<SUBMISSION>
<ACCESSION-NUMBER>0001062993-13-004579
<TYPE>424B3
<PUBLIC-DOCUMENT-COUNT>1
<FILING-DATE>20130911
<DATE-OF-FILING-DATE-CHANGE>20130911
<FILER>
<COMPANY-DATA>
<CONFORMED-NAME>AMERICAN PETRO-HUNTER INC
<CIK>0001040482
<ASSIGNED-SIC>1389
<IRS-NUMBER>980171619
<STATE-OF-INCORPORATION>NV
<FISCAL-YEAR-END>1231
</COMPANY-DATA>
<FILING-VALUES>
<FORM-TYPE>424B3
<ACT>33
<FILE-NUMBER>333-190287
<FILM-NUMBER>131089527
</FILING-VALUES>
<BUSINESS-ADDRESS>
<STREET1>17470  NORTH PACESETTER WAY
<CITY>SCOTTSDALE
<STATE>AZ
<ZIP>85255
<PHONE>480-305-2052
</BUSINESS-ADDRESS>
<MAIL-ADDRESS>
<STREET1>17470  NORTH PACESETTER WAY
<CITY>SCOTTSDALE
<STATE>AZ
<ZIP>85255
</MAIL-ADDRESS>
<FORMER-COMPANY>
<FORMER-CONFORMED-NAME>TRAVELPORT SYSTEMS INC
<DATE-CHANGED>20001129
</FORMER-COMPANY>
<FORMER-COMPANY>
<FORMER-CONFORMED-NAME>WOLF INDUSTRIES INC
<DATE-CHANGED>19970604
</FORMER-COMPANY>
</FILER>
<DOCUMENT>
<TYPE>424B3
<SEQUENCE>1
<FILENAME>form424b3.htm
<DESCRIPTION>FORM 424B3
<TEXT>
<HTML>
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   <TITLE>American Petro-Hunter, Inc.: Form 424B3 - Filed by newsfilecorp.com</TITLE>
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  <TR vAlign=top>
    <TD align=right>Filed Pursuant to Rule 424(b)(3) </TD></TR>
  <TR>
    <TD align=right>&nbsp;</TD></TR>
  <TR vAlign=top>
    <TD style="BORDER-BOTTOM: #000000 1px solid" align=right>Registration No.
      333-190287 </TD></TR></TABLE><BR>
<TABLE
style="BORDER-COLOR: black; BORDER-COLLAPSE: collapse; FONT-SIZE: 10pt; "
border=0 cellSpacing=0 cellPadding=0 width="100%">

  <TR>
    <TD style="BORDER-TOP: #000000 1px solid" align=center>&nbsp;</TD></TR>
  <TR vAlign=bottom>
    <TD align=center><B>PROSPECTUS</B> </TD></TR>
  <TR>
    <TD align=center>&nbsp;</TD></TR>
  <TR vAlign=top>
    <TD align=center><B>16,182,230 SHARES OF COMMON STOCK</B> </TD></TR>
  <TR>
    <TD align=center>&nbsp;</TD></TR>
  <TR vAlign=top>
    <TD align=center><B>AMERICAN PETRO-HUNTER INC.</B> </TD></TR>
  <TR>
    <TD style="BORDER-BOTTOM: #000000 1px solid"
  align=center>&nbsp;</TD></TR></TABLE>
<P align=justify>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;This prospectus relates to the
resale of up to an aggregate of 16,182,230 shares of our common stock, par value
$0.001 per share, by Hanover Holdings I, LLC, a New York limited liability
company (&#147;Hanover&#148; or &#147;Selling Stockholder&#148;), 14,417,524 of which (the &#147;Purchase
Shares&#148;) are issuable to Hanover pursuant to the terms of the Common Stock
Purchase Agreement, between the Company and Hanover, dated March 22, 2013 (the
&#147;Purchase Agreement&#148;) and1,764,706 of which were issued to Hanover on March 22,
2013 in satisfaction of a $150,000 commitment fee paid to Hanover for entering
into the Purchase Agreement, based upon a price per share equal to $0.085 per
share. See the section of this prospectus entitled &#147;Equity Enhancement Program
With Hanover&#148; for a description of the Purchase Agreement and the section
entitled &#147;Selling Stockholder&#148; for additional information regarding Hanover.
</P>
<P align=justify>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;We are not selling any securities
under this prospectus and will not receive any of the proceeds from the resale
of shares of our common stock by the selling stockholder under this prospectus,
however, we may receive gross proceeds of up to $5,000,000 from sales of our
common stock to Hanover under the Purchase Agreement.</P>
<P align=justify>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Hanover may offer all or part of
the shares for resale from time to time through public or private transactions,
at either prevailing market prices or at privately negotiated prices. We provide
more information about how Hanover may sell its shares of common stock in the
section titled &#147;Plan of Distribution&#148; on page 4. We will pay the expenses
incurred in connection with the offering described in this prospectus, with the
exception of brokerage expenses, fees, discounts and commissions, which will be
paid by the selling stockholder. In addition, we issued 1,764,706 shares of our
common stock to Hanover as a commitment fee for entering into the Purchase
Agreement. Hanover is an &#147;underwriter&#148; within the meaning of Section 2(a)(11) of
the Securities Act of 1933, as amended, or the Securities Act.</P>
<P align=justify>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Our common stock is quoted on the
OTC Bulletin Board under the symbol &#147;AAPH&#148; The shares of our common stock
registered hereunder are being offered for sale by Selling Stockholder at prices
established on the OTC Bulletin Board during the term of this offering. On
September 5, 2013, the closing bid price of our common stock was $0.0137 per
share. These prices will fluctuate based on the demand for our common stock.</P>
<TABLE
style="BORDER-COLOR: black; BORDER-COLLAPSE: collapse; FONT-SIZE: 10pt; "
border=0 cellSpacing=0 cellPadding=0 width="100%">

  <TR>
    <TD style="BORDER-TOP: #000000 1px solid" align=left>&nbsp;</TD></TR>
  <TR vAlign=top>
    <TD align=left>
      <P align=justify><B>&nbsp;&nbsp;&nbsp;&nbsp; INVESTING IN OUR COMMON STOCK
      INVOLVES A HIGH DEGREE OF RISK. SEE &#147;RISK FACTORS&#148;</B> <B>BEGINNING ON
      PAGE 6 OF THIS PROSPECTUS.</B> </P></TD></TR>
  <TR>
    <TD style="BORDER-BOTTOM: #000000 1px solid">
      <P align=justify>&nbsp; </P></TD></TR>
  <TR>
    <TD>
      <P align=justify>&nbsp; </P></TD></TR>
  <TR vAlign=top>
    <TD align=left>
      <P align=justify><B>&nbsp;&nbsp;&nbsp;&nbsp; NEITHER THE SECURITIES AND
      EXCHANGE COMMISSION NOR ANY STATE SECURITIES COMMISSION</B> <B>HAS
      APPROVED OR DISAPPROVED OF THESE SECURITIES OR DETERMINED IF THIS
      PROSPECTUS IS</B> <B>TRUTHFUL OR COMPLETE. ANY REPRESENTATION TO THE
      CONTRARY IS A CRIMINAL OFFENSE.</B> </P></TD></TR>
  <TR>
    <TD style="BORDER-BOTTOM: #000000 1px solid">
      <P align=justify>&nbsp; </P></TD></TR>
  <TR>
    <TD>
      <P align=justify>&nbsp; </P></TD></TR>
  <TR vAlign=top>
    <TD align=left>
      <P align=justify>&nbsp;&nbsp;&nbsp;&nbsp; The information in this
      Prospectus is not complete and may be changed. We may not sell these
      securities until the registration statement filed with the Securities and
      Exchange Commission becomes effective. This Prospectus is not an offer to
      sell these securities and we are not soliciting an offer to buy these
      securities in any state where the offer or sale is not permitted or would
      be unlawful prior to registration or qualification under the securities
      laws of any such state. </P></TD></TR>
  <TR>
    <TD style="BORDER-BOTTOM: #000000 1px solid" align=left>&nbsp;&nbsp;
  </TD></TR></TABLE>
<P align=center>The Date of this Prospectus is September 9, 2013.</P>
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<P align=center><B>TABLE OF CONTENTS</B></P>
<P align=center><B>PART I - INFORMATION REQUIRED IN PROSPECTUS</B></P>
<TABLE
style="BORDER-COLOR: black; BORDER-COLLAPSE: collapse; FONT-SIZE: 10pt; "
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  <TR vAlign=top>
    <TD align=left>&nbsp; </TD>
    <TD width="10%" align=right><B>Page</B> </TD></TR>
  <TR vAlign=top>
    <TD bgColor=#eeeeee align=left><a href="#page_3">PROSPECTUS SUMMARY </a></TD>
  <TD bgColor=#eeeeee width="10%" align=right><a href="#page_3">1</a></TD>
  </TR>
  <TR vAlign=top>
    <TD align=left><a href="#page_8">DISCLOSURE REGARDING FORWARD-LOOKING STATEMENTS </a></TD>
    <TD width="10%" align=right><a href="#page_8">6</a></TD>
  </TR>
  <TR vAlign=top>
    <TD bgColor=#eeeeee align=left><a href="#page_8">RISK FACTORS </a></TD>
    <TD bgColor=#eeeeee width="10%" align=right><a href="#page_8">6 </a></TD>
  </TR>
  <TR vAlign=top>
    <TD align=left><a href="#page_16">USE OF PROCEEDS </a></TD>
    <TD width="10%" align=right><a href="#page_16">15</a></TD>
  </TR>
  <TR vAlign=top>
    <TD bgColor=#eeeeee align=left><a href="#page_18">DETERMINATION OF OFFERING PRICE </a></TD>
    <TD bgColor=#eeeeee width="10%" align=right><a href="#page_18">16</a></TD>
  </TR>
  <TR vAlign=top>
    <TD align=left><a href="#page_18">SELLING STOCKHOLDER </a></TD>
    <TD width="10%" align=right><a href="#page_18">16 </a></TD>
  </TR>
  <TR vAlign=top>
    <TD bgColor=#eeeeee align=left><a href="#page_23">PLAN OF DISTRIBUTION </a></TD>
    <TD bgColor=#eeeeee width="10%" align=right><a href="#page_23">21 </a></TD>
  </TR>
  <TR vAlign=top>
    <TD align=left><a href="#page_25">DESCRIPTION OF SECURITIES TO BE REGISTERED </a></TD>
    <TD width="10%" align=right><a href="#page_25">23 </a></TD>
  </TR>
  <TR vAlign=top>
    <TD bgColor=#eeeeee align=left><a href="#page_26">INTERESTS OF NAMED EXPERTS AND COUNSEL </a></TD>
    <TD bgColor=#eeeeee width="10%" align=right><a href="#page_26">24</a></TD>
  </TR>
  <TR vAlign=top>
    <TD align=left><a href="#page_27">INFORMATION WITH RESPECT TO THE REGISTRANT </a></TD>
    <TD width="10%" align=right><a href="#page_27">25 </a></TD>
  </TR>
  <TR vAlign=top>
    <TD bgColor=#eeeeee align=left><a href="#page_29">PROPERTIES </a></TD>
    <TD bgColor=#eeeeee width="10%" align=right><a href="#page_29">27 </a></TD>
  </TR>
  <TR vAlign=top>
    <TD align=left><a href="#page_31">LEGAL PROCEEDINGS </a></TD>
    <TD width="10%" align=right><a href="#page_31">29 </a></TD>
  </TR>
  <TR vAlign=top>
    <TD bgColor=#eeeeee align=left><a href="#page_31">MARKET FOR COMMON EQUITY AND RELATED
      SHAREHOLDER MATTERS </a></TD>
    <TD bgColor=#eeeeee width="10%" align=right><a href="#page_31">29</a></TD>
  </TR>
  <TR vAlign=top>
    <TD align=left><a href="#page_32">MANAGEMENT&#146;S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
      AND RESULTS OF OPERATIONS </a></TD>
    <TD width="10%" align=right><a href="#page_32">30</a></TD>
  </TR>
  <TR vAlign=top>
    <TD bgColor=#eeeeee align=left><a href="#page_35">DIRECTORS AND EXECUTIVE OFFICERS </a></TD>
    <TD bgColor=#eeeeee width="10%" align=right><a href="#page_35">33</a></TD>
  </TR>
  <TR vAlign=top>
    <TD align=left><a href="#page_36">EXECUTIVE COMPENSATION </a></TD>
    <TD width="10%" align=right><a href="#page_36">34 </a></TD>
  </TR>
  <TR vAlign=top>
    <TD bgColor=#eeeeee align=left><a href="#page_37">SECURITY OWNERSHIP OF CERTAIN BENEFICIAL
      OWNERS AND MANAGEMENT </a></TD>
    <TD bgColor=#eeeeee width="10%" align=right><a href="#page_37">35</a></TD>
  </TR>
  <TR vAlign=top>
    <TD align=left><a href="#page_38">CERTAIN RELATIONSHIPS AND RELATED PARTY TRANSACTIONS AND
      DIRECTOR INDEPENDENCE </a></TD>
    <TD width="10%" align=right><a href="#page_38">36</a></TD>
  </TR>
  <TR vAlign=top>
    <TD bgColor=#eeeeee align=left><a href="#page_39">DISCLOSURE OF COMMISSION POSITION OF
      INDEMNIFICATION FOR SECURITIES ACT LIABILITIES </a></TD>
    <TD bgColor=#eeeeee width="10%" align=right><a href="#page_39">37</a></TD>
  </TR>
  <TR vAlign=top>
    <TD align=left><a href="#page_39">WHERE YOU CAN FIND MORE INFORMATION </a></TD>
    <TD width="10%" align=right><a href="#page_39">37 </a></TD>
  </TR>
  <TR vAlign=top>
    <TD bgColor=#eeeeee align=left><a href="#page_f28">FINANCIAL STATEMENTS </a></TD>
<TD bgColor=#eeeeee width="10%" align=right>&nbsp;</TD></TR></TABLE>
<BR>
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<P align=justify><B>You should rely only on the information contained in this
Prospectus. We have not authorized anyone to provide you with different
information. We are not making an offer of these securities in any state where
the offer is not permitted.</B></P>
<P align=center><B>PROSPECTUS SUMMARY</B></P>
<P align=justify><I>You should read the following summary together with the more
detailed information and the financial statements appearing elsewhere in this
Prospectus. This Prospectus contains forward-looking statements that involve
risks and uncertainties. Our actual results could differ materially from those
anticipated in these forward-looking statements as a result of certain factors,
including those set forth under &#147;Risk Factors&#148; and elsewhere in this Prospectus.
Unless the context indicates or suggests otherwise, references to &#147;we,&#148; &#147;our,&#148;
&#147;us,&#148; the &#147;Company,&#148; or the &#147;Registrant&#148; refer to American Petro-Hunter Inc., a
Nevada corporation.</I></P>
<P align=center><B>Our Business</B></P>
<P align=justify>We are an oil and natural gas exploration and production
(E&amp;P) company with current projects in Payne and Lincoln Counties in
Oklahoma. As of March 25, 2013, we have six producing wells in Oklahoma. We also
have ownership of 1,410.7 net acres and rights for the exploration and
production of oil and gas on an aggregate of approximately 4,733.8 gross acres
in Oklahoma. This includes rights to explore on 1,847 gross acres in Oklahoma in
the North Oklahoma Mississippi Project and in 2,886 gross acres in south-central
Oklahoma (the &#147;South Oklahoma Project&#148;). In 2012, oil sales from our producing
wells averaged 13.1 cumulative barrels per day.</P>
<P align=justify>Typically, our interest in a well arises from a contract with
another entity pursuant to which we provide financial support for certain costs
incurred in the exploration and development of a project, which may include land
costs, seismic or other exploration, and test drilling. In exchange, we
typically receive an interest in the proceeds from the project&#146;s production.</P>
<P align=justify>Our future operations will require substantial capital
expenditures which will exceed our current revenues. Therefore, we are dependent
upon the identification and successful completion of additional long-term or
permanent equity financings, the support of creditors and shareholders, and,
ultimately, the achievement of profitable operations. There can be no assurances
that we will be successful, which would in turn significantly affect our ability
to meet our business objectives. If we are not successful we will likely be
required to reduce operations or liquidate assets. We will continue to evaluate
our projected expenditures relative to our available cash and to seek additional
means of financing in order to satisfy our acquisition, working capital and
other cash requirements.</P>
<P align=justify>We continue to operate with very limited administrative
support, and our current officers and directors continue to be responsible for
many duties to preserve our working capital. We expect no significant changes in
the number of employees over the next 12 months.</P>
<P align=justify>Our current burn rate is approximately $55,000 per month and we
currently have approximately $12,000 in cash on hand. We are dependent on
additional capital to continue to operate. Failure to complete a financing will
have an adverse effect on our ability to operate and execute our business plan.
Based on the current burn rate, the Company does not currently have sufficient
capital to operate and we are doing so on a very limited budget. As a result,
our accounts payable are expected to grow. If we are unable to raise capital or
generate sufficient revenue, we will have to liquidate or sell certain assets.
If we do raise capital, it will most likely be obtained through equity or debt
financings. There are no assurances that we will be able to raise the required
working capital on terms favorable to the Company, or that such working capital
will be available on any terms when needed. Any such capital that is raised may
result in substantial dilution to our existing stockholders.</P>
<P align=justify>During the year ended December 31, 2012, we raised $727,200
from promissory notes. We also received recorded $308,770 in revenue during the
year ended December 31, 2012 from our producing wells. For the fiscal year ended
December 31, 2012, we incurred a net loss of $3,303,136.</P>
<P align=center>1</P>
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<P align=justify><B>Corporate Information</B></P>
<P align=justify>We were formed on January 24, 1996 pursuant to the laws of the
State of Nevada under the name Wolf Exploration, Inc. In August 2001, we changed
our name to American Petro-Hunter Inc. and began focusing our business on the
exploration and eventual exploitation of oil and gas. The Company operates from
its offices at 250 N Rock Rd., Suite 365 Wichita, KS. Our telephone number is
(316) 201-1853. </P>
<P align=justify><B>Transfer Agent</B></P>
<P align=justify>Our transfer agent is Holladay Stock Transfer, and is located
at 2939 N 67th Place, Scottsdale, Arizona 85251. The agent&#146;s telephone number is
(480) 481-3940.</P>
<P align=justify><B>Equity Enhancement Program with Hanover Holdings I,
LLC</B></P>
<P align=justify><I>Common Stock Purchase Agreement</I></P>
<P align=justify>On March 22, 2013, which we refer to as the Closing Date, we
entered into the Purchase Agreement with Hanover. The Purchase Agreement
provides that, upon the terms and subject to the conditions set forth therein,
Hanover is committed to purchase up to $5,000,000, which we refer to as the
Total Commitment, worth of our common stock, which we refer to as the Shares,
over the 24-month term of the Purchase Agreement.</P>
<P align=justify>From time to time over the term of the Purchase Agreement,
commencing on the trading day immediately following the date on which the
registration statement of which this prospectus is a part is declared effective
by the Securities and Exchange Commission, or the Commission, we may, in our
sole discretion, provide Hanover with draw down notices, each referred to as a
Draw Down Notice, to purchase a specified dollar amount of Shares, which we
refer to as the Draw Down Amount, over a 10 consecutive trading day period
commencing on the trading day specified in the applicable Draw Down Notice,
which we refer to as the Pricing Period, with each draw down subject to the
limitations discussed below. The maximum amount of Shares requested to be
purchased pursuant to any single Draw Down Notice cannot exceed 300% of the
average daily trading volume of our common stock for the 10 trading days
immediately preceding the date of the Draw Down Notice, which we refer to as the
Maximum Draw Down Amount.</P>
<P align=justify>Once presented with a Draw Down Notice, Hanover is required to
purchase a pro rata portion of the applicable Draw Down Amount on each trading
day during the applicable Pricing Period on which the daily volume weighted
average price for our common stock, or VWAP, equals or exceeds a floor price
determined by us for such draw down, which we refer to as the Floor Price. If
the VWAP falls below the applicable Floor Price on any trading day during the
applicable Pricing Period, the Purchase Agreement provides that Hanover will not
be required to purchase the pro rata portion of the applicable Draw Down Amount
allocated to that trading day. The per share purchase price for the Shares
subject to a Draw Down Notice will be equal to 90.0% of the arithmetic average
of the three lowest VWAPs that equal or exceed the applicable Floor Price during
the applicable Pricing Period, except that if the VWAP does not equal or exceed
the applicable Floor Price for at least three trading days during the applicable
Pricing Period, then the per share purchase price will be equal to 90.0% of the
arithmetic average of all VWAPs that equal or exceed the applicable Floor Price
during such Pricing Period. Each purchase pursuant to a draw down will reduce,
on a dollar-for-dollar basis, the Total Commitment under the Purchase
Agreement.</P>
<P align=justify>We are prohibited from issuing a Draw Down Notice if (i) the
amount requested in such Draw Down Notice exceeds the Maximum Draw Down Amount,
(ii) the sale of Shares pursuant to such Draw Down Notice would cause us to
issue or sell or Hanover to acquire or purchase an aggregate dollar value of
Shares that would exceed the Total Commitment, or (iii) the sale of Shares
pursuant to the Draw Down Notice would cause us to sell or Hanover to purchase
an aggregate number of shares of our common stock which would result in
beneficial ownership by Hanover of more than 4.99% of our common stock (as
calculated pursuant to Section 13(d) of the Securities Exchange Act of 1934, as
amended, or the Exchange Act, and the rules and regulations thereunder). We
cannot make more than one draw down in any Pricing Period and must allow 24
hours to elapse between the completion of the settlement of any one draw down
and the commencement of a Pricing Period for any other draw down.</P>
<P align=justify>The Purchase Agreement contains customary representations,
warranties and covenants by, among and for the benefit of the parties. The
Purchase Agreement may be terminated at any time by the mutual written consent
of the parties. Unless earlier terminated, the Purchase Agreement will
terminate automatically on the earlier to occur of (i) the first day of the
month next following the 24-month anniversary of the date on which the
registration statement of which this prospectus is a part is declared effective
by the Commission or (ii) the date on which Hanover purchases the Total
Commitment worth of common stock under the Purchase Agreement. Under certain
circumstances set forth in the Purchase Agreement, we and Hanover each may
terminate the Purchase Agreement on one trading day&#146;s prior written notice to
the other.</P>
<P align=center>2</P>
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<P align=justify>We paid to Hanover a commitment fee for entering into the
Purchase Agreement equal to $150,000 (or 3.0% of the Total Commitment under the
Purchase Agreement) in the form of 1,764,706 restricted shares of our common
stock, which we refer to as the Commitment Shares, calculated at a price equal
to $0.085 per share, which was the closing price of our common stock on March 4,
2013. The Commitment Shares are being registered for resale in the registration
statement of which this prospectus is a part. </P>
<P align=justify>We also agreed to pay up to $15,000 of reasonable attorneys'
fees and expenses (exclusive of disbursements and out-of-pocket expenses)
incurred by Hanover in connection with the preparation, negotiation, execution
and delivery of the Purchase Agreement and related transaction documentation.
Further, if we issue a Draw Down Notice and fail to deliver the shares to
Hanover on the applicable settlement date, and such failure continues for 10
trading days, we agreed to pay Hanover, in addition to all other remedies
available to Hanover under the Purchase Agreement, an amount in cash equal to
2.0% of the purchase price of such shares for each 30-day period the shares are
not delivered, plus accrued interest.</P>
<P align=justify>The Purchase Agreement also provides for indemnification of
Hanover and its affiliates in the event that Hanover incurs losses, liabilities,
obligations, claims, contingencies, damages, costs and expenses related to a
breach by us of any of our representations and warranties under the Purchase
Agreement or the other related transaction documents or any action instituted
against Hanover or its affiliates due to the transactions contemplated by the
Purchase Agreement or other transaction documents, subject to certain
limitations.</P>
<P align=justify><I>Registration Rights Agreement</I></P>
<P align=justify>In connection with the execution of the Purchase Agreement, on
the Closing Date, we and Hanover also entered into a registration rights
agreement dated as of the Closing Date, or the Registration Rights Agreement.
Pursuant to the Registration Rights Agreement, we agreed to file the
registration statement of which this prospectus is a part with the Commission to
register for resale 16,182,230 Shares, which includes the 1,764,706 Commitment
Shares, on or prior to April 22, 2013, which we refer to as the Filing Deadline,
and have it declared effective at the earlier of (A) the 90<SUP>th
</SUP>calendar day after the Closing Date and (B) the fifth business day after
the date the Company is notified by the Commission that the Registration
Statement will not be reviewed or will not be subject to further review, which
we refer to as the Effectiveness Deadline. The effectiveness of the Registration
Statement of which this Prospectus is a part is a condition precedent to our
ability to sell common stock to Hanover under the Purchase Agreement.</P>
<P align=justify>We have agreed to file with the Commission one or more
additional registration statements to cover all of the securities required to be
registered under the Registration Rights Agreement that are not covered by this
prospectus, in each case, as soon as practicable, but in no event later than the
applicable filing deadline for such additional registration statements as
provided in the Registration Rights Agreement.</P>
<P align=justify>We also agreed, among other things, to indemnify Hanover from
certain liabilities and fees and expenses of Hanover incident to our obligations
under the Registration Rights Agreement, including certain liabilities under the
Securities Act. Hanover has agreed to indemnify and hold harmless us and each of
our directors, officers and persons who control us against certain liabilities
that may be based upon written information furnished by Hanover to us for
inclusion in the registration statement of which this prospectus is a part,
including certain liabilities under the Securities Act. </P>
<P align=justify><B>The Offering</B></P>
<P align=justify>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;As of March 25, 2013, there were
49,862,297 shares of our common stock outstanding, of which 48,962,297 shares
were held by non-affiliates, excluding the 1,764,706 Commitment Shares that we
have already issued to Hanover under the Purchase Agreement. Although the
Purchase Agreement provides that we may sell up to $5,000,000 of our common stock to Hanover, only 16,182,230
shares of our common stock are being offered under this prospectus, which
represents (i) 1,764,706 shares of common stock that we issued to Hanover as
Commitment Shares and (ii) 14,417,524 shares of common stock that we may issue
to Hanover as Shares pursuant to draw downs under the Purchase Agreement. If all
of the 16,182,230 shares offered under this prospectus were issued and
outstanding as of March 25, 2013, such shares would represent approximately
24.50% of the total number of shares of our common stock outstanding and 24.84%
of the total number of outstanding shares of our common stock held by
non-affiliates, in each case as of March 25, 2013. </P>
<P align=center>3</P>
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width="100%" noShade>
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<P align=justify>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;At an assumed purchase price of
$0.01233 (equal to 90.0% of the closing price of our common stock of $0.0137 on
September 5, 2013), and assuming the sale by us to Hanover of all of the
14,417,524 Shares being registered hereunder pursuant to draw downs under the
Purchase Agreement, we would receive only approximately $177,768.07 in gross
proceeds. If we elect to issue and sell more than the 14,417,524 Shares offered
under this prospectus to Hanover, which we have the right, but not the
obligation, to do, we must first register for resale under the Securities Act
any such additional Shares, which could cause additional substantial dilution to
our stockholders. Based on the above assumptions, we would be required to
register an additional approximately 391,097,480 shares of our common stock to
obtain the balance of $5,000,000 of the Total Commitment that would be available
to us under the Purchase Agreement. We currently have authorized and available
for issuance 200,000,000 shares of our common stock pursuant to our charter. The
number of shares of our common stock ultimately offered for resale by Hanover is
dependent upon the number of shares we ultimately issue and sell to Hanover
under the Purchase Agreement.</P>
<P align=justify>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;The Total Commitment of
$5,000,000 was determined based on numerous factors, including our estimated
operating expenses for the next two years. While it is difficult to estimate the
likelihood that we will need the full Total Commitment, we presently believe
that we may need the full Total Commitment under the Purchase Agreement.</P>
<P align=center><B>The Offering</B></P>
<TABLE
style="BORDER-COLOR: black; BORDER-COLLAPSE: collapse; FONT-SIZE: 10pt; "
border=0 cellSpacing=0 cellPadding=0 width="100%">

  <TR vAlign=top>
    <TD align=left nowrap >Issuer </TD>
    <TD colSpan=2 align=left>
      <P align=justify>American Petro-Hunter Inc. </P></TD></TR>
  <TR>
    <TD nowrap >&nbsp; </TD>
    <TD width="5%" >
    <P align=justify> </P></TD>
    <TD width="55%">
  <P align=justify> </P></TD></TR>
  <TR vAlign=top>
    <TD align=left nowrap >Securities Offered for Resale </TD>
    <TD colSpan=2 align=left>
      <P align=justify>Up to an aggregate of 16,182,230 shares of our common
      stock, consisting of: </P></TD></TR>
  <TR>
    <TD nowrap >&nbsp; </TD>
    <TD width="5%" >
    <P align=justify> </P></TD>
    <TD width="55%">
  <P align=justify> </P></TD></TR>
  <TR vAlign=top>
    <TD align=left nowrap ></TD>
    <TD width="5%" align=left >
    <P align=justify>&#186; </P></TD>
    <TD width="55%" align=left>
      <P align=justify>1,764,706 shares of common stock that we issued to
      Hanover as Commitment Shares; and </P></TD></TR>
  <TR vAlign=top>
    <TD align=left nowrap ></TD>
    <TD width="5%" align=left >
    <P align=justify>&#186; </P></TD>
    <TD width="55%" align=left>
      <P align=justify>14,417,524 shares of common stock that we may issue to
      Hanover as Shares pursuant to draw downs under the Purchase Agreement.
    </P></TD></TR>
  <TR>
    <TD  align=left nowrap>&nbsp;</TD>
    <TD  width="5%" align=left>
    <P align=justify>&nbsp;</P></TD>
    <TD  width="55%" align=left>
  <P align=justify>&nbsp;</P></TD></TR>
  <TR vAlign=top>
    <TD align=left nowrap >Common Stock Outstanding Before the Offering    </TD>
    <TD colSpan=2 align=left>
      <P align=justify>49,862,294 shares </P></TD></TR>
  <TR>
    <TD  align=left nowrap>&nbsp;</TD>
    <TD colSpan=2 align=left>
      <P align=justify>&nbsp;</P></TD></TR>
  <TR vAlign=top>
    <TD align=left nowrap >Common Stock to be Outstanding After the
      Offering <BR>
    assuming all of the Securities are Resold </TD>
    <TD colSpan=2 align=left>
      <P align=justify>66,044,524 shares </P></TD></TR>
  <TR>
    <TD  align=left nowrap>&nbsp;</TD>
    <TD colSpan=2 align=left>
      <P align=justify>&nbsp;</P></TD></TR>
  <TR vAlign=top>
    <TD align=left nowrap >Use of Proceeds </TD>
    <TD colSpan=2 align=left>
      <P align=justify>We will not receive any proceeds from the sale of shares
      by the selling stockholder. However, we will receive proceeds from the
      sale of Shares to Hanover pursuant to the Purchase Agreement. The net
      proceeds received under the Purchase Agreement will be used for general
      corporate and working capital purposes and acquisitions or assets,
      businesses or operations or for other purposes that our Board of
      Directors, in its good faith deem to be in the best interest of the
      company and its stockholders. </P></TD></TR>
  <TR>
    <TD  align=left nowrap>&nbsp;</TD>
    <TD colSpan=2 align=left>
      <P align=justify>&nbsp;</P></TD></TR>
  <TR vAlign=top>
    <TD align=left nowrap >Trading </TD>
    <TD colSpan=2 align=left>
      <P align=justify>Our common stock is quoted on the OTC Bulletin Board
      under the symbol &#147;AAPH&#148; </P></TD></TR></TABLE>
<P align=center>4</P>
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width="100%" noShade>
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<TABLE
style="BORDER-COLOR: black; BORDER-COLLAPSE: collapse; FONT-SIZE: 10pt; "
border=0 cellSpacing=0 cellPadding=0 width="100%">

  <TR vAlign=top>
    <TD align=left >
      <P align=justify>Risk Factors </P></TD>
    <TD width="60%" align=left>
      <P align=justify>The common stock offered hereby involves a high degree of
      risk and should not be purchased by investors who cannot afford the loss
      of their entire investment. See &#147;Risk Factors&#148;. </P></TD></TR>
  <TR>
    <TD style="BORDER-BOTTOM: #000000 1px solid"
    align=left>&nbsp;</TD>
    <TD style="BORDER-BOTTOM: #000000 1px solid"  width="60%"
    align=left>&nbsp;</TD>
  </TR></TABLE>
<P align=center><B>SUMMARY OF FINANCIAL INFORMATION</B></P>
<P align=justify>The following selected financial information is derived from
the Company&#146;s Financial Statements appearing elsewhere in this Prospectus and
should be read in conjunction with the Company&#146;s Financial Statements, including
the notes thereto, appearing elsewhere in this Prospectus.</P>
<P align=justify><B><I>Summary of Statements of Operations</I></B></P>
<TABLE
style="BORDER-COLOR: black; BORDER-COLLAPSE: collapse; FONT-SIZE: 10pt; "
border=0 cellSpacing=0 cellPadding=0 width="100%">

  <TR vAlign=top>
    <TD align=left><B>For the Period Ending December 31, 2012:</B> </TD>
    <TD  width="1%" align=left>&nbsp;</TD>
    <TD width="12%" align=left>&nbsp; </TD>
    <TD  width="2%" align=left>&nbsp;</TD></TR>
  <TR vAlign=top>
    <TD bgColor=#e6efff align=left>Total revenue </TD>
    <TD bgColor=#e6efff  width="1%" align=left>$</TD>
    <TD bgColor=#e6efff width="12%" align=right>&nbsp;308,770 </TD>
    <TD bgColor=#e6efff  width="2%" align=left>&nbsp;</TD></TR>
  <TR vAlign=top>
    <TD align=left>Net loss </TD>
    <TD  width="1%" align=left>&nbsp;</TD>
    <TD width="12%" align=right>(3,303,136</TD>
    <TD  width="2%" align=left>) </TD></TR>
  <TR vAlign=top>
    <TD bgColor=#e6efff align=left>Net loss per common share (basic and
      diluted) </TD>
    <TD bgColor=#e6efff  width="1%" align=left>$</TD>
    <TD bgColor=#e6efff width="12%" align=right>&nbsp;(0.07</TD>
    <TD bgColor=#e6efff  width="2%" align=left>) </TD></TR>
  <TR vAlign=top>
    <TD align=left>Weighted average common shares </TD>
    <TD  width="1%" align=left>&nbsp;</TD>
    <TD width="12%" align=right>44,476,603 </TD>
    <TD  width="2%" align=left>&nbsp;</TD></TR>
  <TR>
    <TD bgColor=#e6efff>&nbsp; </TD>
    <TD bgColor=#e6efff  width="1%">&nbsp;</TD>
    <TD bgColor=#e6efff width="12%">&nbsp; </TD>
    <TD bgColor=#e6efff  width="2%">&nbsp;</TD></TR>
  <TR vAlign=top>
    <TD align=left><B><I>Statement of Financial Position</I></B> </TD>
    <TD  width="1%" align=left>&nbsp;</TD>
    <TD width="12%" align=left>&nbsp; </TD>
    <TD  width="2%" align=left>&nbsp;</TD></TR>
  <TR vAlign=top>
    <TD bgColor=#e6efff align=left><B>As of December 31, 2012</B> </TD>
    <TD bgColor=#e6efff  width="1%" align=left>&nbsp;</TD>
    <TD bgColor=#e6efff width="12%" align=left>&nbsp; </TD>
    <TD bgColor=#e6efff  width="2%" align=left>&nbsp;</TD></TR>
  <TR vAlign=top>
    <TD align=left>Cash </TD>
    <TD  width="1%" align=left>$</TD>
    <TD width="12%" align=right>&nbsp;16,216 </TD>
    <TD  width="2%" align=left>&nbsp;</TD></TR>
  <TR vAlign=top>
    <TD bgColor=#e6efff align=left>Accounts Receivable </TD>
    <TD bgColor=#e6efff  width="1%" align=left>&nbsp;</TD>
    <TD bgColor=#e6efff width="12%" align=right>13,735 </TD>
    <TD bgColor=#e6efff  width="2%" align=left>&nbsp;</TD></TR>
  <TR vAlign=top>
    <TD align=left>Total current assets </TD>
    <TD  width="1%" align=left>&nbsp;</TD>
    <TD width="12%" align=right>29,951 </TD>
    <TD  width="2%" align=left>&nbsp;</TD></TR>
  <TR vAlign=top>
    <TD bgColor=#e6efff align=left>Investments in mineral properties, net of
      accumulated amortization of $132,499 and $135,987, respectively </TD>
    <TD bgColor=#e6efff  width="1%" align=left>&nbsp;</TD>
    <TD bgColor=#e6efff width="12%" align=right>1,582,324 </TD>
    <TD bgColor=#e6efff  width="2%" align=left>&nbsp;</TD></TR>
  <TR vAlign=top>
    <TD align=left>Capitalized financing costs, net of amortization of $6,737
      and $0, respectively </TD>
    <TD  width="1%" align=left>&nbsp;</TD>
    <TD width="12%" align=right>41,263 </TD>
    <TD  width="2%" align=left>&nbsp;</TD></TR>
  <TR vAlign=top>
    <TD bgColor=#e6efff align=left>Total assets </TD>
    <TD bgColor=#e6efff  width="1%" align=left>$</TD>
    <TD bgColor=#e6efff width="12%" align=right>&nbsp;1,653,538 </TD>
    <TD bgColor=#e6efff  width="2%" align=left>&nbsp;</TD></TR>
  <TR vAlign=top>
    <TD align=left>Total current liabilities </TD>
    <TD  width="1%" align=left>$</TD>
    <TD width="12%" align=right>&nbsp;648,461 </TD>
    <TD  width="2%" align=left>&nbsp;</TD></TR>
  <TR vAlign=top>
    <TD bgColor=#e6efff align=left>Total long-term liabilities </TD>
    <TD bgColor=#e6efff  width="1%" align=left>$</TD>
    <TD bgColor=#e6efff width="12%" align=right>&nbsp;992,835 </TD>
    <TD bgColor=#e6efff  width="2%" align=left>&nbsp;</TD></TR>
  <TR vAlign=top>
    <TD align=left>Stockholders&#146; equity </TD>
    <TD  width="1%" align=left>$</TD>
    <TD width="12%" align=right>&nbsp;12,242 </TD>
    <TD  width="2%" align=left>&nbsp;</TD></TR>
  <TR vAlign=top>
    <TD bgColor=#e6efff align=left>Total liabilities and stockholders&#146; deficit
    </TD>
    <TD bgColor=#e6efff  width="1%" align=left>$</TD>
    <TD bgColor=#e6efff width="12%" align=right>&nbsp;1,653,538 </TD>
    <TD bgColor=#e6efff  width="2%"
  align=left>&nbsp;</TD></TR></TABLE>
<P align=center>&nbsp;</P>
<P align=center>5</P>
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<P align=center><I><b>DISCLOSURE REGARDING FORWARD-LOOKING STATEMENTS</b></I></P>
<P align=justify><I>Except for statements of historical facts, this Prospectus
  contains forward-looking statements involving risks and uncertainties. The words
  &#147;anticipate,&#148; &#147;believe,&#148; &#147;estimate,&#148; &#147;expect,&#148; &#147;future,&#148; &#147;intend,&#148; &#147;plan&#148; or the
  negative of these terms and similar expressions or variations thereof are
  intended to forward looking statements. Such statements reflect the current view
  of the Registrant with respect to future events and are subject to risks,
  uncertainties, assumptions and other factors (including the risks contained in
  the section of this registration statement on Form S-1 entitled &#147;Risk Factors&#148;)
  relating to the Registrant&#146;s industry, the Registrant&#146;s operations and results
  of operations and any businesses that may be acquired by the Registrant. Should
  one or more of these risks or uncertainties materialize, or should the
  underlying assumptions prove incorrect, actual results may differ significantly
  from those anticipated, believed, estimated, expected, intended or
  planned.</I></P>
<P align=justify><I>Although the Registrant believes that the expectations
reflected in the forward looking statements are reasonable, the Registrant
cannot guarantee future results, levels of activity, performance or
achievements. Except as required by applicable law, including the securities
laws of the United States, the Registrant does not intend to update any of the
forward-looking statements to conform these statements to actual results. The
following discussion should be read in conjunction with the Registrant&#146;s
financial statements and the related notes included in this registration
statement on Form S-1.</I></P>
<P align=center><B>RISK FACTORS</B></P>
<P align=justify><I>You should carefully consider the risks described below
together with all of the other information included in our public filings before
making an investment decision with regard to our securities. The statements
contained in or incorporated into this registration statement on Form S-1 that
are not historic facts are forward-looking statements that are subject to risks
and uncertainties that could cause actual results to differ materially from
those set forth in or implied by forward-looking statements. While the risks
described below are the ones we believe are most important for you to consider,
these risks are not the only ones that we face. If any of the following events
described in these risk factors actually occurs, our business, financial
condition or results of operations could be harmed. In that case, the trading
price of our common stock could decline, and you may lose all or part of your
investment.</I></P>
<P align=justify><B>We have a history of losses which may continue, which may
negatively impact our ability to achieve our business objectives.</B></P>
<P align=justify>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;We have an accumulated deficit of
$13,777,606 for the period from January 24, 1996 (inception) to December 31,
2012. We cannot be assured that we can achieve or sustain profitability on a
quarterly or annual basis in the future. Our operations are subject to the risks
and competition inherent in the establishment of a business enterprise. There
can be no assurance that future operations will be profitable. We may not
achieve our business objectives and the failure to achieve such goals would have
an adverse impact on us.</P>
<P align=justify><B>If we are unable to obtain additional funding our business
operations will be harmed and if we do obtain additional financing our then
existing shareholders may suffer substantial dilution.</B></P>
<P align=justify>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;We will require additional funds
to expand our oil and gas exploration activities, and to take advantage of any
available business opportunities. Historically, we have financed our
expenditures primarily with proceeds from the sale of debt and equity
securities, bridge loans from our officers and stockholders and proceeds from
our producing wells. The proceeds from our operations are currently insufficient
to fully meet our obligations or enable us to carry out our business plan, so we
will have to raise additional funds. Obtaining additional financing will be
subject to market conditions, industry trends, investor sentiment and investor
acceptance of our business plan and management. These factors may make the
timing, amount, terms and conditions of additional financing unattractive or
unavailable to us. If we are not successful in achieving financing in the amount
necessary to further our operations, implementation of our business plan may
fail or be delayed and any such failure or delay may have a material adverse
effect on our company, stock price and business.</P>
<P align=justify><B>Our independent auditors have expressed substantial doubt
about our ability to continue as a going concern, which may hinder our ability
to obtain future financing</B><B><I>.</I></B></P>
<P align=justify>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;In their report dated April 15,
2013, our independent auditors stated that our financial statements for the
fiscal year ended December 31, 2012 were prepared assuming that we would
continue as a going concern. Our ability to continue as a going concern is an issue raised as a
result of recurring losses from operations. We continue to experience net
operating losses. Our ability to continue as a going concern is subject to our
ability to obtain necessary funding from outside sources, including obtaining
additional funding from the sale of our securities. Our continued net operating
losses increase the difficulty in meeting such goals and there can be no
assurances that such methods will prove successful.</P>
<P align=center>6</P>
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<P align=justify><B>We have a limited operating history and if we are not
successful in growing our business, then we may have to scale back or even cease
our ongoing business operations</B><B><I>.</I></B></P>
<P align=justify>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;We have yet to generate positive
earnings from our current business strategy and there can be no assurance that
we will ever operate profitably. Our Company has a limited operating history in
the business of oil and gas exploration and must be considered in the
development stage. Our success significantly depends on successful acquisition
and subsequent exploration activities. Our operations will be subject to all the
risks inherent in the establishment of a developing enterprise and the
uncertainties arising from the absence of a significant operating history. We
may be unable to locate recoverable reserves or operate on a profitable basis.
We are in the development stage and potential investors should be aware of the
difficulties normally encountered by enterprises in the development stage. If
our business plan is not successful, and we are not able to operate profitably,
investors may lose some or all of their investment in our Company.</P>
<P align=center><B><I>Risks Related to our Oil and Gas Exploration</I></B></P>
<P align=justify><B>Our operating revenue is dependent upon the performance of
our properties.</B></P>
<P align=justify>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Our operating revenue depends
upon our ability to profitably operate our existing properties by drilling and
completing wells that produce commercial quantities of oil and gas and our
ability to expand our operations through the successful implementation of our
plans to explore, acquire and develop additional properties. The successful
development of oil and gas properties requires an assessment of potential
recoverable reserves, future oil and gas prices, operating costs, potential
environmental and other liabilities and other factors. Such assessments are
necessarily inexact. No assurance can be given that we can produce sufficient
revenue to operate our existing properties or acquire additional oil and gas
producing properties and leases. We may not discover or successfully produce any
recoverable reserves in the future, or we may not be able to make a profit from
the reserves that we may discover. In the event that we are unable to produce
sufficient operating revenue to fund our operations, we will be forced to seek
additional, third-party funding, if such funding can be obtained. Such options
would possibly include debt financing, sale of equity interests in our Company,
joint venture arrangements, or the sale of oil and gas interests. If we are
unable to secure such financing on a timely basis, we could be required to delay
or scale back our operations. If such unavailability of funds continued for an
extended period of time, this could result in the termination of our operations
and the loss of an investor&#146;s entire investment.</P>
<P align=justify><B>We own rights to oil properties that have not yet been
developed.</B></P>
<P align=justify>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;We own rights to oil and gas
properties that have limited or no development. There are no guarantees that our
properties will be developed profitably or that the potential oil and gas
resources on the property will produce as expected if they are developed.</P>
<P align=justify><B>Title to the properties in which we have an interest may be
impaired by title defects.</B></P>
<P align=justify>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Our general policy is to obtain
title opinions on significant properties that we drill or acquire. However,
there is no assurance that we will not suffer a monetary loss from title defects
or title failure. Additionally, undeveloped acreage has greater risk of title
defects than developed acreage. Generally, under the terms of the operating
agreements affecting our properties, any monetary loss is to be borne by all
parties to any such agreement in proportion to their interests in such property.
If there are any title defects or defects in assignment of leasehold rights in
properties in which we hold an interest, we will suffer a financial loss.</P>
<P align=justify><B>We are subject to risks arising from the failure to fully
identify potential problems related to acquired reserves or to properly estimate
those reserves.</B></P>
<P align=center>7</P>
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<P align=justify>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Although we perform a review of
the acquired properties that we believe is consistent with industry practices,
such reviews are inherently incomplete. It generally is not feasible to review
in depth every individual property involved in each acquisition. Ordinarily, we
will focus our review efforts on the higher-value properties and will sample the
remainder, and depend on the representations of previous owners. However, even a
detailed review of records and properties may not necessarily reveal existing or
potential problems, nor will it permit a buyer to become sufficiently familiar
with the properties to assess fully their deficiencies and potential.
Inspections may not always be performed on every well, and environmental
problems, such as ground water contamination, are not necessarily observable
even when an inspection is undertaken. Even when problems are identified, we
often assume certain environmental and other risks and liabilities in connection
with acquired properties. There are numerous uncertainties inherent in
estimating quantities of proved oil reserves and actual future production rates
and associated costs with respect to acquired properties, and actual results may
vary substantially from those assumed in the estimates.</P>
<P align=justify><B>If we are unable to successfully recruit qualified
managerial and field personnel having experience in oil and gas exploration, we
may not be able to execute on our business plan.</B></P>
<P align=justify>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;In order to successfully
implement and manage our business plan, we will be dependent upon, among other
things, successfully recruiting qualified managerial and field personnel having
experience in the oil and gas exploration business. Competition for qualified
individuals is intense. There can be no assurance that we will be able to find,
attract and retain existing employees or that we will be able to find, attract
and retain qualified personnel on acceptable terms.</P>
<P align=justify><B>Even for producing properties, the potential profitability
of oil and gas ventures depends upon factors beyond the control of our
Company.</B></P>
<P align=justify>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;The potential profitability of
oil and gas properties is dependent upon many factors beyond our control. For
instance, world prices and markets for oil and gas are unpredictable, highly
volatile, potentially subject to governmental fixing, pegging, controls or any
combination of these and other factors, and respond to changes in domestic,
international, political, social and economic environments. Additionally, due to
worldwide economic uncertainty, the availability and cost of funds for
production and other expenses have become increasingly difficult, if not
impossible, to project. These changes and events may materially affect our
future financial performance. These factors cannot be accurately predicted and
the combination of these factors may result in our Company not receiving an
adequate return on invested capital.</P>
<P align=justify><B>Drilling for oil and gas involves inherent risks that may
adversely affect our results of operations and financial condition.</B></P>
<P align=justify>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Drilling for oil and gas involves
numerous risks, including the risk that we will not encounter commercially
productive oil and gas reservoirs. The wells we drill or participate in may not
be productive and we may not recover all or any portion of our investment in
those wells. The seismic data and other technologies we use do not allow us to
know conclusively prior to drilling a well that crude or natural gas is present
or may be produced economically. The costs of drilling, completing and operating
wells are often uncertain, and drilling operations may be curtailed, delayed or
canceled as a result of a variety of factors including, but not limited to:</P>
<UL style="TEXT-ALIGN: justify">
  <LI>
  <P>unexpected drilling conditions; </P>
  <LI>
  <P>pressure or irregularities in formations; </P>
  <LI>
  <P>equipment failures or accidents; </P>
  <LI>
  <P>mechanical difficulties, such as lost or stuck oil field drilling and
  service tools; </P></LI></UL>
<P align=center>8</P>
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<UL style="TEXT-ALIGN: justify">
  <LI>
  <P>fires, explosions, blowouts and surface cratering; </P>
  <LI>
  <P>uncontrollable flows of oil and formation water; </P>
  <LI>
  <P>environmental hazards, such as oil spills, pipeline ruptures and discharges
  of toxic gases; </P>
  <LI>
  <P>other adverse weather conditions; and </P>
  <LI>
  <P>increase in the cost of, or shortages or delays in the availability of,
  drilling rigs and equipment. </P></LI></UL>
<P align=justify>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Certain future drilling
activities may not be successful and, if unsuccessful, this failure could have
an adverse effect on our future results of operations and financial condition.
While all drilling, whether developmental or exploratory, involves these risks,
exploratory drilling involves greater risks of dry holes or failure to find
commercial quantities of hydrocarbons.</P>
<P align=justify><B>Our oil and gas operations involve substantial costs and are
subject to various economic risks.</B></P>
<P align=justify>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Our oil and gas operations are
subject to the economic risks typically associated with exploration, development
and production activities, including the necessity of significant expenditures
to locate and acquire producing properties and to drill exploratory wells. The
cost and length of time necessary to produce any reserves may be such that it
will not be economically viable. In conducting exploration and development
activities, the presence of unanticipated pressure or irregularities in
formations, miscalculations or accidents may cause our exploration, development
and production activities to be unsuccessful. In addition, the cost and timing
of drilling, completing and operating wells is often uncertain. We also face the
risk that the oil and gas reserves may be less than anticipated, that we will
not have sufficient funds to successfully drill on the property, that we will
not be able to market the oil and gas due to a lack of a market and that
fluctuations in the prices of oil will make development of those leases
uneconomical. This could result in a total loss of our investment.</P>
<P align=justify><B>A substantial or extended decline in oil and gas prices may
adversely affect our business, financial condition, cash flow, liquidity or
results of operations as well as our ability to meet our capital expenditure
obligations and financial commitments to implement our business plan.</B></P>
<P align=justify>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Any revenues, cash flow,
profitability and future rate of growth we achieve will be greatly dependent
upon prevailing prices for oil and gas. Our ability to maintain or increase our
borrowing capacity and to obtain additional capital on attractive terms is also
expected to be dependent on oil and gas prices. Historically, oil and gas prices
and markets have been volatile and are likely to continue to be volatile in the
future. Prices for oil and gas are subject to potentially wide fluctuations in
response to relatively minor changes in supply of and demand for oil and gas,
market uncertainty, and a variety of additional factors beyond our control.
Those factors include:</P>
<UL style="TEXT-ALIGN: justify">
  <LI>
  <P>the domestic and foreign supply of oil and natural gas; </P>
  <LI>
  <P>the ability of members of the Organization of Petroleum Exporting Countries
  and other producing countries to agree upon and maintain oil prices and
  production levels; </P>
  <LI>
  <P>political instability, armed conflict or terrorist attacks, whether or not
  in oil or natural gas producing regions; </P>
  <LI>
  <P>the level of consumer product demand; </P></LI></UL>
<P align=center>9</P>
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<UL style="TEXT-ALIGN: justify">
  <LI>
  <P>the growth of consumer product demand in emerging markets, such as China
  and India; </P>
  <LI>
  <P>weather conditions, including hurricanes and other natural occurrences that
  affect the supply and/or demand of oil and natural gas; </P>
  <LI>
  <P>domestic and foreign governmental regulations and other actions; </P>
  <LI>
  <P>the price and availability of alternative fuels; </P>
  <LI>
  <P>the price of foreign imports; </P>
  <LI>
  <P>the availability of liquid natural gas imports; and </P>
  <LI>
  <P>worldwide economic conditions. </P></LI></UL>
<P align=justify>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;These external factors and the
volatile nature of the energy markets make it difficult to estimate future
prices of oil and natural gas. Lower oil and natural gas prices may not only
decrease our revenues on a per unit basis, but may also reduce the amount of oil
we can produce economically, if any. A substantial or extended decline in oil
and natural gas prices may materially affect our future business, financial
condition, results of operations, liquidity and borrowing capacity. While our
revenues may increase if prevailing oil and gas prices increase significantly,
exploration and production costs and acquisition costs for additional properties
and reserves may also increase.</P>
<P align=justify><B>Competition in the oil and gas industry is highly
competitive and there is no assurance that we will be successful in acquiring
viable leases.</B></P>
<P align=justify>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;The oil and gas industry is
intensely competitive. We compete with numerous individuals and companies,
including many major oil and gas companies which have substantially greater
technical, financial and operational resources and staffs. Accordingly, there is
a high degree of competition for desirable oil and gas leases, suitable
properties for drilling operations and necessary drilling equipment, as well as
for access to funds. This competition is increasingly intense as prices of crude
oil and natural gas on the commodities markets have risen in recent years.
Additionally, other companies engaged in our line of business may compete with
us from time to time in obtaining capital from investors. Competitors include
larger companies which, in particular, may have access to greater resources, may
be more successful in the recruitment and retention of qualified employees and
may conduct their own refining and petroleum marketing operations, which may
give them a competitive advantage. If we are unable to compete effectively or
respond adequately to competitive pressures, our results of operation and
financial condition may be materially adversely affected.</P>
<P align=justify><B>Oil and gas operations are subject to comprehensive
regulation which may cause substantial delays or require capital outlays in
excess of those anticipated causing an adverse effect on our
Company</B><B><I>.</I></B></P>
<P align=justify>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Oil and gas operations are
subject to country-specific federal, state, and local laws relating to the
protection of the environment, including laws regulating removal of natural
resources from the ground and the discharge of materials into the environment.
Oil and gas operations are also subject to country-specific federal, state, and
local laws and regulations which seek to maintain health and safety standards by
regulating the design and use of drilling methods and equipment. Various permits
from governmental bodies are required for drilling operations to be conducted
and no assurance can be given that such permits will be received. Environmental
standards imposed by federal, state, provincial, or local authorities may be
changed and any such changes may have material adverse effects on our activities. Moreover,
compliance with such laws may cause substantial delays or require capital
outlays in excess of those anticipated, thus causing an adverse effect on us.
Additionally, we may be subject to liability for pollution or other
environmental damages. To date, we have not been required to spend any material
amount on compliance with environmental regulations. However, we may be required
to do so in the future and this may affect our ability to expand or maintain our
operations.</P>
<P align=center>10</P>
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<P align=justify><B>The unavailability or high cost of drilling rigs, equipment,
supplies, personnel and oil field services could adversely affect our ability to
execute our exploration and development plans on a timely basis and within our
budget.</B></P>
<P align=justify>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Our industry is cyclical and,
from time to time, there is a shortage of drilling rigs, equipment, supplies or
qualified personnel. During these periods, the costs and delivery times of rigs,
equipment and supplies are substantially greater. In addition, the demand for,
and wage rates of, qualified drilling rig crews rise as the number of active
rigs in service increases. As a result of increasing levels of exploration and
production in response to strong prices of oil and natural gas, the demand for
oilfield services and equipment has risen, and the costs of these services and
equipment are increasing. If the unavailability or high cost of drilling rigs,
equipment, supplies or qualified personnel were particularly severe in areas
where we operate, we could be materially and adversely affected.</P>
<P align=justify><B>We depend on the skill, ability and decisions of third party
operators to a significant extent.</B></P>
<P align=justify>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;The success of the drilling,
development and production of the oil properties in which we have or expect to
have a working interest is substantially dependent upon the decisions of such
third-party operators and their diligence to comply with various laws, rules and
regulations affecting such properties. The failure of any third-party operator
to make decisions, perform their services, discharge their obligations, deal
with regulatory agencies, and comply with laws, rules and regulations, including
environmental laws and regulations in a proper manner with respect to properties
in which we have an interest could result in material adverse consequences to
our interest in such properties, including substantial penalties and compliance
costs. Such adverse consequences could result in substantial liabilities to us
or reduce the value of our properties, which could negatively affect our results
of operations.</P>
<P align=justify><B>Exploration and production activities are subject to certain
environmental regulations which may prevent or delay the commencement or
continuation of our operations.</B></P>
<P align=justify>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;In general, our exploration and
production activities are subject to certain country-specific federal, state and
local laws and regulations relating to environmental quality and pollution
control. Such laws and regulations increase the costs of these activities and
may prevent or delay the commencement or continuation of a given operation.
Compliance with these laws and regulations has not had a material effect on our
operations or financial condition to date. Specifically, we will be subject to
legislation regarding emissions into the environment, water discharges and
storage and disposition of hazardous wastes. In addition, legislation has been
enacted which requires well and facility sites to be abandoned and reclaimed to
the satisfaction of U.S. state authorities. However, such laws and regulations
are frequently changed and we are unable to predict the ultimate cost of
compliance. Generally, environmental requirements do not appear to affect us any
differently or to any greater or lesser extent than other companies in the
industry. We believe that our current operations comply, in all material
respects, with all applicable environmental regulations.</P>
<P align=center><B><I>Risks Relating to our Common Stock and our Status as a
Public Company</I></B></P>
<P align=justify><B>We are required to incur significant costs and require
significant management resources to evaluate our internal control over financial
reporting as required under Section 404 of the Sarbanes-Oxley Act, and any
failure to comply or any adverse result from such evaluation may have an adverse
effect on our stock price. </B></P>
<P align=justify>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;As a smaller reporting company as
defined in Rule 12b-2 under the Securities Exchange Act of 1934, as amended, we
are required to evaluate our internal control over financial reporting under
Section 404 of the Sarbanes-Oxley Act of 2002 (&#147;Section 404&#148;). Section 404
requires us to include an internal control report with the Annual Report on Form
10-K. This report must include management&#146;s assessment of the effectiveness of
our internal control over financial reporting as of the end of the
fiscal year. This report must also include disclosure of any material weaknesses
in internal control over financial reporting that we have identified. Failure to
comply, or any adverse results from such evaluation could result in a loss of
investor confidence in our financial reports and have an adverse effect on the
trading price of our equity securities. Management believes that its internal
controls and procedures are currently not effective to detect the inappropriate
application of U.S. GAAP rules. Management realize there are deficiencies in the
design or operation of our internal control that adversely affect our internal
controls which management considers to be material weaknesses including those
described below: </P>
<P align=center>11</P>
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<TABLE
style="BORDER-COLOR: black; BORDER-COLLAPSE: collapse; FONT-SIZE: 10pt; "
border=0 cellSpacing=0 cellPadding=0 width="100%" BCLLIST>

