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<p style="font: 8pt Times New Roman, Times, Serif; margin: 0; text-align: justify"><i>Basis of Presentation and Principals of Consolidation</i></p>
<p style="font: 8pt Times New Roman, Times, Serif; margin: 0; text-align: justify; text-indent: 0.5in"> </p>
<p style="font: 8pt Times New Roman, Times, Serif; margin: 0; text-align: justify; text-indent: 0.5in">The condensed consolidated
financial statements include the accounts of the Company and our wholly-owned subsidiaries. Intercompany balances and transactions
have been eliminated upon consolidation. </p>
<p style="font: 8pt Times New Roman, Times, Serif; margin: 0; text-align: justify; text-indent: 0.5in"> </p>
<p style="font: 8pt Times New Roman, Times, Serif; margin: 0; text-align: justify; text-indent: 0.5in">The accompanying unaudited
condensed consolidated financial statements have been prepared in accordance with accounting principles generally accepted in the
United States of America for interim financial information and in accordance with the instructions to Form 10-Q and Article 10
of Regulation S-X. Accordingly, they do not include all of the information and note disclosures required by U.S. generally accepted
accounting principles for complete financial statements. The accompanying unaudited financial information should be read in conjunction
with the audited consolidated financial statements, including the notes thereto, as of and for the year ended December 31, 2013,
included in our 2013 Annual Report on Form 10-K filed with the Securities and Exchange Commission (the “SEC”). The
information furnished in this report reflects all adjustments (consisting of normal recurring adjustments), which are, in the opinion
of management, necessary for a fair presentation of our financial position, results of operations and cash flows for each period
presented. The results of operations for the interim period ended March 31, 2014 are not necessarily indicative of the results
for the year ending December 31, 2014 or for any future period.</p>
<p style="font: 8pt Times New Roman, Times, Serif; margin: 0; text-align: justify; text-indent: 0.5in"> </p>
<p style="font: 8pt Times New Roman, Times, Serif; margin: 0; text-align: justify"><i>Reclassifications</i></p>
<p style="font: 8pt Times New Roman, Times, Serif; margin: 0; text-align: justify; text-indent: 0.5in"> </p>
<p style="font: 8pt Times New Roman, Times, Serif; margin: 0; text-align: justify; text-indent: 0.5in">Certain amounts for prior
periods have been reclassified in the condensed consolidated financial statements to conform to the classification used in fiscal
year 2014.</p>
<p style="font: 8pt Times New Roman, Times, Serif; margin: 0; text-align: justify; text-indent: 0.5in"> <i> </i></p>
<p style="font: 8pt Times New Roman, Times, Serif; margin: 0; text-align: justify"><i>Fair Value of Financial Instruments</i></p>
<p style="font: 8pt Times New Roman, Times, Serif; margin: 0; text-align: justify; text-indent: 0.5in"> </p>
<p style="font: 8pt Times New Roman, Times, Serif; margin: 0; text-align: justify; text-indent: 0.5in">The carrying values of our
cash and cash equivalents, accounts receivable, accounts payable, accrued expenses and short-term debt approximate their fair values
due to their short maturities. The carrying values of our long-term liabilities approximate their fair values based on current
rates of interest for instruments with similar characteristics.</p>
<p style="font: 8pt/115% Calibri, Helvetica, Sans-Serif; margin: 0 0 10pt; text-align: justify"> </p>
<p style="font: 8pt Times New Roman, Times, Serif; margin: 0; text-align: justify; text-indent: 0.5in">As of March 31, 2014, we
had cash and cash equivalents of approximately $0.3 million and a working capital deficit of $27.0 million. We incurred a net loss
of $2.9 million and net cash used in operations of $0.3 million for the three months ended March 31, 2014. To date, we have funded
our operations primarily through sales of our common stock, convertible preferred stock, and debt financing arrangements.</p>
<p style="font: 8pt Times New Roman, Times, Serif; margin: 0; text-align: justify; text-indent: 0.5in"> </p>
<p style="font: 8pt Times New Roman, Times, Serif; margin: 0; text-align: justify; text-indent: 0.5in">Management is continuing
its efforts to improve quarterly profits by enhancing revenue generation and managing the Company’s cost structure, while
at the same time ensuring the Company has the resources to meet demand from its customers.</p>
<p style="font: 8pt Times New Roman, Times, Serif; margin: 0; text-align: justify; text-indent: 0.5in"> </p>
<p style="font: 8pt Times New Roman, Times, Serif; margin: 0; text-align: justify; text-indent: 0.5in">We may require additional
capital to support our working capital needs in the future. Our ability to fund our capital needs will depend on many factors,
including our future operating performance, our ability to successfully realign our costs or the effect of any strategic and financing
alternatives we may pursue. Financing, if available, may be on terms that are significantly dilutive to our stockholders, and the
prices at which investors would be willing to purchase our securities may be lower than the current price of our common stock.
The holders of new securities may also receive rights, preferences or privileges that are senior to those of existing holders of
our common stock. If new sources of financing are required but are insufficient or unavailable, we would be required to modify
our growth and operating plans accordingly.</p>
<p style="font: 8pt/115% Calibri, Helvetica, Sans-Serif; margin: 0 0 10pt; text-align: justify"> </p>
<p style="margin: 0pt"></p>
<p style="font: 8pt/normal Times New Roman, Times, Serif; margin: 0; text-align: justify"><i>Retention Bonus Obligations</i></p>
<p style="font: 8pt/normal Times New Roman, Times, Serif; margin: 0; text-align: justify; text-indent: 0.5in"> </p>
<p style="font: 8pt/normal Times New Roman, Times, Serif; margin: 0; text-align: justify; text-indent: 0.5in">In connection with
the acquisition of Archer USA, the Company entered into retention bonus arrangements with certain, key employees. As of March 31,
2014 and December 31, 2013, the outstanding amounts owed under these arrangements were $2.0 million and $2.0 million, respectively.
Interest accrues at an annual rate of 6% on any outstanding amounts. We do not plan on paying these obligations until such time
as our resources permit.</p>
<p style="font: 8pt/normal Times New Roman, Times, Serif; margin: 0; text-align: justify; text-indent: 0.5in"><b> </b></p>
<p style="font: 8pt/normal Times New Roman, Times, Serif; margin: 0; text-align: justify"><i>Contingencies Related to Historical
Operations</i></p>
<p style="font: 8pt/normal Times New Roman, Times, Serif; margin: 0; text-align: justify; text-indent: 0.5in"> </p>
<p style="font: 8pt/normal Times New Roman, Times, Serif; margin: 0; text-align: justify; text-indent: 0.5in">The Company was incorporated
in 1999 and became engaged in business in the mobile industry in early 2008. Between 1999 and 2008, the Company was engaged
in different lines of business including discount brokerage and financial services, mortgage banking, and apparel. Current management
was not involved with the Company prior to early 2008. There may be risks and liabilities resulting from the conduct of the Company’s
business prior to February 2008 that are unknown to the management of our Company and not disclosed in these financial statements.
In the event that any liabilities, liens, judgments, warrants, options, or other claims against the Company arise, these will be
recorded when discovered.</p>
<p style="font: 8pt/normal Times New Roman, Times, Serif; margin: 0; text-align: justify; text-indent: 0.5in"> <i> </i></p>
<p style="font: 8pt/normal Times New Roman, Times, Serif; margin: 0; text-align: justify"><i>Legal Proceedings</i></p>
<p style="font: 8pt/normal Times New Roman, Times, Serif; margin: 0; text-align: justify; text-indent: 0.5in"> </p>
<p style="font: 8pt/normal Times New Roman, Times, Serif; margin: 0; text-align: justify; text-indent: 0.5in">We are involved in
a number of claims, proceedings and litigation arising from our operations.  In accordance with applicable accounting principles
and guidance, we establish a reserve for legal proceedings if and when those matters present loss contingencies that are both probable
and reasonably estimable.  As of the date of this report, we have not recorded a reserve related to any of the claims, proceedings
or actions described below.  We continue to monitor these matters for developments that would affect the likelihood of
a loss and the reserved amount, if any, thereof, and adjusts the amount as appropriate.   Moreover, although there is
a reasonable possibility that a loss may be incurred in connection with these matters, at this time, based on the status of each
matter, the possible loss or range of loss cannot in our view be reasonably estimated because, among other things, (a) the
remedies sought are indeterminate or unspecified, (b) the legal and/or factual theories are not well developed; and/or (c) the
matters involve complex or novel legal theories.</p>
<p style="font: 8pt/normal Times New Roman, Times, Serif; margin: 0; text-align: justify; text-indent: 0.5in"> </p>
<p style="font: 8pt/normal Times New Roman, Times, Serif; margin: 0; text-align: justify; text-indent: 0.5in">Archer USA was a
party in a proceeding in Copenhagen, Denmark captioned Cirkelselskabet af 16. Juli 2008 in bankruptcy v. iLoop Mobile, Inc., Vedrorende
sag 3, afd. B-1040-12: (Deres j.nr. 1013836). This matter was filed in the Copenhagen City Court by the trustee for Cirkelselskabet,
formerly iLoop Mobile ApS (“ApS”). ApS was a Danish subsidiary of Archer USA that was declared bankrupt in July 2008.
The trustee claims are based on an asset purchase agreement in December 2007 between Archer USA and ApS. Under the agreement, Archer
USA forgave $2,549,794 of debt owed by ApS to Archer USA in exchange for certain assets allegedly owned by ApS. The Copenhagen
City Court entered a judgment against Archer USA on February 27, 2012 for the amount of the trustee's claim plus expenses. Archer
USA filed an appeal on March 26, 2012 with the High Court of Eastern Denmark (<i>Østre Landsret</i>).  The High
Court affirmed the lower court’s judgment and awarded the trustee additional expenses. On January 10, 2014, Archer USA appealed
the High Court’s decision to the Supreme Court of Denmark. The Supreme Court has declined to hear Archer USA’s appeal
and Archer USA has no further opportunities for appeal in Denmark. The judgment entered against Archer USA in Denmark is for $2,549,794,
plus interest of approximately $1,292,047, plus fees of approximately $168,000. If Archer USA did pay this judgment, the trustee
would owe Archer USA, as a creditor of the estate, approximately $3,000,000 as of March 31, 2014. We believe that it is not probable
that Archer USA will pay any amounts as a result of this judgment. We believe the proceedings in the Danish courts suffered from
serious violations of United States public policy and due process requirements. In addition, we believe the judgment rendered by
the Danish courts is not supported by and offends bankruptcy law and principles of both Denmark and the United States. We intend
to vigorously contest the validity and enforceability of this judgment in the United States and to vigorously dispute any attempt
made to enforce this judgment or collect these amounts.</p>
<p style="font: 8pt/normal Times New Roman, Times, Serif; margin: 0; text-align: justify; text-indent: 0.5in"> </p>
<p style="font: 8pt/normal Times New Roman, Times, Serif; margin: 0; text-align: justify; text-indent: 0.5in">We are a party to
a wage action captioned James O’Brien v. iLoop Mobile, Inc., Lenco Mobile, Inc. and Matthew R. Harris, No. 12-2-12705-1 (King
County Superior Court, filed 4/13/2012). Plaintiff claimed breach of contract and failure to pay wages under a 2011 iLoop employment
agreement and Archer USA/Lenco Mobile retention bonus agreement between Plaintiff and the Company.  In his complaint, Plaintiff
sought retention bonus payments and/or six months’ wages under the employment agreement; double damages in the amount of
any wage liability for willful nonpayment of wages, attorneys’ fees and costs, plus pre and post-judgment interest. 
