8-K

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, D.C. 20549

FORM 8-K

CURRENT REPORT

Pursuant to Section 13 or 15(d) of the

Securities Exchange Act of 1934

Date of report (Date of earliest event reported):  March 19, 2010

Wolf Resources, Inc.

(Exact name of registrant as specified in its charter)

Nevada	000-52296	20-2414965
(State or other jurisdiction of incorporation)	(Commission File Number)	(I.R.S. Employer Identification No.)

3500 Carillon Point

Kirkland, WA 98033

(Address of principal executive offices) (Zip Code)

(425) 256-2600

 (Registrant’s telephone number, including area code)

564 Wedge Lane

Fernley, NV 89408

 (Former name or former address, if changed since last report)

Copies to:

Gregg E. Jaclin, Esq.

Kristina L. Trauger, Esq.

Gary S. Eaton, Esq.

Anslow + Jaclin,  LLP

195 Route 9 South, Suite 204

Manalapan, New Jersey 07726

(732) 409-1212

Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions (see General Instruction A.2. below):

o Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)

o Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)

o Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))

o Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))

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CAUTIONARY NOTE REGARDING FORWARD LOOKING STATEMENTS

This Current Report on Form 8-K contains forward looking statements within the meaning of Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended, that involve risks and uncertainties, principally in the sections entitled “Description of Business,” “Risk Factors,” and “Management’s Discussion and Analysis of Financial Condition and Results of Operations.”  All statements other than statements of historical fact contained in this Current Report on Form 8-K, including statements regarding future events, our future financial performance, business strategy and plans and objectives of management for future operations, are forward-looking statements.  We have attempted to identify forward-looking statements by terminology including “anticipates,” “believes,” “can,” “continue,” “could,” “estimates,” “expects,” “intends,” “may,” “plans,” “potential,” “predicts,” “should,” or “will” or the negative of these terms or other comparable terminology.  Although we do not make forward looking statements unless we believe we have a reasonable basis for doing so, we cannot guarantee their accuracy.  These statements are only predictions and involve known and unknown risks, uncertainties and other factors, including the risks outlined under “Risk Factors” or elsewhere in this Current Report on Form 8-K, which may cause our or our industry’s actual results, levels of activity, performance or achievements expressed or implied by these forward-looking statements.  Moreover, we operate in a very competitive and rapidly changing environment.  New risks emerge from time to time and it is not possible for us to predict all risk factors, nor can we address the impact of all factors on our business or the extent to which any factor, or combination of factors, may cause our actual results to differ materially from those contained in any forward-looking statements.  All forward-looking statements included in this document are based on information available to us on the date hereof, and we assumes no obligation to update any such forward-looking statements

You should not place undue reliance on any forward-looking statement, each of which applies only as of the date of this Current Report on Form 8-K.   Except as required by law, we undertake no obligation to update or revise publicly any of the forward-looking statements after the date of this Current Report on Form 8-K to conform our statements to actual results or changed expectations.

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Item 1.01Entry into a Material Definitive Agreement

As more fully described in Item 2.01 below, we acquired (the “Merger”) an early stage software development company targeting its software at the airline industry in accordance with a Share Exchange Agreement, dated March 19, 2010 (the “Share Exchange Agreement”) by and among Wolf Resources, Inc. (“we,” “Wolf” or the “Company”), Airline Intelligence Systems Inc. (“AISystems”) and the shareholders of AISystems (the “AISystems Shareholders”).  The closing of the transaction (the “Closing”) took place on March 19, 2010 (the “Closing Date”).  On the Closing Date, we acquired 50.8% of the outstanding shares of common stock and 72.6% of the Series A preferred stock of AISystems (the “AISystems Stock”) from the AISystems Shareholders.  In exchange for the AISystems Stock, the AISystems Shareholders acquired from us 1,692,240 shares of Series B preferred stock and 51,960,523 shares of our common stock on a fully diluted basis, with up to an additional 64,289,477 shares of Wolf Common Stock and 637,665 shares of Wolf Series B preferred stock to be issued upon the delivery of additional shares of AI Systems Stock, assuming 100% delivery of the AI Systems Stock, which will represent a total of 116,250,000 shares or approximately 75% of our issued and outstanding common stock on a fully diluted basis and a total of 2,329,905 shares or 100% of our issued and outstanding Series B preferred stock (collectively, the “Exchange Shares”).

Additionally, pursuant to the Share Exchange Agreement, the holders of any outstanding warrants, and options of AI Systems (collectively, the “Convertible Securities”), upon the exercise or conversion of the Convertible Securities, shall have the right to convert such Convertible Securities into the kind and amount of the Company’s  shares of stock and other securities and property which such holder would have owned or have been entitled to receive of AISystems prior to the Closing of the Merger, multiplied by ..95767068.

Pursuant to the terms of the Share Exchange Agreement, Graeme McNeill (“McNeill”) and Christopher Patterson (“Patterson”), the principal shareholders of the Company, cancelled a total of 34,488,000 shares of Common Stock. A copy of the Share Exchange Agreement is included as Exhibit 2.1 to this Current Report and is hereby incorporated by reference. All references to the Share Exchange Agreement and other exhibits to this Current Report are qualified, in their entirety, by the text of such exhibits.

Upon Closing, AISystems became a wholly-owned subsidiary of the Company. The directors of the Company have approved the Share Exchange Agreement and the transactions contemplated under the Share Exchange Agreement. The directors of AISystems have approved the Share Exchange Agreement and the transactions contemplated thereunder.

As a further condition of the Merger, McNeill, the current sole officer and director of the Company, resigned and the following persons, Mr. Stephen C. Johnston (Chairman), Steven Frankel and James Beatty were appointed as the new directors upon effectiveness of an information statement required by Rule 14f-1, promulgated under the Exchange Act of 1934, as amended (the “Exchange Act”) and the following persons were appointed as officers:

NAME	POSITION
Stephen C. Johnston	President, Chief Executive Officer
Gary Clifford	Chief Financial Officer
Salil Munjal	Chief Operating Officer
Charles Mawby	Senior Vice President, Marketing
D. Kordell Fournier	Vice President & General Counsel

The Merger transaction is discussed more fully in Section 2.01 of this Current Report. The information therein is hereby incorporated in this Section 1.01 by reference.

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Item 2.01Completion of Acquisition or Disposition of Assets

CLOSING OF EXCHANGE AGREEMENT

As described in Item 1.01 above, on March 19, 2010, we acquired AISystems, an early stage software development company based in the State of Washington, focused on software for the airline industry, in accordance with the Share Exchange Agreement.  On the Closing Date, we acquired 50.8% of the outstanding shares of common stock and 72.6% of the Series A preferred stock of AISystems from the AISystems Shareholders.  In exchange for the AISystems Stock, the AISystems Shareholders acquired from us 1,692,240 shares of Series B preferred stock and 51,960,523 shares of our common stock on a fully diluted basis, with up to an additional 64,289,477 shares of Wolf Common Stock and 637,665 shares of Wolf Series B preferred stock to be issued upon the delivery of additional shares of AI Systems Stock, assuming 100% delivery of the AI Systems Stock, which will represent a total of 116,250,000 shares or approximately 75% of our issued and outstanding common stock on a fully diluted basis and a total of 2,329,905 shares or 100% of our issued and outstanding Series B preferred stock.

AISystems became a wholly-owned subsidiary of the Company.  The directors of the Company have approved the Share Exchange Agreement and the transactions contemplated under the Share Exchange Agreement.  Upon consummation of the Merger, 90,714,523 of the Company’s Common Stock (which shall be “restricted securities” as described in Item 3.02 for 1 year from the date hereof) are issued and outstanding on a fully diluted basis and 1,692,240 shares of the Company’s preferred stock are issued and outstanding. Assuming the subsequent exchange of the remaining AISystems Stock and assuming a subsequent increase in our authorized common stock, there will be up to 155,004,000  shares of our Common Stock and up to 2,329,905 shares of our Series B preferred stock issued and outstanding.

Airline Intelligence Systems Inc. (“AISystems”) was incorporated in Delaware in December 2005.  The business was initiated by Steve Johnston and Roy Miller, with the intention of solving one of the most difficult planning and scheduling problems facing the commercial airline industry today enabling the integration and control of an airline’s Planning, Revenue Management and Operations functions in real time. Steve Johnston remains as the Chief Executive Officer.

AISystems has the exclusive and perpetual license to use proprietary technology to develop a unique proprietary business platform for the airline industry that is comprised of systems and mathematical algorithms capable of generating significant improvements in strategic planning capabilities, resource scheduling, revenue management and integrated operations.

The core jetEngineTM system technology is the backbone of an integrated business platform solution that once completed and deployed by customers is expected to revolutionize the airline industry.  jetEngineTM is a new paradigm for strategic airline management that will enable the integration and control of a commercial airline’s schedule planning, revenue management, and integrated operations functions, entirely in real time.

The Company was a “shell company” (as such term is defined in Rule 12b-2 under the Exchange Act immediately before the completion of the Merger).  Accordingly, pursuant to the requirements of Item 2.01(a)(f) of Form 8-K, set forth below is the information that would be required if the Company were filing a general form for registration of securities on Form 10 under the Exchange Act, reflecting the Company’s Common Stock, which is the only class of its securities subject to the reporting requirements of Section 13 or Section 15(d) of the Exchange Act upon consummation of the Merger, with such information reflecting the Company and its securities upon consummation of the Merger.

BUSINESS

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History

Airline Intelligence Systems Inc. (“AISystems”) was incorporated in Delaware in December 2005.  The business was initiated by Steve Johnston and Roy Miller, with the intention of solving one of the most difficult planning and scheduling problems facing the commercial airline industry today enabling the integration and control of an airline’s Planning, Revenue Management and Operations functions in real time.

Overview

We have exclusive licensing rights to develop and market a proprietary business platform called jetEngine™ O/S (“jetEngine”) for the airline industry and are in the process of building a software program, jetEngine while simultaneously creating an infrastructure for sustainable growth prepared to enter the commercial stage of its business life cycle.

AISystems is at various stages of discussion with a number of airlines worldwide, implementation and channel partners regarding the development and deployment of jetEngine. The Company’s first beta customer, AeroMexico, was signed on June 7, 2007. AeroMexico is an international carrier with approximately 10.2 million annual transported passengers.  AeroMexico recognized that AISystems’ unique solution could dramatically change its business and the industry in which it competes. The Company does not currently expect any future revenues from AeroMexico.

The Company may not be in compliance of its agreement with AeroMexico in connection with certain monies received from AeroMexico to be kept in escrow. AeroMexico has certain rights, including termination, for certain significant breaches of the agreement. Such non-compliance may be determined to be a significant breach and give AeroMexico the right to terminate its agreement with the Company and other rights.

The Company does not have a Beta customer for its Business Planning Suite at this time.

AISystems currently anticipates the implementation of its business plan will require additional investment capital. The Company aims to complete $5million to $10 million in equity financing in 2010. The funds will be used to engage potential customers, to fund product development, for working capital purposes, for repayment of debt and for other corporate purposes. There is no assurance that the Company will be able to raise the necessary funds to continue operations as envisions or that such funds can be raised on favorable terms to existing shareholders. This could result in significant dilution or a loss of investment to any current or future shareholders.

AISystems’ focus is on the commercial airline industry. Management will place initial efforts on gaining market share within the industry through the sale of its Business Planning Suite (“BPS”). Through the Company’s experiences and discussions with numerous airlines, the Company has decided to focus development attention on launching the BPS in an attempt to get rapid market share and then to have a natural progression to the releases of Schedule Planning, Crew, Revenue Management and Integrated Operations. Management anticipates that the speed and ease of deployment of the BPS, along with aggressive pricing will lead to a rapid penetration of the market. Management further believes that once an airline has had the opportunity to work with BPS, it will be interested in implementing the full capabilities of jetEngine through the purchase of the entire platform. At this time, the Company does not have any customers for its BPS product, it is possible that, 1) the Company will not complete sales with potential customers, 2) that those sales will not be completed on terms favorable to the Company 3) that the Company will not  have sufficient or the appropriate resources to complete the development of its product 4) that a competitive product will address the needs of the market before the Company is able to commercialize thereby significantly reducing the expected market opportunity, 5) the product as envisioned and developed by the Company will not meet the needs of customer and therefore never get deployed or achieve acceptance in the market place..

The Company plans to make extensive use of channel partners as a means of distribution and deployment of its products and has sought out several such companies that have airline customers. This strategy allows the channel partner to handle the deployment aspect of the product sale and allows AISystems to focus on developing and producing world-class products. The Company is working on qualifying channel partners for distribution and deployment. Further Organization of such partners may take longer and be more expensive than the Company anticipated at this time. This could have a material effect on the Company’s ability to be successful.

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AISystems currently anticipates the implementation of its business plan will require additional investment capital. The Company aims to complete $5million to $10 million in equity financing in 2010. The funds will be used to engage potential customers, to fund product development, for working capital purposes, repayment of debt and for other corporate purposes. There is no assurance that the Company will be able to raise the necessary funds to continue operations as envisions or that such funds can be raised on favorable terms to existing shareholders. This could result in significant dilution to any current or future shareholders.  If the Company is unable to raise sufficient funds on the required timelines its ability to implement its vision will be hindered and this could result in the entire loss of any investment in the Company. The Company has limited resources at this time, in the annual financial statements a reference to the Company’s ability to continue as a going concern assumption is rendered, see Liquidity and Capital Resources section below.

Organization & Subsidiaries

AISystems owns 100% of the outstanding common stock of Airline Intelligence Systems Corporation, an Ontario corporation formed in December 2005 and 100% of the outstanding common stock of AIS Canada Services Inc., an Ontario corporation formed in October 2009.

Products & Services

AISystems has the exclusive and perpetual license to use proprietary technology to develop a unique proprietary business platform for the airline industry that is comprised of systems and mathematical algorithms expected to make significant improvements in strategic planning, resource scheduling, revenue management and integrated operations capabilities.

The core jetEngineTM system technology is the backbone of an integrated business platform solution that is expected to revolutionize the airline industry.  jetEngineTM is a new paradigm for strategic airline management that is enabling the integration and control of a commercial airline’s schedule planning, revenue management, and integrated operations functions, entirely in real time. The product has been under development since 2006 and remains under development at this time.

Currently, the airline business planning process begins months before the airline publishes its schedule and considers flight scheduling, including routes, fleet, crew and maintenance, revenue management, operations management and distribution of the final schedule to all stakeholders; all of which are made up of several sub-components (as shown in the diagram below). Changes in the airline environment are difficult to model in a time effective manner, mainly due to existing systems’ inability to manage large quantities of data and the fact that these legacy systems function as independent silos that perform very discrete functions within the organization. For example, a large airline will have several hundred aircraft, thousands of crews, hundreds of thousands of flights per month and tens of millions of passengers per year. jetEngine is capable of integrating all of these factors, leading to a more efficient use of resources and enhanced strategic planning capabilities.

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Mapping of Traditional Airline Planning Functional Areas

The challenges facing the airline industry are well documented and in a MIT white paper, titled Applications of Operation Research in the Air Transport Industry.1 This paper examines the industry’s most pressing technology integration and scheduling needs and surveys existing solutions, as identified by leading researchers at MIT’s Operations Research Centre, and the Centre for Transportation and Opportunities. Its main conclusions are:

 1. “Relaxing the boundaries between the successive stages of aircraft and crew schedule planning, so that schedule design, fleet assignment, aircraft maintenance routing, and crew scheduling might eventually be performed in an integrated way, rather than solved sequentially as interrelated, but distinct sub problems.”

 2. “Including pricing decisions in revenue management, instead of treating fares and fare classes as fixed, externally specified inputs.” and

 3. “Developing fast decision support tools that increase the safety and efficiency of air transport operations by taking advantage of the massive, real-time data flows in an increasingly ‘info-centric’ aviation infrastructure.”

The MIT paper concludes that while a solution to this 35 year old scheduling problem does not exist, an integrated solution across all airline scheduling functions is the only way to deliver profitability to the airline industry. Presently, neither the airline organizational structure and systems, nor the technology solutions currently available, reflect the true nature of the airline or its highly stochastic demand and dynamic competitive environment. Further, these circumstances now govern the airline’s inability to adapt and react to dynamic market conditions.

In addition, the predictive methodologies employed by airlines to develop demand for seats and market share are significantly limited. These methodologies do not take into account competitive behaviours nor do they identify successful strategies for winning market share.

The root cause of these problems, central to every aspect of the airline business, is the scheduling technology itself. Airlines rely on the feasibility and successful execution of their planned schedules which are currently created by inherently flawed scheduling technology. Further, the integration of the business process is critical, since the way in which an airline creates business plans should be directly related to the way it sells its ticket inventory. The current business processes and systems employed by the airline business cannot support this.

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1 Barnhart, C., P. Belobaba, A. Odoni 2003. Applications of Operation Research in the Air Transport Industry. Transport Science Vol. 37, No. 4, pp. 368-391.

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Traditional Systems and Their Limitations

General Systems Type II & III Systems

General Systems Theory (“GST”) categorizes systems by their environment, behavior and structure. Most typical are Type II systems and Type III systems. Current airline structures and systems are rooted in GST Type II linear programming techniques. While these techniques offer a powerful tool for certain applications, they are not adequate for the airline industry as they are not congruent for the size and nature of the problem.

The system attributes for GST types are briefly summarized in the table below:

General Systems Theory Approach

GST Type II Systems are typically systems that are stable and operate in environments where change occurs slowly and infrequently. GST Type III Systems are typically systems that can operate in severely stochastic environments where there is rapid change and uncertainty. In addition, the nature of the problem is NP Hard or NP Complete. NP (“non-deterministic polynomial time”) is a measure of the complexity of the problem in terms of the number of calculations that would be necessary to solve the problem. Systems with NP Complete problems are not tractable with Linear or Integer (Type II) techniques.2

As an example of how large the scheduling problem is, there are considered to be more than 100,000-factorial possible combinations to consider when creating a fully-resourced schedule for a mid-sized airline. To put this in understandable terms for the non-mathematician, 15-factorial, which is 15x14x13x12, etc., yields a number that is in excess of one trillion and 100-factorial yields a number that is larger than the number of atoms in an entire universe. Therefore, in order to build an optimized schedule with linear programming tools and to process the number of possible combinations (that are in excess of 100,000-factorial) a near-infinite amount of time is required. This is why, in order to solve the problem, the industry has tried to break it down into many specific functional problems, or pieces, to solve sequentially. After this is completed, they attempt to reassemble those pieces in sequence to create the schedule. This approach has not yielded any success to date as evidenced by the financial state of the airline industry.

The airline industry is not a Type II system; its highly dynamic environment would suggest that a “Type III” system is much more appropriate, since the operating environment for an airline is volatile and subject to frequent changes. These changes can arise from weather conditions, regulatory changes, competitive forces, mechanical failure, etc. all of which are greatly disruptive to the airline.

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1 See: Sutherland, J W. Systems: Analysis, Administration, and Architecture. Van Nostrand Reinhold, New York, 1975.  Sutherland, J W. Administrative Decision-Making: Extending the Bounds of Rationality. Nostrand Reinhold, New York, 1977. Sutherland, J W. Societal Systems: Methodology, Modeling, and Management. Nostrand Reinhold, New York, 1978.

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Type II systems are unable to represent the airline environment adequately with respect to size, the speed with which decisions need to be made, and the behavior of the environment and systems business flow. As a consequence of this they are unable to integrate or adequately manage the critical aspects of an airline’s operations, be it schedule planning, revenue management or operations.

Current software solutions from all major vendors such as Boeing and Sabre are based on the Type II analytical tools.

jetEngine represents a technology shift within a paradigm shift. The paradigm shift occurs when the airline business is recognized as a Type III system. The technology shift is represented by a change from Type II to Type III analytic tools and allows the following to be incorporated in the jetEngine technology solution:

 ·    Policy-based adaptive Dynamic Programming techniques can be used for scheduling rather than Linear or integer programming;

 ·    Modern micro-economic Game Theory Based methods for determining market share; and

 ·    Dynamic pricing to improve the airline’s competitive pricing position.

Current Airline Organizational Structure is an Impediment

Traditional solutions for the airline industry have developed as optimizations to specific functional problems (point-to-point solutions) within the airline’s business, such as crew optimization. This has resulted in the development of functional silos within an airline, characterized by a poor flow of information between the functions. The organizational structure and business processes that have developed around these silos have become restrictive to improving the business, reacting to the dynamic business environment or competitive forces, or even running the airline profitably. Functional teams continually make strategic decisions without the systems’ capacity to understand the operational and financial impacts of their decision on the rest of the organization.

Functionally, the airline system does not behave as the sum of individual components. A small change in the availability of crew can create havoc for the schedule and passengers, negatively affecting revenue and generally creating a ripple effect across the airline. Functional areas are highly integrated and interdependent and should be treated as such.

An Example of Current System Limitations

Creating a schedule for an airline using current systems is a lengthy and very restrictive process. As such, airlines operations can have significant problems with irregular events, as was experienced in 2007 by JetBlue. On February 14, 2007, a snowstorm shut down John F. Kennedy airport, New York, an important JetBlue hub. That day, hundreds of passengers were stranded aboard JetBlue planes for up to 11 hours. JetBlue had to resort to cancelling all of its flights in 11 airports over the period of a week which included the President’s Day long weekend, in order to “reset” the flight recovery scheduling system. Thousands of passengers had their flights cancelled and thousands had their flights delayed. At the time, JetBlue’s chief executive said the airline would lose “tens of millions of dollars” as a result.3

JetBlue’s scheduling system could not handle the number of calculations required to reschedule aircraft, crews, and other resources, together with the rescheduling of passengers. Their systems were unable to cope with an irregularity of that size and complexity. The Company believes that the jetEngine platform would have been able to generate feasible solutions within five minutes for JetBlue.

This is an interesting example because JetBlue is a relatively young airline of 10 years and is considered very advanced in terms of the systems it uses. The Founder and CEO of the company resigned within three months of the disaster.

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1Source: http://money.cnn.com/2007/02/15/pf/jetblue_congress.reut/index.htm

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The jetEngine Approach

Changing the Scheduling Cycle from Months to Minutes

At the center of every aspect of the airline business is the flight schedule. Creating and maintaining the flight schedule is impacted by and has impact on every aspect of the business. Consequently, the key core technology component of jetEngine is the scheduling engine.

The Schedule Planning module is revolutionary within the industry. Currently, the time to complete a schedule plan is measured in weeks, and even months, as each sub-schedule must be completed independently. This process is iterated many times to achieve an operational flight schedule (which might not always achieve operational feasibility).

Traditional View of Scheduling – Sequential Approach

The following diagram presents the jetEngine approach to scheduling:

jetEngine View of Scheduling – Integrated Scheduling

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As is shown in the above diagram, jetEngine optimizes the scheduling process through the integration of all previously independent operations that were scheduled sequentially. This includes passenger demand, route availability, fleet assignment, crew assignment, maintenance requirements, and other scheduling constraints. jetEngine is capable of producing a fully feasible schedule in minutes, regardless of the state of the data or where the changes to the schedule occurred.

Policy-Based Business Planning

The policy-based scheduling component of jetEngine™ allows an airline to produce schedules that are consistent with its business objectives by controlling the schedule through defined business policies. This allows the airline to streamline its business cycle and to develop more robust business policies that provide better decision making, to optimize resources based on a particular set of priorities.

The jetEngine Solution for Airlines

The Company has designed two main product suites within the jetEngine Platform, each consisting of four product modules, for the commercial airline industry that will enhance both the planning and operational capabilities of airlines. The two product suites include the Business Planning Suite, and the Integrated Operations Suite.

AISystems Integrated Business Systems Platform

AISystems, through its substantial experience working with AeroMexico, Southwest Airlines, as well as extensive discussions with other carriers about the industry’s challenges, identified a significant market opportunity for the Business Planning Suite (BPS), a product not considered initially.  The BPS product is a planning and modeling application which produces business plans for an airline comprised of coordinated aircraft, crew and maintenance schedules which are collectively feasible and cost effective.  A major point is that this is not an “operational” system in that it is a stand-alone planning system and doesn’t require extensive systems integration. It can be deployed very quickly and is importantly non-invasive to airlines. No such product in the industry can produce such holistic plans in a single model.

The Integrated Operations Suite is a real-time system that enables airlines to address its operational needs in an efficient and more profitable manner. While the Schedule Planning, Revenue Management and Crew modules can act as stand-alone products, their integration though the Integrated Operations module provides substantial value to airlines that will translate into distinct advantage to our customers.

Business Planning Suite

In response to the misalignment between the airline problem and current technology offerings, AISystems has created a platform that re-formulates the scheduling problem to cope with the size, dynamics and complexity of the challenge.

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Airline Intelligence System’s Business Planning Suite’s methodology enables the airline to re-format the scheduling problem and solve for a solution in minutes instead of months.  It reduces the airline problem from a technical perspective, reshaping it from an NP-Hard Complexity Class to a simple Order (kN) Complexity Class, allowing the planning process to be executed in minutes instead of months.

Product Overview

AISystems’ BPS when completed is expected to provide cutting edge capabilities for an airline’s planning function through an integrated system and set of tools that:

 1.    Generates an integrated route, fleet, crew and maintenance schedule which is fully feasible against all airline constraints and the associated financial and risk expectations.

 2.    Reduces planning cycle to days from months.

 3.    Identifies the main drivers of an airline’s bottom line in its competitive environment.

 4.    Delivers Risk-Assessed Portfolio Modeling of critical variables (e.g.  model impact of fuel prices on their operations – currently airlines are powerless against rising fuel charges.  With AISystems’ BPS, an airline can actually model out how to adjust its network based on the price of fuel)

 5.    Allows an airline to model fully the dynamics of the competitive ecosystem.

These products are based on our licensed proprietary IP and patents which range from new scheduling IP to game based RM methods.

The BPS Suite is broken up into four product modules, each building upon the previous:

Core Integrated Scheduling (CIS)

CIS provides an integrated scheduling platform that delivers a fully-costed, fully feasible, Schedule for Routes, Fleet, Crew & Maintenance in minutes

CIS when completed will provide the core integrated scheduling environment allows an airline to quickly create a fully feasible, fully-costed, 6 to 18 month schedule in a very short time period. The schedules reflect the real inter-day and inter-week and inter-season variation in demand.

The speed of the Core Integrated Scheduling engine and the ability to consider all constraints and inputs simultaneously enables the airline to generate and assess hundreds of fully feasible distinct schedules based on its strategic objectives or policies. From this range of schedules, the airline can then select and operate the schedule that best fits objectives.

Determining Key Drivers

In order to select its final schedule, one that is relevant in the competitive space and can generate profits, the airline needs to assess the robustness of a schedule by modeling the impact of inputs, infrastructure and constraints on profitability. Current technology is not capable of conducting this sensitivity modeling analysis as it requires significant time (weeks to months) to generate a single fully-feasible fleet, crew and maintenance schedule. The speed of the Core Integrated Scheduling engine makes this critical modeling possible. AISystems has developed a second product, Determining Key Drivers, that enables the airline to model the impact input and constraint changes have on a given schedule.

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The output of Determining Key Drivers is an analysis indicating the significance of each input or variable from a financial point of view. With Determining Key Drivers, the airline can quickly explore and determine the variables that have the greatest impact on profitability of a schedule and refine the schedule to ensure strategic objectives are met.

Risk-Assessed Planning Portfolio

Risk-Assessed Planning Portfolio provides an airline with the Risk-Reward associated with each business plan

Airlines routinely complain that revenue projections vary greatly from actual sales. What is most significant about this is that a relatively small change in the market share or distribution of demand can have a substantial impact on an airline’s bottom line.  Furthermore, effectively dealing with these variations could result in substantial changes to the network or schedule plan – but airlines have limited capabilities to alter course once network schedules are set.

Airlines make rough predictions about their P&L based on the schedule they create. Often these schedules are taken literally, and the numbers taken to be hard.  Very few airlines assess and account for the uncertainty in the business plans or the risk associated with them.  In a dynamic system, such as the airlines find themselves in, not knowing the risk associated with a given business plan can translate into large losses.

Risk-Assessed Planning Portfolio, that provides the airline with the technology, currently not available, to develop risk-assessed Schedule Plans that arms airline management with the risk reward trade-off associated with each plan. The graph on the right shows the risk profiles for branded versus non-branded schedules in a specific plan. The airline can then select the Schedule Plan that best fits its strategic objectives and risk appetite and gain more confidence that the plan chosen will deliver the expected results.

Competitive Dynamics

Competitive Dynamics allows an airline to create and analyze complex competitive scenarios

Airlines have historically used extrapolative methods to make small adjustments to their previous year’s schedules because of the time-prohibitive restrictions associated with current analytic tools. This has proven to be insufficient to respond to the rampant changes in the competitive landscape.  The airline must be able to model the entry of a low- cost carrier into its market space; it must be able to model and predict changing demand demographics and price changes.  In fact, it must be able to model many aspects of the competitive environment that are not currently modeled today. AISystems is developing a fourth BPS module, called Competitive Dynamics, to meet these needs.

Using the Competitive Dynamics module, the airline can create any “virtual reality” associated with the market space, infrastructure and produce suitable business plans accordingly in minutes.  For example, an airline can use the Competitive Dynamics’ Game-Based modeling of revenue management in order to game out its market share competitively. Alternatively, it can simulate the entry of a low-cost carrier with an explicit capacity and determine changes in its market share and or ticket prices. This ability to understand strategic and profit implications through simulated market changes is a revolutionary tool for the airline industry. The Business Planning Suite’s Competitive Dynamics module enables airlines to gain a competitive advantage over competitors.

The BPS has been designed to be deployed rapidly, in days or weeks, and to be very aggressively priced to maximize the customer uptake in 2010. The company will be working primarily with channel partners to get as broad a product distribution as possible and for the channel partner to be responsible for the deployment of the product so that AISystems can focus on delivering an excellent, world-class product.

Integrated Operations Suite

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The Integrated Operations Suite is comprised of 4 modules: Schedule Planning, Crew, Revenue Management, and Integrated Operations. This Suite enables airlines to address in real-time any operational changes required due to shifts in the competitor landscape, disruptions due to weather, epidemics or economic downturns. It shifts the focus from operations to profitability enabling airlines to operate in the most profitable manner translating into a distinct advantage over the competition. The Products remains under development at this time.

Schedule Planning

While the strategic network plan is developed in the Business Planning Suite, it is the Schedule Planning module which inherits this plan and is tasked with its execution. This execution is extremely difficult given the multitude of variables that can cause delays to a schedule. The Schedule Planning module enables the airline to solve such complexities through the generation of an integrated and fully costed, route, fleet, crew and maintenance schedule in minutes.

Currently, airlines follow a well-structured, sequential approach to developing flight schedules and estimating profitability.  The airline first decides which city pairs to service and the frequency of flights between them.  It then estimates passenger volumes and pricing expectations and together with the city pairs and flights previously selected designs its network schedule. Aircraft are then assigned to flights to generate the routed schedule. Maintenance schedules and crew schedules are subsequently created and integrated with the aircraft routed schedule to eventually produce the fleet, crew and maintenance schedule. Lastly, expected profits of this integrated schedule are determined. On the surface, this seems to be a reasonable approach and is strongly reinforced as an industry axiom by all existing airline planning software.

AISystems’ Schedule Planning module enables airlines to break out of this sequential, time-consuming and resource intensive process. It simplifies the schedule problem through the integration of the scheduling activities greatly reducing the time needed to generate schedule, saving costs and enabling the airline to model different scenarios to optimize its schedule.

Crew Planning

The system quickly generates crew schedules which are fully supportive of the flight schedule and comply with all FAA regulations, labor contract work rules, seniority based bid preferences and related airline operational policies.  It produces crew schedules with lower overall costs by using a revolutionary, single, unified process for constructing both crew pairings and rosters.  Traditional crew scheduling solutions take a stepwise, 2-part, sequential approach and thus imbed deterministic limitations into the first part of the process which must be inherited by the second part of the process. AISystems’s breakthrough algorithm eliminates this inefficiency with superior problem formulation while also producing feasible solutions in far less time.

The speed of producing good solutions is particularly valuable in the “every minute counts” situations that an airline operations control center typically face when irregular operations disrupt the original crew schedule.

The system is able to assist crew management needs across the planning and execution lifecycle. It supports key long range planning requirements (crew base sizing, training pipeline scenarios, etc.) through crew rostering, check-in, tracking, schedule modifications and reporting on the day of flight operations.  Key features supporting this end-to-end functionality include an integrated scheduling engine, tools for swaps and rethreads, and subroutines which repair disrupted schedules with minimal impact.  The system can be deployed in a standalone manner or as an integrated part of a broader platform using a structured API.

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Revenue Management

Once a flight schedule has been developed through Schedule Planning, the Revenue Management module is intended to manage system profitability by dynamically and adaptively setting inventory availability and altering fare levels so that tickets are priced to efficiently match market demand with the supply of an airline’s inventory of seats.

This module will have the ability in relative real time to price (and re-price) seats on each flight on each route across the entire network automatically, according to broad or individual policies or even specific prices, in a way that no individual or group of individuals could possibly replicate or maintain manually.

Dynamic Pricing

jetEngine is expected to employ a sophisticated approach to pricing ticket inventory to increase profitability and meet business policy goals (i.e. increasing market share). Dynamic pricing allows the pricing of each fare class to respond more quickly to market conditions and competitive pricing strategies.

In traditional systems, volume and pricing decisions are made by two somewhat disparate groups of employees in the respective Revenue Management and Pricing departments. These two groups’ respective objectives are to maximize revenue yields (not profits) while monitoring and responding to the pricing actions of their competitors. This means strategic decisions are limited to either:

 1.    bucket pricing, which is the adjustment and allocation of seats to individual seat classes (and corresponding bucket prices), or

 2.    lowering prices in the respective seat classes to win customers throughout the booking period in order to fill the plane’s capacity, and then raising prices at the last minute to achieve the original revenue forecast.

In stark contrast, jetEngine is expected to dynamically price tickets to meet the financial expectations established when the flight schedule was developed. This means that the solution is constantly focused on attaining the highest level of profitability for the flight, route, market or network, as strategically determined in advance of sales by the airline.

Financial Planning and Management

Revenue Management will estimate the operating and financial expectations, against a range of sensitivities based on a current schedule to determine the best and worst case scenarios and expected financial outcome. Because ticketing is dynamic and adaptive to competing prices and offerings, the Revenue Management solution is expected to have the ability to track performance against expectations (unachieved, met, or exceeded) and react accordingly. The solution will automatically implement course corrections, or changes to market strategies to respond to booking time remaining prior to departure and the current financial status of the route. In other words, the solution will be designed to understand at what price to sell each ticket in order to achieve overall system and network profitability and to minimize unutilized capacity. Finally, all of this is done within a policy framework detailed by the airline (e.g. a focus on gaining market share on a particular route can be mandated and the solution will ensure that is a priority over other factors when making pricing decisions).

Move Demand to Match Supply and Vice Versa

The jetEngine scheduling engine allows the airline to manage fleet demographics; something that was not possible before. Currently, airlines are not able to accurately monitor profitability expectations of individual flights, in real time prior to departure. jetEngine’s Revenue Management module allows the airline to level demand by changing prices to encourage passengers to fly when it is most efficient for the airline. Airlines will be able to change planes much faster (known as “refleeting”) to accommodate more or fewer passengers to maximize the number of passengers per flight. While airlines are currently able to switch aircraft and crew, they are unable to do so with a full understanding of the impact on network feasibility or profitability. jetEngine grants an airline this flexibility.

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Integrated Operations

The Integrated Operations module allows for the integration of all airline operating variables when executing the airline’s operations.  While each module discussed above has its own advanced functionality not currently offered in the marketplace, Integrated Operations is the module that incorporates all of Integrated Operations Suite modules, their underlying state data and their decisions into one integrated solution.  A truly integrated solution is required to solve the airline industry’s problems, because, disruptions to the schedule are not singular in nature – they tend to be disparate and have a significant compounding effect throughout the network and all of the functions noted above.

To resolve this, Integrated Operations is implemented as a “continuous forward review model.” In this model, all changes in the environment are continuously rescheduled to give fully feasible solutions in minutes.  As a result of the speed of jetEngine, the system can adjust schedules and pricing to fit the dynamic nature of today’s operating environment. An example is that tickets are dynamically and individually priced in the revenue management system, are linked to the operational systems.

The Integrated Operations module also provides the airline the ability to recover in an efficient manner from irregular operations (“IROPS”) events, such as delays in airports or airplanes, which may affect the “day of operations” flight schedule. The objective is to allow the airline a simple and more cost effective method to find a feasible path back to the original planned schedule, in the shortest period of time.

The failure to properly resolve IROPS events and manage the implementation of risk mitigated scheduling plans can have enormous implications for an airline with respect to increased contingency costs, cost overruns, and the loss of loyal passengers, as was experienced by JetBlue in early 2007. We believe that this may not have happened if JetBlue were operating on the jetEngine platform.

The following diagram presents the jetEngine approach to Integrated Operations:

Integrated Operations

Value Proposition of the jetEngine Technology

Most enterprises have an enterprise resource planning (“ERP”) system as their financial backbone. These systems are designed to collect information and report extensively on events after they have occurred. However, jetEngine has a unique operational financial subsystem that provides financial and operational data, reporting concurrently with operational decision-making. All factors impacting costs are incorporated into the solution effectively creating a real-time financial reporting system that instantaneously shows the variance to the airline’s profit model by quantifying the impact of scenarios tested or unforeseen events experienced.

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Through this integrated solution, airlines can model strategies and scenarios with a full understanding of how customers might react and the financial impact of those scenarios. The airline will be able to drill down into their schedule and test scenarios for increasing profitability, market share, etc.

For the first time ever, jetEngine enables true strategic airline management, completely integrating all stages of an airline’s operations from strategic planning through to tactical execution.

The expected benefits of jetEngine to an airline are:

 1.    Strategic planning with advanced modeling and simulation capabilities that create executable business plans supported by fully feasible and integrated fleet, crew and maintenance schedules with a more accurate predictive interpretation of how the airline can compete more effectively;

 2.    Competitive revenue management using dynamic pricing and content-based strategies to increase an airline’s control over its distribution and sales; and

 3.    Integrated operations which resolves scheduling logistics by utilizing a continuous forward review model that can show within minutes a number of feasible solutions to multiple irregular events and unforeseen changes to the airline’s operating environment, based on business policies and priorities.

These benefits are expected to translate directly to improving the airline’s profitability:

 1.    jetEngine enables airline managers to actively shape, rather than to passively reactto, their competitive environments;

 2.    Operational efficiencies, due to the drastic reduction of the business planning cycle time and more efficient use of resources, only achieved through integrated operations and organizational alignment.  These efficiencies should lead to significant cost savings, including the logistics and variable costs of flying, infrastructure, labor, and sales and distribution savings;

 3.    More profitable revenue and additional revenue opportunities; and

 4.    Ability to respond dynamically and strategically to competitive market forces in real time, to maximize profits, as well as to reduce contingency costs and mitigate enterprise risks and uncertainty.

Market Entry Strategy

AISystems’ initial focus is on the commercial airline industry.  Management will place initial efforts on gaining market share within the industry through the sale of its Business Planning Suite.  As discussed above, through the experience at AeroMexico, Southwest Airlines and discussions with numerous other airlines, the company has decided to focus development attention on launching the BPS to get rapid market share and then have a natural progression to the releases of Schedule Planning, Crew, Revenue Management and Integrated Operations. Management believes the speed and ease of deployment of the BPS, along with aggressive pricing will lead to a rapid penetration of the market.  Management further believes that once an airline has had the opportunity to work with the BPS, it will be very interested in implementing the full capabilities of jetEngine through the purchase of the entire platform.

The Company plans to make extensive use of channel partners as a means of distribution and possibly also deployment of its products and has sought out several such companies that have numerous airline customers. This strategy allows the channel partner to handle the deployment aspect of the product sale and allows AISystems to focus on developing and producing world-class products.

The diagram below provides a rough timeline of how AISystems plans to develop, market and deploy jetEngine over the next five quarters:

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Sales and Marketing Plan for Commercial Carriers

Customers

AISystems will initially focus sales efforts on 300+ airlines as targets for the Business Planning Suite (BPS) using it as an entry point into each customer and it expects to sell all four of its modules at an annual licensing fee of $250,000 each. The BPS modules will be released sequentially and customers will be encouraged to purchase the additional 3 modules as they become available.

When selling the Integrated Operations Suite, AISystems will focus its sales efforts on the top 75 airlines in the world, where airline passenger volumes average approximately 22.0 million passengers carried annually. These passengers volumes would generate approximately $3.0-5.0 million in annual Platform Customer revenue from each airline.

We are at various stages in the sales cycle with a number of major international carriers around the world. Our plan is to have 6 signed customers for the Business Planning Suite by the end of 2010 growing to 95 by the end of 2014.  Based on development timelines, the Company anticipates having 3 customers committed to moving to the fully integrated platform by Q1, 2012 and growing to 15 customers by the end of 2014. The airlines in our sales pipeline currently represent approximately 15.0% of passengers carried globally by all airlines (approximately 325.0 million passengers).

The sales cycle in the airline industry has historically been long, many years with some products. The Company will attempt to shorter the sales cycle with its sales effects. The Company does not have a Beta customer for its BPS suite of products at this time, which in software is consider a critical first step in bringing a product to market. Should the Company be unable to shorten the traditional sales cycle, or complete the development of a product acceptable to potential on our expected timeline or secure a Beta customer in the short term our ability to achieve the above sales targets will be compromised. This could result in the Company not have access to sufficient capital or being able to attract and retain the best talent to continue development, market, sale and deploy our technology into the market place. This could result in the loss of any investment made in the Company.

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Pricing Strategy & Structure

Business Planning Suite

AISystems will charge an annual licensing fee of $250,000 for each of four modules within the Business Planning Suite.  The modules are rapid to deploy, utilize standard and readily available data to operate and require minimal interfaces to deploy.  Based on these facts, and the power modeling capabilities of the system, management believes these modules will lead to rapid sales and market penetration.  The market share gained by this product will serve as a ready base into which to sell the Integrated Operations Suite.

Integrated Operations Suite

AISystems will charge an annual licensing fee of $500,000 for the Crew Planning module.  The potential savings realized through more efficient planning and faster, more profitable, responses to day of operations issues, should significantly off-set the cost of this module.

There are two revenue streams from the sale of the remaining modules of the jetEngine platform: (1) an Up-Front Fee, which is currently expected to be approximately $1.0 million per airline, due upon contract execution; and (2) On-Going Fees, which are currently expected to be approximately $0.10 per module per flown passenger.  Management anticipates airlines which purchase the platform will purchase two modules on average.

Beta customer(s)

On June 7, 2007, AISystems signed AeroMexico as its first beta customer. AeroMexico is an international carrier with approximately 10.2 million annual transported passengers.  AeroMexico recognized that AISystems’ unique solution could dramatically change its business and the industry in which it competes. The Company does not currently expect any future revenues from AeroMexico.

The Company may not be in compliance of its agreement with AeroMexico in connection with certain monies received from AeroMexico to be kept in escrow. AeroMexico has certain rights, including termination, for certain significant breaches of the agreement. Such non-compliance may be determined to be a significant breach and give AeroMexico the right to terminate its agreement with the Company and other rights.

The Company does not have a Beta customer for its Business Planning Suite at this time.

Competition

The airlines and many third party companies have developed software systems to try to address the needs of the industry. Unfortunately, the ability of these systems to drive down costs has reached a plateau. Accordingly, there is a great opportunity to bridge the gap between the capabilities of current technology offerings and the economic demands of the airline industry. While the Company believes that its can bridge the above gap, there is risk that the Company will also fall short in meeting the needs of the Airline Industry as other before the Company have.

Airline software vendors typically offer single scheduling solutions to route, crew, maintenance or passenger scheduling needs and yield management. Some solution providers offer products to help with revenue management; however these systems are limited to tracking and reporting competitive pricing behavior. Vendors like Sabre Holdings Corporation, Navitaire, and Jeppesen Systems exclusively target the airline industry with their offerings, but usually solve only a small piece of the puzzle and further entrench the problem of airlines working in functional silos.

Each of these solutions offers varying degrees of assistance to an airline in different aspects of their operations. However, a number of these solutions are not easy to operate and may require days of effort to ‘calibrate’ market data before it can be used to optimize a week’s worth of a schedule. Potential customers have revealed to management that they are highly frustrated with the current software systems.

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Accordingly, there are two aspects of the competitive solutions which we believe indicate that jetEngine is the only solution which can provide airlines with sustainable operating efficiencies. First, none of these products offer a holistic and integrated solution to managing all critical aspects of an airline, therefore, perpetuating the need to manage in operational silos. Second, none of the current software solutions employ GST Type III tools. This means they assume a static environment and cannot factor in the disruptions and unexpected events that occur every day within airline operations. Consequently, the Company believes that jetEngine’s advanced solution has no direct competitors.

Intellectual Property

On December 9, 2005, AISystems entered into an Intellectual Property Agreement with Dynamic Intelligence Inc. to license certain intellectual property from Dynamic Intelligence Inc. and in full satisfaction of the consideration, the Company issued 20,000,000 common shares at a nominal agreed value of $10.

On October 11, 2006, the parties amended the Intellectual Property Agreement to provide AISystems the right to license additional intellectual property from Dynamic Intelligence Inc. (collectively, the “Intellectual Property Agreement”). AISystems’ license consists of the exclusive, fully paid, worldwide and perpetual license to exploit the Dynamic Intellectual Property solely in the airline field, including the right to exploit any product or service in the airline field. Pursuant to the amended Intellectual Property Agreement, the fair value consideration of $8,000,000 as per the amended agreement was settled with the issuance of a note payable for $4,000,000 and issuing 8,000,000 common shares.

In May 2008, the parties amended the Intellectual Property Agreement to provide AISystems the exclusive, worldwide and perpetual right to develop and market the proprietary Integrated E-Commerce Travel Engine Platform for the travel and tourism industry. Pursuant to the amended intellectual property agreement, the fair value of consideration of $5,000,000 was settled with the issuance of a note payable for $5,000,000, the issuance of 2,000,000 common shares and a 5.0% royalty on revenue directly derived from the Integrated E-Commerce Travel Engine Platform.

In May 2009, the May 2008 amendment was cancelled pursuant to another amendment and all obligations under the May 2008 amendment were reversed. Also, the $5,000,000 note and accrued interest, 2,000,000 common shares were cancelled and $800,000 in other debt was cancelled as a premium for the cancellation of the amendment. The Intellectual Property (“IP”) was returned as the Company did not have the capital and technical resources necessary to develop and deploy the additional IP.

Pursuant to the Intellectual Property Agreement, AISystems has the exclusive and perpetual license to use proprietary technology to develop a unique proprietary business platform for the airline industry that is comprised of systems and mathematical algorithms capable of generating significant improvements in strategic planning capabilities, resource scheduling, revenue management and integrated operations.

The core jetEngineTM system technology is the backbone of an integrated business platform solution that is expected to revolutionize the airline industry.  jetEngineTM is a new paradigm for strategic airline management that is enabling the integration and control of a commercial airline’s schedule planning, revenue management, and integrated operations functions, entirely in real time.

Properties

AISystems maintains its corporate office at 55 University Ave., Suite 910, Toronto, ON, Canada M5J 2H7.  The 2,251 square foot facility is under a five year lease, expiring in 2014, which may be extended for an additional five years.   The company pays rent of CAN$45,020 per year plus additional rent consisting of (i) Operating Costs; (ii) Realty Taxes; (iii) utilities; and (iv) maintenance. 

AISystems also maintains a software facility at 3500 Carillon Point, 5th Floor, Kirkland, WA 98033. The 15,116 square foot facility is under a 63 month lease, expiring in October 2012, which may be extended for an additional three years.   The company pays rent ranging between $616,000 to $646,000 per year plus expenses and parking.

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Employees

AISystems currently has a team of 18 people, of whom 9 are directly linked to product development, and 9 are working on various corporate, product development and deployment initiatives.

Management expects the Company will grow to 25 people by the end of 2010, with 15 directly involved in development activities. Employee growth will occur in conjunction with customer acquisition and will coincide with our product development roadmap.

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RISK FACTORS

You should carefully consider the risks described below together with all of the other information included in this report before making an investment decision with regard to our securities.  The statements contained in or incorporated herein 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. If any of the following risks actually occurs, our business, financial condition or results of operations could be harmed. In that case, you may lose all or part of your investment.

Risks Relating to Our Business

OUR LIMITED OPERATING HISTORY MAY NOT SERVE AS AN ADEQUATE BASIS TO JUDGE OUR FUTURE PROSPECTS AND RESULTS OF OPERATIONS.

We have a relatively limited operating history. Such limited operating history and the unpredictability of the airline industry makes it difficult for investors to evaluate our business and future operating results. There can be no assurance that we will be able to obtain or sustain profitable operations or that we will even generate significant revenues.  An investor in our securities must consider the risks, uncertainties, and difficulties frequently encountered by companies in new and rapidly evolving markets. The risks and difficulties we face include:

 ·    The jetEngine platform technology could fail or its performance may not meet our or potential clients’ expectations.

 ·    The sales cycle for contemplated products is long and the adoption rates are unknown, thus it may take longer for us to achieve meaningful revenue or meet our projections.

 ·    The development of our products and services and the implementation of such products in customer environments may take longer than expected.

OUR INDEPENDENT AUDITORS HAVE INCLUDED A GOING CONCERN REFERENCE IN ITS AUDIT OPINION AND RELATED DISCUSSION IN THE NOTES TO OUR FINANCIAL STATEMENTS THAT EXPRESSES SUBSTANTIAL DOUBT AS TO WHETHER WE WILL BE ABLE TO CONTINUE AS A GOING CONCERN.

It should be noted that our independent auditors have included a going concern opinion and related discussion in the notes to our financial statements. The Company has included the going concern reference because we have incurred significant and recurring losses and we have a capital deficiency amongst other things.

The Company has yet to fully commercialize its technologies and consequently has incurred significant losses since its inception. At December 31, 2009, the Company’s deficit accumulated during the development stage was approximately $61.3 million, and the Company had utilized cash in operating activities of $25.3 million. The Company has funded theses losses and cash flows through the sale of equity securities, the issuance of debt and from credit granted by vendors. The Company is also in arrears to certain creditors and in default under certain agreements which may have a material adverse effect on operations.

These factors raise substantial doubt about the ability of the Company to continue as a going concern. There can be no assurance that the Company will have adequate capital resources to fund planned operations or that any additional funds will be available to the Company when needed, or if available, will be available on favorable terms in the amounts required by the Company. If the Company is unable to obtain adequate capital resources to fund operations, it may be required to delay, scale back or eliminate some or all of its operations, which may have a material adverse effect on the Company’s business, results of operations and ability to continue as a going concern. These consolidated financial statements do not include any adjustments that might result from the outcome of these uncertainties. In this regard, management is planning to raise necessary additional funds through loans and additional sales of its common stock. There is no assurance that the Company will be successful in raising additional capital.

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Until such time we receive additional debt or equity financing, or begin to receive significant revenues from operations, there is a risk that we will not be able to continue as a going concern and if our financial condition continues to deteriorate, we may no longer be able to continue to operate our business. We may continue to incur losses and we cannot be certain whether we will ever earn a significant amount of revenues or profit, or, if we do, that we will be able to continue earning such revenues or profit. Any of these factors could cause our stock price to decline and result in your losing a portion or all of your investment.

IF WE FAIL TO MAINTAIN AN EFFECTIVE SYSTEM OF INTERNAL CONTROL OVER FINANCIAL REPORTING, OUR ABILITY TO ACCURATELY AND TIMELY REPORT OUR FINANCIAL RESULTS OR PREVENT FRAUD MAY BE ADVERSELY AFFECTED AND INVESTOR CONFIDENCE AND THE MARKET PRICE OF OUR ORDINARY SHARES MAY BE ADVERSELY IMPACTED.

As directed by Section 404 of the Sarbanes-Oxley Act of 2002, or SOX 404, the Securities and Exchange Commission adopted rules requiring public companies to include a report of management on the company’s internal controls over financial reporting in their annual reports, including Form 10-K. Under current SEC rules, our management may conclude that our internal controls over our financial reporting are not effective.  Even if our management concludes that our internal controls over financial reporting are effective, our independent registered public accounting firm may issue a report that is qualified if it is not satisfied with our controls or the level at which our controls are documented, designed, operated or reviewed, or if it interprets the relevant requirements differently from us.  Any of these possible outcomes

OUR MANAGEMENT HAS LIMITED EXPERIENCE IN MANAGING AND OPERATING A PUBLIC COMPANY.  ANY FAILURE TO COMPLY OR ADEQUATELY COMPLY WITH FEDERAL SECURITIES LAWS, RULES OR REGULATIONS COULD SUBJECT US TO FINES OR REGULATORY ACTIONS, WHICH MAY MATERIALLY ADVERSELY AFFECT OUR BUSINESS, RESULTS OF OPERATIONS AND FINANCIAL CONDITION.

Our current management has limited experience managing and operating a public company and relies in many instances on the professional experience and advice of third parties including its consultants, attorneys and accountants. Failure to comply or adequately comply with any laws, rules, or regulations applicable to our business may result in fines or regulatory actions, which may materially adversely affect our business, results of operation, or financial condition.

THE LACK OF EXPERIENCED ACCOUNTING STAFF MAY LEAD TO MATERIAL WEAKNESS IN THE PREPARATION OF OUR FINANCIALS.

A material weakness may occur in the preparation of our financials due to insufficient resources in our accounting and finance department, resulting in (i) an ineffective review, monitoring and analysis of schedules, reconciliations and financial statement disclosures, and (ii) the misapplication of U.S. GAAP and SEC reporting requirements. Due to the effect of the lack of resources, including a lack of resources that are appropriately qualified in the areas of U.S. GAAP and SEC reporting. Thiscould result in an adverse reaction in the financial marketplace due to a loss of investor confidence in the reliability of the Company’s financial information.

WE MAY BE UNABLE TO SECURE CUSTOMERS.

We may have difficulty securing one or more airline customers and, if so secured, any such airline may purchase less than the full product offering, all of which could have a material adverse impact on our business.

THE DEVELOPMENT OF OUR PRODUCTS MAY BE SLOWER THAN PROJECTED.

The development of our products and services and the implementation of such products in customer environments may take longer than expected. The sales cycle for contemplated products is long and the adoption rates are unknown, thus it may take longer for us to achieve meaningful revenue or meet our projections.

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OUR TECHNOLOGY IS UNPROVEN.

We are a development stage company, bringing to market an advanced and unproven technology. At this stage, we have not completed product development nor have we achieved customer acceptance of our product and there is no certainty that this can be achieved. Failure to achieve product completion or customer acceptance could result in the loss of your investment. You should consider and evaluate our prospects in light of the risks and uncertainty frequently encountered by early stage companies in rapidly evolving markets characterized by rapid technological change, changing customer needs, evolving industry standards and frequent introductions of new products and services.

OUR BUSINESS IS AFFECTED BY MANY CHANGING ECONOMIC AND OTHER CONDITIONS BEYOND OUR CONTROL.

Our business and our results of operations are affected by many changing economic and other conditions beyond our control, including, among others:

 ·    Our products may be subject to regulatory rules imposed in respect of civil aviation and/or the travel and tourism industry.

 ·    We face added business, political, regulatory, operational, financial and economic risks as a result of our international operations, any of which could increase our costs and hinder our growth.

 ·    Actual or potential disruptions to the air traffic control systems.

 ·    Increases in costs of safety, security and environmental measures.

 ·    Outbreaks of diseases that affect travel behaviour.

 ·    Weather and natural disasters.

 ·    Our projected revenue model based on ongoing fee per module and/or per passengers flown may not be accepted by subsequent customers.

WE MAY BE UNABLE TO ATTRACT AND RETAIN KEY MANAGEMENT PERSONNEL.

Our management and employees can terminate their employment at any time, and the loss of the services of one or    more of our executive officers or other key employees could have a material adverse impact on our business. We may be unable to locate and secure and retain talented and qualified consultants or advisors to assist in implementing our plan. If we are unable to attract and retain the necessary technical, sales and other personnel on a cost-effective basis, our business operations and financial performance could be adversely affected.

WE MAY BE UNABLE TO ATTRACT AND RETAIN KEY ADVISORS OR CONSULTANTS

Our advisors and consultants can terminate their agreements at any time, and the loss of the services of one or    more of our key advisors or consultants could have a material adverse impact on our business. We may be unable to locate and secure and retain talented and qualified employees or consultants to implement our plan. If we are unable to attract and retain the necessary technical, sales and other personnel on a cost-effective basis, our business operations and financial performance could be adversely affected.

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WE WILL NEED ADDITIONAL CAPITAL TO FUND OUR GROWING OPERATIONS.  WE MAY NOT BE ABLE TO OBTAIN SUFFICIENT CAPITAL AND MAY BE FORCED TO LIMIT OR CEASE THE SCOPE OF OUR OPERATIONS.

If adequate additional financing is not available on reasonable terms, we may be forced to limit or cease the scope of our operations and we would have to modify our business plans accordingly.  There is no assurance that additional financing will be available to us.

In connection with our growth strategies, we may experience increased capital needs and accordingly, we may not have sufficient capital to fund our future operations without additional capital investments. Our capital needs will depend on numerous factors, including (i) our profitability; (ii) the release of competitive products by our competition; (iii) the level of our investment in research and development; and (iv) the amount of our capital expenditures. We cannot assure you that we will be able to obtain capital in the future to meet our needs.

In recent years, the securities markets in the United States have experienced a high level of price and volume volatility, and the market price of securities of many companies have experienced wide fluctuations that have not necessarily been related to the operations, performances, underlying asset values or prospects of such companies. For these reasons, our common shares can also be expected to be subject to volatility resulting from purely market forces over which we will have no control. If we need additional funding, the market fluctuations affect on our stock price could limit our ability to obtain equity financing.

If we cannot obtain additional funding, we may not be able to fulfill our business plan and could materially affect our business.

Even if we do find a source of additional capital, we may not be able to negotiate terms and conditions for receiving the additional capital that are favorable to us. Any future capital investments could dilute or otherwise materially and adversely affect the holdings or rights of our existing shareholders. In addition, new equity or convertible debt securities issued by us to obtain financing could have rights, preferences and privileges senior to our current issued securities. We cannot give you any assurance that any additional financing will be available to us, or if available, will be on terms favorable to us.

NEED FOR ADDITIONAL EMPLOYEES.

The Company’s future success also depends upon its continuing ability to attract and retain highly qualified personnel. Expansion of the Company’s business and the management and operation of the Company will require additional managers and employees with industry experience, and the success of the Company will be highly dependent on the Company’s ability to attract and retain skilled management personnel and other employees. There can be no assurance that the Company will be able to attract or retain highly qualified personnel. Competition for skilled personnel in the software development industry is significant. This competition may make it more difficult and expensive to attract, hire and retain qualified managers and employees.

THE SEVERE GLOBAL ECONOMIC DOWNTURN HAS RESULTED IN VERY WEAK DEMAND FORAIR TRAVEL WHICH COULD HAVE A SIGNIFICANT NEGATIVE IMPACT ON US.

The World is facing a global recession. This could affect our customers’ purchasing power and their ability to enter into and fulfill terms of agreements with the Company. The Company’s ability to complete financing to implement its business plan on any terms is uncertain.  We may not be able to raise sufficient financing to affect our business plan and deliver products and services that are accepted by customers. If we cannot find adequate capital on reasonable terms, investors will face a significant risk of losing their investments in their entirety.

WE ARE HIGHLY DEPENDENT ON TECHNOLOGY.

Our business and our results of operations is highly dependent on technology our business faces many technology related risks.  Infringements of our intellectual property could adversely affect our ability to compete. Our patents applications may be rejected in whole or in part in the United States or in other jurisdictions around the world. We may have to defend ourselves against claims of intellectual property infringement, which could be very expensive for us and harm our business and financial condition. We may be a party to lawsuits in the course of our business. Litigation can be expensive, lengthy, and disruptive to normal business operations. Moreover, the results of complex legal proceedings are difficult to predict. An unfavorable resolution of a particular lawsuit could have a material adverse effect on our business, operating results, or financial condition.

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THERE IS SUBSTANTIAL COMPETITION IN THE AIRLINE SOFTWARE INDUSTRY, MANY OF WHOM ARE MORE HIGHLY CAPITALIZED THAN US, WHICH COULD LIMIT OUR ABILITY TO SUCCESSFULLY IMPLEMENT OUR BUSINESS PLAN.

There is substantial competition in the airline software industry.  Existing and new competitors may continue to improve their products and to introduce new products with competitive price and performance characteristics.   Our competitors have the advantage of established relationships within the industry and they may be more highly capitalized.  In addition, we cannot assure that additional competitors will not enter our existing markets, or that we will be able to compete successfully against existing or new competition.

OUR INDUSTRY IS SUBJECT TO RISKS GENERALLY ASSOCIATED WITH THE AIRLINE AND TRAVEL INDUSTRY, ANY OF WHICH COULD HAVE A MATERIALLY ADVERSE AFFECT ON OUR BUSINESS.

Our industry is subject to risks generally associated with the airline and travel industry, including economic pressure, rising fuel costs, and financial instability of potential customers, any of which could significantly harm our operating results.

OUR FUTURE SUCCESS IS DEPENDENT UPON OUR ABILITY TO PROTECT INTELLECTUAL PROPERTY LICENSED TO US.

The Company may not be able to protect unauthorized use of intellectual property licensed to us and take appropriate steps to enforce its rights.  Although management does not believe that its services infringes on the intellectual rights of others, there is no assurance that the Company may not be the target of infringement or other claims.  Such claims, even if not true, could result in significant legal and other costs associated and may be a distraction to management.  We plan to rely on a combination of copyright, trade secret, trademark laws and non-disclosure and other contractual provisions to protect our proprietary rights.  Because the policing of intellectual and intangible rights may be difficult and the ideas and other aspects underlying our business model may not in all cases be protectable under intellectual property laws, there can be no assurance that we can prevent competitors from marketing the same or similar products and services.

NEWLY DEVELOPED PRODUCTS MAY NOT BE COMPATIBLE WITH MARKET NEEDS RESULTING IN AN ADVERSE EFFECT ON OUR SALES AND EARNINGS.

Our business is particularly subject to changing customer trends and preferences. We may have difficulty securing one or more subsequent airline customers and, if so secured, any such airline may purchase less than the full product offering, all of which could have a material adverse impact on our business.  Our continued success depends in part on our ability to anticipate and respond to these changes, and we may not respond in a timely or commercially appropriate manner to such changes.

OUR REVENUE MODEL MAY NOT BE ACCEPTED BY POTENTIAL CUSTOMERS.

Our projected revenue model based on ongoing fee per module and/or per passengers flown may not be accepted by subsequent customers.  Our continued success is based on this revenue model; the failure of our revenue model could have a material adverse effect on our business, operating results, or financial condition. Failure to achieve customer acceptance could result in the loss of your investment. You should consider and evaluate our prospects in light of the risks and uncertainty frequently encountered by early stage companies in rapidly evolving markets characterized by rapid technological change, changing customer needs, evolving industry standards and frequent introductions of new products and services.

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DIFFICULTIES IN ESTABLISHING A NEW PRODUCT

We are an early stage company, bringing to market an advanced and unproven technology. We may not be able to raise sufficient financing to effect our business plan and deliver products and services that are accepted by customers. If we cannot find adequate capital on reasonable terms, investors will face a significant risk of losing their investments in their entirety.

DISTRIBUTION CHANNELS ARE IMPORTANT TO OUR BUSINESS, IF DISTRIBUTION MARKETS FOR OUR PRODUCT WEAKENS, OUR OPERATING RESULTS COULD SUFFER.

Our industry is subject to risks generally associated with the airline and travel industry, including economic pressure, rising fuel costs, and financial instability of potential customers, any of which could significantly harm our operating results.  A downturn in the airline industry, our inability to access distribution channels and/or weakening in our existing distribution channels could have a material adverse effect on our business, operating results, or financial condition.

Risks Associated with Our Securities

OUR COMMON STOCK IS QUOTED ON THE OTC BULLETIN BOARD WHICH MAY HAVE AN UNFAVORABLE IMPACT ON OUR STOCK PRICE AND LIQUIDITY.

Our Common Stock is quoted on the OTC Bulletin Board.  The OTC Bulletin Board is a significantly more limited market than the New York Stock Exchange or Nasdaq system.  The quotation of our shares on the OTC Bulletin Board may result in a less liquid market available for existing and potential stockholders to trade shares of our common stock, could depress the trading price of our common stock and could have a long-term adverse impact on our ability to raise capital in the future.

THERE IS LIMITED LIQUIDITY ON THE OTCBB.

When fewer shares of a security are being traded on the OTCBB, volatility of prices may increase and price movement may outpace the ability to deliver accurate quote information.  Due to lower trading volumes in shares of our Common Stock, there may be a lower likelihood of one’s orders for shares of our Common Stock being executed, and current prices may differ significantly from the price one was quoted at the time of one’s order entry.

OUR COMMON STOCK IS THINLY TRADED, SO YOU MAY BE UNABLE TO SELL AT OR NEAR ASKING PRICES OR AT ALL IF YOU NEED TO SELL YOUR SHARES TO RAISE MONEY OR OTHERWISE DESIRE TO LIQUIDATE YOUR SHARES.

Currently, our Common Stock is quoted in the OTC Bulletin Board market and the trading volume we will develop may be limited by the fact that many major institutional investment funds, including mutual funds, as well as individual investors follow a policy of not investing in OTC Bulletin Board stocks and certain major brokerage firms restrict their brokers from recommending OTC Bulletin Board stocks because they are considered speculative, volatile and thinly traded. The OTC Bulletin Board market is an inter-dealer market much less regulated than the major exchanges and our Common Stock is subject to abuses, volatility and shorting. Thus, there is currently no broadly followed and established trading market for our Common Stock. An established trading market may never develop or be maintained. Active trading markets generally result in lower price volatility and more efficient execution of buy and sell orders. Absence of an active trading market reduces the liquidity of the shares traded there.

The trading volume of our Common Stock has been and may continue to be limited and sporadic. As a result of such trading activity, the quoted price for our Common Stock on the OTC Bulletin Board may not necessarily be a reliable indicator of its fair market value. Further, if we cease to be quoted, holders would find it more difficult to dispose of our Common Stock or to obtain accurate quotations as to the market value of our Common Stock and as a result, the market value of our Common Stock likely would decline.

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OUR COMMON STOCK IS SUBJECT TO PRICE VOLATILITY UNRELATED TO OUR OPERATIONS.

The market price of our Common Stock could fluctuate substantially due to a variety of factors, including market perception of our ability to achieve our planned growth, quarterly operating results of other companies in the same industry, trading volume in our Common Stock, changes in general conditions in the economy and the financial markets or other developments affecting our competitors or us. In addition, the stock market is subject to extreme price and volume fluctuations. This volatility has had a significant effect on the market price of securities issued by many companies for reasons unrelated to their operating performance and could have the same effect on our Common Stock.

OUR COMMON STOCK ARE CLASSIFIED AS A “PENNY STOCK” AS THAT TERM IS GENERALLY DEFINED IN THE SECURITIES EXCHANGE ACT OF 1934, AS AMENDED, TO MEAN EQUITY SECURITIES WITH A PRICE OF LESS THAN $5.00. OUR COMMON STOCK WILL BE SUBJECT TO RULES THAT IMPOSE SALES PRACTICE AND DISCLOSURE REQUIREMENTS ON BROKER-DEALERS WHO ENGAGE IN CERTAIN TRANSACTIONS INVOLVING A PENNY STOCK.

We will be subject to the penny stock rules adopted by the Securities and Exchange Commission that require brokers to provide extensive disclosure to its customers prior to executing trades in penny stocks. These disclosure requirements may cause a reduction in the trading activity of our Common Stock, which in all likelihood would make it difficult for our stockholders to sell their securities.

Rule 3a51-1 of the Securities Exchange Act of 1934 establishes the definition of a “penny stock,” for purposes relevant to us, as any equity security that has a minimum bid price of less than $5.00 per share or with an exercise price of less than $5.00 per share, subject to a limited number of exceptions which are not available to us. It is likely that our shares will be considered to be penny stocks for the immediately foreseeable future. This classification severely and adversely affects any market liquidity for our Common Stock.

For any transaction involving a penny stock, unless exempt, the penny stock rules require that a broker or dealer approve a person’s account for transactions in penny stocks and the broker or dealer receive from the investor a written agreement to the transaction setting forth the identity and quantity of the penny stock to be purchased.  In order to approve a person’s account for transactions in penny stocks, the broker or dealer must obtain financial information and investment experience and objectives of the person and make a reasonable determination that the transactions in penny stocks are suitable for that person and that that person has sufficient knowledge and experience in financial matters to be capable of evaluating the risks of transactions in penny stocks.

The broker or dealer must also deliver, prior to any transaction in a penny stock, a disclosure schedule prepared by the SEC relating to the penny stock market, which, in highlight form, sets forth:

•       the basis on which the broker or dealer made the suitability determination, and

•       that the broker or dealer received a signed, written agreement from the investor prior to the transaction.

Disclosure also has to be made about the risks of investing in penny stocks in both public offerings and in secondary trading and commissions payable to both the broker-dealer and the registered representative, current quotations for the securities and the rights and remedies available to an investor in cases of fraud in penny stock transactions. Finally, monthly statements have to be sent disclosing recent price information for the penny stock held in the account and information on the limited market in penny stocks.

NO DIVIDENDS

The Company does not intend to declare any dividends in the foreseeable future.  Investors who require income from dividends should not purchase our common stock.

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THE VAST MAJORITY OF OUR COMMON STOCK IS CURRENTLY CONSIDERED RESTRICTED STOCK AND  IS NOT CURRENTLY ELIGIBLE TO BE RESOLD PURSUANT TO RULE 144.

A significant portion of our outstanding common stock is considered either “restricted shares” or “control shares” as defined in Rule 144 under the Securities Act.  The restricted shares may only be sold if they are registered under the Securities Act or another exemption from registration under the Securities Act.  However, because Across America was a shell company our restricted common stock is not currently eligible to be resold pursuant to Rule 144 until twelve months after the filing of this Form 8-K.

THE LACK OF A BROKER OR DEALER TO CREATE OR MAINTAIN A MARKET IN OUR STOCK COULD ADVERSELY IMPACT THE PRICE AND LIQUIDITY OF OUR SECURITIES.  

The Company has no agreement with any broker or dealer to act as a market maker for its securities and there is no assurance that it will be successful in obtaining any market makers. Thus, no broker or dealer will have an incentive to make a market for our stock. The lack of a market maker for our securities could adversely influence the market for and price of our securities, as well as your ability to dispose of, or to obtain accurate information about, and/or quotations as to the price of, our securities.

AS A COMPANY WITH A CLASS OF SECURITIES REGISTERED PURSUANT TO THE 1934 ACT THE COMPANY HAS SIGNIFICANT OBLIGATIONS UNDER THE 1934 ACT.

Having a class of securities registered under the 1934 Act is a time consuming and expensive process and subjects the company to increased regulatory scrutiny and extensive and complex regulation.  Complying with these regulations would be expensive and could require a significant amount of management’s time.  For example, public companies are obligated to institute and maintain financial accounting controls and for the accuracy and completeness of their books and records. These requirements could necessitate additional corporate spending on procedures and personnel requiring us to reallocate funds from other business objectives.

MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION

AND RESULTS OF OPERATIONS

The following discussion and analysis of the results of operations and financial condition of AISystems from January 1, 2009 to December 31, 2009 or the year ended December 31, 2009  should be read in conjunction with the Selected Consolidated Financial Data, AISystems’ financial statements, and the notes to those financial statements that are included elsewhere in this Form 8-K. Our discussion includes forward-looking statements based upon current expectations that involve risks and uncertainties, such as our plans, objectives, expectations and intentions. Actual results and the timing of events could differ materially from those anticipated in these forward-looking statements as a result of a number of factors, including those set forth under the Risk Factors, Cautionary Notice Regarding Forward-Looking Statements and Business sections in this Form 8-K. We use words such as “anticipate,” “estimate,” “plan,” “project,” “continuing,” “ongoing,” “expect,” “believe,” “intend,” “may,” “will,” “should,” “could,” and similar expressions to identify forward-looking statements.

COMPANY OVERVIEW

On March 19, 2010, the Company entered into a Share Exchange Agreement with AISystems and AISystems shareholders pursuant to which AISystems became a wholly owned subsidiary of the Company.  As a result of the merger transaction, our operations are now focused on the products and services offered by and through AISystems.  Consequently, we believe that the acquisition has caused us to cease to be a shell company as we now have more than nominal operations.

The following management’s discussion and analysis is with respect to the financial statements of AISystems that are filed with this Form 8-K.  For information related to the Company's operations prior to the Merger Transaction, please see the Company's Annual Report on Form 10-K for the year ended July 31, 2009 and all other prior reports filed by the Company with the Securities and Exchange Commission.

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AI Systems have the exclusive licensing right to develop and market a proprietary business platform called jetEngine™ O/S (“jetEngine”) for the airline industry and are in the process of building a software program, jetEngine while simultaneously creating an infrastructure for sustainable growth prepared to enter the commercial stage of its business life cycle.

AISystems is at various stages of discussion with a number of airlines worldwide, implementation and channel partners regarding the development and deployment of jetEngine. The Company’s first beta customer, AeroMexico, was signed on June 7, 2007. AeroMexico is an international carrier with approximately 10.2 million annual transported passengers.  AeroMexico recognized that AISystems’ unique solution could dramatically change its business and the industry in which it competes. The Company does not currently expect any future revenues from AeroMexico.

The Company may not be in compliance of its agreement with AeroMexico in connection with certain monies received from AeroMexico to be kept in escrow. AeroMexico has certain rights, including termination, for certain significant breaches of the agreement. Such non-compliance may be determined to be a significant breach and give AeroMexico the right to terminate its agreement with the Company and other rights.

The Company does not have a Beta customer for its Business Planning Suite at this time.

AISystems currently anticipates the implementation of its business plan will require additional investment capital. The Company aims to complete $5 million to $10 million in equity financing in 2010. The funds will be used to engage potential customers, to fund product development, for working capital purposes, for repayment of debt and for other corporate purposes. There is no assurance that the Company will be able to raise the necessary funds to continue operations as envisions or that such funds can be raised on favorable terms to existing shareholders. This could result in significant dilution or a loss of investment to any current or future shareholders.

AISystems’ focus is on the commercial airline industry. Management will place initial efforts on gaining market share within the industry through the sale of its Business Planning Suite (“BPS”). Through the Company’s experiences and discussions with numerous airlines, the Company has decided to focus development attention on launching the BPS in an attempt to get rapid market share and then to have a natural progression to the releases of Schedule Planning, Crew, Revenue Management and Integrated Operations. Management anticipates that the speed and ease of deployment of the BPS, along with aggressive pricing will lead to a rapid penetration of the market. Management further believes that once an airline has had the opportunity to work with BPS, it will be interested in implementing the full capabilities of jetEngine through the purchase of the entire platform. At this time, the Company does not have any customers for its BPS product, it is possible that, 1) the Company will not complete sales with potential customers, 2) that those sales will not be completed on terms favorable to the Company 3) that the Company will not  have sufficient or the appropriate resources to complete the development of its product 4) that a competitive product will address the needs of the market before the Company is able to commercialize thereby significantly reducing the expected market opportunity, 5) the product as envisioned and developed by the Company will not meet the needs of customer and therefore never get deployed or achieve acceptance in the market place..

The Company plans to make extensive use of channel partners as a means of distribution and deployment of its products and has sought out several such companies that have airline customers. This strategy allows the channel partner to handle the deployment aspect of the product sale and allows AISystems to focus on developing and producing world-class products. The Company is working on qualifying channel partners for distribution and deployment. Further Organization of such partners may take longer and be more expensive than the Company anticipated at this time. This could have a material effect on the Company’s ability to be successful.

AISystems currently anticipates the implementation of its business plan will require additional investment capital. The Company aims to complete $5million to $10 million in equity financing in 2010. The funds will be used to engage potential customers, to fund product development, for working capital purposes, repayment of debt and for other corporate purposes. There is no assurance that the Company will be able to raise the necessary funds to continue operations as envisions or that such funds can be raised on favorable terms to existing shareholders. This could result in significant dilution to any current or future shareholders.  If the Company is unable to raise sufficient funds on the required timelines its ability to implement its vision will be hindered and this could result in the entire loss of any investment in the Company. The Company has limited resources at this time, in the annual financial statements a reference to the Company’s ability to continue as a going concern assumption is rendered, see Liquidity and Capital Resources section below.

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CRITICAL ACCOUNTING POLICIES AND ESTIMATES

Development stage company

The Company complies with Financial Accounting Standards Board (“FASB”) Accounting Standards Codification (“ASC”) 915 (SFAS 7) for its characterization of the Company as a development stage company.  Furthermore, the Company complies with FASB ASC 720-15-25 (SOP-98-5), “Reporting on the Costs of Start-Up Activities,” under which start-up costs and organizational costs are expensed as incurred.

Basis of consolidation

The consolidated financial statements are prepared in accordance with accounting principles generally accepted in the United States of America, and include the accounts of the Company and its wholly owned subsidiaries.  All inter-company accounts and transactions have been eliminated on consolidation.

Use of estimates

The preparation of consolidated financial statements in conformity with accounting principles generally accepted in the United States of America requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the consolidated financial statements and the reported amounts of expenses during the reported periods.  Actual results could differ from these estimates.

Revenue recognition

The Company charges customers a signing, deployment and exclusivity fee, as well as a recurring monthly fee based on passengers carried for its jetEngine™ O/S platform.

The Company follows the provisions of FASB ASC 985-605 (SOP 97-2), “Software Revenue Recognition” and Staff Accounting Bulletin (SAB) 104, “Revenue Recognition in Financial Statements.” Revenue is recognized from the sale of product and software licenses when delivery has occurred based on purchase orders, contracts or other documentary evidence, provided that collection of the resulting receivable is deemed probable by management. A provision is made for estimated sales returns and other insignificant vendor obligations.

Fees earned at contract signing and in conjunction with product deployment are deferred and recognized as income once the customer acceptance of applicable jetEngine™ modules is obtained. Exclusivity fees pursuant to customer contracts are recognized on a straight line basis from the time customer acceptance of applicable jetEngine™ modules is obtained to the maturity of the exclusivity period. Recurring monthly passenger fee is recorded on an accrual basis commencing once the customer has accepted a jetEngine™ module.

Deferred revenue represents unearned income associated with fees due related to contract signing, deployment and exclusivity as applicable.

Interest income is recognized when earned.

Cash and cash equivalents

The Company considers all highly liquid investments with original maturities of three months or less to be cash equivalents.  No collateral or security is provided on these cash and cash equivalents, in excess of the amounts insured by the Federal Deposit Insurance Corporation.

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Interest bearing deposits in banks

Interest bearing deposits in banks are recorded at cost.

Restricted cash

The Company sets funds aside in a separate bank account related to the contractual obligations. Such amounts are termed Restricted Cash.

Property and equipment

Property and equipment is stated at cost and is depreciated using the declining balance method over the estimated useful lives of the assets which range from three to five years.  Maintenance and repairs are charged to expense as incurred.

Intellectual property

Under FASB ASC 350 (SFAS 142), “Goodwill and Other Intangible Assets”, goodwill and intangible assets with indefinite useful lives are not amortized. These standards require that these assets be reviewed for impairment at least annually, or whenever there is an indication of impairment. Intangible assets with finite lives are amortized over their estimated useful lives and reviewed for impairment in accordance with FASB ASC 350-30-35 (SFAS 144), “Accounting for the Impairment or Disposal of Long-Lived Assets”.

The Company’s intellectual property consists of the exclusive worldwide and perpetual license to exploit certain intellectual property (“Dynamic Intellectual Property”), solely in the airline field, acquired from Dynamic Intelligence Inc., the controlling shareholder.  The intellectual property has been recorded at cost. The useful life of the intellectual property is estimated to be five years. Amortization of the intellectual property will be recognized over that useful life commencing in the year the Company begins commercialization.

Impairment of long-lived assets

Management reviews long-lived assets for impairment whenever events or changes in circumstances indicate that the carrying amount of an asset may not be recoverable. Recoverability of assets to be held and used is measured by a comparison of the carrying amount of an asset to future cash flows expected to be generated by the asset. If such assets are considered to be impaired, the impairment to be recognized is measured as the amount by which the carrying amount of the assets exceeds the fair value of the assets. Based on its review, management does not believe that any impairment of long-lived assets exists at December 31, 2009 or December 31, 2008.

