD STYLE="font: 10pt Times New Roman, Times, Serif; text-align: center">Principal Accountant Fees and Services</TD>
    <TD STYLE="text-align: center">14</TD></TR>
<TR STYLE="vertical-align: bottom">
    <TD STYLE="text-align: center">&nbsp;</TD>
    <TD STYLE="text-align: center">&nbsp;</TD>
    <TD STYLE="text-align: center">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom">
    <TD STYLE="text-align: center">&nbsp;</TD>
    <TD STYLE="font-weight: bold; text-align: center">PART IV</TD>
    <TD STYLE="text-align: center">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom">
    <TD STYLE="text-align: center">15</TD>
    <TD STYLE="font: 10pt Times New Roman, Times, Serif; text-align: center">Exhibits and Financial Statement Schedules</TD>
    <TD STYLE="text-align: center">15</TD></TR>
<TR STYLE="vertical-align: bottom">
    <TD STYLE="text-align: center">&nbsp;</TD>
    <TD STYLE="font: 10pt Times New Roman, Times, Serif; text-align: center">Signatures</TD>
    <TD STYLE="text-align: center">16</TD></TR>
<TR STYLE="vertical-align: bottom">
    <TD STYLE="text-align: center">&nbsp;</TD>
    <TD STYLE="font: 10pt Times New Roman, Times, Serif; text-align: center">Exhibit Index</TD>
    <TD STYLE="text-align: center">17</TD></TR>
<TR STYLE="vertical-align: bottom">
    <TD STYLE="text-align: center">&nbsp;</TD>
    <TD STYLE="font: 10pt Times New Roman, Times, Serif; text-align: center">Financial Statements</TD>
    <TD STYLE="text-align: center">F-3</TD></TR>
</TABLE>


<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 4.5pt 0 0; text-align: center"></P>

<P STYLE="font: 9pt Times New Roman, Times, Serif; margin: 0">&nbsp;</P>

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

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 9.5pt 0 0; text-indent: 24.5pt">This Annual Report on Form 10-K contains
or incorporates by reference certain forward-looking statements within the meaning of Section 27A of the 1933 Act and Section 21E
of the Securities Exchange Act of 1934, as amended, and, as such, may involve known and unknown risks, uncertainties and assumptions.
Forward-looking statements are those that predict or describe future events or trends and that do not relate solely to historical
matters. You can generally identify forward-looking statements as statements containing the words &ldquo;will,&rdquo; &ldquo;believe,&rdquo;
&ldquo;expect,&rdquo; &ldquo;anticipate,&rdquo; &ldquo;intend,&rdquo; &ldquo;estimate,&rdquo; &ldquo;assume&rdquo; or other similar
expressions. You should not rely on our forward-looking statements because the matters they describe are subject to assumptions,
known and unknown risks, uncertainties and other unpredictable factors, many of which are beyond our control. Therefore, our actual
results could differ materially and adversely from those expressed in any forward-looking statements as a result of various factors,
some of which are listed under the section &ldquo;Risk Factors,&rdquo; Item&nbsp;1A of this Annual Report on Form 10-K.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 9.5pt 0 0; text-indent: 24.5pt">As used in this Annual Report on Form
10-K, &ldquo;company,&rdquo; &ldquo;we,&rdquo; &ldquo;us,&rdquo; &ldquo;our&rdquo; and &ldquo;TOMI&rdquo; refer to TOMI Environmental
Solutions, Inc.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 14.25pt 0 0; text-align: center"><B>PART I </B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 9.5pt 0 0 55.05pt; text-indent: -55.1pt"><B>Item&nbsp;1.&#9;BUSINESS
</B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 9.5pt 0 0"><B>Overview</B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0; text-indent: 0.25in"><BR>
Surface and air remediation and environmental solutions to treat viruses and resistant bacteria is a multi-billion dollar industry.
TOMI Environmental Solutions, Inc. is positioned as a global    decontamination and infectious disease control company,
providing green energy-efficient environmental solutions for indoor  surface decontamination through
sales and licensing of our premier platform of Hydrogen Peroxide aerosols, Ultra-Violet Ozone Generators and Ultra-Violet Germicidal
Irradiation (&quot;UVGI&quot;) products and technologies.</P>

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

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0; text-indent: 0.25in">Our effort to combat bacterial and viral outbreaks
along with hospital infection control was recently enhanced with the addition of a newly developed line of fixed and portable units
that utilize hydrogen peroxide misting for a cost-effective method to control the spread of infectious diseases including neutralizing
pathogens from bio-terrorism attacks. <FONT STYLE="color: black">Healthcare associated infections are the fourth leading cause
of death in the United States, costing the healthcare system approximately $40 Billion annually. Ten percent of inpatients contract
infections from the hospital resulting in more than 2&nbsp;Million illnesses and&nbsp;over 100,000 deaths. According to most published
studies generic hospital cleaning procedures leave between 30-60% of microorganisms depending upon the process. TOMI's products
safely and effectively kill 99.9999% of all known pathogens. In comparison to its competitors, our SteraMist product has a higher
kill level, leaves no reisdue and a shorter operating time.</FONT></P>

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

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0; text-indent: 0.25in">Our products are designed to service a broad
spectrum of commercial structures including medical facilities, office buildings, hotel and motel rooms, schools, restaurants,
meat and produce processing facilities, military barracks, and athletic facilities. Our products and services have also been used
in single-family homes and multi-unit residences.</P>

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

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0; text-indent: 0.25in">We also intend to generate and support research
on other air remediation solutions including hydroxyl radicals and other Reactive Oxygen Species (&ldquo;ROS&rdquo;) and to form
business alliances with major remediation companies, construction companies and corporations specializing in disaster relief along
with expanding our sales in North America, South America, Central America, Europe, the Middle East and the Far East.</P>

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

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0; text-indent: 0.25in">We continue to pursue complementary business
opportunities in manufacturing ROS related products, testing labs and other indoor air treatment and maintenance products.</P>

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

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0; text-indent: 0.25in">When we complete the sale of its equipment
to customers, our service usually include providing training to customer employees.</P>

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

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0; text-indent: 0.25in">In 2011, we sold our first hydrogen
peroxide aerosol  unit to a major metropolitan hospital that is now expanding its program to use our equipment to additional
rooms and facilities.</P>

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

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0; text-indent: 0.25in">We maintain two service hubs in Southern California
and New York/New Jersey.</P>

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

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

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

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0; text-indent: 0.25in">The decontamination and infectious
disease control industry is extremely competitive.</P>

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

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0; text-indent: 0.25in">The Company&rsquo;s major competitors have
longer operating histories, greater name recognition, larger installed customer bases and substantially greater financial and marketing
resources than the Company. See the Risk Factor, &ldquo;Competition&rdquo; on page 3.</P>

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

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

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

<P STYLE="font: 12pt Times New Roman, Times, Serif; margin: 0"><B>&nbsp;</B></P>

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

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 9pt 0 0; text-indent: 0.25in">At December 31, 2011, we have two employees,
one of whom is full time. Our sales efforts are primarily made through outside sales groups and our remediation partners.</P>

<P STYLE="font: 12pt Times New Roman, Times, Serif; margin: 0"><B>&nbsp;</B></P>

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

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 9pt 0 0; text-indent: 0.25in">We were incorporated in Florida on September
18, 1979 and commenced our current principal operations on February 8, 2008. Our principal executive offices are located at 9454
Wilshire Blvd., R-1, Beverly Hills, California 90212.</P>

<P STYLE="font: 12pt Times New Roman, Times, Serif; margin: 0"><B>&nbsp;</B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0"><B>Information on our Company Website </B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0; text-indent: 28.05pt">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0; text-indent: 0.25in">The Company maintains a website, <I>http://www.tomiesinc.com</I>.
We make our Annual Reports on Form 10-K, Quarterly Reports on Form 10-Q, Current Reports on Form 8-K and amendments to those reports
filed or furnished pursuant to Section 13(a) or 15(d) of the Securities Exchange Act of 1934, or the Exchange Act, available, free
of charge, on our website as soon as reasonably practicable after we file or furnish these reports with the United States Securities
and Exchange Commission, or the SEC. In addition, we post the following information on our website (the Company does not intend
to and does not hereby incorporate by reference the information on our website as a part of this Annual Report on Form 10-K):</P>

<TABLE CELLPADDING="0" CELLSPACING="0" WIDTH="100%" STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 4.75pt; margin-bottom: 0"><TR STYLE="vertical-align: top">
<TD STYLE="width: 24.45pt"></TD><TD STYLE="width: 18.35pt">&bull;</TD><TD><FONT STYLE="background-color: white">our corporate code of conduct, which qualifies as a &ldquo;code of ethics&rdquo; as defined
by Item&nbsp;406 of Regulation S-K of the Exchange Act</FONT>; and</TD></TR></TABLE>

<TABLE CELLPADDING="0" CELLSPACING="0" WIDTH="100%" STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 4.75pt; margin-bottom: 0"><TR STYLE="vertical-align: top">
<TD STYLE="width: 24.45pt"></TD><TD STYLE="width: 18.35pt">&bull;</TD><TD>charters for our Audit Committee and Compensation Committee.</TD></TR></TABLE>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 9pt 0 0; text-indent: 0.25in">All of the above information is also
available in print upon request to our secretary at the address listed under the heading &ldquo;Company Information&rdquo; above.</P>

<P STYLE="font: 12pt Times New Roman, Times, Serif; margin: 0"><B>&nbsp;</B></P>

<P STYLE="font: 12pt Times New Roman, Times, Serif; margin: 0"><B>&nbsp;</B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0"><B>Item 1A. RISK FACTORS.</B></P>

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

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0; text-indent: 0.25in"><I>Our business routinely encounters and attempts
to address risks, some of which will cause our future results to differ, sometimes materially, from those originally anticipated.
Below, we have described our present view of certain important risks. The risk factors set forth below are not the only risks that
we may face or that could adversely affect us. If any of the risks discussed in this Annual Report on Form 10-K actually occur,
our business, financial condition and results of operations could be materially adversely affected. If this were to occur, the
trading price of our securities could decline significantly and you may lose all or part of your investment. </I></P>

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

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0; text-indent: 0.25in"><I>The following discussion of risk factors
contains &ldquo;forward-looking statements,&rdquo; which may be important to understanding any statement in this Annual Report
on Form 10-K or elsewhere. The following information should be read in conjunction with Item&nbsp;7&mdash;Management&rsquo;s Discussion
and Analysis of Financial Condition and Results of Operations (MD&amp;A) and Item&nbsp;8&mdash;Financial Statements and Supplementary
Data of this Annual Report on Form 10-K.</I></P>

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

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

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

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0"><B><I>Our independent registered public accounting firm has issued
a &quot;going concern&quot; opinion.</I></B></P>

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

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0; text-indent: 0.25in">Our ability to continue as a going concern
is dependent upon our ability to generate profitable operations in the future and/or to obtain the necessary financing to meet
our obligations and repay our liabilities arising from normal business operations when they come due. We plan to continue to provide
for our capital requirements by issuing additional equity. No assurance can be given that additional capital will be available
when required or on terms acceptable to us. We also cannot give assurance that we will achieve sufficient revenues in the future
to achieve profitability and cash flow positive operations. The outcome of these matters cannot be predicted at this time and there
are no assurances that, if achieved, we will have sufficient funds to execute our business plan or to generate positive operating
results. Our independent registered public accounting firm has indicated that these matters, among others, raise substantial doubt
about our ability to continue as a going concern.</P>

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

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<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0"><B><I>We operate in a rapidly changing environment that involves
a number of risks, some of which are beyond our control. </I></B></P>

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

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0; text-indent: 0.25in">A number of these risks are listed below. These
risks could affect actual future results and could cause them to differ materially from any forward-looking statements we have
made in this Annual Report. You should carefully consider the risks described below, as well as the other information set forth
in this Form 10-K. Should they materialize, any of the risks described below could significantly and adversely affect our business,
prospects, financial condition or results of operations. In that case, the trading price of our common stock could fall and you
may lose all or part of the money you paid to buy our securities.</P>

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

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0"><B><I>No assurance of sales or profitability.</I></B></P>

<P STYLE="font: 12pt Times New Roman, Times, Serif; margin: 0; text-indent: 0.5in">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0; text-indent: 0.25in">The Company's business is dependent upon
the acceptance of its products, licenses and services as an effective and reliable method to perform indoor decontamination
and infectious disease control. The Company's business is also dependent on the effectiveness of its marketing program to
convince potential clients, potential independent contractors and remediators to utilize its products and services so that
the Company will become profitable. There can be no assurance that the public or industry participants will accept the
Company's services, or that the Company will be successful or that its business will earn any profit. There can be no
assurance that the Company will earn material revenues or that investors will not lose their entire investment. There is no
assurance that the Company will operate its business successfully or that its common stock will have value. A failure of the
Company's marketing campaign would have a material adverse impact on its operating results, financial condition and business
performance.</P>

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

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

<P STYLE="font: 12pt Times New Roman, Times, Serif; margin: 0; text-indent: 0.5in">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0; text-indent: 0.25in"> Decontamination and
environmental infectious disease control industry is extremely competitive. The Company's principal competitors for its
Steramist Mister are BioQuell, Johnson &amp; Johnson, and Sanisol; for its UV Ozone generators are Air-Zone, BI-Ozone and
Crystal Air; and for its UVGI products are Honeywell, Sannavox and Steril-Air. From a service end the competition are other
remediators and abatement companies. These competitors may have longer operating histories, greater name recognition, larger
installed customer bases, and substantially greater financial and marketing resources than the Company. The Company believes
that the principal factors affecting competition in this proposed market include name recognition, and the ability to receive
referrals based on client confidence in the Company's service. There are no significant barriers of entry that could keep
potential competitors from opening similar facilities. The Company's ability to compete successfully in the industry will
depend in large part upon its ability to market and sell its indoor decontamination and infectious disease control products
and services. Be able to respond effectively to changing insurance industry standards and methodology. There can be no
assurance that the Company will be able to compete successfully in the remediation industry, or that future competition will
not have a material adverse effect on the business, operating results, and financial condition of the Company.</P>

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

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0"><B><I>Dependence on key personnel.</I></B></P>

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

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0; text-indent: 0.25in">The Company's success is substantially dependent
on the performance of its executive officer. Given the Company's early stage of operation, the Company is dependent on its ability
to retain and motivate high quality personnel. Although the Company believes it will be able to engage qualified personnel for
such purposes, an inability to do so could materially adversely affect the Company's ability to market and perform its services.
The loss of one or more of its key employees or the Company's inability to hire and retain other qualified employees could have
a material adverse effect on the Company's business.</P>

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

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0"><B><I>Inability to sell its license and equipment packages.</I></B></P>

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

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0; text-indent: 0.25in">In the short-term, the success of the Company's
business plan depends heavily on its ability to sell its certification, license and equipment packages, and in the longer term,
on its ability to profitably integrate and operate those businesses. There is no assurance that the Company will be able to find
and license the new businesses that it needs to successfully implement its business plan. The Company needs to sell its packages
in order to grow at an attractive pace. A failure of the Company to sell its licenses and equipment packages will likely have an
adverse impact on its operating results, financial condition and business performance.</P>

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

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0"><B><I>We may not be able to manage our growth effectively, create
operating efficiencies or achieve or sustain profitability.</I></B></P>

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

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0; text-indent: 0.25in">The ability to manage and operate our business
as we execute our growth strategy will require effective planning. Rapid growth could strain our internal resources, leading to
a lower quality of customer service, reporting problems and delays in meeting important deadlines, resulting in loss of market
share and other problems that could adversely affect our reputation and financial performance. Our efforts to grow have placed,
and we expect will continue to place, a significant strain on our personnel, management systems, infrastructure and other resources.
Our ability to manage future growth effectively will also require us to continue to update and improve our operational, financial
and management controls and procedures. If we do not manage our growth effectively, we could be faced with slower growth and a
failure to achieve or sustain profitability.</P>

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

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

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

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

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0"><B><I>We may incur significant costs as a result of operating as
a public company, and our management devotes substantial time to new compliance initiatives.</I></B></P>

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

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0; text-indent: 0.25in">We may incur significant legal, accounting
and other expenses as a public company, including costs resulting from regulations regarding corporate governance practices. Our
management and other personnel devote a substantial amount of time to these compliance initiatives. Moreover, these rules and regulations
have increased our legal and financial compliance costs and will make some activities more time-consuming and costly. For example,
these rules and regulations could make it more difficult for us to attract and retain qualified persons to serve on our board of
directors or as executive officers.</P>

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

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0; text-indent: 0.25in">In addition, the Sarbanes-Oxley Act of 2002
(&quot;SOX&quot;) requires, among other things, that we maintain effective internal control over financial reporting and disclosure
controls and procedures. For the year ended December 31, 2009, we performed system and process evaluation and testing of our internal
control over financial reporting to allow management to report on the effectiveness of our internal control over financial reporting,
as required by Section 404 of the Sarbanes-Oxley Act. Our testing, or the subsequent testing by our independent registered public
accounting firm in the year ending December 31, 2011, may reveal deficiencies in our internal control over financial reporting
that are deemed to be material weaknesses. Our compliance with Section 404 may require that we incur substantial expense and expend
significant management time on compliance-related issues. Moreover, if our independent registered public accounting firm identify
deficiencies in our internal control over financial reporting that are deemed to be material weaknesses, the market price of our
stock would likely decline and we could be subject to sanctions or investigations by the SEC or other regulatory authorities, which
would require additional financial and management resources.</P>

<P STYLE="font: 12pt Times New Roman, Times, Serif; margin: 0; text-indent: 0.5in">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0"><B><I>There are inherent limitations in all control systems, and
misstatements due to error or fraud may occur and may not be detected.</I></B></P>

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

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0; text-indent: 0.25in">While we continue to take action to ensure
compliance with the disclosure controls and other requirements of SOX, there are inherent limitations in our ability to control
all circumstances. Our management, including our Chief Executive Officer, does not expect that any company's controls, including
our own, will prevent all error and all fraud. A control system, no matter how well conceived and operated, can provide only reasonable,
not absolute, assurance that the objectives of the control system are met. In addition, the design of a control system must reflect
the fact that there are resource constraints and the benefit of controls must be evaluated in relation to their costs. Because
of the inherent limitations in all control systems, no evaluation of controls can provide absolute assurance that all control issues
and instances of fraud, if any, in our Company have been detected. These inherent limitations include the realities that judgments
in decision making can be faulty and that breakdowns can occur because of simple errors or mistakes. Further controls can be circumvented
by individual acts of some persons, by collusion of two or more persons, or by management override of the controls. The design
of any system of controls also is based in part upon certain assumptions about the likelihood of future events, and there can be
no assurance that any design will succeed in achieving its stated goals under all potential future conditions. Over time, a control
may be inadequate because of change in conditions or the degree of compliance with the policies or procedures may deteriorate.
Because of inherent limitations in a cost-effective control system, misstatements due to error or fraud may occur and not be detected.</P>

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

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

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

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

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0"><B><I>Our stock price is volatile and there is a limited market
for our shares.</I></B></P>

<P STYLE="font: 12pt Times New Roman, Times, Serif; margin: 0; text-indent: 0.5in">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0; text-indent: 0.25in">The stock markets generally have experienced,
and will probably continue to experience, extreme price and volume fluctuations that have affected the market price of the shares
of many small capital companies. These fluctuations have often been unrelated to the operating results of such companies. Factors
that may affect the volatility of our stock price include the following:</P>

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

<UL TYPE="DISC" STYLE="margin-top: 0in">

<LI STYLE="margin: 0; font-size: 10pt">Our success or lack of success, in developing and marketing our products and services;</LI>

<LI STYLE="margin: 0; font-size: 10pt">Our ability to maintain compliance with OTCBB listing requirements;</LI>

<LI STYLE="margin: 0; font-size: 10pt">Our ability to raise the required capital to fund our business;</LI>

<LI STYLE="margin: 0; font-size: 10pt">The announcement of new products, services, or technological innovations by us or our competitors;</LI>

<LI STYLE="margin: 0; font-size: 10pt">Changes in the executive leadership of the company;</LI>

<LI STYLE="margin: 0; font-size: 10pt">Quarterly fluctuations of our operating results;</LI>

<LI STYLE="margin: 0; font-size: 10pt">Changes in revenue or earnings estimates; and</LI>

<LI STYLE="margin: 0; font-size: 10pt">Competition.</LI>

</UL>

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

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

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

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0"><B><I>Based on the factors described above, recent trends should
not be considered reliable indicators of our future stock prices or financial results.</I></B></P>

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

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0; text-indent: 0.25in">Our shares of common stock have been traded
on the OTCBB. There has been limited trading in our common stock and we cannot give assurances that such a market will develop
further or be maintained.</P>

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

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0"><B><I>Investors should not expect the payment of dividends by us.</I></B></P>

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

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0; text-indent: 0.25in">We do not expect to pay dividends on our common
stock in the foreseeable future. Investors who require cash dividends from their investments should not purchase our common stock
or warrants.</P>

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

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0"><B><I>There is no assurance that we will on a permanent basis be
able to continue to distribute the hydrogen peroxide aerosol.</I></B></P>

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

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0; text-indent: 0.25in">During the quarter ended September
30, 2011, we were chosen by the hydrogen peroxide aerosol&rsquo;s  manufacturer to facilitate the commercialization of
this hydrogen peroxide aerosol. However, this right to be the exclusive distributor or the right to distribute the aerosol
on a non-exclusive basis may be terminated by the manufacturer after two years if certain sales milestones are not meet.
Since it is presently our intention that distribution of the aerosol  will become a materially important source of revenue
for us, any termination of our ability to distribute the aerosol  will have a material adverse effect on our future
revenue.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 14.25pt 0 0 55.05pt; text-indent: -55.1pt"><B>Item&nbsp;1B.&#9;UNRESOLVED
STAFF COMMENTS </B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 4.75pt 0 0; text-indent: 24.5pt">Not Applicable</P>

<P STYLE="font: 12pt Times New Roman, Times, Serif; margin: 0">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0 0 0 55.05pt; text-indent: -55.1pt"><B>Item&nbsp;2.&#9;PROPERTIES
</B></P>

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

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0; text-indent: 0.25in">The Company rents 300 square feet of office
space at 9454 Wilshire Blvd., Beverly Hills, CA 90212, at $22,500 annually on a month-to-month tenancy, in a professional office
building. We believe the current facilities are adequate for the immediate future.</P>

<P STYLE="font: 12pt Times New Roman, Times, Serif; margin: 0"><B>&nbsp;</B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0"><B>Item&nbsp;3.&#9; LEGAL PROCEEDINGS </B></P>

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

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0; text-indent: 0.25in">We are not a party to any material proceedings
or threatened proceedings as of the date of this filing.</P>

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

<P STYLE="font: 12pt Times New Roman, Times, Serif; margin: 0">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0"><B>Item&nbsp;4.&#9; REMOVED AND RESERVED </B></P>

<P STYLE="font: 12pt Times New Roman, Times, Serif; margin: 0; text-align: center">&nbsp;</P>

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

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 9.5pt 0 0 55.05pt; text-indent: -55.1pt"><B>Item&nbsp;5.&#9;MARKET
FOR REGISTRANT&rsquo;S COMMON EQUITY, RELATED STOCKHOLDER MATTERS AND ISSUER PURCHASES OF EQUITY SECURITIES</B></P>

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

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

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0; text-indent: 27pt">The Company&rsquo;s common stock was approved
for listing on the OTC Bulletin Board, under the symbol &ldquo;TOMZ,&rdquo; on June 23, 2008. The following table sets forth, for
the fiscal quarters indicated, high and low sale prices for the common stock on the over-the-counter market, as reported by the
National Association of Securities Dealers, Inc. (NASD). The information below reflects inter-dealer prices, without retail mark-up,
markdown or commissions, and may not necessarily represent actual transactions.&nbsp;There was little trading in our common stock
during the period(s) reflected. As of March 20, 2012, the Company had 65,635,283 common shares outstanding, of which&nbsp;32,336,547
were unrestricted.</P>

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

<TABLE CELLPADDING="0" CELLSPACING="0" STYLE="width: 100%">
<TR STYLE="vertical-align: bottom">
    <TD STYLE="font: 0.5pt Times New Roman, Times, Serif; border-bottom: Black 1pt solid">&nbsp;</TD>
    <TD STYLE="font: 0.5pt Times New Roman, Times, Serif; border-bottom: Black 1pt solid">&nbsp;</TD>
    <TD STYLE="font: 0.5pt Times New Roman, Times, Serif; border-bottom: Black 1pt solid">&nbsp;</TD>
    <TD STYLE="font: 0.5pt Times New Roman, Times, Serif; border-bottom: Black 1pt solid">&nbsp;</TD>
    <TD STYLE="font: 0.5pt Times New Roman, Times, Serif; border-bottom: Black 1pt solid">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom">
    <TD STYLE="font: 4pt Times New Roman, Times, Serif; border-bottom: Black 1pt solid">&nbsp;</TD>
    <TD COLSPAN="2" STYLE="font: 10pt Times New Roman, Times, Serif; border-bottom: Black 1pt solid"><P STYLE="font: 7.5pt Times New Roman, Times, Serif; margin: 0; text-align: center"><B>2011</B></P> <!-- Field: Rule-Page --><DIV ALIGN="LEFT" STYLE="margin-top: 1pt; margin-bottom: 1pt"><DIV STYLE="font-size: 1pt; border-top: Black 1pt solid; width: 100%">&nbsp;</DIV></DIV><!-- Field: /Rule-Page --></TD>
    <TD COLSPAN="2" STYLE="font: 10pt Times New Roman, Times, Serif; border-bottom: Black 1pt solid"><P STYLE="font: 7.5pt Times New Roman, Times, Serif; margin: 0; text-align: center"><B>2010</B></P> <!-- Field: Rule-Page --><DIV ALIGN="LEFT" STYLE="margin-top: 1pt; margin-bottom: 1pt"><DIV STYLE="font-size: 1pt; border-top: Black 1pt solid; width: 100%">&nbsp;</DIV></DIV><!-- Field: /Rule-Page --></TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,238,255)">
    <TD STYLE="font: 4pt Times New Roman, Times, Serif; padding-left: 0.1in">&nbsp;</TD>
    <TD STYLE="font: 10pt Times New Roman, Times, Serif"><P STYLE="font: 7.5pt Times New Roman, Times, Serif; margin: 0; text-align: center"><B>High</B></P> <!-- Field: Rule-Page --><DIV ALIGN="LEFT" STYLE="margin-top: 1pt; margin-bottom: 1pt"><DIV STYLE="font-size: 1pt; border-top: Black 1pt solid; width: 100%">&nbsp;</DIV></DIV><!-- Field: /Rule-Page --></TD>
    <TD STYLE="font: 10pt Times New Roman, Times, Serif"><P STYLE="font: 7.5pt Times New Roman, Times, Serif; margin: 0; text-align: center"><B>Low</B></P> <!-- Field: Rule-Page --><DIV ALIGN="LEFT" STYLE="margin-top: 1pt; margin-bottom: 1pt"><DIV STYLE="font-size: 1pt; border-top: Black 1pt solid; width: 100%">&nbsp;</DIV></DIV><!-- Field: /Rule-Page --></TD>
    <TD STYLE="font: 10pt Times New Roman, Times, Serif"><P STYLE="font: 7.5pt Times New Roman, Times, Serif; margin: 0; text-align: center"><B>High</B></P> <!-- Field: Rule-Page --><DIV ALIGN="LEFT" STYLE="margin-top: 1pt; margin-bottom: 1pt"><DIV STYLE="font-size: 1pt; border-top: Black 1pt solid; width: 100%">&nbsp;</DIV></DIV><!-- Field: /Rule-Page --></TD>
    <TD STYLE="font: 10pt Times New Roman, Times, Serif"><P STYLE="font: 7.5pt Times New Roman, Times, Serif; margin: 0; text-align: center"><B>Low</B></P> <!-- Field: Rule-Page --><DIV ALIGN="LEFT" STYLE="margin-top: 1pt; margin-bottom: 1pt"><DIV STYLE="font-size: 1pt; border-top: Black 1pt solid; width: 100%">&nbsp;</DIV></DIV><!-- Field: /Rule-Page --></TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD STYLE="width: 48%; font-size: 10pt; text-align: left; text-indent: -12pt; padding-left: 12pt">First Quarter</TD>
    <TD STYLE="width: 13%; font-size: 10pt; text-align: right">$0.07</TD>
    <TD STYLE="width: 13%; font-size: 10pt; text-align: right">$0.03</TD>
    <TD STYLE="width: 13%; font-size: 10pt; text-align: right">$2.15</TD>
    <TD STYLE="width: 13%; font-size: 10pt; text-align: right">$0.24</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,238,255)">
    <TD STYLE="font-size: 10pt; text-align: left; text-indent: -12pt; padding-left: 12pt">Second Quarter</TD>
    <TD STYLE="font-size: 10pt; text-align: right">$0.05</TD>
    <TD STYLE="font-size: 10pt; text-align: right">$0.03</TD>
    <TD STYLE="font-size: 10pt; text-align: right">$0.96</TD>
    <TD STYLE="font-size: 10pt; text-align: right">$0.10</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD STYLE="font-size: 10pt; text-align: left; text-indent: -12pt; padding-left: 12pt">Third Quarter</TD>
    <TD STYLE="font-size: 10pt; text-align: right">$0.05</TD>
    <TD STYLE="font-size: 10pt; text-align: right">$0.03</TD>
    <TD STYLE="font-size: 10pt; text-align: right">$0.11</TD>
    <TD STYLE="font-size: 10pt; text-align: right">$0.04</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,238,255)">
    <TD STYLE="font-size: 10pt; text-align: left; text-indent: -12pt; padding-left: 12pt">Fourth Quarter</TD>
    <TD STYLE="font-size: 10pt; text-align: right">$0.04</TD>
    <TD STYLE="font-size: 10pt; text-align: right">$0.01</TD>
    <TD STYLE="font-size: 10pt; text-align: right">$0.10</TD>
    <TD STYLE="font-size: 10pt; text-align: right">$0.04</TD></TR>
</TABLE>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 14.25pt 0 0">&nbsp;</P>

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<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 14.25pt 0 0"></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 14.25pt 0 0"><B>Stockholders </B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 4.75pt 0 0; text-indent: 24.5pt">As of March 20, 2012, there were approximately
616 record holders of our common stock. On March 20, 2012, the last reported sale price of our common stock on the OTCBB was $0.04
per share.</P>

<P STYLE="font: 12pt Times New Roman, Times, Serif; margin: 0">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0"><B>Recent Sales of Unregistered Securities</B></P>

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

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0; text-indent: 27pt">Unless otherwise noted, the following sales of
securities were effected in reliance on the exemption from registration contained in Section&nbsp;4(2) of the Act or Regulation&nbsp;D
promulgated there under, and such securities may not be reoffered or sold in the United States by the holders in the absence of
an effective registration statement, or valid exemption from the registration requirements, under the Securities Act of 1933 (as
amended, the &ldquo;Act&rdquo;):</P>

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

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0; text-indent: 27pt">During the period from January 1, 2011 through
December 31, 2011, we issued 1,500,000 shares of our common stock for net proceeds of $127,500. In February 2011 we issued 572,115
shares in lieu of cash payment for legal services provided to the company in the amount of $14,875 and 5,624 shares in exchange
for investor relations services. Further, in February 2011, we issued 14,076,923 shares of common stock to our CEO as consideration
for payment of $366,000 in accrued compensation.</P>

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

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0; text-indent: 27pt">On November 21, 2011, we sold a
$75,000 convertible promissory note whose coupon is 10% and matures on December 31, 2016. The note is convertible at any time
and the conversion price is initially $0.05 per share. After June 30, 2012, the conversion price will at the end of each
month adjust to the lower of the current conversion price or 110% of that month&rsquo;s average common stock price subject to
being no lower than $0.005 per shares. The purchaser of the Note also received 375,000 warrants to acquire common shares. The
warrants expire on June 30, 2017 and have an initial exercise price which is $0.05 per share and can adjust lower in the same
manner as the accompanying convertible note. <FONT STYLE="color: black">On February 20, 2012 we sold a $100,000
convertible promissory note whose coupon is 10% and matures December 31, 2015. </FONT>The note is convertible at any time and
the conversion price is initially $0.05 per share. After June 30, 2012, the conversion price will at the end of each month
adjust to the lower of the current conversion price or 110% of that month&rsquo;s average common stock price subject to being
no lower than $0.005 per shares. The purchaser of the Note also received 600,000 warrants to acquire common shares. The
warrants expire on June 30, 2017 and have an initial exercise price which is $0.05 per share and can adjust lower in the same
manner as the accompanying convertible note.</P>

<P STYLE="font: 12pt Times New Roman, Times, Serif; margin: 0 0 0 55.05pt; text-indent: -55.1pt">&nbsp;</P>

<P STYLE="font: 12pt Times New Roman, Times, Serif; margin: 0 0 0 55.05pt; text-indent: -55.1pt">&nbsp;<FONT STYLE="font-size: 10pt"><B>Item&nbsp;6.&#9;SELECTED
FINANCIAL DATA<BR>
</B></FONT><B><FONT STYLE="font-size: 8pt"> </FONT></B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0; text-indent: 45.8pt">Not Required.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; text-indent: -56.1pt; margin-right: 0; margin-left: 56.1pt"><B>Item&nbsp;7.&#9;MANAGEMENT&rsquo;S
DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS</B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0; text-indent: 23.1pt"><I>This Annual Report on Form 10-K contains
or incorporates by reference certain forward-looking statements <FONT STYLE="letter-spacing: 0pt">within </FONT>the meaning of
Section 27A of the 1933 Act and Section 21E of the Securities Exchange Act of 1934, as amended, and, as such, may involve known
and unknown risks, uncertainties and assumptions. Forward-looking statements are those that predict or describe future events
or trends and that do not relate solely to historical matters. You can generally identify forward-looking statements as statements
containing the words &ldquo;will,&rdquo; &ldquo;believe,&rdquo; &ldquo;expect,&rdquo; &ldquo;anticipate,&rdquo; &ldquo;intend,&rdquo;
&ldquo;estimate,&rdquo; &ldquo;assume&rdquo; or other similar expressions. You should not rely on our forward-looking statements
because the matters they describe are subject to assumptions, known and unknown risks, uncertainties and other unpredictable factors,
many of which are beyond our control. Therefore, our actual results could differ materially <FONT STYLE="letter-spacing: 0pt">and
adversely </FONT>from those <FONT STYLE="letter-spacing: 0pt">expressed</FONT> in <FONT STYLE="letter-spacing: 0pt">any </FONT>forward-looking
statements as a result of various factors<FONT STYLE="letter-spacing: 0pt">, some of which are listed under the section &ldquo;Risk
Factors,&rdquo; Item 1A of</FONT> this Annual Report on Form 10-K.</I></P>

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

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0; text-indent: 0.25in">In this report references to &quot;TOMI&quot;
&quot;we,&quot; &quot;us,&quot; and &quot;our&quot; refer to TOMI Environmental Solutions, Inc.</P>

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

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: center"><B><I>SPECIAL NOTE REGARDING FORWARD-LOOKING
STATEMENTS</I></B></P>

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

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0; text-indent: 0.25in">The Securities and Exchange Commission (&quot;SEC&quot;)
encourages companies to disclose forward-looking information so that investors can better understand future prospects and make
informed investment decisions. This report contains these types of statements. Words such as &quot;may,&quot; &quot;will,&quot;
&quot;expect,&quot; &quot;believe,&quot; &quot;anticipate,&quot; &quot;estimate,&quot; &quot;project,&quot; or &quot;continue&quot;
or comparable terminology used in connection with any discussion of future operating results or financial performance identify
forward-looking statements. You are cautioned not to place undue reliance on the forward-looking statements, which speak only as
of the date of this report. All forward-looking statements reflect our present expectation of future events and are subject to
a number of important factors and uncertainties that could cause actual results to differ materially from those described in the
forward-looking statements.</P>

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

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

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

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

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

<P STYLE="font: 10pt Courier New, Courier, Monospace; margin: 0; text-indent: 0.25in"><BR>
<FONT STYLE="font-family: Times New Roman, Times, Serif"> Surface and air remediation and environmental solutions to treat viruses
and resistant bacteria is a multi-billion dollar industry. TOMI Environmental Solutions, Inc. is positioned as a global decontamination and infectious disease control company, providing green energy-efficient environmental solutions for indoor surface decontamination through sales and licensing of our premier platform of Hydrogen Peroxide
aerosols, Ultra-Violet Ozone Generators and Ultra-Violet Germicidal Irradiation (&quot;UVGI&quot;) products and technologies.</FONT></P>