The court granted summary judgment in defendants’ favor, dismissing the claim under the 2011 iLoop employment agreement,
all claims against Matthew Harris, as well as the claim for double damages for willful nonpayment.  The plaintiff’s
only surviving claim was tried and, following trial, the court entered judgment against plaintiff and in favor of defendants. The
plaintiff has appealed the judgment. We believe the claims are without merit and intend to vigorously defend against them on appeal.</p>
<p style="font: 8pt/normal Times New Roman, Times, Serif; margin: 0; text-align: justify; text-indent: 0.5in"> </p>
<p style="font: 8pt/normal Times New Roman, Times, Serif; margin: 0; text-align: justify; text-indent: 0.5in">We are a party to
an action in Nigeria captioned Skynet Telecommunications Limited, Living the Brand Limited v. Archer Mobile South Africa, Lenco
Mobile Inc. USA, Suit No: LD/117/2012 (In the High Court of Lagos State in the Lagos Judicial Division Holden at Lagos, filed
March 26, 2012). Plaintiffs claim more than $100,000,000 in damages for breach of an alleged partnership agreement with Archer
Mobile South Africa. The Company is preparing to file its Statement of Defense in accordance with applicable court procedures.
We believe the claims are without merit and intend to vigorously defend against them.</p>
<p style="font: 8pt/normal Times New Roman, Times, Serif; margin: 0; text-indent: 0.5in">Debt consisted of the following:</p>
<p style="font: 8pt/normal Times New Roman, Times, Serif; margin: 0; text-indent: 0.5in"> </p>
<table cellspacing="0" cellpadding="0" style="font: 8pt Calibri, Helvetica, Sans-Serif; width: 100%; border-collapse: collapse">
<tr style="vertical-align: bottom">
<td style="padding-left: 10pt; text-indent: -10pt; line-height: 115%"> </td>
<td style="line-height: 115%"> </td>
<td colspan="2" style="text-align: center; line-height: 115%"><font style="font: 8pt Times New Roman, Times, Serif"><b>March 31,</b></font></td>
<td style="line-height: 115%"> </td>
<td style="line-height: 115%"> </td>
<td colspan="2" style="text-align: center; line-height: 115%"><font style="font: 8pt Times New Roman, Times, Serif"><b>December 31,</b></font></td>
<td style="line-height: 115%"> </td></tr>
<tr style="vertical-align: bottom">
<td style="padding-left: 10pt; text-indent: -10pt; line-height: 115%"> </td>
<td style="line-height: 115%"> </td>
<td colspan="2" style="border-bottom: black 1pt solid; padding-left: 10pt; text-align: center; line-height: 115%"><font style="font: 8pt Times New Roman, Times, Serif"><b>2014</b></font></td>
<td style="line-height: 115%"> </td>
<td style="padding-left: 10pt; line-height: 115%"> </td>
<td colspan="2" style="border-bottom: black 1pt solid; text-align: center; line-height: 115%"><font style="font: 8pt Times New Roman, Times, Serif"><b>2013</b></font></td>
<td style="line-height: 115%"> </td></tr>
<tr style="vertical-align: bottom">
<td style="padding-left: 10pt; text-indent: -10pt; line-height: 115%"> </td>
<td style="line-height: 115%"> </td>
<td colspan="6" style="text-align: center; line-height: 115%"><font style="font: 8pt Times New Roman, Times, Serif"><b>(In thousands)</b></font></td>
<td style="line-height: 115%"> </td></tr>
<tr style="vertical-align: bottom; background-color: #EEEEEE">
<td style="width: 68%; padding-left: 10pt; text-indent: -10pt; line-height: 115%"><font style="font: 8pt Times New Roman, Times, Serif">Current portion of long-term debt obligations, net of debt discount</font></td>
<td style="width: 1%; line-height: 115%"> </td>
<td style="width: 1%; line-height: 115%"> </td>
<td style="width: 13%; text-align: right; line-height: 115%"><font style="font: 8pt Times New Roman, Times, Serif">12,475</font></td>
<td style="width: 1%; line-height: 115%"> </td>
<td style="width: 1%; line-height: 115%"> </td>
<td style="width: 1%; line-height: 115%"> </td>
<td style="width: 13%; text-align: right; line-height: 115%"><font style="font: 8pt Times New Roman, Times, Serif">11,579</font></td>
<td style="width: 1%; line-height: 115%"> </td></tr>
<tr style="vertical-align: bottom; background-color: white">
<td style="padding-left: 10pt; text-indent: -10pt; line-height: 115%"><font style="font: 8pt Times New Roman, Times, Serif">Long-term obligations, net of debt discount</font></td>
<td style="line-height: 115%"> </td>
<td style="border-bottom: black 1pt solid; padding-left: 10pt; line-height: 115%"> </td>
<td style="border-bottom: black 1pt solid; padding-left: 10pt; text-align: right; line-height: 115%"><font style="font: 8pt Times New Roman, Times, Serif">1,702</font></td>
<td style="line-height: 115%"> </td>
<td style="padding-left: 10pt; line-height: 115%"> </td>
<td style="border-bottom: black 1pt solid; line-height: 115%"> </td>
<td style="border-bottom: black 1pt solid; text-align: right; line-height: 115%"><font style="font: 8pt Times New Roman, Times, Serif">1,520</font></td>
<td style="line-height: 115%"> </td></tr>
<tr style="vertical-align: bottom; background-color: #EEEEEE">
<td style="padding-left: 10pt; text-indent: -10pt; line-height: 115%"><font style="font: 8pt Times New Roman, Times, Serif">Total debt</font></td>
<td style="line-height: 115%"> </td>
<td style="border-bottom: black 2.25pt double; padding-left: 10pt; line-height: 115%"> </td>
<td style="border-bottom: black 2.25pt double; padding-left: 10pt; text-align: right; line-height: 115%"><font style="font: 8pt Times New Roman, Times, Serif">14,177</font></td>
<td style="line-height: 115%"> </td>
<td style="padding-left: 10pt; line-height: 115%"> </td>
<td style="border-bottom: black 2.25pt double; line-height: 115%"> </td>
<td style="border-bottom: black 2.25pt double; text-align: right; line-height: 115%"><font style="font: 8pt Times New Roman, Times, Serif">13,099</font></td>
<td style="line-height: 115%"> </td></tr>
</table>
<p style="font: 8pt/115% Times New Roman, Times, Serif; margin: 0 0 10pt"> </p>
<p style="font: 8pt/normal Times New Roman, Times, Serif; margin: 0; text-align: justify; text-indent: 0.5in">As of March 31, 2014,
there were 9.6 million shares of common stock available for issuance pursuant to our equity compensation plans. Awards of stock
options, stock appreciation rights, stock, restricted stock, restricted stock units, performance units and performance shares may
be granted under the 2012 Incentive Plan. The 2012 Incentive Plan initially authorizes the issuance of up to 53 million shares
of our common stock. In conjunction with the adoption of the 2012 Incentive Plan, all prior plans were suspended and no further
grants are to be made from those plans. Further, any shares subject to outstanding awards under the prior plans on the effective
date of the 2012 Incentive Plan that subsequently cease to be subject to such awards (other than by reason of exercise or settlement
of the awards in shares), will automatically become available for issuance under the 2012 Incentive Plan, up to an aggregate maximum
of 20.5 million shares.</p>
<p style="font: 8pt/normal Times New Roman, Times, Serif; margin: 0; text-align: justify; text-indent: 0.5in"> </p>
<p style="font: 8pt/normal Times New Roman, Times, Serif; margin: 0; text-align: justify; text-indent: 0.5in">Changes in our outstanding
stock options during the three months ended March 31, 2014 were as follows:</p>
<p style="font: 8pt/normal Times New Roman, Times, Serif; margin: 0; text-indent: 0.5in"> </p>
<table cellspacing="0" cellpadding="0" style="font: 8pt Calibri, Helvetica, Sans-Serif; width: 100%; border-collapse: collapse">
<tr style="vertical-align: bottom">
<td style="padding-left: 10pt; text-indent: -10pt; line-height: 115%"> </td>
<td style="line-height: 115%"> </td>
<td colspan="2" style="border-bottom: black 1pt solid; padding-left: 10pt; text-align: center; line-height: 115%"><font style="font: 8pt Times New Roman, Times, Serif">Number of Stock Options</font></td>
<td style="line-height: 115%"> </td>
<td style="padding-left: 10pt; line-height: 115%"> </td>
<td colspan="2" style="border-bottom: black 1pt solid; padding-left: 10pt; text-align: center; line-height: 115%"><font style="font: 8pt Times New Roman, Times, Serif">Weighted Average Price</font></td>
<td style="line-height: 115%"> </td>
<td style="padding-left: 10pt; line-height: 115%"> </td>
<td colspan="2" style="border-bottom: black 1pt solid; text-align: center; line-height: 115%"><font style="font: 8pt Times New Roman, Times, Serif">Weighted Average Remaining Contractual Term</font></td>
<td style="line-height: 115%"> </td></tr>
<tr style="vertical-align: bottom; background-color: #EEEEEE">
<td style="width: 52%; padding-left: 10pt; text-indent: -10pt; line-height: 115%"><font style="font: 8pt Times New Roman, Times, Serif">Outstanding at December 31, 2013</font></td>
<td style="width: 1%; line-height: 115%"> </td>
<td style="width: 1%; line-height: 115%"> </td>
<td style="width: 13%; text-align: right; line-height: 115%"><font style="font: 8pt Times New Roman, Times, Serif">53,465,045</font></td>
<td style="width: 1%; line-height: 115%"> </td>
<td style="width: 1%; line-height: 115%"> </td>
<td style="width: 1%; line-height: 115%"><font style="font: 8pt Times New Roman, Times, Serif">$</font></td>
<td style="width: 13%; text-align: right; line-height: 115%"><font style="font: 8pt Times New Roman, Times, Serif">0.12</font></td>
<td style="width: 1%; line-height: 115%"> </td>
<td style="width: 1%; line-height: 115%"> </td>
<td style="width: 1%; line-height: 115%"> </td>
<td style="width: 13%; text-align: right; line-height: 115%"><font style="font: 8pt Times New Roman, Times, Serif">4.02</font></td>