  <TR>
    <TD width="5%"  >&nbsp;</TD>
    <TD vAlign=top width="5%">i) </TD>
    <TD>
      <P align=justify>We have not achieved the optimal level of segregation of
      duties relative to key financial reporting functions.</P></TD></TR>
  <TR>
    <TD width="5%" >&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD>&nbsp;</TD></TR>
  <TR>
    <TD width="5%" >&nbsp;</TD>
    <TD vAlign=top width="5%">ii) </TD>
    <TD>
      <P align=justify>We have insufficient quantity of dedicated resources and
      experienced personnel involved in reviewing and designing internal
      controls. As a result, a material misstatement of the interim and annual
      financial statements could occur and not be prevented or detected on a
      timely basis.</P></TD></TR>
  <TR>
    <TD width="5%" >&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD>&nbsp;</TD></TR>
  <TR>
    <TD width="5%" >&nbsp;</TD>
    <TD vAlign=top width="5%">iii) </TD>
    <TD>
      <P align=justify>We did not perform an entity level risk assessment to
      evaluate the implication of relevant risks on financial reporting,
      including the impact of potential fraud related risks and the risks
      related to non- routine transactions, if any, on our internal control over
      financial reporting. Lack of an entity-level risk assessment constituted
      an internal control design deficiency which resulted in more than a remote
      likelihood that a material error would not have been prevented or
      detected, and constituted a material weakness.</P></TD></TR>
  <TR>
    <TD width="5%" >&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD>&nbsp;</TD></TR>
  <TR>
    <TD width="5%" >&nbsp;</TD>
    <TD vAlign=top width="5%">iv) </TD>
    <TD>
      <P align=justify>We did not have an audit committee or an independent
      audit committee financial expert. While not being legally obligated to
      have an audit committee or independent audit committee financial expert,
      it is the management&#146;s view that to have an audit committee, comprised of
      independent board members, and an independent audit committee financial
      expert is an important entity-level control over our financial
      statements.</P></TD></TR></TABLE>
<P align=justify>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Achieving continued compliance
with Section 404 may require us to incur significant costs and expend
significant time and management resources. We cannot assure you that we will be
able to fully comply with Section 404 or that we and our independent registered
public accounting firm would be able to conclude that our internal control over
financial reporting is effective at fiscal year-end. As a result, investors
could lose confidence in our reported financial information, which could have an
adverse effect on the trading price of our securities, as well as subject us to
civil or criminal investigations and penalties. In addition, our independent
registered public accounting firm may not agree with our management&#146;s assessment
or conclude that our internal control over financial reporting is operating
effectively.</P>
<P align=justify><B>A limited public trading market exists for our common stock,
which makes it more difficult for our stockholders to sell their common stock in
the public markets.</B></P>
<P align=justify>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Our common stock is currently
traded under the symbol &#147;AAPH&#148; and currently trades at a low volume, based on
quotations on the &#147;Over-the-Counter Bulletin Board,&#148; meaning that the number of
persons interested in purchasing our common stock at or near bid prices at any
given time may be relatively small or non-existent. This situation is
attributable to a number of factors, including the fact that we are a small
company which is still relatively unknown to stock analysts, stock brokers,
institutional investors, and others in the investment community that generate or
influence sales volume, and that even if we came to the attention of such
persons, they tend to be risk-averse and would be reluctant to follow an
unproven company such as ours or purchase or recommend the purchase of our stock
until such time as we became more viable. Additionally, many brokerage firms may
not be willing to effect transactions in the securities. As a consequence, there
may be periods of several days or more when trading activity in our stock is
minimal or non-existent, as compared to a seasoned issuer which has a large and
steady volume of trading activity that will generally support continuous sales
without an adverse effect on share price. We cannot give you any assurance that
a broader or more active public trading market for our common stock will develop
or be sustained, or that trading levels will be sustained.</P>
<P align=justify>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;In the past, securities class
action litigation has often been brought against a company following periods of
volatility in the market price of its securities. Due to the volatility of our
common stock price, we may be the target of securities litigation in the future. Securities litigation
could result in substantial costs and divert management&#146;s attention and
resources.</P>
<P align=center>12</P>
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<P align=justify>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Shareholders should also be aware
that, according to SEC Release No. 34-29093, the market for &#147;penny stock,&#148; such
as our common stock, has suffered in recent years from patterns of fraud and
abuse. Such patterns include (1) control of the market for the security by one
or a few broker-dealers that are often related to the promoter or issuer; (2)
manipulation of prices through prearranged matching of purchases and sales and
false and misleading press releases; (3) boiler room practices involving
high-pressure sales tactics and unrealistic price projections by inexperienced
sales persons; (4) excessive and undisclosed bid-ask differential and markups by
selling broker-dealers; and (5) the wholesale dumping of the same securities by
promoters and broker-dealers after prices have been manipulated to a desired
level, along with the resulting inevitable collapse of those prices and with
consequent investor losses. Our management is aware of the abuses that have
occurred historically in the penny stock market. Although we do not expect to be
in a position to dictate the behavior of the market or of broker-dealers who
participate in the market, management will strive within the confines of
practical limitations to prevent the described patterns from being established
with respect to our securities. The occurrence of these patterns or practices
could increase the future volatility of our share price.</P>
<P align=justify><B>To date, we have not paid any cash dividends and no cash
dividends will be paid in the foreseeable future.</B></P>
<P align=justify>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;We do not anticipate paying cash
dividends on our common stock in the foreseeable future and we may not have
sufficient funds legally available to pay dividends. Even if the funds are
legally available for distribution, we may nevertheless decide not to pay any
dividends. We presently intend to retain all earnings for our operations.</P>
<P align=justify><B>Our stock is categorized as a penny stock. Trading of our
stock may be restricted by the SEC&#146;s penny stock regulations which may limit a
shareholder&#146;s ability to buy and sell our stock.</B></P>
<P align=justify>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Our stock is categorized as a
&#147;penny stock.&#148; The SEC has adopted Rule 15g-9 which generally defines &#147;penny
stock&#148; to be any equity security that has a market price (as defined) less than
$4.00 per share or an exercise price of less than $5.00 per share, subject to
certain exceptions. Our securities are covered by the penny stock rules, which
impose additional sales practice requirements on broker-dealers who sell to
persons other than established customers and accredited investors. The penny
stock rules require a broker-dealer, prior to a transaction in a penny stock not
otherwise exempt from the rules, to deliver a standardized risk disclosure
document in a form prepared by the SEC which provides information about penny
stocks and the nature and level of risks in the penny stock market. The
broker-dealer also must provide the customer with current bid and offer
quotations for the penny stock, the compensation of the broker-dealer and its
salesperson in the transaction and monthly account statements showing the market
value of each penny stock held in the customer&#146;s account. The bid and offer
quotations, and the broker-dealer and salesperson compensation information, must
be given to the customer orally or in writing prior to effecting the transaction
and must be given to the customer in writing before or with the customer&#146;s
confirmation. In addition, the penny stock rules require that prior to a
transaction in a penny stock not otherwise exempt from these rules, the
broker-dealer must make a special written determination that the penny stock is
a suitable investment for the purchaser and receive the purchaser&#146;s written
agreement to the transaction. These disclosure requirements may have the effect
of reducing the level of trading activity in the secondary market for the stock
that is subject to these penny stock rules. Consequently, these penny stock
rules may affect the ability of broker-dealers to trade our securities. We
believe that the penny stock rules discourage investor interest in and limit the
marketability of our common stock.</P>
<P align=justify><B>FINRA sales practice requirements may also limit a
shareholder&#146;s ability to buy and sell our stock.</B></P>
<P align=justify>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;In addition to the &#147;penny stock&#148;
rules described above, the Financial Industry Regulatory Authority (&#147;FINRA&#148;) has
adopted rules that require in recommending an investment to a customer, a
broker-dealer must have reasonable grounds for believing that the investment is
suitable for that customer. Prior to recommending speculative low priced
securities to their non-institutional customers, broker-dealers must make
reasonable efforts to obtain information about the customer&#146;s financial status,
tax status, investment objectives and other information. Under interpretations
of these rules, FINRA believes that there is a high probability that speculative
low priced securities will not be suitable for at least some customers. The
FINRA requirements make it more difficult for broker-dealers to recommend that their customers buy our common
stock, which may limit your ability to buy and sell our stock and have an
adverse effect on the market for our shares.</P>
<P align=center>13</P>
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<P align=justify><B>The elimination of monetary liability against our directors,
officers and employees under Nevada law and the existence of indemnification
rights to our directors, officers and employees may result in substantial
expenditures by our company and may discourage lawsuits against our directors,
officers and employees.</B></P>
<P align=justify>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Our Articles of Incorporation and
Bylaws contain a provision permitting us to eliminate the personal liability of
our directors to our company and shareholders for damages for breach of
fiduciary duty as a director or officer to the extent provided by Nevada law. We
may also have contractual indemnification obligations under our employment
agreements with our officers. The foregoing indemnification obligations could
result in the Company incurring substantial expenditures to cover the cost of
settlement or damage awards against directors and officers, which we may be
unable to recoup. These provisions and resultant costs may also discourage our
Company from bringing a lawsuit against directors and officers for breaches of
their fiduciary duties, and may similarly discourage the filing of derivative
litigation by our shareholders against our directors and officers even though
such actions, if successful, might otherwise benefit our company and
shareholders.</P>
<P align=justify><B>Funding from our Purchase Agreement with Hanover may be
limited or insufficient to fund our operations or to implement our
strategy.</B></P>
<P align=justify>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Under our Purchase Agreement with
Hanover, upon effectiveness of the registration statement of which this
prospectus is a part, and subject to other conditions, we may direct Hanover to
purchase up to $5,000,000 of our shares of common stock over a 24-month period.
Although the Purchase Agreement provides that we may sell up to $5,000,000 of
our common stock to Hanover, only 16,182,230 shares of our common stock are
being offered under this prospectus, which represents (i) 1,764,706 shares of
common stock that we issued to Hanover as Commitment Shares and (ii) 14,417,524
shares of common stock that we may issue to Hanover as Shares pursuant to draw
downs under the Purchase Agreement.</P>
<P align=justify>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;At an assumed purchase price of
$0.01233 (equal to 90.0% of the closing price of our common stock of $0.0137 on
September 5, 2013), and assuming the sale by us to Hanover of all of the
14,417,524 Shares being registered hereunder pursuant to draw downs under the
Purchase Agreement, we would receive only approximately $177,768.07 in gross
proceeds. If we elect to issue and sell more than the 14,417,524 Shares offered
under this prospectus to Hanover, which we have the right, but not the
obligation, to do, we must first register for resale under the Securities Act
any such additional Shares, which could cause additional substantial dilution to
our stockholders. Based on the above assumptions, we would be required to
register an additional approximately 391,097,480 shares of our common stock to
obtain the balance of $5,000,000 of the Total Commitment that would be available
to us under the Purchase Agreement. We have authorized 200,000,000 shares of our
common stock pursuant to our charter, and as of March 25, 2013 we had 49,862,297
shares of common stock issued and outstanding. Depending on the price at which
Shares are ultimately sold, we may have to increase the number of our authorized
shares in order to issue Shares to Hanover.</P>
<P align=justify>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;There can be no assurance that we
will be able to receive all or any of the Total Commitment from Hanover because
the Purchase Agreement contains certain limitations, restrictions, requirements,
conditions and other provisions that could limit our ability to cause Hanover to
buy common stock from us. For instance, we are prohibited from issuing a Draw
Down Notice if the amount requested in such Draw Down Notice exceeds the Maximum
Draw Down Amount or the sale of Shares pursuant to the Draw Down Notice would
cause us to sell or Hanover to purchase an aggregate number of shares of the
Company&#146;s common stock which would result in beneficial ownership by Hanover of
more than 4.99% of our common stock (as calculated pursuant to Section 13(d) of
the Exchange Act and the rules and regulations thereunder). Moreover, we cannot
make more than one draw down in any Pricing Period and must allow 24 hours to
elapse between the completion of the settlement of any one draw down and the
commencement of a Pricing Period for any other draw down. Also, as discussed
above, there must be an effective registration statement covering the resale of
any Shares to be issued pursuant to any draw down under the Purchase Agreement,
and the registration statement of which this prospectus is a part covers the
resale of only 14,417,524 Shares that may be issuable pursuant to draw downs
under the Purchase Agreement. These registration statements may be subject to
review and comment by the staff of the Commission, and will require the consent
of our independent registered public accounting firm. Therefore, the timing of
effectiveness of these registration statements cannot be assured.</P>
<P align=center>14</P>
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<P align=justify>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;The extent to which we rely on
Hanover as a source of funding will depend on a number of factors, including the
amount of working capital needed, the prevailing market price of our common
stock and the extent to which we are able to secure working capital from other
sources. If obtaining sufficient funding from Hanover were to prove unavailable
or prohibitively dilutive, we would need to secure another source of funding.
Even if we sell all $5,000,000 of common stock under the Purchase Agreement with
Hanover, we will still need additional capital to fully implement our current
business, operating plans and development plans.</P>
<P align=justify><B>The sale or issuance of our common stock to Hanover at a
discount may cause dilution and the resale of the shares of common stock by
Hanover into the public market, or the perception that such sales may occur,
could cause the price of our common stock to fall.</B></P>
<P align=justify>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Under the Purchase Agreement with
Hanover, upon effectiveness of the registration statement of which this
prospectus is a part, and subject to other conditions, we may direct Hanover to
purchase up to $5,000,000 of our shares of common stock over a 24-month period.
We are registering an aggregate of 16,182,230 shares of common stock in the
registration statement of which this prospectus is a part pursuant to the
Registration Rights Agreement. Notwithstanding Hanover&#146;s beneficial ownership
limitation set forth in the Purchase Agreement, if all of the 16,182,230 shares
offered under this prospectus were issued and outstanding as of March 25, 2013,
such shares would represent approximately 24.50% of the total number of shares
of our common stock outstanding and 24.84% of the total number of outstanding
shares of our common stock held by non-affiliates, in each case as of March 25,
2013. The number of shares ultimately offered for sale by Hanover under this
prospectus is dependent upon the number of shares ultimately purchased by
Hanover under the Purchase Agreement. Additionally, because the per share
purchase price for the Shares subject to a Draw Down Notice will be equal to
90.0% of the arithmetic average of the VWAPs over a certain number of trading
days during the applicable Pricing Period as set forth in the Purchase
Agreement, Hanover will pay less than the then-prevailing market price for our
common stock, and the actual purchase price for the Shares that we may sell to
Hanover will fluctuate based on the VWAP of our common stock during the term of
the Purchase Agreement. Depending on market liquidity at the time, the sale of a
substantial number of shares of our common stock to Hanover at a discount to the
then-prevailing market price for our common stock under the Purchase Agreement,
and the resale of such shares by Hanover into the public market, or the
perception that such sales may occur, could cause the trading price of our
common stock to decline, result in substantial dilution to existing stockholders
and make it more difficult for us to sell equity or equity-related securities in
the future.</P>
<P align=justify>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Moreover, at an assumed purchase
price of $0.01233 (equal to 90.0% of the closing price of our common stock of
$0.0137 on September 5, 2013), and assuming the sale by us to Hanover of all of
the 14,417,524 Shares being registered hereunder pursuant to draw downs under
the Purchase Agreement, we would receive only approximately $177,768.07 in gross
proceeds. If we elect to issue and sell more than the 14,417,524 Shares offered
under this prospectus to Hanover, which we have the right, but not the
obligation, to do, we must first register for resale under the Securities Act
any such additional Shares, which could cause additional substantial dilution to
our stockholders. Based on the above assumptions, we would be required to
register an additional approximately 391,097,480 shares of our common stock to
obtain the balance of $5,000,000 of the Total Commitment that would be available
to us under the Purchase Agreement. Because the actual purchase price for the
Shares that we may sell to Hanover will fluctuate based on the VWAP of our
common stock during the term of the Purchase Agreement, we are not able to
determine at this time the exact number of shares of our common stock that we
will issue under the Purchase Agreement and, therefore, the exact number of
shares we will ultimately register for resale under the Securities Act. The
resale of such a substantial number of shares of our common stock relative to
our current market capitalization into the public market by Hanover, or the
perception that such sales may occur, could significantly depress the market
price of our common stock and cause substantial dilution to our existing
stockholders.</P>
<P align=center><B>USE OF PROCEEDS</B></P>
<P align=justify>Selling Stockholder may sell all of the common stock offered by
this Prospectus from time-to-time. We will not receive any proceeds from the
sale of those shares of common stock. We may, however, receive aggregate gross
proceeds of $5,000,000 if all shares of common stock in this offering are sold
to Selling Stockholder pursuant to the Purchase Agreement. Any such proceeds we
receive will be used for working capital and general corporate matters.</P>
<P align=center>15</P>
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<!--$$/page=--><A name=page_18></A>
<P align=justify>The exact purchase price at which we will sell the Purchase
Shares pursuant to the Purchase Agreement is dependent upon the market price for
our common stock, therefore, it is likely that the number of shares offered in
this registration statement will be insufficient to allow us to receive the full
amount of proceeds under the Purchase Agreement. Based upon current market
prices ignoring applicable sales volume restrictions in the Purchase Agreement,
we would receive approximately $233,563.88 if we were to sell the 14,417,524
shares being drawn down pursuant to the Purchase Agreement at this time, based
upon 90.0% of the closing price of our common stock of $0.0137 per share on
September 5, 2013.</P>
<P align=center><B>DETERMINATION OF OFFERING PRICE</B></P>
<P align=justify>There currently is a limited public market for our common
stock. Selling Stockholder will determine at what price it may sell the offered
shares, and such sales may be made at prevailing market prices or at privately
negotiated prices. See &#147;Plan of Distribution&#148; below for more information. </P>
<P align=center><B>SELLING STOCKHOLDER</B></P>
<P align=justify>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;This prospectus relates to the
possible resale from time to time by the selling stockholder of any or all of
the shares of common stock that have been or may be issued by us to Hanover
under the Purchase Agreement. For additional information regarding the issuance
of common stock covered by this prospectus, see &#147;Prospectus Summary &#151;Equity
Enhancement Program With Hanover&#148; above. We are registering the shares of common
stock pursuant to the provisions of the Registration Rights Agreement we entered
into with Hanover on March 22, 2013 in order to permit the selling stockholder
to offer the shares for resale from time to time. Except for the transactions
contemplated by the Purchase Agreement and the Registration Rights Agreement,
Hanover has not had any material relationship with us within the past three
years.</P>
<P align=justify>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;The table below presents
information regarding the selling stockholder and the shares of common stock
that it may offer from time to time under this prospectus. This table is
prepared based on information supplied to us by the selling stockholder, and
reflects holdings as of March 25, 2013. As used in this prospectus, the term
&#147;selling stockholder&#148; includes Hanover and any donees, pledgees, transferees or
other successors in interest selling shares received after the date of this
prospectus from the selling stockholder as a gift, pledge, or other non-sale
related transfer. The number of shares in the column &#147;Maximum Number of Shares
of Common Stock to be Offered Pursuant to this Prospectus&#148; represents all of the
shares of common stock that the selling stockholder may offer under this
prospectus. The selling stockholder may sell some, all or none of its shares in
this offering. We do not know how long the selling stockholder will hold the
shares before selling them, and we currently have no agreements, arrangements or
understandings with the selling stockholder regarding the sale of any of the
shares.</P>
<P align=justify>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Beneficial ownership is
determined in accordance with Rule 13d-3(d) promulgated by the SEC under the
Exchange Act, and includes shares of common stock with respect to which the
selling stockholder has voting and investment power. The percentage of shares of
common stock beneficially owned by the selling stockholder prior to the offering
shown in the table below is based on an aggregate of 49,862,294 shares of our
common stock outstanding on March 25, 2013. Because the purchase price of the
shares of common stock issuable under the Purchase Agreement is determined on
each settlement date, the number of shares that may actually be sold by the
Company under the Purchase Agreement may be fewer than the number of shares
being offered by this prospectus. The fourth column assumes the sale of all of
the shares offered by the selling stockholder pursuant to this prospectus.</P>
<TABLE
style="BORDER-COLOR: black; BORDER-COLLAPSE: collapse; FONT-SIZE: 10pt; "
border=0 cellSpacing=0 cellPadding=0 width="100%">

  <TR vAlign=top>
    <TD align=center nowrap >&nbsp; </TD>
    <TD width="28%" colSpan=2 align=center nowrap><B><U>Number of Shares of</U></B>    </TD>
    <TD width="14%" align=center nowrap><B><U>Maximum Number of</U></B> </TD>
    <TD width="28%" colSpan=2 align=center nowrap><B><U>Number of Shares of</U></B>    </TD>
  </TR>
  <TR vAlign=top>
    <TD align=center nowrap >&nbsp; </TD>
    <TD width="28%" colSpan=2 align=center nowrap><B><U>Common Stock Owned
      Prior</U></B> </TD>
    <TD width="14%" align=center nowrap><B><U>Shares of Common Stock</U></B> </TD>
    <TD width="28%" colSpan=2 align=center nowrap><B><U>Common Stock Owned
      After</U></B> </TD>
  </TR>
  <TR vAlign=top>
    <TD align=center nowrap ><B><U>Name of Selling Stockholder</U></B>    </TD>
    <TD width="28%" colSpan=2 align=center nowrap><B><U>to Offering</U></B> </TD>
    <TD width="14%" align=center nowrap><B><U>to be Offered Pursuant to</U></B> </TD>
  <TD width="28%" colSpan=2 align=center nowrap><B><U>Offering</U></B> </TD>
  </TR>
  <TR vAlign=top>
    <TD align=center nowrap >&nbsp; </TD>
    <TD width="28%" colSpan=2 align=center nowrap>&nbsp;</TD>
    <TD width="14%" align=center nowrap><B><U>this Prospectus</U></B> </TD>
  <TD width="28%" colSpan=2 align=center nowrap>&nbsp;</TD>
  </TR>
  <TR>
    <TD align=center nowrap >&nbsp; </TD>
    <TD width="28%" colSpan=2 align=center nowrap>&nbsp;</TD>
    <TD width="14%" align=center nowrap>&nbsp; </TD>
  <TD width="28%" colSpan=2 align=center nowrap>&nbsp;</TD>
  </TR>
  <TR>
    <TD align=center >&nbsp; </TD>
    <TD width="28%" colSpan=2 align=center>&nbsp;</TD>
    <TD width="14%" align=center>&nbsp; </TD>
    <TD width="28%" colSpan=2 align=center>&nbsp;</TD></TR>
  <TR vAlign=top>
    <TD align=center >&nbsp; </TD>
    <TD width="14%" align=center><B><U>Number(1) </U></B></TD>
    <TD  width="14%"
      align=center><STRONG><U>Percent(2)</U></STRONG>&nbsp;&nbsp;</TD>
    <TD width="14%" align=center>&nbsp; </TD>
    <TD width="14%" align=center><B><U>Number(3) </U></B></TD>
    <TD  width="14%"
      align=center><STRONG><U>Percent(2)</U></STRONG>&nbsp;&nbsp;</TD></TR></TABLE>
<TABLE
style="BORDER-COLOR: black; BORDER-COLLAPSE: collapse; FONT-SIZE: 8pt; "
border=0 cellSpacing=0 cellPadding=0 width="100%">
  <TR vAlign=top>
    <TD bgColor=#e6efff align=left >Hanover Holdings I, LLC (4) </TD>
    <TD bgColor=#e6efff width="14%" align=center>1,764,706 </TD>
    <TD bgColor=#e6efff width="14%" align=center>0.35% </TD>
    <TD bgColor=#e6efff width="14%" align=center>16,182,230 </TD>
    <TD bgColor=#e6efff width="14%" align=center>0 </TD>
    <TD bgColor=#e6efff width="14%" align=center>0.00% </TD>
  </TR>
</TABLE>
<P align=center>16</P>
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width="100%" noShade>
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<TABLE
style="BORDER-COLOR: black; BORDER-COLLAPSE: collapse; FONT-SIZE: 10pt; "
border=0 cellSpacing=0 cellPadding=0 width="100%" BCLLIST>

