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<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify">Convertible notes payable consisted of the
following:</p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify; text-indent: 0.5in"> </p>
<table cellspacing="0" cellpadding="0" style="font: 12pt Times New Roman, Times, Serif; width: 100%; font-size-adjust: none; font-stretch: normal">
<tr style="vertical-align: bottom">
<td style="text-align: justify"> </td>
<td style="text-align: justify"> </td>
<td colspan="2" id="hdcell" style="border-bottom-style: solid; border-bottom-width: 1pt; text-align: center"><font style="font-size: 10pt"><b>September 30,</b></font><br />
<font style="font-size: 10pt"><b>2016</b></font></td>
<td style="text-align: center"> </td>
<td style="text-align: center"> </td>
<td colspan="2" style="border-bottom-style: solid; border-bottom-width: 1pt">
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: center"><b>December 31,</b></p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: center"><b>2015</b></p></td>
<td style="text-align: center"> </td></tr>
<tr>
<td style="vertical-align: top; text-decoration: underline; text-align: justify"><font style="font-size: 10pt"><u>Secured </u></font></td>
<td style="vertical-align: bottom; text-align: justify"> </td>
<td colspan="2" id="ffcell" style="vertical-align: bottom; text-align: right"> </td>
<td style="vertical-align: bottom; text-align: justify"> </td>
<td style="vertical-align: bottom; text-align: justify"> </td>
<td colspan="2" style="vertical-align: bottom; text-align: right"> </td>
<td style="vertical-align: bottom; text-align: justify"> </td></tr>
<tr style="background-color: #CCEEFF">
<td style="vertical-align: top; text-align: justify"><font style="font-size: 10pt">(a) DART </font></td>
<td style="vertical-align: bottom; width: 1%; text-align: justify"> </td>
<td style="vertical-align: bottom; width: 1%; text-align: justify"><font style="font-size: 10pt">$</font></td>
<td style="vertical-align: bottom; width: 9%; text-align: right"><font style="font-size: 10pt">542,588</font></td>
<td style="vertical-align: bottom; width: 1%; text-align: justify"> </td>
<td style="vertical-align: bottom; width: 1%; text-align: justify"> </td>
<td style="vertical-align: bottom; width: 1%; text-align: justify"><font style="font-size: 10pt">$</font></td>
<td style="vertical-align: bottom; width: 9%; text-align: right"><font style="font-size: 10pt">542,588</font></td>
<td style="vertical-align: bottom; width: 1%; text-align: justify"> </td></tr>
<tr style="background-color: white">
<td style="text-align: justify"> </td>
<td style="vertical-align: bottom; text-align: justify"> </td>
<td style="vertical-align: bottom; text-align: justify"> </td>
<td style="vertical-align: bottom; text-align: right"> </td>
<td style="vertical-align: bottom; text-align: justify"> </td>
<td style="vertical-align: bottom; text-align: justify"> </td>
<td style="vertical-align: bottom; text-align: justify"> </td>
<td style="vertical-align: bottom; text-align: right"> </td>
<td style="vertical-align: bottom; text-align: justify"> </td></tr>
<tr style="background-color: #CCEEFF">
<td style="vertical-align: top; text-decoration: underline; text-align: justify"><font style="font-size: 10pt"><u>Unsecured </u></font></td>
<td style="vertical-align: bottom; text-align: justify"> </td>
<td style="vertical-align: bottom; text-align: justify"> </td>
<td style="vertical-align: bottom; text-align: right"> </td>
<td style="vertical-align: bottom; text-align: justify"> </td>
<td style="vertical-align: bottom; text-align: justify"> </td>
<td style="vertical-align: bottom; text-align: justify"> </td>
<td style="vertical-align: bottom; text-align: right"> </td>
<td style="vertical-align: bottom; text-align: justify"> </td></tr>
<tr style="background-color: white">
<td style="vertical-align: top; text-align: justify"><font style="font-size: 10pt">(b) Convertible notes with fixed conversion features</font></td>
<td style="vertical-align: bottom; text-align: justify"> </td>
<td style="vertical-align: bottom; text-align: justify"> </td>
<td style="vertical-align: bottom; text-align: right"><font style="font-size: 10pt">905,512</font></td>
<td style="vertical-align: bottom; text-align: justify"> </td>
<td style="vertical-align: bottom; text-align: justify"> </td>
<td style="vertical-align: bottom; text-align: justify"> </td>
<td style="vertical-align: bottom; text-align: right"><font style="font-size: 10pt">910,512</font></td>
<td style="vertical-align: bottom; text-align: justify"> </td></tr>
<tr style="background-color: #CCEEFF">
<td style="vertical-align: top; text-align: justify"><font style="font-size: 10pt">(c) Convertible notes with adjustable conversion features</font></td>
<td style="vertical-align: bottom; text-align: justify"> </td>
<td style="vertical-align: bottom; text-align: justify"> </td>
<td style="vertical-align: bottom; text-align: right"><font style="font-size: 10pt">-</font></td>
<td style="vertical-align: bottom; text-align: justify"> </td>
<td style="vertical-align: bottom; text-align: justify"> </td>
<td style="vertical-align: bottom; text-align: justify"> </td>
<td style="vertical-align: bottom; text-align: right"><font style="font-size: 10pt">824,861</font></td>
<td style="vertical-align: bottom; text-align: justify"> </td></tr>
<tr style="background-color: white">
<td style="vertical-align: top; text-align: justify"><font style="font-size: 10pt">Total convertible notes</font></td>
<td style="vertical-align: bottom; text-align: justify"> </td>
<td style="vertical-align: bottom; border-top-style: solid; border-top-width: 1pt; text-align: justify"> </td>
<td style="vertical-align: bottom; border-top-style: solid; border-top-width: 1pt; text-align: right"><font style="font-size: 10pt">1,448,100</font></td>
<td style="vertical-align: bottom; text-align: justify"> </td>
<td style="vertical-align: bottom; text-align: justify"> </td>
<td style="vertical-align: bottom; border-top-style: solid; border-top-width: 1pt; text-align: justify"> </td>
<td style="vertical-align: bottom; border-top-style: solid; border-top-width: 1pt; text-align: right"><font style="font-size: 10pt">2,277,961</font></td>
<td style="vertical-align: bottom; text-align: justify"> </td></tr>
<tr style="background-color: #CCEEFF">
<td style="vertical-align: top; text-align: justify"><font style="font-size: 10pt">Discount on convertible notes </font></td>
<td style="vertical-align: bottom; text-align: justify"> </td>
<td style="vertical-align: bottom; text-align: justify"> </td>
<td style="vertical-align: bottom; text-align: right"><font style="font-size: 10pt">-</font></td>
<td style="vertical-align: bottom; text-align: justify"> </td>
<td style="vertical-align: bottom; text-align: justify"> </td>
<td style="vertical-align: bottom; text-align: justify"> </td>
<td style="vertical-align: bottom; text-align: right"><font style="font-size: 10pt">(14,266</font></td>
<td style="vertical-align: bottom; text-align: justify"><font style="font-size: 10pt">)</font></td></tr>
<tr style="background-color: white">
<td style="vertical-align: top; text-align: justify"><font style="font-size: 10pt">Convertible notes</font></td>
<td style="vertical-align: bottom; text-align: justify"> </td>
<td style="vertical-align: bottom; border-top-style: solid; border-top-width: 1pt; border-bottom-style: solid; border-bottom-width: 1pt; text-align: justify"><font style="font-size: 10pt">$</font></td>
<td style="vertical-align: bottom; border-top-style: solid; border-top-width: 1pt; border-bottom-style: solid; border-bottom-width: 1pt; text-align: right"><font style="font-size: 10pt">1,448,100</font></td>
<td style="vertical-align: bottom; text-align: justify"> </td>
<td style="vertical-align: bottom; text-align: justify"> </td>
<td style="vertical-align: bottom; border-top-style: solid; border-top-width: 1pt; border-bottom-style: solid; border-bottom-width: 1pt; text-align: justify"><font style="font-size: 10pt">$</font></td>
<td style="vertical-align: bottom; border-top-style: solid; border-top-width: 1pt; border-bottom-style: solid; border-bottom-width: 1pt; text-align: right"><font style="font-size: 10pt">2,263,695</font></td>
<td style="vertical-align: bottom; text-align: justify"> </td></tr>
</table>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify; text-indent: 0.5in"> </p>
<table cellspacing="0" cellpadding="0" style="font: 12pt Times New Roman, Times, Serif; width: 100%; font-size-adjust: none; font-stretch: normal">
<tr style="vertical-align: top">
<td style="width: 4%; text-align: justify"><font style="font-size: 10pt">(a)</font></td>
<td style="text-align: justify"><font style="font-size: 10pt">At September 30, 2016 and December 31, 2015, $542,588 of notes payables are due to DART/Citco Global. The notes are convertible into shares of the Company’s common stock based on adjustable conversion prices, are secured by all of the Company’s assets, and are currently in default. The adjustable conversion feature of the notes are accounted for as derivative liabilities (see Note 6). DART/Citco Global did not process any conversions of notes into shares of common stock in fiscal 2016 or 2015. The Company has been in contact with the note holder who has indicated that it has no present intention of exercising its right to convert the debentures into shares of the Company's common stock. Under the terms of the secured debentures, we are restricted in our ability to issue additional securities as long as any portion of the principal or interest on the secured debentures remains outstanding. During 2016 or 2015, we did not obtain DART/Citco Global’s written consent related to any of our financing agreements.</font></td></tr>
<tr>
<td style="text-align: justify"> </td>
<td style="text-align: justify"> </td></tr>
<tr style="vertical-align: top">
<td style="text-align: justify"><font style="font-size: 10pt">(b)</font></td>
<td style="text-align: justify"><font style="font-size: 10pt">Convertible notes payable consisted of thirteen unsecured convertible notes convertible at a fixed amount (”fixed convertible notes”) into 13 shares of the Company’s common stock, at fixed prices ranging from $1,950,000 to $9,750,000,000 per share, as defined in the agreements. The notes bear interest at 0% to 18% per annum, and were due in various dates through 2015. All of the fixed convertible notes are currently in default and the Company is pursuing settlements with certain of the holders.</font></td></tr>
<tr>
<td style="text-align: justify"> </td>
<td style="text-align: justify"> </td></tr>
<tr style="vertical-align: top">
<td style="text-align: justify"> </td>
<td style="text-align: justify"><font style="font-size: 10pt">At December 31, 2015, the balance of the accrued interest on the fixed convertible notes was $932,272. During the interim period ended September 30, 2016, interest expense of $60,320 was recorded, and at September 30, 2016, the balance of accrued interest on the fixed convertible notes was $966,419.</font></td></tr>
<tr>
<td style="text-align: justify"> </td>
<td style="text-align: justify"> </td></tr>
<tr style="vertical-align: top">
<td style="text-align: justify"><font style="font-size: 10pt">(c)</font></td>
<td style="text-align: justify"><font style="font-size: 10pt">At December 31, 2015, the balance of the convertible notes with adjustable conversion features (“adjustable convertible notes”) was $824,861. During the interim period ended September 30, 2016, the Company repaid $681,738 of note principal, and note holders converted $143,123 of note principal into shares of the Company’s common stock. At September 30, 2016, the balance of adjustable convertible notes was $0.</font></td></tr>
</table>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify; text-indent: 0.5in"> </p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify">At December 31, 2015, the balance of the accrued
interest on the adjustable convertible notes was $298,235. During the interim period ended September 30, 2016, the Company paid
$189,443 of accrued interest, and note holders converted $49,560 of accrued interest into shares of common stock. During the interim
period ended September 30, 2016, interest expense of $13,278 was accrued, and $71,153 was forgiven and written-off. At September
30, 2016, the balance of accrued interest on adjustable convertible notes was $1,357.</p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify; text-indent: 0.5in"> </p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify">At the option of the holder, the adjustable
convertible notes were convertible into shares of common stock of the Company at a price per share discount of 40% of the Company’s
common stock trading market price during a certain time period. The Company determined that the conversion feature of the notes
were not fixed, and recorded them as a derivative liability. During the interim period ended September 30, 2016, the payment and
conversion of the convertible notes resulted in the Company recording a gain of $635,600 related to the extinguishment of the corresponding
derivative liability (see Note 6).</p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0 0 0 34.1pt; text-align: justify"> 	</p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify">At September 30, 2016 and December 31, 2015,
accrued interest due for all convertible notes was $967,776 and $1,230,507 respectively, and is included in accrued interest in
the accompanying balance sheets. Interest expense for all convertible notes payable for the interim periods ended September 30,
2016 and 2015 was $73,598 and $161,756, respectively.</p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify">Convertible notes payable - related parties
consisted of twelve unsecured convertible notes payable. Six notes totaling $268,000 are due to the Company’s Chief Executive
Officer, at a compounded interest rate of 8% per annum; two notes totaling $57,000 are due to the Company’s VP of Technology,
interest at prime plus 2% and prime plus 4% per annum; and four notes totaling $30,000 are due to the spouse of the Company’s
Chief Technology Officer at a compounded interest rate of 8% per annum. All of the notes are convertible at a fixed conversion
price of $9,750,000,000 per share, as defined in the agreements, and have extended due dates of December 31, 2016. At September
30, 2016 and December 31, 2015, the balance of the outstanding convertible notes payable - related parties was $355,500, respectively.</p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify; text-indent: 0.5in"> </p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify">At December 31, 2015, accrued interest due
for the convertible notes – related parties was $391,001. During the interim period ended September 30, 2016, interest of
$41,289 was accrued and at September 30, 2016, accrued interest due on convertible notes payable – related parties was $432,290.</p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify">Notes payable consisted of the following:</p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify; text-indent: 0.5in"> </p>
<table cellspacing="0" cellpadding="0" style="font: 12pt Times New Roman, Times, Serif; width: 100%; font-size-adjust: none; font-stretch: normal">
<tr style="vertical-align: bottom">
<td style="text-align: justify"> </td>
<td style="text-align: justify"> </td>
<td colspan="2" id="hdcell" style="border-bottom-style: solid; border-bottom-width: 1pt; text-align: center"><font style="font-size: 10pt"><b>September 30,</b></font><br />
<font style="font-size: 10pt"><b>2016</b></font></td>
<td style="text-align: center"> </td>
<td style="text-align: center"> </td>
<td colspan="2" style="border-bottom-style: solid; border-bottom-width: 1pt">
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: center"><b>December 31,</b></p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: center"><b>2015</b></p></td>
<td style="text-align: justify"> </td></tr>
<tr>
<td style="vertical-align: top; text-decoration: underline; text-align: justify"><font style="font-size: 10pt"><u>Secured </u></font></td>
<td style="vertical-align: bottom; text-align: justify"> </td>
<td colspan="2" id="ffcell" style="vertical-align: bottom; text-align: right"> </td>
<td style="vertical-align: bottom; text-align: justify"> </td>
<td style="vertical-align: bottom; text-align: justify"> </td>
<td colspan="2" style="vertical-align: bottom; text-align: right"> </td>
<td style="vertical-align: bottom; text-align: justify"> </td></tr>
<tr style="background-color: #CCEEFF">
<td style="vertical-align: top; text-align: justify"><font style="font-size: 10pt">(a) H. Group Partners, Inc.</font></td>
<td style="vertical-align: bottom; width: 1%; text-align: justify"> </td>
<td style="vertical-align: bottom; width: 1%; text-align: justify"><font style="font-size: 10pt">$</font></td>
<td style="vertical-align: bottom; width: 9%; text-align: right"><font style="font-size: 10pt">-</font></td>
<td style="vertical-align: bottom; width: 1%; text-align: justify"> </td>
<td style="vertical-align: bottom; width: 1%; text-align: justify"> </td>
<td style="vertical-align: bottom; width: 1%; text-align: justify"><font style="font-size: 10pt">$</font></td>
<td style="vertical-align: bottom; width: 9%; text-align: right"><font style="font-size: 10pt">310,000</font></td>
<td style="vertical-align: bottom; width: 1%; text-align: justify"> </td></tr>
<tr style="background-color: white">
<td style="vertical-align: top; text-align: justify"><font style="font-size: 10pt">(b) Promissory note - factoring </font></td>
<td style="vertical-align: bottom; text-align: justify"> </td>
<td style="vertical-align: bottom; text-align: justify"> </td>
<td style="vertical-align: bottom; text-align: right"><font style="font-size: 10pt">-</font></td>
<td style="vertical-align: bottom; text-align: justify"> </td>
<td style="vertical-align: bottom; text-align: justify"> </td>
<td style="vertical-align: bottom; text-align: justify"> </td>
<td style="vertical-align: bottom; text-align: right"><font style="font-size: 10pt">35,200</font></td>
<td style="vertical-align: bottom; text-align: justify"> </td></tr>
<tr style="background-color: #CCEEFF">
<td style="text-align: justify"> </td>
<td style="vertical-align: bottom; text-align: justify"> </td>
<td style="vertical-align: bottom; text-align: justify"> </td>
<td style="vertical-align: bottom; text-align: right"> </td>
<td style="vertical-align: bottom; text-align: justify"> </td>
<td style="vertical-align: bottom; text-align: justify"> </td>
<td style="vertical-align: bottom; text-align: justify"> </td>
<td style="vertical-align: bottom; text-align: right"> </td>
<td style="vertical-align: bottom; text-align: justify"> </td></tr>
<tr style="background-color: white">
<td style="vertical-align: top; text-decoration: underline; text-align: justify"><font style="font-size: 10pt"><u>Unsecured</u></font></td>
<td style="vertical-align: bottom; text-align: justify"> </td>
<td style="vertical-align: bottom; text-align: justify"> </td>
<td style="vertical-align: bottom; text-align: right"> </td>
<td style="vertical-align: bottom; text-align: justify"> </td>
<td style="vertical-align: bottom; text-align: justify"> </td>
<td style="vertical-align: bottom; text-align: justify"> </td>
<td style="vertical-align: bottom; text-align: right"> </td>
<td style="vertical-align: bottom; text-align: justify"> </td></tr>
<tr style="background-color: #CCEEFF">
<td style="vertical-align: top; text-align: justify"><font style="font-size: 10pt">(c) Promissory notes </font></td>
<td style="vertical-align: bottom; text-align: justify"> </td>
<td style="vertical-align: bottom; text-align: justify"> </td>
<td style="vertical-align: bottom; text-align: right"><font style="font-size: 10pt">446,824</font></td>
<td style="vertical-align: bottom; text-align: justify"> </td>
<td style="vertical-align: bottom; text-align: justify"> </td>
<td style="vertical-align: bottom; text-align: justify"> </td>
<td style="vertical-align: bottom; text-align: right"><font style="font-size: 10pt">875,609</font></td>
<td style="vertical-align: bottom; text-align: justify"> </td></tr>
<tr style="background-color: white">
<td style="vertical-align: top; text-align: justify"><font style="font-size: 10pt">(d) Promissory notes – StrikeForce Investor Group</font></td>
<td style="vertical-align: bottom; text-align: justify"> </td>
<td style="vertical-align: bottom; text-align: justify"> </td>
<td style="vertical-align: bottom; text-align: right"><font style="font-size: 10pt">1,345,000</font></td>
<td style="vertical-align: bottom; text-align: justify"> </td>
<td style="vertical-align: bottom; text-align: justify"> </td>
<td style="vertical-align: bottom; text-align: justify"> </td>
<td style="vertical-align: bottom; text-align: right"><font style="font-size: 10pt">1,475,000</font></td>
<td style="vertical-align: bottom; text-align: justify"> </td></tr>
<tr style="background-color: #CCEEFF">
<td style="text-align: justify"> </td>
<td style="vertical-align: bottom; text-align: justify"> </td>
<td style="vertical-align: bottom; border-top-style: solid; border-top-width: 1pt; text-align: justify"> </td>
<td style="vertical-align: bottom; border-top-style: solid; border-top-width: 1pt; text-align: right"> </td>
<td style="vertical-align: bottom; text-align: justify"> </td>
<td style="vertical-align: bottom; text-align: justify"> </td>
<td style="vertical-align: bottom; border-top-style: solid; border-top-width: 1pt; text-align: justify"> </td>
<td style="vertical-align: bottom; border-top-style: solid; border-top-width: 1pt; text-align: right"> </td>
<td style="vertical-align: bottom; text-align: justify"> </td></tr>
<tr style="background-color: white">
<td style="vertical-align: top; text-align: justify"><font style="font-size: 10pt">Total notes payable </font></td>
<td style="vertical-align: bottom; text-align: justify"> </td>
<td style="vertical-align: bottom; text-align: justify"> </td>
<td style="vertical-align: bottom; text-align: right"><font style="font-size: 10pt">1,791,824</font></td>
<td style="vertical-align: bottom; text-align: justify"> </td>
<td style="vertical-align: bottom; text-align: justify"> </td>
<td style="vertical-align: bottom; text-align: justify"> </td>
<td style="vertical-align: bottom; text-align: right"><font style="font-size: 10pt">2,695,809</font></td>
<td style="vertical-align: bottom; text-align: justify"> </td></tr>
<tr style="background-color: #CCEEFF">
<td style="vertical-align: top; text-align: justify"><font style="font-size: 10pt">Discount on secured notes payable</font></td>
<td style="vertical-align: bottom; text-align: justify"> </td>
<td style="vertical-align: bottom; text-align: justify"> </td>
<td style="vertical-align: bottom; text-align: right"><font style="font-size: 10pt">-</font></td>
<td style="vertical-align: bottom; text-align: justify"> </td>
<td style="vertical-align: bottom; text-align: justify"> </td>
<td style="vertical-align: bottom; text-align: justify"> </td>
<td style="vertical-align: bottom; text-align: right"><font style="font-size: 10pt">(20,027</font></td>
<td style="vertical-align: bottom; text-align: justify"><font style="font-size: 10pt">)</font></td></tr>
<tr style="background-color: white">
<td style="vertical-align: top; text-align: justify"><font style="font-size: 10pt">Notes payable, net of discount</font></td>
<td style="vertical-align: bottom; text-align: justify"> </td>
<td style="vertical-align: bottom; border-top-style: solid; border-top-width: 1pt; text-align: justify"> </td>
<td style="vertical-align: bottom; border-top-style: solid; border-top-width: 1pt; text-align: right"><font style="font-size: 10pt">1,791,824</font></td>
<td style="vertical-align: bottom; text-align: justify"> </td>
<td style="vertical-align: bottom; text-align: justify"> </td>
<td style="vertical-align: bottom; border-top-style: solid; border-top-width: 1pt; text-align: justify"> </td>
<td style="vertical-align: bottom; border-top-style: solid; border-top-width: 1pt; text-align: right"><font style="font-size: 10pt">2,675,782</font></td>
<td style="vertical-align: bottom; text-align: justify"> </td></tr>
<tr style="background-color: #CCEEFF">
<td style="vertical-align: top; text-align: justify"><font style="font-size: 10pt">Long-term portion</font></td>
<td style="vertical-align: bottom; text-align: justify"> </td>
<td style="vertical-align: bottom; text-align: justify"> </td>
<td style="vertical-align: bottom; text-align: right"><font style="font-size: 10pt">-</font></td>
<td style="vertical-align: bottom; text-align: justify"> </td>
<td style="vertical-align: bottom; text-align: justify"> </td>
<td style="vertical-align: bottom; text-align: justify"> </td>
<td style="vertical-align: bottom; text-align: right"><font style="font-size: 10pt">(222,991</font></td>
<td style="vertical-align: bottom; text-align: justify"><font style="font-size: 10pt">)</font></td></tr>
<tr style="background-color: white">
<td style="text-align: justify"> </td>
<td style="vertical-align: bottom; text-align: justify"> </td>
<td style="vertical-align: bottom; border-top-style: solid; border-top-width: 1pt; text-align: justify"> </td>
<td style="vertical-align: bottom; border-top-style: solid; border-top-width: 1pt; text-align: right"> </td>
<td style="vertical-align: bottom; text-align: justify"> </td>
<td style="vertical-align: bottom; text-align: justify"> </td>
<td style="vertical-align: bottom; border-top-style: solid; border-top-width: 1pt; text-align: justify"> </td>
<td style="vertical-align: bottom; border-top-style: solid; border-top-width: 1pt; text-align: right"> </td>
<td style="vertical-align: bottom; text-align: justify"> </td></tr>
<tr style="background-color: #CCEEFF">
<td style="vertical-align: top; text-align: justify"><font style="font-size: 10pt">Promissory notes, current maturities</font></td>
<td style="vertical-align: bottom; text-align: justify"> </td>
<td style="vertical-align: bottom; border-bottom: black 2.25pt double; text-align: justify"><font style="font-size: 10pt">$</font></td>
<td style="border-bottom: black 2.25pt double; vertical-align: bottom; text-align: right"><font style="font-size: 10pt">1,791,824</font></td>
<td style="vertical-align: bottom; text-align: justify"> </td>
<td style="vertical-align: bottom; text-align: justify"> </td>
<td style="vertical-align: bottom; border-bottom: black 2.25pt double; text-align: justify"><font style="font-size: 10pt">$</font></td>
<td style="border-bottom: black 2.25pt double; vertical-align: bottom; text-align: right"><font style="font-size: 10pt">2,452,791</font></td>
<td style="vertical-align: bottom; text-align: justify"> </td></tr>
</table>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify; text-indent: 0.5in"> </p>
<table cellspacing="0" cellpadding="0" style="font: 12pt Times New Roman, Times, Serif; width: 100%; font-size-adjust: none; font-stretch: normal">
<tr style="vertical-align: top">
<td style="width: 4%; text-align: justify"><font style="font-size: 10pt">(a)</font> </td>
<td style="text-align: justify"><font style="font-size: 10pt">In May 2015, the Company executed a secured promissory note with an unrelated party for $310,000, bearing interest at 10% per annum maturing through March 31, 2018. The note was secured by the Company's intellectual property, accounts, fixtures and property. As an inducement to make the loan, the note holder received 16,667 shares Series B preferred stock at $1.50 per share that are convertible into shares of the Company's common stock at a 30% discount to current market value, as defined. During the interim period ended September 30, 2016, the Company repaid $310,000 of note principal, $23,611 of accrued interest, and $204,560 of additional interest was paid to the note holder.</font></td></tr>
<tr>
<td style="text-align: justify"> </td>
<td style="text-align: justify"> </td></tr>
<tr style="vertical-align: top">
<td style="text-align: justify"><font style="font-size: 10pt">(b)</font></td>
<td style="text-align: justify"><font style="font-size: 10pt">In October 2015, the Company entered into a promissory note agreement for $50,400, secured by all accounts, chattel paper, equipment, general intangibles, instruments and inventory, as defined in the agreement. As December 31, 2015, the balance of the note was $35,200. During the interim period ended September 30, 2016, the Company had repaid the balance of $35,200.</font></td></tr>
<tr>
<td style="text-align: justify"> </td>
<td style="text-align: justify"> </td></tr>
<tr style="vertical-align: top">
<td style="text-align: justify"><font style="font-size: 10pt">(c)</font></td>
<td style="text-align: justify"><font style="font-size: 10pt">Notes payable consists of various unsecured promissory notes with interest up to 10% per annum. As of September 30, 2016, notes aggregating $397,500 were in default, and the notes carry default interest rates up to 14% per annum. The Company is currently pursuing settlements with certain of the note holders. As of December 31, 2015, the balance due under these notes was $875,609. During the interim period ended September 30, 2016, the Company issued an unsecured promissory note for $75,000 to Cyber Safety (see Note 12). Also during the period, the Company paid off note principal totaling $503,785. At September 30, 2016, the balance due under these notes was $446,824.</font></td></tr>
</table>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify; text-indent: 0.5in"> </p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify">At December 31, 2015, the balance of the accrued
interest on the notes payable-various was $438,782. During the interim period ended September 30, 2016, $37,001 of accrued interest
was recorded, and at September 30, 2016, accrued interest on the notes payable-various was $472,619.</p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify; text-indent: 0.5in"> </p>
<table cellspacing="0" cellpadding="0" style="font: 12pt Times New Roman, Times, Serif; width: 100%; font-size-adjust: none; font-stretch: normal">
<tr style="vertical-align: top">
<td style="width: 4%; text-align: justify"><font style="font-size: 10pt">(d)</font></td>
<td style="text-align: justify"><font style="font-size: 10pt">Notes payable to unsecured investors, interest at 10% per annum, originally due in 2011, and currently in default. At December 31, 2015, the balance of notes payable-investors was $1,475,000. During the interim period ended September 30, 2016, the Company repaid $130,000 of principal and at September 30, 2016, the balance of notes payable-investors was $1,345,000. During the interim period ended September 30, 2016, two note holders assigned delinquent notes totaling $150,000, to two unrelated parties, who agreed to extend payment of the two notes to April 2017. The Company is currently pursuing extensions on all of the remaining notes.</font></td></tr>
</table>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify; text-indent: 0.5in"> </p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify">At December 31, 2015, the balance of the accrued
interest on the notes payable-investors was $1,293,092. During the interim period ended September 30, 2016, $108,664 of accrued
interest was recorded, and at September 30, 2016, accrued interest on the notes payable-investors was $1,401,757.</p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify; text-indent: 0.5in"> </p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify">At September 30, 2016 and December 31, 2015,
accrued interest due for all notes payable above was $1,874,736 and $1,731,874, respectively, and is included in accrued interest
in the accompanying balance sheets. Interest expense for notes payable for the interim periods ended September 30, 2016 and 2015
was $169,276 and $143,943, respectively.</p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify">Notes payable- related party consist of eighteen
unsecured notes payable to the Company’s Chief Executive Officer ranging in interest rates of 0% per annum to 10% per annum.
The notes have extended due dates of December 31, 2016, with the exception of one note for $19,875 due in January 2017, and all
are shown as current liabilities. The balance of the outstanding notes payable - related party was $742,513 and $742,513 as of
September 30, 2016 and December 31, 2015, respectively.</p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify; text-indent: 0.5in"> </p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify">At September 30, 2016 and December 31, 2015,
accrued interest due for the notes – related party was $590,751 and $548,653, respectively, and is included in accrued interest
in the accompanying balance sheets. Interest expense for notes payable - related parties for the interim periods ended September
30, 2016 and 2015 was $42,098 and $41,945, respectively.</p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify">Under authoritative guidance issued by the
FASB, instruments which do not have fixed settlement provisions, are deemed to be derivative instruments. The conversion feature
of certain of the Company’s convertible notes payable (see Note 2) did not have fixed settlement provisions because the ultimate
determination of shares to be issued could exceed current available authorized shares.</p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify; text-indent: 0.5in"> </p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify">In accordance with the FASB authoritative guidance,
the conversion feature of the financial instruments was separated from the host contract and recognized as a derivative instrument.
The conversion feature of the financial instruments has been characterized as a derivative liability and was re-measured at the
end of every reporting period with the change in value reported in the statement of operations.</p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify; text-indent: 0.5in"> </p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify">The derivative liability was valued at the
following dates using a probability weighted Black-Scholes-Merton model with the following assumptions:</p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify; text-indent: 0.5in"> </p>
<table cellspacing="0" cellpadding="0" style="font: 12pt Times New Roman, Times, Serif; width: 100%; font-size-adjust: none; font-stretch: normal">
<tr style="vertical-align: bottom">
<td style="text-align: justify"> </td>
<td style="text-align: justify"> </td>
<td colspan="2" id="hdcell" style="border-bottom-style: solid; border-bottom-width: 1pt; text-align: center"><font style="font-size: 10pt"><b>September 30,</b></font><br />
<font style="font-size: 10pt"><b>2016</b></font></td>
<td style="text-align: justify"> </td>
<td style="text-align: justify"> </td>
<td colspan="2" style="border-bottom-style: solid; border-bottom-width: 1pt; padding-left: 15.9pt; text-align: center"><font style="font-size: 10pt"><b>December 31, 2015</b></font></td>
<td style="text-align: justify"> </td></tr>
<tr>
<td style="vertical-align: top; text-align: justify"><font style="font-size: 10pt">Conversion feature:</font></td>
<td style="vertical-align: bottom; text-align: justify"> </td>
<td colspan="2" id="ffcell" style="vertical-align: bottom; text-align: right"> </td>
<td style="vertical-align: bottom; text-align: justify"> </td>
<td style="vertical-align: bottom; text-align: justify"> </td>
<td colspan="2" style="vertical-align: bottom; text-align: right"> </td>
<td style="vertical-align: bottom; text-align: justify"> </td></tr>
<tr style="background-color: #CCEEFF">
<td style="vertical-align: top; padding-left: 11.25pt; text-align: justify"><font style="font-size: 10pt">Risk-free interest rate</font></td>
<td style="vertical-align: bottom; width: 1%; text-align: justify"> </td>
<td style="vertical-align: bottom; width: 1%; text-align: justify"> </td>
<td style="vertical-align: bottom; width: 9%; text-align: right"><font style="font-size: 10pt">0.16</font></td>
<td style="vertical-align: bottom; width: 1%; text-align: justify"><font style="font-size: 10pt">%</font></td>
<td style="vertical-align: bottom; width: 1%; text-align: justify"> </td>
<td style="vertical-align: bottom; width: 1%; text-align: justify"> </td>
<td style="vertical-align: bottom; width: 9%; text-align: right"><font style="font-size: 10pt">0.16</font></td>
<td style="vertical-align: bottom; width: 1%; text-align: justify"><font style="font-size: 10pt">%</font></td></tr>
<tr style="background-color: white">
<td style="vertical-align: top; padding-left: 11.25pt; text-align: justify"><font style="font-size: 10pt">Expected volatility</font></td>
<td style="vertical-align: bottom; text-align: justify"> </td>
<td style="vertical-align: bottom; text-align: justify"> </td>
<td style="vertical-align: bottom; text-align: right"><font style="font-size: 10pt">75</font></td>
<td style="vertical-align: bottom; text-align: justify"><font style="font-size: 10pt">%</font></td>
<td style="vertical-align: bottom; text-align: justify"> </td>
<td style="vertical-align: bottom; text-align: justify"> </td>
<td style="vertical-align: bottom; text-align: right"><font style="font-size: 10pt">100</font></td>
<td style="vertical-align: bottom; text-align: justify"><font style="font-size: 10pt">%</font></td></tr>
<tr style="background-color: #CCEEFF">
<td style="vertical-align: top; padding-left: 11.25pt; text-align: justify"><font style="font-size: 10pt">Expected life (in years)</font></td>
<td style="vertical-align: bottom; text-align: justify"> </td>
<td colspan="2" style="text-align: right"><font style="font-size: 10pt">1 year</font></td>
<td style="vertical-align: bottom; text-align: justify"> </td>
<td style="vertical-align: bottom; text-align: justify"> </td>
<td colspan="2" style="text-align: right"><font style="font-size: 10pt">.25 to 5 years</font></td>
<td style="vertical-align: bottom; text-align: justify"> </td></tr>
<tr style="background-color: white">
<td style="vertical-align: top; padding-left: 11.25pt; text-align: justify"><font style="font-size: 10pt">Expected dividend yield</font></td>
<td style="vertical-align: bottom; text-align: justify"> </td>
<td style="vertical-align: bottom; text-align: justify"> </td>
<td style="vertical-align: bottom; text-align: right"><font style="font-size: 10pt">-</font></td>
<td style="vertical-align: bottom; text-align: justify"> </td>
<td style="vertical-align: bottom; text-align: justify"> </td>
<td style="vertical-align: bottom; text-align: justify"> </td>
<td style="vertical-align: bottom; text-align: right"><font style="font-size: 10pt">-</font></td>
<td style="vertical-align: bottom; text-align: justify"> </td></tr>
<tr style="background-color: #CCEEFF">
<td style="text-align: justify"> </td>
<td style="vertical-align: bottom; text-align: justify"> </td>
<td style="vertical-align: bottom; text-align: justify"> </td>
<td style="vertical-align: bottom; text-align: right"> </td>
<td style="vertical-align: bottom; text-align: justify"> </td>
<td style="vertical-align: bottom; text-align: justify"> </td>
<td style="vertical-align: bottom; text-align: justify"> </td>
<td style="vertical-align: bottom; text-align: right"> </td>
<td style="vertical-align: bottom; text-align: justify"> </td></tr>
<tr style="background-color: white">
<td style="vertical-align: top; text-align: justify"><font style="font-size: 10pt">Fair Value:</font></td>
<td style="vertical-align: bottom; text-align: justify"> </td>
<td style="vertical-align: bottom; text-align: justify"> </td>
<td style="vertical-align: bottom; text-align: right"> </td>
<td style="vertical-align: bottom; text-align: justify"> </td>
<td style="vertical-align: bottom; text-align: justify"> </td>
<td style="vertical-align: bottom; text-align: justify"> </td>
<td style="vertical-align: bottom; text-align: right"> </td>
<td style="vertical-align: bottom; text-align: justify"> </td></tr>
<tr style="background-color: #CCEEFF">
<td style="vertical-align: top; padding-left: 11.25pt; text-align: justify"><font style="font-size: 10pt">Conversion feature</font></td>
<td style="vertical-align: bottom; text-align: justify"> </td>
<td style="vertical-align: bottom; border-bottom-style: double; border-bottom-width: 2.25pt; text-align: justify"><font style="font-size: 10pt">$</font></td>
<td style="vertical-align: bottom; border-bottom-style: double; border-bottom-width: 2.25pt; text-align: right"><font style="font-size: 10pt">256,654</font></td>
<td style="vertical-align: bottom; text-align: justify"> </td>
<td style="vertical-align: bottom; text-align: justify"> </td>
<td style="vertical-align: bottom; border-bottom-style: double; border-bottom-width: 2.25pt; text-align: justify"><font style="font-size: 10pt">$</font></td>
<td style="vertical-align: bottom; border-bottom-style: double; border-bottom-width: 2.25pt; text-align: right"><font style="font-size: 10pt">989,019</font></td>
<td style="vertical-align: bottom; text-align: justify"> </td></tr>
</table>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify; text-indent: 0.5in"> </p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify">The risk-free interest rate was based on rates
established by the Federal Reserve Bank. The expected volatility is based on the historical volatility of a group of comparable
public companies. The expected life of the conversion feature of the notes was based on the remaining terms of the related notes.
