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<p style="margin: 0; text-align: left"></p>
<p style="font: 11pt Times New Roman, Times, Serif; margin: 0; text-align: left"><font style="font: 10pt Times New Roman, Times, Serif"><b><i>Nature
of Organization</i></b></font></p>
<p style="font: 11pt Times New Roman, Times, Serif; margin: 0; text-align: left"><font style="font: 10pt Times New Roman, Times, Serif"> </font></p>
<p style="font: 11pt Times New Roman, Times, Serif; margin: 0; text-align: left"><font style="font: 10pt Times New Roman, Times, Serif">Creative
Learning Corporation (“CLC”), formerly B2 Health, Inc., was incorporated March 8, 2006 in the State of Delaware. BFK
Franchise Company LLC (“BFKF”) was formed in the State of Nevada on May 19, 2009. Effective July 2, 2010, CLC was
acquired by BFKF in a transaction classified as a reverse acquisition.<font style="color: red"> </font>CLC concurrently changed
its name from B2 Health, Inc. to Creative Learning Corporation. The financial statements represent the activity of BFKF from May
19, 2009 forward, and the consolidated activity of BFKF and CLC from July 2, 2010 forward. BFKF and CLC are hereinafter referred
to collectively as the "Company". The Company, primarily through franchises, offers educational programs designed to
teach principles of engineering, architecture and physics to children using Lego ® bricks. The Company may also engage in
any other business that is permitted by law, as designated by the Board of Directors of the Company.</font></p>
<p style="font: 11pt Times New Roman, Times, Serif; margin: 0; text-align: left"><font style="font: 10pt Times New Roman, Times, Serif"> </font></p>
<p style="font: 11pt Times New Roman, Times, Serif; margin: 0; text-align: left"><font style="font: 10pt Times New Roman, Times, Serif">In
addition to the accounts of CLC and BFKF, the accompanying consolidated financial statements include the accounts of CLC’s
subsidiary, BFK Development Company LLC (“BFKD”) from November 25, 2009 (BFKD’s inception) forward.</font></p>
<p style="font: 11pt Times New Roman, Times, Serif; margin: 0; text-align: left"><font style="font: 10pt Times New Roman, Times, Serif"> </font></p>
<p style="font: 11pt Times New Roman, Times, Serif; margin: 0; text-align: left"><font style="font: 10pt Times New Roman, Times, Serif">BFKF
held a 50% ownership interest in BFKD from November 25, 2009 through October 2, 2010. On October 3, 2010, the BFKF acquired the
50% noncontrolling interest in BFKD. Immediately following the acquisition of the noncontrolling interest, BFKF transferred its
100% interest in BFKD to CLC. Because all of the entities (BFKF, BFKD, and CLC) are related parties under common ownership, all
transactions among these entities have been recorded within members’ equity.</font></p>
<p style="font: 11pt Times New Roman, Times, Serif; margin: 0; text-align: left"><font style="font: 10pt Times New Roman, Times, Serif"> </font></p>
<p style="font: bold 11pt Times New Roman, Times, Serif; margin: 0; text-align: left"><font style="font: 10pt Times New Roman, Times, Serif"><i>Principles
of Consolidation</i></font></p>
<p style="font: 11pt Times New Roman, Times, Serif; margin: 0; color: red; text-align: left"><font style="font: 10pt Times New Roman, Times, Serif"> </font></p>
<p style="font: 11pt Times New Roman, Times, Serif; margin: 0; text-align: left"><font style="font: 10pt Times New Roman, Times, Serif">The
accompanying consolidated financial statements include the accounts of the Company and its wholly owned subsidiary. All intercompany
accounts and transactions have been eliminated in consolidation.</font></p>
<p style="font: 11pt Times New Roman, Times, Serif; margin: 0; color: red; text-align: left"><font style="font: 10pt Times New Roman, Times, Serif"> </font></p>
<p style="font: 11pt Times New Roman, Times, Serif; margin: 0; text-align: left"><font style="font: 10pt Times New Roman, Times, Serif"><b><i>Fiscal
year</i></b></font></p>
<p style="font: 11pt Times New Roman, Times, Serif; margin: 0; text-align: left"><font style="font: 10pt Times New Roman, Times, Serif"> </font></p>
<p style="font: 11pt Times New Roman, Times, Serif; margin: 0; text-align: left"><font style="font: 10pt Times New Roman, Times, Serif">The
Company operates on a September 30 fiscal year-end.</font></p>
<p style="font: 11pt Times New Roman, Times, Serif; margin: 0; text-align: left"><font style="font: 10pt Times New Roman, Times, Serif"> </font></p>
<p style="font: 11pt Times New Roman, Times, Serif; margin: 0; text-align: left"><font style="font: 10pt Times New Roman, Times, Serif"><b><i>Use
of Estimates</i></b></font></p>
<p style="font: 11pt Times New Roman, Times, Serif; margin: 0; text-align: left"><font style="font: 10pt Times New Roman, Times, Serif"> </font></p>
<p style="font: 11pt Times New Roman, Times, Serif; margin: 0; text-align: left"><font style="font: 10pt Times New Roman, Times, Serif">The
preparation of financial statements in accordance with generally accepted accounting principles permits management to make estimates
and assumptions that affect the reported amounts of assets and liabilities and the disclosure of contingent assets and liabilities
at the date of financial statements and the reported amounts of revenues and expenses during the reporting period. Actual results
could differ from those estimates.</font></p>
<p style="font: 11pt Times New Roman, Times, Serif; margin: 0; text-align: left"><font style="font: 10pt Times New Roman, Times, Serif"> </font></p>
<p style="font: 11pt Times New Roman, Times, Serif; margin: 0; text-align: left"><font style="font: 10pt Times New Roman, Times, Serif"><b><i>Reclassifications</i></b></font></p>
<p style="font: 11pt Times New Roman, Times, Serif; margin: 0; text-align: left"><font style="font: 10pt Times New Roman, Times, Serif"> </font></p>
<p style="font: 11pt Times New Roman, Times, Serif; margin: 0; text-align: left"><font style="font: 10pt Times New Roman, Times, Serif">Certain
amounts in the prior year’s consolidated financial statements have been reclassified to conform to the current year presentation
and to correct prior year errors. The reclassifications did not have any effect on the prior year net loss.</font></p>
<p style="font: 11pt Times New Roman, Times, Serif; margin: 0; text-align: left"><font style="font: 10pt Times New Roman, Times, Serif"> </font></p>
<p style="font: 11pt Times New Roman, Times, Serif; margin: 0; text-align: left"><font style="font: 10pt Times New Roman, Times, Serif"><b><i>Cash
and Cash Equivalents</i></b></font></p>
<p style="font: 11pt Times New Roman, Times, Serif; margin: 0; text-align: left"><font style="font: 10pt Times New Roman, Times, Serif"> </font></p>
<p style="font: 11pt Times New Roman, Times, Serif; margin: 0; text-align: left"><font style="font: 10pt Times New Roman, Times, Serif">The
Company considers all highly liquid securities with original maturities of three months or less when acquired, to be cash equivalents.
