What changed in this filing

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Item 8. Financial Statements and Supplementary Data

2018-05-17 compared with 2017-03-31 · 1699 added, 1375 removed, 226 unchanged (93% of the section changed)

Financial Statements.

Media Holdings, Inc.

31, 2016 and 2015

to the Consolidated Financial Statements

Report of Independent Registered Accounting Firm

Consolidated Balance Sheets as of December 31, 2016 and 2015

Jerrick Media Holdings, Inc.

December 31, 2017 and 2016

Index to the Consolidated Financial Statements

Reports of Independent Registered Accounting Firms

Consolidated Balance Sheets of December 31, 2017 and 2016

Consolidated Statements of Operations for the Years Ended December 31, 2017 and 2016

Consolidated Statement of Changes in Stockholders’

Consolidated Statements of Stockholders’

Equity for the Years Ended December 31, 2017 and 2016

3 unchanged sentences

ACCOUNTING FIRM

To the Board of Directors

and Stockholders of

Media Holdings, Inc.

audited the accompanying consolidated balance sheets of Jerrick Media Holdings, Inc.

as of December 31, 2016 and 2015 and the related

consolidated statements of operations, stockholders’

To the Board of Directors and Shareholders of Jerrick Media

Holdings, Inc.:

Opinion on the Financial Statements

We have audited the accompanying consolidated balance sheet

of Jerrick Media Holdings, Inc.

(“the Company”) as of December 31, 2017, the related consolidated statements of operations,

stockholders’

deficit, and cash flows for the year then ended, and the related notes (collectively referred to as the “consolidated

financial statements”).

In our opinion, the consolidated financial statements referred to above present fairly, in all material

respects, the consolidated financial position of the Company as of December 31, 2017, and the consolidated results of its operations

and its cash flows for the year then ended, in conformity with accounting principles generally accepted in the United States of

Explanatory Paragraph Regarding Going Concern

The accompanying financial statements have been prepared assuming

that the Company will continue as a going concern.

As discussed in Note 3 to the financial statements, the Company has suffered

recurring losses from operations and has a net capital deficiency which raises substantial doubt about its ability to continue

as a going concern.

Management's plans in regard to these matters are also described in Note 3.

The financial statements do not

include any adjustments that might result from the outcome of this uncertainty.

Basis for Opinion

These financial statements are the responsibility of the Company’s

Our responsibility is to express an opinion on the Company’s financial statements based on our audit.

a public accounting firm registered with the Public Company Accounting Oversight Board (United States) (“PCAOB”) and

are required to be independent with respect to the Company in accordance with the U.S.

federal securities laws and the applicable

rules and regulations of the Securities and Exchange Commission and the PCAOB.

We conducted our audit in accordance with the standards of the

Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements

are free of material misstatement, whether due to error or fraud.

The Company is not required to have, nor were we engaged to perform,

an audit of its internal control over financial reporting.

As part of our audit, we are required to obtain an understanding of

internal control over financial reporting, but not for the purpose of expressing an opinion on the effectiveness of the Company’s

internal control over financial reporting.

Accordingly, we express no such opinion.

Our audit included performing procedures to assess the risks

of material misstatement of the financial statements, whether due to error or fraud, and performing procedures that respond to

Such procedures included examining on a test basis, evidence regarding the amounts and disclosures in the financial

Our audit also included evaluating the accounting principles used and significant estimates made by management, as

well as evaluating the overall presentation of the financial statements.

We believe that our audit provides a reasonable basis

for our opinion.

/s/ Sadler, Gibb & Associates, LLC

We have served as the Company’s auditor since 2017.

Salt Lake City, UT

REPORT OF INDEPENDENT REGISTERED

PUBLIC ACCOUNTING FIRM

To the Board of Directors and Stockholders of

Jerrick Media Holdings, Inc.

We have audited

the accompanying consolidated balance sheet of Jerrick Media Holdings, Inc.

as of December 31, 2016 and the related consolidated

statements of operations, stockholders’

equity (deficit), and cash flows for the year ended December 31, 2016.

Jerrick Media Holdings, Inc.’s management is responsible for these financial statements.

Our responsibility is

to express an opinion on these financial statements based on our audits.

our audits in accordance with the standards of the Public Company Accounting Oversight Board (United States).

Jerrick Media

Holdings, Inc.’s management is responsible for these financial statements.

Our responsibility is to express an opinion on

these financial statements based on our audits.

We conducted our

audit in accordance with the standards of the Public Company Accounting Oversight Board (United States).

Those standards require

that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement.

The company is not required to have, nor were we engaged to perform, an audit of its internal control over financial reporting.

Our audit included consideration of internal control over financial reporting as a basis for designing audit procedures that are

appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the company’s

that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material

misstatement.

The company is not required to have, nor were we engaged to perform, an audit of its internal control over financial

Our audit included consideration of internal control over financial reporting as a basis for designing audit procedures

that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the company’s

internal control over financial reporting.

3 unchanged sentences

significant estimates made by management, as well as evaluating the overall financial statement presentation.

We believe that our

audits provide a reasonable basis for our opinion.

opinion, the consolidated financial statements referred to above present fairly, in all material respects, the financial position

of Jerrick Media Holdings, Inc.

as of December 31, 2016 and 2015, and the results of its operations and its cash flows for the

years ended December 31, 2016 and 2015 in conformity with accounting principles generally accepted in the United States of America.

The accompanying consolidated financial statements

have been prepared assuming that the entity will continue as a going concern.

As discussed in Note 3 to the financial statements,

the entity has suffered recurring losses from operations that raises substantial doubt about its ability to continue as a going

We believe that

our audit provide a reasonable basis for our opinion.

In our opinion,

the consolidated financial statements referred to above present fairly, in all material respects, the financial position of Jerrick

Media Holdings, Inc.

as of December 31, 2016, and the results of its operations and its cash flows for the year ended December

31, 2016 in conformity with accounting principles generally accepted in the United States of America.

The accompanying

consolidated financial statements have been prepared assuming that the entity will continue as a going concern.

As discussed in

Note 3 to the financial statements, the entity has suffered recurring losses from operations that raises substantial doubt about

its ability to continue as a going concern.

Management's plans in regard to these matters are also described in Note 3.

The financial statements do not include any

adjustments that might result from the outcome of this uncertainty.

/s/ KLJ & Associates, LLP

KLJ & Associates, LLP

The financial

statements do not include any adjustments that might result from the outcome of this uncertainty.

Associates, LLP

KLJ & Associates,

March 31, 2017

5201 Eden Avenue

Edina, MN 55436

Media Holdings, Inc.

Balance Sheets

Balance Sheet

Current Assets

Accounts receivable

Prepaid expenses

3 unchanged sentences

Minority investment in business

Liabilities and Stockholders' Deficit

Liabilities and Stockholders’

Current Liabilities

1 unchanged sentence

Accrued dividends

Convertible Notes, net of debt discount and Issuance costs

Convertible Notes, net

Current portion of capital lease payable

Note payable - related party, net of debt discount

Note payable, net of debt discount

Note payable - related party, net

Note payable, net

Line of credit - related party

Line of credit

2 unchanged sentences

Capital lease payables

Convertible Notes - related party, net

Convertible Notes, net

Total Non-Current Liabilities

1 unchanged sentence

Commitments and contingencies

Stockholders' Deficit

Series A Preferred stock, $0.001 par value, 33,414 and 33,314 shares issued and outstanding, respectively

Series B Preferred stock, $0.001 par value, 8,063 and 7,000 shares issued and outstanding, respectively

Series D Preferred stock, $0.001 par value, 914 and 0 shares issued and outstanding, respectively

Stockholders’

Series A Preferred stock:

100,000 shares designated, $0.001 par value 31,581 and 33,314 shares issued and outstanding, respectively

Series B Preferred stock:

20,000 shares designated, $0.001 par value, 8,063 and 8,063 shares issued and outstanding, respectively

Series D Preferred stock:

2,100,000 shares designated, $0.001 par value, 0 and 914 shares issued and outstanding, respectively

Common stock par value $0.001:

4 unchanged sentences

(22,247,551 )

Total Liabilities and Stockholders' Deficit

accompanying notes to the consolidated financial statements

Media Holdings, Inc.

Statements of Operations

(13,277,981 )

Treasury stock, 220,000 and 0 shares, respectively, at cost

Total Liabilities and Stockholders’

The accompanying notes are an integral

part of these consolidated financial statements.

Jerrick Media Holdings, Inc.

Consolidated Statements of Operations

For the Year Ended

11 unchanged sentences

Interest expense

Accretion of debt discount and issuance cost

Change In derivative liability

Settlement of vendor liabilities

Loss on extinguishment of debt

Gain on settlement of debt

Impairment of minority investment

Gain on the sale of assets

7 unchanged sentences

Weighted average number of common shares outstanding

accompanying notes to the consolidated financial statements

Media Holdings, Inc.

Statements of Changes in Stockholders’

The accompanying notes are an integral

part of these consolidated financial statements.

Jerrick Media Holdings, Inc.

Consolidated Statement of Stockholders’

For the Years ended December 31, 2017

A Preferred Stock

2 unchanged sentences

Stockholders'

Balance, January 1, 2015

$ (2,287,135 )

$ (1,454,602 )

Common stock issued

Series A Preferred stock

issued with warrants

Conversion of secured

convertible notes and interest

Series B Preferred stock

issued with warrants

Stock issuance costs

Stock options and stock

Stock warrants issued

with convetible notes

Net loss for the year

ended December 31, 2015

Paid In Capital

Balance, December 31, 2015

1 unchanged sentence

of common stock and warrants

Issuance of common stock

for cashless exercise of warrants

Conversion of series

D preferred stock to common stock

Conversion of interest

to series B preferred stock

Conversion of common

stock to Series D preferred stock

Common stock issued

commissions and placement agreement

Issuance of common stock

Issuance of common stock for

cashless exercise of warrants

Conversion of series D preferred

stock to common stock

Conversion of interest to

series B preferred stock

Conversion of common stock

to Series D preferred stock

Common stock issued commissions

and placement agreement

Issuance of common stock for

Recapitalization

Liquidated damages on

preferred stock and warrants

Liquidated damages on preferred

stock and warrants

Stock based compensation

Stock warrants issued

with convetible notes

Stock warrants issued

with note payable - related party

Stock warrants issued

with promissory note

Net loss for the year

ended December 31, 2016

Stock warrants issued with

convetible notes

Stock warrants issued with

note payable - related party

Stock warrants issued with

promissory note

Net loss for the year ended

December 31, 2016

Balance, December 31, 2016

(13,277,981 )

Conversion of series A to

Conversion of series D to

Common stock issued to settle

vendor liabilities

Stock based compensation

Stock warrants issued with

Common stock issued for services

Common stock issued with note

Purchase of treasury stock

Net loss for the year ended

December 31, 2016

Balance, December 31, 2017

(22,247,551 )

accompanying notes to the consolidated financial statements

Media Holdings, Inc.

Statements of Cash Flows

The accompanying notes are an integral part

of these consolidated financial statements.

Jerrick Media Holdings, Inc.

Consolidated Statements of Cash Flows

For the Year Ended

December 31, 2017

December 31, 2016

CASH FLOWS FROM OPERATING ACTIVITIES:

5 unchanged sentences

Share-based compensation

Loss on settlement of vendor liabilities

Gain on settlement of debt

Impairment of minority investment

Change in fair value of derivative liability

Loss on extinguishment of debt

Changes in operating assets and liabilities:

Prepaid expenses

Accounts receivable

Security deposit

Accounts payable and accrued expenses

Liquidated damages

Accrued liquidating damages

Net Cash Used In Operating Activities

5 unchanged sentences

Net proceeds from issuance of notes

Repayment of notes

Net proceeds from issuance of preferred stock

2 unchanged sentences

Repayment of convertible notes

Proceeds from issuance of convertible notes - related party

Proceeds from issuance of note payable - related party

1 unchanged sentence

Proceeds from issuance of line of credit

Proceeds from issuance of line of credit - related party

Repayment of line of credit

Cash paid for debt issuance costs

Purchase of treasury stock

Net Cash Provided By Financing Activities

5 unchanged sentences

SUPPLEMENTARY DISCLOSURE OF NON-CASH INVESTING AND FINANCING ACTIVITIES:

Settlement of vendor liabilities

Conversion of interest

1 unchanged sentence

Debt discount on related party note payable

Debt discount on note payable

Accrued dividends

1 unchanged sentence

Liquidated damages

Conversion of bridge notes

accompanying notes to the consolidated financial statements

Media Holdings, Inc.

31, 2016 and 2015

to the Consolidated Financial Statements

1 - Organization and Operations

Derivative liability ceases to exist

Conversion of note payable and interest into convertible notes

Conversion of note payable - related party and interest into convertible notes - related party

The accompanying notes are an integral part

of these consolidated financial statements.

Jerrick Media Holdings, Inc.

December 31, 2017 and 2016

Notes to the Consolidated Financial Statements

Note 1 - Organization and Operations

Jerrick Media Holdings, Inc.

(“we,”

“us,”

the “Company,”

or “Jerrick Media”

or “Jerrick”) (formerly Great

Plains Holdings, Inc.

(the “Company”) was incorporated under the laws of the state of Nevada on December 30, 1999

or “GTPH”) was incorporated under the laws of the state of Nevada on December 30, 1999

under the name LILM, Inc.

The Company changed its name on December 3, 2013 as part of its plans to diversify its business through

the acquisition and operation of commercial real estate, including but not limited to self-storage facilities, apartment buildings,

55+ senior manufactured homes communities, and other income producing properties.

Historically, the Company has principally engaged

in manufacture and marketing of the LiL Marc urinal used in the training of young boys, but is changing its focus to residential

and commercial rental real estate as well as exploring other business opportunities.

February 5, 2016, Great Plains Holdings, Inc.

a Nevada corporation (“GTPH”, or the “Company”), GPH Merger

Sub, Inc., a Nevada corporation and wholly-owned subsidiary of GTPH (“Merger Sub”), and Jerrick Ventures, Inc., a

privately-held Nevada corporation headquartered in New Jersey (“Jerrick”), entered into an Agreement and Plan of Merger

(the “Agreement”) pursuant to which the Merger Sub was merged with and into Jerrick, with Jerrick surviving as a wholly-owned

subsidiary of GTPH (the “Merger”).

The transaction (the “Closing”) took place on February 5, 2016 (the

“Closing Date”).

The Company acquired, through a reverse triangular merger, all of the outstanding capital stock of

Jerrick in exchange for issuing Jerrick’s shareholders (the “Jerrick Shareholders”), pro-rata, a total of 28,500,000

shares of the Company’s common stock.

GTPH shall assume 33,414.89 shares of Jerrick’s Series A Convertible Preferred

Stock (the “Series A Preferred”) and 8,063.33 shares of Series B Convertible Preferred Stock (the “Series B

Preferred”) and file the appropriate certificates of designation to reflect the rights, preferences and privileges of the

Jerrick’s Series A Preferred and Series B Preferred.

Jerrick shareholders that hold either Series A Preferred or Series

B Preferred will be able to exchange such shares for the equivalent in GTPH on a one for one basis.

Additionally, GTPH shall assume

12,391,667 outstanding common stock purchase warrants of Jerrick such that each Jerrick shareholder that holds a warrant to purchase

shares of Jerrick common stock will by virtue of the Merger, be able to purchase the equivalent number of shares of GTPH Common

Stock under the same terms and conditions.

connection with the Merger, on February 5, 2016, the Company and Kent Campbell entered into a Spin-Off Agreement (the “Spin-Off

Agreement”), pursuant to which Mr.

Campbell purchased from the Company (i) all of the Company’s interest in Ashland

Holdings, LLC, a Florida limited liability company, and (ii) all of the Company’s interest in Lil Marc, Inc., a Utah corporation,

in exchange for the cancellation of 781,818 shares of the Parent Company’s Common Stock held by Mr.

Campbell assumed all debts, obligations and liabilities of the Company existing prior to the Merger, pursuant to the terms

and conditions of the Spin-Off Agreement.

February 5, 2016 and in conjunction with the Merger, the Company entered into a Share Exchange Agreement with Kent Campbell, Denis

Espinoza and Sarah Campbell (the “Exchange Agreement”).

Pursuant to the Exchange Agreement, (i) Kent Campbell cancelled

363,636 shares of the Company’s common stock, 6,000 shares of the Company’s Series A Preferred Stock and 10,000 shares

of the Company’s Series B Preferred Stock in exchange for 1,648,881 shares of the Company’s Series D Preferred Stock,

(ii) Denis Espinoza cancelled 58,951 shares of the Company’s common stock and 4,000 shares of the Company’s Series

A Preferred Stock in exchange for 265,676 shares of the Company’s Series D Preferred Stock, and (iii) Sarah Campbell cancelled

21,818 shares of the Company’s common stock in exchange for 98,933 shares of the Company’s Series D Preferred Stock.

connection with the Statutory Merger, the Company changed its name to Jerrick Media Holdings, Inc.

Ventures, Inc.

(“Ventures”) was incorporated on November 24, 2014 under the laws of the State of Nevada.

develops digital transmedia content, including videos, imagery, articles, e-books, as well as traditional film and television,

for each brand in its portfolio.

Ventures, LLC (“Jerrick LLC”) was incorporated in Delaware in 2013.

On December 1, 2014, Jerrick LLC entered into

a share exchange agreement whereby the members of Jerrick LLC exchanged all of their membership interests in Jerrick LLC for Common

Stock in Ventures (the “Jerrick Share Exchange”).

As result of the Jerrick Share Exchange, Jerrick LLC became the

operating subsidiary of Ventures

Merger is being accounted for as a “Reverse Business Combination,”

and Ventures is deemed to be the accounting acquirer

in the merger.

Consequently, the assets and liabilities and the historical operations that will be reflected in the financial

statements prior to the Reverse Business Combination will be those of Ventures, and the consolidated financial statements after

completion of the Merger will include the assets and liabilities of Ventures, historical operations of Ventures and combined operations

of Ventures and Jerrick Media Holdings, Inc.

from the Closing Date of the Merger.