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

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0; text-indent: 0.25in">Our effort to combat bacterial and viral outbreaks
along with hospital infection control was recently enhanced with the addition of our ability to distribute a newly developed line
of fixed and portable units that utilizes hydrogen peroxide misting for a cost-effective method to control the spread of infectious
diseases including neutralizing pathogens from bio-terrorism attacks. <FONT STYLE="color: black">Healthcare associated infections
are the fourth leading cause of death in the United States, costing the healthcare system approximately $40 Billion annually. Ten
percent of inpatients contract infections from the hospital resulting in more than 2&nbsp;Million illnesses and&nbsp;over 100,000
deaths. According to most published studies generic hospital cleaning procedures leave between 30-60% of microorganisms depending
upon the process. TOMI's products safely and effectively kill 99.9999% of all known pathogens. In comparison to its competitors,
our SteraMist product has a higher kill level, leaves no reisdue and a shorter operating time.</FONT></P>

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

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0; text-indent: 0.25in">The products which we distribute and those
that we own the manufacturing rights are designed to service a broad spectrum of commercial structures including medical facilities,
office buildings, hotel and motel rooms, schools, restaurants, meat and produce processing facilities, military barracks, and athletic
facilities. We have also used these products and services in single-family homes and multi-unit residences.</P>

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

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0; text-indent: 0.25in">We commenced our planned principal operations
in the second quarter of 2009. Since 2008, we began to implement our business plan by acquiring the related intellectual property
and/or the distribution rights for the Hydrogen Peroxide aerosols, Ultra-Violet ozone Generators, and the UVGI (Ultra Violet Germicidal
Irradiation) system that are at the core of our plan.</P>

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

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0; text-indent: 0.25in">We have also opened two service hubs in Southern
California and New York/New Jersey.</P>

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

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0; text-indent: 0.25in">We also intend to generate and support research
on other air remediation solutions including hydroxyl radicals and other Reactive Oxygen Species (&ldquo;ROS&rdquo;) and to form
business alliances with major remediation companies, construction companies and corporations specializing in disaster relief along
with expanding our sales in North America, Europe, the Middle East and the Far East.</P>

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

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0; text-indent: 0.25in">We continue to pursue complementary businesses
in manufacturing ROS related products, testing labs and other indoor air treatment and maintenance products.</P>

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

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0; text-indent: 0.25in">During the first quarter of 2010 the company
completed the sale of its equipment to its licensee partner in New Your City and its alliance partner Rolyn in Rockville, Maryland.
The company also successfully trained approximately 43 technicians for those respective companies.</P>

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

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0; text-indent: 0.25in">During the second quarter of 2009, the Company
exited the status of development stage enterprise because the Company commenced its planned principal operations and because the
Company earned revenues during the quarter ended June 30, 2009.</P>

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

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0; text-indent: 0.25in">The Company began sales to international locations
during the third quarter of 2010. In February 2012 the Company entered into a Sales and Distribution Agreement covering Latin America
and the Caribbean and sold its first Steramist unit in Latin America in March 2012. </P>

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

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

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

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

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

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

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0; text-indent: 0.25in">TOMI's business growth objective is to be &quot;The
Global Leader in Decontamination and Infectious Disease Control&rdquo; by developing and acquiring a premier platform
of Hydrogen Peroxide aerosols, UV Ozone Generators and other green UVGI products and technologies. We also intend to generate and
support research on other air remediation solutions including hydroxyl radicals and other Reactive Oxygen Species (&ldquo;ROS&rdquo;)
and to form business alliances with major remediation companies, construction companies and corporations specializing in disaster
relief along with expanding our sales in North America, South America, Central America, Europe, the Middle East and the Far East.</P>

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

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0; text-indent: 0.25in">We continue to pursue complementary business
opportunities in manufacturing ROS (Reactive Oxygen Species)-related products, testing labs and other indoor air treatment and
maintenance products.</P>

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

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0; text-indent: 0.25in">Management believes that these contacts will
foster critical relationships and convince more customers that TOMI Environmental Solutions will improve homeland security and
infectious disease control within indoor environments.</P>

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

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0; text-indent: 0.25in">Also during the third quarter of 2010, TOMI
rescinded its stock purchase agreement with Adtec and reversed its 19% holding in Adtec due to a patent infringement law suit from
L-3 Communications, a major U.S. defense contractor that raised legal issues about Adtec&rsquo;s ownership of the intellectual
property. TOMI has received its stock back.</P>

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

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0; text-indent: 0.25in">On November 12, 2010, TOMI signed a term sheet
it received from L-3 Communications setting forth the terms for a license /partnership agreement between L-3 Communications Holding,
Inc., a Delaware corporation and its subsidiary Binary Ionization, Inc., a Delaware corporation, or any subsidiaries thereof (&quot;BII&quot;)
and TOMI Environmental Solutions, Inc. (&quot;TOMI&quot;), a Florida corporation for the sale of BII's product the SteraMist
Mobile Control Unit with the detachable applicator (the &quot;gun&quot;), the SteraMist Room Decontamination Unit, and the
associated consumables (the &quot;Product&quot;).</P>

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

<P STYLE="font: 10pt Courier New, Courier, Monospace; margin: 0; text-indent: 0.25in"></P>

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

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

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0; text-indent: 9pt"><I>Years Ended December 31, 2011 and 2010</I></P>

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

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0; text-indent: 0.25in">We began our planned principal operations during
the second quarter of 2009. During the year ended December 31, 2011, we had total revenue of $208,399, as compared to total revenue
of $357,167 for the year ended December 31, 2010. The decrease in revenue for the year ended December 31, 2010 when compared to
the prior comparable period is due to a change in the Company's business strategy to licensing and selling our products to third
parties and receiving royalty and recurring solution income rather than providing direct service.</P>

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

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0; text-indent: 0.25in">The net loss attributable to the Company for
the year ended December 31, 2011 totaled $826,510. The net loss for the year ended December 31, 2011 is due to various general
and administrative expenses in the amount of $656,866 and professional fees of $202,810, respectively. Professional and consulting
fees include legal, accounting and management consulting expenses. General and administrative expenses primarily include payroll
and payroll related expenses, rent and depreciation.</P>

<P STYLE="font: 12pt Times New Roman, Times, Serif; margin: 0">&nbsp;</P>

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

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

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0; text-indent: 0.25in">The consolidated financial statements contained
in this Annual Report have been prepared on a &quot;going concern&quot; basis, which contemplates the realization of assets and
the satisfaction of liabilities in the normal course of business. We have an immediate and urgent need for additional capital.
For the reasons discussed herein, there is a significant risk that we will be unable to continue as a going concern, in which case,
you would suffer a total loss of your investment in our company.</P>

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

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0; text-indent: 0.25in">We plan on funding operations and our liquidity
needs from licensing and sales arrangements, structured similarly to our current Licensing and Sales Agreement that have profit
margins from sale of equipment, licensing of equipment, recurring income from solution sales.</P>

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

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0; text-indent: 0.25in">We also intend to continue to raise equity
capital through the sale of restricted stock and short-term notes convertible into common stock.</P>

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

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0; text-indent: 0.25in">Our liquid assets generally consist of unpledged
assets and cash and cash equivalents.</P>

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

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

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

<P STYLE="font: 12pt Times New Roman, Times, Serif; margin: 0">&nbsp;</P>

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

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

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0; text-indent: 0.25in">None.</P>

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

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

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

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0; text-indent: 0.25in">None.</P>

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

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0"><B>Critical Accounting Policies and Estimates</B></P>

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

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0; text-indent: 0.5in">Our discussion and analysis of our financial
condition and results of operations are based upon our consolidated financial statements, which have been prepared in accordance
with accounting principles generally accepted in the United States. The preparation of these financial statements requires us to
make estimates and judgments that affect the reported amounts of assets, liabilities, revenues and expenses, and related disclosure
of contingent assets and liabilities. The estimation process requires assumptions to be made about future events and conditions,
and as such, is inherently subjective and uncertain. Actual results could differ materially from our estimates.</P>

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

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0; text-indent: 0.5in">The SEC defines critical accounting policies
as those that are, in management's view, most important to the portrayal of our financial condition and results of operations and
most demanding of our judgment. We consider the following policies to be critical to an understanding of our consolidated financial
statements and the uncertainties associated with the complex judgments made by us that could impact our results of operations,
financial position and cash flows.</P>

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

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0"><B>Income (Loss) Per Share</B></P>

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

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0; text-indent: 0.5in">The computation of income (loss) per share is
based on the weighted average number of common shares outstanding during the periods presented. Diluted income (loss) per common
share is computed based on the weighted average number of common shares outstanding plus the dilutive effect of common stock equivalents.</P>

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

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

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

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0; text-indent: 0.5in">For revenue from services and product sales,
the Company recognized revenue in accordance with Staff Accounting Bulletin No. 104, &quot;Revenue Recognition&quot; (SAB No. 104),
which superseded Staff Accounting Bulletin No. 101, &quot;Revenue Recognition in Financial Statements&quot; (SAB No. 101). SAB
No. 104 requires that four basic criteria must be met before revenue can be recognized: (1) persuasive evidence of an arrangement
exists; (2) service has been rendered or delivery has occurred; (3) the selling price is fixed and determinable; and (4) collectability
is reasonably assured. Determination of criteria (3) and (4) are based on management's judgment regarding the fixed nature of the
selling prices of the services rendered or products delivered and the collectability of those amounts. Provisions for discounts
to customers, and allowance, and other adjustments will be provided for in the same period the related sales are recorded.</P>

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

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

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

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0; text-indent: 0.5in">Effective January 1, 2008, the Company adopted
the provisions of ASC 820, &quot;Fair Value Measurements&quot;. ASC 820 defines fair value, establishes a framework for measuring
fair value in accordance with generally accepted accounting principles and expands disclosures about fair value measurements. The
implementation of this standard did not have any impact on the Company's consolidated financial positions, results of operations,
or cash flows. The carrying amounts of cash and cash equivalents, accounts payable, other accrued expenses and notes payables approximate
fair value because of the short maturity of these items.</P>

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

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

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

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0; text-indent: 45.8pt">We account for stock-based compensation in
accordance with FASB ASC 718, Compensation - Stock Compensation. Under the provisions of FASB ASC 718, stock-based compensation
cost is estimated at the grant date based on the award's fair value and is recognized as expense over the requisite service period.
The Company currently has one active stock-based compensation plan, TOMI Environmental Solutions, Inc. Stock Option and Restricted
Stock Plan (the &quot;Plan&quot;). The Plan calls for the Company through a committee of its Board of Directors, to issue up to
2,500,000 shares of restricted common stock or stock options. The Company generally issues grants to its employees, consultants,
and board members. Stock options are granted with an exercise price equal to the closing price of its common stock on the date
of grant with a term no greater than 10 years. Generally, stock options vest over two to four years. Incentive stock options granted
to shareholders who own 10% or more of the Company's outstanding stock are granted at an exercise price that may not be less than
110% of the closing price of the Company's common stock on the date of grant and have a term no greater than five years. At the
date of grant, the Company determines the fair value of the stock option award and recognizes compensation expense over the requisite
service period, which is generally the vesting period of the award. The fair value of the stock option award is calculated using
the Black-Scholes option-pricing model. As of December 31, 2010, the Company issued 40,000 options under the Plan.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0; text-indent: 45.8pt">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0; text-indent: 45.8pt"></P>

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<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0; text-indent: 45.8pt">&nbsp;</P>

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

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

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

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0; text-indent: 0.25in">In January 2010, the FASB issued Accounting
Standards Update 2010-06, Fair Value Measurements and Disclosures (Topic 820): Improving Disclosures about Fair Value Measurements.
This guidance amends the disclosure requirements related to recurring and nonrecurring fair value measurements and requires new
disclosures on the transfers of assets and liabilities between Level 1 (quoted prices in active market for identical assets or
liabilities) and Level 2 (significant other observable inputs) of the fair value measurement hierarchy, including the reasons and
the timing of the transfers. Additionally, the guidance requires a roll forward of activities on purchases, sales, issuance and
settlements of the assets and liabilities measured using significant unobservable inputs (Level 3 fair value measurements). The
guidance became effective for the reporting period beginning January 1, 2010, except for the disclosure on the roll forward activities
for Level 3 fair value measurements, which will become effective for the reporting period beginning January 1, 2011. The Company's
adoption of this updated guidance was not significant to our consolidated financial statements.</P>

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

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0; text-indent: 0.25in">In February 2010, the FASB issued updated guidance
related to subsequent events. As a result of this updated guidance, public filers must still evaluate subsequent events through
the issuance date of their financial statements; however, they are not required to disclose the date in which subsequent events
were evaluated in their financial statements disclosures. This amended guidance became effective upon its issuance on February
24, 2010 at which time the Company adopted this updated guidance.</P>

<P STYLE="font: 12pt Times New Roman, Times, Serif; margin: 0">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0; text-indent: 45.8pt">In May 2011, the Financial Accounting Standards
Board (&ldquo;FASB&rdquo;) issued Accounting Standards Update (&ldquo;ASU&rdquo;) 2011-04, which updated the guidance in ASC Topic
820, <I>Fair Value Measurement.</I> The amendments in this ASU generally represent clarifications of Topic 820, but also include
some instances where a particular principle or requirement for measuring fair value or disclosing information about fair value
measurements has changed. This update results in common principles and requirements for measuring fair value and for disclosing
information about fair value measurements in accordance with U.S. GAAP and International Financial Reporting Standards. The amendments
in this ASU are to be applied prospectively. For public entities, the amendments are effective for interim and annual periods beginning
after December 15, 2011, and early application is not permitted. ASU 2011-04 is not expected to have a material impact on the Company&rsquo;s
financial position or results of operations.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0">&#9;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0"><B>Item 7A.&nbsp;&nbsp; QUANTITATIVE AND QUALITATIVE DISCLOSURES
ABOUT MARKET RISK</B></P>

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

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0; text-indent: 0.25in">Not applicable.</P>

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

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0 0 0 0.75in; text-indent: -0.75in"><B>Item 8. <FONT STYLE="text-transform: uppercase">Financial
STATEMENTS AND SUPPLEMENTARY INFORMATION</FONT></B></P>

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

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0; text-indent: 0.5in">The Company&rsquo;s financial statements for
the fiscal year ended December 31, 2010 are included in this annual report, beginning on page F-1.</P>

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

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0 0 0 0.75in; text-indent: -0.75in"><B>Item 9. <FONT STYLE="text-transform: uppercase">Changes
in and Disagreements With Accountants on Accounting and Financial Disclosure</FONT></B></P>

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

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0; text-indent: 0.25in">During the two most recent fiscal years we
have not had a change in, or disagreement with, our independent registered public accounting firm.</P>

<P STYLE="font: 12pt Times New Roman, Times, Serif; margin: 0"><B>&nbsp;</B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0"><B>Item 9A. <FONT STYLE="text-transform: uppercase">Controls and
Procedures</FONT></B></P>

<P STYLE="font: 5pt Times New Roman, Times, Serif; margin: 0">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0; text-indent: 9pt"><I>Disclosure Controls and Procedures</I></P>

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

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0; text-indent: 0.25in">Our management, with the participation of our
Principal Executive Officer who is also our Principal Financial Officer, conducted an evaluation of the effectiveness of our disclosure
controls and procedures as of the end of the period covered by this Annual Report (December 31, 2011, as is defined in Rule 13a-15(e)
promulgated under the Securities Exchange Act of 1934, as amended. Our disclosure controls and procedures are intended to ensure
that the information we are required to disclose in the reports that we file or submit under the Securities Exchange Act of 1934
is (i) recorded, processed, summarized and reported within the time periods specified in the Securities and Exchange Commission's
rules and forms and (ii) accumulated and communicated to our management, including the Principal Executive Officer and Principal
Financial Officer to allow timely decisions regarding required disclosures.</P>

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

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0; text-indent: 0.25in">Based on that evaluation, our Principal Executive
Officer concluded that, as of the end of the period covered by this Annual Report, our disclosure controls and procedures were
effective. Our management has concluded that the financial statements included in this Form 10-K present fairly, in all material
respects our financial position, results of operations and cash flows for the periods presented in conformity with generally accepted
accounting principles.</P>

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

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0; text-indent: 0.25in">It should be noted that any system of controls,
however well designed and operated, can provide only reasonable, and not absolute, assurance that the objectives of the system
will be met. In addition, the design of any control system is based in part upon certain assumptions about the likelihood of future
events.</P>

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

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

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

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

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0"><B>Management's Report on Internal Control Over Financial Reporting</B></P>

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

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0; text-indent: 0.25in">Management is responsible for establishing
and maintaining adequate internal control over our financial reporting (as defined in Rule 13a-15(f) and 15d-15(f) of the Exchange
Act). Internal control over financial reporting is a process designed to provide reasonable assurance regarding the reliability
of financial reporting and the preparation of financial statements for external purposes in accordance with accounting principles
generally accepted in the United States of America.</P>

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

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0; text-indent: 0.25in">Our internal control over financial reporting
includes those policies and procedures that (i) pertain to the maintenance of records that, in reasonable detail, accurately and
fairly reflect the transactions and dispositions of our assets, (ii) provide reasonable assurance that transactions are recorded
as necessary to permit preparation of financial statements in accordance with accounting principles generally accepted in the United
States of America, and that our receipts and expenditures are being made only in accordance with authorizations of our management
and directors, and (iii) provide reasonable assurance regarding prevention or timely detection of unauthorized acquisition, use
or disposition of our assets that could have a material effect on the financial statements.</P>

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

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0; text-indent: 0.25in">Because of its inherent limitations, internal
control over financial reporting may not prevent or detect misstatements. Also, projections of any evaluation of effectiveness
to future periods are subject to the risk that controls may become inadequate because of changes in conditions, or that the degree
of compliance with the policies or procedures may deteriorate.</P>

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

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0; text-indent: 0.25in">Our management, with the participation of our
Principal Executive Officer, conducted an evaluation of the effectiveness of our internal control over financial reporting based
on the framework in Internal Control - Integrated Framework issued by the Committee of Sponsoring Organizations of the Treadway
Commission. Based on this evaluation, our Principal Executive Officer concluded that, as of the end of the period covered by this
Annual Report, our internal control over financial reporting was effective.</P>

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

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0; text-indent: 0.25in">This Annual Report does not include an attestation
report of our independent registered public accounting firm regarding internal control over financial reporting. Management's report
was not subject to attestation by our independent registered public accounting firm pursuant to temporary rules of the Securities
and Exchange Commission that permit us to provide only management's report in this Annual Report.</P>

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

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0"><B>Changes in Internal Control Over Financial Reporting</B></P>

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

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0; text-indent: 0.25in">During our most recent fiscal quarter, there
have been no changes in our internal control over financial reporting that have materially affected, or are reasonably likely to
materially affect our internal control over financial reporting.</P>

<P STYLE="font: 12pt Times New Roman, Times, Serif; margin: 0">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0"><B>Item 9B. <FONT STYLE="text-transform: uppercase">Other Information</FONT></B></P>

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

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0; text-indent: 0.5in">None.</P>

<P STYLE="font: 12pt Times New Roman, Times, Serif; margin: 0">&nbsp;</P>

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

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

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0"><B>Item 10. <FONT STYLE="text-transform: uppercase">Directors, Executive
Officers and Corporate Governance</FONT></B></P>

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

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0; text-indent: 0.25in">Our executive officers and directors and their
biographical information are presented below. Our bylaws require three directors who serve until our next annual meeting or until
each is succeeded by a qualified director. Our executive officers are appointed by our Board of Directors and serve at its discretion.
There are no existing family relationships between or among any of our executive officers or directors.</P>

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

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0; text-indent: 0.25in"><I>Halden S. Shane</I>: Dr. Shane has been
our Chairman since the Company's inception. Up until 2009 Dr. Shane also served as President and CEO of Tiger Management International,
a private management company that deals in business management of private and public companies. Dr. Shane resigned all positions
and closed Tiger Management International in 2009. Dr. Shane was founder and CEO of Integrated Healthcare Alliance, Inc. and also
founder and General Partner of Doctors Hospital West Covina, California. Prior thereto, Dr. Shane practiced podiatric surgery specializing
in ankle arthroscopy.</P>

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

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0; text-indent: 0.25in"><I>Harold W. Paul</I>: Mr. Paul has been a
director since June 2009. He has been engaged in the private practice of law for thirty-five years, primarily as a securities specialist.
Mr. Paul has been company counsel to public companies listed on the AMEX, NASDAQ and OTC exchanges. He has served as a director
for six public companies in a variety of industries, including technology and financial services. He holds a BA degree from SUNY
at Stony Brook and a JD from Brooklyn Law School and is admitted to practice in New York and Connecticut.</P>

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

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

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

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

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

<P STYLE="font: 12pt Times New Roman, Times, Serif; margin: 0; text-indent: 0.5in">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0; text-indent: 0.25in">The Company's audit committee was established
in June 2009 and is currently comprised of Harold W. Paul.</P>

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

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0; text-indent: 0.25in">Our Board has determined that it does not have
a member of its Audit Committee that qualifies as an &quot;audit committee financial expert&quot; as defined in Item 401(e) of
Regulation S-B, and is &quot;independent&quot; as the term is used in Item 7(d)(3)(iv) of Schedule 14A under the Exchange Act.</P>

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

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0; text-indent: 0.25in">We believe that retaining an independent director
who would qualify as an &quot;audit committee financial expert&quot; would be overly costly and burdensome and is not warranted
in our current circumstances.</P>

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

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

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

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0; text-indent: 0.25in">The Board adopted a Code of Ethics in 2008
applies to, among other persons, Board members, officers including our Chief Executive Officer, contractors, consultants and advisors.
Our Code of Ethics sets forth written standards designed to deter wrongdoing and to promote:</P>

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

<OL START="1" TYPE="1" STYLE="margin-top: 0in">

<LI STYLE="margin: 0; font-size: 10pt">honest and ethical conduct including the ethical handling of actual or apparent conflicts
of interest between personal and professional relationships;</LI>

<LI STYLE="margin: 0; font-size: 10pt">full, fair, accurate, timely and understandable disclosure in reports and documents that
we file with or submit to the SEC and in other public communications made by us;</LI>

<LI STYLE="margin: 0; font-size: 10pt">compliance with applicable governmental laws, rules and regulations;</LI>

<LI STYLE="margin: 0; font-size: 10pt">the prompt internal reporting of violations of the Code of Ethics to an appropriate person
or persons identified in the Code of Ethics; and</LI>

<LI STYLE="margin: 0; font-size: 10pt">accountability for adherence to the Code of Ethics.</LI>

</OL>

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

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0"><B>Item 11. <FONT STYLE="text-transform: uppercase">Executive Compensation</FONT></B></P>

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

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

<P STYLE="font: 12pt Times New Roman, Times, Serif; margin: 0; text-indent: 0.5in">&nbsp;</P>

<P STYLE="font: 12pt Times New Roman, Times, Serif; margin: 0"></P>

<TABLE BORDER="0" CELLPADDING="0" CELLSPACING="0" STYLE="width: 100%; border-collapse: collapse; font: 11pt Calibri, Helvetica, Sans-Serif">
<TR STYLE="vertical-align: bottom">
    <TD>&nbsp;</TD>
    <TD STYLE="text-align: center">&nbsp;</TD>
    <TD STYLE="text-align: center">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD STYLE="text-align: center">&nbsp;</TD>
    <TD STYLE="text-align: center">&nbsp;</TD>
    <TD STYLE="text-align: center">&nbsp;</TD>
    <TD STYLE="font-weight: bold; text-align: center">Change in</TD>
    <TD STYLE="text-align: center">&nbsp;</TD>
    <TD STYLE="text-align: center">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom">
    <TD>&nbsp;</TD>
    <TD STYLE="text-align: center">&nbsp;</TD>
    <TD STYLE="text-align: center">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD STYLE="text-align: center">&nbsp;</TD>
    <TD STYLE="text-align: center">&nbsp;</TD>
    <TD STYLE="text-align: center">&nbsp;</TD>
    <TD STYLE="font-weight: bold; text-align: center">Pension</TD>
    <TD STYLE="text-align: center">&nbsp;</TD>
    <TD STYLE="text-align: center">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom">
    <TD>&nbsp;</TD>
    <TD STYLE="text-align: center">&nbsp;</TD>
    <TD STYLE="text-align: center">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD STYLE="text-align: center">&nbsp;</TD>
    <TD STYLE="text-align: center">&nbsp;</TD>
    <TD STYLE="text-align: center">&nbsp;</TD>
    <TD STYLE="font-weight: bold; text-align: center">Value and</TD>
    <TD STYLE="text-align: center">&nbsp;</TD>
    <TD STYLE="text-align: center">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom">
    <TD>&nbsp;</TD>
    <TD STYLE="text-align: center">&nbsp;</TD>
    <TD STYLE="text-align: center">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD STYLE="text-align: center">&nbsp;</TD>
    <TD STYLE="text-align: center">&nbsp;</TD>
    <TD STYLE="font-weight: bold; text-align: center">Non-</TD>
    <TD STYLE="font-weight: bold; text-align: center">Non-</TD>
    <TD STYLE="text-align: center">&nbsp;</TD>
    <TD STYLE="text-align: center">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom">
    <TD>&nbsp;</TD>
    <TD STYLE="text-align: center">&nbsp;</TD>
    <TD STYLE="text-align: center">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD STYLE="text-align: center">&nbsp;</TD>
    <TD STYLE="text-align: center">&nbsp;</TD>
    <TD STYLE="font-weight: bold; text-align: center">Equity</TD>
    <TD STYLE="font-weight: bold; text-align: center">Qualified</TD>
    <TD STYLE="text-align: center">&nbsp;</TD>
    <TD STYLE="text-align: center">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom">
    <TD>&nbsp;</TD>
    <TD STYLE="text-align: center">&nbsp;</TD>
    <TD STYLE="text-align: center">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD STYLE="text-align: center">&nbsp;</TD>
    <TD STYLE="text-align: center">&nbsp;</TD>
    <TD STYLE="font-weight: bold; text-align: center">Incentive</TD>
    <TD STYLE="font-weight: bold; text-align: center">Defferre</TD>
    <TD STYLE="text-align: center">&nbsp;</TD>
    <TD STYLE="text-align: center">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom">
    <TD>&nbsp;</TD>
    <TD STYLE="text-align: center">&nbsp;</TD>
    <TD STYLE="text-align: center">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD STYLE="text-align: center">&nbsp;</TD>
    <TD STYLE="text-align: center">&nbsp;</TD>
    <TD STYLE="font-weight: bold; text-align: center">Plan</TD>
    <TD STYLE="font-weight: bold; text-align: center">Compen-</TD>
    <TD STYLE="font-weight: bold; text-align: center">All Other</TD>
    <TD STYLE="text-align: center">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom">
    <TD>&nbsp;</TD>
    <TD STYLE="font-weight: bold; text-align: center">&nbsp;</TD>
    <TD STYLE="font-weight: bold; text-align: center">&nbsp;</TD>
    <TD STYLE="font-weight: bold">&nbsp;</TD>
    <TD STYLE="font-weight: bold; text-align: center">Stock</TD>
    <TD STYLE="font-weight: bold; text-align: center">Option&nbsp;</TD>
    <TD STYLE="font-weight: bold; text-align: center">Compen-</TD>
    <TD STYLE="font-weight: bold; text-align: center">Sation</TD>
    <TD STYLE="font-weight: bold; text-align: center">Compen-</TD>
    <TD STYLE="text-align: center">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom">
    <TD>&nbsp;</TD>
    <TD STYLE="font-weight: bold; text-align: center">&nbsp;</TD>
    <TD STYLE="font-weight: bold; text-align: center">Salary</TD>
    <TD STYLE="font-weight: bold; text-align: center">Bonus</TD>
    <TD STYLE="font-weight: bold; text-align: center">Awards</TD>
    <TD STYLE="font-weight: bold; text-align: center">Awards</TD>
    <TD STYLE="font-weight: bold; text-align: center">sation</TD>
    <TD STYLE="font-weight: bold; text-align: center">Earnings</TD>
    <TD STYLE="font-weight: bold; text-align: center">sation</TD>
    <TD STYLE="font-weight: bold; text-align: center">Total</TD></TR>
<TR STYLE="vertical-align: bottom">
    <TD STYLE="border-bottom: windowtext 1pt solid; font-weight: bold">Name and Principal Position</TD>
    <TD STYLE="border-bottom: windowtext 1pt solid; font-weight: bold; text-align: center">Year</TD>
    <TD STYLE="border-bottom: windowtext 1pt solid; font-weight: bold; text-align: center">($)</TD>
    <TD STYLE="border-bottom: windowtext 1pt solid; font-weight: bold; text-align: center">($)</TD>
    <TD STYLE="border-bottom: windowtext 1pt solid; font-weight: bold; text-align: center">($)</TD>
    <TD STYLE="border-bottom: windowtext 1pt solid; font-weight: bold; text-align: center">($)</TD>
    <TD STYLE="border-bottom: windowtext 1pt solid; font-weight: bold; text-align: center">($)</TD>
    <TD STYLE="border-bottom: windowtext 1pt solid; font-weight: bold; text-align: center">($)</TD>
    <TD STYLE="border-bottom: windowtext 1pt solid; font-weight: bold; text-align: center">($)</TD>
    <TD STYLE="border-bottom: windowtext 1pt solid; font-weight: bold; text-align: center">($)</TD></TR>
<TR STYLE="vertical-align: bottom">
    <TD>&nbsp;</TD>
    <TD STYLE="text-align: center">&nbsp;</TD>
    <TD STYLE="text-align: center">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD STYLE="text-align: center">&nbsp;</TD>
    <TD STYLE="text-align: center">&nbsp;</TD>
    <TD STYLE="text-align: center">&nbsp;</TD>
    <TD STYLE="text-align: center">&nbsp;</TD>
    <TD STYLE="text-align: center">&nbsp;</TD>
    <TD STYLE="text-align: center">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom">
    <TD>Halden S. Shane</TD>
    <TD STYLE="text-align: center">2011</TD>
    <TD STYLE="text-align: center">20,000(1)</TD>
    <TD STYLE="text-align: center">-</TD>
    <TD STYLE="text-align: center">366,000(1)</TD>
    <TD STYLE="text-align: center">-</TD>
    <TD STYLE="text-align: center">-</TD>
    <TD STYLE="font-weight: bold; text-align: center">-</TD>
    <TD STYLE="font-weight: bold; text-align: center">-</TD>
    <TD STYLE="text-align: center">386,000</TD></TR>
<TR STYLE="vertical-align: bottom">
    <TD>Principal Executive Officer and</TD>
    <TD STYLE="text-align: center">2010</TD>
    <TD STYLE="text-align: center">64,000(2)</TD>
    <TD STYLE="text-align: center">-</TD>
    <TD STYLE="text-align: center">275,000(3)</TD>
    <TD STYLE="text-align: center">-</TD>
    <TD STYLE="text-align: center">-</TD>
    <TD STYLE="font-weight: bold; text-align: center">-</TD>
    <TD STYLE="font-weight: bold; text-align: center">-</TD>
    <TD STYLE="text-align: center">339,000</TD></TR>
<TR STYLE="vertical-align: bottom">
    <TD>Principal Financial Officer</TD>
    <TD STYLE="text-align: center">2009</TD>
    <TD STYLE="text-align: center">20,000(2)</TD>
    <TD STYLE="text-align: center">-</TD>
    <TD STYLE="text-align: center">146,250(3)</TD>
    <TD STYLE="text-align: center">-</TD>
    <TD STYLE="text-align: center">-</TD>
    <TD STYLE="font-weight: bold; text-align: center">-</TD>
    <TD STYLE="font-weight: bold; text-align: center">-</TD>
    <TD STYLE="text-align: center">166,250</TD></TR>
</TABLE>


<P STYLE="font: 12pt Times New Roman, Times, Serif; margin: 0"></P>

<P STYLE="font: 12pt Times New Roman, Times, Serif; margin: 0">&nbsp;</P>

<P STYLE="font: 2pt Times New Roman, Times, Serif; margin: 0 0 0 24.45pt; text-indent: -24.5pt">&nbsp;</P>

<TABLE CELLPADDING="0" CELLSPACING="0" WIDTH="100%" STYLE="font: 9pt Times New Roman, Times, Serif; margin-top: 0; margin-bottom: 0"><TR STYLE="vertical-align: top">
<TD STYLE="width: 0"></TD><TD STYLE="width: 24.45pt">(1)</TD><TD><FONT STYLE="color: black">Dr. Shane's employment agreement provides for a $20,000 annual salary plus incentive bonuses. The
$20,000 cash portion of his compensation has been deferred. In February 2011, he was issued 14,075,923 common shares as consideration
for payment of $366,000 in accrued compensation. At that time he also forgave an additional $700,000 in accrued compensation due
him.</FONT></TD></TR></TABLE>

<P STYLE="font: 9pt Times New Roman, Times, Serif; margin: 0 0 0 24.45pt; text-indent: -24.5pt">&nbsp;</P>

<TABLE CELLPADDING="0" CELLSPACING="0" WIDTH="100%" STYLE="font: 9pt Times New Roman, Times, Serif; margin-top: 0; margin-bottom: 0"><TR STYLE="vertical-align: top">
<TD STYLE="width: 0"></TD><TD STYLE="width: 24.45pt">(2)</TD><TD>Does not include deferred compensation in the amounts of $1,066,269 and $827,868 as of December 31, 2010 and December 31, 2009,
respectively.</TD></TR></TABLE>

<P STYLE="font: 4pt Times New Roman, Times, Serif; margin: 0 0 0 24.45pt; text-indent: -24.5pt">&nbsp;</P>

<TABLE CELLPADDING="0" CELLSPACING="0" WIDTH="100%" STYLE="font: 9pt Times New Roman, Times, Serif; margin-top: 0; margin-bottom: 0"><TR STYLE="vertical-align: top">
<TD STYLE="width: 0"></TD><TD STYLE="width: 24.45pt">(3)</TD><TD>In September 2009, Dr. Shane was issued 75,000 shares of common <B>stock</B> valued at $146,250 based on the closing price
on that date in payment of accrued salaries of $150,000. The shares vest two years after issuance provided he is still employed
by the Company at that time. The fair market value of the shares has been recorded as deferred compensation as of September 30,
2009. In August 2010, Dr. Shane was issued 2,500,000 shares of common stock valued at $275,000 based on the closing price on the
date of grant for payment of accrued salaries of $125,000.</TD></TR></TABLE>

<P STYLE="font: 12pt Times New Roman, Times, Serif; margin: 0">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0; text-indent: 0.25in">The following discussion addresses any and
all compensation awarded to, earned by or paid to our named executive officers for the fiscal years ended December 31, 2011 and
December 31, 2010. We have not had a bonus, profit sharing, or deferred compensation plan for the benefit of employees, officers
or directors.</P>

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

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0; text-indent: 0.25in">We have not paid any salaries or other compensation
to officers or directors for their service on the Board of Directors for the years ended December 31, 2011 and 2010. In September
2009, the Board of Directors adopted a resolution to compensate outside directors 20,000 options per year and meeting fees payable
annually payable on January 2 of each year. We have entered into an employment agreement with our CEO, Dr. Halden Shane, and effective
January 1, 2009. Dr. Shane was paid $64,000 and $20,000 during the year ended December 31, 2010 and 2009, respectively. At December
31, 2010 and 2009, Dr. Shane was owed $1,066,269 and $827,868, respectively, in unpaid salary. It is intended Dr. Shane will defer
any compensation until such time as business operations provide sufficient cash flow to provide for salaries. See Subsequent Events
Note No.11 to the financial statements.</P>

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

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

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

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

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0"><B>Retirement or Change of Control Arrangements</B></P>

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

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0; text-indent: 0.25in">We do not offer retirement benefit plans to
our executive officers, nor have we entered into any contract, agreement, plan or arrangement, whether written or unwritten, that
provides for payments to a named executive officer at or in connection with the resignation, retirement or other termination of
a named executive officer, or a change in control of the company or a change in the named executive officer's responsibilities
following a change in control.</P>

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

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

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

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0; text-indent: 0.25in">A directors' compensation plan was adopted
on September 18, 2009 and is comprised of 20,000 options for outside directors upon appointment or election to the board and 20,000
options issued annually the first day of each calendar year that the outside director is continuing in service, together with cash
fees for each committee or subcommittee meeting attended. The options are to be issued from the Company's stock option plan. Meeting
fees are set at $1,000 and $500 for each committee or subcommittee meeting, respectively, attended in person, and $750 and $375
for each committee and subcommittee meeting, respectively, attended by telephone.</P>

<P STYLE="font: 12pt Times New Roman, Times, Serif; margin: 0">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0 0 0 0.75in; text-indent: -0.75in"><B>Item 12. <FONT STYLE="text-transform: uppercase">Security
Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters</FONT></B></P>

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

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0"><B>Securities Under Equity Compensation Plans</B></P>

<P STYLE="font: 12pt Times New Roman, Times, Serif; margin: 0; text-indent: 0.5in">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0; text-indent: 0.25in">The Board of Directors adopted the 2008 Stock
Option Plan that was approved by shareholders on May 13, 2009 and authorizes the issuance of up to 2,500,000 shares under the Plan.</P>

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

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0; text-indent: 0.25in">In January 2010 and January 2011, Willie L.
Brown, Jr.-a former director-and Harold W. Paul were issued 20,000 options each.</P>