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Income taxes

The Company accounts for income taxes under the provisions of FASB ASC 740 (SFAS 109), “Accounting for Income Taxes”. Under the asset and liability method of FASB ASC 740 (SFAS 109), 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 and operating loss and tax credit carry forwards. 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. The effect on deferred tax assets and liabilities of a change in tax rates is recognized in operations in the period that includes the enactment date. A valuation allowance is required to the extent any deferred tax assets may not be realizable.

Stock-based compensation

The Company accounts for stock-based compensation in accordance with FASB ASC 718 (SFAS 123R), “Share-Based Payment”, that addresses the accounting for stock-based payment transactions in which an enterprise receives employee services in exchange for equity instruments of the enterprise.

Stock-based compensation expense recognized during the period is based on the fair value of the portion of stock-based payment award that is ultimately expected to vest. Stock-based compensation expense recognized in the consolidated statements of operations includes compensation expense for the stock-based payment awards based on the grant date fair value estimated in accordance with FASB ASC 718 (SFAS 123R), as stock-based compensation expense recognized in the consolidated statements of operations is based on awards ultimately expected to vest, it has been reduced for estimated forfeitures. These standards require forfeitures to be estimated at the time of grant and revised, if necessary, in subsequent periods if actual forfeitures differ from those estimates. When estimating forfeitures, the Company considers historic voluntary termination behaviors as well as trends of actual option forfeitures.

The fair value of options at the date of the grant is accrued and charged to operations, with an offsetting credit to additional paid in capital, on a straight line basis over the vesting period.  If the stock options are ultimately exercised, the applicable amounts of additional paid in capital are transferred to share capital.  The fair value of options is calculated using the Black-Scholes option pricing model.

Foreign currency translation

Transactions denominated in other currencies are recorded in the applicable functional currencies at the rates of exchange prevailing when the transactions occur. Monetary assets and liabilities denominated in other currencies are translated into the applicable functional currencies at rates of exchange in effect at the balance sheet dates. Non-monetary assets and liabilities are re-measured into the applicable functional currencies at historical exchange rates. Exchange gains and losses are recorded in the consolidated statements of operations.  

The Company has chosen the US dollar as its reporting currency. Assets and liabilities are translated at the exchange rates at the balance sheet date, equity accounts are translated at historical exchange rates and revenues, expenses, gains and losses are translated using the average rate for the year.

Recently Issued and Adopted Accounting Pronouncements

In June 2009, the Financial Accounting Standards Board ("FASB") approved the FASB Accounting Standards Codification ("the Codification" or "FASB ASC") as the single source of authoritative nongovernmental generally accepted accounting principles ("GAAP"). All existing accounting standard documents, such as FASB, American Institute of Certified Public Accountants, Emerging Issues Task Force and other related literature, excluding guidance from the Securities and Exchange Commission ("SEC"), have been superseded by the Codification. All other non-grandfathered, non-SEC accounting literature not included in the Codification has become non-authoritative. The Codification did not change GAAP, but instead introduced a new structure that combines all authoritative standards into a comprehensive, topically organized online database. The Codification is effective for interim or annual periods ending after September 15, 2009, and impacts the Company's financial statements, as all references to authoritative accounting literature are now referenced in accordance with the Codification.

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In June 2008, the FASB issued FASB ASC 815 (EITF 07-5) “Determining Whether an Instrument (or Embedded Feature) is indexed to an Entity's Own Stock”. FASB ASC 815-15 specifies that a contract (that would otherwise meet the definition of a derivative) issued or held by the reporting entity that is both indexed to its own stock and classified in stockholders' equity in its statement of financial position should not be considered a derivative financial instrument. The standard provides guidance for determining whether an equity-linked financial instrument (or an embedded feature) is indexed to an entity's own stock, using a two-step approach. First, the instrument's contingent exercise provisions, if any, must be evaluated, followed by an evaluation of the instrument's settlement provisions. It also clarifies on the impact of foreign currency denominated strike prices and market-based employee stock option valuation instruments on the evaluation. The Company adopted this standard on January 1, 2009.  This standard did not have a material impact on the Company’s consolidated financial statements.

In March 2008, the FASB issued FASB ASC 815 (SFAS 161), “Disclosures about Derivative Instruments and Hedging Activities — an amendment of FASB Statement No. 133”. FASB ASC 815 (SFAS 161) changes the disclosure requirements for derivative instruments and hedging activities. Entities are required to provide enhanced disclosures about (a) how and why an entity uses derivative instruments, (b) how derivative instruments and related hedged items are accounted for, and (c) how derivative instruments and related hedged items affect an entity’s financial position, financial performance, and cash flows. The Company adopted this standard on January 1, 2009.  This standard did not have a material impact on the Company’s consolidated financial statements.  

In February, 2008, the FASB issued FASB ASC 860-10-40 (FSP FAS 140-3), “Accounting for Transfers of Financial Assets and Repurchase Financing Transactions”, which was effective for the Company on January 1, 2009 The FSP requires that an initial transfer of a financial asset and a repurchase financing that was entered into contemporaneously with, or in contemplation of, the initial transfer be evaluated together as a linked transaction under SFAS 140, unless certain criteria are met. The adoption of this standard had no impact on the Company’s financial statements.

In December 2007, the FASB issued FASB ASC 805 (SFAS 141) (revised 2007) (“SFAS 141R”) “Business Combinations” and FASB ASC 810 (SFAS 160), “Non-Controlling Interests in Consolidated Financial Statements, an amendment of Accounting Research Bulletin No. 51.”  FASB ASC 805 changes how business acquisitions are accounted for and will impact financial statements both on the acquisition date and in subsequent periods. FASB ASC 810 changes the accounting and reporting for minority interests, which will be re-characterized as non-controlling interests and classified as a component of equity. These standards were effective for the Company beginning January 1, 2009. The adoption of FASB ASC 805 will change the Company’s accounting treatment for any future business combinations on a prospective basis.

Recent accounting pronouncements

In October 2009, the Financial Accounting Standards Board (“FASB”) issued new revenue recognition standards which eliminate the requirement to establish the fair value of undelivered products and services and instead provides for separate revenue recognition based upon management’s estimate of the selling price for an undelivered item when there is no other means to determine the fair value of that undelivered item. These standards are effective prospectively for revenue arrangements entered into or materially modified in fiscal years beginning on or after June 15, 2010. The Company is currently evaluating the impact, if any, that the adoption of this amendment may have on its consolidated financial statements.

In June 2009, the FASB also issued FASB ASC 805 (SFAS 167), Amendments to FASB Interpretation 46I, which is effective for the Company on January 1, 2010. It amends FIN 46I to require an enterprise to perform an analysis to determine whether the enterprise’s VIEs give it a controlling financial interest in a VIE. This analysis identifies the primary beneficiary of a VIE as the enterprise that has both of the following characteristics: (a) The power to direct the activities of a variable interest entity that most significantly impact the entity’s economic performance and (b) The obligation to absorb losses of the entity that could potentially be significant to the variable interest entity or the right to receive benefits from the entity that could potentially be significant to the variable interest entity. Additionally, an enterprise is required to assess whether it has an implicit financial responsibility to ensure that a VIE operates as designed when determining whether it has the power to direct the activities of the VIE that most significantly impact the entity’s economic performance.

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In contrast to FIN 46I, FASB ASC 805 (SFAS 167) requires ongoing reassessments of whether an enterprise is the primary beneficiary of a VIE. It also amends the events that trigger a reassessment of whether an entity is a VIE and requires enhanced disclosures with more transparent information about an enterprise’s involvement in a VIE. The Company does not expect the adoption of this standard will have an impact on its financial statements.

In June 2009, the FASB also issued FASB ASC 860 (SFAS 166), Accounting for Transfers of Financial Assets an amendment of FASB Statement No. 140, which is effective for the Company on January 1, 2010. On and after the effective date, the concept of a qualifying special purpose entity (QSPE) is no longer relevant for accounting purposes. Therefore, former QSPEs (as defined under previous accounting standards) would be evaluated for consolidation on and after the effective date in accordance with the applicable consolidation guidance. Furthermore, the disclosure provisions of FASB ASC 805 (SFAS 166) will be applied to transfers that occurred both before and after the effective date. The Company does not expect the adoption of this standard will have an impact on its financial statements.

On April 9, 2009, the FASB issued three FASB Staff Positions (FSPs) in order to provide additional application guidance and to enhance disclosures regarding fair value measurements and other-than-temporary impairment of securities, as follows:

FASB ASC 820-10-65 (FSP FAS 157-4), “Determining Fair Value When the Volume and Level of Activity for the Asset or Liability Have Significantly Decreased and Identifying Transactions That Are Not Orderly”, provides additional factors to consider when measuring the fair value of an asset or liability when there has been a significant decrease in the level of market activity for the instrument and quoted prices are associated with transactions that are not considered to be orderly. It also expands the disclosure requirements for the fair value of financial instruments. FASB ASC 320-10-65-1 (FSP FAS 115-2 and FAS 124-2), “Recognition and Presentation of Other-than-Temporary Impairments” (OTTI), amends the impairment assessment guidance and recognition principles of OTTI for debt securities and enhances the presentation and disclosure requirements for debt and equity securities. The FSP requires an entity to recognize an OTTI when the entity intends to sell the security, it is more likely than not that it will be required to sell the security before recovery, or when the entire amortized cost basis of the security will not be recovered. When an entity intends to sell the security, or more likely than not will be required to sell the security, before recovery of its amortized cost basis less any current-period credit loss, the OTTI is recognized in earnings equal to the difference between fair value and amortized cost at the balance sheet date. In all other situations, the impairment is separated into an amount representing credit loss and amount relating to all other factors. The impairment related to credit loss is recognized in earnings and impairment related to other factors is recognized in other comprehensive income.

FASB ASC 825-10-65-1 (FSP FAS 107-1 and APB 28-1), “Interim Disclosures about Fair Value of Financial Instruments”, increases the frequency of fair value disclosures from an annual to a quarterly basis.

The Company does not expect the adoption of these FSP’s will have an impact on its financial statements.

In April 2008, the FASB issued FASB 350-30 (FSP142-3), “Determination of the Useful Life of Intangible Assets”. FASB 350-30 (FSP 142-3) amends the factors that should be considered in developing renewal or extension assumptions used to determine the useful life of a recognized intangible asset under FASB ASC 350 (SFAS 142), “Goodwill and Other Intangible Assets”. The objective of FASB 350-30 is to improve the consistency between the useful life of a recognized intangible asset under (SFAS 142) and the period of expected cash flows used to measure the fair value of the asset under SFAS 141R, “Business Combinations”, and other U.S. generally accepted accounting principles. These standards will be effective beginning in fiscal year 2010. The Company is currently evaluating the impact that this FSP will have on its financial statements and disclosures.

RESULTS OF OPERATIONS AND FINANCIAL CONDITION

Results of Operations for the Years ended December 31, 2009, 2008, 2007 and for the period from December 7, 2005 (inception) to December 31, 2009.

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The following tables set forth key components of our results of operations for the periods indicated  in dollars.  The discussion following the table is based on these audited results.

	2009			2008			2007			For the period from December 7, 2005 (inception) to December 31, 2009
Operating expenses
Salaries and benefits	$	(4,654,468	)	$	(5,543,327	)	$	(3,347,098	)	$	(14,774,756	)
Outside Services		(2,788,840	)		(3,418,071	)		(2,062,513	)		(9,023,485	)
Travel, meals and entertainment		(238,539	)		(1,356,140	)		(603,002	)		(2,492,567	)
Office and general expense		(1,068,589	)		(1,707,026	)		(870,190	)		(3,969,619	)
		(8,750,436	)		(12,024,564	)		(6,882,803	)		(30,260,427	)
Other expenses
Depreciation and amortization		(351,722	)		(322,195	)		(177,480	)		(918,756	)
Stock Based Compensation		(5,799,309	)		(3,742,156	)		(17,245,216	)		(27,020,746	)
		(6,151,031	)		(4,064,351	)		(17,422,696	)		(27,939,502	)
Loss from operations		(14,901,467	)		(16,088,915	)		(24,305,499	)		(58,199,929	)
Other income (expenses)
Interest (expense)		(2,680,016	)		(453,576	)		(152,671	)		(3,337,344	)
Interest income		4,836			74,882			34,892			114,610
Other income (expense)		(74,579	)		123,951			40,952			81,809
		(2,749,758	)		(254,743	)		(76,826	)		(3,140,925	)
Net loss for the period		(17,651,225	)		(16,343,658	)		(24,382,325	)		(61,340,853	)
Deficit, beginning of the period		(43,689,628	)		(27,345,970	)		(2,963,645	)		-
Deficit, end of the period	$	(61,340,853	)	$	(43,689,628	)	$	(27,345,970	)	$	(61,340,853	)

Revenues.

The Company is a development stage company and has not earned any revenue from its inception in 2005 through 2009. The Company expects to commence earning revenue as it attracted customers and deploys software that is accepted by those customers. The Company expects to achieve first revenues in 2011. At this time, the Company’s product remains under development and the Company does not have any deployed products in the market place with potential customers.

On June 7, 2007, AISystems signed AeroMexico as its first beta customer. The Company received $1 million in fees from AeroMexico which are recorded as deferred revenue in the Company’s financial statements as the Company has not met the criteria for recognition. The Company does not currently expect any future revenues from AeroMexico.

Operating Expenses

In 2009 the Company’s loss from operations was $14.9 million as compared to $16.1 million and $24.3 million in 2008 and 2007 respectively.  The Company’s loss from operations from inception through December 31, 2009 are $58.2 million. In 2009 loss from operations was lower than 2008 and 2007 as the Company downsized to align its business progress with financing available in the market to continue operations. Costs incurred in 2009, 2008 and 2007 related primarily to staff, facilities, consultants, advisors, legal, travel and other costs associated with seeking customers, investors and the continued development of software as the Company aims to establish a market for its technology rights. Since inception, the Company has expanded and contracted based upon access to capital, the availability of key resources and traction with potential customers. The Company expects the loss from operations in 2010 to be in line with 2009.

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In 2009, compensation expense was $4.7 million a reduction from $5.5 million in 2008. The decrease was due to a reduction in staff in 2008 caused by reduced access to capital brought on by the economic downturn. Compensation costs in 2008 were higher than in 2007 as the number of staff and average compensation levels had increased from 2007 to 2008.

In 2009, outside services expense decreased to $2.8 million from $3.4 million as the Company reduced the number of consultants, as the deployment of its Beta software to AeroMexico was halted. Outside services in 2008 were $3.4 million compared to $2.1 million in 2007, the increase was due to the addition of consultants to assist with the development of the Company’s software and with the AeroMexico deployment.

In 2009, travel, meals and entertainment decreased to $0.2 million from $1.4 million as the Company reduced its investment in travelling to potential customer sites and due to the cessation of the Aeromexico deployment. In 2008, travel, meals and entertainment increased to $1.4 million as the Company expanded travel to potential customer sites and due to the expanded travel associated with the Aeromexico deployment.

In 2009, office and general expenses were $1.1 million down from $1.7 million in 2008 as the Company reduced the number of staff in the company. In 2008 office and general expenses were $1.7 million up from $0.9 million in 2007 as the Company expanded its operation by adding more staff.

In 2009, depreciation and amortization expenses were $0.4 million up from $0.3 million in 2008 as the Company continued to write off its capital equipment acquired since inception over their estimated useful life.

In 2009, stock based compensation was $5.8 million compared to $3.7 million in 2008 an $17.2 million in 2007. In 2007, the Company modified its 2005 Stock Option Plans to amend certain rights and obligations of the stock options plans. In accordance with FASB ASC 718 (SFAS 123R), the Company has accounted for these changes as a Plan Curtailment/Modification. To implement the change from an accounting standpoint, the Company is deemed to have effectively repurchased the original award and issued a new award at the time of the Plan Curtailment/Modification. Incremental compensation cost is measured as the excess, if any, of the fair value of the modified award over the fair value of the original award immediately before its terms are modified, measured based on the share price and other pertinent factors at that date. In 2009, the Company undertook two re-pricings of stock options. Under the first repricing outstanding under the 2005 Employee stock Plan, the 2008 Employee stock option plan and with non-plan options, whether vested or unvested to the lessor of (i) $0.75 per option and the current and (ii) the current conversion price, provided the optionee had a continuing involvement with the Company at the time of the re-pricing. 2,208,750 options were re-priced from the various Stock Option Plans under this re-pricing. Under the second repricing, the Company undertook a re-pricing of stock options outstanding under the 2005 Employee stock Plan, the 2008 Employee stock option plan and with non-plan options, whether vested or unvested to the lessor of (i) $0.25 per option and the current and (ii) the current conversion price, provided the optionee had a continuing involvement with the Company at the time of the re-pricing. 4,091,500 options were re-priced from the various Stock Option Plans under this re-pricing. Additionally, in April 2009, the Company issued 2,285,000 of stock options with a strike price of $0.75 per share and in October 2009, the Company granted 1,825,000 stock options at a strike price of $0.10 per common share to management and advisors with vesting over key future performance milestones.

Other income (expenses)

Other expenses were $2.7million in 2009, $0.3 million in 2008 and $0.1 million in 2007. Other income (expenses) were primarily comprised of interest expense on debt issued by the Company related to financing operations and for the acquisition of intellectual property.

In 2009, interest expense was $2.7 million compared to $0.5 million in 2008 and $0.2 million in 2007. Starting in the later part of 2008 and increasing throughout 2009, as the access to capital became more difficult due to global economic conditions, the Company took on debt in conjunction with equity as a method of capital raise to keep the development of its technology and customers markets advancing.

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Income tax expense

The income tax expense for 2009, 2008 and 2007 were Nil as the Company has incurred operating losses since inception.

Net Loss

The Company’s net loss was $17.7 million in 2009 as compared to $16.3 million, as compared to $24.4 million in the 2008 and 2007 respectively.

Restricted cash

The Company has restricted cash which represents amounts held by a bank as a collateral security for a letter of credit issued in favor of the lessor of its Kirkland facility and an escrow required pursuant to a loan guarantee agreement.

Additionally, pursuant to a customer contract, the Company is required to hold in escrow ten percent of all payments received from the customer as restricted cash while the contract exists to satisfy its indemnification obligations to the customer pursuant to the contract. For the period from December 7, 2005 (inception) to December 31, 2009 the Company has received $1,000,000 from this customer. The Company is not in compliance with this term of the customer contract. Under a default, the customer may terminate this contract with the Company at any time by providing written notice to the Company.

Loans receivable from employees

In 2007, the Company advanced to certain employees CDN$400,000 in exchange for a five-year unsecured promissory note bearing interest at prime plus 2.0%. In 2008, these loans and accrued interest thereon which totaled $422,000 was assigned to the controlling shareholder in exchange for a reduction in notes payable to the controlling shareholder.

In 2008, $22,305 was loaned to an employee. This loan was non-interest bearing and was repaid in full in 2009.

In 2009, the Company loaned an employee of the Company CDN$20,000 with no fixed terms of repayment. The loan is non-interest bearing, unsecured and due on demand.

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Intellectual Property

On December 9, 2005, AISystems entered into an Intellectual Property Agreement with Dynamic Intelligence Inc. (“Dynamic”), the controlling shareholder, to license certain intellectual property from Dynamic and in full satisfaction of the consideration, the Company issued 20,000,000 common shares at a nominal agreed value of $10. On October 11, 2006, the parties amended the Intellectual Property Agreement to provide AISystems the right to license additional intellectual property from Dynamic (collectively, the “Intellectual Property Agreement”). AISystems’ license consists of the exclusive, fully paid, worldwide and perpetual license to exploit the Dynamic Intellectual Property solely in the airline field, including the right to exploit any product or service in the airline field. Pursuant to the amended Intellectual Property Agreement, the fair value consideration of $8,000,000 was settled with the issuance of a note payable for $4,000,000 plus accrued interest and issuing 8,000,000 common shares. In May 2008, the parties amended the Intellectual Property Agreement to provide AISystems the exclusive, worldwide and perpetual right to develop and market the proprietary Integrated E-Commerce Travel Engine Platform for the travel and tourism industry. Pursuant to the amended intellectual property agreement, the fair value of consideration of $5,000,000 was settled with the issuance of a note payable for $5,000,000, the issuance of 2,000,000 common shares and a 5.0% royalty on revenue directly derived from the Integrated E-Commerce Travel Engine Platform. In May 2009, the May 2008 amendment was cancelled pursuant to another amendment and all obligations under the May 2008 amendment were reversed. As a result, the $5,000,000 note payable was presented as an extinguishment of the debt to Dynamic Intelligence Inc. on the consolidated balance sheet as at December 31, 2008 with no gain or loss being reported in the consolidated statement of operations. Also, the 2,000,000 common shares were cancelled and $800,000 was recorded as additional consideration for the recission of the agreement during the period ended December 31, 2009.

Notes payable to Dynamic Intelligence Inc.

In 2006, the Company amended its license agreement with its controlling shareholder, Dynamic, as described in Note 7. In conjunction with this, amongst other things, the Company issued $4,000,000, 5%, unsecured notes payable. In 2007, the Company paid down the principal of the loan by $2,000,000. In 2008, the Company amended its license agreement with its controlling shareholder, Dynamic. In conjunction with this, amongst other things, the Company issued and subsequently cancelled an additional $5,000,000, 5%, unsecured notes payable. The Company reduced the principal owing under this note when it assigned $422,000 in loans receivable from employees to Dynamic.  Accordingly, during the year ended December 31, 2009, the 2,000,000 common shares were cancelled and an additional amount of $800,000 was recorded as a contribution to additional paid in capital.

All interest in respect of the loan remains outstanding at December 31, 2009. Interest expense on this note was $55,567, $141,188 and $191,944 for the years ended December 31, 2009, 2008 and 2007, respectively.

 Notes payable with detachable warrants

In 2008, the Company issued $2,582,090 one year, 8% notes payable to existing shareholders, executives, consultants and advisors to the Company, which are unsecured and have a detachable warrant with a strike price of $0.001 for every $5.00 of notes payable issued. Management estimated the fair value of each instrument separately and allocated the proceeds in accordance with the relative fair value method. The amount allocated to the warrants in accordance with this method was $1,534,260 during the year ended December 31, 2008. The notes payable have been recorded on the consolidated balance sheet net of the discount representing the allocation of the relative fair value to the warrant. The Company records interest in the consolidated statements of operations as the discounted note is accreted to its face value through maturity, in addition to recording an 8% interest charge. From January 2009 to February 2009, the Company issued an additional $723,550 (Dynamic - $698,600) 8%, unsecured notes payable with a total of 145,000 detachable warrants at a strike price of $0.001. Management estimated the fair value of each instrument separately and allocated $127,342 to these warrants in accordance with the relative fair value method. The expense related to the discount on the 8% notes payable using the interest method was $1,392,764 and $264,449, for 2009 and 2008 respectively.

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In 2009, the Company provided an option to the holders of 8% notes payable to convert these debt instruments into common shares at an issuance price of $0.75 per common share in exchange for the outstanding debt plus accrued and unpaid interest. During the year ended December 31, 2009, an amount of $1,734,327 representing principle and accrued interest on 8% notes payable were converted into 2,312,437 common shares at $0.75 per share. The 8% notes payable, including Dynamic’s portion, are senior in the security ranking to the notes payable issued to Dynamic Intelligence Inc. issued in 2006. As at December 31, 2009, $1,618,750 (2008: $2,552,076) in 8% notes were issued and outstanding; including $1,199,000 to Dynamic (2008: $499,000).  In addition, interest expense representing the coupon was $107,043 and $65,677, for 2009 and2008 respectively.  The 8% notes payable are subject to an early repayment provision should the Company raise in excess of $7.5 million following the issuance of the notes. In addition, during the year ended December 31, 2009,  the Company issued $2,410,000 in 5% unsecured notes that mature within various dates throughout 2009 along with a total of 7,386,666 in detachable warrants with a strike price of $0.001. Management estimated the fair value of each instrument separately and allocated $960,818 to the warrants in accordance with the relative fair value method. The Company records interest in the consolidated statements of operations as the discounted note is accreted to its face value through maturity, in addition to recording a 5% interest charge. The expense related to the discount on the notes payable using the interest method was $960,818 in 2009. Interest expense representing the coupon was $56,625 in 2009.

The Company also entered into a bond agreement during 2009 with a third party to provide a guarantee of notes to be issued by the Company. Under this bond, the Company issued $150,000 of notes bearing interest of 18%, maturing in August 2010. These notes also included a total of 300,000 common stock warrants with a strike price of $0.001 and fair value of $39,894. Pursuant to guarantee agreement, the Company is required to set aside in a separate bank account of 5% of all the future funds raised in excess of $1,000,000. As at December 31, 2009, the restricted amount under this bond agreement was $64,000.

In October 2009, the Company entered into a forbearance agreement to extend the maturity of debt to September 30, 2010 with certain debt holders whom collectively hold $3,647,500 of debt and accrued interest. In exchange for extending the described debt, the Company issued 3,647,500 warrants with an exercise price of $0.001 each, which expire at the earlier of a public listing, a corporate reorganization or specified expiry dates that range for the period from 2009 to 2014. The forbearance agreements were treated as a modification of the debt and accordingly the associated fees, representing the fair value of the warrants issued by the Company to the creditors, have been recorded as a discount on the debt and amortized over the new term to maturity with an additional charge to interest expense calculated in accordance with the interest method.

In 2009, the Company has received an additional $45,000 consisting of two unsecured, non-interest bearing demand loans from shareholders with no fixed terms of repayment.

In 2010, certain parties owed $1,425,317 that are past due since 2008 and 2009 have agreed to standstill and forbear the amounts owing provided that the Company agree to repay the amounts owed on the following basis: 15% of all monies raised by the Company subsequent to February 11, 2010 shall be set aside for the repayment of the debt until fully repaid. The Board of Directors of the Company has agreed to the repayment terms and authorized same. Such obligations shall also become obligations of any public company that results after the reverse merger the Company is completing with Wolf Resources, Inc.

Equity Issuances in 2009 and 2008

Issuances of Common Shares for Cash

From January 2009 to June 2009, the Company issued 576,666 common shares at $0.75 per share for total consideration of $ 432,500 of which $432,500 was received in cash.

From September 2009 to December 2009, the Company issued 15,328,760 common shares at $0.10 per share for total consideration of $1,532,876 of which $1,333,466 was received in cash and $199,410 was received in services.

From October 2009 to December 2009, the Company offered for sale shares to potential investors at $0.25 per share. Under this program the Company issued 4,148,065 common shares for total consideration of $1,037,016 of which $725,000 was received in cash and $312,016 was received in services.

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From February 6, 2008 to May 13, 2008, the Company issued 1,581,366 common shares for $5.00 per common share and received total proceeds of $7,906,830. From May 23, 2008 to May 28, 2008, the Company issued 108,363 common shares for $5.00 per common share and received total proceeds of $541,815.

Issuance of Common Shares in Exchange for Notes Payable

In March 2009, the Company offered holders of 8% notes payable the right to exchange their debt for common stock at the then market value of $0.75 per share. From March 2009 to May 2009, $1,734,328 of note holders opted into this program and the Company issued 2,312,437 Common shares.

Issuance of Common Shares pursuant to ant-dilution agreements

In 2009, the Company reserved 6,744,687 common shares for the issuance of common share warrants. The warrants were issued to all common shareholders who previously acquired common stock in excess of $1.25 per share. These warrants have a strike price of $0.001 and expire at the earlier of a public listing, a corporate reorganization or five years from the date of issue.

Issuance of Common Shares to management and consultants for services

In April 2009, the Company reserved 4,500,000 common shares for restricted stock awards. The common shares were granted to management and consultants for services rendered. In respect of 3,500,000 shares, 50% of such common shares vested on April 7, 2009 with 5% vesting at the end of each month commencing at the end of April 2009. In respect of the remaining 1,000,000 shares all such shares on vested June 6, 2009. The Company valued these share at the market value of $0.75 per share and recorded additional stock based compensation expense in the statement of operations of $3,219,482.

In October 2009, the Company issued 5,000,000 common shares. The common shares were granted to consultants, directors, and management for services rendered. The Company valued these share at market value of $0.10 per share and recorded a additional stock based compensation expense in the statement of operations of $500,000.

Issuance of Common Shares for Intellectual Property from a related party

In May 2008, 2,000,000 common shares were issued to Dynamic, pursuant to the Intellectual Property Agreement, as amended. The shares were returned as cancelled in 2009 pursuant to the cancellation of the further amendment.

Cancellation of Common Shares pursuant to rescission of amended Intellectual Property Agreement

In 2009, the Company cancelled 2,000,000 common shares previously issued to Dynamic in conjunction with the rescission of the amendment of the Intellectual Property Agreement dated in May 2008.

Issuance of Common Shares upon the exercise of stock options.

In May 2008, the Company issued 20,000 common shares upon the exercise of options and received total proceeds of $20,000.

Common Shares reserved for Issuance of Common Stock Warrants

In 2009, the Company reserved 11,290,586 common shares for the issuance of common stock warrants. The warrants were issued in conjunction with the raising of short term notes totaling $5,867,100. These warrants have a strike price of $0.001 and expire at the earlier of a public listing, and a corporate reorganization.

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Series A Preferred Stock (Renamed to Series B Preferred stock following merger)

In 2008, the Company declared a dividend on its common shares in the form of the issuance of 2,329,905 Series A preferred shares to each record holder of common shares as of May 30, 2008. For each 20 common shares then-held by such holder the holder is entitled to one preferred share. The preferred shares (1) entitle the holder thereof to four hundred (400) votes on all matters submitted to a vote of the stockholders of the Company; (2) are not convertible into common shares; (3) may not be transferred except in accordance with applicable Securities Laws; (4) may be redeemed by the Company at any time for a per share redemption price of $0.001; (5) has a liquidation preference of $0.001 per share; and (6) other than with respect to such liquidation preference, does not share in the assets of the Company upon a liquidation.  Other than voting and liquidation rights, the Series A preferred shares have no other material rights or preferences and have nominal economic value.

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Attached below is a schedule setting out all equity issuances of the Company since inception.

	Common stock - number of shares #			Common stock - amount $			Additional Paid in Capital $			Deficit accumulated during the development stage $			Total $			Comprehensive income (loss)
Shares issued in consideration
of Intellectual Property ("IP")		20,000,000			20,000			(19,990	)					10
Shares issued for cash during the year		1,370,720			1,371			341,309						342,680
Net loss											(64,350	)		(64,350	)		(64,350	)
Balance at December 31, 2005		21,370,720			21,371			321,319			(64,350	)		278,340			(64,350	)
Shares issued in consideration of IP		8,000,000			8,000			(8,000	)					-
Special distribution in consideration of IP								(4,000,000	)					(4,000,000	)
Shares issued for cash during then year		6,806,800			6,807			3,490,593						3,497,400
Shares issued upon exercise of options		170,000			170			42,330						42,500
Stock based compensation								234,065						234,065
Net loss											(2,899,295	)		(2,899,295	)		(2,899,295	)
Balance at December 31, 2006		36,347,520			36,348			80,307			(2,963,645	)		(2,846,990	)		(2,899,295	)
Shares issued for cash during the year		6,540,900			6,540			8,768,360						8,774,900
Stock based compensation								17,245,216						17,245,216
Net loss											(24,382,325	)		(24,382,325	)		(24,382,325	)
Balance at December 31, 2007		42,888,420			42,888			26,093,883			(27,345,970	)		(1,209,199	)		(24,382,325	)
Shares issued in consideration of IP		2,000,000			2,000			(2,000	)					-
Shares issued for cash during the year		1,689,729			1,690			8,446,956						8,448,646
Issuance of preferred shares														2,330
Dividend on common shares								(2,330	)					(2,330	)
Common share warrants issued in connection with debt								1,534,260						1,534,260
Shares issued in connection with exercise of warrants		31,020			31			279						310
Shares issued upon exercise of options		20,000			20			19,980						20,000
Stock based compensation								3,742,156						3,742,156
Net loss											(16,343,658	)		(16,343,658	)		(16,343,658	)
Balance at December 31, 2008		46,629,169			46,629			39,833,183			(43,689,628	)		(3,807,486	)		(16,343,658	)
Shares issued $0.75 per share for cash during the year		576,666			577			431,924						432,500
Shares issued $0.10 per share  for cash during the year		15,328,760			15,329			1,517,547						1,532,876
Shares issued $0.25 per share for cash during the year		4,148,065			4,148			1,032,868						1,037,016
Consideration received for cancellation of IP								800,000						800,000
Cancellation of shares issued for IP		(2,000,000	)		(2,000	)		2,000						-
Conversion of warrants for anti dilution		6,744,687			6,745			(6,745	)					-
Share issued on conversion of debt		2,312,437			2,312			1,732,016						1,734,328
Common share warrants issued in connection with debt								1,179,347						1,179,347
Stock based compensation		9,500,000			9,500			5,789,809						5,799,309
Shares issued in connection with exercise of warrants		5,480,478			5,480			(4,123	)					1,357
Net loss											(17,651,225	)		(17,651,225	)		(17,651,225	)
Balance at December 31, 2009		88,720,262			88,720			52,307,826			(61,340,853	)		(8,941,977	)		(17,651,225	)

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LIQUIDITY AND CAPITAL RESOURCES

Capital required to Continue operations and Substantial doubt about ability to continue operations

The Company requires capital to continue operations. The Company is in arrears with its creditors and any of its creditors may petition the Company in receivership.  In this regard, management is planning to raise necessary funds through loans and additional sales of its common stock. There is no assurance that the Company will be successful in raising additional capital.

The Company expects to raise $5 million to $10 million in equity in 2010, which will be used to fund operations, improve working capital and to reduce maturing and past due debt. Should the Company be unable to raise this amount of capital its operating plans to fund our business and financial performance could be adversely affected.

The Company has yet to fully commercialize its technologies and consequently has incurred significant losses since its inception.

The Company owes $1,425,317 to certain parties that are past due since 2008 and 2009.  The parties have agreed to standstill and forbear the amounts owing provided that the Company agree to repay the amounts owed on the following basis: 15% of all monies raised by the Company subsequent to February 11, 2010 shall be set aside for the repayment of the debt until fully repaid.  The Board of Directors of the Company has agreed to repayment terms and authorized same.  Such obligations shall also become obligations of any public company  that results after the reverse merger the Company is completing with Wolf Resources, Inc.

At December 31, 2009, the Company’s deficit accumulated during the development stage was approximately $61.7 million, and the Company had utilized cash in operating activities of $25.4 million. The Company has funded theses losses and cash flows through the sale of equity securities, the issuance of debt and from credit granted by vendors. The Company is also in arrears to certain creditors and in default under certain agreements which may have a material adverse effect on operations.

From January 01, 2010 through March 19, 2010, the Company raised $1,177,193.50 from the sale of common stock ranging from $0.10 per share to $0.25 per share.

These factors raise substantial doubt about the ability of the Company to continue as a going concern. There can be no assurance that the Company will have adequate capital resources to fund planned operations or that any additional funds will be available to the Company when needed, or if available, will be available on favorable terms in the amounts required by the Company.  If the Company is unable to obtain adequate capital resources to fund operations, it may be required to delay, scale back or eliminate some or all of its operations, which may have a material adverse effect on the Company’s business, results of operations and ability to continue as a going concern.

OFF-BALANCE SHEET ARRANGEMENTS

Lease obligations

The Company leases office space in Kirkland, Washington and Toronto, due to expireon October 2012 and May 2014 respectively. Total lease expense for the years ended 2009, 2008 and 2007 was $821,955, $852,416 and $495,978, respectively. The Company has been in arrears/default under the Kirkland lease agreement since November 2009. As described in Note 4, the Company has restricted cash that the landlord may draw upon at any time at their sole discretion to remedy the arrears rent. At this time, the landlord has not drawn on the restricted cash nor has the landlord provided notice that they intend to do so.

In May 2009, the Company extended the lease for its Toronto office space for 5 years. The lease provided for three months free rent at the inception of the lease.

The Company also leases photocopiers, computer equipment and an apartment, expiring at various dates from 2010 to 2014.

The total future minimum lease payments by year for all operating leases are as follows:

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Lease obligations
December 31,	Total
2010	$	737,010
2011		733,399
2012		610,744
2013		99,031
2014		44,364
Thereafter		-
	$	2,224,549

Commitments

The Company has a contractual obligation to pay a third party 2% of all revenue under its single customer contract for three years from signing. No amounts were owing under this agreement as at December 31, 2009 and 2008.

Exchange Right Agreement

The Company and Merus Capital I, L.P. (“Merus”) entered into an exchange right agreement (the “Agreement”), whereby Merus provided funding to the Company in exchange for, amongst other things, a right in liquidation for Merus to exchange common shares held by Merus at the time of the conversion (“Merus Securities”) into an unsecured promissory note with aggregate principle up to $5,000,000 paying interest at a rate of 5.00% per annum.  The term of the Agreement is the earlier of: (i) 36 months following a Going Public Transaction (as defined in the Agreement); (ii) Merus receiving the Note after exercising their rights under the Agreement; and (iii) Merus transferring any of the Merus Securities without the prior authorization of the Company. Management has reviewed the terms of the exchange right agreement and has determined that permanent equity classification is appropriate because all conditions under which the exchange right could be enforced are solely within the control of the Company.  

MANAGEMENT

Appointment of New Directors

At the Closing Date of the Exchange Agreement and subject to the effectiveness of an information statement required by Rule 14f-1 promulgated under the Exchange Act, Graeme McNeill resigned as our sole officer and director.

The following table sets forth the names, ages, and positions of our new executive officers and directors. Executive officers are elected annually by our Board of Directors.  Each executive officer holds his office until he resigns, is removed by the Board, or his successor is elected and qualified.  Directors are elected annually by our stockholders at the annual meeting.  Each director holds his office until his successor is elected and qualified or his earlier resignation or removal.

NAME	AGE	POSITION
Stephen C. Johnston	45	Chairman, President, Chief Executive Officer and Director
Steven Frankel	67	Independent Director
James Beatty	65	Independent Director
Gary Clifford	41	Chief Financial Officer
Salil Munjal	40	Chief Operating Officer
Charles Mawby	50	Senior Vice President, Marketing
D. Kordell Fournier	31	Vice President & General Counsel

45

A brief biography of each officer and director is more fully described in Item 5.02(c).  The information therein is hereby incorporated in this section by reference.

Family Relationships

There are no family relationships between any of our directors or executive officers and any other directors or executive officers.

Involvement in Certain Legal Proceedings

To the best of our knowledge, none of our directors or executive officers have been convicted in a criminal proceeding, excluding traffic violations or similar misdemeanors, or has been a party to any judicial or administrative proceeding during the past five years that resulted in a judgment, decree or final order enjoining the person from future violations of, or prohibiting activities subject to, federal or state securities laws, or a finding of any violation of federal or state securities laws, except for matters that were dismissed without sanction or settlement. Except as set forth in our discussion below in “Certain Relationships and Related Transactions,” none of our directors, director nominees or executive officers has been involved in any transactions with us or any of our directors, executive officers, affiliates or associates which are required to be disclosed pursuant to the rules and regulations of the SEC.

There are no outstanding judgments against the Company or any consent decrees or injunctions to which the Company is subject or by which its assets are bound and there are no claims, proceedings, actions or lawsuits in existence, or to the Company’s knowledge threatened or asserted, against the Company or with respect to any of the assets of the Company that would materially and adversely affect the business, property or financial condition of the Company, including but not limited to environmental actions or claims. However, from time to time, is involved in various lawsuits and legal proceedings which arise in the ordinary course of business.  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.

An employee terminated in 2009, is claiming that she was wrongfully dismissed and is seeking damages. The Company believes that it has complied with law in completing her termination. As such the Company believes that her claim is without merit.

Code of Ethics

The Company has adopted a Code of Ethics that applies to its directors, officers and key employees. The Code of Ethics is attached hereto as Exhibit 14.1

Conflicts of Interest

Certain potential conflicts of interest are inherent in the relationships between our officers and directors, and us.

From time to time, one or more of our affiliates may form or hold an ownership interest in and/or manage other businesses both related and unrelated to the type of business that we own and operate.  These persons expect to continue to form, hold an ownership interest in and/or manage additional other businesses which may compete with ours with respect to operations, including financing and marketing, management time and services and potential customers.  These activities may give rise to conflicts between or among the interests of us and other businesses with which our affiliates are associated.  Our affiliates are in no way prohibited from undertaking such activities, and neither we nor our shareholders will have any right to require participation in such other activities.

Further, because we intend to transact business with some of our officers, directors and affiliates, as well as with firms in which some of our officers, directors or affiliates have a material interest, potential conflicts may arise between the respective interests of us and these related persons or entities.  We believe that such transactions will be effected on terms at least as favorable to us as those available from unrelated third parties.

With respect to transactions involving real or apparent conflicts of interest, we have adopted policies and procedures which require that: (i) the fact of the relationship or interest giving rise to the potential conflict be disclosed or known to the directors who authorize or approve the transaction prior to such authorization or approval, (ii) the transaction be approved by a majority of our disinterested outside directors, and (iii) the transaction be fair and reasonable to us at the time it is authorized or approved by our directors.

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EXECUTIVE COMPENSATION

AISYSTEMS EXECUTIVE COMPENSATION SUMMARY

Summary Compensation Table

The following table sets forth all cash compensation paid by the Company, for the years ended December 31, 2009, 2008 and 2007.  The table below sets forth the positions and compensations for each officer and director of the Company.

Name and Principal Position	Year	Salary	Bonus ($)	Option Award ($)	Non-Equity Incentive Plan Compensation Earnings ($)	Non-Qualified Deferred Compensation Earnings ($)	All other Compensation ($)		Total ($)
Stephen  Johnston, President & CEO and Chairman
	2007	234,053	-	-	-	-	-	234,053
	2008	253,703	200,000	-	-	-	-	453,703
	2009	172,151	-	-	-	-	662,500(4)	834,651
James Beatty, Director(1)
	2007	-	-	-	-	-	-		-
	2008	-	-	-	-	-	-		-
	2009	-	-	-	-	-	-		-
Steven  Frankel, Director(2)
	2007	-	-	13,800	-	-	-		13,800
	2008	-	-	-	-	-	-		-
	2009	-	-	40,960	-	-	-		40,960
Gary Clifford Chief Financial Officer(3)
Salil Munjal, Chief Operating Officer(3)
Charles Mawby, Senior Vice President, Marketing
	2007	158,269	-	-	-	-	-		158,269
	2008	178,229	-	-	-	-	-		178,229
	2009	166,806	-	17,320	-	-	-		184,126
Kordell Fournier, Vice President, General Counsel & Corporate Secretary(3)

(1)	James Beatty joined the Board in 2009. In 2006, Mr. Beatty was grants 100,000 stock options with a strike price of $0.10 as a consultant to the Company.
(2)	Steven  Frankel joined the Board in 2007
(3)	Messrs. Clifford, Munjal and Fournier (the “Consultants”) have agreed to serve as officers of, and consultants to, the Company effective the Closing Date. Prior, each of the Consultants have, directly or indirectly, provided from time to time advisory services to AISystems or a subsidiary thereof. Upon the Closing Date:  Mr. Clifford shall be providing certain business and accounting consulting services to the Company; Mr. Munjal shall be providing business consulting services to the Company; and Mr. Fournier legal consulting services to the Company.
(4)	The Company issued 1.75 million shares to Mr. Johnston in 2009 for retention and for services rendered. Throughout 2009, the Company issued equity capital at prices ranging from $0.01 to $0.75 per share.  At times, the Company was unable to raise any equity capital and issued debt with multiple detachable warrants ranging from one to ten warrants with an exercise price of $0.01 for each dollar of debt raised in an effort to maintain business operations as access to equity capital became impossible as the global recession strengthened and investor confidence diminished. Each warrant entitled a holder to exchange a nominal value warrant for a fully paid common stock. For accounting purposes, the Company recorded $662,500 in expense related to this issuance. The early stage nature of the company, its status as a private company, the absent of liquidity for the Company’s stock, the challenging economic environment which existed in 2009, the Company’s constant need for cash to continue operations, the unproven nature of its technology makes ascertaining its valuation very difficult and imprecise, resulting in significant volatility in the value ascribed to stock issuances.

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Outstanding Equity awards at Fiscal Year End

Other than as set out herein, there are no outstanding equity awards at December 31, 2009.

Director Compensation

Our directors will not receive a fee for attending each board of directors meeting or meeting of a committee of the board of directors. All directors will be reimbursed for their reasonable out-of-pocket expenses incurred in connection with attending board of director and committee meetings.

Stock option plans

The Company has issued stock options to employees, consultants and advisors under two Stock Option Plans, (i) The 2005 Stock Option Plan and (ii) The 2008 Stock Option Plan. The Company has also issued Non-Plan stock options to certain consultants and advisors.

The Company’s 2005 Stock Option Plan, dated December 8, 2005 (as amended from time to time) has reserved 6,000,000 Common Shares for issuance and the Company’s 2008 Stock Option Plan, dated May 30, 2008, has reserved 5,000,000 Common Shares for issuance. Additionally, the Company has reserved 841,500 Common Shares for outstanding non-plan stock options.

The Board of Directors administers the Company’s Plans. The exercise prices of the options granted are determined by the Board of Directors and are generally established at the estimated market value of the Company’s common shares at the date of grant. The Board of Directors determines the term of each option, the number of shares for which each option is granted and the rate at which each option is exercisable. Options are granted with terms not to exceed five years under the 2005 Plan and 10 years under the 2008 Plan.  The fair value of each option award is estimated on the date of grant using a Black Scholes option pricing model using the assumptions as disclosed herein. The expected volatility is based on similar public entities for which share price information is available. The Company uses historical data to estimate option exercise and employee termination to determine the appropriate inputs to the model. The risk-free rate for periods within the contractual life of the option is based on the U.S. Treasury yield curve in effect at the time of grant. For those option awards that have performance conditions, the fair value is estimated on the date of grant using the same model and assumes that performance goals will be achieved. If such goals are not met, no compensation cost is recognized and any recognized compensation cost is reversed. The inputs for expected volatility, expected dividends, and risk-free rate used in estimating those options’ fair value are the same as those noted for options granted without performance conditions.

Stock Plan Curtailment/Modification in 2007

On June 11, 2007, the Company modified its 2005 Stock Option Plans to amend certain rights and obligations of the stock options plans. In accordance with FASB ASC 718 (SFAS 123R), the Company has accounted for these changes as a Plan Curtailment/Modification. To implement the change from an accounting standpoint, the Company is deemed to have effectively repurchased the original award and issued a new award at the time of the Plan Curtailment/Modification. Incremental compensation cost is measured as the excess, if any, of the fair value of the modified award over the fair value of the original award immediately before its terms are modified, measured based on the share price and other pertinent factors at that date. The modifications to the plan included amongst other things and allowed the following:

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 ·    Right to exercise – the option holder now has the right to exercise the option after vesting (no longer dependent on a triggering event).

 ·    Stock-split – the options will now be automatically adjusted to reflect the impact of a stock-split or stock-consolidation.

 ·    Upon termination, the holder would  has 90 days to make a decision to either exercise or forfeit any vested options; previously there was no timeline.

 ·    First right of refusal (terminated employees) – The Company has the first right of refusal to buy back the share of any terminated employees, executed at fair value.

 ·    First right of refusal (share transfers) – The Company has the first right of refusal to buy back the share of any proposed share transfers, executed at fair value.

In 2009, the Company undertook two re-pricing of stock options outstanding under the 2005 Employee stock Plan, the 2008 Employee stock option plan and with non-plan options. Under the first, whether vested or unvested to the lessor of (i) $0.75 per option and the current and (ii) the current conversion price, provided the optionee had a continuing involvement with the Company at the time of the re-pricing. 2,208,750 options were re-priced from the various Stock Option Plans under this re-pricing. Under the second, re-pricing of stock options outstanding under the 2005 Employee stock Plan, the 2008 Employee stock option plan and with non-plan options, whether vested or unvested to the lessor of (i) $0.25 per option and the current and (ii) the current conversion price, provided the optionee had a continuing involvement with the Company at the time of the re-pricing. 4,091,500 options were re-priced from the various Stock Option Plans under this re-pricing.

In April 2009, the Company issued 2,285,000 of stock options with a strike price of $0.75 per share.

In October 2009, the Company granted 1,825,000 stock options at a strike price of $0.10 per common share to management and advisors with vesting over key future performance milestones.

Consolidated Schedule of Stock Option Plans

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A summary of the Company’s stock options from December 7, 2005 (inception) to December 31, 2009 is presented below:

	Shares under option			Weighted Average Exercise Price		Average Remaining Contractual Life (Years)		Weighted Average Grant Date Fair Value
Outstanding at December 7, 2005 (inception)
Granted		-		$	-		-	$	-
Exercised		-		$	-		-	$	-
Forfeited		-		$	-		-	$	-
Outstanding at December 31, 2005		-		$	-		-	$	-
Granted		2,443,750		$	0.66		4.20	$	0.17
Exercised		(85,000	)	$	0.50		-	$	-
Forfeited		(187,500	)	$	0.97		-	$	0.25
Outstanding at December 31, 2006		2,171,250		$	0.64		4.20	$	0.17
Exercisable at December 31, 2006		-		$	-		-	$	-
Granted - plan modification		4,230,000		$	0.33		3.15	$	4.61
Exchanged - plan modification		(2,171,250	)	$	0.64		-	$	0.17
Granted		822,500		$	2.74		4.53	$	1.02
Exercised		-		$	-		-	$	-
Forfeited		(125,000	)	$	1.96		-	$	0.51
Outstanding at December 31, 2007		4,927,500		$	0.69		3.36	$	4.09
Exercisable at December 31, 2007		3,572,250		$	0.36		3.14	$	4.54
Granted		2,760,250		$	5.69		6.19	$	1.65
Exercised		(20,000	)	$	1.00		-	$	-
Forfeited		(349,000	)	$	1.98		-	$	0.19
Outstanding at December 31, 2008		7,318,750		$	2.53		4.60	$	3.43
Exercisable at December 31, 2008		4,499,873		$	0.51		1.88	$	4.23
Granted		4,755,000		$	0.25		9.48	$	0.10
Exercised		-		$	-		-	$	-
Cancelled		(1,185,000	)	$	0.75		-	$	1.04
Forfeited		(1,485,750	)	$	0.24		-	$	1.94
Outstanding at December 31, 2009		9,403,000		$	0.25		5.20	$	2.18
Exercisable at December 31, 2009		6,144,331		$	0.25		5.00	$	2.54

A summary of the status of the Company’s non-vested options from December 7, 2005 (inception) to December 31, 2009 is as follows:

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Non-vested Options	Shares
Non-vested at December 31, 2006		2,171,250
Granted in 2007		5,052,500
Vested		(3,572,250	)
Exchanged		(2,171,250	)
Forfeited		(125,000	)
Non-vested at December 31, 2007		1,355,250
Granted in 2008		2,760,250
Vested		(927,623	)
Exercised		(20,000	)
Forefeited		(349,000	)
Non-vested at December 31, 2008		2,818,877
Granted in 2009		4,755,000
Vested		(1.644,458	)
Exercised		-
Cancelled		(1,185,000	)
Forefeited		(1,485,750	)
Non-vested at December 31, 2009		3,258,669

The total fair value of stock options granted to all employees and directors that vested during the year ended December 31, 2009, 2008 and 2007 was $617,612, $2,418,757 and $13,239,378 respectively. Since inception no employee stock options have been exercised. The intrinsic value of options outstanding and exercisable at December 31, 2009, 2008 and 2007 was $Nil, $1,079,969 and 16,575,240, respectively.

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Employee and Director stock options:

Activity in the Company’s stock options granted to employees and directors from December 7, 2005 (inception) to December 31, 2009 was as follows:

	Options			Weighted Average Exercise Price
Outstanding, January 1, 2006		-			-
Granted		1,955,500		$	0.67
Forfeited		(187,500	)	$	0.97
Exercised		-		$	-
Outstanding, December 31, 2006		1,768,000		$	0.64
Exercisable, December 31, 2006		-		$	-
Granted - plan modification		3,423,500		$	0.33
Exchanged - plan modification		(1,768,000	)	$	0.64
Granted		566,000		$	2.43
Forfeited		(125,000	)	$	1.96
Exercised		-		$	-
Outstanding, December 31, 2007		3,864,500		$	0.58
Exercisable, December 31, 2007		2,674,500		$	0.28
Granted		895,250		$	6.54
Forfeited		(334,000	)	$	1.84
Exercised		-		$	-
Outstanding, December 31, 2008		4,425,750		$	1.70
Exercisable, December 31, 2008		3,103,083		$	0.33
Granted		1,015,000		$	0.26
Forfeited		(1,485,750	)	$	0.24
Exercised		-		$	-
Outstanding, December 31, 2009		3,955,000		$	0.25
Exercisable, December 31, 2009		3,133,166		$	0.25

The fair value of employees and directors stock options was estimated using the Black-Scholes option pricing model with the assumption that no dividends are to be paid on common shares, a weighted average volatility factor for the Company’s share price of 20% (2008 – 20%), a weighted average risk free interest rate of 2.5% (2008 – 4.5%) over an expected term of 5 years (5 years).

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Stock option to consultants:

The activity in the Company’s stock options granted to consultants from December 7, 2005 (inception) to December 31, 2009 were as follows:

	Options			Weighted Average Exercise Price
Outstanding, January 1, 2006		-			-
Granted		228,250		$	0.64
Exercised		(25,000	)	$	0.50
Forfeited		-		$	-
Outstanding, December 31, 2006		203,250		$	0.66
Exercisable, December 31, 2006		-		$	-
Granted - plan modification		406,500		$	0.33
Exchanged - plan modification		(203,250	)	$	0.66
Granted		245,000		$	3.42
Exercised		-		$	-
Forfeited		-		$	-
Outstanding, December 31, 2007		651,500		$	1.08
Exercisable, December 31, 2007		486,250		$	0.59
Granted		1,435,000		$	5.37
Exercised		(20,000	)	$	1.00
Forfeited		(15,000	)	$	5.00
Outstanding, December 31, 2008		2,051,500		$	4.21
Exercisable, December 31, 2008		935,290		$	2.74
Granted		3,740,000		$	0.25
Exercised		-		$	-
Cancelled		(1,185,000	)	$	0.75
Outstanding, December 31, 2009		4,606,500		$	0.25
Exercisable, December 31, 2009		2,549,665		$	0.25

The fair value of stock options granted to consultants was estimated using the Black-Scholes option pricing model with the assumption that no dividends are to be paid on common shares, a weighted average volatility factor for the company’s share price of 20.% (2008 – 20%), a weighted average risk free interest rate of 2.5% (2008 – 4.5%) over an expected term of 5 years (2008 – 5 years).

During 2008, 20,000 of the consulting stock options were exercised for cash proceeds of $20,000. In 2007, no consulting stock options were exercised. In 2006, 25,000 (50,000 post split) of the consulting stock options were exercised for cash proceeds of $12,500. In 2005 no consulting stock options were exercised.

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Non plan options:

The activity in the Company’s stock options granted to consultants from December 7, 2005 (inception) to December 31, 2009 were as follows:

	Options			Weighted Average Exercise Price
Outstanding, January 1, 2006		-			-
Granted		260,000		$	0.64
Forfeited		-		$	-
Exercised		(60,000	)	$	0.50
Outstanding, December 31, 2006		200,000		$	0.66
Exercisable, December 31, 2006		-		$	-
Granted - plan modification		400,000		$	0.32
Exchanged - plan modification		(200,000	)	$	0.66
Granted		11,500		$	3.42
Forfeited		-		$	-
Exercised		-		$	-
Outstanding, December 31, 2007		411,500		$	0.59
Exercisable, December 31, 2007		411,500		$	0.59
Granted		430,000		$	5.00
Forfeited		-		$	-
Exercised		-		$	-
Outstanding, December 31, 2008		841,500		$	2.75
Exercisable, December 31, 2008		461,500		$	0.89
Granted		-		$	-
Forfeited		-		$	-
Exercised		-		$	-
Outstanding, December 31, 2009		841,500		$	0.25
Exercisable, December 31, 2009		461,500		$	0.25

The fair value of the non-plan stock options was estimated using the Black-Scholes option pricing model with the assumption that no dividends are to be paid on common shares, a weighted average volatility factor for the company’s share price of 20.0%, a weighted average risk free interest rate of 4.5% over an expected term of 5 years.

In 2006, 60,000 (120,000 post split) of the non-plan stock options were exercised for cash proceeds of $30,500. In 2009, 2008, 2007 and 2005 no non plan stock options were exercised.

In 2006, the Company adopted a non-qualified stock option plan in connection with the engagement of Access Alternative Group S.A. as a consultant of the Company. Since adoption, the plan provided for a grant of 450,000 non-qualified stock options for Access Alternative Group S.A. As of December 31, 2008, there were options to purchase 450,000 shares (2007 – 400,000) outstanding, 400,000 were fully vested (2007 – 400,000). No options were exercised; vesting is at the sole discretion of the Board of Directors.

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In 2006, the Company adopted a non-qualified stock option plan in connection with the engagement of Interior Expressions Inc. as a consultant of the Company.  The plan provided for a grant of 60,000 non-qualified stock options for Interior Expressions Inc.  In 2007, the options to purchase the 60,000 shares were exercised and common shares were issued.

In 2007, the Company adopted a non-qualified stock option plan in connection with the engagement of Investcan Inc. as a consultant of the Company.  The plan provided for a grant of 7,500 non-qualified stock options.  As of December 31, 2008, there were options to purchase 7,500 outstanding and fully vested (2007 – 7,500). No options have been exercised and no stock options remain unvested.

In 2007, the Company adopted a non-qualified stock option plan in connection with the engagement of WSFP, LLC. as a consultant of the Company.  The plan provided for a grant of 4,000 non-qualified stock options.  As of December 31, 2008, there were options to purchase 4,000 outstanding and fully vested (2007 – 4,000). No options have been exercised and no stock options remain unvested.

In 2008, the Company adopted a non-qualified stock option plan in connection with the engagement of Mr. Melman as a consultant of the Company.  The plan provided for a grant of 300,000 non-qualified stock options.  As of December 31, 2008, there were options to purchase 300,000 outstanding and unvested. Vesting is linked to specific future events.

In 2008, the Company adopted a non-qualified stock option plan in connection with the engagement of Mr. Spring as a consultant of the Company.  The plan provided for a grant of 80,000 non-qualified stock options.  As of December 31, 2008, there were options to purchase 80,000 outstanding and unvested.

PRINCIPAL STOCKHOLDERS

Pre-Combination

The following table sets forth certain information regarding our Common Shares beneficially owned on March __, 2010, for (i) each stockholder known to be the beneficial owner of 5% or more of the outstanding Common Shares of the Company, (ii) each executive officer and director, and (iii) all executive officers and directors as a group, on a pro forma basis prior to the Closing of the Combination and Offering.

Name and Address	Amount and Nature of Beneficial Ownership	Percentage of Class (1)
Graeme McNeill 647 – 1st Ave. N.E., Suite 213 Calgary, Alberta	17,224,000	23.5%
Christopher Paterson 17365 SW 13th Street Pembroke Pines, Florida 33029	17,224,000	23.5%
All Officers and Directors as a group (1 individual)	17,224,000	23.5%

(1) Based on 73,202,000 shares outstanding prior to the close of the Merger.

Post-Combination

Common Stock

The following table sets forth certain information regarding our Common Shares beneficially owned on the Closing Date, for (i) each stockholder known to be the beneficial owner of 5% or more of the outstanding Common Shares of the Company, (ii) each executive officer and director, and (iii) all executive officers and directors as a group.

As of the date of filing, we have 90,714,523 shares of Common Stock and 1,692,240 shares of Wolf Preferred Stock.

Name of Beneficial Owner	Number of Common Shares Owned	Percent of Class Before Offering (1)
Dynamic Intelligence, Inc.	28,557,596	31.48%
Merus Capital I, LP	7,833,512	8.64%
Stephen C. Johnston	252,812(3)	0.28%
Gary Clifford	236,632(2)(3)	0.26%
Salil Munjal	218,431(3)	0.24%
Charles Mawby	0	0.00%
D. Kordell Fournier	0	0.00%
Steven Frankel	0	0.00%
James Beatty	0	0.00%
All Officers and Directors as a group (7 individuals)	707,875	0.78%

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(1)	Based on 90,714,523 shares of Common Stock issued and outstanding on a fully diluted basis after the close of the Combination, assuming the effectiveness of an increase in the authorized common stock of the Company.
(2)	Mr.  Clifford is not the beneficial owner of 200,000 common shares.
(3)	Restricted Common Stock.

Series B Preferred Stock

The following table sets forth certain information regarding our Series B Preferred stockholders beneficially owned on the Closing Date, for (i) each stockholder known to be the beneficial owner of 5% or more of the outstanding Series B Preferred Stock of the Company, (ii) each executive officer and director, and (iii) all executive officers and directors as a group.  As of the date of filing, we have 1,692,240 shares of Series B Preferred Stock. Each share of Series B Preferred Stock entitles the holder to 400 votes on all matters submitted to a vote of stockholders of the Company.

Name of Beneficial Owner	Number of Series B Shares Owned	Percent of Class Before Offering (1)
Dynamic Intelligence, Inc.	1,500,000	88.64%
Stephen C. Johnston	0	0
Gary Clifford	0	*
Salil Munjal	0	*
Charles Mawby	0	0
D. Kordell Fournier	0	0
Steven Frankel	0	0
James Beatty	0	0
All Officers and Directors as a group (8 individuals)	0	*

*  Less than 1%.

(1) Based on 1,692,240 shares of Series B Preferred Stock issued and outstanding after the close of the Combination.

DESCRIPTION OF SECURITIES

Upon consummation of the Merger, 90,714,523 of the Company’s Common Stock was issued and outstanding on a fully diluted basis with a par value of $0.001 per common share and 1,692,240 shares of the Company’s Series B preferred stock issued and outstanding.

(a) Common Shares.   Each outstanding share of common stock entitles the holder thereof to one vote per share on all matters. Our bylaws provide that elections for directors shall be by a plurality of votes. Stockholders do not have preemptive rights to purchase shares in any future issuance of our common stock. Upon our liquidation, dissolution or winding up, and after payment of creditors and preferred stockholders, if any, our assets will be divided pro-rata on a share-for-share basis among the holders of the shares of common stock.

The holders of shares of our common stock are entitled to dividends out of funds legally available when and as declared by our board of directors. Our board of directors has never declared a cash dividend and does not anticipate declaring any dividend in the foreseeable future. Should we decide in the future to pay dividends, as a holding company, our ability to do so and meet other obligations depends upon the receipt of dividends or other payments from our operating subsidiaries and other holdings and investments. In addition, our operating subsidiaries, from time to time, may be subject to restrictions on their ability to make distributions to us, including as a result of restrictive covenants in loan agreements, restrictions on the conversion of local currency into U.S. dollars or other hard currency and other regulatory restrictions. In the event of our liquidation, dissolution or winding up, holders of our common stock are entitled to receive, ratably, the net assets available to stockholders after payment of all creditors and preferred stockholders.

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(b) Preferred Stock.

Series A Preferred Stock.  Each Series A Preferred Stock has a liquidation preference of $0.10, has no voting rights, is convertible at the option of the holder into 40 shares of the Company’s common stock, and is entitled to noncumulative dividends when, if and as declared by the board of directors, at 6% of its par value per annum in preference to any dividends of the Company’s common stock.  In the event that dividends are declared on the common stock, each share of Series A Preferred stock is entitled to receive a dividend equal to 40 times the dividend per share of common stock. Currently there are no Series A Preferred Shares issued and outstanding.

On May 23, 2008, the Company certified the designation of 1,500,000 shares (of its 20,000,000 total authorized shares of preferred stock) as "Series A Preferred Stock". Each share of Series A Preferred Stock has a stated value and liquidation preference of $0.10, has no voting rights, is convertible at the option of the holder into 40 shares of the  Company's  common stock, and is entitled to noncumulative  dividends when, if and as declared by the Board of  Directors,  at 6% of its par value per annum in preference to any dividends on the Company's  common stock.  In the event that dividends are declared on the common stock, each share of Series A Preferred Stock is entitled to receive a dividend equal to 40 times the dividend per share of common stock.

On May 28, 2008, the Company filed a Registration Statement on Form S-1 with the United States Securities and Exchange Commission (the "SEC") to sell up to 1,500,000 shares of Series A Preferred Stock at a price of $0.10 per share or $150,000 total in a "best efforts” self-underwriting for a period of 180 days from the effective date of the Registration Statement.

On July 28, 2008, the Registration Statement was declared effective by the SEC. On January 24, 2009, the offering was terminated; no shares were sold.

Series B Preferred Stock.  Each Series B Preferred Stock entitles the holder to 400 votes on all matters submitted to a vote of stockholders of the Company.  The holders of Series B Preferred shares are not convertible into common shares and are not entitled to receive dividends.  The holders of Series B Preferred shares are entitled to receive, prior and in preference to any distribution of any assets of the Company to the holders of common stock or any series of preferred stock that is not expressly senior to or pari passu with the Series B Preferred Share, by reason thereof, an amount per share equal to $0.001 per share, as adjusted for stock splits, stock dividends and reclassifications.  The Series B Preferred Shares holders upon notice to the Company may have their shares redeemed subject to certain notice provisions (as described in the certificate of designation) at a redemption price of $0.001 per shares. Currently there are 1,692,240 Series B Preferred shares issued and outstanding.

(c) Options.   In connection with the Exchange Agreement, the Company has adopted the Stock Option Plan of AISystems.  Each common share of AISystems underlying the options shall be exercisable into shares of the Company’s common stock at a rate of .95767068 shares of the Company’s common stock for each share of AISystems.

AISystems has issued stock options to employees, consultants and advisors under two Stock Option Plans, (i) The 2005 Stock Option Plan and (ii) The 2008 Stock Option Plan. AISystems has also issued Non-Plan stock options to certain consultants and advisors. AISystems’s 2005 Stock Option Plan, dated December 8, 2005 (as amended from time to time) has reserved 6,000,000 Common Shares for issuance and AISystems’s 2008 Stock Option Plan, dated May 30, 2008, has reserved 5,000,000 Common Shares for issuance. Additionally, AISystems has reserved 841,500 Common Shares for outstanding non-plan stock options.  Options are granted with terms not to exceed five years under the 2005 Plan and 10 years under the 2008 Plan.

On June 11, 2007, AISystems modified its 2005 Stock Option Plans to amend certain rights and obligations of the stock options plans. The modifications to the plan included amongst other things and allowed the following:

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· Right to exercise – the option holder now has the right to exercise the option after vesting (no longer dependent on a triggering event).

 · Stock-split – the options will now be automatically adjusted to reflect the impact of a stock-split or stock-consolidation.

 · Upon termination, the holder would  has 90 days to make a decision to either exercise or forfeit any vested options; previously there was no timeline.

 · First right of refusal (terminated employees) – AISystems has the first right of refusal to buy back the share of any terminated employees, executed at fair value.

 · First right of refusal (share transfers) – AISystems has the first right of refusal to buy back the share of any proposed share transfers, executed at fair value.

In 2009, AISystems undertook a re-pricing of stock options outstanding under the 2005 Employee stock Plan, the 2008 Employee stock option plan and with non-plan options, whether vested or unvested to the lessor of (i) $0.75 per option and (ii) the current conversion price, provided the optionee had a continuing involvement with AISystems at the time of the re-pricing. 5,239,750 options were re-priced from the various Stock Option Plans under this re-pricing.

In April 2009, AISystems issued 2,995,000 of stock options with a strike price of $0.75 per share. In October 2009, AISystems granted 1,825,000 stock options at a strike price of $0.10 per common share to management and advisors with vesting over key future performance milestones.

In November 2009, AISystems undertook a re-pricing of stock options outstanding under the 2005 Employee stock Plan, the 2008 Employee stock option plan and with non-plan options, whether vested or unvested to the lessor of (i) $0.25 per option and the current and (ii) the current conversion price, provided the optionee had a continuing involvement with AISystems at the time of the re-pricing. 3,961,500 options were re-priced from the various Stock Option Plans under this re-pricing.

CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS

To the Company’s knowledge, other than Stephen Johnston and Roy Miller, each of whom and their families have an indirect beneficial interest in Dynamic Intelligence Inc. (“Dynamic”), which is, among other things, the principal stockholder of the Company and the licensor of the Company’s material intellectual property, no director, officer or employee of the Company and no entity that is an affiliate or associate of one or more of such individuals (within the meaning of applicable securities legislation):

 1.    owns, directly or indirectly, any interest in (except for common stock representing less than 10% of the outstanding shares of any class or series of equity securities of any company), or is an officer, director, employee or consultant of, any person which is, or is engaged in business as, a material competitor of the Company or its business or a lessor, lessee, supplier, distributor, sales agent or customer of the Company or its business; or

 2.    has any cause of action or other claim whatsoever against the Company in connection with the Company’s business.

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LEGAL PROCEEDINGS

There are no outstanding judgments against the Company or any consent decrees or injunctions to which the Company is subject or by which its assets are bound and there are no claims, proceedings, actions or lawsuits in existence, or to the Company’s knowledge threatened or asserted, against the Company or with respect to any of the assets of the Company that would materially and adversely affect the business, property or financial condition of the Company, including but not limited to environmental actions or claims. However, from time to time, is involved in various lawsuits and legal proceedings which arise in the ordinary course of business.  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.

An employee terminated in 2009, is claiming that she was wrongfully dismissed and is seeking damages. The Company believes that it has complied with law in completing her termination. As such the Company believes that her claim is without merit.

Item 3.02Unregistered Sales of Equity Securities.

Pursuant to the Share Exchange Agreement, on March 19, 2010, AISystems Shareholders acquired 90,714,523 common shares of Wolf on a fully diluted basis, subject to an increase in our authorized common stock, and 1,692,240 preferred shares of Wolf in exchange for 50.8% of the AISystems Stock, subject to post closing adjustments.  Such securities were not registered under the Securities Act.  These securities qualified for exemption under Section 4(2) of the Securities Act since the issuance of securities by us did not involve a public offering. The offering was not a “public offering” as defined in Section 4(2) due to the insubstantial number of persons involved in the deal, size of the offering, manner of the offering and number of securities offered. We did not undertake an offering in which we sold a high number of securities to a high number of investors. In addition, these shareholders had the necessary investment intent as required by Section 4(2) since they agreed to and received share certificates bearing a legend stating that such securities are restricted pursuant to Rule 144 of the Securities Act. This restriction ensures that these securities would not be immediately redistributed into the market and therefore not be part of a “public offering.” Based on an analysis of the above factors, we have met the requirements to qualify for exemption under Section 4(2) of the Securities Act for this transaction.

Item 4.01 Changes in Registrant's Certifying Accountant.

(a)  Previous Independent Registered Public Accounting Firm

(i)   On or about March 9, 2010, the Company's Board of Directors voted to dismiss its independent registered public accounting firm, Michael T. Studer CPA P.C. (“Studer”)., of Freeport, New York, effective March  9, 2010, and  to replace them with Meyers Norris Penny LLP (“MNP”), of Toronto, Canada. Studer’s has rendered an independent auditor’s report on the Company’s  financial statements as of July 31, 2009 and July 31, 2008 and for the years then ended.

(ii)  The dismissal of Studer was approved by the Company's Board of Directors.

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(iii)  During the period from inception (February 22, 2005) and for the years ended July 31, 2008 and July 31, 2009  and through March 19, 2010, there were no disagreements between the Company and Studer with respect to its accounting principles or practices, financial statement disclosure or audit scope or procedure, which, if not resolved to the satisfaction of Studer would have caused them to make reference to the subject matter of the disagreement in connection with their report. Further, the reports of Studer for the past two years did not contain an adverse opinion or disclaimer of opinion, nor were they modified as to uncertainty, audit scope, or accounting principles, except for an explanatory paragraph describing substantial doubt about our ability to continue as a going concern.

(iv)  During the years ended July 31, 2008 and July 31, 2009 and through March 19, 2010 there have been no reportable events (as defined in Item 304(a)(1)(iv) and (v) of Regulation S-K).

The Company furnished Studer’s with a copy of this Report on Form 8-K prior to filing with the U.S. Securities and Exchange Commission (SEC).  The Company also requested that Studer furnish it with a letter addressed to the SEC stating whether or not it agrees with the above statements.  A copy of the letter furnished by Studer in response to that request dated March 9, 2010, is filed as Exhibit 16.1 to this Report on Form 8-K.

The Company have authorized Studer to respond fully to inquiries of MNP concerning our financial statements.

(b)  New Independent Registered Public Accounting Firm

The Company engaged MNP as our new independent registered public accounting firm as of March 22, 2010.   During the two most recent fiscal years and through March 22, 2010, the Company has not consulted with MNP regarding any of the following:

(1) The application of accounting principles to a specific transaction, either completed or proposed or the type of audit opinion that might be rendered on the Company's consolidated financial statements, and neither a written report nor oral advice was provided to the Company by MNP that MNP concluded was an important factor considered by the Company in reaching a decision as to an accounting, auditing or financial reporting issue;

(2) Any matter that was the subject of a disagreement, as that term is defined in Item 304(a)(1)(iv) of Regulation S-K and the related instructions to Item 304 of Regulation S-K; or

(3) Any matter that was a reportable event, as that item is defined in Item 304(a)(1)(v) of Regulation S-K.

Item 5.01Changes in Control of Registrant.

As explained more fully in Item 2.01, in connection with the Share Exchange Agreement, on March 19, 2010, AISystems Shareholders acquired 90,714,523 common shares of Wolf on a fully diluted basis, and 1,692,240 Series B preferred shares of Wolf in exchange for 50.8% of the AISystems Common Stock and 72.6% of the AISystems Series A preferred stock, subject to post closing adjustments.  As such, immediately following the Merger, the AISystems Shareholders hold approximately57.28% of the total issued and outstanding Common Stock on a fully diluted basis of the Company and 100% of the total issued and outstanding preferred stock of the Company.

In connection with the Closing of the Merger and as explained more fully in Item 2.01 above under the section titled “Management” and below in Item 5.02 of this Current Report on Form 8-K, Graeme McNeill resigned from his position upon effectiveness of an information statement required by Rule 14f-1 promulgated under the Exchange Act.  Further, in connection with the resignation of Graeme McNeill, the following persons were appointed as our directors and officers upon effectiveness of an information statement required by Rule 14f-1 promulgated under the Exchange Act.

Item 5.02Departure of Directors or Principal Officers; Election of Directors; Appointment of Principal Officers.

(a)   Resignation of Directors

Subject to the effectiveness of an information statement required by Rule 14f-1 promulgated under the Exchange Act, Graeme McNeill resigned as the sole member of our board of directors. The resignation was not the result of any disagreement with us on any matter relating to our operations, policies or practices.

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(b)   Resignation of Officers

On the Closing Date, Graeme McNeill resigned as our President, Chief Executive Officer, Chief Financial Officer, Treasurer, and Secretary. The resignation was not the result of any disagreement with us on any matter relating to our operations, policies or practices.

(c)   Appointment of Directors and Officers

The following persons were appointed as our officers at Closing, and upon effectiveness of an information statement required by Rule 14f-1 promulgated under the Exchange Act, will be appointed as our directors:

NAME	AGE	POSITION
Stephen C. Johnston	45	Chairman, President, Chief Executive Officer and Director
Steven Frankel	67	Independent Director
James Beatty	65	Independent Director
Gary Clifford	41	Chief Financial Officer
Salil Munjal	40	Chief Operating Officer
Charles Mawby	50	Senior Vice President, Marketing
D. Kordell Fournier	31	Vice President & General Counsel

The business background descriptions of the newly appointed director and officer are as follows:

Stephen Johnston – President & Chief Executive Officer; Chairman of the Board of Directors

Stephen is the business force that has driven AISystems since inception. His expertise in financing, team building and customer acquisition is evidenced by the success AISystems has had to date. He is an entrepreneur who has founded a number of private and publicly-traded companies in the telecommunications and healthcare sectors. Previously, Stephen was the President and CEO of Genetic Diagnostics Inc., a pioneer in the detection of genetic anomalies. He holds a B.Eng. in Mechanical Engineering from the Technical University of Nova Scotia and a B.Sc. in Mathematics & Physics from Mount Allison University.

Steven Frankel – Director

Steven has served in top-level executive positions in the medical diagnostics industry over a 30-year period.  He is currently CEO of ACON Laboratories, Inc. a leading company in the medical diagnostics market, and served as its President from 2004 to 2006. From October 2006 to October 2008 he was with Accumetrics Inc. a privately held medical device company where he held the position of CEO and board member until rejoining ACON. Prior, he was Principal of Frankel Merchant Group and advised healthcare companies regarding business strategy, mergers, and acquisitions. From 1992 to 1998 he was CEO of Quidel Corporation, a manufacturer of physicians’ office diagnostic tests. Steven spent a large portion of his career as President of various divisions of Becton, Dickinson and Company, a Fortune 500 company, from 1979 to 1992. Mr. Frankel attended the Executive Program at Stanford University and received his BA in Philosophy with Honors from Clark University.

James Beatty – Director

James is the President and founder of Trinity Corporation, an independent merchant bank located in Toronto focused on providing growth capital to small and medium-sized companies that has completed over 150 deals valued at almost $1 billion since 1982.

With over thirty years experience in the investment industry, James has served in top-level positions on more than 30 company boards in Canada and the United States. He has customarily chaired the Audit Committee or Compensation Committee, and he presently sits on three company boards.

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Since May 2006, James has served as the Executive Chairman of Consorteum Holdings, an electronic transaction processing and management services company in the financial services, payment and transaction processing industries. From January 2005 to the present, he has also been the Chairman of Canary Resources Inc., a U.S. publicly traded coal bed methane company. From March 2006 until June 2008, he served as Chairman of First Metals Inc., a Canadian base metals producer listed on the Toronto Stock Exchange.  From June 2007 to the present, James has been Chairman of Bronte Renewables Group S.A. a private renewable merchant bank.

James earned a MBA and MA from the University of Toronto. He is past president of the Association for Corporate Growth and is a frequent guest lecturer at York University and the University of Toronto.

Mr. Beatty qualifies as an audit committee financial expert under Item 407(d)(5)(ii) and (iii) of Regulation S-K.

Gary M. Clifford – Chief Financial Officer

Gary serves as Managing Director of Penfold Capital Corporation. He is also chairman of Penfold Capital Acquisition II Corporation (TSV: PAC.P), Penfold Capital Acquisition III Corporation (TSV: PNF.P) and Phonetime Inc. (TSX: PHD). Mr. Clifford previously served several public companies listed in both Canada and the US. Prior, Gary was with Counsel Corporation (an investment company listed on the TSX and formerly listed on NASDAQ as Executive Vice-President and Chief Financial Officer. Prior, Gary served in various executive capacities, including VP Corporate Development with Leitch Technology Corporation (now Harris Corporation NYSE: HRS). Leitch is a global media infrastructure technology company (formerly listed on the TSX and NASDAQ). Gary is a Chartered Accountant, a graduate with a Bachelor of Arts from the University of Toronto and a member of the National Association of Corporate Directors.

Salil Munjal – Chief Operating Officer

Salil serves as Managing Director of Penfold Capital Corporation. He is also a director of Penfold Capital Acquisition II Corporation (TSV: PAC.P), Penfold Capital Acquisition III Corporation (TSV: PNF.P). Prior,  he served as a senior executive including as Chief Operating Officer at Leitch Technology Corporation,(now Harris Corporation; NYSE: HRS) a global media infrastructure technology company formerly listed on the NASDAQ and TSX and then as a senior executive at  at Hydrogenics Corporation, a clean technology company. Salil holds a B.Sc. (Hon.) from the University of Toronto and a LL.B. from Queen’s University.

Charles Mawby – Senior Vice President, Marketing

Charles joined the Company in 2006. Charles has over 25 years of commercial software development and deployment experience focusing on successfully delivering mission critical enterprise software products and solutions to market. Prior, he has held key roles as a senior executive responsible for the delivery of software products in several successful public and private high-technology companies, such as NetManage, Remuera Corporation, and TechNode. Charles founded and managed a number of successful software companies, acting in a variety of leadership roles overseeing marketing, product management and software development in the design and delivery of products that meet customer needs.