<td style="width: 1%; line-height: 115%"> </td></tr>
<tr style="vertical-align: bottom; background-color: white">
<td style="padding-left: 10pt; text-indent: -10pt; line-height: 115%"> </td>
<td style="line-height: 115%"> </td>
<td style="line-height: 115%"> </td>
<td style="text-align: right; line-height: 115%"> </td>
<td style="line-height: 115%"> </td>
<td style="line-height: 115%"> </td>
<td style="line-height: 115%"> </td>
<td style="text-align: right; line-height: 115%"> </td>
<td style="line-height: 115%"> </td>
<td style="line-height: 115%"> </td>
<td style="line-height: 115%"> </td>
<td style="text-align: right; line-height: 115%"> </td>
<td style="line-height: 115%"> </td></tr>
<tr style="vertical-align: bottom; background-color: #EEEEEE">
<td style="padding-left: 10pt; text-indent: -10pt; line-height: 115%"><font style="font: 8pt Times New Roman, Times, Serif">Granted</font></td>
<td style="line-height: 115%"> </td>
<td style="line-height: 115%"> </td>
<td style="text-align: right; line-height: 115%"><font style="font: 8pt Times New Roman, Times, Serif">1,200,000</font></td>
<td style="line-height: 115%"> </td>
<td style="line-height: 115%"> </td>
<td style="line-height: 115%"><font style="font: 8pt Times New Roman, Times, Serif">$</font></td>
<td style="text-align: right; line-height: 115%"><font style="font: 8pt Times New Roman, Times, Serif">0.08</font></td>
<td style="line-height: 115%"> </td>
<td style="line-height: 115%"> </td>
<td style="line-height: 115%"> </td>
<td style="text-align: right; line-height: 115%"> </td>
<td style="line-height: 115%"> </td></tr>
<tr style="vertical-align: bottom; background-color: white">
<td style="padding-left: 10pt; text-indent: -10pt; line-height: 115%"><font style="font: 8pt Times New Roman, Times, Serif">Exercised</font></td>
<td style="line-height: 115%"> </td>
<td style="line-height: 115%"> </td>
<td style="text-align: right; line-height: 115%"><font style="font: 8pt Times New Roman, Times, Serif">–</font></td>
<td style="line-height: 115%"> </td>
<td style="line-height: 115%"> </td>
<td style="line-height: 115%"> </td>
<td style="text-align: right; line-height: 115%"> </td>
<td style="line-height: 115%"> </td>
<td style="line-height: 115%"> </td>
<td style="line-height: 115%"> </td>
<td style="text-align: right; line-height: 115%"> </td>
<td style="line-height: 115%"> </td></tr>
<tr style="vertical-align: bottom; background-color: #EEEEEE">
<td style="padding-left: 10pt; text-indent: -10pt; line-height: 115%"><font style="font: 8pt Times New Roman, Times, Serif">Cancelled or expired</font></td>
<td style="line-height: 115%"> </td>
<td style="border-bottom: black 1pt solid; padding-left: 10pt; line-height: 115%"> </td>
<td style="border-bottom: black 1pt solid; padding-left: 10pt; text-align: right; line-height: 115%"><font style="font: 8pt Times New Roman, Times, Serif">(400,000</font></td>
<td style="line-height: 115%"><font style="font: 8pt Times New Roman, Times, Serif">)</font></td>
<td style="padding-left: 10pt; line-height: 115%"> </td>
<td style="padding-left: 10pt; line-height: 115%"> </td>
<td style="padding-left: 10pt; text-align: right; line-height: 115%"> </td>
<td style="line-height: 115%"> </td>
<td style="padding-left: 10pt; line-height: 115%"> </td>
<td style="line-height: 115%"> </td>
<td style="text-align: right; line-height: 115%"> </td>
<td style="line-height: 115%"> </td></tr>
<tr style="vertical-align: bottom; background-color: white">
<td style="padding-left: 10pt; text-indent: -10pt; line-height: 115%"> </td>
<td style="line-height: 115%"> </td>
<td style="line-height: 115%"> </td>
<td style="text-align: right; line-height: 115%"> </td>
<td style="line-height: 115%"> </td>
<td style="line-height: 115%"> </td>
<td style="line-height: 115%"> </td>
<td style="text-align: right; line-height: 115%"> </td>
<td style="line-height: 115%"> </td>
<td style="line-height: 115%"> </td>
<td style="line-height: 115%"> </td>
<td style="text-align: right; line-height: 115%"> </td>
<td style="line-height: 115%"> </td></tr>
<tr style="vertical-align: bottom; background-color: #EEEEEE">
<td style="padding-left: 10pt; text-indent: -10pt; line-height: 115%"><font style="font: 8pt Times New Roman, Times, Serif">Outstanding at March 31, 2014</font></td>
<td style="line-height: 115%"> </td>
<td style="line-height: 115%"> </td>
<td style="text-align: right; line-height: 115%"><font style="font: 8pt Times New Roman, Times, Serif">54,265,045</font></td>
<td style="line-height: 115%"> </td>
<td style="line-height: 115%"> </td>
<td style="line-height: 115%"><font style="font: 8pt Times New Roman, Times, Serif">$</font></td>
<td style="text-align: right; line-height: 115%"><font style="font: 8pt Times New Roman, Times, Serif">0.11</font></td>
<td style="line-height: 115%"> </td>
<td style="line-height: 115%"> </td>
<td style="line-height: 115%"> </td>
<td style="text-align: right; line-height: 115%"><font style="font: 8pt Times New Roman, Times, Serif">3.79</font></td>
<td style="line-height: 115%"> </td></tr>
<tr style="vertical-align: bottom; background-color: white">
<td style="padding-left: 10pt; text-indent: -10pt; line-height: 115%"> </td>
<td style="line-height: 115%"> </td>
<td style="line-height: 115%"> </td>
<td style="text-align: right; line-height: 115%"> </td>
<td style="line-height: 115%"> </td>
<td style="line-height: 115%"> </td>
<td style="line-height: 115%"> </td>
<td style="text-align: right; line-height: 115%"> </td>
<td style="line-height: 115%"> </td>
<td style="line-height: 115%"> </td>
<td style="line-height: 115%"> </td>
<td style="text-align: right; line-height: 115%"> </td>
<td style="line-height: 115%"> </td></tr>
<tr style="vertical-align: bottom; background-color: #EEEEEE">
<td style="padding-left: 10pt; text-indent: -10pt; line-height: 115%"><font style="font: 8pt Times New Roman, Times, Serif">Exercisable at March 31, 2014</font></td>
<td style="line-height: 115%"> </td>
<td style="line-height: 115%"> </td>
<td style="text-align: right; line-height: 115%"><font style="font: 8pt Times New Roman, Times, Serif">39,354,241</font></td>
<td style="line-height: 115%"> </td>
<td style="line-height: 115%"> </td>
<td style="line-height: 115%"><font style="font: 8pt Times New Roman, Times, Serif">$</font></td>
<td style="text-align: right; line-height: 115%"><font style="font: 8pt Times New Roman, Times, Serif">0.11</font></td>
<td style="line-height: 115%"> </td>
<td style="line-height: 115%"> </td>
<td style="line-height: 115%"> </td>
<td style="text-align: right; line-height: 115%"> </td>
<td style="line-height: 115%"> </td></tr>
<tr style="vertical-align: bottom; background-color: white">
<td style="padding-left: 10pt; text-indent: -10pt; line-height: 115%"> </td>
<td style="line-height: 115%"> </td>
<td style="line-height: 115%"> </td>
<td style="text-align: right; line-height: 115%"> </td>
<td style="line-height: 115%"> </td>
<td style="line-height: 115%"> </td>
<td style="line-height: 115%"> </td>
<td style="text-align: right; line-height: 115%"> </td>
<td style="line-height: 115%"> </td>
<td style="line-height: 115%"> </td>
<td style="line-height: 115%"> </td>
<td style="text-align: right; line-height: 115%"> </td>
<td style="line-height: 115%"> </td></tr>
<tr style="vertical-align: bottom; background-color: #EEEEEE">
<td style="padding-left: 10pt; text-indent: -10pt; line-height: 115%"><font style="font: 8pt Times New Roman, Times, Serif">Vested and expected to vest at March 31, 2014</font></td>
<td style="line-height: 115%"> </td>
<td style="line-height: 115%"> </td>
<td style="text-align: right; line-height: 115%"><font style="font: 8pt Times New Roman, Times, Serif">54,265,045</font></td>
<td style="line-height: 115%"> </td>
<td style="line-height: 115%"> </td>
<td style="line-height: 115%"><font style="font: 8pt Times New Roman, Times, Serif">$</font></td>
<td style="text-align: right; line-height: 115%"><font style="font: 8pt Times New Roman, Times, Serif">0.11</font></td>
<td style="line-height: 115%"> </td>
<td style="line-height: 115%"> </td>
<td style="line-height: 115%"> </td>
<td style="text-align: right; line-height: 115%"><font style="font: 8pt Times New Roman, Times, Serif">3.79</font></td>
<td style="line-height: 115%"> </td></tr>
</table>
<p style="font: 8pt/normal Times New Roman, Times, Serif; margin: 0; text-indent: 0.5in"> </p>
<p style="font: 8pt/normal Times New Roman, Times, Serif; margin: 0; text-align: justify; text-indent: 0.5in">At March 31, 2014,
there was approximately $1.7 million of unamortized stock-based compensation cost related to non-vested stock options issued. That
cost is expected to be recognized as an expense over a remaining vesting period of approximately 1.0 years.</p>
<p style="font: 8pt/115% Times New Roman, Times, Serif; margin: 0 0 10pt; text-align: justify"> </p>
<p style="font: 8pt/normal Times New Roman, Times, Serif; margin: 0; text-align: justify; text-indent: 0.5in">Stock based compensation
is allocated as follows:</p>
<p style="font: 8pt/normal Times New Roman, Times, Serif; margin: 0; text-indent: 0.5in"> </p>
<table cellspacing="0" cellpadding="0" style="font: 8pt Calibri, Helvetica, Sans-Serif; width: 100%; border-collapse: collapse">
<tr style="vertical-align: bottom">
<td style="padding-left: 10pt; text-indent: -10pt; line-height: 115%"> </td>
<td style="line-height: 115%"> </td>
<td colspan="2" style="text-align: center; line-height: 115%"><font style="font: 8pt Times New Roman, Times, Serif">Three Months ended</font></td>
