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<p style="font: 10pt/normal Times New Roman, Times, Serif; margin: 0"><font style="font: 10pt Times New Roman, Times, Serif"><b>Organization
and Nature of Business </b></font></p>
<p style="font: 10pt/normal Times New Roman, Times, Serif; margin: 0; text-align: justify"><font style="font: 10pt Times New Roman, Times, Serif"> </font></p>
<p style="font: 10pt/normal Times New Roman, Times, Serif; margin: 0; text-align: justify"><font style="font: 10pt Times New Roman, Times, Serif">Gopher
Protocol Inc. (f/k/a Forex International Trading Corp.) (the “Company”) was incorporated on July 22, 2009, under the
laws of the State of Nevada and is headquartered in El Segundo, California. On September 9, 2009, the Company filed Form S-1 Registration
Statement to provide for the registration of securities under the Securities Act of 1933. The Company’s principal business
activities have been to engage in foreign currency market trading for non-US resident professionals and retail clients over its
web-based trading systems. While these trading operations have been closed, the Company continues to operate in the consulting
segment of the foreign currency market, leveraging its contacts and knowledge, and its consulting expertise in the area of foreign
exchange. In addition, the Company is analyzing investments in joint ventures and is selectively pursuing acquisitions.</font></p>
<p style="font: 10pt/normal Times New Roman, Times, Serif; margin: 0; text-align: justify"><font style="font: 10pt Times New Roman, Times, Serif"> </font></p>
<p style="font: 10pt/normal Times New Roman, Times, Serif; margin: 0; text-align: justify"><font style="font: 10pt Times New Roman, Times, Serif">Effective
April 4, 2014, the Company filed with the State of Nevada a Certificate of Amendment to Articles of Incorporation changing the
Company’s number of authorized shares to 600,000,000. On or about June 10, 2014, the Company received approval from the
Secretary of State of Nevada to increase the authorized shares to 2,000,000,000.</font></p>
<p style="font: 10pt/normal Times New Roman, Times, Serif; margin: 0; text-align: justify"><font style="font: 10pt Times New Roman, Times, Serif"> </font></p>
<p style="font: 10pt/normal Times New Roman, Times, Serif; margin: 0; text-align: justify"><font style="font: 10pt Times New Roman, Times, Serif">The
Company is restating its financial statements for the period ended June 30, 2014. The reason for the restatement is that the Company
did not show on its books the effect of the Blackbridge note until the period ended September 30, 2014. The commitment fee of
$90,000 was incurred on June 16, 2014, so this liability should have been recorded on the Company’s books in the quarter
ended June 30, 2014. Accordingly, the Company is restating its books for the period ended June 30, 2014 to disclose the effect
of the Blackbridge note. The maturity of the Blackbridge note was December 16, 2014; the Company defaulted on the note and settled
the matter by issuing shares, and the interest expense was also settled in shares rather than cash.</font></p>
<p style="font: 10pt/normal Times New Roman, Times, Serif; margin: 0"><font style="font: 10pt Times New Roman, Times, Serif"><b>2.
Summary of Significant Accounting Policies </b></font></p>
<p style="font: 10pt/normal Times New Roman, Times, Serif; margin: 0; text-align: justify"><font style="font: 10pt Times New Roman, Times, Serif"><i> </i></font></p>
<p style="font: 10pt/normal Times New Roman, Times, Serif; margin: 0; text-align: justify"><font style="font: 10pt Times New Roman, Times, Serif"><i>Presentation
and Basis of Financial Statements </i></font></p>
<p style="font: 10pt/normal Times New Roman, Times, Serif; margin: 0; text-align: justify"><font style="font: 10pt Times New Roman, Times, Serif"> </font></p>
<p style="font: 10pt/normal Times New Roman, Times, Serif; margin: 0; text-align: justify"><font style="font: 10pt Times New Roman, Times, Serif">The
accompanying unaudited condensed consolidated financial statements include the accounts of Gopher Protocol Inc. (f/k/a Forex International
Trading Corp.) and its wholly owned subsidiary, DirectJV Investments, Inc. (together “Gopher” or the Company”)
and have been prepared in accordance with accounting principles generally accepted in the United States of America (“U.S.
GAAP”) and the rules and regulations of the Securities and Exchange Commission for interim financial information and reports
pursuant to the requirements for reporting on Form 10-Q and Regulation S-X for scaled disclosures for smaller</font></p>
<p style="font: 10pt/normal Times New Roman, Times, Serif; margin: 0; text-align: justify"><font style="font: 10pt Times New Roman, Times, Serif">reporting
companies. Accordingly, they do not include all, or include a condensed version of, the information and footnotes required by
U.S. GAAP for complete financial statements. The Company believes, however, that the disclosures are adequate to make the information
presented not misleading.</font></p>
<p style="font: 10pt/normal Times New Roman, Times, Serif; margin: 0; text-align: justify"><font style="font: 10pt Times New Roman, Times, Serif"> </font></p>
<p style="font: 10pt/normal Times New Roman, Times, Serif; margin: 0; text-align: justify"><font style="font: 10pt Times New Roman, Times, Serif">The
Company’s unaudited condensed consolidated financial statements reflect all material adjustments (consisting of normal recurring
adjustments), which are, in the opinion of management, necessary for the fair presentation of the consolidated financial position
and the consolidated results of operations of the Company for the periods shown. Results shown for the interim periods are not
necessarily indicative of the results to be obtained for a full fiscal year or for any future period. The preparation of financial
statements in conformity with U.S. GAAP requires us to make estimates, judgments and assumptions that affect the amounts reported
in the unaudited condensed consolidated financial statements. Actual results might differ from management’s estimates. The
consolidated balance sheet information as of December 31, 2013 was derived from the audited consolidated financial statements
included in the Company’s Annual Report on Form 10-K filed with Securities and Exchange Commission (“SEC”) for
the fiscal year ended December 31, 2013, These interim unaudited condensed consolidated financial statements should be read in
conjunction with the Company’s most recently audited financial statements and the notes thereto in such above referenced
Annual Report on Form 10-K. All intercompany balances and transactions have been eliminated in consolidation.</font></p>
<p style="font: 10pt/normal Times New Roman, Times, Serif; margin: 0; text-align: justify"><font style="font: 10pt Times New Roman, Times, Serif"><i> </i></font></p>
<p style="font: 10pt/normal Times New Roman, Times, Serif; margin: 0; text-align: justify"><font style="font: 10pt Times New Roman, Times, Serif"><i>Use
of Estimates </i></font></p>
<p style="font: 10pt/normal Times New Roman, Times, Serif; margin: 0; text-align: justify"><font style="font: 10pt Times New Roman, Times, Serif"> </font></p>
<p style="font: 10pt/normal Times New Roman, Times, Serif; margin: 0; text-align: justify"><font style="font: 10pt Times New Roman, Times, Serif">The
preparation of financial statements in conformity with U.S. GAAP requires management to make estimates and assumptions that affect
the reported amount of assets and liabilities and the disclosure of contingent assets and liabilities at the date of the financial
statements, and the reported amounts of revenues and expenses during the reporting periods. Significant estimates include the
useful lives of tangible and intangible assets, depreciation and amortization, allowances for doubtful accounts and loan losses,
valuation of common and preferred stock issuances, and the valuation allowance on deferred tax assets. Actual results could differ
from those estimates.</font></p>
<p style="font: 10pt/normal Times New Roman, Times, Serif; margin: 0; text-align: justify"><font style="font: 10pt Times New Roman, Times, Serif"></font></p>
<p style="font: 10pt/normal Times New Roman, Times, Serif; margin: 0; text-align: justify"><font style="font: 10pt Times New Roman, Times, Serif"><i> </i></font></p>
<p style="font: 10pt/normal Times New Roman, Times, Serif; margin: 0; text-align: justify"><font style="font: 10pt Times New Roman, Times, Serif"><i>Cash
and Cash Equivalents </i></font></p>
<p style="font: 10pt/normal Times New Roman, Times, Serif; margin: 0; text-align: justify"><font style="font: 10pt Times New Roman, Times, Serif"> </font></p>
<p style="font: 10pt/normal Times New Roman, Times, Serif; margin: 0; text-align: justify"><font style="font: 10pt Times New Roman, Times, Serif">The
Company considers all highly liquid financial instruments purchased with an original maturity of three months or less to be cash
equivalents.</font></p>
<p style="font: 10pt/normal Times New Roman, Times, Serif; margin: 0; text-align: justify"><font style="font: 10pt Times New Roman, Times, Serif"><i> </i></font></p>
<p style="font: 10pt/normal Times New Roman, Times, Serif; margin: 0; text-align: justify"><font style="font: 10pt Times New Roman, Times, Serif"><i>Notes
and Short-Term Receivable </i></font></p>
<p style="font: 10pt/normal Times New Roman, Times, Serif; margin: 0; text-align: justify"><font style="font: 10pt Times New Roman, Times, Serif"> </font></p>
<p style="font: 10pt/normal Times New Roman, Times, Serif; margin: 0; text-align: justify"><font style="font: 10pt Times New Roman, Times, Serif">The
notes and short-term receivable are carried at cost, which approximates fair value. The Company measures the impairment of loans
based on its historical loan collection experience and existing economic conditions. Impairment is recognized when management
believes it is probable that payments will not be received on some portion of the loan, which is determined on an individual loan
basis. The Company evaluates loans for impairment on an annual basis or when there are indications that the loan may not be collected.
When management determines that a loan is impaired it is placed on non-accrual status, and an allowance for loan losses is established
to recognize the estimated amount of impairment. Payments received on non-accrual loans are generally applied to the outstanding
principal balance. Loans are removed from non-accrual status when management believes that the borrower will resume making the
payments required by the loan agreement.</font></p>
<p style="font: 10pt/normal Times New Roman, Times, Serif; margin: 0; text-align: justify"><font style="font: 10pt Times New Roman, Times, Serif"><i> </i></font></p>
<p style="font: 10pt/normal Times New Roman, Times, Serif; margin: 0; text-align: justify"><font style="font: 10pt Times New Roman, Times, Serif"><i>Property
and Equipment </i></font></p>
<p style="font: 10pt/normal Times New Roman, Times, Serif; margin: 0; text-align: justify"><font style="font: 10pt Times New Roman, Times, Serif"> </font></p>
<p style="font: 10pt/normal Times New Roman, Times, Serif; margin: 0; text-align: justify"><font style="font: 10pt Times New Roman, Times, Serif">Property
and equipment are stated at cost and the related depreciation is computed using the straight-line method over the estimated useful
lives of the respective assets. Expenditures for repairs and maintenance are charged to operations as incurred. Renewals and betterments
are capitalized. Upon the sale or retirement of an asset, the related costs and accumulated depreciation are removed from the
accounts and any gain or loss is recognized in the results of operations.</font></p>
<p style="font: 10pt/normal Times New Roman, Times, Serif; margin: 0; text-align: justify"><font style="font: 10pt Times New Roman, Times, Serif"> </font></p>
<p style="font: 10pt/normal Times New Roman, Times, Serif; margin: 0; text-align: justify"><font style="font: 10pt Times New Roman, Times, Serif">Leasehold
improvements are amortized over the lesser of the estimated life of the asset or the lease term.</font></p>
<p style="font: 10pt/normal Times New Roman, Times, Serif; margin: 0; text-align: justify"><font style="font: 10pt Times New Roman, Times, Serif"> </font></p>
<p style="font: 10pt/normal Times New Roman, Times, Serif; margin: 0; text-align: justify"><font style="font: 10pt Times New Roman, Times, Serif">As
required by U.S. GAAP for long-lived assets, the Company evaluates the fair value of its property and equipment on an annual basis
or whenever events or changes in circumstances indicate that the carrying amounts may not be recoverable. Any impairment of value
is recognized when the carrying amount of the asset exceeds its fair value. There were no impairment losses for the three months
or for the six months ended June 30, 2014and 2013.</font></p>
<p style="font: 10pt/normal Times New Roman, Times, Serif; margin: 0; text-align: justify"><font style="font: 10pt Times New Roman, Times, Serif"><i> </i></font></p>
<p style="font: 10pt/normal Times New Roman, Times, Serif; margin: 0; text-align: justify"><font style="font: 10pt Times New Roman, Times, Serif"><i>Fair
value measurements</i></font></p>
<p style="font: 10pt/normal Times New Roman, Times, Serif; margin: 0; text-align: justify"><font style="font: 10pt Times New Roman, Times, Serif"> </font></p>
<p style="font: 10pt/normal Times New Roman, Times, Serif; margin: 0; text-align: justify"><font style="font: 10pt Times New Roman, Times, Serif">Financial
instruments and certain non-financial assets and liabilities are measured at their fair value as determined based on the assets
highest and best use. GAAP has established a framework for measuring fair value that is based on a hierarchy that requires that
the valuation technique used be based on the most objective inputs available for measuring a particular asset or liability. There
are three broad levels in the fair value hierarchy that describe the degree of objectivity of the inputs used to determine fair
value. The fair value hierarchy is set forth below:</font></p>
<table cellpadding="0" cellspacing="0" style="width: 100%; font: 10pt/normal Times New Roman, Times, Serif; margin-top: 0; margin-bottom: 0"><tr style="vertical-align: top">
<td style="width: 0.25in"></td><td style="width: 0.25in"><font style="font: 10pt Times New Roman, Times, Serif"> </font></td><td style="text-align: justify"></td></tr></table>
<p style="font: 10pt/normal Times New Roman, Times, Serif; margin: 0 0 0 0.5in; text-align: justify; text-indent: -0.25in"><font style="font: 10pt Times New Roman, Times, Serif">Level
1 — inputs to the valuation methodology are quoted prices (unadjusted) for identical assets or liabilities in active markets.</font></p>
<p style="font: 10pt/normal Times New Roman, Times, Serif; margin: 0 0 0 0.5in; text-align: justify; text-indent: -0.25in"><font style="font: 10pt Times New Roman, Times, Serif">Level
2 — inputs to the valuation methodology include quoted prices for similar assets and liabilities in active markets, and
inputs that are observable for the asset or liability, either directly or indirectly, for substantially the full term of the financial
instrument.</font></p>
<p style="font: 10pt/normal Times New Roman, Times, Serif; margin: 0 0 0 0.5in; text-align: justify; text-indent: -0.25in"><font style="font: 10pt Times New Roman, Times, Serif">Level
3 — inputs to the valuation methodology are unobservable and significant to the fair value measurement. They are based on
best information available in the absence of level 1 and 2 inputs.</font></p>
<p style="font: 10pt/normal Times New Roman, Times, Serif; margin: 0; text-align: justify"><font style="font: 10pt Times New Roman, Times, Serif"> </font></p>
<p style="font: 10pt/normal Times New Roman, Times, Serif; margin: 0; text-align: justify"><font style="font: 10pt Times New Roman, Times, Serif">The
carrying value of financial instruments, which include cash and cash equivalents, notes receivable, notes payable, and accrued
expenses, approximate their fair values due to the short-term nature of these financial instruments.</font></p>
<p style="font: 10pt/normal Times New Roman, Times, Serif; margin: 0; text-align: justify"><font style="font: 10pt Times New Roman, Times, Serif"><i> </i></font></p>
<p style="font: 10pt/normal Times New Roman, Times, Serif; margin: 0; text-align: justify"><font style="font: 10pt Times New Roman, Times, Serif"><i>Treasury
Stock</i></font></p>
<p style="font: 10pt/normal Times New Roman, Times, Serif; margin: 0; text-align: justify"><font style="font: 10pt Times New Roman, Times, Serif"> </font></p>
<p style="font: 10pt/normal Times New Roman, Times, Serif; margin: 0; text-align: justify"><font style="font: 10pt Times New Roman, Times, Serif">Treasury
stock is recorded at cost. The re-issuance of treasury shares is accounted for on a first in, first-out basis and any difference
between the cost of treasury shares and the re-issuance proceeds are charged or credited to additional paid-in capital. During
2011, the Company bought back 38,000 of its own shares.</font></p>
<p style="font: 10pt/normal Times New Roman, Times, Serif; margin: 0; text-align: justify"><font style="font: 10pt Times New Roman, Times, Serif"><i> </i></font></p>
<p style="font: 10pt/normal Times New Roman, Times, Serif; margin: 0; text-align: justify"><font style="font: 10pt Times New Roman, Times, Serif"><i>Income
Taxes </i></font></p>
<p style="font: 10pt/normal Times New Roman, Times, Serif; margin: 0; text-align: justify"><font style="font: 10pt Times New Roman, Times, Serif"> </font></p>
<p style="font: 10pt/normal Times New Roman, Times, Serif; margin: 0; text-align: justify"><font style="font: 10pt Times New Roman, Times, Serif">The
Company accounts for income taxes under FASB Codification Topic 740-10-25 (“ASC 740-10-25”) Income Taxes. Under ASC
740-10-25, deferred tax assets and liabilities are recognized for the future tax consequences attributable to differences between
the financial statement carrying amounts of existing assets and liabilities and their respective tax bases. Deferred tax assets
and liabilities are measured using enacted tax rates expected to apply to taxable income in the years in which those temporary
differences are expected to be recovered or settled. Under ASC 740-10-25, the effect on deferred tax assets and liabilities of
a change in tax rates is recognized in income in the period that includes the enactment date. Valuation allowances are established,
when necessary, to reduce deferred tax assets to the amount of tax benefits expected to be realized.</font></p>
<p style="font: 10pt/normal Times New Roman, Times, Serif; margin: 0; text-align: justify"><font style="font: 10pt Times New Roman, Times, Serif"></font></p>
<p style="font: 10pt/normal Times New Roman, Times, Serif; margin: 0; text-align: justify"><font style="font: 10pt Times New Roman, Times, Serif"> </font></p>
<p style="font: 10pt/normal Times New Roman, Times, Serif; margin: 0; text-align: justify"><font style="font: 10pt Times New Roman, Times, Serif">U.S.
GAAP requires that, in applying the liability method, the financial statement effects of an uncertain tax position be recognized
based on the outcome that is more likely than not to occur. Under this criterion the most likely resolution of an uncertain tax
position should be analyzed based on technical merits and on the outcome that would likely be sustained under examination. The
Company had no uncertain tax positions as of June 30, 2014.</font></p>
<p style="font: 10pt/normal Times New Roman, Times, Serif; margin: 0; text-align: justify"><font style="font: 10pt Times New Roman, Times, Serif"> </font></p>
<p style="font: 10pt/normal Times New Roman, Times, Serif; margin: 0; text-align: justify"><font style="font: 10pt Times New Roman, Times, Serif">The
Company's federal income tax returns are no longer subject to examination by the IRS for the years prior to 2010, and the related
state income tax returns are no longer subject to examination by state authorities for the years prior to 2010.</font></p>
<p style="font: 10pt/normal Times New Roman, Times, Serif; margin: 0; text-align: justify"><font style="font: 10pt Times New Roman, Times, Serif"><i> </i></font></p>
<p style="font: 10pt/normal Times New Roman, Times, Serif; margin: 0; text-align: justify"><font style="font: 10pt Times New Roman, Times, Serif"><i>Revenue
Recognition</i></font></p>
<p style="font: 10pt/normal Times New Roman, Times, Serif; margin: 0; text-align: justify"><font style="font: 10pt Times New Roman, Times, Serif"> </font></p>
<p style="font: 10pt/normal Times New Roman, Times, Serif; margin: 0; text-align: justify"><font style="font: 10pt Times New Roman, Times, Serif">The
Company recognized revenue on arrangements in accordance with FASB Codification Topic 605, “Revenue Recognition” (“ASC
Topic 605”). Under ASC Topic 605, revenue is recognized only when the price is fixed and determinable, persuasive evidence
of an arrangement exists, the service is performed and collectability of the resulting receivable is reasonably assured. We had
revenue of $60,000 and $70,000 for the six months ended June 30, 2014 and 2013, respectively.</font></p>
<p style="font: 10pt/normal Times New Roman, Times, Serif; margin: 0; text-align: justify"><font style="font: 10pt Times New Roman, Times, Serif"> </font></p>
<p style="font: 10pt/normal Times New Roman, Times, Serif; margin: 0; text-align: justify"><font style="font: 10pt Times New Roman, Times, Serif">During
the six months ended June 30, 2014, 100% of the Company’s revenue was related to consulting services provided to one company.</font></p>
<p style="font: 10pt/normal Times New Roman, Times, Serif; margin: 0"><font style="font: 10pt Times New Roman, Times, Serif"> </font></p>
<p style="font: 10pt/normal Times New Roman, Times, Serif; margin: 0; text-align: justify"><font style="font: 10pt Times New Roman, Times, Serif"><i>Share-Based
Compensation</i></font></p>
<p style="font: 10pt/normal Times New Roman, Times, Serif; margin: 0; text-align: justify"><font style="font: 10pt Times New Roman, Times, Serif"> </font></p>
<p style="font: 10pt/normal Times New Roman, Times, Serif; margin: 0; text-align: justify"><font style="font: 10pt Times New Roman, Times, Serif">In
December 2004, the FASB issued FASB Accounting Standards Codification No. 718, Compensation – Stock Compensation. Under
FASB Accounting Standards Codification No. 718, companies are required to measure the compensation costs of share-based compensation
arrangements based on the grant-date fair value and recognize the costs in the financial statements over the period during which
employees are required to provide services. Share-based compensation arrangements include stock options, restricted share plans,
performance-based awards, share appreciation rights and employee share purchase plans. As such, compensation cost is measured
on the date of grant at their fair value. Such compensation amounts, if any, are amortized over the respective vesting periods
of the option grant. The Company applies this statement prospectively. No such expenses were recognized for the fiscal quarter
ended June 30, 2014.</font></p>
<p style="font: 10pt/normal Times New Roman, Times, Serif; margin: 0; text-align: justify"><font style="font: 10pt Times New Roman, Times, Serif"><i> </i></font></p>
<p style="font: 10pt/normal Times New Roman, Times, Serif; margin: 0; text-align: justify"><font style="font: 10pt Times New Roman, Times, Serif"><i>Earnings
(Loss) Per Share </i></font></p>
<p style="font: 10pt/normal Times New Roman, Times, Serif; margin: 0; text-align: justify"><font style="font: 10pt Times New Roman, Times, Serif"> </font></p>
<p style="font: 10pt/normal Times New Roman, Times, Serif; margin: 0; text-align: justify"><font style="font: 10pt Times New Roman, Times, Serif">In
accordance with accounting guidance now codified as FASB ASC Topic 260, “Earnings per Share,” Basic earnings per share
(“EPS”) is computed by dividing net loss available to common stockholders by the weighted average number of common
shares outstanding during the period, excluding the effects of any potentially dilutive securities. Diluted EPS gives effect to
all dilutive potential of shares of common stock outstanding during the period including stock options or warrants, using the
treasury stock method (by using the average stock price for the period to determine the number of shares assumed to be purchased
from the exercise of stock options or warrants), and convertible debt or convertible preferred stock, using the if-converted method.
Diluted EPS excludes all dilutive potential of shares of common stock if their effect is anti-dilutive. Because of the Company’s
net losses, the effects of stock options, convertible notes, and convertible preferred stock would be anti-dilutive and accordingly,
is excluded from the computation of earnings per share. Diluted loss per share has not been computed for the fiscal quarters ended
June 30, 2014 and 2013 because any potential additional common shares would reduce the reported loss per share and therefore have
an antidilutive effect.</font></p>
<p style="font: 10pt/normal Times New Roman, Times, Serif; margin: 0"><font style="font: 10pt Times New Roman, Times, Serif"><b>3.
Liquidity and Going Concern</b></font></p>
<p style="font: 10pt/normal Times New Roman, Times, Serif; margin: 0; text-align: justify"><font style="font: 10pt Times New Roman, Times, Serif"> </font></p>
<p style="font: 10pt/normal Times New Roman, Times, Serif; margin: 0; text-align: justify"><font style="font: 10pt Times New Roman, Times, Serif">As
reflected in the accompanying financial statements, the Company has generated revenues in the six months ended June 30, 2014,
but has had recurring losses from operations since inception, and has working capital of $200,570 as of June 30, 2014. As of June
30, 2014, the Company has an accumulated deficit of $2,290,853.  As the Company continues to incur losses, transition
to profitability is dependent upon achieving a level of revenues adequate to support the Company’s cost structure. The Company
may never achieve profitability, and unless and until it does, the Company will continue to need to raise additional cash. Management
intends to fund future operations through additional private or public debt or equity offerings. Based on the Company’s
operating plan, existing working capital at June 30, 2014 was not sufficient to meet the cash requirements to fund planned operations
through December 31, 2014 without additional sources of cash. This raises substantial doubt about the Company’s ability
to continue as a going concern.  The accompanying financial statements have been prepared assuming that the Company
will continue as a going concern and do not include adjustments that might result from the outcome of this uncertainty.</font></p>
<p style="font: 10pt/normal Times New Roman, Times, Serif; margin: 0"><font style="font: 10pt Times New Roman, Times, Serif"><b>4.
Investments, Acquisitions, and Divestiture</b></font></p>
<p style="font: 10pt/normal Times New Roman, Times, Serif; margin: 0"><font style="font: 10pt Times New Roman, Times, Serif"><i> </i></font></p>
<p style="font: 10pt/normal Times New Roman, Times, Serif; margin: 0"><font style="font: 10pt Times New Roman, Times, Serif"><i>Joint
Venture – Vulcan Oil & Gas Inc.</i></font></p>
<p style="font: 10pt/normal Times New Roman, Times, Serif; margin: 0"><font style="font: 10pt Times New Roman, Times, Serif">On
February 13, 2012, Direct JV Investments Inc. ("JV"), a wholly-owned subsidiary of the Company entered into a Joint Venture Agreement
(the "JV Agreement") with Vulcan Oil& Gas Inc. ("Vulcan"), whereby the Company would from time to time provide financing to
certain Vulcan alternative, green and solar energy projects (the "Projects") with the goal of sharing in any rebates awarded by
the government on any of the Projects. Pursuant to the JV Agreement, JV provided Vulcan with $68,000 in cash (the Funding") and
credit for inventory valued at $31,328 for a total investment value of $99,328 (the "Investment").</font></p>
<p style="font: 10pt/normal Times New Roman, Times, Serif; margin: 0; text-align: justify; background-color: white"><font style="font: 10pt Times New Roman, Times, Serif"> </font></p>
<p style="font: 10pt/normal Times New Roman, Times, Serif; margin: 0; text-align: justify; background-color: white"><font style="font: 10pt Times New Roman, Times, Serif">On
January 7, 2013, effective December 31, 2012, the Company, JV and Vulcan entered into an agreement pursuant to which the JV Agreement
was terminated. The Company issued to Vulcan a 4% convertible promissory note in the principal amount of $500,000 (the "Gopher
Note") and Vulcan issued to the Company a 10% Secured and Collateralized Promissory Note in the principal amount of $400,000 (the
"Vulcan Note" and collectively with the Gopher Note, the "Notes") in consideration of the Gopher Note. The Investment of $99,328
was written off as of December 31, 2012. After closing the Notes and recording of the difference as a debt discount, there are
no further balances due between the parties and the JV Agreement is null and void.</font></p>
<p style="font: 10pt/normal Times New Roman, Times, Serif; margin: 0; text-align: justify; background-color: white"><font style="font: 10pt Times New Roman, Times, Serif"> </font></p>
<p style="font: 10pt/normal Times New Roman, Times, Serif; margin: 0; text-align: justify; background-color: white"><font style="font: 10pt Times New Roman, Times, Serif">The
Gopher Note maturity date is December 31, 2013, which can be extended by the Company for an additional one year at which point
the 4% interest rate will increase to 10% per annum. The Gopher Note is currently in default. The Gopher Note conversion price
is the Variable Conversion Price, which is defined as 50% multiplied by the average of the lowest three trading prices of the
Company's common stock on the OTCBB during the 10-day trading period ending on the latest complete day of trading on the OTCBB
prior to the date of conversion. The Variable Conversion Price cannot be less than $0.002. At no time will Vulcan convert any
amount of the Gopher Note into common stock that would result in Vulcan owning more than 4.9% of the common stock outstanding
of the Company.</font></p>
<p style="font: 10pt/normal Times New Roman, Times, Serif; margin: 0; text-align: justify; background-color: white"><font style="font: 10pt Times New Roman, Times, Serif"> </font></p>
<p style="font: 10pt/normal Times New Roman, Times, Serif; margin: 0; text-align: justify; background-color: white"><font style="font: 10pt Times New Roman, Times, Serif">The
Vulcan Note has a 10% one-time interest charge on the principal sum. The interest rate will be increased by an additional 4% per
annum (e.g. 14% per annum) in the event the principal is not paid by the December 31, 2013 maturity date. The Company is negotiating
an offset of the Gopher Note against the note receivable from Vulcan as final satisfaction, and will recognize a gain or loss
on its financial statements at that time. As of June 30, 2014, the Company has not reached an agreement with Vulcan for offsetting
of the notes, and the Vulcan Note is currently in default.</font></p>
<p style="font: 10pt/normal Times New Roman, Times, Serif; margin: 0"><font style="font: 10pt Times New Roman, Times, Serif"><b>6.
