<!--egx--><p align="center" style='margin:0in;margin-bottom:.0001pt;text-autospace:none;margin-top:11.0pt;margin-right:0in;margin-bottom:0in;margin-left:13.2pt;margin-bottom:.0001pt;text-align:center'> </p> <table border="0" cellspacing="0" cellpadding="0" style='border-collapse:collapse'> <tr style='height:12.4pt'> <td width="21" valign="top" style='width:15.8pt;background:white;padding:0;height:12.4pt'> <p style='margin:0in;margin-bottom:.0001pt;text-autospace:none'><b>1.</b></p> </td> <td width="7" valign="top" style='width:5.25pt;background:white;padding:0;height:12.4pt'> <p style='margin:0in;margin-bottom:.0001pt;text-autospace:none'> </p> </td> <td width="7" valign="top" style='width:5.25pt;background:white;padding:0;height:12.4pt'> <p style='margin:0in;margin-bottom:.0001pt;text-autospace:none'> </p> </td> <td width="508" valign="top" style='width:381.3pt;background:white;padding:0;height:12.4pt'> <p style='margin:0in;margin-bottom:.0001pt;text-autospace:none'><b>UNAUDITED INTERIM FINANCIAL STATEMENTS</b></p> </td> </tr> </table> <p style='margin:0in;margin-bottom:.0001pt;text-autospace:none'>The unaudited condensed consolidated financial statements and related notes have been prepared pursuant to the rules and regulations of the Securities and Exchange Commission. </p> <p style='margin:0in;margin-bottom:.0001pt;text-autospace:none'>Accordingly, certain information and footnote disclosures normally included in financial statements prepared in accordance with generally accepted accounting principles have been omitted pursuant to such rules and regulations. The accompanying unaudited condensed consolidated financial statements and related notes should be read in conjunction with the audited consolidated financial statements of the Company and notes thereto for the year ended December 31, 2016.</p> <p style='margin:0in;margin-bottom:.0001pt;text-autospace:none'> </p> <p style='margin:0in;margin-bottom:.0001pt;text-autospace:none;margin-left:4.4pt'>The information furnished reflects, in the opinion of management, all adjustments, consisting of normal recurring accruals, necessary for a fair presentation of the results of the interim periods presented. Operating results of the interim period are not necessarily indicative of the amounts that will be reported for the year ending December 31, 2017.  </p> <p style='margin:0in;margin-bottom:.0001pt;text-autospace:none;margin-left:4.4pt'> </p> <p style='margin:0in;margin-bottom:.0001pt;text-autospace:none;text-autospace:ideograph-numeric ideograph-other'><u>Income (Loss) Per Share</u></p> <p style='margin:0in;margin-bottom:.0001pt;text-autospace:none;text-autospace:ideograph-numeric ideograph-other'> </p> <p style='margin:0in;margin-bottom:.0001pt;text-autospace:none;text-autospace:ideograph-numeric ideograph-other'>Income (loss) per share – basic is calculated by dividing net income (loss) by the weighted average number of shares of stock outstanding during the year, including shares issuable without additional consideration. Income per share – assuming dilution is calculated by dividing net income by the weighted average number of shares outstanding during the year adjusted for the effect of dilutive potential shares calculated using the treasury stock method.</p> <p style='margin:0in;margin-bottom:.0001pt;text-autospace:none;text-autospace:ideograph-numeric ideograph-other'> </p> <table border="0" cellspacing="0" cellpadding="0"> <tr align="left"> <td width="666" colspan="4" valign="bottom" style='width:499.5pt;padding:0'> <p align="center" style='margin:0in;margin-bottom:.0001pt;text-autospace:none;text-align:center'>Schedule of Income (Loss) Per Share</p> </td> </tr> <tr align="left"> <td width="444" valign="bottom" style='width:333.0pt;padding:0'> <p style='margin:0in;margin-bottom:.0001pt;text-autospace:none'> </p> </td> <td width="222" colspan="3" valign="bottom" style='width:166.5pt;padding:0'> <p align="center" style='margin:0in;margin-bottom:.0001pt;text-autospace:none;text-align:center'>Three Months Ended</p> </td> </tr> <tr align="left"> <td width="444" valign="bottom" style='width:333.0pt;padding:0'> <p style='margin:0in;margin-bottom:.0001pt;text-autospace:none'> </p> </td> <td width="108" valign="bottom" style='width:81.0pt;padding:0'> <p align="center" style='margin:0in;margin-bottom:.0001pt;text-autospace:none;text-align:center'>March 31, 2017</p> </td> <td width="12" valign="bottom" style='width:9.0pt;padding:0'> <p style='margin:0in;margin-bottom:.0001pt;text-autospace:none'> </p> </td> <td width="102" valign="bottom" style='width:76.5pt;padding:0'> <p align="center" style='margin:0in;margin-bottom:.0001pt;text-autospace:none;text-align:center'>March 31, 2016</p> </td> </tr> <tr align="left"> <td width="444" valign="bottom" style='width:333.0pt;padding:0'> <p style='margin:0in;margin-bottom:.0001pt;text-autospace:none'>Numerator:</p> </td> <td width="108" valign="bottom" style='width:81.0pt;padding:0'> <p style='margin:0in;margin-bottom:.0001pt;text-autospace:none'> </p> </td> <td width="12" valign="bottom" style='width:9.0pt;padding:0'> <p style='margin:0in;margin-bottom:.0001pt;text-autospace:none'> </p> </td> <td width="102" valign="bottom" style='width:76.5pt;padding:0'> <p style='margin:0in;margin-bottom:.0001pt;text-autospace:none'> </p> </td> </tr> <tr align="left"> <td width="444" valign="bottom" style='width:333.0pt;background:#CCEEFF;padding:0'> <p style='margin:0in;margin-bottom:.0001pt;text-autospace:none'>Net loss available to common shareholders</p> </td> <td width="108" valign="bottom" style='width:81.0pt;background:#CCEEFF;padding:0'> <p style='margin:0in;margin-bottom:.0001pt;text-autospace:none'>   $                 (1,535)</p> </td> <td width="12" valign="bottom" style='width:9.0pt;background:#CCEEFF;padding:0'></td> <td width="102" valign="bottom" style='width:76.5pt;background:#CCEEFF;padding:0'> <p style='margin:0in;margin-bottom:.0001pt;text-autospace:none'>   $             (43,055)</p> </td> </tr> <tr align="left"> <td width="444" valign="bottom" style='width:333.0pt;padding:0'> <p style='margin:0in;margin-bottom:.0001pt;text-autospace:none'>Denominator:</p> </td> <td width="108" valign="bottom" style='width:81.0pt;padding:0'></td> <td width="12" valign="bottom" style='width:9.0pt;padding:0'></td> <td width="102" valign="bottom" style='width:76.5pt;padding:0'></td> </tr> <tr align="left"> <td width="444" valign="bottom" style='width:333.0pt;background:#CCEEFF;padding:0'> <p style='margin:0in;margin-bottom:.0001pt;text-autospace:none'>Weighted average shares and share equivalents outstanding – basic </p> </td> <td width="108" valign="bottom" style='width:81.0pt;border:none;border-bottom:solid black 1.0pt;background:#CCEEFF;padding:0'> <p style='margin:0in;margin-bottom:.0001pt;text-autospace:none'>             11,871,009 </p> </td> <td width="12" valign="bottom" style='width:9.0pt;background:#CCEEFF;padding:0'></td> <td width="102" valign="bottom" style='width:76.5pt;border:none;border-bottom:solid black 1.0pt;background:#CCEEFF;padding:0'> <p style='margin:0in;margin-bottom:.0001pt;text-autospace:none'>               9,118,161 </p> </td> </tr> <tr align="left"> <td width="444" valign="bottom" style='width:333.0pt;padding:0'> <p style='margin:0in;margin-bottom:.0001pt;text-autospace:none'>Effect of preferred stock</p> </td> <td width="108" valign="bottom" style='width:81.0pt;padding:0'> <p style='margin:0in;margin-bottom:.0001pt;text-autospace:none'>                   987,102 </p> </td> <td width="12" valign="bottom" style='width:9.0pt;padding:0'> <p style='margin:0in;margin-bottom:.0001pt;text-autospace:none'> </p> </td> <td width="102" valign="bottom" style='width:76.5pt;padding:0'> <p style='margin:0in;margin-bottom:.0001pt;text-autospace:none'>                  987,102 </p> </td> </tr> <tr align="left"> <td width="444" valign="bottom" style='width:333.0pt;background:#CCEEFF;padding:0'> <p style='margin:0in;margin-bottom:.0001pt;text-autospace:none'>Effect of dilutive stock options</p> </td> <td width="108" valign="bottom" style='width:81.0pt;background:#CCEEFF;padding:0'> <p style='margin:0in;margin-bottom:.0001pt;text-autospace:none'>                1,257,613 </p> </td> <td width="12" valign="bottom" style='width:9.0pt;background:#CCEEFF;padding:0'> <p style='margin:0in;margin-bottom:.0001pt;text-autospace:none'> </p> </td> <td width="102" valign="bottom" style='width:76.5pt;background:#CCEEFF;padding:0'> <p style='margin:0in;margin-bottom:.0001pt;text-autospace:none'>                  417,246 </p> </td> </tr> <tr align="left"> <td width="444" valign="bottom" style='width:333.0pt;padding:0'> <p style='margin:0in;margin-bottom:.0001pt;text-autospace:none'>Effect of dilutive warrants</p> </td> <td width="108" valign="bottom" style='width:81.0pt;padding:0'> <p style='margin:0in;margin-bottom:.0001pt;text-autospace:none'>                   202,647 </p> </td> <td width="12" valign="bottom" style='width:9.0pt;padding:0'> <p style='margin:0in;margin-bottom:.0001pt;text-autospace:none'> </p> </td> <td width="102" valign="bottom" style='width:76.5pt;padding:0'> <p style='margin:0in;margin-bottom:.0001pt;text-autospace:none'>                  216,667 </p> </td> </tr> <tr align="left"> <td width="444" valign="bottom" style='width:333.0pt;background:#CCEEFF;padding:0'> <p style='margin:0in;margin-bottom:.0001pt;text-autospace:none'>Weighted average shares and share equivalents outstanding – assuming dilution</p> </td> <td width="108" valign="bottom" style='width:81.0pt;border-top:solid windowtext 1.0pt;border-left:none;border-bottom:solid windowtext 1.0pt;border-right:none;background:#CCEEFF;padding:0'> <p style='margin:0in;margin-bottom:.0001pt;text-autospace:none'>             14,318,371 </p> </td> <td width="12" valign="bottom" style='width:9.0pt;background:#CCEEFF;padding:0'> <p style='margin:0in;margin-bottom:.0001pt;text-autospace:none'> </p> </td> <td width="102" valign="bottom" style='width:76.5pt;border-top:solid windowtext 1.0pt;border-left:none;border-bottom:solid windowtext 1.0pt;border-right:none;background:#CCEEFF;padding:0'> <p style='margin:0in;margin-bottom:.0001pt;text-autospace:none'>            10,739,176 </p> </td> </tr> <tr align="left"> <td width="444" valign="bottom" style='width:333.0pt;padding:0'> <p style='margin:0in;margin-bottom:.0001pt;text-autospace:none'> </p> </td> <td width="108" valign="bottom" style='width:81.0pt;padding:0'></td> <td width="12" valign="bottom" style='width:9.0pt;padding:0'></td> <td width="102" valign="bottom" style='width:76.5pt;padding:0'></td> </tr> <tr align="left"> <td width="444" valign="bottom" style='width:333.0pt;background:#CCEEFF;padding:0'> <p style='margin:0in;margin-bottom:.0001pt;text-autospace:none'>Net loss per share — basic and diluted</p> </td> <td width="108" valign="bottom" style='width:81.0pt;border:none;border-bottom:solid black 1.0pt;background:#CCEEFF;padding:0'> <p style='margin:0in;margin-bottom:.0001pt;text-autospace:none'>   $                     (.00)</p> </td> <td width="12" valign="bottom" style='width:9.0pt;background:#CCEEFF;padding:0'></td> <td width="102" valign="bottom" style='width:76.5pt;border:none;border-bottom:solid black 1.0pt;background:#CCEEFF;padding:0'> <p style='margin:0in;margin-bottom:.0001pt;text-autospace:none'>   $                   (.00)</p> </td> </tr> </table> <p style='margin:0in;margin-bottom:.0001pt;text-autospace:none'> </p> <p style='margin:0in;margin-bottom:.0001pt;text-autospace:none;text-autospace:ideograph-numeric ideograph-other'> Basic and diluted loss per share were the same for the three months ended March 31, 2017 and 2016 because there was a net loss for the period. </p> <p style='margin:0in;margin-bottom:.0001pt;text-autospace:none'> </p> <table border="0" cellspacing="0" cellpadding="0"> <tr align="left"> <td width="666" colspan="4" valign="bottom" style='width:499.5pt;padding:0'> <p align="center" style='margin:0in;margin-bottom:.0001pt;text-autospace:none;text-align:center'>Schedule of Anti-dilutive Securities Excluded</p> </td> </tr> <tr align="left"> <td width="438" valign="bottom" style='width:328.5pt;padding:0'> <p style='margin:0in;margin-bottom:.0001pt;text-autospace:none'> </p> </td> <td