Kordell Fournier – Vice-President & General Counsel

From 2007 to 2009 was an associate at the law firm of McCarthy Tétrault LLP where he practiced corporate/securities law, acting for various reporting issuers and underwriters in various corporate finance deals, including private placements, public offerings, mergers and acquisitions.  Kordell also advised various market intermediaries on matters relating to capital markets regulation.  Prior to returning to McCarthy, Kordell provided legal advice to RBC Financial Group relating to capital markets regulation from 2004 to 2007.  Kordell began his legal career in 2003 with McCarthy as an articling student before joining RBC.

Kordell completed a concurrent H.B.A./LL.B. from the Richard Ivey School of Business and the University of Western Ontario Faculty of Law and is a member of the Law Society of Upper Canada, the Ontario Bar Association and the Canadian Bar Association.

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Family Relationships

There are no family relationships between any of our directors or executive officers and any other directors or executive officers.

 (d) Employment Agreements of the Executive Officers

The employment agreements of our Executive officer are filed as Exhibit 10.1 to this current report and are incorporated herein by reference.

Item 5.06Change in Shell Company Status

As explained more fully in Item 2.01 above, we were a “shell company” (as such term is defined in Rule 12b-2 under the Exchange Act) immediately before the Closing of the Combination.  As a result of the Combination, Merit Times became our wholly owned subsidiary and became our main operational business.  Consequently, the Combination has caused us to cease to be a shell company.  For information about the Combination, please see the information set forth above under Item 2.01 of this Current Report on Form 8-K which information is incorporated herein by reference.

Item 9.01Financial Statement and Exhibits.

(a)  FINANCIAL STATEMENTS OF BUSINESS ACQUIRED.

The Audited Consolidated Financial Statements of AISystems as of December 31, 2009 and 2008, are filed as Exhibit 99.1 to this current report and are incorporated herein by reference.

(b)  PRO FORMA FINANCIAL INFORMATION.

Except as set forth in the paragraph below relating to pro forma per-share information, a pro-forma statement of operations of Wolf for the year ended December 31, 2009 is not presented, as pro-forma financial information for the period would be virtually identical to the historical statement of operations of AISystems for the period.

Pro forma (loss) income per share for the years ended December 31, 2009 and 2008 (considering the retroactive restatement to reflect the new capital structure as a result of the reverse acquisition) would be ($0.21) and ($0.29) per share, respectively; the pro forma weighted average number of common shares outstanding would be 84.6 million and 55.95 million for each period.

(c)  SHELL COMPANY TRANSACTIONS

Reference is made to Items 9.01(a) and 9.01(b) and the exhibits referred to therein which are incorporated herein by reference.

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(d)  EXHIBITS

Exhibit No.	Description
2.1	Share Exchange Agreement by and between the Company, AISystems and the AISystems Shareholders, dated March 19, 2010
3.1	Articles of Incorporation (incorporated by reference in the Registration Statement on Form SB-2 filed with the SEC on September 30, 2005)
3.2	Amended and Restated Articles of Incorporation (incorporated by reference in the Registration Statement on Form S-1 filed with the SEC on May 28, 2008)
3.3	Bylaws (incorporated by reference in the Registration Statement on Form SB-2 filed with the SEC on September 30, 2005)
3.4	Certificate of Designation of the Series B Preferred Stock filed with the Nevada Secretary of State on March 22, 2010.
10.1	Stephen C. Johnston Employment Agreement
10.2	Office Lease Agreement between Carillon Properties and Airline Intelligence Systems, Inc
10.3	Lease between SITQ National Inc. and Airline Intelligence Systems Corp.
10.5	Software Licensing Agreement with AeroMexico as amended
10.6	License Agreement between Dynamic Intelligence, Inc. and Airline Intelligence Systems, Inc. as amended
10.7	Master Services Agreement between Dynamic Intelligence, Inc., Airline Intelligence Systems, Inc. (US) and Airline Intelligence Systems, Inc. (CA).
10.8	Exchange Right Agreement between Airline Intelligence Systems, Inc. and Merus Capital I, L.P.
14.1	Code of Ethics
16.1	Letter from Michael T. Studer CPA P.C.
99.1	The Audited Consolidated Financial Statements of AISystems as of December 31, 2009 and 2008.

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SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, the Registrant has duly caused this Report on Form 8-K to be signed on its behalf by the undersigned hereunto duly authorized.

	WOLF RESOURCES, INC.
Date: March 22, 2010	By:	/s/ Stephen C. Johnston
		Stephen C. Johnston
		Chief Executive Officer

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EX-2.1

Exhibit 2.1

SHARE EXCHANGE AGREEMENT

by and among

Wolf Resources, Inc.

a Nevada corporation

and

Airline Intelligence Systems Inc.

a Delaware corporation

and

the Shareholders of Airline Intelligence Systems Inc.

Dated as of March 19, 2010

1

SHARE EXCHANGE AGREEMENT

This SHARE EXCHANGE AGREEMENT (the “Agreement”) is entered into as of this 19th day of March, 2010, by and among Wolf Resources, Inc., a Nevada corporation (“Wolf”), with offices at 564 Wedge Lane, Fernley, NV, 89408; Airline Intelligence Systems Inc., a Delaware corporation (“AISystems”), with offices at 3500 Carillon Point, Kirkland, WA, 98033 and the shareholders of AISystems (collectively, the “AISystems Shareholders,” individually, the “AISystem Shareholder”), as set forth on Exhibit A, attached hereto. Each of the parties to this Agreement is individually referred to herein as a “Party” and collectively, as the “Parties.”

WITNESSETH:

WHEREAS, Wolf is a publicly held corporation organized under the laws of the State of Nevada with no significant operations;

WHEREAS, AISystems has 106,825,282 shares of common stock and 2,329,905 shares of Series A Preferred Stock (the “AISystems Stock”) issued and outstanding, all of which are held by the AISystems Shareholders.  Each AISystems Shareholder is the record and beneficial owner of the number of shares of AISystems Stock set forth adjacent such AISystems Shareholder’s name on Exhibit A, attached hereto.  

WHEREAS, in consideration for up to 100% of the issued and outstanding AISystems Stock, Wolf agrees to issue up to 116,250,000 shares of Wolf common stock, par value $0.001 per share (the “Wolf Common Stock”) which represents approximately 75% of the issued and outstanding common stock of Wolf and 2,329,905 shares of Wolf Series A Preferred Stock (the “Wolf Preferred Stock”) (collectively, the Wolf Common Stock and the Wolf Preferred Stock, the “Wolf Securities”).  On the Closing Date (as defined in Section 1.02), AISystems will become a wholly-owned subsidiary of Wolf.

AGREEMENT

NOW THEREFORE, on the stated premises and for and in consideration of the mutual covenants and agreements hereinafter set forth and the mutual benefits to the parties to be derived here from, and intending to be legally bound hereby, it is hereby agreed as follows:

ARTICLE I

PLAN OF EXCHANGE

Section 1.01Share Exchange.

  On the terms and subject to the conditions set forth in this Agreement, on the Closing Date, the AISystems Shareholders, by executing this Agreement, shall assign, transfer and deliver, free and clear of all liens, pledges, encumbrances, charges, restrictions or known claims of any kind, nature, or description, the number of shares of AISystems set forth on the AISystems Schedule (as defined in Section 2.10 below) attached hereto, constituting all of the shares of AISystems held by such AISystems Shareholders.

2

 In exchange for the transfer of such securities by the AISystems Shareholders, Wolf shall issue to the AISystems Shareholders, their affiliates or assigns, up to 116,250,000 shares of common stock and 2,329,905 shares of preferred stock, pursuant to Exhibit A, attached hereto for all of the outstanding shares of AISystems held by AISystems Shareholders (the “Exchange Shares”) based on an exchange ratio of approximately .95767 Wolf Common Stock for every one (1) share of AISystems Stock and one (1) Wolf Preferred Stock for every one (1) share of AISystems Preferred Stock. After the cancellation of the 34,488,000 shares of Wolf Common Stock upon the Closing (as defined in Section 1.04) and upon the increase in Wolf’s number of authorized common stock, as set forth in Section 1.03 hereof, the 116,250,000 common shares shall represent approximately 75% of the total Wolf Common Stock and the 2,329,905 shares of preferred stock will represent 100% of the total Wolf Preferred Stock. At the Closing Date, each AISystems Shareholder shall, on surrender of his certificate or certificates representing his AISystems Stock to Wolf or its registrar or transfer agent, be entitled to receive a certificate or certificates evidencing his proportionate interest in the Exchange Shares.

 Upon consummation of the transaction contemplated herein, of AISystems shall become a subsidiary of Wolf and, upon the exchange of all shares of AISystems by AISystems Shareholders for Exchange Shares, a wholly owned subsidiary of Wolf.  Upon consummation of the transaction contemplated herein and an increase in authorized stated capital, there shall be up to 155,004,000 shares of Wolf Common Stock and 2,329,905 shares of Wolf Preferred Stock issued and outstanding.

Section 1.02Exchange of Convertible Securities. Effective as of the Closing Date, the holders (individually, the “Holder,” and collectively the “Holders”) of the outstanding warrants, options and convertible debentures of AISystems (collectively, the “Convertible Securities”), as set forth on Schedule 1.02 hereto, upon the exercise or conversion of the Convertible Securities, shall have the right to convert such Convertible Securities into the kind and amount of Wolf shares of stock and other securities and property which such Holder would have owned or have been entitled to receive prior to the Closing of the share exchange transaction contemplated in this Agreement, multiplied by approximately 0.95767068.

Section 1.03Cancellation of Certain Shares of Wolf Common Stock. Prior to the Closing Date, Graeme McNeill, the former sole officer and director of Wolf, and Christopher Patterson, a principal shareholder of Wolf, shall cancel a total number of 34,448,000 shares of Wolf Common Stock.

Section 1.04Closing

 The closing (“Closing”) of the transactions contemplated by this Agreement shall occur upon the exchange of at least 50.01% of the AI Common Stock and of the AISystems Preferred Stock for the stock of Wolf, as described in Section 1.01 herein and the completion of the deliverables described in Article VIII below (the “Closing Date”).  Such Closing shall take place at a mutually agreeable time and place.

Section 1.05Closing Events

On the Closing Date, Wolf, AISystems and the AISystems Shareholders shall execute, acknowledge, and deliver (or shall ensure to be executed, acknowledged, and delivered), any and all certificates representing a majority of the AI Common Stock and a majority of the AISystems Preferred Stock, opinions, financial statements, schedules, agreements, resolutions, rulings or other instruments required by this Agreement to be so delivered at or prior to the Closing, together with such other items as may be reasonably requested by the parties hereto and their respective legal counsel in order to effectuate or evidence the transactions contemplated hereby.  The certificates representing the remainder of the AI Common Stock and AISystems Preferred Stock shall be delivered within due course post-Closing.

3

Section  1.06Preferred Shares.  Upon Closing, Wolf shall file an amendment to its Articles of Incorporation to include a certificate of designation (the “Certificate of Designation”) as set forth on Exhibit B hereto, with the Secretary of the State of Nevada.  The Certificate of Designation shall have the preferences, limitations and relative rights, included voting rights as that of the AISystems Preferred Stock.

Section 1.07Termination. This Agreement may be terminated by the board of directors of AISystems or Wolf only in the event that Wolf or AISystems does not meet the conditions precedent set forth in Articles VI and VII.  If this Agreement is terminated pursuant to this section, this Agreement shall be of no further force or effect, and no obligation, right or liability shall arise hereunder.

Section 1.08Directors of Wolf at Closing.  Effective as of the Closing Date, and subject to applicable regulatory requirements, including the preparation, filing and distribution to the shareholders of Wolf of a Schedule 14(f)-1 Notice to Stockholders, Graeme McNeill shall resign from the board of directors of Wolf and the following individuals shall be appointed to the board of Wolf:

NAME	AGE	POSITION
Stephen C. Johnston	45	Director (Chairman)
Steven Frankel	67	Independent Director
James Beatty	65	Independent Director

Section 1.09Officers of Wolf at Closing.  Effective as of the Closing Date, Graeme McNeill shall resign from each officer position held at Wolf, and the following individuals shall be appointed to the offices of Wolf:

NAME	POSITION
Stephen C. Johnston	President, Chief Executive Officer
Gary Clifford	Chief Financial Officer
Salil Munjal	Chief Operating Officer
Charles Mawby	Senior Vice President, Marketing
D. Kordell Fournier	Vice President & General Counsel, Corporate Secretary

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ARTICLE II

REPRESENTATIONS, COVENANTS, AND WARRANTIES OF AISYSTEMS

As an inducement to, and to obtain the reliance of Wolf, except as set forth in the AISystems Schedules, AISystems represents and warrants as of the Closing Date, as defined below, as follows:

Section 2.01Incorporation. Section 2.02AISystems is a company duly incorporated, validly existing, and in good standing under the laws of the state of Delaware and has the corporate power and is duly authorized under all applicable laws, regulations, ordinances, and orders of public authorities to carry on its business in all material respects as it is now being conducted. Included in the AISystems Schedules are complete and correct copies of the Articles of Incorporation and By-Laws of AISystems as in effect on the date hereof.  The execution and delivery of this Agreement does not, and the consummation of the transactions contemplated hereby will not, violate any provision of AISystems’ Articles of Incorporation or By-Laws.  AISystems has taken all actions required by law, its Articles of Incorporation and By-Laws, or otherwise to authorize the execution and delivery of this Agreement.  AISystems has full power, authority, and legal capacity and has taken all action required by law, its Articles of Incorporation and By-Laws, and otherwise to consummate the transactions herein contemplated.

Section 2.02Authorized Shares. AISystems is authorized to issue 505,000,000 shares of capital stock, consisting of 500,000,000 shares of common stock, par value of $0.001 per share and 5,000,000 shares of preferred stock, par value of $0.001 per share.  There are 106,825,282 shares of common stock currently issued and outstanding and 2,329,905 shares of preferred stock currently issued and outstanding.  The issued and outstanding shares are validly issued, fully paid, and non-assessable and not issued in violation of the preemptive or other rights of any person.  Except as disclosed in the Schedule 2.02, there are not  other bonds, debentures, notes or other indebtedness of AISystems having the right to vote (or convertible into, or exchangeable for, securities having right to the vote (“Voting AISystems Debt”).  Except as disclosed in the Schedule 2.02, there are not other options, warrants, rights, stock-based performance units, commitments, contracts, arrangements or undertakings of any kind to which AISystems is a party or by which any of them is bound (a) obligating AISystems to issue, deliver or sell, or cause to be issued, delivered or sold, additional shares of capital stock or other equity interests in, or any security convertible or exercisable for or exchangeable into any capital stock of or other equity interest in AISystems or any Voting AISystems Debt, (b) obligating AISystems to issue, grant, extend or enter into any such option, warrant, call, right, security, commitment, contract, arrangement or undertaking or (c) that give any person the right to receive any economic benefit or right similar to or derived from the economic benefits and rights occurring to holders of the capital stock of AISystems. As of the date of this Agreement, there are not any outstanding contractual obligations of AISystems to repurchase, redeem or otherwise acquire any shares of capital stock of AISystems.

Section 2.03Subsidiaries. Except as set forth on Schedule 2.03 hereto, AISystems does not have any subsidiaries, and does not own, beneficially or of record, any shares of any other corporation.

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Section 2.04Financial Statements.

(a)Schedule 2.04 contains the audited balance sheets of AISystems as of December 31, 2009 and 2008 and the related audited statements of operations, stockholders’ equity and cash flows for the fiscal years ended 2009 and 2008, together with the notes to such statements and the opinion ofMeyers Norris Penny LLP, independent certified public accountants.

(b)All such financial statements have been prepared in accordance with generally accepted accounting principles (the “U.S. GAAP”) consistently applied throughout the periods involved.  The AISystems balance sheets are true and accurate and present fairly as of their respective dates the financial condition of AISystems.  As of the date of such balance sheets, except as and to the extent reflected or reserved against therein, AISystems had no other liabilities or obligations (absolute or contingent) which should be reflected in the balance sheets or the notes thereto prepared in accordance with the U.S. GAAP, and all assets reflected therein are properly reported and present fairly the value of the assets of AISystems, in accordance with the US GAAP. The statements of operations, stockholders’ equity and cash flows reflect fairly the information required to be set forth therein by generally accepted accounting principles.

(c)AISystems has duly and punctually paid all governmental fees and taxation which it has become liable to pay and has duly allowed for all taxation reasonably foreseeable and is under no liability to pay any penalty or interest in connection with any claim for governmental fees or taxation and AISystems has made any and all proper declarations and returns for taxation purposes and all information contained in such declarations and returns is true and complete and full provision or reserves have been made in its financial statements for all governmental fees and taxation.

(d)The books and records, financial and otherwise of AISystems are in all material aspects complete and correct and have been maintained in accordance with good business and accounting practices.

(e)All of AISystems’ assets are reflected on its financial statements, and, except as set forth in the AISystems Schedules or the financial statements of AISystems or the notes thereto, AISystems has no material liabilities, direct or indirect, matured or unmatured, contingent or otherwise.

Section 2.05Information. The information concerning AISystems set forth in this Agreement and in the AISystems Schedules is complete and accurate in all material respects and does not contain any untrue statement of a material fact or omit to state a material fact required to make the statements made, in light of the circumstances under which they were made, not misleading.  In addition, AISystems has fully disclosed in writing to Wolf (through this Agreement or the AISystems Schedules) all information relating to matters involving AISystems or its assets or its present or past operations or activities which (i) indicated or may indicate, in the aggregate, the existence of a greater than $50,000 liability , (ii) have led or may lead to a competitive disadvantage on the part of AISystems or (iii) either alone or in aggregation with other information covered by this Section, otherwise have led or may lead to a material adverse effect on AISystems, its assets, or its operations or activities as presently conducted or as contemplated to be conducted after the Closing Date, including, but not limited to, information relating to governmental, employee, environmental, litigation and securities matters and transactions with affiliates.

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Section 2.06Litigation and Proceedings. Except as disclosed on Schedule 2.06 hereto, there are no actions, suits, proceedings, or investigations pending or, to the knowledge of AISystems after reasonable investigation, threatened by or against AISystems or affecting AISystems or its properties, at law or in equity, before any court or other governmental agency or instrumentality, domestic or foreign, or before any arbitrator of any kind.  AISystems does not have any knowledge of any material default on its part with respect to any judgment, order, injunction, decree, award, rule, or regulation of any court, arbitrator, or governmental agency or instrumentality or of any circumstances which, after reasonable investigation, would result in the discovery of such a default.

Section 2.07No Conflict with Other Instruments. The execution of this Agreement and the consummation of the transactions contemplated by this Agreement will not result in the breach of any term or provision of, constitute a default under, or terminate, accelerate or modify the terms of any indenture, mortgage, deed of trust, or other material agreement, or instrument to which AISystems is a party or to which any of its assets, properties or operations are subject.

Section 2.08Compliance with Laws and Regulations. To the best of its knowledge, AISystems has complied with all applicable statutes and regulations of any federal, state, or other governmental entity or agency thereof, except to the extent that noncompliance would not materially and adversely affect the business, operations, properties, assets, or condition of AISystems or except to the extent that noncompliance would not result in the occurrence of any material liability for AISystems.  This compliance includes, but is not limited to, the filing of all reports to date with federal and state securities authorities.

Section 2.09Authority, Execution and Delivery; Enforceability of Agreement. AISystems has all requisite corporate power and authority to execute and deliver this Agreement and to consummate the Share Exchange. The execution and delivery by AISystems of this Agreement and the consummation by AISystems of the Share Exchange have been duly authorized and approved by the Board of Directors of AISystems and no other corporate proceedings on the part of AISystems are necessary to authorize this Agreement and the Share Exchange.  When executed and delivered, this Agreement will be enforceable against AISystems in accordance with its terms.

Section 2.10AISystems Schedules. AISystems has delivered to Wolf the following schedules, which are collectively referred to as the “AISystems Schedules” and which consist of separate schedules dated as of the date of execution of this Agreement, all certified by the chief executive officer of AISystems as complete, true, and correct as of the date of this Agreement in all material respects:

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(a)Schedule 1.02 indicating any Convertible Securities issued and outstanding by AISystems;

(b)Schedule 2.01 containing complete and accurate copies of the Certificate of Incorporation and By-Laws of AISystems as in effect as of the date of this Agreement;

(c)Schedule 2.02 indicating any Voting AISystems Debt issued and outstanding by AISystems;

(d)Schedule 2.03 indicating AISystems’ subsidiaries;

(e)Schedule 2.04 containing AISystems’ financial statements;

(f)Schedule 2.06 indicating any exceptions to s. 2.06 of this Agreement;

(g)Schedule 2.12 indicating any exceptions to Section 2.12 of this Agreement;

(h)Schedule 2.13 indicating any exceptions to Section 2.13 of this Agreement; and

(i)Schedule 2.14 indicating any exceptions to Section 2.14 of this Agreement;

AISystems shall cause the AISystems Schedules and the instruments and data delivered to Wolf hereunder to be promptly updated after the date hereof up to and including the Closing Date.

Section 2.11Valid Obligation. This Agreement and all agreements and other documents executed by AISystems in connection herewith constitute the valid and binding obligation of AISystems, enforceable in accordance with its or their terms, except as may be limited by bankruptcy, insolvency, moratorium or other similar laws affecting the enforcement of creditors’ rights generally and subject to the qualification that the availability of equitable remedies is subject to the discretion of the court before which any proceeding therefore may be brought.

Section 2.12Title to Properties.  Except as disclosed in Schedule 2.12, AISystems does not own any real property.

Section 2.13Intellectual Property.  Except as disclosed in Schedule 2.13, AISystems does not own, nor is validly licensed nor otherwise has the right to use, any Intellectual Property Rights.  No claims are pending or, to the knowledge of AISystems, threatened that AISystems is infringing or otherwise adversely affecting the rights of any person with regard to any Intellectual Property Rights.

Section 2.14Insurance.  Except as disclosed in Schedule 2.14, AISystems and any of its subsidiaries does not currently maintain any form of insurance.

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ARTICLE III

REPRESENTATIONS, COVENANTS, AND WARRANTIES OF WOLF

As an inducement to, and to obtain the reliance of AISystems and the AISystems Shareholders, except as set forth in the Wolf Schedules (as defined in Section 3.14 below), Wolf represents and warrants, as of the date hereof and as of the Closing Date, as follows:

Section 3.01Organization. Wolf is a corporation duly organized, validly existing, and in good standing under the laws of the State of Nevada and has the corporate power and is duly authorized under all applicable laws, regulations, ordinances, and orders of public authorities to carry on its business in all material respects as it is now being conducted.  Included in the Wolf Schedules are complete and correct copies of the Certificate of Incorporation and By-Laws of Wolf as in effect on the date hereof.  The execution and delivery of this Agreement does not, and the consummation of the transactions contemplated hereby will not, violate any provision of Wolf’s Certificate of Incorporation or By-Laws.  Wolf has taken all action required by law, its Certificate of Incorporation, its By-Laws, or otherwise to authorize the execution and delivery of this Agreement, and Wolf has full power, authority, and legal right and has taken all action required by law, its Certificate of Incorporation, By-Laws, or otherwise to consummate the transactions herein contemplated.  Wolf is not conducting any business other than in the State of Nevada.

Section 3.02Capitalization. Wolf is authorized to issue: (i) 100,000,000 shares of common stock, par value $0.001 per share (“Wolf Common Stock”), of which 38,754,000 shares are issued and outstanding after the cancellation of 34,448,000 shares of common stock by Wolf’s officer and director and principal shareholder as of the date hereof; and (ii) 20,000,000 shares of preferred stock, par value $0.001 per share, of which zero shares are issued and outstanding.  All issued and outstanding shares are legally issued, fully paid, and non-assessable and not issued in violation of the preemptive or other rights of any person. There are no bonds, debentures, notes or other indebtedness of Wolf having the right to vote (or convertible into, or exchangeable for, securities having right to the vote (“Voting Wolf Debt”). There are no options, warrants, rights, stock-based performance units, commitments, contracts, arrangements or undertakings of any kind to which Wolf is a party or by which the company is bound (a) obligating Wolf to issue, deliver or sell, or cause to be issued, delivered or sold, additional shares of capital stock or other equity interests in, or any security convertible or exercisable for or exchangeable into any capital stock of or other equity interest in Wolf or any Voting Wolf Debt, (b) obligating Wolf to issue, grant, extend or enter into any such option, warrant, call, right, security, commitment, contract, arrangement or undertaking or (c) that give any person the right to receive any economic benefit or right similar to or derived from the economic benefits and rights occurring to holders of the capital stock of Wolf. As of the date of this Agreement, there are not any outstanding contractual obligations of Wolf to repurchase, redeem or otherwise acquire any shares of capital stock of Wolf.

Section 3.03Subsidiaries and Predecessor Corporations. Wolf does not have any subsidiaries, and does not own, beneficially or of record, any shares of any other corporation.

Section 3.04No Assets or Liabilities. Except as set forth on the attached Schedule 3.04, Wolf does not have any (a) material assets of any kind or (b) material liabilities or obligations, whether secured or unsecured, accrued, determined, absolute or contingent, asserted or unasserted or otherwise.

Section 3.05Financial Statements.

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(a)Schedule 3.05 contains: (i) the audited balance sheets of Wolf as of July 31, 2009 and 2008 and the related audited statements of operations, stockholders’ equity and cash flows for July 31, 2009 and 2008 together with the notes to such statements and the opinion of Michael T. Studer CPA P.C., independent certified public accountants with respect thereto; and (ii) the unaudited balance sheets of October 31, 2009 and the related unaudited statements of operations, stockholders’ equity and cash flows for the quarters ended on such dates and all such financial statements have been reviewed by Michael T. Studer CPA P.C.

(b)All such financial statements have been prepared in accordance with the U.S. GAAP consistently applied throughout the periods involved. The Wolf balance sheets are true and accurate and present fairly as of their respective dates the financial condition of Wolf.  As of the date of such balance sheets, except as and to the extent reflected or reserved against therein, Wolf had no liabilities or obligations (absolute or contingent) which should be reflected in the balance sheets or the notes thereto prepared in accordance with U.S. GAAP, and all assets reflected therein are properly reported and present fairly the value of the assets of Wolf, in accordance with the US GAAP. The statements of operations, stockholders’ equity and cash flows reflect fairly the information required to be set forth therein by the U.S. GAAP.

(c)Wolf has no liabilities with respect to the payment of any federal, state, county, local or other taxes (including any deficiencies, interest or penalties), except for taxes accrued but not yet due and payable.

(d)Wolf has timely filed all state, federal or local income and/or franchise tax returns required to be filed by it from inception to the date hereof except for the years ended 2007 and 2008 (the “Outstanding Returns”).  Each of such income tax returns reflects the taxes due for the period covered thereby, except for amounts which, in the aggregate, are immaterial.

(e)Wolf has paid and will continue until the Closing Date to pay all taxes, including any amount due on or before the Closing, including installments or prepayments of taxes, which are required to have been paid to any applicable authority pursuant to applicable law, and no deficiency with respect to the payment of any taxes or tax installments has been asserted against it by any applicable authority.  Wolf has not incurred any liability, whether actual or contingent, for taxes or engaged in any transaction or event that would result in any liability, whether actual or contingent, for taxes or realized any income or gain for tax purposes otherwise than in the usual and ordinary course of its business.  Other than taxes provided for in Wolf’s financial statements, Wolf has no liability or obligation in respect of any taxes for any taxable periods ending on or before the Closing, and where no taxable period ends or is deemed to end on or immediately prior to the Closing, no liability or obligation for taxes in respect of any time or event prior to the Closing.  There are no liens, charges, encumbrances or any rights of others on any of the assets of Wolf that arose in connection with any failure (or alleged failure) to pay any tax when due.

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(f)The income tax liability of Wolf has been assessed by the relevant authority in respect of the taxation years of Wolf ending before the date hereof;

(g)Wolf has no outstanding assessments for taxes, and Wolf has no knowledge of any threatened or potential assessment or other proceedings, negotiations or investigations in respect of taxes, against Wolf;

(h)Wolf is not a party to any agreement, waiver or arrangement with any authority that relates to any extension of time with respect to the filing of any tax return, any payment of taxes or any assessment;

(i)Wolf is not subject to liability for taxes of any other person.  Wolf has not acquired property from any person in circumstances where Wolf did or could become liable for any taxes of such person. The value of the consideration paid or received by Wolf for the acquisition, sale, transfer or provision of property (including intangibles) or the provision of services (including financial transactions) from or to a person with whom Wolf was not dealing at arm’s length within the meaning of applicable legislation was equal to the estimated fair market value of such property acquired, provided or sold or services purchased or provided.  Wolf has not entered into any agreement with, or provided any undertaking to, any person pursuant to which it has assumed liability for the payment of income taxes owing by such person;

(j)The books and records, financial and otherwise, of Wolf are in all material aspects complete and correct and have been maintained in accordance with good business and accounting practices.

(k)All of Wolf’s assets are reflected on its financial statements, and, except as set forth in the Wolf Schedules or the financial statements of Wolf or the notes thereto, Wolf has no material liabilities, direct or indirect, matured or unmatured, contingent or otherwise.

Section 3.06Information The information concerning Wolf set forth in this Agreement and the Wolf Schedules is complete and accurate in all material respects and does not contain any untrue statements of a material fact or omit to state a material fact required to make the statements made, in light of the circumstances under which they were made, not misleading.  In addition, Wolf has fully disclosed in writing to AISystems (through this Agreement or the Wolf Schedules) all information relating to matters involving Wolf or its assets or its present or past operations or activities which (i) indicated or may indicate, in the aggregate, the existence of a greater than $500 liability , (ii) have led or may lead to a competitive disadvantage on the part of Wolf or (iii) either alone or in aggregation with other information covered by this Section, otherwise have led or may lead to a material adverse effect on Wolf, its assets, or its operations or activities as presently conducted or as contemplated to be conducted after the Closing Date, including, but not limited to, information relating to governmental, employee, environmental, litigation and securities matters and transactions with affiliates.

Section 3.07Absence of Certain Changes or Events. Since October 31, 2009:

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(a)there has not been (i) any material adverse change in the business, operations, properties, assets or condition of Wolf or (ii) any damage, destruction or loss to Wolf (whether or not covered by insurance) materially and adversely affecting the business, operations, properties, assets or condition of Wolf;

(b)Wolf  has not (i) amended its Certificate of Incorporation or By-Laws except as required by this Agreement; (ii) declared or made, or agreed to declare or make any payment of dividends or distributions of any assets of any kind whatsoever to stockholders or purchased or redeemed, or agreed to purchase or redeem, any of its capital stock; (iii) waived any rights of value which in the aggregate are outside of the ordinary course of business or material considering the business of  Wolf; (iv) made any material change in its method of management, operation, or accounting; (v) entered into any transactions or agreements other than in the ordinary course of business; (vi) made any accrual or arrangement for or payment of bonuses or special compensation of any kind or any severance or  termination pay to any present or former officer or employee; (vii) increased the rate of compensation payable or to become payable by it to any of its officers or directors or any of its salaried employees whose monthly compensation exceed $1,000; or  (viii) made any increase in any profit sharing, bonus, deferred compensation, insurance, pension, retirement, or other employee benefit plan, payment, or arrangement, made to, for or with its officers, directors, or employees;

(c)Wolf has not (i) granted or agreed to grant any options, warrants, or other rights for its stock, bonds, or other corporate securities calling for the issuance thereof; (ii) borrowed or agreed to borrow any funds or incurred, or become subject to, any material obligation or liability (absolute or contingent) except liabilities incurred in the ordinary course of business; (iii) paid or agreed to pay any material obligations or liabilities (absolute or contingent) other than current liabilities reflected in or shown on the most recent Wolf balance sheet and current liabilities incurred since that date in the ordinary course of business and professional and other fees and expenses in connection with the preparation of this Agreement and the consummation of the transaction contemplated hereby; (iv) sold or transferred, or agreed to sell or transfer, any of its assets, properties, or rights (except assets, properties, or rights not used or useful in its business which, in the aggregate have a value of less than $1,000), or canceled, or agreed to cancel, any debts or claims (except debts or claims which in the aggregate are of a value less than $1,000); (v) made or permitted any amendment or termination of any contract, agreement, or license to which it is a party if such amendment or termination is material, considering the business of Wolf; or (vi) issued, delivered or agreed to issue or deliver, any stock, bonds or other corporate securities including debentures (whether authorized and unissued or held as treasury stock), except in connection with this Agreement; and

(d)to its knowledge, Wolf has not become subject to any law or regulation which materially and adversely affects, or in the future, may adversely affect, the business, operations, properties, assets or condition of Wolf.

Section 3.08Litigation and Proceedings. There are no actions, suits, proceedings or investigations pending or, to the knowledge of Wolf after reasonable investigation, threatened by or against Wolf or affecting Wolf or its properties, at law or in equity, before any court or other governmental agency or instrumentality, domestic or foreign, or before any arbitrator of any kind except as disclosed in Schedule 3.08.  Wolf has no knowledge of any default on its part with respect to any judgment, order, writ, injunction, decree, award, rule or regulation of any court, arbitrator, or governmental agency or instrumentality or any circumstance which after reasonable investigation would result in the discovery of such default.

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Section 3.09Contracts.

(a)Wolf is not a party to, and its assets, products, technology and properties are not bound by, any contract, franchise, license agreement, agreement, debt instrument, option, understanding or commitment, or any right or privilege capable of becoming an agreement whether such agreement is in writing or oral.

(b)Wolf is not a party to or bound by, and the properties of Wolf are not subject to any contract, agreement, other commitment or instrument; any charter or other corporate restriction; or any judgment, order, writ, injunction, decree, or award; and

(c)Wolf is not a party to any oral or written (i) contract for the employment of any officer or employee; (ii) profit sharing, bonus, deferred compensation, stock option, severance pay, pension benefit or retirement plan, (iii) agreement, contract, or indenture relating to the borrowing of money, (iv) guarantee, indemnification, surety or other similar obligation, (v) collective bargaining agreement; or (vi) agreement with any present or former officer or director of Wolf.

Section 3.10No Conflict with Other Instruments. The execution of this Agreement and the consummation of the transactions contemplated by this Agreement will not result in the breach of any term or provision of, constitute a default under, or terminate, accelerate or modify the terms of, any indenture, mortgage, deed of trust, or other material agreement or instrument to which Wolf is a party or to which any of its assets, properties or operations are subject.

Section 3.11Compliance with Laws and Regulations. To the best of its knowledge, Wolf has complied with all applicable statutes and regulations of any federal, state, or other applicable governmental entity or agency thereof.  This compliance includes, but is not limited to, the filing of all reports to date with federal and state securities authorities.

Section 3.12Approval of Agreement. The board of directors of Wolf has authorized the execution and delivery of this Agreement by Wolf and has approved this Agreement and the transactions contemplated hereby.

Section 3.13Material Transactions or Affiliations. Except as disclosed herein and in Schedule 3.13, there exists no contract, agreement or arrangement between Wolf and any predecessor and any person who was at the time of such contract, agreement or arrangement an officer, director, or person owning of record or known by Wolf to own beneficially, 5% or more of the issued and outstanding common stock of Wolf and which is to be performed in whole or in part after the date hereof or was entered into not more than three years prior to the date hereof.  Neither any officer, director, nor 5% shareholders of Wolf has, or has had since inception of Wolf, any known interest, direct or indirect, in any such transaction with Wolf which was material to the business of Wolf.  Wolf has no commitment, whether written or oral, to lend any funds to, borrow any money from, or enter into any other transaction with, any such affiliated person.

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Section 3.14Wolf Schedules. Wolf has delivered to AISystems the following schedules, which are collectively referred to as the “Wolf Schedules” and which consist of separate schedules, which are dated the date of this Agreement, all certified by the chief executive officer of Wolf to be complete, true, and accurate in all material respects as of the date of this Agreement.

(a)Schedule 3.01 containing complete and accurate copies of the Certificate of Incorporation and By-Laws of Wolf as in effect as of the date of this Agreement;

(b)Schedule 3.04 containing any exceptions to Section 3.04 of this Agreement;

(c)Schedule 3.05 containing Wolf’s financial statements;

(d)Schedule 3.08 containing any exceptions to Section 3.08;

(e)Schedule 3.13 containing any exceptions to Section 3.13;

(f)Schedule 3.15 containing the financial accounts of Wolf and the individuals who hold powers of attorney over such accounts;

(g)Schedule 3.20(b) containing any exceptions to Section 3.20(b);

(h)Schedule 3.20(j) containing any exceptions to Section 3.20(j); and

(i)Schedule 3.20(k) containing any exceptions to Section 3.20(k);

Wolf shall cause the Wolf Schedules and the instruments and data delivered to AISystems hereunder to be promptly updated after the date hereof up to and including the Closing Date.

Section 3.15Bank Accounts; Power of Attorney. Set forth in Schedule 3.15 is a true and complete list of (a) all accounts with banks, money market mutual funds or securities or other financial institutions maintained by Wolf within the past twelve (12) months, the account numbers thereof, and all persons authorized to sign or act on behalf of Wolf, (b) all safe deposit boxes and other similar custodial arrangements maintained by Wolf within the past twelve (12) months, (c) the check ledger for the last 12 months, and (d) the names of all persons holding powers of attorney from Wolf or who are otherwise authorized to act on behalf of Wolf with respect to any matter, other than its officers and directors, and a summary of the terms of such powers or authorizations.

Section 3.16Valid Obligation. This Agreement and all agreements and other documents executed by Wolf in connection herewith constitute the valid and binding obligation of Wolf, enforceable in accordance with its or their terms, except as may be limited by bankruptcy, insolvency, moratorium or other similar laws affecting the enforcement of creditors’ rights generally and subject to the qualification that the availability of equitable remedies is subject to the discretion of the court before which any proceeding therefore may be brought.

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Section 3.17SEC Filings. Financial Statements. 

(a) Wolf has made available to AISystems a correct and complete copy, or there has been available on EDGAR, copies of each report, registration statement and definitive proxy statement filed by Wolf with the Securities & Exchange Commission (“SEC”) for the thirty six (36) months prior to the date of this Agreement (the “Wolf SEC Reports”), which, to Wolf’s knowledge, are all the forms, reports and documents filed by Wolf with the SEC for the thirty six (36) months prior to the date of this Agreement. As of their respective dates, to Wolf’s knowledge, the Wolf SEC Reports: (i) were prepared in accordance and complied in all material respects with the requirements of the Securities Act of 1933, as amended (the “Securities Act”) or the Securities Exchange Act of 1934, as amended  (the “Exchange Act”), as the case may be, and the rules and regulations of the SEC thereunder applicable to such Wolf SEC Reports, and (ii) did not at the time they were filed (and if amended or superseded by a filing prior to the date of this Agreement then on the date of such filing and as so amended or superseded) contain any untrue statement of a material fact or omit to state a material fact required to be stated therein or necessary in order to make the statements therein, in light of the circumstances under which they were made, not misleading.

(b) To Wolf’s knowledge, each set of financial statements (including, in each case, any related notes thereto) contained in the Wolf SEC Reports comply as to form in all material respects with the published rules and regulations of the SEC with respect thereto, were prepared in accordance with the U.S. GAAP applied on a consistent basis throughout the periods involved (except as may be indicated in the notes thereto or, in the case of unaudited statements, do not contain footnotes as permitted by Form 10-Q promulgated under the Exchange Act) and each fairly presents in all material respects the financial position of Wolf at the respective dates thereof and the results of its operations and cash flows for the periods indicated, except that the unaudited interim financial statements were or are subject to normal adjustments which were not or are not expected to have a Material Adverse Effect taken as a whole. For purposes herein, “Material Adverse Effect” means any change, event, violation, inaccuracy, circumstance or effect that is, or could reasonably be expected to be, materially adverse to the business, assets, liabilities, financial condition, results of operations of Wolf and its Subsidiaries, if any, individually, or in the aggregate and/or any condition, circumstance, or situation that would prohibit or otherwise materially interfere with the ability of Wolf to perform any of its obligations under this Agreement in any material respect.

Section 3.18Over-the-Counter Bulletin Board Quotation. Wolf Common Stock is quoted on the Over-the-Counter Bulletin Board (“OTCBB”). There is no action or proceeding pending or, to Wolf’s knowledge, threatened against Wolf by The Financial Industry Regulatory Authority, Inc. (“FINRA”), with respect to any intention by such entities to prohibit or terminate the quotation of Wolf Common Stock on the OTCBB.

Section 3.19Exchange Act Compliance. Wolf is in compliance with, and current in, all of the reporting, filing and other requirements under the Exchange Act, the shares of Wolf Common Stock have been registered under Section 12(g) of the Exchange Act, and Wolf is in compliance with all of the requirements under, and imposed by, Section 12(g) of the Exchange Act, except where a failure to so comply is not reasonably likely to have a Material Adverse Effect on Wolf.

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Section 3.20Environmental Compliance. Wolf is in compliance with, and current in, all of the reporting, filing and other requirements with respect to the following environmental matters:

(a)The business of the Wolf, as carried on by Wolf and its predecessors in title, and its assets are in compliance in all material respects with all applicable environmental laws and regulations (“Environmental Laws”) and there are no facts that could give rise to a notice of non-compliance with any Environmental Law.

(b)Except as disclosed in Schedule ‎3.20(b) Wolf does not require any environmental permits to used in or required to carry on the business of Wolf.

(c)Neither Wolf, nor to its knowledge any of its predecessors in title, have used any of the facilities or lands owned by Wolf, or permitted them to be used, to generate, manufacture, refine, treat, transport, store, handle, dispose, transfer, produce or process any substance or material that is prohibited, controlled or regulated by any governmental authority (“Hazardous Substances”) pursuant to Environmental Laws except in compliance in all material respects with all Environmental Laws.  None of the lands owned by Wolf have been used for or been designated as a waste disposal site.

(d)To the knowledge of Wolf, there are no pending changes to Environmental Laws that would render illegal, or materially restrict, the operation of the business of the Wolf in its usual and ordinary course.

(e)Wolf has not been convicted of an offence or been subjected to any judgment, injunction or other proceeding or been fined or otherwise sentenced for non-compliance with any Environmental Laws, and it has not settled any prosecution or other proceeding short of conviction in connection therewith.

(f)Neither Wolf, nor to its knowledge any of its predecessors in title, have caused or permitted the release of any Hazardous Substance at, on or under the lands owned by Wolf, or the release of any Hazardous Substance off-site of the lands owned by Wolf, except in compliance in all material respects with Environmental Laws.

(g)There are no conditions that directly or indirectly relate to environmental matters or to the condition of the soil or the groundwater that would adversely affect Wolf in a material manner (whether at, on or below the lands owned by Wolf or any adjoining properties).

(h)The lands owned by Wolf are not located within or adjacent to an area that has been determined to be an environmentally sensitive area or a wetlands area by any governmental authority.

(i)Neither Wolf, nor to its knowledge any of its predecessors in title, have received written notice, or has knowledge after due inquiry of any facts that could give rise to any notice, that Wolf or its predecessors in title are potentially responsible for any remedial action under any Environmental Law.

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(j)Except as disclosed in Schedule ‎3.20(j), Wolf has not received any analyses and monitoring data for soil, groundwater and surface water or any reports pertaining to any environmental assessments or audits relating to Wolf.

(k)Wolf, and to the best of its knowledge its predecessors in title, have maintained all environmental and operating documents and records in the manner and for the time periods required by Environmental Laws and, except as disclosed in Schedule ‎3.20(k), have never conducted an environmental audit of the lands owned by Wolf.

(l)Neither Wolf, nor to the best of its knowledge any of its predecessors in title, have breached any obligation to report to any person imposed by any Environmental Law.

Section 3.21Consent to Proceed without Counsel.  Wolf acknowledges that Anslow & Jaclin, LLP is acting as counsel only for AISystems and the AISystems Shareholders.  Wolf is not relying on any advice or legal counsel from Anslow & Jaclin, LLP.

ARTICLE IV 

REPRESENTATIONS AND WARRANTIES

OF THE AISYSTEMS SHAREHOLDERS

Each AISystems Shareholder hereby represents and warrants, severally and not jointly, to Wolf as follows.

Section 4.01Good Title.The AISystems Shareholder is the record and beneficial owner, and has good title to his AISystems Stock, with the right and authority to sell and deliver such AISystems Stock.  Upon delivery of any certificate or certificates duly assigned, representing the same as herein contemplated and/or upon registering of Wolf as the new owner of such AISystems Stock in the share register of AISystems, Wolf will receive good title to such AISystems Stock, free and clear of all liens, claims or other encumbrances.

Section 4.02Power and Authority. The AISystems Shareholder has the legal power, capacity and authority to execute and deliver this Agreement to consummate the transactions contemplated by this Agreement, and to perform the AISystems Shareholder’s obligations under this Agreement and any other agreements delivered together with this Agreement or in connection herewith (collectively the “Transaction Document”) to which the AISystems Shareholder is a party.  This Agreement constitutes a legal, valid and binding obligation of the AISystems Shareholder, enforceable against the AISystems Shareholder in accordance with the terms hereof.

Section 4.03No Conflicts.  The execution and delivery of this Agreement by the AISystems Shareholder and the performance by the AISystems Shareholder of its obligations hereunder in accordance with the terms hereof: (a) will not require the consent of any third party or governmental entity under any applicable laws; (b) will not violate any laws applicable to the AISystems Shareholder and (c) will not violate or breach any contractual obligation to which the AISystems Shareholder is a party.

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Section 4.04Finder’s Fee.  The AISystems Shareholder represents and warrants that it has not created any obligation for any finder’s, investment banker’s or broker’s fee in connection with this Agreement.

Section 4.05Purchase Entirely for Own Account. The Exchange Shares proposed to be acquired by the AISystems Shareholder hereunder will be acquired for investment for its own account, and not with a view to the resale or distribution of any part thereof, and the AISystems Shareholder has no present intention of selling or otherwise distributing the Exchange Shares, except in compliance with applicable securities laws.

Section 4.06Acquisition of Exchange Shares for Investment.    

(a)Each AISystems Shareholder represents that he or she does not have any contract, undertaking, agreement or arrangement with any person to sell, transfer or grant participation to such person or to any third person, with respect to any of the Exchange Shares.

(b)Each AISystems Shareholder represents and warrants that he or she: (i) can bear the economic risk of his respective investments, and (ii) possesses such knowledge and experience in financial and business matters that he is capable of evaluating the merits and risks of the investment in Wolf and its securities.

(c)Each AISystems Shareholder who is not a “U.S. Person” as defined in Rule 902(k) of Regulation S of the Securities Act (“Regulation S”) (each a “Non-U.S. Shareholder”) understands that the Exchange Shares are not registered under the Securities Act and that the issuance thereof to such AISystems Shareholder is intended to be exempt from registration under the Securities Act pursuant to Regulation S.  Each Non-U.S. Shareholder has no intention of becoming a U.S. Person.  At the time of the origination of contact concerning this Agreement and the date of the execution and delivery of this Agreement, each Non-U.S. Shareholder was outside of the United States.  Each certificate representing the Exchange Shares shall be endorsed with the following legends, in addition to any other legend required to be placed thereon by applicable federal or state securities laws:

“THE SECURITIES ARE BEING OFFERED TO INVESTORS WHO ARE NOT U.S. PERSONS (AS DEFINED IN REGULATION S UNDER THE SECURITIES ACT OF 1933, AS AMENDED (“SECURITIES ACT”)) AND WITHOUT REGISTRATION WITH THE UNITED STATES SECURITIES AND EXCHANGE COMMISSION UNDER THE SECURITIES ACT IN RELIANCE UPON REGULATION S PROMULGATED UNDER THE SECURITIES ACT.”

“TRANSFER OF THESE SECURITIES IS PROHIBITED, EXCEPT IN ACCORDANCE WITH THE PROVISIONS OF REGULATION S, PURSUANT TO REGISTRATION UNDER THE SECURITIES ACT, OR PURSUANT TO AVAILABLE EXEMPTION FROM REGISTRATION.  HEDGING TRANSACTIONS MAY NOT BE CONDUCTED UNLESS IN COMPLIANCE WITH THE SECURITIES ACT.”

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(d)Each AISystems Shareholder who is a “U.S. Person” as defined in Rule 902(k) of Regulation S (each a “U.S. Shareholder”) understands that the Exchange Shares are not registered under the Securities Act and that the issuance thereof to such AISystems Shareholder is intended to be exempt from registration under the Securities Act pursuant to Regulation D promulgated thereunder (“Regulation D”).  Each U.S. Shareholder represents and warrants that he is an “accredited investor” as such term is defined in Rule 501 of Regulation D.Each U.S. Shareholder agrees to provide documentation to Wolf prior to Closing as may be requested by Wolf to confirm compliance with Regulation D and/or Section 4(2), including, without limitation, a letter of investment intent or similar representation letter and a completed investor questionnaire.Each certificate representing the Exchange Shares issued to such AISystems Shareholder shall be endorsed with the following legends, in addition to any other legend required to be placed thereon by applicable federal or state securities laws:

“THIS SECURITY HAS BEEN ACQUIRED FOR INVESTMENT AND HAS NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED (“SECURITIES ACT”), OR APPLICABLE STATE SECURITIES OR “BLUE SKY” LAWS.”

“TRANSFER OF THESE SECURITIES IS PROHIBITED UNLESS A REGISTRATION STATEMENT UNDER THE SECURITIES ACT WITH RESPECT TO SUCH SECURITY SHALL THEN BE IN EFFECT AND SUCH TRANSFER HAS BEEN QUALIFIED UNDER ALL APPLICABLE STATE SECURITIES OR “BLUE SKY” LAWS, OR AN EXEMPTION THEREFROM SHALL BE AVAILABLE UNDER THE ACT AND SUCH LAWS.”

(e)Each AISystems Shareholder acknowledges that neither the SEC, nor the securities regulatory body of any state or other jurisdiction, has received, considered or passed upon the accuracy or adequacy of the information and representations made in this Agreement.

(f)Each AISystems Shareholder acknowledges that he has carefully reviewed such information as he has deemed necessary to evaluate an investment in Wolf and its securities, and with respect to each U.S. Shareholder, that all information required to be disclosed to such AISystems Shareholder under Regulation D has been furnished to such AISystems Shareholder by Wolf.  To the full satisfaction of each AISystems Shareholder, he has been furnished all materials that he has requested relating to Wolf and the issuance of the Exchange Shares hereunder, and each AISystems Shareholder has been afforded the opportunity to ask questions of Wolf’s representatives to obtain any information necessary to verify the accuracy of any representations or information made or given to the AISystems Shareholders.  Notwithstanding the foregoing, nothing herein shall derogate from or otherwise modify the representations and warranties of Wolf set forth in this Agreement, on which each of the AISystems Shareholders have relied in making an exchange of his AISystems shares for the Exchange Shares.

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(g)Each AISystems Shareholder understands that the Exchange Shares may not be sold, transferred, or otherwise disposed of without registration under the Securities Act or an exemption therefrom, and that in the absence of an effective registration statement covering the Exchange Shares or any available exemption from registration under the Securities Act, the Exchange Shares may have to be held indefinitely.  Each AISystems Shareholder further acknowledges that the Exchange Shares may not be sold pursuant to Rule 144 promulgated under the Securities Act unless all of the conditions of Rule 144 are satisfied (including, without limitation, Wolf’s compliance with the reporting requirements under the Securities Exchange Act of 1934, as amended (“Exchange Act”)).

(h) The AISystems Shareholder agrees that, notwithstanding anything contained herein to the contrary, the warranties, representations, agreements and covenants of the AISystems Shareholder under this Section 4.06 shall survive the Closing.

Section 4.07Additional Legend; Consent. Additionally, the Exchange Shares will bear any legend required by the “blue sky” laws of any state to the extent such laws are applicable to the securities represented by the certificate so legended. The AISystems Shareholder consents to Wolf making a notation on its records or giving instructions to any transfer agent of Exchange Shares in order to implement the restrictions on transfer of the Exchange Shares.

ARTICLE V

SPECIAL COVENANTS

Section 5.01Access to Properties and Records. Wolf and  AISystems will each afford to the officers and authorized representatives of the other full access to the properties, books and records of Wolf or AISystems , as the case may be, in order that each may have a full opportunity to make such reasonable investigation as it shall desire to make of the affairs of the other, and each will furnish the other with such additional financial and operating data and other information as to the business and properties of Wolf or AISystems, as the case may be, as the other shall from time to time reasonably request.  Without limiting the foregoing, as soon as practicable after the end of each fiscal quarter (and in any event through the last fiscal quarter prior to the Closing Date), each party shall provide the other with quarterly internally prepared and unaudited financial statements.

Section 5.02Delivery of Books and Records.  At the Closing, Wolf shall deliver to AISystems, the originals of the corporate minute books, books of account, contracts, records, and all other books or documents of Wolf now in the possession of Wolf or its representatives.

Section 5.03Third Party Consents and Certificates.  Wolf and AISystems agree to cooperate with each other in order to obtain any required third party consents to this Agreement and the transactions herein contemplated.

Section 5.04Designation of New Directors.  Effective as of the Closing Date, and subject to applicable regulatory requirements, including the preparation, filing and distribution to the shareholders of Wolf of a Schedule 14(f)-1 Notice to Stockholders, Graeme McNeill shall resign from the board of directors of Wolf and the following individuals shall be appointed to the board of Wolf:

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NAME	AGE	POSITION
Stephen C. Johnston	45	Director (Chairman)
Steven Frankel	67	Independent Director
James Beatty	65	Independent Director

Section 5.05Designation of New Officers.  Effective as of the Closing Date, Graeme McNeill shall resign from each officer position held at Wolf, and the following individuals shall be appointed to the offices of Wolf:

NAME	POSITION
Stephen C. Johnston	President, Chief Executive Officer
Gary Clifford	Chief Financial Officer
Salil Munjal	Chief Operating Officer
Charles Mawby	Senior Vice President, Marketing
D. Kordell Fournier	Vice President & General Counsel, Corporate Secretary

Section 5.06Indemnification.

 Wolf, the directors and officers of Wolf (collectively, the “Indemnitors”) hereby agree to indemnify AISystems and each of the officers, agents, employees, consultants and directors of AISystems and the AISystems Shareholders (collectively, the “Indemnitees”) as of the date of execution of this Agreement against any loss, claim, damage or liability to which it or they may become subject arising out of or based on any inaccuracy appearing in or misrepresentation made under Article III of this Agreement and/or the Outstanding Returns.  This indemnification provided for the Indemnitees by the Indemnitor shall survive the Closing and consummation of the transactions contemplated hereby and termination of this Agreement for one year following the Closing.

Section 5.07The Acquisition of

Section 5.08the Exchange Shares.  Wolf and AISystems understand and agree that the consummation of this Agreement including the issuance of the Exchange Shares to the AISystems Shareholders in exchange for the AISystems Stock as contemplated hereby constitutes the offer and sale of securities under the Securities Act and applicable state statutes.  Wolf and AISystems agree that such transactions shall be consummated in reliance on exemptions from the registration and prospectus delivery requirements of such statutes, which depend, among other items, on the circumstances under which such securities are acquired.

(a)In connection with the transaction contemplated by this Agreement, Wolf and AISystems shall each file, with the assistance of the other and their respective legal counsel, such notices, applications, reports, or other instruments as may be deemed by them to be necessary or appropriate in an effort to document reliance on such exemptions, and the appropriate regulatory authority in the states where the shareholders of AISystems reside unless an exemption requiring no filing is available in such jurisdictions, all to the extent and in the manner as may be deemed by such parties to be appropriate.

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(b)The AISystems Shareholders acknowledges that the basis for relying on exemptions from registration or qualifications are factual, depending on the conduct of the various parties, and that no legal opinion or other assurance will be required or given to the effect that the transactions contemplated hereby are in fact exempt from registration or qualification.

Section 5.09Sales of Securities Under Rule 144, If Applicable.

(a)Wolf will use its best efforts to at all times satisfy the current public information requirements of Rule 144 promulgated under the Securities Act so that its shareholders can sell restricted securities that have been held for one year or more or such other restricted period as required by Rule 144 as it is from time to time amended.

(b)Upon being informed in writing by any person holding restricted stock of Wolf that such person intends to sell any shares under Rule 144 promulgated under the Securities Act (including any rule adopted in substitution or replacement thereof), Wolf will certify in writing to such person that Wolf is compliance with Rule 144 current public information requirements to enable such person to sell such person’s restricted stock under Rule 144, as may be applicable under the circumstances.

(c)If any certificate representing any such restricted stock is presented to Wolf’s transfer agent for registration or transfer in connection with any sales theretofore made under Rule 144, provided such certificate is duly endorsed for transfer by the appropriate person(s) or accompanied by a separate stock power duly executed by the appropriate person(s) in each case with reasonable assurances that such endorsements are genuine and effective, and is accompanied by a legal opinion that such transfer has complied with the requirements of Rule 144, as the case may be, Wolf will promptly instruct its transfer agent to register such transfer and to issue one or more new certificates representing such shares to the transferee and, if appropriate under the provisions of Rule 144, as the case may be, free of any stop transfer order or restrictive legend.

Section 5.10Assistance with Post-Closing SEC Reports and Inquiries. Upon the reasonable request of AISystems, after the Closing Date, Wolf shall use their reasonable best efforts to provide such information available to it, including information, filings, reports, financial statements or other circumstances of Wolf occurring, reported or filed prior to the Closing, as may be necessary or required by Wolf for the preparation of the reports that Wolf is required to file after Closing with the SEC to remain in compliance and current with its reporting requirements under the Exchange Act, or filings required to address and resolve matters as may relate to the period prior to Closing and any SEC comments relating thereto or any SEC inquiry thereof.

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ARTICLE VI

CONDITIONS PRECEDENT TO OBLIGATIONS OF WOLF

The obligations of Wolf under this Agreement are subject to the satisfaction, at or before the Closing Date, of the following conditions:

Section 6.01Accuracy of Representations and Performance of Covenants. Wolf shall have been furnished with a certificate dated the Closing Date and signed by a duly authorized officer of AISystems to the effect that the representations and warranties made by AISystems and AISystems Shareholders in this Agreement were true when made and shall be true at the Closing Date with the same force and effect as if such representations and warranties were made at and as of the Closing Date (except for changes therein permitted by this Agreement).  AISystems shall have performed or complied with all covenants and conditions required by this Agreement to be performed or complied with by AISystems prior to or at the Closing.  Wolf shall be furnished with a certificate, signed by a duly authorized executive officer of AISystems and dated the Closing Date, to the foregoing effect.

Section 6.02Officer’s Certificate.  Wolf shall have been furnished with a certificate dated the Closing Date and signed by a duly authorized officer of AISystems to the effect that no litigation, proceeding, investigation, or inquiry is pending, or to the best knowledge of AISystems threatened, which might result in an action to enjoin or prevent the consummation of the transactions contemplated by this Agreement, or, to the extent not disclosed in the AISystems Schedules, by or against AISystems, which might result in any material adverse change in any of the assets, properties, business, or operations of AISystems.

Section 6.03Good Standing.  At the Closing, Wolf shall have received a certificate of good standing from the Secretary of State of Delaware certifying that AISystems is in good standing as a company in the State of Delaware.

Section 6.04 Approval by AISystems Shareholders.  The Share Exchange shall have been approved by the holders of not less than fifty and one – one hundredth percent (50.01%) of the voting power of AISystems Stock, unless a lesser number is agreed to by Wolf.

Section 6.05No Governmental Prohibition.  No order, statute, rule, regulation, executive order, injunction, stay, decree, judgment or restraining order shall have been enacted, entered, promulgated or enforced by any court or governmental or regulatory authority or instrumentality which prohibits the consummation of the transactions contemplated hereby.

Section 6.06Consents.  All consents, approvals, waivers or amendments pursuant to all contracts, licenses, permits, trademarks and other intangibles in connection with the transactions contemplated herein, or for the continued operation of AISystems after the Closing Date on the basis as presently operated shall have been obtained.

Section 6.07Other Items.

(a)Wolf shall have received a list containing the name, address, and number of shares held by the AISystems Shareholders as of the date of Closing, certified by an executive officer of AISystems as being true, complete and accurate; and

(b)Wolf shall have received such further opinions, documents, certificates or instruments relating to the transactions contemplated hereby as Wolf may reasonably request.

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ARTICLE VII

CONDITIONS PRECEDENT TO OBLIGATIONS OF AISYSTEMS

AND THE AISYSTEMS SHAREHOLDERS

The obligations of AISystems and the AISystems Shareholders under this Agreement are subject to the satisfaction, at or before the Closing Date, of the following conditions:

Section 7.01    Accuracy of Representations and Performance of Covenants. AISystems shall have been furnished with a certificate dated the Closing Date and signed by a duly authorized officer of AISystems to the effect that the representations and warranties made by Wolf in this Agreement were true when made and shall be true as of the Closing Date (except for changes therein permitted by this Agreement) with the same force and effect as if such representations and warranties were made at and as of the Closing Date.  Additionally, Wolf shall have performed and complied with all covenants and conditions required by this Agreement to be performed or complied with by Wolf.

Section 7.02Officer’s Certificate.  AISystems shall have been furnished with certificates dated the Closing Date and signed by a duly authorized executive officer of Wolf, to the effect that no litigation, proceeding, investigation or inquiry is pending, or to the best knowledge of Wolf threatened, which might result in an action to enjoin or prevent the consummation of the transactions contemplated by this Agreement  or, to the extent not disclosed in the Wolf Schedules, by or against Wolf, which might result in any material adverse change in any of the assets, properties or operations of Wolf, and that there are no outstanding liabilities of Wolf.

Section 7.03Good Standing.  At the Closing, AISystems shall receive a certificate of good standing from the Secretary of State of Delaware or other appropriate office, dated as of a date certifying that Wolf is in good standing as a corporation in the State of Nevada and has filed all tax returns required to have been filed to all applicable entities by it to date and has paid all taxes reported as due thereon.

Section 7.04No Governmental Prohibition.  No order, statute, rule, regulation, executive order, injunction, stay, decree, judgment or restraining order shall have been enacted, entered, promulgated or enforced by any court or governmental or regulatory authority or instrumentality which prohibits the consummation of the transactions contemplated hereby.

Section 7.05Consents.  All consents, approvals, waivers or amendments pursuant to all contracts, licenses, permits, trademarks and other intangibles in connection with the transactions contemplated herein, or for the continued operation of Wolf after the Closing Date on the basis as presently operated shall have been obtained.

Section 7.06Other Items.  AISystems shall have received further opinions, documents, certificates, or instruments relating to the transactions contemplated hereby as AISystems may reasonably request.

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ARTICLE VIII

CLOSING DELIVERABLES

Section 8.01Wolf Deliverables.  The following items must be delivered to AISystems and the AISystems Shareholders prior to or at Closing by Wolf, unless otherwise stated.

(a)Certificate of Incorporation and amendments thereto, By-laws and amendments thereto, and certificate of good standing of Wolf in Nevada;

(b)all applicable schedules hereto;

(c)all minutes and resolutions of board of director and shareholder meetings in possession of Wolf;

(d)a current shareholder list, evidencing the cancellation of a total of 34,448,000 shares of Wolf Common Stock by Graeme McNeill and Christopher Patterson, to be delivered post-Closing;

(e)all Financial Statements and all tax returns in possession of the Wolf;

(f)a letter of resignation from Graeme McNeill, the sole officer and director of the Wolf resigning from all positions effective upon the Closing;

(g)evidence of the election of the new officers and directors  effective as of the Closing;

(h)resolution from the Wolf’s Board of Directors, and if applicable, shareholder resolutions approving this transaction and authorizing the issuances of the shares hereto;

(i)certificates representing up to 116,250,000 shares of Wolf Common Stock and 2,329,905 shares of Wolf Preferred Stock issued in the name of the AISystems Shareholders, to be delivered post-Closing after the increase in authorized stated capital and the change in name from “Wolf Resources, Inc.” to “Airline Intelligence Systems Holdings Inc.” have each become effective;

(j)a certificate dated the Closing Date and signed by a duly authorized officer of Wolf as set forth in Sections 7.01 and 7.02 herein;

(k)a certificate of incumbency;

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(l)a release by Wolf from any and all possible matters in relation to Section 3.08 against the Wolf arising from any act, matter or thing arising at or prior to the Closing;

(m)a receipt for each of the closing deliverables required to be delivered by Wolf to AISystems; and

(n)any other document reasonably requested by AISystems and the AISystems Shareholders that he deems necessary for the consummation of this transaction.

Section 8.02AISystems Deliverables.  The following items must be delivered to Wolf prior to or at Closing Date by AISystems and the AISystems Shareholders.

(a)all applicable schedules hereto;

(b)certificate of good standing of AISystems in Delaware;

(c)instructions from AISystems appointing its designees to Wolf’s Board of Directors;

(d)share certificates and duly executed stock powers certificates, representing at least 50.01% of the total outstanding stock of AISystems Shareholders, transferring such AISystems Stock to Wolf;

(e)resolutions from the Board of Directors of AISystems if applicable, and shareholder resolutions approving the transactions contemplated hereby;

(f)a certificate dated the Closing Date and signed by a duly authorized officer of AISystems as set forth in Sections 6.01 and 6.02 herein;

(g)a certificate of incumbency;

(h)a receipt for each of the closing deliverables required to be delivered by Wolf to AISystems; and

(i)any other document reasonably requested by the Wolf that it deems necessary for the consummation of this transaction.

ARTICLE IX

MISCELLANEOUS

Section 9.01Brokers.  Wolf and AISystems agree that there were no finders or brokers involved in bringing the parties together or who were instrumental in the negotiation, execution or consummation of this Agreement.  Wolf and AISystems each agree to indemnify the other against any claim by any third person other than those described above for any commission, brokerage, or finder’s fee arising from the transactions contemplated hereby based on any alleged agreement or understanding between the indemnifying party and such third person, whether express or implied from the actions of the indemnifying party.

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Section 9.02Governing Law.  This Agreement shall be governed by, enforced, and construed under and in accordance with the laws of the United States of America and, with respect to the matters of state law, with the laws of the state of Delaware.  Venue for all matters shall be in Wilmington, Delaware, without giving effect to principles of conflicts of law thereunder.  Each of the parties (a) irrevocably consents and agrees that any legal or equitable action or proceedings arising under or in connection with this Agreement shall be brought exclusively in the federal courts of the United States. By execution and delivery of this Agreement, each party hereto irrevocably submits to and accepts, with respect to any such action or proceeding, generally and unconditionally, the jurisdiction of the aforesaid court, and irrevocably waives any and all rights such party may now or hereafter have to object to such jurisdiction.

Section 9.03Notices.  Any notice or other communications required or permitted hereunder shall  be in writing and shall be sufficiently given if personally delivered to it or sent by telecopy, overnight courier or registered mail or certified mail, postage prepaid, addressed as follows:

If to AISystems, to:

Airline Intelligence Systems Inc.

Attn.: Stephen C. Johnston, CEO

3500 Carillon Point

Kirkland, WA 98033

Tel.: (425) 256-2600

Fax: (416) 352-1837

With copies (which shall not constitute notice) to:

Anslow & Jaclin, LLP

Attn.: Gregg Jaclin, Esq.

195 Route 9 South, Suite 204

Manalapan, NJ 07726

Tel.: (732) 409-1212

If to Wolf, to:

Wolf Resources, Inc.

Attn.: Graeme McNeill

564 Wedge LaneFernley, NV 89408

Tel: (403) 585-9144

Fax:  (___) [___-____]

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or such other addresses as shall be furnished in writing by any party in the manner for giving notices hereunder, and any such notice or communication shall be deemed to have been given (i) upon receipt, if personally delivered, (ii) on the day after dispatch, if sent by overnight courier, (iii) upon dispatch, if transmitted by telecopy and receipt is confirmed by telephone and (iv) three (3) days after mailing, if sent by registered or certified mail.

Section 9.04Attorney’s Fee.  In the event that either party institutes any action or suit to enforce this Agreement or to secure relief from any default hereunder or breach hereof, the prevailing party shall be reimbursed by the losing party for all costs, including reasonable attorney’s fees, incurred in connection therewith and in enforcing or collecting any judgment rendered therein.

Section 9.05Confidentiality.  Each party hereto agrees with the other that, unless and until the transactions contemplated by this Agreement have been consummated, it and its representatives will hold in strict confidence all data and information obtained with respect to another party or any subsidiary thereof from any representative, officer, director or employee, or from any books or records or from personal inspection, of such other party, and shall not use such data or information or disclose the same to others, except (i) to the extent such data or information is published, is a matter of public knowledge, or is required by law to be published; (ii) to the extent that such data or information must be used or disclosed in order to consummate the transactions contemplated by this Agreement; or (iii) as required by applicable law.  In the event of the termination of this Agreement, each party shall return to the other party all documents and other materials obtained by it or on its behalf and shall destroy all copies, digests, work papers, abstracts or other materials relating thereto, and each party will continue to comply with the confidentiality provisions set forth herein.

Section 9.06Schedules; Knowledge.  Each party is presumed to have full knowledge of all information set forth in the other party’s schedules delivered pursuant to this Agreement.

Section 9.07Third Party Beneficiaries.  This contract is strictly between Wolf and AISystems, and, except as specifically provided, no director, officer, stockholder (other than the AISystems Shareholders), employee, agent, independent contractor or any other person or entity shall be deemed to be a third party beneficiary of this Agreement.

Section 9.08Expenses.  Subject to Section 9.04 above, whether or not the Share Exchange is consummated, each of Wolf and AISystems will bear their own respective expenses, including legal, accounting and professional fees, incurred in connection with the Share Exchange or any of the other transactions contemplated hereby.

Section 9.09Entire Agreement.  This Agreement represents the entire agreement between the parties relating to the subject matter thereof and supersedes all prior agreements, understandings and negotiations, written or oral, with respect to such subject matter.

Section 9.10Survival; Termination.  The representations, warranties, and covenants of the respective parties shall survive the Closing Date and the consummation of the transactions herein contemplated for a period of two years.

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Section 9.11Counterparts.  This Agreement may be executed in multiple counterparts, each of which shall be deemed an original and all of which taken together shall be but a single instrument.

Section 9.12Amendment or Waiver.  Every right and remedy provided herein shall be cumulative with every other right and remedy, whether conferred herein, at law, or in equity, and may be enforced concurrently herewith, and no waiver by any party of the performance of any obligation by the other shall be construed as a waiver of the same or any other default then, theretofore, or thereafter occurring or existing.  At any time prior to the Closing Date, this Agreement may by amended by a writing signed by all parties hereto, with respect to any of the terms contained herein, and any term or condition of this Agreement may be waived or the time for performance may be extended by a writing signed by the party or parties for whose benefit the provision is intended.

Section 9.13Best Efforts.  Subject to the terms and conditions herein provided, each party shall use its best efforts to perform or fulfill all conditions and obligations to be performed or fulfilled by it under this Agreement so that the transactions contemplated hereby shall be consummated as soon as practicable.  Each party also agrees that it shall use its best efforts to take, or cause to be taken, all actions and to do, or cause to be done, all things necessary, proper or advisable under applicable laws and regulations to consummate and make effective this Agreement and the transactions contemplated herein.

Section 9.14Time of the Essence.  Time is of the essence of this Agreement.

Section 9.15Public Announcements.  Except as required by law, no public announcement or press release concerning the Share Transfer Agreement may be made by Wolf without the prior consent and joint aproval of the AISystems.

Section 9.16Electronic Execution.  Delivery of an executed signature page to this Agreement by any party by electronic transmission will be as effective as delivery of a manually executed copy of this Agreement by such party.

[-Signature Pages Follow-]

29

IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be executed by their respective officers, hereunto duly authorized, as of the date first-above written.

Wolf Resources, Inc.
By:	/s/ Graeme McNeill
	Name: Graeme McNeill
	Title: Chief Executive Officer
Airline Intelligence Services Inc.
By:	/s/ Stephen C. Johnston
	Name: Stephen C. Johnston
	Title: Chief Executive Officer

30

[-Airline Intelligence Systems Inc. Shareholders Signature Page-]

Airline Intelligence Systems Inc. Shareholders
Access Alternative Group S.A.
By:	/s/ Robert Montgomery
Name: Robert Montgomery
Number of Common Shares Beneficially Owned: 6,999,800
Number of Common Shares Beneficially Owned: 49,740

31

[-Airline Intelligence Systems Inc. Shareholders Signature Page-]

Airline Intelligence Systems Inc. Shareholders
Dynamic Intelligence, Inc.
By:	/s/ Barry Skinner
Name:  Barry Skinner
Title:  President
Number of Common Shares Beneficially Owned: 28,240,000
Number of Common Shares Beneficially Owned: 1,500,000

32

[-Airline Intelligence Systems Inc. Shareholders Signature Page-]

Airline Intelligence Systems Inc. Shareholders
Merus Capital I, L.P.
By:	/s/ Salman Ullah
Name:  Salman Ullah
Title:  Managing Dirctor
Number of Common Shares Beneficially Owned: 7,746,393
Number of Common Shares Beneficially Owned: 50,000

33

[-Airline Intelligence Systems Inc. Shareholders Signature Page-]

Airline Intelligence Systems Inc. Shareholders
Bansco & Co. In Trust for Salida Multi Strategy A/C 78200003
By:	/s/ Marla
Name:  Marla
Title:  Assistant Manager
Number of Common Shares Beneficially Owned: 6,541,000
Number of Common Shares Beneficially Owned: 42,500

34

[-Airline Intelligence Systems Inc. Shareholders Signature Page-]

Airline Intelligence Systems Inc. Shareholders
Bansco & Co. In Trust for Salida Multi Strategy A/C 78200003
By:	/s/ Geoffrey Alles
Name:  Geoffrey Alles
Number of Common Shares Beneficially Owned: 4,730,000
Number of Common Shares Beneficially Owned: 50,000

35

EXHIBIT B

[CERTIFICATE OF DESIGNATION]

CERTIFICATE OF DESIGNATIONS,

PREFERENCES, LIMITATIONS, VOTING POWERS AND RELATIVE RIGHTS OF

THE SERIES B PREFERRED STOCK OF

WOLF RESOURCES, INC.

          Wolf Resources, Inc., a Nevada Corporation (the “Corporation”), DOES HEREBY

CERTIFY:

          Pursuant to authority expressly granted and vested in the Board of Directors of the Corporation (the “Board”) by the provisions of the Corporation’s Certificate of Incorporation, as amended, (“Certificate of Incorporation”) the Board of adopted the following resolution on March 19, 2010 (i) authorizing a series of the Corporation’s previously authorized 20,000,000 shares of preferred stock, par value $.001 per share, (“Preferred Stock”) and (ii) providing for the designations, preferences and relative, participating, optional or other rights, and the qualifications, limitations or restrictions thereof, of 2,400,000 shares of Series B Preferred Stock of the Corporation as follows:

WHEREAS, the Board believes that it is in the best interests of the Corporation to create a series of preferred stock, par value $0.001 per share, designated as Series B Preferred Stock (“Series B Preferred”); and

WHEREAS, the Certificate of Incorporation authorizes the issuance of 20,000,000 shares of Preferred Stock and expressly vests in the board the authority provided therein to issue the shares of Preferred Stock in series, to establish from time to time the number of shares to be included in such series, and to fix the designation, powers, preferences and rights of the shares of each such series and any qualifications, limitations or restrictions thereon;   NOW THEREFORE BE IT:

RESOLVED, that a series of authorized Preferred Stock be hereby created and that the designation and amount thereof and the voting powers, preferences and relative, participating optional and other special rights of the shares of such series, if any, and the qualifications, limitations or restrictions thereof, are as follows:

1.Designation and Amount.  That pursuant to the authority vested in the Board of Directors of the Corporation by the Corporation’s Certificate of Incorporation (the “Certificate of Incorporation”) as amended, a series of Preferred Stock of the Corporation be, and it hereby is, created out of the 20,000,000 authorized but unissued shares of the capital preferred stock of the Corporation, such series to be designated  Series B Preferred Stock (the “Series B Preferred Stock”), to consist of 2,400,000 shares, par value $.001 per share, which shall have the following preferences, powers, designations and other special rights.

36

2.Voting Rights.  The holders of shares of Series B Preferred shall have the following voting rights:

(a)           General Voting Provisions

(i) Each share of Series B Preferred shall entitle the holder thereof to four hundred (400) votes on all matters submitted to a vote of the stockholders of the Corporation. In the event the Corporation shall at any time after the date of this Certificate (x) declare any dividend on Common Stock, par value $0.001 per share, of the Corporation (“Common Stock”) payable in shares of Common Stock, (y) subdivide the outstanding Common Stock, or (z) combine the outstanding Common Stock into a smaller number of shares, then in each such case the number of votes per share to which holders of shares of Series B Preferred are entitled shall be adjusted by multiplying the number of votes per share to which holders of shares of Series B Preferred were entitled immediately prior to such event by a fraction the numerator of which is the number of shares of Common Stock outstanding immediately after such event and the denominator of which is the number of shares of Common Stock that were outstanding immediately prior to such event.

(ii) Except as otherwise provided herein, in the Certificate of Incorporation or by law, the holders of Series B Preferred shall be entitled to notice of any stockholders’ meeting in accordance with the Bylaws of the Corporation (“Bylaws”), and the holders of Common Stock and the Series B Preferred shall vote together as a single class on all matters.

(iii) Except as otherwise provided herein, in the Certificate of Incorporation or in the Bylaws, holders of Series B Preferred shall have no special voting rights and their consent shall not be required (except to the extent they are entitled to vote with holders of Common Stock as set forth herein) for taking any corporate action.

(b)           Protective Provisions.   In addition to any other rights provided by law, so long as any shares of Series B Preferred shall be outstanding, the Corporation shall not take any of the following actions (whether directly or indirectly, or by amendment, filing of a certificate of designations, preferences or rights, merger, consolidation or otherwise) without first obtaining the written consent, authorization or waiver of the holders of not less than a majority of the then-outstanding shares of Series B Preferred, voting together as a single voting group (the “Series B Majority”), which consent, authorization or waiver may be obtained without the necessity of formal stockholder action or of notice to the holders of any shares of capital stock not expressly empowered with such right to consent, authorize or waive:

(i) Alter or change the rights, preferences or privileges of the shares of Series B Preferred so as to adversely affect the shares of such series of Preferred Stock, whether by formal amendment of the Certificate of Incorporation, merger or otherwise;

(ii) Increase or decrease the total number of authorized shares of Series B Preferred;

37

(iii) Authorize, designate, or issue, or obligate itself to issue, any equity security of the Corporation, including any security convertible into or exercisable or exchangeable for any equity security, having superior voting rights over the Series B Preferred;

(iv) Liquidate, dissolve or wind up the Corporation; or

(v) Effect any of the following transactions or series of transactions:  (a) selling, conveying or otherwise disposing of all or substantially all of the Corporation’s property or business (including the exclusive licensing of all or substantially all of the Corporation’s intellectual property to a third party), or (b) entering into any corporate reorganization, share exchange or recapitalization, or merging with or into, or consolidating with, any other corporation, limited liability company or other entity if the holders of shares of Common Stock and/or Preferred Stock sell or otherwise transfer in such transaction, to any person or group of persons acting jointly or in concert, shares of Common Stock and/or Preferred Stock representing 50% or more of the voting power of the stockholders of the Corporation (any such transaction, a “Liquidation Transaction”); provided, however, that none of the following shall be considered a Liquidation Transaction:  (x) a merger effected exclusively for the purpose of changing the domicile of the Corporation, (y) a merger or consolidation with a wholly owned subsidiary of the Corporation or (z) an equity financing in which the Corporation is the surviving corporation.

3.           Redemption by Holders.

(a)           Redemption Date and Price.  At any time following the date hereof, any holder of then-outstanding shares of Series B Preferred (each, a “Redeeming Holder”) shall be entitled, by written request (a “Redemption Election”) delivered to the Corporation, to require that all (but not less than all) of the then-outstanding shares of Series B Preferred held by such Redeeming Holder be redeemed.  The Corporation shall, to the extent permitted by law, redeem that number of shares specified in the Redemption Election (the “Redeemed Shares”) in accordance with the procedures set forth in Section 3(b) as of a date (the “Redemption Date”) within ninety (90) days of the receipt by the Corporation of the Redemption Election.  The Corporation shall redeem the Redeemed Shares by paying in cash an amount per share equal to $0.001 for each such share (the “Redemption Price”).