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

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0; text-indent: 0.25in">In January 2012 Mr. Paul was issued 20,000
options.</P>

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

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

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

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0; text-indent: 0.25in">The following table sets forth the beneficial
ownership of our outstanding common stock by our management and each person or group known by us to own beneficially more than
5% of our outstanding common stock. Beneficial ownership is determined in accordance with SEC rules and regulations, which generally
requires voting or investment power with respect to securities. Except as indicated by footnote, the persons named in the table
below have sole voting power and investment power with respect to all shares of common stock shown as beneficially owned by them.
The percentage of beneficial ownership is based on 65,635,283 shares of common stock outstanding as of March 20, 2012.</P>

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

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

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

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

<TABLE ALIGN="CENTER" CELLSPACING="0" CELLPADDING="0" STYLE="width: 100%; border-collapse: collapse">
<TR STYLE="vertical-align: top">
    <TD STYLE="width: 48%; border-bottom: windowtext 1pt solid; padding: 0.05in 5.75pt">
        <P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: center"><B>Name and Address of</B></P>
        <P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: center"><B>Beneficial Owners</B></P></TD>
    <TD STYLE="width: 3%; font: bold 10pt Times New Roman, Times, Serif; padding: 0.05in 5.75pt; text-align: center">&nbsp;</TD>
    <TD STYLE="width: 30%; border-bottom: windowtext 1pt solid; padding: 0.05in 5.75pt">
        <P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: center"><B>Amount and Nature of </B></P>
        <P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: center"><B>Beneficial Owner</B></P></TD>
    <TD STYLE="width: 3%; font: bold 10pt Times New Roman, Times, Serif; padding: 0.05in 5.75pt; text-align: center">&nbsp;</TD>
    <TD STYLE="width: 16%; border-bottom: windowtext 1pt solid; padding: 0.05in 5.75pt">
        <P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: center"><B>Percent of </B></P>
        <P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: center"><B>Class</B></P></TD></TR>
<TR>
    <TD STYLE="padding: 0.05in 5.75pt; vertical-align: top">
        <P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0">Halden Shane</P>
        <P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0">11710 Wetherby Lane</P>
        <P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0">Los Angeles, CA 90077</P></TD>
    <TD STYLE="font: 10pt Times New Roman, Times, Serif; vertical-align: top; padding: 0.05in 5.75pt; text-align: center">&nbsp;</TD>
    <TD STYLE="padding: 0.05in 5.75pt">
        <P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: center">14,076,923</P>
        <P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: center">&nbsp;</P></TD>
    <TD STYLE="font: 10pt Times New Roman, Times, Serif; padding: 0.05in 5.75pt; text-align: center">&nbsp;</TD>
    <TD STYLE="font: 10pt Times New Roman, Times, Serif; padding: 0.05in 5.75pt; text-align: center">21.4%</TD></TR>
<TR>
    <TD STYLE="padding: 0.05in 5.75pt; vertical-align: top">
        <P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0">Shane Family Trust (1)</P>
        <P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0">11710 Wetherby Lane</P>
        <P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0">Los Angeles, CA 90077</P></TD>
    <TD STYLE="font: 10pt Times New Roman, Times, Serif; vertical-align: top; padding: 0.05in 5.75pt; text-align: center">&nbsp;</TD>
    <TD STYLE="padding: 0.05in 5.75pt">
        <P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: center">8,100,000</P>
        <P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: center">&nbsp;</P></TD>
    <TD STYLE="font: 10pt Times New Roman, Times, Serif; padding: 0.05in 5.75pt; text-align: center">&nbsp;</TD>
    <TD STYLE="padding: 0.05in 5.75pt">
        <P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: center">12.3%</P>
        <P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: center">&nbsp;</P></TD></TR>
<TR>
    <TD STYLE="padding: 0.05in 5.75pt; vertical-align: top">
        <P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0">Harold W. Paul (2)</P>
        <P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0">9454 Wilshire Blvd., Penthouse</P>
        <P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0">Beverly Hills, CA 90212</P></TD>
    <TD STYLE="font: 10pt Times New Roman, Times, Serif; vertical-align: top; padding: 0.05in 5.75pt; text-align: center">&nbsp;</TD>
    <TD STYLE="padding: 0.05in 5.75pt">
        <P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: center">1,862,500</P>
        <P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: center">&nbsp;</P></TD>
    <TD STYLE="font: 10pt Times New Roman, Times, Serif; padding: 0.05in 5.75pt; text-align: center">&nbsp;</TD>
    <TD STYLE="padding: 0.05in 5.75pt">
        <P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: center">2.8%</P>
        <P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: center">&nbsp;</P></TD></TR>
<TR>
    <TD STYLE="padding: 0.05in 5.75pt; vertical-align: top">
        <P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0">Belinha Shane (3)</P>
        <P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0">11710 Wetherby Lane</P>
        <P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0">Los Angeles, CA 90077</P></TD>
    <TD STYLE="font: 10pt Times New Roman, Times, Serif; vertical-align: top; padding: 0.05in 5.75pt; text-align: center">&nbsp;</TD>
    <TD STYLE="padding: 0.05in 5.75pt">
        <P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: center">1,000,000</P>
        <P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: center">&nbsp;</P></TD>
    <TD STYLE="font: 10pt Times New Roman, Times, Serif; padding: 0.05in 5.75pt; text-align: center">&nbsp;</TD>
    <TD STYLE="padding: 0.05in 5.75pt">
        <P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: center">1.5%</P>
        <P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: center">&nbsp;</P></TD></TR>
<TR>
    <TD STYLE="padding: 0.05in 5.75pt; vertical-align: top">
        <P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0">Ah Kee Wee</P>
        <P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0">112 Spring Leaf Avenue</P>
        <P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0">Singapore 788502</P></TD>
    <TD STYLE="font: 10pt Times New Roman, Times, Serif; vertical-align: top; padding: 0.05in 5.75pt; text-align: center">&nbsp;</TD>
    <TD STYLE="padding: 0.05in 5.75pt">
        <P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: center">7,865,556</P>
        <P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: center">&nbsp;</P></TD>
    <TD STYLE="font: 10pt Times New Roman, Times, Serif; padding: 0.05in 5.75pt; text-align: center">&nbsp;</TD>
    <TD STYLE="padding: 0.05in 5.75pt">
        <P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: center">12.0%</P>
        <P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: center">&nbsp;</P></TD></TR>
<TR>
    <TD STYLE="font: 10pt Times New Roman, Times, Serif; vertical-align: top; padding: 0.05in 5.75pt">All Directors and Officers as a Group:</TD>
    <TD STYLE="font: 10pt Times New Roman, Times, Serif; vertical-align: top; padding: 0.05in 5.75pt; text-align: center">&nbsp;</TD>
    <TD STYLE="font: 10pt Times New Roman, Times, Serif; padding: 0.05in 5.75pt; text-align: center">32,904,979</TD>
    <TD STYLE="font: 10pt Times New Roman, Times, Serif; padding: 0.05in 5.75pt; text-align: center">&nbsp;</TD>
    <TD STYLE="font: 10pt Times New Roman, Times, Serif; padding: 0.05in 5.75pt; text-align: center">50.1%</TD></TR>
</TABLE>
<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0">&#9;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0">(1) Halden Shane is a trustee of the Share Family Trust.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0">(2) Includes 40,000 options presently exercisable.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0">(3) Belinha Shane is the wife of Halden Shane. Mr. Shane disclaims
beneficial ownership of any shares held in her name.</P>

<P STYLE="font: 12pt Times New Roman, Times, Serif; margin: 0">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0 0 0 0.75in; text-indent: -0.75in"><B>Item 13. <FONT STYLE="text-transform: uppercase">Certain
Relationships and Related Transactions, and Director Independence</FONT></B></P>

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

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

<P STYLE="font: 12pt Times New Roman, Times, Serif; margin: 0; text-indent: 0.5in">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0; text-indent: 0.25in">We have not engaged in any transactions during
the past fiscal year involving our executive officers, directors, more than 5% stockholders or immediate family members of such
persons.</P>

<P STYLE="font: 12pt Times New Roman, Times, Serif; margin: 0">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0"><B>Item<FONT STYLE="text-transform: uppercase"> 14. Principal Accountant
Fees and Services</FONT></B></P>

<P STYLE="font: 12pt Times New Roman, Times, Serif; margin: 0">&nbsp;</P>

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

<P STYLE="font: 12pt Times New Roman, Times, Serif; margin: 0; text-indent: 0.5in">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0; text-indent: 0.25in">The following table presents the aggregate
fees billed for each of the last two fiscal years by our independent registered public accounting firm Wolinetz, Lafazan &amp;
Company, P.C., Certified Public Accountants, in connection with the audit of our financial statements and other professional services
rendered by that accounting firm:</P>

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

<P STYLE="font: 12pt Times New Roman, Times, Serif; margin: 0; text-indent: 81pt"></P>

<TABLE CELLPADDING="0" CELLSPACING="0" STYLE="width: 100%; font: 11pt Calibri, Helvetica, Sans-Serif">
<TR STYLE="vertical-align: bottom">
    <TD>&nbsp;</TD>
    <TD STYLE="font-weight: bold; text-align: center">December31,</TD>
    <TD STYLE="font-weight: bold; text-align: center">December 31,</TD></TR>
<TR STYLE="vertical-align: bottom">
    <TD>&nbsp;</TD>
    <TD STYLE="font-weight: bold; text-align: center; border-bottom: Black 1pt solid">2011</TD>
    <TD STYLE="font-weight: bold; text-align: center; border-bottom: Black 1pt solid">2010</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,238,255)">
    <TD>&nbsp;</TD>
    <TD STYLE="text-align: center">&nbsp;</TD>
    <TD STYLE="text-align: center">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD STYLE="width: 68%; text-align: left">Audit fees</TD>
    <TD STYLE="width: 16%; text-align: center">$68,000</TD>
    <TD STYLE="width: 16%; text-align: center">$58,000</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,238,255)">
    <TD>Audit-related fees</TD>
    <TD STYLE="text-align: center">-</TD>
    <TD STYLE="text-align: center">-</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD STYLE="text-align: left">Tax fees</TD>
    <TD STYLE="text-align: center">-</TD>
    <TD STYLE="text-align: center">-</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,238,255)">
    <TD STYLE="text-align: left">All other fees</TD>
    <TD STYLE="border-bottom: Black 1pt solid; text-align: center">-</TD>
    <TD STYLE="border-bottom: Black 1pt solid; text-align: center">-</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD>Total:</TD>
    <TD STYLE="border-bottom: Black 2pt double; text-align: center">$68,000</TD>
    <TD STYLE="border-bottom: Black 2pt double; text-align: center">$58,000</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,238,255)">
    <TD>&nbsp;</TD>
    <TD STYLE="text-align: center">&nbsp;</TD>
    <TD STYLE="text-align: center">&nbsp;</TD></TR>
</TABLE>



<P STYLE="font: 12pt Times New Roman, Times, Serif; margin: 0; text-indent: 81pt"></P>

<P STYLE="font: 12pt Times New Roman, Times, Serif; margin: 0; text-indent: 81pt"></P>

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

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0; text-indent: 0.25in">Audit fees represent the professional services
rendered for the audit of our annual financial statements and the review of our financial statements included in quarterly reports,
along with services normally provided by the accounting firm in connection with statutory and regulatory filings or engagements.
Audit-related fees represent professional services rendered for assurance and related services by the accounting firm that are
reasonably related to the performance of the audit or review of our financial statements that are not reported under audit fees.</P>

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

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0; text-indent: 0.25in">Tax fees represent professional services rendered
by the accounting firm for tax compliance, tax advice, and tax planning. All other fees represent fees billed for products and
services provided by the accounting firm other than the services reported for the other categories.</P>

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

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

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

<P STYLE="font: 12pt Times New Roman, Times, Serif; margin: 0">&nbsp;</P>

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

<P STYLE="font: 12pt Times New Roman, Times, Serif; margin: 0; text-indent: 0.5in">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0; text-indent: 0.25in">Our audit committee evaluates and approves
the scope, cost and engagement of an auditor and has done so this year. The Company does not otherwise rely on pre- approval policies
and procedures.</P>

<P STYLE="font: 12pt Times New Roman, Times, Serif; margin: 0">&nbsp;</P>

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

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

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 9.5pt 0 0 55.05pt; text-indent: -55.1pt"><B>Item&nbsp;15.&#9;EXHIBITS
AND FINANCIAL STATEMENT SCHEDULES </B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 4.75pt 0 0; text-indent: 24.5pt">(a) Documents filed as part of this
report:</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 9.5pt 0 0; text-indent: 24.5pt">(1) The following financial statements
of the Company are included in Part II, Item&nbsp;8 of this Annual Report on Form&nbsp;10-K:</P>

<TABLE CELLPADDING="0" CELLSPACING="0" WIDTH="100%" STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 4.75pt; margin-bottom: 0"><TR STYLE="vertical-align: top">
<TD STYLE="width: 24.45pt"></TD><TD STYLE="width: 18.35pt">&bull;</TD><TD>Report of Independent Registered Public Accounting Firm, Wolinetz, Lafazan &amp; Company, P.C.;</TD></TR></TABLE>

<TABLE CELLPADDING="0" CELLSPACING="0" WIDTH="100%" STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0; margin-bottom: 0"><TR STYLE="vertical-align: top">
<TD STYLE="width: 24.45pt"></TD><TD STYLE="width: 18.35pt">&bull;</TD><TD>Consolidated Balance Sheets as of December&nbsp;31, 2011 and December&nbsp;31, 2010;</TD></TR></TABLE>

<TABLE CELLPADDING="0" CELLSPACING="0" WIDTH="100%" STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0; margin-bottom: 0"><TR STYLE="vertical-align: top">
<TD STYLE="width: 24.45pt"></TD><TD STYLE="width: 18.35pt">&bull;</TD><TD>Consolidated Statements of Operations: For the Year Ended December&nbsp;31, 2011 and December&nbsp;31, 2010;</TD></TR></TABLE>

<TABLE CELLPADDING="0" CELLSPACING="0" WIDTH="100%" STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0; margin-bottom: 0"><TR STYLE="vertical-align: top">
<TD STYLE="width: 24.45pt"></TD><TD STYLE="width: 18.35pt">&bull;</TD><TD>Consolidated Statements of Stockholders&rsquo; Equity (Deficiency): Years Ended December&nbsp;31, 2011 and December&nbsp;31,
2010;</TD></TR></TABLE>

<TABLE CELLPADDING="0" CELLSPACING="0" WIDTH="100%" STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0; margin-bottom: 0"><TR STYLE="vertical-align: top">
<TD STYLE="width: 24.45pt"></TD><TD STYLE="width: 18.35pt">&bull;</TD><TD>Consolidated Statements of Cash Flows: For the Year Ended December&nbsp;31, 2011 and December&nbsp;31, 2010; and</TD></TR></TABLE>

<TABLE CELLPADDING="0" CELLSPACING="0" WIDTH="100%" STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0; margin-bottom: 0"><TR STYLE="vertical-align: top">
<TD STYLE="width: 24.45pt"></TD><TD STYLE="width: 18.35pt">&bull;</TD><TD>Notes to Consolidated Financial Statements.</TD></TR></TABLE>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 9.5pt 0 0; text-indent: 24.5pt">(2) Schedules to financial statements:</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 4.75pt 0 0 24.45pt; text-indent: 24.5pt">All financial statement schedules
have been omitted because they are either inapplicable or the information required is provided in the Company&rsquo;s Consolidated
Financial Statements and Notes thereto, included in Part II, Item&nbsp;8 of this Annual Report on Form 10-K.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 9.5pt 0 0; text-indent: 24.5pt">(3) The exhibits listed on the accompanying
Exhibit Index are filed as part of this Annual Report on Form 10-K.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 9.5pt 0 0; text-indent: 24.5pt">&nbsp;</P>

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

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 9.5pt 0 0; text-indent: 24.5pt">Pursuant to the requirements of Section&nbsp;13
or 15(d) of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned,
thereunto duly authorized.</P>

<P STYLE="font: 9.5pt Times New Roman, Times, Serif; margin: 0">&nbsp;</P>

<TABLE CELLSPACING="0" CELLPADDING="0" STYLE="width: 100%; border-collapse: collapse">
<TR>
    <TD STYLE="width: 48%; font: 0.5pt Times New Roman, Times, Serif">&nbsp;</TD>
    <TD STYLE="width: 5%; font: 0.5pt Times New Roman, Times, Serif">&nbsp;</TD>
    <TD STYLE="width: 47%; font: 0.5pt Times New Roman, Times, Serif">&nbsp;</TD></TR>
<TR>
    <TD STYLE="vertical-align: bottom; font: 10pt Times New Roman, Times, Serif">DATED: &nbsp;March 29, 2012</TD>
    <TD STYLE="vertical-align: top; font: 4pt/2pt Times New Roman, Times, Serif; padding-left: 0.1in">&nbsp;</TD>
    <TD STYLE="vertical-align: bottom; font: 10pt Times New Roman, Times, Serif">TOMI ENVIRONMENTAL SOLUTIONS, INC.</TD></TR>
<TR>
    <TD STYLE="font: 12pt Times New Roman, Times, Serif">&nbsp;</TD>
    <TD STYLE="font: 12pt Times New Roman, Times, Serif">&nbsp;</TD>
    <TD STYLE="font: 12pt Times New Roman, Times, Serif">&nbsp;</TD></TR>
<TR STYLE="vertical-align: top">
    <TD STYLE="padding-left: 0.1in">
        <P STYLE="font: 4pt/2pt Times New Roman, Times, Serif; margin: 0">&nbsp;</P>
        <P STYLE="font: 12pt Times New Roman, Times, Serif; margin-right: 0; margin-left: 0">&nbsp;</P></TD>
    <TD STYLE="font: 4pt/2pt Times New Roman, Times, Serif; padding-left: 0.1in">&nbsp;</TD>
    <TD STYLE="border-bottom: black 1pt solid">
        <P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: center">&nbsp;</P>
        <P STYLE="font: 12pt Times New Roman, Times, Serif; margin: 0; text-align: center"><FONT STYLE="font-size: 10pt">/s/&nbsp;&nbsp;&nbsp;&nbsp;HALDEN
        S. SHANE</FONT><FONT STYLE="font-size: 7.5pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;</FONT></P></TD></TR>
<TR>
    <TD STYLE="vertical-align: top; font: 4pt/2pt Times New Roman, Times, Serif; padding-left: 0.1in">&nbsp;</TD>
    <TD STYLE="vertical-align: top; font: 4pt/2pt Times New Roman, Times, Serif; padding-left: 0.1in">&nbsp;</TD>
    <TD STYLE="vertical-align: bottom">
        <P STYLE="font: 7.5pt Times New Roman, Times, Serif; margin: 0; text-align: center"><B>Halden S Shane</B></P>
        <P STYLE="font: 7.5pt Times New Roman, Times, Serif; margin: 0; text-align: center"><B>Chairman of the Board and Chief Executive
        Officer</B></P>
        <P STYLE="font: 7.5pt Times New Roman, Times, Serif; margin: 0 0 0.8pt; text-align: center"><B>(Principal Executive Officer)</B></P></TD></TR>
</TABLE>
<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 9.5pt 0 0; text-indent: 24.5pt">Pursuant to the requirements of the
Securities Exchange Act of 1934, this report has been signed below by the following persons on behalf of the registrant and in
the capacities and on the dates indicated.</P>

<P STYLE="font: 9.5pt Times New Roman, Times, Serif; margin: 0">&nbsp;</P>

<P STYLE="font: 9pt Arial; margin: 0; color: Red"><B>&nbsp;</B></P>

<P STYLE="font: 12pt Times New Roman, Times, Serif; margin: 0"></P>

<TABLE BORDER="0" CELLPADDING="0" CELLSPACING="0" STYLE="width: 100%; border-collapse: collapse; font: 11pt Calibri, Helvetica, Sans-Serif">
<TR STYLE="vertical-align: bottom">
    <TD STYLE="border-bottom: windowtext 1pt solid; text-align: center">Signature</TD>
    <TD STYLE="border-bottom: windowtext 1pt solid; text-align: center">Title</TD>
    <TD STYLE="border-bottom: windowtext 1pt solid; text-align: center">Date</TD></TR>
<TR STYLE="vertical-align: bottom">
    <TD>&nbsp;</TD>
    <TD STYLE="text-align: center">&nbsp;</TD>
    <TD STYLE="text-align: center">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom">
    <TD>&nbsp;</TD>
    <TD STYLE="text-align: center">&nbsp;</TD>
    <TD STYLE="text-align: center">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom">
    <TD STYLE="border-bottom: windowtext 1.5pt solid; text-align: center">/s/&nbsp; HALDEN S. SHANE</TD>
    <TD STYLE="text-align: center">Chairman of the Board and Chief Executive</TD>
    <TD STYLE="text-align: center">March 29, 2012</TD></TR>
<TR STYLE="vertical-align: bottom">
    <TD STYLE="text-align: center">Halden S. Shane</TD>
    <TD STYLE="text-align: center">Officer (Principal Executive Officer)</TD>
    <TD STYLE="text-align: center">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom">
    <TD>&nbsp;</TD>
    <TD STYLE="text-align: center">&nbsp;</TD>
    <TD STYLE="text-align: center">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom">
    <TD STYLE="border-bottom: windowtext 1.5pt solid; text-align: center">/s/&nbsp; HALDEN S. SHANE</TD>
    <TD STYLE="text-align: center">Chief Financial Officer (Principal Financial</TD>
    <TD STYLE="text-align: center">March 29 , 2012</TD></TR>
<TR STYLE="vertical-align: bottom">
    <TD STYLE="text-align: center">Halden S. shane</TD>
    <TD STYLE="text-align: center">Officer and Principal Accounting Officer)</TD>
    <TD STYLE="text-align: center">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom">
    <TD STYLE="text-align: center">&nbsp;</TD>
    <TD STYLE="text-align: center">&nbsp;</TD>
    <TD STYLE="text-align: center">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom">
    <TD STYLE="border-bottom: windowtext 1.5pt solid; text-align: center">/s/&nbsp; HAROLD W. PAUL</TD>
    <TD STYLE="text-align: left">&nbsp; Director</TD>
    <TD STYLE="text-align: center">March 29, 2012</TD></TR>
<TR STYLE="vertical-align: bottom">
    <TD STYLE="text-align: center">Harold W. Paul&nbsp;</TD>
    <TD STYLE="text-align: center">&nbsp;</TD>
    <TD STYLE="text-align: center">&nbsp;</TD></TR>
</TABLE>


<P STYLE="font: 12pt Times New Roman, Times, Serif; margin: 0"></P>

<P STYLE="font: 12pt Times New Roman, Times, Serif; margin: 0">&nbsp;</P>

<P STYLE="font: 12pt Times New Roman, Times, Serif; margin: 0">&nbsp;</P>

<P STYLE="font: 12pt Times New Roman, Times, Serif; margin: 0">&nbsp;</P>

<P STYLE="font: 12pt Times New Roman, Times, Serif; margin: 0">&nbsp;</P>

<P STYLE="font: 12pt Times New Roman, Times, Serif; margin: 0">&nbsp;</P>

<P STYLE="font: 12pt Times New Roman, Times, Serif; margin: 0">&#9;</P>

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<P STYLE="font: 12pt Times New Roman, Times, Serif; margin: 0">&nbsp;</P>

<P STYLE="font: 12pt Times New Roman, Times, Serif; margin: 0; text-align: center"><B>EXHIBIT INDEX</B></P>

<P STYLE="font: 12pt Times New Roman, Times, Serif; margin: 0">&nbsp;</P>

<TABLE CELLPADDING="0" CELLSPACING="0" STYLE="width: 100%">
<TR STYLE="vertical-align: bottom">
    <TD STYLE="font-family: Times New Roman, Times, Serif; border-bottom: Black 1pt solid"><P STYLE="font: 7.5pt Times New Roman, Times, Serif; margin: 0; text-align: center; border-bottom: black 0.75pt solid"><B>Exhibit</B></P> <P STYLE="font: 7.5pt Times New Roman, Times, Serif; margin: 0; text-align: center"><B>Number</B></P> <P STYLE="font: 4pt/1pt Times New Roman, Times, Serif; margin: 1pt 0 0; text-align: center; text-indent: 0.5in; border-top: Black 1pt solid">&nbsp;</P></TD>
    <TD STYLE="font-family: Times New Roman, Times, Serif; border-bottom: Black 1pt solid"><P STYLE="font: 7.5pt Times New Roman, Times, Serif; margin: 0; border-bottom: black 0.75pt solid"><B>Description</B></P> <P STYLE="font: 4pt/1pt Times New Roman, Times, Serif; margin: 1pt 0 0; text-align: center; text-indent: 0.5in; border-top: Black 1pt solid">&nbsp;</P></TD></TR>
<TR STYLE="vertical-align: bottom">
    <TD COLSPAN="2" STYLE="font: 10pt Times New Roman, Times, Serif">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom">
    <TD STYLE="width: 11%; font: 10pt Times New Roman, Times, Serif; text-align: center">31.1</TD>
    <TD STYLE="width: 89%; font: 10pt Times New Roman, Times, Serif; text-align: left">Certification of the Principal Executive Officer, as required by Rule 13a-14(a) of the Securities Exchange Act of 1934</TD></TR>
<TR STYLE="vertical-align: bottom">
    <TD STYLE="font: 12pt Times New Roman, Times, Serif; text-align: center">&nbsp;</TD>
    <TD STYLE="font: 6pt Times New Roman, Times, Serif">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom">
    <TD STYLE="font: 10pt Times New Roman, Times, Serif; text-align: center">31.2</TD>
    <TD STYLE="font: 10pt Times New Roman, Times, Serif; text-align: left">Certification of the Principal Financial Officer, as required by Rule 13a-14(a) of the Securities Exchange Act of 1934</TD></TR>
<TR STYLE="vertical-align: bottom">
    <TD STYLE="font: 12pt Times New Roman, Times, Serif; text-align: center">&nbsp;</TD>
    <TD STYLE="font: 6pt Times New Roman, Times, Serif">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom">
    <TD STYLE="font: 10pt Times New Roman, Times, Serif; text-align: center">32.1</TD>
    <TD STYLE="font: 10pt Times New Roman, Times, Serif; text-align: left">Certifications of the Principal Executive Officer provided pursuant to 18 U.S.C. Section 1350 as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002<BR> <BR></TD></TR>
<TR STYLE="vertical-align: bottom">
    <TD STYLE="font: 10pt Times New Roman, Times, Serif; text-align: center">32.2</TD>
    <TD STYLE="font: 10pt Times New Roman, Times, Serif; text-align: left">Certifications of the Principal Financial Officer provided pursuant to 18 U.S.C. Section 1350 as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002</TD></TR>
<TR STYLE="vertical-align: bottom">
    <TD STYLE="font: 10pt Times New Roman, Times, Serif; text-align: center">&nbsp;</TD>
    <TD STYLE="font: 10pt Times New Roman, Times, Serif">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom">
    <TD STYLE="font: 10pt Times New Roman, Times, Serif; text-align: center">&nbsp;</TD>
    <TD STYLE="font: 10pt Times New Roman, Times, Serif">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD></TR>
</TABLE>

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    <DIV STYLE="page-break-before: always; margin-top: 6pt"><TABLE CELLPADDING="0" CELLSPACING="0" STYLE="width: 100%"><TR><TD STYLE="text-align: center; width: 100%">&nbsp;</TD></TR></TABLE></DIV>
    <!-- Field: /Page -->

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

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 4.75pt 0 0; text-align: center"><B>INDEX TO CONSOLIDATED FINANCIAL
STATEMENTS </B></P>

<P STYLE="font: 9.5pt Times New Roman, Times, Serif; margin: 0">&nbsp;</P>

<TABLE ALIGN="CENTER" CELLSPACING="0" CELLPADDING="0" STYLE="width: 100%; border-collapse: collapse">
<TR>
    <TD STYLE="width: 93%; font: 0.5pt Times New Roman, Times, Serif">&nbsp;</TD>
    <TD STYLE="width: 7%; font: 0.5pt Times New Roman, Times, Serif">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom">
    <TD STYLE="font: 4pt/2pt Times New Roman, Times, Serif; padding-left: 0.1in">&nbsp;</TD>
    <TD STYLE="padding-left: 0.1in">
        <P STYLE="font: 7.5pt Times New Roman, Times, Serif; margin: 0; text-align: center"><B>Page</B></P>
<!-- Field: Rule-Page --><DIV ALIGN="LEFT" STYLE="margin-top: 1pt; margin-bottom: 1pt"><DIV STYLE="font-size: 0.75pt; border-top: Black 0.75pt solid; border-bottom: Black 0.75pt solid; width: 100%">&nbsp;</DIV></DIV><!-- Field: /Rule-Page --></TD></TR>
<TR>
    <TD STYLE="vertical-align: top; padding-left: 12pt; font-size: 10pt; text-indent: -12pt">Report of Independent Registered Public Accounting Firm</TD>
    <TD NOWRAP STYLE="vertical-align: bottom; padding-left: 0.1in; font-size: 10pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; F-2</TD></TR>
<TR>
    <TD STYLE="vertical-align: top; padding-left: 12pt; font-size: 10pt; text-indent: -12pt">Consolidated Balance Sheets as of December&nbsp;31, 2011 and 2010</TD>
    <TD NOWRAP STYLE="vertical-align: bottom; padding-left: 0.1in; font-size: 10pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; F-3</TD></TR>
<TR>
    <TD STYLE="vertical-align: top; padding-left: 12pt; font-size: 10pt; text-indent: -12pt">Consolidated Statements of Operations for the Years Ended December&nbsp;31, 2011 and 2010</TD>
    <TD NOWRAP STYLE="vertical-align: bottom; padding-left: 0.1in; font-size: 10pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; F-4</TD></TR>
<TR>
    <TD STYLE="vertical-align: top; padding-left: 12pt; font-size: 10pt; text-indent: -12pt">Consolidated Statements of Stockholders&rsquo; Equity (Deficiency) for the Years Ended December&nbsp;31, 2011 and 2010</TD>
    <TD NOWRAP STYLE="vertical-align: bottom; padding-left: 0.1in; font-size: 10pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; F-5</TD></TR>
<TR>
    <TD STYLE="vertical-align: top; padding-left: 12pt; font-size: 10pt; text-indent: -12pt">Consolidated Statements of Cash Flows for the Years Ended December&nbsp;31, 2011 and 2010</TD>
    <TD NOWRAP STYLE="vertical-align: bottom; padding-left: 0.1in; font-size: 10pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; F-6</TD></TR>
<TR>
    <TD STYLE="vertical-align: top; padding-left: 12pt; font-size: 10pt; text-indent: -12pt">Notes to Consolidated Financial Statements</TD>
    <TD NOWRAP STYLE="vertical-align: bottom; padding-left: 0.1in; font-size: 10pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; F-8</TD></TR>
</TABLE>
<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 9.5pt 0 0; text-indent: 24.5pt">&nbsp;</P>

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    <DIV STYLE="margin-bottom: 6pt"><TABLE CELLPADDING="0" CELLSPACING="0" STYLE="width: 100%"><TR><TD STYLE="text-align: center; width: 100%">F-1</TD></TR></TABLE></DIV>
    <DIV STYLE="page-break-before: always; margin-top: 6pt"><TABLE CELLPADDING="0" CELLSPACING="0" STYLE="width: 100%"><TR><TD STYLE="text-align: center; width: 100%">&nbsp;</TD></TR></TABLE></DIV>
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<P STYLE="font: 12pt Times New Roman, Times, Serif; margin: 0"><B>&nbsp;</B></P>

<P STYLE="font: 12pt Times New Roman, Times, Serif; margin: 0">&nbsp;</P>

<P STYLE="font: 12pt Times New Roman, Times, Serif; margin: 0; text-align: center"><B>REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING
FIRM</B></P>

<P STYLE="font: 11pt Arial, Helvetica, Sans-Serif; margin: 0; text-align: justify">&nbsp;</P>

<P STYLE="font: 11pt Arial, Helvetica, Sans-Serif; margin: 0; text-align: justify">&nbsp;</P>

<P STYLE="font: 11pt Arial, Helvetica, Sans-Serif; margin: 0; text-align: justify">Board of Directors and Stockholders</P>

<P STYLE="font: 11pt Arial, Helvetica, Sans-Serif; margin: 0; text-align: justify">TOMI Environmental Solutions, Inc. (A Florida
Corporation)</P>

<P STYLE="font: 11pt Arial, Helvetica, Sans-Serif; margin: 0; text-align: justify">&nbsp;</P>

<P STYLE="font: 11pt Arial, Helvetica, Sans-Serif; margin: 0; text-align: justify">We have audited the accompanying consolidated
balance sheets of TOMI Environmental Solutions, Inc. and Subsidiaries (&quot;the Company&quot;) as of December 31, 2011 and 2010
and the related consolidated statements of operations, stockholders' equity (deficiency) and cash flows for each of the two years
in the period ended December 31, 2011. These financial statements are the responsibility of the Company's management. Our responsibility
is to express an opinion on these financial statements based on our audits.</P>

<P STYLE="font: 11pt Arial, Helvetica, Sans-Serif; margin: 0; text-align: justify">&nbsp;</P>

<P STYLE="font: 11pt Arial, Helvetica, Sans-Serif; margin: 0; text-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 the
audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. The Company is not
required to have, nor were we engaged to perform, an audit of its internal control over financial reporting. Our audits included
consideration of internal control over financial reporting as a basis for designing audit procedures that are appropriate in the
circumstances, but not for the purpose of expressing an opinion on the effectiveness of the Company's internal control over financial
reporting. Accordingly, we express no such opinion. Also, an audit includes examining, on a test basis, evidence supporting the
amounts and disclosures in the financial statements, assessing the accounting principles used and significant estimates made by
management, as well as evaluating the overall financial statement presentation. We believe that our audits provide a reasonable
basis for our opinion.</P>

<P STYLE="font: 11pt Arial, Helvetica, Sans-Serif; margin: 0; text-align: justify">&nbsp;</P>

<P STYLE="font: 11pt Arial, Helvetica, Sans-Serif; margin: 0; text-align: justify">In our opinion, the financial statements referred
to above present fairly, in all material respects, the financial position of TOMI Environmental Solutions, Inc. and Subsidiaries
at December 31, 2011 and 2010, and the results of their operations and their cash flows for each of the two years in the period
ended December 31, 2011 in conformity with accounting principles generally accepted in the United States of America.</P>

<P STYLE="font: 11pt Arial, Helvetica, Sans-Serif; margin: 0; text-align: justify">&nbsp;</P>

<P STYLE="font: 11pt Arial, Helvetica, Sans-Serif; margin: 0; text-align: justify">The accompanying financial statements have been
prepared assuming the Company will continue as a going concern. As discussed in Note 2 to the financial statements, the Company
has had limited revenues during the years ended December 31, 2011 and 2010 and has not been able to generate positive cash from
operations for the years ended December 31, 2011 and 2010. In addition, at December 31, 2011 the Company has a working capital
deficiency and stockholders&rsquo; deficiency. These factors raise substantial doubt about the Company's ability to continue as
a going concern. Management's plans regarding those matters are also described in Note 2. The financial statements do not include
any adjustments that might result from the outcome of this uncertainty.</P>

<P STYLE="font: 11pt Arial, Helvetica, Sans-Serif; margin: 0; text-align: justify">&nbsp;</P>

<P STYLE="font: 11pt Arial, Helvetica, Sans-Serif; margin: 0; text-align: justify; text-indent: 280pt">&nbsp;WOLINETZ, LAFAZAN &amp; COMPANY, P.C.</P>

<P STYLE="font: 11pt Arial, Helvetica, Sans-Serif; margin: 0; text-align: justify">&nbsp;</P>

<P STYLE="font: 11pt Arial, Helvetica, Sans-Serif; margin: 0; text-align: justify">Rockville Centre, New York</P>

<P STYLE="font: 11pt Arial, Helvetica, Sans-Serif; margin: 0; text-align: justify">March 29, 2012</P>

<P STYLE="font: 11pt Arial, Helvetica, Sans-Serif; margin: 0; text-align: justify">&nbsp;<B>&nbsp;</B></P>

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

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<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 9pt 0 0; text-align: center"><B>TOMI ENVIRONMENTAL SOLUTIONS, INC.
</B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 4.5pt 0 0; text-align: center"><B>CONSOLIDATED BALANCE SHEETS </B></P>