The expected dividend yield was based on the fact that the Company has not customarily paid dividends to its common stockholders
in the past and does not expect to pay dividends to its common stockholders in the future.</p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify; text-indent: 0.5in"> </p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify">At December 31, 2015, the balance of the derivative
liabilities was $989,019. During the nine months ended September 30, 2016, convertible notes and accrued interest totaling $1,087,707
were converted into shares of common stock or paid off in cash, and the Company recorded a gain of $635,600 related to the extinguishment
of the corresponding derivative liabilities. Also during the nine months ended September 30, 2016, the Company recorded a change
in fair value of derivatives of $96,765. At September 30, 2016, the balance of the derivative liabilities was $256,654.</p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify"><i><u>Common Stock</u></i></p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify; text-indent: 0.5in"> </p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify">During the nine month period ended September
30, 2016, the Company issued an aggregate of 2,295,964,462 shares of its common stock as follows:</p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify; text-indent: 0.5in"> </p>
<table cellspacing="0" cellpadding="0" style="width: 100%; font-size-adjust: none; font-stretch: normal">
<tr>
<td style="width: 4%; text-align: justify"> </td>
<td style="vertical-align: top; width: 4%; font: 12pt Times New Roman, Times, Serif; text-align: justify"><font style="font: 10pt Symbol">·</font></td>
<td style="vertical-align: top; font: 12pt Times New Roman, Times, Serif; text-align: justify"><font style="font-size: 10pt">Convertible note holders converted $143,123 of principal, $49,560 of accrued interest and $386,352 of additional interest, or a total of $579,035, into 2,105,237,983 shares of common stock at conversion prices ranging from $0.000058 to $0.0008 per share.</font></td></tr>
<tr>
<td style="text-align: justify"> </td>
<td style="vertical-align: top; font: 12pt Times New Roman, Times, Serif; text-align: justify"><font style="font: 10pt Symbol">·</font></td>
<td style="vertical-align: top; font: 12pt Times New Roman, Times, Serif; text-align: justify"><font style="font-size: 10pt">Four holders of the Company’s Series B Preferred Stock converted 125,337 Series B Preferred shares into 35,703,979 shares of the Company’s common stock at conversion prices ranging from $0.00383 to $0.00532 per share.</font></td></tr>
<tr>
<td style="text-align: justify"> </td>
<td style="vertical-align: top; font: 12pt Times New Roman, Times, Serif; text-align: justify"><font style="font: 10pt Symbol">·</font></td>
<td style="vertical-align: top; font: 12pt Times New Roman, Times, Serif; text-align: justify"><font style="font-size: 10pt">An investor processed a cashless exercise of 30 warrant shares into 125,000 shares of the Company’s common stock. The investor received an additional 154,875,000 shares of the Company’s common stock as modification consideration, valued at $185,850, and recorded as the fair value of shares issued for services in general and administrative expenses.</font></td></tr>
<tr>
<td style="text-align: justify"> </td>
<td style="vertical-align: top; font: 12pt Times New Roman, Times, Serif; text-align: justify"><font style="font: 10pt Symbol">·</font></td>
<td style="vertical-align: top; font: 12pt Times New Roman, Times, Serif; text-align: justify"><font style="font-size: 10pt">The Company issued 22,500 shares of common stock for services, valued at $188.</font></td></tr>
</table>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify; text-indent: 0.5in"> </p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify"><i><u>Capital Contribution </u></i></p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify; text-indent: 0.5in"> </p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify">In January 2016, the Company’s officers
forgave an aggregate total of $762,275 of accrued payroll due to them from the Company. The Company recorded the forgiveness of
accrued payroll as a capital contribution.</p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify">The table below summarizes the Company’s
warrant activities at September 30, 2016:</p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify; text-indent: 0.5in"> </p>
<table cellspacing="0" cellpadding="0" style="font: 12pt Times New Roman, Times, Serif; width: 100%; font-size-adjust: none; font-stretch: normal">
<tr style="vertical-align: bottom">
<td style="text-align: justify"> </td>
<td style="text-align: justify"> </td>
<td colspan="2" id="hdcell" style="border-bottom: black 1pt solid">
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: center"><b>Number of</b></p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: center"><b>Warrant Shares</b></p></td>
<td style="text-align: justify"> </td>
<td style="text-align: justify"> </td>
<td colspan="2" style="border-bottom: black 1pt solid">
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: center"><b>Exercise Price Range</b></p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: center"><b>Per Share</b></p></td>
<td style="text-align: justify"> </td>
<td style="text-align: justify"> </td>
<td colspan="2" style="border-bottom: black 1pt solid; text-align: center"><font style="font-size: 10pt"><b>Weighted Average Exercise Price</b></font></td>
<td style="text-align: justify"> </td>
<td style="text-align: justify"> </td>
<td colspan="2" style="border-bottom: black 1pt solid; text-align: center"><font style="font-size: 10pt"><b>Fair Value</b></font><br />
<font style="font-size: 10pt"><b>at Date</b></font><br />
<font style="font-size: 10pt"><b>of Issuance</b></font></td>
<td style="text-align: justify"> </td>
<td style="text-align: justify"> </td>
<td colspan="2" style="border-bottom: black 1pt solid">
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: center"><b>Aggregate</b></p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: center"><b>Intrinsic</b></p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: center"><b>Value</b></p></td>
<td style="text-align: justify"> </td></tr>
<tr>
<td style="text-align: justify"> </td>
<td style="vertical-align: bottom; text-align: justify"> </td>
<td colspan="2" id="ffcell" style="vertical-align: bottom; text-align: right"> </td>
<td style="vertical-align: bottom; text-align: justify"> </td>
<td style="vertical-align: bottom; text-align: justify"> </td>
<td colspan="2" style="vertical-align: bottom; text-align: right"> </td>
<td style="vertical-align: bottom; text-align: justify"> </td>
<td style="vertical-align: bottom; text-align: justify"> </td>
<td colspan="2" style="vertical-align: bottom; text-align: right"> </td>
<td style="vertical-align: bottom; text-align: justify"> </td>
<td style="vertical-align: bottom; text-align: justify"> </td>
<td colspan="2" style="vertical-align: bottom; text-align: right"> </td>
<td style="vertical-align: bottom; text-align: justify"> </td>
<td style="vertical-align: bottom; text-align: justify"> </td>
<td colspan="2" style="vertical-align: bottom; text-align: right"> </td>
<td style="vertical-align: bottom; text-align: justify"> </td></tr>
<tr style="background-color: #CCEEFF">
<td style="vertical-align: top; text-align: justify"><font style="font-size: 10pt">Balance, December 31, 2015</font></td>
<td style="vertical-align: bottom; width: 1%; text-align: justify"> </td>
<td style="vertical-align: bottom; width: 1%; text-align: justify"> </td>
<td style="vertical-align: bottom; width: 9%; text-align: right"><font style="font-size: 10pt">30</font></td>
<td style="vertical-align: bottom; width: 1%; text-align: justify"> </td>
<td style="vertical-align: bottom; width: 1%; text-align: justify"> </td>
<td style="vertical-align: bottom; width: 1%; text-align: justify"><font style="font-size: 10pt">$</font></td>
<td style="width: 15%; text-align: right"><font style="font-size: 10pt">695,000-9,750,000,000</font></td>
<td style="vertical-align: bottom; width: 1%; text-align: justify"> </td>
<td style="vertical-align: bottom; width: 1%; text-align: justify"> </td>
<td style="vertical-align: bottom; width: 1%; text-align: justify"><font style="font-size: 10pt">$</font></td>
<td style="vertical-align: bottom; width: 9%; text-align: right"><font style="font-size: 10pt">10,430,000</font></td>
<td style="vertical-align: bottom; width: 1%; text-align: justify"> </td>
<td style="vertical-align: bottom; width: 1%; text-align: justify"> </td>
<td style="vertical-align: bottom; width: 1%; text-align: justify"><font style="font-size: 10pt">$</font></td>
<td style="vertical-align: bottom; width: 9%; text-align: right"><font style="font-size: 10pt">509,262</font></td>
<td style="vertical-align: bottom; width: 1%; text-align: justify"> </td>
<td style="vertical-align: bottom; width: 1%; text-align: justify"> </td>
<td style="vertical-align: bottom; width: 1%; text-align: justify"><font style="font-size: 10pt">$</font></td>
<td style="vertical-align: bottom; width: 9%; text-align: right"><font style="font-size: 10pt">-</font></td>
<td style="vertical-align: bottom; width: 1%; text-align: justify"> </td></tr>
<tr style="background-color: white">
<td style="text-align: justify"> </td>
<td style="vertical-align: bottom; text-align: justify"> </td>
<td style="vertical-align: bottom; text-align: justify"> </td>
<td style="vertical-align: bottom; text-align: right"> </td>
<td style="vertical-align: bottom; text-align: justify"> </td>
<td style="vertical-align: bottom; text-align: justify"> </td>
<td colspan="2" style="vertical-align: bottom; text-align: right"> </td>
<td style="vertical-align: bottom; text-align: justify"> </td>
<td style="vertical-align: bottom; text-align: justify"> </td>
<td style="vertical-align: bottom; text-align: justify"> </td>
<td style="vertical-align: bottom; text-align: right"> </td>
<td style="vertical-align: bottom; text-align: justify"> </td>
<td style="vertical-align: bottom; text-align: justify"> </td>
<td style="vertical-align: bottom; text-align: justify"> </td>
<td style="vertical-align: bottom; text-align: right"> </td>
<td style="vertical-align: bottom; text-align: justify"> </td>
<td style="vertical-align: bottom; text-align: justify"> </td>
<td style="vertical-align: bottom; text-align: justify"> </td>
<td style="vertical-align: bottom; text-align: right"> </td>
<td style="vertical-align: bottom; text-align: justify"> </td></tr>
<tr style="background-color: #CCEEFF">
<td style="vertical-align: top; text-align: justify"><font style="font-size: 10pt">Granted</font></td>
<td style="vertical-align: bottom; text-align: justify"> </td>
<td style="vertical-align: bottom; text-align: justify"> </td>
<td style="vertical-align: bottom; text-align: right"><font style="font-size: 10pt">-</font></td>
<td style="vertical-align: bottom; text-align: justify"> </td>
<td style="vertical-align: bottom; text-align: justify"> </td>
<td style="vertical-align: bottom; text-align: justify"> </td>
<td style="vertical-align: bottom; text-align: right"><font style="font-size: 10pt">-</font></td>
<td style="vertical-align: bottom; text-align: justify"> </td>
<td style="vertical-align: bottom; text-align: justify"> </td>
<td style="vertical-align: bottom; text-align: justify"> </td>
<td style="vertical-align: bottom; text-align: right"><font style="font-size: 10pt">-</font></td>
<td style="vertical-align: bottom; text-align: justify"> </td>
<td style="vertical-align: bottom; text-align: justify"> </td>
<td style="vertical-align: bottom; text-align: justify"> </td>
<td style="vertical-align: bottom; text-align: right"><font style="font-size: 10pt">-</font></td>
<td style="vertical-align: bottom; text-align: justify"> </td>
<td style="vertical-align: bottom; text-align: justify"> </td>
<td style="vertical-align: bottom; text-align: justify"><font style="font-size: 10pt">$</font></td>
<td style="vertical-align: bottom; text-align: right"><font style="font-size: 10pt">-</font></td>
<td style="vertical-align: bottom; text-align: justify"> </td></tr>
<tr style="background-color: white">
<td style="vertical-align: top; text-align: justify"><font style="font-size: 10pt">Canceled </font></td>
<td style="vertical-align: bottom; text-align: justify"> </td>
<td colspan="2" style="text-align: right"><font style="font-size: 10pt">(-</font></td>
<td style="vertical-align: bottom; text-align: justify"><font style="font-size: 10pt">)</font></td>
<td style="vertical-align: bottom; text-align: justify"> </td>
<td style="vertical-align: bottom; text-align: justify"> </td>
<td style="vertical-align: bottom; text-align: right"><font style="font-size: 10pt">-</font></td>
<td style="vertical-align: bottom; text-align: justify"> </td>
<td style="vertical-align: bottom; text-align: justify"> </td>
<td style="vertical-align: bottom; text-align: justify"> </td>
<td style="vertical-align: bottom; text-align: right"><font style="font-size: 10pt">-</font></td>
<td style="vertical-align: bottom; text-align: justify"> </td>
<td style="vertical-align: bottom; text-align: justify"> </td>
<td style="vertical-align: bottom; text-align: justify"> </td>
<td style="vertical-align: bottom; text-align: right"><font style="font-size: 10pt">-</font></td>
<td style="vertical-align: bottom; text-align: justify"> </td>
<td style="vertical-align: bottom; text-align: justify"> </td>
<td style="vertical-align: bottom; text-align: justify"> </td>
<td style="vertical-align: bottom; text-align: right"><font style="font-size: 10pt">-</font></td>
<td style="vertical-align: bottom; text-align: justify"> </td></tr>
<tr style="background-color: #CCEEFF">
<td style="text-align: justify"> </td>
<td style="vertical-align: bottom; text-align: justify"> </td>
<td style="vertical-align: bottom; text-align: justify"> </td>
<td style="vertical-align: bottom; text-align: right"> </td>
<td style="vertical-align: bottom; text-align: justify"> </td>
<td style="vertical-align: bottom; text-align: justify"> </td>
<td style="vertical-align: bottom; text-align: justify"> </td>
<td style="vertical-align: bottom; text-align: right"> </td>
<td style="vertical-align: bottom; text-align: justify"> </td>
<td style="vertical-align: bottom; text-align: justify"> </td>
<td style="vertical-align: bottom; text-align: justify"> </td>
<td style="vertical-align: bottom; text-align: right"> </td>
<td style="vertical-align: bottom; text-align: justify"> </td>
<td style="vertical-align: bottom; text-align: justify"> </td>
<td style="vertical-align: bottom; text-align: justify"> </td>
<td style="vertical-align: bottom; text-align: right"> </td>
<td style="vertical-align: bottom; text-align: justify"> </td>
<td style="vertical-align: bottom; text-align: justify"> </td>
<td style="vertical-align: bottom; text-align: justify"> </td>
<td style="vertical-align: bottom; text-align: right"> </td>
<td style="vertical-align: bottom; text-align: justify"> </td></tr>
<tr style="background-color: white">
<td style="vertical-align: top; text-align: justify"><font style="font-size: 10pt">Exercised </font></td>
<td style="vertical-align: bottom; text-align: justify"> </td>
<td style="vertical-align: bottom; text-align: justify"> </td>
<td style="vertical-align: bottom; text-align: right"><font style="font-size: 10pt">(30</font></td>
<td style="vertical-align: bottom; text-align: justify"><font style="font-size: 10pt">)</font></td>
<td style="vertical-align: bottom; text-align: justify"> </td>
<td style="vertical-align: bottom; text-align: justify"><font style="font-size: 10pt">$</font></td>
<td style="vertical-align: bottom; text-align: right"><font style="font-size: 10pt">0.00024</font></td>
<td style="vertical-align: bottom; text-align: justify"> </td>
<td style="vertical-align: bottom; text-align: justify"> </td>
<td style="vertical-align: bottom; text-align: justify"><font style="font-size: 10pt">$</font></td>
<td style="vertical-align: bottom; text-align: right"><font style="font-size: 10pt">8,382,915</font></td>
<td style="vertical-align: bottom; text-align: justify"> </td>
<td style="vertical-align: bottom; text-align: justify"> </td>
<td style="vertical-align: bottom; text-align: justify"> </td>
<td style="vertical-align: bottom; text-align: right"><font style="font-size: 10pt">(103,969</font></td>
<td style="vertical-align: bottom; text-align: justify"><font style="font-size: 10pt">)</font></td>
<td style="vertical-align: bottom; text-align: justify"> </td>
<td style="vertical-align: bottom; text-align: justify"> </td>
<td style="vertical-align: bottom; text-align: right"><font style="font-size: 10pt">-</font></td>
<td style="vertical-align: bottom; text-align: justify"> </td></tr>
<tr style="background-color: #CCEEFF">
<td style="vertical-align: top; text-align: justify"><font style="font-size: 10pt">Expired</font></td>
<td style="vertical-align: bottom; text-align: justify"> </td>
<td colspan="2" style="vertical-align: bottom; border-bottom: black 1pt solid; text-align: right"><font style="font-size: 10pt">(-</font></td>
<td style="vertical-align: bottom; text-align: justify"><font style="font-size: 10pt">) </font></td>
<td style="vertical-align: bottom; text-align: justify"> </td>
<td style="vertical-align: bottom; border-bottom: black 1pt solid; text-align: justify"><font style="font-size: 10pt">$</font></td>
<td style="border-bottom: black 1pt solid; text-align: right"><font style="font-size: 10pt">29,250,000-9,750,000,000</font></td>
<td style="vertical-align: bottom; text-align: justify"> </td>
<td style="vertical-align: bottom; text-align: justify"> </td>
<td style="vertical-align: bottom; border-bottom: black 1pt solid; text-align: justify"><font style="font-size: 10pt">$</font></td>
<td style="border-bottom: black 1pt solid; vertical-align: bottom; text-align: right"><font style="font-size: 10pt">29,886,738</font></td>
<td style="vertical-align: bottom; text-align: justify"> </td>
<td style="vertical-align: bottom; text-align: justify"> </td>
<td style="vertical-align: bottom; border-bottom: black 1pt solid; text-align: justify"><font style="font-size: 10pt">$</font></td>
<td style="border-bottom: black 1pt solid; vertical-align: bottom; text-align: right"><font style="font-size: 10pt">(405,293</font></td>
<td style="vertical-align: bottom; text-align: justify"><font style="font-size: 10pt">)</font></td>
<td style="vertical-align: bottom; text-align: justify"> </td>
<td style="vertical-align: bottom; border-bottom: black 1pt solid; text-align: justify"><font style="font-size: 10pt">$</font></td>
<td style="border-bottom: black 1pt solid; vertical-align: bottom; text-align: right"><font style="font-size: 10pt">-</font></td>
<td style="vertical-align: bottom; text-align: justify"> </td></tr>
<tr style="background-color: white">
<td style="vertical-align: top; text-align: justify"><font style="font-size: 10pt">Balance, September 30, 2016</font></td>
<td style="vertical-align: bottom; text-align: justify"> </td>
<td style="vertical-align: bottom; border-bottom: black 2.25pt double; text-align: justify"> </td>
<td style="border-bottom: black 2.25pt double; vertical-align: bottom; text-align: right"><font style="font-size: 10pt">-</font></td>
<td style="vertical-align: bottom; text-align: justify"> </td>
<td style="vertical-align: bottom; text-align: justify"> </td>
<td style="vertical-align: bottom; border-bottom: black 2.25pt double; text-align: justify"><font style="font-size: 10pt">$</font></td>
<td style="border-bottom: black 2.25pt double; vertical-align: bottom; text-align: right"><font style="font-size: 10pt">-</font></td>
<td style="vertical-align: bottom; text-align: justify"> </td>
<td style="vertical-align: bottom; text-align: justify"> </td>
<td style="vertical-align: bottom; border-bottom: black 2.25pt double; text-align: justify"><font style="font-size: 10pt">$</font></td>
<td style="border-bottom: black 2.25pt double; vertical-align: bottom; text-align: right"><font style="font-size: 10pt">-</font></td>
<td style="vertical-align: bottom; text-align: justify"> </td>
<td style="vertical-align: bottom; text-align: justify"> </td>
<td style="vertical-align: bottom; border-bottom: black 2.25pt double; text-align: justify"><font style="font-size: 10pt">$</font></td>
<td style="border-bottom: black 2.25pt double; vertical-align: bottom; text-align: right"><font style="font-size: 10pt">-</font></td>
<td style="vertical-align: bottom; text-align: justify"> </td>
<td style="vertical-align: bottom; text-align: justify"> </td>
<td style="vertical-align: bottom; border-bottom: black 2.25pt double; text-align: justify"><font style="font-size: 10pt">$</font></td>
<td style="border-bottom: black 2.25pt double; vertical-align: bottom; text-align: right"><font style="font-size: 10pt">-</font></td>
<td style="vertical-align: bottom; text-align: justify"> </td></tr>
<tr style="background-color: #CCEEFF">
<td style="text-align: justify"> </td>
<td style="vertical-align: bottom; text-align: justify"> </td>
<td style="vertical-align: bottom; text-align: justify"> </td>
<td style="vertical-align: bottom; text-align: right"> </td>
<td style="vertical-align: bottom; text-align: justify"> </td>
<td style="vertical-align: bottom; text-align: justify"> </td>
<td style="vertical-align: bottom; text-align: justify"> </td>
<td style="vertical-align: bottom; text-align: right"> </td>
<td style="vertical-align: bottom; text-align: justify"> </td>
<td style="vertical-align: bottom; text-align: justify"> </td>
<td style="vertical-align: bottom; text-align: justify"> </td>
<td style="vertical-align: bottom; text-align: right"> </td>
<td style="vertical-align: bottom; text-align: justify"> </td>
<td style="vertical-align: bottom; text-align: justify"> </td>
<td style="vertical-align: bottom; text-align: justify"> </td>
<td style="vertical-align: bottom; text-align: right"> </td>
<td style="vertical-align: bottom; text-align: justify"> </td>
<td style="vertical-align: bottom; text-align: justify"> </td>
<td style="vertical-align: bottom; text-align: justify"> </td>
<td style="vertical-align: bottom; text-align: right"> </td>
<td style="vertical-align: bottom; text-align: justify"> </td></tr>
<tr style="background-color: white">
<td style="vertical-align: top; text-align: justify"><font style="font-size: 10pt">Vested and exercisable, September 30, 2016</font></td>
<td style="vertical-align: bottom; text-align: justify"> </td>
<td style="vertical-align: bottom; border-bottom: black 2.25pt double; text-align: justify"> </td>
<td style="border-bottom: black 2.25pt double; vertical-align: bottom; text-align: right"><font style="font-size: 10pt">-</font></td>
<td style="vertical-align: bottom; text-align: justify"> </td>
<td style="vertical-align: bottom; text-align: justify"> </td>
<td style="vertical-align: bottom; border-bottom: black 2.25pt double; text-align: justify"><font style="font-size: 10pt">$</font></td>
<td style="border-bottom: black 2.25pt double; vertical-align: bottom; text-align: right"><font style="font-size: 10pt">-</font></td>
<td style="vertical-align: bottom; text-align: justify"> </td>
<td style="vertical-align: bottom; text-align: justify"> </td>
<td style="vertical-align: bottom; border-bottom: black 2.25pt double; text-align: justify"><font style="font-size: 10pt">$</font></td>
<td style="border-bottom: black 2.25pt double; vertical-align: bottom; text-align: right"><font style="font-size: 10pt">-</font></td>
<td style="vertical-align: bottom; text-align: justify"> </td>
<td style="vertical-align: bottom; text-align: justify"> </td>
<td style="vertical-align: bottom; border-bottom: black 2.25pt double; text-align: justify"><font style="font-size: 10pt">$</font></td>
<td style="border-bottom: black 2.25pt double; vertical-align: bottom; text-align: right"><font style="font-size: 10pt">-</font></td>
<td style="vertical-align: bottom; text-align: justify"> </td>
<td style="vertical-align: bottom; text-align: justify"> </td>
<td style="vertical-align: bottom; border-bottom: black 2.25pt double; text-align: justify"><font style="font-size: 10pt">$</font></td>
<td style="border-bottom: black 2.25pt double; vertical-align: bottom; text-align: right"><font style="font-size: 10pt">-</font></td>
<td style="vertical-align: bottom; text-align: justify"> </td></tr>
<tr style="background-color: #CCEEFF">
<td style="text-align: justify"> </td>
<td style="vertical-align: bottom; text-align: justify"> </td>
<td style="vertical-align: bottom; text-align: justify"> </td>
<td style="vertical-align: bottom; text-align: right"> </td>
<td style="vertical-align: bottom; text-align: justify"> </td>
<td style="vertical-align: bottom; text-align: justify"> </td>
<td style="vertical-align: bottom; text-align: justify"> </td>
<td style="vertical-align: bottom; text-align: right"> </td>
<td style="vertical-align: bottom; text-align: justify"> </td>
<td style="vertical-align: bottom; text-align: justify"> </td>
<td style="vertical-align: bottom; text-align: justify"> </td>
<td style="vertical-align: bottom; text-align: right"> </td>
<td style="vertical-align: bottom; text-align: justify"> </td>
<td style="vertical-align: bottom; text-align: justify"> </td>
<td style="vertical-align: bottom; text-align: justify"> </td>
<td style="vertical-align: bottom; text-align: right"> </td>
<td style="vertical-align: bottom; text-align: justify"> </td>
<td style="vertical-align: bottom; text-align: justify"> </td>
<td style="vertical-align: bottom; text-align: justify"> </td>
<td style="vertical-align: bottom; text-align: right"> </td>
<td style="vertical-align: bottom; text-align: justify"> </td></tr>
<tr style="background-color: white">
<td style="vertical-align: top; text-align: justify"><font style="font-size: 10pt">Unvested, September 30, 2016</font></td>
<td style="vertical-align: bottom; text-align: justify"> </td>
<td style="vertical-align: bottom; border-bottom: black 2.25pt double; text-align: justify"> </td>
<td style="border-bottom: black 2.25pt double; vertical-align: bottom; text-align: right"><font style="font-size: 10pt">-</font></td>
<td style="vertical-align: bottom; text-align: justify"> </td>
<td style="vertical-align: bottom; text-align: justify"> </td>
<td style="vertical-align: bottom; border-bottom: black 2.25pt double; text-align: justify"><font style="font-size: 10pt">$</font></td>
<td style="border-bottom: black 2.25pt double; vertical-align: bottom; text-align: right"><font style="font-size: 10pt">-</font></td>
<td style="vertical-align: bottom; text-align: justify"> </td>
<td style="vertical-align: bottom; text-align: justify"> </td>
<td style="vertical-align: bottom; border-bottom: black 2.25pt double; text-align: justify"><font style="font-size: 10pt">$</font></td>
<td style="border-bottom: black 2.25pt double; vertical-align: bottom; text-align: right"><font style="font-size: 10pt">-</font></td>
<td style="vertical-align: bottom; text-align: justify"> </td>
<td style="vertical-align: bottom; text-align: justify"> </td>
<td style="vertical-align: bottom; border-bottom: black 2.25pt double; text-align: justify"><font style="font-size: 10pt">$</font></td>
<td style="border-bottom: black 2.25pt double; vertical-align: bottom; text-align: right"><font style="font-size: 10pt">-</font></td>
<td style="vertical-align: bottom; text-align: justify"> </td>
<td style="vertical-align: bottom; text-align: justify"> </td>
<td style="vertical-align: bottom; border-bottom: black 2.25pt double; text-align: justify"><font style="font-size: 10pt">$</font></td>
<td style="border-bottom: black 2.25pt double; vertical-align: bottom; text-align: right"><font style="font-size: 10pt">-</font></td>
<td style="vertical-align: bottom; text-align: justify"> </td></tr>
</table>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify; text-indent: 0.5in"> </p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify">In April 2016, the Company executed a settlement
agreement with an investor relating to outstanding warrant agreements issued in conjunction with convertible notes that were repaid
by the Company in January 2016. Per the terms of the settlement, the investor processed a cashless exercise of 30 warrant shares
into 125,000 shares of the Company’s common stock, valued at $150, and recorded as financing expense. The investor received
an additional 154,875,000 shares of the Company’s common stock as modification consideration, valued at $185,850, and recorded
in general and administrative expenses on the accompanying statement of operations.</p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify">In November 2012, the stockholders approved
the 2012 Stock Incentive Plan effective January 3, 2013. The number of shares authorized for issuance under the plan was 100,000,000.The
number of shares authorized for issuance under the Incentive Plan was increased to 200,000,000 in September 2016 by unanimous consent
of the Board of Directors.</p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify; text-indent: 0.5in"> </p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify">In August 2015, the Company awarded options
to purchase 1,000,000 shares of its common stock to an unrelated consultant, exercisable at $0.0005 per share.</p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify; text-indent: 0.5in"> </p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify">In September 2016, the Company awarded options
to purchase 196,000,000 shares of its common stock to its management team and employees, exercisable at $0.00625 per share, expiring
ten (10) years from the date of grant and vesting over a six-month period.</p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify; text-indent: 0.5in"> </p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify">Fair value of vested options was $269,250 in
the interim period ended September 30, 2016, and included as part of operating expenses on the statement of operations.</p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify; text-indent: 0.5in"> </p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify">The table below summarizes the Company’s
2004 Incentive Plan and 2012 Stock Incentive Plan activities through September 30, 2016:</p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify; text-indent: 0.5in"> </p>
<table cellspacing="0" cellpadding="0" style="font: 12pt Times New Roman, Times, Serif; width: 100%; font-size-adjust: none; font-stretch: normal">
<tr style="vertical-align: bottom">
<td style="text-align: justify"> </td>
<td style="text-align: justify"> </td>
<td colspan="2" id="hdcell">
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: center"><b>Number of</b></p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: center"><b>Options Shares</b></p></td>
<td style="text-align: justify"> </td>
<td style="text-align: justify"> </td>
<td colspan="2">
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: center"><b>Exercise Price Range</b></p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: center"><b>Per Share</b></p></td>
<td style="text-align: justify"> </td>
<td style="text-align: justify"> </td>
<td colspan="2" style="text-align: center"><font style="font-size: 10pt"><b>Weighted Average Exercise Price</b></font></td>
<td style="text-align: justify"> </td>
<td style="text-align: justify"> </td>
<td colspan="2" style="text-align: center"><font style="font-size: 10pt"><b>Fair Value at Date of Issuance</b></font></td>
<td style="text-align: justify"> </td>
<td style="text-align: justify"> </td>
<td colspan="2">
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: center"><b>Aggregate</b></p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: center"><b>Intrinsic</b></p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: center"><b>Value</b></p></td>
<td style="text-align: justify"> </td></tr>
<tr>
<td style="text-align: justify"> </td>
<td style="vertical-align: bottom; text-align: justify"> </td>
<td colspan="2" id="ffcell" style="vertical-align: bottom; border-top-style: solid; border-top-width: 1pt; text-align: right"> </td>
<td style="vertical-align: bottom; text-align: justify"> </td>
<td style="vertical-align: bottom; text-align: justify"> </td>
<td colspan="2" style="vertical-align: bottom; border-top-style: solid; border-top-width: 1pt; text-align: right"> </td>
<td style="vertical-align: bottom; text-align: justify"> </td>
<td style="vertical-align: bottom; text-align: justify"> </td>
<td colspan="2" style="vertical-align: bottom; border-top-style: solid; border-top-width: 1pt; text-align: right"> </td>
<td style="vertical-align: bottom; text-align: justify"> </td>
<td style="vertical-align: bottom; text-align: justify"> </td>
<td colspan="2" style="vertical-align: bottom; border-top-style: solid; border-top-width: 1pt; text-align: right"> </td>
<td style="vertical-align: bottom; text-align: justify"> </td>
<td style="vertical-align: bottom; text-align: justify"> </td>
<td colspan="2" style="vertical-align: bottom; border-top-style: solid; border-top-width: 1pt; text-align: right"> </td>
<td style="vertical-align: bottom; text-align: justify"> </td></tr>
<tr style="background-color: #CCEEFF">
<td style="vertical-align: top; text-align: justify"><font style="font-size: 10pt">Balance, December 31, 2015</font></td>
<td style="vertical-align: bottom; width: 1%; text-align: justify"> </td>
<td style="vertical-align: bottom; width: 1%; text-align: justify"> </td>
<td style="vertical-align: bottom; width: 9%; text-align: right"><font style="font-size: 10pt">1,000,003</font></td>
<td style="vertical-align: bottom; width: 1%; text-align: justify"> </td>
<td style="vertical-align: bottom; width: 1%; text-align: justify"> </td>
<td style="vertical-align: bottom; width: 1%; text-align: justify"><font style="font-size: 10pt">$</font></td>
<td style="width: 15%; text-align: right"><font style="font-size: 10pt">0.0005- 9,750,000,000</font></td>
<td style="vertical-align: bottom; width: 1%; text-align: justify"> </td>
<td style="vertical-align: bottom; width: 1%; text-align: justify"> </td>
<td style="vertical-align: bottom; width: 1%; text-align: justify"><font style="font-size: 10pt">$</font></td>
<td style="vertical-align: bottom; width: 9%; text-align: right"><font style="font-size: 10pt">2.00</font></td>
<td style="vertical-align: bottom; width: 1%; text-align: justify"> </td>
<td style="vertical-align: bottom; width: 1%; text-align: justify"> </td>
<td style="vertical-align: bottom; width: 1%; text-align: justify"><font style="font-size: 10pt">$</font></td>
<td style="vertical-align: bottom; width: 9%; text-align: right"><font style="font-size: 10pt">2,785,163</font></td>
<td style="vertical-align: bottom; width: 1%; text-align: justify"> </td>
<td style="vertical-align: bottom; width: 1%; text-align: justify"> </td>
<td style="vertical-align: bottom; width: 1%; text-align: justify"><font style="font-size: 10pt">$</font></td>
<td style="vertical-align: bottom; width: 9%; text-align: right"><font style="font-size: 10pt">-</font></td>
<td style="vertical-align: bottom; width: 1%; text-align: justify"> </td></tr>
<tr style="background-color: white">
<td style="text-align: justify"> </td>
<td style="vertical-align: bottom; text-align: justify"> </td>
<td style="vertical-align: bottom; text-align: justify"> </td>
<td style="vertical-align: bottom; text-align: right"> </td>
<td style="vertical-align: bottom; text-align: justify"> </td>
<td style="vertical-align: bottom; text-align: justify"> </td>
<td colspan="2" style="vertical-align: bottom; text-align: right"> </td>
<td style="vertical-align: bottom; text-align: justify"> </td>
<td style="vertical-align: bottom; text-align: justify"> </td>
<td style="vertical-align: bottom; text-align: justify"> </td>
<td style="vertical-align: bottom; text-align: right"> </td>
<td style="vertical-align: bottom; text-align: justify"> </td>
<td style="vertical-align: bottom; text-align: justify"> </td>
<td style="vertical-align: bottom; text-align: justify"> </td>
<td style="vertical-align: bottom; text-align: right"> </td>
<td style="vertical-align: bottom; text-align: justify"> </td>
<td style="vertical-align: bottom; text-align: justify"> </td>
<td style="vertical-align: bottom; text-align: justify"> </td>
<td style="vertical-align: bottom; text-align: right"> </td>
<td style="vertical-align: bottom; text-align: justify"> </td></tr>
<tr style="background-color: #CCEEFF">
<td style="vertical-align: top; text-align: justify"><font style="font-size: 10pt">Granted</font></td>
<td style="vertical-align: bottom; text-align: justify"> </td>
<td style="vertical-align: bottom; text-align: justify"> </td>
<td style="vertical-align: bottom; text-align: right"><font style="font-size: 10pt">196,000,000</font></td>
<td style="vertical-align: bottom; text-align: justify"> </td>
<td style="vertical-align: bottom; text-align: justify"> </td>
<td style="vertical-align: bottom; text-align: justify"><font style="font-size: 10pt">$</font></td>
<td style="vertical-align: bottom; text-align: right"><font style="font-size: 10pt">0.00625</font></td>
<td style="vertical-align: bottom; text-align: justify"> </td>
<td style="vertical-align: bottom; text-align: justify"> </td>
<td style="vertical-align: bottom; text-align: justify"><font style="font-size: 10pt">$</font></td>
<td style="vertical-align: bottom; text-align: right"><font style="font-size: 10pt">0.00625</font></td>
<td style="vertical-align: bottom; text-align: justify"> </td>
<td style="vertical-align: bottom; text-align: justify"> </td>
<td style="vertical-align: bottom; text-align: justify"><font style="font-size: 10pt">$</font></td>
