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<td style="line-height: 107%"><font style="font-size: 10pt"> </font></td></tr>
<tr style="vertical-align: bottom; background-color: rgb(204,238,255)">
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<td style="width: 1%; line-height: 107%"><font style="font-size: 10pt"> </font></td>
<td style="width: 9%; text-align: right; line-height: 107%"><font style="font: 10pt Times New Roman, Times, Serif">10</font></td>
<td style="width: 1%; line-height: 107%"><font style="font-size: 10pt"> </font></td></tr>
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<td style="line-height: 107%"><font style="font-size: 10pt"> </font></td>
<td style="text-align: right; line-height: 107%"><font style="font: 10pt Times New Roman, Times, Serif">10</font></td>
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<p style="font: 8pt/normal Times New Roman, Times, Serif; margin: 0; text-align: justify"><font style="font-size: 10pt">A summary
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conversion options that are categorized within Level 3 of the fair value hierarchy as of March 31, 2016 is as follows:</font></p>
<p style="font: 8pt/normal Times New Roman, Times, Serif; margin: 0; text-indent: 0.5in"><font style="font-size: 10pt"> </font></p>
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31, 2016</font></td>
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<td style="text-align: right; line-height: 107%"><font style="font-size: 10pt"> </font></td>
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<p style="font: 8pt/normal Times New Roman, Times, Serif; margin: 0; background-color: white"><font style="font-size: 10pt">Volatility
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<td style="width: 1%; line-height: 107%"><font style="font-size: 10pt"> </font></td>
<td style="width: 19%; text-align: right; line-height: 107%"><font style="font: 10pt Times New Roman, Times, Serif">75%</font></td>
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<td style="text-align: right; line-height: 107%"><font style="font-size: 10pt"> </font></td>
<td style="line-height: 107%"><font style="font-size: 10pt"> </font></td>
<td style="text-align: right; line-height: 107%"><font style="font: 10pt Times New Roman, Times, Serif">$0.15
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<td style="line-height: 107%"><font style="font-size: 10pt"> </font></td>
<td style="text-align: right; line-height: 107%"><font style="font: 10pt Times New Roman, Times, Serif"> 0.91%</font></td>
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<td style="line-height: 107%"><font style="font-size: 10pt"> </font></td></tr>
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<p style="font: 8pt/normal Times New Roman, Times, Serif; margin: 0; text-align: justify; text-indent: 0.5in"><font style="font-size: 10pt"> </font></p>
<p style="font: 8pt/normal Times New Roman, Times, Serif; margin: 0; text-align: justify; text-indent: 0.5in"></p>
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<td style="line-height: 107%"><font style="font: 10pt Times New Roman, Times, Serif"> </font></td>
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<td style="line-height: 107%"><font style="font: 10pt Times New Roman, Times, Serif"> </font></td>
<td style="line-height: 107%"><font style="font: 10pt Times New Roman, Times, Serif"> </font></td>
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<td style="line-height: 107%"><font style="font: 10pt Times New Roman, Times, Serif"> </font></td>
<td style="line-height: 107%"><font style="font: 10pt Times New Roman, Times, Serif"> </font></td>
<td colspan="2" style="border-bottom: black 1pt solid; text-align: center; line-height: 107%"><font style="font: 10pt Times New Roman, Times, Serif">Current</font></td>
<td style="line-height: 107%"><font style="font: 10pt Times New Roman, Times, Serif"> </font></td>
<td style="line-height: 107%"><font style="font: 10pt Times New Roman, Times, Serif"> </font></td>
<td colspan="2" style="border-bottom: black 1pt solid; text-align: center; line-height: 107%"><font style="font: 10pt Times New Roman, Times, Serif">Long-Term</font></td>
<td style="line-height: 107%"><font style="font: 10pt Times New Roman, Times, Serif"> </font></td>
<td style="line-height: 107%"><font style="font: 10pt Times New Roman, Times, Serif"> </font></td>
<td colspan="2" style="border-bottom: black 1pt solid; text-align: center; line-height: 107%"><font style="font: 10pt Times New Roman, Times, Serif">Current</font></td>
<td style="line-height: 107%"><font style="font: 10pt Times New Roman, Times, Serif"> </font></td>
<td style="line-height: 107%"><font style="font: 10pt Times New Roman, Times, Serif"> </font></td>
<td colspan="2" style="border-bottom: black 1pt solid; text-align: center; line-height: 107%"><font style="font: 10pt Times New Roman, Times, Serif">Long-Term</font></td>
<td style="line-height: 107%"><font style="font: 10pt Times New Roman, Times, Serif"> </font></td></tr>
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<td style="width: 52%; line-height: 107%"><font style="font: 10pt Times New Roman, Times, Serif"> Balance
at December 31, 2015</font></td>
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<td style="width: 1%; line-height: 107%"><font style="font: 10pt Times New Roman, Times, Serif"> </font></td>
<td style="width: 9%; text-align: right; line-height: 107%"><font style="font: 10pt Times New Roman, Times, Serif">632,422</font></td>
<td style="width: 1%; line-height: 107%"><font style="font: 10pt Times New Roman, Times, Serif"> </font></td>
<td style="width: 1%; text-align: right; line-height: 107%"><font style="font: 10pt Times New Roman, Times, Serif"> </font></td>
<td style="width: 1%; line-height: 107%"><font style="font: 10pt Times New Roman, Times, Serif"> </font></td>
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<td style="width: 1%; line-height: 107%"><font style="font: 10pt Times New Roman, Times, Serif"> </font></td>
<td style="width: 1%; text-align: right; line-height: 107%"><font style="font: 10pt Times New Roman, Times, Serif"> </font></td>
<td style="width: 1%; line-height: 107%"><font style="font: 10pt Times New Roman, Times, Serif"> </font></td>
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<td style="width: 1%; line-height: 107%"><font style="font: 10pt Times New Roman, Times, Serif"> </font></td>
<td style="width: 1%; text-align: right; line-height: 107%"><font style="font: 10pt Times New Roman, Times, Serif"> </font></td>
<td style="width: 1%; line-height: 107%"><font style="font: 10pt Times New Roman, Times, Serif"> </font></td>
<td style="width: 9%; text-align: right; line-height: 107%"><font style="font: 10pt Times New Roman, Times, Serif">-</font></td>
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<td style="line-height: 107%"><font style="font: 10pt Times New Roman, Times, Serif"> </font></td>
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<td style="line-height: 107%"><font style="font: 10pt Times New Roman, Times, Serif"> </font></td>
<td style="text-align: right; line-height: 107%"><font style="font: 10pt Times New Roman, Times, Serif"> </font></td>
<td style="line-height: 107%"><font style="font: 10pt Times New Roman, Times, Serif"> </font></td>
<td style="text-align: right; line-height: 107%"><font style="font: 10pt Times New Roman, Times, Serif">(112,497</font></td>
<td style="line-height: 107%"><font style="font: 10pt Times New Roman, Times, Serif">) </font></td>
<td style="text-align: right; line-height: 107%"><font style="font: 10pt Times New Roman, Times, Serif"> </font></td>
<td style="line-height: 107%"><font style="font: 10pt Times New Roman, Times, Serif"> </font></td>
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<td style="line-height: 107%"><font style="font: 10pt Times New Roman, Times, Serif"> </font></td>
<td style="text-align: right; line-height: 107%"><font style="font: 10pt Times New Roman, Times, Serif"> </font></td>
<td style="line-height: 107%"><font style="font: 10pt Times New Roman, Times, Serif"> </font></td>
<td style="text-align: right; line-height: 107%"><font style="font: 10pt Times New Roman, Times, Serif">-</font></td>
<td style="line-height: 107%"><font style="font: 10pt Times New Roman, Times, Serif"> </font></td></tr>
<tr style="vertical-align: bottom; background-color: #CCEEFF">
<td style="line-height: 107%"><font style="font: 10pt Times New Roman, Times, Serif">      Recoveries</font></td>
<td style="text-align: right; line-height: 107%"><font style="font: 10pt Times New Roman, Times, Serif"> </font></td>
<td style="line-height: 107%"><font style="font: 10pt Times New Roman, Times, Serif"> </font></td>
<td style="text-align: right; line-height: 107%"><font style="font: 10pt Times New Roman, Times, Serif">-</font></td>
<td style="line-height: 107%"><font style="font: 10pt Times New Roman, Times, Serif"> </font></td>
<td style="text-align: right; line-height: 107%"><font style="font: 10pt Times New Roman, Times, Serif"> </font></td>
<td style="line-height: 107%"><font style="font: 10pt Times New Roman, Times, Serif"> </font></td>
<td style="text-align: right; line-height: 107%"><font style="font: 10pt Times New Roman, Times, Serif">-</font></td>
<td style="line-height: 107%"><font style="font: 10pt Times New Roman, Times, Serif"> </font></td>
<td style="text-align: right; line-height: 107%"><font style="font: 10pt Times New Roman, Times, Serif"> </font></td>
<td style="line-height: 107%"><font style="font: 10pt Times New Roman, Times, Serif"> </font></td>
<td style="text-align: right; line-height: 107%"><font style="font: 10pt Times New Roman, Times, Serif">-</font></td>
<td style="line-height: 107%"><font style="font: 10pt Times New Roman, Times, Serif"> </font></td>
<td style="text-align: right; line-height: 107%"><font style="font: 10pt Times New Roman, Times, Serif"> </font></td>
<td style="line-height: 107%"><font style="font: 10pt Times New Roman, Times, Serif"> </font></td>
<td style="text-align: right; line-height: 107%"><font style="font: 10pt Times New Roman, Times, Serif">-</font></td>
<td style="line-height: 107%"><font style="font: 10pt Times New Roman, Times, Serif"> </font></td></tr>
<tr style="vertical-align: bottom; background-color: white">
<td style="line-height: 107%"><font style="font: 10pt Times New Roman, Times, Serif">      Charge
offs</font></td>
<td style="text-align: right; line-height: 107%"><font style="font: 10pt Times New Roman, Times, Serif"> </font></td>
<td style="border-bottom: black 1pt solid; line-height: 107%"><font style="font: 10pt Times New Roman, Times, Serif"> </font></td>
<td style="border-bottom: black 1pt solid; text-align: right; line-height: 107%"><font style="font: 10pt Times New Roman, Times, Serif">-</font></td>
<td style="line-height: 107%"></td>
<td style="text-align: right; line-height: 107%"><font style="font: 10pt Times New Roman, Times, Serif"> </font></td>
<td style="border-bottom: black 1pt solid; line-height: 107%"><font style="font: 10pt Times New Roman, Times, Serif"> </font></td>
<td style="border-bottom: black 1pt solid; text-align: right; line-height: 107%"><font style="font: 10pt Times New Roman, Times, Serif">-</font></td>
<td style="line-height: 107%"><font style="font: 10pt Times New Roman, Times, Serif"> </font></td>
<td style="text-align: right; line-height: 107%"><font style="font: 10pt Times New Roman, Times, Serif"> </font></td>
<td style="border-bottom: black 1pt solid; line-height: 107%"><font style="font: 10pt Times New Roman, Times, Serif"> </font></td>
<td style="border-bottom: black 1pt solid; text-align: right; line-height: 107%"><font style="font: 10pt Times New Roman, Times, Serif">(23,779)</font></td>
<td style="line-height: 107%"><font style="font: 10pt Times New Roman, Times, Serif"> </font></td>
<td style="text-align: right; line-height: 107%"><font style="font: 10pt Times New Roman, Times, Serif"> </font></td>
<td style="border-bottom: black 1pt solid; line-height: 107%"><font style="font: 10pt Times New Roman, Times, Serif"> </font></td>
<td style="border-bottom: black 1pt solid; text-align: right; line-height: 107%"><font style="font: 10pt Times New Roman, Times, Serif">-</font></td>
<td style="line-height: 107%"><font style="font: 10pt Times New Roman, Times, Serif"> </font></td></tr>
<tr style="vertical-align: bottom; background-color: #CCEEFF">
<td style="line-height: 107%"><font style="font: 10pt Times New Roman, Times, Serif"> Balance at March
31, 2016</font></td>
<td style="text-align: right; line-height: 107%"><font style="font: 10pt Times New Roman, Times, Serif"> </font></td>
<td style="border-bottom: black 2.25pt double; line-height: 107%"><font style="font: 10pt Times New Roman, Times, Serif"> </font></td>
<td style="border-bottom: black 2.25pt double; text-align: right; line-height: 107%"><font style="font: 10pt Times New Roman, Times, Serif">748,839</font></td>
<td style="line-height: 107%"><font style="font: 10pt Times New Roman, Times, Serif"> </font></td>
<td style="text-align: right; line-height: 107%"><font style="font: 10pt Times New Roman, Times, Serif"> </font></td>
<td style="border-bottom: black 2.25pt double; line-height: 107%"><font style="font: 10pt Times New Roman, Times, Serif"> </font></td>
<td style="border-bottom: black 2.25pt double; text-align: right; line-height: 107%"><font style="font: 10pt Times New Roman, Times, Serif">349,205</font></td>
<td style="line-height: 107%"><font style="font: 10pt Times New Roman, Times, Serif"> </font></td>
<td style="text-align: right; line-height: 107%"><font style="font: 10pt Times New Roman, Times, Serif"> </font></td>
<td style="border-bottom: black 2.25pt double; line-height: 107%"><font style="font: 10pt Times New Roman, Times, Serif"> </font></td>
<td style="border-bottom: black 2.25pt double; text-align: right; line-height: 107%"><font style="font: 10pt Times New Roman, Times, Serif">298,506</font></td>
<td style="line-height: 107%"><font style="font: 10pt Times New Roman, Times, Serif"> </font></td>
<td style="text-align: right; line-height: 107%"><font style="font: 10pt Times New Roman, Times, Serif"> </font></td>
<td style="border-bottom: black 2.25pt double; line-height: 107%"><font style="font: 10pt Times New Roman, Times, Serif"> </font></td>
<td style="border-bottom: black 2.25pt double; text-align: right; line-height: 107%"><font style="font: 10pt Times New Roman, Times, Serif">-</font></td>
<td style="line-height: 107%"><font style="font: 10pt Times New Roman, Times, Serif"> </font></td></tr>
</table>
<p style="font: 8pt/normal Times New Roman, Times, Serif; margin: 0"><font style="font: 10pt Times New Roman, Times, Serif"> </font></p>
<p style="font: 8pt/normal Times New Roman, Times, Serif; margin: 0; text-align: justify"><font style="font-size: 10pt">The following
securities were not included in the diluted net income (loss) per share calculation because their effect was anti-dilutive as
of the periods presented:</font></p>
<p style="font: 8pt/normal Times New Roman, Times, Serif; margin: 0"><font style="font-size: 10pt"> </font></p>
<table cellspacing="0" cellpadding="0" style="width: 100%; font: 8pt Calibri, Helvetica, Sans-Serif; border-collapse: collapse">
<tr style="vertical-align: bottom">
<td style="line-height: 107%"><font style="font-size: 10pt"> </font></td>
<td style="line-height: 107%"><font style="font-size: 10pt"> </font></td>
<td colspan="6" style="border-bottom: black 1pt solid"><p style="font: 8pt/normal Times New Roman, Times, Serif; margin: 0; text-align: center"><font style="font-size: 10pt"><b>For
the three months ended</b></font></p>
<p style="font: 8pt/normal Times New Roman, Times, Serif; margin: 0; text-align: center"><font style="font-size: 10pt"><b>March
31,</b></font></p></td>
<td style="line-height: 107%"><font style="font-size: 10pt"> </font></td></tr>
<tr style="vertical-align: bottom">
<td style="line-height: 107%"><font style="font-size: 10pt"> </font></td>
<td style="line-height: 107%"><font style="font-size: 10pt"> </font></td>
<td colspan="2" style="border-bottom: black 1pt solid; text-align: center; line-height: 107%"><font style="font: 10pt Times New Roman, Times, Serif"><b>2016</b></font></td>
<td style="line-height: 107%"><font style="font-size: 10pt"> </font></td>
<td style="line-height: 107%"><font style="font-size: 10pt"> </font></td>
<td colspan="2" style="border-bottom: black 1pt solid; text-align: center; line-height: 107%"><font style="font: 10pt Times New Roman, Times, Serif"><b>2015</b></font></td>
<td style="line-height: 107%"><font style="font-size: 10pt"> </font></td></tr>
<tr style="vertical-align: bottom; background-color: #CCEEFF">
<td style="width: 76%; line-height: 107%"><font style="font: 10pt Times New Roman, Times, Serif">Convertible
notes</font></td>
<td style="width: 1%; text-align: right; line-height: 107%"><font style="font-size: 10pt"> </font></td>
<td style="width: 1%; line-height: 107%"><font style="font-size: 10pt"> </font></td>
<td style="width: 9%; text-align: right; line-height: 107%"><font style="font: 10pt Times New Roman, Times, Serif">4,645,054</font></td>
<td style="width: 1%; line-height: 107%"><font style="font-size: 10pt"> </font></td>
<td style="width: 1%; text-align: right; line-height: 107%"><font style="font-size: 10pt"> </font></td>
<td style="width: 1%; line-height: 107%"><font style="font-size: 10pt"> </font></td>
<td style="width: 9%; text-align: right; line-height: 107%"><font style="font: 10pt Times New Roman, Times, Serif">750,000</font></td>
<td style="width: 1%; line-height: 107%"><font style="font-size: 10pt"> </font></td></tr>
<tr style="vertical-align: bottom; background-color: white">
<td style="line-height: 107%"><font style="font: 10pt Times New Roman, Times, Serif">Common stock options</font></td>
<td style="text-align: right; line-height: 107%"><font style="font-size: 10pt"> </font></td>
<td style="line-height: 107%"><font style="font-size: 10pt"> </font></td>
<td style="text-align: right; line-height: 107%"><font style="font: 10pt Times New Roman, Times, Serif">17,088,129</font></td>
<td style="line-height: 107%"><font style="font-size: 10pt"> </font></td>
<td style="text-align: right; line-height: 107%"><font style="font-size: 10pt"> </font></td>
<td style="line-height: 107%"><font style="font-size: 10pt"> </font></td>
<td style="text-align: right; line-height: 107%"><font style="font: 10pt Times New Roman, Times, Serif">8,938,639</font></td>
<td style="line-height: 107%"><font style="font-size: 10pt"> </font></td></tr>
<tr style="vertical-align: bottom; background-color: #CCEEFF">
<td style="line-height: 107%"><font style="font: 10pt Times New Roman, Times, Serif">Investor warrants</font></td>
<td style="text-align: right; line-height: 107%"><font style="font-size: 10pt"> </font></td>
<td style="line-height: 107%"><font style="font-size: 10pt"> </font></td>
<td style="text-align: right; line-height: 107%"><font style="font: 10pt Times New Roman, Times, Serif">37,960,774</font></td>
<td style="line-height: 107%"><font style="font-size: 10pt"> </font></td>
<td style="text-align: right; line-height: 107%"><font style="font-size: 10pt"> </font></td>
<td style="line-height: 107%"><font style="font-size: 10pt"> </font></td>
<td style="text-align: right; line-height: 107%"><font style="font: 10pt Times New Roman, Times, Serif">22,669,871</font></td>
<td style="line-height: 107%"><font style="font-size: 10pt"> </font></td></tr>
<tr style="vertical-align: bottom; background-color: white">
<td style="line-height: 107%"><font style="font: 10pt Times New Roman, Times, Serif">Compensation warrants</font></td>
<td style="text-align: right; line-height: 107%"><font style="font-size: 10pt"> </font></td>
<td style="border-bottom: black 1pt solid; line-height: 107%"><font style="font-size: 10pt"> </font></td>
<td style="border-bottom: black 1pt solid; text-align: right; line-height: 107%"><font style="font: 10pt Times New Roman, Times, Serif">2,098,333</font></td>
<td style="line-height: 107%"><font style="font-size: 10pt"> </font></td>
<td style="text-align: right; line-height: 107%"><font style="font-size: 10pt"> </font></td>
<td style="border-bottom: black 1pt solid; line-height: 107%"><font style="font-size: 10pt"> </font></td>
<td style="border-bottom: black 1pt solid; text-align: right; line-height: 107%"><font style="font: 10pt Times New Roman, Times, Serif">1,940,525</font></td>
<td style="line-height: 107%"><font style="font-size: 10pt"> </font></td></tr>
<tr style="vertical-align: bottom; background-color: #CCEEFF">
<td style="line-height: 107%"><font style="font: 10pt Times New Roman, Times, Serif">Excluded potentially
dilutive securities</font></td>
<td style="text-align: right; line-height: 107%"><font style="font-size: 10pt"> </font></td>
<td style="border-bottom: black 2.25pt double; line-height: 107%"><font style="font-size: 10pt"> </font></td>
<td style="border-bottom: black 2.25pt double; text-align: right; line-height: 107%"><font style="font: 10pt Times New Roman, Times, Serif">61,792,290</font></td>
<td style="line-height: 107%"><font style="font-size: 10pt"> </font></td>
<td style="text-align: right; line-height: 107%"><font style="font-size: 10pt"> </font></td>
<td style="border-bottom: black 2.25pt double; line-height: 107%"><font style="font-size: 10pt"> </font></td>
<td style="border-bottom: black 2.25pt double; text-align: right; line-height: 107%"><font style="font: 10pt Times New Roman, Times, Serif">34,299,035</font></td>
<td style="line-height: 107%"><font style="font-size: 10pt"> </font></td></tr>
</table>
<p style="font: 8pt/normal Times New Roman, Times, Serif; margin: 0"><font style="font-size: 10pt"> </font></p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"></p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"> </p>
<table cellpadding="0" cellspacing="0" style="border-collapse: collapse; width: 100%; font: 10pt Times New Roman, Times, Serif">
<tr style="vertical-align: bottom">
<td> </td><td style="font-weight: bold"> </td>
<td colspan="7" style="font-weight: bold; text-align: center">For the three months ended</td></tr>
<tr style="vertical-align: bottom">
<td> </td><td style="font-weight: bold; padding-bottom: 1pt"> </td>
<td colspan="7" style="font-weight: bold; text-align: center; border-bottom: Black 1pt solid">March 31,</td></tr>
<tr style="vertical-align: bottom">
<td> </td><td style="font-weight: bold; padding-bottom: 1pt"> </td>
<td colspan="3" style="font-weight: bold; text-align: center; border-bottom: Black 1pt solid">2015</td><td style="font-weight: bold; padding-bottom: 1pt"> </td>
<td colspan="3" style="font-weight: bold; text-align: center; border-bottom: Black 1pt solid">2015</td></tr>
<tr style="vertical-align: bottom; background-color: rgb(204,238,255)">
<td style="width: 74%; text-align: left">Beginning balance outstanding</td><td style="width: 1%"> </td>
<td style="width: 1%; text-align: left"> </td><td style="width: 10%; text-align: right">26,397,410</td><td style="width: 1%; text-align: left"> </td><td style="width: 1%"> </td>
<td style="width: 1%; text-align: left"> </td><td style="width: 10%; text-align: right">23,933,922</td><td style="width: 1%; text-align: left"> </td></tr>
<tr style="vertical-align: bottom; background-color: White">
<td style="text-align: left">Warrants issued during the year:</td><td> </td>
<td style="text-align: left"> </td><td style="text-align: right"> </td><td style="text-align: left"> </td><td> </td>
<td style="text-align: left"> </td><td style="text-align: right"> </td><td style="text-align: left"> </td></tr>
<tr style="vertical-align: bottom; background-color: rgb(204,238,255)">
<td style="text-align: left">Expired during the year</td><td> </td>
<td style="text-align: left"> </td><td style="text-align: right">(546,667</td><td style="text-align: left">)</td><td> </td>
<td style="text-align: left"> </td><td style="text-align: right">(73,530</td><td style="text-align: left">)</td></tr>
<tr style="vertical-align: bottom; background-color: White">
<td style="text-align: left">Exercised during the year</td><td> </td>
<td style="text-align: left"> </td><td style="text-align: right">(12,270,853</td><td style="text-align: left">)</td><td> </td>
<td style="text-align: left"> </td><td style="text-align: right">—  </td><td style="text-align: left"> </td></tr>
<tr style="vertical-align: bottom; background-color: rgb(204,238,255)">
<td style="text-align: left">In connection with issuance of convertible notes</td><td> </td>
<td style="text-align: left"> </td><td style="text-align: right">—  </td><td style="text-align: left"> </td><td> </td>
<td style="text-align: left"> </td><td style="text-align: right">750,004</td><td style="text-align: left"> </td></tr>
<tr style="vertical-align: bottom; background-color: White">
<td style="text-align: left; padding-bottom: 1pt">In connection with tender offer exercise</td><td style="padding-bottom: 1pt"> </td>
<td style="border-bottom: Black 1pt solid; text-align: left"> </td><td style="border-bottom: Black 1pt solid; text-align: right">26,479,217</td><td style="padding-bottom: 1pt; text-align: left"> </td><td style="padding-bottom: 1pt"> </td>
<td style="border-bottom: Black 1pt solid; text-align: left"> </td><td style="border-bottom: Black 1pt solid; text-align: right">—  </td><td style="padding-bottom: 1pt; text-align: left"> </td></tr>
<tr style="vertical-align: bottom; background-color: rgb(204,238,255)">
<td style="padding-bottom: 2.5pt">Ending balance outstanding</td><td style="padding-bottom: 2.5pt"> </td>
<td style="border-bottom: Black 2.5pt double; text-align: left"> </td><td style="border-bottom: Black 2.5pt double; text-align: right">40,059,107</td><td style="padding-bottom: 2.5pt; text-align: left"> </td><td style="padding-bottom: 2.5pt"> </td>
<td style="border-bottom: Black 2.5pt double; text-align: left"> </td><td style="border-bottom: Black 2.5pt double; text-align: right">24,610,396</td><td style="padding-bottom: 2.5pt; text-align: left"> </td></tr>
</table>
<p style="font: 8pt/normal Times New Roman, Times, Serif; margin: 0; text-align: justify"><font style="font-size: 10pt">The numbers
and exercise prices of all options and warrants outstanding at March 31, 2016 are as follows:</font></p>
<p style="font: 8pt/normal Times New Roman, Times, Serif; margin: 0; text-align: justify"><font style="font-size: 10pt"> </font></p>
<p style="font: 8pt/normal Times New Roman, Times, Serif; margin: 0; text-align: justify; text-indent: 0.5in"><font style="font-size: 10pt"> </font></p>
<table cellspacing="0" cellpadding="0" style="width: 100%; font: 8pt Calibri, Helvetica, Sans-Serif; border-collapse: collapse">
<tr>
<td style="vertical-align: bottom; border-bottom: black 1pt solid; text-align: center; line-height: 107%"><font style="font: 10pt Times New Roman, Times, Serif">Shares
Outstanding</font></td>
<td style="vertical-align: bottom; line-height: 107%"><font style="font-size: 10pt"> </font></td>
<td style="vertical-align: bottom; line-height: 107%"><font style="font-size: 10pt"> </font></td>
<td colspan="2" style="vertical-align: bottom; border-bottom: black 1pt solid"><p style="font: 8pt/normal Times New Roman, Times, Serif; margin: 0; text-align: center"><font style="font-size: 10pt">Weighted
Average</font></p>
<p style="font: 8pt/normal Times New Roman, Times, Serif; margin: 0; text-align: center"><font style="font-size: 10pt">Exerecise
Price</font></p></td>
<td style="vertical-align: bottom; line-height: 107%"><font style="font-size: 10pt"> </font></td>
<td style="vertical-align: bottom; line-height: 107%"><font style="font-size: 10pt"> </font></td>
<td style="vertical-align: top; border-bottom: black 1pt solid"><p style="font: 8pt/normal Times New Roman, Times, Serif; margin: 0; text-align: center"><font style="font-size: 10pt">Expiration
Fiscal</font></p>
<p style="font: 8pt/normal Times New Roman, Times, Serif; margin: 0; text-align: center"><font style="font-size: 10pt">Period</font></p></td>
<td style="vertical-align: bottom; border-bottom: black 1pt solid; line-height: 107%"><font style="font-size: 10pt"> </font></td></tr>
<tr style="vertical-align: bottom; background-color: #CCEEFF">
<td style="width: 25%; text-align: right; line-height: 107%"><font style="font: 10pt Times New Roman, Times, Serif">85,833</font></td>
<td style="width: 6%; line-height: 107%"><font style="font-size: 10pt"> </font></td>
<td style="width: 6%; text-align: right; line-height: 107%"><font style="font-size: 10pt"> </font></td>
<td style="width: 9%; line-height: 107%"><font style="font-size: 10pt"> </font></td>
<td style="width: 17%; text-align: right; line-height: 107%"><font style="font: 10pt Times New Roman, Times, Serif">9.00</font></td>
<td style="width: 6%; line-height: 107%"><font style="font-size: 10pt"> </font></td>
<td style="width: 6%; line-height: 107%"><font style="font-size: 10pt"> </font></td>
<td style="width: 19%; text-align: right; line-height: 107%"><font style="font: 10pt Times New Roman, Times, Serif">2nd
Qtr, 2016</font></td>
<td style="width: 6%; line-height: 107%"><font style="font-size: 10pt"> </font></td></tr>
<tr style="vertical-align: bottom; background-color: white">
<td style="text-align: right; line-height: 107%"><font style="font: 10pt Times New Roman, Times, Serif">625</font></td>
<td style="line-height: 107%"><font style="font-size: 10pt"> </font></td>
<td style="text-align: right; line-height: 107%"><font style="font-size: 10pt"> </font></td>
<td style="line-height: 107%"><font style="font-size: 10pt"> </font></td>
<td style="text-align: right; line-height: 107%"><font style="font: 10pt Times New Roman, Times, Serif">9.00</font></td>
<td style="line-height: 107%"><font style="font-size: 10pt"> </font></td>
<td style="line-height: 107%"><font style="font-size: 10pt"> </font></td>
<td style="text-align: right; line-height: 107%"><font style="font: 10pt Times New Roman, Times, Serif">3rd
Qtr, 2016</font></td>
<td style="line-height: 107%"><font style="font-size: 10pt"> </font></td></tr>
<tr style="vertical-align: bottom; background-color: #CCEEFF">
<td style="text-align: right; line-height: 107%"><font style="font: 10pt Times New Roman, Times, Serif">475,142</font></td>
<td style="line-height: 107%"><font style="font-size: 10pt"> </font></td>
<td style="text-align: right; line-height: 107%"><font style="font-size: 10pt"> </font></td>
<td style="line-height: 107%"><font style="font-size: 10pt"> </font></td>
<td style="text-align: right; line-height: 107%"><font style="font: 10pt Times New Roman, Times, Serif">7.54</font></td>
<td style="line-height: 107%"><font style="font-size: 10pt"> </font></td>
<td style="line-height: 107%"><font style="font-size: 10pt"> </font></td>
<td style="text-align: right; line-height: 107%"><font style="font: 10pt Times New Roman, Times, Serif">4th
Qtr, 2016</font></td>
<td style="line-height: 107%"><font style="font-size: 10pt"> </font></td></tr>
<tr style="vertical-align: bottom; background-color: white">
<td style="text-align: right; line-height: 107%"><font style="font: 10pt Times New Roman, Times, Serif">34,749</font></td>
<td style="line-height: 107%"><font style="font-size: 10pt"> </font></td>
<td style="text-align: right; line-height: 107%"><font style="font-size: 10pt"> </font></td>
<td style="line-height: 107%"><font style="font-size: 10pt"> </font></td>
<td style="text-align: right; line-height: 107%"><font style="font: 10pt Times New Roman, Times, Serif">7.99</font></td>
<td style="line-height: 107%"><font style="font-size: 10pt"> </font></td>
<td style="line-height: 107%"><font style="font-size: 10pt"> </font></td>
<td style="text-align: right; line-height: 107%"><font style="font: 10pt Times New Roman, Times, Serif">1st
Qtr, 2017</font></td>
<td style="line-height: 107%"><font style="font-size: 10pt"> </font></td></tr>
<tr style="vertical-align: bottom; background-color: #CCEEFF">
<td style="text-align: right; line-height: 107%"><font style="font: 10pt Times New Roman, Times, Serif">1,265,850</font></td>
<td style="line-height: 107%"><font style="font-size: 10pt"> </font></td>
<td style="text-align: right; line-height: 107%"><font style="font-size: 10pt"> </font></td>
<td style="line-height: 107%"><font style="font-size: 10pt"> </font></td>
<td style="text-align: right; line-height: 107%"><font style="font: 10pt Times New Roman, Times, Serif">6.86</font></td>
<td style="line-height: 107%"><font style="font-size: 10pt"> </font></td>
<td style="line-height: 107%"><font style="font-size: 10pt"> </font></td>
<td style="text-align: right; line-height: 107%"><font style="font: 10pt Times New Roman, Times, Serif">2nd
Qtr, 2017</font></td>
<td style="line-height: 107%"><font style="font-size: 10pt"> </font></td></tr>
<tr style="vertical-align: bottom; background-color: white">
<td style="text-align: right; line-height: 107%"><font style="font: 10pt Times New Roman, Times, Serif">536,500</font></td>
<td style="line-height: 107%"><font style="font-size: 10pt"> </font></td>
<td style="text-align: right; line-height: 107%"><font style="font-size: 10pt"> </font></td>
<td style="line-height: 107%"><font style="font-size: 10pt"> </font></td>
<td style="text-align: right; line-height: 107%"><font style="font: 10pt Times New Roman, Times, Serif">1.14</font></td>
<td style="line-height: 107%"><font style="font-size: 10pt"> </font></td>
<td style="line-height: 107%"><font style="font-size: 10pt"> </font></td>
<td style="text-align: right; line-height: 107%"><font style="font: 10pt Times New Roman, Times, Serif">3rd
Qtr, 2017</font></td>
<td style="line-height: 107%"><font style="font-size: 10pt"> </font></td></tr>
<tr style="vertical-align: bottom; background-color: #CCEEFF">
<td style="text-align: right; line-height: 107%"><font style="font: 10pt Times New Roman, Times, Serif">1,162,088</font></td>
<td style="line-height: 107%"><font style="font-size: 10pt"> </font></td>
<td style="text-align: right; line-height: 107%"><font style="font-size: 10pt"> </font></td>
<td style="line-height: 107%"><font style="font-size: 10pt"> </font></td>
<td style="text-align: right; line-height: 107%"><font style="font: 10pt Times New Roman, Times, Serif">6.45</font></td>
<td style="line-height: 107%"><font style="font-size: 10pt"> </font></td>
<td style="line-height: 107%"><font style="font-size: 10pt"> </font></td>
<td style="text-align: right; line-height: 107%"><font style="font: 10pt Times New Roman, Times, Serif">4th
Qtr, 2017</font></td>
<td style="line-height: 107%"><font style="font-size: 10pt"> </font></td></tr>
<tr style="vertical-align: bottom; background-color: white">
<td style="text-align: right; line-height: 107%"><font style="font: 10pt Times New Roman, Times, Serif">10,000</font></td>
<td style="line-height: 107%"><font style="font-size: 10pt"> </font></td>
<td style="text-align: right; line-height: 107%"><font style="font-size: 10pt"> </font></td>
<td style="line-height: 107%"><font style="font-size: 10pt"> </font></td>
<td style="text-align: right; line-height: 107%"><font style="font: 10pt Times New Roman, Times, Serif">6.60</font></td>
<td style="line-height: 107%"><font style="font-size: 10pt"> </font></td>
<td style="line-height: 107%"><font style="font-size: 10pt"> </font></td>
<td style="text-align: right; line-height: 107%"><font style="font: 10pt Times New Roman, Times, Serif">1st
Qtr, 2018</font></td>
<td style="line-height: 107%"><font style="font-size: 10pt"> </font></td></tr>
<tr style="vertical-align: bottom; background-color: #CCEEFF">
<td style="text-align: right; line-height: 107%"><font style="font: 10pt Times New Roman, Times, Serif">750,000</font></td>
<td style="line-height: 107%"><font style="font-size: 10pt"> </font></td>
<td style="text-align: right; line-height: 107%"><font style="font-size: 10pt"> </font></td>
<td style="line-height: 107%"><font style="font-size: 10pt"> </font></td>
<td style="text-align: right; line-height: 107%"><font style="font: 10pt Times New Roman, Times, Serif">0.25</font></td>
<td style="line-height: 107%"><font style="font-size: 10pt"> </font></td>
<td style="line-height: 107%"><font style="font-size: 10pt"> </font></td>
<td style="text-align: right; line-height: 107%"><font style="font: 10pt Times New Roman, Times, Serif">4th
Qtr, 2018</font></td>
<td style="line-height: 107%"><font style="font-size: 10pt"> </font></td></tr>
<tr style="vertical-align: bottom; background-color: white">