width="228" colspan="3" valign="bottom" style='width:171.0pt;padding:0'> <p align="center" style='margin:0in;margin-bottom:.0001pt;text-autospace:none;text-align:center'>Three Months Ended</p> </td> </tr> <tr align="left"> <td width="438" valign="bottom" style='width:328.5pt;padding:0'> <p style='margin:0in;margin-bottom:.0001pt;text-autospace:none'> </p> </td> <td width="114" valign="bottom" style='width:85.5pt;padding:0'> <p align="center" style='margin:0in;margin-bottom:.0001pt;text-autospace:none;text-align:center'>March 31, 2017</p> </td> <td width="6" valign="bottom" style='width:4.5pt;padding:0'> <p style='margin:0in;margin-bottom:.0001pt;text-autospace:none'> </p> </td> <td width="108" valign="bottom" style='width:81.0pt;padding:0'> <p align="center" style='margin:0in;margin-bottom:.0001pt;text-autospace:none;text-align:center'>March 31, 2016</p> </td> </tr> <tr align="left"> <td width="438" valign="bottom" style='width:328.5pt;background:#CCEEFF;padding:0'> <p style='margin:0in;margin-bottom:.0001pt;text-autospace:none'>Stock options</p> </td> <td width="114" valign="bottom" style='width:85.5pt;background:#CCEEFF;padding:0'> <p style='margin:0in;margin-bottom:.0001pt;text-autospace:none'>                         3,000</p> </td> <td width="6" valign="bottom" style='width:4.5pt;background:#CCEEFF;padding:0'> <p style='margin:0in;margin-bottom:.0001pt;text-autospace:none'> </p> </td> <td width="108" valign="bottom" style='width:81.0pt;background:#CCEEFF;padding:0'> <p style='margin:0in;margin-bottom:.0001pt;text-autospace:none'>               1,661,100</p> </td> </tr> <tr align="left"> <td width="438" valign="bottom" style='width:328.5pt;padding:0'> <p style='margin:0in;margin-bottom:.0001pt;text-autospace:none'>Convertible promissory notes</p> </td> <td width="114" valign="bottom" style='width:85.5pt;padding:0'> <p style='margin:0in;margin-bottom:.0001pt;text-autospace:none'>                    172,411</p> </td> <td width="6" valign="bottom" style='width:4.5pt;padding:0'> <p style='margin:0in;margin-bottom:.0001pt;text-autospace:none'> </p> </td> <td width="108" valign="bottom" style='width:81.0pt;padding:0'> <p style='margin:0in;margin-bottom:.0001pt;text-autospace:none'>                  183,252</p> </td> </tr> <tr align="left"> <td width="438" valign="bottom" style='width:328.5pt;background:#CCEEFF;padding:0'> <p style='margin:0in;margin-bottom:.0001pt;text-autospace:none'>Total anti-dilutive securities excluded</p> </td> <td width="114" valign="bottom" style='width:85.5pt;border-top:solid windowtext 1.0pt;border-left:none;border-bottom:solid windowtext 1.0pt;border-right:none;background:#CCEEFF;padding:0'> <p style='margin:0in;margin-bottom:.0001pt;text-autospace:none'>                    175,411</p> </td> <td width="6" valign="bottom" style='width:4.5pt;background:#CCEEFF;padding:0'> <p style='margin:0in;margin-bottom:.0001pt;text-autospace:none'> </p> </td> <td width="108" valign="bottom" style='width:81.0pt;border-top:solid windowtext 1.0pt;border-left:none;border-bottom:solid windowtext 1.0pt;border-right:none;background:#CCEEFF;padding:0'> <p style='margin:0in;margin-bottom:.0001pt;text-autospace:none'>               1,844,352 </p> </td> </tr> </table> <p style='margin:0in;margin-bottom:.0001pt;text-autospace:none'> </p> <p style='margin:0in;margin-bottom:.0001pt;text-autospace:none'>Anti-dilutive securities consist of stock options and convertible promissory notes whose exercise price or conversion price, respectively, was greater than the average market price of the common stock.</p> <p style='margin:0in;margin-bottom:.0001pt;text-autospace:none;margin-left:4.4pt'> </p>
<!--egx--><p style='margin:0in;margin-bottom:.0001pt;text-autospace:none'> </p> <table border="0" cellspacing="0" cellpadding="0" style='border-collapse:collapse'> <tr style='height:12.4pt'> <td width="21" valign="top" style='width:15.8pt;background:white;padding:0;height:12.4pt'> <p style='margin:0in;margin-bottom:.0001pt;text-autospace:none'><b>2.</b></p> </td> <td width="7" valign="top" style='width:5.25pt;background:white;padding:0;height:12.4pt'> <p style='margin:0in;margin-bottom:.0001pt;text-autospace:none'> </p> </td> <td width="464" valign="top" style='width:348.15pt;background:white;padding:0;height:12.4pt'> <p style='margin:0in;margin-bottom:.0001pt;text-autospace:none'><b>GOING CONCERN AND MANAGEMENT’S PLANS</b></p> </td> </tr> </table> <p style='margin:0in;margin-bottom:.0001pt;text-autospace:none;margin-top:11.0pt;margin-right:0in;margin-bottom:0in;margin-left:4.4pt;margin-bottom:.0001pt'>At March 31, 2017, current liabilities exceeded current assets by $1,100,384 .  The Company does not have a line of credit or credit facility to serve as an additional source of liquidity. Historically the Company has relied on shareholder loans as an additional source of funds. These factors raise substantial doubts about the Company’s ability to continue as a going concern.</p> <p style='margin:0in;margin-bottom:.0001pt;text-autospace:none;margin-top:11.0pt;margin-right:0in;margin-bottom:0in;margin-left:4.4pt;margin-bottom:.0001pt'>The ability of the Company to continue as a going concern is dependent upon continued operations of the Company that in turn is dependent upon the Company’s ability to meet its financing requirements on a continuing basis, to maintain present financing, to achieve the objectives of its business plan and to succeed in its future operations. The financial statements do not include any adjustments relating to the recoverability and classification of recorded asset amounts or amounts and classification of liabilities that might be necessary should the Company be unable to continue in existence.</p> <p style='margin:0in;margin-bottom:.0001pt;text-autospace:none;margin-top:11.0pt;margin-right:0in;margin-bottom:0in;margin-left:4.4pt;margin-bottom:.0001pt'> </p> <p style='margin:0in;margin-bottom:.0001pt;text-autospace:none'>The Company’s business plan includes, among other things, expansion through mergers and acquisitions and the development of its co-location and advanced voice and data solutions. Execution of the Company’s business plan will require significant capital to fund capital expenditures, working capital needs and debt service. Current cash balances will not be sufficient to fund the Company’s current business plan beyond the next few months. As a consequence, the Company is currently focusing on revenue enhancement and cost cutting opportunities as well as working to sell non-core assets and to extend vendor payment terms. The Company continues to seek additional convertible debt or equity financing as well as the placement of a credit facility to fund the Company’s liquidity. There can be no assurance that the Company will be able to obtain additional capital on satisfactory terms, or at all, or on terms that will not dilute the shareholders’ interests.</p> <p style='margin:0in;margin-bottom:.0001pt;text-autospace:none'> </p>
<!--egx--><p style='margin:0in;margin-bottom:.0001pt;text-autospace:none'> </p> <table border="0" cellspacing="0" cellpadding="0" style='border-collapse:collapse'> <tr style='height:12.4pt'> <td width="21" valign="top" style='width:15.8pt;background:white;padding:0;height:12.4pt'> <p style='margin:0in;margin-bottom:.0001pt;text-autospace:none'><b>3.</b></p> </td> <td width="7" valign="top" style='width:5.25pt;background:white;padding:0;height:12.4pt'> <p style='margin:0in;margin-bottom:.0001pt;text-autospace:none'> </p> </td> <td width="350" valign="top" style='width:262.3pt;background:white;padding:0;height:12.4pt'> <p style='margin:0in;margin-bottom:.0001pt;text-autospace:none'><b>CONVERTIBLE NOTES PAYABLE RELATED PARTY</b></p> </td> </tr> </table> <p style='margin:0in;margin-bottom:.0001pt;text-autospace:none'> </p> <p style='margin:0in;margin-bottom:.0001pt;text-autospace:none;margin-top:11.0pt;margin-right:0in;margin-bottom:0in;margin-left:4.4pt;margin-bottom:.0001pt'>At December 31, 2016 the Company had a secured convertible promissory note from a shareholder with a balance of $144,966.  The interest rate of this note was 6% through December 31, 2014, 7% through December 31, 2015and is 8% through December 31, 2016, 8.5% through December 31, 2017, and 9% through May 31, 2018, with fixed monthly payments of $3,301 and matures May 31, 2018, at which time the remaining balance of principal and all accrued interest shall be due and payable.  This convertible promissory note is secured by all tangible and intangible assets of the Company.  The note holder has the right to convert the note, in its entirety or in part, into common stock of the Company at the rate of $1.00 per share.  During the three months ended March 31, 2017, the Company made principal and interest payments totaling $13,203.  The secured convertible promissory note had a balance of $135,773 at March 31, 2017 of which $39,608 is short-term and $96,165 is long-term. </p> <p style='margin:0in;margin-bottom:.0001pt;text-autospace:none;margin-top:11.0pt;margin-right:0in;margin-bottom:0in;margin-left:4.4pt;margin-bottom:.0001pt'>At December 31, 2016 the Company had a secured convertible promissory note from a shareholder with a balance of $38,286.  The interest rate of this note is 6%, required monthly installments of interest only through May 31, 2014, then requires monthly installments of $600 including principal and interest and matures May 31, 2023.  This convertible promissory note is secured by certain equipment of the Company.  The note holder has the right to convert the note, in its entirety or in part, into common stock of the Company at the rate of $1.00 per share.  During the three months ended March 31, 2017, the Company made principal and interest payments totaling $2,401.  The secured convertible promissory note had a balance of $36,638 at March 31, 2017 of which $7,203 is short-term and $29,435 is long-term.</p> <p style='margin:0in;margin-bottom:.0001pt;text-autospace:none'> </p> <p style='margin:0in;margin-bottom:.0001pt;text-autospace:none'> </p> <table border="0" cellspacing="0" cellpadding="0" style='border:solid windowtext 1.0pt;border-collapse:collapse;border:none'> <tr align="left"> <td width="712" colspan="4" valign="top" style='width:534.1pt;padding:0in 5.4pt 0in 5.4pt'> <p style='margin:0in;margin-bottom:.0001pt;text-autospace:none'>Notes payable consist of the following:</p> </td> </tr> <tr align="left"> <td width="712" colspan="4" valign="top" style='width:534.1pt;padding:0in 5.4pt 0in 5.4pt'> <p align="center" style='margin:0in;margin-bottom:.0001pt;text-autospace:none;text-align:center'>Schedule of Notes Payable Related Party</p> </td> </tr> <tr align="left"> <td width="490" valign="top" style='width:367.65pt;padding:0in 5.4pt 0in 5.4pt'> <p style='margin:0in;margin-bottom:.0001pt;text-autospace:none'> </p> </td> <td width="99" valign="top" style='width:74.3pt;border:none;border-bottom:solid windowtext 1.0pt;padding:0in 5.4pt 0in 5.4pt'> <p align="center" style='margin:0in;margin-bottom:.0001pt;text-autospace:none;text-align:center'><b>March 31, 2017</b></p> </td> <td width="24" valign="top" style='width:17.85pt;padding:0in 5.4pt 0in 5.4pt'> <p style='margin:0in;margin-bottom:.0001pt;text-autospace:none'> </p> </td> <td width="99" valign="top" style='width:74.3pt;border:none;border-bottom:solid windowtext 1.0pt;padding:0in 5.4pt 0in 5.4pt'> <p align="center" style='margin:0in;margin-bottom:.0001pt;text-autospace:none;text-align:center'><b>December 31, 2016</b></p> </td> </tr> <tr align="left"> <td width="490" valign="top" style='width:367.65pt;background:#CCEEFF;padding:0in 5.4pt 0in 5.4pt'> <p style='margin:0in;margin-bottom:.0001pt;text-autospace:none'>Secured convertible promissory note from a shareholder; interest rate of 6% through December 31, 2014, 7% through December 31, 2015, 8% through December 31, 2016, 8.5% through December 31, 2017, and 9% through May 31, 2018, with fixed monthly payments of $3,301 through the Maturity Date, at which time the remaining balance of principal and all accrued interest shall be due and payable; matures May 31, 2018; secured by all tangible and intangible assets of