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<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify"><font style="font: 10pt Times New Roman, Times, Serif">Optimizer
Systems, LLC was formed in the State of Michigan on January 31, 2006. It then became a corporation in the State of Michigan on
October 22, 2007 and changed its name to OptimizeRx Corporation. On April 14, 2008, RFID, Ltd., a Colorado corporation, consummated
a reverse merger by entering into a share exchange agreement with the stockholders of OptimizeRx Corporation, pursuant to which
the stockholders of OptimizeRx Corporation exchanged all of the issued and outstanding capital stock of OptimizeRx Corporation
for 1,256,958 shares of common stock of RFID, Ltd., representing 100% of the outstanding capital stock of RFID, Ltd. As of April
30, 2008, RFID’s officers and directors resigned their positions and RFID changed its business to OptimizeRx’s business.
On April 15, 2008, RFID, Ltd.’s corporate name was changed to OptimizeRx Corporation. On September 4, 2008, a migratory
merger was completed, thereby changing the state of incorporation from Colorado to Nevada, resulting in the current corporate
structure, in which OptimizeRx Corporation, a Nevada corporation, is the parent corporation, and OptimizeRx Corporation, a Michigan
corporation, is a wholly-owned subsidiary (together, "OptimizeRx" and "the Company").</font></p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify"><font style="font: 10pt Times New Roman, Times, Serif"> </font></p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify"><font style="font: 10pt Times New Roman, Times, Serif">The
wholly-owned subsidiary, OptimizeRx Corporation, is a technology solutions company targeting the health care industry. Their objective
is to bring better access to better care through connecting patients, physicians and pharmaceutical manufacturers through technology.
Once defined as a marketing and advertising company through its consumer website, OptimizeRx is maturing as a technology solutions
provider as it launched its direct to physician solution, SampleMD. SampleMD allows physicians to search, print and send available
sample trial vouchers and/or co-pay coupons on behalf of their patients. The SampleMD solution can either sit on the doctor’s
desktop or can be integrated into the ePrescribing or Electronic Medical Records applications. OptimizeRx solutions provide pharmaceutical
manufacturers either a direct to consumer and/or direct to physician channels for communicating and promoting their products.
It provides health care providers a means to provide sampling and coupons without having to physically store samples on site,
and it provides better access and affordability to the patients.</font></p>
1256958
1.00
2006-01-31
2007-10-22
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<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify"><font style="font: 10pt Times New Roman, Times, Serif"><u>Basis
of Presentation</u></font></p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify"><font style="font: 10pt Times New Roman, Times, Serif">The
accompanying unaudited interim consolidated financial statements have been prepared in accordance with accounting principles generally
accepted in the United States of America and the rules of the Securities and Exchange Commission (“SEC”), and should
be read in conjunction with the audited financial statements and notes thereto contained in the Company’s Form 10-K filed
with the SEC as of and for the year ended December 31, 2012. In the opinion of management, all adjustments necessary for the financial
statements to be not misleading for the interim periods presented have been reflected herein. The results of operations for interim
periods are not necessarily indicative of the results to be expected for the full year.</font></p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify"><font style="font: 10pt Times New Roman, Times, Serif"> </font></p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify"><font style="font: 10pt Times New Roman, Times, Serif"><u>Accounting
Basis</u></font></p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify"><font style="font: 10pt Times New Roman, Times, Serif">The
Company uses the accrual basis of accounting and accounting principles generally accepted in the United States of America (“GAAP”
accounting). The Company has adopted a December 31 fiscal year end.</font></p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; letter-spacing: -0.1pt; text-align: center"><font style="font: 10pt Times New Roman, Times, Serif"> </font></p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; letter-spacing: -0.1pt; text-align: justify"><font style="font: 10pt Times New Roman, Times, Serif"><u>Principles
of Consolidation</u></font></p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; letter-spacing: -0.1pt; text-align: justify"><font style="font: 10pt Times New Roman, Times, Serif">The
financial statements reflect the consolidated results of OptimizeRx Corporation (a Nevada corporation) and its wholly owned subsidiary
OptimizeRx Corporation (a Michigan corporation). All material inter-company transactions have been eliminated in the consolidation. </font></p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; letter-spacing: -0.1pt; text-align: center"><font style="font: 10pt Times New Roman, Times, Serif"> </font></p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; letter-spacing: -0.1pt; text-align: justify"><font style="font: 10pt Times New Roman, Times, Serif; letter-spacing: 0px"><u>Cash
and Cash Equivalents</u></font></p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify"><font style="font: 10pt Times New Roman, Times, Serif; letter-spacing: 0px">For
purposes of the accompanying financial statements, the Company considers all highly liquid instruments with an initial maturity
of three months or less to be cash equivalents.</font></p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; letter-spacing: -0.1pt; text-align: justify"><font style="font: 10pt Times New Roman, Times, Serif"> </font></p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify"><font style="font: 10pt Times New Roman, Times, Serif; letter-spacing: 0px"><u>Fair
Value of Financial Instruments</u></font></p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify"><font style="font: 10pt Times New Roman, Times, Serif; letter-spacing: 0px">The
fair value of cash, accounts receivable, prepaid expenses, patent rights, web development costs, accounts payable, accounts payable
– related party, accrued expenses and deferred revenue approximates the carrying amount of these financial instruments due
to their short-term nature. The fair value of long-term debt, which approximates its carrying value, is based on current rates
at which the Company could borrow funds with similar remaining maturities.</font></p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify"><font style="font: 10pt Times New Roman, Times, Serif"> </font></p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify"><font style="font: 10pt Times New Roman, Times, Serif; letter-spacing: 0px"><u>Accounts
Receivable and Allowance for Doubtful Accounts</u></font></p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify"><font style="font: 10pt Times New Roman, Times, Serif; letter-spacing: 0px">Accounts
receivable are reported at realizable value, net of allowances for doubtful accounts, which is estimated and recorded in the period
the related revenue is recorded. The Company has a standardized approach to estimate and review the collectability of its receivables
based on a number of factors, including the period they have been outstanding. Historical collection and payer reimbursement experience
is an integral part of the estimation process related to allowances for doubtful accounts. In addition, the Company regularly
assesses the state of its billing operations in order to identify issues, which may impact the collectability of these receivables
or reserve estimates. Bad debt expense was $0 for the nine months ended September 30, 2013 and 2012, respectively. The allowance
for doubtful accounts was $0 as of September 30, 2013 and December 31, 2012, respectively.</font></p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify"><font style="font: 10pt Times New Roman, Times, Serif"> </font></p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify"><font style="font: 10pt Times New Roman, Times, Serif; letter-spacing: 0px"><u>Property
and Equipment</u></font></p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify"><font style="font: 10pt Times New Roman, Times, Serif; letter-spacing: 0px">The
capital assets are being depreciated over their estimated useful lives, three to seven years using the straight-line method of
depreciation for book purposes.</font></p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify"><font style="font: 10pt Times New Roman, Times, Serif"> </font></p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0"><font style="font: 10pt Times New Roman, Times, Serif; letter-spacing: 0px"><u>Revenue
Recognition</u></font></p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify"><font style="font: 10pt Times New Roman, Times, Serif; letter-spacing: 0px">All
revenue is recognized when it is earned. Revenues are generated either through the Company’s website activities, in which
we earn revenue from advertising and lead generation activities, or from our SampleMD activities, which include offering setup
within the systems and our offers, coupons, and vouchers that enable our customers to save money on medical products and services.
The Company’s processes are monitored by third parties who collect revenues from clients on a per activity basis and report
and forward the revenue to the Company’s account.</font></p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify"><font style="font: 10pt Times New Roman, Times, Serif"> </font></p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0"><font style="font: 10pt Times New Roman, Times, Serif; letter-spacing: 0px"><u>Research
and Development</u></font></p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify"><font style="font: 10pt Times New Roman, Times, Serif; letter-spacing: 0px">The
Company’s key members are part of a continual research development team and monitor new technologies, trends, services and
partnerships that can provide the Company with additional services, value to healthcare and pharmaceutical industries and to the
patients it serves.</font></p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0 0.25in 0 0; letter-spacing: -0.1pt; text-align: justify"><font style="font: 10pt Times New Roman, Times, Serif"> </font></p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify"><font style="font: 10pt Times New Roman, Times, Serif; letter-spacing: 0px">The
Company seeks to educate team members through understanding of all market dynamics that have the potential to affect the business
both short term and longer term. The primary goal is to help patients better afford and access the medicines their doctor prescribes,
as well as other healthcare products and services they need. Based on this, the Company continually seeks better ways to meet
this mission through technology, better user experiences and new ways to engage industries to provide new support for patients
needing their products. The Company is always seeking new services and solutions to offer. At this time, the three current platforms
provide robust opportunities and growth during the next five years.</font></p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; letter-spacing: -0.1pt; text-align: justify"><font style="font: 10pt Times New Roman, Times, Serif"> </font></p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0"><font style="font: 10pt Times New Roman, Times, Serif; letter-spacing: 0px"><u>Income
Taxes</u></font></p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify"><font style="font: 10pt Times New Roman, Times, Serif; letter-spacing: 0px">Income
taxes are computed using the asset and liability method. Under the asset and liability method, deferred income tax assets and
liabilities are determined based on the differences between the financial reporting and tax bases of assets and liabilities and
are measured using the currently enacted tax rates and laws. A valuation allowance is provided for the amount of deferred tax
assets that, based on available evidence, are not expected to be realized.</font></p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify"><font style="font: 10pt Times New Roman, Times, Serif"> </font></p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0"><font style="font: 10pt Times New Roman, Times, Serif; letter-spacing: 0px"><u>Concentration
of Credit Risks</u></font></p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; letter-spacing: -0.1pt; text-align: justify"><font style="font: 10pt Times New Roman, Times, Serif; letter-spacing: 0px">The
Company maintains its cash and cash equivalents in bank deposit accounts, which, at times, may exceed federally insured limits.
The Company has not experienced any losses in such accounts; however, amounts in excess of the federally insured limit may be
at risk if the bank experiences financial difficulties.</font></p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify"><font style="font: 10pt Times New Roman, Times, Serif"> </font></p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0"><font style="font: 10pt Times New Roman, Times, Serif; letter-spacing: 0px"><u>Use
of Estimates</u></font></p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; letter-spacing: -0.1pt; text-align: justify"><font style="font: 10pt Times New Roman, Times, Serif; letter-spacing: 0px">The
preparation of financial statements in conformity with generally accepted accounting principles requires management to make estimates
and assumptions that affect the reported amounts of assets and liabilities at the date of the financial statements and the reported
amounts of revenues and expenses during the reporting period. Estimates and assumptions have been made in determining the depreciable
lives of such assets and the allowance for doubtful accounts receivable. Actual results could differ from these estimates.</font></p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; letter-spacing: -0.1pt; text-align: justify"><font style="font: 10pt Times New Roman, Times, Serif"> </font></p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify"><font style="font: 10pt Times New Roman, Times, Serif; letter-spacing: 0px"><u>Earnings
Per Common and Common Equivalent Share</u></font></p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; letter-spacing: -0.1pt; text-align: justify"><font style="font: 10pt Times New Roman, Times, Serif; letter-spacing: 0px">The
computation of basic earnings per common share is computed using the weighted average number of common shares outstanding during
the year. The computation of diluted earnings per common share is based on the weighted average number of shares outstanding during
the year plus common stock equivalents which would arise from the exercise of warrants outstanding using the treasury stock method
and the average market price per share during the year. Options, warrants and convertible preferred stock which are common stock
equivalents are included in the per share calculation for the three and nine months ended September 30, 2013. They have not been
included in the diluted earnings per share calculation for the three and nine months ended September 30, 2012 since their effect
is anti-dilutive.</font></p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify"><font style="font: 10pt Times New Roman, Times, Serif"> </font></p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify"><font style="font: 10pt Times New Roman, Times, Serif; letter-spacing: 0px"><u>Impairment
of Long-Lived Assets</u></font></p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; letter-spacing: -0.1pt; text-align: justify"><font style="font: 10pt Times New Roman, Times, Serif; letter-spacing: 0px">The
Company continually monitors events and changes in circumstances that could indicate carrying amounts of long-lived assets may
not be recoverable. When such events or changes in circumstances are present, the Company assesses the recoverability of long-lived
assets by determining whether the carrying value of such assets will be recovered through undiscounted expected future cash flows.
If the total of the future cash flows is less than the carrying amount of those assets, the Company recognizes an impairment loss
based on the excess of the carrying amount over the fair value of the assets. Assets to be disposed of are reported at the lower
of the carrying amount or the fair value less costs to sell.</font></p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; letter-spacing: -0.1pt; text-align: justify"><font style="font: 10pt Times New Roman, Times, Serif"> </font></p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0"><font style="font: 10pt Times New Roman, Times, Serif; letter-spacing: 0px"><u>Recently
Issued Accounting Guidance</u></font></p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; letter-spacing: -0.1pt; text-align: justify"><font style="font: 10pt Times New Roman, Times, Serif; letter-spacing: 0px">The
Company does not expect the adoption of recently issued accounting pronouncements to have a significant impact on the Company’s
results of operations, financial position or cash flow.</font></p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify"><font style="font: 10pt Times New Roman, Times, Serif"><u>Basis
of Presentation</u></font></p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify"><font style="font: 10pt Times New Roman, Times, Serif">The
accompanying unaudited interim consolidated financial statements have been prepared in accordance with accounting principles generally
accepted in the United States of America and the rules of the Securities and Exchange Commission (“SEC”), and should
be read in conjunction with the audited financial statements and notes thereto contained in the Company’s Form 10-K filed
with the SEC as of and for the year ended December 31, 2012. In the opinion of management, all adjustments necessary for the financial
statements to be not misleading for the interim periods presented have been reflected herein. The results of operations for interim
periods are not necessarily indicative of the results to be expected for the full year.</font></p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify"><font style="font: 10pt Times New Roman, Times, Serif"><u>Accounting
Basis</u></font></p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify"><font style="font: 10pt Times New Roman, Times, Serif">The
Company uses the accrual basis of accounting and accounting principles generally accepted in the United States of America (“GAAP”
accounting). The Company has adopted a December 31 fiscal year end.</font></p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; letter-spacing: -0.1pt; text-align: justify"><font style="font: 10pt Times New Roman, Times, Serif"><u>Principles
of Consolidation</u></font></p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; letter-spacing: -0.1pt; text-align: justify"><font style="font: 10pt Times New Roman, Times, Serif">The
financial statements reflect the consolidated results of OptimizeRx Corporation (a Nevada corporation) and its wholly owned subsidiary
OptimizeRx Corporation (a Michigan corporation). All material inter-company transactions have been eliminated in the consolidation. </font></p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; letter-spacing: -0.1pt; text-align: justify"><font style="font: 10pt Times New Roman, Times, Serif; letter-spacing: 0px"><u>Cash
and Cash Equivalents</u></font></p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify"><font style="font: 10pt Times New Roman, Times, Serif; letter-spacing: 0px">For
purposes of the accompanying financial statements, the Company considers all highly liquid instruments with an initial maturity
of three months or less to be cash equivalents.</font></p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify"><font style="font: 10pt Times New Roman, Times, Serif; letter-spacing: 0px"><u>Fair
Value of Financial Instruments</u></font></p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify"><font style="font: 10pt Times New Roman, Times, Serif; letter-spacing: 0px">The
fair value of cash, accounts receivable, prepaid expenses, patent rights, web development costs, accounts payable, accounts payable
– related party, accrued expenses and deferred revenue approximates the carrying amount of these financial instruments due
to their short-term nature. The fair value of long-term debt, which approximates its carrying value, is based on current rates
at which the Company could borrow funds with similar remaining maturities.</font></p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify"><font style="font: 10pt Times New Roman, Times, Serif; letter-spacing: 0px"><u>Accounts
Receivable and Allowance for Doubtful Accounts</u></font></p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify"><font style="font: 10pt Times New Roman, Times, Serif; letter-spacing: 0px">Accounts
receivable are reported at realizable value, net of allowances for doubtful accounts, which is estimated and recorded in the period
the related revenue is recorded. The Company has a standardized approach to estimate and review the collectability of its receivables
based on a number of factors, including the period they have been outstanding. Historical collection and payer reimbursement experience
is an integral part of the estimation process related to allowances for doubtful accounts. In addition, the Company regularly
assesses the state of its billing operations in order to identify issues, which may impact the collectability of these receivables
or reserve estimates. Bad debt expense was $0 for the nine months ended September 30, 2013 and 2012, respectively. The allowance
for doubtful accounts was $0 as of September 30, 2013 and December 31, 2012, respectively.</font></p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify"><font style="font: 10pt Times New Roman, Times, Serif; letter-spacing: 0px"><u>Property
and Equipment</u></font></p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify"><font style="font: 10pt Times New Roman, Times, Serif; letter-spacing: 0px">The
capital assets are being depreciated over their estimated useful lives, three to seven years using the straight-line method of
depreciation for book purposes.</font></p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0"><font style="font: 10pt Times New Roman, Times, Serif; letter-spacing: 0px"><u>Revenue
Recognition</u></font></p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify"><font style="font: 10pt Times New Roman, Times, Serif; letter-spacing: 0px">All
revenue is recognized when it is earned. Revenues are generated either through the Company’s website activities, in which
we earn revenue from advertising and lead generation activities, or from our SampleMD activities, which include offering setup
within the systems and our offers, coupons, and vouchers that enable our customers to save money on medical products and services.
The Company’s processes are monitored by third parties who collect revenues from clients on a per activity basis and report
and forward the revenue to the Company’s account.</font></p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0"><font style="font: 10pt Times New Roman, Times, Serif; letter-spacing: 0px"><u>Research
and Development</u></font></p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify"><font style="font: 10pt Times New Roman, Times, Serif; letter-spacing: 0px">The
Company’s key members are part of a continual research development team and monitor new technologies, trends, services and
partnerships that can provide the Company with additional services, value to healthcare and pharmaceutical industries and to the
patients it serves.</font></p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0 0.25in 0 0; letter-spacing: -0.1pt; text-align: justify"><font style="font: 10pt Times New Roman, Times, Serif"> </font></p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify"><font style="font: 10pt Times New Roman, Times, Serif; letter-spacing: 0px">The
Company seeks to educate team members through understanding of all market dynamics that have the potential to affect the business
both short term and longer term. The primary goal is to help patients better afford and access the medicines their doctor prescribes,
as well as other healthcare products and services they need. Based on this, the Company continually seeks better ways to meet
this mission through technology, better user experiences and new ways to engage industries to provide new support for patients
needing their products. The Company is always seeking new services and solutions to offer. At this time, the three current platforms
provide robust opportunities and growth during the next five years.</font></p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0"><font style="font: 10pt Times New Roman, Times, Serif; letter-spacing: 0px"><u>Income
Taxes</u></font></p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify"><font style="font: 10pt Times New Roman, Times, Serif; letter-spacing: 0px">Income
taxes are computed using the asset and liability method. Under the asset and liability method, deferred income tax assets and
liabilities are determined based on the differences between the financial reporting and tax bases of assets and liabilities and
are measured using the currently enacted tax rates and laws. A valuation allowance is provided for the amount of deferred tax
assets that, based on available evidence, are not expected to be realized.</font></p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0"><font style="font: 10pt Times New Roman, Times, Serif; letter-spacing: 0px"><u>Concentration
of Credit Risks</u></font></p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; letter-spacing: -0.1pt; text-align: justify"><font style="font: 10pt Times New Roman, Times, Serif; letter-spacing: 0px">The
Company maintains its cash and cash equivalents in bank deposit accounts, which, at times, may exceed federally insured limits.
The Company has not experienced any losses in such accounts; however, amounts in excess of the federally insured limit may be
at risk if the bank experiences financial difficulties.</font></p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0"><font style="font: 10pt Times New Roman, Times, Serif; letter-spacing: 0px"><u>Use
of Estimates</u></font></p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; letter-spacing: -0.1pt; text-align: justify"><font style="font: 10pt Times New Roman, Times, Serif; letter-spacing: 0px">The
preparation of financial statements in conformity with generally accepted accounting principles requires management to make estimates
and assumptions that affect the reported amounts of assets and liabilities at the date of the financial statements and the reported
amounts of revenues and expenses during the reporting period. Estimates and assumptions have been made in determining the depreciable
lives of such assets and the allowance for doubtful accounts receivable. Actual results could differ from these estimates.</font></p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify"><font style="font: 10pt Times New Roman, Times, Serif; letter-spacing: 0px"><u>Earnings
Per Common and Common Equivalent Share</u></font></p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; letter-spacing: -0.1pt; text-align: justify"><font style="font: 10pt Times New Roman, Times, Serif; letter-spacing: 0px">The
computation of basic earnings per common share is computed using the weighted average number of common shares outstanding during
the year. The computation of diluted earnings per common share is based on the weighted average number of shares outstanding during
the year plus common stock equivalents which would arise from the exercise of warrants outstanding using the treasury stock method
and the average market price per share during the year. Options, warrants and convertible preferred stock which are common stock
equivalents are included in the per share calculation for the three and nine months ended September 30, 2013. They have not been
included in the diluted earnings per share calculation for the three and nine months ended September 30, 2012 since their effect
is anti-dilutive.</font></p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify"><font style="font: 10pt Times New Roman, Times, Serif; letter-spacing: 0px"><u>Impairment
of Long-Lived Assets</u></font></p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; letter-spacing: -0.1pt; text-align: justify"><font style="font: 10pt Times New Roman, Times, Serif; letter-spacing: 0px">The
Company continually monitors events and changes in circumstances that could indicate carrying amounts of long-lived assets may
not be recoverable. When such events or changes in circumstances are present, the Company assesses the recoverability of long-lived
assets by determining whether the carrying value of such assets will be recovered through undiscounted expected future cash flows.