We had no cash equivalents at September 30, 2011, 2010 and 2009.</font></p>
<p style="font: 11pt Times New Roman, Times, Serif; margin: 0; text-align: left"><font style="font: 10pt Times New Roman, Times, Serif"> </font></p>
<p style="font: 11pt Times New Roman, Times, Serif; margin: 0; text-align: left"><font style="font: 10pt Times New Roman, Times, Serif"><b><i>Accounts
Receivable</i></b></font></p>
<p style="font: 11pt Times New Roman, Times, Serif; margin: 0; text-align: left"><font style="font: 10pt Times New Roman, Times, Serif"> </font></p>
<p style="font: 11pt Times New Roman, Times, Serif; margin: 0; text-align: left"><font style="font: 10pt Times New Roman, Times, Serif">The
Company reviews accounts receivable periodically for collectability and establishes an allowance for doubtful accounts and records
bad debt expense when deemed necessary. At September 30, 2011 and 2010, the Company’s allowance for doubtful accounts totaled
$28,660, and $-0-, respectively.</font></p>
<p style="font: 11pt Times New Roman, Times, Serif; margin: 0; text-align: left"><font style="font: 10pt Times New Roman, Times, Serif"> </font></p>
<p style="font: 11pt Times New Roman, Times, Serif; margin: 0; text-align: left"><font style="font: 10pt Times New Roman, Times, Serif"><b><i>Property,
Equipment and Depreciation</i></b></font></p>
<p style="font: 11pt Times New Roman, Times, Serif; margin: 0; text-align: left"><font style="font: 10pt Times New Roman, Times, Serif"> </font></p>
<p style="font: 11pt Times New Roman, Times, Serif; margin: 0; text-align: left"><font style="font: 10pt Times New Roman, Times, Serif">Property
and equipment are stated at cost. Depreciation is calculated using the straight-line method over the estimated useful lives of
the related assets, currently set at five years. Expenditures for additions and improvements are capitalized, while repairs and
maintenance costs are expensed as incurred. The cost and related accumulated depreciation of property and equipment sold or otherwise
disposed of are removed from the accounts and any gain or loss is recorded in the year of disposal.</font></p>
<p style="font: 11pt Times New Roman, Times, Serif; margin: 0; text-align: left"><font style="font: 10pt Times New Roman, Times, Serif"> </font></p>
<p style="font: 11pt Times New Roman, Times, Serif; margin: 0; text-align: left"><font style="font: 10pt Times New Roman, Times, Serif"><b><i>Fair
Value of Financial Instruments </i></b></font></p>
<p style="font: 11pt Times New Roman, Times, Serif; margin: 0; text-align: left"><font style="font: 10pt Times New Roman, Times, Serif"> </font></p>
<p style="font: 11pt Times New Roman, Times, Serif; margin: 0; text-align: left"><font style="font: 10pt Times New Roman, Times, Serif">The
carrying amounts of cash, accounts receivable and current liabilities approximate fair value because of the short-term maturity
of these items. These fair value estimates are subjective in nature and involve uncertainties and matters of significant judgment,
and, therefore, cannot be determined with precision.  Changes in assumptions could significantly affect these estimates.  The
Company does not hold or issue financial instruments for trading purposes, nor does it utilize derivative instruments.</font></p>
<p style="font: 11pt Times New Roman, Times, Serif; margin: 0; text-align: left"><font style="font: 10pt Times New Roman, Times, Serif"> </font></p>
<p style="font: 11pt Times New Roman, Times, Serif; margin: 0; text-align: left"><font style="font: 10pt Times New Roman, Times, Serif">The
FASB Accounting Standards Codification (“ASC”) clarifies that fair value is an exit price, representing the amount
that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants.
It also requires disclosure about how fair value is determined for assets and liabilities and establishes a hierarchy for which
these assets and liabilities must be grouped, based on significant levels of inputs as follows:</font></p>
<p style="font: 11pt Times New Roman, Times, Serif; margin: 0; text-align: left"><font style="font: 10pt Times New Roman, Times, Serif"> </font></p>
<p style="font: 11pt Times New Roman, Times, Serif; margin: 0; text-align: left; text-indent: 22pt"><font style="font: 10pt Times New Roman, Times, Serif">	Level
1:	Quoted prices in active markets for identical assets or liabilities.</font></p>
<table align="center" cellspacing="0" cellpadding="0" style="font: 11pt Times New Roman, Times, Serif; width: 100%">
<tr style="vertical-align: top">
<td style="width: 12px; text-align: left"><font style="font: 10pt Times New Roman, Times, Serif"> </font></td>
<td style="width: 72px; padding-left: 9pt; text-align: left"><font style="font: 10pt Times New Roman, Times, Serif">Level
2:</font></td>
<td style="text-align: left"><font style="font: 10pt Times New Roman, Times, Serif">Quoted prices in active markets for similar
assets and liabilities and inputs that are observable for the asset or liability.</font></td></tr>
<tr style="vertical-align: top">
<td style="text-align: left"><font style="font: 10pt Times New Roman, Times, Serif"> </font></td>
<td style="padding-left: 9pt; text-align: left"><font style="font: 10pt Times New Roman, Times, Serif">Level 3:</font></td>
<td style="text-align: left"><font style="font: 10pt Times New Roman, Times, Serif">Unobservable inputs in which there is
little or no market data, which require the reporting entity to develop its own assumptions.</font></td></tr>
</table>
<p style="font: 11pt Times New Roman, Times, Serif; margin: 0; text-align: left"><font style="font: 10pt Times New Roman, Times, Serif"> </font></p>
<p style="font: 11pt Times New Roman, Times, Serif; margin: 0; text-align: left"><font style="font: 10pt Times New Roman, Times, Serif">The
determination of where assets and liabilities fall within this hierarchy is based upon the lowest level of input that is significant
to the fair value measurement.</font></p>
<p style="font: 11pt Times New Roman, Times, Serif; margin: 0; text-align: left"><font style="font: 10pt Times New Roman, Times, Serif"> </font></p>
<p style="font: bold 11pt Times New Roman, Times, Serif; margin: 0; text-align: left"><font style="font: 10pt Times New Roman, Times, Serif"><i>Long-Lived
Assets</i></font></p>
<p style="font: 11pt Times New Roman, Times, Serif; margin: 0; text-align: left"><font style="font: 10pt Times New Roman, Times, Serif"> </font></p>
<p style="font: 11pt Times New Roman, Times, Serif; margin: 0; text-align: left"><font style="font: 10pt Times New Roman, Times, Serif">In
accordance with ASC 350, the Company regularly reviews the carrying value of intangible and other long-lived assets for the existence
of facts or circumstances, both internally and externally, that may suggest impairment. If impairment testing indicates a lack
of recoverability, an impairment loss is recognized by the Company if the carrying amount of a long-lived asset exceeds its fair
value.</font></p>
<p style="font: 11pt Times New Roman, Times, Serif; margin: 0; text-align: left"><font style="font: 10pt Times New Roman, Times, Serif"> </font></p>
<p style="font: bold 11pt Times New Roman, Times, Serif; margin: 0; text-align: left"><font style="font: 10pt Times New Roman, Times, Serif"><i>Revenue
recognition</i></font></p>
<p style="font: 11pt Times New Roman, Times, Serif; margin: 0; text-align: left"><font style="font: 10pt Times New Roman, Times, Serif"> </font></p>
<p style="font: 11pt Times New Roman, Times, Serif; margin: 0; text-align: left"><font style="font: 10pt Times New Roman, Times, Serif">Revenue
is recognized on an accrual basis after services have been performed under contract terms, the service price to the client is
fixed or determinable, and collectibility is reasonably assured.</font></p>
<p style="font: 11pt Times New Roman, Times, Serif; margin: 0; text-align: left"><font style="font: 10pt Times New Roman, Times, Serif"> </font></p>
<p style="font: 11pt Times New Roman, Times, Serif; margin: 0; text-align: left"><font style="font: 10pt Times New Roman, Times, Serif">Initial
franchise fees are recognized upon the commencement of operations by the franchisee, which is when the Company has performed substantially
all initial services required by the franchise agreement. Any unearned income<font style="color: red"> </font>represents franchise
fees received for which the Company has not completed its initial obligations under the franchise agreement. Such obligations
generally consist of site location assistance and training. Royalties and marketing fees are recognized as earned.</font></p>
<p style="font: 11pt Times New Roman, Times, Serif; margin: 0; text-align: left"><font style="font: 10pt Times New Roman, Times, Serif"> </font></p>
<p style="font: bold 11pt Times New Roman, Times, Serif; margin: 0; text-align: left"><font style="font: 10pt Times New Roman, Times, Serif"><i>Advertising
costs</i></font></p>
<p style="font: 11pt Times New Roman, Times, Serif; margin: 0; text-align: left"><font style="font: 10pt Times New Roman, Times, Serif"> </font></p>