(b)           Procedure and Payment.  Within fifteen (15) days following its receipt of the Redemption Election, the Corporation shall mail a written notice, first class postage prepaid, to the Redeeming Holder at the address last shown for such Redeeming Holder on the share transfer records of the Corporation.  In addition to any information required by law, such notice (the “Redemption Notice”) shall state: (i) the Redemption Date, (ii) the Redemption Price, (iii) the number of shares that may lawfully be redeemed from such Redeeming Holder, and (iv) the place or places where certificates for such shares are to be surrendered for payment of the Redemption Price.  If the Corporation is unable lawfully to redeem all of the shares set forth in the Redemption Election with respect to a Redeeming Holder, then the Corporation may reduce the number of shares of Series B Preferred to be redeemed from any such Redeeming Holder, without penalty or prejudice, by written notice to such Redeeming Holder given within ten (10) days of receipt of the Redemption Notice.  

38

Subject to the preceding sentence, on or after the Redemption Date, the Redeeming Holder shall surrender to the Corporation the certificate or certificates representing such shares, in the manner and at the place designated in the Redemption Notice, and thereupon the Redemption Price of such shares shall be payable in accordance with this Section 3(b) to the person whose name appears on such certificate or certificates as the owner thereof and each surrendered certificate shall be cancelled.  As promptly as practicable after receipt of the surrendered certificate or certificates (and in no event more than ten (10) days following the Redemption Date), the Corporation shall issue and deliver to or upon the written order of such Redeeming Holder, at such office or other place designated by the Redeeming Holder, a check for cash in an amount equal to the Redemption Price for the shares to be redeemed.  In the event less than all the shares represented by any such certificate are redeemed, a new certificate shall be issued representing the unredeemed shares.

(c)           Effect of Redemption.  From and after any Redemption Date, unless there shall occur a default in payment of the Redemption Price, all rights of the Redeeming Holder (except the right to receive the Redemption Price upon surrender of the applicable share certificate or certificates) shall cease with respect to the shares designated to be redeemed on such Redemption Date, and such shares shall not thereafter be transferred on the books of the Corporation.  In the event of a redemption provided for in this Section 3 and there are more than one Redeeming Holders with respect to a Redemption Date, those funds which are legally available will be used to redeem the maximum possible number of shares, allocated ratably among all such Redeeming Holders based upon the total Redemption Price applicable to the shares of Series B Preferred designated to be redeemed on any such Redemption Date. Any shares of Series B Preferred not redeemed pursuant to this Section 3 shall remain outstanding and be entitled to all the rights and preferences provided herein.  At any time thereafter when additional funds of the Corporation are legally available for the redemption of shares of Series B Preferred, such funds will immediately be used to redeem the balance of the shares which the Corporation has become obliged to redeem on any Redemption Date but which it has not redeemed.

(d)           Termination. The rights set forth in this Section 3 shall terminate upon the consummation of a Liquidation Transaction.

4.           Redemption by the Corporation

(a)           Conditions to Redemption.  The Corporation may, in its sole and exclusive discretion, to the extent permitted by law, elect to redeem, in whole or from time to time in part, any shares of Series B Preferred held by any holder of Series B Preferred (such holder, a “Redeemed Holder”) by paying in cash an amount per share equal to the Redemption Price.

(b)           Redemption Date.  In the event that the Corporation elects to redeem any shares of Series B Preferred from a Redeemed Holder, the Corporation may fix a Redemption Date for the redemption of the shares of Series B Preferred held by such Redeemed Holder(s), which must be not less than five nor more than 60 days after the date on which a Redemption Notice is mailed by the Corporation pursuant to Section 4(c).

39

(c)           Procedure and Payment.  The Corporation shall mail a Redemption Notice, first class postage prepaid, to each Redeemed Holder at the address last shown for such Redeemed Holder on the share transfer records of the Corporation.  No failure to give such notice or any defect therein or in the mailing thereof shall affect the validity of the proceedings for the redemption of any Series B Preferred except as to any holder to whom the Corporation has failed to give notice or except as to any holder to whom notice was defective.  Unless otherwise determined by the Board, on or before the applicable Redemption Date, the Redeemed Holder shall surrender to the Corporation the certificate or certificates representing the shares to be redeemed, in the manner and at the place designated in the Redemption Notice, and thereupon the Redemption Price of such shares shall be payable in accordance with this Section 4(c) to the person whose name appears on such certificate or certificates as the owner thereof and each surrendered certificate shall be cancelled.  As promptly as practicable after receipt of the surrendered certificate or certificates (and in no event more than ten (10) days following the Redemption Date), the Corporation shall issue and deliver to or upon the written order of such Redeemed Holder, at such office or other place designated by the holder, a check for cash in an amount equal to the Redemption Price for the shares to be redeemed.  In the event less than all the shares represented by any such certification are redeemed, a new certificate shall be issued representing the unredeemed shares.  No Series B Preferred may be redeemed except with assets legally available for the payment of the Redemption Price.

(d)           Effect of Redemption.  From and after any Redemption Date, unless there shall occur a default in payment of the Redemption Price, all rights of the Redeemed Holder (except the right to receive the Redemption Price upon surrender of the applicable share certificate or certificates) shall cease with respect to the shares designated to be redeemed on such Redemption Date, and such shares shall not thereafter be transferred on the books of the Corporation.  The shares of Series B Preferred not redeemed shall remain outstanding and entitled to all the rights and preferences provided herein.

5.           Dividends.  The holders of Series B Preferred are not entitled to receive any dividends with respect to their shares of Series B Preferred.

6.           Restrictions on Transfer.

(a)           Shares of Series B Preferred  or any interest therein (including but not limited to any voting or other rights pertaining to such shares) may not he sold, assigned, awarded, pledged, gifted, encumbered or otherwise transferred for consideration or otherwise, whether voluntarily, involuntarily, or by operation of law (collectively, “Transferred”), unless (i) (A) there is an effective registration statement under the Securities Act of 1933, as amended (the “Securities Act”), covering such securities, or (B) the sale is made in accordance with Rule 144 promulgated under the Securities Act, and (ii) the Corporation receives an opinion of counsel for the holder of such securities reasonably satisfactory to the Corporation stating that such Transfer is exempt from the registration and prospectus delivery requirements of the Securities Act.

A Transfer or attempt to effect a Transfer subject to the provisions of this Section 6 shall be deemed to occur whenever any interest in any shares of Series B Preferred is Transferred or is attempted to be Transferred, voluntarily, involuntarily, or by operation of law, irrespective of whether any change in the record ownership of such share occurs.

40

(b)           In the event that a holder of Series B Preferred desires to Transfer shares of Series B Preferred in accordance with Section 6(a) above, such holder shall deliver written notice of its desire to effect the Transfer (the “Transfer Notice”) to the Corporation, including the opinion of counsel referred to therein, no less than fifteen (15) calendar days prior to the anticipated closing date of the Transfer. Any shares of Series B Preferred that are subject to the Transfer Notice may be redeemed by the Corporation, in its sole and exclusive discretion, pursuant to Section 4 above.

(c)           Any attempt by a Series B Holder to Transfer shares of Series B Preferred in violation of Sections 4 and/or 6 of this Certificate shall be null and void, and the Corporation will not effect any such Transfer nor will it treat any alleged Transferee as the holder of such shares for any purposes.

7.           Liquidation.

(a)           Preference.  In the event of any liquidation, dissolution or winding up of the Corporation, either voluntary or involuntary, the assets of the Corporation available for distribution to its stockholders shall be distributed in the following order and amounts:

41

(i)           First, the holders of the Series B Preferred shall be entitled to receive, prior and in preference to any distribution of any of the assets of the Corporation to the holders of Common Stock or any other series of Preferred Stock that is not expressly senior to or pari passu with the Series B Preferred, by reason of their ownership thereof, an amount per share equal to $0.001 per share, as adjusted for stock splits, stock dividends, reclassification and the like (the “Series B Liquidation Amount”).  If, upon the occurrence of such event, the assets and funds thus distributed among the holders of the Series B Preferred shall be insufficient to permit the payment of the full

Series B Liquidation Amount, then the entire assets and funds of the Corporation legally available for distribution shall be distributed ratably among the holders of the Series B Preferred in proportion to the preferential amount each such holder is otherwise entitled to receive.

(ii)           Upon the distribution of the full Series B Liquidation Amount and any other distribution that may be required with respect to a series of Preferred Stock that may from time to time come into existence, the remaining assets of the Corporation available for distribution to stockholders shall be distributed among the holders of Common Stock pro rata based on the number of shares of Common Stock held by each such holder.

(b)           Certain Acquisitions.

(i)           Deemed Liquidation. For purposes of this Section 7, a liquidation dissolution, or winding up of the Corporation shall be deemed to occur if the Corporation shall effect a Liquidation Transaction.

(ii)           Valuation of Consideration.  In the event of a deemed liquidation as described in Section 7(b)(i) above, if the consideration received by the Corporation is other than cash, its value will be deemed its fair market value as determined in good faith by the Board in accordance with the following provisions:

(1) Securities not subject to investment letter or other similar restrictions on free marketability:

(A) If traded on a national securities exchange, the value shall deemed to be the average of the closing prices of the securities on such exchange over the ten (10) trading day period ending three (3) trading days prior to the distribution (unless the Board approves some other valuation method);

(B) If actively traded over-the-counter, the value shall he deemed to be the average of the closing bid prices for such securities over the ten (10) trading day period ending three (3) trading days prior to the distribution (unless the Board approves some other valuation method); and

(C) If there is no active public market, the value shall be the fair market value thereof; as determined in good faith by the Board.

(2) The method of valuation of securities subject to investment letter or other restrictions on free marketability (other than restrictions arising solely by virtue of a stockholder’s status as an affiliate or former affiliate) shall be to make an appropriate discount from the market value determined as specified above in Section 7(b)(ii)(1) to reflect the approximate fair market value thereof, as determined in good faith by the Board.

(3) For the purposes of this Section 7(b)(ii), “trading day” shall mean any day which the exchange or system on which the securities to be distributed are traded is open and “closing prices” or “closing bid prices” shall be deemed to be:  (A) for securities traded primarily on the New York Stock Exchange, the American Stock Exchange or a Nasdaq market, the last reported trade price or sale price, as the case may be, at 4:00 p.m., New York time, on that day and (B) for securities listed or traded on other exchanges, markets and systems, the market price as of the end of the regular hours trading period that is generally accepted as such for such exchange, market or system.  If, after the date hereof, the benchmark times generally accepted in the securities industry for determining the market price of a stock as of a given trading day shall change from those set forth above, the fair market value shall be determined as of such other generally accepted benchmark times.

8.           Reacquired Shares.  Any shares of Series B Preferred purchased or otherwise acquired by the Corporation in any manner whatsoever shall be retired and cancelled promptly after the acquisition thereof.  All such shares shall upon their cancellation become authorized but unissued shares of Preferred Stock and may be reissued as part of a new series of Preferred Stock to be created by resolution or resolutions of the Board, subject to the conditions and restrictions on issuance set forth herein.

42

9.           Limitations.                      Except as may otherwise be required by law and as are set forth in any agreement among the holders of Series B Preferred and the Corporation, the shares of Series B Preferred shall not have any powers, preference or relative participating, optional or other special rights other than those specifically set forth in this Certificate (as may be amended from time to time) or otherwise in the Certificate of Incorporation.

43

SCHEDULE 1.02

[AISYSTEMS’ CONVERTIBLE SECURITIES]

44

SCHEDULE 2.01

[CERTIFIED COPIES OF

AISYSTEMS’ ARTICLES OF INCORPORATION AND BY-LAWS]

45

SCHEDULE 2.02

[VOTING AISYSTEMS DEBT]

46

SCHEDULE 2.03

[AISYSTEMS’ SUBSIDIARIES]

AISystems owns 100% of the outstanding common stock of Airline Intelligence Systems Corporation, an Ontario corporation formed in December 2005 and 100% of the outstanding common stock of AIS Canada Services Inc., an Ontario corporation formed in October 2009.

47

SCHEDULE 2.04

[AISYSTEMS’ FINANCIAL STATEMENTS]

48

SCHEDULE 2.06

[AISYSTEMS’ LITIGATION MATTERS]

Currently there are no outstanding judgments against the Company or any consent decrees or injunctions to which the Company is subject or by which its assets are bound and there are no claims, proceedings, actions or lawsuits in existence, or to the Company’s knowledge threatened or asserted, against the Company or with respect to any of the assets of the Company that would materially and adversely affect the business, property or financial condition of the Company, including but not limited to environmental actions or claims. However, from time to time, we may become involved in various lawsuits and legal proceedings which arise in the ordinary course of business.  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.

An employee terminated in 2009, is claiming that she was wrongfully dismissed and is seeking damages. The Company believes that it has complied with law in completing her termination. As such the Company believes that her claim is without merit.

49

SCHEDULE 2.12

[AISYSTEMS’ TITLE TO PROPERTIES]

None.

50

SCHEDULE 2.13

[AISYSTEMS’ INTELLECTUAL PROPERTY]

AISystems has the exclusive and perpetual license to use proprietary technology to develop a unique proprietary business platform for the airline industry that is comprised of systems and mathematical algorithms capable of generating significant improvements in strategic planning capabilities, resource scheduling, revenue management and integrated operations.

The core jetEngineTM system technology is the backbone of an integrated business platform solution that is expected to revolutionize the airline industry.  jetEngineTM is a new paradigm for strategic airline management that is enabling the integration and control of a commercial airline’s schedule planning, revenue management, and integrated operations functions, entirely in real time.

51

SCHEDULE 2.14

[AISYSTEMS’ INSURANCE]

None.

52

SCHEDULE 3.01

[CERTIFIED COPIES OF

WOLF’S ARTICLES OF INCORPORATION AND BY-LAWS]

53

SCHEDULE 3.04

[WOLF ASSETS AND LIBILITIES]

54

SCHEDULE 3.05

[WOLF’S FINANCIAL STATEMENTS]

55

SCHEDULE 3.08

[WOLF’S LITIGATION MATTERS]

56

SCHEDULE 3.13

[WOLF’S MATERIAL TRANSACTIONS OR AFFILIATIONS]

57

SCHEDULE 3.15

[WOLF’S FINANCIAL ACCOUNTS AND POWERS OF ATTORNEY]

58

SCHEDULE 3.20(B)

[WOLF’S ENVIRONMENTAL PERMITS]

59

SCHEDULE 3.20(J)

[WOLF’S ENVIRONMENTAL REPORTS]

60

SCHEDULE 3.20(J)

[WOLF’S ENVIRONMENTAL OPERATING DOCUMENTS]

61

EX-3.4

Exhibit 3.4

ROSS MILLER Secretary of State 204 North Carson Street, Suite 1 Carson City, Nevada 89701-4520 (775) 684 5708 Website: www.nvsos.gov

Certificate of Designation

(PURSUANT TO NRS 78.1955)

USE BLACK INK ONLY - DO NOT HIGHLIGHT  ABOVE SPACE IS FOR OFFICE USE ONLY

Certificate of Designation For

Nevada Profit Corporations  

(Pursuant to NRS 78.1955)

1.Name of corporation:

Wolf Resources, Inc.

2.By resolution of the board of directors pursuant to a provision in the articles of incorporation this certificate establishes the following regarding the voting powers, designations, preferences, limitations, restrictions and relative rights of the following class or series of stock.

Pursuant to authority expressly granted and vested in the Board of Directors of the Corporation (the “Board”) by the provisions of the Corporation’s Certificate of Incorporation, as amended, (“Certificate of Incorporation”) the Board of adopted the following resolution on March 19, 2010 (i) authorizing a series of the Corporation’s previously authorized 20,000,000 shares of preferred stock, par value $.001 per share, (“Preferred Stock”) and (ii) providing for the designations, preferences and relative, participating, optional or other rights, and the qualifications, limitations or restrictions thereof, of 2,400,000 shares of Series B Preferred Stock of the Corporation with the rights and preferences a s set forth in the Series B Preferred Stock Certificate of Designation attached hereto as Exhibit A.

3.Effective date of filing: (optional)

(must not be later than 90 days after the certificate is filed)

4.Signature: (required)

X /s/ Stephen Johnston

Signature of Officer

Filing Fee: $175.00

IMPORTANT: Failure to include any of the above information and submit with the proper fees may cause this filing to be rejected.

This form must be accompanied by appropriate fees. Revised: 3-6-09  Nevada Secretary of State Stock Designation

1

CERTIFICATE OF DESIGNATIONS,

PREFERENCES, LIMITATIONS, VOTING POWERS AND RELATIVE RIGHTS OF

THE SERIES B PREFERRED STOCK OF

WOLF RESOURCES, INC.

          Wolf Resources, Inc., a Nevada Corporation (the “Corporation”), DOES HEREBY CERTIFY:

           Pursuant to authority expressly granted and vested in the Board of Directors of the Corporation (the “Board”) by the provisions of the Corporation’s Certificate of Incorporation, as amended, (“Certificate of Incorporation”) the Board of adopted the following resolution on March 19, 2010 (i) authorizing a series of the Corporation’s previously authorized 20,000,000 shares of preferred stock, par value $.001 per share, (“Preferred Stock”) and (ii) providing for the designations, preferences and relative, participating, optional or other rights, and the qualifications, limitations or restrictions thereof, of 2,400,000 shares of Series B Preferr ed Stock of the Corporation as follows:

WHEREAS, the Board believes that it is in the best interests of the Corporation to create a series of preferred stock, par value $0.001 per share, designated as Series B Preferred Stock (“Series B Preferred”); and

WHEREAS, the Certificate of Incorporation authorizes the issuance of 20,000,000 shares of Preferred Stock and expressly vests in the board the authority provided therein to issue the shares of Preferred Stock in series, to establish from time to time the number of shares to be included in such series, and to fix the designation, powers, preferences and rights of the shares of each such series and any qualifications, limitations or restrictions thereon;   NOW THEREFORE BE IT:

RESOLVED, that a series of authorized Preferred Stock be hereby created and that the designation and amount thereof and the voting powers, preferences and relative, participating optional and other special rights of the shares of such series, if any, and the qualifications, limitations or restrictions thereof, are as follows:

1.   Designation and Amount.  That pursuant to the authority vested in the Board of Directors of the Corporation by the Corporation’s Certificate of Incorporation (the “Certificate of Incorporation”) as amended, a series of Preferred Stock of the Corporation be, and it hereby is, created out of the 20,000,000 authorized but unissued shares of the capital preferred stock of the Corporation, such series to be designated  Series B Preferred Stock (the “Series B Preferred Stock”), to consist of 2,400,000 shares, par value $.001 per share, which shall have the following preferences, powers, designations and other special rights.

2

2.    Voting Rights.  The holders of shares of Series B Preferred shall have the following voting rights:

(a)           General Voting Provisions

(i)           Each share of Series B Preferred shall entitle the holder thereof to four hundred (400) votes on all matters submitted to a vote of the stockholders of the Corporation. In the event the Corporation shall at any time after the date of this Certificate (x) declare any dividend on Common Stock, par value $0.001 per share, of the Corporation (“Common Stock”) payable in shares of Common Stock, (y) subdivide the outstanding Common Stock, or (z) combine the outstanding Common Stock into a smaller number of shares, then in each such case the number of votes per share to which holders of shares of Series B Preferred are entitled shall be adju sted by multiplying the number of votes per share to which holders of shares of Series B Preferred were entitled immediately prior to such event by a fraction the numerator of which is the number of shares of Common Stock outstanding immediately after such event and the denominator of which is the number of shares of Common Stock that were outstanding immediately prior to such event.

(ii)          Except as otherwise provided herein, in the Certificate of Incorporation or by law, the holders of Series B Preferred shall be entitled to notice of any stockholders’ meeting in accordance with the Bylaws of the Corporation (“Bylaws”), and the holders of Common Stock and the Series B Preferred shall vote together as a single class on all matters.

(iii)         Except as otherwise provided herein, in the Certificate of Incorporation or in the Bylaws, holders of Series B Preferred shall have no special voting rights and their consent shall not be required (except to the extent they are entitled to vote with holders of Common Stock as set forth herein) for taking any corporate action.

(b)           Protective Provisions.   In addition to any other rights provided by law, so long as any shares of Series B Preferred shall be outstanding, the Corporation shall not take any of the following actions (whether directly or indirectly, or by amendment, filing of a certificate of designations, preferences or rights, merger, consolidation or otherwise) without first obtaining the written consent, authorization or waiver of the holders of not less than a majority of the then-outstanding shares of Series B Preferred, voting together as a single voting group (the “Series B Majorit y”), which consent, authorization or waiver may be obtained without the necessity of formal stockholder action or of notice to the holders of any shares of capital stock not expressly empowered with such right to consent, authorize or waive:

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(i)           Alter or change the rights, preferences or privileges of the shares of Series B Preferred so as to adversely affect the shares of such series of Preferred Stock, whether by formal amendment of the Certificate of Incorporation, merger or otherwise;

(ii)           Increase or decrease the total number of authorized shares of Series B Preferred;

(iii)           Authorize, designate, or issue, or obligate itself to issue, any equity security of the Corporation, including any security convertible into or exercisable or exchangeable for any equity security, having superior voting rights over the Series B Preferred;

(iv)           Liquidate, dissolve or wind up the Corporation; or

(v)           Effect any of the following transactions or series of transactions:  (a) selling, conveying or otherwise disposing of all or substantially all of the Corporation’s property or business (including the exclusive licensing of all or substantially all of the Corporation’s intellectual property to a third party), or (b) entering into any corporate reorganization, share exchange or recapitalization, or merging with or into, or consolidating with, any other corporation, limited liability company or other entity if the holders of shares of Common Stock and/or Preferred Stock sell or otherwise transfer in such transaction, to any person or group of persons acting jointly or in concert, shares of Common Stoc k and/or Preferred Stock representing 50% or more of the voting power of the stockholders of the Corporation (any such transaction, a “Liquidation Transaction”); provided, however, that none of the following shall be considered a Liquidation Transaction:  (x) a merger effected exclusively for the purpose of changing the domicile of the Corporation, (y) a merger or consolidation with a wholly owned subsidiary of the Corporation or (z) an equity financing in which the Corporation is the surviving corporation.

3.           Redemption by Holders.

(a)           Redemption Date and Price.  At any time following the date hereof, any holder of then-outstanding shares of Series B Preferred (each, a “Redeeming Holder”) shall be entitled, by written request (a “Redemption Election”) delivered to the Corporation, to require that all (but not less than all) of the then-outstanding shares of Series B Preferred held by such Redeeming Holder be redeemed.  The Corporation shall, to the extent permitted by law, redeem that number of shares specified in the Redemption Election (the “Redeemed Shares”) in accordance with the procedures set forth in Section 3(b) as of a date (the “Redemption Date”) within ninety (90) days of the receipt by the Corporation of the Redemption Election.  The Corporation shall redeem the Redeemed Shares by paying in cash an amount per share equal to $0.001 for each such share (the “Redemption Price”).

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(b)           Procedure and Payment.  Within fifteen (15) days following its receipt of the Redemption Election, the Corporation shall mail a written notice, first class postage prepaid, to the Redeeming Holder at the address last shown for such Redeeming Holder on the share transfer records of the Corporation.  In addition to any information required by law, such notice (the “Redemption Notice”) shall state: (i) the Redemption Date, (ii) the Redemption Price, (iii) the number of shares that may lawfully be redeemed from such Redeeming Holder, and (iv) the place o r places where certificates for such shares are to be surrendered for payment of the Redemption Price.  If the Corporation is unable lawfully to redeem all of the shares set forth in the Redemption Election with respect to a Redeeming Holder, then the Corporation may reduce the number of shares of Series B Preferred to be redeemed from any such Redeeming Holder, without penalty or prejudice, by written notice to such Redeeming Holder given within ten (10) days of receipt of the Redemption Notice.  Subject to the preceding sentence, on or after the Redemption Date, the Redeeming Holder shall surrender to the Corporation the certificate or certificates representing such shares, in the manner and at the place designated in the Redemption Notice, and thereupon the Redemption Price of such shares shall be payable in accordance with this Section 3(b) to the person whose name appears on such certificate or certificates as the owner thereof and each surrendered certificate shall be cancelled. 0; As promptly as practicable after receipt of the surrendered certificate or certificates (and in no event more than ten (10) days following the Redemption Date), the Corporation shall issue and deliver to or upon the written order of such Redeeming Holder, at such office or other place designated by the Redeeming Holder, a check for cash in an amount equal to the Redemption Price for the shares to be redeemed.  In the event less than all the shares represented by any such certificate are redeemed, a new certificate shall be issued representing the unredeemed shares.

(c)           Effect of Redemption.  From and after any Redemption Date, unless there shall occur a default in payment of the Redemption Price, all rights of the Redeeming Holder (except the right to receive the Redemption Price upon surrender of the applicable share certificate or certificates) shall cease with respect to the shares designated to be redeemed on such Redemption Date, and such shares shall not thereafter be transferred on the books of the Corporation.  In the event of a redemption provided for in this Section 3 and there are more than one Redeeming Holders with respect to a Redemption Date, those funds which are legally available will be used to redeem the maximum possible number of shares, allocated ratably among all such Redeeming Holders based upon the total Redemption Price applicable to the shares of Series B Preferred designated to be redeemed on any such Redemption Date. Any shares of Series B Preferred not redeemed pursuant to this Section 3 shall remain outstanding and be entitled to all the rights and preferences provided herein.  At any time thereafter when additional funds of the Corporation are legally available for the redemption of shares of Series B Preferred, such funds will immediately be used to redeem the balance of the shares which the Corporation has become obliged to redeem on any Redemption Date but which it has not redeemed.

(d)           Termination. The rights set forth in this Section 3 shall terminate upon the consummation of a Liquidation Transaction.

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4.           Redemption by the Corporation

(a)           Conditions to Redemption.  The Corporation may, in its sole and exclusive discretion, to the extent permitted by law, elect to redeem, in whole or from time to time in part, any shares of Series B Preferred held by any holder of Series B Preferred (such holder, a “Redeemed Holder”) by paying in cash an amount per share equal to the Redemption Price.

(b)           Redemption Date.  In the event that the Corporation elects to redeem any shares of Series B Preferred from a Redeemed Holder, the Corporation may fix a Redemption Date for the redemption of the shares of Series B Preferred held by such Redeemed Holder(s), which must be not less than five nor more than 60 days after the date on which a Redemption Notice is mailed by the Corporation pursuant to Section 4(c).

(c)           Procedure and Payment.  The Corporation shall mail a Redemption Notice, first class postage prepaid, to each Redeemed Holder at the address last shown for such Redeemed Holder on the share transfer records of the Corporation.  No failure to give such notice or any defect therein or in the mailing thereof shall affect the validity of the proceedings for the redemption of any Series B Preferred except as to any holder to whom the Corporation has failed to give notice or except as to any holder to whom notice was defective.  Unless otherwise determined by the Board, on or before the applicable Redemption Date, the Redeemed Holder shall surrender to the Corporation the certificate or certificates representing the shares to be redeemed, in the manner and at the place designated in the Redemption Notice, and thereupon the Redemption Price of such shares shall be payable in accordance with this Section 4(c) to the person whose name appears on such certificate or certificates as the owner thereof and each surrendered certificate shall be cancelled.  As promptly as practicable after receipt of the surrendered certificate or certificates (and in no event more than ten (10) days following the Redemption Date), the Corporation shall issue and deliver to or upon the written order of such Redeemed Holder, at such office or other place designated by the holder, a check for cash in an amount equal to the Redemption Price for the shares to be redeemed.  In the event less than all the shares represented by any such certification are redeemed, a new certificate shall be issued representing the unredeemed shares.  No Se ries B Preferred may be redeemed except with assets legally available for the payment of the Redemption Price.

(d)           Effect of Redemption.  From and after any Redemption Date, unless there shall occur a default in payment of the Redemption Price, all rights of the Redeemed Holder (except the right to receive the Redemption Price upon surrender of the applicable share certificate or certificates) shall cease with respect to the shares designated to be redeemed on such Redemption Date, and such shares shall not thereafter be transferred on the books of the Corporation.  The shares of Series B Preferred not redeemed shall remain outstanding and entitled to all the rights and preferences provided herein.

5.           Dividends.  The holders of Series B Preferred are not entitled to receive any dividends with respect to their shares of Series B Preferred.

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6.           Restrictions on Transfer.

(a)           Shares of Series B Preferred  or any interest therein (including but not limited to any voting or other rights pertaining to such shares) may not he sold, assigned, awarded, pledged, gifted, encumbered or otherwise transferred for consideration or otherwise, whether voluntarily, involuntarily, or by operation of law (collectively, “Transferred”), unless (i) (A) there is an effective registration statement under the Securities Act of 1933, as amended (the “Securities Act”), covering such securities, or (B) the sale is made in accordance w ith Rule 144 promulgated under the Securities Act, and (ii) the Corporation receives an opinion of counsel for the holder of such securities reasonably satisfactory to the Corporation stating that such Transfer is exempt from the registration and prospectus delivery requirements of the Securities Act. A Transfer or attempt to effect a Transfer subject to the provisions of this Section 6 shall be deemed to occur whenever any interest in any shares of Series B Preferred is Transferred or is attempted to be Transferred, voluntarily, involuntarily, or by operation of law, irrespective of whether any change in the record ownership of such share occurs.

(b)           In the event that a holder of Series B Preferred desires to Transfer shares of Series B Preferred in accordance with Section 6(a) above, such holder shall deliver written notice of its desire to effect the Transfer (the “Transfer Notice”) to the Corporation, including the opinion of counsel referred to therein, no less than fifteen (15) calendar days prior to the anticipated closing date of the Transfer. Any shares of Series B Preferred that are subject to the Transfer Notice may be redeemed by the Corporation, in its sole and exclusive discretion, pursuant to Section 4 above.

(c)           Any attempt by a Series B Holder to Transfer shares of Series B Preferred in violation of Sections 4 and/or 6 of this Certificate shall be null and void, and the Corporation will not effect any such Transfer nor will it treat any alleged Transferee as the holder of such shares for any purposes.

7.           Liquidation.

(a)           Preference.  In the event of any liquidation, dissolution or winding up of the Corporation, either voluntary or involuntary, the assets of the Corporation available for distribution to its stockholders shall be distributed in the following order and amounts:

(i)           First, the holders of the Series B Preferred shall be entitled to receive, prior and in preference to any distribution of any of the assets of the Corporation to the holders of Common Stock or any other series of Preferred Stock that is not expressly senior to or pari passu with the Series B Preferred, by reason of their ownership thereof, an amount per share equal to $0.001 per share, as adjusted for stock splits, stock dividends, reclassification and the like (the “Series B Liquidation Amount”).  If, upon the occurrence of such event, the assets and funds thus distributed among the holders of the Series B Preferred shall be insufficient to permit the payment of the full

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Series B Liquidation Amount, then the entire assets and funds of the Corporation legally available for distribution shall be distributed ratably among the holders of the Series B Preferred in proportion to the preferential amount each such holder is otherwise entitled to receive.

(ii)           Upon the distribution of the full Series B Liquidation Amount and any other distribution that may be required with respect to a series of Preferred Stock that may from time to time come into existence, the remaining assets of the Corporation available for distribution to stockholders shall be distributed among the holders of Common Stock pro rata based on the number of shares of Common Stock held by each such holder.

(b)           Certain Acquisitions.

(i)           Deemed Liquidation. For purposes of this Section 7, a liquidation dissolution, or winding up of the Corporation shall be deemed to occur if the Corporation shall effect a Liquidation Transaction.

(ii)           Valuation of Consideration.  In the event of a deemed liquidation as described in Section 7(b)(i) above, if the consideration received by the Corporation is other than cash, its value will be deemed its fair market value as determined in good faith by the Board in accordance with the following provisions:

(1)  Securities not subject to investment letter or other similar restrictions on free marketability:

(A)  If traded on a national securities exchange, the value shall deemed to be the average of the closing prices of the securities on such exchange over the ten (10) trading day period ending three (3) trading days prior to the distribution (unless the Board approves some other valuation method);

(B)   If actively traded over-the-counter, the value shall he deemed to be the average of the closing bid prices for such securities over the ten (10) trading day period ending three (3) trading days prior to the distribution (unless the Board approves some other valuation method); and

(C)   If there is no active public market, the value shall be the fair market value thereof; as determined in good faith by the Board.

(2)  The method of valuation of securities subject to investment letter or other restrictions on free marketability (other than restrictions arising solely by virtue of a stockholder’s status as an affiliate or former affiliate) shall be to make an appropriate discount from the market value determined as specified above in Section 7(b)(ii)(1) to reflect the approximate fair market value thereof, as determined in good faith by the Board.

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(3)   For the purposes of this Section 7(b)(ii), “trading day” shall mean any day which the exchange or system on which the securities to be distributed are traded is open and “closing prices” or “closing bid prices” shall be deemed to be:  (A) for securities traded primarily on the New York Stock Exchange, the American Stock Exchange or a Nasdaq market, the last reported trade price or sale price, as the case may be, at 4:00 p.m., New York time, on that day and (B) for securities listed or traded on other exchanges, markets and systems, the market price as of the end of the regular hours trading period that is generally accepted as such for such excha nge, market or system.  If, after the date hereof, the benchmark times generally accepted in the securities industry for determining the market price of a stock as of a given trading day shall change from those set forth above, the fair market value shall be determined as of such other generally accepted benchmark times.

8.           Reacquired Shares.  Any shares of Series B Preferred purchased or otherwise acquired by the Corporation in any manner whatsoever shall be retired and cancelled promptly after the acquisition thereof.  All such shares shall upon their cancellation become authorized but unissued shares of Preferred Stock and may be reissued as part of a new series of Preferred Stock to be created by resolution or resolutions of the Board, subject to the conditions and restrictions on issuance set forth herein.

9.           Limitations. Except as may otherwise be required by law and as are set forth in any agreement among the holders of Series B Preferred and the Corporation, the shares of Series B Preferred shall not have any powers, preference or relative participating, optional or other special rights other than those specifically set forth in this Certificate (as may be amended from time to time) or otherwise in the Certificate of Incorporation.

IN WITNESS WHEREOF, the undersigned, the President and Chief Executive Officer of the Corporation, under penalties of  perjury, does hereby declare and certify that this is the act and deed  of the Corporation and the facts stated herein are true and accordingly has signed this Certificate of Designations on March 19, 2010.

By:	/s/ Stephen C. Johnston
	NAME: Stephen C. Johnston
	President & Chief Executive Officer

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EX-10.1

Exhibit 10.1

AIRLINE INTELLIGENCE SYSTEMS, INC.

January 1, 2006

Mr. Stephen Johnston

220-33 Hazelton Ave.

Toronto Ontario M5R 2E3

Dear Steve:

Re:    Employment Terms

This letter agreement (the "Agreement") sets out the employment terms for your employment with Airline Intelligence Systems, Inc. (the "Company"), a corporation incorporated pursuant to the laws of the State of Delaware. This Agreement will set out additional benefits that you will receive and your obligations to the Company.

1.             Duties

You will hold the position of President and Chief Executive Officer of the Company. The Company acknowledges that you will also be employed as the Corporate Secretary of a Canadian wholly-owned subsidiary of the Company, Airline Intelligence Systems Inc.. an Ontario company (the "Canadian Subsidiary"). You will report to the Board of Directors of the Company and will devote sufficient time and attention to performing the duties consistent with your position in the Company.

2.             Compensation

2.1Salary. The Canadian Subsidiary will pay you a salary ("Salary") for your services of CDNS200.000 per fiscal year, less applicable Canadian withholding of taxes and other mandatory deductions. The Salary will be bonic by the Company and the Canadian Subsidiary in an allocation that is reasonable. You will be responsible for all US federal and state withholding taxes and deductions.

2.2Business Expenses. You will be reimbursed for normal business expenses which you reasonably incur in connection with your duties as an employee of the Company in accordance with Company policies. You will provide the Company with complete statements, receipts or vouchers to support claims for reimbursement of your expenses prior to the receiving reimbursement. Your expenses will be subject to review from time to time by the Board of Directors of the Company.

2.3Vacation. In each 12-month period during the Term, you will be eligible for 4 weeks of paid vacation to be taken at such times as may be acceptable to the Company.

If your employment ends for any reason, you will not be entitled to receive any payment for unused vacation unless provided by Company policies, or required by applicable law.

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2.4     Benefits. You will be entitled to participate in the benefit plans of the Company.

3.             Term

3.1Term. This Agreement will commence as of January 1, 2006, and will continue indefinitely unless terminated sooner in accordance with the provisions of this section 3. You must provide at least 6 months' written notice of termination to the Company. At any time after the receipt by the Company of your notice of resignation the Company will be entitled to waive that notice, and your employment will then be terminated immediately. Upon waiver of that notice, you will receive your regular Salary for the remainder of the then current term.

3.2Termination upon Death. Your employment will terminate upon your death.

3.3Termination for Cause. The Company may terminate your employment for cause without notice or further obligation.

3.4Termination Without Cause. The Company is entitled to terminate your employment without cause by advising you of its decision and by paying you a lump sum payment equal to the Salary that the Company would have paid to you over a period of 18 months based on your Salary at the date of termination. Subject to availability and in no event at any cost to the Company above its regular premiums, you will receive a continuation of health and dental benefits in Canada for the 18 month period following your termination. All other benefits will immediately terminate on your termination.

3.5Result of Termination. If your employment is terminated:

(a)   this Agreement will be terminated, except for sections 4.2, 4.3, 4.4, 4.5, 4.6 and 4.7 and any other provisions specifically contemplated to continue beyond the termination of this Agreement;

(b)   you will have no claim against the Company, its subsidiaries and their respective officers, directors, employees, shareholders or agents for damages or any other amounts arising out of or in respect of your employment, except for payment of any compensation, benefits or expense reimbursement owed to you pursuant to this Agreement on termination under this Agreement. At the Company's request, you will re­confirm this release in writing as a condition to receiving any payment under section 3.4;

(c)   you will promptly return any property of the Company in your possession.

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4.             Your Obligations

4.1 General Obligations. During the term of this Agreement, you will:

(a)   well and faithfully serve the Company and carry out the duties assigned to you to the best of your ability;

(b)   act honestly and in good faith with a view to the best interests of the Company;

(c)   comply with all applicable policies of the Company as implemented and amended from time to time;

(d)   not improperly bring to the Company or use any trade secrets, confidential information or other proprietary information of any third party;

(e)   be responsible for submitting all US federal and state taxes & deductions;

(f)   not knowingly infringe the intellectual property rights or other rights of any third party in the performance of your duties; and

(g)   by entering into this Agreement you confirm that you are not subject to any restrictions which might prevent you from being employed by, or carrying out any of the duties of your position on behalf of, the Company.

4.2Confidentiality and Proprietary Rights. You acknowledge and understand that the Company has expended significant financial resources in developing its products, services, intellectual property and confidential information. You agree to be bound by the provisions of Schedule A attached. Your obligations under Schedule A are to remain in effect following termination of this Agreement and/or your employment.

4.3Non-Competition. You acknowledge that your services are unique and extraordinary. You also acknowledge that your position will give you access to confidential information of substantial importance to the Company and its business. Accordingly, during the Non-Competition Period (as defined below), other than you being employed by the Canadian Subsidiary, you will not either individually or in partnership or jointly or in conjunction with any other person, entity or organization, as principal, agent, consultant, lender, contractor, employer, employee, investor, shareholder or in any other manner, directly or indirectly, advise, manage, carry on, establish, control, engage in, invest in, offer financial assistance or services to. or permit your name or any part thereof to be used by, any business that competes, in any jurisdiction the Company operates or proposes to operate in with the current and future business of the Company, its parent, affiliated or subsidiary companies, or any planned business in which the Company, its parent, affiliated or subsidiary companies is engaged (collectively, the "Business"). Without limiting the generality of the foregoing, this provision prohibits you from being involved in the solicitation or sale to any customers of the Business of any products or services sold or provided by the Business. "Non-Competition Period" means the period during which you arc employed by the Company and a period immediately thereafter equal to 24 months. The parties hereto agree that if in any proceeding before a court of competent jurisdiction, the court shall refuse to enforce the covenants set forth in section 4.3 because such covenants cover too extensive a geographic area or too long a period of time, the Court is expressly authorized to appropriately amend and modify the provision in keeping with the intention of the parties to give this provision to the maximum scope permitted by law.

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4.4Non-Solicitation. During the applicable Non-Solicitation Period (as defined below), neither you nor any entity with whom you are at the time associated, or affiliated will, directly or indirectly, hire or offer to hire or entice away or in any other manner persuade or attempt to persuade any officer, employee, agent, supplier or customer of the Business to discontinue or alter any one of their or its relationship with the Company. You will not assist or procure any other person or entity to do any act that, if done by you, would constitute a violation of any of your obligations above. "Non-Solicitation Period" means the period during which you are employed by the Company and a period immediately thereafter equal to 24 months.

4.5Validity of Covenants. You agree that (a) all provisions and restrictions in this Agreement are reasonable and valid and (b) you waive all defences to the strict enforcement of this Agreement.

4.6Injunctive Relief. You agree that the remedy at law for any breach by you of section 4.2, 4.3 or 4.4 of this Agreement will be inadequate and that the Company will be entitled to temporary and permanent injunctive relief against you without the necessity of proving actual damage to the Company.

4.7Company Breach No Excuse. You agree that sections 4.2, 4.3 and 4.4 of this Agreement are enforceable against you despite any breach or repudiation or alleged breach or repudiation of this Agreement by the Company, even if the Company terminates you in a fashion that does not comply with this Agreement or applicable law.

5.             Notice

Any notice required or permitted to be given to you will be in writing and will be sufficiently given if delivered to you personally or mailed by registered or certified mail, postage prepaid, addressed to you at your address as shown on the records of the Company. Any such notice which is mailed will be deemed to have been received by you on the third business day following the date of mailing.

6.             Entire Agreement, Governing l.aw

This Agreement is the entire agreement between you and the Company with respect to this subject matter hereof and supersedes any and all prior agreements, arrangements or understanding between the parties relating to the subject matter hereof, except written agreements relating to stock option grants. The provisions of this Agreement will be governed by and interpreted in accordance with the laws of the State of Delaware.

7.             Severability

The provisions of this Agreement are severable and the invalidity or unenforceability of any part will not affect the validity and enforceability of the other parts. If any part is held to be unenforceable, it will be interpreted in such a way as to affect most comprehensively the intention of the parties. If any part is determined to be unenforceable, it will not impair the validity of any other part and each part is separate and distinct. The parties will co-operate to replace any severed term of this Agreement with a replacement provision as close to the severed term as is legally permissible.

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8.             Acknowledgement

You acknowledge that you have had sufficient time to review this Agreement, which includes Schedule A, thoroughly and to obtain legal advice if desired. You confirm that you have read and understand the terms of, and your obligations under, this Agreement.

If this Agreement is acceptable to you, please sign and return one copy to us. Upon receipt by the Company of the fully executed copy, this Agreement will be effective.

AIRLINE INTELLIGENCE SYSTEMS, INC.
By:	/s/ Stephen Johnston
	Name: Stephen Johnston
	Title: Director

I agree to the terms of this Agreement.
By:	/s/ Stephen Johnston
	Stephen Johnston

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SCHEDULE A

CONFIDENTIALITY AND PROPRIETARY RIGHTS

AGREEMENT

1.      Proprietary Information

(a) Your employment creates a relationship of confidence and trust between theCompany and you with respect to any information which may be made known to you by the Company or by any client or customer of the Company, or learned by you in that context during the period of your employment and which:

(i) has not been made generally available to the public; and

(ii) is applicable or of value to the Company's current or anticipated business, research or development activities, or those of any client or customer of  the Company.

(b) All that information has commercial value in the business in which the Company is engaged and is referred to in this Agreement as "Proprietary Information.'1 By way of illustration, but not limitation. Proprietary Information includes: (i) any and all technical and non-technical information including patent disclosures and applications, copyright applications, trade secrets, confidential information, techniques, sketches, drawings, models, inventions, know-how, processes, apparatus, equipment, algorithms, software programs, software source documents, and formulae related to the current, future and proposed products and services of the Company; (ii) any and all information concerning research, experimental work, development, design details and specifications, engineering, financial information, procurement requirements, purchasing, manufacturing, prospective and current customer lists and information, customer contracts and services, business forecasts, cost and pricing information, sales and marketing plans and information; and (iii) proprietary or confidential information of any of the Company's customers or any other third party who may disclose such information to the Company or to you in the course of the Company's business.

(c) Proprietary Information does not include any information: (i) which has been published by others in a form generally available to the public; or (ii) which you have received from a third party with the legal right to use that information. Proprietary Information will not be deemed to have been published merely because individual portions of the information have been separately published, but only if all the material features comprising such information have been published in combination. Proprietary Information will not be considered to be publicly available, if it is made public by you in violation of this Agreement or by a third party who has no lawful right to hold or disclose the Proprietary Information or who does so in violation of any contractual, legal, or fiduciary obligation to the Company.

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2.             Ownership and Nondisclosure of Proprietary Information

All Proprietary Information is the sole property of the Company, the Company's assigns or the Company's customers, as the case may be, and the Company, the Company's assigns or the Company's customers will be the sole and exclusive owner of all patents, copyrights, mask works, trade secrets and other rights in the Proprietary Information. You will not acquire any ownership or other interest in the Proprietary Information. At all times, both during your employment by the Company and after termination of such employment, you will keep in confidence and trust all Proprietary Information, and you will not use or disclose any Proprietary Information or anything directly relating to Proprietary Information without the written consent of the Company, except and only as may be necessary in the course of performing your duties as an employee of the Company.

3.             Ownership and Return of Materials

All materials (including, without limitation, documents, drawings, models, apparatus, sketches, designs, lists, and all other tangible media of expression) furnished to you by the Company will remain the property of the Company. Upon termination of your employment, or at any time on the request of the Company before termination, you will promptly (but no later than five days after the earlier of your employment's termination or the Company's request) destroy or deliver to the Company, at the Company's option: (a) all materials furnished to you by the Company; (b) all tangible media of expression which are in your possession and which include any Proprietary Information or otherwise relate to the Company's business; and (c) written certification of your compliance with your obligations under this sentence.

4.             Innovations

As used in this Schedule A, the term "Innovations" means all processes, machines, manufactures, compositions of matter, improvements, inventions (whether or not protectable under patent laws), works of authorship, information fixed in any tangible medium of expression (whether or not protectable under copyright laws), moral right, mask works, trademarks, trade names, trade dress, trade secrets, know-how, ideas (whether or not protectable under trade secret laws), and all other subject matter protectable under patent, copyright, moral right, mask work, trademark, trade secret or other laws, and includes without limitation all new or useful art, combinations, discoveries, formulae, manufacturing techniques, technical developments, discoveries, artwork, software, and designs. Innovations includes "Inventions," which is defined to mean any inventions or discoveries protectable under patent laws. It is also understood that Innovations subject to copyright will be works made for hire.

5.             Records

You will keep complete, accurate and authentic notes, reference materials, data and records of all Innovations in the manner and form requested in writing by the Company of you or of its employees generally. All these materials will be Proprietary Information upon their creation.

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6.             Assignment of Innovations

You will promptly disclose and describe to the Company and you will assign to the Company or the Company's designee your entire right, title, and interest in and to, each of the Innovations, and any associated intellectual property rights, which you may solely or jointly conceive, reduce to practice, create, derive, develop or make during the period of your employment with the Company, which either: (i) relate, at the time of conception, reduction to practice, creation, derivation, development, or making of such Innovation, to the Company's business or actual or demonstrably anticipated research or development; or (ii) were developed on any amount of the Company's time or with the use of any of the Company's equipment, supplies, facilities or trade secret information; or (iii) resulted from any work you performed for the Company. All such Innovations as described in this paragraph are referred to in this Agreement as "Company Innovations."

7.             Moral Rights

You irrevocably waive all moral rights that you may have now or in the future with respect to the Company Innovations, including, without limitation, any rights you may have to have your name associated with the Company Innovation, any rights you may have to prevent the alteration, translation or destruction of the Company Innovations, and any rights you may have to control the use of the Company Innovations in association with any product, service, cause or institution. This waiver may be invoked by the Company, and by any of its authorized agents or assignees, in respect of any of the Company Innovations.

8.             Future Innovations

You recognize that Innovations or Proprietary Information relating to your activities while working for the Company and conceived, reduced to practice, created, derived, developed, or made by you, alone or with others, within three months after termination of your employment may have been conceived, reduced to practice, created, derived, developed, or made, as applicable, in significant part while employed by the Company. Accordingly, such Innovations and Proprietary Information will be presumed to have been conceived, reduced to practice, created, derived, developed, or made, as applicable, during your employment with the Company and are to be promptly assigned to the Company unless and until you have established the contrary by written evidence satisfying the clear and convincing standard of proof.

9.             Cooperation in Perfecting Rights to Proprietary Information and Innovations

(a) You will perform, during and after your employment, all acts deemed necessary or desirable by the Company to permit and assist the Company, at the Company's expense, in obtaining and enforcing the full benefits, enjoyment, rights and title throughout the world in the Proprietary Information and Innovations. Such acts may include, but are not limited to, execution of documents and assistance or co-operation: (i) in the filing, prosecution, registration, and memorialization of assignment of any applicable patents, copyrights, mask work, or other applications; (ii) in the enforcement of any applicable patents, copyrights, mask work, moral rights, trade secrets, other proprietary rights; and (iii) in other legal proceedings related to the Proprietary Information or Innovations.

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(b) If the Company is unable for any reason to secure your signature to any document required to file, prosecute, register, or memorialize the assignment of any patent, copyright, mask work or other applications or to enforce any patent, copyright, mask work, moral right, trade secret or other proprietary right under any Proprietary Information (including improvements thereof) or any Innovations (including derivative works, improvements, renewals, extensions, continuations, divisional, continuations in part, continuing patent applications, reissues, and reexaminations), you hereby irrevocably designate and appoint the Company and the Company's duly authorized officers and agents as your attorney, with full power of substitution, in your name but on behalf of and at the expense of the Company: (i) to execute, file, prosecute, register and memorialize the assignment of any such application; (ii)to execute and file any documentation required for such enforcement; and (iii) to do all other lawfully permitted acts to further the filing, prosecution, registration, memorialization of assignment, issuance, and enforcement of patents, copyrights, mask works, moral rights, trade secrets or other rights under the Proprietary Information, or Innovations, all with the same legal force and effect as if executed by you. Such appointment, being coupled with an interest, is irrevocable by you and shall not be revoked by your insolvency, bankruptcy, death or incapacity and you agree to ratify and confirm all that the Company may do or cause to be done pursuant to the foregoing.

10.           No Violation of Rights of Third Parties

Your performance of all the terms of this Schedule and as an employee of the Company does not and will not breach any agreement to keep in confidence proprietary information, knowledge or data acquired by you prior to your employment with the Company, and you will not disclose to the Company, or induce the Company to use, any confidential or proprietary information or material belonging to any previous employer or others. You arc not a party to any other agreement which will interfere with your full compliance with this Agreement. You will not enter into any agreement, whether written or oral, in conflict with the provisions of this Schedule. In the course of my employment with the Company, you will not knowingly violate or cause the Company to violate the intellectual property rights of others.

11.          Survival

This Schedule: (a) shall survive your employment by the Company; (b) does not in any way restrict your right or the right of the Company to terminate your employment at any time, for any reason or for no reason; (c) enures to the benefit of successors and assigns of the Company; and (d) is binding upon your heirs and legal representatives.

12.           Injunctive Relief

A breach of any of the promises or agreements contained herein will result in irreparable and continuing damage to the Company for which there will be no adequate remedy at law, and the Company is entitled to injunctive relief and/or a decree for specific performance, and such other relief as may be proper (including monetary damages if appropriate).

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EX-10.2

Exhibit 10.2

OFFICE LEASE AGREEMENT

Between

CARILLON PROPERTIES (LANDLORD)

and AIRLINE INTELLIGENCE SYSTEMS INC. (TENANT)

Table of Contents

SECTION			PAGE
1.	Lease Data and Exhibits		1
	(a)	Development, Building, Premises	1
	(b)	Tenant's Pro Rata Share of the Building	1
	(c)	Tenant's Pro Rata Share of Development Common Areas	1
	(d)	Term, Commencement and Expiration Dates	1
	(e)	Basic Rent	1
	(f)	Letter of Credit	2
	(g)	Exhibits	2
2.	Premises		3
3.	Rent		3
4.	Construction of Tenant Improvements		3
5.	Uses		3
	(a)	General Use	3
6.	Hazardous Materials		3
	(a)	Landlord's Right to Cure	4
	(b)	Landlord's Release	4
	(c)	Third Parties	4
	(d)	Complete Agreement	4
7.	Additional Rent		4
	(a)	Tenant Payment	4
	(b)	Definitions	4
	(c)	Manner of Payment	7
	(d)	Proration	7
	(e)	Landlord's Records	7
8.	Personal Property Taxes		7
9.	Taxes on Rent		7
10.	Maintenance and Other Services by Landlord		8
11.	Assignment and Subletting		8
	(a)	Prior Written Consent	8
	(b)	Approval Process	8
	(c)	Limitation of Landlord's Withholding Consent	9
	(d)	Requirements	9
	(e)	Processing Fee	9
	(f)	Subleasing Profits	9
	(g)	Recapture	9
12.	Care of Premises		10
13.	Surrender of Possession		10
14.	Alterations		10
15.	Entry and Inspection		11
16.	Damage or Destruction		11
	(a)	Damage and Repair	11
	(b)	Business Interruption	11
	(c)	Tenant Improvements	11
17.	Indemnification		12
18.	Insurance		12
	(a)	Liability Insurance	12
	(b)	Property Insurance	12
	(c)	Insurance Policy Requirements	12
	(d)	Waiver of Subrogation	12
	(e)	Landlord's Insurance	12

19.	Advertising and Signs		13
20.	Insolvency and Liens		13
	(a)	Insolvency	13
	(b)	Liens	13
21.	Condemnation		13
	(a)	Entire Taking	13
	(b)	Partial Taking	14
	(c)	Awards and Damages	14
22.	Default		14
	(a)	Cumulative Remedies	14
	(b)	Tenant's Right to Cure	14
	(c)	Vacation and Abandonment	14
	(d)	Landlord's Re-entry	14
	(e)	Reletting the Premises	14
	(f)	Right to Perform	15
	(g)	Late Payments	15
23.	Subordination to Mortgage		15
24.	Mortgagee Protection		15
25.	Holdover		15
26.	Agent		15
27.	Notices		15
28.	Costs and Attorneys' Fees		16
29.	Estoppel Certificates		16
30.	Limitation of Liability		16
31.	Transfer of Landlord's Interest		16
32.	Nonwaiver		16
33.	Quiet Possession		16
34.	Letter of Credit		16
35.	Landlord Default		17
36.	General		17

	(a)	Headings	17
	(b)	Heirs and Assigns	17
	(c)	No Brokers	17
	(d)	Identification of Tenant	17
	(e)	Entire Agreement	18
	(f)	Severability	18
	(g)	Force Majeure	18
	(h)	Changes to Building	18
	(i)	Building Directory	18
	(j)	Governing Law	18
	(k)	Corporate Authority	18
	(1)	Notice Addresses	18
	(m)	Recordation	18
Notary			20
Exhibit A-l		Legal and Development Description	21
Exhibit A-2		Site Layout	22
Exhibit B		Floor Plan	23
Exhibit C		INTENTIONALLY OMITTED	24
Exhibit D		Additional Provisions	25
Exhibit E		Parking Agreement	27
Exhibit F		Subordination, Non-Disturbance & Attornment Agrmt	29
Exhibit G		Form of Tenant Estoppel Certificate	33
Exhibit H		Fomr of Letter of Credit Acceptable to Landlord	34

Office Lease Agreement

THIS LEASE AGREEMENT ("Lease") is dated the_______________________ day of ____________, 2007, by and between

CARILLON PROPERTIES, a Washington general partnership ("Landlord"), and AIRLINE INTELLIGENCE SYSTEMS INC., a Delaware corporation ('Tenant").

Landlord and Tenant agree as follows:

1.   Lease Data and Exhibits. The following terms shall have the meanings provided in this Section I unless otherwise specifically modified herein:

(a)Development, Building and Premises. "Development" as used in this Lease means all of the buildings, grounds, streets, parking areas and other improvements comprising the multi-use development known as Carillon Point and located in Kirkland, Washington, legally described on Exhibit A-1 and shown on Exhibit A-2. '"Building" as used in this Lease means Building 3000 in the Development; the Building is comprised of approximately 120,929 rentable square feet. "Premises" as used in this Lease means that space consisting of approximately 15,166 rentable square feet on the fifth (5th) floor of the Building, as outlined on the floor plan attached hereto as Exhibit B. The address of the Premises is 3500 Carillon Point, Kirkland, WA 98033.

(b)Tenant's Pro Rata Share. Tenant's Pro Rata Share of the Building is 12.54% calculated by dividing the rentable square feet of the Premises by the rentable square feet of the Building, as each may be reasonably determined from time to time by Landlord, in accordance with BOMA International Standard Method for Measuring Floor Area in Office Buildings, ANSI Z65.1-1996 ("BOMA International Standards").

(c)Building's Pro Rata Share of the Development Common Areas. The Building's Pro Rata Share of the Development is 20.49% calculated by dividing the rentable square feet of the Building by the rentable square feet of all buildings in the Development (and Landlord shall include a reasonable portion of rentable square feet for the hotel and marina), as each may be reasonably determined from time to time by Landlord, in accordance with BOMA International Standards.

(d)Term. Commencement and Expiration Dates. The term of this Lease (the 'Term") shall commence on the later of (i) July 15, 2007, and (ii) the date that Landlord delivers the Premises (the "Commencement Date"), and shall expire on the date that is sixty-three (63) months after the Commencement Date (the "Expiration Date"), unless earlier terminated as provided herein. Landlord shall use commercially reasonable efforts to deliver possession of the Premises to Tenant on or before July 15, 2007. If the Commencement Date has not occurred by July 15, 2007 due to the failure of an existing tenant to vacate the Premises, Tenant agrees that Landlord shall not be liable to Tenant for any loss or damage resulting there from and this Lease shall not be void or voidable, and Landlord shall diligently proceed with eviction proceedings against such holdover tenant(s), at Landlord cost and expense. Notwithstanding the foregoing, (i) Tenant shall have no obligation to pay Basic Rent or any other rent or charges payable under this Lease until the Premises has been delivered to Tenant, and (ii) if the Commencement Date has not occurred by October 15, 2007, Tenant shall be entitled to terminate this Lease by delivering written notice to Landlord of such termination, in which event neither Landlord nor Tenant shall have any further obligations hereunder and Landlord will promptly return the Letter of Credit (defined in Section 1(f)) and any prepaid rent or other charges paid by Tenant to Landlord. When the Commencement Date has been ascertained, the parties hereto agree promptly to execute a memorandum confirming the Commencement Date and scheduled Expiration Date.

(e)  Basic Rent. Tenant shall pay Basic Rent as follows:

(i) On or about the date of mutual execution of this Lease, Tenant shall pay the sum of Fifty Thousand One Hundred Twenty-Three and 64/100 Dollars ($50.123.64), representing monthly Basic Rent of Sixteen Thousand Seven Hundred Seven and 88/100 Dollars ($16.707.88) per month, for the 3-month period from July 15, 2007 through October 14, 2007, based upon $13.22 per rentable square foot of the Premises.

(ii) From October 15, 2007 to October 14, 2008, Tenant shall pay monthly Basic Rent of Forty Eight Thousand Eight Hundred Nine and 24/100 Dollars ($48.809.24) per month based upon $38.62 per rentable square foot of the Premises.

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(iii) From October 15, 2008 to October 14. 2009, Tenant shall pay monthly Basic Rent of Fifty Thousand Seventy Three and 08/100 Dollars ($50.073.08) per month based upon $39.62 per rentable square foot of the Premises.

(iv) From October 15, 2009 to October 14, 2010, Tenant shall pay monthly Basic Rent of Fifty One Thousand Three Hundred Thirty Six and 91/100 Dollars ($51.336.91) per month based upon $40.62 per rentable square foot of the Premises.

(v) From October 15, 2010 to October 14, 2011. Tenant shall pay monthly Basic Rent of Fifty Two Thousand Six Hundred and 74/100 Dollars ($52.600.74) per month based upon $41.62 per rentable square foot of the Premises.

(vi)  From October 15. 2011 to October 14, 2012, Tenant shall pay monthly Basic Rent of Fifty Three Thousand Eight Hundred Sixty Four and 58/100 Dollars ($53.864.58) per month based upon $42.62 per rentable square foot of the Premises.

Notwithstanding the foregoing, if the Commencement Date occurs later than July 15, 2007, the dates listed above will be adjusted such that Tenant's obligation to pay Basic Rent will commence on the Commencement Date (with the first adjustment occurring on the date which is three (3) months after the Commencement Date and thereafter each adjustment occurring every twelve (12) months).

During the initial Lease Term, Landlord and Tenant hereby agree to be bound by the rentable area and usable area measurement of the Premises set forth on Exhibit B attached hereto, notwithstanding the fact that measuring the Premises using different methods, means, devices and/or personnel might yield different results. If Tenant elects to extend the Lease Term, the measurement of the Premises may be revised based on the then current measurement.

Basic Rent includes the Base Amount, which shall be the Actual Expenses (as defined in Section 7 below) for the 2007 calendar year (the "Base Year")- In addition to Basic Rent, to the extent that the Actual Expenses for each succeeding Operating Year exceed the Base Amount, Tenant shall pay its Pro Rata Share of such excess as Additional Rent in the manner described in Section 7 below. "Rent" as used in this Lease shall mean Basic Rent and Additional Rent.

Tenant has deposited with Landlord, and Landlord hereby acknowledges receipt of, the sum of Forty Eight Thousand Eight Hundred Nine and 25/100 Dollars ($48.809.25) to be applied to the Basic Rent for the fourth month under this Lease.

(f)  Letter of Credit. No later than the scheduled Commencement Date (unless delayed by Landlord's acts or omissions), Tenant shall deposit with Landlord an unconditional and irrevocable standby letter of credit in the amount of Five Hundred Ten Thousand and 00/100 Dollars ($510.000.00) ("Letter of Credit"), as security for the full and faithful performance of every provision of the Lease to be performed by Tenant pursuant to the terms and conditions set forth in Section 34 hereof. The Letter of Credit shall be made in favor of Landlord and shall: (i) be in form and substance acceptable to Landlord in Landlord's reasonable discretion; (ii) be issued by a national banking association maintaining offices in the United States of America acceptable to Landlord in Landlord's reasonable discretion (the "Bank"); (iii) be available for draw by Landlord at an office of the Bank located in the Seattle area in the State of Washington; (iv) be governed by the Internationa] Standby Practices set by the International Chamber of Commerce; (v) permit partial drawings; and (vi) automatically renew on the same terms and conditions so that the Letter of Credit continuously remains in full force and effect for the Term. Landlord confirms that [Bank of America] is acceptable as the Bank and that the form of Letter of Credit attached hereto as Exhibit H is acceptable in form and substance to Landlord, provided, however, Tenant may also use another Bank or form of Letter of Credit that meets Landlord's criteria set forth above.

In the event Tenant's operations generate positive cash flow as of each of the dates outlined below (each, an "Adjustment Date"), as evidenced by audited financial statements for the twelve (12) month period prior to the applicable Adjustment Date, then Landlord and Tenant agree to amend the Letter of Credit to decrease the amount of the Letter of Credit to the amount as outlined below:

Adjustment Date	Principal Amount
First day of Month 28	$	306,000.00
First day of Month 52	$	102,000.00

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(g)  Exhibits. Landlord and Tenant agree that this Lease is further subject to the provisions of the attached Exhibits which are listed below. The provisions of the Exhibits are understood to be an integral portion of this Lease.

Exhibit A-l                              -           Legal and Development Description

Exhibit A-2                             - -           Site Layout

Exhibit B                                 - -           Premises Floor Plan

Exhibit C                                 - -           Intentionally Omitted

Exhibit D                                -           Additional Provisions

Exhibit E                                 -           Parking Agreement

Exhibit F Exhibit G Exhibit H

Subordination, Non Disturbance and Attornment Agreement Landlord's Mortgagee's form of Tenant Estoppel Certificate Landlord accepted form of Letter of Credit

2.Premises. Landlord hereby leases to Tenant and Tenant hereby leases from Landlord upon the terms and conditions herein set forth herein, the Premises together with the non-exclusive rights of ingress and egress over the Building Common Areas and the Development Common Areas, all as shown on Exhibit A-2 below.

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3.Rent. Tenant shall pay Landlord without notice the Rent, and any other payments due hereunder, from and after the Commencement Date, without deduction or offset (except as specifically set forth herein) in lawful money of the United States of America in advance on or before the first day of each month (or at other dates specified in this Lease) during the Term at Landlord's Notice Address set forth on the signature page, or to such other party or at such other place as Landlord may hereafter from time to time designate in writing. Rent for any partial month at the beginning or end of the Term shall be prorated.

4.Construction of Improvements. Subject to Landlord's obligation to perform the improvements set forth in this Section 4, and except as specifically provided in this Lease, Landlord shall provide the Premises to Tenant "As Is Where Is." Prior to the Commencement Date, Landlord shall (i) provide new paint, (ii) clean carpets throughout the Premises, (iii) repair all damaged ceiling tiles and window blinds as necessary, and (iv) ensure all Building systems are functioning properly. Any alterations to the Premises shall be made pursuant to Section 14 of the Lease and with the prior consent of Landlord.

5.Uses.

(a) General Use. The Premises shall be used only for general office and ancillary purposes which are consistent with applicable zoning and the operation of a first class building (the "Permitted Use") and for no other business or other purpose without the prior written consent of Landlord, which consent may be withheld in Landlord's sole discretion. Neither Tenant, nor its agents, employees or contractors, shall use the Premises, the Building Common Areas or the Development Common Areas to conduct unlawful activities or in any other manner that is unlawful or that will increase the Landlord's then existing rate of insurance, unless Tenant pays all of such increases. Tenant shall not commit, or knowingly allow to be committed, any waste upon the Premises, or any public or private nuisance or other act or thing that disturbs the quiet enjoyment of any other tenant in the Building. Tenant shall not, without written consent of Landlord, use any apparatus, machinery or device in or about the Premises that will cause any substantia] noise, vibration or fumes or disturb the quiet enjoyment of any other tenant in the Building. Tenant shall observe such rules and regulations concerning Tenant's use, operations, or occupancy of the Premises, the Building Common Areas, or the Development Common Areas, as may be adopted by Landlord from time to time and made available to Tenant by written notice, so long as the same are not inconsistent with this Lease and do not materially increase Tenant's obligations or costs hereunder. Tenant, at its own expense, shall comply with all laws, rules, orders, regulations and requirements of any federal, state, county or local governmental authority (collectively, "Requirements") which impose any duty on Landlord or Tenant with respect to Tenant's use, operations, or occupancy of the Premises, including the Requirements of the Americans with Disabilities Act ("ADA"). Tenant shall indemnify, defend and hold Landlord harmless from any liabilities, damages, obligations, losses, claims, actions, costs or expenses, including attorneys' and other professional fees, arising from any violation of the Requirements that is Tenant's responsibility under this Lease.

6.  Hazardous Materials. Tenant, its officers, partners, members, employees, contractors, or agents shall not cause or permit the escape, disposal or release of any hazardous substances or materials on or in the Development, the Building or the Premises. Tenant, its officers, partners, members, employees, contractors, or agents shall not store or use such hazardous substances or materials in any manner not sanctioned by law or by the highest standards prevailing in the industry for the storage and use of such hazardous substances or materials, nor bring into the Development any such hazardous substances or materials, except in amounts which are not subject to regulation. Without limitation, hazardous substances or materials shall include those described in the Comprehensive Environmental Response. Compensation and Liability Act of 1980, as amended, 42 U.S.C. Section 9601 et seq., any applicable state or local laws and the regulations adopted under these acts. Notwithstanding the foregoing, Tenant shall be entitled to use hazardous substances at the Premises which are incidental to general office use, such as photocopier toner and cleaning supplies, so long as such use is in compliance with laws and prudent business practices.  If any lender or governmental agency shall ever require testing to ascertain whether or not there has been any release of hazardous substances or materials, then the reasonable costs thereof shall be reimbursed by Tenant to Landlord upon demand if such requirement applies to the Premises. In addition. Tenant shall execute affidavits or certifications from time to time at Landlord's request concerning Tenant's actual knowledge and belief regarding the presence of hazardous substances or materials on the Premises, (other than customary office supplies as referenced above). In all events, Tenant shall indemnify Landlord in the manner elsewhere provided in this Lease from any escape, disposal or release by Tenant, its officers, partners, members, employees, contractors, or agents of hazardous substances or materials on the Premises, the Building or the Development. The covenants and indemnities contained in this Section 6 shall survive the expiration or earlier termination of the Term.

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(a)Landlord's Right to Cure. After notice to Tenant and a reasonable opportunity for Tenant to effect such compliance, Landlord may, but is not obligated to, enter upon the Premises and take such actions and incur such costs and expenses to effect such compliance as it deems advisable to protect its interest in the Premises and the Building. However, Landlord shall not be obligated to give Tenant notice and an opportunity to effect compliance if: (i) such delay might result in material adverse harm to Landlord or the Premises, Building or Development, or (ii) an emergency exists. If it has been determined that a release of hazardous substances or materials on the Premises, the Building or Development was caused or otherwise resulted from Tenant's use, operations or occupancy of the Premises (regardless of whether Tenant knew about such release), Tenant shall reimburse Landlord for the full amount of all costs and expenses incurred by Landlord in connection with such compliance activities, and such obligation shall continue even after the expiration or earlier termination of this Lease. Tenant shall notify Landlord immediately of any emission, disposal or release of any hazardous substances or materials on the Premises.

(b)Landlord's Release. Tenant shall not be liable for. and Landlord hereby releases Tenant, its officers, partners, members and employees from all losses, costs, claims, liabilities and damages (including attorneys' and consultants' fees) of every type and nature, arising out of or in connection with any hazardous substances or materials present on or before the Commencement Date on or about the Premises, the Building or the Development, or the violation of any Requirements relating to such hazardous substances or materials, except to the extent that any of the forgoing results from the release or emission of hazardous substances or materials by Tenant its officers, partners, members, employees, contractors, or agents. Landlord confirms, to Landlord's actual knowledge as of the date hereof without any duty of investigation or injury, that Landlord has received no written notice of violations of hazardous substances laws that exist at the Premises, the Building or the Development.

c)Third Parties. If any hazardous substances or materials are used, disposed of or otherwise occurs within the Premises, the Building, or the Development due to an act or omission of a third party (i.e., a party other than described in the Tenant and Landlord indemnifications set forth above), then all costs of cleanup, repair, remediation and litigation shall be treated as an operating expense for which Tenant shall pay its Pro Rata Share, but there shall be a credit against such operating expenses to the extent Landlord receives compensation or insurance from the third party or insurer for such loss or damage.

(d)Complete Agreement. This Section 6 constitutes the entire agreement of Landlord and Tenant regarding hazardous substances and materials. No other provisions of the Lease shall apply thereto.

7.   Additional Rent.

(a)  Tenant Payment. From and after January 1, 2008, to the extent that the Actual Expenses for a calendar year exceeds the Base Amount, Tenant shall pay its Pro Rata Share of such excess as Additional Rent in the manner described below.

(b)  Definitions.

(1)  "Actual Expenses" shall mean the actual expenses paid or incurred by Landlord during any Operating Year for the Building Operating Expenses, the Building's Pro Rata Share of the Development Common Area Expenses, and Real Property Taxes.

(2)  "Base Amount" shall mean the Actual Expenses for the Base Year.

(3)   "Building Operating Expenses" shall mean all expenses paid or incurred by Landlord for maintaining, operating and repairing the Building and the personal property used in conjunction therewith, including, without limitation: the costs of refuse collection, water, sewer, electricity, gas and other utilities; supplies; janitorial and cleaning services; interior and exterior window washing; plant maintenance; services of independent contractors for maintenance and operations; compensation (including employment taxes and fringe benefits) of all persons who perform duties in connection with the operation, maintenance and repair of the Building; insurance deductibles and premiums on insurance as Landlord in its sole discretion decides to carry; licenses, permits and inspection fees; management fees; legal and accounting expenses; the amortized amount of capital improvements constructed after completion of the Building, which capital expenditures will be amortized by dividing the capital improvement costs by the useful life of the capital improvements as reasonably determined by Landlord in accordance with generally accepted accounting and management practices; Maintenance Reserves, costs arising from any Requirements requiring changes to the Building, including, without limitation, the ADA; and any other expense or charge whether or not hereinabove described, which in accordance with generally accepted accounting and management practices would be considered an expense of maintaining, operating or repairing the Building, excluding:

(A) costs to replace the foundation and structural portions of the exterior walls and roof of the Building, or to comply with any Requirement applicable to the Building or the Development Common Areas prior to the Commencement Date;

(B) payments of principal and interest charges incurred on debt, or depreciation expenses;

(C)the wages and benefits of any employee who does not devote substantially all of his or her time to the Development unless such wages and benefits are appropriately prorated;

5

(D) costs of any items for which Landlord is entitled to receive an unqualified reimbursement from insurance proceeds, from a tenant, or from any third party;

(E) legal fees and costs, settlements, judgments or awards arising out of negotiations or disputes with any other tenant or potential tenant of the Building;

(F) marketing costs, brokerage fees, leasing commissions, legal fees, advertising and promotional expenses specifically designed for marketing and letting space within the Building;

(G) costs of electrical, heating, cooling and combined utility services to th extent that such services are separately metered to a premises and paid directly by such tenant;

(H) any item of expense included in the Development Common Area Expenses or Real Property Taxes;

(I) expenses resulting from the negligence or willful misconduct of Landlord or its employees, contractors, or agents;

(J) any amount paid to any person, firm or corporation related to or otherwise affiliated with Landlord or any genera! partner, officer or director of Landlord, or any of its general partners to the extent that they exceed arms length competitive prices in the Kirkland, Washington area for the services or goods provided;

(K) Landlord's general corporate overhead and general and administrative expenses, including amounts paid to any partners, shareholders, officers and/or directors of Landlord for salary or other compensation to the extent any such amounts do not apply to the management and operation of the Building or Development, and including costs relating to maintaining Landlord's existence as a legal entity;

(L) fines, penalties, or interest incurred due to Landlord's delinquent payment of obligations; and

(M) the expense of extraordinary services provided to other tenants in the Building or Development or provided selectively to one or more tenant or occupants (other than Tenant), including without limitation, any special or excessive use of utilities, such as HVAC or electricity, by such other tenants.

(4)"Development Common Areas" shall mean the areas in the Development other than the buildings, the parking garages, the hotel and the marina.

(5)"Development Common Area Expenses'" shall mean all expenses paid or incurred by Landlord for maintaining, operating and repairing the Development Common Areas and the personal property used in conjunction therewith, including, without limitation: the cost of maintaining the asphalt drives and parking areas; refuse collection, water, sewer, electricity, gas and other utilities; supplies; janitorial and cleaning services; landscape maintenance; services of independent contractors; compensation (including employment taxes and fringe benefits) of all persons who perform duties in connection with the operation, maintenance and repair of the Development Common Areas; insurance deductibles and premiums on insurance which Landlord in its sole discretion decides to carry; licenses, permits and inspection fees; management fees; legal and accounting expenses; the amortized amount of capital improvements constructed after completion of the Development determined by dividing the capital improvement costs by the useful life of the capital improvements as reasonably determined by Landlord in accordance with generally accepted accounting and management practices; costs arising from any Requirements requiring changes in the Development or rearrangements of the Development Common Areas, including, without limitation, costs of compliance with the ADA; and any other expense or charge whether or not hereinafter described, which is in accordance with generally accepted accounting and management practices would be considered an expense of maintaining, operating or repairing the Development Common Areas, excluding:

(A) costs to replace the foundation and structural portions of the exterior walls and roof of a building in the Development, or to comply with any Requirement applicable to the Development prior to the Commencement Date;

(B) payments of principal and interest charges incurred on debt, or depreciation expenses;

(C)the wages and benefits of any employee who does not devote substantially all of his or her time to the Development unless such wages and benefits are appropriately prorated;

(D)costs of any items for which Landlord is entitled to receive an unqualified reimbursement from insurance proceeds, from a tenant, or from any third party;

(E) legal fees and costs, settlements, judgments or awards arising out of negotiations or disputes with any other tenant or potential tenant of the Development;

(F) marketing costs, brokerage fees, leasing commissions, legal fees, advertising and promotional expenses specifically designed for marketing and letting space within the Development;

(G) costs of electrical, heating, cooling and combined utility services to the extent that such services are separately metered and paid directly;

(H) Any item of expense included in Building Operating Expenses or Real Property Taxes;

(I) expenses resulting from the negligence or willful misconduct of Landlord or its employees, contractors, or agents;

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(J) any amount paid to any person, firm or corporation related to or otherwise affiliated with Landlord or any general partner, officer or director of Landlord, or any of its general partners to the extent that they exceed arms length competitive prices in the Kirkland, Washington area for the services or goods provided;

(K) Landlord's general corporate overhead and general and administrative expenses, including amounts paid to any partners, shareholders, officers and/or directors of Landlord for salary or other compensation to the extent any such amounts do not apply to the management and operation of the Building or Development, and including costs relating to maintaining Landlord's existence as a legal entity;

(L) fines, penalties, or interest incurred due to Landlord's delinquent payment of obligations; and

(M) the expense of extraordinary services provided to other tenants in the Building or Development or provided selectively to one or more tenant or occupants (other than Tenant), including without limitation, any special or excessive use of utilities, such as HVAC or electricity, by such other tenants.

(6)"Estimated Expenses" shall mean Landlord's estimate of Actual Expenses for a Operating Year minus the Base Amount multiplied by Tenant's Pro Rata Share, to be given by Landlord to Tenant pursuant to Section 7(c) below.

(7)"Maintenance Reserves" shall mean an amount established for the purpose of paying for repairs, maintenance and replacements to the Building systems in the Building or the Premises incurred on a periodic, but less frequent than annual, basis.

(8)"Occupancy Adjustment" shall mean that in the event the average occupancy level of the Building for any Operating Year, including the Base Year, was or is not one hundred percent (100%) of full occupancy, then the Actual Expenses for such year shall be proportionately adjusted by Landlord to reflect those costs which would have occurred had the Building been one hundred percent (100%) occupied during such year.

(9)"Operating Year" shall mean January 1 through December 31 of each calendar year of the Term.

(10)  "Real Property Taxes" shall mean: (i) the total amount of all real and personal property taxes, assessments, including omit tax, and other governmental impositions and charges of every kind and nature, now or hereafter imposed, including surcharges with respect to the Development (excluding the hotel and the marina) or the use, occupancy or possession thereof; and (ii) taxes on Tenant's Personal Property (as defined in Section 13), which have not been paid by Tenant directly to the taxing authority, as well as any taxes levied or assessed in addition to, in lieu of, or as a substitute for, in whole or part, taxes now levied or assessed or any other tax upon owning, leasing or rents receivable by Landlord from the Development (excluding the hotel and marina), but not including any federal or state or local income tax or inheritance, transfer, gift, succession or franchise taxes imposed on Landlord, all determined with respect to the period for which such taxes are (or would have been if timely levied) due and payable. The Real Property Taxes for the Development (excluding the hotel and marina) shall be allocated amongst the buildings in the Development (excluding the hotel and marina) on a per rentable square foot basis. All assessments shall be paid by Landlord and charged to Tenant in installments over the longest permitted term.

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(c) Manner of Payment. Tenant's payment of Additional Rent shall be made as follows:

(1)Within ninety (90) days of the commencement of each Operating Year following the Base Year, Landlord shall furnish Tenant a written statement of the Estimated Expenses for such Operating Year and a calculation of the twelve (12) monthly installments of Additional Rent to be paid by Tenant and the deficit, if any, for the first three (3) months of such Operating Year. If at any time or times during a Operating Year it reasonably appears to Landlord that the amount of Actual Expenses will vary from the Estimated Expenses by more than three percent (3%) on an annual basis, then Landlord by written notice to Tenant may revise the Estimated Expenses for such Operating Year and the monthly installments of Additional Rent made by Tenant for the balance of such Operating Year shall be thereafter based on such revised Estimated Expenses.

(2)Within ninety (90) days after the end of each Operating Year, or as soon thereafter as practicable, Landlord shall provide a statement (the "Statement") to Tenant showing: (a) the amount of Actual Expenses, with a listing of amounts of Actual Expenses in the major categories of Building Operating Expenses, Development Common Area Expenses and Real Property Taxes, (b) any amount paid by Tenant toward such Additional Rent during such Operating Year on an estimated basis, and (c) any revised estimate of Tenant's obligations for Additional Rent for the current Operating Year.