If the total of the future cash flows is less than the carrying amount of those assets, the Company recognizes an impairment loss
based on the excess of the carrying amount over the fair value of the assets. Assets to be disposed of are reported at the lower
of the carrying amount or the fair value less costs to sell.</font></p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0"><font style="font: 10pt Times New Roman, Times, Serif; letter-spacing: 0px"><u>Recently
Issued Accounting Guidance</u></font></p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; letter-spacing: -0.1pt; text-align: justify"><font style="font: 10pt Times New Roman, Times, Serif; letter-spacing: 0px">The
Company does not expect the adoption of recently issued accounting pronouncements to have a significant impact on the Company’s
results of operations, financial position or cash flow.</font></p>
0
0
0
0
--12-31
P3Y
P7Y
<p style="margin: 0pt"></p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; letter-spacing: -0.1pt; text-align: justify"><font style="font: 10pt Times New Roman, Times, Serif; letter-spacing: 0px">Prepaid
expenses consisted of the following as of September 30, 2013 and December 31, 2012:</font></p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify"><font style="font: 10pt Times New Roman, Times, Serif"> </font></p>
<table cellspacing="0" cellpadding="0" align="center" style="width: 50%; border-collapse: collapse; font-size: 10pt">
<tr style="vertical-align: bottom">
<td><font style="font: 10pt Times New Roman, Times, Serif"> </font></td>
<td colspan="3" style="border-bottom: black 1pt solid; text-align: center"><font style="font: 10pt Times New Roman, Times, Serif">2013</font></td>
<td style="padding-bottom: 1pt"><font style="font: 10pt Times New Roman, Times, Serif"> </font></td>
<td colspan="3" style="border-bottom: black 1pt solid; text-align: center"><font style="font: 10pt Times New Roman, Times, Serif">2012</font></td></tr>
<tr style="background-color: rgb(204,238,204); vertical-align: bottom">
<td style="padding-left: 5.4pt; width: 55%"><font style="font: 10pt Times New Roman, Times, Serif">Insurance</font></td>
<td style="text-align: left; width: 1%"><font style="font: 10pt Times New Roman, Times, Serif">$</font></td>
<td style="text-align: right; width: 20%"><font style="font: 10pt Times New Roman, Times, Serif">6,653</font></td>
<td style="text-align: left; width: 1%"><font style="font: 10pt Times New Roman, Times, Serif"> </font></td>
<td style="width: 1%"><font style="font: 10pt Times New Roman, Times, Serif"> </font></td>
<td style="text-align: left; width: 1%"><font style="font: 10pt Times New Roman, Times, Serif">$</font></td>
<td style="text-align: right; width: 20%"><font style="font: 10pt Times New Roman, Times, Serif">6,437</font></td>
<td style="text-align: left; width: 1%"><font style="font: 10pt Times New Roman, Times, Serif"> </font></td></tr>
<tr style="background-color: white; vertical-align: bottom">
<td style="padding-left: 5.4pt"><font style="font: 10pt Times New Roman, Times, Serif">Rent</font></td>
<td style="text-align: left"><font style="font: 10pt Times New Roman, Times, Serif"> </font></td>
<td style="text-align: right"><font style="font: 10pt Times New Roman, Times, Serif">5,049</font></td>
<td style="text-align: left"><font style="font: 10pt Times New Roman, Times, Serif"> </font></td>
<td><font style="font: 10pt Times New Roman, Times, Serif"> </font></td>
<td style="text-align: left"><font style="font: 10pt Times New Roman, Times, Serif"> </font></td>
<td style="text-align: right"><font style="font: 10pt Times New Roman, Times, Serif">5,049</font></td>
<td style="text-align: left"><font style="font: 10pt Times New Roman, Times, Serif"> </font></td></tr>
<tr style="background-color: rgb(204,238,204); vertical-align: bottom">
<td style="padding-left: 5.4pt"><font style="font: 10pt Times New Roman, Times, Serif">Consulting</font></td>
<td style="text-align: left"><font style="font: 10pt Times New Roman, Times, Serif"> </font></td>
<td style="text-align: right"><font style="font: 10pt Times New Roman, Times, Serif">14,634</font></td>
<td style="text-align: left"><font style="font: 10pt Times New Roman, Times, Serif"> </font></td>
<td><font style="font: 10pt Times New Roman, Times, Serif"> </font></td>
<td style="text-align: left"><font style="font: 10pt Times New Roman, Times, Serif"> </font></td>
<td style="text-align: right"><font style="font: 10pt Times New Roman, Times, Serif">31,672</font></td>
<td style="text-align: left"><font style="font: 10pt Times New Roman, Times, Serif"> </font></td></tr>
<tr style="background-color: white; vertical-align: bottom">
<td style="padding-bottom: 1pt; padding-left: 5.4pt"><font style="font: 10pt Times New Roman, Times, Serif">Legal</font></td>
<td style="border-bottom: black 1pt solid; text-align: left"><font style="font: 10pt Times New Roman, Times, Serif"> </font></td>
<td style="border-bottom: black 1pt solid; text-align: right"><font style="font: 10pt Times New Roman, Times, Serif">0</font></td>
<td style="text-align: left; padding-bottom: 1pt"><font style="font: 10pt Times New Roman, Times, Serif"> </font></td>
<td style="padding-bottom: 1pt"><font style="font: 10pt Times New Roman, Times, Serif"> </font></td>
<td style="border-bottom: black 1pt solid; text-align: left"><font style="font: 10pt Times New Roman, Times, Serif"> </font></td>
<td style="border-bottom: black 1pt solid; text-align: right"><font style="font: 10pt Times New Roman, Times, Serif">25,000</font></td>
<td style="text-align: left; padding-bottom: 1pt"><font style="font: 10pt Times New Roman, Times, Serif"> </font></td></tr>
<tr style="background-color: rgb(204,238,204); vertical-align: bottom">
<td style="text-align: left; padding-bottom: 2.5pt; padding-left: 5.4pt"><font style="font: 10pt Times New Roman, Times, Serif">Total
prepaid expenses</font></td>
<td style="border-bottom: black 2.5pt double; text-align: left"><font style="font: 10pt Times New Roman, Times, Serif">$</font></td>
<td style="border-bottom: black 2.5pt double; text-align: right"><font style="font: 10pt Times New Roman, Times, Serif">26,336</font></td>
<td style="text-align: left; padding-bottom: 2.5pt"><font style="font: 10pt Times New Roman, Times, Serif"> </font></td>
<td style="padding-bottom: 2.5pt"><font style="font: 10pt Times New Roman, Times, Serif"> </font></td>
<td style="border-bottom: black 2.5pt double; text-align: left"><font style="font: 10pt Times New Roman, Times, Serif">$</font></td>
<td style="border-bottom: black 2.5pt double; text-align: right"><font style="font: 10pt Times New Roman, Times, Serif">68,158</font></td>
<td style="text-align: left; padding-bottom: 2.5pt"><font style="font: 10pt Times New Roman, Times, Serif"> </font></td></tr>
</table>
<p style="margin: 0pt"></p>
<table cellspacing="0" cellpadding="0" align="center" style="width: 50%; border-collapse: collapse; font-size: 10pt">
<tr style="vertical-align: bottom">
<td><font style="font: 10pt Times New Roman, Times, Serif"> </font></td>
<td colspan="3" style="border-bottom: black 1pt solid; text-align: center"><font style="font: 10pt Times New Roman, Times, Serif">2013</font></td>
<td style="padding-bottom: 1pt"><font style="font: 10pt Times New Roman, Times, Serif"> </font></td>
<td colspan="3" style="border-bottom: black 1pt solid; text-align: center"><font style="font: 10pt Times New Roman, Times, Serif">2012</font></td></tr>
<tr style="background-color: rgb(204,238,204); vertical-align: bottom">
<td style="padding-left: 5.4pt; width: 55%"><font style="font: 10pt Times New Roman, Times, Serif">Insurance</font></td>
<td style="text-align: left; width: 1%"><font style="font: 10pt Times New Roman, Times, Serif">$</font></td>
<td style="text-align: right; width: 20%"><font style="font: 10pt Times New Roman, Times, Serif">6,653</font></td>
<td style="text-align: left; width: 1%"><font style="font: 10pt Times New Roman, Times, Serif"> </font></td>
<td style="width: 1%"><font style="font: 10pt Times New Roman, Times, Serif"> </font></td>
<td style="text-align: left; width: 1%"><font style="font: 10pt Times New Roman, Times, Serif">$</font></td>
<td style="text-align: right; width: 20%"><font style="font: 10pt Times New Roman, Times, Serif">6,437</font></td>
<td style="text-align: left; width: 1%"><font style="font: 10pt Times New Roman, Times, Serif"> </font></td></tr>
<tr style="background-color: white; vertical-align: bottom">
<td style="padding-left: 5.4pt"><font style="font: 10pt Times New Roman, Times, Serif">Rent</font></td>
<td style="text-align: left"><font style="font: 10pt Times New Roman, Times, Serif"> </font></td>
<td style="text-align: right"><font style="font: 10pt Times New Roman, Times, Serif">5,049</font></td>
<td style="text-align: left"><font style="font: 10pt Times New Roman, Times, Serif"> </font></td>
<td><font style="font: 10pt Times New Roman, Times, Serif"> </font></td>
<td style="text-align: left"><font style="font: 10pt Times New Roman, Times, Serif"> </font></td>
<td style="text-align: right"><font style="font: 10pt Times New Roman, Times, Serif">5,049</font></td>
<td style="text-align: left"><font style="font: 10pt Times New Roman, Times, Serif"> </font></td></tr>
<tr style="background-color: rgb(204,238,204); vertical-align: bottom">
<td style="padding-left: 5.4pt"><font style="font: 10pt Times New Roman, Times, Serif">Consulting</font></td>
<td style="text-align: left"><font style="font: 10pt Times New Roman, Times, Serif"> </font></td>
<td style="text-align: right"><font style="font: 10pt Times New Roman, Times, Serif">14,634</font></td>
<td style="text-align: left"><font style="font: 10pt Times New Roman, Times, Serif"> </font></td>
<td><font style="font: 10pt Times New Roman, Times, Serif"> </font></td>
<td style="text-align: left"><font style="font: 10pt Times New Roman, Times, Serif"> </font></td>
<td style="text-align: right"><font style="font: 10pt Times New Roman, Times, Serif">31,672</font></td>
<td style="text-align: left"><font style="font: 10pt Times New Roman, Times, Serif"> </font></td></tr>
<tr style="background-color: white; vertical-align: bottom">
<td style="padding-bottom: 1pt; padding-left: 5.4pt"><font style="font: 10pt Times New Roman, Times, Serif">Legal</font></td>
<td style="border-bottom: black 1pt solid; text-align: left"><font style="font: 10pt Times New Roman, Times, Serif"> </font></td>
<td style="border-bottom: black 1pt solid; text-align: right"><font style="font: 10pt Times New Roman, Times, Serif">0</font></td>
<td style="text-align: left; padding-bottom: 1pt"><font style="font: 10pt Times New Roman, Times, Serif"> </font></td>
<td style="padding-bottom: 1pt"><font style="font: 10pt Times New Roman, Times, Serif"> </font></td>
<td style="border-bottom: black 1pt solid; text-align: left"><font style="font: 10pt Times New Roman, Times, Serif"> </font></td>
<td style="border-bottom: black 1pt solid; text-align: right"><font style="font: 10pt Times New Roman, Times, Serif">25,000</font></td>
<td style="text-align: left; padding-bottom: 1pt"><font style="font: 10pt Times New Roman, Times, Serif"> </font></td></tr>
<tr style="background-color: rgb(204,238,204); vertical-align: bottom">
<td style="text-align: left; padding-bottom: 2.5pt; padding-left: 5.4pt"><font style="font: 10pt Times New Roman, Times, Serif">Total
prepaid expenses</font></td>
<td style="border-bottom: black 2.5pt double; text-align: left"><font style="font: 10pt Times New Roman, Times, Serif">$</font></td>
<td style="border-bottom: black 2.5pt double; text-align: right"><font style="font: 10pt Times New Roman, Times, Serif">26,336</font></td>
<td style="text-align: left; padding-bottom: 2.5pt"><font style="font: 10pt Times New Roman, Times, Serif"> </font></td>
<td style="padding-bottom: 2.5pt"><font style="font: 10pt Times New Roman, Times, Serif"> </font></td>
<td style="border-bottom: black 2.5pt double; text-align: left"><font style="font: 10pt Times New Roman, Times, Serif">$</font></td>
<td style="border-bottom: black 2.5pt double; text-align: right"><font style="font: 10pt Times New Roman, Times, Serif">68,158</font></td>
<td style="text-align: left; padding-bottom: 2.5pt"><font style="font: 10pt Times New Roman, Times, Serif"> </font></td></tr>
</table>
6653
6437
5049
5049
14634
31672
0
25000
<p style="margin: 0pt"></p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify"><font style="font: 10pt Times New Roman, Times, Serif; letter-spacing: 0px">The
Company owned equipment recorded at cost which consisted of the following as of September 30, 2013 and December 31, 2012:</font></p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; letter-spacing: -0.1pt; text-align: center"><font style="font: 10pt Times New Roman, Times, Serif"> </font></p>
<table cellspacing="0" cellpadding="0" align="center" style="width: 50%; border-collapse: collapse; font-size: 10pt">
<tr style="vertical-align: bottom">
<td><font style="font: 10pt Times New Roman, Times, Serif"> </font></td>
<td colspan="3" style="border-bottom: black 1pt solid; text-align: center"><font style="font: 10pt Times New Roman, Times, Serif">2013</font></td>
<td style="padding-bottom: 1pt"><font style="font: 10pt Times New Roman, Times, Serif"> </font></td>
<td colspan="3" style="border-bottom: black 1pt solid; text-align: center"><font style="font: 10pt Times New Roman, Times, Serif">2012</font></td></tr>
<tr style="background-color: rgb(204,238,204); vertical-align: bottom">
<td style="text-align: left; padding-left: 5.4pt; width: 55%"><font style="font: 10pt Times New Roman, Times, Serif">Computer
equipment</font></td>
<td style="text-align: left; width: 1%"><font style="font: 10pt Times New Roman, Times, Serif">$</font></td>
<td style="text-align: right; width: 20%"><font style="font: 10pt Times New Roman, Times, Serif">22,360</font></td>
<td style="text-align: left; width: 1%"><font style="font: 10pt Times New Roman, Times, Serif"> </font></td>
<td style="width: 1%"><font style="font: 10pt Times New Roman, Times, Serif"> </font></td>
<td style="text-align: left; width: 1%"><font style="font: 10pt Times New Roman, Times, Serif">$</font></td>
<td style="text-align: right; width: 20%"><font style="font: 10pt Times New Roman, Times, Serif">22,360</font></td>
<td style="text-align: left; width: 1%"><font style="font: 10pt Times New Roman, Times, Serif"> </font></td></tr>
<tr style="background-color: white; vertical-align: bottom">
<td style="text-align: left; padding-bottom: 1pt; padding-left: 5.4pt"><font style="font: 10pt Times New Roman, Times, Serif">Furniture
and fixtures</font></td>
<td style="border-bottom: black 1pt solid; text-align: left"><font style="font: 10pt Times New Roman, Times, Serif"> </font></td>
<td style="border-bottom: black 1pt solid; text-align: right"><font style="font: 10pt Times New Roman, Times, Serif">11,088</font></td>
<td style="text-align: left; padding-bottom: 1pt"><font style="font: 10pt Times New Roman, Times, Serif"> </font></td>
<td style="padding-bottom: 1pt"><font style="font: 10pt Times New Roman, Times, Serif"> </font></td>
<td style="border-bottom: black 1pt solid; text-align: left"><font style="font: 10pt Times New Roman, Times, Serif"> </font></td>
<td style="border-bottom: black 1pt solid; text-align: right"><font style="font: 10pt Times New Roman, Times, Serif">11,088</font></td>
<td style="text-align: left; padding-bottom: 1pt"><font style="font: 10pt Times New Roman, Times, Serif"> </font></td></tr>
<tr style="background-color: rgb(204,238,204); vertical-align: bottom">
<td style="padding-left: 5.4pt"><font style="font: 10pt Times New Roman, Times, Serif">Subtotal</font></td>
<td style="text-align: left"><font style="font: 10pt Times New Roman, Times, Serif"> </font></td>
<td style="text-align: right"><font style="font: 10pt Times New Roman, Times, Serif">33,448</font></td>
<td style="text-align: left"><font style="font: 10pt Times New Roman, Times, Serif"> </font></td>
<td><font style="font: 10pt Times New Roman, Times, Serif"> </font></td>
<td style="text-align: left"><font style="font: 10pt Times New Roman, Times, Serif"> </font></td>
<td style="text-align: right"><font style="font: 10pt Times New Roman, Times, Serif">33,448</font></td>
<td style="text-align: left"><font style="font: 10pt Times New Roman, Times, Serif"> </font></td></tr>
<tr style="background-color: white; vertical-align: bottom">
<td style="text-align: left; padding-bottom: 1pt; padding-left: 5.4pt"><font style="font: 10pt Times New Roman, Times, Serif">Accumulated
depreciation</font></td>
<td style="border-bottom: black 1pt solid; text-align: left"><font style="font: 10pt Times New Roman, Times, Serif"> </font></td>
<td style="border-bottom: black 1pt solid; text-align: right"><font style="font: 10pt Times New Roman, Times, Serif">(16,984</font></td>
<td style="text-align: left; padding-bottom: 1pt"><font style="font: 10pt Times New Roman, Times, Serif">)</font></td>
<td style="padding-bottom: 1pt"><font style="font: 10pt Times New Roman, Times, Serif"> </font></td>
<td style="border-bottom: black 1pt solid; text-align: left"><font style="font: 10pt Times New Roman, Times, Serif"> </font></td>
<td style="border-bottom: black 1pt solid; text-align: right"><font style="font: 10pt Times New Roman, Times, Serif">(12,763</font></td>
<td style="text-align: left; padding-bottom: 1pt"><font style="font: 10pt Times New Roman, Times, Serif">)</font></td></tr>
<tr style="background-color: rgb(204,238,204); vertical-align: bottom">
<td style="text-align: left; padding-bottom: 2.5pt; padding-left: 5.4pt"><font style="font: 10pt Times New Roman, Times, Serif">Property
and equipment, net</font></td>
<td style="border-bottom: black 2.5pt double; text-align: left"><font style="font: 10pt Times New Roman, Times, Serif">$</font></td>
<td style="border-bottom: black 2.5pt double; text-align: right"><font style="font: 10pt Times New Roman, Times, Serif">16,464</font></td>
<td style="text-align: left; padding-bottom: 2.5pt"><font style="font: 10pt Times New Roman, Times, Serif"> </font></td>
<td style="padding-bottom: 2.5pt"><font style="font: 10pt Times New Roman, Times, Serif"> </font></td>
<td style="border-bottom: black 2.5pt double; text-align: left"><font style="font: 10pt Times New Roman, Times, Serif">$</font></td>
<td style="border-bottom: black 2.5pt double; text-align: right"><font style="font: 10pt Times New Roman, Times, Serif">20,685</font></td>
<td style="text-align: left; padding-bottom: 2.5pt"><font style="font: 10pt Times New Roman, Times, Serif"> </font></td></tr>
</table>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify"><font style="font: 10pt Times New Roman, Times, Serif"> </font></p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify"><font style="font: 10pt Times New Roman, Times, Serif; letter-spacing: 0px">Depreciation
expense was $1,407 and $1,382 for the three months ended September 30, 2013 and 2012, respectively. Depreciation expense was $4,221
and $4,094 for the nine months ended September 30, 2013 and 2012, respectively.</font></p>
<p style="margin: 0pt"></p>
<p style="margin: 0pt"> </p>
<table cellspacing="0" cellpadding="0" align="center" style="width: 50%; border-collapse: collapse; font-size: 10pt">
<tr style="vertical-align: bottom">
<td><font style="font: 10pt Times New Roman, Times, Serif"> </font></td>
<td colspan="3" style="border-bottom: black 1pt solid; text-align: center"><font style="font: 10pt Times New Roman, Times, Serif">2013</font></td>
<td style="padding-bottom: 1pt"><font style="font: 10pt Times New Roman, Times, Serif"> </font></td>
<td colspan="3" style="border-bottom: black 1pt solid; text-align: center"><font style="font: 10pt Times New Roman, Times, Serif">2012</font></td></tr>
<tr style="background-color: rgb(204,238,204); vertical-align: bottom">
<td style="text-align: left; padding-left: 5.4pt; width: 55%"><font style="font: 10pt Times New Roman, Times, Serif">Computer
equipment</font></td>
<td style="text-align: left; width: 1%"><font style="font: 10pt Times New Roman, Times, Serif">$</font></td>
<td style="text-align: right; width: 20%"><font style="font: 10pt Times New Roman, Times, Serif">22,360</font></td>
<td style="text-align: left; width: 1%"><font style="font: 10pt Times New Roman, Times, Serif"> </font></td>
<td style="width: 1%"><font style="font: 10pt Times New Roman, Times, Serif"> </font></td>
<td style="text-align: left; width: 1%"><font style="font: 10pt Times New Roman, Times, Serif">$</font></td>
<td style="text-align: right; width: 20%"><font style="font: 10pt Times New Roman, Times, Serif">22,360</font></td>
<td style="text-align: left; width: 1%"><font style="font: 10pt Times New Roman, Times, Serif"> </font></td></tr>
<tr style="background-color: white; vertical-align: bottom">
<td style="text-align: left; padding-bottom: 1pt; padding-left: 5.4pt"><font style="font: 10pt Times New Roman, Times, Serif">Furniture
and fixtures</font></td>
<td style="border-bottom: black 1pt solid; text-align: left"><font style="font: 10pt Times New Roman, Times, Serif"> </font></td>
<td style="border-bottom: black 1pt solid; text-align: right"><font style="font: 10pt Times New Roman, Times, Serif">11,088</font></td>
<td style="text-align: left; padding-bottom: 1pt"><font style="font: 10pt Times New Roman, Times, Serif"> </font></td>
<td style="padding-bottom: 1pt"><font style="font: 10pt Times New Roman, Times, Serif"> </font></td>
<td style="border-bottom: black 1pt solid; text-align: left"><font style="font: 10pt Times New Roman, Times, Serif"> </font></td>
<td style="border-bottom: black 1pt solid; text-align: right"><font style="font: 10pt Times New Roman, Times, Serif">11,088</font></td>
<td style="text-align: left; padding-bottom: 1pt"><font style="font: 10pt Times New Roman, Times, Serif"> </font></td></tr>
<tr style="background-color: rgb(204,238,204); vertical-align: bottom">
<td style="padding-left: 5.4pt"><font style="font: 10pt Times New Roman, Times, Serif">Subtotal</font></td>
<td style="text-align: left"><font style="font: 10pt Times New Roman, Times, Serif"> </font></td>
<td style="text-align: right"><font style="font: 10pt Times New Roman, Times, Serif">33,448</font></td>
<td style="text-align: left"><font style="font: 10pt Times New Roman, Times, Serif"> </font></td>
<td><font style="font: 10pt Times New Roman, Times, Serif"> </font></td>
<td style="text-align: left"><font style="font: 10pt Times New Roman, Times, Serif"> </font></td>
<td style="text-align: right"><font style="font: 10pt Times New Roman, Times, Serif">33,448</font></td>
<td style="text-align: left"><font style="font: 10pt Times New Roman, Times, Serif"> </font></td></tr>
<tr style="background-color: white; vertical-align: bottom">
<td style="text-align: left; padding-bottom: 1pt; padding-left: 5.4pt"><font style="font: 10pt Times New Roman, Times, Serif">Accumulated
depreciation</font></td>
<td style="border-bottom: black 1pt solid; text-align: left"><font style="font: 10pt Times New Roman, Times, Serif"> </font></td>
<td style="border-bottom: black 1pt solid; text-align: right"><font style="font: 10pt Times New Roman, Times, Serif">(16,984</font></td>
<td style="text-align: left; padding-bottom: 1pt"><font style="font: 10pt Times New Roman, Times, Serif">)</font></td>
<td style="padding-bottom: 1pt"><font style="font: 10pt Times New Roman, Times, Serif"> </font></td>
<td style="border-bottom: black 1pt solid; text-align: left"><font style="font: 10pt Times New Roman, Times, Serif"> </font></td>
<td style="border-bottom: black 1pt solid; text-align: right"><font style="font: 10pt Times New Roman, Times, Serif">(12,763</font></td>
<td style="text-align: left; padding-bottom: 1pt"><font style="font: 10pt Times New Roman, Times, Serif">)</font></td></tr>
<tr style="background-color: rgb(204,238,204); vertical-align: bottom">
<td style="text-align: left; padding-bottom: 2.5pt; padding-left: 5.4pt"><font style="font: 10pt Times New Roman, Times, Serif">Property
and equipment, net</font></td>
<td style="border-bottom: black 2.5pt double; text-align: left"><font style="font: 10pt Times New Roman, Times, Serif">$</font></td>
<td style="border-bottom: black 2.5pt double; text-align: right"><font style="font: 10pt Times New Roman, Times, Serif">16,464</font></td>
<td style="text-align: left; padding-bottom: 2.5pt"><font style="font: 10pt Times New Roman, Times, Serif"> </font></td>
<td style="padding-bottom: 2.5pt"><font style="font: 10pt Times New Roman, Times, Serif"> </font></td>
<td style="border-bottom: black 2.5pt double; text-align: left"><font style="font: 10pt Times New Roman, Times, Serif">$</font></td>
<td style="border-bottom: black 2.5pt double; text-align: right"><font style="font: 10pt Times New Roman, Times, Serif">20,685</font></td>
<td style="text-align: left; padding-bottom: 2.5pt"><font style="font: 10pt Times New Roman, Times, Serif"> </font></td></tr>
</table>
<p style="margin: 0pt"></p>
22360
22360
11088
11088
33448
33448
-16984
-12763
4221
1407
1382
4094
<p style="margin: 0pt"></p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify"><font style="font: 10pt Times New Roman, Times, Serif; letter-spacing: 0px">The
Company has capitalized costs in developing their website and web-based products, which consisted of the following as of September
30, 2013 and December 31, 2012:</font></p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify"><font style="font: 10pt Times New Roman, Times, Serif"> </font></p>
<table cellspacing="0" cellpadding="0" align="center" style="width: 50%; border-collapse: collapse; font-size: 10pt">
<tr style="vertical-align: bottom">
<td><font style="font: 10pt Times New Roman, Times, Serif"> </font></td>
<td colspan="3" style="border-bottom: black 1pt solid; text-align: center"><font style="font: 10pt Times New Roman, Times, Serif">2013</font></td>
<td style="padding-bottom: 1pt"><font style="font: 10pt Times New Roman, Times, Serif"> </font></td>
<td colspan="3" style="border-bottom: black 1pt solid; text-align: center"><font style="font: 10pt Times New Roman, Times, Serif">2012</font></td></tr>
<tr style="background-color: rgb(204,238,204); vertical-align: bottom">
<td style="text-align: left; padding-left: 5.4pt; width: 55%"><font style="font: 10pt Times New Roman, Times, Serif">OptimizeRx
web development</font></td>
<td style="text-align: left; width: 1%"><font style="font: 10pt Times New Roman, Times, Serif">$</font></td>
<td style="text-align: right; width: 20%"><font style="font: 10pt Times New Roman, Times, Serif">154,133</font></td>
<td style="text-align: left; width: 1%"><font style="font: 10pt Times New Roman, Times, Serif"> </font></td>
<td style="width: 1%"><font style="font: 10pt Times New Roman, Times, Serif"> </font></td>
<td style="text-align: left; width: 1%"><font style="font: 10pt Times New Roman, Times, Serif">$</font></td>
<td style="text-align: right; width: 20%"><font style="font: 10pt Times New Roman, Times, Serif">154,133</font></td>
<td style="text-align: left; width: 1%"><font style="font: 10pt Times New Roman, Times, Serif"> </font></td></tr>
<tr style="background-color: white; vertical-align: bottom">
<td style="text-align: left; padding-left: 5.4pt"><font style="font: 10pt Times New Roman, Times, Serif">SampleMD web development</font></td>
<td style="text-align: left"><font style="font: 10pt Times New Roman, Times, Serif"> </font></td>
<td style="text-align: right"><font style="font: 10pt Times New Roman, Times, Serif">602,517</font></td>
<td style="text-align: left"><font style="font: 10pt Times New Roman, Times, Serif"> </font></td>
<td><font style="font: 10pt Times New Roman, Times, Serif"> </font></td>
<td style="text-align: left"><font style="font: 10pt Times New Roman, Times, Serif"> </font></td>
<td style="text-align: right"><font style="font: 10pt Times New Roman, Times, Serif">602,517</font></td>
<td style="text-align: left"><font style="font: 10pt Times New Roman, Times, Serif"> </font></td></tr>
<tr style="background-color: rgb(204,238,204); vertical-align: bottom">
<td style="padding-bottom: 1pt; padding-left: 5.4pt"><font style="font: 10pt Times New Roman, Times, Serif">SampleMD 2.0</font></td>
<td style="border-bottom: black 1pt solid; text-align: left"><font style="font: 10pt Times New Roman, Times, Serif"> </font></td>
<td style="border-bottom: black 1pt solid; text-align: right"><font style="font: 10pt Times New Roman, Times, Serif">62,280</font></td>
<td style="text-align: left; padding-bottom: 1pt"><font style="font: 10pt Times New Roman, Times, Serif"> </font></td>
<td style="padding-bottom: 1pt"><font style="font: 10pt Times New Roman, Times, Serif"> </font></td>
<td style="border-bottom: black 1pt solid; text-align: left"><font style="font: 10pt Times New Roman, Times, Serif"> </font></td>
<td style="border-bottom: black 1pt solid; text-align: right"><font style="font: 10pt Times New Roman, Times, Serif">0</font></td>
<td style="text-align: left; padding-bottom: 1pt"><font style="font: 10pt Times New Roman, Times, Serif"> </font></td></tr>
<tr style="background-color: white; vertical-align: bottom">
<td style="text-align: left; padding-left: 5.4pt"><font style="font: 10pt Times New Roman, Times, Serif">Subtotal, web development
costs</font></td>
<td style="text-align: left"><font style="font: 10pt Times New Roman, Times, Serif"> </font></td>
<td style="text-align: right"><font style="font: 10pt Times New Roman, Times, Serif">818,930</font></td>
<td style="text-align: left"><font style="font: 10pt Times New Roman, Times, Serif"> </font></td>
<td><font style="font: 10pt Times New Roman, Times, Serif"> </font></td>
<td style="text-align: left"><font style="font: 10pt Times New Roman, Times, Serif"> </font></td>
<td style="text-align: right"><font style="font: 10pt Times New Roman, Times, Serif">756,650</font></td>
<td style="text-align: left"><font style="font: 10pt Times New Roman, Times, Serif"> </font></td></tr>
<tr style="background-color: rgb(204,238,204); vertical-align: bottom">
<td style="text-align: left; padding-left: 5.4pt"><font style="font: 10pt Times New Roman, Times, Serif">Accumulated amortization</font></td>
<td style="text-align: left"><font style="font: 10pt Times New Roman, Times, Serif"> </font></td>
<td style="text-align: right"><font style="font: 10pt Times New Roman, Times, Serif">(408,069</font></td>
<td style="text-align: left"><font style="font: 10pt Times New Roman, Times, Serif">)</font></td>
<td><font style="font: 10pt Times New Roman, Times, Serif"> </font></td>
<td style="text-align: left"><font style="font: 10pt Times New Roman, Times, Serif"> </font></td>
<td style="text-align: right"><font style="font: 10pt Times New Roman, Times, Serif">(310,352</font></td>
<td style="text-align: left"><font style="font: 10pt Times New Roman, Times, Serif">)</font></td></tr>
<tr style="background-color: white; vertical-align: bottom">
<td style="padding-bottom: 1pt; padding-left: 5.4pt"><font style="font: 10pt Times New Roman, Times, Serif">Impairment</font></td>
<td style="border-bottom: black 1pt solid; text-align: left"><font style="font: 10pt Times New Roman, Times, Serif"> </font></td>
<td style="border-bottom: black 1pt solid; text-align: right"><font style="font: 10pt Times New Roman, Times, Serif">(59,083</font></td>
<td style="text-align: left; padding-bottom: 1pt"><font style="font: 10pt Times New Roman, Times, Serif">)</font></td>
<td style="padding-bottom: 1pt"><font style="font: 10pt Times New Roman, Times, Serif"> </font></td>
<td style="border-bottom: black 1pt solid; text-align: left"><font style="font: 10pt Times New Roman, Times, Serif"> </font></td>
<td style="border-bottom: black 1pt solid; text-align: right"><font style="font: 10pt Times New Roman, Times, Serif">(59,083</font></td>
<td style="text-align: left; padding-bottom: 1pt"><font style="font: 10pt Times New Roman, Times, Serif">)</font></td></tr>
<tr style="background-color: rgb(204,238,204); vertical-align: bottom">
<td style="text-align: left; padding-bottom: 2.5pt; padding-left: 5.4pt"><font style="font: 10pt Times New Roman, Times, Serif">Web
development costs, net</font></td>
<td style="border-bottom: black 2.5pt double; text-align: left"><font style="font: 10pt Times New Roman, Times, Serif">$</font></td>
<td style="border-bottom: black 2.5pt double; text-align: right"><font style="font: 10pt Times New Roman, Times, Serif">351,778</font></td>
<td style="text-align: left; padding-bottom: 2.5pt"><font style="font: 10pt Times New Roman, Times, Serif"> </font></td>
<td style="padding-bottom: 2.5pt"><font style="font: 10pt Times New Roman, Times, Serif"> </font></td>
<td style="border-bottom: black 2.5pt double; text-align: left"><font style="font: 10pt Times New Roman, Times, Serif">$</font></td>
<td style="border-bottom: black 2.5pt double; text-align: right"><font style="font: 10pt Times New Roman, Times, Serif">387,215</font></td>
<td style="text-align: left; padding-bottom: 2.5pt"><font style="font: 10pt Times New Roman, Times, Serif"> </font></td></tr>
</table>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify"><font style="font: 10pt Times New Roman, Times, Serif"> </font></p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify"><font style="font: 10pt Times New Roman, Times, Serif; letter-spacing: 0px">Amortization
is recorded using the straight-line method over a period of five years. The Company is currently developing an enhanced SampleMD
website and has capitalized $62,280. The development is currently in process. It is not completed at September 30, 2013. Accordingly,
no amortization has been recorded. The development is expected to be completed in 2014. The Company determined that the original
OptimizeRx website was no longer useful so the remaining unamortized balance of $59,083 was impaired as of December 31, 2010.