<td style="line-height: 115%"> </td>
<td style="line-height: 115%"> </td>
<td colspan="2" style="text-align: center; line-height: 115%"><font style="font: 8pt Times New Roman, Times, Serif">Three Months ended</font></td>
<td style="line-height: 115%"> </td></tr>
<tr style="vertical-align: bottom">
<td style="padding-left: 10pt; text-indent: -10pt; line-height: 115%"> </td>
<td style="line-height: 115%"> </td>
<td colspan="2" style="text-align: center; line-height: 115%"><font style="font: 8pt Times New Roman, Times, Serif">March 31, 2014</font></td>
<td style="line-height: 115%"> </td>
<td style="line-height: 115%"> </td>
<td colspan="2" style="text-align: center; line-height: 115%"><font style="font: 8pt Times New Roman, Times, Serif">March 31, 2013</font></td>
<td style="line-height: 115%"> </td></tr>
<tr style="vertical-align: bottom">
<td style="padding-left: 10pt; text-indent: -10pt; line-height: 115%"> </td>
<td style="line-height: 115%"> </td>
<td colspan="2" style="border-bottom: black 1pt solid; padding-left: 10pt; text-align: center; line-height: 115%"><font style="font: 8pt Times New Roman, Times, Serif">(in thousands)</font></td>
<td style="line-height: 115%"> </td>
<td style="padding-left: 10pt; line-height: 115%"> </td>
<td colspan="2" style="border-bottom: black 1pt solid; text-align: center; line-height: 115%"><font style="font: 8pt Times New Roman, Times, Serif">(in thousands)</font></td>
<td style="line-height: 115%"> </td></tr>
<tr style="vertical-align: bottom; background-color: #EEEEEE">
<td style="width: 68%; padding-left: 10pt; text-indent: -10pt; line-height: 115%"><font style="font: 8pt Times New Roman, Times, Serif">Sales and marketing</font></td>
<td style="width: 1%; line-height: 115%"> </td>
<td style="width: 1%; line-height: 115%"><font style="font: 8pt Times New Roman, Times, Serif">$</font></td>
<td style="width: 13%; text-align: right; line-height: 115%"><font style="font: 8pt Times New Roman, Times, Serif">425</font></td>
<td style="width: 1%; line-height: 115%"> </td>
<td style="width: 1%; line-height: 115%"> </td>
<td style="width: 1%; line-height: 115%"> </td>
<td style="width: 13%; text-align: right; line-height: 115%"><font style="font: 8pt Times New Roman, Times, Serif">131</font></td>
<td style="width: 1%; line-height: 115%"> </td></tr>
<tr style="vertical-align: bottom; background-color: white">
<td style="padding-left: 10pt; text-indent: -10pt; line-height: 115%"><font style="font: 8pt Times New Roman, Times, Serif">General and administrative</font></td>
<td style="line-height: 115%"> </td>
<td style="line-height: 115%"> </td>
<td style="text-align: right; line-height: 115%"><font style="font: 8pt Times New Roman, Times, Serif">267</font></td>
<td style="line-height: 115%"> </td>
<td style="line-height: 115%"> </td>
<td style="line-height: 115%"> </td>
<td style="text-align: right; line-height: 115%"><font style="font: 8pt Times New Roman, Times, Serif">264</font></td>
<td style="line-height: 115%"> </td></tr>
<tr style="vertical-align: bottom; background-color: #EEEEEE">
<td style="padding-left: 10pt; text-indent: -10pt; line-height: 115%"><font style="font: 8pt Times New Roman, Times, Serif">Research and development</font></td>
<td style="line-height: 115%"> </td>
<td style="border-bottom: black 1pt solid; padding-left: 10pt; line-height: 115%"> </td>
<td style="border-bottom: black 1pt solid; padding-left: 10pt; text-align: right; line-height: 115%"><font style="font: 8pt Times New Roman, Times, Serif">55</font></td>
<td style="line-height: 115%"> </td>
<td style="padding-left: 10pt; line-height: 115%"> </td>
<td style="border-bottom: black 1pt solid; line-height: 115%"> </td>
<td style="border-bottom: black 1pt solid; text-align: right; line-height: 115%"><font style="font: 8pt Times New Roman, Times, Serif">75</font></td>
<td style="line-height: 115%"> </td></tr>
<tr style="vertical-align: bottom; background-color: white">
<td style="padding-left: 10pt; text-indent: -10pt; line-height: 115%"> </td>
<td style="line-height: 115%"> </td>
<td style="border-bottom: black 2.25pt double; padding-left: 10pt; line-height: 115%"><font style="font: 8pt Times New Roman, Times, Serif">$</font></td>
<td style="border-bottom: black 2.25pt double; padding-left: 10pt; text-align: right; line-height: 115%"><font style="font: 8pt Times New Roman, Times, Serif">747</font></td>
<td style="line-height: 115%"> </td>
<td style="padding-left: 10pt; line-height: 115%"> </td>
<td style="border-bottom: black 2.25pt double; line-height: 115%"><font style="font: 8pt Times New Roman, Times, Serif">$</font></td>
<td style="border-bottom: black 2.25pt double; text-align: right; line-height: 115%"><font style="font: 8pt Times New Roman, Times, Serif">470</font></td>
<td style="line-height: 115%"> </td></tr>
</table>
<p style="font: 8pt/normal Times New Roman, Times, Serif; margin: 0; text-indent: 0.5in">  </p>
<p style="font: 8pt/normal Times New Roman, Times, Serif; margin: 0; text-indent: 0.5in">The following table summarizes outstanding
warrants to purchase shares of our common stock as of March 31, 2014:</p>
<p style="font: 8pt/normal Times New Roman, Times, Serif; margin: 0; text-indent: 0.5in"> </p>
<table cellspacing="0" cellpadding="0" style="font: 8pt Calibri, Helvetica, Sans-Serif; width: 100%; border-collapse: collapse">
<tr style="vertical-align: bottom">
<td colspan="2" style="line-height: 115%"> </td>
<td style="line-height: 115%"> </td>
<td style="line-height: 115%"> </td>
<td colspan="2" style="text-align: center; line-height: 115%"><font style="font: 8pt Times New Roman, Times, Serif"><b>Shares of Common Stock</b></font></td>
<td style="line-height: 115%"> </td>
<td style="line-height: 115%"> </td>
<td colspan="2" style="line-height: 115%"> </td>
<td style="line-height: 115%"> </td>
<td style="line-height: 115%"> </td>
<td colspan="2" style="line-height: 115%"> </td>
<td style="line-height: 115%"> </td></tr>
<tr style="vertical-align: bottom">
<td colspan="2" style="line-height: 115%"> </td>
<td style="line-height: 115%"> </td>
<td style="line-height: 115%"> </td>
<td colspan="2" style="text-align: center; line-height: 115%"><font style="font: 8pt Times New Roman, Times, Serif"><b>Issuable from Warrants</b></font></td>
<td style="line-height: 115%"> </td>
<td style="line-height: 115%"> </td>
<td colspan="2" style="line-height: 115%"> </td>
<td style="line-height: 115%"> </td>
<td style="line-height: 115%"> </td>
<td colspan="2" style="line-height: 115%"> </td>
<td style="line-height: 115%"> </td></tr>
<tr style="vertical-align: bottom">
<td colspan="2" style="line-height: 115%"> </td>
<td style="line-height: 115%"> </td>
<td style="line-height: 115%"> </td>
<td colspan="2" style="text-align: center; line-height: 115%"><font style="font: 8pt Times New Roman, Times, Serif"><b>Outstanding as of</b></font></td>
<td style="line-height: 115%"> </td>
<td style="line-height: 115%"> </td>
<td colspan="2" style="line-height: 115%"> </td>
<td style="line-height: 115%"> </td>
<td style="line-height: 115%"> </td>
<td colspan="2" style="line-height: 115%"> </td>
<td style="line-height: 115%"> </td></tr>
<tr style="vertical-align: bottom">
<td colspan="2" style="line-height: 115%"> </td>
<td style="line-height: 115%"> </td>
<td style="line-height: 115%"> </td>
<td colspan="2" style="text-align: center; line-height: 115%"><font style="font: 8pt Times New Roman, Times, Serif"><b>March 31,</b></font></td>
<td style="line-height: 115%"> </td>
<td style="line-height: 115%"> </td>
<td colspan="2" style="text-align: center; line-height: 115%"><font style="font: 8pt Times New Roman, Times, Serif"><b>Exercise</b></font></td>
<td style="line-height: 115%"> </td>
<td style="line-height: 115%"> </td>
<td colspan="2" style="line-height: 115%"> </td>
<td style="line-height: 115%"> </td></tr>
<tr style="vertical-align: bottom">
<td colspan="2" style="border-bottom: black 1pt solid; line-height: 115%"><font style="font: 8pt Times New Roman, Times, Serif"><b>Date of Issue</b></font></td>
<td style="line-height: 115%"> </td>
<td style="line-height: 115%"> </td>
<td colspan="2" style="border-bottom: black 1pt solid; text-align: center; line-height: 115%"><font style="font: 8pt Times New Roman, Times, Serif"><b>2014</b></font></td>
<td style="line-height: 115%"> </td>
<td style="line-height: 115%"> </td>
<td colspan="2" style="border-bottom: black 1pt solid; text-align: center; line-height: 115%"><font style="font: 8pt Times New Roman, Times, Serif"><b>Price</b></font></td>
<td style="line-height: 115%"> </td>
<td style="line-height: 115%"> </td>
<td colspan="2" style="border-bottom: black 1pt solid; text-align: center; line-height: 115%"><font style="font: 8pt Times New Roman, Times, Serif"><b>Expiration</b></font></td>
<td style="line-height: 115%"> </td></tr>
<tr style="vertical-align: bottom; background-color: #EEEEEE">
<td style="width: 1%; line-height: 115%"> </td>
<td style="width: 25%; text-align: right; line-height: 115%"><font style="font: 8pt Times New Roman, Times, Serif">July 30, 2012</font></td>
<td style="width: 1%; line-height: 115%"> </td>
<td style="width: 1%; line-height: 115%"> </td>
<td style="width: 1%; line-height: 115%"> </td>
<td style="width: 22%; text-align: right; line-height: 115%"><font style="font: 8pt Times New Roman, Times, Serif">6,627,000</font></td>
<td style="width: 1%; line-height: 115%"> </td>
<td style="width: 1%; line-height: 115%"> </td>
<td style="width: 1%; line-height: 115%"><font style="font: 8pt Times New Roman, Times, Serif">$</font></td>