  <TR>
    <TD vAlign=top  colSpan=2>_________________</TD></TR>
  <TR>
    <TD vAlign=top width="5%">* </TD>
    <TD>
      <P align=justify>Represents beneficial ownership of less than one percent
      of the outstanding shares of our common stock.</P></TD></TR>
  <TR>
    <TD vAlign=top width="5%">&nbsp;</TD>
    <TD>&nbsp;</TD></TR>
  <TR>
    <TD vAlign=top width="5%">(1) </TD>
    <TD vAlign=top>
      <P align=justify>This number represents the 1,764,706 shares of common
      stock we issued to Hanover on March 6, 2013 as Commitment Shares in
      consideration for entering into the Purchase Agreement with us. In
      accordance with Rule 13d-3(d) under the Exchange Act, we have excluded
      from the number of shares beneficially owned prior to the offering all of
      the shares that Hanover may be required to purchase under the Purchase
      Agreement, because the issuance of such shares is solely at our discretion
      and is subject to certain conditions, the satisfaction of all of which are
      outside of Hanover&#146;s control, including the registration statement of
      which this prospectus is a part becoming and remaining effective.
      Furthermore, the maximum dollar value of each put of common stock to
      Hanover under the Purchase Agreement is subject to certain agreed upon
      threshold limitations set forth in the Purchase Agreement. Also, under the
      terms of the Purchase Agreement, we may not issue shares of our common
      stock to Hanover to the extent that Hanover or any of its affiliates
      would, at any time, beneficially own more than 4.99% of our outstanding
      common stock.</P></TD></TR>
  <TR>
    <TD vAlign=top width="5%">&nbsp;</TD>
    <TD>&nbsp;</TD></TR>
  <TR>
    <TD vAlign=top width="5%">(2) </TD>
    <TD vAlign=top>
      <P align=justify>Applicable percentage ownership is based on 49,862,294
      shares of our common stock outstanding as of March 25, 2013.</P></TD></TR>
  <TR>
    <TD vAlign=top width="5%">&nbsp;</TD>
    <TD>&nbsp;</TD></TR>
  <TR>
    <TD vAlign=top width="5%">(3) </TD>
    <TD vAlign=top>
      <P align=justify>Assumes the sale of all shares being offered pursuant to
      this prospectus.</P></TD></TR>
  <TR>
    <TD vAlign=top width="5%">&nbsp;</TD>
    <TD>&nbsp;</TD></TR>
  <TR>
    <TD vAlign=top width="5%">(4) </TD>
    <TD vAlign=top>
      <P align=justify>The business address of Hanover is c/o Magna Group, 5
      Hanover Square, New York, New York 10004. Hanover&#146;s principal business is
      that of a private investment firm. We have been advised that Hanover is
      not a member of the Financial Industry Regulatory Authority, or FINRA, or
      an independent broker-dealer, and that neither Hanover nor any of its
      affiliates is an affiliate or an associated person of any FINRA member or
      independent broker-dealer. We have been further advised that Joshua Sason
      is the Chief Executive Officer of Hanover and owns all of the membership
      interests in Hanover, and that Mr. Sason has sole power to vote or to
      direct the vote and sole power to dispose or to direct the disposition of
      all securities owned directly by Hanover.</P></TD></TR></TABLE>
<P align=center>17</P>
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<P align=center><B>EQUITY ENHANCEMENT PROGRAM WITH HANOVER</B></P>
<P align=justify><I>Common Stock Purchase Agreement</I></P>
<P align=justify>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;On March 22, 2013, we entered
into the Purchase Agreement with Hanover. The Purchase Agreement provides that,
upon the terms and subject to the conditions set forth therein, Hanover is
committed to purchase up to $5,000,000 worth of our common stock over the
24-month term of the Purchase Agreement.</P>
<P align=justify>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;From time to time over the term
of the Purchase Agreement, commencing on the trading day immediately following
the date on which the registration statement of which this prospectus is a part
is declared effective by the Commission, we may, in our sole discretion, provide
Hanover with Draw Down Notices to purchase a specified dollar amount of Shares
over a 10 consecutive trading day period commencing on the trading day specified
in the applicable Draw Down Notice, with each draw down subject to the
limitations discussed below. The maximum amount of Shares requested to be
purchased pursuant to any single Draw Down Notice cannot exceed 300% of the
average daily trading volume of our common stock for the 10 trading days
immediately preceding the date of the Draw Down Notice.</P>
<P align=justify>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Once presented with a Draw Down
Notice, Hanover is required to purchase a pro rata portion of the applicable
Draw Down Amount on each trading day during the applicable Pricing Period on
which the VWAP equals or exceeds a Floor Price determined by us for such draw
down. If the VWAP falls below the applicable Floor Price on any trading day
during the applicable Pricing Period, the Purchase Agreement provides that
Hanover will not be required to purchase the pro rata portion of the applicable
Draw Down Amount allocated to that trading day. The per share purchase price for
the Shares subject to a Draw Down Notice will be equal to 90.0% of the
arithmetic average of the three lowest VWAPs that equal or exceed the applicable
Floor Price during the applicable Pricing Period, except that if the VWAP does
not equal or exceed the applicable Floor Price for at least three trading days
during the applicable Pricing Period, then the per share purchase price will be
equal to 90.0% of the arithmetic average of all VWAPs that equal or exceed the
applicable Floor Price during such Pricing Period. Each purchase pursuant to a
draw down will reduce, on a dollar-for-dollar basis, the Total Commitment under
the Purchase Agreement.</P>
<P align=justify>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;We are prohibited from issuing a
Draw Down Notice if (i) the amount requested in such Draw Down Notice exceeds
the Maximum Draw Down Amount, (ii) the sale of Shares pursuant to such Draw Down
Notice would cause us to issue or sell or Hanover to acquire or purchase an
aggregate dollar value of Shares that would exceed the Total Commitment, or
(iii) the sale of Shares pursuant to the Draw Down Notice would cause us to sell
or Hanover to purchase an aggregate number of shares of our common stock which
would result in beneficial ownership by Hanover of more than 4.99% of our common
stock (as calculated pursuant to Section 13(d) of the Exchange Act and the rules
and regulations thereunder). We cannot make more than one draw down in any
Pricing Period and must allow 24 hours to elapse between the completion of the
settlement of any one draw down and the commencement of a Pricing Period for any
other draw down.</P>
<P align=justify>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;As of March 25, 2013, there were
49,862,297 shares of our common stock outstanding, of which 48,962,297 shares
were held by non-affiliates, excluding the 1,764,706 Commitment Shares that we
have already issued to Hanover under the Purchase Agreement. Although the
Purchase Agreement provides that we may sell up to $5,000,000 of our common
stock to Hanover, only 16,182,230 shares of our common stock are being offered
under this prospectus, which represents (i) 1,764,706 shares of common stock
that we issued to Hanover as Commitment Shares and (ii) 14,417,524 shares of
common stock that we may issue to Hanover as Shares pursuant to draw downs under
the Purchase Agreement. If all of the 16,182,230 shares offered under this
prospectus were issued and outstanding as of March 25, 2013, such shares would
represent approximately 24.50% of the total number of shares of our common stock
outstanding and 24.84% of the total number of outstanding shares of our common
stock held by non-affiliates, in each case as of March 25, 2013. </P>
<P align=justify>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;At an assumed purchase price of
$0.01233 (equal to 90.0% of the closing price of our common stock of $0.0137 on
September 5, 2013), and assuming the sale by us to Hanover of all of the
14,417,524 Shares being registered hereunder pursuant to draw downs under the
Purchase Agreement, we would receive only approximately $177,768.07 in gross
proceeds. If we elect to issue and sell more than the 14,417,524 Shares offered
under this prospectus to Hanover, which we have the right, but not the
obligation, to do, we must first register for resale under the Securities Act
any such additional Shares, which could cause additional substantial dilution to
our stockholders. Based on the above assumptions, we would be required to
register an additional approximately 391,097,480 shares of our common stock to
obtain the balance of $5,000,000 of the Total Commitment that would be available
to us under the Purchase Agreement. We currently have authorized and available
for issuance 200,000,000 shares of our common stock pursuant to our charter. The
number of shares of our common stock ultimately offered for resale by Hanover is
dependent upon the number of shares we ultimately issue and sell to Hanover
under the Purchase Agreement.</P>
<P align=center>18</P>
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<P align=justify>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Hanover has agreed that during
the term of the Purchase Agreement, neither Hanover nor any of its affiliates
will, directly or indirectly, engage in any short sales involving our securities
or grant any option to purchase, or acquire any right to dispose of or otherwise
dispose for value of, any shares of our common stock or any securities
convertible into or exercisable or exchangeable for any shares of our common
stock, or enter into any swap, hedge or other similar agreement that transfers,
in whole or in part, the economic risk of ownership of any shares of our common
stock, provided that Hanover will not be prohibited from engaging in certain
transactions relating to any of the shares of our common stock that it owns or
that it is obligated to purchase under a pending draw down notice.</P>
<P align=justify>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;The Purchase Agreement contains
customary representations, warranties and covenants by, among and for the
benefit of the parties. Before Hanover is obligated to purchase any Shares
pursuant to a Draw Down Notice, certain conditions specified in the Purchase
Agreement, none of which are in Hanover's control, must be satisfied, including
the following:</P>
<UL style="TEXT-ALIGN: justify">
  <LI>
  <P>Each of our representations and warranties in the Purchase Agreement must
  be true and correct in all material respects. </P>
  <LI>
  <P>We must have performed, satisfied and complied in all material respects
  with all covenants, agreements and conditions required to be performed,
  satisfied or complied with by us. </P>
  <LI>
  <P>The registration statement of which this prospectus forms a part must be
  effective under the Securities Act. </P>
  <LI>
  <P>We must not have knowledge of any event that could reasonably be expected
  to have the effect of causing the suspension of the effectiveness of the
  registration statement of which this prospectus forms a part or the
  prohibition or suspension of the use of this prospectus. </P>
  <LI>
  <P>We must have filed with the Commission all required prospectus supplements
  relating to this prospectus and all periodic reports and filings required to
  be filed by us under the Exchange Act. </P>
  <LI>
  <P>Trading in our common stock must not have been suspended by the Commission,
  the OTCBB or the Financial Industry Regulatory Authority, or FINRA, and
  trading in securities generally on the OTCBB must not have been suspended or
  limited. </P>
  <LI>
  <P>We must have complied with all applicable federal, state and local
  governmental laws, rules, regulations and ordinances in connection with the
  execution, delivery and performance of the Purchase Agreement and the
  Registration Rights Agreement. </P>
  <LI>
  <P>No statute, regulation, order, decree, writ, ruling or injunction by any
  court or governmental authority of competent jurisdiction shall have been
  enacted, entered, promulgated, threatened or endorsed which prohibits the
  consummation of or which would materially modify or delay any of the
  transactions contemplated by the Purchase Agreement and the Registration
  Rights Agreement. </P>
  <LI>
  <P>No action, suit or proceeding before any arbitrator or any court or
  governmental authority shall have been commenced or threatened, and no inquiry
  or investigation by any governmental authority shall have been commenced or
  threatened seeking to restrain, prevent or change the transactions
  contemplated by the Purchase Agreement or the Registration Rights Agreement,
  or seeking material damages in connection with such transaction. </P>
  <LI>
  <P>The absence of any condition, occurrence, state of facts or event having,
  or insofar as reasonably can be foreseen would likely have, any effect on our
  business, operations, properties or financial condition that is material and
  adverse to us. </P></LI></UL>
<P align=justify>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;There is no guarantee that we
will be able to meet the foregoing conditions or any of the other conditions in
the Purchase Agreement or that we will be able to draw down any portion of the
Total Commitment available under the Purchase Agreement with Hanover.</P>
<P align=justify>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;The obligations of Hanover under
the Purchase Agreement to purchase shares of our common stock may not be
transferred to any other party, and none of the terms or conditions contained in
the Purchase Agreement may now be amended or waived by the parties.</P>
<P align=justify>&nbsp;&nbsp;&nbsp;&nbsp; The Purchase Agreement may be
terminated at any time by the mutual written consent of the parties. Unless
earlier terminated, the Purchase Agreement will terminate automatically
on the earlier to occur of (i) the first day of the month next following the
24-month anniversary of the effective date of the Registration Statement of
which this prospectus is a part or (ii) the date on which Hanover purchases the
Total Commitment worth of common stock under the Purchase Agreement. We may
terminate the Purchase Agreement on one trading day&#146;s prior written notice to
Hanover, subject to certain conditions. Hanover may terminate the Purchase
Agreement effective upon one trading day&#146;s prior written notice to us under
certain circumstances, including the following:</P>
<P align=center>19</P>
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<UL style="TEXT-ALIGN: justify">
  <LI>
  <P>The existence of any condition, occurrence, state of facts or event having,
  or insofar as reasonably can be foreseen would likely have, any effect on our
  business, operations, properties or financial condition that is material and
  adverse to us. </P>
  <LI>
  <P>We enter into an agreement providing for certain types of financing
  transactions that are similar to the equity enhancement program with Hanover.
  </P>
  <LI>
  <P>Certain transactions involving a change in control of the company or the
  sale of all or substantially all of our assets have occurred. </P>
  <LI>
  <P>We are in breach or default in any material respect under any of the
  provisions of the Purchase Agreement or the Registration Rights Agreement,
  and, if such breach or default is capable of being cured, such breach or
  default is not cured within 10 trading days after notice of such breach or
  default is delivered to us. </P>
  <LI>
  <P>While Hanover holds any shares issued under the Purchase Agreement, the
  effectiveness of the registration statement that includes this prospectus is
  suspended or the use of this Prospectus is suspended or prohibited, and such
  suspension or prohibition continues for a period of 20 consecutive trading
  days or for more than an aggregate of 60 trading days in any 365- day period,
  subject to certain exceptions. </P>
  <LI>
  <P>Trading in our common stock is suspended or our common stock ceases to be
  listed or quoted on a trading market, and such suspension or failure continues
  for a period of 20 consecutive trading days or for more than an aggregate of
  60 trading days in any 365-day period. </P>
  <LI>
  <P>We have filed for and/or are subject to any bankruptcy, insolvency,
  reorganization or liquidation proceedings. </P></LI></UL>
<P align=justify>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;The Purchase Agreement provides
that no termination of the Purchase Agreement will limit, alter, modify, change
or otherwise affect any of the parties' rights or obligations with respect to
any pending Draw Down Notice, and that the parties must fully perform their
respective obligations with respect to any such pending Draw Down Notice under
the Purchase Agreement, provided all of the conditions to the settlement thereof
are timely satisfied. </P>
<P align=justify>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;We paid to Hanover a commitment
fee for entering into the Purchase Agreement equal to $150,000 (or 3.0% of the
Total Commitment under the Purchase Agreement) in the form of 1,764,706
Commitment Shares, calculated at a price equal to $0.085 per share, which was
the closing price of our Common Stock on March 4, 2013. The Commitment Shares
are being registered for resale in the registration statement of which this
prospectus is a part. </P>
<P align=justify>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;We also agreed to pay up to
$15,000 of reasonable attorneys' fees and expenses (exclusive of disbursements
and out-of-pocket expenses) incurred by Hanover in connection with the
preparation, negotiation, execution and delivery of the Purchase Agreement and
related transaction documentation. Further, if we issue a Draw Down Notice and
fail to deliver the shares to Hanover on the applicable settlement date, and
such failure continues for 10 trading days, we agreed to pay Hanover, in
addition to all other remedies available to Hanover under the Purchase
Agreement, an amount in cash equal to 2.0% of the purchase price of such shares
for each 30-day period the shares are not delivered, plus accrued interest.</P>
<P align=justify>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;The Purchase Agreement also
provides for indemnification of Hanover and its affiliates in the event that
Hanover incurs losses, liabilities, obligations, claims, contingencies, damages,
costs and expenses related to a breach by us of any of our representations and
warranties under the Purchase Agreement or the other related transaction
documents or any action instituted against Hanover or its affiliates due to the
transactions contemplated by the Purchase Agreement or other transaction
documents, subject to certain limitations.</P>
<P align=justify>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;The issuance of the Initial
Commitment Shares and the sale of the Shares to Hanover under the Purchase
Agreement are exempt from registration under the Securities Act pursuant to the
exemption for transactions by an issuer not involving any public offering under Section 4(a)(2) of and Regulation D under the
Securities Act. </P>
<P align=center>20</P>
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<P align=justify><I>Registration Rights Agreement</I></P>
<P align=justify>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;In connection with the execution
of the Purchase Agreement, on the Closing Date, we and Hanover also entered into
the Registration Rights Agreement. Pursuant to the Registration Rights
Agreement, we agreed to file the registration statement of which this prospectus
is a part with the Commission to register for resale 16,182,230 Shares, which
includes the 1,764,706 Commitment Shares, on or prior to April 22, 2013 and have
it declared effective prior to the Effectiveness Deadline. The effectiveness of
the registration statement of which this prospectus is a part is a condition
precedent to our ability to sell common stock to Hanover under the Purchase
Agreement.</P>
<P align=justify>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;We have agreed to file with the
Commission one or more additional registration statements to cover all of the
securities required to be registered under the Registration Rights Agreement
that are not covered by this prospectus, in each case, as soon as practicable,
but in no event later than the applicable filing deadline for such additional
registration statements as provided in the Registration Rights Agreement.</P>
<P align=justify>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;We also agreed, among other
things, to indemnify Hanover from certain liabilities and fees and expenses of
Hanover incident to our obligations under the Registration Rights Agreement,
including certain liabilities under the Securities Act. Hanover has agreed to
indemnify and hold harmless us and each of our directors, officers and persons
who control us against certain liabilities that may be based upon written
information furnished by Hanover to us for inclusion in the registration
statement of which this prospectus is a part, including certain liabilities
under the Securities Act. </P>
<P align=justify>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;The foregoing description of the
Purchase Agreement and the Registration Rights Agreement does not purport to be
complete and is qualified in its entirety by reference to the full text of the
Purchase Agreement and Registration Rights Agreement, copies of which have been
filed or incorporated by reference as exhibits to the registration statement of
which this prospectus is a part.</P>
<P align=center><B>PLAN OF DISTRIBUTION</B></P>
<P align=justify>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;We are registering shares of
common stock that have been or may be issued by us from time to time to Hanover
under the Purchase Agreement to permit the resale of these shares of common
stock after the issuance thereof by the selling stockholder from time to time
after the date of this prospectus. We will not receive any of the proceeds from
the sale by the selling stockholder of the shares of common stock. We will bear
all fees and expenses incident to our obligation to register the shares of
common stock.</P>
<P align=justify>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;The selling stockholder may
decide not to sell any shares of common stock. The selling stockholder may sell
all or a portion of the shares of common stock beneficially owned by it and
offered hereby from time to time directly or through one or more underwriters,
broker-dealers or agents, who may receive compensation in the form of discounts,
concessions or commissions from the selling stockholder and/or the purchasers of
the shares of common stock for whom they may act as agent. In effecting sales,
broker-dealers that are engaged by the selling stockholder may arrange for other
broker-dealers to participate. Hanover is an &#147;underwriter&#148; within the meaning of
the Securities Act. Any brokers, dealers or agents who participate in the
distribution of the shares of common stock by the selling stockholder may also
be deemed to be &#147;underwriters,&#148; and any profits on the sale of the shares of
common stock by them and any discounts, commissions or concessions received by
any such brokers, dealers or agents may be deemed to be underwriting discounts
and commissions under the Securities Act. Hanover has advised us that it will
use an unaffiliated broker-dealer to effectuate all resales of our common stock.
To our knowledge, Hanover has not entered into any agreement, arrangement or
understanding with any particular broker-dealer or market maker with respect to
the shares of common stock offered hereby, nor do we know the identity of the
broker-dealers or market makers that may participate in the resale of the
shares. Because Hanover is, and any other selling stockholder, broker, dealer or
agent may be deemed to be, an &#147;underwriter&#148; within the meaning of the Securities
Act, Hanover will (and any other selling stockholder, broker, dealer or agent
may) be subject to the prospectus delivery requirements of the Securities Act
and may be subject to certain statutory liabilities of the Securities Act
(including, without limitation, Sections 11, 12 and 17 thereof) and Rule 10b-5
under the Exchange Act.</P>
<P align=justify>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;The selling stockholder will act
independently of us in making decisions with respect to the timing, manner and
size of each sale. The shares of common stock may be sold in one or more
transactions at fixed prices, at prevailing market prices at the time of the
sale, at varying prices determined at the time of sale, or at negotiated prices.
These sales may be effected in transactions, which may involve crosses or block
transactions, pursuant to one or more of the following methods:</P>
<P align=center>21</P>
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<UL style="TEXT-ALIGN: justify">
  <LI>
  <P>on any national securities exchange or quotation service on which the
  securities may be listed or quoted at the time of sale; </P>
  <LI>
  <P>in the over-the-counter market in accordance with the rules of NASDAQ; </P>
  <LI>
  <P>in transactions otherwise than on these exchanges or systems or in the
  over-the-counter market; </P>
  <LI>
  <P>through the writing or settlement of options, whether such options are
  listed on an options exchange or otherwise; </P>
  <LI>
  <P>ordinary brokerage transactions and transactions in which the broker-dealer
  solicits purchasers; </P>
  <LI>
  <P>block trades in which the broker-dealer will attempt to sell the shares as
  agent but may position and resell a portion of the block as principal to
  facilitate the transaction; </P>
  <LI>
  <P>purchases by a broker-dealer as principal and resale by the broker-dealer
  for its account; </P>
  <LI>
  <P>an exchange distribution in accordance with the rules of the applicable
  exchange; </P>
  <LI>
  <P>privately negotiated transactions; </P>
  <LI>
  <P>broker-dealers may agree with the selling stockholder to sell a specified
  number of such shares at a stipulated price per share; </P>
  <LI>
  <P>a combination of any such methods of sale; and </P>
  <LI>
  <P>any other method permitted pursuant to applicable law. </P></LI></UL>
<P align=justify>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;The selling stockholder may also
sell shares of common stock covered by this prospectus pursuant to Rule 144
promulgated under the Securities Act, if available, rather than under this
prospectus. In addition, the selling stockholder may transfer the shares of
common stock by other means not described in this prospectus.</P>
<P align=justify>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Any broker-dealer participating
in such transactions as agent may receive commissions from the selling
stockholder (and, if they act as agent for the purchaser of such shares, from
such purchaser). Hanover has informed us that each such broker-dealer will
receive commissions from Hanover which will not exceed customary brokerage
commissions. Broker-dealers may agree with the selling stockholder to sell a
specified number of shares at a stipulated price per share, and, to the extent
such a broker-dealer is unable to do so acting as agent for the selling
stockholder, to purchase as principal any unsold shares at the price required to
fulfill the broker-dealer commitment to the selling stockholder. Broker-dealers
who acquire shares as principal may thereafter resell such shares from time to
time in one or more transactions (which may involve crosses and block
transactions and which may involve sales to and through other broker-dealers,
including transactions of the nature described above and pursuant to the one or
more of the methods described above) at fixed prices, at prevailing market
prices at the time of the sale, at varying prices determined at the time of
sale, or at negotiated prices, and in connection with such resales may pay to or
receive from the purchasers of such shares commissions computed as described
above. To the extent required under the Securities Act, an amendment to this
prospectus or a supplemental prospectus will be filed, disclosing:</P>
<UL style="TEXT-ALIGN: justify">
  <LI>
  <P>the name of any such broker-dealers; </P>
  <LI>
  <P>the number of shares involved; </P>
  <LI>
  <P>the price at which such shares are to be sold; </P>
  <LI>
  <P>the commission paid or discounts or concessions allowed to such
  broker-dealers, where applicable; </P>
  <LI>
  <P>that such broker-dealers did not conduct any investigation to verify the
  information set out or incorporated by reference in this prospectus, as
  supplemented; and </P></LI></UL>
<P align=center>22</P>
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<UL style="TEXT-ALIGN: justify">
  <LI>other facts material to the transaction. </LI></UL>
<P align=justify>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Hanover has informed us that it
does not have any written or oral agreement or understanding, directly or
indirectly, with any person to distribute the common stock. </P>
<P align=justify>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Under the securities laws of some
states, the shares of common stock may be sold in such states only through
registered or licensed brokers or dealers. In addition, in some states the
shares of common stock may not be sold unless such shares have been registered
or qualified for sale in such state or an exemption from registration or
qualification is available and is complied with.</P>
<P align=justify>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;There can be no assurance that
the selling stockholder will sell any or all of the shares of common stock
registered pursuant to the registration statement, of which this prospectus
forms a part.</P>
<P align=justify>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Underwriters and purchasers that
are deemed underwriters under the Securities Act may engage in transactions that
stabilize, maintain or otherwise affect the price of the common stock, including
the entry of stabilizing bids or syndicate covering transactions or the
imposition of penalty bids. The selling stockholder and any other person
participating in the sale or distribution of the shares of common stock will be
subject to applicable provisions of the Exchange Act and the rules and
regulations thereunder (including, without limitation, Regulation M of the
Exchange Act), which may restrict certain activities of, and limit the timing of
purchases and sales of any of the shares of common stock by, the selling
stockholder and any other participating person. To the extent applicable,
Regulation M may also restrict the ability of any person engaged in the
distribution of the shares of common stock to engage in market-making and
certain other activities with respect to the shares of common stock. In
addition, the anti-manipulation rules under the Exchange Act may apply to sales
of the shares of common stock in the market. All of the foregoing may affect the
marketability of the shares of common stock and the ability of any person or
entity to engage in market-making activities with respect to the shares of
common stock.</P>
<P align=justify>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;We have agreed to pay all
expenses of the registration of the shares of common stock pursuant to the
registration rights agreement, estimated to be $16,566.58 in total, including,
without limitation, Securities and Exchange Commission filing fees and expenses
of compliance with state securities or &#147;Blue Sky&#148; laws; provided, however,
Hanover will pay all selling commissions, concessions and discounts, and other
amounts payable to underwriters, dealers or agents, if any, as well as transfer
taxes and certain other expenses associated with the sale of the shares of
common stock. We have agreed to indemnify Hanover and certain other persons
against certain liabilities in connection with the offering of shares of common
stock offered hereby, including liabilities arising under the Securities Act or,
if such indemnity is unavailable, to contribute amounts required to be paid in
respect of such liabilities. Hanover has agreed to indemnify us against
liabilities under the Securities Act that may arise from any written information
furnished to us by Hanover specifically for use in this prospectus or, if such
indemnity is unavailable, to contribute amounts required to be paid in respect
of such liabilities.</P>
<P align=justify>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;At any time a particular offer of
the shares of common stock is made by the selling stockholder, a revised
prospectus or prospectus supplement, if required, will be distributed. Such
prospectus supplement or post-effective amendment will be filed with the
Securities and Exchange Commission to reflect the disclosure of any required
additional information with respect to the distribution of the shares of common
stock. We may suspend the sale of shares by the selling stockholder pursuant to
this prospectus for certain periods of time for certain reasons, including if
the prospectus is required to be supplemented or amended to include additional
material information.</P>
<P align=center><B>DESCRIPTION OF SECURITIES TO BE REGISTERED</B></P>
<P align=justify><B>General</B></P>
<P align=justify>The following summary includes a description of material
provisions of our capital stock.</P>
<P align=justify><B>Authorized and Outstanding Securities</B></P>
<P align=justify>The Company is authorized to issue 200,000,000 shares of common
stock, par value $0.001 per share. As of March 25, 2013, there were issued and
outstanding 49,862,294 shares of our common stock.</P>
<P align=justify><B>Common Stock</B></P>
<P align=center>23</P>
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<P align=justify>The holders of our common stock are entitled to one vote for
each share on all matters to be voted on by the shareholders. Holders of common
stock do not have cumulative voting rights. Holders of common stock are entitled
to share ratably in dividends, if any, as may be declared from time to time by
the board of directors in its discretion from funds legally available therefore.
In the event of a liquidation, dissolution or winding up of the Company, the
holders of common stock are entitled to share pro rata all assets remaining
after payment in full of all liabilities. Holders of common stock have no
preemptive rights to purchase the Company&#146;s common stock. There are no
conversion or redemption rights or sinking fund provisions with respect to the
common stock.</P>
<P align=justify><B>Warrants</B></P>
<P align=justify>During the year ended December 31, 2011, the Company issued
200,000 warrants in relation to sales of the Company&#146;s common stock. The
warrants have a $0.40 exercise price and a two-year life. The warrants expire on
November 7, 2013. During the year ended December 31, 2012, the Company issued
3,003,104 warrants in connection with a debt financing arrangement with ASYM
Energy Opportunities LLC. The warrants are exercisable for a term of five years
and at a strike price of $0.01. These warrants expire in the third and fourth
quarter of 2017.</P>
<P align=justify>As of December 31, 2012, there are 3,203,104 warrants
outstanding at a weighted average exercise price of $0.0344.</P>
<P align=justify><B>Dividends</B></P>
<P align=justify>Dividends, if any, will be contingent upon our revenues and
earnings, if any, capital requirements and financial conditions. The payment of
dividends, if any, will be within the discretion of our board of directors. We
intend to retain earnings, if any, for use in its business operations and
accordingly, the board of directors does not anticipate declaring any dividends
in the foreseeable future.</P>
<P align=justify><B>Registration Rights</B></P>
<P align=justify>In accordance with the Registration Rights Agreement (&#147;Rights
Agreement&#148;) entered into with Hanover, Hanover is entitled to certain rights
with respect to the registration of the shares of common stock issued in
connection with the Purchase Agreement, including the Purchase Shares and the
Commitment Shares (the &#147;Registrable Securities&#148;). </P>
<P align=justify><I>Filings</I></P>
<P align=justify>We are obligated to file a registration statement with respect
to the Registrable Securities. Upon becoming effective, we shall use
commercially reasonable efforts to maintain the continuous effectiveness of such
registration statement during the period the Rights Agreement is in effect. We
will also take such action, if any, as is necessary to obtain an exemption for
or to qualify the Registrable Securities under applicable state securities or
&#147;Blue Sky&#148; laws; <U>provided</U>, <U>however</U>, that the Company shall not be
required in connection therewith or as a condition thereto to (x) qualify to do
business in any jurisdiction where it would not otherwise be required to
qualify, (y) subject itself to general taxation in any such jurisdiction, or (z)
file a general consent to service of process in any such jurisdiction.</P>
<P align=justify><I>Expenses of Registration Rights</I></P>
<P align=justify>We will pay all reasonable expenses incurred in connection with
the registrations described above. However, we will not be responsible for
selling commissions, concessions and discounts, and other amounts payable to
underwriters, dealers or agents, if any, as well as transfer taxes and certain
other expenses associated with the sale of the shares of common stock.</P>
<P align=center><B>INTERESTS OF NAMED EXPERTS AND COUNSEL</B></P>
<P align=justify>No expert or counsel named in this prospectus as having
prepared or certified any part of this prospectus or having given an opinion
upon the validity of the securities being registered or upon other legal matters
in connection with the registration or offering of the common stock was employed
on a contingency basis, or had, or is to receive, in connection with the
offering, a substantial interest, direct or indirect, in the registrant or any
of its parents or subsidiaries. Nor was any such person connected with the
registrant or any of its parents or subsidiaries as a promoter, managing or
principal underwriter, voting trustee, director, officer, or employee.</P>
<P align=justify>The financial statements included in this prospectus and in the
registration statement have been audited by Weaver, Martin &amp; Samyn, LLC, and
are included in reliance upon such report given upon the authority of said firm
as experts in auditing and accounting.</P>
<P align=center>24</P>
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<P align=justify>The validity of the issuance of the common stock hereby will be
passed upon for us by Greenberg Traurig, LLP.</P>
<P align=center><B>INFORMATION WITH RESPECT TO THE REGISTRANT</B></P>
<P align=justify><B>Background</B></P>
<P align=justify>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;We are an oil and natural gas
exploration and production (E&amp;P) company with current projects in Payne and
Lincoln Counties in Oklahoma. As of March 25, 2013, we have six producing wells
in Oklahoma. We also have ownership of 1,410.7 net acres and rights for the
exploration and production of oil and gas on an aggregate of approximately
4,733.8 gross acres in Oklahoma. This includes rights to explore on 1,847 gross
acres in Oklahoma in the North Oklahoma Mississippi Project and in 2,886 gross
acres in south-central Oklahoma (the &#147;South Oklahoma Project&#148;). In 2012, oil
sales from our producing wells averaged 13.1 cumulative barrels per day.</P>
<P align=justify>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Typically, our interest in a well
arises from a contract with another entity pursuant to which we provide
financial support for certain costs incurred in the exploration and development
of a project, which may include land costs, seismic or other exploration, and
test drilling. In exchange, we typically receive an interest in the proceeds
from the project&#146;s production.</P>
<P align=justify>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;We were formed on January 24,
1996 pursuant to the laws of the State of Nevada under the name Wolf
Exploration, Inc. In August 2001, we changed our name to American Petro-Hunter
Inc. and began focusing our business on the exploration and eventual
exploitation of oil and gas. The Company operates from its offices at 250 N Rock
Rd., Suite 365 Wichita, KS. </P>
<P align=justify><U>Producing Properties</U></P>
<P align=justify>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<I>North Oklahoma Project (North
Oklahoma Woodford &#147;Yale&#148; and North Oklahoma Mississippi Lime Projects) </I>- On
April 21, 2010, we entered into an operating agreement with Bay Petroleum Corp.
(&#147;Bay&#148;) to participate in the drilling for oil in northern Oklahoma (the
&#147;Prospect&#148;). Pursuant to such operating agreement, we agreed to pay to Bay
$52,125 for all costs in connection with the acquisition and operation of the
Prospect, up to the drilling of an initial test well, in exchange for a 25%
working interest and 80% net revenue interest in the Prospect. We are also
responsible for 25% of all expenditures in connection with the development and
operation of the Prospect for drilling. </P>
<P align=justify>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;On June 1, 2010, we announced
that the No. 1 well had been put into production. The well produced 1,638
barrels in 2012 at an average of 4.4 barrels per day. The current daily rate is
5.3 barrels per day.</P>
<P align=justify>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;On June 29, 2011, we announced
that NOS122, a re-entry project where the well bore and casing was opened and
cleaned, had begun commercial production. Inaugural loads of oil began shipping
in July of 2011. The well produced 888 barrels in 2012 at a rate of 2.43 barrels
per day. </P>
<P align=justify>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;On March 25, 2011, we announced
that we had acquired a varied working interest in an additional 2,000 acres
located in Payne County in northern Oklahoma, near the Company&#146;s Yale Prospect.
The project has been named &#147;North Oklahoma Mississippi Lime Project&#148;. On May 16,
2011, we announced that drilling operations had commenced at the Company&#146;s first
horizontal well, NOM1H. The Company owns a 25% Working Interest in the lease. On
June 29, 2011, we announced that NOM1H had begun commercial production. The well
produced 5,199 barrels in 2012 at a rate of 14.2 barrels per day. Daily gas
production is in the 50 Mcf/day range.</P>
<P align=justify>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;On July 27, 2011 we announced the
NOW2H, an 80 acre offset to NOM1H. On November 7, 2011, the well commenced
commercial oil and gas production. On March 26, 2012, we announced that after
undergoing a second frack and the installation of a submersible pump, the well
was producing at a daily rate of 30 barrels per day. Since that time the well
has drastically declined and produced a total of 888 barrels in 2012, and 5,837
Mcf of gas. The well is currently no longer economically viable, has had no
sales since June of 2012, and would require re-drilling of the lateral and
re-completion to return to commercial viability. There are no plans at this time
to implement this program.</P>
<P align=justify>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;On January 9, 2012, we announced
plans to drill a third horizontal well at the North Oklahoma Project, NOM3H, on
the same section of land as our two previously completed wells, NOM1H and NOW2H.
On February 6, 2012, we announced that we had drilled a total of 1,988 feet in
the horizontal well segment penetrating into the 100 plus foot thick Mississippi
pay zone. The NOM3H began commercial oil and gas production on March 7, 2012. As
of March 1, 2013, the well had cumulatively produced 8,571 barrels of oil, with
8,035 barrels in 2013 at an average daily rate of 26.7 barrels per day. Daily
gas production is in the 85 Mcf/day range. </P>
<P align=center>25</P>
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<P align=justify>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;On October 1, 2012 we announced
the commencement of drilling of the NOS222 oil and gas well in Payne County,
Oklahoma. The well is an offset to the NOS122. On October 15, 2012 we announced
that the completion program was underway. It was determined, after the program
was completed that the Skinner sand portion, the primary objective of the well,
was the only viable commercial producer. The well is in production and the
Company has been informed that the well is forecast to produce approximately
seven to ten barrels per day.</P>
<P align=justify>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;On July 18, 2011, we announced
drilling plans for a total of eleven horizontal wells at the North Oklahoma
Project. As of March, 2013, there are at least eight locations left to drill on
the acreage in each of the Woodford Shale and Mississippi Lime that would be
horizontal wells spaced on 180 acres. We previously announced a drilling
schedule that involved drilling one horizontal well approximately every 90 days.
However, based on estimated engineering expenses of $3,200,000 for drilling and
completion, we were unable to implement that drilling schedule. Our revised
drilling schedule for 2013 is between one to three wells, depending upon
available capital. </P>
<P align=justify>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;The next well planned is a direct
offset to the NOM1H and is expected to cost $800,000 for our working interest
share of the drilling and completion costs. The well is a Woodford Shale
horizontal well and we plan to announce a drilling schedule once it is
determined by the operator in April 2013.</P>
<P align=justify>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<I>South Oklahoma Project </I>-
On July 20, 2011, we announced the acquisition of a forty percent (40%) working
interest in the South Oklahoma Project on 3,000 acres of land in south-central
Oklahoma. Our engineers have identified five key areas which, if developed on
160 acre spacing, could allow future development of 18 additional locations for
horizontal Mississippi lime and Woodford Shale oil and gas wells.</P>
<P align=justify>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;On April 2, 2012, we announced
the spud of the first well on the South Oklahoma Project, designated SOM-1H. On
July 10, 2012, the well began commercial production. As of March 1, 2013, the
well had cumulatively produced 5,696 barrels of oil, with 4,618 barrels for the
2012 calendar year, and sales beginning in July 2012 at an average daily rate of
25.4 barrels per day. Daily gas production is in the 60 Mcf/day range.</P>
<P align=justify><U>Customers</U></P>
<P align=justify>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Our crude oil production is sold
to Sunoco in Oklahoma. We receive Oklahoma spot prices for our oil and sell our
oil in minimum allotments of 160 barrels.</P>
<P align=justify>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;We have commercial sales of
natural gas at our Oklahoma Project through our connection to nearby pipeline
infrastructure. We sell natural gas through such pipeline to DCP Midstream, LP
of Tulsa, Oklahoma and receive a premium to the NYMEX spot natural gas prices
due to the higher BTU content of the gas produced.</P>
<P align=justify><B>Competition</B></P>
<P align=justify>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Competition in the oil and gas
industry is intense. Producing properties and undeveloped acreage are in high
demand and we compete for such properties, and the equipment and labor required
to develop and operate them, against independent oil and gas companies, drilling
and production purchase programs and individual producers and operators. Many
industry competitors have exploration and development budgets substantially
greater than ours, potentially reducing our ability to compete for desirable
properties. To compete effectively, we maintain a disciplined approach to
selecting property acquisition and development opportunities.</P>
<P align=justify><B>Our Strategy</B></P>
<P align=justify>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Our focus is currently in
locating and assessing potential acquisition targets, including real property,
oil and gas rights and oil and gas companies. We focus primarily on oil and gas
properties within the U.S. and Canada including exploration, secondary recovery
and development projects. Each project is evaluated by our management based on
sound geology, acceptable risk levels and total capital requirements to develop.
Our officers and directors travel to different locations throughout North
America to evaluate potential acquisitions. Further, our management will, if
capital allows, participate in a variety of different conferences throughout
2013 to increase our exposure to potential opportunities.</P>
<P align=justify>&nbsp;&nbsp;&nbsp;&nbsp; Our ability to execute our strategy as
outlined above is dependent on several factors including but not limited to: (i)
identifying potential acquisitions of either assets or
operational companies with prices, terms and conditions acceptable to us; (ii)
additional financing for capital expenditures, acquisitions and working capital
either in the form of equity or debt with terms and conditions that would be
acceptable to us; (iii) our success in developing revenue, profitability and
cash flow; (iv) the development of successful strategic alliances or
partnerships; and (v) the extent and associated efforts and costs of federal,
state and local regulations in each of the industries in which we currently or
plan to operate in. There are no assurances that we will be successful in
implementing our strategy as any negative result of one of the factors alone or
in combination could have a material adverse effect on our business.</P>
<P align=center>26</P>
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<P align=justify><B>Employees</B></P>
<P align=justify>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;As of December 31, 2012, we had
no employees. Our President, Robert McIntosh, devotes a significant portion of
his time to operating and growing our Company. We currently utilize temporary
contract labor throughout the year to address business and administrative
needs.</P>
<P align=justify><B>Environmental Regulation</B></P>
<P align=justify>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Oil and gas operations are
subject to country-specific federal, state, and local laws relating to the
protection of the environment, including laws regulating removal of natural
resources from the ground and the discharge of materials into the environment.
Various permits from governmental bodies are required for drilling operations to
be conducted. Numerous governmental departments issue rules and regulations to
implement and enforce such laws that are often complex and costly to comply with
and that carry substantial administrative, civil and possibly criminal penalties
for failure to comply. Under these laws and regulations, we may be liable for
remediation or removal costs, damages and other costs associated with releases
of hazardous materials (including oil) into the environment, and such liability
may be imposed on us even if the acts that resulted in the releases were in
compliance with all applicable laws at the time such acts were performed.</P>
<P align=justify>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;The Comprehensive Environmental
Response, Compensation, and Liability Act (&#147;CERCLA&#148;) contains provisions
requiring the remediation of releases of hazardous substances into the
environment and imposes liability, without regard to fault or the legality of
the original conduct, on certain classes of persons including owners and
operators of contaminated sites where the release occurred and those companies
who transport, dispose of, or arrange for disposal of hazardous substances
released at the sites. Under CERCLA, such persons may be subject to joint and
several liability for the costs of cleaning up the hazardous substances that
have been released into the environment, for damages to natural resources and
for the costs of certain health studies. Third parties may also file claims for
personal injury and property damage allegedly caused by the release of hazardous
substances. Although we handle hazardous substances in the ordinary course of
business, we are not aware of any hazardous substance contamination for which we
may be liable.</P>
<P align=justify>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Management believes that we are
in compliance in all material respects with the applicable environmental laws
and regulations to which we are subject. We do not anticipate that compliance
with existing environmental laws and regulations will have a material effect
upon our capital expenditures, earnings or competitive position. To date, we
have not been required to spend any material amount on compliance with
environmental regulations. However, changes in environmental laws and
regulations, or claims for damages to persons, property, natural resources or
the environment, could result in substantial costs and liabilities, and thus
there can be no assurance that we will not incur significant environmental
compliance costs in the future.</P>
<P align=center><B>PROPERTIES</B></P>
<P align=justify><I>Facilities</I></P>
<P align=justify>&nbsp;&nbsp;&nbsp;&nbsp; Our corporate headquarters are located
at 250 N. Rock Rd., Suite 365, Wichita, Kansas 67206.</P>
<P align=justify><I>Reserves</I></P>
<P align=justify>&nbsp;&nbsp;&nbsp;&nbsp; As of the end of the 2012 fiscal year,
the Company has no proved reserves.</P>
<P align=justify><I>Production, Production Prices and Production Costs</I></P>
<P align=justify>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Sales of oil during the 2012
fiscal year amounted to $267,109 for 2,831 barrels at an average price of $94.56
per barrel and at an average production cost per barrel of $30.22. Sales of oil
during the 2011 fiscal year amounted to $298,390 for 3,834.50 barrels at an
average price of $77.82 per barrel and at an average production cost per barrel
of $16.50. Sales of oil during the 2010 fiscal year amounted to $92,754 for 1,446 barrels at an average price of
$70.03 per barrel and at an average production cost per barrel of $10.
Production costs are expected to increase as production increases. All of our
oil production has occurred in the United States.</P>
<P align=center>27</P>
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<P align=justify>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Sales of gas during the 2012
fiscal year amounted to $41,061 for 993.5 barrels of oil equivalent (BOE), based
upon a 6:1ratio of MCF gas to barrels of oil, at an average price of $41.33 per
BOE and at an average production cost per BOE of $2.64. Sales of gas during the
2011 fiscal year amounted to $19,541 for 602.1 barrels of oil equivalent (BOE),
based upon a 6:1 ratio of MCF gas to barrels of oil, at an average price of
$32.45 per BOE and at an average production cost per BOE of $2.46. Production
costs are expected to increase as production increases. Prior to the 2011 fiscal
year we had not had any gas production. All of our gas production has occurred
in the United States.</P>
<P align=justify><I>Past and Present Development Activities</I></P>
<P align=justify>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;During the 2012 fiscal year we
drilled three exploratory wells in the United States, these being the NOM-3H,
SOM-1H and NOS-222 wells. All three wells were completed and put into commercial
production. We did not drill any development wells during the 2012 fiscal year.
As of the end of the 2012 fiscal year, no additional wells were being
drilled.</P>
<P align=justify>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;During the 2011 fiscal year we
drilled five exploratory wells in the United States, of which two were net
productive. The other three exploratory wells did not contain sufficient volumes
to be considered commercial and two of these wells were not completed. We did
not drill any development wells during the 2011 fiscal year. During the 2010
fiscal year we drilled seven exploratory wells in the United States, of which
three were net productive and four did not contain sufficient volumes to warrant
completion for commercial production. We did not drill any development wells
during the 2010 fiscal year.</P>
<P align=justify><I>Delivery Commitments</I></P>
<P align=justify>&nbsp;&nbsp;&nbsp;&nbsp; As of December 31, 2012, we had no
delivery commitments for oil or natural gas under existing contracts or
agreements.</P>
<P align=justify><I>Properties, Wells, Operations, Acreage and Current
Activities</I></P>
<P align=justify>&nbsp;&nbsp;&nbsp;&nbsp; The following table sets forth our
interest in wells and acreage as of December 31, 2012.</P>
<TABLE
style="BORDER-COLOR: black; BORDER-COLLAPSE: collapse; FONT-SIZE: 8pt; "
border=0 cellSpacing=0 cellPadding=0 width="100%">

  <TR vAlign=top>
    <TD align=left>&nbsp; </TD>
    <TD width="28%" colSpan=2 align=center><U>Number of Productive Wells
      </U>(1) </TD>
    <TD width="28%" colSpan=2 align=center>&nbsp; &nbsp; &nbsp;<U>Developed
      Acreage </U>(4) </TD>
    <TD width="28%" colSpan=2 align=center>&nbsp; &nbsp; &nbsp;<U>Undeveloped
      Acreage</U> </TD></TR>
  <TR vAlign=top>
    <TD align=left>&nbsp; </TD>
    <TD width="14%" align=center><U>Gross (2)</U> </TD>
    <TD width="14%" align=center><U>Net (3)</U> </TD>
    <TD width="14%" align=center><U>Gross (2)</U> </TD>
    <TD width="14%" align=center><U>Net (3)</U> </TD>
    <TD width="14%" align=center><U>Gross (2)</U> </TD>
    <TD width="14%" align=center><U>Net (3)</U> </TD></TR>
  <TR vAlign=top>
    <TD bgColor=#e6efff align=center>Oil </TD>
    <TD bgColor=#e6efff width="14%" align=center>5 </TD>
    <TD bgColor=#e6efff width="14%" align=center>1.1 </TD>
    <TD bgColor=#e6efff width="14%" align=center>840 </TD>
    <TD bgColor=#e6efff width="14%" align=center>134 </TD>
    <TD bgColor=#e6efff width="14%" align=center>3,893.5 </TD>
    <TD bgColor=#e6efff width="14%" align=center>1,276.7 </TD></TR>
  <TR vAlign=top>
    <TD align=center>Gas </TD>
    <TD width="14%" align=center>0 </TD>
    <TD width="14%" align=center>0 </TD>
    <TD width="14%" align=center>0 </TD>
    <TD width="14%" align=center>0 </TD>
    <TD width="14%" align=center>0 </TD>
    <TD width="14%" align=center>0 </TD></TR></TABLE><BR>
<TABLE
style="BORDER-COLOR: black; BORDER-COLLAPSE: collapse; FONT-SIZE: 10pt; "
border=0 cellSpacing=0 cellPadding=0 width="100%" BCLLIST>

  <TR>
    <TD vAlign=top width="5%">(1) </TD>
    <TD>
      <P align=justify>A well which has both oil and gas completions is
      classified as an oil well.</P></TD></TR>
  <TR>
    <TD vAlign=top width="5%">(2) </TD>
    <TD>
      <P align=justify>A gross well or acre is a well or acre in which we own an
      interest.</P></TD></TR>
  <TR>
    <TD vAlign=top width="5%">(3) </TD>
    <TD>
      <P align=justify>A net well or acre is deemed to exist when the sum of
      fractional ownership interests in wells or acres equals 1.</P></TD></TR>
  <TR>
    <TD vAlign=top width="5%">(4) </TD>
    <TD>
      <P align=justify>Developed acreage is acreage assignable to productive
      wells.</P></TD></TR></TABLE>
<P align=justify>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;As of December 31, 2012, our
acreage subject to leases has the minimum remaining lease terms set forth in the
following table.</P>
<TABLE
style="BORDER-COLOR: black; BORDER-COLLAPSE: collapse; FONT-SIZE: 10pt; "
border=0 cellSpacing=0 cellPadding=0 width="100%">

  <TR vAlign=top>
    <TD align=left >&nbsp; </TD>
    <TD width="22%" align=center><U>Gross</U> </TD>
    <TD width="22%" align=center><U>Net</U> </TD>
    <TD width="22%" align=left>&nbsp; </TD></TR>
  <TR vAlign=top>
    <TD align=center ><U>Property</U> </TD>
    <TD width="22%" align=center><U>Acreage</U> </TD>
    <TD width="22%" align=center><U>Acreage</U> </TD>
    <TD width="22%" align=center><U>Minimum Remaining Lease Terms</U> </TD></TR>
  <TR vAlign=top>
    <TD bgColor=#e6efff align=center >North Oklahoma
      Project-Payne County </TD>
    <TD bgColor=#e6efff width="22%" align=center>1,847.2 </TD>
    <TD bgColor=#e6efff width="22%" align=center>464.9 </TD>
    <TD bgColor=#e6efff width="22%" align=center>1.5 Years </TD></TR>
  <TR vAlign=top>
    <TD align=center >South Oklahoma Project-Lincoln County </TD>
    <TD width="22%" align=center>2,886.55 </TD>
    <TD width="22%" align=center>945.8 </TD>
    <TD width="22%" align=center>2 years </TD></TR></TABLE>
<P align=justify>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;All of our oil and gas interests
and acreage are located in, and all of our drilling and other development
activities have occurred in, the United States.</P>
<P align=center>&nbsp;</P>
<P align=center>28</P>
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width="100%" noShade>
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<P align=center><b>LEGAL PROCEEDINGS</b></P>
<P align=justify>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;From time to time, we may become
  involved in various lawsuits and legal proceedings which arise in the ordinary
  course of business. However, litigation is subject to inherent uncertainties and
  an adverse result in these or other matters may arise from time to time that may
  harm our business. To the best knowledge of management, there are no material
  legal proceedings pending against the Company.</P>
<P align=center><B>MARKET FOR COMMON EQUITY AND RELATED SHAREHOLDER
MATTERS</B></P>
<P align=justify><B>Market Information</B></P>
<P align=justify>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Our common stock is traded on the
Over the Counter Bulletin Board under the symbol AAPH. The closing bid price for
our stock as of September 5, 2013 was $0.0137.</P>
<P align=justify>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;The following is the range of
high and low bid prices for our common stock for the periods indicated. The
quotations reflect inter-dealer prices, without retail mark-up, mark-down or
commissions and may not represent actual transactions.</P>
<TABLE
style="BORDER-COLOR: black; BORDER-COLLAPSE: collapse; FONT-SIZE: 10pt; "
border=0 cellSpacing=0 cellPadding=0 width="100%">

  <TR vAlign=top>
    <TD style="BORDER-BOTTOM: #000000 1px solid" align=left><B>Fiscal 2013</B>
    </TD>
    <TD style="BORDER-BOTTOM: #000000 1px solid"  width="1%"
    align=left>&nbsp;</TD>
    <TD style="BORDER-BOTTOM: #000000 1px solid" width="12%"
      align=center><B>High</B> </TD>
    <TD style="BORDER-BOTTOM: #000000 1px solid"  width="2%"
    align=center>&nbsp;</TD>
    <TD style="BORDER-BOTTOM: #000000 1px solid"  width="1%"
    align=center>&nbsp;</TD>
    <TD style="BORDER-BOTTOM: #000000 1px solid" width="12%"
      align=center><B>Low</B> </TD>
    <TD style="BORDER-BOTTOM: #000000 1px solid"  width="2%"
    align=left>&nbsp;</TD></TR>
  <TR vAlign=top>
    <TD bgColor=#e6efff align=left>First Quarter (March 31, 2013) </TD>
    <TD bgColor=#e6efff  width="1%" align=left>$</TD>
    <TD bgColor=#e6efff width="12%" align=right>&nbsp;.14 </TD>
    <TD bgColor=#e6efff  width="2%" align=left>&nbsp;</TD>
    <TD bgColor=#e6efff  width="1%" align=left>$</TD>
    <TD bgColor=#e6efff width="12%" align=right>&nbsp;.055 </TD>
    <TD bgColor=#e6efff  width="2%" align=left>&nbsp;</TD></TR>
  <TR vAlign=top>
    <TD align=left>Second Quarter (June 30, 2013) </TD>
    <TD  width="1%" align=left>$</TD>
    <TD width="12%" align=right>&nbsp;.065 </TD>
    <TD  width="2%" align=left>&nbsp;</TD>
    <TD  width="1%" align=left>$</TD>
    <TD width="12%" align=right>&nbsp;.009 </TD>
    <TD  width="2%" align=left>&nbsp;</TD></TR>
  <TR vAlign=top>
    <TD bgColor=#e6efff align=left>Third Quarter (through September 5, 2013)
    </TD>
    <TD bgColor=#e6efff  width="1%" align=left>$</TD>
    <TD bgColor=#e6efff width="12%" align=right>&nbsp;.0153 </TD>
    <TD bgColor=#e6efff  width="2%" align=left>&nbsp;</TD>
    <TD bgColor=#e6efff  width="1%" align=left>$</TD>
    <TD bgColor=#e6efff width="12%" align=right>&nbsp;.0063 </TD>
    <TD bgColor=#e6efff  width="2%"
  align=left>&nbsp;</TD></TR></TABLE><BR>
<TABLE
style="BORDER-COLOR: black; BORDER-COLLAPSE: collapse; FONT-SIZE: 10pt; "
border=0 cellSpacing=0 cellPadding=0 width="100%">

  <TR vAlign=top>
    <TD style="BORDER-BOTTOM: #000000 1px solid" align=left><B>Fiscal 2012</B>
    </TD>
    <TD style="BORDER-BOTTOM: #000000 1px solid"  width="1%"
    align=left>&nbsp;</TD>
    <TD style="BORDER-BOTTOM: #000000 1px solid" width="12%"
      align=center><B>High</B> </TD>
    <TD style="BORDER-BOTTOM: #000000 1px solid"  width="2%"
    align=center>&nbsp;</TD>
    <TD style="BORDER-BOTTOM: #000000 1px solid"  width="1%"
    align=center>&nbsp;</TD>
    <TD style="BORDER-BOTTOM: #000000 1px solid" width="12%"
      align=center><B>Low</B> </TD>
    <TD style="BORDER-BOTTOM: #000000 1px solid"  width="2%"
    align=left>&nbsp;</TD></TR>
  <TR vAlign=top>
    <TD bgColor=#e6efff align=left>First Quarter (March 31, 2012) </TD>
    <TD bgColor=#e6efff  width="1%" align=left>$</TD>
    <TD bgColor=#e6efff width="12%" align=right>&nbsp;.429 </TD>
    <TD bgColor=#e6efff  width="2%" align=left>&nbsp;</TD>
    <TD bgColor=#e6efff  width="1%" align=left>$</TD>
    <TD bgColor=#e6efff width="12%" align=right>&nbsp;.1812 </TD>
    <TD bgColor=#e6efff  width="2%" align=left>&nbsp;</TD></TR>
  <TR vAlign=top>
    <TD align=left>Second Quarter (June 30, 2012) </TD>
    <TD  width="1%" align=left>$</TD>
    <TD width="12%" align=right>&nbsp;.29 </TD>
    <TD  width="2%" align=left>&nbsp;</TD>
    <TD  width="1%" align=left>$</TD>
    <TD width="12%" align=right>&nbsp;.18 </TD>
    <TD  width="2%" align=left>&nbsp;</TD></TR>
  <TR vAlign=top>
    <TD bgColor=#e6efff align=left>Third Quarter (September 30, 2012) </TD>
    <TD bgColor=#e6efff  width="1%" align=left>$</TD>
    <TD bgColor=#e6efff width="12%" align=right>&nbsp;.205 </TD>
    <TD bgColor=#e6efff  width="2%" align=left>&nbsp;</TD>
    <TD bgColor=#e6efff  width="1%" align=left>$</TD>
    <TD bgColor=#e6efff width="12%" align=right>&nbsp;.136 </TD>
    <TD bgColor=#e6efff  width="2%" align=left>&nbsp;</TD></TR>
  <TR vAlign=top>
    <TD align=left>Fourth Quarter (December 31, 2012) </TD>
    <TD  width="1%" align=left>$</TD>
    <TD width="12%" align=right>&nbsp;.18 </TD>
    <TD  width="2%" align=left>&nbsp;</TD>
    <TD  width="1%" align=left>$</TD>
    <TD width="12%" align=right>&nbsp;.06 </TD>
    <TD  width="2%" align=left>&nbsp;</TD></TR></TABLE><BR>
<TABLE
style="BORDER-COLOR: black; BORDER-COLLAPSE: collapse; FONT-SIZE: 10pt; "
border=0 cellSpacing=0 cellPadding=0 width="100%">

  <TR vAlign=top>
    <TD style="BORDER-BOTTOM: #000000 1px solid" align=left><B>Fiscal 2011</B>
    </TD>
    <TD style="BORDER-BOTTOM: #000000 1px solid"  width="1%"
    align=left>&nbsp;</TD>
    <TD style="BORDER-BOTTOM: #000000 1px solid" width="12%"
      align=center><B>High</B> </TD>
    <TD style="BORDER-BOTTOM: #000000 1px solid"  width="2%"
    align=center>&nbsp;</TD>
    <TD style="BORDER-BOTTOM: #000000 1px solid"  width="1%"
    align=center>&nbsp;</TD>
    <TD style="BORDER-BOTTOM: #000000 1px solid" width="12%"
      align=center><B>Low</B> </TD>
    <TD style="BORDER-BOTTOM: #000000 1px solid"  width="2%"
    align=left>&nbsp;</TD></TR>
  <TR vAlign=top>
    <TD bgColor=#e6efff align=left>First Quarter (March 31, 2011) </TD>
    <TD bgColor=#e6efff  width="1%" align=left>$</TD>
    <TD bgColor=#e6efff width="12%" align=right>&nbsp;.40 </TD>
    <TD bgColor=#e6efff  width="2%" align=left>&nbsp;</TD>
    <TD bgColor=#e6efff  width="1%" align=left>$</TD>
    <TD bgColor=#e6efff width="12%" align=right>&nbsp;.24 </TD>
    <TD bgColor=#e6efff  width="2%" align=left>&nbsp;</TD></TR>
  <TR vAlign=top>
    <TD align=left>Second Quarter (June 30, 2011) </TD>
    <TD  width="1%" align=left>$</TD>
    <TD width="12%" align=right>&nbsp;.70 </TD>
    <TD  width="2%" align=left>&nbsp;</TD>
    <TD  width="1%" align=left>$</TD>
    <TD width="12%" align=right>&nbsp;.29 </TD>
    <TD  width="2%" align=left>&nbsp;</TD></TR>
  <TR vAlign=top>
    <TD bgColor=#e6efff align=left>Third Quarter (September 30, 2011) </TD>
    <TD bgColor=#e6efff  width="1%" align=left>$</TD>
    <TD bgColor=#e6efff width="12%" align=right>&nbsp;.62 </TD>
    <TD bgColor=#e6efff  width="2%" align=left>&nbsp;</TD>
    <TD bgColor=#e6efff  width="1%" align=left>$</TD>
    <TD bgColor=#e6efff width="12%" align=right>&nbsp;.21 </TD>
    <TD bgColor=#e6efff  width="2%" align=left>&nbsp;</TD></TR>
  <TR vAlign=top>
    <TD align=left>Fourth Quarter (December 31, 2011) </TD>
    <TD  width="1%" align=left>$</TD>
    <TD width="12%" align=right>&nbsp;.33 </TD>
    <TD  width="2%" align=left>&nbsp;</TD>
    <TD  width="1%" align=left>$</TD>
    <TD width="12%" align=right>&nbsp;.19 </TD>
    <TD  width="2%" align=left>&nbsp;</TD></TR></TABLE>
<P align=justify><B>Stockholders</B></P>
<P align=justify>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;As of March 25, 2013, there were
49,862,294 shares of common stock issued and outstanding held by 73 stockholders
of record (not including street name holders).</P>
<P align=justify><B>Dividends</B></P>
<P align=justify>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;We have not paid dividends to
date and do not anticipate paying any dividends in the foreseeable future. Our
Board of Directors intends to follow a policy of retaining earnings, if any, to
finance our growth. The declaration and payment of dividends in the future will
be determined by our Board of Directors in light of conditions then existing,
including our earnings, financial condition, capital requirements and other
factors.</P>
<P align=center>29</P>
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<P align=center><B>MANAGEMENT&#146;S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
AND RESULTS OF OPERATIONS</B></P>
<P align=justify><I>The following discussion and analysis of the results of
operations and financial condition for the period for the fiscal years ended
December 31, 2012 and 2011, should be read in conjunction with the financial
statements and related notes and the other financial information that are
included elsewhere in this Prospectus. This discussion includes forward-looking
statements based upon current expectations that involve risks and uncertainties,
such as our plans, objectives, expectations and intentions. Actual results and
the timing of events could differ materially from those anticipated in these
forward-looking statements as a result of a number of factors, including those
set forth under the Risk Factors, Cautionary Notice Regarding Forward-Looking
Statements and Business sections in this registration statement on Form S-1. We
use words such as &#147;anticipate,&#148; &#147;estimate,&#148; &#147;plan,&#148; &#147;project,&#148; &#147;continuing,&#148;
&#147;ongoing,&#148; &#147;expect,&#148; &#147;believe,&#148; &#147;intend,&#148; &#147;may,&#148; &#147;will,&#148; &#147;should,&#148; &#147;could,&#148; and
similar expressions to identify forward-looking statements.</I></P>
<P align=justify>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;The following discussion should
be read in conjunction with our consolidated financial statements and notes
thereto included elsewhere in this Report. Forward looking statements are
statements not based on historical information and which relate to future
operations, strategies, financial results or other developments. Forward-looking
statements are based upon estimates, forecasts, and assumptions that are
inherently subject to significant business, economic and competitive
uncertainties and contingencies, many of which are beyond our control and many
of which, with respect to future business decisions, are subject to change.
These uncertainties and contingencies can affect actual results and could cause
actual results to differ materially from those expressed in any forward-looking
statements made by us, or on our behalf. We disclaim any obligation to update
forward-looking statements.</P>
<P align=justify><B>Background</B></P>
<P align=justify>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;We are an oil and natural gas
exploration and production (E&amp;P) company with current projects in Payne and
Lincoln Counties in Oklahoma. As of March 25, 2013, we have six producing wells
in Oklahoma. We also have ownership of 1,410.7 net acres and rights for the
exploration and production of oil and gas on an aggregate of approximately
4,733.8 gross acres in that state. This includes our core assets with rights to
explore on 1,847 gross acres in Oklahoma in the North Oklahoma Mississippi
Project and in 2,886 gross acres in south-central Oklahoma (the &#147;South Oklahoma
Project&#148;). In 2012, we had oil sales from seven wells at an average cumulative
daily rate of 13.1 barrels per day.</P>
<P align=justify>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Typically, our interest in a well
arises from a contract with another entity pursuant to which we provide
financial support for certain costs incurred in the exploration and development
of a project, which may include land costs, seismic or other exploration, and
test drilling. In exchange, we typically receive an interest in the proceeds
from the project&#146;s production. </P>
<P align=justify>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Our six producing wells in
Oklahoma arise out of our 2010 operating agreement with Bay Petroleum Corp.
(&#147;Bay&#148;). One of these wells began production in mid-2010, an additional two
wells, including one horizontal well, began production in 2011, and an
additional three wells, including two horizontal wells, began production in
2012. Collectively, daily production from the Oklahoma wells averaged 13.1
barrels per day in 2012.</P>
<P align=justify><B>2012 Highlights</B></P>
<P align=justify><I>Exploration and Development</I></P>
<P align=justify>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;In 2012 we drilled three wells in
Oklahoma, all of which are commercially producing. The NOM3H, a horizontal well
which is part of our Northern Oklahoma Project in Payne County, began commercial
oil and gas production on March 7, 2012, As of March 1, 2013, the well had
cumulatively produced 8,571 barrels of oil, 8,035 barrels in 2013 at an average
daily rate of 26.7 barrels per day. Daily gas production is in the 85 Mcf/day
range. </P>
<P align=justify>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;On July 10, 2012, SOM-1H, a
horizontal well which is our first well on the South Oklahoma Project in Lincoln
County, began commercial production. As of March 1, 2013, the well had
cumulatively produced 5,696 barrels of oil, and 4,618 barrels for the 2012
period, with sales beginning in July at an average daily rate of 25.4 barrels
per day. Daily gas production is in the 60 Mcf/day range. </P>
<P align=justify>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;NOS-222, a vertical oil and gas
well in Payne County, Oklahoma, which is an offset to our NOS122 well, began
commercial production on March 23, 2013 after a lengthy testing, frack and
pumping process to evaluate several prospective pay zones. NOS-222 is currently
producing and is now expected to stabilize at a rate between 7 and 10 barrels
per day. No gas production is associated with this well.</P>
<P align=center>30</P>
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<P align=justify><I>Drilling and Completion Expenditures</I></P>
<P align=justify>&nbsp;&nbsp;&nbsp;&nbsp; During the 2012 fiscal year, we
invested $355,242 in drilling and completion of new wells.</P>
<P align=justify><I>Production</I></P>
<P align=justify>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Our total 2012 fiscal year
production was net 3,613 barrels of oil and 1,962 BOE or 11,777 MCF of natural
gas, based upon a 6:1 ratio of MCF gas to barrels of oil. Average daily
production for the 2012 fiscal year averaged 9.9 barrels of oil, a decrease of
5.8% from the 2011 fiscal year daily production of 10.5 barrels. Average daily
gas production for the 2012 fiscal year averaged 5.37 BOE, or 32.3 MCF, an
increase of 69.5% from the 2011 fiscal year daily production of 1.64 BOE. Our
current production combined oil and gas equals 15.3 BOE.</P>
<P align=justify><I>Leaseholds</I></P>
<P align=justify>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;On February 23, 2012, due to an
increase in costs of water haulage for disposal that was affecting the net
revenue and a desire to focus on the planned wells and development of our
Oklahoma leases, we sold 75% of our 25% working interest in the 750-acre Poston
Prospect #1 Lutters oilfield in Southwest Trego County, Kansas for $65,000, and
on September 30, 2012, our remaining working interest was sold for $4,500. The
Poston Prospect encompassed the #1 Lutters Well and #3 Lutters Well.</P>
<P align=justify><B>2013 Outlook</B></P>
<P align=justify>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Our 2013 operating plans are
entirely focused on development of the Mississippi Lime and the Woodford Shale
on our Oklahoma leases. Subject to available capital, our goal is to drill a
total of three new horizontal wells in 2013 the first of which, in the Woodford
Shale is planned for early April 2013 and we would hope to begin on the next two
in July and September of 2013, respectively. The drilling and completion of
these wells are estimated to cost between $2.7 and $3.2 million and based upon
our working interest in the leases the Company would need to fund up to $800,000
per well. The Company may offset the working interest risk taking a lower
percentage, or negotiate a carried working interest scenario in order to
participate. </P>
<P align=justify>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Our future operations will
require substantial capital expenditures which will exceed our current revenues.
Therefore, we are dependent upon the identification and successful completion of
additional long-term or permanent equity financings, the support of creditors
and shareholders, and, ultimately, the achievement of profitable operations.
There can be no assurances that we will be successful, which would in turn
significantly affect our ability to meet our business objectives. If we are not
successful we will likely be required to reduce operations or liquidate assets.
We will continue to evaluate our projected expenditures relative to our
available cash and to seek additional means of financing in order to satisfy our
acquisition, working capital and other cash requirements.</P>
<P align=justify>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;We continue to operate with very
limited administrative support, and our current officers and directors continue
to be responsible for many duties to preserve our working capital. We expect no
significant changes in the number of employees over the next 12 months.</P>
<P align=justify><B>Critical Accounting Policies</B></P>
<P align=justify>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;The preparation of financial
statements in conformity with United States generally accepted accounting
principles requires management of our Company to make estimates and assumptions
that affect the reported amounts of assets and liabilities, the disclosure of
contingent assets and liabilities at the date of the financial statements and
the reported amounts of revenues and expenses during the reporting periods.</P>
<P align=justify>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;The discussion and analysis of
our financial condition and results of operations are based upon our financial
statements, which have been prepared in accordance with accounting principles
generally accepted in the United States of America. We believe certain critical
accounting policies affect our more significant judgments and estimates used in
the preparation of the financial statements. A description of our critical
accounting policies is set forth in our Annual Report on Form 10-K for the year
ended December 31, 2008. As of, and for the year ended December 31, 2012, there
have been no material changes or updates to our critical accounting
policies.</P>
<P align=center>31</P>
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<P align=justify><B>Results of Operations</B></P>
<P align=justify>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;The discussion and financial
statements contained herein are for our fiscal year ended December 31, 2012 and
December 31, 2011. The following discussion regarding our financial statements
should be read in conjunction with our financial statements included
herewith.</P>
<P align=justify><B>Financial Condition as of December 31, 2012</B></P>
<P align=justify>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;We reported total current assets
of $29,951 at December 31, 2012, consisting of cash of $16,216, accounts
receivable of $13,735 and prepaid expenses of $0. Total current liabilities
reported of $648,461 included accounts payable of $567,629, note payable and
accrued interest of $80,832. The Company had a working capital deficit of
$618,510 at December 31, 2012.</P>
<P align=justify>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Stockholders&#146; Deficiency
decreased from $2,136,142 at December 31, 2011 to Stockholders&#146; Equity of
$12,242 at December 31, 2012. This decrease is due primarily to conversion of
debt to stock and additional financing costs.</P>
<P align=justify><B>Cash and Cash Equivalents</B></P>
<P align=justify>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;As of December 31, 2012, we had
cash of $16,216. We anticipate that a substantial amount of cash will be used as
working capital and to execute our strategy and business plan. As such, we
further anticipate that we will have to raise additional capital through debt or
equity financings to fund our operations during the next 6 to 12 months.</P>
<P align=justify><B>Results of Operations for the Fiscal Year Ended December 31,
2012</B></P>
<P align=justify>&nbsp;&nbsp;&nbsp;&nbsp; For the fiscal year ended December 31,
2012, we incurred a net loss of $3,303,136.</P>
<P align=justify>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;General and administration
expenses for the fiscal year end December 31, 2012, amounted to $575,783
compared to $635,091 in 2011. Executive compensation for the 2012 fiscal year
end was $481,000 compared to $602,000 in 2011.</P>
<P align=justify><B>Results of Operations for the Fiscal Year Ended December 31,
2011</B></P>
<P align=justify>For the fiscal year ended December 31, 2011, we incurred a net
loss of $2,734,079.</P>
<P align=justify>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;General and administration
expenses for the fiscal year end December 31, 2011, amounted to $635,091
compared to $416,864 in 2010. Executive compensation for the 2011 fiscal year
end was $602,000 compared to $430,000 in 2010.</P>
<P align=justify><B>Liquidity and Capital Resources</B></P>
<P align=justify>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;As of December 31, 2012, we had
cash of $16,216, and working capital deficiency of $618,510. During the year
ended December 31, 2012, we funded our operations from the proceeds of private
convertible note issuances and producing well revenues. We are currently seeking
further financing and we believe that will provide sufficient working capital to
fund our operations for at least the next six months. Changes in our operating
plans, increased expenses, acquisitions, or other events, may cause us to seek
additional equity or debt financing in the future.</P>
<P align=justify>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;For the year ended December 31,
2012, we used net cash of $427,851in operations. Net cash used in operating
activities reflected an increase of stocks and warrants issued for financing of
$1,424,394, an increase of $322,731 for forgiveness of debt both from fiscal
year ended December 31, 2012 and a decrease in the change in accrued interest
from $583,803 for the fiscal year ended December 31, 2011 to $183,521for the
fiscal year ended December 31, 2012 and an increase in impairment expenses from
$173,879 for the year ended December 31, 2011 to $565,737 for the fiscal year
ended December 31, 2012.</P>
<P align=justify>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;On March 22, 2013, we announced
that we had entered into a common stock purchase agreement dated as of the
Closing Date (the &#147;Purchase Agreement&#148;) with Hanover Holdings I, LLC, a New York
limited liability company (&#147;Hanover&#148;). The Purchase Agreement provides that,
upon the terms and subject to the conditions set forth therein including volume
based share and price limitations, Hanover is committed to purchase up to
$5,000,000 (the &#147;Total Commitment&#148;) worth of our common stock, $0.001 par value
(the &#147;Shares&#148;), over the 24-month term of the Purchase Agreement, beginning on
the trading day following the date on which a registration statement covering
the resale of the Shares by Hanover is declared effective. The per share
purchase price for the shares shall be equal to 90.0% of the arithmetic average of the three
lowest volume weighted average prices for our common stock during the applicable
pricing period that equal or exceed the applicable floor price established by
the Company. We paid to Hanover a commitment fee for entering into the Purchase
Agreement equal to $150,000 (or 3.0% of the Total Commitment under the Purchase
Agreement) in the form of 1,764,706 restricted shares of our common stock,
calculated at a price equal to $0.085 per share, which was the closing price of
our Common Stock on March 4, 2013. In connection with the execution of the
Purchase Agreement, we agreed to file an initial registration statement with the
Commission to register an agreed upon number of Shares, which shall not exceed
1/3 of the number of shares of our common stock held by non-affiliates of the
Company, on or prior to April 30, 2013.</P>
<P align=center>32</P>
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<P align=justify>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;On July 9, 2012, we announced
that we entered into a three-year credit facility with ASYM Energy Partners LLC
and its affiliates (&#147;ASYM&#148;), a private investment firm focused on the energy
industry. The credit facility is secured by all of our assets. At this time
$490,000 has been advanced under the ASYM credit facility. We do not expect to
receive additional funds from the ASYM facility at this time as we do not
qualify under the agreement covenants.</P>
<P align=justify>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Subsequent to the year ended
December 31, 2012, the Company and ASYM agreed to modify the terms of the
agreement with ASYM whereby eliminating the variable exercise price of each
warrant grant due pursuant to the agreement to a fixed exercise price of $0.01
applicable to both past and future warrant grants.</P>
<P align=justify>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;In addition, during the year
ended December 31, 2012, we raised $727,200 from promissory notes. We also
received $308,770 in revenue during the year ended December 31, 2012 from our
producing wells.</P>
<P align=justify>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Our current cash requirements are
significant due to planned exploration and development of current projects. We
anticipate drilling one to three wells in Oklahoma in 2013 which is estimated to
cost between $800,000 and $2,400,000. Additionally, we have an aggregate of
$39,200 in outstanding short term borrowings. We will need to secure additional
debt or equity financing to pay such obligations as they become due.
Accordingly, we expect to continue to use debt and equity financing to fund
operations for the next twelve months, as we look to expand our asset base and
fund exploration and development of our properties.</P>
<P align=justify>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Our management believes that we
will be able to generate sufficient revenue or raise sufficient amounts of
working capital through debt or equity offerings, as may be required to meet our
short-term and long-term obligations. In order to execute on our business
strategy, we will require additional working capital, commensurate with the
operational needs of our planned drilling projects and obligations. Such working
capital will most likely be obtained through equity or debt financings until
such time as acquired operations are integrated and producing revenue in excess
of operating expenses. There are no assurances that we will be able to raise the
required working capital on terms favorable, or that such working capital will
be available on any terms when needed.</P>
<P align=justify><B>Off-Balance Sheet Arrangements</B></P>
<P align=justify>&nbsp;&nbsp;&nbsp;&nbsp; There are no off-balance sheet
arrangements.</P>
<P align=center><B>DIRECTORS AND EXECUTIVE OFFICERS</B></P>
<P align=justify>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;The following table sets forth
the names and ages of our current directors and executive officers, the
principal offices and positions held by each person:</P>
<TABLE
style="BORDER-COLOR: black; BORDER-COLLAPSE: collapse; FONT-SIZE: 10pt; "
border=0 cellSpacing=0 cellPadding=0 width="100%">