Property and Equipment, Net</b></font></p>
<p style="font: 10pt/normal Times New Roman, Times, Serif; margin: 0"><font style="font: 10pt Times New Roman, Times, Serif"> </font></p>
<p style="font: 10pt/normal Times New Roman, Times, Serif; margin: 0"><font style="font: 10pt Times New Roman, Times, Serif">Property
and equipment consisted of the following as of June 30, 2014 and December 31, 2013:</font></p>
<p style="font: 10pt/normal Times New Roman, Times, Serif; margin: 0"><font style="font: 10pt Times New Roman, Times, Serif">  </font></p>
<table align="center" cellspacing="0" cellpadding="0" style="font-size: 10pt; line-height: normal; width: 80%; border-collapse: collapse; font-size-adjust: none; font-stretch: normal">
<tr style="vertical-align: bottom">
<td><font style="font: 10pt Times New Roman, Times, Serif"> </font></td>
<td><font style="font: 10pt Times New Roman, Times, Serif"> </font></td>
<td style="text-align: center"><font style="font: 10pt Times New Roman, Times, Serif">Estimated</font></td>
<td><font style="font: 10pt Times New Roman, Times, Serif"> </font></td>
<td colspan="2"><font style="font: 10pt Times New Roman, Times, Serif"> </font></td>
<td><font style="font: 10pt Times New Roman, Times, Serif"> </font></td>
<td><font style="font: 10pt Times New Roman, Times, Serif"> </font></td>
<td colspan="2"><font style="font: 10pt Times New Roman, Times, Serif"> </font></td>
<td><font style="font: 10pt Times New Roman, Times, Serif"> </font></td></tr>
<tr style="vertical-align: bottom">
<td><font style="font: 10pt Times New Roman, Times, Serif"> </font></td>
<td><font style="font: 10pt Times New Roman, Times, Serif"> </font></td>
<td style="text-align: center"><font style="font: 10pt Times New Roman, Times, Serif">Useful</font></td>
<td><font style="font: 10pt Times New Roman, Times, Serif"> </font></td>
<td colspan="6" style="text-align: center"><font style="font: 10pt Times New Roman, Times, Serif"> </font></td>
<td><font style="font: 10pt Times New Roman, Times, Serif"> </font></td></tr>
<tr style="vertical-align: bottom">
<td><font style="font: 10pt Times New Roman, Times, Serif"> </font></td>
<td style="padding-bottom: 1pt"><font style="font: 10pt Times New Roman, Times, Serif"> </font></td>
<td style="border-bottom: black 1pt solid; text-align: center"><font style="font: 10pt Times New Roman, Times, Serif">Lives</font></td>
<td style="padding-bottom: 1pt"><font style="font: 10pt Times New Roman, Times, Serif"> </font></td>
<td colspan="2" style="border-bottom: black 1pt solid; text-align: center"><font style="font: 10pt Times New Roman, Times, Serif">June
30, 2014</font></td>
<td style="padding-bottom: 1pt"><font style="font: 10pt Times New Roman, Times, Serif"> </font></td>
<td style="padding-bottom: 1pt"><font style="font: 10pt Times New Roman, Times, Serif"> </font></td>
<td colspan="2" style="border-bottom: black 1pt solid; text-align: center"><font style="font: 10pt Times New Roman, Times, Serif">December
31, 2013</font></td>
<td style="padding-bottom: 1pt"><font style="font: 10pt Times New Roman, Times, Serif"> </font></td></tr>
<tr style="vertical-align: bottom; background-color: rgb(204, 238, 255)">
<td style="width: 47%; text-align: left"><font style="font: 10pt Times New Roman, Times, Serif">Computers
and equipment</font></td>
<td style="width: 1%"><font style="font: 10pt Times New Roman, Times, Serif"> </font></td>
<td style="width: 16%; text-align: center"><font style="font: 10pt Times New Roman, Times, Serif">3 years</font></td>
<td style="width: 1%"><font style="font: 10pt Times New Roman, Times, Serif"> </font></td>
<td style="width: 1%; text-align: left"><font style="font: 10pt Times New Roman, Times, Serif">$</font></td>
<td style="width: 15%; text-align: right"><font style="font: 10pt Times New Roman, Times, Serif">12,539</font></td>
<td style="width: 1%; text-align: left"><font style="font: 10pt Times New Roman, Times, Serif"> </font></td>
<td style="width: 1%"><font style="font: 10pt Times New Roman, Times, Serif"> </font></td>
<td style="width: 1%; text-align: left"><font style="font: 10pt Times New Roman, Times, Serif">$</font></td>
<td style="width: 15%; text-align: right"><font style="font: 10pt Times New Roman, Times, Serif">12,539</font></td>
<td style="width: 1%; text-align: left"><font style="font: 10pt Times New Roman, Times, Serif"> </font></td></tr>
<tr style="vertical-align: bottom; background-color: white">
<td style="padding-bottom: 1pt"><font style="font: 10pt Times New Roman, Times, Serif">Furniture</font></td>
<td style="padding-bottom: 1pt"><font style="font: 10pt Times New Roman, Times, Serif"> </font></td>
<td style="text-align: center; padding-bottom: 1pt"><font style="font: 10pt Times New Roman, Times, Serif">7
years</font></td>
<td style="padding-bottom: 1pt"><font style="font: 10pt Times New Roman, Times, Serif"> </font></td>
<td style="text-align: left; border-bottom: black 1pt solid"><font style="font: 10pt Times New Roman, Times, Serif"> </font></td>
<td style="text-align: right; border-bottom: black 1pt solid"><font style="font: 10pt Times New Roman, Times, Serif">9,431</font></td>
<td style="text-align: left; padding-bottom: 1pt"><font style="font: 10pt Times New Roman, Times, Serif"> </font></td>
<td style="padding-bottom: 1pt"><font style="font: 10pt Times New Roman, Times, Serif"> </font></td>
<td style="text-align: left; border-bottom: black 1pt solid"><font style="font: 10pt Times New Roman, Times, Serif"> </font></td>
<td style="text-align: right; border-bottom: black 1pt solid"><font style="font: 10pt Times New Roman, Times, Serif">9,431</font></td>
<td style="text-align: left; padding-bottom: 1pt"><font style="font: 10pt Times New Roman, Times, Serif"> </font></td></tr>
<tr style="vertical-align: bottom; background-color: rgb(204, 238, 255)">
<td><font style="font: 10pt Times New Roman, Times, Serif"> </font></td>
<td><font style="font: 10pt Times New Roman, Times, Serif"> </font></td>
<td><font style="font: 10pt Times New Roman, Times, Serif"> </font></td>
<td><font style="font: 10pt Times New Roman, Times, Serif"> </font></td>
<td style="text-align: left"><font style="font: 10pt Times New Roman, Times, Serif"> </font></td>
<td style="text-align: right"><font style="font: 10pt Times New Roman, Times, Serif">21,970</font></td>
<td style="text-align: left"><font style="font: 10pt Times New Roman, Times, Serif"> </font></td>
<td><font style="font: 10pt Times New Roman, Times, Serif"> </font></td>
<td style="text-align: left"><font style="font: 10pt Times New Roman, Times, Serif"> </font></td>
<td style="text-align: right"><font style="font: 10pt Times New Roman, Times, Serif">21,970</font></td>
<td style="text-align: left"><font style="font: 10pt Times New Roman, Times, Serif"> </font></td></tr>
<tr style="vertical-align: bottom; background-color: white">
<td style="text-align: left; padding-bottom: 1pt"><font style="font: 10pt Times New Roman, Times, Serif">Less
accumulated depreciation</font></td>
<td style="padding-bottom: 1pt"><font style="font: 10pt Times New Roman, Times, Serif"> </font></td>
<td style="text-align: left; padding-bottom: 1pt"><font style="font: 10pt Times New Roman, Times, Serif"> </font></td>
<td style="padding-bottom: 1pt"><font style="font: 10pt Times New Roman, Times, Serif"> </font></td>
<td style="text-align: left; border-bottom: black 1pt solid"><font style="font: 10pt Times New Roman, Times, Serif"> </font></td>
<td style="text-align: right; border-bottom: black 1pt solid"><font style="font: 10pt Times New Roman, Times, Serif">17,861</font></td>
<td style="text-align: left; padding-bottom: 1pt"><font style="font: 10pt Times New Roman, Times, Serif"> </font></td>
<td style="padding-bottom: 1pt"><font style="font: 10pt Times New Roman, Times, Serif"> </font></td>
<td style="text-align: left; border-bottom: black 1pt solid"><font style="font: 10pt Times New Roman, Times, Serif"> </font></td>
<td style="text-align: right; border-bottom: black 1pt solid"><font style="font: 10pt Times New Roman, Times, Serif">16,936</font></td>
<td style="text-align: left; padding-bottom: 1pt"><font style="font: 10pt Times New Roman, Times, Serif"> </font></td></tr>
<tr style="vertical-align: bottom; background-color: rgb(204, 238, 255)">
<td style="padding-bottom: 2.5pt"><font style="font: 10pt Times New Roman, Times, Serif"> </font></td>
<td style="padding-bottom: 2.5pt"><font style="font: 10pt Times New Roman, Times, Serif"> </font></td>
<td style="padding-bottom: 2.5pt"><font style="font: 10pt Times New Roman, Times, Serif"> </font></td>
<td style="padding-bottom: 2.5pt"><font style="font: 10pt Times New Roman, Times, Serif"> </font></td>
<td style="text-align: left; border-bottom: black 2.5pt double"><font style="font: 10pt Times New Roman, Times, Serif">$</font></td>
<td style="text-align: right; border-bottom: black 2.5pt double"><font style="font: 10pt Times New Roman, Times, Serif">4,109</font></td>
<td style="text-align: left; padding-bottom: 2.5pt"><font style="font: 10pt Times New Roman, Times, Serif"> </font></td>
<td style="padding-bottom: 2.5pt"><font style="font: 10pt Times New Roman, Times, Serif"> </font></td>
<td style="text-align: left; border-bottom: black 2.5pt double"><font style="font: 10pt Times New Roman, Times, Serif">$</font></td>
<td style="text-align: right; border-bottom: black 2.5pt double"><font style="font: 10pt Times New Roman, Times, Serif">5,034</font></td>
<td style="text-align: left; padding-bottom: 2.5pt"><font style="font: 10pt Times New Roman, Times, Serif"> </font></td></tr>
</table>
<p style="font: 10pt/normal Times New Roman, Times, Serif; margin: 0"><font style="font: 10pt Times New Roman, Times, Serif"> </font></p>
<p style="font: 10pt/normal Times New Roman, Times, Serif; margin: 0"><font style="font: 10pt Times New Roman, Times, Serif">Depreciation
expense was $925 and $3,383 for the six months ended June 30, 2014, and the fiscal year ended December 31, 2013, respectively.</font></p>
<p style="font: 10pt/normal Times New Roman, Times, Serif; margin: 0"><font style="font: 10pt Times New Roman, Times, Serif"><b>7.
Other Assets </b></font></p>
<p style="font: 10pt/normal Times New Roman, Times, Serif; margin: 0"><font style="font: 10pt Times New Roman, Times, Serif"><i> </i></font></p>
<p style="font: 10pt/normal Times New Roman, Times, Serif; margin: 0"><font style="font: 10pt Times New Roman, Times, Serif"><i>License
agreement</i></font></p>
<p style="font: 10pt/normal Times New Roman, Times, Serif; margin: 0"><font style="font: 10pt Times New Roman, Times, Serif"><i> </i></font></p>
<p style="font: 10pt/normal Times New Roman, Times, Serif; margin: 0; text-align: justify"><font style="font: 10pt Times New Roman, Times, Serif">On
January 2, 2014, and effective December 31, 2013, the Company and Micrologic Design Automation, Inc. ("MDA") signed a letter agreement
whereby MDA provided for a perpetual, royalty free, exclusive license of the Licensed Technology, as defined in the Evaluation
License Agreement dated September 1, 2013. In connection with this agreement, the Company agreed to issue 200,000,000 shares of
common stock having a value of $600,000 based upon recent market value ($0.003 per share).</font></p>
<p style="font: 10pt/normal Times New Roman, Times, Serif; margin: 0"><font style="font: 10pt Times New Roman, Times, Serif"><b>8.
Notes Payable</b></font></p>
<p style="font: 10pt/normal Times New Roman, Times, Serif; margin: 0; text-align: justify"><font style="font: 10pt Times New Roman, Times, Serif"> </font></p>
<p style="font: 10pt/normal Times New Roman, Times, Serif; margin: 0; text-align: justify"><font style="font: 10pt Times New Roman, Times, Serif">At
June 30, 2014 and December 31, 2013, notes payable and accrued interest consisted of:</font></p>
<p style="font: 10pt/normal Times New Roman, Times, Serif; margin: 0; text-align: justify"><font style="font: 10pt Times New Roman, Times, Serif"> </font></p>
<table cellspacing="0" cellpadding="0" style="font-size: 10pt; line-height: normal; width: 100%; border-collapse: collapse; font-size-adjust: none; font-stretch: normal">
<tr style="vertical-align: bottom">
<td><font style="font: 10pt Times New Roman, Times, Serif"> </font></td>
<td style="padding-bottom: 1pt"><font style="font: 10pt Times New Roman, Times, Serif"> </font></td>
<td colspan="2" style="text-align: center; border-bottom: black 1pt solid"><font style="font: 10pt Times New Roman, Times, Serif">2014</font></td>
<td style="padding-bottom: 1pt"><font style="font: 10pt Times New Roman, Times, Serif"> </font></td>
<td style="padding-bottom: 1pt"><font style="font: 10pt Times New Roman, Times, Serif"> </font></td>
<td colspan="2" style="text-align: center; border-bottom: black 1pt solid"><font style="font: 10pt Times New Roman, Times, Serif">2013</font></td>
<td style="padding-bottom: 1pt"><font style="font: 10pt Times New Roman, Times, Serif"> </font></td>
<td style="padding-bottom: 1pt"><font style="font: 10pt Times New Roman, Times, Serif"> </font></td>
<td><font style="font: 10pt Times New Roman, Times, Serif"> </font></td></tr>
<tr style="vertical-align: bottom; background-color: rgb(204, 238, 255)">
<td style="width: 61%; text-align: left"><font style="font: 10pt Times New Roman, Times, Serif">Notes payable
and accrued interest - Rasel</font></td>
<td style="width: 1%"><font style="font: 10pt Times New Roman, Times, Serif"> </font></td>
<td style="width: 1%; text-align: left"><font style="font: 10pt Times New Roman, Times, Serif">$</font></td>
<td style="width: 15%; text-align: right"><font style="font: 10pt Times New Roman, Times, Serif">74,209</font></td>
<td style="width: 1%; text-align: left"><font style="font: 10pt Times New Roman, Times, Serif"> </font></td>
<td style="width: 1%"><font style="font: 10pt Times New Roman, Times, Serif"> </font></td>
<td style="width: 1%; text-align: left"><font style="font: 10pt Times New Roman, Times, Serif">$</font></td>
<td style="width: 15%; text-align: right"><font style="font: 10pt Times New Roman, Times, Serif">145,847</font></td>
<td style="width: 1%; text-align: left"><font style="font: 10pt Times New Roman, Times, Serif"> </font></td>
<td style="width: 1%"><font style="font: 10pt Times New Roman, Times, Serif"> </font></td>
<td style="width: 2%; text-align: center"><font style="font: 10pt Times New Roman, Times, Serif">a.</font></td></tr>
<tr style="vertical-align: bottom; background-color: white">
<td style="text-align: left"><font style="font: 10pt Times New Roman, Times, Serif">Note payable and accrued
interest - Glendon</font></td>
<td><font style="font: 10pt Times New Roman, Times, Serif"> </font></td>
<td style="text-align: left"><font style="font: 10pt Times New Roman, Times, Serif"> </font></td>
<td style="text-align: right"><font style="font: 10pt Times New Roman, Times, Serif">80,421</font></td>
<td style="text-align: left"><font style="font: 10pt Times New Roman, Times, Serif"> </font></td>
<td><font style="font: 10pt Times New Roman, Times, Serif"> </font></td>
<td style="text-align: left"><font style="font: 10pt Times New Roman, Times, Serif"> </font></td>
<td style="text-align: right"><font style="font: 10pt Times New Roman, Times, Serif">97,552</font></td>
<td style="text-align: left"><font style="font: 10pt Times New Roman, Times, Serif"> </font></td>
<td><font style="font: 10pt Times New Roman, Times, Serif"> </font></td>
<td style="text-align: center"><font style="font: 10pt Times New Roman, Times, Serif">b.</font></td></tr>
<tr style="vertical-align: bottom; background-color: rgb(204, 238, 255)">
<td style="text-align: left"><font style="font: 10pt Times New Roman, Times, Serif">Note payable and accrued
interest - Third Party Financier</font></td>
<td><font style="font: 10pt Times New Roman, Times, Serif"> </font></td>
<td style="text-align: left"><font style="font: 10pt Times New Roman, Times, Serif"> </font></td>
<td style="text-align: right"><font style="font: 10pt Times New Roman, Times, Serif">32,630</font></td>
<td style="text-align: left"><font style="font: 10pt Times New Roman, Times, Serif"> </font></td>
<td><font style="font: 10pt Times New Roman, Times, Serif"> </font></td>
<td style="text-align: left"><font style="font: 10pt Times New Roman, Times, Serif"> </font></td>
<td style="text-align: right"><font style="font: 10pt Times New Roman, Times, Serif">43,925</font></td>
<td style="text-align: left"><font style="font: 10pt Times New Roman, Times, Serif"> </font></td>
<td><font style="font: 10pt Times New Roman, Times, Serif"> </font></td>
<td style="text-align: center"><font style="font: 10pt Times New Roman, Times, Serif">c.</font></td></tr>
<tr style="vertical-align: bottom; background-color: white">
<td style="text-align: left"><font style="font: 10pt Times New Roman, Times, Serif">Note payable and accrued
interest - Third Party Financier</font></td>
<td><font style="font: 10pt Times New Roman, Times, Serif"> </font></td>
<td style="text-align: left"><font style="font: 10pt Times New Roman, Times, Serif"> </font></td>
<td style="text-align: right"><font style="font: 10pt Times New Roman, Times, Serif">25,282</font></td>
<td style="text-align: left"><font style="font: 10pt Times New Roman, Times, Serif"> </font></td>
<td><font style="font: 10pt Times New Roman, Times, Serif"> </font></td>
<td style="text-align: left"><font style="font: 10pt Times New Roman, Times, Serif"> </font></td>
<td style="text-align: right"><font style="font: 10pt Times New Roman, Times, Serif"> </font></td>
<td style="text-align: left"><font style="font: 10pt Times New Roman, Times, Serif"> </font></td>
<td><font style="font: 10pt Times New Roman, Times, Serif"> </font></td>
<td style="text-align: center"><font style="font: 10pt Times New Roman, Times, Serif">d.</font></td></tr>
<tr style="vertical-align: bottom; background-color: rgb(204, 238, 255)">
<td style="text-align: left"><font style="font: 10pt Times New Roman, Times, Serif">Note payable and accrued
interest - Blackbridge</font></td>
<td><font style="font: 10pt Times New Roman, Times, Serif"> </font></td>
<td style="text-align: left"><font style="font: 10pt Times New Roman, Times, Serif"> </font></td>
<td style="text-align: right"><font style="font: 10pt Times New Roman, Times, Serif">14,424</font></td>
<td style="text-align: left"><font style="font: 10pt Times New Roman, Times, Serif"> </font></td>
<td><font style="font: 10pt Times New Roman, Times, Serif"> </font></td>
<td style="text-align: left"><font style="font: 10pt Times New Roman, Times, Serif"> </font></td>
<td style="text-align: right"><font style="font: 10pt Times New Roman, Times, Serif">-</font></td>
<td style="text-align: left"><font style="font: 10pt Times New Roman, Times, Serif"> </font></td>
<td><font style="font: 10pt Times New Roman, Times, Serif"> </font></td>
<td style="text-align: center"><font style="font: 10pt Times New Roman, Times, Serif">e.</font></td></tr>
<tr style="vertical-align: bottom; background-color: white">
<td style="text-align: left; text-indent: -0.125in; padding-bottom: 1pt; padding-left: 0.125in"><font style="font: 10pt Times New Roman, Times, Serif">Note
payable and accrued interest - Vulcan (net of debt discount of $0 and $100,000 as of June 30, 2014 and December 31, 2013,
respectively)</font></td>
<td style="padding-bottom: 1pt"><font style="font: 10pt Times New Roman, Times, Serif"> </font></td>
<td style="text-align: left; border-bottom: black 1pt solid"><font style="font: 10pt Times New Roman, Times, Serif"> </font></td>
<td style="text-align: right; border-bottom: black 1pt solid"><font style="font: 10pt Times New Roman, Times, Serif">545,000</font></td>
<td style="text-align: left; padding-bottom: 1pt"><font style="font: 10pt Times New Roman, Times, Serif"> </font></td>
<td style="padding-bottom: 1pt"><font style="font: 10pt Times New Roman, Times, Serif"> </font></td>
<td style="text-align: left; border-bottom: black 1pt solid"><font style="font: 10pt Times New Roman, Times, Serif"> </font></td>
<td style="text-align: right; border-bottom: black 1pt solid"><font style="font: 10pt Times New Roman, Times, Serif">520,000</font></td>
<td style="text-align: left; padding-bottom: 1pt"><font style="font: 10pt Times New Roman, Times, Serif"> </font></td>
<td style="padding-bottom: 1pt"><font style="font: 10pt Times New Roman, Times, Serif"> </font></td>
<td style="text-align: center; padding-bottom: 1pt"><font style="font: 10pt Times New Roman, Times, Serif">f.</font></td></tr>
<tr style="vertical-align: bottom; background-color: rgb(204, 238, 255)">
<td><font style="font: 10pt Times New Roman, Times, Serif"> </font></td>
<td><font style="font: 10pt Times New Roman, Times, Serif"> </font></td>
<td style="text-align: left"><font style="font: 10pt Times New Roman, Times, Serif"> </font></td>
<td style="text-align: right"><font style="font: 10pt Times New Roman, Times, Serif"> </font></td>
<td style="text-align: left"><font style="font: 10pt Times New Roman, Times, Serif"> </font></td>
<td><font style="font: 10pt Times New Roman, Times, Serif"> </font></td>
<td style="text-align: left"><font style="font: 10pt Times New Roman, Times, Serif"> </font></td>
<td style="text-align: right"><font style="font: 10pt Times New Roman, Times, Serif"> </font></td>
<td style="text-align: left"><font style="font: 10pt Times New Roman, Times, Serif"> </font></td>
<td><font style="font: 10pt Times New Roman, Times, Serif"> </font></td>
<td><font style="font: 10pt Times New Roman, Times, Serif"> </font></td></tr>
<tr style="vertical-align: bottom; background-color: white">
<td style="padding-bottom: 2.5pt"><font style="font: 10pt Times New Roman, Times, Serif"> </font></td>
<td style="padding-bottom: 2.5pt"><font style="font: 10pt Times New Roman, Times, Serif"> </font></td>
<td style="text-align: left; border-bottom: black 2.5pt double"><font style="font: 10pt Times New Roman, Times, Serif">$</font></td>
<td style="text-align: right; border-bottom: black 2.5pt double"><font style="font: 10pt Times New Roman, Times, Serif">771,965</font></td>
<td style="text-align: left; padding-bottom: 2.5pt"><font style="font: 10pt Times New Roman, Times, Serif"> </font></td>
<td style="padding-bottom: 2.5pt"><font style="font: 10pt Times New Roman, Times, Serif"> </font></td>
<td style="text-align: left; border-bottom: black 2.5pt double"><font style="font: 10pt Times New Roman, Times, Serif">$</font></td>
<td style="text-align: right; border-bottom: black 2.5pt double"><font style="font: 10pt Times New Roman, Times, Serif">807,324</font></td>
<td style="text-align: left; padding-bottom: 2.5pt"><font style="font: 10pt Times New Roman, Times, Serif"> </font></td>
<td style="padding-bottom: 2.5pt"><font style="font: 10pt Times New Roman, Times, Serif"> </font></td>
<td style="padding-bottom: 2.5pt"><font style="font: 10pt Times New Roman, Times, Serif"> </font></td></tr>
</table>
<p style="font: 10pt/normal Times New Roman, Times, Serif; margin: 0; text-align: center"><font style="font: 10pt Times New Roman, Times, Serif"> </font></p>
<p style="font: 10pt/normal Times New Roman, Times, Serif; margin: 0"><font style="font: 10pt Times New Roman, Times, Serif"><i>a)
Convertible Notes Payable</i></font></p>
<p style="font: 10pt/normal Times New Roman, Times, Serif; margin: 0; text-align: justify"><font style="font: 10pt Times New Roman, Times, Serif"> </font></p>
<p style="font: 10pt/normal Times New Roman, Times, Serif; margin: 0; text-align: justify"><font style="font: 10pt Times New Roman, Times, Serif">On
October 6, 2009, the Company signed a note payable for $25,000 to Rasel Ltd due on October 6, 2010, bearing interest at 4% per
annum. The proceeds were used to pay for half of existing accounts payable for legal fees incurred at the Company’s inception.
On October 20, 2009, the Company signed a note payable for $50,000 payable to Rasel due on October 20, 2010, bearing interest
at 4% per annum (collectively, the “Rasel Note”). These proceeds were used to pay for startup costs, audit fees and
future expenses. On January 22, 2010, the Company signed a note payable for $50,000 payable to Rasel due on October 30, 2011,
bearing interest at 4% per annum. These proceeds were used for working capital and expenditures. On January 22, 2010, the Company
signed an amendment to extend the maturity date of the promissory notes in the amount of $25,000 and $50,000 dated October 6,
2009 and October 20, 2009, respectively, to October 30, 2011. On March 2, 2011, the Company and Rasel agreed to extend the maturity
of all notes to December 31, 2012, in consideration of adding a conversion feature to the notes with either a 5% discount to the
market price or a fixed price of $0.60. The extension of maturity was effective as of December 30, 2010.</font></p>
<p style="font: 10pt/normal Times New Roman, Times, Serif; margin: 0; text-align: justify"><font style="font: 10pt Times New Roman, Times, Serif"> </font></p>
<p style="font: 10pt/normal Times New Roman, Times, Serif; margin: 0; text-align: justify"><font style="font: 10pt Times New Roman, Times, Serif">The
balance of the notes as of June 30, 2014 and December 31, 2013, was $74,209 and $145,847, respectively, which includes accrued
interest in the amounts of $22,097 and $20,847 at December 31, 2013 and 2012, respectively. The note is currently in default since
the beginning of 2013; and the Company will attempt to reach an amicable settlement with the counterparty.</font></p>
<p style="font: 10pt/normal Times New Roman, Times, Serif; margin: 0"><font style="font: 10pt Times New Roman, Times, Serif"><i> </i></font></p>
<p style="font: 10pt/normal Times New Roman, Times, Serif; margin: 0"><font style="font: 10pt Times New Roman, Times, Serif"><i>b)
Note Payable</i></font></p>
<p style="font: 10pt/normal Times New Roman, Times, Serif; margin: 0; text-align: justify"><font style="font: 10pt Times New Roman, Times, Serif"> </font></p>
<p style="font: 10pt/normal Times New Roman, Times, Serif; margin: 0; text-align: justify"><font style="font: 10pt Times New Roman, Times, Serif">On
December 31, 2012, the Company converted a payable in the amount of $155,242 to a note payable. The note bears annual interest
at 10%, and was to mature on December 31, 2012. The Company has negotiated an extension to the maturity date until December 31,
2013. The note is currently in default; the Company will attempt to reach an amicable settlement with the counterparty.</font></p>
<p style="font: 10pt/normal Times New Roman, Times, Serif; margin: 0"><font style="font: 10pt Times New Roman, Times, Serif"> </font></p>
<p style="font: 10pt/normal Times New Roman, Times, Serif; margin: 0"><font style="font: 10pt Times New Roman, Times, Serif">The
balance at June 30, 2014 and December 31, 2013, including accrued interest, is $80,421 and $97,552, respectively. The note was
reduced for revenue received during the six months ended June 30, 2014 from the Note holder.</font></p>
<p style="font: 10pt/normal Times New Roman, Times, Serif; margin: 0; text-align: justify"><font style="font: 10pt Times New Roman, Times, Serif"><i> </i></font></p>
<p style="font: 10pt/normal Times New Roman, Times, Serif; margin: 0; text-align: justify"><font style="font: 10pt Times New Roman, Times, Serif"><i>c)
Issuance of note payable to third party</i></font></p>
<p style="font: 10pt/normal Times New Roman, Times, Serif; margin: 0; text-align: justify"><font style="font: 10pt Times New Roman, Times, Serif"> </font></p>
<p style="font: 10pt/normal Times New Roman, Times, Serif; margin: 0; text-align: justify"><font style="font: 10pt Times New Roman, Times, Serif">On
July 24, 2013, the Company entered into a Securities Purchase Agreement with a third party financing source ("Financer
1"), for the issuance of an 8% convertible note in the principal amount of $42,500 (the "July 2013 Note"), of which $2,500 was
for legal fees associated with the transaction.  The financing closed on July 31, 2013.</font></p>
<p style="font: 10pt/normal Times New Roman, Times, Serif; margin: 0; text-align: justify"><font style="font: 10pt Times New Roman, Times, Serif"></font></p>
<p style="font: 10pt/normal Times New Roman, Times, Serif; margin: 0; text-align: justify"><font style="font: 10pt Times New Roman, Times, Serif"> </font></p>
<p style="font: 10pt/normal Times New Roman, Times, Serif; margin: 0; text-align: justify"><font style="font: 10pt Times New Roman, Times, Serif">The July
2013 Note bears interest at the rate of 8% per annum. All interest and principal must be repaid on April
29, 2014.  The July 2013 Note is convertible into common stock, at Financer’s option, at the greater of a 42% discount to
the average of the three lowest closing bid prices of the common stock during the 10 trading day period prior to conversion
or $0.00009.  In the event the Company prepays the July 2013 Note in full, the Company is required to pay to Financer
an amount in cash equal to all principal, interest and any other amounts owing multiplied by (i) 112% if prepaid during the period
commencing on the closing date through 30 days thereafter, (ii) 121% if prepaid 31 days following the closing through 60 days
following the closing and (iii) 126% if prepaid 61 days following the closing through 90 days following the closing and (iv) 131%
if prepaid 91 days following the closing through 120 days following the closing and (v) 136% if prepaid 121 days following the
closing through 150 days following the closing and (vi) 141% if prepaid 151 days following the closing through 180 days following
the closing. After the expiration of 180 days following the date of the Note, the Company has no right of prepayment.   </font></p>
<p style="font: 10pt/normal Times New Roman, Times, Serif; margin: 0; text-align: justify"><font style="font: 10pt Times New Roman, Times, Serif"> </font></p>
<p style="font: 10pt/normal Times New Roman, Times, Serif; margin: 0; text-align: justify"><font style="font: 10pt Times New Roman, Times, Serif">Financer has
agreed to restrict its ability to convert the July 2013 Note and receive shares of common stock such that the number of shares
of common stock held by them in the aggregate and their affiliates after such conversion or exercise
does not exceed 9.99% of the then issued and outstanding shares of common stock.   The total net proceeds the Company
received from this offering was $42,500, less $2,500 in attorney’s fees.<font style="background-color: white"> As of the
date of the </font>July 2013 <font style="background-color: white">Note, the Company is obligated on the Note issued to Financer
in connection with the offering. The</font> July 2013 <font style="background-color: white">Note is a debt obligation arising
other than in the ordinary course of business, which constitutes a direct financial obligation of the Company. </font></font></p>
<p style="font: 10pt/normal Times New Roman, Times, Serif; margin: 0; text-align: justify"><font style="font: 10pt Times New Roman, Times, Serif"> </font></p>
<p style="font: 10pt/normal Times New Roman, Times, Serif; margin: 0; text-align: justify"><font style="font: 10pt Times New Roman, Times, Serif">The Company claims
an exemption from the registration requirements of the Securities Act of 1933, as amended  (the
"Act") for the private placement of these securities pursuant to Section  4(2) of the
Act  and/or  Regulation  D promulgated  there under since,  among other  things,  the  transaction  did
not involve a public  offering,  Financer is an accredited  investor, Financer had
access to information about the Company  and their  investment,  Financer  took the  securities  for
investment and not resale, and the Company took appropriate measures to restrict the transfer of the securities.</font></p>
<p style="font: 10pt/normal Times New Roman, Times, Serif; margin: 0; text-align: justify"><font style="font: 10pt Times New Roman, Times, Serif"> </font></p>
<p style="font: 10pt/normal Times New Roman, Times, Serif; margin: 0; text-align: justify"><font style="font: 10pt Times New Roman, Times, Serif">In
April 2014, Financier converted the entire remaining note balance, and released the company from its debt, which is a zero balance.
On or about June 3, 2014, the Company issued another note to the Financier payable for $32,500 (“June 2014 Note”),
of which $2,500 was for legal fees associated with the transaction. The terms of the new note were similar to the terms described
above, with a maturity of March 5, 2015.</font></p>
<p style="font: 10pt/normal Times New Roman, Times, Serif; margin: 0; text-align: justify"><font style="font: 10pt Times New Roman, Times, Serif"> </font></p>
<p style="font: 10pt/normal Times New Roman, Times, Serif; margin: 0; text-align: justify"><font style="font: 10pt Times New Roman, Times, Serif">The June
2014 Note bears interest at the rate of 8% per annum. All interest and principal must be repaid on March
5, 2015.  The June 2014 Note is convertible into common stock, at Financer’s option, at the greater of a 42% discount to
the average of the three lowest closing bid prices of the common stock during the 10 trading day period prior to conversion
or $0.00001.  In the event the Company prepays the June 2014 Note in full, the Company is required to pay to Financer
an amount in cash equal to all principal, interest and any other amounts owing multiplied by (i) 112% if prepaid during the period
commencing on the closing date through 30 days thereafter, (ii) 121% if prepaid 31 days following the closing through 60 days
following the closing and (iii) 126% if prepaid 61 days following the closing through 90 days following the closing and (iv) 131%
if prepaid 91 days following the closing through 120 days following the closing and (v) 136% if prepaid 121 days following the
closing through 150 days following the closing and (vi) 141% if prepaid 151 days following the closing through 180 days following
the closing. After the expiration of 180 days following the date of the Note, the Company has no right of prepayment.   </font></p>
<p style="font: 10pt/normal Times New Roman, Times, Serif; margin: 0; text-align: justify"><font style="font: 10pt Times New Roman, Times, Serif"> </font></p>
<p style="font: 10pt/normal Times New Roman, Times, Serif; margin: 0; text-align: justify"><font style="font: 10pt Times New Roman, Times, Serif">Financer has
agreed to restrict its ability to convert the June 2014 Note and receive shares of common stock such that the number of shares
of common stock held by them in the aggregate and their affiliates after such conversion or exercise
does not exceed 4.99% of the then issued and outstanding shares of common stock.   The total net proceeds the Company
received from this offering were $32,500, less $2,500 in attorney’s fees pursuant to the terms of this convertible agreement.