(3)If the Statement shows Tenant's estimated payments were less than Tenant's Actual Expenses, less the Base Amount, then Tenant shall pay the difference. If the Statement shows an increase from Tenant's Estimated Expenses, then Tenant shall pay the difference between the new and former estimates, for the period from January 1 of the current Operating Year through the month in which the Statement is sent. Tenant shall make such payments within thirty (30) days after Landlord sends the Statement.

(4)If the Statement shows the Tenant's Estimated Expense payments exceeded Tenant's Actual Expenses, less the Base Amount, then Tenant shall receive a credit for the difference against payments of Rent next due. If the Term shall have expired and no further Rent shall be due, Tenant shall receive a refund of such difference, within thirty (30) days after Landlord sends the Statement.

(5)So long as Tenant's obligations hereunder are not materially adversely affected thereby, Landlord reserves the right to reasonably change, from time to time, the manner or timing of the foregoing payments. In lieu of providing one (1) Statement covering Building Operating Expenses, Real Property Taxes, and Development Common Area Expenses, Landlord may provide separate statements, at the same or different times. No delay by Landlord in providing the Statement (or separate statements) shall be deemed a default by Landlord or a waiver of Landlord's right to require payment of Tenant's obligations for actual or estimated Building Operating Expenses, Real Property Taxes, or Development Common Area Expenses.

(d)Pro Ration. If the Term ends other than on December 31, Tenant's obligations to pay Estimated Expenses and actual amounts towards Additional Rent for such final Operating Year shall be prorated to reflect the portion of such year included in the Term. Such pro ration shall be made by multiplying (i) the Base Amount (as stated on an annual basis) and (ii) the total estimated or actual Additional Rent for such Operating Year, by a fraction wherein the numerator is the number of days of the Term during such Operating Year and the denominator is 365 days.

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(e)Landlord's Records. The determination of Additional Rent shall be made by Landlord. Landlord or its agents shall keep records for three (3) years after delivery of a Statement, in reasonable detail, showing all expenditures made or items enumerated in the Statement (the "Expense Information"). Such records shall be available for inspection by or on behalf of Tenant, at Tenant's cost, at Landlord's office during regular business hours and after reasonable notice, but in any event prior to the expiration of the Term. If any such inspection shows Landlord overstated Tenant's share of Additional Rent for the subject Lease Year by more than five percent (5%) of the actual amount payable by Tenant, Landlord shall reimburse Tenant for the reasonable costs and expenses of the inspection (not to exceed $ 1,000).

8.Personal Property Taxes. Tenant shall pay, prior to delinquency, all personal property taxes payable with respect to all of Tenant's Personal Property as defined in Section 13 below, located on the Premises or in the Building and promptly upon request of Landlord shall provide written proof of such payment. "Personal Property Taxes" shall include all property taxes assessed against Tenant's Personal Property, whether assessed as real or personal property.

9.Taxes on Rent. The Rent stated herein and any payment provided for in this Lease is exclusive of any sales, business and occupation or other tax or charge upon, based upon or measured by rents payable to Landlord hereunder, the number of employees of Tenant, or any other tax which is not currently in effect. If during the Term any such tax or other charge becomes payable by Landlord to any governmental authority, the Rent hereunder shall be deemed increased by such amount upon twenty (20) days' written notice by Landlord to Tenant. The foregoing does not apply to federal, state, or local income, inheritance, gift, succession or franchise taxes payable by Landlord.

10. Maintenance and Other Services Provided by Landlord. Landlord will maintain and repair the foundation, exterior walls and structural portions of the roof of the Building, the other buildings in the Development in a manner customary for Class A office buildings in the Greater Seattle area. In addition, Landlord will provide, maintain, replace the Building systems, including without limitation: electricity for lighting and standard power usage office machines; water and sewer; security system; and mechanical, cooling heating, and ventilation, at such times as the Landlord normally furnishes this service to other tenants of the Building, but in no event less than normal business hours, and at such temperatures and in such amounts as are reasonably standard for Class A office buildings in the Greater Seattle area. All services including elevator, Building access through the security system, water, and parking, but not including the cooling, heating, and ventilation systems, shall be available at all times. Normal business hours shall be from 7:00 a.m. to 6:00 p.m. on weekdays, and 8:00 a.m. to noon on Saturdays, excluding legal holidays. Landlord shall also provide daily (i.e., five days per week) janitorial service, lamp replacement for building standard lighting, toilet room supplies and perimeter window washing (at least twice annually), all with reasonable frequency customary to Class A office buildings in the Greater Seattle area. Unless charged to individual tenants (including the Tenant) as hereinafter provided, the costs of such Landlord services shall be included as "Building Operating Expenses" or "Development Common Area Expenses", as applicable, and paid as Additional Rent pursuant to Section 7. Landlord shall not be liable for any loss or damage caused by or resulting from any variation, interruption or failure of such services due to any cause whatsoever, and no temporary interruption or failure of such services incident to the making of repairs, alterations or improvements or due to accident or strike conditions shall be deemed as an eviction of Tenant or relieve Tenant from any of Tenant's obligations hereunder. For those services within Landlord's reasonable control, Landlord will take commercially reasonable steps to correct any interruption of services as soon as practicable; provided, however, in the event there is an interruption of utilities or services which materially affects Tenant's use of the Premises for more than ten (10) business days caused by the gross negligence or willful misconduct of Landlord, as Tenant's sole and exclusive remedy unless Section 35 of the Lease shall apply, in which case Tenant shall be entitled to the rights and remedies set forth therein, Tenant's Rent shall be abated until such time as the utilities or services are restored. Landlord shall provide mechanical, cooling, heating, and ventilation at times other than normal business hours upon Tenant's written request and reasonable notice to Landlord, and Tenant shall pay the reasonable cost thereof (which is currently equal to $30.00 per hour for each half of each floor in the Building. Landlord shall provide a security system (and issue cards, keys, or other appropriate access devices) which will allow Tenant access to the Premises at all times.

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If Tenant has special mechanical, cooling, heating, ventilation, electrical or other requirements, Landlord shall have the right to approve any modifications or additions to the existing Building systems, in Landlord's sole discretion. The cost of furnishing, installing, operating and maintaining such additional equipment and appurtenances to satisfy these requirements, including separate meters if requested by Landlord, shall be borne by Tenant, with Tenant either paying directly to the utility if separately metered or paying to Landlord as Additional Rent, the reasonable cost of providing such additional services.

11. Assignment and Subletting.

(a)Prior Written Consent. Without Landlord's prior written consent. Tenant shall not cause or permit, directly or indirectly, voluntarily or involuntarily, any of the following events (or any amendment to the instrument affecting the same): (i) sale, assignment, hypothecation, mortgage, encumbrance, conveyance or other transfer of the Lease (or any interest therein); (ii) a sublease of the Premises or any portion thereof; or (iii) the use and/or occupancy of the Premises or any portion thereof by anyone other than Tenant (individually referred to as a "Transfer"). Notwithstanding the foregoing, and subject to subsection (d) below. Tenant's subleasing of the Premises to an affiliated entity, or the assignment this Lease to an affiliated entity or a successor entity related to Tenant by a purchase of substantially all of the Tenant's assets, a merger or consolidation, non-bankruptcy reorganization, or government action (individually referred to as an "'Allowed Transfer"), shall not constitute a "Transfer" for the purpose of this Lease. As used herein, an "affiliated entity" means an entity which controls, is controlled by or is under common control with Tenant.

(b)Approval Process. If Tenant desires the consent of Landlord to a Transfer, Tenant shall submit to Landlord the following items:

(1)A copy of the proposed sublease, assignment, or other transfer agreement at least fifteen (15) days (but no more than 180 days) prior to the proposed effective date of such instrument. As a condition precedent to any Transfer being effective, the instrument (with this Lease as an Exhibit thereto) shall provide that the sublessee or assignee (the "Transferee") is bound by all of the provisions, terms, covenants, and conditions of this Lease (other than, in the case of a sublease, payment of Rent or provisions relating to spaces not covered by the sublease), that Tenant (and all guarantors) shall continue to be and remain liable hereunder jointly and severally with the Transferee, and that Landlord's consent to the Transfer shall not be deemed a consent to any subsequent Transfer;

(2)A copy of all material changes to or modifications of the proposed sublease, assignment or other transfer agreement promptly if and when made;

(3)An original or a copy of the final sublease, assignment or other transfer agreement, duly executed and acknowledged by the Tenant and the proposed Transferee, at least five (5) business days prior to the proposed effective date of such assignment, sublease, or other transfer agreement; and

(4)Any other items or information Landlord may reasonably request, including, without limitation, sufficient information to permit Landlord to determine acceptability of the financial wherewithal and character of the proposed Transferee.

(c) Limitation of Landlord's Withholding of Consent. Landlord shall not unreasonably withhold or delay its consent to or approval of any proposed Transfer if all of the following conditions are fully satisfied:

(1)Tenant is not in default of its obligations under this Lease at the time of Tenant's request, unless curing such default is a condition to the effectiveness of the proposed Transfer;

(2)The use and occupancy of the Premises by the Transferee is consistent with applicable zoning, the applicable Requirements, and is consistent with the nature of Development as a Class A mixed-use office, hotel and retail complex;

(3)The proposed assignment or sublease does not conflict with or cause Landlord to be in default under any provision of any other lease for any other part of the Development;

(4)The Transferee (and its guarantors, if any,) has or have the financial wherewithal to fully perform the obligations with respect to the proposed assignment, sublease or transfer agreement, taking into consideration all relevant factors; and

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(5)The form and substance of all proposed assignments, subleases, and transfer documents are consistent with the terms of this Lease, and provide that Landlord's consent to the Transfer shall not be deemed a consent to any subsequent Transfer.

(d) Allowed Transfer Requirements. For an Allowed Transfer to be valid and effective, the following conditions must be fully satisfied:

(1) Tenant is not in default of its obligations under this Lease at the time of the Allowed Transfer;

(2)Landlord must have received written notice of Tenant's exercise of its right to enter into an Allowed Transfer, including the name and address of the Transferee, or the related or successor entity;

(3)Tenant shall have provided Landlord with a copy of the proposed sublease, assignment or transfer agreement which states the effective date of the Allowed Transfer; and

(4) Tenant shall have received no monetary consideration for the Lease; and

(5) If Tenant has subleased or assigned this Lease to a parent, subsidiary or affiliate of Tenant, evidence that the Transferee or the related successor entity has the same or better financial position as the Tenant had of the date that it executed this Lease.

(e)Processing Fee. Tenant shall pay Landlord a reasonable fee to review the Transfer or an Allowed Transfer documentation submitted to Landlord not to exceed $2,500.00. Such fee shall cover the direct and indirect costs and expenses incurred by Landlord in connection with such review, including, but not limited to the following: wages, salaries, and benefits of Landlord's employees, fees for services rendered and costs advanced by architects, engineers, space planners, landscape architects, construction managers, attorneys, real estate consultants, and other professionals; copying and messenger fees; general and administrative expenses.

(f)Subleasing Profits. Except in the case of an Allowed Transfer, fifty percent (50%) of any rent, additional rent, fee or charge collected by Assignee in excess of the Rent due under the Lease as described in Sections 3 and 7. shall be payable to Landlord as it is collected by Tenant.

(g) Recapture.

(1)If Tenant wishes to assign the Lease in its entirety to an unaffiliated third party (an "Assignment"), such Assignment shall be subject to Landlord's right to recapture.

(2)If Landlord intends to exercise its right to recapture, Landlord will give notice of such intent within thirty (30) days after Landlord becomes aware that Tenant has notified Landlord that Tenant intends to enter into an Assignment, or within thirty (30) days after Tenant has requested Landlord's consent to a proposed Assignment, whichever occurs last.

(3)If Landlord exercises its right to recapture, Tenant's right to occupy and/or use the Premises shall terminate on the proposed effective date of the Assignment (the "Recapture Date").

(4)If Landlord exercises its right to recapture, Tenant's obligation to pay Rent for the Recaptured Space shall terminate on the earlier of: the Recapture Date; or ninety (90) days after Landlord exercises its right to recapture.

12.Care of Premises. Tenant shall keep the Premises in a reasonably neat, clean and sanitary condition and shall at all times preserve them in the same condition as when received, ordinary wear and tear or damage due to casualty or condemnation excepted. If Tenant shall fail to do so, and after expiration of Tenant's cure period, Landlord may at its option place the Premises into said condition and state of repair, and in such case, the Tenant shall pay the costs thereof within thirty (30) days of Landlord's written demand (with reasonable accompanying documentation). Tenant shall reimburse Landlord for the cost of replacing all broken interior or exterior glass with glass of same or similar quality, subject to Section 18(d). Tenant shall have no responsibility to perform, repair, maintain or improve any Building system serving the Premises which is located outside the demising walls of the Premises or does not exclusively serve the Premises. Landlord shall perform such work and the cost of such work shall be included in Building Operating Expenses and/or Development Common Area Expenses, as applicable.

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13.Surrender of Possession. Subject to the terms of Section 16 relating to damage and destruction, and Section 21 relating to condemnation, upon expiration or termination of the Term of this Lease, whether by lapse of time or otherwise (including any holdover period), Tenant at its expense shall: (1) remove Tenant's personal property that (A) was installed by Tenant and (B) is not attached to the Premises or the removal of which will not damage the Premises, including, but not limited to: wires, data and voice cabling and appurtenant installations related thereto including, without limitation plenums and/or risers (the "Wires"'); furniture; equipment; inventory, and all other personal property located on the Premises (collectively, 'Tenant's Personal Property"); (2) repair and restore the Premises to a condition as good as received by Tenant from Landlord or as thereafter improved, reasonable wear and tear excepted; and (3) promptly and peacefully surrender the Premises (including surrender of all Tenant Improvements and/or other alterations, additions or improvements installed in the Premises, except Tenant's Personal Property that does not become part of the Building). Any of Tenant's Personal Property left on the Premises after the expiration or termination of the Term shall be deemed to have been abandoned and the property of Landlord to dispose of as Landlord deems expedient, and Tenant shall be liable for all costs associated with the disposal of such Tenant's Personal Property. Notwithstanding the forgoing: (1) Landlord shall have the right, within thirty (30) days prior to the expiration or termination of the Term of this Lease, to notify Tenant that it intends to reuse all or any portion of the Wires, and in such event such Wires shall remain in the Premises upon surrender; and (2) if the Premises have been improved with Non­standard Items (and Tenant has been notified that of such Non-Standard Items, as set forth below), Tenant shall reimburse Landlord for its actual and reasonable costs to replace all such Non-Standard Items with Building Standard Items, as defined in Section 14 of this Lease, within thirty (30) days of receipt of an invoice therefor.

14.Alterations. Tenant shall make no additions, changes, alterations or improvements (collectively, "Alterations") to the Premises which exceed the cost of $ 1.00 per foot over the Term, without the prior written consent of Landlord, which shall not be unreasonably withheld or delayed. In addition, Tenant shall make no Alternations to the Premises which include Non-Standard Items, as defined below, which impact or involve any structural components or the exterior design of the Building, or which require modification of the electrical or mechanical systems pertaining to the Building or the Premises, without the prior written consent of Landlord, which consent may be withheld in Landlord's reasonable discretion.

(a)All Alterations shall be consistent with building standard: ceiling suspension systems and ceilings; fluorescent light fixtures; mechanical cooling, heating and ventilation unit covers; millwork detail; doors and door sills; hardware; hard surface floor tile; and base trim and all materials used shall be of a quality comparable to those in the Premises and Building ("Building Standard Items"). Tenant shall submit to Landlord no later than thirty (30) days before commencing construction of an Alteration Tenant's plans and/or specifications. To the extent any proposed item of an Alteration is not consistent with Building Standard Items. Landlord shall advise Tenant in writing concurrently with Landlord's consent to the proposed Alterations and in any event prior to the date that Tenant commences construction of such Alterations (collectively, "Non-Standard Items").

(b)Tenant shall pay Landlord a reasonable fee to review Tenant's plans and specifications, to inspect the Alterations, and (if Landlord requires that the Alterations be performed under Landlord's supervision) to supervise the Alterations; such amount shall be no less than the amount necessary to cover all direct and indirect costs and expenses incurred by Landlord in connection with such review, inspection, and supervision, including, but not limited to the following: wages, salaries, and benefits of Landlord's employees; fees for services rendered and costs advanced by architects, engineers, space planners, landscape architects, construction managers, attorneys, real estate consultants, and other professionals; copying and

messenger fees; and general and administrative expenses; etc. All Alterations shall be performed in a good and workmanlike manner and shall be in accordance with plans and specifications approved by Landlord, and Landlord may require that all such Alterations be performed under Landlord's supervision. If Landlord consents to and/or supervises any such Alterations by Tenant, the same shall not be deemed a warranty as to the adequacy of the design, workmanship or quality of materials, and Landlord hereby expressly disclaims any responsibility or liability for the same, except for Landlord's negligent supervision. Landlord shall under no circumstances have any obligation to repair, maintain or replace any portion of the Alterations.

(c) During the construction of Alterations, Tenant shall maintain a safe working environment, including the continuation of all fire and security protection devices, if any, previously installed in the Premises by Landlord.

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15. Entry and Inspection. Landlord, after not less than 24 hours notice and at reasonable times may enter the Premises for the purpose of inspecting, altering or improving the Premises or the Building subject to Tenant's reasonable security measures; provided, however, in the event of an emergency, Landlord may immediately enter the Premises, without notice. Nothing in this Section shall impose upon Landlord any obligation not expressly imposed elsewhere in this Lease. Landlord shall have the right at reasonable times to enter the Premises for the purpose of showing the Premises to prospective purchasers and lenders and to prospective tenants during the period beginning one hundred and eighty (180) days prior to a the expiration or sooner termination of this Lease.

16. Damage or Destruction.

(a)  Damage and Repair. In case of damage to the Premises or the Building by fire or other casualty, Tenant immediately shall notify Landlord.

(i)  If the cost of restoration as estimated by Landlord shall amount to less than twenty-five percent (25%) of said replacement value of the Building and insurance proceeds sufficient for restoration (including the amount of any deductibles and coinsurance amounts collected by Landlord as Building Operating Expenses) are available, then Landlord shall restore the Building and the Premises to the extent that the improvements to the Premises were either originally provided by Landlord or insured by Landlord, with reasonable promptness, subject to Force Majeure delays and to delays in the making of insurance adjustments, and Tenant shall have no right to terminate this Lease.

(ii)  If the Building is damaged by fire or any other cause to such extent that thecost of restoration, as reasonably estimated by Landlord, will equal or exceed twenty five percent (25%) of the replacement value of the Building, or if insurance proceeds sufficient for full restoration (including the amount of any deductibles and coinsurance amounts collected by Landlord as Building Operating Expenses) are unavailable for any reason, then Landlord, no later than the sixty (60) days following the date of the damage, shall give Tenant a notice of election to either terminate this Lease or to restore the Building to the extent that the improvements were either originally provided by Landlord or insured by Landlord (which notice will include Landlord's reasonable estimate of the time to complete such repairs or restoration), in which case this Lease shall remain in full force and effect.

(iii) Notwithstanding subsection (i) and (ii) above, in the event the Building is damaged such that it in Landlord's reasonable opinion it would take more than three hundred and sixty-five (365) days from the date of such damage to restore the Building, then either Landlord or Tenant may elect to terminate this Lease in the manner provided herein. Landlord shall notify Tenant no later than sixty (60) days following the date of the damage if Landlord concludes the time to complete restoration of the Building will exceed 365 days. Landlord may include in such notice that it desires to terminate the Lease; provided, however, if the Landlord's notice does not include a termination, Tenant may terminate the Lease, by giving written notice to the Landlord within ten (10) days thereafter. In the event either party elects to terminate the Lease. Tenant shall surrender possession of the Premises within a reasonable time thereafter, and the Rent shall be apportioned as of the date of Tenant's surrender and any Rent paid for any period beyond such date shall be repaid to Tenant.

(b)Rent Abatement; Business Interruption. In the event of repair, reconstruction and restoration by or through Landlord as herein provided, the Basic Rent, Additional Rent and any other charges (including, without limitation, parking charges) payable under the Lease shall be abated proportionately to the degree to which Tenant's use of the Premises is materially impaired during the period of such repair, reconstruction or restoration. Except for such rent abatement, no damages, compensation or claim shall be payable by Landlord for inconvenience, loss of business or annoyance arising from any repair or restoration of any portion of the Premises or the Building. Landlord shall use commercially reasonable efforts to affect such repair promptly.

(c)Tenant Improvements - Alterations - Tenant's Personal Property. Landlord will carry insurance on the improvements constructed in the Premises. Landlord shall not carry, and Tenant shall be responsible for insurance coverage for any Alterations and Tenant's Personal Property. Landlord shall not be obligated, and Tenant shall repair any damage thereto or replace the same.

17. Indemnification. Tenant shall indemnify, hold harmless and defend Landlord from and against all liabilities, damages, obligations, losses, claims, actions, costs, or expenses, including attorneys' and other professional fees, in conjunction with loss of life, personal injury and/or property damage arising out of the occupancy or use by Tenant of any part of the Premises, the Building or the Development, occasioned wholly or in part by any act or omission of Tenant or its officers, partners, members, contractors, licensees, agents, servants, employees, guests, invitees or visitors, except to the extent caused by or resulting from the negligence or willful misconduct of Landlord or its employees or agents. The foregoing provisions shall not be construed to make Tenant responsible for loss, damage, liability or expense resulting from injuries to third parties caused by the gross negligence or willful misconduct of Landlord, its agents or employees or other tenants of the Building. Landlord shall not be liable for any loss or damage to persons or property sustained by Tenant or other persons, which may be caused by theft, or by any act or neglect of any tenant or occupant of the Building or the Development or any other third parties as set forth herein.

18.  Insurance.

(a)Liability Insurance. Throughout the term of this Lease and any renewal or extension hereof, Tenant at its own expense, shall keep and maintain in full force and effect, a policy of commercial general liability insurance on an occurrence form including a contractual liability endorsement covering Tenant's obligations under Section 17. insuring Tenant's activities upon, in or about the Premises, the Building or the Development against claims of bodily injury or death or property damage or loss with a limit of not less than Two Million Dollars ($2,000,000) combined single limit per occurrence and in the aggregate (per policy year) which shall be primary and noncontributory. General Aggregate shall apply on a per location basis. In addition, Tenant shall maintain statutory workers' compensation insurance and employer's liability insurance with statutory limits as required in the state and commercial automobile liability insurance in a form providing coverage not less than the standard commercial automobile liability ISO form CA 00 01 06 92 (or its equivalent) covering all owned, non-owned, borrowed and hired automobiles in a limit of no less than $1,000,000 per occurrence.

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(b)Property Insurance. Throughout the term of this Lease and any renewal hereof, Tenant at its own expense, shall keep and maintain in full force and effect what is commonly referred to as "all risk" coverage insurance or its equivalent (but excluding earthquake and flood) on Tenant's Alterations and Tenant's Personal Property, in an amount not less than the current 100% replacement value thereof.

(c)Insurance Policy Requirements. All insurance required under this Section shall be with companies rated AX or better in Best's Insurance Guide. No insurance policy required under this Section shall be canceled or reduced in coverage and each insurance policy shall provide that it is not subject to cancellation or a reduction in coverage except after thirty (30) days prior written notice to Landlord. Tenant shall deliver to Landlord prior to its entry into the Premises, or the Commencement Date, whichever occurs first, and from time to time thereafter, copies of policies of such insurance or certificates evidencing the existence and amounts of same and naming Landlord and Landlord's Mortgagee (if such Mortgagee is identified to Tenant) as an additional insureds thereunder. The limits of any required insurance policy shall not limit the liability of Tenant under this Lease.

(d)Waiver of Subrogation. Notwithstanding any other provision to the contrary herein, Landlord and Tenant release each other, their agents and employees from liability and waive all right of recovery against each other for any property loss from perils insured against under their respective policies for damages caused by fire or other perils that are covered by insurance (or should have been covered if Tenant carried the insurance required to be carried by this Lease and Landlord carried the insurance that is typically carried by reasonably prudent owners of buildings or developments similar in size, type, location and quality as the Building and Development), regardless of any fault or negligence. Deductibles under any such policies shall be deemed to be self insured and shall be included within such waiver of subrogation. Each party shall use reasonable efforts to cause its insurance carriers to consent to the foregoing waiver of rights of subrogation against the other party and shall promptly inform the other if its insurance company refuses to do so. Notwithstanding the foregoing, no such release shall be effective unless and to the extent the aforesaid insurance policy or policies expressly permit such release or contain a waiver of the carrier's right to be subrogated.

(e)Landlord's Insurance. Landlord agrees to maintain such property insurance on the Building which is required by Landlord's first mortgage lender (which currently is carried at 100% replacement cost on a blanket basis with Landlord's other properties), or if no such loan exists, such casualty insurance and all-risk property damage insurance as is determined by Landlord as appropriate to protect against casualty loss and property damage, which shall be consistent with the property insurance typically carried by reasonably prudent owners of buildings or developments similar in size, type, location and quality as the Building and Development. In addition, Landlord shall carry commercial liability insurance in commercially reasonable amounts, consistent with what that is typically carried by reasonably prudent owners of buildings or developments similar in size, type, location and quality as the Building and Development. The cost of such insurance and any other form of insurance carried by Landlord with respect to the Building or the Development shall be included as either part of the Building Operating Expenses or the Development Common Area Expenses.

19. Advertising and Signs. Tenant shall not place on the exterior of the Premises or the Building, or any exterior door or wall or the exterior or interior of any window thereof, or any part of the interior of the Premises visible from the exterior thereof, any sign or advertising matter and shall not place any decoration, letter or other thing of any kind on the glass of any window or door of the Premises, without the prior written consent of Landlord. With respect to any sign or advertising matter or decoration approved by Landlord, Tenant at its sole cost and expense shall maintain the same in good condition and repair at all times. Landlord hereby reserves the exclusive right to use for any purpose whatsoever the roof and exterior of the walls of the Premises or the Building. Landlord reserves the right to temporarily remove Tenant's sign during any period when Landlord repairs, restores, constructs or renovates the Premises or Building. Landlord shall have the right to prohibit any advertising by Tenant that, in Landlord's reasonable opinion, tends to impair the reputation of the Building as a Class A office building. Upon the expiration or sooner termination of this Lease, Tenant at Landlord's request shall remove all signs, advertising matters or decorations at its sole cost and expense and repair any resulting damage to the Premises.

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20.  Insolvency and Liens.

(a)Insolvency. If Tenant becomes insolvent, or voluntarily or involuntarily bankrupt, or if a receiver, assignee or other liquidating officer is appointed for the business of Tenant, and any of the foregoing is not dismissed within sixty (60) days thereafter. Landlord at its option may terminate this Lease and Tenant's right of possession under this Lease and in no event shall this Lease or any rights or privileges hereunder be an asset of Tenant in any bankruptcy, insolvency or reorganization proceeding. In the event of an assumption or assignment by operation of law under the federal Bankruptcy Code or any state bankruptcy or insolvency law and Landlord elects (or is otherwise prevented from electing) not to terminate this Lease, the trustee in assuming this Lease or any assignee thereof shall (a) remedy the Tenant's prior default under this Lease, (b) be bound by and assume all of the terms and conditions of this Lease, (c) provide adequate assurances of future performance of all the terms, conditions and covenants of this Lease, which shall include making the following express covenants to the Landlord; (1) there is sufficient capital to pay all Rent due under the Lease for the entire Term, (2) assumption of the Lease by any assignee will not cause Landlord to be in violation or breach of any provision of any existing lease, finance agreement, or operating agreement concerning or in the Development, and (3) such assumption or assignment by the assignee will not substantially disrupt or impair any existing tenant mix or development plans for the Building or Development.

(b)Liens. Tenant shall not permit any lien to be filed against the Development or the Building by reason of obligations incurred by or on behalf of Tenant. Tenant hereby indemnifies and holds Landlord harmless from any liability from any such lien. If any lien is filed against the Development, or the Building by any person claiming by. through or under Tenant, Tenant shall upon request of Landlord, at Tenant's expense, immediately furnish to Landlord a bond in form and amount and issued by a surety satisfactory to Landlord, indemnifying Landlord against all liability, costs and expenses, including attorneys' fees, which Landlord may incur as a result thereof. Provided that such bond has been furnished to Landlord, Tenant, at its sole cost and expense and after written notice to Landlord, may contest, by appropriate proceedings conducted in good faith and with due diligence, any lien, encumbrance or charge against the Development or the Building rising from work done or materials provided to and for Tenant, if, and only if, such proceedings suspend the collection thereof from Landlord and neither the Development or the Building nor any part thereof or interest therein is or will be in any danger of being sold, forfeited or lost.

21. Condemnation.

(a)Entire Taking. If fifty-one percent (51 %) or more of the Premises is taken by eminent domain, this Lease shall automatically terminate as of the date title vests in the condemning authority and all Rent and other payments shall be paid to that date.

(b)Partial Taking. In the event of a taking of fifty percent (50%) or less of the Premises, or a portion of the Building or the Development Common Areas not required for the reasonable use of the Premises, this Lease shall continue in full force and effect, and to the extent applicable, Basic Rent shall be equitably reduced based on the proportion by which the floor area of the Premises is reduced, and Additional Rent shall be adjusted based on a recalculation of the Building's Pro Rata Share. Rent adjustment shall be effective as of the date title to such portion vests in the condemning authority. In the event of a taking of a portion of the Building or the Development Common Areas required for the reasonable use of the Premises, which cannot be restored or reconstructed except as to materially alter the use of the Premises, either Landlord or Tenant may terminate this Lease by notifying the other party of such termination within sixty (60) days prior to the anticipated date of vesting of title; and this Lease shall expire on the date vesting of title and the Rent hereunder shall be apportioned as of such date.

(c)Awards and Damages. Landlord reserves all rights to damages to the Premises, the Building or the Development for any partial or entire taking by eminent domain, and Tenant hereby assigns to Landlord any right Tenant may have to such damages or award (except for Tenant's Personal Property and moving expenses Tenant is entitled to as a separate award under state law), and Tenant shall make no claim against Landlord or the condemning authority for damages for termination of the leasehold interest. Tenant shall have the right, however, to claim and recover from the condemning authority compensation for any loss to which Tenant may be put but only to the extent that such loss is awarded separately in the eminent domain proceedings and not out of or as part of damages recoverable by Landlord.

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22.  Default.

(a)Cumulative Remedies. All rights and remedies of Landlord herein enumerated shall be cumulative, and none shall exclude any other right or remedy allowed by law. Notwithstanding the foregoing, Landlord hereby waives any statutory lien rights Landlord may have as to Tenant's client files, records or legal documents.

(b)Tenant's Right to Cure. Tenant shall have a period of five (5) days from the date of written notice from Landlord to Tenant that such payment is past due within which to cure any default in the payment of Rent, and other sums due hereunder. Tenant shall have a period of thirty (30) days from the date of written notice from Landlord to Tenant within which to cure any other default hereunder, but with respect to any such default that cannot reasonably be cured within thirty (30) days, the default shall not be deemed to be uncured if Tenant commences to cure within a reasonable time not to exceed thirty (30) days and for so long as Tenant is diligently prosecuting the cure thereof.

(c)Vacation and Abandonment Vacation shall mean a prolonged absence from the Premises without continued payment of Rent. Abandonment shall mean an absence from the Premises of five (5) days or more while Tenant is in default. Any vacation or abandonment by Tenant shall be considered a default with no right to cure, allowing Landlord to re-enter the Premises under this Section 22.

(d)Landlord's Re-entry. Upon a default by Tenant and the expiration of the applicable cure period. Landlord, besides other rights or remedies it may have, at its option, may terminate Tenant's right to possession of the Premises without terminating this Lease and may enter the Premises or any part thereof, either with or without process of law, and expel, remove or put out Tenant or any other persons who may be thereon, together with all personal property found therein and as agent of Tenant, relet the Premises or any part thereof for such term or terms (which may be for a term less than or extending beyond the term hereof), and at such rental or rentals and upon such other terms and conditions as Landlord in its sole discretion may deem advisable, with the right to repair, renovate, remodel, redecorate, alter and change the Premises, Tenant remaining liable for any deficiency computed as hereinafter set forth; or Landlord may terminate this Lease and relet the Premises for the Tenant's account. In the case of any termination or re-entry and/or disposition by summary proceedings or otherwise, all Rent shall become due thereupon and be paid up to the time of such termination, re-entry or dispossession together with such expenses as Landlord may incur for reasonable attorneys' fees, advertising expense, brokerage fees and/or putting the Premises in good order or preparing the same for re-rental, together with interest thereon as provided in Section 22(f) hereof, accruing from the date of any such expenditure by Landlord.

(e)Reletting the Premises. At the option of Landlord, rents received by Landlord from such reletting shall be applied first to the payment of any indebtedness from Tenant to Landlord other than Rent; second, to the payment of any costs and expenses of such reletting and including, but not limited to, attorneys' fees, advertising fees and brokerage fees, and to the payment of any repairs, renovations, remodeling, redecoration. alterations and changes in the Premises: third, to the payment of Rent due and to become due hereunder, and. if after so applying said rents there is any deficiency in the Rent to be paid by Tenant under this Lease. Tenant shall pay any deficiency to Landlord monthly on the dates specified herein and any payment made or suits brought to collect the amount of the deficiency for any months shall not prejudice in any way the right of Landlord to collect the deficiency for any subsequent month. Landlord shall take reasonable steps to relet the Premises as required by law. The failure or refusal of Landlord to relet the Premises or any part or parts thereof shall not release or affect Tenant's liability hereunder, nor shall Landlord be liable for failure to relet, or in the event of reletting, for failure to collect the rent thereof, and in no event shall Tenant be entitled to receive any excess of net rents collected over sums payable by Tenant to Landlord hereunder. No such re-entry or taking possession of the Premises shall be construed as an election on Landlord's part to terminate this Lease unless a written notice of such intention be given to Tenant. Notwithstanding any such reletting without termination, Landlord may at any time thereafter elect to terminate this Lease for such previous breach and default. Should Landlord at any time terminate this Lease by reason of any default, in addition to any other remedies it may have, it may recover from Tenant the present value of the amount of Rent reserved by this Lease for the balance of the Term, as it may have extended, over the then fair market rental value of the Premises for the same period, plus all expenses, including court costs and attorneys* fees incurred by Landlord in the collection of the same discounted to present value.

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(f)Right to Perform. If Tenant shall fail to pay any sum of money, required to be paid by Tenant to a person or entity other than Landlord or shall fail to perform any other act to be performed by Tenant hereunder, and such failure shall continue for ten (10) days after notice thereof by Landlord, Landlord may, but shall not be obligated so to do, and without waiving or releasing Tenant from any obligations of Tenant, make any such payment or perform any such other act on Tenant's part to be made or performed as provided in this Lease. Notwithstanding any other provision hereof. Landlord may undertake repairs in an emergency or to prevent further damage to the Building or Premises without delivery of notice and expiration of the cure period. Landlord shall have (in addition to any other right or remedy of Landlord), the same rights and remedies in the event of the nonpayment of sums due under this Section as in the case of default by Tenant in the payment of Rent.

(g) Late Payments. All Rent or other payments that have not been paid within three (3) days of the due date shall bear interest from the date due at twelve percent (12%) per annum or the maximum permitted by law whichever is less. In addition to any interest that may be charged hereunder, if Tenant has been late in any payment more than three (3) times in any twelve (12) month period, then Landlord, at its option, may collect from Tenant a service charge for the collection of any subsequent payment during that twelve (12) month period which is not made within five (5) days of the due date in the amount equal to four percent (4%) of the amount due.

23.Subordination to Mortgage. This Lease shall be subordinate to any mortgage or deed of trust placed at any time on the Building or the Development by Landlord and to any and all advances to be made thereunder and to interest thereon and all modifications, renewals and replacements or extensions thereof ("Landlord's Mortgage'*), but Tenant's rights under this Lease and Tenant's possession of the Premises shall not be disturbed so long as Tenant performs all its obligations under this Lease. At the request of the holder of a Landlord's Mortgage (the "Holder"), Tenant agrees to execute the Holder's standard form of subordination, attornment, and nondisturbance agreement (the "SNDA") acceptable to Tenant, and Tenant's agreement to subordinate to any future Landlord's Mortgage is conditioned upon the Holder's execution of such SNDA. Landlord and Tenant acknowledge that the current Holder's form of SNDA is attached hereto as Exhibit F. If the Holder wishes to have this Lease as a prior lien to the Landlord's Mortgage, it shall be so deemed upon the Holder so notifying Tenant. Tenant in any event shall not terminate this Lease on account of a foreclosure of Landlord's Mortgage or exercise of power of sale under Landlord's Mortgage or deed in lieu of foreclosure, and Tenant shall attorn to the transferee of the Building or Development upon such foreclosure, exercise of power, sale or deed in lieu of foreclosure upon the request of that transferee, so long as such transferee recognizes Tenant's rights under this Lease and right to possess the Premises, so long as Tenant is not in default under this Lease beyond any applicable notice and cure periods. Tenant shall properly execute and deliver within ten (10) days of written notice any documents (in form and substance reasonably acceptable to Tenant) Landlord or Holder may reasonably require to carry out the provisions of this Section 23. Notwithstanding anything to the contrary in this Section 23, or Exhibit F. in no event will Tenant be required to execute any documents referenced in this Section 23, including without limitation, the SNDA attached hereto as Exhibit F. without a reasonable opportunity to negotiate commercially reasonable modifications to such documents with the applicable Holder or other party to such documents, provided that. Tenant shall provide such Holder or other party with any proposed modifications promptly (and in any event within the ten (10) day period referenced above). Tenant will cooperate with Landlord and such Holder or other party to finalize any such documents as soon as reasonably practicable, using all commercially reasonable diligent efforts.

24.Mortgagee Protection. Tenant agree to give any Holder, by registered mail, a copy of any notice of default served upon the Landlord, provided that prior to such notice Tenant has been notified in writing (by way notice of assignment of rents and leases, or otherwise) of the address of such Holder. If Landlord shall have failed to cure such default within thirty (30) days the Holder shall have an additional thirty (30) days within which to cure such default or if such default cannot be cured within that time, then, such additional time as necessary to cure such default (including the time necessary to foreclose or otherwise terminate its Encumbrance, if necessary to effect such cure), and this Lease shall not be terminated so long as such remedies are being diligently pursued.

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25.Holdover. Tenant is not authorized to hold over beyond the expiration or earlier termination of the Lease Term. If Landlord consents to a holdover and no other agreement is reached between Tenant and Landlord concerning the duration and terms of the Holdover, Tenant's holdover shall be a month-to-month tenancy. During such tenancy, Tenant shall pay to Landlord One Hundred Fifty Percent (150%) of the rate of Basic Rent in effect on the expiration or termination of the Term plus all Additional Rent and other sums payable under this Lease, and shall be bound by all of the other covenants and conditions specified in this Lease, so far as applicable. If Landlord does not consent to the Tenant's remaining in possession, Landlord shall have all the rights and remedies provided for by law and this Lease, including the right to recover consequential damages suffered by Landlord in the event of Tenant's wrongful refusal to relinquish possession of the Premises. The Basic Rent applicable for the period that Tenant wrongfully remains in possession shall be increased to twice the rate of Basic Rent in effect on the expiration or termination of the Lease Term

26.Agent. Landlord has appointed Skinner Development Company ("SDC") as its agent in all matters concerning this Lease, and the Tenant, until notified in writing to the contrary, shall pay all rent and give any notices hereunder to SDC at the address listed below. As long as such agency shall exist, each and every term and provision of this Lease that is in any way beneficial to Landlord, including any limitation of liability, shall inure to the benefit of SDC and its agents and shall be applicable to SDC and its agents in the same manner as fully and with the same effect as Landlord. Tenant may rely without further inquiry upon the authority of Skinner Development Company.

27.Notices. All notices under this Lease shall be in writing and delivered in person or sent by air courier or registered or certified mail, return receipt requested, postage prepaid, to Landlord and to Tenant at the addresses listed below, and to the holder of any first mortgage or deed of trust at such place as such holder shall specify to Tenant in writing; or such other addresses as may from time to time be designated by any such party in writing. Notices mailed as aforesaid shall be deemed given at the earlier of three (3) business days after the date of such mailing, one (1) business day after being sent by air courier or upon the date of receipt.

28.Costs and Attorneys' Fees. If Tenant or Landlord shall bring any action arising out of this Lease, the losing party shall pay the prevailing party a reasonable sum for attorneys' fees in such suit, at trial and on appeal, and such attorneys' fees shall be deemed to have accrued on commencement of such action.

29.Estoppel Certificates. Tenant shall, from time to time, upon written request of Landlord, execute, acknowledge and deliver to Landlord or its designee a written statement stating (or modified as appropriate to be factually correct): (i) the date this Lease was executed and the date it expires; (ii) the date the Term commenced and the date Tenant accepted the Premises; (iii) the amount of Rent and date of which such Rent has been paid (iv) to Tenant's knowledge this Lease is in full force and effect and has not been assigned, ratified, supplemented or amended in any way (or specifying the date and terms of any agreement so affecting this Lease); (v) this Lease represents the entire agreement between the parties as to the Premises; (vi) all conditions under this Lease to be performed by the Landlord have been satisfied, including, without limitation, all co­tenancy requirements, if any; (vii) all required contributions by Landlord to Tenant on account of Tenant's improvements have been received; (viii) that as of the date of such request there are no existing claims, defenses or offsets which the Tenant has against the enforcement of this Lease by the Landlord; (ix) no Rent has been paid more than one month in advance; (x) the amount of the security deposit held by Landlord; and (xi) any other information or items reasonably requested by the Holder of Landlord's Mortgage. Landlord's existing Holder currently requests the form attached hereto as Exhibit G. It is intended that any such statement delivered pursuant to this Section 29 may be relied upon by a prospective purchaser of Landlord's interest, a prospective Holder, or assignee of any mortgage upon Landlord's interest in the Building. If Tenant shall fail to respond within ten (10) days of receipt by Tenant of a written request by Landlord as herein provided. Tenant shall be deemed to have given such certificate as above provided without modification and shall be deemed to have admitted the accuracy of any information supplied by Landlord to a prospective purchaser or Holder.

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30.Limitation of Liability. Notwithstanding any other Lease provision, all covenants, undertakings and agreements herein made on the part of Landlord are made and intended not as personal covenants, undertakings and agreements for the purpose of binding Landlord personally or the assets of Landlord except Landlord's interest in the Development as described on Exhibit A-l. but are made and intended for the purpose of binding only the Landlord's interest in the Development described on Exhibit A-1, as the same may from time to time be encumbered. No personal liability or personal responsibility is assumed by, nor shall at any time be asserted or enforceable against Landlord or its partners, shareholders, directors and officers or their respective heirs, legal representatives, successors or assigns on account of the Lease or on account of any covenant, undertaking or agreement of Landlord in this Lease contained.

31.Transfer of Landlord's Interest. In the event of any transfer or transfers of Landlord's interest in the Development, other than a transfer for security purposes only, the transferee shall be deemed to have assumed the obligations and liabilities of Landlord as of the date of such transfer and the transferor shall be automatically relieved of any and all obligations and liabilities on the part of Landlord accruing from and after the date of such transfer and such transferee shall have no obligation or liability with respect to any matter occurring or arising prior to the date of such transfer. Tenant agrees to attorn to the transferee, so long as such transferee assumes and agrees to perform ail obligations of Landlord to be performed from and after the date of transfer.

32.Nonwaiver. Waiver by Landlord or Tenant of any term, covenant or condition herein contained or any breach thereof shall not be deemed to be a waiver of such term, covenant, or condition or of any subsequent breach of the same or any other term, covenant or condition herein contained. The subsequent acceptance of Rent hereunder by Landlord shall not be deemed to be a waiver of any preceding breach by Tenant of any term, covenant or condition of this Lease, other than the failure of Tenant to pay the particular Rent so accepted, regardless of Landlord's knowledge of such preceding breach at the time of acceptance of such Rent.

33.Quiet Possession. Landlord warrants that so long as Tenant is not in default under this Lease beyond any applicable cure period, Tenant's quiet possession of the Premises shall not be disturbed by Landlord or others claiming through Landlord.

34.Letter of Credit. As security for the full and faithful performance of every covenant and condition of this Lease to be performed by Tenant, Tenant shall deliver to Landlord the Letter of Credit specified in Section 1. Landlord shall be entitled to draw upon the Letter of Credit upon demand, without prior notice to Tenant, at any time or from time to time on or after (1) the occurrence of any default by Tenant beyond any applicable notice and cure period with respect to any covenant or condition of this Lease, including but not limited to the payment of Rent, (2) if Tenant, or anyone in possession of the Premises through Tenant, holds over after the expiration or earlier termination of this Lease without Landlord's prior written consent, (3) Landlord is given notice by the issuer of the Letter of Credit that it is terminating the Letter of Credit, (4) a

confirming bank gives notice to Landlord that it will cease to act in that capacity, or (5) the Letter of Credit expires on a specified date by its terms and is not renewed or replaced at least sixty (60) days in advance of its expiration date or (6) to the extent permitted by law, in the event any bankruptcy, insolvency, reorganization or any other debtor creditor proceeding is instituted by or against Tenant.

Landlord may apply the proceeds drawn on the Letter of Credit to the payment of any sum in default or any sum which Landlord may be required to spend or incur by reason of Tenant's default or any other sum which Landlord may in its reasonable discretion deem necessary to spend or incur by reason of Tenant's default, in such order and priority as Landlord elects in its absolute discretion. If any of the proceeds drawn on the Letter of Credit are not applied immediately to sums owing to Landlord under this Lease, Landlord may retain any such excess proceeds as a cash Lease Security Deposit for application, at Landlord's election, to future sums owing to Landlord under this Lease, in such order and priority as Landlord elects in its absolute discretion. Tenant shall, within fifteen (15) days after Landlord's demand, restore the amount of the Letter of Credit drawn to the extent necessary so that the sum of any Security Deposit held by Landlord (that was not applied to amounts payable under the Lease) and the Letter of Credit is equal to the original amount of the Letter of Credit. If Tenant does not restore the Letter of Credit to its original amount within the required time period, such non-restoration shall be considered an Event of Default.

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If Tenant shall have fully complied with all of the covenants and conditions of this Lease, the Letter of Credit shall be returned to Tenant or, if Landlord has drawn on the Letter of Credit, the remaining proceeds of the Letter of Credit which are in excess of sums due the Landlord shall be repaid to Tenant, without interest, within thirty (30) days after the expiration or termination of the Lease Term and delivery of possession of the Premises to Landlord in accordance with this Lease.

In the event of a sale or transfer of Landlord's estate or interest in the Land and Building, Landlord shall have the right to transfer the Letter of Credit to the vendee or the transferee, Tenant shall pay any transfer fees charged by the issuing bank and Landlord shall thereafter be considered released by Tenant from all liability for the return of the Letter of Credit. Tenant shall cooperate in effecting such transfer.

In the event of Tenant's default beyond any applicable notice and cure period. Landlord's rights to draw on the Letter of Credit shall be deemed to be in addition to any and all other rights and remedies at law or in equity available to Landlord for Tenant's default under this Lease.

35.  Landlord Default. If Landlord fails to perform any of its obligations under this Lease within a commercially reasonable period of time under the circumstances after receipt of written notice from Tenant specifying Landlord's deficiency, Landlord shall be in default under this Lease; provided, however, that if the nature of Landlord's obligation is such that in excess of thirty (30) days are reasonably required for its performance, then Landlord shall not be in default if Landlord commences such performance within thirty

(30) days and thereafter diligently pursues the same to completion. Upon any such uncured default by Landlord, Tenant may exercise any of its rights provided in law or at equity, except those rights that Tenant specifically waives hereunder.

36. General.

(a)Headings. Titles to Sections of this Lease are not a part of this Lease and shall have no effect upon the construction or interpretation of any part hereof.

(b)Heirs and Assigns. All of the covenants, agreements, terms and conditions contained in this Lease shall inure to and be binding upon Landlord and Tenant and their respective heirs executors, administrators, successors and assigns.

(c)No Brokers. Except for Colliers International, Tenant represents and warrants to Landlord that it has not engaged any broker, finder or other person who would be entitled to any commission or fees from Landlord in respect of the negotiation, execution or delivery of this Lease and shall indemnify and hold harmless Landlord against any loss, cost, liability or expense incurred by Landlord as a result of any claim asserted by any such broker, finder or other person on the basis of any arrangements or agreements made or alleged to have been made by or on behalf of Tenant. Except for The Broderick Group, Landlord represents and warrants to Tenant that it has not engaged any broker, finder or other person who would be entitled to any commission or fees from Tenant in respect of the negotiation, execution or delivery of this Lease and shall indemnify and hold harmless Tenant against any loss, cost, liability or expense incurred by Tenant as a result of any claim asserted by any such broker, finder or other person on the basis of any arrangements or agreements made or alleged to have been made by or on behalf of Landlord. The provision of this paragraph shall not apply to brokers with whom Landlord has an express written brokerage agreement.

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(d)Identification of Tenant. If more than one person executes this Lease as Tenant, (i) each of them is jointly and severally liable for the keeping, observing and performance of all of the terms, covenants, conditions, provisions and agreements of this Lease to be kept, observed and performed by Tenant, and (ii) the term "Tenant" as used in this Lease shall mean and include each of them jointly and severally. The act of or notice from, or notice of refund to, or the signature of any one or more of them, with respect to the tenancy of this Lease, including, but not limited to any renewal, extension, expiration, termination or modification of this Lease, shall be binding upon each and all of the persons executing this Lease as Tenant with the same force and effect as if each and all of them had so acted or so given or received such notice or refund or so signed.

(e)Entire Agreement. This Lease contains all covenants and agreements between Landlord and Tenant relating in any manner to the leasing, use and occupancy of the Premises and Tenant's use of the Building and other matters set forth in this Lease, except for any parking, storage, lease take-over, or marina agreements which may be separately executed by the parties. No prior agreements or understanding pertaining to the same shall be valid or of any force or effect and the covenants and agreements of this Lease shall not be altered, modified or added to except in writing signed by Landlord and Tenant.

(f)Severability. Any provision of this Lease that shall prove to be invalid, void or illegal shall in no way affect, impair or invalidate any other provision hereof and the remaining provisions hereof shall nevertheless remain in full force and effect.

(g)Force Majeure. Time periods for Landlord's performance under any provisions of this Lease shall be extended for periods of time during which Landlord's performance is prevented due to circumstances beyond Landlord's control, including without limitation, terrorist attacks, strikes, embargoes, shortages of labor or materials, governmental regulations, acts of God, war or other strife.

(h) Changes to Building. Landlord shall have the right, from time to time, without thereby creating an actual or constructive eviction or incurring any liability to Tenant, to change the arrangement or location of the Building Common Areas or the Development Common Areas or any part thereof, including, without limitation, entrances, passageways, doors and doorways, corridors, stairs, toilets, and other similar public service areas. Nevertheless, in no event shall Landlord change the arrangement or location of the elevators serving the Premises, make any other change which alters the character of the Building from a Class A building. Landlord may change the name of the Building at any time.

(i)  Building Directory. Landlord shall maintain in the Lobby of the Building at Landlord's sole cost and expense, a directory which shall include the name of Tenant and any other names reasonably requested by Tenant in proportion to the number of listings given to comparable tenants of the Building.

(j)  Governing Law. This Lease shall be governed by and construed in accordance with the laws of the State of Washington.

(k) Authority. Tenant shall, concurrently with execution of this Lease, deliver to Landlord a certified copy of a resolution of the executive committee or other governing authority of Tenant authorizing or ratifying the execution of this Lease and granting or confirming the authority of the person executing this Lease on behalf of Tenant or provide other evidence of such authority reasonably satisfactory to Landlord.

(1) Notice Addresses. All notices given under this Lease shall be sent to the addresses set forth on the signature page of this Lease, or to such other address as either party from time to time may provide the other in writing.

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(m) Recordation. Tenant shall not record or file this Lease or any assignment or security document pertaining to this Lease on or with respect to any or all part of Tenant's interest therein without the prior written consent of Landlord, which consent may be subject to conditions as Landlord shall deem appropriate and which may be withheld in Landlord's sole discretion. Upon request of Landlord, however, Tenant shall execute a memorandum or "short form" of this Lease for the purpose of recordation in a form customarily used for such purpose. Such memorandum or short form of this Lease shall describe the parties, the Premises and the term hereof and may, at the Landlord's option, incorporate this Lease by reference.

(n)       Time is of the Essence. Time is of the essence as to the dates and timeframes set forth in this Lease.

IN WITNESS WFJEREOF. the Landlord and the Tenant have signed their name and affixed their seals the day and year first above written.

TENANT:	LANDLORD:
AIRLINE INTELLIGENCE SYSTEMS INC., a Delaware corporation	CARILLON PROPERTIES, a Washington general partnership
	By SKINNER DEVELOPMENT COMPANY, a Washington corporation Its: Managing General Partner
By: ____________________________________	By: _________________________________________
Its: ____________________________________	Barbara Leland
	Its  Vice President & General Manager
Address:	Address:
3500 Carillon Point                                  Kirkland, WA 98033	c/o Skinner Development Company 4100 Carillon Point Kirkland, WA 98033

And To:

55 University Ave., Suite 910

Toronto, ON M5J 2H7

Exhibit A-l	Legal and Development Description
Exhibit A-2	Site Layout
Exhibit B	Premises Floor Plan
Exhibit C	Intentionally Omitted
Exhibit D	Additional Provisions
Exhibit E	Parking Agreement
Exhibit F	Subordination, Non Disturbance and Attornment Agreement
Exhibit G	Landlord's Mortgagee's form of Tenant Estoppel Certificate
Exhibit H	Landlord accepted form of Letter of Credit

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Notary

AIRLINE INTELLIGENCE SYSTEMS, INC.

STATE OF                                                                 )

                                                                                     ) ss.

COUNTY OF                                                             )

On this________day of __________, 2007, before me, a Notary Public in and for the State of ___________ , personally appeared____________________, personally known to me (or proved to me on the basis of satisfactory evidence) to be the person who executed this instrument, on oath stated   that __________was   authorized   to   execute   the   instrument,   and   acknowledged   it   as   the __________of_____________to be the free and voluntary act and deed of said corporation for the uses and purposes mentioned in the instrument.

IN WITNESS WHEREOF, I have hereunto set my hand and official seal the day and year first above written.

Signature of Notary Public

(Print Name)

NOTARY PUBLIC in and for the State

of ______, residing at___________

My appointment expires   ____________________

Carillon Properties

STATE OF WASHINGTON                      )

                                                                       ) ss.

 COUNTY OF KING                                   )

On this__________day of ____________, 2007, before me, a Notary Public in and for the State of Washington, personally appeared Barbara Lei and, personally known to me (or proved to me on the basis of satisfactory evidence) to be the person who executed this instrument, on oath stated that she was authorized to execute the instrument, and acknowledged it as Vice President & General Manager of Skinner Development Company, the Managing General Partner of Carillon Properties, to be the free and voluntary act and deed of said corporation for the uses and purposes mentioned in the instrument.

IN WITNESS WHEREOF, I have hereunto set my hand and official seal the day and year first above written.

Signature of Notary Public

(Print Name)

NOTARY PUBLIC in and for the State

of Washington, residing at ________________   

My appointment expires __________________

Type of Document: ________________

Document Date:__________________

Number of Pages:_________________

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EXHIBIT A-1

LEGAL AND DEVELOPMENT DESCRIPTION For Lease Agreement

Between CARILON PROPERTIES ("Landlord")

and AIRLINE INTELLIGENCE SYSTEMS INC. (Tenant")

Description of Development

The Development is a mixed-use project to consist of buildings and uses up to the following sizes: a 100-room hotel; 20,000 square feet of retail space; 20,000 square feet of restaurant space; 430,000 square feet of Class A office building space; a 200-slip marina; and Development Common Areas. The real property is legally described on Exhibit A-1 and the Development, the Development Common Areas and the Building are shown on Exhibit A-2.

Legal Description

that portion of government lots 1 and 2 in the northwest 1/4 of section 17. township 25 north, range 5 east w.m.;

together with blocks "f' and "g" of the second supplemental plat of lake washington shorelands;

and together with second class shorelands as conveyed by the state of washington, situate in front of. adjacent to, or abutting thereon, described as follows:

beginning at the meander corner on the north line of said section, said corner being a brass cap monument:

thence south 88 36'25" east (bearing refer to the k.c.a.s. meridian), along the north line of said section, 48.76 feet;

thence south 01 23'35" west 842.60 feet to the intersection of the south line of the north 842.60 feet of said government lot 1 with the westerly right-of-way line of lake washington blvd. northeast (sr 908) and the true point of beginning;

thence north 88 36'25" west, along said south line, 562.00 feet to the inner harbor line as defined by the state of washington in 1920 and 1921;

thence south 01 09'29" west. along said inner harbor line. 1531.93 feet;

thence continue along said inner harbor line south 13°i0"38" east 84.06 feet to the intersection of a line that is parallel with the north line of the south 1/2 of the south 1/2 of said government lot 2 extended westerly is 75.00 feet south of the intersection of said north line with said westerly right-of-way line of lake washington blvd. northeast (sr 908) as measured along said right-of-way line:

thence south 88 51 '33" east, along said line. 889.31 feet to the westerly right-of-way line of said lake washington blvd. northeast (sr 908);

thence north 03 09' 13" west, along said westerly right-of-way line, 462.20 feet;

thence continue along said right-of-way line north 86°50'47" east 10.40 feet;

thence continue along said westerly right-of-way line north 03 09' 13" west 313.01 feet:

thence continue along said westerly right-of-way line on a tangent curve to the left in

a northwesterly direction. having a radius of 542.96 feet, through a central angle of 32

42-07" an arc distance of 309.90 feet:

thence continue along the southwesterly right-of-way line of said lake washington blvd. northeast (sr 908) north 35°51 "20" west 67.87 feet;

thence continue along said right-of-way line on a tangent curve to the right in a northwesterly and northerly direction, having a radius of 602.96 feet. through a central angle of 27 42' 10" an arc distance of 291.53 feet;

thence continue along said westerly right-of-way line north 08 09' 11" west 234.43 feet to the true point of beginning;

except that portion hereof lying north of the south line of the north 1,076.80 feet of said government lot 1 and its westerly prolongation;

and except that portion thereof conveyed to the city of kirkland for road proposes by deed recorded under recording no. 8907281497;

situated in the city of kirkland, county of king, state of washington.

Landlord's Intials Tenant's Intials

24

EXHIBIT A-2

SITE LAYOUT For Lease Agreement

Between CARILON PROPERTIES ("Landlord")

and AIRLINE INTELLIGENCE SYSTEMS INC. (Tenant")

Landlord's Intials Tenant's Intials

25

EXHIBIT B

FLOOR PLAN For Lease Agreement

Between CARILON PROPERTIES ("Landlord")

and AIRLINE INTELLIGENCE SYSTEMS INC. (Tenant")

PREMISES LOCATION

BUILDING 3000

Floor: 5'"

Approximately 15,166 Rentable Square Feet

Approximately 13,413 Usable Square Feet

Floor Plan

Tenant hereby acknowledges and agrees that Tenant has had and adequate opportunity to measure the Premises and to verify the figures set forth in this Lease for Rentable Square Feet and Usable Square Feet, using whatever methods, means, devices and/or personnel Tenant might have desired. Landlord and Tenant hereby agree to be bound by such figures under the terms of this Lease, notwithstanding the fact that measuring the Premises using different methods, means, devices, and/or personnel might yield different results.

(Area represents approximate Premises)

Landlord's Intials Tenant's Intials

26

EXHIBIT C

INTENTIONALLY OMITTED

Landlord's Intials Tenant's Intials

27

EXHIBIT D

ADDITIONAL PROVISION For Lease Agreement

Between CARILON PROPERTIES ("Landlord")

and AIRLINE INTELLIGENCE SYSTEMS INC. (Tenant")

D l.      Option to Extend Term.

(a)Exercise of Option to Extend Term. If Tenant has not been in default beyond any applicable cure period in any of its obligations under this Lease during the Lease Term, and Tenant is not in default of its obligations under this Lease beyond any applicable notice and cure periods at the time of Tenant's exercise, then Tenant shall have the option and right to extend the Term (the "Option") for a three (3) year period (the "Extended Term") upon compliance with this Section. Tenant shall exercise its Option by delivering written notice to Landlord of such exercise not less than ten (10) months prior to the end of the Term. If Tenant fails to give its written notice by said time, then the Option shall immediately lapse and terminate without any further notice or action by Landlord. The period of the exercised Option shall be included within the meaning of "Term." All terms and conditions of this Lease shall apply during the entire Term as extended by Tenant's exercised Option, except Basic Rent shall be established as provided in Subsection (b) or (c) below and any obligation of Landlord as to improvements to the Premises set forth in Section 4 of the Lease shall not apply. The Option is granted specifically to the named Tenant entity and any successor pursuant to an Allowed Transfer, and no other assignee, subtenant or successor through a Transfer shall hold the Option to extend the Term unless Landlord expressly grants such Option to the assignee, subtenant or successor.

(b)Basic Rent During Extended Term. The annual Basic Rent to be paid in each year of the Extended Term shall be equal to the annual fair market rental (the "AFMR") for recent lease renewals of comparable office space in the Development (comparable office space being a comparable size, with similar views, grade of the tenant improvements, and concessions given), taking into consideration the additional rent then being charged to other tenants in the Development and other relevant factors, but in no event shall the Rent during any year of the Extended Term be less than the Rent being paid to Landlord in the past twelve (12) months of the original Lease Term. Tenant may request not earlier than twelve (12) months prior to the expiration of the original Term Landlord's opinion as to the amount of AFMR and Basic Rent due and payable by Tenant during each year of the applicable Extended Term. Landlord shall provide to Tenant such opinion within thirty (30) days thereafter. After receiving Landlord's determination of AFMR and Basic Rent, Tenant shall have the right any time prior to the expiration of the Option to notify Landlord in writing that it is exercising its Option and: (i) that Tenant accepts Landlord's determination of AFMR and annual Basic Rent during the Extended Term, in which event Landlord and Tenant shall enter into an amendment to this Lease so specifying the annual Basic Rent; or (ii) notify Landlord that Tenant disagrees with Landlord's determination of the AFMR and wishes to utilize the appraisal process pursuant to Subsection (c) below.

(c)Appraisal Process. If Tenant does not agree as the Landlord's determination of AFMR, then the AFMR shall be established by a rental study by appraisers as provided herein. The appraisal determination shall be completed on or before sixty (60) days after Tenant exercises its Option (the "Exercise Date"). The parties shall use their best efforts to designate a single licensed M.A.I. appraiser, but if the parties are unable to agree upon a single appraiser within ten (10) days after the Exercise Date, then Landlord and Tenant each shall immediately designate an M.A.I, appraiser having at least five (5) years experience appraising office rental property in the greater Seattle metropolitan area. The two appraisers designated shall then immediately designate a third appraiser similarly qualified. Within thirty (30) days of being chosen, the appraiser(s) shall promptly conduct an independent rental study and narrative comparison of the AFMR for each lease year of the Extended Term taking into account recent lease renewals of comparable office space in the Development (comparable office space being a comparable size, with similar views, grade of the tenant improvements, and concessions given), the additional rent then being charged to other tenants in the Development, and other relevant factors such facts as are appropriate and customary in establishing an AFMR. In the case of a single appraiser, the appraiser shall deliver his or her opinion directly to the Landlord and Tenant. In the case of three appraiser, as soon as the studies are complete, the appraisers shall meet and attempt to reach agreement upon the AFMR for the Premises. If the appraisers are unable to agree, then the two rates closest in amount for each year of the Extended Term shall be mathematically averaged and that average shall be the AFMR for determining Basic Rent for the Premises. Notwithstanding the foregoing, in no event shall the Rent during any year of the Extended Term be less than the Rent being paid to Landlord in the last twelve (12) months of the original Lease Term. Each party shall pay the cost of its own appraiser and shall pay one-half the costs of the third appraiser. If the appraisal determination is not completed within sixty (60) days after the Exercise Date, and as extended by one day for each day Landlord delays naming its appraiser after then tenth (10th) day following the Exercise Date, Tenant agree to accept the Basic Rent for each lease year at the Basic Rent determined by Landlord.

D2. Moorage. Subject to availability, Tenant shall have the right to rent during the Term, at Landlord's prevailing market rate as it may be adjusted from time to time, one slip in Landlord's marina. This right shall be exercised by Tenant's notifying Landlord's of its election to lease a slip, and if such slip is available. Tenant's contemporaneous execution of a separate Marina Lease, with marina rent commencing upon the execution of the Marina Lease. If a slip is not available, Tenant shall have a priority on the marina waiting list to rent a slip. Tenant's priority shall be subject to any priorities granted by Landlord to other tenants or marina tenants or condominium purchasers within the Development.

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D3. Rules and Regulations for Development Common Areas. Tenant, including, without limitation, its officers, partners, members, agents, employees and independent contractors, shall comply with the rules and regulations that Landlord may from time to time promulgate and/or modify which are not inconsistent with the terms of this Lease, do not materially increase Tenant's obligations under the Lease or decrease Tenant's rights under the Lease and do not discriminate against Tenant. The rules and regulations shall be binding upon Tenant upon delivery of a copy of them to Tenant, so long as the rules and regulations apply to all office tenants in the Development. Landlord shall use reasonable efforts to insure performance of the rules and regulations, and Tenant shall notify Landlord of any nonperformance by any tenant of which Tenant is aware, but Landlord shall not be liable to Tenant for any damages due to any nonperformance of the rules and regulations.

D4. Sorting and Separation of Refuse and Trash. Tenant covenants and agrees, at its sole cost and expense, to comply with all present and future laws, orders, and regulations of all state, federal, municipal, and local governments, departments, commissions, and boards regarding the collection, sorting, separation, and recycling of waste products, garbage, refuse, and trash. Tenant shall sort and separate such waste products, garbage, refuse, and trash into such categories as provided by law. Each separately sorted category of waste products, garbage, refuse, and trash shall be placed in separate receptacles reasonably approved by Landlord. Such separate receptacles may, at Landlord's option, be removed from the demised Premises in accordance with a collection schedule prescribed by law.

Landlord reserves the right to refuse to collect or accept from Tenant any waste products, garbage, refuse, or trash that is not separated and sorted as required by law, and to require Tenant to arrange for such collection at Tenant's sole cost and expense, utilizing a contractor satisfactory to Landlord. Tenant shall pay all costs, expenses, fines, penalties, or damages that may be imposed on Landlord or Tenant by reason of Tenant's failure to comply with the provisions of this article, and, at Tenant's sole cost and expense, shall indemnify, defend, and hold Landlord harmless (including legal fees and expenses) from and against any actions, claims, and suits arising from such noncompliance, utilizing counsel reasonably satisfactory to Landlord.

D5. Right of First Offer. If Tenant has not been in default beyond any applicable notice or cure periods in any of its obligations under this Lease more than once per year during the Lease Term, and Tenant is not in default of its obligations under this Lease beyond any applicable notice and cure periods at the time of Tenant's exercise, during the original Term, Tenant shall have the one-time Right of First Offer ("ROFO") to lease any space that is located on the fifth (5th) floor (the "ROFO Space") when it becomes available, subject to the prior rights of tenants existing as of the date of this Lease. When Landlord is notified that space will be available, prior to marketing the space for lease. Landlord shall notify Tenant in writing of the size, location, Landlord's reasonable determination of the annual fair market rental (the "AFMR") for recent leases of comparable office space in the Development, taking into consideration the additional rent then being charged to other tenants in the Development and other relevant factors, date of availability, length of term and other material business terms. Tenant shall then have ten (10) business days to exercise its ROFO, during which, if requested by Tenant, Landlord agrees to meet with Tenant to discuss in good faith any modifications to the AFMR that Tenant may request, provided, that, Landlord shall have no obligation whatsoever to agree to any such modifications pursuant thereto. If Tenant does not notify Landlord in writing that it elects to lease the ROFO Space within the ten (10) business day period, then Landlord thereafter may lease the ROFO Space to a third party without any further notice to or right of Tenant and the ROFO shall terminate.

If Tenant exercises its ROFO within such 10-day period. Landlord and Tenant shall enter into a Lease Amendment stating the Basic Rent and Base Year as determined by the AFMR (as it may have been modified pursuant to discussions between Landlord and Tenant during the 10-business day exercise period), the Tenant's Pro Rata Share adjusted to reflect the additional rentable square feet, and otherwise, Tenant shall let the ROFO Space on the same terms and conditions as this Lease, except that the provisions of Section 4 of the Lease shall not apply.

D6. Conflict. In the event of any conflict between the terms of this Exhibit D and any other provision of the Lease, the provisions of Exhibit D shall prevail.

Landlord's Intials Tenant's Intials

29

EXHIBIT E

PARKING AGREEMENT For Lease Agreement

Between CARILON PROPERTIES ("Landlord")

and AIRLINE INTELLIGENCE SYSTEMS INC. (Tenant")

El. Landlord hereby grants Tenant and persons designated by Tenant a license to use the P-3500 Parking Garage located at Carillon Point, Kirkland, WA 98033. The term of this license shall be the same duration as the Lease Term. Tenant shall have the right to use up to 3.75 parking permits per 1,000 usable square feet of the Premises. Therefore, from the Commencement Date, Tenant shall have the license to use up to fifty (50) parking stalls. Tenant shall pay in advance, on or before the first day of each month, a parking charge equal to the use of each of the stalls Tenant elects to license for such month based upon the rate schedule below.

For the first 12 months after the Commencement Date, Tenant shall pay $100.00 per parking stall per month plus Washington State Sales Tax.

Thereafter through the Expiration of the Lease Term, Tenant shall the monthly charges established from time to time by Landlord for parking in the Garage, per stall per month, plus Washington State Sales Tax. Adjustments to the monthly parking charge for each parking stall shall only be made after twenty (20) days written notice by Landlord.

No deductions from the monthly charge shall be made for days on which the Garage is not used by Tenant. However. Tenant may reduce the number of parking stalls which Tenant is using, at any time, by providing at least twenty (20) days advance written notice to Landlord, accompanied by any Key-card, sticker or other identification or entrance system provided by Landlord or its parking contractor.

E2. Tenant shall pay Landlord's monthly charges established from time to time by Landlord for VIP parking stalls in the Garage if requested by Tenant, on a per stall per month basis, plus Washington State Sales Tax. Such VIP permits shall be provided and used on the terms and conditions of this Parking Agreement.

E3. Tenant may from time to time, request additional parking permits, over and above their allotment, and Landlord shall provide the same, subject to then current availability, as determined by Landlord and such monthly parking charges shall be one and one-half (1-1/2) times the market rate as determined by Landlord as Landlord shall establish from time to time. For any parking stalls provided over the allotted amount above, the charge for said stalls over the allotment. Such additional parking permits shall be provided and used on the terms and conditions of this Parking Agreement.

E4. Tenants shall at all times comply with all applicable ordinances, rules, regulations, codes, laws, statutes and requirements of all federal, state, county and municipal governmental bodies or their subdivisions respecting the use of the Garage. Landlord reserves the right to adopt, modify and enforce reasonable Parking Rules governing the use of the Garage from time to time, including any key-card, sticker or other identification or entrance system and hours of operation. The Rules set forth hereinafter as Schedule 1 are currently in effect. Tenant agrees to acquaint with these Rules all person to whom Tenant assigns a parking stall. Landlord may refuse to permit any person who violates such Rules to park in the Garage, and any violation of the Rules shall subject the car to removal from the Garage.

E5. Tenant may validate visitor parking by such reasonable methods as the Landlord may approve, at the validation rate from time to time generally applicable to visitor parking. The parking stalls hereunder shall be provided on an unreserved "first-come, first-served" basis. Except for gross negligence on the Part of Landlord, Landlord shall have no liability whatsoever for any damage to property or any other items located in the Garage or for any personal injuries or death arising out of any matter relating to the Garage (a "Garage Claim"). In all events, Tenant hereby agrees releases, indemnifies and agrees to hold Landlord harmless from a Garage Claim and agrees to look to its liability and property insurance carrier for payment of any losses sustained in connection with Tenant's, its employees, agents or invitees use of the Garage, and Tenant hereby waives on behalf of its liability and property insurance carriers all rights of subrogation against Landlord.

E6. Landlord reserves the right to assign specific stalls and to reserve stalls for visitors cars, handicapped persons and for other tenants, guests for tenants or other parties, and Tenant and persons designated by Tenant hereunder shall not park in any such assigned or reserved stalls. Landlord also reserves the right to close all or any portion of the Garage in order to make repairs or perform maintenance services, or to alter, modify, re-stripe or renovate the Garage, or if required by Force Majeure or other reason beyond Landlord's reasonable control. In such event, Landlord shall refund any prepaid parking rent hereunder, prorated on a per diem basis. If, for any other reason, Tenant or persons properly designated by Tenant, shall be denied access to the Garage, and Tenant or such persons shall have complied with the Agreement and this Agreement shall be in effect, Landlord's liability shall be limited to such parking charges (excluding tickets for parking violations) incurred by Tenant or such persons in utilizing alternative parking which amount Landlord shall pay upon presentation of documentation supporting Tenant's claims in connection therewith.

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E7. If Tenant shall default under the Lease or this Parking Agreement, Landlord shall have the right to remove from the Garage any vehicles hereunder which shall have been involved or shall have been owned or driven by parties involved in causing such default, without liability therefor whatsoever. In addition, if Tenant shall default under this Parking Agreement, Landlord shall have the right to cancel this Parking Agreement on ten (10) days written notice, unless within such ten (10) day period Tenant cures such default. If Tenant defaults with respect to the same term or condition under this Parking Agreement more than three times (3x) during any twelve (12) month period, the next default of such term or condition during the succeeding twelve month period, shall, at Landlords election constitute an incurable default. Such cancellation right shall be cumulative and in addition to any other rights or remedies available to Landlord at law or equity, or provided under the Lease (all of which rights and remedies under the Lease are hereby incorporated herein, as though fully set forth). Any default by Tenant under the Lease shall constitute a default under this Agreement, and any default under the Parking Agreement shall be a default under the Lease.

CARRILON POINT

Schedule 1

Parking Garage Rules

A. Attended Garage hours shall be 7am to 7pm, Monday through Friday.

B. Cars must be parked entirely within the stall lines painted on the floor, and only small cars may be parked in areas reserved for small cars.

C. All directional signs and arrows must be observed.

D.  The speed limit shall be 5 miles per hour.

E.  Stalls reserved for handicapped parking must be used only by vehicles properly designated.

F. Parking is prohibited in all areas not expressly designated for parking, including without limitation: (i) areas not striped for parking; (ii) aisles; (iii) where ''no parking" signs are posted; (iv) ramps; and (v) loading zones.

G.   Monthly parkers must park their vehicles in the Parking Garage specified in the Parking Agreement.

H.   Tenant must complete a card-key application form prior to receiving a parking permit.

I. Parking permits or any other devices or forms of identification or entry supplied by Landlord shall remain the property of Landlord. The serial number of the parking identification device may not be obliterated.  Devices are not transferable and any device in the possession of an unauthorized holder will be void.

J.    Garage managers or attendants are not authorized to make or allow any exception to these Rules.

K. Every parker is required to park and lock his own car.

L. Loss or theft of parking identification, key cards or other such devices must be reported to Landlord or any garage manager immediately. Any parking devices reported lost or stolen found on any unauthorized car will be confiscated and the illegal holder will be subject to prosecution. Lost or stolen devices found by Tenant or its employees must be reported to the Tenant Service Center.

M. Washing, waxing, cleaning or servicing of any vehicle by the customer and/or his agents is prohibited. Parking stalls may be used only for parking automobile

Landlord's Intials Tenant's Intials

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EXHIBIT F

SUBORDINATION NON DISTURBANCE AND ATTORNMENT AGREEMENT For Lease Agreement

Between CARILON PROPERTIES ("Landlord")

and AIRLINE INTELLIGENCE SYSTEMS INC. (Tenant")

GRANTOR/TENANT:                                       __________________________________

GRANTEE/LENDER:                                          TEACHERS INSURANCE AND ANNUITY ASSOCIATION OF

                                                                              AMERICA

Legal Description:

Abbreviated Form:    PORTION OF GOVERNMENT LOTS 1 AND 2 IN THE NORTHWEST 1/4OF SECTION 17, TOWNSHIP 25 NORTH, RANGE 5 EAST, W.M.

Additional legal is on Exhibit A to document.

Assessor's Tax Parcel ID #:                   172505-9058-09 & 172505-9120-03

THIS SUBORDINATION, NON-DISTURBANCE AND ATTORNMENT AGREEMENT (this "Agreement" is made by and between TEACHERS INSURANCE AND ANNUITY ASSOCIATION OF AMERICA, a New York corporation with offices at 730 Third Avenue, New York, New York 10017

("Lender") and _______________________________with its principal place of business at ________________________ ("Tenant").

RECITALS:

A.  Lender has made a loan (together with all advances and increases, the "Loan") to Carillon Properties, a Washington general partnership ("Borrower").

B.  Borrower, as landlord, and Tenant have entered into a lease dated_________________as amended by amendment(s) dated ____________ (The "Lease") which leased to Tenant Suite No. 3500 located in the Property (defined below).

C.  The Loan is or will be secured by the (Open-End) Mortgage, Assignment of Leases and Rents, Fixture Filing Statement and Security Agreement recorded or to be recorded in the official records of the County of King, State or Commonwealth of Washington (together with all advances, increases, amendments or consolidations, the "Mortgage") and the Assignment of Leases and Rents recorded or to be recorded in such official records (together with all amendments or consolidations, the "Assignment"), assigning to Lender thLease and all rent, additional rent and other sums payable by Tenant under the Lease (the "Rent").

D.  The Mortgage encumbers the real property, improvements and fixtures located at 1000-7000 Carillon Point in the City of Kirkland, County of King, State or Commonwealth of Washington, commonly known as Carillon Point, and described on Exhibit "A" (the "Property").

IN CONSIDERATION of the mutual agreements contained in this Agreement. Lender and Tenant agree as follows:

1.Subject to the terms and conditions hereof, the lease and all of Tenant's rights under the Lease are and will remain subject and subordinate to the lien of the Mortgage and all of Lender's rights under the Mortgage and Tenant will not subordinate the Lease to any other lien against the Property without Lender's prior consent.

2.This Agreement constitutes notice to Tenant of the Mortgage and the Assignment and, upon receipt of notice from Lender, Tenant will pay the Rent as and when due under the Lease to Lender and the payments will be credited against the Rent due under the Lease.

3.Tenant does not have and will not acquire any right or option to purchase any portion of or interest in the Property.

4.Tenant and Lender agree that if Lender exercises its remedies under the Mortgage or the Assignment and if Tenant is not then in default under this Agreement and if Tenant is not then in default beyond any applicable grace and cure periods under the Lease:

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(a)Lender will not name Tenant as a party to any judicial or non-judicial foreclosure or other proceeding to enforce the Mortgage unless joinder is required under applicable law but in such case Lender will not seek affirmative relief against Tenant, the Lease will not be terminated and Tenant's possession of the Leased Space will not be disturbed;

(b)If Lender or any other entity (a "Successor Landlord") acquires the Property through foreclosure, by other proceeding to enforce the Mortgage or by deed-in-lieu of foreclosure (a "Foreclosure"), Tenant's possession of the Leased Space will not be disturbed and the Lease will continue in full force and effect between Successor Landlord and Tenant; and

(c)If, notwithstanding the foregoing, the Lease is terminated as a result of Foreclosure, a lease between Successor Landlord and Tenant will be deemed created on the same terms as the Lease except that the term of the replacement lease will be the then unexpired term of the Lease. Successor Landlord and Tenant will execute a replacement lease at the request of either.

5.  Upon Foreclosure, Tenant will recognize and attorn to Successor Landlord as the landlord under the Lease for the balance of the term. Tenant's attornment will be self-operative with no further instrument required to effectuate the attornment except that at Successor Landlord's request. Tenant will execute instruments reasonably satisfactory to Successor Landlord confirming the attornment.