<td style="width: 21%; text-align: right; line-height: 115%"><font style="font: 8pt Times New Roman, Times, Serif">0.05</font></td>
<td style="width: 1%; line-height: 115%"> </td>
<td style="width: 1%; line-height: 115%"> </td>
<td style="width: 1%; line-height: 115%"> </td>
<td style="width: 21%; text-align: right; line-height: 115%"><font style="font: 8pt Times New Roman, Times, Serif">July 30, 2017</font></td>
<td style="width: 1%; line-height: 115%"> </td></tr>
<tr style="vertical-align: bottom; background-color: white">
<td style="line-height: 115%"> </td>
<td style="text-align: right; line-height: 115%"><font style="font: 8pt Times New Roman, Times, Serif">August 3, 2012</font></td>
<td style="line-height: 115%"> </td>
<td style="line-height: 115%"> </td>
<td style="line-height: 115%"> </td>
<td style="text-align: right; line-height: 115%"><font style="font: 8pt Times New Roman, Times, Serif">2,667,000</font></td>
<td style="line-height: 115%"> </td>
<td style="line-height: 115%"> </td>
<td style="line-height: 115%"><font style="font: 8pt Times New Roman, Times, Serif">$</font></td>
<td style="text-align: right; line-height: 115%"><font style="font: 8pt Times New Roman, Times, Serif">0.05</font></td>
<td style="line-height: 115%"> </td>
<td style="line-height: 115%"> </td>
<td style="line-height: 115%"> </td>
<td style="text-align: right; line-height: 115%"><font style="font: 8pt Times New Roman, Times, Serif">August 3, 2017</font></td>
<td style="line-height: 115%"> </td></tr>
<tr style="vertical-align: bottom; background-color: #EEEEEE">
<td style="line-height: 115%"> </td>
<td style="text-align: right; line-height: 115%"><font style="font: 8pt Times New Roman, Times, Serif">August 21, 2012</font></td>
<td style="line-height: 115%"> </td>
<td style="line-height: 115%"> </td>
<td style="line-height: 115%"> </td>
<td style="text-align: right; line-height: 115%"><font style="font: 8pt Times New Roman, Times, Serif">2,625,000</font></td>
<td style="line-height: 115%"> </td>
<td style="line-height: 115%"> </td>
<td style="line-height: 115%"><font style="font: 8pt Times New Roman, Times, Serif">$</font></td>
<td style="text-align: right; line-height: 115%"><font style="font: 8pt Times New Roman, Times, Serif">0.05</font></td>
<td style="line-height: 115%"> </td>
<td style="line-height: 115%"> </td>
<td style="line-height: 115%"> </td>
<td style="text-align: right; line-height: 115%"><font style="font: 8pt Times New Roman, Times, Serif">August 21, 2017</font></td>
<td style="line-height: 115%"> </td></tr>
<tr style="vertical-align: bottom; background-color: white">
<td style="line-height: 115%"> </td>
<td style="text-align: right; line-height: 115%"><font style="font: 8pt Times New Roman, Times, Serif">February 15, 2013</font></td>
<td style="line-height: 115%"> </td>
<td style="line-height: 115%"> </td>
<td style="border-bottom: black 1pt solid; line-height: 115%"> </td>
<td style="border-bottom: black 1pt solid; text-align: right; line-height: 115%"><font style="font: 8pt Times New Roman, Times, Serif">12,000,000</font></td>
<td style="line-height: 115%"> </td>
<td style="line-height: 115%"> </td>
<td style="line-height: 115%"><font style="font: 8pt Times New Roman, Times, Serif">$</font></td>
<td style="text-align: right; line-height: 115%"><font style="font: 8pt Times New Roman, Times, Serif">0.05</font></td>
<td style="line-height: 115%"> </td>
<td style="line-height: 115%"> </td>
<td style="line-height: 115%"> </td>
<td style="text-align: right; line-height: 115%"><font style="font: 8pt Times New Roman, Times, Serif">February 15, 2018</font></td>
<td style="line-height: 115%"> </td></tr>
<tr style="vertical-align: bottom; background-color: #EEEEEE">
<td style="line-height: 115%"> </td>
<td style="text-align: right; line-height: 115%"> </td>
<td style="line-height: 115%"> </td>
<td style="line-height: 115%"> </td>
<td style="line-height: 115%"> </td>
<td style="text-align: right; line-height: 115%"><font style="font: 8pt Times New Roman, Times, Serif">23,919,000</font></td>
<td style="line-height: 115%"> </td>
<td style="line-height: 115%"> </td>
<td style="line-height: 115%"> </td>
<td style="text-align: right; line-height: 115%"> </td>
<td style="line-height: 115%"> </td>
<td style="line-height: 115%"> </td>
<td style="line-height: 115%"> </td>
<td style="text-align: right; line-height: 115%"> </td>
<td style="line-height: 115%"> </td></tr>
</table>
<p style="font: 8pt/normal Times New Roman, Times, Serif; margin: 0; text-indent: 0.5in"> <b> </b></p>
<p style="font: 8pt/normal Times New Roman, Times, Serif; margin: 0; text-align: justify"><b>Liability For Reclassified Equity
Contracts Represented by Potentially Dilutive Securities in Excess of Authorized Number of Common Shares</b></p>
<p style="font: 8pt/normal Times New Roman, Times, Serif; margin: 0; text-align: justify; text-indent: 0.5in"> </p>
<p style="font: 8pt/normal Times New Roman, Times, Serif; margin: 0; text-align: justify; text-indent: 0.5in">In accordance with
ASC Topic 815, Derivatives and Hedging, the Company accounts for contracts for the issuance of common stock that are in excess
of authorized shares as a liability that is recorded at fair value.  This liability is required to be remeasured at each reporting
period with any change in value to be included in other income and expense until such time as there is no longer an excess of the
number of issued and potentially issuable securities over the number of authorized shares.  This condition will change either
because of an increase in the authorized number of shares or a reverse stock split as approved by shareholders or a reduction in
the number of potentially issuable securities.  At that time any existing liability will be eliminated.</p>
<p style="font: 8pt/normal Times New Roman, Times, Serif; margin: 0; text-align: justify; text-indent: 0.5in"> </p>
<p style="font: 8pt/normal Times New Roman, Times, Serif; margin: 0; text-align: justify; text-indent: 0.5in">On January 1, 2013,
the combined total of the Company’s issued shares and its potentially issuable shares exceeded the authorized number of shares
by 60,100,524 potentially issuable shares. This excess arose because of the conversion features of certain preferred shares that
were triggered on that date, and issuances of warrants and stock options. At this initial measurement date, the fair value of the
potentially issuable shares in excess of the authorized number of common shares was approximately $2.0 million, which amount was
recorded as a liability for reclassified equity contracts, with a corresponding charge to shareholders’ equity. This liability
was recorded based on the valuation of the last contracts to contribute to the excess.</p>
<p style="font: 8pt/normal Times New Roman, Times, Serif; margin: 0; text-indent: 0.5in"> </p>
<p style="font: 8pt/normal Times New Roman, Times, Serif; margin: 0; text-indent: 0.5in">As of March 31, 2014, potentially issuable
shares in excess of the authorized number of common shares were 59,882,074 potentially issuable shares, represented by warrants,
stock options, Series A and Series A/1 preferred shares, the fair value of which was measured at approximately $2.1 million. The
adjustment to the liability for reclassified equity contracts at that date resulted in a charge to other income and expense of
$0.4 million for the quarter then ended. The income has been recorded as valuation of reclassified equity contracts.</p>
<p style="font: 8pt/115% Times New Roman, Times, Serif; margin: 0 0 10pt"> </p>
<p style="font: 8pt Times New Roman, Times, Serif; margin: 0; text-align: justify; text-indent: 0.5in">The Company has received
notices from seven shareholders of Series A Preferred Stock that each of them has elected to have the Company redeem the Series
A Preferred Stock held by them. As of April 15, 2014, the total amount that would be required to redeem all of the shares of Series
A Preferred Stock held by these seven shareholders is approximately $2.4 million. The Company is not legally able to redeem any
shares at this time.</p>
<p style="font: 8pt Times New Roman, Times, Serif; margin: 0; text-align: justify"><i>Basis of Presentation and Principals of Consolidation</i></p>
<p style="font: 8pt Times New Roman, Times, Serif; margin: 0; text-align: justify; text-indent: 0.5in"> </p>
<p style="font: 8pt Times New Roman, Times, Serif; margin: 0; text-align: justify; text-indent: 0.5in">The condensed consolidated
financial statements include the accounts of the Company and our wholly-owned subsidiaries. Intercompany balances and transactions
have been eliminated upon consolidation. </p>
<p style="font: 8pt Times New Roman, Times, Serif; margin: 0; text-align: justify; text-indent: 0.5in"> </p>
<p style="font: 8pt Times New Roman, Times, Serif; margin: 0; text-align: justify; text-indent: 0.5in">The accompanying unaudited
condensed consolidated financial statements have been prepared in accordance with accounting principles generally accepted in
the United States of America for interim financial information and in accordance with the instructions to Form 10-Q and Article
10 of Regulation S-X. Accordingly, they do not include all of the information and note disclosures required by U.S. generally
accepted accounting principles for complete financial statements. The accompanying unaudited financial information should be read
in conjunction with the audited consolidated financial statements, including the notes thereto, as of and for the year ended December
31, 2013, included in our 2013 Annual Report on Form 10-K filed with the Securities and Exchange Commission (the “SEC”).
