ASSETS

Current Assets

Cash

Expense advances made to a related party

Advances to affiliate

Total current assets

TOTAL ASSETS

LIABILITIES

Current Liabilities

Accounts payable and accrued liabilities

Accounts payable – related party

Advances payable

Total current liabilities

STOCKHOLDERS’ EQUITY (DEFICIT)

Preferred stock, $0.0001 par value, 300,000,000 shares authorized, 250,000,000 shares undesignated

Series A convertible preferred stock, $0.0001 par value, 50,000,000 shares authorized, 8,888,888 shares issued and outstanding

Common stock, $0.0001 par value, 500,000,000 shares authorized, 19,917,571 and 10,106,066 shares issued and outstanding

Additional paid-in capital

Subscription receivable

Deficit accumulated during the development stage

Total stockholders’ equity (deficit)

TOTAL LIABILITIES AND STOCKHOLDERS’ EQUITY (DEFICIT)

Consulting and technology development services

Sales and marketing services

Management and advisory services

Accounting and audit

Legal services

Other general and administrative

Net loss

Adjustments to reconcile net loss to net cash used in operating activities:

Common shares issued for services

Warrant expense

Changes in operating assets and liabilities:

Expense advances to a related party

Accounts Payable – Related Party

Accounts payable and accrued liabilities

Advances to affiliate

Advances received

Proceeds from exercise of warrant

Proceeds from issuance of preferred stock

Proceeds from issuance of common stock

Cash paid for:

Interest

Income taxes

Sale of preferred stock to founders

Sale of common stock to founders

Sale of common stock

Common stock issued for services

Net loss

Balances, December 31, 2009

Sale of common stock

Common stock issued for services

Warrant expense

Issuance of common stock for the exercise of warrants

Net loss

Balances, December 31, 2010

BUSINESS, BASIS OF PRESENTATION AND SIGNIFICANT ACCOUNTING POLICIES

Organization

Mount Knowledge USA, INC. (“the Company”) is a privately held company and was incorporated in the State of Nevada, U.S.A., on September 1, 2009. The Company’s principal executive offices are in the state of Michigan. The Company was formed for the purpose of providing marketing and sales services of educational bases products and services and, since its formation, has not yet realized any revenues from its planned operations.

Development Stage Company

The Company is a development stage company, as defined by ASC 915 (formerly SFAS 7). The Company is devoting substantially all of its present efforts to developing its business. Costs of start up activities, including organizational costs, are expensed as incurred.

Basic and Diluted Loss per Share

In accordance with ASC Topic 260, “Earnings Per Share” (formerly SFAS 128), the basic loss per common share is computed by dividing net loss available to common stockholders by the weighted average number of common shares outstanding. Diluted loss per common share is computed similar to basic loss per common share except that the denominator is increased to include the number of additional common shares that would have been outstanding if the potential common shares had been issued and if the additional common shares were dilutive. Loss per share is rounded to the nearest penny. The Company’s outstanding common stock warrants and convertible preferred stock were excluded from the diluted loss per share calculation as their impact would have been anti-dilutive.

Income Taxes

The Company has adopted ASC Topic 740, “Accounting for Income Taxes” (formerly SFAS 109). This standard requires the use of an asset and liability approach for financial accounting and reporting on income taxes. If it is more likely than not that some portion or all of a deferred tax asset will not be realized, a valuation allowance is recognized.

Financial Instruments

The Company’s financial instruments consist of cash and expense advances.

Unless otherwise noted, it is management’s opinion that the Company is not exposed to significant interest or credit risks arising from these financial instruments.

Use of Estimates

The preparation of financial statements in accordance with United States generally accepted accounting principles requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities at the date of the financial statements and the reported amounts of revenue and expenses in the reporting period. The Company regularly evaluates estimates and assumptions related to deferred income tax asset valuations. The Company bases its estimates and assumptions on current facts, historical experience and various other factors that it believes to be reasonable under the circumstances, the results of which form the basis for making judgments about the carrying values of assets and liabilities and the accrual of costs and expenses that are not readily apparent from other sources. The actual results experienced by the Company may differ materially and adversely from the Company’s estimates. To the extent there are material differences between the estimates and the actual results, future results of operations will be affected.

Recently Issued Accounting Pronouncements

The Company does not expect the adoption of any recently issued accounting pronouncements to have a significant impact on its financial position, results of operations or cash flows.