  <TR vAlign=top>
    <TD style="BORDER-BOTTOM: #000000 1px solid" align=left><B>Person</B> </TD>
    <TD style="BORDER-BOTTOM: #000000 1px solid" width="27%"
      align=center><B>Age</B> </TD>
    <TD style="BORDER-BOTTOM: #000000 1px solid" width="45%" align=left
    >&nbsp; &nbsp; &nbsp; &nbsp; &nbsp; &nbsp; &nbsp; &nbsp;
      &nbsp; &nbsp; &nbsp; &nbsp; &nbsp; &nbsp; &nbsp; &nbsp; &nbsp; &nbsp;
      &nbsp; &nbsp; &nbsp; &nbsp; &nbsp; &nbsp; &nbsp; &nbsp; &nbsp; &nbsp;
      &nbsp; &nbsp; &nbsp; &nbsp; &nbsp; &nbsp; &nbsp;<B>Position</B> </TD></TR>
  <TR>
    <TD>&nbsp; </TD>
    <TD width="27%">&nbsp; </TD>
    <TD width="45%" >&nbsp; </TD></TR>
  <TR vAlign=top>
    <TD bgColor=#e6efff align=left>Robert McIntosh </TD>
    <TD bgColor=#e6efff width="27%" align=center>52 </TD>
    <TD bgColor=#e6efff width="45%" align=left >Director;
      President, Chief Executive Officer and Chief Financial Officer
  </TD></TR></TABLE>
<P align=justify>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Our board of directors believes
that its members encompass a range of talent, skill, and experience sufficient
to provide sound and prudent guidance with respect to our operations and
interests. The information below with respect to our directors includes each
director&#146;s experience, qualifications, attributes, and skills that led our board
of directions to the conclusion that he or she should serve as a director.</P>
<P align=justify>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<B>Robert McIntosh. </B>On June
2, 2010, Mr. McIntosh became our President and Chief Executive Officer and in
July 2012 he also became our Chief Financial Officer. Prior to that, Mr.
McIntosh had been our Chief Operating Officer and a Director on our Board since March 2009. Prior to joining our company, Mr.
McIntosh served as President of Silver Star Energy, Inc. from September 2003 to
May 2008 and as President of Bancroft Uranium, Inc. from July 2008 to December
2008. Mr. McIntosh has been a businessman and consulting geologist for the past
25 years. He is experienced both as a resource exploration geoscientist
alongside noteworthy strengths in all facets of corporate development. Since
1983 his career has taken him across the Americas and abroad where he has been
instrumental in the design, implementation, execution and management of programs
in the oil, gas, precious and base metals segments of the resource sector. His
skills encompass virtually every aspect of oil &amp; gas exploration, well
completion and production techniques alongside a diverse experience in project
acquisition, negotiations, contracts, and project divestitures within the
petroleum industry. He has developed significant expertise and industry contacts
in his various roles across the publicly traded market sector as well as with
private junior E&amp;P companies. Mr. McIntosh has successfully assisted his
clients and stakeholders in the U.S.A. and Canada on projects that ultimately
became producing properties where he has contributed in full field exploitation
programs with additional traditional and secondary forms of drilling and
completions, along with ongoing well site supervision aimed at fully optimizing
the overall asset. Mr. McIntosh&#146;s business experience, and his 25 year career as
a consulting geologist, gives him unique insights into our challenges,
opportunities, and operations.</P>
<P align=center>33</P>
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<P align=justify>&nbsp;&nbsp;&nbsp;&nbsp; Except as set forth above, no officer
or director has been involved in any material legal proceeding.</P>
<P align=justify>&nbsp;&nbsp;&nbsp;&nbsp; There are no arrangements,
understandings, or family relationships pursuant to which our executive officers
were selected.</P>
<P align=justify><B>Term of Office</B></P>
<P align=justify>Our directors are appointed for a one-year term to hold office
until the next annual general meeting of our shareholders or until removed from
office in accordance with our bylaws. Our officers are appointed by our Board of
Directors and hold office until removed by the Board, absent an employment
agreement.</P>
<P align=center><B>EXECUTIVE COMPENSATION</B></P>
<P align=justify><B>Summary Compensation</B></P>
<P align=justify>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;The summary compensation table
below shows certain compensation information for services rendered in all
capacities to us by our principal executive officer and principal financial
officer and by each other executive officer whose total annual salary and bonus
exceeded $100,000 during the fiscal periods ended December 31, 2011 and December
31, 2012. Other than as set forth below, no executive officer&#146;s total annual
compensation exceeded $100,000 during our last fiscal period.</P>
<P align=justify><B>Summary Compensation Table</B></P>
<TABLE
style="BORDER-COLOR: black; BORDER-COLLAPSE: collapse; FONT-SIZE: 8pt; "
border=0 cellSpacing=0 cellPadding=0 width="100%">

  <TR vAlign=top>
    <TD align=left >&nbsp; </TD>
    <TD width="8%" align=left>&nbsp; </TD>
    <TD width="8%" align=left>&nbsp; </TD>
    <TD width="8%" align=left>&nbsp; </TD>
    <TD width="8%" align=left>&nbsp; </TD>
    <TD width="8%" align=left>&nbsp; </TD>
    <TD width="8%" align=center><B>Non</B> </TD>
    <TD width="8%" align=left>&nbsp; </TD>
    <TD width="8%" align=left>&nbsp; </TD>
    <TD width="8%" align=left>&nbsp; </TD></TR>
  <TR vAlign=top>
    <TD align=left >&nbsp; </TD>
    <TD width="8%" align=left>&nbsp; </TD>
    <TD width="8%" align=left>&nbsp; </TD>
    <TD width="8%" align=left>&nbsp; </TD>
    <TD width="8%" align=left>&nbsp; </TD>
    <TD width="8%" align=left>&nbsp; </TD>
    <TD width="8%" align=center><B>Equity</B> </TD>
    <TD width="8%" align=center><B>Non-qualified</B> </TD>
    <TD width="8%" align=left>&nbsp; </TD>
    <TD width="8%" align=left>&nbsp; </TD></TR>
  <TR vAlign=top>
    <TD align=left >&nbsp; </TD>
    <TD width="8%" align=left>&nbsp; </TD>
    <TD width="8%" align=left>&nbsp; </TD>
    <TD width="8%" align=left>&nbsp; </TD>
    <TD width="8%" align=left>&nbsp; </TD>
    <TD width="8%" align=left>&nbsp; </TD>
    <TD width="8%" align=center><B>Incentive</B> </TD>
    <TD width="8%" align=center><B>Deferred</B> </TD>
    <TD width="8%" align=left>&nbsp; </TD>
    <TD width="8%" align=left>&nbsp; </TD></TR>
  <TR vAlign=top>
    <TD align=left >&nbsp; </TD>
    <TD width="8%" align=left>&nbsp; </TD>
    <TD width="8%" align=left>&nbsp; </TD>
    <TD width="8%" align=left>&nbsp; </TD>
    <TD width="8%" align=center><B>Stock</B> </TD>
    <TD width="8%" align=center><B>Option</B> </TD>
    <TD width="8%" align=center><B>Plan</B> </TD>
    <TD width="8%" align=center><B>Compensation</B> </TD>
    <TD width="8%" align=center><B>All Other</B> </TD>
    <TD width="8%" align=left>&nbsp; </TD></TR>
  <TR vAlign=top>
    <TD align=left >&nbsp; </TD>
    <TD width="8%" align=left>&nbsp; </TD>
    <TD width="8%" align=center><B>Salary</B> </TD>
    <TD width="8%" align=center><B>Bonus</B> </TD>
    <TD width="8%" align=center><B>Awards</B> </TD>
    <TD width="8%" align=center><B>Awards</B> </TD>
    <TD width="8%" align=center><B>Compensation</B> </TD>
    <TD width="8%" align=center><B>Earnings</B> </TD>
    <TD width="8%" align=center><B>Compensation</B> </TD>
    <TD width="8%" align=center><B>Total</B> </TD></TR>
  <TR vAlign=top>
    <TD align=left >&nbsp; </TD>
    <TD width="8%" align=center><B>Year</B> </TD>
    <TD width="8%" align=center><B>($)</B> </TD>
    <TD width="8%" align=center><B>($)</B> </TD>
    <TD width="8%" align=center><B>($)</B> </TD>
    <TD width="8%" align=center><B>($)</B> </TD>
    <TD width="8%" align=center><B>($)</B> </TD>
    <TD width="8%" align=center><B>($)</B> </TD>
    <TD width="8%" align=center><B>($)</B> </TD>
    <TD width="8%" align=center><B>($)</B> </TD></TR>
  <TR vAlign=top>
    <TD align=left >&nbsp; &nbsp; &nbsp;<B>Name and Principal
      Position (a)</B> </TD>
    <TD width="8%" align=center><B>(b)</B> </TD>
    <TD width="8%" align=center><B>(c)</B> </TD>
    <TD width="8%" align=center><B>(d)</B> </TD>
    <TD width="8%" align=center><B>(e)</B> </TD>
    <TD width="8%" align=center><B>(f)</B> </TD>
    <TD width="8%" align=center><B>(g)</B> </TD>
    <TD width="8%" align=center><B>(h)</B> </TD>
    <TD width="8%" align=center><B>(i)</B> </TD>
    <TD width="8%" align=center><B>(j)</B> </TD></TR>
  <TR vAlign=top>
    <TD bgColor=#e6efff align=left ><B>John J. Lennon,</B>
      <BR>Former Chairman of the Board, Chief <BR>Financial Officer </TD>
    <TD bgColor=#e6efff width="8%" align=center>2012 <BR><BR>2011 </TD>
    <TD bgColor=#e6efff width="8%" align=right>$ 12,000 <BR><BR>$ -0- </TD>
    <TD bgColor=#e6efff width="8%" align=right>$ -0- <BR><BR>$ -0- </TD>
    <TD bgColor=#e6efff width="8%" align=right>$ 52,500 <BR><BR>$ -0- </TD>
    <TD bgColor=#e6efff width="8%" align=right>$ -0- <BR><BR>$ -0- </TD>
    <TD bgColor=#e6efff width="8%" align=right>$ -0- <BR><BR>$ -0- </TD>
    <TD bgColor=#e6efff width="8%" align=right>$ -0- <BR><BR>$ -0- </TD>
    <TD bgColor=#e6efff width="8%" align=right>$ -0- <BR><BR>$ -0- </TD>
    <TD bgColor=#e6efff width="8%" align=right>$ 64,500 <BR><BR>$ -0- </TD></TR>
  <TR>
    <TD >&nbsp; </TD>
    <TD width="8%">&nbsp; </TD>
    <TD width="8%" align=right>&nbsp; </TD>
    <TD width="8%" align=right>&nbsp; </TD>
    <TD width="8%" align=right>&nbsp; </TD>
    <TD width="8%" align=right>&nbsp; </TD>
    <TD width="8%" align=right>&nbsp; </TD>
    <TD width="8%" align=right>&nbsp; </TD>
    <TD width="8%" align=right>&nbsp; </TD>
    <TD width="8%" align=right>&nbsp; </TD></TR>
  <TR vAlign=top>
    <TD bgColor=#e6efff align=left ><B>Robert McIntosh</B>
      <BR>Director, President and Chief Executive <BR>Officer </TD>
    <TD bgColor=#e6efff width="8%" align=center>2012 <BR><BR>2011 </TD>
    <TD bgColor=#e6efff width="8%" align=right>$ 184,500 <BR><BR>$ 180,000 </TD>
    <TD bgColor=#e6efff width="8%" align=right>$ -0- <BR><BR>$ -0- </TD>
    <TD bgColor=#e6efff width="8%" align=right>$ 84,000 <BR><BR>$ 204,000 </TD>
    <TD bgColor=#e6efff width="8%" align=right>$ -0- <BR><BR>$ -0- </TD>
    <TD bgColor=#e6efff width="8%" align=right>$ -0- <BR><BR>$ -0- </TD>
    <TD bgColor=#e6efff width="8%" align=right>$ -0- <BR><BR>$ -0- </TD>
    <TD bgColor=#e6efff width="8%" align=right>$ -0- <BR><BR>$ 0- </TD>
    <TD bgColor=#e6efff width="8%" align=right>$ 268,500 <BR><BR>$ 384,000
  </TD></TR>
  <TR>
    <TD >&nbsp; </TD>
    <TD width="8%">&nbsp; </TD>
    <TD width="8%" align=right>&nbsp; </TD>
    <TD width="8%" align=right>&nbsp; </TD>
    <TD width="8%" align=right>&nbsp; </TD>
    <TD width="8%" align=right>&nbsp; </TD>
    <TD width="8%" align=right>&nbsp; </TD>
    <TD width="8%" align=right>&nbsp; </TD>
    <TD width="8%" align=right>&nbsp; </TD>
    <TD width="8%" align=right>&nbsp; </TD></TR>
  <TR vAlign=top>
    <TD style="BORDER-BOTTOM: #000000 1px solid" bgColor=#e6efff align=left
    ><B>Dan Holladay</B> <BR>Former Director, Vice President
      <BR>Operations </TD>
    <TD style="BORDER-BOTTOM: #000000 1px solid" bgColor=#e6efff width="8%"
    align=center>2012 <BR><BR>2011 </TD>
    <TD style="BORDER-BOTTOM: #000000 1px solid" bgColor=#e6efff width="8%"
    align=right>$ 92,500 <BR><BR>$ 116,000 </TD>
    <TD style="BORDER-BOTTOM: #000000 1px solid" bgColor=#e6efff width="8%"
    align=right>$ -0- <BR><BR>$ -0- </TD>
    <TD style="BORDER-BOTTOM: #000000 1px solid" bgColor=#e6efff width="8%"
    align=right>$ 52,500 <BR><BR>$ 102,000 </TD>
    <TD style="BORDER-BOTTOM: #000000 1px solid" bgColor=#e6efff width="8%"
    align=right>$ -0- <BR><BR>$ -0- </TD>
    <TD style="BORDER-BOTTOM: #000000 1px solid" bgColor=#e6efff width="8%"
    align=right>$ -0- <BR><BR>$ -0- </TD>
    <TD style="BORDER-BOTTOM: #000000 1px solid" bgColor=#e6efff width="8%"
    align=right>$ -0- <BR><BR>$ -0- </TD>
    <TD style="BORDER-BOTTOM: #000000 1px solid" bgColor=#e6efff width="8%"
    align=right>$ -0- <BR><BR>$ -0- </TD>
    <TD style="BORDER-BOTTOM: #000000 1px solid" bgColor=#e6efff width="8%"
    align=right>$ 145,000 <BR><BR>$ 218,000 </TD></TR></TABLE>
<P align=justify>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Pursuant to the business
consultant agreement with Mr. McIntosh, dated March 15, 2009, it was agreed that
Mr. McIntosh would provide us with corporate management consulting services for
a monthly fee of $15,000. The initial term of the agreement is twelve months
with automatic renewals on a month-by-month basis thereafter. Mr. McIntosh
received a total of $384,000 in compensation for the fiscal year ended December
31, 2011, of this, $204,000 was stock issued for services rendered. Mr. McIntosh
received a total of $268,500 in compensation for the fiscal year ended December
31, 2012, of this, $84,000 was stock issued for services rendered.</P>
<P align=justify>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;In January 2012, the Company
verbally agreed to pay Mr. Lennon a salary of $3,000 per month and grant him
100,000 shares of our Common Stock. Mr. Lennon resigned as an officer and
director of the Company effective July 17, 2012.</P>
<P align=center>34</P>
<HR style="PAGE-BREAK-AFTER: always" align=center color=black SIZE=5
width="100%" noShade>
<!--$$/page=--><A name=page_37></A>
<P align=justify>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Mr. Holladay became a Director in
June 2009. On September 1, 2011, Mr. Holladay became our Vice President
Operations, and his responsibilities were increased to include supervision of
all field operations. He entered into a verbal agreement, effective September 1,
2011, whereby his monthly compensation was increased to $15,000 per month. Mr.
Holladay resigned as an officer and director of the Company effective October
21, 2012.</P>
<P align=justify><B>Director Compensation</B></P>
<P align=justify>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Our board of directors are
reimbursed for actual expenses incurred in attending Board meetings. There are
no other compensation arrangements with directors, and the directors did not
receive any other compensation in the fiscal year ending December 31, 2012.</P>
<P align=center><B>SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND
MANAGEMENT</B></P>
<P align=justify>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;The following table sets forth,
as of March 25, 2013, the number and percentage of outstanding shares of our
common stock owned by (i) each person known to us to beneficially own more than
5% of our outstanding common stock, (ii) each director, (iii) each named
executive officer, and (iv) all executive officers and directors as a group.
Share ownership is deemed to include all shares that may be acquired through the
exercise or conversion of any other security immediately or within sixty days of
March 25, 2013. Such shares that may be so acquired are also deemed outstanding
for purposes of calculating the percentage of ownership for that individual or
any group of which that individual is a member. Unless otherwise indicated, the
stockholders listed possess sole voting and investment power with respect to the
shares shown.</P>
<TABLE
style="BORDER-COLOR: black; BORDER-COLLAPSE: collapse; FONT-SIZE: 10pt; "
border=0 cellSpacing=0 cellPadding=0 width="100%">

  <TR vAlign=top>
    <TD style="BORDER-BOTTOM: #000000 1px solid" align=center><BR><BR><B>Name
      and Address</B> <BR><B>of Beneficial Owner</B> </TD>
    <TD style="BORDER-BOTTOM: #000000 1px solid" width="20%"
      align=center><BR><BR><BR><B>Title of Class</B> </TD>
    <TD style="BORDER-BOTTOM: #000000 1px solid" width="20%"
      align=center><B>Amount and Nature</B> <BR><B>of Beneficial</B>
      <BR><B>Ownership of</B> <BR><B>Common Stock(1)</B> </TD>
    <TD style="BORDER-BOTTOM: #000000 1px solid" width="20%"
      align=center><BR><B>Percentage of</B> <BR><B>Common Stock</B>
      <BR><B>Outstanding(1)</B> </TD></TR>
  <TR>
    <TD>&nbsp; </TD>
    <TD width="20%">&nbsp; </TD>
    <TD width="20%">&nbsp; </TD>
    <TD width="20%">&nbsp; </TD></TR>
  <TR vAlign=top>
    <TD bgColor=#e6efff align=left>John J. Lennon <BR>104 Swallow Hill Drive
      <BR>Barnstable, Massachusetts </TD>
    <TD bgColor=#e6efff width="20%" align=right><BR><BR>Common </TD>
    <TD bgColor=#e6efff width="20%" align=right><BR><BR>0 (2) </TD>
    <TD bgColor=#e6efff width="20%" align=right><BR><BR>0.00% </TD></TR>
  <TR>
    <TD>&nbsp; </TD>
    <TD width="20%" align=right>&nbsp; </TD>
    <TD width="20%" align=right>&nbsp; </TD>
    <TD width="20%" align=right>&nbsp; </TD></TR>
  <TR vAlign=top>
    <TD bgColor=#e6efff align=left>Robert B. McIntosh <BR>17470 N Pacesetter
      &#145;Way <BR>Scottsdale, AZ 85255 </TD>
    <TD bgColor=#e6efff width="20%" align=right><BR><BR>Common </TD>
    <TD bgColor=#e6efff width="20%" align=right><BR><BR>900,000 </TD>
    <TD bgColor=#e6efff width="20%" align=right><BR><BR>1.80% </TD></TR>
  <TR>
    <TD>&nbsp; </TD>
    <TD width="20%" align=right>&nbsp; </TD>
    <TD width="20%" align=right>&nbsp; </TD>
    <TD width="20%" align=right>&nbsp; </TD></TR>
  <TR vAlign=top>
    <TD bgColor=#e6efff align=left>Dan Holladay <BR>5813 E 17 <BR>Wichita, KS
      67208 </TD>
    <TD bgColor=#e6efff width="20%" align=right><BR><BR>Common </TD>
    <TD bgColor=#e6efff width="20%" align=right><BR><BR>150,000 (3) </TD>
    <TD bgColor=#e6efff width="20%" align=right><BR><BR>0.30% </TD></TR>
  <TR>
    <TD>&nbsp; </TD>
    <TD width="20%" align=right>&nbsp; </TD>
    <TD width="20%" align=right>&nbsp; </TD>
    <TD width="20%" align=right>&nbsp; </TD></TR>
  <TR vAlign=top>
    <TD bgColor=#e6efff align=left>All Executive Officers and Directors as a
      Group <BR>(4 persons) </TD>
    <TD bgColor=#e6efff width="20%" align=right><BR>Common </TD>
    <TD bgColor=#e6efff width="20%" align=right><BR>1,050,000 </TD>
    <TD bgColor=#e6efff width="20%" align=right><BR>2.11%
</TD></TR></TABLE><BR>
<TABLE
style="BORDER-COLOR: black; BORDER-COLLAPSE: collapse; FONT-SIZE: 10pt; "
border=0 cellSpacing=0 cellPadding=0 width="100%" BCLLIST>

  <TR>
    <TD vAlign=top width="5%">(1) </TD>
    <TD>
      <P align=justify>Consists of the aggregate total of shares of common stock
      held by the named individual directly. Based upon information furnished to
      us by the directors and executive officers or obtained from our stock
      transfer books showing 49,862,294 shares of common stock outstanding as of
      March 25, 2013. We are informed that these persons hold the sole voting
      and dispositive power with respect to the common stock except as noted
      herein. For purposes of computing &#147;beneficial ownership&#148; and the
      percentage of outstanding common stock held by each person or group of
      persons named above as of March 25, 2013, any security which such person
      or group of persons has the right to acquire within 60 days after such
      date is deemed to be outstanding for the purpose of computing beneficial
      ownership and the percentage ownership of such person or persons, but is
      not deemed to be outstanding for the purpose of computing the percentage
      ownership of any other person.</P></TD></TR>
  <TR>
    <TD width="5%">&nbsp;</TD>
    <TD>&nbsp;</TD></TR>
  <TR>
    <TD vAlign=top width="5%">(2) </TD>
    <TD>
      <P align=justify>Mr. Lennon resigned as an officer and director of the
      Company effective July 17, 2012.</P></TD></TR></TABLE>
<P align=center>35</P>
<HR style="PAGE-BREAK-AFTER: always" align=center color=black SIZE=5
width="100%" noShade>
<!--$$/page=--><A name=page_38></A><BR>
<TABLE
style="BORDER-COLOR: black; BORDER-COLLAPSE: collapse; FONT-SIZE: 10pt; "
border=0 cellSpacing=0 cellPadding=0 width="100%" BCLLIST>

  <TR>
    <TD vAlign=top width="5%">(3) </TD>
    <TD>
      <P align=justify>Mr. Holladay resigned as an officer and director of the
      Company effective October 21, 2012.</P></TD></TR></TABLE>
<P align=center><B>CERTAIN RELATIONSHIPS AND RELATED PARTY TRANSACTIONS AND
DIRECTOR INDEPENDENCE</B></P>
<P align=justify><B>Related Party Transactions</B></P>
<P align=justify>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;On March 15, 2009 we entered into
a business consultant agreement with Robert McIntosh, our President, Chief
Executive Officer and director, whereby it was agreed that Mr. McIntosh will
provide us with corporate management consulting services for a monthly fee of
$15,000. The term of the agreement is twelve months and is subject to
termination upon 30 days prior written notice by either party. Upon expiration
of the initial twelve month term, this agreement has continued upon a
month-by-month basis until further notice.</P>
<P align=justify>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;On September 1, 2011, the Company
agreed to name Dan Holladay, a director of the Company, to the position of Vice
President Operations. Mr. Holladay entered into a verbal agreement with the
Company, effective September 1, 2011, whereby his monthly compensation was
increased to $15,000 per month. Mr. Holladay resigned as an officer and director
of the Company effective October 21, 2012.</P>
<P align=justify>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;In January 2012, the Company
verbally agreed to pay John J. Lennon a salary of $3,000 per month and grant him
100,000 shares of our Common Stock, for his service as Chief Financial Officer
of the Company. Mr. Lennon resigned as an officer and director of the Company
effective July 17, 2012.</P>
<P align=justify>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;On January 24, 2012, the Company
issued 400,000 shares of the Company&#146;s Common Stock to Robert McIntosh, 250,000
to John J. Lennon and 250,000 to Dan Holladay in lieu of executive
compensation.</P>
<P align=justify><B>Review, Approval or Ratification of Transactions with
Related Persons</B></P>
<P align=justify>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Although we adopted a Code of
Ethical Conduct on July 20, 2009, we still rely on our board to review related
party transactions on an ongoing basis to prevent conflicts of interest. Our
board reviews a transaction in light of the affiliations of the director,
officer or employee and the affiliations of such person&#146;s immediate family.
Transactions are presented to our board for approval before they are entered
into or, if this is not possible, for ratification after the transaction has
occurred. If our board finds that a conflict of interest exists, then it will
determine the appropriate remedial action, if any. Our board approves or
ratifies a transaction if it determines that the transaction is consistent with
the best interests of the Company. For the above transaction, the board approved
and ratified the transaction, finding it in the best interest of the
Company.</P>
<P align=justify><B>Director Independence</B></P>
<P align=justify>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;During fiscal 2012, we had one
independent director on our board, Lonnie McDade. Mr. McDade resigned from the
board following the 2012 fiscal year, on February 27, 2013. We evaluate
independence by the standards for director independence established by
applicable laws, rules, and listing standards including, without limitation, the
standards for independent directors established by The New York Stock Exchange,
Inc., The NASDAQ National Market, and the Securities and Exchange
Commission.</P>
<P align=justify>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Subject to some exceptions, these
standards generally provide that a director will not be independent if (a) the
director is, or in the past three years has been, an employee of ours; (b) a
member of the director&#146;s immediate family is, or in the past three years has
been, an executive officer of ours; (c) the director or a member of the
director&#146;s immediate family has received more than $120,000 per year in direct
compensation from us other than for service as a director (or for a family
member, as a non-executive employee); (d) the director or a member of the
director&#146;s immediate family is, or in the past three years has been, employed in
a professional capacity by our independent public accountants, or has worked for
such firm in any capacity on our audit; (e) the director or a member of the
director&#146;s immediate family is, or in the past three years has been, employed as
an executive officer of a company where one of our executive officers serves on
the compensation committee; or (f) the director or a member of the director&#146;s
immediate family is an executive officer of a company that makes payments to, or
receives payments from, us in an amount which, in any twelve-month period during
the past three years, exceeds the greater of $1,000,000 or two percent of that
other company&#146;s consolidated gross revenues.</P>
<P align=center>36</P>
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width="100%" noShade>
<!--$$/page=--><A name=page_39></A>
<P align=center><B>DISCLOSURE OF COMMISSION POSITION OF INDEMNIFICATION FOR
SECURITIES ACT LIABILITIES</B></P>
<P align=justify>Sections 78.7502 and 78.751 of the Nevada Revised Statutes
authorizes a court to award, or a corporation&#146;s board of directors to grant
indemnity to directors and officers in terms sufficiently broad to permit
indemnification, including reimbursement of expenses incurred, under certain
circumstances for liabilities arising under the Securities Act of 1933, as
amended. In addition, the registrant&#146;s Bylaws provide that the registrant has
the authority to indemnify the registrant&#146;s directors and officers and may
indemnify the registrant&#146;s employees and agents (other than officers and
directors) against liabilities to the fullest extent permitted by Nevada law.
The registrant is also empowered under the registrant&#146;s Bylaws to purchase
insurance on behalf of any person whom the registrant is required or permitted
to indemnify.</P>
<P align=justify>Insofar as indemnification for liabilities arising under the
Securities Act may be permitted to directors, officers or persons controlling us
pursuant to the foregoing provisions, or otherwise, we have been advised that in
the opinion of the SEC, such indemnification is against public policy as
expressed in the Securities Act and is therefore unenforceable.</P>
<P align=center><B>WHERE YOU CAN FIND MORE INFORMATION</B></P>
<P align=justify>We have filed a registration statement on Form S-1, together
with all amendments and exhibits, with the SEC. This Prospectus, which forms a
part of that registration statement, does not contain all information included
in the registration statement. Certain information is omitted and you should
refer to the registration statement and its exhibits. With respect to references
made in this Prospectus to any of our contracts or other documents, the
references are not necessarily complete and you should refer to the exhibits
attached to the registration statement for copies of the actual contracts or
documents. You may read and copy any document that we file at the Commission&#146;s
Public Reference Room at 100 F Street, N.E., Washington, D.C. 20549. Please call
the SEC at 1-800-SEC-0330 for further information on the operation of the public
reference rooms. Our filings and the registration statement can also be reviewed
by accessing the SEC&#146;s website at http://www.sec.gov.</P>
<P align=center><B>FINANCIAL STATEMENTS</B></P>
<P align=justify>Our consolidated financial statements as of and for the period
ended December 31, 2012 are included herewith.</P>
<P align=center>37</P>
<HR style="PAGE-BREAK-AFTER: always" align=center color=black SIZE=5
width="100%" noShade>
<A name=page_f28></A>
<P align=justify>To the Board of Directors and Stockholders <BR>American
Petro-Hunter, Inc.<BR>Wichita, Kansas</P>
<P align=center>REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM</P>
<P align=justify>We have audited the accompanying balance sheet of American
Petro-Hunter, Inc. as of December 31, 2012 and 2011 and the related statements
of operations, stockholders&#146; equity, and cash flows for the years then ended.
American Petro-Hunter, Inc.&#146;s management is responsible for these financial
statements. Our responsibility is to express an opinion on these financial
statements based on our audit.</P>
<P align=justify>We conducted our audit in accordance with the standards of the
Public Company Accounting Oversight Board (United States). Those standards
require that we plan and perform the audit to obtain reasonable assurance about
whether the financial statements are free of material misstatement. The Company
is not required to have, nor were we engaged to perform, an audit of its
internal control over financial reporting. Our audit included consideration of
internal control over financial reporting as a basis for designing audit
procedures that are appropriate in the circumstances, but not for the purpose of
expressing an opinion on the effectiveness of the Company&#146;s internal control
over financial reporting. Accordingly, we express no such opinion. Our audit of
the financial statements 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, and
evaluating the overall financial statement presentation. We believe that our
audit provides a reasonable basis for our opinion.</P>
<P align=justify>In our opinion, the financial statements referred to above
present fairly, in all material respects, the financial position of American
Petro-Hunter, Inc. as of December 31, 2012 and 2011 and the results of its
operations, stockholders&#146; equity, and cash flows for the years then ended in
conformity with accounting principles generally accepted in the United States of
America.</P>
<P align=justify>The accompanying financial statements have been prepared
assuming that the Company will continue as a going concern. As discussed in Note
1 to the financial statements, the Company has suffered recurring losses from
operations and is dependent upon the continued sale of its securities or
obtaining debt financing for funds to meet its cash requirements. These factors
raise substantial doubt about the Company&#146;s ability to continue as a going
concern. The financial statements do not include any adjustments that might
result from the outcome of this uncertainty.</P>
<P align=justify>&nbsp;</P>
<P align=justify>Weaver Martin &amp; Samyn, LLC <BR>Kansas City, Missouri
<BR>
April 15, 2013</P>
<P align=center>F-1</P>
<HR style="PAGE-BREAK-AFTER: always" align=center width="100%" color=black
noShade SIZE=5>
<A name=page_f29></A>
<P align=center><B>American Petro-Hunter, Inc.</B><BR><B>Balance Sheets</B></P>
<TABLE
style="BORDER-COLOR: black; FONT-SIZE: 10pt; BORDER-COLLAPSE: collapse; "
cellSpacing=0 cellPadding=0 width="100%" border=0>