Reverse Business Combination will be treated as a recapitalization of the Company for financial accounting purposes.

The historical

financial statements of Predecessor before the Reverse Business Combination will be replaced with the historical financial statements

of Ventures before the Reverse Business Combination in all future filings with the Securities and Exchange Commission (the “

SEC ”).

2 - Significant and Critical Accounting Policies and Practices

of the Company is responsible for the selection and use of appropriate accounting policies and the appropriateness of accounting

policies and their application.

Critical accounting policies and practices are those that are both most important to the portrayal

of the Company’s financial condition and results and require management’s most difficult, subjective, or complex judgments,

often as a result of the need to make estimates about the effects of matters that are inherently uncertain.

The Company’s

significant and critical accounting policies and practices are disclosed below as required by generally accepted accounting principles.

of Presentation

Company’s consolidated financial statements have been prepared in accordance with accounting principles generally accepted

in the United States of America (“US GAAP”) and the rules and regulations of the Securities and Exchange Commission

(“SEC”).

of Estimates and Assumptions and Critical Accounting Estimates and Assumptions

preparation of financial statements in conformity with US GAAP requires management to make estimates and assumptions that affect

the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the dates of the financial

statements and the reported amounts of revenues and expenses during the reporting periods.

accounting estimates are estimates for which (a) the nature of the estimate is material due to the levels of subjectivity and

judgment necessary to account for highly uncertain matters or the susceptibility of such matters to change and (b) the impact

of the estimate on financial condition or operating performance is material.

The Company’s critical accounting estimates

and assumptions affecting the financial statements were:

The Company changed its name on December 3, 2013 to Great Plains Holdings, Inc.

as part of its plan

to diversify its business through the acquisition and operation of commercial real estate, including, but not limited to,

self-storage facilities, apartment buildings, 55+ senior manufactured home communities, and other income producing

Historically, the Company has principally engaged in the manufacture and marketing of the LiL Marc, a plastic

toilet-training device, which we discontinued as of December 31, 2014.

On February 5, 2016 (the “Closing

Date”), GTPH, GPH Merger Sub, Inc., a Nevada corporation and wholly-owned subsidiary of GTPH (“Merger Sub”),

and Jerrick Ventures, Inc., a privately-held Nevada corporation headquartered in New Jersey (“Jerrick”), entered into

an Agreement and Plan of Merger (the “Agreement”) pursuant to which the Merger Sub was merged with and into Jerrick,

with Jerrick surviving as a wholly-owned subsidiary of GTPH (the “Merger”).

GTPH acquired, through a reverse triangular

merger, all of the outstanding capital stock of Jerrick in exchange for issuing Jerrick’s shareholders (the “Jerrick

Shareholders”), pro-rata, a total of 28,500,000 shares of GTPH’s common stock.

GTPH assumed 33,415 shares of Jerrick’s

Series A Convertible Preferred Stock (the “Jerrick Series A Preferred”) and 8,064 shares of Series B Convertible Preferred

Stock (the “Jerrick Series B Preferred”).

In connection with the Merger, on the Closing

Date, GTPH and Kent Campbell entered into a Spin-Off Agreement (the “Spin-Off Agreement”), pursuant to which Mr.

purchased from GTPH (i) all of GTPH’s interest in Ashland Holdings, LLC, a Florida limited liability company, and (ii) all

of GTPH’s interest in Lil Marc, Inc., a Utah corporation, in exchange for the cancellation of 781,818 shares of GTPH’s

Common Stock held by Mr.

In addition, Mr.

Campbell assumed all debts, obligations and liabilities of GTPH, including

any existing prior to the Merger, pursuant to the terms and conditions of the Spin-Off Agreement.

Upon closing of the Merger on February

5, 2016, the Company changed its business plan to that of Jerrick Media.

Effective February 28, 2016, GTPH entered

into an Agreement and Plan of Merger (the “Statutory Merger Agreement”) with Jerrick, pursuant to which GTPH became

the parent company of Jerrick Ventures, LLC, a wholly-owned operating subsidiary of Jerrick (the “Statutory Merger”)

and GTPH changed its name to Jerrick Media Holdings, Inc.

to better reflect its new business strategy.

Jerrick Media is a technology company focused

on the development of digital communities, marketing branded digital content, and e-commerce opportunities.

Jerrick’s content

distribution platform, Vocal, delivers a robust long-form, digital publishing platform organized into highly engaged niche-communities

capable of hosting all forms of rich media content.

Through Jerrick’s proprietary algorithm dynamics, Vocal enhances the

visibility of content and maximizes viewership, providing advertisers access to target markets that most closely match their interests.

Note 2 - Significant and Critical Accounting

Policies and Practices

Management of the Company is responsible

for the selection and use of appropriate accounting policies and the appropriateness of accounting policies and their application.

Critical accounting policies and practices are those that are both most important to the portrayal of the Company’s financial

condition and results and require management’s most difficult, subjective, or complex judgments, often as a result of the

need to make estimates about the effects of matters that are inherently uncertain.

The Company’s significant and critical

accounting policies and practices are disclosed below as required by generally accepted accounting principles.

Basis of Presentation

The Company’s consolidated financial

statements have been prepared in accordance with accounting principles generally accepted in the United States of America (“US

GAAP”) and the rules and regulations of the Securities and Exchange Commission (“SEC”).

Use of Estimates and Assumptions

and Critical Accounting Estimates and Assumptions

The preparation of financial statements

in conformity with US GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and

liabilities and disclosure of contingent assets and liabilities at the dates of the financial statements and the reported amounts

of revenues and expenses during the reporting periods.

Critical accounting estimates are estimates

for which (a) the nature of the estimate is material due to the levels of subjectivity and judgment necessary to account for highly

uncertain matters or the susceptibility of such matters to change and (b) the impact of the estimate on financial condition or

operating performance is material.

The Company’s critical accounting estimates and assumptions affecting the financial statements

Assumption as a going concern :

14 unchanged sentences

Management made this assumption based on (a) the Company has incurred recurring losses, (b) general economic conditions, and (c) its ability to raise additional funds to support its daily operations by way of a public or private offering, among other factors.

and assumptions used in valuation of equity instruments:

Management estimates expected term of share options and similar

instruments, expected volatility of the Company’s common shares and the method used to estimate it, expected annual

rate of quarterly dividends, and risk free rate(s) to value share options and similar instruments.

significant accounting estimates or assumptions bear the risk of change due to the fact that there are uncertainties attached

to these estimates or assumptions, and certain estimates or assumptions are difficult to measure or value.

bases its estimates on historical experience and on various assumptions that are believed to be reasonable in relation to the

financial statements taken as a whole under the circumstances, the results of which form the basis for making judgments about

the carrying values of assets and liabilities that are not readily apparent from other sources.

regularly evaluates the key factors and assumptions used to develop the estimates utilizing currently available information, changes

in facts and circumstances, historical experience and reasonable assumptions.

After such evaluations, if deemed appropriate, those

estimates are adjusted accordingly.

results could differ from those estimates.

of consolidation

Company applies the guidance of Topic 810 “

Consolidation ”

of the FASB Accounting Standards Codification (“

to determine whether and how to consolidate another entity.

Pursuant to ASC Paragraph 810-10-15-10, all majority-owned subsidiaries—all

entities in which a parent has a controlling financial interest—shall be consolidated except (1) when control does not rest

with the parent, the majority owner;

(2) if the parent is a broker-dealer within the scope of Topic 940 and control is likely

to be temporary;

(3) consolidation by an investment company within the scope of Topic 946 of a non-investment-company investee.

Pursuant to ASC Paragraph 810-10-15-8, the usual condition for a controlling financial interest is ownership of a majority voting

interest, and, therefore, as a general rule ownership by one reporting entity, directly or indirectly, of more than 50 percent

of the outstanding voting shares of another entity is a condition pointing toward consolidation.

The power to control may also

exist with a lesser percentage of ownership, for example, by contract, lease, agreement with other stockholders, or by court decree.

The Company consolidates all less-than-majority-owned subsidiaries, if any, in which the parent’s power to control exists.

Company's consolidated subsidiaries and/or entities are as follows:

Estimates and assumptions used in valuation of equity instruments:

Management estimates expected term of share options and similar instruments, expected volatility of the Company’s common shares and the method used to estimate it, expected annual rate of quarterly dividends, and risk free rate(s) to value share options and similar instruments.

These significant accounting estimates

or assumptions bear the risk of change due to the fact that there are uncertainties attached to these estimates or assumptions,

and certain estimates or assumptions are difficult to measure or value.

Management bases its estimates on historical

experience and on various assumptions that are believed to be reasonable in relation to the financial statements taken as a whole

under the circumstances, the results of which form the basis for making judgments about the carrying values of assets and liabilities

that are not readily apparent from other sources.

Management regularly evaluates the key

factors and assumptions used to develop the estimates utilizing currently available information, changes in facts and circumstances,

historical experience and reasonable assumptions.

After such evaluations, if deemed appropriate, those estimates are adjusted accordingly.

Actual results could differ from those

Principles of consolidation

The Company consolidates all majority-owned subsidiaries, if any, in which the parent’s power to

control exists.

As of December 31, 2017, the Company’s

consolidated subsidiaries and/or entities are as follows:

Name of combined affiliate

2 unchanged sentences

Company interest

Astoria Surgical Supplies North LLC

The State of New Jersey

Castle 6 Productions LLC

The State of New Jersey

Filthy Gorgeous LLC

The State of Delaware

Geek Room LLC

The State of Delaware

Graphic Expression Corporate Collectibles LLC

The State of Delaware

Guccione Stores LLC

The State of New Jersey

iLongevity LLC

The State of New Jersey

JAJ Enterprises LLC

The State of Delaware

Jerrick Ventures LLC

The State of Delaware

Miss Filthy LLC

The State of Delaware

Next Geek Thing LLC

The State of Delaware

No One’s Pet LLC

The State of New Jersey

OMNI Reboot LLC

The State of Delaware

Romper Zombie LLC

The State of Delaware

Steam Wars LLC

The State of Delaware

inter-company balances and transactions have been eliminated.

Value of Financial Instruments

Company follows paragraph 825-10-50-10 of the FASB Accounting Standards Codification for disclosures about fair value of its financial

instruments and paragraph 820-10-35-37 of the FASB Accounting Standards Codification (“Paragraph 820-10-35-37”) to

measure the fair value of its financial instruments.

Paragraph 820-10-35-37 establishes a framework for measuring fair value in

GAAP, and expands disclosures about fair value measurements.

To increase consistency and comparability in fair value measurements

and related disclosures, Paragraph 820-10-35-37 establishes a fair value hierarchy which prioritizes the inputs to valuation techniques

used to measure fair value into three (3) broad levels.

The fair value hierarchy gives the highest priority to quoted prices (unadjusted)

in active markets for identical assets or liabilities and the lowest priority to unobservable inputs.

The three (3) levels of

fair value hierarchy defined by Paragraph 820-10-35-37 are described below:

market prices available in active markets for identical assets or liabilities as of the reporting date.

inputs other than quoted prices in active markets included in Level 1, which are either directly or indirectly observable

as of the reporting date.

inputs that are generally observable inputs and not corroborated by market data.

assets are considered Level 3 when their fair values are determined using pricing models, discounted cash flow methodologies or

similar techniques and at least one significant model assumption or input is unobservable.

fair value hierarchy gives the highest priority to quoted prices (unadjusted) in active markets for identical assets or liabilities

and the lowest priority to unobservable inputs.

If the inputs used to measure the financial assets and liabilities fall within

more than one level described above, the categorization is based on the lowest level input that is significant to the fair value

measurement of the instrument.

carrying amount of the Company’s financial assets and liabilities, such as cash, prepaid expenses, accounts payable and

accrued liabilities and accrued liquidating damages approximate their fair value because of the short maturity of those instruments.

involving related parties cannot be presumed to be carried out on an arm’s-length basis, as the requisite conditions of

competitive, free-market dealings may not exist.

Representations about transactions with related parties, if made, shall not imply

that the related party transactions were consummated on terms equivalent to those that prevail in arm’s-length transactions

unless such representations can be substantiated.

Value of Non-Financial Assets or Liabilities Measured on a Recurring Basis

Company’s non-financial assets include inventory.

The Company identifies potentially excess and slow-moving inventory by

evaluating turn rates, inventory levels and other factors.

Excess quantities are identified through evaluation of inventory aging,

review of inventory turns and historical sales experiences.

The Company provides lower of cost or market reserves for such identified

excess and slow-moving inventories.

The Company establishes a reserve for inventory shrinkage, if any, based on the historical

results of physical inventory cycle counts.

Company considers all highly liquid investments with a maturity of three months or less when purchased to be cash equivalents.

Company minimizes its credit risk associated with cash by periodically evaluating the credit quality of its primary financial

The balance at times may exceed federally insured limits.

Company values inventory, entirely consisting of finished goods, at the lower of cost or market.

Cost is determined on the first-in

and first-out (“FIFO”) method.

The Company reduces inventory for the diminution of value, resulting from product obsolescence,

damage or other issues affecting marketability, equal to the difference between the cost of the inventory and its estimated market

Factors utilized in the determination of estimated market value include:

(i) current sales data and historical return rates,

(ii) estimates of future demand, and (iii) competitive pricing pressures.

Obsolescence and Markdowns

Company evaluates its current level of inventory considering historical sales and other factors and, based on this evaluation,

classify inventory markdowns in the income statement as a component of cost of goods sold pursuant to Paragraph 420-10-S99 of

the FASB Accounting Standards Codification to adjust inventory to net realizable value.

These markdowns are estimates, which could

vary significantly from actual requirements if future economic conditions, customer demand or competition differ from expectations.

Company recorded a markdown of $0 and $21,861 as of December 31, 2016 and 2015, respectively, due to slow moving inventory.

was no lower of cost or market adjustments for the reporting period ended December 31, 2016 or 2015.

and Equipment

and equipment are recorded at cost.

All inter-company balances and transactions

have been eliminated.

On May 12, 2017, the Company assigned the

right, title and interest to all of the membership interests of certain of it’s inactive business subsidiaries, with the

exception of Jerrick Ventures LLC, to the Company’s Chief Executive Officer, Jeremy Frommer, in consideration for Mr.

Frommer’s

assumption of all liabilities of such subsidiaries, if any, with such assignment and assumption effected entirely in the interest

of corporate efficiency.

The Board reviewed the transaction and believes it to be fair in all respects, deeming it to advance the

Company’s business interests by allowing the Company to divest non-producing and non-operating subsidiaries at no cost to

All of the Company’s operations have been, and will continue to be, run through its operating subsidiary, Jerrick

Ventures LLC.

Fair Value of Financial Instruments

The Company follows paragraph 825-10-50-10

of the FASB Accounting Standards Codification for disclosures about fair value of its financial instruments and paragraph 820-10-35-37

of the FASB Accounting Standards Codification (“Paragraph 820-10-35-37”) to measure the fair value of its financial

Paragraph 820-10-35-37 establishes a framework for measuring fair value in U.S.

GAAP, and expands disclosures about

fair value measurements.

To increase consistency and comparability in fair value measurements and related disclosures, Paragraph

820-10-35-37 establishes a fair value hierarchy which prioritizes the inputs to valuation techniques used to measure fair value

into three (3) broad levels.

The fair value hierarchy gives the highest priority to quoted prices (unadjusted) in active markets

for identical assets or liabilities and the lowest priority to unobservable inputs.

The three (3) levels of fair value hierarchy

defined by Paragraph 820-10-35-37 are described below:

Quoted market prices available in active markets for identical assets or liabilities as of the reporting date.

Pricing inputs other than quoted prices in active markets included in Level 1, which are either directly or indirectly observable as of the reporting date.

Pricing inputs that are generally observable inputs and not corroborated by market data.

Financial assets are considered Level 3

when their fair values are determined using pricing models, discounted cash flow methodologies or similar techniques and at least

one significant model assumption or input is unobservable.

The fair value hierarchy gives the highest

priority to quoted prices (unadjusted) in active markets for identical assets or liabilities and the lowest priority to unobservable

If the inputs used to measure the financial assets and liabilities fall within more than one level described above, the

categorization is based on the lowest level input that is significant to the fair value measurement of the instrument.

The carrying amount of the Company’s

financial assets and liabilities, such as cash, prepaid expenses, accounts payable and accrued liabilities and accrued liquidating

damages approximate their fair value because of the short maturity of those instruments.

Transactions involving related parties

cannot be presumed to be carried out on an arm’s-length basis, as the requisite conditions of competitive, free-market dealings

may not exist.

Representations about transactions with related parties, if made, shall not imply that the related party transactions

were consummated on terms equivalent to those that prevail in arm’s-length transactions unless such representations can be

substantiated.

Cash Equivalents

The Company considers all highly liquid

investments with a maturity of three months or less when purchased to be cash equivalents.

The Company minimizes its credit risk associated

with cash by periodically evaluating the credit quality of its primary financial institution.

The balance at times may exceed federally

insured limits.

Property and Equipment

Property and equipment are recorded at

Expenditures for major additions and betterments are capitalized.

Maintenance and repairs

are charged to operations as incurred.

Depreciation is computed by the straight-line method (after taking into account their respective

estimated residual values) over the estimated useful lives of the respective assets as follows:

Maintenance and repairs are charged to operations as incurred.

Depreciation is computed by the straight-line method (after taking into account their respective estimated residual values) over

the estimated useful lives of the respective assets as follows:

Estimated Useful

1 unchanged sentence

Furniture and fixture

sale or retirement of property and equipment, the related cost and accumulated depreciation are removed from the accounts and

any gain or loss is reflected in the consolidated statements of operations.

- Cost Method, Equity Method and Joint Venture

Company accounts for marketable debt and equity securities, available for sale, in accordance with sub-topic 320-10 of the FASB

Accounting Standards Codification (“Sub-topic 320-10”).

to Paragraph 320-10-35-1, investments in debt securities that are classified as available for sale and equity securities that

have readily determinable fair values that are classified as available for sale shall be measured subsequently at fair value in

the consolidated balance sheets at each balance sheet date.