<td style="text-align: right; line-height: 107%"><font style="font: 10pt Times New Roman, Times, Serif">35,063,685</font></td>
<td style="line-height: 107%"><font style="font-size: 10pt"> </font></td>
<td style="text-align: right; line-height: 107%"><font style="font-size: 10pt"> </font></td>
<td style="line-height: 107%"><font style="font-size: 10pt"> </font></td>
<td style="text-align: right; line-height: 107%"><font style="font: 10pt Times New Roman, Times, Serif">0.38</font></td>
<td style="line-height: 107%"><font style="font-size: 10pt"> </font></td>
<td style="line-height: 107%"><font style="font-size: 10pt"> </font></td>
<td style="text-align: right; line-height: 107%"><font style="font: 10pt Times New Roman, Times, Serif">1st
Qtr, 2019</font></td>
<td style="line-height: 107%"><font style="font-size: 10pt"> </font></td></tr>
<tr style="vertical-align: bottom; background-color: #CCEEFF">
<td style="text-align: right; line-height: 107%"><font style="font: 10pt Times New Roman, Times, Serif">883,336</font></td>
<td style="line-height: 107%"><font style="font-size: 10pt"> </font></td>
<td style="text-align: right; line-height: 107%"><font style="font-size: 10pt"> </font></td>
<td style="line-height: 107%"><font style="font-size: 10pt"> </font></td>
<td style="text-align: right; line-height: 107%"><font style="font: 10pt Times New Roman, Times, Serif">0.91</font></td>
<td style="line-height: 107%"><font style="font-size: 10pt"> </font></td>
<td style="line-height: 107%"><font style="font-size: 10pt"> </font></td>
<td style="text-align: right; line-height: 107%"><font style="font: 10pt Times New Roman, Times, Serif">2nd
Qtr, 2019</font></td>
<td style="line-height: 107%"><font style="font-size: 10pt"> </font></td></tr>
<tr style="vertical-align: bottom; background-color: white">
<td style="text-align: right; line-height: 107%"><font style="font: 10pt Times New Roman, Times, Serif">1,113,000</font></td>
<td style="line-height: 107%"><font style="font-size: 10pt"> </font></td>
<td style="text-align: right; line-height: 107%"><font style="font-size: 10pt"> </font></td>
<td style="line-height: 107%"><font style="font-size: 10pt"> </font></td>
<td style="text-align: right; line-height: 107%"><font style="font: 10pt Times New Roman, Times, Serif">1.16</font></td>
<td style="line-height: 107%"><font style="font-size: 10pt"> </font></td>
<td style="line-height: 107%"><font style="font-size: 10pt"> </font></td>
<td style="text-align: right; line-height: 107%"><font style="font: 10pt Times New Roman, Times, Serif">3rd
Qtr, 2019</font></td>
<td style="line-height: 107%"><font style="font-size: 10pt"> </font></td></tr>
<tr style="vertical-align: bottom; background-color: #CCEEFF">
<td style="text-align: right; line-height: 107%"><font style="font: 10pt Times New Roman, Times, Serif">2,608,000</font></td>
<td style="line-height: 107%"><font style="font-size: 10pt"> </font></td>
<td style="text-align: right; line-height: 107%"><font style="font-size: 10pt"> </font></td>
<td style="line-height: 107%"><font style="font-size: 10pt"> </font></td>
<td style="text-align: right; line-height: 107%"><font style="font: 10pt Times New Roman, Times, Serif">1.15</font></td>
<td style="line-height: 107%"><font style="font-size: 10pt"> </font></td>
<td style="line-height: 107%"><font style="font-size: 10pt"> </font></td>
<td style="text-align: right; line-height: 107%"><font style="font: 10pt Times New Roman, Times, Serif">4th
QTR, 2019</font></td>
<td style="line-height: 107%"><font style="font-size: 10pt"> </font></td></tr>
<tr style="vertical-align: bottom; background-color: white">
<td style="text-align: right; line-height: 107%"><font style="font: 10pt Times New Roman, Times, Serif">505,000</font></td>
<td style="line-height: 107%"><font style="font-size: 10pt"> </font></td>
<td style="text-align: right; line-height: 107%"><font style="font-size: 10pt"> </font></td>
<td style="line-height: 107%"><font style="font-size: 10pt"> </font></td>
<td style="text-align: right; line-height: 107%"><font style="font: 10pt Times New Roman, Times, Serif">0.92</font></td>
<td style="line-height: 107%"><font style="font-size: 10pt"> </font></td>
<td style="line-height: 107%"><font style="font-size: 10pt"> </font></td>
<td style="text-align: right; line-height: 107%"><font style="font: 10pt Times New Roman, Times, Serif">1st
Qtr, 2020</font></td>
<td style="line-height: 107%"><font style="font-size: 10pt"> </font></td></tr>
<tr style="vertical-align: bottom; background-color: #CCEEFF">
<td style="text-align: right; line-height: 107%"><font style="font: 10pt Times New Roman, Times, Serif">75,000</font></td>
<td style="line-height: 107%"><font style="font-size: 10pt"> </font></td>
<td style="text-align: right; line-height: 107%"><font style="font-size: 10pt"> </font></td>
<td style="line-height: 107%"><font style="font-size: 10pt"> </font></td>
<td style="text-align: right; line-height: 107%"><font style="font: 10pt Times New Roman, Times, Serif">0.65</font></td>
<td style="line-height: 107%"><font style="font-size: 10pt"> </font></td>
<td style="line-height: 107%"><font style="font-size: 10pt"> </font></td>
<td style="text-align: right; line-height: 107%"><font style="font: 10pt Times New Roman, Times, Serif">2nd
Qtr, 2019</font></td>
<td style="line-height: 107%"><font style="font-size: 10pt"> </font></td></tr>
<tr style="vertical-align: bottom; background-color: white">
<td style="text-align: right; line-height: 107%"><font style="font: 10pt Times New Roman, Times, Serif">1,707,780</font></td>
<td style="line-height: 107%"><font style="font-size: 10pt"> </font></td>
<td style="text-align: right; line-height: 107%"><font style="font-size: 10pt"> </font></td>
<td style="line-height: 107%"><font style="font-size: 10pt"> </font></td>
<td style="text-align: right; line-height: 107%"><font style="font: 10pt Times New Roman, Times, Serif">0.19</font></td>
<td style="line-height: 107%"><font style="font-size: 10pt"> </font></td>
<td style="line-height: 107%"><font style="font-size: 10pt"> </font></td>
<td style="text-align: right; line-height: 107%"><font style="font: 10pt Times New Roman, Times, Serif">4th
Qtr, 2020</font></td>
<td style="line-height: 107%"><font style="font-size: 10pt"> </font></td></tr>
<tr style="vertical-align: bottom; background-color: #CCEEFF">
<td style="text-align: right; line-height: 107%"><font style="font: 10pt Times New Roman, Times, Serif">6,836,016</font></td>
<td style="line-height: 107%"><font style="font-size: 10pt"> </font></td>
<td style="text-align: right; line-height: 107%"><font style="font-size: 10pt"> </font></td>
<td style="line-height: 107%"><font style="font-size: 10pt"> </font></td>
<td style="text-align: right; line-height: 107%"><font style="font: 10pt Times New Roman, Times, Serif">0.12</font></td>
<td style="line-height: 107%"><font style="font-size: 10pt"> </font></td>
<td style="line-height: 107%"><font style="font-size: 10pt"> </font></td>
<td style="text-align: right; line-height: 107%"><font style="font: 10pt Times New Roman, Times, Serif">1st
Qtr, 2021</font></td>
<td style="line-height: 107%"><font style="font-size: 10pt"> </font></td></tr>
<tr style="vertical-align: bottom; background-color: white">
<td style="border-bottom: black 1pt solid; text-align: right; line-height: 107%"><font style="font: 10pt Times New Roman, Times, Serif">133,334</font></td>
<td style="line-height: 107%"><font style="font-size: 10pt"> </font></td>
<td style="text-align: right; line-height: 107%"><font style="font-size: 10pt"> </font></td>
<td style="line-height: 107%"><font style="font-size: 10pt"> </font></td>
<td style="text-align: right; line-height: 107%"><font style="font: 10pt Times New Roman, Times, Serif">7.05</font></td>
<td style="line-height: 107%"><font style="font-size: 10pt"> </font></td>
<td style="line-height: 107%"><font style="font-size: 10pt"> </font></td>
<td style="text-align: right; line-height: 107%"><font style="font: 10pt Times New Roman, Times, Serif">4th
Qtr, 2020</font></td>
<td style="line-height: 107%"><font style="font-size: 10pt"> </font></td></tr>
<tr style="vertical-align: bottom; background-color: #CCEEFF">
<td style="border-bottom: black 2.25pt double; text-align: right; line-height: 107%"><font style="font: 10pt Times New Roman, Times, Serif">53,245,938</font></td>
<td style="line-height: 107%"><font style="font-size: 10pt"> </font></td>
<td style="line-height: 107%"><font style="font-size: 10pt"> </font></td>
<td style="line-height: 107%"><font style="font-size: 10pt"> </font></td>
<td style="text-align: right; line-height: 107%"><font style="font-size: 10pt"> </font></td>
<td style="line-height: 107%"><font style="font-size: 10pt"> </font></td>
<td style="line-height: 107%"><font style="font-size: 10pt"> </font></td>
<td style="text-align: right; line-height: 107%"><font style="font-size: 10pt"> </font></td>
<td style="line-height: 107%"><font style="font-size: 10pt"> </font></td></tr>
</table>
<p style="font: 8pt/normal Times New Roman, Times, Serif; margin: 0; text-align: justify"><font style="font-size: 10pt">The following
weighted average assumptions were utilized for the calculations during the three months ended March 31, 2016 and 2015:</font></p>
<p style="font: 8pt/normal Times New Roman, Times, Serif; margin: 0"><font style="font-size: 10pt"> </font></p>
<table cellspacing="0" cellpadding="0" style="width: 100%; font: 8pt Calibri, Helvetica, Sans-Serif; border-collapse: collapse">
<tr style="vertical-align: bottom">
<td style="line-height: 107%"><font style="font-size: 10pt"> </font></td>
<td style="line-height: 107%"><font style="font-size: 10pt"> </font></td>
<td colspan="6" style="text-align: center; line-height: 107%"><font style="font: 10pt Times New Roman, Times, Serif"><b>For
the three months ended</b></font></td>
<td style="line-height: 107%"><font style="font-size: 10pt"> </font></td></tr>
<tr style="vertical-align: bottom">
<td style="line-height: 107%"><font style="font-size: 10pt"> </font></td>
<td style="line-height: 107%"><font style="font-size: 10pt"> </font></td>
<td colspan="6" style="border-bottom: black 1pt solid; text-align: center; line-height: 107%"><font style="font: 10pt Times New Roman, Times, Serif"><b>March
31,</b></font></td>
<td style="line-height: 107%"><font style="font-size: 10pt"> </font></td></tr>
<tr style="vertical-align: bottom">
<td style="line-height: 107%"><font style="font-size: 10pt"> </font></td>
<td style="line-height: 107%"><font style="font-size: 10pt"> </font></td>
<td colspan="2" style="border-bottom: black 1pt solid; text-align: center; line-height: 107%"><font style="font: 10pt Times New Roman, Times, Serif"><b>2016</b></font></td>
<td style="line-height: 107%"><font style="font-size: 10pt"> </font></td>
<td style="line-height: 107%"><font style="font-size: 10pt"> </font></td>
<td colspan="2" style="border-bottom: black 1pt solid; text-align: center; line-height: 107%"><font style="font: 10pt Times New Roman, Times, Serif"><b>2015</b></font></td>
<td style="line-height: 107%"><font style="font-size: 10pt"> </font></td></tr>
<tr style="vertical-align: bottom; background-color: #CCEEFF">
<td style="line-height: 107%"><font style="font: 10pt Times New Roman, Times, Serif">Expected life (in
years)</font></td>
<td style="line-height: 107%"><font style="font-size: 10pt"> </font></td>
<td colspan="2" style="text-align: right; line-height: 107%"><font style="font: 10pt Times New Roman, Times, Serif">2.87
years</font></td>
<td style="line-height: 107%"><font style="font-size: 10pt"> </font></td>
<td style="line-height: 107%"><font style="font-size: 10pt"> </font></td>
<td colspan="2" style="text-align: right; line-height: 107%"><font style="font: 10pt Times New Roman, Times, Serif">2.87
years</font></td>
<td style="line-height: 107%"><font style="font-size: 10pt"> </font></td></tr>
<tr style="vertical-align: bottom; background-color: white">
<td style="width: 76%; line-height: 107%"><font style="font: 10pt Times New Roman, Times, Serif">Weighted
average volatility</font></td>
<td style="width: 1%; text-align: right; line-height: 107%"><font style="font-size: 10pt"> </font></td>
<td style="width: 1%; line-height: 107%"><font style="font-size: 10pt"> </font></td>
<td style="width: 9%; text-align: right; line-height: 107%"><font style="font: 10pt Times New Roman, Times, Serif">126.09</font></td>
<td style="width: 1%; line-height: 107%"><font style="font: 10pt Times New Roman, Times, Serif">%</font></td>
<td style="width: 1%; text-align: right; line-height: 107%"><font style="font-size: 10pt"> </font></td>
<td style="width: 1%; line-height: 107%"><font style="font-size: 10pt"> </font></td>
<td style="width: 9%; text-align: right; line-height: 107%"><font style="font: 10pt Times New Roman, Times, Serif">108.81</font></td>
<td style="width: 1%; line-height: 107%"><font style="font: 10pt Times New Roman, Times, Serif">%</font></td></tr>
<tr style="vertical-align: bottom; background-color: #CCEEFF">
<td style="line-height: 107%"><font style="font: 10pt Times New Roman, Times, Serif">Forfeiture rate</font></td>
<td style="text-align: right; line-height: 107%"><font style="font-size: 10pt"> </font></td>
<td style="line-height: 107%"><font style="font-size: 10pt"> </font></td>
<td style="text-align: right; line-height: 107%"><font style="font: 10pt Times New Roman, Times, Serif">17.49</font></td>
<td style="line-height: 107%"><font style="font: 10pt Times New Roman, Times, Serif">%</font></td>
<td style="text-align: right; line-height: 107%"><font style="font-size: 10pt"> </font></td>
<td style="line-height: 107%"><font style="font-size: 10pt"> </font></td>
<td style="text-align: right; line-height: 107%"><font style="font: 10pt Times New Roman, Times, Serif">13.95</font></td>
<td style="line-height: 107%"><font style="font: 10pt Times New Roman, Times, Serif">%</font></td></tr>
<tr style="vertical-align: bottom; background-color: white">
<td style="line-height: 107%"><font style="font: 10pt Times New Roman, Times, Serif">Risk-free interest
rate</font></td>
<td style="text-align: right; line-height: 107%"><font style="font-size: 10pt"> </font></td>
<td style="line-height: 107%"><font style="font-size: 10pt"> </font></td>
<td style="text-align: right; line-height: 107%"><font style="font: 10pt Times New Roman, Times, Serif">.96</font></td>
<td style="line-height: 107%"><font style="font: 10pt Times New Roman, Times, Serif">%</font></td>
<td style="text-align: right; line-height: 107%"><font style="font-size: 10pt"> </font></td>
<td style="line-height: 107%"><font style="font-size: 10pt"> </font></td>
<td style="text-align: right; line-height: 107%"><font style="font: 10pt Times New Roman, Times, Serif">.96</font></td>
<td style="line-height: 107%"><font style="font: 10pt Times New Roman, Times, Serif">%</font></td></tr>
<tr style="vertical-align: bottom; background-color: #CCEEFF">
<td style="line-height: 107%"><font style="font: 10pt Times New Roman, Times, Serif">Expected dividend
rate</font></td>
<td style="text-align: right; line-height: 107%"><font style="font-size: 10pt"> </font></td>
<td style="line-height: 107%"><font style="font-size: 10pt"> </font></td>
<td style="text-align: right; line-height: 107%"><font style="font: 10pt Times New Roman, Times, Serif">0.00</font></td>
<td style="line-height: 107%"><font style="font: 10pt Times New Roman, Times, Serif">%</font></td>
<td style="text-align: right; line-height: 107%"><font style="font-size: 10pt"> </font></td>
<td style="line-height: 107%"><font style="font-size: 10pt"> </font></td>
<td style="text-align: right; line-height: 107%"><font style="font: 10pt Times New Roman, Times, Serif">0.00</font></td>
<td style="line-height: 107%"><font style="font: 10pt Times New Roman, Times, Serif">%</font></td></tr>
</table>
<p style="font: 8pt/normal Times New Roman, Times, Serif; margin: 0; text-indent: 0.5in"><font style="font-size: 10pt"> </font></p>
Delaware
SSPC
.11
.75
.15
.75
.0091
2016-09-30
3512570
0
0
3512570
198630
179
0
0
198630
0
0
179
3711200
179
0
0
3711200
0
0
179
3711200
179
3512570
179
198630
4214305
4015675
198630
-503284
-503105
-179
P10Y
P10Y
179646
241384
0
39680
110365
35481
-179
0
31809
69818
908590
951251
661371
467696
632422
748839
461702
345285
276168
202412
199669
122411
437589
584762
0
0
1392630
295759
298506
0
0
141830
286256
0
0
116417
-116497
23779
0
0
0
23779
.70
.69
41500
16600
61792290
34299035
37960774
2098333
17088129
22669871
1940525
8938639
750000
4645054
40059107
26397410
23933922
24610396
546667
73530
-12270853
0
0
750004
26479217
0
57147236
1381666
625
475142
34749
1349183
536500
1162088
10000
750000
37585877
883336
1113000
2608000
505000
75000
1707780
6836016
133334
6.28
9
7.54
7.99
6.90
1.14
6.45
6.6
0.25
.42
0.91
1.16
1.15
0.92
0.65
0.19
0.12
7.05
2nd Qtr, 2016
3rd Qtr, 2016
4th Qtr, 2016
1st Qtr, 2017
2nd Qtr, 2017
3rd Qtr, 2017
4th Qtr, 2017
1st Qtr, 2018
4th Qtr, 2018
1st Qtr, 2019
2nd Qtr, 2019
3rd Qtr, 2019
4th QTR, 2019
1st Qtr, 2020
2nd Qtr, 2019
4th Qtr, 2020
1st Qtr, 2021
4th Qtr, 2020
P2Y10M13D
P2Y8M26D
1.0881
1.2609
.1358
.1749
.0096
.0096
0.00
0.00
433180
590937
456888
590937
603431
P20M11D
1343
<p style="font: 8pt/normal Times New Roman, Times, Serif; margin: 0"></p>
<table cellspacing="0" cellpadding="0" style="width: 100%; font: 8pt Calibri, Helvetica, Sans-Serif; border-collapse: collapse">
<tr style="vertical-align: bottom">
<td style="line-height: 107%"><font style="font-size: 10pt"> </font></td>
<td style="line-height: 107%"><font style="font-size: 10pt"> </font></td>
<td colspan="22" style="border-bottom: black 1pt solid; text-align: center; line-height: 107%"><font style="font: 10pt Times New Roman, Times, Serif"><b>March
31, 2016</b></font></td>
<td style="line-height: 107%"><font style="font-size: 10pt"> </font></td></tr>
<tr style="vertical-align: bottom">
<td style="line-height: 107%"><font style="font-size: 10pt"> </font></td>
<td style="line-height: 107%"><font style="font-size: 10pt"> </font></td>
<td colspan="6" style="border-bottom: black 1pt solid; text-align: center; line-height: 107%"><font style="font: 10pt Times New Roman, Times, Serif">Gross</font></td>
<td style="line-height: 107%"><font style="font-size: 10pt"> </font></td>
<td style="line-height: 107%"><font style="font-size: 10pt"> </font></td>
<td colspan="6" style="border-bottom: black 1pt solid; text-align: center; line-height: 107%"><font style="font: 10pt Times New Roman, Times, Serif">Reserve</font></td>
<td style="line-height: 107%"><font style="font-size: 10pt"> </font></td>
<td style="line-height: 107%"><font style="font-size: 10pt"> </font></td>
<td colspan="6" style="border-bottom: black 1pt solid; text-align: center; line-height: 107%"><font style="font: 10pt Times New Roman, Times, Serif">Net</font></td>
<td style="line-height: 107%"><font style="font-size: 10pt"> </font></td></tr>
<tr style="vertical-align: bottom">
<td style="line-height: 107%"><font style="font-size: 10pt"> </font></td>
<td style="line-height: 107%"><font style="font-size: 10pt"> </font></td>
<td colspan="2" style="border-bottom: black 1pt solid; text-align: center; line-height: 107%"><font style="font: 10pt Times New Roman, Times, Serif">Current</font></td>
<td style="line-height: 107%"><font style="font-size: 10pt"> </font></td>
<td style="line-height: 107%"><font style="font-size: 10pt"> </font></td>
<td colspan="2" style="border-bottom: black 1pt solid; text-align: center; line-height: 107%"><font style="font: 10pt Times New Roman, Times, Serif">Long-Term</font></td>
<td style="line-height: 107%"><font style="font-size: 10pt"> </font></td>
<td style="line-height: 107%"><font style="font-size: 10pt"> </font></td>
<td colspan="2" style="border-bottom: black 1pt solid; text-align: center; line-height: 107%"><font style="font: 10pt Times New Roman, Times, Serif">Current</font></td>
<td style="line-height: 107%"><font style="font-size: 10pt"> </font></td>
<td style="line-height: 107%"><font style="font-size: 10pt"> </font></td>
<td colspan="2" style="border-bottom: black 1pt solid; text-align: center; line-height: 107%"><font style="font: 10pt Times New Roman, Times, Serif">Long-Term</font></td>
<td style="line-height: 107%"><font style="font-size: 10pt"> </font></td>
<td style="line-height: 107%"><font style="font-size: 10pt"> </font></td>
<td colspan="2" style="border-bottom: black 1pt solid; text-align: center; line-height: 107%"><font style="font: 10pt Times New Roman, Times, Serif">Current</font></td>
<td style="line-height: 107%"><font style="font-size: 10pt"> </font></td>
<td style="line-height: 107%"><font style="font-size: 10pt"> </font></td>
<td colspan="2" style="border-bottom: black 1pt solid; text-align: center; line-height: 107%"><font style="font: 10pt Times New Roman, Times, Serif">Long-Term</font></td>
<td style="line-height: 107%"><font style="font-size: 10pt"> </font></td></tr>
<tr style="vertical-align: bottom; background-color: #CCEEFF">
<td style="width: 28%; line-height: 107%"><font style="font: 10pt Times New Roman, Times, Serif"> Customer
Notes Receivable</font></td>
<td style="width: 1%; text-align: right; line-height: 107%"><font style="font-size: 10pt"> </font></td>
<td style="width: 1%; line-height: 107%"><font style="font: 10pt Times New Roman, Times, Serif"> $</font></td>
<td style="width: 9%; text-align: right; line-height: 107%"><font style="font: 10pt Times New Roman, Times, Serif">951,251</font></td>
<td style="width: 1%; line-height: 107%"><font style="font-size: 10pt"> </font></td>
<td style="width: 1%; text-align: right; line-height: 107%"><font style="font-size: 10pt"> </font></td>
<td style="width: 1%; line-height: 107%"><font style="font: 10pt Times New Roman, Times, Serif"> $</font></td>
<td style="width: 9%; text-align: right; line-height: 107%"><font style="font: 10pt Times New Roman, Times, Serif">467,696</font></td>
<td style="width: 1%; line-height: 107%"><font style="font-size: 10pt"> </font></td>
<td style="width: 1%; text-align: right; line-height: 107%"><font style="font-size: 10pt"> </font></td>
<td style="width: 1%; line-height: 107%"><font style="font: 10pt Times New Roman, Times, Serif"> $</font></td>
<td style="width: 9%; text-align: right; line-height: 107%"><font style="font: 10pt Times New Roman, Times, Serif">748,839</font></td>
<td style="width: 1%; line-height: 107%"><font style="font-size: 10pt"> </font></td>
<td style="width: 1%; text-align: right; line-height: 107%"><font style="font-size: 10pt"> </font></td>
<td style="width: 1%; line-height: 107%"><font style="font: 10pt Times New Roman, Times, Serif"> $</font></td>
<td style="width: 9%; text-align: right; line-height: 107%"><font style="font: 10pt Times New Roman, Times, Serif">345,285</font></td>
<td style="width: 1%; line-height: 107%"><font style="font-size: 10pt"> </font></td>
<td style="width: 1%; text-align: right; line-height: 107%"><font style="font-size: 10pt"> </font></td>
<td style="width: 1%; line-height: 107%"><font style="font: 10pt Times New Roman, Times, Serif"> $</font></td>
<td style="width: 9%; text-align: right; line-height: 107%"><font style="font: 10pt Times New Roman, Times, Serif">202,529</font></td>
<td style="width: 1%; line-height: 107%"><font style="font-size: 10pt"> </font></td>
<td style="width: 1%; text-align: right; line-height: 107%"><font style="font-size: 10pt"> </font></td>
<td style="width: 1%; line-height: 107%"><font style="font: 10pt Times New Roman, Times, Serif"> $</font></td>
<td style="width: 9%; text-align: right; line-height: 107%"><font style="font: 10pt Times New Roman, Times, Serif">122,411</font></td>
<td style="width: 1%; line-height: 107%"><font style="font-size: 10pt"> </font></td></tr>
<tr style="vertical-align: bottom; background-color: white">
<td style="line-height: 107%"><font style="font: 10pt Times New Roman, Times, Serif"> Accounts Receivable</font></td>
<td style="text-align: right; line-height: 107%"><font style="font-size: 10pt"> </font></td>
<td style="line-height: 107%"><font style="font: 10pt Times New Roman, Times, Serif"> $</font></td>
<td style="text-align: right; line-height: 107%"><font style="font: 10pt Times New Roman, Times, Serif">584,762</font></td>
<td style="line-height: 107%"><font style="font-size: 10pt"> </font></td>
<td style="text-align: right; line-height: 107%"><font style="font-size: 10pt"> </font></td>
<td style="line-height: 107%"><font style="font: 10pt Times New Roman, Times, Serif"> $</font></td>
<td style="text-align: right; line-height: 107%"><font style="font: 10pt Times New Roman, Times, Serif">-</font></td>
<td style="line-height: 107%"><font style="font-size: 10pt"> </font></td>
<td style="text-align: right; line-height: 107%"><font style="font-size: 10pt"> </font></td>
<td style="line-height: 107%"><font style="font: 10pt Times New Roman, Times, Serif"> $</font></td>
<td style="text-align: right; line-height: 107%"><font style="font: 10pt Times New Roman, Times, Serif">298,506</font></td>
<td style="line-height: 107%"><font style="font-size: 10pt"> </font></td>
<td style="text-align: right; line-height: 107%"><font style="font-size: 10pt"> </font></td>
<td style="line-height: 107%"><font style="font: 10pt Times New Roman, Times, Serif"> $</font></td>
<td style="text-align: right; line-height: 107%"><font style="font: 10pt Times New Roman, Times, Serif">-</font></td>
<td style="line-height: 107%"><font style="font-size: 10pt"> </font></td>
<td style="text-align: right; line-height: 107%"><font style="font-size: 10pt"> </font></td>
<td style="line-height: 107%"><font style="font: 10pt Times New Roman, Times, Serif"> $</font></td>
<td style="text-align: right; line-height: 107%"><font style="font: 10pt Times New Roman, Times, Serif">286,256</font></td>
<td style="line-height: 107%"><font style="font-size: 10pt"> </font></td>
<td style="text-align: right; line-height: 107%"><font style="font-size: 10pt"> </font></td>
<td style="line-height: 107%"><font style="font: 10pt Times New Roman, Times, Serif"> $</font></td>
<td style="text-align: right; line-height: 107%"><font style="font: 10pt Times New Roman, Times, Serif">-</font></td>
<td style="line-height: 107%"><font style="font-size: 10pt"> </font></td></tr>
<tr style="vertical-align: bottom; background-color: white">
<td style="line-height: 107%"><font style="font-size: 10pt"> </font></td>
<td style="line-height: 107%"><font style="font-size: 10pt"> </font></td>
<td style="line-height: 107%"><font style="font-size: 10pt"> </font></td>
<td style="text-align: right; line-height: 107%"><font style="font-size: 10pt"> </font></td>
<td style="line-height: 107%"><font style="font-size: 10pt"> </font></td>
<td style="line-height: 107%"><font style="font-size: 10pt"> </font></td>
<td style="line-height: 107%"><font style="font-size: 10pt"> </font></td>
<td style="text-align: right; line-height: 107%"><font style="font-size: 10pt"> </font></td>
<td style="line-height: 107%"><font style="font-size: 10pt"> </font></td>
<td style="line-height: 107%"><font style="font-size: 10pt"> </font></td>
<td style="line-height: 107%"><font style="font-size: 10pt"> </font></td>
<td style="text-align: right; line-height: 107%"><font style="font-size: 10pt"> </font></td>
<td style="line-height: 107%"><font style="font-size: 10pt"> </font></td>
<td style="line-height: 107%"><font style="font-size: 10pt"> </font></td>
<td style="line-height: 107%"><font style="font-size: 10pt"> </font></td>
<td style="text-align: right; line-height: 107%"><font style="font-size: 10pt"> </font></td>
<td style="line-height: 107%"><font style="font-size: 10pt"> </font></td>
<td style="line-height: 107%"><font style="font-size: 10pt"> </font></td>
<td style="line-height: 107%"><font style="font-size: 10pt"> </font></td>
<td style="text-align: right; line-height: 107%"><font style="font-size: 10pt"> </font></td>
<td style="line-height: 107%"><font style="font-size: 10pt"> </font></td>
<td style="line-height: 107%"><font style="font-size: 10pt"> </font></td>
<td style="line-height: 107%"><font style="font-size: 10pt"> </font></td>
<td style="text-align: right; line-height: 107%"><font style="font-size: 10pt"> </font></td>
<td style="line-height: 107%"><font style="font-size: 10pt"> </font></td></tr>
<tr style="vertical-align: bottom; background-color: white">
<td style="line-height: 107%"><font style="font-size: 10pt"> </font></td>
<td style="line-height: 107%"><font style="font-size: 10pt"> </font></td>
<td colspan="22" style="border-bottom: black 1pt solid; text-align: center; line-height: 107%"><font style="font: 10pt Times New Roman, Times, Serif"><b>December
31, 2015</b></font></td>
<td style="text-align: right; line-height: 107%"><font style="font-size: 10pt"> </font></td></tr>
<tr style="vertical-align: bottom; background-color: white">
<td style="line-height: 107%"><font style="font-size: 10pt"> </font></td>
<td style="line-height: 107%"><font style="font-size: 10pt"> </font></td>
<td colspan="5" style="border-bottom: black 1pt solid; text-align: center; line-height: 107%"><font style="font: 10pt Times New Roman, Times, Serif">Gross</font></td>
<td style="border-bottom: black 1pt solid; text-align: right; line-height: 107%"><font style="font-size: 10pt"> </font></td>
<td style="line-height: 107%"><font style="font-size: 10pt"> </font></td>
<td style="line-height: 107%"><font style="font-size: 10pt"> </font></td>
<td colspan="5" style="border-bottom: black 1pt solid; text-align: center; line-height: 107%"><font style="font: 10pt Times New Roman, Times, Serif">Reserve</font></td>
<td style="border-bottom: black 1pt solid; text-align: right; line-height: 107%"><font style="font-size: 10pt"> </font></td>
<td style="line-height: 107%"><font style="font-size: 10pt"> </font></td>
<td style="line-height: 107%"><font style="font-size: 10pt"> </font></td>
<td colspan="6" style="border-bottom: black 1pt solid; text-align: center; line-height: 107%"><font style="font: 10pt Times New Roman, Times, Serif">Net</font></td>
<td style="line-height: 107%"><font style="font-size: 10pt"> </font></td></tr>
<tr style="vertical-align: bottom; background-color: white">
<td style="line-height: 107%"><font style="font-size: 10pt"> </font></td>
<td style="line-height: 107%"><font style="font-size: 10pt"> </font></td>
<td colspan="2" style="border-bottom: black 1pt solid; text-align: center; line-height: 107%"><font style="font: 10pt Times New Roman, Times, Serif">Current</font></td>
<td style="line-height: 107%"><font style="font-size: 10pt"> </font></td>
<td style="line-height: 107%"><font style="font-size: 10pt"> </font></td>
<td colspan="2" style="border-bottom: black 1pt solid; text-align: center; line-height: 107%"><font style="font: 10pt Times New Roman, Times, Serif">Long-Term</font></td>
<td style="line-height: 107%"><font style="font-size: 10pt"> </font></td>
<td style="line-height: 107%"><font style="font-size: 10pt"> </font></td>
<td colspan="2" style="border-bottom: black 1pt solid; text-align: center; line-height: 107%"><font style="font: 10pt Times New Roman, Times, Serif">Current</font></td>
<td style="line-height: 107%"><font style="font-size: 10pt"> </font></td>
<td style="line-height: 107%"><font style="font-size: 10pt"> </font></td>
<td colspan="2" style="border-bottom: black 1pt solid; text-align: center; line-height: 107%"><font style="font: 10pt Times New Roman, Times, Serif">Long-Term</font></td>
<td style="line-height: 107%"><font style="font-size: 10pt"> </font></td>
<td style="line-height: 107%"><font style="font-size: 10pt"> </font></td>
<td colspan="2" style="border-bottom: black 1pt solid; text-align: center; line-height: 107%"><font style="font: 10pt Times New Roman, Times, Serif">Current</font></td>
<td style="line-height: 107%"><font style="font-size: 10pt"> </font></td>
<td style="line-height: 107%"><font style="font-size: 10pt"> </font></td>
<td colspan="2" style="border-bottom: black 1pt solid; text-align: center; line-height: 107%"><font style="font: 10pt Times New Roman, Times, Serif">Long-Term</font></td>
<td style="line-height: 107%"><font style="font-size: 10pt"> </font></td></tr>
<tr style="vertical-align: bottom; background-color: #CCEEFF">
<td style="line-height: 107%"><font style="font: 10pt Times New Roman, Times, Serif"> Customer Notes
Receivable</font></td>
<td style="text-align: right; line-height: 107%"><font style="font-size: 10pt"> </font></td>
<td style="line-height: 107%"><font style="font: 10pt Times New Roman, Times, Serif"> $</font></td>
<td style="text-align: right; line-height: 107%"><font style="font: 10pt Times New Roman, Times, Serif">908,590</font></td>
<td style="line-height: 107%"><font style="font-size: 10pt"> </font></td>
<td style="text-align: right; line-height: 107%"><font style="font-size: 10pt"> </font></td>
<td style="line-height: 107%"><font style="font: 10pt Times New Roman, Times, Serif"> $</font></td>
<td style="text-align: right; line-height: 107%"><font style="font: 10pt Times New Roman, Times, Serif">661,371</font></td>
<td style="line-height: 107%"><font style="font-size: 10pt"> </font></td>
<td style="text-align: right; line-height: 107%"><font style="font-size: 10pt"> </font></td>
<td style="line-height: 107%"><font style="font: 10pt Times New Roman, Times, Serif"> $</font></td>
<td style="text-align: right; line-height: 107%"><font style="font: 10pt Times New Roman, Times, Serif">632,422</font></td>
<td style="line-height: 107%"><font style="font-size: 10pt"> </font></td>
<td style="text-align: right; line-height: 107%"><font style="font-size: 10pt"> </font></td>
<td style="line-height: 107%"><font style="font: 10pt Times New Roman, Times, Serif"> $</font></td>
<td style="text-align: right; line-height: 107%"><font style="font: 10pt Times New Roman, Times, Serif">461,702</font></td>
<td style="line-height: 107%"><font style="font-size: 10pt"> </font></td>
<td style="text-align: right; line-height: 107%"><font style="font-size: 10pt"> </font></td>
<td style="line-height: 107%"><font style="font: 10pt Times New Roman, Times, Serif"> $</font></td>
<td style="text-align: right; line-height: 107%"><font style="font: 10pt Times New Roman, Times, Serif">276,168</font></td>
<td style="line-height: 107%"><font style="font-size: 10pt"> </font></td>
<td style="text-align: right; line-height: 107%"><font style="font-size: 10pt"> </font></td>
<td style="line-height: 107%"><font style="font: 10pt Times New Roman, Times, Serif"> $</font></td>
<td style="text-align: right; line-height: 107%"><font style="font: 10pt Times New Roman, Times, Serif">199,669</font></td>
<td style="line-height: 107%"><font style="font-size: 10pt"> </font></td></tr>
<tr style="vertical-align: bottom; background-color: white">
<td style="line-height: 107%"><font style="font: 10pt Times New Roman, Times, Serif"> Accounts Receivable</font></td>
<td style="text-align: right; line-height: 107%"><font style="font-size: 10pt"> </font></td>
<td style="line-height: 107%"><font style="font: 10pt Times New Roman, Times, Serif"> $</font></td>
<td style="text-align: right; line-height: 107%"><font style="font: 10pt Times New Roman, Times, Serif">437,589</font></td>
<td style="line-height: 107%"><font style="font-size: 10pt"> </font></td>
<td style="text-align: right; line-height: 107%"><font style="font-size: 10pt"> </font></td>
<td style="line-height: 107%"><font style="font: 10pt Times New Roman, Times, Serif"> $</font></td>
<td style="text-align: right; line-height: 107%"><font style="font: 10pt Times New Roman, Times, Serif">-</font></td>
<td style="line-height: 107%"><font style="font-size: 10pt"> </font></td>
<td style="text-align: right; line-height: 107%"><font style="font-size: 10pt"> </font></td>
<td style="line-height: 107%"><font style="font: 10pt Times New Roman, Times, Serif"> $</font></td>
<td style="text-align: right; line-height: 107%"><font style="font: 10pt Times New Roman, Times, Serif">295,759</font></td>
<td style="line-height: 107%"><font style="font-size: 10pt"> </font></td>
<td style="text-align: right; line-height: 107%"><font style="font-size: 10pt"> </font></td>
<td style="line-height: 107%"><font style="font: 10pt Times New Roman, Times, Serif"> $</font></td>
<td style="text-align: right; line-height: 107%"><font style="font: 10pt Times New Roman, Times, Serif">-</font></td>
<td style="line-height: 107%"><font style="font-size: 10pt"> </font></td>
<td style="text-align: right; line-height: 107%"><font style="font-size: 10pt"> </font></td>