the Company (1)</p> </td> <td width="99" valign="bottom" style='width:74.3pt;background:#CCEEFF;padding:0in 5.4pt 0in 5.4pt'> <p align="right" style='margin:0in;margin-bottom:.0001pt;text-autospace:none;text-align:right'>$ 135,773 </p> </td> <td width="24" valign="bottom" style='width:17.85pt;background:#CCEEFF;padding:0in 5.4pt 0in 5.4pt'> <p align="right" style='margin:0in;margin-bottom:.0001pt;text-autospace:none;text-align:right'> </p> </td> <td width="99" valign="bottom" style='width:74.3pt;background:#CCEEFF;padding:0in 5.4pt 0in 5.4pt'> <p align="right" style='margin:0in;margin-bottom:.0001pt;text-autospace:none;text-align:right'>$ 144,966 </p> </td> </tr> <tr align="left"> <td width="490" valign="top" style='width:367.65pt;padding:0in 5.4pt 0in 5.4pt'> <p style='margin:0in;margin-bottom:.0001pt;text-autospace:none'> </p> </td> <td width="99" valign="bottom" style='width:74.3pt;padding:0in 5.4pt 0in 5.4pt'> <p align="right" style='margin:0in;margin-bottom:.0001pt;text-autospace:none;text-align:right'> </p> </td> <td width="24" valign="bottom" style='width:17.85pt;padding:0in 5.4pt 0in 5.4pt'> <p align="right" style='margin:0in;margin-bottom:.0001pt;text-autospace:none;text-align:right'> </p> </td> <td width="99" valign="bottom" style='width:74.3pt;padding:0in 5.4pt 0in 5.4pt'> <p align="right" style='margin:0in;margin-bottom:.0001pt;text-autospace:none;text-align:right'> </p> </td> </tr> <tr align="left"> <td width="490" valign="top" style='width:367.65pt;background:#CCEEFF;padding:0in 5.4pt 0in 5.4pt'> <p style='margin:0in;margin-bottom:.0001pt;text-autospace:none'>Secured convertible promissory note from a shareholder; interest at 6%, requires monthly installments of interest only through May 31, 2014, then requires monthly installments of $600 including principal and interest; matures May 31, 2023; secured by certain equipment of the Company (2)</p> </td> <td width="99" valign="bottom" style='width:74.3pt;border:none;border-bottom:solid windowtext 1.0pt;background:#CCEEFF;padding:0in 5.4pt 0in 5.4pt'> <p align="right" style='margin:0in;margin-bottom:.0001pt;text-autospace:none;text-align:right'>36,638 </p> </td> <td width="24" valign="bottom" style='width:17.85pt;background:#CCEEFF;padding:0in 5.4pt 0in 5.4pt'> <p align="right" style='margin:0in;margin-bottom:.0001pt;text-autospace:none;text-align:right'> </p> </td> <td width="99" valign="bottom" style='width:74.3pt;border:none;border-bottom:solid windowtext 1.0pt;background:#CCEEFF;padding:0in 5.4pt 0in 5.4pt'> <p align="right" style='margin:0in;margin-bottom:.0001pt;text-autospace:none;text-align:right'>38,286 </p> </td> </tr> <tr align="left"> <td width="490" valign="top" style='width:367.65pt;padding:0in 5.4pt 0in 5.4pt'> <p style='margin:0in;margin-bottom:.0001pt;text-autospace:none'> </p> </td> <td width="99" valign="bottom" style='width:74.3pt;border:none;padding:0in 5.4pt 0in 5.4pt'> <p align="right" style='margin:0in;margin-bottom:.0001pt;text-autospace:none;text-align:right'>172,411 </p> </td> <td width="24" valign="bottom" style='width:17.85pt;padding:0in 5.4pt 0in 5.4pt'> <p align="right" style='margin:0in;margin-bottom:.0001pt;text-autospace:none;text-align:right'> </p> </td> <td width="99" valign="bottom" style='width:74.3pt;border:none;padding:0in 5.4pt 0in 5.4pt'> <p align="right" style='margin:0in;margin-bottom:.0001pt;text-autospace:none;text-align:right'>183,252 </p> </td> </tr> <tr align="left"> <td width="490" valign="top" style='width:367.65pt;background:#CCEEFF;padding:0in 5.4pt 0in 5.4pt'> <p style='margin:0in;margin-bottom:.0001pt;text-autospace:none'> </p> </td> <td width="99" valign="bottom" style='width:74.3pt;background:#CCEEFF;padding:0in 5.4pt 0in 5.4pt'> <p align="right" style='margin:0in;margin-bottom:.0001pt;text-autospace:none;text-align:right'> </p> </td> <td width="24" valign="bottom" style='width:17.85pt;background:#CCEEFF;padding:0in 5.4pt 0in 5.4pt'> <p align="right" style='margin:0in;margin-bottom:.0001pt;text-autospace:none;text-align:right'> </p> </td> <td width="99" valign="bottom" style='width:74.3pt;background:#CCEEFF;padding:0in 5.4pt 0in 5.4pt'> <p align="right" style='margin:0in;margin-bottom:.0001pt;text-autospace:none;text-align:right'> </p> </td> </tr> <tr align="left"> <td width="490" valign="top" style='width:367.65pt;padding:0in 5.4pt 0in 5.4pt'> <p style='margin:0in;margin-bottom:.0001pt;text-autospace:none'>Less current portion</p> </td> <td width="99" valign="bottom" style='width:74.3pt;border:none;border-bottom:solid windowtext 1.0pt;padding:0in 5.4pt 0in 5.4pt'> <p align="right" style='margin:0in;margin-bottom:.0001pt;text-autospace:none;text-align:right'>46,811 </p> </td> <td width="24" valign="bottom" style='width:17.85pt;padding:0in 5.4pt 0in 5.4pt'> <p align="right" style='margin:0in;margin-bottom:.0001pt;text-autospace:none;text-align:right'> </p> </td> <td width="99" valign="bottom" style='width:74.3pt;border:none;border-bottom:solid windowtext 1.0pt;padding:0in 5.4pt 0in 5.4pt'> <p align="right" style='margin:0in;margin-bottom:.0001pt;text-autospace:none;text-align:right'>46,811 </p> </td> </tr> <tr align="left"> <td width="490" valign="top" style='width:367.65pt;background:#CCEEFF;padding:0in 5.4pt 0in 5.4pt'> <p style='margin:0in;margin-bottom:.0001pt;text-autospace:none'> </p> </td> <td width="99" valign="bottom" style='width:74.3pt;border:none;background:#CCEEFF;padding:0in 5.4pt 0in 5.4pt'> <p align="right" style='margin:0in;margin-bottom:.0001pt;text-autospace:none;text-align:right'> </p> </td> <td width="24" valign="bottom" style='width:17.85pt;background:#CCEEFF;padding:0in 5.4pt 0in 5.4pt'> <p align="right" style='margin:0in;margin-bottom:.0001pt;text-autospace:none;text-align:right'> </p> </td> <td width="99" valign="bottom" style='width:74.3pt;border:none;background:#CCEEFF;padding:0in 5.4pt 0in 5.4pt'> <p align="right" style='margin:0in;margin-bottom:.0001pt;text-autospace:none;text-align:right'> </p> </td> </tr> <tr align="left"> <td width="490" valign="top" style='width:367.65pt;padding:0in 5.4pt 0in 5.4pt'> <p style='margin:0in;margin-bottom:.0001pt;text-autospace:none'>Convertible notes payable, related party - less current portion</p> </td> <td width="99" valign="bottom" style='width:74.3pt;border:none;border-bottom:double windowtext 1.5pt;padding:0in 5.4pt 0in 5.4pt'> <p align="right" style='margin:0in;margin-bottom:.0001pt;text-autospace:none;text-align:right'>$ 125,600 </p> </td> <td width="24" valign="bottom" style='width:17.85pt;padding:0in 5.4pt 0in 5.4pt'> <p align="right" style='margin:0in;margin-bottom:.0001pt;text-autospace:none;text-align:right'> </p> </td> <td width="99" valign="bottom" style='width:74.3pt;border:none;border-bottom:double windowtext 1.5pt;padding:0in 5.4pt 0in 5.4pt'> <p align="right" style='margin:0in;margin-bottom:.0001pt;text-autospace:none;text-align:right'>$ 136,441 </p> </td> </tr> </table> <p style='margin:0in;margin-bottom:.0001pt;text-autospace:none'> </p> <p style='margin:0in;margin-bottom:.0001pt;text-autospace:none;text-align:justify'> </p> <p style='margin:0in;margin-bottom:.0001pt;text-autospace:none;text-align:justify'>(1)           The note holder has the right to convert the note, in its entirety or in part, into common stock of the Company at the rate of $1.00 per share.  During the three months ended March 31, 2017, the Company made principal and interest payments totaling $13,203. The secured convertible promissory note had a balance of $135,773 at March  31, 2017 of which $39,608 is short-term and $96,165 is long-term.  </p> <p style='margin:0in;margin-bottom:.0001pt;text-autospace:none;text-align:justify'> </p> <p style='margin:0in;margin-bottom:.0001pt;text-autospace:none;text-align:justify'> </p> <p style='margin:0in;margin-bottom:.0001pt;text-autospace:none;text-align:justify'>(2)           The note holder has the right to convert the note, in its entirety or in part, into common stock of the Company at the rate of $1.00 per share.  During the three months ended March 31, 2017, the Company made principal and interest payments totaling $2,401. The secured convertible promissory note had a balance of $36,638 at March 31, 2017 of which $7,203 is short-term and $29,435 is long-term. </p> <p style='margin:0in;margin-bottom:.0001pt;text-autospace:none;text-align:justify'> </p> <p style='margin:0in;margin-bottom:.0001pt;text-autospace:none;text-align:justify'>This secured convertible promissory note is secured by certain equipment of the Company. Upon payment of the balance due on this secured convertible promissory note title of the equipment will be transferred to the Company free and clear of all liens and encumbrances.</p> <p style='margin:0in;margin-bottom:.0001pt;text-autospace:none;text-align:justify'> </p>
<!--egx--><p style='margin:0in;margin-bottom:.0001pt;text-autospace:none;text-autospace:ideograph-numeric ideograph-other'> </p> <table border="0" cellspacing="0" cellpadding="0" style='border-collapse:collapse'> <tr style='height:12.4pt'> <td width="21" valign="top" style='width:15.8pt;background:white;padding:0;height:12.4pt'> <p style='margin:0in;margin-bottom:.0001pt;text-autospace:none'><b>4.</b></p> </td> <td width="7" valign="top" style='width:5.25pt;background:white;padding:0;height:12.4pt'> <p style='margin:0in;margin-bottom:.0001pt;text-autospace:none'> </p> </td> <td width="484" valign="top" style='width:363.15pt;background:white;padding:0;height:12.4pt'> <p style='margin:0in;margin-bottom:.0001pt;text-autospace:none'><b>STOCK BASED COMPENSATION</b></p> </td> </tr> </table> <p style='margin:0in;margin-bottom:.0001pt;text-autospace:none'> </p> <p style='margin:0in;margin-bottom:.0001pt;text-autospace:none;text-autospace:ideograph-numeric ideograph-other'>The following table summarizes the Company’s employee stock option activity for the three months ended March 31, 2017:</p> <p style='margin:0in;margin-bottom:.0001pt;text-autospace:none;text-autospace:ideograph-numeric ideograph-other'> </p> <table border="0" cellspacing="0" cellpadding="0" align="left" width="854" style='width:640.5pt;border-collapse:collapse;margin-left:6.75pt;margin-right:6.75pt'> <tr align="left"> <td valign="bottom" style='padding:0in 6.0pt 0in 6.0pt'> <p style='margin:0in;margin-bottom:.0001pt;text-autospace:none'><b> </b></p> </td> <td valign="bottom" style='padding:0in 6.0pt 0in 6.0pt'> <p align="center" style='margin:0in;margin-bottom:.0001pt;text-autospace:none;text-align:center'><b>Options</b></p> </td> <td valign="bottom" style='padding:0in 6.0pt 0in 6.0pt'> <p style='margin:0in;margin-bottom:.0001pt;text-autospace:none'><b> </b></p> </td> <td valign="bottom" style='padding:0in 6.0pt 0in 6.0pt'> <p align="center" style='margin:0in;margin-bottom:.0001pt;text-autospace:none;text-align:center'><b>Weighted average</b></p> <p align="center" style='margin:0in;margin-bottom:.0001pt;text-autospace:none;text-align:center'><b>exercise price</b></p> </td> <td valign="bottom" style='padding:0in 6.0pt 0in 6.0pt'> <p style='margin:0in;margin-bottom:.0001pt;text-autospace:none'><b> </b></p> </td> <td valign="bottom" style='padding:0in 6.0pt 0in 6.0pt'> <p align="center" style='margin:0in;margin-bottom:.0001pt;text-autospace:none;text-align:center'><b>Weighted average</b></p> <p align="center" style='margin:0in;margin-bottom:.0001pt;text-autospace:none;text-align:center'><b>remaining</b></p> <p align="center" style='margin:0in;margin-bottom:.0001pt;text-autospace:none;text-align:center'><b>contractual life (yrs)</b></p> </td> <td valign="bottom" style='padding:0in 6.0pt 0in 6.0pt'> <p style='margin:0in;margin-bottom:.0001pt;text-autospace:none'><b> </b></p> </td> <td width="169" valign="bottom" style='width:126.55pt;padding:0in 6.0pt 0in 6.0pt'> <p align="center" style='margin:0in;margin-bottom:.0001pt;text-autospace:none;text-align:center'><b>Aggregate</b></p> <p align="center" style='margin:0in;margin-bottom:.0001pt;text-autospace:none;text-align:center'><b>intrinsicvalue</b></p> </td> </tr> <tr style='height:54.6pt'> <td valign="bottom" style='background:#CCEEFF;padding:0in 6.0pt 0in 6.0pt;height:54.6pt'> <p style='margin:0in;margin-bottom:.0001pt;text-autospace:none'>Options outstanding, December 