<font style="background-color: white">As of the date of the </font>June 2014 <font style="background-color: white">Note, the Company
is obligated on the Note issued to Financer in connection with the offering. The</font> June 2014 <font style="background-color: white">Note
is a debt obligation arising other than in the ordinary course of business, which constitutes a direct financial obligation of
the Company. </font></font></p>
<p style="font: 10pt/normal Times New Roman, Times, Serif; margin: 0; text-align: justify"><font style="font: 10pt Times New Roman, Times, Serif"> </font></p>
<p style="font: 10pt/normal Times New Roman, Times, Serif; margin: 0; text-align: justify"><font style="font: 10pt Times New Roman, Times, Serif">The Company claims
an exemption from the registration requirements of the Securities Act of 1933, as amended  (the
"Act") for the private  placement  of these  securities  pursuant  to  Section  4(2)
of the Act  and/or  Regulation  D promulgated  there under since,  among other  things,  the  transaction  did
not involve a public  offering,  Financer is an accredited  investor, Financer had
access to information about the Company  and their  investment,  Financer  took the  securities  for
investment and not resale, and the Company took appropriate measures to restrict the transfer of the securities.</font></p>
<p style="font: 10pt/normal Times New Roman, Times, Serif; margin: 0; text-align: justify"><font style="font: 10pt Times New Roman, Times, Serif"> </font></p>
<p style="font: 10pt/normal Times New Roman, Times, Serif; margin: 0; text-align: justify"><font style="font: 10pt Times New Roman, Times, Serif"><i>d)
Third Party Note Payable</i></font></p>
<p style="font: 10pt/normal Times New Roman, Times, Serif; margin: 0; text-align: justify"><font style="font: 10pt Times New Roman, Times, Serif"> </font></p>
<p style="font: 10pt/normal Times New Roman, Times, Serif; margin: 0; text-align: justify"><font style="font: 10pt Times New Roman, Times, Serif">On
May 13, 2014, the Company entered into an agreement with a third party financing source ("Financier 2"), for the
issuance of an 8% convertible note in the principal amount of $147,625 (the "May 2014 Note").  In conjunction with the
issuance of the May 2014 Note, an existing note holder (Rasel, owner of the Rasel Notes) agreed to have the proceeds of the May
2014 Note used to offset the amounts owed to them as evidenced by the Assignment of Convertible Debenture agreement dated May
12, 2014, between the holders of the Rasel Notes and Financier 2. The Assignment of Convertible Debenture agreement calls for
the Financier 2 to make two payments of $73,812.50 each to the existing note holder (Rasel Notes). On May 13, 2014, the Financier
2 made the first payment to the existing note holder (Rasel Notes), however, Financier 2 defaulted on their obligation to make
the second payment per the Assignment of Convertible Debenture agreement. As a result, Gopher and Financier 2 have mutually agreed
to release Financier 2 from its’ obligation for the second payment, and the other half of the note in the amount of $73,812.50
reverted back to Rasel.</font></p>
<p style="font: 10pt/normal Times New Roman, Times, Serif; margin: 0; text-align: justify"><font style="font: 10pt Times New Roman, Times, Serif"> </font></p>
<p style="font: 10pt/normal Times New Roman, Times, Serif; margin: 0; text-align: justify"><font style="font: 10pt Times New Roman, Times, Serif">The May
2014 Note, which is currently in default and has mostly been converted into common stock, bears interest at the
rate of 8% per annum. All interest and principal must be repaid on October 30, 2011.  The May 2104 Note is
convertible into common stock, at Financer 2’s option, at the greater of a 42% discount to the average of
the three lowest closing bid prices of the common stock during the 10 trading day period prior to conversion or $0.0001.  </font></p>
<p style="font: 10pt/normal Times New Roman, Times, Serif; margin: 0; text-align: justify; text-indent: 0.5in"><font style="font: 10pt Times New Roman, Times, Serif"> </font></p>
<p style="font: 10pt/normal Times New Roman, Times, Serif; margin: 0; text-align: justify; text-indent: 0.5in"><font style="font: 10pt Times New Roman, Times, Serif"></font></p>
<p style="font: 10pt/normal Times New Roman, Times, Serif; margin: 0; text-align: justify"><font style="font: 10pt Times New Roman, Times, Serif">Financer
2 has agreed to restrict its ability to convert the May 2014 Note and receive shares of common stock such that the number
of shares of common stock held by them in the aggregate and their affiliates after such conversion or
exercise does not exceed 4.99% of the then issued and outstanding shares of common stock.   <font style="background-color: white">As
of the date of the May 2014 Note, the Company is obligated on the Note issued to Financer 2 in connection with the offering. The
</font>May 2014 <font style="background-color: white">Note is a debt obligation arising other than in the ordinary course of business,
which constitutes a direct financial obligation of the Company. </font></font></p>
<p style="font: 10pt/normal Times New Roman, Times, Serif; margin: 0; text-align: justify"><font style="font: 10pt Times New Roman, Times, Serif"> </font></p>
<p style="font: 10pt/normal Times New Roman, Times, Serif; margin: 0; text-align: justify"><font style="font: 10pt Times New Roman, Times, Serif">The Company claims
an exemption from the registration requirements of the Securities Act of 1933, as amended  (the
"Act") for the private placement of these securities pursuant to Section  4(2) of the
Act  and/or  Regulation  D promulgated  there under since,  among other  things,  the  transaction  did
not involve a public  offering,  Financer is an accredited  investor, Financer had
access to information about the Company  and their  investment,  Financer  took the  securities  for
investment and not resale, and the Company took appropriate measures to restrict the transfer of the securities.</font></p>
<p style="font: 10pt/normal Times New Roman, Times, Serif; margin: 0; text-align: justify"><font style="font: 10pt Times New Roman, Times, Serif"> </font></p>
<p style="font: 10pt/normal Times New Roman, Times, Serif; margin: 0; text-align: justify"><font style="font: 10pt Times New Roman, Times, Serif"><i>e)
Convertible Note Payable</i></font></p>
<p style="font: 10pt/normal Times New Roman, Times, Serif; margin: 0; text-align: justify; background-color: white"><font style="font: 10pt Times New Roman, Times, Serif">On
June 16, 2014, the Company entered into a set of agreements (collectively, the “Blackbridge Agreement”) with Blackbridge,
a financial services firm. The Company and Blackbridge were discussing an equity line of credit, and the Company agreed to pay
Blackbridge a commitment fee of 90,000,000 shares, and also issued a convertible note for $90,000 having a 5% interest rate that
matures on December 16, 2014. The note can be converted after the maturity date. The conversion price is 90% multiplied by the
market price, which is defined in the agreement as the lowest of the daily trading price for the common stock during the twenty
(20) trading day period ending on the latest complete trading day prior to the conversion date.</font></p>
<p style="font: 10pt/normal Times New Roman, Times, Serif; margin: 0; text-align: justify; text-indent: 0.5in"><font style="font: 10pt Times New Roman, Times, Serif"> </font></p>
<p style="font: 10pt/normal Times New Roman, Times, Serif; margin: 0; text-align: justify"><font style="font: 10pt Times New Roman, Times, Serif">The`
Company computed the fair value of the conversion feature at the commitment date, based on the following management assumptions:</font></p>
<p style="font: 10pt/normal Times New Roman, Times, Serif; margin: 0; text-align: justify; text-indent: 0.5in"><font style="font: 10pt Times New Roman, Times, Serif"> </font></p>
<table cellspacing="0" cellpadding="0" style="font-size: 10pt; line-height: normal; width: 70%; margin-left: 0.5in; border-collapse: collapse; font-size-adjust: none; font-stretch: normal">
<tr style="vertical-align: bottom; background-color: rgb(204, 238, 255)">
<td style="width: 82%; text-align: justify"><font style="font: 10pt Times New Roman, Times, Serif">Expected
dividends</font></td>
<td style="width: 1%"><font style="font: 10pt Times New Roman, Times, Serif"> </font></td>
<td style="width: 1%; text-align: left"><font style="font: 10pt Times New Roman, Times, Serif"> </font></td>
<td style="width: 15%; text-align: right"><font style="font: 10pt Times New Roman, Times, Serif">0</font></td>
<td style="width: 1%; text-align: left"><font style="font: 10pt Times New Roman, Times, Serif">%</font></td></tr>
<tr style="vertical-align: bottom; background-color: white">
<td style="text-align: justify"><font style="font: 10pt Times New Roman, Times, Serif">Expected volatility</font></td>
<td><font style="font: 10pt Times New Roman, Times, Serif"> </font></td>
<td style="text-align: left"><font style="font: 10pt Times New Roman, Times, Serif"> </font></td>
<td style="text-align: right"><font style="font: 10pt Times New Roman, Times, Serif">374</font></td>
<td style="text-align: left"><font style="font: 10pt Times New Roman, Times, Serif">%</font></td></tr>
<tr style="vertical-align: bottom; background-color: rgb(204, 238, 255)">
<td style="text-align: justify"><font style="font: 10pt Times New Roman, Times, Serif">Expected term: conversion
feature</font></td>
<td><font style="font: 10pt Times New Roman, Times, Serif"> </font></td>
<td style="text-align: left"><font style="font: 10pt Times New Roman, Times, Serif"> </font></td>
<td style="text-align: right"><font style="font: 10pt Times New Roman, Times, Serif">183 days</font></td>
<td style="text-align: left"><font style="font: 10pt Times New Roman, Times, Serif"> </font></td></tr>
<tr style="vertical-align: bottom; background-color: white">
<td style="text-align: justify"><font style="font: 10pt Times New Roman, Times, Serif">Risk free interest
rate</font></td>
<td><font style="font: 10pt Times New Roman, Times, Serif"> </font></td>
<td style="text-align: left"><font style="font: 10pt Times New Roman, Times, Serif"> </font></td>
<td style="text-align: right"><font style="font: 10pt Times New Roman, Times, Serif">-0.079</font></td>
<td style="text-align: left"><font style="font: 10pt Times New Roman, Times, Serif">%</font></td></tr>
</table>
<p style="font: 10pt/normal Times New Roman, Times, Serif; margin: 0; text-align: justify; text-indent: 0.5in"><font style="font: 10pt Times New Roman, Times, Serif"> </font></p>
<p style="font: 10pt/normal Times New Roman, Times, Serif; margin: 0; text-align: justify"><font style="font: 10pt Times New Roman, Times, Serif">The
fair value of the embedded conversion option on the commitment date was $82,210. In the second quarter, which was 14 days after
the commitment date, the Company should have recorded amortization expense of the debt discount of $6,289 on its income statement
in the second quarter of 2014. In addition, at June 30, 2014, the Company should have recorded $344 of additional interest expense
on its income statement in the second quarter of 2014. The book value of the (net) note payable on the balance sheet at 6/30/14
should have been the face value of the note less the unamortized debt discount at that point, which was $75,921, and including
the $344 of interest expense: $14,424.</font></p>
<p style="font: 10pt/normal Times New Roman, Times, Serif; margin: 0; text-align: justify"><font style="font: 10pt Times New Roman, Times, Serif"> </font></p>
<p style="font: 10pt/normal Times New Roman, Times, Serif; margin: 0; text-align: justify; background-color: white"><font style="font: 10pt Times New Roman, Times, Serif">At
June 30, 2014, we remeasured the value of the derivative liability, according to the following assumptions:</font></p>
<p style="font: 10pt/normal Times New Roman, Times, Serif; margin: 0; text-align: justify; background-color: white"><font style="font: 10pt Times New Roman, Times, Serif"> </font></p>
<table cellspacing="0" cellpadding="0" style="font-size: 10pt; line-height: normal; width: 70%; margin-left: 0.5in; border-collapse: collapse; font-size-adjust: none; font-stretch: normal">
<tr style="vertical-align: bottom; background-color: rgb(204, 238, 255)">
<td style="width: 82%; text-align: justify"><font style="font: 10pt Times New Roman, Times, Serif">Expected
dividends</font></td>
<td style="width: 1%"><font style="font: 10pt Times New Roman, Times, Serif"> </font></td>
<td style="width: 1%; text-align: left"><font style="font: 10pt Times New Roman, Times, Serif"> </font></td>
<td style="width: 15%; text-align: right"><font style="font: 10pt Times New Roman, Times, Serif">0</font></td>
<td style="width: 1%; text-align: left"><font style="font: 10pt Times New Roman, Times, Serif">%</font></td></tr>
<tr style="vertical-align: bottom; background-color: white">
<td style="text-align: justify"><font style="font: 10pt Times New Roman, Times, Serif">Expected volatility</font></td>
<td><font style="font: 10pt Times New Roman, Times, Serif"> </font></td>
<td style="text-align: left"><font style="font: 10pt Times New Roman, Times, Serif"> </font></td>
<td style="text-align: right"><font style="font: 10pt Times New Roman, Times, Serif">373</font></td>
<td style="text-align: left"><font style="font: 10pt Times New Roman, Times, Serif">%</font></td></tr>
<tr style="vertical-align: bottom; background-color: rgb(204, 238, 255)">
<td style="text-align: justify"><font style="font: 10pt Times New Roman, Times, Serif">Expected term: conversion
feature</font></td>
<td><font style="font: 10pt Times New Roman, Times, Serif"> </font></td>
<td style="text-align: left"><font style="font: 10pt Times New Roman, Times, Serif"> </font></td>
<td style="text-align: right"><font style="font: 10pt Times New Roman, Times, Serif">169 days</font></td>
<td style="text-align: left"><font style="font: 10pt Times New Roman, Times, Serif"> </font></td></tr>
<tr style="vertical-align: bottom; background-color: white">
<td style="text-align: justify"><font style="font: 10pt Times New Roman, Times, Serif">Risk free interest
rate</font></td>
<td><font style="font: 10pt Times New Roman, Times, Serif"> </font></td>
<td style="text-align: left"><font style="font: 10pt Times New Roman, Times, Serif"> </font></td>
<td style="text-align: right"><font style="font: 10pt Times New Roman, Times, Serif">-0.070</font></td>
<td style="text-align: left"><font style="font: 10pt Times New Roman, Times, Serif">%</font></td></tr>
</table>
<p style="font: 10pt/normal Times New Roman, Times, Serif; margin: 0; text-align: justify; background-color: white"><font style="font: 10pt Times New Roman, Times, Serif"> </font></p>
<p style="font: 10pt/normal Times New Roman, Times, Serif; margin: 0; text-align: justify; background-color: white"><font style="font: 10pt Times New Roman, Times, Serif">The
fair value of the embedded derivative at the commitment date was therefore remeasured to be $126,184. The difference of $43,974
was recorded as a change in the fair market value of the embedded derivative, and the derivative liability on the balance sheet
was increased to $126,184. On the income statement, the earnings number at June 30, 2014 should have decreased by $140,608. On
the statement of cash flows, cash flows used by operations should have decreased by $90,000, which was offset by increased borrowings
under a note payable in cash flows from financing.</font></p>
<p style="font: 10pt/normal Times New Roman, Times, Serif; margin: 0; text-align: justify; background-color: white"><font style="font: 10pt Times New Roman, Times, Serif"> </font></p>
<p style="font: 10pt/normal Times New Roman, Times, Serif; margin: 0; text-align: justify"><font style="font: 10pt Times New Roman, Times, Serif"><i>f)
Convertible Note Payable</i></font></p>
<p style="font: 10pt/normal Times New Roman, Times, Serif; margin: 0; text-align: justify"><font style="font: 10pt Times New Roman, Times, Serif"> </font></p>
<p style="font: 10pt/normal Times New Roman, Times, Serif; margin: 0; text-align: justify"><font style="font: 10pt Times New Roman, Times, Serif">On
January 7, 2013, effective December 31, 2012, the Company, JV and Vulcan entered an agreement pursuant to which the JV Agreement
was terminated, the Company issued to Vulcan a 4% convertible promissory note in the principal amount of $500,000 (the "Gopher
Note") and Vulcan issued to the Company a 10% Secured and Collateralized Promissory Note in the principal amount of $400,000.
The Company recognized a debt discount in the amount of $100,000 for the difference in the face value of the note issued and the
note received from the same party. The face value of the note payable is shown net of the debt discount. This debt discount will
be amortized over the one-year life of the note. The note has a maturity date of December 31, 2013, and can be extended by the
Company for an additional one year at which point the 4% interest rate will increase to 10% per annum. The Gopher Note may be
prepaid without penalty. The Gopher Note conversion price is the Variable Conversion Price, which is defined as 50% multiplied
by the average of the lowest three trading prices of the Company's common stock on the OTCBB during the 10-day trading period
ending on the latest complete day of trading on the OTCBB prior to the date of conversion. The Variable Conversion Price cannot
be less than $0.002. At no time will Vulcan convert any amount of the Gopher Note into common stock that would result in Vulcan
owning more than 4.99% of the common stock outstanding of the Company.</font></p>
<p style="font: 10pt/normal Times New Roman, Times, Serif; margin: 0; text-align: justify"><font style="font: 10pt Times New Roman, Times, Serif"></font></p>
<p style="font: 10pt/normal Times New Roman, Times, Serif; margin: 0; text-align: justify"><font style="font: 10pt Times New Roman, Times, Serif"> </font></p>
<p style="font: 10pt/normal Times New Roman, Times, Serif; margin: 0; text-align: justify"><font style="font: 10pt Times New Roman, Times, Serif">As
of December 31, 2013, the entire debt discount has been amortized in the accompanying financial statements, and $20,000 of interest
expense was accrued during the year ended December 31, 2013. Another $25,000 of interest expense was accrued in the six months
ended June 30, 2014. The Company is negotiating an offset of the Gopher Note against the note receivable from Vulcan as final
satisfaction, and will recognize a gain or loss on its financial statements at that time. As of June 30, 2014, the Company has
not reached an agreement with Vulcan for offsetting of the notes, and the Vulcan Note is currently in default.</font></p>
<p style="font: 10pt/normal Times New Roman, Times, Serif; margin: 0"><font style="font: 10pt Times New Roman, Times, Serif"><b>10.
Stockholders’ Equity</b></font></p>
<p style="font: 10pt/normal Times New Roman, Times, Serif; margin: 0"><font style="font: 10pt Times New Roman, Times, Serif"><i> </i></font></p>
<p style="font: 10pt/normal Times New Roman, Times, Serif; margin: 0"><font style="font: 10pt Times New Roman, Times, Serif"><i>Authorized
Shares </i></font></p>
<p style="font: 10pt/normal Times New Roman, Times, Serif; margin: 0; text-align: justify"><font style="font: 10pt Times New Roman, Times, Serif"> </font></p>
<p style="font: 10pt/normal Times New Roman, Times, Serif; margin: 0; text-align: justify"><font style="font: 10pt Times New Roman, Times, Serif">Effective
April 4, 2014, the Company filed with the State of Nevada a Certificate of Amendment to Articles of Incorporation changing the
Company’s number of authorized shares to 600,000,000. On or about June 10, 2014, the Company received approval from the
Secretary of State of Nevada to increase the authorized shares to 2,000,000,000.</font></p>
<p style="font: 10pt/normal Times New Roman, Times, Serif; margin: 0; text-align: justify"><font style="font: 10pt Times New Roman, Times, Serif"> </font></p>
<p style="font: 10pt/normal Times New Roman, Times, Serif; margin: 0; text-align: justify"><font style="font: 10pt Times New Roman, Times, Serif">The
Company has 2,000,000,000 authorized shares of its $0.00001 par value common stock and 20,000,000 shares of its $0.00001 par value
Preferred Stock Series B as of June 30, 2014. On September 26, 2012, the Company authorized 10,000 Preferred Stock Series C shares,
par value $0.00001.</font></p>
<p style="font: 10pt/normal Times New Roman, Times, Serif; margin: 0"><font style="font: 10pt Times New Roman, Times, Serif"><i> </i></font></p>
<p style="font: 10pt/normal Times New Roman, Times, Serif; margin: 0"><font style="font: 10pt Times New Roman, Times, Serif"><i>Common
Shares:</i></font></p>
<p style="font: 10pt/normal Times New Roman, Times, Serif; margin: 0; text-align: justify"><font style="font: 10pt Times New Roman, Times, Serif"> </font></p>
<p style="font: 10pt/normal Times New Roman, Times, Serif; margin: 0; text-align: justify"><font style="font: 10pt Times New Roman, Times, Serif">On
September 2, 2013, effective September 1, 2013, Gopher International Trading Corp. (the “Company”) entered into an
Evaluation License Agreement (the "ELA") with Micrologic Design Automation, Inc. ("MDA"), pursuant to which MDA temporarily
licensed to the Company, on a non-exclusive and royalty-free basis, certain technology and related materials for any purpose related
to evaluating NanoDRC, NanoRV and NanoLVS technology (the “Technology”).  On January 2, 2014, and effective
December 31, 2013, the Company and MDA signed a letter agreement whereby MDA provided for a perpetual, royalty free, exclusive
license of the Licensed Technology, as defined in the Evaluation License Agreement dated September 1, 2013, in exchange for 200
million shares of common stock (the “Shares”) of the Company.  MDA is not permitted to sell, assign, hypothecate
or transfer the Shares in any way prior to the Company generating at minimum $50,000 in revenue through the use of the Technology
(the “Revenue Target”).  A stop transfer legend shall be affixed to the certificate representing the Shares.  If
the Revenue Target is achieved, then such stop transfer legend shall be removed.  The shares of common stock were issued
under Section 4(2) of the Securities Act of 1933, as amended. (See Note 7)</font></p>
<p style="font: 10pt/normal Times New Roman, Times, Serif; margin: 0; text-align: justify"><font style="font: 10pt Times New Roman, Times, Serif"> </font></p>
<p style="font: 10pt/normal Times New Roman, Times, Serif; margin: 0; text-align: justify"><font style="font: 10pt Times New Roman, Times, Serif">During
the six months ended June 30, 2014, Financier converted $44,200 of its note into 31,994,477 shares of common stock at an average
conversion price of $0.0014 per share.</font></p>
<p style="font: 10pt/normal Times New Roman, Times, Serif; margin: 0; text-align: justify"><font style="font: 10pt Times New Roman, Times, Serif"> </font></p>
<p style="font: 10pt/normal Times New Roman, Times, Serif; margin: 0; text-align: justify"><font style="font: 10pt Times New Roman, Times, Serif">During
the second quarter, Third Party converted $49,010 of its note into 91,000,000 shares at an average valuation of $0.000529 per
share.</font></p>
<p style="font: 10pt/normal Times New Roman, Times, Serif; margin: 0; text-align: justify"><font style="font: 10pt Times New Roman, Times, Serif"><i> </i></font></p>
<p style="font: 10pt/normal Times New Roman, Times, Serif; margin: 0; text-align: justify"><font style="font: 10pt Times New Roman, Times, Serif">During
the six months ended June 30, 2014, GV Global Communications, Inc converted 7,770 of its Series C Preferred Stocks into 54,651,667
common shares.</font></p>
<p style="font: 10pt/normal Times New Roman, Times, Serif; margin: 0; text-align: justify"><font style="font: 10pt Times New Roman, Times, Serif"><i> </i></font></p>
<p style="font: 10pt/normal Times New Roman, Times, Serif; margin: 0; text-align: justify"><font style="font: 10pt Times New Roman, Times, Serif"><i>Treasury
Stock</i></font></p>
<p style="font: 10pt/normal Times New Roman, Times, Serif; margin: 0; text-align: justify"><font style="font: 10pt Times New Roman, Times, Serif"> </font></p>
<p style="font: 10pt/normal Times New Roman, Times, Serif; margin: 0; text-align: justify"><font style="font: 10pt Times New Roman, Times, Serif">On
April 25, 2011, the Company issued a press release announcing that its Board of Directors approved a share repurchase program.
Under the program, the Company is authorized to purchase up to 1,000,000 of its shares of common stock in open market transactions
at the discretion of management. All stock repurchases will be subject to the requirements of Rule 10b-18 under the Securities
Exchange Act of 1934, as amended and other rules that govern such purchases. As of December 31, 2013 and December 31, 2012, the
Company had repurchased 38,000 of its common shares in the open market, which were returned to treasury.</font></p>
<p style="font: 10pt/normal Times New Roman, Times, Serif; margin: 0; text-align: justify"><font style="font: 10pt Times New Roman, Times, Serif"> </font></p>
<p style="font: 10pt/normal Times New Roman, Times, Serif; margin: 0; text-align: justify"><font style="font: 10pt Times New Roman, Times, Serif"></font></p>
<table cellspacing="0" cellpadding="0" style="font-size: 10pt; line-height: normal; width: 100%; border-collapse: collapse; font-size-adjust: none; font-stretch: normal">
<tr style="vertical-align: bottom">
<td style="text-align: justify"><font style="font: 10pt Times New Roman, Times, Serif"><b> </b></font></td>
<td style="font-weight: bold"><font style="font: 10pt Times New Roman, Times, Serif"><b> </b></font></td>
<td colspan="2" style="text-align: center; font-weight: bold"><font style="font: 10pt Times New Roman, Times, Serif"><b>Total
Number of</b></font></td>
<td style="font-weight: bold"><font style="font: 10pt Times New Roman, Times, Serif"><b> </b></font></td>
<td style="font-weight: bold"><font style="font: 10pt Times New Roman, Times, Serif"><b> </b></font></td>
<td colspan="2" style="text-align: center; font-weight: bold"><font style="font: 10pt Times New Roman, Times, Serif"><b>Average</b></font></td>
<td style="font-weight: bold"><font style="font: 10pt Times New Roman, Times, Serif"><b> </b></font></td>
<td style="font-weight: bold"><font style="font: 10pt Times New Roman, Times, Serif"><b> </b></font></td>
<td colspan="2" style="text-align: center; font-weight: bold"><font style="font: 10pt Times New Roman, Times, Serif"><b>Shares
Purchased</b></font></td>
<td style="font-weight: bold"><font style="font: 10pt Times New Roman, Times, Serif"><b> </b></font></td>
<td style="font-weight: bold"><font style="font: 10pt Times New Roman, Times, Serif"><b> </b></font></td>
<td colspan="2" style="text-align: center; font-weight: bold"><font style="font: 10pt Times New Roman, Times, Serif"><b>Shares
Remaining</b></font></td>
<td style="font-weight: bold"><font style="font: 10pt Times New Roman, Times, Serif"><b> </b></font></td></tr>
<tr style="vertical-align: bottom">
<td style="text-align: justify"><font style="font: 10pt Times New Roman, Times, Serif"><b> </b></font></td>
<td style="padding-bottom: 1pt; font-weight: bold"><font style="font: 10pt Times New Roman, Times, Serif"><b> </b></font></td>
<td colspan="2" style="border-bottom: black 1pt solid; text-align: center; font-weight: bold"><font style="font: 10pt Times New Roman, Times, Serif"><b>Shares
Purchased</b></font></td>
<td style="padding-bottom: 1pt; font-weight: bold"><font style="font: 10pt Times New Roman, Times, Serif"><b> </b></font></td>
<td style="padding-bottom: 1pt; font-weight: bold"><font style="font: 10pt Times New Roman, Times, Serif"><b> </b></font></td>
<td colspan="2" style="border-bottom: black 1pt solid; text-align: center; font-weight: bold"><font style="font: 10pt Times New Roman, Times, Serif"><b>Price
Paid</b></font></td>
<td style="padding-bottom: 1pt; font-weight: bold"><font style="font: 10pt Times New Roman, Times, Serif"><b> </b></font></td>
<td style="padding-bottom: 1pt; font-weight: bold"><font style="font: 10pt Times New Roman, Times, Serif"><b> </b></font></td>
<td colspan="2" style="border-bottom: black 1pt solid; text-align: center; font-weight: bold"><font style="font: 10pt Times New Roman, Times, Serif"><b>Under
Repurchase Plan</b></font></td>
<td style="padding-bottom: 1pt; font-weight: bold"><font style="font: 10pt Times New Roman, Times, Serif"><b> </b></font></td>
<td style="padding-bottom: 1pt; font-weight: bold"><font style="font: 10pt Times New Roman, Times, Serif"><b> </b></font></td>
<td colspan="2" style="border-bottom: black 1pt solid; text-align: center; font-weight: bold"><font style="font: 10pt Times New Roman, Times, Serif"><b>Under
Repurchase Plan</b></font></td>
<td style="padding-bottom: 1pt; font-weight: bold"><font style="font: 10pt Times New Roman, Times, Serif"><b> </b></font></td></tr>
<tr style="vertical-align: bottom">
<td style="text-align: justify"><font style="font: 10pt Times New Roman, Times, Serif"> </font></td>
<td><font style="font: 10pt Times New Roman, Times, Serif"> </font></td>
<td colspan="2" style="text-align: center"><font style="font: 10pt Times New Roman, Times, Serif"> </font></td>
<td><font style="font: 10pt Times New Roman, Times, Serif"> </font></td>
<td><font style="font: 10pt Times New Roman, Times, Serif"> </font></td>
<td colspan="2" style="text-align: center"><font style="font: 10pt Times New Roman, Times, Serif"> </font></td>
<td><font style="font: 10pt Times New Roman, Times, Serif"> </font></td>
<td><font style="font: 10pt Times New Roman, Times, Serif"> </font></td>
<td colspan="2" style="text-align: center"><font style="font: 10pt Times New Roman, Times, Serif"> </font></td>
<td><font style="font: 10pt Times New Roman, Times, Serif"> </font></td>
<td><font style="font: 10pt Times New Roman, Times, Serif"> </font></td>
<td colspan="2" style="text-align: center"><font style="font: 10pt Times New Roman, Times, Serif"> </font></td>
<td><font style="font: 10pt Times New Roman, Times, Serif"> </font></td></tr>
<tr style="vertical-align: bottom; background-color: rgb(204, 238, 255)">
<td style="text-align: justify; font-weight: bold"><font style="font: 10pt Times New Roman, Times, Serif"><b>Month</b></font></td>
<td><font style="font: 10pt Times New Roman, Times, Serif"> </font></td>
<td style="text-align: left"><font style="font: 10pt Times New Roman, Times, Serif"> </font></td>
<td style="text-align: right"><font style="font: 10pt Times New Roman, Times, Serif"> </font></td>
<td style="text-align: left"><font style="font: 10pt Times New Roman, Times, Serif"> </font></td>
<td><font style="font: 10pt Times New Roman, Times, Serif"> </font></td>
<td style="text-align: left"><font style="font: 10pt Times New Roman, Times, Serif"> </font></td>
<td style="text-align: right"><font style="font: 10pt Times New Roman, Times, Serif"> </font></td>
<td style="text-align: left"><font style="font: 10pt Times New Roman, Times, Serif"> </font></td>
<td><font style="font: 10pt Times New Roman, Times, Serif"> </font></td>
<td style="text-align: left"><font style="font: 10pt Times New Roman, Times, Serif"> </font></td>
<td style="text-align: right"><font style="font: 10pt Times New Roman, Times, Serif"> </font></td>
<td style="text-align: left"><font style="font: 10pt Times New Roman, Times, Serif"> </font></td>
<td><font style="font: 10pt Times New Roman, Times, Serif"> </font></td>
<td style="text-align: left"><font style="font: 10pt Times New Roman, Times, Serif"> </font></td>
<td style="text-align: right"><font style="font: 10pt Times New Roman, Times, Serif"> </font></td>
<td style="text-align: left"><font style="font: 10pt Times New Roman, Times, Serif"> </font></td></tr>
<tr style="vertical-align: bottom; background-color: white">
<td style="text-align: justify"><font style="font: 10pt Times New Roman, Times, Serif"> </font></td>
<td><font style="font: 10pt Times New Roman, Times, Serif"> </font></td>
<td style="text-align: left"><font style="font: 10pt Times New Roman, Times, Serif"> </font></td>
<td style="text-align: right"><font style="font: 10pt Times New Roman, Times, Serif"> </font></td>
<td style="text-align: left"><font style="font: 10pt Times New Roman, Times, Serif"> </font></td>
<td><font style="font: 10pt Times New Roman, Times, Serif"> </font></td>
<td style="text-align: left"><font style="font: 10pt Times New Roman, Times, Serif"> </font></td>
<td style="text-align: right"><font style="font: 10pt Times New Roman, Times, Serif"> </font></td>
<td style="text-align: left"><font style="font: 10pt Times New Roman, Times, Serif"> </font></td>
<td><font style="font: 10pt Times New Roman, Times, Serif"> </font></td>
<td style="text-align: left"><font style="font: 10pt Times New Roman, Times, Serif"> </font></td>
<td style="text-align: right"><font style="font: 10pt Times New Roman, Times, Serif"> </font></td>
<td style="text-align: left"><font style="font: 10pt Times New Roman, Times, Serif"> </font></td>
<td><font style="font: 10pt Times New Roman, Times, Serif"> </font></td>
<td style="text-align: left"><font style="font: 10pt Times New Roman, Times, Serif"> </font></td>
<td style="text-align: right"><font style="font: 10pt Times New Roman, Times, Serif"> </font></td>
<td style="text-align: left"><font style="font: 10pt Times New Roman, Times, Serif"> </font></td></tr>
<tr style="vertical-align: bottom; background-color: rgb(204, 238, 255)">
<td style="width: 40%; text-align: justify"><font style="font: 10pt Times New Roman, Times, Serif">May
2011</font></td>
<td style="width: 1%"><font style="font: 10pt Times New Roman, Times, Serif"> </font></td>
<td style="width: 1%; text-align: left"><font style="font: 10pt Times New Roman, Times, Serif"> </font></td>
<td style="width: 12%; text-align: right"><font style="font: 10pt Times New Roman, Times, Serif">23,500</font></td>
<td style="width: 1%; text-align: left"><font style="font: 10pt Times New Roman, Times, Serif"> </font></td>
<td style="width: 1%"><font style="font: 10pt Times New Roman, Times, Serif"> </font></td>
<td style="width: 1%; text-align: left"><font style="font: 10pt Times New Roman, Times, Serif">$</font></td>
<td style="width: 12%; text-align: right"><font style="font: 10pt Times New Roman, Times, Serif">0.4095</font></td>