6.  Successor Landlord will not be:

(a)liable for any act or omission of any prior landlord under the Lease occurring before the date of the Foreclosure except for repair and maintenance obligations of a continuing nature imposed on the landlord under the Lease;

(b)required to credit Tenant with any Rent paid more than one month in advance or for any security deposit unless such Rent or security deposit has been received by Successor Landlord;

(c)bound by any amendment, renewal, or extension of the Lease that is inconsistent with the terms of this Agreement or is not in writing and signed by both Tenant and Landlord;

(d)bound by any reduction of the Rent unless the reduction is in connection with an extension or renewal of the Lease at prevailing market terms or was made with Lender's prior consent;

(e)bound by any reduction of the term of the Lease or any termination, cancellation or surrender of the Lease unless the reduction, termination, cancellation or surrender occurred during the last 6 months of the term, or was made with Lender's prior consent;

(f)bound by any amendment, renewal or extension of the Lease entered into without Lender's prior consent if the Leased Space represents 50% or more of the net rentable area of the building in which the Leased Space is located;

(g)subject to any credits, offsets, claims, counterclaims or defenses that Tenant may have that arose prior to the date of the Foreclosure or liable for any damages Tenant may suffer as a result of any misrepresentation, breach of warranty or any act of or failure to act by any party other than Successor Landlord;

(h) bound by any obligation to make improvements to the Property, including the Leased Space, to make any payment or give any credit or allowance to Tenant provided for in the Lease or to pay any leasing commissions arising out of the Lease, except that Successor Landlord will be:

(i) bound by any such obligations provided for in the Lender-approved form lease;

(ii) bound by any such obligations if the overall economic terms of the Lease (including the economic terms of any renewal options) represented market terms for similar space in properties comparable to the Property when the Lease was executed; and

(iii) bound to comply with the casualty and condemnation restoration provisions included in the Lease provided that Successor Landlord receives the insurance or condemnation proceeds; or

(j) liable for obligations under the Lease with respect to any off-site property or facilities for the use of Tenant (such as off-site leased space or parking) unless Successor Landlord acquires right, title or interest to the off-site property.

7.   Lender will have the right, but not the obligation, to cure any default by Borrower, as landlord, under the Lease. Tenant will notify Lender of any default that would entitle Tenant to terminate the Lease or abate the Rent and any notice of termination or abatement will not be effective unless Tenant has so notified

___________________________

For purposes of this subparagraph "the term of the Lease" includes any renewal term after the right to renew has been exercised.

33

Lender of the default and Lender has had a 30-day cure period (or such longer period as may be necessary, if the default is not susceptible to cure within 30 days) commencing on the latest to occur of the date on which (i) the cure period under the Lease expires; (ii) Lender receives the notice required by this paragraph; and (iii) Successor Landlord obtains possession of the Property if the default is not susceptible to cure without possession.

8. All notices, requests or consents required or permitted to be given under this Agreement must be in writing and sent by certified mail, return receipt requested or by nationally recognized overnight delivery service providing evidence of the date of delivery, with all charges prepaid, addressed to the appropriate party at the address set forth above.

9.Any claim by Tenant against Successor Landlord under the Lease or this Agreement will be satisfied solely out of Successor Landlord's interest in the Property and Tenant will not seek recovery against or out of any other assets of Successor Landlord. Successor Landlord will have no liability or responsibility for any obligations under the Lease that arise subsequent to any transfer of the Property by Successor Landlord.

10.This Agreement is governed by and will be construed in accordance with the laws of the state or commonwealth in which the Property is located.

11.Lender and Tenant waive trial by jury in any proceeding brought by. or counterclaim asserted by. Lender or Tenant relating to this Agreement

12  If there is a conflict between the terms of the Lease and this Agreement will prevail as between Successor Landlord and Tenant.

13. This Agreement binds and anures to the benefit of Lender and Tenant and their respective successros, assignees, heirs, administrators, executors, agents and representatives.

14. This Agreement contains the entire agreement between Lender and Tenant with respect to the  subject matter of this Agreement, may be executed in counterparts that together constitute a single document  and may be amended only by a writing signed by Lender and Tenant.

IN WITNESS WHEREOF, Lender and Tenant have executed  and delivered this Agreement as of _________, 20____.

LENDER:	TENANT:
TEACHERS INSURANCE AND ANNUTY
ASSOCIATION OF AMERICA, a New York corporation

By: ________________________________	By: ________________________________
Name: ______________________________	Name: ______________________________
Title:________________________________	Title:________________________________

34

Notary

STATE OF                                                                 )

                                                                                     ) ss.

COUNTY OF                                                             )

On this________day of __________, 2007, before me, a Notary Public in and for the State of ___________ , personally appeared____________________, personally known to me (or proved to me on the basis of satisfactory evidence) to be the person who executed this instrument, on oath stated   that __________was   authorized   to   execute   the   instrument,   and   acknowledged   it   as   the __________of_____________to be the free and voluntary act and deed of said corporation for the uses and purposes mentioned in the instrument.

IN WITNESS WHEREOF, I have hereunto set my hand and official seal the day and year first above written.

Signature of Notary Public

(Print Name)

NOTARY PUBLIC in and for the State

of ______, residing at___________

My appointment expires   ____________________

STATE OF                                                                 )

                                                                                     ) ss.

COUNTY OF                                                             )

On this________day of __________, 2007, before me, a Notary Public in and for the State of ___________ , personally appeared____________________, personally known to me (or proved to me on the basis of satisfactory evidence) to be the person who executed this instrument, on oath stated   that __________was   authorized   to   execute   the   instrument,   and   acknowledged   it   as   the __________of_____________to be the free and voluntary act and deed of said corporation for the uses and purposes mentioned in the instrument.

IN WITNESS WHEREOF, I have hereunto set my hand and official seal the day and year first above written.

Signature of Notary Public

(Print Name)

NOTARY PUBLIC in and for the State

of ______, residing at___________

My appointment expires   ____________________

Landlord's Initials Tenant's Initials

35

EXHIBIT G

FORM OF TENANT ESTOPPEL CERTIFICATE

For Lease Agreement Between CARILLON PROPERTIES ("Landlord")

and AIRLINE INTELLIGENCE SYSTEMS INC. ("Tenant")

Date:

Teachers Insurance and Annuity

Association of America

730 Third Avenue

New York, New York 10017

Attn: Ms. Yelena Kharnas

  RE:       T1AA Mtge. #000387801 Carillon Point 1000-6000 Carillon Point Kirkland, WA 98033

It is our understanding that you have committed to place a mortgage upon the subject premises and as a condition precedent thereof have required this certification of the undersigned.

The undersigned, as lessee, under that certain lease dated _______________with CARILLON PROPERTIES, as lessor, hereby ratifies said lease and certifiesthat, as of the date hereof:

1.  the "Commencement Date" of said lease was___________________ with the extended term commencing on ________________: and

2. the undersigned is presently solvent and free from reorganization and/or bankruptcy and is in occupancy; open ; and conducting business with the public in the premises; and

3.  the operation and use of the premises do not involve the generation, treatment, storage, disposal or release of a hazardous substance or a solidswaste in the environment other that to the extent necessary to conduct its ordinary courses of businsss in the premises and in accordance with all applicable environmental laws, and that the premises are being operared in accordance with all applicable environmental laws, zoning ordinances and building codes; and

4. as of  ___________________, base and rental payable pursuant to the terms of said lease is $_______________ per annum; and further; additional rental pursuant to said lease is payable as follows; and

5. said lease is in full force and effect  and has not been assigned, modified, supplemented or amended in any (except in Agreement dated) dated _______________, and to Tenant's knowledge, neither party thereto is in default thereunder ; and

6. the lease described above represents the entire agreement between the parties as to the leasing of the premises; and

7. the term of the said lease expries on____________; and

8. all conditions under said lease to be performed by the lessor have been satisfied, including, without limitation, all co-tenacy requirements thereunder, if any, except _____________; and

9. all required contributions by lessor to lessee on account of lessee's improvements have been received except_______________; and

10. on this date there is no existing defenses or offsets, claims or counterclaims which the undersigned has against the enforcement of said lease by the lessor except______________;

11. no rental has been paid in advance and no security (except the security deposit in the amount of $_________ as been deposited with lessor; and

12.lessee's floor area as set forth in the Lease is______________square feet; and

36

13. the most recent payment of current basic rental was for the payment due on 20___________, and all basic rental and additional rental payable pursuant to the terms of the lease have been paid up to said date; and

14. the undersigned acknowledges notice that lessor's interest under the lease and the rent and all other sums due thereunder will be assigned to you as part of the security for a mortgage loan by you to lessor. In the event that Teachers Insurance and Annuity Association of America, as lender, notifies the undersigned of a default under the mortgage and demands that the undersigned pay its rent and all other sums due under the lease to lender, lessee agrees that it shall pay its rent and all such other sums to lender.

Landlord's Initials Tenant's Initials

37

38

39

40

EX-10.3

Exhibit 10.3

   

Courier and via Electronic Mail May 22,2008	55 University Avenus Suite 300 TorontoON Canada M5J2H7
Airline Intelligence Systems Coip, c/o Mr. Richard Turner Lennard Commercial Realty 150 York Street, Suite 1900 Toronto, Ontario M5H3SS	T 416,6816250 F 416,6813405 www.bantsll.com

Dear Mr. Turner,

Re: Airline Intelligence Systems Corp., 55 University Avenue Toronto, Ontario ("Building"), located on the lands ("Project")

Further to your request, we are pleased to propose to you terms upon which we would bt prepared to recommend to the Landlord that they expand andrenew Airline intelligence Systems Corp, at the Project, as follows:

Landlord: Tenant: Premises:  SITQ National Inc.   Airline Intelligence Systems Corp.   An Rentable Area of approximately 2.251square feet, comprising:

	(a)	a measured Rentable Area of 2,251 square feet, designated as Suite 910 located on the 9* floor of the Building ("Existing Premises"), as approximately shown outlined on the floor plan attached to the Existing Lease (as hereinafter defined) as Schedule "B"; and
Term:	Five (5) years from June 1, 2009 ("Extension Commencement Date") to May 31, 2014 ("Expiry Date").

Fixiurittg Period :

1

Airline btteltigcncc Systems Corp,

55 Univeisiiy Avenue

May 22,2008

Basic Sent:

Years  1-5: $20.00 per square foot of Rentable Area of the Premises per annum, Basic Rent shall be completely net to the Landlord.

Additional Rent:

In addition to Basic Rent, the Tenant shall be responsible for: (a) Tenant's share of all Operating Costs (as defined and as calculated in accordance with the Existing Lease) being all costs incurred in the operation, maintenance, repair, replacement, administration and management of the Project (including insurance, capital taxes and a managementfadmmistration fee); (b) Tenant's share of the Landlord's Realty Taxes (as defined and as calculated in accordance with the Existing Lease); (c) utilities; and (d) all maintenance, repairs and replacements requfrcd to the Premises, and such other amounts, costs or charges as are required to be paid by the Tenant pursuant to any provision of the Existing Lease. The capitalized terms herein shall have the meaning ascribed to them in the Existing Lease. Operating Costa and Realty Taxes are estimated to be $20.41 per square foot of Rentable Area per annum for the current year 2008, but are subject to adjustment at year end in accordance with the terms of the Existing Lease. This is a bona fide estimate made by the Landlord based on information available to it at this time, and such estimate is not intended to be binding on the Landlord nor limit the Tenant's obligations hereunder or under the Existing Lease.

       Condition of

2

Airline btteltigcncc Systems Corp,

55 Univeisiiy Avenue

May 22,2008

Premises;	Existing Premises Tenant currently occupies the Existing Premises pursuant to the provisions of the Existing Lease for a term expiring on May 31, 2009. Tenant shall accept the Existing Premises as at the Extension Commencement Date in an "as is, where is" condition, without Landlord being required to perform any work to such premises.
Landlord's Work to	the following work to the Additional Premises ("Landlord's Work Premises"):
Tenant Improvement
Form of Lease       Documentation;	Landlord and Tenant are parties to a lease dated March 20,2007 ("Existing Lease") for the Existing Premises. The Existing Lease shall be amended by the Landlord's standard form of lease amending agreement ("Lease Amending Agreement") to reflect the terms and conditions of this proposal, which will be elaborated upon therein. The Lease Amending Agreement shall be executed by Tenant and delivered to Landlord within ten (10) business days of receipt thereof from Landlord. Tenant shall have no right to occupy the Additional Premises for any purpose, nor shall Landlord be obligated to commence Landlord's Work to Additional Premises, until the Lease Amending Agreement is fully executed and delivered by the parties hereto.
Sates Taxes:	Basic Rent and Additional Rent rates as set out herein, are exclusive of Sales Taxes.

Bentail Real Estate Services Limited Partnership, in its capacity as authorized agents for Landlord ("Ben-tali"), hereby discloses, in accordance with the 'Real Estate and Business Brokers' Act, 2002 (Ontario), (hat it: (i) acts on behalf of Landlord, (ii) owes a fiduciary duty to Landlord in this transaction and (iii) shall be compensated by Landlord.

3

Airline btteltigcncc Systems Corp,

55 Univeisiiy Avenue

May 22,2008

This proposal is provided as the basis for negotiation of a Lease Amending Agreement between Landlord and Tenant for the above referenced Premises at the Project. The terms and conditions of this proposal are not binding on the Landtord^nd are not to be construed as an Offer to Lease or as a reservation of .right in favour of the Tenant. In order fbihi Lease Amending Agreement to be binding it must be in writmg^nd executed by the Tenant and the Landlord.

Any binding Lease Amending Agreement shall be conditional upon:

(i)               Landlord's approval to the terms thereof, hi its sole discretion;

(ii)Tenant providing to Landlord its financial statements (and such other financial .information relating to Tenant as Landlord may request) demonstrating credit worthiness satisfactory to Landlord, in its sole disoretion;

We appreciate the opportunity to submit this proposal to Airline Intelligence Systems Corp. and look forward to your positive reply.

Yours very truly,

Bentall Real Estate Services Limited Partnership, by its General Partner,

Bentall Real Estate Services G.P. Ltd,, as Authorized Agents for

SITQ National Inc, 

/s/ Mark Rzadt

Mark Rzadt

Senior Director, Office Leasing

The undersigned Tenant acknowledges its receipt of the within proposal and its agreement to proceed with the negotiation of a Lease Amending Agreement on the basis of the terms and conditions contained herein this 24th day of February2009

Airline Intelligence Systems Corp.

Per;	/s/ Stephen Johnson
	Name Stephen Johnson
	Title Director

Per;	/s/
	Name
	Title

I/We have the authority to bind the corporation

4

5

REDER #1

SHALL FORM PART OF THIS AGREEMENT

BETWEEN

SITQ NATIONAL INC.

(LANDLORD)

AND

AIRLINE INTELLIGENCE SYSTEMS CORP.

(TENANT)

1.      FREE RENT

The first three (3) months of the Term shall be free of Basic and Additional Rent, During this period all other terms of the Lease shall apply.

2.     RESTORATION

The Tenant shall, upon expiration or other termination of the term, be required to remove or cause to be removed at the Tenant's cost all or any part of the non standard Leasehold Improvements (to be' defined in the Lease Amending Agreement) in the Existing-whether or not installed by or on behalf of the Tenant or a previous tenant or during a previous term thereof to base building standards. The Tenant will be required to maintain the premises as a prudent owner would during the term of the Lease. The Tenant will be required to repair any damage to the premises or building cause in the removal of furniture, fixturing, equipment, or non standard leasehold improvements.

6

3.      OPTION TO RENEW

Provided the Tenant has not been in continuous default of its obligations under the Lease, the Tenant shall have a one time Option to Renew the Lease for an additional term of not more than five (5) years (the "Renewal ^ Term"). The Tenant shall provide the Landlord with not less than-s&-(6).fitn£/ months and not more than twelve (12) months prior written notice of its intention to exercise this right. The lease for the Renewal Term shall be in the same form as the Lease for the Term save and except for any further Option to Renew and any inducements or free rent enjoyed by the Tenant during the initial Term.

The Basic Rent for the renewal term will be fair market rent for comparable premises in comparable buildings in the area as agreed to between the parties, and failing such agreement, as determined by arbitration pursuant to the Arbitration Act of Ontario.

4.                TENANT'S CONDITION

This Offer to Lease is conditional on the following:

i)  The Tenant, 'acting in its sole interest, approving a detailed space-plan and finish schedule for the Premises within ten (10) business days of conditional acceptance of this Offer to Lease; and

ii)  The Tenant, acting in its sole interest, obtaining the approval of this Offer to Lease by its Board of Directors of the terms thereof, in itssole discretion, within fen (10) business days of conditional acceptance of this Offer to Lease.

The above condition^) are for the sole benefit of the Tenant and may be waived and/or satisfied by the Tenant at any time during the conditional period. In the absence of written notice by the Tenant to the Landlord satisfying or waiving the condition(s) in the time outlined above, this Offer to Lease shall be null and void and the deposit returned to the Tenant in full without interest or deduction,

5.                AGENCY DISCLOSURE

The Landlord and the Tenant acknowledge that in accordance with the Code of Ethics of the Canadian Real Estate Association and the Toronto Real Estate Board, Lermard Commercial Realty, Brokerage (the "Agent") has disclosed that it is representing the Tenant in the transaction described in this Agreement and will be compensated by the Landlord.

7

EX-10.5

Exhibit 10.5

jetEngineTM Software License Agreement

This jetEngineTM Software License Agreement ("Agreement"), effective as of June 7'h, 2007, ("Effective Date"), is made by and between Airline Intelligence Systems Inc. ("AISystems"), a Delaware corporation having an office at 4122 Factorie Blvd. SE, Suite 310, Bellevue, Washington 98006 USA, and Aerovias De Mexico, S.A. DB CV ("Licensee"), a Mexican corporation having an office at Paseo de la Reforma No. 445, Col. Cuahtemoc 06500, Mexico, D.F ,(individually, a "Party," and collectively, the "Parties"). If no date is provided above, then the Effective Date of this Agreement shall be the date on which it is fully signed by the Parties.

In consideration of the rights and obligations set forth in this Agreement, and other good and valuable consideration, the sufficiency and receipt of which are hereby acknowledged, the Parties agree as follows:

1. DEFINITIONS

The following terms, and derivatives thereof, shall have the following meanings for the purposes of this Agreement.

1.1  "Acceptance" means Licensee's acceptance of a Licensed Software module pursuant to Section 43(e).

1.2  "Affiliate" of a party means a corporation or other legal entity (a) controlled by the party, (b) controlling the party, or (c) controlled by the corporation or legal entity that controls the party, For the purposes of this paragraph, to "control" a corporation or an entity means to own or control, either directly or indirectly such as by intermediary entities, (1) more than 50% of the shares or other securities entitled to vote for election of directors (or other managing authority) of the corporation or entity; or (2) if the corporation or entity does not have outstanding shares or securities as may be the case in a partnership, joint venture, or unincorporated association, more than 50% of the ownership interest representing the right to make decisions for the corporation or entity. Notwithstanding the foregoing, any corp oration or other legal entity shall be deemed to be an Affiliate only so long as such control exists.

1.3 "Airline Services" means the provision of mass air transport services to consumer passengers, and excludes freight transport services and military applications.

1.4 "Confidential Information" has the meaning set forth In Section 7.1.

1.5 "Deployment Schedule" means the schedule for the initial installation and testing of the modules of Licensed Software.

1.6 "Documentation" means the user manual or guide for the Licensed Software supplied by AISystems, as updated from time to time,

1.7 "Exclusivity Term" has the meaning set forth set forth In SCHEDULE A (PAYMENT)

1.8 "Exclusivity Term Extension Fee" has the meaning set forth in SCHEDULE A (PAYMENT).

1.9 "GA AP" shall mean the then-current applicable generally accepted accounting principles in Mexico. As used herein, "GAAP" shall also include cost accounting principles that are generally accepted in Mexico.

1.10 "Licensed Software" means the Schedule Planning, Irregular Operations and Revenue Management software modules, in object code form only, that are listed on SCHEDULE B (LICENSED SOFTWARE), and all associated databases and Updates thereto provided hereunder.

1.11    "Ongoing Fees" has the meaning set forth in SCHEDULE A (PAYMENT),

1.12  "Public- Passenger Information" means the number of passengers identified as being flown by Licensee as published in the "Bstadistica Mensual per empresa" quarterly report by the "DGAC", Direccion General de Aeronautics Civil.

1.13  "Term" means the period beginning on the Effective Date and ending three (3) years thereafter unless this Agreement is extended or terminated sooner in accordance with the provisions hereof, in which case the Term shall end on the date of such extension or termination.

1.14    "Territory" means Mexico.

1.15 "Updates" mean new versions of the Licensed Software which are generally provided by AISystems free of charge to customers who are receiving maintenance support services. For the avoidance of doubt, "Updates" do not include new, separate product offerings for which AISystems charges an additional fee. Updates are typically designed by a change in the version number to the right of the decimal point (e.g., version 1.0 to 1.1).

2.       SCOPE

2.1 Grant. Subject to the terms and conditions of this Agreement, AISystems grants Licensee a personal, non-transferable (subject to Section 9.6 below) license to (a) install the Licensed Software on computers and servers In the Territory and the United States that are solely owned and controlled by Licensee, (b) install those portions of the Licensed Software identified by AISystems as remote access software on computers that are solely owned and controlled by Licensee (in and out of the Territory) and (c) internally use such installed Licensed Software, in object code form, solely for Licensee's own internal business purposes in connection with Airline Services.

2.2 Exclusivity. During the Exclusivity Term, AISystems shall not license the Licensed Software to any of the Territory-based airlines listed on SCHEDULE F (LIST OF TERRITORY-BASED AIRLINES) for use in connection with Airline Services, so Ion as Licensee is at all times in full compliance with the terms of this Agreement, including, without limitation, Licensee's full cooperation and timely performance of its oblige ins under the Deployment Schedule and assistance in connection with the installation, testing and deployment of the Licensed Software and Licensee's timely payment of all fees.Should an airline listed on SCHEDULE F (LIST OF TERRITORY-BASED AIRLINES) cease to have its corporate headquarters located in the Territory, that airline shall immediately and automatically be deemed deleted from SCHEDULE F (LIST OF TERRITORY-BASED AIRLINES). Should an airline not listed on SCHEDULE F (LIST OF TERRITORY-BASED AIRLINES) open or move its corporate headquarters to the Territory, that airline shall immediately and automatically be included in SCHEDULE F (LIST OF TERRITORY-BASED AIRLINES). Licensee may extend the Exclusivity Term in six (6) month increments by both (a) paying AISystems, prior to the next extension, the Exclusivity Term Extension Fee for each module that was Accepted by Licensee and (b) providing AISystems with notice of its intent to extend the Exclusivity Term and pay the Exclusivity Term Extension Fee at least ninety (90) days in advance of the expiration of the then-current Exclusivity Term.

2.3 Affiliates. Licensee has the right to grant any of its Affiliates a sublicense within the scope of the licenses granted to Licensee, provided that (a) Licensee first obtains AlSysternsi written consent before granting a sublicense to an entity that becomes an Affiliate after the Effective Date, (b) the sublicensee is bound in writing by the same terms and conditions imposed on Licensee under this Agreement, including obligations to pay fees (by way of example, Ongoing Fees for the passengers flown by the Affiliate), and (c) Licensee and its Affiliates shall be responsible for the actions or omissions of the Affiliates and both shall be jointl y and severally liable to AISystems if any such actions or omissions breach any provision of this Agreement (including due to bankruptcy). Any such sublicense granted to an Affiliate shall immediately terminate in the event that the sublicense° ceases to be an Affiliate, and no sublicensee shall be granted the right to grant any further sublicenses or use the Licensed Software or Documentation on behalf of any third party, including any Affiliate or alliance or code share partner of the sublicensee, Any sublicense permitted under this Section may be made effective retroactively, but not before the Effective Date nor before the sublicensee becoming an Affiliate of Licensee. Licensee shall notify AISystems of the identity of each sublicensee and provide to AISystems within thirty (30) days after execution, a true copy of such sublicense. Licensee shall pay, report and account to AISystems for payments due for the exercise by any sublicensee of any subl icense. For the purposes of interpretation of this Agreement, the use of the both "Licensee" and "Affiliate" in one instance, and only "Licensee" in another instance, shall not be construed as an intention to exclude a sublicensed Affiliate from the obligations of the Licensee in the second instance.

2.4 Copies. Licensee shall have the right to make (a) a single archival copy of the Licensed Software for archival purposes only and (b) single copies as necessary to its installation of the Licensed Software. Otherwise, Licensee shall not make copies of the Licensed Software.

2.5 Third Party Software Required.  Licensee understands that the Licensed Software will not function properly unless used with third party products and services identified, but tot provided, by AISystems. In the event AISystems provides Licensee with third pa products and services covered by a third party license (including a "shrink-wrap" licensee), Licensee agrees to use such products and services inaccordance with the terms of the third party license agreement.

2.6 No Other Rights.Licensee acknowledges that it obtains no ownership rights in the Licensed Software under the terms of this Agreement and that no other rights, other than those expressly set forth herein, are granted or implied. By way of example only, Licensee may not: provide copies of or perform or display the Licensed Software to third parties; modify, merge, or create derivative works from the Licensed Software; incorporate the Licensed Software into other software, or; rent, lease, license or sublicense the Licensed Software to any third party, As between AISystems and Licensee, ownership in the Licensed Software and copies thereof, includi ng the ownership of any associated trade secrets, modifications to the Licensed Software, trademarks, service marks, patents, and copyrights associated therewith, remains in AISystems, its suppliers, and its licensors. AISystems retains the rights to exploit the Licensed Software for all purposes of AISystems and its customers not otherwise expressly precluded by the Agreement without accounting or disclosure to Licensee, All rights not expressly granted to Licensee are reserved by AISystems. There are no implied rights,

2.7  Fixes. Licensee will make its best effort to use the most recent version of the Licensed Software and Documentation provided by AISystems to Licensee, including any Updates provided during the term of this Agreement.

2.8  No Reverse Engineering.Licensee will not reverse engineer the Licensed Software, nor disassemble, decompile or attempt to derive the source code from, or input or output data formats of, any portion of the Licensed Software; however, to the extent certain reverse engineering activities may be permitted by law in spite of Licensee's agreement not to reverse engineer, this sentence shall not apply to such activities, provided that Licensee shall notify AISystems in writing at least ninety (90) days prior to taking any proposed action in contravention of this provision. Such written notice shall provide the parties an opportunity to discuss the scope of any necessary reverse 'engineering that would be required to be permitted under applicable local law,

2.9 Backups.Licensee must maintain backups of' any data outputted _from, or intended for input into, the Licensed Software.

2.10 Internal Use Only. Licensee may not use the Licensed Software for the purpose of processing data on behalf of third parties including, without limitation, any Licensee airline alliance or code share partners, nor in connection with a service bureau or utility computing arrangement. Licensee shall not install the Licensed Software on any computer in a manner allowing the Licensed Software to be executed or accessed by third parties. Notwithstanding the previous sentence, Licensee may use the Licensed Software for the purposes of revenue management, operations and reservations with respect to Licensee's code share partners, provided that (a) such use is for tickets sold by Licensee on code share partner flights and (b) Licensee's u ses the Licensed Software for schedule planning solely in connection with Licensee's own fleet.

2.11 Proprietary Legends. Licensee shall not alter any proprietary markings on or in he Licensed Software or any other materials provided by AISystems hereunder, or any co gas thereof, including copyright, trademark, trade secret, and patent notices.

3. PAYMENT

3.1

3.2

3.3

(a)

(b)

(c)

3.4

(a)

(b)

AISystems may change the foregoing payment account and address information upon notice to Licensee,

3.5

3.6

3.7

3.8

3.9

3.10

3.11

4.       DEPLOYMENT

4.1 Technical Baseline Assessment. Promptly following the Effective Date, the parties shall confer and cooperate in good faith to perform an assessment of Licensee's systems and personnel with respect to the Installation and deployment of each module of the Licensed Software and prepare a Deployment Schedule.

4.2 Cooperation and Assistance. Licensee shall cooperate at all times and fully support the installation and deployment of the Licensed Software. In addition to performing the tasks and requirements outlined in the Deployment Schedule, Licensee's cooperation and support shall include, but not be limited to, the dedication of appropriate Licensee equipment and resources and personnel and the provision of qualified Licensee personnel reasonably acceptable to AISystems who will assist AISystems in its efforts, arid the provision of timely and responsive information, input and assistance. Licensee may need to provide, at its own expense, office space and customary workplace amenities, such as telephone access, office furniture, network access, etc., so that AISystems technical representatives will be able to carry out in a professional manner their technical duties in furtherance of the installation and deployment of the Licensed Software.

4.3     Deployment

(a) Kick-Off Dates. For the Schedule Planning module of the Licensed Software, the kickoff date will be the Effective Date. The second kick-off date will be for the Irregular Operations or Revenue Management module of the Licensed Software, and will occur on the earlier of Acceptance of the Schedule Planning module or a mutually agreed-to date. The third kick-off date will be for the Irregular Operations or Revenue Management module of the Licensed Software, whichever has not had a kick-off date yet, and will occur on the earlier of the date that the other two modules are both Accepted or a mutually agreed-to date.

(b) Time Limit. If any module is not Accepted by Licensee within nine (9) months of the kick-off date, then either party may terminate the agreement immediately upon written notice.

(c)  Ready and Acceptance/Rejection Notices. If AISystems provides Licensee with a notice that a given module is ready for acceptance (the "ready notice"), then Licensee must provide notice within fifteen (15) business days of the ready notice stating that Licensee either accepts or rejects the module (the "acceptance/rejection notice"). A rejection may only be based on the module's failure to be in line with Licensee's business functions or substantial defects in the module, Licensee shall explain the basis for the rejection I reasonable detail in the acceptance/rejection notice.The ready notice and acceptance/rejection notice shall be made in AISystems' and Licensee's sole discretion, respectively, but shall be made in good faith. If Licensee fails to provide notice with such fifteen (15) business day period, the module shall be deemed accepted by Licensee.

(d) Overcoming Rejections. If Licensee provides AISystems with an acceptance/rejection notice rejecting a module, then AISysterns must provide counter-notice within fifteen (15) business days of receipt, which counter-notice shall indicate whether AISystems either agrees to attempt to overcome the rejection(s) (in which ease it will provide an estimated date by which it will be overcome) or state that it will not overcome the rejection. If the estimated date 1$ more Than nine (9) months after the modules kick-off date, then Licensee may terminate this Agreement. If AlSysteins is unwilling to overcome a rejection, either party may terminate this Agreement immediately upon written notice; provided, however, AISystems may not terminate the Agreement in accordance with this sentence if the rejection both (a) would require AISystems to incur less than US$500,000 (Five Hundred Thousand United States Dollars) and (b) in AISystems reasonable estimation, would be overcome by a date less than nine (9) months after the module's kick-off date.

5. MAINTENANCE, TRAINING AND ENHANCEMENTS

5.1  Maintenance and Support. AISystems shall maintain and support the Licensed Software in accordance with SCHEDULE B (MAINTENANCE AND SUPPORT).

5.2 Training. AISystems shall train Licensee in the use of the Licensed Software in accordance with SCHEDULE C (TRAINING).

5.3 Updates. AISystems shall provide Licensee with Updates to the Licensed Software following release at no additional cost beyond the payments required in Section 3 ("PAYMENT"). Updates shall not include new versions: containing modifications that AISystems is prohibited from licensing to Licensee in accordance with this Agreement. Updates further do not include any new versions containing modifications which, if licensed to Licensee in accordance with this Agreement, would require AISystems to pay royalties or other consideration to a third party.

5.4 Maintenance Exceptions. AISystems shall have no obligation to provide maintenance, support or training as set forth in this Section 5 with respect to (a) any aspect of the Licensed Software modified by Updates that have been made available to, but not yet used by, Licensee or (b) any software questions, errors or issues arising from Licensee's use or development of interfaces for the Licensed Software (or other software or systems which transfer data between the Licensed Software and Licensee's systems and services) that are not provided by AISystems.

5.5  Customizations and Interfaces. In the event AISystems agrees to customize the Licensed Software for Licensee after acceptance, AISystems may require such customizations to be performed pursuant to a separate mutually-acceptable agreement between the parties, including an agreement by Licensee to pay additional compensation. Absent such separate agreement, any customizations, software, databases or other materials provided by AISystems to Licensee relating to the Licensed Software, including any interfaces between the Licensed Software and Licensee's systems and services, shall be owned by AISystems (as between AISystems and Licensee) and considered Licensed Software for the purposes of this Agreement.

6.       WARRANTIES, LIMITATION ON LIABILITY AND INDEMNIFICATION

6.1 Warranty Disclaimer, THE LICENSED SOFTWARE AND DOCUMENTATION ARE PROVIDED "AS IS" AND WITHOUT WARRANTY OF ANY TYPE OR KIND AND AISYSTEMS MAKES NO WARRANTIES AND DISCLAIMS AND EXCLUDES ALL OTHER WARRANTIES, WHETHER STATUTORY, EXPRESS OR IMPLIED, INCLUDING, BUT NOT LIMITED TO, ANY IMPLIED WARRANTY OP MERCHANTABILITY, FITNESS FOR A PARTICULAR PURPOSE, TITLE OR NON-INFRINGEMENT OR ANY WARRANTY ARISING BY USAGE OF TRADE, COURSE OF DEALING OR COURSE OF PERFORMANCE.

6.2 Consequential Damages Waiver. IN NO EVENT SHALL AISYSTEMS BE LIABLE FOR ANY INDIRECT, INCIDENTAL, CONSEQUENTIAL, PUNITIVE OR SPECIAL DAMAGES, INCLUDING, WITHOUT LIMITATION, DAMAGES FOR LOST PROFITS, LOSS OF USE, BUSINESS INTERRUPTION OR LOSS OF DATA OR INFORMATION, RELATING TO THE LICENSED SOFTWARE OR MATE 'IALS ASSOCIATED THEREWITH OR ARISING OUT OF THIS AGREEMENT, HO VER CAUSED, WHETHER FOR BREACH OF WARRANTY, TORT (INCLUDING NEGLIGENCE) OR OTHERWISE, EVEN IF AISYSTEMS HAS BEEN ADVISED OF THE POSSIBILITY OF SUCH DAMAGES AND NOTWITHSTANDING ANY FAILURE OF THE ESSENTIAL PURPOSE OF THIS AGREEMENT OR ANY LIMITED REMEDY HEREUNDER. For the purposes of this paragraph only, references to "AISystems" and "Licensee" shall be deemed to include AISystems' and Licensee's subsidiaries, affiliates, employees , directors, officers, licensees, representatives and subcontractors, suppliers and distributors. This paragraphshall not be construed to limit any amounts owed by AISystems to Licensee pursuant to Section 6.4 ("Indemnification and Indemnification Procedure).

6.3 Cap on Liability. AISYSTEMS AND ITS SUPPLIERS' TOTAL LIABILITY UNDER OR FOR BREACH OF THIS AGREEMENT SHALL BE LIMITED TO THE AMOUNTS PAID BY LICENSEE TO AISYSTEMS PURSUANT TO THIS AGREEMENT; PROVIDED, HOWEVER, THAT DIRECT OR INDIRECT DAMAGES OWED BY LICENSEE TO THIRD PARTIES FOR WHICH AISYSTBMS IS OBLIGATED TO INDEMNIFY LICENSEE PURSUANT TO SECTION 6.4 ("Indemnification and Indemnification Procedures") ARE NOT SUBJECT TO THE FOREGOING LIMITATION.

6.4     Indemnification and indemnification Procedures

(a)  AISystems will defend, at its expense, any action brought against Licensee by a third party to the extent that such action is based on a claim that use of the Licensed Software within the scope of this Agreement infringes the third party's patent or copyright or misappropriates the third party's trade secret right. AISystems will indemnify Licensee from an direct or indirect damages owed to such third party resulting from such claim. If commercially feasible to do so, AISystems shall, at its own expense, procure the necessary rights for Licensee to exercise the licenses granted herein or replace the Licensed Software with substantially-equivalent non-infringing software. If neither of the foregoing are commercially feasible, AISystems may terminate this Agreement upon written notice, Notwithstanding the foregoing, AISystems shall have no obligation to defend or indemnify Licensee against any claim that would not arise but for; (i) the combination, operation or use of the Licensed Software with other software, hardware, equipment, programs, services or data not supplied by AISystems, (ii) the infringement results from non-core features that were added at AeroMexico's request (whereby "non-core features" for the purposes of this sentence are features that are not core to the business functions of AeroMexlco's sys tems and processes existing as of the Effective Date), (ii) to the extent it arises from Licensee's failure to satisfy an obligation herein, (iii) Licensee's failure to use the most recent Update made available to Licensee, provided that if requested by Licensee, AISystems will install such Update on Licensee's systems without additional charge to Licensee, or (iv) Licensee's continued engagement in the allegedly infringing conduct after receiving notice of the claim, In the event the above exclusions apply, Licensee shall indemnify and hold AISystems harmless from and against all damages resulting from such claim. THIS SECTION STATES THE ENTIRE LIABILITY OF AISYSTEMS WITH RESPECT TO INFRINGEMENT OR SOFTWARE AND AISYSTEMS WITH RESPECT TO INFRINGEMENT OR VIOLATION OF INTELLECTUAL PROPERTY RIGHTS BY THE LICENSED SOFTWARE AND AISYSTEMS SHALL HAVE NO ADDITIONAL LIABILITY WITH RESPECT TO ANY ALLEGED OR PROVEN INFRINGEMENT OR VIOLATION.

(b)  A Party requesting indemnification hereunder shall send notice of same to the indemnifying party. Such notice shall explain the nature of the claim giving rise to indemnification request and shall be sent within seven (7) days after the indemnified party is notified regarding the claim or earlier ifnecessary to prevent prejudice to the indemnifying party's ability to defend the claim. The indemnifying party shall have Rill authority to defend or settle the claim with counsel of its own choosing, but shall consult with the indemnified party regarding settlement discussions and its defenses. The indemnified party shall be entitled to participate in the defense of the claim, including employment of separate counsel, at its own expense. The indemnified pa rty shall cooperate with the indemnifying party in the defense of the claim. The indemnifying party shall have the right to immediately terminate this Agreement whenever a claim shall arise for indemnification hereunder.

6.5 High Risk Activities. The Licensed Software is not fault-tolerant and is not designed, manufactured or intended for use in hazardous environments requiring fail-safe pet-romance, such as in the flight operation of aircraft, aircraft navigation or communication systems, air traffic control, nuclear facilities, medical equipment, direct life support machines, weapons systems or any other business, system or product in which the failure of the Licensed Software could lead to death, personal injury, or physical or environmental damage ("High Risk Activities"). Licensee agrees that AISystems and its Affiliates and their suppliers will not be liable for any claims or damages arising from the use of the Licensed Software in such applications,

7. CONFIDENTIALITY

7.1 Definition. "Confidential Information" means (a) the Licensed Software and Documentation, (b) all financial information, all operational related information and labor & unions information and (c) any non-public information disclosed in connection with this Agreement that the Recipient knows or reasonably should know is confidential to the Discloser. 'Discloser" means the Party disclosing Confidential Information and "Recipient" means the Party receiving Confidential Information. Confidential Information also includes all summaries or abstracts of Confidential Information.

7.2 Reproductions.Recipient shall reproduce Confidential Information only to the extent necessary to exercise its rights and obligations under this Agreement. Reproductions of Confidential Information shall include any proprietary markings on or in the Confidential Information, including copyright, trademark, trade secret and patent notices.

7.3 Licensed Software Output. As between Licensee and AISystems, the Licensed Software and Documentation comprise the Confidential Information of AISystems. However, to the extent data is generated based on both the Licensed Software and data provided by Licensee, such as, but not limited to, data calculated by the Licensed Software based on data input by the Licensee, then such generated data shall be considered Confidential information of both parties and neither party shall disclose such generated data to third parties except as permitted under this Agreement. Notwithstanding the foregoing or anything else in this Agreement to the contrary, AISystems shall be entitled to aggregate such generated data with data received from third parties, and use and disclose , such aggregated data, provided that the aggregated data does not reveal Licensee's data by may of example, AISystems may d isclose averages across multiple customers of AISystems provided that a reasonable person in Licensee's industry would not be able to discern which aspects of the data are particular to Licensee.

7.4  No Use or Disclosure. Each party acknowledges that, in the course of the performance of this Agreement, it may obtain the Confidential Information of the other party. The Recipient shall not use the Confidential Information of the Discloser other than as necessary to perform its obligations or exercise its rights under this Agreement. Recipient shall not disclose Confidential Information to any third party, other than its officers, employees, consultants and independent contractors who need access to such Confidential Information in order to effect the intent of this Agreement and who have entered into written confidentiality agreements wit h the Recipient under terms sufficient to enable the Disclosing Party to comply with its confidentiality obligations under this Agreement, nor use the Confidential Information for the benefit of a third party, without prior written approval of Discloser. Recipient shall take reasonable precautions to prevent the inadvertent or unauthorized disclosure of Confidential Information, including at least those reasonable precautions taken by Recipient to protect its own confidential information of similar nature and importance and all other precautions necessary to comply with the confidential obligations established in this agreement, For the purposes of this paragraph, "need to know" means that the person requires the Confidential Information to perform his, her or its responsibilities in connection with this Agreement. The Recipient shall immediately give notice to the Discloser of any unauthorized use or disclosure of the Discloser's Confidential Information when it becomes aware of the unauthorized use or disc losure. The Recipient agrees to assist the Discloser in remedying such unauthorized use or disclosure of its Confidential Information,

7.5 Duration. Recipient's duty to protect Confidential Information commences upon receipt of the Confidential Information and shall continue for a period of 10 (ten) years beyond the termination of this Agreement.

7.6 Exceptions. These restrictions on the use and disclosure of Confidential Information shall not apply to any Confidential Information that Recipient can document: (a) is lawfully received by Recipient free of restriction from another source having the right to furnish the Confidential Information free of restriction; (b) becomes readily available to the public without breach of this Agreement by Recipient; (c) is, at the tithe of disclosure to Recipient, known to Recipient free of confidentiality restrictions; (d) is independently developed by the Recipient without use of, or reference to, the Confidential Information of the Discloser, which independent development the Recipient shall have the burden of proving; or (e) is approved for release by written authorization of the Disclos er. A disclosure of Confidential Information by Recipient, on the advice of counsel, which isrequired under applicable law or other demand under lawful process, including a formal discovery request in a civil litigation, shall not be considered to be a breach of this Agreement or waiver of confidentiality for other purposes; provided however, that the Recipient shall use reasonable efforts to first give Discloser notice as soon as reasonably practicable of the required disclosure and cooperate with Discloser, at Discloser’s sole expense, in seeking reasonable protective arrangements with the party requiring disclosure under applicable law or other demand under lawful process. In no event shall Recipient’s cooperation with Discloser require Recipient to take any action which, on the advice of Recipient's counsel, could result in the imposition of any sanctions or other penalties against Recipient.

8. TERM AND TERMINATION

8.1 Term. The rights and obligations of this Agreement shall be effective during the Term and shall terminate at the end of the Term. The Term may be continuously extended in one (1) year increments at the end of the then-current Term if both Parties agree in writing to renew the Agreement at least ninety (90) days before the end of then-current Term.

8.2 Early Termination -- Licensee

8.3 Early Termination -- Either PartyEither party may terminate this Agreement:

(a) in accordance with any terms of-this Agreement which expressly provide for termination; or

(b)  upon thirty (30) days prior written notice, if the other party has breached a material obligationunder this Agreement and such breach remains uncured during such thirty (30) day period; provided, however, that the notice and cure period shall be forty-five (45) days in the case of non-payment; or

(c) to the extent permitted by applicable law, immediately upon the other party, or a third party with respect to the other party, filing a petition requesting, with respect to the other patty's debts, liquidation, dissolution, reorganization, suspension, rearrangement or readjustment, in any form, under the laws of the United States or any other jurisdiction, or any other bankruptcy or insolvency law; the making by the 'other party of any assignment for the benefit of its creditors; or the admission by the other party in writing of its inability to pay its debts as they mature.

8.4 Effect of Termination. Upon termination of this Agreement:

(a) each Party shall use reasonable efforts to immediately destroy or return to the other Party all copies of the Confidential Information of the other party and certify in writing of it compliance with this Section 83(a) as to the destruction or return of such Confidential Information (excluding any generated data);

(b)  the license granted to Licensee shall immediately terminate and Licensee shall discontinue all further use of the Licensed Software;

(c)  if not previously terminated, the exclusivity under Section 2.2 ("Exclusivity")shall immediately terminate and be of no further force or effect;

(d)   all payments accrued prior to the date of termination shall become immediately due and payable; and

(e)    notwithstanding such specific termination rights, each Party reserves all of its other legal rights and equitable remedies.

8.5 Change of Control.Upon the occurrence of any of the following events: merger of Licensee with another company whether Licensee is not the surviving entity or a third company is formed different from merger and merged; the sale of Licensee's stock which causes a change of control, for purposes of this provision, the term "change of control" means the sale or transfer of 20% or more of the voting stock of Licensee; the total sale of Licensee's stock and/or assets, change of Control of Licensee or Licensee's Parent Company, the parties will have the right to terminate this Agreement without any liability and without the need of judicial notice in a period no longer than 90 days after the effectiveness of the Change of Control by providing a minimum of 90 days prior written notice of termination. Notwithstanding the aforementioned, the parties will agree in good faith the terms and conditions of Transition Process.

8.6 Survival. The parties' rights and obligations under this Agreement which expressly or by their nature would continue beyond the termination of this Agreement shall remain in effect and survive termination of this Agreement, including Sections 3.10 ("Record Keeping") and 7 ("Confidentiality").

9.       GENERAL

9.1 Relationship of the Parties. In performing this Agreement, each of the Parties will operate as, and have the status of; an independent contractor. Except as may be expressly set forth in this Agreement, neither Party will have the right or authority to assume or create any obligations or to make any representations, warranties or commitments on behalf of the other Party, whether express or implied, or to bind the other Party in any respect whatsoever. Nothing in this Agreement shall be construed as forming any partnership, joint venture, agency, employment, franchise, distributorship, dealership or other similar or special relationship between the Parties.

9.2  Rules of Construction. As used in this Agreement, (a) the words "herein," "hereunder" and other words of similar import refer to this Agreement as a whole, including any exhibits and schedules as the same may be modified from time to time, and not to any subdivision of this Agreement; (h) the terms "including," "by way of example" or any variation there ofmeans "including but not limited to" and "by way of example only and without limitation," respectively, and shall not be construed to limit any general statement that it follows to the specific or similar items or matters immediately following it; (a) descriptive headings and titles are inserted for convenience of reference only and do not constitute apart of and shall not be utilized in interpreting this Agreement; an d (d) explicit references to a particular section shall be deemed to include a reference to its subsections. This Agreement shall be fairly interpreted in accordance with its terms and without any presumption in favor of or against either Party regardless of the drafter. The schedules shall be construed to be fully consistent with all of the provisions appearing before the signatures below and, in the case of any conflict between the schedules and such provisions, such provisions shall prevail.

9.3 Notice. Unless otherwise provided in this Agreement, all notices, consents, approvals, waivers and the like made hereunder shall be in written English to the addresses set forth below, shall reference this Agreement and shall be sent by any of the following methods: (a) certified mail, postage-prepaid, return-receipt requested, or (b) an internationally recognized overnight delivery service which requires proof of delivery signed by the recipient. The date of notice shall be deemed to be the date it was first received or refused. A Party may change its address for notice by written notice in accordance with this paragraph.

Notices to AISystems shall be sent to:

Airline Intelligence Systems Inc. 4122 Factoria Blvd. SE, Suite 310 Bellevue, Washington 98006 USA Attn: Chief Executive Officer

and faxed to: 425.696.0451

Notices to Licensee shall be sent to:

Humberto Figueroa

Chief Information Officer Av. Paseo de is Reforma 445 Col. Cuauhtemoc

Del Cuauhtemoc

CP 06500

cc Edmundo Olivares

9.4 Equitable Remedies. The Parties recognize that money damages may not be an adequate remedy for any breach or threatened breach of any obligation hereunder and that the aggrieved Party may suffer immediate and irreparable harm as a result, The Parties therefore agree that In addition to any other remedies available hereunder, by law or otherwise, a Party may be entitled to obtain injunctive relief against any such continued breach of such obligations.

9.5 Third Party Beneficiaries. This Agreement is not intended to be for the benefit of and shall not be enforceable by any third party. Nothing in this Agreement, express or implied, is intended to or shall confer on any third party any rights (including third-party beneficiary rights), remedies, obligations or liabilities under or by reason of this Agreement. This Agreement shall not provide third parties with any remedy, claim, liability, reimbursement, cause of action or other right in excess of those existing without reference to the terms of this Agreement. No third party shall have any right, independent of any right that exists irrespective of this Agreement, to bring any suit at law or equity for any matter governed by or subject to the provisions of this Agreement.

9.6  Assignment. Except as set forth in Section 2.3 or expressly elsewhere in this Agreement neither Party may assign or transfer any of its rights and obligations under this Agreement In whole or part, without the other Party's prior written consent, except that such prior written consent shall not be required in connection with the assignment to (1) an Affiliate; or (ii) to a third party where the assignment is in connection with the merger, acquisition, sale, reorganization or other transfer of all or substantially all of the relevant business of the assigning party to the third party, provided that the assignee agrees in writing to comply with the terms of this Agreement and p rovided further that, in the case of an assignment by Licensee pursuant to Section 9.6(ii), the licenses granted under this Agreement shall be limited to the assignee using the Licensed Software and Documentation to operate Licensee's business as it existed immediately prior to the effective date of the assignment and may not be used by the assignee in connection with its own business or that of any assignee Affiliate (other than Licensee), or any other party. Any assignment or other transfer which is derogation of the foregoing shall be null and void abinitio.

9.7 No Disclosure Of Agreement.. Neither Party shall disclose information concerning this Agreement or its execution, and the transactions contemplated hereby, including providing a copy of this Agreement, unless such disclosure: (a) is to the Party's outside accounting firm who have entered into written confidentiality agreements with the Recipient under terms sufficient to enable the Disclosing Party to comply with its confidentiality obligations under this Agreement, (I)) the Party's outside legal counsel in connection with obtaining legal advice or enforcing this Agreement, provided the outside counsel either (1) have entered into written confidentiality agreements with the Recipient under terms sufficient to enable the Disclosing Party to comply with its confidentiality obligations under this Agreement or (ii) are bound by law not to disclose the terms of this Agreement without the permission of the Party-client, or (c) is to a potential investor, potential acquirer, or financial advisor of the Party i n connection with the bona fide due diligence review of such Party and who have entered into written confidentiality agreements with the Recipient under terms sufficient to enable the Disclosing Party to comply with its confidentiality obligations under this Agreement, or (d) is required to establish or enforce any rights hereunder. In the event a Party is compelled to disclose this Agreement to a governmental authority in connection with regulatory obligations, including to a governmental taxing 'authority in order to verify its tax obligations or a regulatory agency in connection with a public offering, such Party may disclose this Agreement to such authority without obtaining the other Party's prior consent, provided that the authority is obligated to its confidentiality or confidential treatment is requested and obtained. This paragraph shall survive termination of the Agreement. Notwithstanding, each Party has the right to disclose to third parties during the Term that Licensee is a licensee of AISystem s provided that Licensee is a reference account pursuant to Section 9.12.

9.8 Force Majeure Neither Party shall be held responsible for any delay or failure in performance of any part of this Agreement to the extent such delay or failure is caused by any cause beyond such Party's reasonable control, including, but not limited to, fire, flood, explosion, war, strike, embargo, government requirements, civil or military authority, act of God, act of terrorism, or other similar causes (collectively, "Force Majeuro Events"). The delayed party shall give the other Party prompt written notice of such Force Majeure Event and use its reasonable efforts to correct such failure or delay in its performance. The Party affected by the other's inability to perform may terminate this Agreement upon 15 (fifteen) days notice if the delay or nonperformance continues during such fifteen (15) days.

9.9 Applicable Law and Venue. This Agreement, including any questions relating to its validity, shall be governed by the laws of the State of New York, New York, USA without regard to its or another jurisdiction's conflicts of law rules. The parties expressly agree that the United Nations Convention on Contracts for the International Sale of Goods is specifically excluded from application to this Agreement. Any suit arising under, in connection with or relating to this Agreement, including counterclaims, shall be brought and prosecuted only in the Manhattan Borough; provided, however, that such a suit may be brought in any court having requisite jurisdiction and venue in the event that the courts of Manhattan Borough do not have, or decline, subject matter jurisdiction, personal jurisdiction or venue relating to such suit. Each of the Parties hereby ir revocably submits to the jurisdiction of the state and federal courts of Manhattan Borough, New York, New York, USA for such suit and waives any objection based on forum non conveniens or venue being laid therein.

9.10 Assertion of Unenforceabilitv. If any provision of this Agreement is deemed illegal or unenforceable, the requirements of the provision shall remain to the full extent permissible by law and the offending portions thereof shall be deemed replaced, to the extent possible, with a provision most closely reflecting the economic effect and intent of the offending provision and the remainder of this Agreement shall continue unchanged in WI/ force and effect.

9.11 Entire Agreement; No Modification or Waiver. This Agreement constitutes the entire agreement between the Parties concerning its subject matter and supersedes all prior written or oral negotiations, correspondence, understandings and agreements between the Parties respecting such subject matter; provided, however, that all information disclosed prior to the Effective Date in accordance with the confidentiality agreement dated February 15, 2006, shall continue to be subject to such agreement and the Parties agree that no information shall be disclosed under such agreement after the Effective Date. Prior unexecuted drafts of this Agreement, if any, may not be used to interpret the intentions of the parties or underlying facts relating to this Agreement and the fact that certain provisions may have been added, removed or modified during negotiations shall have no interpretive significance. This Agreement shall not be modified or rescinded, except by a writing signed by both Parties, No provision of this Agreement shall be deemed modified by any action or omission or failure to object to any action that may be inconsistent with the terms of this Agreement. No waiver of a breach committed by a Party in one instance shall constitute a waiver or license to commit or continue breaches in other or like instances. By way of example only and without limiting the foregoing, this Agreement may not be modified by any statement appearing on any cheek or similar transfer of money, or by any provision appearing in any preprinted form of one Party unless expressly accepted by the other Party in a writing which expressly refers to snob preprinted form and this Agreement.

9.12 Reference Account. Licensee shall endorse the Licensed Software and AISystems by serving as a reference account for AISystems. Specifically and without limitation, AISystems shall be permitted to name Licensee as a customer in any of its marketing oradvertising materials and otherwise publicly state that Licensee uses the Licensed Software and is a customer of AISystems. AISystems shall also be permitted to use Licenesee’s trademarks in its sales and marketingliterature, which use shall be in accordance with Licensee's trademark usage guidelines set forth in SCHEDULE D (AEROMEXICO TRADEMARK USAGE GUIDELINES). Licensee shall also work with AISystems in good faith to cr eate white papers and customer testimonials and, from time to time, respond to calls for reference from prospective AISystems customers, investors, analysts or other interested parties. Upon mutual agreement of the Parties (not to be unreasonably withheld, conditioned or delayed), Licensee shall also allow AISystems and its prospective customers to tour Licensee's facilities where the Licensed Software is being used. Both parties acknowledge that the following factors are relevant to determining whether such consent is unreasonably withheld, conditioned or delayed: (a) whether the prospective customer is a competitor of Licensee (indicating reasonableness of withholding consent), (b) whether both Licensee and the prospective customer are members of the SkyTeam Alliance (indicating unreasonableness of withholding consent), (c) the availability of keeping confidential information ( and Licensee's financial and operation data in particular), from disclosure to the prospective customer, and (d) the availability of binding the prospective customer to a confidentiality agreement. In the absence of a tour, Licensee shall use reasonable efforts to be available to the prospective customer by telephone. The provisions of this paragraph shall expire at the end of the Exclusivity Term, including any extensions thereto.

9.13 Export. Licensee acknowledges and agrees that the Licensed Software is subject to the export control laws and regulations of the United States, including, but not limited to, the Export Administration Regulations ("BAR"), and sanctions regimes of the U.S. Department of Treasury, Office of Foreign Asset Controls. Licenseewill comply with these laws and regulations. Licensee shall not without prior U.S. government authorization, export, re-export, or transfer any goods, software, or technology subject to this Agreement, directly to any country subject to a U.S. trade embargo (currently Cuba, Iran, North Korea, Sudan, and Syria) or to any resident or national of any such country, or to any person or entity listed on the "Entity List" or "Denied Persons List.maintained by the U.S. Department of Commerce or the list of "Specifically Designated Nationals and Blocked Persons" maintained by the U.S. Department of Treasury. AISystems and Licensee confirm that their understanding the export laws do not prevent Licensee from using the Licensed Software to schedule international flights.

9.14 English. This Agreement, and the exhibits hereto, are prepared an executed in the English language only, which language shall be controlling in all respects. Any translations of this Agreement into any other language are for reference only and shall have no legal or other effect. All proceedings related to this Agreement shall be conducted in the English language. The Parties acknowledge having carefully read this Agreement, having obtained adequate explanations on the nature of Its provisions, and understanding the latter. The Parties hereto acknowledge that they are satisfied that this Agreement and all related documents, as the case may be, is drafted in the English language.

IN WITNESS WHEREOF, the parties hereto have executed this agreement on the dates and year written below.

Aerovias de Mexico, S.A. de C.V. ("LICENSEE")    ("AISystems")

By:	/s/ Edmundo Olivares Dufoo /s/ Alejandro Somuano Ventura	By:
	(Authorized Signature)
Name:	Edmundo Olivares Dufoo	Name:
	Alejandro Somuano Ventura		(Typed or Printed Name)
	(Type or Printed Name)
Title:	Sr. VP Legal Executive/Chief Planning Officer	Title:
Date:	June 7th, 2007	Date:

THIS AGREEMENT DOES NOT BIND OR OBLIGATE EITHER PARTY IN ANY MANNER UNLESS DULY EXECUTED BY AUTHORIZED REPRESENTATIVES OF BOTH PARTIES.

SCHEDULE A (PAYMENT)

SCHEDULE B (MAINTENANCE AND SUPPORT)

SCHEDULE C (TRAINING)

SCHEDULE E (LICENSED SOFTWARE)

SCHEDULE F (LIST OF TERRITORY-BASED AIRLINES)

EX-10.6

Exhibit 10.6

INTELLECTUAL PROPERTY AGREEMENT

This agreement ("Agreement") is effective December 9, 2005 ("Effective Date") and is by and between DYNAMIC INTELLIGENCE INC. ("Dynamic"), a Barbados Corporation having an office at First Floor, Trident House, Lower Broad Street, Bridgetown, Barbados, and AIRLINE INTELLIGENCE SYSTEMS INC., a Delaware Corporation, ("AIS"), having an office at 2711 Centerville Road Suite 4 Wilmington, Delaware 19808 USA.

In consideration of the terms, conditions and other covenants and agreements contained in this Agreement and other good and valuable consideration, the receipt and sufficiency of which are acknowledged, Dynamic and AIS ("the Parties") agree as follows:

1. DEFINITIONS

For the purposes of this Agreement, certain terms have been defined below and elsewhere in this Agreement to encompass meanings that may differ from, or be in addition to, the normal connotation of the defined word,

1.1"Affiliate" of a Party means a corporation or other legal entity (a) controlled by the Party, (b) controlling the Party, or (c) controlled by the corporation or legal entity which controls the Party. For the purposes of this paragraph, to "control" a corporation or an entity means to own or control, either directly or indirectly such as by intermediary entities, (1) more than 50% of the shares or other securities entitled to vote for election of directors (or other managing authority) of the corporation or entity; (2) more than 50% of the equity interest of the corporation or entity; (3) if the corporation or entity does not have outstanding shares or securities as may be the case in a partnership, joint venture, or unincorporated association, more than 50% of the ownership interest representing the right to make decisions for the corporation or entity; or (4) the maximum shares or other securities entitled to vote for election of directors (or other managing authority) of a foreign corporation or entity permitted by law if (i) the applicable country does not permit the Party to own a greater share due to its nationality and (ii) the foreign corporation or entity is substantially controlled by the Party. Notwithstanding the foregoing, any corporation or other legal entity shall be deemed to be an Affiliate only so long as such control exists.

1.2"Airline Field" means the field of resource scheduling and planning in the airline industry and airline operations, excluding military applications and Maintenance Repair Operations. "Maintenance Repair Operations" ("MRO") means the field of managing and optimizing the scheduling, parts inventory, shop floor configurations, and resources for facilities that maintain and repair aircraft By way of example, other than military applications and MRO, the Airline Field includes resource scheduling and planning in connection with: airline ticketing, airline route schedules, airline fleet schedules, airline crew schedules, airline maintenance schedules, airline passenger schedules, airline and operational relationships between the foregoing, and asset management systems and financial reporting models that can be implemented on a computer system to allow for dynamic adjustment of airline operations based on unforeseen disruptions to those schedules.

1.3"AIS Intellectual Property" means Intellectual Property that becomes or became owned, controlled or llcensable by AIS or its Affiliates before or during the Term. Notwithstanding the foregoing, "AIS Intellectual Property" excludes Intellectual Property if (and solely to the extent) (a) AIS or its Affiliates would be obligated to pay royalties or other consideration to a non-Affiliated Third Party if the Intellectual Property is assigned to Dynamic hereunder and (b) such obligation existed at the time AIS or its Affiliates acquired its rights in the Intellectual Property.

1.4"Benefited Party" means (a) AIS to the extent it is receiving a license under Dynamic Intellectual Property pursuant to this Agreement or (b) Dynamic to the extent it is receiving an assignment or license of AIS Intellectual Property pursuant to this Agreement.

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1.5 "Confidential Information" means any information disclosed by one Party ("Discloser") to the other Party ("Recipient") in connection with this Agreement, including but not limited to source code, specifications, designs, plans, drawings, inventions, software, data, prototypes, methods, processes, business and/or other technical information relating to the business of the Parties, Notwithstanding, "Confidential Information" does not include any information: (a) lawfully received by Recipient tree of restriction from another source having the right to tarnish the information free of restriction; (b) after it has become available to third parties without an obligation of confidence without breach of this Agreement by Recipient; (c) independently developed by individuals who did not have access to the information; (d) that, at the time of disclosure to Recipient, was known to Recipient free of restriction; (e) that Discloser agrees in writing is tree of such restrictions; or (f) mat Recipient, on the advice of counsel, is required to disclose under applicable law or other demand under lawful process, including a discovery request in a civil litigation, if Recipient first gives Discloser notice of the required disclosure if reasonably practical and cooperates with Discloser, at Discloser's sole expense, in seeking reasonable protective arrangements with the party requiring disclosure under applicable law or other demand under lawful process (in no event shall Recipient's cooperation with Discloser require Recipient to take any action which, on the advice of Recipient's counsel, could result in the imposition of any sanctions or other penalties against Recipient).

1.6"Dynamic Intellectual Property" means Intellectual Property that becomes or became owned, controlled or licensable by Dynamic or its Affiliates before or during the Term, including AIS Intellectual Property assigned to Dynamic pursuant to this Agreement. Notwithstanding the foregoing, "Dynamic Intellectual Property" excludes Intellectual Property if (and solely to the extent) (a) Dynamic would be obligated to pay royalties or other consideration to a non-Affiliated Third Party if the Intellectual Property is licensed to AIS hereunder and (b) such obligation existed at the time Dynamic acquired its rights in the Intellectual Property.

1.7"Exploit" includes make, use, sell, offer for sale, import, reproduce, distribute (including but not limited to by sale, rental, lease, or lending), perform, display, modify, adapt, prepare derivative works of, make substantial and insubstantial alterations, translate into any language, aggregate, have made, license, sublicense, grant sublicensing rights, in any medium whatsoever whether now known or hereafter devised, or otherwise exploit.

1.8"Intellectual Property" means any and all of the following items that are or were created, authored, invented, conceived, reduced to practice, made, filed or derived (collectively "created"), as the case may be, before the Effective Date or during the Term (regardless of the location where it was created):

(a)	copyrightable works, copyrights and computer software (including data and related documentation), whether or not the subject of a copyright application, copyright registration or renewed copyright,
(b)	inventions (whether or not the subject of a patent or patent application, and whether or not reduced to practice), improvements, conceptions, patents, patent applications, patent disclosures, industrial designs, utility models, industrial design applications and industrial registrations,
(c)	continuations, continuations-in-part, divisionals, reissues, reexaminations, revisions, extensions, substitute applications (as defined in MPEP § 201.09) of patents or patent applications filed before the Effective Date or during the Term, and other patents which claim the benefit of the filing date of a patent or patent application otherwise filed before the Effective Date or during the Term, but solely to the extent it claims subject matter that was disclosed in a patent or patent application filed before the Effective Date or during the Term,
(d)	moral rights,
(e)	trade secrets and know-how, and
(f)	any other proprietary, intellectual or intangible property protected by the law of any jurisdiction or governmental agency

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Notwithstanding the foregoing, "Intellectual Property" does not include trademarks, service marks, or similar indicia of origin.

1.9"Transferred Intellectual Property" means (a) Dynamic Intellectual Property to the extent such Intellectual Property is being licensed from Dynamic to AIS pursuant to this Agreement or (b) AIS Intellectual Property to the extent AIS is assigning or licensing AIS Intellectual Property to Dynamic pursuant to this Agreement.

1.10"Transferring Party" means (a) AIS to the extent it is assigning or licensing AIS Intellectual Property to Dynamic pursuant to this Agreement or (b) Dynamic to the extent it is licensing Dynamic Intellectual Property to AIS pursuant to this Agreement

1.11"Non-Airline Field" means any field(s) not included in the Airline Field. By way of example, the Non-Airline Field includes any field unrelated to airline resource scheduling and planning. By further way of example only, the Non-Airline Field includes, but is not limited to, resource scheduling and planning in connection with: the military; transportation of goods by car, ship, rail or truck; warehousing; supply-chain management; car-rental fleets; electricity; and natural gas, oil and telecommunication networks.

1.12"Reasonable Efforts" means that the obligated Party is required to pursue all reasonable methods to accomplish the applicable objective using resources reasonably available to it. Such obligation, however, does not require that the obligated Party incur liability, nor does it require that the obligated Party act in a manner that would be contrary to normal commercial practices in order to accomplish the objective. The fact that the objective is not actually accomplished is no indication that the obligated Party did not in feet utilize its reasonable efforts in attempting to accomplish the objective.

1.13"Term" shall mean the period beginning on the Effective Date and ending three (3) years thereafter unless the Term is terminated or extended in accordance with the provisions hereof.

2.   LICENSE AND ASSIGNMENT

2.1Exclusive License to AIS. Dynamic hereby grants to AIS an exclusive, fully paid up, worldwide and perpetual license to Exploit the Dynamic Intellectual Property (including Dynamic Intellectual Property acquired from AIS pursuant to this Agreement) solely in the Airline Field, including the right under Dynamic Intellectual Property to Exploit any product or service in the Airline Field. In the event Dynamic is prohibited by law (at any time) or contract (provided such contractual prohibition existed at the time Dynamic acquired its rights in the Intellectual Property) from exclusively licensing particular Dynamic Intellectual Property to AIS, Dynamic shall, to the maximum extent permitted by law or contract, grant AIS a non-exclusive fiilly paid up, worldwide and perpetual license to Exploit the Dynamic Intellectual Property (including Dynamic Intellectual, Property acquired from AIS pursuant to this Agreement) solely in the Airline Field, including the right under Dynamic Intellectual Property to Exploit any product or service in the Airline Field. Notwithstanding this grant, no license is granted in Dynamic Intellectual Property pursuant to this paragraph if the Dynamic Intellectual Property is incapable of Exploitation in the Airline Field. TTie foregoing license does not relieve AIS of its obligations with respect to Confidential Information disclosed by Dynamic.

2.2Assignment/License to Dynamic.

(a) AIS hereby irrevocably assigns to Dynamic all right, title, and interest, throughout the world, in the AIS Intellectual Property, including the right to Exploit the AIS Intellectual Property, and including the right to collect past damages and obtain and own renewals or extensions including copyright renewals, without any accounting or any other obligation owed to AIS, all to the maximum extent permitted by law. Dynamic shall retain ownership of the AIS Intellectual Property regardless of any termination or the basis of termination of this Agreement, Dynamic has sole discretion to register, enforce or protect the AIS Intellectual Property, including filing and controlling copyright applications and patent applications in its own name. AIS acknowledges that it retains no rights to any AIS Intellectual Property except as expressly granted herein. By way of example only, AIS has no right to Exploit the AIS Intellectual Property in the Non-Airline Field. To the extent permissible by law including United States Copyright Law and without implying an employee-employer relationship between AIS and Dynamic, AIS agrees that AIS Intellectual Property is "work made for hire" owned solely by Dynamic.

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(b)	m the event AIS is prohibited by law (at any time) or contract (provided such contractual prohibition existed at the time AIS acquired its rights in the Intellectual Property) from assigning particular AIS Intellectual Property to Dynamic, or Dynamic assigns Dynamic Intellectual Property to AIS pursuant to this Agreement, AIS shall, to the maximum extent permitted by law or contract, grant Dynamic a fully paid up, worldwide and perpetual license to Exploit the AIS Intellectual Property solely in the Non-Airline Field, including the right under AIS Intellectual Property to Exploit any product or service in the Non-Airline Field. Such license shall be exclusive to the maximum extent permitted by law or contract.
(c)	Notwithstanding mis Section 2.2, no assignment or license is granted in AIS Intellectual Property pursuant to this Section if the AIS Intellectual Property is incapable of Exploitation in the Non-Airline Field.
(d)	AIS warrants that all AIS Intellectual Property that becomes or became owned, controlled or licensable by AIS' Affiliates before or during the Term shall be assigned to AIS for assignment or licensing to Dynamic pursuant to this Section 2.2.

2.3No Other Rights. Each Party acknowledges that no other rights, other than those expressly set forth herein, are granted or implied. Dynamic retains the right to Exploit its Dynamic Intellectual Property for all purposes not otherwise precluded by the exclusive license granted herein, without accounting or disclosure to AIS. By way of example, in the event Dynamic acquires Intellectual Property that is capable of use in both Airline and Non-Airline Fields, Dynamic shall retain full ownership of such Intellectual Property although Dynamic shall not have the right to Exploit the Intellectual Property in the Airline Field and AIS shall not have the right to Exploit the Intellectual property in the Non-Airline Field.

2.4Third Party Limitations. The Transferring Party shall use Reasonable Efforts to notify the Benefited Party if the Transferred Intellectual Property is subject to third party restrictions that limit the Benefited Party's right to Exploit the Transferred Intellectual Property.

2.5Joint-Qwnership. The foregoing rights and restrictions also apply to Intellectual Property jointly created by the Parties.

2.6Sufficient Rights. The Transferring Party represents that, to its knowledge, it has the right to grant the assignments and licenses set forth in this Agreement.

2.7Unfiled Inventions. For the purposes of this paragraph, an "Unfiled Invention" is an invention that (a) comprises Dynamic Intellectual Property exclusively licensed to AIS hereunder and (b) was not claimed in a patent or patent application. AIS may provide Dynamic with notice of its demand that Dynamic file a patent application on an Unfiled Invention; such notice shall identify the Unfiled Invention with reasonable particularity. Within ninety (90) days of such notice, Dynamic shall, in its sole discretion, either (a) file a patent application claiming the Unfiled Invention, (b) permit AIS to file patent applications on the Unfiled Invention, or (c) provide AIS with notice that Dynamic is not exercising either option "a" or "b" because (1) Dynamic has reasonable trade secret concerns or (2) Dynamic is prohibited by law or contract (provided such contractual prohibition existed at the time AS sent its demand notice) from exercising such options. If Dynamic elects option "b", then (i) Dynamic shall assign sufficient rights to AIS to permit AIS to file and own patent applications and patents claiming the Unfiled Invention, (ii) AIS shall grant Dynamic a license under such patent applications and patents pursuant to Section 2.2(b), (iii) AIS acknowledges that this paragraph does not give it the right to rile patent applications containing claims that cover Dynamic Intellectual Property other than the Untiled Invention, (iv) AIS acknowledges that it does not obtain any right in related Dynamic Intellectual Property by nature of the assignment of the right to file patent applications on the Unfiled Invention (by way of example, Dynamic's assignment of the right to file a patent application on a method performed by software does not include assignment of the copyrights in the software or other patentable methods performed by the software), and (v) AIS shall be bear all the costs of filing and maintaining such patent applications and patents,

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2.8Expiring Patents. For the purposes of this paragraph, an "Expiring Patent" is a patent or patent application (a) to the extent it claims Dynamic Intellectual Property exclusively licensed to AIS hereunder and (b) that Dynamic intends to abandon or allow to go abandoned for failure to take some action, such as the failure to pay maintenance fees. AIS may provide Dynamic with notice of its demand that Dynamic take action to prevent the abandonment of an Expiring Patent; such notice shall identify the Expiring Patent with reasonable particularity. Within ninety (90) days of such notice, Dynamic shall, in its sole discretion, either (a) make Reasonable Efforts to prevent the abandonment of the Expiring Patent, (b) assign the Expiring Patent to AIS, or (c) provide AIS with notice that Dynamic is not exercising either option "a" or "b" because (1) the Expiring Patent is not publicly available and Dynamic has reasonable trade secret concerns or (2) Dynamic is prohibited by law or contract (provided such contractual prohibition existed at the time AIS sent its demand notice) from exercising such options. If Dynamic elects option "b", then (i) Dynamic shall assign the Expiring Patent to AIS, (ii) AIS shall grant Dynamic a license under the Expiring Patent pursuant to Section 2.2(b), (iii) AIS acknowledges that this paragraph does not give AIS the right to file patent applications containing claims other than those contained in the Expired Patent at the time of the assignment, (iv) AIS acknowledges that it does not obtain any right in related Dynamic Intellectual Property by nature of the assignment of Expired Patent, and (v) AIS shall be bear all the costs of filing and maintaining such patent applications and patents.

3. ACKNOWLEDGEMENT OF CONSIDERATION

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4. DISCLOSURE OF INTELLECTUAL PROPERTY

4.1Exchange of Information. The Transferring Party shall disclose the Transferred Intellectual Property to the Benefited Party at the Benefited Party's request. The Parties agree to use good faith efforts to agree on procedures which promote the exchange of Transferred Intellectual Property without unnecessarily burdening the Transferring Party, including disclosing the Transferring Party's intentions with respect to filing and maintaining patent applications on the Transferred Intellectual Property. In the event the Parties cannot agree on such procedures, the procedures may be determined by binding arbitration at the request of a Party. Each Party hereby acknowledges mat to the extent its employees, independent contractors and other entities are providing products or services to both Parries, such employees, independent contractors and other entities may inform the other Party of Transferred Intellectual Property that is the subject of a license or assignment to the other Party.

4.2Software. This Section 4.2 applies to the extent Transferred Intellectual Property includes software.

(a) Source Code. To the extent the Transferring Party is not prevented by obligations to third parties and to the extent the formats are available, the Transferring Party shall disclose the software to the Benefited Party in source code format (including programmer comments and associated documentation), object code format, and any other format in which the Transferring Party keeps the software.

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(b)   No Reverse Engineering. A Party obtaining software in object code format from a Transferring Party, who in turn obtained and is obligated to maintain such software in object code format pursuant to an agreement with a third party, shall neither disassemble the software, attempt to derive its source code, nor similarly reverse engineer the object code; however, to the extent certain reverse engineering activities may be permitted by law in spite of the Party's agreement not to reverse engineer, this sentence shall not apply to such activities. This obligation shall survive termination of this Agreement.

(c)   No Maintenance. Neither the Transferring Party nor the Benefited Party has the obligation under this Agreement to maintain, update or support the software.

(d)   No Malicious Code. Unless clearly and conspicuously disclosed by the Transferring Party to the Benefited Party upon or prior to delivery, the software shall not contain any feature intended to (i) fully or partially disable such software (such as "time bombs"); (ii) provide remote access to such software (such as "back door" passwords for software); (iii) modify or transfer any data without the express consent of a user of the data; or (iv) act as a virus or similar intentional infirmity-

4.3Costs. Each Party will be responsible for the costs it incurs in carrying out its obligations under this Agreement.

5. CONFIDENTIALITY

5.1Disclosures to Third Parties. The Recipient of the Discloser's Confidential Information shall not disclose the Confidential Information to a third party unless:

(a)   thepiscloser consents to such disclosure; or

(b)   the Confidential Information is Transferred Intellectual Property, and the Recipient is the Benefited Party of the Transferred Intellectual Property, and

(i)           the disclosure is made for the purpose of the Benefited Party enjoying its rights or satisfying its obligations under this Agreement (by way of example, by distributing software to the Benefited Party's customers or outsourcing manufacturing) or the disclosure is made pursuant to one of the exceptions set forth in Section 12.6; and

(ii)          the third party is prohibited from disclosing the Confidential Information to any other third party, provided, however, that the third party may disclose the Confidential Information to other third parties if (i) the other third parties are similarly bound to protect Confidential Information in accordance with this Section 5 ("Confidentiality"), (ii) the third party apprises the other third parties of the confidentiality of the information and restrictions applicable thereto, and (iii) the Benefited Party approved the disclosure prior to its occurrence.

At the Discloser's request, the Recipient shall use Reasonable Efforts to identify, to the Discloser, the third parties to whom the Discloser's Party's Confidential Information has been disclosed.

5.2Lead Time. Notwithstanding any other provision of this Agreement to the contrary, the Discloser may, upon request to the Recipient, prevent the Recipient from disclosing its Confidential Information to any third party for a period of up to ninety (90) days after the Confidential Information is first disclosed to the Recipient.

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5.3Reasonable Precautioas. The Recipient, including third parties to whom the Recipient has provided the Discloser's Confidential Information, shall take reasonable precautions to prevent the inadvertent or unauthorized disclosure of the Discloser's Confidential Information.

5.4Relationship to Licenses and Assignments. Nothing in this Section 5 ("Confidentiality") may be interpreted as giving Dynamic, its customers, suppliers, or independent contractors, or any other entity to whom Dynamic conveys AIS' Confidential Information, any right to Exploit AIS1 Confidential Information in the Airline Field. Nothing in this Section 5 ("Confidentiality") may be interpreted as giving AIS, its customers, suppliers, or independent contractors, or any other entity to whom AIS conveys Dynamic's Confidential Information, any right to Exploit Dynamic's Confidential Information in the Non-Airline Field. If Confidential Information comprises AIS Intellectual Property assigned to Dynamic hereunder, such Confidential Information shall be considered Dynamic Confidential Information and Dynamic shall be considered the Discloser of such Confidential Information for the purposes of this Section S.

5.5Duration of Confidentiality Obligation. Recipient's duty to protect Confidential Information commences upon receipt of the Confidential Information and shall continue beyond the termination of this Agreement.

6. ENFORCEMENT

6.1Cooperation. The Parties will provide reasonable cooperation to one another with respect to enforcing Transferred Intellectual Property against unauthorized activity by third parties, and use good faith efforts to reach a mutual agreement to handle actual or potential inrringement of Transferred Intellectual Property by third parties. Absent such mutual agreement and to the maximum extent permitted by law, the other paragraphs of this Section 6 ("Enforcement") shall apply.

6.2Notice. A Party shall give the other Party at least ninety (90) days notice before filing a litigation relating to Transferred Intellectual Property against a third parry, or before taking any action which notifies a third party of its infringement or likely infringement of Transferred Intellectual Property; provided, however, that such notice period may be shortened to the extent necessary for a Party to prevent irreparable harm occurring during such ninety (90) period.

6.3Enforcement Bxpenses. Each Party shall bear its own expenses in any litigation relating to enforcement of the Transferred Intellectual Property.

6.4Necessary Parties. If a Parry's ("the Necessary Party" for the purposes of this paragraph) cooperation is necessary in order to prevent a third party infringer from materially prejudicing the rights of the other Party ("the Prejudiced Party" for the purposes of mis paragraph) in Transferred Intellectual Property, then the Necessary Party shall use Reasonable Efforts to provide cooperation with respect to such inrringement at the request of the Prejudiced Party. If (i) the Prejudiced Party brings or intends to bring a litigation against a third party nifringer of Transferred Intellectual Property, and (ii) the Necessary Party's participation in the litigation as a named party is necessary in order to prevent the dismissal of the litigation or to prevent denial of the filing parry's requested relief, then the Necessary Party (A) shall use Reasonable Efforts to join such litigation and (B) may elect, within thirty (30) days of joining, to require the Prejudiced Party to reimburse the Necessary Party's for its reasonable attorneys fees and out-of-pocket expenses. If the Necessary Party exercises such election, the Necessary Parry shall give its share (if any) of the award from the litigation to the Prejudiced Party.