<td style="line-height: 107%"><font style="font: 10pt Times New Roman, Times, Serif"> $</font></td>
<td style="text-align: right; line-height: 107%"><font style="font: 10pt Times New Roman, Times, Serif">141,830</font></td>
<td style="line-height: 107%"><font style="font-size: 10pt"> </font></td>
<td style="text-align: right; line-height: 107%"><font style="font-size: 10pt"> </font></td>
<td style="line-height: 107%"><font style="font: 10pt Times New Roman, Times, Serif"> $</font></td>
<td style="text-align: right; line-height: 107%"><font style="font: 10pt Times New Roman, Times, Serif">-</font></td>
<td style="line-height: 107%"><font style="font-size: 10pt"> </font></td></tr>
</table>
<p style="font: 8pt/normal Times New Roman, Times, Serif; margin: 0; text-indent: 0.5in"><font style="font-size: 10pt"> </font></p>
7425
11100
-288618
0
456888
456888
35000
0
<table cellspacing="0" cellpadding="0" style="font: 12pt Times New Roman, Times, Serif; width: 100%">
<tr style="vertical-align: bottom">
<td colspan="16" style="text-decoration: underline; text-align: center"><font style="font-size: 10pt"><b><u>Fair Value Measurements
Using Level 3 Inputs</u></b></font></td>
<td nowrap="nowrap"><font style="font-size: 10pt"> </font></td></tr>
<tr style="vertical-align: bottom">
<td colspan="16"><font style="font-size: 10pt"> </font></td>
<td nowrap="nowrap"><font style="font-size: 10pt"> </font></td></tr>
<tr style="vertical-align: bottom">
<td style="padding-bottom: 1.5pt"><font style="font-size: 10pt"> </font></td>
<td style="padding-bottom: 1.5pt"><font style="font-size: 10pt"> </font></td>
<td colspan="3" style="border-bottom: black 1.5pt solid"><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center"><font style="font-size: 10pt">Warrant</font></p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center"><font style="font-size: 10pt">Derivative</font></p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center"><font style="font-size: 10pt">Liability</font></p></td>
<td style="padding-bottom: 1.5pt"><font style="font-size: 10pt"> </font></td>
<td colspan="2" style="border-bottom: black 1.5pt solid"><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center"><font style="font-size: 10pt">Notes</font></p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center"><font style="font-size: 10pt">Conversion</font></p></td>
<td nowrap="nowrap" style="padding-bottom: 1.5pt"><font style="font-size: 10pt"> </font></td>
<td style="padding-bottom: 1.5pt"><font style="font-size: 10pt"> </font></td>
<td colspan="2" style="border-bottom: black 1.5pt solid"><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center"><font style="font-size: 10pt">Liability</font></p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center"><font style="font-size: 10pt">Earn-out</font></p></td>
<td nowrap="nowrap" style="padding-bottom: 1.5pt"><font style="font-size: 10pt"> </font></td>
<td style="padding-bottom: 1.5pt"><font style="font-size: 10pt"> </font></td>
<td colspan="2" style="border-bottom: black 1.5pt solid; text-align: center"><font style="font-size: 10pt">Total</font></td>
<td nowrap="nowrap" style="padding-bottom: 1.5pt"><font style="font-size: 10pt"> </font></td></tr>
<tr style="vertical-align: bottom; background-color: #CCEEFF">
<td style="width: 52%"><font style="font-size: 10pt">Balance - December 31, 2015</font></td>
<td style="width: 1%; text-align: right"><font style="font-size: 10pt"> </font></td>
<td style="width: 1%"><font style="font-size: 10pt">$</font></td>
<td style="width: 9%; text-align: right"><font style="font-size: 10pt">-</font></td>
<td nowrap="nowrap" style="width: 1%"><font style="font-size: 10pt"> </font></td>
<td style="width: 1%; text-align: right"><font style="font-size: 10pt"> </font></td>
<td style="width: 1%"><font style="font-size: 10pt"> </font></td>
<td style="width: 9%; text-align: right"><font style="font-size: 10pt">179</font></td>
<td nowrap="nowrap" style="width: 1%"><font style="font-size: 10pt"> </font></td>
<td style="width: 1%; text-align: right"><font style="font-size: 10pt"> </font></td>
<td style="width: 1%"><font style="font-size: 10pt"> </font></td>
<td style="width: 9%; text-align: right"><font style="font-size: 10pt">-</font></td>
<td nowrap="nowrap" style="width: 1%"><font style="font-size: 10pt"> </font></td>
<td style="width: 1%; text-align: right"><font style="font-size: 10pt"> </font></td>
<td style="width: 1%"><font style="font-size: 10pt">$</font></td>
<td style="width: 9%; text-align: right"><font style="font-size: 10pt">179</font></td>
<td nowrap="nowrap" style="width: 1%"><font style="font-size: 10pt"> </font></td></tr>
<tr style="vertical-align: bottom; background-color: white">
<td style="padding-left: 11pt"><font style="font-size: 10pt; letter-spacing: 9pt">   </font><font style="font-size: 10pt"> Additions
during the period</font></td>
<td style="text-align: right"><font style="font-size: 10pt"> </font></td>
<td><font style="font-size: 10pt"> </font></td>
<td style="text-align: right"><font style="font-size: 10pt">4,015,675</font></td>
<td nowrap="nowrap"><font style="font-size: 10pt"> </font></td>
<td style="text-align: right"><font style="font-size: 10pt"> </font></td>
<td><font style="font-size: 10pt"> </font></td>
<td style="text-align: right"><font style="font-size: 10pt">198,630</font></td>
<td nowrap="nowrap"><font style="font-size: 10pt"> </font></td>
<td style="text-align: right"><font style="font-size: 10pt"> </font></td>
<td><font style="font-size: 10pt"> </font></td>
<td style="text-align: right"><font style="font-size: 10pt">-</font></td>
<td nowrap="nowrap"><font style="font-size: 10pt"> </font></td>
<td style="text-align: right"><font style="font-size: 10pt"> </font></td>
<td><font style="font-size: 10pt"> </font></td>
<td style="text-align: right"><font style="font-size: 10pt">4,214,305</font></td>
<td nowrap="nowrap"><font style="font-size: 10pt"> </font></td></tr>
<tr style="vertical-align: bottom; background-color: #CCEEFF">
<td><font style="font-size: 10pt; letter-spacing: 9pt">   </font><font style="font-size: 10pt"> Total
Unrealized (gains) or losses include in net loss</font></td>
<td style="text-align: right"><font style="font-size: 10pt"> </font></td>
<td><font style="font-size: 10pt"> </font></td>
<td style="text-align: right"><font style="font-size: 10pt">(503,105</font></td>
<td nowrap="nowrap"><font style="font-size: 10pt">)</font></td>
<td style="text-align: right"><font style="font-size: 10pt"> </font></td>
<td><font style="font-size: 10pt"> </font></td>
<td style="text-align: right"><font style="font-size: 10pt">(179</font></td>
<td nowrap="nowrap"><font style="font-size: 10pt">) </font></td>
<td style="text-align: right"><font style="font-size: 10pt"> </font></td>
<td><font style="font-size: 10pt"> </font></td>
<td style="text-align: right"><font style="font-size: 10pt">-</font></td>
<td nowrap="nowrap"><font style="font-size: 10pt"> </font></td>
<td style="text-align: right"><font style="font-size: 10pt"> </font></td>
<td><font style="font-size: 10pt"> </font></td>
<td style="text-align: right"><font style="font-size: 10pt">(503,284</font></td>
<td nowrap="nowrap"><font style="font-size: 10pt">) </font></td></tr>
<tr style="vertical-align: bottom; background-color: white">
<td><font style="font-size: 10pt; letter-spacing: 9pt">   </font><font style="font-size: 10pt"> Settlements
during the period</font></td>
<td style="text-align: right"><font style="font-size: 10pt"> </font></td>
<td><font style="font-size: 10pt"> </font></td>
<td style="text-align: right"><font style="font-size: 10pt">-</font></td>
<td nowrap="nowrap"><font style="font-size: 10pt"> </font></td>
<td style="text-align: right"><font style="font-size: 10pt"> </font></td>
<td><font style="font-size: 10pt"> </font></td>
<td style="text-align: right"><font style="font-size: 10pt">-</font></td>
<td nowrap="nowrap"><font style="font-size: 10pt"> </font></td>
<td style="text-align: right"><font style="font-size: 10pt"> </font></td>
<td><font style="font-size: 10pt"> </font></td>
<td style="text-align: right"><font style="font-size: 10pt">-</font></td>
<td nowrap="nowrap"><font style="font-size: 10pt"> </font></td>
<td style="text-align: right"><font style="font-size: 10pt"> </font></td>
<td><font style="font-size: 10pt"> </font></td>
<td style="text-align: right"><font style="font-size: 10pt">-</font></td>
<td nowrap="nowrap"><font style="font-size: 10pt"> </font></td></tr>
<tr style="vertical-align: bottom; background-color: #CCEEFF">
<td><font style="font-size: 10pt; letter-spacing: 9pt">   </font><font style="font-size: 10pt"> Transfers
in and/or out of Level 3</font></td>
<td style="padding-bottom: 1.5pt; text-align: right"><font style="font-size: 10pt"> </font></td>
<td style="border-bottom: black 1.5pt solid"><font style="font-size: 10pt"> </font></td>
<td style="border-bottom: black 1.5pt solid; text-align: right"><font style="font-size: 10pt">-</font></td>
<td nowrap="nowrap" style="padding-bottom: 1.5pt"><font style="font-size: 10pt"> </font></td>
<td style="padding-bottom: 1.5pt; text-align: right"><font style="font-size: 10pt"> </font></td>
<td style="border-bottom: black 1.5pt solid"><font style="font-size: 10pt"> </font></td>
<td style="border-bottom: black 1.5pt solid; text-align: right"><font style="font-size: 10pt">-</font></td>
<td nowrap="nowrap" style="padding-bottom: 1.5pt"><font style="font-size: 10pt"> </font></td>
<td style="padding-bottom: 1.5pt; text-align: right"><font style="font-size: 10pt"> </font></td>
<td style="border-bottom: black 1.5pt solid"><font style="font-size: 10pt"> </font></td>
<td style="border-bottom: black 1.5pt solid; text-align: right"><font style="font-size: 10pt">-</font></td>
<td nowrap="nowrap" style="padding-bottom: 1.5pt"><font style="font-size: 10pt"> </font></td>
<td style="padding-bottom: 1.5pt; text-align: right"><font style="font-size: 10pt"> </font></td>
<td style="border-bottom: black 1.5pt solid"><font style="font-size: 10pt"> </font></td>
<td style="border-bottom: black 1.5pt solid; text-align: right"><font style="font-size: 10pt">-</font></td>
<td nowrap="nowrap" style="padding-bottom: 1.5pt"><font style="font-size: 10pt"> </font></td></tr>
<tr style="vertical-align: bottom; background-color: white">
<td style="padding-bottom: 3pt"><font style="font-size: 10pt">Balance - March 31, 2016</font></td>
<td style="padding-bottom: 3pt; text-align: right"><font style="font-size: 10pt"> </font></td>
<td style="border-bottom: black 2.25pt double"><font style="font-size: 10pt">$</font></td>
<td style="border-bottom: black 2.25pt double; text-align: right"><font style="font-size: 10pt">3,512,570</font></td>
<td nowrap="nowrap" style="padding-bottom: 3pt"><font style="font-size: 10pt"> </font></td>
<td style="padding-bottom: 3pt; text-align: right"><font style="font-size: 10pt"> </font></td>
<td style="border-bottom: black 2.25pt double"><font style="font-size: 10pt"> </font></td>
<td style="border-bottom: black 2.25pt double; text-align: right"><font style="font-size: 10pt">198,630</font></td>
<td nowrap="nowrap" style="padding-bottom: 3pt"><font style="font-size: 10pt"> </font></td>
<td style="padding-bottom: 3pt; text-align: right"><font style="font-size: 10pt"> </font></td>
<td style="border-bottom: black 2.25pt double"><font style="font-size: 10pt"> </font></td>
<td style="border-bottom: black 2.25pt double; text-align: right"><font style="font-size: 10pt">-</font></td>
<td nowrap="nowrap" style="padding-bottom: 3pt"><font style="font-size: 10pt"> </font></td>
<td style="padding-bottom: 3pt; text-align: right"><font style="font-size: 10pt"> </font></td>
<td style="border-bottom: black 2.25pt double"><font style="font-size: 10pt">$</font></td>
<td style="border-bottom: black 2.25pt double; text-align: right"><font style="font-size: 10pt">3,711,200</font></td>
<td nowrap="nowrap" style="padding-bottom: 3pt"><font style="font-size: 10pt"> </font></td></tr>
</table>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"><font style="font-size: 10pt"> </font></p>
<table cellspacing="0" cellpadding="0" style="font: 12pt Times New Roman, Times, Serif; width: 100%">
<tr>
<td style="vertical-align: bottom"><font style="font-size: 10pt"> </font></td>
<td style="vertical-align: bottom"><font style="font-size: 10pt"> </font></td>
<td style="vertical-align: bottom"><font style="font-size: 10pt"> </font></td>
<td style="vertical-align: top"><font style="font-size: 10pt"> </font></td>
<td colspan="10" style="vertical-align: bottom"><font style="font-size: 10pt"> </font></td>
<td style="vertical-align: bottom"><font style="font-size: 10pt"> </font></td></tr>
<tr>
<td style="vertical-align: bottom; padding-bottom: 1.5pt"><font style="font-size: 10pt"> </font></td>
<td style="vertical-align: bottom; padding-bottom: 1.5pt"><font style="font-size: 10pt"> </font></td>
<td style="vertical-align: bottom; padding-bottom: 1.5pt"><font style="font-size: 10pt"> </font></td>
<td style="vertical-align: top; padding-bottom: 1.5pt"><font style="font-size: 10pt"> </font></td>
<td colspan="10" style="vertical-align: bottom; border-bottom: black 1.5pt solid; text-align: center"><font style="font-size: 10pt">Fair
Value Measurements at March 31, 2016:</font></td>
<td style="vertical-align: bottom; padding-bottom: 1.5pt"><font style="font-size: 10pt"> </font></td></tr>
<tr>
<td style="vertical-align: bottom; padding-bottom: 1.5pt"><font style="font-size: 10pt"> </font></td>
<td style="vertical-align: bottom; border-bottom: black 1.5pt solid"><font style="font-size: 10pt"> </font></td>
<td style="vertical-align: bottom; border-bottom: black 1.5pt solid"><font style="font-size: 10pt"> Carrying Value</font></td>
<td style="vertical-align: top; padding-bottom: 1.5pt"><font style="font-size: 10pt"> </font></td>
<td colspan="2" style="vertical-align: bottom; border-bottom: black 1.5pt solid; text-align: center"><font style="font-size: 10pt">Level
1</font></td>
<td style="vertical-align: top; padding-bottom: 1.5pt"><font style="font-size: 10pt"> </font></td>
<td style="vertical-align: top; padding-bottom: 1.5pt"><font style="font-size: 10pt"> </font></td>
<td colspan="2" style="vertical-align: bottom; border-bottom: black 1.5pt solid; text-align: center"><font style="font-size: 10pt">Level
2</font></td>
<td style="vertical-align: top; padding-bottom: 1.5pt"><font style="font-size: 10pt"> </font></td>
<td style="vertical-align: top; padding-bottom: 1.5pt"><font style="font-size: 10pt"> </font></td>
<td colspan="2" style="vertical-align: bottom; border-bottom: black 1.5pt solid; text-align: center"><font style="font-size: 10pt">Level
3</font></td>
<td style="padding-bottom: 1.5pt"><font style="font-size: 10pt"> </font></td></tr>
<tr style="background-color: #CCEEFF">
<td style="vertical-align: bottom; width: 52%"><font style="font-size: 10pt">Derivative liability-warrants liability</font></td>
<td style="vertical-align: bottom; width: 1%"><font style="font-size: 10pt"> $</font></td>
<td style="vertical-align: bottom; width: 11%; text-align: right"><font style="font-size: 10pt"> 3,512,570</font></td>
<td style="vertical-align: top; width: 1%"><font style="font-size: 10pt"> </font></td>
<td style="vertical-align: top; width: 1%"><font style="font-size: 10pt"> </font></td>
<td style="vertical-align: top; width: 9%; text-align: right"><font style="font-size: 10pt"> -</font></td>
<td style="vertical-align: top; width: 1%"><font style="font-size: 10pt"> </font></td>
<td style="vertical-align: top; width: 1%"><font style="font-size: 10pt"> </font></td>
<td style="vertical-align: top; width: 1%"><font style="font-size: 10pt"> </font></td>
<td style="vertical-align: top; width: 9%; text-align: right"><font style="font-size: 10pt"> -</font></td>
<td style="vertical-align: top; width: 1%"><font style="font-size: 10pt"> </font></td>
<td style="vertical-align: top; width: 1%"><font style="font-size: 10pt"> </font></td>
<td style="vertical-align: top; width: 1%"><font style="font-size: 10pt">$</font></td>
<td style="vertical-align: top; width: 9%; text-align: right"><font style="font-size: 10pt"> 3,512,570</font></td>
<td style="width: 1%"><font style="font-size: 10pt"> </font></td></tr>
<tr style="background-color: white">
<td style="vertical-align: bottom; padding-bottom: 1.5pt"><font style="font-size: 10pt">Derivative liability – convertible
options</font></td>
<td style="vertical-align: bottom; border-bottom: black 1.5pt solid"><font style="font-size: 10pt"> </font></td>
<td style="vertical-align: bottom; border-bottom: black 1.5pt solid; text-align: right"><font style="font-size: 10pt">198,630</font></td>
<td style="vertical-align: top; padding-bottom: 1.5pt"><font style="font-size: 10pt"> </font></td>
<td style="vertical-align: top; border-bottom: black 1.5pt solid"><font style="font-size: 10pt"> </font></td>
<td style="vertical-align: top; border-bottom: black 1.5pt solid; text-align: right"><font style="font-size: 10pt">-</font></td>
<td style="vertical-align: top; padding-bottom: 1.5pt"><font style="font-size: 10pt"> </font></td>
<td style="vertical-align: top; padding-bottom: 1.5pt"><font style="font-size: 10pt"> </font></td>
<td style="vertical-align: top; border-bottom: black 1.5pt solid"><font style="font-size: 10pt"> </font></td>
<td style="vertical-align: top; border-bottom: black 1.5pt solid; text-align: right"><font style="font-size: 10pt">-</font></td>
<td style="vertical-align: top; padding-bottom: 1.5pt"><font style="font-size: 10pt"> </font></td>
<td style="vertical-align: top; padding-bottom: 1.5pt"><font style="font-size: 10pt"> </font></td>
<td style="vertical-align: top; border-bottom: black 1.5pt solid"><font style="font-size: 10pt">$</font></td>
<td style="vertical-align: top; border-bottom: black 1.5pt solid; text-align: right"><font style="font-size: 10pt">198,630</font></td>
<td style="padding-bottom: 1.5pt"><font style="font-size: 10pt"> </font></td></tr>
<tr style="background-color: #CCEEFF">
<td style="vertical-align: bottom; padding-bottom: 3pt"><font style="font-size: 10pt">Total securities</font></td>
<td style="vertical-align: bottom; border-bottom: black 2.25pt double"><font style="font-size: 10pt"> $</font></td>
<td style="vertical-align: bottom; border-bottom: black 2.25pt double; text-align: right"><font style="font-size: 10pt">3,711,200</font></td>
<td style="vertical-align: top; padding-bottom: 3pt"><font style="font-size: 10pt"> </font></td>
<td style="vertical-align: top; border-bottom: black 2.25pt double"><font style="font-size: 10pt">$</font></td>
<td style="vertical-align: top; border-bottom: black 2.25pt double; text-align: right"><font style="font-size: 10pt">-</font></td>
<td style="vertical-align: top; padding-bottom: 3pt"><font style="font-size: 10pt"> </font></td>
<td style="vertical-align: top; padding-bottom: 3pt"><font style="font-size: 10pt"> </font></td>
<td style="vertical-align: top; border-bottom: black 2.25pt double"><font style="font-size: 10pt">$</font></td>
<td style="vertical-align: top; border-bottom: black 2.25pt double; text-align: right"><font style="font-size: 10pt">-</font></td>
<td style="vertical-align: top; padding-bottom: 3pt"><font style="font-size: 10pt"> </font></td>
<td style="vertical-align: top; padding-bottom: 3pt"><font style="font-size: 10pt"> </font></td>
<td style="vertical-align: top; border-bottom: black 2.25pt double"><font style="font-size: 10pt">$</font></td>
<td style="vertical-align: top; border-bottom: black 2.25pt double; text-align: right"><font style="font-size: 10pt">$3,711,200</font></td>
<td style="padding-bottom: 3pt"><font style="font-size: 10pt"> </font></td></tr>
<tr style="background-color: white">
<td style="vertical-align: bottom"><font style="font-size: 10pt"> </font></td>
<td style="vertical-align: bottom"><font style="font-size: 10pt"> </font></td>
<td style="vertical-align: bottom"><font style="font-size: 10pt"> </font></td>
<td style="vertical-align: top"><font style="font-size: 10pt"> </font></td>
<td colspan="10" style="vertical-align: bottom"><font style="font-size: 10pt"> </font></td>
<td><font style="font-size: 10pt"> </font></td></tr>
<tr style="background-color: white">
<td style="vertical-align: bottom; padding-bottom: 1.5pt"><font style="font-size: 10pt"> </font></td>
<td style="vertical-align: bottom; padding-bottom: 1.5pt"><font style="font-size: 10pt"> </font></td>
<td style="vertical-align: bottom; padding-bottom: 1.5pt"><font style="font-size: 10pt"> </font></td>
<td style="vertical-align: top; padding-bottom: 1.5pt"><font style="font-size: 10pt"> </font></td>
<td colspan="10" style="vertical-align: bottom; border-bottom: black 1.5pt solid; text-align: center"><font style="font-size: 10pt">Fair
Value Measurements at December 31, 2015:</font></td>
<td style="padding-bottom: 1.5pt"><font style="font-size: 10pt"> </font></td></tr>
<tr style="background-color: white">
<td style="vertical-align: bottom; padding-bottom: 1.5pt"><font style="font-size: 10pt"> </font></td>
<td style="vertical-align: bottom; border-bottom: black 1.5pt solid"><font style="font-size: 10pt"> </font></td>
<td style="vertical-align: bottom; border-bottom: black 1.5pt solid"><font style="font-size: 10pt"> Carrying Value</font></td>
<td style="vertical-align: top; padding-bottom: 1.5pt"><font style="font-size: 10pt"> </font></td>
<td colspan="2" style="vertical-align: bottom; border-bottom: black 1.5pt solid; text-align: center"><font style="font-size: 10pt">Level
1</font></td>
<td style="vertical-align: top; padding-bottom: 1.5pt"><font style="font-size: 10pt"> </font></td>
<td style="vertical-align: top; padding-bottom: 1.5pt"><font style="font-size: 10pt"> </font></td>
<td colspan="2" style="vertical-align: bottom; border-bottom: black 1.5pt solid; text-align: center"><font style="font-size: 10pt">Level
2</font></td>
<td style="vertical-align: top; padding-bottom: 1.5pt"><font style="font-size: 10pt"> </font></td>
<td style="vertical-align: top; padding-bottom: 1.5pt"><font style="font-size: 10pt"> </font></td>
<td colspan="2" style="vertical-align: bottom; border-bottom: black 1.5pt solid; text-align: center"><font style="font-size: 10pt">Level
3</font></td>
<td style="padding-bottom: 1.5pt"><font style="font-size: 10pt"> </font></td></tr>
<tr style="background-color: #CCEEFF">
<td style="vertical-align: bottom"><font style="font-size: 10pt">Earn-out liability</font></td>
<td style="vertical-align: bottom"><font style="font-size: 10pt"> $</font></td>
<td style="vertical-align: bottom; text-align: right"><font style="font-size: 10pt">      -</font></td>
<td style="vertical-align: top"><font style="font-size: 10pt"> </font></td>
<td style="vertical-align: top"><font style="font-size: 10pt">$</font></td>
<td style="vertical-align: top; text-align: right"><font style="font-size: 10pt">-</font></td>
<td style="vertical-align: top"><font style="font-size: 10pt"> </font></td>
<td style="vertical-align: top"><font style="font-size: 10pt"> </font></td>
<td style="vertical-align: top"><font style="font-size: 10pt">$</font></td>
<td style="vertical-align: top; text-align: right"><font style="font-size: 10pt">-</font></td>
<td style="vertical-align: top"><font style="font-size: 10pt"> </font></td>
<td style="vertical-align: top"><font style="font-size: 10pt"> </font></td>
<td style="vertical-align: top"><font style="font-size: 10pt">$</font></td>
<td style="vertical-align: top; text-align: right"><font style="font-size: 10pt">      -</font></td>
<td><font style="font-size: 10pt"> </font></td></tr>
<tr style="background-color: white">
<td style="vertical-align: bottom; padding-bottom: 1.5pt"><font style="font-size: 10pt">Derivative liability – convertible
options</font></td>
<td style="vertical-align: bottom; border-bottom: black 1.5pt solid"><font style="font-size: 10pt"> </font></td>
<td style="vertical-align: bottom; border-bottom: black 1.5pt solid; text-align: right"><font style="font-size: 10pt">179</font></td>
<td style="vertical-align: top; padding-bottom: 1.5pt"><font style="font-size: 10pt"> </font></td>
<td style="vertical-align: top; border-bottom: black 1.5pt solid"><font style="font-size: 10pt">$</font></td>
<td style="vertical-align: top; border-bottom: black 1.5pt solid; text-align: right"><font style="font-size: 10pt">-</font></td>
<td style="vertical-align: top; padding-bottom: 1.5pt"><font style="font-size: 10pt"> </font></td>
<td style="vertical-align: top; padding-bottom: 1.5pt"><font style="font-size: 10pt"> </font></td>
<td style="vertical-align: top; border-bottom: black 1.5pt solid"><font style="font-size: 10pt">$</font></td>
<td style="vertical-align: top; border-bottom: black 1.5pt solid; text-align: right"><font style="font-size: 10pt">-</font></td>
<td style="vertical-align: top; padding-bottom: 1.5pt"><font style="font-size: 10pt"> </font></td>
<td style="vertical-align: top; padding-bottom: 1.5pt"><font style="font-size: 10pt"> </font></td>
<td style="vertical-align: top; border-bottom: black 1.5pt solid"><font style="font-size: 10pt">$</font></td>
<td style="vertical-align: top; border-bottom: black 1.5pt solid; text-align: right"><font style="font-size: 10pt">        179</font></td>
<td style="padding-bottom: 1.5pt"><font style="font-size: 10pt"> </font></td></tr>
<tr style="background-color: #CCEEFF">
<td style="vertical-align: bottom; padding-bottom: 3pt"><font style="font-size: 10pt">Total securities</font></td>
<td style="vertical-align: bottom; border-bottom: black 2.25pt double"><font style="font-size: 10pt"> $</font></td>
<td style="vertical-align: bottom; border-bottom: black 2.25pt double; text-align: right"><font style="font-size: 10pt">179</font></td>
<td style="vertical-align: top; padding-bottom: 3pt"><font style="font-size: 10pt"> </font></td>
<td style="vertical-align: top; border-bottom: black 2.25pt double"><font style="font-size: 10pt">$</font></td>
<td style="vertical-align: top; border-bottom: black 2.25pt double; text-align: right"><font style="font-size: 10pt">-</font></td>
<td style="vertical-align: top; padding-bottom: 3pt"><font style="font-size: 10pt"> </font></td>
<td style="vertical-align: top; padding-bottom: 3pt"><font style="font-size: 10pt"> </font></td>
<td style="vertical-align: top; border-bottom: black 2.25pt double"><font style="font-size: 10pt">$</font></td>
<td style="vertical-align: top; border-bottom: black 2.25pt double; text-align: right"><font style="font-size: 10pt">-</font></td>
<td style="vertical-align: top; padding-bottom: 3pt"><font style="font-size: 10pt"> </font></td>
<td style="vertical-align: top; padding-bottom: 3pt"><font style="font-size: 10pt"> </font></td>
<td style="vertical-align: top; border-bottom: black 2.25pt double"><font style="font-size: 10pt">$</font></td>
<td style="vertical-align: top; border-bottom: black 2.25pt double; text-align: right"><font style="font-size: 10pt">      179</font></td>
<td style="padding-bottom: 3pt"><font style="font-size: 10pt"> </font></td></tr>
</table>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"><font style="font-size: 10pt"> </font></p>
<p style="font: 8pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center; text-indent: 0.5in"><font style="font-size: 10pt"> </font></p>
269028
0
0
0
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">SpendSmart Networks, Inc. is a Delaware corporation (“the
Company”).  The Company brings value added products and mobile marketing solutions to consumers, merchants, businesses
and government organizations.  The Company is a publicly traded company trading on the OTCQB under the symbol “SSPC.”  The
Company purchased substantially all of the assets of Intellectual Capital Management LLC d/b/a SMS Masterminds (“SMS”)
on February 11, 2014, and substantially all of the assets of TechXpress, Inc. on September 18, 2014.  The accompanying
unaudited condensed consolidated financial statements include the accounts of the Company and its wholly owned subsidiary SpendSmart
Networks, Inc., a California corporation (SpendSmart-CA). All material intercompany balances and transactions have been eliminated.  The
accompanying unaudited condensed consolidated financial statements should be read in conjunction with the financial statements
included in our Annual Report on Form 10-K for the year ended December 31, 2015.  The year-end balance sheet data was
derived from audited financial statements, but does not include all disclosures required by accounting principles generally accepted
in the United States of America (“GAAP”).  All normal recurring adjustments which are necessary for the fair
presentation of the results for the interim periods are reflected herein.  Operating results for the three-month periods
ended March 31, 2016 and 2015 are not necessarily indicative of results to be expected for a full year.</p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">As of December 31, 2015, the Company’s audited consolidated
financial statements included an opinion containing an explanatory paragraph as to the uncertainty of the Company’s ability
to continue as a going concern. The Company has continued to incur net losses through March 31, 2016 and have yet to establish
profitable operations. These factors among others create a substantial doubt about the Company’s ability to continue as a
going concern. The Company’s unaudited consolidated financial statements as of and for the period ended March 31, 2016 does
not contain any adjustments for this uncertainty.  </p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.5in"> </p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">In an effort to reduce overhead, the Company reduced salaries
by 10% and issued options equal to the value of the reduction. The Company also currently plans to attempt to raise additional
required capital through the sale of unregistered shares of the Company’s preferred or common stock. All additional amounts
raised will be used for our future investing and operating cash flow needs. However, there can be no assurance that we will be
successful in consummating such financing. This description of our recent financing and future plans for financing does not constitute
an offer to sell or the solicitation of an offer to buy our securities, nor shall such securities be offered or sold in the United
States absent registration or an applicable exemption from the registration requirements and certificates evidencing such shares
contain a legend stating the same.</p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"> </p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">The condensed consolidated financial statements have been prepared
in accordance with GAAP.</p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"> </p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"><b><i>Loans Receivable and Accounts Receivable</i></b></p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.5in"> </p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">The Company extends credit to its licensees in the normal course
of business and performs credit evaluations of its customers. Loans and accounts receivable are stated at amounts due from customers
net of an allowance for doubtful accounts. Accounts that are outstanding longer than the contractual payment terms are considered
past due. The Company determines its allowance for doubtful accounts by considering a number of factors, including the length of
time loan and accounts receivable are past due and the customer's current ability to pay its obligation to the Company. The Company
writes off loans and accounts receivable when they become uncollectible.</p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.5in"> </p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"><b><i>Use of Estimates</i></b></p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"><b><i> </i></b></p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"><b><i></i></b></p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">The preparation of financial statements
in conformity with GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities
and disclosure of contingent assets and liabilities, fair value of financial instruments, at the date of the consolidated financial
statements and the reported amounts of revenues and expenses during the reporting period.  Actual results could materially
differ from those estimates. Significant estimates inherent in the preparation of the accompanying consolidated financial statements
include recoverability and useful lives of intangible assets, the valuation allowance related to the Company's deferred tax assets,
the allowance for doubtful accounts related and notes and accounts receivable, the fair value of stock options and warrants granted
to employees, consultants, directors, investors and placement agents, and notes and warrant tender offer.</p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"><b><i> </i></b></p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"><b><i>Revenue Recognition</i></b></p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.5in"> </p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">The Company generates revenues primarily in the form of set
up fees, license fees, messaging, equipment and marketing services fees and value added mobile marketing and mobile commerce services.  License
fees are charged monthly for support services.  Set-up fees primarily consist of fees for website development services
(including support and unspecified upgrades and enhancements when and if they are available), training and professional services
that are not essential to functionality. The Company offers two licenses consisting of our Engage license and our Thrive license.  The
revenues for Engage and Thrive license set-up fees are recognized over the training and implementation periods of one month, respectively.</p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.5in"> </p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">The Company recognizes revenues when all of the following conditions
are met:</p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"> </p>
<table cellspacing="0" cellpadding="0" style="width: 100%">
<tr style="vertical-align: top">
<td style="width: 6%; font: 12pt Times New Roman, Times, Serif; text-align: center"><font style="font-size: 10pt">●</font></td>
<td style="width: 94%; font: 12pt Times New Roman, Times, Serif"><font style="font-size: 10pt">there is persuasive evidence of an arrangement;</font></td></tr>
</table>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"> </p>
<table cellspacing="0" cellpadding="0" style="width: 100%">
<tr style="vertical-align: top">
<td style="width: 6%; font: 12pt Times New Roman, Times, Serif; text-align: center"><font style="font-size: 10pt">●</font></td>
<td style="width: 94%; font: 12pt Times New Roman, Times, Serif"><font style="font-size: 10pt">the products or services have been delivered to the customer;</font></td></tr>
</table>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"> </p>
<table cellspacing="0" cellpadding="0" style="width: 100%">
<tr style="vertical-align: top">
<td style="width: 6%; font: 12pt Times New Roman, Times, Serif; text-align: center"><font style="font-size: 10pt">●</font></td>
<td style="width: 94%; font: 12pt Times New Roman, Times, Serif"><font style="font-size: 10pt">the amount of fees to be paid by the customer is fixed or determinable; and</font></td></tr>
</table>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"> </p>
<table cellspacing="0" cellpadding="0" style="width: 100%">
<tr style="vertical-align: top">
<td style="width: 6%; font: 12pt Times New Roman, Times, Serif; text-align: center"><font style="font-size: 10pt">●</font></td>
<td style="width: 94%; font: 12pt Times New Roman, Times, Serif"><font style="font-size: 10pt">The collection of the related fees is probable.</font></td></tr>
</table>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"> </p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">Signed agreements are used as evidence of an arrangement. Electronic
delivery occurs when we provide the customer with access to the software. The Company assesses whether a fee is fixed or determinable
at the outset of the arrangement, primarily based on the payment terms associated with the transaction. The Company offered extended
payment terms with regards to the setup fee with typical terms of payment due between one and three years from delivery of license.