Unrealized holding gains and losses for available-for-sale securities

(including those classified as current assets) shall be excluded from earnings and reported in other comprehensive income until

realized except an available-for-sale security that is designated as being hedged in a fair value hedge, from which all or a portion

of the unrealized holding gain and loss of shall be recognized in earnings during the period of the hedge, pursuant to paragraphs

815-25-35-1 through 815-25-35-4.

Company follows Paragraphs 320-10-35-17 through 320-10-35-34E and assess whether an investment is impaired in each reporting period.

An investment is impaired if the fair value of the investment is less than its cost.

Impairment indicators include, but are not

limited to the following:

a significant deterioration in the earnings performance, credit rating, asset quality, or business

prospects of the investee;

a significant adverse change in the regulatory, economic, or technological environment of the investee;

a significant adverse change in the general market condition of either the geographic area or the industry in which the investee

a bona fide offer to purchase (whether solicited or unsolicited), an offer by the investee to sell, or a completed

auction process for the same or similar security for an amount less than the cost of the investment;

factors that raise significant

concerns about the investee's ability to continue as a going concern, such as negative cash flows from operations, working capital

deficiencies, or noncompliance with statutory capital requirements or debt covenants.

If the fair value of an investment is less

than its cost basis at the balance sheet date of the reporting period for which impairment is assessed, the impairment is either

temporary or other than temporary.

Pursuant to Paragraph 320-10-35-34, if it is determined that the impairment is other than temporary,

then an impairment loss shall be recognized in earnings equal to the entire difference between the investment’s cost and

its fair value at the balance sheet date of the reporting period for which the assessment is made.

The measurement of the impairment

shall not include partial recoveries after the balance sheet date.

The fair value of the investment would then become the new

basis of the investment and shall not be adjusted for subsequent recoveries in fair value.

For presentation purpose, the entity

shall present the total other-than-temporary impairment in the statement of earnings with an offset for the amount of the total

other-than-temporary impairment that is recognized in other comprehensive income, in accordance with paragraph 320-10-35-34D,

if any, pursuant to Paragraph 320-10-45-8A;

and separately present, in the financial statement in which the components of accumulated

other comprehensive income are reported, amounts recognized therein related to held-to-maturity and available-for-sale debt securities

for which a portion of an other-than-temporary impairment has been recognized in earnings pursuant to Paragraph 320-10-45-9A.

Pursuant to Paragraphs 320-10-35-36 and 37 the entire change in the fair value of foreign-currency-denominated available-for-sale

debt securities shall be reported in other comprehensive income and An entity holding a foreign-currency-denominated available-for-sale

debt security is required to consider, among other things, changes in market interest rates and foreign exchange rates since acquisition

in determining whether an other-than-temporary impairment has occurred.

Pursuant to FASB ASC Paragraph 320-10-50-2, the entity

shall disclose all of the following by major security type as of each date for which a statement of financial position is presented:

(a) cost basis (net of amortization of debt discount for debt securities), aggregate fair value, total other-than-temporary impairment

recognized in accumulated other comprehensive income;

(b) Total gains for securities with net gains in accumulated other comprehensive

and (d) Information about the

contractual maturities of those securities as of the date of the most recent statement of financial position presented.

On January 2, 2013, the Company

purchased a minority interest in a business for proceeds of $83,333.

The interest is accounted for under the cost method.

Company tests the carrying value annually for impairment.

Company follows subtopic 850-10 of the FASB Accounting Standards Codification for the identification of related parties and disclosure

of related party transactions.

to Section 850-10-20 FASB Accounting Standards, the related parties include (a) affiliates of the Company (“Affiliate”

means, with respect to any specified Person, any other Person that, directly or indirectly through one or more intermediaries,

controls, is controlled by or is under common control with such Person, as such terms are used in and construed under Rule 405

under the Securities Act);

(b) entities for which investments in their equity securities would be required, absent the election

of the fair value option under the Fair Value Option Subsection of Section 825–10–15 FASB Accounting Standards, to

be accounted for by the equity method by the investing entity;

trusts that are managed by or under the trusteeship of management;

(d) principal owners of the Company and members of their immediate

(e) management of the Company and members of their immediate families;

(f) other parties with which the Company may

deal if one party controls or can significantly influence the management or operating policies of the other to an extent that

one of the transacting parties might be prevented from fully pursuing its own separate interests;

and (g) other parties that can

significantly influence the management or operating policies of the transacting parties or that have an ownership interest in

one of the transacting parties and can significantly influence the other to an extent that one or more of the transacting parties

might be prevented from fully pursuing its own separate interests.

to ASC Paragraphs 850-10-50-1 and 50-5 financial statements shall include disclosures of material related party transactions,

other than compensation arrangements, expense allowances, and other similar items in the ordinary course of business.

The disclosures

shall include:

(a) the nature of the relationship(s) involved;

(b) a description of the transactions, including transactions to

which no amounts or nominal amounts were ascribed, for each of the periods for which income statements are presented, and such

other information deemed necessary to an understanding of the effects of the transactions on the financial statements;

dollar amounts of transactions for each of the periods for which income statements are presented and the effects of any change

in the method of establishing the terms from that used in the preceding period;

and (d) amounts due from or to related parties

as of the date of each balance sheet presented and, if not otherwise apparent, the terms and manner of settlement.

involving related parties cannot be presumed to be carried out on an arm's-length basis, as the requisite conditions of competitive,

free-market dealings may not exist.

Representations about transactions with related parties, if made, shall not imply that the

related party transactions were consummated on terms equivalent to those that prevail in arm's-length transactions unless such

representations can be substantiated.

and Contingencies

Company follows subtopic 450-20 of the FASB Accounting Standards Codification to report accounting for contingencies.

conditions may exist as of the date the consolidated financial statements are issued, which may result in a loss to the Company

but which will only be resolved when one or more future events occur or fail to occur.

The Company assesses such contingent liabilities,

and such assessment inherently involves an exercise of judgment.

In assessing loss contingencies related to legal proceedings

that are pending against the Company or un-asserted claims that may result in such proceedings, the Company evaluates the perceived

merits of any legal proceedings or un-asserted claims as well as the perceived merits of the amount of relief sought or expected

to be sought therein.

the assessment of a contingency indicates that it is probable that a material loss has been incurred and the amount of the liability

can be estimated, then the estimated liability would be accrued in the Company’s consolidated financial statements.

assessment indicates that a potential material loss contingency is not probable but is reasonably possible, or is probable but

cannot be estimated, then the nature of the contingent liability, and an estimate of the range of possible losses, if determinable

and material, would be disclosed.

contingencies considered remote are generally not disclosed unless they involve guarantees, in which case the guarantees would

be disclosed.

Company follows paragraph 605-10-S99-1 of the FASB Accounting Standards Codification for revenue recognition.

The Company will

recognize revenue when it is realized or realizable and earned.

The Company considers revenue realized or realizable and earned

when all of the following criteria are met:

(i) persuasive evidence of an arrangement exists, (ii) the product has been shipped

or the services have been rendered to the customer, (iii) the sales price is fixed or determinable, and (iv) collectability is

reasonably assured.

Compensation for Obtaining Employee Services

Company accounts for share-based payment transactions issued to employees under the guidance of the Topic 718 “

Compensation—Stock

Compensation”

of the FASB Accounting Standards Codification (“ASC Topic 718”).

to ASC Section 718-10-20 an employee is an individual over whom the grantor of a share-based compensation award exercises or has

the right to exercise sufficient control to establish an employer-employee relationship based on common law as illustrated in

case law and currently under U.S.

Internal Revenue Service (“IRS”) Revenue Ruling 87-41.

A non-employee director does

not satisfy this definition of employee.

Nevertheless, non-employee directors acting in their role as members of a board of directors

are treated as employees if those directors were elected by the employer’s shareholders or appointed to a board position

that will be filled by shareholder election when the existing term expires.

However, that requirement applies only to awards granted

to non-employee directors for their services as directors.

Awards granted to non-employee directors for other services shall be

accounted for as awards to non-employees.

to ASC Paragraphs 718-10-30-2 and 718-10-30-3 a share-based payment transaction with employees shall be measured based on the

fair value of the equity instruments issued and an entity shall account for the compensation cost from share-based payment transactions

with employees in accordance with the fair value-based method, i.e., the cost of services received from employees in exchange

for awards of share-based compensation generally shall be measured based on the grant-date fair value of the equity instruments

issued or the fair value of the liabilities incurred/settled.

to ASC Paragraphs 718-10-30-6 and 718-10-30-9 the measurement objective for equity instruments awarded to employees is to estimate

the fair value at the grant date of the equity instruments that the entity is obligated to issue when employees have rendered

the requisite service and satisfied any other conditions necessary to earn the right to benefit from the instruments (for example,

to exercise share options).

That estimate is based on the share price and other pertinent factors, such as expected volatility,

at the grant date.

As such, the fair value of an equity share option or similar instrument shall be estimated using a valuation

technique such as an option pricing model.

For this purpose, a similar instrument is one whose fair value differs from its intrinsic

value, that is, an instrument that has time value.

the Company’s common shares are traded in one of the national exchanges, the grant-date share price of the Company’s

common stock will be used to measure the fair value of the common shares issued, however, if the Company’s common shares

are thinly traded the use of share prices established in its most recent private placement memorandum (“PPM”), or

weekly or monthly price observations would generally be more appropriate than the use of daily price observations as such shares

could be artificially inflated due to a larger spread between the bid and asked quotes and lack of consistent trading in the market.

to ASC Paragraph 718-10-55-21 if an observable market price is not available for a share option or similar instrument with the

same or similar terms and conditions, an entity shall estimate the fair value of that instrument using a valuation technique or

model that meets the requirements in paragraph 718-10-55-11 and takes into account, at a minimum, all of the following factors:

exercise price of the option.

expected term of the option, taking into account both the contractual term of the option and the effects of employees’

expected exercise and post-vesting employment termination behavior:

The expected life of options and similar instruments represents

the period of time the option and/or warrant are expected to be outstanding.

Pursuant to paragraph 718-10-S99-1,

it may be appropriate to use the simplified method , i.e., expected term = ((vesting term + original contractual

term) / 2) , if (i) A company does not have sufficient historical exercise data to provide a reasonable basis upon which

to estimate expected term due to the limited period of time its equity shares have been publicly traded;

(ii) A company significantly

changes the terms of its share option grants or the types of employees that receive share option grants such that its historical

exercise data may no longer provide a reasonable basis upon which to estimate expected term;

or (iii) A company has or expects

to have significant structural changes in its business such that its historical exercise data may no longer provide a reasonable

basis upon which to estimate expected term.

The Company uses the simplified method to calculate expected term of share options

and similar instruments as the company does not have sufficient historical exercise data to provide a reasonable basis upon

which to estimate expected term.

current price of the underlying share.

expected volatility of the price of the underlying share for the expected term of the option.

Pursuant to ASC Paragraph

718-10-55-25 a newly publicly traded entity might base expectations about future volatility on the average volatilities of

similar entities for an appropriate period following their going public.

A nonpublic entity might base its expected volatility

on the average volatilities of otherwise similar public entities.

For purposes of identifying otherwise similar entities,

an entity would likely consider characteristics such as industry, stage of life cycle, size, and financial leverage.

of the effects of diversification that are present in an industry sector index, the volatility of an index should not be substituted

for the average of volatilities of otherwise similar entities in a fair value measurement.

Pursuant to paragraph

718-10-S99-1 if shares of a company are thinly traded the use of weekly or monthly price observations would generally be more

appropriate than the use of daily price observations as the volatility calculation using daily observations for such shares

could be artificially inflated due to a larger spread between the bid and asked quotes and lack of consistent trading in the

The Company uses the average historical volatility of the comparable companies over the expected term of

the share options or similar instruments as its expected volatility.

expected dividends on the underlying share for the expected term of the option.

The expected dividend yield is

based on the Company’s current dividend yield as the best estimate of projected dividend yield for periods within the

expected term of the share options and similar instruments.

risk-free interest rate(s) for the expected term of the option.

Pursuant to ASC 718-10-55-28 a U.S.

entity issuing an option

on its own shares must use as the risk-free interest rates the implied yields currently available from the U.S.

Treasury zero-coupon

yield curve over the contractual term of the option if the entity is using a lattice model incorporating the option’s

contractual term.

If the entity is using a closed-form model, the risk-free interest rate is the implied yield currently available

Treasury zero-coupon issues with a remaining term equal to the expected term used as the assumption in the model.

to ASC Paragraphs 718-10-30-11 and 718-10-30-17 a restriction that stems from the forfeitability of instruments to which employees

have not yet earned the right, such as the inability either to exercise a non-vested equity share option or to sell non-vested

shares, is not reflected in estimating the fair value of the related instruments at the grant date.

Instead, those restrictions

are taken into account by recognizing compensation cost only for awards for which employees render the requisite service and a

non-vested equity share or non-vested equity share unit awarded to an employee shall be measured at its fair value as if it were

vested and issued on the grant date.

to ASC Paragraphs 718-10-35-2 and 718-10-35-3 the compensation cost for an award of share-based employee compensation classified

as equity shall be recognized over the requisite service period, with a corresponding credit to equity (generally, paid-in capital).

The requisite service period is the period during which an employee is required to provide service in exchange for an award, which

often is the vesting period.

The total amount of compensation cost recognized at the end of the requisite service period for an

award of share-based compensation shall be based on the number of instruments for which the requisite service has been rendered

(that is, for which the requisite service period has been completed).

An entity shall base initial accruals of compensation cost

on the estimated number of instruments for which the requisite service is expected to be rendered.

That estimate shall be revised

if subsequent information indicates that the actual number of instruments is likely to differ from previous estimates.

The cumulative

effect on current and prior periods of a change in the estimated number of instruments for which the requisite service is expected

to be or has been rendered shall be recognized in compensation cost in the period of the change.

Previously recognized compensation

cost shall not be reversed if an employee share option (or share unit) for which the requisite service has been rendered expires

unexercised (or unconverted).

the requirement of ASC Paragraph 718-10-35-8 the Company made a policy decision to recognize compensation cost for an award with

only service conditions that has a graded vesting schedule on a straight-line basis over the requisite service period for the

entire award.

Instruments Issued to Parties Other Than Employees for Acquiring Goods or Services

Company accounts for equity instruments issued to parties other than employees for acquiring goods or services under the guidance

of Sub-topic 505-50 of the FASB Accounting Standards Codification (“Sub-topic 505-50”).

to ASC paragraphs 505-50-25-6 and 505-50-25-7, a grantor shall recognize the goods acquired or services received in a share-based

payment transaction when it obtains the goods or as services are received.

A grantor may need to recognize an asset before it

actually receives goods or services if it first exchanges share-based payment for an enforceable right to receive those goods

Nevertheless, the goods or services themselves are not recognized before they are received.

If fully vested, nonforfeitable

equity instruments are issued at the date the grantor and grantee enter into an agreement for goods or services (no specific performance

is required by the grantee to retain those equity instruments), then, because of the elimination of any obligation on the part

of the counterparty to earn the equity instruments, a measurement date has been reached.

A grantor shall recognize the equity

instruments when they are issued (in most cases, when the agreement is entered into).

Pursuant to ASC paragraph 505-50-45-1, a

grantor may conclude that an asset (other than a note or a receivable) has been received in return for fully vested, nonforfeitable

equity instruments that are issued at the date the grantor and grantee enter into an agreement for goods or services (and no specific

performance is required by the grantee in order to retain those equity instruments).

Such an asset shall not be displayed as contra-equity

by the grantor of the equity instruments.

The transferability (or lack thereof) of the equity instruments shall not affect the

balance sheet display of the asset.

This guidance is limited to transactions in which equity instruments are transferred to other

than employees in exchange for goods or services.

to Paragraphs 505-50-25-8 and 505-50-25-9, an entity may grant fully vested, non-forfeitable equity instruments that are exercisable

by the grantee only after a specified period of time if the terms of the agreement provide for earlier exercisability if the grantee

achieves specified performance conditions.

Any measured cost of the transaction shall be recognized in the same period(s) and

in the same manner as if the entity had paid cash for the goods or services or used cash rebates as a sales discount instead of

paying with, or using, the equity instruments.

A recognized asset, expense, or sales discount shall not be reversed if a stock

option that the counterparty has the right to exercise expires unexercised.

to ASC Paragraphs 505-50-30-2 and 505-50-30-11 share-based payment transactions with nonemployees shall be measured at the fair

value of the consideration received or the fair value of the equity instruments issued, whichever is more reliably measurable.

The issuer shall measure the fair value of the equity instruments in these transactions using the stock price and other measurement

assumptions as of the earlier of the following dates, referred to as the measurement date:

(a) The date at which a commitment

for performance by the counterparty to earn the equity instruments is reached (a performance commitment);

or (b) The date at which

the counterparty's performance is complete.

If the Company’s common shares are traded in one of the national exchanges the

grant-date share price of the Company’s common stock will be used to measure the fair value of the common shares issued;

however, if the Company’s common shares are thinly traded the use of share prices established in the Company’s most

recent private placement memorandum (“PPM”), or weekly or monthly price observations would generally be more appropriate

than the use of daily price observations as such shares could be artificially inflated due to a larger spread between the bid

and asked quotes and lack of consistent trading in the market.

to ASC Paragraph 718-10-55-21 if an observable market price is not available for a share option or similar instrument with the

same or similar terms and conditions, an entity shall estimate the fair value of that instrument using a valuation technique or

model that meets the requirements in paragraph 718-10-55-11 and takes into account, at a minimum, all of the following factors:

exercise price of the option.

expected term of the option, taking into account both the contractual term of the option and the effects of employees’

expected exercise and post-vesting employment termination behavior:

Pursuant to Paragraph 718-10-50-2(f)(2)(i) of the FASB

Accounting Standards Codification the expected term of share options and similar instruments represents the period of time

the options and similar instruments are expected to be outstanding taking into consideration of the contractual term of the

instruments and holder’s expected exercise behavior into the fair value (or calculated value) of the instruments.