<td style="vertical-align: bottom; text-align: right"><font style="font-size: 10pt">1,568,000</font></td>
<td style="vertical-align: bottom; text-align: justify"> </td>
<td style="vertical-align: bottom; text-align: justify"> </td>
<td style="vertical-align: bottom; text-align: justify"> </td>
<td style="vertical-align: bottom; text-align: right"> </td>
<td style="vertical-align: bottom; text-align: justify"> </td></tr>
<tr style="background-color: white">
<td style="text-align: justify"> </td>
<td style="vertical-align: bottom; text-align: justify"> </td>
<td style="vertical-align: bottom; text-align: justify"> </td>
<td style="vertical-align: bottom; text-align: right"> </td>
<td style="vertical-align: bottom; text-align: justify"> </td>
<td style="vertical-align: bottom; text-align: justify"> </td>
<td style="vertical-align: bottom; text-align: justify"> </td>
<td style="vertical-align: bottom; text-align: right"> </td>
<td style="vertical-align: bottom; text-align: justify"> </td>
<td style="vertical-align: bottom; text-align: justify"> </td>
<td style="vertical-align: bottom; text-align: justify"> </td>
<td style="vertical-align: bottom; text-align: right"> </td>
<td style="vertical-align: bottom; text-align: justify"> </td>
<td style="vertical-align: bottom; text-align: justify"> </td>
<td style="vertical-align: bottom; text-align: justify"> </td>
<td style="vertical-align: bottom; text-align: right"> </td>
<td style="vertical-align: bottom; text-align: justify"> </td>
<td style="vertical-align: bottom; text-align: justify"> </td>
<td style="vertical-align: bottom; text-align: justify"> </td>
<td style="vertical-align: bottom; text-align: right"> </td>
<td style="vertical-align: bottom; text-align: justify"> </td></tr>
<tr style="background-color: #CCEEFF">
<td style="vertical-align: top; text-align: justify"><font style="font-size: 10pt">Expired</font></td>
<td style="vertical-align: bottom; text-align: justify"> </td>
<td style="vertical-align: bottom; border-bottom-style: solid; border-bottom-width: 1pt; text-align: justify"> </td>
<td style="vertical-align: bottom; border-bottom-style: solid; border-bottom-width: 1pt; text-align: right"><font style="font-size: 10pt">(2</font></td>
<td style="vertical-align: bottom; text-align: justify"><font style="font-size: 10pt">)</font></td>
<td style="vertical-align: bottom; text-align: justify"> </td>
<td style="vertical-align: bottom; border-bottom-style: solid; border-bottom-width: 1pt; text-align: justify"><font style="font-size: 10pt">$</font></td>
<td style="vertical-align: bottom; border-bottom-style: solid; border-bottom-width: 1pt; text-align: right"><font style="font-size: 10pt">9,750,000</font></td>
<td style="vertical-align: bottom; text-align: justify"> </td>
<td style="vertical-align: bottom; text-align: justify"> </td>
<td style="vertical-align: bottom; border-bottom-style: solid; border-bottom-width: 1pt; text-align: justify"><font style="font-size: 10pt">$</font></td>
<td style="vertical-align: bottom; border-bottom-style: solid; border-bottom-width: 1pt; text-align: right"><font style="font-size: 10pt">9,750,000</font></td>
<td style="vertical-align: bottom; text-align: justify"> </td>
<td style="vertical-align: bottom; text-align: justify"> </td>
<td style="vertical-align: bottom; border-bottom-style: solid; border-bottom-width: 1pt; text-align: justify"><font style="font-size: 10pt">$</font></td>
<td style="vertical-align: bottom; border-bottom-style: solid; border-bottom-width: 1pt; text-align: right"><font style="font-size: 10pt">(506,697</font></td>
<td style="vertical-align: bottom; text-align: justify"><font style="font-size: 10pt">)</font></td>
<td style="vertical-align: bottom; text-align: justify"> </td>
<td style="vertical-align: bottom; border-bottom-style: solid; border-bottom-width: 1pt; text-align: justify"><font style="font-size: 10pt">$</font></td>
<td style="vertical-align: bottom; border-bottom-style: solid; border-bottom-width: 1pt; text-align: right"><font style="font-size: 10pt">-</font></td>
<td style="vertical-align: bottom; text-align: justify"> </td></tr>
<tr style="background-color: white">
<td style="text-align: justify"> </td>
<td style="vertical-align: bottom; text-align: justify"> </td>
<td style="vertical-align: bottom; text-align: justify"> </td>
<td style="vertical-align: bottom; text-align: right"> </td>
<td style="vertical-align: bottom; text-align: justify"> </td>
<td style="vertical-align: bottom; text-align: justify"> </td>
<td style="vertical-align: bottom; text-align: justify"> </td>
<td style="vertical-align: bottom; text-align: right"> </td>
<td style="vertical-align: bottom; text-align: justify"> </td>
<td style="vertical-align: bottom; text-align: justify"> </td>
<td style="vertical-align: bottom; text-align: justify"> </td>
<td style="vertical-align: bottom; text-align: right"> </td>
<td style="vertical-align: bottom; text-align: justify"> </td>
<td style="vertical-align: bottom; text-align: justify"> </td>
<td style="vertical-align: bottom; text-align: justify"> </td>
<td style="vertical-align: bottom; text-align: right"> </td>
<td style="vertical-align: bottom; text-align: justify"> </td>
<td style="vertical-align: bottom; text-align: justify"> </td>
<td style="vertical-align: bottom; text-align: justify"> </td>
<td style="vertical-align: bottom; text-align: right"> </td>
<td style="vertical-align: bottom; text-align: justify"> </td></tr>
<tr style="background-color: #CCEEFF">
<td style="vertical-align: top; text-align: justify"><font style="font-size: 10pt">Balance, September 30, 2016</font></td>
<td style="vertical-align: bottom; text-align: justify"> </td>
<td style="vertical-align: bottom; border-bottom-style: double; border-bottom-width: 2.25pt; text-align: justify"> </td>
<td style="vertical-align: bottom; border-bottom-style: double; border-bottom-width: 2.25pt; text-align: right"><font style="font-size: 10pt">197,000,001</font></td>
<td style="vertical-align: bottom; text-align: justify"> </td>
<td style="vertical-align: bottom; text-align: justify"> </td>
<td style="vertical-align: bottom; border-bottom-style: double; border-bottom-width: 2.25pt; text-align: justify"><font style="font-size: 10pt">$</font></td>
<td style="border-bottom: black 2.25pt double; text-align: right"><font style="font-size: 10pt">0.0005- 975,000,000</font></td>
<td style="vertical-align: bottom; text-align: justify"> </td>
<td style="vertical-align: bottom; text-align: justify"> </td>
<td style="vertical-align: bottom; border-bottom-style: double; border-bottom-width: 2.25pt; text-align: justify"><font style="font-size: 10pt">$</font></td>
<td style="vertical-align: bottom; border-bottom-style: double; border-bottom-width: 2.25pt; text-align: right"><font style="font-size: 10pt">0.00625</font></td>
<td style="vertical-align: bottom; text-align: justify"> </td>
<td style="vertical-align: bottom; text-align: justify"> </td>
<td style="vertical-align: bottom; border-bottom-style: double; border-bottom-width: 2.25pt; text-align: justify"><font style="font-size: 10pt">$</font></td>
<td style="vertical-align: bottom; border-bottom-style: double; border-bottom-width: 2.25pt; text-align: right"><font style="font-size: 10pt">3,846,466</font></td>
<td style="vertical-align: bottom; text-align: justify"> </td>
<td style="vertical-align: bottom; text-align: justify"> </td>
<td style="vertical-align: bottom; border-bottom-style: double; border-bottom-width: 2.25pt; text-align: justify"><font style="font-size: 10pt">$</font></td>
<td style="vertical-align: bottom; border-bottom-style: double; border-bottom-width: 2.25pt; text-align: right"><font style="font-size: 10pt">-</font></td>
<td style="vertical-align: bottom; text-align: justify"> </td></tr>
<tr style="background-color: white">
<td style="text-align: justify"> </td>
<td style="vertical-align: bottom; text-align: justify"> </td>
<td style="vertical-align: bottom; text-align: justify"> </td>
<td style="vertical-align: bottom; text-align: right"> </td>
<td style="vertical-align: bottom; text-align: justify"> </td>
<td style="vertical-align: bottom; text-align: justify"> </td>
<td style="vertical-align: bottom; text-align: justify"> </td>
<td style="vertical-align: bottom; text-align: right"> </td>
<td style="vertical-align: bottom; text-align: justify"> </td>
<td style="vertical-align: bottom; text-align: justify"> </td>
<td style="vertical-align: bottom; text-align: justify"> </td>
<td style="vertical-align: bottom; text-align: right"> </td>
<td style="vertical-align: bottom; text-align: justify"> </td>
<td style="vertical-align: bottom; text-align: justify"> </td>
<td style="vertical-align: bottom; text-align: justify"> </td>
<td style="vertical-align: bottom; text-align: right"> </td>
<td style="vertical-align: bottom; text-align: justify"> </td>
<td style="vertical-align: bottom; text-align: justify"> </td>
<td style="vertical-align: bottom; text-align: justify"> </td>
<td style="vertical-align: bottom; text-align: right"> </td>
<td style="vertical-align: bottom; text-align: justify"> </td></tr>
<tr style="background-color: #CCEEFF">
<td style="vertical-align: top; text-align: justify"><font style="font-size: 10pt">Vested and exercisable, September 30, 2016</font></td>
<td style="vertical-align: bottom; text-align: justify"> </td>
<td style="vertical-align: bottom; border-bottom: black 1pt solid; text-align: justify"> </td>
<td style="border-bottom: black 1pt solid; vertical-align: bottom; text-align: right"><font style="font-size: 10pt">33,666,668</font></td>
<td style="vertical-align: bottom; text-align: justify"> </td>
<td style="vertical-align: bottom; text-align: justify"> </td>
<td style="border-bottom: black 1pt solid; text-align: justify"><font style="font-size: 10pt">$</font></td>
<td style="border-bottom: black 1pt solid; text-align: right"><font style="font-size: 10pt">0.0005-975,000,000</font></td>
<td style="vertical-align: bottom; text-align: justify"> </td>
<td style="vertical-align: bottom; text-align: justify"> </td>
<td style="vertical-align: bottom; border-bottom: black 1pt solid; text-align: justify"><font style="font-size: 10pt">$</font></td>
<td style="border-bottom: black 1pt solid; vertical-align: bottom; text-align: right"><font style="font-size: 10pt">0.005</font></td>
<td style="vertical-align: bottom; text-align: justify"> </td>
<td style="vertical-align: bottom; text-align: justify"> </td>
<td style="vertical-align: bottom; border-bottom: black 1pt solid; text-align: justify"><font style="font-size: 10pt">$</font></td>
<td style="border-bottom: black 1pt solid; vertical-align: bottom; text-align: right"><font style="font-size: 10pt">2,539,799</font></td>
<td style="vertical-align: bottom; text-align: justify"> </td>
<td style="vertical-align: bottom; text-align: justify"> </td>
<td style="vertical-align: bottom; border-bottom: black 1pt solid; text-align: justify"><font style="font-size: 10pt">$</font></td>
<td style="border-bottom: black 1pt solid; vertical-align: bottom; text-align: right"><font style="font-size: 10pt">-</font></td>
<td style="vertical-align: bottom; text-align: justify"> </td></tr>
<tr style="background-color: white">
<td style="text-align: justify"> </td>
<td style="vertical-align: bottom; text-align: justify"> </td>
<td style="vertical-align: bottom; text-align: justify"> </td>
<td style="vertical-align: bottom; text-align: right"> </td>
<td style="vertical-align: bottom; text-align: justify"> </td>
<td style="vertical-align: bottom; text-align: justify"> </td>
<td style="vertical-align: bottom; text-align: justify"> </td>
<td style="vertical-align: bottom; text-align: right"> </td>
<td style="vertical-align: bottom; text-align: justify"> </td>
<td style="vertical-align: bottom; text-align: justify"> </td>
<td style="vertical-align: bottom; text-align: justify"> </td>
<td style="vertical-align: bottom; text-align: right"> </td>
<td style="vertical-align: bottom; text-align: justify"> </td>
<td style="vertical-align: bottom; text-align: justify"> </td>
<td style="vertical-align: bottom; text-align: justify"> </td>
<td style="vertical-align: bottom; text-align: right"> </td>
<td style="vertical-align: bottom; text-align: justify"> </td>
<td style="vertical-align: bottom; text-align: justify"> </td>
<td style="vertical-align: bottom; text-align: justify"> </td>
<td style="vertical-align: bottom; text-align: right"> </td>
<td style="vertical-align: bottom; text-align: justify"> </td></tr>
<tr style="background-color: #CCEEFF">
<td style="vertical-align: top; text-align: justify"><font style="font-size: 10pt">Unvested, September 30, 2016</font></td>
<td style="vertical-align: bottom; text-align: justify"> </td>
<td style="vertical-align: bottom; border-bottom-style: solid; border-bottom-width: 1pt; text-align: justify"> </td>
<td style="vertical-align: bottom; border-bottom-style: solid; border-bottom-width: 1pt; text-align: right"><font style="font-size: 10pt">163,333,333</font></td>
<td style="vertical-align: bottom; text-align: justify"> </td>
<td style="vertical-align: bottom; text-align: justify"> </td>
<td style="vertical-align: bottom; border-bottom-style: solid; border-bottom-width: 1pt; text-align: justify"><font style="font-size: 10pt">$</font></td>
<td style="vertical-align: bottom; border-bottom-style: solid; border-bottom-width: 1pt; text-align: right"><font style="font-size: 10pt">0.00625</font></td>
<td style="vertical-align: bottom; text-align: justify"> </td>
<td style="vertical-align: bottom; text-align: justify"> </td>
<td style="vertical-align: bottom; border-bottom-style: solid; border-bottom-width: 1pt; text-align: justify"><font style="font-size: 10pt">$</font></td>
<td style="vertical-align: bottom; border-bottom-style: solid; border-bottom-width: 1pt; text-align: right"><font style="font-size: 10pt">0.00625</font></td>
<td style="vertical-align: bottom; text-align: justify"> </td>
<td style="vertical-align: bottom; text-align: justify"> </td>
<td style="vertical-align: bottom; border-bottom-style: solid; border-bottom-width: 1pt; text-align: justify"><font style="font-size: 10pt">$</font></td>
<td style="vertical-align: bottom; border-bottom-style: solid; border-bottom-width: 1pt; text-align: right"><font style="font-size: 10pt">1,306,667</font></td>
<td style="vertical-align: bottom; text-align: justify"> </td>
<td style="vertical-align: bottom; text-align: justify"> </td>
<td style="vertical-align: bottom; border-bottom-style: solid; border-bottom-width: 1pt; text-align: justify"><font style="font-size: 10pt">$</font></td>
<td style="vertical-align: bottom; border-bottom-style: solid; border-bottom-width: 1pt; text-align: right"><font style="font-size: 10pt">-</font></td>
<td style="vertical-align: bottom; text-align: justify"> </td></tr>
</table>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify; text-indent: 0.5in"> </p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify">As of September 30, 2016, options to purchase
an aggregate of 197,000,001 shares of common stock were outstanding under the 2004 incentive plan and 2012 Stock Incentive Plan
and there were 9,500,000 shares remaining available for issuance. At September 30, 2016, the intrinsic value of outstanding options
was zero.</p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify; text-indent: 0.5in"> </p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify">The following table summarizes information
concerning 2004 Incentive plan and 2012 Stock Incentive Plan as of September 30, 2016:</p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify; text-indent: 0.5in"> </p>
<table cellspacing="0" cellpadding="0" style="font: 12pt Times New Roman, Times, Serif; width: 100%; font-size-adjust: none; font-stretch: normal">
<tr style="vertical-align: bottom">
<td colspan="2" style="text-align: justify"> </td>
<td style="text-align: justify"> </td>
<td style="text-align: justify"> </td>
<td colspan="10" style="border-bottom-style: solid; border-bottom-width: 1pt; text-align: center"><font style="font-size: 10pt"><b>Options Outstanding</b></font></td>
<td style="text-align: justify"> </td>
<td style="text-align: justify"> </td>
<td colspan="10" style="border-bottom-style: solid; border-bottom-width: 1pt; text-align: center"><font style="font-size: 10pt"><b>Options Exercisable</b></font></td>
<td style="text-align: justify"> </td></tr>
<tr style="vertical-align: bottom">
<td colspan="2" style="text-align: center"><font style="font-size: 10pt"><b>Range of Exercise Prices</b></font></td>
<td style="text-align: justify"> </td>
<td style="text-align: justify"> </td>
<td colspan="2" style="text-align: center"><font style="font-size: 10pt"><b>Number Outstanding</b></font></td>
<td style="text-align: justify"> </td>
<td style="text-align: justify"> </td>
<td colspan="2" style="text-align: center"><font style="font-size: 10pt"><b>Average Remaining Contractual Life (in years)</b></font></td>
<td style="text-align: justify"> </td>
<td style="text-align: justify"> </td>
<td colspan="2" style="text-align: center"><font style="font-size: 10pt"><b>Weighted Average Exercise Price</b></font></td>
<td style="text-align: justify"> </td>
<td style="text-align: justify"> </td>
<td colspan="2">
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: center"><b>Number</b></p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: center"><b>Exercisable</b></p></td>
<td style="text-align: justify"> </td>
<td style="text-align: justify"> </td>
<td colspan="2" style="text-align: center"><font style="font-size: 10pt"><b>Average Remaining Contractual Life (in years)</b></font></td>
<td style="text-align: justify"> </td>
<td style="text-align: justify"> </td>
<td colspan="2" style="text-align: center"><font style="font-size: 10pt"><b>Weighted Average Exercise Price</b></font></td>
<td style="text-align: justify"> </td></tr>
<tr>
<td colspan="2" style="border-top-style: solid; border-top-width: 1pt; text-align: justify"> </td>
<td style="vertical-align: bottom; text-align: justify"> </td>
<td style="vertical-align: bottom; text-align: justify"> </td>
<td colspan="2" style="vertical-align: bottom; border-top-style: solid; border-top-width: 1pt; text-align: right"> </td>
<td style="vertical-align: bottom; text-align: justify"> </td>
<td style="vertical-align: bottom; text-align: justify"> </td>
<td colspan="2" style="vertical-align: bottom; border-top-style: solid; border-top-width: 1pt; text-align: right"> </td>
<td style="vertical-align: bottom; text-align: justify"> </td>
<td style="vertical-align: bottom; text-align: justify"> </td>
<td colspan="2" style="vertical-align: bottom; border-top-style: solid; border-top-width: 1pt; text-align: right"> </td>
<td style="vertical-align: bottom; text-align: justify"> </td>
<td style="vertical-align: bottom; text-align: justify"> </td>
<td colspan="2" style="vertical-align: bottom; border-top-style: solid; border-top-width: 1pt; text-align: right"> </td>
<td style="vertical-align: bottom; text-align: justify"> </td>
<td style="vertical-align: bottom; text-align: justify"> </td>
<td colspan="2" style="vertical-align: bottom; border-top-style: solid; border-top-width: 1pt; text-align: right"> </td>
<td style="vertical-align: bottom; text-align: justify"> </td>
<td style="vertical-align: bottom; text-align: justify"> </td>
<td colspan="2" style="vertical-align: bottom; border-top-style: solid; border-top-width: 1pt; text-align: right"> </td>
<td style="vertical-align: bottom; text-align: justify"> </td></tr>
<tr style="background-color: #CCEEFF">
<td style="vertical-align: bottom; width: 1%; text-align: justify"><font style="font-size: 10pt">$</font></td>
<td style="width: 26%; text-align: right"><font style="font-size: 10pt">975,000,000</font></td>
<td style="vertical-align: bottom; width: 1%; text-align: justify"> </td>
<td style="vertical-align: bottom; width: 1%; text-align: justify"> </td>
<td style="vertical-align: bottom; width: 1%; text-align: justify"> </td>
<td style="vertical-align: bottom; width: 9%; text-align: right"><font style="font-size: 10pt">1</font></td>
<td style="vertical-align: bottom; width: 1%; text-align: justify"> </td>
<td style="vertical-align: bottom; width: 1%; text-align: justify"> </td>
<td style="vertical-align: bottom; width: 1%; text-align: justify"> </td>
<td style="vertical-align: bottom; width: 9%; text-align: right"><font style="font-size: 10pt">1.00</font></td>
<td style="vertical-align: bottom; width: 1%; text-align: justify"> </td>
<td style="vertical-align: bottom; width: 1%; text-align: justify"> </td>
<td style="vertical-align: bottom; width: 1%; text-align: justify"><font style="font-size: 10pt">$</font></td>
<td style="vertical-align: bottom; width: 9%; text-align: right"><font style="font-size: 10pt">975,000,000</font></td>
<td style="vertical-align: bottom; width: 1%; text-align: justify"> </td>
<td style="vertical-align: bottom; width: 1%; text-align: justify"> </td>
<td style="vertical-align: bottom; width: 1%; text-align: justify"> </td>
<td style="vertical-align: bottom; width: 9%; text-align: right"><font style="font-size: 10pt">1</font></td>
<td style="vertical-align: bottom; width: 1%; text-align: justify"> </td>
<td style="vertical-align: bottom; width: 1%; text-align: justify"> </td>
<td style="vertical-align: bottom; width: 1%; text-align: justify"> </td>
<td style="vertical-align: bottom; width: 9%; text-align: right"><font style="font-size: 10pt">1.00</font></td>
<td style="vertical-align: bottom; width: 1%; text-align: justify"> </td>
<td style="vertical-align: bottom; width: 1%; text-align: justify"> </td>
<td style="vertical-align: bottom; width: 1%; text-align: justify"><font style="font-size: 10pt">$</font></td>
<td style="vertical-align: bottom; width: 9%; text-align: right"><font style="font-size: 10pt">975,000,000</font></td>
<td style="vertical-align: bottom; width: 1%; text-align: justify"> </td></tr>
<tr style="background-color: white">
<td style="vertical-align: bottom; text-align: justify"> </td>
<td style="text-align: justify"> </td>
<td style="vertical-align: bottom; text-align: justify"> </td>
<td style="vertical-align: bottom; text-align: justify"> </td>
<td style="vertical-align: bottom; text-align: justify"> </td>
<td style="vertical-align: bottom; text-align: right"> </td>
<td style="vertical-align: bottom; text-align: justify"> </td>
<td style="vertical-align: bottom; text-align: justify"> </td>
<td style="vertical-align: bottom; text-align: justify"> </td>
<td style="vertical-align: bottom; text-align: right"> </td>
<td style="vertical-align: bottom; text-align: justify"> </td>
<td style="vertical-align: bottom; text-align: justify"> </td>
<td style="vertical-align: bottom; text-align: justify"> </td>
<td style="vertical-align: bottom; text-align: right"> </td>
<td style="vertical-align: bottom; text-align: justify"> </td>
<td style="vertical-align: bottom; text-align: justify"> </td>
<td style="vertical-align: bottom; text-align: justify"> </td>
<td style="vertical-align: bottom; text-align: right"> </td>
<td style="vertical-align: bottom; text-align: justify"> </td>
<td style="vertical-align: bottom; text-align: justify"> </td>
<td style="vertical-align: bottom; text-align: justify"> </td>
<td style="vertical-align: bottom; text-align: right"> </td>
<td style="vertical-align: bottom; text-align: justify"> </td>
<td style="vertical-align: bottom; text-align: justify"> </td>
<td style="vertical-align: bottom; text-align: justify"> </td>
<td style="vertical-align: bottom; text-align: right"> </td>
<td style="vertical-align: bottom; text-align: justify"> </td></tr>
<tr style="background-color: #CCEEFF">
<td style="vertical-align: bottom; text-align: justify"><font style="font-size: 10pt">$</font></td>
<td style="text-align: right"><font style="font-size: 10pt">0.00625</font></td>
<td style="vertical-align: bottom; text-align: justify"> </td>
<td style="vertical-align: bottom; text-align: justify"> </td>
<td style="vertical-align: bottom; text-align: justify"> </td>
<td style="vertical-align: bottom; text-align: right"><font style="font-size: 10pt">196,000,000</font></td>
<td style="vertical-align: bottom; text-align: justify"> </td>
<td style="vertical-align: bottom; text-align: justify"> </td>
<td style="vertical-align: bottom; text-align: justify"> </td>
<td style="vertical-align: bottom; text-align: right"><font style="font-size: 10pt">10.00</font></td>
<td style="vertical-align: bottom; text-align: justify"> </td>
<td style="vertical-align: bottom; text-align: justify"> </td>
<td style="vertical-align: bottom; text-align: justify"><font style="font-size: 10pt">$</font></td>
<td style="vertical-align: bottom; text-align: right"><font style="font-size: 10pt">0.00625</font></td>
<td style="vertical-align: bottom; text-align: justify"> </td>
<td style="vertical-align: bottom; text-align: justify"> </td>
<td style="vertical-align: bottom; text-align: justify"> </td>
<td style="vertical-align: bottom; text-align: right"><font style="font-size: 10pt">32,666,667</font></td>
<td style="vertical-align: bottom; text-align: justify"> </td>
<td style="vertical-align: bottom; text-align: justify"> </td>
<td style="vertical-align: bottom; text-align: justify"> </td>
<td style="vertical-align: bottom; text-align: right"><font style="font-size: 10pt">10.00</font></td>
<td style="vertical-align: bottom; text-align: justify"> </td>
<td style="vertical-align: bottom; text-align: justify"> </td>
<td style="vertical-align: bottom; text-align: justify"><font style="font-size: 10pt">$</font></td>
<td style="vertical-align: bottom; text-align: right"><font style="font-size: 10pt">0.00625</font></td>
<td style="vertical-align: bottom; text-align: justify"> </td></tr>
<tr style="background-color: white">
<td style="vertical-align: bottom; text-align: justify"> </td>
<td style="text-align: justify"> </td>
<td style="vertical-align: bottom; text-align: justify"> </td>
<td style="vertical-align: bottom; text-align: justify"> </td>
<td style="vertical-align: bottom; text-align: justify"> </td>
<td style="vertical-align: bottom; text-align: right"> </td>
<td style="vertical-align: bottom; text-align: justify"> </td>
<td style="vertical-align: bottom; text-align: justify"> </td>
<td style="vertical-align: bottom; text-align: justify"> </td>
<td style="vertical-align: bottom; text-align: right"> </td>
<td style="vertical-align: bottom; text-align: justify"> </td>
<td style="vertical-align: bottom; text-align: justify"> </td>
<td style="vertical-align: bottom; text-align: justify"> </td>
<td style="vertical-align: bottom; text-align: right"> </td>
<td style="vertical-align: bottom; text-align: justify"> </td>
<td style="vertical-align: bottom; text-align: justify"> </td>
<td style="vertical-align: bottom; text-align: justify"> </td>
<td style="vertical-align: bottom; text-align: right"> </td>
<td style="vertical-align: bottom; text-align: justify"> </td>
<td style="vertical-align: bottom; text-align: justify"> </td>
<td style="vertical-align: bottom; text-align: justify"> </td>
<td style="vertical-align: bottom; text-align: right"> </td>
<td style="vertical-align: bottom; text-align: justify"> </td>
<td style="vertical-align: bottom; text-align: justify"> </td>
<td style="vertical-align: bottom; text-align: justify"> </td>
<td style="vertical-align: bottom; text-align: right"> </td>
<td style="vertical-align: bottom; text-align: justify"> </td></tr>
<tr style="background-color: #CCEEFF">
<td style="vertical-align: bottom; border-bottom-style: solid; border-bottom-width: 1pt; text-align: justify"><font style="font-size: 10pt">$</font></td>
<td style="border-bottom-style: solid; border-bottom-width: 1pt; text-align: right"><font style="font-size: 10pt">0.0005</font></td>
<td style="vertical-align: bottom; text-align: justify"> </td>
<td style="vertical-align: bottom; text-align: justify"> </td>
<td style="vertical-align: bottom; border-bottom-style: solid; border-bottom-width: 1pt; text-align: justify"> </td>
<td style="vertical-align: bottom; border-bottom-style: solid; border-bottom-width: 1pt; text-align: right"><font style="font-size: 10pt">1,000,000</font></td>
<td style="vertical-align: bottom; text-align: justify"> </td>
<td style="vertical-align: bottom; text-align: justify"> </td>
<td style="vertical-align: bottom; border-bottom-style: solid; border-bottom-width: 1pt; text-align: justify"> </td>
<td style="vertical-align: bottom; border-bottom-style: solid; border-bottom-width: 1pt; text-align: right"><font style="font-size: 10pt">1.30</font></td>
<td style="vertical-align: bottom; text-align: justify"> </td>
<td style="vertical-align: bottom; text-align: justify"> </td>
<td style="vertical-align: bottom; border-bottom-style: solid; border-bottom-width: 1pt; text-align: justify"><font style="font-size: 10pt">$</font></td>
<td style="vertical-align: bottom; border-bottom-style: solid; border-bottom-width: 1pt; text-align: right"><font style="font-size: 10pt">0.0005</font></td>
<td style="vertical-align: bottom; text-align: justify"> </td>
<td style="vertical-align: bottom; text-align: justify"> </td>
<td style="vertical-align: bottom; border-bottom-style: solid; border-bottom-width: 1pt; text-align: justify"> </td>
<td style="vertical-align: bottom; border-bottom-style: solid; border-bottom-width: 1pt; text-align: right"><font style="font-size: 10pt">1,000,000</font></td>
<td style="vertical-align: bottom; text-align: justify"> </td>
<td style="vertical-align: bottom; text-align: justify"> </td>
<td style="vertical-align: bottom; border-bottom-style: solid; border-bottom-width: 1pt; text-align: justify"> </td>
<td style="vertical-align: bottom; border-bottom-style: solid; border-bottom-width: 1pt; text-align: right"><font style="font-size: 10pt">1.30</font></td>
<td style="vertical-align: bottom; text-align: justify"> </td>
<td style="vertical-align: bottom; text-align: justify"> </td>
<td style="vertical-align: bottom; border-bottom-style: solid; border-bottom-width: 1pt; text-align: justify"><font style="font-size: 10pt">$</font></td>
<td style="vertical-align: bottom; border-bottom-style: solid; border-bottom-width: 1pt; text-align: right"><font style="font-size: 10pt">0.0005</font></td>
<td style="vertical-align: bottom; text-align: justify"> </td></tr>
<tr style="background-color: white">
<td style="vertical-align: bottom; text-align: justify"> </td>
<td style="text-align: justify"> </td>
<td style="vertical-align: bottom; text-align: justify"> </td>
<td style="vertical-align: bottom; text-align: justify"> </td>
<td style="vertical-align: bottom; text-align: justify"> </td>
<td style="vertical-align: bottom; text-align: right"> </td>
<td style="vertical-align: bottom; text-align: justify"> </td>
<td style="vertical-align: bottom; text-align: justify"> </td>
<td style="vertical-align: bottom; text-align: justify"> </td>
<td style="vertical-align: bottom; text-align: right"> </td>
<td style="vertical-align: bottom; text-align: justify"> </td>
<td style="vertical-align: bottom; text-align: justify"> </td>
<td style="vertical-align: bottom; text-align: justify"> </td>
<td style="vertical-align: bottom; text-align: right"> </td>
<td style="vertical-align: bottom; text-align: justify"> </td>
<td style="vertical-align: bottom; text-align: justify"> </td>
<td style="vertical-align: bottom; text-align: justify"> </td>
<td style="vertical-align: bottom; text-align: right"> </td>
<td style="vertical-align: bottom; text-align: justify"> </td>
<td style="vertical-align: bottom; text-align: justify"> </td>
<td style="vertical-align: bottom; text-align: justify"> </td>
<td style="vertical-align: bottom; text-align: right"> </td>
<td style="vertical-align: bottom; text-align: justify"> </td>
<td style="vertical-align: bottom; text-align: justify"> </td>
<td style="vertical-align: bottom; text-align: justify"> </td>
<td style="vertical-align: bottom; text-align: right"> </td>
<td style="vertical-align: bottom; text-align: justify"> </td></tr>
<tr style="background-color: #CCEEFF">
<td style="vertical-align: top; border-bottom-style: double; border-bottom-width: 2.25pt"><font style="font-size: 10pt">$</font></td>
<td style="border-bottom: black 2.25pt double; text-align: right"><font style="font-size: 10pt">0.0005 - 975,000</font></td>
<td style="vertical-align: bottom; text-align: justify"> </td>
<td style="vertical-align: bottom; text-align: justify"> </td>
<td style="vertical-align: bottom; border-bottom-style: double; border-bottom-width: 2.25pt; text-align: justify"> </td>
<td style="vertical-align: bottom; border-bottom-style: double; border-bottom-width: 2.25pt; text-align: right"><font style="font-size: 10pt">197,000,001</font></td>
<td style="vertical-align: bottom; text-align: justify"> </td>
<td style="vertical-align: bottom; text-align: justify"> </td>
<td style="vertical-align: bottom; border-bottom-style: double; border-bottom-width: 2.25pt; text-align: justify"> </td>
<td style="vertical-align: bottom; border-bottom-style: double; border-bottom-width: 2.25pt; text-align: right"><font style="font-size: 10pt">4.10</font></td>
<td style="vertical-align: bottom; text-align: justify"> </td>
<td style="vertical-align: bottom; text-align: justify"> </td>
<td style="vertical-align: bottom; border-bottom-style: double; border-bottom-width: 2.25pt; text-align: justify"><font style="font-size: 10pt">$</font></td>
<td style="vertical-align: bottom; border-bottom-style: double; border-bottom-width: 2.25pt; text-align: right"><font style="font-size: 10pt">0.00625</font></td>
<td style="vertical-align: bottom; text-align: justify"> </td>
<td style="vertical-align: bottom; text-align: justify"> </td>
<td style="vertical-align: bottom; border-bottom-style: double; border-bottom-width: 2.25pt; text-align: justify"> </td>
<td style="vertical-align: bottom; border-bottom-style: double; border-bottom-width: 2.25pt; text-align: right"><font style="font-size: 10pt">33,666,668</font></td>
<td style="vertical-align: bottom; text-align: justify"> </td>
<td style="vertical-align: bottom; text-align: justify"> </td>
<td style="vertical-align: bottom; border-bottom-style: double; border-bottom-width: 2.25pt; text-align: justify"> </td>
<td style="vertical-align: bottom; border-bottom-style: double; border-bottom-width: 2.25pt; text-align: right"><font style="font-size: 10pt">4.10</font></td>
<td style="vertical-align: bottom; text-align: justify"> </td>
<td style="vertical-align: bottom; text-align: justify"> </td>
<td style="vertical-align: bottom; border-bottom-style: double; border-bottom-width: 2.25pt; text-align: justify"><font style="font-size: 10pt">$</font></td>
<td style="vertical-align: bottom; border-bottom-style: double; border-bottom-width: 2.25pt; text-align: right"><font style="font-size: 10pt">0.00625</font></td>
<td style="vertical-align: bottom; text-align: justify"> </td></tr>
</table>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify">On March 28, 2013 the Company initiated patent
litigation against an outside party. In March 2015, the case was in full discovery, the pre-trial hearing was held, and the deliberations
were continuing. Mediation took place in May 2015 to discuss a potential settlement, and on January 15, 2016, the parties reached
a settlement in the matter. As part of the settlement, the Company received a payment in January 2016 of $9,750,000 and incurred
fees related to the settlement of $4,187,257.</p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify; text-indent: 0.5in"> </p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify">During the nine months ended September 30,
2016, the Company wrote off $414,219 of trade payables, recorded as forgiveness of debt, that were aged over ten years. Additionally,
accrued interest of $71,153 was forgiven and written-off (see Note 2).</p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify; text-indent: 0.5in"> </p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify">In March 2015 the Company entered into a settlement
agreement relating to a lawsuit with a former channel partner for $412,500 which was recorded as other income. In the period ended
September 30, 2015, the Company and the former channel partner amended the settlement agreement and reduced the total settlement
to $305,000.</p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify">For the nine months ended September 30, 2016
and 2015, the Company recognized net income of $4,306,356 and net loss of ($265,826), respectively. The Company did not record
any provision for income taxes because the net income for these periods was offset by available net operating losses of approximately
$18.9 million and $18.1 million, respectively.</p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify; text-indent: 0.5in"> </p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify">In accordance with guidance of FASB Accounting
Standards Codification (“ASC”) 740, Income Taxes, the Company evaluates its deferred tax assets to determine if a valuation
allowance is required based on the consideration of all available evidence using a “more likely than not” standard,
with significant weight being given to evidence that can be objectively verified. This assessment considers, among other matters,
the nature, frequency and severity of current and cumulative losses, forecasts of future profitability; the length of statutory
carryover periods for operating losses and tax credit carryovers; and available tax planning alternatives. Our deferred tax assets
are composed primarily of U.S. federal net operating loss carryforwards and temporary differences related to stock based compensation.