Amortization expense for the web development costs was $32,572 and $31,677 for the three months ended September 30, 2013 and 2012,
respectively. Amortization expense for the web development costs was $97,717 and $94,964 for the nine months ended September 30,
2013 and 2012, respectively.</font></p>
<p style="margin: 0pt"></p>
<p style="margin: 0pt"> </p>
<table cellspacing="0" cellpadding="0" align="center" style="width: 50%; border-collapse: collapse; font-size: 10pt">
<tr style="vertical-align: bottom">
<td><font style="font: 10pt Times New Roman, Times, Serif"> </font></td>
<td colspan="3" style="border-bottom: black 1pt solid; text-align: center"><font style="font: 10pt Times New Roman, Times, Serif">2013</font></td>
<td style="padding-bottom: 1pt"><font style="font: 10pt Times New Roman, Times, Serif"> </font></td>
<td colspan="3" style="border-bottom: black 1pt solid; text-align: center"><font style="font: 10pt Times New Roman, Times, Serif">2012</font></td></tr>
<tr style="background-color: rgb(204,238,204); vertical-align: bottom">
<td style="text-align: left; padding-left: 5.4pt; width: 55%"><font style="font: 10pt Times New Roman, Times, Serif">OptimizeRx
web development</font></td>
<td style="text-align: left; width: 1%"><font style="font: 10pt Times New Roman, Times, Serif">$</font></td>
<td style="text-align: right; width: 20%"><font style="font: 10pt Times New Roman, Times, Serif">154,133</font></td>
<td style="text-align: left; width: 1%"><font style="font: 10pt Times New Roman, Times, Serif"> </font></td>
<td style="width: 1%"><font style="font: 10pt Times New Roman, Times, Serif"> </font></td>
<td style="text-align: left; width: 1%"><font style="font: 10pt Times New Roman, Times, Serif">$</font></td>
<td style="text-align: right; width: 20%"><font style="font: 10pt Times New Roman, Times, Serif">154,133</font></td>
<td style="text-align: left; width: 1%"><font style="font: 10pt Times New Roman, Times, Serif"> </font></td></tr>
<tr style="background-color: white; vertical-align: bottom">
<td style="text-align: left; padding-left: 5.4pt"><font style="font: 10pt Times New Roman, Times, Serif">SampleMD web development</font></td>
<td style="text-align: left"><font style="font: 10pt Times New Roman, Times, Serif"> </font></td>
<td style="text-align: right"><font style="font: 10pt Times New Roman, Times, Serif">602,517</font></td>
<td style="text-align: left"><font style="font: 10pt Times New Roman, Times, Serif"> </font></td>
<td><font style="font: 10pt Times New Roman, Times, Serif"> </font></td>
<td style="text-align: left"><font style="font: 10pt Times New Roman, Times, Serif"> </font></td>
<td style="text-align: right"><font style="font: 10pt Times New Roman, Times, Serif">602,517</font></td>
<td style="text-align: left"><font style="font: 10pt Times New Roman, Times, Serif"> </font></td></tr>
<tr style="background-color: rgb(204,238,204); vertical-align: bottom">
<td style="padding-bottom: 1pt; padding-left: 5.4pt"><font style="font: 10pt Times New Roman, Times, Serif">SampleMD 2.0</font></td>
<td style="border-bottom: black 1pt solid; text-align: left"><font style="font: 10pt Times New Roman, Times, Serif"> </font></td>
<td style="border-bottom: black 1pt solid; text-align: right"><font style="font: 10pt Times New Roman, Times, Serif">62,280</font></td>
<td style="text-align: left; padding-bottom: 1pt"><font style="font: 10pt Times New Roman, Times, Serif"> </font></td>
<td style="padding-bottom: 1pt"><font style="font: 10pt Times New Roman, Times, Serif"> </font></td>
<td style="border-bottom: black 1pt solid; text-align: left"><font style="font: 10pt Times New Roman, Times, Serif"> </font></td>
<td style="border-bottom: black 1pt solid; text-align: right"><font style="font: 10pt Times New Roman, Times, Serif">0</font></td>
<td style="text-align: left; padding-bottom: 1pt"><font style="font: 10pt Times New Roman, Times, Serif"> </font></td></tr>
<tr style="background-color: white; vertical-align: bottom">
<td style="text-align: left; padding-left: 5.4pt"><font style="font: 10pt Times New Roman, Times, Serif">Subtotal, web development
costs</font></td>
<td style="text-align: left"><font style="font: 10pt Times New Roman, Times, Serif"> </font></td>
<td style="text-align: right"><font style="font: 10pt Times New Roman, Times, Serif">818,930</font></td>
<td style="text-align: left"><font style="font: 10pt Times New Roman, Times, Serif"> </font></td>
<td><font style="font: 10pt Times New Roman, Times, Serif"> </font></td>
<td style="text-align: left"><font style="font: 10pt Times New Roman, Times, Serif"> </font></td>
<td style="text-align: right"><font style="font: 10pt Times New Roman, Times, Serif">756,650</font></td>
<td style="text-align: left"><font style="font: 10pt Times New Roman, Times, Serif"> </font></td></tr>
<tr style="background-color: rgb(204,238,204); vertical-align: bottom">
<td style="text-align: left; padding-left: 5.4pt"><font style="font: 10pt Times New Roman, Times, Serif">Accumulated amortization</font></td>
<td style="text-align: left"><font style="font: 10pt Times New Roman, Times, Serif"> </font></td>
<td style="text-align: right"><font style="font: 10pt Times New Roman, Times, Serif">(408,069</font></td>
<td style="text-align: left"><font style="font: 10pt Times New Roman, Times, Serif">)</font></td>
<td><font style="font: 10pt Times New Roman, Times, Serif"> </font></td>
<td style="text-align: left"><font style="font: 10pt Times New Roman, Times, Serif"> </font></td>
<td style="text-align: right"><font style="font: 10pt Times New Roman, Times, Serif">(310,352</font></td>
<td style="text-align: left"><font style="font: 10pt Times New Roman, Times, Serif">)</font></td></tr>
<tr style="background-color: white; vertical-align: bottom">
<td style="padding-bottom: 1pt; padding-left: 5.4pt"><font style="font: 10pt Times New Roman, Times, Serif">Impairment</font></td>
<td style="border-bottom: black 1pt solid; text-align: left"><font style="font: 10pt Times New Roman, Times, Serif"> </font></td>
<td style="border-bottom: black 1pt solid; text-align: right"><font style="font: 10pt Times New Roman, Times, Serif">(59,083</font></td>
<td style="text-align: left; padding-bottom: 1pt"><font style="font: 10pt Times New Roman, Times, Serif">)</font></td>
<td style="padding-bottom: 1pt"><font style="font: 10pt Times New Roman, Times, Serif"> </font></td>
<td style="border-bottom: black 1pt solid; text-align: left"><font style="font: 10pt Times New Roman, Times, Serif"> </font></td>
<td style="border-bottom: black 1pt solid; text-align: right"><font style="font: 10pt Times New Roman, Times, Serif">(59,083</font></td>
<td style="text-align: left; padding-bottom: 1pt"><font style="font: 10pt Times New Roman, Times, Serif">)</font></td></tr>
<tr style="background-color: rgb(204,238,204); vertical-align: bottom">
<td style="text-align: left; padding-bottom: 2.5pt; padding-left: 5.4pt"><font style="font: 10pt Times New Roman, Times, Serif">Web
development costs, net</font></td>
<td style="border-bottom: black 2.5pt double; text-align: left"><font style="font: 10pt Times New Roman, Times, Serif">$</font></td>
<td style="border-bottom: black 2.5pt double; text-align: right"><font style="font: 10pt Times New Roman, Times, Serif">351,778</font></td>
<td style="text-align: left; padding-bottom: 2.5pt"><font style="font: 10pt Times New Roman, Times, Serif"> </font></td>
<td style="padding-bottom: 2.5pt"><font style="font: 10pt Times New Roman, Times, Serif"> </font></td>
<td style="border-bottom: black 2.5pt double; text-align: left"><font style="font: 10pt Times New Roman, Times, Serif">$</font></td>
<td style="border-bottom: black 2.5pt double; text-align: right"><font style="font: 10pt Times New Roman, Times, Serif">387,215</font></td>
<td style="text-align: left; padding-bottom: 2.5pt"><font style="font: 10pt Times New Roman, Times, Serif"> </font></td></tr>
</table>
<p style="margin: 0pt"></p>
154133
154133
602517
602517
818930
756650
-408069
-310352
-59083
-59083
351778
387215
62280
0
P5Y
97717
32572
31677
94964
<p style="margin: 0pt"></p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify"><font style="font: 10pt Times New Roman, Times, Serif; letter-spacing: 0px">On
April 26, 2010, the Company acquired from an officer and shareholder the technical contributions and assignment of all exclusive
rights to and for the SampleMD patent currently in process in exchange for 300,000 shares of common stock to be granted at the
discretion of the seller in addition to 200,000 stock options valued at $360,000. The shares were valued on the grant date at
$570,000 and have been recorded as a payable to the related party.</font></p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify"><font style="font: 10pt Times New Roman, Times, Serif"> </font></p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify"><font style="font: 10pt Times New Roman, Times, Serif; letter-spacing: 0px">The
Company has capitalized costs in purchasing and defending the SampleMD patent, which consisted of the following as of September
30, 2013 and December 31, 2012:</font></p>
<p style="font: 10pt/6pt Times New Roman, Times, Serif; margin: 0; text-align: justify"><font style="font: 10pt Times New Roman, Times, Serif"> </font></p>
<table cellspacing="0" cellpadding="0" align="center" style="width: 50%; border-collapse: collapse; font-size: 10pt">
<tr style="vertical-align: bottom">
<td><font style="font: 10pt Times New Roman, Times, Serif"> </font></td>
<td colspan="3" style="border-bottom: black 1pt solid; text-align: center"><font style="font: 10pt Times New Roman, Times, Serif">2013</font></td>
<td style="padding-bottom: 1pt"><font style="font: 10pt Times New Roman, Times, Serif"> </font></td>
<td colspan="3" style="border-bottom: black 1pt solid; text-align: center"><font style="font: 10pt Times New Roman, Times, Serif">2012</font></td></tr>
<tr style="background-color: rgb(204,238,204); vertical-align: bottom">
<td style="text-align: left; padding-left: 5.4pt; width: 55%"><font style="font: 10pt Times New Roman, Times, Serif">Patent
rights and intangible assets</font></td>
<td style="text-align: left; width: 1%"><font style="font: 10pt Times New Roman, Times, Serif">$</font></td>
<td style="text-align: right; width: 20%"><font style="font: 10pt Times New Roman, Times, Serif">930,000</font></td>
<td style="text-align: left; width: 1%"><font style="font: 10pt Times New Roman, Times, Serif"> </font></td>
<td style="width: 1%"><font style="font: 10pt Times New Roman, Times, Serif"> </font></td>
<td style="text-align: left; width: 1%"><font style="font: 10pt Times New Roman, Times, Serif">$</font></td>
<td style="text-align: right; width: 20%"><font style="font: 10pt Times New Roman, Times, Serif">930,000</font></td>
<td style="text-align: left; width: 1%"><font style="font: 10pt Times New Roman, Times, Serif"> </font></td></tr>
<tr style="background-color: white; vertical-align: bottom">
<td style="text-align: left; padding-left: 5.4pt"><font style="font: 10pt Times New Roman, Times, Serif">Patent defense costs</font></td>
<td style="text-align: left"><font style="font: 10pt Times New Roman, Times, Serif"> </font></td>
<td style="text-align: right"><font style="font: 10pt Times New Roman, Times, Serif">38,278</font></td>
<td style="text-align: left"><font style="font: 10pt Times New Roman, Times, Serif"> </font></td>
<td><font style="font: 10pt Times New Roman, Times, Serif"> </font></td>
<td style="text-align: left"><font style="font: 10pt Times New Roman, Times, Serif"> </font></td>
<td style="text-align: right"><font style="font: 10pt Times New Roman, Times, Serif">0</font></td>
<td style="text-align: left"><font style="font: 10pt Times New Roman, Times, Serif"> </font></td></tr>
<tr style="background-color: rgb(204,238,204); vertical-align: bottom">
<td style="text-align: left; padding-bottom: 1pt; padding-left: 5.4pt"><font style="font: 10pt Times New Roman, Times, Serif">Accumulated
amortization</font></td>
<td style="border-bottom: black 1pt solid; text-align: left"><font style="font: 10pt Times New Roman, Times, Serif"> </font></td>
<td style="border-bottom: black 1pt solid; text-align: right"><font style="font: 10pt Times New Roman, Times, Serif">(179,388</font></td>
<td style="text-align: left; padding-bottom: 1pt"><font style="font: 10pt Times New Roman, Times, Serif">)</font></td>
<td style="padding-bottom: 1pt"><font style="font: 10pt Times New Roman, Times, Serif"> </font></td>
<td style="border-bottom: black 1pt solid; text-align: left"><font style="font: 10pt Times New Roman, Times, Serif"> </font></td>
<td style="border-bottom: black 1pt solid; text-align: right"><font style="font: 10pt Times New Roman, Times, Serif">(136,764</font></td>
<td style="text-align: left; padding-bottom: 1pt"><font style="font: 10pt Times New Roman, Times, Serif">)</font></td></tr>
<tr style="background-color: white; vertical-align: bottom">
<td style="text-align: left; padding-bottom: 2.5pt; padding-left: 5.4pt"><font style="font: 10pt Times New Roman, Times, Serif">Patent
rights and intangible assets, net</font></td>
<td style="border-bottom: black 2.5pt double; text-align: left"><font style="font: 10pt Times New Roman, Times, Serif">$</font></td>
<td style="border-bottom: black 2.5pt double; text-align: right"><font style="font: 10pt Times New Roman, Times, Serif">788,890</font></td>
<td style="text-align: left; padding-bottom: 2.5pt"><font style="font: 10pt Times New Roman, Times, Serif"> </font></td>
<td style="padding-bottom: 2.5pt"><font style="font: 10pt Times New Roman, Times, Serif"> </font></td>
<td style="border-bottom: black 2.5pt double; text-align: left"><font style="font: 10pt Times New Roman, Times, Serif">$</font></td>
<td style="border-bottom: black 2.5pt double; text-align: right"><font style="font: 10pt Times New Roman, Times, Serif">793,236</font></td>
<td style="text-align: left; padding-bottom: 2.5pt"><font style="font: 10pt Times New Roman, Times, Serif"> </font></td></tr>
</table>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; letter-spacing: -0.1pt; text-align: left"><font style="font: 10pt Times New Roman, Times, Serif"> </font></p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify"><font style="font: 10pt Times New Roman, Times, Serif; letter-spacing: 0px">The
Company began amortizing the patent, using the straight-line method over the estimated useful life of 17 years, once it was put
into service in July 2010. In 2013, the Company began incurring costs related to defense of the patent. These costs have been
capitalized and will be amortized using the straight-line method over the remaining useful life of the original patent. Amortization
expense was $14,246 and $13,676 for the three months ended September 30, 2013 and 2012, respectively. Amortization expense was
$42,624 and $41,029 for the nine months ended September 30, 2013 and 2012, respectively.</font></p>
<p style="margin: 0pt"></p>
<table cellspacing="0" cellpadding="0" align="center" style="width: 50%; border-collapse: collapse; font-size: 10pt"><tr style="vertical-align: bottom"><td><font style="font: 10pt Times New Roman, Times, Serif"> </font></td>
<td colspan="3" style="border-bottom: black 1pt solid; text-align: center"><font style="font: 10pt Times New Roman, Times, Serif">2013</font></td>
<td style="padding-bottom: 1pt"><font style="font: 10pt Times New Roman, Times, Serif"> </font></td>
<td colspan="3" style="border-bottom: black 1pt solid; text-align: center"><font style="font: 10pt Times New Roman, Times, Serif">2012</font></td></tr>
<tr style="background-color: rgb(204,238,204); vertical-align: bottom">
<td style="text-align: left; padding-left: 5.4pt; width: 55%"><font style="font: 10pt Times New Roman, Times, Serif">Patent
rights and intangible assets</font></td>
<td style="text-align: left; width: 1%"><font style="font: 10pt Times New Roman, Times, Serif">$</font></td>
<td style="text-align: right; width: 20%"><font style="font: 10pt Times New Roman, Times, Serif">930,000</font></td>
<td style="text-align: left; width: 1%"><font style="font: 10pt Times New Roman, Times, Serif"> </font></td>
<td style="width: 1%"><font style="font: 10pt Times New Roman, Times, Serif"> </font></td>
<td style="text-align: left; width: 1%"><font style="font: 10pt Times New Roman, Times, Serif">$</font></td>
<td style="text-align: right; width: 20%"><font style="font: 10pt Times New Roman, Times, Serif">930,000</font></td>
<td style="text-align: left; width: 1%"><font style="font: 10pt Times New Roman, Times, Serif"> </font></td></tr>
<tr style="background-color: white; vertical-align: bottom">
<td style="text-align: left; padding-left: 5.4pt"><font style="font: 10pt Times New Roman, Times, Serif">Patent defense costs</font></td>
<td style="text-align: left"><font style="font: 10pt Times New Roman, Times, Serif"> </font></td>
<td style="text-align: right"><font style="font: 10pt Times New Roman, Times, Serif">38,278</font></td>
<td style="text-align: left"><font style="font: 10pt Times New Roman, Times, Serif"> </font></td>
<td><font style="font: 10pt Times New Roman, Times, Serif"> </font></td>
<td style="text-align: left"><font style="font: 10pt Times New Roman, Times, Serif"> </font></td>
<td style="text-align: right"><font style="font: 10pt Times New Roman, Times, Serif">0</font></td>
<td style="text-align: left"><font style="font: 10pt Times New Roman, Times, Serif"> </font></td></tr>
<tr style="background-color: rgb(204,238,204); vertical-align: bottom">
<td style="text-align: left; padding-bottom: 1pt; padding-left: 5.4pt"><font style="font: 10pt Times New Roman, Times, Serif">Accumulated
amortization</font></td>
<td style="border-bottom: black 1pt solid; text-align: left"><font style="font: 10pt Times New Roman, Times, Serif"> </font></td>
<td style="border-bottom: black 1pt solid; text-align: right"><font style="font: 10pt Times New Roman, Times, Serif">(179,388</font></td>
<td style="text-align: left; padding-bottom: 1pt"><font style="font: 10pt Times New Roman, Times, Serif">)</font></td>
<td style="padding-bottom: 1pt"><font style="font: 10pt Times New Roman, Times, Serif"> </font></td>
<td style="border-bottom: black 1pt solid; text-align: left"><font style="font: 10pt Times New Roman, Times, Serif"> </font></td>
<td style="border-bottom: black 1pt solid; text-align: right"><font style="font: 10pt Times New Roman, Times, Serif">(136,764</font></td>
<td style="text-align: left; padding-bottom: 1pt"><font style="font: 10pt Times New Roman, Times, Serif">)</font></td></tr>
<tr style="background-color: white; vertical-align: bottom">
<td style="text-align: left; padding-bottom: 2.5pt; padding-left: 5.4pt"><font style="font: 10pt Times New Roman, Times, Serif">Patent
rights and intangible assets, net</font></td>
<td style="border-bottom: black 2.5pt double; text-align: left"><font style="font: 10pt Times New Roman, Times, Serif">$</font></td>
<td style="border-bottom: black 2.5pt double; text-align: right"><font style="font: 10pt Times New Roman, Times, Serif">788,890</font></td>
<td style="text-align: left; padding-bottom: 2.5pt"><font style="font: 10pt Times New Roman, Times, Serif"> </font></td>
<td style="padding-bottom: 2.5pt"><font style="font: 10pt Times New Roman, Times, Serif"> </font></td>
<td style="border-bottom: black 2.5pt double; text-align: left"><font style="font: 10pt Times New Roman, Times, Serif">$</font></td>
<td style="border-bottom: black 2.5pt double; text-align: right"><font style="font: 10pt Times New Roman, Times, Serif">793,236</font></td>
<td style="text-align: left; padding-bottom: 2.5pt"><font style="font: 10pt Times New Roman, Times, Serif"> </font></td></tr></table>
-179388
-136764
788890
793236
38278
0
930000
930000
300000
200000
360000
570000
P17Y
42624
14246
13676
41029
<p style="margin: 0pt"></p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify"><font style="font: 10pt Times New Roman, Times, Serif; letter-spacing: 0px">On
January 14, 2013, the Company hired a new CEO. The employment agreement required annual compensation of $175,000 that was to be
accrued and deferred until at least January 1, 2014. Additionally, the agreement required the issuance of 2,000,000 options with
an exercise price of $1.00 for a term of five years. The options were not exercisable until at least January 1, 2014. On September
20, 2013, the Company entered into a separation agreement with the CEO. As part of the agreement, the accrued compensation was
paid through the date of separation and the options were terminated.</font></p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; letter-spacing: -0.1pt; text-align: justify"><font style="font: 10pt Times New Roman, Times, Serif"> </font></p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify"><font style="font: 10pt Times New Roman, Times, Serif; letter-spacing: 0px">Accrued
expenses consisted of the following as of September 30, 2013 and December 31, 2012: </font></p>
<p style="font: 10pt/6pt Times New Roman, Times, Serif; margin: 0; text-align: justify"><font style="font: 10pt Times New Roman, Times, Serif"> </font></p>
<table cellspacing="0" cellpadding="0" align="center" style="width: 50%; border-collapse: collapse; font-size: 10pt">
<tr style="vertical-align: bottom">
<td><font style="font: 10pt Times New Roman, Times, Serif"> </font></td>
<td colspan="3" style="border-bottom: black 1pt solid; text-align: center"><font style="font: 10pt Times New Roman, Times, Serif">2013</font></td>
<td style="padding-bottom: 1pt"><font style="font: 10pt Times New Roman, Times, Serif"> </font></td>
<td colspan="3" style="border-bottom: black 1pt solid; text-align: center"><font style="font: 10pt Times New Roman, Times, Serif">2012</font></td></tr>
<tr style="background-color: rgb(204,238,204); vertical-align: bottom">
<td style="text-align: left; padding-left: 5.4pt; width: 55%"><font style="font: 10pt Times New Roman, Times, Serif">Accrued
compensation</font></td>
<td style="text-align: left; width: 1%"><font style="font: 10pt Times New Roman, Times, Serif">$</font></td>
<td style="text-align: right; width: 20%"><font style="font: 10pt Times New Roman, Times, Serif">0</font></td>
<td style="text-align: left; width: 1%"><font style="font: 10pt Times New Roman, Times, Serif"> </font></td>
<td style="width: 1%"><font style="font: 10pt Times New Roman, Times, Serif"> </font></td>
<td style="text-align: left; width: 1%"><font style="font: 10pt Times New Roman, Times, Serif">$</font></td>
<td style="text-align: right; width: 20%"><font style="font: 10pt Times New Roman, Times, Serif">0</font></td>
<td style="text-align: left; width: 1%"><font style="font: 10pt Times New Roman, Times, Serif"> </font></td></tr>
<tr style="background-color: white; vertical-align: bottom">
<td style="text-align: left; padding-bottom: 1pt; padding-left: 5.4pt"><font style="font: 10pt Times New Roman, Times, Serif">Accrued
audit fees</font></td>
<td style="border-bottom: black 1pt solid; text-align: left"><font style="font: 10pt Times New Roman, Times, Serif"> </font></td>
<td style="border-bottom: black 1pt solid; text-align: right"><font style="font: 10pt Times New Roman, Times, Serif">0</font></td>
<td style="text-align: left; padding-bottom: 1pt"><font style="font: 10pt Times New Roman, Times, Serif"> </font></td>
<td style="padding-bottom: 1pt"><font style="font: 10pt Times New Roman, Times, Serif"> </font></td>
<td style="border-bottom: black 1pt solid; text-align: left"><font style="font: 10pt Times New Roman, Times, Serif"> </font></td>
<td style="border-bottom: black 1pt solid; text-align: right"><font style="font: 10pt Times New Roman, Times, Serif">6,000</font></td>
<td style="text-align: left; padding-bottom: 1pt"><font style="font: 10pt Times New Roman, Times, Serif"> </font></td></tr>
<tr style="background-color: rgb(204,238,204); vertical-align: bottom">
<td style="text-align: left; padding-bottom: 2.5pt; padding-left: 5.4pt"><font style="font: 10pt Times New Roman, Times, Serif">Total
accrued expenses</font></td>
<td style="border-bottom: black 2.5pt double; text-align: left"><font style="font: 10pt Times New Roman, Times, Serif">$</font></td>
<td style="border-bottom: black 2.5pt double; text-align: right"><font style="font: 10pt Times New Roman, Times, Serif">0</font></td>
<td style="text-align: left; padding-bottom: 2.5pt"><font style="font: 10pt Times New Roman, Times, Serif"> </font></td>
<td style="padding-bottom: 2.5pt"><font style="font: 10pt Times New Roman, Times, Serif"> </font></td>
<td style="border-bottom: black 2.5pt double; text-align: left"><font style="font: 10pt Times New Roman, Times, Serif">$</font></td>
<td style="border-bottom: black 2.5pt double; text-align: right"><font style="font: 10pt Times New Roman, Times, Serif">6,000</font></td>
<td style="text-align: left; padding-bottom: 2.5pt"><font style="font: 10pt Times New Roman, Times, Serif"> </font></td></tr>
</table>
<p style="margin: 0pt"></p>
<table cellspacing="0" cellpadding="0" align="center" style="width: 50%; border-collapse: collapse; font-size: 10pt"><tr style="vertical-align: bottom"><td><font style="font: 10pt Times New Roman, Times, Serif"> </font></td>
<td colspan="3" style="border-bottom: black 1pt solid; text-align: center"><font style="font: 10pt Times New Roman, Times, Serif">2013</font></td>
<td style="padding-bottom: 1pt"><font style="font: 10pt Times New Roman, Times, Serif"> </font></td>
<td colspan="3" style="border-bottom: black 1pt solid; text-align: center"><font style="font: 10pt Times New Roman, Times, Serif">2012</font></td></tr>
<tr style="background-color: rgb(204,238,204); vertical-align: bottom">
<td style="text-align: left; padding-left: 5.4pt; width: 55%"><font style="font: 10pt Times New Roman, Times, Serif">Accrued
compensation</font></td>
<td style="text-align: left; width: 1%"><font style="font: 10pt Times New Roman, Times, Serif">$</font></td>
<td style="text-align: right; width: 20%"><font style="font: 10pt Times New Roman, Times, Serif">0</font></td>
<td style="text-align: left; width: 1%"><font style="font: 10pt Times New Roman, Times, Serif"> </font></td>
<td style="width: 1%"><font style="font: 10pt Times New Roman, Times, Serif"> </font></td>
<td style="text-align: left; width: 1%"><font style="font: 10pt Times New Roman, Times, Serif">$</font></td>
<td style="text-align: right; width: 20%"><font style="font: 10pt Times New Roman, Times, Serif">0</font></td>
<td style="text-align: left; width: 1%"><font style="font: 10pt Times New Roman, Times, Serif"> </font></td></tr>
<tr style="background-color: white; vertical-align: bottom">
<td style="text-align: left; padding-bottom: 1pt; padding-left: 5.4pt"><font style="font: 10pt Times New Roman, Times, Serif">Accrued
audit fees</font></td>
<td style="border-bottom: black 1pt solid; text-align: left"><font style="font: 10pt Times New Roman, Times, Serif"> </font></td>
<td style="border-bottom: black 1pt solid; text-align: right"><font style="font: 10pt Times New Roman, Times, Serif">0</font></td>
<td style="text-align: left; padding-bottom: 1pt"><font style="font: 10pt Times New Roman, Times, Serif"> </font></td>
<td style="padding-bottom: 1pt"><font style="font: 10pt Times New Roman, Times, Serif"> </font></td>
<td style="border-bottom: black 1pt solid; text-align: left"><font style="font: 10pt Times New Roman, Times, Serif"> </font></td>
<td style="border-bottom: black 1pt solid; text-align: right"><font style="font: 10pt Times New Roman, Times, Serif">6,000</font></td>
<td style="text-align: left; padding-bottom: 1pt"><font style="font: 10pt Times New Roman, Times, Serif"> </font></td></tr>
<tr style="background-color: rgb(204,238,204); vertical-align: bottom">
<td style="text-align: left; padding-bottom: 2.5pt; padding-left: 5.4pt"><font style="font: 10pt Times New Roman, Times, Serif">Total
accrued expenses</font></td>
<td style="border-bottom: black 2.5pt double; text-align: left"><font style="font: 10pt Times New Roman, Times, Serif">$</font></td>
<td style="border-bottom: black 2.5pt double; text-align: right"><font style="font: 10pt Times New Roman, Times, Serif">0</font></td>
<td style="text-align: left; padding-bottom: 2.5pt"><font style="font: 10pt Times New Roman, Times, Serif"> </font></td>
<td style="padding-bottom: 2.5pt"><font style="font: 10pt Times New Roman, Times, Serif"> </font></td>
<td style="border-bottom: black 2.5pt double; text-align: left"><font style="font: 10pt Times New Roman, Times, Serif">$</font></td>
<td style="border-bottom: black 2.5pt double; text-align: right"><font style="font: 10pt Times New Roman, Times, Serif">6,000</font></td>
<td style="text-align: left; padding-bottom: 2.5pt"><font style="font: 10pt Times New Roman, Times, Serif"> </font></td></tr></table>
0
6000
0
0
0
6000
175000
2000000
1.00
P5Y
2014-01-01
<p style="margin: 0pt"><font style="font: 10pt Times New Roman, Times, Serif; letter-spacing: 0px">The Company has signed several
contracts with customers for either the distribution or redemption of coupons. The payments are not taken into revenue until either
the coupon is distributed to a patient or the coupon has been redeemed depending on the specific contract. The distributions and
redemptions are tracked by the Company’s administrative tool. Additionally, customer setup contracts that have been paid
in full are deferred until the Company has completed the obligations of the contacts. Deferred revenue was $13,272 and $49,252
as of September 30, 2013 and December 31, 2012, respectively.</font></p>
<p style="margin: 0pt"><font style="font: 10pt Times New Roman, Times, Serif; letter-spacing: 0px">During the year ended December
31, 2010, the Company acquired from an officer and shareholder the technical contributions and assignment of all exclusive rights
to and for the SampleMD patent currently in process in exchange for 300,000 shares of common stock to be granted at the discretion
of the seller in addition to 200,000 stock options valued at $360,000. The shares were valued on the grant date at $570,000 and
have been recorded as a payable to the related party.</font></p>
300000
200000
360000
570000
<p style="margin: 0pt"></p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify"><font style="font: 10pt Times New Roman, Times, Serif; letter-spacing: 0px">OptimizeRx
Corporation has 500,000,000 shares of $.001 par value common stock authorized as of September 30, 2013.</font></p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify"><font style="font: 10pt Times New Roman, Times, Serif"> </font></p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify"><font style="font: 10pt Times New Roman, Times, Serif; letter-spacing: 0px">There
were 14,752,496 and 14,232,496 common shares issued and outstanding at September 30, 2013 and December 31, 2012, respectively.</font></p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify"><font style="font: 10pt Times New Roman, Times, Serif"> </font></p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify"><font style="font: 10pt Times New Roman, Times, Serif; letter-spacing: 0px">On
June 1, 2012, the Company entered into a consulting agreement with North Coast Advisors, Inc. for various services. The Company
agreed to issue 40,000 shares of common stock as of the date of the contract. However, these shares were not issued until July
12, 2012. The Company also agreed to issue an additional 40,000 shares every six months in alignment with the agreement renewal
up to the two years of the agreement. The first 40,000 shares were valued at the Company’s common stock price as of the date
of the contract, which was $1.12/share and has been expensed. No additional shares were issued and the agreement was voided and
replaced by a new agreement as noted below.</font></p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify"><font style="font: 10pt Times New Roman, Times, Serif"> </font></p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify"><font style="font: 10pt Times New Roman, Times, Serif; letter-spacing: 0px">On
June 1, 2013, the Company entered into a consulting agreement with North Coast Advisors, Inc. for various services. The Company
agreed to issue 20,000 shares of common stock as of the date of the contract. The Company also agreed to issue an additional 20,000
shares every six months in alignment with the agreement renewal up to the two years of the agreement. The first 20,000 shares
were valued at the Company’s common stock price as of the date of the contract, which was $1.945/share and has been expensed.</font></p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify"><font style="font: 10pt Times New Roman, Times, Serif"> </font></p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify"><font style="font: 10pt Times New Roman, Times, Serif; letter-spacing: 0px">On
September 20, 2013, the Company entered into a separation agreement that includes post-employment consulting services with a former
officer. The Company agreed to issue 500,000 shares of common stock, 250,000 shares immediately and 250,000 by January 1, 2014.