6.5Award. The total award collectively granted to one or both the Parties as a result of inrringement of Transferred Intellectual Property shall be allocated pro-rata based on the extent of infringement in the Parties' respective exclusively licensed or retained fields, after reimbursement of the Parties' reasonable attorneys fees and out-of-pocket expenses relating to the enforcement of the Transferred Intellectual Property against the infringer.

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7. THIRD PARTY NOTICES

7.1Notice of Third Party Defenses. A Party shall use Reasonable Efforts to promptly provide the other Party with notice in the event such Party receives a written statement from an alleged third party infringer stating that that the Transferred Intellectual Property (whether transferred to or from such Party hereunder) or Exploitation thereof is not infringed, invalid or unenforceable.

7.2Notice of Third Party Allegations. A Party shall use Reasonable Efforts to promptly provide the other Party with notice in the event such Party receives a written statement from ft third party stating that that the Transferred Intellectual Property (whether transferred to or from such Party hereunder) or Exploitation thereof infringes the third party's Intellectual Property.

7.3No Knowledge. The Transferring Party represents that, as of the Effective Date, its belief is that the Transferred Intellectual Property or Exploitation thereof does not infringe a third party's Intellectual Property.

8. COMMON LEGAL INTEREST

8.1Confirmation. The Parties confirm that they may be exchanging privileged Confidential Information in connection with their common legal interests relating to the Transferred Intellectual Property, including pursuing a joint strategy when evaluating the applicability of Transferred Intellectual Property to potential third party infringers and protecting the Transferred Intellectual Property, by way of example, by filing patent applications.

8.2No Waiver. The Parties agree that the disclosure of privileged Confidential Information in furtherance of the common legal interest is not a waiver of any applicable privilege (work-product, attorney-client or otherwise). The Parties agree not to disclose the privileged Confidential Information to any third party, and further agree to assist in retaining any applicable privilege. The recipient of privileged Confidential Information shall only use the information for the purpose of pursuing the common legal interest.

8.3Manner Disclosed Irrelevant. The protections set forth in this section shall apply regardless of the manner in which the privileged Confidential Information is exchanged. By way of example, discussions between an attorney representing one Party and an employee of the other Party pursuant to the common legal interest shall be privileged and subject to this Section 8.

8.4Lfolfrrtnna. Nothing in this Section is intended to require one party to disclose privileged information to the other.

8.5Cessation of Exchange. Either Party may terminate their rights and obligations under this Section 8 at any time by written letter to the other Party. However, the provisions of this Section shall continue with respect to any privileged Confidential Information disclosed prior to the termination of this Section or Agreement.

9. DISCLAIMERS

9.1As Is. Transferred Intellectual Property is provided to the Benefited Party "AS IS", The Benefited Party assumes total responsibility and risk for its Exploitation of the Transferred Intellectual Property including the risk of any defects or inaccuracies therein. THE TRANSFERRING PARTY MAKES NO WARRANTIES, EXPRESS OR IMPLIED, AND SPECIFICALLY DISCLAIMS ANY WARRANTY OF MERCHANTABILITY, FITNESS FOR A PARTICULAR PURPOSE, TITLE OR NON INFRINGEMENT OR ANY WARRANTY ARISING BY USAGE OF TRADE, COURSE OF DEALING OR COURSE OF PERFORMANCE. THE TRANSFERRING PARTY DOES NOT WARRANT THAT THE TRANSFERRED INTELLECTUAL PROPERTY WILL BE ERROR FREE OR THAT THE TRANSFERRED INTELLECTUAL PROPERTY WILL MEET THE BENEFITED PARTY'S REQUIREMENTS. THE DISCLAIMERS AND PROVISIONS OF THIS PARAGRAPH ARE LIMITED TO THE GREATEST EXTENT PERMITTED BY APPLICABLE LAW.

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9.2No Special Damages. TO THE GREATEST EXTENT PERMITTED BY APPLICABLE LAW, IN NO EVENT SHALL EITHER PARTY BE LIABLE TO THE OTHER FOR ANY INDIRECT, INCIDENTAL, CONSEQUENTIAL, PUNITfVE, RELIANCE OR SPECIAL DAMAGES, INCLUDING WITHOUT LIMITATION, DAMAGES FOR LOST PROFITS, LOSS OF ADVANTAGE, LOSS OF SAVINGS, LOSS OF REVENUES OF ANY KIND, INCREASED COST OF OPERATIONS, BUSINESS INTERRUPTION OR LOSS OF INFORMATION, EVEN IF A PARTY KNEW OR HAD BEEN ADVISED OF THE POSSIBILITY OF SUCH DAMAGES.

10. TERM

10.1Duration. The rights and obligations of this Agreement shall be effective during the Term.

10.2Renewal. The Term shall be automatically and continuously extended in one (1) year increments at the end of the then-current Term unless (a) a Party provides notice of non-renewal at least ninety (90) days before the then-current Term or (b) this Agreement is terminated prior to the end of the then-current Term.

10.3Early Termination. Either Party may terminate this Agreement:

(a)in accordance with any terms of this Agreement which expressly provide for termination;

(b)upon thirty (30) days prior written notice if the other Party has breached a material obligation under this Agreement and such breach remains uncured during such thirty (30) day period; or

10.4 Effect of Termination and Survival. Upon termination of this Agreement, all rights and obligations of the Parties, shall terminate except that the rights and obligations of the Parties under this Agreement which expressly or by their nature would continue beyond the termination of this Agreement shall remain in effect and survive termination of this Agreement, including the assignment and perpetual licenses under Section 2 ("License"), Section 5.5 ("Duration of Confidentiality Obligation"), Section 6 ("Enforcement"), Section 7 ("Third Party Noficesu)l and Section 8 ("Common Legal Interest"). Notwithstanding. such specific termination rights, each Party reserves all of its other legal rights and equitable remedies.

II. ASSIGNMENT

11.1Limited Assignment Rights. Neither Party shall have the right to assign or transfer any of its rights and obligations under this Agreement (in insolvency proceedings, by mergers, acquisitions or otherwise) without the other Parry's written consent except that all rights and obligations may be assigned to an Affiliate or third party where the assignment is in connection with the sale, reorganization or other transfer of substantially all of the relevant business of the assigning party.

11.2No Release. The assignment of this Agreement by the Benefited Party shall not release the assignee of any liability for infringement or unauthorized use of Transferred Intellectual Property or other claims prior to the assignment.

11.3Termination Option.Upon receiving notice of the assigning Party's assignment of or intent to assign this Agreement, the other Party may terminate this Agreement by providing notice to the assigning Party within thirty (30) days of such notice of assignment or intent to assign. If the assignment occurs and this Agreement is terminated in accordance with this paragraph, then termination shall be effective the moment before the assignment.

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11.4Change in Ownership, Any change in ownership of a Party that results in a change in control of a Party shall be deemed an assignment to a third party for the purposes of this paragraph.

11.5Transfer of Intellectual Property. Nothing in this paragraph shall be deemed to restrict the Transferring Party's right to transfer ownership in the Transferred Intellectual Property to third parties as long as such transfer preserves the Benefited Parry's rights hereunder.

11.6Void Assignments. Any assignment or other transfer of rights and obligations hereunder which is inconsistent with the foregoing shall be null and void ab initio.

12. GENERAL TERMS

12.1Relationship of the Parties. In performing this Agreement, each of the Parties will operate as, and have the status of, an independent contractor. Except as may be expressly set forth in this Agreement, neither Party will have the right or authority to assume or create any obligations or to make any representations, warranties or commitments on behalf of the other Party, whether express or implied, or to bind the other Party in any respect whatsoever. Nothing in this Agreement shall be construed as forming any partnership, joint venture, agency, employment, franchise, distributorship, dealership or other similar or special relationship between the Parries.

12.2Rules of Construction. As used In (his Agreement, (a) the words "herein," "hereunder" and other words of similar import refer to this Agreement as a whole, including any exhibits and schedules as the same may be modified from time to time, and not to any subdivision of this Agreement; (b) the terms "including," "by way of example" or any variation thereof means "including but not limited to" and "by way of example only and without limitation," respectively, and shall not be construed to limit any general statement that it follows to the specific or similar items or matters immediately following it; (c) descriptive headings and titles are inserted for convenience of reference only and do not constitute a part of and shall not be utilized in interpreting this Agreement; (d) explicit references to a particular section shall be deemed to include a reference to its subsections, if any, and (e) the word "third party" means an entity other than a party to this Agreement. This Agreement shall be fairly interpreted in accordance with its terms and without any presumption in favor of or against either Party regardless of the drafter.

12.3Notice. Unless otherwise provided in this Agreement, all notices, consents, approvals, waivers and the like made hereunder shall be in written English to the addresses set forth below, shall reference this Agreement and shall be sent by any of the following methods; (a) certified mall, postage-prepaid, return-receipt requested, (b) a delivery service which requires proof of delivery signed by the recipient or (c) properly-transmitted facsimile followed by written confirmation in accordance with methods (a), (b) or first-class U.S. mail. The date of notice shall be deemed to be the date it was first received or refused. A Party may change its address for notice by written notice in accordance with this paragraph.

(a)   Notices to Dynamic shall be sent to: First Floor, Trident House, Lower Broad Street, Bridgetown, Barbados, Fax (246) 436-9541.

(b)   Notices to AIS shall be sent to: 2711 Centerville Road Suite 4 Wilmington, Delaware 19808 USA, Fax (302)397-0769.

12.4Equitable Remedies. The Parties recognize that money damages may not be an adequate remedy for any breach or threatened breach of any obligation hereunder by the other Party involving Intellectual Property and that such Party suffer immediate and irreparable harm as a result. The Parties therefore agree that in addition to any other remedies available hereunder, by law or otherwise, such Party may be entitled to obtain injunctive relief against any such continued breach by the other party of such obligations.

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12.5Third Party Beneficiaries. This Agreement is not intended to be for the benefit of and shall not be enforceable by any third party. Nothing in this Agreement, express or implied, is intended to or shall confer on any third party any rights (including third-party beneficiary rights), remedies, obligations or liabilities under or by reason of this Agreement. This Agreement shall not provide third parties with any remedy, claim, liability, reimbursement, cause of action or other right in excess of those existing without reference to the terms of this Agreement. No third party shall have any right, independent of any right that exists irrespective of this Agreement, to bring any suit at law or equity for any matter governed by or subject to the provisions of this Agreement.

12.6No Disclosure Of Agreement Neither Party shall disclose, expressly or by implication, the provisions of this Agreement including provisions from unexecuted prior drafts of this Agreement, unless such disclosure (a) is to a financial auditor, potential investor, potential acquirer, financial advisor, potential lender or legal advisor of the party, or an advisor of the foregoing, who is contractually or legally obligated not to disclose the provisions of this Agreement to third parties and has a need to know the provisions herein, or (b) meets the requirements to the exceptions set forth in the definition of Confidential Information if this Agreement were considered Confidential Information of the other Party, In the event a party is compelled to disclose this Agreement to a governmental authority in connection with regulatory obligations, including to a governmental taxing authority in order to verify its tax obligations or a regulatory agency in connection with a public offering, such party may disclose this Agreement in confidence to such authority without obtaining the other party's prior consent. This paragraph shall survive termination of the Agreement Notwithstanding, each Party has the right to disclose to third parties during the Term that it is a licensee of the other Party.

12.7Applicable Law and Venue. This Agreement shall be governed by and construed in accordance with the laws of the State of Delaware without regard to its conflicts of law rules.

12.8Force Majeure. Neither Party shall be held responsible for any delay or failure In performance of any part of this Agreement to toe extent such delay or failure is caused by fire, flood, explosion, war, strike, embargo, government requirements, civil or military authority, court orders, industry-wide shortage of goods, act of God, or other similar causes beyond its reasonable control ("force majeure events"). The Party affected by the other's inability to perform may elect to: (a) suspend this Agreement for the duration of the force majeure event or (b) terminate this Agreement upon sixty (60) days notice if the delay or nonperformance continues during such sixty (60) days.

12.9Assertion of Unenforceability. If any provision of this Agreement is deemed illegal or unenforceable, the requirements of the provision shall remain to the full extent permissible by law and the offending portions thereof shall be deemed replaced, to the extent possible, with a provision most closely reflecting the purpose of the offending provision.

12.10Arbitration. Any claims of any nature relating to this Agreement, including the breach, termination or validity thereof, whether based on contract, tort, statute, fraud or any other legal theory (the "Claim"), shall be resolved solely and exclusively by arbitration by the American Arbitration Association ("AAA") in accordance with this paragraph and its Commercial Arbitration Rules to the extent such rules do not conflict with this Agreement. The arbitrator shall comprise a panel of three (3) persons selected from a list provided by the AAA. Requests for temporary injunctive relief may be submitted to a court of competent jurisdiction if the arbitrator has not yet been appointed but the arbitrator shall have the authority to modify any injunctive relief granted by such a court The arbitration award shall be made final within one (1) year of commencement and may be entered by either Party in any court having competent jurisdiction. Each Party shall bear its own expenses, but those related to the compensation of the arbitrator shall be borne equally. The existence and contents of the entire arbitration shall be maintained by all participants as confidential and shall not be disclosed to any third party except as required by law. A party's request for arbitration shall not be deemed a waiver of the right of the party, if any, to terminate the Agreement. The arbitrators shall not have the authority to award punitive damages. The Parties agree that the existence and contents of the entire arbitration, including the award, snail be deemed a compromise of a dispute under Rule 408 of the Federal Rules of Evidence, shall not be discoverable in any proceeding, shall not be admissible in any court (except for the enforcement thereof) or arbitration and shall not bind or collaterally estop either Party with respect to any claim or defense made by any third parry.

11

12.11Entire Agreement: No Modification or Waiver. This Agreement constitutes the entire agreement between the Parties concerning its subject matter and supersedes all prior written or oral negotiations, correspondence, understandings and agreements between the Parties respecting such subject matter. Prior unexecuted drafts of this Agreement may not be used to interpret the Intentions of the parties or underlying facts relating to this Agreement and the fact that certain provisions may have been added, removed or modified during negotiations shall have no interpretive significance. This Agreement shall not be modified or rescinded, except by a writing signed by both Parties. No provision of mis Agreement shall be deemed modified by any action or omission or failure to object to any action that may be inconsistent with the terms of this Agreement. No waiver of a breach committed by a Party in one instance shall constitute a waiver or license to commit or continue breaches in other or like instances.

12.12Counsel. Each Party acknowledges that, in connection with the negotiation and execution of this Agreement, it had the opportunity for independent legal advice by counsel of its own selection and experienced in the relevant subject matter areas and domiciles of the Parties, that each Party fully understands the facts, that each Party has been fully informed as to its legal rights and obligations, and that each Party is signing the Agreement freely and voluntarily. 

DYNAMIC INTELLIGENCE INC.		AIRLINE INTELLIGENCE SYSTEMS INC.
By:	/s/ Barry Skinner	By:	/s/ Stephen Johnston
	(Authorized Signature)		(Authorized Signature)
Name:	Barry Skinner	Name:	Stephen Johnston
Title:	President	Title:	President

12

OCTOBER 2006 AMENDMENT TO INTELLECTUAL PROPERTY AGREEMENT

This amendment ("Amendment") is effective as of October 11, 2006 and is by and between DYNAMIC INTELLIGENCE INC, ("Dynamic1'), a Barbados Corporation having an office at First Floor, Trident House, Lower Broad Street, Bridgetown, Barbados, and AIRLINE INTELLIGENCE SYSTEMS INC, a Delaware Corporation, ("AIS"), having an office at 4122 Factorla Blvd. SE, Suite 310, Bcllcvue, WA 98006, USA.

In consideration of the terms, conditions and other covenants and agreements contained in this Amendment and for other good and valuable consideration, me receipt and sufficiency of which are acknowledged, Dynamic and AIS ("the Parties") agree as follows;

1. The definition of "Airline Field" in Section 1.2 of the Intellectual Property Agreement between the Parties dated December 9,2005 (hereafter, the "Prior Agreement") shall be deleted as of the effective date of tins Amendment and replaced with the following definition of "Airline Field";

1.2 "Airline Field" means all of the following fields within the airline industry and airline' operations: (a) schedule planning, revenue management, reservations, and Irregular operations, (b) Maintenance Repair Operations, and (o) Airline Performance Travel Insurance.. Notwithstanding the foregoing definition, "Airline Field" excludes military applications. By way of example, other than military applications, the Airline Field includes schedule planning, revenue management; reservations, and irregular operations in connection with: airline ticketing, airline route schedules, airline fleet schedules, airline crew schedules, airline maintenance schedules; airline passenger schedules, airline and operational relationships between the foregoing, and asset management systems and financial reporting models that, can be implemented on a computer system to allow for dynamic adjustment of airline operations based on unforeseen disruptions to those schedules.

2. The following sections 1.14 and 1.15 shall be added to the Agreement as of the effective date of this Amendment

1.14"Maintenance Repair Operations" ("MRO") means the field of managing and optimizing the scheduling, parte inventory, shop floor configurations, and resources for facilities that maintain and repair aircraft,

1.15"Airline Performance Travel Insurance" means the field of offering insurance products to airline passengers based on whether the airlines satisfied predefined service performance requirements in connection with the passengers' airline flights. By way of example, Airline Performance Travel Insurance includes the service of paying passengers, in exchange for receiving a .premium from the passengers, an amount commensurate with whether and how much a flight's arrival is delayed,

3.

1

4. Absent mutual agreement by the Parties to the contrary, AIS shall reimburse Dynamic for the reasonable out-of-pocket payments incurred by Dynamic in connection with filing and maintaining Dynamic Intellectual Property licensed to AIS, including payment of maintenance fees for issued patents, patent application filing and annuity fees, prosecution-attorney fees, and expenses associated with ex-parte or inter-partes reexaminations.

5. Dynamic hereby represents and 'warrants to AIS that: (a) it has all right and authority to enter into mis Amendment and to grant Company the rights set forth in this Amendment; (b) it is permitted by applicable law and regulations to enter into this Amendment.

6. AIS hereby represents and warrants to Dynamic that: (a) it has all right and authority to enter into' this Agreement and to grant Dynamic the rights granted herein; (b) it is permitted by applicable law and regulations to enter into, this Agreement.

7.

8. The rights and obligations of the Parties under the Prior Agreement which by their nature would apply to this Amendment shall so apply. By way of example and without limitation, the obligations relating, to non disclosure (prior Agreement §12.6) and arbitration (prior Agreement §12.10) apply with equal force to this Amendment.

9. This Amendment, including the  Prior Agreement, constitutes the entire agreement between the Parties concerning its subject matter and supersedes all prior written or oral negotiations correspondence, understandings and agreements between the Parties respecting such subject matter. Prior unexecuted drifts of this Amendment may not bo used to interpret the intentions of the parties or underlying facts relating to this Amendment and the fact that certain provisions may have been added; removed or modified during negotiations shall, have no interpretive significance. This Amendment shall not be modified or rescinded, except by a writing signed by both Parties. No provision, of this Amendment shall be deemed modified by any action or omission or failure to object to any action that may be inconsistent with me terms of this Amendment No waiver of a breach comitted by a Party in one instance shall constitute a waiver or license to commit or continue breaches in other or like instances.

IN WITNESS WHEREOF, the Parties hereto have executed this Amendment as of the date first above written

DYNAMIC INTELLIGENCE INC.		AIRLINE INTELLIGENCE SYSTEMS INC.
By:	/s/ Barry Skinner	By:	/s/ Stephen Johnston
	(Authorised Signature)		(Authorised Signature)
Name:	Barry Skinner	Name:	Stephen Johnston
	(Typed or Printed Name)		(Typed or Printed Name)
Title :	President	Title:	President

2

AMENDMENT 2 TO INTELLECTUAL PROPERTY AGREEMENT

This amendment ("Amendment No,2") is effective as of May 23, 2008 and is by and between DYNAMIC INTELLIGENCE INC. ("Dynamic"), a Barbados Corporation having an office at Latirisron House, Lower Collymore Rock Drive, P.O. Box 1132, Bridgetown, BB11000, Barbados, and AIRLINE INTELLIGENCE SYSTEMS INC., a Delaware Corporation, ("AIS"), having an office at 3500 Carillon Point, Kirkland, WA 98033, USA. Dynamic and AIS may each be referred to as a "Party" and together as the "Parties",

The Parties entered into an Intellectual Property Agreement effective as of December 9, 2005 (the "Original Agreement") and, thereafter, effective as of October 11, 2006, the Parties entered into the October 2006 Amendment to Intellectual Property Agreement ("Amendment No.l"). The Original Agreement, together with Amendment No.l, shall be referred to herein as the "Agreement."

In consideration of the terms, conditions and other covenants and agreements contained in this Amendment No,2 and for other good and valuable consideration, the receipt and sufficiency of which are acknowledged, the Parties agree as follows:

1. The definition of "Airline Field" in Section 1.2 of the Agreement shall be deleted as of the effective date of this Amendment No.2 and replaced with the following definition of "Licensed Field":

"1.2 "Licensed Field" means, other than expressly excluded below: (i) all of the following in connection with the airline industry and airline operations: (a) schedule planning, revenue management, reservations, and irregular operations, (b) Maintenance Repair Operations, (c) Airline Performance Travel Insurance, and (d) cargo and freight forwarding; and (ii) the Integrated E-Commerce Travel Engine Platform, Notwithstanding the foregoing definition, the Licensed Field excludes military applications, air traffic control applications and airport management applications. By way of example only, the Licensed Field Includes schedule planning, revenue management, reservations, and irregular operations In connection with; airline ticketing, airline route schedules, airline fleet schedules, airline crew schedules, airline maintenance schedules, airline passenger schedules, airline and operational relationships between the foregoing, and asset management systems and financial reporting models that can be implemented on a computer system to allow for dynamic adjustment of airline operations based on unforeseen disruptions to those schedules."

The term "Licensed Field" shall replace the term "Airline Field" throughout the Agreement, and all references to "Airline Field" in the Agreement shall be deemed to refer to "Licensed Field."

2. Section 1,11 of the Agreement shall be amended and restated as of the effective date of this Amendment No, 2 to read in its entirety as follows:.

"1.11 "Excluded Field" means any field or application not included in the Licensed Field,"

The term "Excluded Field" shall replace the term "Non-Airline Field" throughout the Agreement, and all references to "Non-Airline Field" in the Agreement shall be deemed to refer to "Excluded Field."

1

3. The following section 1.16 shall be added to the Agreement as of the effective date of this Amendment No. 2,

"1.16 "Integrated B-Commeree Travel Engine Platform" means technology to the extent it Is utilized in connection with the purchase and sale of travel products and services. By way of example only, this includes the aggregation, marketing, sale and distribution of travel products, travel services and travel content offerings and the technological facilitation of the transactions between travel industry suppliers and travelers. These offerings include, by way of example and not by limitation, airline travel, hotel accommodations, vehicle rentals, cruises, tour and sightseeing packages, travel insurance, and personalized comprehensive travel itineraries. By further way of example only, the Integrated E-Commerce Travel Engine Platform would facilitate inference-based and intelligent travel searches, provide access to extensive travel information, provide reservations booking and management, facilitate the bidding, auctioning, purchase and sale of a variety of travel products, travel services and travel content offerings to consumers, either made available or created by or on behalf of travel industry providers, effect the booking of and payment for such transactions, and be fully integrated with the travel industry supplier operations."

4.

2

5. Absent mutual agreement by the Parties to the contrary, ATS shall reimburse Dynamic for the reasonable out-of-pocket payments incurred by Dynamic In connection with filing and maintaining Dynamic Intellectual Property licensed to A3S, including payment of maintenance fees for issued patents, patent application filing and annuity fees, prosecution attorney fees, and expenses associated with ex-parte or inter-partes reexaminations.

6.            Dynamic hereby represents and warrants to AIS that; (a) it has all right and authority to enter into this Amendment and to grant Company the rights set forth in thisAmendment; (b) it is permitted by applicable law and regulations to enter in to this Amendment.

7. AIS hereby represents and warrants to Dynamic that; (a) It has all right and authority to enter into this Agreement and to grant Dynamic the rights granted herein;(b) it is permitted by applicable law and regulations to enter into this Agreement.

8.

9. The rights and obligations of the Parties under the Prior Agreement which by their nature would apply to this Amendment shall so apply. By way of example and without limitation, the obligations relating to non-disclosure (Prior Agreement §12.6) and arbitration (Prior Agreement § 12.10) apply with equal force to this Amendment.

10. This Amendment, including the Prior Agreement, constitutes the entire agreement between the Parties concerning its subject matter and supersedes all prior written or oral negotiations, correspondence, understandings and agreements between the Parties respecting such subject matter. Prior unexecuted drafts of this Amendment may not be used to interpret the intentions of the parties or underlying facts relating to this Amendment and the fact that certain provisions may have been added, removed or modified during negotiations shall have no interpretive significance. This Amendment shall not be modified or rescinded, except by a writing signed by both Parties. No provision of this Amendment shall be deemed modified by any action or omission or failure to object to any action that may be inconsistent with the terms of this Amendment. No waiver of a breach committed by a Party in one instance shall constitute a waiver or license to commit or continue breaches in other or like instances.

3

IN WITNESS WHEREOF, the Parties hereto have executed this Amendment as of the da|e first above written

DYNAMIC INTELLIGENCE INC.		AIRLINE INTELLIGENCE SYSTEMS INC.
By:	/s/ Barry Skinner	By:	/s/Stephen C. Johnston
	(Authorized Signature)		(Authorized Signature)
Name:	Barry Skinner	Name:	Stephen C. Johnston
	(Typed or Printed Name)		(Typed or Printed Name)
Title:	President	Title:	President & CEO

4

SCHEDULE A

By:	/s/ Stephen Johnston
	Stephen Johnston
	President and Chief Executive Officer

5

AMENDMENT 3 TO INTELLECTUAL PROPERTY AGREEMENT

This amendment ("Amendment No. 3") is effective as of May 31, 2009 and is by and between Dynamic Intelligence Inc. ("Dynamic"), a Barbados Corporation having an office at Lauriston House, Lower Collymore Rock Drive, P.O. Box 1132, Bridgetown, BB11000, Barbados, and Airline Intelligence Systems Inc., a Delaware Corporation, ("Ain having an office at 3500 Carillon Point, Kirkland, WA 98033, USA. Dynamic and AIS may each be referred to as a "Pare and together as the "Parties".

The Parties entered into an Intellectual Property Agreement (the "Original Agreement") effective as of December 9, 2005, as amended by Amendment to Intellectual Property Agreement, dated October 11, 2006 ("Amendment No. 1"), and as further amended by Amendment 2 to Intellectual Property Agreement, dated May 23, 2008 ("Amendment No. 2"). The Original Agreement, together with Amendment No. 1 and Amendment No. 2, shall be referred to herein as the "Agreement."

In consideration of the terms, conditions and other covenants and agreements contained in this Amendment No. 3 and for other good and valuable consideration, the receipt and sufficiency of which are acknowledged, the Parties agree as follows:

1.    The definition of "License Field" in Section 1.2 of the Agreement shall be deleted as of the effective date of this Amendment No. 3 and replaced with the following definition of "Airline Field":

"1.2 "Airline Field" means all of the following fields within the airline Industry and airline operations: (a) schedule planning, revenue management, reservations, and irregular operations, (b) Maintenance Repair Operations, and (c) Airline Performance Travel Iiisurance. Notwithstanding the foregoing definition, "Airline Field" excludes military applications. By way of example, other than military applications, the Airline Field includes schedule planning, revenue management, reservations, and irregular operations in connection with: airline ticketing, airline route schedules, airline fleet schedules, airline crew schedules, airline maintenance schedules, airline passenger schedules, airline and operational relationships between the foregoing, and asset management systems and financial reporting models that can be implemented on a computer system to allow for dynamic adjustment of airline operations based on unforeseen disruptions to those schedules."

The term "Airline Field" shall replace the term "Licensed Field" throughout the Agreement, and all references to "Licensed Field" in the Agreement shall be deemed to refer to "Airline Field."

2.     Section 1.11 of the Agreement shall be amended and restated as of the effective date of this Amendment No. 3 to read in its entirety as follows:.

"Non-Airline Field" means any fields) not included in the Airline Field. By way of example, the Non-Airline Field includes any field unrelated to airline resource scheduling and planning. By further way of example only, the Non-Airline Field includes, but is not limited to, resource scheduling and planning in connection with: the military; transportation of goods by car, ship, rail or truck; warehousing; supply-chain management; car rental fleets; electricity; and natural gas, oil and telecommunication networks.

1

The term "Non-Airline Field" shall replace the term "Excluded Field" throughout the Agreement, and all references to "Excluded Field" in the Agreement shall be deemed to refer to "Non-Airline Field."

3.     Section 1.16 shall be deleted in its entirety from the Agreement as of the effective date of this Amendment No. 3.

4.

5.    Absent mutual agreement by the Parties to the contrary, AIS shall reimburse Dynamic for the reasonable out-of-pocket payments incurred by Dynamic in connection with filing and maintaining Dynamic Intellectual Property (as defined in the Original Agreement) licensed to AIS, including payment of maintenance fees for Issued patents, patent application filing and annuity fees, prosecution-attorney fees, and expenses associated with ex-parte or inter­partes reexaminations.

6.     Dynamic hereby represents and warrants to AIS that: (a) it has all right and authority to enter into this Amendment No. 3 and to grant Company the rights set forth in this Amendment No. 3 and (b) it is permitted by applicable law and regulations to enter into this Amendment No. 3.

7.    AIS hereby represents and warrants to Dynamic that: (a) it has all right and authority to enter into this Agreement and to grant Dynamic the rights granted herein; (b) it is permitted by applicable law and regulations to enter into this Agreement.

8.

9.     The rights and obligations of the Parties under the Original Agreement which by their nature would apply to this Amendment No. 3 shall so apply. By way of example and without limitation, the obligations relating to non-disclosure (Original Agreement §12.6) and arbitration (Original Agreement §12.10) apply with equal force to this Amendment No. 3.

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10.  This Amendment No. 3, and the agreements referenced herein, constitutes the entire agreement between the Parties concerning its subject matter and supersedes all prior written or oral negotiations, correspondence, understandings and agreements between the Parties respecting such subject matter. Prior unexecuted drafts of this Amendment No. 3 may not be used to interpret the intentions of the parties or underlying facts relating to this Amendment No, 3 and the fact that certain provisions may have been added, removed or modified during negotiations shall have no interpretive significance. This Amendment No 3 shall not be modified or rescinded, except by a writing signed by both Parties. No provision of this Amendment No. 3 shall be deemed modified by any action or omission or failure to object to any action that may be inconsistent with the terms of this Amendment No. 3. No waiver of a breach committed by a Party in one instance shall constitute a waiver or license to commit or continue breaches in other or like instances.

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IN WITNESS WHEREOF, the Parties hereto have caused this Amendment No. 3 to be duly executed as of the day and year first above written.

AIRLINE INTELLIGENCE SYSTEMS INC.

By:/s/  Stephen Johnston                               

Name:   

Title: 

DYNAMIC INTELLIGENCE INC.

By:  /s/ Barry skinner                                      

Name: Barry Skinner                                       

Title:   President                                              

4

EXHIBIT A

5

EXHIBIT B

6

EXHIBIT C

 7

EX-10.7

Exhibit 10.7

DYNAMIC INTELLIGENCE INC.

-AND - -

AIRLINE INTELLIGENCE SYSTEMS INC.

-AND-

AIRLINE INTELLIGENCE SYSTEMS INC.

MASTER SERVICES AGREEMENT

Made as of December 9, 2005

Article 1		INTERPRETATION	2
	1.1	Definitions	2
	1.2	Gender and Number	4
Article 2		SERVICES PRODUCTS	4
	2.1	Services	4
	2.2	Non-Exclusivity	4
	2.3	Intellectual Property Rights	5
	2.4	Requests for Assistance	6
	2.5	Notice to be Provided	6
	2.6	Performance by Responders	6
	2.7	Performance by Third Parties	6
	2.8	Remuneration for Services	7
	2.9	Other Activities	7
Article 3		LIABILITY	7
	3.1	Limitation of Liability	7
Article 4		TERM AND TERMINATION	7
	4.1	Effective Date	7
	4.2	Term	7
	4.3	Insolvency, Etc	7
	4.4	Default	8
	4.5	Effect of Termination	8
Article 5		GENERAL	8
	5.1	Governing Law and Attornment

5.2	Public Notices	8
5.3	Relationship of Parties	8
5.4	Further Assurances	8
5.5	Assignment	9
5.6	Severability	9
5.7	Notices	9
5.8	Time of Essence	9
5.9	Limitation of Extent of Agreement	10
5.10	Entire Agreement, Waiver	10
5.11	Breach of One Party.	10
5.12	Counterparts	10

MASTER SERVICES AGREEMENT

THIS AGREEMENT is made as of the 9th day of December, 2005

BETWEEN:

DYNAMIC INTELLIGENCE INC., a corporation

incorporated under the laws of Barbados

("Dynamic")

- and -

AIRLINE INTELLIGENCE SYSTEMS INC., a

corporation incorporated under the laws of the State of Delaware

("AI US")

- and - -

AIRLINE INTELLIGENCE SYSTEMS INC a

corporation incorporated under the laws of the Province of

Ontario

("AI Canada")

RECITALS:

A.	Dunamic, AI US and AL Cananda each possess certain capabilities (including any of research, development, marketing, sales and client services capabilities) and each may from time to time require the assistance from one or more of the Group of Companies.
B.	Dynamic AI US and AI Canada wish to establish an ongoing arrangement for the provision of assistance of this sort.
C.	The part parties wish to have AI Canada assign its intellectual Property to AI US so that AI US can assign its Intellectual Property to Dynamic pursuant to the IPA, and for Dynamic to license AIS US pursuant to the IPA.

NOW THEREFORE IN CONSIDERATION of the mutual covenants contrained in this agreement and other good and valuable consideration (the receipt and sufficiency of which are hereby acknoledged), the parties agree as follows:

1

ARTICLE 1

INTERPRETATION

1.1                      Definitions

In this Agreement, the following terms have the following meanings:

"Affiliate" of a Party means a corporation or other legal entity (a) controlled by the Party, (b) controlling the Party, or (c) controlled by the corporation or legal entity which controls the Party, For the purposes of this paragraph, to "control" a corporation or an entity means to own or control, either directly or indirectly such as by intermediary entities, (1) more than 50% of the shares or other securities entitled to vote for election of directors (or other managing authority) of the corporation or entity; (2) more than 50% of the equity interest of the corporation or entity, (3) if the corporation or entity does not have outstanding shares or securities as may be the case in a partnership, joint venture, or unincorporated association, more than 50% of the ownership interest representing the right to make decisions for the corporation or entity; or (4) the maximum shares or other securities entitled to vote for election of directors (or other managing authority) of a foreign corporation or entity permitted by law if (i) the applicable country does not permit the Party to own a greater share due to its nationality and (ii) the foreign corporation or entity is substantially controlled by the Party. Notwithstanding the foregoing, any corporation or other legal entity shall be deemed to be an Affiliate only so long as such control exists,

"AI Canada Intellectual Property" means Intellectual Property that becomes or became owned, controlled or licensable by AI Canada, or its Affiliates to extent such Affiliates are not Affiliates of AI US, during the term of the IPA. Notwithstanding the foregoing, "AI Canada Intellectual Property" excludes Intellectual Property if (and solely to the extent) (a) AIS Canada, or such Affiliates as the case may be, would be obligated to pay royalties or other consideration to a non-affiliated third party if the Intellectual Property is assigned or licensed to AI US hereunder and (b) such obligation existed at the time AI Canada, or such Affiliates as the case may be, acquired its rights in the Intellectual Property.

"Agreement" means this agreement including the recitals, and all schedules attached to this agreement, in each case as they may be amended or supplemented from time to time;

"Group of Companies" means collectively Dynamic, AI US and AI Canada.

"Business Day" means any day, other than Saturday, Sunday or any statutory holiday in Canada or the United States;

2

"Exploit" means make, use, sell, offer for sale, import, reproduce, distribute (including but not limited to by sale, rental, lease, or lending), perform, display, modify, adapt, prepare derivative works of, make substantial and insubstantial alterations, translate into any language, aggregate, have made, license, sublicense, grant sublicensing rights, in any medium whatsoever whether now known or hereafter devised, or otherwise exploit.

"Intellectual Property" means any and all of the following items that are or were created, authored, invented, conceived, reduced to practice, made, filed or derived (collectively "created"), as the case may be, before or during the term of this Agreement (regardless of the location where it was created):

(a)copyrightable works, copyrights and computer software (including data and related documentation), whether or not the subject of a copyright application, copyright registration or renewed copyright,

(b)inventions (whether or not the subject of a patent or patent application, and whether or not reduced to practice), all improvements thereto, conceptions, patents, patent applications, patent disclosures, industrial designs, utility models, industrial design applications and industrial registrations,

(c) continuations, continuations-in-part, divisionals, reissues, reexaminations, revisions, extensions, substitute applications (as defined in MPEP § 201.09) of patents or patent applications filed before or during the term of this Agreement, and other patents which claim the benefit of the filing date of a patent or patent application otherwise filed before or during the term of this Agreement, but solely to the extent it claims subject matter that was disclosed in a patent or patent application filed before or during the term of this Agreement,

(d)moral rights,

(e)proprietary or confidential information, trade secrets and know-how, and

(f)any other proprietary, intellectual or intangible property protected by the law of any jurisdiction or governmental agency

Notwithstanding the foregoing, "Intellectual Property" does not include trademarks, service marks, or similar indicia of origin,

"IPA" means the executed agreement entitled "Intellectual Property Agreement" between AI US and Dynamic, a copy of which is attached as Schedule A.

"Party" means any signatory to this Agreement and "Parties" means all of them;

"Person" means any individual, partnership, limited partnership, syndicate, sole proprietorship, company or corporation with or without share capital, unincorporated association, trust, trustee, executor, administrator or other legal personal representative, regulatory body or agency, government or governmental agency, authority or entity however designated or constituted;

3

"Requester" has the meaning given to that term in Section 2.3;

"Responder" has the meaning given to that term in Section 2.3; and

"Services" has the meaning attributed to that term in Section 2.1.

1.2                      Gender and Number

In this Agreement, unless the context otherwise requires, words importing the singular include the plural and vice versa and words importing gender include all genders.

ARTICLE 2

SERVICES PRODUCTS

2.1                      Services

2.1.1 Subject to this Agreement, the Parties agree to assist each other as required to provide the following services (collectively, the "Services") for each other:

•   marketing and sales support services

•   consulting services

•   research and development services

•    logistical services

•    financial management and support services

•    technical assistance services

•training services

•administrative services

•loan facilities

•other services as specifically identified from time to time.

2.2                      Non-Exclusivity

The Parties acknowledge that their respective agreements to provide assistance as contemplated by this Agreement are on a non-exclusive basis and that nothing contained in this Agreement will restrict any of them from carrying out or providing, itself or through any third Person, directly or indirectly, Services.

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2.3                      Intellectual Property Rights

The following provisions in this Section 2.3 shall apply notwithstanding any other provision to the contrary. In the event of any conflict between this section and another provision hereunder, the rights and obligations of this section shall prevail. In the event of any conflict between this Agreement and the IPA, the rights and obligations of the IPA shall prevail.

(a)	(i)	AI Canada hereby irrevocably assigns to AI US all right, title, and interest, throughout the world, in the AI Canada Intellectual Property including the right to: reproduce, distribute, perform, display, make, have made, modify, adapt, prepare derivative works of, make substantial alterations, use, sell, license, grant sublicensing rights, lease, rent, import, transfer, collect past damages, obtain and own renewals or extensions including copyright renewals, translate into any language or otherwise exploit, in any medium whatsoever, whether now known or hereafter devised, without any accounting or any other obligation owed to AI Canada, all to the maximum extent permitted by law. As between AI US and AI Canada, AI US shall retain ownership of the AI Canada Intellectual Property regardless of any termination or the basis of termination of this Agreement. As between AI US and AI Canada, AI US has sole discretion to register, enforce or protect the AI Canada Intellectual Property, including filing and controlling copyright applications and patent applications in its own name, including continuations, continuation-in-parts, divisionals, reissues, reexaminations or any other patent application which claims the benefit of the filing date of a patent or application assigned to Dynamic. To the extent permissible by law including Copyright Law and without implying an employee-employer relationship between AI Canada and AI US, AI Canada agrees that AI Canada Intellectual Property is "work made for hire" owned solely by AI US.
	(ii)	AI Canada, subject to the provisions of this Agreement, hereby waives all of its moral rights in all works.
(b)	In the event AI Canada is prohibited by law or contract from assigning particular AI Canada Intellectual Property to AI US, AI Canada shall, to the maximum extent permitted by law or contract, grant AI US a fully paid up, worldwide and perpetual license under the AI Canada Intellectual Property to Exploit any product or service. Such license shall be exclusive to the maximum extent permitted by law or contract.
(c)	AI Canada warrants that all AI Canada Intellectual Property that becomes or became owned, controlled or licensable by AI Canada's Affiliates to extent such Affiliates are not Affiliates of AI US, before or during the Term of the IPA shall be assigned to AI Canada for assignment or licensing to AI US pursuant to this Section 2.3.
(d)	AI Canada warrants that it will not take any action or permit a material omission which interferes with or prevents Dynamics' rights under the IPA.
(e)	The rights and obligations between Dynamic and AI US with respect to Intellectual Property are governed by the PA.
(f)	The rights and obligations of this Section 2.3 shall terminate upon the termination of the IPA regardless of the Term of this Agreement, except that any rights acquired by AI US pursuant to this Section 2.3 and prior to the termination of the IPA shall survive the termination of the IPA and this Agreement.

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2.4                      Requests for Assistance

Whenever a Party (the "Requester") requires Services to be provided by a third Person, the Requester may, but need not, by notice as contemplated by this Agreement or as otherwise agreed by the Parties from time to time, offer the opportunity to perform the Services to any one or more of the other Parties. Any Party that, within 3 Business Days after receipt of the notice provided for in Section 2.5, expresses willingness to assist the Requester is referred to below as a "Responder".

2.5                      Notice to be Provided

If a Requester anticipates that it will require another member of the Group to provide Services, the Requester will notify the relevant other Parties, providing as much prior notice as is practicable and specifying, to the extent possible, the nature of the Services to be provided, any timing deadlines or constraints, and any further information that may reasonably be required by a Responder.

2.6                      Performance by Responders

The Responders will perform their duties under this Agreement honestly and in good faith with a view to the best interests of the Group of Companies.

2.7                      Performance by Third Parties

With consent of the Requester, any Service to be performed by a Responder may be performed by a third party with whom the Responder has entered into an arrangement or agreement relating to the provision of that Service, provided that agreement contains provisions in favour of the Requester which are no less favourable than those contained in this Agreement.

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2.8                      Remuneration for Services

The fees for Services provided by the Responders to the Requesters will be agreed to by the Parties on a comparable basis to arm's length pricing.

2.9                      Other Activities

The Parties acknowledge the possibility that each of them may provide services to third parties. Each Party will be free to pursue these opportunities, subject only to maintaining its capacity to perform Services it has agreed to provide and to fulfilling its obligations as described in this Agreement

ARTICLE 3

LIABILITY

3-1                      Limitation of Liability

A Responder's entire liability and a Requester's exclusive remedy for damages resulting from a Responder's performance or non-performance related in any way to any Services provided under this Agreement will be recovery of actual damages. This limitation will apply regardless of the form of action, whether based on contract or tort, including negligence.

IN NO EVENT WILL A RESPONDER BE LIABLE FOR SPECIAL, INDIRECT OR CONSEQUENTIAL DAMAGES (EVEN IF THE RESPONDER HAS BEEN ADVISED OF THE POSSIBILITY OF THIS LOSS) INCLUDING BUT NOT LIMITED TO, LOST BUSINESS REVENUE, FAILURE TO REALIZE EXPECTED PROFITS OR SAVINGS OR OTHER COMMERCIAL OR ECONOMIC LOSS OF ANY KIND, OR ANY CLAIM AGAINST A REQUESTER BY ANY OTHER PARTY.

ARTICLE 4

TERM AND TERMINATION

4.1                      Effective Date

This Agreement will take effect as of December 9, 2005.

4.2                      Term

Subject to earlier termination in accordance with its terms, this Agreement will remain in force as long as the IPA is in force and will terminate contemporaneously with the IPA without notice.

4.3                      Insolvency. Etc.

Any Party may terminate this Agreement immediately by written notice upon the other Party being adjudged bankrupt or filing a voluntary petition in bankruptcy or similar legislation for the relief of debtors, or making an assignment for the benefit of creditors generally, or upon any proceedings for dissolution or liquidation being commenced (except for purposes of amalgamation or reconstruction) or upon a receiver, manager or receiver-manager bemg appointed in respect of its undertaking or all or a substantial part of it proceedings or whose appointment is not vacated or discharged wimin 30 days.

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                    Default

Any party may terminate this agreement upon any material breach of it by any other Partv by giving 30 days' prior written notice to that Party specifying the alleged breach, provided that the breach is not cured within the 30 day period.

4.5                      Effect of Termination

Termination or expiry of this Agreement will be without prejudice to the rights of the Parties accrued up to the date of termination or expiry of this Agreement.

The provisions of Sections 2.3 and 3.1 will remain in force and effect after termination or expiration of this Agreement, until the Parties may mutually agree to the release of the obligations contained therein.

ARTICLE 5

GENERAL

5.1                      Governing Law and Attornment

This Agreement will be deemed to have been entered into in the State of Delaware, and will be governed by the laws in force in Delaware. The Parties irrevocably attorn to the non-exclusive jurisdiction of the courts of Delaware.

5.2                      Public Notices

No press release or other announcement concerning the transaction contemplated by this Agreement may be made by any Party, without the prior written consent of the other Parties, not to be unreasonably withheld.

5.3                      Relationship of Parties

The relationship of the Parties established by this Agreement is that of independent contractors, and nothing contained in this Agreement is to be construed to constitute the Parties as partners, joint venturers, co-owners or otherwise as participants in a joint venture or common undertaking.

5.4                     Further Assurances

The Parties will each, as reasonably required by the other, enter into agreements, execute documents and otherwise do all things as may be necessary or desirable to carry into full force and effect the intentions of this Agreement.

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5.5                      Assignment

Limited Assignment Rights. No Party shall have the right to assign or transfer any of its rights and obligations under this Agreement (in insolvency proceedings, by mergers, acquisitions or otherwise) without the other Partys' written consent except that all rights and obligations may be assigned to an Affiliate or third party where the assignment is in connection with the sale, reorganization or other transfer of substantially all of the relevant business of the assigning party.

Termination Option. Upon receiving notice of the assigning Party's assignment of or intent to assign this Agreement, the other Party may terminate this Agreement by providing notice to the assigning Party within thirty (30) days of such notice of assignment or intent to assign. If the assignment occurs and this Agreement is terminated in accordance with this paragraph, then termination shall be effective the moment before the assignment. AI US shall not have the option to terminate the Agreement in accordance with this paragraph if the assigning party is AI Canada, and AI Canada shall not have the option to terminate the Agreement in accordance with this paragraph if the assigning party is AI US.

Change in Ownership. Any change in ownership of a Party that results in a change in control of a Party shall be deemed an assignment to a third party for the purposes of this paragraph.

Void Assignments. Any assignment or other transfer of rights and obligations hereunder which is inconsistent with the foregoing shall be null and void ab initio.

5.6                      Severability

If any provision of this Agreement is held invalid by a tribunal of competent jurisdiction, the remaining provisions will nevertheless remain in full force and effect.

5.7                      Notices

Any notice or other communication to be given or made under this Agreement including a notice to effect a change in a Party's address for notice, must be in writing addressed to the current head office of that Party and will be deemed to have been duly given or made on the earliest of the following:

•actual delivery

•48 hours after being sent by commercial courier service; and

•the day following which any e-mail, facsimile or telegram message is sent.

5.8                      Time of Essence

Time is of the essence of this Agreement.

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5.9                      Limitation of Extent of Agreement

This Agreement is subject and subordinate to any other agreement between any all of the Parties that deals specifically with any matter addressed in this Agreement.

5.10                    Entire Agreement. Waiver

Subject to Section 5.9, this Agreement constitutes the entire agreement between the Parties pertaining to the subject matter hereof. There are no warranties, conditions, or representations (including any that may be implied by statute) and there are no agreements in connection with this subject matter except as specifically set forth or referred to in this Agreement. Except as expressly provided in this Agreement, no amendment or waiver of this Agreement will be binding unless executed in writing by the Party to be bound thereby. No waiver of any provision of this Agreement will constitute a waiver of any other provision nor will any waiver of any provision of this Agreement constitute a continuing waiver unless otherwise expressly provided.

5.11                    Breach of One Party

In the event a Party breaches this Agreement ("Breaching Party") and another Party ("Acting Party") chooses to take action against the Breaching Party, then such action shall only affect the rights and obligations between the Breaching Party and the Acting Party. The rights and obligations between the Breaching Party and the remaining Parties (if any), and the Acting Party and the remaining Parties (if any), shall remain unaffected.

5.12                    Counterparts

This Agreement may be signed in counterparts and each counterpart will constitute an original document and all counterparts, taken together, will constitute one and the same instrument.

5.13                    Counsel

Each Party acknowledges that, in connection with the negotiation and execution of this Agreement, it had the opportunity for independent legal advice by counsel of its own selection and experienced in the relevant subject matter areas and domiciles of the Parties, that each Party fully understands the facts, that each Party has been fully informed as to its legal rights and obligations, and that each Party is signing the Agreement freely and voluntarily.

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IN WITNESS WHEREOF THE PARTIES HAVE EXECUTED THIS AGREEMENT WITH EFFECT AS OF THE 9TH DAY OF DECEMBER, 2005.

DYNAMIC INTELLIGENCE INC.
By:	/s/ Barry Skinner
	Barry Skinner
	President

AIRLINE INTELLIGENCE SYSTEMS INC.
By:	/s/ Stephen Johnston
	Stephen Johnston
	President

AIRLINE INTELLIGENCE SYSTEMS INC.
By:	/s/ Harrold Roy Miller
	Harrold Roy Miller
	President

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SCHEDULE A

Intellectual Property Agreement between AI US and Dynamic (the "IPA")

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EX-10.8

Exhibit 10.8

EXCHANGE RIGHT AGREEMENT

This Exchange Right Agreement (this "Agreement*) is made effective as of January 28, 2010, by and between Airline Intelligence Systems Inc., a Delaware corporation (the "Company"), and Merus Capital I, L.P. ("Merus").

RECITALS

A.          Merus is presently a holder of shares of Common Stock of the Company ("Common Stock").

B.          Prior to the date hereof, Merus provided the Company with emergency debt financing in exchange for, among other things, the Company providing Merus with the exchange right provided for herein with respect to the Merus Securities.

C.          The Company is contemplating entering into a Going Public Transaction (as defined below) and this Agreement will not be triggered by, and will survive, such transaction.

AGREEMENT

For good and valuable consideration, the receipt and sufficiency of which is hereby acknowledged, the parties agree as follows:

1.Definitions. Whenever used herein, the following definitions shall govern this Agreement:

"Board" means the Board of Directors of the Company.

"Buyer" means the person or entity that purchases the Company's business pursuant to a Liquidation Transaction.

"Contingent Acquisition Consideration" is the aggregate amounts paid after the Closing on a contingent basis, or following the expiration of an indemnification, escrow or holdback period, or in connection with an earn-out to: (i) the Company in a sale of all or substantially all of its assets or a license of all or substantially all of the Company's intellectual property assets; or (ii) the shareholders of the Company in a merger, consolidation, statutory or contractual share exchange or other transaction that constitutes a Liquidation Transaction, in each case but for the operation of this Agreement and repayment of the Promissory Note; provided, that such amount shall not include (1) any amounts payable to officers, directors or employees of the Company by the Buyer in connection with any agreements) not to compete or similar arrangements) or as salary, bonus or consulting fees for services rendered after the Closing, or (2) any amounts payable in connection with administration of the indemnification, holdback, escrow or earn-out provision.

"Closing" means the closing of the Liquidation Transaction as determined pursuant to the agreements providing for such event.

"Going Public Transaction" means a transaction or a series of transactions that results in the Company (including any successor in interest) becoming a majority-owned subsidiary of a company ("Parent) that is subject to the reporting obligations under Section 13 or 15(d) of the United States Securities Exchange Act of 1934, as amended, and following which the stockholders of the Company own 50% or more of the voting power of the outstanding securities of Parent at the closing of the transaction.

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"Liquidation Transaction" means the first to occur of the following transactions or series of related transactions: (a) the sale, conveyance or other disposition of all or substantially all of the Company's property or business (including the exclusive licensing of all or substantially all of the Company's intellectual property to a third party), (b) other than a Going Public Transaction, the consummation by the Company of any corporate reorganization, share exchange or recapitalization, or merger with or into, or consolidation with, any other corporation, limited liability company or other entity if the holders of shares of capital stock of the Company sell or otherwise transfer in such transaction, to any person or group of persons acting jointly or in concert, shares of the Company's capital stock representing 50% or more of the voting power of the stockholders of the Company or (c) the determination by the Board to liquidate, dissolve, wind up or otherwise cease the regular business operations of the Company; provided, however. that none of the following transactions shall be considered a Liquidation Transaction: (x) a merger effected exclusively for the purpose of changing the domicile of the Company, (y) a merger or consolidation with a wholly owned subsidiary of the Company, or (z) an equity financing in which the Company is the surviving corporation, The Board shall have the right in its reasonable discretion to determine whether multiple sales or exchanges of the voting securities of the Company or multiple Liquidation Transactions are related, and its determination shall be final, binding and conclusive.

"Merus Securities" means the following outstanding equity securities of the company issued to Merus.

2.Exchange in Connection with a Liquidation Transaction.

2.1Liquidation Transaction. In the event a Liquidation Transaction occurs during the term of this Agreement, Merus shall have the irrevocable right (the "Exchange Right') to exchange all of the Merus Securities for an unsecured promissory note (the "Promissory Note") in the principal amount equal to the lesser of (A) the product of $5 million multiplied by a fraction, the numerator of which is equal to the aggregate number of Merus Securities outstanding immediately prior to the Election Date (as defined below), without taking into account the exercise of the Exchange Right, and the denominator of which is equal to the total number of Merus Securities outstanding as of the date hereof (as adjusted pursuant to any stock split, stock dividend, recapitalization or similar event), in each case calculated on an as-converted to Common Stock basis, and (B) the aggregate amount of the consideration, including Contingent Acquisition Consideration, if any, payable in the Liquidation Transaction after payment of the Obligations (as defined below), without taking into account the exercise of the Exchange Right, subject to the terms and conditions set forth in Sections 2.2 and 2.3 below (collectively, the "Payment Obligation"). The Promissory Note shall bear interest at a rate equal to the minimum rate established pursuant to Section 1274(d) of the Internal Revenue Code of 1986, as amended, as of the Election Date. The Promissory Note shall be payable in full on the Closing of the Liquidation Transaction; provided, however, that in the event the Liquidation Transaction contemplates the payments of any Contingent Acquisition Consideration, the Company will take such actions as are necessary to provide that any unpaid obligations under the Promissory Note outstanding as of the Closing shall be paid (1) by the Company promptly following its receipt of any Contingent Acquisition Consideration, in the event that the Liquidation Transaction is an asset sale, and (2) by Buyer or the Company's paying agent or such other person designated to distribute the consideration to the Company's stockholders, promptly following their respective receipt of any Contingent Acquisition Consideration, in the event that the Liquidation Transaction is not an asset sale, subject to the terms and conditions set forth in Sections 2.2 and 2.3 below, and shall have the terms contemplated in Section 2.4, 2.5 and 2.6. The obligations under the Promissory Note shall be subordinate in right of payment to (i) any costs and expenses incurred by the Company and directly associated with completing the Liquidation Transaction, including (without limitation) legal, accounting, and banking fees, (ii) any wind-down costs of the Company, and (hi) all amounts paid or payable in order to satisfy or extinguish liabilities to vendors, creditors or other third parties (without duplication to the items set forth in the proviso in (i) above) (collectively, "Obligations"). A form promissory note is attached hereto as Exhibit A.

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2.2           Election Terms and Conditions.

(a)Subject to Merus receiving timely notice pursuant to Section 2.3 below, if Merus f|ils to exercise its Exchange Right at least five (5) calendar days prior to fhe anticipated Closing, the Exchange Right shall lapse and Merus shall only have the rights applicable to the Company's equity holders in such transaction.

(b)In the event that Merus properly exercises its Exchange Right, the Merus Securities shall be deemed cancelled and terminated in their entirety upon the receipt by Merus of the Promissory Note.

2.3Election Mechanics.

(a)The Company shall give Merus written notice of any impending Liquidation Transaction not later man twenty (20) calendar days prior to the stockholders' meeting (or execution of an action taken by written consent) to approve such Liquidation Transaction, or twenty (20) calendar days prior to the closing of such Liquidation Transaction, whichever is earlier. Such notice shall describe the material terms of the impending Liquidation Transaction.

(b)At least five (5) calendar days prior to the anticipated Closing, Merus may, by written notice provided to the Company (the "Election Date"), exercise its Exchange Right as provided above. Such exercise shall be final and irrevocable and shall be conditioned only on the consummation of the Liquidation Transaction.

2.4Form of Payment. The Promissory Note shall provide that it may be satisfied with cash or with such other consideration as provided to the Company's stockholders or the Company, as the case may be, in the Liquidation Transaction. The value of any non-cash consideration shall be determined by the Board in good faith and shall not be inconsistent with the value of like consideration in the Liquidation Transaction, Any restrictions on delivery, or subsequent transfer, of such consideration imposed by a Buyer on the Company or its stockholders shall likewise apply to the consideration paid in satisfaction of the Promissory Note. Merus shall execute and deliver upon request such acknowledgments as the issuer of such consideration may reasonably request to evidence Merus' obligations to comply with such restrictions.

2.5Restricted Securities. Notwithstanding anything contained in this Agreement to the contrary, if the Promissory Note is satisfied with common stock or other securities that are not issued pursuant to a registration statement declared or ordered "effective" under the Securities Act of 1933, as amended, then Merus shall agree to comply with applicable securities laws with respect to any transfer of such common stock or other securities. Merus shall be entitled to the same registration rights with respect to the securities it receives in the Liquidation Transaction as are granted to any other holder of the Company's equity securities in connection with a Liquidation Transaction.

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2.6Payment in Connection with a Liquidation and Dissolution. If the Board and the stockholders of the Company determine to consummate a liquidation and dissolution of the Company, and Merus elects to exercise the Exchange Right, then Merus shall have the rights of an unsecured general creditor of the Company that is subordinate in right of payment to the Obligations.

3.General Provisions.

3.1Obligations Unfixnded: No Trust. The liability of the Company to pay the Promissory Note is based solely on the contractual obligations created by the Promissory Note, if and when it is issued. This Agreeement constitutes a mere promise by the Company to exchange the Merus Securities for the Promissory Note. The interest of Merus in the Promissory Note is an unsecured claim against the general assets of the Company that is subordinate in right of payemnt to the Obligations. Merus does not have any interest in any fund or in any specific asset of the Company by reason of any amounts credited or deemed to be credited thereunder. Accordingly, the Promissory Note will not be secured by any trust, pledge, lien or encumbrance on any property of the Company or on the assets of any benefit trust, and nothing contained in this Agreement nor in the Promissory Note and no action taken pursuant to the provisions of any related agreements shall create or be construed to create a trust of any kind.

3.2Representations,Warranties and Covenants of the Company. The Company hereby represents, warrants and covenants to Merus that;

(a)  Organization, Good Standing and Qualification. The Company is a corporation duly organized, validly existing and in good standing under the laws of the State of Delaware. The Company has the requisite corporate power and authority to own and operate its properties and assets, to carry on its business as presently conducted or proposed to be conducted, to execute and deliver this Agreement, to issue Promissory Note, and to perform its obligations pursuant to this Agreement and as contemplated pursuant to the Promissory Note.

(b)  Authorization. All corporate action on the part of the Company and its directors, officers and stockholders necessary for the authorization, execution and delivery of this Agreement, the issuance and delivery of the Promissory Note, and the performance of all of the Company's obligations under this Agreement has been taken. Without limiting the foregoing, all of the members of the Board and the holders of not less than a majority of the Common Stock (not including shares of Common Stock held by Merus) have approved this Agreement and the transactions contemplated hereby. This Agreement and the Promissory Note, when executed and delivered by the Company, shall constitute valid and binding obligations of the Company enforceable in accordance with their terms.

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(c)  No Conflicts. The execution and delivery of this Agreement by the Company, and the performance by the Company of its obligations pursuant to this Agreement and the Promissory Note, will not result in any material violation of, or materially conflict with, or constitute a material default under, the Company's Certificate of Incorporation or Bylaws, each as amended to date, or any of its agreements, nor, to the Company's knowledge, result in the creation of any material mortgage, pledge, lien, encumbrance or charge upon any of the properties or assets of the Company or the suspension, revocation, impairment, forfeiture or nonrenewal of any permit, license, authorization or approval applicable to the Company, its business or operations or any of its assets or properties.

3.3Assignment. Neither this Agreement nor the Promissory Note is transferable by the Company and any attempt to assign, pledge or encumber this Agreement or the Promissory Note or any of the rights or obligations hereunder or thereunder shall be void. With the prior written consent of the Company, Merus may assign this Agreement, in whole or in part, in connection with the transfer of all or any of the Merus Securities, or the Promissory Note; provided that the assignee(s) agrees to be bound by the terms of this Agreement.

3.4Successors and Assigns. Subject to Section 3.3 above, the terms and conditions of this Agreement shall inure to the benefit of and bind the Company and Merus, and their respective successors and assigns.

3.5Term. This Agreement and the Exchange Right shall terminate on the date that is the earlier of (i) 36 months following any Going Public Transaction; (ii) upon receipt by Merus of the Promissory Note after exercising the Exchange Right; and (iii) if Merus transfers any of the Merus Securities without the prior written consent of the Company.

3.6Waiver. Either party's failure to enforce any provision of this Agreement shall not in any way be construed as a waiver of any such provision, or prevent that party thereafter from enforcing each and every other provision of this Agreement.

3.7Severability. In the event any provision of this Agreement is found to be unenforceable by an arbitrator or court of competent jurisdiction, such provision shall be deemed modified to the extent necessary to allow enforceability of the provision as so limited, it being intended that the parties shall receive the benefit contemplated herein to the fullest extent permitted by law. If a deemed modification is not satisfactory in the judgment of such arbitrator or court, the unenforceable provision shall be deemed deleted, and the validity and enforceability of the remaining provisions shall not be affected thereby.

3.8Interpretation Construction. The headings set forth in this Agreement are for convenience only and shall not be used in interpreting this Agreement. Legal counsel representing the Company has drafted this Agreement, but Merus has participated in the negotiation of its terms. Furthermore, Merus acknowledges that Merus has had an opportunity to review and revise, and has reviewed and revised, the Agreement and has had it reviewed by legal counsel and, therefore, the normal rule of construction to the effect that any ambiguities are to be resolved against the drafting party shall not be employed in the interpretation of this Agreement.

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3.9Tax Advisors. Merus has reviewed with its own tax advisors the U.S. federal, state, local and foreign tax consequences of this Agreement and the transactions contemplated by the Agreements. With respect to such matters, Merus relies solely on such advisors and not on any statements or representations of the Company or any of its agents, written or oral. Merus understands that it shall be responsible for its own tax liability that may arise as a result of this Agreement or the transactions contemplated by the Agreement.

3.10Governing Law. This Agreement will be governed by and construed in accordance with the laws of the United States and the State of Delaware.

3.11Jurisdiction/Venue. Each party consents to the non-exclusive jurisdiction and venue of the state or federal courts in the State of Delaware, if applicable, in any action, suit or proceeding arising out of or related to this Agreement. In the event that any suit or action is instituted to enforce any provisions in this Agreement, the substantially prevailing party in such dispute shall be entitled to recover from the losing party such reasonable fees and expenses of attorneys and accountants, which shall include, without limitation, all fees, costs and expenses of appeals.

3.12Notices. Any notice required or permitted by this Agreement shall be in writing and shall be delivered as follows with notice deemed given as indicated: (a) by personal delivery when delivered personally; (b) by overnight courier upon written verification of receipt; (c)by telecopy or facsimile transmission upon acknowledgment of receipt of electronic transmission; or (d) by certified or registered mail, return receipt requested, upon verification of receipt. Notice shall be sent to the addresses set forth below, or such other address as either party may specify in writing.

 If to the Company:

Airline Intelligence Systems, Inc.

Attn: President

3500 Carillon Point

Kirkland, Washington 98006

 If to Merus:

Merus Capital I, L.P.

Attn: Salman Ullah

300 Hamilton Avenue Suite 400

Palo Alto, CA 94301

3.13Counterparts. This Agreement may be executed in two counterparts, each of which will be deemed to be an original copy of this Agreement and both of which, when taken together, will be deemed to constitute one and the same agreement.

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3.14Entire Agreement. This Agreement constitute the entire agreement between the parties relating to this subject matter and supersedes all prior or simultaneous representations, discussions, negotiations, and agreements, whether written or oral. This Agreement may be amended or modified only with the written consent of Merus and the Company. No oral waiver, amendment or modification will be effective under any circumstances whatsoever.

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IN WITNESS WHEREOF, this Agreement has been executed effective as of the date first written above,

AIRLINE INTELLIGENCE SYSTEMS INC.
By:	/s/ Stephen Johnston
	Name: Stephen Johnston
	Title: President & CEO
MERUS CAPITAL X,
By:	Merus Capital Management L.L.P. Its General Partner
By:	/s/ Salman Ullah
	Name: Salman Ullah
	Title: Managing  Director

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EXHIBIT A FORM OF PROMISSORY NOTE

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PROMISSORY NOTE

Maximum Amount: $__________  Date of Issuance:__________,20__________ 

FOR VALUE RECEIVED, the undersigned, Airline Intelligence Systems Inc., a Delaware corporation ("Debtor"), promises to pay to Merus Capital I, L.P. ("Creditor"), the Principal Amount (as defined below) and accrued interest thereon. This Promissory Note (this "Note") is made and delivered pursuant to that certain Exchange Right Agreement dated as of January 28, 2010 between Debtor and Creditor, as such may be amended from time to time (the "Exchange Agreement*). Unless otherwise defined herein, all capitalized terms used In this Note shall have the same meanings that are given to such terms in the Exchange Agreement, the terms of which are incorporated into this Note by reference.

A.Payment Terms.

1.Principal and Interest Payment. The Principal Amount hereunder and the interest accrued and unpaid with respect thereto (collectively, the "Obligation^') shall be due and payable at the Closing (the "Maturity Date"); provided, however, that, in the event the full amount of the Obligations are not repaid at the Closing because the Liquidation Transaction includes Contingent Acquisition Consideration and the amount payable at the Closing is less than the Obligations, such unpaid Obligations shall be paid upon, and out of, the payment of any Contingent Consideration Payments; provided, further, however, the entire principal and accrued and unpaid interest, fees, costs and expenses, if any, shall be due and payable if an Event of Default (as defined below) occurs, all as provided in Section B below.  For purposes of this Note, the "Principal Amount' shall mean $_______________ , which is the aggregate amount of the Payment Obligation, as set forth and determined in accordance with the Exchange Agreement.

2.Interest. Interest shall accrue with respect to the principal sum hereunder at the greater of: (a) five percent (5.00%) per annum and (b) the minimum rate necessary to avoid imputed interest under the Internal Revenue Code of 1986, as amended. Interest payable hereunder shall be calculated on the basis of a three hundred sixty (360) day year, comprised of 12,30-day months, for actual days elapsed.

3.Application of Payments. Any payment received from Debtor shall be first applied to the accrued interest and then to the principal.

4.Prepayment. Debtor shall have the right at any time and from time to time to prepay, in whole or in part, the principal of this Note, without payment of any premium or penalty. Any principal prepayment shall be accompanied by a payment of all interest accrued and unpaid on the amount deemed satisfied as a result of such prepayment through the date of such prepayment.

5.Form of Payments. Principal and interest and all other amounts due hereunder are to be paid in lawful money of the United States of America in federal or other immediately available funds.

6.Right to Set-off. The Debtor hereby has a right to set-off and/or apply any and all amounts owed to Debtor, its subsidiaries and affiliates by Creditor, its subsidiaries and affiliates pursuant to any agreement or arrangement between Debtor, Creditor and/or their respective subsidiaries and affiliates, against any all amounts owed by Debtor to Creditor pursuant to this Note. Neither the exercise nor failure to exercise such right of set-off will constitute an election of remedies or limit the Debtor, its subsidiaries and affiliates in any manner in the enforcement of any other remedies that may be available to it under this Note or any other agreement or arrangement between Debtor, Creditor and/or their respective subsidiaries and affiliates.

B.Events of Default.

1.DEFINITION OF EVENT OF DEFAULT. THE OCCURRENCE OF ANY ONE OR MORE OF THE FOLLOWING EVENTS SHALL CONSTITUTE AN "EVENT OF DEFAULT' HEREUNDER:

a) Debtor's breach of the obligation to pay any amount payable hereunder within five (5) days after the date that it is due and payable;

b) Debtor's institution of proceedings against it, or Debtor's filing of a petition or answer or consent seeking reorganization or release, under the federal Bankruptcy Code, or any other applicable federal or state law relating to creditor rights and remedies, or Debtor's consent to the filing of any such petition or the appointment of a receiver, liquidator, assignee, trustee or other similar official of Debtor or of any substantial part of Its property, or Debtor's making of an assignment for the benefit of creditors, or the taking of corporate action in furtherance of such action; or

c) the entry of any judgment or order against Debtor which could reasonably be expected to have a material adverse effect on Debtor's business and which remains unsatisfied or undischarged and in effect for thirty (30) days after such entry without a stay of enforcement or execution,

2.RIGHTS AND REMEDIES ON EVENT OF DEFAULT. UPON THE OCCURRENCE OF AN EVENT OF DEFAULT, AS PROVIDED IN SECTION A.2 ABOVE, CREDITOR MAY DECLARE THE PAYMENT OF THE AMOUNTS DUE BY DEBTOR HEREUNDER AND ENFORCE THIS NOTE BY EXERCISE OF THE RIGHTS AND REMEDIES GRANTED TO IT BY APPLICABLE LAW.

C.Other Provisions.

1.Governing Law. Time: Venue: Attorney's Fees. This Note shall be governed by Delaware law, without giving effect to conflicts of law principles. Time is of the essence hereunder. Each party consents to the non-exclusive jurisdiction and venue of the state or federal courts in the State of Delaware, if applicable, in any action, suit or proceeding arising out of or related to this Note. In the event that any suit or action is instituted to enforce any provisions in this Note, the substantially prevailing party in such dispute shall be entitled to recover from the losing party such reasonable fees and expenses of attorneys and accountants, which shall include, without limitation, all fees, costs and expenses of appeals.

2.Notices. All notices, demands and other communications which a party may desire, or may be required, to give to another shall be in writing, shall be delivered personally against receipt, or sent by recognized overnight courier service, or mailed by registered or certified mail, return receipt requested, postage prepaid, or sent by telecopy, and shall be addressed to the party to be notified as follows:

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If to Debtor:	Airline Intelligence Systems Inc. 3500 Carillon Point Kirkland, WA 98033. USA Fax: (425)696-0451
If to Creditor:	Merus Capital I, L.P. Attn: Salman Ullah 300 Hamilton Avenue Suite 400 Palo Alto, CA 94301 Fax:_______________

Any such notice, demand, or communication shall be deemed given when received if personally delivered or sent by overnight courier, or when deposited in the United States mails, postage prepaid, if sent by registered or certified mail, or when answerback received, if sent by telecopier. A party's address may be changed by notice given in accordance with this subsection.

3.Creditor's Rights. Debtor Waivers. Creditor's failure to exercise any right hereunder, shall not constitute a waiver of any obligation of Debtor hereunder, or any right of Creditor hereunder, and shall not affect in any way the right to require full performance at any time thereafter. Debtor waives presentment, diligence, demand of payment, notice, protest and all other demands and notices in connection with the delivery, acceptance, performance, default or enforcement of this Note. In any action on this Note, Creditor need not produce or file the original of this Note, but need only file a photocopy of this Note certified by Creditor be a true and correct copy of this Note in ail material respects.

4.Severability. Whenever possible each provision of this Note shall be interpreted in such manner as to be effective and valid under applicable law, but if any provision is prohibited by or invalid under applicable law, it shall be ineffective to the extent of such prohibition or invalidity, without invalidating the remainder of the provision or the remaining provisions of this Note.

5.Amendment Provisions. Entire Agreement. This Note may not be amended or modified, nor may any of its terms be waived, except by written instruments signed by Debtor and Creditor, This Note represents the final agreement of Debtor and Creditor as to all matters addressed herein and supersede all previous agreements, negotiations, and discussions by the parties regarding the subject matters addressed herein.

6.Binding Effect. This Note shall be binding upon, and shall inure to the benefit of, Debtor and Creditor and their respective successors and assigns; provided, however, that Debtor's rights and obligations shall not be assigned or delegated, other than in connection with a Liquidation Transaction and in accordance with the Exchange Agreement, without Creditor's prior written consent, given in its sole discretion, and any purported assignment or delegation without such consent shall be void ab_ initio.

[Remainder ofpage intentionally left blank]

11

ORAL AGREEMENTS OR ORAL COMMITMENTS TO LOAN MONEY, EXTEND CREDIT OR TO FORBEAR FROM ENFORCING REPAYMENT OF A DEBT ARE NOT ENFORCEABLE UNDER WASHINGTON LAW.

AIRLINE INTELLIGENCE SYSTEMS INC.
By:	/s/
	Stephen C. Johnston
	President and Chief Executive Officer

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EX-14.1

Exhibit 14.1

AI SYSTEMS CODE OF BUSINESS CONDUCT AND ETHICS

Adopted March 3, 2010

Introduction

The Board of Directors of AI Systems has adopted the following Code of Business Conduct and Ethics (the “Code”). Each director, officer, employee and consultant (“AI Systems’ Personnel”, and separately, each an “Individual”) must comply with the letter and spirit of this Code. No code or policy can anticipate every situation that may arise. As a participant in the global capital markets, AI Systems has a responsibility to insure that its activities are conducted in accordance with the highest standards of business and personal integrity. Accordingly, this Code is intended to serve as a set of guiding principles for directors. Directors must conduct themselves accordingly and seek to avoid even the appearance of improper behaviour. Directors are encouraged to bring questions about particular circumstances that may involve one or more of the provisions of this Code to the attention of the Chair of the Board of Directors.

1.   Compliance with Laws, Rules and Regulations

Obeying the law, both in letter and in spirit, and behaving in a manner consistent with AI Systems’ values is the foundation on which AI Systems’ ethical standards are built. All AI Systems’ Personnel are expected to conduct all their business and affairs in full compliance with applicable laws, rules and regulations, and shall encourage and promote such behaviour for themselves, officers and employees.

2.   Conflicts of Interest

AI Systems’ Personnel must avoid any conflicts of interest between himself or herself and AI Systems. A “conflict of interest” exists when the personal or professional interest of an Individual is adverse to the interests of AI Systems. Conflicts of interest may also arise when an Individual, or members of his or her family, or an organization with which the Individual is affiliated receives improper personal benefits as a result of the Individual’s position. Any situation that involves, or may involve, a conflict of interest with AI Systems, should be promptly disclosed to the Chair of the Board of Directors or Lead Independent Director if the conflict involves the Chair of the Board of Directors, who may consult with inside or outside legal counsel, as appropriate.

Although it would not be possible to describe every situation in which a conflict of interest may arise, the following are examples of situations where the rules are clear. No Individual, when acting for or on behalf of AI Systems, may directly or indirectly (such as through a family member):

•   Accept any benefit, gift or entertainment that would be illegal or result in any violation of law;

•   Accept any gift of cash or cash equivalent (such as gift certificates, loans, stock);

•   Accept or request anything as a “quid pro quo,” or as part of an agreement to do anything in return for the benefit, gift or entertainment;

•   Participate in any activity that he or she knows would cause the person giving the benefit, gift or entertainment to violate his or her own employer’s standards.

The following are examples of situations that may constitute a conflict of interest. Situations such as these should be brought to the attention of the Chair of the Board of Directors or Lead Independent Director if the conflict involves the Chair of the Board of Directors, for review and clearance before any action is taken:

1

•   Competing with AI Systems for the purchase or sale of property, services or other interests.

•   Having an interest in a transaction involving AI Systems, a customer or supplier (other than as a director of AI Systems and not including routine investments in publicly traded companies).

•   Receiving a loan or guarantee of an obligation as a result of a director’s position with AI Systems.

•   Engaging in any conduct or activities that disrupt or impair AI Systems’ relationship with any person or entity with which AI Systems has or proposes to enter into a business or contractual relationship.

•   Accepting compensation, in any form, for services performed for AI Systems from any source other than AI Systems.

•   Either an Individual or a member of an Individual’s family receiving benefits, gifts or entertainment from persons or entities who deal with AI Systems where a benefit, gift or entertainment is intended to influence the Individual’s actions as a member of AI Systems, or where the acceptance could create the appearance of a conflict of interest.

3.   Insider Trading

The securities laws impose severe sanctions upon any individual who uses “inside information” for his or her own benefit or discloses it to others for their use. Individuals who have access to confidential information as a result of their service are not permitted to use or share that information for securities trading purposes or for any other purpose except the conduct of AI Systems’ business. All non-public information about AI Systems or its subsidiaries should be considered confidential information. To use non-public information for personal financial benefit or to “tip” others who might make an investment decision on the basis of this information is not only unethical but also illegal.

4.   Corporate Opportunities

AI Systems’ Personnel are prohibited from taking for themselves personally, or for the organizations with which they are affiliated, opportunities that are discovered through the use of AI Systems property, information or position without the consent of the Board of Directors. No Individual may use AI Systems property, information, or position for improper personal gain. Individuals, in particular member of the Board of Directors, owe a duty to AI Systems to advance its legitimate interests when the opportunity to do so arises.

5.   Competition and Fair Dealing

The AI Systems adheres to a policy of fair dealing in all its activities. AI Systems’ Personnel shall endeavour to deal fairly with AI Systems’ customers, suppliers, competitors and employees. No Individual should take unfair advantage of anyone through manipulation, concealment, abuse of privileged information, misrepresentation of material facts, or any other intentional unfair-dealing practice.

The purpose of business entertainment and gifts in a commercial setting is to create goodwill and sound working relationships, not to gain unfair advantage with customers. Individuals and members of their immediate families may not accept gifts from persons or entities where any such gift is being made in order to influence the Individual’s actions as a member of AI Systems, or where acceptance of the gifts could create the appearance of such influence.

2

No Individual may offer or give anything that is:

•   Illegal;

•   Known to be in violation of the rules of the recipient’s organization;

•   Cash or monetary instruments (such as bank checks, traveler’s checks, money orders, investment securities or negotiable instruments);

•   Unsavoury, sexually oriented, or otherwise violates our commitment to mutual respect;

•   A quid pro quo (offered for something in return); or

•   Not recorded properly on the company books.

Practices that are acceptable in commercial business environments may be against the law or the policies governing federal, state or local government employees. Therefore, no gifts or business entertainment of any kind may be given to any government employee without prior agreement of the Board of Directors, who will consult with counsel as appropriate.

6.   Antitrust Laws

The AI Systems believes that vigorous competition is in the best interest of AI Systems, its employees, and the public. The antitrust laws were conceived and enacted to help preserve private enterprise capitalism in America by promoting fair and healthy competition. It is the firm policy of AI Systems to comply fully with the spirit and letter of these laws.

Essentially, the antitrust laws prohibit activities which constitute unreasonable restraint of trade, unfair trade practices and other anti-competitive practices which restrict or lessen competition, including:

•   Creation of, or attempts to create, a monopoly.

•   Agreements among competitors to increase, decrease or stabilize prices; to divide territories or markets; to allocate customers; to limit the quality of products; or to limit production; or

•   Price discrimination and other predatory trade practices.

Any failure to comply with the antitrust laws can have grave consequences not only for AI Systems but for any Individual who may be involved in a violation. Any Individual having any question concerning compliance with the antitrust laws should seek the advice of AI Systems’ General Counsel.