  <TR vAlign=top>
    <TD align=left>&nbsp; </TD>
    <TD align=left width="1%" >&nbsp;</TD>
    <TD width="12%" align=center nowrap>December 31, </TD>
    <TD width="2%" align=center nowrap >&nbsp;</TD>
    <TD width="1%" align=center nowrap >&nbsp;</TD>
    <TD width="12%" align=center nowrap>December 31, </TD>
    <TD align=left width="2%" >&nbsp;</TD></TR>
  <TR vAlign=top>
    <TD align=left>&nbsp; </TD>
    <TD style="BORDER-BOTTOM: #000000 1px solid" align=left width="1%"
    >&nbsp;</TD>
    <TD width="12%" align=center nowrap style="BORDER-BOTTOM: #000000 1px solid">2012    </TD>
    <TD width="2%" align=center nowrap style="BORDER-BOTTOM: #000000 1px solid"
    >&nbsp;</TD>
    <TD width="1%" align=center nowrap style="BORDER-BOTTOM: #000000 1px solid"
    >&nbsp;</TD>
    <TD width="12%" align=center nowrap style="BORDER-BOTTOM: #000000 1px solid">2011    </TD>
    <TD style="BORDER-BOTTOM: #000000 1px solid" align=left width="2%"
    >&nbsp;</TD></TR>
  <TR vAlign=top>
    <TD align=left bgColor=#e6efff><B>Assets</B> </TD>
    <TD vAlign=bottom align=left width="1%"
    bgColor=#e6efff>&nbsp;</TD>
    <TD vAlign=bottom align=left width="12%" bgColor=#e6efff>&nbsp; </TD>
    <TD vAlign=bottom align=left width="2%"
    bgColor=#e6efff>&nbsp;</TD>
    <TD vAlign=bottom align=left width="1%"
    bgColor=#e6efff>&nbsp;</TD>
    <TD vAlign=bottom align=left width="12%" bgColor=#e6efff>&nbsp; </TD>
    <TD vAlign=bottom align=left width="2%"
    bgColor=#e6efff>&nbsp;</TD></TR>
  <TR>
    <TD>&nbsp; </TD>
    <TD vAlign=bottom width="1%" >&nbsp;</TD>
    <TD vAlign=bottom width="12%">&nbsp; </TD>
    <TD vAlign=bottom width="2%" >&nbsp;</TD>
    <TD vAlign=bottom width="1%" >&nbsp;</TD>
    <TD vAlign=bottom width="12%">&nbsp; </TD>
    <TD vAlign=bottom width="2%" >&nbsp;</TD></TR>
  <TR vAlign=top>
    <TD align=left bgColor=#e6efff>Current assets: </TD>
    <TD vAlign=bottom align=left width="1%"
    bgColor=#e6efff>&nbsp;</TD>
    <TD vAlign=bottom align=left width="12%" bgColor=#e6efff>&nbsp; </TD>
    <TD vAlign=bottom align=left width="2%"
    bgColor=#e6efff>&nbsp;</TD>
    <TD vAlign=bottom align=left width="1%"
    bgColor=#e6efff>&nbsp;</TD>
    <TD vAlign=bottom align=left width="12%" bgColor=#e6efff>&nbsp; </TD>
    <TD vAlign=bottom align=left width="2%"
    bgColor=#e6efff>&nbsp;</TD></TR>
  <TR vAlign=top>
    <TD align=left>&nbsp; &nbsp;Cash </TD>
    <TD vAlign=bottom align=left width="1%" >$</TD>
    <TD vAlign=bottom align=right width="12%">&nbsp;16,216 </TD>
    <TD vAlign=bottom align=left width="2%" >&nbsp;</TD>
    <TD vAlign=bottom align=left width="1%" >$</TD>
    <TD vAlign=bottom align=right width="12%">&nbsp;2,609 </TD>
    <TD vAlign=bottom align=left width="2%" >&nbsp;</TD></TR>
  <TR vAlign=top>
    <TD align=left bgColor=#e6efff>&nbsp; &nbsp;Accounts receivable </TD>
    <TD vAlign=bottom align=left width="1%"
    bgColor=#e6efff>&nbsp;</TD>
    <TD vAlign=bottom align=right width="12%" bgColor=#e6efff>13,735 </TD>
    <TD vAlign=bottom align=left width="2%"
    bgColor=#e6efff>&nbsp;</TD>
    <TD vAlign=bottom align=left width="1%"
    bgColor=#e6efff>&nbsp;</TD>
    <TD vAlign=bottom align=right width="12%" bgColor=#e6efff>46,417 </TD>
    <TD vAlign=bottom align=left width="2%"
    bgColor=#e6efff>&nbsp;</TD></TR>
  <TR vAlign=top>
    <TD align=left>&nbsp; &nbsp;Prepaid expenses </TD>
    <TD style="BORDER-BOTTOM: #000000 1px solid" vAlign=bottom align=left
    width="1%" >&nbsp;</TD>
    <TD style="BORDER-BOTTOM: #000000 1px solid" vAlign=bottom align=right
    width="12%">- </TD>
    <TD style="BORDER-BOTTOM: #000000 1px solid" vAlign=bottom align=left
    width="2%" >&nbsp;</TD>
    <TD style="BORDER-BOTTOM: #000000 1px solid" vAlign=bottom align=left
    width="1%" >&nbsp;</TD>
    <TD style="BORDER-BOTTOM: #000000 1px solid" vAlign=bottom align=right
    width="12%">79,464 </TD>
    <TD style="BORDER-BOTTOM: #000000 1px solid" vAlign=bottom align=left
    width="2%" >&nbsp;</TD></TR>
  <TR vAlign=top>
    <TD align=left bgColor=#e6efff>&nbsp; &nbsp; &nbsp; &nbsp; &nbsp;Total
      current assets </TD>
    <TD style="BORDER-BOTTOM: #000000 1px solid" vAlign=bottom align=left
    width="1%"  bgColor=#e6efff>&nbsp;</TD>
    <TD style="BORDER-BOTTOM: #000000 1px solid" vAlign=bottom align=right
    width="12%" bgColor=#e6efff>29,951 </TD>
    <TD style="BORDER-BOTTOM: #000000 1px solid" vAlign=bottom align=left
    width="2%"  bgColor=#e6efff>&nbsp;</TD>
    <TD style="BORDER-BOTTOM: #000000 1px solid" vAlign=bottom align=left
    width="1%"  bgColor=#e6efff>&nbsp;</TD>
    <TD style="BORDER-BOTTOM: #000000 1px solid" vAlign=bottom align=right
    width="12%" bgColor=#e6efff>128,490 </TD>
    <TD style="BORDER-BOTTOM: #000000 1px solid" vAlign=bottom align=left
    width="2%"  bgColor=#e6efff>&nbsp;</TD></TR>
  <TR>
    <TD>&nbsp; </TD>
    <TD vAlign=bottom width="1%" >&nbsp;</TD>
    <TD vAlign=bottom width="12%">&nbsp; </TD>
    <TD vAlign=bottom width="2%" >&nbsp;</TD>
    <TD vAlign=bottom width="1%" >&nbsp;</TD>
    <TD vAlign=bottom width="12%">&nbsp; </TD>
    <TD vAlign=bottom width="2%" >&nbsp;</TD></TR>
  <TR vAlign=top>
    <TD align=left bgColor=#e6efff>Investments in mineral properties, net of
      accumulated&nbsp;<BR>&nbsp;&nbsp;&nbsp;amortization of $132,499 and
      $135,987, respectively </TD>
    <TD vAlign=bottom align=left width="1%"
    bgColor=#e6efff>&nbsp;</TD>
    <TD vAlign=bottom align=right width="12%" bgColor=#e6efff>1,582,324 </TD>
    <TD vAlign=bottom align=left width="2%"
    bgColor=#e6efff>&nbsp;</TD>
    <TD vAlign=bottom align=left width="1%"
    bgColor=#e6efff>&nbsp;</TD>
    <TD vAlign=bottom align=right width="12%" bgColor=#e6efff>1,965,577 </TD>
    <TD vAlign=bottom align=left width="2%"
    bgColor=#e6efff>&nbsp;</TD></TR>
  <TR vAlign=top>
    <TD align=left>Capitalized financing costs, net of
      amortization&nbsp;<BR>&nbsp;&nbsp;&nbsp;of $6,737 and $0, respectively </TD>
    <TD style="BORDER-BOTTOM: #000000 1px solid" vAlign=bottom align=left
    width="1%" >&nbsp;</TD>
    <TD style="BORDER-BOTTOM: #000000 1px solid" vAlign=bottom align=right
    width="12%">41,263 </TD>
    <TD style="BORDER-BOTTOM: #000000 1px solid" vAlign=bottom align=left
    width="2%" >&nbsp;</TD>
    <TD style="BORDER-BOTTOM: #000000 1px solid" vAlign=bottom align=left
    width="1%" >&nbsp;</TD>
    <TD style="BORDER-BOTTOM: #000000 1px solid" vAlign=bottom align=right
    width="12%">- </TD>
    <TD style="BORDER-BOTTOM: #000000 1px solid" vAlign=bottom align=left
    width="2%" >&nbsp;</TD></TR>
  <TR>
    <TD bgColor=#e6efff>&nbsp; </TD>
    <TD vAlign=bottom width="1%"  bgColor=#e6efff>&nbsp;</TD>
    <TD vAlign=bottom width="12%" bgColor=#e6efff>&nbsp; </TD>
    <TD vAlign=bottom width="2%"  bgColor=#e6efff>&nbsp;</TD>
    <TD vAlign=bottom width="1%"  bgColor=#e6efff>&nbsp;</TD>
    <TD vAlign=bottom width="12%" bgColor=#e6efff>&nbsp; </TD>
    <TD vAlign=bottom width="2%"  bgColor=#e6efff>&nbsp;</TD></TR>
  <TR vAlign=top>
    <TD align=left>Total assets </TD>
    <TD style="BORDER-BOTTOM: #000000 3px double" vAlign=bottom align=left
    width="1%" >$</TD>
    <TD style="BORDER-BOTTOM: #000000 3px double" vAlign=bottom align=right
    width="12%">&nbsp;1,653,538 </TD>
    <TD style="BORDER-BOTTOM: #000000 3px double" vAlign=bottom align=left
    width="2%" >&nbsp;</TD>
    <TD style="BORDER-BOTTOM: #000000 3px double" vAlign=bottom align=left
    width="1%" >$</TD>
    <TD style="BORDER-BOTTOM: #000000 3px double" vAlign=bottom align=right
    width="12%">&nbsp;2,094,067 </TD>
    <TD style="BORDER-BOTTOM: #000000 3px double" vAlign=bottom align=left
    width="2%" >&nbsp;</TD></TR>
  <TR>
    <TD bgColor=#e6efff>&nbsp; </TD>
    <TD vAlign=bottom width="1%"  bgColor=#e6efff>&nbsp;</TD>
    <TD vAlign=bottom width="12%" bgColor=#e6efff>&nbsp; </TD>
    <TD vAlign=bottom width="2%"  bgColor=#e6efff>&nbsp;</TD>
    <TD vAlign=bottom width="1%"  bgColor=#e6efff>&nbsp;</TD>
    <TD vAlign=bottom width="12%" bgColor=#e6efff>&nbsp; </TD>
    <TD vAlign=bottom width="2%"  bgColor=#e6efff>&nbsp;</TD></TR>
  <TR vAlign=top>
    <TD align=left><B>Liabilities and Stockholders' Equity (Deficit)</B> </TD>
    <TD vAlign=bottom align=left width="1%" >&nbsp;</TD>
    <TD vAlign=bottom align=left width="12%">&nbsp; </TD>
    <TD vAlign=bottom align=left width="2%" >&nbsp;</TD>
    <TD vAlign=bottom align=left width="1%" >&nbsp;</TD>
    <TD vAlign=bottom align=left width="12%">&nbsp; </TD>
    <TD vAlign=bottom align=left width="2%" >&nbsp;</TD></TR>
  <TR>
    <TD bgColor=#e6efff>&nbsp; </TD>
    <TD vAlign=bottom width="1%"  bgColor=#e6efff>&nbsp;</TD>
    <TD vAlign=bottom width="12%" bgColor=#e6efff>&nbsp; </TD>
    <TD vAlign=bottom width="2%"  bgColor=#e6efff>&nbsp;</TD>
    <TD vAlign=bottom width="1%"  bgColor=#e6efff>&nbsp;</TD>
    <TD vAlign=bottom width="12%" bgColor=#e6efff>&nbsp; </TD>
    <TD vAlign=bottom width="2%"  bgColor=#e6efff>&nbsp;</TD></TR>
  <TR vAlign=top>
    <TD align=left>Current liabilities: </TD>
    <TD vAlign=bottom align=left width="1%" >&nbsp;</TD>
    <TD vAlign=bottom align=left width="12%">&nbsp; </TD>
    <TD vAlign=bottom align=left width="2%" >&nbsp;</TD>
    <TD vAlign=bottom align=left width="1%" >&nbsp;</TD>
    <TD vAlign=bottom align=left width="12%">&nbsp; </TD>
    <TD vAlign=bottom align=left width="2%" >&nbsp;</TD></TR>
  <TR vAlign=top>
    <TD align=left bgColor=#e6efff>&nbsp; &nbsp;Accounts payable and other
      liabilities </TD>
    <TD vAlign=bottom align=left width="1%"  bgColor=#e6efff>$</TD>
    <TD vAlign=bottom align=right width="12%" bgColor=#e6efff>&nbsp;567,629
</TD>
    <TD vAlign=bottom align=left width="2%"
    bgColor=#e6efff>&nbsp;</TD>
    <TD vAlign=bottom align=left width="1%"  bgColor=#e6efff>$</TD>
    <TD vAlign=bottom align=right width="12%" bgColor=#e6efff>&nbsp;565,552
</TD>
    <TD vAlign=bottom align=left width="2%"
    bgColor=#e6efff>&nbsp;</TD></TR>
  <TR vAlign=top>
    <TD align=left>&nbsp; &nbsp;Short term note from officer </TD>
    <TD vAlign=bottom align=left width="1%" >&nbsp;</TD>
    <TD vAlign=bottom align=right width="12%">39,200 </TD>
    <TD vAlign=bottom align=left width="2%" >&nbsp;</TD>
    <TD vAlign=bottom align=left width="1%" >&nbsp;</TD>
    <TD vAlign=bottom align=right width="12%">- </TD>
    <TD vAlign=bottom align=left width="2%" >&nbsp;</TD></TR>
  <TR vAlign=top>
    <TD align=left bgColor=#e6efff>&nbsp; &nbsp;Note payable and accrued
      interest </TD>
    <TD vAlign=bottom align=left width="1%"
    bgColor=#e6efff>&nbsp;</TD>
    <TD vAlign=bottom align=right width="12%" bgColor=#e6efff>- </TD>
    <TD vAlign=bottom align=left width="2%"
    bgColor=#e6efff>&nbsp;</TD>
    <TD vAlign=bottom align=left width="1%"
    bgColor=#e6efff>&nbsp;</TD>
    <TD vAlign=bottom align=right width="12%" bgColor=#e6efff>202,484 </TD>
    <TD vAlign=bottom align=left width="2%"
    bgColor=#e6efff>&nbsp;</TD></TR>
  <TR vAlign=top>
    <TD align=left>&nbsp; &nbsp;Convertible debenture, net of discount of $0
      and $212,070 </TD>
    <TD vAlign=bottom align=left width="1%" >&nbsp;</TD>
    <TD vAlign=bottom align=right width="12%">- </TD>
    <TD vAlign=bottom align=left width="2%" >&nbsp;</TD>
    <TD vAlign=bottom align=left width="1%" >&nbsp;</TD>
    <TD vAlign=bottom align=right width="12%">2,164,205 </TD>
    <TD vAlign=bottom align=left width="2%" >&nbsp;</TD></TR>
  <TR vAlign=top>
    <TD align=left bgColor=#e6efff>&nbsp; &nbsp;Convertible debenture </TD>
    <TD vAlign=bottom align=left width="1%"
    bgColor=#e6efff>&nbsp;</TD>
    <TD vAlign=bottom align=right width="12%" bgColor=#e6efff>- </TD>
    <TD vAlign=bottom align=left width="2%"
    bgColor=#e6efff>&nbsp;</TD>
    <TD vAlign=bottom align=left width="1%"
    bgColor=#e6efff>&nbsp;</TD>
    <TD vAlign=bottom align=right width="12%" bgColor=#e6efff>633,306 </TD>
    <TD vAlign=bottom align=left width="2%"
    bgColor=#e6efff>&nbsp;</TD></TR>
  <TR vAlign=top>
    <TD align=left>&nbsp; &nbsp;Accrued interest on convertible debenture </TD>
    <TD vAlign=bottom align=left width="1%" >&nbsp;</TD>
    <TD vAlign=bottom align=right width="12%">41,073 </TD>
    <TD vAlign=bottom align=left width="2%" >&nbsp;</TD>
    <TD vAlign=bottom align=left width="1%" >&nbsp;</TD>
    <TD vAlign=bottom align=right width="12%">456,638 </TD>
    <TD vAlign=bottom align=left width="2%" >&nbsp;</TD></TR>
  <TR vAlign=top>
    <TD align=left bgColor=#e6efff>&nbsp; &nbsp;RoyaltyRoyalty
      interestinterest payablepayable </TD>
    <TD vAlign=bottom align=left width="1%"
    bgColor=#e6efff>&nbsp;</TD>
    <TD vAlign=bottom align=right width="12%" bgColor=#e6efff>- </TD>
    <TD vAlign=bottom align=left width="2%"
    bgColor=#e6efff>&nbsp;</TD>
    <TD vAlign=bottom align=left width="1%"
    bgColor=#e6efff>&nbsp;</TD>
    <TD vAlign=bottom align=right width="12%"
      bgColor=#e6efff><B>113</B>,<B>164</B> </TD>
    <TD vAlign=bottom align=left width="2%"
    bgColor=#e6efff>&nbsp;</TD></TR>
  <TR vAlign=top>
    <TD align=left>&nbsp; &nbsp;Derivative liability </TD>
    <TD vAlign=bottom align=left width="1%" >&nbsp;</TD>
    <TD vAlign=bottom align=right width="12%">559 </TD>
    <TD vAlign=bottom align=left width="2%" >&nbsp;</TD>
    <TD vAlign=bottom align=left width="1%" >&nbsp;</TD>
    <TD vAlign=bottom align=right width="12%">- </TD>
    <TD vAlign=bottom align=left width="2%" >&nbsp;</TD></TR>
  <TR vAlign=top>
    <TD align=left bgColor=#e6efff>&nbsp; &nbsp;Loan guarantee </TD>
    <TD style="BORDER-BOTTOM: #000000 1px solid" vAlign=bottom align=left
    width="1%"  bgColor=#e6efff>&nbsp;</TD>
    <TD style="BORDER-BOTTOM: #000000 1px solid" vAlign=bottom align=right
    width="12%" bgColor=#e6efff>- </TD>
    <TD style="BORDER-BOTTOM: #000000 1px solid" vAlign=bottom align=left
    width="2%"  bgColor=#e6efff>&nbsp;</TD>
    <TD style="BORDER-BOTTOM: #000000 1px solid" vAlign=bottom align=left
    width="1%"  bgColor=#e6efff>&nbsp;</TD>
    <TD style="BORDER-BOTTOM: #000000 1px solid" vAlign=bottom align=right
    width="12%" bgColor=#e6efff>94,860 </TD>
    <TD style="BORDER-BOTTOM: #000000 1px solid" vAlign=bottom align=left
    width="2%"  bgColor=#e6efff>&nbsp;</TD></TR>
  <TR vAlign=top>
    <TD align=left>&nbsp; &nbsp; &nbsp; &nbsp; &nbsp;Total current liabilities
    </TD>
    <TD style="BORDER-BOTTOM: #000000 1px solid" vAlign=bottom align=left
    width="1%" >&nbsp;</TD>
    <TD style="BORDER-BOTTOM: #000000 1px solid" vAlign=bottom align=right
    width="12%">648,461 </TD>
    <TD style="BORDER-BOTTOM: #000000 1px solid" vAlign=bottom align=left
    width="2%" >&nbsp;</TD>
    <TD style="BORDER-BOTTOM: #000000 1px solid" vAlign=bottom align=left
    width="1%" >&nbsp;</TD>
    <TD style="BORDER-BOTTOM: #000000 1px solid" vAlign=bottom align=right
    width="12%">4,230,209 </TD>
    <TD style="BORDER-BOTTOM: #000000 1px solid" vAlign=bottom align=left
    width="2%" >&nbsp;</TD></TR>
  <TR>
    <TD bgColor=#e6efff>&nbsp; </TD>
    <TD vAlign=bottom width="1%"  bgColor=#e6efff>&nbsp;</TD>
    <TD vAlign=bottom width="12%" bgColor=#e6efff>&nbsp; </TD>
    <TD vAlign=bottom width="2%"  bgColor=#e6efff>&nbsp;</TD>
    <TD vAlign=bottom width="1%"  bgColor=#e6efff>&nbsp;</TD>
    <TD vAlign=bottom width="12%" bgColor=#e6efff>&nbsp; </TD>
    <TD vAlign=bottom width="2%"  bgColor=#e6efff>&nbsp;</TD></TR>
  <TR vAlign=top>
    <TD align=left>Long term liabilities: </TD>
    <TD vAlign=bottom align=left width="1%" >&nbsp;</TD>
    <TD vAlign=bottom align=left width="12%">&nbsp; </TD>
    <TD vAlign=bottom align=left width="2%" >&nbsp;</TD>
    <TD vAlign=bottom align=left width="1%" >&nbsp;</TD>
    <TD vAlign=bottom align=left width="12%">&nbsp; </TD>
    <TD vAlign=bottom align=left width="2%" >&nbsp;</TD></TR>
  <TR vAlign=top>
    <TD align=left bgColor=#e6efff>&nbsp; &nbsp;Note payable, net of discount
      of $178,471 and $0 </TD>
    <TD vAlign=bottom align=left width="1%"
    bgColor=#e6efff>&nbsp;</TD>
    <TD vAlign=bottom align=right width="12%" bgColor=#e6efff>359,529 </TD>
    <TD vAlign=bottom align=left width="2%"
    bgColor=#e6efff>&nbsp;</TD>
    <TD vAlign=bottom align=left width="1%"
    bgColor=#e6efff>&nbsp;</TD>
    <TD vAlign=bottom align=right width="12%" bgColor=#e6efff>- </TD>
    <TD vAlign=bottom align=left width="2%"
    bgColor=#e6efff>&nbsp;</TD></TR>
  <TR vAlign=top>
    <TD align=left>&nbsp; &nbsp;Convertible debenture </TD>
    <TD style="BORDER-BOTTOM: #000000 1px solid" vAlign=bottom align=left
    width="1%" >&nbsp;</TD>
    <TD style="BORDER-BOTTOM: #000000 1px solid" vAlign=bottom align=right
    width="12%">633,306 </TD>
    <TD style="BORDER-BOTTOM: #000000 1px solid" vAlign=bottom align=left
    width="2%" >&nbsp;</TD>
    <TD style="BORDER-BOTTOM: #000000 1px solid" vAlign=bottom align=left
    width="1%" >&nbsp;</TD>
    <TD style="BORDER-BOTTOM: #000000 1px solid" vAlign=bottom align=right
    width="12%">- </TD>
    <TD style="BORDER-BOTTOM: #000000 1px solid" vAlign=bottom align=left
    width="2%" >&nbsp;</TD></TR>
  <TR vAlign=top>
    <TD align=left bgColor=#e6efff>&nbsp; &nbsp; &nbsp; &nbsp; &nbsp;Total
      long term liabilities </TD>
    <TD style="BORDER-BOTTOM: #000000 1px solid" vAlign=bottom align=left
    width="1%"  bgColor=#e6efff>&nbsp;</TD>
    <TD style="BORDER-BOTTOM: #000000 1px solid" vAlign=bottom align=right
    width="12%" bgColor=#e6efff>992,835 </TD>
    <TD style="BORDER-BOTTOM: #000000 1px solid" vAlign=bottom align=left
    width="2%"  bgColor=#e6efff>&nbsp;</TD>
    <TD style="BORDER-BOTTOM: #000000 1px solid" vAlign=bottom align=left
    width="1%"  bgColor=#e6efff>&nbsp;</TD>
    <TD style="BORDER-BOTTOM: #000000 1px solid" vAlign=bottom align=right
    width="12%" bgColor=#e6efff>- </TD>
    <TD style="BORDER-BOTTOM: #000000 1px solid" vAlign=bottom align=left
    width="2%"  bgColor=#e6efff>&nbsp;</TD></TR>
  <TR vAlign=top>
    <TD
      align=left>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Total
      liabilities </TD>
    <TD vAlign=bottom align=left width="1%" >&nbsp;</TD>
    <TD vAlign=bottom align=right width="12%">1,641,296 </TD>
    <TD vAlign=bottom align=left width="2%" >&nbsp;</TD>
    <TD vAlign=bottom align=left width="1%" >&nbsp;</TD>
    <TD vAlign=bottom align=right width="12%">4,230,209 </TD>
    <TD vAlign=bottom align=left width="2%" >&nbsp;</TD></TR>
  <TR>
    <TD bgColor=#e6efff>&nbsp; </TD>
    <TD vAlign=bottom width="1%"  bgColor=#e6efff>&nbsp;</TD>
    <TD vAlign=bottom width="12%" bgColor=#e6efff>&nbsp; </TD>
    <TD vAlign=bottom width="2%"  bgColor=#e6efff>&nbsp;</TD>
    <TD vAlign=bottom width="1%"  bgColor=#e6efff>&nbsp;</TD>
    <TD vAlign=bottom width="12%" bgColor=#e6efff>&nbsp; </TD>
    <TD vAlign=bottom width="2%"  bgColor=#e6efff>&nbsp;</TD></TR>
  <TR vAlign=top>
    <TD align=left>Stockholders' equity (deficit): </TD>
    <TD vAlign=bottom align=left width="1%" >&nbsp;</TD>
    <TD vAlign=bottom align=left width="12%">&nbsp; </TD>
    <TD vAlign=bottom align=left width="2%" >&nbsp;</TD>
    <TD vAlign=bottom align=left width="1%" >&nbsp;</TD>
    <TD vAlign=bottom align=left width="12%">&nbsp; </TD>
    <TD vAlign=bottom align=left width="2%" >&nbsp;</TD></TR>
  <TR vAlign=top>
    <TD align=left bgColor=#e6efff>&nbsp;&nbsp;&nbsp;Common stock, $0.001 par
      value, 200,000,000 shares
      authorized,&nbsp;<BR>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;47,620,406 and
      32,867,028 shares issued and outstanding
      as&nbsp;<BR>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;December 31, 2012 and
      2011, respectively </TD>
    <TD vAlign=bottom align=left width="1%"
    bgColor=#e6efff>&nbsp;</TD>
    <TD vAlign=bottom align=right width="12%" bgColor=#e6efff>47,621 </TD>
    <TD vAlign=bottom align=left width="2%"
    bgColor=#e6efff>&nbsp;</TD>
    <TD vAlign=bottom align=left width="1%"
    bgColor=#e6efff>&nbsp;</TD>
    <TD vAlign=bottom align=right width="12%" bgColor=#e6efff>32,867 </TD>
    <TD vAlign=bottom align=left width="2%"
    bgColor=#e6efff>&nbsp;</TD></TR>
  <TR vAlign=top>
    <TD align=left>&nbsp;&nbsp;&nbsp;Common stock to be issued; 6,423,708 and
      0 shares as of&nbsp;<BR>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;December 31,
      2012 and 2011 </TD>
    <TD vAlign=bottom align=left width="1%" >&nbsp;</TD>
    <TD vAlign=bottom align=right width="12%">6,424 </TD>
    <TD vAlign=bottom align=left width="2%" >&nbsp;</TD>
    <TD vAlign=bottom align=left width="1%" >&nbsp;</TD>
    <TD vAlign=bottom align=right width="12%">- </TD>
    <TD vAlign=bottom align=left width="2%" >&nbsp;</TD></TR>
  <TR vAlign=top>
    <TD align=left bgColor=#e6efff>&nbsp; &nbsp;Additional paid-in capital </TD>
    <TD vAlign=bottom align=left width="1%"
    bgColor=#e6efff>&nbsp;</TD>
    <TD vAlign=bottom align=right width="12%" bgColor=#e6efff>13,731,097 </TD>
    <TD vAlign=bottom align=left width="2%"
    bgColor=#e6efff>&nbsp;</TD>
    <TD vAlign=bottom align=left width="1%"
    bgColor=#e6efff>&nbsp;</TD>
    <TD vAlign=bottom align=right width="12%" bgColor=#e6efff>8,313,575 </TD>
    <TD vAlign=bottom align=left width="2%"
    bgColor=#e6efff>&nbsp;</TD></TR>
  <TR vAlign=top>
    <TD align=left>&nbsp; &nbsp;Accumulated comprehensive gain (loss) </TD>
    <TD vAlign=bottom align=left width="1%" >&nbsp;</TD>
    <TD vAlign=bottom align=right width="12%">4,706 </TD>
    <TD vAlign=bottom align=left width="2%" >&nbsp;</TD>
    <TD vAlign=bottom align=left width="1%" >&nbsp;</TD>
    <TD vAlign=bottom align=right width="12%">(8,114</TD>
    <TD vAlign=bottom align=left width="2%" >) </TD></TR>
  <TR vAlign=top>
    <TD align=left bgColor=#e6efff>&nbsp; &nbsp;Accumulated deficit </TD>
    <TD style="BORDER-BOTTOM: #000000 1px solid" vAlign=bottom align=left
    width="1%"  bgColor=#e6efff>&nbsp;</TD>
    <TD style="BORDER-BOTTOM: #000000 1px solid" vAlign=bottom align=right
    width="12%" bgColor=#e6efff>(13,777,606</TD>
    <TD style="BORDER-BOTTOM: #000000 1px solid" vAlign=bottom align=left
    width="2%"  bgColor=#e6efff>) </TD>
    <TD style="BORDER-BOTTOM: #000000 1px solid" vAlign=bottom align=left
    width="1%"  bgColor=#e6efff>&nbsp;</TD>
    <TD style="BORDER-BOTTOM: #000000 1px solid" vAlign=bottom align=right
    width="12%" bgColor=#e6efff>(10,474,470</TD>
    <TD style="BORDER-BOTTOM: #000000 1px solid" vAlign=bottom align=left
    width="2%"  bgColor=#e6efff>) </TD></TR>
  <TR vAlign=top>
    <TD align=left>&nbsp; &nbsp; &nbsp; &nbsp; &nbsp;Total stockholders'
      equity (deficit) </TD>
    <TD style="BORDER-BOTTOM: #000000 1px solid" vAlign=bottom align=left
    width="1%" >&nbsp;</TD>
    <TD style="BORDER-BOTTOM: #000000 1px solid" vAlign=bottom align=right
    width="12%">12,242 </TD>
    <TD style="BORDER-BOTTOM: #000000 1px solid" vAlign=bottom align=left
    width="2%" >&nbsp;</TD>
    <TD style="BORDER-BOTTOM: #000000 1px solid" vAlign=bottom align=left
    width="1%" >&nbsp;</TD>
    <TD style="BORDER-BOTTOM: #000000 1px solid" vAlign=bottom align=right
    width="12%">(2,136,142</TD>
    <TD style="BORDER-BOTTOM: #000000 1px solid" vAlign=bottom align=left
    width="2%" >) </TD></TR>
  <TR>
    <TD bgColor=#e6efff>&nbsp; </TD>
    <TD vAlign=bottom width="1%"  bgColor=#e6efff>&nbsp;</TD>
    <TD vAlign=bottom width="12%" bgColor=#e6efff>&nbsp; </TD>
    <TD vAlign=bottom width="2%"  bgColor=#e6efff>&nbsp;</TD>
    <TD vAlign=bottom width="1%"  bgColor=#e6efff>&nbsp;</TD>
    <TD vAlign=bottom width="12%" bgColor=#e6efff>&nbsp; </TD>
    <TD vAlign=bottom width="2%"  bgColor=#e6efff>&nbsp;</TD></TR>
  <TR vAlign=top>
    <TD align=left>Total liabilities and stockholders' equity (deficit) </TD>
    <TD style="BORDER-BOTTOM: #000000 3px double" vAlign=bottom align=left
    width="1%" >$</TD>
    <TD style="BORDER-BOTTOM: #000000 3px double" vAlign=bottom align=right
    width="12%">&nbsp;1,653,538 </TD>
    <TD style="BORDER-BOTTOM: #000000 3px double" vAlign=bottom align=left
    width="2%" >&nbsp;</TD>
    <TD style="BORDER-BOTTOM: #000000 3px double" vAlign=bottom align=left
    width="1%" >$</TD>
    <TD style="BORDER-BOTTOM: #000000 3px double" vAlign=bottom align=right
    width="12%">&nbsp;2,094,067 </TD>
<TD style="BORDER-BOTTOM: #000000 3px double" vAlign=bottom align=left
    width="2%" >&nbsp;</TD></TR></TABLE>
<P align=justify>The accompanying notes are an integral part of these financial
statements</P>
<P align=center>F-2</P>
<HR style="PAGE-BREAK-AFTER: always" align=center width="100%" color=black
noShade SIZE=5>
<A name=page_fx2></A>
<P align=center><B>American Petro-Hunter, Inc.</B><BR><B>Statements of
Operations</B></P>
<TABLE
style="BORDER-COLOR: black; FONT-SIZE: 10pt; BORDER-COLLAPSE: collapse; "
cellSpacing=0 cellPadding=0 width="100%" border=0>

  <TR vAlign=top>
    <TD align=left>&nbsp; </TD>
    <TD align=left width="1%" >&nbsp;</TD>
    <TD width="27%" colSpan=4 align=center nowrap>For the year ended </TD>
    <TD align=left width="2%" >&nbsp;</TD></TR>
  <TR vAlign=top>
    <TD align=left>&nbsp; </TD>
    <TD align=left width="1%" >&nbsp;</TD>
    <TD width="27%" colSpan=4 align=center nowrap>December 31, </TD>
    <TD align=left width="2%" >&nbsp;</TD></TR>
  <TR vAlign=top>
    <TD align=left>&nbsp; </TD>
    <TD style="BORDER-BOTTOM: #000000 1px solid" align=left width="1%"
    >&nbsp;</TD>
    <TD width="12%" align=center nowrap style="BORDER-BOTTOM: #000000 1px solid">2012    </TD>
    <TD width="2%" align=center nowrap style="BORDER-BOTTOM: #000000 1px solid"
    >&nbsp;</TD>
    <TD width="1%" align=center nowrap style="BORDER-BOTTOM: #000000 1px solid"
    >&nbsp;</TD>
    <TD width="12%" align=center nowrap style="BORDER-BOTTOM: #000000 1px solid">2011    </TD>
    <TD style="BORDER-BOTTOM: #000000 1px solid" align=left width="2%"
    >&nbsp;</TD></TR>
  <TR>
    <TD>&nbsp; </TD>
    <TD width="1%" >&nbsp;</TD>
    <TD width="12%">&nbsp; </TD>
    <TD width="2%" >&nbsp;</TD>
    <TD width="1%" >&nbsp;</TD>
    <TD width="12%">&nbsp; </TD>
    <TD width="2%" >&nbsp;</TD></TR>
  <TR>
    <TD>&nbsp; </TD>
    <TD width="1%" >&nbsp;</TD>
    <TD width="12%">&nbsp; </TD>
    <TD width="2%" >&nbsp;</TD>
    <TD width="1%" >&nbsp;</TD>
    <TD width="12%">&nbsp; </TD>
    <TD width="2%" >&nbsp;</TD></TR>
  <TR vAlign=top>
    <TD align=left bgColor=#e6efff>Revenue </TD>
    <TD style="BORDER-BOTTOM: #000000 1px solid" align=left width="1%"
     bgColor=#e6efff>$</TD>
    <TD style="BORDER-BOTTOM: #000000 1px solid" align=right width="12%"
    bgColor=#e6efff>&nbsp;308,770 </TD>
    <TD style="BORDER-BOTTOM: #000000 1px solid" align=left width="2%"
     bgColor=#e6efff>&nbsp;</TD>
    <TD style="BORDER-BOTTOM: #000000 1px solid" align=left width="1%"
     bgColor=#e6efff>$</TD>
    <TD style="BORDER-BOTTOM: #000000 1px solid" align=right width="12%"
    bgColor=#e6efff>&nbsp;317,931 </TD>
    <TD style="BORDER-BOTTOM: #000000 1px solid" align=left width="2%"
     bgColor=#e6efff>&nbsp;</TD></TR>
  <TR>
    <TD>&nbsp; </TD>
    <TD width="1%" >&nbsp;</TD>
    <TD width="12%">&nbsp; </TD>
    <TD width="2%" >&nbsp;</TD>
    <TD width="1%" >&nbsp;</TD>
    <TD width="12%">&nbsp; </TD>
    <TD width="2%" >&nbsp;</TD></TR>
  <TR vAlign=top>
    <TD align=left bgColor=#e6efff>Cost of Goods Sold </TD>
    <TD align=left width="1%"  bgColor=#e6efff>&nbsp;</TD>
    <TD align=left width="12%" bgColor=#e6efff>&nbsp; </TD>
    <TD align=left width="2%"  bgColor=#e6efff>&nbsp;</TD>
    <TD align=left width="1%"  bgColor=#e6efff>&nbsp;</TD>
    <TD align=left width="12%" bgColor=#e6efff>&nbsp; </TD>
    <TD align=left width="2%"  bgColor=#e6efff>&nbsp;</TD></TR>
  <TR vAlign=top>
    <TD align=left>&nbsp; &nbsp; &nbsp; &nbsp;Production and amortization </TD>
    <TD style="BORDER-BOTTOM: #000000 1px solid" align=left width="1%"
    >&nbsp;</TD>
    <TD style="BORDER-BOTTOM: #000000 1px solid" align=right
      width="12%">193,674 </TD>
    <TD style="BORDER-BOTTOM: #000000 1px solid" align=left width="2%"
    >&nbsp;</TD>
    <TD style="BORDER-BOTTOM: #000000 1px solid" align=left width="1%"
    >&nbsp;</TD>
    <TD style="BORDER-BOTTOM: #000000 1px solid" align=right
      width="12%">228,863 </TD>
    <TD style="BORDER-BOTTOM: #000000 1px solid" align=left width="2%"
    >&nbsp;</TD></TR>
  <TR>
    <TD bgColor=#e6efff>&nbsp; </TD>
    <TD width="1%"  bgColor=#e6efff>&nbsp;</TD>
    <TD width="12%" bgColor=#e6efff>&nbsp; </TD>
    <TD width="2%"  bgColor=#e6efff>&nbsp;</TD>
    <TD width="1%"  bgColor=#e6efff>&nbsp;</TD>
    <TD width="12%" bgColor=#e6efff>&nbsp; </TD>



    <TD width="2%"  bgColor=#e6efff>&nbsp;</TD></TR>
  <TR vAlign=top>
    <TD align=left>Gross profit </TD>
    <TD style="BORDER-BOTTOM: #000000 1px solid" align=left width="1%"
    >&nbsp;</TD>
    <TD style="BORDER-BOTTOM: #000000 1px solid" align=right
      width="12%">115,096 </TD>
    <TD style="BORDER-BOTTOM: #000000 1px solid" align=left width="2%"
    >&nbsp;</TD>
    <TD style="BORDER-BOTTOM: #000000 1px solid" align=left width="1%"
    >&nbsp;</TD>
    <TD style="BORDER-BOTTOM: #000000 1px solid" align=right
      width="12%">89,068 </TD>
    <TD style="BORDER-BOTTOM: #000000 1px solid" align=left width="2%"
    >&nbsp;</TD></TR>
  <TR>
    <TD bgColor=#e6efff>&nbsp; </TD>
    <TD width="1%"  bgColor=#e6efff>&nbsp;</TD>
    <TD width="12%" bgColor=#e6efff>&nbsp; </TD>
    <TD width="2%"  bgColor=#e6efff>&nbsp;</TD>
    <TD width="1%"  bgColor=#e6efff>&nbsp;</TD>
    <TD width="12%" bgColor=#e6efff>&nbsp; </TD>
    <TD width="2%"  bgColor=#e6efff>&nbsp;</TD></TR>
  <TR vAlign=top>
    <TD align=left>General and administrative </TD>
    <TD align=left width="1%" >&nbsp;</TD>
    <TD align=right width="12%">575,783 </TD>
    <TD align=left width="2%" >&nbsp;</TD>
    <TD align=left width="1%" >&nbsp;</TD>
    <TD align=right width="12%">635,091 </TD>
    <TD align=left width="2%" >&nbsp;</TD></TR>
  <TR vAlign=top>
    <TD align=left bgColor=#e6efff>Executive compensation </TD>
    <TD align=left width="1%"  bgColor=#e6efff>&nbsp;</TD>
    <TD align=right width="12%" bgColor=#e6efff>481,000 </TD>
    <TD align=left width="2%"  bgColor=#e6efff>&nbsp;</TD>
    <TD align=left width="1%"  bgColor=#e6efff>&nbsp;</TD>
    <TD align=right width="12%" bgColor=#e6efff>602,000 </TD>
    <TD align=left width="2%"  bgColor=#e6efff>&nbsp;</TD></TR>
  <TR vAlign=top>
    <TD align=left>Impairment expense </TD>
    <TD style="BORDER-BOTTOM: #000000 1px solid" align=left width="1%"
    >&nbsp;</TD>
    <TD style="BORDER-BOTTOM: #000000 1px solid" align=right
      width="12%">565,737 </TD>
    <TD style="BORDER-BOTTOM: #000000 1px solid" align=left width="2%"
    >&nbsp;</TD>
    <TD style="BORDER-BOTTOM: #000000 1px solid" align=left width="1%"
    >&nbsp;</TD>
    <TD style="BORDER-BOTTOM: #000000 1px solid" align=right
      width="12%">173,879 </TD>
    <TD style="BORDER-BOTTOM: #000000 1px solid" align=left width="2%"
    >&nbsp;</TD></TR>
  <TR vAlign=top>
    <TD align=left bgColor=#e6efff>&nbsp; &nbsp; &nbsp; &nbsp;Total expenses
    </TD>
    <TD style="BORDER-BOTTOM: #000000 1px solid" align=left width="1%"
     bgColor=#e6efff>&nbsp;</TD>
    <TD style="BORDER-BOTTOM: #000000 1px solid" align=right width="12%"
    bgColor=#e6efff>1,622,520 </TD>
    <TD style="BORDER-BOTTOM: #000000 1px solid" align=left width="2%"
     bgColor=#e6efff>&nbsp;</TD>
    <TD style="BORDER-BOTTOM: #000000 1px solid" align=left width="1%"
     bgColor=#e6efff>&nbsp;</TD>
    <TD style="BORDER-BOTTOM: #000000 1px solid" align=right width="12%"
    bgColor=#e6efff>1,410,970 </TD>
    <TD style="BORDER-BOTTOM: #000000 1px solid" align=left width="2%"
     bgColor=#e6efff>&nbsp;</TD></TR>

  <TR>
    <TD>&nbsp; </TD>
    <TD width="1%" >&nbsp;</TD>
    <TD width="12%">&nbsp; </TD>
    <TD width="2%" >&nbsp;</TD>
    <TD width="1%" >&nbsp;</TD>
    <TD width="12%">&nbsp; </TD>
    <TD width="2%" >&nbsp;</TD></TR>
  <TR vAlign=top>
    <TD align=left bgColor=#e6efff>Net loss before other income (expense) </TD>
    <TD align=left width="1%"  bgColor=#e6efff>&nbsp;</TD>
    <TD align=right width="12%" bgColor=#e6efff>(1,507,424</TD>
    <TD align=left width="2%"  bgColor=#e6efff>) </TD>
    <TD align=left width="1%"  bgColor=#e6efff>&nbsp;</TD>
    <TD align=right width="12%" bgColor=#e6efff>(1,321,902</TD>
    <TD align=left width="2%"  bgColor=#e6efff>) </TD></TR>
  <TR>
    <TD>&nbsp; </TD>
    <TD width="1%" >&nbsp;</TD>
    <TD width="12%">&nbsp; </TD>
    <TD width="2%" >&nbsp;</TD>
    <TD width="1%" >&nbsp;</TD>
    <TD width="12%">&nbsp; </TD>
    <TD width="2%" >&nbsp;</TD></TR>
  <TR vAlign=top>
    <TD align=left bgColor=#e6efff>Other income (expense): </TD>
    <TD align=left width="1%"  bgColor=#e6efff>&nbsp;</TD>
    <TD align=left width="12%" bgColor=#e6efff>&nbsp; </TD>
    <TD align=left width="2%"  bgColor=#e6efff>&nbsp;</TD>
    <TD align=left width="1%"  bgColor=#e6efff>&nbsp;</TD>
    <TD align=left width="12%" bgColor=#e6efff>&nbsp; </TD>
    <TD align=left width="2%"  bgColor=#e6efff>&nbsp;</TD></TR>
  <TR vAlign=top>
    <TD align=left>Gain (loss) on sale of mineral properties </TD>
    <TD align=left width="1%" >&nbsp;</TD>
    <TD align=right width="12%">2,621 </TD>
    <TD align=left width="2%" >&nbsp;</TD>
    <TD align=left width="1%" >&nbsp;</TD>
    <TD align=right width="12%">- </TD>
    <TD align=left width="2%" >&nbsp;</TD></TR>
  <TR vAlign=top>
    <TD align=left bgColor=#e6efff>Gain on forgiveness of debt </TD>
    <TD align=left width="1%"  bgColor=#e6efff>&nbsp;</TD>
    <TD align=right width="12%" bgColor=#e6efff>322,731 </TD>
    <TD align=left width="2%"  bgColor=#e6efff>&nbsp;</TD>
    <TD align=left width="1%"  bgColor=#e6efff>&nbsp;</TD>
    <TD align=right width="12%" bgColor=#e6efff>- </TD>
    <TD align=left width="2%"  bgColor=#e6efff>&nbsp;</TD></TR>
  <TR vAlign=top>
    <TD align=left>Gain (loss) on derivative instruments </TD>
    <TD align=left width="1%" >&nbsp;</TD>
    <TD align=right width="12%">(5,265</TD>
    <TD align=left width="2%" >) </TD>
    <TD align=left width="1%" >&nbsp;</TD>
    <TD align=right width="12%">- </TD>
    <TD align=left width="2%" >&nbsp;</TD></TR>
  <TR vAlign=top>
    <TD align=left bgColor=#e6efff>Interest expense </TD>
    <TD style="BORDER-BOTTOM: #000000 1px solid" align=left width="1%"
     bgColor=#e6efff>&nbsp;</TD>
    <TD style="BORDER-BOTTOM: #000000 1px solid" align=right width="12%"
    bgColor=#e6efff>(2,115,799</TD>
    <TD style="BORDER-BOTTOM: #000000 1px solid" align=left width="2%"
     bgColor=#e6efff>) </TD>
    <TD style="BORDER-BOTTOM: #000000 1px solid" align=left width="1%"
     bgColor=#e6efff>&nbsp;</TD>
    <TD style="BORDER-BOTTOM: #000000 1px solid" align=right width="12%"
    bgColor=#e6efff>(1,412,177</TD>
    <TD style="BORDER-BOTTOM: #000000 1px solid" align=left width="2%"
     bgColor=#e6efff>) </TD></TR>
  <TR vAlign=top>
    <TD align=left>&nbsp; &nbsp; &nbsp; &nbsp;Total other income (expense) </TD>
    <TD style="BORDER-BOTTOM: #000000 1px solid" align=left width="1%"
    >&nbsp;</TD>
    <TD style="BORDER-BOTTOM: #000000 1px solid" align=right
      width="12%">(1,795,712</TD>
    <TD style="BORDER-BOTTOM: #000000 1px solid" align=left width="2%"
    >) </TD>
    <TD style="BORDER-BOTTOM: #000000 1px solid" align=left width="1%"
    >&nbsp;</TD>
    <TD style="BORDER-BOTTOM: #000000 1px solid" align=right
      width="12%">(1,412,177</TD>
    <TD style="BORDER-BOTTOM: #000000 1px solid" align=left width="2%"
    >) </TD></TR>
  <TR>
    <TD bgColor=#e6efff>&nbsp; </TD>
    <TD width="1%"  bgColor=#e6efff>&nbsp;</TD>
    <TD width="12%" bgColor=#e6efff>&nbsp; </TD>
    <TD width="2%"  bgColor=#e6efff>&nbsp;</TD>
    <TD width="1%"  bgColor=#e6efff>&nbsp;</TD>
    <TD width="12%" bgColor=#e6efff>&nbsp; </TD>
    <TD width="2%"  bgColor=#e6efff>&nbsp;</TD></TR>
  <TR vAlign=top>
    <TD align=left>Net loss before income taxes </TD>
    <TD align=left width="1%" >&nbsp;</TD>
    <TD align=right width="12%">(3,303,136</TD>
    <TD align=left width="2%" >) </TD>
    <TD align=left width="1%" >&nbsp;</TD>
    <TD align=right width="12%">(2,734,079</TD>
    <TD align=left width="2%" >) </TD></TR>
  <TR>
    <TD bgColor=#e6efff>&nbsp; </TD>
    <TD width="1%"  bgColor=#e6efff>&nbsp;</TD>
    <TD width="12%" bgColor=#e6efff>&nbsp; </TD>
    <TD width="2%"  bgColor=#e6efff>&nbsp;</TD>
    <TD width="1%"  bgColor=#e6efff>&nbsp;</TD>
    <TD width="12%" bgColor=#e6efff>&nbsp; </TD>
    <TD width="2%"  bgColor=#e6efff>&nbsp;</TD></TR>
  <TR vAlign=top>
    <TD align=left>Provision for income taxes </TD>
    <TD style="BORDER-BOTTOM: #000000 1px solid" align=left width="1%"
    >&nbsp;</TD>
    <TD style="BORDER-BOTTOM: #000000 1px solid" align=right width="12%">- </TD>
    <TD style="BORDER-BOTTOM: #000000 1px solid" align=left width="2%"
    >&nbsp;</TD>
    <TD style="BORDER-BOTTOM: #000000 1px solid" align=left width="1%"
    >&nbsp;</TD>
    <TD style="BORDER-BOTTOM: #000000 1px solid" align=right width="12%">- </TD>
    <TD style="BORDER-BOTTOM: #000000 1px solid" align=left width="2%"
    >&nbsp;</TD></TR>
  <TR>
    <TD bgColor=#e6efff>&nbsp; </TD>
    <TD width="1%"  bgColor=#e6efff>&nbsp;</TD>
    <TD width="12%" bgColor=#e6efff>&nbsp; </TD>
    <TD width="2%"  bgColor=#e6efff>&nbsp;</TD>
    <TD width="1%"  bgColor=#e6efff>&nbsp;</TD>
    <TD width="12%" bgColor=#e6efff>&nbsp; </TD>
    <TD width="2%"  bgColor=#e6efff>&nbsp;</TD></TR>
  <TR vAlign=top>
    <TD align=left>Net loss </TD>
    <TD align=left width="1%" >&nbsp;</TD>
    <TD align=right width="12%">(3,303,136</TD>
    <TD align=left width="2%" >) </TD>
    <TD align=left width="1%" >&nbsp;</TD>
    <TD align=right width="12%">(2,734,079</TD>
    <TD align=left width="2%" >) </TD></TR>
  <TR>
    <TD bgColor=#e6efff>&nbsp; </TD>
    <TD width="1%"  bgColor=#e6efff>&nbsp;</TD>
    <TD width="12%" bgColor=#e6efff>&nbsp; </TD>
    <TD width="2%"  bgColor=#e6efff>&nbsp;</TD>
    <TD width="1%"  bgColor=#e6efff>&nbsp;</TD>
    <TD width="12%" bgColor=#e6efff>&nbsp; </TD>
    <TD width="2%"  bgColor=#e6efff>&nbsp;</TD></TR>
  <TR vAlign=top>
    <TD align=left>Other comprehensive income (expense) </TD>
    <TD style="BORDER-BOTTOM: #000000 1px solid" align=left width="1%"
    >&nbsp;</TD>
    <TD style="BORDER-BOTTOM: #000000 1px solid" align=right width="12%">8,114
    </TD>
    <TD style="BORDER-BOTTOM: #000000 1px solid" align=left width="2%"
    >&nbsp;</TD>
    <TD style="BORDER-BOTTOM: #000000 1px solid" align=left width="1%"
    >&nbsp;</TD>
    <TD style="BORDER-BOTTOM: #000000 1px solid" align=right width="12%">- </TD>
    <TD style="BORDER-BOTTOM: #000000 1px solid" align=left width="2%"
    >&nbsp;</TD></TR>
  <TR>
    <TD bgColor=#e6efff>&nbsp; </TD>
    <TD width="1%"  bgColor=#e6efff>&nbsp;</TD>
    <TD width="12%" bgColor=#e6efff>&nbsp; </TD>
    <TD width="2%"  bgColor=#e6efff>&nbsp;</TD>
    <TD width="1%"  bgColor=#e6efff>&nbsp;</TD>
    <TD width="12%" bgColor=#e6efff>&nbsp; </TD>
    <TD width="2%"  bgColor=#e6efff>&nbsp;</TD></TR>
  <TR vAlign=top>
    <TD align=left>Comprehensive loss </TD>
    <TD style="BORDER-BOTTOM: #000000 3px double" align=left width="1%"
    >$</TD>
    <TD style="BORDER-BOTTOM: #000000 3px double" align=right
      width="12%">&nbsp;(3,295,022</TD>
    <TD style="BORDER-BOTTOM: #000000 3px double" align=left width="2%"
    >) </TD>
    <TD style="BORDER-BOTTOM: #000000 3px double" align=left width="1%"
    >$</TD>
    <TD style="BORDER-BOTTOM: #000000 3px double" align=right
      width="12%">&nbsp;(2,734,079</TD>
    <TD style="BORDER-BOTTOM: #000000 3px double" align=left width="2%"
    >) </TD></TR>

  <TR>
    <TD bgColor=#e6efff>&nbsp; </TD>
    <TD width="1%"  bgColor=#e6efff>&nbsp;</TD>
    <TD width="12%" bgColor=#e6efff>&nbsp; </TD>
    <TD width="2%"  bgColor=#e6efff>&nbsp;</TD>
    <TD width="1%"  bgColor=#e6efff>&nbsp;</TD>
    <TD width="12%" bgColor=#e6efff>&nbsp; </TD>
    <TD width="2%"  bgColor=#e6efff>&nbsp;</TD></TR>
  <TR vAlign=top>
    <TD align=left>Weighted average common shares </TD>
    <TD align=left width="1%" >&nbsp;</TD>
    <TD align=left width="12%">&nbsp; </TD>
    <TD align=left width="2%" >&nbsp;</TD>
    <TD align=left width="1%" >&nbsp;</TD>
    <TD align=left width="12%">&nbsp; </TD>
    <TD align=left width="2%" >&nbsp;</TD></TR>
  <TR vAlign=top>
    <TD align=left bgColor=#e6efff>&nbsp; &nbsp; &nbsp; &nbsp;
      &nbsp;outstanding - basic and fully diluted </TD>
    <TD style="BORDER-BOTTOM: #000000 3px double" align=left width="1%"
     bgColor=#e6efff>&nbsp;</TD>
    <TD style="BORDER-BOTTOM: #000000 3px double" align=right width="12%"
    bgColor=#e6efff>44,476,603 </TD>
    <TD style="BORDER-BOTTOM: #000000 3px double" align=left width="2%"
     bgColor=#e6efff>&nbsp;</TD>
    <TD style="BORDER-BOTTOM: #000000 3px double" align=left width="1%"
     bgColor=#e6efff>&nbsp;</TD>
    <TD style="BORDER-BOTTOM: #000000 3px double" align=right width="12%"
    bgColor=#e6efff>28,221,310 </TD>
    <TD style="BORDER-BOTTOM: #000000 3px double" align=left width="2%"
     bgColor=#e6efff>&nbsp;</TD></TR>
  <TR>
    <TD>&nbsp; </TD>
    <TD width="1%" >&nbsp;</TD>
    <TD width="12%">&nbsp; </TD>
    <TD width="2%" >&nbsp;</TD>
    <TD width="1%" >&nbsp;</TD>
    <TD width="12%">&nbsp; </TD>
    <TD width="2%" >&nbsp;</TD></TR>
  <TR vAlign=top>
    <TD align=left bgColor=#e6efff>Net loss per common share </TD>
    <TD align=left width="1%"  bgColor=#e6efff>&nbsp;</TD>
    <TD align=left width="12%" bgColor=#e6efff>&nbsp; </TD>
    <TD align=left width="2%"  bgColor=#e6efff>&nbsp;</TD>
    <TD align=left width="1%"  bgColor=#e6efff>&nbsp;</TD>
    <TD align=left width="12%" bgColor=#e6efff>&nbsp; </TD>
    <TD align=left width="2%"  bgColor=#e6efff>&nbsp;</TD></TR>
  <TR vAlign=top>
    <TD align=left>&nbsp; &nbsp; &nbsp; &nbsp;basic and fully diluted </TD>
    <TD style="BORDER-BOTTOM: #000000 3px double" align=left width="1%"
    >$</TD>
    <TD style="BORDER-BOTTOM: #000000 3px double" align=right
      width="12%">&nbsp;(0.07</TD>
    <TD style="BORDER-BOTTOM: #000000 3px double" align=left width="2%"
    >) </TD>
    <TD style="BORDER-BOTTOM: #000000 3px double" align=left width="1%"
    >$</TD>
    <TD style="BORDER-BOTTOM: #000000 3px double" align=right
      width="12%">&nbsp;(0.10</TD>
<TD style="BORDER-BOTTOM: #000000 3px double" align=left width="2%"
    >) </TD></TR></TABLE>
<P align=justify>The accompanying notes are an integral part of these financial
statements</P>
<P align=center>F-3</P>
<HR style="PAGE-BREAK-AFTER: always" align=center width="100%" color=black
noShade SIZE=5>
<A name=page_fx3></A>
<P align=center><B>American Petro-Hunter, Inc.</B><BR><B>Statement of
Stockholder's Equity (Deficit)</B></P>
<TABLE
style="BORDER-COLOR: black; FONT-SIZE: 8pt; BORDER-COLLAPSE: collapse; "
cellSpacing=0 cellPadding=0 width="100%" border=0>