<P STYLE="font: 10pt Courier New, Courier, Monospace; margin: 0">&nbsp;</P>

<P STYLE="font: 9pt Arial; margin: 0; color: Red"></P>

<P STYLE="font: 10pt Courier New, Courier, Monospace; margin: 0"></P>

<TABLE BORDER="0" CELLPADDING="0" CELLSPACING="0" STYLE="width: 100%; border-collapse: collapse; font: 9pt Times New Roman, Times, Serif">
<TR STYLE="vertical-align: bottom">
    <TD STYLE="font-size: 7pt">&nbsp;</TD>
    <TD STYLE="font-size: 7pt">&nbsp;</TD>
    <TD STYLE="border-bottom: windowtext 0.5pt solid; font-size: 7.5pt; font-weight: bold; text-align: center; vertical-align: middle">December 31,<BR> 2011</TD>
    <TD STYLE="font-size: 7.5pt; font-weight: bold; text-align: center">&nbsp;</TD>
    <TD STYLE="border-bottom: windowtext 0.5pt solid; font-size: 7.5pt; font-weight: bold; text-align: center; vertical-align: middle">December 31,<BR> 2010</TD></TR>
<TR STYLE="vertical-align: bottom">
    <TD STYLE="font-size: 7pt">&nbsp;</TD>
    <TD STYLE="font-size: 7pt">&nbsp;</TD>
    <TD STYLE="font-size: 7.5pt; font-weight: bold; text-align: right; vertical-align: middle">&nbsp;</TD>
    <TD STYLE="font-size: 7.5pt; font-weight: bold; text-align: center">&nbsp;</TD>
    <TD STYLE="font-size: 7.5pt; font-weight: bold; text-align: right; vertical-align: middle">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom">
    <TD STYLE="font-weight: bold; text-align: center">ASSETS</TD>
    <TD>&nbsp;</TD>
    <TD STYLE="text-align: right; vertical-align: middle">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD STYLE="text-align: right; vertical-align: middle">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom">
    <TD STYLE="text-align: left">Current Assets:</TD>
    <TD>&nbsp;</TD>
    <TD STYLE="text-align: right; vertical-align: middle">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD STYLE="text-align: right; vertical-align: middle">&nbsp;</TD></TR>
<TR>
    <TD STYLE="vertical-align: bottom">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Cash and cash equivalents</TD>
    <TD STYLE="vertical-align: bottom">&nbsp;</TD>
    <TD STYLE="vertical-align: middle; text-align: right">&nbsp;$&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; -&nbsp;&nbsp;</TD>
    <TD STYLE="vertical-align: middle; text-align: right">&nbsp;</TD>
    <TD STYLE="vertical-align: middle; text-align: right">&nbsp;$&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; 61,179</TD></TR>
<TR>
    <TD STYLE="vertical-align: bottom">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Miscellaneous Receivable</TD>
    <TD STYLE="vertical-align: bottom">&nbsp;</TD>
    <TD STYLE="text-align: right; vertical-align: middle">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; 10,569</TD>
    <TD STYLE="vertical-align: middle; text-align: right">&nbsp;</TD>
    <TD STYLE="text-align: right; vertical-align: middle">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; -</TD></TR>
<TR>
    <TD STYLE="vertical-align: bottom">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Prepaid expenses</TD>
    <TD STYLE="vertical-align: bottom">&nbsp;</TD>
    <TD STYLE="border-bottom: windowtext 0.5pt solid; vertical-align: middle; text-align: right">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; 4,950</TD>
    <TD STYLE="vertical-align: middle; text-align: right">&nbsp;</TD>
    <TD STYLE="border-bottom: windowtext 0.5pt solid; vertical-align: middle; text-align: right">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; 2,862</TD></TR>
<TR>
    <TD STYLE="vertical-align: bottom">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Total Current Assets</TD>
    <TD STYLE="vertical-align: bottom">&nbsp;</TD>
    <TD STYLE="border-bottom: windowtext 0.5pt solid; vertical-align: middle; text-align: right; border-top-color: windowtext; border-top-width: 0.5pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; 15,519</TD>
    <TD STYLE="vertical-align: middle; text-align: right">&nbsp;</TD>
    <TD STYLE="border-bottom: windowtext 0.5pt solid; vertical-align: middle; text-align: right; border-top-color: windowtext; border-top-width: 0.5pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; 64,041</TD></TR>
<TR>
    <TD STYLE="vertical-align: bottom">Property and equipment, net</TD>
    <TD STYLE="vertical-align: bottom">&nbsp;</TD>
    <TD STYLE="vertical-align: middle; text-align: right">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; 29,313</TD>
    <TD STYLE="vertical-align: middle; text-align: right">&nbsp;</TD>
    <TD STYLE="vertical-align: middle; text-align: right">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; 153,638</TD></TR>
<TR>
    <TD STYLE="vertical-align: bottom">Intangible assets, net</TD>
    <TD STYLE="vertical-align: bottom">&nbsp;</TD>
    <TD STYLE="vertical-align: middle; text-align: right">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; 80,549</TD>
    <TD STYLE="vertical-align: middle; text-align: right">&nbsp;</TD>
    <TD STYLE="vertical-align: middle; text-align: right">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; 91,659</TD></TR>
<TR>
    <TD STYLE="vertical-align: bottom">Security deposits</TD>
    <TD STYLE="vertical-align: bottom">&nbsp;</TD>
    <TD STYLE="border-bottom: windowtext 0.5pt solid; vertical-align: middle; text-align: right">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; 500</TD>
    <TD STYLE="vertical-align: middle; text-align: right">&nbsp;</TD>
    <TD STYLE="border-bottom: windowtext 0.5pt solid; vertical-align: middle; text-align: right">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; 5,416</TD></TR>
<TR>
    <TD STYLE="vertical-align: bottom">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Total Assets</TD>
    <TD STYLE="vertical-align: bottom">&nbsp;</TD>
    <TD STYLE="border-bottom: windowtext 2pt double; vertical-align: middle; text-align: right; border-top-color: windowtext; border-top-width: 0.5pt">&nbsp;$&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; 125,881</TD>
    <TD STYLE="vertical-align: middle; text-align: right">&nbsp;</TD>
    <TD STYLE="border-bottom: windowtext 2pt double; vertical-align: middle; text-align: right; border-top-color: windowtext; border-top-width: 0.5pt">&nbsp;$&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; 314,754</TD></TR>
<TR>
    <TD STYLE="vertical-align: bottom">&nbsp;</TD>
    <TD STYLE="vertical-align: bottom">&nbsp;</TD>
    <TD STYLE="vertical-align: middle; text-align: right">&nbsp;</TD>
    <TD STYLE="vertical-align: middle; text-align: right">&nbsp;</TD>
    <TD STYLE="vertical-align: middle; text-align: right">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom">
    <TD STYLE="font-weight: bold; text-align: center">LIABILITIES AND STOCKHOLDERS' EQUITY (DEFICIENCY)</TD>
    <TD>&nbsp;</TD>
    <TD STYLE="text-align: right; vertical-align: middle">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD STYLE="text-align: right; vertical-align: middle">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom">
    <TD STYLE="text-align: left">Current Liabilities:</TD>
    <TD>&nbsp;</TD>
    <TD STYLE="text-align: right; vertical-align: middle">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD STYLE="text-align: right; vertical-align: middle">&nbsp;</TD></TR>
<TR>
    <TD STYLE="vertical-align: bottom; text-align: left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Cash Overdraft</TD>
    <TD STYLE="vertical-align: bottom">&nbsp;</TD>
    <TD STYLE="text-align: right; vertical-align: middle">&nbsp;$&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; 1,309</TD>
    <TD STYLE="vertical-align: bottom">&nbsp;</TD>
    <TD STYLE="text-align: right; vertical-align: middle">&nbsp;$&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; -&nbsp;&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom">
    <TD>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Accounts payable and accrued expenses</TD>
    <TD>&nbsp;</TD>
    <TD STYLE="text-align: right; vertical-align: middle">290,527</TD>
    <TD>&nbsp;</TD>
    <TD STYLE="text-align: right; vertical-align: middle">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; 169,475</TD></TR>
<TR STYLE="vertical-align: bottom">
    <TD>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Accrued officer's compensation</TD>
    <TD>&nbsp;</TD>
    <TD STYLE="text-align: right; vertical-align: middle">20,000</TD>
    <TD>&nbsp;</TD>
    <TD STYLE="text-align: right; vertical-align: middle">1,066,269</TD></TR>
<TR STYLE="vertical-align: bottom">
    <TD>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Notes payable - current portion</TD>
    <TD>&nbsp;</TD>
    <TD STYLE="text-align: right; vertical-align: middle">2,157</TD>
    <TD>&nbsp;</TD>
    <TD STYLE="text-align: right; vertical-align: middle">8,077</TD></TR>
<TR STYLE="vertical-align: bottom">
    <TD>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Loans Payable - Officer</TD>
    <TD>&nbsp;</TD>
    <TD STYLE="text-align: right; vertical-align: middle">81,468</TD>
    <TD>&nbsp;</TD>
    <TD STYLE="text-align: right; vertical-align: middle">23,158</TD></TR>
<TR STYLE="vertical-align: bottom">
    <TD>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Customer deposits</TD>
    <TD>&nbsp;</TD>
    <TD STYLE="text-align: right; vertical-align: middle">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD STYLE="text-align: right; vertical-align: middle">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; 53,940</TD></TR>
<TR STYLE="vertical-align: bottom">
    <TD>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Total Current Liabilities</TD>
    <TD>&nbsp;</TD>
    <TD STYLE="border-top: windowtext 0.5pt solid; border-bottom: windowtext 0.5pt solid; text-align: right; vertical-align: middle">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; 395,461</TD>
    <TD>&nbsp;</TD>
    <TD STYLE="border-top: windowtext 0.5pt solid; border-bottom: windowtext 0.5pt solid; text-align: right; vertical-align: middle">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; 1,320,919</TD></TR>
<TR STYLE="vertical-align: bottom">
    <TD>Long-Term Liabilities:</TD>
    <TD>&nbsp;</TD>
    <TD STYLE="text-align: right; vertical-align: middle">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD STYLE="text-align: right; vertical-align: middle">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom">
    <TD>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Convertible Debenture Payable , net of discount of $73,398</TD>
    <TD>&nbsp;</TD>
    <TD STYLE="text-align: right; vertical-align: middle">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; 1,602</TD>
    <TD>&nbsp;</TD>
    <TD STYLE="text-align: right; vertical-align: middle">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; -&nbsp;&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom">
    <TD>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Non-current portion of notes payable - other</TD>
    <TD>&nbsp;</TD>
    <TD STYLE="text-align: right; vertical-align: middle">&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>&nbsp;</TD>
    <TD STYLE="text-align: right; vertical-align: middle">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; 2,157</TD></TR>
<TR STYLE="vertical-align: bottom">
    <TD>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Total Liabilities</TD>
    <TD>&nbsp;</TD>
    <TD STYLE="border-top: windowtext 0.5pt solid; border-bottom: windowtext 0.5pt solid; text-align: right; vertical-align: middle">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; 397,063</TD>
    <TD>&nbsp;</TD>
    <TD STYLE="border-top: windowtext 0.5pt solid; border-bottom: windowtext 0.5pt solid; text-align: right; vertical-align: middle">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; 1,323,076</TD></TR>
<TR STYLE="vertical-align: bottom">
    <TD>Stockholders' Equity (Deficiency):</TD>
    <TD>&nbsp;</TD>
    <TD STYLE="text-align: right; vertical-align: middle">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD STYLE="text-align: right; vertical-align: middle">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom">
    <TD>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Cumulative Convertible Series A Preferred Stock; par value $0.01;
    1,000,000 shares&nbsp;&nbsp;&nbsp; authorized; 510,000 and 510,000 shares issued and outstanding at December 31, 2011 and
    December 31, 2010, respectively</TD>
    <TD>&nbsp;</TD>
    <TD STYLE="text-align: right; vertical-align: middle">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; 5,100</TD>
    <TD>&nbsp;</TD>
    <TD STYLE="text-align: right; vertical-align: middle">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; 5,100</TD></TR>
<TR STYLE="vertical-align: bottom">
    <TD>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Cumulative Convertible Series B Preferred Stock; $1,000 stated value; 7.5 % cumulative &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; dividend, 4,000 shares authorized; none issued and outstanding at  December 31, 2011 and December 31, 2010</TD>
    <TD>&nbsp;</TD>
    <TD STYLE="text-align: right; vertical-align: middle">&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>&nbsp;</TD>
    <TD STYLE="text-align: right; vertical-align: middle">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; -</TD></TR>
<TR STYLE="vertical-align: bottom">
    <TD>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Common Stock; par value $0.01; 200,000,000 and 75,000,000 shares authorized at&nbsp;&nbsp; &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; December 31,2011 and December 31, 2010, respectively; 64,629,033 and 48,282,871 shares&nbsp;&nbsp;&nbsp; issued and outstanding at December 31,2011 and December 31, 2010 , respectively</TD>
    <TD>&nbsp;</TD>
    <TD STYLE="text-align: right; vertical-align: middle">646,290</TD>
    <TD>&nbsp;</TD>
    <TD STYLE="text-align: right; vertical-align: middle">482,829</TD></TR>
<TR STYLE="vertical-align: bottom">
    <TD>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Additional paid-in capital</TD>
    <TD>&nbsp;</TD>
    <TD STYLE="text-align: right; vertical-align: middle">10,934,799</TD>
    <TD>&nbsp;</TD>
    <TD STYLE="text-align: right; vertical-align: middle">9,584,424</TD></TR>
<TR STYLE="vertical-align: bottom">
    <TD>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Accumulated deficit</TD>
    <TD>&nbsp;</TD>
    <TD STYLE="text-align: right; vertical-align: middle">(11,857,371)</TD>
    <TD>&nbsp;</TD>
    <TD STYLE="text-align: right; vertical-align: middle">(11,032,491)</TD></TR>
<TR STYLE="vertical-align: bottom">
    <TD>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Deferred compensation</TD>
    <TD>&nbsp;</TD>
    <TD STYLE="text-align: right; vertical-align: middle">&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>&nbsp;</TD>
    <TD STYLE="text-align: right; vertical-align: middle">(52,788)</TD></TR>
<TR STYLE="vertical-align: bottom">
    <TD>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Accumulated Other Comprehensive Income</TD>
    <TD>&nbsp;</TD>
    <TD STYLE="border-bottom: windowtext 0.5pt solid; text-align: right; vertical-align: middle">&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>&nbsp;</TD>
    <TD STYLE="border-bottom: windowtext 0.5pt solid; text-align: right; vertical-align: middle">348</TD></TR>
<TR STYLE="vertical-align: bottom">
    <TD>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Total TOMI Environmental Solutions, Inc. Shareholders' Equity (Deficiency)&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD STYLE="text-align: right; vertical-align: middle">(271,182)</TD>
    <TD>&nbsp;</TD>
    <TD STYLE="text-align: right; vertical-align: middle">(1,012,578)</TD></TR>
<TR STYLE="vertical-align: bottom">
    <TD>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Non-controlling Interest</TD>
    <TD>&nbsp;</TD>
    <TD STYLE="border-bottom: windowtext 0.5pt solid; text-align: right; vertical-align: middle">&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>&nbsp;</TD>
    <TD STYLE="border-bottom: windowtext 0.5pt solid; text-align: right; vertical-align: middle">4,256</TD></TR>
<TR STYLE="vertical-align: bottom">
    <TD>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Total Stockholders' Equity (Deficiency)</TD>
    <TD>&nbsp;</TD>
    <TD STYLE="border-bottom: windowtext 0.5pt solid; text-align: right; vertical-align: middle">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; (271,182)</TD>
    <TD>&nbsp;</TD>
    <TD STYLE="border-bottom: windowtext 0.5pt solid; text-align: right; vertical-align: middle">&nbsp;&nbsp;&nbsp;&nbsp; (1,008,322)</TD></TR>
<TR STYLE="vertical-align: bottom">
    <TD>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Total Liabilities and Stockholders' Equity (Deficiency)</TD>
    <TD>&nbsp;</TD>
    <TD STYLE="border-bottom: windowtext 2pt double; border-top-color: windowtext; border-top-width: 0.5pt; text-align: right; vertical-align: middle">&nbsp;$&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; 125,881</TD>
    <TD>&nbsp;</TD>
    <TD STYLE="border-bottom: windowtext 2pt double; border-top-color: windowtext; border-top-width: 0.5pt; text-align: right; vertical-align: middle">&nbsp;$&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; 314,754</TD></TR>
</TABLE>


<P STYLE="font: 10pt Courier New, Courier, Monospace; margin: 0"></P>

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

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

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

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: center">See accompanying notes to consolidated financial
statements.</P>

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    <DIV STYLE="margin-bottom: 6pt"><TABLE CELLPADDING="0" CELLSPACING="0" STYLE="width: 100%"><TR><TD STYLE="text-align: center; width: 100%">F-3</TD></TR></TABLE></DIV>
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<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: center"><B>TOMI ENVIRONMENTAL SOLUTIONS, INC.</B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 4.75pt 0 0; text-align: center"><B>CONSOLIDATED STATEMENTS OF OPERATIONS</B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 4.75pt 0 0; text-align: center"><B>&nbsp;</B></P>

<P STYLE="font: 9pt Arial; margin: 4.75pt 0 0; text-align: center; color: Red"></P>

<P STYLE="font: 12pt Times New Roman, Times, Serif; margin: 4.75pt 0 0; text-align: center"></P>

<TABLE BORDER="0" CELLPADDING="0" CELLSPACING="0" STYLE="width: 100%; border-collapse: collapse; font: 9pt Times New Roman, Times, Serif">
<TR STYLE="vertical-align: bottom">
    <TD STYLE="font-size: 7.5pt; font-weight: bold">&nbsp;</TD>
    <TD STYLE="font-size: 7.5pt; font-weight: bold">&nbsp;</TD>
    <TD COLSPAN="3" STYLE="border-bottom: windowtext 0.5pt solid; font-size: 7.5pt; font-weight: bold; text-align: center">For the Year Ended December 31,</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: white">
    <TD STYLE="font-size: 7.5pt">&nbsp;</TD>
    <TD STYLE="font-size: 7.5pt">&nbsp;</TD>
    <TD STYLE="width: 59pt; border-bottom: windowtext 0.5pt solid; font-size: 7.5pt; font-weight: bold; text-align: center">2011</TD>
    <TD STYLE="width: 21pt; font-size: 7.5pt; font-weight: bold; text-align: right">&nbsp;</TD>
    <TD STYLE="width: 61pt; border-bottom: windowtext 0.5pt solid; font-size: 7.5pt; font-weight: bold; text-align: center">2010</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: white">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD STYLE="text-align: right">&nbsp;</TD>
    <TD STYLE="text-align: right">&nbsp;</TD>
    <TD STYLE="text-align: right">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom">
    <TD STYLE="text-align: left; background-color: white">Net revenue</TD>
    <TD STYLE="background-color: white">&nbsp;</TD>
    <TD STYLE="text-align: right">&nbsp;$&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; 208,399</TD>
    <TD STYLE="text-align: right">&nbsp;</TD>
    <TD STYLE="text-align: right">&nbsp;$&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; 357,167</TD></TR>
<TR STYLE="vertical-align: bottom">
    <TD STYLE="text-align: left; background-color: white">Cost of sales</TD>
    <TD STYLE="background-color: white">&nbsp;</TD>
    <TD STYLE="text-align: right">137,159</TD>
    <TD STYLE="text-align: right">&nbsp;</TD>
    <TD STYLE="text-align: right">145,296</TD></TR>
<TR STYLE="vertical-align: bottom">
    <TD STYLE="text-align: left; background-color: white">Gross profit</TD>
    <TD STYLE="background-color: white">&nbsp;</TD>
    <TD STYLE="border-top: windowtext 0.5pt solid; border-bottom: windowtext 0.5pt solid; text-align: right">71,240</TD>
    <TD STYLE="text-align: right">&nbsp;</TD>
    <TD STYLE="border-top: windowtext 0.5pt solid; border-bottom: windowtext 0.5pt solid; text-align: right">211,871</TD></TR>
<TR STYLE="vertical-align: bottom">
    <TD STYLE="text-align: left; background-color: white">Costs and Expenses:</TD>
    <TD STYLE="background-color: white">&nbsp;</TD>
    <TD STYLE="text-align: right">&nbsp;</TD>
    <TD STYLE="text-align: right">&nbsp;</TD>
    <TD STYLE="text-align: right">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom">
    <TD STYLE="text-align: left; background-color: white">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Professional fees</TD>
    <TD STYLE="background-color: white">&nbsp;</TD>
    <TD STYLE="text-align: right">202,810</TD>
    <TD STYLE="text-align: right">&nbsp;</TD>
    <TD STYLE="text-align: right">247,470</TD></TR>
<TR STYLE="vertical-align: bottom">
    <TD STYLE="text-align: left; background-color: white">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Other general and administrative expenses</TD>
    <TD STYLE="background-color: white">&nbsp;</TD>
    <TD STYLE="text-align: right">656,866</TD>
    <TD STYLE="text-align: right">&nbsp;</TD>
    <TD STYLE="text-align: right">1,054,562</TD></TR>
<TR STYLE="vertical-align: bottom">
    <TD STYLE="text-align: left; background-color: white">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; (Recission) of acquisition and related research and development expense</TD>
    <TD STYLE="background-color: white">&nbsp;</TD>
    <TD STYLE="text-align: right">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; -</TD>
    <TD STYLE="text-align: right">&nbsp;</TD>
    <TD STYLE="text-align: right">(902,500)</TD></TR>
<TR STYLE="vertical-align: bottom">
    <TD STYLE="background-color: white">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Management and consulting fees- related party</TD>
    <TD STYLE="background-color: white">&nbsp;</TD>
    <TD STYLE="text-align: right; border-bottom: Black 1pt solid">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; -</TD>
    <TD STYLE="text-align: right">&nbsp;</TD>
    <TD STYLE="text-align: right; border-bottom: Black 1pt solid">1,193,447</TD></TR>
<TR STYLE="vertical-align: bottom">
    <TD STYLE="background-color: white">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Total Costs and Expenses</TD>
    <TD STYLE="background-color: white">&nbsp;</TD>
    <TD STYLE="text-align: right">859,676</TD>
    <TD STYLE="text-align: right">&nbsp;</TD>
    <TD STYLE="text-align: right">1,592,979</TD></TR>
<TR STYLE="vertical-align: bottom">
    <TD STYLE="background-color: white">Loss from operations</TD>
    <TD STYLE="background-color: white">&nbsp;</TD>
    <TD STYLE="border-top: windowtext 0.5pt solid; border-bottom: windowtext 0.5pt solid; text-align: right">(788,436)</TD>
    <TD STYLE="text-align: right">&nbsp;</TD>
    <TD STYLE="border-top: windowtext 0.5pt solid; border-bottom: windowtext 0.5pt solid; text-align: right">(1,381,108)</TD></TR>
<TR STYLE="vertical-align: bottom">
    <TD STYLE="background-color: white">Other Income (Expense) :</TD>
    <TD STYLE="background-color: white">&nbsp;</TD>
    <TD STYLE="text-align: right">&nbsp;</TD>
    <TD STYLE="text-align: right">&nbsp;</TD>
    <TD STYLE="text-align: right">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom">
    <TD STYLE="background-color: white">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Change in fair market value of derivative liability</TD>
    <TD STYLE="background-color: white">&nbsp;</TD>
    <TD STYLE="text-align: right">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; -&nbsp;&nbsp;</TD>
    <TD STYLE="text-align: right">&nbsp;</TD>
    <TD STYLE="text-align: right">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; (50,269)</TD></TR>
<TR STYLE="vertical-align: bottom">
    <TD STYLE="background-color: white">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Amortization of debt discount</TD>
    <TD STYLE="background-color: white">&nbsp;</TD>
    <TD STYLE="text-align: right">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; (1,602)</TD>
    <TD STYLE="text-align: right">&nbsp;</TD>
    <TD STYLE="text-align: right">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; (95,000)</TD></TR>
<TR STYLE="vertical-align: bottom">
    <TD STYLE="background-color: white">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Interest expense</TD>
    <TD STYLE="background-color: white">&nbsp;</TD>
    <TD STYLE="text-align: right">(18,519)</TD>
    <TD STYLE="text-align: right">&nbsp;</TD>
    <TD STYLE="text-align: right">(34,275)</TD></TR>
<TR STYLE="vertical-align: bottom">
    <TD STYLE="background-color: white">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Finance charges related to convertible debt</TD>
    <TD STYLE="background-color: white">&nbsp;</TD>
    <TD STYLE="text-align: right">(14,999)</TD>
    <TD STYLE="text-align: right">&nbsp;</TD>
    <TD STYLE="text-align: right">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom">
    <TD>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Other&nbsp;</TD>
    <TD STYLE="background-color: white">&nbsp;</TD>
    <TD STYLE="text-align: right">(2,954)</TD>
    <TD STYLE="text-align: right">&nbsp;</TD>
    <TD STYLE="text-align: right">21,729</TD></TR>
<TR STYLE="vertical-align: bottom">
    <TD STYLE="background-color: white">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Total Other Income (Expense)</TD>
    <TD STYLE="background-color: white">&nbsp;</TD>
    <TD STYLE="border-top: windowtext 0.5pt solid; border-bottom: windowtext 0.5pt solid; text-align: right">(38,074)</TD>
    <TD STYLE="text-align: right">&nbsp;</TD>
    <TD STYLE="border-top: windowtext 0.5pt solid; border-bottom: windowtext 0.5pt solid; text-align: right">(157,815)</TD></TR>
<TR STYLE="vertical-align: bottom">
    <TD STYLE="background-color: white">Net loss</TD>
    <TD STYLE="background-color: white">&nbsp;</TD>
    <TD STYLE="border-bottom: windowtext 2pt double; border-top-color: windowtext; border-top-width: 0.5pt; text-align: right">&nbsp;$&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; (826,510)</TD>
    <TD STYLE="text-align: right">&nbsp;</TD>
    <TD STYLE="border-bottom: windowtext 2pt double; border-top-color: windowtext; border-top-width: 0.5pt; text-align: right">&nbsp;$&nbsp;&nbsp; (1,538,923)</TD></TR>
<TR STYLE="vertical-align: bottom">
    <TD STYLE="background-color: white">Loss attributable to common stockholders:</TD>
    <TD STYLE="background-color: white">&nbsp;</TD>
    <TD STYLE="text-align: right">&nbsp;</TD>
    <TD STYLE="text-align: right">&nbsp;</TD>
    <TD STYLE="text-align: right">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom">
    <TD STYLE="background-color: white">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Net loss</TD>
    <TD STYLE="background-color: white">&nbsp;</TD>
    <TD STYLE="text-align: right">&nbsp;$&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; (826,510)</TD>
    <TD STYLE="text-align: right">&nbsp;</TD>
    <TD STYLE="text-align: right">&nbsp;$&nbsp;&nbsp; (1,538,923)</TD></TR>
<TR STYLE="vertical-align: bottom">
    <TD STYLE="background-color: white">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; ( Income) loss attributable to non-controlling interest</TD>
    <TD STYLE="background-color: white">&nbsp;</TD>
    <TD STYLE="border-bottom: windowtext 0.5pt solid; text-align: right">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; 1,630</TD>
    <TD STYLE="text-align: right">&nbsp;</TD>
    <TD STYLE="border-bottom: windowtext 0.5pt solid; text-align: right">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; (4,256)</TD></TR>
<TR STYLE="vertical-align: bottom">
    <TD STYLE="background-color: white">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Net loss attributable to common stockholders</TD>
    <TD STYLE="background-color: white">&nbsp;</TD>
    <TD STYLE="border-bottom: windowtext 2pt double; text-align: right">&nbsp;$&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; (824,880)</TD>
    <TD STYLE="text-align: right">&nbsp;</TD>
    <TD STYLE="border-bottom: windowtext 2pt double; text-align: right">&nbsp;$&nbsp;&nbsp; (1,543,179)</TD></TR>
<TR STYLE="vertical-align: bottom">
    <TD STYLE="background-color: white">Basic and diluted loss per common share</TD>
    <TD STYLE="background-color: white">&nbsp;</TD>
    <TD STYLE="border-bottom: windowtext 2pt double; text-align: right">&nbsp;$&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; (0.01)</TD>
    <TD STYLE="text-align: right">&nbsp;</TD>
    <TD STYLE="border-bottom: windowtext 2pt double; text-align: right">&nbsp;$&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; (0.04)</TD></TR>
<TR STYLE="vertical-align: bottom">
    <TD STYLE="background-color: white">Basic and diluted weighted average number of shares outstanding</TD>
    <TD STYLE="background-color: white">&nbsp;</TD>
    <TD STYLE="border-bottom: windowtext 2pt double; text-align: right">62,014,096</TD>
    <TD STYLE="text-align: right">&nbsp;</TD>
    <TD STYLE="border-bottom: windowtext 2pt double; text-align: right">38,194,157</TD></TR>
</TABLE>


<P STYLE="font: 12pt Times New Roman, Times, Serif; margin: 4.75pt 0 0; text-align: center"></P>

<P STYLE="font: 12pt Times New Roman, Times, Serif; margin: 4.75pt 0 0; text-align: center"></P>

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<P STYLE="font: 12pt Times New Roman, Times, Serif; margin: 4.75pt 0 0">&nbsp;<B>&nbsp;</B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 4.75pt 0 0"><B>&nbsp;</B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 4.75pt 0 0; text-align: center">See accompanying notes to consolidated
financial statements.</P>

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    <DIV STYLE="margin-bottom: 6pt"><TABLE CELLPADDING="0" CELLSPACING="0" STYLE="width: 100%"><TR><TD STYLE="text-align: center; width: 100%">F-4</TD></TR></TABLE></DIV>
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    <!-- Field: /Page -->

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

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: center"><B>CONSOLIDATED STATEMENTS OF STOCKHOLDERS&rsquo;
EQUITY (DEFICIENCY)</B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: center"><B>YEARS ENDED DECEMBER 31, 2011 AND 2010</B></P>

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

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

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</TABLE>





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

<P STYLE="font: 9pt Arial; margin: 0; color: Red"></P>

<P STYLE="font: 12pt Times New Roman, Times, Serif; margin: 0"></P>

<TABLE CELLPADDING="0" CELLSPACING="0" ALIGN="CENTER" STYLE="width: 100%; font: 11pt Calibri, Helvetica, Sans-Serif">
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<P STYLE="font: 12pt Times New Roman, Times, Serif; margin: 0"></P>