The Company assesses collectability of the set-up fee based on a number of factors such as collection history and creditworthiness
of the licensee. If the Company determines that collectability is not probable, revenue is deferred until collectability becomes
probable, generally upon receipt of cash.</p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.5in"> </p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">License arrangements may also include set-up
fees for website development, delivery of tablets, professional services and training services, which are typically delivered within
30-60 days of the contract term. In determining whether set-up fee revenues should be accounted for separately from license revenues,
we evaluate whether the set-up fees are considered essential to the functionality of the license using factors such as the nature
of our products; whether they are ready for use by the customer upon receipt; the nature of our implementation services, which
typically do not involve significant customization to or development of the underlying software code; the availability of services
from other vendors; whether the timing of payments for license revenues is coincident with performance of services; and whether
milestones or acceptance criteria exist that affect the realizability of the license fee. Substantially all of our set-up fee arrangements
are recognized as the services are performed. Payments received in advance of services performed are deferred and recognized when
the related services are performed.</p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.5in"> </p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">We do not offer refunds and therefore have not recorded any
sales return allowance for any of the periods presented. Upon a periodic review of outstanding accounts and notes receivable, amounts
that are deemed to be uncollectible are written off against the allowance for doubtful accounts.</p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"> </p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">Deferred revenue consists substantially of amounts invoiced
in advance of revenue recognition for our products and services described above. We recognize deferred revenue as revenue only
when the revenue recognition criteria are met.  </p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"> </p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"><b><i>Cash and cash equivalents</i></b></p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.5in"><b><i> </i></b></p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">The Company considers all investments with an original maturity
of three months or less to be cash equivalents. Cash equivalents primarily represent funds invested in money market funds, bank
certificates of deposit and U.S. government debt securities whose cost equals fair market value.</p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"> </p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"></p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">From time to time, the Company has maintained
bank balances in excess of insurance limits . The Company has not experienced any losses with respect to cash. Management believes
the Company is not exposed to any significant credit risk with respect to its cash and cash equivalents.</p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"> </p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"></p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"><b><i>Property and Equipment</i></b></p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.5in"> </p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">Property and equipment had been recorded
at cost and depreciated using the straight-line method over the estimated useful lives of the related assets (generally three to
five years). Costs incurred for maintenance and repairs are expensed as incurred and expenditures for major replacements and improvements
are capitalized and depreciated over their estimated remaining useful lives. Depreciation expense for the three months ended March
31, 2016 and 2015 was $0 and $39,680, respectively.  Property and equipment has been fully depreciated as of March 31,
2016.</p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"> </p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"><b><i>Software Capitalization</i></b></p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.5in"> </p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">The Company accounts for computer software
used in the business in accordance with ASC 350 “Intangibles-Goodwill and Other”. ASC 350 requires computer software
costs associated with internal use software to be charged to operations as incurred until certain capitalization criteria are met.
Costs incurred during the preliminary project stage and the post-implementation stages are expensed as incurred. Certain qualifying
costs incurred during the application development stage are capitalized as property, equipment and software. These costs generally
consist of internal labor during configuration, coding, and testing activities. Capitalization begins when (i) the preliminary
project stage is complete, (ii) management with the relevant authority authorizes and commits to the funding of the software project,
and (iii) it is probable both that the project will be completed and that the software will be used to perform the function intended.  We
capitalized $179,646 and $241,384, respectively, in software development related to programming and coding for new product development
for the three months ended March 31, 2016 and 2015.  Software depreciation expense for the three months ended March 31,
2016 and 2015 was $110,365 and $35,481, respectively.</p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"> </p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"><b><i>Valuation of Long-Lived Assets</i></b></p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.5in"><b><i> </i></b></p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"></p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">The Company records impairment losses
on long-lived assets used in operations when indicators of impairment are present and the undiscounted cash flows estimated to
be generated by those assets are less than the assets’ carrying amount. If such assets are considered to be impaired, the
impairment to be recognized is measured by the amount by which the carrying amounts of the assets exceed the estimated fair value
of the assets. There has not been any impairment recorded during the quarter ended March 31, 2016.</p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"></p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.5in"><b><i> </i></b></p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"><b><i>Income Tax Expense Estimates and Policies</i></b></p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 45pt"> </p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">As part of the income tax provision process of preparing the
Company’s financial statements, the Company is required to estimate the Company’s provision for income taxes. This process
involves estimating current tax liabilities together with assessing temporary differences resulting from differing treatments
of items for tax and accounting purposes. These differences result in deferred tax assets and liabilities. Management then assesses
the likelihood that the Company deferred tax assets will be recovered from future taxable income and to the extent believed that
recovery is not likely, a valuation allowance is established. Further, to the extent a valuation allowance is established and
changes occur to this allowance in a financial accounting period, such changes are recognized in the Company’s tax provision
in the Company’s condensed consolidated statement of operations. The Company’s use of judgment in making estimates to
determine the Company’s provision for income taxes, deferred tax assets and liabilities and any valuation allowance is recorded
against our net deferred tax assets.</p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"> </p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">The Company recognizes the benefit of an uncertain tax position
taken or expected to be taken on the Company’s income tax returns if it is “more likely than not” that such tax
position will be sustained based on its technical merits. The Company does not have any unrecognized tax benefits or accrued penalties
and interest. If such matters were to arise, the Company would recognize interest and penalties related to income tax matters in
income tax expense.</p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.5in"><b><i> </i></b></p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"><b><i>Stock-Based Compensation</i></b></p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.5in"><b><i> </i></b></p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">The Company accounts for stock based compensation arrangements
through the measurement and recognition of compensation expense for all stock based payment awards to employees and directors based
on estimated fair values. The Company uses the Black-Scholes option valuation model to estimate the fair value of the Company’s
stock options and warrants at the date of grant. The Black-Scholes option valuation model requires the input of subjective assumptions
to calculate the value of options and warrants. The Company uses historical company data among other information to estimate the
expected price volatility and the expected forfeiture rate and not comparable company information.</p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.5in"><b><i> </i></b></p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"><b><i>Net Loss per Share</i></b></p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.5in"><b><i> </i></b></p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">The Company calculates basic earnings per share (“EPS”)
by dividing the Company’s net loss and comprehensive net loss applicable to common shareholders by the weighted average number
of common shares outstanding for the period, without considering common stock equivalents. Diluted EPS is computed by dividing
net income or net loss and comprehensive net loss applicable to common shareholders by the weighted average number of common shares
outstanding for the period and the weighted average number of dilutive common stock equivalents, such as options and warrants.
Options and warrants are only included in the calculation of diluted EPS when their effect is dilutive.</p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"> </p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"><b><i>Derivatives - Warrant Liability</i></b></p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.5in"> </p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">The Company accounts for the common stock warrants granted and
still outstanding as of March 31, 2016 in connection with certain financing transactions (“Transactions”) in accordance
with the guidance contained in ASC 815-40-15-7D, "Contracts in Entity's Own Equity" whereby under that provision they
do not meet the criteria for equity treatment and must be recorded as a liability. Accordingly, the Company classifies the warrant
instrument as a liability at its fair value and adjusts the instrument to fair value at each reporting period. This liability is
subject to re-measurement at each balance sheet date until exercised, and any change in fair value is recognized in the Company's
statements of operations. The fair value of the warrants issued by the Company in connection with the Transactions has been estimated
using a Monte Carlo simulation.</p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.5in"> </p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">The Company accounts for certain of its
outstanding warrants issued in fiscal 2010, 2012 and 2013 (“2010 Warrants,” “2012 Warrants” and “2013
Warrants, respectively) as derivative liabilities. The 2010 Warrants were determined to be ineligible for equity classification
due to provisions of the respective instruments that may result in an adjustment to their conversion or exercise prices. The Company
recognized gains of $0 and $26,046 in the fair value of derivatives for the three months ended March 31, 2016 and 2015, respectively.  These
derivative liabilities which arose from the issuance of the 2010 Warrants resulted in an ending balance of derivative liabilities
of $0 as of March 31, 2016 and December 31, 2015, respectively.</p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in"></p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"> </p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">In April 2015, the FASB issued ASU 2015-03,
Interest-Imputation of Interest (Subtopic 835-30), Simplifying the Presentation of Debt Issuance Costs, which requires that debt
issuance costs related to a recognized debt liability be presented in the balance sheet as a direct deduction from the carrying
amount of that debt liability, consistent with debt discounts. The ASU is effective for financial statements issued for fiscal
years beginning after December 15, 2015 and interim periods within that fiscal year. Since we did not previously have any debt
issuance costs, there was not a need for retrospective application. The guidance was adopted for the year ended December 31, 2015.
The adoption did not have a material impact on the financial statements.</p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"> </p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><b><i>Debt discount and issuance costs</i></b></p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"> </p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">Debt issuance costs, including warrants
issued in connection with debt financing and fees or costs paid to lender, are presented in the consolidated balance sheets as
a direct deduction from the carrying amount of that debt. </p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"> </p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">The Company amortizes the discount to interest
expense over the term of the respective debt using the effective interest method.</p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in"> </p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"><b><i>Derivatives – Bifurcated Conversion Option in Convertible
Notes</i></b></p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"> </p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">The Company does not use derivative financial
instruments to hedge exposures to cash-flow, market or foreign-currency risks. However, the Company has issued Convertible Notes
with features that are either (i) not afforded equity classification, (ii) embody risks not clearly and closely related to host
contracts, or (iii) may be net-cash settled by the counterparty. As required by ASC 815, <i>Accounting for Derivative Financial
Instruments and Hedging Activities</i>, in certain instances, these instruments are required to be carried as derivative liabilities,
at fair value, in our financial statements.</p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"> </p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">The Convertible Notes issued during the
year ended December 31, 2015 are subject to anti-dilution adjustments that allow for the reduction in the Conversion Price, as
defined in the agreement, in the event the Company subsequently issues equity securities including Common Stock or any security
convertible or exchangeable for shares of Common Stock for a price less than the current conversion price. The Company bifurcated
and accounted for the conversion option in accordance with ASC 815 as a derivative liability, since this conversion feature is
not considered to be indexed to the Company’s own stock.</p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"> </p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">The Company’s derivative liability
has been measured at fair value at March 31, 2016 using a Monte-Carlo Simulation. Inputs into the model require estimates, including
such items as estimated volatility of the Company’s stock, estimated probabilities of additional financing, risk-free interest
rate, and the estimated life of the financial instruments being fair valued. In addition, since the conversion price contains an
anti-dilution adjustment, the probability that the Conversion Price of the Notes would decrease as the share price decreased was
also incorporated into the valuation calculation.</p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in"> </p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">The Company modified two existing Notes
during the first quarter, 2016.  According to FASB ASC 470-50, the modification is accounted for as a debt extinguishment,
whereby the new debt instrument is initially recorded at fair value, and that amount is used to determine the debt extinguishment
gain or loss to be recognized and the effective rate of the new instrument.  We recognized a loss on the extinguishment
of debt of $288,618 for the quarter, of which $23,180 was related to the repricing of warrants for the three months ended March
31, 2016.</p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in"> </p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">The Company recognized a loss of $179 and
a gain of $0 in the fair value of derivatives for the three months ended March 31, 2016 and 2015, respectively. These derivative
liabilities which arose from the issuance of the convertible notes resulted in an ending balance of derivative liabilities of $198,630
and $179 as of March 31, 2016 and December 31, 2015, respectively. Subsequent changes to the fair value of the derivative liabilities
will continue to require adjustments to their carrying value that will be recorded as other income (in the event that their value
decreases) or as other expense (in the event that their value increases). The fair value of these liabilities is estimated using
Monte Carlo pricing models that are based on the individual characteristics of the Company’s warrants, preferred and common
stock, as well as assumptions for volatility, remaining expected life, risk-free interest rate and, in some cases, credit spread.</p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.5in"> </p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"><b><i>Fair value of assets and liabilities</i></b></p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.5in"><b><i> </i></b></p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">Fair value is defined as the price that would be received from
selling an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date.
When determining the fair value for applicable assets and liabilities, we consider the principal or most advantageous market in
which we would transact and we consider assumptions market participants would use when pricing the asset or liability, such as
inherent risk, transfer restrictions, and risk of nonperformance. This guidance also establishes a fair value hierarchy to prioritize
inputs used in measuring fair value as follows:</p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.5in"> </p>
<table cellspacing="0" cellpadding="0" style="width: 100%">
<tr style="vertical-align: top">
<td style="width: 2%; font: 12pt Times New Roman, Times, Serif; text-align: center"><font style="font: 10pt Symbol">·</font></td>
<td style="width: 98%; font: 12pt Times New Roman, Times, Serif"><font style="font-size: 10pt">Level 1: Observable inputs such as quoted prices in active markets;</font></td></tr>
</table>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"> </p>
<table cellspacing="0" cellpadding="0" style="width: 100%">
<tr style="vertical-align: top">
<td style="width: 2%; font: 12pt Times New Roman, Times, Serif; text-align: center"><font style="font: 10pt Symbol">·</font></td>
<td style="width: 98%; font: 12pt Times New Roman, Times, Serif"><font style="font-size: 10pt">Level 2: Inputs, other than quoted prices in active markets, that are observable either directly or indirectly; and</font></td></tr>
</table>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"> </p>
<table cellspacing="0" cellpadding="0" style="width: 100%">
<tr style="vertical-align: top">
<td style="width: 2%; font: 12pt Times New Roman, Times, Serif; text-align: center"><font style="font: 10pt Symbol">·</font></td>
<td style="width: 98%; font: 12pt Times New Roman, Times, Serif"><font style="font-size: 10pt">Level 3: Unobservable inputs in which there is little or no market data, which require the reporting entity to develop its own assumptions.</font></td></tr>
</table>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.5in"> </p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"></p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">The Company’s financial instruments
are cash and cash equivalents, accounts receivable, notes receivable, notes payable, accounts payable and derivative liabilities.
The recorded values of cash equivalents and accounts payable approximate their fair values based on their short-term nature. The
fair value of derivative liabilities is estimated using option pricing models that are based on the individual characteristics
of our warrants, preferred and common stock, the derivative liability on the valuation date as well as assumptions for volatility,
remaining expected life, risk-free interest rate and, in some cases, credit spread. The derivative liabilities and earn-out liabilities
are the only Level 3 fair value measures.</p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"></p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.5in"> </p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">A summary of quantitative information with respect to valuation
methodology and significant unobservable inputs used for the Company’s warrant liabilities that are categorized within Level
3 of the fair value hierarchy as of March 31, 2016 and December 31, 2015 is as follows:</p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.5in"> </p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">A summary of quantitative information with respect to valuation
methodology and significant unobservable inputs used for the Company’s warrant liabilities that are categorized within Level
3 of the fair value hierarchy as of March 31, 2016 and December 31, 2015 is as follows:</p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.5in"> </p>
<table cellspacing="0" cellpadding="0" style="font: 12pt Times New Roman, Times, Serif; width: 100%">
<tr style="vertical-align: bottom">
<td style="padding-bottom: 1.5pt"><font style="font-size: 10pt">Date of Valuation</font></td>
<td colspan="3" style="border-bottom: black 1.5pt solid; text-align: center"><font style="font-size: 10pt">March 31, 2016</font></td>
<td nowrap="nowrap" style="padding-bottom: 1.5pt"> </td></tr>
<tr style="vertical-align: bottom; background-color: #CCEEFF">
<td><font style="font-size: 10pt">Stock Price</font></td>
<td style="text-align: right"> </td>
<td colspan="2" style="text-align: right"><font style="font-size: 10pt">$0.11</font></td>
<td nowrap="nowrap"> </td></tr>
<tr style="vertical-align: bottom; background-color: white">
<td style="width: 79%"><font style="font-size: 10pt">Volatility (Annual)</font></td>
<td style="width: 1%; text-align: right"> </td>
<td style="width: 1%"> </td>
<td style="width: 18%; text-align: right"><font style="font-size: 10pt">75%</font></td>
<td nowrap="nowrap" style="width: 1%"> </td></tr>
<tr style="vertical-align: bottom; background-color: #CCEEFF">
<td><font style="font-size: 10pt">Strike Price   $0.75</font></td>
<td style="text-align: right"> </td>
<td> </td>
<td nowrap="nowrap" style="text-align: right"><font style="font-size: 10pt">$0.15 and $0.75</font></td>
<td nowrap="nowrap"> </td></tr>
<tr style="vertical-align: bottom; background-color: white">
<td><font style="font-size: 10pt">Risk-free Rate</font></td>
<td style="text-align: right"> </td>
<td> </td>
<td style="text-align: right"><font style="font-size: 10pt"> 0.91%</font></td>
<td nowrap="nowrap"> </td></tr>
<tr style="vertical-align: bottom; background-color: #CCEEFF">
<td><font style="font-size: 10pt">Maturity Date   </font></td>
<td colspan="3" style="text-align: right"><font style="font-size: 10pt">9/30/16</font></td>
<td nowrap="nowrap"> </td></tr>
</table>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.5in"> </p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">At March 31, 2016 and December 31, 2015, the estimated Level
3 fair values of the liabilities measured on a recurring basis are as follows:</p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.5in"> </p>
<table cellspacing="0" cellpadding="0" style="font: 12pt Times New Roman, Times, Serif; width: 100%">
<tr>
<td style="vertical-align: bottom"> </td>
<td style="vertical-align: bottom"> </td>
<td style="vertical-align: bottom"> </td>
<td style="vertical-align: top"> </td>
<td colspan="10" style="vertical-align: bottom"> </td>
<td style="vertical-align: bottom"> </td></tr>
<tr>
<td style="vertical-align: bottom; padding-bottom: 1.5pt"> </td>
<td style="vertical-align: bottom; padding-bottom: 1.5pt"> </td>
<td style="vertical-align: bottom; padding-bottom: 1.5pt"> </td>
<td style="vertical-align: top; padding-bottom: 1.5pt"> </td>
<td colspan="10" style="vertical-align: bottom; border-bottom: black 1.5pt solid; text-align: center"><font style="font-size: 10pt">Fair Value Measurements at March 31, 2016:</font></td>
<td style="vertical-align: bottom; padding-bottom: 1.5pt"> </td></tr>
<tr>
<td style="vertical-align: bottom; padding-bottom: 1.5pt"> </td>
<td style="vertical-align: bottom; border-bottom: black 1.5pt solid"> </td>
<td style="vertical-align: bottom; border-bottom: black 1.5pt solid"><font style="font-size: 10pt"> Carrying Value</font></td>
<td style="vertical-align: top; padding-bottom: 1.5pt"> </td>
<td colspan="2" style="vertical-align: bottom; border-bottom: black 1.5pt solid; text-align: center"><font style="font-size: 10pt">Level 1</font></td>
<td style="vertical-align: top; padding-bottom: 1.5pt"> </td>
<td style="vertical-align: top; padding-bottom: 1.5pt"> </td>
<td colspan="2" style="vertical-align: bottom; border-bottom: black 1.5pt solid; text-align: center"><font style="font-size: 10pt">Level 2</font></td>
<td style="vertical-align: top; padding-bottom: 1.5pt"> </td>
<td style="vertical-align: top; padding-bottom: 1.5pt"> </td>
<td colspan="2" style="vertical-align: bottom; border-bottom: black 1.5pt solid; text-align: center"><font style="font-size: 10pt">Level 3</font></td>
<td style="padding-bottom: 1.5pt"> </td></tr>
<tr style="background-color: #CCEEFF">
<td style="vertical-align: bottom; width: 52%"><font style="font-size: 10pt">Derivative liability-warrants liability</font></td>
<td style="vertical-align: bottom; width: 1%"><font style="font-size: 10pt"> $</font></td>
<td style="vertical-align: bottom; width: 11%; text-align: right"><font style="font-size: 10pt"> 3,512,570</font></td>
<td style="vertical-align: top; width: 1%"> </td>
<td style="vertical-align: top; width: 1%"> </td>
<td style="vertical-align: top; width: 9%; text-align: right"><font style="font-size: 10pt"> -</font></td>
<td style="vertical-align: top; width: 1%"> </td>
<td style="vertical-align: top; width: 1%"> </td>
<td style="vertical-align: top; width: 1%"> </td>
<td style="vertical-align: top; width: 9%; text-align: right"><font style="font-size: 10pt"> -</font></td>
<td style="vertical-align: top; width: 1%"> </td>
<td style="vertical-align: top; width: 1%"> </td>
<td style="vertical-align: top; width: 1%"><font style="font-size: 10pt">$</font></td>
<td style="vertical-align: top; width: 9%; text-align: right"><font style="font-size: 10pt"> 3,512,570</font></td>
<td style="width: 1%"> </td></tr>
<tr style="background-color: white">
<td style="vertical-align: bottom; padding-bottom: 1.5pt"><font style="font-size: 10pt">Derivative liability – convertible options</font></td>
<td style="vertical-align: bottom; border-bottom: black 1.5pt solid"> </td>
<td style="vertical-align: bottom; border-bottom: black 1.5pt solid; text-align: right"><font style="font-size: 10pt">198,630</font></td>
<td style="vertical-align: top; padding-bottom: 1.5pt"> </td>
<td style="vertical-align: top; border-bottom: black 1.5pt solid"> </td>
<td style="vertical-align: top; border-bottom: black 1.5pt solid; text-align: right"><font style="font-size: 10pt">-</font></td>
<td style="vertical-align: top; padding-bottom: 1.5pt"> </td>
<td style="vertical-align: top; padding-bottom: 1.5pt"> </td>
<td style="vertical-align: top; border-bottom: black 1.5pt solid"> </td>
<td style="vertical-align: top; border-bottom: black 1.5pt solid; text-align: right"><font style="font-size: 10pt">-</font></td>
<td style="vertical-align: top; padding-bottom: 1.5pt"> </td>
<td style="vertical-align: top; padding-bottom: 1.5pt"> </td>
<td style="vertical-align: top; border-bottom: black 1.5pt solid"><font style="font-size: 10pt">$</font></td>
<td style="vertical-align: top; border-bottom: black 1.5pt solid; text-align: right"><font style="font-size: 10pt">198,630</font></td>
<td style="padding-bottom: 1.5pt"> </td></tr>
<tr style="background-color: #CCEEFF">
<td style="vertical-align: bottom; padding-bottom: 3pt"><font style="font-size: 10pt">Total securities</font></td>
<td style="vertical-align: bottom; border-bottom: black 2.25pt double"><font style="font-size: 10pt"> $</font></td>
<td style="vertical-align: bottom; border-bottom: black 2.25pt double; text-align: right"><font style="font-size: 10pt">3,711,200</font></td>
<td style="vertical-align: top; padding-bottom: 3pt"> </td>
<td style="vertical-align: top; border-bottom: black 2.25pt double"><font style="font-size: 10pt">$</font></td>
<td style="vertical-align: top; border-bottom: black 2.25pt double; text-align: right"><font style="font-size: 10pt">-</font></td>
<td style="vertical-align: top; padding-bottom: 3pt"> </td>
<td style="vertical-align: top; padding-bottom: 3pt"> </td>
<td style="vertical-align: top; border-bottom: black 2.25pt double"><font style="font-size: 10pt">$</font></td>
<td style="vertical-align: top; border-bottom: black 2.25pt double; text-align: right"><font style="font-size: 10pt">-</font></td>
<td style="vertical-align: top; padding-bottom: 3pt"> </td>
<td style="vertical-align: top; padding-bottom: 3pt"> </td>
<td style="vertical-align: top; border-bottom: black 2.25pt double"><font style="font-size: 10pt">$</font></td>
<td style="vertical-align: top; border-bottom: black 2.25pt double; text-align: right"><font style="font-size: 10pt">$3,711,200</font></td>
<td style="padding-bottom: 3pt"> </td></tr>
<tr style="background-color: white">
<td style="vertical-align: bottom"> </td>
<td style="vertical-align: bottom"> </td>
<td style="vertical-align: bottom"> </td>
<td style="vertical-align: top"> </td>
<td colspan="10" style="vertical-align: bottom"> </td>
<td> </td></tr>
<tr style="background-color: white">
<td style="vertical-align: bottom; padding-bottom: 1.5pt"> </td>
<td style="vertical-align: bottom; padding-bottom: 1.5pt"> </td>
<td style="vertical-align: bottom; padding-bottom: 1.5pt"> </td>
<td style="vertical-align: top; padding-bottom: 1.5pt"> </td>
<td colspan="10" style="vertical-align: bottom; border-bottom: black 1.5pt solid; text-align: center"><font style="font-size: 10pt">Fair Value Measurements at December 31, 2015:</font></td>
<td style="padding-bottom: 1.5pt"> </td></tr>
<tr style="background-color: white">
<td style="vertical-align: bottom; padding-bottom: 1.5pt"> </td>
<td style="vertical-align: bottom; border-bottom: black 1.5pt solid"> </td>
<td style="vertical-align: bottom; border-bottom: black 1.5pt solid"><font style="font-size: 10pt"> Carrying Value</font></td>
<td style="vertical-align: top; padding-bottom: 1.5pt"> </td>
<td colspan="2" style="vertical-align: bottom; border-bottom: black 1.5pt solid; text-align: center"><font style="font-size: 10pt">Level 1</font></td>
<td style="vertical-align: top; padding-bottom: 1.5pt"> </td>
<td style="vertical-align: top; padding-bottom: 1.5pt"> </td>
<td colspan="2" style="vertical-align: bottom; border-bottom: black 1.5pt solid; text-align: center"><font style="font-size: 10pt">Level 2</font></td>
<td style="vertical-align: top; padding-bottom: 1.5pt"> </td>
<td style="vertical-align: top; padding-bottom: 1.5pt"> </td>
<td colspan="2" style="vertical-align: bottom; border-bottom: black 1.5pt solid; text-align: center"><font style="font-size: 10pt">Level 3</font></td>
<td style="padding-bottom: 1.5pt"> </td></tr>
<tr style="background-color: #CCEEFF">
<td style="vertical-align: bottom"><font style="font-size: 10pt">Earn-out liability</font></td>
<td style="vertical-align: bottom"><font style="font-size: 10pt"> $</font></td>
<td style="vertical-align: bottom; text-align: right"><font style="font-size: 10pt">      -</font></td>
<td style="vertical-align: top"> </td>
<td style="vertical-align: top"><font style="font-size: 10pt">$</font></td>
<td style="vertical-align: top; text-align: right"><font style="font-size: 10pt">-</font></td>
<td style="vertical-align: top"> </td>
<td style="vertical-align: top"> </td>
<td style="vertical-align: top"><font style="font-size: 10pt">$</font></td>
<td style="vertical-align: top; text-align: right"><font style="font-size: 10pt">-</font></td>
<td style="vertical-align: top"> </td>
<td style="vertical-align: top"> </td>
<td style="vertical-align: top"><font style="font-size: 10pt">$</font></td>
<td style="vertical-align: top; text-align: right"><font style="font-size: 10pt">      -</font></td>
<td> </td></tr>
<tr style="background-color: white">
<td style="vertical-align: bottom; padding-bottom: 1.5pt"><font style="font-size: 10pt">Derivative liability – convertible options</font></td>
<td style="vertical-align: bottom; border-bottom: black 1.5pt solid"> </td>
<td style="vertical-align: bottom; border-bottom: black 1.5pt solid; text-align: right"><font style="font-size: 10pt">179</font></td>
<td style="vertical-align: top; padding-bottom: 1.5pt"> </td>
<td style="vertical-align: top; border-bottom: black 1.5pt solid"><font style="font-size: 10pt">$</font></td>
<td style="vertical-align: top; border-bottom: black 1.5pt solid; text-align: right"><font style="font-size: 10pt">-</font></td>
<td style="vertical-align: top; padding-bottom: 1.5pt"> </td>
<td style="vertical-align: top; padding-bottom: 1.5pt"> </td>
<td style="vertical-align: top; border-bottom: black 1.5pt solid"><font style="font-size: 10pt">$</font></td>
<td style="vertical-align: top; border-bottom: black 1.5pt solid; text-align: right"><font style="font-size: 10pt">-</font></td>
<td style="vertical-align: top; padding-bottom: 1.5pt"> </td>
<td style="vertical-align: top; padding-bottom: 1.5pt"> </td>
<td style="vertical-align: top; border-bottom: black 1.5pt solid"><font style="font-size: 10pt">$</font></td>
<td style="vertical-align: top; border-bottom: black 1.5pt solid; text-align: right"><font style="font-size: 10pt">        179</font></td>
<td style="padding-bottom: 1.5pt"> </td></tr>
<tr style="background-color: #CCEEFF">
<td style="vertical-align: bottom; padding-bottom: 3pt"><font style="font-size: 10pt">Total securities</font></td>
<td style="vertical-align: bottom; border-bottom: black 2.25pt double"><font style="font-size: 10pt"> $</font></td>
<td style="vertical-align: bottom; border-bottom: black 2.25pt double; text-align: right"><font style="font-size: 10pt">179</font></td>
<td style="vertical-align: top; padding-bottom: 3pt"> </td>
<td style="vertical-align: top; border-bottom: black 2.25pt double"><font style="font-size: 10pt">$</font></td>
<td style="vertical-align: top; border-bottom: black 2.25pt double; text-align: right"><font style="font-size: 10pt">-</font></td>
<td style="vertical-align: top; padding-bottom: 3pt"> </td>
<td style="vertical-align: top; padding-bottom: 3pt"> </td>
<td style="vertical-align: top; border-bottom: black 2.25pt double"><font style="font-size: 10pt">$</font></td>
<td style="vertical-align: top; border-bottom: black 2.25pt double; text-align: right"><font style="font-size: 10pt">-</font></td>
<td style="vertical-align: top; padding-bottom: 3pt"> </td>
<td style="vertical-align: top; padding-bottom: 3pt"> </td>
<td style="vertical-align: top; border-bottom: black 2.25pt double"><font style="font-size: 10pt">$</font></td>
<td style="vertical-align: top; border-bottom: black 2.25pt double; text-align: right"><font style="font-size: 10pt">      179</font></td>
<td style="padding-bottom: 3pt"> </td></tr>
</table>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"> </p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.5in"> </p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">The following tables present the activity for Level 3 liabilities
for the three months ended March 31, 2016:</p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.5in"> </p>
<table cellspacing="0" cellpadding="0" style="font: 12pt Times New Roman, Times, Serif; width: 100%">
<tr style="vertical-align: bottom">
<td colspan="16" style="text-decoration: underline; text-align: center"><font style="font-size: 10pt"><b><u>Fair Value Measurements Using Level 3 Inputs</u></b></font></td>
<td nowrap="nowrap"> </td></tr>
<tr style="vertical-align: bottom">
<td colspan="16"> </td>
<td nowrap="nowrap"> </td></tr>
<tr style="vertical-align: bottom">
<td style="padding-bottom: 1.5pt"> </td>
<td style="padding-bottom: 1.5pt"> </td>
<td colspan="3" style="border-bottom: black 1.5pt solid">