31, 2016</p> </td> <td valign="bottom" style='background:#CCEEFF;padding:0in 6.0pt 0in 6.0pt;height:54.6pt'> <p align="right" style='margin:0in;margin-bottom:.0001pt;text-autospace:none;text-align:right'>514,934</p> </td> <td valign="bottom" style='background:#CCEEFF;padding:0in 6.0pt 0in 6.0pt;height:54.6pt'> <p align="right" style='margin:0in;margin-bottom:.0001pt;text-autospace:none;text-align:right'> </p> </td> <td valign="bottom" style='background:#CCEEFF;padding:0in 6.0pt 0in 6.0pt;height:54.6pt'> <p align="right" style='margin:0in;margin-bottom:.0001pt;text-autospace:none;text-align:right'>$.005</p> </td> <td valign="bottom" style='background:#CCEEFF;padding:0in 6.0pt 0in 6.0pt;height:54.6pt'> <p align="right" style='margin:0in;margin-bottom:.0001pt;text-autospace:none;text-align:right'> </p> </td> <td valign="bottom" style='border:none;border-bottom:solid windowtext 1.0pt;background:#CCEEFF;padding:0in 6.0pt 0in 6.0pt;height:54.6pt'> <p align="right" style='margin:0in;margin-bottom:.0001pt;text-autospace:none;text-align:right'>6.26 </p> </td> <td valign="bottom" style='background:#CCEEFF;padding:0in 6.0pt 0in 6.0pt;height:54.6pt'> <p align="right" style='margin:0in;margin-bottom:.0001pt;text-autospace:none;text-align:right'> </p> </td> <td width="169" valign="bottom" style='width:126.55pt;background:#CCEEFF;padding:0in 6.0pt 0in 6.0pt;height:54.6pt'> <p align="right" style='margin:0in;margin-bottom:.0001pt;text-autospace:none;text-align:right'>-</p> </td> </tr> <tr align="left"> <td valign="bottom" style='padding:0in 6.0pt 0in 6.0pt'> <p style='margin:0in;margin-bottom:.0001pt;text-autospace:none'> </p> </td> <td valign="bottom" style='padding:0in 6.0pt 0in 6.0pt'> <p align="right" style='margin:0in;margin-bottom:.0001pt;text-autospace:none;text-align:right'> </p> </td> <td valign="bottom" style='padding:0in 6.0pt 0in 6.0pt'> <p align="right" style='margin:0in;margin-bottom:.0001pt;text-autospace:none;text-align:right'> </p> </td> <td valign="bottom" style='padding:0in 6.0pt 0in 6.0pt'> <p align="right" style='margin:0in;margin-bottom:.0001pt;text-autospace:none;text-align:right'> </p> </td> <td valign="bottom" style='padding:0in 6.0pt 0in 6.0pt'> <p align="right" style='margin:0in;margin-bottom:.0001pt;text-autospace:none;text-align:right'> </p> </td> <td valign="bottom" style='padding:0in 6.0pt 0in 6.0pt'> <p align="right" style='margin:0in;margin-bottom:.0001pt;text-autospace:none;text-align:right'> </p> </td> <td valign="bottom" style='padding:0in 6.0pt 0in 6.0pt'> <p align="right" style='margin:0in;margin-bottom:.0001pt;text-autospace:none;text-align:right'> </p> </td> <td width="169" valign="bottom" style='width:126.55pt;padding:0in 6.0pt 0in 6.0pt'> <p align="right" style='margin:0in;margin-bottom:.0001pt;text-autospace:none;text-align:right'> </p> </td> </tr> <tr align="left"> <td valign="bottom" style='background:#CCEEFF;padding:0in 6.0pt 0in 6.0pt'> <p style='margin:0in;margin-bottom:.0001pt;text-autospace:none'>Options exercisable, December 31, 2016</p> </td> <td valign="bottom" style='background:#CCEEFF;padding:0in 6.0pt 0in 6.0pt'> <p align="right" style='margin:0in;margin-bottom:.0001pt;text-autospace:none;text-align:right'>425,934 </p> </td> <td valign="bottom" style='background:#CCEEFF;padding:0in 6.0pt 0in 6.0pt'> <p align="right" style='margin:0in;margin-bottom:.0001pt;text-autospace:none;text-align:right'> </p> </td> <td valign="bottom" style='background:#CCEEFF;padding:0in 6.0pt 0in 6.0pt'> <p align="right" style='margin:0in;margin-bottom:.0001pt;text-autospace:none;text-align:right'>$.003</p> </td> <td valign="bottom" style='background:#CCEEFF;padding:0in 6.0pt 0in 6.0pt'> <p align="right" style='margin:0in;margin-bottom:.0001pt;text-autospace:none;text-align:right'> </p> </td> <td valign="bottom" style='border:none;border-bottom:solid windowtext 1.0pt;background:#CCEEFF;padding:0in 6.0pt 0in 6.0pt'> <p align="right" style='margin:0in;margin-bottom:.0001pt;text-autospace:none;text-align:right'>5.78</p> </td> <td valign="bottom" style='background:#CCEEFF;padding:0in 6.0pt 0in 6.0pt'> <p align="right" style='margin:0in;margin-bottom:.0001pt;text-autospace:none;text-align:right'> </p> </td> <td width="169" valign="bottom" style='width:126.55pt;border:none;border-bottom:solid windowtext 1.0pt;background:#CCEEFF;padding:0in 6.0pt 0in 6.0pt'> <p align="right" style='margin:0in;margin-bottom:.0001pt;text-autospace:none;text-align:right'>$ 9,,350</p> </td> </tr> <tr align="left"> <td valign="bottom" style='padding:0in 6.0pt 0in 6.0pt'> <p style='margin:0in;margin-bottom:.0001pt;text-autospace:none'> </p> </td> <td valign="bottom" style='padding:0in 6.0pt 0in 6.0pt'> <p align="right" style='margin:0in;margin-bottom:.0001pt;text-autospace:none;text-align:right'> </p> </td> <td valign="bottom" style='padding:0in 6.0pt 0in 6.0pt'> <p align="right" style='margin:0in;margin-bottom:.0001pt;text-autospace:none;text-align:right'> </p> </td> <td valign="bottom" style='padding:0in 6.0pt 0in 6.0pt'> <p align="right" style='margin:0in;margin-bottom:.0001pt;text-autospace:none;text-align:right'> </p> </td> <td valign="bottom" style='padding:0in 6.0pt 0in 6.0pt'> <p align="right" style='margin:0in;margin-bottom:.0001pt;text-autospace:none;text-align:right'> </p> </td> <td valign="bottom" style='border:none;padding:0in 6.0pt 0in 6.0pt'> <p align="right" style='margin:0in;margin-bottom:.0001pt;text-autospace:none;text-align:right'> </p> </td> <td valign="bottom" style='padding:0in 6.0pt 0in 6.0pt'> <p align="right" style='margin:0in;margin-bottom:.0001pt;text-autospace:none;text-align:right'> </p> </td> <td width="169" valign="bottom" style='width:126.55pt;border:none;padding:0in 6.0pt 0in 6.0pt'> <p align="right" style='margin:0in;margin-bottom:.0001pt;text-autospace:none;text-align:right'> </p> </td> </tr> <tr align="left"> <td valign="bottom" style='padding:0in 6.0pt 0in 6.0pt'> <p style='margin:0in;margin-bottom:.0001pt;text-autospace:none'>Options issued during the period</p> </td> <td valign="bottom" style='padding:0in 6.0pt 0in 6.0pt'> <p align="right" style='margin:0in;margin-bottom:.0001pt;text-autospace:none;text-align:right'>1,503,000</p> </td> <td valign="bottom" style='padding:0in 6.0pt 0in 6.0pt'> <p align="right" style='margin:0in;margin-bottom:.0001pt;text-autospace:none;text-align:right'> </p> </td> <td valign="bottom" style='padding:0in 6.0pt 0in 6.0pt'> <p align="right" style='margin:0in;margin-bottom:.0001pt;text-autospace:none;text-align:right'>.007</p> </td> <td valign="bottom" style='padding:0in 6.0pt 0in 6.0pt'> <p align="right" style='margin:0in;margin-bottom:.0001pt;text-autospace:none;text-align:right'> </p> </td> <td valign="bottom" style='padding:0in 6.0pt 0in 6.0pt'> <p align="right" style='margin:0in;margin-bottom:.0001pt;text-autospace:none;text-align:right'><font style='display:none'>-</font></p> </td> <td valign="bottom" style='padding:0in 6.0pt 0in 6.0pt'> <p align="right" style='margin:0in;margin-bottom:.0001pt;text-autospace:none;text-align:right'> </p> </td> <td width="169" valign="bottom" style='width:126.55pt;padding:0in 6.0pt 0in 6.0pt'> <p align="right" style='margin:0in;margin-bottom:.0001pt;text-autospace:none;text-align:right'>-</p> </td> </tr> <tr align="left"> <td valign="bottom" style='padding:0in 6.0pt 0in 6.0pt'> <p style='margin:0in;margin-bottom:.0001pt;text-autospace:none'> </p> </td> <td valign="bottom" style='padding:0in 6.0pt 0in 6.0pt'> <p align="right" style='margin:0in;margin-bottom:.0001pt;text-autospace:none;text-align:right'> </p> </td> <td valign="bottom" style='padding:0in 6.0pt 0in 6.0pt'> <p align="right" style='margin:0in;margin-bottom:.0001pt;text-autospace:none;text-align:right'> </p> </td> <td valign="bottom" style='padding:0in 6.0pt 0in 6.0pt'> <p align="right" style='margin:0in;margin-bottom:.0001pt;text-autospace:none;text-align:right'> </p> </td> <td valign="bottom" style='padding:0in 6.0pt 0in 6.0pt'> <p align="right" style='margin:0in;margin-bottom:.0001pt;text-autospace:none;text-align:right'> </p> </td> <td valign="bottom" style='padding:0in 6.0pt 0in 6.0pt'> <p align="right" style='margin:0in;margin-bottom:.0001pt;text-autospace:none;text-align:right'> </p> </td> <td valign="bottom" style='padding:0in 6.0pt 0in 6.0pt'> <p align="right" style='margin:0in;margin-bottom:.0001pt;text-autospace:none;text-align:right'> </p> </td> <td width="169" valign="bottom" style='width:126.55pt;padding:0in 6.0pt 0in 6.0pt'> <p align="right" style='margin:0in;margin-bottom:.0001pt;text-autospace:none;text-align:right'> </p> </td> </tr> <tr align="left"> <td valign="bottom" style='background:#CCEEFF;padding:0in 6.0pt 0in 6.0pt'> <p style='margin:0in;margin-bottom:.0001pt;text-autospace:none'>Options outstanding, March 31, 2017</p> </td> <td valign="bottom" style='background:#CCEEFF;padding:0in 6.0pt 0in 6.0pt'> <p align="right" style='margin:0in;margin-bottom:.0001pt;text-autospace:none;text-align:right'>2,017,934 </p> </td> <td valign="bottom" style='background:#CCEEFF;padding:0in 6.0pt 0in 6.0pt'> <p align="right" style='margin:0in;margin-bottom:.0001pt;text-autospace:none;text-align:right'> </p> </td> <td valign="bottom" style='background:#CCEEFF;padding:0in 6.0pt 0in 6.0pt'> <p align="right" style='margin:0in;margin-bottom:.0001pt;text-autospace:none;text-align:right'>$ .006</p> </td> <td valign="bottom" style='background:#CCEEFF;padding:0in 6.0pt 0in 6.0pt'> <p align="right" style='margin:0in;margin-bottom:.0001pt;text-autospace:none;text-align:right'> </p> </td> <td valign="bottom" style='background:#CCEEFF;padding:0in 6.0pt 0in 6.0pt'> <p align="right" style='margin:0in;margin-bottom:.0001pt;text-autospace:none;text-align:right'>8.80</p> </td> <td valign="bottom" style='background:#CCEEFF;padding:0in 6.0pt 0in 6.0pt'> <p align="right" style='margin:0in;margin-bottom:.0001pt;text-autospace:none;text-align:right'> </p> </td> <td width="169" valign="bottom" style='width:126.55pt;background:#CCEEFF;padding:0in 6.0pt 0in 6.0pt'> <p align="right" style='margin:0in;margin-bottom:.0001pt;text-autospace:none;text-align:right'>-</p> </td> </tr> <tr align="left"> <td valign="bottom" style='padding:0in 6.0pt 0in 6.0pt'> <p style='margin:0in;margin-bottom:.0001pt;text-autospace:none'> </p> </td> <td valign="bottom" style='padding:0in 6.0pt 0in 6.0pt'> <p align="right" style='margin:0in;margin-bottom:.0001pt;text-autospace:none;text-align:right'> </p> </td> <td valign="bottom" style='padding:0in 6.0pt 0in 6.0pt'> <p align="right" style='margin:0in;margin-bottom:.0001pt;text-autospace:none;text-align:right'> </p> </td> <td valign="bottom" style='padding:0in 6.0pt 0in 6.0pt'> <p align="right" style='margin:0in;margin-bottom:.0001pt;text-autospace:none;text-align:right'> </p> </td> <td valign="bottom" style='padding:0in 6.0pt 0in 6.0pt'> <p align="right" style='margin:0in;margin-bottom:.0001pt;text-autospace:none;text-align:right'> </p> </td> <td valign="bottom" style='padding:0in 6.0pt 0in 6.0pt'> <p align="right" style='margin:0in;margin-bottom:.0001pt;text-autospace:none;text-align:right'> </p> </td> <td valign="bottom" style='padding:0in 6.0pt 0in 6.0pt'> <p align="right" style='margin:0in;margin-bottom:.0001pt;text-autospace:none;text-align:right'> </p> </td> <td width="169" valign="bottom" style='width:126.55pt;padding:0in 6.0pt 0in 6.0pt'> <p align="right" style='margin:0in;margin-bottom:.0001pt;text-autospace:none;text-align:right'> </p> </td> </tr> <tr align="left"> <td valign="bottom" style='padding:0in 6.0pt 0in 6.0pt'> <p style='margin:0in;margin-bottom:.0001pt;text-autospace:none'>Options exercisable, March 31, 2017</p> </td> <td valign="bottom" style='border:none;border-top:solid windowtext 1.0pt;padding:0in 6.0pt 0in 6.0pt'> <p align="right" style='margin:0in;margin-bottom:.0001pt;text-autospace:none;text-align:right'>426,934 </p> </td> <td valign="bottom" style='padding:0in 6.0pt 0in 6.0pt'> <p align="right" style='margin:0in;margin-bottom:.0001pt;text-autospace:none;text-align:right'> </p> </td> <td valign="bottom" style='border:none;border-top:solid windowtext 1.0pt;padding:0in 6.0pt 0in 6.0pt'> <p align="right" style='margin:0in;margin-bottom:.0001pt;text-autospace:none;text-align:right'>$ .003</p> </td> <td valign="bottom" style='padding:0in 6.0pt 0in 6.0pt'> <p align="right" style='margin:0in;margin-bottom:.0001pt;text-autospace:none;text-align:right'> </p> </td> <td valign="bottom" style='border:none;border-top:solid windowtext 1.0pt;padding:0in 6.0pt 0in 6.0pt'> <p align="right" style='margin:0in;margin-bottom:.0001pt;text-autospace:none;text-align:right'>5.45</p> </td> <td valign="bottom" style='padding:0in 6.0pt 0in 6.0pt'> <p align="right" style='margin:0in;margin-bottom:.0001pt;text-autospace:none;text-align:right'> </p> </td> <td width="169" valign="bottom" style='width:126.55pt;padding:0in 6.0pt 0in 6.0pt'> <p align="right" style='margin:0in;margin-bottom:.0001pt;text-autospace:none;text-align:right'>$ 5,956</p> </td> </tr> <tr align="left"> <td valign="bottom" style='padding:0in 6.0pt 0in 6.0pt'> <p style='margin:0in;margin-bottom:.0001pt;text-autospace:none'> </p> </td> <td valign="bottom" style='border:none;border-top:solid windowtext 1.0pt;padding:0in 6.0pt 0in 6.0pt'> <p align="right" style='margin:0in;margin-bottom:.0001pt;text-autospace:none;text-align:right'> </p> </td> <td valign="bottom" style='padding:0in 6.0pt 0in 6.0pt'> <p align="right" style='margin:0in;margin-bottom:.0001pt;text-autospace:none;text-align:right'> </p> </td> <td valign="bottom" style='border:none;border-top:solid windowtext 1.0pt;padding:0in 6.0pt 0in 6.0pt'> <p align="right" style='margin:0in;margin-bottom:.0001pt;text-autospace:none;text-align:right'> </p> </td> <td valign="bottom" style='padding:0in 6.0pt 0in 6.0pt'> <p align="right" style='margin:0in;margin-bottom:.0001pt;text-autospace:none;text-align:right'> </p> </td> <td valign="bottom" style='border:none;border-top:solid windowtext 1.0pt;padding:0in 6.0pt 0in 6.0pt'> <p align="right" style='margin:0in;margin-bottom:.0001pt;text-autospace:none;text-align:right'> </p> </td> <td valign="bottom" style='padding:0in 6.0pt 0in 6.0pt'> <p align="right" style='margin:0in;margin-bottom:.0001pt;text-autospace:none;text-align:right'> </p> </td> <td width="169" valign="bottom" style='width:126.55pt;border:none;border-top:solid windowtext 1.0pt;padding:0in 6.0pt 0in 6.0pt'> <p align="right" style='margin:0in;margin-bottom:.0001pt;text-autospace:none;text-align:right'> </p> </td> </tr> </table> <p style='margin:0in;margin-bottom:.0001pt;text-autospace:none'> </p> <p style='margin:0in;margin-bottom:.0001pt;text-autospace:none'> </p> <p style='margin:0in;margin-bottom:.0001pt;text-autospace:none'> </p> <p style='margin:0in;margin-bottom:.0001pt;text-autospace:none'> </p> <p style='margin:0in;margin-bottom:.0001pt;text-autospace:none'> </p> <p style='margin:0in;margin-bottom:.0001pt;text-autospace:none'> </p> <p style='margin:0in;margin-bottom:.0001pt;text-autospace:none;text-align:justify'> </p> <p style='margin:0in;margin-bottom:.0001pt;text-autospace:none'><font style='background:yellow'>During the three months ended March 31, 2017, 850,000, 650,000 and 3,000 nonqualified employee stock options were granted with exercise prices of $.01, $.003 and $.02, respectively.  The options were valued using Black-Scholes option pricing model on the respective date of issuance and the fair value of the shares was determined to be $14,461 of which $1,202 was recognized as stock-based compensation expense for the three months ended March 31, 2017.  The stock options will vest one-third on each annual anniversary date of the grant and will expire ten years from the date of the grant.</font>  </p> <p style='margin:0in;margin-bottom:.0001pt;text-autospace:none'> </p> <p style='margin:0in;margin-bottom:.0001pt;text-autospace:none'>Total stock-based compensation expense for the three months ended March 31, 2017 was $1,651 of which $1,202 was related to options issued during the three months ended March 31, 2017 and $449 was related to options issued in prior years.  </p> <p style='margin:0in;margin-bottom:.0001pt;text-autospace:none'>Stock-based compensation is measured at the grant date, based on the calculated fair value of the option, and is recognized as an expense on a straight-line basis over the requisite employee service period (generally the vesting period of the grant). </p> <p style='margin:0in;margin-bottom:.0001pt;text-autospace:none'> </p> <p style='margin:0in;margin-bottom:.0001pt;text-autospace:none'>The Black-Scholes option pricing model was used with the following weighted-average assumptions for options granted during the three months ended March 31, 2017:</p> <p style='margin:0in;margin-bottom:.0001pt;text-autospace:none;text-align:justify'> </p> <p style='margin:0in;margin-bottom:.0001pt;text-autospace:none;text-align:justify'> </p> <table border="0" cellspacing="0" cellpadding="0" style='border-collapse:collapse'> <tr align="left"> <td valign="bottom" style='padding:0in 6.0pt 1.5pt 6.0pt'> <p style='margin:0in;margin-bottom:.0001pt;text-autospace:none'> </p> </td> <td valign="bottom" style='padding:0in 6.0pt 1.5pt 6.0pt'> <p style='margin:0in;margin-bottom:.0001pt;text-autospace:none'> </p> </td> <td valign="bottom" style='border:none;border-bottom:solid black 1.0pt;padding:0in 6.0pt 0in 6.0pt'> <p align="center" style='margin:0in;margin-bottom:.0001pt;text-autospace:none;text-align:center'><b>2017</b></p> </td> </tr> <tr style='height:18.35pt'> <td valign="bottom" style='background:#CCEEFF;padding:0in 6.0pt 0in 6.0pt;height:18.35pt'> <p style='margin:0in;margin-bottom:.0001pt;text-autospace:none;background:#CCEEFF'>Risk free interest rate</p> </td> <td valign="bottom" style='background:#CCEEFF;padding:0in 6.0pt 0in 6.0pt;height:18.35pt'> <p style='margin:0in;margin-bottom:.0001pt;text-autospace:none;background:#CCEEFF'> </p> </td> <td valign="bottom" style='background:#CCEEFF;padding:0in 6.0pt 0in 6.0pt;height:18.35pt'> <p align="right" style='margin:0in;margin-bottom:.0001pt;text-autospace:none;text-align:right;background:#CCEEFF'>1.80% - 1.97 %</p> </td> </tr> <tr style='height:13.5pt'> <td valign="bottom" style='background:white;padding:0in 6.0pt 0in 6.0pt;height:13.5pt'> <p style='margin:0in;margin-bottom:.0001pt;text-autospace:none;background:white'>Expected lives (in years)</p> </td> <td valign="bottom" style='background:white;padding:0in 6.0pt 0in 6.0pt;height:13.5pt'> <p style='margin:0in;margin-bottom:.0001pt;text-autospace:none;background:white'> </p> </td> <td valign="bottom" style='background:white;padding:0in 6.0pt 0in 6.0pt;height:13.5pt'> <p align="right" style='margin:0in;margin-bottom:.0001pt;text-autospace:none;text-align:right;background:white'>5 </p> </td> </tr> <tr align="left"> <td valign="bottom" style='background:#CCEEFF;padding:0in 6.0pt 0in 6.0pt'> <p style='margin:0in;margin-bottom:.0001pt;text-autospace:none;background:#CCEEFF'>Expected volatility</p> </td> <td valign="bottom" style='background:#CCEEFF;padding:0in 6.0pt 0in 6.0pt'> <p style='margin:0in;margin-bottom:.0001pt;text-autospace:none;background:#CCEEFF'> </p> </td> <td valign="bottom" style='background:#CCEEFF;padding:0in 6.0pt 0in 6.0pt'> <p align="right" style='margin:0in;margin-bottom:.0001pt;text-autospace:none;text-align:right;background:#CCEEFF'>173% - 174 %</p> </td> </tr> <tr align="left"> <td valign="bottom" style='background:white;padding:0in 6.0pt 0in 6.0pt'> <p style='margin:0in;margin-bottom:.0001pt;text-autospace:none;background:white'>Dividend yield</p> </td> <td valign="bottom" style='background:white;padding:0in 6.0pt 0in 6.0pt'> <p style='margin:0in;margin-bottom:.0001pt;text-autospace:none;background:white'> </p> </td> <td valign="bottom" style='background:white;padding:0in 6.0pt 0in 6.0pt'> <p align="right" style='margin:0in;margin-bottom:.0001pt;text-autospace:none;text-align:right;background:white'>0 %</p> </td> </tr> </table> <p style='margin:0in;margin-bottom:.0001pt;text-autospace:none'>»]</p> <p style='margin:0in;margin-bottom:.0001pt;text-autospace:none'> </p>
<!--egx--><p style='margin:0in;margin-bottom:.0001pt;text-autospace:none'> </p> <p style='margin:0in;margin-bottom:.0001pt;text-autospace:none'> </p> <table border="0" cellspacing="0" cellpadding="0" style='border-collapse:collapse'> <tr style='height:12.4pt'> <td width="21" valign="top" style='width:15.8pt;background:white;padding:0;height:12.4pt'> <p style='margin:0in;margin-bottom:.0001pt;text-autospace:none'><b>5.</b></p> </td> <td width="7" valign="top" style='width:5.25pt;background:white;padding:0;height:12.4pt'> <p style='margin:0in;margin-bottom:.0001pt;text-autospace:none'> </p> </td> <td width="387" valign="top" style='width:290.0pt;background:white;padding:0;height:12.4pt'> <p style='margin:0in;margin-bottom:.0001pt;text-autospace:none'><b>SERIES A CONVERTIBLE PREFERRED STOCK</b></p> </td> </tr> </table> <p style='margin:0in;margin-bottom:.0001pt;text-autospace:none;margin-left:22.5pt'> </p> <p style='margin:0in;margin-bottom:.0001pt'>On March 30, 2017 the Company’s board of directors made the determination that it was in the best interest of the Company and its stockholders to conserve the Company’s working capital at this time and not make the annual dividend payment for the year ending December 31, 2016, on its Series A Convertible Preferred Stock. The Company has never made an annual dividend payment on its Series A convertible preferred stock.</p> <p style='margin:0in;margin-bottom:.0001pt;text-autospace:none'> </p> <p style='margin:0in;margin-bottom:.0001pt;text-autospace:none'>The amortization of the increasing dividend rate preferred stock discount for the three months ended March 31, 2017 was $6,724.  </p>
<!--egx--><p style='margin:0in;margin-bottom:.0001pt;text-autospace:none'> </p> <table border="0" cellspacing="0" cellpadding="0" style='border-collapse:collapse'> <tr style='height:12.4pt'> <td width="21" valign="top" style='width:15.8pt;background:white;padding:0;height:12.4pt'> <p style='margin:0in;margin-bottom:.0001pt;text-autospace:none'><b>6.</b></p> </td> <td width="7" valign="top" style='width:5.25pt;background:white;padding:0;height:12.4pt'> <p style='margin:0in;margin-bottom:.0001pt;text-autospace:none'> </p> </td> <td width="387" valign="top" style='width:290.0pt;background:white;padding:0;height:12.4pt'> <p style='margin:0in;margin-bottom:.0001pt;text-autospace:none'><b>PROPERTY AND EQUIPMENT</b></p> </td> </tr> </table> <p style='margin:0in;margin-bottom:.0001pt;text-autospace:none'> </p> <p style='margin:0in;margin-bottom:.0001pt;text-autospace:none'>During the three months ended March 31, 2017, $766 was paid for property and equipment and $4,969 was recorded as depreciation expense.</p>
16883
11859
13935
135354
109761
6614
5998
567643
593818
-10378254
-10373065
8655009
8649936
-6724
6724
<!--egx--><p style='margin:0in;margin-bottom:.0001pt;text-autospace:none'>The unaudited condensed consolidated financial statements and related notes have been prepared pursuant to the rules and regulations of the Securities and Exchange Commission.</p>
474396
496004
119
119
0.00001
0.00001
40000000
40000000
11871009
11871009
46811
46811
136441
125600
20444
12875
83388
79938
369248
408846
<!--egx--><p style='margin:0in;margin-bottom:.0001pt;text-autospace:none;text-autospace:ideograph-numeric ideograph-other'>Income (loss) per share – basic is calculated by dividing net income (loss) by the weighted average number of shares of stock outstanding during the year, including shares issuable without additional consideration. Income per share – assuming dilution is calculated by dividing net income by the weighted average number of shares outstanding during the year adjusted for the effect of dilutive potential shares calculated using the treasury stock method.</p>
-27254
9953
4033
4764
5189
-43055
-1535
0.00
0.00
30864
28523
591776
598500
-11768
-6724
987102
987102
0.001
0.001
10000000
10000000
3061
21375
77154
72951