Based on available objective evidence, management believes it is more likely than not that these deferred tax assets are not recognizable
and will not be recognizable until its determined that we have sufficient taxable income. We may recognize the tax benefit from
an uncertain tax position only if it is more likely than not that the tax position will be sustained on examination by the taxing
authorities, based on the technical merits of the position. The tax benefits recognized in the financial statements from such a
position should be measured based on the largest benefit that has a greater than fifty percent likelihood of being realized upon
ultimate settlement. ASC 740 also provides guidance on de-recognition, classification, interest and penalties on income taxes,
accounting in interim periods, and disclosures. As of September 30, 2016, the Company does not have any liabilities for unrecognized
tax uncertainties.</p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify"><i><u>Asset Sale and Licensing Agreement</u></i></p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify; text-indent: 0.5in"> </p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify">On August 24, 2015, the Company entered into
an agreement with Cyber Safety, Inc., a New York corporation (“Cyber Safety”) for Cyber Safety to license, and retain
an option to purchase, the patents and Intellectual Property related to the GuardedID®<font style="font-family: Symbol"> </font>and
MobileTrust® software. In conjunction with the licensing and the option to purchase, Cyber Safety loaned the Company $408,000
in 2015 and $75,000 (see Note 4) in 2016. During the nine months ended September 30, 2016, $450,000 was repaid to Cyber Safety,
and at September 30, 2016, $33,000 is outstanding.</p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify; text-indent: 0.5in"> </p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify">Cyber Safety has the option to buy our GuardedID®<font style="font-family: Symbol">
</font>patent for $9,000,000 that expires on September 30, 2020. At September 30, 2016, the Company does not have an estimate
if Cyber Safety will exercise its option to make the purchase. Cyber Safety will also resell our GuardedID® and MobileTrust®
products, for which we will receive a royalty, while we retain an unlimited license to resell those products.</p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify; text-indent: 0.5in"> </p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify">As a condition of the asset purchase agreement,
Cyber Safety will license the Malware Suite (as defined in the Asset Purchase Agreement) up to and until September 30, 2020. Pursuant
to this license, Cyber Safety shall pay the Company 15% of the net amount Cyber Safety receives, as defined, which amount may be
increased to 20% under certain conditions for ProtectID®<font style="font: 10pt Symbol"></font>, and is subject to reduction for commissions and support costs
that Cyber Safety will be obligated to pay to the Company.</p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify; text-indent: 0.5in"> </p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify">In March 2016, Advanced Cyber, a subsidiary
of Cyber Safety, agreed to pay the Company $25,000 per month as a license fee in conjunction with Company’s agreements with
Cyber Safety. Included in revenue for the three and nine months ended September 30, 2016 is $75,000 and $175,000, respectively,
of license revenue from Advanced Cyber. At September 30, 2016, the total license fee receivable due from Advanced Cyber was $175,000.</p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify; text-indent: 0.5in"> </p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify"><i><u>Legal Proceedings</u></i></p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify; text-indent: 0.5in"> </p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify">On June 20, 2016, the Company initiated additional
patent litigation against three major competitors in the U.S. District Court for the District of New Jersey in Newark, for infringement
of United States Patent No. 8,484,698. This litigation is ongoing.</p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify; text-indent: 0.5in"> </p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify"><i><u>Due to Factor</u></i></p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify; text-indent: 0.5in"> </p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify">In March 2007, the Company entered into a sale
and subordination agreement with a factoring firm whereby the Company sold its rights to two invoices, from February 2007 and March
2007, totaling $470,200 to the factor. Upon signing the agreement and providing the required disclosures, the factor remitted $197,450
to the Company. By December 31, 2007, the two invoice were deemed uncollectible. In February 2008, the Company agreed to pay the
factor a settlement of $75,000 in September 2008, unless both parties mutually agreed to extend the due date. In September 2008,
the Company and the factor reached a verbal agreement to extend the due date to December 31, 2008. The Company is currently pursuing
a further extension. As of September 30, 2016, the balance due to the factor by the Company was $209,192 including interest.</p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify">The accompanying financial statements have
been prepared on a going concern basis, which contemplates the realization of assets and the settlement of liabilities and commitments
in the normal course of business. As reflected in the accompanying financial statements, for the nine months ended September 30,
2016, the Company incurred a loss from operations of $1,416,296 and at September 30, 2016, the Company had a stockholders’
deficit of $7,621,534. These factors raise substantial doubt about the Company’s ability to continue as a going concern.
In addition, the Company’s independent registered public accounting firm, in its report on the Company’s December 31,
2015 financial statements, has raised substantial doubt about the Company’s ability to continue as a going concern. The financial
statements do not include any adjustments that might be necessary if the Company is unable to continue as a going concern.</p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify; text-indent: 0.5in"> </p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify">The Company’s ability to continue as
a going concern is dependent upon its ability to continue to implement its business plan. Currently, management is attempting to
increase revenues and improve gross margins by redirecting its sales focus from direct sales to domestic and international sales
channels, primarily selling through a channel of distributors, value added resellers, strategic partners and original equipment
manufacturers. While the Company believes in the viability of its strategy to increase revenues, there can be no assurances to
that effect. The Company’s ability to continue as a going concern is dependent upon its ability to continually increase its
customer base and realize increased revenues from recently signed contracts. No assurance can be given that any future financing,
if needed, will be available or, if available, that it will be on terms that are satisfactory to the Company. Even if the Company
is able to obtain additional financing, if needed, it may contain undue restrictions on its operations, in the case of debt financing,
or cause substantial dilution for its stock holders, in the case of equity financing.</p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify">The accompanying unaudited financial statements
have been prepared in accordance with accounting principles generally accepted in the United States of America (“U.S. GAAP”)
for interim financial information and with the rules and regulations of the United States Securities and Exchange Commission to
Form 10-Q and Article 8 of Regulation S-X. Accordingly, they do not include all of the information and footnotes required by U.S.
GAAP for complete financial statements. In the opinion of management, all adjustments (consisting of normal recurring accruals)
considered necessary for a fair presentation of the financial position, results of operations and cash flows for the interim periods
have been included. The results of operations for the nine months ended September 30, 2016 are not necessarily indicative of the
results of operations to be expected for the full fiscal year ending December 31, 2016. These financial statements should be read
in conjunction with the financial statements of the Company for the year ended December 31, 2015 and notes thereto contained in
the Annual Report on Form 10-K of the Company as filed with the United States Securities and Exchange Commission (“SEC”)
on April 14, 2016.</p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify">The preparation of financial statements in
conformity with generally accepted accounting principles 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 financial statements
and the reported amounts of revenues and expenses during the reporting period. Significant estimates include those related to accounting
for potential liabilities and the assumptions made in valuing stock instruments issued for services and derivative liabilities.
Actual results could differ from those estimates.</p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify">The Company recognizes revenue when (i) persuasive
evidence of an arrangement exists, (ii) the product has been shipped or the services have been rendered to the customer and there
are no significant uncertainties surrounding acceptance by the customer, (iii) the sales price is fixed and determinable, and (iv)
collectability is reasonably assured. When the Company recognizes revenue, no provisions are made for returns because, historically,
there have been very few sales returns and adjustments that have impacted the ultimate collection of revenues.</p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify; text-indent: 0.5in"> </p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify">Revenue from hardware sales is recognized when
the product is shipped to the customer and there are either no unfulfilled obligations by the Company, or any obligations that
will not affect the customer's final acceptance of the arrangement. All costs of these obligations are accrued when the corresponding
revenue is recognized.</p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify; text-indent: 0.5in"> </p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify">Revenue from time and service contracts is
recognized as the services are provided. Revenue from delivered elements of one-time charge licensed software is recognized at
the inception of the license term, provided we have vendor-specific objective evidence of the fair value of each delivered element.
Revenue is deferred for undelivered elements. The Company recognizes revenue from the sale of software licenses when the four criteria
discussed above are met. If the Company determines that collection of a fee is not reasonably assured, it defers the fee and recognizes
revenue at the time collection becomes reasonably assured, which is generally upon receipt of cash. Revenue from monthly software
licenses is recognized on a subscription basis.</p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify; text-indent: 0.5in"> </p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify">The Company offers an Application Service Provider
(ASP) hosted cloud service whereby customer usage transactions are invoiced monthly on a cost per transaction basis.</p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify">The Company periodically issues stock options
and warrants to employees and non-employees in non-capital raising transactions for services and for financing costs. The Company
accounts for stock option and warrant grants issued and vesting to employees based on the authoritative guidance provided by the
Financial Accounting Standards Board (FASB) whereas the value of the award is measured on the date of grant and recognized as compensation
expense on the straight-line basis over the vesting period. The Company accounts for stock option and warrant grants issued and
vesting to non-employees in accordance with the authoritative guidance of the FASB whereas the value of the stock compensation
is based upon the measurement date as determined at either a) the date at which a performance commitment is reached, or b) at the
date at which the necessary performance to earn the equity instruments is complete. Options granted to non-employees are revalued
each reporting period to determine the amount to be recorded as an expense in the respective period. As the options vest, they
are valued on each vesting date and an adjustment is recorded for the difference between the value already recorded and the then
current value on the date of vesting. In certain circumstances where there are no future performance requirements by the non-employee,
option grants are immediately vested and the total stock-based compensation charge is recorded in the period of the measurement
date.</p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify; text-indent: 0.5in"> </p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify">The fair value of the Company’s stock
option and warrant grants are estimated using the Black-Scholes-Merton Option Pricing model, which uses certain assumptions related
to risk-free interest rates, expected volatility, expected life of the stock options or warrants, and future dividends. Compensation
expense is recorded based upon the value derived from the Black-Scholes-Merton Option Pricing model, and based on actual experience.
The assumptions used in the Black-Scholes-Merton Option Pricing model could materially affect compensation expense recorded in
future periods.</p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify">The Company evaluates its financial instruments
to determine if such instruments are derivatives or contain features that qualify as embedded derivatives. For derivative financial
instruments that are accounted for as liabilities, the derivative instrument is initially recorded at its fair value and is
then re-valued at each reporting date, with changes in the fair value reported in the statements of operations. The classification
of derivative instruments, including whether such instruments should be recorded as liabilities or as equity, is evaluated at the
end of each reporting period. Derivative instrument liabilities are classified in the balance sheet as current or non-current based
on whether or not net-cash settlement of the derivative instrument could be required within 12 months of the balance sheet date.</p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify; text-indent: 0.5in"> </p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify">To determine the number of authorized but unissued
shares available to satisfy outstanding convertible securities, the Company uses a sequencing method to prioritize its convertible
securities as prescribed by ASC 815-40-35. At each reporting date, the Company reviews its convertible securities to determine
that their classification is appropriate.</p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify">The Company follows the authoritative guidance
issued by the Financial Accounting Standards Board (“FASB”) for fair value measurements. Fair value is defined as the
price that would be received to sell an asset or paid to transfer a liability in the principal or most advantageous market for
the asset or liability in an orderly transaction between market participants at the measurement date. A fair value hierarchy was
established, which prioritizes the inputs used in measuring fair value into three broad levels as follows:</p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify; text-indent: 0.5in"> </p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify">Level 1—Quoted prices in active
markets for identical assets or liabilities.</p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify">Level 2—Inputs, other than the quoted
prices in active markets, that are observable either directly or indirectly.</p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify">Level 3—Unobservable inputs based
on the Company's assumptions.</p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify; text-indent: 0.5in"> </p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify">The Company is required to use of observable
market data if such data is available without undue cost and effort.</p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify; text-indent: 0.5in"> </p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify">As of September 30, 2016 and December 31, 2015,
the Company’s balance sheets included the fair value of derivative liabilities of $256,654 and $989,019, respectively, which
were based on Level 2 measurements. </p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify; text-indent: 0.5in"> </p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify">The recorded amounts for accounts receivable,
accounts payable, accrued expenses, convertible notes, and notes payables approximate their fair value due to their short term
nature.</p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify">For the interim period ended September 30,
2016, sales to three customers comprised 45%, 29% and 12% of revenues, respectively. For the interim period ended September 30,
2015, sales to one customer comprised 64% of revenues. At September 30, 2016, two customers comprised 65%, and 16% of accounts
receivable, respectively.</p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify">In May 2014, the FASB issued Accounting Standards
Update No. 2014-09, Revenue from Contracts with Customers. ASU 2014-09 is a comprehensive revenue recognition standard that will
supersede nearly all existing revenue recognition guidance under current U.S. GAAP and replace it with a principle based approach
for determining revenue recognition. ASU 2014-09 will require that companies recognize revenue based on the value of transferred
goods or services as they occur in the contract. The ASU also will require additional disclosure about the nature, amount, timing
and uncertainty of revenue and cash flows arising from customer contracts, including significant judgments and changes in judgments
and assets recognized from costs incurred to obtain or fulfill a contract. ASU 2014-09 is effective for interim and annual periods
beginning after December 15, 2017. Early adoption is permitted only in annual reporting periods beginning after December 15, 2016,
including interim periods therein. Entities will be able to transition to the standard either retrospectively or as a cumulative-effect
adjustment as of the date of adoption. The Company is in the process of evaluating the impact of ASU 2014-09 on the Company’s
financial statements and disclosures.</p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify; text-indent: 0.5in"> </p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify">In August 2014, the FASB issued Accounting
Standards Update No. 2014-15, Disclosure of Uncertainties about an Entity’s Ability to Continue as a Going Concern, which
provides guidance on determining when and how to disclose going-concern uncertainties in the financial statements. ASU 2014-15
requires management to perform interim and annual assessments of an entity’s ability to continue as a going concern within
one year of the date the financial statements are issued. An entity must provide certain disclosures if conditions or events raise
substantial doubt about the entity’s ability to continue as a going concern. ASU 2014-15 is effective for annual periods
ending after December 15, 2016, and interim periods thereafter. Early adoption is permitted. The Company is currently evaluating
the expected impact that the standard could have on its financial statements and related disclosures.</p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify; text-indent: 0.5in"> </p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify">In February 2016, the FASB issued Accounting
Standards Update No. 2016-02, Leases. ASU 2016-02 requires a lessee to record a right of use asset and a corresponding lease liability
on the balance sheet for all leases with terms longer than 12 months. ASU 2016-02 is effective for all interim and annual reporting
periods beginning after December 15, 2018. Early adoption is permitted. A modified retrospective transition approach is required
for lessees for capital and operating leases existing at, or entered into after, the beginning of the earliest comparative period
presented in the financial statements, with certain practical expedients available. The Company is in the process of evaluating
the impact of ASU 2016-02 on the Company’s financial statements and disclosures.</p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify; text-indent: 0.5in"> </p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify">Other recent accounting pronouncements issued
by the FASB, including its Emerging Issues Task Force, the American Institute of Certified Public Accountants, and the Securities
and Exchange Commission did not or are not believed by management to have a material impact on the Company's present or future
consolidated financial statement presentation or disclosures.</p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify">Convertible notes payable consisted of the
following:</p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify; text-indent: 0.5in"> </p>
<table cellspacing="0" cellpadding="0" style="font: 12pt Times New Roman, Times, Serif; width: 100%; font-size-adjust: none; font-stretch: normal">
<tr style="vertical-align: bottom">
<td style="text-align: justify"> </td>
<td style="text-align: justify"> </td>
<td colspan="2" id="hdcell" style="border-bottom-style: solid; border-bottom-width: 1pt; text-align: center"><font style="font-size: 10pt"><b>September 30,</b></font><br />
<font style="font-size: 10pt"><b>2016</b></font></td>
<td style="text-align: center"> </td>
<td style="text-align: center"> </td>
<td colspan="2" style="border-bottom-style: solid; border-bottom-width: 1pt">
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: center"><b>December 31,</b></p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: center"><b>2015</b></p></td>
<td style="text-align: center"> </td></tr>
<tr>
<td style="vertical-align: top; text-decoration: underline; text-align: justify"><font style="font-size: 10pt"><u>Secured </u></font></td>
<td style="vertical-align: bottom; text-align: justify"> </td>
<td colspan="2" id="ffcell" style="vertical-align: bottom; text-align: right"> </td>
<td style="vertical-align: bottom; text-align: justify"> </td>
<td style="vertical-align: bottom; text-align: justify"> </td>
<td colspan="2" style="vertical-align: bottom; text-align: right"> </td>
<td style="vertical-align: bottom; text-align: justify"> </td></tr>
<tr style="background-color: #CCEEFF">
<td style="vertical-align: top; text-align: justify"><font style="font-size: 10pt">(a) DART </font></td>
<td style="vertical-align: bottom; width: 1%; text-align: justify"> </td>
<td style="vertical-align: bottom; width: 1%; text-align: justify"><font style="font-size: 10pt">$</font></td>
<td style="vertical-align: bottom; width: 9%; text-align: right"><font style="font-size: 10pt">542,588</font></td>
<td style="vertical-align: bottom; width: 1%; text-align: justify"> </td>
<td style="vertical-align: bottom; width: 1%; text-align: justify"> </td>
<td style="vertical-align: bottom; width: 1%; text-align: justify"><font style="font-size: 10pt">$</font></td>
<td style="vertical-align: bottom; width: 9%; text-align: right"><font style="font-size: 10pt">542,588</font></td>
<td style="vertical-align: bottom; width: 1%; text-align: justify"> </td></tr>
<tr style="background-color: white">
<td style="text-align: justify"> </td>
<td style="vertical-align: bottom; text-align: justify"> </td>
<td style="vertical-align: bottom; text-align: justify"> </td>
<td style="vertical-align: bottom; text-align: right"> </td>
<td style="vertical-align: bottom; text-align: justify"> </td>
<td style="vertical-align: bottom; text-align: justify"> </td>
<td style="vertical-align: bottom; text-align: justify"> </td>
<td style="vertical-align: bottom; text-align: right"> </td>
<td style="vertical-align: bottom; text-align: justify"> </td></tr>
<tr style="background-color: #CCEEFF">
<td style="vertical-align: top; text-decoration: underline; text-align: justify"><font style="font-size: 10pt"><u>Unsecured </u></font></td>
<td style="vertical-align: bottom; text-align: justify"> </td>
<td style="vertical-align: bottom; text-align: justify"> </td>
<td style="vertical-align: bottom; text-align: right"> </td>
<td style="vertical-align: bottom; text-align: justify"> </td>
<td style="vertical-align: bottom; text-align: justify"> </td>
<td style="vertical-align: bottom; text-align: justify"> </td>
<td style="vertical-align: bottom; text-align: right"> </td>
<td style="vertical-align: bottom; text-align: justify"> </td></tr>
<tr style="background-color: white">
<td style="vertical-align: top; text-align: justify"><font style="font-size: 10pt">(b) Convertible notes with fixed conversion features</font></td>
<td style="vertical-align: bottom; text-align: justify"> </td>
<td style="vertical-align: bottom; text-align: justify"> </td>
<td style="vertical-align: bottom; text-align: right"><font style="font-size: 10pt">905,512</font></td>
<td style="vertical-align: bottom; text-align: justify"> </td>
<td style="vertical-align: bottom; text-align: justify"> </td>
<td style="vertical-align: bottom; text-align: justify"> </td>
<td style="vertical-align: bottom; text-align: right"><font style="font-size: 10pt">910,512</font></td>
<td style="vertical-align: bottom; text-align: justify"> </td></tr>
<tr style="background-color: #CCEEFF">
<td style="vertical-align: top; text-align: justify"><font style="font-size: 10pt">(c) Convertible notes with adjustable conversion features</font></td>
<td style="vertical-align: bottom; text-align: justify"> </td>
<td style="vertical-align: bottom; text-align: justify"> </td>
<td style="vertical-align: bottom; text-align: right"><font style="font-size: 10pt">-</font></td>
<td style="vertical-align: bottom; text-align: justify"> </td>
<td style="vertical-align: bottom; text-align: justify"> </td>
<td style="vertical-align: bottom; text-align: justify"> </td>
<td style="vertical-align: bottom; text-align: right"><font style="font-size: 10pt">824,861</font></td>
<td style="vertical-align: bottom; text-align: justify"> </td></tr>
<tr style="background-color: white">
<td style="vertical-align: top; text-align: justify"><font style="font-size: 10pt">Total convertible notes</font></td>
<td style="vertical-align: bottom; text-align: justify"> </td>
<td style="vertical-align: bottom; border-top-style: solid; border-top-width: 1pt; text-align: justify"> </td>
<td style="vertical-align: bottom; border-top-style: solid; border-top-width: 1pt; text-align: right"><font style="font-size: 10pt">1,448,100</font></td>
<td style="vertical-align: bottom; text-align: justify"> </td>
<td style="vertical-align: bottom; text-align: justify"> </td>
<td style="vertical-align: bottom; border-top-style: solid; border-top-width: 1pt; text-align: justify"> </td>
<td style="vertical-align: bottom; border-top-style: solid; border-top-width: 1pt; text-align: right"><font style="font-size: 10pt">2,277,961</font></td>
<td style="vertical-align: bottom; text-align: justify"> </td></tr>
<tr style="background-color: #CCEEFF">
<td style="vertical-align: top; text-align: justify"><font style="font-size: 10pt">Discount on convertible notes </font></td>
<td style="vertical-align: bottom; text-align: justify"> </td>
<td style="vertical-align: bottom; text-align: justify"> </td>
<td style="vertical-align: bottom; text-align: right"><font style="font-size: 10pt">-</font></td>
<td style="vertical-align: bottom; text-align: justify"> </td>
<td style="vertical-align: bottom; text-align: justify"> </td>
<td style="vertical-align: bottom; text-align: justify"> </td>
<td style="vertical-align: bottom; text-align: right"><font style="font-size: 10pt">(14,266</font></td>
<td style="vertical-align: bottom; text-align: justify"><font style="font-size: 10pt">)</font></td></tr>
<tr style="background-color: white">
<td style="vertical-align: top; text-align: justify"><font style="font-size: 10pt">Convertible notes</font></td>
<td style="vertical-align: bottom; text-align: justify"> </td>
<td style="vertical-align: bottom; border-top-style: solid; border-top-width: 1pt; border-bottom-style: solid; border-bottom-width: 1pt; text-align: justify"><font style="font-size: 10pt">$</font></td>
<td style="vertical-align: bottom; border-top-style: solid; border-top-width: 1pt; border-bottom-style: solid; border-bottom-width: 1pt; text-align: right"><font style="font-size: 10pt">1,448,100</font></td>
<td style="vertical-align: bottom; text-align: justify"> </td>
<td style="vertical-align: bottom; text-align: justify"> </td>
<td style="vertical-align: bottom; border-top-style: solid; border-top-width: 1pt; border-bottom-style: solid; border-bottom-width: 1pt; text-align: justify"><font style="font-size: 10pt">$</font></td>
<td style="vertical-align: bottom; border-top-style: solid; border-top-width: 1pt; border-bottom-style: solid; border-bottom-width: 1pt; text-align: right"><font style="font-size: 10pt">2,263,695</font></td>
<td style="vertical-align: bottom; text-align: justify"> </td></tr>
</table>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify">Notes payable consisted of the following:</p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify; text-indent: 0.5in"> </p>
<table cellspacing="0" cellpadding="0" style="font: 12pt Times New Roman, Times, Serif; width: 100%; font-size-adjust: none; font-stretch: normal">
<tr style="vertical-align: bottom">
<td style="text-align: justify"> </td>
<td style="text-align: justify"> </td>
<td colspan="2" id="hdcell" style="border-bottom-style: solid; border-bottom-width: 1pt; text-align: center"><font style="font-size: 10pt"><b>September 30,</b></font><br />
<font style="font-size: 10pt"><b>2016</b></font></td>
<td style="text-align: center"> </td>
<td style="text-align: center"> </td>
<td colspan="2" style="border-bottom-style: solid; border-bottom-width: 1pt">
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: center"><b>December 31,</b></p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: center"><b>2015</b></p></td>
<td style="text-align: justify"> </td></tr>
<tr>
<td style="vertical-align: top; text-decoration: underline; text-align: justify"><font style="font-size: 10pt"><u>Secured </u></font></td>
<td style="vertical-align: bottom; text-align: justify"> </td>
<td colspan="2" id="ffcell" style="vertical-align: bottom; text-align: right"> </td>
<td style="vertical-align: bottom; text-align: justify"> </td>
<td style="vertical-align: bottom; text-align: justify"> </td>
<td colspan="2" style="vertical-align: bottom; text-align: right"> </td>
<td style="vertical-align: bottom; text-align: justify"> </td></tr>
<tr style="background-color: #CCEEFF">
<td style="vertical-align: top; text-align: justify"><font style="font-size: 10pt">(a) H. Group Partners, Inc.</font></td>
<td style="vertical-align: bottom; width: 1%; text-align: justify"> </td>
<td style="vertical-align: bottom; width: 1%; text-align: justify"><font style="font-size: 10pt">$</font></td>
<td style="vertical-align: bottom; width: 9%; text-align: right"><font style="font-size: 10pt">-</font></td>
<td style="vertical-align: bottom; width: 1%; text-align: justify"> </td>
<td style="vertical-align: bottom; width: 1%; text-align: justify"> </td>
<td style="vertical-align: bottom; width: 1%; text-align: justify"><font style="font-size: 10pt">$</font></td>
<td style="vertical-align: bottom; width: 9%; text-align: right"><font style="font-size: 10pt">310,000</font></td>
<td style="vertical-align: bottom; width: 1%; text-align: justify"> </td></tr>
<tr style="background-color: white">
<td style="vertical-align: top; text-align: justify"><font style="font-size: 10pt">(b) Promissory note - factoring </font></td>
<td style="vertical-align: bottom; text-align: justify"> </td>
<td style="vertical-align: bottom; text-align: justify"> </td>
<td style="vertical-align: bottom; text-align: right"><font style="font-size: 10pt">-</font></td>
<td style="vertical-align: bottom; text-align: justify"> </td>
<td style="vertical-align: bottom; text-align: justify"> </td>
<td style="vertical-align: bottom; text-align: justify"> </td>
<td style="vertical-align: bottom; text-align: right"><font style="font-size: 10pt">35,200</font></td>
<td style="vertical-align: bottom; text-align: justify"> </td></tr>
<tr style="background-color: #CCEEFF">
<td style="text-align: justify"> </td>
<td style="vertical-align: bottom; text-align: justify"> </td>
<td style="vertical-align: bottom; text-align: justify"> </td>
<td style="vertical-align: bottom; text-align: right"> </td>
<td style="vertical-align: bottom; text-align: justify"> </td>
<td style="vertical-align: bottom; text-align: justify"> </td>
<td style="vertical-align: bottom; text-align: justify"> </td>
<td style="vertical-align: bottom; text-align: right"> </td>
<td style="vertical-align: bottom; text-align: justify"> </td></tr>
<tr style="background-color: white">
<td style="vertical-align: top; text-decoration: underline; text-align: justify"><font style="font-size: 10pt"><u>Unsecured</u></font></td>
<td style="vertical-align: bottom; text-align: justify"> </td>
<td style="vertical-align: bottom; text-align: justify"> </td>
<td style="vertical-align: bottom; text-align: right"> </td>
<td style="vertical-align: bottom; text-align: justify"> </td>
<td style="vertical-align: bottom; text-align: justify"> </td>
<td style="vertical-align: bottom; text-align: justify"> </td>
<td style="vertical-align: bottom; text-align: right"> </td>
<td style="vertical-align: bottom; text-align: justify"> </td></tr>
<tr style="background-color: #CCEEFF">
<td style="vertical-align: top; text-align: justify"><font style="font-size: 10pt">(c) Promissory notes </font></td>
<td style="vertical-align: bottom; text-align: justify"> </td>
<td style="vertical-align: bottom; text-align: justify"> </td>
<td style="vertical-align: bottom; text-align: right"><font style="font-size: 10pt">446,824</font></td>
<td style="vertical-align: bottom; text-align: justify"> </td>
<td style="vertical-align: bottom; text-align: justify"> </td>
<td style="vertical-align: bottom; text-align: justify"> </td>
<td style="vertical-align: bottom; text-align: right"><font style="font-size: 10pt">875,609</font></td>
<td style="vertical-align: bottom; text-align: justify"> </td></tr>
<tr style="background-color: white">
<td style="vertical-align: top; text-align: justify"><font style="font-size: 10pt">(d) Promissory notes – StrikeForce Investor Group</font></td>
<td style="vertical-align: bottom; text-align: justify"> </td>
<td style="vertical-align: bottom; text-align: justify"> </td>
<td style="vertical-align: bottom; text-align: right"><font style="font-size: 10pt">1,345,000</font></td>
<td style="vertical-align: bottom; text-align: justify"> </td>
<td style="vertical-align: bottom; text-align: justify"> </td>
<td style="vertical-align: bottom; text-align: justify"> </td>
<td style="vertical-align: bottom; text-align: right"><font style="font-size: 10pt">1,475,000</font></td>
<td style="vertical-align: bottom; text-align: justify"> </td></tr>
<tr style="background-color: #CCEEFF">
<td style="text-align: justify"> </td>
<td style="vertical-align: bottom; text-align: justify"> </td>
<td style="vertical-align: bottom; border-top-style: solid; border-top-width: 1pt; text-align: justify"> </td>
<td style="vertical-align: bottom; border-top-style: solid; border-top-width: 1pt; text-align: right"> </td>
<td style="vertical-align: bottom; text-align: justify"> </td>
<td style="vertical-align: bottom; text-align: justify"> </td>
<td style="vertical-align: bottom; border-top-style: solid; border-top-width: 1pt; text-align: justify"> </td>
<td style="vertical-align: bottom; border-top-style: solid; border-top-width: 1pt; text-align: right"> </td>
<td style="vertical-align: bottom; text-align: justify"> </td></tr>
<tr style="background-color: white">
<td style="vertical-align: top; text-align: justify"><font style="font-size: 10pt">Total notes payable </font></td>
<td style="vertical-align: bottom; text-align: justify"> </td>
<td style="vertical-align: bottom; text-align: justify"> </td>
<td style="vertical-align: bottom; text-align: right"><font style="font-size: 10pt">1,791,824</font></td>
<td style="vertical-align: bottom; text-align: justify"> </td>
<td style="vertical-align: bottom; text-align: justify"> </td>
<td style="vertical-align: bottom; text-align: justify"> </td>
<td style="vertical-align: bottom; text-align: right"><font style="font-size: 10pt">2,695,809</font></td>
<td style="vertical-align: bottom; text-align: justify"> </td></tr>
<tr style="background-color: #CCEEFF">
<td style="vertical-align: top; text-align: justify"><font style="font-size: 10pt">Discount on secured notes payable</font></td>
<td style="vertical-align: bottom; text-align: justify"> </td>
<td style="vertical-align: bottom; text-align: justify"> </td>
<td style="vertical-align: bottom; text-align: right"><font style="font-size: 10pt">-</font></td>
<td style="vertical-align: bottom; text-align: justify"> </td>
<td style="vertical-align: bottom; text-align: justify"> </td>
<td style="vertical-align: bottom; text-align: justify"> </td>
<td style="vertical-align: bottom; text-align: right"><font style="font-size: 10pt">(20,027</font></td>
<td style="vertical-align: bottom; text-align: justify"><font style="font-size: 10pt">)</font></td></tr>
<tr style="background-color: white">
<td style="vertical-align: top; text-align: justify"><font style="font-size: 10pt">Notes payable, net of discount</font></td>
<td style="vertical-align: bottom; text-align: justify"> </td>
<td style="vertical-align: bottom; border-top-style: solid; border-top-width: 1pt; text-align: justify"> </td>
<td style="vertical-align: bottom; border-top-style: solid; border-top-width: 1pt; text-align: right"><font style="font-size: 10pt">1,791,824</font></td>
<td style="vertical-align: bottom; text-align: justify"> </td>
<td style="vertical-align: bottom; text-align: justify"> </td>
<td style="vertical-align: bottom; border-top-style: solid; border-top-width: 1pt; text-align: justify"> </td>
<td style="vertical-align: bottom; border-top-style: solid; border-top-width: 1pt; text-align: right"><font style="font-size: 10pt">2,675,782</font></td>
<td style="vertical-align: bottom; text-align: justify"> </td></tr>
<tr style="background-color: #CCEEFF">
<td style="vertical-align: top; text-align: justify"><font style="font-size: 10pt">Long-term portion</font></td>