<td style="width: 1%; text-align: left"><font style="font: 10pt Times New Roman, Times, Serif"> </font></td>
<td style="width: 1%"><font style="font: 10pt Times New Roman, Times, Serif"> </font></td>
<td style="width: 1%; text-align: left"><font style="font: 10pt Times New Roman, Times, Serif"> </font></td>
<td style="width: 12%; text-align: right"><font style="font: 10pt Times New Roman, Times, Serif">23,500</font></td>
<td style="width: 1%; text-align: left"><font style="font: 10pt Times New Roman, Times, Serif"> </font></td>
<td style="width: 1%"><font style="font: 10pt Times New Roman, Times, Serif"> </font></td>
<td style="width: 1%; text-align: left"><font style="font: 10pt Times New Roman, Times, Serif"> </font></td>
<td style="width: 12%; text-align: right"><font style="font: 10pt Times New Roman, Times, Serif">976,500</font></td>
<td style="width: 1%; text-align: left"><font style="font: 10pt Times New Roman, Times, Serif"> </font></td></tr>
<tr style="vertical-align: bottom; background-color: white">
<td style="text-align: justify"><font style="font: 10pt Times New Roman, Times, Serif">August 2011</font></td>
<td><font style="font: 10pt Times New Roman, Times, Serif"> </font></td>
<td style="text-align: left"><font style="font: 10pt Times New Roman, Times, Serif"> </font></td>
<td style="text-align: right"><font style="font: 10pt Times New Roman, Times, Serif">9000</font></td>
<td style="text-align: left"><font style="font: 10pt Times New Roman, Times, Serif"> </font></td>
<td><font style="font: 10pt Times New Roman, Times, Serif"> </font></td>
<td style="text-align: left"><font style="font: 10pt Times New Roman, Times, Serif">$</font></td>
<td style="text-align: right"><font style="font: 10pt Times New Roman, Times, Serif">0.1007</font></td>
<td style="text-align: left"><font style="font: 10pt Times New Roman, Times, Serif"> </font></td>
<td><font style="font: 10pt Times New Roman, Times, Serif"> </font></td>
<td style="text-align: left"><font style="font: 10pt Times New Roman, Times, Serif"> </font></td>
<td style="text-align: right"><font style="font: 10pt Times New Roman, Times, Serif">9,000</font></td>
<td style="text-align: left"><font style="font: 10pt Times New Roman, Times, Serif"> </font></td>
<td><font style="font: 10pt Times New Roman, Times, Serif"> </font></td>
<td style="text-align: left"><font style="font: 10pt Times New Roman, Times, Serif"> </font></td>
<td style="text-align: right"><font style="font: 10pt Times New Roman, Times, Serif">967,500</font></td>
<td style="text-align: left"><font style="font: 10pt Times New Roman, Times, Serif"> </font></td></tr>
<tr style="vertical-align: bottom; background-color: rgb(204, 238, 255)">
<td style="text-align: justify; padding-bottom: 1pt"><font style="font: 10pt Times New Roman, Times, Serif">November
2011</font></td>
<td style="padding-bottom: 1pt"><font style="font: 10pt Times New Roman, Times, Serif"> </font></td>
<td style="text-align: left; border-bottom: black 1pt solid"><font style="font: 10pt Times New Roman, Times, Serif"> </font></td>
<td style="text-align: right; border-bottom: black 1pt solid"><font style="font: 10pt Times New Roman, Times, Serif">5500</font></td>
<td style="text-align: left; padding-bottom: 1pt"><font style="font: 10pt Times New Roman, Times, Serif"> </font></td>
<td style="padding-bottom: 1pt"><font style="font: 10pt Times New Roman, Times, Serif"> </font></td>
<td style="text-align: left; border-bottom: black 1pt solid"><font style="font: 10pt Times New Roman, Times, Serif">$</font></td>
<td style="text-align: right; border-bottom: black 1pt solid"><font style="font: 10pt Times New Roman, Times, Serif">0.0964</font></td>
<td style="text-align: left; padding-bottom: 1pt"><font style="font: 10pt Times New Roman, Times, Serif"> </font></td>
<td style="padding-bottom: 1pt"><font style="font: 10pt Times New Roman, Times, Serif"> </font></td>
<td style="text-align: left; border-bottom: black 1pt solid"><font style="font: 10pt Times New Roman, Times, Serif"> </font></td>
<td style="text-align: right; border-bottom: black 1pt solid"><font style="font: 10pt Times New Roman, Times, Serif">5,500</font></td>
<td style="text-align: left; padding-bottom: 1pt"><font style="font: 10pt Times New Roman, Times, Serif"> </font></td>
<td style="padding-bottom: 1pt"><font style="font: 10pt Times New Roman, Times, Serif"> </font></td>
<td style="text-align: left; padding-bottom: 1pt"><font style="font: 10pt Times New Roman, Times, Serif"> </font></td>
<td style="text-align: right; padding-bottom: 1pt"><font style="font: 10pt Times New Roman, Times, Serif">962,000</font></td>
<td style="text-align: left; padding-bottom: 1pt"><font style="font: 10pt Times New Roman, Times, Serif"> </font></td></tr>
<tr style="vertical-align: bottom; background-color: white">
<td style="text-align: justify"><font style="font: 10pt Times New Roman, Times, Serif"> </font></td>
<td><font style="font: 10pt Times New Roman, Times, Serif"> </font></td>
<td style="text-align: left"><font style="font: 10pt Times New Roman, Times, Serif"> </font></td>
<td style="text-align: right"><font style="font: 10pt Times New Roman, Times, Serif"> </font></td>
<td style="text-align: left"><font style="font: 10pt Times New Roman, Times, Serif"> </font></td>
<td><font style="font: 10pt Times New Roman, Times, Serif"> </font></td>
<td style="text-align: left"><font style="font: 10pt Times New Roman, Times, Serif"> </font></td>
<td style="text-align: right"><font style="font: 10pt Times New Roman, Times, Serif"> </font></td>
<td style="text-align: left"><font style="font: 10pt Times New Roman, Times, Serif"> </font></td>
<td><font style="font: 10pt Times New Roman, Times, Serif"> </font></td>
<td style="text-align: left"><font style="font: 10pt Times New Roman, Times, Serif"> </font></td>
<td style="text-align: right"><font style="font: 10pt Times New Roman, Times, Serif"> </font></td>
<td style="text-align: left"><font style="font: 10pt Times New Roman, Times, Serif"> </font></td>
<td><font style="font: 10pt Times New Roman, Times, Serif"> </font></td>
<td style="text-align: left"><font style="font: 10pt Times New Roman, Times, Serif"> </font></td>
<td style="text-align: right"><font style="font: 10pt Times New Roman, Times, Serif"> </font></td>
<td style="text-align: left"><font style="font: 10pt Times New Roman, Times, Serif"> </font></td></tr>
<tr style="vertical-align: bottom; background-color: rgb(204, 238, 255)">
<td style="text-align: left; padding-bottom: 2.5pt"><font style="font: 10pt Times New Roman, Times, Serif">Weighted-average
price paid per share</font></td>
<td style="padding-bottom: 2.5pt; font-weight: bold"><font style="font: 10pt Times New Roman, Times, Serif"> </font></td>
<td style="text-align: left; font-weight: bold; border-bottom: black 2.5pt double"><font style="font: 10pt Times New Roman, Times, Serif"> </font></td>
<td style="text-align: right; font-weight: bold; border-bottom: black 2.5pt double"><font style="font: 10pt Times New Roman, Times, Serif"><b>38,000</b></font></td>
<td style="text-align: left; padding-bottom: 2.5pt; font-weight: bold"><font style="font: 10pt Times New Roman, Times, Serif"><b> </b></font></td>
<td style="padding-bottom: 2.5pt; font-weight: bold"><font style="font: 10pt Times New Roman, Times, Serif"><b> </b></font></td>
<td style="text-align: left; font-weight: bold; border-bottom: black 2.5pt double"><font style="font: 10pt Times New Roman, Times, Serif"><b>$</b></font></td>
<td style="text-align: right; font-weight: bold; border-bottom: black 2.5pt double"><font style="font: 10pt Times New Roman, Times, Serif"><b>0.2910</b></font></td>
<td style="text-align: left; padding-bottom: 2.5pt; font-weight: bold"><font style="font: 10pt Times New Roman, Times, Serif"><b> </b></font></td>
<td style="padding-bottom: 2.5pt; font-weight: bold"><font style="font: 10pt Times New Roman, Times, Serif"><b> </b></font></td>
<td style="text-align: left; font-weight: bold; border-bottom: black 2.5pt double"><font style="font: 10pt Times New Roman, Times, Serif"><b> </b></font></td>
<td style="text-align: right; font-weight: bold; border-bottom: black 2.5pt double"><font style="font: 10pt Times New Roman, Times, Serif"><b>38,000</b></font></td>
<td style="text-align: left; padding-bottom: 2.5pt; font-weight: bold"><font style="font: 10pt Times New Roman, Times, Serif"><b> </b></font></td>
<td style="padding-bottom: 2.5pt"><font style="font: 10pt Times New Roman, Times, Serif"> </font></td>
<td style="text-align: left; padding-bottom: 2.5pt"><font style="font: 10pt Times New Roman, Times, Serif"> </font></td>
<td style="text-align: right; padding-bottom: 2.5pt"><font style="font: 10pt Times New Roman, Times, Serif"> </font></td>
<td style="text-align: left; padding-bottom: 2.5pt"><font style="font: 10pt Times New Roman, Times, Serif"> </font></td></tr>
</table>
<p style="color: red; font: 10pt/normal Times New Roman, Times, Serif; margin: 0; text-align: justify"><font style="font: 10pt Times New Roman, Times, Serif"><i>  </i></font></p>
<p style="font: 10pt/normal Times New Roman, Times, Serif; margin: 0; text-align: justify"><font style="font: 10pt Times New Roman, Times, Serif"><i>Series
B Preferred Shares</i></font></p>
<p style="font: 10pt/normal Times New Roman, Times, Serif; margin: 0; text-align: justify"><font style="font: 10pt Times New Roman, Times, Serif"> </font></p>
<p style="font: 10pt/normal Times New Roman, Times, Serif; margin: 0; text-align: justify"><font style="font: 10pt Times New Roman, Times, Serif">On
November 1, 2011, the Company and certain creditors entered into a Settlement Agreement (the "Settlement Agreement") whereby without
admitting any wrongdoing on either part, the parties settled all previous agreements and resolved any existing disputes. Under
the terms of the Settlement Agreement, the Company agreed to issue the creditors 45,000 shares of Series B Preferred Stock of
the Company on a pro-rata basis. Following the issuance and delivery of the shares of Series B Preferred Stock to said creditors,
as well as surrendering the undelivered shares, the Settlement Agreement resulted in the settlement of all debts, liabilities
and obligations between the parties.</font></p>
<p style="font: 10pt/normal Times New Roman, Times, Serif; margin: 0; text-align: justify"><font style="font: 10pt Times New Roman, Times, Serif"> </font></p>
<p style="font: 10pt/normal Times New Roman, Times, Serif; margin: 0; text-align: justify"><font style="font: 10pt Times New Roman, Times, Serif">The
Series B Preferred Stock has a stated value of $100 per share and is convertible into the Company’s common stock at a conversion
price of $0.30 per share representing 15,000,000 common shares. Furthermore, the Series B Preferred Stock votes on an as converted
basis and carries standard anti-dilution rights. These rights were subsequently removed, except in cases of stock dividends or
splits.</font></p>
<p style="font: 10pt/normal Times New Roman, Times, Serif; margin: 0; text-align: justify"><font style="font: 10pt Times New Roman, Times, Serif"><i> </i></font></p>
<p style="font: 10pt/normal Times New Roman, Times, Serif; margin: 0; text-align: justify"><font style="font: 10pt Times New Roman, Times, Serif"><i>Series
C Preferred Shares</i></font></p>
<p style="font: 10pt/normal Times New Roman, Times, Serif; margin: 0; text-align: justify"><font style="font: 10pt Times New Roman, Times, Serif"> </font></p>
<p style="font: 10pt/normal Times New Roman, Times, Serif; margin: 0; text-align: justify"><font style="font: 10pt Times New Roman, Times, Serif">On
April 29, 2011, GV Global Communications, Inc. (“GV”) provided funding to the Company in the aggregate principal amount
of $111,000 (the “Loan”).  On September 25, 2012, the Company and GV entered into a Conversion Agreement
pursuant to which the Company agreed to convert the Loan into 10,000 shares of Series C Preferred Stock of the Company, which
was approved by the Board of Directors.</font></p>
<p style="font: 10pt/normal Times New Roman, Times, Serif; margin: 0; text-align: justify"><font style="font: 10pt Times New Roman, Times, Serif"> </font></p>
<p style="font: 10pt/normal Times New Roman, Times, Serif; margin: 0; text-align: justify"><font style="font: 10pt Times New Roman, Times, Serif">Each
share of Series C Preferred Stock is convertible, at the option of GV, into such number of shares of common stock of the Company
as determined by dividing the Stated Value (as defined below) by the Conversion Price (as defined below).  The Conversion
Price for each share is equal to a 50% discount to the average of the lowest three lowest closing bid prices of the Company’s
common stock during the 10-day trading period prior to the conversion with a minimum conversion price of $0.002.  The
stated value is $11.00 per share (the “Stated Value”).  The Series C Preferred Stock has no liquidation
preference, does not pay dividends and the holder of Series C Preferred Stock shall be entitled to one vote for each share of
common stock that the Series C Preferred Stock shall be convertible into.   <font style="background-color: white">GV
has contractually agreed to restrict its ability to convert the Series C Preferred Stock and receive shares of the Company's common
stock such that the number of shares of the Company's common stock held by it and its affiliates after such conversion does not
exceed 4.9% of the then issued and outstanding shares of the Company's common stock. </font></font></p>
<p style="font: 10pt/normal Times New Roman, Times, Serif; margin: 0; text-align: justify"><font style="font: 10pt Times New Roman, Times, Serif"> </font></p>
<p style="font: 10pt/normal Times New Roman, Times, Serif; margin: 0; text-align: justify"><font style="font: 10pt Times New Roman, Times, Serif">Effective
October 21, 2013, GV notified the Company of its intention to convert 345 of Series C Preferred into 1,897,500 shares of common
stock of the Company, representing a conversion price of $0.002 per share. The Company instructed its transfer agent to issue
the required shares to GV. On November 5, 2013, 2013, GV notified the Company of the additional conversion of 380 of Series C
Preferred into 2,090,000 shares of common stock of the Company. On November 11, 2013, 2013, GV notified the Company of the additional
conversion of 380 of Series C Preferred into 2,090,000 shares of common stock of the Company. On November 26, 2013, 2013, GV notified
the Company of the additional conversion of 425 of Series C Preferred into 2,337,500 shares of common stock of the Company. On
January 2, GV notified the Company of the additional conversion of 1,800 of its Series C Preferred into 9,900,000 shares of common
stock of the Company. After these conversions, GV holds 6,670 Series C Preferred shares as of March 31, 2014.</font></p>
<p style="font: 10pt/normal Times New Roman, Times, Serif; margin: 0; text-align: justify"><font style="font: 10pt Times New Roman, Times, Serif"> </font></p>
<p style="font: 10pt/normal Times New Roman, Times, Serif; margin: 0; text-align: justify"><font style="font: 10pt Times New Roman, Times, Serif">During
the six months ended June 30, 2014, GV Global Communications, Inc converted 7,770 of its Series C Preferred Stocks into 54,651,667
common shares. As of June 30, 2014, GV still holds 700 Series C Preferred Shares.</font></p>
<p style="font: 10pt/normal Times New Roman, Times, Serif; margin: 0; text-align: justify"><font style="font: 10pt Times New Roman, Times, Serif"> </font></p>
<p style="font: 10pt/normal Times New Roman, Times, Serif; margin: 0; text-align: justify"><font style="font: 10pt Times New Roman, Times, Serif"></font></p>
<p style="font: 10pt/normal Times New Roman, Times, Serif; margin: 0; text-align: justify"><font style="font: 10pt Times New Roman, Times, Serif">The
following table shows how the conversions were accounted for within the Series C and Common Stock Additional Paid in Capital accounts:</font></p>
<p style="font: 10pt/normal Times New Roman, Times, Serif; margin: 0; text-align: center; text-indent: 0.5in"><font style="font: 10pt Times New Roman, Times, Serif"> </font></p>
<table cellspacing="0" cellpadding="0" style="font-size: 10pt; line-height: normal; width: 100%; border-collapse: collapse; font-size-adjust: none; font-stretch: normal">
<tr style="vertical-align: bottom">
<td><font style="font: 10pt Times New Roman, Times, Serif"><b> </b></font></td>
<td style="font-weight: bold"><font style="font: 10pt Times New Roman, Times, Serif"><b> </b></font></td>
<td colspan="6" style="text-align: center; font-weight: bold"><font style="font: 10pt Times New Roman, Times, Serif"><b>Series
C</b></font></td>
<td style="font-weight: bold"><font style="font: 10pt Times New Roman, Times, Serif"><b> </b></font></td>
<td><font style="font: 10pt Times New Roman, Times, Serif"><b> </b></font></td>
<td colspan="2"><font style="font: 10pt Times New Roman, Times, Serif"><b> </b></font></td>
<td><font style="font: 10pt Times New Roman, Times, Serif"><b> </b></font></td>
<td><font style="font: 10pt Times New Roman, Times, Serif"><b> </b></font></td>
<td colspan="2"><font style="font: 10pt Times New Roman, Times, Serif"><b> </b></font></td>
<td><font style="font: 10pt Times New Roman, Times, Serif"><b> </b></font></td>
<td style="font-weight: bold"><font style="font: 10pt Times New Roman, Times, Serif"><b> </b></font></td>
<td colspan="2" style="text-align: center; font-weight: bold"><font style="font: 10pt Times New Roman, Times, Serif"><b>Series
C</b></font></td>
<td style="font-weight: bold"><font style="font: 10pt Times New Roman, Times, Serif"><b> </b></font></td>
<td><font style="font: 10pt Times New Roman, Times, Serif"><b> </b></font></td>
<td colspan="2"><font style="font: 10pt Times New Roman, Times, Serif"><b> </b></font></td>
<td><font style="font: 10pt Times New Roman, Times, Serif"><b> </b></font></td></tr>
<tr style="vertical-align: bottom">
<td><font style="font: 10pt Times New Roman, Times, Serif"><b> </b></font></td>
<td style="font-weight: bold"><font style="font: 10pt Times New Roman, Times, Serif"><b> </b></font></td>
<td colspan="6" style="text-align: center; font-weight: bold"><font style="font: 10pt Times New Roman, Times, Serif"><b>Convertible
Preferred</b></font></td>
<td style="font-weight: bold"><font style="font: 10pt Times New Roman, Times, Serif"><b> </b></font></td>
<td><font style="font: 10pt Times New Roman, Times, Serif"><b> </b></font></td>
<td colspan="2"><font style="font: 10pt Times New Roman, Times, Serif"><b> </b></font></td>
<td><font style="font: 10pt Times New Roman, Times, Serif"><b> </b></font></td>
<td><font style="font: 10pt Times New Roman, Times, Serif"><b> </b></font></td>
<td colspan="2"><font style="font: 10pt Times New Roman, Times, Serif"><b> </b></font></td>
<td><font style="font: 10pt Times New Roman, Times, Serif"><b> </b></font></td>
<td style="font-weight: bold"><font style="font: 10pt Times New Roman, Times, Serif"><b> </b></font></td>
<td colspan="2" style="text-align: center; font-weight: bold"><font style="font: 10pt Times New Roman, Times, Serif"><b>Convertible
Preferred</b></font></td>
<td style="font-weight: bold"><font style="font: 10pt Times New Roman, Times, Serif"><b> </b></font></td>
<td><font style="font: 10pt Times New Roman, Times, Serif"><b> </b></font></td>
<td colspan="2"><font style="font: 10pt Times New Roman, Times, Serif"><b> </b></font></td>
<td><font style="font: 10pt Times New Roman, Times, Serif"><b> </b></font></td></tr>
<tr style="vertical-align: bottom">
<td><font style="font: 10pt Times New Roman, Times, Serif"><b> </b></font></td>
<td style="padding-bottom: 1pt; font-weight: bold"><font style="font: 10pt Times New Roman, Times, Serif"><b> </b></font></td>
<td colspan="6" style="border-bottom: black 1pt solid; text-align: center; font-weight: bold"><font style="font: 10pt Times New Roman, Times, Serif"><b>Stock</b></font></td>
<td style="padding-bottom: 1pt; font-weight: bold"><font style="font: 10pt Times New Roman, Times, Serif"><b> </b></font></td>
<td style="padding-bottom: 1pt; font-weight: bold"><font style="font: 10pt Times New Roman, Times, Serif"><b> </b></font></td>
<td colspan="6" style="border-bottom: black 1pt solid; text-align: center; font-weight: bold"><font style="font: 10pt Times New Roman, Times, Serif"><b>Common
Stock</b></font></td>
<td style="padding-bottom: 1pt; font-weight: bold"><font style="font: 10pt Times New Roman, Times, Serif"><b> </b></font></td>
<td style="padding-bottom: 1pt; font-weight: bold"><font style="font: 10pt Times New Roman, Times, Serif"><b> </b></font></td>
<td colspan="2" style="border-bottom: black 1pt solid; text-align: center; font-weight: bold"><font style="font: 10pt Times New Roman, Times, Serif"><b>Stock</b></font></td>
<td style="padding-bottom: 1pt; font-weight: bold"><font style="font: 10pt Times New Roman, Times, Serif"><b> </b></font></td>
<td style="padding-bottom: 1pt; font-weight: bold"><font style="font: 10pt Times New Roman, Times, Serif"><b> </b></font></td>
<td colspan="2" style="border-bottom: black 1pt solid; text-align: center; font-weight: bold"><font style="font: 10pt Times New Roman, Times, Serif"><b>Common
Stock</b></font></td>
<td style="padding-bottom: 1pt; font-weight: bold"><font style="font: 10pt Times New Roman, Times, Serif"><b> </b></font></td></tr>
<tr style="vertical-align: bottom">
<td><font style="font: 10pt Times New Roman, Times, Serif"><b> </b></font></td>
<td><font style="font: 10pt Times New Roman, Times, Serif"><b> </b></font></td>
<td colspan="2"><font style="font: 10pt Times New Roman, Times, Serif"><b> </b></font></td>
<td><font style="font: 10pt Times New Roman, Times, Serif"><b> </b></font></td>
<td><font style="font: 10pt Times New Roman, Times, Serif"><b> </b></font></td>
<td colspan="2"><font style="font: 10pt Times New Roman, Times, Serif"><b> </b></font></td>
<td><font style="font: 10pt Times New Roman, Times, Serif"><b> </b></font></td>
<td><font style="font: 10pt Times New Roman, Times, Serif"><b> </b></font></td>
<td colspan="2"><font style="font: 10pt Times New Roman, Times, Serif"><b> </b></font></td>
<td><font style="font: 10pt Times New Roman, Times, Serif"><b> </b></font></td>
<td><font style="font: 10pt Times New Roman, Times, Serif"><b> </b></font></td>
<td colspan="2"><font style="font: 10pt Times New Roman, Times, Serif"><b> </b></font></td>
<td><font style="font: 10pt Times New Roman, Times, Serif"><b> </b></font></td>
<td style="font-weight: bold"><font style="font: 10pt Times New Roman, Times, Serif"><b> </b></font></td>
<td colspan="2" style="text-align: center; font-weight: bold"><font style="font: 10pt Times New Roman, Times, Serif"><b>Additional
Paid</b></font></td>
<td style="font-weight: bold"><font style="font: 10pt Times New Roman, Times, Serif"><b> </b></font></td>
<td style="font-weight: bold"><font style="font: 10pt Times New Roman, Times, Serif"><b> </b></font></td>
<td colspan="2" style="text-align: center; font-weight: bold"><font style="font: 10pt Times New Roman, Times, Serif"><b>Additional
Paid</b></font></td>
<td style="font-weight: bold"><font style="font: 10pt Times New Roman, Times, Serif"><b> </b></font></td></tr>
<tr style="vertical-align: bottom">
<td><font style="font: 10pt Times New Roman, Times, Serif"><b> </b></font></td>
<td style="padding-bottom: 1pt; font-weight: bold"><font style="font: 10pt Times New Roman, Times, Serif"><b> </b></font></td>
<td colspan="2" style="border-bottom: black 1pt solid; text-align: center; font-weight: bold"><font style="font: 10pt Times New Roman, Times, Serif"><b>Shares</b></font></td>
<td style="padding-bottom: 1pt; font-weight: bold"><font style="font: 10pt Times New Roman, Times, Serif"><b> </b></font></td>
<td style="padding-bottom: 1pt; font-weight: bold"><font style="font: 10pt Times New Roman, Times, Serif"><b> </b></font></td>
<td colspan="2" style="border-bottom: black 1pt solid; text-align: center; font-weight: bold"><font style="font: 10pt Times New Roman, Times, Serif"><b>Amount</b></font></td>
<td style="padding-bottom: 1pt; font-weight: bold"><font style="font: 10pt Times New Roman, Times, Serif"><b> </b></font></td>
<td style="padding-bottom: 1pt; font-weight: bold"><font style="font: 10pt Times New Roman, Times, Serif"><b> </b></font></td>
<td colspan="2" style="border-bottom: black 1pt solid; text-align: center; font-weight: bold"><font style="font: 10pt Times New Roman, Times, Serif"><b>Shares</b></font></td>
<td style="padding-bottom: 1pt; font-weight: bold"><font style="font: 10pt Times New Roman, Times, Serif"><b> </b></font></td>
<td style="padding-bottom: 1pt; font-weight: bold"><font style="font: 10pt Times New Roman, Times, Serif"><b> </b></font></td>
<td colspan="2" style="border-bottom: black 1pt solid; text-align: center; font-weight: bold"><font style="font: 10pt Times New Roman, Times, Serif"><b>Amount</b></font></td>
<td style="padding-bottom: 1pt; font-weight: bold"><font style="font: 10pt Times New Roman, Times, Serif"><b> </b></font></td>
<td style="padding-bottom: 1pt; font-weight: bold"><font style="font: 10pt Times New Roman, Times, Serif"><b> </b></font></td>
<td colspan="2" style="border-bottom: black 1pt solid; text-align: center; font-weight: bold"><font style="font: 10pt Times New Roman, Times, Serif"><b>In
Capital</b></font></td>
<td style="padding-bottom: 1pt; font-weight: bold"><font style="font: 10pt Times New Roman, Times, Serif"><b> </b></font></td>
<td style="padding-bottom: 1pt; font-weight: bold"><font style="font: 10pt Times New Roman, Times, Serif"><b> </b></font></td>
<td colspan="2" style="border-bottom: black 1pt solid; text-align: center; font-weight: bold"><font style="font: 10pt Times New Roman, Times, Serif"><b>In
Capital</b></font></td>
<td style="padding-bottom: 1pt; font-weight: bold"><font style="font: 10pt Times New Roman, Times, Serif"><b> </b></font></td></tr>
<tr style="vertical-align: bottom; background-color: rgb(204, 238, 255)">
<td style="width: 34%; padding-bottom: 2.5pt; font-weight: bold"><font style="font: 10pt Times New Roman, Times, Serif"><b>Balances
at December 31, 2013</b></font></td>
<td style="width: 1%; padding-bottom: 2.5pt"><font style="font: 10pt Times New Roman, Times, Serif"> </font></td>
<td style="width: 1%; text-align: left; border-bottom: black 2.5pt double"><font style="font: 10pt Times New Roman, Times, Serif"> </font></td>
<td style="width: 8%; text-align: right; border-bottom: black 2.5pt double"><font style="font: 10pt Times New Roman, Times, Serif">8,470</font></td>
<td style="width: 1%; text-align: left; padding-bottom: 2.5pt"><font style="font: 10pt Times New Roman, Times, Serif"> </font></td>
<td style="width: 1%; padding-bottom: 2.5pt"><font style="font: 10pt Times New Roman, Times, Serif"> </font></td>
<td style="width: 1%; text-align: left; border-bottom: black 2.5pt double"><font style="font: 10pt Times New Roman, Times, Serif">$</font></td>
<td style="width: 8%; text-align: right; border-bottom: black 2.5pt double"><font style="font: 10pt Times New Roman, Times, Serif">-</font></td>
<td style="width: 1%; text-align: left; padding-bottom: 2.5pt"><font style="font: 10pt Times New Roman, Times, Serif"> </font></td>
<td style="width: 1%; padding-bottom: 2.5pt"><font style="font: 10pt Times New Roman, Times, Serif"> </font></td>
<td style="width: 1%; text-align: left; border-bottom: black 2.5pt double"><font style="font: 10pt Times New Roman, Times, Serif"> </font></td>
<td style="width: 8%; text-align: right; border-bottom: black 2.5pt double"><font style="font: 10pt Times New Roman, Times, Serif">247,303,586</font></td>
<td style="width: 1%; text-align: left; padding-bottom: 2.5pt"><font style="font: 10pt Times New Roman, Times, Serif"> </font></td>
<td style="width: 1%; padding-bottom: 2.5pt"><font style="font: 10pt Times New Roman, Times, Serif"> </font></td>
<td style="width: 1%; text-align: left; border-bottom: black 2.5pt double"><font style="font: 10pt Times New Roman, Times, Serif">$</font></td>
<td style="width: 8%; text-align: right; border-bottom: black 2.5pt double"><font style="font: 10pt Times New Roman, Times, Serif">2,473</font></td>
<td style="width: 1%; text-align: left; padding-bottom: 2.5pt"><font style="font: 10pt Times New Roman, Times, Serif"> </font></td>
<td style="width: 1%; padding-bottom: 2.5pt"><font style="font: 10pt Times New Roman, Times, Serif"> </font></td>
<td style="width: 1%; text-align: left; border-bottom: black 2.5pt double"><font style="font: 10pt Times New Roman, Times, Serif">$</font></td>
<td style="width: 8%; text-align: right; border-bottom: black 2.5pt double"><font style="font: 10pt Times New Roman, Times, Serif">188,322</font></td>
<td style="width: 1%; text-align: left; padding-bottom: 2.5pt"><font style="font: 10pt Times New Roman, Times, Serif"> </font></td>
<td style="width: 1%; padding-bottom: 2.5pt"><font style="font: 10pt Times New Roman, Times, Serif"> </font></td>
<td style="width: 1%; text-align: left; border-bottom: black 2.5pt double"><font style="font: 10pt Times New Roman, Times, Serif">$</font></td>
<td style="width: 8%; text-align: right; border-bottom: black 2.5pt double"><font style="font: 10pt Times New Roman, Times, Serif">2,050,621</font></td>
<td style="width: 1%; text-align: left; padding-bottom: 2.5pt"><font style="font: 10pt Times New Roman, Times, Serif"> </font></td></tr>
<tr style="vertical-align: bottom; background-color: white">
<td><font style="font: 10pt Times New Roman, Times, Serif"> </font></td>
<td><font style="font: 10pt Times New Roman, Times, Serif"> </font></td>
<td style="text-align: left"><font style="font: 10pt Times New Roman, Times, Serif"> </font></td>
<td style="text-align: right"><font style="font: 10pt Times New Roman, Times, Serif"> </font></td>
<td style="text-align: left"><font style="font: 10pt Times New Roman, Times, Serif"> </font></td>
<td><font style="font: 10pt Times New Roman, Times, Serif"> </font></td>
<td style="text-align: left"><font style="font: 10pt Times New Roman, Times, Serif"> </font></td>
<td style="text-align: right"><font style="font: 10pt Times New Roman, Times, Serif"> </font></td>
<td style="text-align: left"><font style="font: 10pt Times New Roman, Times, Serif"> </font></td>
<td><font style="font: 10pt Times New Roman, Times, Serif"> </font></td>
<td style="text-align: left"><font style="font: 10pt Times New Roman, Times, Serif"> </font></td>
<td style="text-align: right"><font style="font: 10pt Times New Roman, Times, Serif"> </font></td>
<td style="text-align: left"><font style="font: 10pt Times New Roman, Times, Serif"> </font></td>
<td><font style="font: 10pt Times New Roman, Times, Serif"> </font></td>
<td style="text-align: left"><font style="font: 10pt Times New Roman, Times, Serif"> </font></td>
<td style="text-align: right"><font style="font: 10pt Times New Roman, Times, Serif"> </font></td>
<td style="text-align: left"><font style="font: 10pt Times New Roman, Times, Serif"> </font></td>
<td><font style="font: 10pt Times New Roman, Times, Serif"> </font></td>
<td style="text-align: left"><font style="font: 10pt Times New Roman, Times, Serif"> </font></td>
<td style="text-align: right"><font style="font: 10pt Times New Roman, Times, Serif"> </font></td>
<td style="text-align: left"><font style="font: 10pt Times New Roman, Times, Serif"> </font></td>
<td><font style="font: 10pt Times New Roman, Times, Serif"> </font></td>
<td style="text-align: left"><font style="font: 10pt Times New Roman, Times, Serif"> </font></td>
<td style="text-align: right"><font style="font: 10pt Times New Roman, Times, Serif"> </font></td>
<td style="text-align: left"><font style="font: 10pt Times New Roman, Times, Serif"> </font></td></tr>
<tr style="vertical-align: bottom; background-color: rgb(204, 238, 255)">
<td style="text-align: left"><font style="font: 10pt Times New Roman, Times, Serif">Conversion of Series
C Preferred Stock to Common Stock</font></td>
<td><font style="font: 10pt Times New Roman, Times, Serif"> </font></td>
<td style="text-align: left"><font style="font: 10pt Times New Roman, Times, Serif"> </font></td>
<td style="text-align: right"><font style="font: 10pt Times New Roman, Times, Serif">(7,770</font></td>
<td style="text-align: left"><font style="font: 10pt Times New Roman, Times, Serif">)</font></td>
<td><font style="font: 10pt Times New Roman, Times, Serif"> </font></td>
<td style="text-align: left"><font style="font: 10pt Times New Roman, Times, Serif"> </font></td>
<td style="text-align: right"><font style="font: 10pt Times New Roman, Times, Serif"> </font></td>
<td style="text-align: left"><font style="font: 10pt Times New Roman, Times, Serif"> </font></td>
<td><font style="font: 10pt Times New Roman, Times, Serif"> </font></td>
<td style="text-align: left"><font style="font: 10pt Times New Roman, Times, Serif"> </font></td>
<td style="text-align: right"><font style="font: 10pt Times New Roman, Times, Serif">64,551,667</font></td>
<td style="text-align: left"><font style="font: 10pt Times New Roman, Times, Serif"> </font></td>
<td><font style="font: 10pt Times New Roman, Times, Serif"> </font></td>
<td style="text-align: left"><font style="font: 10pt Times New Roman, Times, Serif"> </font></td>
<td style="text-align: right"><font style="font: 10pt Times New Roman, Times, Serif">646</font></td>
<td style="text-align: left"><font style="font: 10pt Times New Roman, Times, Serif"> </font></td>
<td><font style="font: 10pt Times New Roman, Times, Serif"> </font></td>
<td style="text-align: left"><font style="font: 10pt Times New Roman, Times, Serif"> </font></td>
<td style="text-align: right"><font style="font: 10pt Times New Roman, Times, Serif">(172,758</font></td>
<td style="text-align: left"><font style="font: 10pt Times New Roman, Times, Serif">)</font></td>
<td><font style="font: 10pt Times New Roman, Times, Serif"> </font></td>
<td style="text-align: left"><font style="font: 10pt Times New Roman, Times, Serif"> </font></td>
<td style="text-align: right"><font style="font: 10pt Times New Roman, Times, Serif">172,112</font></td>
<td style="text-align: left"><font style="font: 10pt Times New Roman, Times, Serif"> </font></td></tr>
<tr style="vertical-align: bottom; background-color: white">
<td style="text-align: left; padding-bottom: 1pt"><font style="font: 10pt Times New Roman, Times, Serif">Conversion
of note payable to common stock</font></td>
<td style="padding-bottom: 1pt"><font style="font: 10pt Times New Roman, Times, Serif"> </font></td>