<p style="font: 11pt Times New Roman, Times, Serif; margin: 0; text-align: left"><font style="font: 10pt Times New Roman, Times, Serif">Advertising
costs are expensed as incurred. The Company incurred advertising costs for the years ended September 30, 2011 and 2010 of $180,774
and $109,229, respectively.</font></p>
<p style="font: 11pt Times New Roman, Times, Serif; margin: 0; text-align: left"><font style="font: 10pt Times New Roman, Times, Serif"> </font></p>
<p style="font: 11pt Times New Roman, Times, Serif; margin: 0; text-align: left"><font style="font: 10pt Times New Roman, Times, Serif"><b><i>Income
Taxes</i></b></font></p>
<p style="font: 11pt Times New Roman, Times, Serif; margin: 0; text-align: left"><font style="font: 10pt Times New Roman, Times, Serif"> </font></p>
<p style="font: 11pt Times New Roman, Times, Serif; margin: 0; text-align: left"><font style="font: 10pt Times New Roman, Times, Serif">The
Company accounts for income taxes pursuant to ASC 740. Under ASC 740 deferred taxes are provided on a liability method whereby
deferred tax assets are recognized for deductible temporary differences and operating loss carryforwards and deferred tax liabilities
are recognized for taxable temporary differences. Temporary differences are the differences between the reported amounts of assets
and liabilities and their tax bases. Deferred tax assets are reduced by a valuation allowance when, in the opinion of management,
it is more likely than not that some portion or all of the deferred tax assets will not be realized. Deferred tax assets and liabilities
are adjusted for the effects of changes in tax laws and rates on the date of enactment.</font></p>
<p style="font: 11pt Times New Roman, Times, Serif; margin: 0; text-align: left"><font style="font: 10pt Times New Roman, Times, Serif"> </font></p>
<p style="font: 11pt Times New Roman, Times, Serif; margin: 0; text-align: left"><font style="font: 10pt Times New Roman, Times, Serif"><b><i>Net
loss per share</i></b></font></p>
<p style="font: 11pt Times New Roman, Times, Serif; margin: 0; text-align: left"><font style="font: 10pt Times New Roman, Times, Serif"> </font></p>
<p style="font: 11pt Times New Roman, Times, Serif; margin: 0; text-align: left"><font style="font: 10pt Times New Roman, Times, Serif">The
net loss per share is computed by dividing the net loss by the weighted average number of shares of common outstanding. Warrants,
stock options, and common stock issuable upon the conversion of the Company's preferred stock (if any), are not included in the
computation if the effect would be anti-dilutive and would increase the earnings or decrease loss per share.</font></p>
<p style="font: 11pt Times New Roman, Times, Serif; margin: 0; text-align: left"><font style="font: 10pt Times New Roman, Times, Serif"> </font></p>
<p style="font: 11pt Times New Roman, Times, Serif; margin: 0; text-align: left"><font style="font: 10pt Times New Roman, Times, Serif"><b><i>Stock-based
compensation</i></b></font></p>
<p style="font: 11pt Times New Roman, Times, Serif; margin: 0; text-align: left"><font style="font: 10pt Times New Roman, Times, Serif"> </font></p>
<p style="font: 11pt Times New Roman, Times, Serif; margin: 0; text-align: left"><font style="font: 10pt Times New Roman, Times, Serif">The
Company accounts for employee and non-employee stock awards under ASC 718, whereby equity instruments issued to employees for
services are recorded based on the fair value of the instrument issued and those issued to non-employees are recorded based on
the fair value of the consideration received or the fair value of the equity instrument, whichever is more reliably measurable.</font></p>
<p style="font: 11pt Times New Roman, Times, Serif; margin: 0; text-align: left"><font style="font: 10pt Times New Roman, Times, Serif"> </font></p>
<p style="font: 11pt Times New Roman, Times, Serif; margin: 0; text-align: left"><font style="font: 10pt Times New Roman, Times, Serif"><b><i>Non-controlling
interest</i></b></font></p>
<p style="font: 11pt Times New Roman, Times, Serif; margin: 0; text-align: left"><font style="font: 10pt Times New Roman, Times, Serif"> </font></p>
<p style="margin: 0; text-align: left"><font style="font: 10pt Times New Roman, Times, Serif">A subsidiary of the Company had
minority members, representing ownership interests of 50% at September 30, 2010. The Company accounted for this non-controlling
interest pursuant to ASC 810-10-65 whereby gains or losses in a subsidiary with a non-controlling interest are allocated to the
non-controlling interest based on the ownership percentage of the non-controlling interest, even if that allocation results in
a deficit non-controlling interest balance. As discussed above, the minority interest was reduced to 0% on October 3, 2010.</font></p>
<p style="margin: 0; text-align: left"></p>
<p style="margin: 0pt; text-align: left"><font style="font: 10pt Times New Roman, Times, Serif"> </font></p>
<p style="font: 11pt Times New Roman, Times, Serif; margin: 0; text-align: left"><font style="font: 10pt Times New Roman, Times, Serif">On
July 2, 2010 Creative Learning Corporation entered into an agreement to exchange securities (the "Agreement") with BFK
Franchise Company LLC, acquiring 100% of the outstanding membership interests of BFK Franchise Company LLC through the Agreement
calling for the issuance of 9,000,000 shares of its common stock. During the years ended September 30, 2011 and 2010, 5,240,000
and 1,557,000 shares were issued under the Agreement, with 2,203,000 shares remaining to be issued as of September 30, 2011. The
transaction was accounted for as a reverse acquisition as the members of BFK Franchise Company LLC retained the majority of the
outstanding common stock of Creative Learning Corporation after the share exchange. Effective with the Agreement, the Company's
stockholders' equity was retroactively recapitalized as that of BFK Franchise Company LLC, while 100% of the net liabilities of
Creative Learning Corporation valued at $200,330 consisting of accounts payable of $26,330 and stock subscriptions payable $174,000,
were recorded as being acquired in the reverse acquisition for its 713,000 outstanding common shares. The net liabilities acquired
of $200,330 combined with the stock value of $962,500 based on market price on the acquisition date led to the Company recognizing
goodwill on the transaction of $1,162,880, which was immediately written off. Subsequent to the July 2, 2010 recapitalization,
Creative Learning Corporation and BFK Franchise Company LLC remain separate legal entities (with Creative Learning Corporation
as the parent of BFK Franchise Company LLC). The accompanying consolidated financial statements exclude the financial position,
results of operations and cash flows of Creative Learning Corporation prior to the July 2, 2010. Creative Learning Corporation
concurrent with the transaction changed its name from B2 Health, Inc. to Creative Learning Corporation. Effective with the July
2, 2010 Agreement the Company sold its 100% owned subsidiary Back 2 Health, Ltd. to a company related by common control for a
nominal fee.</font></p>
<p style="margin: 0pt; text-align: left"></p>
<p style="margin: 0pt; text-align: left"><font style="font: 10pt Times New Roman, Times, Serif"> </font></p>
<p style="font: 11pt Times New Roman, Times, Serif; margin: 0; text-align: left"><font style="font: 10pt Times New Roman, Times, Serif">During
the years ended September 30, 2011 and 2010, the Company paid related parties (companies related by common control) for the following
expenses:</font></p>
<p style="font: 11pt Times New Roman, Times, Serif; margin: 0; text-align: left"><font style="font: 10pt Times New Roman, Times, Serif"> </font></p>
<ul style="list-style-type: disc; margin-top: 0in">
<li style="margin: 0; text-align: left"><font style="font: 10pt Times New Roman, Times, Serif">$303,801 and $247,000, respectively,
for franchise consulting and commissions;</font></li>
<li style="margin: 0; text-align: left"><font style="font: 10pt Times New Roman, Times, Serif">$76,746 and $70,000, respectively,
for franchise training and expenses;</font></li>
</ul>
<p style="font: 11pt Times New Roman, Times, Serif; margin: 0; text-align: left"><font style="font: 10pt Times New Roman, Times, Serif"> </font></p>
<p style="font: 11pt Times New Roman, Times, Serif; margin: 0; text-align: left"><font style="font: 10pt Times New Roman, Times, Serif">As
of September 30, 2011, the Company owed related parties $11,100 for franchise commissions and other charges. This liability is
reported in the accompanying consolidated financial statements as Accounts payable, related party.</font></p>
<p style="font: 11pt Times New Roman, Times, Serif; margin: 0; text-align: left"><font style="font: 10pt Times New Roman, Times, Serif"> </font></p>
<p style="font: 11pt Times New Roman, Times, Serif; margin: 0; text-align: left"><font style="font: 10pt Times New Roman, Times, Serif">As
of September 30, 2010 and 2009, the Company owed a $650 unsecured note payable to a related party that matured in December 2010.