The first 250,000 shares have been issued and the Company has recognized the entire issuance in the September 30, 2013 shares
outstanding. The shares were valued at $505,000 and $233,077 of that amount has been recorded as deferred stock compensation as
of September 30, 2013.</font></p>
<p style="margin: 0pt"></p>
20000
40000
40000
250000
250000
1.945
1.12
P2Y
P2Y
<p style="margin: 0pt"></p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify"><font style="font: 10pt Times New Roman, Times, Serif; letter-spacing: 0px"><u>Series
A Preferred</u></font></p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify"><font style="font: 10pt Times New Roman, Times, Serif"> </font></p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify"><font style="font: 10pt Times New Roman, Times, Serif; letter-spacing: 0px">During
the year ended December 31, 2008, 35 preferred shares were issued for $3,500,000. Issuance costs totaled $515,000 resulting in
net proceeds of $2,985,000. The 35 shares are convertible to 3,500,000 shares of common stock and bear a 10% cumulative dividend.
In addition, there was a warrant issued to purchase 6,000,000 shares of common stock at an exercise price of $2 for a period of
seven years.</font></p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify"><font style="font: 10pt Times New Roman, Times, Serif"> </font></p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify"><font style="font: 10pt Times New Roman, Times, Serif; letter-spacing: 0px"><u>Series
A Preferred Continued</u></font></p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify"><font style="font: 10pt Times New Roman, Times, Serif"> </font></p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify"><font style="font: 10pt Times New Roman, Times, Serif; letter-spacing: 0px">The
holders of the preferred stock are entitled to semi-annual dividends payable on the stated value of the Series A preferred stock
at a rate of 10% per annum, which shall be cumulative, and accrue daily from the issuance date. The dividends may be paid in cash
or shares of the Company's common stock at management’s discretion. If after the conversion eligibility date, the market
price for the common stock for any ten consecutive trading days in which the stock trades for over $2 per share and trading exceeds
100,000 shares per day, the preferred shareholders can be required to convert their shares to common stock. Each share of Series
A preferred stock shall also be convertible at the option of the holder into that number of shares of common stock of the Company
at the stated value of such share at a $1 conversion price.</font></p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify"><font style="font: 10pt Times New Roman, Times, Serif"> </font></p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify"><font style="font: 10pt Times New Roman, Times, Serif; letter-spacing: 0px">The
holder may cause this conversion at the time the shares are eligible for resale by the holder. The conversion price is subject
to adjustment as hereinafter provided, at any time, or from time to time upon the terms and in the manner hereinafter set forth
in the shareholder agreement. There is no conversion expiration date, however, the holder must provide 30 days notice for the
registration of the conversion.</font></p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify"><font style="font: 10pt Times New Roman, Times, Serif"> </font></p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify"><font style="font: 10pt Times New Roman, Times, Serif; letter-spacing: 0px">On
May 12, 2010, the Company’s Board declared and issued 236,598 common shares as payment for all cumulative and current semi-annual
dividends. On November 16, 2010, the Company’s Board declared and issued 173,922 common shares for its semi-annual dividend
payment. On March 25, 2011, the Company’s Board declared and issued 176,768 common shares for its semi-annual dividend payment.
On September 21, 2011, the Company's Board declared and issued 156,306 common shares for its semi-annual dividend payment. The
Company has undeclared dividends that were due in February and September 2012 totaling $350,000 and undeclared dividends of $350,000
that were due in February and September 2013 for a total undeclared amount of $700,000 as of September 30, 2013.</font></p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify"><font style="font: 10pt Times New Roman, Times, Serif"> </font></p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify"><font style="font: 10pt Times New Roman, Times, Serif; letter-spacing: 0px"><u>Series
B Preferred</u></font></p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify"><font style="font: 10pt Times New Roman, Times, Serif"> </font></p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify"><font style="font: 10pt Times New Roman, Times, Serif; letter-spacing: 0px">During
the year ended December 31, 2010, 15 preferred shares were issued for $1,500,000. The 15 shares are convertible to 1,000,000 shares
of common stock and bear a 10% cumulative dividend. In addition, there was a warrant issued to purchase 3,000,000 shares of common
stock at an exercise price of $3 for a period of seven years.</font></p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify"><font style="font: 10pt Times New Roman, Times, Serif"> </font></p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify"><font style="font: 10pt Times New Roman, Times, Serif; letter-spacing: 0px">The
preferred stock was issued for $1,500,000 less associated issuance costs of $350,000 for net proceeds of $1,150,000. Additionally,
3,000,000 common stock warrants were issued with the preferred stock. Based on the fair values of the preferred stock and common
stock warrants on the issue date, $341,100 was allocated to preferred stock and $1,158,900 was allocated to the common stock warrants.
Equity issuance costs of $350,000 were allocated to the preferred stock.</font></p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: center"><font style="font: 10pt Times New Roman, Times, Serif"> </font></p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify"><font style="font: 10pt Times New Roman, Times, Serif; letter-spacing: 0px">During
the quarter ended September 30, 2011, 15 preferred shares were issued to an investor for $1,500,000. The 15 shares are convertible
to 1,000,000 shares of common stock and bear a 10% cumulative dividend. In addition, there was a warrant issued to purchase 1,000,000
shares of common stock at an exercise price of $3 for a period of seven years. Based on the fair values of the preferred stock
and common stock warrants on the issue date, $855,460 was allocated to preferred stock and $644,540 was allocated to the common
stock warrants. See Note 12.</font></p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify"><font style="font: 10pt Times New Roman, Times, Serif"> </font></p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify"><font style="font: 10pt Times New Roman, Times, Serif; letter-spacing: 0px"><u>Series
B Preferred Continued</u></font></p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify"><font style="font: 10pt Times New Roman, Times, Serif"> </font></p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify"><font style="font: 10pt Times New Roman, Times, Serif; letter-spacing: 0px">The
holders of the preferred stock are entitled to semi-annual dividends payable on the stated value of the Series B preferred stock
at a rate of 10% per annum, which shall be cumulative, and accrue daily from the issuance date. The dividends may be paid in cash
or shares of the Company's common stock at management’s discretion. If after the conversion eligibility date, the market
price for the common stock for any ten consecutive trading days in which the stock trades for over $2 per share and trading exceeds
100,000 shares per day, the preferred shareholders can be required to convert their shares to common stock. Each share of Series
B preferred stock shall also be convertible at the option of the holder into that number of shares of common stock of the Company
at the stated value of such share at a $1.50 conversion price.</font></p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify"><font style="font: 10pt Times New Roman, Times, Serif"> </font></p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify"><font style="font: 10pt Times New Roman, Times, Serif; letter-spacing: 0px">The
holder may cause this conversion at the time the shares are eligible for resale by the holder. The conversion price is subject
to adjustment as hereinafter provided, at any time, or from time to time upon the terms and in the manner hereinafter set forth
in the shareholder agreement. On March 25, 2011, the Company’s Board declared and issued 75,758 common shares for its semi-annual
dividend payment. On September 21, 2011, the Company's Board declared and issued 66,988 common shares for its semi-annual dividend
payment. The Company has undeclared dividends that were due in February and September 2012 totaling $150,000 and undeclared dividends
of $150,000 that were due in February and September 2013 for a total undeclared amount of $300,000 as of September 30, 2013.</font></p>
<p style="margin: 0pt"></p>
35
3500000
515000
2985000
3500000
0.10
6000000
3000000
1000000
2.00
3.00
3.00
P7Y
P7Y
P7Y
176768
156306
236598
173922
15
15
1500000
1500000
1000000
1000000
.10
0.10
350000
1150000
3000000
341100
855460
1158900
644540
75758
66988
350000
350000
700000
150000
150000
300000
<p style="margin: 0pt"></p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify"><font style="font: 10pt Times New Roman, Times, Serif; letter-spacing: 0px">The
Company accounts for employee stock-based compensation in accordance with the guidance of ASC Topic 718: Compensation - Stock
Compensation, which requires all share-based payments to employees, including grants of employee stock options, to be recognized
in the financial statements based on their fair values.</font></p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify"><font style="font: 10pt Times New Roman, Times, Serif"> </font></p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify"><font style="font: 10pt Times New Roman, Times, Serif; letter-spacing: 0px">The
Company follows ASC Topic 505-50, formerly EITF 96-18, “Accounting for Equity Instruments that are Issued to Other than Employees
for Acquiring, or in Conjunction with Selling Goods and Services,” for stock options and warrants issued to consultants and
other non-employees. In accordance with ASC Topic 505-50, these stock options and warrants issued as compensation for services
provided to the Company are accounted for based upon the fair value of the services provided or the estimated fair market value
of the option or warrant, whichever can be more clearly determined. The fair value of the equity instrument is charged directly
to compensation expense and additional paid-in capital over the period during which services are rendered.</font></p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify"><font style="font: 10pt Times New Roman, Times, Serif"> </font></p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify"><font style="font: 10pt Times New Roman, Times, Serif; letter-spacing: 0px">On
May 31, 2011, the Company issued 285,000 stock options to 3 employees at an exercise price of $1.00. The options were valued on
the grant date using the Black-Scholes option-pricing model with the following assumptions: dividend yield of 0%, expected volatility
of 218%, risk-free interest rate of 1.68% and expected life of 60 months. The total value of the options was $320,585. The options
vest over one year. The Company recognized share-based compensation expense of $187,005 during the year ended December 31, 2011.
The remaining balance of $133,580 was recognized over the first five months of 2012.</font></p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify"><font style="font: 10pt Times New Roman, Times, Serif"> </font></p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify"></p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify"><font style="font: 10pt Times New Roman, Times, Serif; letter-spacing: 0px">During
the quarter ended December 31, 2011, the Company issued 20,000 stock options to 2 employees at an exercise price of $1.00. The
options were valued on the grant date using the Black-Scholes option-pricing model with the following assumptions: dividend yield
of 0%, expected volatility of 204-205%, risk-free interest rate of 0.88-0.93% and expected life of 60 months. The total value
of the options was $19,270. The options vest over one year. <font style="color: black; background-color: white"> </font></font><font style="font: 10pt Times New Roman, Times, Serif; letter-spacing: 0px; background-color: white">The
Company<font style="color: black"> recognized share-based compensation expense of $2,480 during the year ended </font>December
31, 2011 a<font style="color: black">nd $14,459 during the nine</font> months ended September 30, 2012<font style="color: black">.
The remaining balance was recognized during the remainder of 2012. </font></font></p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify"><font style="font: 10pt Times New Roman, Times, Serif"> </font></p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify"><font style="font: 10pt Times New Roman, Times, Serif; letter-spacing: 0px">On
November 21, 2011, the Company issued 100,000 stock options to an individual at an exercise price of $0.73. The options were valued
on the grant date using the Black-Scholes option-pricing model with the following assumptions: dividend yield of 0%, expected
volatility of 205%, risk-free interest rate of 0.92% and expected life of 60 months. <font style="background-color: white">The
Company recognized expenses of $8,346 during the year ended December 31, 2011 and $75,117 during the nine months ended September
3</font>0, 2012. <font style="background-color: white">The remaining balance was recognized during the remainder of 2012.</font></font></p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify"><font style="font: 10pt Times New Roman, Times, Serif"> </font></p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify"><font style="font: 10pt Times New Roman, Times, Serif; letter-spacing: 0px">During
the quarter ended March 31, 2012, the Company issued 50,000 stock options to 4 non-employees at an exercise price of $0.89. The
options were valued on the grant date using the Black-Scholes option-pricing model with the following assumptions: dividend yield
of 0%, expected volatility of 198%, risk-free interest rate of 0.65% and expected life of 48 months. The total value of the options
was $35,091. The options vest over 4 months. The Company recognized share-based compensation expense of $35,091 during the six
months ended June 30, 2012.</font></p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify"><font style="font: 10pt Times New Roman, Times, Serif"> </font></p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify"><font style="font: 10pt Times New Roman, Times, Serif; letter-spacing: 0px">During
the quarter ended December 31, 2012, the Company issued 25,000 stock options to a non-employee at an exercise price of $1.58.
The options were valued on the grant date using the Black-Scholes option-pricing model with the following assumptions: dividend
yield of 0%, expected volatility of 200%, risk-free interest rate of 0.67% and expected life of 60 months. The total value of
the options was $40,007. The options vest over 1 year. The Company recognized share-based compensation expense of $8,335 during
the three months ended December 31, 2012 and $30,006 during the nine months ended September 30, 2013. The remaining balance will
be recognized over the remainder of 2013.</font></p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify"><font style="font: 10pt Times New Roman, Times, Serif"> </font></p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify"><font style="font: 10pt Times New Roman, Times, Serif; letter-spacing: 0px">The
Company had the following options outstanding as of September 30, 2013:</font></p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify"><font style="font: 10pt Times New Roman, Times, Serif"> </font></p>
<table cellspacing="0" cellpadding="0" align="center" style="width: 50%; border-collapse: collapse; font-size: 10pt">
<tr style="vertical-align: bottom">
<td colspan="3"><font style="font: 10pt Times New Roman, Times, Serif"> </font></td>
<td style="padding-bottom: 1pt"><font style="font: 10pt Times New Roman, Times, Serif"> </font></td>
<td colspan="3" style="border-bottom: black 1pt solid; text-align: center"><font style="font: 10pt Times New Roman, Times, Serif">Number
of Options</font></td>
<td style="padding-bottom: 1pt"><font style="font: 10pt Times New Roman, Times, Serif"> </font></td>
<td colspan="3" style="border-bottom: black 1pt solid; text-align: center"><font style="font: 10pt Times New Roman, Times, Serif">Weighted
average<br />exercise price</font></td></tr>
<tr style="background-color: rgb(204,238,204); vertical-align: bottom">
<td style="text-align: left; width: 1%"><font style="font: 10pt Times New Roman, Times, Serif"> </font></td>
<td style="text-align: right; width: 52%; font-size: 10pt"><font style="font: 10pt Times New Roman, Times, Serif; letter-spacing: 0px">Outstanding,
January 1, 2012</font></td>
<td style="text-align: left; width: 1%"><font style="font: 10pt Times New Roman, Times, Serif"> </font></td>
<td style="width: 1%"><font style="font: 10pt Times New Roman, Times, Serif"> </font></td>
<td style="text-align: left; width: 1%"><font style="font: 10pt Times New Roman, Times, Serif"> </font></td>
<td style="text-align: right; width: 20%"><font style="font: 10pt Times New Roman, Times, Serif">405,000</font></td>
<td style="text-align: left; width: 1%"><font style="font: 10pt Times New Roman, Times, Serif"> </font></td>
<td style="width: 1%"><font style="font: 10pt Times New Roman, Times, Serif"> </font></td>
<td style="text-align: left; width: 1%"><font style="font: 10pt Times New Roman, Times, Serif">$</font></td>
<td style="text-align: right; width: 20%"><font style="font: 10pt Times New Roman, Times, Serif">1.01</font></td>
<td style="text-align: left; width: 1%"><font style="font: 10pt Times New Roman, Times, Serif"> </font></td></tr>
<tr style="background-color: white; vertical-align: bottom">
<td style="text-align: left"><font style="font: 10pt Times New Roman, Times, Serif"> </font></td>
<td style="text-align: right; font-size: 10pt"><font style="font: 10pt Times New Roman, Times, Serif; letter-spacing: 0px">Granted
- 2012</font></td>
<td style="text-align: left"><font style="font: 10pt Times New Roman, Times, Serif"> </font></td>
<td><font style="font: 10pt Times New Roman, Times, Serif"> </font></td>
<td style="text-align: left"><font style="font: 10pt Times New Roman, Times, Serif"> </font></td>
<td style="text-align: right"><font style="font: 10pt Times New Roman, Times, Serif">75,000</font></td>
<td style="text-align: left"><font style="font: 10pt Times New Roman, Times, Serif"> </font></td>
<td><font style="font: 10pt Times New Roman, Times, Serif"> </font></td>
<td style="text-align: left"><font style="font: 10pt Times New Roman, Times, Serif"> </font></td>
<td style="text-align: right"><font style="font: 10pt Times New Roman, Times, Serif">1.17</font></td>
<td style="text-align: left"><font style="font: 10pt Times New Roman, Times, Serif"> </font></td></tr>
<tr style="background-color: rgb(204,238,204); vertical-align: bottom">
<td style="text-align: left"><font style="font: 10pt Times New Roman, Times, Serif"> </font></td>
<td style="text-align: right; font-size: 10pt"><font style="font: 10pt Times New Roman, Times, Serif; letter-spacing: 0px">Exercised
- 2012</font></td>
<td style="text-align: left"><font style="font: 10pt Times New Roman, Times, Serif"> </font></td>
<td><font style="font: 10pt Times New Roman, Times, Serif"> </font></td>
<td style="text-align: left"><font style="font: 10pt Times New Roman, Times, Serif"> </font></td>
<td style="text-align: right"><font style="font: 10pt Times New Roman, Times, Serif">0</font></td>
<td style="text-align: left"><font style="font: 10pt Times New Roman, Times, Serif"> </font></td>
<td><font style="font: 10pt Times New Roman, Times, Serif"> </font></td>
<td style="text-align: left"><font style="font: 10pt Times New Roman, Times, Serif"> </font></td>
<td style="text-align: right"><font style="font: 10pt Times New Roman, Times, Serif">0</font></td>
<td style="text-align: left"><font style="font: 10pt Times New Roman, Times, Serif"> </font></td></tr>
<tr style="background-color: white; vertical-align: bottom">
<td style="text-align: left"><font style="font: 10pt Times New Roman, Times, Serif"> </font></td>
<td style="text-align: right; font-size: 10pt"><font style="font: 10pt Times New Roman, Times, Serif; letter-spacing: 0px">Expired
- 2012</font></td>
<td style="text-align: left; padding-bottom: 1pt"><font style="font: 10pt Times New Roman, Times, Serif"> </font></td>
<td style="padding-bottom: 1pt"><font style="font: 10pt Times New Roman, Times, Serif"> </font></td>
<td style="border-bottom: black 1pt solid; text-align: left"><font style="font: 10pt Times New Roman, Times, Serif"> </font></td>
<td style="border-bottom: black 1pt solid; text-align: right"><font style="font: 10pt Times New Roman, Times, Serif">(455,000</font></td>
<td style="text-align: left; padding-bottom: 1pt"><font style="font: 10pt Times New Roman, Times, Serif">)</font></td>
<td style="padding-bottom: 1pt"><font style="font: 10pt Times New Roman, Times, Serif"> </font></td>
<td style="border-bottom: black 1pt solid; text-align: left"><font style="font: 10pt Times New Roman, Times, Serif"> </font></td>
<td style="border-bottom: black 1pt solid; text-align: right"><font style="font: 10pt Times New Roman, Times, Serif">(.98</font></td>
<td style="text-align: left; padding-bottom: 1pt"><font style="font: 10pt Times New Roman, Times, Serif">)</font></td></tr>
<tr style="background-color: rgb(204,238,204); vertical-align: bottom">
<td style="text-align: left"><font style="font: 10pt Times New Roman, Times, Serif"> </font></td>
<td style="text-align: right; font-size: 10pt"><font style="font: 10pt Times New Roman, Times, Serif; letter-spacing: 0px">Balance,
December 31, 2012</font></td>
<td style="text-align: left"><font style="font: 10pt Times New Roman, Times, Serif"> </font></td>
<td><font style="font: 10pt Times New Roman, Times, Serif"> </font></td>
<td style="text-align: left"><font style="font: 10pt Times New Roman, Times, Serif"> </font></td>
<td style="text-align: right"><font style="font: 10pt Times New Roman, Times, Serif">25,000</font></td>
<td style="text-align: left"><font style="font: 10pt Times New Roman, Times, Serif"> </font></td>
<td><font style="font: 10pt Times New Roman, Times, Serif"> </font></td>
<td style="text-align: left"><font style="font: 10pt Times New Roman, Times, Serif"> </font></td>
<td style="text-align: right"><font style="font: 10pt Times New Roman, Times, Serif">1.58</font></td>
<td style="text-align: left"><font style="font: 10pt Times New Roman, Times, Serif"> </font></td></tr>
<tr style="background-color: white; vertical-align: bottom">
<td style="text-align: left"><font style="font: 10pt Times New Roman, Times, Serif"> </font></td>
<td style="text-align: right; font-size: 10pt"><font style="font: 10pt Times New Roman, Times, Serif; letter-spacing: 0px">Granted
- 2013</font></td>
<td style="text-align: left"><font style="font: 10pt Times New Roman, Times, Serif"> </font></td>
<td><font style="font: 10pt Times New Roman, Times, Serif"> </font></td>
<td style="text-align: left"><font style="font: 10pt Times New Roman, Times, Serif"> </font></td>
<td style="text-align: right"><font style="font: 10pt Times New Roman, Times, Serif">0</font></td>
<td style="text-align: left"><font style="font: 10pt Times New Roman, Times, Serif"> </font></td>
<td><font style="font: 10pt Times New Roman, Times, Serif"> </font></td>
<td style="text-align: left"><font style="font: 10pt Times New Roman, Times, Serif"> </font></td>
<td style="text-align: right"><font style="font: 10pt Times New Roman, Times, Serif">0</font></td>
<td style="text-align: left"><font style="font: 10pt Times New Roman, Times, Serif"> </font></td></tr>
<tr style="background-color: rgb(204,238,204); vertical-align: bottom">
<td style="text-align: left"><font style="font: 10pt Times New Roman, Times, Serif"> </font></td>
<td style="text-align: right; font-size: 10pt"><font style="font: 10pt Times New Roman, Times, Serif; letter-spacing: 0px">Exercised
- 2013</font></td>
<td style="text-align: left"><font style="font: 10pt Times New Roman, Times, Serif"> </font></td>