Company uses historical data to estimate holder’s expected exercise behavior.

If the Company is a newly formed

corporation or shares of the Company are thinly traded the contractual term of the share options and similar instruments is

used as the expected term of share options and similar instruments as the Company does not have sufficient historical exercise

data to provide a reasonable basis upon which to estimate expected term.

current price of the underlying share.

expected volatility of the price of the underlying share for the expected term of the option.

Pursuant to ASC Paragraph

718-10-55-25 a newly publicly traded entity might base expectations about future volatility on the average volatilities of

similar entities for an appropriate period following their going public.

A nonpublic entity might base its expected volatility

on the average volatilities of otherwise similar public entities.

For purposes of identifying otherwise similar entities,

an entity would likely consider characteristics such as industry, stage of life cycle, size, and financial leverage.

of the effects of diversification that are present in an industry sector index, the volatility of an index should not be substituted

for the average of volatilities of otherwise similar entities in a fair value measurement.

Pursuant to paragraph

718-10-S99-1 if shares of a company are thinly traded the use of weekly or monthly price observations would generally be more

appropriate than the use of daily price observations as the volatility calculation using daily observations for such shares

could be artificially inflated due to a larger spread between the bid and asked quotes and lack of consistent trading in the

The Company uses the average historical volatility of the comparable companies over the expected term of

the share options or similar instruments as its expected volatility.

expected dividends on the underlying share for the expected term of the option.

The expected dividend yield is

based on the Company’s current dividend yield as the best estimate of projected dividend yield for periods within the

expected term of the share options and similar instruments.

risk-free interest rate(s) for the expected term of the option.

Pursuant to ASC 718-10-55-28 a U.S.

entity issuing an option

on its own shares must use as the risk-free interest rates the implied yields currently available from the U.S.

Treasury zero-coupon

yield curve over the contractual term of the option if the entity is using a lattice model incorporating the option’s

contractual term.

If the entity is using a closed-form model, the risk-free interest rate is the implied yield currently available

Treasury zero-coupon issues with a remaining term equal to the expected term used as the assumption in the model.

to ASC paragraph 505-50-S99-1, if the Company receives a right to receive future services in exchange for unvested, forfeitable

equity instruments, those equity instruments are treated as unissued for accounting purposes until the future services are received

(that is, the instruments are not considered issued until they vest).

Consequently, there would be no recognition at the measurement

date and no entry should be recorded.

Tax Assets and Income Tax Provision

Company accounts for income taxes under Section 740-10-30 of the FASB Accounting Standards Codification.

Deferred income tax assets

and liabilities are determined based upon differences between the financial reporting and tax bases of assets and liabilities

and are measured using the enacted tax rates and laws that will be in effect when the differences are expected to reverse.

tax assets are reduced by a valuation allowance to the extent management concludes it is more likely than not that the assets

will not be realized.

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.

The effect on deferred tax assets and

liabilities of a change in tax rates is recognized in the statements of operations in the period that includes the enactment date.

Company adopted section 740-10-25 of the FASB Accounting Standards Codification (“Section 740-10-25”).

Upon sale or retirement of property and equipment, the related

cost and accumulated depreciation are removed from the accounts and any gain or loss is reflected in the consolidated statements

of operations.

Investments - Cost Method, Equity

Method and Joint Venture

In accordance with sub-topic 323-10 of

the FASB ASC (“Sub-topic 323-10”), the Company accounts for investments in common stock of an investee for which the

Company has significant influence in the operating or financial policies even though the Company holds 50% or less of the common

stock or in-substance common stock.

On January 2, 2013, the Company purchased a minority interest in a business for proceeds of $83,333.

interest is accounted for under the cost method.

The Company tests the carrying value annually for impairment.

The company recorded

an impairment of minority investment of $83,333.

Commitments and Contingencies

The Company follows subtopic 450-20 of

the FASB Accounting Standards Codification to report accounting for contingencies.

Certain conditions may exist as of the date

the consolidated financial statements are issued, which may result in a loss to the Company, but which will only be resolved when

one or more future events occur or fail to occur.

The Company assesses such contingent liabilities, and such assessment inherently

involves an exercise of judgment.

In assessing loss contingencies related to legal proceedings that are pending against the Company

or un-asserted claims that may result in such proceedings, the Company evaluates the perceived merits of any legal proceedings

or un-asserted claims as well as the perceived merits of the amount of relief sought or expected to be sought therein.

If the assessment of a contingency indicates

that it is probable that a material loss has been incurred and the amount of the liability can be estimated, then the estimated

liability would be accrued in the Company’s consolidated financial statements.

If the assessment indicates that a potential

material loss contingency is not probable but is reasonably possible, or is probable but cannot be estimated, then the nature of

the contingent liability, and an estimate of the range of possible losses, if determinable and material, would be disclosed.

Loss contingencies considered remote are

generally not disclosed unless they involve guarantees, in which case the guarantees would be disclosed.

Derivative Liability

The Company evaluates its debt and equity

issuances to determine if those contracts or embedded components of those contracts qualify as derivatives to be separately accounted

for in accordance with paragraph 815-10-05-4 and Section 815-40-25 of the FASB Accounting Standards Codification.

The result of

this accounting treatment is that the fair value of the embedded derivative is marked-to-market each balance sheet date and recorded

as either an asset or a liability.

In the event that the fair value is recorded as a liability, the change in fair value is recorded

in the consolidated statement of operations as other income or expense.

Upon conversion, exercise or cancellation of a derivative

instrument, the instrument is marked to fair value at the date of conversion, exercise or cancellation and then the related fair

value is reclassified to equity.

In circumstances where the embedded conversion

option in a convertible instrument is required to be bifurcated and there are also other embedded derivative instruments in the

convertible instrument that are required to be bifurcated, the bifurcated derivative instruments are accounted for as a single,

compound derivative instrument.

The classification of derivative instruments,

including whether such instruments should be recorded as liabilities or as equity, is re-assessed at the end of each reporting

Equity instruments that are initially classified as equity that become subject to reclassification are reclassified to

liability at the fair value of the instrument on the reclassification date.

Derivative instrument liabilities will be classified

in the balance sheet as current or non-current based on whether or not net-cash settlement of the derivative instrument is expected

within 12 months of the balance sheet date.

The Company adopted Section 815-40-15 of the FASB Accounting Standards Codification (“Section 815-40-15”)

to determine whether an instrument (or an embedded feature) is indexed to the Company’s own stock.

Section 815-40-15

addresses the determination of whether tax benefits claimed or expected to be claimed on a tax return should be recorded in the

financial statements.

Under Section 740-10-25, the Company may recognize the tax benefit from an uncertain tax position only if

it is more likely than not that the tax position will be sustained on examination by the taxing authorities, based on the technical

merits of the position.

The tax benefits recognized in the financial statements from such a position should be measured based

on the largest benefit that has a greater than fifty percent (50%) likelihood of being realized upon ultimate settlement.

740-10-25 also provides guidance on de-recognition, classification, interest and penalties on income taxes, accounting in interim

periods and requires increased disclosures.

estimated future tax effects of temporary differences between the tax basis of assets and liabilities are reported in the accompanying

consolidated balance sheets, as well as tax credit carry-backs and carry-forwards.

The Company periodically reviews the recoverability

of deferred tax assets recorded on its consolidated balance sheets and provides valuation allowances as management deems necessary.

makes judgments as to the interpretation of the tax laws that might be challenged upon an audit and cause changes to previous

estimates of tax liability.

In addition, the Company operates within multiple taxing jurisdictions and is subject to audit in

these jurisdictions.

In management’s opinion, adequate provisions for income taxes have been made for all years.

taxable income by tax jurisdiction varies from estimates, additional allowances or reversals of reserves may be necessary.

Flows Reporting

Company adopted paragraph 230-10-45-24 of the FASB Accounting Standards Codification for cash flows reporting, classifies cash

receipts and payments according to whether they stem from operating, investing, or financing activities and provides definitions

of each category, and uses the indirect or reconciliation method (the “Indirect Method”) as defined by paragraph 230-10-45-25

of the FASB Accounting Standards Codification to report net cash flow from operating activities by adjusting net income to reconcile

it to net cash flow from operating activities by removing the effects of (a) all deferrals of past operating cash receipts and

payments and all accruals of expected future operating cash receipts and payments and (b) all items that are included in net income

that do not affect operating cash receipts and payments

Company follows the guidance in Section 855-10-50 of the FASB Accounting Standards Codification for the disclosure of subsequent

The Company will evaluate subsequent events through the date when the financial statements were issued.

Pursuant to ASU

2010-09 of the FASB Accounting Standards Codification, the Company as a filer with the United States Securities & Exchange

Commission (the “SEC”) considers its financial statements issued when they are widely distributed to users, such as

through filing them on EDGAR.

Issued Accounting Pronouncements

August 2014, the FASB issued the FASB Accounting Standards Update No.

2014-15 “Presentation of Financial Statements—Going

Concern (Subtopic 205-40):

Disclosure of Uncertainties about an Entity’s Ability to Continue as a Going Concern (“ASU

2014-15”).

connection with preparing financial statements for each annual and interim reporting period, an entity’s management should

evaluate whether there are conditions or events, considered in the aggregate, that raise substantial doubt about the entity’s

ability to continue as a going concern within one year after the date that the financial statements are issued (or within

one year after the date that the financial statements are available to be issued when applicable).

Management’s evaluation

should be based on relevant conditions and events that are known and reasonably knowable at the date that the financial statements

are issued (or at the date that the financial statements are available to be issued when applicable).

Substantial doubt

about an entity’s ability to continue as a going concern exists when relevant conditions and events, considered in the aggregate,

indicate that it is probable that the entity will be unable to meet its obligations as they become due within one year after the

date that the financial statements are issued (or available to be issued).

The term probable is used consistently with

its use in Topic 450, Contingencies .

management identifies conditions or events that raise substantial doubt about an entity’s ability to continue as a going

concern, management should consider whether its plans that are intended to mitigate those relevant conditions or events will alleviate

the substantial doubt.

The mitigating effect of management’s plans should be considered only to the extent that (1) it is

probable that the plans will be effectively implemented and, if so, (2) it is probable that the plans will mitigate the conditions

or events that raise substantial doubt about the entity’s ability to continue as a going concern.

conditions or events raise substantial doubt about an entity’s ability to continue as a going concern, but the substantial

doubt is alleviated as a result of consideration of management’s plans, the entity should disclose information that enables

users of the financial statements to understand all of the following (or refer to similar information disclosed elsewhere in the

conditions or events that raised substantial doubt about the entity’s ability to continue as a going concern (before

consideration of management’s plans)

Management’s

evaluation of the significance of those conditions or events in relation to the entity’s ability to meet its obligations

Management’s

plans that alleviated substantial doubt about the entity’s ability to continue as a going concern.

conditions or events raise substantial doubt about an entity’s ability to continue as a going concern, and substantial doubt

is not alleviated after consideration of management’s plans, an entity should include a statement in the footnotes indicating

that there is substantial doubt about the entity’s ability to continue as a going concern within one year after the

date that the financial statements are issued (or available to be issued).

Additionally, the entity should disclose information

that enables users of the financial statements to understand all of the following:

conditions or events that raise substantial doubt about the entity’s ability to continue as a going concern

Management’s

evaluation of the significance of those conditions or events in relation to the entity’s ability to meet its obligations

Management’s

plans that are intended to mitigate the conditions or events that raise substantial doubt about the entity’s ability

to continue as a going concern.

amendments in this Update are effective for the annual period ending after December 15, 2016, and for annual periods and interim

periods thereafter.

Early application is permitted.

The Company has elected to adopt early application of ASU No.

November 2015, the FASB issued the FASB Accounting Standards Update No.

2015-17 “

Income Taxes (Topic 740):

Balance Sheet

Classification of Deferred Taxes ”

(“ASU 2015-17”).

This update simplifies the presentation of deferred income

the amendments in this Update require that deferred tax liabilities and assets be classified as noncurrent in a classified

statement of financial position.

The amendments in this Update apply to all entities that present a classified statement of financial

public business entities, the amendments in this Update are effective for financial statements issued for annual periods beginning

after December 15, 2016, and interim periods within those annual periods.

January 2016, the FASB issued the FASB Accounting Standards Update No.

2016-01 “

Financial Instruments—Overall (Subtopic

Recognition and Measurement of Financial Assets and Financial Liabilities ”

(“ASU 2016-01”).

Update makes limited amendments to the guidance in U.S.

GAAP on the classification and measurement of financial instruments.

new standard significantly revises an entity’s accounting related to (1) the classification and measurement of investments

in equity securities and (2) the presentation of certain fair value changes for financial liabilities measured at fair value.

It also amends certain disclosure requirements associated with the fair value of financial instruments.

Some of the major changes

as a result of the ASU 2016-01 are summarized below.

equity investments (except those accounted for under the equity method of accounting or those that result in consolidation

of the investee) to be measured at fair value with changes in fair value recognized in net income.

the impairment assessment of equity investments without readily determinable fair values by requiring a qualitative assessment

to identify impairment.

When a qualitative assessment indicates that impairment exists, an entity is required to measure the

investment at fair value.

the requirement for public business entities to disclose the method(s) and significant assumptions used to estimate the fair

value that is required to be disclosed for financial instruments measured at amortized cost on the balance sheet.

public business entities to use the exit price notion when measuring the fair value of financial instruments for disclosure

an entity to present separately in other comprehensive income the portion of the total change in the fair value of a liability

resulting from a change in the instrument-specific credit risk when the entity has elected to measure the liability at fair

value in accordance with the fair value option for financial instruments.

separate presentation of financial assets and financial liabilities by measurement category and form of financial asset (that

is, securities or loans and receivables) on the balance sheet or the accompanying notes to the financial statements.

that an entity should evaluate the need for a valuation allowance on a deferred tax asset related to available-for-sale securities

in combination with the entity’s other deferred tax assets.

public business entities, the amendments in this Update are effective for fiscal years beginning after December 15, 2017, including

interim periods within those fiscal years.

February 2016, the FASB issued ASU 2016-02, “

Leases”

, which will amend current lease accounting to require

lessees to recognize (i) a lease liability, which is a lessee’s obligation to make lease payments arising from a lease,

measured on a discounted basis, and (ii) a right-of-use asset, which is an asset that represents the lessee’s right to use,

or control the use of, a specified asset for the lease term.

ASU 2016-02 does not significantly change lease accounting requirements

applicable to lessors;

however, certain changes were made to align, where necessary, lessor accounting with the lessee accounting

This standard will be effective for fiscal years beginning after December 15, 2018, including interim periods within those

fiscal years.

The Company is currently reviewing the provisions of this ASU to determine if there will be any impact on our results

of operations, cash flows or financial condition.

March 30, 2016, the FASB issued ASU 2016-09, "

Compensation - Stock Compensation "

which simplifies several aspects

of the accounting for employee share-based payment transactions for both public and nonpublic entities, including the accounting

for income taxes, forfeitures, and statutory tax withholding requirements, as well as classification in the statement of cash

For public business entities, the ASU is effective for annual reporting periods beginning after December 15, 2016, including

interim periods within those annual reporting periods.

Early adoption will be permitted in any interim or annual period for which

financial statements have not yet been issued or have not been made available for issuance.

If early adoption is elected, all

amendments in the ASU that apply must be adopted in the same period.

In addition, if early adoption is elected in an interim period,

any adjustments should be reflected as of the beginning of the annual period that includes that interim period.

The Company is

in the process of evaluating the impact of the standard on its consolidated financial statements.

April 2016, the FASB issued ASU 2016–10 “

Revenue from Contract with Customers (Topic 606):

Identifying Performance

Obligations and Licensing”.

The amendments in this Update do not change the core principle of the guidance in Topic

Rather, the amendments in this Update clarify the following two aspects of Topic 606:

identifying performance obligations

and the licensing implementation guidance, while retaining the related principles for those areas.

Topic 606 includes implementation

guidance on (a) contracts with customers to transfer goods and services in exchange for consideration and (b) determining whether

an entity’s promise to grant a license provides a customer with either a right to use the entity’s intellectual property

(which is satisfied at a point in time) or a right to access the entity’s intellectual property (which is satisfied over

The amendments in this Update are intended render more detailed implementation guidance with the expectation to reduce

the degree of judgment necessary to comply with Topic 606.

The Company is currently reviewing the provisions of this ASU to determine

if there will be any impact on our results of operations, cash flows or financial condition.

August 2016, the FASB issued ASU 2016-15, “Statement of Cash Flows (Topic 230):

Classification of Certain Cash Receipts

and Cash Payments”

(“ASU 2016-15”).

ASU 2016-15 will make eight targeted changes to how cash

receipts and cash payments are presented and classified in the statement of cash flows.

ASU 2016-15 is effective for

fiscal years beginning after December 15, 2017.

The new standard will require adoption on a retrospective basis unless it is impracticable

to apply, in which case it would be required to apply the amendments prospectively as of the earliest date practicable.

is currently in the process of evaluating the impact of ASU 2016-15 on its consolidated financial statements.

October 2016, the FASB issued ASU 2016-16, “Income Taxes (Topic 740):

Intra-Entity Transfers of Assets Other than

Inventory”, which eliminates the exception that prohibits the recognition of current and deferred income tax effects

for intra-entity transfers of assets other than inventory until the asset has been sold to an outside party.

provides that an entity should use a two-step approach to evaluate whether an equity-linked financial instrument (or embedded feature)

is indexed to its own stock, including evaluating the instrument’s contingent exercise and settlement provisions.

Company changed its method of accounting for the debt and warrants through the early adoption of ASU 2017-11 during the three months

ended December 31, 2017 on a retrospective basis.

The Company utilizes an option pricing

model to compute the fair value of the derivative and to mark to market the fair value of the derivative at each balance sheet

The Company records the change in the fair value of the derivative as other income or expense in the condensed consolidated

statements of operations.