<!--egx--><p style='margin:0in;margin-bottom:.0001pt;text-autospace:none'> </p> <table border="0" cellspacing="0" cellpadding="0"> <tr align="left"> <td width="666" colspan="4" valign="bottom" style='width:499.5pt;padding:0'> <p align="center" style='margin:0in;margin-bottom:.0001pt;text-autospace:none;text-align:center'>Schedule of Anti-dilutive Securities Excluded</p> </td> </tr> <tr align="left"> <td width="438" valign="bottom" style='width:328.5pt;padding:0'> <p style='margin:0in;margin-bottom:.0001pt;text-autospace:none'> </p> </td> <td width="228" colspan="3" valign="bottom" style='width:171.0pt;padding:0'> <p align="center" style='margin:0in;margin-bottom:.0001pt;text-autospace:none;text-align:center'>Three Months Ended</p> </td> </tr> <tr align="left"> <td width="438" valign="bottom" style='width:328.5pt;padding:0'> <p style='margin:0in;margin-bottom:.0001pt;text-autospace:none'> </p> </td> <td width="114" valign="bottom" style='width:85.5pt;padding:0'> <p align="center" style='margin:0in;margin-bottom:.0001pt;text-autospace:none;text-align:center'>March 31, 2017</p> </td> <td width="6" valign="bottom" style='width:4.5pt;padding:0'> <p style='margin:0in;margin-bottom:.0001pt;text-autospace:none'> </p> </td> <td width="108" valign="bottom" style='width:81.0pt;padding:0'> <p align="center" style='margin:0in;margin-bottom:.0001pt;text-autospace:none;text-align:center'>March 31, 2016</p> </td> </tr> <tr align="left"> <td width="438" valign="bottom" style='width:328.5pt;background:#CCEEFF;padding:0'> <p style='margin:0in;margin-bottom:.0001pt;text-autospace:none'>Stock options</p> </td> <td width="114" valign="bottom" style='width:85.5pt;background:#CCEEFF;padding:0'> <p style='margin:0in;margin-bottom:.0001pt;text-autospace:none'>                         3,000</p> </td> <td width="6" valign="bottom" style='width:4.5pt;background:#CCEEFF;padding:0'> <p style='margin:0in;margin-bottom:.0001pt;text-autospace:none'> </p> </td> <td width="108" valign="bottom" style='width:81.0pt;background:#CCEEFF;padding:0'> <p style='margin:0in;margin-bottom:.0001pt;text-autospace:none'>               1,661,100</p> </td> </tr> <tr align="left"> <td width="438" valign="bottom" style='width:328.5pt;padding:0'> <p style='margin:0in;margin-bottom:.0001pt;text-autospace:none'>Convertible promissory notes</p> </td> <td width="114" valign="bottom" style='width:85.5pt;padding:0'> <p style='margin:0in;margin-bottom:.0001pt;text-autospace:none'>                    172,411</p> </td> <td width="6" valign="bottom" style='width:4.5pt;padding:0'> <p style='margin:0in;margin-bottom:.0001pt;text-autospace:none'> </p> </td> <td width="108" valign="bottom" style='width:81.0pt;padding:0'> <p style='margin:0in;margin-bottom:.0001pt;text-autospace:none'>                  183,252</p> </td> </tr> <tr align="left"> <td width="438" valign="bottom" style='width:328.5pt;background:#CCEEFF;padding:0'> <p style='margin:0in;margin-bottom:.0001pt;text-autospace:none'>Total anti-dilutive securities excluded</p> </td> <td width="114" valign="bottom" style='width:85.5pt;border-top:solid windowtext 1.0pt;border-left:none;border-bottom:solid windowtext 1.0pt;border-right:none;background:#CCEEFF;padding:0'> <p style='margin:0in;margin-bottom:.0001pt;text-autospace:none'>                    175,411</p> </td> <td width="6" valign="bottom" style='width:4.5pt;background:#CCEEFF;padding:0'> <p style='margin:0in;margin-bottom:.0001pt;text-autospace:none'> </p> </td> <td width="108" valign="bottom" style='width:81.0pt;border-top:solid windowtext 1.0pt;border-left:none;border-bottom:solid windowtext 1.0pt;border-right:none;background:#CCEEFF;padding:0'> <p style='margin:0in;margin-bottom:.0001pt;text-autospace:none'>               1,844,352 </p> </td> </tr> </table>
<!--egx--><p style='margin:0in;margin-bottom:.0001pt;text-autospace:none;text-autospace:ideograph-numeric ideograph-other'> </p> <table border="0" cellspacing="0" cellpadding="0"> <tr align="left"> <td width="666" colspan="4" valign="bottom" style='width:499.5pt;padding:0'> <p align="center" style='margin:0in;margin-bottom:.0001pt;text-autospace:none;text-align:center'>Schedule of Income (Loss) Per Share</p> </td> </tr> <tr align="left"> <td width="444" valign="bottom" style='width:333.0pt;padding:0'> <p style='margin:0in;margin-bottom:.0001pt;text-autospace:none'> </p> </td> <td width="222" colspan="3" valign="bottom" style='width:166.5pt;padding:0'> <p align="center" style='margin:0in;margin-bottom:.0001pt;text-autospace:none;text-align:center'>Three Months Ended</p> </td> </tr> <tr align="left"> <td width="444" valign="bottom" style='width:333.0pt;padding:0'> <p style='margin:0in;margin-bottom:.0001pt;text-autospace:none'> </p> </td> <td width="108" valign="bottom" style='width:81.0pt;padding:0'> <p align="center" style='margin:0in;margin-bottom:.0001pt;text-autospace:none;text-align:center'>March 31, 2017</p> </td> <td width="12" valign="bottom" style='width:9.0pt;padding:0'> <p style='margin:0in;margin-bottom:.0001pt;text-autospace:none'> </p> </td> <td width="102" valign="bottom" style='width:76.5pt;padding:0'> <p align="center" style='margin:0in;margin-bottom:.0001pt;text-autospace:none;text-align:center'>March 31, 2016</p> </td> </tr> <tr align="left"> <td width="444" valign="bottom" style='width:333.0pt;padding:0'> <p style='margin:0in;margin-bottom:.0001pt;text-autospace:none'>Numerator:</p> </td> <td width="108" valign="bottom" style='width:81.0pt;padding:0'> <p style='margin:0in;margin-bottom:.0001pt;text-autospace:none'> </p> </td> <td width="12" valign="bottom" style='width:9.0pt;padding:0'> <p style='margin:0in;margin-bottom:.0001pt;text-autospace:none'> </p> </td> <td width="102" valign="bottom" style='width:76.5pt;padding:0'> <p style='margin:0in;margin-bottom:.0001pt;text-autospace:none'> </p> </td> </tr> <tr align="left"> <td width="444" valign="bottom" style='width:333.0pt;background:#CCEEFF;padding:0'> <p style='margin:0in;margin-bottom:.0001pt;text-autospace:none'>Net loss available to common shareholders</p> </td> <td width="108" valign="bottom" style='width:81.0pt;background:#CCEEFF;padding:0'> <p style='margin:0in;margin-bottom:.0001pt;text-autospace:none'>   $                 (1,535)</p> </td> <td width="12" valign="bottom" style='width:9.0pt;background:#CCEEFF;padding:0'></td> <td width="102" valign="bottom" style='width:76.5pt;background:#CCEEFF;padding:0'> <p style='margin:0in;margin-bottom:.0001pt;text-autospace:none'>   $             (43,055)</p> </td> </tr> <tr align="left"> <td width="444" valign="bottom" style='width:333.0pt;padding:0'> <p style='margin:0in;margin-bottom:.0001pt;text-autospace:none'>Denominator:</p> </td> <td width="108" valign="bottom" style='width:81.0pt;padding:0'></td> <td width="12" valign="bottom" style='width:9.0pt;padding:0'></td> <td width="102" valign="bottom" style='width:76.5pt;padding:0'></td> </tr> <tr align="left"> <td width="444" valign="bottom" style='width:333.0pt;background:#CCEEFF;padding:0'> <p style='margin:0in;margin-bottom:.0001pt;text-autospace:none'>Weighted average shares and share equivalents outstanding – basic </p> </td> <td width="108" valign="bottom" style='width:81.0pt;border:none;border-bottom:solid black 1.0pt;background:#CCEEFF;padding:0'> <p style='margin:0in;margin-bottom:.0001pt;text-autospace:none'>             11,871,009 </p> </td> <td width="12" valign="bottom" style='width:9.0pt;background:#CCEEFF;padding:0'></td> <td width="102" valign="bottom" style='width:76.5pt;border:none;border-bottom:solid black 1.0pt;background:#CCEEFF;padding:0'> <p style='margin:0in;margin-bottom:.0001pt;text-autospace:none'>               9,118,161 </p> </td> </tr> <tr align="left"> <td width="444" valign="bottom" style='width:333.0pt;padding:0'> <p style='margin:0in;margin-bottom:.0001pt;text-autospace:none'>Effect of preferred stock</p> </td> <td width="108" valign="bottom" style='width:81.0pt;padding:0'> <p style='margin:0in;margin-bottom:.0001pt;text-autospace:none'>                   987,102 </p> </td> <td width="12" valign="bottom" style='width:9.0pt;padding:0'> <p style='margin:0in;margin-bottom:.0001pt;text-autospace:none'> </p> </td> <td width="102" valign="bottom" style='width:76.5pt;padding:0'> <p style='margin:0in;margin-bottom:.0001pt;text-autospace:none'>                  987,102 </p> </td> </tr> <tr align="left"> <td width="444" valign="bottom" style='width:333.0pt;background:#CCEEFF;padding:0'> <p style='margin:0in;margin-bottom:.0001pt;text-autospace:none'>Effect of dilutive stock options</p> </td> <td width="108" valign="bottom" style='width:81.0pt;background:#CCEEFF;padding:0'> <p style='margin:0in;margin-bottom:.0001pt;text-autospace:none'>                1,257,613 </p> </td> <td width="12" valign="bottom" style='width:9.0pt;background:#CCEEFF;padding:0'> <p style='margin:0in;margin-bottom:.0001pt;text-autospace:none'> </p> </td> <td width="102" valign="bottom" style='width:76.5pt;background:#CCEEFF;padding:0'> <p style='margin:0in;margin-bottom:.0001pt;text-autospace:none'>                  417,246 </p> </td> </tr> <tr align="left"> <td width="444" valign="bottom" style='width:333.0pt;padding:0'> <p style='margin:0in;margin-bottom:.0001pt;text-autospace:none'>Effect of dilutive warrants</p> </td> <td width="108" valign="bottom" style='width:81.0pt;padding:0'> <p style='margin:0in;margin-bottom:.0001pt;text-autospace:none'>                   202,647 </p> </td> <td width="12" valign="bottom" style='width:9.0pt;padding:0'> <p style='margin:0in;margin-bottom:.0001pt;text-autospace:none'> </p> </td> <td width="102" valign="bottom" style='width:76.5pt;padding:0'> <p style='margin:0in;margin-bottom:.0001pt;text-autospace:none'>                  216,667 </p> </td> </tr> <tr align="left"> <td width="444" valign="bottom" style='width:333.0pt;background:#CCEEFF;padding:0'> <p style='margin:0in;margin-bottom:.0001pt;text-autospace:none'>Weighted average shares and share equivalents outstanding – assuming dilution</p> </td> <td width="108" valign="bottom" style='width:81.0pt;border-top:solid windowtext 1.0pt;border-left:none;border-bottom:solid windowtext 1.0pt;border-right:none;background:#CCEEFF;padding:0'> <p style='margin:0in;margin-bottom:.0001pt;text-autospace:none'>             14,318,371 </p> </td> <td width="12" valign="bottom" style='width:9.0pt;background:#CCEEFF;padding:0'> <p style='margin:0in;margin-bottom:.0001pt;text-autospace:none'> </p> </td> <td width="102" valign="bottom" style='width:76.5pt;border-top:solid windowtext 1.0pt;border-left:none;border-bottom:solid windowtext 1.0pt;border-right:none;background:#CCEEFF;padding:0'> <p style='margin:0in;margin-bottom:.0001pt;text-autospace:none'>            10,739,176 </p> </td> </tr> <tr align="left"> <td width="444" valign="bottom" style='width:333.0pt;padding:0'> <p style='margin:0in;margin-bottom:.0001pt;text-autospace:none'> </p> </td> <td width="108" valign="bottom" style='width:81.0pt;padding:0'></td> <td width="12" valign="bottom" style='width:9.0pt;padding:0'></td> <td width="102" valign="bottom" style='width:76.5pt;padding:0'></td> </tr> <tr align="left"> <td width="444" valign="bottom" style='width:333.0pt;background:#CCEEFF;padding:0'> <p style='margin:0in;margin-bottom:.0001pt;text-autospace:none'>Net loss per share — basic and diluted</p> </td> <td width="108" valign="bottom" style='width:81.0pt;border:none;border-bottom:solid black 1.0pt;background:#CCEEFF;padding:0'> <p style='margin:0in;margin-bottom:.0001pt;text-autospace:none'>   $                     (.00)</p> </td> <td width="12" valign="bottom" style='width:9.0pt;background:#CCEEFF;padding:0'></td> <td width="102" valign="bottom" style='width:76.5pt;border:none;border-bottom:solid black 1.0pt;background:#CCEEFF;padding:0'> <p style='margin:0in;margin-bottom:.0001pt;text-autospace:none'>   $                   (.00)</p> </td> </tr> </table>