The information furnished in this report reflects all adjustments (consisting of normal recurring adjustments), which are, in
the opinion of management, necessary for a fair presentation of our financial position, results of operations and cash flows for
each period presented. The results of operations for the interim period ended March 31, 2014 are not necessarily indicative of
the results for the year ending December 31, 2014 or for any future period.</p>
<p style="font: 8pt Times New Roman, Times, Serif; margin: 0; text-align: justify"><i>Reclassifications</i></p>
<p style="font: 8pt Times New Roman, Times, Serif; margin: 0; text-align: justify; text-indent: 0.5in"> </p>
<p style="font: 8pt Times New Roman, Times, Serif; margin: 0; text-align: justify; text-indent: 0.5in">Certain amounts for prior
periods have been reclassified in the condensed consolidated financial statements to conform to the classification used in fiscal
year 2014.</p>
<p style="font: 8pt/115% Calibri, Helvetica, Sans-Serif; margin: 0 0 10pt; text-align: justify"> </p>
<p style="font: 8pt Times New Roman, Times, Serif; margin: 0; text-align: justify"><i>Fair Value of Financial Instruments</i></p>
<p style="font: 8pt Times New Roman, Times, Serif; margin: 0; text-align: justify; text-indent: 0.5in"> </p>
<p style="font: 8pt Times New Roman, Times, Serif; margin: 0; text-align: justify; text-indent: 0.5in">The carrying values of our
cash and cash equivalents, accounts receivable, accounts payable, accrued expenses and short-term debt approximate their fair values
due to their short maturities. The carrying values of our long-term liabilities approximate their fair values based on current
rates of interest for instruments with similar characteristics.</p>
<p style="font: 8pt/115% Calibri, Helvetica, Sans-Serif; margin: 0 0 10pt; text-align: justify"> </p>
<p style="font: 8pt/normal Times New Roman, Times, Serif; margin: 0; text-indent: 0.5in">Debt consisted of the following:</p>
<p style="font: 8pt/normal Times New Roman, Times, Serif; margin: 0; text-indent: 0.5in"> </p>
<table cellspacing="0" cellpadding="0" style="font: 8pt Calibri, Helvetica, Sans-Serif; width: 100%; border-collapse: collapse">
<tr style="vertical-align: bottom">
<td style="padding-left: 10pt; text-indent: -10pt; line-height: 115%"> </td>
<td style="line-height: 115%"> </td>
<td colspan="2" style="text-align: center; line-height: 115%"><font style="font: 8pt Times New Roman, Times, Serif"><b>March 31,</b></font></td>
<td style="line-height: 115%"> </td>
<td style="line-height: 115%"> </td>
<td colspan="2" style="text-align: center; line-height: 115%"><font style="font: 8pt Times New Roman, Times, Serif"><b>December 31,</b></font></td>
<td style="line-height: 115%"> </td></tr>
<tr style="vertical-align: bottom">
<td style="padding-left: 10pt; text-indent: -10pt; line-height: 115%"> </td>
<td style="line-height: 115%"> </td>
<td colspan="2" style="border-bottom: black 1pt solid; padding-left: 10pt; text-align: center; line-height: 115%"><font style="font: 8pt Times New Roman, Times, Serif"><b>2014</b></font></td>
<td style="line-height: 115%"> </td>
<td style="padding-left: 10pt; line-height: 115%"> </td>
<td colspan="2" style="border-bottom: black 1pt solid; text-align: center; line-height: 115%"><font style="font: 8pt Times New Roman, Times, Serif"><b>2013</b></font></td>
<td style="line-height: 115%"> </td></tr>
<tr style="vertical-align: bottom">
<td style="padding-left: 10pt; text-indent: -10pt; line-height: 115%"> </td>
<td style="line-height: 115%"> </td>
<td colspan="6" style="text-align: center; line-height: 115%"><font style="font: 8pt Times New Roman, Times, Serif"><b>(In thousands)</b></font></td>
<td style="line-height: 115%"> </td></tr>
<tr style="vertical-align: bottom; background-color: #EEEEEE">
<td style="width: 68%; padding-left: 10pt; text-indent: -10pt; line-height: 115%"><font style="font: 8pt Times New Roman, Times, Serif">Current portion of long-term debt obligations, net of debt discount</font></td>
<td style="width: 1%; line-height: 115%"> </td>
<td style="width: 1%; line-height: 115%"> </td>
<td style="width: 13%; text-align: right; line-height: 115%"><font style="font: 8pt Times New Roman, Times, Serif">12,475</font></td>
<td style="width: 1%; line-height: 115%"> </td>
<td style="width: 1%; line-height: 115%"> </td>
<td style="width: 1%; line-height: 115%"> </td>
<td style="width: 13%; text-align: right; line-height: 115%"><font style="font: 8pt Times New Roman, Times, Serif">11,579</font></td>
<td style="width: 1%; line-height: 115%"> </td></tr>
<tr style="vertical-align: bottom; background-color: white">
<td style="padding-left: 10pt; text-indent: -10pt; line-height: 115%"><font style="font: 8pt Times New Roman, Times, Serif">Long-term obligations, net of debt discount</font></td>
<td style="line-height: 115%"> </td>
<td style="border-bottom: black 1pt solid; padding-left: 10pt; line-height: 115%"> </td>
<td style="border-bottom: black 1pt solid; padding-left: 10pt; text-align: right; line-height: 115%"><font style="font: 8pt Times New Roman, Times, Serif">1,702</font></td>
<td style="line-height: 115%"> </td>
<td style="padding-left: 10pt; line-height: 115%"> </td>
<td style="border-bottom: black 1pt solid; line-height: 115%"> </td>
<td style="border-bottom: black 1pt solid; text-align: right; line-height: 115%"><font style="font: 8pt Times New Roman, Times, Serif">1,520</font></td>
<td style="line-height: 115%"> </td></tr>
<tr style="vertical-align: bottom; background-color: #EEEEEE">
<td style="padding-left: 10pt; text-indent: -10pt; line-height: 115%"><font style="font: 8pt Times New Roman, Times, Serif">Total debt</font></td>
<td style="line-height: 115%"> </td>
<td style="border-bottom: black 2.25pt double; padding-left: 10pt; line-height: 115%"> </td>
<td style="border-bottom: black 2.25pt double; padding-left: 10pt; text-align: right; line-height: 115%"><font style="font: 8pt Times New Roman, Times, Serif">14,177</font></td>
<td style="line-height: 115%"> </td>
<td style="padding-left: 10pt; line-height: 115%"> </td>
<td style="border-bottom: black 2.25pt double; line-height: 115%"> </td>
<td style="border-bottom: black 2.25pt double; text-align: right; line-height: 115%"><font style="font: 8pt Times New Roman, Times, Serif">13,099</font></td>
<td style="line-height: 115%"> </td></tr>
</table>
<p style="font: 8pt/115% Times New Roman, Times, Serif; margin: 0 0 10pt"> </p>
<p style="font: 8pt/normal Times New Roman, Times, Serif; margin: 0; text-indent: 0.5in">Changes in our outstanding stock options
during the three months ended March 31, 2014 were as follows:</p>
<p style="font: 8pt/normal Times New Roman, Times, Serif; margin: 0; text-indent: 0.5in"> </p>
<table cellspacing="0" cellpadding="0" style="font: 8pt Calibri, Helvetica, Sans-Serif; width: 100%; border-collapse: collapse">
<tr style="vertical-align: bottom">
<td style="padding-left: 10pt; text-indent: -10pt; line-height: 115%"> </td>
<td style="line-height: 115%"> </td>
<td colspan="2" style="border-bottom: black 1pt solid; padding-left: 10pt; text-align: center; line-height: 115%"><font style="font: 8pt Times New Roman, Times, Serif">Number of Stock Options</font></td>
<td style="line-height: 115%"> </td>
<td style="padding-left: 10pt; line-height: 115%"> </td>
<td colspan="2" style="border-bottom: black 1pt solid; padding-left: 10pt; text-align: center; line-height: 115%"><font style="font: 8pt Times New Roman, Times, Serif">Weighted Average Price</font></td>
<td style="line-height: 115%"> </td>
<td style="padding-left: 10pt; line-height: 115%"> </td>
<td colspan="2" style="border-bottom: black 1pt solid; text-align: center; line-height: 115%"><font style="font: 8pt Times New Roman, Times, Serif">Weighted Average Remaining Contractual Term</font></td>
<td style="line-height: 115%"> </td></tr>
<tr style="vertical-align: bottom; background-color: #EEEEEE">
<td style="width: 52%; padding-left: 10pt; text-indent: -10pt; line-height: 115%"><font style="font: 8pt Times New Roman, Times, Serif">Outstanding at December 31, 2013</font></td>
<td style="width: 1%; line-height: 115%"> </td>
<td style="width: 1%; line-height: 115%"> </td>
<td style="width: 13%; text-align: right; line-height: 115%"><font style="font: 8pt Times New Roman, Times, Serif">53,465,045</font></td>
<td style="width: 1%; line-height: 115%"> </td>
<td style="width: 1%; line-height: 115%"> </td>
<td style="width: 1%; line-height: 115%"><font style="font: 8pt Times New Roman, Times, Serif">$</font></td>
<td style="width: 13%; text-align: right; line-height: 115%"><font style="font: 8pt Times New Roman, Times, Serif">0.12</font></td>
<td style="width: 1%; line-height: 115%"> </td>
<td style="width: 1%; line-height: 115%"> </td>
<td style="width: 1%; line-height: 115%"> </td>
<td style="width: 13%; text-align: right; line-height: 115%"><font style="font: 8pt Times New Roman, Times, Serif">4.02</font></td>
<td style="width: 1%; line-height: 115%"> </td></tr>
<tr style="vertical-align: bottom; background-color: white">
<td style="padding-left: 10pt; text-indent: -10pt; line-height: 115%"> </td>
<td style="line-height: 115%"> </td>
<td style="line-height: 115%"> </td>
<td style="text-align: right; line-height: 115%"> </td>
<td style="line-height: 115%"> </td>
<td style="line-height: 115%"> </td>
<td style="line-height: 115%"> </td>
<td style="text-align: right; line-height: 115%"> </td>
<td style="line-height: 115%"> </td>
<td style="line-height: 115%"> </td>
<td style="line-height: 115%"> </td>
<td style="text-align: right; line-height: 115%"> </td>
<td style="line-height: 115%"> </td></tr>
<tr style="vertical-align: bottom; background-color: #EEEEEE">
<td style="padding-left: 10pt; text-indent: -10pt; line-height: 115%"><font style="font: 8pt Times New Roman, Times, Serif">Granted</font></td>
<td style="line-height: 115%"> </td>
<td style="line-height: 115%"> </td>
<td style="text-align: right; line-height: 115%"><font style="font: 8pt Times New Roman, Times, Serif">1,200,000</font></td>
<td style="line-height: 115%"> </td>
<td style="line-height: 115%"> </td>
<td style="line-height: 115%"><font style="font: 8pt Times New Roman, Times, Serif">$</font></td>
<td style="text-align: right; line-height: 115%"><font style="font: 8pt Times New Roman, Times, Serif">0.08</font></td>
<td style="line-height: 115%"> </td>
<td style="line-height: 115%"> </td>
<td style="line-height: 115%"> </td>
<td style="text-align: right; line-height: 115%"> </td>
<td style="line-height: 115%"> </td></tr>
<tr style="vertical-align: bottom; background-color: white">
<td style="padding-left: 10pt; text-indent: -10pt; line-height: 115%"><font style="font: 8pt Times New Roman, Times, Serif">Exercised</font></td>
<td style="line-height: 115%"> </td>
<td style="line-height: 115%"> </td>