<P STYLE="font: 12pt Times New Roman, Times, Serif; margin: 0"></P>

<TABLE BORDER="0" CELLPADDING="0" CELLSPACING="0" STYLE="width: 100%; border-collapse: collapse; font: 6pt Times New Roman, Times, Serif">
<TR STYLE="vertical-align: bottom">
    <TD STYLE="padding-left: 24px; text-align: left">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD STYLE="border-bottom: windowtext 0.5pt solid; font-weight: bold; text-align: center">Series A<BR> Preferred Stock Shares</TD>
    <TD STYLE="font-weight: bold; text-align: center">&nbsp;</TD>
    <TD STYLE="border-bottom: windowtext 0.5pt solid; font-weight: bold; text-align: center">Series B<BR> Preferred Stock Shares</TD>
    <TD>&nbsp;</TD>
    <TD STYLE="border-bottom: windowtext 0.5pt solid; font-weight: bold; text-align: center">Common Stock Shares</TD>
    <TD>&nbsp;</TD>
    <TD STYLE="border-bottom: windowtext 0.5pt solid; font-weight: bold; text-align: center">Series A<BR> Preferred Stock<BR> Par Value</TD>
    <TD STYLE="font-weight: bold; text-align: center">&nbsp;</TD>
    <TD STYLE="border-bottom: windowtext 0.5pt solid; font-weight: bold; text-align: center">Series B<BR> Preferred Stock<BR> Par Value</TD>
    <TD>&nbsp;</TD>
    <TD STYLE="border-bottom: windowtext 0.5pt solid; font-weight: bold; text-align: center">&nbsp;Common Stock Par Value&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD STYLE="border-bottom: windowtext 0.5pt solid; font-weight: bold; text-align: center">&nbsp;Additional<BR> Paid-In<BR> Capital&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD STYLE="border-bottom: windowtext 0.5pt solid; font-weight: bold; text-align: center">Accumulated&nbsp; (Deficit)</TD>
    <TD STYLE="font-weight: bold; text-align: center">&nbsp;</TD>
    <TD STYLE="border-bottom: windowtext 0.5pt solid; font-weight: bold; text-align: center">Deferred<BR> Stock<BR> Compensation</TD>
    <TD>&nbsp;</TD>
    <TD STYLE="border-bottom: windowtext 0.5pt solid; font-weight: bold; text-align: center">Non-controlling Interest</TD>
    <TD>&nbsp;</TD>
    <TD STYLE="border-bottom: windowtext 0.5pt solid; font-weight: bold; text-align: center">Other Comprehensive Income</TD>
    <TD>&nbsp;</TD>
    <TD STYLE="border-bottom: windowtext 0.5pt solid; font-weight: bold; text-align: center">Total</TD></TR>
<TR>
    <TD STYLE="vertical-align: top; text-align: left">Balance, December 31, 2009</TD>
    <TD STYLE="vertical-align: bottom">&nbsp;</TD>
    <TD STYLE="border-bottom: windowtext 0.5pt solid; vertical-align: bottom; border-top-color: windowtext; border-top-width: 0.5pt; text-align: right">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; 510,000</TD>
    <TD STYLE="vertical-align: bottom">&nbsp;</TD>
    <TD STYLE="border-bottom: windowtext 0.5pt solid; vertical-align: bottom; border-top-color: windowtext; border-top-width: 0.5pt; text-align: right">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; 3,250</TD>
    <TD STYLE="vertical-align: bottom">&nbsp;</TD>
    <TD STYLE="border-bottom: windowtext 0.5pt solid; vertical-align: bottom; border-top-color: windowtext; border-top-width: 0.5pt; text-align: right">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; 35,277,480</TD>
    <TD STYLE="vertical-align: bottom">&nbsp;</TD>
    <TD STYLE="border-bottom: windowtext 0.5pt solid; vertical-align: bottom; border-top-color: windowtext; border-top-width: 0.5pt; text-align: right">&nbsp;$&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; 5,100</TD>
    <TD STYLE="vertical-align: bottom">&nbsp;</TD>
    <TD STYLE="border-bottom: windowtext 0.5pt solid; vertical-align: bottom; border-top-color: windowtext; border-top-width: 0.5pt; text-align: right">&nbsp;$&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; 3,250,000</TD>
    <TD STYLE="vertical-align: bottom">&nbsp;</TD>
    <TD STYLE="border-bottom: windowtext 0.5pt solid; vertical-align: bottom; border-top-color: windowtext; border-top-width: 0.5pt; text-align: right">&nbsp;$&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; 352,774</TD>
    <TD STYLE="vertical-align: bottom">&nbsp;</TD>
    <TD STYLE="border-bottom: windowtext 0.5pt solid; vertical-align: bottom; border-top-color: windowtext; border-top-width: 0.5pt; text-align: right">&nbsp;$&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; 9,683,721</TD>
    <TD STYLE="vertical-align: bottom">&nbsp;</TD>
    <TD STYLE="border-bottom: windowtext 0.5pt solid; vertical-align: bottom; border-top-color: windowtext; border-top-width: 0.5pt; text-align: right">&nbsp;$&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; (9,489,312)</TD>
    <TD STYLE="vertical-align: bottom">&nbsp;</TD>
    <TD STYLE="border-bottom: windowtext 0.5pt solid; vertical-align: bottom; border-top-color: windowtext; border-top-width: 0.5pt; text-align: right">&nbsp;$&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; (1,284,855)</TD>
    <TD STYLE="vertical-align: bottom">&nbsp;</TD>
    <TD STYLE="border-bottom: windowtext 0.5pt solid; vertical-align: bottom; border-top-color: windowtext; border-top-width: 0.5pt; text-align: right">&nbsp;$&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; -&nbsp;&nbsp;</TD>
    <TD STYLE="vertical-align: bottom">&nbsp;</TD>
    <TD STYLE="border-bottom: windowtext 0.5pt solid; vertical-align: bottom; border-top-color: windowtext; border-top-width: 0.5pt; text-align: right">&nbsp;$&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&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="vertical-align: bottom">&nbsp;</TD>
    <TD STYLE="border-bottom: windowtext 0.5pt solid; vertical-align: bottom; border-top-color: windowtext; border-top-width: 0.5pt; text-align: right">&nbsp;$&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; 2,517,428</TD></TR>
<TR>
    <TD STYLE="vertical-align: top; text-align: left">Issuance of Common Stock for services</TD>
    <TD STYLE="vertical-align: bottom">&nbsp;</TD>
    <TD STYLE="vertical-align: bottom; text-align: right">&nbsp;</TD>
    <TD STYLE="vertical-align: bottom">&nbsp;</TD>
    <TD STYLE="vertical-align: bottom; text-align: right">&nbsp;</TD>
    <TD STYLE="vertical-align: bottom">&nbsp;</TD>
    <TD STYLE="vertical-align: bottom; text-align: right">2,989,952</TD>
    <TD STYLE="vertical-align: bottom">&nbsp;</TD>
    <TD STYLE="vertical-align: bottom; text-align: right">&nbsp;</TD>
    <TD STYLE="vertical-align: bottom">&nbsp;</TD>
    <TD STYLE="vertical-align: bottom; text-align: right">&nbsp;</TD>
    <TD STYLE="vertical-align: bottom">&nbsp;</TD>
    <TD STYLE="vertical-align: bottom; text-align: right">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; 29,900</TD>
    <TD STYLE="vertical-align: bottom">&nbsp;</TD>
    <TD STYLE="vertical-align: bottom; text-align: right">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; 181,812</TD>
    <TD STYLE="vertical-align: bottom">&nbsp;</TD>
    <TD STYLE="vertical-align: bottom; text-align: right">&nbsp;</TD>
    <TD STYLE="vertical-align: bottom">&nbsp;</TD>
    <TD STYLE="vertical-align: bottom; text-align: right">&nbsp;</TD>
    <TD STYLE="vertical-align: bottom">&nbsp;</TD>
    <TD STYLE="vertical-align: bottom; text-align: right">&nbsp;</TD>
    <TD STYLE="vertical-align: bottom">&nbsp;</TD>
    <TD STYLE="vertical-align: bottom; text-align: right">&nbsp;</TD>
    <TD STYLE="vertical-align: bottom">&nbsp;</TD>
    <TD STYLE="vertical-align: bottom; text-align: right">211,712</TD></TR>
<TR>
    <TD STYLE="vertical-align: top; text-align: left">Issuance of Stock Options to Directors for services</TD>
    <TD STYLE="vertical-align: bottom">&nbsp;</TD>
    <TD STYLE="vertical-align: bottom; text-align: right">&nbsp;</TD>
    <TD STYLE="vertical-align: bottom">&nbsp;</TD>
    <TD STYLE="vertical-align: bottom; text-align: right">&nbsp;</TD>
    <TD STYLE="vertical-align: bottom">&nbsp;</TD>
    <TD STYLE="vertical-align: bottom; text-align: right">&nbsp;</TD>
    <TD STYLE="vertical-align: bottom">&nbsp;</TD>
    <TD STYLE="vertical-align: bottom; text-align: right">&nbsp;</TD>
    <TD STYLE="vertical-align: bottom">&nbsp;</TD>
    <TD STYLE="vertical-align: bottom; text-align: right">&nbsp;</TD>
    <TD STYLE="vertical-align: bottom">&nbsp;</TD>
    <TD STYLE="vertical-align: bottom; text-align: right">&nbsp;</TD>
    <TD STYLE="vertical-align: bottom">&nbsp;</TD>
    <TD STYLE="vertical-align: bottom; text-align: right">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; 84,000</TD>
    <TD STYLE="vertical-align: bottom">&nbsp;</TD>
    <TD STYLE="vertical-align: bottom; text-align: right">&nbsp;</TD>
    <TD STYLE="vertical-align: bottom">&nbsp;</TD>
    <TD STYLE="vertical-align: bottom; text-align: right">&nbsp;</TD>
    <TD STYLE="vertical-align: bottom">&nbsp;</TD>
    <TD STYLE="vertical-align: bottom; text-align: right">&nbsp;</TD>
    <TD STYLE="vertical-align: bottom">&nbsp;</TD>
    <TD STYLE="vertical-align: bottom; text-align: right">&nbsp;</TD>
    <TD STYLE="vertical-align: bottom">&nbsp;</TD>
    <TD STYLE="vertical-align: bottom; text-align: right">84,000</TD></TR>
<TR>
    <TD STYLE="vertical-align: top; text-align: left">Sale of common stock</TD>
    <TD STYLE="vertical-align: bottom">&nbsp;</TD>
    <TD STYLE="vertical-align: bottom; text-align: right">&nbsp;</TD>
    <TD STYLE="vertical-align: bottom">&nbsp;</TD>
    <TD STYLE="vertical-align: bottom; text-align: right">&nbsp;</TD>
    <TD STYLE="vertical-align: bottom">&nbsp;</TD>
    <TD STYLE="vertical-align: bottom; text-align: right">7,430,556</TD>
    <TD STYLE="vertical-align: bottom">&nbsp;</TD>
    <TD STYLE="vertical-align: bottom; text-align: right">&nbsp;</TD>
    <TD STYLE="vertical-align: bottom">&nbsp;</TD>
    <TD STYLE="vertical-align: bottom; text-align: right">&nbsp;</TD>
    <TD STYLE="vertical-align: bottom">&nbsp;</TD>
    <TD STYLE="vertical-align: bottom; text-align: right">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; 74,306</TD>
    <TD STYLE="vertical-align: bottom">&nbsp;</TD>
    <TD STYLE="vertical-align: bottom; text-align: right">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; 250,694</TD>
    <TD STYLE="vertical-align: bottom">&nbsp;</TD>
    <TD STYLE="vertical-align: bottom; text-align: right">&nbsp;</TD>
    <TD STYLE="vertical-align: bottom">&nbsp;</TD>
    <TD STYLE="vertical-align: bottom; text-align: right">&nbsp;</TD>
    <TD STYLE="vertical-align: bottom">&nbsp;</TD>
    <TD STYLE="vertical-align: bottom; text-align: right">&nbsp;</TD>
    <TD STYLE="vertical-align: bottom">&nbsp;</TD>
    <TD STYLE="vertical-align: bottom; text-align: right">&nbsp;</TD>
    <TD STYLE="vertical-align: bottom">&nbsp;</TD>
    <TD STYLE="vertical-align: bottom; text-align: right">325,000</TD></TR>
<TR>
    <TD STYLE="vertical-align: top; text-align: left">Cancellation of Series B Preferred Stock</TD>
    <TD STYLE="vertical-align: bottom">&nbsp;</TD>
    <TD STYLE="vertical-align: bottom; text-align: right">&nbsp;</TD>
    <TD STYLE="vertical-align: bottom">&nbsp;</TD>
    <TD STYLE="vertical-align: bottom; text-align: right">(3,250)</TD>
    <TD STYLE="vertical-align: bottom">&nbsp;</TD>
    <TD STYLE="vertical-align: bottom; text-align: right">&nbsp;</TD>
    <TD STYLE="vertical-align: bottom">&nbsp;</TD>
    <TD STYLE="vertical-align: bottom; text-align: right">&nbsp;</TD>
    <TD STYLE="vertical-align: bottom">&nbsp;</TD>
    <TD STYLE="vertical-align: bottom; text-align: right">(3,250,000)</TD>
    <TD STYLE="vertical-align: bottom">&nbsp;</TD>
    <TD STYLE="vertical-align: bottom; text-align: right">&nbsp;</TD>
    <TD STYLE="vertical-align: bottom">&nbsp;</TD>
    <TD STYLE="vertical-align: bottom; text-align: right">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; 1,236,938</TD>
    <TD STYLE="vertical-align: bottom">&nbsp;</TD>
    <TD STYLE="vertical-align: bottom; text-align: right">&nbsp;</TD>
    <TD STYLE="vertical-align: bottom">&nbsp;</TD>
    <TD STYLE="vertical-align: bottom; text-align: right">&nbsp;</TD>
    <TD STYLE="vertical-align: bottom">&nbsp;</TD>
    <TD STYLE="vertical-align: bottom; text-align: right">&nbsp;</TD>
    <TD STYLE="vertical-align: bottom">&nbsp;</TD>
    <TD STYLE="vertical-align: bottom; text-align: right">&nbsp;</TD>
    <TD STYLE="vertical-align: bottom">&nbsp;</TD>
    <TD STYLE="vertical-align: bottom; text-align: right">(2,013,062)</TD></TR>
<TR>
    <TD STYLE="vertical-align: top; text-align: left">Dividends on Cumulative Convertible Series B Preferred Stock</TD>
    <TD STYLE="vertical-align: bottom">&nbsp;</TD>
    <TD STYLE="vertical-align: bottom; text-align: right">&nbsp;</TD>
    <TD STYLE="vertical-align: bottom">&nbsp;</TD>
    <TD STYLE="vertical-align: bottom; text-align: right">&nbsp;</TD>
    <TD STYLE="vertical-align: bottom">&nbsp;</TD>
    <TD STYLE="vertical-align: bottom; text-align: right">&nbsp;</TD>
    <TD STYLE="vertical-align: bottom">&nbsp;</TD>
    <TD STYLE="vertical-align: bottom; text-align: right">&nbsp;</TD>
    <TD STYLE="vertical-align: bottom">&nbsp;</TD>
    <TD STYLE="vertical-align: bottom; text-align: right">&nbsp;</TD>
    <TD STYLE="vertical-align: bottom">&nbsp;</TD>
    <TD STYLE="vertical-align: bottom; text-align: right">&nbsp;</TD>
    <TD STYLE="vertical-align: bottom">&nbsp;</TD>
    <TD STYLE="vertical-align: bottom; text-align: right">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; (60,103)</TD>
    <TD STYLE="vertical-align: bottom">&nbsp;</TD>
    <TD STYLE="vertical-align: bottom; text-align: right">&nbsp;</TD>
    <TD STYLE="vertical-align: bottom">&nbsp;</TD>
    <TD STYLE="vertical-align: bottom; text-align: right">&nbsp;</TD>
    <TD STYLE="vertical-align: bottom">&nbsp;</TD>
    <TD STYLE="vertical-align: bottom; text-align: right">&nbsp;</TD>
    <TD STYLE="vertical-align: bottom">&nbsp;</TD>
    <TD STYLE="vertical-align: bottom; text-align: right">&nbsp;</TD>
    <TD STYLE="vertical-align: bottom">&nbsp;</TD>
    <TD STYLE="vertical-align: bottom; text-align: right">(60,103)</TD></TR>
<TR>
    <TD STYLE="vertical-align: top; text-align: left">Cancellation of Dividends of Series B Preferred Stock</TD>
    <TD STYLE="vertical-align: bottom">&nbsp;</TD>
    <TD STYLE="vertical-align: bottom; text-align: right">&nbsp;</TD>
    <TD STYLE="vertical-align: bottom">&nbsp;</TD>
    <TD STYLE="vertical-align: bottom; text-align: right">&nbsp;</TD>
    <TD STYLE="vertical-align: bottom">&nbsp;</TD>
    <TD STYLE="vertical-align: bottom; text-align: right">&nbsp;</TD>
    <TD STYLE="vertical-align: bottom">&nbsp;</TD>
    <TD STYLE="vertical-align: bottom; text-align: right">&nbsp;</TD>
    <TD STYLE="vertical-align: bottom">&nbsp;</TD>
    <TD STYLE="vertical-align: bottom; text-align: right">&nbsp;</TD>
    <TD STYLE="vertical-align: bottom">&nbsp;</TD>
    <TD STYLE="vertical-align: bottom; text-align: right">&nbsp;</TD>
    <TD STYLE="vertical-align: bottom">&nbsp;</TD>
    <TD STYLE="vertical-align: bottom; text-align: right">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; 265,788</TD>
    <TD STYLE="vertical-align: bottom">&nbsp;</TD>
    <TD STYLE="vertical-align: bottom; text-align: right">&nbsp;</TD>
    <TD STYLE="vertical-align: bottom">&nbsp;</TD>
    <TD STYLE="vertical-align: bottom; text-align: right">&nbsp;</TD>
    <TD STYLE="vertical-align: bottom">&nbsp;</TD>
    <TD STYLE="vertical-align: bottom; text-align: right">&nbsp;</TD>
    <TD STYLE="vertical-align: bottom">&nbsp;</TD>
    <TD STYLE="vertical-align: bottom; text-align: right">&nbsp;</TD>
    <TD STYLE="vertical-align: bottom">&nbsp;</TD>
    <TD STYLE="vertical-align: bottom; text-align: right">265,788</TD></TR>
<TR>
    <TD STYLE="vertical-align: top; text-align: left">Issuance of Common Stock for Settlement of Litigation</TD>
    <TD STYLE="vertical-align: bottom">&nbsp;</TD>
    <TD STYLE="vertical-align: bottom; text-align: right">&nbsp;</TD>
    <TD STYLE="vertical-align: bottom">&nbsp;</TD>
    <TD STYLE="vertical-align: bottom; text-align: right">&nbsp;</TD>
    <TD STYLE="vertical-align: bottom">&nbsp;</TD>
    <TD STYLE="vertical-align: bottom; text-align: right">300,000</TD>
    <TD STYLE="vertical-align: bottom">&nbsp;</TD>
    <TD STYLE="vertical-align: bottom; text-align: right">&nbsp;</TD>
    <TD STYLE="vertical-align: bottom">&nbsp;</TD>
    <TD STYLE="vertical-align: bottom; text-align: right">&nbsp;</TD>
    <TD STYLE="vertical-align: bottom">&nbsp;</TD>
    <TD STYLE="vertical-align: bottom; text-align: right">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; 3,000</TD>
    <TD STYLE="vertical-align: bottom">&nbsp;</TD>
    <TD STYLE="vertical-align: bottom; text-align: right">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; 15,000</TD>
    <TD STYLE="vertical-align: bottom">&nbsp;</TD>
    <TD STYLE="vertical-align: bottom; text-align: right">&nbsp;</TD>
    <TD STYLE="vertical-align: bottom">&nbsp;</TD>
    <TD STYLE="vertical-align: bottom; text-align: right">&nbsp;</TD>
    <TD STYLE="vertical-align: bottom">&nbsp;</TD>
    <TD STYLE="vertical-align: bottom; text-align: right">&nbsp;</TD>
    <TD STYLE="vertical-align: bottom">&nbsp;</TD>
    <TD STYLE="vertical-align: bottom; text-align: right">&nbsp;</TD>
    <TD STYLE="vertical-align: bottom">&nbsp;</TD>
    <TD STYLE="vertical-align: bottom; text-align: right">18,000</TD></TR>
<TR>
    <TD STYLE="vertical-align: top; text-align: left">Deferred Compensation</TD>
    <TD STYLE="vertical-align: bottom">&nbsp;</TD>
    <TD STYLE="vertical-align: bottom; text-align: right">&nbsp;</TD>
    <TD STYLE="vertical-align: bottom">&nbsp;</TD>
    <TD STYLE="vertical-align: bottom; text-align: right">&nbsp;</TD>
    <TD STYLE="vertical-align: bottom">&nbsp;</TD>
    <TD STYLE="vertical-align: bottom; text-align: right">&nbsp;</TD>
    <TD STYLE="vertical-align: bottom">&nbsp;</TD>
    <TD STYLE="vertical-align: bottom; text-align: right">&nbsp;</TD>
    <TD STYLE="vertical-align: bottom">&nbsp;</TD>
    <TD STYLE="vertical-align: bottom; text-align: right">&nbsp;</TD>
    <TD STYLE="vertical-align: bottom">&nbsp;</TD>
    <TD STYLE="vertical-align: bottom; text-align: right">&nbsp;</TD>
    <TD STYLE="vertical-align: bottom">&nbsp;</TD>
    <TD STYLE="vertical-align: bottom; text-align: right">&nbsp;</TD>
    <TD STYLE="vertical-align: bottom">&nbsp;</TD>
    <TD STYLE="vertical-align: bottom; text-align: right">&nbsp;</TD>
    <TD STYLE="vertical-align: bottom">&nbsp;</TD>
    <TD STYLE="vertical-align: bottom; text-align: right">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; 38,620</TD>
    <TD STYLE="vertical-align: bottom">&nbsp;</TD>
    <TD STYLE="vertical-align: bottom; text-align: right">&nbsp;</TD>
    <TD STYLE="vertical-align: bottom">&nbsp;</TD>
    <TD STYLE="vertical-align: bottom; text-align: right">&nbsp;</TD>
    <TD STYLE="vertical-align: bottom">&nbsp;</TD>
    <TD STYLE="vertical-align: bottom; text-align: right">38,620</TD></TR>
<TR>
    <TD STYLE="vertical-align: top; text-align: left">Amortization of Deferred Compensation</TD>
    <TD STYLE="vertical-align: bottom">&nbsp;</TD>
    <TD STYLE="vertical-align: bottom; text-align: right">&nbsp;</TD>
    <TD STYLE="vertical-align: bottom">&nbsp;</TD>
    <TD STYLE="vertical-align: bottom; text-align: right">&nbsp;</TD>
    <TD STYLE="vertical-align: bottom">&nbsp;</TD>
    <TD STYLE="vertical-align: bottom; text-align: right">&nbsp;</TD>
    <TD STYLE="vertical-align: bottom">&nbsp;</TD>
    <TD STYLE="vertical-align: bottom; text-align: right">&nbsp;</TD>
    <TD STYLE="vertical-align: bottom">&nbsp;</TD>
    <TD STYLE="vertical-align: bottom; text-align: right">&nbsp;</TD>
    <TD STYLE="vertical-align: bottom">&nbsp;</TD>
    <TD STYLE="vertical-align: bottom; text-align: right">&nbsp;</TD>
    <TD STYLE="vertical-align: bottom">&nbsp;</TD>
    <TD STYLE="vertical-align: bottom; text-align: right">&nbsp;</TD>
    <TD STYLE="vertical-align: bottom">&nbsp;</TD>
    <TD STYLE="vertical-align: bottom; text-align: right">&nbsp;</TD>
    <TD STYLE="vertical-align: bottom">&nbsp;</TD>
    <TD STYLE="vertical-align: bottom; text-align: right">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; 1,193,447</TD>
    <TD STYLE="vertical-align: bottom">&nbsp;</TD>
    <TD STYLE="vertical-align: bottom; text-align: right">&nbsp;</TD>
    <TD STYLE="vertical-align: bottom">&nbsp;</TD>
    <TD STYLE="vertical-align: bottom; text-align: right">&nbsp;</TD>
    <TD STYLE="vertical-align: bottom">&nbsp;</TD>
    <TD STYLE="vertical-align: bottom; text-align: right">1,193,447</TD></TR>
<TR>
    <TD STYLE="vertical-align: top; text-align: left">Cancellation of Common Stock</TD>
    <TD STYLE="vertical-align: bottom">&nbsp;</TD>
    <TD STYLE="vertical-align: bottom; text-align: right">&nbsp;</TD>
    <TD STYLE="vertical-align: bottom">&nbsp;</TD>
    <TD STYLE="vertical-align: bottom; text-align: right">&nbsp;</TD>
    <TD STYLE="vertical-align: bottom">&nbsp;</TD>
    <TD STYLE="vertical-align: bottom; text-align: right">(550,000)</TD>
    <TD STYLE="vertical-align: bottom">&nbsp;</TD>
    <TD STYLE="vertical-align: bottom; text-align: right">&nbsp;</TD>
    <TD STYLE="vertical-align: bottom">&nbsp;</TD>
    <TD STYLE="vertical-align: bottom; text-align: right">&nbsp;</TD>
    <TD STYLE="vertical-align: bottom">&nbsp;</TD>
    <TD STYLE="vertical-align: bottom; text-align: right">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; (5,500)</TD>
    <TD STYLE="vertical-align: bottom">&nbsp;</TD>
    <TD STYLE="vertical-align: bottom; text-align: right">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; (1,584,500)</TD>
    <TD STYLE="vertical-align: bottom">&nbsp;</TD>
    <TD STYLE="vertical-align: bottom; text-align: right">&nbsp;</TD>
    <TD STYLE="vertical-align: bottom">&nbsp;</TD>
    <TD STYLE="vertical-align: bottom; text-align: right">&nbsp;</TD>
    <TD STYLE="vertical-align: bottom">&nbsp;</TD>
    <TD STYLE="vertical-align: bottom; text-align: right">&nbsp;</TD>
    <TD STYLE="vertical-align: bottom">&nbsp;</TD>
    <TD STYLE="vertical-align: bottom; text-align: right">&nbsp;</TD>
    <TD STYLE="vertical-align: bottom">&nbsp;</TD>
    <TD STYLE="vertical-align: bottom; text-align: right">(1,590,000)</TD></TR>
<TR>
    <TD STYLE="vertical-align: top; text-align: left">Cancellation of Common Stock relating to Recission of Acquisition and Related Research and Development Expenses</TD>
    <TD STYLE="vertical-align: bottom">&nbsp;</TD>
    <TD STYLE="vertical-align: bottom; text-align: right">&nbsp;</TD>
    <TD STYLE="vertical-align: bottom">&nbsp;</TD>
    <TD STYLE="vertical-align: bottom; text-align: right">&nbsp;</TD>
    <TD STYLE="vertical-align: bottom">&nbsp;</TD>
    <TD STYLE="vertical-align: bottom; text-align: right">(190,000)</TD>
    <TD STYLE="vertical-align: bottom">&nbsp;</TD>
    <TD STYLE="vertical-align: bottom; text-align: right">&nbsp;</TD>
    <TD STYLE="vertical-align: bottom">&nbsp;</TD>
    <TD STYLE="vertical-align: bottom; text-align: right">&nbsp;</TD>
    <TD STYLE="vertical-align: bottom">&nbsp;</TD>
    <TD STYLE="vertical-align: bottom; text-align: right">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; (1,900)</TD>
    <TD STYLE="vertical-align: bottom">&nbsp;</TD>
    <TD STYLE="vertical-align: bottom; text-align: right">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; (900,600)</TD>
    <TD STYLE="vertical-align: bottom">&nbsp;</TD>
    <TD STYLE="vertical-align: bottom; text-align: right">&nbsp;</TD>
    <TD STYLE="vertical-align: bottom">&nbsp;</TD>
    <TD STYLE="vertical-align: bottom; text-align: right">&nbsp;</TD>
    <TD STYLE="vertical-align: bottom">&nbsp;</TD>
    <TD STYLE="vertical-align: bottom; text-align: right">&nbsp;</TD>
    <TD STYLE="vertical-align: bottom">&nbsp;</TD>
    <TD STYLE="vertical-align: bottom; text-align: right">&nbsp;</TD>
    <TD STYLE="vertical-align: bottom">&nbsp;</TD>
    <TD STYLE="vertical-align: bottom; text-align: right">(902,500)</TD></TR>
<TR>
    <TD STYLE="vertical-align: top; text-align: left">Issuance of Common Stock as consideration of accrued officer's compensation</TD>
    <TD STYLE="vertical-align: bottom">&nbsp;</TD>
    <TD STYLE="vertical-align: bottom; text-align: right">&nbsp;</TD>
    <TD STYLE="vertical-align: bottom">&nbsp;</TD>
    <TD STYLE="vertical-align: bottom; text-align: right">&nbsp;</TD>
    <TD STYLE="vertical-align: bottom">&nbsp;</TD>
    <TD STYLE="vertical-align: bottom; text-align: right">2,500,000</TD>
    <TD STYLE="vertical-align: bottom">&nbsp;</TD>
    <TD STYLE="vertical-align: bottom; text-align: right">&nbsp;</TD>
    <TD STYLE="vertical-align: bottom">&nbsp;</TD>
    <TD STYLE="vertical-align: bottom; text-align: right">&nbsp;</TD>
    <TD STYLE="vertical-align: bottom">&nbsp;</TD>
    <TD STYLE="vertical-align: bottom; text-align: right">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; 25,000</TD>
    <TD STYLE="vertical-align: bottom">&nbsp;</TD>
    <TD STYLE="vertical-align: bottom; text-align: right">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; 250,000</TD>
    <TD STYLE="vertical-align: bottom">&nbsp;</TD>
    <TD STYLE="vertical-align: bottom; text-align: right">&nbsp;</TD>
    <TD STYLE="vertical-align: bottom">&nbsp;</TD>
    <TD STYLE="vertical-align: bottom; text-align: right">&nbsp;</TD>
    <TD STYLE="vertical-align: bottom">&nbsp;</TD>
    <TD STYLE="vertical-align: bottom; text-align: right">&nbsp;</TD>
    <TD STYLE="vertical-align: bottom">&nbsp;</TD>
    <TD STYLE="vertical-align: bottom; text-align: right">&nbsp;</TD>
    <TD STYLE="vertical-align: bottom">&nbsp;</TD>
    <TD STYLE="vertical-align: bottom; text-align: right">275,000</TD></TR>
<TR>
    <TD STYLE="vertical-align: top; text-align: left">Debt Discount on Convertible Notes</TD>
    <TD STYLE="vertical-align: bottom">&nbsp;</TD>
    <TD STYLE="vertical-align: bottom; text-align: right">&nbsp;</TD>
    <TD STYLE="vertical-align: bottom">&nbsp;</TD>
    <TD STYLE="vertical-align: bottom; text-align: right">&nbsp;</TD>
    <TD STYLE="vertical-align: bottom">&nbsp;</TD>
    <TD STYLE="vertical-align: bottom; text-align: right">&nbsp;</TD>
    <TD STYLE="vertical-align: bottom">&nbsp;</TD>
    <TD STYLE="vertical-align: bottom; text-align: right">&nbsp;</TD>
    <TD STYLE="vertical-align: bottom">&nbsp;</TD>
    <TD STYLE="vertical-align: bottom; text-align: right">&nbsp;</TD>
    <TD STYLE="vertical-align: bottom">&nbsp;</TD>
    <TD STYLE="vertical-align: bottom; text-align: right">&nbsp;</TD>
    <TD STYLE="vertical-align: bottom">&nbsp;</TD>
    <TD STYLE="vertical-align: bottom; text-align: right">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; 95,000</TD>
    <TD STYLE="vertical-align: bottom">&nbsp;</TD>
    <TD STYLE="vertical-align: bottom; text-align: right">&nbsp;</TD>
    <TD STYLE="vertical-align: bottom">&nbsp;</TD>
    <TD STYLE="vertical-align: bottom; text-align: right">&nbsp;</TD>
    <TD STYLE="vertical-align: bottom">&nbsp;</TD>
    <TD STYLE="vertical-align: bottom; text-align: right">&nbsp;</TD>
    <TD STYLE="vertical-align: bottom">&nbsp;</TD>
    <TD STYLE="vertical-align: bottom; text-align: right">&nbsp;</TD>
    <TD STYLE="vertical-align: bottom">&nbsp;</TD>
    <TD STYLE="vertical-align: bottom; text-align: right">95,000</TD></TR>
<TR>
    <TD STYLE="vertical-align: top; text-align: left">Reclassification of derivative liability</TD>
    <TD STYLE="vertical-align: bottom">&nbsp;</TD>
    <TD STYLE="vertical-align: bottom; text-align: right">&nbsp;</TD>
    <TD STYLE="vertical-align: bottom">&nbsp;</TD>
    <TD STYLE="vertical-align: bottom; text-align: right">&nbsp;</TD>
    <TD STYLE="vertical-align: bottom">&nbsp;</TD>
    <TD STYLE="vertical-align: bottom; text-align: right">&nbsp;</TD>
    <TD STYLE="vertical-align: bottom">&nbsp;</TD>
    <TD STYLE="vertical-align: bottom; text-align: right">&nbsp;</TD>
    <TD STYLE="vertical-align: bottom">&nbsp;</TD>
    <TD STYLE="vertical-align: bottom; text-align: right">&nbsp;</TD>
    <TD STYLE="vertical-align: bottom">&nbsp;</TD>
    <TD STYLE="vertical-align: bottom; text-align: right">&nbsp;</TD>
    <TD STYLE="vertical-align: bottom">&nbsp;</TD>
    <TD STYLE="vertical-align: bottom; text-align: right">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; 107,636</TD>
    <TD STYLE="vertical-align: bottom">&nbsp;</TD>
    <TD STYLE="vertical-align: bottom; text-align: right">&nbsp;</TD>
    <TD STYLE="vertical-align: bottom">&nbsp;</TD>
    <TD STYLE="vertical-align: bottom; text-align: right">&nbsp;</TD>
    <TD STYLE="vertical-align: bottom">&nbsp;</TD>
    <TD STYLE="vertical-align: bottom; text-align: right">&nbsp;</TD>
    <TD STYLE="vertical-align: bottom">&nbsp;</TD>
    <TD STYLE="vertical-align: bottom; text-align: right">&nbsp;</TD>
    <TD STYLE="vertical-align: bottom">&nbsp;</TD>
    <TD STYLE="vertical-align: bottom; text-align: right">107,636</TD></TR>
<TR>
    <TD STYLE="vertical-align: top; text-align: left">Establishment of derivative liability</TD>
    <TD STYLE="vertical-align: bottom">&nbsp;</TD>
    <TD STYLE="vertical-align: bottom; text-align: right">&nbsp;</TD>
    <TD STYLE="vertical-align: bottom">&nbsp;</TD>
    <TD STYLE="vertical-align: bottom; text-align: right">&nbsp;</TD>
    <TD STYLE="vertical-align: bottom">&nbsp;</TD>
    <TD STYLE="vertical-align: bottom; text-align: right">&nbsp;</TD>
    <TD STYLE="vertical-align: bottom">&nbsp;</TD>
    <TD STYLE="vertical-align: bottom; text-align: right">&nbsp;</TD>
    <TD STYLE="vertical-align: bottom">&nbsp;</TD>
    <TD STYLE="vertical-align: bottom; text-align: right">&nbsp;</TD>
    <TD STYLE="vertical-align: bottom">&nbsp;</TD>
    <TD STYLE="vertical-align: bottom; text-align: right">&nbsp;</TD>
    <TD STYLE="vertical-align: bottom">&nbsp;</TD>
    <TD STYLE="vertical-align: bottom; text-align: right">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; (55,213)</TD>
    <TD STYLE="vertical-align: bottom">&nbsp;</TD>
    <TD STYLE="vertical-align: bottom; text-align: right">&nbsp;</TD>
    <TD STYLE="vertical-align: bottom">&nbsp;</TD>
    <TD STYLE="vertical-align: bottom; text-align: right">&nbsp;</TD>
    <TD STYLE="vertical-align: bottom">&nbsp;</TD>
    <TD STYLE="vertical-align: bottom; text-align: right">&nbsp;</TD>
    <TD STYLE="vertical-align: bottom">&nbsp;</TD>
    <TD STYLE="vertical-align: bottom; text-align: right">&nbsp;</TD>
    <TD STYLE="vertical-align: bottom">&nbsp;</TD>
    <TD STYLE="vertical-align: bottom; text-align: right">(55,213)</TD></TR>
<TR>
    <TD STYLE="vertical-align: top; text-align: left">Issuance of Common Stock upon conversion of convertible debt</TD>
    <TD STYLE="vertical-align: bottom">&nbsp;</TD>
    <TD STYLE="vertical-align: bottom; text-align: right">&nbsp;</TD>
    <TD STYLE="vertical-align: bottom">&nbsp;</TD>
    <TD STYLE="vertical-align: bottom; text-align: right">&nbsp;</TD>
    <TD STYLE="vertical-align: bottom">&nbsp;</TD>
    <TD STYLE="vertical-align: bottom; text-align: right">374,883</TD>
    <TD STYLE="vertical-align: bottom">&nbsp;</TD>
    <TD STYLE="vertical-align: bottom; text-align: right">&nbsp;</TD>
    <TD STYLE="vertical-align: bottom">&nbsp;</TD>
    <TD STYLE="vertical-align: bottom; text-align: right">&nbsp;</TD>
    <TD STYLE="vertical-align: bottom">&nbsp;</TD>
    <TD STYLE="vertical-align: bottom; text-align: right">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; 3,749</TD>
    <TD STYLE="vertical-align: bottom">&nbsp;</TD>
    <TD STYLE="vertical-align: bottom; text-align: right">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; 8,251</TD>
    <TD STYLE="vertical-align: bottom">&nbsp;</TD>
    <TD STYLE="vertical-align: bottom; text-align: right">&nbsp;</TD>
    <TD STYLE="vertical-align: bottom">&nbsp;</TD>
    <TD STYLE="vertical-align: bottom; text-align: right">&nbsp;</TD>
    <TD STYLE="vertical-align: bottom">&nbsp;</TD>
    <TD STYLE="vertical-align: bottom; text-align: right">&nbsp;</TD>
    <TD STYLE="vertical-align: bottom">&nbsp;</TD>
    <TD STYLE="vertical-align: bottom; text-align: right">&nbsp;</TD>