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center">Warrant</p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center">Derivative</p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center">Liability</p></td>
<td style="padding-bottom: 1.5pt"> </td>
<td colspan="2" style="border-bottom: black 1.5pt solid">
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center">Notes</p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center">Conversion</p></td>
<td nowrap="nowrap" style="padding-bottom: 1.5pt"> </td>
<td style="padding-bottom: 1.5pt"> </td>
<td colspan="2" style="border-bottom: black 1.5pt solid">
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center">Liability</p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center">Earn-out</p></td>
<td nowrap="nowrap" style="padding-bottom: 1.5pt"> </td>
<td style="padding-bottom: 1.5pt"> </td>
<td colspan="2" style="border-bottom: black 1.5pt solid; text-align: center"><font style="font-size: 10pt">Total</font></td>
<td nowrap="nowrap" style="padding-bottom: 1.5pt"> </td></tr>
<tr style="vertical-align: bottom; background-color: #CCEEFF">
<td style="width: 52%"><font style="font-size: 10pt">Balance - December 31, 2015</font></td>
<td style="width: 1%; text-align: right"> </td>
<td style="width: 1%"><font style="font-size: 10pt">$</font></td>
<td style="width: 9%; text-align: right"><font style="font-size: 10pt">-</font></td>
<td nowrap="nowrap" style="width: 1%"> </td>
<td style="width: 1%; text-align: right"> </td>
<td style="width: 1%"> </td>
<td style="width: 9%; text-align: right"><font style="font-size: 10pt">179</font></td>
<td nowrap="nowrap" style="width: 1%"> </td>
<td style="width: 1%; text-align: right"> </td>
<td style="width: 1%"> </td>
<td style="width: 9%; text-align: right"><font style="font-size: 10pt">-</font></td>
<td nowrap="nowrap" style="width: 1%"> </td>
<td style="width: 1%; text-align: right"> </td>
<td style="width: 1%"><font style="font-size: 10pt">$</font></td>
<td style="width: 9%; text-align: right"><font style="font-size: 10pt">179</font></td>
<td nowrap="nowrap" style="width: 1%"> </td></tr>
<tr style="vertical-align: bottom; background-color: white">
<td style="padding-left: 11pt"><font style="font-size: 10pt; letter-spacing: 9pt">   </font><font style="font-size: 10pt"> Additions during the period</font></td>
<td style="text-align: right"> </td>
<td> </td>
<td style="text-align: right"><font style="font-size: 10pt">4,015,675</font></td>
<td nowrap="nowrap"> </td>
<td style="text-align: right"> </td>
<td> </td>
<td style="text-align: right"><font style="font-size: 10pt">198,630</font></td>
<td nowrap="nowrap"> </td>
<td style="text-align: right"> </td>
<td> </td>
<td style="text-align: right"><font style="font-size: 10pt">-</font></td>
<td nowrap="nowrap"> </td>
<td style="text-align: right"> </td>
<td> </td>
<td style="text-align: right"><font style="font-size: 10pt">4,214,305</font></td>
<td nowrap="nowrap"> </td></tr>
<tr style="vertical-align: bottom; background-color: #CCEEFF">
<td><font style="font-size: 10pt; letter-spacing: 9pt">   </font><font style="font-size: 10pt"> Total Unrealized (gains) or losses include in net loss</font></td>
<td style="text-align: right"> </td>
<td> </td>
<td style="text-align: right"><font style="font-size: 10pt">(503,105</font></td>
<td nowrap="nowrap"><font style="font-size: 10pt">)</font></td>
<td style="text-align: right"> </td>
<td> </td>
<td style="text-align: right"><font style="font-size: 10pt">(179</font></td>
<td nowrap="nowrap"><font style="font-size: 10pt">) </font></td>
<td style="text-align: right"> </td>
<td> </td>
<td style="text-align: right"><font style="font-size: 10pt">-</font></td>
<td nowrap="nowrap"> </td>
<td style="text-align: right"> </td>
<td> </td>
<td style="text-align: right"><font style="font-size: 10pt">(503,284</font></td>
<td nowrap="nowrap"><font style="font-size: 10pt">) </font></td></tr>
<tr style="vertical-align: bottom; background-color: white">
<td><font style="font-size: 10pt; letter-spacing: 9pt">   </font><font style="font-size: 10pt"> Settlements during the period</font></td>
<td style="text-align: right"> </td>
<td> </td>
<td style="text-align: right"><font style="font-size: 10pt">-</font></td>
<td nowrap="nowrap"> </td>
<td style="text-align: right"> </td>
<td> </td>
<td style="text-align: right"><font style="font-size: 10pt">-</font></td>
<td nowrap="nowrap"> </td>
<td style="text-align: right"> </td>
<td> </td>
<td style="text-align: right"><font style="font-size: 10pt">-</font></td>
<td nowrap="nowrap"> </td>
<td style="text-align: right"> </td>
<td> </td>
<td style="text-align: right"><font style="font-size: 10pt">-</font></td>
<td nowrap="nowrap"> </td></tr>
<tr style="vertical-align: bottom; background-color: #CCEEFF">
<td><font style="letter-spacing: 9pt"> <font style="font-size: 10pt">  </font></font><font style="font-size: 10pt"> Transfers in and/or out of Level 3</font></td>
<td style="padding-bottom: 1.5pt; text-align: right"> </td>
<td style="border-bottom: black 1.5pt solid"> </td>
<td style="border-bottom: black 1.5pt solid; text-align: right"><font style="font-size: 10pt">-</font></td>
<td nowrap="nowrap" style="padding-bottom: 1.5pt"> </td>
<td style="padding-bottom: 1.5pt; text-align: right"> </td>
<td style="border-bottom: black 1.5pt solid"> </td>
<td style="border-bottom: black 1.5pt solid; text-align: right"><font style="font-size: 10pt">-</font></td>
<td nowrap="nowrap" style="padding-bottom: 1.5pt"> </td>
<td style="padding-bottom: 1.5pt; text-align: right"> </td>
<td style="border-bottom: black 1.5pt solid"> </td>
<td style="border-bottom: black 1.5pt solid; text-align: right"><font style="font-size: 10pt">-</font></td>
<td nowrap="nowrap" style="padding-bottom: 1.5pt"> </td>
<td style="padding-bottom: 1.5pt; text-align: right"> </td>
<td style="border-bottom: black 1.5pt solid"> </td>
<td style="border-bottom: black 1.5pt solid; text-align: right"><font style="font-size: 10pt">-</font></td>
<td nowrap="nowrap" style="padding-bottom: 1.5pt"> </td></tr>
<tr style="vertical-align: bottom; background-color: white">
<td style="padding-bottom: 3pt"><font style="font-size: 10pt">Balance - March 31, 2016</font></td>
<td style="padding-bottom: 3pt; text-align: right"> </td>
<td style="border-bottom: black 2.25pt double"><font style="font-size: 10pt">$</font></td>
<td style="border-bottom: black 2.25pt double; text-align: right"><font style="font-size: 10pt">3,512,570</font></td>
<td nowrap="nowrap" style="padding-bottom: 3pt"> </td>
<td style="padding-bottom: 3pt; text-align: right"> </td>
<td style="border-bottom: black 2.25pt double"> </td>
<td style="border-bottom: black 2.25pt double; text-align: right"><font style="font-size: 10pt">198,630</font></td>
<td nowrap="nowrap" style="padding-bottom: 3pt"> </td>
<td style="padding-bottom: 3pt; text-align: right"> </td>
<td style="border-bottom: black 2.25pt double"> </td>
<td style="border-bottom: black 2.25pt double; text-align: right"><font style="font-size: 10pt">-</font></td>
<td nowrap="nowrap" style="padding-bottom: 3pt"> </td>
<td style="padding-bottom: 3pt; text-align: right"> </td>
<td style="border-bottom: black 2.25pt double"><font style="font-size: 10pt">$</font></td>
<td style="border-bottom: black 2.25pt double; text-align: right"><font style="font-size: 10pt">3,711,200</font></td>
<td nowrap="nowrap" style="padding-bottom: 3pt"> </td></tr>
</table>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.5in"> </p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"><b><i>Advertising</i></b></p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.5in"><b><i> </i></b></p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">The Company expenses advertising costs as incurred. The Company
has no existing arrangements under which the Company provides or receives advertising services from others for any consideration
other than cash. Advertising expenses from continuing operations (primarily in the form of Internet direct marketing) totaled $31,809
and $69,818 for the three months ended March 31, 2016 and 2015, respectively.</p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"> </p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"><b><i>Litigation</i></b></p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.5in"><b><i> </i></b></p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">From time to time, the Company may become
involved in litigation and other legal actions. The Company estimates the range of liability related to any pending litigation
where the amount and range of loss can be estimated. The Company records its best estimate of a loss when the loss is considered
probable. Where a liability is probable and there is a range of estimated losses with no best estimate in the range, the Company
records a charge equal to at least the minimum estimated liability for a loss contingency when both of the following conditions
are met: (i) information available prior to issuance of the financial statements indicates that it is probable that an asset had
been impaired or a liability had been incurred at the date of the financial statements and (ii) the range of loss can be reasonably
estimated. </p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"> </p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"><b><i>Goodwill</i></b></p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"> </p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">The Company accounts for goodwill under ASC 350 “Intangibles – Goodwill and Other” (“ASC 350”). ASC 350 requires
an evaluation of impairment by assessing qualitative factors, and if necessary, applying a fair-value based test. The goodwill
impairment test requires qualitative analysis to determine whether is it more likely than not that the fair value of a reporting
unit is less than the carrying amount, including goodwill. An indication of impairment through analysis of these qualitative factors
initiates a two-step process, which requires management to make judgments in determining what assumptions to use in the calculation.
The first step of the process consists of estimating the fair value of the Company’s reporting units based on discounted
cash flow models using revenue and profit forecasts and comparing the estimated fair values with the carrying values of the Company’s
reporting units which include the goodwill. If the estimated fair values are less than the carrying values, a second step is performed
to compute the amount of the impairment by determining an “implied fair value” of goodwill.  The determination
of the Company’s “implied fair value” requires the Company to allocate the estimated fair value to the assets
and liabilities of the reporting unit. Any unallocated fair value represents the “implied fair value” of goodwill,
which is compared to the corresponding carrying value. The Company tested goodwill impairment at December 31, 2015 and concluded
that goodwill was fully impaired. Goodwill was written down in the amount of $3,202,276.</p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"><b><i> </i></b></p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"><b><i>Intangible assets</i></b></p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"> </p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">Intangible assets consist of intellectual
property/technology, customer lists, and trade-name/marks acquired in business combinations under the purchase method of accounting
are recorded at fair value net of accumulated amortization since the acquisition date. Amortization is calculated using the straight
line method over the estimated useful lives at the following annual rates:</p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.5in"> </p>
<table cellspacing="0" cellpadding="0" style="font: 12pt Times New Roman, Times, Serif; width: 100%">
<tr style="vertical-align: bottom">
<td> </td>
<td> </td>
<td colspan="2" style="text-align: center"><font style="font-size: 10pt"><b>Useful Lives</b></font></td>
<td nowrap="nowrap"> </td></tr>
<tr style="vertical-align: bottom; background-color: rgb(204,238,255)">
<td style="width: 89%"><font style="font-size: 10pt">IP/technology</font></td>
<td style="width: 1%"> </td>
<td style="width: 1%"> </td>
<td style="width: 8%; text-align: right"><font style="font-size: 10pt">10</font></td>
<td nowrap="nowrap" style="width: 1%"> </td></tr>
<tr style="vertical-align: bottom; background-color: White">
<td><font style="font-size: 10pt">Trade-name/marks</font></td>
<td> </td>
<td> </td>
<td style="text-align: right"><font style="font-size: 10pt">10</font></td>
<td nowrap="nowrap"> </td></tr>
</table>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.5in"> </p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">The Company reviews its finite-lived intangible
assets for impairment whenever events or changes in circumstances indicate that the carrying amount of finite-lived intangible
asset may not be recoverable. Recoverability of a finite-lived intangible asset is measured by a comparison of its carrying amount
to the undiscounted future cash flows expected to be generated by the asset. If the asset is considered to be impaired, the impairment
to be recognized is measured by the amount by which the carrying amount of the asset exceeds the fair value of the asset, which
is determined based on discounted cash flows.  Amortization of intangible assets was $48,285 and $83,899 for the three
months ended March 31, 2016 and 2015, respectively.</p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.5in"> </p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">According to the Financial Accounting Standards
Board Accounting Standards Codification (“ASC”) 360 (“ASC 360”), a long-lived asset (group) that is held
and used should be reviewed for impairment whenever events or changes in circumstances indicate that the carrying amount (book
value) of the long-lived asset (group) might not be recoverable (i.e. information indicates that an impairment might exist). As
a result, companies are not required to perform an impairment analysis (i.e. test the asset (group) for recoverability and potentially
measure an impairment loss) if indicators of impairment are not present. Instead, entities would assess the need the need for an
impairment write-down only if an indicator of impairment is present. Companies are responsible for routinely assessing whether
impairment indicators are present.  Based on the impairment analysis completed, it was determined that our Customer lists
were fully impaired. This resulted in the write down of these intangible assets by $1,189,246 at December 31, 2015.</p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center; text-indent: 0.5in"> </p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"><b><i>Recently Issued Accounting Pronouncements</i></b></p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.5in"> </p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">In February 2016, the FASB issued ASU 2016-02,
Leases which amended guidance for lease arrangements in order to increase transparency and comparability by providing additional
information to users of financial statements regarding an entity's leasing activities. The revised guidance seeks to achieve this
objective by requiring reporting entities to recognize lease assets and lease liabilities on the balance sheet for substantially
all lease arrangements. The guidance, which is required to be adopted in the first quarter of 2019, will be applied on a modified
retrospective basis beginning with the earliest period presented. Early adoption is permitted.  We are currently evaluating
the impact of adopting this guidance on our consolidated financial statements.</p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in"> </p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">On May 28, 2014, the FASB issued ASU 2014-09,
Revenue from Contracts with Customers (Topic 606), with an effective date for annual reporting periods beginning after December
15, 2016, including interim periods within that reporting period, for public business entities, certain not-for-profit entities,
and certain employee benefit plans. The effective date for ASU 2014-09 was deferred by one year through the issuance of ASU 2015-14,
Revenue from Contracts with Customers – Deferral of the Effective Date, to annual reporting periods beginning after December
15, 2017, including interim reporting periods within that reporting period. Earlier application is permitted only as of annual
reporting periods beginning after December 15, 2016, including interim reporting periods within that reporting period. The Company
is evaluating the impact, if any, the pronouncement will have on both historical and future financial positions and results of
operations.</p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"> </p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">In August 2014, the FASB issued ASU No. 2014-15, <i>Presentation
of Financial Statements—Going Concern </i>(“ASU 2014-15”)<i>,</i> which states management should evaluate
whether there are conditions or events, considered in the aggregate, that raise a substantial doubt about the entity’s ability
to continue as a going concern within one year after the date that the financial statements are issued. Management’s
evaluation should be based on relevant conditions and events that are known and likely to occur at the date that the financial
statements are issued. ASU 2014-15 will be effective for the annual period ending after December 15, 2016, and for annual
periods and interim periods thereafter, however, early application is permitted. Management does not expect the adoption
of ASU 2014-15 to have a material impact on the Company’s consolidated financial statements, although there may be additional
disclosures upon adoption.</p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"> </p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">On March 30, 2016, the FASB issued ASU 2016-09, <i>Compensation—Stock Compensation (Topic 718):
Improvements to Employee Share-Based Payment Accounting </i>(“ASU 2016-09”)<i>. </i>ASU 2016-09 simplifies several aspects
of the accounting for employee share-based payment transactions including the accounting for income taxes, forfeitures, and statutory
tax withholding requirements, as well as classification in the statement of cash flows.  ASU 2016-09 will take effect
for fiscal years, and interim periods within those fiscal years, beginning after December 15, 2017, with early application permitted.
Management does not expect the adoption of ASU 2016-09 to have a material impact on the Company’s consolidated financial
statements, although there may be additional disclosures upon adoption.</p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">  </p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"><b><i>Segments</i></b></p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.5in"> </p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">The Company operates in one reportable
segment now due to the discontinuance of its Card Division on November 26, 2014.</p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">Accordingly, no segment disclosures have
been presented herein.</p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.5in"></p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"></p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">Management reviews accounts receivable,
short-term and long-term notes receivable on a monthly basis to determine if any receivables are potentially uncollectible. An
allowance for doubtful accounts is determined based on a combination of historical experience, length of time outstanding, customer
credit worthiness, and current economic trends. We recorded a bad debt expense of $26,526 during the three months ended March 31,
2016 and wrote off uncollectable accounts during the three months ended March 31, 2016 in the amount of $23,779. As of March 31,
2016, the Company has recorded an allowance for doubtful accounts of $1,392,630.</p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in"> </p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">Notes receivable aged over 30 days past due are considered
delinquent and notes receivable aged over 60 days past due with known collection issues are placed on non-accrual status. Interest
revenue is not recognized on notes receivable while on non-accrual status. Cash payments received on non-accrual receivables are
applied towards the principal. When notes receivable on non-accrual status are again less than 60 days past due, recognition of
interest revenue for notes receivable is resumed.  The Company charges interest rates on notes receivable averaging
14%.  The Company recorded $14,319 in interest income for the three months ended March 31, 2016.</p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"> </p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">The allowance for doubtful accounts on long-term receivables
is the Company's best estimate of the amount of probable credit losses related to the Company's existing note receivables.  The
allowance for doubtful accounts is the Company's best estimate of probable credit losses related to trade receivables and notes
receivable based upon the aging of the receivables, historical collection data, internal assessments of credit quality and the
economic conditions in the business subprime industry, as well as in the economy as a whole. The Company charges off uncollectable
amounts against the reserve in the period in which it determines they are uncollectable. Unearned income on notes receivable is
amortized using the effective interest method.  The Company determines the allowance for doubtful accounts related to
notes receivable based upon a reserve for known collection issues, as well as a reserve based upon aging, both of which are based
upon history of such losses and current economic conditions. Based upon the Company's methodology, the notes receivable balances
with reserves and the reserves associated with those balances are as follows:</p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"> </p>
<table cellspacing="0" cellpadding="0" style="font: 12pt Times New Roman, Times, Serif; width: 100%">
<tr style="vertical-align: bottom">
<td style="padding-bottom: 1.5pt"> </td>
<td style="padding-bottom: 1.5pt"> </td>
<td colspan="22" style="border-bottom: black 1.5pt solid; text-align: center"><font style="font-size: 10pt"><b>March 31, 2016</b></font></td>
<td nowrap="nowrap" style="padding-bottom: 1.5pt"> </td></tr>
<tr style="vertical-align: bottom">
<td style="padding-bottom: 1.5pt"> </td>
<td style="padding-bottom: 1.5pt"> </td>
<td colspan="6" style="border-bottom: black 1.5pt solid; text-align: center"><font style="font-size: 10pt">Gross</font></td>
<td nowrap="nowrap" style="padding-bottom: 1.5pt"> </td>
<td style="padding-bottom: 1.5pt"> </td>
<td colspan="6" style="border-bottom: black 1.5pt solid; text-align: center"><font style="font-size: 10pt">Reserve</font></td>
<td nowrap="nowrap" style="padding-bottom: 1.5pt"> </td>
<td style="padding-bottom: 1.5pt"> </td>
<td colspan="6" style="border-bottom: black 1.5pt solid; text-align: center"><font style="font-size: 10pt">Net</font></td>
<td nowrap="nowrap" style="padding-bottom: 1.5pt"> </td></tr>
<tr style="vertical-align: bottom">
<td style="padding-bottom: 1.5pt"> </td>
<td style="padding-bottom: 1.5pt"> </td>
<td colspan="2" style="border-bottom: black 1.5pt solid; text-align: center"><font style="font-size: 10pt">Current</font></td>
<td nowrap="nowrap" style="padding-bottom: 1.5pt"> </td>
<td style="padding-bottom: 1.5pt"> </td>
<td colspan="2" style="border-bottom: black 1.5pt solid; text-align: center"><font style="font-size: 10pt">Long-Term</font></td>
<td nowrap="nowrap" style="padding-bottom: 1.5pt"> </td>
<td style="padding-bottom: 1.5pt"> </td>
<td colspan="2" style="border-bottom: black 1.5pt solid; text-align: center"><font style="font-size: 10pt">Current</font></td>
<td nowrap="nowrap" style="padding-bottom: 1.5pt"> </td>
<td style="padding-bottom: 1.5pt"> </td>
<td colspan="2" style="border-bottom: black 1.5pt solid; text-align: center"><font style="font-size: 10pt">Long-Term</font></td>
<td nowrap="nowrap" style="padding-bottom: 1.5pt"> </td>
<td style="padding-bottom: 1.5pt"> </td>
<td colspan="2" style="border-bottom: black 1.5pt solid; text-align: center"><font style="font-size: 10pt">Current</font></td>
<td nowrap="nowrap" style="padding-bottom: 1.5pt"> </td>
<td style="padding-bottom: 1.5pt"> </td>
<td colspan="2" style="border-bottom: black 1.5pt solid; text-align: center"><font style="font-size: 10pt">Long-Term</font></td>
<td nowrap="nowrap" style="padding-bottom: 1.5pt"> </td></tr>
<tr style="vertical-align: bottom; background-color: #CCEEFF">
<td style="width: 28%"><font style="font-size: 10pt"> Customer Notes Receivable</font></td>
<td style="width: 1%; text-align: right"> </td>
<td style="width: 1%"><font style="font-size: 10pt"> $</font></td>
<td style="width: 9%; text-align: right"><font style="font-size: 10pt">951,251</font></td>
<td nowrap="nowrap" style="width: 1%"> </td>
<td style="width: 1%; text-align: right"> </td>
<td style="width: 1%"><font style="font-size: 10pt"> $</font></td>
<td style="width: 9%; text-align: right"><font style="font-size: 10pt">467,696</font></td>
<td nowrap="nowrap" style="width: 1%"> </td>
<td style="width: 1%; text-align: right"> </td>
<td style="width: 1%"><font style="font-size: 10pt"> $</font></td>
<td style="width: 9%; text-align: right"><font style="font-size: 10pt">748,839</font></td>
<td nowrap="nowrap" style="width: 1%"> </td>
<td style="width: 1%; text-align: right"> </td>
<td style="width: 1%"><font style="font-size: 10pt"> $</font></td>
<td style="width: 9%; text-align: right"><font style="font-size: 10pt">345,285</font></td>
<td nowrap="nowrap" style="width: 1%"> </td>
<td style="width: 1%; text-align: right"> </td>
<td style="width: 1%"><font style="font-size: 10pt"> $</font></td>
<td style="width: 9%; text-align: right"><font style="font-size: 10pt">202,529</font></td>
<td nowrap="nowrap" style="width: 1%"> </td>
<td style="width: 1%; text-align: right"> </td>
<td style="width: 1%"><font style="font-size: 10pt"> $</font></td>
<td style="width: 9%; text-align: right"><font style="font-size: 10pt">122,411</font></td>
<td nowrap="nowrap" style="width: 1%"> </td></tr>
<tr style="vertical-align: bottom; background-color: white">
<td><font style="font-size: 10pt"> Accounts Receivable</font></td>
<td style="text-align: right"> </td>
<td><font style="font-size: 10pt"> $</font></td>
<td style="text-align: right"><font style="font-size: 10pt">584,762</font></td>
<td nowrap="nowrap"> </td>
<td style="text-align: right"> </td>
<td><font style="font-size: 10pt"> $</font></td>
<td style="text-align: right"><font style="font-size: 10pt">-</font></td>
<td nowrap="nowrap"> </td>
<td style="text-align: right"> </td>
<td><font style="font-size: 10pt"> $</font></td>
<td style="text-align: right"><font style="font-size: 10pt">298,506</font></td>
<td nowrap="nowrap"> </td>
<td style="text-align: right"> </td>
<td><font style="font-size: 10pt"> $</font></td>
<td style="text-align: right"><font style="font-size: 10pt">-</font></td>
<td nowrap="nowrap"> </td>
<td style="text-align: right"> </td>
<td><font style="font-size: 10pt"> $</font></td>
<td style="text-align: right"><font style="font-size: 10pt">286,256</font></td>
<td nowrap="nowrap"> </td>
<td style="text-align: right"> </td>
<td><font style="font-size: 10pt"> $</font></td>
<td style="text-align: right"><font style="font-size: 10pt">-</font></td>
<td nowrap="nowrap"> </td></tr>
<tr style="vertical-align: bottom; background-color: white">
<td> </td>
<td> </td>
<td> </td>
<td style="text-align: right"> </td>
<td nowrap="nowrap"> </td>
<td> </td>
<td> </td>
<td style="text-align: right"> </td>
<td nowrap="nowrap"> </td>
<td> </td>
<td> </td>
<td style="text-align: right"> </td>
<td nowrap="nowrap"> </td>
<td> </td>
<td> </td>
<td style="text-align: right"> </td>
<td nowrap="nowrap"> </td>
<td> </td>
<td> </td>
<td style="text-align: right"> </td>
<td nowrap="nowrap"> </td>
<td> </td>
<td> </td>
<td style="text-align: right"> </td>
<td nowrap="nowrap"> </td></tr>
<tr style="vertical-align: bottom; background-color: white">
<td style="padding-bottom: 1.5pt"> </td>
<td style="padding-bottom: 1.5pt"> </td>
<td colspan="22" style="border-bottom: black 1.5pt solid; text-align: center"><font style="font-size: 10pt"><b>December 31, 2015</b></font></td>
<td style="padding-bottom: 1.5pt; text-align: right"> </td></tr>
<tr style="vertical-align: bottom; background-color: white">
<td style="padding-bottom: 1.5pt"> </td>
<td style="padding-bottom: 1.5pt"> </td>
<td colspan="5" style="border-bottom: black 1.5pt solid; text-align: center"><font style="font-size: 10pt">Gross</font></td>
<td style="border-bottom: black 1.5pt solid; text-align: right"> </td>
<td nowrap="nowrap" style="padding-bottom: 1.5pt"> </td>
<td style="padding-bottom: 1.5pt"> </td>
<td colspan="5" style="border-bottom: black 1.5pt solid; text-align: center"><font style="font-size: 10pt">Reserve</font></td>
<td style="border-bottom: black 1.5pt solid; text-align: right"> </td>
<td nowrap="nowrap" style="padding-bottom: 1.5pt"> </td>
<td style="padding-bottom: 1.5pt"> </td>
<td colspan="6" style="border-bottom: black 1.5pt solid; text-align: center"><font style="font-size: 10pt">Net</font></td>
<td nowrap="nowrap" style="padding-bottom: 1.5pt"> </td></tr>
<tr style="vertical-align: bottom; background-color: white">
<td style="padding-bottom: 1.5pt"> </td>
<td style="padding-bottom: 1.5pt"> </td>
<td colspan="2" style="border-bottom: black 1.5pt solid; text-align: center"><font style="font-size: 10pt">Current</font></td>
<td nowrap="nowrap" style="padding-bottom: 1.5pt"> </td>
<td style="padding-bottom: 1.5pt"> </td>
<td colspan="2" style="border-bottom: black 1.5pt solid; text-align: center"><font style="font-size: 10pt">Long-Term</font></td>
<td nowrap="nowrap" style="padding-bottom: 1.5pt"> </td>
<td style="padding-bottom: 1.5pt"> </td>
<td colspan="2" style="border-bottom: black 1.5pt solid; text-align: center"><font style="font-size: 10pt">Current</font></td>
<td nowrap="nowrap" style="padding-bottom: 1.5pt"> </td>
<td style="padding-bottom: 1.5pt"> </td>
<td colspan="2" style="border-bottom: black 1.5pt solid; text-align: center"><font style="font-size: 10pt">Long-Term</font></td>
<td nowrap="nowrap" style="padding-bottom: 1.5pt"> </td>
<td style="padding-bottom: 1.5pt"> </td>
<td colspan="2" style="border-bottom: black 1.5pt solid; text-align: center"><font style="font-size: 10pt">Current</font></td>
<td nowrap="nowrap" style="padding-bottom: 1.5pt"> </td>
<td style="padding-bottom: 1.5pt"> </td>
<td colspan="2" style="border-bottom: black 1.5pt solid; text-align: center"><font style="font-size: 10pt">Long-Term</font></td>
<td nowrap="nowrap" style="padding-bottom: 1.5pt"> </td></tr>
<tr style="vertical-align: bottom; background-color: #CCEEFF">
<td><font style="font-size: 10pt"> Customer Notes Receivable</font></td>
<td style="text-align: right"> </td>
<td><font style="font-size: 10pt"> $</font></td>
<td style="text-align: right"><font style="font-size: 10pt">908,590</font></td>
<td nowrap="nowrap"> </td>
<td style="text-align: right"> </td>
<td><font style="font-size: 10pt"> $</font></td>
<td style="text-align: right"><font style="font-size: 10pt">661,371</font></td>
<td nowrap="nowrap"> </td>
<td style="text-align: right"> </td>
<td><font style="font-size: 10pt"> $</font></td>
<td style="text-align: right"><font style="font-size: 10pt">632,422</font></td>
<td nowrap="nowrap"> </td>
<td style="text-align: right"> </td>
<td><font style="font-size: 10pt"> $</font></td>
<td style="text-align: right"><font style="font-size: 10pt">461,702</font></td>
<td nowrap="nowrap"> </td>
<td style="text-align: right"> </td>
<td><font style="font-size: 10pt"> $</font></td>
<td style="text-align: right"><font style="font-size: 10pt">276,168</font></td>
<td nowrap="nowrap"> </td>
<td style="text-align: right"> </td>
<td><font style="font-size: 10pt"> $</font></td>
<td style="text-align: right"><font style="font-size: 10pt">199,669</font></td>
<td nowrap="nowrap"> </td></tr>
<tr style="vertical-align: bottom; background-color: white">
<td><font style="font-size: 10pt"> Accounts Receivable</font></td>
<td style="text-align: right"> </td>
<td><font style="font-size: 10pt"> $</font></td>
<td style="text-align: right"><font style="font-size: 10pt">437,589</font></td>
<td nowrap="nowrap"> </td>
<td style="text-align: right"> </td>
<td><font style="font-size: 10pt"> $</font></td>
<td style="text-align: right"><font style="font-size: 10pt">-</font></td>
<td nowrap="nowrap"> </td>
<td style="text-align: right"> </td>
<td><font style="font-size: 10pt"> $</font></td>
<td style="text-align: right"><font style="font-size: 10pt">295,759</font></td>
<td nowrap="nowrap"> </td>
<td style="text-align: right"> </td>
<td><font style="font-size: 10pt"> $</font></td>
<td style="text-align: right"><font style="font-size: 10pt">-</font></td>
<td nowrap="nowrap"> </td>
<td style="text-align: right"> </td>
<td><font style="font-size: 10pt"> $</font></td>
<td style="text-align: right"><font style="font-size: 10pt">141,830</font></td>
<td nowrap="nowrap"> </td>
<td style="text-align: right"> </td>
<td><font style="font-size: 10pt"> $</font></td>
<td style="text-align: right"><font style="font-size: 10pt">-</font></td>
<td nowrap="nowrap"> </td></tr>
</table>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.5in"> </p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">The roll forward of the allowance for doubtful accounts related
to notes receivable and accounts receivable is as follows:</p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.5in"> </p>
<table cellspacing="0" cellpadding="0" style="font: 12pt Times New Roman, Times, Serif; width: 100%">
<tr style="vertical-align: bottom">
<td style="padding-bottom: 1.5pt"> </td>
<td style="padding-bottom: 1.5pt"> </td>
<td colspan="6" style="border-bottom: black 1.5pt solid; text-align: center"><font style="font-size: 10pt">Notes Receivable</font></td>
<td nowrap="nowrap" style="padding-bottom: 1.5pt"> </td>
<td style="padding-bottom: 1.5pt"> </td>
<td colspan="6" style="border-bottom: black 1.5pt solid; text-align: center"><font style="font-size: 10pt">Accounts Receivable</font></td>
<td nowrap="nowrap" style="padding-bottom: 1.5pt"> </td></tr>
<tr style="vertical-align: bottom">
<td style="padding-bottom: 1.5pt"> </td>
<td style="padding-bottom: 1.5pt"> </td>
<td colspan="2" style="border-bottom: black 1.5pt solid; text-align: center"><font style="font-size: 10pt">Current</font></td>
<td nowrap="nowrap" style="padding-bottom: 1.5pt"> </td>
<td style="padding-bottom: 1.5pt"> </td>
<td colspan="2" style="border-bottom: black 1.5pt solid; text-align: center"><font style="font-size: 10pt">Long-Term</font></td>
<td nowrap="nowrap" style="padding-bottom: 1.5pt"> </td>
<td style="padding-bottom: 1.5pt"> </td>
<td colspan="2" style="border-bottom: black 1.5pt solid; text-align: center"><font style="font-size: 10pt">Current</font></td>
<td nowrap="nowrap" style="padding-bottom: 1.5pt"> </td>
<td style="padding-bottom: 1.5pt"> </td>
<td colspan="2" style="border-bottom: black 1.5pt solid; text-align: center"><font style="font-size: 10pt">Long-Term</font></td>
<td nowrap="nowrap" style="padding-bottom: 1.5pt"> </td></tr>
<tr style="vertical-align: bottom; background-color: #CCEEFF">
<td style="width: 52%"><font style="font-size: 10pt"> Balance at December 31, 2015</font></td>
<td style="width: 1%; text-align: right"> </td>
<td style="width: 1%"> </td>
<td style="width: 9%; text-align: right"><font style="font-size: 10pt">632,422</font></td>
<td nowrap="nowrap" style="width: 1%"> </td>
<td style="width: 1%; text-align: right"> </td>
<td style="width: 1%"> </td>
<td style="width: 9%; text-align: right"><font style="font-size: 10pt">461,702</font></td>
<td nowrap="nowrap" style="width: 1%"> </td>
<td style="width: 1%; text-align: right"> </td>
<td style="width: 1%"> </td>
<td style="width: 9%; text-align: right"><font style="font-size: 10pt">295,759</font></td>
<td nowrap="nowrap" style="width: 1%"> </td>
<td style="width: 1%; text-align: right"> </td>
<td style="width: 1%"> </td>
<td style="width: 9%; text-align: right"><font style="font-size: 10pt">-</font></td>
<td nowrap="nowrap" style="width: 1%"> </td></tr>
<tr style="background-color: white">
<td style="vertical-align: bottom"><font style="font-size: 10pt">      Incremental Provision</font></td>
<td style="vertical-align: bottom; text-align: right"> </td>
<td style="vertical-align: bottom"> </td>
<td style="vertical-align: bottom; text-align: right"><font style="font-size: 10pt"> 116,417</font></td>
<td nowrap="nowrap" style="vertical-align: bottom"> </td>
<td style="vertical-align: bottom; text-align: right"> </td>
<td style="vertical-align: bottom"> </td>
<td style="vertical-align: bottom; text-align: right"><font style="font-size: 10pt"> (116,497</font></td>
<td nowrap="nowrap" style="vertical-align: top"><font style="font-size: 10pt">)</font></td>
<td style="vertical-align: bottom; text-align: right"> </td>
<td style="vertical-align: bottom"> </td>
<td style="vertical-align: bottom; text-align: right"><font style="font-size: 10pt"> 26,526</font></td>
<td nowrap="nowrap" style="vertical-align: bottom"> </td>
<td style="vertical-align: bottom; text-align: right"> </td>
<td style="vertical-align: bottom"> </td>
<td style="vertical-align: bottom; text-align: right"> </td>
<td nowrap="nowrap" style="vertical-align: bottom"> </td></tr>
<tr style="vertical-align: bottom; background-color: #CCEEFF">