Revenue Recognition

The Company follows paragraph 605-10-S99-1

of the FASB Accounting Standards Codification for revenue recognition.

The Company recognizes gross revenue when it is realized

or realizable and earned.

The Company considers revenue realized or realizable and earned when all of the following criteria are

(i) persuasive evidence of an arrangement exists, (ii) the product has been shipped or the services have been rendered to

the customer, (iii) the sales price is fixed or determinable, and (iv) collectability is reasonably assured.

During the year ended

the recorded revenue from the following sources products at auction, sponsored content and affiliate sites.

Stock-Based Compensation

The Company recognizes compensation expense

for all equity–based payments granted to employees in accordance with ASC 718 “Compensation –

Compensation”.

Under fair value recognition provisions, the Company recognizes equity–based compensation net

of an estimated forfeiture rate and recognizes compensation cost only for those shares expected to vest over the requisite service

period of the award.

Restricted stock awards are granted at

the discretion of the Company.

These awards are restricted as to the transfer of ownership and generally vest over the requisite

service periods, typically over a five year period (vesting on a straight–line basis).

The fair value of a stock award is

equal to the fair market value of a share of Company stock on the grant date.

The fair value of an option award is estimated

on the date of grant using the Black–Scholes option valuation model.

The Black–Scholes option valuation model requires

the development of assumptions that are inputs into the model.

These assumptions are the value of the underlying share, the expected

stock volatility, the risk–free interest rate, the expected life of the option, the dividend yield on the underlying stock

and the expected forfeiture rate.

Expected volatility is benchmarked against similar companies in a similar industry over the expected

option life and other appropriate factors.

Risk–free interest rates are calculated based on continuously compounded risk–free

rates for the appropriate term.

The dividend yield is assumed to be zero as the Company has never paid or declared any cash dividends

on its Common stock and does not intend to pay dividends on its Common stock in the foreseeable future.

The expected forfeiture

rate is estimated based on management’s best estimate.

Determining the appropriate fair value

model and calculating the fair value of equity–based payment awards requires the input of the subjective assumptions described

The assumptions used in calculating the fair value of equity–based payment awards represent management’s best

estimates, which involve inherent uncertainties and the application of management’s judgment.

As a result, if factors change

and the Company uses different assumptions, our equity–based compensation could be materially different in the future.

addition, the Company is required to estimate the expected forfeiture rate and recognize expense only for those shares expected

If the Company’s actual forfeiture rate is materially different from its estimate, the equity–based compensation

could be significantly different from what the Company has recorded in the current period.

The Company accounts for share–based

payments granted to non–employees in accordance with ASC 505-40, “Equity Based Payments to Non–Employees”.

The Company determines the fair value of the stock–based payment as either the fair value of the consideration received or

the fair value of the equity instruments issued, whichever is more reliably measurable.

If the fair value of the equity instruments

issued is used, it is measured using the stock price and other measurement assumptions as of the earlier of either (1) the date

at which a commitment for performance by the counterparty to earn the equity instruments is reached, or (2) the date at which the

counterparty’s performance is complete.

The fair value of the equity instruments is re-measured each reporting period over

the requisite service period.

Income taxes are provided in accordance

Accounting for Income Taxes ”.

A deferred tax asset or liability is recorded for all temporary

differences between financial and tax reporting and net operating loss carryforwards.

Deferred tax expense (benefit) results from

the net change during the period of deferred tax assets and liabilities.

Deferred tax assets are reduced by a valuation

allowance when, in the opinion of management, it is more likely than not that some portion or all of the deferred tax assets will

not be realized.

Deferred tax assets and liabilities are adjusted for the effects of changes in tax laws and rates on the date

of enactment.

Management makes judgments as to the interpretation

of the tax laws that might be challenged upon an audit and cause changes to previous estimates of tax liability.

In addition, the

Company operates within multiple taxing jurisdictions and is subject to audit in these jurisdictions.

In management’s opinion,

adequate provisions for income taxes have been made for all years.

If actual taxable income by tax jurisdiction varies from estimates,

additional allowances or reversals of reserves may be necessary.

Loss Per Share

Basic net loss per common share is computed

by dividing net loss attributable to common stockholders by the weighted-average number of common shares outstanding during the

Diluted net loss per common share is determined using the weighted-average number of common shares outstanding during the

period, adjusted for the dilutive effect of common stock equivalents.

In periods when losses are reported, which is the case for

the year ended December 31, 2017 and 2016 presented in these consolidated financial statements, the weighted-average number of

common shares outstanding excludes common stock equivalents because their inclusion would be anti-dilutive.

The Company had the following common stock

equivalents at December 31, 2017 and 2016:

Series A Preferred stock

Series B Preferred stock

Convertible notes - related party

Convertible notes

Reclassifications

Certain prior year amounts in the consolidated

financial statements and the notes thereto have been reclassified where necessary to conform to the current year presentation.

These reclassifications did not affect the prior period total assets, total liabilities, stockholders’

deficit, net loss

or net cash used in operating activities.

Recently Adopted Accounting Guidance

In April 2016, the FASB issued ASU No.

2016-09, “Compensation –

Stock Compensation”

The FASB issued this update to improve the accounting

for employee share-based payments and affect all organizations that issue share-based payment awards to their employees.

aspects of the accounting for share-based payment award transactions are simplified, including:

(a) income tax consequences;

classification of awards as either equity or liabilities;

and (c) classification on the statement of cash flows.

The updated guidance

1 unchanged sentence

adoption of the update is permitted.

The Company is currently evaluating the impact of the new standard.

November 2016, the FASB issued ASU 2016-18, “Statement of Cash Flows (Topic 230)”

, requiring that the statement

of cash flows explain the change in the total cash, cash equivalents, and amounts generally described as restricted cash or restricted

cash equivalents.

This guidance is effective for fiscal years, and interim reporting periods therein, beginning after December

15, 2017 with early adoption permitted.

The provisions of this guidance are to be applied using a retrospective approach which

requires application of the guidance for all periods presented.

The adoption of ASU 2016-09 will not have a material effect on its financial position or

results of operations or cash flows.

In April 2016, the FASB issued ASU No.

2016-10, “Revenue from Contracts with Customers:

Identifying Performance Obligations and Licensing”

March 2016, the FASB issued ASU No.

2016-08, “Revenue from Contracts with Customers:

Principal versus Agent Considerations

(Reporting Revenue Gross verses Net)”

These amendments provide additional clarification and implementation guidance

on the previously issued ASU 2014-09, “Revenue from Contracts with Customers”.

The amendments in ASU 2016-10 provide

clarifying guidance on materiality of performance obligations;

evaluating distinct performance obligations;

treatment of shipping

and handling costs;

and determining whether an entity’s promise to grant a license provides a customer with either a right

to use an entity’s intellectual property or a right to access an entity’s intellectual property.

The amendments in

ASU 2016-08 clarify how an entity should identify the specified good or service for the principal versus agent evaluation and how

it should apply the control principle to certain types of arrangements.

The adoption of ASU 2016-10 and ASU 2016-08 is to coincide

with an entity’s adoption of ASU 2014-09, which we intend to adopt for interim and annual reporting periods beginning after

December 15, 2017.

The adoption of ASU 2016-10 will not have a material effect on its financial position or results of operations

or cash flows.

In May 2016, the FASB issued ASU No.

“Revenue from Contracts with Customers (Topic 606):

Narrow-Scope Improvements and Practical Expedients”, which narrowly

amended the revenue recognition guidance regarding collectability, noncash consideration, presentation of sales tax and transition

and is effective during the same period as ASU 2014-09.

The adoption of ASU 2016-12 won’t have a material effect on its financial

position or results of operations or cash flows.

In August 2016, the FASB issued ASU

2016-15, “Statement of Cash Flows (Topic 230):

Classification of Certain Cash Receipts and Cash Payments”

2016-15”).

ASU 2016-15 will make eight targeted changes to how cash receipts and cash payments are presented and classified

in the statement of cash flows.

ASU 2016-15 is effective for fiscal years beginning after December 15, 2017.

The new standard will

require adoption on a retrospective basis unless it is impracticable to apply, in which case it would be required to apply the

amendments prospectively as of the earliest date practicable.

The adoption of ASU 2016-15 won’t have a material effect on

its financial position or results of operations or cash flows.

In July 2017, the FASB issued ASU 2017-11, “Earnings Per Share (Topic 260), Distinguishing Liabilities

from Equity (Topic 480) and Derivatives and Hedging (Topic 815):

Accounting for Certain Financial Instruments with Down Round

Replacement of the Indefinite Deferral for Mandatorily Redeemable Financial Instruments of Certain Nonpublic Entities

and Certain Mandatorily Redeemable Noncontrolling Interests with a Scope Exception”.

Part I of this update addresses the

complexity of accounting for certain financial instruments with down round features.

Down round features are features of certain

equity-linked instruments (or embedded features) that result in the strike price being reduced on the basis of the pricing of future

equity offerings.

Current accounting guidance creates cost and complexity for entities that issue financial instruments (such as

warrants and convertible instruments) with down round features that require fair value measurement of the entire instrument or

conversion option.

Part II of this update addresses the difficulty of navigating Topic 480, Distinguishing Liabilities from Equity,

because of the existence of extensive pending content in the FASB Accounting Standards Codification.

This pending content is the

result of the indefinite deferral of accounting requirements about mandatorily redeemable financial instruments of certain nonpublic

entities and certain mandatorily redeemable noncontrolling interests.

The amendments in Part II of this update do not have an accounting

This ASU is effective for fiscal years, and interim periods within those years, beginning after December 15, 2018.

Company early adopted the ASU 2017-11 in the year ending December 31, 2017.

Recent Accounting Guidance Not Yet

In February 2016, the FASB issued ASU 2016-02,

“Leases (Topic 842).”

Under ASU 2016-02, lessees will be required to recognize, for all leases of 12 months or more,

a liability to make lease payments and a right-of-use asset representing the right to use the underlying asset for the lease term.

Additionally, the guidance requires improved disclosures to help users of financial statements better understand the nature of

an entity’s leasing activities.

This ASU is effective for public reporting companies for interim and annual periods beginning

after December 15, 2018, with early adoption permitted, and must be adopted using a modified retrospective approach.

is in the process of evaluating the effect of the new guidance on its consolidated financial statements and disclosures.

In October 2016, the FASB issued ASU 2016-16,

“Income Taxes (Topic 740):

Intra-Entity Transfers of Assets Other than Inventory”, which eliminates the exception that

prohibits the recognition of current and deferred income tax effects for intra-entity transfers of assets other than inventory

until the asset has been sold to an outside party.

The updated guidance is effective for annual periods beginning after December

15, 2019, including interim periods within those fiscal years.

Early adoption of the update is permitted.

The Company is currently

evaluating the impact of the new standard.

In November 2016, the FASB issued ASU 2016-18,

“Statement of Cash Flows (Topic 230)”, requiring that the statement of cash flows explain the change in the total cash,

cash equivalents, and amounts generally described as restricted cash or restricted cash equivalents.

This guidance is effective

for fiscal years, and interim reporting periods therein, beginning after December 15, 2017 with early adoption permitted.

The provisions

of this guidance are to be applied using a retrospective approach which requires application of the guidance for all periods presented.

The Company is currently evaluating the impact of the new standard.

does not believe that any recently issued, but not yet effective accounting pronouncements, when adopted, will have a material

effect on the accompanying consolidated financial statements.

In May 2017, the FASB issued ASU 2017-09,

“Compensation—Stock Compensation (Topic 718):

Scope of Modification Accounting,”

which provides guidance about

which changes to the terms or conditions of a share-based payment award require an entity to apply modification accounting in Topic

This standard is required to be adopted in the first quarter of 2018.

The Company is currently evaluating the impact this

guidance will have on its consolidated financial statements and related disclosures.

Management does not believe that any recently

issued, but not yet effective accounting pronouncements, when adopted, will have a material effect on the accompanying consolidated

financial statements.

Note 3 –

Going Concern

Company has elected to adopt early application of ASU No.

2014-15, “Presentation of Financial Statements—Going

Concern (Subtopic 205-40):

Disclosure of Uncertainties about an Entity’s Ability to Continue as a Going Concern (“ASU

2014-15”) .

Company's consolidated financial statements have been prepared assuming that it will continue as a going concern, which contemplates

continuity of operations, realization of assets, and liquidation of liabilities in the normal course of business.

reflected in the consolidated financial statements, the Company had an accumulated deficit at December 31, 2016, a net loss and

net cash used in operating activities for the reporting period then ended.

These factors raise substantial doubt about the Company’s

ability to continue as a going concern.

Company is attempting to further implement its business plan and generate sufficient revenues;

however, its cash position may

not be sufficient to support its daily operations.

While the Company believes in the viability of its strategy to further implement

its business plan and generate sufficient revenues and in its ability to raise additional funds by way of a public or private

offering, there can be no assurance to that effect.

The ability of the Company to continue as a going concern is dependent upon

its ability to further implement its business plan and generate sufficient revenues and its ability to raise additional funds

by way of a public or private offering.

consolidated financial statements do not include any adjustments related to the recoverability and classification of recorded

asset amounts or the amounts and classification of liabilities that might be necessary should the Company be unable to continue

as a going concern.

The Company’s consolidated financial

statements have been prepared assuming that it will continue as a going concern, which contemplates continuity of operations, realization

of assets, and liquidation of liabilities in the normal course of business.

As reflected in the consolidated financial

statements, the Company had an accumulated deficit at December 31, 2017, a net loss and net cash used in operating activities for

the reporting period then ended.

These factors raise substantial doubt about the Company’s ability to continue as a going

The Company is attempting to further implement

its business plan and generate sufficient revenues;

however, its cash position may not be sufficient to support its daily operations.

While the Company believes in the viability of its strategy to further implement its business plan and generate sufficient revenues

and in its ability to raise additional funds by way of a public or private offering of its debt or equity securities, there can

be no assurance to that effect.

The ability of the Company to continue as a going concern is dependent upon its ability to further

implement its business plan and generate sufficient revenues and its ability to raise additional funds by way of a public or private

The consolidated financial statements do

not include any adjustments related to the recoverability and classification of recorded asset amounts or the amounts and classification

of liabilities that might be necessary should the Company be unable to continue as a going concern.

Note 4 –

Property and Equipment

and equipment stated at cost, less accumulated depreciation and amortization, consisted of the following:

Property and equipment

stated at cost, less accumulated depreciation and amortization, consisted of the following:

Computer Equipment

1 unchanged sentence

Accumulated Depreciation

expense was $42,634 and $10,001 for the years ended December 31, 2016 and 2015, respectively.

Depreciation expense

was $38,435 and $42,634 for the year ended December 31, 2017 and 2016, respectively.

Note 5 –

Line of Credit

March 19, 2009 Astoria Surgical Supplies North LLC signed a revolving note (the “Note”) at PNC Bank (the “Bank”).

Line of credit as of December 31, 2017

and 2016 is as follows:

Outstanding Balances as of

Revolving Note

Factoring Agreement

On March 19, 2009, Astoria Surgical Supplies North LLC signed a revolving note (the “Revolving Note”)

at PNC Bank (the “Bank”).

The outstanding balance of this Note is limited to $200,000 and expired March 19, 2010.

The outstanding balance accrues interest

at a variable rate.

The interest rate is subject to change based on changes in an independent index which is the highest Prime

Rate as published in the “Money Rates”

outstanding balance accrues interest at a variable rate.

The interest rate is subject to change based on changes in an independent

index which is the highest Prime Rate as published in the “Money Rates”

section of the Wall Street Journal.

Interest is payable monthly and the rate

as of December 31, 2016 and 2015 was 3.75% and 4.50%, respectively.

Company has been in payment default since March 19, 2010.

The Company does not believe it is probable that the loan will be called

or that the interest rate shall be increased to the default interest rate due to the fact that the Company is current and has

been current since the maturity date with its monthly installment payment obligation.

balance outstanding on the revolving note at December 31, 2016 and 2015 was $219,176 and $202,422, respectively.

6 –Note Payable

October 24, 2016, the Company entered into a loan agreement (the “Loan Agreement”) with an individual (the “Lender”),

pursuant to which on October 24, 2016 (the “Closing Date”), the Lender issued the Company a promissory note of $15,000

(the “Loan”).

maturity date of the Loan is April 24, 2017 (the “Maturity Date”).

Pursuant to the Loan Agreement, the Loan bears

interest at a rate of 9% per annum.

All outstanding principal, accrued and unpaid interest and other amounts due under the Loan

are due on the Maturity Date.

additional consideration for entering in the Loan Agreement, the Company issued Lender a warrant to purchase 30,000 shares of

the Company’s common stock with an exercise price of $0.30 per share (the “Warrant”).

The Warrant has a term

of five (5) years

October 25, 2016, the Company entered into a loan agreement (the “Loan Agreement”) with an individual (the “Lender”),

pursuant to which on October 25, 2016 (the “Closing Date”), the Lender issued the Company a promissory note of $25,000

(the “Loan”).

maturity date of the Loan is April 25, 2017 (the “Maturity Date”).

Pursuant to the Loan Agreement, the Loan bears

interest at a rate of 9% per annum.

All outstanding principal, accrued and unpaid interest and other amounts due under the Loan

are due on the Maturity Date.

additional consideration for entering in the Loan Agreement, the Company issued Lender a warrant to purchase 50,000 shares of

the Company’s common stock with an exercise price of $0.30 per share (the “Warrant”).

The Warrant has a term

of five (5) years.

of December 31, 2016, the total outstanding balance of notes payable was $30,579, net of debt discount of $9,421.

is payable monthly and the rate as of December 31, 2017 and 2016 was 3.75% and 3.75%, respectively.

The Company had been in payment

default since March 19, 2010;

however, on May 3, 2017, the Company agreed to pay back the line of credit by December 1, 2017.

of the date of this filing the Revolving Note has been paid off.

The balance outstanding on the Revolving

Note at December 31, 2017 and 2016 was $44,996 and $203,988, respectively.