<td><font style="font: 10pt Times New Roman, Times, Serif"> </font></td>
<td style="text-align: left"><font style="font: 10pt Times New Roman, Times, Serif"> </font></td>
<td style="text-align: right"><font style="font: 10pt Times New Roman, Times, Serif">0</font></td>
<td style="text-align: left"><font style="font: 10pt Times New Roman, Times, Serif"> </font></td>
<td><font style="font: 10pt Times New Roman, Times, Serif"> </font></td>
<td style="text-align: left"><font style="font: 10pt Times New Roman, Times, Serif"> </font></td>
<td style="text-align: right"><font style="font: 10pt Times New Roman, Times, Serif">0</font></td>
<td style="text-align: left"><font style="font: 10pt Times New Roman, Times, Serif"> </font></td></tr>
<tr style="background-color: white; vertical-align: bottom">
<td style="text-align: left"><font style="font: 10pt Times New Roman, Times, Serif"> </font></td>
<td style="text-align: right; font-size: 10pt"><font style="font: 10pt Times New Roman, Times, Serif; letter-spacing: 0px">Expired
- 2013</font></td>
<td style="text-align: left; padding-bottom: 1pt"><font style="font: 10pt Times New Roman, Times, Serif"> </font></td>
<td style="padding-bottom: 1pt"><font style="font: 10pt Times New Roman, Times, Serif"> </font></td>
<td style="border-bottom: black 1pt solid; text-align: left"><font style="font: 10pt Times New Roman, Times, Serif"> </font></td>
<td style="border-bottom: black 1pt solid; text-align: right"><font style="font: 10pt Times New Roman, Times, Serif">0</font></td>
<td style="text-align: left; padding-bottom: 1pt"><font style="font: 10pt Times New Roman, Times, Serif"> </font></td>
<td style="padding-bottom: 1pt"><font style="font: 10pt Times New Roman, Times, Serif"> </font></td>
<td style="border-bottom: black 1pt solid; text-align: left"><font style="font: 10pt Times New Roman, Times, Serif"> </font></td>
<td style="border-bottom: black 1pt solid; text-align: right"><font style="font: 10pt Times New Roman, Times, Serif">0</font></td>
<td style="text-align: left; padding-bottom: 1pt"><font style="font: 10pt Times New Roman, Times, Serif"> </font></td></tr>
<tr style="background-color: rgb(204,238,204); vertical-align: bottom">
<td style="text-align: left"><font style="font: 10pt Times New Roman, Times, Serif"> </font></td>
<td style="text-align: right; font-size: 10pt"><font style="font: 10pt Times New Roman, Times, Serif; letter-spacing: 0px">Balance,
September 30, 2013</font></td>
<td style="text-align: left; padding-bottom: 2.5pt"><font style="font: 10pt Times New Roman, Times, Serif"> </font></td>
<td style="padding-bottom: 2.5pt"><font style="font: 10pt Times New Roman, Times, Serif"> </font></td>
<td style="border-bottom: black 2.5pt double; text-align: left"><font style="font: 10pt Times New Roman, Times, Serif"> </font></td>
<td style="border-bottom: black 2.5pt double; text-align: right"><font style="font: 10pt Times New Roman, Times, Serif">25,000</font></td>
<td style="text-align: left; padding-bottom: 2.5pt"><font style="font: 10pt Times New Roman, Times, Serif"> </font></td>
<td style="padding-bottom: 2.5pt"><font style="font: 10pt Times New Roman, Times, Serif"> </font></td>
<td style="border-bottom: black 2.5pt double; text-align: left"><font style="font: 10pt Times New Roman, Times, Serif">$</font></td>
<td style="border-bottom: black 2.5pt double; text-align: right"><font style="font: 10pt Times New Roman, Times, Serif">1.58</font></td></tr>
</table>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify"></p>
<p style="margin: 0pt"></p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify"><font style="font: 10pt Times New Roman, Times, Serif; letter-spacing: 0px"> </font></p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify"><font style="font: 10pt Times New Roman, Times, Serif; letter-spacing: 0px">The
Company had the following warrants outstanding as of September 30, 2013:</font></p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify"><font style="font: 10pt Times New Roman, Times, Serif"> </font></p>
<table cellspacing="0" cellpadding="0" align="center" style="width: 50%; border-collapse: collapse; font-size: 10pt">
<tr style="vertical-align: bottom">
<td colspan="3"><font style="font: 10pt Times New Roman, Times, Serif"> </font></td>
<td style="padding-bottom: 1pt"><font style="font: 10pt Times New Roman, Times, Serif"> </font></td>
<td colspan="3" style="border-bottom: black 1pt solid; text-align: center"><font style="font: 10pt Times New Roman, Times, Serif">Number
of Warrants</font></td>
<td style="padding-bottom: 1pt"><font style="font: 10pt Times New Roman, Times, Serif"> </font></td>
<td colspan="3" style="border-bottom: black 1pt solid; text-align: center"><font style="font: 10pt Times New Roman, Times, Serif">Weighted
average exercise price</font></td></tr>
<tr style="background-color: rgb(204,238,204); vertical-align: bottom">
<td style="text-align: left; width: 1%"><font style="font: 10pt Times New Roman, Times, Serif"> </font></td>
<td style="text-align: right; width: 52%; font-size: 10pt"><font style="font: 10pt Times New Roman, Times, Serif; letter-spacing: 0px">Outstanding,
January 1, 2012</font></td>
<td style="text-align: left; width: 1%"><font style="font: 10pt Times New Roman, Times, Serif"> </font></td>
<td style="width: 1%"><font style="font: 10pt Times New Roman, Times, Serif"> </font></td>
<td style="text-align: left; width: 1%"><font style="font: 10pt Times New Roman, Times, Serif"> </font></td>
<td style="text-align: right; width: 20%"><font style="font: 10pt Times New Roman, Times, Serif">14,344,434</font></td>
<td style="text-align: left; width: 1%"><font style="font: 10pt Times New Roman, Times, Serif"> </font></td>
<td style="width: 1%"><font style="font: 10pt Times New Roman, Times, Serif"> </font></td>
<td style="text-align: left; width: 1%"><font style="font: 10pt Times New Roman, Times, Serif">$</font></td>
<td style="text-align: right; width: 20%"><font style="font: 10pt Times New Roman, Times, Serif">2.41</font></td>
<td style="text-align: left; width: 1%"><font style="font: 10pt Times New Roman, Times, Serif"> </font></td></tr>
<tr style="background-color: white; vertical-align: bottom">
<td style="text-align: left"><font style="font: 10pt Times New Roman, Times, Serif"> </font></td>
<td style="text-align: right; font-size: 10pt"><font style="font: 10pt Times New Roman, Times, Serif; letter-spacing: 0px">Granted
- 2012</font></td>
<td style="text-align: left"><font style="font: 10pt Times New Roman, Times, Serif"> </font></td>
<td><font style="font: 10pt Times New Roman, Times, Serif"> </font></td>
<td style="text-align: left"><font style="font: 10pt Times New Roman, Times, Serif"> </font></td>
<td style="text-align: right"><font style="font: 10pt Times New Roman, Times, Serif">0</font></td>
<td style="text-align: left"><font style="font: 10pt Times New Roman, Times, Serif"> </font></td>
<td><font style="font: 10pt Times New Roman, Times, Serif"> </font></td>
<td style="text-align: left"><font style="font: 10pt Times New Roman, Times, Serif"> </font></td>
<td style="text-align: right"><font style="font: 10pt Times New Roman, Times, Serif">0</font></td>
<td style="text-align: left"><font style="font: 10pt Times New Roman, Times, Serif"> </font></td></tr>
<tr style="background-color: rgb(204,238,204); vertical-align: bottom">
<td style="text-align: left"><font style="font: 10pt Times New Roman, Times, Serif"> </font></td>
<td style="text-align: right; font-size: 10pt"><font style="font: 10pt Times New Roman, Times, Serif; letter-spacing: 0px">Exercised
- 2012</font></td>
<td style="text-align: left"><font style="font: 10pt Times New Roman, Times, Serif"> </font></td>
<td><font style="font: 10pt Times New Roman, Times, Serif"> </font></td>
<td style="text-align: left"><font style="font: 10pt Times New Roman, Times, Serif"> </font></td>
<td style="text-align: right"><font style="font: 10pt Times New Roman, Times, Serif">0</font></td>
<td style="text-align: left"><font style="font: 10pt Times New Roman, Times, Serif"> </font></td>
<td><font style="font: 10pt Times New Roman, Times, Serif"> </font></td>
<td style="text-align: left"><font style="font: 10pt Times New Roman, Times, Serif"> </font></td>
<td style="text-align: right"><font style="font: 10pt Times New Roman, Times, Serif">0</font></td>
<td style="text-align: left"><font style="font: 10pt Times New Roman, Times, Serif"> </font></td></tr>
<tr style="background-color: white; vertical-align: bottom">
<td style="border-bottom: black 1pt solid; text-align: left"><font style="font: 10pt Times New Roman, Times, Serif"> </font></td>
<td style="border-bottom: black 1pt solid; text-align: right; font-size: 10pt"><font style="font: 10pt Times New Roman, Times, Serif; letter-spacing: 0px">Expired
- 2012</font></td>
<td style="text-align: left; padding-bottom: 1pt"><font style="font: 10pt Times New Roman, Times, Serif"> </font></td>
<td style="padding-bottom: 1pt"><font style="font: 10pt Times New Roman, Times, Serif"> </font></td>
<td style="border-bottom: black 1pt solid; text-align: left"><font style="font: 10pt Times New Roman, Times, Serif"> </font></td>
<td style="border-bottom: black 1pt solid; text-align: right"><font style="font: 10pt Times New Roman, Times, Serif">0</font></td>
<td style="text-align: left; padding-bottom: 1pt"><font style="font: 10pt Times New Roman, Times, Serif"> </font></td>
<td style="padding-bottom: 1pt"><font style="font: 10pt Times New Roman, Times, Serif"> </font></td>
<td style="border-bottom: black 1pt solid; text-align: left"><font style="font: 10pt Times New Roman, Times, Serif"> </font></td>
<td style="border-bottom: black 1pt solid; text-align: right"><font style="font: 10pt Times New Roman, Times, Serif">0</font></td>
<td style="text-align: left; padding-bottom: 1pt"><font style="font: 10pt Times New Roman, Times, Serif"> </font></td></tr>
<tr style="background-color: rgb(204,238,204); vertical-align: bottom">
<td style="text-align: left"><font style="font: 10pt Times New Roman, Times, Serif"> </font></td>
<td style="text-align: right; font-size: 10pt"><font style="font: 10pt Times New Roman, Times, Serif; letter-spacing: 0px">Balance,
December 31, 2012</font></td>
<td style="text-align: left"><font style="font: 10pt Times New Roman, Times, Serif"> </font></td>
<td><font style="font: 10pt Times New Roman, Times, Serif"> </font></td>
<td style="text-align: left"><font style="font: 10pt Times New Roman, Times, Serif"> </font></td>
<td style="text-align: right"><font style="font: 10pt Times New Roman, Times, Serif">14,344,434</font></td>
<td style="text-align: left"><font style="font: 10pt Times New Roman, Times, Serif"> </font></td>
<td><font style="font: 10pt Times New Roman, Times, Serif"> </font></td>
<td style="text-align: left"><font style="font: 10pt Times New Roman, Times, Serif"> </font></td>
<td style="text-align: right"><font style="font: 10pt Times New Roman, Times, Serif">2.41</font></td>
<td style="text-align: left"><font style="font: 10pt Times New Roman, Times, Serif"> </font></td></tr>
<tr style="background-color: white; vertical-align: bottom">
<td style="text-align: left"><font style="font: 10pt Times New Roman, Times, Serif"> </font></td>
<td style="text-align: right; font-size: 10pt"><font style="font: 10pt Times New Roman, Times, Serif; letter-spacing: 0px">Granted
- 2013</font></td>
<td style="text-align: left"><font style="font: 10pt Times New Roman, Times, Serif"> </font></td>
<td><font style="font: 10pt Times New Roman, Times, Serif"> </font></td>
<td style="text-align: left"><font style="font: 10pt Times New Roman, Times, Serif"> </font></td>
<td style="text-align: right"><font style="font: 10pt Times New Roman, Times, Serif">0</font></td>
<td style="text-align: left"><font style="font: 10pt Times New Roman, Times, Serif"> </font></td>
<td><font style="font: 10pt Times New Roman, Times, Serif"> </font></td>
<td style="text-align: left"><font style="font: 10pt Times New Roman, Times, Serif"> </font></td>
<td style="text-align: right"><font style="font: 10pt Times New Roman, Times, Serif">0</font></td>
<td style="text-align: left"><font style="font: 10pt Times New Roman, Times, Serif"> </font></td></tr>
<tr style="background-color: rgb(204,238,204); vertical-align: bottom">
<td style="text-align: left"><font style="font: 10pt Times New Roman, Times, Serif"> </font></td>
<td style="text-align: right; font-size: 10pt"><font style="font: 10pt Times New Roman, Times, Serif; letter-spacing: 0px">Exercised
- 2013</font></td>
<td style="text-align: left"><font style="font: 10pt Times New Roman, Times, Serif"> </font></td>
<td><font style="font: 10pt Times New Roman, Times, Serif"> </font></td>
<td style="text-align: left"><font style="font: 10pt Times New Roman, Times, Serif"> </font></td>
<td style="text-align: right"><font style="font: 10pt Times New Roman, Times, Serif">0</font></td>
<td style="text-align: left"><font style="font: 10pt Times New Roman, Times, Serif"> </font></td>
<td><font style="font: 10pt Times New Roman, Times, Serif"> </font></td>
<td style="text-align: left"><font style="font: 10pt Times New Roman, Times, Serif"> </font></td>
<td style="text-align: right"><font style="font: 10pt Times New Roman, Times, Serif">0</font></td>
<td style="text-align: left"><font style="font: 10pt Times New Roman, Times, Serif"> </font></td></tr>
<tr style="background-color: white; vertical-align: bottom">
<td style="border-bottom: black 1pt solid; text-align: left"><font style="font: 10pt Times New Roman, Times, Serif"> </font></td>
<td style="border-bottom: black 1pt solid; text-align: right; font-size: 10pt"><font style="font: 10pt Times New Roman, Times, Serif; letter-spacing: 0px">Expired
- 2013</font></td>
<td style="text-align: left; padding-bottom: 1pt"><font style="font: 10pt Times New Roman, Times, Serif"> </font></td>
<td style="padding-bottom: 1pt"><font style="font: 10pt Times New Roman, Times, Serif"> </font></td>
<td style="border-bottom: black 1pt solid; text-align: left"><font style="font: 10pt Times New Roman, Times, Serif"> </font></td>
<td style="border-bottom: black 1pt solid; text-align: right"><font style="font: 10pt Times New Roman, Times, Serif">(672,000</font></td>
<td style="text-align: left; padding-bottom: 1pt"><font style="font: 10pt Times New Roman, Times, Serif">)</font></td>
<td style="padding-bottom: 1pt"><font style="font: 10pt Times New Roman, Times, Serif"> </font></td>
<td style="border-bottom: black 1pt solid; text-align: left"><font style="font: 10pt Times New Roman, Times, Serif"> </font></td>
<td style="border-bottom: black 1pt solid; text-align: right"><font style="font: 10pt Times New Roman, Times, Serif">(2.59</font></td>
<td style="text-align: left; padding-bottom: 1pt"><font style="font: 10pt Times New Roman, Times, Serif">)</font></td></tr>
<tr style="background-color: rgb(204,238,204); vertical-align: bottom">
<td style="border-bottom: black 2.5pt double; text-align: left"><font style="font: 10pt Times New Roman, Times, Serif"> </font></td>
<td style="border-bottom: black 2.5pt double; text-align: right; font-size: 10pt"><font style="font: 10pt Times New Roman, Times, Serif; letter-spacing: 0px">Balance,
September 30, 2013</font></td>
<td style="text-align: left; padding-bottom: 2.5pt"><font style="font: 10pt Times New Roman, Times, Serif"> </font></td>
<td style="padding-bottom: 2.5pt"><font style="font: 10pt Times New Roman, Times, Serif"> </font></td>
<td style="border-bottom: black 2.5pt double; text-align: left"><font style="font: 10pt Times New Roman, Times, Serif"> </font></td>
<td style="border-bottom: black 2.5pt double; text-align: right"><font style="font: 10pt Times New Roman, Times, Serif">13,672,434</font></td>
<td style="text-align: left; padding-bottom: 2.5pt"><font style="font: 10pt Times New Roman, Times, Serif"> </font></td>
<td style="padding-bottom: 2.5pt"><font style="font: 10pt Times New Roman, Times, Serif"> </font></td>
<td style="border-bottom: black 2.5pt double; text-align: left"><font style="font: 10pt Times New Roman, Times, Serif">$</font></td>
<td style="border-bottom: black 2.5pt double; text-align: right"><font style="font: 10pt Times New Roman, Times, Serif">2.44</font></td>
<td style="text-align: left; padding-bottom: 2.5pt"><font style="font: 10pt Times New Roman, Times, Serif"> </font></td></tr>
</table>
<p style="margin: 0pt"></p>
<p style="margin: 0pt"> </p>
<table cellspacing="0" cellpadding="0" align="center" style="width: 50%; border-collapse: collapse; font-size: 10pt">
<tr style="vertical-align: bottom">
<td colspan="3"><font style="font: 10pt Times New Roman, Times, Serif"> </font></td>
<td style="padding-bottom: 1pt"><font style="font: 10pt Times New Roman, Times, Serif"> </font></td>
<td colspan="3" style="border-bottom: black 1pt solid; text-align: center"><font style="font: 10pt Times New Roman, Times, Serif">Number
of Options</font></td>
<td style="padding-bottom: 1pt"><font style="font: 10pt Times New Roman, Times, Serif"> </font></td>
<td colspan="3" style="border-bottom: black 1pt solid; text-align: center"><font style="font: 10pt Times New Roman, Times, Serif">Weighted
average<br />exercise price</font></td></tr>
<tr style="background-color: rgb(204,238,204); vertical-align: bottom">
<td style="text-align: left; width: 1%"><font style="font: 10pt Times New Roman, Times, Serif"> </font></td>
<td style="text-align: right; width: 52%; font-size: 10pt"><font style="font: 10pt Times New Roman, Times, Serif; letter-spacing: 0px">Outstanding,
January 1, 2012</font></td>
<td style="text-align: left; width: 1%"><font style="font: 10pt Times New Roman, Times, Serif"> </font></td>
<td style="width: 1%"><font style="font: 10pt Times New Roman, Times, Serif"> </font></td>
<td style="text-align: left; width: 1%"><font style="font: 10pt Times New Roman, Times, Serif"> </font></td>
<td style="text-align: right; width: 20%"><font style="font: 10pt Times New Roman, Times, Serif">405,000</font></td>
<td style="text-align: left; width: 1%"><font style="font: 10pt Times New Roman, Times, Serif"> </font></td>
<td style="width: 1%"><font style="font: 10pt Times New Roman, Times, Serif"> </font></td>
<td style="text-align: left; width: 1%"><font style="font: 10pt Times New Roman, Times, Serif">$</font></td>
<td style="text-align: right; width: 20%"><font style="font: 10pt Times New Roman, Times, Serif">1.01</font></td>
<td style="text-align: left; width: 1%"><font style="font: 10pt Times New Roman, Times, Serif"> </font></td></tr>
<tr style="background-color: white; vertical-align: bottom">
<td style="text-align: left"><font style="font: 10pt Times New Roman, Times, Serif"> </font></td>
<td style="text-align: right; font-size: 10pt"><font style="font: 10pt Times New Roman, Times, Serif; letter-spacing: 0px">Granted
- 2012</font></td>
<td style="text-align: left"><font style="font: 10pt Times New Roman, Times, Serif"> </font></td>
<td><font style="font: 10pt Times New Roman, Times, Serif"> </font></td>
<td style="text-align: left"><font style="font: 10pt Times New Roman, Times, Serif"> </font></td>
<td style="text-align: right"><font style="font: 10pt Times New Roman, Times, Serif">75,000</font></td>
<td style="text-align: left"><font style="font: 10pt Times New Roman, Times, Serif"> </font></td>
<td><font style="font: 10pt Times New Roman, Times, Serif"> </font></td>
<td style="text-align: left"><font style="font: 10pt Times New Roman, Times, Serif"> </font></td>
<td style="text-align: right"><font style="font: 10pt Times New Roman, Times, Serif">1.17</font></td>
<td style="text-align: left"><font style="font: 10pt Times New Roman, Times, Serif"> </font></td></tr>
<tr style="background-color: rgb(204,238,204); vertical-align: bottom">
<td style="text-align: left"><font style="font: 10pt Times New Roman, Times, Serif"> </font></td>
<td style="text-align: right; font-size: 10pt"><font style="font: 10pt Times New Roman, Times, Serif; letter-spacing: 0px">Exercised
- 2012</font></td>
<td style="text-align: left"><font style="font: 10pt Times New Roman, Times, Serif"> </font></td>
<td><font style="font: 10pt Times New Roman, Times, Serif"> </font></td>
<td style="text-align: left"><font style="font: 10pt Times New Roman, Times, Serif"> </font></td>
<td style="text-align: right"><font style="font: 10pt Times New Roman, Times, Serif">0</font></td>
<td style="text-align: left"><font style="font: 10pt Times New Roman, Times, Serif"> </font></td>
<td><font style="font: 10pt Times New Roman, Times, Serif"> </font></td>
<td style="text-align: left"><font style="font: 10pt Times New Roman, Times, Serif"> </font></td>
<td style="text-align: right"><font style="font: 10pt Times New Roman, Times, Serif">0</font></td>
<td style="text-align: left"><font style="font: 10pt Times New Roman, Times, Serif"> </font></td></tr>
<tr style="background-color: white; vertical-align: bottom">
<td style="text-align: left"><font style="font: 10pt Times New Roman, Times, Serif"> </font></td>
<td style="text-align: right; font-size: 10pt"><font style="font: 10pt Times New Roman, Times, Serif; letter-spacing: 0px">Expired
- 2012</font></td>
<td style="text-align: left; padding-bottom: 1pt"><font style="font: 10pt Times New Roman, Times, Serif"> </font></td>
<td style="padding-bottom: 1pt"><font style="font: 10pt Times New Roman, Times, Serif"> </font></td>
<td style="border-bottom: black 1pt solid; text-align: left"><font style="font: 10pt Times New Roman, Times, Serif"> </font></td>
<td style="border-bottom: black 1pt solid; text-align: right"><font style="font: 10pt Times New Roman, Times, Serif">(455,000</font></td>
<td style="text-align: left; padding-bottom: 1pt"><font style="font: 10pt Times New Roman, Times, Serif">)</font></td>
<td style="padding-bottom: 1pt"><font style="font: 10pt Times New Roman, Times, Serif"> </font></td>
<td style="border-bottom: black 1pt solid; text-align: left"><font style="font: 10pt Times New Roman, Times, Serif"> </font></td>
<td style="border-bottom: black 1pt solid; text-align: right"><font style="font: 10pt Times New Roman, Times, Serif">(.98</font></td>
<td style="text-align: left; padding-bottom: 1pt"><font style="font: 10pt Times New Roman, Times, Serif">)</font></td></tr>
<tr style="background-color: rgb(204,238,204); vertical-align: bottom">
<td style="text-align: left"><font style="font: 10pt Times New Roman, Times, Serif"> </font></td>
<td style="text-align: right; font-size: 10pt"><font style="font: 10pt Times New Roman, Times, Serif; letter-spacing: 0px">Balance,
December 31, 2012</font></td>
<td style="text-align: left"><font style="font: 10pt Times New Roman, Times, Serif"> </font></td>
<td><font style="font: 10pt Times New Roman, Times, Serif"> </font></td>
<td style="text-align: left"><font style="font: 10pt Times New Roman, Times, Serif"> </font></td>
<td style="text-align: right"><font style="font: 10pt Times New Roman, Times, Serif">25,000</font></td>
<td style="text-align: left"><font style="font: 10pt Times New Roman, Times, Serif"> </font></td>
<td><font style="font: 10pt Times New Roman, Times, Serif"> </font></td>
<td style="text-align: left"><font style="font: 10pt Times New Roman, Times, Serif"> </font></td>
<td style="text-align: right"><font style="font: 10pt Times New Roman, Times, Serif">1.58</font></td>
<td style="text-align: left"><font style="font: 10pt Times New Roman, Times, Serif"> </font></td></tr>
<tr style="background-color: white; vertical-align: bottom">
<td style="text-align: left"><font style="font: 10pt Times New Roman, Times, Serif"> </font></td>
<td style="text-align: right; font-size: 10pt"><font style="font: 10pt Times New Roman, Times, Serif; letter-spacing: 0px">Granted
- 2013</font></td>
<td style="text-align: left"><font style="font: 10pt Times New Roman, Times, Serif"> </font></td>
<td><font style="font: 10pt Times New Roman, Times, Serif"> </font></td>
<td style="text-align: left"><font style="font: 10pt Times New Roman, Times, Serif"> </font></td>
<td style="text-align: right"><font style="font: 10pt Times New Roman, Times, Serif">0</font></td>
<td style="text-align: left"><font style="font: 10pt Times New Roman, Times, Serif"> </font></td>
<td><font style="font: 10pt Times New Roman, Times, Serif"> </font></td>
<td style="text-align: left"><font style="font: 10pt Times New Roman, Times, Serif"> </font></td>
<td style="text-align: right"><font style="font: 10pt Times New Roman, Times, Serif">0</font></td>
<td style="text-align: left"><font style="font: 10pt Times New Roman, Times, Serif"> </font></td></tr>
<tr style="background-color: rgb(204,238,204); vertical-align: bottom">
<td style="text-align: left"><font style="font: 10pt Times New Roman, Times, Serif"> </font></td>
<td style="text-align: right; font-size: 10pt"><font style="font: 10pt Times New Roman, Times, Serif; letter-spacing: 0px">Exercised