<td style="text-align: left; border-bottom: black 1pt solid"><font style="font: 10pt Times New Roman, Times, Serif"> </font></td>
<td style="text-align: right; border-bottom: black 1pt solid"><font style="font: 10pt Times New Roman, Times, Serif"> </font></td>
<td style="text-align: left; padding-bottom: 1pt"><font style="font: 10pt Times New Roman, Times, Serif"> </font></td>
<td style="padding-bottom: 1pt"><font style="font: 10pt Times New Roman, Times, Serif"> </font></td>
<td style="text-align: left; border-bottom: black 1pt solid"><font style="font: 10pt Times New Roman, Times, Serif"> </font></td>
<td style="text-align: right; border-bottom: black 1pt solid"><font style="font: 10pt Times New Roman, Times, Serif"> </font></td>
<td style="text-align: left; padding-bottom: 1pt"><font style="font: 10pt Times New Roman, Times, Serif"> </font></td>
<td style="padding-bottom: 1pt"><font style="font: 10pt Times New Roman, Times, Serif"> </font></td>
<td style="text-align: left; border-bottom: black 1pt solid"><font style="font: 10pt Times New Roman, Times, Serif"> </font></td>
<td style="text-align: right; border-bottom: black 1pt solid"><font style="font: 10pt Times New Roman, Times, Serif">122,994,477</font></td>
<td style="text-align: left; padding-bottom: 1pt"><font style="font: 10pt Times New Roman, Times, Serif"> </font></td>
<td style="padding-bottom: 1pt"><font style="font: 10pt Times New Roman, Times, Serif"> </font></td>
<td style="text-align: left; border-bottom: black 1pt solid"><font style="font: 10pt Times New Roman, Times, Serif"> </font></td>
<td style="text-align: right; border-bottom: black 1pt solid"><font style="font: 10pt Times New Roman, Times, Serif">1,230</font></td>
<td style="text-align: left; padding-bottom: 1pt"><font style="font: 10pt Times New Roman, Times, Serif"> </font></td>
<td style="padding-bottom: 1pt"><font style="font: 10pt Times New Roman, Times, Serif"> </font></td>
<td style="text-align: left; border-bottom: black 1pt solid"><font style="font: 10pt Times New Roman, Times, Serif"> </font></td>
<td style="text-align: right; border-bottom: black 1pt solid"><font style="font: 10pt Times New Roman, Times, Serif"> </font></td>
<td style="text-align: left; padding-bottom: 1pt"><font style="font: 10pt Times New Roman, Times, Serif"> </font></td>
<td style="padding-bottom: 1pt"><font style="font: 10pt Times New Roman, Times, Serif"> </font></td>
<td style="text-align: left; border-bottom: black 1pt solid"><font style="font: 10pt Times New Roman, Times, Serif"> </font></td>
<td style="text-align: right; border-bottom: black 1pt solid"><font style="font: 10pt Times New Roman, Times, Serif">91,980</font></td>
<td style="text-align: left; padding-bottom: 1pt"><font style="font: 10pt Times New Roman, Times, Serif"> </font></td></tr>
<tr style="vertical-align: bottom; background-color: rgb(204, 238, 255)">
<td><font style="font: 10pt Times New Roman, Times, Serif"> </font></td>
<td><font style="font: 10pt Times New Roman, Times, Serif"> </font></td>
<td style="text-align: left"><font style="font: 10pt Times New Roman, Times, Serif"> </font></td>
<td style="text-align: right"><font style="font: 10pt Times New Roman, Times, Serif"> </font></td>
<td style="text-align: left"><font style="font: 10pt Times New Roman, Times, Serif"> </font></td>
<td><font style="font: 10pt Times New Roman, Times, Serif"> </font></td>
<td style="text-align: left"><font style="font: 10pt Times New Roman, Times, Serif"> </font></td>
<td style="text-align: right"><font style="font: 10pt Times New Roman, Times, Serif"> </font></td>
<td style="text-align: left"><font style="font: 10pt Times New Roman, Times, Serif"> </font></td>
<td><font style="font: 10pt Times New Roman, Times, Serif"> </font></td>
<td style="text-align: left"><font style="font: 10pt Times New Roman, Times, Serif"> </font></td>
<td style="text-align: right"><font style="font: 10pt Times New Roman, Times, Serif"> </font></td>
<td style="text-align: left"><font style="font: 10pt Times New Roman, Times, Serif"> </font></td>
<td><font style="font: 10pt Times New Roman, Times, Serif"> </font></td>
<td style="text-align: left"><font style="font: 10pt Times New Roman, Times, Serif"> </font></td>
<td style="text-align: right"><font style="font: 10pt Times New Roman, Times, Serif"> </font></td>
<td style="text-align: left"><font style="font: 10pt Times New Roman, Times, Serif"> </font></td>
<td><font style="font: 10pt Times New Roman, Times, Serif"> </font></td>
<td style="text-align: left"><font style="font: 10pt Times New Roman, Times, Serif"> </font></td>
<td style="text-align: right"><font style="font: 10pt Times New Roman, Times, Serif"> </font></td>
<td style="text-align: left"><font style="font: 10pt Times New Roman, Times, Serif"> </font></td>
<td><font style="font: 10pt Times New Roman, Times, Serif"> </font></td>
<td style="text-align: left"><font style="font: 10pt Times New Roman, Times, Serif"> </font></td>
<td style="text-align: right"><font style="font: 10pt Times New Roman, Times, Serif"> </font></td>
<td style="text-align: left"><font style="font: 10pt Times New Roman, Times, Serif"> </font></td></tr>
<tr style="vertical-align: bottom; background-color: white">
<td style="padding-bottom: 2.5pt; font-weight: bold"><font style="font: 10pt Times New Roman, Times, Serif"><b>Balances
at June 30, 2014</b></font></td>
<td style="padding-bottom: 2.5pt"><font style="font: 10pt Times New Roman, Times, Serif"> </font></td>
<td style="text-align: left; border-bottom: black 2.5pt double"><font style="font: 10pt Times New Roman, Times, Serif"> </font></td>
<td style="text-align: right; border-bottom: black 2.5pt double"><font style="font: 10pt Times New Roman, Times, Serif">700</font></td>
<td style="text-align: left; padding-bottom: 2.5pt"><font style="font: 10pt Times New Roman, Times, Serif"> </font></td>
<td style="padding-bottom: 2.5pt"><font style="font: 10pt Times New Roman, Times, Serif"> </font></td>
<td style="text-align: left; border-bottom: black 2.5pt double"><font style="font: 10pt Times New Roman, Times, Serif">$</font></td>
<td style="text-align: right; border-bottom: black 2.5pt double"><font style="font: 10pt Times New Roman, Times, Serif">-</font></td>
<td style="text-align: left; padding-bottom: 2.5pt"><font style="font: 10pt Times New Roman, Times, Serif"> </font></td>
<td style="padding-bottom: 2.5pt"><font style="font: 10pt Times New Roman, Times, Serif"> </font></td>
<td style="text-align: left; border-bottom: black 2.5pt double"><font style="font: 10pt Times New Roman, Times, Serif"> </font></td>
<td style="text-align: right; border-bottom: black 2.5pt double"><font style="font: 10pt Times New Roman, Times, Serif">434,849,730</font></td>
<td style="text-align: left; padding-bottom: 2.5pt"><font style="font: 10pt Times New Roman, Times, Serif"> </font></td>
<td style="padding-bottom: 2.5pt"><font style="font: 10pt Times New Roman, Times, Serif"> </font></td>
<td style="text-align: left; border-bottom: black 2.5pt double"><font style="font: 10pt Times New Roman, Times, Serif">$</font></td>
<td style="text-align: right; border-bottom: black 2.5pt double"><font style="font: 10pt Times New Roman, Times, Serif">4,349</font></td>
<td style="text-align: left; padding-bottom: 2.5pt"><font style="font: 10pt Times New Roman, Times, Serif"> </font></td>
<td style="padding-bottom: 2.5pt"><font style="font: 10pt Times New Roman, Times, Serif"> </font></td>
<td style="text-align: left; border-bottom: black 2.5pt double"><font style="font: 10pt Times New Roman, Times, Serif">$</font></td>
<td style="text-align: right; border-bottom: black 2.5pt double"><font style="font: 10pt Times New Roman, Times, Serif">15,564</font></td>
<td style="text-align: left; padding-bottom: 2.5pt"><font style="font: 10pt Times New Roman, Times, Serif"> </font></td>
<td style="padding-bottom: 2.5pt"><font style="font: 10pt Times New Roman, Times, Serif"> </font></td>
<td style="text-align: left; border-bottom: black 2.5pt double"><font style="font: 10pt Times New Roman, Times, Serif">$</font></td>
<td style="text-align: right; border-bottom: black 2.5pt double"><font style="font: 10pt Times New Roman, Times, Serif">2,314,713</font></td>
<td style="text-align: left; padding-bottom: 2.5pt"><font style="font: 10pt Times New Roman, Times, Serif"> </font></td></tr>
</table>
<p style="font: 10pt/normal Times New Roman, Times, Serif; margin: 0; text-align: center"><font style="font: 10pt Times New Roman, Times, Serif"> </font></p>
<p style="font: 10pt/normal Times New Roman, Times, Serif; margin: 0; text-align: justify"><font style="font: 10pt Times New Roman, Times, Serif">This
presentation shows the impact on the Additional Paid-in Capital account for the Series C Preferred and Common Stock, whereas the
financial statements present the Additional Paid-in Capital as one combined account.</font></p>
<p style="font: 10pt/normal Times New Roman, Times, Serif; margin: 0; text-align: justify"><font style="font: 10pt Times New Roman, Times, Serif"> </font></p>
<p style="font: 10pt/normal Times New Roman, Times, Serif; margin: 0; text-align: justify"><font style="font: 10pt Times New Roman, Times, Serif">The
issuance of the Series C Preferred Stock was made in reliance upon exemptions from registration pursuant to Section 4(2) under
the Securities Act of 1933 and Rule 506 promulgated under Regulation D thereunder.  GV is an accredited investor as
defined in Rule 501 of Regulation D promulgated under the Securities Act of 1933. <font style="background-color: white"> 
</font></font></p>
<p style="font: 10pt/normal Times New Roman, Times, Serif; margin: 0; text-align: justify"><font style="font: 10pt Times New Roman, Times, Serif"><b>11.
Related Parties</b></font></p>
<p style="font: 10pt/normal Times New Roman, Times, Serif; margin: 0; text-align: justify"><font style="font: 10pt Times New Roman, Times, Serif"> </font></p>
<p style="font: 10pt/normal Times New Roman, Times, Serif; margin: 0; text-align: justify"><font style="font: 10pt Times New Roman, Times, Serif">Related
parties are natural persons or other entities that have the ability, directly or indirectly, to control another party or exercise
significant influence over the party in making financial and operating decisions. Related parties include other parties that are
subject to common control or that are subject to common significant influences.</font></p>
<p style="font: 10pt/normal Times New Roman, Times, Serif; margin: 0; text-align: justify"><font style="font: 10pt Times New Roman, Times, Serif"> </font></p>
<p style="font: 10pt/normal Times New Roman, Times, Serif; margin: 0; text-align: justify"><font style="font: 10pt Times New Roman, Times, Serif">Effective
January 2, 2012, Erik Klinger was appointed by the Company to serve as the Chief Financial Officer, on a part-time basis, and
a Director of the Company. Mr. Klinger earned fees of $24,000 and $49,200, in the six months ended June 30, 2014 and the fiscal
year ended December 31, 2013, respectively.</font></p>
<p style="font: 10pt/normal Times New Roman, Times, Serif; margin: 0; text-align: justify"><font style="font: 10pt Times New Roman, Times, Serif"> </font></p>
<p style="font: 10pt/normal Times New Roman, Times, Serif; margin: 0; text-align: justify"><font style="font: 10pt Times New Roman, Times, Serif">Robert
Morris Price was appointed by the Company to serve as the President, Chief Executive Officer, and Treasurer as well as Chairman
of the Company in April 2012. On May 20, 2013, Robert Price resigned as CEO of the Company to pursue other opportunities. This
decision was not the result of any disagreement with the Company. Erik Klinger became the Chief Executive Officer effective the
same day.</font></p>
<p style="font: 10pt/normal Times New Roman, Times, Serif; margin: 0; text-align: justify"><font style="font: 10pt Times New Roman, Times, Serif"> </font></p>
<p style="font: 10pt/normal Times New Roman, Times, Serif; margin: 0; text-align: justify"><font style="font: 10pt Times New Roman, Times, Serif">The
Company’s sole director and officer does not own any stock in the Company.</font></p>
<p style="font: 10pt/normal Times New Roman, Times, Serif; margin: 0; text-align: justify"><font style="font: 10pt Times New Roman, Times, Serif"> </font></p>
<p style="font: 10pt/normal Times New Roman, Times, Serif; margin: 0"><font style="font: 10pt Times New Roman, Times, Serif">During
the six months ended June 30, 2014, the Company paid no rent for the use of headquarters in El Segundo, California, though it
did pay minimal fees for office expenses.</font></p>
<p style="font: 10pt/normal Times New Roman, Times, Serif; margin: 0; text-align: justify"><font style="font: 10pt Times New Roman, Times, Serif"><b>12.
Contingencies</b></font></p>
<p style="font: 10pt/normal Times New Roman, Times, Serif; margin: 0"><font style="font: 10pt Times New Roman, Times, Serif"><i> </i></font></p>
<p style="font: 10pt/normal Times New Roman, Times, Serif; margin: 0"><font style="font: 10pt Times New Roman, Times, Serif"><i>Legal
Proceedings</i></font></p>
<p style="font: 10pt/normal Times New Roman, Times, Serif; margin: 0; text-align: justify"><font style="font: 10pt Times New Roman, Times, Serif"> </font></p>
<p style="font: 10pt/normal Times New Roman, Times, Serif; margin: 0; text-align: justify"><font style="font: 10pt Times New Roman, Times, Serif">From
time to time, the Company may be involved in various litigation matters, which arise in the ordinary course of business. There
is currently no litigation that management believes will have a material impact on the financial position of the Company.</font></p>
<p style="font: 10pt/normal Times New Roman, Times, Serif; margin: 0"><font style="font: 10pt Times New Roman, Times, Serif"><b>13.
Per Share Information</b></font></p>
<p style="font: 10pt/normal Times New Roman, Times, Serif; margin: 0"><font style="font: 10pt Times New Roman, Times, Serif"><i> </i></font></p>
<p style="font: 10pt/normal Times New Roman, Times, Serif; margin: 0"><font style="font: 10pt Times New Roman, Times, Serif"><i>Loss
per share</i></font></p>
<p style="font: 10pt/normal Times New Roman, Times, Serif; margin: 0; text-align: justify"><font style="font: 10pt Times New Roman, Times, Serif"> </font></p>
<p style="font: 10pt/normal Times New Roman, Times, Serif; margin: 0; text-align: justify"><font style="font: 10pt Times New Roman, Times, Serif">Basic
loss per share of common stock is computed by dividing the net loss by the weighted-average number of shares of common stock outstanding. 
Diluted loss per share of common stock (“Diluted EPS”) is computed by dividing the net loss by the weighted-average
number of shares of common stock and dilutive common stock equivalents and convertible securities then outstanding.  At June
30, 2014 and 2013, there were 900,256,322 and 238,638,820 of potentially dilutive common stock equivalents outstanding, respectively.
The potentially dilutive common stock equivalents at June 30, 2014 arise from (i) the issuance on December 7, 2011 of 45,000
Series B Preferred Shares which are convertible into 15,000,000 common shares, (ii) the issuance of the Rasel note which is convertible
into 255,893,103 shares, (iii) the issuance of 10,000 Series C Preferred Shares having a stated value of $100 per share, of which
700 shares remain unconverted, which remaining unconverted shares are convertible into 25,666,667 common shares, given recent
market prices, and notwithstanding a restriction against owning more than 4.99% of the Company’s stock, and (iv) the issuance
of a $500,000 convertible note payable to Vulcan netted against the note receivable from Vulcan, which is convertible into 154,000,000
shares, given recent market prices, and notwithstanding a restriction against owning more than 4.99% of the Company’s stock,
(iv) the issuance of a note to a third party Financier, which based on a theoretical conversion at June 30, 2014 would have converted
into 112,517,241 shares of common stock, (v) the issuance of a note payable to a Third Party, of which the remaining balance at
June 30, 2014 is $25,282, which at current market prices converts into 87,179,310 shares, and (vi) the issuance of a note for
the Blackbridge commitment fee. The note was convertible at 90% of the lowest price for the previous 20 trading days. At June
30, 2014, the note would have converted into 250,000,000 shares (50 shares post-split, after 5,000-to-1 and 1,000-to-1 reverse
splits in October 2014 and February 2015, respectively). The potentially dilutive common stock equivalents at June 30, 2013 arise
from (i) the issuance on December 7, 2011 of 45,000 Series B Preferred Shares which are convertible into 15 million shares, (ii)
the issuance of the Rasel note which is convertible into 238,820 shares, (iii) the issuance of 10,000 Series C Preferred Shares
having a stated value of $100 per share which are convertible into 40,000,000 common shares, given recent market prices, and notwithstanding
a restriction against owning more than 4.99% of the Company’s stock, and (iv) the issuance of a $500,000 convertible note
payable to Vulcan, which is convertible into 183,400,000 shares, given recent market prices, and notwithstanding a restriction
against owning more than 4.99% of the Company’s stock. The computation of Diluted EPS does not assume exercise or conversion
of securities that would have an anti-dilutive effect on the net loss per common share. </font></p>
<p style="font: 10pt/normal Times New Roman, Times, Serif; margin: 0"><font style="font: 10pt Times New Roman, Times, Serif"><b>12.
Subsequent Events </b></font></p>
<p style="font: 10pt/normal Times New Roman, Times, Serif; margin: 0"><font style="font: 10pt Times New Roman, Times, Serif"> </font></p>
<p style="font: 10pt/normal Times New Roman, Times, Serif; margin: 0"><font style="font: 10pt Times New Roman, Times, Serif">In
preparing these financial statements, the Company has evaluated events and transactions for potential recognition of disclosure
as follows:</font></p>
<p style="font: 10pt/normal Times New Roman, Times, Serif; margin: 0"><font style="font: 10pt Times New Roman, Times, Serif"> </font></p>
<p style="font: 10pt/normal Times New Roman, Times, Serif; margin: 0; text-align: justify"><font style="font: 10pt Times New Roman, Times, Serif">In
July and August 2014, Third Party converted $8,584 into 83,000,000 common shares at an average valuation of $0.0001 per share.</font></p>
<p style="font: 10pt/normal Times New Roman, Times, Serif; margin: 0; text-align: justify"><font style="font: 10pt Times New Roman, Times, Serif"> </font></p>
<p style="font: 10pt/normal Times New Roman, Times, Serif; margin: 0; text-align: justify"><font style="font: 10pt Times New Roman, Times, Serif">In
July 2014, GV received 21,021,900 common shares as an adjustment to prior conversions, at a valuation of $0.0004 per share. The
market value of the shares on the day received was approximately $8,409.</font></p>
<p style="font: 10pt/normal Times New Roman, Times, Serif; margin: 0"><font style="font: 10pt Times New Roman, Times, Serif">  </font></p>
<p style="font: 10pt/normal Times New Roman, Times, Serif; margin: 0"><font style="font: 10pt Times New Roman, Times, Serif">On
or about July 21, 2014 the Company filed Information statement Pursuant to Section 14 (c) of the Securities Exchange Act of 1934
for the following purposes:</font></p>
<p style="font: 10pt/normal Times New Roman, Times, Serif; margin: 0"><font style="font: 10pt Times New Roman, Times, Serif"> </font></p>
<table cellspacing="0" cellpadding="0" style="width: 100%; font-size: 10pt; line-height: normal; margin-top: 0px; margin-bottom: 0px; font-size-adjust: none; font-stretch: normal">
<tr style="vertical-align: top">
<td style="width: 0.25in"><font style="font: 10pt Times New Roman, Times, Serif"> </font></td>
<td style="width: 0.25in"><b>•</b></td>
<td style="text-align: justify"><font style="font: 10pt Times New Roman, Times, Serif">The amendment (the
“Amendment”) to the Company’s Articles of Incorporation, as amended (the “Articles of Incorporation”)
to increase the Company’s authorized Common Stock from 400,000,000 shares to 2,000,000,000 shares, par value $0.0001 </font></td></tr>
</table>
<table cellspacing="0" cellpadding="0" style="width: 100%; font-size: 10pt; line-height: normal; margin-top: 0px; margin-bottom: 0px; font-size-adjust: none; font-stretch: normal">
<tr style="vertical-align: top">
<td style="width: 0.25in"><font style="font: 10pt Times New Roman, Times, Serif"> </font></td>
<td style="width: 0.25in"><font style="font: 10pt Times New Roman, Times, Serif"><b> •</b></font></td>
<td style="text-align: justify"><font style="font: 10pt Times New Roman, Times, Serif">The amendment Articles
of Incorporation to effect <u>up to</u> a one-for-ten thousand (1-10,000) reverse stock split of the Company’s Common
Stock (the “Reverse Split”)</font></td></tr>
</table>
<p style="font: 10pt/normal Times New Roman, Times, Serif; margin: 0; text-align: justify"><font style="font: 10pt Times New Roman, Times, Serif"> </font></p>
<p style="font: 10pt/normal Times New Roman, Times, Serif; margin: 0"><font style="font: 10pt Times New Roman, Times, Serif">On May
1, 2014, the Company stock was moved from OTCQB to OTC Pink Sheets due to the new OTCQB $.01 closing bid price requirement. From
May1, 2014 to July 18, 2014, the Company stock traded both on OTCBB and on OTC Pink Sheets. On July 18, 2012, the last broker
quoting the Company stock on the OTCBB had removed their quote, resulting in the company no longer trading on OTCBB from that
date.</font></p>
<p style="font: 10pt/normal Times New Roman, Times, Serif; margin: 0; text-align: justify"><font style="font: 10pt Times New Roman, Times, Serif"><i>Presentation
and Basis of Financial Statements </i></font></p>
<p style="font: 10pt/normal Times New Roman, Times, Serif; margin: 0; text-align: justify"><font style="font: 10pt Times New Roman, Times, Serif"> </font></p>
<p style="font: 10pt/normal Times New Roman, Times, Serif; margin: 0; text-align: justify"><font style="font: 10pt Times New Roman, Times, Serif">The
accompanying unaudited condensed consolidated financial statements include the accounts of Gopher Protocol Inc. (f/k/a Forex International
Trading Corp.) and its wholly owned subsidiary, DirectJV Investments, Inc. (together “Gopher” or the Company”)
and have been prepared in accordance with accounting principles generally accepted in the United States of America (“U.S.
GAAP”) and the rules and regulations of the Securities and Exchange Commission for interim financial information and reports
pursuant to the requirements for reporting on Form 10-Q and Regulation S-X for scaled disclosures for smaller</font></p>
<p style="font: 10pt/normal Times New Roman, Times, Serif; margin: 0; text-align: justify"><font style="font: 10pt Times New Roman, Times, Serif">reporting
companies. Accordingly, they do not include all, or include a condensed version of, the information and footnotes required by
U.S. GAAP for complete financial statements. The Company believes, however, that the disclosures are adequate to make the information
presented not misleading.</font></p>
<p style="font: 10pt/normal Times New Roman, Times, Serif; margin: 0; text-align: justify"><font style="font: 10pt Times New Roman, Times, Serif"> </font></p>
<p style="font: 10pt/normal Times New Roman, Times, Serif; margin: 0; text-align: justify"><font style="font: 10pt Times New Roman, Times, Serif">The
Company’s unaudited condensed consolidated financial statements reflect all material adjustments (consisting of normal recurring
adjustments), which are, in the opinion of management, necessary for the fair presentation of the consolidated financial position
and the consolidated results of operations of the Company for the periods shown. Results shown for the interim periods are not
necessarily indicative of the results to be obtained for a full fiscal year or for any future period. The preparation of financial
statements in conformity with U.S. GAAP requires us to make estimates, judgments and assumptions that affect the amounts reported
in the unaudited condensed consolidated financial statements. Actual results might differ from management’s estimates. The
consolidated balance sheet information as of December 31, 2013 was derived from the audited consolidated financial statements
included in the Company’s Annual Report on Form 10-K filed with Securities and Exchange Commission (“SEC”) for
the fiscal year ended December 31, 2013, These interim unaudited condensed consolidated financial statements should be read in
conjunction with the Company’s most recently audited financial statements and the notes thereto in such above referenced
Annual Report on Form 10-K. All intercompany balances and transactions have been eliminated in consolidation.</font></p>
<p style="font: 10pt/normal Times New Roman, Times, Serif; margin: 0; text-align: justify"><font style="font: 10pt Times New Roman, Times, Serif"><i>Use
of Estimates </i></font></p>
<p style="font: 10pt/normal Times New Roman, Times, Serif; margin: 0; text-align: justify"><font style="font: 10pt Times New Roman, Times, Serif"> </font></p>
<p style="font: 10pt/normal Times New Roman, Times, Serif; margin: 0; text-align: justify"><font style="font: 10pt Times New Roman, Times, Serif">The
preparation of financial statements in conformity with U.S. GAAP requires management to make estimates and assumptions that affect
the reported amount of assets and liabilities and the disclosure of contingent assets and liabilities at the date of the financial
statements, and the reported amounts of revenues and expenses during the reporting periods. Significant estimates include the
useful lives of tangible and intangible assets, depreciation and amortization, allowances for doubtful accounts and loan losses,
valuation of common and preferred stock issuances, and the valuation allowance on deferred tax assets. Actual results could differ
from those estimates.</font></p>
<p style="font: 10pt/normal Times New Roman, Times, Serif; margin: 0; text-align: justify"><font style="font: 10pt Times New Roman, Times, Serif"><i>Cash
and Cash Equivalents </i></font></p>
<p style="font: 10pt/normal Times New Roman, Times, Serif; margin: 0; text-align: justify"><font style="font: 10pt Times New Roman, Times, Serif"> </font></p>
<p style="font: 10pt/normal Times New Roman, Times, Serif; margin: 0; text-align: justify"><font style="font: 10pt Times New Roman, Times, Serif">The
Company considers all highly liquid financial instruments purchased with an original maturity of three months or less to be cash
equivalents.</font></p>
<p style="font: 10pt/normal Times New Roman, Times, Serif; margin: 0; text-align: justify"><font style="font: 10pt Times New Roman, Times, Serif"><i>Property
and Equipment </i></font></p>
<p style="font: 10pt/normal Times New Roman, Times, Serif; margin: 0; text-align: justify"><font style="font: 10pt Times New Roman, Times, Serif"> </font></p>
<p style="font: 10pt/normal Times New Roman, Times, Serif; margin: 0; text-align: justify"><font style="font: 10pt Times New Roman, Times, Serif">Property
and equipment are stated at cost and the related depreciation is computed using the straight-line method over the estimated useful
lives of the respective assets. Expenditures for repairs and maintenance are charged to operations as incurred. Renewals and betterments
are capitalized. Upon the sale or retirement of an asset, the related costs and accumulated depreciation are removed from the
accounts and any gain or loss is recognized in the results of operations.</font></p>
<p style="font: 10pt/normal Times New Roman, Times, Serif; margin: 0; text-align: justify"><font style="font: 10pt Times New Roman, Times, Serif"> </font></p>
<p style="font: 10pt/normal Times New Roman, Times, Serif; margin: 0; text-align: justify"><font style="font: 10pt Times New Roman, Times, Serif">Leasehold
improvements are amortized over the lesser of the estimated life of the asset or the lease term.</font></p>
<p style="font: 10pt/normal Times New Roman, Times, Serif; margin: 0; text-align: justify"><font style="font: 10pt Times New Roman, Times, Serif"> </font></p>
<p style="font: 10pt/normal Times New Roman, Times, Serif; margin: 0; text-align: justify"><font style="font: 10pt Times New Roman, Times, Serif">As
required by U.S. GAAP for long-lived assets, the Company evaluates the fair value of its property and equipment on an annual basis
or whenever events or changes in circumstances indicate that the carrying amounts may not be recoverable. Any impairment of value
is recognized when the carrying amount of the asset exceeds its fair value. There were no impairment losses for the three months
or for the six months ended June 30, 2014and 2013.</font></p>
<p style="font: 10pt/normal Times New Roman, Times, Serif; margin: 0; text-align: justify"><font style="font: 10pt Times New Roman, Times, Serif"><i>Fair
value measurements</i></font></p>
<p style="font: 10pt/normal Times New Roman, Times, Serif; margin: 0; text-align: justify"><font style="font: 10pt Times New Roman, Times, Serif"> </font></p>
<p style="font: 10pt/normal Times New Roman, Times, Serif; margin: 0; text-align: justify"><font style="font: 10pt Times New Roman, Times, Serif">Financial
instruments and certain non-financial assets and liabilities are measured at their fair value as determined based on the assets
highest and best use. GAAP has established a framework for measuring fair value that is based on a hierarchy that requires that
the valuation technique used be based on the most objective inputs available for measuring a particular asset or liability. There
are three broad levels in the fair value hierarchy that describe the degree of objectivity of the inputs used to determine fair
value. The fair value hierarchy is set forth below:</font></p>
<table cellpadding="0" cellspacing="0" style="width: 100%; font: 10pt/normal Times New Roman, Times, Serif; margin-top: 0; margin-bottom: 0"><tr style="vertical-align: top">
<td style="width: 0.25in"></td><td style="width: 0.25in"><font style="font: 10pt Times New Roman, Times, Serif"> </font></td><td style="text-align: justify"></td></tr></table>
<p style="font: 10pt/normal Times New Roman, Times, Serif; margin: 0 0 0 0.5in; text-align: justify; text-indent: -0.25in"><font style="font: 10pt Times New Roman, Times, Serif">Level
1 — inputs to the valuation methodology are quoted prices (unadjusted) for identical assets or liabilities in active markets.</font></p>
<p style="font: 10pt/normal Times New Roman, Times, Serif; margin: 0 0 0 0.5in; text-align: justify; text-indent: -0.25in"><font style="font: 10pt Times New Roman, Times, Serif">Level
2 — inputs to the valuation methodology include quoted prices for similar assets and liabilities in active markets, and
inputs that are observable for the asset or liability, either directly or indirectly, for substantially the full term of the financial
instrument.</font></p>
<p style="font: 10pt/normal Times New Roman, Times, Serif; margin: 0 0 0 0.5in; text-align: justify; text-indent: -0.25in"><font style="font: 10pt Times New Roman, Times, Serif">Level
3 — inputs to the valuation methodology are unobservable and significant to the fair value measurement. They are based on
best information available in the absence of level 1 and 2 inputs.</font></p>
<p style="font: 10pt/normal Times New Roman, Times, Serif; margin: 0; text-align: justify"><font style="font: 10pt Times New Roman, Times, Serif"> </font></p>
<p style="font: 10pt/normal Times New Roman, Times, Serif; margin: 0; text-align: justify"><font style="font: 10pt Times New Roman, Times, Serif">The
carrying value of financial instruments, which include cash and cash equivalents, notes receivable, notes payable, and accrued
expenses, approximate their fair values due to the short-term nature of these financial instruments.</font></p>
<p style="font: 10pt/normal Times New Roman, Times, Serif; margin: 0; text-align: justify"><font style="font: 10pt Times New Roman, Times, Serif"><i>Treasury
Stock</i></font></p>
<p style="font: 10pt/normal Times New Roman, Times, Serif; margin: 0; text-align: justify"><font style="font: 10pt Times New Roman, Times, Serif"> </font></p>
<p style="font: 10pt/normal Times New Roman, Times, Serif; margin: 0; text-align: justify"><font style="font: 10pt Times New Roman, Times, Serif">Treasury
stock is recorded at cost. The re-issuance of treasury shares is accounted for on a first in, first-out basis and any difference
between the cost of treasury shares and the re-issuance proceeds are charged or credited to additional paid-in capital. During
2011, the Company bought back 38,000 of its own shares.</font></p>
<p style="font: 10pt/normal Times New Roman, Times, Serif; margin: 0; text-align: justify"><font style="font: 10pt Times New Roman, Times, Serif"><i>Income
Taxes </i></font></p>
<p style="font: 10pt/normal Times New Roman, Times, Serif; margin: 0; text-align: justify"><font style="font: 10pt Times New Roman, Times, Serif"> </font></p>
<p style="font: 10pt/normal Times New Roman, Times, Serif; margin: 0; text-align: justify"><font style="font: 10pt Times New Roman, Times, Serif">The
Company accounts for income taxes under FASB Codification Topic 740-10-25 (“ASC 740-10-25”) Income Taxes. Under ASC
740-10-25, deferred tax assets and liabilities are recognized for the future tax consequences attributable to differences between
the financial statement carrying amounts of existing assets and liabilities and their respective tax bases. Deferred tax assets
and liabilities are measured using enacted tax rates expected to apply to taxable income in the years in which those temporary
differences are expected to be recovered or settled. Under ASC 740-10-25, the effect on deferred tax assets and liabilities of
a change in tax rates is recognized in income in the period that includes the enactment date. Valuation allowances are established,
when necessary, to reduce deferred tax assets to the amount of tax benefits expected to be realized.</font></p>
<p style="font: 10pt/normal Times New Roman, Times, Serif; margin: 0; text-align: justify"><font style="font: 10pt Times New Roman, Times, Serif">  </font></p>
<p style="font: 10pt/normal Times New Roman, Times, Serif; margin: 0; text-align: justify"><font style="font: 10pt Times New Roman, Times, Serif">U.S.
