NOTE

– RESTATEMENT

As a result of the restatement of the previously issued

2016

consolidated financial statements, as further described in the Company’s annual report on Form

-K for the year ended

December 31, 2017,

the

January 1, 2017

accumulated deficit was increased by

$654,453.

Furthermore, as a result of the audit for the year ended

December 31, 2017,

the net loss reported for

three

and

nine

-months ended

September 30, 2017

has been increased (decreased) by

$82,876

and (

$22,877

), respectively, and accumulated deficit increased by

$631,576

to reflect the net correction of the errors identified in previously reported

2017

and

2016

results, primarily related to the recognition of a liability for a commitment of

$5,000,000

worth of common stock to be issued in the future as consideration in the acquisition of the patent intangible described in Note

and related to the

2017

deferral on the recognition of rental expense related to a lease agreement. The recognition of the

$5,000,000

liability in the restated

2016

results created a corresponding increase in the associated cost basis of the patent. The increase in the value recognized for the patent intangible in

2016

caused an increase in amortization expense to be taken in each subsequent period. The deferral of the rental expense as of

January 1, 2017

in the restated results for the

three

and

nine

-month period ended

September 30, 2017

resulted in a decrease in the rental expense taken in the

first

nine

months of

2017.

In addition, as a result of the restatement of the previously issued

2016

consolidated financial statements, as further described in the Company’s annual report on Form

-K for the year ended

December 31, 2017,

the

January 1, 2017

balance of common stock was reduced by

$3.

It was also determined that the common stock was

-par and the associated amounts recorded within common stock was reclassified to additional paid-in capital.

In addition, certain reclassifications were noted related to interest expense. These had

net impact on consolidated results.

The effect on the Company's previously issued

three

and

nine

-month period ended

September 30, 2017

consolidated financial statements is summarized as follows:

Consolidated Balance Sheet as of

September 30

2017

	Previously Reported			Increase (Decrease)			As Restated

Deferred lease expense	$	-		$	230,786		$	230,786
Intangible assets, net		2,209,152			4,127,635			6,336,787
Patent acquisition liability		-			5,000,000			5,000,000
Common stock		85			(85	)		-
Additional paid-in capital		10,000			(9,918	)		82
Accumulated deficit		(16,889,864	)		(631,576	)		(17,521,440	)

Consolidated Statement of Operations for the

three

-months ended

September 30

2017

	Previously Reported		Increase (Decrease)			As Restated

Consulting fees	$	195,381	$	(40,756	)	$	154,625
Consulting fees and payroll – related parties		-		39,017			39,017
General and administrative		272,438		84,615			357,053
Interest expense		518,894		2,624			521,518
Interest expense – related parties		85,947		(2,624	)		83,323

Consolidated Statement of Operations

for the

nine

-months

ended

September 30

2017

	Previously Reported		Increase (Decrease)			As Restated

Consulting fees	$	498,158	$	(145,933	)	$	352,225
Consulting fees and payroll – related parties		-		122,744			122,744
General and administrative		1,145,632		312			1,145,944
Interest expense		1,552,275		(35,970	)		1,516,305
Interest expense – related parties		210,777		35,970			246,747