<td style="text-align: right; line-height: 115%"><font style="font: 8pt Times New Roman, Times, Serif">–</font></td>
<td style="line-height: 115%"> </td>
<td style="line-height: 115%"> </td>
<td style="line-height: 115%"> </td>
<td style="text-align: right; line-height: 115%"> </td>
<td style="line-height: 115%"> </td>
<td style="line-height: 115%"> </td>
<td style="line-height: 115%"> </td>
<td style="text-align: right; line-height: 115%"> </td>
<td style="line-height: 115%"> </td></tr>
<tr style="vertical-align: bottom; background-color: #EEEEEE">
<td style="padding-left: 10pt; text-indent: -10pt; line-height: 115%"><font style="font: 8pt Times New Roman, Times, Serif">Cancelled or expired</font></td>
<td style="line-height: 115%"> </td>
<td style="border-bottom: black 1pt solid; padding-left: 10pt; line-height: 115%"> </td>
<td style="border-bottom: black 1pt solid; padding-left: 10pt; text-align: right; line-height: 115%"><font style="font: 8pt Times New Roman, Times, Serif">(400,000</font></td>
<td style="line-height: 115%"><font style="font: 8pt Times New Roman, Times, Serif">)</font></td>
<td style="padding-left: 10pt; line-height: 115%"> </td>
<td style="padding-left: 10pt; line-height: 115%"> </td>
<td style="padding-left: 10pt; text-align: right; line-height: 115%"> </td>
<td style="line-height: 115%"> </td>
<td style="padding-left: 10pt; line-height: 115%"> </td>
<td style="line-height: 115%"> </td>
<td style="text-align: right; line-height: 115%"> </td>
<td style="line-height: 115%"> </td></tr>
<tr style="vertical-align: bottom; background-color: white">
<td style="padding-left: 10pt; text-indent: -10pt; line-height: 115%"> </td>
<td style="line-height: 115%"> </td>
<td style="line-height: 115%"> </td>
<td style="text-align: right; line-height: 115%"> </td>
<td style="line-height: 115%"> </td>
<td style="line-height: 115%"> </td>
<td style="line-height: 115%"> </td>
<td style="text-align: right; line-height: 115%"> </td>
<td style="line-height: 115%"> </td>
<td style="line-height: 115%"> </td>
<td style="line-height: 115%"> </td>
<td style="text-align: right; line-height: 115%"> </td>
<td style="line-height: 115%"> </td></tr>
<tr style="vertical-align: bottom; background-color: #EEEEEE">
<td style="padding-left: 10pt; text-indent: -10pt; line-height: 115%"><font style="font: 8pt Times New Roman, Times, Serif">Outstanding at March 31, 2014</font></td>
<td style="line-height: 115%"> </td>
<td style="line-height: 115%"> </td>
<td style="text-align: right; line-height: 115%"><font style="font: 8pt Times New Roman, Times, Serif">54,265,045</font></td>
<td style="line-height: 115%"> </td>
<td style="line-height: 115%"> </td>
<td style="line-height: 115%"><font style="font: 8pt Times New Roman, Times, Serif">$</font></td>
<td style="text-align: right; line-height: 115%"><font style="font: 8pt Times New Roman, Times, Serif">0.11</font></td>
<td style="line-height: 115%"> </td>
<td style="line-height: 115%"> </td>
<td style="line-height: 115%"> </td>
<td style="text-align: right; line-height: 115%"><font style="font: 8pt Times New Roman, Times, Serif">3.79</font></td>
<td style="line-height: 115%"> </td></tr>
<tr style="vertical-align: bottom; background-color: white">
<td style="padding-left: 10pt; text-indent: -10pt; line-height: 115%"> </td>
<td style="line-height: 115%"> </td>
<td style="line-height: 115%"> </td>
<td style="text-align: right; line-height: 115%"> </td>
<td style="line-height: 115%"> </td>
<td style="line-height: 115%"> </td>
<td style="line-height: 115%"> </td>
<td style="text-align: right; line-height: 115%"> </td>
<td style="line-height: 115%"> </td>
<td style="line-height: 115%"> </td>
<td style="line-height: 115%"> </td>
<td style="text-align: right; line-height: 115%"> </td>
<td style="line-height: 115%"> </td></tr>
<tr style="vertical-align: bottom; background-color: #EEEEEE">
<td style="padding-left: 10pt; text-indent: -10pt; line-height: 115%"><font style="font: 8pt Times New Roman, Times, Serif">Exercisable at March 31, 2014</font></td>
<td style="line-height: 115%"> </td>
<td style="line-height: 115%"> </td>
<td style="text-align: right; line-height: 115%"><font style="font: 8pt Times New Roman, Times, Serif">39,354,241</font></td>
<td style="line-height: 115%"> </td>
<td style="line-height: 115%"> </td>
<td style="line-height: 115%"><font style="font: 8pt Times New Roman, Times, Serif">$</font></td>
<td style="text-align: right; line-height: 115%"><font style="font: 8pt Times New Roman, Times, Serif">0.11</font></td>
<td style="line-height: 115%"> </td>
<td style="line-height: 115%"> </td>
<td style="line-height: 115%"> </td>
<td style="text-align: right; line-height: 115%"> </td>
<td style="line-height: 115%"> </td></tr>
<tr style="vertical-align: bottom; background-color: white">
<td style="padding-left: 10pt; text-indent: -10pt; line-height: 115%"> </td>
<td style="line-height: 115%"> </td>
<td style="line-height: 115%"> </td>
<td style="text-align: right; line-height: 115%"> </td>
<td style="line-height: 115%"> </td>
<td style="line-height: 115%"> </td>
<td style="line-height: 115%"> </td>
<td style="text-align: right; line-height: 115%"> </td>
<td style="line-height: 115%"> </td>
<td style="line-height: 115%"> </td>
<td style="line-height: 115%"> </td>
<td style="text-align: right; line-height: 115%"> </td>
<td style="line-height: 115%"> </td></tr>
<tr style="vertical-align: bottom; background-color: #EEEEEE">
<td style="padding-left: 10pt; text-indent: -10pt; line-height: 115%"><font style="font: 8pt Times New Roman, Times, Serif">Vested and expected to vest at March 31, 2014</font></td>
<td style="line-height: 115%"> </td>
<td style="line-height: 115%"> </td>
<td style="text-align: right; line-height: 115%"><font style="font: 8pt Times New Roman, Times, Serif">54,265,045</font></td>
<td style="line-height: 115%"> </td>
<td style="line-height: 115%"> </td>
<td style="line-height: 115%"><font style="font: 8pt Times New Roman, Times, Serif">$</font></td>
<td style="text-align: right; line-height: 115%"><font style="font: 8pt Times New Roman, Times, Serif">0.11</font></td>
<td style="line-height: 115%"> </td>
<td style="line-height: 115%"> </td>
<td style="line-height: 115%"> </td>
<td style="text-align: right; line-height: 115%"><font style="font: 8pt Times New Roman, Times, Serif">3.79</font></td>
<td style="line-height: 115%"> </td></tr>
</table>
<p style="font: 8pt/115% Times New Roman, Times, Serif; margin: 0 0 10pt"> </p>
<p style="font: 8pt/normal Times New Roman, Times, Serif; margin: 0; text-indent: 0.5in">Stock based compensation is allocated
as follows:</p>
<p style="font: 8pt/normal Times New Roman, Times, Serif; margin: 0; text-indent: 0.5in"> </p>
<table cellspacing="0" cellpadding="0" style="font: 8pt Calibri, Helvetica, Sans-Serif; width: 100%; border-collapse: collapse">
<tr style="vertical-align: bottom">
<td style="padding-left: 10pt; text-indent: -10pt; line-height: 115%"> </td>
<td style="line-height: 115%"> </td>
<td colspan="2" style="text-align: center; line-height: 115%"><font style="font: 8pt Times New Roman, Times, Serif">Three Months ended</font></td>
<td style="line-height: 115%"> </td>
<td style="line-height: 115%"> </td>
<td colspan="2" style="text-align: center; line-height: 115%"><font style="font: 8pt Times New Roman, Times, Serif">Three Months ended</font></td>
<td style="line-height: 115%"> </td></tr>
<tr style="vertical-align: bottom">
<td style="padding-left: 10pt; text-indent: -10pt; line-height: 115%"> </td>
<td style="line-height: 115%"> </td>
<td colspan="2" style="text-align: center; line-height: 115%"><font style="font: 8pt Times New Roman, Times, Serif">March 31, 2014</font></td>
<td style="line-height: 115%"> </td>
<td style="line-height: 115%"> </td>
<td colspan="2" style="text-align: center; line-height: 115%"><font style="font: 8pt Times New Roman, Times, Serif">March 31, 2013</font></td>
<td style="line-height: 115%"> </td></tr>
<tr style="vertical-align: bottom">
<td style="padding-left: 10pt; text-indent: -10pt; line-height: 115%"> </td>
<td style="line-height: 115%"> </td>
<td colspan="2" style="border-bottom: black 1pt solid; padding-left: 10pt; text-align: center; line-height: 115%"><font style="font: 8pt Times New Roman, Times, Serif">(in thousands)</font></td>
<td style="line-height: 115%"> </td>
<td style="padding-left: 10pt; line-height: 115%"> </td>
<td colspan="2" style="border-bottom: black 1pt solid; text-align: center; line-height: 115%"><font style="font: 8pt Times New Roman, Times, Serif">(in thousands)</font></td>
<td style="line-height: 115%"> </td></tr>
<tr style="vertical-align: bottom; background-color: #EEEEEE">
<td style="width: 68%; padding-left: 10pt; text-indent: -10pt; line-height: 115%"><font style="font: 8pt Times New Roman, Times, Serif">Sales and marketing</font></td>
<td style="width: 1%; line-height: 115%"> </td>
<td style="width: 1%; line-height: 115%"><font style="font: 8pt Times New Roman, Times, Serif">$</font></td>
<td style="width: 13%; text-align: right; line-height: 115%"><font style="font: 8pt Times New Roman, Times, Serif">425</font></td>
<td style="width: 1%; line-height: 115%"> </td>
<td style="width: 1%; line-height: 115%"> </td>
<td style="width: 1%; line-height: 115%"> </td>
<td style="width: 13%; text-align: right; line-height: 115%"><font style="font: 8pt Times New Roman, Times, Serif">131</font></td>
<td style="width: 1%; line-height: 115%"> </td></tr>
<tr style="vertical-align: bottom; background-color: white">
<td style="padding-left: 10pt; text-indent: -10pt; line-height: 115%"><font style="font: 8pt Times New Roman, Times, Serif">General and administrative</font></td>
<td style="line-height: 115%"> </td>
<td style="line-height: 115%"> </td>
<td style="text-align: right; line-height: 115%"><font style="font: 8pt Times New Roman, Times, Serif">267</font></td>
<td style="line-height: 115%"> </td>
<td style="line-height: 115%"> </td>
<td style="line-height: 115%"> </td>
<td style="text-align: right; line-height: 115%"><font style="font: 8pt Times New Roman, Times, Serif">264</font></td>
<td style="line-height: 115%"> </td></tr>
<tr style="vertical-align: bottom; background-color: #EEEEEE">
<td style="padding-left: 10pt; text-indent: -10pt; line-height: 115%"><font style="font: 8pt Times New Roman, Times, Serif">Research and development</font></td>
<td style="line-height: 115%"> </td>
<td style="border-bottom: black 1pt solid; padding-left: 10pt; line-height: 115%"> </td>
<td style="border-bottom: black 1pt solid; padding-left: 10pt; text-align: right; line-height: 115%"><font style="font: 8pt Times New Roman, Times, Serif">55</font></td>
<td style="line-height: 115%"> </td>
<td style="padding-left: 10pt; line-height: 115%"> </td>
<td style="border-bottom: black 1pt solid; line-height: 115%"> </td>