GAAP requires that, in applying the liability method, the financial statement effects of an uncertain tax position be recognized
based on the outcome that is more likely than not to occur. Under this criterion the most likely resolution of an uncertain tax
position should be analyzed based on technical merits and on the outcome that would likely be sustained under examination. The
Company had no uncertain tax positions as of June 30, 2014.</font></p>
<p style="font: 10pt/normal Times New Roman, Times, Serif; margin: 0; text-align: justify"><font style="font: 10pt Times New Roman, Times, Serif"> </font></p>
<p style="font: 10pt/normal Times New Roman, Times, Serif; margin: 0; text-align: justify"><font style="font: 10pt Times New Roman, Times, Serif">The
Company's federal income tax returns are no longer subject to examination by the IRS for the years prior to 2010, and the related
state income tax returns are no longer subject to examination by state authorities for the years prior to 2010.</font></p>
<p style="font: 10pt/normal Times New Roman, Times, Serif; margin: 0; text-align: justify"><font style="font: 10pt Times New Roman, Times, Serif"><i>Revenue
Recognition</i></font></p>
<p style="font: 10pt/normal Times New Roman, Times, Serif; margin: 0; text-align: justify"><font style="font: 10pt Times New Roman, Times, Serif"> </font></p>
<p style="font: 10pt/normal Times New Roman, Times, Serif; margin: 0; text-align: justify"><font style="font: 10pt Times New Roman, Times, Serif">The
Company recognized revenue on arrangements in accordance with FASB Codification Topic 605, “Revenue Recognition” (“ASC
Topic 605”). Under ASC Topic 605, revenue is recognized only when the price is fixed and determinable, persuasive evidence
of an arrangement exists, the service is performed and collectability of the resulting receivable is reasonably assured. We had
revenue of $60,000 and $70,000 for the six months ended June 30, 2014 and 2013, respectively.</font></p>
<p style="font: 10pt/normal Times New Roman, Times, Serif; margin: 0; text-align: justify"><font style="font: 10pt Times New Roman, Times, Serif"> </font></p>
<p style="font: 10pt/normal Times New Roman, Times, Serif; margin: 0; text-align: justify"><font style="font: 10pt Times New Roman, Times, Serif">During
the six months ended June 30, 2014, 100% of the Company’s revenue was related to consulting services provided to one company.</font></p>
<p style="font: 10pt/normal Times New Roman, Times, Serif; margin: 0; text-align: justify"><font style="font: 10pt Times New Roman, Times, Serif"><i>Earnings
(Loss) Per Share </i></font></p>
<p style="font: 10pt/normal Times New Roman, Times, Serif; margin: 0; text-align: justify"><font style="font: 10pt Times New Roman, Times, Serif"> </font></p>
<p style="font: 10pt/normal Times New Roman, Times, Serif; margin: 0; text-align: justify"><font style="font: 10pt Times New Roman, Times, Serif">In
accordance with accounting guidance now codified as FASB ASC Topic 260, “Earnings per Share,” Basic earnings per share
(“EPS”) is computed by dividing net loss available to common stockholders by the weighted average number of common
shares outstanding during the period, excluding the effects of any potentially dilutive securities. Diluted EPS gives effect to
all dilutive potential of shares of common stock outstanding during the period including stock options or warrants, using the
treasury stock method (by using the average stock price for the period to determine the number of shares assumed to be purchased
from the exercise of stock options or warrants), and convertible debt or convertible preferred stock, using the if-converted method.
Diluted EPS excludes all dilutive potential of shares of common stock if their effect is anti-dilutive. Because of the Company’s
net losses, the effects of stock options, convertible notes, and convertible preferred stock would be anti-dilutive and accordingly,
is excluded from the computation of earnings per share. Diluted loss per share has not been computed for the fiscal quarters ended
June 30, 2014 and 2013 because any potential additional common shares would reduce the reported loss per share and therefore have
an antidilutive effect.</font></p>
<p style="font: 10pt/normal Times New Roman, Times, Serif; margin: 0; text-align: justify"><font style="font: 10pt Times New Roman, Times, Serif"><i>Notes
and Short-Term Receivable </i></font></p>
<p style="font: 10pt/normal Times New Roman, Times, Serif; margin: 0; text-align: justify"><font style="font: 10pt Times New Roman, Times, Serif"> </font></p>
<p style="font: 10pt/normal Times New Roman, Times, Serif; margin: 0; text-align: justify"><font style="font: 10pt Times New Roman, Times, Serif">The
notes and short-term receivable are carried at cost, which approximates fair value. The Company measures the impairment of loans
based on its historical loan collection experience and existing economic conditions. Impairment is recognized when management
believes it is probable that payments will not be received on some portion of the loan, which is determined on an individual loan
basis. The Company evaluates loans for impairment on an annual basis or when there are indications that the loan may not be collected.
When management determines that a loan is impaired it is placed on non-accrual status, and an allowance for loan losses is established
to recognize the estimated amount of impairment. Payments received on non-accrual loans are generally applied to the outstanding
principal balance. Loans are removed from non-accrual status when management believes that the borrower will resume making the
payments required by the loan agreement.</font></p>
<p style="font: 10pt/normal Times New Roman, Times, Serif; margin: 0; text-align: justify"><font style="font: 10pt Times New Roman, Times, Serif"><i>Share-Based
Compensation</i></font></p>
<p style="font: 10pt/normal Times New Roman, Times, Serif; margin: 0; text-align: justify"><font style="font: 10pt Times New Roman, Times, Serif"> </font></p>
<p style="font: 10pt/normal Times New Roman, Times, Serif; margin: 0; text-align: justify"><font style="font: 10pt Times New Roman, Times, Serif">In
December 2004, the FASB issued FASB Accounting Standards Codification No. 718, Compensation – Stock Compensation. Under
FASB Accounting Standards Codification No. 718, companies are required to measure the compensation costs of share-based compensation
arrangements based on the grant-date fair value and recognize the costs in the financial statements over the period during which
employees are required to provide services. Share-based compensation arrangements include stock options, restricted share plans,
performance-based awards, share appreciation rights and employee share purchase plans. As such, compensation cost is measured
on the date of grant at their fair value. Such compensation amounts, if any, are amortized over the respective vesting periods
of the option grant. The Company applies this statement prospectively. No such expenses were recognized for the fiscal quarter
ended June 30, 2014.</font></p>
<p style="font: 10pt/normal Times New Roman, Times, Serif; margin: 0"><font style="font: 10pt Times New Roman, Times, Serif">Property
and equipment consisted of the following as of June 30, 2014 and December 31, 2013:</font></p>
<p style="font: 10pt/normal Times New Roman, Times, Serif; margin: 0"><font style="font: 10pt Times New Roman, Times, Serif"></font></p>
<p style="font: 10pt/normal Times New Roman, Times, Serif; margin: 0 0 0 1in; text-indent: 0.5in"><font style="font: 10pt Times New Roman, Times, Serif"> </font></p>
<table cellspacing="0" cellpadding="0" style="font-size: 10pt; line-height: normal; width: 80%; border-collapse: collapse; font-size-adjust: none; font-stretch: normal">
<tr style="vertical-align: bottom">
<td><font style="font: 10pt Times New Roman, Times, Serif"> </font></td>
<td><font style="font: 10pt Times New Roman, Times, Serif"> </font></td>
<td style="text-align: center"><font style="font: 10pt Times New Roman, Times, Serif">Estimated</font></td>
<td><font style="font: 10pt Times New Roman, Times, Serif"> </font></td>
<td colspan="2"><font style="font: 10pt Times New Roman, Times, Serif"> </font></td>
<td><font style="font: 10pt Times New Roman, Times, Serif"> </font></td>
<td><font style="font: 10pt Times New Roman, Times, Serif"> </font></td>
<td colspan="2"><font style="font: 10pt Times New Roman, Times, Serif"> </font></td>
<td><font style="font: 10pt Times New Roman, Times, Serif"> </font></td></tr>
<tr style="vertical-align: bottom">
<td><font style="font: 10pt Times New Roman, Times, Serif"> </font></td>
<td><font style="font: 10pt Times New Roman, Times, Serif"> </font></td>
<td style="text-align: center"><font style="font: 10pt Times New Roman, Times, Serif">Useful</font></td>
<td><font style="font: 10pt Times New Roman, Times, Serif"> </font></td>
<td colspan="6" style="text-align: center"><font style="font: 10pt Times New Roman, Times, Serif"> </font></td>
<td><font style="font: 10pt Times New Roman, Times, Serif"> </font></td></tr>
<tr style="vertical-align: bottom">
<td><font style="font: 10pt Times New Roman, Times, Serif"> </font></td>
<td style="padding-bottom: 1pt"><font style="font: 10pt Times New Roman, Times, Serif"> </font></td>
<td style="border-bottom: black 1pt solid; text-align: center"><font style="font: 10pt Times New Roman, Times, Serif">Lives</font></td>
<td style="padding-bottom: 1pt"><font style="font: 10pt Times New Roman, Times, Serif"> </font></td>
<td colspan="2" style="border-bottom: black 1pt solid; text-align: center"><font style="font: 10pt Times New Roman, Times, Serif">June
30, 2014</font></td>
<td style="padding-bottom: 1pt"><font style="font: 10pt Times New Roman, Times, Serif"> </font></td>
<td style="padding-bottom: 1pt"><font style="font: 10pt Times New Roman, Times, Serif"> </font></td>
<td colspan="2" style="border-bottom: black 1pt solid; text-align: center"><font style="font: 10pt Times New Roman, Times, Serif">December
31, 2013</font></td>
<td style="padding-bottom: 1pt"><font style="font: 10pt Times New Roman, Times, Serif"> </font></td></tr>
<tr style="vertical-align: bottom; background-color: rgb(204, 238, 255)">
<td style="width: 47%; text-align: left"><font style="font: 10pt Times New Roman, Times, Serif">Computers
and equipment</font></td>
<td style="width: 1%"><font style="font: 10pt Times New Roman, Times, Serif"> </font></td>
<td style="width: 16%; text-align: center"><font style="font: 10pt Times New Roman, Times, Serif">3 years</font></td>
<td style="width: 1%"><font style="font: 10pt Times New Roman, Times, Serif"> </font></td>
<td style="width: 1%; text-align: left"><font style="font: 10pt Times New Roman, Times, Serif">$</font></td>
<td style="width: 15%; text-align: right"><font style="font: 10pt Times New Roman, Times, Serif">12,539</font></td>
<td style="width: 1%; text-align: left"><font style="font: 10pt Times New Roman, Times, Serif"> </font></td>
<td style="width: 1%"><font style="font: 10pt Times New Roman, Times, Serif"> </font></td>
<td style="width: 1%; text-align: left"><font style="font: 10pt Times New Roman, Times, Serif">$</font></td>
<td style="width: 15%; text-align: right"><font style="font: 10pt Times New Roman, Times, Serif">12,539</font></td>
<td style="width: 1%; text-align: left"><font style="font: 10pt Times New Roman, Times, Serif"> </font></td></tr>
<tr style="vertical-align: bottom; background-color: white">
<td style="padding-bottom: 1pt"><font style="font: 10pt Times New Roman, Times, Serif">Furniture</font></td>
<td style="padding-bottom: 1pt"><font style="font: 10pt Times New Roman, Times, Serif"> </font></td>
<td style="text-align: center; padding-bottom: 1pt"><font style="font: 10pt Times New Roman, Times, Serif">7
years</font></td>
<td style="padding-bottom: 1pt"><font style="font: 10pt Times New Roman, Times, Serif"> </font></td>
<td style="text-align: left; border-bottom: black 1pt solid"><font style="font: 10pt Times New Roman, Times, Serif"> </font></td>
<td style="text-align: right; border-bottom: black 1pt solid"><font style="font: 10pt Times New Roman, Times, Serif">9,431</font></td>
<td style="text-align: left; padding-bottom: 1pt"><font style="font: 10pt Times New Roman, Times, Serif"> </font></td>
<td style="padding-bottom: 1pt"><font style="font: 10pt Times New Roman, Times, Serif"> </font></td>
<td style="text-align: left; border-bottom: black 1pt solid"><font style="font: 10pt Times New Roman, Times, Serif"> </font></td>
<td style="text-align: right; border-bottom: black 1pt solid"><font style="font: 10pt Times New Roman, Times, Serif">9,431</font></td>
<td style="text-align: left; padding-bottom: 1pt"><font style="font: 10pt Times New Roman, Times, Serif"> </font></td></tr>
<tr style="vertical-align: bottom; background-color: rgb(204, 238, 255)">
<td><font style="font: 10pt Times New Roman, Times, Serif"> </font></td>
<td><font style="font: 10pt Times New Roman, Times, Serif"> </font></td>
<td><font style="font: 10pt Times New Roman, Times, Serif"> </font></td>
<td><font style="font: 10pt Times New Roman, Times, Serif"> </font></td>
<td style="text-align: left"><font style="font: 10pt Times New Roman, Times, Serif"> </font></td>
<td style="text-align: right"><font style="font: 10pt Times New Roman, Times, Serif">21,970</font></td>
<td style="text-align: left"><font style="font: 10pt Times New Roman, Times, Serif"> </font></td>
<td><font style="font: 10pt Times New Roman, Times, Serif"> </font></td>
<td style="text-align: left"><font style="font: 10pt Times New Roman, Times, Serif"> </font></td>
<td style="text-align: right"><font style="font: 10pt Times New Roman, Times, Serif">21,970</font></td>
<td style="text-align: left"><font style="font: 10pt Times New Roman, Times, Serif"> </font></td></tr>
<tr style="vertical-align: bottom; background-color: white">
<td style="text-align: left; padding-bottom: 1pt"><font style="font: 10pt Times New Roman, Times, Serif">Less
accumulated depreciation</font></td>
<td style="padding-bottom: 1pt"><font style="font: 10pt Times New Roman, Times, Serif"> </font></td>
<td style="text-align: left; padding-bottom: 1pt"><font style="font: 10pt Times New Roman, Times, Serif"> </font></td>
<td style="padding-bottom: 1pt"><font style="font: 10pt Times New Roman, Times, Serif"> </font></td>
<td style="text-align: left; border-bottom: black 1pt solid"><font style="font: 10pt Times New Roman, Times, Serif"> </font></td>
<td style="text-align: right; border-bottom: black 1pt solid"><font style="font: 10pt Times New Roman, Times, Serif">17,861</font></td>
<td style="text-align: left; padding-bottom: 1pt"><font style="font: 10pt Times New Roman, Times, Serif"> </font></td>
<td style="padding-bottom: 1pt"><font style="font: 10pt Times New Roman, Times, Serif"> </font></td>
<td style="text-align: left; border-bottom: black 1pt solid"><font style="font: 10pt Times New Roman, Times, Serif"> </font></td>
<td style="text-align: right; border-bottom: black 1pt solid"><font style="font: 10pt Times New Roman, Times, Serif">16,936</font></td>
<td style="text-align: left; padding-bottom: 1pt"><font style="font: 10pt Times New Roman, Times, Serif"> </font></td></tr>
<tr style="vertical-align: bottom; background-color: rgb(204, 238, 255)">
<td style="padding-bottom: 2.5pt"><font style="font: 10pt Times New Roman, Times, Serif"> </font></td>
<td style="padding-bottom: 2.5pt"><font style="font: 10pt Times New Roman, Times, Serif"> </font></td>
<td style="padding-bottom: 2.5pt"><font style="font: 10pt Times New Roman, Times, Serif"> </font></td>
<td style="padding-bottom: 2.5pt"><font style="font: 10pt Times New Roman, Times, Serif"> </font></td>
<td style="text-align: left; border-bottom: black 2.5pt double"><font style="font: 10pt Times New Roman, Times, Serif">$</font></td>
<td style="text-align: right; border-bottom: black 2.5pt double"><font style="font: 10pt Times New Roman, Times, Serif">4,109</font></td>
<td style="text-align: left; padding-bottom: 2.5pt"><font style="font: 10pt Times New Roman, Times, Serif"> </font></td>
<td style="padding-bottom: 2.5pt"><font style="font: 10pt Times New Roman, Times, Serif"> </font></td>
<td style="text-align: left; border-bottom: black 2.5pt double"><font style="font: 10pt Times New Roman, Times, Serif">$</font></td>
<td style="text-align: right; border-bottom: black 2.5pt double"><font style="font: 10pt Times New Roman, Times, Serif">5,034</font></td>
<td style="text-align: left; padding-bottom: 2.5pt"><font style="font: 10pt Times New Roman, Times, Serif"> </font></td></tr>
</table>
<p style="font: 10pt/normal Times New Roman, Times, Serif; margin: 0; text-align: justify"><font style="font: 10pt Times New Roman, Times, Serif">The`
Company computed the fair value of the conversion feature at the commitment date, based on the following management assumptions:</font></p>
<p style="font: 10pt/normal Times New Roman, Times, Serif; margin: 0; text-align: justify; text-indent: 0.5in"><font style="font: 10pt Times New Roman, Times, Serif"> </font></p>
<table cellspacing="0" cellpadding="0" style="font-size: 10pt; line-height: normal; width: 70%; margin-left: 0.5in; border-collapse: collapse; font-size-adjust: none; font-stretch: normal">
<tr style="vertical-align: bottom; background-color: rgb(204, 238, 255)">
<td style="width: 82%; text-align: justify"><font style="font: 10pt Times New Roman, Times, Serif">Expected
dividends</font></td>
<td style="width: 1%"><font style="font: 10pt Times New Roman, Times, Serif"> </font></td>
<td style="width: 1%; text-align: left"><font style="font: 10pt Times New Roman, Times, Serif"> </font></td>
<td style="width: 15%; text-align: right"><font style="font: 10pt Times New Roman, Times, Serif">0</font></td>
<td style="width: 1%; text-align: left"><font style="font: 10pt Times New Roman, Times, Serif">%</font></td></tr>
<tr style="vertical-align: bottom; background-color: white">
<td style="text-align: justify"><font style="font: 10pt Times New Roman, Times, Serif">Expected volatility</font></td>
<td><font style="font: 10pt Times New Roman, Times, Serif"> </font></td>
<td style="text-align: left"><font style="font: 10pt Times New Roman, Times, Serif"> </font></td>
<td style="text-align: right"><font style="font: 10pt Times New Roman, Times, Serif">374</font></td>
<td style="text-align: left"><font style="font: 10pt Times New Roman, Times, Serif">%</font></td></tr>
<tr style="vertical-align: bottom; background-color: rgb(204, 238, 255)">
<td style="text-align: justify"><font style="font: 10pt Times New Roman, Times, Serif">Expected term: conversion
feature</font></td>
<td><font style="font: 10pt Times New Roman, Times, Serif"> </font></td>
<td style="text-align: left"><font style="font: 10pt Times New Roman, Times, Serif"> </font></td>
<td style="text-align: right"><font style="font: 10pt Times New Roman, Times, Serif">183 days</font></td>
<td style="text-align: left"><font style="font: 10pt Times New Roman, Times, Serif"> </font></td></tr>
<tr style="vertical-align: bottom; background-color: white">
<td style="text-align: justify"><font style="font: 10pt Times New Roman, Times, Serif">Risk free interest
rate</font></td>
<td><font style="font: 10pt Times New Roman, Times, Serif"> </font></td>
<td style="text-align: left"><font style="font: 10pt Times New Roman, Times, Serif"> </font></td>
<td style="text-align: right"><font style="font: 10pt Times New Roman, Times, Serif">-0.079</font></td>
<td style="text-align: left"><font style="font: 10pt Times New Roman, Times, Serif">%</font></td></tr>
</table>
<p style="font: 10pt/normal Times New Roman, Times, Serif; margin: 0; text-align: justify; text-indent: 0.5in"></p>
<p style="font: 10pt/normal Times New Roman, Times, Serif; margin: 0; text-align: justify"><font style="font: 10pt Times New Roman, Times, Serif">At
June 30, 2014 and December 31, 2013, notes payable and accrued interest consisted of:</font></p>
<p style="font: 10pt/normal Times New Roman, Times, Serif; margin: 0; text-align: justify"><font style="font: 10pt Times New Roman, Times, Serif"> </font></p>
<table cellspacing="0" cellpadding="0" style="font-size: 10pt; line-height: normal; width: 100%; border-collapse: collapse; font-size-adjust: none; font-stretch: normal">
<tr style="vertical-align: bottom">
<td><font style="font: 10pt Times New Roman, Times, Serif"> </font></td>
<td style="padding-bottom: 1pt"><font style="font: 10pt Times New Roman, Times, Serif"> </font></td>
<td colspan="2" style="text-align: center; border-bottom: black 1pt solid"><font style="font: 10pt Times New Roman, Times, Serif">2014</font></td>
<td style="padding-bottom: 1pt"><font style="font: 10pt Times New Roman, Times, Serif"> </font></td>
<td style="padding-bottom: 1pt"><font style="font: 10pt Times New Roman, Times, Serif"> </font></td>
<td colspan="2" style="text-align: center; border-bottom: black 1pt solid"><font style="font: 10pt Times New Roman, Times, Serif">2013</font></td>
<td style="padding-bottom: 1pt"><font style="font: 10pt Times New Roman, Times, Serif"> </font></td>
<td style="padding-bottom: 1pt"><font style="font: 10pt Times New Roman, Times, Serif"> </font></td>
<td><font style="font: 10pt Times New Roman, Times, Serif"> </font></td></tr>
<tr style="vertical-align: bottom; background-color: rgb(204, 238, 255)">
<td style="width: 61%; text-align: left"><font style="font: 10pt Times New Roman, Times, Serif">Notes payable
and accrued interest - Rasel</font></td>
<td style="width: 1%"><font style="font: 10pt Times New Roman, Times, Serif"> </font></td>
<td style="width: 1%; text-align: left"><font style="font: 10pt Times New Roman, Times, Serif">$</font></td>
<td style="width: 15%; text-align: right"><font style="font: 10pt Times New Roman, Times, Serif">74,209</font></td>
<td style="width: 1%; text-align: left"><font style="font: 10pt Times New Roman, Times, Serif"> </font></td>
<td style="width: 1%"><font style="font: 10pt Times New Roman, Times, Serif"> </font></td>
<td style="width: 1%; text-align: left"><font style="font: 10pt Times New Roman, Times, Serif">$</font></td>
<td style="width: 15%; text-align: right"><font style="font: 10pt Times New Roman, Times, Serif">145,847</font></td>
<td style="width: 1%; text-align: left"><font style="font: 10pt Times New Roman, Times, Serif"> </font></td>
<td style="width: 1%"><font style="font: 10pt Times New Roman, Times, Serif"> </font></td>
<td style="width: 2%; text-align: center"><font style="font: 10pt Times New Roman, Times, Serif">a.</font></td></tr>
<tr style="vertical-align: bottom; background-color: white">
<td style="text-align: left"><font style="font: 10pt Times New Roman, Times, Serif">Note payable and accrued
interest - Glendon</font></td>
<td><font style="font: 10pt Times New Roman, Times, Serif"> </font></td>
<td style="text-align: left"><font style="font: 10pt Times New Roman, Times, Serif"> </font></td>
<td style="text-align: right"><font style="font: 10pt Times New Roman, Times, Serif">80,421</font></td>
<td style="text-align: left"><font style="font: 10pt Times New Roman, Times, Serif"> </font></td>
<td><font style="font: 10pt Times New Roman, Times, Serif"> </font></td>
<td style="text-align: left"><font style="font: 10pt Times New Roman, Times, Serif"> </font></td>
<td style="text-align: right"><font style="font: 10pt Times New Roman, Times, Serif">97,552</font></td>
<td style="text-align: left"><font style="font: 10pt Times New Roman, Times, Serif"> </font></td>
<td><font style="font: 10pt Times New Roman, Times, Serif"> </font></td>
<td style="text-align: center"><font style="font: 10pt Times New Roman, Times, Serif">b.</font></td></tr>
<tr style="vertical-align: bottom; background-color: rgb(204, 238, 255)">
<td style="text-align: left"><font style="font: 10pt Times New Roman, Times, Serif">Note payable and accrued
interest - Third Party Financier</font></td>
<td><font style="font: 10pt Times New Roman, Times, Serif"> </font></td>
<td style="text-align: left"><font style="font: 10pt Times New Roman, Times, Serif"> </font></td>
<td style="text-align: right"><font style="font: 10pt Times New Roman, Times, Serif">32,630</font></td>
<td style="text-align: left"><font style="font: 10pt Times New Roman, Times, Serif"> </font></td>
<td><font style="font: 10pt Times New Roman, Times, Serif"> </font></td>
<td style="text-align: left"><font style="font: 10pt Times New Roman, Times, Serif"> </font></td>
<td style="text-align: right"><font style="font: 10pt Times New Roman, Times, Serif">43,925</font></td>
<td style="text-align: left"><font style="font: 10pt Times New Roman, Times, Serif"> </font></td>
<td><font style="font: 10pt Times New Roman, Times, Serif"> </font></td>
<td style="text-align: center"><font style="font: 10pt Times New Roman, Times, Serif">c.</font></td></tr>
<tr style="vertical-align: bottom; background-color: white">
<td style="text-align: left"><font style="font: 10pt Times New Roman, Times, Serif">Note payable and accrued
interest - Third Party Financier</font></td>
<td><font style="font: 10pt Times New Roman, Times, Serif"> </font></td>
<td style="text-align: left"><font style="font: 10pt Times New Roman, Times, Serif"> </font></td>
<td style="text-align: right"><font style="font: 10pt Times New Roman, Times, Serif">25,282</font></td>
<td style="text-align: left"><font style="font: 10pt Times New Roman, Times, Serif"> </font></td>
<td><font style="font: 10pt Times New Roman, Times, Serif"> </font></td>
<td style="text-align: left"><font style="font: 10pt Times New Roman, Times, Serif"> </font></td>
<td style="text-align: right"><font style="font: 10pt Times New Roman, Times, Serif"> </font></td>
<td style="text-align: left"><font style="font: 10pt Times New Roman, Times, Serif"> </font></td>
<td><font style="font: 10pt Times New Roman, Times, Serif"> </font></td>
<td style="text-align: center"><font style="font: 10pt Times New Roman, Times, Serif">d.</font></td></tr>
<tr style="vertical-align: bottom; background-color: rgb(204, 238, 255)">
<td style="text-align: left"><font style="font: 10pt Times New Roman, Times, Serif">Note payable and accrued
interest - Blackbridge</font></td>
<td><font style="font: 10pt Times New Roman, Times, Serif"> </font></td>
<td style="text-align: left"><font style="font: 10pt Times New Roman, Times, Serif"> </font></td>
<td style="text-align: right"><font style="font: 10pt Times New Roman, Times, Serif">14,424</font></td>
<td style="text-align: left"><font style="font: 10pt Times New Roman, Times, Serif"> </font></td>
<td><font style="font: 10pt Times New Roman, Times, Serif"> </font></td>
<td style="text-align: left"><font style="font: 10pt Times New Roman, Times, Serif"> </font></td>
<td style="text-align: right"><font style="font: 10pt Times New Roman, Times, Serif">-</font></td>
<td style="text-align: left"><font style="font: 10pt Times New Roman, Times, Serif"> </font></td>
<td><font style="font: 10pt Times New Roman, Times, Serif"> </font></td>
<td style="text-align: center"><font style="font: 10pt Times New Roman, Times, Serif">e.</font></td></tr>
<tr style="vertical-align: bottom; background-color: white">
<td style="text-align: left; text-indent: -0.125in; padding-bottom: 1pt; padding-left: 0.125in"><font style="font: 10pt Times New Roman, Times, Serif">Note
payable and accrued interest - Vulcan (net of debt discount of $0 and $100,000 as of June 30, 2014 and December 31, 2013,
respectively)</font></td>
<td style="padding-bottom: 1pt"><font style="font: 10pt Times New Roman, Times, Serif"> </font></td>
<td style="text-align: left; border-bottom: black 1pt solid"><font style="font: 10pt Times New Roman, Times, Serif"> </font></td>
<td style="text-align: right; border-bottom: black 1pt solid"><font style="font: 10pt Times New Roman, Times, Serif">545,000</font></td>
<td style="text-align: left; padding-bottom: 1pt"><font style="font: 10pt Times New Roman, Times, Serif"> </font></td>
<td style="padding-bottom: 1pt"><font style="font: 10pt Times New Roman, Times, Serif"> </font></td>
<td style="text-align: left; border-bottom: black 1pt solid"><font style="font: 10pt Times New Roman, Times, Serif"> </font></td>
<td style="text-align: right; border-bottom: black 1pt solid"><font style="font: 10pt Times New Roman, Times, Serif">520,000</font></td>
<td style="text-align: left; padding-bottom: 1pt"><font style="font: 10pt Times New Roman, Times, Serif"> </font></td>
<td style="padding-bottom: 1pt"><font style="font: 10pt Times New Roman, Times, Serif"> </font></td>
<td style="text-align: center; padding-bottom: 1pt"><font style="font: 10pt Times New Roman, Times, Serif">f.</font></td></tr>
<tr style="vertical-align: bottom; background-color: rgb(204, 238, 255)">
<td><font style="font: 10pt Times New Roman, Times, Serif"> </font></td>
<td><font style="font: 10pt Times New Roman, Times, Serif"> </font></td>
<td style="text-align: left"><font style="font: 10pt Times New Roman, Times, Serif"> </font></td>
<td style="text-align: right"><font style="font: 10pt Times New Roman, Times, Serif"> </font></td>
<td style="text-align: left"><font style="font: 10pt Times New Roman, Times, Serif"> </font></td>
<td><font style="font: 10pt Times New Roman, Times, Serif"> </font></td>
<td style="text-align: left"><font style="font: 10pt Times New Roman, Times, Serif"> </font></td>
<td style="text-align: right"><font style="font: 10pt Times New Roman, Times, Serif"> </font></td>
<td style="text-align: left"><font style="font: 10pt Times New Roman, Times, Serif"> </font></td>
<td><font style="font: 10pt Times New Roman, Times, Serif"> </font></td>
<td><font style="font: 10pt Times New Roman, Times, Serif"> </font></td></tr>
<tr style="vertical-align: bottom; background-color: white">
<td style="padding-bottom: 2.5pt"><font style="font: 10pt Times New Roman, Times, Serif"> </font></td>
<td style="padding-bottom: 2.5pt"><font style="font: 10pt Times New Roman, Times, Serif"> </font></td>
<td style="text-align: left; border-bottom: black 2.5pt double"><font style="font: 10pt Times New Roman, Times, Serif">$</font></td>
<td style="text-align: right; border-bottom: black 2.5pt double"><font style="font: 10pt Times New Roman, Times, Serif">771,965</font></td>
<td style="text-align: left; padding-bottom: 2.5pt"><font style="font: 10pt Times New Roman, Times, Serif"> </font></td>
<td style="padding-bottom: 2.5pt"><font style="font: 10pt Times New Roman, Times, Serif"> </font></td>
<td style="text-align: left; border-bottom: black 2.5pt double"><font style="font: 10pt Times New Roman, Times, Serif">$</font></td>
<td style="text-align: right; border-bottom: black 2.5pt double"><font style="font: 10pt Times New Roman, Times, Serif">807,324</font></td>
<td style="text-align: left; padding-bottom: 2.5pt"><font style="font: 10pt Times New Roman, Times, Serif"> </font></td>
<td style="padding-bottom: 2.5pt"><font style="font: 10pt Times New Roman, Times, Serif"> </font></td>
<td style="padding-bottom: 2.5pt"><font style="font: 10pt Times New Roman, Times, Serif"> </font></td></tr>
</table>
<p style="font: 10pt/normal Times New Roman, Times, Serif; margin: 0; text-align: justify; background-color: white"><font style="font: 10pt Times New Roman, Times, Serif">At
June 30, 2014, we remeasured the value of the derivative liability, according to the following assumptions:</font></p>
<p style="font: 10pt/normal Times New Roman, Times, Serif; margin: 0; text-align: justify; background-color: white"><font style="font: 10pt Times New Roman, Times, Serif"> </font></p>
<table cellspacing="0" cellpadding="0" style="font-size: 10pt; line-height: normal; width: 70%; margin-left: 0.5in; border-collapse: collapse; font-size-adjust: none; font-stretch: normal">
<tr style="vertical-align: bottom; background-color: rgb(204, 238, 255)">
<td style="width: 82%; text-align: justify"><font style="font: 10pt Times New Roman, Times, Serif">Expected
dividends</font></td>
<td style="width: 1%"><font style="font: 10pt Times New Roman, Times, Serif"> </font></td>
<td style="width: 1%; text-align: left"><font style="font: 10pt Times New Roman, Times, Serif"> </font></td>