<td style="vertical-align: bottom; text-align: justify"> </td>
<td style="vertical-align: bottom; text-align: justify"> </td>
<td style="vertical-align: bottom; text-align: right"><font style="font-size: 10pt">-</font></td>
<td style="vertical-align: bottom; text-align: justify"> </td>
<td style="vertical-align: bottom; text-align: justify"> </td>
<td style="vertical-align: bottom; text-align: justify"> </td>
<td style="vertical-align: bottom; text-align: right"><font style="font-size: 10pt">(222,991</font></td>
<td style="vertical-align: bottom; text-align: justify"><font style="font-size: 10pt">)</font></td></tr>
<tr style="background-color: white">
<td style="text-align: justify"> </td>
<td style="vertical-align: bottom; text-align: justify"> </td>
<td style="vertical-align: bottom; border-top-style: solid; border-top-width: 1pt; text-align: justify"> </td>
<td style="vertical-align: bottom; border-top-style: solid; border-top-width: 1pt; text-align: right"> </td>
<td style="vertical-align: bottom; text-align: justify"> </td>
<td style="vertical-align: bottom; text-align: justify"> </td>
<td style="vertical-align: bottom; border-top-style: solid; border-top-width: 1pt; text-align: justify"> </td>
<td style="vertical-align: bottom; border-top-style: solid; border-top-width: 1pt; text-align: right"> </td>
<td style="vertical-align: bottom; text-align: justify"> </td></tr>
<tr style="background-color: #CCEEFF">
<td style="vertical-align: top; text-align: justify"><font style="font-size: 10pt">Promissory notes, current maturities</font></td>
<td style="vertical-align: bottom; text-align: justify"> </td>
<td style="vertical-align: bottom; border-bottom: black 2.25pt double; text-align: justify"><font style="font-size: 10pt">$</font></td>
<td style="border-bottom: black 2.25pt double; vertical-align: bottom; text-align: right"><font style="font-size: 10pt">1,791,824</font></td>
<td style="vertical-align: bottom; text-align: justify"> </td>
<td style="vertical-align: bottom; text-align: justify"> </td>
<td style="vertical-align: bottom; border-bottom: black 2.25pt double; text-align: justify"><font style="font-size: 10pt">$</font></td>
<td style="border-bottom: black 2.25pt double; vertical-align: bottom; text-align: right"><font style="font-size: 10pt">2,452,791</font></td>
<td style="vertical-align: bottom; text-align: justify"> </td></tr>
</table>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify">The derivative liability was valued at the
following dates using a probability weighted Black-Scholes-Merton model with the following assumptions:</p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify; text-indent: 0.5in"> </p>
<table cellspacing="0" cellpadding="0" style="font: 12pt Times New Roman, Times, Serif; width: 100%; font-size-adjust: none; font-stretch: normal">
<tr style="vertical-align: bottom">
<td style="text-align: justify"> </td>
<td style="text-align: justify"> </td>
<td colspan="2" id="hdcell" style="border-bottom-style: solid; border-bottom-width: 1pt; text-align: center"><font style="font-size: 10pt"><b>September 30,</b></font><br />
<font style="font-size: 10pt"><b>2016</b></font></td>
<td style="text-align: justify"> </td>
<td style="text-align: justify"> </td>
<td colspan="2" style="border-bottom-style: solid; border-bottom-width: 1pt; padding-left: 15.9pt; text-align: center"><font style="font-size: 10pt"><b>December 31, 2015</b></font></td>
<td style="text-align: justify"> </td></tr>
<tr>
<td style="vertical-align: top; text-align: justify"><font style="font-size: 10pt">Conversion feature:</font></td>
<td style="vertical-align: bottom; text-align: justify"> </td>
<td colspan="2" id="ffcell" style="vertical-align: bottom; text-align: right"> </td>
<td style="vertical-align: bottom; text-align: justify"> </td>
<td style="vertical-align: bottom; text-align: justify"> </td>
<td colspan="2" style="vertical-align: bottom; text-align: right"> </td>
<td style="vertical-align: bottom; text-align: justify"> </td></tr>
<tr style="background-color: #CCEEFF">
<td style="vertical-align: top; padding-left: 11.25pt; text-align: justify"><font style="font-size: 10pt">Risk-free interest rate</font></td>
<td style="vertical-align: bottom; width: 1%; text-align: justify"> </td>
<td style="vertical-align: bottom; width: 1%; text-align: justify"> </td>
<td style="vertical-align: bottom; width: 9%; text-align: right"><font style="font-size: 10pt">0.16</font></td>
<td style="vertical-align: bottom; width: 1%; text-align: justify"><font style="font-size: 10pt">%</font></td>
<td style="vertical-align: bottom; width: 1%; text-align: justify"> </td>
<td style="vertical-align: bottom; width: 1%; text-align: justify"> </td>
<td style="vertical-align: bottom; width: 9%; text-align: right"><font style="font-size: 10pt">0.16</font></td>
<td style="vertical-align: bottom; width: 1%; text-align: justify"><font style="font-size: 10pt">%</font></td></tr>
<tr style="background-color: white">
<td style="vertical-align: top; padding-left: 11.25pt; text-align: justify"><font style="font-size: 10pt">Expected volatility</font></td>
<td style="vertical-align: bottom; text-align: justify"> </td>
<td style="vertical-align: bottom; text-align: justify"> </td>
<td style="vertical-align: bottom; text-align: right"><font style="font-size: 10pt">75</font></td>
<td style="vertical-align: bottom; text-align: justify"><font style="font-size: 10pt">%</font></td>
<td style="vertical-align: bottom; text-align: justify"> </td>
<td style="vertical-align: bottom; text-align: justify"> </td>
<td style="vertical-align: bottom; text-align: right"><font style="font-size: 10pt">100</font></td>
<td style="vertical-align: bottom; text-align: justify"><font style="font-size: 10pt">%</font></td></tr>
<tr style="background-color: #CCEEFF">
<td style="vertical-align: top; padding-left: 11.25pt; text-align: justify"><font style="font-size: 10pt">Expected life (in years)</font></td>
<td style="vertical-align: bottom; text-align: justify"> </td>
<td colspan="2" style="text-align: right"><font style="font-size: 10pt">1 year</font></td>
<td style="vertical-align: bottom; text-align: justify"> </td>
<td style="vertical-align: bottom; text-align: justify"> </td>
<td colspan="2" style="text-align: right"><font style="font-size: 10pt">.25 to 5 years</font></td>
<td style="vertical-align: bottom; text-align: justify"> </td></tr>
<tr style="background-color: white">
<td style="vertical-align: top; padding-left: 11.25pt; text-align: justify"><font style="font-size: 10pt">Expected dividend yield</font></td>
<td style="vertical-align: bottom; text-align: justify"> </td>
<td style="vertical-align: bottom; text-align: justify"> </td>
<td style="vertical-align: bottom; text-align: right"><font style="font-size: 10pt">-</font></td>
<td style="vertical-align: bottom; text-align: justify"> </td>
<td style="vertical-align: bottom; text-align: justify"> </td>
<td style="vertical-align: bottom; text-align: justify"> </td>
<td style="vertical-align: bottom; text-align: right"><font style="font-size: 10pt">-</font></td>
<td style="vertical-align: bottom; text-align: justify"> </td></tr>
<tr style="background-color: #CCEEFF">
<td style="text-align: justify"> </td>
<td style="vertical-align: bottom; text-align: justify"> </td>
<td style="vertical-align: bottom; text-align: justify"> </td>
<td style="vertical-align: bottom; text-align: right"> </td>
<td style="vertical-align: bottom; text-align: justify"> </td>
<td style="vertical-align: bottom; text-align: justify"> </td>
<td style="vertical-align: bottom; text-align: justify"> </td>
<td style="vertical-align: bottom; text-align: right"> </td>
<td style="vertical-align: bottom; text-align: justify"> </td></tr>
<tr style="background-color: white">
<td style="vertical-align: top; text-align: justify"><font style="font-size: 10pt">Fair Value:</font></td>
<td style="vertical-align: bottom; text-align: justify"> </td>
<td style="vertical-align: bottom; text-align: justify"> </td>
<td style="vertical-align: bottom; text-align: right"> </td>
<td style="vertical-align: bottom; text-align: justify"> </td>
<td style="vertical-align: bottom; text-align: justify"> </td>
<td style="vertical-align: bottom; text-align: justify"> </td>
<td style="vertical-align: bottom; text-align: right"> </td>
<td style="vertical-align: bottom; text-align: justify"> </td></tr>
<tr style="background-color: #CCEEFF">
<td style="vertical-align: top; padding-left: 11.25pt; text-align: justify"><font style="font-size: 10pt">Conversion feature</font></td>
<td style="vertical-align: bottom; text-align: justify"> </td>
<td style="vertical-align: bottom; border-bottom-style: double; border-bottom-width: 2.25pt; text-align: justify"><font style="font-size: 10pt">$</font></td>
<td style="vertical-align: bottom; border-bottom-style: double; border-bottom-width: 2.25pt; text-align: right"><font style="font-size: 10pt">256,654</font></td>
<td style="vertical-align: bottom; text-align: justify"> </td>
<td style="vertical-align: bottom; text-align: justify"> </td>
<td style="vertical-align: bottom; border-bottom-style: double; border-bottom-width: 2.25pt; text-align: justify"><font style="font-size: 10pt">$</font></td>
<td style="vertical-align: bottom; border-bottom-style: double; border-bottom-width: 2.25pt; text-align: right"><font style="font-size: 10pt">989,019</font></td>
<td style="vertical-align: bottom; text-align: justify"> </td></tr>
</table>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify">The table below summarizes the Company’s
warrant activities at September 30, 2016:</p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify; text-indent: 0.5in"> </p>
<table cellspacing="0" cellpadding="0" style="font: 12pt Times New Roman, Times, Serif; width: 100%; font-size-adjust: none; font-stretch: normal">
<tr style="vertical-align: bottom">
<td style="text-align: justify"> </td>
<td style="text-align: justify"> </td>
<td colspan="2" id="hdcell" style="border-bottom: black 1pt solid">
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: center"><b>Number of</b></p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: center"><b>Warrant Shares</b></p></td>
<td style="text-align: justify"> </td>
<td style="text-align: justify"> </td>
<td colspan="2" style="border-bottom: black 1pt solid">
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: center"><b>Exercise Price Range</b></p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: center"><b>Per Share</b></p></td>
<td style="text-align: justify"> </td>
<td style="text-align: justify"> </td>
<td colspan="2" style="border-bottom: black 1pt solid; text-align: center"><font style="font-size: 10pt"><b>Weighted Average Exercise Price</b></font></td>
<td style="text-align: justify"> </td>
<td style="text-align: justify"> </td>
<td colspan="2" style="border-bottom: black 1pt solid; text-align: center"><font style="font-size: 10pt"><b>Fair Value</b></font><br />
<font style="font-size: 10pt"><b>at Date</b></font><br />
<font style="font-size: 10pt"><b>of Issuance</b></font></td>
<td style="text-align: justify"> </td>
<td style="text-align: justify"> </td>
<td colspan="2" style="border-bottom: black 1pt solid">
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: center"><b>Aggregate</b></p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: center"><b>Intrinsic</b></p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: center"><b>Value</b></p></td>
<td style="text-align: justify"> </td></tr>
<tr>
<td style="text-align: justify"> </td>
<td style="vertical-align: bottom; text-align: justify"> </td>
<td colspan="2" id="ffcell" style="vertical-align: bottom; text-align: right"> </td>
<td style="vertical-align: bottom; text-align: justify"> </td>
<td style="vertical-align: bottom; text-align: justify"> </td>
<td colspan="2" style="vertical-align: bottom; text-align: right"> </td>
<td style="vertical-align: bottom; text-align: justify"> </td>
<td style="vertical-align: bottom; text-align: justify"> </td>
<td colspan="2" style="vertical-align: bottom; text-align: right"> </td>
<td style="vertical-align: bottom; text-align: justify"> </td>
<td style="vertical-align: bottom; text-align: justify"> </td>
<td colspan="2" style="vertical-align: bottom; text-align: right"> </td>
<td style="vertical-align: bottom; text-align: justify"> </td>
<td style="vertical-align: bottom; text-align: justify"> </td>
<td colspan="2" style="vertical-align: bottom; text-align: right"> </td>
<td style="vertical-align: bottom; text-align: justify"> </td></tr>
<tr style="background-color: #CCEEFF">
<td style="vertical-align: top; text-align: justify"><font style="font-size: 10pt">Balance, December 31, 2015</font></td>
<td style="vertical-align: bottom; width: 1%; text-align: justify"> </td>
<td style="vertical-align: bottom; width: 1%; text-align: justify"> </td>
<td style="vertical-align: bottom; width: 9%; text-align: right"><font style="font-size: 10pt">30</font></td>
<td style="vertical-align: bottom; width: 1%; text-align: justify"> </td>
<td style="vertical-align: bottom; width: 1%; text-align: justify"> </td>
<td style="vertical-align: bottom; width: 1%; text-align: justify"><font style="font-size: 10pt">$</font></td>
<td style="width: 15%; text-align: right"><font style="font-size: 10pt">695,000-9,750,000,000</font></td>
<td style="vertical-align: bottom; width: 1%; text-align: justify"> </td>
<td style="vertical-align: bottom; width: 1%; text-align: justify"> </td>
<td style="vertical-align: bottom; width: 1%; text-align: justify"><font style="font-size: 10pt">$</font></td>
<td style="vertical-align: bottom; width: 9%; text-align: right"><font style="font-size: 10pt">10,430,000</font></td>
<td style="vertical-align: bottom; width: 1%; text-align: justify"> </td>
<td style="vertical-align: bottom; width: 1%; text-align: justify"> </td>
<td style="vertical-align: bottom; width: 1%; text-align: justify"><font style="font-size: 10pt">$</font></td>
<td style="vertical-align: bottom; width: 9%; text-align: right"><font style="font-size: 10pt">509,262</font></td>
<td style="vertical-align: bottom; width: 1%; text-align: justify"> </td>
<td style="vertical-align: bottom; width: 1%; text-align: justify"> </td>
<td style="vertical-align: bottom; width: 1%; text-align: justify"><font style="font-size: 10pt">$</font></td>
<td style="vertical-align: bottom; width: 9%; text-align: right"><font style="font-size: 10pt">-</font></td>
<td style="vertical-align: bottom; width: 1%; text-align: justify"> </td></tr>
<tr style="background-color: white">
<td style="text-align: justify"> </td>
<td style="vertical-align: bottom; text-align: justify"> </td>
<td style="vertical-align: bottom; text-align: justify"> </td>
<td style="vertical-align: bottom; text-align: right"> </td>
<td style="vertical-align: bottom; text-align: justify"> </td>
<td style="vertical-align: bottom; text-align: justify"> </td>
<td colspan="2" style="vertical-align: bottom; text-align: right"> </td>
<td style="vertical-align: bottom; text-align: justify"> </td>
<td style="vertical-align: bottom; text-align: justify"> </td>
<td style="vertical-align: bottom; text-align: justify"> </td>
<td style="vertical-align: bottom; text-align: right"> </td>
<td style="vertical-align: bottom; text-align: justify"> </td>
<td style="vertical-align: bottom; text-align: justify"> </td>
<td style="vertical-align: bottom; text-align: justify"> </td>
<td style="vertical-align: bottom; text-align: right"> </td>
<td style="vertical-align: bottom; text-align: justify"> </td>
<td style="vertical-align: bottom; text-align: justify"> </td>
<td style="vertical-align: bottom; text-align: justify"> </td>
<td style="vertical-align: bottom; text-align: right"> </td>
<td style="vertical-align: bottom; text-align: justify"> </td></tr>
<tr style="background-color: #CCEEFF">
<td style="vertical-align: top; text-align: justify"><font style="font-size: 10pt">Granted</font></td>
<td style="vertical-align: bottom; text-align: justify"> </td>
<td style="vertical-align: bottom; text-align: justify"> </td>
<td style="vertical-align: bottom; text-align: right"><font style="font-size: 10pt">-</font></td>
<td style="vertical-align: bottom; text-align: justify"> </td>
<td style="vertical-align: bottom; text-align: justify"> </td>
<td style="vertical-align: bottom; text-align: justify"> </td>
<td style="vertical-align: bottom; text-align: right"><font style="font-size: 10pt">-</font></td>
<td style="vertical-align: bottom; text-align: justify"> </td>
<td style="vertical-align: bottom; text-align: justify"> </td>
<td style="vertical-align: bottom; text-align: justify"> </td>
<td style="vertical-align: bottom; text-align: right"><font style="font-size: 10pt">-</font></td>
<td style="vertical-align: bottom; text-align: justify"> </td>
<td style="vertical-align: bottom; text-align: justify"> </td>
<td style="vertical-align: bottom; text-align: justify"> </td>
<td style="vertical-align: bottom; text-align: right"><font style="font-size: 10pt">-</font></td>
<td style="vertical-align: bottom; text-align: justify"> </td>
<td style="vertical-align: bottom; text-align: justify"> </td>
<td style="vertical-align: bottom; text-align: justify"><font style="font-size: 10pt">$</font></td>
<td style="vertical-align: bottom; text-align: right"><font style="font-size: 10pt">-</font></td>
<td style="vertical-align: bottom; text-align: justify"> </td></tr>
<tr style="background-color: white">
<td style="vertical-align: top; text-align: justify"><font style="font-size: 10pt">Canceled </font></td>
<td style="vertical-align: bottom; text-align: justify"> </td>
<td colspan="2" style="text-align: right"><font style="font-size: 10pt">(-</font></td>
<td style="vertical-align: bottom; text-align: justify"><font style="font-size: 10pt">)</font></td>
<td style="vertical-align: bottom; text-align: justify"> </td>
<td style="vertical-align: bottom; text-align: justify"> </td>
<td style="vertical-align: bottom; text-align: right"><font style="font-size: 10pt">-</font></td>
<td style="vertical-align: bottom; text-align: justify"> </td>
<td style="vertical-align: bottom; text-align: justify"> </td>
<td style="vertical-align: bottom; text-align: justify"> </td>
<td style="vertical-align: bottom; text-align: right"><font style="font-size: 10pt">-</font></td>
<td style="vertical-align: bottom; text-align: justify"> </td>
<td style="vertical-align: bottom; text-align: justify"> </td>
<td style="vertical-align: bottom; text-align: justify"> </td>
<td style="vertical-align: bottom; text-align: right"><font style="font-size: 10pt">-</font></td>
<td style="vertical-align: bottom; text-align: justify"> </td>
<td style="vertical-align: bottom; text-align: justify"> </td>
<td style="vertical-align: bottom; text-align: justify"> </td>
<td style="vertical-align: bottom; text-align: right"><font style="font-size: 10pt">-</font></td>
<td style="vertical-align: bottom; text-align: justify"> </td></tr>
<tr style="background-color: #CCEEFF">
<td style="text-align: justify"> </td>
<td style="vertical-align: bottom; text-align: justify"> </td>
<td style="vertical-align: bottom; text-align: justify"> </td>
<td style="vertical-align: bottom; text-align: right"> </td>
<td style="vertical-align: bottom; text-align: justify"> </td>
<td style="vertical-align: bottom; text-align: justify"> </td>
<td style="vertical-align: bottom; text-align: justify"> </td>
<td style="vertical-align: bottom; text-align: right"> </td>
<td style="vertical-align: bottom; text-align: justify"> </td>
<td style="vertical-align: bottom; text-align: justify"> </td>
<td style="vertical-align: bottom; text-align: justify"> </td>
<td style="vertical-align: bottom; text-align: right"> </td>
<td style="vertical-align: bottom; text-align: justify"> </td>
<td style="vertical-align: bottom; text-align: justify"> </td>
<td style="vertical-align: bottom; text-align: justify"> </td>
<td style="vertical-align: bottom; text-align: right"> </td>
<td style="vertical-align: bottom; text-align: justify"> </td>
<td style="vertical-align: bottom; text-align: justify"> </td>
<td style="vertical-align: bottom; text-align: justify"> </td>
<td style="vertical-align: bottom; text-align: right"> </td>
<td style="vertical-align: bottom; text-align: justify"> </td></tr>
<tr style="background-color: white">
<td style="vertical-align: top; text-align: justify"><font style="font-size: 10pt">Exercised </font></td>
<td style="vertical-align: bottom; text-align: justify"> </td>
<td style="vertical-align: bottom; text-align: justify"> </td>
<td style="vertical-align: bottom; text-align: right"><font style="font-size: 10pt">(30</font></td>
<td style="vertical-align: bottom; text-align: justify"><font style="font-size: 10pt">)</font></td>
<td style="vertical-align: bottom; text-align: justify"> </td>
<td style="vertical-align: bottom; text-align: justify"><font style="font-size: 10pt">$</font></td>
<td style="vertical-align: bottom; text-align: right"><font style="font-size: 10pt">0.00024</font></td>
<td style="vertical-align: bottom; text-align: justify"> </td>
<td style="vertical-align: bottom; text-align: justify"> </td>
<td style="vertical-align: bottom; text-align: justify"><font style="font-size: 10pt">$</font></td>
<td style="vertical-align: bottom; text-align: right"><font style="font-size: 10pt">8,382,915</font></td>
<td style="vertical-align: bottom; text-align: justify"> </td>
<td style="vertical-align: bottom; text-align: justify"> </td>
<td style="vertical-align: bottom; text-align: justify"> </td>
<td style="vertical-align: bottom; text-align: right"><font style="font-size: 10pt">(103,969</font></td>
<td style="vertical-align: bottom; text-align: justify"><font style="font-size: 10pt">)</font></td>
<td style="vertical-align: bottom; text-align: justify"> </td>
<td style="vertical-align: bottom; text-align: justify"> </td>
<td style="vertical-align: bottom; text-align: right"><font style="font-size: 10pt">-</font></td>
<td style="vertical-align: bottom; text-align: justify"> </td></tr>
<tr style="background-color: #CCEEFF">
<td style="vertical-align: top; text-align: justify"><font style="font-size: 10pt">Expired</font></td>
<td style="vertical-align: bottom; text-align: justify"> </td>
<td colspan="2" style="vertical-align: bottom; border-bottom: black 1pt solid; text-align: right"><font style="font-size: 10pt">(-</font></td>
<td style="vertical-align: bottom; text-align: justify"><font style="font-size: 10pt">) </font></td>
<td style="vertical-align: bottom; text-align: justify"> </td>
<td style="vertical-align: bottom; border-bottom: black 1pt solid; text-align: justify"><font style="font-size: 10pt">$</font></td>
<td style="border-bottom: black 1pt solid; text-align: right"><font style="font-size: 10pt">29,250,000-9,750,000,000</font></td>
<td style="vertical-align: bottom; text-align: justify"> </td>
<td style="vertical-align: bottom; text-align: justify"> </td>
<td style="vertical-align: bottom; border-bottom: black 1pt solid; text-align: justify"><font style="font-size: 10pt">$</font></td>
<td style="border-bottom: black 1pt solid; vertical-align: bottom; text-align: right"><font style="font-size: 10pt">29,886,738</font></td>
<td style="vertical-align: bottom; text-align: justify"> </td>
<td style="vertical-align: bottom; text-align: justify"> </td>
<td style="vertical-align: bottom; border-bottom: black 1pt solid; text-align: justify"><font style="font-size: 10pt">$</font></td>
<td style="border-bottom: black 1pt solid; vertical-align: bottom; text-align: right"><font style="font-size: 10pt">(405,293</font></td>
<td style="vertical-align: bottom; text-align: justify"><font style="font-size: 10pt">)</font></td>
<td style="vertical-align: bottom; text-align: justify"> </td>
<td style="vertical-align: bottom; border-bottom: black 1pt solid; text-align: justify"><font style="font-size: 10pt">$</font></td>
<td style="border-bottom: black 1pt solid; vertical-align: bottom; text-align: right"><font style="font-size: 10pt">-</font></td>
<td style="vertical-align: bottom; text-align: justify"> </td></tr>
<tr style="background-color: white">
<td style="vertical-align: top; text-align: justify"><font style="font-size: 10pt">Balance, September 30, 2016</font></td>
<td style="vertical-align: bottom; text-align: justify"> </td>
<td style="vertical-align: bottom; border-bottom: black 2.25pt double; text-align: justify"> </td>
<td style="border-bottom: black 2.25pt double; vertical-align: bottom; text-align: right"><font style="font-size: 10pt">-</font></td>
<td style="vertical-align: bottom; text-align: justify"> </td>
<td style="vertical-align: bottom; text-align: justify"> </td>
<td style="vertical-align: bottom; border-bottom: black 2.25pt double; text-align: justify"><font style="font-size: 10pt">$</font></td>
<td style="border-bottom: black 2.25pt double; vertical-align: bottom; text-align: right"><font style="font-size: 10pt">-</font></td>
<td style="vertical-align: bottom; text-align: justify"> </td>
<td style="vertical-align: bottom; text-align: justify"> </td>
<td style="vertical-align: bottom; border-bottom: black 2.25pt double; text-align: justify"><font style="font-size: 10pt">$</font></td>
<td style="border-bottom: black 2.25pt double; vertical-align: bottom; text-align: right"><font style="font-size: 10pt">-</font></td>
<td style="vertical-align: bottom; text-align: justify"> </td>
<td style="vertical-align: bottom; text-align: justify"> </td>
<td style="vertical-align: bottom; border-bottom: black 2.25pt double; text-align: justify"><font style="font-size: 10pt">$</font></td>
<td style="border-bottom: black 2.25pt double; vertical-align: bottom; text-align: right"><font style="font-size: 10pt">-</font></td>
<td style="vertical-align: bottom; text-align: justify"> </td>
<td style="vertical-align: bottom; text-align: justify"> </td>
<td style="vertical-align: bottom; border-bottom: black 2.25pt double; text-align: justify"><font style="font-size: 10pt">$</font></td>
<td style="border-bottom: black 2.25pt double; vertical-align: bottom; text-align: right"><font style="font-size: 10pt">-</font></td>
<td style="vertical-align: bottom; text-align: justify"> </td></tr>
<tr style="background-color: #CCEEFF">
<td style="text-align: justify"> </td>
<td style="vertical-align: bottom; text-align: justify"> </td>
<td style="vertical-align: bottom; text-align: justify"> </td>
<td style="vertical-align: bottom; text-align: right"> </td>
<td style="vertical-align: bottom; text-align: justify"> </td>
<td style="vertical-align: bottom; text-align: justify"> </td>
<td style="vertical-align: bottom; text-align: justify"> </td>
<td style="vertical-align: bottom; text-align: right"> </td>
<td style="vertical-align: bottom; text-align: justify"> </td>
<td style="vertical-align: bottom; text-align: justify"> </td>
<td style="vertical-align: bottom; text-align: justify"> </td>
<td style="vertical-align: bottom; text-align: right"> </td>
<td style="vertical-align: bottom; text-align: justify"> </td>
<td style="vertical-align: bottom; text-align: justify"> </td>
<td style="vertical-align: bottom; text-align: justify"> </td>
<td style="vertical-align: bottom; text-align: right"> </td>
<td style="vertical-align: bottom; text-align: justify"> </td>
<td style="vertical-align: bottom; text-align: justify"> </td>
<td style="vertical-align: bottom; text-align: justify"> </td>
<td style="vertical-align: bottom; text-align: right"> </td>
<td style="vertical-align: bottom; text-align: justify"> </td></tr>
<tr style="background-color: white">
<td style="vertical-align: top; text-align: justify"><font style="font-size: 10pt">Vested and exercisable, September 30, 2016</font></td>
<td style="vertical-align: bottom; text-align: justify"> </td>
<td style="vertical-align: bottom; border-bottom: black 2.25pt double; text-align: justify"> </td>
<td style="border-bottom: black 2.25pt double; vertical-align: bottom; text-align: right"><font style="font-size: 10pt">-</font></td>
<td style="vertical-align: bottom; text-align: justify"> </td>
<td style="vertical-align: bottom; text-align: justify"> </td>
<td style="vertical-align: bottom; border-bottom: black 2.25pt double; text-align: justify"><font style="font-size: 10pt">$</font></td>
<td style="border-bottom: black 2.25pt double; vertical-align: bottom; text-align: right"><font style="font-size: 10pt">-</font></td>
<td style="vertical-align: bottom; text-align: justify"> </td>
<td style="vertical-align: bottom; text-align: justify"> </td>
<td style="vertical-align: bottom; border-bottom: black 2.25pt double; text-align: justify"><font style="font-size: 10pt">$</font></td>
<td style="border-bottom: black 2.25pt double; vertical-align: bottom; text-align: right"><font style="font-size: 10pt">-</font></td>
<td style="vertical-align: bottom; text-align: justify"> </td>
<td style="vertical-align: bottom; text-align: justify"> </td>
<td style="vertical-align: bottom; border-bottom: black 2.25pt double; text-align: justify"><font style="font-size: 10pt">$</font></td>
<td style="border-bottom: black 2.25pt double; vertical-align: bottom; text-align: right"><font style="font-size: 10pt">-</font></td>
<td style="vertical-align: bottom; text-align: justify"> </td>
<td style="vertical-align: bottom; text-align: justify"> </td>
<td style="vertical-align: bottom; border-bottom: black 2.25pt double; text-align: justify"><font style="font-size: 10pt">$</font></td>
<td style="border-bottom: black 2.25pt double; vertical-align: bottom; text-align: right"><font style="font-size: 10pt">-</font></td>
<td style="vertical-align: bottom; text-align: justify"> </td></tr>
<tr style="background-color: #CCEEFF">
<td style="text-align: justify"> </td>
<td style="vertical-align: bottom; text-align: justify"> </td>
<td style="vertical-align: bottom; text-align: justify"> </td>
<td style="vertical-align: bottom; text-align: right"> </td>
<td style="vertical-align: bottom; text-align: justify"> </td>
<td style="vertical-align: bottom; text-align: justify"> </td>
<td style="vertical-align: bottom; text-align: justify"> </td>
<td style="vertical-align: bottom; text-align: right"> </td>
<td style="vertical-align: bottom; text-align: justify"> </td>
<td style="vertical-align: bottom; text-align: justify"> </td>
<td style="vertical-align: bottom; text-align: justify"> </td>
<td style="vertical-align: bottom; text-align: right"> </td>
<td style="vertical-align: bottom; text-align: justify"> </td>
<td style="vertical-align: bottom; text-align: justify"> </td>
<td style="vertical-align: bottom; text-align: justify"> </td>
<td style="vertical-align: bottom; text-align: right"> </td>
<td style="vertical-align: bottom; text-align: justify"> </td>
<td style="vertical-align: bottom; text-align: justify"> </td>
<td style="vertical-align: bottom; text-align: justify"> </td>
<td style="vertical-align: bottom; text-align: right"> </td>
<td style="vertical-align: bottom; text-align: justify"> </td></tr>
<tr style="background-color: white">
<td style="vertical-align: top; text-align: justify"><font style="font-size: 10pt">Unvested, September 30, 2016</font></td>
<td style="vertical-align: bottom; text-align: justify"> </td>
<td style="vertical-align: bottom; border-bottom: black 2.25pt double; text-align: justify"> </td>
<td style="border-bottom: black 2.25pt double; vertical-align: bottom; text-align: right"><font style="font-size: 10pt">-</font></td>
<td style="vertical-align: bottom; text-align: justify"> </td>
<td style="vertical-align: bottom; text-align: justify"> </td>
<td style="vertical-align: bottom; border-bottom: black 2.25pt double; text-align: justify"><font style="font-size: 10pt">$</font></td>
<td style="border-bottom: black 2.25pt double; vertical-align: bottom; text-align: right"><font style="font-size: 10pt">-</font></td>
<td style="vertical-align: bottom; text-align: justify"> </td>
<td style="vertical-align: bottom; text-align: justify"> </td>
<td style="vertical-align: bottom; border-bottom: black 2.25pt double; text-align: justify"><font style="font-size: 10pt">$</font></td>
<td style="border-bottom: black 2.25pt double; vertical-align: bottom; text-align: right"><font style="font-size: 10pt">-</font></td>
<td style="vertical-align: bottom; text-align: justify"> </td>
<td style="vertical-align: bottom; text-align: justify"> </td>
<td style="vertical-align: bottom; border-bottom: black 2.25pt double; text-align: justify"><font style="font-size: 10pt">$</font></td>
<td style="border-bottom: black 2.25pt double; vertical-align: bottom; text-align: right"><font style="font-size: 10pt">-</font></td>
<td style="vertical-align: bottom; text-align: justify"> </td>
<td style="vertical-align: bottom; text-align: justify"> </td>
<td style="vertical-align: bottom; border-bottom: black 2.25pt double; text-align: justify"><font style="font-size: 10pt">$</font></td>
<td style="border-bottom: black 2.25pt double; vertical-align: bottom; text-align: right"><font style="font-size: 10pt">-</font></td>
<td style="vertical-align: bottom; text-align: justify"> </td></tr>
</table>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify">The table below summarizes the Company’s
2004 Incentive Plan and 2012 Stock Incentive Plan activities through September 30, 2016:</p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify; text-indent: 0.5in"> </p>
<table cellspacing="0" cellpadding="0" style="font: 12pt Times New Roman, Times, Serif; width: 100%; font-size-adjust: none; font-stretch: normal">
<tr style="vertical-align: bottom">
<td style="text-align: justify"> </td>
<td style="text-align: justify"> </td>
<td colspan="2" id="hdcell">
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: center"><b>Number of</b></p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: center"><b>Options Shares</b></p></td>
<td style="text-align: justify"> </td>
<td style="text-align: justify"> </td>
<td colspan="2">
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: center"><b>Exercise Price Range</b></p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: center"><b>Per Share</b></p></td>
<td style="text-align: justify"> </td>
<td style="text-align: justify"> </td>
<td colspan="2" style="text-align: center"><font style="font-size: 10pt"><b>Weighted Average Exercise Price</b></font></td>
<td style="text-align: justify"> </td>
<td style="text-align: justify"> </td>
<td colspan="2" style="text-align: center"><font style="font-size: 10pt"><b>Fair Value at Date of Issuance</b></font></td>
<td style="text-align: justify"> </td>
<td style="text-align: justify"> </td>
<td colspan="2">
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: center"><b>Aggregate</b></p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: center"><b>Intrinsic</b></p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: center"><b>Value</b></p></td>
<td style="text-align: justify"> </td></tr>
<tr>
<td style="text-align: justify"> </td>
<td style="vertical-align: bottom; text-align: justify"> </td>
<td colspan="2" id="ffcell" style="vertical-align: bottom; border-top-style: solid; border-top-width: 1pt; text-align: right"> </td>
<td style="vertical-align: bottom; text-align: justify"> </td>
<td style="vertical-align: bottom; text-align: justify"> </td>
<td colspan="2" style="vertical-align: bottom; border-top-style: solid; border-top-width: 1pt; text-align: right"> </td>
<td style="vertical-align: bottom; text-align: justify"> </td>
<td style="vertical-align: bottom; text-align: justify"> </td>
<td colspan="2" style="vertical-align: bottom; border-top-style: solid; border-top-width: 1pt; text-align: right"> </td>
<td style="vertical-align: bottom; text-align: justify"> </td>
<td style="vertical-align: bottom; text-align: justify"> </td>
<td colspan="2" style="vertical-align: bottom; border-top-style: solid; border-top-width: 1pt; text-align: right"> </td>
<td style="vertical-align: bottom; text-align: justify"> </td>
<td style="vertical-align: bottom; text-align: justify"> </td>
<td colspan="2" style="vertical-align: bottom; border-top-style: solid; border-top-width: 1pt; text-align: right"> </td>
<td style="vertical-align: bottom; text-align: justify"> </td></tr>
<tr style="background-color: #CCEEFF">
<td style="vertical-align: top; text-align: justify"><font style="font-size: 10pt">Balance, December 31, 2015</font></td>
<td style="vertical-align: bottom; width: 1%; text-align: justify"> </td>
<td style="vertical-align: bottom; width: 1%; text-align: justify"> </td>
<td style="vertical-align: bottom; width: 9%; text-align: right"><font style="font-size: 10pt">1,000,003</font></td>
<td style="vertical-align: bottom; width: 1%; text-align: justify"> </td>
<td style="vertical-align: bottom; width: 1%; text-align: justify"> </td>
<td style="vertical-align: bottom; width: 1%; text-align: justify"><font style="font-size: 10pt">$</font></td>
<td style="width: 15%; text-align: right"><font style="font-size: 10pt">0.0005- 9,750,000,000</font></td>
<td style="vertical-align: bottom; width: 1%; text-align: justify"> </td>
<td style="vertical-align: bottom; width: 1%; text-align: justify"> </td>
<td style="vertical-align: bottom; width: 1%; text-align: justify"><font style="font-size: 10pt">$</font></td>
<td style="vertical-align: bottom; width: 9%; text-align: right"><font style="font-size: 10pt">2.00</font></td>
<td style="vertical-align: bottom; width: 1%; text-align: justify"> </td>
<td style="vertical-align: bottom; width: 1%; text-align: justify"> </td>
<td style="vertical-align: bottom; width: 1%; text-align: justify"><font style="font-size: 10pt">$</font></td>
<td style="vertical-align: bottom; width: 9%; text-align: right"><font style="font-size: 10pt">2,785,163</font></td>
<td style="vertical-align: bottom; width: 1%; text-align: justify"> </td>
<td style="vertical-align: bottom; width: 1%; text-align: justify"> </td>
<td style="vertical-align: bottom; width: 1%; text-align: justify"><font style="font-size: 10pt">$</font></td>
<td style="vertical-align: bottom; width: 9%; text-align: right"><font style="font-size: 10pt">-</font></td>
<td style="vertical-align: bottom; width: 1%; text-align: justify"> </td></tr>
<tr style="background-color: white">
<td style="text-align: justify"> </td>
<td style="vertical-align: bottom; text-align: justify"> </td>
<td style="vertical-align: bottom; text-align: justify"> </td>
<td style="vertical-align: bottom; text-align: right"> </td>
<td style="vertical-align: bottom; text-align: justify"> </td>
<td style="vertical-align: bottom; text-align: justify"> </td>
<td colspan="2" style="vertical-align: bottom; text-align: right"> </td>
<td style="vertical-align: bottom; text-align: justify"> </td>
<td style="vertical-align: bottom; text-align: justify"> </td>
<td style="vertical-align: bottom; text-align: justify"> </td>
<td style="vertical-align: bottom; text-align: right"> </td>
<td style="vertical-align: bottom; text-align: justify"> </td>
<td style="vertical-align: bottom; text-align: justify"> </td>
<td style="vertical-align: bottom; text-align: justify"> </td>
<td style="vertical-align: bottom; text-align: right"> </td>
<td style="vertical-align: bottom; text-align: justify"> </td>
<td style="vertical-align: bottom; text-align: justify"> </td>
<td style="vertical-align: bottom; text-align: justify"> </td>