- 2013</font></td>
<td style="text-align: left"><font style="font: 10pt Times New Roman, Times, Serif"> </font></td>
<td><font style="font: 10pt Times New Roman, Times, Serif"> </font></td>
<td style="text-align: left"><font style="font: 10pt Times New Roman, Times, Serif"> </font></td>
<td style="text-align: right"><font style="font: 10pt Times New Roman, Times, Serif">0</font></td>
<td style="text-align: left"><font style="font: 10pt Times New Roman, Times, Serif"> </font></td>
<td><font style="font: 10pt Times New Roman, Times, Serif"> </font></td>
<td style="text-align: left"><font style="font: 10pt Times New Roman, Times, Serif"> </font></td>
<td style="text-align: right"><font style="font: 10pt Times New Roman, Times, Serif">0</font></td>
<td style="text-align: left"><font style="font: 10pt Times New Roman, Times, Serif"> </font></td></tr>
<tr style="background-color: white; vertical-align: bottom">
<td style="text-align: left"><font style="font: 10pt Times New Roman, Times, Serif"> </font></td>
<td style="text-align: right; font-size: 10pt"><font style="font: 10pt Times New Roman, Times, Serif; letter-spacing: 0px">Expired
- 2013</font></td>
<td style="text-align: left; padding-bottom: 1pt"><font style="font: 10pt Times New Roman, Times, Serif"> </font></td>
<td style="padding-bottom: 1pt"><font style="font: 10pt Times New Roman, Times, Serif"> </font></td>
<td style="border-bottom: black 1pt solid; text-align: left"><font style="font: 10pt Times New Roman, Times, Serif"> </font></td>
<td style="border-bottom: black 1pt solid; text-align: right"><font style="font: 10pt Times New Roman, Times, Serif">0</font></td>
<td style="text-align: left; padding-bottom: 1pt"><font style="font: 10pt Times New Roman, Times, Serif"> </font></td>
<td style="padding-bottom: 1pt"><font style="font: 10pt Times New Roman, Times, Serif"> </font></td>
<td style="border-bottom: black 1pt solid; text-align: left"><font style="font: 10pt Times New Roman, Times, Serif"> </font></td>
<td style="border-bottom: black 1pt solid; text-align: right"><font style="font: 10pt Times New Roman, Times, Serif">0</font></td>
<td style="text-align: left; padding-bottom: 1pt"><font style="font: 10pt Times New Roman, Times, Serif"> </font></td></tr>
<tr style="background-color: rgb(204,238,204); vertical-align: bottom">
<td style="text-align: left"><font style="font: 10pt Times New Roman, Times, Serif"> </font></td>
<td style="text-align: right; font-size: 10pt"><font style="font: 10pt Times New Roman, Times, Serif; letter-spacing: 0px">Balance,
September 30, 2013</font></td>
<td style="text-align: left; padding-bottom: 2.5pt"><font style="font: 10pt Times New Roman, Times, Serif"> </font></td>
<td style="padding-bottom: 2.5pt"><font style="font: 10pt Times New Roman, Times, Serif"> </font></td>
<td style="border-bottom: black 2.5pt double; text-align: left"><font style="font: 10pt Times New Roman, Times, Serif"> </font></td>
<td style="border-bottom: black 2.5pt double; text-align: right"><font style="font: 10pt Times New Roman, Times, Serif">25,000</font></td>
<td style="text-align: left; padding-bottom: 2.5pt"><font style="font: 10pt Times New Roman, Times, Serif"> </font></td>
<td style="padding-bottom: 2.5pt"><font style="font: 10pt Times New Roman, Times, Serif"> </font></td>
<td style="border-bottom: black 2.5pt double; text-align: left"><font style="font: 10pt Times New Roman, Times, Serif">$</font></td>
<td style="border-bottom: black 2.5pt double; text-align: right"><font style="font: 10pt Times New Roman, Times, Serif">1.58</font></td></tr>
</table>
<p style="margin: 0pt"></p>
<p style="margin: 0pt"> </p>
<table cellspacing="0" cellpadding="0" align="center" style="width: 50%; border-collapse: collapse; font-size: 10pt">
<tr style="vertical-align: bottom">
<td colspan="3"><font style="font: 10pt Times New Roman, Times, Serif"> </font></td>
<td style="padding-bottom: 1pt"><font style="font: 10pt Times New Roman, Times, Serif"> </font></td>
<td colspan="3" style="border-bottom: black 1pt solid; text-align: center"><font style="font: 10pt Times New Roman, Times, Serif">Number
of Warrants</font></td>
<td style="padding-bottom: 1pt"><font style="font: 10pt Times New Roman, Times, Serif"> </font></td>
<td colspan="3" style="border-bottom: black 1pt solid; text-align: center"><font style="font: 10pt Times New Roman, Times, Serif">Weighted
average exercise price</font></td></tr>
<tr style="background-color: rgb(204,238,204); vertical-align: bottom">
<td style="text-align: left; width: 1%"><font style="font: 10pt Times New Roman, Times, Serif"> </font></td>
<td style="text-align: right; width: 52%; font-size: 10pt"><font style="font: 10pt Times New Roman, Times, Serif; letter-spacing: 0px">Outstanding,
January 1, 2012</font></td>
<td style="text-align: left; width: 1%"><font style="font: 10pt Times New Roman, Times, Serif"> </font></td>
<td style="width: 1%"><font style="font: 10pt Times New Roman, Times, Serif"> </font></td>
<td style="text-align: left; width: 1%"><font style="font: 10pt Times New Roman, Times, Serif"> </font></td>
<td style="text-align: right; width: 20%"><font style="font: 10pt Times New Roman, Times, Serif">14,344,434</font></td>
<td style="text-align: left; width: 1%"><font style="font: 10pt Times New Roman, Times, Serif"> </font></td>
<td style="width: 1%"><font style="font: 10pt Times New Roman, Times, Serif"> </font></td>
<td style="text-align: left; width: 1%"><font style="font: 10pt Times New Roman, Times, Serif">$</font></td>
<td style="text-align: right; width: 20%"><font style="font: 10pt Times New Roman, Times, Serif">2.41</font></td>
<td style="text-align: left; width: 1%"><font style="font: 10pt Times New Roman, Times, Serif"> </font></td></tr>
<tr style="background-color: white; vertical-align: bottom">
<td style="text-align: left"><font style="font: 10pt Times New Roman, Times, Serif"> </font></td>
<td style="text-align: right; font-size: 10pt"><font style="font: 10pt Times New Roman, Times, Serif; letter-spacing: 0px">Granted
- 2012</font></td>
<td style="text-align: left"><font style="font: 10pt Times New Roman, Times, Serif"> </font></td>
<td><font style="font: 10pt Times New Roman, Times, Serif"> </font></td>
<td style="text-align: left"><font style="font: 10pt Times New Roman, Times, Serif"> </font></td>
<td style="text-align: right"><font style="font: 10pt Times New Roman, Times, Serif">0</font></td>
<td style="text-align: left"><font style="font: 10pt Times New Roman, Times, Serif"> </font></td>
<td><font style="font: 10pt Times New Roman, Times, Serif"> </font></td>
<td style="text-align: left"><font style="font: 10pt Times New Roman, Times, Serif"> </font></td>
<td style="text-align: right"><font style="font: 10pt Times New Roman, Times, Serif">0</font></td>
<td style="text-align: left"><font style="font: 10pt Times New Roman, Times, Serif"> </font></td></tr>
<tr style="background-color: rgb(204,238,204); vertical-align: bottom">
<td style="text-align: left"><font style="font: 10pt Times New Roman, Times, Serif"> </font></td>
<td style="text-align: right; font-size: 10pt"><font style="font: 10pt Times New Roman, Times, Serif; letter-spacing: 0px">Exercised
- 2012</font></td>
<td style="text-align: left"><font style="font: 10pt Times New Roman, Times, Serif"> </font></td>
<td><font style="font: 10pt Times New Roman, Times, Serif"> </font></td>
<td style="text-align: left"><font style="font: 10pt Times New Roman, Times, Serif"> </font></td>
<td style="text-align: right"><font style="font: 10pt Times New Roman, Times, Serif">0</font></td>
<td style="text-align: left"><font style="font: 10pt Times New Roman, Times, Serif"> </font></td>
<td><font style="font: 10pt Times New Roman, Times, Serif"> </font></td>
<td style="text-align: left"><font style="font: 10pt Times New Roman, Times, Serif"> </font></td>
<td style="text-align: right"><font style="font: 10pt Times New Roman, Times, Serif">0</font></td>
<td style="text-align: left"><font style="font: 10pt Times New Roman, Times, Serif"> </font></td></tr>
<tr style="background-color: white; vertical-align: bottom">
<td style="border-bottom: black 1pt solid; text-align: left"><font style="font: 10pt Times New Roman, Times, Serif"> </font></td>
<td style="border-bottom: black 1pt solid; text-align: right; font-size: 10pt"><font style="font: 10pt Times New Roman, Times, Serif; letter-spacing: 0px">Expired
- 2012</font></td>
<td style="text-align: left; padding-bottom: 1pt"><font style="font: 10pt Times New Roman, Times, Serif"> </font></td>
<td style="padding-bottom: 1pt"><font style="font: 10pt Times New Roman, Times, Serif"> </font></td>
<td style="border-bottom: black 1pt solid; text-align: left"><font style="font: 10pt Times New Roman, Times, Serif"> </font></td>
<td style="border-bottom: black 1pt solid; text-align: right"><font style="font: 10pt Times New Roman, Times, Serif">0</font></td>
<td style="text-align: left; padding-bottom: 1pt"><font style="font: 10pt Times New Roman, Times, Serif"> </font></td>
<td style="padding-bottom: 1pt"><font style="font: 10pt Times New Roman, Times, Serif"> </font></td>
<td style="border-bottom: black 1pt solid; text-align: left"><font style="font: 10pt Times New Roman, Times, Serif"> </font></td>
<td style="border-bottom: black 1pt solid; text-align: right"><font style="font: 10pt Times New Roman, Times, Serif">0</font></td>
<td style="text-align: left; padding-bottom: 1pt"><font style="font: 10pt Times New Roman, Times, Serif"> </font></td></tr>
<tr style="background-color: rgb(204,238,204); vertical-align: bottom">
<td style="text-align: left"><font style="font: 10pt Times New Roman, Times, Serif"> </font></td>
<td style="text-align: right; font-size: 10pt"><font style="font: 10pt Times New Roman, Times, Serif; letter-spacing: 0px">Balance,
December 31, 2012</font></td>
<td style="text-align: left"><font style="font: 10pt Times New Roman, Times, Serif"> </font></td>
<td><font style="font: 10pt Times New Roman, Times, Serif"> </font></td>
<td style="text-align: left"><font style="font: 10pt Times New Roman, Times, Serif"> </font></td>
<td style="text-align: right"><font style="font: 10pt Times New Roman, Times, Serif">14,344,434</font></td>
<td style="text-align: left"><font style="font: 10pt Times New Roman, Times, Serif"> </font></td>
<td><font style="font: 10pt Times New Roman, Times, Serif"> </font></td>
<td style="text-align: left"><font style="font: 10pt Times New Roman, Times, Serif"> </font></td>
<td style="text-align: right"><font style="font: 10pt Times New Roman, Times, Serif">2.41</font></td>
<td style="text-align: left"><font style="font: 10pt Times New Roman, Times, Serif"> </font></td></tr>
<tr style="background-color: white; vertical-align: bottom">
<td style="text-align: left"><font style="font: 10pt Times New Roman, Times, Serif"> </font></td>
<td style="text-align: right; font-size: 10pt"><font style="font: 10pt Times New Roman, Times, Serif; letter-spacing: 0px">Granted
- 2013</font></td>
<td style="text-align: left"><font style="font: 10pt Times New Roman, Times, Serif"> </font></td>
<td><font style="font: 10pt Times New Roman, Times, Serif"> </font></td>
<td style="text-align: left"><font style="font: 10pt Times New Roman, Times, Serif"> </font></td>
<td style="text-align: right"><font style="font: 10pt Times New Roman, Times, Serif">0</font></td>
<td style="text-align: left"><font style="font: 10pt Times New Roman, Times, Serif"> </font></td>
<td><font style="font: 10pt Times New Roman, Times, Serif"> </font></td>
<td style="text-align: left"><font style="font: 10pt Times New Roman, Times, Serif"> </font></td>
<td style="text-align: right"><font style="font: 10pt Times New Roman, Times, Serif">0</font></td>
<td style="text-align: left"><font style="font: 10pt Times New Roman, Times, Serif"> </font></td></tr>
<tr style="background-color: rgb(204,238,204); vertical-align: bottom">
<td style="text-align: left"><font style="font: 10pt Times New Roman, Times, Serif"> </font></td>
<td style="text-align: right; font-size: 10pt"><font style="font: 10pt Times New Roman, Times, Serif; letter-spacing: 0px">Exercised
- 2013</font></td>
<td style="text-align: left"><font style="font: 10pt Times New Roman, Times, Serif"> </font></td>
<td><font style="font: 10pt Times New Roman, Times, Serif"> </font></td>
<td style="text-align: left"><font style="font: 10pt Times New Roman, Times, Serif"> </font></td>
<td style="text-align: right"><font style="font: 10pt Times New Roman, Times, Serif">0</font></td>
<td style="text-align: left"><font style="font: 10pt Times New Roman, Times, Serif"> </font></td>
<td><font style="font: 10pt Times New Roman, Times, Serif"> </font></td>
<td style="text-align: left"><font style="font: 10pt Times New Roman, Times, Serif"> </font></td>
<td style="text-align: right"><font style="font: 10pt Times New Roman, Times, Serif">0</font></td>
<td style="text-align: left"><font style="font: 10pt Times New Roman, Times, Serif"> </font></td></tr>
<tr style="background-color: white; vertical-align: bottom">
<td style="border-bottom: black 1pt solid; text-align: left"><font style="font: 10pt Times New Roman, Times, Serif"> </font></td>
<td style="border-bottom: black 1pt solid; text-align: right; font-size: 10pt"><font style="font: 10pt Times New Roman, Times, Serif; letter-spacing: 0px">Expired
- 2013</font></td>
<td style="text-align: left; padding-bottom: 1pt"><font style="font: 10pt Times New Roman, Times, Serif"> </font></td>
<td style="padding-bottom: 1pt"><font style="font: 10pt Times New Roman, Times, Serif"> </font></td>
<td style="border-bottom: black 1pt solid; text-align: left"><font style="font: 10pt Times New Roman, Times, Serif"> </font></td>
<td style="border-bottom: black 1pt solid; text-align: right"><font style="font: 10pt Times New Roman, Times, Serif">(672,000</font></td>
<td style="text-align: left; padding-bottom: 1pt"><font style="font: 10pt Times New Roman, Times, Serif">)</font></td>
<td style="padding-bottom: 1pt"><font style="font: 10pt Times New Roman, Times, Serif"> </font></td>
<td style="border-bottom: black 1pt solid; text-align: left"><font style="font: 10pt Times New Roman, Times, Serif"> </font></td>
<td style="border-bottom: black 1pt solid; text-align: right"><font style="font: 10pt Times New Roman, Times, Serif">(2.59</font></td>
<td style="text-align: left; padding-bottom: 1pt"><font style="font: 10pt Times New Roman, Times, Serif">)</font></td></tr>
<tr style="background-color: rgb(204,238,204); vertical-align: bottom">
<td style="border-bottom: black 2.5pt double; text-align: left"><font style="font: 10pt Times New Roman, Times, Serif"> </font></td>
<td style="border-bottom: black 2.5pt double; text-align: right; font-size: 10pt"><font style="font: 10pt Times New Roman, Times, Serif; letter-spacing: 0px">Balance,
September 30, 2013</font></td>
<td style="text-align: left; padding-bottom: 2.5pt"><font style="font: 10pt Times New Roman, Times, Serif"> </font></td>
<td style="padding-bottom: 2.5pt"><font style="font: 10pt Times New Roman, Times, Serif"> </font></td>
<td style="border-bottom: black 2.5pt double; text-align: left"><font style="font: 10pt Times New Roman, Times, Serif"> </font></td>
<td style="border-bottom: black 2.5pt double; text-align: right"><font style="font: 10pt Times New Roman, Times, Serif">13,672,434</font></td>
<td style="text-align: left; padding-bottom: 2.5pt"><font style="font: 10pt Times New Roman, Times, Serif"> </font></td>
<td style="padding-bottom: 2.5pt"><font style="font: 10pt Times New Roman, Times, Serif"> </font></td>
<td style="border-bottom: black 2.5pt double; text-align: left"><font style="font: 10pt Times New Roman, Times, Serif">$</font></td>
<td style="border-bottom: black 2.5pt double; text-align: right"><font style="font: 10pt Times New Roman, Times, Serif">2.44</font></td>
<td style="text-align: left; padding-bottom: 2.5pt"><font style="font: 10pt Times New Roman, Times, Serif"> </font></td></tr>
</table>
<p style="margin: 0pt"></p>
25000
25000
405000
1.58
1.58
1.01
75000
1.17
0
0
-455000
-0.98
13672434
14344434
14344434
2.44
2.41
2.41
0
0
0
0
0
0
0
0
-672000
0
-2.59
0
<p style="margin: 0pt"></p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify"><font style="font: 10pt Times New Roman, Times, Serif; letter-spacing: 0px">The
Company signed a lease for new office space on December 1, 2011 at an approximate rent of $5,000 per month. The new offices are
in Rochester, Michigan. The lease is for three years with an option to renew for an additional two years at approximately $5,200
per month with six months advance notice to exercise the option. Minimum annual rent is as follows for the initial term of the
lease:</font></p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify"><font style="font: 10pt Times New Roman, Times, Serif"> </font></p>
<table cellspacing="0" cellpadding="0" align="center" style="width: 50%; border-collapse: collapse; font-size: 10pt">
<tr style="background-color: rgb(204,238,204); vertical-align: bottom">
<td style="text-align: left; width: 1%"><font style="font: 10pt Times New Roman, Times, Serif"> </font></td>
<td style="text-align: right; width: 43%; font-size: 10pt"><font style="font: 10pt Times New Roman, Times, Serif; letter-spacing: 0px">Year
ended December 31, 2013</font></td>
<td style="text-align: left; width: 1%"><font style="font: 10pt Times New Roman, Times, Serif"> </font></td>
<td style="width: 10%"><font style="font: 10pt Times New Roman, Times, Serif"> </font></td>
<td style="text-align: left; width: 1%"><font style="font: 10pt Times New Roman, Times, Serif">$</font></td>
<td style="text-align: right; width: 43%"><font style="font: 10pt Times New Roman, Times, Serif">60,591</font></td>
<td style="text-align: left; width: 1%"><font style="font: 10pt Times New Roman, Times, Serif"> </font></td></tr>
<tr style="background-color: white; vertical-align: bottom">
<td style="text-align: left"><font style="font: 10pt Times New Roman, Times, Serif"> </font></td>
<td style="text-align: right"><font style="font: 10pt Times New Roman, Times, Serif">2014</font></td>
<td style="text-align: left"><font style="font: 10pt Times New Roman, Times, Serif"> </font></td>
<td><font style="font: 10pt Times New Roman, Times, Serif"> </font></td>
<td style="text-align: left"><font style="font: 10pt Times New Roman, Times, Serif"> </font></td>
<td style="text-align: right"><font style="font: 10pt Times New Roman, Times, Serif">55,542</font></td>
<td style="text-align: left"><font style="font: 10pt Times New Roman, Times, Serif"> </font></td></tr>
<tr style="background-color: rgb(204,238,204); vertical-align: bottom">
<td style="text-align: left"><font style="font: 10pt Times New Roman, Times, Serif"> </font></td>
<td style="text-align: right"><font style="font: 10pt Times New Roman, Times, Serif">2015</font></td>
<td style="text-align: left; padding-bottom: 1pt"><font style="font: 10pt Times New Roman, Times, Serif"> </font></td>
<td style="padding-bottom: 1pt"><font style="font: 10pt Times New Roman, Times, Serif"> </font></td>
<td style="border-bottom: black 1pt solid; text-align: left"><font style="font: 10pt Times New Roman, Times, Serif"> </font></td>
<td style="border-bottom: black 1pt solid; text-align: right"><font style="font: 10pt Times New Roman, Times, Serif">0</font></td>
<td style="text-align: left; padding-bottom: 1pt"><font style="font: 10pt Times New Roman, Times, Serif"> </font></td></tr>
<tr style="background-color: white; vertical-align: bottom">
<td style="text-align: left"><font style="font: 10pt Times New Roman, Times, Serif"> </font></td>
<td style="text-align: right; font-size: 10pt"><font style="font: 10pt Times New Roman, Times, Serif; letter-spacing: 0px">Total
lease commitment</font></td>
<td style="text-align: left; padding-bottom: 2.5pt"><font style="font: 10pt Times New Roman, Times, Serif"> </font></td>
<td style="padding-bottom: 2.5pt"><font style="font: 10pt Times New Roman, Times, Serif"> </font></td>
<td style="border-bottom: black 2.5pt double; text-align: left"><font style="font: 10pt Times New Roman, Times, Serif">$</font></td>
<td style="border-bottom: black 2.5pt double; text-align: right"><font style="font: 10pt Times New Roman, Times, Serif">116,133</font></td>
<td style="text-align: left; padding-bottom: 2.5pt"><font style="font: 10pt Times New Roman, Times, Serif"> </font></td></tr>
</table>
<p style="margin: 0pt"></p>
<p style="margin: 0pt"> </p>
<table cellspacing="0" cellpadding="0" align="center" style="width: 50%; border-collapse: collapse; font-size: 10pt">
<tr style="background-color: rgb(204,238,204); vertical-align: bottom">
<td style="text-align: left; width: 1%"><font style="font: 10pt Times New Roman, Times, Serif"> </font></td>
<td style="text-align: right; width: 43%; font-size: 10pt"><font style="font: 10pt Times New Roman, Times, Serif; letter-spacing: 0px">Year
ended December 31, 2013</font></td>
<td style="text-align: left; width: 1%"><font style="font: 10pt Times New Roman, Times, Serif"> </font></td>
<td style="width: 10%"><font style="font: 10pt Times New Roman, Times, Serif"> </font></td>
<td style="text-align: left; width: 1%"><font style="font: 10pt Times New Roman, Times, Serif">$</font></td>
<td style="text-align: right; width: 43%"><font style="font: 10pt Times New Roman, Times, Serif">60,591</font></td>
<td style="text-align: left; width: 1%"><font style="font: 10pt Times New Roman, Times, Serif"> </font></td></tr>
<tr style="background-color: white; vertical-align: bottom">
<td style="text-align: left"><font style="font: 10pt Times New Roman, Times, Serif"> </font></td>
<td style="text-align: right"><font style="font: 10pt Times New Roman, Times, Serif">2014</font></td>
<td style="text-align: left"><font style="font: 10pt Times New Roman, Times, Serif"> </font></td>
<td><font style="font: 10pt Times New Roman, Times, Serif"> </font></td>
<td style="text-align: left"><font style="font: 10pt Times New Roman, Times, Serif"> </font></td>
<td style="text-align: right"><font style="font: 10pt Times New Roman, Times, Serif">55,542</font></td>
<td style="text-align: left"><font style="font: 10pt Times New Roman, Times, Serif"> </font></td></tr>
<tr style="background-color: rgb(204,238,204); vertical-align: bottom">
<td style="text-align: left"><font style="font: 10pt Times New Roman, Times, Serif"> </font></td>
<td style="text-align: right"><font style="font: 10pt Times New Roman, Times, Serif">2015</font></td>
<td style="text-align: left; padding-bottom: 1pt"><font style="font: 10pt Times New Roman, Times, Serif"> </font></td>
<td style="padding-bottom: 1pt"><font style="font: 10pt Times New Roman, Times, Serif"> </font></td>
<td style="border-bottom: black 1pt solid; text-align: left"><font style="font: 10pt Times New Roman, Times, Serif"> </font></td>
<td style="border-bottom: black 1pt solid; text-align: right"><font style="font: 10pt Times New Roman, Times, Serif">0</font></td>
<td style="text-align: left; padding-bottom: 1pt"><font style="font: 10pt Times New Roman, Times, Serif"> </font></td></tr>
<tr style="background-color: white; vertical-align: bottom">
<td style="text-align: left"><font style="font: 10pt Times New Roman, Times, Serif"> </font></td>
<td style="text-align: right; font-size: 10pt"><font style="font: 10pt Times New Roman, Times, Serif; letter-spacing: 0px">Total
lease commitment</font></td>
<td style="text-align: left; padding-bottom: 2.5pt"><font style="font: 10pt Times New Roman, Times, Serif"> </font></td>
<td style="padding-bottom: 2.5pt"><font style="font: 10pt Times New Roman, Times, Serif"> </font></td>
<td style="border-bottom: black 2.5pt double; text-align: left"><font style="font: 10pt Times New Roman, Times, Serif">$</font></td>
<td style="border-bottom: black 2.5pt double; text-align: right"><font style="font: 10pt Times New Roman, Times, Serif">116,133</font></td>
<td style="text-align: left; padding-bottom: 2.5pt"><font style="font: 10pt Times New Roman, Times, Serif"> </font></td></tr>
</table>
<p style="margin: 0pt"></p>
P3Y
5000
5200
60591
55542
0
116133
<p style="margin: 0pt"><font style="font: 10pt Times New Roman, Times, Serif; letter-spacing: 0px">The Company had three major
customers that accounted for 68% and two major customers that accounted for 50% of the Company’s revenues for the nine months
ended September 30, 2013 and 2012, respectively. The Company expects to continue to maintain these relationships with the customers.</font></p>
0.63
0.53
<p style="margin: 0pt"></p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify"><font style="font: 10pt Times New Roman, Times, Serif; letter-spacing: 0px">For
the nine months ended September 30, 2013, the Company incurred net income of approximately $260,000 but has no tax liability.