<td style="width: 15%; text-align: right"><font style="font: 10pt Times New Roman, Times, Serif">0</font></td>
<td style="width: 1%; text-align: left"><font style="font: 10pt Times New Roman, Times, Serif">%</font></td></tr>
<tr style="vertical-align: bottom; background-color: white">
<td style="text-align: justify"><font style="font: 10pt Times New Roman, Times, Serif">Expected volatility</font></td>
<td><font style="font: 10pt Times New Roman, Times, Serif"> </font></td>
<td style="text-align: left"><font style="font: 10pt Times New Roman, Times, Serif"> </font></td>
<td style="text-align: right"><font style="font: 10pt Times New Roman, Times, Serif">373</font></td>
<td style="text-align: left"><font style="font: 10pt Times New Roman, Times, Serif">%</font></td></tr>
<tr style="vertical-align: bottom; background-color: rgb(204, 238, 255)">
<td style="text-align: justify"><font style="font: 10pt Times New Roman, Times, Serif">Expected term: conversion
feature</font></td>
<td><font style="font: 10pt Times New Roman, Times, Serif"> </font></td>
<td style="text-align: left"><font style="font: 10pt Times New Roman, Times, Serif"> </font></td>
<td style="text-align: right"><font style="font: 10pt Times New Roman, Times, Serif">169 days</font></td>
<td style="text-align: left"><font style="font: 10pt Times New Roman, Times, Serif"> </font></td></tr>
<tr style="vertical-align: bottom; background-color: white">
<td style="text-align: justify"><font style="font: 10pt Times New Roman, Times, Serif">Risk free interest
rate</font></td>
<td><font style="font: 10pt Times New Roman, Times, Serif"> </font></td>
<td style="text-align: left"><font style="font: 10pt Times New Roman, Times, Serif"> </font></td>
<td style="text-align: right"><font style="font: 10pt Times New Roman, Times, Serif">-0.070</font></td>
<td style="text-align: left"><font style="font: 10pt Times New Roman, Times, Serif">%</font></td></tr>
</table>
<p style="font: 10pt/normal Times New Roman, Times, Serif; margin: 0; text-align: justify"><font style="font: 10pt Times New Roman, Times, Serif">The
following table shows how the conversions were accounted for within the Series C and Common Stock Additional Paid in Capital accounts:</font></p>
<p style="font: 10pt/normal Times New Roman, Times, Serif; margin: 0; text-align: center; text-indent: 0.5in"><font style="font: 10pt Times New Roman, Times, Serif"> </font></p>
<table cellspacing="0" cellpadding="0" style="font-size: 10pt; line-height: normal; width: 100%; border-collapse: collapse; font-size-adjust: none; font-stretch: normal">
<tr style="vertical-align: bottom">
<td><font style="font: 10pt Times New Roman, Times, Serif"><b> </b></font></td>
<td style="font-weight: bold"><font style="font: 10pt Times New Roman, Times, Serif"><b> </b></font></td>
<td colspan="6" style="text-align: center; font-weight: bold"><font style="font: 10pt Times New Roman, Times, Serif"><b>Series
C</b></font></td>
<td style="font-weight: bold"><font style="font: 10pt Times New Roman, Times, Serif"><b> </b></font></td>
<td><font style="font: 10pt Times New Roman, Times, Serif"><b> </b></font></td>
<td colspan="2"><font style="font: 10pt Times New Roman, Times, Serif"><b> </b></font></td>
<td><font style="font: 10pt Times New Roman, Times, Serif"><b> </b></font></td>
<td><font style="font: 10pt Times New Roman, Times, Serif"><b> </b></font></td>
<td colspan="2"><font style="font: 10pt Times New Roman, Times, Serif"><b> </b></font></td>
<td><font style="font: 10pt Times New Roman, Times, Serif"><b> </b></font></td>
<td style="font-weight: bold"><font style="font: 10pt Times New Roman, Times, Serif"><b> </b></font></td>
<td colspan="2" style="text-align: center; font-weight: bold"><font style="font: 10pt Times New Roman, Times, Serif"><b>Series
C</b></font></td>
<td style="font-weight: bold"><font style="font: 10pt Times New Roman, Times, Serif"><b> </b></font></td>
<td><font style="font: 10pt Times New Roman, Times, Serif"><b> </b></font></td>
<td colspan="2"><font style="font: 10pt Times New Roman, Times, Serif"><b> </b></font></td>
<td><font style="font: 10pt Times New Roman, Times, Serif"><b> </b></font></td></tr>
<tr style="vertical-align: bottom">
<td><font style="font: 10pt Times New Roman, Times, Serif"><b> </b></font></td>
<td style="font-weight: bold"><font style="font: 10pt Times New Roman, Times, Serif"><b> </b></font></td>
<td colspan="6" style="text-align: center; font-weight: bold"><font style="font: 10pt Times New Roman, Times, Serif"><b>Convertible
Preferred</b></font></td>
<td style="font-weight: bold"><font style="font: 10pt Times New Roman, Times, Serif"><b> </b></font></td>
<td><font style="font: 10pt Times New Roman, Times, Serif"><b> </b></font></td>
<td colspan="2"><font style="font: 10pt Times New Roman, Times, Serif"><b> </b></font></td>
<td><font style="font: 10pt Times New Roman, Times, Serif"><b> </b></font></td>
<td><font style="font: 10pt Times New Roman, Times, Serif"><b> </b></font></td>
<td colspan="2"><font style="font: 10pt Times New Roman, Times, Serif"><b> </b></font></td>
<td><font style="font: 10pt Times New Roman, Times, Serif"><b> </b></font></td>
<td style="font-weight: bold"><font style="font: 10pt Times New Roman, Times, Serif"><b> </b></font></td>
<td colspan="2" style="text-align: center; font-weight: bold"><font style="font: 10pt Times New Roman, Times, Serif"><b>Convertible
Preferred</b></font></td>
<td style="font-weight: bold"><font style="font: 10pt Times New Roman, Times, Serif"><b> </b></font></td>
<td><font style="font: 10pt Times New Roman, Times, Serif"><b> </b></font></td>
<td colspan="2"><font style="font: 10pt Times New Roman, Times, Serif"><b> </b></font></td>
<td><font style="font: 10pt Times New Roman, Times, Serif"><b> </b></font></td></tr>
<tr style="vertical-align: bottom">
<td><font style="font: 10pt Times New Roman, Times, Serif"><b> </b></font></td>
<td style="padding-bottom: 1pt; font-weight: bold"><font style="font: 10pt Times New Roman, Times, Serif"><b> </b></font></td>
<td colspan="6" style="border-bottom: black 1pt solid; text-align: center; font-weight: bold"><font style="font: 10pt Times New Roman, Times, Serif"><b>Stock</b></font></td>
<td style="padding-bottom: 1pt; font-weight: bold"><font style="font: 10pt Times New Roman, Times, Serif"><b> </b></font></td>
<td style="padding-bottom: 1pt; font-weight: bold"><font style="font: 10pt Times New Roman, Times, Serif"><b> </b></font></td>
<td colspan="6" style="border-bottom: black 1pt solid; text-align: center; font-weight: bold"><font style="font: 10pt Times New Roman, Times, Serif"><b>Common
Stock</b></font></td>
<td style="padding-bottom: 1pt; font-weight: bold"><font style="font: 10pt Times New Roman, Times, Serif"><b> </b></font></td>
<td style="padding-bottom: 1pt; font-weight: bold"><font style="font: 10pt Times New Roman, Times, Serif"><b> </b></font></td>
<td colspan="2" style="border-bottom: black 1pt solid; text-align: center; font-weight: bold"><font style="font: 10pt Times New Roman, Times, Serif"><b>Stock</b></font></td>
<td style="padding-bottom: 1pt; font-weight: bold"><font style="font: 10pt Times New Roman, Times, Serif"><b> </b></font></td>
<td style="padding-bottom: 1pt; font-weight: bold"><font style="font: 10pt Times New Roman, Times, Serif"><b> </b></font></td>
<td colspan="2" style="border-bottom: black 1pt solid; text-align: center; font-weight: bold"><font style="font: 10pt Times New Roman, Times, Serif"><b>Common
Stock</b></font></td>
<td style="padding-bottom: 1pt; font-weight: bold"><font style="font: 10pt Times New Roman, Times, Serif"><b> </b></font></td></tr>
<tr style="vertical-align: bottom">
<td><font style="font: 10pt Times New Roman, Times, Serif"><b> </b></font></td>
<td><font style="font: 10pt Times New Roman, Times, Serif"><b> </b></font></td>
<td colspan="2"><font style="font: 10pt Times New Roman, Times, Serif"><b> </b></font></td>
<td><font style="font: 10pt Times New Roman, Times, Serif"><b> </b></font></td>
<td><font style="font: 10pt Times New Roman, Times, Serif"><b> </b></font></td>
<td colspan="2"><font style="font: 10pt Times New Roman, Times, Serif"><b> </b></font></td>
<td><font style="font: 10pt Times New Roman, Times, Serif"><b> </b></font></td>
<td><font style="font: 10pt Times New Roman, Times, Serif"><b> </b></font></td>
<td colspan="2"><font style="font: 10pt Times New Roman, Times, Serif"><b> </b></font></td>
<td><font style="font: 10pt Times New Roman, Times, Serif"><b> </b></font></td>
<td><font style="font: 10pt Times New Roman, Times, Serif"><b> </b></font></td>
<td colspan="2"><font style="font: 10pt Times New Roman, Times, Serif"><b> </b></font></td>
<td><font style="font: 10pt Times New Roman, Times, Serif"><b> </b></font></td>
<td style="font-weight: bold"><font style="font: 10pt Times New Roman, Times, Serif"><b> </b></font></td>
<td colspan="2" style="text-align: center; font-weight: bold"><font style="font: 10pt Times New Roman, Times, Serif"><b>Additional
Paid</b></font></td>
<td style="font-weight: bold"><font style="font: 10pt Times New Roman, Times, Serif"><b> </b></font></td>
<td style="font-weight: bold"><font style="font: 10pt Times New Roman, Times, Serif"><b> </b></font></td>
<td colspan="2" style="text-align: center; font-weight: bold"><font style="font: 10pt Times New Roman, Times, Serif"><b>Additional
Paid</b></font></td>
<td style="font-weight: bold"><font style="font: 10pt Times New Roman, Times, Serif"><b> </b></font></td></tr>
<tr style="vertical-align: bottom">
<td><font style="font: 10pt Times New Roman, Times, Serif"><b> </b></font></td>
<td style="padding-bottom: 1pt; font-weight: bold"><font style="font: 10pt Times New Roman, Times, Serif"><b> </b></font></td>
<td colspan="2" style="border-bottom: black 1pt solid; text-align: center; font-weight: bold"><font style="font: 10pt Times New Roman, Times, Serif"><b>Shares</b></font></td>
<td style="padding-bottom: 1pt; font-weight: bold"><font style="font: 10pt Times New Roman, Times, Serif"><b> </b></font></td>
<td style="padding-bottom: 1pt; font-weight: bold"><font style="font: 10pt Times New Roman, Times, Serif"><b> </b></font></td>
<td colspan="2" style="border-bottom: black 1pt solid; text-align: center; font-weight: bold"><font style="font: 10pt Times New Roman, Times, Serif"><b>Amount</b></font></td>
<td style="padding-bottom: 1pt; font-weight: bold"><font style="font: 10pt Times New Roman, Times, Serif"><b> </b></font></td>
<td style="padding-bottom: 1pt; font-weight: bold"><font style="font: 10pt Times New Roman, Times, Serif"><b> </b></font></td>
<td colspan="2" style="border-bottom: black 1pt solid; text-align: center; font-weight: bold"><font style="font: 10pt Times New Roman, Times, Serif"><b>Shares</b></font></td>
<td style="padding-bottom: 1pt; font-weight: bold"><font style="font: 10pt Times New Roman, Times, Serif"><b> </b></font></td>
<td style="padding-bottom: 1pt; font-weight: bold"><font style="font: 10pt Times New Roman, Times, Serif"><b> </b></font></td>
<td colspan="2" style="border-bottom: black 1pt solid; text-align: center; font-weight: bold"><font style="font: 10pt Times New Roman, Times, Serif"><b>Amount</b></font></td>
<td style="padding-bottom: 1pt; font-weight: bold"><font style="font: 10pt Times New Roman, Times, Serif"><b> </b></font></td>
<td style="padding-bottom: 1pt; font-weight: bold"><font style="font: 10pt Times New Roman, Times, Serif"><b> </b></font></td>
<td colspan="2" style="border-bottom: black 1pt solid; text-align: center; font-weight: bold"><font style="font: 10pt Times New Roman, Times, Serif"><b>In
Capital</b></font></td>
<td style="padding-bottom: 1pt; font-weight: bold"><font style="font: 10pt Times New Roman, Times, Serif"><b> </b></font></td>
<td style="padding-bottom: 1pt; font-weight: bold"><font style="font: 10pt Times New Roman, Times, Serif"><b> </b></font></td>
<td colspan="2" style="border-bottom: black 1pt solid; text-align: center; font-weight: bold"><font style="font: 10pt Times New Roman, Times, Serif"><b>In
Capital</b></font></td>
<td style="padding-bottom: 1pt; font-weight: bold"><font style="font: 10pt Times New Roman, Times, Serif"><b> </b></font></td></tr>
<tr style="vertical-align: bottom; background-color: rgb(204, 238, 255)">
<td style="width: 34%; padding-bottom: 2.5pt; font-weight: bold"><font style="font: 10pt Times New Roman, Times, Serif"><b>Balances
at December 31, 2013</b></font></td>
<td style="width: 1%; padding-bottom: 2.5pt"><font style="font: 10pt Times New Roman, Times, Serif"> </font></td>
<td style="width: 1%; text-align: left; border-bottom: black 2.5pt double"><font style="font: 10pt Times New Roman, Times, Serif"> </font></td>
<td style="width: 8%; text-align: right; border-bottom: black 2.5pt double"><font style="font: 10pt Times New Roman, Times, Serif">8,470</font></td>
<td style="width: 1%; text-align: left; padding-bottom: 2.5pt"><font style="font: 10pt Times New Roman, Times, Serif"> </font></td>
<td style="width: 1%; padding-bottom: 2.5pt"><font style="font: 10pt Times New Roman, Times, Serif"> </font></td>
<td style="width: 1%; text-align: left; border-bottom: black 2.5pt double"><font style="font: 10pt Times New Roman, Times, Serif">$</font></td>
<td style="width: 8%; text-align: right; border-bottom: black 2.5pt double"><font style="font: 10pt Times New Roman, Times, Serif">-</font></td>
<td style="width: 1%; text-align: left; padding-bottom: 2.5pt"><font style="font: 10pt Times New Roman, Times, Serif"> </font></td>
<td style="width: 1%; padding-bottom: 2.5pt"><font style="font: 10pt Times New Roman, Times, Serif"> </font></td>
<td style="width: 1%; text-align: left; border-bottom: black 2.5pt double"><font style="font: 10pt Times New Roman, Times, Serif"> </font></td>
<td style="width: 8%; text-align: right; border-bottom: black 2.5pt double"><font style="font: 10pt Times New Roman, Times, Serif">247,303,586</font></td>
<td style="width: 1%; text-align: left; padding-bottom: 2.5pt"><font style="font: 10pt Times New Roman, Times, Serif"> </font></td>
<td style="width: 1%; padding-bottom: 2.5pt"><font style="font: 10pt Times New Roman, Times, Serif"> </font></td>
<td style="width: 1%; text-align: left; border-bottom: black 2.5pt double"><font style="font: 10pt Times New Roman, Times, Serif">$</font></td>
<td style="width: 8%; text-align: right; border-bottom: black 2.5pt double"><font style="font: 10pt Times New Roman, Times, Serif">2,473</font></td>
<td style="width: 1%; text-align: left; padding-bottom: 2.5pt"><font style="font: 10pt Times New Roman, Times, Serif"> </font></td>
<td style="width: 1%; padding-bottom: 2.5pt"><font style="font: 10pt Times New Roman, Times, Serif"> </font></td>
<td style="width: 1%; text-align: left; border-bottom: black 2.5pt double"><font style="font: 10pt Times New Roman, Times, Serif">$</font></td>
<td style="width: 8%; text-align: right; border-bottom: black 2.5pt double"><font style="font: 10pt Times New Roman, Times, Serif">188,322</font></td>
<td style="width: 1%; text-align: left; padding-bottom: 2.5pt"><font style="font: 10pt Times New Roman, Times, Serif"> </font></td>
<td style="width: 1%; padding-bottom: 2.5pt"><font style="font: 10pt Times New Roman, Times, Serif"> </font></td>
<td style="width: 1%; text-align: left; border-bottom: black 2.5pt double"><font style="font: 10pt Times New Roman, Times, Serif">$</font></td>
<td style="width: 8%; text-align: right; border-bottom: black 2.5pt double"><font style="font: 10pt Times New Roman, Times, Serif">2,050,621</font></td>
<td style="width: 1%; text-align: left; padding-bottom: 2.5pt"><font style="font: 10pt Times New Roman, Times, Serif"> </font></td></tr>
<tr style="vertical-align: bottom; background-color: white">
<td><font style="font: 10pt Times New Roman, Times, Serif"> </font></td>
<td><font style="font: 10pt Times New Roman, Times, Serif"> </font></td>
<td style="text-align: left"><font style="font: 10pt Times New Roman, Times, Serif"> </font></td>
<td style="text-align: right"><font style="font: 10pt Times New Roman, Times, Serif"> </font></td>
<td style="text-align: left"><font style="font: 10pt Times New Roman, Times, Serif"> </font></td>
<td><font style="font: 10pt Times New Roman, Times, Serif"> </font></td>
<td style="text-align: left"><font style="font: 10pt Times New Roman, Times, Serif"> </font></td>
<td style="text-align: right"><font style="font: 10pt Times New Roman, Times, Serif"> </font></td>
<td style="text-align: left"><font style="font: 10pt Times New Roman, Times, Serif"> </font></td>
<td><font style="font: 10pt Times New Roman, Times, Serif"> </font></td>
<td style="text-align: left"><font style="font: 10pt Times New Roman, Times, Serif"> </font></td>
<td style="text-align: right"><font style="font: 10pt Times New Roman, Times, Serif"> </font></td>
<td style="text-align: left"><font style="font: 10pt Times New Roman, Times, Serif"> </font></td>
<td><font style="font: 10pt Times New Roman, Times, Serif"> </font></td>
<td style="text-align: left"><font style="font: 10pt Times New Roman, Times, Serif"> </font></td>
<td style="text-align: right"><font style="font: 10pt Times New Roman, Times, Serif"> </font></td>
<td style="text-align: left"><font style="font: 10pt Times New Roman, Times, Serif"> </font></td>
<td><font style="font: 10pt Times New Roman, Times, Serif"> </font></td>
<td style="text-align: left"><font style="font: 10pt Times New Roman, Times, Serif"> </font></td>
<td style="text-align: right"><font style="font: 10pt Times New Roman, Times, Serif"> </font></td>
<td style="text-align: left"><font style="font: 10pt Times New Roman, Times, Serif"> </font></td>
<td><font style="font: 10pt Times New Roman, Times, Serif"> </font></td>
<td style="text-align: left"><font style="font: 10pt Times New Roman, Times, Serif"> </font></td>
<td style="text-align: right"><font style="font: 10pt Times New Roman, Times, Serif"> </font></td>
<td style="text-align: left"><font style="font: 10pt Times New Roman, Times, Serif"> </font></td></tr>
<tr style="vertical-align: bottom; background-color: rgb(204, 238, 255)">
<td style="text-align: left"><font style="font: 10pt Times New Roman, Times, Serif">Conversion of Series
C Preferred Stock to Common Stock</font></td>
<td><font style="font: 10pt Times New Roman, Times, Serif"> </font></td>
<td style="text-align: left"><font style="font: 10pt Times New Roman, Times, Serif"> </font></td>
<td style="text-align: right"><font style="font: 10pt Times New Roman, Times, Serif">(7,770</font></td>
<td style="text-align: left"><font style="font: 10pt Times New Roman, Times, Serif">)</font></td>
<td><font style="font: 10pt Times New Roman, Times, Serif"> </font></td>
<td style="text-align: left"><font style="font: 10pt Times New Roman, Times, Serif"> </font></td>
<td style="text-align: right"><font style="font: 10pt Times New Roman, Times, Serif"> </font></td>
<td style="text-align: left"><font style="font: 10pt Times New Roman, Times, Serif"> </font></td>
<td><font style="font: 10pt Times New Roman, Times, Serif"> </font></td>
<td style="text-align: left"><font style="font: 10pt Times New Roman, Times, Serif"> </font></td>
<td style="text-align: right"><font style="font: 10pt Times New Roman, Times, Serif">64,551,667</font></td>
<td style="text-align: left"><font style="font: 10pt Times New Roman, Times, Serif"> </font></td>
<td><font style="font: 10pt Times New Roman, Times, Serif"> </font></td>
<td style="text-align: left"><font style="font: 10pt Times New Roman, Times, Serif"> </font></td>
<td style="text-align: right"><font style="font: 10pt Times New Roman, Times, Serif">646</font></td>
<td style="text-align: left"><font style="font: 10pt Times New Roman, Times, Serif"> </font></td>
<td><font style="font: 10pt Times New Roman, Times, Serif"> </font></td>
<td style="text-align: left"><font style="font: 10pt Times New Roman, Times, Serif"> </font></td>
<td style="text-align: right"><font style="font: 10pt Times New Roman, Times, Serif">(172,758</font></td>
<td style="text-align: left"><font style="font: 10pt Times New Roman, Times, Serif">)</font></td>
<td><font style="font: 10pt Times New Roman, Times, Serif"> </font></td>
<td style="text-align: left"><font style="font: 10pt Times New Roman, Times, Serif"> </font></td>
<td style="text-align: right"><font style="font: 10pt Times New Roman, Times, Serif">172,112</font></td>
<td style="text-align: left"><font style="font: 10pt Times New Roman, Times, Serif"> </font></td></tr>
<tr style="vertical-align: bottom; background-color: white">
<td style="text-align: left; padding-bottom: 1pt"><font style="font: 10pt Times New Roman, Times, Serif">Conversion
of note payable to common stock</font></td>
<td style="padding-bottom: 1pt"><font style="font: 10pt Times New Roman, Times, Serif"> </font></td>
<td style="text-align: left; border-bottom: black 1pt solid"><font style="font: 10pt Times New Roman, Times, Serif"> </font></td>
<td style="text-align: right; border-bottom: black 1pt solid"><font style="font: 10pt Times New Roman, Times, Serif"> </font></td>
<td style="text-align: left; padding-bottom: 1pt"><font style="font: 10pt Times New Roman, Times, Serif"> </font></td>
<td style="padding-bottom: 1pt"><font style="font: 10pt Times New Roman, Times, Serif"> </font></td>
<td style="text-align: left; border-bottom: black 1pt solid"><font style="font: 10pt Times New Roman, Times, Serif"> </font></td>
<td style="text-align: right; border-bottom: black 1pt solid"><font style="font: 10pt Times New Roman, Times, Serif"> </font></td>
<td style="text-align: left; padding-bottom: 1pt"><font style="font: 10pt Times New Roman, Times, Serif"> </font></td>
<td style="padding-bottom: 1pt"><font style="font: 10pt Times New Roman, Times, Serif"> </font></td>
<td style="text-align: left; border-bottom: black 1pt solid"><font style="font: 10pt Times New Roman, Times, Serif"> </font></td>
<td style="text-align: right; border-bottom: black 1pt solid"><font style="font: 10pt Times New Roman, Times, Serif">122,994,477</font></td>
<td style="text-align: left; padding-bottom: 1pt"><font style="font: 10pt Times New Roman, Times, Serif"> </font></td>
<td style="padding-bottom: 1pt"><font style="font: 10pt Times New Roman, Times, Serif"> </font></td>
<td style="text-align: left; border-bottom: black 1pt solid"><font style="font: 10pt Times New Roman, Times, Serif"> </font></td>
<td style="text-align: right; border-bottom: black 1pt solid"><font style="font: 10pt Times New Roman, Times, Serif">1,230</font></td>
<td style="text-align: left; padding-bottom: 1pt"><font style="font: 10pt Times New Roman, Times, Serif"> </font></td>
<td style="padding-bottom: 1pt"><font style="font: 10pt Times New Roman, Times, Serif"> </font></td>
<td style="text-align: left; border-bottom: black 1pt solid"><font style="font: 10pt Times New Roman, Times, Serif"> </font></td>
<td style="text-align: right; border-bottom: black 1pt solid"><font style="font: 10pt Times New Roman, Times, Serif"> </font></td>
<td style="text-align: left; padding-bottom: 1pt"><font style="font: 10pt Times New Roman, Times, Serif"> </font></td>
<td style="padding-bottom: 1pt"><font style="font: 10pt Times New Roman, Times, Serif"> </font></td>
<td style="text-align: left; border-bottom: black 1pt solid"><font style="font: 10pt Times New Roman, Times, Serif"> </font></td>
<td style="text-align: right; border-bottom: black 1pt solid"><font style="font: 10pt Times New Roman, Times, Serif">91,980</font></td>
<td style="text-align: left; padding-bottom: 1pt"><font style="font: 10pt Times New Roman, Times, Serif"> </font></td></tr>
<tr style="vertical-align: bottom; background-color: rgb(204, 238, 255)">
<td><font style="font: 10pt Times New Roman, Times, Serif"> </font></td>
<td><font style="font: 10pt Times New Roman, Times, Serif"> </font></td>
<td style="text-align: left"><font style="font: 10pt Times New Roman, Times, Serif"> </font></td>
<td style="text-align: right"><font style="font: 10pt Times New Roman, Times, Serif"> </font></td>
<td style="text-align: left"><font style="font: 10pt Times New Roman, Times, Serif"> </font></td>
<td><font style="font: 10pt Times New Roman, Times, Serif"> </font></td>
<td style="text-align: left"><font style="font: 10pt Times New Roman, Times, Serif"> </font></td>
<td style="text-align: right"><font style="font: 10pt Times New Roman, Times, Serif"> </font></td>
<td style="text-align: left"><font style="font: 10pt Times New Roman, Times, Serif"> </font></td>
<td><font style="font: 10pt Times New Roman, Times, Serif"> </font></td>
<td style="text-align: left"><font style="font: 10pt Times New Roman, Times, Serif"> </font></td>
<td style="text-align: right"><font style="font: 10pt Times New Roman, Times, Serif"> </font></td>
<td style="text-align: left"><font style="font: 10pt Times New Roman, Times, Serif"> </font></td>
<td><font style="font: 10pt Times New Roman, Times, Serif"> </font></td>
<td style="text-align: left"><font style="font: 10pt Times New Roman, Times, Serif"> </font></td>
<td style="text-align: right"><font style="font: 10pt Times New Roman, Times, Serif"> </font></td>
<td style="text-align: left"><font style="font: 10pt Times New Roman, Times, Serif"> </font></td>
<td><font style="font: 10pt Times New Roman, Times, Serif"> </font></td>
<td style="text-align: left"><font style="font: 10pt Times New Roman, Times, Serif"> </font></td>
<td style="text-align: right"><font style="font: 10pt Times New Roman, Times, Serif"> </font></td>
<td style="text-align: left"><font style="font: 10pt Times New Roman, Times, Serif"> </font></td>
<td><font style="font: 10pt Times New Roman, Times, Serif"> </font></td>
<td style="text-align: left"><font style="font: 10pt Times New Roman, Times, Serif"> </font></td>
<td style="text-align: right"><font style="font: 10pt Times New Roman, Times, Serif"> </font></td>
<td style="text-align: left"><font style="font: 10pt Times New Roman, Times, Serif"> </font></td></tr>
<tr style="vertical-align: bottom; background-color: white">
<td style="padding-bottom: 2.5pt; font-weight: bold"><font style="font: 10pt Times New Roman, Times, Serif"><b>Balances
at June 30, 2014</b></font></td>
<td style="padding-bottom: 2.5pt"><font style="font: 10pt Times New Roman, Times, Serif"> </font></td>
<td style="text-align: left; border-bottom: black 2.5pt double"><font style="font: 10pt Times New Roman, Times, Serif"> </font></td>
<td style="text-align: right; border-bottom: black 2.5pt double"><font style="font: 10pt Times New Roman, Times, Serif">700</font></td>
<td style="text-align: left; padding-bottom: 2.5pt"><font style="font: 10pt Times New Roman, Times, Serif"> </font></td>
<td style="padding-bottom: 2.5pt"><font style="font: 10pt Times New Roman, Times, Serif"> </font></td>
<td style="text-align: left; border-bottom: black 2.5pt double"><font style="font: 10pt Times New Roman, Times, Serif">$</font></td>
<td style="text-align: right; border-bottom: black 2.5pt double"><font style="font: 10pt Times New Roman, Times, Serif">-</font></td>
<td style="text-align: left; padding-bottom: 2.5pt"><font style="font: 10pt Times New Roman, Times, Serif"> </font></td>
<td style="padding-bottom: 2.5pt"><font style="font: 10pt Times New Roman, Times, Serif"> </font></td>
<td style="text-align: left; border-bottom: black 2.5pt double"><font style="font: 10pt Times New Roman, Times, Serif"> </font></td>
<td style="text-align: right; border-bottom: black 2.5pt double"><font style="font: 10pt Times New Roman, Times, Serif">434,849,730</font></td>
<td style="text-align: left; padding-bottom: 2.5pt"><font style="font: 10pt Times New Roman, Times, Serif"> </font></td>
<td style="padding-bottom: 2.5pt"><font style="font: 10pt Times New Roman, Times, Serif"> </font></td>
<td style="text-align: left; border-bottom: black 2.5pt double"><font style="font: 10pt Times New Roman, Times, Serif">$</font></td>
<td style="text-align: right; border-bottom: black 2.5pt double"><font style="font: 10pt Times New Roman, Times, Serif">4,349</font></td>
<td style="text-align: left; padding-bottom: 2.5pt"><font style="font: 10pt Times New Roman, Times, Serif"> </font></td>
<td style="padding-bottom: 2.5pt"><font style="font: 10pt Times New Roman, Times, Serif"> </font></td>
<td style="text-align: left; border-bottom: black 2.5pt double"><font style="font: 10pt Times New Roman, Times, Serif">$</font></td>
<td style="text-align: right; border-bottom: black 2.5pt double"><font style="font: 10pt Times New Roman, Times, Serif">15,564</font></td>
<td style="text-align: left; padding-bottom: 2.5pt"><font style="font: 10pt Times New Roman, Times, Serif"> </font></td>
<td style="padding-bottom: 2.5pt"><font style="font: 10pt Times New Roman, Times, Serif"> </font></td>
<td style="text-align: left; border-bottom: black 2.5pt double"><font style="font: 10pt Times New Roman, Times, Serif">$</font></td>
<td style="text-align: right; border-bottom: black 2.5pt double"><font style="font: 10pt Times New Roman, Times, Serif">2,314,713</font></td>
<td style="text-align: left; padding-bottom: 2.5pt"><font style="font: 10pt Times New Roman, Times, Serif"> </font></td></tr>
</table>
<p style="font: 10pt/normal Times New Roman, Times, Serif; margin: 0; text-align: justify"><font style="font: 10pt Times New Roman, Times, Serif">As
of December 31, 2013 and December 31, 2012, the Company had repurchased 38,000 of its common shares in the open market, which
were returned to treasury.</font></p>
<p style="font: 10pt/normal Times New Roman, Times, Serif; margin: 0; text-align: justify"><font style="font: 10pt Times New Roman, Times, Serif"> </font></p>
<table cellspacing="0" cellpadding="0" style="font-size: 10pt; line-height: normal; width: 100%; border-collapse: collapse; font-size-adjust: none; font-stretch: normal">
<tr style="vertical-align: bottom">
<td style="text-align: justify"><font style="font: 10pt Times New Roman, Times, Serif"><b> </b></font></td>
<td style="font-weight: bold"><font style="font: 10pt Times New Roman, Times, Serif"><b> </b></font></td>
<td colspan="2" style="text-align: center; font-weight: bold"><font style="font: 10pt Times New Roman, Times, Serif"><b>Total
Number of</b></font></td>
<td style="font-weight: bold"><font style="font: 10pt Times New Roman, Times, Serif"><b> </b></font></td>
<td style="font-weight: bold"><font style="font: 10pt Times New Roman, Times, Serif"><b> </b></font></td>
<td colspan="2" style="text-align: center; font-weight: bold"><font style="font: 10pt Times New Roman, Times, Serif"><b>Average</b></font></td>
<td style="font-weight: bold"><font style="font: 10pt Times New Roman, Times, Serif"><b> </b></font></td>
<td style="font-weight: bold"><font style="font: 10pt Times New Roman, Times, Serif"><b> </b></font></td>
<td colspan="2" style="text-align: center; font-weight: bold"><font style="font: 10pt Times New Roman, Times, Serif"><b>Shares
Purchased</b></font></td>
<td style="font-weight: bold"><font style="font: 10pt Times New Roman, Times, Serif"><b> </b></font></td>
<td style="font-weight: bold"><font style="font: 10pt Times New Roman, Times, Serif"><b> </b></font></td>
<td colspan="2" style="text-align: center; font-weight: bold"><font style="font: 10pt Times New Roman, Times, Serif"><b>Shares
Remaining</b></font></td>
<td style="font-weight: bold"><font style="font: 10pt Times New Roman, Times, Serif"><b> </b></font></td></tr>
<tr style="vertical-align: bottom">
<td style="text-align: justify"><font style="font: 10pt Times New Roman, Times, Serif"><b> </b></font></td>
<td style="padding-bottom: 1pt; font-weight: bold"><font style="font: 10pt Times New Roman, Times, Serif"><b> </b></font></td>
<td colspan="2" style="border-bottom: black 1pt solid; text-align: center; font-weight: bold"><font style="font: 10pt Times New Roman, Times, Serif"><b>Shares
Purchased</b></font></td>
<td style="padding-bottom: 1pt; font-weight: bold"><font style="font: 10pt Times New Roman, Times, Serif"><b> </b></font></td>
<td style="padding-bottom: 1pt; font-weight: bold"><font style="font: 10pt Times New Roman, Times, Serif"><b> </b></font></td>
<td colspan="2" style="border-bottom: black 1pt solid; text-align: center; font-weight: bold"><font style="font: 10pt Times New Roman, Times, Serif"><b>Price