On October 4, 2016, the Company signed

a revenue based factoring agreement (the “Factoring Agreement”) with Imperial Advance, LLC.

The company received proceeds

of $40,000 and agreed to pay $52,400 of future receivables.

The note issued in connection with the Factoring Agreement is secured

by an officer of the Company.

On August 21, 2017, the Company and Imperial Advance, LLC entered into a Settlement Agreement pursuant

to which the Company agreed to pay Imperial Advance, LLC $9,368 by August 23, 2017.

The company recorded a gain on settlement of

debt of $2,079.

The balance outstanding on the revenue

based factoring agreement at December 31, 2017 and 2016 was $0 and $31,153, respectively.

Note 6 –

Notes payable as of December 31, 2017 and

2016 is as follows:

Outstanding Principal as of

Interest Rate

Maturity Date

October 25, 2016

February 22, 2017

September 1, 2017

June 12, 2017

September 1, 2017

November 28, 2017

January 12, 2018

November 29, 2017

January 13, 2018

November 29, 2017

January 13, 2018

Debt Discount

Debt Issuance Costs

Private Placement Offering:

February 24, 2017 through March 17, 2017, the Company conducted multiple closings of a private placement offering (the “February

2017 Offering”) of the Company’s securities by entering into subscription agreements (the “Subscription Agreements”)

with accredited investors (the “Accredited Investors”) for aggregate gross proceeds of $916,585 for which the Accredited

Investors received $975,511 in principal value of secured promissory notes with an original issue discount of six percent (6%)

(the “February 2017 Offering Notes”) and warrants to purchase the Company’s common stock (the “February

2017 Offering Warrants”).

The February 2017 Offering Notes are convertible

into shares of the Company’s common stock at the time of Company’s next round of financing (the “Subsequent

Offering”) at a price equal to eighty-five percent (85%) of the price per share offered in the Subsequent Offering (the

“Conversion Price”).

The February 2017 Offering Warrants have a five-year term.

Investors received the February

2017 Offering Warrants in the following amounts:

(i) Investors purchasing $150,000 or more of the Offering received a February

2017 Offering Warrant equal to one hundred thirty percent (130%) of the dollar amount invested in the Offering;

(ii) investors

purchasing at least $100,000 but less than $150,000 of the February 2017 Offering received a February 2017 Offering Warrant equal

to one hundred percent (100%) of the dollar amount invested in the Offering;

and (iii) investors purchasing less than $100,000

of the Offering received to a February 2017 Offering Warrant equal to seventy percent (70%) of the dollar amount invested in the

The Warrants entitle the holder to purchase shares of the Company’s common stock at $0.20 per share (the “Exercise

Price”) .

The Conversion Price and the Exercise Price

are subject to adjustments for issuances of (i) the Company’s common stock, (ii) any equity linked instruments or (iii) securities

convertible into the Company’s common stock, at a purchase price of less than the prevailing Conversion Price or Exercise

Such adjustments shall result in the Conversion Price or Exercise Price being reduced to such lower purchase price, as described

in the February 2017 Offering Notes and the February 2017 Offering Warrants.

Pursuant to the Subscription Agreements,

the February 2017 Offering Notes matured on September 1, 2017 (the “February 2017 Offering Maturity Date”).

Prior to the February

2017 Offering Maturity Date, investors representing $575,511 in principal value converted their February 2017 Offering Notes into

two year, 15% secured convertible promissory notes offered by the Company (the “August 2017 Convertible Note Offering”).

The remaining investors representing an aggregate $400,000 in principal of the February 2017 Offering Notes agreed to forbear their

right to declare an event of default until December 15, 2017 during which time they retain the right to convert their principal

and any accrued but unpaid interest into the August 2017 Convertible Note Offering.

In consideration of the forbearance for which

the investors will receive a warrant to purchase up to fifteen percent (15%) of the shares of common stock underlying the warrant

acquired with the purchase of the February 2017 Offering Notes at a purchase price of $0.20 per share, and the interest on their

note would be increased to eighteen percent (18%) from September 1, 2017 through December 15, 2017 or the conversion date, whichever

On June 12, 2017, the Company entered into a loan agreement (the “June 2017 Loan Agreement”)

with an individual (the “June 2017 Lender”), the June 2017 Lender issued the Company a promissory note of $50,000 (the

“June 2017 Note”).

Pursuant to the June 2017 Loan Agreement, the June 2017 Note bears interest at a rate of 10% per

As additional consideration for entering in the June 2017 Loan Agreement, the Company issued the June 2017 Lender a five-year

warrant to purchase 35,000 shares of the Company’s common stock with an exercise price of $0.20 per share.

The maturity date

of the June 2017 Note was September 1, 2017 (the “June 2017 Maturity Date”) at which time all outstanding principal,

accrued and unpaid interest and other amounts due under the June 2017 Note were due.

As of the date of the filing the note is in

On July 21, 2017, the Company entered into

a loan agreement (the “July 2017 Loan Agreement”) with an individual (the “July 2017 Lender”), the July

2017 Lender issued the Company a promissory note of $100,000 (the “July 2017 Note”).

Pursuant to the July 2017 Loan

Agreement, the July 2017 Note bears interest at a rate of 10% per annum.

As additional consideration for entering in the July 2017

Loan Agreement, the Company issued the July 2017 Lender a five-year warrant to purchase 100,000 shares of the Company’s common

stock with an exercise price of $0.20 per share.

The maturity date of the July 2017 Note was April 21, 2017 (the “July 2017

Maturity Date”) at which time all outstanding principal, accrued and unpaid interest and other amounts due under the July

2017 Note were due.

On September 28, 2017, the July 2017 Note and accrued but unpaid interest was converted into the Company’s

August 2017 Convertible Note Offering.

On August 18, 2017, the Company entered

into a loan agreement (the “August 2017 Loan Agreement”) with an individual (the “August 2017 Lender”),

the August 2017 the Company issued the Lender a promissory note of $50,000 (the “August 2017 Note”).

Pursuant to the

August 2017 Loan Agreement, the August 2017 Note bears interest at a rate of 15% per annum.

The maturity date of the August 2017

Note was October 2, 2017 at which time all outstanding principal, accrued and unpaid interest and other amounts due under the August

2017 Note were due.

During September 2017, the August 2017 Note and accrued but unpaid interest was converted into the Company’s

August Convertible Note Offering.

November 28, 2017, the Company entered into a loan agreement (the “First November 2017 Loan Agreement”) with an

individual (the “First November 2017 Lender”), the First November 2017 Lender issued the Company a promissory

note of $100,000 (the “First November 2017 Note”).

Pursuant to the First November 2017 Loan Agreement, the First

November 2017 Note has interest of fifteen percent (15%), (i) five percent (5%) (i.e.

$5,000) shall be payable in cash or

convertible into shares of the Company’s restricted common stock at a rate of $0.20 per share, at the option of the

Lender, at the Maturity Date;

(ii) ten percent (10%) (i.e.

$10,000) shall be paid in the form of the Company’s restricted

common stock at a rate of $0.20 per share (equivalent to 50,000 shares of the Company’s common stock issued at $0.20

The maturity date of the First November 2017 Note was January 12, 2018 (the “First November 2017 Maturity

Date”) at which time all outstanding principal, accrued and unpaid interest and other amounts due under the First

November 2017 Note are due.

On November 29, 2017, the Company entered

into a loan agreement (the “Second November 2017 Loan Agreement”) with an individual (the “Second November 2017

Lender”), the Second November 2017 Lender issued the Company a promissory note of $50,000 (the “Second November 2017

Note”).

Pursuant to the Second November 2017 Loan Agreement, the Second November 2017 Note has interest of fifteen percent

(15%), (i) five percent (5%) (i.e.

$2,500) shall be payable in cash or convertible into shares of the Company’s restricted

common stock at a rate of $0.20 per share, at the option of the Lender, at the Maturity Date;

(ii) ten percent (10%) (i.e.

shall be paid in the form of the Company’s restricted common stock at a rate of $0.20 per share (equivalent to 25,000 shares

of the Company’s common stock issued at $0.20 per share).

The maturity date of the Second November 2017 Note was January

13, 2018 (the “Second November 2017 Maturity Date”) at which time all outstanding principal, accrued and unpaid interest

and other amounts due under the Second November 2017 Note are due.

On November 29, 2017, the Company entered into a loan agreement (the “Third November 2017 Loan Agreement”)

with an individual (the “Third November 2017 Lender”), the Third November 2017 Lender issued the Company a promissory

note of $100,000 (the “Third November 2017 Note”).

Pursuant to the Third November 2017 Loan Agreement, the Third November

2017 Note has interest of fifteen percent (15%), (i) five percent (5%) (i.e.

$5,000) shall be payable in cash or convertible into

shares of the Company’s restricted common stock at a rate of $0.20 per share, at the option of the Lender, at the Maturity

(ii) ten percent (10%) (i.e.

$10,000) shall be paid in the form of the Company’s restricted common stock at a rate

of $0.20 per share (equivalent to 50,000 shares of the Company’s common stock issued at $0.20 per share).

The maturity date

of the Third November 2017 Note was January 13, 2018 (the “Third November 2017 Maturity Date”) at which time all outstanding

principal, accrued and unpaid interest and other amounts due under the Third November 2017 Note are due.

Note 7 –

Convertible Note Payable

December 2, 2015, the Company issued a convertible note to a third party lender totaling $100,000.

The note accrues interest at

12% per annum and matures with interest and principal both due on December 1, 2016.

In addition the Company issued a warrant

Convertible notes payable as of December

31, 2017 and 2016 is as follows:

Outstanding Principal as of

December 31, 2017

December 31, 2016

Maturity Date

November –

December, 2016

November 1, 2017

December 27, 2016

December 27, 2017

Not Applicable

September 1, 2017

April 11, 2018

August –

November 2017

August –

November 2019

December 21, 2017

Debt Discount

Debt Issuance Costs

Total Long-Term Debt

(*) As subject to adjustment as further

outlined in the notes

During the months of November and December

2016, the Company issued convertible notes to third party lenders totaling $400,000.

These notes accrue interest at a rate of 10%

per annum and mature with interest and principal both due on November 1, 2017 through December 29, 2017.

The notes and accrued

interest are convertible at a conversion price as defined therein.

In addition, in connection with the notes the Company issued

five-year warrants to purchase an aggregate of 400,000 shares of Company common stock at a purchase price of $0.30 per share.

investors converted $375,000 of principal and $30,719 of interest into the August 2017 Convertible Note Offering.

On December 27, 2016, the Company issued

a convertible note to a third party lender totaling $100,000 (the “December 2016 Note”).

The December 2016 Note accrues

interest at 10% per annum and matures with interest and principal both due on December 27, 2017.

In addition, the Company issued

a warrant to purchase 100,000 shares of Company common stock.

The warrant entitles the holder to purchase the Company’s common

stock at a purchase price of $0.40 per share for a period of five years from the issue date.

The December 2016 Note and accrued

interest is convertible at a conversion price of $0.30 per share, subject to adjustment.

On August 31, 2017 the investor converted

$100,000 of principal and $6,767 of interest into the August 2017 Convertible Note Offering.

During the month of June 2017 the Company

issued convertible notes to third party lenders totaling $71,500.

The notes accrue interest at 12% per annum and mature with interest

and principal both due on September 1, 2017.

The notes and accrued interest may be converted into a subsequent offering at a 15%

discount to the offering price are convertible at a conversion price as defined therein.

In addition, the Company issued warrants

to purchase 67,550 shares of Company common stock.

The note and accrued interest are convertible at a conversion price of $0.35

per share subject to adjustment.

warrant entitles the holder to purchase the Company’s common stock at a purchase price of $0.35 per share for a period of

five years from the issue date.

December 21, 2015, the notes were automatically converted into Series B preferred stock.

March 17, 2016, the Company issued a convertible note to a third party lender totaling $200,000.

The note accrues interest at

12% per annum and matures with interest and principal both due on April 21, 2016.

In addition the Company issued a warrant to

purchase 150,000 shares of Company common stock.

The note and accrued interest are convertible at a conversion price as defined.

warrant entitles the holder to purchase the Company’s common stock at a purchase price of $0.40 per share for a period of

five years from the issue date.

May 27, 2016, the notes and accrued interest were paid off in full satisfaction.

August 2, 2016, the Company issued a convertible note to a third party lender totaling $50,000.

The note accrues interest equal

to 10% of the principal balance and matures with interest and principal both due on August 31, 2016.

The note and accrued interest

are convertible at a conversion price as defined.

On August 22, 2016, the notes and accrued interest were paid off in full satisfaction.

the months of November and December 2016, the Company issued a convertible notes to third party lenders totaling $400,000.

note accrues interest at 10% per annum and mature with interest and principal both due on November 1, 2017.

In addition the Company

issued a warrant to purchase 400,000 shares of Company common stock.

The note and accrued interest are convertible at a conversion

price as defined.

warrant entitles the holder to purchase the Company’s common stock at a purchase price of $0.30 per share for a period of

five years from the issue date.

The warrants entitle the holders to purchase the Company’s common stock

at a purchase price of $0.20 per share for a period of five years from the issue date.

As of December 31, 2018, the Company was

currently in default on $71,500 in principal due on the notes.

On February 8, 2018, the Company repurchased these notes

and is no longer in default.

The July 2017 Convertible Offering

During the month of July 2017, the Company

entered into Securities Purchase Agreements and conducted closings of a private placement offering (the “July 2017 Convertible

Note Offering”) of the Company’s securities for aggregate gross proceeds of $445,000.

In aggregate, the Company entered

into Securities Purchase Agreements with three accredited investors for (i) the issuance and sale of 8.5% Convertible Redeemable

Debentures, containing a ten percent (10%) original issuance discount, due April 18, 2018 (the “Debentures”)

and (ii) the issuance and sale of five-year Common Stock Purchase Warrants to purchase up to 778,750 shares of the Company’s

common stock, par value $0.001 per share.

The Warrants were immediately exercisable upon issuance at an exercise price of $0.20

per share, subject to adjustment, and expire five years from the date of issuance.

The accredited investors also received a total

of 245,000 shares of the Company’s common stock as inducement for participating in the July 2017 Convertible Note Offering

(the “Consideration Shares”).

During September 8, 2017 through September

13, 2017, the Company redeemed the 8.5% Convertible Redeemable Debentures by paying the three accredited investors an aggregate

$606,812 representing 117.5% of the principal along with interest.

Pursuant to such redemption, the Debentures are no longer in

full force and effect.

The Company also repurchased 220,000 consideration shares of one of the accredited investors for $19,007,

cancelling the accredited investor’s Consideration Shares.

Due to the fact that these convertible

notes have an option to convert at a variable amount, they are subject to derivative liability treatment.

The Company has applied

ASC 815, due to the potential for settlement in a variable quantity of shares.

The conversion feature has been measured at fair

value using a Black Scholes model at the issuance date and the period end.

The conversion feature of The July 2017 Convertible

Offering issued during the year ended December 31, 2017, gave rise to a derivative liability of $332,942 which was recorded as

a debt discount.

The debt discount is charged to accretion of debt discount and issuance cost ratably over the term of the convertible

The Company recorded an $78,823 debt discount

relating to 778,750 warrants issued to investors based on the relative fair value of each equity instrument on the dates of issuance.

The debt discount is being accreted over the life of the note to accretion of debt discount and issuance cost.

The August 2017 Convertible Note

During the year ended December 31, 2017,

the Company conducted multiple closings of a private placement offering to accredited investors (the “August 2017 Convertible

Note Offering”) of units of the Company’s securities by entering into subscription agreements with “accredited

investors”

(the “Investors”) for aggregate gross proceeds of $1,585,000.

In addition, $1,217,177 of the Company’s

short term debt along with accrued but unpaid interest of $40,146 was converted into the August Offering.

The conversions resulted

in the issuance of 6,791,419 warrants with a fair value of $583,681 and an original issue discount of $101,561.

These were recorded

as a loss on extinguishment of debt.

The August Offering consisted of a maximum

of $6,000,000 of units of the Company’s securities (each, a “Unit”

and collectively, the “Units”),

with each Unit consisting of (a) a 15% Convertible Secured Promissory Note (each a “Note”

and together the “Notes”),

convertible into shares of the Company’s common stock, par value $.001 per share (“Conversion Shares”) at a conversion

price of $0.20 per share (the “Conversion Price”), and (b) a five-year warrant (each a “Warrant and together

the “Warrants”) to purchase common stock equal to one hundred percent (100%) of the shares into which the Notes can

be converted into (“Warrant Shares”) at an exercise price of $0.20 per share (“Exercise Price”).

mature on the second (2nd) anniversary of their issuance dates.

The Conversion Price of the Note and the

Exercise Price of the Warrants are subject to adjustment for issuances of the Company’s common stock or any equity linked

instruments or securities convertible into the Company’s common stock at a purchase price of less than the prevailing Conversion

Price or Exercise Price.

Such adjustment shall result in the Conversion Price and Exercise Price being reduced to such lower purchase

price, subject to carve-outs as described therein.

The Company recorded a $472,675 debt discount

relating to 7,925,000 warrants issued to investors based on the relative fair value of each equity instrument on the dates of issuance.

The debt discount is being accreted over the life of the note to accretion of debt discount and issuance cost.

In connection with the Offering, the Company

paid a placement agent a cash fee of $90,508 to carry out the Offering on a “best-efforts”

basis, which was recorded

as issuance cost and is being accreted over the life of the note to accretion of debt discount and issuance cost.

On December 27, 2017, the Company

issued a convertible note to a third party lender totaling $100,000.

The note accrues interest at 10% per annum and matures with

interest and principal both due on December 27, 2017.

In addition, the Company issued a warrant to purchase 100,000 shares of

Company common stock.

The note and accrued interest are convertible at a conversion price of $0.30 per share subject to adjustment.

warrant entitles the holder to purchase the Company’s common stock at a purchase price of $0.40 per share for a period of

five years from the issue date.