The related party forgave the note during the year ended September 30, 2011.</font></p>
<p style="font: 11pt Times New Roman, Times, Serif; margin: 0; text-align: left"><font style="font: 10pt Times New Roman, Times, Serif"> </font></p>
<p style="margin: 0; text-align: left"><font style="font: 10pt Times New Roman, Times, Serif">During the year ended September
30, 2011, certain debt holders converted their promissory notes and related accrued interest into shares of CLC common stock (see
Note 5).</font></p>
<p style="margin: 0pt; text-align: left"></p>
<p style="margin: 0pt"><font style="font: 10pt Times New Roman, Times, Serif"> </font></p>
<p style="font: 11pt Times New Roman, Times, Serif; margin: 0; text-align: justify"><font style="font: 10pt Times New Roman, Times, Serif">Property
and equipment consist of the following:</font></p>
<p style="font: 11pt Times New Roman, Times, Serif; margin: 0; text-align: justify"><font style="font: 10pt Times New Roman, Times, Serif"> </font></p>
<p style="font: 11pt Times New Roman, Times, Serif; margin: 0; text-align: justify"></p>
<table border="0" cellpadding="0" cellspacing="0" style="width: 100%; border-collapse: collapse; font: 11pt Times New Roman, Times, Serif">
<tr style="vertical-align: bottom">
<td><font style="font: 10pt Times New Roman, Times, Serif"> </font></td>
<td><font style="font: 10pt Times New Roman, Times, Serif"> </font></td>
<td colspan="3" style="border-bottom: windowtext 0.5pt solid; font-weight: bold; text-align: center"><font style="font: 10pt Times New Roman, Times, Serif">September
30,</font></td></tr>
<tr style="vertical-align: bottom">
<td style="width: 59%"><font style="font: 10pt Times New Roman, Times, Serif"> </font></td>
<td style="width: 1%; text-align: center"><font style="font: 10pt Times New Roman, Times, Serif"> </font></td>
<td style="width: 19%; border-bottom: windowtext 0.5pt solid; font-weight: bold; text-align: center"><font style="font: 10pt Times New Roman, Times, Serif">2011</font></td>
<td style="width: 2%; font-weight: bold"><font style="font: 10pt Times New Roman, Times, Serif"> </font></td>
<td style="width: 19%; border-bottom: windowtext 0.5pt solid; font-weight: bold; text-align: center"><font style="font: 10pt Times New Roman, Times, Serif">2010</font></td></tr>
<tr style="vertical-align: bottom">
<td colspan="2"><font style="font: 10pt Times New Roman, Times, Serif">Furniture and fixtures</font></td>
<td><font style="font: 10pt Times New Roman, Times, Serif"> $       42,334</font></td>
<td><font style="font: 10pt Times New Roman, Times, Serif"> </font></td>
<td><font style="font: 10pt Times New Roman, Times, Serif"> $       31,763</font></td></tr>
<tr style="vertical-align: bottom">
<td colspan="2"><font style="font: 10pt Times New Roman, Times, Serif">Equipment</font></td>
<td><font style="font: 10pt Times New Roman, Times, Serif">          21,200</font></td>
<td><font style="font: 10pt Times New Roman, Times, Serif"> </font></td>
<td><font style="font: 10pt Times New Roman, Times, Serif">           
9,980</font></td></tr>
<tr style="vertical-align: bottom">
<td colspan="2"><font style="font: 10pt Times New Roman, Times, Serif">Real property</font></td>
<td style="border-bottom: windowtext 0.5pt solid"><font style="font: 10pt Times New Roman, Times, Serif">       
105,365</font></td>
<td><font style="font: 10pt Times New Roman, Times, Serif"> </font></td>
<td style="border-bottom: windowtext 0.5pt solid"><font style="font: 10pt Times New Roman, Times, Serif">               
-  </font></td></tr>
<tr style="vertical-align: bottom">
<td><font style="font: 10pt Times New Roman, Times, Serif"> </font></td>
<td><font style="font: 10pt Times New Roman, Times, Serif"> </font></td>
<td><font style="font: 10pt Times New Roman, Times, Serif">        168,899</font></td>
<td><font style="font: 10pt Times New Roman, Times, Serif"> </font></td>
<td><font style="font: 10pt Times New Roman, Times, Serif">          41,743</font></td></tr>
<tr style="vertical-align: bottom">
<td colspan="2"><font style="font: 10pt Times New Roman, Times, Serif">Less accumulated depreciation</font></td>
<td style="border-bottom: windowtext 0.5pt solid"><font style="font: 10pt Times New Roman, Times, Serif">       
(11,280)</font></td>
<td><font style="font: 10pt Times New Roman, Times, Serif"> </font></td>
<td style="border-bottom: windowtext 0.5pt solid"><font style="font: 10pt Times New Roman, Times, Serif">            
(589)</font></td></tr>
<tr style="vertical-align: bottom">
<td><font style="font: 10pt Times New Roman, Times, Serif"> </font></td>
<td><font style="font: 10pt Times New Roman, Times, Serif"> </font></td>
<td style="border-bottom: windowtext 2pt double; border-top-color: windowtext; border-top-width: 0.5pt"><font style="font: 10pt Times New Roman, Times, Serif"> $    
157,619</font></td>
<td><font style="font: 10pt Times New Roman, Times, Serif"> </font></td>
<td style="border-bottom: windowtext 2pt double; border-top-color: windowtext; border-top-width: 0.5pt"><font style="font: 10pt Times New Roman, Times, Serif"> $      
41,154</font></td></tr>
</table>
<p style="font: 11pt Times New Roman, Times, Serif; margin: 0; text-align: justify"></p>
<p style="font: 11pt Times New Roman, Times, Serif; margin: 0; text-align: justify"><font style="font: 10pt Times New Roman, Times, Serif"> </font></p>
<p style="font: 11pt Times New Roman, Times, Serif; margin: 0; text-align: justify"><font style="font: 10pt Times New Roman, Times, Serif">Depreciation
expense totaled $10,691 and $589, respectively, for the years ended September 30, 2011 and 2010.</font></p>
<p style="margin: 0pt"></p>
<p style="margin: 0pt; text-align: left"><font style="font: 10pt Times New Roman, Times, Serif"> </font></p>
<p style="font: 11pt Times New Roman, Times, Serif; margin: 0; text-align: left"><font style="font: 10pt Times New Roman, Times, Serif">At
September 30, 2010, the Company owed $100,000 in unsecured promissory notes outstanding to individuals, to be repaid from proceeds
of a private placement offering of the Company’s common stock which was commenced in July 2010, with 1% interest compounded
monthly on the outstanding balance. If one of the notes, for $50,000, was not repaid by July 1, 2010, the Company was required
to pay $5,000 per month from mid-July 2010 forward, until the note was retired. Pursuant to note terms, the lenders were to also
receive 50,000 common shares by June 2010 (which remained due at September 30, 2010); and upon repayment of the note, have the
right to purchase 200,000 shares of the Company at $.50 per share. In June 2011, the Company exchanged 125,000 shares of common
stock for the $50,000 note and $6,341 in accrued interest (a value of $.45 per share).</font></p>
<p style="font: 11pt Times New Roman, Times, Serif; margin: 0; text-align: left"><font style="font: 10pt Times New Roman, Times, Serif"> </font></p>
<p style="font: 11pt Times New Roman, Times, Serif; margin: 0; text-align: left"><font style="font: 10pt Times New Roman, Times, Serif">At
September 30, 2010, the Company also had $100,000 in unsecured convertible notes outstanding to individuals, due in November 2010,
with 1% interest compounded monthly on the outstanding balance, convertible at the lender’s election at $.50 per share into
200,000 common shares. Pursuant to note terms, the lenders were to also receive 25,000 common shares by June 2010 and 25,000 shares
by August 31, 2010, which remained due at September 30, 2010. The Company recognized a beneficial conversion feature debt discount
on the convertible notes of $100,000 (limited to the face amount of the notes), which was allocated $58,753 to paid in capital
and $41,247 to stock subscriptions payable. The debt discount is amortized over the lives of the loans. Interest expense from
debt amortization in fiscal year 2010 was $80,370, with a remaining debt discount of $19,630 amortized during the year ended September
30, 2011.</font></p>
<p style="font: 11pt Times New Roman, Times, Serif; margin: 0; text-align: left"><font style="font: 10pt Times New Roman, Times, Serif"> </font></p>