The Company began operations in 2007 and has previous net operating loss carry-forwards of approximately $13,843,000 through December
31, 2012. The cumulative loss of approximately $13,583,000 will be carried forward and can be used through the year 2033 to offset
future taxable income. In the future, the cumulative net operating loss carry-forward for income tax purposes may differ from
the cumulative financial statement loss due to timing differences between book and tax reporting.</font></p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify"><font style="font: 10pt Times New Roman, Times, Serif">  </font></p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify"><font style="font: 10pt Times New Roman, Times, Serif; letter-spacing: 0px">The
provision for Federal income tax consists of the following for the nine months ended September 30, 2013 and 2012:</font></p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify"><font style="font: 10pt Times New Roman, Times, Serif"> </font></p>
<table cellspacing="0" cellpadding="0" align="center" style="width: 50%; border-collapse: collapse; font-size: 10pt">
<tr style="vertical-align: bottom">
<td style="text-align: justify; font-family: Arial, Helvetica, Sans-Serif"><font style="font: 10pt Times New Roman, Times, Serif"> </font></td>
<td colspan="3" style="border-bottom: black 1pt solid; text-align: center"><font style="font: 10pt Times New Roman, Times, Serif">2013</font></td>
<td style="padding-bottom: 1pt"><font style="font: 10pt Times New Roman, Times, Serif"> </font></td>
<td colspan="3" style="border-bottom: black 1pt solid; text-align: center"><font style="font: 10pt Times New Roman, Times, Serif">2012</font></td></tr>
<tr style="background-color: rgb(204,238,204); vertical-align: bottom">
<td style="text-align: left"><font style="font: 10pt Times New Roman, Times, Serif">Federal income tax (expense) benefit
attributable to:</font></td>
<td style="text-align: left; font-family: Arial, Helvetica, Sans-Serif"><font style="font: 10pt Times New Roman, Times, Serif"> </font></td>
<td style="text-align: right; font-family: Arial, Helvetica, Sans-Serif"><font style="font: 10pt Times New Roman, Times, Serif"> </font></td>
<td style="text-align: left; font-family: Arial, Helvetica, Sans-Serif"><font style="font: 10pt Times New Roman, Times, Serif"> </font></td>
<td style="font-family: Arial, Helvetica, Sans-Serif"><font style="font: 10pt Times New Roman, Times, Serif"> </font></td>
<td style="text-align: left; font-family: Arial, Helvetica, Sans-Serif"><font style="font: 10pt Times New Roman, Times, Serif"> </font></td>
<td style="text-align: right; font-family: Arial, Helvetica, Sans-Serif"><font style="font: 10pt Times New Roman, Times, Serif"> </font></td>
<td style="text-align: left; font-family: Arial, Helvetica, Sans-Serif"><font style="font: 10pt Times New Roman, Times, Serif"> </font></td></tr>
<tr style="background-color: white; vertical-align: bottom">
<td style="text-align: left; width: 55%"><font style="font: 10pt Times New Roman, Times, Serif">Current operations</font></td>
<td style="text-align: left; width: 1%"><font style="font: 10pt Times New Roman, Times, Serif">$</font></td>
<td style="text-align: right; width: 20%"><font style="font: 10pt Times New Roman, Times, Serif">(88,000</font></td>
<td style="text-align: left; width: 1%"><font style="font: 10pt Times New Roman, Times, Serif">)</font></td>
<td style="width: 1%"><font style="font: 10pt Times New Roman, Times, Serif"> </font></td>
<td style="text-align: left; width: 1%"><font style="font: 10pt Times New Roman, Times, Serif">$</font></td>
<td style="text-align: right; width: 20%"><font style="font: 10pt Times New Roman, Times, Serif">102,000</font></td>
<td style="text-align: left; width: 1%"><font style="font: 10pt Times New Roman, Times, Serif"> </font></td></tr>
<tr style="background-color: rgb(204,238,204); vertical-align: bottom">
<td style="text-align: left; padding-bottom: 1pt"><font style="font: 10pt Times New Roman, Times, Serif">Valuation allowance</font></td>
<td style="border-bottom: black 1pt solid; text-align: left"><font style="font: 10pt Times New Roman, Times, Serif"> </font></td>
<td style="border-bottom: black 1pt solid; text-align: right"><font style="font: 10pt Times New Roman, Times, Serif">88,000</font></td>
<td style="text-align: left; padding-bottom: 1pt"><font style="font: 10pt Times New Roman, Times, Serif"> </font></td>
<td style="padding-bottom: 1pt"><font style="font: 10pt Times New Roman, Times, Serif"> </font></td>
<td style="border-bottom: black 1pt solid; text-align: left"><font style="font: 10pt Times New Roman, Times, Serif"> </font></td>
<td style="border-bottom: black 1pt solid; text-align: right"><font style="font: 10pt Times New Roman, Times, Serif">(102,000</font></td>
<td style="text-align: left; padding-bottom: 1pt"><font style="font: 10pt Times New Roman, Times, Serif">)</font></td></tr>
<tr style="background-color: white; vertical-align: bottom">
<td style="text-align: left; padding-bottom: 2.5pt"><font style="font: 10pt Times New Roman, Times, Serif">Net provision for
federal income tax</font></td>
<td style="border-bottom: black 2.5pt double; text-align: left"><font style="font: 10pt Times New Roman, Times, Serif">$</font></td>
<td style="border-bottom: black 2.5pt double; text-align: right"><font style="font: 10pt Times New Roman, Times, Serif">0</font></td>
<td style="text-align: left; padding-bottom: 2.5pt"><font style="font: 10pt Times New Roman, Times, Serif"> </font></td>
<td style="padding-bottom: 2.5pt"><font style="font: 10pt Times New Roman, Times, Serif"> </font></td>
<td style="border-bottom: black 2.5pt double; text-align: left"><font style="font: 10pt Times New Roman, Times, Serif">$</font></td>
<td style="border-bottom: black 2.5pt double; text-align: right"><font style="font: 10pt Times New Roman, Times, Serif">0</font></td>
<td style="text-align: left; padding-bottom: 2.5pt"><font style="font: 10pt Times New Roman, Times, Serif"> </font></td></tr>
</table>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify"><font style="font: 10pt Times New Roman, Times, Serif"> </font></p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify"><font style="font: 10pt Times New Roman, Times, Serif; letter-spacing: 0px">The
cumulative tax effect at the expected rate of 34% of significant items comprising our net deferred tax amount is as follows as
of September 30, 2013 and December 31, 2012:</font></p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; letter-spacing: -0.1pt; text-align: justify"><font style="font: 10pt Times New Roman, Times, Serif"> </font></p>
<table cellspacing="0" cellpadding="0" align="center" style="width: 50%; border-collapse: collapse; font-size: 10pt">
<tr style="vertical-align: bottom">
<td style="text-align: justify; font-family: Arial, Helvetica, Sans-Serif"><font style="font: 10pt Times New Roman, Times, Serif"> </font></td>
<td colspan="3" style="border-bottom: black 1pt solid; text-align: center"><font style="font: 10pt Times New Roman, Times, Serif">2013</font></td>
<td style="padding-bottom: 1pt"><font style="font: 10pt Times New Roman, Times, Serif"> </font></td>
<td colspan="3" style="border-bottom: black 1pt solid; text-align: center"><font style="font: 10pt Times New Roman, Times, Serif">2012</font></td></tr>
<tr style="background-color: rgb(204,238,204); vertical-align: bottom">
<td style="text-align: left"><font style="font: 10pt Times New Roman, Times, Serif">Deferred tax asset attributable to:</font></td>
<td style="text-align: left; font-family: Arial, Helvetica, Sans-Serif"><font style="font: 10pt Times New Roman, Times, Serif"> </font></td>
<td style="text-align: right; font-family: Arial, Helvetica, Sans-Serif"><font style="font: 10pt Times New Roman, Times, Serif"> </font></td>
<td style="text-align: left; font-family: Arial, Helvetica, Sans-Serif"><font style="font: 10pt Times New Roman, Times, Serif"> </font></td>
<td style="font-family: Arial, Helvetica, Sans-Serif"><font style="font: 10pt Times New Roman, Times, Serif"> </font></td>
<td style="text-align: left; font-family: Arial, Helvetica, Sans-Serif"><font style="font: 10pt Times New Roman, Times, Serif"> </font></td>
<td style="text-align: right; font-family: Arial, Helvetica, Sans-Serif"><font style="font: 10pt Times New Roman, Times, Serif"> </font></td>
<td style="text-align: left; font-family: Arial, Helvetica, Sans-Serif"><font style="font: 10pt Times New Roman, Times, Serif"> </font></td></tr>
<tr style="background-color: white; vertical-align: bottom">
<td style="text-align: left; width: 55%"><font style="font: 10pt Times New Roman, Times, Serif">Net operating loss carryover</font></td>
<td style="text-align: left; width: 1%"><font style="font: 10pt Times New Roman, Times, Serif">$</font></td>
<td style="text-align: right; width: 20%"><font style="font: 10pt Times New Roman, Times, Serif">4,618,000</font></td>
<td style="text-align: left; width: 1%"><font style="font: 10pt Times New Roman, Times, Serif"> </font></td>
<td style="width: 1%"><font style="font: 10pt Times New Roman, Times, Serif"> </font></td>
<td style="text-align: left; width: 1%"><font style="font: 10pt Times New Roman, Times, Serif">$</font></td>
<td style="text-align: right; width: 20%"><font style="font: 10pt Times New Roman, Times, Serif">4,706,000</font></td>
<td style="text-align: left; width: 1%"><font style="font: 10pt Times New Roman, Times, Serif"> </font></td></tr>
<tr style="background-color: rgb(204,238,204); vertical-align: bottom">
<td style="text-align: left; padding-bottom: 1pt"><font style="font: 10pt Times New Roman, Times, Serif">Valuation allowance</font></td>
<td style="border-bottom: black 1pt solid; text-align: left"><font style="font: 10pt Times New Roman, Times, Serif"> </font></td>
<td style="border-bottom: black 1pt solid; text-align: right"><font style="font: 10pt Times New Roman, Times, Serif">(4,618,000</font></td>
<td style="text-align: left; padding-bottom: 1pt"><font style="font: 10pt Times New Roman, Times, Serif">)</font></td>
<td style="padding-bottom: 1pt"><font style="font: 10pt Times New Roman, Times, Serif"> </font></td>
<td style="border-bottom: black 1pt solid; text-align: left"><font style="font: 10pt Times New Roman, Times, Serif"> </font></td>
<td style="border-bottom: black 1pt solid; text-align: right"><font style="font: 10pt Times New Roman, Times, Serif">(4,706,000</font></td>
<td style="text-align: left; padding-bottom: 1pt"><font style="font: 10pt Times New Roman, Times, Serif">)</font></td></tr>
<tr style="background-color: white; vertical-align: bottom">
<td style="text-align: left; padding-bottom: 2.5pt"><font style="font: 10pt Times New Roman, Times, Serif">Net deferred tax
asset</font></td>
<td style="border-bottom: black 2.5pt double; text-align: left"><font style="font: 10pt Times New Roman, Times, Serif">$</font></td>
<td style="border-bottom: black 2.5pt double; text-align: right"><font style="font: 10pt Times New Roman, Times, Serif">0</font></td>
<td style="text-align: left; padding-bottom: 2.5pt"><font style="font: 10pt Times New Roman, Times, Serif"> </font></td>
<td style="padding-bottom: 2.5pt"><font style="font: 10pt Times New Roman, Times, Serif"> </font></td>
<td style="border-bottom: black 2.5pt double; text-align: left"><font style="font: 10pt Times New Roman, Times, Serif">$</font></td>
<td style="border-bottom: black 2.5pt double; text-align: right"><font style="font: 10pt Times New Roman, Times, Serif">0</font></td>
<td style="text-align: left; padding-bottom: 2.5pt"><font style="font: 10pt Times New Roman, Times, Serif"> </font></td></tr>
</table>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify"><font style="font: 10pt Times New Roman, Times, Serif"> </font></p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify"><font style="font: 10pt Times New Roman, Times, Serif; letter-spacing: 0px">Due
to the change in ownership provisions of the Tax Reform Act of 1986, net operating loss carry forwards of approximately $13,583,000
for Federal income tax reporting purposes are subject to annual limitations. Should a change in ownership occur, net operating
loss carry forwards may be limited as to use in future years.</font></p>
<p style="margin: 0pt"></p>
<p style="margin: 0pt"> </p>
<table cellspacing="0" cellpadding="0" align="center" style="width: 50%; border-collapse: collapse; font-size: 10pt">
<tr style="vertical-align: bottom">
<td style="text-align: justify; font-family: Arial, Helvetica, Sans-Serif"><font style="font: 10pt Times New Roman, Times, Serif"> </font></td>
<td colspan="3" style="border-bottom: black 1pt solid; text-align: center"><font style="font: 10pt Times New Roman, Times, Serif">2013</font></td>
<td style="padding-bottom: 1pt"><font style="font: 10pt Times New Roman, Times, Serif"> </font></td>
<td colspan="3" style="border-bottom: black 1pt solid; text-align: center"><font style="font: 10pt Times New Roman, Times, Serif">2012</font></td></tr>
<tr style="background-color: rgb(204,238,204); vertical-align: bottom">
<td style="text-align: left"><font style="font: 10pt Times New Roman, Times, Serif">Federal income tax (expense) benefit
attributable to:</font></td>
<td style="text-align: left; font-family: Arial, Helvetica, Sans-Serif"><font style="font: 10pt Times New Roman, Times, Serif"> </font></td>
<td style="text-align: right; font-family: Arial, Helvetica, Sans-Serif"><font style="font: 10pt Times New Roman, Times, Serif"> </font></td>
<td style="text-align: left; font-family: Arial, Helvetica, Sans-Serif"><font style="font: 10pt Times New Roman, Times, Serif"> </font></td>
<td style="font-family: Arial, Helvetica, Sans-Serif"><font style="font: 10pt Times New Roman, Times, Serif"> </font></td>
<td style="text-align: left; font-family: Arial, Helvetica, Sans-Serif"><font style="font: 10pt Times New Roman, Times, Serif"> </font></td>
<td style="text-align: right; font-family: Arial, Helvetica, Sans-Serif"><font style="font: 10pt Times New Roman, Times, Serif"> </font></td>
<td style="text-align: left; font-family: Arial, Helvetica, Sans-Serif"><font style="font: 10pt Times New Roman, Times, Serif"> </font></td></tr>
<tr style="background-color: white; vertical-align: bottom">
<td style="text-align: left; width: 55%"><font style="font: 10pt Times New Roman, Times, Serif">Current operations</font></td>
<td style="text-align: left; width: 1%"><font style="font: 10pt Times New Roman, Times, Serif">$</font></td>
<td style="text-align: right; width: 20%"><font style="font: 10pt Times New Roman, Times, Serif">(88,000</font></td>
<td style="text-align: left; width: 1%"><font style="font: 10pt Times New Roman, Times, Serif">)</font></td>
<td style="width: 1%"><font style="font: 10pt Times New Roman, Times, Serif"> </font></td>
<td style="text-align: left; width: 1%"><font style="font: 10pt Times New Roman, Times, Serif">$</font></td>
<td style="text-align: right; width: 20%"><font style="font: 10pt Times New Roman, Times, Serif">102,000</font></td>
<td style="text-align: left; width: 1%"><font style="font: 10pt Times New Roman, Times, Serif"> </font></td></tr>
<tr style="background-color: rgb(204,238,204); vertical-align: bottom">
<td style="text-align: left; padding-bottom: 1pt"><font style="font: 10pt Times New Roman, Times, Serif">Valuation allowance</font></td>
<td style="border-bottom: black 1pt solid; text-align: left"><font style="font: 10pt Times New Roman, Times, Serif"> </font></td>
<td style="border-bottom: black 1pt solid; text-align: right"><font style="font: 10pt Times New Roman, Times, Serif">88,000</font></td>
<td style="text-align: left; padding-bottom: 1pt"><font style="font: 10pt Times New Roman, Times, Serif"> </font></td>
<td style="padding-bottom: 1pt"><font style="font: 10pt Times New Roman, Times, Serif"> </font></td>
<td style="border-bottom: black 1pt solid; text-align: left"><font style="font: 10pt Times New Roman, Times, Serif"> </font></td>
<td style="border-bottom: black 1pt solid; text-align: right"><font style="font: 10pt Times New Roman, Times, Serif">(102,000</font></td>
<td style="text-align: left; padding-bottom: 1pt"><font style="font: 10pt Times New Roman, Times, Serif">)</font></td></tr>
<tr style="background-color: white; vertical-align: bottom">
<td style="text-align: left; padding-bottom: 2.5pt"><font style="font: 10pt Times New Roman, Times, Serif">Net provision for
federal income tax</font></td>
<td style="border-bottom: black 2.5pt double; text-align: left"><font style="font: 10pt Times New Roman, Times, Serif">$</font></td>
<td style="border-bottom: black 2.5pt double; text-align: right"><font style="font: 10pt Times New Roman, Times, Serif">0</font></td>
<td style="text-align: left; padding-bottom: 2.5pt"><font style="font: 10pt Times New Roman, Times, Serif"> </font></td>
<td style="padding-bottom: 2.5pt"><font style="font: 10pt Times New Roman, Times, Serif"> </font></td>
<td style="border-bottom: black 2.5pt double; text-align: left"><font style="font: 10pt Times New Roman, Times, Serif">$</font></td>
<td style="border-bottom: black 2.5pt double; text-align: right"><font style="font: 10pt Times New Roman, Times, Serif">0</font></td>
<td style="text-align: left; padding-bottom: 2.5pt"><font style="font: 10pt Times New Roman, Times, Serif"> </font></td></tr>
</table>
<p style="margin: 0pt"></p>
<p style="margin: 0pt"> </p>
<table cellspacing="0" cellpadding="0" align="center" style="width: 50%; border-collapse: collapse; font-size: 10pt">
<tr style="vertical-align: bottom">
<td style="text-align: justify; font-family: Arial, Helvetica, Sans-Serif"><font style="font: 10pt Times New Roman, Times, Serif"> </font></td>
<td colspan="3" style="border-bottom: black 1pt solid; text-align: center"><font style="font: 10pt Times New Roman, Times, Serif">2013</font></td>
<td style="padding-bottom: 1pt"><font style="font: 10pt Times New Roman, Times, Serif"> </font></td>
<td colspan="3" style="border-bottom: black 1pt solid; text-align: center"><font style="font: 10pt Times New Roman, Times, Serif">2012</font></td></tr>
<tr style="background-color: rgb(204,238,204); vertical-align: bottom">
<td style="text-align: left"><font style="font: 10pt Times New Roman, Times, Serif">Deferred tax asset attributable to:</font></td>
<td style="text-align: left; font-family: Arial, Helvetica, Sans-Serif"><font style="font: 10pt Times New Roman, Times, Serif"> </font></td>
<td style="text-align: right; font-family: Arial, Helvetica, Sans-Serif"><font style="font: 10pt Times New Roman, Times, Serif"> </font></td>
<td style="text-align: left; font-family: Arial, Helvetica, Sans-Serif"><font style="font: 10pt Times New Roman, Times, Serif"> </font></td>
<td style="font-family: Arial, Helvetica, Sans-Serif"><font style="font: 10pt Times New Roman, Times, Serif"> </font></td>
<td style="text-align: left; font-family: Arial, Helvetica, Sans-Serif"><font style="font: 10pt Times New Roman, Times, Serif"> </font></td>
<td style="text-align: right; font-family: Arial, Helvetica, Sans-Serif"><font style="font: 10pt Times New Roman, Times, Serif"> </font></td>
<td style="text-align: left; font-family: Arial, Helvetica, Sans-Serif"><font style="font: 10pt Times New Roman, Times, Serif"> </font></td></tr>
<tr style="background-color: white; vertical-align: bottom">
<td style="text-align: left; width: 55%"><font style="font: 10pt Times New Roman, Times, Serif">Net operating loss carryover</font></td>
<td style="text-align: left; width: 1%"><font style="font: 10pt Times New Roman, Times, Serif">$</font></td>
<td style="text-align: right; width: 20%"><font style="font: 10pt Times New Roman, Times, Serif">4,618,000</font></td>
<td style="text-align: left; width: 1%"><font style="font: 10pt Times New Roman, Times, Serif"> </font></td>
<td style="width: 1%"><font style="font: 10pt Times New Roman, Times, Serif"> </font></td>
<td style="text-align: left; width: 1%"><font style="font: 10pt Times New Roman, Times, Serif">$</font></td>
<td style="text-align: right; width: 20%"><font style="font: 10pt Times New Roman, Times, Serif">4,706,000</font></td>
<td style="text-align: left; width: 1%"><font style="font: 10pt Times New Roman, Times, Serif"> </font></td></tr>
<tr style="background-color: rgb(204,238,204); vertical-align: bottom">
<td style="text-align: left; padding-bottom: 1pt"><font style="font: 10pt Times New Roman, Times, Serif">Valuation allowance</font></td>
<td style="border-bottom: black 1pt solid; text-align: left"><font style="font: 10pt Times New Roman, Times, Serif"> </font></td>
<td style="border-bottom: black 1pt solid; text-align: right"><font style="font: 10pt Times New Roman, Times, Serif">(4,618,000</font></td>
<td style="text-align: left; padding-bottom: 1pt"><font style="font: 10pt Times New Roman, Times, Serif">)</font></td>
<td style="padding-bottom: 1pt"><font style="font: 10pt Times New Roman, Times, Serif"> </font></td>
<td style="border-bottom: black 1pt solid; text-align: left"><font style="font: 10pt Times New Roman, Times, Serif"> </font></td>
<td style="border-bottom: black 1pt solid; text-align: right"><font style="font: 10pt Times New Roman, Times, Serif">(4,706,000</font></td>
<td style="text-align: left; padding-bottom: 1pt"><font style="font: 10pt Times New Roman, Times, Serif">)</font></td></tr>
<tr style="background-color: white; vertical-align: bottom">
<td style="text-align: left; padding-bottom: 2.5pt"><font style="font: 10pt Times New Roman, Times, Serif">Net deferred tax
asset</font></td>
<td style="border-bottom: black 2.5pt double; text-align: left"><font style="font: 10pt Times New Roman, Times, Serif">$</font></td>
<td style="border-bottom: black 2.5pt double; text-align: right"><font style="font: 10pt Times New Roman, Times, Serif">0</font></td>
<td style="text-align: left; padding-bottom: 2.5pt"><font style="font: 10pt Times New Roman, Times, Serif"> </font></td>
<td style="padding-bottom: 2.5pt"><font style="font: 10pt Times New Roman, Times, Serif"> </font></td>
<td style="border-bottom: black 2.5pt double; text-align: left"><font style="font: 10pt Times New Roman, Times, Serif">$</font></td>
<td style="border-bottom: black 2.5pt double; text-align: right"><font style="font: 10pt Times New Roman, Times, Serif">0</font></td>
<td style="text-align: left; padding-bottom: 2.5pt"><font style="font: 10pt Times New Roman, Times, Serif"> </font></td></tr>
</table>
<p style="margin: 0pt"></p>
-88000
102000
88000
-102000
0
0
4618000
4706000
-4618000
-4706000
0
0
260000
2033-01-01
0.34
13583000
13843000
<p style="margin: 0pt"></p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify"><font style="font: 10pt Times New Roman, Times, Serif; letter-spacing: 0px">On
January 14, 2013, the Company hired a new CEO. The employment agreement required annual compensation of $175,000 that was to be
accrued and deferred until at least January 1, 2014. Additionally, the agreement required the issuance of 2,000,000 options with
an exercise price of $1.00 for a term of five years. The options were not exercisable until at least January 1, 2014, and were
only exercisable after reaching certain financial terms and conditions. Due to these restrictions, no accrual was made for the
issuance of these options.</font></p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify"><font style="font: 10pt Times New Roman, Times, Serif"> </font></p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify"><font style="font: 10pt Times New Roman, Times, Serif; letter-spacing: 0px">On
September 20, 2013, the Company entered into a separation agreement with the CEO. As part of the terms of the separation agreement,
the accrued compensation up to the date of separation was paid and the options were terminated. Also as part of the agreement,
the Company will be involved with the former CEO in a limited role as a consultant for one year to assist in various initiatives
and in transition of various ongoing projects for 500,000 shares of company stock. Half of the value of the shares will be expensed
immediately, with the other half expensed over the one year life of the agreement. 7.69% of the second half of the stock value
has been expensed at September 30, 2013, with the remainder to be expensed as services are rendered over the remaining life of
the agreement. The unamortized balance has been recorded as Deferred Stock Compensation in the equity section of the balance sheet.</font></p>
<p style="margin: 0pt"></p>
<p style="margin: 0pt"></p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify"><font style="font: 10pt Times New Roman, Times, Serif; letter-spacing: 0px">Operating
expenses consisted of the following for the three and nine months ended September 30, 2013 and 2012, respectively:</font></p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0 0 0 2.5in; text-indent: 4.5pt"><font style="font: 10pt Times New Roman, Times, Serif"> </font></p>
<table cellspacing="0" cellpadding="0" align="center" style="width: 60%; border-collapse: collapse; font-size: 10pt">
<tr style="vertical-align: bottom">
<td><font style="font: 10pt Times New Roman, Times, Serif"> </font></td>
<td colspan="7" style="border-bottom: black 1pt solid; text-align: center"><font style="font: 10pt Times New Roman, Times, Serif">Three
months ended<br />September 30,</font></td>
<td style="padding-bottom: 1pt"><font style="font: 10pt Times New Roman, Times, Serif"> </font></td>
<td colspan="7" style="border-bottom: black 1pt solid; text-align: center"><font style="font: 10pt Times New Roman, Times, Serif">Nine
months ended<br />September 30,</font></td></tr>
<tr style="vertical-align: bottom">
<td><font style="font: 10pt Times New Roman, Times, Serif"> </font></td>
<td colspan="3" style="border-bottom: black 1pt solid; text-align: center"><font style="font: 10pt Times New Roman, Times, Serif">2013</font></td>
<td style="padding-bottom: 1pt"><font style="font: 10pt Times New Roman, Times, Serif"> </font></td>
<td colspan="3" style="border-bottom: black 1pt solid; text-align: center"><font style="font: 10pt Times New Roman, Times, Serif">2012</font></td>
<td style="padding-bottom: 1pt"><font style="font: 10pt Times New Roman, Times, Serif"> </font></td>
<td colspan="3" style="border-bottom: black 1pt solid; text-align: center"><font style="font: 10pt Times New Roman, Times, Serif">2013</font></td>
<td style="padding-bottom: 1pt"><font style="font: 10pt Times New Roman, Times, Serif"> </font></td>
<td colspan="3" style="border-bottom: black 1pt solid; text-align: center"><font style="font: 10pt Times New Roman, Times, Serif">2012</font></td></tr>
<tr style="background-color: rgb(204,238,204); vertical-align: bottom">
<td style="padding-left: 5.4pt; width: 49%"><font style="font: 10pt Times New Roman, Times, Serif">Advertising</font></td>
<td style="text-align: left; width: 1%"><font style="font: 10pt Times New Roman, Times, Serif">$</font></td>
<td style="text-align: right; width: 10%"><font style="font: 10pt Times New Roman, Times, Serif">23,207</font></td>
<td style="text-align: left; width: 1%"><font style="font: 10pt Times New Roman, Times, Serif"> </font></td>
<td style="width: 1%"><font style="font: 10pt Times New Roman, Times, Serif"> </font></td>
<td style="text-align: left; width: 1%"><font style="font: 10pt Times New Roman, Times, Serif">$</font></td>
<td style="text-align: right; width: 10%"><font style="font: 10pt Times New Roman, Times, Serif">1,167</font></td>
<td style="text-align: left; width: 1%"><font style="font: 10pt Times New Roman, Times, Serif"> </font></td>
<td style="width: 1%"><font style="font: 10pt Times New Roman, Times, Serif"> </font></td>
<td style="text-align: left; width: 1%"><font style="font: 10pt Times New Roman, Times, Serif">$</font></td>
<td style="text-align: right; width: 10%"><font style="font: 10pt Times New Roman, Times, Serif">30,372</font></td>
<td style="text-align: left; width: 1%"><font style="font: 10pt Times New Roman, Times, Serif"> </font></td>
<td style="width: 1%"><font style="font: 10pt Times New Roman, Times, Serif"> </font></td>
<td style="text-align: left; width: 1%"><font style="font: 10pt Times New Roman, Times, Serif">$</font></td>
<td style="text-align: right; width: 10%"><font style="font: 10pt Times New Roman, Times, Serif">45,088</font></td>
<td style="text-align: left; width: 1%"><font style="font: 10pt Times New Roman, Times, Serif"> </font></td></tr>
<tr style="background-color: white; vertical-align: bottom">
<td style="text-align: left; padding-left: 5.4pt"><font style="font: 10pt Times New Roman, Times, Serif">Professional fees</font></td>
<td style="text-align: left"><font style="font: 10pt Times New Roman, Times, Serif"> </font></td>
<td style="text-align: right"><font style="font: 10pt Times New Roman, Times, Serif">151,610</font></td>
<td style="text-align: left"><font style="font: 10pt Times New Roman, Times, Serif"> </font></td>
<td><font style="font: 10pt Times New Roman, Times, Serif"> </font></td>
<td style="text-align: left"><font style="font: 10pt Times New Roman, Times, Serif"> </font></td>
<td style="text-align: right"><font style="font: 10pt Times New Roman, Times, Serif">83,235</font></td>
<td style="text-align: left"><font style="font: 10pt Times New Roman, Times, Serif"> </font></td>
<td><font style="font: 10pt Times New Roman, Times, Serif"> </font></td>
<td style="text-align: left"><font style="font: 10pt Times New Roman, Times, Serif"> </font></td>
<td style="text-align: right"><font style="font: 10pt Times New Roman, Times, Serif">275,004</font></td>
<td style="text-align: left"><font style="font: 10pt Times New Roman, Times, Serif"> </font></td>
<td><font style="font: 10pt Times New Roman, Times, Serif"> </font></td>
<td style="text-align: left"><font style="font: 10pt Times New Roman, Times, Serif"> </font></td>
<td style="text-align: right"><font style="font: 10pt Times New Roman, Times, Serif">186,188</font></td>
<td style="text-align: left"><font style="font: 10pt Times New Roman, Times, Serif"> </font></td></tr>
<tr style="background-color: rgb(204,238,204); vertical-align: bottom">
<td style="padding-left: 5.4pt"><font style="font: 10pt Times New Roman, Times, Serif">Consulting</font></td>
<td style="text-align: left"><font style="font: 10pt Times New Roman, Times, Serif"> </font></td>
<td style="text-align: right"><font style="font: 10pt Times New Roman, Times, Serif">25,657</font></td>
<td style="text-align: left"><font style="font: 10pt Times New Roman, Times, Serif"> </font></td>
<td><font style="font: 10pt Times New Roman, Times, Serif"> </font></td>
<td style="text-align: left"><font style="font: 10pt Times New Roman, Times, Serif"> </font></td>
<td style="text-align: right"><font style="font: 10pt Times New Roman, Times, Serif">0</font></td>
<td style="text-align: left"><font style="font: 10pt Times New Roman, Times, Serif"> </font></td>
<td><font style="font: 10pt Times New Roman, Times, Serif"> </font></td>
<td style="text-align: left"><font style="font: 10pt Times New Roman, Times, Serif"> </font></td>
<td style="text-align: right"><font style="font: 10pt Times New Roman, Times, Serif">65,786</font></td>
<td style="text-align: left"><font style="font: 10pt Times New Roman, Times, Serif"> </font></td>
<td><font style="font: 10pt Times New Roman, Times, Serif"> </font></td>
<td style="text-align: left"><font style="font: 10pt Times New Roman, Times, Serif"> </font></td>
<td style="text-align: right"><font style="font: 10pt Times New Roman, Times, Serif">7,835</font></td>
<td style="text-align: left"><font style="font: 10pt Times New Roman, Times, Serif"> </font></td></tr>
<tr style="background-color: white; vertical-align: bottom">
<td style="text-align: left; padding-left: 5.4pt"><font style="font: 10pt Times New Roman, Times, Serif">Salaries, wages and