Paid</b></font></td>
<td style="padding-bottom: 1pt; font-weight: bold"><font style="font: 10pt Times New Roman, Times, Serif"><b> </b></font></td>
<td style="padding-bottom: 1pt; font-weight: bold"><font style="font: 10pt Times New Roman, Times, Serif"><b> </b></font></td>
<td colspan="2" style="border-bottom: black 1pt solid; text-align: center; font-weight: bold"><font style="font: 10pt Times New Roman, Times, Serif"><b>Under
Repurchase Plan</b></font></td>
<td style="padding-bottom: 1pt; font-weight: bold"><font style="font: 10pt Times New Roman, Times, Serif"><b> </b></font></td>
<td style="padding-bottom: 1pt; font-weight: bold"><font style="font: 10pt Times New Roman, Times, Serif"><b> </b></font></td>
<td colspan="2" style="border-bottom: black 1pt solid; text-align: center; font-weight: bold"><font style="font: 10pt Times New Roman, Times, Serif"><b>Under
Repurchase Plan</b></font></td>
<td style="padding-bottom: 1pt; font-weight: bold"><font style="font: 10pt Times New Roman, Times, Serif"><b> </b></font></td></tr>
<tr style="vertical-align: bottom">
<td style="text-align: justify"><font style="font: 10pt Times New Roman, Times, Serif"> </font></td>
<td><font style="font: 10pt Times New Roman, Times, Serif"> </font></td>
<td colspan="2" style="text-align: center"><font style="font: 10pt Times New Roman, Times, Serif"> </font></td>
<td><font style="font: 10pt Times New Roman, Times, Serif"> </font></td>
<td><font style="font: 10pt Times New Roman, Times, Serif"> </font></td>
<td colspan="2" style="text-align: center"><font style="font: 10pt Times New Roman, Times, Serif"> </font></td>
<td><font style="font: 10pt Times New Roman, Times, Serif"> </font></td>
<td><font style="font: 10pt Times New Roman, Times, Serif"> </font></td>
<td colspan="2" style="text-align: center"><font style="font: 10pt Times New Roman, Times, Serif"> </font></td>
<td><font style="font: 10pt Times New Roman, Times, Serif"> </font></td>
<td><font style="font: 10pt Times New Roman, Times, Serif"> </font></td>
<td colspan="2" style="text-align: center"><font style="font: 10pt Times New Roman, Times, Serif"> </font></td>
<td><font style="font: 10pt Times New Roman, Times, Serif"> </font></td></tr>
<tr style="vertical-align: bottom; background-color: rgb(204, 238, 255)">
<td style="text-align: justify; font-weight: bold"><font style="font: 10pt Times New Roman, Times, Serif"><b>Month</b></font></td>
<td><font style="font: 10pt Times New Roman, Times, Serif"> </font></td>
<td style="text-align: left"><font style="font: 10pt Times New Roman, Times, Serif"> </font></td>
<td style="text-align: right"><font style="font: 10pt Times New Roman, Times, Serif"> </font></td>
<td style="text-align: left"><font style="font: 10pt Times New Roman, Times, Serif"> </font></td>
<td><font style="font: 10pt Times New Roman, Times, Serif"> </font></td>
<td style="text-align: left"><font style="font: 10pt Times New Roman, Times, Serif"> </font></td>
<td style="text-align: right"><font style="font: 10pt Times New Roman, Times, Serif"> </font></td>
<td style="text-align: left"><font style="font: 10pt Times New Roman, Times, Serif"> </font></td>
<td><font style="font: 10pt Times New Roman, Times, Serif"> </font></td>
<td style="text-align: left"><font style="font: 10pt Times New Roman, Times, Serif"> </font></td>
<td style="text-align: right"><font style="font: 10pt Times New Roman, Times, Serif"> </font></td>
<td style="text-align: left"><font style="font: 10pt Times New Roman, Times, Serif"> </font></td>
<td><font style="font: 10pt Times New Roman, Times, Serif"> </font></td>
<td style="text-align: left"><font style="font: 10pt Times New Roman, Times, Serif"> </font></td>
<td style="text-align: right"><font style="font: 10pt Times New Roman, Times, Serif"> </font></td>
<td style="text-align: left"><font style="font: 10pt Times New Roman, Times, Serif"> </font></td></tr>
<tr style="vertical-align: bottom; background-color: white">
<td style="text-align: justify"><font style="font: 10pt Times New Roman, Times, Serif"> </font></td>
<td><font style="font: 10pt Times New Roman, Times, Serif"> </font></td>
<td style="text-align: left"><font style="font: 10pt Times New Roman, Times, Serif"> </font></td>
<td style="text-align: right"><font style="font: 10pt Times New Roman, Times, Serif"> </font></td>
<td style="text-align: left"><font style="font: 10pt Times New Roman, Times, Serif"> </font></td>
<td><font style="font: 10pt Times New Roman, Times, Serif"> </font></td>
<td style="text-align: left"><font style="font: 10pt Times New Roman, Times, Serif"> </font></td>
<td style="text-align: right"><font style="font: 10pt Times New Roman, Times, Serif"> </font></td>
<td style="text-align: left"><font style="font: 10pt Times New Roman, Times, Serif"> </font></td>
<td><font style="font: 10pt Times New Roman, Times, Serif"> </font></td>
<td style="text-align: left"><font style="font: 10pt Times New Roman, Times, Serif"> </font></td>
<td style="text-align: right"><font style="font: 10pt Times New Roman, Times, Serif"> </font></td>
<td style="text-align: left"><font style="font: 10pt Times New Roman, Times, Serif"> </font></td>
<td><font style="font: 10pt Times New Roman, Times, Serif"> </font></td>
<td style="text-align: left"><font style="font: 10pt Times New Roman, Times, Serif"> </font></td>
<td style="text-align: right"><font style="font: 10pt Times New Roman, Times, Serif"> </font></td>
<td style="text-align: left"><font style="font: 10pt Times New Roman, Times, Serif"> </font></td></tr>
<tr style="vertical-align: bottom; background-color: rgb(204, 238, 255)">
<td style="width: 40%; text-align: justify"><font style="font: 10pt Times New Roman, Times, Serif">May
2011</font></td>
<td style="width: 1%"><font style="font: 10pt Times New Roman, Times, Serif"> </font></td>
<td style="width: 1%; text-align: left"><font style="font: 10pt Times New Roman, Times, Serif"> </font></td>
<td style="width: 12%; text-align: right"><font style="font: 10pt Times New Roman, Times, Serif">23,500</font></td>
<td style="width: 1%; text-align: left"><font style="font: 10pt Times New Roman, Times, Serif"> </font></td>
<td style="width: 1%"><font style="font: 10pt Times New Roman, Times, Serif"> </font></td>
<td style="width: 1%; text-align: left"><font style="font: 10pt Times New Roman, Times, Serif">$</font></td>
<td style="width: 12%; text-align: right"><font style="font: 10pt Times New Roman, Times, Serif">0.4095</font></td>
<td style="width: 1%; text-align: left"><font style="font: 10pt Times New Roman, Times, Serif"> </font></td>
<td style="width: 1%"><font style="font: 10pt Times New Roman, Times, Serif"> </font></td>
<td style="width: 1%; text-align: left"><font style="font: 10pt Times New Roman, Times, Serif"> </font></td>
<td style="width: 12%; text-align: right"><font style="font: 10pt Times New Roman, Times, Serif">23,500</font></td>
<td style="width: 1%; text-align: left"><font style="font: 10pt Times New Roman, Times, Serif"> </font></td>
<td style="width: 1%"><font style="font: 10pt Times New Roman, Times, Serif"> </font></td>
<td style="width: 1%; text-align: left"><font style="font: 10pt Times New Roman, Times, Serif"> </font></td>
<td style="width: 12%; text-align: right"><font style="font: 10pt Times New Roman, Times, Serif">976,500</font></td>
<td style="width: 1%; text-align: left"><font style="font: 10pt Times New Roman, Times, Serif"> </font></td></tr>
<tr style="vertical-align: bottom; background-color: white">
<td style="text-align: justify"><font style="font: 10pt Times New Roman, Times, Serif">August 2011</font></td>
<td><font style="font: 10pt Times New Roman, Times, Serif"> </font></td>
<td style="text-align: left"><font style="font: 10pt Times New Roman, Times, Serif"> </font></td>
<td style="text-align: right"><font style="font: 10pt Times New Roman, Times, Serif">9000</font></td>
<td style="text-align: left"><font style="font: 10pt Times New Roman, Times, Serif"> </font></td>
<td><font style="font: 10pt Times New Roman, Times, Serif"> </font></td>
<td style="text-align: left"><font style="font: 10pt Times New Roman, Times, Serif">$</font></td>
<td style="text-align: right"><font style="font: 10pt Times New Roman, Times, Serif">0.1007</font></td>
<td style="text-align: left"><font style="font: 10pt Times New Roman, Times, Serif"> </font></td>
<td><font style="font: 10pt Times New Roman, Times, Serif"> </font></td>
<td style="text-align: left"><font style="font: 10pt Times New Roman, Times, Serif"> </font></td>
<td style="text-align: right"><font style="font: 10pt Times New Roman, Times, Serif">9,000</font></td>
<td style="text-align: left"><font style="font: 10pt Times New Roman, Times, Serif"> </font></td>
<td><font style="font: 10pt Times New Roman, Times, Serif"> </font></td>
<td style="text-align: left"><font style="font: 10pt Times New Roman, Times, Serif"> </font></td>
<td style="text-align: right"><font style="font: 10pt Times New Roman, Times, Serif">967,500</font></td>
<td style="text-align: left"><font style="font: 10pt Times New Roman, Times, Serif"> </font></td></tr>
<tr style="vertical-align: bottom; background-color: rgb(204, 238, 255)">
<td style="text-align: justify; padding-bottom: 1pt"><font style="font: 10pt Times New Roman, Times, Serif">November
2011</font></td>
<td style="padding-bottom: 1pt"><font style="font: 10pt Times New Roman, Times, Serif"> </font></td>
<td style="text-align: left; border-bottom: black 1pt solid"><font style="font: 10pt Times New Roman, Times, Serif"> </font></td>
<td style="text-align: right; border-bottom: black 1pt solid"><font style="font: 10pt Times New Roman, Times, Serif">5500</font></td>
<td style="text-align: left; padding-bottom: 1pt"><font style="font: 10pt Times New Roman, Times, Serif"> </font></td>
<td style="padding-bottom: 1pt"><font style="font: 10pt Times New Roman, Times, Serif"> </font></td>
<td style="text-align: left; border-bottom: black 1pt solid"><font style="font: 10pt Times New Roman, Times, Serif">$</font></td>
<td style="text-align: right; border-bottom: black 1pt solid"><font style="font: 10pt Times New Roman, Times, Serif">0.0964</font></td>
<td style="text-align: left; padding-bottom: 1pt"><font style="font: 10pt Times New Roman, Times, Serif"> </font></td>
<td style="padding-bottom: 1pt"><font style="font: 10pt Times New Roman, Times, Serif"> </font></td>
<td style="text-align: left; border-bottom: black 1pt solid"><font style="font: 10pt Times New Roman, Times, Serif"> </font></td>
<td style="text-align: right; border-bottom: black 1pt solid"><font style="font: 10pt Times New Roman, Times, Serif">5,500</font></td>
<td style="text-align: left; padding-bottom: 1pt"><font style="font: 10pt Times New Roman, Times, Serif"> </font></td>
<td style="padding-bottom: 1pt"><font style="font: 10pt Times New Roman, Times, Serif"> </font></td>
<td style="text-align: left; padding-bottom: 1pt"><font style="font: 10pt Times New Roman, Times, Serif"> </font></td>
<td style="text-align: right; padding-bottom: 1pt"><font style="font: 10pt Times New Roman, Times, Serif">962,000</font></td>
<td style="text-align: left; padding-bottom: 1pt"><font style="font: 10pt Times New Roman, Times, Serif"> </font></td></tr>
<tr style="vertical-align: bottom; background-color: white">
<td style="text-align: justify"><font style="font: 10pt Times New Roman, Times, Serif"> </font></td>
<td><font style="font: 10pt Times New Roman, Times, Serif"> </font></td>
<td style="text-align: left"><font style="font: 10pt Times New Roman, Times, Serif"> </font></td>
<td style="text-align: right"><font style="font: 10pt Times New Roman, Times, Serif"> </font></td>
<td style="text-align: left"><font style="font: 10pt Times New Roman, Times, Serif"> </font></td>
<td><font style="font: 10pt Times New Roman, Times, Serif"> </font></td>
<td style="text-align: left"><font style="font: 10pt Times New Roman, Times, Serif"> </font></td>
<td style="text-align: right"><font style="font: 10pt Times New Roman, Times, Serif"> </font></td>
<td style="text-align: left"><font style="font: 10pt Times New Roman, Times, Serif"> </font></td>
<td><font style="font: 10pt Times New Roman, Times, Serif"> </font></td>
<td style="text-align: left"><font style="font: 10pt Times New Roman, Times, Serif"> </font></td>
<td style="text-align: right"><font style="font: 10pt Times New Roman, Times, Serif"> </font></td>
<td style="text-align: left"><font style="font: 10pt Times New Roman, Times, Serif"> </font></td>
<td><font style="font: 10pt Times New Roman, Times, Serif"> </font></td>
<td style="text-align: left"><font style="font: 10pt Times New Roman, Times, Serif"> </font></td>
<td style="text-align: right"><font style="font: 10pt Times New Roman, Times, Serif"> </font></td>
<td style="text-align: left"><font style="font: 10pt Times New Roman, Times, Serif"> </font></td></tr>
<tr style="vertical-align: bottom; background-color: rgb(204, 238, 255)">
<td style="text-align: left; padding-bottom: 2.5pt"><font style="font: 10pt Times New Roman, Times, Serif">Weighted-average
price paid per share</font></td>
<td style="padding-bottom: 2.5pt; font-weight: bold"><font style="font: 10pt Times New Roman, Times, Serif"> </font></td>
<td style="text-align: left; font-weight: bold; border-bottom: black 2.5pt double"><font style="font: 10pt Times New Roman, Times, Serif"> </font></td>
<td style="text-align: right; font-weight: bold; border-bottom: black 2.5pt double"><font style="font: 10pt Times New Roman, Times, Serif"><b>38,000</b></font></td>
<td style="text-align: left; padding-bottom: 2.5pt; font-weight: bold"><font style="font: 10pt Times New Roman, Times, Serif"><b> </b></font></td>
<td style="padding-bottom: 2.5pt; font-weight: bold"><font style="font: 10pt Times New Roman, Times, Serif"><b> </b></font></td>
<td style="text-align: left; font-weight: bold; border-bottom: black 2.5pt double"><font style="font: 10pt Times New Roman, Times, Serif"><b>$</b></font></td>
<td style="text-align: right; font-weight: bold; border-bottom: black 2.5pt double"><font style="font: 10pt Times New Roman, Times, Serif"><b>0.2910</b></font></td>
<td style="text-align: left; padding-bottom: 2.5pt; font-weight: bold"><font style="font: 10pt Times New Roman, Times, Serif"><b> </b></font></td>
<td style="padding-bottom: 2.5pt; font-weight: bold"><font style="font: 10pt Times New Roman, Times, Serif"><b> </b></font></td>
<td style="text-align: left; font-weight: bold; border-bottom: black 2.5pt double"><font style="font: 10pt Times New Roman, Times, Serif"><b> </b></font></td>
<td style="text-align: right; font-weight: bold; border-bottom: black 2.5pt double"><font style="font: 10pt Times New Roman, Times, Serif"><b>38,000</b></font></td>
<td style="text-align: left; padding-bottom: 2.5pt; font-weight: bold"><font style="font: 10pt Times New Roman, Times, Serif"><b> </b></font></td>
<td style="padding-bottom: 2.5pt"><font style="font: 10pt Times New Roman, Times, Serif"><b> </b></font></td>
<td style="text-align: left; padding-bottom: 2.5pt"><font style="font: 10pt Times New Roman, Times, Serif"><b> </b></font></td>
<td style="text-align: right; padding-bottom: 2.5pt"><font style="font: 10pt Times New Roman, Times, Serif"> </font></td>
<td style="text-align: left; padding-bottom: 2.5pt"><font style="font: 10pt Times New Roman, Times, Serif"> </font></td></tr>
</table>
200570
68000
31328
99328
500000
74209
145847
25000
50000
50000
21330
500000
111000
400000
99328
21970
21970
12539
12539
9431
9431
17861
16936
P3Y
P7Y
38000
23500
9000
5500
38000
200000000
38000
38000
1.00
10000
10000
200000000
0.04
0.10
0.04
0.04
0.04
0.10
0.08
0.14
0.04
0.10
0.10
0.08
0.08
400000
25,000 and $50,000 dated October 6, 2009 and October 20, 2009, respectively, to October 30, 2011.
0.05
0.60
0.002
0.0001
0.0004
0.0014
0.000529
0.30
0.002
0.0001
155542
90000
75273
8409
1230
91980
44200
49010
7770
8584
8584
22097
20847
1380
344
100000
2500
2500
All interest and principal must be repaid on April 29, 2014
<p><font style="font: 10pt Times New Roman, Times, Serif">All interest and principal must be repaid on March
5, 2015.</font></p>
<p><font style="font: 10pt Times New Roman, Times, Serif">All interest and principal must be repaid on September
1, 2014.</font></p>
0.42
0.42
0.42
P10Y
P20D
P10D
P10D
P10D
1.41
1.26
1.36
1.21
1.31
1.12
0.10
0.04
<p style="font: 8pt Times New Roman, Times, Serif; margin: 0; text-align: justify; text-indent: 20pt">Financer has agreed to restrict
its ability to convert the July 2013 Note and receive shares of common stock such that the number of shares of
common stock held by them in the aggregate and their affiliates after such conversion or
exercise does not exceed 9.99% of the then issued and outstanding shares of common stock.   The total net proceeds
the Company received from this offering were $42,500, less $2,500 in attorney’s fees. As of the date of
the July 2013 Note, the Company is obligated on the Note issued to Financer in connection with the offering.
The July 2013 Note is a debt obligation arising other than in the ordinary course of business, which constitutes a
direct financial obligation of the Company. </p>
</p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify"><font style="font: 10pt Times New Roman, Times, Serif">Financer has
agreed to restrict its ability to convert the June 2014 Note and receive shares of common stock such that the number of shares
of common stock held by them in the aggregate and their affiliates after such conversion or exercise
does not exceed 4.99% of the then issued and outstanding shares of common stock.   The total net proceeds the Company
received from this offering were $32,500, less $2,500 in attorney’s fees pursuant to the terms of this convertible agreement.
<font style="background-color: white">As of the date of the </font>June 2014 <font style="background-color: white">Note, the Company
is obligated on the Note issued to Financer in connection with the offering. The</font> June 2014 <font style="background-color: white">Note
is a debt obligation arising other than in the ordinary course of business, which constitutes a direct financial obligation of
the Company. </font></font></p>
<p style="font: 8pt Times New Roman, Times, Serif; margin: 0; text-align: justify">
</p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify"><font style="font: 10pt Times New Roman, Times, Serif">Financer
2 has agreed to restrict its ability to convert the May 2014 Note and receive shares of common stock such that the number
of shares of common stock held by them in the aggregate and their affiliates after such conversion or
exercise does not exceed 4.99% of the then issued and outstanding shares of common stock.   <font style="background-color: white">As
of the date of the May 2014 Note, the Company is obligated on the Note issued to Financer 2 in connection with the offering. The
</font>May 2014 <font style="background-color: white">Note is a debt obligation arising other than in the ordinary course of business,
which constitutes a direct financial obligation of the Company.</font></font></p>
<p style="font: 8pt Times New Roman, Times, Serif; margin: 0; text-align: justify">
<p><font style="font: 10pt Times New Roman, Times, Serif">The conversion price is 90% multiplied by the market
price, which is defined in the agreement as the lowest of the daily trading price for the common stock during the twenty (20)
trading day period ending on the latest complete trading day prior to the conversion date.</font></p>
<p><font style="font: 10pt Times New Roman, Times, Serif">Each share of Series C Preferred Stock is convertible,
at the option of GV, into such number of shares of common stock of the Company as determined by dividing the Stated Value (as
defined below) by the Conversion Price (as defined below).  The Conversion Price for each share is equal to a 50% discount
to the average of the lowest three lowest closing bid prices of the Company’s common stock during the 10-day trading period
prior to the conversion with a minimum conversion price of $0.002.</font></p>
<p><font style="font: 10pt Times New Roman, Times, Serif">The note was convertible at 90% of the lowest price
for the previous 20 trading days. At June 30, 2014, the note would have converted into 250,000,000 shares (50 shares post-split,
after 5,000-to-1 and 1,000-to-1 reverse splits in October 2014 and February 2015, respectively).</font></p>
90000000
42500
500000
500000
147625
82210
2014-12-16
2015-03-05
0.0499
0.0499
0.0499
0.0499
0.0499
0.049
0.00009
0.00001
0.0001
0
100000
75921
0.0000
0.0000
3.74
3.73
P183D
P169D
0.0079
0.0070
24000
49200
900256322
238638820
45000
112517241
45000
15000000
255893103
25666667
87179310
15000000
238820
40000000
100
100
25282
700
154000000
183400000
<p><font style="font: 10pt Times New Roman, Times, Serif">1-10,000</font></p>
21021900
122994477
31994477
91000000
54651667
15000000
10000
345
1897500
380
2090000
380
2090000
425
2337500
1800
9900000
83000000
83000000
0.4095
0.1007
0.0964
0.291
23500
9000
5500
38000
976500
967500
962000
700
8470
247303586
434849730
646
-172758
172112
-7770
64551667
1000000
11.00
100
700
6670
600000
0.003
126184
43974
126184
140608
90000
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0"><font style="font: 10pt Times New Roman, Times, Serif"><b>5.
Notes and Short-term Receivables </b></font></p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify"><font style="font: 10pt Times New Roman, Times, Serif"> </font></p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify"><font style="font: 10pt Times New Roman, Times, Serif">At
June 30, 2014 and December 31, 2013, notes and short-term receivables, including accrued interest, consisted of:</font></p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: center"><font style="font: 10pt Times New Roman, Times, Serif"></font></p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0"><font style="font: 10pt Times New Roman, Times, Serif"> </font></p>
<table cellspacing="0" cellpadding="0" align="center" style="width: 80%; border-collapse: collapse; font-size: 10pt">
<tr style="vertical-align: bottom">
<td nowrap="nowrap"><font style="font: 10pt Times New Roman, Times, Serif"> </font></td>
<td nowrap="nowrap" style="padding-bottom: 1pt"><font style="font: 10pt Times New Roman, Times, Serif"> </font></td>
<td colspan="2" nowrap="nowrap" style="border-bottom: black 1pt solid; text-align: center"><font style="font: 10pt Times New Roman, Times, Serif">June
30, 2014</font></td>
<td nowrap="nowrap" style="padding-bottom: 1pt"><font style="font: 10pt Times New Roman, Times, Serif"> </font></td>
<td nowrap="nowrap" style="padding-bottom: 1pt"><font style="font: 10pt Times New Roman, Times, Serif"> </font></td>
<td colspan="2" nowrap="nowrap" style="border-bottom: black 1pt solid; text-align: center"><font style="font: 10pt Times New Roman, Times, Serif">December
31, 2013</font></td>
<td nowrap="nowrap" style="padding-bottom: 1pt"><font style="font: 10pt Times New Roman, Times, Serif"> </font></td></tr>
<tr style="background-color: rgb(204,238,255); vertical-align: bottom">
<td style="text-align: left; padding-bottom: 1pt; width: 64%"><font style="font: 10pt Times New Roman, Times, Serif">Note
receivable - Vulcan</font></td>
<td style="padding-bottom: 1pt; width: 1%"><font style="font: 10pt Times New Roman, Times, Serif"> </font></td>
<td style="border-bottom: black 1pt solid; text-align: left; width: 1%"><font style="font: 10pt Times New Roman, Times, Serif">$</font></td>
<td style="border-bottom: black 1pt solid; text-align: right; width: 15%"><font style="font: 10pt Times New Roman, Times, Serif">468,000</font></td>
<td style="text-align: left; padding-bottom: 1pt; width: 1%"><font style="font: 10pt Times New Roman, Times, Serif"> </font></td>
<td style="padding-bottom: 1pt; width: 1%"><font style="font: 10pt Times New Roman, Times, Serif"> </font></td>
<td style="border-bottom: black 1pt solid; text-align: left; width: 1%"><font style="font: 10pt Times New Roman, Times, Serif">$</font></td>
<td style="border-bottom: black 1pt solid; text-align: right; width: 15%"><font style="font: 10pt Times New Roman, Times, Serif">440,000</font></td>
<td style="text-align: left; padding-bottom: 1pt; width: 1%"><font style="font: 10pt Times New Roman, Times, Serif"> </font></td></tr>
<tr style="background-color: white; vertical-align: bottom">
<td><font style="font: 10pt Times New Roman, Times, Serif"> </font></td>
<td><font style="font: 10pt Times New Roman, Times, Serif"> </font></td>
<td style="text-align: left"><font style="font: 10pt Times New Roman, Times, Serif"> </font></td>
<td style="text-align: right"><font style="font: 10pt Times New Roman, Times, Serif"> </font></td>
<td style="text-align: left"><font style="font: 10pt Times New Roman, Times, Serif"> </font></td>
<td><font style="font: 10pt Times New Roman, Times, Serif"> </font></td>
<td style="text-align: left"><font style="font: 10pt Times New Roman, Times, Serif"> </font></td>
<td style="text-align: right"><font style="font: 10pt Times New Roman, Times, Serif"> </font></td>
<td style="text-align: left"><font style="font: 10pt Times New Roman, Times, Serif"> </font></td></tr>
<tr style="background-color: rgb(204,238,255); vertical-align: bottom">
<td style="text-align: left; padding-bottom: 2.5pt; padding-left: 9pt"><font style="font: 10pt Times New Roman, Times, Serif">Total
notes and short-term receivables</font></td>
<td style="padding-bottom: 2.5pt"><font style="font: 10pt Times New Roman, Times, Serif"> </font></td>
<td style="border-bottom: black 2.5pt double; text-align: left"><font style="font: 10pt Times New Roman, Times, Serif">$</font></td>
<td style="border-bottom: black 2.5pt double; text-align: right"><font style="font: 10pt Times New Roman, Times, Serif">468,000</font></td>
<td style="text-align: left; padding-bottom: 2.5pt"><font style="font: 10pt Times New Roman, Times, Serif"> </font></td>
<td style="padding-bottom: 2.5pt"><font style="font: 10pt Times New Roman, Times, Serif"> </font></td>
<td style="border-bottom: black 2.5pt double; text-align: left"><font style="font: 10pt Times New Roman, Times, Serif">$</font></td>
<td style="border-bottom: black 2.5pt double; text-align: right"><font style="font: 10pt Times New Roman, Times, Serif">440,000</font></td>
<td style="text-align: left; padding-bottom: 2.5pt"><font style="font: 10pt Times New Roman, Times, Serif"> </font></td></tr>
</table>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0"><font style="font: 10pt Times New Roman, Times, Serif">At
June 30, 2014 and December 31, 2013, notes and short-term receivables, including accrued interest, consisted of: </font></p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0"><font style="font: 10pt Times New Roman, Times, Serif"> </font></p>
<table cellspacing="0" cellpadding="0" align="center" style="width: 80%; border-collapse: collapse; font-size: 10pt">
<tr style="vertical-align: bottom">
<td nowrap="nowrap"><font style="font: 10pt Times New Roman, Times, Serif"> </font></td>
<td nowrap="nowrap" style="padding-bottom: 1pt"><font style="font: 10pt Times New Roman, Times, Serif"> </font></td>
<td colspan="2" nowrap="nowrap" style="border-bottom: black 1pt solid; text-align: center"><font style="font: 10pt Times New Roman, Times, Serif">June
30, 2014</font></td>
<td nowrap="nowrap" style="padding-bottom: 1pt"><font style="font: 10pt Times New Roman, Times, Serif"> </font></td>
<td nowrap="nowrap" style="padding-bottom: 1pt"><font style="font: 10pt Times New Roman, Times, Serif"> </font></td>
<td colspan="2" nowrap="nowrap" style="border-bottom: black 1pt solid; text-align: center"><font style="font: 10pt Times New Roman, Times, Serif">December
31, 2013</font></td>
<td nowrap="nowrap" style="padding-bottom: 1pt"><font style="font: 10pt Times New Roman, Times, Serif"> </font></td></tr>
<tr style="background-color: rgb(204,238,255); vertical-align: bottom">
<td style="text-align: left; padding-bottom: 1pt; width: 64%"><font style="font: 10pt Times New Roman, Times, Serif">Note
receivable - Vulcan</font></td>
<td style="padding-bottom: 1pt; width: 1%"><font style="font: 10pt Times New Roman, Times, Serif"> </font></td>
<td style="border-bottom: black 1pt solid; text-align: left; width: 1%"><font style="font: 10pt Times New Roman, Times, Serif">$</font></td>
<td style="border-bottom: black 1pt solid; text-align: right; width: 15%"><font style="font: 10pt Times New Roman, Times, Serif">468,000</font></td>
<td style="text-align: left; padding-bottom: 1pt; width: 1%"><font style="font: 10pt Times New Roman, Times, Serif"> </font></td>
<td style="padding-bottom: 1pt; width: 1%"><font style="font: 10pt Times New Roman, Times, Serif"> </font></td>
<td style="border-bottom: black 1pt solid; text-align: left; width: 1%"><font style="font: 10pt Times New Roman, Times, Serif">$</font></td>
<td style="border-bottom: black 1pt solid; text-align: right; width: 15%"><font style="font: 10pt Times New Roman, Times, Serif">440,000</font></td>
<td style="text-align: left; padding-bottom: 1pt; width: 1%"><font style="font: 10pt Times New Roman, Times, Serif"> </font></td></tr>
<tr style="background-color: white; vertical-align: bottom">
<td><font style="font: 10pt Times New Roman, Times, Serif"> </font></td>
<td><font style="font: 10pt Times New Roman, Times, Serif"> </font></td>
<td style="text-align: left"><font style="font: 10pt Times New Roman, Times, Serif"> </font></td>
<td style="text-align: right"><font style="font: 10pt Times New Roman, Times, Serif"> </font></td>
<td style="text-align: left"><font style="font: 10pt Times New Roman, Times, Serif"> </font></td>
<td><font style="font: 10pt Times New Roman, Times, Serif"> </font></td>
<td style="text-align: left"><font style="font: 10pt Times New Roman, Times, Serif"> </font></td>
<td style="text-align: right"><font style="font: 10pt Times New Roman, Times, Serif"> </font></td>
<td style="text-align: left"><font style="font: 10pt Times New Roman, Times, Serif"> </font></td></tr>
<tr style="background-color: rgb(204,238,255); vertical-align: bottom">
<td style="text-align: left; padding-bottom: 2.5pt; padding-left: 9pt"><font style="font: 10pt Times New Roman, Times, Serif">Total
notes and short-term receivables</font></td>
<td style="padding-bottom: 2.5pt"><font style="font: 10pt Times New Roman, Times, Serif"> </font></td>
<td style="border-bottom: black 2.5pt double; text-align: left"><font style="font: 10pt Times New Roman, Times, Serif">$</font></td>
<td style="border-bottom: black 2.5pt double; text-align: right"><font style="font: 10pt Times New Roman, Times, Serif">468,000</font></td>
<td style="text-align: left; padding-bottom: 2.5pt"><font style="font: 10pt Times New Roman, Times, Serif"> </font></td>
<td style="padding-bottom: 2.5pt"><font style="font: 10pt Times New Roman, Times, Serif"> </font></td>
<td style="border-bottom: black 2.5pt double; text-align: left"><font style="font: 10pt Times New Roman, Times, Serif">$</font></td>
<td style="border-bottom: black 2.5pt double; text-align: right"><font style="font: 10pt Times New Roman, Times, Serif">440,000</font></td>
<td style="text-align: left; padding-bottom: 2.5pt"><font style="font: 10pt Times New Roman, Times, Serif"> </font></td></tr>
</table>
126184
14424
<p style="font: 10pt/normal Times New Roman, Times, Serif; margin: 0"><font style="font: 10pt Times New Roman, Times, Serif">The
Company is restating its financial statements for the period ended June 30, 2014. The reason for the restatement is that the Company
did not show on its books the effect of the Blackbridge note until the period ended September 30, 2014. The commitment fee of
$90,000 was incurred on June 16, 2014, so this liability should have been recorded on the Company’s books in the quarter
ended June 30, 2014. Accordingly, the Company is restating its books for the period ended June 30, 2014 to disclose the effect
of the Blackbridge note. The maturity of the Blackbridge note was December 16, 2014; the Company defaulted on the note and settled
the matter by issuing shares, and the interest expense was also settled in shares rather than cash.</font></p>