    <TD STYLE="vertical-align: bottom">&nbsp;</TD>
    <TD STYLE="vertical-align: bottom; text-align: right">12,000</TD></TR>
<TR>
    <TD STYLE="vertical-align: top; text-align: left">Issuance of Common Stock as consideration for payment of loans</TD>
    <TD STYLE="vertical-align: bottom">&nbsp;</TD>
    <TD STYLE="vertical-align: bottom; text-align: right">&nbsp;</TD>
    <TD STYLE="vertical-align: bottom">&nbsp;</TD>
    <TD STYLE="vertical-align: bottom; text-align: right">&nbsp;</TD>
    <TD STYLE="vertical-align: bottom">&nbsp;</TD>
    <TD STYLE="vertical-align: bottom; text-align: right">150,000</TD>
    <TD STYLE="vertical-align: bottom">&nbsp;</TD>
    <TD STYLE="vertical-align: bottom; text-align: right">&nbsp;</TD>
    <TD STYLE="vertical-align: bottom">&nbsp;</TD>
    <TD STYLE="vertical-align: bottom; text-align: right">&nbsp;</TD>
    <TD STYLE="vertical-align: bottom">&nbsp;</TD>
    <TD STYLE="vertical-align: bottom; text-align: right">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; 1,500</TD>
    <TD STYLE="vertical-align: bottom">&nbsp;</TD>
    <TD STYLE="vertical-align: bottom; text-align: right">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; 6,000</TD>
    <TD STYLE="vertical-align: bottom">&nbsp;</TD>
    <TD STYLE="vertical-align: bottom; text-align: right">&nbsp;</TD>
    <TD STYLE="vertical-align: bottom">&nbsp;</TD>
    <TD STYLE="vertical-align: bottom; text-align: right">&nbsp;</TD>
    <TD STYLE="vertical-align: bottom">&nbsp;</TD>
    <TD STYLE="vertical-align: bottom; text-align: right">&nbsp;</TD>
    <TD STYLE="vertical-align: bottom">&nbsp;</TD>
    <TD STYLE="vertical-align: bottom; text-align: right">&nbsp;</TD>
    <TD STYLE="vertical-align: bottom">&nbsp;</TD>
    <TD STYLE="vertical-align: bottom; text-align: right">7,500</TD></TR>
<TR>
    <TD STYLE="vertical-align: top; text-align: left">Foreign Currency Translation Adjustment</TD>
    <TD STYLE="vertical-align: bottom">&nbsp;</TD>
    <TD STYLE="vertical-align: bottom; text-align: right">&nbsp;</TD>
    <TD STYLE="vertical-align: bottom">&nbsp;</TD>
    <TD STYLE="vertical-align: bottom; text-align: right">&nbsp;</TD>
    <TD STYLE="vertical-align: bottom">&nbsp;</TD>
    <TD STYLE="vertical-align: bottom; text-align: right">&nbsp;</TD>
    <TD STYLE="vertical-align: bottom">&nbsp;</TD>
    <TD STYLE="vertical-align: bottom; text-align: right">&nbsp;</TD>
    <TD STYLE="vertical-align: bottom">&nbsp;</TD>
    <TD STYLE="vertical-align: bottom; text-align: right">&nbsp;</TD>
    <TD STYLE="vertical-align: bottom">&nbsp;</TD>
    <TD STYLE="vertical-align: bottom; text-align: right">&nbsp;</TD>
    <TD STYLE="vertical-align: bottom">&nbsp;</TD>
    <TD STYLE="vertical-align: bottom; text-align: right">&nbsp;</TD>
    <TD STYLE="vertical-align: bottom">&nbsp;</TD>
    <TD STYLE="vertical-align: bottom; text-align: right">&nbsp;</TD>
    <TD STYLE="vertical-align: bottom">&nbsp;</TD>
    <TD STYLE="vertical-align: bottom; text-align: right">&nbsp;</TD>
    <TD STYLE="vertical-align: bottom">&nbsp;</TD>
    <TD STYLE="vertical-align: bottom; text-align: right">&nbsp;</TD>
    <TD STYLE="vertical-align: bottom">&nbsp;</TD>
    <TD STYLE="vertical-align: bottom; text-align: right">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; 348</TD>
    <TD STYLE="vertical-align: bottom">&nbsp;</TD>
    <TD STYLE="vertical-align: bottom; text-align: right">348</TD></TR>
<TR>
    <TD STYLE="vertical-align: top; text-align: left">Non-Controlling Interest</TD>
    <TD STYLE="vertical-align: bottom">&nbsp;</TD>
    <TD STYLE="vertical-align: bottom; text-align: right">&nbsp;</TD>
    <TD STYLE="vertical-align: bottom">&nbsp;</TD>
    <TD STYLE="vertical-align: bottom; text-align: right">&nbsp;</TD>
    <TD STYLE="vertical-align: bottom">&nbsp;</TD>
    <TD STYLE="vertical-align: bottom; text-align: right">&nbsp;</TD>
    <TD STYLE="vertical-align: bottom">&nbsp;</TD>
    <TD STYLE="vertical-align: bottom; text-align: right">&nbsp;</TD>
    <TD STYLE="vertical-align: bottom">&nbsp;</TD>
    <TD STYLE="vertical-align: bottom; text-align: right">&nbsp;</TD>
    <TD STYLE="vertical-align: bottom">&nbsp;</TD>
    <TD STYLE="vertical-align: bottom; text-align: right">&nbsp;</TD>
    <TD STYLE="vertical-align: bottom">&nbsp;</TD>
    <TD STYLE="vertical-align: bottom; text-align: right">&nbsp;</TD>
    <TD STYLE="vertical-align: bottom">&nbsp;</TD>
    <TD STYLE="vertical-align: bottom; text-align: right">&nbsp;</TD>
    <TD STYLE="vertical-align: bottom">&nbsp;</TD>
    <TD STYLE="vertical-align: bottom; text-align: right">&nbsp;</TD>
    <TD STYLE="vertical-align: bottom">&nbsp;</TD>
    <TD STYLE="vertical-align: bottom; text-align: right">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; 4,256</TD>
    <TD STYLE="vertical-align: bottom">&nbsp;</TD>
    <TD STYLE="vertical-align: bottom; text-align: right">&nbsp;</TD>
    <TD STYLE="vertical-align: bottom">&nbsp;</TD>
    <TD STYLE="vertical-align: bottom; text-align: right">4,256</TD></TR>
<TR>
    <TD STYLE="vertical-align: top; text-align: left">Net Loss</TD>
    <TD STYLE="vertical-align: bottom">&nbsp;</TD>
    <TD STYLE="vertical-align: bottom; text-align: right">&nbsp;</TD>
    <TD STYLE="vertical-align: bottom">&nbsp;</TD>
    <TD STYLE="vertical-align: bottom; text-align: right">&nbsp;</TD>
    <TD STYLE="vertical-align: bottom">&nbsp;</TD>
    <TD STYLE="vertical-align: bottom; text-align: right">&nbsp;</TD>
    <TD STYLE="vertical-align: bottom">&nbsp;</TD>
    <TD STYLE="vertical-align: bottom; text-align: right">&nbsp;</TD>
    <TD STYLE="vertical-align: bottom">&nbsp;</TD>
    <TD STYLE="vertical-align: bottom; text-align: right">&nbsp;</TD>
    <TD STYLE="vertical-align: bottom">&nbsp;</TD>
    <TD STYLE="vertical-align: bottom; text-align: right">&nbsp;</TD>
    <TD STYLE="vertical-align: bottom">&nbsp;</TD>
    <TD STYLE="vertical-align: bottom; text-align: right">&nbsp;</TD>
    <TD STYLE="vertical-align: bottom">&nbsp;</TD>
    <TD STYLE="vertical-align: bottom; text-align: right">(1,543,179)</TD>
    <TD STYLE="vertical-align: bottom">&nbsp;</TD>
    <TD STYLE="vertical-align: bottom; text-align: right">&nbsp;</TD>
    <TD STYLE="vertical-align: bottom">&nbsp;</TD>
    <TD STYLE="vertical-align: bottom; text-align: right">&nbsp;</TD>
    <TD STYLE="vertical-align: bottom">&nbsp;</TD>
    <TD STYLE="vertical-align: bottom; text-align: right">&nbsp;</TD>
    <TD STYLE="vertical-align: bottom">&nbsp;</TD>
    <TD STYLE="vertical-align: bottom; text-align: right">(1,543,179)</TD></TR>
<TR>
    <TD STYLE="vertical-align: top; text-align: left">Balance, December 31, 2010</TD>
    <TD STYLE="vertical-align: bottom">&nbsp;</TD>
    <TD STYLE="border-top: windowtext 0.5pt solid; border-bottom: windowtext 0.5pt solid; vertical-align: bottom; text-align: right">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; 510,000</TD>
    <TD STYLE="vertical-align: bottom">&nbsp;</TD>
    <TD STYLE="border-top: windowtext 0.5pt solid; border-bottom: windowtext 0.5pt solid; vertical-align: bottom; text-align: right">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&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="vertical-align: bottom">&nbsp;</TD>
    <TD STYLE="border-top: windowtext 0.5pt solid; border-bottom: windowtext 0.5pt solid; vertical-align: bottom; text-align: right">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; 48,282,871</TD>
    <TD STYLE="vertical-align: bottom">&nbsp;</TD>
    <TD STYLE="border-top: windowtext 0.5pt solid; border-bottom: windowtext 0.5pt solid; vertical-align: bottom; text-align: right">5,100</TD>
    <TD STYLE="vertical-align: bottom">&nbsp;</TD>
    <TD STYLE="border-top: windowtext 0.5pt solid; border-bottom: windowtext 0.5pt solid; vertical-align: bottom; text-align: right">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&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="vertical-align: bottom">&nbsp;</TD>
    <TD STYLE="border-top: windowtext 0.5pt solid; border-bottom: windowtext 0.5pt solid; vertical-align: bottom; text-align: right">482,829</TD>
    <TD STYLE="vertical-align: bottom">&nbsp;</TD>
    <TD STYLE="border-top: windowtext 0.5pt solid; border-bottom: windowtext 0.5pt solid; vertical-align: bottom; text-align: right">9,584,424</TD>
    <TD STYLE="vertical-align: bottom">&nbsp;</TD>
    <TD STYLE="border-top: windowtext 0.5pt solid; border-bottom: windowtext 0.5pt solid; vertical-align: bottom; text-align: right">(11,032,491)</TD>
    <TD STYLE="vertical-align: bottom">&nbsp;</TD>
    <TD STYLE="border-top: windowtext 0.5pt solid; border-bottom: windowtext 0.5pt solid; vertical-align: bottom; text-align: right">(52,788)</TD>
    <TD STYLE="vertical-align: bottom">&nbsp;</TD>
    <TD STYLE="border-top: windowtext 0.5pt solid; border-bottom: windowtext 0.5pt solid; vertical-align: bottom; text-align: right">4,256</TD>
    <TD STYLE="vertical-align: bottom">&nbsp;</TD>
    <TD STYLE="border-top: windowtext 0.5pt solid; border-bottom: windowtext 0.5pt solid; vertical-align: bottom; text-align: right">348</TD>
    <TD STYLE="vertical-align: bottom">&nbsp;</TD>
    <TD STYLE="border-top: windowtext 0.5pt solid; border-bottom: windowtext 0.5pt solid; vertical-align: bottom; text-align: right">(1,008,322)</TD></TR>
<TR STYLE="vertical-align: bottom">
    <TD STYLE="padding-left: 24px; font-size: 10pt; text-align: left">&nbsp;</TD>
    <TD STYLE="font-size: 10pt">&nbsp;</TD>
    <TD STYLE="font-size: 10pt; text-align: right">&nbsp;</TD>
    <TD STYLE="font-size: 10pt">&nbsp;</TD>
    <TD STYLE="font-size: 10pt; text-align: right">&nbsp;</TD>
    <TD STYLE="font-size: 10pt">&nbsp;</TD>
    <TD STYLE="font-size: 10pt; text-align: right">&nbsp;</TD>
    <TD STYLE="font-size: 10pt">&nbsp;</TD>
    <TD STYLE="font-size: 10pt; text-align: right">&nbsp;</TD>
    <TD STYLE="font-size: 10pt">&nbsp;</TD>
    <TD STYLE="font-size: 10pt; text-align: right">&nbsp;</TD>
    <TD STYLE="font-size: 10pt">&nbsp;</TD>
    <TD STYLE="font-size: 10pt; text-align: right">&nbsp;</TD>
    <TD STYLE="font-size: 10pt">&nbsp;</TD>
    <TD STYLE="font-size: 10pt; text-align: right">&nbsp;</TD>
    <TD STYLE="font-size: 10pt">&nbsp;</TD>
    <TD STYLE="font-size: 10pt; text-align: right">&nbsp;</TD>
    <TD STYLE="font-size: 10pt">&nbsp;</TD>
    <TD STYLE="font-size: 10pt; text-align: right">&nbsp;</TD>
    <TD STYLE="font-size: 10pt">&nbsp;</TD>
    <TD STYLE="font-size: 10pt; text-align: right">&nbsp;</TD>
    <TD STYLE="font-size: 10pt">&nbsp;</TD>
    <TD STYLE="font-size: 10pt; text-align: right">&nbsp;</TD>
    <TD STYLE="font-size: 10pt">&nbsp;</TD>
    <TD STYLE="font-size: 10pt; text-align: right">&nbsp;</TD></TR>
<TR>
    <TD STYLE="vertical-align: top; text-align: left">Common&nbsp; stock issued as consideration for accrued salaries of CEO</TD>
    <TD STYLE="vertical-align: bottom">&nbsp;</TD>
    <TD STYLE="vertical-align: bottom; text-align: right">&nbsp;</TD>
    <TD STYLE="vertical-align: bottom">&nbsp;</TD>
    <TD STYLE="vertical-align: bottom; text-align: right">&nbsp;</TD>
    <TD STYLE="vertical-align: bottom">&nbsp;</TD>
    <TD STYLE="vertical-align: bottom; text-align: right">14,076,923</TD>
    <TD STYLE="vertical-align: bottom">&nbsp;</TD>
    <TD STYLE="vertical-align: bottom; text-align: right">&nbsp;</TD>
    <TD STYLE="vertical-align: bottom">&nbsp;</TD>
    <TD STYLE="vertical-align: bottom; text-align: right">&nbsp;</TD>
    <TD STYLE="vertical-align: bottom">&nbsp;</TD>
    <TD STYLE="vertical-align: bottom; text-align: right">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; 140,769</TD>
    <TD STYLE="vertical-align: bottom">&nbsp;</TD>
    <TD STYLE="vertical-align: bottom; text-align: right">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; 422,308</TD>
    <TD STYLE="vertical-align: bottom">&nbsp;</TD>
    <TD STYLE="vertical-align: bottom; text-align: right">&nbsp;</TD>
    <TD STYLE="vertical-align: bottom">&nbsp;</TD>
    <TD STYLE="vertical-align: bottom; text-align: right">&nbsp;</TD>
    <TD STYLE="vertical-align: bottom">&nbsp;</TD>
    <TD STYLE="vertical-align: bottom; text-align: right">&nbsp;</TD>
    <TD STYLE="vertical-align: bottom">&nbsp;</TD>
    <TD STYLE="vertical-align: bottom; text-align: right">&nbsp;</TD>
    <TD STYLE="vertical-align: bottom">&nbsp;</TD>
    <TD STYLE="vertical-align: bottom; text-align: right">563,077</TD></TR>
<TR>
    <TD STYLE="vertical-align: top; text-align: left">CEO forgiveness of accrued compensation&nbsp;</TD>
    <TD STYLE="vertical-align: bottom">&nbsp;</TD>
    <TD STYLE="vertical-align: bottom; text-align: right">&nbsp;</TD>
    <TD STYLE="vertical-align: bottom">&nbsp;</TD>
    <TD STYLE="vertical-align: bottom; text-align: right">&nbsp;</TD>
    <TD STYLE="vertical-align: bottom">&nbsp;</TD>
    <TD STYLE="vertical-align: bottom; text-align: right">&nbsp;</TD>
    <TD STYLE="vertical-align: bottom">&nbsp;</TD>
    <TD STYLE="vertical-align: bottom; text-align: right">&nbsp;</TD>
    <TD STYLE="vertical-align: bottom">&nbsp;</TD>
    <TD STYLE="vertical-align: bottom; text-align: right">&nbsp;</TD>
    <TD STYLE="vertical-align: bottom">&nbsp;</TD>
    <TD STYLE="vertical-align: bottom; text-align: right">&nbsp;</TD>
    <TD STYLE="vertical-align: bottom">&nbsp;</TD>
    <TD STYLE="vertical-align: bottom; text-align: right">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; 700,269</TD>
    <TD STYLE="vertical-align: bottom">&nbsp;</TD>
    <TD STYLE="vertical-align: bottom; text-align: right">&nbsp;</TD>
    <TD STYLE="vertical-align: bottom">&nbsp;</TD>
    <TD STYLE="vertical-align: bottom; text-align: right">&nbsp;</TD>
    <TD STYLE="vertical-align: bottom">&nbsp;</TD>
    <TD STYLE="vertical-align: bottom; text-align: right">&nbsp;</TD>
    <TD STYLE="vertical-align: bottom">&nbsp;</TD>
    <TD STYLE="vertical-align: bottom; text-align: right">&nbsp;</TD>
    <TD STYLE="vertical-align: bottom">&nbsp;</TD>
    <TD STYLE="vertical-align: bottom; text-align: right">700,269</TD></TR>
<TR>
    <TD STYLE="vertical-align: top; text-align: left">Amortization of Deferred Compensation</TD>
    <TD STYLE="vertical-align: bottom">&nbsp;</TD>
    <TD STYLE="vertical-align: bottom; text-align: right">&nbsp;</TD>
    <TD STYLE="vertical-align: bottom">&nbsp;</TD>
    <TD STYLE="vertical-align: bottom; text-align: right">&nbsp;</TD>
    <TD STYLE="vertical-align: bottom">&nbsp;</TD>
    <TD STYLE="vertical-align: bottom; text-align: right">&nbsp;</TD>
    <TD STYLE="vertical-align: bottom">&nbsp;</TD>
    <TD STYLE="vertical-align: bottom; text-align: right">&nbsp;</TD>
    <TD STYLE="vertical-align: bottom">&nbsp;</TD>
    <TD STYLE="vertical-align: bottom; text-align: right">&nbsp;</TD>
    <TD STYLE="vertical-align: bottom">&nbsp;</TD>
    <TD STYLE="vertical-align: bottom; text-align: right">&nbsp;</TD>
    <TD STYLE="vertical-align: bottom">&nbsp;</TD>
    <TD STYLE="vertical-align: bottom; text-align: right">&nbsp;</TD>
    <TD STYLE="vertical-align: bottom">&nbsp;</TD>
    <TD STYLE="vertical-align: bottom; text-align: right">&nbsp;</TD>
    <TD STYLE="vertical-align: bottom">&nbsp;</TD>
    <TD STYLE="vertical-align: bottom; text-align: right">52788</TD>
    <TD STYLE="vertical-align: bottom">&nbsp;</TD>
    <TD STYLE="vertical-align: bottom; text-align: right">&nbsp;</TD>
    <TD STYLE="vertical-align: bottom">&nbsp;</TD>
    <TD STYLE="vertical-align: bottom; text-align: right">&nbsp;</TD>
    <TD STYLE="vertical-align: bottom">&nbsp;</TD>
    <TD STYLE="vertical-align: bottom; text-align: right">52,788</TD></TR>
<TR>
    <TD STYLE="vertical-align: top; text-align: left">Common&nbsp; stock issued as consideration for legal fees and accrued legal fees</TD>
    <TD STYLE="vertical-align: bottom">&nbsp;</TD>
    <TD STYLE="vertical-align: bottom; text-align: right">&nbsp;</TD>
    <TD STYLE="vertical-align: bottom">&nbsp;</TD>
    <TD STYLE="vertical-align: bottom; text-align: right">&nbsp;</TD>
    <TD STYLE="vertical-align: bottom">&nbsp;</TD>
    <TD STYLE="vertical-align: bottom; text-align: right">572,115</TD>
    <TD STYLE="vertical-align: bottom">&nbsp;</TD>
    <TD STYLE="vertical-align: bottom; text-align: right">&nbsp;</TD>
    <TD STYLE="vertical-align: bottom">&nbsp;</TD>
    <TD STYLE="vertical-align: bottom; text-align: right">&nbsp;</TD>
    <TD STYLE="vertical-align: bottom">&nbsp;</TD>
    <TD STYLE="vertical-align: bottom; text-align: right">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; 5,721</TD>
    <TD STYLE="vertical-align: bottom">&nbsp;</TD>
    <TD STYLE="vertical-align: bottom; text-align: right">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; 17,254</TD>
    <TD STYLE="vertical-align: bottom">&nbsp;</TD>
    <TD STYLE="vertical-align: bottom; text-align: right">&nbsp;</TD>
    <TD STYLE="vertical-align: bottom">&nbsp;</TD>
    <TD STYLE="vertical-align: bottom; text-align: right">&nbsp;</TD>
    <TD STYLE="vertical-align: bottom">&nbsp;</TD>
    <TD STYLE="vertical-align: bottom; text-align: right">&nbsp;</TD>
    <TD STYLE="vertical-align: bottom">&nbsp;</TD>
    <TD STYLE="vertical-align: bottom; text-align: right">&nbsp;</TD>
    <TD STYLE="vertical-align: bottom">&nbsp;</TD>
    <TD STYLE="vertical-align: bottom; text-align: right">22,975</TD></TR>
<TR>
    <TD STYLE="vertical-align: top; text-align: left">Sale of common stock</TD>
    <TD STYLE="vertical-align: bottom">&nbsp;</TD>
    <TD STYLE="vertical-align: bottom; text-align: right">&nbsp;</TD>
    <TD STYLE="vertical-align: bottom">&nbsp;</TD>
    <TD STYLE="vertical-align: bottom; text-align: right">&nbsp;</TD>
    <TD STYLE="vertical-align: bottom">&nbsp;</TD>
    <TD STYLE="vertical-align: bottom; text-align: right">1,500,000</TD>
    <TD STYLE="vertical-align: bottom">&nbsp;</TD>
    <TD STYLE="vertical-align: bottom; text-align: right">&nbsp;</TD>
    <TD STYLE="vertical-align: bottom">&nbsp;</TD>
    <TD STYLE="vertical-align: bottom; text-align: right">&nbsp;</TD>
    <TD STYLE="vertical-align: bottom">&nbsp;</TD>
    <TD STYLE="vertical-align: bottom; text-align: right">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; 15,000</TD>
    <TD STYLE="vertical-align: bottom">&nbsp;</TD>
    <TD STYLE="vertical-align: bottom; text-align: right">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; 112,500</TD>
    <TD STYLE="vertical-align: bottom">&nbsp;</TD>
    <TD STYLE="vertical-align: bottom; text-align: right">&nbsp;</TD>
    <TD STYLE="vertical-align: bottom">&nbsp;</TD>
    <TD STYLE="vertical-align: bottom; text-align: right">&nbsp;</TD>
    <TD STYLE="vertical-align: bottom">&nbsp;</TD>
    <TD STYLE="vertical-align: bottom; text-align: right">&nbsp;</TD>
    <TD STYLE="vertical-align: bottom">&nbsp;</TD>
    <TD STYLE="vertical-align: bottom; text-align: right">&nbsp;</TD>
    <TD STYLE="vertical-align: bottom">&nbsp;</TD>
    <TD STYLE="vertical-align: bottom; text-align: right">127,500</TD></TR>
<TR>
    <TD STYLE="vertical-align: top; text-align: left">Issuance of stock options as consideration for director fees</TD>
    <TD STYLE="vertical-align: bottom">&nbsp;</TD>
    <TD STYLE="vertical-align: bottom; text-align: right">&nbsp;</TD>
    <TD STYLE="vertical-align: bottom">&nbsp;</TD>
    <TD STYLE="vertical-align: bottom; text-align: right">&nbsp;</TD>
    <TD STYLE="vertical-align: bottom">&nbsp;</TD>
    <TD STYLE="vertical-align: bottom; text-align: right">&nbsp;</TD>
    <TD STYLE="vertical-align: bottom">&nbsp;</TD>
    <TD STYLE="vertical-align: bottom; text-align: right">&nbsp;</TD>
    <TD STYLE="vertical-align: bottom">&nbsp;</TD>
    <TD STYLE="vertical-align: bottom; text-align: right">&nbsp;</TD>
    <TD STYLE="vertical-align: bottom">&nbsp;</TD>
    <TD STYLE="vertical-align: bottom; text-align: right">&nbsp;</TD>
    <TD STYLE="vertical-align: bottom">&nbsp;</TD>
    <TD STYLE="vertical-align: bottom; text-align: right">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; 2,000</TD>
    <TD STYLE="vertical-align: bottom">&nbsp;</TD>
    <TD STYLE="vertical-align: bottom; text-align: right">&nbsp;</TD>
    <TD STYLE="vertical-align: bottom">&nbsp;</TD>
    <TD STYLE="vertical-align: bottom; text-align: right">&nbsp;</TD>
    <TD STYLE="vertical-align: bottom">&nbsp;</TD>
    <TD STYLE="vertical-align: bottom; text-align: right">&nbsp;</TD>
    <TD STYLE="vertical-align: bottom">&nbsp;</TD>
    <TD STYLE="vertical-align: bottom; text-align: right">&nbsp;</TD>
    <TD STYLE="vertical-align: bottom">&nbsp;</TD>
    <TD STYLE="vertical-align: bottom; text-align: right">2,000</TD></TR>
<TR>
    <TD STYLE="vertical-align: top; text-align: left">Exercise of stock options</TD>
    <TD STYLE="vertical-align: bottom">&nbsp;</TD>
    <TD STYLE="vertical-align: bottom; text-align: right">&nbsp;</TD>
    <TD STYLE="vertical-align: bottom">&nbsp;</TD>
    <TD STYLE="vertical-align: bottom; text-align: right">&nbsp;</TD>
    <TD STYLE="vertical-align: bottom">&nbsp;</TD>
    <TD STYLE="vertical-align: bottom; text-align: right">20,000</TD>
    <TD STYLE="vertical-align: bottom">&nbsp;</TD>
    <TD STYLE="vertical-align: bottom; text-align: right">&nbsp;</TD>
    <TD STYLE="vertical-align: bottom">&nbsp;</TD>
    <TD STYLE="vertical-align: bottom; text-align: right">&nbsp;</TD>
    <TD STYLE="vertical-align: bottom">&nbsp;</TD>
    <TD STYLE="vertical-align: bottom; text-align: right">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&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</TD>
    <TD STYLE="vertical-align: bottom">&nbsp;</TD>
    <TD STYLE="vertical-align: bottom; text-align: right">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; 800</TD>
    <TD STYLE="vertical-align: bottom">&nbsp;</TD>
    <TD STYLE="vertical-align: bottom; text-align: right">&nbsp;</TD>
    <TD STYLE="vertical-align: bottom">&nbsp;</TD>
    <TD STYLE="vertical-align: bottom; text-align: right">&nbsp;</TD>
    <TD STYLE="vertical-align: bottom">&nbsp;</TD>
    <TD STYLE="vertical-align: bottom; text-align: right">&nbsp;</TD>
    <TD STYLE="vertical-align: bottom">&nbsp;</TD>
    <TD STYLE="vertical-align: bottom; text-align: right">&nbsp;</TD>
    <TD STYLE="vertical-align: bottom">&nbsp;</TD>
    <TD STYLE="vertical-align: bottom; text-align: right">1,000</TD></TR>
<TR>
    <TD STYLE="vertical-align: top; text-align: left">Issuance of Common Stock for services</TD>
    <TD STYLE="vertical-align: bottom">&nbsp;</TD>
    <TD STYLE="vertical-align: bottom; text-align: right">&nbsp;</TD>
    <TD STYLE="vertical-align: bottom">&nbsp;</TD>
    <TD STYLE="vertical-align: bottom; text-align: right">&nbsp;</TD>
    <TD STYLE="vertical-align: bottom">&nbsp;</TD>
    <TD STYLE="vertical-align: bottom; text-align: right">177,124</TD>
    <TD STYLE="vertical-align: bottom">&nbsp;</TD>
    <TD STYLE="vertical-align: bottom; text-align: right">&nbsp;</TD>
    <TD STYLE="vertical-align: bottom">&nbsp;</TD>
    <TD STYLE="vertical-align: bottom; text-align: right">&nbsp;</TD>
    <TD STYLE="vertical-align: bottom">&nbsp;</TD>
    <TD STYLE="vertical-align: bottom; text-align: right">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; 1,771</TD>
    <TD STYLE="vertical-align: bottom">&nbsp;</TD>
    <TD STYLE="vertical-align: bottom; text-align: right">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; 8,454</TD>
    <TD STYLE="vertical-align: bottom">&nbsp;</TD>
    <TD STYLE="vertical-align: bottom; text-align: right">&nbsp;</TD>
    <TD STYLE="vertical-align: bottom">&nbsp;</TD>
    <TD STYLE="vertical-align: bottom; text-align: right">&nbsp;</TD>
    <TD STYLE="vertical-align: bottom">&nbsp;</TD>
    <TD STYLE="vertical-align: bottom; text-align: right">&nbsp;</TD>
    <TD STYLE="vertical-align: bottom">&nbsp;</TD>
    <TD STYLE="vertical-align: bottom; text-align: right">&nbsp;</TD>
    <TD STYLE="vertical-align: bottom">&nbsp;</TD>
    <TD STYLE="vertical-align: bottom; text-align: right">10,225</TD></TR>
<TR>
    <TD STYLE="vertical-align: top; text-align: left">Debt discount and finance charges</TD>
    <TD STYLE="vertical-align: bottom">&nbsp;</TD>
    <TD STYLE="vertical-align: bottom; text-align: right">&nbsp;</TD>
    <TD STYLE="vertical-align: bottom">&nbsp;</TD>
    <TD STYLE="vertical-align: bottom; text-align: right">&nbsp;</TD>
    <TD STYLE="vertical-align: bottom">&nbsp;</TD>
    <TD STYLE="vertical-align: bottom; text-align: right">&nbsp;</TD>
    <TD STYLE="vertical-align: bottom">&nbsp;</TD>
    <TD STYLE="vertical-align: bottom; text-align: right">&nbsp;</TD>
    <TD STYLE="vertical-align: bottom">&nbsp;</TD>
    <TD STYLE="vertical-align: bottom; text-align: right">&nbsp;</TD>
    <TD STYLE="vertical-align: bottom">&nbsp;</TD>
    <TD STYLE="vertical-align: bottom; text-align: right">&nbsp;</TD>
    <TD STYLE="vertical-align: bottom">&nbsp;</TD>
    <TD STYLE="vertical-align: bottom; text-align: right">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; 89,999</TD>
    <TD STYLE="vertical-align: bottom">&nbsp;</TD>
    <TD STYLE="vertical-align: bottom; text-align: right">&nbsp;</TD>
    <TD STYLE="vertical-align: bottom">&nbsp;</TD>
    <TD STYLE="vertical-align: bottom; text-align: right">&nbsp;</TD>
    <TD STYLE="vertical-align: bottom">&nbsp;</TD>
    <TD STYLE="vertical-align: bottom; text-align: right">&nbsp;</TD>
    <TD STYLE="vertical-align: bottom">&nbsp;</TD>
    <TD STYLE="vertical-align: bottom; text-align: right">&nbsp;</TD>
    <TD STYLE="vertical-align: bottom">&nbsp;</TD>
    <TD STYLE="vertical-align: bottom; text-align: right">89,999</TD></TR>
<TR>
    <TD STYLE="vertical-align: top; text-align: left">Disposition of majority owned subsidiary</TD>
    <TD STYLE="vertical-align: bottom">&nbsp;</TD>
    <TD STYLE="vertical-align: bottom; text-align: right">&nbsp;</TD>
    <TD STYLE="vertical-align: bottom">&nbsp;</TD>
    <TD STYLE="vertical-align: bottom; text-align: right">&nbsp;</TD>
    <TD STYLE="vertical-align: bottom">&nbsp;</TD>
    <TD STYLE="vertical-align: bottom; text-align: right">&nbsp;</TD>
    <TD STYLE="vertical-align: bottom">&nbsp;</TD>
    <TD STYLE="vertical-align: bottom; text-align: right">&nbsp;</TD>
    <TD STYLE="vertical-align: bottom">&nbsp;</TD>
    <TD STYLE="vertical-align: bottom; text-align: right">&nbsp;</TD>
    <TD STYLE="vertical-align: bottom">&nbsp;</TD>
    <TD STYLE="vertical-align: bottom; text-align: right">&nbsp;</TD>
    <TD STYLE="vertical-align: bottom">&nbsp;</TD>
    <TD STYLE="vertical-align: bottom; text-align: right">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; (3,209)</TD>
    <TD STYLE="vertical-align: bottom">&nbsp;</TD>
    <TD STYLE="vertical-align: bottom; text-align: right">&nbsp;</TD>
    <TD STYLE="vertical-align: bottom">&nbsp;</TD>
    <TD STYLE="vertical-align: bottom; text-align: right">&nbsp;</TD>
    <TD STYLE="vertical-align: bottom">&nbsp;</TD>
    <TD STYLE="vertical-align: bottom; text-align: right">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; (4,256)</TD>
    <TD STYLE="vertical-align: bottom">&nbsp;</TD>
    <TD STYLE="vertical-align: bottom; text-align: right">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; (348)</TD>
    <TD STYLE="vertical-align: bottom">&nbsp;</TD>
    <TD STYLE="vertical-align: bottom; text-align: right">(7,813)</TD></TR>
<TR>
    <TD STYLE="vertical-align: top; text-align: left">Net loss</TD>
    <TD STYLE="vertical-align: bottom">&nbsp;</TD>
    <TD STYLE="vertical-align: bottom; text-align: right">&nbsp;</TD>
    <TD STYLE="vertical-align: bottom">&nbsp;</TD>
    <TD STYLE="vertical-align: bottom; text-align: right">&nbsp;</TD>
    <TD STYLE="vertical-align: bottom">&nbsp;</TD>
    <TD STYLE="vertical-align: bottom; text-align: right">&nbsp;</TD>
    <TD STYLE="vertical-align: bottom">&nbsp;</TD>
    <TD STYLE="vertical-align: bottom; text-align: right">&nbsp;</TD>
    <TD STYLE="vertical-align: bottom">&nbsp;</TD>
    <TD STYLE="vertical-align: bottom; text-align: right">&nbsp;</TD>
    <TD STYLE="vertical-align: bottom">&nbsp;</TD>
    <TD STYLE="vertical-align: bottom; text-align: right">&nbsp;</TD>
    <TD STYLE="vertical-align: bottom">&nbsp;</TD>
    <TD STYLE="vertical-align: bottom; text-align: right">&nbsp;</TD>
    <TD STYLE="vertical-align: bottom">&nbsp;</TD>
    <TD STYLE="vertical-align: bottom; text-align: right">(824,880)</TD>
    <TD STYLE="vertical-align: bottom">&nbsp;</TD>
    <TD STYLE="vertical-align: bottom; text-align: right">&nbsp;</TD>
    <TD STYLE="vertical-align: bottom">&nbsp;</TD>
    <TD STYLE="vertical-align: bottom; text-align: right">&nbsp;</TD>
    <TD STYLE="vertical-align: bottom">&nbsp;</TD>
    <TD STYLE="vertical-align: bottom; text-align: right">&nbsp;</TD>
    <TD STYLE="vertical-align: bottom">&nbsp;</TD>
    <TD STYLE="vertical-align: bottom; text-align: right">(824,880)</TD></TR>
<TR>
    <TD STYLE="vertical-align: top; text-align: left">Balance, December 31, 2011</TD>
    <TD STYLE="vertical-align: bottom">&nbsp;</TD>
    <TD STYLE="border-top: windowtext 0.5pt solid; border-bottom: windowtext 2pt double; vertical-align: bottom; text-align: right">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; 510,000</TD>
    <TD STYLE="vertical-align: bottom">&nbsp;</TD>
    <TD STYLE="border-top: windowtext 0.5pt solid; border-bottom: windowtext 2pt double; vertical-align: bottom; text-align: right">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&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="vertical-align: bottom">&nbsp;</TD>
    <TD STYLE="border-top: windowtext 0.5pt solid; border-bottom: windowtext 2pt double; vertical-align: bottom; text-align: right">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; 64,629,033</TD>
    <TD STYLE="vertical-align: bottom">&nbsp;</TD>
    <TD STYLE="border-top: windowtext 0.5pt solid; border-bottom: windowtext 2pt double; vertical-align: bottom; text-align: right">&nbsp;$&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; 5,100.00</TD>
    <TD STYLE="vertical-align: bottom">&nbsp;</TD>
    <TD STYLE="border-top: windowtext 0.5pt solid; border-bottom: windowtext 2pt double; vertical-align: bottom; text-align: right">&nbsp;$&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; -&nbsp;&nbsp;</TD>
    <TD STYLE="vertical-align: bottom">&nbsp;</TD>
    <TD STYLE="border-top: windowtext 0.5pt solid; border-bottom: windowtext 2pt double; vertical-align: bottom; text-align: right">&nbsp;$&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; 646,290</TD>
    <TD STYLE="vertical-align: bottom">&nbsp;</TD>
    <TD STYLE="border-top: windowtext 0.5pt solid; border-bottom: windowtext 2pt double; vertical-align: bottom; text-align: right">&nbsp;$&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; 10,934,799</TD>
    <TD STYLE="vertical-align: bottom">&nbsp;</TD>
    <TD STYLE="border-top: windowtext 0.5pt solid; border-bottom: windowtext 2pt double; vertical-align: bottom; text-align: right">&nbsp;$&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; (11,857,371)</TD>
    <TD STYLE="vertical-align: bottom">&nbsp;</TD>
    <TD STYLE="border-top: windowtext 0.5pt solid; border-bottom: windowtext 2pt double; vertical-align: bottom; text-align: right">&nbsp;$&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; -&nbsp;&nbsp;</TD>
    <TD STYLE="vertical-align: bottom">&nbsp;</TD>
    <TD STYLE="border-top: windowtext 0.5pt solid; border-bottom: windowtext 2pt double; vertical-align: bottom; text-align: right">&nbsp;$&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&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="vertical-align: bottom">&nbsp;</TD>
    <TD STYLE="border-top: windowtext 0.5pt solid; border-bottom: windowtext 2pt double; vertical-align: bottom; text-align: right">&nbsp;$&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; -&nbsp;&nbsp;</TD>
    <TD STYLE="vertical-align: bottom">&nbsp;</TD>
    <TD STYLE="border-top: windowtext 0.5pt solid; border-bottom: windowtext 2pt double; vertical-align: bottom; text-align: right">&nbsp;$&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; (271,182)</TD></TR>
</TABLE>