GOING CONCERN

The accompanying financial statements have been prepared assuming the Company will continue as a going concern.

As shown in the accompanying financial statements, for the period from September 1, 2009, (inception) through December 31, 2010, the Company generated no revenue and incurred accumulated net losses of $3,209,278. These conditions raise substantial doubt as to the Company’s ability to continue as a going concern. The ability of the Company to continue as a going concern is dependent upon its ability to obtain financing. Management has plans to seek additional capital through debt, and private and public offerings of its common stock. The financial statements do not include any adjustments relating to the recoverability and classification of recorded assets, or the amounts of and classification of liabilities that might be necessary in the event the Company cannot continue in existence.

EXPENSE ADVANCES TO A RELATED PARTY

At December 31, 2010, a company, controlled by a shareholder of Mount Knowledge USA, Inc., providing management and advisory services held prepaid expenses from the Company in the amount of $41,573 (2009 - $45,500). These expense advances are non- interest bearing and will be applied to future services to be rendered.

RELATED PARTY TRANSACTIONS

During the period from September 1, 2009 (inception) through December 31, 2010, the Company incurred the following expenses with related parties in the normal course of business measured at the exchange amount:

sales and marketing services of $507,000 (2009 - $250,000) to a corporate majority shareholder with common directorships; and

management and advisory services of $89,920 (2009 - $15,000) and mileage reimbursement of $1,013 (2009 - $1,200) to a company with common directorships;

technology development services of $417,000 (2009 – Nil) to a corporate shareholder with common directorships.

Accounts payable to related parties totaled $16,840 and zero as of December 31, 2010 and 2009, respectively. These represented payables for services provided by an entity controlled by the Company’s president.

During 2010, the Company made advances to its affiliate, Mount Knowledge Holdings, Inc., totaling $405,950. The advances are unsecured, bear no interest and are due on demand. As of December 31, 2010, the unpaid balance of these advances was $405,950.

During 2010, the Company received cash advances from shareholders totaling $869,354. The advances are unsecured, bear no interest and are due on demand. In March 2011, $719,354 of these advances were converted into 4,795,694 common shares of the Company.

Sales Agent Agreement

On September 4, 2009, the Company entered into an agreement to acquire the assignment of a sales agent agreement with the Company’s sole shareholder at the time, Mount Knowledge Inc. The sales agent agreement was originally executed on March 12, 2009 between Mount Knowledge USA, Inc. and Tianjin You He Trading Co., Ltd. The Company received all rights, title, interest and benefits of the contract; and in addition to assume and agreed to perform all the remaining executor obligations of assignor under the contract.

As consideration for the assignment, the Company gave the assignor rights to purchase 8,888,888 shares of Series A Convertible Preferred Stock at $0.0001 per share, and warrants to purchase 4,233,338 shares of common stock at $0.0001 per share, with a term of 12 months. The rights to purchase the preferred shares and the common stock warrants were issued to the Company’s founders. As the rights to purchase the preferred shares and the common stock warrant were issued at inception to the Company’s founders, the fair value of the instruments was considered to be nominal.

ADVANCES PAYABLE

During 2010, the Company received cash advances totaling $869,354. On December 31, 2010, these advances were converted to notes payable which are unsecured, bear interest at 5% per annum beginning December 31, 2010 and mature on December 31, 2011. In March 2011, $719,354 of these advances was converted into 4,795,694 common shares of the Company.

STOCKHOLDERS’ EQUITY

As of December 31, 2010, the Company’s authorized shares consisted of the following:

300,000,000 preferred shares with 50,000,000 designated as Series A convertible, par value $0.0001

500,000,000 common shares, par value $0.0001

Granted

Exercised

Granted

Income Tax Provision

The provision for income taxes differs from the result which would be obtained by applying the statutory income tax rate of 34% to income before income taxes. The difference results from the following items:

Significant components of the Company’s deferred income tax assets are as follows:

The Company has incurred operating losses of approximately $1,627,786, which, if unutilized, will fully expire in 2030. Future tax benefits, which may arise as a result of these losses, have not been recognized in these financial statements, and have been offset by a valuation allowance.

Between January and March 2011, the Company issued an aggregate of 2,611,667 common shares for cash proceeds of $391,705.

On March 16, 2011, the Company issued an aggregate of 4,795,694 common shares to repay $719,354 of advances payable.