<td><font style="font-size: 10pt">      Recoveries</font></td>
<td style="text-align: right"> </td>
<td> </td>
<td style="text-align: right"><font style="font-size: 10pt">-</font></td>
<td nowrap="nowrap"> </td>
<td style="text-align: right"> </td>
<td> </td>
<td style="text-align: right"><font style="font-size: 10pt">-</font></td>
<td nowrap="nowrap"> </td>
<td style="text-align: right"> </td>
<td> </td>
<td style="text-align: right"><font style="font-size: 10pt">-</font></td>
<td nowrap="nowrap"> </td>
<td style="text-align: right"> </td>
<td> </td>
<td style="text-align: right"><font style="font-size: 10pt">-</font></td>
<td nowrap="nowrap"> </td></tr>
<tr style="background-color: white">
<td style="vertical-align: bottom; padding-bottom: 1.5pt"><font style="font-size: 10pt">      Charge offs</font></td>
<td style="vertical-align: bottom; padding-bottom: 1.5pt; text-align: right"> </td>
<td style="vertical-align: bottom; border-bottom: black 1.5pt solid"> </td>
<td style="vertical-align: bottom; border-bottom: black 1.5pt solid; text-align: right"><font style="font-size: 10pt">-</font></td>
<td nowrap="nowrap" style="vertical-align: bottom; padding-bottom: 1.5pt"> </td>
<td style="vertical-align: bottom; padding-bottom: 1.5pt; text-align: right"> </td>
<td style="vertical-align: bottom; border-bottom: black 1.5pt solid"> </td>
<td style="vertical-align: bottom; border-bottom: black 1.5pt solid; text-align: right"><font style="font-size: 10pt">-</font></td>
<td nowrap="nowrap" style="vertical-align: bottom; padding-bottom: 1.5pt"> </td>
<td style="vertical-align: bottom; padding-bottom: 1.5pt; text-align: right"> </td>
<td style="vertical-align: bottom; border-bottom: black 1.5pt solid"> </td>
<td style="vertical-align: bottom; border-bottom: black 1.5pt solid; text-align: right"><font style="font-size: 10pt">(23,779</font></td>
<td nowrap="nowrap" style="vertical-align: top; padding-bottom: 1.5pt"><font style="font-size: 10pt">)</font></td>
<td style="vertical-align: bottom; padding-bottom: 1.5pt; text-align: right"> </td>
<td style="vertical-align: bottom; border-bottom: black 1.5pt solid"> </td>
<td style="vertical-align: bottom; border-bottom: black 1.5pt solid; text-align: right"><font style="font-size: 10pt">-</font></td>
<td nowrap="nowrap" style="vertical-align: bottom; padding-bottom: 1.5pt"> </td></tr>
<tr style="vertical-align: bottom; background-color: #CCEEFF">
<td style="padding-bottom: 3pt"><font style="font-size: 10pt"> Balance at March 31, 2016</font></td>
<td style="padding-bottom: 3pt; text-align: right"> </td>
<td style="border-bottom: black 2.25pt double"> </td>
<td style="border-bottom: black 2.25pt double; text-align: right"><font style="font-size: 10pt">748,839</font></td>
<td nowrap="nowrap" style="padding-bottom: 3pt"> </td>
<td style="padding-bottom: 3pt; text-align: right"> </td>
<td style="border-bottom: black 2.25pt double"> </td>
<td style="border-bottom: black 2.25pt double; text-align: right"><font style="font-size: 10pt">345,285</font></td>
<td nowrap="nowrap" style="padding-bottom: 3pt"> </td>
<td style="padding-bottom: 3pt; text-align: right"> </td>
<td style="border-bottom: black 2.25pt double"> </td>
<td style="border-bottom: black 2.25pt double; text-align: right"><font style="font-size: 10pt">298,506</font></td>
<td nowrap="nowrap" style="padding-bottom: 3pt"> </td>
<td style="padding-bottom: 3pt; text-align: right"> </td>
<td style="border-bottom: black 2.25pt double"> </td>
<td style="border-bottom: black 2.25pt double; text-align: right"><font style="font-size: 10pt">-</font></td>
<td nowrap="nowrap" style="padding-bottom: 3pt"> </td></tr>
</table>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"></p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.5in"> </p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">The allowance for doubtful accounts as
a percentage of total receivables was approximately 70% as of March 31, 2016 and approximately 69% as of December 31, 2015.</p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"> </p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">The Company received a Secured Convertible Promissory Note (the
“Note”) for a principal amount of $410,000 from a third party in September 2014. The Note bears interest at the rate
of 5.25% per annum and matured in four months. For the three months ended March 31, 2015, the Company had recorded $4,751 of interest
income from this Note.  $90,000 of the principal amount was paid during first quarter of 2015.  The Note was
written off as of the year ended December 31, 2015.</p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><i>Common stock</i></p>
<p style="font: 8pt Times New Roman, Times, Serif; margin: 0pt 0"> </p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">During the three months ended March 31,
2016, the company issued 17,895,859 related to the tender offer and 1,669,205 shares of common stock and the Company recognized
expense of $132,247 for services rendered. No shares of Series C Stock converted to common shares during the three months ended
March 31, 2016.</p>
<p style="font: 8pt Times New Roman, Times, Serif; margin: 0pt 0"> </p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">During the three months ended March 31,
2015, the company didn’t issue any common stock for services. 41,500 shares of Series C Stock converted to 166,000 common
shares during the three months ended March 31, 2015.</p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"> </p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><i>Tender Offer and Debt Conversion</i></p>
<p style="font: 10pt/120% Times New Roman, Times, Serif; margin: 0pt 0"> </p>
<p style="font: 10pt/120% Times New Roman, Times, Serif; margin: 0pt 0">Between December 11, 2015 and February 3, 2016, the Company
entered into agreements with investors, pursuant to which on February 3, 2016, warrant holders exercised 12,270,846 Warrants to
purchase an aggregate of 12,270,846 shares of our common stock for gross proceeds of $1.84 million. The Company issued new warrants
to purchase an aggregate of 26,479,217 shares of common stock at an exercise price of $0.15 per share, in consideration for the
immediate exercise of the warrants.</p>
<p style="font: 10pt/120% Times New Roman, Times, Serif; margin: 0pt 0"> </p>
<p style="font: 10pt/120% Times New Roman, Times, Serif; margin: 0pt 0">The Warrants have a cash settlement feature; as a result,
they were classified as a derivative liability and recorded at fair value. Fair value of the Warrants, in the total amount of
$3,918,924 was calculated using the Monte-Carlo model, using the following assumptions: 68.7% expected volatility, a risk-free
interest rate of 0.91%, estimated life of 3 years and no dividend yield. The fair value of the common stock was $0.148. The transaction
was accounted for as an inducement.  ASC 470-20-40 addresses the accounting for altered conversion privileges, including
the issuance of warrants or other securities (not provided for in the original conversion terms) to induce conversion.  As
a result of this transaction, the Company recognized an inducement expense of $3,560,958 equal to the fair value of all securities
and other consideration transferred in the transaction in excess of the fair value of securities issuable pursuant to the original
conversion terms, as of the date of the conversion.</p>
<p style="font: 10pt/120% Times New Roman, Times, Serif; margin: 0pt 0"> </p>
<p style="font: 10pt/120% Times New Roman, Times, Serif; margin: 0pt 0">In connection with the tender offer, investors converted $843,751 in Convertible
Notes at a conversion price of $0.15 per share into 5,625,013 shares of our common stock.</p>
<p style="font: 10pt/120% Times New Roman, Times, Serif; margin: 0pt 0"></p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">On March 30 and 31, 2015, the Company
closed on a private offering and issued and sold 11.25 units (the “Units”) to investors with each such Unit consisting
of a 9% Convertible Promissory Note with the principal face value of $50,000 (the “Notes”) and a warrant to purchase
66,667 shares of the Company’s common stock (the “Warrant”). The Company also agreed to provide piggy-back registration
rights to the holders of the Units. The Notes have a term of twelve (12) months, pay interest semi-annually at 9% per annum and
can be voluntarily converted by the holder into shares of common stock at an exercise price of $0.75 per share, subject to adjustments
for stock dividends, splits, combinations and similar events as described in the Notes. In addition, if the Company issues or sells
common stock at a price below the conversion price then in effect, the conversion price of the Notes shall be adjusted downward
to such price but in no event shall the conversion price be reduced to a price less than $0.50 per share. The Warrants have an
exercise price of $1.00 per share and have a term of four years. The holders of the Warrants may exercise the Warrants on a cashless
basis for as long as the shares of common stock underlying the Warrants are not registered on an effective registration statement.
 The Company raised gross proceeds of $562,500 and issued warrants to acquire 750,004 shares of common stock. The relative
fair value ascribed to the 750,004 warrants issued was $171,875 and was recorded to additional paid-in capital.</p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"> </p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">The embedded conversion feature was bifurcated
and accounted for as a derivative liability at $164,300 on the day of issuance. The remaining proceeds were allocated based on
the relative fair value of the debt and the warrant, and accordingly, $336,175 of debt discount was recorded at issuance and was
amortized over the term of the debt using the effective interest method. The amount of debt discount amortized for the three months
ended March 31, 2016 was $119,479.</p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"> </p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">On March 29, 2016, the Company amended
the March 30, 2015 9% Convertible Promissory Note with a principal amount of $300,000 as follows: the maturity date was extended
to September 29, 2016, the conversion price was lowered to $0.15 per share, the provision limiting the conversion price adjustment
to that of the Series C Preferred Stock was removed, and an option to be repaid prior to the maturity date in the event the Company
raises capital in excess of three million dollars was added. The Company also amended the warrant issued in conjunction with the
Convertible Promissory Note reducing the exercise price to $0.15 and issued a new warrant to purchase 400,002 shares of the Company's
common stock with a $0.15 exercise price and a three year expiration. According to FASB ASC 470-50, the modification is accounted
for as a debt extinguishment, whereby the new debt instrument is initially recorded at fair value, and that amount is used to determine
the debt extinguishment gain or loss to be recognized and the effective rate of the new instrument. We recognized a loss on the
extinguishment of debt of $147,566 for the quarter.</p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"> </p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">On March 30, 2016, the Company amended
the March 30, 2015 9% Convertible Promissory Note with a principal amount of $262,500 as follows: the maturity date was extended
to September 30, 2016, the conversion price was lowered to $0.15 per share, the provision limiting the conversion price adjustment
to that of the Series C Preferred Stock was removed, and an option to be repaid prior to the maturity date in the event the Company
raises capital in excess of three million dollars was added. The Company also amended the warrant issued in conjunction with the
Convertible Promissory Note reducing the exercise price to $0.15 and issued a new warrant to purchase 350,002 shares of the Company's
common stock with a $0.15 exercise price and a three year expiration. According to FASB ASC 470-50, the modification is accounted
for as a debt extinguishment, whereby the new debt instrument is initially recorded at fair value, and that amount is used to determine
the debt extinguishment gain or loss to be recognized and the effective rate of the new instrument. We recognized a loss on the
extinguishment of debt of $141,052 for the quarter.</p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"> </p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">During the second quarter 2015, the Company
closed on private offerings and issued and sold 11.00 units (the “Units”) to investors with each such Unit
consisting of a 9% Convertible Promissory Note with the principal face value of $50,000 (the “Notes”) and a warrant
to purchase 66,667 shares of the Company’s common stock (the “Warrant”). The Company also agreed to provide piggy-back
registration rights to the holders of the Units. The Notes have a term of twelve (12) months, pay interest semi-annually at 9%
per annum and can be voluntarily converted by the holder into shares of common stock at an exercise price of $0.75 per share, subject
to adjustments for stock dividends, splits, combinations and similar events as described in the Notes. In addition, if the Company
issues or sells common stock at a price below the conversion price then in effect, the conversion price of the Notes shall be adjusted
downward to such price but in no event shall the conversion price be reduced to a price less than $0.50 per share. The Warrants
have an exercise price of $1.00 per share and have a term of four years. The holders of the Warrants may exercise the Warrants
on a cashless basis for as long as the shares of common stock underlying the Warrants are not registered on an effective registration
statement. The Company raised gross proceeds of $550,000 and issued warrants to acquire 733,336 shares of common stock. The relative
fair value ascribed to the 750,004 warrants issued was $171,875 and was recorded to additional paid-in capital.</p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"> </p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">The embedded conversion feature was bifurcated
and accounted for as a derivative liability at $228,700 on the day of issuance. The remaining proceeds were allocated based on
the relative fair value of the debt and the warrant, and accordingly, $394,345 of debt discount was recorded at issuance and is
being amortized over the term of the debt using the effective interest method. The amount of debt discount amortized for the three
months ended March 31, 2016 was $134,257.</p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"> </p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">On July 15, 2015, the Company issued a Convertible Promissory Note in the principal amount
of $400,000 inclusive of interest. The Note was for a term of six months. The Note bears interest at twelve percent per annum.
The Note is secured by the assets of the Company. The Note may be converted into shares of the Company’s common stock at
$0.75 per share. The Company also issued the holder warrants to purchase 500,000 shares of the Company’s common stock. The
proceeds were allocated based on the relative fair value of the debt and the warrant. The warrants have an exercise price of $0.75
per share and have a term of two years. The relative fair value ascribed to the 500,000 warrants issued was approximately $49,000
and was recorded to additional paid-in capital. This amount which was recorded as a debt discount was amortized over the term
of the debt using the effective interest method. As part of the closing of the Tender Offer, $200,000 of these notes converted
into 1,333,334 shares of common stock and the investor received common stock and 1,333,333 warrants with a three year term at
an exercise price of $0.15. The remaining $200,000 of notes was paid in February, 2016.</p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"> </p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">On October 5, 2015, the Company issued
a Convertible Promissory Note to an investor in the principal amount of $150,000. The Note features a mandatory conversion feature
obligating the holder to participate and apply the principal and interest into a “Qualified Financing” meaning a financing
taking place prior to January 31, 2016, wherein the Company receives gross proceeds totaling at least $1,000,000. In the event
the entire principal plus accrued interest under this Note is not eligible for conversion into a Qualified Financing, then any
remaining balance of this Note shall be converted into restricted common stock at the price of the Qualified Financing and Holder
shall receive three (3) times any warrant coverage provided for in the Qualified Financing. The Note bears interest at nine percent
per annum and has a maturity date of six months. The embedded conversion feature of the note was bifurcated and accounted for
as a derivative liability at approximately $17,127 on the day of issuance. As part of the closing of the Tender Offer, these notes
converted into 1,029.918 shares of common stock and the investor received 3,089,754 warrants with a three year term at an exercise
price of $0.15.</p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"> </p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">On November 12, 2015, the Company issued a Convertible Promissory Note to an investor in the principal amount of
$150,000. The Note features a mandatory conversion feature obligating the holder to participate and apply the principal and interest
into a “Qualified Financing” meaning a financing taking place prior to January 31, 2016, wherein the Company receives
gross proceeds totaling at least $1,000,000. In the event the entire principal plus accrued interest under this Note is not eligible
for conversion into a Qualified Financing, then any remaining balance of this Note shall be converted into restricted common stock
at the price of the Qualified Financing and Holder shall receive three (3) times any warrant coverage provided for in the Qualified
Financing. The Note bears interest at nine percent per annum and has a maturity date of six months. The embedded conversion feature
of the note was bifurcated and accounted for as a derivative liability at approximately $50 on the day of issuance. As part of
the closing of the Tender Offer, these notes converted into 1,000,987 shares of common stock and the investor received 3,002,961
warrants with a three year term at an exercise price of $0.15.</p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"> </p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">On November 13, 2015, the Company issued
Convertible Promissory Notes to five investors in the principal amount of $287,333. The Notes feature a mandatory conversion feature
obligating the holder to participate and apply the principal and interest into a “Qualified Financing” meaning a financing
taking place prior to January 31, 2016, wherein the Company receives gross proceeds totaling at least $1,000,000. In the event
the entire principal plus accrued interest under this Note is not eligible for conversion into a Qualified Financing, then any
remaining balance of this Note shall be converted into restricted common stock at the price of the Qualified Financing and Holder
shall receive three (3) times any warrant coverage provided for in the Qualified Financing. The Notes bears interest at nine percent
per annum and has a maturity date of six months. The embedded conversion feature of the notes was bifurcated and accounted for
as a derivative liability at approximately $172 on the day of issuance. As part of the closing of the Tender Offer, these
notes converted into 1,937,105 shares of common stock and the investors received 5,811,315 warrants with a three year term at an
exercise price of $0.15.</p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"> </p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">On November 16, 2015, the Company issued
a Convertible Promissory Note to an investor in the principal amount of $48,000. The Note features a mandatory conversion feature
obligating the holder to participate and apply the principal and interest into a “Qualified Financing” meaning a financing
taking place prior to January 31, 2016, wherein the Company receives gross proceeds totaling at least $1,000,000. In the event
the entire principal plus accrued interest under this Note is not eligible for conversion into a Qualified Financing, then any
remaining balance of this Note shall be converted into restricted common stock at the price of the Qualified Financing and Holder
shall receive three (3) times any warrant coverage provided for in the Qualified Financing. The Note bears interest at nine percent
per annum and has a maturity date of six months. The embedded conversion feature of the note was bifurcated and accounted for as
a derivative liability at approximately $30 on the day of issuance. As part of the closing of the Tender Offer, these notes converted
into 323,669 shares of common stock and the investor received 971,007 warrants with a three year term at an exercise price
of $0.15.</p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"></p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"> </p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.5in"></p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"><b><i>Series A Preferred Stock</i></b></p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.5in"> </p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">At March 31, 2016 and December 31, 2014, the Company had 0 shares
of Series A Cumulative Convertible Preferred Stock (the “Series A Stock”) outstanding.</p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.5in"> </p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"><b><i>Series B Preferred Stock</i></b></p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.5in"> </p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">At March 31, 2016 and December 31, 2015, the Company had 0 shares
of Series B convertible preferred stock (“Series B Stock”) outstanding.</p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.5in"> </p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"><b><i>Series C Convertible Preferred Stock</i></b></p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.5in"> </p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">At March 31, 2016 and December 31, 2015, the Company had 3,700,729
shares of Series C convertible preferred stock (“Series C Stock”) outstanding that were issued to investors for $3.00
per share. No shares of Series C Stock converted to common shares during the three months ended March 31, 2016.</p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">In conjunction with Mr. Hernandez-Ellsworth’s resignation,
on January 29, 2015 the Company entered into an Agreement with Mr. Hernandez-Ellsworth (the “Agreement”). Pursuant to
the Agreement, and in conjunction with the closing of the Company’s card business, Mr. Hernandez-Ellsworth shall remain employed
by the Company, on an as needed basis, for a one year term commencing on the Effective Date and shall be paid an annual salary
of $120,000. Additionally, Mr. Hernandez-Ellsworth will: (i) be permitted to participate in any group life, hospitalization or
disability insurance plans, health programs, retirement plans, fringe benefit programs and other benefits that may be available
to employees of the Company; (ii) shall have 50,000 unvested shares of Non-Qualified Stock Options issued on March 19, 2014, and
112,500 unvested shares of Incentive Stock Options issued on March 21, 2014 (the “Incentive Stock Option”), become fully
vested; and (iii) the provisions in Mr. Hernandez-Ellsworth Incentive Option that requires he exercise all vested and unexercised
options within ninety (90) days of his departure from the Company shall be deleted and shall no longer apply. The Agreement also
contained customary confidentiality and non-solicitation provisions.</p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">Options, warrants, and convertible debt outstanding were all
considered anti-dilutive for the three months ended March 31, 2016 and 2015 due to net losses.</p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.5in"> </p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">The following securities were not included in the diluted net
income (loss) per share calculation because their effect was anti-dilutive as of the periods presented:</p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"> </p>
<table cellspacing="0" cellpadding="0" style="font: 12pt Times New Roman, Times, Serif; width: 100%">
<tr style="vertical-align: bottom">
<td style="padding-bottom: 1.5pt"> </td>
<td style="padding-bottom: 1.5pt"> </td>
<td colspan="6" style="border-bottom: black 1.5pt solid">
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center"><b>For the three months ended</b></p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center"><b>March 31,</b></p></td>
<td style="padding-bottom: 1.5pt"> </td></tr>
<tr style="vertical-align: bottom">
<td style="padding-bottom: 1.5pt"> </td>
<td style="padding-bottom: 1.5pt"> </td>
<td colspan="2" style="border-bottom: black 1.5pt solid; text-align: center"><font style="font-size: 10pt"><b>2016</b></font></td>
<td style="padding-bottom: 1.5pt"> </td>
<td style="padding-bottom: 1.5pt"> </td>
<td colspan="2" style="border-bottom: black 1.5pt solid; text-align: center"><font style="font-size: 10pt"><b>2015</b></font></td>
<td style="padding-bottom: 1.5pt"> </td></tr>
<tr style="vertical-align: bottom; background-color: #CCEEFF">
<td style="width: 78%"><font style="font-size: 10pt">Convertible notes</font></td>
<td style="width: 1%; text-align: right"> </td>
<td style="width: 1%"> </td>
<td style="width: 8%; text-align: right"><font style="font-size: 10pt">4,645,054</font></td>
<td style="width: 1%"> </td>
<td style="width: 1%; text-align: right"> </td>
<td style="width: 1%"> </td>
<td style="width: 8%; text-align: right"><font style="font-size: 10pt">750,000</font></td>
<td style="width: 1%"> </td></tr>
<tr style="vertical-align: bottom; background-color: white">
<td><font style="font-size: 10pt">Common stock options</font></td>
<td style="text-align: right"> </td>
<td> </td>
<td style="text-align: right"><font style="font-size: 10pt">17,088,129</font></td>
<td> </td>
<td style="text-align: right"> </td>
<td> </td>
<td style="text-align: right"><font style="font-size: 10pt">8,938,639</font></td>
<td> </td></tr>
<tr style="vertical-align: bottom; background-color: #CCEEFF">
<td><font style="font-size: 10pt">Investor warrants</font></td>
<td style="text-align: right"> </td>
<td> </td>
<td style="text-align: right"><font style="font-size: 10pt">37,960,774</font></td>
<td> </td>
<td style="text-align: right"> </td>
<td> </td>
<td style="text-align: right"><font style="font-size: 10pt">22,669,871</font></td>
<td> </td></tr>
<tr style="vertical-align: bottom; background-color: white">
<td style="padding-bottom: 1.5pt"><font style="font-size: 10pt">Compensation warrants</font></td>
<td style="padding-bottom: 1.5pt; text-align: right"> </td>
<td style="border-bottom: black 1.5pt solid"> </td>
<td style="border-bottom: black 1.5pt solid; text-align: right"><font style="font-size: 10pt">2,098,333</font></td>
<td style="padding-bottom: 1.5pt"> </td>
<td style="padding-bottom: 1.5pt; text-align: right"> </td>
<td style="border-bottom: black 1.5pt solid"> </td>
<td style="border-bottom: black 1.5pt solid; text-align: right"><font style="font-size: 10pt">1,940,525</font></td>
<td style="padding-bottom: 1.5pt"> </td></tr>
<tr style="vertical-align: bottom; background-color: #CCEEFF">
<td style="padding-bottom: 3pt"><font style="font-size: 10pt">Excluded potentially dilutive securities</font></td>
<td style="padding-bottom: 3pt; text-align: right"> </td>
<td style="border-bottom: black 2.25pt double"> </td>
<td style="border-bottom: black 2.25pt double; text-align: right"><font style="font-size: 10pt">61,792,290</font></td>
<td style="padding-bottom: 3pt"> </td>
<td style="padding-bottom: 3pt; text-align: right"> </td>
<td style="border-bottom: black 2.25pt double"> </td>
<td style="border-bottom: black 2.25pt double; text-align: right"><font style="font-size: 10pt">34,299,035</font></td>
<td style="padding-bottom: 3pt"> </td></tr>
</table>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"> </p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"><b><i>Stock Options and Warrants</i></b></p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"> </p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">Warrant activity (including warrants issued to investors and
for consulting and advisory services) for the three months ended March 31, 2016 and 2015 was as follows:</p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"> </p>
<table cellpadding="0" cellspacing="0" style="border-collapse: collapse; width: 100%; font: 10pt Times New Roman, Times, Serif">
<tr style="vertical-align: bottom">
<td> </td><td style="font-weight: bold"> </td>
<td colspan="7" style="font-weight: bold; text-align: center">For the three months ended</td></tr>
<tr style="vertical-align: bottom">
<td> </td><td style="font-weight: bold; padding-bottom: 1pt"> </td>
<td colspan="7" style="font-weight: bold; text-align: center; border-bottom: Black 1pt solid">March 31,</td></tr>
<tr style="vertical-align: bottom">
<td> </td><td style="font-weight: bold; padding-bottom: 1pt"> </td>
<td colspan="3" style="font-weight: bold; text-align: center; border-bottom: Black 1pt solid">2015</td><td style="font-weight: bold; padding-bottom: 1pt"> </td>
<td colspan="3" style="font-weight: bold; text-align: center; border-bottom: Black 1pt solid">2015</td></tr>
<tr style="vertical-align: bottom; background-color: rgb(204,238,255)">
<td style="width: 74%; text-align: left">Beginning balance outstanding</td><td style="width: 1%"> </td>
<td style="width: 1%; text-align: left"> </td><td style="width: 10%; text-align: right">26,397,410</td><td style="width: 1%; text-align: left"> </td><td style="width: 1%"> </td>
<td style="width: 1%; text-align: left"> </td><td style="width: 10%; text-align: right">23,933,922</td><td style="width: 1%; text-align: left"> </td></tr>
<tr style="vertical-align: bottom; background-color: White">
<td style="text-align: left">Warrants issued during the year:</td><td> </td>
<td style="text-align: left"> </td><td style="text-align: right"> </td><td style="text-align: left"> </td><td> </td>
<td style="text-align: left"> </td><td style="text-align: right"> </td><td style="text-align: left"> </td></tr>
<tr style="vertical-align: bottom; background-color: rgb(204,238,255)">
<td style="text-align: left">Expired during the year</td><td> </td>
<td style="text-align: left"> </td><td style="text-align: right">(546,667</td><td style="text-align: left">)</td><td> </td>
<td style="text-align: left"> </td><td style="text-align: right">(73,530</td><td style="text-align: left">)</td></tr>
<tr style="vertical-align: bottom; background-color: White">
<td style="text-align: left">Exercised during the year</td><td> </td>
<td style="text-align: left"> </td><td style="text-align: right">(12,270,853</td><td style="text-align: left">)</td><td> </td>
<td style="text-align: left"> </td><td style="text-align: right">—  </td><td style="text-align: left"> </td></tr>
<tr style="vertical-align: bottom; background-color: rgb(204,238,255)">
<td style="text-align: left">In connection with issuance of convertible notes</td><td> </td>
<td style="text-align: left"> </td><td style="text-align: right">—  </td><td style="text-align: left"> </td><td> </td>
<td style="text-align: left"> </td><td style="text-align: right">750,004</td><td style="text-align: left"> </td></tr>
<tr style="vertical-align: bottom; background-color: White">
<td style="text-align: left; padding-bottom: 1pt">In connection with tender offer exercise</td><td style="padding-bottom: 1pt"> </td>
<td style="border-bottom: Black 1pt solid; text-align: left"> </td><td style="border-bottom: Black 1pt solid; text-align: right">26,479,217</td><td style="padding-bottom: 1pt; text-align: left"> </td><td style="padding-bottom: 1pt"> </td>
<td style="border-bottom: Black 1pt solid; text-align: left"> </td><td style="border-bottom: Black 1pt solid; text-align: right">—  </td><td style="padding-bottom: 1pt; text-align: left"> </td></tr>
<tr style="vertical-align: bottom; background-color: rgb(204,238,255)">
<td style="padding-bottom: 2.5pt">Ending balance outstanding</td><td style="padding-bottom: 2.5pt"> </td>
<td style="border-bottom: Black 2.5pt double; text-align: left"> </td><td style="border-bottom: Black 2.5pt double; text-align: right">40,059,107</td><td style="padding-bottom: 2.5pt; text-align: left"> </td><td style="padding-bottom: 2.5pt"> </td>
<td style="border-bottom: Black 2.5pt double; text-align: left"> </td><td style="border-bottom: Black 2.5pt double; text-align: right">24,610,396</td><td style="padding-bottom: 2.5pt; text-align: left"> </td></tr>
</table>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"> </p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">The numbers and exercise prices of all options and warrants
outstanding at March 31, 2016 are as follows:</p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.5in"><br />
 </p>
<table cellspacing="0" cellpadding="0" style="font: 12pt Times New Roman, Times, Serif; width: 100%">
<tr>
<td style="vertical-align: bottom; border-bottom: black 1.5pt solid; text-align: center"><font style="font-size: 10pt">Shares Outstanding</font></td>
<td nowrap="nowrap" style="vertical-align: bottom; padding-bottom: 1.5pt"> </td>
<td style="vertical-align: bottom; padding-bottom: 1.5pt"> </td>
<td colspan="2" style="vertical-align: bottom; border-bottom: black 1.5pt solid">
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center">Weighted Average</p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center">Exerecise Price</p></td>
<td nowrap="nowrap" style="vertical-align: bottom; padding-bottom: 1.5pt"> </td>
<td style="vertical-align: bottom; padding-bottom: 1.5pt"> </td>
<td style="vertical-align: top; border-bottom: black 1.5pt solid">
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center">Expiration Fiscal</p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center">Period</p></td>
<td style="vertical-align: bottom; border-bottom: black 1.5pt solid"> </td></tr>
<tr style="vertical-align: bottom; background-color: #CCEEFF">
<td style="text-align: right"><font style="font-size: 10pt">85,833</font></td>
<td nowrap="nowrap" style="width: 1%"> </td>
<td style="width: 1%; text-align: right"> </td>
<td style="width: 1%"> </td>
<td style="width: 9%; text-align: right"><font style="font-size: 10pt">9.00</font></td>
<td nowrap="nowrap" style="width: 1%"> </td>
<td style="width: 1%"> </td>
<td style="width: 11%; text-align: right"><font style="font-size: 10pt">2nd Qtr, 2016</font></td>
<td style="width: 1%"> </td></tr>
<tr style="vertical-align: bottom; background-color: white">
<td style="text-align: right"><font style="font-size: 10pt">625</font></td>
<td nowrap="nowrap"> </td>
<td style="text-align: right"> </td>
<td> </td>
<td style="text-align: right"><font style="font-size: 10pt">9.00</font></td>
<td nowrap="nowrap"> </td>
<td> </td>
<td style="text-align: right"><font style="font-size: 10pt">3rd Qtr, 2016</font></td>
<td> </td></tr>
<tr style="vertical-align: bottom; background-color: #CCEEFF">
<td style="text-align: right"><font style="font-size: 10pt">475,142</font></td>
<td nowrap="nowrap"> </td>
<td style="text-align: right"> </td>
<td> </td>
<td style="text-align: right"><font style="font-size: 10pt">7.54</font></td>
<td nowrap="nowrap"> </td>
<td> </td>
<td style="text-align: right"><font style="font-size: 10pt">4th Qtr, 2016</font></td>
<td> </td></tr>
<tr style="vertical-align: bottom; background-color: white">
<td style="text-align: right"><font style="font-size: 10pt">34,749</font></td>
<td nowrap="nowrap"> </td>
<td style="text-align: right"> </td>
<td> </td>
<td style="text-align: right"><font style="font-size: 10pt">7.99</font></td>
<td nowrap="nowrap"> </td>
<td> </td>
<td style="text-align: right"><font style="font-size: 10pt">1st Qtr, 2017</font></td>
<td> </td></tr>
<tr style="vertical-align: bottom; background-color: #CCEEFF">
<td style="text-align: right"><font style="font-size: 10pt">1,265,850</font></td>
<td nowrap="nowrap"> </td>
<td style="text-align: right"> </td>
<td> </td>
<td style="text-align: right"><font style="font-size: 10pt">6.86</font></td>
<td nowrap="nowrap"> </td>
<td> </td>
<td style="text-align: right"><font style="font-size: 10pt">2nd Qtr, 2017</font></td>
<td> </td></tr>
<tr style="vertical-align: bottom; background-color: white">
<td style="text-align: right"><font style="font-size: 10pt">536,500</font></td>
<td nowrap="nowrap"> </td>
<td style="text-align: right"> </td>
<td> </td>
<td style="text-align: right"><font style="font-size: 10pt">1.14</font></td>
<td nowrap="nowrap"> </td>
<td> </td>
<td style="text-align: right"><font style="font-size: 10pt">3rd Qtr, 2017</font></td>
<td> </td></tr>
<tr style="vertical-align: bottom; background-color: #CCEEFF">
<td style="text-align: right"><font style="font-size: 10pt">1,162,088</font></td>
<td nowrap="nowrap"> </td>
<td style="text-align: right"> </td>
<td> </td>
<td style="text-align: right"><font style="font-size: 10pt">6.45</font></td>
<td nowrap="nowrap"> </td>
<td> </td>
<td style="text-align: right"><font style="font-size: 10pt">4th Qtr, 2017</font></td>