<P STYLE="font: 12pt Times New Roman, Times, Serif; margin: 0"></P>

<P STYLE="font: 12pt Times New Roman, Times, Serif; margin: 0; text-align: center">&nbsp;</P>

<P STYLE="font: 12pt Times New Roman, Times, Serif; margin-top: 0; text-align: center; margin-bottom: 0">See accompanying notes to consolidated
financial statements.&nbsp;</P>

<!-- Field: Page; Sequence: 24 -->
    <DIV STYLE="margin-bottom: 6pt"><TABLE CELLPADDING="0" CELLSPACING="0" STYLE="width: 100%"><TR><TD STYLE="text-align: center; width: 100%">F-5</TD></TR></TABLE></DIV>
    <DIV STYLE="page-break-before: always; margin-top: 6pt"><TABLE CELLPADDING="0" CELLSPACING="0" STYLE="width: 100%"><TR><TD STYLE="text-align: center; width: 100%">&nbsp;</TD></TR></TABLE></DIV>
    <!-- Field: /Page -->

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

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

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

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

<TABLE BORDER="0" CELLPADDING="0" CELLSPACING="0" STYLE="width: 100%; border-collapse: collapse; font: 8pt Times New Roman, Times, Serif">
<TR STYLE="vertical-align: bottom">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD STYLE="text-align: right">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD STYLE="text-align: right">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: white">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD COLSPAN="3" STYLE="border-bottom: windowtext 0.5pt solid; font-weight: bold; text-align: center">For the Year Ended December 31,</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: white">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD STYLE="border-bottom: windowtext 0.5pt solid; font-weight: bold; text-align: center">2011</TD>
    <TD STYLE="font-weight: bold; text-align: center">&nbsp;</TD>
    <TD STYLE="border-bottom: windowtext 0.5pt solid; font-weight: bold; text-align: center">2010</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: white">
    <TD STYLE="text-align: left">Operating Activities:</TD>
    <TD>&nbsp;</TD>
    <TD STYLE="text-align: right">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD STYLE="text-align: right">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom">
    <TD STYLE="background-color: white">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Net loss attributable to the Company</TD>
    <TD STYLE="background-color: white">&nbsp;</TD>
    <TD STYLE="text-align: right">&nbsp;$&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; (824,880)</TD>
    <TD STYLE="background-color: white">&nbsp;</TD>
    <TD STYLE="text-align: right">&nbsp;$&nbsp;&nbsp;&nbsp;&nbsp; (1,543,179)</TD></TR>
<TR STYLE="vertical-align: bottom">
    <TD STYLE="background-color: white">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Less: Net Income( loss) attributable to non-controlliong interest</TD>
    <TD STYLE="background-color: white">&nbsp;</TD>
    <TD STYLE="border-bottom: windowtext 0.5pt solid; text-align: right">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; (1,630)</TD>
    <TD STYLE="background-color: white">&nbsp;</TD>
    <TD STYLE="border-bottom: windowtext 0.5pt solid; text-align: right">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; 4,256</TD></TR>
<TR STYLE="vertical-align: bottom">
    <TD STYLE="background-color: white">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Net loss</TD>
    <TD STYLE="background-color: white">&nbsp;</TD>
    <TD STYLE="text-align: right">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; (826,510)</TD>
    <TD STYLE="background-color: white">&nbsp;</TD>
    <TD STYLE="text-align: right">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; (1,538,923)</TD></TR>
<TR STYLE="vertical-align: bottom">
    <TD DIR="LTR" STYLE="background-color: white">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Adjustments to reconcile net loss to net cash (used in) operating activities:</TD>
    <TD STYLE="background-color: white">&nbsp;</TD>
    <TD STYLE="text-align: right">&nbsp;</TD>
    <TD STYLE="background-color: white">&nbsp;</TD>
    <TD STYLE="text-align: right">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom">
    <TD STYLE="background-color: white">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Depreciation and amortization</TD>
    <TD STYLE="background-color: white">&nbsp;</TD>
    <TD STYLE="text-align: right">70,128</TD>
    <TD STYLE="background-color: white">&nbsp;</TD>
    <TD STYLE="text-align: right">85,921</TD></TR>
<TR STYLE="vertical-align: bottom">
    <TD STYLE="background-color: white">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Bad debt expense</TD>
    <TD STYLE="background-color: white">&nbsp;</TD>
    <TD STYLE="text-align: right">43,900</TD>
    <TD STYLE="background-color: white">&nbsp;</TD>
    <TD STYLE="text-align: right">101,090</TD></TR>
<TR STYLE="vertical-align: bottom">
    <TD STYLE="background-color: white">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Amortization of debt discount and deferred financing charges</TD>
    <TD STYLE="background-color: white">&nbsp;</TD>
    <TD STYLE="text-align: right">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; 16,602</TD>
    <TD STYLE="background-color: white">&nbsp;</TD>
    <TD STYLE="text-align: right">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; 95,000</TD></TR>
<TR STYLE="vertical-align: bottom">
    <TD STYLE="background-color: white">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Common Stock and options issued for services</TD>
    <TD STYLE="background-color: white">&nbsp;</TD>
    <TD STYLE="text-align: right">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; 211,402</TD>
    <TD STYLE="background-color: white">&nbsp;</TD>
    <TD STYLE="text-align: right">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; 445,712</TD></TR>
<TR STYLE="vertical-align: bottom">
    <TD STYLE="background-color: white">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Common Stock issued for settlement of litigation</TD>
    <TD STYLE="background-color: white">&nbsp;</TD>
    <TD STYLE="text-align: right">&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="background-color: white">&nbsp;</TD>
    <TD STYLE="text-align: right">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; 18,000</TD></TR>
<TR STYLE="vertical-align: bottom">
    <TD STYLE="background-color: white">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Common Stock cancelled for acquisition</TD>
    <TD STYLE="background-color: white">&nbsp;</TD>
    <TD STYLE="text-align: right">&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="background-color: white">&nbsp;</TD>
    <TD STYLE="text-align: right">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; (902,500)</TD></TR>
<TR STYLE="vertical-align: bottom">
    <TD STYLE="background-color: white">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Amortization of deferred compensation</TD>
    <TD STYLE="background-color: white">&nbsp;</TD>
    <TD STYLE="text-align: right">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; 52,788</TD>
    <TD STYLE="background-color: white">&nbsp;</TD>
    <TD STYLE="text-align: right">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; 1,232,068</TD></TR>
<TR STYLE="vertical-align: bottom">
    <TD STYLE="background-color: white">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Change in fair market value of derivative liability</TD>
    <TD STYLE="background-color: white">&nbsp;</TD>
    <TD STYLE="text-align: right">&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="background-color: white">&nbsp;</TD>
    <TD STYLE="text-align: right">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; 50,269</TD></TR>
<TR STYLE="vertical-align: bottom">
    <TD>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Decrease in deferred revenue</TD>
    <TD STYLE="background-color: white">&nbsp;</TD>
    <TD STYLE="text-align: right">&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="background-color: white">&nbsp;</TD>
    <TD STYLE="text-align: right">(199,022)</TD></TR>
<TR STYLE="vertical-align: bottom">
    <TD>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Increase in accrued officer's compensation</TD>
    <TD STYLE="background-color: white">&nbsp;</TD>
    <TD STYLE="text-align: right">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; 20,000</TD>
    <TD STYLE="background-color: white">&nbsp;</TD>
    <TD STYLE="text-align: right">&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></TR>
<TR STYLE="vertical-align: bottom">
    <TD STYLE="background-color: white">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Loss on sale of property and equipment</TD>
    <TD STYLE="background-color: white">&nbsp;</TD>
    <TD STYLE="text-align: right">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; 1,119</TD>
    <TD STYLE="background-color: white">&nbsp;</TD>
    <TD STYLE="text-align: right">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; 6,079</TD></TR>
<TR STYLE="vertical-align: bottom">
    <TD STYLE="background-color: white">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Changes in operating assets and liabilities:</TD>
    <TD STYLE="background-color: white">&nbsp;</TD>
    <TD STYLE="text-align: right">&nbsp;</TD>
    <TD STYLE="background-color: white">&nbsp;</TD>
    <TD STYLE="text-align: right">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom">
    <TD STYLE="background-color: white">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Decrease in security deposits</TD>
    <TD STYLE="background-color: white">&nbsp;</TD>
    <TD STYLE="text-align: right">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; 4,916</TD>
    <TD STYLE="background-color: white">&nbsp;</TD>
    <TD STYLE="text-align: right">&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></TR>
<TR STYLE="vertical-align: bottom">
    <TD STYLE="background-color: white">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Decrease in Accounts Receivable</TD>
    <TD STYLE="background-color: white">&nbsp;</TD>
    <TD STYLE="text-align: right">&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="background-color: white">&nbsp;</TD>
    <TD STYLE="text-align: right">5,570</TD></TR>
<TR STYLE="vertical-align: bottom">
    <TD STYLE="background-color: white">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; (Increase) Decrease in prepaid expenses and other current assets</TD>
    <TD STYLE="background-color: white">&nbsp;</TD>
    <TD STYLE="text-align: right">(12,657)</TD>
    <TD STYLE="background-color: white">&nbsp;</TD>
    <TD STYLE="text-align: right">122,466</TD></TR>
<TR STYLE="vertical-align: bottom">
    <TD STYLE="background-color: white">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Increase in Accounts Payable and Accrued Liabilities</TD>
    <TD STYLE="background-color: white">&nbsp;</TD>
    <TD STYLE="text-align: right">142,929</TD>
    <TD STYLE="background-color: white">&nbsp;</TD>
    <TD STYLE="text-align: right">146,250</TD></TR>
<TR STYLE="vertical-align: bottom">
    <TD STYLE="background-color: white">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Increase(decrease) in customer deposits payable</TD>
    <TD STYLE="background-color: white">&nbsp;</TD>
    <TD STYLE="text-align: right">(53,940)</TD>
    <TD STYLE="background-color: white">&nbsp;</TD>
    <TD STYLE="text-align: right">53,940</TD></TR>
<TR STYLE="vertical-align: bottom">
    <TD STYLE="text-align: left; background-color: white">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Net cash (used in) operating activities</TD>
    <TD STYLE="background-color: white">&nbsp;</TD>
    <TD STYLE="border-top: windowtext 0.5pt solid; border-bottom: windowtext 0.5pt solid; text-align: right">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; (329,323)</TD>
    <TD STYLE="background-color: white">&nbsp;</TD>
    <TD STYLE="border-top: windowtext 0.5pt solid; border-bottom: windowtext 0.5pt solid; text-align: right">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; (278,080)</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: white">
    <TD STYLE="text-align: left">Investing Activities:</TD>
    <TD>&nbsp;</TD>
    <TD STYLE="text-align: right">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD STYLE="text-align: right">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom">
    <TD STYLE="background-color: white">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Proceeds from liquidation of investments</TD>
    <TD STYLE="background-color: white">&nbsp;</TD>
    <TD STYLE="text-align: right">&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="background-color: white">&nbsp;</TD>
    <TD STYLE="text-align: right">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; 3,563,062</TD></TR>
<TR STYLE="vertical-align: bottom">
    <TD STYLE="background-color: white">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Capital expenditures</TD>
    <TD STYLE="background-color: white">&nbsp;</TD>
    <TD STYLE="text-align: right">&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="background-color: white">&nbsp;</TD>
    <TD STYLE="text-align: right">(46,248)</TD></TR>
<TR STYLE="vertical-align: bottom">
    <TD STYLE="background-color: white">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Proceeds from sale of property and equipment</TD>
    <TD STYLE="background-color: white">&nbsp;</TD>
    <TD STYLE="text-align: right">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; 20,000</TD>
    <TD STYLE="background-color: white">&nbsp;</TD>
    <TD STYLE="text-align: right">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; 120,505</TD></TR>
<TR STYLE="vertical-align: bottom">
    <TD STYLE="background-color: white">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Effect of subsidiary disposition</TD>
    <TD STYLE="background-color: white">&nbsp;</TD>
    <TD STYLE="text-align: right">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; (5,898)</TD>
    <TD STYLE="background-color: white">&nbsp;</TD>
    <TD STYLE="text-align: right">&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></TR>
<TR STYLE="vertical-align: bottom">
    <TD STYLE="background-color: white">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Net cash provided by investing activities</TD>
    <TD STYLE="background-color: white">&nbsp;</TD>
    <TD STYLE="border-top: windowtext 0.5pt solid; border-bottom: windowtext 0.5pt solid; text-align: right">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; 14,102</TD>
    <TD STYLE="background-color: white">&nbsp;</TD>
    <TD STYLE="border-top: windowtext 0.5pt solid; border-bottom: windowtext 0.5pt solid; text-align: right">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; 3,637,319</TD></TR>
<TR STYLE="vertical-align: bottom">
    <TD STYLE="background-color: white">Financing Activities:</TD>
    <TD STYLE="background-color: white">&nbsp;</TD>
    <TD STYLE="text-align: right">&nbsp;</TD>
    <TD STYLE="background-color: white">&nbsp;</TD>
    <TD STYLE="text-align: right">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom">
    <TD STYLE="background-color: white">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Cash Overdraft</TD>
    <TD STYLE="background-color: white">&nbsp;</TD>
    <TD STYLE="text-align: right">1309</TD>
    <TD STYLE="background-color: white">&nbsp;</TD>
    <TD STYLE="text-align: right">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom">
    <TD STYLE="background-color: white">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Payment for Notes Receivable</TD>
    <TD STYLE="background-color: white">&nbsp;</TD>
    <TD STYLE="text-align: right">&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="background-color: white">&nbsp;</TD>
    <TD STYLE="text-align: right">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; (20,000)</TD></TR>
<TR STYLE="vertical-align: bottom">
    <TD STYLE="background-color: white">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Proceeds from the sale of Common Stock</TD>
    <TD STYLE="background-color: white">&nbsp;</TD>
    <TD STYLE="text-align: right">127,500</TD>
    <TD STYLE="background-color: white">&nbsp;</TD>
    <TD STYLE="text-align: right">325,000</TD></TR>
<TR STYLE="vertical-align: bottom">
    <TD>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Redemption of Series B preferred stock</TD>
    <TD>&nbsp;</TD>
    <TD STYLE="text-align: right">&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>&nbsp;</TD>
    <TD STYLE="text-align: right">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; (3,250,000)</TD></TR>
<TR STYLE="vertical-align: bottom">
    <TD>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Redemption of common stock</TD>
    <TD>&nbsp;</TD>
    <TD STYLE="text-align: right">&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>&nbsp;</TD>
    <TD STYLE="text-align: right">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; (353,062)</TD></TR>
<TR STYLE="vertical-align: bottom">
    <TD>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Proceeds from loan payables</TD>
    <TD>&nbsp;</TD>
    <TD STYLE="text-align: right">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; 58,310</TD>
    <TD>&nbsp;</TD>
    <TD STYLE="text-align: right">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; 73,992</TD></TR>
<TR STYLE="vertical-align: bottom">
    <TD>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Payments of loan payables</TD>
    <TD>&nbsp;</TD>
    <TD STYLE="text-align: right">&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>&nbsp;</TD>
    <TD STYLE="text-align: right">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; (43,334)</TD></TR>
<TR STYLE="vertical-align: bottom">
    <TD STYLE="background-color: white">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Proceeds from convertible notes payable</TD>
    <TD STYLE="background-color: white">&nbsp;</TD>
    <TD STYLE="text-align: right">75,000</TD>
    <TD STYLE="background-color: white">&nbsp;</TD>
    <TD STYLE="text-align: right">95,000</TD></TR>
<TR STYLE="vertical-align: bottom">
    <TD STYLE="background-color: white">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Payments of convertible notes payable</TD>
    <TD STYLE="background-color: white">&nbsp;</TD>
    <TD STYLE="text-align: right">&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="background-color: white">&nbsp;</TD>
    <TD STYLE="text-align: right">(83,000)</TD></TR>
<TR STYLE="vertical-align: bottom">
    <TD STYLE="background-color: white">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Payments of notes payable</TD>
    <TD STYLE="background-color: white">&nbsp;</TD>
    <TD STYLE="text-align: right">(8,077)</TD>
    <TD STYLE="background-color: white">&nbsp;</TD>
    <TD STYLE="text-align: right">(56,130)</TD></TR>
<TR STYLE="vertical-align: bottom">
    <TD STYLE="background-color: white">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Net cash provided by (used in) financing activities</TD>
    <TD STYLE="background-color: white">&nbsp;</TD>
    <TD STYLE="border-top: windowtext 0.5pt solid; border-bottom: windowtext 0.5pt solid; text-align: right">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; 254,042</TD>
    <TD STYLE="background-color: white">&nbsp;</TD>
    <TD STYLE="border-top: windowtext 0.5pt solid; border-bottom: windowtext 0.5pt solid; text-align: right">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; (3,311,534)</TD></TR>
<TR STYLE="vertical-align: bottom">
    <TD STYLE="background-color: white">Effect of exchange rate change</TD>
    <TD STYLE="background-color: white">&nbsp;</TD>
    <TD STYLE="border-bottom: windowtext 0.5pt solid; border-top-color: windowtext; border-top-width: 0.5pt; text-align: right">&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="background-color: white">&nbsp;</TD>
    <TD STYLE="border-bottom: windowtext 0.5pt solid; border-top-color: windowtext; border-top-width: 0.5pt; text-align: right">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; 348</TD></TR>
<TR STYLE="vertical-align: bottom">
    <TD STYLE="background-color: white">Net increase (decrease) in cash and cash equivalents</TD>
    <TD STYLE="background-color: white">&nbsp;</TD>
    <TD STYLE="text-align: right">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; (61,179)</TD>
    <TD STYLE="background-color: white">&nbsp;</TD>
    <TD STYLE="text-align: right">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; 48,053</TD></TR>
<TR STYLE="vertical-align: bottom">
    <TD STYLE="background-color: white">Cash and cash equivalents at beginning of period</TD>
    <TD STYLE="background-color: white">&nbsp;</TD>
    <TD STYLE="text-align: right">61,179</TD>
    <TD STYLE="background-color: white">&nbsp;</TD>
    <TD STYLE="text-align: right">13,126</TD></TR>
<TR STYLE="vertical-align: bottom">
    <TD STYLE="background-color: white">Cash and cash equivalents at end of period</TD>
    <TD STYLE="background-color: white">&nbsp;</TD>
    <TD STYLE="border-top: windowtext 0.5pt solid; border-bottom: windowtext 2pt double; text-align: right">&nbsp;$&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; -&nbsp;&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD STYLE="border-top: windowtext 0.5pt solid; border-bottom: windowtext 2pt double; text-align: right">&nbsp;$&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; 61,179</TD></TR>
<TR STYLE="vertical-align: bottom">
    <TD STYLE="background-color: white">Cash paid during the period for:</TD>
    <TD STYLE="background-color: white">&nbsp;</TD>
    <TD STYLE="text-align: right">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD STYLE="text-align: right">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom">
    <TD STYLE="background-color: white">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Interest expense</TD>
    <TD STYLE="background-color: white">&nbsp;</TD>
    <TD STYLE="text-align: right">&nbsp;$&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; 11,351</TD>
    <TD>&nbsp;</TD>
    <TD STYLE="text-align: right">&nbsp;$&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; 34,275</TD></TR>
<TR STYLE="vertical-align: bottom">
    <TD STYLE="background-color: white">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Income taxes</TD>
    <TD STYLE="background-color: white">&nbsp;</TD>
    <TD STYLE="text-align: right">&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>&nbsp;</TD>
    <TD STYLE="text-align: right">&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></TR>
</TABLE>


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

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: center">See accompanying notes to consolidated
financial statements.&nbsp;</P>

<P STYLE="font: 9pt Arial; margin: 0; text-align: center; color: Red"></P>

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

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

<P STYLE="font: 12pt Times New Roman, Times, Serif; margin: 0; text-align: center">&nbsp;</P>

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

<P STYLE="font: 9pt Arial; margin: 0; text-align: center; color: Red"></P>

<TABLE BORDER="0" CELLPADDING="0" CELLSPACING="0" STYLE="width: 100%; border-collapse: collapse; font: 8pt Times New Roman, Times, Serif">
<TR STYLE="vertical-align: bottom; background-color: white">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD COLSPAN="3" STYLE="border-bottom: windowtext 0.5pt solid; font-weight: bold; text-align: center">For the Year Ended December 31,</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: white">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD STYLE="width: 65pt; border-bottom: windowtext 0.5pt solid; font-weight: bold; text-align: center">2011</TD>
    <TD STYLE="width: 11pt; font-weight: bold; text-align: center">&nbsp;</TD>
    <TD STYLE="width: 65pt; border-bottom: windowtext 0.5pt solid; font-weight: bold; text-align: center">2010</TD></TR>
<TR STYLE="vertical-align: bottom">
    <TD STYLE="background-color: white">Supplemental Disclosure of Cash Flow Information:</TD>
    <TD STYLE="background-color: white">&nbsp;</TD>
    <TD STYLE="color: white">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD STYLE="color: white">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom">
    <TD STYLE="background-color: white">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Non-Cash Financing Activities:</TD>
    <TD STYLE="background-color: white">&nbsp;</TD>
    <TD STYLE="color: white">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD STYLE="color: white">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom">
    <TD>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Issuance of Common Stock for payment of Accounts Payable</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;$&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; 20,875</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;$&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; 6,000</TD></TR>
<TR STYLE="vertical-align: bottom">
    <TD>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Forgiveness of accrued compensation to related party</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; 700,269</TD>
    <TD>&nbsp;</TD>
    <TD>&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></TR>
<TR STYLE="vertical-align: bottom">
    <TD>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Common stock issued for payment of accrued compensation</TD>
    <TD>&nbsp;</TD>
    <TD>&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>&nbsp;</TD>
    <TD>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; 125,000</TD></TR>
<TR STYLE="vertical-align: bottom">
    <TD>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Dividends payable on preferred stock - Series B</TD>
    <TD>&nbsp;</TD>
    <TD>&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>&nbsp;</TD>
    <TD>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; 60,102</TD></TR>
<TR STYLE="vertical-align: bottom">
    <TD>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Discount on convertible notes payable</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; 75,000</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; 95,000</TD></TR>
<TR STYLE="vertical-align: bottom">
    <TD>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Reversal of dividends payable on preferred stock - Series B</TD>
    <TD>&nbsp;</TD>
    <TD>&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>&nbsp;</TD>
    <TD>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; 265,787</TD></TR>
<TR STYLE="vertical-align: bottom">
    <TD>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Issuance of Common Stock upon conversion of convertible debt</TD>
    <TD>&nbsp;</TD>
    <TD>&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>&nbsp;</TD>
    <TD>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; 12,000</TD></TR>
<TR STYLE="vertical-align: bottom">
    <TD>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Issuance of Common Stock as consideration for payment of loans payable</TD>
    <TD>&nbsp;</TD>
    <TD>&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>&nbsp;</TD>
    <TD>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; 7,500</TD></TR>
<TR STYLE="vertical-align: bottom">
    <TD COLSPAN="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Common stock issued as consideration for accrued compensation to related party</TD>
    <TD>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; 366,000</TD>
    <TD>&nbsp;</TD>
    <TD>&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></TR>
<TR STYLE="vertical-align: bottom">
    <TD>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Accounts payable applied to option exercise</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; 1,000</TD>
    <TD>&nbsp;</TD>
    <TD>&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></TR>
</TABLE>


<P STYLE="font: 9pt Arial; margin: 0; text-align: center; color: Red"></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: center">See accompanying notes to consolidated
financial statements.&nbsp;</P>

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



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

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

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

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

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

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

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0"><B>NOTE 1. DESCRIPTION OF BUSINESS</B></P>

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

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0; text-indent: 0.25in">TOMI Environmental Solutions, Inc. is a global decontamination and infectious disease control company, providing green energy-efficient environmental solutions
for indoor surface decontamination through sales and licensing of our premier platform of Hydrogen
Peroxide aerosols, Ultra-Violet Ozone Generators and Ultra-Violet Germicidal Irradiation (&quot;UVGI&quot;) products and technologies.</P>

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

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0; text-indent: 0.25in">Our products are designed to service a broad
spectrum of commercial structures including medical facilities, office buildings, hotel and motel rooms, schools, restaurants,
meat and produce processing facilities, military barracks, and athletic facilities. Our products and services have also been used
in single-family homes and multi-unit residences.</P>

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

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0; text-indent: 0.25in">In July 2010, the Company established TOMI
Environmental Solutions-Singapore Pte, Ltd. (&quot;TOMI-Singapore&quot;), a subsidiary with an ownership interest of 55% and began
operations in Singapore. In November 2011 the Company disposed of TOMI Singapore.</P>

<P STYLE="font: 12pt Times New Roman, Times, Serif; margin: 0">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0"><B>NOTE 2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES AND BASIS
OF PRESENTATION</B></P>

<P STYLE="font: 5pt Times New Roman, Times, Serif; margin: 0">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0; text-indent: 9pt"><I>Going Concern</I></P>

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

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0; text-indent: 0.25in">The Company had limited revenues during the
years ended December 31, 2011 and 2010 and has incurred a net loss of $824,880 for the year ended December 31, 2011. The Company
has not been able to generate positive cash from operations for the years ended December 31, 2011 and 2010. In addition, at December
31, 2011 the Company has a negative working capital of $379,942 and stockholders' deficiency of $271,182. These factors raise substantial
doubt about the Company's ability to continue as a going concern.</P>

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

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0; text-indent: 0.25in">The Company plans on funding operations and
liquidity needs from licensing arrangements, debt financing and sales of its common stock and notes convertible into common stock.
There can be no assurance that additional funds required for continued operations during the next year or thereafter will be generated
from our operations.</P>

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

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0; text-indent: 0.25in">Should the Company seek additional funds from
external sources such as debt or additional equity financings or other potential sources, there can be no assurance that such funds
will be available on terms acceptable to the Company or that they will not have a significant dilutive effect on the Company's
existing stockholders. The inability to generate cash flow from operations or to raise sufficient capital from external sources
would force the Company to substantially curtail or cease operations and would, therefore, have a material adverse effect on its
business.</P>

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

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0; text-indent: 0.25in">Accordingly, the Company's existence is dependent
on management's ability to develop profitable operations and resolve its liquidity problems. The accompanying financial statements
do not include any adjustments related to the recoverability or classification of asset-carrying amounts or the amounts and classification
of liabilities that may result should the Company be unable to continue as a going concern.</P>

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

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0; text-indent: 0.25in">The Company plans to raise additional funds
through debt and equity placements and increase revenue through new product development. In the event that the Company cannot generate
sufficient cash flow from its operations or raise proceeds from offering debt or equity securities, the Company may be forced to
curtail or cease its activities. There can be no assurance that the Company will be successful in achieving its goals.</P>

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

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

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

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0; text-indent: 0.25in">The accompanying financial statements include
the accounts of TOMI (a Florida Corporation) (Parent), its wholly owned subsidiary, TOMI Environmental Solutions, Inc. (a Nevada
Corporation) and through November 2011 its 55% owned subsidiary, TOMI-Singapore. In November 2011 the Company disposed TOMI-Singapore.
The Company&rsquo;s 55% owned subsidiary, TOMI-Environmental-China (TOMI-China) has been dormant since its formation in April 2011.
All significant intercompany accounts and transactions have been eliminated in consolidation.</P>

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

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

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

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0; text-indent: 45.8pt">The preparation of consolidated financial statements
in conformity with U.S. generally accepted accounting principles requires us to make estimates and assumptions that affect the
amounts reported and disclosed in the financial statements and the accompanying notes. Actual results could differ materially from
these estimates. On an ongoing basis, we evaluate our estimates, including those related to the accounts receivable, fair values
of financial instruments, intangible assets, useful lives of intangible assets and property and equipment, fair values of stock-based
awards, income taxes, and contingent liabilities, among others. We base our estimates on historical experience and on various other
assumptions that are believed to be reasonable, the results of which form the basis for making judgments about the carrying values
of assets and liabilities.</P>

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

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

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

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0; text-indent: 0.25in">Certain reclassifications have been made to
prior-year comparative financial statements to conform to the current year presentation. These reclassifications had no effect
on previously reported results of operations or financial position.</P>

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

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

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

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0; text-indent: 45.8pt">The authoritative guidance for fair value measurements
defines fair value as the exchange price that would be received for an asset or paid to transfer a liability (an exit price) in
the principal or the most advantageous market for the asset or liability in an orderly transaction between market participants
on the measurement date. Market participants are buyers and sellers in the principal market that are (i) independent, (ii) knowledgeable,
(iii) able to transact, and (iv) willing to transact. The guidance describes a fair value hierarchy based on the levels of inputs,
of which the first two are considered observable and the last unobservable, that may be used to measure fair value which are the
following:</P>

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

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0 0 0 0.75in; text-indent: -0.5in">Level 1 Quoted prices in active
markets for identical assets or liabilities.</P>

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

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0 0 0 0.75in; text-indent: -0.5in">Level 2 Inputs other than Level
1 that are observable, either directly or indirectly, such as quoted prices for similar assets or liabilities; quoted prices in
markets that are not active, or other inputs that are observable or corroborated by observable market data or substantially the
full term of the assets or liabilities.</P>

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

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0 0 0 0.75in; text-indent: -0.5in">Level 3 Unobservable inputs that
are supported by little or no market activity and that are significant to the value of the assets or liabilities.</P>

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

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0; text-indent: 45.8pt">The Company&rsquo;s financial instruments include
cash and equivalents, accounts payable and accrued expenses, loans payable and convertible notes. All these items were determined
to be Level 1 fair value measurements.</P>

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

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0; text-indent: 45.8pt">The carrying amounts of cash and equivalents,
accounts payable and accrued expenses and loans payable approximated fair value because of the short maturity of these instruments.
The recorded value of long-term debt approximates its fair value as the terms and rates approximate market rates.</P>

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

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

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

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0; text-indent: 45.8pt">For purposes of the statement of cash flows,
cash and cash equivalents includes cash on hand held at financial institutions and other liquid investments with original maturities
of three months or less. Amounts held at financial institutions did not exceed federally insured limits at December 31, 2011.</P>

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

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

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

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0; text-indent: 45.8pt">We account for property and equipment at cost
less accumulated depreciation. We compute depreciation using the straight-line method over the estimated useful lives of the assets,
generally three to five years. Depreciation for equipment, furniture and fixtures and vehicles commences once placed in service
for its intended use.</P>

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

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0"><B>Long-Lived Assets Including Goodwill and Other Acquired Intangible
Assets </B></P>

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

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0; text-indent: 45.8pt">The Company reviews its property and equipment
and intangible assets for impairment whenever events or changes in circumstances indicate the carrying amount of an asset may not
be recoverable. We measure recoverability of these assets by comparing the carrying amounts to the future undiscounted cash flows
the assets are expected to generate. If property and equipment and intangible assets are considered to be impaired, the impairment
to be recognized equals the amount by which the carrying value of the asset exceeds its fair market value. We have made no material
adjustments to our long-lived assets in any of the years presented.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0; text-indent: 45.8pt">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0; text-indent: 45.8pt"></P>

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<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0; text-indent: 45.8pt">&nbsp;</P>

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

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0"><B>Income (Loss) Per Share</B></P>

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

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0; text-indent: 45.8pt">The computation of loss per share is based
on the weighted average number of common shares outstanding during the period presented. Diluted loss per share is the same as
basic loss per share as the effect of potentially dilutive securities (Series A Preferred Stock, options, convertible debt and
warrants: 2,445,000 and 550,000 shares at December 31, 2011 and 2010 respectively) would be anti-dilutive.</P>

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

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

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

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0; text-indent: 0.5in">For revenue from services and product sales,
the Company recognized revenue in accordance with Staff Accounting Bulletin No. 104, &quot;Revenue Recognition&quot; (SAB No. 104),
which superseded Staff Accounting Bulletin No. 101, &quot;Revenue Recognition in Financial Statements&quot; (SAB No. 101). SAB
No. 104 requires that four basic criteria must be met before revenue can be recognized: (1) persuasive evidence of an arrangement
exists; (2) service has been rendered or delivery has occurred; (3) the selling price is fixed and determinable; and (4) collectibility
is reasonably assured. Determination of criteria (3) and (4) are based on management's judgment regarding the fixed nature of the
selling prices of the services rendered or products delivered and the collectibility of those amounts. Provisions for discounts
to customers, and allowance, and other adjustments will be provided for in the same period the related sales are recorded.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 13.5pt 0 0"><B>Stock-based Compensation </B></P>

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

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0; text-indent: 45.8pt">We account for stock-based compensation in
accordance with FASB ASC 718, Compensation - Stock Compensation. Under the provisions of FASB ASC 718, stock-based compensation
cost is estimated at the grant date based on the award's fair value and is recognized as expense over the requisite service period.
The Company currently has one active stock-based compensation plan, TOMI Environmental Solutions, Inc. Stock Option and Restricted
Stock Plan (the &quot;Plan&quot;). The Plan calls for the Company through a committee of its Board of Directors, to issue up to
2,500,000 shares of restricted common stock or stock options. The Company generally issues grants to its employees, consultants,
and board members. Stock options are granted with an exercise price equal to the closing price of its common stock on the date
of grant with a term no greater</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0">than 10 years. Generally, stock options vest over two to four years.
Incentive stock options granted to shareholders who own 10% or more of the Company's outstanding stocks are granted at an exercise
price that may not be less than 110% of the closing price of the Company's common stock on the date of grant and have a term no
greater than five years. At the date of grant, the Company determines the fair value of the stock option award and recognizes compensation
expense over the requisite service period, which is generally the vesting period of the award. The fair value of the stock option
award is calculated using the Black-Scholes option-pricing model. As of December 31, 2011, the Company has 60,000 options outstanding
and 941,500 common shares issued under the Plan.</P>

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

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

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

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0; text-indent: 45.8pt">The Company follows the authoritative guidance
for accounting for debt discount and valuation of detachable warrants. The Company recognized the value of detachable warrants
issued in conjunction with issuance of the convertible Debenture note. The Company valued the warrants using the Black-Scholes
pricing model. The Company recorded the warrant relative fair value as an increase to additional paid-in capital and discount against
the related debt. The discount attributed to the value of the warrants is amortized over the term of the underlying debt.</P>

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

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

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

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0; text-indent: 45.8pt">The Company follows the authoritative guidance
for accounting for income taxes. Deferred income taxes are determined using the asset and liability method. Under this method,
deferred tax assets and liabilities are determined based on differences between financial reporting and tax bases of assets and
liabilities and are measured using the enacted tax rates and laws that will be in effect when the differences are expected to reverse.
A valuation allowance is recorded when the expected recognition of a deferred tax asset is considered to be unlikely. The guidance
also requires that the Company determine whether it is more likely than not that a tax position will not be sustained upon examination
by the appropriate taxing authority.</P>

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

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

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

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0; text-indent: 0.25in">Comprehensive income is calculated in accordance
with ASC 220 &quot;Comprehensive Income&quot;. ASC 220 requires the disclosure of all components of comprehensive income. As of
December 31, 2010, comprehensive income related to foreign currency translation adjustment relating to the Company's Singapore
subsidiary.</P>

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

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

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

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0; text-indent: 0.25in">Assets and liabilities of the Company's Singapore
subsidiary were translated to US dollars using the current exchange rate for assets and liabilities. Amounts on the statement of
operations are translated at the average exchange rates during the year. Gains or losses resulting from foreign currency translation
are included as a component of other comprehensive income (loss).</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 13.5pt 0 0"><B>Advertising and Promotional Expenses </B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 4.5pt 0 0; text-indent: 24.5pt">The Company expenses advertising costs
in the period in which they are incurred. For the years ended December&nbsp;31, 2011 and 2010, advertising expenses totaled approximately
$2,200 and $12,000, respectively.<FONT STYLE="font-family: Arial, Helvetica, Sans-Serif"> </FONT></P>

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

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

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

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0; text-indent: 0.25in">In January 2010, the FASB issued Accounting
Standards Update 2010-06, Fair Value Measurements and Disclosures (Topic 820): Improving Disclosures about Fair Value Measurements.
This guidance amends the disclosure requirements related to recurring and nonrecurring fair value measurements and requires new
disclosures on the transfers of assets and liabilities between Level 1 (quoted prices in active market for identical assets or
liabilities) and Level 2 (significant other observable inputs) of the fair value measurement hierarchy, including the reasons and
the timing of the transfers. Additionally, the guidance requires a roll forward of activities on purchases, sales, issuance and
settlements of the assets and liabilities measured using significant unobservable inputs (Level 3 fair value measurements). The
guidance became effective for the reporting period beginning January 1, 2010, except for the disclosure on the roll forward activities
for Level 3 fair value measurements, which will become effective for the reporting period beginning January 1, 2011. The Company's
adoption of this updated guidance was not significant to our consolidated financial statements.</P>

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

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0; text-indent: 0.25in">In February 2010, the FASB issued updated guidance
related to subsequent events. As a result of this updated guidance, public filers must still evaluate subsequent events through
the issuance date of their financial statements; however, they are not required to disclose the date in which subsequent events
were evaluated in their financial statements disclosures. This amended guidance became effective upon its issuance on February
24, 2010 at which time the Company adopted this updated guidance.</P>

<P STYLE="font: 12pt Times New Roman, Times, Serif; margin: 0">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0; text-indent: 45.8pt">In May 2011, the Financial Accounting Standards
Board (&ldquo;FASB&rdquo;) issued Accounting Standards Update (&ldquo;ASU&rdquo;) 2011-04, which updated the guidance in ASC Topic
820, <I>Fair Value Measurement.</I> The amendments in this ASU generally represent clarifications of Topic 820, but also include
some instances where a particular principle or requirement for measuring fair value or disclosing information about fair value
measurements has changed. This update results in common principles and requirements for measuring fair value and for disclosing
information about fair value measurements in accordance with U.S. GAAP and International Financial Reporting Standards. The amendments
in this ASU are to be applied prospectively. For public entities, the amendments are effective for interim and annual periods beginning
after December 15, 2011, and early application is not permitted. ASU 2011-04 is not expected to have a material impact on the Company&rsquo;s
financial position or results of operations.</P>

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

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0"><B>NOTE 3. PROPERTY AND EQUIPMENT</B></P>

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

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0; text-indent: 0.25in">Property and equipment consists of the following:</P>

<TABLE CELLPADDING="0" CELLSPACING="0" STYLE="width: 100%">
<TR STYLE="vertical-align: bottom">
    <TD>&nbsp;</TD>
    <TD STYLE="text-align: center; border-bottom: Black 1pt solid">December 31,</TD>
    <TD STYLE="text-align: center; border-bottom: Black 1pt solid">December 31,</TD></TR>
<TR STYLE="vertical-align: bottom">
    <TD>&nbsp;</TD>
    <TD STYLE="text-align: center; border-bottom: Black 1pt solid">2011</TD>
    <TD STYLE="text-align: center; border-bottom: Black 1pt solid">2010</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,238,255)">
    <TD STYLE="width: 68%; text-align: left; padding-left: 5.4pt">Furniture and fixture</TD>
    <TD STYLE="width: 16%; text-align: right">$18,937</TD>
    <TD STYLE="width: 16%; text-align: right">$18,937</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD STYLE="padding-left: 5.4pt">Equipment</TD>
    <TD STYLE="text-align: right">102,861</TD>
    <TD STYLE="text-align: right">147,049</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,238,255)">
    <TD STYLE="padding-left: 5.4pt">Vehicles</TD>
    <TD STYLE="border-bottom: Black 1pt solid; text-align: right">88,687</TD>
    <TD STYLE="border-bottom: Black 1pt solid; text-align: right">132,055</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD STYLE="padding-left: 5.4pt">&nbsp;</TD>
    <TD STYLE="text-align: right">210,485</TD>
    <TD STYLE="text-align: right">298,041</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,238,255)">
    <TD STYLE="text-align: left; padding-left: 5.4pt">Less: Accumulated depreciation</TD>
    <TD STYLE="border-bottom: Black 1pt solid; text-align: right">181,172</TD>
    <TD STYLE="border-bottom: Black 1pt solid; text-align: right">144,403</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD STYLE="padding-left: 5.4pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 2pt double; text-align: right">$29,313</TD>
    <TD STYLE="border-bottom: Black 2pt double; text-align: right">$153,638</TD></TR>
</TABLE>