<!--egx--><table border="0" cellspacing="0" cellpadding="0" align="left" width="854" style='width:640.5pt;border-collapse:collapse;margin-left:6.75pt;margin-right:6.75pt'> <tr align="left"> <td valign="bottom" style='padding:0in 6.0pt 0in 6.0pt'> <p style='margin:0in;margin-bottom:.0001pt;text-autospace:none'><b> </b></p> </td> <td valign="bottom" style='padding:0in 6.0pt 0in 6.0pt'> <p align="center" style='margin:0in;margin-bottom:.0001pt;text-autospace:none;text-align:center'><b>Options</b></p> </td> <td valign="bottom" style='padding:0in 6.0pt 0in 6.0pt'> <p style='margin:0in;margin-bottom:.0001pt;text-autospace:none'><b> </b></p> </td> <td valign="bottom" style='padding:0in 6.0pt 0in 6.0pt'> <p align="center" style='margin:0in;margin-bottom:.0001pt;text-autospace:none;text-align:center'><b>Weighted average</b></p> <p align="center" style='margin:0in;margin-bottom:.0001pt;text-autospace:none;text-align:center'><b>exercise price</b></p> </td> <td valign="bottom" style='padding:0in 6.0pt 0in 6.0pt'> <p style='margin:0in;margin-bottom:.0001pt;text-autospace:none'><b> </b></p> </td> <td valign="bottom" style='padding:0in 6.0pt 0in 6.0pt'> <p align="center" style='margin:0in;margin-bottom:.0001pt;text-autospace:none;text-align:center'><b>Weighted average</b></p> <p align="center" style='margin:0in;margin-bottom:.0001pt;text-autospace:none;text-align:center'><b>remaining</b></p> <p align="center" style='margin:0in;margin-bottom:.0001pt;text-autospace:none;text-align:center'><b>contractual life (yrs)</b></p> </td> <td valign="bottom" style='padding:0in 6.0pt 0in 6.0pt'> <p style='margin:0in;margin-bottom:.0001pt;text-autospace:none'><b> </b></p> </td> <td width="169" valign="bottom" style='width:126.55pt;padding:0in 6.0pt 0in 6.0pt'> <p align="center" style='margin:0in;margin-bottom:.0001pt;text-autospace:none;text-align:center'><b>Aggregate</b></p> <p align="center" style='margin:0in;margin-bottom:.0001pt;text-autospace:none;text-align:center'><b>intrinsicvalue</b></p> </td> </tr> <tr style='height:54.6pt'> <td valign="bottom" style='background:#CCEEFF;padding:0in 6.0pt 0in 6.0pt;height:54.6pt'> <p style='margin:0in;margin-bottom:.0001pt;text-autospace:none'>Options outstanding, December 31, 2016</p> </td> <td valign="bottom" style='background:#CCEEFF;padding:0in 6.0pt 0in 6.0pt;height:54.6pt'> <p align="right" style='margin:0in;margin-bottom:.0001pt;text-autospace:none;text-align:right'>514,934</p> </td> <td valign="bottom" style='background:#CCEEFF;padding:0in 6.0pt 0in 6.0pt;height:54.6pt'> <p align="right" style='margin:0in;margin-bottom:.0001pt;text-autospace:none;text-align:right'> </p> </td> <td valign="bottom" style='background:#CCEEFF;padding:0in 6.0pt 0in 6.0pt;height:54.6pt'> <p align="right" style='margin:0in;margin-bottom:.0001pt;text-autospace:none;text-align:right'>$.005</p> </td> <td valign="bottom" style='background:#CCEEFF;padding:0in 6.0pt 0in 6.0pt;height:54.6pt'> <p align="right" style='margin:0in;margin-bottom:.0001pt;text-autospace:none;text-align:right'> </p> </td> <td valign="bottom" style='border:none;border-bottom:solid windowtext 1.0pt;background:#CCEEFF;padding:0in 6.0pt 0in 6.0pt;height:54.6pt'> <p align="right" style='margin:0in;margin-bottom:.0001pt;text-autospace:none;text-align:right'>6.26 </p> </td> <td valign="bottom" style='background:#CCEEFF;padding:0in 6.0pt 0in 6.0pt;height:54.6pt'> <p align="right" style='margin:0in;margin-bottom:.0001pt;text-autospace:none;text-align:right'> </p> </td> <td width="169" valign="bottom" style='width:126.55pt;background:#CCEEFF;padding:0in 6.0pt 0in 6.0pt;height:54.6pt'> <p align="right" style='margin:0in;margin-bottom:.0001pt;text-autospace:none;text-align:right'>-</p> </td> </tr> <tr align="left"> <td valign="bottom" style='padding:0in 6.0pt 0in 6.0pt'> <p style='margin:0in;margin-bottom:.0001pt;text-autospace:none'> </p> </td> <td valign="bottom" style='padding:0in 6.0pt 0in 6.0pt'> <p align="right" style='margin:0in;margin-bottom:.0001pt;text-autospace:none;text-align:right'> </p> </td> <td valign="bottom" style='padding:0in 6.0pt 0in 6.0pt'> <p align="right" style='margin:0in;margin-bottom:.0001pt;text-autospace:none;text-align:right'> </p> </td> <td valign="bottom" style='padding:0in 6.0pt 0in 6.0pt'> <p align="right" style='margin:0in;margin-bottom:.0001pt;text-autospace:none;text-align:right'> </p> </td> <td valign="bottom" style='padding:0in 6.0pt 0in 6.0pt'> <p align="right" style='margin:0in;margin-bottom:.0001pt;text-autospace:none;text-align:right'> </p> </td> <td valign="bottom" style='padding:0in 6.0pt 0in 6.0pt'> <p align="right" style='margin:0in;margin-bottom:.0001pt;text-autospace:none;text-align:right'> </p> </td> <td valign="bottom" style='padding:0in 6.0pt 0in 6.0pt'> <p align="right" style='margin:0in;margin-bottom:.0001pt;text-autospace:none;text-align:right'> </p> </td> <td width="169" valign="bottom" style='width:126.55pt;padding:0in 6.0pt 0in 6.0pt'> <p align="right" style='margin:0in;margin-bottom:.0001pt;text-autospace:none;text-align:right'> </p> </td> </tr> <tr align="left"> <td valign="bottom" style='background:#CCEEFF;padding:0in 6.0pt 0in 6.0pt'> <p style='margin:0in;margin-bottom:.0001pt;text-autospace:none'>Options exercisable, December 31, 2016</p> </td> <td valign="bottom" style='background:#CCEEFF;padding:0in 6.0pt 0in 6.0pt'> <p align="right" style='margin:0in;margin-bottom:.0001pt;text-autospace:none;text-align:right'>425,934 </p> </td> <td valign="bottom" style='background:#CCEEFF;padding:0in 6.0pt 0in 6.0pt'> <p align="right" style='margin:0in;margin-bottom:.0001pt;text-autospace:none;text-align:right'> </p> </td> <td valign="bottom" style='background:#CCEEFF;padding:0in 6.0pt 0in 6.0pt'> <p align="right" style='margin:0in;margin-bottom:.0001pt;text-autospace:none;text-align:right'>$.003</p> </td> <td valign="bottom" style='background:#CCEEFF;padding:0in 6.0pt 0in 6.0pt'> <p align="right" style='margin:0in;margin-bottom:.0001pt;text-autospace:none;text-align:right'> </p> </td> <td valign="bottom" style='border:none;border-bottom:solid windowtext 1.0pt;background:#CCEEFF;padding:0in 6.0pt 0in 6.0pt'> <p align="right" style='margin:0in;margin-bottom:.0001pt;text-autospace:none;text-align:right'>5.78</p> </td> <td valign="bottom" style='background:#CCEEFF;padding:0in 6.0pt 0in 6.0pt'> <p align="right" style='margin:0in;margin-bottom:.0001pt;text-autospace:none;text-align:right'> </p> </td> <td width="169" valign="bottom" style='width:126.55pt;border:none;border-bottom:solid windowtext 1.0pt;background:#CCEEFF;padding:0in 6.0pt 0in 6.0pt'> <p align="right" style='margin:0in;margin-bottom:.0001pt;text-autospace:none;text-align:right'>$ 9,,350</p> </td> </tr> <tr align="left"> <td valign="bottom" style='padding:0in 6.0pt 0in 6.0pt'> <p style='margin:0in;margin-bottom:.0001pt;text-autospace:none'> </p> </td> <td valign="bottom" style='padding:0in 6.0pt 0in 6.0pt'> <p align="right" style='margin:0in;margin-bottom:.0001pt;text-autospace:none;text-align:right'> </p> </td> <td valign="bottom" style='padding:0in 6.0pt 0in 6.0pt'> <p align="right" style='margin:0in;margin-bottom:.0001pt;text-autospace:none;text-align:right'> </p> </td> <td valign="bottom" style='padding:0in 6.0pt 0in 6.0pt'> <p align="right" style='margin:0in;margin-bottom:.0001pt;text-autospace:none;text-align:right'> </p> </td> <td valign="bottom" style='padding:0in 6.0pt 0in 6.0pt'> <p align="right" style='margin:0in;margin-bottom:.0001pt;text-autospace:none;text-align:right'> </p> </td> <td valign="bottom" style='border:none;padding:0in 6.0pt 0in 6.0pt'> <p align="right" style='margin:0in;margin-bottom:.0001pt;text-autospace:none;text-align:right'> </p> </td> <td valign="bottom" style='padding:0in 6.0pt 0in 6.0pt'> <p align="right" style='margin:0in;margin-bottom:.0001pt;text-autospace:none;text-align:right'> </p> </td> <td width="169" valign="bottom" style='width:126.55pt;border:none;padding:0in 6.0pt 0in 6.0pt'> <p align="right" style='margin:0in;margin-bottom:.0001pt;text-autospace:none;text-align:right'> </p> </td> </tr> <tr align="left"> <td valign="bottom" style='padding:0in 6.0pt 0in 6.0pt'> <p style='margin:0in;margin-bottom:.0001pt;text-autospace:none'>Options issued during the period</p> </td> <td valign="bottom" style='padding:0in 6.0pt 0in 6.0pt'> <p align="right" style='margin:0in;margin-bottom:.0001pt;text-autospace:none;text-align:right'>1,503,000</p> </td> <td valign="bottom" style='padding:0in 6.0pt 0in 6.0pt'> <p align="right" style='margin:0in;margin-bottom:.0001pt;text-autospace:none;text-align:right'> </p> </td> <td valign="bottom" style='padding:0in 6.0pt 0in 6.0pt'> <p align="right" style='margin:0in;margin-bottom:.0001pt;text-autospace:none;text-align:right'>.007</p> </td> <td valign="bottom" style='padding:0in 6.0pt 0in 6.0pt'> <p align="right" style='margin:0in;margin-bottom:.0001pt;text-autospace:none;text-align:right'> </p> </td> <td valign="bottom" style='padding:0in 6.0pt 0in 6.0pt'> <p align="right" style='margin:0in;margin-bottom:.0001pt;text-autospace:none;text-align:right'><font style='display:none'>-</font></p> </td> <td valign="bottom" style='padding:0in 6.0pt 0in 6.0pt'> <p align="right" style='margin:0in;margin-bottom:.0001pt;text-autospace:none;text-align:right'> </p> </td> <td width="169" valign="bottom" style='width:126.55pt;padding:0in 6.0pt 0in 6.0pt'> <p align="right" style='margin:0in;margin-bottom:.0001pt;text-autospace:none;text-align:right'>-</p> </td> </tr> <tr align="left"> <td valign="bottom" style='padding:0in 6.0pt 0in 6.0pt'> <p style='margin:0in;margin-bottom:.0001pt;text-autospace:none'> </p> </td> <td valign="bottom" style='padding:0in 6.0pt 0in 6.0pt'> <p align="right" style='margin:0in;margin-bottom:.0001pt;text-autospace:none;text-align:right'> </p> </td> <td valign="bottom" style='padding:0in 6.0pt 0in 6.0pt'> <p align="right" style='margin:0in;margin-bottom:.0001pt;text-autospace:none;text-align:right'> </p> </td> <td valign="bottom" style='padding:0in 6.0pt 0in 6.0pt'> <p align="right" style='margin:0in;margin-bottom:.0001pt;text-autospace:none;text-align:right'> </p> </td> <td valign="bottom" style='padding:0in 6.0pt 0in 6.0pt'> <p align="right" style='margin:0in;margin-bottom:.0001pt;text-autospace:none;text-align:right'> </p> </td> <td valign="bottom" style='padding:0in 6.0pt 0in 6.0pt'> <p align="right" style='margin:0in;margin-bottom:.0001pt;text-autospace:none;text-align:right'> </p> </td> <td valign="bottom" style='padding:0in 6.0pt 0in 6.0pt'> <p align="right" style='margin:0in;margin-bottom:.0001pt;text-autospace:none;text-align:right'> </p> </td> <td width="169" valign="bottom" style='width:126.55pt;padding:0in 6.0pt 0in 6.0pt'> <p align="right" style='margin:0in;margin-bottom:.0001pt;text-autospace:none;text-align:right'> </p> </td> </tr> <tr align="left"> <td valign="bottom" style='background:#CCEEFF;padding:0in 6.0pt 0in 6.0pt'> <p style='margin:0in;margin-bottom:.0001pt;text-autospace:none'>Options outstanding, March 31, 2017</p> </td> <td valign="bottom" style='background:#CCEEFF;padding:0in 6.0pt 0in 6.0pt'> <p align="right" style='margin:0in;margin-bottom:.0001pt;text-autospace:none;text-align:right'>2,017,934 </p> </td> <td valign="bottom" style='background:#CCEEFF;padding:0in 6.0pt 0in 6.0pt'> <p align="right" style='margin:0in;margin-bottom:.0001pt;text-autospace:none;text-align:right'> </p> </td> <td valign="bottom" style='background:#CCEEFF;padding:0in 6.0pt 0in 6.0pt'> <p align="right" style='margin:0in;margin-bottom:.0001pt;text-autospace:none;text-align:right'>$ .006</p> </td> <td valign="bottom" style='background:#CCEEFF;padding:0in 6.0pt 0in 6.0pt'> <p align="right" style='margin:0in;margin-bottom:.0001pt;text-autospace:none;text-align:right'> </p> </td> <td valign="bottom" style='background:#CCEEFF;padding:0in 6.0pt 0in 6.0pt'> <p align="right" style='margin:0in;margin-bottom:.0001pt;text-autospace:none;text-align:right'>8.80</p> </td> <td valign="bottom" style='background:#CCEEFF;padding:0in 6.0pt 0in 6.0pt'> <p align="right" style='margin:0in;margin-bottom:.0001pt;text-autospace:none;text-align:right'> </p> </td> <td width="169" valign="bottom" style='width:126.55pt;background:#CCEEFF;padding:0in 6.0pt 0in 6.0pt'> <p align="right" style='margin:0in;margin-bottom:.0001pt;text-autospace:none;text-align:right'>-</p> </td> </tr> <tr align="left"> <td valign="bottom" style='padding:0in 6.0pt 0in 6.0pt'> <p style='margin:0in;margin-bottom:.0001pt;text-autospace:none'> </p> </td> <td valign="bottom" style='padding:0in 6.0pt 0in 6.0pt'> <p align="right" style='margin:0in;margin-bottom:.0001pt;text-autospace:none;text-align:right'> </p> </td> <td valign="bottom" style='padding:0in 6.0pt 0in 6.0pt'> <p align="right" style='margin:0in;margin-bottom:.0001pt;text-autospace:none;text-align:right'> </p> </td> <td valign="bottom" style='padding:0in 6.0pt 0in 6.0pt'> <p align="right" style='margin:0in;margin-bottom:.0001pt;text-autospace:none;text-align:right'> </p> </td> <td