benefits</font></td>
<td style="text-align: left"><font style="font: 10pt Times New Roman, Times, Serif"> </font></td>
<td style="text-align: right"><font style="font: 10pt Times New Roman, Times, Serif">344,979</font></td>
<td style="text-align: left"><font style="font: 10pt Times New Roman, Times, Serif"> </font></td>
<td><font style="font: 10pt Times New Roman, Times, Serif"> </font></td>
<td style="text-align: left"><font style="font: 10pt Times New Roman, Times, Serif"> </font></td>
<td style="text-align: right"><font style="font: 10pt Times New Roman, Times, Serif">299,286</font></td>
<td style="text-align: left"><font style="font: 10pt Times New Roman, Times, Serif"> </font></td>
<td><font style="font: 10pt Times New Roman, Times, Serif"> </font></td>
<td style="text-align: left"><font style="font: 10pt Times New Roman, Times, Serif"> </font></td>
<td style="text-align: right"><font style="font: 10pt Times New Roman, Times, Serif">1,040,238</font></td>
<td style="text-align: left"><font style="font: 10pt Times New Roman, Times, Serif"> </font></td>
<td><font style="font: 10pt Times New Roman, Times, Serif"> </font></td>
<td style="text-align: left"><font style="font: 10pt Times New Roman, Times, Serif"> </font></td>
<td style="text-align: right"><font style="font: 10pt Times New Roman, Times, Serif">900,751</font></td>
<td style="text-align: left"><font style="font: 10pt Times New Roman, Times, Serif"> </font></td></tr>
<tr style="background-color: rgb(204,238,204); vertical-align: bottom">
<td style="padding-left: 5.4pt"><font style="font: 10pt Times New Roman, Times, Serif">Rent</font></td>
<td style="text-align: left"><font style="font: 10pt Times New Roman, Times, Serif"> </font></td>
<td style="text-align: right"><font style="font: 10pt Times New Roman, Times, Serif">15,148</font></td>
<td style="text-align: left"><font style="font: 10pt Times New Roman, Times, Serif"> </font></td>
<td><font style="font: 10pt Times New Roman, Times, Serif"> </font></td>
<td style="text-align: left"><font style="font: 10pt Times New Roman, Times, Serif"> </font></td>
<td style="text-align: right"><font style="font: 10pt Times New Roman, Times, Serif">15,148</font></td>
<td style="text-align: left"><font style="font: 10pt Times New Roman, Times, Serif"> </font></td>
<td><font style="font: 10pt Times New Roman, Times, Serif"> </font></td>
<td style="text-align: left"><font style="font: 10pt Times New Roman, Times, Serif"> </font></td>
<td style="text-align: right"><font style="font: 10pt Times New Roman, Times, Serif">45,444</font></td>
<td style="text-align: left"><font style="font: 10pt Times New Roman, Times, Serif"> </font></td>
<td><font style="font: 10pt Times New Roman, Times, Serif"> </font></td>
<td style="text-align: left"><font style="font: 10pt Times New Roman, Times, Serif"> </font></td>
<td style="text-align: right"><font style="font: 10pt Times New Roman, Times, Serif">47,214</font></td>
<td style="text-align: left"><font style="font: 10pt Times New Roman, Times, Serif"> </font></td></tr>
<tr style="background-color: white; vertical-align: bottom">
<td style="text-align: left; padding-left: 5.4pt"><font style="font: 10pt Times New Roman, Times, Serif">Depreciation and
amortization</font></td>
<td style="text-align: left"><font style="font: 10pt Times New Roman, Times, Serif"> </font></td>
<td style="text-align: right"><font style="font: 10pt Times New Roman, Times, Serif">48,225</font></td>
<td style="text-align: left"><font style="font: 10pt Times New Roman, Times, Serif"> </font></td>
<td><font style="font: 10pt Times New Roman, Times, Serif"> </font></td>
<td style="text-align: left"><font style="font: 10pt Times New Roman, Times, Serif"> </font></td>
<td style="text-align: right"><font style="font: 10pt Times New Roman, Times, Serif">46,735</font></td>
<td style="text-align: left"><font style="font: 10pt Times New Roman, Times, Serif"> </font></td>
<td><font style="font: 10pt Times New Roman, Times, Serif"> </font></td>
<td style="text-align: left"><font style="font: 10pt Times New Roman, Times, Serif"> </font></td>
<td style="text-align: right"><font style="font: 10pt Times New Roman, Times, Serif">144,562</font></td>
<td style="text-align: left"><font style="font: 10pt Times New Roman, Times, Serif"> </font></td>
<td><font style="font: 10pt Times New Roman, Times, Serif"> </font></td>
<td style="text-align: left"><font style="font: 10pt Times New Roman, Times, Serif"> </font></td>
<td style="text-align: right"><font style="font: 10pt Times New Roman, Times, Serif">140,087</font></td>
<td style="text-align: left"><font style="font: 10pt Times New Roman, Times, Serif"> </font></td></tr>
<tr style="background-color: rgb(204,238,204); vertical-align: bottom">
<td style="padding-left: 5.4pt"><font style="font: 10pt Times New Roman, Times, Serif">Stock-based compensation</font></td>
<td style="text-align: left"><font style="font: 10pt Times New Roman, Times, Serif"> </font></td>
<td style="text-align: right"><font style="font: 10pt Times New Roman, Times, Serif">281,925</font></td>
<td style="text-align: left"><font style="font: 10pt Times New Roman, Times, Serif"> </font></td>
<td><font style="font: 10pt Times New Roman, Times, Serif"> </font></td>
<td style="text-align: left"><font style="font: 10pt Times New Roman, Times, Serif"> </font></td>
<td style="text-align: right"><font style="font: 10pt Times New Roman, Times, Serif">29,857</font></td>
<td style="text-align: left"><font style="font: 10pt Times New Roman, Times, Serif"> </font></td>
<td><font style="font: 10pt Times New Roman, Times, Serif"> </font></td>
<td style="text-align: left"><font style="font: 10pt Times New Roman, Times, Serif"> </font></td>
<td style="text-align: right"><font style="font: 10pt Times New Roman, Times, Serif">310,823</font></td>
<td style="text-align: left"><font style="font: 10pt Times New Roman, Times, Serif"> </font></td>
<td><font style="font: 10pt Times New Roman, Times, Serif"> </font></td>
<td style="text-align: left"><font style="font: 10pt Times New Roman, Times, Serif"> </font></td>
<td style="text-align: right"><font style="font: 10pt Times New Roman, Times, Serif">227,922</font></td>
<td style="text-align: left"><font style="font: 10pt Times New Roman, Times, Serif"> </font></td></tr>
<tr style="background-color: white; vertical-align: bottom">
<td style="padding-left: 5.4pt"><font style="font: 10pt Times New Roman, Times, Serif">Revenue share expense</font></td>
<td style="text-align: left"><font style="font: 10pt Times New Roman, Times, Serif"> </font></td>
<td style="text-align: right"><font style="font: 10pt Times New Roman, Times, Serif">376,831</font></td>
<td style="text-align: left"><font style="font: 10pt Times New Roman, Times, Serif"> </font></td>
<td><font style="font: 10pt Times New Roman, Times, Serif"> </font></td>
<td style="text-align: left"><font style="font: 10pt Times New Roman, Times, Serif"> </font></td>
<td style="text-align: right"><font style="font: 10pt Times New Roman, Times, Serif">20,669</font></td>
<td style="text-align: left"><font style="font: 10pt Times New Roman, Times, Serif"> </font></td>
<td><font style="font: 10pt Times New Roman, Times, Serif"> </font></td>
<td style="text-align: left"><font style="font: 10pt Times New Roman, Times, Serif"> </font></td>
<td style="text-align: right"><font style="font: 10pt Times New Roman, Times, Serif">614,234</font></td>
<td style="text-align: left"><font style="font: 10pt Times New Roman, Times, Serif"> </font></td>
<td><font style="font: 10pt Times New Roman, Times, Serif"> </font></td>
<td style="text-align: left"><font style="font: 10pt Times New Roman, Times, Serif"> </font></td>
<td style="text-align: right"><font style="font: 10pt Times New Roman, Times, Serif">28,804</font></td>
<td style="text-align: left"><font style="font: 10pt Times New Roman, Times, Serif"> </font></td></tr>
<tr style="background-color: rgb(204,238,204); vertical-align: bottom">
<td style="text-align: left; padding-bottom: 1pt; padding-left: 5.4pt"><font style="font: 10pt Times New Roman, Times, Serif">General
and administrative</font></td>
<td style="border-bottom: black 1pt solid; text-align: left"><font style="font: 10pt Times New Roman, Times, Serif"> </font></td>
<td style="border-bottom: black 1pt solid; text-align: right"><font style="font: 10pt Times New Roman, Times, Serif">94,753</font></td>
<td style="text-align: left; padding-bottom: 1pt"><font style="font: 10pt Times New Roman, Times, Serif"> </font></td>
<td style="padding-bottom: 1pt"><font style="font: 10pt Times New Roman, Times, Serif"> </font></td>
<td style="border-bottom: black 1pt solid; text-align: left"><font style="font: 10pt Times New Roman, Times, Serif"> </font></td>
<td style="border-bottom: black 1pt solid; text-align: right"><font style="font: 10pt Times New Roman, Times, Serif">63,208</font></td>
<td style="text-align: left; padding-bottom: 1pt"><font style="font: 10pt Times New Roman, Times, Serif"> </font></td>
<td style="padding-bottom: 1pt"><font style="font: 10pt Times New Roman, Times, Serif"> </font></td>
<td style="border-bottom: black 1pt solid; text-align: left"><font style="font: 10pt Times New Roman, Times, Serif"> </font></td>
<td style="border-bottom: black 1pt solid; text-align: right"><font style="font: 10pt Times New Roman, Times, Serif">360,010</font></td>
<td style="text-align: left; padding-bottom: 1pt"><font style="font: 10pt Times New Roman, Times, Serif"> </font></td>
<td style="padding-bottom: 1pt"><font style="font: 10pt Times New Roman, Times, Serif"> </font></td>
<td style="border-bottom: black 1pt solid; text-align: left"><font style="font: 10pt Times New Roman, Times, Serif"> </font></td>
<td style="border-bottom: black 1pt solid; text-align: right"><font style="font: 10pt Times New Roman, Times, Serif">197,368</font></td>
<td style="text-align: left; padding-bottom: 1pt"><font style="font: 10pt Times New Roman, Times, Serif"> </font></td></tr>
<tr style="background-color: white; vertical-align: bottom">
<td style="text-align: left; padding-bottom: 2.5pt; padding-left: 5.4pt"><font style="font: 10pt Times New Roman, Times, Serif">Total
Operating Expenses</font></td>
<td style="border-bottom: black 2.5pt double; text-align: left"><font style="font: 10pt Times New Roman, Times, Serif">$</font></td>
<td style="border-bottom: black 2.5pt double; text-align: right"><font style="font: 10pt Times New Roman, Times, Serif">1,362,335</font></td>
<td style="text-align: left; padding-bottom: 2.5pt"><font style="font: 10pt Times New Roman, Times, Serif"> </font></td>
<td style="padding-bottom: 2.5pt"><font style="font: 10pt Times New Roman, Times, Serif"> </font></td>
<td style="border-bottom: black 2.5pt double; text-align: left"><font style="font: 10pt Times New Roman, Times, Serif">$</font></td>
<td style="border-bottom: black 2.5pt double; text-align: right"><font style="font: 10pt Times New Roman, Times, Serif">559,305</font></td>
<td style="text-align: left; padding-bottom: 2.5pt"><font style="font: 10pt Times New Roman, Times, Serif"> </font></td>
<td style="padding-bottom: 2.5pt"><font style="font: 10pt Times New Roman, Times, Serif"> </font></td>
<td style="border-bottom: black 2.5pt double; text-align: left"><font style="font: 10pt Times New Roman, Times, Serif">$</font></td>
<td style="border-bottom: black 2.5pt double; text-align: right"><font style="font: 10pt Times New Roman, Times, Serif">2,886,473</font></td>
<td style="text-align: left; padding-bottom: 2.5pt"><font style="font: 10pt Times New Roman, Times, Serif"> </font></td>
<td style="padding-bottom: 2.5pt"><font style="font: 10pt Times New Roman, Times, Serif"> </font></td>
<td style="border-bottom: black 2.5pt double; text-align: left"><font style="font: 10pt Times New Roman, Times, Serif">$</font></td>
<td style="border-bottom: black 2.5pt double; text-align: right"><font style="font: 10pt Times New Roman, Times, Serif">1,781,257</font></td>
<td style="text-align: left; padding-bottom: 2.5pt"><font style="font: 10pt Times New Roman, Times, Serif"> </font></td></tr>
</table>
<p style="margin: 0pt"></p>
<p style="margin: 0pt"> </p>
<table cellspacing="0" cellpadding="0" align="center" style="width: 60%; border-collapse: collapse; font-size: 10pt">
<tr style="vertical-align: bottom">
<td><font style="font: 10pt Times New Roman, Times, Serif"> </font></td>
<td colspan="7" style="border-bottom: black 1pt solid; text-align: center"><font style="font: 10pt Times New Roman, Times, Serif">Three
months ended<br />September 30,</font></td>
<td style="padding-bottom: 1pt"><font style="font: 10pt Times New Roman, Times, Serif"> </font></td>
<td colspan="7" style="border-bottom: black 1pt solid; text-align: center"><font style="font: 10pt Times New Roman, Times, Serif">Nine
months ended<br />September 30,</font></td></tr>
<tr style="vertical-align: bottom">
<td><font style="font: 10pt Times New Roman, Times, Serif"> </font></td>
<td colspan="3" style="border-bottom: black 1pt solid; text-align: center"><font style="font: 10pt Times New Roman, Times, Serif">2013</font></td>
<td style="padding-bottom: 1pt"><font style="font: 10pt Times New Roman, Times, Serif"> </font></td>
<td colspan="3" style="border-bottom: black 1pt solid; text-align: center"><font style="font: 10pt Times New Roman, Times, Serif">2012</font></td>
<td style="padding-bottom: 1pt"><font style="font: 10pt Times New Roman, Times, Serif"> </font></td>
<td colspan="3" style="border-bottom: black 1pt solid; text-align: center"><font style="font: 10pt Times New Roman, Times, Serif">2013</font></td>
<td style="padding-bottom: 1pt"><font style="font: 10pt Times New Roman, Times, Serif"> </font></td>
<td colspan="3" style="border-bottom: black 1pt solid; text-align: center"><font style="font: 10pt Times New Roman, Times, Serif">2012</font></td></tr>
<tr style="background-color: rgb(204,238,204); vertical-align: bottom">
<td style="padding-left: 5.4pt; width: 49%"><font style="font: 10pt Times New Roman, Times, Serif">Advertising</font></td>
<td style="text-align: left; width: 1%"><font style="font: 10pt Times New Roman, Times, Serif">$</font></td>
<td style="text-align: right; width: 10%"><font style="font: 10pt Times New Roman, Times, Serif">23,207</font></td>
<td style="text-align: left; width: 1%"><font style="font: 10pt Times New Roman, Times, Serif"> </font></td>
<td style="width: 1%"><font style="font: 10pt Times New Roman, Times, Serif"> </font></td>
<td style="text-align: left; width: 1%"><font style="font: 10pt Times New Roman, Times, Serif">$</font></td>
<td style="text-align: right; width: 10%"><font style="font: 10pt Times New Roman, Times, Serif">1,167</font></td>
<td style="text-align: left; width: 1%"><font style="font: 10pt Times New Roman, Times, Serif"> </font></td>
<td style="width: 1%"><font style="font: 10pt Times New Roman, Times, Serif"> </font></td>
<td style="text-align: left; width: 1%"><font style="font: 10pt Times New Roman, Times, Serif">$</font></td>
<td style="text-align: right; width: 10%"><font style="font: 10pt Times New Roman, Times, Serif">30,372</font></td>
<td style="text-align: left; width: 1%"><font style="font: 10pt Times New Roman, Times, Serif"> </font></td>
<td style="width: 1%"><font style="font: 10pt Times New Roman, Times, Serif"> </font></td>
<td style="text-align: left; width: 1%"><font style="font: 10pt Times New Roman, Times, Serif">$</font></td>
<td style="text-align: right; width: 10%"><font style="font: 10pt Times New Roman, Times, Serif">45,088</font></td>
<td style="text-align: left; width: 1%"><font style="font: 10pt Times New Roman, Times, Serif"> </font></td></tr>
<tr style="background-color: white; vertical-align: bottom">
<td style="text-align: left; padding-left: 5.4pt"><font style="font: 10pt Times New Roman, Times, Serif">Professional fees</font></td>
<td style="text-align: left"><font style="font: 10pt Times New Roman, Times, Serif"> </font></td>
<td style="text-align: right"><font style="font: 10pt Times New Roman, Times, Serif">151,610</font></td>
<td style="text-align: left"><font style="font: 10pt Times New Roman, Times, Serif"> </font></td>
<td><font style="font: 10pt Times New Roman, Times, Serif"> </font></td>
<td style="text-align: left"><font style="font: 10pt Times New Roman, Times, Serif"> </font></td>
<td style="text-align: right"><font style="font: 10pt Times New Roman, Times, Serif">83,235</font></td>
<td style="text-align: left"><font style="font: 10pt Times New Roman, Times, Serif"> </font></td>
<td><font style="font: 10pt Times New Roman, Times, Serif"> </font></td>
<td style="text-align: left"><font style="font: 10pt Times New Roman, Times, Serif"> </font></td>
<td style="text-align: right"><font style="font: 10pt Times New Roman, Times, Serif">275,004</font></td>
<td style="text-align: left"><font style="font: 10pt Times New Roman, Times, Serif"> </font></td>
<td><font style="font: 10pt Times New Roman, Times, Serif"> </font></td>
<td style="text-align: left"><font style="font: 10pt Times New Roman, Times, Serif"> </font></td>
<td style="text-align: right"><font style="font: 10pt Times New Roman, Times, Serif">186,188</font></td>
<td style="text-align: left"><font style="font: 10pt Times New Roman, Times, Serif"> </font></td></tr>
<tr style="background-color: rgb(204,238,204); vertical-align: bottom">
<td style="padding-left: 5.4pt"><font style="font: 10pt Times New Roman, Times, Serif">Consulting</font></td>
<td style="text-align: left"><font style="font: 10pt Times New Roman, Times, Serif"> </font></td>
<td style="text-align: right"><font style="font: 10pt Times New Roman, Times, Serif">25,657</font></td>
<td style="text-align: left"><font style="font: 10pt Times New Roman, Times, Serif"> </font></td>
<td><font style="font: 10pt Times New Roman, Times, Serif"> </font></td>
<td style="text-align: left"><font style="font: 10pt Times New Roman, Times, Serif"> </font></td>
<td style="text-align: right"><font style="font: 10pt Times New Roman, Times, Serif">0</font></td>
<td style="text-align: left"><font style="font: 10pt Times New Roman, Times, Serif"> </font></td>
<td><font style="font: 10pt Times New Roman, Times, Serif"> </font></td>
<td style="text-align: left"><font style="font: 10pt Times New Roman, Times, Serif"> </font></td>
<td style="text-align: right"><font style="font: 10pt Times New Roman, Times, Serif">65,786</font></td>
<td style="text-align: left"><font style="font: 10pt Times New Roman, Times, Serif"> </font></td>
<td><font style="font: 10pt Times New Roman, Times, Serif"> </font></td>
<td style="text-align: left"><font style="font: 10pt Times New Roman, Times, Serif"> </font></td>
<td style="text-align: right"><font style="font: 10pt Times New Roman, Times, Serif">7,835</font></td>
<td style="text-align: left"><font style="font: 10pt Times New Roman, Times, Serif"> </font></td></tr>
<tr style="background-color: white; vertical-align: bottom">
<td style="text-align: left; padding-left: 5.4pt"><font style="font: 10pt Times New Roman, Times, Serif">Salaries, wages and
benefits</font></td>
<td style="text-align: left"><font style="font: 10pt Times New Roman, Times, Serif"> </font></td>
<td style="text-align: right"><font style="font: 10pt Times New Roman, Times, Serif">344,979</font></td>
<td style="text-align: left"><font style="font: 10pt Times New Roman, Times, Serif"> </font></td>
<td><font style="font: 10pt Times New Roman, Times, Serif"> </font></td>
<td style="text-align: left"><font style="font: 10pt Times New Roman, Times, Serif"> </font></td>
<td style="text-align: right"><font style="font: 10pt Times New Roman, Times, Serif">299,286</font></td>
<td style="text-align: left"><font style="font: 10pt Times New Roman, Times, Serif"> </font></td>
<td><font style="font: 10pt Times New Roman, Times, Serif"> </font></td>
<td style="text-align: left"><font style="font: 10pt Times New Roman, Times, Serif"> </font></td>
<td style="text-align: right"><font style="font: 10pt Times New Roman, Times, Serif">1,040,238</font></td>
<td style="text-align: left"><font style="font: 10pt Times New Roman, Times, Serif"> </font></td>
<td><font style="font: 10pt Times New Roman, Times, Serif"> </font></td>
<td style="text-align: left"><font style="font: 10pt Times New Roman, Times, Serif"> </font></td>
<td style="text-align: right"><font style="font: 10pt Times New Roman, Times, Serif">900,751</font></td>
<td style="text-align: left"><font style="font: 10pt Times New Roman, Times, Serif"> </font></td></tr>
<tr style="background-color: rgb(204,238,204); vertical-align: bottom">
<td style="padding-left: 5.4pt"><font style="font: 10pt Times New Roman, Times, Serif">Rent</font></td>
<td style="text-align: left"><font style="font: 10pt Times New Roman, Times, Serif"> </font></td>
<td style="text-align: right"><font style="font: 10pt Times New Roman, Times, Serif">15,148</font></td>
<td style="text-align: left"><font style="font: 10pt Times New Roman, Times, Serif"> </font></td>
<td><font style="font: 10pt Times New Roman, Times, Serif"> </font></td>
<td style="text-align: left"><font style="font: 10pt Times New Roman, Times, Serif"> </font></td>
<td style="text-align: right"><font style="font: 10pt Times New Roman, Times, Serif">15,148</font></td>
<td style="text-align: left"><font style="font: 10pt Times New Roman, Times, Serif"> </font></td>
<td><font style="font: 10pt Times New Roman, Times, Serif"> </font></td>
<td style="text-align: left"><font style="font: 10pt Times New Roman, Times, Serif"> </font></td>
<td style="text-align: right"><font style="font: 10pt Times New Roman, Times, Serif">45,444</font></td>
<td style="text-align: left"><font style="font: 10pt Times New Roman, Times, Serif"> </font></td>
<td><font style="font: 10pt Times New Roman, Times, Serif"> </font></td>
<td style="text-align: left"><font style="font: 10pt Times New Roman, Times, Serif"> </font></td>
<td style="text-align: right"><font style="font: 10pt Times New Roman, Times, Serif">47,214</font></td>
<td style="text-align: left"><font style="font: 10pt Times New Roman, Times, Serif"> </font></td></tr>
<tr style="background-color: white; vertical-align: bottom">
<td style="text-align: left; padding-left: 5.4pt"><font style="font: 10pt Times New Roman, Times, Serif">Depreciation and
amortization</font></td>
<td style="text-align: left"><font style="font: 10pt Times New Roman, Times, Serif"> </font></td>
<td style="text-align: right"><font style="font: 10pt Times New Roman, Times, Serif">48,225</font></td>
<td style="text-align: left"><font style="font: 10pt Times New Roman, Times, Serif"> </font></td>
<td><font style="font: 10pt Times New Roman, Times, Serif"> </font></td>
<td style="text-align: left"><font style="font: 10pt Times New Roman, Times, Serif"> </font></td>
<td style="text-align: right"><font style="font: 10pt Times New Roman, Times, Serif">46,735</font></td>
<td style="text-align: left"><font style="font: 10pt Times New Roman, Times, Serif"> </font></td>
<td><font style="font: 10pt Times New Roman, Times, Serif"> </font></td>
<td style="text-align: left"><font style="font: 10pt Times New Roman, Times, Serif"> </font></td>
<td style="text-align: right"><font style="font: 10pt Times New Roman, Times, Serif">144,562</font></td>
<td style="text-align: left"><font style="font: 10pt Times New Roman, Times, Serif"> </font></td>
<td><font style="font: 10pt Times New Roman, Times, Serif"> </font></td>
<td style="text-align: left"><font style="font: 10pt Times New Roman, Times, Serif"> </font></td>
<td style="text-align: right"><font style="font: 10pt Times New Roman, Times, Serif">140,087</font></td>
<td style="text-align: left"><font style="font: 10pt Times New Roman, Times, Serif"> </font></td></tr>
<tr style="background-color: rgb(204,238,204); vertical-align: bottom">
<td style="padding-left: 5.4pt"><font style="font: 10pt Times New Roman, Times, Serif">Stock-based compensation</font></td>
<td style="text-align: left"><font style="font: 10pt Times New Roman, Times, Serif"> </font></td>
<td style="text-align: right"><font style="font: 10pt Times New Roman, Times, Serif">281,925</font></td>
<td style="text-align: left"><font style="font: 10pt Times New Roman, Times, Serif"> </font></td>
<td><font style="font: 10pt Times New Roman, Times, Serif"> </font></td>
<td style="text-align: left"><font style="font: 10pt Times New Roman, Times, Serif"> </font></td>
<td style="text-align: right"><font style="font: 10pt Times New Roman, Times, Serif">29,857</font></td>
<td style="text-align: left"><font style="font: 10pt Times New Roman, Times, Serif"> </font></td>
<td><font style="font: 10pt Times New Roman, Times, Serif"> </font></td>
<td style="text-align: left"><font style="font: 10pt Times New Roman, Times, Serif"> </font></td>
<td style="text-align: right"><font style="font: 10pt Times New Roman, Times, Serif">310,823</font></td>
<td style="text-align: left"><font style="font: 10pt Times New Roman, Times, Serif"> </font></td>
<td><font style="font: 10pt Times New Roman, Times, Serif"> </font></td>
<td style="text-align: left"><font style="font: 10pt Times New Roman, Times, Serif"> </font></td>
<td style="text-align: right"><font style="font: 10pt Times New Roman, Times, Serif">227,922</font></td>
<td style="text-align: left"><font style="font: 10pt Times New Roman, Times, Serif"> </font></td></tr>
<tr style="background-color: white; vertical-align: bottom">
<td style="padding-left: 5.4pt"><font style="font: 10pt Times New Roman, Times, Serif">Revenue share expense</font></td>
<td style="text-align: left"><font style="font: 10pt Times New Roman, Times, Serif"> </font></td>
<td style="text-align: right"><font style="font: 10pt Times New Roman, Times, Serif">376,831</font></td>
<td style="text-align: left"><font style="font: 10pt Times New Roman, Times, Serif"> </font></td>
<td><font style="font: 10pt Times New Roman, Times, Serif"> </font></td>
<td style="text-align: left"><font style="font: 10pt Times New Roman, Times, Serif"> </font></td>
<td style="text-align: right"><font style="font: 10pt Times New Roman, Times, Serif">20,669</font></td>
<td style="text-align: left"><font style="font: 10pt Times New Roman, Times, Serif"> </font></td>
<td><font style="font: 10pt Times New Roman, Times, Serif"> </font></td>
<td style="text-align: left"><font style="font: 10pt Times New Roman, Times, Serif"> </font></td>
<td style="text-align: right"><font style="font: 10pt Times New Roman, Times, Serif">614,234</font></td>
<td style="text-align: left"><font style="font: 10pt Times New Roman, Times, Serif"> </font></td>
<td><font style="font: 10pt Times New Roman, Times, Serif"> </font></td>
<td style="text-align: left"><font style="font: 10pt Times New Roman, Times, Serif"> </font></td>
<td style="text-align: right"><font style="font: 10pt Times New Roman, Times, Serif">28,804</font></td>
<td style="text-align: left"><font style="font: 10pt Times New Roman, Times, Serif"> </font></td></tr>
<tr style="background-color: rgb(204,238,204); vertical-align: bottom">
<td style="text-align: left; padding-bottom: 1pt; padding-left: 5.4pt"><font style="font: 10pt Times New Roman, Times, Serif">General
and administrative</font></td>
<td style="border-bottom: black 1pt solid; text-align: left"><font style="font: 10pt Times New Roman, Times, Serif"> </font></td>
<td style="border-bottom: black 1pt solid; text-align: right"><font style="font: 10pt Times New Roman, Times, Serif">94,753</font></td>
<td style="text-align: left; padding-bottom: 1pt"><font style="font: 10pt Times New Roman, Times, Serif"> </font></td>
<td style="padding-bottom: 1pt"><font style="font: 10pt Times New Roman, Times, Serif"> </font></td>
<td style="border-bottom: black 1pt solid; text-align: left"><font style="font: 10pt Times New Roman, Times, Serif"> </font></td>
<td style="border-bottom: black 1pt solid; text-align: right"><font style="font: 10pt Times New Roman, Times, Serif">63,208</font></td>
<td style="text-align: left; padding-bottom: 1pt"><font style="font: 10pt Times New Roman, Times, Serif"> </font></td>
<td style="padding-bottom: 1pt"><font style="font: 10pt Times New Roman, Times, Serif"> </font></td>
<td style="border-bottom: black 1pt solid; text-align: left"><font style="font: 10pt Times New Roman, Times, Serif"> </font></td>
<td style="border-bottom: black 1pt solid; text-align: right"><font style="font: 10pt Times New Roman, Times, Serif">360,010</font></td>
<td style="text-align: left; padding-bottom: 1pt"><font style="font: 10pt Times New Roman, Times, Serif"> </font></td>
<td style="padding-bottom: 1pt"><font style="font: 10pt Times New Roman, Times, Serif"> </font></td>
<td style="border-bottom: black 1pt solid; text-align: left"><font style="font: 10pt Times New Roman, Times, Serif"> </font></td>
<td style="border-bottom: black 1pt solid; text-align: right"><font style="font: 10pt Times New Roman, Times, Serif">197,368</font></td>
<td style="text-align: left; padding-bottom: 1pt"><font style="font: 10pt Times New Roman, Times, Serif"> </font></td></tr>
<tr style="background-color: white; vertical-align: bottom">
<td style="text-align: left; padding-bottom: 2.5pt; padding-left: 5.4pt"><font style="font: 10pt Times New Roman, Times, Serif">Total
Operating Expenses</font></td>
<td style="border-bottom: black 2.5pt double; text-align: left"><font style="font: 10pt Times New Roman, Times, Serif">$</font></td>
<td style="border-bottom: black 2.5pt double; text-align: right"><font style="font: 10pt Times New Roman, Times, Serif">1,362,335</font></td>
<td style="text-align: left; padding-bottom: 2.5pt"><font style="font: 10pt Times New Roman, Times, Serif"> </font></td>
<td style="padding-bottom: 2.5pt"><font style="font: 10pt Times New Roman, Times, Serif"> </font></td>
<td style="border-bottom: black 2.5pt double; text-align: left"><font style="font: 10pt Times New Roman, Times, Serif">$</font></td>
<td style="border-bottom: black 2.5pt double; text-align: right"><font style="font: 10pt Times New Roman, Times, Serif">559,305</font></td>
<td style="text-align: left; padding-bottom: 2.5pt"><font style="font: 10pt Times New Roman, Times, Serif"> </font></td>
<td style="padding-bottom: 2.5pt"><font style="font: 10pt Times New Roman, Times, Serif"> </font></td>
<td style="border-bottom: black 2.5pt double; text-align: left"><font style="font: 10pt Times New Roman, Times, Serif">$</font></td>
<td style="border-bottom: black 2.5pt double; text-align: right"><font style="font: 10pt Times New Roman, Times, Serif">2,886,473</font></td>
<td style="text-align: left; padding-bottom: 2.5pt"><font style="font: 10pt Times New Roman, Times, Serif"> </font></td>
<td style="padding-bottom: 2.5pt"><font style="font: 10pt Times New Roman, Times, Serif"> </font></td>
<td style="border-bottom: black 2.5pt double; text-align: left"><font style="font: 10pt Times New Roman, Times, Serif">$</font></td>
<td style="border-bottom: black 2.5pt double; text-align: right"><font style="font: 10pt Times New Roman, Times, Serif">1,781,257</font></td>
<td style="text-align: left; padding-bottom: 2.5pt"><font style="font: 10pt Times New Roman, Times, Serif"> </font></td></tr>
</table>
<p style="margin: 0pt"></p>
30372
23207
1167
45088
275004
151610
83235
186188
65786
25657
0
7835
1040238
344979
299286
900751
45444
15148
15148
47214
614234
376831
20669
28804
360010
94753
63208
197368
<p style="margin: 0pt"><font style="font: 10pt Times New Roman, Times, Serif; letter-spacing: 0px">In accordance with ASC 855-10,
the Company has analyzed its operations subsequent to September 30, 2013 through the date these financial statements were issued
and has determined that it does not have any material subsequent events to disclose in these financial statements other than the
events described above.</font></p>