  <TR vAlign=top>
    <TD align=left>&nbsp; </TD>
    <TD align=center width="1%">&nbsp;</TD>
    <TD width="7%" align=center nowrap>&nbsp; </TD>
    <TD width="2%" align=center nowrap>&nbsp;</TD>
    <TD width="1%" align=center nowrap>&nbsp;</TD>
    <TD width="7%" align=center nowrap>&nbsp; </TD>
    <TD width="2%" align=center nowrap>&nbsp;</TD>
    <TD width="1%" align=center nowrap>&nbsp;</TD>
    <TD width="7%" align=center nowrap>&nbsp; </TD>
    <TD width="2%" align=center nowrap>&nbsp;</TD>
    <TD width="1%" align=center nowrap>&nbsp;</TD>
    <TD width="7%" align=center nowrap>&nbsp; </TD>
    <TD width="2%" align=center nowrap>&nbsp;</TD>
    <TD width="1%" align=center nowrap>&nbsp;</TD>
    <TD width="7%" align=center nowrap>&nbsp; </TD>
    <TD width="2%" align=center nowrap>&nbsp;</TD>
    <TD width="1%" align=center nowrap>&nbsp;</TD>
    <TD width="7%" align=center nowrap>&nbsp; </TD>
    <TD width="2%" align=center nowrap>&nbsp;</TD>
    <TD width="1%" align=center nowrap>&nbsp;</TD>
    <TD width="7%" align=center nowrap>Total </TD>
    <TD align=left width="2%">&nbsp;</TD></TR>
  <TR vAlign=top>
    <TD align=left>&nbsp; </TD>
    <TD style="BORDER-BOTTOM: #000000 1px solid" align=left
    width="1%">&nbsp;</TD>
    <TD width="17%"
    colSpan=4 align=center nowrap style="BORDER-BOTTOM: #000000 1px solid">Common Stock </TD>
    <TD
    width="2%" align=center nowrap style="BORDER-BOTTOM: #000000 1px solid">&nbsp;</TD>
    <TD width="1%" align=center nowrap>&nbsp;</TD>
    <TD width="7%" align=center nowrap>Additional </TD>
    <TD width="2%" align=center nowrap>&nbsp;</TD>
    <TD width="1%" align=center nowrap>&nbsp;</TD>
    <TD width="7%" align=center nowrap>Stock </TD>
    <TD width="2%" align=center nowrap>&nbsp;</TD>
    <TD width="1%" align=center nowrap>&nbsp;</TD>
    <TD width="7%" align=center nowrap>&nbsp; </TD>
    <TD width="2%" align=center nowrap>&nbsp;</TD>
    <TD width="1%" align=center nowrap>&nbsp;</TD>
    <TD width="7%" align=center nowrap>Accumulated </TD>
    <TD width="2%" align=center nowrap>&nbsp;</TD>
    <TD width="1%" align=center nowrap>&nbsp;</TD>
    <TD width="7%" align=center nowrap>Stockholder's </TD>
    <TD align=left width="2%">&nbsp;</TD></TR>
  <TR vAlign=top>
    <TD align=left>&nbsp; </TD>
    <TD align=center width="1%">&nbsp;</TD>
    <TD width="7%" align=center nowrap>&nbsp; </TD>
    <TD width="2%" align=center nowrap>&nbsp;</TD>
    <TD width="1%" align=center nowrap>&nbsp;</TD>
    <TD width="7%" align=center nowrap>&nbsp; </TD>
    <TD width="2%" align=center nowrap>&nbsp;</TD>
    <TD width="1%" align=center nowrap>&nbsp;</TD>
    <TD width="7%" align=center nowrap>Paid-in </TD>
    <TD width="2%" align=center nowrap>&nbsp;</TD>
    <TD width="1%" align=center nowrap>&nbsp;</TD>
    <TD width="7%" align=center nowrap>owed but </TD>
    <TD width="2%" align=center nowrap>&nbsp;</TD>
    <TD width="1%" align=center nowrap>&nbsp;</TD>
    <TD width="7%" align=center nowrap>Accumulated </TD>
    <TD width="2%" align=center nowrap>&nbsp;</TD>
    <TD width="1%" align=center nowrap>&nbsp;</TD>
    <TD width="7%" align=center nowrap>Comprehensive </TD>
    <TD width="2%" align=center nowrap>&nbsp;</TD>
    <TD width="1%" align=center nowrap>&nbsp;</TD>
    <TD width="7%" align=center nowrap>Equity </TD>
    <TD align=left width="2%">&nbsp;</TD></TR>
  <TR vAlign=top>
    <TD align=left>&nbsp; </TD>
    <TD style="BORDER-BOTTOM: #000000 1px solid" align=left
    width="1%">&nbsp;</TD>
    <TD
      width="7%" align=center nowrap style="BORDER-BOTTOM: #000000 1px solid">Shares </TD>
    <TD
    width="2%" align=center nowrap style="BORDER-BOTTOM: #000000 1px solid">&nbsp;</TD>
    <TD
    width="1%" align=center nowrap style="BORDER-BOTTOM: #000000 1px solid">&nbsp;</TD>
    <TD
      width="7%" align=center nowrap style="BORDER-BOTTOM: #000000 1px solid">Amount </TD>
    <TD
    width="2%" align=center nowrap style="BORDER-BOTTOM: #000000 1px solid">&nbsp;</TD>
    <TD
    width="1%" align=center nowrap style="BORDER-BOTTOM: #000000 1px solid">&nbsp;</TD>
    <TD
      width="7%" align=center nowrap style="BORDER-BOTTOM: #000000 1px solid">Capital </TD>
    <TD
    width="2%" align=center nowrap style="BORDER-BOTTOM: #000000 1px solid">&nbsp;</TD>
    <TD
    width="1%" align=center nowrap style="BORDER-BOTTOM: #000000 1px solid">&nbsp;</TD>
    <TD width="7%" align=center nowrap style="BORDER-BOTTOM: #000000 1px solid">not
      issued </TD>
    <TD
    width="2%" align=center nowrap style="BORDER-BOTTOM: #000000 1px solid">&nbsp;</TD>
    <TD
    width="1%" align=center nowrap style="BORDER-BOTTOM: #000000 1px solid">&nbsp;</TD>
    <TD
      width="7%" align=center nowrap style="BORDER-BOTTOM: #000000 1px solid">Deficit </TD>
    <TD
    width="2%" align=center nowrap style="BORDER-BOTTOM: #000000 1px solid">&nbsp;</TD>
    <TD
    width="1%" align=center nowrap style="BORDER-BOTTOM: #000000 1px solid">&nbsp;</TD>
    <TD
      width="7%" align=center nowrap style="BORDER-BOTTOM: #000000 1px solid">(Loss) </TD>
    <TD
    width="2%" align=center nowrap style="BORDER-BOTTOM: #000000 1px solid">&nbsp;</TD>
    <TD
    width="1%" align=center nowrap style="BORDER-BOTTOM: #000000 1px solid">&nbsp;</TD>
    <TD
      width="7%" align=center nowrap style="BORDER-BOTTOM: #000000 1px solid">(deficit) </TD>
    <TD style="BORDER-BOTTOM: #000000 1px solid" align=left
    width="2%">&nbsp;</TD></TR>
  <TR>
    <TD>&nbsp; </TD>
    <TD vAlign=bottom width="1%">&nbsp;</TD>
    <TD vAlign=bottom width="7%">&nbsp; </TD>
    <TD vAlign=bottom width="2%">&nbsp;</TD>
    <TD vAlign=bottom width="1%">&nbsp;</TD>
    <TD vAlign=bottom width="7%">&nbsp; </TD>
    <TD vAlign=bottom width="2%">&nbsp;</TD>
    <TD vAlign=bottom width="1%">&nbsp;</TD>
    <TD vAlign=bottom width="7%">&nbsp; </TD>
    <TD vAlign=bottom width="2%">&nbsp;</TD>
    <TD vAlign=bottom width="1%">&nbsp;</TD>
    <TD vAlign=bottom width="7%">&nbsp; </TD>
    <TD vAlign=bottom width="2%">&nbsp;</TD>
    <TD vAlign=bottom width="1%">&nbsp;</TD>
    <TD vAlign=bottom width="7%">&nbsp; </TD>
    <TD vAlign=bottom width="2%">&nbsp;</TD>
    <TD vAlign=bottom width="1%">&nbsp;</TD>
    <TD vAlign=bottom width="7%">&nbsp; </TD>
    <TD vAlign=bottom width="2%">&nbsp;</TD>
    <TD vAlign=bottom width="1%">&nbsp;</TD>
    <TD vAlign=bottom width="7%">&nbsp; </TD>
    <TD vAlign=bottom width="2%">&nbsp;</TD></TR>
  <TR vAlign=top>
    <TD align=left bgColor=#e6efff>Balance at December 31, 2010 </TD>
    <TD vAlign=bottom align=left width="1%" bgColor=#e6efff>&nbsp;</TD>
    <TD vAlign=bottom align=right width="7%" bgColor=#e6efff>27,060,561 </TD>
    <TD vAlign=bottom align=left width="2%" bgColor=#e6efff>&nbsp;</TD>
    <TD vAlign=bottom align=left width="1%" bgColor=#e6efff>&nbsp;</TD>
    <TD vAlign=bottom align=right width="7%" bgColor=#e6efff>27,061 </TD>
    <TD vAlign=bottom align=left width="2%" bgColor=#e6efff>&nbsp;</TD>
    <TD vAlign=bottom align=left width="1%" bgColor=#e6efff>&nbsp;</TD>
    <TD vAlign=bottom align=right width="7%" bgColor=#e6efff>6,348,559 </TD>
    <TD vAlign=bottom align=left width="2%" bgColor=#e6efff>&nbsp;</TD>
    <TD vAlign=bottom align=left width="1%" bgColor=#e6efff>&nbsp;</TD>
    <TD vAlign=bottom align=right width="7%" bgColor=#e6efff>543 </TD>
    <TD vAlign=bottom align=left width="2%" bgColor=#e6efff>&nbsp;</TD>
    <TD vAlign=bottom align=left width="1%" bgColor=#e6efff>&nbsp;</TD>
    <TD vAlign=bottom align=right width="7%" bgColor=#e6efff>(7,740,391</TD>
    <TD vAlign=bottom align=left width="2%" bgColor=#e6efff>) </TD>
    <TD vAlign=bottom align=left width="1%" bgColor=#e6efff>&nbsp;</TD>
    <TD vAlign=bottom align=right width="7%" bgColor=#e6efff>(8,114</TD>
    <TD vAlign=bottom align=left width="2%" bgColor=#e6efff>) </TD>
    <TD vAlign=bottom align=left width="1%" bgColor=#e6efff>&nbsp;</TD>
    <TD vAlign=bottom align=right width="7%" bgColor=#e6efff>(1,372,342</TD>
    <TD vAlign=bottom align=left width="2%" bgColor=#e6efff>) </TD></TR>
  <TR>
    <TD>&nbsp; </TD>
    <TD vAlign=bottom width="1%">&nbsp;</TD>
    <TD vAlign=bottom width="7%">&nbsp; </TD>
    <TD vAlign=bottom width="2%">&nbsp;</TD>
    <TD vAlign=bottom width="1%">&nbsp;</TD>
    <TD vAlign=bottom width="7%">&nbsp; </TD>
    <TD vAlign=bottom width="2%">&nbsp;</TD>
    <TD vAlign=bottom width="1%">&nbsp;</TD>
    <TD vAlign=bottom width="7%">&nbsp; </TD>
    <TD vAlign=bottom width="2%">&nbsp;</TD>
    <TD vAlign=bottom width="1%">&nbsp;</TD>
    <TD vAlign=bottom width="7%">&nbsp; </TD>
    <TD vAlign=bottom width="2%">&nbsp;</TD>
    <TD vAlign=bottom width="1%">&nbsp;</TD>
    <TD vAlign=bottom width="7%">&nbsp; </TD>
    <TD vAlign=bottom width="2%">&nbsp;</TD>
    <TD vAlign=bottom width="1%">&nbsp;</TD>
    <TD vAlign=bottom width="7%">&nbsp; </TD>
    <TD vAlign=bottom width="2%">&nbsp;</TD>
    <TD vAlign=bottom width="1%">&nbsp;</TD>
    <TD vAlign=bottom width="7%">&nbsp; </TD>
    <TD vAlign=bottom width="2%">&nbsp;</TD></TR>
  <TR vAlign=top>
    <TD align=left bgColor=#e6efff>&nbsp; &nbsp;Shares issued that were owed
    </TD>
    <TD vAlign=bottom align=left width="1%" bgColor=#e6efff>&nbsp;</TD>
    <TD vAlign=bottom align=right width="7%" bgColor=#e6efff>542,856 </TD>
    <TD vAlign=bottom align=left width="2%" bgColor=#e6efff>&nbsp;</TD>
    <TD vAlign=bottom align=left width="1%" bgColor=#e6efff>&nbsp;</TD>
    <TD vAlign=bottom align=right width="7%" bgColor=#e6efff>543 </TD>
    <TD vAlign=bottom align=left width="2%" bgColor=#e6efff>&nbsp;</TD>
    <TD vAlign=bottom align=left width="1%" bgColor=#e6efff>&nbsp;</TD>
    <TD vAlign=bottom align=right width="7%" bgColor=#e6efff>- </TD>
    <TD vAlign=bottom align=left width="2%" bgColor=#e6efff>&nbsp;</TD>
    <TD vAlign=bottom align=left width="1%" bgColor=#e6efff>&nbsp;</TD>
    <TD vAlign=bottom align=right width="7%" bgColor=#e6efff>(543</TD>
    <TD vAlign=bottom align=left width="2%" bgColor=#e6efff>) </TD>
    <TD vAlign=bottom align=left width="1%" bgColor=#e6efff>&nbsp;</TD>
    <TD vAlign=bottom align=right width="7%" bgColor=#e6efff>- </TD>
    <TD vAlign=bottom align=left width="2%" bgColor=#e6efff>&nbsp;</TD>
    <TD vAlign=bottom align=left width="1%" bgColor=#e6efff>&nbsp;</TD>
    <TD vAlign=bottom align=right width="7%" bgColor=#e6efff>- </TD>
    <TD vAlign=bottom align=left width="2%" bgColor=#e6efff>&nbsp;</TD>
    <TD vAlign=bottom align=left width="1%" bgColor=#e6efff>&nbsp;</TD>
    <TD vAlign=bottom align=right width="7%" bgColor=#e6efff>- </TD>
    <TD vAlign=bottom align=left width="2%" bgColor=#e6efff>&nbsp;</TD></TR>
  <TR vAlign=top>
    <TD align=left>&nbsp; &nbsp;Shares issued for compensation </TD>
    <TD vAlign=bottom align=left width="1%">&nbsp;</TD>
    <TD vAlign=bottom align=right width="7%">600,000 </TD>
    <TD vAlign=bottom align=left width="2%">&nbsp;</TD>
    <TD vAlign=bottom align=left width="1%">&nbsp;</TD>
    <TD vAlign=bottom align=right width="7%">600 </TD>
    <TD vAlign=bottom align=left width="2%">&nbsp;</TD>
    <TD vAlign=bottom align=left width="1%">&nbsp;</TD>
    <TD vAlign=bottom align=right width="7%">305,400 </TD>
    <TD vAlign=bottom align=left width="2%">&nbsp;</TD>
    <TD vAlign=bottom align=left width="1%">&nbsp;</TD>
    <TD vAlign=bottom align=right width="7%">- </TD>
    <TD vAlign=bottom align=left width="2%">&nbsp;</TD>
    <TD vAlign=bottom align=left width="1%">&nbsp;</TD>
    <TD vAlign=bottom align=right width="7%">- </TD>
    <TD vAlign=bottom align=left width="2%">&nbsp;</TD>
    <TD vAlign=bottom align=left width="1%">&nbsp;</TD>
    <TD vAlign=bottom align=right width="7%">- </TD>
    <TD vAlign=bottom align=left width="2%">&nbsp;</TD>
    <TD vAlign=bottom align=left width="1%">&nbsp;</TD>
    <TD vAlign=bottom align=right width="7%">306,000 </TD>
    <TD vAlign=bottom align=left width="2%">&nbsp;</TD></TR>
  <TR vAlign=top>
    <TD align=left bgColor=#e6efff>&nbsp; &nbsp;Shares issued for services </TD>
    <TD vAlign=bottom align=left width="1%" bgColor=#e6efff>&nbsp;</TD>
    <TD vAlign=bottom align=right width="7%" bgColor=#e6efff>100,000 </TD>
    <TD vAlign=bottom align=left width="2%" bgColor=#e6efff>&nbsp;</TD>
    <TD vAlign=bottom align=left width="1%" bgColor=#e6efff>&nbsp;</TD>
    <TD vAlign=bottom align=right width="7%" bgColor=#e6efff>100 </TD>
    <TD vAlign=bottom align=left width="2%" bgColor=#e6efff>&nbsp;</TD>
    <TD vAlign=bottom align=left width="1%" bgColor=#e6efff>&nbsp;</TD>
    <TD vAlign=bottom align=right width="7%" bgColor=#e6efff>50,900 </TD>
    <TD vAlign=bottom align=left width="2%" bgColor=#e6efff>&nbsp;</TD>
    <TD vAlign=bottom align=left width="1%" bgColor=#e6efff>&nbsp;</TD>
    <TD vAlign=bottom align=right width="7%" bgColor=#e6efff>- </TD>
    <TD vAlign=bottom align=left width="2%" bgColor=#e6efff>&nbsp;</TD>
    <TD vAlign=bottom align=left width="1%" bgColor=#e6efff>&nbsp;</TD>
    <TD vAlign=bottom align=right width="7%" bgColor=#e6efff>- </TD>
    <TD vAlign=bottom align=left width="2%" bgColor=#e6efff>&nbsp;</TD>
    <TD vAlign=bottom align=left width="1%" bgColor=#e6efff>&nbsp;</TD>
    <TD vAlign=bottom align=right width="7%" bgColor=#e6efff>- </TD>
    <TD vAlign=bottom align=left width="2%" bgColor=#e6efff>&nbsp;</TD>
    <TD vAlign=bottom align=left width="1%" bgColor=#e6efff>&nbsp;</TD>
    <TD vAlign=bottom align=right width="7%" bgColor=#e6efff>51,000 </TD>
    <TD vAlign=bottom align=left width="2%" bgColor=#e6efff>&nbsp;</TD></TR>
  <TR vAlign=top>
    <TD align=left>&nbsp; &nbsp;Shares issued for cash </TD>
    <TD vAlign=bottom align=left width="1%">&nbsp;</TD>
    <TD vAlign=bottom align=right width="7%">200,000 </TD>
    <TD vAlign=bottom align=left width="2%">&nbsp;</TD>
    <TD vAlign=bottom align=left width="1%">&nbsp;</TD>
    <TD vAlign=bottom align=right width="7%">200 </TD>
    <TD vAlign=bottom align=left width="2%">&nbsp;</TD>
    <TD vAlign=bottom align=left width="1%">&nbsp;</TD>
    <TD vAlign=bottom align=right width="7%">49,800 </TD>
    <TD vAlign=bottom align=left width="2%">&nbsp;</TD>
    <TD vAlign=bottom align=left width="1%">&nbsp;</TD>
    <TD vAlign=bottom align=right width="7%">- </TD>
    <TD vAlign=bottom align=left width="2%">&nbsp;</TD>
    <TD vAlign=bottom align=left width="1%">&nbsp;</TD>
    <TD vAlign=bottom align=right width="7%">- </TD>
    <TD vAlign=bottom align=left width="2%">&nbsp;</TD>
    <TD vAlign=bottom align=left width="1%">&nbsp;</TD>
    <TD vAlign=bottom align=right width="7%">- </TD>
    <TD vAlign=bottom align=left width="2%">&nbsp;</TD>
    <TD vAlign=bottom align=left width="1%">&nbsp;</TD>
    <TD vAlign=bottom align=right width="7%">50,000 </TD>
    <TD vAlign=bottom align=left width="2%">&nbsp;</TD></TR>
  <TR vAlign=top>
    <TD align=left bgColor=#e6efff>&nbsp; &nbsp;Convertible debenture
      converted to stock </TD>
    <TD vAlign=bottom align=left width="1%" bgColor=#e6efff>&nbsp;</TD>
    <TD vAlign=bottom align=right width="7%" bgColor=#e6efff>4,363,611 </TD>
    <TD vAlign=bottom align=left width="2%" bgColor=#e6efff>&nbsp;</TD>
    <TD vAlign=bottom align=left width="1%" bgColor=#e6efff>&nbsp;</TD>
    <TD vAlign=bottom align=right width="7%" bgColor=#e6efff>4,363 </TD>
    <TD vAlign=bottom align=left width="2%" bgColor=#e6efff>&nbsp;</TD>
    <TD vAlign=bottom align=left width="1%" bgColor=#e6efff>&nbsp;</TD>
    <TD vAlign=bottom align=right width="7%" bgColor=#e6efff>1,086,539 </TD>
    <TD vAlign=bottom align=left width="2%" bgColor=#e6efff>&nbsp;</TD>
    <TD vAlign=bottom align=left width="1%" bgColor=#e6efff>&nbsp;</TD>
    <TD vAlign=bottom align=right width="7%" bgColor=#e6efff>- </TD>
    <TD vAlign=bottom align=left width="2%" bgColor=#e6efff>&nbsp;</TD>
    <TD vAlign=bottom align=left width="1%" bgColor=#e6efff>&nbsp;</TD>
    <TD vAlign=bottom align=right width="7%" bgColor=#e6efff>- </TD>
    <TD vAlign=bottom align=left width="2%" bgColor=#e6efff>&nbsp;</TD>
    <TD vAlign=bottom align=left width="1%" bgColor=#e6efff>&nbsp;</TD>
    <TD vAlign=bottom align=right width="7%" bgColor=#e6efff>- </TD>
    <TD vAlign=bottom align=left width="2%" bgColor=#e6efff>&nbsp;</TD>
    <TD vAlign=bottom align=left width="1%" bgColor=#e6efff>&nbsp;</TD>
    <TD vAlign=bottom align=right width="7%" bgColor=#e6efff>1,090,902 </TD>
    <TD vAlign=bottom align=left width="2%" bgColor=#e6efff>&nbsp;</TD></TR>
  <TR vAlign=top>
    <TD align=left>&nbsp;&nbsp;&nbsp;Beneficial conversion feature issued on
      convertible debenture </TD>
    <TD vAlign=bottom align=left width="1%">&nbsp;</TD>
    <TD vAlign=bottom align=right width="7%">- </TD>
    <TD vAlign=bottom align=left width="2%">&nbsp;</TD>
    <TD vAlign=bottom align=left width="1%">&nbsp;</TD>
    <TD vAlign=bottom align=right width="7%">- </TD>
    <TD vAlign=bottom align=left width="2%">&nbsp;</TD>
    <TD vAlign=bottom align=left width="1%">&nbsp;</TD>
    <TD vAlign=bottom align=right width="7%">472,377 </TD>
    <TD vAlign=bottom align=left width="2%">&nbsp;</TD>
    <TD vAlign=bottom align=left width="1%">&nbsp;</TD>
    <TD vAlign=bottom align=right width="7%">- </TD>
    <TD vAlign=bottom align=left width="2%">&nbsp;</TD>
    <TD vAlign=bottom align=left width="1%">&nbsp;</TD>
    <TD vAlign=bottom align=right width="7%">- </TD>
    <TD vAlign=bottom align=left width="2%">&nbsp;</TD>
    <TD vAlign=bottom align=left width="1%">&nbsp;</TD>
    <TD vAlign=bottom align=right width="7%">- </TD>
    <TD vAlign=bottom align=left width="2%">&nbsp;</TD>
    <TD vAlign=bottom align=left width="1%">&nbsp;</TD>
    <TD vAlign=bottom align=right width="7%">472,377 </TD>
    <TD vAlign=bottom align=left width="2%">&nbsp;</TD></TR>
  <TR vAlign=top>
    <TD align=left bgColor=#e6efff>&nbsp; &nbsp;Net loss </TD>
    <TD style="BORDER-BOTTOM: #000000 1px solid" vAlign=bottom align=left
    width="1%" bgColor=#e6efff>&nbsp;</TD>
    <TD style="BORDER-BOTTOM: #000000 1px solid" vAlign=bottom align=right
    width="7%" bgColor=#e6efff>- </TD>
    <TD style="BORDER-BOTTOM: #000000 1px solid" vAlign=bottom align=left
    width="2%" bgColor=#e6efff>&nbsp;</TD>
    <TD style="BORDER-BOTTOM: #000000 1px solid" vAlign=bottom align=left
    width="1%" bgColor=#e6efff>&nbsp;</TD>
    <TD style="BORDER-BOTTOM: #000000 1px solid" vAlign=bottom align=right
    width="7%" bgColor=#e6efff>- </TD>
    <TD style="BORDER-BOTTOM: #000000 1px solid" vAlign=bottom align=left
    width="2%" bgColor=#e6efff>&nbsp;</TD>
    <TD style="BORDER-BOTTOM: #000000 1px solid" vAlign=bottom align=left
    width="1%" bgColor=#e6efff>&nbsp;</TD>
    <TD style="BORDER-BOTTOM: #000000 1px solid" vAlign=bottom align=right
    width="7%" bgColor=#e6efff>- </TD>
    <TD style="BORDER-BOTTOM: #000000 1px solid" vAlign=bottom align=left
    width="2%" bgColor=#e6efff>&nbsp;</TD>
    <TD style="BORDER-BOTTOM: #000000 1px solid" vAlign=bottom align=left
    width="1%" bgColor=#e6efff>&nbsp;</TD>
    <TD style="BORDER-BOTTOM: #000000 1px solid" vAlign=bottom align=right
    width="7%" bgColor=#e6efff>- </TD>
    <TD style="BORDER-BOTTOM: #000000 1px solid" vAlign=bottom align=left
    width="2%" bgColor=#e6efff>&nbsp;</TD>
    <TD style="BORDER-BOTTOM: #000000 1px solid" vAlign=bottom align=left
    width="1%" bgColor=#e6efff>&nbsp;</TD>
    <TD style="BORDER-BOTTOM: #000000 1px solid" vAlign=bottom align=right
    width="7%" bgColor=#e6efff>(2,734,079</TD>
    <TD style="BORDER-BOTTOM: #000000 1px solid" vAlign=bottom align=left
    width="2%" bgColor=#e6efff>) </TD>
    <TD style="BORDER-BOTTOM: #000000 1px solid" vAlign=bottom align=left
    width="1%" bgColor=#e6efff>&nbsp;</TD>
    <TD style="BORDER-BOTTOM: #000000 1px solid" vAlign=bottom align=right
    width="7%" bgColor=#e6efff>- </TD>
    <TD style="BORDER-BOTTOM: #000000 1px solid" vAlign=bottom align=left
    width="2%" bgColor=#e6efff>&nbsp;</TD>
    <TD style="BORDER-BOTTOM: #000000 1px solid" vAlign=bottom align=left
    width="1%" bgColor=#e6efff>&nbsp;</TD>
    <TD style="BORDER-BOTTOM: #000000 1px solid" vAlign=bottom align=right
    width="7%" bgColor=#e6efff>(2,734,079</TD>
    <TD style="BORDER-BOTTOM: #000000 1px solid" vAlign=bottom align=left
    width="2%" bgColor=#e6efff>) </TD></TR>
  <TR>
    <TD>&nbsp; </TD>
    <TD vAlign=bottom width="1%">&nbsp;</TD>
    <TD vAlign=bottom width="7%">&nbsp; </TD>
    <TD vAlign=bottom width="2%">&nbsp;</TD>
    <TD vAlign=bottom width="1%">&nbsp;</TD>
    <TD vAlign=bottom width="7%">&nbsp; </TD>
    <TD vAlign=bottom width="2%">&nbsp;</TD>
    <TD vAlign=bottom width="1%">&nbsp;</TD>
    <TD vAlign=bottom width="7%">&nbsp; </TD>
    <TD vAlign=bottom width="2%">&nbsp;</TD>
    <TD vAlign=bottom width="1%">&nbsp;</TD>
    <TD vAlign=bottom width="7%">&nbsp; </TD>
    <TD vAlign=bottom width="2%">&nbsp;</TD>
    <TD vAlign=bottom width="1%">&nbsp;</TD>
    <TD vAlign=bottom width="7%">&nbsp; </TD>
    <TD vAlign=bottom width="2%">&nbsp;</TD>
    <TD vAlign=bottom width="1%">&nbsp;</TD>
    <TD vAlign=bottom width="7%">&nbsp; </TD>
    <TD vAlign=bottom width="2%">&nbsp;</TD>
    <TD vAlign=bottom width="1%">&nbsp;</TD>
    <TD vAlign=bottom width="7%">&nbsp; </TD>
    <TD vAlign=bottom width="2%">&nbsp;</TD></TR>
  <TR vAlign=top>
    <TD align=left bgColor=#e6efff>Balance at December 31, 2011 </TD>
    <TD vAlign=bottom align=left width="1%" bgColor=#e6efff>&nbsp;</TD>
    <TD vAlign=bottom align=right width="7%" bgColor=#e6efff>32,867,028 </TD>
    <TD vAlign=bottom align=left width="2%" bgColor=#e6efff>&nbsp;</TD>
    <TD vAlign=bottom align=left width="1%" bgColor=#e6efff>&nbsp;</TD>
    <TD vAlign=bottom align=right width="7%" bgColor=#e6efff>32,867 </TD>
    <TD vAlign=bottom align=left width="2%" bgColor=#e6efff>&nbsp;</TD>
    <TD vAlign=bottom align=left width="1%" bgColor=#e6efff>&nbsp;</TD>
    <TD vAlign=bottom align=right width="7%" bgColor=#e6efff>8,313,575 </TD>
    <TD vAlign=bottom align=left width="2%" bgColor=#e6efff>&nbsp;</TD>
    <TD vAlign=bottom align=left width="1%" bgColor=#e6efff>&nbsp;</TD>
    <TD vAlign=bottom align=right width="7%" bgColor=#e6efff>- </TD>
    <TD vAlign=bottom align=left width="2%" bgColor=#e6efff>&nbsp;</TD>
    <TD vAlign=bottom align=left width="1%" bgColor=#e6efff>&nbsp;</TD>
    <TD vAlign=bottom align=right width="7%" bgColor=#e6efff>(10,474,470</TD>
    <TD vAlign=bottom align=left width="2%" bgColor=#e6efff>) </TD>
    <TD vAlign=bottom align=left width="1%" bgColor=#e6efff>&nbsp;</TD>
    <TD vAlign=bottom align=right width="7%" bgColor=#e6efff>(8,114</TD>
    <TD vAlign=bottom align=left width="2%" bgColor=#e6efff>) </TD>
    <TD vAlign=bottom align=left width="1%" bgColor=#e6efff>&nbsp;</TD>
    <TD vAlign=bottom align=right width="7%" bgColor=#e6efff>(2,136,142</TD>
    <TD vAlign=bottom align=left width="2%" bgColor=#e6efff>) </TD></TR>
  <TR>
    <TD align=left>&nbsp; </TD>
    <TD vAlign=bottom width="1%">&nbsp;</TD>
    <TD vAlign=bottom width="7%">&nbsp; </TD>
    <TD vAlign=bottom width="2%">&nbsp;</TD>
    <TD vAlign=bottom width="1%">&nbsp;</TD>
    <TD vAlign=bottom width="7%">&nbsp; </TD>
    <TD vAlign=bottom width="2%">&nbsp;</TD>
    <TD vAlign=bottom width="1%">&nbsp;</TD>
    <TD vAlign=bottom width="7%">&nbsp; </TD>
    <TD vAlign=bottom width="2%">&nbsp;</TD>
    <TD vAlign=bottom width="1%">&nbsp;</TD>
    <TD vAlign=bottom width="7%">&nbsp; </TD>
    <TD vAlign=bottom width="2%">&nbsp;</TD>
    <TD vAlign=bottom width="1%">&nbsp;</TD>
    <TD vAlign=bottom width="7%">&nbsp; </TD>
    <TD vAlign=bottom width="2%">&nbsp;</TD>
    <TD vAlign=bottom width="1%">&nbsp;</TD>
    <TD vAlign=bottom width="7%">&nbsp; </TD>
    <TD vAlign=bottom width="2%">&nbsp;</TD>
    <TD vAlign=bottom width="1%">&nbsp;</TD>
    <TD vAlign=bottom width="7%">&nbsp; </TD>
    <TD vAlign=bottom width="2%">&nbsp;</TD></TR>
  <TR vAlign=top>
    <TD align=left bgColor=#e6efff>&nbsp; &nbsp;Shares issued for compensation
    </TD>
    <TD vAlign=bottom align=left width="1%" bgColor=#e6efff>&nbsp;</TD>
    <TD vAlign=bottom align=right width="7%" bgColor=#e6efff>900,000 </TD>
    <TD vAlign=bottom align=left width="2%" bgColor=#e6efff>&nbsp;</TD>
    <TD vAlign=bottom align=left width="1%" bgColor=#e6efff>&nbsp;</TD>
    <TD vAlign=bottom align=right width="7%" bgColor=#e6efff>900 </TD>
    <TD vAlign=bottom align=left width="2%" bgColor=#e6efff>&nbsp;</TD>
    <TD vAlign=bottom align=left width="1%" bgColor=#e6efff>&nbsp;</TD>
    <TD vAlign=bottom align=right width="7%" bgColor=#e6efff>188,100 </TD>
    <TD vAlign=bottom align=left width="2%" bgColor=#e6efff>&nbsp;</TD>
    <TD vAlign=bottom align=left width="1%" bgColor=#e6efff>&nbsp;</TD>
    <TD vAlign=bottom align=right width="7%" bgColor=#e6efff>- </TD>
    <TD vAlign=bottom align=left width="2%" bgColor=#e6efff>&nbsp;</TD>
    <TD vAlign=bottom align=left width="1%" bgColor=#e6efff>&nbsp;</TD>
    <TD vAlign=bottom align=right width="7%" bgColor=#e6efff>- </TD>
    <TD vAlign=bottom align=left width="2%" bgColor=#e6efff>&nbsp;</TD>
    <TD vAlign=bottom align=left width="1%" bgColor=#e6efff>&nbsp;</TD>
    <TD vAlign=bottom align=right width="7%" bgColor=#e6efff>- </TD>
    <TD vAlign=bottom align=left width="2%" bgColor=#e6efff>&nbsp;</TD>
    <TD vAlign=bottom align=left width="1%" bgColor=#e6efff>&nbsp;</TD>
    <TD vAlign=bottom align=right width="7%" bgColor=#e6efff>189,000 </TD>
    <TD vAlign=bottom align=left width="2%" bgColor=#e6efff>&nbsp;</TD></TR>
  <TR vAlign=top>
    <TD align=left>&nbsp; &nbsp;Shares issued in exchange for accts pay. </TD>
    <TD vAlign=bottom align=left width="1%">&nbsp;</TD>
    <TD vAlign=bottom align=right width="7%">350,000 </TD>
    <TD vAlign=bottom align=left width="2%">&nbsp;</TD>
    <TD vAlign=bottom align=left width="1%">&nbsp;</TD>
    <TD vAlign=bottom align=right width="7%">350 </TD>
    <TD vAlign=bottom align=left width="2%">&nbsp;</TD>
    <TD vAlign=bottom align=left width="1%">&nbsp;</TD>
    <TD vAlign=bottom align=right width="7%">238,702 </TD>
    <TD vAlign=bottom align=left width="2%">&nbsp;</TD>
    <TD vAlign=bottom align=left width="1%">&nbsp;</TD>
    <TD vAlign=bottom align=right width="7%">417 </TD>
    <TD vAlign=bottom align=left width="2%">&nbsp;</TD>
    <TD vAlign=bottom align=left width="1%">&nbsp;</TD>
    <TD vAlign=bottom align=right width="7%">- </TD>
    <TD vAlign=bottom align=left width="2%">&nbsp;</TD>
    <TD vAlign=bottom align=left width="1%">&nbsp;</TD>
    <TD vAlign=bottom align=right width="7%">- </TD>
    <TD vAlign=bottom align=left width="2%">&nbsp;</TD>
    <TD vAlign=bottom align=left width="1%">&nbsp;</TD>
    <TD vAlign=bottom align=right width="7%">239,469 </TD>
    <TD vAlign=bottom align=left width="2%">&nbsp;</TD></TR>
  <TR vAlign=top>
    <TD align=left bgColor=#e6efff>&nbsp; &nbsp;Convertible debenture
      converted to stock </TD>
    <TD vAlign=bottom align=left width="1%" bgColor=#e6efff>&nbsp;</TD>
    <TD vAlign=bottom align=right width="7%" bgColor=#e6efff>12,652,869 </TD>
    <TD vAlign=bottom align=left width="2%" bgColor=#e6efff>&nbsp;</TD>
    <TD vAlign=bottom align=left width="1%" bgColor=#e6efff>&nbsp;</TD>
    <TD vAlign=bottom align=right width="7%" bgColor=#e6efff>12,653 </TD>
    <TD vAlign=bottom align=left width="2%" bgColor=#e6efff>&nbsp;</TD>
    <TD vAlign=bottom align=left width="1%" bgColor=#e6efff>&nbsp;</TD>
    <TD vAlign=bottom align=right width="7%" bgColor=#e6efff>3,150,565 </TD>
    <TD vAlign=bottom align=left width="2%" bgColor=#e6efff>&nbsp;</TD>
    <TD vAlign=bottom align=left width="1%" bgColor=#e6efff>&nbsp;</TD>
    <TD vAlign=bottom align=right width="7%" bgColor=#e6efff>- </TD>
    <TD vAlign=bottom align=left width="2%" bgColor=#e6efff>&nbsp;</TD>
    <TD vAlign=bottom align=left width="1%" bgColor=#e6efff>&nbsp;</TD>
    <TD vAlign=bottom align=right width="7%" bgColor=#e6efff>- </TD>
    <TD vAlign=bottom align=left width="2%" bgColor=#e6efff>&nbsp;</TD>
    <TD vAlign=bottom align=left width="1%" bgColor=#e6efff>&nbsp;</TD>
    <TD vAlign=bottom align=right width="7%" bgColor=#e6efff>- </TD>
    <TD vAlign=bottom align=left width="2%" bgColor=#e6efff>&nbsp;</TD>
    <TD vAlign=bottom align=left width="1%" bgColor=#e6efff>&nbsp;</TD>
    <TD vAlign=bottom align=right width="7%" bgColor=#e6efff>3,163,218 </TD>
    <TD vAlign=bottom align=left width="2%" bgColor=#e6efff>&nbsp;</TD></TR>
  <TR vAlign=top>
    <TD align=left>&nbsp; &nbsp;Shares issued in exchange for notes pay. </TD>
    <TD vAlign=bottom align=left width="1%">&nbsp;</TD>
    <TD vAlign=bottom align=right width="7%">850,509 </TD>
    <TD vAlign=bottom align=left width="2%">&nbsp;</TD>
    <TD vAlign=bottom align=left width="1%">&nbsp;</TD>
    <TD vAlign=bottom align=right width="7%">851 </TD>
    <TD vAlign=bottom align=left width="2%">&nbsp;</TD>
    <TD vAlign=bottom align=left width="1%">&nbsp;</TD>
    <TD vAlign=bottom align=right width="7%">211,777 </TD>
    <TD vAlign=bottom align=left width="2%">&nbsp;</TD>
    <TD vAlign=bottom align=left width="1%">&nbsp;</TD>
    <TD vAlign=bottom align=right width="7%">- </TD>
    <TD vAlign=bottom align=left width="2%">&nbsp;</TD>
    <TD vAlign=bottom align=left width="1%">&nbsp;</TD>
    <TD vAlign=bottom align=right width="7%">- </TD>
    <TD vAlign=bottom align=left width="2%">&nbsp;</TD>
    <TD vAlign=bottom align=left width="1%">&nbsp;</TD>
    <TD vAlign=bottom align=right width="7%">- </TD>
    <TD vAlign=bottom align=left width="2%">&nbsp;</TD>
    <TD vAlign=bottom align=left width="1%">&nbsp;</TD>
    <TD vAlign=bottom align=right width="7%">212,628 </TD>
    <TD vAlign=bottom align=left width="2%">&nbsp;</TD></TR>
  <TR vAlign=top>
    <TD align=left bgColor=#e6efff>&nbsp; &nbsp;Derivative instruments for
      purchase agreement </TD>
    <TD vAlign=bottom align=left width="1%" bgColor=#e6efff>&nbsp;</TD>
    <TD vAlign=bottom align=right width="7%" bgColor=#e6efff>- </TD>
    <TD vAlign=bottom align=left width="2%" bgColor=#e6efff>&nbsp;</TD>
    <TD vAlign=bottom align=left width="1%" bgColor=#e6efff>&nbsp;</TD>
    <TD vAlign=bottom align=right width="7%" bgColor=#e6efff>- </TD>
    <TD vAlign=bottom align=left width="2%" bgColor=#e6efff>&nbsp;</TD>
    <TD vAlign=bottom align=left width="1%" bgColor=#e6efff>&nbsp;</TD>
    <TD vAlign=bottom align=right width="7%" bgColor=#e6efff>1,628,378 </TD>
    <TD vAlign=bottom align=left width="2%" bgColor=#e6efff>&nbsp;</TD>
    <TD vAlign=bottom align=left width="1%" bgColor=#e6efff>&nbsp;</TD>
    <TD vAlign=bottom align=right width="7%" bgColor=#e6efff>6,007 </TD>
    <TD vAlign=bottom align=left width="2%" bgColor=#e6efff>&nbsp;</TD>
    <TD vAlign=bottom align=left width="1%" bgColor=#e6efff>&nbsp;</TD>
    <TD vAlign=bottom align=right width="7%" bgColor=#e6efff>- </TD>
    <TD vAlign=bottom align=left width="2%" bgColor=#e6efff>&nbsp;</TD>
    <TD vAlign=bottom align=left width="1%" bgColor=#e6efff>&nbsp;</TD>
    <TD vAlign=bottom align=right width="7%" bgColor=#e6efff>4,706 </TD>
    <TD vAlign=bottom align=left width="2%" bgColor=#e6efff>&nbsp;</TD>
    <TD vAlign=bottom align=left width="1%" bgColor=#e6efff>&nbsp;</TD>
    <TD vAlign=bottom align=right width="7%" bgColor=#e6efff>1,639,091 </TD>
    <TD vAlign=bottom align=left width="2%" bgColor=#e6efff>&nbsp;</TD></TR>
  <TR vAlign=top>
    <TD align=left>&nbsp; &nbsp;Net Loss </TD>
    <TD style="BORDER-BOTTOM: #000000 1px solid" vAlign=bottom align=left
    width="1%">&nbsp;</TD>
    <TD style="BORDER-BOTTOM: #000000 1px solid" vAlign=bottom align=right
    width="7%">- </TD>
    <TD style="BORDER-BOTTOM: #000000 1px solid" vAlign=bottom align=left
    width="2%">&nbsp;</TD>
    <TD style="BORDER-BOTTOM: #000000 1px solid" vAlign=bottom align=left
    width="1%">&nbsp;</TD>
    <TD style="BORDER-BOTTOM: #000000 1px solid" vAlign=bottom align=right
    width="7%">- </TD>
    <TD style="BORDER-BOTTOM: #000000 1px solid" vAlign=bottom align=left
    width="2%">&nbsp;</TD>
    <TD style="BORDER-BOTTOM: #000000 1px solid" vAlign=bottom align=left
    width="1%">&nbsp;</TD>
    <TD style="BORDER-BOTTOM: #000000 1px solid" vAlign=bottom align=right
    width="7%">- </TD>
    <TD style="BORDER-BOTTOM: #000000 1px solid" vAlign=bottom align=left
    width="2%">&nbsp;</TD>
    <TD style="BORDER-BOTTOM: #000000 1px solid" vAlign=bottom align=left
    width="1%">&nbsp;</TD>
    <TD style="BORDER-BOTTOM: #000000 1px solid" vAlign=bottom align=right
    width="7%">- </TD>
    <TD style="BORDER-BOTTOM: #000000 1px solid" vAlign=bottom align=left
    width="2%">&nbsp;</TD>
    <TD style="BORDER-BOTTOM: #000000 1px solid" vAlign=bottom align=left
    width="1%">&nbsp;</TD>
    <TD style="BORDER-BOTTOM: #000000 1px solid" vAlign=bottom align=right
    width="7%">(3,303,136</TD>
    <TD style="BORDER-BOTTOM: #000000 1px solid" vAlign=bottom align=left
    width="2%">) </TD>
    <TD style="BORDER-BOTTOM: #000000 1px solid" vAlign=bottom align=left
    width="1%">&nbsp;</TD>
    <TD style="BORDER-BOTTOM: #000000 1px solid" vAlign=bottom align=right
    width="7%">8,114 </TD>
    <TD style="BORDER-BOTTOM: #000000 1px solid" vAlign=bottom align=left
    width="2%">&nbsp;</TD>
    <TD style="BORDER-BOTTOM: #000000 1px solid" vAlign=bottom align=left
    width="1%">&nbsp;</TD>
    <TD style="BORDER-BOTTOM: #000000 1px solid" vAlign=bottom align=right
    width="7%">(3,295,022</TD>
    <TD style="BORDER-BOTTOM: #000000 1px solid" vAlign=bottom align=left
    width="2%">) </TD></TR>
  <TR>
    <TD align=left bgColor=#e6efff>&nbsp; </TD>
    <TD vAlign=bottom width="1%" bgColor=#e6efff>&nbsp;</TD>
    <TD vAlign=bottom width="7%" bgColor=#e6efff>&nbsp; </TD>
    <TD vAlign=bottom width="2%" bgColor=#e6efff>&nbsp;</TD>
    <TD vAlign=bottom width="1%" bgColor=#e6efff>&nbsp;</TD>
    <TD vAlign=bottom width="7%" bgColor=#e6efff>&nbsp; </TD>
    <TD vAlign=bottom width="2%" bgColor=#e6efff>&nbsp;</TD>
    <TD vAlign=bottom width="1%" bgColor=#e6efff>&nbsp;</TD>
    <TD vAlign=bottom width="7%" bgColor=#e6efff>&nbsp; </TD>
    <TD vAlign=bottom width="2%" bgColor=#e6efff>&nbsp;</TD>
    <TD vAlign=bottom width="1%" bgColor=#e6efff>&nbsp;</TD>
    <TD vAlign=bottom width="7%" bgColor=#e6efff>&nbsp; </TD>
    <TD vAlign=bottom width="2%" bgColor=#e6efff>&nbsp;</TD>
    <TD vAlign=bottom width="1%" bgColor=#e6efff>&nbsp;</TD>
    <TD vAlign=bottom width="7%" bgColor=#e6efff>&nbsp; </TD>
    <TD vAlign=bottom width="2%" bgColor=#e6efff>&nbsp;</TD>
    <TD vAlign=bottom width="1%" bgColor=#e6efff>&nbsp;</TD>
    <TD vAlign=bottom width="7%" bgColor=#e6efff>&nbsp; </TD>
    <TD vAlign=bottom width="2%" bgColor=#e6efff>&nbsp;</TD>
    <TD vAlign=bottom width="1%" bgColor=#e6efff>&nbsp;</TD>
    <TD vAlign=bottom width="7%" bgColor=#e6efff>&nbsp; </TD>
    <TD vAlign=bottom width="2%" bgColor=#e6efff>&nbsp;</TD></TR>
  <TR vAlign=top>
    <TD align=left>Balance at December 31, 2012 </TD>
    <TD style="BORDER-BOTTOM: #000000 3px double" vAlign=bottom align=left
    width="1%">&nbsp;</TD>
    <TD style="BORDER-BOTTOM: #000000 3px double" vAlign=bottom align=right
    width="7%">47,620,406 </TD>
    <TD style="BORDER-BOTTOM: #000000 3px double" vAlign=bottom align=left
    width="2%">&nbsp;</TD>
    <TD style="BORDER-BOTTOM: #000000 3px double" vAlign=bottom align=left
    width="1%">&nbsp;</TD>
    <TD style="BORDER-BOTTOM: #000000 3px double" vAlign=bottom align=right
    width="7%">47,621 </TD>
    <TD style="BORDER-BOTTOM: #000000 3px double" vAlign=bottom align=left
    width="2%">&nbsp;</TD>
    <TD style="BORDER-BOTTOM: #000000 3px double" vAlign=bottom align=left
    width="1%">&nbsp;</TD>
    <TD style="BORDER-BOTTOM: #000000 3px double" vAlign=bottom align=right
    width="7%">13,731,097 </TD>
    <TD style="BORDER-BOTTOM: #000000 3px double" vAlign=bottom align=left
    width="2%">&nbsp;</TD>
    <TD style="BORDER-BOTTOM: #000000 3px double" vAlign=bottom align=left
    width="1%">&nbsp;</TD>
    <TD style="BORDER-BOTTOM: #000000 3px double" vAlign=bottom align=right
    width="7%">6,424 </TD>
    <TD style="BORDER-BOTTOM: #000000 3px double" vAlign=bottom align=left
    width="2%">&nbsp;</TD>
    <TD style="BORDER-BOTTOM: #000000 3px double" vAlign=bottom align=left
    width="1%">&nbsp;</TD>
    <TD style="BORDER-BOTTOM: #000000 3px double" vAlign=bottom align=right
    width="7%">(13,777,606</TD>
    <TD style="BORDER-BOTTOM: #000000 3px double" vAlign=bottom align=left
    width="2%">) </TD>
    <TD style="BORDER-BOTTOM: #000000 3px double" vAlign=bottom align=left
    width="1%">&nbsp;</TD>
    <TD style="BORDER-BOTTOM: #000000 3px double" vAlign=bottom align=right
    width="7%">4,706 </TD>
    <TD style="BORDER-BOTTOM: #000000 3px double" vAlign=bottom align=left
    width="2%">&nbsp;</TD>
    <TD style="BORDER-BOTTOM: #000000 3px double" vAlign=bottom align=left
    width="1%">&nbsp;</TD>
    <TD style="BORDER-BOTTOM: #000000 3px double" vAlign=bottom align=right
    width="7%">12,242 </TD>
<TD style="BORDER-BOTTOM: #000000 3px double" vAlign=bottom align=left
    width="2%">&nbsp;</TD></TR></TABLE>
<P align=justify>The accompanying notes are an integral part of these financial
statements</P>
<P align=center>F-4</P>
<HR style="PAGE-BREAK-AFTER: always" align=center width="100%" color=black
noShade SIZE=5>
<A name=page_fx4></A>
<P align=center><B>American Petro-Hunter, Inc.</B><BR><B>Statement of Cash
Flows</B></P>
<TABLE
style="BORDER-COLOR: black; FONT-SIZE: 10pt; BORDER-COLLAPSE: collapse; "
cellSpacing=0 cellPadding=0 width="100%" border=0>