<td style="vertical-align: bottom; text-align: right"> </td>
<td style="vertical-align: bottom; text-align: justify"> </td></tr>
<tr style="background-color: #CCEEFF">
<td style="vertical-align: top; text-align: justify"><font style="font-size: 10pt">Granted</font></td>
<td style="vertical-align: bottom; text-align: justify"> </td>
<td style="vertical-align: bottom; text-align: justify"> </td>
<td style="vertical-align: bottom; text-align: right"><font style="font-size: 10pt">196,000,000</font></td>
<td style="vertical-align: bottom; text-align: justify"> </td>
<td style="vertical-align: bottom; text-align: justify"> </td>
<td style="vertical-align: bottom; text-align: justify"><font style="font-size: 10pt">$</font></td>
<td style="vertical-align: bottom; text-align: right"><font style="font-size: 10pt">0.00625</font></td>
<td style="vertical-align: bottom; text-align: justify"> </td>
<td style="vertical-align: bottom; text-align: justify"> </td>
<td style="vertical-align: bottom; text-align: justify"><font style="font-size: 10pt">$</font></td>
<td style="vertical-align: bottom; text-align: right"><font style="font-size: 10pt">0.00625</font></td>
<td style="vertical-align: bottom; text-align: justify"> </td>
<td style="vertical-align: bottom; text-align: justify"> </td>
<td style="vertical-align: bottom; text-align: justify"><font style="font-size: 10pt">$</font></td>
<td style="vertical-align: bottom; text-align: right"><font style="font-size: 10pt">1,568,000</font></td>
<td style="vertical-align: bottom; text-align: justify"> </td>
<td style="vertical-align: bottom; text-align: justify"> </td>
<td style="vertical-align: bottom; text-align: justify"> </td>
<td style="vertical-align: bottom; text-align: right"> </td>
<td style="vertical-align: bottom; text-align: justify"> </td></tr>
<tr style="background-color: white">
<td style="text-align: justify"> </td>
<td style="vertical-align: bottom; text-align: justify"> </td>
<td style="vertical-align: bottom; text-align: justify"> </td>
<td style="vertical-align: bottom; text-align: right"> </td>
<td style="vertical-align: bottom; text-align: justify"> </td>
<td style="vertical-align: bottom; text-align: justify"> </td>
<td style="vertical-align: bottom; text-align: justify"> </td>
<td style="vertical-align: bottom; text-align: right"> </td>
<td style="vertical-align: bottom; text-align: justify"> </td>
<td style="vertical-align: bottom; text-align: justify"> </td>
<td style="vertical-align: bottom; text-align: justify"> </td>
<td style="vertical-align: bottom; text-align: right"> </td>
<td style="vertical-align: bottom; text-align: justify"> </td>
<td style="vertical-align: bottom; text-align: justify"> </td>
<td style="vertical-align: bottom; text-align: justify"> </td>
<td style="vertical-align: bottom; text-align: right"> </td>
<td style="vertical-align: bottom; text-align: justify"> </td>
<td style="vertical-align: bottom; text-align: justify"> </td>
<td style="vertical-align: bottom; text-align: justify"> </td>
<td style="vertical-align: bottom; text-align: right"> </td>
<td style="vertical-align: bottom; text-align: justify"> </td></tr>
<tr style="background-color: #CCEEFF">
<td style="vertical-align: top; text-align: justify"><font style="font-size: 10pt">Expired</font></td>
<td style="vertical-align: bottom; text-align: justify"> </td>
<td style="vertical-align: bottom; border-bottom-style: solid; border-bottom-width: 1pt; text-align: justify"> </td>
<td style="vertical-align: bottom; border-bottom-style: solid; border-bottom-width: 1pt; text-align: right"><font style="font-size: 10pt">(2</font></td>
<td style="vertical-align: bottom; text-align: justify"><font style="font-size: 10pt">)</font></td>
<td style="vertical-align: bottom; text-align: justify"> </td>
<td style="vertical-align: bottom; border-bottom-style: solid; border-bottom-width: 1pt; text-align: justify"><font style="font-size: 10pt">$</font></td>
<td style="vertical-align: bottom; border-bottom-style: solid; border-bottom-width: 1pt; text-align: right"><font style="font-size: 10pt">9,750,000</font></td>
<td style="vertical-align: bottom; text-align: justify"> </td>
<td style="vertical-align: bottom; text-align: justify"> </td>
<td style="vertical-align: bottom; border-bottom-style: solid; border-bottom-width: 1pt; text-align: justify"><font style="font-size: 10pt">$</font></td>
<td style="vertical-align: bottom; border-bottom-style: solid; border-bottom-width: 1pt; text-align: right"><font style="font-size: 10pt">9,750,000</font></td>
<td style="vertical-align: bottom; text-align: justify"> </td>
<td style="vertical-align: bottom; text-align: justify"> </td>
<td style="vertical-align: bottom; border-bottom-style: solid; border-bottom-width: 1pt; text-align: justify"><font style="font-size: 10pt">$</font></td>
<td style="vertical-align: bottom; border-bottom-style: solid; border-bottom-width: 1pt; text-align: right"><font style="font-size: 10pt">(506,697</font></td>
<td style="vertical-align: bottom; text-align: justify"><font style="font-size: 10pt">)</font></td>
<td style="vertical-align: bottom; text-align: justify"> </td>
<td style="vertical-align: bottom; border-bottom-style: solid; border-bottom-width: 1pt; text-align: justify"><font style="font-size: 10pt">$</font></td>
<td style="vertical-align: bottom; border-bottom-style: solid; border-bottom-width: 1pt; text-align: right"><font style="font-size: 10pt">-</font></td>
<td style="vertical-align: bottom; text-align: justify"> </td></tr>
<tr style="background-color: white">
<td style="text-align: justify"> </td>
<td style="vertical-align: bottom; text-align: justify"> </td>
<td style="vertical-align: bottom; text-align: justify"> </td>
<td style="vertical-align: bottom; text-align: right"> </td>
<td style="vertical-align: bottom; text-align: justify"> </td>
<td style="vertical-align: bottom; text-align: justify"> </td>
<td style="vertical-align: bottom; text-align: justify"> </td>
<td style="vertical-align: bottom; text-align: right"> </td>
<td style="vertical-align: bottom; text-align: justify"> </td>
<td style="vertical-align: bottom; text-align: justify"> </td>
<td style="vertical-align: bottom; text-align: justify"> </td>
<td style="vertical-align: bottom; text-align: right"> </td>
<td style="vertical-align: bottom; text-align: justify"> </td>
<td style="vertical-align: bottom; text-align: justify"> </td>
<td style="vertical-align: bottom; text-align: justify"> </td>
<td style="vertical-align: bottom; text-align: right"> </td>
<td style="vertical-align: bottom; text-align: justify"> </td>
<td style="vertical-align: bottom; text-align: justify"> </td>
<td style="vertical-align: bottom; text-align: justify"> </td>
<td style="vertical-align: bottom; text-align: right"> </td>
<td style="vertical-align: bottom; text-align: justify"> </td></tr>
<tr style="background-color: #CCEEFF">
<td style="vertical-align: top; text-align: justify"><font style="font-size: 10pt">Balance, September 30, 2016</font></td>
<td style="vertical-align: bottom; text-align: justify"> </td>
<td style="vertical-align: bottom; border-bottom-style: double; border-bottom-width: 2.25pt; text-align: justify"> </td>
<td style="vertical-align: bottom; border-bottom-style: double; border-bottom-width: 2.25pt; text-align: right"><font style="font-size: 10pt">197,000,001</font></td>
<td style="vertical-align: bottom; text-align: justify"> </td>
<td style="vertical-align: bottom; text-align: justify"> </td>
<td style="vertical-align: bottom; border-bottom-style: double; border-bottom-width: 2.25pt; text-align: justify"><font style="font-size: 10pt">$</font></td>
<td style="border-bottom: black 2.25pt double; text-align: right"><font style="font-size: 10pt">0.0005- 975,000,000</font></td>
<td style="vertical-align: bottom; text-align: justify"> </td>
<td style="vertical-align: bottom; text-align: justify"> </td>
<td style="vertical-align: bottom; border-bottom-style: double; border-bottom-width: 2.25pt; text-align: justify"><font style="font-size: 10pt">$</font></td>
<td style="vertical-align: bottom; border-bottom-style: double; border-bottom-width: 2.25pt; text-align: right"><font style="font-size: 10pt">0.00625</font></td>
<td style="vertical-align: bottom; text-align: justify"> </td>
<td style="vertical-align: bottom; text-align: justify"> </td>
<td style="vertical-align: bottom; border-bottom-style: double; border-bottom-width: 2.25pt; text-align: justify"><font style="font-size: 10pt">$</font></td>
<td style="vertical-align: bottom; border-bottom-style: double; border-bottom-width: 2.25pt; text-align: right"><font style="font-size: 10pt">3,846,466</font></td>
<td style="vertical-align: bottom; text-align: justify"> </td>
<td style="vertical-align: bottom; text-align: justify"> </td>
<td style="vertical-align: bottom; border-bottom-style: double; border-bottom-width: 2.25pt; text-align: justify"><font style="font-size: 10pt">$</font></td>
<td style="vertical-align: bottom; border-bottom-style: double; border-bottom-width: 2.25pt; text-align: right"><font style="font-size: 10pt">-</font></td>
<td style="vertical-align: bottom; text-align: justify"> </td></tr>
<tr style="background-color: white">
<td style="text-align: justify"> </td>
<td style="vertical-align: bottom; text-align: justify"> </td>
<td style="vertical-align: bottom; text-align: justify"> </td>
<td style="vertical-align: bottom; text-align: right"> </td>
<td style="vertical-align: bottom; text-align: justify"> </td>
<td style="vertical-align: bottom; text-align: justify"> </td>
<td style="vertical-align: bottom; text-align: justify"> </td>
<td style="vertical-align: bottom; text-align: right"> </td>
<td style="vertical-align: bottom; text-align: justify"> </td>
<td style="vertical-align: bottom; text-align: justify"> </td>
<td style="vertical-align: bottom; text-align: justify"> </td>
<td style="vertical-align: bottom; text-align: right"> </td>
<td style="vertical-align: bottom; text-align: justify"> </td>
<td style="vertical-align: bottom; text-align: justify"> </td>
<td style="vertical-align: bottom; text-align: justify"> </td>
<td style="vertical-align: bottom; text-align: right"> </td>
<td style="vertical-align: bottom; text-align: justify"> </td>
<td style="vertical-align: bottom; text-align: justify"> </td>
<td style="vertical-align: bottom; text-align: justify"> </td>
<td style="vertical-align: bottom; text-align: right"> </td>
<td style="vertical-align: bottom; text-align: justify"> </td></tr>
<tr style="background-color: #CCEEFF">
<td style="vertical-align: top; text-align: justify"><font style="font-size: 10pt">Vested and exercisable, September 30, 2016</font></td>
<td style="vertical-align: bottom; text-align: justify"> </td>
<td style="vertical-align: bottom; border-bottom: black 1pt solid; text-align: justify"> </td>
<td style="border-bottom: black 1pt solid; vertical-align: bottom; text-align: right"><font style="font-size: 10pt">33,666,668</font></td>
<td style="vertical-align: bottom; text-align: justify"> </td>
<td style="vertical-align: bottom; text-align: justify"> </td>
<td style="border-bottom: black 1pt solid; text-align: justify"><font style="font-size: 10pt">$</font></td>
<td style="border-bottom: black 1pt solid; text-align: right"><font style="font-size: 10pt">0.0005-975,000,000</font></td>
<td style="vertical-align: bottom; text-align: justify"> </td>
<td style="vertical-align: bottom; text-align: justify"> </td>
<td style="vertical-align: bottom; border-bottom: black 1pt solid; text-align: justify"><font style="font-size: 10pt">$</font></td>
<td style="border-bottom: black 1pt solid; vertical-align: bottom; text-align: right"><font style="font-size: 10pt">0.005</font></td>
<td style="vertical-align: bottom; text-align: justify"> </td>
<td style="vertical-align: bottom; text-align: justify"> </td>
<td style="vertical-align: bottom; border-bottom: black 1pt solid; text-align: justify"><font style="font-size: 10pt">$</font></td>
<td style="border-bottom: black 1pt solid; vertical-align: bottom; text-align: right"><font style="font-size: 10pt">2,539,799</font></td>
<td style="vertical-align: bottom; text-align: justify"> </td>
<td style="vertical-align: bottom; text-align: justify"> </td>
<td style="vertical-align: bottom; border-bottom: black 1pt solid; text-align: justify"><font style="font-size: 10pt">$</font></td>
<td style="border-bottom: black 1pt solid; vertical-align: bottom; text-align: right"><font style="font-size: 10pt">-</font></td>
<td style="vertical-align: bottom; text-align: justify"> </td></tr>
<tr style="background-color: white">
<td style="text-align: justify"> </td>
<td style="vertical-align: bottom; text-align: justify"> </td>
<td style="vertical-align: bottom; text-align: justify"> </td>
<td style="vertical-align: bottom; text-align: right"> </td>
<td style="vertical-align: bottom; text-align: justify"> </td>
<td style="vertical-align: bottom; text-align: justify"> </td>
<td style="vertical-align: bottom; text-align: justify"> </td>
<td style="vertical-align: bottom; text-align: right"> </td>
<td style="vertical-align: bottom; text-align: justify"> </td>
<td style="vertical-align: bottom; text-align: justify"> </td>
<td style="vertical-align: bottom; text-align: justify"> </td>
<td style="vertical-align: bottom; text-align: right"> </td>
<td style="vertical-align: bottom; text-align: justify"> </td>
<td style="vertical-align: bottom; text-align: justify"> </td>
<td style="vertical-align: bottom; text-align: justify"> </td>
<td style="vertical-align: bottom; text-align: right"> </td>
<td style="vertical-align: bottom; text-align: justify"> </td>
<td style="vertical-align: bottom; text-align: justify"> </td>
<td style="vertical-align: bottom; text-align: justify"> </td>
<td style="vertical-align: bottom; text-align: right"> </td>
<td style="vertical-align: bottom; text-align: justify"> </td></tr>
<tr style="background-color: #CCEEFF">
<td style="vertical-align: top; text-align: justify"><font style="font-size: 10pt">Unvested, September 30, 2016</font></td>
<td style="vertical-align: bottom; text-align: justify"> </td>
<td style="vertical-align: bottom; border-bottom-style: solid; border-bottom-width: 1pt; text-align: justify"> </td>
<td style="vertical-align: bottom; border-bottom-style: solid; border-bottom-width: 1pt; text-align: right"><font style="font-size: 10pt">163,333,333</font></td>
<td style="vertical-align: bottom; text-align: justify"> </td>
<td style="vertical-align: bottom; text-align: justify"> </td>
<td style="vertical-align: bottom; border-bottom-style: solid; border-bottom-width: 1pt; text-align: justify"><font style="font-size: 10pt">$</font></td>
<td style="vertical-align: bottom; border-bottom-style: solid; border-bottom-width: 1pt; text-align: right"><font style="font-size: 10pt">0.00625</font></td>
<td style="vertical-align: bottom; text-align: justify"> </td>
<td style="vertical-align: bottom; text-align: justify"> </td>
<td style="vertical-align: bottom; border-bottom-style: solid; border-bottom-width: 1pt; text-align: justify"><font style="font-size: 10pt">$</font></td>
<td style="vertical-align: bottom; border-bottom-style: solid; border-bottom-width: 1pt; text-align: right"><font style="font-size: 10pt">0.00625</font></td>
<td style="vertical-align: bottom; text-align: justify"> </td>
<td style="vertical-align: bottom; text-align: justify"> </td>
<td style="vertical-align: bottom; border-bottom-style: solid; border-bottom-width: 1pt; text-align: justify"><font style="font-size: 10pt">$</font></td>
<td style="vertical-align: bottom; border-bottom-style: solid; border-bottom-width: 1pt; text-align: right"><font style="font-size: 10pt">1,306,667</font></td>
<td style="vertical-align: bottom; text-align: justify"> </td>
<td style="vertical-align: bottom; text-align: justify"> </td>
<td style="vertical-align: bottom; border-bottom-style: solid; border-bottom-width: 1pt; text-align: justify"><font style="font-size: 10pt">$</font></td>
<td style="vertical-align: bottom; border-bottom-style: solid; border-bottom-width: 1pt; text-align: right"><font style="font-size: 10pt">-</font></td>
<td style="vertical-align: bottom; text-align: justify"> </td></tr>
</table>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify">The following table summarizes information
concerning 2004 Incentive plan and 2012 Stock Incentive Plan as of September 30, 2016:</p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify; text-indent: 0.5in"> </p>
<table cellspacing="0" cellpadding="0" style="font: 12pt Times New Roman, Times, Serif; width: 100%; font-size-adjust: none; font-stretch: normal">
<tr style="vertical-align: bottom">
<td colspan="2" style="text-align: justify"> </td>
<td style="text-align: justify"> </td>
<td style="text-align: justify"> </td>
<td colspan="10" id="hdcell" style="border-bottom-style: solid; border-bottom-width: 1pt; text-align: center"><font style="font-size: 10pt"><b>Options Outstanding</b></font></td>
<td style="text-align: justify"> </td>
<td style="text-align: justify"> </td>
<td colspan="10" style="border-bottom-style: solid; border-bottom-width: 1pt; text-align: center"><font style="font-size: 10pt"><b>Options Exercisable</b></font></td>
<td style="text-align: justify"> </td></tr>
<tr style="vertical-align: bottom">
<td colspan="2" style="text-align: center"><font style="font-size: 10pt"><b>Range of Exercise Prices</b></font></td>
<td style="text-align: justify"> </td>
<td style="text-align: justify"> </td>
<td colspan="2" style="text-align: center"><font style="font-size: 10pt"><b>Number Outstanding</b></font></td>
<td style="text-align: justify"> </td>
<td style="text-align: justify"> </td>
<td colspan="2" style="text-align: center"><font style="font-size: 10pt"><b>Average Remaining Contractual Life (in years)</b></font></td>
<td style="text-align: justify"> </td>
<td style="text-align: justify"> </td>
<td colspan="2" style="text-align: center"><font style="font-size: 10pt"><b>Weighted Average Exercise Price</b></font></td>
<td style="text-align: justify"> </td>
<td style="text-align: justify"> </td>
<td colspan="2">
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: center"><b>Number</b></p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: center"><b>Exercisable</b></p></td>
<td style="text-align: justify"> </td>
<td style="text-align: justify"> </td>
<td colspan="2" style="text-align: center"><font style="font-size: 10pt"><b>Average Remaining Contractual Life (in years)</b></font></td>
<td style="text-align: justify"> </td>
<td style="text-align: justify"> </td>
<td colspan="2" style="text-align: center"><font style="font-size: 10pt"><b>Weighted Average Exercise Price</b></font></td>
<td style="text-align: justify"> </td></tr>
<tr>
<td colspan="2" style="border-top-style: solid; border-top-width: 1pt; text-align: justify"> </td>
<td style="vertical-align: bottom; text-align: justify"> </td>
<td style="vertical-align: bottom; text-align: justify"> </td>
<td colspan="2" id="ffcell" style="vertical-align: bottom; border-top-style: solid; border-top-width: 1pt; text-align: right"> </td>
<td style="vertical-align: bottom; text-align: justify"> </td>
<td style="vertical-align: bottom; text-align: justify"> </td>
<td colspan="2" style="vertical-align: bottom; border-top-style: solid; border-top-width: 1pt; text-align: right"> </td>
<td style="vertical-align: bottom; text-align: justify"> </td>
<td style="vertical-align: bottom; text-align: justify"> </td>
<td colspan="2" style="vertical-align: bottom; border-top-style: solid; border-top-width: 1pt; text-align: right"> </td>
<td style="vertical-align: bottom; text-align: justify"> </td>
<td style="vertical-align: bottom; text-align: justify"> </td>
<td colspan="2" style="vertical-align: bottom; border-top-style: solid; border-top-width: 1pt; text-align: right"> </td>
<td style="vertical-align: bottom; text-align: justify"> </td>
<td style="vertical-align: bottom; text-align: justify"> </td>
<td colspan="2" style="vertical-align: bottom; border-top-style: solid; border-top-width: 1pt; text-align: right"> </td>
<td style="vertical-align: bottom; text-align: justify"> </td>
<td style="vertical-align: bottom; text-align: justify"> </td>
<td colspan="2" style="vertical-align: bottom; border-top-style: solid; border-top-width: 1pt; text-align: right"> </td>
<td style="vertical-align: bottom; text-align: justify"> </td></tr>
<tr style="background-color: #CCEEFF">
<td style="vertical-align: bottom; width: 1%; text-align: justify"><font style="font-size: 10pt">$</font></td>
<td style="width: 26%; text-align: right"><font style="font-size: 10pt">975,000,000</font></td>
<td style="vertical-align: bottom; width: 1%; text-align: justify"> </td>
<td style="vertical-align: bottom; width: 1%; text-align: justify"> </td>
<td style="vertical-align: bottom; width: 1%; text-align: justify"> </td>
<td style="vertical-align: bottom; width: 9%; text-align: right"><font style="font-size: 10pt">1</font></td>
<td style="vertical-align: bottom; width: 1%; text-align: justify"> </td>
<td style="vertical-align: bottom; width: 1%; text-align: justify"> </td>
<td style="vertical-align: bottom; width: 1%; text-align: justify"> </td>
<td style="vertical-align: bottom; width: 9%; text-align: right"><font style="font-size: 10pt">1.00</font></td>
<td style="vertical-align: bottom; width: 1%; text-align: justify"> </td>
<td style="vertical-align: bottom; width: 1%; text-align: justify"> </td>
<td style="vertical-align: bottom; width: 1%; text-align: justify"><font style="font-size: 10pt">$</font></td>
<td style="vertical-align: bottom; width: 9%; text-align: right"><font style="font-size: 10pt">975,000,000</font></td>
<td style="vertical-align: bottom; width: 1%; text-align: justify"> </td>
<td style="vertical-align: bottom; width: 1%; text-align: justify"> </td>
<td style="vertical-align: bottom; width: 1%; text-align: justify"> </td>
<td style="vertical-align: bottom; width: 9%; text-align: right"><font style="font-size: 10pt">1</font></td>
<td style="vertical-align: bottom; width: 1%; text-align: justify"> </td>
<td style="vertical-align: bottom; width: 1%; text-align: justify"> </td>
<td style="vertical-align: bottom; width: 1%; text-align: justify"> </td>
<td style="vertical-align: bottom; width: 9%; text-align: right"><font style="font-size: 10pt">1.00</font></td>
<td style="vertical-align: bottom; width: 1%; text-align: justify"> </td>
<td style="vertical-align: bottom; width: 1%; text-align: justify"> </td>
<td style="vertical-align: bottom; width: 1%; text-align: justify"><font style="font-size: 10pt">$</font></td>
<td style="vertical-align: bottom; width: 9%; text-align: right"><font style="font-size: 10pt">975,000,000</font></td>
<td style="vertical-align: bottom; width: 1%; text-align: justify"> </td></tr>
<tr style="background-color: white">
<td style="vertical-align: bottom; text-align: justify"> </td>
<td style="text-align: justify"> </td>
<td style="vertical-align: bottom; text-align: justify"> </td>
<td style="vertical-align: bottom; text-align: justify"> </td>
<td style="vertical-align: bottom; text-align: justify"> </td>
<td style="vertical-align: bottom; text-align: right"> </td>
<td style="vertical-align: bottom; text-align: justify"> </td>
<td style="vertical-align: bottom; text-align: justify"> </td>
<td style="vertical-align: bottom; text-align: justify"> </td>
<td style="vertical-align: bottom; text-align: right"> </td>
<td style="vertical-align: bottom; text-align: justify"> </td>
<td style="vertical-align: bottom; text-align: justify"> </td>
<td style="vertical-align: bottom; text-align: justify"> </td>
<td style="vertical-align: bottom; text-align: right"> </td>
<td style="vertical-align: bottom; text-align: justify"> </td>
<td style="vertical-align: bottom; text-align: justify"> </td>
<td style="vertical-align: bottom; text-align: justify"> </td>
<td style="vertical-align: bottom; text-align: right"> </td>
<td style="vertical-align: bottom; text-align: justify"> </td>
<td style="vertical-align: bottom; text-align: justify"> </td>
<td style="vertical-align: bottom; text-align: justify"> </td>
<td style="vertical-align: bottom; text-align: right"> </td>
<td style="vertical-align: bottom; text-align: justify"> </td>
<td style="vertical-align: bottom; text-align: justify"> </td>
<td style="vertical-align: bottom; text-align: justify"> </td>
<td style="vertical-align: bottom; text-align: right"> </td>
<td style="vertical-align: bottom; text-align: justify"> </td></tr>
<tr style="background-color: #CCEEFF">
<td style="vertical-align: bottom; text-align: justify"><font style="font-size: 10pt">$</font></td>
<td style="text-align: right"><font style="font-size: 10pt">0.00625</font></td>
<td style="vertical-align: bottom; text-align: justify"> </td>
<td style="vertical-align: bottom; text-align: justify"> </td>
<td style="vertical-align: bottom; text-align: justify"> </td>
<td style="vertical-align: bottom; text-align: right"><font style="font-size: 10pt">196,000,000</font></td>
<td style="vertical-align: bottom; text-align: justify"> </td>
<td style="vertical-align: bottom; text-align: justify"> </td>
<td style="vertical-align: bottom; text-align: justify"> </td>
<td style="vertical-align: bottom; text-align: right"><font style="font-size: 10pt">10.00</font></td>
<td style="vertical-align: bottom; text-align: justify"> </td>
<td style="vertical-align: bottom; text-align: justify"> </td>
<td style="vertical-align: bottom; text-align: justify"><font style="font-size: 10pt">$</font></td>
<td style="vertical-align: bottom; text-align: right"><font style="font-size: 10pt">0.00625</font></td>
<td style="vertical-align: bottom; text-align: justify"> </td>
<td style="vertical-align: bottom; text-align: justify"> </td>
<td style="vertical-align: bottom; text-align: justify"> </td>
<td style="vertical-align: bottom; text-align: right"><font style="font-size: 10pt">32,666,667</font></td>
<td style="vertical-align: bottom; text-align: justify"> </td>
<td style="vertical-align: bottom; text-align: justify"> </td>
<td style="vertical-align: bottom; text-align: justify"> </td>
<td style="vertical-align: bottom; text-align: right"><font style="font-size: 10pt">10.00</font></td>
<td style="vertical-align: bottom; text-align: justify"> </td>
<td style="vertical-align: bottom; text-align: justify"> </td>
<td style="vertical-align: bottom; text-align: justify"><font style="font-size: 10pt">$</font></td>
<td style="vertical-align: bottom; text-align: right"><font style="font-size: 10pt">0.00625</font></td>
<td style="vertical-align: bottom; text-align: justify"> </td></tr>
<tr style="background-color: white">
<td style="vertical-align: bottom; text-align: justify"> </td>
<td style="text-align: justify"> </td>
<td style="vertical-align: bottom; text-align: justify"> </td>
<td style="vertical-align: bottom; text-align: justify"> </td>
<td style="vertical-align: bottom; text-align: justify"> </td>
<td style="vertical-align: bottom; text-align: right"> </td>
<td style="vertical-align: bottom; text-align: justify"> </td>
<td style="vertical-align: bottom; text-align: justify"> </td>
<td style="vertical-align: bottom; text-align: justify"> </td>
<td style="vertical-align: bottom; text-align: right"> </td>
<td style="vertical-align: bottom; text-align: justify"> </td>
<td style="vertical-align: bottom; text-align: justify"> </td>
<td style="vertical-align: bottom; text-align: justify"> </td>
<td style="vertical-align: bottom; text-align: right"> </td>
<td style="vertical-align: bottom; text-align: justify"> </td>
<td style="vertical-align: bottom; text-align: justify"> </td>
<td style="vertical-align: bottom; text-align: justify"> </td>
<td style="vertical-align: bottom; text-align: right"> </td>
<td style="vertical-align: bottom; text-align: justify"> </td>
<td style="vertical-align: bottom; text-align: justify"> </td>
<td style="vertical-align: bottom; text-align: justify"> </td>
<td style="vertical-align: bottom; text-align: right"> </td>
<td style="vertical-align: bottom; text-align: justify"> </td>
<td style="vertical-align: bottom; text-align: justify"> </td>
<td style="vertical-align: bottom; text-align: justify"> </td>
<td style="vertical-align: bottom; text-align: right"> </td>
<td style="vertical-align: bottom; text-align: justify"> </td></tr>
<tr style="background-color: #CCEEFF">
<td style="vertical-align: bottom; border-bottom-style: solid; border-bottom-width: 1pt; text-align: justify"><font style="font-size: 10pt">$</font></td>
<td style="border-bottom-style: solid; border-bottom-width: 1pt; text-align: right"><font style="font-size: 10pt">0.0005</font></td>
<td style="vertical-align: bottom; text-align: justify"> </td>
<td style="vertical-align: bottom; text-align: justify"> </td>
<td style="vertical-align: bottom; border-bottom-style: solid; border-bottom-width: 1pt; text-align: justify"> </td>
<td style="vertical-align: bottom; border-bottom-style: solid; border-bottom-width: 1pt; text-align: right"><font style="font-size: 10pt">1,000,000</font></td>
<td style="vertical-align: bottom; text-align: justify"> </td>
<td style="vertical-align: bottom; text-align: justify"> </td>
<td style="vertical-align: bottom; border-bottom-style: solid; border-bottom-width: 1pt; text-align: justify"> </td>
<td style="vertical-align: bottom; border-bottom-style: solid; border-bottom-width: 1pt; text-align: right"><font style="font-size: 10pt">1.30</font></td>
<td style="vertical-align: bottom; text-align: justify"> </td>
<td style="vertical-align: bottom; text-align: justify"> </td>
<td style="vertical-align: bottom; border-bottom-style: solid; border-bottom-width: 1pt; text-align: justify"><font style="font-size: 10pt">$</font></td>
<td style="vertical-align: bottom; border-bottom-style: solid; border-bottom-width: 1pt; text-align: right"><font style="font-size: 10pt">0.0005</font></td>
<td style="vertical-align: bottom; text-align: justify"> </td>
<td style="vertical-align: bottom; text-align: justify"> </td>
<td style="vertical-align: bottom; border-bottom-style: solid; border-bottom-width: 1pt; text-align: justify"> </td>
<td style="vertical-align: bottom; border-bottom-style: solid; border-bottom-width: 1pt; text-align: right"><font style="font-size: 10pt">1,000,000</font></td>
<td style="vertical-align: bottom; text-align: justify"> </td>
<td style="vertical-align: bottom; text-align: justify"> </td>
<td style="vertical-align: bottom; border-bottom-style: solid; border-bottom-width: 1pt; text-align: justify"> </td>
<td style="vertical-align: bottom; border-bottom-style: solid; border-bottom-width: 1pt; text-align: right"><font style="font-size: 10pt">1.30</font></td>
<td style="vertical-align: bottom; text-align: justify"> </td>
<td style="vertical-align: bottom; text-align: justify"> </td>
<td style="vertical-align: bottom; border-bottom-style: solid; border-bottom-width: 1pt; text-align: justify"><font style="font-size: 10pt">$</font></td>
<td style="vertical-align: bottom; border-bottom-style: solid; border-bottom-width: 1pt; text-align: right"><font style="font-size: 10pt">0.0005</font></td>
<td style="vertical-align: bottom; text-align: justify"> </td></tr>
<tr style="background-color: white">
<td style="vertical-align: bottom; text-align: justify"> </td>
<td style="text-align: justify"> </td>
<td style="vertical-align: bottom; text-align: justify"> </td>
<td style="vertical-align: bottom; text-align: justify"> </td>
<td style="vertical-align: bottom; text-align: justify"> </td>
<td style="vertical-align: bottom; text-align: right"> </td>
<td style="vertical-align: bottom; text-align: justify"> </td>
<td style="vertical-align: bottom; text-align: justify"> </td>
<td style="vertical-align: bottom; text-align: justify"> </td>
<td style="vertical-align: bottom; text-align: right"> </td>
<td style="vertical-align: bottom; text-align: justify"> </td>
<td style="vertical-align: bottom; text-align: justify"> </td>
<td style="vertical-align: bottom; text-align: justify"> </td>
<td style="vertical-align: bottom; text-align: right"> </td>
<td style="vertical-align: bottom; text-align: justify"> </td>
<td style="vertical-align: bottom; text-align: justify"> </td>
<td style="vertical-align: bottom; text-align: justify"> </td>
<td style="vertical-align: bottom; text-align: right"> </td>
<td style="vertical-align: bottom; text-align: justify"> </td>
<td style="vertical-align: bottom; text-align: justify"> </td>
<td style="vertical-align: bottom; text-align: justify"> </td>
<td style="vertical-align: bottom; text-align: right"> </td>
<td style="vertical-align: bottom; text-align: justify"> </td>
<td style="vertical-align: bottom; text-align: justify"> </td>
<td style="vertical-align: bottom; text-align: justify"> </td>
<td style="vertical-align: bottom; text-align: right"> </td>
<td style="vertical-align: bottom; text-align: justify"> </td></tr>
<tr style="background-color: #CCEEFF">
<td style="vertical-align: top; border-bottom-style: double; border-bottom-width: 2.25pt"><font style="font-size: 10pt">$</font></td>
<td style="border-bottom: black 2.25pt double; text-align: right"><font style="font-size: 10pt">0.0005 - 975,000</font></td>
<td style="vertical-align: bottom; text-align: justify"> </td>
<td style="vertical-align: bottom; text-align: justify"> </td>
<td style="vertical-align: bottom; border-bottom-style: double; border-bottom-width: 2.25pt; text-align: justify"> </td>
<td style="vertical-align: bottom; border-bottom-style: double; border-bottom-width: 2.25pt; text-align: right"><font style="font-size: 10pt">197,000,001</font></td>
<td style="vertical-align: bottom; text-align: justify"> </td>
<td style="vertical-align: bottom; text-align: justify"> </td>
<td style="vertical-align: bottom; border-bottom-style: double; border-bottom-width: 2.25pt; text-align: justify"> </td>
<td style="vertical-align: bottom; border-bottom-style: double; border-bottom-width: 2.25pt; text-align: right"><font style="font-size: 10pt">4.10</font></td>
<td style="vertical-align: bottom; text-align: justify"> </td>
<td style="vertical-align: bottom; text-align: justify"> </td>
<td style="vertical-align: bottom; border-bottom-style: double; border-bottom-width: 2.25pt; text-align: justify"><font style="font-size: 10pt">$</font></td>
<td style="vertical-align: bottom; border-bottom-style: double; border-bottom-width: 2.25pt; text-align: right"><font style="font-size: 10pt">0.00625</font></td>
<td style="vertical-align: bottom; text-align: justify"> </td>
<td style="vertical-align: bottom; text-align: justify"> </td>
<td style="vertical-align: bottom; border-bottom-style: double; border-bottom-width: 2.25pt; text-align: justify"> </td>
<td style="vertical-align: bottom; border-bottom-style: double; border-bottom-width: 2.25pt; text-align: right"><font style="font-size: 10pt">33,666,668</font></td>
<td style="vertical-align: bottom; text-align: justify"> </td>
<td style="vertical-align: bottom; text-align: justify"> </td>
<td style="vertical-align: bottom; border-bottom-style: double; border-bottom-width: 2.25pt; text-align: justify"> </td>
<td style="vertical-align: bottom; border-bottom-style: double; border-bottom-width: 2.25pt; text-align: right"><font style="font-size: 10pt">4.10</font></td>
<td style="vertical-align: bottom; text-align: justify"> </td>
<td style="vertical-align: bottom; text-align: justify"> </td>
<td style="vertical-align: bottom; border-bottom-style: double; border-bottom-width: 2.25pt; text-align: justify"><font style="font-size: 10pt">$</font></td>
<td style="vertical-align: bottom; border-bottom-style: double; border-bottom-width: 2.25pt; text-align: right"><font style="font-size: 10pt">0.00625</font></td>
<td style="vertical-align: bottom; text-align: justify"> </td></tr>
</table>
761905
0.45
0.29
0.64
0.12
1000001
197000001
1000001
30
0
30
32875063
14097838
32875063
432232
25
432232
169276
143943
196000000
0.00625
1022178
582684
95481
286342
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify"><font style="font: 10pt Times New Roman, Times, Serif">StrikeForce
Technical Services Corporation was incorporated in August 2001 under the laws of the State of New Jersey. On September 3, 2004,
the Company changed its name to StrikeForce Technologies, Inc. (the “Company”). On November 15, 2010, the Company
was re-domiciled under the laws of the State of Wyoming. The Company’s operations are based in Edison, New Jersey.</font></p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify; text-indent: 0.5in"><font style="font: 10pt Times New Roman, Times, Serif"> </font></p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify"><font style="font: 10pt Times New Roman, Times, Serif">The
Company is a software development and services company that offers a suite of integrated computer network security products using
proprietary technology. In 2003, the Company acquired certain intellectual property rights and patent pending technology from
NetLabs.com, Inc. (“NetLabs”) including the rights to further develop and sell their principal technology. In addition,
certain officers of NetLabs joined our company as officers and directors of the Company. The Company’s ongoing strategy
is developing and marketing its suite of network security products to the corporate, financial, healthcare, legal, government,
technology, insurance, e-commerce and consumer sectors.</font></p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify; text-indent: 0.5in"><font style="font: 10pt Times New Roman, Times, Serif"> </font></p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify"><font style="font: 10pt Times New Roman, Times, Serif"><i><u>Liquidity
and Going Concern</u></i></font></p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify; text-indent: 0.5in"><font style="font: 10pt Times New Roman, Times, Serif"> </font></p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify"><font style="font: 10pt Times New Roman, Times, Serif">The
accompanying financial statements have been prepared on a going concern basis, which contemplates the realization of assets and
the settlement of liabilities and commitments in the normal course of business. As reflected in the accompanying financial statements,
for the nine months ended September 30, 2016, the Company incurred a loss from operations of $1,416,296 and at September 30, 2016,
the Company had a stockholders’ deficit of $7,621,534. These factors raise substantial doubt about the Company’s ability
to continue as a going concern. In addition, the Company’s independent registered public accounting firm, in its report
on the Company’s December 31, 2015 financial statements, has raised substantial doubt about the Company’s ability
to continue as a going concern. The financial statements do not include any adjustments that might be necessary if the Company
is unable to continue as a going concern.</font></p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify; text-indent: 0.5in"><font style="font: 10pt Times New Roman, Times, Serif"> </font></p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify"><font style="font: 10pt Times New Roman, Times, Serif">The
Company’s ability to continue as a going concern is dependent upon its ability to continue to implement its business plan.