As of December 31, 2016, the total

outstanding balance of convertible notes payable was $268,823, net of debt discount and debt issuance costs of $184,398 and $46,779,

respectively.

issued a convertible note to a third party lender totaling $100,000 (the “First December 2017 Note”).

December 2017 Note accrues interest at 15% per annum and matures with interest and principal both due on December 27, 2019.

In addition, the Company issued a warrant to purchase 500,000 shares of Company common stock.

The warrant entitles the holder

to purchase the Company’s common stock at a purchase price of $0.20 per share for a period of five years from the issue

The Company recorded a $35,525 debt discount relating to the warrants issued to the investor based on the relative fair

value of each equity instrument on the dates of issuance.

The debt discount is being accreted over the life of the note The

First December 2017 Note and accrued interest is convertible at a conversion price of $0.20 per share, subject to adjustment.

The First December 2017 Note is secured by a second priority lien on the assets of the Company.

Note 8 –

Related Party Loan

May 26, 2016, the Company entered into a loan agreement (the “Loan Agreement”) with Arthur Rosen, an individual (the

“Lender”), pursuant to which on May 26, 2016 (the “Closing Date”), the Lender issued the Company a secured

term loan of $1,000,000 (the “Loan”).

In connection with the Loan Agreement, on May 26, 2016, the Company and Lender

entered into a security agreement (the “Security Agreement”), pursuant to which the Company granted to Lender a senior

security interest in substantially all of the Company’s assets as security for repayment of the Loan.

maturity date of the Loan is May 26, 2017 (the “Maturity Date”).

Pursuant to the Loan Agreement, the Loan bears interest

at a rate of 12.5% per annum, compounded annually and payable on the Maturity Date.

All outstanding principal, accrued and unpaid

interest and other amounts due under the Loan are due on the Maturity Date.

additional consideration for entering in the Loan Agreement, the Company issued Lender a warrant to purchase 1,000,000 shares

of the Company’s common stock with an exercise price of $0.40 per share (the “Warrant”).

The Warrant has a term

of five (5) years and contains anti-dilution provisions as further described therein.

September 12, 2016, the Company entered into a loan agreement (the “Loan Agreement”) with Arthur Rosen, an individual

(the “Lender”), pursuant to which on September 12, 2016 (the “Closing Date”), the Lender issued the Company

a promissory note of $100,000 (the “Loan”).

original maturity date of the Loan was October 12, 2016 (the “Maturity Date”).

Pursuant to the Loan Agreement, the

Loan bears interest at a rate of 12% per annum.

All outstanding principal, accrued and unpaid interest and other amounts due under

the Loan are due on the Maturity Date.

On October 12, 2016 the Company entered into an amendment to the note.

The note’s

Maturity Date was extended 90 days.

additional consideration for entering in the Loan Agreement, the Company issued Lender a warrant to purchase 150,000 shares of

the Company’s common stock with an exercise price of $0.40 per share (the “Warrant”).

The Warrant has a term

of five (5) years.

September 20, 2016, the Company entered into a loan agreement (the “Loan Agreement”) with 202 S Dean LLC, a company

partially owned by an officer of the Company, (the “Lender”), pursuant to which on September 20, 2016 (the “Closing

Date”), the Lender issued the Company a promissory note of $10,000 (the “Loan”).

maturity date of the Loan is March 20, 2017 (the “Maturity Date”).

Pursuant to the Loan Agreement, the Loan bears

interest at a rate of 10% per annum.

additional consideration for entering in the Loan Agreement, the Company issued Lender a warrant to purchase 235,000 shares of

the Company’s common stock with an exercise price of $0.40 per share (the “Warrant”).

The Warrant has a term

of five (5) years.

October 13, 2016, the Company entered into a loan agreement (the “Loan Agreement”) with Chris Gordon, an individual

(the “Lender”), pursuant to which on October 13, 2016 (the “Closing Date”), the Lender issued the Company

a promissory note of $50,000 (the “Loan”).

original maturity date of the Loan was November 12, 2016 (the “Maturity Date”).

Pursuant to the Loan Agreement, the

Loan bears interest at a rate of 12% per annum.

All outstanding principal, accrued and unpaid interest and other amounts due under

the Loan are due on the Maturity Date.

The Company is currently in payment default.

additional consideration for entering in the Loan Agreement, the Company issued Lender a warrant to purchase 50,000 shares of

the Company’s common stock with an exercise price of $0.40 per share (the “Warrant”).

The Warrant has a term

of five (5) years.

October 31, 2016, the Company entered into a loan agreement (the “Loan Agreement”) with Arthur Rosen, an individual

(the “Lender”), pursuant to which on October 31, 2016 (the “Closing Date”), the Lender issued the Company

a promissory note of $10,000 (the “Loan”).

original maturity date of the Loan was November 10, 2016 (the “Maturity Date”).

Pursuant to the Loan Agreement, the

Loan bears interest at a rate of 10% per annum.

All outstanding principal, accrued and unpaid interest and other amounts due under

the Loan are due on the Maturity Date.

The Company is currently in payment default.

additional consideration for entering in the Loan Agreement, the Company issued Lender a warrant to purchase 10,000 shares of

the Company’s common stock with an exercise price of $0.30 per share (the “Warrant”).

The Warrant has a term

of five (5) years.

December 21, 2016, the Company entered into a loan agreement (the “Loan Agreement”) with Chris Gordon, an individual

(the “Lender”), pursuant to which on December 21, 2016 (the “Closing Date”), the Lender issued the Company

a promissory note of $275,000 (the “Loan”).

maturity date of the Loan is January 20, 2017 (the “Maturity Date”).

Pursuant to the Loan Agreement, the Loan bears

Convertible notes

Convertible notes payable –

party as of December 31, 2017 and 2016 is as follows:

Outstanding Principal as of

December 31, 2017

Interest Rate

Maturity Date

August –

December 21, 2018

December 21, 2019

Debt Discount

Total Long-Term Debt

On April 25, 2017, the Company issued convertible

notes to Arthur Rosen, a lender, totaling $25,000 (the “April Rosen Notes”).

The April Rosen Notes accrue interest

at 12% per annum and mature with interest and principal both due on September 1, 2017.

In addition, in connection with the April

Rosen Notes, the Company issued a five-year warrant to purchase 17,500 shares of Company common stock at a purchase price of $0.20

On September 7, 2017, the April Rosen Notes and accrued interest was converted into the August 2017 Convertible Note

On April 25, 2017, the Company issued a

convertible note to Chris Gordon, a lender totaling $25,000 (the “April Gordon Notes”).

The April Gordon Notes accrue

interest at 12% per annum and matures with interest and principal both due on September 1, 2017.

In addition, the Company issued

a five-year warrant to purchase 17,500 shares of Company common stock at a purchase price of $0.20 per share.

The April Gordon

Notes and accrued interest were converted into the August 2017 Convertible Note Offering.

The August 2017 Convertible Note

Offering –

Related Party

During the year ended December 31, 2017,

the Company conducted multiple closings of a private placement offering to accredited investors (the “The August 2017 Convertible

Offering”) of units of the Company’s securities by entering into subscription agreements with “accredited investors”

(the “Investors”) for aggregate gross proceeds of $505,000.

In addition, $645,000 of the Company’s short term

debt along with accrued but unpaid interest of $206,026 was converted into the August 2017 Convertible Offering.

The conversions

resulted in the issuance of 4,555,129 warrants with a fair value of $440,157 and the increase of principal of $60,000.

These resulted

in a loss on extinguishment of debt of $500,157.

The Company offered, through a placement

agent, $6,000,000 of units of its securities (each, a “Unit”

and collectively, the “Units”), with each

Unit consisting of (a) a 15% Convertible Secured Promissory Note (each a “Note”

and together the “Notes”),

convertible into shares of the Company’s common stock, par value $.001 per share (“Conversion Shares”) at a conversion

price of $0.20 per share (the “Conversion Price”), and (b) a five-year warrant ( each a “Warrant and together

the “Warrants”) to purchase common stock equal to one hundred percent (100%) of the shares into which the Notes can

be converted into (“Warrant Shares”) at an exercise price of $0.20 per share (“Exercise Price”).

mature on the second (2nd) anniversary of their issuance dates.

The Conversion Price of the Note and the

Exercise Price of the Warrants are subject to adjustment for issuances of the Company’s common stock or any equity linked

instruments or securities convertible into the Company’s common stock at a purchase price of less than the prevailing Conversion

Price or Exercise Price.

Such adjustment shall result in the Conversion Price and Exercise Price being reduced to such lower purchase

price, subject to carve-outs as described therein.

The Company recorded a $160,700 debt discount

relating to 2,525,000 warrants issued to investors based on the relative fair value of each equity instrument on the dates of issuance.

The debt discount is being accreted over the life of the note to accretion of debt discount and issuance cost.

On December 21, 2017, the Company issued

a convertible note to a third party lender totaling $100,000 (the “Second December 2017 Note”).

The Second December

2017 Note accrues interest at 15% per annum and matures with interest and principal both due on December 27, 2019.

the Company issued a warrant to purchase 500,000 shares of Company common stock.

The warrant entitles the holder to purchase the

Company’s common stock at a purchase price of $0.20 per share for a period of five years from the issue date.

recorded a $36,722 debt discount relating to the warrants issued to the investor based on the relative fair value of each equity

instrument on the dates of issuance.

The debt discount is being accreted over the life of the note The Second December 2017 Note

and accrued interest is convertible at a conversion price of $0.20 per share, subject to adjustment.

The Second December 2017 Note

is secured as a second priority lien on the assets of the Company.

Notes payable

Notes payable –

related party as

of December 31, 2017 and 2016 is as follows:

Principal as of

November 26, 2017

September 12, 2016

November 22, 2017

September 20, 2016

March 20, 2017

October 13, 2016

November 22, 2017

October 24, 2016

January 1, 2018

October 31, 2016

November 10, 2016

November 22, 2016

November 22, 2017

December 21, 2016

November 22, 2017

September 8, 2017

September 24, 2017

November 20, 2017

December 31, 2017

Debt Discount

May 26, 2016, the Company entered into a loan agreement (the “May 2016 Rosen Loan Agreement”) with Arthur Rosen, an

individual (“Rosen”), pursuant to which on May 26, 2016 (the “Closing Date”), Rosen provided the Company

a secured term loan of $1,000,000 (the “May 2016 Rosen Loan”).

In connection with the May 2016 Rosen Loan Agreement,

on May 26, 2016, the Company and Rosen entered into a security agreement (the “Rosen Security Agreement”), pursuant

to which the Company granted to Rosen a senior security interest in substantially all of the Company’s assets as security

for repayment of the May 2016 Rosen Loan.

Pursuant to the May 2016 Rosen Loan Agreement, the May 2016 Rosen Loan bears interest

at a rate of 12.5% per annum, compounded annually and payable on the maturity date of May 26, 2017 (the “May 2016 Rosen Maturity

Date”) at which time all outstanding principal, accrued and unpaid interest and other amounts due under the May 2016 Rosen

Loan are due.

The Company entered into an amendment to the May 2016 Rosen Loan extending the May 2016 Rosen Maturity Date to November

As additional consideration for entering in the May 2016 Rosen Loan Agreement, the Company issued Rosen a five-year warrant

to purchase 1,000,000 shares of the Company’s common stock at a purchase price of $0.40 per share (the “May 2016 Rosen

Warrant”).

The May 2016 Rosen Warrant contains anti-dilution provisions as further described therein.

On September 7,

2017 (the “Conversion Date”), Rosen converted all accrued but unpaid interest on the May 26 Rosen Loan from May 26,

2016 through September 6, 2017 in the amount of $150,127.97 (the “May 26 Rosen Loan Interest”) into the Company’s

August Convertible Note Offering, after which May 26 Rosen Loan Interest was deemed paid in full through the Conversion Date.

On September 12, 2016, the Company entered

into a loan agreement (the “September 2016 Rosen Loan Agreement”) with Rosen, pursuant to which on September 12, 2016

(the “Closing Date”), the Company issued Rosen a promissory note of $100,000 (the “September 2016 Rosen Note”).

Pursuant to the September 2016 Rosen Loan Agreement, the September 2016 Rosen Note bears interest at a rate of 12% per annum.

additional consideration for entering in the September 2016 Rosen Loan Agreement, the Company issued Rosen a five-year warrant

to purchase 150,000 shares of the Company’s common stock at a purchase price of $0.40 per share.

During the year ended December

31, 2017 the principal and interest of this note were converted into the August 2017 Convertible Note Offering.

On October 13, 2016, the Company entered

into a loan agreement (the “October 2016 Gordon Loan Agreement”) with Chris Gordon, an individual (the “Gordon”),

pursuant to which on October 13, 2016 (the “Closing Date”), the Company issued a promissory note of $50,000 to Gordon

(the “October 2016 Gordon Note”).

Pursuant to the October 2016 Gordon Loan Agreement, the October 2016 Gordon Note

bears interest at a rate of 12% per annum.

As additional consideration for entering in the October 2016 Gordon Loan Agreement,

the Company issued Gordon a five-year warrant to purchase 50,000 shares of the Company’s common stock at a purchase price

of $0.40 per share.

During the year ended December 31, 2017 the principal and interest of this note were converted into the August

2017 Convertible Note Offering.

On October 24, 2016, the Company entered

into a loan agreement (the “October 2016 Schiller Loan Agreement”) with Leonard Schiller, a Board Member (the “Schiller”),

pursuant to which on October 24, 2016 (the “Closing Date”), the Company issued Schiller a promissory note of $15,000

(the “October 2016 Schiller Note”).

Pursuant to the October 2016 Schiller Loan Agreement, the October 2016 Schiller

Note bears interest at a rate of 9% per annum.

As additional consideration for entering in the October 2016 Schiller Loan Agreement,

the Company issued Schiller a 5-year warrant to purchase 30,000 shares of the Company’s common stock at a purchase price

of $0.30 per share.

During the year ended December 31, 2017 the principal and interest of this note were converted into the August

2017 Convertible Note Offering.

On October 31, 2016, the Company entered

into a loan agreement (the “October 2016 Rosen Loan Agreement”) with Rosen, pursuant to which on October 31, 2016 (the

“Closing Date”), Company issued Rosen a promissory note of $10,000 (the “October 2016 Rosen Note”).

to the October 2016 Rosen Loan Agreement, the October 2016 Rosen Note bears interest at a rate of 10% per annum.

As additional

consideration for entering in the October 2016 Rosen Loan Agreement, the Company issued Rosen a five-year warrant to purchase 10,000

shares of the Company’s common stock at a purchase price of $0.30 per share.

During the year ended December 31, 2017 the

principal and interest of this note were converted into the August 2017 Convertible Note Offering.

On December 21, 2016, the Company entered

into a loan agreement (the “December 2016 Gordon Loan Agreement”) with Gordon, pursuant to which on December 21, 2016

(the “Closing Date”), the Company issued Gordon a promissory note of $275,000 (the “December 2016 Gordon Note”).

Pursuant to the December 2016 Gordon Loan Agreement, the December 2016 Gordon Note bears interest at a rate of 10% per annum.

additional consideration for entering in the December 2016 Gordon Loan Agreement, the Company issued Gordon a five-year warrant

to purchase 166,666 shares of the Company’s common stock at a purchase price of $0.40 per share.

During the year ended December

31, 2017 the principal and interest of this note were converted into the August 2017 Convertible Note Offering.

On January 25, 2017, the Company entered

into a loan agreement (the “January 2017 Rosen Loan Agreement”) with Rosen pursuant to which on January 25, 2017 (the

“Closing Date”), the Company issued Rosen a promissory note of $50,000 (the “January 2017 Rosen Note”).

The January 2017 Rosen Note is secured by an officer of the Company.

Pursuant to the January 2017 Rosen Loan Agreement, the January

2017 Rosen Note bears interest at a rate of 10% per annum.

As additional consideration for entering in the January 2017 Rosen Loan

Agreement, the Company issued Rosen a five-year warrant to purchase 50,000 shares of the Company’s common stock at a purchase

price of $0.30 per share.

During the year ended December 31, 2017 the principal and interest of this note were converted into the

August 2017 Convertible Note Offering.

On January 26, 2017, the Company entered

into a loan agreement (the “January 2017 Gordon Loan Agreement”) with Gordon pursuant to which on January 26, 2017

(the “Closing Date”), the Company issued Gordon a promissory note of $50,000 (the “January 2017 Gordon Note”).

The January 2017 Gordon Note is secured by an officer of the Company.

Pursuant to the January 2017 Gordon Loan Agreement, the January

2017 Gordon Note bears interest at a rate of 10% per annum.

As additional consideration for entering in the January 2017 Gordon

Loan Agreement, the Company issued Gordon a five-year warrant to purchase 50,000 shares of the Company’s common stock at

a purchase price of $0.30 per share.

During the year ended December 31, 2017 the principal and interest of this note were repaid.

On February 7, 2017, the Company entered

into a loan agreement (the “February 2017 Schiller Loan Agreement”) with Schiller, a member of the Board, pursuant

to which on October 24, 2016 (the “Closing Date”), the Company issued Schiller a promissory note of $10,000 (the “February

2017 Schiller Note”).

The February 2017 Schiller Note is secured by an officer of the Company.

Pursuant to the February 2017

Schiller Loan Agreement, the February 2017 Schiller Note bears interest at a rate of 10% per annum.

As additional consideration

for entering in the February 2017 Schiller Note Loan Agreement, the Company issued Schiller a five-year warrant to purchase 10,000

shares of the Company’s common stock at a purchase price of $0.30 per share.

During the year ended December 31, 2017 the

principal and interest of this note were converted into the August 2017 Convertible Note Offering.

On April 12, 2017, the Company entered

into a loan agreement (the “April 2017 Schiller Loan Agreement”) with Schiller, a member of the Board, whereby the

Company issued Schiller a promissory note of $10,000 (the “April 2017 Schiller Note”).

The April 2017 Schiller Note

is secured by an officer of the Company.

Pursuant to the April 2017 Schiller Loan Agreement, the April 2017 Schiller Note bears

interest at a rate of 10% per annum.