  <TR vAlign=top>
    <TD align=left>&nbsp; </TD>
    <TD align=left width="1%" >&nbsp;</TD>
    <TD width="27%" colSpan=4 align=center nowrap>For the year ended </TD>
    <TD align=left width="2%" >&nbsp;</TD></TR>
  <TR vAlign=top>
    <TD align=left>&nbsp; </TD>
    <TD align=left width="1%" >&nbsp;</TD>
    <TD width="27%" colSpan=4 align=center nowrap>December 31, </TD>
    <TD align=left width="2%" >&nbsp;</TD></TR>
  <TR vAlign=top>
    <TD align=left>&nbsp; </TD>
    <TD style="BORDER-BOTTOM: #000000 1px solid" align=left width="1%"
    >&nbsp;</TD>
    <TD width="12%" align=center nowrap style="BORDER-BOTTOM: #000000 1px solid">2012    </TD>
    <TD width="2%" align=center nowrap style="BORDER-BOTTOM: #000000 1px solid"
    >&nbsp;</TD>
    <TD width="1%" align=center nowrap style="BORDER-BOTTOM: #000000 1px solid"
    >&nbsp;</TD>
    <TD width="12%" align=center nowrap style="BORDER-BOTTOM: #000000 1px solid">2011    </TD>
    <TD style="BORDER-BOTTOM: #000000 1px solid" align=left width="2%"
    >&nbsp;</TD></TR>
  <TR vAlign=top>
    <TD align=left bgColor=#e6efff><B>Cash flows from operating activities</B>
    </TD>
    <TD align=left width="1%"  bgColor=#e6efff>&nbsp;</TD>
    <TD align=left width="12%" bgColor=#e6efff>&nbsp; </TD>
    <TD align=left width="2%"  bgColor=#e6efff>&nbsp;</TD>
    <TD align=left width="1%"  bgColor=#e6efff>&nbsp;</TD>
    <TD align=left width="12%" bgColor=#e6efff>&nbsp; </TD>
    <TD align=left width="2%"  bgColor=#e6efff>&nbsp;</TD></TR>
  <TR vAlign=top>
    <TD align=left>Net (loss) </TD>
    <TD align=left width="1%" >$</TD>
    <TD align=right width="12%">&nbsp;(3,303,136</TD>
    <TD align=left width="2%" >) </TD>
    <TD align=left width="1%" >$</TD>
    <TD align=right width="12%">&nbsp;(2,734,079</TD>
    <TD align=left width="2%" >) </TD></TR>
  <TR vAlign=top>
    <TD align=left bgColor=#e6efff>Adjustments to reconcile net (loss) to net
      cash used in operating activities: </TD>
    <TD align=left width="1%"  bgColor=#e6efff>&nbsp;</TD>
    <TD align=left width="12%" bgColor=#e6efff>&nbsp; </TD>
    <TD align=left width="2%"  bgColor=#e6efff>&nbsp;</TD>
    <TD align=left width="1%"  bgColor=#e6efff>&nbsp;</TD>
    <TD align=left width="12%" bgColor=#e6efff>&nbsp; </TD>
    <TD align=left width="2%"  bgColor=#e6efff>&nbsp;</TD></TR>
  <TR vAlign=top>
    <TD align=left>&nbsp; &nbsp; &nbsp; &nbsp; &nbsp; &nbsp;Shares issued for
      compensation </TD>
    <TD align=left width="1%" >&nbsp;</TD>
    <TD align=right width="12%">189,000 </TD>
    <TD align=left width="2%" >&nbsp;</TD>
    <TD align=left width="1%" >&nbsp;</TD>
    <TD align=right width="12%">306,000 </TD>
    <TD align=left width="2%" >&nbsp;</TD></TR>
  <TR vAlign=top>
    <TD align=left bgColor=#e6efff>&nbsp; &nbsp; &nbsp; &nbsp; &nbsp;
      &nbsp;Shares issued for services </TD>
    <TD align=left width="1%"  bgColor=#e6efff>&nbsp;</TD>
    <TD align=right width="12%" bgColor=#e6efff>- </TD>
    <TD align=left width="2%"  bgColor=#e6efff>&nbsp;</TD>
    <TD align=left width="1%"  bgColor=#e6efff>&nbsp;</TD>
    <TD align=right width="12%" bgColor=#e6efff>51,000 </TD>
    <TD align=left width="2%"  bgColor=#e6efff>&nbsp;</TD></TR>
  <TR vAlign=top>
    <TD align=left>&nbsp; &nbsp; &nbsp; &nbsp; &nbsp; &nbsp;Amortization of
      discount </TD>
    <TD align=left width="1%" >&nbsp;</TD>
    <TD align=right width="12%">243,590 </TD>
    <TD align=left width="2%" >&nbsp;</TD>
    <TD align=left width="1%" >&nbsp;</TD>
    <TD align=right width="12%">646,760 </TD>
    <TD align=left width="2%" >&nbsp;</TD></TR>
  <TR vAlign=top>
    <TD align=left bgColor=#e6efff>&nbsp; &nbsp; &nbsp; &nbsp; &nbsp;
      &nbsp;Impairment expense </TD>
    <TD align=left width="1%"  bgColor=#e6efff>&nbsp;</TD>
    <TD align=right width="12%" bgColor=#e6efff>565,737 </TD>
    <TD align=left width="2%"  bgColor=#e6efff>&nbsp;</TD>
    <TD align=left width="1%"  bgColor=#e6efff>&nbsp;</TD>
    <TD align=right width="12%" bgColor=#e6efff>173,879 </TD>
    <TD align=left width="2%"  bgColor=#e6efff>&nbsp;</TD></TR>
  <TR vAlign=top>
    <TD align=left>&nbsp; &nbsp; &nbsp; &nbsp; &nbsp; &nbsp;Amortization of
      mineral properties </TD>
    <TD align=left width="1%" >&nbsp;</TD>
    <TD align=right width="12%">105,880 </TD>
    <TD align=left width="2%" >&nbsp;</TD>
    <TD align=left width="1%" >&nbsp;</TD>
    <TD align=right width="12%">119,415 </TD>
    <TD align=left width="2%" >&nbsp;</TD></TR>
  <TR vAlign=top>
    <TD align=left bgColor=#e6efff>&nbsp; &nbsp; &nbsp; &nbsp; &nbsp;
      &nbsp;Amortization of prepaid financing costs </TD>
    <TD align=left width="1%"  bgColor=#e6efff>&nbsp;</TD>
    <TD align=right width="12%" bgColor=#e6efff>6,737 </TD>
    <TD align=left width="2%"  bgColor=#e6efff>&nbsp;</TD>
    <TD align=left width="1%"  bgColor=#e6efff>&nbsp;</TD>
    <TD align=right width="12%" bgColor=#e6efff>- </TD>
    <TD align=left width="2%"  bgColor=#e6efff>&nbsp;</TD></TR>
  <TR vAlign=top>
    <TD align=left>&nbsp; &nbsp; &nbsp; &nbsp; &nbsp; &nbsp;Recognized (gain)
      loss on fair value of derivative liability </TD>
    <TD align=left width="1%" >&nbsp;</TD>
    <TD align=right width="12%">5,265 </TD>
    <TD align=left width="2%" >&nbsp;</TD>
    <TD align=left width="1%" >&nbsp;</TD>
    <TD align=right width="12%">- </TD>
    <TD align=left width="2%" >&nbsp;</TD></TR>
  <TR vAlign=top>
    <TD align=left bgColor=#e6efff>&nbsp; &nbsp; &nbsp; &nbsp; &nbsp;
      &nbsp;Stock and warrants issued for financing </TD>
    <TD align=left width="1%"  bgColor=#e6efff>&nbsp;</TD>
    <TD align=right width="12%" bgColor=#e6efff>1,424,394 </TD>
    <TD align=left width="2%"  bgColor=#e6efff>&nbsp;</TD>
    <TD align=left width="1%"  bgColor=#e6efff>&nbsp;</TD>
    <TD align=right width="12%" bgColor=#e6efff>- </TD>
    <TD align=left width="2%"  bgColor=#e6efff>&nbsp;</TD></TR>
  <TR vAlign=top>
    <TD align=left>&nbsp; &nbsp; &nbsp; &nbsp; &nbsp; &nbsp;Gain on
      forgiveness of debt </TD>
    <TD align=left width="1%" >&nbsp;</TD>
    <TD align=right width="12%">(322,731</TD>
    <TD align=left width="2%" >) </TD>
    <TD align=left width="1%" >&nbsp;</TD>
    <TD align=right width="12%">- </TD>
    <TD align=left width="2%" >&nbsp;</TD></TR>
  <TR vAlign=top>
    <TD align=left bgColor=#e6efff>&nbsp; &nbsp; &nbsp; &nbsp; &nbsp;
      &nbsp;Gain on sale of mineral properties </TD>
    <TD align=left width="1%"  bgColor=#e6efff>&nbsp;</TD>
    <TD align=right width="12%" bgColor=#e6efff>(2,621</TD>
    <TD align=left width="2%"  bgColor=#e6efff>) </TD>
    <TD align=left width="1%"  bgColor=#e6efff>&nbsp;</TD>
    <TD align=right width="12%" bgColor=#e6efff>- </TD>
    <TD align=left width="2%"  bgColor=#e6efff>&nbsp;</TD></TR>
  <TR vAlign=top>
    <TD align=left>Changes in operating assets and liabilities: </TD>
    <TD align=left width="1%" >&nbsp;</TD>
    <TD align=left width="12%">&nbsp; </TD>
    <TD align=left width="2%" >&nbsp;</TD>
    <TD align=left width="1%" >&nbsp;</TD>
    <TD align=left width="12%">&nbsp; </TD>
    <TD align=left width="2%" >&nbsp;</TD></TR>
  <TR vAlign=top>
    <TD align=left bgColor=#e6efff>&nbsp; &nbsp; &nbsp;(Increase) decrease in
      accounts receivable </TD>
    <TD align=left width="1%"  bgColor=#e6efff>&nbsp;</TD>
    <TD align=right width="12%" bgColor=#e6efff>32,682 </TD>
    <TD align=left width="2%"  bgColor=#e6efff>&nbsp;</TD>
    <TD align=left width="1%"  bgColor=#e6efff>&nbsp;</TD>
    <TD align=right width="12%" bgColor=#e6efff>(30,797</TD>
    <TD align=left width="2%"  bgColor=#e6efff>) </TD></TR>
  <TR vAlign=top>
    <TD align=left>&nbsp; &nbsp; &nbsp;(Increase) decrease in prepaid expenses
    </TD>
    <TD align=left width="1%" >&nbsp;</TD>
    <TD align=right width="12%">48,518 </TD>
    <TD align=left width="2%" >&nbsp;</TD>
    <TD align=left width="1%" >&nbsp;</TD>
    <TD align=right width="12%">(71,091</TD>
    <TD align=left width="2%" >) </TD></TR>
  <TR vAlign=top>
    <TD align=left bgColor=#e6efff>&nbsp; &nbsp; &nbsp;Increase (decrease) in
      accounts payable and accrued liabilities </TD>
    <TD align=left width="1%"  bgColor=#e6efff>&nbsp;</TD>
    <TD align=right width="12%" bgColor=#e6efff>395,313 </TD>
    <TD align=left width="2%"  bgColor=#e6efff>&nbsp;</TD>
    <TD align=left width="1%"  bgColor=#e6efff>&nbsp;</TD>
    <TD align=right width="12%" bgColor=#e6efff>427,326 </TD>
    <TD align=left width="2%"  bgColor=#e6efff>&nbsp;</TD></TR>
  <TR vAlign=top>
    <TD align=left>&nbsp; &nbsp; &nbsp;Increase (decrease) in accrued interest
    </TD>
    <TD style="BORDER-BOTTOM: #000000 1px solid" align=left width="1%"
    >&nbsp;</TD>
    <TD style="BORDER-BOTTOM: #000000 1px solid" align=right
      width="12%">183,521 </TD>
    <TD style="BORDER-BOTTOM: #000000 1px solid" align=left width="2%"
    >&nbsp;</TD>
    <TD style="BORDER-BOTTOM: #000000 1px solid" align=left width="1%"
    >&nbsp;</TD>
    <TD style="BORDER-BOTTOM: #000000 1px solid" align=right
      width="12%">583,803 </TD>
    <TD style="BORDER-BOTTOM: #000000 1px solid" align=left width="2%"
    >&nbsp;</TD></TR>
  <TR vAlign=top>
    <TD align=left bgColor=#e6efff>Net cash used by operating activities </TD>
    <TD style="BORDER-BOTTOM: #000000 1px solid" align=left width="1%"
     bgColor=#e6efff>&nbsp;</TD>
    <TD style="BORDER-BOTTOM: #000000 1px solid" align=right width="12%"
    bgColor=#e6efff>(427,851</TD>
    <TD style="BORDER-BOTTOM: #000000 1px solid" align=left width="2%"
     bgColor=#e6efff>) </TD>
    <TD style="BORDER-BOTTOM: #000000 1px solid" align=left width="1%"
     bgColor=#e6efff>&nbsp;</TD>
    <TD style="BORDER-BOTTOM: #000000 1px solid" align=right width="12%"
    bgColor=#e6efff>(527,784</TD>
    <TD style="BORDER-BOTTOM: #000000 1px solid" align=left width="2%"
     bgColor=#e6efff>) </TD></TR>
  <TR>
    <TD>&nbsp; </TD>
    <TD width="1%" >&nbsp;</TD>
    <TD width="12%">&nbsp; </TD>
    <TD width="2%" >&nbsp;</TD>
    <TD width="1%" >&nbsp;</TD>
    <TD width="12%">&nbsp; </TD>
    <TD width="2%" >&nbsp;</TD></TR>
  <TR vAlign=top>
    <TD align=left bgColor=#e6efff><B>Cash flows from investing activities</B>
    </TD>
    <TD align=left width="1%"  bgColor=#e6efff>&nbsp;</TD>
    <TD align=left width="12%" bgColor=#e6efff>&nbsp; </TD>
    <TD align=left width="2%"  bgColor=#e6efff>&nbsp;</TD>
    <TD align=left width="1%"  bgColor=#e6efff>&nbsp;</TD>
    <TD align=left width="12%" bgColor=#e6efff>&nbsp; </TD>
    <TD align=left width="2%"  bgColor=#e6efff>&nbsp;</TD></TR>
  <TR vAlign=top>
    <TD align=left>&nbsp; &nbsp;Proceeds from sale of mineral properties </TD>
    <TD align=left width="1%" >&nbsp;</TD>
    <TD align=right width="12%">69,500 </TD>
    <TD align=left width="2%" >&nbsp;</TD>
    <TD align=left width="1%" >&nbsp;</TD>
    <TD align=right width="12%">- </TD>
    <TD align=left width="2%" >&nbsp;</TD></TR>
  <TR vAlign=top>
    <TD align=left bgColor=#e6efff>&nbsp; &nbsp;Acquisition of mineral
      properties </TD>
    <TD style="BORDER-BOTTOM: #000000 1px solid" align=left width="1%"
     bgColor=#e6efff>&nbsp;</TD>
    <TD style="BORDER-BOTTOM: #000000 1px solid" align=right width="12%"
    bgColor=#e6efff>(355,242</TD>
    <TD style="BORDER-BOTTOM: #000000 1px solid" align=left width="2%"
     bgColor=#e6efff>) </TD>
    <TD style="BORDER-BOTTOM: #000000 1px solid" align=left width="1%"
     bgColor=#e6efff>&nbsp;</TD>
    <TD style="BORDER-BOTTOM: #000000 1px solid" align=right width="12%"
    bgColor=#e6efff>(1,374,730</TD>
    <TD style="BORDER-BOTTOM: #000000 1px solid" align=left width="2%"
     bgColor=#e6efff>) </TD></TR>
  <TR vAlign=top>
    <TD align=left>Net cash used by investing activities </TD>
    <TD style="BORDER-BOTTOM: #000000 1px solid" align=left width="1%"
    >&nbsp;</TD>
    <TD style="BORDER-BOTTOM: #000000 1px solid" align=right
      width="12%">(285,742</TD>
    <TD style="BORDER-BOTTOM: #000000 1px solid" align=left width="2%"
    >) </TD>
    <TD style="BORDER-BOTTOM: #000000 1px solid" align=left width="1%"
    >&nbsp;</TD>
    <TD style="BORDER-BOTTOM: #000000 1px solid" align=right
      width="12%">(1,374,730</TD>
    <TD style="BORDER-BOTTOM: #000000 1px solid" align=left width="2%"
    >) </TD></TR>
  <TR>
    <TD bgColor=#e6efff>&nbsp; </TD>
    <TD width="1%"  bgColor=#e6efff>&nbsp;</TD>
    <TD width="12%" bgColor=#e6efff>&nbsp; </TD>
    <TD width="2%"  bgColor=#e6efff>&nbsp;</TD>
    <TD width="1%"  bgColor=#e6efff>&nbsp;</TD>
    <TD width="12%" bgColor=#e6efff>&nbsp; </TD>
    <TD width="2%"  bgColor=#e6efff>&nbsp;</TD></TR>
  <TR vAlign=top>
    <TD align=left><B>Cash flows from financing activities</B> </TD>
    <TD align=left width="1%" >&nbsp;</TD>
    <TD align=left width="12%">&nbsp; </TD>
    <TD align=left width="2%" >&nbsp;</TD>
    <TD align=left width="1%" >&nbsp;</TD>
    <TD align=left width="12%">&nbsp; </TD>
    <TD align=left width="2%" >&nbsp;</TD></TR>
  <TR vAlign=top>
    <TD align=left bgColor=#e6efff>&nbsp; &nbsp;Proceeds from sale of common
      stock </TD>
    <TD align=left width="1%"  bgColor=#e6efff>&nbsp;</TD>
    <TD align=right width="12%" bgColor=#e6efff><B>-</B> </TD>
    <TD align=left width="2%"  bgColor=#e6efff>&nbsp;</TD>
    <TD align=left width="1%"  bgColor=#e6efff>&nbsp;</TD>
    <TD align=right width="12%" bgColor=#e6efff>50,000 </TD>
    <TD align=left width="2%"  bgColor=#e6efff>&nbsp;</TD></TR>
  <TR vAlign=top>
    <TD align=left>&nbsp; &nbsp; &nbsp;Short-term note from officer </TD>
    <TD align=left width="1%" >&nbsp;</TD>
    <TD align=right width="12%">39,200 </TD>
    <TD align=left width="2%" >&nbsp;</TD>
    <TD align=left width="1%" >&nbsp;</TD>
    <TD align=right width="12%">- </TD>
    <TD align=left width="2%" >&nbsp;</TD></TR>
  <TR vAlign=top>
    <TD align=left bgColor=#e6efff>&nbsp; &nbsp; &nbsp;Proceeds from note
      payable </TD>
    <TD align=left width="1%"  bgColor=#e6efff>&nbsp;</TD>
    <TD align=right width="12%" bgColor=#e6efff>490,000 </TD>
    <TD align=left width="2%"  bgColor=#e6efff>&nbsp;</TD>
    <TD align=left width="1%"  bgColor=#e6efff>&nbsp;</TD>
    <TD align=right width="12%" bgColor=#e6efff>150,980 </TD>
    <TD align=left width="2%"  bgColor=#e6efff>&nbsp;</TD></TR>
  <TR vAlign=top>
    <TD align=left>&nbsp; &nbsp; &nbsp;Proceeds from convertible debenture </TD>
    <TD style="BORDER-BOTTOM: #000000 1px solid" align=left width="1%"
    >&nbsp;</TD>
    <TD style="BORDER-BOTTOM: #000000 1px solid" align=right
      width="12%">198,000 </TD>
    <TD style="BORDER-BOTTOM: #000000 1px solid" align=left width="2%"
    >&nbsp;</TD>
    <TD style="BORDER-BOTTOM: #000000 1px solid" align=left width="1%"
    >&nbsp;</TD>
    <TD style="BORDER-BOTTOM: #000000 1px solid" align=right
      width="12%">1,700,918 </TD>
    <TD style="BORDER-BOTTOM: #000000 1px solid" align=left width="2%"
    >&nbsp;</TD></TR>
  <TR vAlign=top>
    <TD align=left bgColor=#e6efff>Net cash provided by financing activities
    </TD>
    <TD style="BORDER-BOTTOM: #000000 1px solid" align=left width="1%"
     bgColor=#e6efff>&nbsp;</TD>
    <TD style="BORDER-BOTTOM: #000000 1px solid" align=right width="12%"
    bgColor=#e6efff>727,200 </TD>
    <TD style="BORDER-BOTTOM: #000000 1px solid" align=left width="2%"
     bgColor=#e6efff>&nbsp;</TD>
    <TD style="BORDER-BOTTOM: #000000 1px solid" align=left width="1%"
     bgColor=#e6efff>&nbsp;</TD>
    <TD style="BORDER-BOTTOM: #000000 1px solid" align=right width="12%"
    bgColor=#e6efff>1,901,898 </TD>
    <TD style="BORDER-BOTTOM: #000000 1px solid" align=left width="2%"
     bgColor=#e6efff>&nbsp;</TD></TR>
  <TR>
    <TD>&nbsp; </TD>
    <TD width="1%" >&nbsp;</TD>
    <TD width="12%">&nbsp; </TD>
    <TD width="2%" >&nbsp;</TD>
    <TD width="1%" >&nbsp;</TD>
    <TD width="12%">&nbsp; </TD>
    <TD width="2%" >&nbsp;</TD></TR>
  <TR vAlign=top>
    <TD align=left bgColor=#e6efff>Net increase (decrease) in cash </TD>
    <TD align=left width="1%"  bgColor=#e6efff>&nbsp;</TD>
    <TD align=right width="12%" bgColor=#e6efff>13,607 </TD>
    <TD align=left width="2%"  bgColor=#e6efff>&nbsp;</TD>
    <TD align=left width="1%"  bgColor=#e6efff>&nbsp;</TD>
    <TD align=right width="12%" bgColor=#e6efff>(616</TD>
    <TD align=left width="2%"  bgColor=#e6efff>) </TD></TR>
  <TR vAlign=top>
    <TD align=left>Cash - beginning </TD>
    <TD style="BORDER-BOTTOM: #000000 1px solid" align=left width="1%"
    >&nbsp;</TD>
    <TD style="BORDER-BOTTOM: #000000 1px solid" align=right width="12%">2,609
    </TD>
    <TD style="BORDER-BOTTOM: #000000 1px solid" align=left width="2%"
    >&nbsp;</TD>
    <TD style="BORDER-BOTTOM: #000000 1px solid" align=left width="1%"
    >&nbsp;</TD>
    <TD style="BORDER-BOTTOM: #000000 1px solid" align=right width="12%">3,225
    </TD>
    <TD style="BORDER-BOTTOM: #000000 1px solid" align=left width="2%"
    >&nbsp;</TD></TR>
  <TR vAlign=top>
    <TD align=left bgColor=#e6efff>Cash - ending </TD>
    <TD style="BORDER-BOTTOM: #000000 3px double" align=left width="1%"
     bgColor=#e6efff>$</TD>
    <TD style="BORDER-BOTTOM: #000000 3px double" align=right width="12%"
    bgColor=#e6efff>&nbsp;16,216 </TD>
    <TD style="BORDER-BOTTOM: #000000 3px double" align=left width="2%"
     bgColor=#e6efff>&nbsp;</TD>
    <TD style="BORDER-BOTTOM: #000000 3px double" align=left width="1%"
     bgColor=#e6efff>$</TD>
    <TD style="BORDER-BOTTOM: #000000 3px double" align=right width="12%"
    bgColor=#e6efff>&nbsp;2,609 </TD>
    <TD style="BORDER-BOTTOM: #000000 3px double" align=left width="2%"
     bgColor=#e6efff>&nbsp;</TD></TR>
  <TR>
    <TD>&nbsp; </TD>
    <TD width="1%" >&nbsp;</TD>
    <TD width="12%">&nbsp; </TD>
    <TD width="2%" >&nbsp;</TD>
    <TD width="1%" >&nbsp;</TD>
    <TD width="12%">&nbsp; </TD>
    <TD width="2%" >&nbsp;</TD></TR>
  <TR vAlign=top>
    <TD align=left bgColor=#e6efff>Supplemental disclosures: </TD>
    <TD align=left width="1%"  bgColor=#e6efff>&nbsp;</TD>
    <TD align=left width="12%" bgColor=#e6efff>&nbsp; </TD>
    <TD align=left width="2%"  bgColor=#e6efff>&nbsp;</TD>
    <TD align=left width="1%"  bgColor=#e6efff>&nbsp;</TD>
    <TD align=left width="12%" bgColor=#e6efff>&nbsp; </TD>
    <TD align=left width="2%"  bgColor=#e6efff>&nbsp;</TD></TR>
  <TR vAlign=top>
    <TD align=left>&nbsp; &nbsp;Interest paid </TD>
    <TD style="BORDER-BOTTOM: #000000 3px double" align=left width="1%"
    >$</TD>
    <TD style="BORDER-BOTTOM: #000000 3px double" align=right
      width="12%">&nbsp;117,391 </TD>
    <TD style="BORDER-BOTTOM: #000000 3px double" align=left width="2%"
    >&nbsp;</TD>
    <TD style="BORDER-BOTTOM: #000000 3px double" align=left width="1%"
    >$</TD>
    <TD style="BORDER-BOTTOM: #000000 3px double" align=right
      width="12%">&nbsp;136,500 </TD>
    <TD style="BORDER-BOTTOM: #000000 3px double" align=left width="2%"
    >&nbsp;</TD></TR>
  <TR vAlign=top>
    <TD align=left bgColor=#e6efff>&nbsp; &nbsp;Income taxes paid </TD>
    <TD style="BORDER-BOTTOM: #000000 3px double" align=left width="1%"
     bgColor=#e6efff>$</TD>
    <TD style="BORDER-BOTTOM: #000000 3px double" align=right width="12%"
    bgColor=#e6efff>&nbsp;- </TD>
    <TD style="BORDER-BOTTOM: #000000 3px double" align=left width="2%"
     bgColor=#e6efff>&nbsp;</TD>
    <TD style="BORDER-BOTTOM: #000000 3px double" align=left width="1%"
     bgColor=#e6efff>$</TD>
    <TD style="BORDER-BOTTOM: #000000 3px double" align=right width="12%"
    bgColor=#e6efff>&nbsp;- </TD>
    <TD style="BORDER-BOTTOM: #000000 3px double" align=left width="2%"
     bgColor=#e6efff>&nbsp;</TD></TR>
  <TR>
    <TD>&nbsp; </TD>
    <TD width="1%" >&nbsp;</TD>
    <TD width="12%">&nbsp; </TD>
    <TD width="2%" >&nbsp;</TD>
    <TD width="1%" >&nbsp;</TD>
    <TD width="12%">&nbsp; </TD>
    <TD width="2%" >&nbsp;</TD></TR>
  <TR vAlign=top>
    <TD align=left bgColor=#e6efff>Non-cash transactions: </TD>
    <TD align=left width="1%"  bgColor=#e6efff>&nbsp;</TD>
    <TD align=left width="12%" bgColor=#e6efff>&nbsp; </TD>
    <TD align=left width="2%"  bgColor=#e6efff>&nbsp;</TD>
    <TD align=left width="1%"  bgColor=#e6efff>&nbsp;</TD>
    <TD align=left width="12%" bgColor=#e6efff>&nbsp; </TD>
    <TD align=left width="2%"  bgColor=#e6efff>&nbsp;</TD></TR>
  <TR vAlign=top>
    <TD align=left>&nbsp; &nbsp;Shares issued for compensation </TD>
    <TD style="BORDER-BOTTOM: #000000 3px double" align=left width="1%"
    >$</TD>
    <TD style="BORDER-BOTTOM: #000000 3px double" align=right
      width="12%">&nbsp;189,000 </TD>
    <TD style="BORDER-BOTTOM: #000000 3px double" align=left width="2%"
    >&nbsp;</TD>
    <TD style="BORDER-BOTTOM: #000000 3px double" align=left width="1%"
    >$</TD>
    <TD style="BORDER-BOTTOM: #000000 3px double" align=right
      width="12%">&nbsp;306,000 </TD>
    <TD style="BORDER-BOTTOM: #000000 3px double" align=left width="2%"
    >&nbsp;</TD></TR>
  <TR vAlign=top>
    <TD align=left bgColor=#e6efff>&nbsp; &nbsp;Shares issued for services </TD>
    <TD style="BORDER-BOTTOM: #000000 3px double" align=left width="1%"
     bgColor=#e6efff>$</TD>
    <TD style="BORDER-BOTTOM: #000000 3px double" align=right width="12%"
    bgColor=#e6efff>&nbsp;- </TD>
    <TD style="BORDER-BOTTOM: #000000 3px double" align=left width="2%"
     bgColor=#e6efff>&nbsp;</TD>
    <TD style="BORDER-BOTTOM: #000000 3px double" align=left width="1%"
     bgColor=#e6efff>$</TD>
    <TD style="BORDER-BOTTOM: #000000 3px double" align=right width="12%"
    bgColor=#e6efff>&nbsp;51,000 </TD>
    <TD style="BORDER-BOTTOM: #000000 3px double" align=left width="2%"
     bgColor=#e6efff>&nbsp;</TD></TR>
  <TR vAlign=top>
    <TD align=left>&nbsp; &nbsp;Accounts payable converted to stock </TD>
    <TD style="BORDER-BOTTOM: #000000 3px double" align=left width="1%"
    >$</TD>
    <TD style="BORDER-BOTTOM: #000000 3px double" align=right
      width="12%">&nbsp;239,469 </TD>
    <TD style="BORDER-BOTTOM: #000000 3px double" align=left width="2%"
    >&nbsp;</TD>
    <TD style="BORDER-BOTTOM: #000000 3px double" align=left width="1%"
    >$</TD>
    <TD style="BORDER-BOTTOM: #000000 3px double" align=right
      width="12%">&nbsp;- </TD>
    <TD style="BORDER-BOTTOM: #000000 3px double" align=left width="2%"
    >&nbsp;</TD></TR>
  <TR vAlign=top>
    <TD align=left bgColor=#e6efff>&nbsp; &nbsp;Note payable and accrued
      interest converted to stock </TD>
    <TD style="BORDER-BOTTOM: #000000 3px double" align=left width="1%"
     bgColor=#e6efff>$</TD>
    <TD style="BORDER-BOTTOM: #000000 3px double" align=right width="12%"
    bgColor=#e6efff>&nbsp;3,375,846 </TD>
    <TD style="BORDER-BOTTOM: #000000 3px double" align=left width="2%"
     bgColor=#e6efff>&nbsp;</TD>
    <TD style="BORDER-BOTTOM: #000000 3px double" align=left width="1%"
     bgColor=#e6efff>$</TD>
    <TD style="BORDER-BOTTOM: #000000 3px double" align=right width="12%"
    bgColor=#e6efff>&nbsp;1,090,902 </TD>
<TD style="BORDER-BOTTOM: #000000 3px double" align=left width="2%"
     bgColor=#e6efff>&nbsp;</TD></TR></TABLE>
<P align=justify>The accompanying notes are an integral part of these financial
statements</P>
<P align=center>F-5</P>
<HR style="PAGE-BREAK-AFTER: always" align=center width="100%" color=black
noShade SIZE=5>
<A name=page_f30></A>
<P align=center><B>American Petro-Hunter Inc. <BR>Notes to Financial Statements
<BR>December 31, 2012</B></P>
<TABLE
style="BORDER-COLOR: black; FONT-SIZE: 10pt; BORDER-COLLAPSE: collapse; "
cellSpacing=0 cellPadding=0 width="100%" border=0 >

  <TR>
    <TD vAlign=top width="5%"><B>1.</B> </TD>
    <TD>
      <P align=justify><B>Nature and Continuance of Operations</B></P></TD></TR>
  <TR>
    <TD width="5%">&nbsp;</TD>
    <TD>&nbsp;</TD></TR>
  <TR>
    <TD width="5%"></TD>
    <TD>
      <P align=justify>American Petro-Hunter Inc. (the &#147;Company&#148;) was
      incorporated in the State of Nevada on January 24, 1996 as Wolf
      Exploration Inc. On March 17, 1997, Wolf Exploration Inc. changed its name
      to Wolf Industries Inc.; on November 21, 2000, they changed its name to
      Travelport Systems Inc., and on August 17, 2001, changed its name to
      American Petro-Hunter Inc.</P></TD></TR>
  <TR>
    <TD width="5%">&nbsp;</TD>
    <TD>&nbsp;</TD></TR>
  <TR>
    <TD width="5%"></TD>
    <TD>
      <P align=justify>The Company is evaluating the acquisition of certain
      natural resource projects with the intent of developing such projects. The
      Company focus is currently in locating and assessing potential acquisition
      targets, including real property, oil and gas companies.</P></TD></TR>
  <TR>
    <TD width="5%">&nbsp;</TD>
    <TD>&nbsp;</TD></TR>
  <TR>
    <TD width="5%"></TD>
    <TD>
      <P align=justify><B>Going Concern</B></P></TD></TR>
  <TR>
    <TD width="5%">&nbsp;</TD>
    <TD>&nbsp;</TD></TR>
  <TR>
    <TD width="5%"></TD>
    <TD>
      <P align=justify>These financial statements have been prepared in
      accordance with accounting principles generally accepted in the United
      States of America (&#147;GAAP&#148;) applicable to a going concern, which
      contemplates the realization of assets and the satisfaction of liabilities
      and commitments in the normal course of business. The Company has limited
      assets and requires additional funds to maintain its operations.
      Management&#146;s plan in this regard is to raise equity financing as required.
      There can be no assurance that sufficient funding will be obtained. The
      foregoing matters raise substantial doubt about the Company&#146;s ability to
      continue as a going concern. The financial statements do not include any
      adjustments relating to the recoverability and classification of recorded
      assets, or the amounts of and classification of liabilities that might be
      necessary in the event the Company cannot continue in existence.</P></TD></TR>
  <TR>
    <TD width="5%">&nbsp;</TD>
    <TD>&nbsp;</TD></TR>
  <TR>
    <TD vAlign=top width="5%"><B>2.</B> </TD>
    <TD>
      <P align=justify><B>Significant Accounting Policies</B></P></TD></TR>
  <TR>
    <TD width="5%">&nbsp;</TD>
    <TD>&nbsp;</TD></TR>
  <TR>
    <TD width="5%"></TD>
    <TD>
      <P align=justify>The following is a summary of significant accounting
      policies used in the preparation of these financial statements.</P></TD></TR>
  <TR>
    <TD width="5%">&nbsp;</TD>
    <TD>&nbsp;</TD></TR>
  <TR>
    <TD width="5%"></TD>
    <TD>
      <P align=justify><B>Income taxes</B></P></TD></TR>
  <TR>
    <TD width="5%"></TD>
    <TD>
      <P align=justify>The Company accounts for income taxes under FASB
      Codification Topic 740-10-25 (&#147;ASC 740-10-5&#148;). Under ASC 740-10-25,
      deferred tax assets and liabilities are recognized for the future tax
      consequences attributable to differences between the financial statement
      carrying amounts of existing assets and liabilities and their respective
      tax bases. Deferred tax assets and liabilities are measured using enacted
      tax rates expected to apply to taxable income in the years in which those
      temporary differences are expected to be recovered or settled. Under ASC
      740-10-25, the effect on deferred tax assets and liabilities of a change
      in tax rates is recognized in income in the period that includes the
      enactment date. See footnote 8 for further details.</P></TD></TR>
  <TR>
    <TD width="5%">&nbsp;</TD>
    <TD>&nbsp;</TD></TR>
  <TR>
    <TD width="5%"></TD>
    <TD>
      <P align=justify><B>Revenue Recognition</B></P></TD></TR>
  <TR>
    <TD width="5%"></TD>
    <TD>
      <P align=justify>It is our policy that revenues will be recognized in
      accordance with ASC subtopic 605-10. Under ASC 605-10, product revenues
      are recognized when persuasive evidence of an arrangement exists, delivery
      has occurred, the sales price is fixed and determinable and collectability
      is reasonably assured.</P></TD></TR>
  <TR>
    <TD width="5%">&nbsp;</TD>
    <TD>&nbsp;</TD></TR>
  <TR>
    <TD width="5%"></TD>
    <TD>
      <P align=justify><B>Use of estimates</B></P></TD></TR>
  <TR>
    <TD width="5%">&nbsp;</TD>
    <TD>&nbsp;</TD></TR>
  <TR>
    <TD width="5%"></TD>
    <TD>
      <P align=justify>The preparation of financial statements, in conformity
      with accounting principles generally accepted in the United States,
      requires management to make estimates and assumptions that affect the
      reported amount of assets and liabilities and disclosure of contingent
      assets and liabilities at the date of the financial statements and the
      reported amounts of revenues and expenses during the reporting period.
      Actual results could differ from those estimates.</P></TD></TR>
  <TR>
    <TD width="5%">&nbsp;</TD>
    <TD>&nbsp;</TD></TR>
  <TR>
    <TD width="5%"></TD>
    <TD>
      <P align=justify><B>Cash Equivalents</B></P></TD></TR>
  <TR>
    <TD width="5%"></TD>
    <TD>
      <P align=justify>The Company maintains cash balances in interest and
      non-interest bearing accounts. For the purpose of these financial
      statements, all highly liquid cash and investments with a maturity of
      three months or less are considered to be cash equivalents.</P></TD></TR>
  <TR>
    <TD width="5%">&nbsp;</TD>
    <TD>&nbsp;</TD></TR>
  <TR>
    <TD width="5%"></TD>
    <TD>
      <P align=justify><B>Net loss per share</B></P></TD></TR>
  <TR>
    <TD width="5%"></TD>
    <TD>
      <P align=justify>In accordance with ASC subtopic 260-10, the basic loss
      per common share is computed by dividing net loss available to common
      stockholders by the weighted average number of common shares outstanding.
      Diluted loss per common share is computed similar to basic loss per common
      share except that the denominator is increased to include the number of
      additional common shares that would have been outstanding if the potential
      common shares had been issued and if the additional common shares were
      dilutive. For the years ended December 31, 2012 and 2011, the denominator
      in the diluted EPS computation is the same as the denominator for basic
      EPS due to the anti-dilutive effect of the stock warrants and convertible
      debt on the Company&#146;s net loss.</P></TD></TR>
  <TR>
    <TD width="5%">&nbsp;</TD>
    <TD>&nbsp;</TD></TR>
  <TR>
    <TD width="5%"></TD>
    <TD>
      <P align=justify><B>Financial instruments</B></P></TD></TR>
  <TR>
    <TD width="5%"></TD>
    <TD>
      <P align=justify>The Company&#146;s financial instruments consist of cash and
      cash equivalents, accounts receivable, accounts payable, and notes
      payable. Unless otherwise noted, it is management&#146;s opinion that the
      Company is not exposed to significant interest, or credit risks arising
      from these financial instruments. The fair values of these financial
      instruments approximate their carrying values because of their relatively
      short-term maturities. See Note 5 for further details.</P></TD></TR>
  <TR>
    <TD width="5%">&nbsp;</TD>
    <TD>&nbsp;</TD></TR>
  <TR>
    <TD width="5%"></TD>
    <TD>
      <P align=justify><B>Fair Value of Financial
  Instruments</B></P></TD></TR></TABLE><BR>
<P align=center>F-6</P>
<HR style="PAGE-BREAK-AFTER: always" align=center width="100%" color=black
noShade SIZE=5>
<A name=page_f31></A><BR>
<TABLE
style="BORDER-COLOR: black; FONT-SIZE: 10pt; BORDER-COLLAPSE: collapse; "
cellSpacing=0 cellPadding=0 width="100%" border=0 >

  <TR>
    <TD width="5%"></TD>
    <TD>
      <P align=justify>The Company has financial instruments whereby the fair
      value of the financial instruments could be different from that recorded
      on a historical basis in the accompanying balance sheets. The Company's
      financial instruments consist of cash, accounts receivable, accounts
      payable, and notes payable. The carrying amounts of the Company's
      financial instruments approximate their fair values as of December 31,
      2012 and 2011, due to their short-term nature. See Note 5 for further
      details.</P></TD></TR>
  <TR>
    <TD width="5%">&nbsp;</TD>
    <TD>&nbsp;</TD></TR>
  <TR>
    <TD width="5%"></TD>
    <TD>
      <P align=justify><B>Reclassifications</B></P></TD></TR>
  <TR>
    <TD width="5%"></TD>
    <TD>
      <P align=justify>Certain reclassifications have been made to the prior
      years&#146; financial statements to conform to the current year presentation.
      These reclassifications had no effect on previously reported results of
      operations or retained earnings.</P></TD></TR>
  <TR>
    <TD width="5%">&nbsp;</TD>
    <TD>&nbsp;</TD></TR>
  <TR>
    <TD width="5%"></TD>
    <TD>
      <P align=justify><B>Oil and Gas Properties</B></P></TD></TR>
  <TR>
    <TD width="5%"></TD>
    <TD>
      <P align=justify>We follow the successful efforts method of accounting for
      oil and gas exploration and production activities. All costs for
      development wells, related plant and equipment, proved mineral interests
      in oil and gas properties are capitalized. Costs of exploratory wells are
      capitalized pending determination of whether the wells found proved
      reserves. Cost of wells that are assigned proved reserves remain
      capitalized. All other exploratory wells and costs are expensed.</P></TD></TR>
  <TR>
    <TD width="5%">&nbsp;</TD>
    <TD>&nbsp;</TD></TR>
  <TR>
    <TD width="5%"></TD>
    <TD>
      <P align=justify>Depreciation, depletion and amortization of all
      capitalized costs of proved oil and gas producing properties are expensed
      using the straight-line method over the estimated life of each well.
      Period valuation provisions for impairment of capitalized costs of
      unproved mineral interests are expensed. The costs of unproved properties
      are excluded from amortization until the properties are proved.</P></TD></TR>
  <TR>
    <TD width="5%">&nbsp;</TD>
    <TD>&nbsp;</TD></TR>
  <TR>
    <TD width="5%"></TD>
    <TD>
      <P align=justify>Unproved properties are assessed periodically
      individually when drilling and flow testing results indicate whether there
      is an economic resource or not. All capitalized costs associated with
      properties that have been determined to be a &#147;dry-hole&#148; or &#147;uneconomic&#148;
      are impaired when that determination is made. Proved properties are
      assessed periodically for impairment on an individual basis. Events that
      can trigger the test for possible impairment include significant decreases
      in the market value of a property, significant change in the extent or
      manner of use or change in property and the expectation that a property
      will be sold or otherwise disposed of significantly sooner than the
      previously estimated useful life. The assessment is done by comparing each
      property&#146;s carrying value to their associated estimated undiscounted
      future net cash flows. Impaired properties are written down to their
      estimated fair values. The resulting impairment would be expensed to
      operations as impairment expense in the period in which it was determined
      that the impairment was indicated and calculated.</P></TD></TR>
  <TR>
    <TD width="5%">&nbsp;</TD>
    <TD>&nbsp;</TD></TR>
  <TR>
    <TD vAlign=top width="5%"><B>3.</B> </TD>
    <TD>
      <P align=justify><B>Recent Accounting Pronouncements</B></P></TD></TR>
  <TR>
    <TD width="5%"></TD>
    <TD>
      <P align=justify>Recent accounting pronouncements issued by the FASB
      (including its Emerging Issues Task Force), the AICPA, and the SEC did not
      or are not believed by management to have a material impact on the
      Company's present or future financial statements</P></TD></TR>
  <TR>
    <TD width="5%">&nbsp;</TD>
    <TD>&nbsp;</TD></TR>
  <TR>
    <TD vAlign=top width="5%"><B>4.</B> </TD>
    <TD>
      <P align=justify><B>Investments in Mineral Properties</B></P></TD></TR>
  <TR>
    <TD width="5%"></TD>
    <TD>
      <P align=justify>During the year ended December 31, 2012, the Company
      invested a total of $355,242 in four mineral properties and exchanged a
      Poston Prospect well with a book value of $41,000 plus cash in the amount
      of $6,500 for partial payment on a well located in the Oklahoma prospect.
      Management reviewed the carrying amount of the Company&#146;s investments in
      its oil and gas properties as of the balance sheet date and recognized an
      impairment expense in the amount of $565,737. As of December 31, 2012 and
      2011, the estimated fair value of mineral properties totaled $1,582,324
      and $1,965,577, net of accumulated amortization of $132,499 and $135,987,
      respectively. As of December 31, 2011, the Company has total capitalized
      costs of mineral properties (gross) of $2,101,564; $1,365,714 in proved
      properties and $735,850 in unproved properties. As of December 31, 2012,
      the Company has total capitalized costs of mineral properties (gross) of
      $1,714,822; $1,103,205 in proved properties and $611,617 in unproved
      properties. Capitalized costs of proved properties are amortized using the
      straight-line method over the estimated useful life of each well. Unproved
      properties are excluded from amortization. Amortization expense for the
      years ended December 31, 2012 and 2011 was $105,880 and $119,415,
      respectively. A summary of investments follows:</P></TD></TR>
  <TR>
    <TD width="5%">&nbsp;</TD>
    <TD>&nbsp;</TD></TR>
  <TR>
    <TD width="5%"></TD>
    <TD>
      <P align=justify><B>S&amp;W Oil &amp; Gas, LLC - Poston
  Prospect</B></P></TD></TR>
  <TR>
    <TD width="5%"></TD>
    <TD>
      <P align=justify>On May 4, 2009, the Company entered into an Agreement
      with S&amp;W Oil &amp; Gas, LLC (&#147;S&amp;W&#148;) to participate in the drilling
      for oil in the Poston Prospect #1 Lutters in Southwest Trego County,
      Kansas (the &#147;Poston Prospect&#148;). Pursuant to the agreement, the Company
      paid $64,500 in exchange for a 25% working interest in the 81.5% net
      revenue interest in the Poston Prospect. Subsequent to acquiring the
      working interest, the Company paid $138,615 in capitalized development
      costs necessary for completion of the initial well and the drilling and
      completion of a second well in the Poston Prospect. In 2011, the Company
      recognized an impairment of the investment in the amount of $93,879.
      Amortization attributable to the Poston Prospect totaled $3,215 and
      $22,468 for the years ended December 31, 2012 and 2011, respectively.
      During the year ended December 31, 2012, the Company sold its interest in
      the Poston Prospect for cash in the amount of $69,500, resulting in a gain
      of $2,621. This well contributed approximately 5% of the Company&#146;s 2012
      revenue.</P></TD></TR>
  <TR>
    <TD width="5%">&nbsp;</TD>
    <TD>&nbsp;</TD></TR>
  <TR>
    <TD width="5%"></TD>
    <TD>
      <P align=justify><B>Oklahoma prospects</B></P></TD></TR>
  <TR>
    <TD width="5%"></TD>
    <TD>
      <P align=justify>During 2010 and 2011, the Company acquired various
      working interest percentages ranging from 5% to 50%, from Bay Petroleum
      for mineral properties located in Oklahoma in exchange for cash totaling
      $1,992,330. During the year ended December 31, 2011, one well was
      determined to be a &#147;dry hole&#148; and its full $80,000 carrying value was
      impaired. During the year ended December 31, 2012, the Company acquired
      additional working interests in the Oklahoma prospects for cash in the
      amount of $355,242 and property valued at $41,000. As of December 31, 2012
      and 2011, amortization expense was $102,665 and
$96,847, respectively, relating to these wells. During the year
      ended December 31, 2012, two of the wells were determined to be uneconomic
      and $565,737 of impairment was taken to reduce the properties to their
      fair value. These wells contributed approximately 95% of the Company&#146;s
2012 revenue.</P></TD></TR></TABLE><BR>
<P align=center>F-7</P>
<HR style="PAGE-BREAK-AFTER: always" align=center width="100%" color=black
noShade SIZE=5>
<A name=page_f32></A><BR>
<TABLE
style="BORDER-COLOR: black; FONT-SIZE: 10pt; BORDER-COLLAPSE: collapse; "
cellSpacing=0 cellPadding=0 width="100%" border=0 >

  <TR>
    <TD vAlign=top width="5%"><B>5.</B> </TD>
    <TD>
      <P align=justify><B>Fair Value Measurements</B></P></TD></TR>
  <TR>
    <TD width="5%">&nbsp;</TD>
    <TD>&nbsp;</TD></TR>
  <TR>
    <TD width="5%"></TD>
    <TD>
      <P align=justify>The Company adopted ASC Topic 820-10 at the beginning of
      2009 to measure the fair value of certain of its financial assets required
      to be measured on a recurring basis. The adoption of ASC Topic 820-10 did
      not impact the Company&#146;s financial condition or results of operations. ASC
      Topic 820-10 establishes a fair value hierarchy that prioritizes the
      inputs to valuation techniques used to measure fair value. The hierarchy
      gives the highest priority to unadjusted quoted prices in active markets
      for identical assets or liabilities (Level 1 measurements) and the lowest
      priority to unobservable inputs (Level 3 measurements). ASC Topic 820-10
      defines fair value as the price that would be received to sell an asset or
      paid to transfer a liability in an orderly transaction between market
      participants on the measurement date. A fair value measurement assumes
      that the transaction to sell the asset or transfer the liability occurs in
      the principal market for the asset or liability. The three levels of the
      fair value hierarchy under ASC Topic 820-10 are described
  below:</P></TD></TR></TABLE>
<P style="MARGIN-LEFT: 10%" align=justify>Level 1 &#150; Valuations based on quoted
prices in active markets for identical assets or liabilities that an entity has
the ability to access.</P>
<P style="MARGIN-LEFT: 10%" align=justify>Level 2 &#150; Valuations based on quoted
prices for similar assets and liabilities in active markets, quoted prices for
identical assets and liabilities in markets that are not active, or other inputs
that are observable or can be corroborated by observable data for substantially
the full term of the assets or liabilities.</P>
<P style="MARGIN-LEFT: 10%" align=justify>Level 3 &#150; Valuations based on inputs
that are supportable by little or no market activity and that are significant to
the fair value of the asset or liability.</P>
<P style="MARGIN-LEFT: 5%" align=justify>The following table presents a
reconciliation of all assets and liabilities measured at fair value on a
recurring basis as of:</P>
<TABLE
style="BORDER-COLOR: black; FONT-SIZE: 10pt; BORDER-COLLAPSE: collapse; "
cellSpacing=0 cellPadding=0 width="100%" border=0>

  <TR vAlign=top>
    <TD width="10%" >&nbsp;</TD>
    <TD align=left>&nbsp; </TD>
    <TD style="BORDER-BOTTOM: #000000 1px solid" align=left
    width="1%">&nbsp;</TD>
    <TD
      width="10%" align=center nowrap style="BORDER-BOTTOM: #000000 1px solid">Level 1 </TD>
    <TD
    width="2%" align=center nowrap style="BORDER-BOTTOM: #000000 1px solid">&nbsp;</TD>
    <TD
    width="1%" align=center nowrap style="BORDER-BOTTOM: #000000 1px solid">&nbsp;</TD>
    <TD
      width="10%" align=center nowrap style="BORDER-BOTTOM: #000000 1px solid">Level 2 </TD>
    <TD
    width="2%" align=center nowrap style="BORDER-BOTTOM: #000000 1px solid">&nbsp;</TD>
    <TD
    width="1%" align=center nowrap style="BORDER-BOTTOM: #000000 1px solid">&nbsp;</TD>
    <TD
      width="10%" align=center nowrap style="BORDER-BOTTOM: #000000 1px solid">Level 3 </TD>
    <TD
    width="2%" align=center nowrap style="BORDER-BOTTOM: #000000 1px solid">&nbsp;</TD>
    <TD
    width="1%" align=center nowrap style="BORDER-BOTTOM: #000000 1px solid">&nbsp;</TD>
    <TD
      width="10%" align=center nowrap style="BORDER-BOTTOM: #000000 1px solid">Total </TD>
  <TD style="BORDER-BOTTOM: #000000 1px solid" align=left
    width="2%">&nbsp;</TD></TR>
  <TR vAlign=top>
    <TD width="10%">&nbsp;</TD>
    <TD align=left bgColor=#e6efff>December 31, 2012: </TD>
    <TD align=left width="1%" bgColor=#e6efff>&nbsp;</TD>
    <TD align=left width="10%" bgColor=#e6efff>&nbsp; </TD>
    <TD align=left width="2%" bgColor=#e6efff>&nbsp;</TD>
    <TD align=left width="1%" bgColor=#e6efff>&nbsp;</TD>
    <TD align=left width="10%" bgColor=#e6efff>&nbsp; </TD>
    <TD align=left width="2%" bgColor=#e6efff>&nbsp;</TD>
    <TD align=left width="1%" bgColor=#e6efff>&nbsp;</TD>
    <TD align=left width="10%" bgColor=#e6efff>&nbsp; </TD>
    <TD align=left width="2%" bgColor=#e6efff>&nbsp;</TD>
    <TD align=left width="1%" bgColor=#e6efff>&nbsp;</TD>
    <TD align=left width="10%" bgColor=#e6efff>&nbsp; </TD>
    <TD align=left width="2%" bgColor=#e6efff>&nbsp;</TD></TR>
  <TR vAlign=top>
    <TD width="10%">&nbsp;</TD>
    <TD align=left>&nbsp; &nbsp;Investments in mineral properties </TD>
    <TD align=left width="1%">$</TD>
    <TD align=right width="10%">&nbsp;- $ </TD>
    <TD align=left width="2%">&nbsp;</TD>
    <TD align=left width="1%">&nbsp;</TD>
    <TD align=right width="10%">- </TD>
    <TD align=left width="2%">&nbsp;</TD>
    <TD align=left width="1%">$</TD>
    <TD align=right width="10%">1,582,324 </TD>
    <TD align=left width="2%">&nbsp;</TD>
    <TD align=left width="1%">$</TD>
    <TD align=right width="10%">&nbsp;1,582,324 </TD>
    <TD align=left width="2%">&nbsp;</TD></TR>
  <TR vAlign=top>
    <TD width="10%">&nbsp;</TD>
    <TD align=left bgColor=#e6efff>&nbsp; &nbsp;Accounts receivable </TD>
    <TD align=left width="1%" bgColor=#e6efff>&nbsp;</TD>
    <TD align=right width="10%" bgColor=#e6efff>- </TD>
    <TD align=left width="2%" bgColor=#e6efff>&nbsp;</TD>
    <TD align=left width="1%" bgColor=#e6efff>&nbsp;</TD>
    <TD align=right width="10%" bgColor=#e6efff>13,735 </TD>
    <TD align=left width="2%" bgColor=#e6efff>&nbsp;</TD>
    <TD align=left width="1%" bgColor=#e6efff>&nbsp;</TD>
    <TD align=right width="10%" bgColor=#e6efff>- </TD>
    <TD align=left width="2%" bgColor=#e6efff>&nbsp;</TD>
    <TD align=left width="1%" bgColor=#e6efff>&nbsp;</TD>
    <TD align=right width="10%" bgColor=#e6efff>13,735 </TD>
    <TD align=left width="2%" bgColor=#e6efff>&nbsp;</TD></TR>
  <TR vAlign=top>
    <TD width="10%">&nbsp;</TD>
    <TD align=left>&nbsp; &nbsp;Accounts payable and other liab. </TD>
    <TD align=left width="1%">&nbsp;</TD>
    <TD align=right width="10%">- </TD>
    <TD align=left width="2%">&nbsp;</TD>
    <TD align=left width="1%">&nbsp;</TD>
    <TD align=right width="10%">(608,702</TD>
    <TD align=left width="2%">) </TD>
    <TD align=left width="1%">&nbsp;</TD>
    <TD align=right width="10%">- </TD>
    <TD align=left width="2%">&nbsp;</TD>
    <TD align=left width="1%">&nbsp;</TD>
    <TD align=right width="10%">(608,702</TD>
    <TD align=left width="2%">) </TD></TR>
  <TR vAlign=top>
    <TD width="10%">&nbsp;</TD>
    <TD align=left bgColor=#e6efff>&nbsp; &nbsp;Derivative liability </TD>
    <TD align=left width="1%" bgColor=#e6efff>&nbsp;</TD>
    <TD align=right width="10%" bgColor=#e6efff>- </TD>
    <TD align=left width="2%" bgColor=#e6efff>&nbsp;</TD>
    <TD align=left width="1%" bgColor=#e6efff>&nbsp;</TD>
    <TD align=right width="10%" bgColor=#e6efff>(559</TD>
    <TD align=left width="2%" bgColor=#e6efff>) </TD>
    <TD align=left width="1%" bgColor=#e6efff>&nbsp;</TD>
    <TD align=right width="10%" bgColor=#e6efff>- </TD>
    <TD align=left width="2%" bgColor=#e6efff>&nbsp;</TD>
    <TD align=left width="1%" bgColor=#e6efff>&nbsp;</TD>
    <TD align=right width="10%" bgColor=#e6efff>(559</TD>
    <TD align=left width="2%" bgColor=#e6efff>) </TD></TR>
  <TR vAlign=top>
    <TD width="10%">&nbsp;</TD>
    <TD align=left>&nbsp; &nbsp;Notes and convertible notes payable </TD>
    <TD align=left width="1%">&nbsp;</TD>
    <TD align=right width="10%">- </TD>
    <TD align=left width="2%">&nbsp;</TD>
    <TD align=left width="1%">&nbsp;</TD>
    <TD align=right width="10%">(1,032,035</TD>
    <TD align=left width="2%">) </TD>
    <TD align=left width="1%">&nbsp;</TD>
    <TD align=right width="10%">- </TD>
    <TD align=left width="2%">&nbsp;</TD>
    <TD align=left width="1%">&nbsp;</TD>
    <TD align=right width="10%">(1,032,035</TD>
    <TD align=left width="2%">) </TD></TR>
  <TR>
    <TD width="10%">&nbsp;</TD>
    <TD bgColor=#e6efff>&nbsp; </TD>
    <TD width="1%" bgColor=#e6efff>&nbsp;</TD>
    <TD width="10%" bgColor=#e6efff>&nbsp; </TD>
    <TD width="2%" bgColor=#e6efff>&nbsp;</TD>
    <TD width="1%" bgColor=#e6efff>&nbsp;</TD>
    <TD width="10%" bgColor=#e6efff>&nbsp; </TD>
    <TD width="2%" bgColor=#e6efff>&nbsp;</TD>
    <TD width="1%" bgColor=#e6efff>&nbsp;</TD>
    <TD width="10%" bgColor=#e6efff>&nbsp; </TD>
    <TD width="2%" bgColor=#e6efff>&nbsp;</TD>
    <TD width="1%" bgColor=#e6efff>&nbsp;</TD>
    <TD width="10%" bgColor=#e6efff>&nbsp; </TD>
    <TD width="2%" bgColor=#e6efff>&nbsp;</TD></TR>
  <TR vAlign=top>
    <TD width="10%">&nbsp;</TD>
    <TD align=left>December 31, 2011: </TD>
    <TD align=left width="1%">&nbsp;</TD>
    <TD align=left width="10%">&nbsp; </TD>
    <TD align=left width="2%">&nbsp;</TD>
    <TD align=left width="1%">&nbsp;</TD>
    <TD align=left width="10%">&nbsp; </TD>
    <TD align=left width="2%">&nbsp;</TD>
    <TD align=left width="1%">&nbsp;</TD>
    <TD align=left width="10%">&nbsp; </TD>
    <TD align=left width="2%">&nbsp;</TD>
    <TD align=left width="1%">&nbsp;</TD>
    <TD align=left width="10%">&nbsp; </TD>
    <TD align=left width="2%">&nbsp;</TD></TR>
  <TR vAlign=top>
    <TD width="10%">&nbsp;</TD>
    <TD align=left bgColor=#e6efff>&nbsp; &nbsp;Investments in mineral
      properties </TD>
    <TD align=left width="1%" bgColor=#e6efff>$</TD>
    <TD align=right width="10%" bgColor=#e6efff>&nbsp;- $ </TD>
    <TD align=left width="2%" bgColor=#e6efff>&nbsp;</TD>
    <TD align=left width="1%" bgColor=#e6efff>&nbsp;</TD>
    <TD align=right width="10%" bgColor=#e6efff>- </TD>
    <TD align=left width="2%" bgColor=#e6efff>&nbsp;</TD>
    <TD align=left width="1%" bgColor=#e6efff>$</TD>
    <TD align=right width="10%" bgColor=#e6efff>&nbsp;1,965,577 </TD>
    <TD align=left width="2%" bgColor=#e6efff>&nbsp;</TD>
    <TD align=left width="1%" bgColor=#e6efff>$</TD>
    <TD align=right width="10%" bgColor=#e6efff>&nbsp;1,965,577 </TD>
    <TD align=left width="2%" bgColor=#e6efff>&nbsp;</TD></TR>
  <TR vAlign=top>
    <TD width="10%">&nbsp;</TD>
    <TD align=left>&nbsp; &nbsp;Accounts receivable </TD>
    <TD align=left width="1%">&nbsp;</TD>
    <TD align=right width="10%">- </TD>
    <TD align=left width="2%">&nbsp;</TD>
    <TD align=left width="1%">&nbsp;</TD>
    <TD align=right width="10%">46,417 </TD>
    <TD align=left width="2%">&nbsp;</TD>
    <TD align=left width="1%">&nbsp;</TD>
    <TD align=right width="10%">- </TD>
    <TD align=left width="2%">&nbsp;</TD>
    <TD align=left width="1%">&nbsp;</TD>
    <TD align=right width="10%">46,417 </TD>
    <TD align=left width="2%">&nbsp;</TD></TR>
  <TR vAlign=top>
    <TD width="10%">&nbsp;</TD>
    <TD align=left bgColor=#e6efff>&nbsp; &nbsp;Accounts payable and other
      liab. </TD>
    <TD align=left width="1%" bgColor=#e6efff>&nbsp;</TD>
    <TD align=right width="10%" bgColor=#e6efff>- </TD>
    <TD align=left width="2%" bgColor=#e6efff>&nbsp;</TD>
    <TD align=left width="1%" bgColor=#e6efff>&nbsp;</TD>
    <TD align=right width="10%" bgColor=#e6efff>(1,230,214</TD>
    <TD align=left width="2%" bgColor=#e6efff>) </TD>
    <TD align=left width="1%" bgColor=#e6efff>&nbsp;</TD>
    <TD align=right width="10%" bgColor=#e6efff>- </TD>
    <TD align=left width="2%" bgColor=#e6efff>&nbsp;</TD>
    <TD align=left width="1%" bgColor=#e6efff>&nbsp;</TD>
    <TD align=right width="10%" bgColor=#e6efff>(1,230,214</TD>
    <TD align=left width="2%" bgColor=#e6efff>) </TD></TR>
  <TR vAlign=top>
    <TD width="10%">&nbsp;</TD>
    <TD align=left>&nbsp; &nbsp;Notes and convertible notes payable </TD>
    <TD align=left width="1%">&nbsp;</TD>
    <TD align=right width="10%">- </TD>
    <TD align=left width="2%">&nbsp;</TD>
    <TD align=left width="1%">&nbsp;</TD>
    <TD align=right width="10%">(2,999,995</TD>
    <TD align=left width="2%">) </TD>
    <TD align=left width="1%">&nbsp;</TD>
    <TD align=right width="10%">- </TD>
    <TD align=left width="2%">&nbsp;</TD>
    <TD align=left width="1%">&nbsp;</TD>
    <TD align=right width="10%">(2,999,995</TD>
    <TD align=left width="2%">) </TD></TR></TABLE><BR>
<TABLE
style="BORDER-COLOR: black; FONT-SIZE: 10pt; BORDER-COLLAPSE: collapse; "
cellSpacing=0 cellPadding=0 width="100%" border=0 >