<p style="font: 11pt Times New Roman, Times, Serif; margin: 0; text-align: left"><font style="font: 10pt Times New Roman, Times, Serif">During
the year ended September 30, 2011, the remaining $150,000 in promissory notes and $13,956 in related accrued interest were converted
into 372,902 shares of the Company’s common stock (a value of $.44 per share). As of September 30, 2011, the Company had
no promissory notes or accrued interest liabilities outstanding.</font></p>
<p style="margin: 0pt; text-align: left"></p>
<p style="margin: 0pt; text-align: left"><font style="font: 10pt Times New Roman, Times, Serif"> </font></p>
<p style="font: 11pt Times New Roman, Times, Serif; margin: 0; text-align: left"><font style="font: 10pt Times New Roman, Times, Serif">During
the year ended September 30, 2011, the Company sold 1,156,734 shares of its common stock to investors for proceeds totaling $951,177,
or $.82 per share.</font></p>
<p style="font: 11pt Times New Roman, Times, Serif; margin: 0; text-align: left"><font style="font: 10pt Times New Roman, Times, Serif"> </font></p>
<p style="font: 11pt Times New Roman, Times, Serif; margin: 0; text-align: left"><font style="font: 10pt Times New Roman, Times, Serif">During
the year ended September 30, 2011, the Company issued 1,310,573 shares of its common stock to vendors in exchange for consulting
services valued at $409,346, or $.31 per share.</font></p>
<p style="font: 11pt Times New Roman, Times, Serif; margin: 0; text-align: left"><font style="font: 10pt Times New Roman, Times, Serif"> </font></p>
<p style="font: 11pt Times New Roman, Times, Serif; margin: 0; text-align: left"><font style="font: 10pt Times New Roman, Times, Serif">During
the year ended September 30, 2010, the Company sold 124,268 shares of its common stock to investors for proceeds totaling $93,201,
or $.75 per share.</font></p>
<p style="font: 11pt Times New Roman, Times, Serif; margin: 0; text-align: left"><font style="font: 10pt Times New Roman, Times, Serif"> </font></p>
<p style="font: 11pt Times New Roman, Times, Serif; margin: 0; text-align: left"><font style="font: 10pt Times New Roman, Times, Serif">During
the year ended September 30, 2010, the Company issued 100,000 shares of its common stock to vendors in exchange for consulting
services valued at $141,247, or $1.41 per share.</font></p>
<p style="margin: 0pt; text-align: left"></p>
<p style="margin: 0pt; text-align: left"><font style="font: 10pt Times New Roman, Times, Serif"> </font></p>
<p style="font: 11pt Times New Roman, Times, Serif; margin: 0; text-align: left"><font style="font: 10pt Times New Roman, Times, Serif">At
September 30, 2011, the Company remains committed to issue an additional 2,203,000 common shares pursuant to the July 2, 2010
Securities Exchange Agreement (see Note 2). If all 2,203,000 shares were issued and outstanding, when coupled with the Company’s
currently outstanding shares of 10,288,575, the Company would have 12,491,575 common shares outstanding.</font></p>
<p style="margin: 0pt; text-align: left"></p>
<p style="margin: 0pt; text-align: left"><font style="font: 10pt Times New Roman, Times, Serif"> </font></p>
<p style="font: 11pt Times New Roman, Times, Serif; margin: 0; text-align: left"><font style="font: 10pt Times New Roman, Times, Serif"><u>Non-employee
stock options</u></font></p>
<p style="font: 11pt Times New Roman, Times, Serif; margin: 0; text-align: left"><font style="font: 10pt Times New Roman, Times, Serif"> </font></p>
<p style="font: 11pt Times New Roman, Times, Serif; margin: 0; text-align: left"><font style="font: 10pt Times New Roman, Times, Serif">The
Company accounts for non-employee stock options under ASC 718, whereby option costs are recorded based on the fair value of the
consideration received or the fair value of the equity instruments issued, whichever is more reliably measurable. Unless otherwise
provided for, the Company covers option exercises by issuing new shares.</font></p>
<p style="font: 11pt Times New Roman, Times, Serif; margin: 0; text-align: left"><font style="font: 10pt Times New Roman, Times, Serif"> </font></p>
<p style="font: 11pt Times New Roman, Times, Serif; margin: 0; text-align: left"><font style="font: 10pt Times New Roman, Times, Serif">During
the year ended September 30, 2010 the Company issued 200,000 common stock purchase options in conjunction with notes payable,
allowing the holder to purchase one share of common stock per option, exercisable upon repayment of the notes payable at $.50
per share with an open term. At September 30, 2011, all of these options remained outstanding. The fair value of the option grants
were estimated on the date of grant using the Black-Scholes option pricing model with the following assumptions: risk free interest
rate of 2.1 – 2.57%, dividend yield of 0%, expected lives estimated at five years, volatility from 81 - 115%. The Company
incurred and recorded compensation expense under the stock options of $-0- and $353,814, respectively, for the years ended September
30, 2011 and 2010.</font></p>
<p style="font: 11pt Times New Roman, Times, Serif; margin: 0; text-align: left"><font style="font: 10pt Times New Roman, Times, Serif"> </font></p>
<p style="font: 11pt Times New Roman, Times, Serif; margin: 0; text-align: left"><font style="font: 10pt Times New Roman, Times, Serif">Also
in fiscal year 2010 the Company issued 31,067 common stock purchase warrants as part of $3.00 units sold in an ongoing private
placement offering that commenced in July 2010. Each unit contains four shares of common stock and one common stock purchase warrant,
with each warrant allowing the holder to purchase one share of common stock, exercisable anytime at the holder’s election
at $3.00 per share, through a term expiring July 31, 2013. The value of the sold units has been allocated to the common shares
as the warrants were not in the money on the date of sale.</font></p>
<p style="font: 11pt Times New Roman, Times, Serif; margin: 0; text-align: left"><font style="font: 10pt Times New Roman, Times, Serif"> </font></p>
<p style="font: 11pt Times New Roman, Times, Serif; margin: 0; text-align: left"><font style="font: 10pt Times New Roman, Times, Serif"><u>Employee
stock options</u></font></p>
<p style="font: 11pt Times New Roman, Times, Serif; margin: 0; text-align: left"><font style="font: 10pt Times New Roman, Times, Serif"> </font></p>
<p style="font: 11pt Times New Roman, Times, Serif; margin: 0; text-align: left"><font style="font: 10pt Times New Roman, Times, Serif">The
Company accounts for employee stock options under ASC 718. Unless otherwise provided for, the Company covers option exercises
by issuing new shares. There were no employee stock options issued or outstanding in 2011 and 2010.</font></p>
<p style="margin: 0pt; text-align: left"></p>
<p style="margin: 0pt"><font style="font: 10pt Times New Roman, Times, Serif"> </font></p>
<p style="font: 11pt Times New Roman, Times, Serif; margin: 0; text-align: justify"><font style="font: 10pt Times New Roman, Times, Serif">The
Company currently supports independently owned franchises located in 25 states, 4 Canadian provinces and 4 other countries. Following
is a summary of the annual franchise activity:</font></p>
<p style="font: 11pt Times New Roman, Times, Serif; margin: 0; text-align: justify"><font style="font: 10pt Times New Roman, Times, Serif"> </font></p>
<p style="font: 11pt Times New Roman, Times, Serif; margin: 0; text-align: justify"></p>
<table border="0" cellpadding="0" cellspacing="0" style="width: 100%; border-collapse: collapse; font: 11pt Times New Roman, Times, Serif">
<tr style="vertical-align: bottom">
<td><font style="font: 10pt Times New Roman, Times, Serif"> </font></td>
<td><font style="font: 10pt Times New Roman, Times, Serif"> </font></td>
<td colspan="5" style="border-bottom: windowtext 0.5pt solid; font-weight: bold; text-align: center"><font style="font: 10pt Times New Roman, Times, Serif">September