<td style="border-bottom: black 1pt solid; text-align: right; line-height: 115%"><font style="font: 8pt Times New Roman, Times, Serif">75</font></td>
<td style="line-height: 115%"> </td></tr>
<tr style="vertical-align: bottom; background-color: white">
<td style="padding-left: 10pt; text-indent: -10pt; line-height: 115%"> </td>
<td style="line-height: 115%"> </td>
<td style="border-bottom: black 2.25pt double; padding-left: 10pt; line-height: 115%"><font style="font: 8pt Times New Roman, Times, Serif">$</font></td>
<td style="border-bottom: black 2.25pt double; padding-left: 10pt; text-align: right; line-height: 115%"><font style="font: 8pt Times New Roman, Times, Serif">747</font></td>
<td style="line-height: 115%"> </td>
<td style="padding-left: 10pt; line-height: 115%"> </td>
<td style="border-bottom: black 2.25pt double; line-height: 115%"><font style="font: 8pt Times New Roman, Times, Serif">$</font></td>
<td style="border-bottom: black 2.25pt double; text-align: right; line-height: 115%"><font style="font: 8pt Times New Roman, Times, Serif">470</font></td>
<td style="line-height: 115%"> </td></tr>
</table>
<p style="font: 8pt/115% Times New Roman, Times, Serif; margin: 0 0 10pt"> </p>
<p style="font: 8pt/normal Times New Roman, Times, Serif; margin: 0; text-indent: 0.5in">The following table summarizes outstanding
warrants to purchase shares of our common stock as of March 31, 2014:</p>
<p style="font: 8pt/normal Times New Roman, Times, Serif; margin: 0; text-indent: 0.5in"> </p>
<table cellspacing="0" cellpadding="0" style="font: 8pt Calibri, Helvetica, Sans-Serif; width: 100%; border-collapse: collapse">
<tr style="vertical-align: bottom">
<td colspan="2" style="line-height: 115%"> </td>
<td style="line-height: 115%"> </td>
<td style="line-height: 115%"> </td>
<td colspan="2" style="text-align: center; line-height: 115%"><font style="font: 8pt Times New Roman, Times, Serif"><b>Shares of Common Stock</b></font></td>
<td style="line-height: 115%"> </td>
<td style="line-height: 115%"> </td>
<td colspan="2" style="line-height: 115%"> </td>
<td style="line-height: 115%"> </td>
<td style="line-height: 115%"> </td>
<td colspan="2" style="line-height: 115%"> </td>
<td style="line-height: 115%"> </td></tr>
<tr style="vertical-align: bottom">
<td colspan="2" style="line-height: 115%"> </td>
<td style="line-height: 115%"> </td>
<td style="line-height: 115%"> </td>
<td colspan="2" style="text-align: center; line-height: 115%"><font style="font: 8pt Times New Roman, Times, Serif"><b>Issuable from Warrants</b></font></td>
<td style="line-height: 115%"> </td>
<td style="line-height: 115%"> </td>
<td colspan="2" style="line-height: 115%"> </td>
<td style="line-height: 115%"> </td>
<td style="line-height: 115%"> </td>
<td colspan="2" style="line-height: 115%"> </td>
<td style="line-height: 115%"> </td></tr>
<tr style="vertical-align: bottom">
<td colspan="2" style="line-height: 115%"> </td>
<td style="line-height: 115%"> </td>
<td style="line-height: 115%"> </td>
<td colspan="2" style="text-align: center; line-height: 115%"><font style="font: 8pt Times New Roman, Times, Serif"><b>Outstanding as of</b></font></td>
<td style="line-height: 115%"> </td>
<td style="line-height: 115%"> </td>
<td colspan="2" style="line-height: 115%"> </td>
<td style="line-height: 115%"> </td>
<td style="line-height: 115%"> </td>
<td colspan="2" style="line-height: 115%"> </td>
<td style="line-height: 115%"> </td></tr>
<tr style="vertical-align: bottom">
<td colspan="2" style="line-height: 115%"> </td>
<td style="line-height: 115%"> </td>
<td style="line-height: 115%"> </td>
<td colspan="2" style="text-align: center; line-height: 115%"><font style="font: 8pt Times New Roman, Times, Serif"><b>March 31,</b></font></td>
<td style="line-height: 115%"> </td>
<td style="line-height: 115%"> </td>
<td colspan="2" style="text-align: center; line-height: 115%"><font style="font: 8pt Times New Roman, Times, Serif"><b>Exercise</b></font></td>
<td style="line-height: 115%"> </td>
<td style="line-height: 115%"> </td>
<td colspan="2" style="line-height: 115%"> </td>
<td style="line-height: 115%"> </td></tr>
<tr style="vertical-align: bottom">
<td colspan="2" style="border-bottom: black 1pt solid; line-height: 115%"><font style="font: 8pt Times New Roman, Times, Serif"><b>Date of Issue</b></font></td>
<td style="line-height: 115%"> </td>
<td style="line-height: 115%"> </td>
<td colspan="2" style="border-bottom: black 1pt solid; text-align: center; line-height: 115%"><font style="font: 8pt Times New Roman, Times, Serif"><b>2014</b></font></td>
<td style="line-height: 115%"> </td>
<td style="line-height: 115%"> </td>
<td colspan="2" style="border-bottom: black 1pt solid; text-align: center; line-height: 115%"><font style="font: 8pt Times New Roman, Times, Serif"><b>Price</b></font></td>
<td style="line-height: 115%"> </td>
<td style="line-height: 115%"> </td>
<td colspan="2" style="border-bottom: black 1pt solid; text-align: center; line-height: 115%"><font style="font: 8pt Times New Roman, Times, Serif"><b>Expiration</b></font></td>
<td style="line-height: 115%"> </td></tr>
<tr style="vertical-align: bottom; background-color: #EEEEEE">
<td style="width: 1%; line-height: 115%"> </td>
<td style="width: 25%; text-align: right; line-height: 115%"><font style="font: 8pt Times New Roman, Times, Serif">July 30, 2012</font></td>
<td style="width: 1%; line-height: 115%"> </td>
<td style="width: 1%; line-height: 115%"> </td>
<td style="width: 1%; line-height: 115%"> </td>
<td style="width: 22%; text-align: right; line-height: 115%"><font style="font: 8pt Times New Roman, Times, Serif">6,627,000</font></td>
<td style="width: 1%; line-height: 115%"> </td>
<td style="width: 1%; line-height: 115%"> </td>
<td style="width: 1%; line-height: 115%"><font style="font: 8pt Times New Roman, Times, Serif">$</font></td>
<td style="width: 21%; text-align: right; line-height: 115%"><font style="font: 8pt Times New Roman, Times, Serif">0.05</font></td>
<td style="width: 1%; line-height: 115%"> </td>
<td style="width: 1%; line-height: 115%"> </td>
<td style="width: 1%; line-height: 115%"> </td>
<td style="width: 21%; text-align: right; line-height: 115%"><font style="font: 8pt Times New Roman, Times, Serif">July 30, 2017</font></td>
<td style="width: 1%; line-height: 115%"> </td></tr>
<tr style="vertical-align: bottom; background-color: white">
<td style="line-height: 115%"> </td>
<td style="text-align: right; line-height: 115%"><font style="font: 8pt Times New Roman, Times, Serif">August 3, 2012</font></td>
<td style="line-height: 115%"> </td>
<td style="line-height: 115%"> </td>
<td style="line-height: 115%"> </td>
<td style="text-align: right; line-height: 115%"><font style="font: 8pt Times New Roman, Times, Serif">2,667,000</font></td>
<td style="line-height: 115%"> </td>
<td style="line-height: 115%"> </td>
<td style="line-height: 115%"><font style="font: 8pt Times New Roman, Times, Serif">$</font></td>
<td style="text-align: right; line-height: 115%"><font style="font: 8pt Times New Roman, Times, Serif">0.05</font></td>
<td style="line-height: 115%"> </td>
<td style="line-height: 115%"> </td>
<td style="line-height: 115%"> </td>
<td style="text-align: right; line-height: 115%"><font style="font: 8pt Times New Roman, Times, Serif">August 3, 2017</font></td>
<td style="line-height: 115%"> </td></tr>
<tr style="vertical-align: bottom; background-color: #EEEEEE">
<td style="line-height: 115%"> </td>
<td style="text-align: right; line-height: 115%"><font style="font: 8pt Times New Roman, Times, Serif">August 21, 2012</font></td>
<td style="line-height: 115%"> </td>
<td style="line-height: 115%"> </td>
<td style="line-height: 115%"> </td>
<td style="text-align: right; line-height: 115%"><font style="font: 8pt Times New Roman, Times, Serif">2,625,000</font></td>
<td style="line-height: 115%"> </td>
<td style="line-height: 115%"> </td>
<td style="line-height: 115%"><font style="font: 8pt Times New Roman, Times, Serif">$</font></td>
<td style="text-align: right; line-height: 115%"><font style="font: 8pt Times New Roman, Times, Serif">0.05</font></td>
<td style="line-height: 115%"> </td>
<td style="line-height: 115%"> </td>
<td style="line-height: 115%"> </td>
<td style="text-align: right; line-height: 115%"><font style="font: 8pt Times New Roman, Times, Serif">August 21, 2017</font></td>
<td style="line-height: 115%"> </td></tr>
<tr style="vertical-align: bottom; background-color: white">
<td style="line-height: 115%"> </td>
<td style="text-align: right; line-height: 115%"><font style="font: 8pt Times New Roman, Times, Serif">February 15, 2013</font></td>
<td style="line-height: 115%"> </td>
<td style="line-height: 115%"> </td>
<td style="border-bottom: black 1pt solid; line-height: 115%"> </td>
<td style="border-bottom: black 1pt solid; text-align: right; line-height: 115%"><font style="font: 8pt Times New Roman, Times, Serif">12,000,000</font></td>
<td style="line-height: 115%"> </td>
<td style="line-height: 115%"> </td>
<td style="line-height: 115%"><font style="font: 8pt Times New Roman, Times, Serif">$</font></td>
<td style="text-align: right; line-height: 115%"><font style="font: 8pt Times New Roman, Times, Serif">0.05</font></td>
<td style="line-height: 115%"> </td>
<td style="line-height: 115%"> </td>
<td style="line-height: 115%"> </td>
<td style="text-align: right; line-height: 115%"><font style="font: 8pt Times New Roman, Times, Serif">February 15, 2018</font></td>
<td style="line-height: 115%"> </td></tr>
<tr style="vertical-align: bottom; background-color: #EEEEEE">
<td style="line-height: 115%"> </td>
<td style="text-align: right; line-height: 115%"> </td>
<td style="line-height: 115%"> </td>
<td style="line-height: 115%"> </td>
<td style="line-height: 115%"> </td>
<td style="text-align: right; line-height: 115%"><font style="font: 8pt Times New Roman, Times, Serif">23,919,000</font></td>
<td style="line-height: 115%"> </td>
<td style="line-height: 115%"> </td>
<td style="line-height: 115%"> </td>
<td style="text-align: right; line-height: 115%"> </td>
<td style="line-height: 115%"> </td>
<td style="line-height: 115%"> </td>
<td style="line-height: 115%"> </td>
<td style="text-align: right; line-height: 115%"> </td>
<td style="line-height: 115%"> </td></tr>
</table>
<p style="font: 8pt/115% Times New Roman, Times, Serif; margin: 0 0 10pt"> </p>
9600
1700000
P1Y
<p style="font: 8pt/115% Times New Roman, Times, Serif; margin: 0 0 10pt; text-align: justify">July 30, 2017</p>
<p style="font: 8pt/115% Times New Roman, Times, Serif; margin: 0 0 10pt; text-align: justify">August 3, 2017</p>
<p style="font: 8pt/115% Times New Roman, Times, Serif; margin: 0 0 10pt; text-align: justify">August 21, 2017</p>
<p style="font: 8pt/115% Times New Roman, Times, Serif; margin: 0 0 10pt; text-align: justify">February 15, 2018</p>
P3Y9M15D
P4Y7D
-168000
116000