Currently, management is attempting to increase revenues and improve gross margins by redirecting its sales focus from direct
sales to domestic and international sales channels, primarily selling through a channel of distributors, value added resellers,
strategic partners and original equipment manufacturers. While the Company believes in the viability of its strategy to increase
revenues, there can be no assurances to that effect. The Company’s ability to continue as a going concern is dependent upon
its ability to continually increase its customer base and realize increased revenues from recently signed contracts. No assurance
can be given that any future financing, if needed, will be available or, if available, that it will be on terms that are satisfactory
to the Company. Even if the Company is able to obtain additional financing, if needed, it may contain undue restrictions on its
operations, in the case of debt financing, or cause substantial dilution for its stock holders, in the case of equity financing.</font></p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify; text-indent: 0.5in"><font style="font: 10pt Times New Roman, Times, Serif"> </font></p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify"><font style="font: 10pt Times New Roman, Times, Serif"><i><u>Basis
of Presentation-Unaudited Interim Financial Information</u></i></font></p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify; text-indent: 0.5in"><font style="font: 10pt Times New Roman, Times, Serif"> </font></p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify"><font style="font: 10pt Times New Roman, Times, Serif">The
accompanying unaudited financial statements have been prepared in accordance with accounting principles generally accepted in
the United States of America (“U.S. GAAP”) for interim financial information and with the rules and regulations of
the United States Securities and Exchange Commission to Form 10-Q and Article 8 of Regulation S-X. Accordingly, they do not include
all of the information and footnotes required by U.S. GAAP for complete financial statements. In the opinion of management, all
adjustments (consisting of normal recurring accruals) considered necessary for a fair presentation of the financial position,
results of operations and cash flows for the interim periods have been included. The results of operations for the nine months
ended September 30, 2016 are not necessarily indicative of the results of operations to be expected for the full fiscal year ending
December 31, 2016. These financial statements should be read in conjunction with the financial statements of the Company for the
year ended December 31, 2015 and notes thereto contained in the Annual Report on Form 10-K of the Company as filed with the United
States Securities and Exchange Commission (“SEC”) on April 14, 2016.</font></p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify; text-indent: 0.5in"><font style="font: 10pt Times New Roman, Times, Serif"> </font></p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify"><font style="font: 10pt Times New Roman, Times, Serif"><i><u>Reverse
Stock Splits </u></i></font></p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify; text-indent: 0.5in"><font style="font: 10pt Times New Roman, Times, Serif"> </font></p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify"><font style="font: 10pt Times New Roman, Times, Serif">In March
2014, the Company effected a 1:1,500 reverse stock split of the Company's issued and outstanding shares of common stock. </font></p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify; text-indent: 0.5in"><font style="font: 10pt Times New Roman, Times, Serif"> </font></p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify"><font style="font: 10pt Times New Roman, Times, Serif">In February
2015, the Company effected a 1:650 reverse stock split of the Company's issued and outstanding shares of common stock.</font></p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify; text-indent: 0.5in"><font style="font: 10pt Times New Roman, Times, Serif"> </font></p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify"><font style="font: 10pt Times New Roman, Times, Serif">In August
2015, the Company effected a 1:1,000 reverse stock split of the Company's issued and outstanding shares of common stock.</font></p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify; text-indent: 0.5in"><font style="font: 10pt Times New Roman, Times, Serif"> </font></p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify"><font style="font: 10pt Times New Roman, Times, Serif">All
share and per share amounts have been adjusted, on a retroactive basis, to reflect the reverse stock splits adopted by the Company
as if the reverses stock splits had occurred at the beginning of the earliest period presented.</font></p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify; text-indent: 0.5in"><font style="font: 10pt Times New Roman, Times, Serif"> </font></p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify"><font style="font: 10pt Times New Roman, Times, Serif"><i><u>Estimates</u></i></font></p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify; text-indent: 0.5in"><font style="font: 10pt Times New Roman, Times, Serif"> </font></p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify"><font style="font: 10pt Times New Roman, Times, Serif">The
preparation of financial statements in conformity with generally accepted accounting principles 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 financial statements and the reported amounts of revenues and expenses during the reporting period. Significant
estimates include those related to accounting for potential liabilities and the assumptions made in valuing stock instruments
issued for services and derivative liabilities. Actual results could differ from those estimates.</font></p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify; text-indent: 0.5in"><font style="font: 10pt Times New Roman, Times, Serif"> </font></p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify"><font style="font: 10pt Times New Roman, Times, Serif"><i><u>Revenue
</u></i></font></p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify; text-indent: 0.5in"><font style="font: 10pt Times New Roman, Times, Serif"> </font></p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify"><font style="font: 10pt Times New Roman, Times, Serif">The
Company recognizes revenue when (i) persuasive evidence of an arrangement exists, (ii) the product has been shipped or the services
have been rendered to the customer and there are no significant uncertainties surrounding acceptance by the customer, (iii) the
sales price is fixed and determinable, and (iv) collectability is reasonably assured. When the Company recognizes revenue, no
provisions are made for returns because, historically, there have been very few sales returns and adjustments that have impacted
the ultimate collection of revenues.</font></p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify; text-indent: 0.5in"><font style="font: 10pt Times New Roman, Times, Serif"> </font></p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify"><font style="font: 10pt Times New Roman, Times, Serif">Revenue
from hardware sales is recognized when the product is shipped to the customer and there are either no unfulfilled obligations
by the Company, or any obligations that will not affect the customer's final acceptance of the arrangement. All costs of these
obligations are accrued when the corresponding revenue is recognized.</font></p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify; text-indent: 0.5in"><font style="font: 10pt Times New Roman, Times, Serif"> </font></p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify"><font style="font: 10pt Times New Roman, Times, Serif">Revenue
from time and service contracts is recognized as the services are provided. Revenue from delivered elements of one-time charge
licensed software is recognized at the inception of the license term, provided we have vendor-specific objective evidence of the
fair value of each delivered element. Revenue is deferred for undelivered elements. The Company recognizes revenue from the sale
of software licenses when the four criteria discussed above are met. If the Company determines that collection of a fee is not
reasonably assured, it defers the fee and recognizes revenue at the time collection becomes reasonably assured, which is generally
upon receipt of cash. Revenue from monthly software licenses is recognized on a subscription basis.</font></p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify; text-indent: 0.5in"><font style="font: 10pt Times New Roman, Times, Serif"> </font></p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify"><font style="font: 10pt Times New Roman, Times, Serif">The
Company offers an Application Service Provider (ASP) hosted cloud service whereby customer usage transactions are invoiced monthly
on a cost per transaction basis.</font></p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify; text-indent: 0.5in"><font style="font: 10pt Times New Roman, Times, Serif"> </font></p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify"><font style="font: 10pt Times New Roman, Times, Serif"><i><u>Stock
Compensation</u></i></font></p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify; text-indent: 0.5in"><font style="font: 10pt Times New Roman, Times, Serif"> </font></p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify"><font style="font: 10pt Times New Roman, Times, Serif">The
Company periodically issues stock options and warrants to employees and non-employees in non-capital raising transactions for
services and for financing costs. The Company accounts for stock option and warrant grants issued and vesting to employees based
on the authoritative guidance provided by the Financial Accounting Standards Board (FASB) whereas the value of the award is measured
on the date of grant and recognized as compensation expense on the straight-line basis over the vesting period. The Company accounts
for stock option and warrant grants issued and vesting to non-employees in accordance with the authoritative guidance of the FASB
whereas the value of the stock compensation is based upon the measurement date as determined at either a) the date at which a
performance commitment is reached, or b) at the date at which the necessary performance to earn the equity instruments is complete.
Options granted to non-employees are revalued each reporting period to determine the amount to be recorded as an expense in the
respective period. As the options vest, they are valued on each vesting date and an adjustment is recorded for the difference
between the value already recorded and the then current value on the date of vesting. In certain circumstances where there are
no future performance requirements by the non-employee, option grants are immediately vested and the total stock-based compensation
charge is recorded in the period of the measurement date.</font></p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify; text-indent: 0.5in"><font style="font: 10pt Times New Roman, Times, Serif"> </font></p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify"><font style="font: 10pt Times New Roman, Times, Serif">The
fair value of the Company’s stock option and warrant grants are estimated using the Black-Scholes-Merton Option Pricing
model, which uses certain assumptions related to risk-free interest rates, expected volatility, expected life of the stock options
or warrants, and future dividends. Compensation expense is recorded based upon the value derived from the Black-Scholes-Merton
Option Pricing model, and based on actual experience. The assumptions used in the Black-Scholes-Merton Option Pricing model could
materially affect compensation expense recorded in future periods.</font></p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify; text-indent: 0.5in"><font style="font: 10pt Times New Roman, Times, Serif"> </font></p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify"><font style="font: 10pt Times New Roman, Times, Serif"><i><u>Derivative
Financial Instruments</u></i></font></p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify; text-indent: 0.5in"><font style="font: 10pt Times New Roman, Times, Serif"> </font></p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify"><font style="font: 10pt Times New Roman, Times, Serif">The
Company evaluates its financial instruments to determine if such instruments are derivatives or contain features that qualify
as embedded derivatives. For derivative financial instruments that are accounted for as liabilities, the derivative instrument is
initially recorded at its fair value and is then re-valued at each reporting date, with changes in the fair value reported in
the statements of operations. The classification of derivative instruments, including whether such instruments should be recorded
as liabilities or as equity, is evaluated at the end of each reporting period. Derivative instrument liabilities are classified
in the balance sheet as current or non-current based on whether or not net-cash settlement of the derivative instrument could
be required within 12 months of the balance sheet date.</font></p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify; text-indent: 0.5in"><font style="font: 10pt Times New Roman, Times, Serif"> </font></p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify"><font style="font: 10pt Times New Roman, Times, Serif">To
determine the number of authorized but unissued shares available to satisfy outstanding convertible securities, the Company uses
a sequencing method to prioritize its convertible securities as prescribed by ASC 815-40-35. At each reporting date, the Company
reviews its convertible securities to determine that their classification is appropriate.</font></p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify; text-indent: 0.5in"><font style="font: 10pt Times New Roman, Times, Serif"> </font></p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify"><font style="font: 10pt Times New Roman, Times, Serif"><i><u>Fair
Value of Financial Instruments</u></i></font></p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify; text-indent: 0.5in"><font style="font: 10pt Times New Roman, Times, Serif"> </font></p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify"><font style="font: 10pt Times New Roman, Times, Serif">The
Company follows the authoritative guidance issued by the Financial Accounting Standards Board (“FASB”) for fair value
measurements. Fair value is defined as the price that would be received to sell an asset or paid to transfer a liability in the
principal or most advantageous market for the asset or liability in an orderly transaction between market participants at the
measurement date. A fair value hierarchy was established, which prioritizes the inputs used in measuring fair value into three
broad levels as follows:</font></p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify; text-indent: 0.5in"><font style="font: 10pt Times New Roman, Times, Serif"> </font></p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify"><font style="font: 10pt Times New Roman, Times, Serif">Level 1—Quoted
prices in active markets for identical assets or liabilities.</font></p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify"><font style="font: 10pt Times New Roman, Times, Serif">Level 2—Inputs,
other than the quoted prices in active markets, that are observable either directly or indirectly.</font></p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify"><font style="font: 10pt Times New Roman, Times, Serif">Level 3—Unobservable
inputs based on the Company's assumptions.</font></p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify; text-indent: 0.5in"><font style="font: 10pt Times New Roman, Times, Serif"> </font></p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify"><font style="font: 10pt Times New Roman, Times, Serif">The
Company is required to use of observable market data if such data is available without undue cost and effort.</font></p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify; text-indent: 0.5in"><font style="font: 10pt Times New Roman, Times, Serif"> </font></p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify"><font style="font: 10pt Times New Roman, Times, Serif">As
of September 30, 2016 and December 31, 2015, the Company’s balance sheets included the fair value of derivative liabilities
of $256,654 and $989,019, respectively, which were based on Level 2 measurements. </font></p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify; text-indent: 0.5in"><font style="font: 10pt Times New Roman, Times, Serif"> </font></p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify"><font style="font: 10pt Times New Roman, Times, Serif">The
recorded amounts for accounts receivable, accounts payable, accrued expenses, convertible notes, and notes payables approximate
their fair value due to their short term nature.</font></p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify; text-indent: 0.5in"><font style="font: 10pt Times New Roman, Times, Serif">   </font></p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify"><font style="font: 10pt Times New Roman, Times, Serif"><i><u>Income
(loss) per Share</u></i></font></p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify; text-indent: 0.5in"><font style="font: 10pt Times New Roman, Times, Serif"> </font></p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify"><font style="font: 10pt Times New Roman, Times, Serif">Basic
income (loss) per share is computed by dividing net income (loss) available to common stockholders by the weighted average number
of common shares outstanding during the period. Diluted income (loss) per share reflects the potential dilution, using the treasury
stock method that could occur if securities or other contracts to issue common stock were exercised or converted into common stock
or resulted in the issuance of common stock that then shared in the income (loss) of the Company. In computing diluted income
(loss) per share, the treasury stock method assumes that outstanding options, warrants, and convertible preferred stock are exercised
and the proceeds are used to purchase common stock at the average market price during the period. Options, warrants, and convertible
preferred stock may have a dilutive effect under the treasury stock method only when the average market price of the common stock
during the period exceeds the exercise price of the options and warrants.</font></p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify; text-indent: 0.5in"><font style="font: 10pt Times New Roman, Times, Serif"> </font></p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify"><font style="font: 10pt Times New Roman, Times, Serif">For
the three months ended September 30, 2016 and 2015, the dilutive impact of outstanding stock options for 197,000,001 shares
and 1,000,001 shares, respectively; outstanding warrants for 0 shares and 30 shares, respectively; preferred stock that can
convert into 14,097,838 shares and 32,875,063 shares of our common stock, respectively, and notes payable that can convert
into 25 shares and 432,232 shares of our common stock, respectively, have been excluded because their impact on the loss
per share is anti-dilutive.</font></p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify; text-indent: 0.5in"><font style="font: 10pt Times New Roman, Times, Serif"> </font></p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify"><font style="font: 10pt Times New Roman, Times, Serif">For
the nine months ended September 30, 2015, the dilutive impact of outstanding stock options for 1,000,001 shares, outstanding warrants
for 30 shares, preferred stock that can convert into 32,875,063 shares of our common stock and notes payable that can convert
into 432,232 shares of our common stock have been excluded because their impact on the loss per share is anti-dilutive.</font></p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify; text-indent: 0.5in"><font style="font: 10pt Times New Roman, Times, Serif"> </font></p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify"><font style="font: 10pt Times New Roman, Times, Serif">The
following tables set forth the computation of basic and diluted earnings (loss) per share:</font></p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify; text-indent: 0.5in"><font style="font: 10pt Times New Roman, Times, Serif"> </font></p>
<table cellspacing="0" cellpadding="0" style="font: 12pt Times New Roman, Times, Serif; width: 100%; font-size-adjust: none; font-stretch: normal">
<tr style="vertical-align: bottom">
<td style="text-align: justify"><font style="font: 10pt Times New Roman, Times, Serif"> </font></td>
<td style="text-align: justify"><font style="font: 10pt Times New Roman, Times, Serif"> </font></td>
<td colspan="6" id="hdcell" style="border-bottom-style: solid; border-bottom-width: 1pt; text-align: center"><font style="font: 10pt Times New Roman, Times, Serif"><b>Nine
months ended</b><br />
<b>September 30,</b></font></td>
<td style="text-align: justify"><font style="font: 10pt Times New Roman, Times, Serif"> </font></td></tr>
<tr style="vertical-align: bottom">
<td style="text-align: justify"><font style="font: 10pt Times New Roman, Times, Serif"> </font></td>
<td style="text-align: justify"><font style="font: 10pt Times New Roman, Times, Serif"> </font></td>
<td colspan="2" style="border-bottom-style: solid; border-bottom-width: 1pt; text-align: center"><font style="font: 10pt Times New Roman, Times, Serif"><b>2016</b></font></td>
<td style="text-align: justify"><font style="font: 10pt Times New Roman, Times, Serif"> </font></td>
<td style="text-align: justify"><font style="font: 10pt Times New Roman, Times, Serif"> </font></td>
<td colspan="2" style="border-bottom-style: solid; border-bottom-width: 1pt; text-align: center"><font style="font: 10pt Times New Roman, Times, Serif"><b>2015</b></font></td>
<td style="text-align: justify"><font style="font: 10pt Times New Roman, Times, Serif"> </font></td></tr>
<tr>
<td style="vertical-align: top; text-decoration: underline; text-align: justify"><font style="font: 10pt Times New Roman, Times, Serif"><b><u>Income
(Loss) per share – Basic:</u></b></font></td>
<td style="vertical-align: bottom; text-align: justify"><font style="font: 10pt Times New Roman, Times, Serif"> </font></td>
<td colspan="2" id="ffcell" style="vertical-align: bottom; text-align: right"><font style="font: 10pt Times New Roman, Times, Serif"> </font></td>
<td style="vertical-align: bottom; text-align: justify"><font style="font: 10pt Times New Roman, Times, Serif"> </font></td>
<td style="vertical-align: bottom; text-align: justify"><font style="font: 10pt Times New Roman, Times, Serif"> </font></td>
<td colspan="2" style="vertical-align: bottom; text-align: right"><font style="font: 10pt Times New Roman, Times, Serif"> </font></td>
<td style="vertical-align: bottom; text-align: justify"><font style="font: 10pt Times New Roman, Times, Serif"> </font></td></tr>
<tr style="background-color: #CCEEFF">
<td style="vertical-align: top; text-align: justify"><font style="font: 10pt Times New Roman, Times, Serif"><b>Income
(Loss) for the period</b></font></td>
<td style="vertical-align: bottom; width: 1%; text-align: justify"><font style="font: 10pt Times New Roman, Times, Serif"> </font></td>
<td style="vertical-align: bottom; width: 1%; border-bottom-style: double; border-bottom-width: 2.25pt; text-align: justify"><font style="font: 10pt Times New Roman, Times, Serif">$</font></td>
<td style="vertical-align: bottom; border-bottom-style: double; border-bottom-width: 2.25pt; width: 9%; text-align: right"><font style="font: 10pt Times New Roman, Times, Serif">4,306,356</font></td>
<td style="vertical-align: bottom; width: 1%; text-align: justify"><font style="font: 10pt Times New Roman, Times, Serif"> </font></td>
<td style="vertical-align: bottom; width: 1%; text-align: justify"><font style="font: 10pt Times New Roman, Times, Serif"> </font></td>
<td style="vertical-align: bottom; width: 1%; border-bottom-style: double; border-bottom-width: 2.25pt; text-align: justify"><font style="font: 10pt Times New Roman, Times, Serif">$</font></td>
<td style="vertical-align: bottom; border-bottom-style: double; border-bottom-width: 2.25pt; width: 9%; text-align: right"><font style="font: 10pt Times New Roman, Times, Serif">(265,826</font></td>
<td style="vertical-align: top; width: 1%; text-align: left"><font style="font: 10pt Times New Roman, Times, Serif">)</font></td></tr>
<tr style="background-color: white">
<td style="vertical-align: top; text-align: justify"><font style="font: 10pt Times New Roman, Times, Serif">Basic
average common stock outstanding</font></td>
<td style="vertical-align: bottom; text-align: justify"><font style="font: 10pt Times New Roman, Times, Serif"> </font></td>
<td style="vertical-align: bottom; border-bottom-style: double; border-bottom-width: 2.25pt; text-align: justify"><font style="font: 10pt Times New Roman, Times, Serif"> </font></td>
<td style="vertical-align: bottom; border-bottom-style: double; border-bottom-width: 2.25pt; text-align: right"><font style="font: 10pt Times New Roman, Times, Serif">1,699,727,344</font></td>
<td style="vertical-align: bottom; text-align: justify"><font style="font: 10pt Times New Roman, Times, Serif"> </font></td>
<td style="vertical-align: bottom; text-align: justify"><font style="font: 10pt Times New Roman, Times, Serif"> </font></td>
<td style="vertical-align: bottom; border-bottom-style: double; border-bottom-width: 2.25pt; text-align: justify"><font style="font: 10pt Times New Roman, Times, Serif"> </font></td>
<td style="vertical-align: bottom; border-bottom-style: double; border-bottom-width: 2.25pt; text-align: right"><font style="font: 10pt Times New Roman, Times, Serif">1,021,505</font></td>
<td style="vertical-align: bottom; text-align: justify"><font style="font: 10pt Times New Roman, Times, Serif"> </font></td></tr>
<tr style="background-color: #CCEEFF">
<td style="vertical-align: top; text-align: justify"><font style="font: 10pt Times New Roman, Times, Serif">Net
earnings/(loss) per share</font></td>
<td style="vertical-align: bottom; text-align: justify"><font style="font: 10pt Times New Roman, Times, Serif"> </font></td>
<td style="vertical-align: bottom; border-bottom-style: double; border-bottom-width: 2.25pt; text-align: justify"><font style="font: 10pt Times New Roman, Times, Serif">$</font></td>
<td style="vertical-align: bottom; border-bottom-style: double; border-bottom-width: 2.25pt; text-align: right"><font style="font: 10pt Times New Roman, Times, Serif">-</font></td>
<td style="vertical-align: bottom; text-align: justify"><font style="font: 10pt Times New Roman, Times, Serif"> </font></td>
<td style="vertical-align: bottom; text-align: justify"><font style="font: 10pt Times New Roman, Times, Serif"> </font></td>
<td style="vertical-align: bottom; border-bottom-style: double; border-bottom-width: 2.25pt; text-align: justify"><font style="font: 10pt Times New Roman, Times, Serif">$</font></td>
<td style="vertical-align: bottom; border-bottom-style: double; border-bottom-width: 2.25pt; text-align: right"><font style="font: 10pt Times New Roman, Times, Serif">(0.26</font></td>
<td style="vertical-align: top; text-align: left"><font style="font: 10pt Times New Roman, Times, Serif">)</font></td></tr>
</table>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify; text-indent: 0.5in"><font style="font: 10pt Times New Roman, Times, Serif"> </font></p>
<table cellspacing="0" cellpadding="0" style="font: 12pt Times New Roman, Times, Serif; width: 100%; font-size-adjust: none; font-stretch: normal">
<tr style="vertical-align: bottom">
<td style="text-align: justify"><font style="font: 10pt Times New Roman, Times, Serif"> </font></td>
<td style="text-align: justify"><font style="font: 10pt Times New Roman, Times, Serif"> </font></td>
<td colspan="6" style="border-bottom-style: solid; border-bottom-width: 1pt; text-align: center"><font style="font: 10pt Times New Roman, Times, Serif"><b>Nine
months ended</b><br />
<b>September 30,</b></font></td>
<td style="text-align: justify"><font style="font: 10pt Times New Roman, Times, Serif"> </font></td></tr>
<tr style="vertical-align: bottom">
<td style="text-align: justify"><font style="font: 10pt Times New Roman, Times, Serif"> </font></td>
<td style="text-align: justify"><font style="font: 10pt Times New Roman, Times, Serif"> </font></td>
<td colspan="2" style="border-bottom-style: solid; border-bottom-width: 1pt; text-align: center"><font style="font: 10pt Times New Roman, Times, Serif"><b>2016</b></font></td>
<td style="text-align: justify"><font style="font: 10pt Times New Roman, Times, Serif"> </font></td>
<td style="text-align: justify"><font style="font: 10pt Times New Roman, Times, Serif"> </font></td>
<td colspan="2" style="border-bottom-style: solid; border-bottom-width: 1pt; text-align: center"><font style="font: 10pt Times New Roman, Times, Serif"><b>2015</b></font></td>
<td style="text-align: justify"><font style="font: 10pt Times New Roman, Times, Serif"> </font></td></tr>
<tr>
<td style="vertical-align: top; text-decoration: underline; text-align: justify"><font style="font: 10pt Times New Roman, Times, Serif"><b><u>Income
(Loss) per share – Diluted:</u></b></font></td>
<td style="vertical-align: bottom; text-align: justify"><font style="font: 10pt Times New Roman, Times, Serif"> </font></td>
<td colspan="2" style="vertical-align: bottom; text-align: right"><font style="font: 10pt Times New Roman, Times, Serif"> </font></td>
<td style="vertical-align: bottom; text-align: justify"><font style="font: 10pt Times New Roman, Times, Serif"> </font></td>
<td style="vertical-align: bottom; text-align: justify"><font style="font: 10pt Times New Roman, Times, Serif"> </font></td>
<td colspan="2" style="vertical-align: bottom; text-align: right"><font style="font: 10pt Times New Roman, Times, Serif"> </font></td>
<td style="vertical-align: bottom; text-align: justify"><font style="font: 10pt Times New Roman, Times, Serif"> </font></td></tr>
<tr style="background-color: #CCEEFF">
<td style="vertical-align: top; text-align: justify"><font style="font: 10pt Times New Roman, Times, Serif"><b>Income
(Loss) for the period</b></font></td>
<td style="vertical-align: bottom; width: 1%; text-align: justify"><font style="font: 10pt Times New Roman, Times, Serif"> </font></td>
<td style="vertical-align: bottom; width: 1%; border-bottom-style: double; border-bottom-width: 2.25pt; text-align: justify"><font style="font: 10pt Times New Roman, Times, Serif">$</font></td>
<td style="vertical-align: bottom; border-bottom-style: double; border-bottom-width: 2.25pt; width: 9%; text-align: right"><font style="font: 10pt Times New Roman, Times, Serif">4,306,356</font></td>
<td style="vertical-align: bottom; width: 1%; text-align: justify"><font style="font: 10pt Times New Roman, Times, Serif"> </font></td>
<td style="vertical-align: bottom; width: 1%; text-align: justify"><font style="font: 10pt Times New Roman, Times, Serif"> </font></td>
<td style="vertical-align: bottom; width: 1%; border-bottom-style: double; border-bottom-width: 2.25pt; text-align: justify"><font style="font: 10pt Times New Roman, Times, Serif">$</font></td>
<td style="vertical-align: bottom; border-bottom-style: double; border-bottom-width: 2.25pt; width: 9%; text-align: right"><font style="font: 10pt Times New Roman, Times, Serif">(265,826</font></td>
<td style="vertical-align: top; width: 1%; text-align: left"><font style="font: 10pt Times New Roman, Times, Serif">)</font></td></tr>
<tr style="background-color: white">
<td style="vertical-align: top; text-align: justify"><font style="font: 10pt Times New Roman, Times, Serif">Basic
average common stock outstanding</font></td>
<td style="vertical-align: bottom; text-align: justify"><font style="font: 10pt Times New Roman, Times, Serif"> </font></td>
<td style="vertical-align: bottom; text-align: justify"><font style="font: 10pt Times New Roman, Times, Serif"> </font></td>
<td style="vertical-align: bottom; text-align: right"><font style="font: 10pt Times New Roman, Times, Serif">1,699,727,344</font></td>
<td style="vertical-align: bottom; text-align: justify"><font style="font: 10pt Times New Roman, Times, Serif"> </font></td>
<td style="vertical-align: bottom; text-align: justify"><font style="font: 10pt Times New Roman, Times, Serif"> </font></td>
<td style="vertical-align: bottom; text-align: justify"><font style="font: 10pt Times New Roman, Times, Serif"> </font></td>
<td style="vertical-align: bottom; text-align: right"><font style="font: 10pt Times New Roman, Times, Serif">1,021,505</font></td>
<td style="vertical-align: bottom; text-align: justify"><font style="font: 10pt Times New Roman, Times, Serif"> </font></td></tr>
<tr style="background-color: #CCEEFF">
<td style="vertical-align: top; text-align: left"><font style="font: 10pt Times New Roman, Times, Serif">Diluted
effect of outstanding stock options, warrants, notes and preferred stock</font></td>
<td style="vertical-align: bottom; text-align: justify"><font style="font: 10pt Times New Roman, Times, Serif"> </font></td>
<td style="vertical-align: bottom; border-bottom-style: solid; border-bottom-width: 1pt; text-align: justify"><font style="font: 10pt Times New Roman, Times, Serif"> </font></td>
<td style="vertical-align: bottom; border-bottom-style: solid; border-bottom-width: 1pt; text-align: right"><font style="font: 10pt Times New Roman, Times, Serif">761,905</font></td>
<td style="vertical-align: bottom; text-align: justify"><font style="font: 10pt Times New Roman, Times, Serif"> </font></td>
<td style="vertical-align: bottom; text-align: justify"><font style="font: 10pt Times New Roman, Times, Serif"> </font></td>
<td style="vertical-align: bottom; border-bottom-style: solid; border-bottom-width: 1pt; text-align: justify"><font style="font: 10pt Times New Roman, Times, Serif"> </font></td>
<td style="vertical-align: bottom; border-bottom-style: solid; border-bottom-width: 1pt; text-align: right"><font style="font: 10pt Times New Roman, Times, Serif">-</font></td>
<td style="vertical-align: bottom; text-align: justify"><font style="font: 10pt Times New Roman, Times, Serif"> </font></td></tr>
<tr style="background-color: white">
<td style="vertical-align: top; text-align: justify"><font style="font: 10pt Times New Roman, Times, Serif">Diluted
average common stock outstanding</font></td>
<td style="vertical-align: bottom; text-align: justify"><font style="font: 10pt Times New Roman, Times, Serif"> </font></td>
<td style="vertical-align: bottom; border-bottom-style: double; border-bottom-width: 2.25pt; text-align: justify"><font style="font: 10pt Times New Roman, Times, Serif"> </font></td>
<td style="vertical-align: bottom; border-bottom-style: double; border-bottom-width: 2.25pt; text-align: right"><font style="font: 10pt Times New Roman, Times, Serif">1,700,489,249</font></td>
<td style="vertical-align: bottom; text-align: justify"><font style="font: 10pt Times New Roman, Times, Serif"> </font></td>
<td style="vertical-align: bottom; text-align: justify"><font style="font: 10pt Times New Roman, Times, Serif"> </font></td>
<td style="vertical-align: bottom; border-bottom-style: double; border-bottom-width: 2.25pt; text-align: justify"><font style="font: 10pt Times New Roman, Times, Serif"> </font></td>
<td style="vertical-align: bottom; border-bottom-style: double; border-bottom-width: 2.25pt; text-align: right"><font style="font: 10pt Times New Roman, Times, Serif">1,021,505</font></td>
<td style="vertical-align: bottom; text-align: justify"><font style="font: 10pt Times New Roman, Times, Serif"> </font></td></tr>
<tr style="background-color: #CCEEFF">
<td style="vertical-align: top; text-align: justify"><font style="font: 10pt Times New Roman, Times, Serif">Net
earnings/(loss) per share</font></td>
<td style="vertical-align: bottom; text-align: justify"><font style="font: 10pt Times New Roman, Times, Serif"> </font></td>
<td style="vertical-align: bottom; border-bottom-style: double; border-bottom-width: 2.25pt; text-align: justify"><font style="font: 10pt Times New Roman, Times, Serif">$</font></td>
<td style="vertical-align: bottom; border-bottom-style: double; border-bottom-width: 2.25pt; text-align: right"><font style="font: 10pt Times New Roman, Times, Serif">-</font></td>
<td style="vertical-align: bottom; text-align: justify"><font style="font: 10pt Times New Roman, Times, Serif"> </font></td>
<td style="vertical-align: bottom; text-align: justify"><font style="font: 10pt Times New Roman, Times, Serif"> </font></td>
<td style="vertical-align: bottom; border-bottom-style: double; border-bottom-width: 2.25pt; text-align: justify"><font style="font: 10pt Times New Roman, Times, Serif">$</font></td>
<td style="vertical-align: bottom; border-bottom-style: double; border-bottom-width: 2.25pt; text-align: right"><font style="font: 10pt Times New Roman, Times, Serif">(0.26</font></td>
<td style="vertical-align: top; text-align: left"><font style="font: 10pt Times New Roman, Times, Serif">)</font></td></tr>
</table>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify; text-indent: 0.5in"><font style="font: 10pt Times New Roman, Times, Serif"> </font></p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify"><font style="font: 10pt Times New Roman, Times, Serif"><i><u>Significant
Concentrations</u></i></font></p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify; text-indent: 0.5in"><font style="font: 10pt Times New Roman, Times, Serif"> </font></p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify"><font style="font: 10pt Times New Roman, Times, Serif">For
the interim period ended September 30, 2016, sales to three customers comprised 45%, 29% and 12% of revenues, respectively. For
the interim period ended September 30, 2015, sales to one customer comprised 64% of revenues. At September 30, 2016, two customers
comprised 65%, and 16% of accounts receivable, respectively.</font></p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify; background-color: white; text-indent: 0.5in"><font style="font: 10pt Times New Roman, Times, Serif"> </font></p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify"><font style="font: 10pt Times New Roman, Times, Serif"><i><u>Recent
Accounting Pronouncements</u></i></font></p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify; text-indent: 0.5in"><font style="font: 10pt Times New Roman, Times, Serif"> </font></p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify"><font style="font: 10pt Times New Roman, Times, Serif">In
May 2014, the FASB issued Accounting Standards Update No. 2014-09, Revenue from Contracts with Customers. ASU 2014-09 is a comprehensive
revenue recognition standard that will supersede nearly all existing revenue recognition guidance under current U.S. GAAP and
replace it with a principle based approach for determining revenue recognition. ASU 2014-09 will require that companies recognize
revenue based on the value of transferred goods or services as they occur in the contract. The ASU also will require additional
disclosure about the nature, amount, timing and uncertainty of revenue and cash flows arising from customer contracts, including
significant judgments and changes in judgments and assets recognized from costs incurred to obtain or fulfill a contract. ASU
2014-09 is effective for interim and annual periods beginning after December 15, 2017. Early adoption is permitted only in annual
reporting periods beginning after December 15, 2016, including interim periods therein. Entities will be able to transition to
the standard either retrospectively or as a cumulative-effect adjustment as of the date of adoption. The Company is in the process
of evaluating the impact of ASU 2014-09 on the Company’s financial statements and disclosures.</font></p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify; text-indent: 0.5in"><font style="font: 10pt Times New Roman, Times, Serif"> </font></p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify"><font style="font: 10pt Times New Roman, Times, Serif">In
August 2014, the FASB issued Accounting Standards Update No. 2014-15, Disclosure of Uncertainties about an Entity’s Ability
to Continue as a Going Concern, which provides guidance on determining when and how to disclose going-concern uncertainties in
the financial statements. ASU 2014-15 requires management to perform interim and annual assessments of an entity’s ability
to continue as a going concern within one year of the date the financial statements are issued. An entity must provide certain
disclosures if conditions or events raise substantial doubt about the entity’s ability to continue as a going concern. ASU
2014-15 is effective for annual periods ending after December 15, 2016, and interim periods thereafter. Early adoption is permitted.
The Company is currently evaluating the expected impact that the standard could have on its financial statements and related disclosures.</font></p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify; text-indent: 0.5in"><font style="font: 10pt Times New Roman, Times, Serif"> </font></p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify"><font style="font: 10pt Times New Roman, Times, Serif">In
February 2016, the FASB issued Accounting Standards Update No. 2016-02, Leases. ASU 2016-02 requires a lessee to record a right
of use asset and a corresponding lease liability on the balance sheet for all leases with terms longer than 12 months. ASU 2016-02
is effective for all interim and annual reporting periods beginning after December 15, 2018. Early adoption is permitted. A modified
retrospective transition approach is required for lessees for capital and operating leases existing at, or entered into after,
the beginning of the earliest comparative period presented in the financial statements, with certain practical expedients available.