30,</font></td></tr>
<tr style="vertical-align: bottom">
<td style="width: 56%"><font style="font: 10pt Times New Roman, Times, Serif"> </font></td>
<td style="width: 1%"><font style="font: 10pt Times New Roman, Times, Serif"> </font></td>
<td style="width: 13%; border-bottom: windowtext 0.5pt solid; font-weight: bold; text-align: center"><font style="font: 10pt Times New Roman, Times, Serif">2011</font></td>
<td style="width: 2%; font: 10pt Arial, Helvetica, Sans-Serif"><font style="font: 10pt Times New Roman, Times, Serif"> </font></td>
<td style="width: 13%; border-bottom: windowtext 0.5pt solid; font-weight: bold; text-align: center"><font style="font: 10pt Times New Roman, Times, Serif">2010</font></td>
<td style="width: 2%; font: 10pt Arial, Helvetica, Sans-Serif"><font style="font: 10pt Times New Roman, Times, Serif"> </font></td>
<td style="width: 13%; border-bottom: windowtext 0.5pt solid; font-weight: bold; text-align: center"><font style="font: 10pt Times New Roman, Times, Serif">2009</font></td></tr>
<tr style="vertical-align: bottom">
<td colspan="2"><font style="font: 10pt Times New Roman, Times, Serif">Franchises in operation - beginning of year</font></td>
<td><font style="font: 10pt Times New Roman, Times, Serif">            
36</font></td>
<td style="font: 10pt Arial, Helvetica, Sans-Serif"><font style="font: 10pt Times New Roman, Times, Serif"> </font></td>
<td><font style="font: 10pt Times New Roman, Times, Serif">             
6</font></td>
<td style="font: 10pt Arial, Helvetica, Sans-Serif"><font style="font: 10pt Times New Roman, Times, Serif"> </font></td>
<td><font style="font: 10pt Times New Roman, Times, Serif">            
-  </font></td></tr>
<tr style="vertical-align: bottom">
<td colspan="2"><font style="font: 10pt Times New Roman, Times, Serif">Franchises sold during the year</font></td>
<td><font style="font: 10pt Times New Roman, Times, Serif">            
42</font></td>
<td style="font: 10pt Arial, Helvetica, Sans-Serif"><font style="font: 10pt Times New Roman, Times, Serif"> </font></td>
<td><font style="font: 10pt Times New Roman, Times, Serif">            
30</font></td>
<td style="font: 10pt Arial, Helvetica, Sans-Serif"><font style="font: 10pt Times New Roman, Times, Serif"> </font></td>
<td><font style="font: 10pt Times New Roman, Times, Serif">             
6</font></td></tr>
<tr style="vertical-align: bottom">
<td><font style="font: 10pt Times New Roman, Times, Serif">Franchises cancelled, terminated or </font></td>
<td><font style="font: 10pt Times New Roman, Times, Serif"> </font></td>
<td><font style="font: 10pt Times New Roman, Times, Serif"> </font></td>
<td style="font: 10pt Arial, Helvetica, Sans-Serif"><font style="font: 10pt Times New Roman, Times, Serif"> </font></td>
<td><font style="font: 10pt Times New Roman, Times, Serif"> </font></td>
<td style="font: 10pt Arial, Helvetica, Sans-Serif"><font style="font: 10pt Times New Roman, Times, Serif"> </font></td>
<td><font style="font: 10pt Times New Roman, Times, Serif"> </font></td></tr>
<tr style="vertical-align: bottom">
<td colspan="2"><font style="font: 10pt Times New Roman, Times, Serif">   repurchased during the year</font></td>
<td style="border-bottom: windowtext 0.5pt solid"><font style="font: 10pt Times New Roman, Times, Serif">            
(3)</font></td>
<td style="font: 10pt Arial, Helvetica, Sans-Serif"><font style="font: 10pt Times New Roman, Times, Serif"> </font></td>
<td style="border-bottom: windowtext 0.5pt solid"><font style="font: 10pt Times New Roman, Times, Serif">            
-  </font></td>
<td style="font: 10pt Arial, Helvetica, Sans-Serif"><font style="font: 10pt Times New Roman, Times, Serif"> </font></td>
<td style="border-bottom: windowtext 0.5pt solid"><font style="font: 10pt Times New Roman, Times, Serif">            
-  </font></td></tr>
<tr style="vertical-align: bottom">
<td colspan="2"><font style="font: 10pt Times New Roman, Times, Serif">Franchises in operation - end of year</font></td>
<td style="border-bottom: windowtext 2pt double; border-top-color: windowtext; border-top-width: 0.5pt"><font style="font: 10pt Times New Roman, Times, Serif">            
75</font></td>
<td style="font: 10pt Arial, Helvetica, Sans-Serif"><font style="font: 10pt Times New Roman, Times, Serif"> </font></td>
<td style="border-bottom: windowtext 2pt double; border-top-color: windowtext; border-top-width: 0.5pt"><font style="font: 10pt Times New Roman, Times, Serif">            
36</font></td>
<td style="font: 10pt Arial, Helvetica, Sans-Serif"><font style="font: 10pt Times New Roman, Times, Serif"> </font></td>
<td style="border-bottom: windowtext 2pt double; border-top-color: windowtext; border-top-width: 0.5pt"><font style="font: 10pt Times New Roman, Times, Serif">             
6</font></td></tr>
</table>
<p style="font: 11pt Times New Roman, Times, Serif; margin: 0; text-align: justify"></p>
<p style="font: 9pt Arial; margin: 0; text-align: justify; text-indent: 0.5in; color: Red"></p>
<p style="font: 11pt Times New Roman, Times, Serif; margin: 0; text-align: justify"><font style="font: 10pt Times New Roman, Times, Serif"> </font></p>
<p style="font: 11pt Times New Roman, Times, Serif; margin: 0; text-align: justify"><font style="font: 10pt Times New Roman, Times, Serif">Franchises
are required to pay the Company an initial franchise fee, royalty fees totaling 7% of gross sales, and marketing fees totaling
2% of gross sales.</font></p>
<p style="margin: 0pt"></p>
<p style="margin: 0pt; text-align: left"><font style="font: 10pt Times New Roman, Times, Serif"> </font></p>
<p style="font: 11pt Times New Roman, Times, Serif; margin: 0; text-align: left"><font style="font: 10pt Times New Roman, Times, Serif"><b><i>Lease
Commitments</i></b></font></p>
<p style="font: 11pt Times New Roman, Times, Serif; margin: 0; text-align: left"><font style="font: 10pt Times New Roman, Times, Serif"> </font></p>
<p style="font: 11pt Times New Roman, Times, Serif; margin: 0; text-align: left"><font style="font: 10pt Times New Roman, Times, Serif">The
Company entered into an office lease agreement commencing May 1, 2010 and ending April 30, 2015. The office lease calls for monthly
rent and operating payments that escalate over the term of the lease. Future minimum rental payments are estimated as follows:</font></p>
<p style="font: 11pt Times New Roman, Times, Serif; margin: 0; text-align: justify"><font style="font: 10pt Times New Roman, Times, Serif"> </font></p>
<table cellpadding="0" cellspacing="0" style="width: 100%; font: 11pt Times New Roman, Times, Serif">
<tr style="vertical-align: bottom">
<td style="font-weight: bold; text-align: center"><font style="font: 10pt Times New Roman, Times, Serif">September 30,</font></td><td style="font-weight: bold"><font style="font: 10pt Times New Roman, Times, Serif"> </font></td>
<td colspan="3" style="font-weight: bold; text-align: center"><font style="font: 10pt Times New Roman, Times, Serif"> </font></td></tr>
<tr style="vertical-align: bottom">
<td style="width: 70%"><font style="font: 10pt Times New Roman, Times, Serif">2012</font></td><td style="width: 10%"><font style="font: 10pt Times New Roman, Times, Serif"> </font></td>
<td style="width: 1%; text-align: left"><font style="font: 10pt Times New Roman, Times, Serif">$</font></td><td style="width: 18%; text-align: right"><font style="font: 10pt Times New Roman, Times, Serif">42,000</font></td><td style="width: 1%; text-align: left"><font style="font: 10pt Times New Roman, Times, Serif"> </font></td></tr>
<tr style="vertical-align: bottom">
<td><font style="font: 10pt Times New Roman, Times, Serif">2013</font></td><td><font style="font: 10pt Times New Roman, Times, Serif"> </font></td>
<td style="text-align: left"><font style="font: 10pt Times New Roman, Times, Serif"> </font></td><td style="text-align: right"><font style="font: 10pt Times New Roman, Times, Serif">43,000</font></td><td style="text-align: left"><font style="font: 10pt Times New Roman, Times, Serif"> </font></td></tr>
<tr style="vertical-align: bottom">