valign="bottom" style='padding:0in 6.0pt 0in 6.0pt'> <p align="right" style='margin:0in;margin-bottom:.0001pt;text-autospace:none;text-align:right'> </p> </td> <td valign="bottom" style='padding:0in 6.0pt 0in 6.0pt'> <p align="right" style='margin:0in;margin-bottom:.0001pt;text-autospace:none;text-align:right'> </p> </td> <td valign="bottom" style='padding:0in 6.0pt 0in 6.0pt'> <p align="right" style='margin:0in;margin-bottom:.0001pt;text-autospace:none;text-align:right'> </p> </td> <td width="169" valign="bottom" style='width:126.55pt;padding:0in 6.0pt 0in 6.0pt'> <p align="right" style='margin:0in;margin-bottom:.0001pt;text-autospace:none;text-align:right'> </p> </td> </tr> <tr align="left"> <td valign="bottom" style='padding:0in 6.0pt 0in 6.0pt'> <p style='margin:0in;margin-bottom:.0001pt;text-autospace:none'>Options exercisable, March 31, 2017</p> </td> <td valign="bottom" style='border:none;border-top:solid windowtext 1.0pt;padding:0in 6.0pt 0in 6.0pt'> <p align="right" style='margin:0in;margin-bottom:.0001pt;text-autospace:none;text-align:right'>426,934 </p> </td> <td valign="bottom" style='padding:0in 6.0pt 0in 6.0pt'> <p align="right" style='margin:0in;margin-bottom:.0001pt;text-autospace:none;text-align:right'> </p> </td> <td valign="bottom" style='border:none;border-top:solid windowtext 1.0pt;padding:0in 6.0pt 0in 6.0pt'> <p align="right" style='margin:0in;margin-bottom:.0001pt;text-autospace:none;text-align:right'>$ .003</p> </td> <td valign="bottom" style='padding:0in 6.0pt 0in 6.0pt'> <p align="right" style='margin:0in;margin-bottom:.0001pt;text-autospace:none;text-align:right'> </p> </td> <td valign="bottom" style='border:none;border-top:solid windowtext 1.0pt;padding:0in 6.0pt 0in 6.0pt'> <p align="right" style='margin:0in;margin-bottom:.0001pt;text-autospace:none;text-align:right'>5.45</p> </td> <td valign="bottom" style='padding:0in 6.0pt 0in 6.0pt'> <p align="right" style='margin:0in;margin-bottom:.0001pt;text-autospace:none;text-align:right'> </p> </td> <td width="169" valign="bottom" style='width:126.55pt;padding:0in 6.0pt 0in 6.0pt'> <p align="right" style='margin:0in;margin-bottom:.0001pt;text-autospace:none;text-align:right'>$ 5,956</p> </td> </tr> <tr align="left"> <td valign="bottom" style='padding:0in 6.0pt 0in 6.0pt'> <p style='margin:0in;margin-bottom:.0001pt;text-autospace:none'> </p> </td> <td valign="bottom" style='border:none;border-top:solid windowtext 1.0pt;padding:0in 6.0pt 0in 6.0pt'> <p align="right" style='margin:0in;margin-bottom:.0001pt;text-autospace:none;text-align:right'> </p> </td> <td valign="bottom" style='padding:0in 6.0pt 0in 6.0pt'> <p align="right" style='margin:0in;margin-bottom:.0001pt;text-autospace:none;text-align:right'> </p> </td> <td valign="bottom" style='border:none;border-top:solid windowtext 1.0pt;padding:0in 6.0pt 0in 6.0pt'> <p align="right" style='margin:0in;margin-bottom:.0001pt;text-autospace:none;text-align:right'> </p> </td> <td valign="bottom" style='padding:0in 6.0pt 0in 6.0pt'> <p align="right" style='margin:0in;margin-bottom:.0001pt;text-autospace:none;text-align:right'> </p> </td> <td valign="bottom" style='border:none;border-top:solid windowtext 1.0pt;padding:0in 6.0pt 0in 6.0pt'> <p align="right" style='margin:0in;margin-bottom:.0001pt;text-autospace:none;text-align:right'> </p> </td> <td valign="bottom" style='padding:0in 6.0pt 0in 6.0pt'> <p align="right" style='margin:0in;margin-bottom:.0001pt;text-autospace:none;text-align:right'> </p> </td> <td width="169" valign="bottom" style='width:126.55pt;border:none;border-top:solid windowtext 1.0pt;padding:0in 6.0pt 0in 6.0pt'> <p align="right" style='margin:0in;margin-bottom:.0001pt;text-autospace:none;text-align:right'> </p> </td> </tr> </table> <p style='margin:0in;margin-bottom:.0001pt;text-autospace:none'> </p> <p style='margin:0in;margin-bottom:.0001pt;text-autospace:none'> </p> <p style='margin:0in;margin-bottom:.0001pt;text-autospace:none'> </p> <p style='margin:0in;margin-bottom:.0001pt;text-autospace:none'> </p> <p style='margin:0in;margin-bottom:.0001pt;text-autospace:none'> </p>
<!--egx--><p style='margin:0in;margin-bottom:.0001pt;text-autospace:none;text-align:justify'> </p> <table border="0" cellspacing="0" cellpadding="0" style='border-collapse:collapse'> <tr align="left"> <td valign="bottom" style='padding:0in 6.0pt 1.5pt 6.0pt'> <p style='margin:0in;margin-bottom:.0001pt;text-autospace:none'> </p> </td> <td valign="bottom" style='padding:0in 6.0pt 1.5pt 6.0pt'> <p style='margin:0in;margin-bottom:.0001pt;text-autospace:none'> </p> </td> <td valign="bottom" style='border:none;border-bottom:solid black 1.0pt;padding:0in 6.0pt 0in 6.0pt'> <p align="center" style='margin:0in;margin-bottom:.0001pt;text-autospace:none;text-align:center'><b>2017</b></p> </td> </tr> <tr style='height:18.35pt'> <td valign="bottom" style='background:#CCEEFF;padding:0in 6.0pt 0in 6.0pt;height:18.35pt'> <p style='margin:0in;margin-bottom:.0001pt;text-autospace:none;background:#CCEEFF'>Risk free interest rate</p> </td> <td valign="bottom" style='background:#CCEEFF;padding:0in 6.0pt 0in 6.0pt;height:18.35pt'> <p style='margin:0in;margin-bottom:.0001pt;text-autospace:none;background:#CCEEFF'> </p> </td> <td valign="bottom" style='background:#CCEEFF;padding:0in 6.0pt 0in 6.0pt;height:18.35pt'> <p align="right" style='margin:0in;margin-bottom:.0001pt;text-autospace:none;text-align:right;background:#CCEEFF'>1.80% - 1.97 %</p> </td> </tr> <tr style='height:13.5pt'> <td valign="bottom" style='background:white;padding:0in 6.0pt 0in 6.0pt;height:13.5pt'> <p style='margin:0in;margin-bottom:.0001pt;text-autospace:none;background:white'>Expected lives (in years)</p> </td> <td valign="bottom" style='background:white;padding:0in 6.0pt 0in 6.0pt;height:13.5pt'> <p style='margin:0in;margin-bottom:.0001pt;text-autospace:none;background:white'> </p> </td> <td valign="bottom" style='background:white;padding:0in 6.0pt 0in 6.0pt;height:13.5pt'> <p align="right" style='margin:0in;margin-bottom:.0001pt;text-autospace:none;text-align:right;background:white'>5 </p> </td> </tr> <tr align="left"> <td valign="bottom" style='background:#CCEEFF;padding:0in 6.0pt 0in 6.0pt'> <p style='margin:0in;margin-bottom:.0001pt;text-autospace:none;background:#CCEEFF'>Expected volatility</p> </td> <td valign="bottom" style='background:#CCEEFF;padding:0in 6.0pt 0in 6.0pt'> <p style='margin:0in;margin-bottom:.0001pt;text-autospace:none;background:#CCEEFF'> </p> </td> <td valign="bottom" style='background:#CCEEFF;padding:0in 6.0pt 0in 6.0pt'> <p align="right" style='margin:0in;margin-bottom:.0001pt;text-autospace:none;text-align:right;background:#CCEEFF'>173% - 174 %</p> </td> </tr> <tr align="left"> <td valign="bottom" style='background:white;padding:0in 6.0pt 0in 6.0pt'> <p style='margin:0in;margin-bottom:.0001pt;text-autospace:none;background:white'>Dividend yield</p> </td> <td valign="bottom" style='background:white;padding:0in 6.0pt 0in 6.0pt'> <p style='margin:0in;margin-bottom:.0001pt;text-autospace:none;background:white'> </p> </td> <td valign="bottom" style='background:white;padding:0in 6.0pt 0in 6.0pt'> <p align="right" style='margin:0in;margin-bottom:.0001pt;text-autospace:none;text-align:right;background:white'>0 %</p> </td> </tr> </table>
407608
397787
<!--egx--> <p style='margin:0in;margin-bottom:.0001pt;text-autospace:none'>Stock-based compensation is measured at the grant date, based on the calculated fair value of the option, and is recognized as an expense on a straight-line basis over the requisite employee service period (generally the vesting period of the grant). </p>
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<!--egx--><p style='margin:0in;margin-bottom:.0001pt;text-autospace:none'> </p> <table border="0" cellspacing="0" cellpadding="0" style='border-collapse:collapse'> <tr style='height:12.4pt'> <td width="21" valign="top" style='width:15.8pt;background:white;padding:0;height:12.4pt'> <p style='margin:0in;margin-bottom:.0001pt;text-autospace:none'><b>7.</b></p> </td> <td width="7" valign="top" style='width:5.25pt;background:white;padding:0;height:12.4pt'> <p style='margin:0in;margin-bottom:.0001pt;text-autospace:none'> </p> </td> <td width="387" valign="top" style='width:290.0pt;background:white;padding:0;height:12.4pt'> <p style='margin:0in;margin-bottom:.0001pt;text-autospace:none'><b>INTANGIBLE ASSET                      </b></p> </td> </tr> </table> <p style='margin:0in;margin-bottom:.0001pt;text-autospace:none'> </p> <p style='margin:0in;margin-bottom:.0001pt;text-autospace:none'>During the three months ended March 31, 2017, $7,700 was paid for an intangible asset and $2,341 was recorded as amortization expense.  There is a remaining balance of $8,300 purchased on account at March 31, 2017.</p>
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At March 31, 2017, current liabilities exceeded current assets by $1,100,384 .
1100384
The Company’s business plan includes, among other things, expansion through mergers and acquisitions and the development of its co-location and advanced voice and data solutions. Execution of the Company’s business plan will require significant capital to fund capital expenditures, working capital needs and debt service. Current cash balances will not be sufficient to fund the Company’s current business plan beyond the next few months.
Secured convertible promissory note from a shareholder
2018-05-31
secured by all tangible and intangible assets of the Company
135773
144966
Secured convertible promissory note from a shareholder
0.0600
requires monthly installments of interest only through May 31, 2014, then requires monthly installments of $600 including principal and interest
2023-05-31
secured by certain equipment of the Company
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On March 30, 2017 the Company’s board of directors made the determination that it was in the best interest of the Company and its stockholders to conserve the Company’s working capital at this time and not make the annual dividend payment for the year ending December 31, 2016, on its Series A Convertible Preferred Stock. The Company has never made an annual dividend payment on its Series A convertible preferred stock.
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false
FULLNET COMMUNICATIONS INC
0001092570
fulo
--12-31
11871009
Smaller Reporting Company
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No
No
2017
Q1
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$.001 par value; authorized, 10,000,000 shares; Series A convertible issued and outstanding, 987,102 shares
$.00001 par value; authorized, 40,000,000 shares; issued and outstanding, 11,871,009 shares
The note holder has the right to convert the note, in its entirety or in part, into common stock of the Company at the rate of $1.00 per share. During the three months ended March 31, 2017, the Company made principal and interest payments totaling $13,203. The secured convertible promissory note had a balance of $135,773 at March 31, 2017 of which $39,608 is short-term and $96,165 is long-term. </p> <p style='margin:0in;margin-bottom:.0001pt;text-autospace:none;text-align:justify'> </p> <p style='margin:0in;margin-bottom:.0001pt;text-autospace:none;text-align:justify'> </p>
The note holder has the right to convert the note, in its entirety or in part, into common stock of the Company at the rate of $1.00 per share. During the three months ended March 31, 2017, the Company made principal and interest payments totaling $2,401. The secured convertible promissory note had a balance of $36,638 at March 31, 2017 of which $7,203 is short-term and $29,435 is long-term. </p> <p style='margin:0in;margin-bottom:.0001pt;text-autospace:none;text-align:justify'> </p> <p style='margin:0in;margin-bottom:.0001pt;text-autospace:none;text-align:justify'>This secured convertible promissory note is secured by certain equipment of the Company. Upon payment of the balance due on this secured convertible promissory note title of the equipment will be transferred to the Company free and clear of all liens and encumbrances.</p> <p style='margin:0in;margin-bottom:.0001pt;text-autospace:none;text-align:justify'> </p>