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

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0; text-indent: 0.25in">Depreciation was $59,018 and $74,814 for the
years ended December 31, 2011 and 2010, respectively.</P>

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

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

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

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

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0"><B>NOTE 4. INTANGIBLE ASSETS</B></P>

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

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0; text-indent: 45.8pt">Definite life intangible assets consist of
the following:</P>

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

<TABLE CELLPADDING="0" CELLSPACING="0" STYLE="width: 100%">
<TR STYLE="vertical-align: bottom">
    <TD>&nbsp;</TD>
    <TD STYLE="text-align: center">December 31,</TD>
    <TD STYLE="text-align: center">December 31,</TD></TR>
<TR STYLE="vertical-align: bottom">
    <TD>&nbsp;</TD>
    <TD STYLE="text-align: center; border-bottom: Black 1pt solid">2011</TD>
    <TD STYLE="text-align: center; border-bottom: Black 1pt solid">2010</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,238,255)">
    <TD STYLE="width: 68%; text-align: left; padding-left: 5.4pt">Intellectual property and trademarks</TD>
    <TD STYLE="width: 16%; text-align: right">$111,100</TD>
    <TD STYLE="width: 16%; text-align: right">$111,100</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD STYLE="padding-left: 5.4pt">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,238,255)">
    <TD STYLE="text-align: left; padding-left: 5.4pt">Less: Accumulated Amortization</TD>
    <TD STYLE="border-bottom: Black 1pt solid; text-align: right">30,551</TD>
    <TD STYLE="border-bottom: Black 1pt solid; text-align: right">19,441</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD STYLE="padding-left: 5.4pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 2pt double; text-align: right">$80,549</TD>
    <TD STYLE="border-bottom: Black 2pt double; text-align: right">$91,659</TD></TR>
</TABLE>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0; text-indent: 45.8pt">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0; text-indent: 45.8pt">The Company&rsquo;s definite life intangible
assets are being amortized over their estimated useful lives of ten years. Amortization expense was $11,110 and $11,109 for the
years ended December 31, 2011 and 2010, respectively.</P>

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

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0"><B>NOTE 5. NOTES AND LOANS PAYABLE</B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0; text-indent: 9pt"><I>&nbsp;</I></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0; text-indent: 9pt"><I>Note Payable</I></P>

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

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0; text-indent: 0.25in">The Company financed two field service vehicles
in 2008 using notes payables with various terms. These notes are collateralized by the related field service vehicles. The notes
expire at various times through March 2012 and have interest rates from 8.8% to 10.1% per annum and are payable in monthly installments
of $732 (including principal and interest) and due by March 2012. As of December 31, 2011, the note payable relating to one of
the two field service vehicles has been paid. The remaining note payable will mature in 2012. The note is secured by the vehicle
acquired.</P>

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

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

<TABLE CELLPADDING="0" CELLSPACING="0" STYLE="width: 100%; font: 11pt Calibri, Helvetica, Sans-Serif">
<TR STYLE="vertical-align: bottom">
    <TD>&nbsp;</TD>
    <TD STYLE="text-align: center">December 31,</TD>
    <TD STYLE="text-align: center">December 31,</TD></TR>
<TR STYLE="vertical-align: bottom">
    <TD>&nbsp;</TD>
    <TD STYLE="text-align: center; border-bottom: Black 1pt solid">2011</TD>
    <TD STYLE="text-align: center; border-bottom: Black 1pt solid">2010</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,238,255)">
    <TD>&nbsp;</TD>
    <TD STYLE="text-align: center">&nbsp;</TD>
    <TD STYLE="text-align: center">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD STYLE="width: 68%; text-align: left">Total vehicle note</TD>
    <TD STYLE="width: 16%; text-align: right">2,157</TD>
    <TD STYLE="width: 16%; text-align: right">10,234</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,238,255)">
    <TD STYLE="text-align: left">Less: current portion</TD>
    <TD STYLE="border-bottom: Black 1pt solid; text-align: right">2,157</TD>
    <TD STYLE="border-bottom: Black 1pt solid; text-align: right">8,077</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD STYLE="padding-left: -20pt">&nbsp;&nbsp;&nbsp;Long-term portion:</TD>
    <TD STYLE="border-bottom: Black 2pt double; text-align: right">-</TD>
    <TD STYLE="border-bottom: Black 2pt double; text-align: right">2,157</TD></TR>
</TABLE>



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

<P STYLE="font: 9pt Arial; margin: 0; text-align: center; text-indent: 63pt; color: Red"></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0; text-indent: 63pt"><BR>
<I>Convertible Notes Payable</I></P>

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

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0; text-indent: 27pt">On November 21, 2011, we sold a $75,000 convertible
promissory note bearing interest at 10% per annum and maturing on December 31, 2016. The note is convertible at any time, contains
various default provisions and the conversion price is initially $0.05 per share. After June 30, 2012, the conversion price will
at the end of each month adjust to the lower of the current conversion price or 110% of that month&rsquo;s volume weighted average
price as reported by Bloomberg subject to being no lower than $0.005 per shares. Accordingly, a derivative instrument will be established
at that time. The purchaser of the Note also received 375,000 warrants to acquire common shares. The warrants expire on December
31, 2017 and have an initial exercise price which is $0.05 per share and can adjust lower in the same manner as the accompanying
convertible note, thereby becoming a derivative instrument at that time.</P>

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

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0; text-indent: 45.8pt">These warrants and note were valued at $89,999
using the Black-Scholes pricing model with the following assumptions: expected volatility 327%; expected dividend -0-; expected
term 5.12 and 6.12 years; and risk free rate .25%.</P>

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

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0; text-indent: 45.8pt">The Company recorded a deferred debt discount
in the amount of $75,000 and finance charge of $14,999. The deferred debt discount was recorded as a reduction of the carrying
amount of the convertible debt and an addition to paid-in capital. The finance charges were recognized in the current period. Amortization
of the debt discount was $1,602 for the year ended December 31, 2011.</P>

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

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0; text-indent: 9pt"><I>Loans Payable- Officer</I></P>

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

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0; text-indent: 45.8pt">Loans payable to the Company&rsquo;s CEO bear
interest at 5% per annum and are payable on demand. Included in loans payable at December 31, 2011 is accrued interest of $2,690.</P>

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

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0; text-indent: 45.8pt">At December 31, 2010, loans payable of $23,158
included amounts owed to the Company&rsquo;s CEO of $20,658 and $2,500 to a third party.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0; text-indent: 45.8pt">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0; text-indent: 45.8pt"></P>

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<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0; text-indent: 45.8pt">&nbsp;</P>

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

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0"><B>NOTE 6. SHAREHOLDERS' EQUITY</B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0; text-indent: 9pt">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0; text-indent: 0.25in">The Company's Board of Directors may, without
further action by the Company's stockholders, from time to time, direct the issuance of any authorized but unissued or unreserved
shares of preferred stock in series and at the time of issuance, determine the rights, preferences and limitations of each series.
The holders of preferred stock may be entitled to receive a preference payment in the event of any liquidation, dissolution or
winding-up of the Company before any payment is made to the holders of the common stock. Furthermore, the board of directors could
issue preferred stock with voting and other rights that could adversely affect the voting power of the holders of the common stock.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0; text-indent: 9pt"><I>&nbsp;</I></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0; text-indent: 9pt"><I>Convertible Series A Preferred Stock </I></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0; text-indent: 9pt">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0; text-indent: 9pt">The Company has authorized 1,000,000 shares of
Convertible Series A Preferred Stock, $0.001 par value. At December&nbsp;31, 2011 and 2010, there were 510,000 shares issued and
outstanding.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0; text-indent: 0.25in"><I>&#9;</I></P>

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

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

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0; text-indent: 0.25in">The Company has authorized 200,000,000 shares
of common stock, par value $0.01. At December 31, 2011 and 2010, there were 64,629,033 and 48,282,871 shares issued and outstanding,
respectively.</P>

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

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0; text-indent: 0.25in">On April 13, 2010, the Company&rsquo;s Board
of Directors rescinded a transaction entered into in February 2009 with Taurus Global Opportunity Fund, canceled 3,250 shares of
the Series B preferred stock and 350,000 common shares and paid the holders $3,563,062 from the proceeds of the restricted investment.
The accrued dividends on the Series B stopped upon the effective date of the cancellation of the agreement on April 13, 2010 and
the accrued dividend of $265,787 was reversed into additional paid in capital. In connection with this transaction, the Company
recognized a loss on investment of $1,238,652 for the year ended December 31, 2009.</P>

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

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0; text-indent: 0.25in">In July 2010, the Company cancelled 190,000
shares valued at $902,500 due to a recession of the Adtec agreement to acquire 19% of the issued and outstanding member interest
of Adtec. Accordingly, the Company recognized a credit of $902,500 which offset the $902,500 research and development expense originally
recognized in 2009.</P>

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

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0; text-indent: 0.25in">In August 2010, the Company issued to Dr. Shane
2,500,000 shares of common stock as consideration for payment of $125,000 accrued compensation. These shares were valued at $275,000
which was the quoted market value on the date of issuance. Accordingly, the Company recorded compensation expense of $150,000 in
connection with this transaction.</P>

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

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0; text-indent: 0.25in">In September 2010 and in a private placement
transaction, the Company sold 1,875,000 restricted common shares to investors for $75,000.</P>

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

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0; text-indent: 0.25in">In October and November of 2010, a total of
$12,000 principal convertible notes payable were converted into 374,883 common shares.</P>

<P STYLE="font: 12pt Times New Roman, Times, Serif; margin: 0; text-indent: 0.25in">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0; text-indent: 0.25in">In November 2010, and in a private placement
transaction, the company sold 5,555,556 restricted common shares for $250,000.</P>

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

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0; text-indent: 0.25in">In September 2010, the Company issued 300,000
common shares valued at $18,000 in settlement of a lawsuit.</P>

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

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0; text-indent: 0.25in">During the year ended December 31, 2010, the
Company issued 2,989,952 common shares valued at $211,712 as compensation for consulting services.</P>

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

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0; text-indent: 0.25in">During the year ended December 31, 2010, the
Company cancelled 200,000 common shares valued at $40,000 that was previously issued to a consultant due to cancellation of a consulting
agreement. This amount was credited to professional fees. In addition, the Company reversed a liability to issue common stock amounting
to $250,000. This amount has been credited to other general and administrative expenses.</P>

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

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0; text-indent: 0.25in">In December 2010, the Company issued 100,000
and 50,000 shares of common stock as consideration for payment of $5,000 and $2,500 principal loans payable to the Company&rsquo;s
CEO and a third party, respectively.</P>

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

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

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    <DIV STYLE="page-break-before: always; margin-top: 6pt; margin-bottom: 12pt"><TABLE CELLPADDING="0" CELLSPACING="0" STYLE="width: 100%"><TR><TD STYLE="text-align: center; width: 100%">&nbsp;</TD></TR></TABLE></DIV>
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<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0; text-indent: 0.25in">&nbsp;</P>

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

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

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0; text-indent: 0.5in">In February 2011, the Company issued 572,115
common shares with a fair market value of $22,975 for payment of accrued legal fees in the amount of $14,875; the excess fair market
value of the common shares of $8,100 was recorded as legal expenses.</P>

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

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0; text-indent: 0.5in">In February 2011, the Company issued 14,076,923
shares of common stock with a fair market value of $563,077 to the CEO as consideration for payment of $366,000 accrued compensation;
the excess fair market value of $197,077 has been recorded as share-based compensation during the three months ended March 31,
2011. Further, the CEO forgave accrued compensation due him amounting to $700,269. The compensation forgiven by the CEO has been
treated as a capital contribution to the Company and therefore has been recorded as additional paid-in capital in February 2011.</P>

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

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0; text-indent: 0.5in">In February 2011, the Company sold 750,000 shares
of common stock for $63,750.</P>

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

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0; text-indent: 0.5in">In February 2011, 20,000 stock options were
exercised at a value of $0.05 per common stock.</P>

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

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0; text-indent: 0.5in">In April 2011, the Company sold 750,000 common
shares valued at $63,750.</P>

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

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0; text-indent: 0.5in">In September 2011, the Company issued 171,500
shares of common stock to Harold Paul valued at $8,575 as consideration for payment of accrued legal services amounting to $6,000.
The company recorded additional share-based compensation expense of $2,575 in connection with this transaction. The Company also
issued 5,626 shares valued at $1,650 to a vendor for services rendered.</P>

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

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0; text-indent: 95.25pt"><I>Stock Options&#9;</I></P>

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

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0; text-indent: 0.25in">The Company issued a total of 40,000 options
valued at $84,000 to two directors in January 2010. The options have an exercise price of $2.10 and a fair market value of $2.10
per option. The options expire on January 2020. The options were valued using the black-scholes model using the following assumptions:
volatility - 316%; dividend yield &ndash; 0%; zero coupon rate &ndash; 3.85% and a life of 10 years.</P>

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

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0; text-indent: 0.5in">The Company issued a total of 40,000 options
valued at $2,000 to two directors in January 2011. The options have an exercise price of $0.05 and a fair market value of $0.05
per option. The options expire on January 2021. The options were valued using the Black-Scholes model using the following assumptions:
volatility - 348%; dividend yield - 0%; zero coupon rate 3.50% and a life of 10 years.</P>

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

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0; text-indent: 0.5in">The Black-Scholes option-pricing model was developed
for use in estimating the fair value of traded options that have no vesting restrictions and are fully transferable. In addition,
option-pricing models require the input of highly subjective assumptions, including the expected stock price volatility. Because
the Company&rsquo;s options have characteristics significantly different from those of traded options and because changes in the
subjective input assumptions can materially affect the fair value estimate, in management&rsquo;s opinion the existing models may
not necessarily provide a reliable single measure of the fair value of its options.</P>

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

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0; text-indent: 0.5in">A summary of the status of the Company&rsquo;s
options is presented below.</P>

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

<TABLE CELLPADDING="0" CELLSPACING="0" STYLE="width: 100%; font: 10pt Times New Roman, Times, Serif">
<TR STYLE="vertical-align: bottom">
    <TD>&nbsp;</TD>
    <TD COLSPAN="2" STYLE="font-weight: bold; text-align: center">December 31, 2011</TD>
    <TD COLSPAN="2" STYLE="font-weight: bold; text-align: center">December 31, 2010</TD></TR>
<TR STYLE="vertical-align: bottom">
    <TD>&nbsp;</TD>
    <TD STYLE="text-align: center">Number of</TD>
    <TD STYLE="text-align: center">Weighted Average</TD>
    <TD STYLE="text-align: center">Number of</TD>
    <TD STYLE="text-align: center">Weighted Average</TD></TR>
<TR STYLE="vertical-align: bottom">
    <TD>&nbsp;</TD>
    <TD STYLE="text-align: center; border-bottom: Black 1pt solid">Options</TD>
    <TD STYLE="text-align: center; border-bottom: Black 1pt solid">Exercise Price</TD>
    <TD STYLE="text-align: center; border-bottom: Black 1pt solid">Options</TD>
    <TD STYLE="text-align: center; border-bottom: Black 1pt solid">Exercise Price</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,238,255)">
    <TD STYLE="width: 48%; text-align: left; padding-left: 5.75pt">Outstanding, beginning of year</TD>
    <TD STYLE="width: 13%; text-align: right">40,000</TD>
    <TD STYLE="width: 13%; text-align: right">$2.10</TD>
    <TD STYLE="width: 13%; text-align: right">-</TD>
    <TD STYLE="width: 13%; text-align: right">$2.10</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD STYLE="padding-left: 5.75pt">Granted</TD>
    <TD STYLE="text-align: right">40,000</TD>
    <TD STYLE="text-align: right">.05</TD>
    <TD STYLE="text-align: right">40,000</TD>
    <TD STYLE="text-align: right">-</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,238,255)">
    <TD STYLE="padding-left: 5.75pt">Exercised</TD>
    <TD STYLE="border-bottom: Black 1pt solid; text-align: right">(20,000)</TD>
    <TD STYLE="border-bottom: Black 1pt solid; text-align: right">(.05)</TD>
    <TD STYLE="border-bottom: Black 1pt solid; text-align: right">-</TD>
    <TD STYLE="border-bottom: Black 1pt solid; text-align: right">-</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD STYLE="text-align: left; padding-left: 5.75pt">Outstanding, end of year</TD>
    <TD STYLE="border-bottom: Black 2pt double; text-align: right">60,000</TD>
    <TD STYLE="border-bottom: Black 2pt double; text-align: right">$1.42</TD>
    <TD STYLE="border-bottom: Black 2pt double; text-align: right">40,000</TD>
    <TD STYLE="border-bottom: Black 2pt double; text-align: right">$2.10</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,238,255)">
    <TD STYLE="padding-left: 5.75pt">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD></TR>
</TABLE>

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

<!-- Field: Page; Sequence: 33 -->
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<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0; text-indent: 45.8pt">Options outstanding and exercisable by price
range as of December 31, 2011 were as follows:</P>

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

<TABLE ALIGN="CENTER" CELLSPACING="0" CELLPADDING="0" STYLE="width: 100%; border-collapse: collapse">
<TR STYLE="vertical-align: top">
    <TD COLSPAN="2" STYLE="padding: 1.45pt 5.75pt">Outstanding Options</TD>
    <TD STYLE="padding: 1.45pt 5.75pt; text-align: center; vertical-align: bottom">&nbsp;</TD>
    <TD COLSPAN="2" STYLE="padding: 1.45pt 5.75pt">Exercisable Options</TD></TR>
<TR STYLE="vertical-align: bottom">
    <TD STYLE="width: 20%; padding: 1.45pt 5.75pt">Range</TD>
    <TD STYLE="width: 20%; padding: 1.45pt 5.75pt">Number</TD>
    <TD STYLE="width: 20%; padding: 1.45pt 5.75pt; text-align: center; vertical-align: bottom">
        <P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0">Average</P>
        <P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0">Weighted</P>
        <P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0">Remaining Contractual</P>
        <P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0"><U>Life in Years</U></P></TD>
    <TD STYLE="width: 20%; padding: 1.45pt 5.75pt">Number</TD>
    <TD STYLE="width: 20%; padding: 1.45pt 5.75pt; text-align: center; vertical-align: bottom">
        <P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0">Weighted</P>
        <P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0">Average</P>
        <P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0"><U>Exercise Price</U></P></TD></TR>
<TR STYLE="vertical-align: top">
    <TD STYLE="padding: 1.45pt 5.75pt">$2.10</TD>
    <TD STYLE="padding: 1.45pt 5.75pt">40,000</TD>
    <TD STYLE="padding: 1.45pt 5.75pt; text-align: center; vertical-align: bottom">8</TD>
    <TD STYLE="padding: 1.45pt 5.75pt">40,000</TD>
    <TD STYLE="padding: 1.45pt 5.75pt; text-align: center; vertical-align: bottom">$2.10</TD></TR>
<TR STYLE="vertical-align: top">
    <TD STYLE="padding: 1.45pt 5.75pt">$0.05</TD>
    <TD STYLE="padding: 1.45pt 5.75pt">20,000</TD>
    <TD STYLE="padding: 1.45pt 5.75pt; text-align: center; vertical-align: bottom">7</TD>
    <TD STYLE="padding: 1.45pt 5.75pt">20,000</TD>
    <TD STYLE="padding: 1.45pt 5.75pt; text-align: center; vertical-align: bottom">$0.05</TD></TR>
</TABLE>
<P STYLE="font: 12pt Times New Roman, Times, Serif; margin: 0">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0"><B>NOTE 7. RELATED PARTY</B></P>

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

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0; text-indent: 0.25in">In August 2010, the Company issued to Dr. Shane
2,500,000 shares of common stock as consideration for payment of $125,000 accrued compensation. These shares were valued at $275,000
which was the quoted market value on the date of issuance. Accordingly, the Company recorded compensation expense of $150,000 in
connection with this transaction.</P>

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

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0; text-indent: 0.25in">In February 2011, the Company entered into
a new employment agreement with its CEO that provides for a base salary of $20,000, subject to CPI adjustments, incentive performance
bonuses equal to 12% of the Company's annual GAAP earnings for the years 2011 through 2015 and discretionary bonuses, as well as
expense reimbursements and certain employee benefits. The agreement terminates December 31, 2015.</P>

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

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0; text-indent: 0.25in">As of December 31, 2011, the Company has accrued
$20,000 for unpaid wages under the employment agreement.</P>

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

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0"><B>NOTE 8. COMMITMENTS AND CONTINGENCIES</B></P>

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

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0; text-indent: 0.5in">None.</P>

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

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0"><B>NOTE 9. NOTES RECEIVABLES</B></P>

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

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0; text-indent: 0.5in">The Company is the holder of two promissory
notes with Advanced Disinfectant Technologies (&ldquo;Adtec&rdquo;) in the amount of $75,000 and $20,000 due on November 30, 2010
and February 2011, respectively. The notes bear interest of 8% per annum. In the event of default, the Company is entitled to receive
seven foggers for the first note and two foggers for the second note at no charge. As of December 31, 2010, the Company fully reserved
these notes receivables and recorded bad debt expense of $95,000.</P>

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

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

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

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0; text-indent: 0.5in">At December 31, 2011 the Company had available
net-operating loss carryforwards for Federal tax purposes of approximately $5,300,000, which may be applied against future taxable
income, if any, from 2027 to 2031. Certain significant changes in ownership of the Company may restrict the future utilization
of these tax loss carryforwards.</P>

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

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0; text-indent: 0.25in">At December 31, 2011 the Company had a deferred
tax asset of approximately $1,802,000 representing the benefit of its net operating loss carry-forwards. The Company has not recognized
any tax benefit or tax assets from these loss carry-forwards due to the fact that realization of the tax benefit is uncertain and
therefore, a valuation allowance equal to 100% of the tax benefit has been applied against the value of any tax asset arising from
these losses. The difference between the federal statutory tax rate of 34% and the Company's effective tax rate of 0% is due to
an increase in the valuation allowance of approximately $255,000 in 2011.</P>

<P STYLE="font: 12pt Times New Roman, Times, Serif; margin: 0">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0"><B>NOTE 11. SUBSEQUENT EVENTS</B></P>

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

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0; text-indent: 0.25in">The Company has evaluated subsequent events
through the date the financial statements were issued and up to the time of filing of the financial statements with the Securities
and Exchange Commission.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0; text-indent: 0.25in">In January 2012 the Company granted 20,000
stock options to a director. The Options have an exercise price of $0.03 per share and expire January 1, 2022.</P>

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

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

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

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0; text-indent: 0.25in">In January 2012 the Company issued
100,000 shares of common stock to a former director.</P>

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

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0; text-indent: 0.25in">On January 9, 2012 the Company sold 800,000
shares of common stock for $10,000 to a private investor.</P>


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

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

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0; text-indent: 0.25in"><FONT STYLE="color: black">In February 20,
2012 we sold a $100,000 convertible promissory note bearing interest at10% per annum and maturing December 31, 2015. </FONT>The
note is convertible at any time and the conversion price is initially $0.05 per share. After August 30, 2012, the conversion price
will at the end of each month adjust to the lower of the current conversion price or 110% of that month&rsquo;s volume weighted
average price as reported by Bloomberg subject to being no lower than $0.005 per shares. The purchaser of the Note also received
600,000 warrants to acquire common shares. The warrants expire on December 31, 2017 and have an initial exercise price which is
$0.05 per share and can adjust lower in the same manner as the accompanying convertible note.</P>

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

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0; text-indent: 0.25in">In February 2012, the Company issued 181,250
common shares for payment of $5,437 in legal fees.&nbsp;</P>

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

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<P STYLE="font: 9.5pt Times New Roman, Times, Serif; margin: 0">&nbsp;</P>

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<P STYLE="font: 9.5pt Times New Roman, Times, Serif; margin: 0">&nbsp;</P>

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<P STYLE="font: 12pt Times New Roman, Times, Serif; margin: 0">&nbsp;</P>

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

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: right"><B>EXHIBIT 31.1 </B></P>

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

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

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

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0; text-indent: 18.7pt">I, Halden S. Shane, certify that:</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 9.5pt 0 0; text-indent: 24.5pt">1.&nbsp;I have reviewed this Annual
Report on Form 10-K of TOMI Environmental Solutions, Inc.;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 9.5pt 0 0; text-indent: 24.5pt">2.&nbsp;Based on my knowledge, this
report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements
made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by
this report;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 9.5pt 0 0; text-indent: 24.5pt">3.&nbsp;Based on my knowledge, the
financial statements, and other financial information included in this report, fairly present in all material respects the financial
condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 9.5pt 0 0; text-indent: 24.5pt">4.&nbsp;The registrant&rsquo;s other
certifying officer(s) and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in
Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal controls over financial reporting (as defined in Exchange Act Rules 13a-15(f)
and 15d-15(f)) for the registrant and have:</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 4.75pt 0 0 24.45pt; text-indent: 24.5pt">(a)&nbsp;Designed such disclosure
controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that
material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within
those entities, particularly during the period in which this report is being prepared;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 4.75pt 0 0 24.45pt; text-indent: 24.5pt">(b) Designed such internal
control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision,
to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for
external purposes in accordance with generally accepted accounting principles;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 4.75pt 0 0 24.45pt; text-indent: 24.5pt">(c)&nbsp;Evaluated the effectiveness
of the registrant&rsquo;s disclosure controls and procedures and presented in this report our conclusions about the effectiveness
of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 4.75pt 0 0 24.45pt; text-indent: 24.5pt">(d)&nbsp;Disclosed in this
report any change in the registrant&rsquo;s internal control over financial reporting that occurred during the registrant&rsquo;s
most recent fiscal quarter (the registrant&rsquo;s fourth fiscal quarter in the case of an annual report) that has materially affected,
or is reasonably likely to materially affect, the registrant&rsquo;s internal control over financial reporting;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 9.5pt 0 0; text-indent: 24.5pt">5.&nbsp;The registrant&rsquo;s other
certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the
registrant&rsquo;s auditors and the audit committee of registrant&rsquo;s board of directors (or persons performing the equivalent
functions):</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 4.75pt 0 0 24.45pt; text-indent: 24.5pt">(a)&nbsp;All significant deficiencies
and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to
adversely affect the registrant&rsquo;s ability to record, process, summarize and report financial information; and</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 4.75pt 0 0 24.45pt; text-indent: 24.5pt">(b)&nbsp;Any fraud, whether
or not material, that involves management or other employees who have a significant role in the registrant&rsquo;s internal control
over financial reporting.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 9.5pt 0 0">Dated: March 29, 2012</P>

<P STYLE="font: 9.5pt Times New Roman, Times, Serif; margin: 0">&nbsp;</P>

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<TR>
    <TD STYLE="font: 12pt Times New Roman, Times, Serif; text-align: right">&nbsp;</TD></TR>
<TR STYLE="vertical-align: top">
    <TD STYLE="border-bottom: black 1pt solid; font: 12pt Times New Roman, Times, Serif; text-align: right"><FONT STYLE="font-size: 10pt">/s/&nbsp;&nbsp;&nbsp;&nbsp;HALDEN S. SHANE</FONT><FONT STYLE="font-size: 7.5pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;</FONT></TD></TR>
<TR STYLE="vertical-align: bottom">
    <TD STYLE="text-align: right">
        <P STYLE="font: 7.5pt Times New Roman, Times, Serif; margin: 0; text-align: right"><B>Halden S. Shane</B></P>
        <P STYLE="font: 7.5pt Times New Roman, Times, Serif; margin: 0; text-align: right"><B>Chairman of the Board and Chief Executive
        Officer<BR>
        (Principal Executive Officer)</B></P>
        <P STYLE="font: 7.5pt Times New Roman, Times, Serif; margin: 0 0 0.8pt; text-align: right"><B>(authorized officer of registrant)</B></P></TD></TR></TABLE>

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

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<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: right"><B>EXHIBIT 31.2 </B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 9.5pt 0 0; text-align: center"><B>CERTIFICATION OF PRINCIPAL FINANCIAL
OFFICER </B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 9.5pt 0 0; text-indent: 24.5pt">I, Halden S Shane, certify that:</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 9.5pt 0 0; text-indent: 24.5pt">1.&nbsp;I have reviewed this Annual
Report on Form 10-K of TOMI Environmental Solutions, Inc.;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 9.5pt 0 0; text-indent: 24.5pt">2.&nbsp;Based on my knowledge, this
report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements
made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by
this report;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 9.5pt 0 0; text-indent: 24.5pt">3.&nbsp;Based on my knowledge, the
financial statements, and other financial information included in this report, fairly present in all material respects the financial
condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 9.5pt 0 0; text-indent: 24.5pt">4.&nbsp;The registrant&rsquo;s other
certifying officer(s) and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in
Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal controls over financial reporting (as defined in Exchange Act Rules 13a-15(f)
and 15d-15(f)) and have:</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 4.75pt 0 0 24.45pt; text-indent: 24.5pt">(a)&nbsp;Designed such disclosure
controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that
material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within
those entities, particularly during the period in which this report is being prepared;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 4.75pt 0 0 24.45pt; text-indent: 24.5pt">(b) Designed such internal
control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision,
to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for
external purposes in accordance with generally accepted accounting principles;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 4.75pt 0 0 24.45pt; text-indent: 24.5pt">(c)&nbsp;Evaluated the effectiveness
of the registrant&rsquo;s disclosure controls and procedures and presented in this report our conclusions about the effectiveness
of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 4.75pt 0 0 24.45pt; text-indent: 24.5pt">(d)&nbsp;Disclosed in this
report any change in the registrant&rsquo;s internal control over financial reporting that occurred during the registrant&rsquo;s
most recent fiscal quarter (the registrant&rsquo;s fourth fiscal quarter in the case of an annual report) that has materially affected,
or is reasonably likely to materially affect, the registrant&rsquo;s internal control over financial reporting;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 9.5pt 0 0; text-indent: 24.5pt">5.&nbsp;The registrant&rsquo;s other
certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the
registrant&rsquo;s auditors and the audit committee of registrant&rsquo;s board of directors (or persons performing the equivalent
functions):</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 4.75pt 0 0 24.45pt; text-indent: 24.5pt">(a)&nbsp;All significant deficiencies
and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to
adversely affect the registrant&rsquo;s ability to record, process, summarize and report financial information; and</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 4.75pt 0 0 24.45pt; text-indent: 24.5pt">(b)&nbsp;Any fraud, whether
or not material, that involves management or other employees who have a significant role in the registrant&rsquo;s internal control
over financial reporting.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 9.5pt 0 0 12.2pt; text-indent: -12.25pt">Dated: March 29, 2012</P>

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<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: right"><B>EXHIBIT 32.1 </B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 9.5pt 0 0; text-align: center"><B>CERTIFICATION PURSUANT TO </B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: center"><B>18 U.S.C. SECTION 1350, </B></P>

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

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: center"><B>SECTION 906 OF THE SARBANES-OXLEY ACT OF
2002 </B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 9.5pt 0 0; text-indent: 24.5pt">In connection with the annual report
of TOMI Environmental Solutions, Inc. (the &ldquo;Company&rdquo;) on Form&nbsp;10-K for the year ended December&nbsp;31, 2011,
as filed with the Securities and Exchange Commission on March 30, 2012 (the &ldquo;Report&rdquo;), I, Halden S. Shane, Chairman
of the Board and Chief Executive Officer (Principal Executive Officer) of the Company, certify, pursuant to 18 U.S.C. Section&nbsp;1350,
as adopted pursuant to Section&nbsp;906 of the Sarbanes-Oxley Act of 2002, that:</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 4.75pt 0 0; text-indent: 24.5pt">1. The Report fully complies with
the requirements of Section&nbsp;13(a) or 15(d) of the Securities Exchange Act of 1934, as amended; and</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 9.5pt 0 0; text-indent: 24.5pt">2. The information contained in the
Report fairly presents, in all material respects, the financial condition and results of operations of the Company.</P>

<P STYLE="font: 9.5pt Times New Roman, Times, Serif; margin: 0">&nbsp;</P>

<TABLE ALIGN="RIGHT" CELLSPACING="0" CELLPADDING="0" STYLE="width: 100%; border-collapse: collapse">
<TR>
    <TD STYLE="width: 60%; font: 0.5pt Times New Roman, Times, Serif">&nbsp;</TD>
    <TD STYLE="width: 40%; font: 0.5pt Times New Roman, Times, Serif; text-align: right; padding-left: 0pt; padding-right: 0pt">&nbsp;</TD></TR>
<TR>
    <TD STYLE="font: 12pt Times New Roman, Times, Serif">&nbsp;</TD>
    <TD STYLE="font: 12pt Times New Roman, Times, Serif; text-align: right; padding-left: 0pt; padding-right: 0pt">&nbsp;</TD></TR>
<TR STYLE="vertical-align: top">
    <TD STYLE="font: 10pt Times New Roman, Times, Serif; text-align: right">By:</TD>
    <TD STYLE="border-bottom: black 1pt solid; font: 12pt Times New Roman, Times, Serif; text-align: right; padding-left: 0pt; padding-right: 0pt"><FONT STYLE="font-size: 10pt">/s/&nbsp;&nbsp;&nbsp;&nbsp;HALDEN S/ SHANE</FONT><FONT STYLE="font-size: 7.5pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;</FONT></TD></TR>
<TR>
    <TD STYLE="vertical-align: top; font: 4pt/2pt Times New Roman, Times, Serif; padding-left: 0.1in">&nbsp;</TD>
    <TD STYLE="vertical-align: bottom; text-align: right; padding-left: 0pt; padding-right: 0pt">
        <P STYLE="font: 7.5pt Times New Roman, Times, Serif; margin: 0 0pt; text-align: right"><B>Halden S. Shane</B></P>
        <P STYLE="font: 7.5pt Times New Roman, Times, Serif; margin: 0 0pt; text-align: right"><B>Chairman of the Board and Chief Executive
        Officer</B></P>
        <P STYLE="font: 7.5pt Times New Roman, Times, Serif; margin: 0 0pt 0.8pt; text-align: right"><B>(Principal Executive Officer)</B></P></TD></TR>
</TABLE>
<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 9.5pt 0 0 12.2pt; text-indent: -12.25pt">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 9.5pt 0 0 12.2pt; text-indent: -12.25pt">March 29, 2012</P>

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

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<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: right"><B>EXHIBIT 32.2 </B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 9.5pt 0 0; text-align: center"><B>CERTIFICATION PURSUANT TO </B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: center"><B>18 U.S.C. SECTION 1350, </B></P>

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

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: center"><B>SECTION 906 OF THE SARBANES-OXLEY ACT OF
2002 </B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 9.5pt 0 0; text-indent: 24.5pt">In connection with the annual report
of TOMI Environmental Solutions, Inc. (the &ldquo;Company&rdquo;) on Form&nbsp;10-K for the year ended December&nbsp;31, 2011,
as filed with the Securities and Exchange Commission on March 30, 2012 (the &ldquo;Report&rdquo;), I, Halden S. Shane, Chief Financial
Officer (Principal Financial Officer) of the Company, certify, pursuant to 18 U.S.C. Section&nbsp;1350, as adopted pursuant to
Section&nbsp;906 of the Sarbanes-Oxley Act of 2002, that:</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 4.75pt 0 0; text-indent: 24.5pt">1. The Report fully complies with
the requirements of Section&nbsp;13(a) or 15(d) of the Securities Exchange Act of 1934, as amended; and</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 9.5pt 0 0; text-indent: 24.5pt">2. The information contained in the
Report fairly presents, in all material respects, the financial condition and results of operations of the Company.</P>

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    <TD STYLE="width: 36%; font: 0.5pt Times New Roman, Times, Serif; text-align: right">&nbsp;</TD></TR>
<TR>
    <TD STYLE="font: 12pt Times New Roman, Times, Serif">&nbsp;</TD>
    <TD STYLE="font: 12pt Times New Roman, Times, Serif; text-align: right">&nbsp;</TD></TR>
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    <TD STYLE="font: 10pt Times New Roman, Times, Serif; text-align: right">By:</TD>
    <TD STYLE="border-bottom: black 1pt solid; font: 12pt Times New Roman, Times, Serif; text-align: right"><FONT STYLE="font-size: 10pt">/s/&nbsp;&nbsp;&nbsp;&nbsp;HALDEN S. SHANE</FONT><FONT STYLE="font-size: 7.5pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;</FONT></TD></TR>
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    <TD STYLE="vertical-align: top; font: 4pt/2pt Times New Roman, Times, Serif; padding-left: 0.1in">&nbsp;</TD>
    <TD STYLE="vertical-align: bottom; text-align: right">
        <P STYLE="font: 7.5pt Times New Roman, Times, Serif; margin: 0; text-align: right"><B>Halden S. Shane</B></P>
        <P STYLE="font: 7.5pt Times New Roman, Times, Serif; margin: 0 0 0.8pt; text-align: right"><B>Chief Financial Officer<BR>
        (Principal Financial Officer)</B></P></TD></TR>
</TABLE>
<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 9.5pt 0 0 12.2pt; text-indent: -12.25pt">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 9.5pt 0 0 12.2pt; text-indent: -12.25pt">March 29, 2012</P>

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