7.   Confidentiality

Individuals must maintain the confidentiality of confidential information entrusted to them by AI Systems or its customers, except when disclosure is required by law or regulation. Confidential information includes all non-public information that might be of use to competitors, or harmful to AI Systems or its subsidiaries, if disclosed.

3

8.   Protection and Proper Use of AI Systems Assets

AI Systems’ Personnel may not use AI Systems assets, labour or information for personal use, unless approved by the Board of Directors, or as part of an approved compensation or expense reimbursement program.

9.   Waivers of the Code of Business Conduct and Ethics

Any waiver of this Code may be made only by the Board of Directors and will be promptly publicly disclosed.

10.    Reporting any Illegal or Unethical Behavior

Directors should promote ethical behaviour and encourage an environment in which AI Systems encourages employees to talk to supervisors, managers or other appropriate personnel about observed illegal or unethical behaviour and, when in doubt, about the best course of action in a particular situation. It is the policy of AI Systems not to allow retaliation for reports of misconduct by others made in good faith.

11.    Enforcement of the Code of Business Conduct and Ethics

The Board of Directors shall determine appropriate actions to be taken in the event of violations of this Code. Such actions shall be reasonably designed to deter wrongdoing and to promote accountability for adherence to the Code. In determining what action is appropriate in a particular case, the Board of Directors shall take into account all relevant information, including the nature and severity of the violation, whether the violation appears to have been intentional or inadvertent, and whether the individual in question had been advised prior to the violation as to the proper course of action.

12.    Political Contributions and Activities

Any political contributions made by or on behalf of AI Systems and any solicitations for political contributions of any kind must be lawful and in compliance with AI Systems policies. This restriction applies solely to the use of AI Systems assets and is not intended to discourage or prevent AI Systems’ Personnel from making political contributions or engaging in political activities on their own behalf. No one may be reimbursed directly or indirectly by AI Systems for personal political contributions.

13.    Foreign Payments

Except in certain limited circumstances, certain laws prohibit giving anything of value directly or indirectly to any “foreign official” for the purpose of obtaining or retaining business or other improper purposes such as reducing taxes. The meaning of “foreign official” can be surprisingly broad – UN officials, candidates for political office, employees of state owned businesses, etc. When in doubt as to whether a possible arrangement, payment or gift may violate these laws contact the General Counsel before taking any action.

14.    Other Legal Standards

There are many legal and ethical standards that apply to those who act for AI Systems. Among these are the following:

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•   We are fully committed to mutual respect among all those who act for AI Systems. We do not discriminate against anyone based on race, color, religion, sex, age, national origin, sexual orientation, veteran status, citizenship status, marital status, parental status, political affiliation or disability. We do not tolerate any form of illegal harassment, including sexual harassment.

•   We respect and are diligent in protecting the privacy of employees and AI Systems members and investors.

•   All records (including email and computer records) that may be relevant in the event of litigation or governmental inquiries must be carefully preserved. In any dealings with the government, honesty is required of anyone acting for AI Systems.

•   We will also not accept or use anyone else’s proprietary information that is improperly obtained, and we will not copy or otherwise misappropriate others’ copyrighted materials.

15.    Annual Review

The Board of Directors shall review and reassess the adequacy of the Code annually and make any amendments to the Code that the Board of Directors deems appropriate.

5

EX-16.1

Exhibit 16.1

MICHAEL T. STUDER CPA P.C.

18 East Sunrise Highway, Suite 311

Freeport, NY11520

Phone: (516) 378-1000

Fax: (516) 546-6220

March 9,2010

Office of the Chief Accountant

Securities and Exchange Commission

100 F Street, N. E.

Washington D.C. 20549

Re: Wolf Resources, Inc.

Gentlemen:

I have read Wolf Resources, Inc.'s statements included under Item 4.01 of the accompanying Form 8-K and I agree with such statements as they relate to my firm.

I hereby consent to the filing of this letter as an exhibit to the foregoing report on Form 8-K.

Very truly yours,

/s/ Michael T. Studer 

Michael T. Studer

President

EX-99.1

Exhibit 99.1

AIRLINE INTELLIGENCE SYSTEMS INC.

(A Development Stage Company)

Consolidated Financial Statements

As at December 31, 2009 and 2008 and for the years

ended December 31, 2009, 2008 and 2007 and

the period from December 7, 2005 (inception)

to December 31, 2009

AIRLINE INTELLIGENCE SYSTEMS INC.

(A DEVELOPMENT STAGE COMPANY)

CONSOLIDATED FINANCIAL STATEMENTS

INDEX

	PAGE
Report of Independent Registered Public Accounting Firm	3
Consolidated Financial Statements
Consolidated Balance Sheets At December 31, 2009 and December 31, 2008	4
Consolidated Statements of Operations
For the years ended December 31, 2009, 2008 and 2007 and for the period from December 7, 2005 (inception) to December 31, 2009	5
Consolidated Statements of Shareholders’ Deficit For the period from December 7, 2005 (inception) to December 31, 2009	6
Consolidated Statements of Cash Flows
For the years ended December 31, 2009 and 2008 and 2007 and for the period from December 7, 2005 (inception) to December 31, 2009	7
Notes to the Consolidated Financial Statements	8-46

2

REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM

To the Shareholders of Airline Intelligence Systems Inc.:

We have audited the consolidated balance sheets of Airline Intelligence Systems Inc. and its subsidiaries (collectively referred to as the “Company”) as of December 31, 2009 and 2008, the related consolidated statements of operations, shareholders’ deficit and cash flows for each of the three years in the period ended December 31, 2009 and the period from December 7, 2005 (inception) to December 31, 2009.  These financial statements are the responsibility of the Company's management. Our responsibility is to express an opinion on these financial statements based on our audits.

We conducted our audits in accordance with the standards of the Public Company Accounting Oversight Board (United States). Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements.  An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audits provide a reasonable basis for our opinion.

In our opinion, the financial statements referred to above present fairly, in all material respects, the financial position of Airline Intelligence Systems Inc. and its subsidiaries as of December 31, 2009 and 2008 and the results of their operations and their cash flows for each of the three years in the period ended December 31, 2009 and the period from December 7, 2005 (inception) to December 31, 2009, in conformity with U.S. generally accepted accounting principles.

The accompanying consolidated financial statements have been prepared assuming that the Company will continue as a going concern. As discussed in Note 2 to the financial statements, the Company’s recurring losses, shareholders’ deficit, and inability to fully commercialize its technologies to permit adequate capital resources to fund planned operations raise substantial doubt about its ability to continue as a going concern. Management’s plans concerning these matters are also discussed in Note 2 to the financial statements. The financial statements do not include any adjustments that might result from the outcome of this uncertainty.

/s/  Meyers Norris Penny LLP

Meyers Norris Penny LLP

Toronto, Ontario

February 8, 2010, except for note 16 as to which the date is March 19, 2010 

3

AIRLINE INTELLIGENCE SYSTEMS INC.

(A Development Stage Company)

Consolidated Balance Sheets

As at December 31, 2009 and 2008

	2009			2008
Assets
Current
Cash
Cash and due from bank	$	32,977		$	329,036
Interest bearing deposits in banks		-			228,535
Restricted cash		619,104			728,227
		652,081			1,285,798
Loan receivable from employees		19,029			22,305
Subscription receivable		15,825			-
Prepaid expenses and other current assets		71,457			116,659
Total Current Assets		758,392			1,424,762
Property and equipment, net		482,995			816,183
Intellectual Property		10			10
Total Assets	$	1,241,397		$	2,240,955
Liabilities and Shareholders' Deficit
Current
Accounts payable and accrued liabilities	$	4,161,063		$	1,877,646
Notes payable to Shareholders, net of unamortized discount of $15,578		3,923,262			1,312,279
(2008-$1,269,811)
Current portion of equipment loan		5,740			5,740
Total Current Liabilities		8,090,065			3,195,665
Loan payable for equipment, net of current portion		1,842			9,092
Deferred revenue		1,000,000			1,000,000
Deferred lease obligation		100,740			108,523
Loans payable to controlling shareholder for Intellectual Property		990,727			1,735,161
Total Liabilities		10,183,374			6,048,441
Shareholders' Deficit
Preferred Shares (Authorized 2009 and 2008: 5,000,000 with 2,400,000
designated as Series A, Issued 2009 and 2008: 2,329,905 Series A)		2,330			2,330
Common shares - (Authorized: 2009 and 2008: 500,000,000
Issued 2009: 88,720,262 and 2008: 46,629,169 )		88,720			46,629
Liquidation Preference (note 12)		-			-
Additional paid-in capital		52,307,826			39,833,183
Deficit accumulated during the development stage		(61,340,853	)		(43,689,628	)
Total Shareholders' Deficit		(8,941,977	)		(3,807,486	)
Total Liabilities and Shareholders' Deficit	$	1,241,397		$	2,240,955

Approved on behalf of the Board of Directors of the Company on February 8, 2010 by:

Mr. Stephen Johnston

Director

4

AIRLINE INTELLIGENCE SYSTEMS INC.

 (A Development Stage Company)

Consolidated Statements of Operations

For the years ended December 31, 2009, 2008 and 2007

and for the period from December 7, 2005 (inception) to December 31, 2009

	2009			2008			2007			For the period from December 7, 2005 (inception) to December 31, 2009
Operating expenses
Salaries and benefits	$	(4,654,468	)	$	(5,543,327	)	$	(3,347,098	)	$	(14,774,756	)
Outside Services		(2,788,840	)		(3,418,071	)		(2,062,513	)		(9,023,485	)
Travel, meals and entertainment		(238,539	)		(1,356,140	)		(603,002	)		(2,492,567	)
Office and general expense		(1,068,589	)		(1,707,026	)		(870,190	)		(3,969,619	)
		(8,750,436	)		(12,024,564	)		(6,882,803	)		(30,260,427	)
Other expenses
Depreciation and amortization		(351,722	)		(322,195	)		(177,480	)		(918,756	)
Stock Based Compensation		(5,799,309	)		(3,742,156	)		(17,245,216	)		(27,020,746	)
		(6,151,031	)		(4,064,351	)		(17,422,696	)		(27,939,502	)
Loss from operations		(14,901,467	)		(16,088,915	)		(24,305,499	)		(58,199,929	)
Other income (expenses)
Interest (expense)		(2,680,016	)		(453,576	)		(152,671	)		(3,337,344	)
Interest income		4,836			74,882			34,892			114,610
Other income (expense)		(74,579	)		123,951			40,952			81,809
		(2,749,758	)		(254,743	)		(76,826	)		(3,140,925	)
Net loss for the period		(17,651,225	)		(16,343,658	)		(24,382,325	)		(61,340,853	)
Deficit, beginning of the period		(43,689,628	)		(27,345,970	)		(2,963,645	)		-
Deficit, end of the period	$	(61,340,853	)	$	(43,689,628	)	$	(27,345,970	)	$	(61,340,853	)

5

AIRLINE INTELLIGENCE SYSTEMS INC.

 (A Development Stage Company)

Consolidated Statements of Shareholders’ Deficit

For the period from December 7, 2005(inception) to December 31, 2009

	Common stock - number of shares #			Common stock - amount $			Additional Paid in Capital $			Deficit accumulated during the development stage $			Total $			Comprehensive income (loss)
Shares issued in consideration
of Intellectual Property ("IP")		20,000,000			20,000			(19,990	)					10
Shares issued for cash during
the year, net of issuance costs		1,370,720			1,371			341,309						342,680
of NIL
Net loss											(64,350	)		(64,350	)		(64,350	)
Balance at December 31, 2005		21,370,720			21,371			321,319			(64,350	)		278,340			(64,350	)
Shares issued in consideration of IP		8,000,000			8,000			(8,000	)					-
Special distribution in consideration of IP								(4,000,000	)					(4,000,000	)
Shares issued for cash during
the year		6,806,800			6,807			3,490,593						3,497,400
Shares issued upon exercise of options		170,000			170			42,330						42,500
Stock based compensation								234,065						234,065
Net loss											(2,899,295	)		(2,899,295	)		(2,899,295	)
Balance at December 31, 2006		36,347,520			36,348			80,307			(2,963,645	)		(2,846,990	)		(2,899,295	)
Shares issued for cash during
the year		6,540,900			6,540			8,768,360						8,774,900
Stock based compensation								17,245,216						17,245,216
Net loss											(24,382,325	)		(24,382,325	)		(24,382,325	)
Balance at December 31, 2007		42,888,420			42,888			26,093,883			(27,345,970	)		(1,209,199	)		(24,382,325	)
Shares issued in consideration of IP		2,000,000			2,000			(2,000	)					-
Shares issued for cash during
the year		1,689,729			1,690			8,446,956						8,448,646
Issuance of preferred shares														2,330
Dividend on common shares								(2,330	)					(2,330	)
Common share warrants issued in connection
with debt								1,534,260						1,534,260
Shares issued in connection with exercise of
warrants		31,020			31			279						310
Shares issued upon exercise of options		20,000			20			19,980						20,000
Stock based compensation								3,742,156						3,742,156
Net loss											(16,343,658	)		(16,343,658	)		(16,343,658	)
Balance at December 31, 2008		46,629,169			46,629			39,833,183			(43,689,628	)		(3,807,486	)		(16,343,658	)
Shares issued $0.75 per share for cash during
the year		576,666			577			431,924						432,500
Shares issued $0.10 per share  for cash during
the year		15,328,760			15,329			1,517,547						1,532,876
Shares issued $0.25 per share for cash during
the year		4,148,065			4,148			1,032,868						1,037,016
Consideration received for cancellation of IP								800,000						800,000
Cancellation of shares issued for IP		(2,000,000	)		(2,000	)		2,000						-
Conversion of warrants for anti dilution		6,744,687			6,745			(6,745	)					-
Share issued on conversion of debt		2,312,437			2,312			1,732,016						1,734,328
Common share warrants issued in connection
with debt								1,179,347						1,179,347
Stock based compensation		9,500,000			9,500			5,789,809						5,799,309
Shares issued in connection with exercise of														-
warrants		5,480,478			5,480			(4,123	)					1,357
Net loss											(17,651,225	)		(17,651,225	)		(17,651,225	)
Balance at December 31, 2009		88,720,262			88,720			52,307,826			(61,340,853	)		(8,941,977	)		(17,651,225	)

6

AIRLINE INTELLIGENCE SYSTEMS INC.

(A Development Stage Company)

Consolidated Statements of Cash Flows

For the years ended December 31, 2009, 2008 and 2007

and for the period from December 7, 2005 (inception) to December 31, 2009

	2009			2008			2007			For the period from December 7, 2005 (inception) to December 31, 2009
Operating activities
Net Loss	$	(17,651,225	)	$	(16,343,658	)	$	(24,382,325	)	$	(61,340,853	)
Adjustments to reconcile net loss to net cash used in
operating activities:
Depreciation and amortization		351,722			322,195			177,480			918,756
Accretion of discount on notes		2,196,108			264,449			-			2,460,557
Options issued for services rendered		5,799,309			3,742,156			17,245,215			27,020,745
Prepaid expenses and other current assets		45,202			31,389			(78,033	)		(71,457	)
Receivable from controlling shareholder		-			-			-			(32,454	)
Loan receivable from employees		3,276			(22,305	)		(426,646	)		(445,675	)
Accounts payable and accrued liabilities		2,796,201			229,743			1,443,066			4,629,496
Deferred revenue		-			-			1,000,000			1,000,000
Deferred lease obligation		(7,783	)		7,383			101,140			100,740
Interest expense on note payable to controlling shareholder		55,566			141,188			191,944			388,698
Subscription receivable		(15,825	)		-			-			(15,825	)
Other					310			(14,568	)		5,520
Net cash (used in) operating activities		(6,427,449	)		(11,627,150	)		(4,742,727	)		(25,381,752	)
Investing activities
Increase (decrease) in bank deposits and restricted cash		337,658			(234,668	)		(722,094	)		(619,104	)
Purchase of property and equipment		(18,534	)		(630,975	)		(339,211	)		(1,268,092	)
Net cash provided by (used in) investing activities		319,124			(865,643	)		(1,061,305	)		(1,887,206	)
Financing activities
Proceed from issuance of common shares		2,490,966			8,468,645			8,774,900			23,617,102
Proceed (repayment)  on notes payable to shareholders		3,328,550			2,582,090			(2,000,000	)		3,910,640
Proceed (repayment) on notes payable to controlling shareholders					(130,138	)					(130,138	)
Proceeds from loan to related party		-			-			-			44,444
Proceeds (repayments of) from loan		(7,250	)		(5,740	)		26,314			13,324
Payment on obligation under capital lease		-			(160,271	)		(19,778	)		(153,437	)
Net cash provided by financing activities		5,812,266			10,754,586			6,781,436			27,301,935
Increase (decrease) in cash		(296,059	)		(1,738,207	)		977,404			32,977
Cash, beginning of period		329,036			2,067,243			1,089,838			-
Cash, end of period	$	32,977		$	329,036		$	2,067,243		$	32,977
Supplemental cash flow information
Interest received		4,790			74,882			34,982			114,654

Note: Significant non-cash transactions are disclosed in notes 7,8 and 12 to the consolidated financial statements.

7

AIRLINE INTELLIGENCE SYSTEMS INC.

(A Development Stage Company)

Notes to Consolidated Financial Statements

For the years ended December 31, 2009, 2008 and 2007

1. Organization

Airline Intelligence Systems Inc. (“AISystems” or the “Company”) was incorporated on December 7, 2005 under Delaware General Corporation Law. Since its inception, AISystems efforts have been devoted to the development of the unique proprietary operating system jetEngine™ O/S, which is expected to be a new paradigm for strategic airline management that enables the integration and control of an airline’s schedule planning, revenue management,  and irregular operations functions, amongst other things. The Company has two wholly owned Canadian subsidiaries Airline Intelligence Systems Corp. and AIS Services Canada Inc. The subsidiaries provide management services and corporate services to the parent company.

The Company completed a 2 for 1 stock split on June 11, 2007. All amounts shown and incorporated in these consolidated financial statements are shown on a post-split basis as if the stock split had occurred on the earliest reported date.

2.       Going concern

The accompanying consolidated financial statements have been prepared in conformity with accounting principles generally accepted in the United States of America (“GAAP”) which contemplate continuation of the Company as a going concern. The Company has yet to fully commercialize its technologies and consequently has incurred significant losses since its inception. At December 31, 2009, the Company’s deficit accumulated during the development stage was approximately $61.7 million, and the Company had utilized cash in operating activities of $25.4 million. The Company has funded theses losses and cash flows through the sale of equity securities, the issuance of debt and from credit granted by vendors. The Company is also in arrears to certain creditors and in default under certain agreements which may have a material adverse effect on operations.

These factors raise substantial doubt about the ability of the Company to continue as a going concern . There can be no assurance that the Company will have adequate capital resources to fund planned operations or that any additional funds will be available to the Company when needed, or if available, will be available on favorable terms in the amounts required by the Company. If the Company is unable to obtain adequate capital resources to fund operations, it may be required to delay, scale back or eliminate some or all of its operations, which may have a material adverse effect on the Company’s.

8

AIRLINE INTELLIGENCE SYSTEMS INC.

(A Development Stage Company)

Notes to Consolidated Financial Statements

For the years ended December 31, 2009, 2008 and 2007

2.  Going Concern (continued)

business, results of operations and ability to continue as a going concern. These consolidated financial statements do not include any adjustments that might result from the outcome of these uncertainties. In this regard, management is planning to raise necessary additional funds through loans and additional sales of its common stock. There is no assurance that the Company will be successful in raising additional capital.

3.Summary of Significant Accounting Policies

Development stage company

The Company complies with Financial Accounting Standards Board (“FASB”) Accounting Standards Codification (“ASC”) 915 (SFAS 7) for its characterization of the Company as a development stage company.  Furthermore, the Company complies with FASB ASC 720-15-25 (SOP-98-5), “Reporting on the Costs of Start-Up Activities,” under which start-up costs and organizational costs are expensed as incurred.

Basis of consolidation

The consolidated financial statements are prepared in accordance with accounting principles generally accepted in the United States of America, and include the accounts of the Company and its wholly owned subsidiaries.  All inter-company accounts and transactions have been eliminated on consolidation.

Use of estimates

The preparation of consolidated financial statements in conformity with accounting principles generally accepted in the United States of America requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the consolidated financial statements and the reported amounts of expenses during the reported periods.  Actual results could differ from these estimates.

9

AIRLINE INTELLIGENCE SYSTEMS INC.

(A Development Stage Company)

Notes to Consolidated Financial Statements

For the years ended December 31, 2009, 2008 and 2007

3.Summary of Significant Accounting Policies (Continued)

Revenue recognition

The Company charges customers a signing, deployment and exclusivity fee, as well as a recurring monthly fee based on passengers carried for its jetEngine™ O/S platform.

The Company follows the provisions of FASB ASC 985-605 (SOP 97-2), “Software Revenue Recognition” and Staff Accounting Bulletin (SAB) 104, “Revenue Recognition in Financial Statements.” Revenue is recognized from the sale of product and software licenses when delivery has occurred based on purchase orders, contracts or other documentary evidence, provided that collection of the resulting receivable is deemed probable by management. A provision is made for estimated sales returns and other insignificant vendor obligations.

Fees earned at contract signing and in conjunction with product deployment are deferred and recognized as income once the customer acceptance of applicable jetEngine™ modules is obtained. Exclusivity fees pursuant to customer contracts are recognized on a straight line basis from the time customer acceptance of applicable jetEngine™ modules is obtained to the maturity of the exclusivity period. Recurring monthly passenger fee is recorded on an accrual basis commencing once the customer has accepted a jetEngine™ module.

Deferred revenue represents unearned income associated with fees due related to contract signing, deployment and exclusivity as applicable.

Interest income is recognized when earned.

Cash and cash equivalents

The Company considers all highly liquid investments with original maturities of three months or less to be cash equivalents.  No collateral or security is provided on these cash and cash equivalents, in excess of the amounts insured by the Federal Deposit Insurance Corporation.

Interest bearing deposits in banks

Interest bearing deposits in banks are recorded at cost.

10

AIRLINE INTELLIGENCE SYSTEMS INC.

(A Development Stage Company)

Notes to Consolidated Financial Statements

For the years ended December 31, 2009, 2008 and 2007

3.Summary of Significant Accounting Policies (Continued)

Restricted cash

The Company sets funds aside in a separate bank account related to the contractual obligations. Such amounts are termed Restricted Cash (Note 4).

Property and equipment

Property and equipment is stated at cost and is depreciated using the declining balance method over the estimated useful lives of the assets which range from three to five years.  Maintenance and repairs are charged to expense as incurred.

Intellectual property

Under FASB ASC 350 (SFAS 142), “Goodwill and Other Intangible Assets”, goodwill and intangible assets with indefinite useful lives are not amortized. These standards require that these assets be reviewed for impairment at least annually, or whenever there is an indication of impairment. Intangible assets with finite lives are amortized over their estimated useful lives and reviewed for impairment in accordance with FASB ASC 350-30-35 (SFAS 144), “Accounting for the Impairment or Disposal of Long-Lived Assets”.

The Company’s intellectual property consists of the exclusive worldwide and perpetual license to exploit certain intellectual property (“Dynamic Intellectual Property”), solely in the airline field, acquired from Dynamic Intelligence Inc., the controlling shareholder.  The intellectual property has been recorded at cost. The useful life of the intellectual property is estimated to be five years. Amortization of the intellectual property will be recognized over that useful life commencing in the year the Company begins commercialization.

11

AIRLINE INTELLIGENCE SYSTEMS INC.

(A Development Stage Company)

Notes to Consolidated Financial Statements

For the years ended December 31, 2009, 2008 and 2007

3. Summary of Significant Accounting Policies (Continued)

Impairment of long-lived assets

Management reviews long-lived assets for impairment whenever events or changes in circumstances indicate that the carrying amount of an asset may not be recoverable. Recoverability of assets to be held and used is measured by a comparison of the carrying amount of an asset to future cash flows expected to be generated by the asset. If such assets are considered to be impaired, the impairment to be recognized is measured as the amount by which the carrying amount of the assets exceeds the fair value of the assets. Based on its review, management does not believe that any impairment of long-lived assets exists at December 31, 2009 or December 31, 2008.

Income taxes

The Company accounts for income taxes under the provisions of FASB ASC 740 (SFAS 109), “Accounting for Income Taxes”. Under the asset and liability method of FASB ASC 740 (SFAS 109), 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 and operating loss and tax credit carry forwards. 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. The effect on deferred tax assets and liabilities of a change in tax rates is recognized in operations in the period that includes the enactment date. A valuation allowance is required to the extent any deferred tax assets may not be realizable.

Stock-based compensation

The Company accounts for stock-based compensation in accordance with FASB ASC 718 (SFAS 123R), “Share-Based Payment”, that addresses the accounting for stock-based payment transactions in which an enterprise receives employee services in exchange for equity instruments of the enterprise.

12

AIRLINE INTELLIGENCE SYSTEMS INC.

(A Development Stage Company)

Notes to Consolidated Financial Statements

For the years ended December 31, 2009, 2008 and 2007

3. Summary of Significant Accounting Policies (Continued)

Stock-based compensation expense recognized during the period is based on the fair value of the portion of stock-based payment award that is ultimately expected to vest. Stock-based compensation expense recognized in the consolidated statements of operations includes compensation expense for the stock-based payment awards based on the grant date fair value estimated in accordance with FASB ASC 718 (SFAS 123R), as stock-based compensation expense recognized in the consolidated statements of operations is based on awards ultimately expected to vest, it has been reduced for estimated forfeitures. These standards require forfeitures to be estimated at the time of grant and revised, if necessary, in subsequent periods if actual forfeitures differ from those estimates. When estimating forfeitures, the Company considers historic voluntary termination behaviors as well as trends of actual option forfeitures.

The fair value of options at the date of the grant is accrued and charged to operations, with an offsetting credit to additional paid in capital, on a straight line basis over the vesting period.  If the stock options are ultimately exercised, the applicable amounts of additional paid in capital are transferred to share capital.  The fair value of options is calculated using the Black-Scholes option pricing model.

Foreign currency translation

Transactions denominated in other currencies are recorded in the applicable functional currencies at the rates of exchange prevailing when the transactions occur. Monetary assets and liabilities denominated in other currencies are translated into the applicable functional currencies at rates of exchange in effect at the balance sheet dates. Non-monetary assets and liabilities are re-measured into the applicable functional currencies at historical exchange rates. Exchange gains and losses are recorded in the consolidated statements of operations.  

The Company has chosen the US dollar as its reporting currency. Assets and liabilities are translated at the exchange rates at the balance sheet date, equity accounts are translated at historical exchange rates and revenues, expenses, gains and losses are translated using the average rate for the year.

13

AIRLINE INTELLIGENCE SYSTEMS INC.

(A Development Stage Company)

Notes to Consolidated Financial Statements

For the years ended December 31, 2009, 2008 and 2007

3.Summary of Significant Accounting Policies (Continued)

Recently issued and adopted accounting pronouncements

In June 2009, the Financial Accounting Standards Board ("FASB") approved the FASB Accounting Standards Codification ("the Codification" or "FASB ASC") as the single source of authoritative nongovernmental generally accepted accounting principles ("GAAP"). All existing accounting standard documents, such as FASB, American Institute of Certified Public Accountants, Emerging Issues Task Force and other related literature, excluding guidance from the Securities and Exchange Commission ("SEC"), have been superseded by the Codification. All other non-grandfathered, non-SEC accounting literature not included in the Codification has become non-authoritative. The Codification did not change GAAP, but instead introduced a new structure that combines all authoritative standards into a comprehensive, topically organized online database. The Codification is effective for interim or annual periods ending after September 15, 2009, and impacts the Company's financial statements, as all references to authoritative accounting literature are now referenced in accordance with the Codification.

In June 2008, the FASB issued FASB ASC 815 (EITF 07-5) “Determining Whether an Instrument (or Embedded Feature) is indexed to an Entity's Own Stock”. FASB ASC 815-15 specifies that a contract (that would otherwise meet the definition of a derivative) issued or held by the reporting entity that is both indexed to its own stock and classified in stockholders' equity in its statement of financial position should not be considered a derivative financial instrument. The standard provides guidance for determining whether an equity-linked financial instrument (or an embedded feature) is indexed to an entity's own stock, using a two-step approach. First, the instrument's contingent exercise provisions, if any, must be evaluated, followed by an evaluation of the instrument's settlement provisions. It also clarifies on the impact of foreign currency denominated strike prices and market-based employee stock option valuation instruments on the evaluation. The Company adopted this standard on January 1, 2009.  This standard did not have a material impact on the Company’s consolidated financial statements.

14

AIRLINE INTELLIGENCE SYSTEMS INC.

(A Development Stage Company)

Notes to Consolidated Financial Statements

For the years ended December 31, 2009, 2008 and 2007

3. Summary of Significant Accounting Policies (Continued)

Recently issued and adopted accounting pronouncements (Continued)

In March 2008, the FASB issued FASB ASC 815 (SFAS 161), “Disclosures about Derivative Instruments and Hedging Activities — an amendment of FASB Statement No. 133”. FASB ASC 815 (SFAS 161) changes the disclosure requirements for derivative instruments and hedging activities. Entities are required to provide enhanced disclosures about (a) how and why an entity uses derivative instruments, (b) how derivative instruments and related hedged items are accounted for, and (c) how derivative instruments and related hedged items affect an entity’s financial position, financial performance, and cash flows. The Company adopted this standard on January 1, 2009.  This standard did not have a material impact on the Company’s consolidated financial statements.  

In February 2008, the FASB issued FASB ASC 860-10-40 (FSP FAS 140-3), “Accounting for Transfers of Financial Assets and Repurchase Financing Transactions”, which was effective for the Company on January 1, 2009 The FSP requires that an initial transfer of a financial asset and a repurchase financing that was entered into contemporaneously with, or in contemplation of, the initial transfer be evaluated together as a linked transaction under SFAS 140, unless certain criteria are met. The adoption of this standard had no impact on the Company’s financial statements.

In December 2007, the FASB issued FASB ASC 805 (SFAS 141) (revised 2007) (“SFAS 141R”) “Business Combinations” and FASB ASC 810 (SFAS 160), “Non-Controlling Interests in Consolidated Financial Statements, an amendment of Accounting Research Bulletin No. 51.”  FASB ASC 805 changes how business acquisitions are accounted for and will impact financial statements both on the acquisition date and in subsequent periods. FASB ASC 810 changes the accounting and reporting for minority interests, which will be re-characterized as non-controlling interests and classified as a component of equity. These standards were effective for the Company beginning January 1, 2009. The adoption of FASB ASC 805 will change the Company’s accounting treatment for any future business combinations on a prospective basis.

15

AIRLINE INTELLIGENCE SYSTEMS INC.

(A Development Stage Company)

Notes to Consolidated Financial Statements

For the years ended December 31, 2009, 2008 and 2007

3.Summary of Significant Accounting Policies (Continued)

Recent accounting pronouncements

In October 2009, the Financial Accounting Standards Board (“FASB”) issued new revenue recognition standards which eliminate the requirement to establish the fair value of undelivered products and services and instead provides for separate revenue recognition based upon management’s estimate of the selling price for an undelivered item when there is no other means to determine the fair value of that undelivered item. These standards are effective prospectively for revenue arrangements entered into or materially modified in fiscal years beginning on or after June 15, 2010. The Company is currently evaluating the impact, if any, that the adoption of this amendment may have on its consolidated financial statements.

In June 2009, the FASB also issued FASB ASC 805 (SFAS 167), Amendments to FASB Interpretation 46(R), which is effective for the Company on January 1, 2010. It amends FIN 46(R) to require an enterprise to perform an analysis to determine whether the enterprise’s VIEs give it a controlling financial interest in a VIE. This analysis identifies the primary beneficiary of a VIE as the enterprise that has both of the following characteristics: (a) The power to direct the activities of a variable interest entity that most significantly impact the entity’s economic performance and (b) The obligation to absorb losses of the entity that could potentially be significant to the variable interest entity or the right to receive benefits from the entity that could potentially be significant to the variable interest entity. Additionally, an enterprise is required to assess whether it has an implicit financial responsibility to ensure that a VIE operates as designed when determining whether it has the power to direct the activities of the VIE that most significantly impact the entity’s economic performance. In contrast to FIN 46(R), FASB ASC 805 (SFAS 167) requires ongoing reassessments of whether an enterprise is the primary beneficiary of a VIE. It also amends the events that trigger a reassessment of whether an entity is a VIE and requires enhanced disclosures with more transparent information about an enterprise’s involvement in a VIE. The Company does not expect the adoption of this standard will have an impact on its financial statements.

16

AIRLINE INTELLIGENCE SYSTEMS INC.

(A Development Stage Company)

Notes to Consolidated Financial Statements

For the years ended December 31, 2009, 2008 and 2007

3. Summary of Significant Accounting Policies (Continued)

Recent accounting pronouncements (Continued)

In June 2009, the FASB also issued FASB ASC 860 (SFAS 166), Accounting for Transfers of Financial Assets an amendment of FASB Statement No. 140, which is effective for the Company on January 1, 2010. On and after the effective date, the concept of a qualifying special purpose entity (QSPE) is no longer relevant for accounting purposes. Therefore, former QSPEs (as defined under previous accounting standards) would be evaluated for consolidation on and after the effective date in accordance with the applicable consolidation guidance. Furthermore, the disclosure provisions of FASB ASC 805 (SFAS 166) will be applied to transfers that occurred both before and after the effective date. The Company does not expect the adoption of this standard will have an impact on its financial statements.

On April 9, 2009, the FASB issued three FASB Staff Positions (FSPs) in order to provide additional application guidance and to enhance disclosures regarding fair value measurements and other-than-temporary impairment of securities, as follows:

FASB ASC 820-10-65 (FSP FAS 157-4), “Determining Fair Value When the Volume and Level of Activity for the Asset or Liability Have Significantly Decreased and Identifying Transactions That Are Not Orderly”, provides additional factors to consider when measuring the fair value of an asset or liability when there has been a significant decrease in the level of market activity for the instrument and quoted prices are associated with transactions that are not considered to be orderly. It also expands the disclosure requirements for the fair value of financial instruments.

17

AIRLINE INTELLIGENCE SYSTEMS INC.

(A Development Stage Company)

Notes to Consolidated Financial Statements

For the years ended December 31, 2009, 2008 and 2007

3. Summary of Significant Accounting Policies (Continued)

Recent accounting pronouncements (Continued)

FASB ASC 320-10-65-1 (FSP FAS 115-2 and FAS 124-2), “Recognition and Presentation of Other-than-Temporary Impairments” (OTTI), amends the impairment assessment guidance and recognition principles of OTTI for debt securities and enhances the presentation and disclosure requirements for debt and equity securities. The FSP requires an entity to recognize an OTTI when the entity intends to sell the security, it is more likely than not that it will be required to sell the security before recovery, or when the entire amortized cost basis of the security will not be recovered. When an entity intends to sell the security, or more likely than not will be required to sell the security, before recovery of its amortized cost basis less any current-period credit loss, the OTTI is recognized in earnings equal to the difference between fair value and amortized cost at the balance sheet date. In all other situations, the impairment is separated into an amount representing credit loss and amount relating to all other factors. The impairment related to credit loss is recognized in earnings and impairment related to other factors is recognized in other comprehensive income.

FASB ASC 825-10-65-1 (FSP FAS 107-1 and APB 28-1), “Interim Disclosures about Fair Value of Financial Instruments”, increases the frequency of fair value disclosures from an annual to a quarterly basis.

The Company does not expect the adoption of these FSP’s will have an impact on its financial statements.

In April 2008, the FASB issued FASB 350-30 (FSP142-3), “Determination of the Useful Life of Intangible Assets”. FASB 350-30 (FSP 142-3) amends the factors that should be considered in developing renewal or extension assumptions used to determine the useful life of a recognized intangible asset under FASB ASC 350 (SFAS 142), “Goodwill and Other Intangible Assets”. The objective of FASB 350-30 is to improve the consistency between the useful life of a recognized intangible asset under (SFAS 142) and the period of expected cash flows used to measure the fair value of the asset under SFAS 141R, “Business Combinations”, and other U.S. generally accepted accounting principles. These standards will be effective beginning in fiscal year 2010. The Company is currently evaluating the impact that this FSP will have on its financial statements and disclosures.

18

AIRLINE INTELLIGENCE SYSTEMS INC.

(A Development Stage Company)

Notes to Consolidated Financial Statements

For the years ended December 31, 2009, 2008 and 2007

4.      Restricted cash

Restricted cash represents amounts held by a bank as a collateral security for a letter of credit issued in favor of the lessor of its Kirkland facility and an escrow required pursuant to a loan guarantee agreement.

Additionally, pursuant to a customer contract, the Company is required to hold in escrow ten percent of all payments received from the customer as restricted cash while the contract exists to satisfy its indemnification obligations to the customer pursuant to the contract. For the period from December 7, 2005 (inception) to December 31, 2009 the Company has received $1,000,000 from this customer. The Company is not in compliance with this term of the customer contract. Under a default, the customer may terminate this contract with the Company at any time by providing written notice to the Company.

5.     Loans receivable from employees

In 2007, the Company advanced to certain employees CDN$400,000 in exchange for a five-year unsecured promissory note bearing interest at prime plus 2.0%. In 2008, these loans and accrued interest thereon which totaled $422,000 was assigned to the controlling shareholder in exchange for a reduction in notes payable to the controlling shareholder.

In 2008, $22,305 was loaned to an employee. This loan was non-interest bearing and was repaid in full in 2009.

In 2009, the Company loaned an employee of the Company CDN$20,000 with no fixed terms of repayment. The loan is non-interest bearing, unsecured and due on demand.

6.     Property and equipment

	2009			2008
Computer equipment	$	905,117		$	896,798
Office equipment		265,379			263,896
Vehicle		28,706			28,706
Computer software		113,141			104,409
		1,312,343			1,293,809
Less: accumulated depreciation		(829,348	)		(477,626	)
		482,995		$	816,183

Depreciation expense was $351,722, $322,195 and $177,480 for the years ended December 31, 2009, 2008 and 2007, respectively.

19

AIRLINE INTELLIGENCE SYSTEMS INC.

(A Development Stage Company)

Notes to Consolidated Financial Statements

For the years ended December 31, 2009, 2008 and 2007

7.  Intellectual Property

On December 9, 2005, AISystems entered into an Intellectual Property Agreement with Dynamic Intelligence Inc. (“Dynamic”), the controlling shareholder, to license certain intellectual property from Dynamic and in full satisfaction of the consideration, the Company issued 20,000,000 common shares at a nominal agreed value of $10.

On October 11, 2006, the parties amended the Intellectual Property Agreement to provide AISystems the right to license additional intellectual property from Dynamic (collectively, the “Intellectual Property Agreement”). AISystems’ license consists of the exclusive, fully paid, worldwide and perpetual license to exploit the Dynamic Intellectual Property solely in the airline field, including the right to exploit any product or service in the airline field. Pursuant to the amended Intellectual Property Agreement, the fair value consideration of $8,000,000 was settled with the issuance of a note payable for $4,000,000 and issuing 8,000,000 common shares.

SEC Staff Accounting Bulletin Topic 5G requires that non-monetary assets transferred by shareholders to be recognized at historical cost as recorded in the books of the transferor, Dynamic, in accordance with GAAP. Management of the Company has determined that historical cost of the non-monetary assets transferred in accordance with GAAP would be nil. Accordingly, the fair value of the monetary consideration in excess of cost has been recorded as a special distribution in the consolidated statement of shareholders’ deficit.

In May 2008, the parties amended the Intellectual Property Agreement to provide AISystems the exclusive, worldwide and perpetual right to develop and market the proprietary Integrated E-Commerce Travel Engine Platform for the travel and tourism industry. Pursuant to the amended intellectual property agreement, the fair value of consideration of $5,000,000 was settled with the issuance of a note payable for $5,000,000, the issuance of 2,000,000 common shares and a 5.0% royalty on revenue directly derived from the Integrated E-Commerce Travel Engine Platform.

In May 2009, the May 2008 amendment was cancelled pursuant to another amendment and all obligations under the May 2008 amendment were reversed. As a result, the $5,000,000 note payable was presented as an extinguishment of the debt to Dynamic Intelligence Inc. on the consolidated balance sheet as at December 31, 2008 with no gain or loss being reported in the consolidated statement of operations. Also, the 2,000,000 common shares were cancelled and $800,000 was recorded as additional consideration for the rescission of the agreement during the period ended December 31, 2009.

20

AIRLINE INTELLIGENCE SYSTEMS INC.

(A Development Stage Company)

Notes to Consolidated Financial Statements

For the years ended December 31, 2009, 2008 and 2007

8.  Notes payable – related party and related party transactions

Notes payable to Dynamic Intelligence Inc.

In 2006, the Company amended its license agreement with its controlling shareholder, Dynamic, as described in Note 7. In conjunction with this, amongst other things, the Company issued $4,000,000, 5%, unsecured notes payable. In 2007, the Company paid down the principal of the loan by $2,000,000.

In 2008, the Company amended its license agreement with its controlling shareholder, Dynamic, as described in Note 7. In conjunction with this, amongst other things, the Company issued and subsequently cancelled an additional $5,000,000, 5%, unsecured notes payable. As described in Note 5, the Company reduced the principal owing under this note when it assigned $422,000 in loans receivable from employees to Dynamic.

During the year ended December 31, 2009, a further reduction in principal in the amount of $800,000 was recorded as a contribution to additional paid in capital, as described in Note 7.

All interest in respect of the loan remains outstanding at December 31, 2009. Interest expense on this note was $55,567, $141,188 and $191,944 for the years ended December 31, 2009, 2008 and 2007, respectively.

Notes payable with detachable warrants

In 2008, the Company issued $2,582,090 one year, 8% notes payable to existing shareholders, executives, consultants and advisors to the Company, which are unsecured and have a detachable warrant with a strike price of $0.001 for every $5.00 of notes payable issued. Management estimated the fair value of each instrument separately and allocated the proceeds in accordance with the relative fair value method. The amount allocated to the warrants in accordance with this method was $1,534,260 during the year ended December 31, 2008. The notes payable have been recorded on the consolidated balance sheet net of the discount representing the allocation of the relative fair value to the warrant. The Company records interest in the consolidated statements of operations as the discounted note is accreted to its face value through maturity, in addition to recording an 8% interest charge. From January 2009 to February 2009, the Company issued an additional $723,550 (Dynamic - $698,600) 8%, unsecured notes payable with a total of 145,000 detachable warrants at a strike price of $0.001.  Management estimated the fair value of each instrument separately and allocated $127,342 to these warrants in accordance with the relative fair value method. The expense related to the discount on the

21

AIRLINE INTELLIGENCE SYSTEMS INC.

(A Development Stage Company)

Notes to Consolidated Financial Statements

For the years ended December 31, 2009, 2008 and 2007

8.   Notes payable – related party and related party transactions (continued)

8% notes payable using the interest method was $1,392,764 and $264,449, for 2009 and 2008 respectively.

In 2009, the Company provided an option to the holders of 8% notes payable to convert these debt instruments into common shares at an issuance price of $0.75 per common share in exchange for the outstanding debt plus accrued and unpaid interest. During the year ended December 31, 2009, an amount of $1,734,327 representing principle and accrued interest on 8% notes payable were converted into 2,312,437 common shares at $0.75 per share. The 8% notes payable, including Dynamic’s portion, are senior in the security ranking to the notes payable issued to Dynamic Intelligence Inc. issued in 2006.

As at December 31, 2009, $1,618,750 (2008: $2,552,076) of 8% notes were issued and outstanding; including $1,199,000 to Dynamic (2008: $499,000).  In addition, interest expense representing the coupon was $107,043 and $65,677, for 2009 and 2008 respectively.  The 8% notes payable are subject to an early repayment provision should the Company raise in excess of $7.5 million following the issuance of the notes.

During the year ended December 31, 2009,  the Company issued $2,410,000 in 5% unsecured notes that mature within various dates throughout 2009 along with a total of 7,386,666 in detachable warrants with a strike price of $0.001. Management estimated the fair value of each instrument separately and allocated $960,818 to the warrants in accordance with the relative fair value method. The Company records interest in the consolidated statements of operations as the discounted note is accreted to its face value through maturity, in addition to recording a 5% interest charge. The expense related to the discount on the notes payable using the interest method was $960,818 in 2009. Interest expense representing the coupon was $56,625 in 2009.

The Company also entered into a bond agreement during 2009 with a third party to provide a guarantee of notes to be issued by the Company. Under this bond, the Company issued $150,000 of notes bearing interest of 18%, maturing in August 2010. These notes also included a total of 300,000 common stock warrants with a strike price of $0.001 and fair value of $39,894. Pursuant to guarantee agreement, the Company is required to set aside in a separate bank account of 5% of all the future funds raised in excess of $1,000,000. As at December 31, 2009, the restricted amount under this bond agreement was $64,000.

22

AIRLINE INTELLIGENCE SYSTEMS INC.

(A Development Stage Company)

Notes to Consolidated Financial Statements

For the years ended December 31, 2009, 2008 and 2007

8.   Notes payable – related party and related party transactions (continued)

In October 2009, the Company entered into a forbearance agreement to extend the maturity of debt to September 30, 2010 with certain debt holders whom collectively hold $3,647,500 of debt and accrued interest. In exchange for extending the described debt, the Company issued 3,647,500 warrants with an exercise price of $0.001 each, which expire at the earlier of a public listing, a corporate reorganization or specified expiry dates that range for the period from 2009 to 2014. The forbearance agreements were treated as a modification of the debt and accordingly the associated fees, representing the fair value of the warrants issued by the Company to the creditors, have been recorded as a discount on the debt and amortized over the new term to maturity with an additional charge to interest expense calculated in accordance with the interest method.

In 2009, the Company has received an additional $45,000 consisting of two unsecured, non-interest bearing demand loans from shareholders with no fixed terms of repayment.

9.       Equipment loan payable

The Company has a five year non-interest bearing secured vehicle loan. At December 31, 2009, $7,582 was outstanding; monthly payments under the loan are $478. Future minimum payments are as follows:

Year ending December 31,
2010	$	5,740
2011		1,842
Thereafter		-
	$	7,582

23

AIRLINE INTELLIGENCE SYSTEMS INC.

(A Development Stage Company)

Notes to Consolidated Financial Statements

For the years ended December 31, 2009, 2008 and 2007

10.  Lease obligations, commitments and Contingencies

 (A) Lease obligations

The Company leases office space in Kirkland, Washington and Toronto, due to expire on October 2012 and May 2014 respectively. Total lease expense for the years ended 2009, 2008 and 2007 was $821,955, $852,416 and $495,978, respectively. The Company has been in arrears/default under the Kirkland lease agreement since November 2009. As described in Note 4, the Company has restricted cash that the landlord may draw upon at any time at their sole discretion to remedy the arrears rent. At this time, the landlord has not drawn on the restricted cash nor has the landlord provided notice that they intend to do so.

In May 2009, the Company extended the lease for its Toronto office space for 5 years. The lease provided for three months free rent at the inception of the lease.

The Company also leases photocopiers, computer equipment and an apartment, expiring at various dates from 2010 to 2014.

The total future minimum lease payments by year for all operating leases are as follows:

Lease obligations
December 31,	Total
2010	$	737,010
2011		733,399
2012		610,744
2013		99,031
2014		44,364
Thereafter		-
	$	2,224,549

 (B) Commitments

The Company has a contractual obligation to pay a third party 2% of all revenue under its single customer contract for three years from signing. No amounts were owing under this agreement as at December 31, 2009 and 2008.

24

AIRLINE INTELLIGENCE SYSTEMS INC.

(A Development Stage Company)

Notes to Consolidated Financial Statements

For the years ended December 31, 2009, 2008 and 2007

10.           Lease obligations, commitments and Contingencies (continued)

 (C) Contingencies

There are no outstanding judgments against the Company or any consent decrees or injunctions to which the Company is subject or by which its assets are bound and there are no claims, proceedings, actions or lawsuits in existence, or to the Company’s knowledge threatened or asserted, against the Company or with respect to any of the assets of the Company that would materially and adversely affect the business, property or financial condition of the Company, including but not limited to environmental actions or claims. However, from time to time, is involved in various lawsuits and legal proceedings which arise in the ordinary course of business.  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.

An employee terminated in 2009, is claiming that she was wrongfully dismissed and is seeking damages. The Company believes that it has complied with law in completing her termination. As such the Company believes that her claim is without merit.

11.           Unearned revenue

The Company entered into a contract with its single customer in June 2007, wherein the customer provided the Company with a $1,000,000 signing fee. The Company has deferred recognition of revenue for this signing fee until customer acceptance of its product is obtained. The customer or the Company may cancel the contract at anytime. There is no certainty that the customer will accept that Company’s product or that the company will deliver a working product for the customer.

12.           Shareholders’ equity

The authorized capital of the Company consisted of: (i) 500,000,000 common shares, 88,720,262 shares of which were issued and outstanding at December 31, 2009 and (ii) 5,000,000 shares of preferred stock of the Company, 2,400,000 of which have been designated as Series A Preferred Stock (“Series A Preferred”), 2,329,905 of which were issued and outstanding at December 31, 2009.

25

AIRLINE INTELLIGENCE SYSTEMS INC.

(A Development Stage Company)

Notes to Consolidated Financial Statements

For the years ended December 31, 2009, 2008 and 2007

12.           Shareholders’ equity (continued)

2005 Shareholder Transactions

Issuance of Common Shares for Cash

From the date of inception, December 7, 2005 to December 31, 2005, the Company issued 1,370,720 common shares for $0.25 per common share and received total proceeds of $342,680.

Issuance of Common Shares for Intellectual Property from a related party

On December 9, 2005, 20,000,000 common shares were issued to Dynamic Intelligence Inc. pursuant to the Intellectual Property Agreement.

2006 Shareholder Transactions

Issuance of Common Shares for Cash

From January 1, 2006 to March 9, 2006, the Company issued 730,000 common shares for $0.25 per share and received total proceeds of $182,500.

From March 10, 2006 to October 26, 2006, the Company issued 5,523,800 common shares for $0.50 per share and received total proceeds of $2,761,900.

From October 27, 2006 to December 31, 2006, the Company issued 553,000 common shares for $1.00 per common share and received total proceeds of $553,000.

Issuance of Common Shares for Intellectual Property from a related party

On October 11, 2006, 8,000,000 common shares were issued to Dynamic Intelligence Inc., pursuant to the Intellectual Property Agreement, as amended.

Issuance of Common Shares upon the exercise of stock options.

In 2006, the Company issued 170,000 shares pursuant to the exercise of stock options for total proceeds of $42,500.

26

AIRLINE INTELLIGENCE SYSTEMS INC.

(A Development Stage Company)

Notes to Consolidated Financial Statements

For the years ended December 31, 2009, 2008 and 2007

12.           Shareholders’ equity (continued)

2007 Shareholder Transactions

Issuance of Common Shares for Cash

From March 1, 2007 to June 7, 2007, the Company issued 5,982,400 common shares for $1.00 per share and received total proceeds of $5,982,400.

From September 7, 2007 to December 31, 2007, the Company issued 558,500 common shares for $5.00 per share and received total proceeds of $2,792,500.

2008 Shareholder Transactions

Issuance of Common Shares for Cash

From February 6, 2008 to May 13, 2008, the Company issued 1,581,366 common shares for $5.00 per common share and received total proceeds of $7,906,830. From May 23, 2008 to May 28, 2008, the Company issued 108,363 common shares for $5.00 per common share and received total proceeds of $541,815.

Issuance of Common Shares for Intellectual Property from a related party

In May 2008, 2,000,000 common shares were issued to Dynamic, pursuant to the Intellectual Property Agreement, as amended. The shares were returned as cancelled in 2009 pursuant to the cancellation of the further amendment.

27

AIRLINE INTELLIGENCE SYSTEMS INC.

(A Development Stage Company)

Notes to Consolidated Financial Statements

For the years ended December 31, 2009, 2008 and 2007

12.           Shareholders’ equity (continued)

2008 Shareholder Transactions (Contd.)

Series A Preferred Stock

In 2008, the Company declared a dividend on its common shares in the form of the issuance of 2,329,905 Series A preferred shares to each record holder of common shares as of May 30, 2008. For each 20 common shares then-held by such holder the holder is entitled to one preferred share. The preferred shares (1) entitle the holder thereof to four hundred (400) votes on all matters submitted to a vote of the stockholders of the Company; (2) are not convertible into common shares; (3) may not be transferred except in accordance with applicable Securities Laws; (4) may be redeemed by the Company at any time for a per share redemption price of $0.001; (5) has a liquidation preference of $0.001 per share; and (6) other than with respect to such liquidation preference, does not share in the assets of the Company upon a liquidation.  Other than voting and liquidation rights, the Series A preferred shares have no other material rights or preferences and have nominal economic value.

Issuance of Common Shares upon the exercise of stock options.

In May 2008, the Company issued 20,000 common shares upon the exercise of options and received total proceeds of $20,000.

Stock Warrants

In the fourth quarter of 2008, the Company authorized 700,000 common shares to be reserved for issuance pursuant to the potential exercise of warrants to purchase common shares pursuant to the Company’s closed offering of up to $3,500,000 in aggregate principal amount of indebtedness. As at December 31, 2008 511,420 common share warrants were issued of which 31,020 were converted to common shares, leaving in 480,400 outstanding. During the first quarter of 2009, an additional 145,000 warrants were issued in conjunction with an increase in the notes payable of $725,000.

28

AIRLINE INTELLIGENCE SYSTEMS INC.

(A Development Stage Company)

Notes to Consolidated Financial Statements

For the years ended December 31, 2009, 2008 and 2007

12.           Shareholders’ equity (continued)

2008 Shareholder Transactions (Contd.)

Shareholder Side Agreement

The Company entered into a contractual agreement (the “Side Letter”), dated February 15, 2008 with Merus Capital I LP (“Merus”) in connection with a certain purchase by Merus of Company common shares (“Shares”) whereby Merus obtains the contractual right to: (i) access to the Company’s books and records; (ii) notice of certain transfers of the Company’s common stock (“Transfers”); (iii) the right to participate in such Transfers; (iv) the right to participate in future offerings, if any, of the Company’s preferred stock and (v) anti-dilution protection regarding certain shares issuances by the Company.  The Side Letter terminates the earlier of: (a) Merus holding less than 500,000 common shares of the Company; (b) immediately prior to the Company completing an initial public offering; (c) the date the Company first becomes subject to reporting requirements under Sections 13 or 15(d) of the Securities Exchange Act of 1934, as amended; and (d) a reorganization, merger or consolidation of the Company or a sale, lease or other disposition of all or substantially all of the assets of the Company pursuant to which the Company receives cash or publicly tradable securities in exchange for the Shares. Pursuant to this Side Agreement, Merus were issued 3,000,000 common share warrants of the Company at nominal consideration for anti-dilution. The Company is not required to issue any further warrants in the future in respect of the anti-dilution clause contained in this Side Letter.

29

AIRLINE INTELLIGENCE SYSTEMS INC.

(A Development Stage Company)

Notes to Consolidated Financial Statements

For the years ended December 31, 2009, 2008 and 2007

12.           Shareholders’ equity (continued)

2009 Shareholder Transactions

Issuances of Common Shares for Cash

From January 2009 to June 2009, the Company issued 576,666 common shares at $0.75 per share for total consideration of $ 432,500 of which $432,500 was received in cash.

From September 2009 to December 2009, the Company issued 15,328,760 common shares at $0.10 per share for total consideration of $1,532,876 of which $1,333,466 was received in cash and $199,410 was received in services.

From October 2009 to December 2009, the Company offered for sale shares to potential investors at $0.25 per share. Under this program the Company issued 4,148,065 common shares for total consideration of $1,037,016 of which $725,000 was received in cash and $312,016 was received in services.

Issuance of Common Shares in Exchange for Notes Payable

In March 2009, the Company offered holders of 8% notes payable the right to exchange their debt for common stock at the then market value of $0.75 per share. From March 2009 to May 2009, $1,734,328 of note holders opted into this program and the Company issued 2,312,437 Common shares.

Issuance of Common Shares pursuant to ant-dilution agreements

In 2009, the Company reserved 6,744,687 common shares for the issuance of common share warrants. The warrants were issued to all common shareholders who previously acquired common stock in excess of $1.25 per share. All warrants are converted to common shares as at December 31, 2009.

30

AIRLINE INTELLIGENCE SYSTEMS INC.

(A Development Stage Company)

Notes to Consolidated Financial Statements

For the years ended December 31, 2009, 2008 and 2007

12.           Shareholders’ equity (continued)

Issuance of Common Shares to management and consultants for services

In April 2009, the Company reserved 4,500,000 common shares for restricted stock awards. The common shares were granted to management and consultants for services rendered. In respect of 3,500,000 shares, 50% of such common shares vested on April 7, 2009 with 5% vesting at the end of each month commencing at the end of April 2009. In respect of the remaining 1,000,000 shares all such shares on vested June 6, 2009. The Company valued these share at the market value of $0.75 per share and recorded additional stock based compensation expense in the statement of operations of $3,219,482.

In October 2009, the Company issued 5,000,000 common shares. The common shares were granted to consultants, directors, and management for services rendered. The Company valued these share at market value of $0.10 per share and recorded a additional stock based compensation expense in the statement of operations of $500,000.

Cancellation of Common Shares pursuant to rescission of amended Intellectual Property Agreement

In 2009, the Company cancelled 2,000,000 common shares previously issued to Dynamic in conjunction with the rescission of the amendment of the Intellectual Property Agreement dated in May 2008, as described in Note 7.

Common Shares reserved for Issuance of Common Stock Warrants

In 2009, the Company reserved 11,290,586 common shares for the issuance of common stock warrants. The warrants were issued in conjunction with the raising of short term notes totaling $5,867,100. These warrants have a strike price of $0.001 and expire at the earlier of a public listing, and a corporate reorganization.

31

AIRLINE INTELLIGENCE SYSTEMS INC.

(A Development Stage Company)

Notes to Consolidated Financial Statements

For the years ended December 31, 2009, 2008 and 2007

12.           Shareholders’ equity (continued)

Exchange Right Agreement

The Company and Merus Capital I, L.P. (“Merus”) entered into an exchange right agreement (the “Agreement”), whereby Merus provided funding to the Company in exchange for, amongst other things, a right in liquidation for Merus to exchange common shares held by Merus at the time of the conversion (“Merus Securities”) into an unsecured promissory note with aggregate principle up to $5,000,000 paying interest at a rate of 5.00% per annum.  The term of the Agreement is the earlier of: (i) 36 months following a Going Public Transaction (as defined in the Agreement); (ii) Merus receiving the Note after exercising their rights under the Agreement; and (iii) Merus transferring any of the Merus Securities without the prior authorization of the Company. Management has reviewed the terms of the exchange right agreement and has determined that permanent equity classification is appropriate because all conditions under which the exchange right could be enforced are solely within the control of the Company.  

32

AIRLINE INTELLIGENCE SYSTEMS INC.

(A Development Stage Company)

Notes to Consolidated Financial Statements

For the years ended December 31, 2009, 2008 and 2007

13.   Income taxes

The Company has made no provision for income taxes for the years ended December 31, 2009, 2008 and 2007 as the Company has incurred net losses. Based on statutory rates, the Company’s expected income tax benefit based on the accounting loss for the years ended December 31, 2009, 2008and 2007would be approximately $6,056,135, $5,607,509, and $8,363,537, respectively.

The deferred tax consequences of temporary differences in reporting items for financial statement and income tax purposes are recognized, if appropriate. Realization of the future tax benefits related to the deferred tax assets is dependent on many factors, including the Company’s ability to generate taxable income within the net operating loss carry forward period. Management has considered these factors in reaching its conclusion as to the valuation allowance for financial reporting purposes.

The Company has accumulated net operating loss carry forwards, including losses of its subsidiaries, of approximately $30,521,000 (2009: $11,335,000, 2008: $11,944,000, 2007: $4,520,000, 2006: $2,657,000, 2005: 65,000) which are available to offset future taxable income, due to expire beginning 2025.  The realization of the future tax benefit is uncertain.  Accordingly, the Company has recorded a valuation allowance to reduce the deferred tax asset, which primarily consists of the net operating losses.

The nature and effects of the temporary differences that give rise to significant portions of the deferred income tax asset is as follows:

	December 31, 2009			December 31,2008
Deferred income tax asset		11,679,000			7,773,000
Valuation allowance		(11,679,000	)		(7,773,000	)
Net future income tax asset	$	-		$	-

33

AIRLINE INTELLIGENCE SYSTEMS INC.

(A Development Stage Company)

Notes to Consolidated Financial Statements

For the years ended December 31, 2009, 2008 and 2007

14.  Stock option plans

The Company has issued stock options to employees, consultants and advisors under two Stock Option Plans, (i) The 2005 Stock Option Plan and (ii) The 2008 Stock Option Plan. The Company has also issued Non-Plan stock options to certain consultants and advisors.

The Company’s 2005 Stock Option Plan, dated December 8, 2005 (as amended from time to time) has reserved 6,000,000 Common Shares for issuance and the Company’s 2008 Stock Option Plan, dated May 30, 2008, has reserved 5,000,000 Common Shares for issuance. Additionally, the Company has reserved 841,500 Common Shares for outstanding non-plan stock options.

The Board of Directors administers the Company’s Plans. The exercise prices of the options granted are determined by the Board of Directors and are generally established at the estimated market value of the Company’s common shares at the date of grant. The Board of Directors determines the term of each option, the number of shares for which each option is granted and the rate at which each option is exercisable. Options are granted with terms not to exceed five years under the 2005 Plan and 10 years under the 2008 Plan.

The fair value of each option award is estimated on the date of grant using a Black Scholes option pricing model using the assumptions as disclosed herein. The expected volatility is based on similar public entities for which share price information is available. The Company uses historical data to estimate option exercise and employee termination to determine the appropriate inputs to the model. The risk-free rate for periods within the contractual life of the option is based on the U.S. Treasury yield curve in effect at the time of grant.

For those option awards that have performance conditions, the fair value is estimated on the date of grant using the same model and assumes that performance goals will be achieved. If such goals are not met, no compensation cost is recognized and any recognized compensation cost is reversed. The inputs for expected volatility, expected dividends, and risk-free rate used in estimating those options’ fair value are the same as those noted for options granted without performance conditions.

34

AIRLINE INTELLIGENCE SYSTEMS INC.

(A Development Stage Company)

Notes to Consolidated Financial Statements

For the years ended December 31, 2009, 2008 and 2007

14.  Stock option plans (Contd.)

Stock Plan Curtailment/Modification in 2007

On June 11, 2007, the Company modified its 2005 Stock Option Plans to amend certain rights and obligations of the stock options plans. In accordance with FASB ASC 718 (SFAS 123R), the Company has accounted for these changes as a Plan Curtailment/Modification. To implement the change from an accounting standpoint, the Company is deemed to have effectively repurchased the original award and issued a new award at the time of the Plan Curtailment/Modification. Incremental compensation cost is measured as the excess, if any, of the fair value of the modified award over the fair value of the original award immediately before its terms are modified, measured based on the share price and other pertinent factors at that date. The modifications to the plan included amongst other things and allowed the following:

·   Right to exercise – the option holder now has the right to exercise the option after vesting (no longer dependent on a triggering event).

·   Stock-split – the options will now be automatically adjusted to reflect the impact of a stock-split or stock-consolidation.

·   Upon termination, the holder would  has 90 days to make a decision to either exercise or forfeit any vested options; previously there was no timeline.

·   First right of refusal (terminated employees) – The Company has the first right of refusal to buy back the share of any terminated employees, executed at fair value.

·   First right of refusal (share transfers) – The Company has the first right of refusal to buy back the share of any proposed share transfers, executed at fair value.

In 2009, the Company undertook a re-pricing of stock options outstanding under the 2005 Employee stock Plan, the 2008 Employee stock option plan and with non-plan options, whether vested or unvested to the lessor of (i) $0.75 per option and the current and (ii) the current conversion price, provided the optionee had a continuing involvement with the Company at the time of the re-pricing. An amount of 2,208,750 options were re-priced from the various Stock Option Plans under this re-pricing.

In April 2009, the Company issued 2,285,000 of stock options with a strike price of $0.75 per share.

35

AIRLINE INTELLIGENCE SYSTEMS INC.

(A Development Stage Company)

Notes to Consolidated Financial Statements

For the years ended December 31, 2009, 2008 and 2007

14.  Stock option plans (Contd.)

In October 2009, the Company granted 1,825,000 stock options at a strike price of $0.10 per common share to management and advisors with vesting over key future performance milestones.

In December 2009, the Company undertook a re-pricing of stock options outstanding under the 2005 Employee stock Plan, the 2008 Employee stock option plan and with non-plan options, whether vested or unvested to the lessor of (i) $0.25 per option and the current and (ii) the current conversion price, provided the optionee had a continuing involvement with the Company at the time of the re-pricing. An amount of 4,091,500 options were re-priced from the various Stock Option Plans under this re-pricing.

The Company has recorded stock based compensation expense, relating to the stock options and restricted stock awards, of $5,799,309, $3,742,156 and $17,245,215 for the years ended December 31, 2009, 2008 and 2007, respectively.

36

AIRLINE INTELLIGENCE SYSTEMS INC.

(A Development Stage Company)

Notes to Consolidated Financial Statements

For the years ended December 31, 2009, 2008 and 2007

14.  Stock option plans (Contd.)

(A)                Consolidated Schedule of Stock Option Plans

A summary of the Company’s stock options from December 7, 2005 (inception) to December 31, 2009 is presented below:

	Shares under option			Weighted Average Exercise Price		Average Remaining Contractual Life (Years)		Weighted Average Grant Date Fair Value
Outstanding at December 7, 2005 (inception)
Granted		-		$	-		-	$	-
Exercised		-		$	-		-	$	-
Forfeited		-		$	-		-	$	-
Outstanding at December 31, 2005		-		$	-		-	$	-
Granted		2,443,750		$	0.66		4.20	$	0.17
Exercised		(85,000	)	$	0.50		-	$	-
Forfeited		(187,500	)	$	0.97		-	$	0.25
Outstanding at December 31, 2006		2,171,250		$	0.64		4.20	$	0.17
Exercisable at December 31, 2006		-		$	-		-	$	-
Granted - plan modification		4,230,000		$	0.33		3.15	$	4.61
Exchanged - plan modification		(2,171,250	)	$	0.64		-	$	0.17
Granted		822,500		$	2.74		4.53	$	1.02
Exercised		-		$	-		-	$	-
Forfeited		(125,000	)	$	1.96		-	$	0.51
Outstanding at December 31, 2007		4,927,500		$	0.69		3.36	$	4.09
Exercisable at December 31, 2007		3,572,250		$	0.36		3.14	$	4.54
Granted		2,760,250		$	5.69		6.19	$	1.65
Exercised		(20,000	)	$	1.00		-	$	-
Forfeited		(349,000	)	$	1.98		-	$	0.19
Outstanding at December 31, 2008		7,318,750		$	2.53		4.60	$	3.43
Exercisable at December 31, 2008		4,499,873		$	0.51		1.88	$	4.23
Granted		4,755,000		$	0.25		9.48	$	0.10
Exercised		-		$	-		-	$	-
Cancelled		(1,185,000	)	$	0.75		-	$	1.04
Forfeited		(1,485,750	)	$	0.24		-	$	1.94
Outstanding at December 31, 2009		9,403,000		$	0.25		5.20	$	2.18
Exercisable at December 31, 2009		6,144,331		$	0.25		5.00	$	2.54

37

AIRLINE INTELLIGENCE SYSTEMS INC.

(A Development Stage Company)

Notes to Consolidated Financial Statements

For the years ended December 31, 2009, 2008 and 2007

14.  Stock option plans (Contd.)

A summary of the status of the Company’s non-vested options from December 7, 2005 (inception) to December 31, 2009 is as follows:

Non-vested Options	Shares
Non-vested at December 31, 2006		2,171,250
Granted in 2007		5,052,500
Vested		(3,572,250	)
Exchanged		(2,171,250	)
Forfeited		(125,000	)
Non-vested at December 31, 2007		1,355,250
Granted in 2008		2,760,250
Vested		(927,623	)
Exercised		(20,000	)
Forefeited		(349,000	)
Non-vested at December 31, 2008		2,818,877
Granted in 2009		4,755,000
Vested		(1,644,458	)
Exercised		-
Cancelled		(1,185,000	)
Forefeited		(1,485,750	)
Non-vested at December 31, 2009		3,258,669

The total fair value of stock options granted, to all employees and directors that vested during the year ended December 31, 2009, 2008 and 2007 was $617,612, $2,418,757 and $13,239,378 respectively. Since inception no employee stock options have been exercised. The intrinsic value of options outstanding and exercisable at December 31, 2009, 2008 and 2007 was $Nil, $1,079,969 and $16,575,240, respectively.

38

AIRLINE INTELLIGENCE SYSTEMS INC.

(A Development Stage Company)

Notes to Consolidated Financial Statements

For the years ended December 31, 2009, 2008 and 2007

14.  Stock option plans (Contd.)

(a)Employee and Director stock options:

Activity in the Company’s stock options granted to employees and directors from December 7, 2005 (inception) to December 31, 2009 was as follows:

	Options			Weighted Average
				Exercise Price
Outstanding, January 1, 2006		-			-
Granted		1,955,500		$	0.67
Forfeited		(187,500	)	$	0.97
Exercised		-		$	-
Outstanding, December 31, 2006		1,768,000		$	0.64
Exercisable, December 31, 2006		-		$	-
Granted - plan modification		3,423,500		$	0.33
Exchanged - plan modification		(1,768,000	)	$	0.64
Granted		566,000		$	2.43
Forfeited		(125,000	)	$	1.96
Exercised		-		$	-
Outstanding, December 31, 2007		3,864,500		$	0.58
Exercisable, December 31, 2007		2,674,500		$	0.28
Granted		895,250		$	6.54
Forfeited		(334,000	)	$	1.84
Exercised		-		$	-
Outstanding, December 31, 2008		4,425,750		$	1.70
Exercisable, December 31, 2008		3,103,083		$	0.33
Granted		1,015,000		$	0.26
Forfeited		(1,485,750	)	$	0.24
Exercised		-		$	-
Outstanding, December 31, 2009		3,955,000		$	0.25
Exercisable, December 31, 2009		3,133,166		$	0.25

39

AIRLINE INTELLIGENCE SYSTEMS INC.

(A Development Stage Company)

Notes to Consolidated Financial Statements

For the years ended December 31, 2009, 2008 and 2007

14.  Stock option plans (Contd.)

The fair value of employees and directors stock options was estimated using the Black-Scholes option pricing model with the assumption that no dividends are to be paid on common shares, a weighted average volatility factor for the Company’s share price of 20% (2008 – 20%), a weighted average risk free interest rate of 2.5% (2008 – 4.5%) over an expected term of 5 years (5 years).

(b)Stock option to consultants:

The activity in the Company’s stock options granted to consultants from December 7, 2005 (inception) to December 31, 2009 were as follows:

	Options			Weighted Average
				Exercise Price
Outstanding, January 1, 2006		-			-
Granted		228,250		$	0.64
Exercised		(25,000	)	$	0.50
Forfeited		-		$	-
Outstanding, December 31, 2006		203,250		$	0.66
Exercisable, December 31, 2006		-		$	-
Granted - plan modification		406,500		$	0.33
Exchanged - plan modification		(203,250	)	$	0.66
Granted		245,000		$	3.42
Exercised		-		$	-
Forfeited		-		$	-
Outstanding, December 31, 2007		651,500		$	1.08
Exercisable, December 31, 2007		486,250		$	0.59
Granted		1,435,000		$	5.37
Exercised		(20,000	)	$	1.00
Forfeited		(15,000	)	$	5.00
Outstanding, December 31, 2008		2,051,500		$	4.21
Exercisable, December 31, 2008		935,290		$	2.74
Granted		3,740,000		$	0.25
Exercised		-		$	-
Cancelled		(1,185,000	)	$	0.75
Outstanding, December 31, 2009		4,606,500		$	0.25
Exercisable, December 31, 2009		2,549,665		$	0.25

40

AIRLINE INTELLIGENCE SYSTEMS INC.

(A Development Stage Company)

Notes to Consolidated Financial Statements

For the years ended December 31, 2009, 2008 and 2007

14.  Stock option plans (Contd.)

The fair value of stock options granted to consultants was estimated using the Black-Scholes option pricing model with the assumption that no dividends are to be paid on common shares, a weighted average volatility factor for the company’s share price of 20% (2008 – 20%), a weighted average risk free interest rate of 2.5% (2008 – 4.5%) over an expected term of 5 years (2008 – 5 years).

During 2008, 20,000 of the consulting stock options were exercised for cash proceeds of $20,000. In 2007, no consulting stock options were exercised. In 2006, 25,000 (50,000 post split) of the consulting stock options were exercised for cash proceeds of $12,500. In 2005 no consulting stock options were exercised.

41

AIRLINE INTELLIGENCE SYSTEMS INC.

(A Development Stage Company)

Notes to Consolidated Financial Statements

For the years ended December 31, 2009, 2008 and 2007

14.  Stock option plans (Contd.)

(c)      Non plan options:

The activity in the Company’s stock options granted to consultants from December 7, 2005 (inception) to December 31, 2009 were as follows:

	Options			Weighted Average
				Exercise Price
Outstanding, January 1, 2006		-			-
Granted		260,000		$	0.64
Forfeited		-		$	-
Exercised		(60,000	)	$	0.50
Outstanding, December 31, 2006		200,000		$	0.66
Exercisable, December 31, 2006		-		$	-
Granted - plan modification		400,000		$	0.32
Exchanged - plan modification		(200,000	)	$	0.66
Granted		11,500		$	3.42
Forfeited		-		$	-
Exercised		-		$	-
Outstanding, December 31, 2007		411,500		$	0.59
Exercisable, December 31, 2007		411,500		$	0.59
Granted		430,000		$	5.00
Forfeited		-		$	-
Exercised		-		$	-
Outstanding, December 31, 2008		841,500		$	2.75
Exercisable, December 31, 2008		461,500		$	0.89
Granted		-		$	-
Forfeited		-		$	-
Exercised		-		$	-
Outstanding, December 31, 2009		841,500		$	0.25
Exercisable, December 31, 2009		461,500		$	0.25

42

AIRLINE INTELLIGENCE SYSTEMS INC.

(A Development Stage Company)

Notes to Consolidated Financial Statements

For the years ended December 31, 2009, 2008 and 2007

14.   Stock option plans (Contd.)

(c)      Non-plan options:

The fair value of the non-plan stock options was estimated using the Black-Scholes option pricing model with the assumption that no dividends are to be paid on common shares, a weighted average volatility factor for the company’s share price of 20.0%, a weighted average risk free interest rate of 4.5% over an expected term of 5 years.

In 2006, 60,000 (120,000 post split) of the non-plan stock options were exercised for cash proceeds of $30,500. In 2009, 2008, 2007 and 2005 no non plan stock options were exercised.

In 2006, the Company adopted a non-qualified stock option plan in connection with the engagement of Access Alternative Group S.A. as a consultant of the Company.  Since adoption, the plan provided for a grant of 450,000 non-qualified stock options for Access Alternative Group S.A.  As of December 31, 2008, there were options to purchase 450,000 shares (2007 – 400,000) outstanding, 400,000 were fully vested (2007 – 400,000). No options were exercised; vesting is at the sole discretion of the Board of Directors.

In 2006, the Company adopted a non-qualified stock option plan in connection with the engagement of Interior Expressions Inc. as a consultant of the Company.  The plan provided for a grant of 60,000 non-qualified stock options for Interior Expressions Inc.  In 2007, the options to purchase the 60,000 shares were exercised and common shares were issued.

In 2007, the Company adopted a non-qualified stock option plan in connection with the engagement of Investcan Inc. as a consultant of the Company.  The plan provided for a grant of 7,500 non-qualified stock options.  As of December 31, 2008, there were options to purchase 7,500 outstanding and fully vested (2007 – 7,500). No options have been exercised and no stock options remain unvested.

In 2007, the Company adopted a non-qualified stock option plan in connection with the engagement of WSFP, LLC. as a consultant of the Company.  The plan provided for a grant of 4,000 non-qualified stock options.  As of December 31, 2008, there were options to purchase 4,000 outstanding and fully vested (2007 – 4,000). No options have been exercised and no stock options remain unvested.

43

AIRLINE INTELLIGENCE SYSTEMS INC.

(A Development Stage Company)

Notes to Consolidated Financial Statements

For the years ended December 31, 2009, 2008 and 2007

14.  Stock option plans (Contd.)

(c)      Non plan options:

In 2008, the Company adopted a non-qualified stock option plan in connection with the engagement of Mr. Melman as a consultant of the Company.  The plan provided for a grant of 300,000 non-qualified stock options.  As of December 31, 2008, there were options to purchase 300,000 outstanding and unvested. Vesting is linked to specific future events.

In 2008, the Company adopted a non-qualified stock option plan in connection with the engagement of Mr. Spring as a consultant of the Company.  The plan provided for a grant of 80,000 non-qualified stock options.  As of December 31, 2008, there were options to purchase 80,000 outstanding and unvested.

15. Financial instruments

The Company, as part of its operations, carries a number of financial instruments. It is management’s opinion that the Company is not exposed to significant interest, credit or currency risks arising from these financial instruments except as otherwise disclosed.

The Company’s financial instruments, including cash and short term deposits, accounts payable and accrued liabilities are carried at values that approximate their fair values due to their relatively short maturity periods.

16. Subsequent Events

(A) Common shares

From January 1, 2010 to February 28, 2010, the Company issued 1,860,000 common shares for $0.25 per share and received total proceeds of $465,000.

From March 1, 2010 to March 19, 2010, the Company issued 7,121,935 common shares for  $0.10 per share and received total proceeds of $410,000 and subscription receipts of $302,193.50.

44

AIRLINE INTELLIGENCE SYSTEMS INC.

(A Development Stage Company)

Notes to Consolidated Financial Statements

For the years ended December 31, 2009, 2008 and 2007

16. Subsequent Events (continued)

(B) Reverse Merger

On about March 19, 2010, the Company acquired through a share exchange reverse merger Wolf Resources, Inc. (“Wolf”). Wolf is presently, a non-operating Company registered with the Securities and Exchange Commission (“SEC”) and list on the Over The Counter Bulletin Board (“OTCBB”) in the United States.

In exchange for all of the common shares and preferred shares of the Company, the Company’s shareholders acquired from Wolf 116,250,000 shares common stock of Wolf, subject to an increase in Wolf’s authorized common stock, which represents approximately 75% of the issued and outstanding common stock of Wolf on a fully diluted basis and 2,329,905 preferred stock, which represents approximately 100% of the issued and outstanding preferred stock of Wolf, following the cancellation of 34,488,000 shares of Common Stock of Wolf.

Upon Closing, the Company became a wholly-owned subsidiary of Wolf. The directors of Wolf and the Company have approved the Share Exchange Agreement and the transactions contemplated under the Share Exchange Agreement. The Board of Wolf has resigned their positions and the Board of Directors of the Company, has assumed the directorships of Wolf.

The Company will account for the merger as a reverse merger, in this scenario, the financial results of the Company will be reported on a historical as if the Company had acquired Wolf.

(C) Creditor Forbearance

The Company owes $1,425,317 to certain parties that are past due since 2008 and 2009. The parties have agreed to standstill and forbear the amounts owing provided that the Company agree to repay the amounts owed on the following basis: 15% of all monies raised by the Company subsequent to February 11, 2010 shall be set aside for the repayment of the debt until fully repaid. The Board of Directors of the Company has agreed to the repayment terms and authorized same. Such obligations shall also become obligations of any public company that results after the reverse merger the Company is completing with Wolf Resources, Inc.

45

AIRLINE INTELLIGENCE SYSTEMS INC.

(A Development Stage Company)

Notes to Consolidated Financial Statements

For the years ended December 31, 2009, 2008 and 2007

16.  Subsequent Events (continued)

(D) Issuance of stock options

The Company issued 5,055,000 options to employees and consultants with a strike price of $0.25, vesting over various dates. These options shall immediately vest upon a change of control of the Company.

(E) Issuance of common stock upon exercise of warrants

The Company issued 2,841,671 common shares to warrants holders for the gross proceeds of $ 2,876 and 6,000 warrants expired upon go public event described in (B) above.

46