The Company is in the process of evaluating the impact of ASU 2016-02 on the Company’s financial statements and disclosures.</font></p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify; text-indent: 0.5in"><font style="font: 10pt Times New Roman, Times, Serif"> </font></p>
<p style="margin: 0; text-align: justify"><font style="font: 10pt Times New Roman, Times, Serif">Other recent accounting pronouncements
issued by the FASB, including its Emerging Issues Task Force, the American Institute of Certified Public Accountants, and the
Securities and Exchange Commission did not or are not believed by management to have a material impact on the Company's present
or future consolidated financial statement presentation or disclosures.</font></p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify"><font style="font: 10pt Times New Roman, Times, Serif">In March
2014, the Company effected a 1:1,500 reverse stock split of the Company's issued and outstanding shares of common stock. </font></p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify; text-indent: 0.5in"><font style="font: 10pt Times New Roman, Times, Serif"> </font></p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify"><font style="font: 10pt Times New Roman, Times, Serif">In February
2015, the Company effected a 1:650 reverse stock split of the Company's issued and outstanding shares of common stock.</font></p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify; text-indent: 0.5in"><font style="font: 10pt Times New Roman, Times, Serif"> </font></p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify"><font style="font: 10pt Times New Roman, Times, Serif">In August
2015, the Company effected a 1:1,000 reverse stock split of the Company's issued and outstanding shares of common stock.</font></p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify; text-indent: 0.5in"><font style="font: 10pt Times New Roman, Times, Serif"> </font></p>
<p style="margin: 0; text-align: justify"><font style="font: 10pt Times New Roman, Times, Serif">All share
and per share amounts have been adjusted, on a retroactive basis, to reflect the reverse stock splits adopted by the Company as
if the reverses stock splits had occurred at the beginning of the earliest period presented.</font></p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify"><font style="font: 10pt Times New Roman, Times, Serif">Basic
income (loss) per share is computed by dividing net income (loss) available to common stockholders by the weighted average number
of common shares outstanding during the period. Diluted income (loss) per share reflects the potential dilution, using the treasury
stock method that could occur if securities or other contracts to issue common stock were exercised or converted into common stock
or resulted in the issuance of common stock that then shared in the income (loss) of the Company. In computing diluted income
(loss) per share, the treasury stock method assumes that outstanding options, warrants, and convertible preferred stock are exercised
and the proceeds are used to purchase common stock at the average market price during the period. Options, warrants, and convertible
preferred stock may have a dilutive effect under the treasury stock method only when the average market price of the common stock
during the period exceeds the exercise price of the options and warrants.</font></p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify; text-indent: 0.5in"><font style="font: 10pt Times New Roman, Times, Serif"> </font></p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify"><font style="font: 10pt Times New Roman, Times, Serif">For
the three months ended September 30, 2016 and 2015, the dilutive impact of outstanding stock options for 197,000,001 shares
and 1,000,001 shares, respectively; outstanding warrants for 0 shares and 30 shares, respectively; preferred stock that can
convert into 14,097,838 shares and 32,875,063 shares of our common stock, respectively, and notes payable that can convert
into 25 shares and 432,232 shares of our common stock, respectively, have been excluded because their impact on the loss
per share is anti-dilutive.</font></p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify; text-indent: 0.5in"><font style="font: 10pt Times New Roman, Times, Serif"> </font></p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify"><font style="font: 10pt Times New Roman, Times, Serif">For
the nine months ended September 30, 2015, the dilutive impact of outstanding stock options for 1,000,001 shares, outstanding warrants
for 30 shares, preferred stock that can convert into 32,875,063 shares of our common stock and notes payable that can convert
into 432,232 shares of our common stock have been excluded because their impact on the loss per share is anti-dilutive.</font></p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify; text-indent: 0.5in"><font style="font: 10pt Times New Roman, Times, Serif"> </font></p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify"><font style="font: 10pt Times New Roman, Times, Serif">The
following tables set forth the computation of basic and diluted earnings (loss) per share:</font></p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify; text-indent: 0.5in"><font style="font: 10pt Times New Roman, Times, Serif"> </font></p>
<table cellspacing="0" cellpadding="0" style="font: 12pt Times New Roman, Times, Serif; width: 100%; font-size-adjust: none; font-stretch: normal">
<tr style="vertical-align: bottom">
<td style="text-align: justify"><font style="font: 10pt Times New Roman, Times, Serif"> </font></td>
<td style="text-align: justify"><font style="font: 10pt Times New Roman, Times, Serif"> </font></td>
<td colspan="6" id="hdcell" style="border-bottom-style: solid; border-bottom-width: 1pt; text-align: center"><font style="font: 10pt Times New Roman, Times, Serif"><b>Nine
months ended</b><br />
<b>September 30,</b></font></td>
<td style="text-align: justify"><font style="font: 10pt Times New Roman, Times, Serif"> </font></td></tr>
<tr style="vertical-align: bottom">
<td style="text-align: justify"><font style="font: 10pt Times New Roman, Times, Serif"> </font></td>
<td style="text-align: justify"><font style="font: 10pt Times New Roman, Times, Serif"> </font></td>
<td colspan="2" style="border-bottom-style: solid; border-bottom-width: 1pt; text-align: center"><font style="font: 10pt Times New Roman, Times, Serif"><b>2016</b></font></td>
<td style="text-align: justify"><font style="font: 10pt Times New Roman, Times, Serif"> </font></td>
<td style="text-align: justify"><font style="font: 10pt Times New Roman, Times, Serif"> </font></td>
<td colspan="2" style="border-bottom-style: solid; border-bottom-width: 1pt; text-align: center"><font style="font: 10pt Times New Roman, Times, Serif"><b>2015</b></font></td>
<td style="text-align: justify"><font style="font: 10pt Times New Roman, Times, Serif"> </font></td></tr>
<tr>
<td style="vertical-align: top; text-decoration: underline; text-align: justify"><font style="font: 10pt Times New Roman, Times, Serif"><b><u>Income
(Loss) per share – Basic:</u></b></font></td>
<td style="vertical-align: bottom; text-align: justify"><font style="font: 10pt Times New Roman, Times, Serif"> </font></td>
<td colspan="2" id="ffcell" style="vertical-align: bottom; text-align: right"><font style="font: 10pt Times New Roman, Times, Serif"> </font></td>
<td style="vertical-align: bottom; text-align: justify"><font style="font: 10pt Times New Roman, Times, Serif"> </font></td>
<td style="vertical-align: bottom; text-align: justify"><font style="font: 10pt Times New Roman, Times, Serif"> </font></td>
<td colspan="2" style="vertical-align: bottom; text-align: right"><font style="font: 10pt Times New Roman, Times, Serif"> </font></td>
<td style="vertical-align: bottom; text-align: justify"><font style="font: 10pt Times New Roman, Times, Serif"> </font></td></tr>
<tr style="background-color: #CCEEFF">
<td style="vertical-align: top; text-align: justify"><font style="font: 10pt Times New Roman, Times, Serif"><b>Income
(Loss) for the period</b></font></td>
<td style="vertical-align: bottom; width: 1%; text-align: justify"><font style="font: 10pt Times New Roman, Times, Serif"> </font></td>
<td style="vertical-align: bottom; width: 1%; border-bottom-style: double; border-bottom-width: 2.25pt; text-align: justify"><font style="font: 10pt Times New Roman, Times, Serif">$</font></td>
<td style="vertical-align: bottom; border-bottom-style: double; border-bottom-width: 2.25pt; width: 9%; text-align: right"><font style="font: 10pt Times New Roman, Times, Serif">4,306,356</font></td>
<td style="vertical-align: bottom; width: 1%; text-align: justify"><font style="font: 10pt Times New Roman, Times, Serif"> </font></td>
<td style="vertical-align: bottom; width: 1%; text-align: justify"><font style="font: 10pt Times New Roman, Times, Serif"> </font></td>
<td style="vertical-align: bottom; width: 1%; border-bottom-style: double; border-bottom-width: 2.25pt; text-align: justify"><font style="font: 10pt Times New Roman, Times, Serif">$</font></td>
<td style="vertical-align: bottom; border-bottom-style: double; border-bottom-width: 2.25pt; width: 9%; text-align: right"><font style="font: 10pt Times New Roman, Times, Serif">(265,826</font></td>
<td style="vertical-align: top; width: 1%; text-align: left"><font style="font: 10pt Times New Roman, Times, Serif">)</font></td></tr>
<tr style="background-color: white">
<td style="vertical-align: top; text-align: justify"><font style="font: 10pt Times New Roman, Times, Serif">Basic
average common stock outstanding</font></td>
<td style="vertical-align: bottom; text-align: justify"><font style="font: 10pt Times New Roman, Times, Serif"> </font></td>
<td style="vertical-align: bottom; border-bottom-style: double; border-bottom-width: 2.25pt; text-align: justify"><font style="font: 10pt Times New Roman, Times, Serif"> </font></td>
<td style="vertical-align: bottom; border-bottom-style: double; border-bottom-width: 2.25pt; text-align: right"><font style="font: 10pt Times New Roman, Times, Serif">1,699,727,344</font></td>
<td style="vertical-align: bottom; text-align: justify"><font style="font: 10pt Times New Roman, Times, Serif"> </font></td>
<td style="vertical-align: bottom; text-align: justify"><font style="font: 10pt Times New Roman, Times, Serif"> </font></td>
<td style="vertical-align: bottom; border-bottom-style: double; border-bottom-width: 2.25pt; text-align: justify"><font style="font: 10pt Times New Roman, Times, Serif"> </font></td>
<td style="vertical-align: bottom; border-bottom-style: double; border-bottom-width: 2.25pt; text-align: right"><font style="font: 10pt Times New Roman, Times, Serif">1,021,505</font></td>
<td style="vertical-align: bottom; text-align: justify"><font style="font: 10pt Times New Roman, Times, Serif"> </font></td></tr>
<tr style="background-color: #CCEEFF">
<td style="vertical-align: top; text-align: justify"><font style="font: 10pt Times New Roman, Times, Serif">Net
earnings/(loss) per share</font></td>
<td style="vertical-align: bottom; text-align: justify"><font style="font: 10pt Times New Roman, Times, Serif"> </font></td>
<td style="vertical-align: bottom; border-bottom-style: double; border-bottom-width: 2.25pt; text-align: justify"><font style="font: 10pt Times New Roman, Times, Serif">$</font></td>
<td style="vertical-align: bottom; border-bottom-style: double; border-bottom-width: 2.25pt; text-align: right"><font style="font: 10pt Times New Roman, Times, Serif">-</font></td>
<td style="vertical-align: bottom; text-align: justify"><font style="font: 10pt Times New Roman, Times, Serif"> </font></td>
<td style="vertical-align: bottom; text-align: justify"><font style="font: 10pt Times New Roman, Times, Serif"> </font></td>
<td style="vertical-align: bottom; border-bottom-style: double; border-bottom-width: 2.25pt; text-align: justify"><font style="font: 10pt Times New Roman, Times, Serif">$</font></td>
<td style="vertical-align: bottom; border-bottom-style: double; border-bottom-width: 2.25pt; text-align: right"><font style="font: 10pt Times New Roman, Times, Serif">(0.26</font></td>
<td style="vertical-align: top; text-align: left"><font style="font: 10pt Times New Roman, Times, Serif">)</font></td></tr>
</table>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify; text-indent: 0.5in"><font style="font: 10pt Times New Roman, Times, Serif"> </font></p>
<table cellspacing="0" cellpadding="0" style="font: 12pt Times New Roman, Times, Serif; width: 100%; font-size-adjust: none; font-stretch: normal">
<tr style="vertical-align: bottom">
<td style="text-align: justify"><font style="font: 10pt Times New Roman, Times, Serif"> </font></td>
<td style="text-align: justify"><font style="font: 10pt Times New Roman, Times, Serif"> </font></td>
<td colspan="6" style="border-bottom-style: solid; border-bottom-width: 1pt; text-align: center"><font style="font: 10pt Times New Roman, Times, Serif"><b>Nine
months ended</b><br />
<b>September 30,</b></font></td>
<td style="text-align: justify"><font style="font: 10pt Times New Roman, Times, Serif"> </font></td></tr>
<tr style="vertical-align: bottom">
<td style="text-align: justify"><font style="font: 10pt Times New Roman, Times, Serif"> </font></td>
<td style="text-align: justify"><font style="font: 10pt Times New Roman, Times, Serif"> </font></td>
<td colspan="2" style="border-bottom-style: solid; border-bottom-width: 1pt; text-align: center"><font style="font: 10pt Times New Roman, Times, Serif"><b>2016</b></font></td>
<td style="text-align: justify"><font style="font: 10pt Times New Roman, Times, Serif"> </font></td>
<td style="text-align: justify"><font style="font: 10pt Times New Roman, Times, Serif"> </font></td>
<td colspan="2" style="border-bottom-style: solid; border-bottom-width: 1pt; text-align: center"><font style="font: 10pt Times New Roman, Times, Serif"><b>2015</b></font></td>
<td style="text-align: justify"><font style="font: 10pt Times New Roman, Times, Serif"> </font></td></tr>
<tr>
<td style="vertical-align: top; text-decoration: underline; text-align: justify"><font style="font: 10pt Times New Roman, Times, Serif"><b><u>Income
(Loss) per share – Diluted:</u></b></font></td>
<td style="vertical-align: bottom; text-align: justify"><font style="font: 10pt Times New Roman, Times, Serif"> </font></td>
<td colspan="2" style="vertical-align: bottom; text-align: right"><font style="font: 10pt Times New Roman, Times, Serif"> </font></td>
<td style="vertical-align: bottom; text-align: justify"><font style="font: 10pt Times New Roman, Times, Serif"> </font></td>
<td style="vertical-align: bottom; text-align: justify"><font style="font: 10pt Times New Roman, Times, Serif"> </font></td>
<td colspan="2" style="vertical-align: bottom; text-align: right"><font style="font: 10pt Times New Roman, Times, Serif"> </font></td>
<td style="vertical-align: bottom; text-align: justify"><font style="font: 10pt Times New Roman, Times, Serif"> </font></td></tr>
<tr style="background-color: #CCEEFF">
<td style="vertical-align: top; text-align: justify"><font style="font: 10pt Times New Roman, Times, Serif"><b>Income
(Loss) for the period</b></font></td>
<td style="vertical-align: bottom; width: 1%; text-align: justify"><font style="font: 10pt Times New Roman, Times, Serif"> </font></td>
<td style="vertical-align: bottom; width: 1%; border-bottom-style: double; border-bottom-width: 2.25pt; text-align: justify"><font style="font: 10pt Times New Roman, Times, Serif">$</font></td>
<td style="vertical-align: bottom; border-bottom-style: double; border-bottom-width: 2.25pt; width: 9%; text-align: right"><font style="font: 10pt Times New Roman, Times, Serif">4,306,356</font></td>
<td style="vertical-align: bottom; width: 1%; text-align: justify"><font style="font: 10pt Times New Roman, Times, Serif"> </font></td>
<td style="vertical-align: bottom; width: 1%; text-align: justify"><font style="font: 10pt Times New Roman, Times, Serif"> </font></td>
<td style="vertical-align: bottom; width: 1%; border-bottom-style: double; border-bottom-width: 2.25pt; text-align: justify"><font style="font: 10pt Times New Roman, Times, Serif">$</font></td>
<td style="vertical-align: bottom; border-bottom-style: double; border-bottom-width: 2.25pt; width: 9%; text-align: right"><font style="font: 10pt Times New Roman, Times, Serif">(265,826</font></td>
<td style="vertical-align: top; width: 1%; text-align: left"><font style="font: 10pt Times New Roman, Times, Serif">)</font></td></tr>
<tr style="background-color: white">
<td style="vertical-align: top; text-align: justify"><font style="font: 10pt Times New Roman, Times, Serif">Basic
average common stock outstanding</font></td>
<td style="vertical-align: bottom; text-align: justify"><font style="font: 10pt Times New Roman, Times, Serif"> </font></td>
<td style="vertical-align: bottom; text-align: justify"><font style="font: 10pt Times New Roman, Times, Serif"> </font></td>
<td style="vertical-align: bottom; text-align: right"><font style="font: 10pt Times New Roman, Times, Serif">1,699,727,344</font></td>
<td style="vertical-align: bottom; text-align: justify"><font style="font: 10pt Times New Roman, Times, Serif"> </font></td>
<td style="vertical-align: bottom; text-align: justify"><font style="font: 10pt Times New Roman, Times, Serif"> </font></td>
<td style="vertical-align: bottom; text-align: justify"><font style="font: 10pt Times New Roman, Times, Serif"> </font></td>
<td style="vertical-align: bottom; text-align: right"><font style="font: 10pt Times New Roman, Times, Serif">1,021,505</font></td>
<td style="vertical-align: bottom; text-align: justify"><font style="font: 10pt Times New Roman, Times, Serif"> </font></td></tr>
<tr style="background-color: #CCEEFF">
<td style="vertical-align: top; text-align: left"><font style="font: 10pt Times New Roman, Times, Serif">Diluted
effect of outstanding stock options, warrants, notes and preferred stock</font></td>
<td style="vertical-align: bottom; text-align: justify"><font style="font: 10pt Times New Roman, Times, Serif"> </font></td>
<td style="vertical-align: bottom; border-bottom-style: solid; border-bottom-width: 1pt; text-align: justify"><font style="font: 10pt Times New Roman, Times, Serif"> </font></td>
<td style="vertical-align: bottom; border-bottom-style: solid; border-bottom-width: 1pt; text-align: right"><font style="font: 10pt Times New Roman, Times, Serif">761,905</font></td>
<td style="vertical-align: bottom; text-align: justify"><font style="font: 10pt Times New Roman, Times, Serif"> </font></td>
<td style="vertical-align: bottom; text-align: justify"><font style="font: 10pt Times New Roman, Times, Serif"> </font></td>
<td style="vertical-align: bottom; border-bottom-style: solid; border-bottom-width: 1pt; text-align: justify"><font style="font: 10pt Times New Roman, Times, Serif"> </font></td>
<td style="vertical-align: bottom; border-bottom-style: solid; border-bottom-width: 1pt; text-align: right"><font style="font: 10pt Times New Roman, Times, Serif">-</font></td>
<td style="vertical-align: bottom; text-align: justify"><font style="font: 10pt Times New Roman, Times, Serif"> </font></td></tr>
<tr style="background-color: white">
<td style="vertical-align: top; text-align: justify"><font style="font: 10pt Times New Roman, Times, Serif">Diluted
average common stock outstanding</font></td>
<td style="vertical-align: bottom; text-align: justify"><font style="font: 10pt Times New Roman, Times, Serif"> </font></td>
<td style="vertical-align: bottom; border-bottom-style: double; border-bottom-width: 2.25pt; text-align: justify"><font style="font: 10pt Times New Roman, Times, Serif"> </font></td>
<td style="vertical-align: bottom; border-bottom-style: double; border-bottom-width: 2.25pt; text-align: right"><font style="font: 10pt Times New Roman, Times, Serif">1,700,489,249</font></td>
<td style="vertical-align: bottom; text-align: justify"><font style="font: 10pt Times New Roman, Times, Serif"> </font></td>
<td style="vertical-align: bottom; text-align: justify"><font style="font: 10pt Times New Roman, Times, Serif"> </font></td>
<td style="vertical-align: bottom; border-bottom-style: double; border-bottom-width: 2.25pt; text-align: justify"><font style="font: 10pt Times New Roman, Times, Serif"> </font></td>
<td style="vertical-align: bottom; border-bottom-style: double; border-bottom-width: 2.25pt; text-align: right"><font style="font: 10pt Times New Roman, Times, Serif">1,021,505</font></td>
<td style="vertical-align: bottom; text-align: justify"><font style="font: 10pt Times New Roman, Times, Serif"> </font></td></tr>
<tr style="background-color: #CCEEFF">
<td style="vertical-align: top; text-align: justify"><font style="font: 10pt Times New Roman, Times, Serif">Net
earnings/(loss) per share</font></td>
<td style="vertical-align: bottom; text-align: justify"><font style="font: 10pt Times New Roman, Times, Serif"> </font></td>
<td style="vertical-align: bottom; border-bottom-style: double; border-bottom-width: 2.25pt; text-align: justify"><font style="font: 10pt Times New Roman, Times, Serif">$</font></td>
<td style="vertical-align: bottom; border-bottom-style: double; border-bottom-width: 2.25pt; text-align: right"><font style="font: 10pt Times New Roman, Times, Serif">-</font></td>
<td style="vertical-align: bottom; text-align: justify"><font style="font: 10pt Times New Roman, Times, Serif"> </font></td>
<td style="vertical-align: bottom; text-align: justify"><font style="font: 10pt Times New Roman, Times, Serif"> </font></td>
<td style="vertical-align: bottom; border-bottom-style: double; border-bottom-width: 2.25pt; text-align: justify"><font style="font: 10pt Times New Roman, Times, Serif">$</font></td>
<td style="vertical-align: bottom; border-bottom-style: double; border-bottom-width: 2.25pt; text-align: right"><font style="font: 10pt Times New Roman, Times, Serif">(0.26</font></td>
<td style="vertical-align: top; text-align: left"><font style="font: 10pt Times New Roman, Times, Serif">)</font></td></tr>
</table>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify"><font style="font: 10pt Times New Roman, Times, Serif">The
following tables set forth the computation of basic and diluted earnings (loss) per share:</font></p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify; text-indent: 0.5in"><font style="font: 10pt Times New Roman, Times, Serif"> </font></p>
<table cellspacing="0" cellpadding="0" style="font: 12pt Times New Roman, Times, Serif; width: 100%; font-size-adjust: none; font-stretch: normal">
<tr style="vertical-align: bottom">
<td style="text-align: justify"><font style="font: 10pt Times New Roman, Times, Serif"> </font></td>
<td style="text-align: justify"><font style="font: 10pt Times New Roman, Times, Serif"> </font></td>
<td colspan="6" id="hdcell" style="border-bottom-style: solid; border-bottom-width: 1pt; text-align: center"><font style="font: 10pt Times New Roman, Times, Serif"><b>Nine
months ended</b><br />
<b>September 30,</b></font></td>
<td style="text-align: justify"><font style="font: 10pt Times New Roman, Times, Serif"> </font></td></tr>
<tr style="vertical-align: bottom">
<td style="text-align: justify"><font style="font: 10pt Times New Roman, Times, Serif"> </font></td>
<td style="text-align: justify"><font style="font: 10pt Times New Roman, Times, Serif"> </font></td>
<td colspan="2" style="border-bottom-style: solid; border-bottom-width: 1pt; text-align: center"><font style="font: 10pt Times New Roman, Times, Serif"><b>2016</b></font></td>
<td style="text-align: justify"><font style="font: 10pt Times New Roman, Times, Serif"> </font></td>
<td style="text-align: justify"><font style="font: 10pt Times New Roman, Times, Serif"> </font></td>
<td colspan="2" style="border-bottom-style: solid; border-bottom-width: 1pt; text-align: center"><font style="font: 10pt Times New Roman, Times, Serif"><b>2015</b></font></td>
<td style="text-align: justify"><font style="font: 10pt Times New Roman, Times, Serif"> </font></td></tr>
<tr>
<td style="vertical-align: top; text-decoration: underline; text-align: justify"><font style="font: 10pt Times New Roman, Times, Serif"><b><u>Income
(Loss) per share – Basic:</u></b></font></td>
<td style="vertical-align: bottom; text-align: justify"><font style="font: 10pt Times New Roman, Times, Serif"> </font></td>
<td colspan="2" id="ffcell" style="vertical-align: bottom; text-align: right"><font style="font: 10pt Times New Roman, Times, Serif"> </font></td>
<td style="vertical-align: bottom; text-align: justify"><font style="font: 10pt Times New Roman, Times, Serif"> </font></td>
<td style="vertical-align: bottom; text-align: justify"><font style="font: 10pt Times New Roman, Times, Serif"> </font></td>
<td colspan="2" style="vertical-align: bottom; text-align: right"><font style="font: 10pt Times New Roman, Times, Serif"> </font></td>
<td style="vertical-align: bottom; text-align: justify"><font style="font: 10pt Times New Roman, Times, Serif"> </font></td></tr>
<tr style="background-color: #CCEEFF">
<td style="vertical-align: top; text-align: justify"><font style="font: 10pt Times New Roman, Times, Serif"><b>Income
(Loss) for the period</b></font></td>
<td style="vertical-align: bottom; width: 1%; text-align: justify"><font style="font: 10pt Times New Roman, Times, Serif"> </font></td>
<td style="vertical-align: bottom; width: 1%; border-bottom-style: double; border-bottom-width: 2.25pt; text-align: justify"><font style="font: 10pt Times New Roman, Times, Serif">$</font></td>
<td style="vertical-align: bottom; border-bottom-style: double; border-bottom-width: 2.25pt; width: 9%; text-align: right"><font style="font: 10pt Times New Roman, Times, Serif">4,306,356</font></td>
<td style="vertical-align: bottom; width: 1%; text-align: justify"><font style="font: 10pt Times New Roman, Times, Serif"> </font></td>
<td style="vertical-align: bottom; width: 1%; text-align: justify"><font style="font: 10pt Times New Roman, Times, Serif"> </font></td>
<td style="vertical-align: bottom; width: 1%; border-bottom-style: double; border-bottom-width: 2.25pt; text-align: justify"><font style="font: 10pt Times New Roman, Times, Serif">$</font></td>
<td style="vertical-align: bottom; border-bottom-style: double; border-bottom-width: 2.25pt; width: 9%; text-align: right"><font style="font: 10pt Times New Roman, Times, Serif">(265,826</font></td>
<td style="vertical-align: top; width: 1%; text-align: left"><font style="font: 10pt Times New Roman, Times, Serif">)</font></td></tr>
<tr style="background-color: white">
<td style="vertical-align: top; text-align: justify"><font style="font: 10pt Times New Roman, Times, Serif">Basic
average common stock outstanding</font></td>
<td style="vertical-align: bottom; text-align: justify"><font style="font: 10pt Times New Roman, Times, Serif"> </font></td>
<td style="vertical-align: bottom; border-bottom-style: double; border-bottom-width: 2.25pt; text-align: justify"><font style="font: 10pt Times New Roman, Times, Serif"> </font></td>
<td style="vertical-align: bottom; border-bottom-style: double; border-bottom-width: 2.25pt; text-align: right"><font style="font: 10pt Times New Roman, Times, Serif">1,699,727,344</font></td>
<td style="vertical-align: bottom; text-align: justify"><font style="font: 10pt Times New Roman, Times, Serif"> </font></td>
<td style="vertical-align: bottom; text-align: justify"><font style="font: 10pt Times New Roman, Times, Serif"> </font></td>
<td style="vertical-align: bottom; border-bottom-style: double; border-bottom-width: 2.25pt; text-align: justify"><font style="font: 10pt Times New Roman, Times, Serif"> </font></td>
<td style="vertical-align: bottom; border-bottom-style: double; border-bottom-width: 2.25pt; text-align: right"><font style="font: 10pt Times New Roman, Times, Serif">1,021,505</font></td>
<td style="vertical-align: bottom; text-align: justify"><font style="font: 10pt Times New Roman, Times, Serif"> </font></td></tr>
<tr style="background-color: #CCEEFF">
<td style="vertical-align: top; text-align: justify"><font style="font: 10pt Times New Roman, Times, Serif">Net
earnings/(loss) per share</font></td>
<td style="vertical-align: bottom; text-align: justify"><font style="font: 10pt Times New Roman, Times, Serif"> </font></td>
<td style="vertical-align: bottom; border-bottom-style: double; border-bottom-width: 2.25pt; text-align: justify"><font style="font: 10pt Times New Roman, Times, Serif">$</font></td>
<td style="vertical-align: bottom; border-bottom-style: double; border-bottom-width: 2.25pt; text-align: right"><font style="font: 10pt Times New Roman, Times, Serif">-</font></td>
<td style="vertical-align: bottom; text-align: justify"><font style="font: 10pt Times New Roman, Times, Serif"> </font></td>
<td style="vertical-align: bottom; text-align: justify"><font style="font: 10pt Times New Roman, Times, Serif"> </font></td>
<td style="vertical-align: bottom; border-bottom-style: double; border-bottom-width: 2.25pt; text-align: justify"><font style="font: 10pt Times New Roman, Times, Serif">$</font></td>
<td style="vertical-align: bottom; border-bottom-style: double; border-bottom-width: 2.25pt; text-align: right"><font style="font: 10pt Times New Roman, Times, Serif">(0.26</font></td>
<td style="vertical-align: top; text-align: left"><font style="font: 10pt Times New Roman, Times, Serif">)</font></td></tr>
</table>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify; text-indent: 0.5in"><font style="font: 10pt Times New Roman, Times, Serif"> </font></p>
<table cellspacing="0" cellpadding="0" style="font: 12pt Times New Roman, Times, Serif; width: 100%; font-size-adjust: none; font-stretch: normal">
<tr style="vertical-align: bottom">
<td style="text-align: justify"><font style="font: 10pt Times New Roman, Times, Serif"> </font></td>
<td style="text-align: justify"><font style="font: 10pt Times New Roman, Times, Serif"> </font></td>
<td colspan="6" style="border-bottom-style: solid; border-bottom-width: 1pt; text-align: center"><font style="font: 10pt Times New Roman, Times, Serif"><b>Nine
months ended</b><br />
<b>September 30,</b></font></td>
<td style="text-align: justify"><font style="font: 10pt Times New Roman, Times, Serif"> </font></td></tr>
<tr style="vertical-align: bottom">
<td style="text-align: justify"><font style="font: 10pt Times New Roman, Times, Serif"> </font></td>
<td style="text-align: justify"><font style="font: 10pt Times New Roman, Times, Serif"> </font></td>
<td colspan="2" style="border-bottom-style: solid; border-bottom-width: 1pt; text-align: center"><font style="font: 10pt Times New Roman, Times, Serif"><b>2016</b></font></td>
<td style="text-align: justify"><font style="font: 10pt Times New Roman, Times, Serif"> </font></td>
<td style="text-align: justify"><font style="font: 10pt Times New Roman, Times, Serif"> </font></td>
<td colspan="2" style="border-bottom-style: solid; border-bottom-width: 1pt; text-align: center"><font style="font: 10pt Times New Roman, Times, Serif"><b>2015</b></font></td>
<td style="text-align: justify"><font style="font: 10pt Times New Roman, Times, Serif"> </font></td></tr>
<tr>
<td style="vertical-align: top; text-decoration: underline; text-align: justify"><font style="font: 10pt Times New Roman, Times, Serif"><b><u>Income
(Loss) per share – Diluted:</u></b></font></td>
<td style="vertical-align: bottom; text-align: justify"><font style="font: 10pt Times New Roman, Times, Serif"> </font></td>
<td colspan="2" style="vertical-align: bottom; text-align: right"><font style="font: 10pt Times New Roman, Times, Serif"> </font></td>
<td style="vertical-align: bottom; text-align: justify"><font style="font: 10pt Times New Roman, Times, Serif"> </font></td>
<td style="vertical-align: bottom; text-align: justify"><font style="font: 10pt Times New Roman, Times, Serif"> </font></td>
<td colspan="2" style="vertical-align: bottom; text-align: right"><font style="font: 10pt Times New Roman, Times, Serif"> </font></td>
<td style="vertical-align: bottom; text-align: justify"><font style="font: 10pt Times New Roman, Times, Serif"> </font></td></tr>
<tr style="background-color: #CCEEFF">
<td style="vertical-align: top; text-align: justify"><font style="font: 10pt Times New Roman, Times, Serif"><b>Income
(Loss) for the period</b></font></td>
<td style="vertical-align: bottom; width: 1%; text-align: justify"><font style="font: 10pt Times New Roman, Times, Serif"> </font></td>
<td style="vertical-align: bottom; width: 1%; border-bottom-style: double; border-bottom-width: 2.25pt; text-align: justify"><font style="font: 10pt Times New Roman, Times, Serif">$</font></td>
<td style="vertical-align: bottom; border-bottom-style: double; border-bottom-width: 2.25pt; width: 9%; text-align: right"><font style="font: 10pt Times New Roman, Times, Serif">4,306,356</font></td>
<td style="vertical-align: bottom; width: 1%; text-align: justify"><font style="font: 10pt Times New Roman, Times, Serif"> </font></td>
<td style="vertical-align: bottom; width: 1%; text-align: justify"><font style="font: 10pt Times New Roman, Times, Serif"> </font></td>
<td style="vertical-align: bottom; width: 1%; border-bottom-style: double; border-bottom-width: 2.25pt; text-align: justify"><font style="font: 10pt Times New Roman, Times, Serif">$</font></td>
<td style="vertical-align: bottom; border-bottom-style: double; border-bottom-width: 2.25pt; width: 9%; text-align: right"><font style="font: 10pt Times New Roman, Times, Serif">(265,826</font></td>
<td style="vertical-align: top; width: 1%; text-align: left"><font style="font: 10pt Times New Roman, Times, Serif">)</font></td></tr>
<tr style="background-color: white">
<td style="vertical-align: top; text-align: justify"><font style="font: 10pt Times New Roman, Times, Serif">Basic
average common stock outstanding</font></td>
<td style="vertical-align: bottom; text-align: justify"><font style="font: 10pt Times New Roman, Times, Serif"> </font></td>
<td style="vertical-align: bottom; text-align: justify"><font style="font: 10pt Times New Roman, Times, Serif"> </font></td>
<td style="vertical-align: bottom; text-align: right"><font style="font: 10pt Times New Roman, Times, Serif">1,699,727,344</font></td>
<td style="vertical-align: bottom; text-align: justify"><font style="font: 10pt Times New Roman, Times, Serif"> </font></td>
<td style="vertical-align: bottom; text-align: justify"><font style="font: 10pt Times New Roman, Times, Serif"> </font></td>
<td style="vertical-align: bottom; text-align: justify"><font style="font: 10pt Times New Roman, Times, Serif"> </font></td>
<td style="vertical-align: bottom; text-align: right"><font style="font: 10pt Times New Roman, Times, Serif">1,021,505</font></td>
<td style="vertical-align: bottom; text-align: justify"><font style="font: 10pt Times New Roman, Times, Serif"> </font></td></tr>
<tr style="background-color: #CCEEFF">
<td style="vertical-align: top; text-align: left"><font style="font: 10pt Times New Roman, Times, Serif">Diluted
effect of outstanding stock options, warrants, notes and preferred stock</font></td>
<td style="vertical-align: bottom; text-align: justify"><font style="font: 10pt Times New Roman, Times, Serif"> </font></td>
<td style="vertical-align: bottom; border-bottom-style: solid; border-bottom-width: 1pt; text-align: justify"><font style="font: 10pt Times New Roman, Times, Serif"> </font></td>
<td style="vertical-align: bottom; border-bottom-style: solid; border-bottom-width: 1pt; text-align: right"><font style="font: 10pt Times New Roman, Times, Serif">761,905</font></td>
<td style="vertical-align: bottom; text-align: justify"><font style="font: 10pt Times New Roman, Times, Serif"> </font></td>
<td style="vertical-align: bottom; text-align: justify"><font style="font: 10pt Times New Roman, Times, Serif"> </font></td>
<td style="vertical-align: bottom; border-bottom-style: solid; border-bottom-width: 1pt; text-align: justify"><font style="font: 10pt Times New Roman, Times, Serif"> </font></td>
<td style="vertical-align: bottom; border-bottom-style: solid; border-bottom-width: 1pt; text-align: right"><font style="font: 10pt Times New Roman, Times, Serif">-</font></td>
<td style="vertical-align: bottom; text-align: justify"><font style="font: 10pt Times New Roman, Times, Serif"> </font></td></tr>
<tr style="background-color: white">
<td style="vertical-align: top; text-align: justify"><font style="font: 10pt Times New Roman, Times, Serif">Diluted
average common stock outstanding</font></td>
<td style="vertical-align: bottom; text-align: justify"><font style="font: 10pt Times New Roman, Times, Serif"> </font></td>
<td style="vertical-align: bottom; border-bottom-style: double; border-bottom-width: 2.25pt; text-align: justify"><font style="font: 10pt Times New Roman, Times, Serif"> </font></td>
<td style="vertical-align: bottom; border-bottom-style: double; border-bottom-width: 2.25pt; text-align: right"><font style="font: 10pt Times New Roman, Times, Serif">1,700,489,249</font></td>
<td style="vertical-align: bottom; text-align: justify"><font style="font: 10pt Times New Roman, Times, Serif"> </font></td>
<td style="vertical-align: bottom; text-align: justify"><font style="font: 10pt Times New Roman, Times, Serif"> </font></td>
<td style="vertical-align: bottom; border-bottom-style: double; border-bottom-width: 2.25pt; text-align: justify"><font style="font: 10pt Times New Roman, Times, Serif"> </font></td>
<td style="vertical-align: bottom; border-bottom-style: double; border-bottom-width: 2.25pt; text-align: right"><font style="font: 10pt Times New Roman, Times, Serif">1,021,505</font></td>
<td style="vertical-align: bottom; text-align: justify"><font style="font: 10pt Times New Roman, Times, Serif"> </font></td></tr>
<tr style="background-color: #CCEEFF">
<td style="vertical-align: top; text-align: justify"><font style="font: 10pt Times New Roman, Times, Serif">Net
earnings/(loss) per share</font></td>
<td style="vertical-align: bottom; text-align: justify"><font style="font: 10pt Times New Roman, Times, Serif"> </font></td>
<td style="vertical-align: bottom; border-bottom-style: double; border-bottom-width: 2.25pt; text-align: justify"><font style="font: 10pt Times New Roman, Times, Serif">$</font></td>
<td style="vertical-align: bottom; border-bottom-style: double; border-bottom-width: 2.25pt; text-align: right"><font style="font: 10pt Times New Roman, Times, Serif">-</font></td>
<td style="vertical-align: bottom; text-align: justify"><font style="font: 10pt Times New Roman, Times, Serif"> </font></td>
<td style="vertical-align: bottom; text-align: justify"><font style="font: 10pt Times New Roman, Times, Serif"> </font></td>
<td style="vertical-align: bottom; border-bottom-style: double; border-bottom-width: 2.25pt; text-align: justify"><font style="font: 10pt Times New Roman, Times, Serif">$</font></td>
<td style="vertical-align: bottom; border-bottom-style: double; border-bottom-width: 2.25pt; text-align: right"><font style="font: 10pt Times New Roman, Times, Serif">(0.26</font></td>
<td style="vertical-align: top; text-align: left"><font style="font: 10pt Times New Roman, Times, Serif">)</font></td></tr>
</table>
In May 2015, the Company executed a secured promissory note with an unrelated party for $310,000, bearing interest at 10% per annum maturing through March 31, 2018. The note was secured by the Company's intellectual property, accounts, fixtures and property. As an inducement to make the loan, the note holder received 16,667 shares Series B preferred stock at $1.50 per share that are convertible into shares of the Company's common stock at a 30% discount to current market value, as defined. During the interim period ended September 30, 2016, the Company repaid $310,000 of note principal, $23,611 of accrued interest, and $204,560 of additional interest was paid to the note holder.
In October 2015, the Company entered into a promissory note agreement for $50,400, secured by all accounts, chattel paper, equipment, general intangibles, instruments and inventory, as defined in the agreement. As December 31, 2015, the balance of the note was $35,200. During the interim period ended September 30, 2016, the Company had repaid the balance of $35,200.
Notes payable consists of various unsecured promissory notes with interest up to 10% per annum. As of September 30, 2016, notes aggregating $397,500 were in default, and the notes carry default interest rates up to 14% per annum. The Company is currently pursuing settlements with certain of the note holders. As of December 31, 2015, the balance due under these notes was $875,609. During the interim period ended September 30, 2016, the Company issued an unsecured promissory note for $75,000 to Cyber Safety (see Note 12). Also during the period, the Company paid off note principal totaling $503,785. At September 30, 2016, the balance due under these notes was $446,824.
Notes payable to unsecured investors, interest at 10% per annum, originally due in 2011, and currently in default. At December 31, 2015, the balance of notes payable-investors was $1,475,000. During the interim period ended September 30, 2016, the Company repaid $130,000 of principal and at September 30, 2016, the balance of notes payable-investors was $1,345,000. During the interim period ended September 30, 2016, two note holders assigned delinquent notes totaling $150,000, to two unrelated parties, who agreed to extend payment of the two notes to April 2017. The Company is currently pursuing extensions on all of the remaining notes.