  <TR>
    <TD vAlign=top width="5%"><B>6.</B> </TD>
    <TD>
      <P align=justify><B>Debt and Debt Guarantee</B></P></TD></TR>
  <TR>
    <TD width="5%">&nbsp;</TD>
    <TD>&nbsp;</TD></TR>
  <TR>
    <TD width="5%"></TD>
    <TD>
      <P align=justify><B>Advances Payable &#150; Related Party</B></P></TD></TR>
  <TR>
    <TD width="5%"></TD>
    <TD>
      <P align=justify>During the year ended December 31, 2012, the Company
      issued a promissory note in the amount of $39,200 for cash advances
      received from an officer of the Company. The note is non-interest bearing,
      unsecured and due on demand. As of December 31, 2012, no payments have
      been made to the officer.</P></TD></TR>
  <TR>
    <TD width="5%">&nbsp;</TD>
    <TD>&nbsp;</TD></TR>
  <TR>
    <TD width="5%"></TD>
    <TD>
      <P align=justify><B>Notes Payable</B></P></TD></TR>
  <TR>
    <TD width="5%"></TD>
    <TD>
      <P align=justify>On October 18, 2006, the Company issued a promissory note
      in the amount of $25,000. The note bears interest at a rate of 12% per
      annum, is unsecured and matured on May 18, 2007. On March 26, 2012, the
      holder of the note elected to convert the entire principal balance
      together with accrued interest of $21,819 into 187,277 shares of the
      Company&#146;s common stock at a conversion rate of $0.25 per share.</P></TD></TR>
  <TR>
    <TD width="5%">&nbsp;</TD>
    <TD>&nbsp;</TD></TR>
  <TR>
    <TD width="5%"></TD>
    <TD>
      <P align=justify>In August 2011, the Company issued a promissory note in
      the amount of $71,000. The note bears interest at a rate of 24% per annum,
      is unsecured and due on demand. On April 30, 2012, the holder of the note
      elected to convert the entire principal balance together with accrued
      interest of $12,140 into 332,561 shares of the Company&#146;s common stock at a
      conversion rate of $0.25 per share.</P></TD></TR>
  <TR>
    <TD width="5%">&nbsp;</TD>
    <TD>&nbsp;</TD></TR>
  <TR>
    <TD width="5%"></TD>
    <TD>
      <P align=justify>In December, 2011, the Company issued a promissory note
      in the amount of $79,980 to Centennial Petroleum Partners LLC (&#147;CPP&#148;). The
      note bears interest at a rate of 6% per annum, is unsecured and due on
      demand. On April 30, 2012, the holder of the note elected to convert the
      entire principal balance together with accrued interest of $2,688 into
      330,671 shares of the Company&#146;s common stock at a conversion rate of
$0.25 per share.</P></TD></TR></TABLE><BR>
<P align=center>F-8</P>
<HR style="PAGE-BREAK-AFTER: always" align=center width="100%" color=black
noShade SIZE=5>
<A name=page_f33></A>
<P style="MARGIN-LEFT: 5%" align=justify>In 2011, CPP was assigned the 6%
royalty interest originally granted to Maxum Overseas Fund. The royalty interest
was valued at $113,164 utilizing the present value of estimated future payments
due over the remaining life of the wells. The liability was recorded with
corresponding prepaid financing costs to be amortized over the remaining term of
the debt. For the years ended December 31, 2012 and 2011, $42,436 and $35,364,
respectively, was amortized into interest expense in relation to this prepaid.
During the year ended December 31, 2012, in connection with the royalty
termination agreement discussed below, the Company has recorded a gain of
$77,800 on the forgiveness of future royalty payments of $108,746 net of the
unamortized financing costs of $30,946.</P>
<P style="MARGIN-LEFT: 5%" align=justify>On July 3, 2012 in connection with the
Purchase Agreement between the Company and ASYM Energy Opportunities, LLC, CPP
agreed to enter into a royalty termination agreement, resulting in the
elimination of their 6% royalty interest in exchange for anti-dilution
protection with respect to the shares issued in the conversion of their note
payable at a conversion rate of $0.25. The anti-dilution protection provides
that in the event the Company issues warrants to a third party with an exercise
price less than the conversion rate of $0.25, the Company will issue additional
shares for the previous conversions equal to the difference between the number
of shares calculated utilizing the variable ASYM warrant exercise price less the
number of shares previously issued subject to a ceiling of 4.99% of the total
outstanding shares of the Company. On July 3, 2012, the Company estimated the
potential future number of anti-dilution share issuances required pursuant to
the agreements to be 2,385,311 and recorded a derivative liability and
corresponding comprehensive income (loss) in the amount of $333,943 representing
the fair value of the potential anti-dilution shares on that date. As of
December 31, 2012, the Company has authorized the issuance of 3,003,104 shares
as a result of the anti-dilution provision and recorded a financing expense in
the amount of $406,615, the fair value of the shares on the date of grant. As of
December 31, 2012, CPP there were an additional 4,633 additional anti-dilution
shares potentially issuable to meet the beneficial ownership ceiling as a
result; the Company recorded a decrease in derivative liability of $333,664 and
a corresponding change in comprehensive gain (loss).</P>
<P style="MARGIN-LEFT: 5%" align=justify><B>Convertible Debentures -
2009<BR></B>In August and September of 2009, the issued two Secured Convertible
Promissory Notes in the amount of $500,000 each to an investor for total
proceeds of $1,000,000. The notes bear interest at a rate of 18% per annum, are
secured by the assets of the Company, and matured on August 13 and September 15,
2010, respectively. In accordance with the agreement, the Company is required to
make monthly interest payments until the principal balances are paid in full.
Additionally, the Company issued warrants to purchase up to 2,857,142 shares of
the Company&#146;s common stock at an exercise price of $0.50. The warrants expired
in 2011 and were unexercised. In March 2010, the holder elected to convert
$350,000 of the notes into 1,000,000 shares of the Company&#146;s common stock at a
conversion rate of $0.35 per share. In December 2010 and August 2011, the
debentures were subsequently amended whereby extending the original maturity
date to August 13 and September 15, 2012 and reducing the conversion rate from
the lower of $0.35 or a 25% discount to the five day average trading price to
the lower of $0.25 or a 25% discount to the five day average. </P>
<P style="MARGIN-LEFT: 5%" align=justify>On July 3, 2012, in connection with the
Purchase Agreement between the Company and ASYM Energy Opportunities, LLC, the
Company entered into a third amendment whereby the holder agreed to terminate
his security interest in the assets of the Company, reduce the interest rate
from 18% to 10% per annum upon receipt of the initial financing tranche of
$1,000,000 and to revise the repayment terms, whereby the entire unpaid
principle together with accrued interest will be payable in two equal
installments upon successful financing obtained by the Company, but in no event
later than December 31, 2014.</P>
<P style="MARGIN-LEFT: 5%" align=justify>The principal balance of the notes
totaled $633,306 at each of the years ended December 31, 2012 and 2011.</P>
<P style="MARGIN-LEFT: 5%" align=justify><B>Convertible Debentures -
2010<BR></B>In 2010, the company entered into a Convertible Line of Credit
Agreement with Maxum Overseas Fund (&#147;Maxum&#148;) in the amount of $1,500,000 and
received an initial advance in the amount of $1,462,774. The line of credit
bears interest at a rate of 24% per annum, is convertible at $0.90, and was
secured by certain assets of the Company and due in full on May 17, 2011. In
November of 2010, the Company amended the line of credit agreement to reduce the
conversion price to $0.25 per share. In May and July of 2011, the Company
entered into a third and fourth amendment to the line of credit whereby
increasing the line of credit to $2,000,000 in exchange for a 3% royalty
interest in production revenue generated by the Company. The Company was
advances additional proceeds of $1,700,918. In August 2011, the agreement was
further amended to extend the maturity date to November 17, 2012 and increase
the line to $3,000,000 in exchange for an additional 3% royalty interest. The
royalty interest was subsequently assigned by Maxum to Centennial Petroleum
Partners, LLC (&#147;CPP&#148;). See CPP information above for further details on the
royalty interest and its termination in 2012.</P>
<P style="MARGIN-LEFT: 5%" align=justify>In December 2011, the holder elected to
convert $1,090,902 of the balance owed into 4,363,611 shares of the Company&#146;s
common stock at a conversion rate of $0.25 per share. In the first quarter of
2012, the Company was advanced an additional $198,000 against the line of credit
and In March and April of 2012; the holder elected to convert the entire unpaid
principle balance and accrued interest in the amount of $3,163,218 into
12,652,869 shares of the Company&#146;s common stock at a conversion rate of $0.25.
Additionally, in 2012, Maxum agreed to forgive the finders&#146; fee and the Company
recorded debt forgiveness of $158,185.</P>
<P align=center>F-9</P>
<HR style="PAGE-BREAK-AFTER: always" align=center width="100%" color=black
noShade SIZE=5>
<A name=page_f34></A>
<P style="MARGIN-LEFT: 5%" align=justify>As of December 31, 2012 and 2011, the
Company recorded amortization expense related to the beneficial conversion
feature in the amount of $212,070 and $646,760, respectively. </P>
<P style="MARGIN-LEFT: 5%" align=justify>On July 3, 2012 in connection with the
Purchase Agreement between the Company and ASYM Energy Opportunities, LLC, the
investor group agreed to enter into a lien termination agreement, resulting in
the termination of their security interest in certain assets of the Company in
exchange for anti-dilution protection with respect to the shares issued in the
conversion of the line of credit at a conversion rate of $0.25 The anti-dilution
protection provides that in the event the Company issues warrants to a third
party with an exercise price less than the conversion rate of $0.25, the Company
will issue additional shares for the previous conversions equal to the
difference between the number of shares calculated utilizing the exercise price
of the warrants less the number of shares previously issued subject to a ceiling
of 4.99% of the total outstanding shares of the Company. The Company estimated
the number of shares that could be issued pursuant to the agreements on July 3,
2012 to be 2,576,975 and recorded a derivative liability and corresponding
comprehensive income (loss) in the amount of $360,776 representing the fair
value of the shares on that date.</P>
<P style="MARGIN-LEFT: 5%" align=justify>During the year ended December 31,
2012, the Company authorized the issuance of 3,003,104 shares as a result of the
anti-dilution provision and recorded a financing expense in the amount of
$425,468, the fair value of the shares on the date of grant. As of December 31,
2012, there were an additional 4,633 additional anti-dilution shares potentially
issuable to meet the beneficial ownership ceiling as a result; the Company
recorded a decrease in derivative liability of $360,497 and a corresponding
change in comprehensive gain (loss).</P>
<P style="MARGIN-LEFT: 5%" align=justify><B>Note Payable &#150; 2012<BR></B>On July
3, 2012, the Company entered into a Purchase Agreement with ASYM Energy
Opportunities LLC (&#147;ASYM&#148;), pursuant to which ASYM agreed to provide up to
$10,000,000 in debt financing to be advanced in approximately ten tranches of
$1,000,000 each, with $300,000 of the initial tranche to be paid upon closing
and the remaining $700,000 to be funded upon the satisfaction of certain
conditions, including completion of due diligence by ASYM, satisfaction by the
Company of certain financial tests, and the availability of funds of ASYM. Each
tranche will be evidenced by a senior secured promissory note which bears
interest at a rate of 15% per annum, with all tranches maturing on June 30, 2015
at an amount equal to 110% of the principle amount funded. Additionally, each
note is subject to early repayment in the event the Company does not meet
certain financial covenants. In accordance with the agreement, the Company has
issued a First Lien Security Agreement, Mortgage, Deed of Trust, Assignment of
Production, Fixture Filing and Financing Statement to ASYM as collateral to the
financing. In connection with each tranche of funding, the Company is required
to issue a warrant to purchase shares of the Company&#146;s common stock equal to 83%
the tranche amount, divided by the warrant exercise price. Additionally, the
Company has entered into a Deposit Account Control Agreement with ASYM to
perfect ASYM&#146;s security interest in certain bank accounts maintained by the
Company. The Company is required to pay an administrative fee of $100,000
payable upon receipt of the second tranche of $1,000,000. </P>
<P style="MARGIN-LEFT: 5%" align=justify>Further, pursuant to the Purchase
Agreement, the Company entered into a perpetual Management Services Agreement
with ASYM Management LLC ("ASYM Management") for managerial, financial,
strategic and operational consulting services. The agreement expires only upon
the sale, liquidation or dissolution of the Company or termination by ASYM
Management. Pursuant to the terms of the agreement, the Company has agreed to
pay a monthly management fee of $12,000 plus two percent of the unfunded balance
of the Purchase Agreement. ASYM Management will receive a management fee equal
to $12,000 per month, plus 2% of the Purchase Agreement&#146;s balance not previously
funded. In addition, ASYM Management will be entitled to receive a warrant equal
to 17% of the tranche amount divided by the exercise price of the warrant.</P>
<P style="MARGIN-LEFT: 5%" align=justify>The aforementioned warrants have a
variable exercise price computed based on the lesser of (i) $0.20, (ii) eighty
five percent (85%) of the volume weighted average price per share of the
Company&#146;s common stock for the fifteen days preceding the issuance of any
tranche, or (iii) the trailing ninety (90) net average daily oil production
multiplied by $40,000, the product of which is reduced by the Company&#146;s total
liabilities, but not less than $500,000, and then divided by the Company&#146;s fully
diluted number of common shares outstanding. Each warrant will have a term of
five years from the date of issuance and will be limited to an amount where the
underlying shares of common stock issuable upon exercise does not cause ASYM
collectively, to exceed a 4.99% ownership interest in the Company. Upon exercise
of any warrant, the warrant shares are subject to demand registration rights
utilizing best efforts. </P>
<P style="MARGIN-LEFT: 5%" align=justify>On July 3, 2012, the Company estimated
the number of shares underlying warrants that could be issued pursuant to the
Purchase Agreement, while not exceeding an ownership interest of 4.99%, to be
2,576,975 and recorded a derivative liability and corresponding comprehensive
income (loss) in the amount of $354,049 representing the fair value of the of
the warrants on that date. The warrants were valued utilizing the Black-Sholes
Model and the following terms: i) five-year life ii) exercise price of $0.031
iii) volatility of 181% iv) risk free rate of 0.69% and v) share price on the
date of grant of $0.14.</P>
<P style="MARGIN-LEFT: 5%" align=justify>On July 6, 2012, the Company received
$300,000 of the initial tranche and in accordance with the Purchase Agreement
the Company granted two warrants to purchase a total of 2,576,975 shares of the
Company&#146;s common stock, 2,138,889 to ASYM and 438,086 to ASYM Management, at an
exercise price of $0.031 and recorded a financing expense in the amount of
$354,049, the fair value of the warrants on the date of grant. On
      September 27, 2012, the Company received additional proceeds of $180,000
      due under the first tranche. As consideration for the limitation of
      funding the entire remaining $700,000 per the Purchase Agreement, ASYM
      agreed to a $0.35 exercise price for the warrant due them in connection
      with the September 27<SUP>th </SUP>funding. As a result, the Company
      granted two warrants to purchase a total of 376,209 shares of the
      Company&#146;s common stock and recorded a financing expense in the amount of
      $59,124, the fair value of the warrants on the date of grant. The warrants
      were valued utilizing the Black-Sholes Model and the following terms: i)
      five-year life ii) exercise price of $0.2946 iii) volatility of 179% iv)
      risk free rate of 0.64% and v) share price on the date of grant of
$0.16</P>
<P align=center>F-10</P>
<HR style="PAGE-BREAK-AFTER: always" align=center width="100%" color=black
noShade SIZE=5>
<A name=page_f35></A><BR>
<TABLE
style="BORDER-COLOR: black; FONT-SIZE: 10pt; BORDER-COLLAPSE: collapse; "
cellSpacing=0 cellPadding=0 width="100%" border=0 >

  <TR>
    <TD width="5%"></TD>
    <TD>
      <P align=justify>On November 19 and December 17, the Company received two
      additional tranches in the amount of $5,000 each. In accordance with the
      terms of the financing agreement the Company granted the issuance of two
      warrants to purchase 18,773 and 31,147, respectively in connection with
      the funding advances and recorded financing costs of $4,452. The warrants
      were valued utilizing the Black-Sholes Model and the following terms: i)
      five-year life ii) exercise price of $0.01 iii) volatility of 184%-185 iv)
      risk free rate of 0.64%-0.77% and v) share price on the date of grant of
      $0.12-$0.07.</P></TD></TR>
  <TR>
    <TD width="5%">&nbsp;</TD>
    <TD>&nbsp;</TD></TR>
  <TR>
    <TD width="5%"></TD>
    <TD>
      <P align=justify>Subsequent to the year ended December 31, 2012, the
      Company and ASYM agreed to modify the terms of the July 3, 2012 agreement
      whereby eliminating the variable exercise price of each warrant grant due
      pursuant to the agreement to a fixed exercise price of $0.01 applicable to
      both past and future warrant grants. As a result of the retrospective
      modification of terms, the Company re-valued all warrants previously
      issued and recorded a financing expense in the amount of $174,683. As of
      December 31, 2012, the derivative liability related to the fair value of
      the variable number of warrants potentially issuable has been eliminated
      due to the fixed conversion rate.</P></TD></TR>
  <TR>
    <TD width="5%">&nbsp;</TD>
    <TD>&nbsp;</TD></TR>
  <TR>
    <TD width="5%"></TD>
    <TD>
      <P align=justify>The ASYM agreement contains miscellaneous debt covenant
      requirements. As of December 31, 2012, the Company was not in compliance
      with those covenants. On March 28, 2013, ASYM granted the Company a waiver
      of those covenants through March 31, 2013 in return for a 3% overriding
      royalty interest in all existing and future properties and a $25,000
      waiver fee.</P></TD></TR>
  <TR>
    <TD width="5%">&nbsp;</TD>
    <TD>&nbsp;</TD></TR>
  <TR>
    <TD width="5%"></TD>
    <TD>
      <P align=justify><B>Loan Guarantee</B></P></TD></TR>
  <TR>
    <TD width="5%"></TD>
    <TD>
      <P align=justify>In 2004, the Company received a demand for payment from
      Canadian Western Bank (&#147;CWB&#148;) pursuant to a guarantee provided by the
      Company in favor of Calgary Chemical, a former subsidiary. The Company
      divested itself of Calgary Chemical in 1998 under an agreement with a
      former president and purchaser. The agreements included an indemnity
      guarantee from the purchaser of Calgary Chemical, whereby the purchaser
      would indemnify and save harmless the Company from any and all liability,
      loss, damage or expenses. Upon receipt of the demand, the Company accrued
      the estimated amount of the claim, $94,860 along with a comprehensive loss
      on foreign currency of $8,114, since in the opinion of legal counsel it is
      more likely than not that CWB would prevail in this action. As of December
      31, 2012, the Company has determined the loan guarantee is no longer valid
      due to its age and the statute of limitations. As a result, the Company
      recognized a gain on debt in the amount of $86,746.</P></TD></TR>
  <TR>
    <TD width="5%">&nbsp;</TD>
    <TD>&nbsp;</TD></TR>
  <TR>
    <TD width="5%"></TD>
    <TD>
      <P align=justify><B>Financing and interest expense</B></P></TD></TR>
  <TR>
    <TD width="5%"></TD>
    <TD>
      <P align=justify>Financing and interest costs related to the Company&#146;s
      aforementioned financing activities for the year ended December 31, 2012
      and 2011, totaled $2,115,799 and $1,412,177, respectively.</P></TD></TR>
  <TR>
    <TD width="5%">&nbsp;</TD>
    <TD>&nbsp;</TD></TR>
  <TR>
    <TD vAlign=top width="5%"><B>7.</B> </TD>
    <TD>
      <P align=justify><B>Stockholders&#146; Equity Transactions</B></P></TD></TR>
  <TR>
    <TD width="5%">&nbsp;</TD>
    <TD>&nbsp;</TD></TR>
  <TR>
    <TD width="5%"></TD>
    <TD>
      <P align=justify><B>Common Stock</B></P></TD></TR>
  <TR>
    <TD width="5%"></TD>
    <TD>
      <P align=justify>As of December 31, 2010, the Company had 27,060,561
      shares of common stock issued and outstanding and 542,856 shares owed but
      not issued.</P></TD></TR>
  <TR>
    <TD width="5%">&nbsp;</TD>
    <TD>&nbsp;</TD></TR>
  <TR>
    <TD width="5%"></TD>
    <TD>
      <P align=justify>During the year ending December 31, 2011, the Company
      issued 542,856 shares of common stock that were owed but not issued as of
      December 31, 2010.</P></TD></TR>
  <TR>
    <TD width="5%">&nbsp;</TD>
    <TD>&nbsp;</TD></TR>
  <TR>
    <TD width="5%"></TD>
    <TD>
      <P align=justify>During the year ended December 31, 2011, the Company
      issued 600,000 shares to Directors in lieu of executive compensation. The
      shares were valued at $306,000 which was market value on the day of the
      grant.</P></TD></TR>
  <TR>
    <TD width="5%">&nbsp;</TD>
    <TD>&nbsp;</TD></TR>
  <TR>
    <TD width="5%"></TD>
    <TD>
      <P align=justify>During the year ended December 31, 2011, the Company
      issued 100,000 shares of common stock for services. The shares were valued
      at $51,000, which was market value on the day of the grant.</P></TD></TR>
  <TR>
    <TD width="5%">&nbsp;</TD>
    <TD>&nbsp;</TD></TR>
  <TR>
    <TD width="5%"></TD>
    <TD>
      <P align=justify>During the year ended December 31, 2011, the Company
      issued 200,000 units of equity for cash in the amount of $50,000. Each
      unit contained one share of common stock and one warrant for a share of
      common stock at an exercise price of $0.40. The warrants have a term of
      two years.</P></TD></TR>
  <TR>
    <TD width="5%">&nbsp;</TD>
    <TD>&nbsp;</TD></TR>
  <TR>
    <TD width="5%"></TD>
    <TD>
      <P align=justify>During the year ended December 31, 2011, the Company
      issued 4,363,611 shares of common stock in conversion of $1,090,902 of
      convertible debt at 0.25 per shares. See Note 6 for further
  details.</P></TD></TR>
  <TR>
    <TD width="5%">&nbsp;</TD>
    <TD>&nbsp;</TD></TR>
  <TR>
    <TD width="5%"></TD>
    <TD>
      <P align=justify>As of December 31, 2011, there are 32,867,028 shares of
      common stock issued and outstanding and no common stock owed but not
      issued.</P></TD></TR></TABLE>
<BR>
<P align=center>F-11</P>
<HR style="PAGE-BREAK-AFTER: always" align=center width="100%" color=black
noShade SIZE=5>
<A name=page_f36></A><BR>
<TABLE
style="BORDER-COLOR: black; FONT-SIZE: 10pt; BORDER-COLLAPSE: collapse; "
cellSpacing=0 cellPadding=0 width="100%" border=0 >

  <TR>
    <TD width="5%"></TD>
    <TD>
      <P align=justify>In January of 2012, the Company issued 900,000 shares of
      common stock in lieu of executive compensation. The shares were valued at
      $189,000, which was market value on the day of the grant.</P></TD></TR>
  <TR>
    <TD width="5%">&nbsp;</TD>
    <TD>&nbsp;</TD></TR>
  <TR>
    <TD width="5%"></TD>
    <TD>
      <P align=justify>During the year December 31, 2012, the Company authorized
      the issuance of 767,500 shares of common stock for the conversion of
      $239,469 of accounts payable balances. As of the balance sheet date
      417,500 shares were unissued.</P></TD></TR>
  <TR>
    <TD width="5%">&nbsp;</TD>
    <TD>&nbsp;</TD></TR>
  <TR>
    <TD width="5%"></TD>
    <TD>
      <P align=justify>During the year ended December 31, 2012, the Company
      authorized the issuance of 12,652,869 shares of common stock for the
      conversion of $3,163,218 in convertible debt and accrued interest as
      discussed in Note 6.</P></TD></TR>
  <TR>
    <TD width="5%">&nbsp;</TD>
    <TD>&nbsp;</TD></TR>
  <TR>
    <TD width="5%"></TD>
    <TD>
      <P align=justify>During the year ended December 31, 2012, the Company
      authorized the issuance of 850,509 shares of common stock for the
      conversion of $212,628 in notes payable and accrued interest as discussed
      in Note 6.</P></TD></TR>
  <TR>
    <TD width="5%">&nbsp;</TD>
    <TD>&nbsp;</TD></TR>
  <TR>
    <TD width="5%"></TD>
    <TD>
      <P align=justify>During the year ended December 31, 2012, the Company
      authorized the issuance of 6,006,208 shares of common stock valued at
      $832,083 in connection with the anti-dilution provisions provided to Maxum
      and CPP.</P></TD></TR>
  <TR>
    <TD width="5%">&nbsp;</TD>
    <TD>&nbsp;</TD></TR>
  <TR>
    <TD width="5%"></TD>
    <TD>
      <P align=justify>As of December 31, 2012 there are 47,620,406 shares of
      common stock issued and outstanding and 6,423,708 shares of common stock
      owed but not issued.</P></TD></TR>
  <TR>
    <TD width="5%">&nbsp;</TD>
    <TD>&nbsp;</TD></TR>
  <TR>
    <TD width="5%"></TD>
    <TD>
      <P align=justify><B>Warrants</B></P></TD></TR>
  <TR>
    <TD width="5%"></TD>
    <TD>
      <P align=justify>During the year ended December 31, 2011, the Company
      issued 200,000 warrants in relation to a stock sale as described in above.
      The warrants have a $0.40 exercise price and a two-year life. The warrants
      expire on November 7, 2013.</P></TD></TR>
  <TR>
    <TD width="5%">&nbsp;</TD>
    <TD>&nbsp;</TD></TR>
  <TR>
    <TD width="5%"></TD>
    <TD>
      <P align=justify>During the year ended December 31, 2012, the Company
      issued 3,003,104 warrants in connection with the ASYM Purchase Agreement
      discussed in Note 6. The warrants are exercisable for a term of five years
      and at a strike price of $0.01. These warrants expire in the third and
      fourth quarter of 2017.</P></TD></TR>
  <TR>
    <TD width="5%">&nbsp;</TD>
    <TD>&nbsp;</TD></TR>
  <TR>
    <TD width="5%"></TD>
    <TD>
      <P align=justify>As of December 31, 2012, there are 3,203,104 warrants
      outstanding at a weighted average exercise price of $0.0344.</P></TD></TR>
  <TR>
    <TD width="5%">&nbsp;</TD>
    <TD>&nbsp;</TD></TR>
  <TR>
    <TD vAlign=top width="5%"><B>8.</B> </TD>
    <TD>
      <P align=justify><B>Income Taxes</B></P></TD></TR>
  <TR>
    <TD width="5%">&nbsp;</TD>
    <TD>&nbsp;</TD></TR>
  <TR>
    <TD width="5%"></TD>
    <TD>
      <P align=justify>The Company follows ASC subtopic 740-10 (formerly
      Statement of Financial Accounting Standard No. 109, &#147;Accounting for Income
      Taxes&#148;) for recording the provision for income taxes. ASC 740-10 requires
      the use of the asset and liability method of accounting for income taxes.
      Under the asset and liability method, deferred tax assets and liabilities
      are computed based upon the difference between the financial statement and
      income tax basis of assets and liabilities using the enacted marginal tax
      rate applicable when the related asset or liability is expected to be
      realized or settled. Deferred income tax expenses or benefits are based on
      the changes in the asset or liability each period. If available evidence
      suggests that it is more likely than not that some portion or all of the
      deferred tax assets will not be realized, a valuation allowance is
      required to reduce the deferred tax assets to the amount that is more
      likely than not to be realized. Future changes in such valuation allowance
      are included in the provision for deferred income taxes in the period of
      change.</P></TD></TR>
  <TR>
    <TD width="5%">&nbsp;</TD>
    <TD>&nbsp;</TD></TR>
  <TR>
    <TD width="5%"></TD>
    <TD>
      <P align=justify>Deferred income taxes may arise from temporary
      differences resulting from income and expense items reported for financial
      accounting and tax purposes in different periods. Deferred taxes are
      classified as current or non-current, depending on the classification of
      assets and liabilities to which they relate. Deferred taxes arising from
      temporary differences that are not related to an asset or liability are
      classified as current or non-current depending on the periods in which the
      temporary differences are expected to reverse.</P></TD></TR>
  <TR>
    <TD width="5%">&nbsp;</TD>
    <TD>&nbsp;</TD></TR>
  <TR>
    <TD width="5%"></TD>
    <TD>
      <P align=justify>The Company&#146;s effective income tax rate is higher than
      would be expected if the federal statutory rate were applied to income
      before tax, primarily because of expenses deductible for financial
      reporting purposes that are not deductible for tax purposes. The Company&#146;s
      operations for the years ended December 31, 2012 and 2011 resulted in
      losses. Accordingly, no provisions for current income taxes have been
      reflected in the accompanying statements of operations.</P></TD></TR>
  <TR>
    <TD width="5%">&nbsp;</TD>
    <TD>&nbsp;</TD></TR>
  <TR>
    <TD width="5%"></TD>
    <TD>
      <P align=justify>As of December 31, 2012, the Company has total net
      operating loss carryforwards of approximately $10,000,000 which may or may
      not be used to reduce future income taxes payable. Current federal tax law
      limits the amount of loss available to offset against future taxable
      income when a substantial change in ownership occurs. Therefore, the
      amount of these losses available to offset future taxable income may be
      limited. A valuation allowance has been recorded to reduce the net benefit
      recorded in the financial statements related to this deferred asset to $0.
      The valuation allowance is deemed necessary as a result of the uncertainty
      associated with the ultimate realization of these deferred tax assets.
      Accordingly, no provisions for deferred income taxes have been reflected
      in the accompanying statements of operations.</P></TD></TR>
  <TR>
    <TD width="5%">&nbsp;</TD>
    <TD>&nbsp;</TD></TR>
  <TR>
    <TD vAlign=top width="5%"><B>9.</B> </TD>
    <TD>
      <P align=justify><B>Related Party Transactions</B></P></TD></TR>
  <TR>
    <TD width="5%">&nbsp;</TD>
    <TD>&nbsp;</TD></TR>
  <TR>
    <TD width="5%"></TD>
    <TD>
      <P align=justify>During the years ended December 31, 2012 and 2011, the
      Company granted 900,000 shares and 600,000 shares, respectively, to
      directors and officers in lieu of executive
compensation.</P></TD></TR></TABLE><BR>
<P align=center>F-12</P>
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<TABLE
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  <TR>
    <TD width="5%"></TD>
    <TD>
      <P align=justify>During the period from August to December of 2011, the
      Company reimbursed an officer $9,000 for a residential lease in Wichita,
      Kansas. The Company also reimbursed the officer approximately $8,700 in
      connection with  expenses during the same period.</P></TD></TR>
  <TR>
    <TD width="5%">&nbsp;</TD>
    <TD>&nbsp;</TD></TR>
  <TR>
    <TD width="5%"></TD>
    <TD>
      <P align=justify>During the year ended December 31, 2012, the Company
      reimbursed an officer $16,498 for a residential lease in Wichita, Kansas.
      The Company also reimbursed the officer approximately $12,844 in
      connection with  expenses and $8,482 in connection with
      utilities during the year ended December 31, 2012.</P></TD></TR>
  <TR>
    <TD width="5%">&nbsp;</TD>
    <TD>&nbsp;</TD></TR>
  <TR>
    <TD width="5%"></TD>
    <TD>
      <P align=justify>During the year ended December 31, 2012, an
      officer/director loaned the company $39,200 for the purchase of mineral
      properties as discussed in note 6.</P></TD></TR>
  <TR>
    <TD width="5%">&nbsp;</TD>
    <TD>&nbsp;</TD></TR>
  <TR>
    <TD width="5%"></TD>
    <TD>
      <P align=justify>As noted in note 7, during the year December 31, 2012,
      the Company authorized the issuance of 767,500 shares of common stock for
      the conversion of $239,469 of accounts payable balances. As of the balance
      sheet date 417,500 shares were unissued. $173,205 of the accounts payable
      converted was held by officers/directors of the Company.</P></TD></TR>
  <TR>
    <TD width="5%">&nbsp;</TD>
    <TD>&nbsp;</TD></TR>
  <TR>
    <TD vAlign=top width="5%"><B>10.</B> </TD>
    <TD>
      <P align=justify><B>Subsequent Events</B></P></TD></TR>
  <TR>
    <TD width="5%">&nbsp;</TD>
    <TD>&nbsp;</TD></TR>
  <TR>
    <TD width="5%"></TD>
    <TD>
      <P align=justify>In preparing these financial statements, the Company has
      evaluated events and transactions for potential recognition or disclosure
      through the date the financial statements were issued.</P></TD></TR>
  <TR>
    <TD width="5%">&nbsp;</TD>
    <TD>&nbsp;</TD></TR>
  <TR>
    <TD width="5%"></TD>
    <TD>
      <P align=justify>In February of 2013, the company sold 75,000 shares of
      common stock for $4,500.</P>
      <p align="justify">Effective February 27, 2013, the Company  received the resignation of Lonnie McDade as a member of the Company&rsquo;s Board of  Directors.</p>
      <p align="justify">On March  14, 2013, the company sold 166,667 shares of common stock for $10,000.</p>
      <p align="justify"><i>Debt Exchange</i></p>
      <p align="justify">Effective March  4, 2013, in connection with the assignment of $140,000 of outstanding  convertible debt of the Company to Magna Group, LLC (&ldquo;Magna&rdquo;), the Company  issued to Magna a Twelve Percent (12%) Convertible Note (the &ldquo;Note&rdquo;).</p>
      <p align="justify">The Note provides that Magna, at any time, and the Company,  on the maturity date, may convert any remaining outstanding principal balance  and accrued interest under the Note into shares of common stock of the  Company.&nbsp; The conversion price of the  Note shall be equal to a forty five percent (45%) discount from the lowest  trading price of the Company&rsquo;s common stock in the five days prior to the day  Magna requests conversion.&nbsp; An additional  eight percent (8%) discount will be applied if the Company&rsquo;s common stock is  chilled for deposit at DTC and/or becomes chilled at any point while the Note  is outstanding.&nbsp; In no event will the  conversion price be less than $0.00004 per share.&nbsp; If at any time the Company issues any stock  or grants options or warrants at a price per share less than the conversion  price, then the conversion price will be reduced to such lesser amount.&nbsp; The note matures on September 4, 2013.&nbsp; The Company may prepay the note at any time,  upon three business days&rsquo; written notice, at a price equal to one hundred and  fifty percent (150%) of the outstanding principal balance of the Note, plus  accrued interest.&nbsp; The issuance of the  Note was conducted by the Company and was issued in reliance upon Section  3(a)(9) of the Securities Act of 1933, as amended,  and comparable exemptions under state securities laws. </p>
    </TD></TR>
  <TR>
    <TD width="5%">&nbsp;</TD>
    <TD>&nbsp;</TD></TR>
  <TR>
    <TD width="5%"></TD>
    <TD>
      <P align=justify>In March of 2013, the company issued 235,515 shares of common stock in relation to a partial conversion of $10,000 of the Note. </P>
      <P align=justify><i>ASYM Transaction </i></P></TD></TR>
  <TR>
    <TD width="5%">&nbsp;</TD>
    <TD>&nbsp;</TD></TR>
  <TR>
    <TD width="5%"></TD>
    <TD>
      <P align=justify>In March of 2013, the Company amended its agreement with
      ASYM Management to raise the monthly management fee to $20,000 per month
      and to eliminate the fee on the unused portion of the funding. The amended
      agreement lowers the amount owed to ASYM as of March of 2013 by
      approximately $47,000 if the full balance owed to them is paid in full by
      July 31, 2013.</P></TD></TR>
  <TR>
    <TD width="5%">&nbsp;</TD>
    <TD>&nbsp;</TD></TR>
  <TR>
    <TD width="5%"></TD>
    <TD>
      <P align=justify>In March of 2013, ASYM agreed to rest all of its
      warrants, existing and future under the purchase agreement, to
    $0.01.</P></TD></TR>
  <TR>
    <TD width="5%">&nbsp;</TD>
    <TD>&nbsp;</TD></TR>
  <TR>
    <TD width="5%"></TD>
    <TD>
      <P align=justify>In March of 2013, ASYM granted the Company a waiver of
      the covenants contained in its agreement through March 31, 2013 in return
      for a 3% overriding royalty interest in all existing and future properties
      and a $25,000 waiver fee.</P></TD></TR>
  <TR>
    <TD width="5%">&nbsp;</TD>
    <TD>&nbsp;</TD></TR>
  <TR>
    <TD width="5%"></TD>
    <TD>
      <P align=justify><i>Hanover Transaction</i></P>
      <P align=justify>In March of 2013, the Company entered into a common stock
      purchase agreement as noted below:</P></TD></TR>
  <TR>
    <TD width="5%">&nbsp;</TD>
    <TD>&nbsp;</TD></TR>
  <TR>
    <TD width="5%"></TD>
    <TD>      <div align="justify">On March 22, 2013, the Company
      entered into a common stock purchase agreement with Hanover Holdings I,
      LLC, a New York limited liability company (the &#147;<U>Investor</U>&#148;). The
      Purchase Agreement provides that, upon the terms and subject to the
      conditions set forth therein, the Investor is committed to purchase up to
      $5,000,000 worth of the Company&#146;s common stock over the 24-month term of
    the Purchase Agreement.</div></TD>
  </TR>
  <TR>
    <TD width="5%">&nbsp;</TD>
    <TD>&nbsp;</TD></TR>
  <TR>
    <TD width="5%"></TD>
    <TD>      <div align="justify">From time to time over the term
      of the Purchase Agreement, commencing on the trading day immediately
      following the date on which the initial registration statement is declared
      effective by the Securities and Exchange Commission (the
      &#147;<U>Commission&#148;</U>), as further discussed below, the Company may, in its
      sole discretion, provide the Investor with draw down notices to purchase a
      specified dollar amount of Shares over a 10 consecutive trading day period
      commencing on the trading day specified in the applicable Draw Down
      Notice, with each draw down subject to the limitations discussed below.
      The maximum amount of Shares requested to be purchased pursuant to any
      single Draw Down Notice cannot exceed 300% of the average daily trading
      volume of the Company&#146;s common stock for the 10 trading days immediately
    preceding the date of the Draw Down Notice.</div></TD>
  </TR>
  <TR>
    <TD width="5%">&nbsp;</TD>
    <TD>&nbsp;</TD></TR>
  <TR>
    <TD width="5%"></TD>
    <TD>      <div align="justify">Once presented with a Draw Down
      Notice, the Investor is required to purchase a pro rata portion of the
      applicable Draw Down Amount on each trading day during the applicable
      Pricing Period on which the daily volume weighted average price for the
      Company&#146;s common stock (the &#147;<U>VWAP</U>&#148;) equals or exceeds a floor price
      determined by the Company for such draw down (the &#147;<U>Floor Price</U>&#148;).
      If the VWAP falls below the applicable Floor Price on any trading day
      during the applicable Pricing Period, the Purchase Agreement provides that
      the Investor will not be required to purchase the pro rata portion of the
      applicable Draw Down Amount allocated to that trading day. The per share
      purchase price for the Shares subject to a Draw Down Notice shall be equal
      to 90.0% of the arithmetic average of the three lowest VWAPs that equal or
      exceed the applicable Floor Price during the applicable Pricing Period;
      provided, however, that if the VWAP does not equal or exceed the
      applicable Floor Price for at least three trading days during the
      applicable Pricing Period, then the per share purchase price shall be
      equal to 90.0% of the arithmetic average of all VWAPs that equal or exceed
      the applicable Floor Price during such Pricing Period. Each purchase
      pursuant to a draw down shall reduce, on a dollar-for-dollar basis, the
    Total Commitment under the Purchase Agreement.</div></TD>
  </TR>
  <TR>
    <TD width="5%">&nbsp;</TD>
    <TD>&nbsp;</TD></TR>
  <TR>
    <TD width="5%"></TD>
    <TD>      <div align="justify">The Company is prohibited from
      issuing a Draw Down Notice if (i) the amount requested in such Draw Down
      Notice exceeds the Maximum Draw Down Amount, (ii) the sale of Shares
      pursuant to such Draw Down Notice would cause the Company to issue or sell
      or the Investor to acquire or purchase an aggregate dollar value of Shares
      that would exceed the Total Commitment, or (iii) the sale of Shares
      pursuant to the Draw Down Notice would cause the Company to sell or the
      Investor to purchase an aggregate number of shares
      of the Company&#146;s common stock which would result in beneficial ownership by the
      Investor of more than 4.99% of the Company&#146;s common stock (as calculated
      pursuant to Section 13(d) of the Securities Exchange Act of 1934, as amended,
      and the rules and regulations thereunder). The Company cannot make more than one
      draw down in any Pricing Period and must allow 24 hours to elapse between the
      completion of the settlement of any one draw down and the commencement of a
    Pricing Period for any other draw down. </div></TD>
  </TR></TABLE>
<BR>
<P align=center>F-13</P>
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<P style="MARGIN-LEFT: 5%" align=justify>The Purchase Agreement contains
customary representations, warranties and covenants by, among and for the
benefit of the parties. The Purchase Agreement may be terminated at any time by
the mutual written consent of the parties. Unless earlier terminated, the
Purchase Agreement will terminate automatically on the earlier to occur of (i)
the first day of the month next following the 24-month anniversary of the date
on which the initial registration statement is declared effective by the
Commission or (ii) the date on which the Investor purchases the Total Commitment
worth of common stock under the Purchase Agreement. Under certain circumstances
set forth in the Purchase Agreement, the Company and the Investor each may
terminate the Purchase Agreement on one trading day&#146;s prior written notice to
the other.</P>
<P style="MARGIN-LEFT: 5%" align=justify>The Company paid to the Investor a
commitment fee for entering into the Purchase Agreement equal to $150,000 (or
3.0% of the Total Commitment under the Purchase Agreement) in the form of
1,764,706 restricted shares of the Company&#146;s common stock, calculated at a price
equal to $0.085 per share, which was the closing price of our Common Stock on
March 4, 2013. The Commitment shares were issued in March of 2013. The
Commitment Shares will be registered for resale in the Registration Statement,
as discussed below. </P>
<P style="MARGIN-LEFT: 5%" align=justify>The Company also agreed to pay up to
$15,000 of reasonable attorneys' fees and expenses (exclusive of disbursements
and out-of-pocket expenses) incurred by the Investor in connection with the
preparation, negotiation, execution and delivery of the Purchase Agreement and
related transaction documentation. Further, if the Company issues a Draw Down
Notice and fails to deliver the shares to the Investor on the applicable
settlement date, and such failure continues for 10 trading days, the Company
agreed to pay the Investor, in addition to all other remedies available to the
Investor under the Purchase Agreement, an amount in cash equal to 2.0% of the
purchase price of such shares for each 30-day period the shares are not
delivered, plus accrued interest.</P>
<P style="MARGIN-LEFT: 5%" align=justify>The Purchase Agreement also provides
for indemnification of the Investor and its affiliates in the event that the
Investor incurs losses, liabilities, obligations, claims, contingencies,
damages, costs and expenses related to a breach by the Company of any of its
representations and warranties under the Purchase Agreement or the other related
transaction documents or any action instituted against the Investor or its
affiliates due to the transactions contemplated by the Purchase Agreement or
other transaction documents, subject to certain limitations.</P>
<P style="MARGIN-LEFT: 5%" align=justify><I>Registration Rights
Agreement</I></P>
<P style="MARGIN-LEFT: 5%" align=justify>In connection with the execution of
the Purchase Agreement, the Company and the Investor also entered into a
registration rights agreement (the &#147;<U>Registration Rights Agreement</U>&#148;).
Pursuant to the Registration Rights Agreement, the Company has agreed to file an
initial registration statement with the Commission to register an agreed upon
number of Shares, which shall not exceed 1/3 of the number of shares of the
Company's common stock held by non-affiliates of the Company, on or prior to
April 22, 2013 (the &#147;<U>Filing Deadline</U>&#148;) and have it declared effective at
the earlier of (A) the 90<SUP>th </SUP>calendar day after the Closing Date and
(B) the fifth business day after the date the Company is notified by the
Commission that such Registration Statement will not be reviewed or will not be
subject to further review (the &#147;<U>Effectiveness Deadline</U>&#148;). </P>
<P style="MARGIN-LEFT: 5%" align=justify>If at any time all of the Registrable
Securities (as defined in the Registration Rights Agreement) are not covered by
the initial Registration Statement, the Company has agreed to file with the
Commission one or more additional Registration Statements so as to cover all of
the Registrable Securities not covered by such initial Registration Statement,
in each case, as soon as practicable, but in no event later than the applicable
filing deadline for such additional Registration Statements as provided in the
Registration Rights Agreement.</P>
<P style="MARGIN-LEFT: 5%" align=justify>The Company also agreed, among other
things, to indemnify the Investor from certain liabilities and fees and expenses
of the Investor incident to the Company&#146;s obligations under the Registration
Rights Agreement, including certain liabilities under the Securities Act of
1933, as amended (the &#147;<U>Securities Act</U>&#148;). The Investor has agreed to
indemnify and hold harmless the Company and each of its directors, officers and
persons who control the Company against certain liabilities that may be based
upon written information furnished by the Investor to the Company for inclusion
in a registration statement pursuant to the Registration Rights Agreement,
including certain liabilities under the Securities Act. </P>
<P align=center>F-14</P>
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