<td> </td></tr>
<tr style="vertical-align: bottom; background-color: white">
<td style="text-align: right"><font style="font-size: 10pt">10,000</font></td>
<td nowrap="nowrap"> </td>
<td style="text-align: right"> </td>
<td> </td>
<td style="text-align: right"><font style="font-size: 10pt">6.60</font></td>
<td nowrap="nowrap"> </td>
<td> </td>
<td style="text-align: right"><font style="font-size: 10pt">1st Qtr, 2018</font></td>
<td> </td></tr>
<tr style="vertical-align: bottom; background-color: #CCEEFF">
<td style="text-align: right"><font style="font-size: 10pt">750,000</font></td>
<td nowrap="nowrap"> </td>
<td style="text-align: right"> </td>
<td> </td>
<td style="text-align: right"><font style="font-size: 10pt">0.25</font></td>
<td nowrap="nowrap"> </td>
<td> </td>
<td style="text-align: right"><font style="font-size: 10pt">4th Qtr, 2018</font></td>
<td> </td></tr>
<tr style="vertical-align: bottom; background-color: white">
<td style="text-align: right"><font style="font-size: 10pt">35,063,685</font></td>
<td nowrap="nowrap"> </td>
<td style="text-align: right"> </td>
<td> </td>
<td style="text-align: right"><font style="font-size: 10pt">0.38</font></td>
<td nowrap="nowrap"> </td>
<td> </td>
<td style="text-align: right"><font style="font-size: 10pt">1st Qtr, 2019</font></td>
<td> </td></tr>
<tr style="vertical-align: bottom; background-color: #CCEEFF">
<td style="text-align: right"><font style="font-size: 10pt">883,336</font></td>
<td nowrap="nowrap"> </td>
<td style="text-align: right"> </td>
<td> </td>
<td style="text-align: right"><font style="font-size: 10pt">0.91</font></td>
<td nowrap="nowrap"> </td>
<td> </td>
<td style="text-align: right"><font style="font-size: 10pt">2nd Qtr, 2019</font></td>
<td> </td></tr>
<tr style="vertical-align: bottom; background-color: white">
<td style="text-align: right"><font style="font-size: 10pt">1,113,000</font></td>
<td nowrap="nowrap"> </td>
<td style="text-align: right"> </td>
<td> </td>
<td style="text-align: right"><font style="font-size: 10pt">1.16</font></td>
<td nowrap="nowrap"> </td>
<td> </td>
<td style="text-align: right"><font style="font-size: 10pt">3rd Qtr, 2019</font></td>
<td> </td></tr>
<tr style="vertical-align: bottom; background-color: #CCEEFF">
<td style="text-align: right"><font style="font-size: 10pt">2,608,000</font></td>
<td nowrap="nowrap"> </td>
<td style="text-align: right"> </td>
<td> </td>
<td style="text-align: right"><font style="font-size: 10pt">1.15</font></td>
<td nowrap="nowrap"> </td>
<td> </td>
<td style="text-align: right"><font style="font-size: 10pt">4th QTR, 2019</font></td>
<td> </td></tr>
<tr style="vertical-align: bottom; background-color: white">
<td style="text-align: right"><font style="font-size: 10pt">505,000</font></td>
<td nowrap="nowrap"> </td>
<td style="text-align: right"> </td>
<td> </td>
<td style="text-align: right"><font style="font-size: 10pt">0.92</font></td>
<td nowrap="nowrap"> </td>
<td> </td>
<td style="text-align: right"><font style="font-size: 10pt">1st Qtr, 2020</font></td>
<td> </td></tr>
<tr style="vertical-align: bottom; background-color: #CCEEFF">
<td style="text-align: right"><font style="font-size: 10pt">75,000</font></td>
<td nowrap="nowrap"> </td>
<td style="text-align: right"> </td>
<td> </td>
<td style="text-align: right"><font style="font-size: 10pt">0.65</font></td>
<td nowrap="nowrap"> </td>
<td> </td>
<td style="text-align: right"><font style="font-size: 10pt">2nd Qtr, 2019</font></td>
<td> </td></tr>
<tr style="vertical-align: bottom; background-color: white">
<td style="text-align: right"><font style="font-size: 10pt">1,707,780</font></td>
<td nowrap="nowrap"> </td>
<td style="text-align: right"> </td>
<td> </td>
<td style="text-align: right"><font style="font-size: 10pt">0.19</font></td>
<td nowrap="nowrap"> </td>
<td> </td>
<td style="text-align: right"><font style="font-size: 10pt">4th Qtr, 2020</font></td>
<td> </td></tr>
<tr style="vertical-align: bottom; background-color: #CCEEFF">
<td style="text-align: right"><font style="font-size: 10pt">6,836,016</font></td>
<td nowrap="nowrap"> </td>
<td style="text-align: right"> </td>
<td> </td>
<td style="text-align: right"><font style="font-size: 10pt">0.12</font></td>
<td nowrap="nowrap"> </td>
<td> </td>
<td style="text-align: right"><font style="font-size: 10pt">1st Qtr, 2021</font></td>
<td> </td></tr>
<tr style="vertical-align: bottom; background-color: white">
<td style="border-bottom: black 1.5pt solid; text-align: right"><font style="font-size: 10pt">133,334</font></td>
<td nowrap="nowrap" style="padding-bottom: 1.5pt"> </td>
<td style="padding-bottom: 1.5pt; text-align: right"> </td>
<td style="padding-bottom: 1.5pt"> </td>
<td style="padding-bottom: 1.5pt; text-align: right"><font style="font-size: 10pt">7.05</font></td>
<td nowrap="nowrap" style="padding-bottom: 1.5pt"> </td>
<td style="padding-bottom: 1.5pt"> </td>
<td style="padding-bottom: 1.5pt; text-align: right"><font style="font-size: 10pt">4th Qtr, 2020</font></td>
<td style="padding-bottom: 1.5pt"> </td></tr>
<tr style="vertical-align: bottom; background-color: #CCEEFF">
<td style="border-bottom: black 2.25pt double; text-align: right"><font style="font-size: 10pt">53,245,938</font></td>
<td nowrap="nowrap" style="padding-bottom: 3pt"> </td>
<td style="padding-bottom: 3pt"> </td>
<td style="padding-bottom: 3pt"> </td>
<td style="padding-bottom: 3pt; text-align: right"> </td>
<td nowrap="nowrap" style="padding-bottom: 3pt"> </td>
<td style="padding-bottom: 3pt"> </td>
<td style="padding-bottom: 3pt; text-align: right"> </td>
<td style="padding-bottom: 3pt"> </td></tr>
</table>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.5in"><b><i> </i></b></p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"><b><i>Stock-based Compensation</i></b></p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in"> </p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"></p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"></p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">Results of operations for the three months
ended March 31, 2016 and 2015 include stock based compensation costs totaling $433,180 and $590,937, respectively, all of which
was charged to personnel related expenses.</p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"> </p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">For purposes of accounting for stock based
compensation, the fair value of each option and warrant award is estimated on the date of grant using the Black-Scholes-Merton
option pricing formula. Compensation expense is recognized over the service period. The following weighted average assumptions
were utilized for the calculations during the three months ended March 31, 2016 and 2015:</p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"></p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"></p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"> </p>
<table cellspacing="0" cellpadding="0" style="font: 12pt Times New Roman, Times, Serif; width: 100%">
<tr style="vertical-align: bottom">
<td> </td>
<td> </td>
<td colspan="6" style="text-align: center"><font style="font-size: 10pt"><b>For the three months ended</b></font></td>
<td> </td></tr>
<tr style="vertical-align: bottom">
<td style="padding-bottom: 1.5pt"> </td>
<td style="padding-bottom: 1.5pt"> </td>
<td colspan="6" style="border-bottom: black 1.5pt solid; text-align: center"><font style="font-size: 10pt"><b>March 31,</b></font></td>
<td style="padding-bottom: 1.5pt"> </td></tr>
<tr style="vertical-align: bottom">
<td style="padding-bottom: 1.5pt"> </td>
<td style="padding-bottom: 1.5pt"> </td>
<td colspan="2" style="border-bottom: black 1.5pt solid; text-align: center"><font style="font-size: 10pt"><b>2016</b></font></td>
<td style="padding-bottom: 1.5pt"> </td>
<td style="padding-bottom: 1.5pt"> </td>
<td colspan="2" style="border-bottom: black 1.5pt solid; text-align: center"><font style="font-size: 10pt"><b>2015</b></font></td>
<td style="padding-bottom: 1.5pt"> </td></tr>
<tr style="vertical-align: bottom; background-color: #CCEEFF">
<td><font style="font-size: 10pt">Expected life (in years)</font></td>
<td> </td>
<td colspan="2" style="text-align: right"><font style="font-size: 10pt">2.87 years</font></td>
<td> </td>
<td> </td>
<td colspan="2" style="text-align: right"><font style="font-size: 10pt">2.74 years</font></td>
<td> </td></tr>
<tr style="vertical-align: bottom; background-color: white">
<td style="width: 78%"><font style="font-size: 10pt">Weighted average volatility</font></td>
<td style="width: 1%; text-align: right"> </td>
<td style="width: 1%"> </td>
<td style="width: 8%; text-align: right"><font style="font-size: 10pt">108.81</font></td>
<td style="width: 1%"><font style="font-size: 10pt">%</font></td>
<td style="width: 1%; text-align: right"> </td>
<td style="width: 1%"> </td>
<td style="width: 8%; text-align: right"><font style="font-size: 10pt">126.09</font></td>
<td style="width: 1%"><font style="font-size: 10pt">%</font></td></tr>
<tr style="vertical-align: bottom; background-color: #CCEEFF">
<td><font style="font-size: 10pt">Forfeiture rate</font></td>
<td style="text-align: right"> </td>
<td> </td>
<td style="text-align: right"><font style="font-size: 10pt">13.58</font></td>
<td><font style="font-size: 10pt">%</font></td>
<td style="text-align: right"> </td>
<td> </td>
<td style="text-align: right"><font style="font-size: 10pt">17.49</font></td>
<td><font style="font-size: 10pt">%</font></td></tr>
<tr style="vertical-align: bottom; background-color: white">
<td><font style="font-size: 10pt">Risk-free interest rate</font></td>
<td style="text-align: right"> </td>
<td> </td>
<td style="text-align: right"><font style="font-size: 10pt">.96</font></td>
<td><font style="font-size: 10pt">%</font></td>
<td style="text-align: right"> </td>
<td> </td>
<td style="text-align: right"><font style="font-size: 10pt">.96</font></td>
<td><font style="font-size: 10pt">%</font></td></tr>
<tr style="vertical-align: bottom; background-color: #CCEEFF">
<td><font style="font-size: 10pt">Expected dividend rate</font></td>
<td style="text-align: right"> </td>
<td> </td>
<td style="text-align: right"><font style="font-size: 10pt">0.00</font></td>
<td><font style="font-size: 10pt">%</font></td>
<td style="text-align: right"> </td>
<td> </td>
<td style="text-align: right"><font style="font-size: 10pt">0.00</font></td>
<td><font style="font-size: 10pt">%</font></td></tr>
</table>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.5in"> </p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">The weighted average expected option and warrant term for employee
stock options granted reflects the application of the simplified method set out in SEC Staff Accounting Bulletin No. 107,<i> Share-Based
Payment</i> (SAB 107). The simplified method defines the life as the average of the contractual term of the options and the weighted
average vesting period for all options. The Company utilized this approach as its historical share option exercise experience does
not provide a reasonable basis upon which to estimate an expected term. Expected volatilities are based on the historical volatility
of the Company’s stock. The Company estimated the forfeiture rate based on our expectation for future forfeitures and (for
the purpose of computing stock based compensation given the contractual vesting of the Company’s options and warrants outstanding)
the Company assumes that all options and warrants will vest. The risk-free rate for periods within the contractual life of the
option is based on the U.S. Treasury yield in effect at or near the time of grant. The Company has never declared or paid dividends
and has no plans to do so in the foreseeable future.</p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.5in"> </p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">As of March 31, 2016, $603,431 of total unrecognized compensation
cost related to unvested stock based compensation arrangements is expected to be recognized over a weighted-average period of 20.3
months.</p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">On August 26, 2015, the Company entered into a Business Promissory
Note and Security Agreement with Bank of Lake Mills for the principal sum of $200,000 and a daily interest rate of .22%. The total
repayment amount including interest and principal was $244,637 to be paid pro-rata weekly ending February 22, 2016. For the three
months ended March 31, 2016, we recorded interest expense related to the note of $4,947.  As of February 25, 2016, the
note has been fully repaid.</p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">On August 14, 2015 and September 28, 2015,
the Company entered into Loan Agreements with Alex Minicucci for the principal sum of $65,000 and $35,000, respectively. The Loans
include an interest rate of 7%. The $35,000 Loan was repaid in February 2016.  For the year three months ended March
31, 2016, we recorded interest expense related to the loans of $1,343.</p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; background-color: white">On April 4, 2016,
the Company amended the May 5, 2015 9% Convertible Promissory Note with a principal amount of $275,000 as follows: the maturity
date was extended to October 5, 2016, the conversion price was lowered to $0.15 per share, the provision limiting the conversion
price adjustment to that of the Series C Preferred Stock was removed, and an option to be repaid prior to the maturity date in
the event the Company raises capital in excess of three million dollars was added. The Company also amended the warrant issued
in conjunction with the Convertible Promissory Note reducing the exercise price to $0.15 and issued an additional warrant to purchase
366,667 shares of the Company's common stock with a $0.15 exercise price and a three year expiration.</p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; background-color: white"> </p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; background-color: white"> </p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; background-color: white">Effective
May 3, 2016, the Board of Directors of SpendSmart Networks, Inc. appointed Frank Liddy to the Board. In connection with Mr.
Liddy’s appointment to the Board, the Company agreed to grant Mr. Liddy vested options to purchase 264,000 shares of
the Company’s common stock at an exercise price of $0.11 per share, the market closing price on the day of appointment,
and having a term of five years.</p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; background-color: white"> </p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; background-color: white"> </p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; background-color: white"> </p>
<p style="font: 8pt Times New Roman, Times, Serif; margin: 0pt 0"> </p>
<p style="font: 8pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center; text-indent: 0.5in"> </p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">The Company extends credit to its licensees in the normal course
of business and performs credit evaluations of its customers. Loans and accounts receivable are stated at amounts due from customers
net of an allowance for doubtful accounts. Accounts that are outstanding longer than the contractual payment terms are considered
past due. The Company determines its allowance for doubtful accounts by considering a number of factors, including the length of
time loan and accounts receivable are past due and the customer's current ability to pay its obligation to the Company. The Company
writes off loans and accounts receivable when they become uncollectible.</p>
<p style="margin: 0pt"></p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">The preparation of financial statements
in conformity with GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities
and disclosure of contingent assets and liabilities, fair value of financial instruments, at the date of the consolidated financial
statements and the reported amounts of revenues and expenses during the reporting period.  Actual results could materially
differ from those estimates. Significant estimates inherent in the preparation of the accompanying consolidated financial statements
include recoverability and useful lives of intangible assets, the valuation allowance related to the Company's deferred tax assets,
the allowance for doubtful accounts related and notes and accounts receivable, the fair value of stock options and warrants granted
to employees, consultants, directors, investors and placement agents, and notes and warrant tender offer.</p>
<p style="margin: 0pt"></p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">The Company generates revenues primarily in the form of set
up fees, license fees, messaging, equipment and marketing services fees and value added mobile marketing and mobile commerce services.  License
fees are charged monthly for support services.  Set-up fees primarily consist of fees for website development services
(including support and unspecified upgrades and enhancements when and if they are available), training and professional services
that are not essential to functionality. The Company offers two licenses consisting of our Engage license and our Thrive license.  The
revenues for Engage and Thrive license set-up fees are recognized over the training and implementation periods of one month, respectively.</p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.5in"> </p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">The Company recognizes revenues when all of the following conditions
are met:</p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"> </p>
<table cellspacing="0" cellpadding="0" style="width: 100%">
<tr style="vertical-align: top">
<td style="width: 6%; font: 12pt Times New Roman, Times, Serif; text-align: center"><font style="font-size: 10pt">●</font></td>
<td style="width: 94%; font: 12pt Times New Roman, Times, Serif"><font style="font-size: 10pt">there is persuasive evidence of an arrangement;</font></td></tr>
</table>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"> </p>
<table cellspacing="0" cellpadding="0" style="width: 100%">
<tr style="vertical-align: top">
<td style="width: 6%; font: 12pt Times New Roman, Times, Serif; text-align: center"><font style="font-size: 10pt">●</font></td>
<td style="width: 94%; font: 12pt Times New Roman, Times, Serif"><font style="font-size: 10pt">the products or services have been delivered to the customer;</font></td></tr>
</table>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"> </p>
<table cellspacing="0" cellpadding="0" style="width: 100%">
<tr style="vertical-align: top">
<td style="width: 6%; font: 12pt Times New Roman, Times, Serif; text-align: center"><font style="font-size: 10pt">●</font></td>
<td style="width: 94%; font: 12pt Times New Roman, Times, Serif"><font style="font-size: 10pt">the amount of fees to be paid by the customer is fixed or determinable; and</font></td></tr>
</table>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"> </p>
<table cellspacing="0" cellpadding="0" style="width: 100%">
<tr style="vertical-align: top">
<td style="width: 6%; font: 12pt Times New Roman, Times, Serif; text-align: center"><font style="font-size: 10pt">●</font></td>
<td style="width: 94%; font: 12pt Times New Roman, Times, Serif"><font style="font-size: 10pt">The collection of the related fees is probable.</font></td></tr>
</table>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"> </p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">Signed agreements are used as evidence of an arrangement. Electronic
delivery occurs when we provide the customer with access to the software. The Company assesses whether a fee is fixed or determinable
at the outset of the arrangement, primarily based on the payment terms associated with the transaction. The Company offered extended
payment terms with regards to the setup fee with typical terms of payment due between one and three years from delivery of license.
The Company assesses collectability of the set-up fee based on a number of factors such as collection history and creditworthiness
of the licensee. If the Company determines that collectability is not probable, revenue is deferred until collectability becomes
probable, generally upon receipt of cash.</p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.5in"> </p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">License arrangements may also include set-up
fees for website development, delivery of tablets, professional services and training services, which are typically delivered within
30-60 days of the contract term. In determining whether set-up fee revenues should be accounted for separately from license revenues,
we evaluate whether the set-up fees are considered essential to the functionality of the license using factors such as the nature
of our products; whether they are ready for use by the customer upon receipt; the nature of our implementation services, which
typically do not involve significant customization to or development of the underlying software code; the availability of services
from other vendors; whether the timing of payments for license revenues is coincident with performance of services; and whether
milestones or acceptance criteria exist that affect the realizability of the license fee. Substantially all of our set-up fee arrangements
are recognized as the services are performed. Payments received in advance of services performed are deferred and recognized when
the related services are performed.</p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.5in"> </p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">We do not offer refunds and therefore have not recorded any
sales return allowance for any of the periods presented. Upon a periodic review of outstanding accounts and notes receivable, amounts
that are deemed to be uncollectible are written off against the allowance for doubtful accounts.</p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"> </p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">Deferred revenue consists substantially of amounts invoiced
in advance of revenue recognition for our products and services described above. We recognize deferred revenue as revenue only
when the revenue recognition criteria are met.  </p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">The Company considers all investments with an original maturity
of three months or less to be cash equivalents. Cash equivalents primarily represent funds invested in money market funds, bank
certificates of deposit and U.S. government debt securities whose cost equals fair market value.</p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.5in"> </p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">From time to time, the Company has maintained bank balances
in excess of insurance limits. The Company has not experienced any losses
with respect to cash. Management believes the Company is not exposed to any significant credit risk with respect to its cash and
cash equivalents.</p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">Property and equipment had been recorded
at cost and depreciated using the straight-line method over the estimated useful lives of the related assets (generally three to
five years). Costs incurred for maintenance and repairs are expensed as incurred and expenditures for major replacements and improvements
are capitalized and depreciated over their estimated remaining useful lives. Depreciation expense for the three months ended March
31, 2016 and 2015 was $0 and $39,680, respectively.  Property and equipment has been fully depreciated as of March 31,
2016.</p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">The Company accounts for computer software
used in the business in accordance with ASC 350 “Intangibles-Goodwill and Other”. ASC 350 requires computer software
costs associated with internal use software to be charged to operations as incurred until certain capitalization criteria are met.
Costs incurred during the preliminary project stage and the post-implementation stages are expensed as incurred. Certain qualifying
costs incurred during the application development stage are capitalized as property, equipment and software. These costs generally
consist of internal labor during configuration, coding, and testing activities. Capitalization begins when (i) the preliminary
project stage is complete, (ii) management with the relevant authority authorizes and commits to the funding of the software project,
and (iii) it is probable both that the project will be completed and that the software will be used to perform the function intended.  We
capitalized $179,646 and $241,384, respectively, in software development related to programming and coding for new product development
for the three months ended March 31, 2016 and 2015.  Software depreciation expense for the three months ended March 31,
2016 and 2015 was $110,365 and $35,481, respectively.</p>
<p style="margin: 0pt"></p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><b><i> </i></b></p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">The Company records impairment losses on
long-lived assets used in operations when indicators of impairment are present and the undiscounted cash flows estimated to be
generated by those assets are less than the assets’ carrying amount. If such assets are considered to be impaired, the impairment
to be recognized is measured by the amount by which the carrying amounts of the assets exceed the estimated fair value of the assets.</p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">. There has not been any impairment recorded
during the quarter ended March 31, 2016.</p>
<p style="margin: 0pt"></p>
<p style="margin: 0pt"></p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">As part of the income tax provision process of preparing the
Company’s financial statements, the Company is required to estimate the Company’s provision for income taxes. This
process involves estimating current tax liabilities together with assessing temporary differences resulting from differing treatments
of items for tax and accounting purposes. These differences result in deferred tax assets and liabilities. Management then assesses
the likelihood that the Company deferred tax assets will be recovered from future taxable income and to the extent believed that
recovery is not likely, a valuation allowance is established. Further, to the extent a valuation allowance is established and changes
occur to this allowance in a financial accounting period, such changes are recognized in the Company’s tax provision in the
Company’s condensed consolidated statement of operations. The Company’s use of judgment in making estimates to determine
the Company’s provision for income taxes, deferred tax assets and liabilities and any valuation allowance is recorded against
our net deferred tax assets.</p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"></p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"> </p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">The Company recognizes the benefit of an uncertain tax position
taken or expected to be taken on the Company’s income tax returns if it is “more likely than not” that such tax
position will be sustained based on its technical merits. The Company does not have any unrecognized tax benefits or accrued penalties
and interest. If such matters were to arise, the Company would recognize interest and penalties related to income tax matters in
income tax expense.</p>
<p style="margin: 0pt"></p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">The Company accounts for stock based compensation arrangements
through the measurement and recognition of compensation expense for all stock based payment awards to employees and directors based
on estimated fair values. The Company uses the Black-Scholes option valuation model to estimate the fair value of the Company’s
stock options and warrants at the date of grant. The Black-Scholes option valuation model requires the input of subjective assumptions
to calculate the value of options and warrants. The Company uses historical company data among other information to estimate the
expected price volatility and the expected forfeiture rate and not comparable company information.</p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">The Company calculates basic earnings per share (“EPS”)
by dividing the Company’s net loss and comprehensive net loss applicable to common shareholders by the weighted average number
of common shares outstanding for the period, without considering common stock equivalents. Diluted EPS is computed by dividing
net income or net loss and comprehensive net loss applicable to common shareholders by the weighted average number of common shares
outstanding for the period and the weighted average number of dilutive common stock equivalents, such as options and warrants.
Options and warrants are only included in the calculation of diluted EPS when their effect is dilutive.</p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">The Company accounts for the common stock warrants granted and
still outstanding as of March 31, 2016 in connection with certain financing transactions (“Transactions”) in accordance
with the guidance contained in ASC 815-40-15-7D, "Contracts in Entity's Own Equity" whereby under that provision they
do not meet the criteria for equity treatment and must be recorded as a liability. Accordingly, the Company classifies the warrant
instrument as a liability at its fair value and adjusts the instrument to fair value at each reporting period. This liability is
subject to re-measurement at each balance sheet date until exercised, and any change in fair value is recognized in the Company's
statements of operations. The fair value of the warrants issued by the Company in connection with the Transactions has been estimated
using a Monte Carlo simulation.</p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.5in"> </p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">The Company accounts for certain of its
outstanding warrants issued in fiscal 2010, 2012 and 2013 (“2010 Warrants,” “2012 Warrants” and “2013
Warrants, respectively) as derivative liabilities. The 2010 Warrants were determined to be ineligible for equity classification
due to provisions of the respective instruments that may result in an adjustment to their conversion or exercise prices. The Company
recognized gains of $0 and $26,046 in the fair value of derivatives for the three months ended March 31, 2016 and 2015, respectively.  These
derivative liabilities which arose from the issuance of the 2010 Warrants resulted in an ending balance of derivative liabilities
of $0 as of March 31, 2016 and December 31, 2015, respectively.</p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in"> </p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">Debt issuance costs, including warrants
issued in connection with debt financing and fees or costs paid to lender, are presented in the consolidated balance sheets as
a direct deduction from the carrying amount of that debt. </p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"> </p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">The Company amortizes the discount to interest
expense over the term of the respective debt using the effective interest method.</p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">The Company does not use derivative financial
instruments to hedge exposures to cash-flow, market or foreign-currency risks. However, the Company has issued Convertible Notes
with features that are either (i) not afforded equity classification, (ii) embody risks not clearly and closely related to host
contracts, or (iii) may be net-cash settled by the counterparty. As required by ASC 815, <i>Accounting for Derivative Financial
Instruments and Hedging Activities</i>, in certain instances, these instruments are required to be carried as derivative liabilities,
at fair value, in our financial statements.</p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"> </p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">The Convertible Notes issued during the
year ended December 31, 2015 are subject to anti-dilution adjustments that allow for the reduction in the Conversion Price, as
defined in the agreement, in the event the Company subsequently issues equity securities including Common Stock or any security
convertible or exchangeable for shares of Common Stock for a price less than the current conversion price. The Company bifurcated
and accounted for the conversion option in accordance with ASC 815 as a derivative liability, since this conversion feature is
not considered to be indexed to the Company’s own stock.</p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"> </p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">The Company’s derivative liability
has been measured at fair value at March 31, 2016 using a Monte-Carlo Simulation. Inputs into the model require estimates, including
such items as estimated volatility of the Company’s stock, estimated probabilities of additional financing, risk-free interest
rate, and the estimated life of the financial instruments being fair valued. In addition, since the conversion price contains an
anti-dilution adjustment, the probability that the Conversion Price of the Notes would decrease as the share price decreased was
also incorporated into the valuation calculation.</p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in"> </p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">The Company modified two existing Notes
during the first quarter, 2016.  According to FASB ASC 470-50, the modification is accounted for as a debt extinguishment,
whereby the new debt instrument is initially recorded at fair value, and that amount is used to determine the debt extinguishment
gain or loss to be recognized and the effective rate of the new instrument.  We recognized a loss on the extinguishment
of debt of $288,618 for the quarter, of which $23,180 was related to the repricing of warrants for the three months ended March
31, 2016.</p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in"> </p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">The Company recognized a loss of $179 and
a gain of $0 in the fair value of derivatives for the three months ended March 31, 2016 and 2015, respectively. These derivative
liabilities which arose from the issuance of the convertible notes resulted in an ending balance of derivative liabilities of $198,630
and $179 as of March 31, 2016 and December 31, 2015, respectively. Subsequent changes to the fair value of the derivative liabilities
will continue to require adjustments to their carrying value that will be recorded as other income (in the event that their value
decreases) or as other expense (in the event that their value increases). The fair value of these liabilities is estimated using
Monte Carlo pricing models that are based on the individual characteristics of the Company’s warrants, preferred and common
stock, as well as assumptions for volatility, remaining expected life, risk-free interest rate and, in some cases, credit spread.</p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">Fair value is defined as the price that would be received from
selling an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date.
When determining the fair value for applicable assets and liabilities, we consider the principal or most advantageous market in
which we would transact and we consider assumptions market participants would use when pricing the asset or liability, such as
inherent risk, transfer restrictions, and risk of nonperformance. This guidance also establishes a fair value hierarchy to prioritize
inputs used in measuring fair value as follows:</p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.5in"> </p>
<table cellspacing="0" cellpadding="0" style="width: 100%">
<tr style="vertical-align: top">
<td style="width: 2%; font: 12pt Times New Roman, Times, Serif; text-align: center"><font style="font: 10pt Symbol">·</font></td>
<td style="width: 98%; font: 12pt Times New Roman, Times, Serif"><font style="font-size: 10pt">Level 1: Observable inputs such as quoted prices in active markets;</font></td></tr>
</table>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"> </p>
<table cellspacing="0" cellpadding="0" style="width: 100%">
<tr style="vertical-align: top">
<td style="width: 2%; font: 12pt Times New Roman, Times, Serif; text-align: center"><font style="font: 10pt Symbol">·</font></td>
<td style="width: 98%; font: 12pt Times New Roman, Times, Serif"><font style="font-size: 10pt">Level 2: Inputs, other than quoted prices in active markets, that are observable either directly or indirectly; and</font></td></tr>
</table>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"> </p>
<table cellspacing="0" cellpadding="0" style="width: 100%">
<tr style="vertical-align: top">
<td style="width: 2%; font: 12pt Times New Roman, Times, Serif; text-align: center"><font style="font: 10pt Symbol">·</font></td>
<td style="width: 98%; font: 12pt Times New Roman, Times, Serif"><font style="font-size: 10pt">Level 3: Unobservable inputs in which there is little or no market data, which require the reporting entity to develop its own assumptions.</font></td></tr>
</table>
<p style="font: 10pt Times New Roman, Times, Serif; margin-top: 0; margin-bottom: 6pt; margin-left: 0pt; text-indent: 0pt; text-align: justify"></p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">The Company’s financial instruments
are cash and cash equivalents, accounts receivable, notes receivable, notes payable, accounts payable and derivative liabilities.