<td><font style="font: 10pt Times New Roman, Times, Serif">2014</font></td><td><font style="font: 10pt Times New Roman, Times, Serif"> </font></td>
<td style="text-align: left"><font style="font: 10pt Times New Roman, Times, Serif"> </font></td><td style="text-align: right"><font style="font: 10pt Times New Roman, Times, Serif">44,000</font></td><td style="text-align: left"><font style="font: 10pt Times New Roman, Times, Serif"> </font></td></tr>
<tr style="vertical-align: bottom">
<td><font style="font: 10pt Times New Roman, Times, Serif">2015</font></td><td><font style="font: 10pt Times New Roman, Times, Serif"> </font></td>
<td style="text-align: left"><font style="font: 10pt Times New Roman, Times, Serif"> </font></td><td style="text-align: right"><font style="font: 10pt Times New Roman, Times, Serif">25,000</font></td><td style="text-align: left"><font style="font: 10pt Times New Roman, Times, Serif"> </font></td></tr>
<tr style="vertical-align: bottom">
<td style="padding-bottom: 1pt"><font style="font: 10pt Times New Roman, Times, Serif"> </font></td><td style="padding-bottom: 1pt"><font style="font: 10pt Times New Roman, Times, Serif"> </font></td>
<td style="border-bottom: Black 1pt solid; text-align: left"><font style="font: 10pt Times New Roman, Times, Serif"> </font></td><td style="border-bottom: Black 1pt solid; text-align: right"><font style="font: 10pt Times New Roman, Times, Serif">—  </font></td><td style="padding-bottom: 1pt; text-align: left"><font style="font: 10pt Times New Roman, Times, Serif"> </font></td></tr>
<tr style="vertical-align: bottom">
<td style="padding-bottom: 2.5pt"><font style="font: 10pt Times New Roman, Times, Serif"> </font></td><td style="padding-bottom: 2.5pt"><font style="font: 10pt Times New Roman, Times, Serif"> </font></td>
<td style="border-bottom: Black 2.5pt double; text-align: left"><font style="font: 10pt Times New Roman, Times, Serif">$</font></td><td style="border-bottom: Black 2.5pt double; text-align: right"><font style="font: 10pt Times New Roman, Times, Serif">154,000</font></td><td style="padding-bottom: 2.5pt; text-align: left"><font style="font: 10pt Times New Roman, Times, Serif"> </font></td></tr>
</table>
<p style="font: 11pt Times New Roman, Times, Serif; margin: 0; text-align: justify"></p>
<p style="font: 11pt Times New Roman, Times, Serif; margin: 0; text-align: justify"><font style="font: 10pt Times New Roman, Times, Serif"> </font></p>
<p style="font: 11pt Times New Roman, Times, Serif; margin: 0; text-align: justify"><font style="font: 10pt Times New Roman, Times, Serif"> </font></p>
<p style="font: 11pt Times New Roman, Times, Serif; margin: 0; text-align: left"><font style="font: 10pt Times New Roman, Times, Serif">Rent
expense was $80,122 and $14,000, respectively, for the years ended September 30, 2011 and 2010.</font></p>
<p style="font: 11pt Times New Roman, Times, Serif; margin: 0; text-align: left"><font style="font: 10pt Times New Roman, Times, Serif"> </font></p>
<p style="font: 11pt Times New Roman, Times, Serif; margin: 0; text-align: left"><font style="font: 10pt Times New Roman, Times, Serif"><b><i>Contingencies</i></b></font></p>
<p style="font: 11pt Times New Roman, Times, Serif; margin: 0; text-align: left"><font style="font: 10pt Times New Roman, Times, Serif"> </font></p>
<p style="font: 11pt Times New Roman, Times, Serif; margin: 0; text-align: left"><font style="font: 10pt Times New Roman, Times, Serif">On
September 30, 2011, the Company filed a complaint in St. Johns County, Florida against an individual for breach of contract, breach
of a noncompete agreement, and for violating the Florida Uniform Trade Secrets Act. The case is currently in the discovery phase.</font></p>
<p style="font: 11pt Times New Roman, Times, Serif; margin: 0; text-align: left"><font style="font: 10pt Times New Roman, Times, Serif"> </font></p>
<p style="font: 11pt Times New Roman, Times, Serif; margin: 0; text-align: left"><font style="font: 10pt Times New Roman, Times, Serif">The
Company entered into a Consent Order with the State of Washington’s Department of Institutions, Securities Division. The
Findings of Fact and Conclusions in the Consent Order include:</font></p>
<p style="font: 11pt Times New Roman, Times, Serif; margin: 0; text-align: left"><font style="font: 10pt Times New Roman, Times, Serif"> </font></p>
<ul style="list-style-type: disc; margin-top: 0in">
<li style="margin: 0; text-align: left"><font style="font: 10pt Times New Roman, Times, Serif">The Company made unregistered franchise offers and/or
sales of a franchise to two Washington residents;</font></li>
<li style="margin: 0; text-align: left"><font style="font: 10pt Times New Roman, Times, Serif">The two above offers and/or sales of said franchises
were in violation of RCW 19.100.020 because no registration for such offer and/or sale was on file with the Securities Administrator;
and</font></li>
<li style="margin: 0; text-align: left"><font style="font: 10pt Times New Roman, Times, Serif">The Company did not offer a disclosure document to
the two residents.</font></li>
</ul>
<p style="font: 11pt Times New Roman, Times, Serif; margin: 0; text-align: left"><font style="font: 10pt Times New Roman, Times, Serif"> </font></p>
<p style="font: 11pt Times New Roman, Times, Serif; margin: 0; text-align: left"><font style="font: 10pt Times New Roman, Times, Serif">The
Company has neither admitted nor denied the findings within the Consent Order. The Company has agreed to comply with the disclosure
requirements stipulated by the State of Washington.</font></p>
<p style="font: 11pt Times New Roman, Times, Serif; margin: 0; text-align: left"><font style="font: 10pt Times New Roman, Times, Serif"> </font></p>
<p style="font: 11pt Times New Roman, Times, Serif; margin: 0; text-align: left"><font style="font: 10pt Times New Roman, Times, Serif">The
Office of the Attorney General for the State of New York advised the Company that two franchises sold in New York do not meet
the requirements for an exemption under the isolated sale rule and will require the Company to enter into an Assurance of Discontinuance
and register with the State of New York.</font></p>
<p style="margin: 0pt; text-align: left"></p>
<p style="margin: 0pt"><font style="font: 10pt Times New Roman, Times, Serif"> </font></p>
<p style="font: 11pt Times New Roman, Times, Serif; margin: 0; text-align: justify"><font style="font: 10pt Times New Roman, Times, Serif">A
reconciliation of the U.S. statutory federal income tax rate to the effective tax rate is as follows:</font></p>
<p style="font: 11pt Times New Roman, Times, Serif; margin: 0; text-align: justify"><font style="font: 10pt Times New Roman, Times, Serif"> </font></p>
<p style="font: 11pt Times New Roman, Times, Serif; margin: 0; text-align: justify"></p>
<table border="0" cellpadding="0" cellspacing="0" style="width: 100%; border-collapse: collapse; font: 11pt Times New Roman, Times, Serif">
<tr style="vertical-align: bottom">
<td><font style="font: 10pt Times New Roman, Times, Serif"> </font></td>
<td><font style="font: 10pt Times New Roman, Times, Serif"> </font></td>
<td colspan="3" style="border-bottom: windowtext 0.5pt solid; font-weight: bold; text-align: center"><font style="font: 10pt Times New Roman, Times, Serif">September
30,</font></td></tr>
<tr style="vertical-align: bottom">
<td style="width: 59%"><font style="font: 10pt Times New Roman, Times, Serif"> </font></td>
<td style="width: 1%"><font style="font: 10pt Times New Roman, Times, Serif"> </font></td>
<td style="width: 19%; border-bottom: windowtext 0.5pt solid; font-weight: bold; text-align: center"><font style="font: 10pt Times New Roman, Times, Serif">2011</font></td>
<td style="width: 2%; font: 10pt Arial, Helvetica, Sans-Serif"><font style="font: 10pt Times New Roman, Times, Serif"> </font></td>
<td style="width: 19%; border-bottom: windowtext 0.5pt solid; font-weight: bold; text-align: center"><font style="font: 10pt Times New Roman, Times, Serif">2010</font></td></tr>
<tr style="vertical-align: bottom">