All outstanding principal, accrued and unpaid interest and other amounts due under the Loan

are due on the Maturity Date.

The Company is currently in payment default.

additional consideration for entering in the Loan Agreement, the Company issued Lender a warrant to purchase 166,666 shares of

the Company’s common stock with an exercise price of $0.40 per share (the “Warrant”).

The Warrant has a term

of five (5) years.

of December 31, 2016, the total outstanding balance of related party notes payable was $1,350,325 net of debt discount of $94,675.

As additional consideration for entering in the April 2017 Schiller Loan Agreement, the Company

issued Schiller a five-year warrant to purchase 10,000 shares of the Company’s common stock at a purchase price of $0.30

During the year ended December 31, 2017 the principal and interest of this note were converted into the August 2017

Convertible Note Offering.

On April 12, 2017, the Company entered

into a loan agreement (the “April 2017 Rosen Loan Agreement”) with Rosen, whereby the Company issued Rosen a promissory

note of $10,000 (the “April 2017 Rosen Note”).

The April 2017 Rosen Note is secured by an officer of the Company.

to the April 2017 Rosen Loan Agreement, the April 2017 Rosen Note bears interest at a rate of 10% per annum.

As additional consideration

for entering in the April 2017 Rosen Loan Agreement, the Company issued Rosen a five-year warrant to purchase 10,000 shares of

the Company’s common stock at a purchase price of $0.30 per share.

During the year ended December 31, 2017 the principal

and interest of this note were converted into the August 2017 Convertible Note Offering.

On May 4, 2017, the Company entered into a loan agreement (the

“May 2017 Rosen Loan Agreement”) with Rosen, whereby the Company issued Rosen a promissory note of $15,000 (the “May

2017 Rosen Note”).

The May 2017 Rosen Note is secured by an officer of the Company.

Pursuant to the May 2017 Rosen Note Loan

Agreement, the May 2017 Rosen Note bears interest at a rate of 12% per annum.

As additional consideration for entering in the May

2017 Rosen Note Loan Agreement, the Company issued Rosen a five-year warrant to purchase 10,500 shares of the Company’s common

stock at a purchase price of $0.30 per share.

During the year ended December 31, 2017 the principal and interest of this note were

converted into the August 2017 Convertible Note Offering.

On May 11, 2017, the Company entered into

a loan agreement (the “May 2017 Schiller Loan Agreement”) with Schiller, a member of the Board, whereby the Company

issued Schiller a promissory note of $20,000 (the “May 2017 Schiller Note”).

Pursuant to the May 2017 Schiller Loan

Agreement, the May 2017 Schiller Note bears interest at a rate of 10% per annum.

As additional consideration for entering in the

May 2017 Schiller Note Loan Agreement, the Company issued Schiller a five-year warrant to purchase 20,000 shares of the Company’s

common stock at a purchase price of $0.20 per share.

During the year ended December 31, 2017 the principal and interest of this

note were converted into the August 2017 Convertible Note Offering.

On June 26, 2017, the Company entered into

a loan agreement (the “June 2017 Schiller Loan Agreement”) Schiller, a member of the Board, whereby the Company issued

Schiller a promissory note of $30,000 (the “June 2017 Schiller Note”).

Pursuant to the June 2017 Schiller Loan Agreement,

the June 2017 Schiller Note bears interest at a rate of 10% per annum.

As additional consideration for entering in the June 2017

Schiller Loan Agreement, the Company issued Schiller a five-year warrant to purchase 22,500 shares of the Company’s common

stock at a purchase price of $0.20 per share.

During the year ended December 31, 2017 the principal and interest of this note were

converted into the August 2017 Convertible Note Offering.

On July 6, 2017, the Company entered into

a loan agreement (the “July 2017 Rosen Loan Agreement”) with Rosen, whereby the Company issued Rosen a promissory note

of $25,000 (the “July 2017 Rosen Note”).

The July 2017 Rosen Note is secured by an officer of the Company.

to the July 2017 Rosen Note Loan Agreement, the July 2017 Rosen Note bears interest at a rate of 10% per annum.

As additional consideration

for entering in the July 2017 Rosen Note Loan Agreement, the Company issued Rosen a five-year warrant to purchase 18,750 shares

of the Company’s common stock at a purchase price of $0.20 per share.

During the year ended December 31, 2017 the principal

and interest of this note were converted into the August 2017 Convertible Note Offering.

On July 6, 2017, the Company entered into

a loan agreement (the “July 2017 Gordon Loan Agreement”) with Gordon, whereby the Company issued Gordon a promissory

note of $25,000 (the “July 2017 Gordon Note”).

The July 2017 Gordon Note is secured by an officer of the Company.

to the July 2017 Gordon Note Loan Agreement, the July 2017 Gordon Note bears interest at a rate of 10% per annum.

As additional

consideration for entering in the July 2017 Gordon Note Loan Agreement, the Company issued Gordon a five-year warrant to purchase

18,750 shares of the Company’s common stock at a purchase price of $0.20 per share.

During the year ended December 31, 2017

the principal and interest of this note were converted into the August 2017 Convertible Note Offering.

On August 24, 2017, the Company entered

into a loan agreement (the “August 2017 Rosen Loan Agreement”) with Rosen, whereby the Company issued Rosen a promissory

note of $20,000 (the “August 2017 Rosen Note”).

The August 2017 Rosen Note is secured by an officer of the Company.

Pursuant to the August 2017 Rosen Note Loan Agreement, the August 2017 Rosen Note bears interest at a rate of 12% per annum.

the year ended December 31, 2017 the principal and interest of this note were converted into the August 2017 Convertible Note Offering.

On September 8, 2017, the Company entered

into a loan agreement (the “September 2017 Rosen Loan Agreement”) with Rosen, whereby the Company issued Rosen a promissory

note of $224,000 (the “September 2017 Rosen Note”).

The September 2017 Rosen Note is secured by an officer of the Company.

As additional consideration for entering in the September 2017 Rosen Note Loan Agreement, the Company issued Rosen a five-year

warrant to purchase 25,000 shares of the Company’s common stock at a purchase price of $0.20 per share.

On November 13, 2017,

in consideration for extending the Promissory Note, Rosen was issued a warrant to purchase 100,000 shares of the Company’s

Common Stock exercisable within five (5) years and with an exercise price of $0.20 per share.

On November 20, 2017, the Company entered

into a loan agreement (the “November 2017 Schiller Loan Agreement”) Schiller, a member of the Board, whereby the Company

issued Schiller a promissory note of $25,000 (the “November 2017 Schiller Note”).

Pursuant to the November 2017 Schiller

Loan Agreement, the November 2017 Schiller Note bears interest at a rate of 15% per annum.

November 20, 2017, the Company entered into a loan agreement (the “November 2017 Rosen Agreement”) whereby the

Company issued Rosen a promissory note of $25,000 (the “November 2017 Rosen Note”).

Pursuant to the November 2017

Rosen Loan Agreement, the November 2017 Rosen Note bears interest at a rate of 15% per annum.

During the year ended December

31, 2017 the principal and interest of this note were repaid.

Line of credit

On May 9, 2017, the Company entered into

a Revolving Line of Credit (the “LOC”) with Grawin, LLC, an LLC controlled by Arthur Rosen, a related party.

is was established for a period of twelve months in which the Company can borrow principal up to $130,000.

The LOC bears interest

at a rate of 18%.

As of December 31, 2017, the total outstanding

balance of line of credit - related party was $130,000.

Note 9 –

Capital Leases Payable

lease obligation consisted of the following:

December 31, 2016

Capital lease obligation to a financing company for a term of five (5) years,

collateralized by equipment, with interest at 10.0% per annum, with principal and interest due and payable in monthly

installments of $383.10

Capital lease obligation consisted of the

Capital lease obligation to a financing company for a term of five (5) years, collateralized by equipment, with interest at 10.0% per annum, with principal and interest due and payable in monthly installments of $383.10

Less current maturities

1 unchanged sentence

TOTAL CAPITAL LEASE OBLIGATION

capital leases mature as follows:

10 - Stockholders’

incorporation, the total number of shares of all classes of stock which the Company is authorized to issue is One Hundred Million

(100,000,000) shares of which Ninety Million (90,000,000) shares shall be Common Stock, par value $0.001 per share and Ten Million

The capital leases mature as follows:

Note 10 –

Derivative Liabilities

The Company has identified derivative instruments

arising from embedded conversion features in the Company’s convertible notes payable at December 31, 2017.

The Company had

no financial assets measured at fair value on a recurring basis as of December 31, 2017.

The following summarizes the Black-Scholes

assumptions used to estimate the fair value of the derivative liability at the date of issuance and for the convertible notes during

the year ended December 31, 2017.

Annual dividend rate

Expected life

Risk-free interest rate

Expected volatility

Risk-free interest rate:

The Company uses

the risk-free interest rate of a U.S.

Treasury Note with a similar term on the date of the grant.

Dividend yield:

The Company uses a 0% expected

dividend yield as the Company has not paid dividends to date and does not anticipate declaring dividends in the near future.

The Company calculates the

expected volatility of the stock price based on the corresponding volatility of the Company’s peer group stock price for

a period consistent with the expected term.

Expected term:

The Company’s remaining term is based on the remaining contractual maturity of the

convertible notes.

The following are the changes in the derivative liabilities

during the year ended December 31, 2017.

December 31, 2017

Derivative liabilities as January 1, 2017

Extinguishment Expense

Gain on changes in fair value

Derivative liabilities as December 31, 2017

Note 11 - Stockholders’

Shares Authorized

Upon incorporation, the total number of

shares of all classes of stock which the Company is authorized to issue is Three Hundred Twenty Million (320,000,000) shares of

which Three Hundred Million (300,000,000) shares shall be Common Stock, par value $0.001 per share and Twenty Million (20,000,000)

shall be Preferred Stock, par value $0.001 per share.

The designations, rights, and preferences of such preferred

stock are to be determined by the Board of Directors.

A Cumulative Convertible Preferred Stock

February 13, 2015, 100,000 shares of preferred stock were designated as Series A Cumulative Convertible Preferred Stock (“Series

Each share of Series A shall have a stated value equal to $100.00 (as adjusted for any stock dividends, combinations

or splits with respect to such shares) (the "Series A Stated Value").

the year ended December 31, 2015, the Company sold 24,400 shares of Series A for proceeds of $2,450,000.

In addition, $800,000

in convertible notes and $91,400 in accrued interest were converted into 8,914 shares of the Company’s Series A.

holders of the Series A shall be entitled to receive preferential dividends at the rate of 6% per share per annum on the Series

A Stated Value, but before any dividend or other distribution will be paid or declared and set apart for payment on any shares

of any Junior Stock, as defined.

Such dividends shall compound annually and be fully cumulative, and shall accumulate from the

date of original issuance of the Series A and shall be payable quarterly, in arrears, commencing on the first day of the calendar

quarter following the date on which the Series A is issued.

Upon the occurrence of an Event of Default (as defined below) and

while such Event of Default is outstanding, such dividend rate shall be increased to 15% per annum on the Series A Stated

At the Company's option, such dividend payments may be made in (i) cash (ii) additional shares of Series A valued at the

Series A Stated Value thereof, in an amount equal to 150% of the cash dividend otherwise payable or (iii) a combination of cash

and additional shares of Series A, provided there is not an existing current Event of Default on the date on which a

dividend payment is payable, in which event the Holder entitled to receive such dividend may elect to receive such dividends in

cash or additional shares of Series A Preferred.

dividends on the Series A shall be cumulative whether or not declared so that, if at any time full cumulative dividends at the

rate aforesaid on all shares of the Series A then outstanding from the date from and after which dividends thereon are cumulative

to the end of the annual dividend period next preceding such time shall not have been paid or declared and set apart for payment,

or if the full dividend on all such outstanding Series A for the then current dividend period shall not have been paid or declared

and set apart for payment, the amount of the deficiency shall be paid or declared and set apart for payment before any sum shall

be set apart for or applied by the Corporation or a subsidiary of the Corporation to the purchase, redemption or other acquisition

of the Series A or any shares of any other class of stock ranking on a parity with the Series A and before any dividend or other

distribution shall be paid or declared and set apart for payment on any Junior Stock and before any sum shall be set aside for

or applied to the purchase, redemption or other acquisition of any Junior Stock.

of Series A shall have the right at any time after the issuance, to convert such shares, accrued but unpaid declared dividends

on the Series A and any other sum owed by the Corporation arising from the Series A into fully paid and non-assessable shares

of Common Stock (the "Conversion Shares") of the Corporation determined in accordance with the applicable conversion

price (the "Conversion Price").

number of Conversion Shares issuable upon conversion shall equal (i) the sum of (A) the Series A Stated Value being converted

and/or (B) at the Holder's election, accrued and unpaid dividends or any other component of the Conversion Amount, divided by

(ii) the Conversion Price.

The Conversion Price of the Series A shall be $0.25, subject to adjustment.

Corporation and the Holder may not convert that amount of the Conversion Amount on a Conversion Date in amounts that would result

in the Holder having a beneficial ownership of Common Stock which would be in excess of the sum of (i) the number of shares of

Common Stock beneficially owned by the Holder and its Affiliates on such Conversion Date, and (ii) the number of Conversion Shares

issuable upon the conversion of the Conversion Amount with respect to which the determination of this proviso is being made on

such Conversion Date, which would result in the aggregate beneficial ownership by the Holder and its Affiliates of more than 4.99%

of the outstanding shares of Common Stock of the Corporation.

For the purposes of the proviso to the immediately preceding sentence,

beneficial ownership shall be determined in accordance with Section 13(d) of the 1934 Act and Regulation 13d-3 thereunder.

to the foregoing, the Holder shall not be limited to successive exercises which would result in the aggregate issuance of more

The Holder may allocate which of the equity of the Corporation deemed beneficially owned by the Holder shall be included

in the 4.99% amount described above and which shall be allocated to the excess above 4.99%.

The Holder may waive the conversion

limitation described in this Section in whole or in part, upon and effective after sixty one (61) days' prior written notice to

the Corporation.

holders of our Series A do vote together with the holders of our Common Stock on an as converted basis on each matter submitted

to a vote of holders of Common Stock.

The number of votes that may be cast by a holder of Series A shall be equal to the number

of shares of Common Stock issuable upon conversion of such Holder's Series A on the record date for determining those stockholders

entitled to vote on the matter.

In addition, the affirmative vote of the holders of a majority of our outstanding Series A is

required to for the following actions:

amending the Corporation's certificate of incorporation or by-laws if such amendment would adversely affect the Series A

purchasing any of the Corporation's securities other than required redemptions of Series A and repurchase under restricted stock

and option agreements authorizing the Corporation's employees;

effecting a Liquidation Event;

declaring or paying any dividends other than in respect of the Series A;

issuing any additional securities having rights senior to or on parity with the Series A.

the year ended December 31, 2016, the Company accrued $3,318,353 for liquidating damages on the Series A and $309,665 on the warrants

associated with the Series A.

B Cumulative Convertible Preferred Stock

December 21, 2015, 20,000 shares of preferred stock were designated as Series B Cumulative Convertible Preferred Stock (“Series

Each share of Series B shall have a stated value equal to $100.00 (as adjusted for any stock dividends, combinations

or splits with respect to such shares) (the "Series B Stated Value").

the year ended December 31, 2015, the Company sold 7,000 shares of Series B for proceeds of $700,000.

holders of outstanding shares of Series B shall be entitled to receive preferential dividends at the rate of 6% per share per

annum on the Series B Stated Value, but before any dividend or other distribution will be paid or declared and set apart for payment

on any shares of any Junior Stock as defined.

Such dividends shall compound annually and be fully cumulative, and shall accumulate

from the date of original issuance of the Series B, and shall be payable quarterly, in arrears, commencing on the first day of

the calendar quarter following the date on which the Series B is issued.

Upon the occurrence of an Event of Default as defined

below and while such Event of Default is outstanding, such dividend rate shall be increased to 15% per annum on the Series B Stated

At the Corporation's option, such dividend payments may be made in (i) cash (ii) additional shares of Series B valued at

the Series B Stated Value thereof, in an amount equal to 100% of the cash dividend otherwise payable or (iii) a combination of

cash and additional shares of Series B, provided there is not an existing current Event of Default on the date on which

a dividend payment is payable, in which event the Holder entitled to receive such dividend may elect to receive such dividends

in cash or additional shares of Series B Preferred.

dividends on the Series B shall be cumulative whether or not declared so that, if at any time full cumulative dividends at the

rate aforesaid on all shares of the Series B then outstanding from the date from and after which dividends thereon are cumulative

to the end of the annual dividend period next preceding such time shall not have been paid or declared and set apart for payment,

or if the full dividend on all such outstanding Series B for the then current dividend period shall not have been paid or declared

and set apart for payment, the amount of the deficiency shall be paid or declared and set apart for payment before any sum shall

be set apart for or applied by the Corporation or a subsidiary of the Corporation to the purchase, redemption or other acquisition

of the Series B or any shares of any other class of stock ranking on a parity with the Series B and before any dividend or other

distribution shall be paid or declared and set apart for payment on any Junior Stock and before any sum shall be set aside for

or applied to the purchase, redemption or other acquisition of any Junior Stock.

of shares of Series B shall have the right at any time commencing after the issuance to convert such shares, accrued but unpaid

declared dividends on the Series B into fully paid and non-assessable shares of Common Stock (the "Conversion Shares")

of the Corporation determined in accordance with the applicable conversion price (the "Conversion Price").

declared or accrued but unpaid dividends may be converted at the election of the Holder together with or independent of the conversion

of the Series B Stated Value of the Series B.

number of Conversion Shares issuable upon conversion of the Conversion Amount shall equal (i) the sum of (A) the Series B Stated

Value being converted and/or (B) at the Holder's election, accrued and unpaid dividends or any other component of the Conversion

Amount, divided by (ii) the Conversion Price.

The Conversion Price of the Series B shall be $0.30, subject to adjustment.