The recorded values of cash equivalents and accounts payable approximate their fair values based on their short-term nature. The
fair value of derivative liabilities is estimated using option pricing models that are based on the individual characteristics
of our warrants, preferred and common stock, the derivative liability on the valuation date as well as assumptions for volatility,
remaining expected life, risk-free interest rate and, in some cases, credit spread. The derivative liabilities and earn-out liabilities
are the only Level 3 fair value measures.</p>
<p style="font: 10pt Times New Roman, Times, Serif; margin-top: 0; margin-bottom: 6pt; margin-left: 0pt; text-indent: 0pt; text-align: justify"> </p>
<p style="font: 10pt Times New Roman, Times, Serif; margin-top: 0; margin-bottom: 6pt; margin-left: 0pt; text-indent: 0pt; text-align: justify">A
summary of quantitative information with respect to valuation methodology and significant unobservable inputs used for the Company’s
warrant liabilities that are categorized within Level 3 of the fair value hierarchy as of March 31, 2016 and December 31, 2015
is as follows:</p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.5in"> </p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">A summary of quantitative information with respect to valuation
methodology and significant unobservable inputs used for the Company’s warrant liabilities that are categorized within Level
3 of the fair value hierarchy as of March 31, 2016 and December 31, 2015 is as follows:</p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.5in"> </p>
<table cellspacing="0" cellpadding="0" style="font: 12pt Times New Roman, Times, Serif; width: 100%">
<tr style="vertical-align: bottom">
<td style="padding-bottom: 1.5pt"><font style="font-size: 10pt">Date of Valuation</font></td>
<td colspan="3" style="border-bottom: black 1.5pt solid; text-align: center"><font style="font-size: 10pt">March 31, 2016</font></td>
<td nowrap="nowrap" style="padding-bottom: 1.5pt"> </td></tr>
<tr style="vertical-align: bottom; background-color: #CCEEFF">
<td><font style="font-size: 10pt">Stock Price</font></td>
<td style="text-align: right"> </td>
<td colspan="2" style="text-align: right"><font style="font-size: 10pt">$0.11</font></td>
<td nowrap="nowrap"> </td></tr>
<tr style="vertical-align: bottom; background-color: white">
<td style="width: 79%"><font style="font-size: 10pt">Volatility (Annual)</font></td>
<td style="width: 1%; text-align: right"> </td>
<td style="width: 1%"> </td>
<td style="width: 18%; text-align: right"><font style="font-size: 10pt">75%</font></td>
<td nowrap="nowrap" style="width: 1%"> </td></tr>
<tr style="vertical-align: bottom; background-color: #CCEEFF">
<td><font style="font-size: 10pt">Strike Price   $0.75</font></td>
<td style="text-align: right"> </td>
<td> </td>
<td nowrap="nowrap" style="text-align: right"><font style="font-size: 10pt">$0.15 and $0.75</font></td>
<td nowrap="nowrap"> </td></tr>
<tr style="vertical-align: bottom; background-color: white">
<td><font style="font-size: 10pt">Risk-free Rate</font></td>
<td style="text-align: right"> </td>
<td> </td>
<td style="text-align: right"><font style="font-size: 10pt"> 0.91%</font></td>
<td nowrap="nowrap"> </td></tr>
<tr style="vertical-align: bottom; background-color: #CCEEFF">
<td><font style="font-size: 10pt">Maturity Date   </font></td>
<td colspan="3" style="text-align: right"><font style="font-size: 10pt">9/30/16</font></td>
<td nowrap="nowrap"> </td></tr>
</table>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.5in"> </p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">At March 31, 2016 and December 31, 2015, the estimated Level
3 fair values of the liabilities measured on a recurring basis are as follows:</p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.5in"> </p>
<table cellspacing="0" cellpadding="0" style="font: 12pt Times New Roman, Times, Serif; width: 100%">
<tr>
<td style="vertical-align: bottom"> </td>
<td style="vertical-align: bottom"> </td>
<td style="vertical-align: bottom"> </td>
<td style="vertical-align: top"> </td>
<td colspan="10" style="vertical-align: bottom"> </td>
<td style="vertical-align: bottom"> </td></tr>
<tr>
<td style="vertical-align: bottom; padding-bottom: 1.5pt"> </td>
<td style="vertical-align: bottom; padding-bottom: 1.5pt"> </td>
<td style="vertical-align: bottom; padding-bottom: 1.5pt"> </td>
<td style="vertical-align: top; padding-bottom: 1.5pt"> </td>
<td colspan="10" style="vertical-align: bottom; border-bottom: black 1.5pt solid; text-align: center"><font style="font-size: 10pt">Fair Value Measurements at March 31, 2016:</font></td>
<td style="vertical-align: bottom; padding-bottom: 1.5pt"> </td></tr>
<tr>
<td style="vertical-align: bottom; padding-bottom: 1.5pt"> </td>
<td style="vertical-align: bottom; border-bottom: black 1.5pt solid"> </td>
<td style="vertical-align: bottom; border-bottom: black 1.5pt solid"><font style="font-size: 10pt"> Carrying Value</font></td>
<td style="vertical-align: top; padding-bottom: 1.5pt"> </td>
<td colspan="2" style="vertical-align: bottom; border-bottom: black 1.5pt solid; text-align: center"><font style="font-size: 10pt">Level 1</font></td>
<td style="vertical-align: top; padding-bottom: 1.5pt"> </td>
<td style="vertical-align: top; padding-bottom: 1.5pt"> </td>
<td colspan="2" style="vertical-align: bottom; border-bottom: black 1.5pt solid; text-align: center"><font style="font-size: 10pt">Level 2</font></td>
<td style="vertical-align: top; padding-bottom: 1.5pt"> </td>
<td style="vertical-align: top; padding-bottom: 1.5pt"> </td>
<td colspan="2" style="vertical-align: bottom; border-bottom: black 1.5pt solid; text-align: center"><font style="font-size: 10pt">Level 3</font></td>
<td style="padding-bottom: 1.5pt"> </td></tr>
<tr style="background-color: #CCEEFF">
<td style="vertical-align: bottom; width: 52%"><font style="font-size: 10pt">Derivative liability-warrants liability</font></td>
<td style="vertical-align: bottom; width: 1%"><font style="font-size: 10pt"> $</font></td>
<td style="vertical-align: bottom; width: 11%; text-align: right"><font style="font-size: 10pt"> 3,512,570</font></td>
<td style="vertical-align: top; width: 1%"> </td>
<td style="vertical-align: top; width: 1%"> </td>
<td style="vertical-align: top; width: 9%; text-align: right"><font style="font-size: 10pt"> -</font></td>
<td style="vertical-align: top; width: 1%"> </td>
<td style="vertical-align: top; width: 1%"> </td>
<td style="vertical-align: top; width: 1%"> </td>
<td style="vertical-align: top; width: 9%; text-align: right"><font style="font-size: 10pt"> -</font></td>
<td style="vertical-align: top; width: 1%"> </td>
<td style="vertical-align: top; width: 1%"> </td>
<td style="vertical-align: top; width: 1%"><font style="font-size: 10pt">$</font></td>
<td style="vertical-align: top; width: 9%; text-align: right"><font style="font-size: 10pt"> 3,512,570</font></td>
<td style="width: 1%"> </td></tr>
<tr style="background-color: white">
<td style="vertical-align: bottom; padding-bottom: 1.5pt"><font style="font-size: 10pt">Derivative liability – convertible options</font></td>
<td style="vertical-align: bottom; border-bottom: black 1.5pt solid"> </td>
<td style="vertical-align: bottom; border-bottom: black 1.5pt solid; text-align: right"><font style="font-size: 10pt">198,630</font></td>
<td style="vertical-align: top; padding-bottom: 1.5pt"> </td>
<td style="vertical-align: top; border-bottom: black 1.5pt solid"> </td>
<td style="vertical-align: top; border-bottom: black 1.5pt solid; text-align: right"><font style="font-size: 10pt">-</font></td>
<td style="vertical-align: top; padding-bottom: 1.5pt"> </td>
<td style="vertical-align: top; padding-bottom: 1.5pt"> </td>
<td style="vertical-align: top; border-bottom: black 1.5pt solid"> </td>
<td style="vertical-align: top; border-bottom: black 1.5pt solid; text-align: right"><font style="font-size: 10pt">-</font></td>
<td style="vertical-align: top; padding-bottom: 1.5pt"> </td>
<td style="vertical-align: top; padding-bottom: 1.5pt"> </td>
<td style="vertical-align: top; border-bottom: black 1.5pt solid"><font style="font-size: 10pt">$</font></td>
<td style="vertical-align: top; border-bottom: black 1.5pt solid; text-align: right"><font style="font-size: 10pt">198,630</font></td>
<td style="padding-bottom: 1.5pt"> </td></tr>
<tr style="background-color: #CCEEFF">
<td style="vertical-align: bottom; padding-bottom: 3pt"><font style="font-size: 10pt">Total securities</font></td>
<td style="vertical-align: bottom; border-bottom: black 2.25pt double"><font style="font-size: 10pt"> $</font></td>
<td style="vertical-align: bottom; border-bottom: black 2.25pt double; text-align: right"><font style="font-size: 10pt">3,711,200</font></td>
<td style="vertical-align: top; padding-bottom: 3pt"> </td>
<td style="vertical-align: top; border-bottom: black 2.25pt double"><font style="font-size: 10pt">$</font></td>
<td style="vertical-align: top; border-bottom: black 2.25pt double; text-align: right"><font style="font-size: 10pt">-</font></td>
<td style="vertical-align: top; padding-bottom: 3pt"> </td>
<td style="vertical-align: top; padding-bottom: 3pt"> </td>
<td style="vertical-align: top; border-bottom: black 2.25pt double"><font style="font-size: 10pt">$</font></td>
<td style="vertical-align: top; border-bottom: black 2.25pt double; text-align: right"><font style="font-size: 10pt">-</font></td>
<td style="vertical-align: top; padding-bottom: 3pt"> </td>
<td style="vertical-align: top; padding-bottom: 3pt"> </td>
<td style="vertical-align: top; border-bottom: black 2.25pt double"><font style="font-size: 10pt">$</font></td>
<td style="vertical-align: top; border-bottom: black 2.25pt double; text-align: right"><font style="font-size: 10pt">$3,711,200</font></td>
<td style="padding-bottom: 3pt"> </td></tr>
<tr style="background-color: white">
<td style="vertical-align: bottom"> </td>
<td style="vertical-align: bottom"> </td>
<td style="vertical-align: bottom"> </td>
<td style="vertical-align: top"> </td>
<td colspan="10" style="vertical-align: bottom"> </td>
<td> </td></tr>
<tr style="background-color: white">
<td style="vertical-align: bottom; padding-bottom: 1.5pt"> </td>
<td style="vertical-align: bottom; padding-bottom: 1.5pt"> </td>
<td style="vertical-align: bottom; padding-bottom: 1.5pt"> </td>
<td style="vertical-align: top; padding-bottom: 1.5pt"> </td>
<td colspan="10" style="vertical-align: bottom; border-bottom: black 1.5pt solid; text-align: center"><font style="font-size: 10pt">Fair Value Measurements at December 31, 2015:</font></td>
<td style="padding-bottom: 1.5pt"> </td></tr>
<tr style="background-color: white">
<td style="vertical-align: bottom; padding-bottom: 1.5pt"> </td>
<td style="vertical-align: bottom; border-bottom: black 1.5pt solid"> </td>
<td style="vertical-align: bottom; border-bottom: black 1.5pt solid"><font style="font-size: 10pt"> Carrying Value</font></td>
<td style="vertical-align: top; padding-bottom: 1.5pt"> </td>
<td colspan="2" style="vertical-align: bottom; border-bottom: black 1.5pt solid; text-align: center"><font style="font-size: 10pt">Level 1</font></td>
<td style="vertical-align: top; padding-bottom: 1.5pt"> </td>
<td style="vertical-align: top; padding-bottom: 1.5pt"> </td>
<td colspan="2" style="vertical-align: bottom; border-bottom: black 1.5pt solid; text-align: center"><font style="font-size: 10pt">Level 2</font></td>
<td style="vertical-align: top; padding-bottom: 1.5pt"> </td>
<td style="vertical-align: top; padding-bottom: 1.5pt"> </td>
<td colspan="2" style="vertical-align: bottom; border-bottom: black 1.5pt solid; text-align: center"><font style="font-size: 10pt">Level 3</font></td>
<td style="padding-bottom: 1.5pt"> </td></tr>
<tr style="background-color: #CCEEFF">
<td style="vertical-align: bottom"><font style="font-size: 10pt">Earn-out liability</font></td>
<td style="vertical-align: bottom"><font style="font-size: 10pt"> $</font></td>
<td style="vertical-align: bottom; text-align: right"><font style="font-size: 10pt">      -</font></td>
<td style="vertical-align: top"> </td>
<td style="vertical-align: top"><font style="font-size: 10pt">$</font></td>
<td style="vertical-align: top; text-align: right"><font style="font-size: 10pt">-</font></td>
<td style="vertical-align: top"> </td>
<td style="vertical-align: top"> </td>
<td style="vertical-align: top"><font style="font-size: 10pt">$</font></td>
<td style="vertical-align: top; text-align: right"><font style="font-size: 10pt">-</font></td>
<td style="vertical-align: top"> </td>
<td style="vertical-align: top"> </td>
<td style="vertical-align: top"><font style="font-size: 10pt">$</font></td>
<td style="vertical-align: top; text-align: right"><font style="font-size: 10pt">      -</font></td>
<td> </td></tr>
<tr style="background-color: white">
<td style="vertical-align: bottom; padding-bottom: 1.5pt"><font style="font-size: 10pt">Derivative liability – convertible options</font></td>
<td style="vertical-align: bottom; border-bottom: black 1.5pt solid"> </td>
<td style="vertical-align: bottom; border-bottom: black 1.5pt solid; text-align: right"><font style="font-size: 10pt">179</font></td>
<td style="vertical-align: top; padding-bottom: 1.5pt"> </td>
<td style="vertical-align: top; border-bottom: black 1.5pt solid"><font style="font-size: 10pt">$</font></td>
<td style="vertical-align: top; border-bottom: black 1.5pt solid; text-align: right"><font style="font-size: 10pt">-</font></td>
<td style="vertical-align: top; padding-bottom: 1.5pt"> </td>
<td style="vertical-align: top; padding-bottom: 1.5pt"> </td>
<td style="vertical-align: top; border-bottom: black 1.5pt solid"><font style="font-size: 10pt">$</font></td>
<td style="vertical-align: top; border-bottom: black 1.5pt solid; text-align: right"><font style="font-size: 10pt">-</font></td>
<td style="vertical-align: top; padding-bottom: 1.5pt"> </td>
<td style="vertical-align: top; padding-bottom: 1.5pt"> </td>
<td style="vertical-align: top; border-bottom: black 1.5pt solid"><font style="font-size: 10pt">$</font></td>
<td style="vertical-align: top; border-bottom: black 1.5pt solid; text-align: right"><font style="font-size: 10pt">        179</font></td>
<td style="padding-bottom: 1.5pt"> </td></tr>
<tr style="background-color: #CCEEFF">
<td style="vertical-align: bottom; padding-bottom: 3pt"><font style="font-size: 10pt">Total securities</font></td>
<td style="vertical-align: bottom; border-bottom: black 2.25pt double"><font style="font-size: 10pt"> $</font></td>
<td style="vertical-align: bottom; border-bottom: black 2.25pt double; text-align: right"><font style="font-size: 10pt">179</font></td>
<td style="vertical-align: top; padding-bottom: 3pt"> </td>
<td style="vertical-align: top; border-bottom: black 2.25pt double"><font style="font-size: 10pt">$</font></td>
<td style="vertical-align: top; border-bottom: black 2.25pt double; text-align: right"><font style="font-size: 10pt">-</font></td>
<td style="vertical-align: top; padding-bottom: 3pt"> </td>
<td style="vertical-align: top; padding-bottom: 3pt"> </td>
<td style="vertical-align: top; border-bottom: black 2.25pt double"><font style="font-size: 10pt">$</font></td>
<td style="vertical-align: top; border-bottom: black 2.25pt double; text-align: right"><font style="font-size: 10pt">-</font></td>
<td style="vertical-align: top; padding-bottom: 3pt"> </td>
<td style="vertical-align: top; padding-bottom: 3pt"> </td>
<td style="vertical-align: top; border-bottom: black 2.25pt double"><font style="font-size: 10pt">$</font></td>
<td style="vertical-align: top; border-bottom: black 2.25pt double; text-align: right"><font style="font-size: 10pt">      179</font></td>
<td style="padding-bottom: 3pt"> </td></tr>
</table>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"> </p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.5in"> </p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">The following tables present the activity for Level 3 liabilities
for the three months ended March 31, 2016:</p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.5in"> </p>
<table cellspacing="0" cellpadding="0" style="font: 12pt Times New Roman, Times, Serif; width: 100%">
<tr style="vertical-align: bottom">
<td colspan="16" style="text-decoration: underline; text-align: center"><font style="font-size: 10pt"><b><u>Fair Value Measurements Using Level 3 Inputs</u></b></font></td>
<td nowrap="nowrap"> </td></tr>
<tr style="vertical-align: bottom">
<td colspan="16"> </td>
<td nowrap="nowrap"> </td></tr>
<tr style="vertical-align: bottom">
<td style="padding-bottom: 1.5pt"> </td>
<td style="padding-bottom: 1.5pt"> </td>
<td colspan="3" style="border-bottom: black 1.5pt solid">
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center">Warrant</p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center">Derivative</p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center">Liability</p></td>
<td style="padding-bottom: 1.5pt"> </td>
<td colspan="2" style="border-bottom: black 1.5pt solid">
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center">Notes</p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center">Conversion</p></td>
<td nowrap="nowrap" style="padding-bottom: 1.5pt"> </td>
<td style="padding-bottom: 1.5pt"> </td>
<td colspan="2" style="border-bottom: black 1.5pt solid">
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center">Liability</p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center">Earn-out</p></td>
<td nowrap="nowrap" style="padding-bottom: 1.5pt"> </td>
<td style="padding-bottom: 1.5pt"> </td>
<td colspan="2" style="border-bottom: black 1.5pt solid; text-align: center"><font style="font-size: 10pt">Total</font></td>
<td nowrap="nowrap" style="padding-bottom: 1.5pt"> </td></tr>
<tr style="vertical-align: bottom; background-color: #CCEEFF">
<td style="width: 52%"><font style="font-size: 10pt">Balance - December 31, 2015</font></td>
<td style="width: 1%; text-align: right"> </td>
<td style="width: 1%"><font style="font-size: 10pt">$</font></td>
<td style="width: 9%; text-align: right"><font style="font-size: 10pt">-</font></td>
<td nowrap="nowrap" style="width: 1%"> </td>
<td style="width: 1%; text-align: right"> </td>
<td style="width: 1%"> </td>
<td style="width: 9%; text-align: right"><font style="font-size: 10pt">179</font></td>
<td nowrap="nowrap" style="width: 1%"> </td>
<td style="width: 1%; text-align: right"> </td>
<td style="width: 1%"> </td>
<td style="width: 9%; text-align: right"><font style="font-size: 10pt">-</font></td>
<td nowrap="nowrap" style="width: 1%"> </td>
<td style="width: 1%; text-align: right"> </td>
<td style="width: 1%"><font style="font-size: 10pt">$</font></td>
<td style="width: 9%; text-align: right"><font style="font-size: 10pt">179</font></td>
<td nowrap="nowrap" style="width: 1%"> </td></tr>
<tr style="vertical-align: bottom; background-color: white">
<td style="padding-left: 11pt"><font style="font-size: 10pt; letter-spacing: 9pt">   </font><font style="font-size: 10pt"> Additions during the period</font></td>
<td style="text-align: right"> </td>
<td> </td>
<td style="text-align: right"><font style="font-size: 10pt">4,015,675</font></td>
<td nowrap="nowrap"> </td>
<td style="text-align: right"> </td>
<td> </td>
<td style="text-align: right"><font style="font-size: 10pt">198,630</font></td>
<td nowrap="nowrap"> </td>
<td style="text-align: right"> </td>
<td> </td>
<td style="text-align: right"><font style="font-size: 10pt">-</font></td>
<td nowrap="nowrap"> </td>
<td style="text-align: right"> </td>
<td> </td>
<td style="text-align: right"><font style="font-size: 10pt">4,214,305</font></td>
<td nowrap="nowrap"> </td></tr>
<tr style="vertical-align: bottom; background-color: #CCEEFF">
<td><font style="font-size: 10pt; letter-spacing: 9pt">   </font><font style="font-size: 10pt"> Total Unrealized (gains) or losses include in net loss</font></td>
<td style="text-align: right"> </td>
<td> </td>
<td style="text-align: right"><font style="font-size: 10pt">(503,105</font></td>
<td nowrap="nowrap"><font style="font-size: 10pt">)</font></td>
<td style="text-align: right"> </td>
<td> </td>
<td style="text-align: right"><font style="font-size: 10pt">(179</font></td>
<td nowrap="nowrap"><font style="font-size: 10pt">) </font></td>
<td style="text-align: right"> </td>
<td> </td>
<td style="text-align: right"><font style="font-size: 10pt">-</font></td>
<td nowrap="nowrap"> </td>
<td style="text-align: right"> </td>
<td> </td>
<td style="text-align: right"><font style="font-size: 10pt">(503,284</font></td>
<td nowrap="nowrap"><font style="font-size: 10pt">) </font></td></tr>
<tr style="vertical-align: bottom; background-color: white">
<td><font style="font-size: 10pt; letter-spacing: 9pt">   </font><font style="font-size: 10pt"> Settlements during the period</font></td>
<td style="text-align: right"> </td>
<td> </td>
<td style="text-align: right"><font style="font-size: 10pt">-</font></td>
<td nowrap="nowrap"> </td>
<td style="text-align: right"> </td>
<td> </td>
<td style="text-align: right"><font style="font-size: 10pt">-</font></td>
<td nowrap="nowrap"> </td>
<td style="text-align: right"> </td>
<td> </td>
<td style="text-align: right"><font style="font-size: 10pt">-</font></td>
<td nowrap="nowrap"> </td>
<td style="text-align: right"> </td>
<td> </td>
<td style="text-align: right"><font style="font-size: 10pt">-</font></td>
<td nowrap="nowrap"> </td></tr>
<tr style="vertical-align: bottom; background-color: #CCEEFF">
<td><font style="letter-spacing: 9pt"> <font style="font-size: 10pt">  </font></font><font style="font-size: 10pt"> Transfers in and/or out of Level 3</font></td>
<td style="padding-bottom: 1.5pt; text-align: right"> </td>
<td style="border-bottom: black 1.5pt solid"> </td>
<td style="border-bottom: black 1.5pt solid; text-align: right"><font style="font-size: 10pt">-</font></td>
<td nowrap="nowrap" style="padding-bottom: 1.5pt"> </td>
<td style="padding-bottom: 1.5pt; text-align: right"> </td>
<td style="border-bottom: black 1.5pt solid"> </td>
<td style="border-bottom: black 1.5pt solid; text-align: right"><font style="font-size: 10pt">-</font></td>
<td nowrap="nowrap" style="padding-bottom: 1.5pt"> </td>
<td style="padding-bottom: 1.5pt; text-align: right"> </td>
<td style="border-bottom: black 1.5pt solid"> </td>
<td style="border-bottom: black 1.5pt solid; text-align: right"><font style="font-size: 10pt">-</font></td>
<td nowrap="nowrap" style="padding-bottom: 1.5pt"> </td>
<td style="padding-bottom: 1.5pt; text-align: right"> </td>
<td style="border-bottom: black 1.5pt solid"> </td>
<td style="border-bottom: black 1.5pt solid; text-align: right"><font style="font-size: 10pt">-</font></td>
<td nowrap="nowrap" style="padding-bottom: 1.5pt"> </td></tr>
<tr style="vertical-align: bottom; background-color: white">
<td style="padding-bottom: 3pt"><font style="font-size: 10pt">Balance - March 31, 2016</font></td>
<td style="padding-bottom: 3pt; text-align: right"> </td>
<td style="border-bottom: black 2.25pt double"><font style="font-size: 10pt">$</font></td>
<td style="border-bottom: black 2.25pt double; text-align: right"><font style="font-size: 10pt">3,512,570</font></td>
<td nowrap="nowrap" style="padding-bottom: 3pt"> </td>
<td style="padding-bottom: 3pt; text-align: right"> </td>
<td style="border-bottom: black 2.25pt double"> </td>
<td style="border-bottom: black 2.25pt double; text-align: right"><font style="font-size: 10pt">198,630</font></td>
<td nowrap="nowrap" style="padding-bottom: 3pt"> </td>
<td style="padding-bottom: 3pt; text-align: right"> </td>
<td style="border-bottom: black 2.25pt double"> </td>
<td style="border-bottom: black 2.25pt double; text-align: right"><font style="font-size: 10pt">-</font></td>
<td nowrap="nowrap" style="padding-bottom: 3pt"> </td>
<td style="padding-bottom: 3pt; text-align: right"> </td>
<td style="border-bottom: black 2.25pt double"><font style="font-size: 10pt">$</font></td>
<td style="border-bottom: black 2.25pt double; text-align: right"><font style="font-size: 10pt">3,711,200</font></td>
<td nowrap="nowrap" style="padding-bottom: 3pt"> </td></tr>
</table>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.5in"> </p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">The Company expenses advertising costs as incurred. The Company
has no existing arrangements under which the Company provides or receives advertising services from others for any consideration
other than cash. Advertising expenses from continuing operations (primarily in the form of Internet direct marketing) totaled $31,809
and $69,818 for the three months ended March 31, 2016 and 2015, respectively.</p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">From time to time, the Company may become
involved in litigation and other legal actions. The Company estimates the range of liability related to any pending litigation
where the amount and range of loss can be estimated. The Company records its best estimate of a loss when the loss is considered
probable. Where a liability is probable and there is a range of estimated losses with no best estimate in the range, the Company
records a charge equal to at least the minimum estimated liability for a loss contingency when both of the following conditions
are met: (i) information available prior to issuance of the financial statements indicates that it is probable that an asset had
been impaired or a liability had been incurred at the date of the financial statements and (ii) the range of loss can be reasonably
estimated. </p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">The Company accounts for goodwill under ASC 350 “Intangibles – Goodwill and Other” (“ASC 350”). ASC 350 requires
an evaluation of impairment by assessing qualitative factors, and if necessary, applying a fair-value based test. The goodwill
impairment test requires qualitative analysis to determine whether is it more likely than not that the fair value of a reporting
unit is less than the carrying amount, including goodwill. An indication of impairment through analysis of these qualitative factors
initiates a two-step process, which requires management to make judgments in determining what assumptions to use in the calculation.
The first step of the process consists of estimating the fair value of the Company’s reporting units based on discounted
cash flow models using revenue and profit forecasts and comparing the estimated fair values with the carrying values of the Company’s
reporting units which include the goodwill. If the estimated fair values are less than the carrying values, a second step is performed
to compute the amount of the impairment by determining an “implied fair value” of goodwill.  The determination
of the Company’s “implied fair value” requires the Company to allocate the estimated fair value to the assets
and liabilities of the reporting unit. Any unallocated fair value represents the “implied fair value” of goodwill,
which is compared to the corresponding carrying value. The Company tested goodwill impairment at December 31, 2015 and concluded
that goodwill was fully impaired. Goodwill was written down in the amount of $3,202,276.</p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">Intangible assets consist of intellectual
property/technology, customer lists, and trade-name/marks acquired in business combinations under the purchase method of accounting
are recorded at fair value net of accumulated amortization since the acquisition date. Amortization is calculated using the straight
line method over the estimated useful lives at the following annual rates:</p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.5in"> </p>
<table cellspacing="0" cellpadding="0" style="font: 12pt Times New Roman, Times, Serif; width: 100%">
<tr style="vertical-align: bottom">
<td> </td>
<td> </td>
<td colspan="2" style="text-align: center"><font style="font-size: 10pt"><b>Useful Lives</b></font></td>
<td nowrap="nowrap"> </td></tr>
<tr style="vertical-align: bottom; background-color: #CCEEFF">
<td style="width: 89%"><font style="font-size: 10pt">IP/technology</font></td>
<td style="width: 1%"> </td>
<td style="width: 1%"> </td>
<td style="width: 8%; text-align: right"><font style="font-size: 10pt">10</font></td>
<td nowrap="nowrap" style="width: 1%"> </td></tr>
<tr style="vertical-align: bottom; background-color: white">
<td><font style="font-size: 10pt">Customer lists</font></td>
<td> </td>
<td> </td>
<td style="text-align: right"><font style="font-size: 10pt">0</font></td>
<td nowrap="nowrap"> </td></tr>
<tr style="vertical-align: bottom; background-color: #CCEEFF">
<td><font style="font-size: 10pt">Trade-name/marks</font></td>
<td> </td>
<td> </td>
<td style="text-align: right"><font style="font-size: 10pt">10</font></td>
<td nowrap="nowrap"> </td></tr>
</table>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.5in"> </p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">The Company reviews its finite-lived intangible
assets for impairment whenever events or changes in circumstances indicate that the carrying amount of finite-lived intangible
asset may not be recoverable. Recoverability of a finite-lived intangible asset is measured by a comparison of its carrying amount
to the undiscounted future cash flows expected to be generated by the asset. If the asset is considered to be impaired, the impairment
to be recognized is measured by the amount by which the carrying amount of the asset exceeds the fair value of the asset, which
is determined based on discounted cash flows.  Amortization of intangible assets was $48,285 and $83,899 for the three
months ended March 31, 2016 and 2015, respectively.</p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.5in"> </p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">According to the Financial Accounting Standards
Board Accounting Standards Codification (“ASC”) 360 (“ASC 360”), a long-lived asset (group) that is held
and used should be reviewed for impairment whenever events or changes in circumstances indicate that the carrying amount (book
value) of the long-lived asset (group) might not be recoverable (i.e. information indicates that an impairment might exist). As
a result, companies are not required to perform an impairment analysis (i.e. test the asset (group) for recoverability and potentially
measure an impairment loss) if indicators of impairment are not present. Instead, entities would assess the need the need for an
impairment write-down only if an indicator of impairment is present. Companies are responsible for routinely assessing whether
impairment indicators are present.  Based on the impairment analysis completed, it was determined that our Customer lists
were fully impaired. This resulted in the write down of these intangible assets by $1,189,246 at December 31, 2015.</p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">In February 2016, the FASB issued ASU 2016-02,
Leases which amended guidance for lease arrangements in order to increase transparency and comparability by providing additional
information to users of financial statements regarding an entity's leasing activities. The revised guidance seeks to achieve this
objective by requiring reporting entities to recognize lease assets and lease liabilities on the balance sheet for substantially
all lease arrangements. The guidance, which is required to be adopted in the first quarter of 2019, will be applied on a modified
retrospective basis beginning with the earliest period presented. Early adoption is permitted.  We are currently evaluating
the impact of adopting this guidance on our consolidated financial statements.</p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in"> </p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">On May 28, 2014, the FASB issued ASU 2014-09,
Revenue from Contracts with Customers (Topic 606), with an effective date for annual reporting periods beginning after December
15, 2016, including interim periods within that reporting period, for public business entities, certain not-for-profit entities,
and certain employee benefit plans. The effective date for ASU 2014-09 was deferred by one year through the issuance of ASU 2015-14,
Revenue from Contracts with Customers – Deferral of the Effective Date, to annual reporting periods beginning after December
15, 2017, including interim reporting periods within that reporting period. Earlier application is permitted only as of annual
reporting periods beginning after December 15, 2016, including interim reporting periods within that reporting period. The Company
is evaluating the impact, if any, the pronouncement will have on both historical and future financial positions and results of
operations.</p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"></p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"></p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.5in"> </p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">In August 2014, the FASB issued ASU No. 2014-15, <i>Presentation
of Financial Statements—Going Concern </i>(“ASU 2014-15”)<i>,</i> which states management should evaluate
whether there are conditions or events, considered in the aggregate, that raise a substantial doubt about the entity’s ability
to continue as a going concern within one year after the date that the financial statements are issued. Management’s
evaluation should be based on relevant conditions and events that are known and likely to occur at the date that the financial
statements are issued. ASU 2014-15 will be effective for the annual period ending after December 15, 2016, and for annual
periods and interim periods thereafter, however, early application is permitted. Management does not expect the adoption
of ASU 2014-15 to have a material impact on the Company’s consolidated financial statements, although there may be additional
disclosures upon adoption.</p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.5in"> </p>
<p style="font: 12pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.5in"></p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">On March 30, 2016, the FASB issued ASU
2016-09, <i>Compensation—Stock Compensation (Topic 718): Improvements to Employee Share-Based Payment Accounting </i>(“ASU
2016-09”)<i>. </i>ASU 2016-09 simplifies several aspects of the accounting for employee share-based payment transactions
including the accounting for income taxes, forfeitures, and statutory tax withholding requirements, as well as classification
in the statement of cash flows.  ASU 2016-09 will take effect for fiscal years, and interim periods within those fiscal
years, beginning after December 15, 2017, with early application permitted. Management does not expect the adoption of ASU 2016-09
to have a material impact on the Company’s consolidated financial statements, although there may be additional disclosures
upon adoption.</p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">  </p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"></p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">The Company operates in one reportable
segment now due to the discontinuance of its Card Division on November 26, 2014.</p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">Accordingly, no segment disclosures have
been presented herein.</p>
17895859
1669205
132247
0
<p style="margin: 0pt"></p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">Certain reclassifications were made to
the 2015 financial statement presentation to conform to the 2016 financial statement presentation.  These reclassifications
relate to balances from discontinued operations, which have been included in respective balances from continuing operations.</p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"> </p>
<p style="margin: 0pt"></p>
3560958
0