<td colspan="2"><font style="font: 10pt Times New Roman, Times, Serif">U.S. Federal statutory graduated rate</font></td>
<td style="text-align: right"><font style="font: 10pt Times New Roman, Times, Serif">34.00%</font></td>
<td style="font: 10pt Arial, Helvetica, Sans-Serif"><font style="font: 10pt Times New Roman, Times, Serif"> </font></td>
<td style="text-align: right"><font style="font: 10pt Times New Roman, Times, Serif">34.00%</font></td></tr>
<tr style="vertical-align: bottom">
<td><font style="font: 10pt Times New Roman, Times, Serif">State income tax rate,</font></td>
<td><font style="font: 10pt Times New Roman, Times, Serif"> </font></td>
<td><font style="font: 10pt Times New Roman, Times, Serif"> </font></td>
<td style="font: 10pt Arial, Helvetica, Sans-Serif"><font style="font: 10pt Times New Roman, Times, Serif"> </font></td>
<td><font style="font: 10pt Times New Roman, Times, Serif"> </font></td></tr>
<tr style="vertical-align: bottom">
<td colspan="2"><font style="font: 10pt Times New Roman, Times, Serif">    net of federal benefit</font></td>
<td style="text-align: right"><font style="font: 10pt Times New Roman, Times, Serif">3.63%</font></td>
<td style="font: 10pt Arial, Helvetica, Sans-Serif"><font style="font: 10pt Times New Roman, Times, Serif"> </font></td>
<td style="text-align: right"><font style="font: 10pt Times New Roman, Times, Serif">3.63%</font></td></tr>
<tr style="vertical-align: bottom">
<td><font style="font: 10pt Times New Roman, Times, Serif">Net operating loss for which no tax</font></td>
<td><font style="font: 10pt Times New Roman, Times, Serif"> </font></td>
<td><font style="font: 10pt Times New Roman, Times, Serif"> </font></td>
<td style="font: 10pt Arial, Helvetica, Sans-Serif"><font style="font: 10pt Times New Roman, Times, Serif"> </font></td>
<td><font style="font: 10pt Times New Roman, Times, Serif"> </font></td></tr>
<tr style="vertical-align: bottom">
<td colspan="2"><font style="font: 10pt Times New Roman, Times, Serif">  benefit is currently available</font></td>
<td style="border-bottom: windowtext 0.5pt solid; text-align: right"><font style="font: 10pt Times New Roman, Times, Serif">-37.63%</font></td>
<td style="font: 10pt Arial, Helvetica, Sans-Serif"><font style="font: 10pt Times New Roman, Times, Serif"> </font></td>
<td style="border-bottom: windowtext 0.5pt solid; text-align: right"><font style="font: 10pt Times New Roman, Times, Serif">-37.63%</font></td></tr>
<tr style="vertical-align: bottom">
<td><font style="font: 10pt Times New Roman, Times, Serif"> </font></td>
<td><font style="font: 10pt Times New Roman, Times, Serif"> </font></td>
<td style="border-bottom: windowtext 2pt double; border-top-color: windowtext; border-top-width: 0.5pt; text-align: right"><font style="font: 10pt Times New Roman, Times, Serif">0.00%</font></td>
<td style="font: 10pt Arial, Helvetica, Sans-Serif"><font style="font: 10pt Times New Roman, Times, Serif"> </font></td>
<td style="border-bottom: windowtext 2pt double; border-top-color: windowtext; border-top-width: 0.5pt; text-align: right"><font style="font: 10pt Times New Roman, Times, Serif">0.00%</font></td></tr>
</table>
<p style="font: 11pt Times New Roman, Times, Serif; margin: 0; text-align: justify"></p>
<p style="font: 9pt Arial; margin: 0; text-align: justify; text-indent: 0.5in; color: Red"></p>
<p style="font: 11pt Times New Roman, Times, Serif; margin: 0; text-align: justify"><font style="font-size: 10pt"> </font></p>
<p style="font: 11pt Times New Roman, Times, Serif; margin: 0; text-align: justify"></p>
<p style="font: 11pt Times New Roman, Times, Serif; margin: 0; text-align: left"><font style="font: 10pt Times New Roman, Times, Serif">At
September 30, 2011, deferred tax assets consisted of a net tax asset of $483,185, due to operating loss carryforwards of $1,284,043
which was fully allowed for in the valuation allowance of $483,185. The valuation allowance offsets the net deferred tax asset
for which there is no assurance of recovery. The change in the valuation allowance for the years ended September 30, 2011 and
2010 totaled $190,413 and $292,772, respectively. The current tax benefit also totaled $190,413 and $292,772 for the years ended
September 30, 2011 and 2010, respectively. The net operating loss carryforwards begin to expire in the year 2030.</font></p>
<p style="font: 11pt Times New Roman, Times, Serif; margin: 0; text-align: justify"></p>
<p style="font: 11pt Times New Roman, Times, Serif; margin: 0; text-align: left"><font style="font: 10pt Times New Roman, Times, Serif"> </font></p>
<p style="font: 11pt Times New Roman, Times, Serif; margin: 0; text-align: left"><font style="font: 10pt Times New Roman, Times, Serif">The
valuation allowance will be evaluated at the end of each year, considering positive and negative evidence about whether the deferred
tax asset will be realized. At that time, the allowance will either be increased or reduced; reduction could result in the complete
elimination of the allowance if positive evidence indicates that the value of the deferred tax assets is no longer impaired and
the allowance is no longer required.</font></p>
<p style="font: 11pt Times New Roman, Times, Serif; margin: 0; text-align: left"><font style="font: 10pt Times New Roman, Times, Serif"> </font></p>
<p style="font: 11pt Times New Roman, Times, Serif; margin: 0; text-align: left"><font style="font: 10pt Times New Roman, Times, Serif">Should
we undergo an ownership change as defined in the Internal Revenue Code, our net tax operating loss carryforwards generated prior
to the ownership change may be subject to an annual limitation, which could reduce or defer the utilization of these losses.</font></p>
<p style="font: 11pt Times New Roman, Times, Serif; margin: 0; text-align: justify"><font style="font-size: 10pt"> </font></p>
<p style="font: 11pt Times New Roman, Times, Serif; margin: 0; text-align: justify"><font style="font-size: 10pt">Prior to fiscal
year 2010 the Company operated as an LLC, was a pass-through entity for federal income tax purposes, and paid no income tax at
the company level.</font></p>
<p style="margin: 0pt"></p>
<p style="margin: 0pt"><font style="font: 10pt Times New Roman, Times, Serif"> </font></p>
<p style="font: 11pt Times New Roman, Times, Serif; margin: 0; text-align: justify"><font style="font: 10pt Times New Roman, Times, Serif">We
have evaluated the effects of all subsequent events from October 1, 2011 through January 17, 2012, the date the accompanying financial
statements were available to be issued.</font></p>
<p style="margin: 0pt"></p>
11100
6250
<p style="margin: 0pt; text-align: left"><font style="font: 10pt Times New Roman, Times, Serif"> </font></p>
<p style="font: 11pt Times New Roman, Times, Serif; margin: 0; text-align: left"><font style="font: 10pt Times New Roman, Times, Serif">The
Company has suffered a loss from operations and has a working capital deficit and stockholders' deficit, and in all likelihood
will be required to make significant future expenditures in connection with continuing marketing efforts along with general administrative
expenses. These conditions raise substantial doubt about the Company’s ability to continue as a going concern.</font></p>
<p style="font: 11pt Times New Roman, Times, Serif; margin: 0; text-align: left"><font style="font: 10pt Times New Roman, Times, Serif"> </font></p>
<p style="font: 11pt Times New Roman, Times, Serif; margin: 0; text-align: left"><font style="font: 10pt Times New Roman, Times, Serif">The
Company may raise additional capital through the sale of its equity securities, through an offering of debt securities, or through
borrowings from financial institutions. By doing so, the Company hopes through increased marketing efforts to generate greater
revenues from sales of its franchises. Management believes that actions presently being taken to obtain additional funding provide
the opportunity for the Company to continue as a going concern.</font></p>
<p style="margin: 0pt; text-align: left"></p>