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<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify"><font style="font-variant: small-caps"><b>Note
1 - Description of Business</b></font></p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify; text-indent: 0.5in"><font style="font-variant: small-caps"><b> </b></font></p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify">EmployUS, LLC (“EmployUS”)
a Delaware Limited Liability Company, was formed on September 30, 2010 having a perpetual existence and was a full service turnkey
staffing company. Initially established to respond to the relief and recovery of the major oil spill in the Gulf of Mexico, EmployUS,
was expanded to provide services on most major construction, chemical, and maritime projects in the Southeast United States. From
its single initial project four years ago, EmployUS, grew to nine offices in three states, with more than 300 customers and that
provided employment to over 4,500 individuals as of December 31, 2014.</p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify; text-indent: 0.5in"> </p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify">Effective July 1, 2013, EmployUS,
changed its corporate status from a limited liability company to a “C” corporation and its state of registration from
Delaware to Nevada. As a result of these changes, the new name of EmployUS became EmployUS, Ltd. (“EmployUS, Ltd.”).</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">On January 22, 2014, The Staffing
Group Ltd. (“the Company”) entered into a Share Exchange Agreement (the “Exchange Agreement”) with
EmployUS, Ltd., all of the stockholders of EmployUS, Ltd. (the “EmployUS, Ltd. Shareholders”), and the Company’s
controlling stockholders. The Exchange Agreement closed on February 14, 2014.  Pursuant to the terms and conditions of
the final, fully executed Exchange Agreement and upon the consummation of the closing, the Company issued an aggregate of 263,076
to the shareholders of EmployUS Ltd in exchange for the transfer of the EmployUS, Ltd. common stock. Additionally, three of the
Company’s stockholders agreed to cancel an aggregate of 263,076 of the Company’s common stock.</p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify; text-indent: 0.35in">  <font style="font-variant: small-caps"><b> </b></font></p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify">Following the Exchange Agreement,
there are 702,000 shares of the Company’s common stock issued and outstanding, which include 263,076 shares held by the former
stockholders of EmployUS, Ltd. and 121,000 shares held by Brian McLoone, EmployUS Ltd.’s Chief Operating Officer but not
a stockholder of EmployUS Ltd. prior to the merger. As a result, EmployUS, Ltd. pre-merger stockholders, including Brian McLoone,
hold approximately 54.72% of the Company’s issued and outstanding shares of common stock and the former stockholders of the
Company hold approximately 45.28%.</p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify; text-indent: 0.5in"> </p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify">Upon closing of the Exchange Agreement,
EmployUS, Ltd. became a wholly owned subsidiary of the Company. The Company ceased its prior operations and became engaged in the
business of EmployUS, Ltd. As the Company was formerly a shell company, no pro forma disclosures were required. The Exchange Agreement
was accounted for as a reverse merger and recapitalization and EmployUS, Ltd. was deemed to be the acquirer in the reverse merger
for accounting purposes and the Company was deemed the legal acquirer. The Company therefore, take on EmployUS, Ltd.’s operating
history.</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">On November 13, 2015, the Board
of Directors approved the issuance of two (2) shares of Series A Preferred Stock to each of its current, at that time, directors,
Brian McLoone and Brent Callais.</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">On December 18, 2015, the Board
approved the issuance of one (1) share of Series A Preferred Stock to Labor Smart, Inc., a 18.45% shareholder of common stock,
in conjunction with the issuance of a convertible promissory note dated December 18, 2015.</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">The fair value of Series A Preferred
Stock was determined to be $0 per share as the holders do not have the right to receive dividends or distributions, the holders
do not have the right to receive asset upon any liquidation of the Company and the Company may redeem Series A Preferred Stock
for no consideration.</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">On December 22, 2015, the Company
entered into a Licensing Agreement with Labor Smart, Inc. whereby Labor Smart, Inc. has granted the Company an exclusive license
to use their trademarked name in connection with general advertising materials, point of sale displays and other promotional materials.
As consideration for the use of the trademarked name, the Company agreed to pay to Labor Smart, Inc. a one-time fee of $5,000 for
each newly opened branch location that is opened under the name of Labor Smart, Inc.</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">On December 28, 2015, the Company
incorporated a subsidiary, Staff Fund I, LLC, a Nevada Limited Liability Company.</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">On December 31, 2015, the Company
entered into a Stock Purchase Agreement (“SPA”) with Pour Les Enfant, LLC, a Louisiana limited liability company (“Pour
Les Enfant”). Pursuant to the SPA, the Company, as sole shareholder of EmployUS, Ltd. completed the split-off by transferring
to Pour Les Enfant all outstanding shares and tangible assets of EmployUS, Ltd. (the “split-off transaction”). In consideration
thereof, Pour Les Enfant assumes all liabilities of EmployUS, Ltd. associated with monies owed to the Internal Revenue Service
for late payroll taxes; and all corporate, personal, and validity guarantees associated the Crestmark Bank Loan and Security Agreement.
Pursuant to the SPA, Brent Callais and Brian McLoone, directors, executives and controlling shareholders of the Company, each agree
to transfer to the Company 91,000 shares of the Company’s common stock and one share of the Company’s preferred stock,
for immediate cancellation. As a result of the cancellation of the two (2) preferred shares by Brent Callais and Brian McLoone,
there was a change in control of the Company as Labor Smart, Inc. holds the one (1) remaining outstanding preferred share of the
Company.</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">The financial results of EmployUS,
Ltd. qualifies for reporting as a discontinued operations. A substantial portion of the Company’s 2015 financial statements
have been reclassified to conform to the reporting of discontinued operations adopted in the current year. (See Note 4).</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">In January 2016, the Company commenced
operations of one (1) staffing location Montgomery, Alabama through the subsidiary, Staff Fund I, LLC. This subsidiary recruits,
hires, employs and manages skilled and unskilled workers that it places with its client companies. During the year ended December
31, 2016. Staff Fund I, LLC issued membership interests for cash proceeds of $14,000. At December 31, 2016, 7% of Staff Fund I,
LLC’s membership interest are held by non-controlling interest.</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">On April 1, 2016, the Company purchased
the operating assets of four (4) branch locations in Charlotte, NC, Indianapolis, IN, Nashville, TN and Raleigh, NC from Labor
Smart, Inc. for consideration with a fair value of $2,666,000. The one-time fee of $5,000 for the (4) newly opened branches which
were opened under the Labor Smart, Inc. name totaling $20,000 was waived. As a requirement of the purchase of the operating assets,
the one (1) issued and outstanding share of Series A Preferred Stock owed by Labor Smart, Inc. was transferred to Kimberly Thompson,
the Chief Executive Officer of the Company in addition the CEO stepped down from any former position she held with Labor Smart,
Inc. Each share of Series A Preferred Stock gives the holder voting rights equal to 2 votes for every one share of common stock
outstanding at the time of a vote of shareholders and does not have any additional rights or preferences. As such, at December
31, 2016, Kimberly Thompson controlled the majority of shareholder votes. (See Note 4). These consolidated financial statements
report the financial position, operations and cash flows of the acquired business (the “Predecessor”). SEC Regulations
require the Predecessor to be reported when the acquired business succeeds substantially all of the business and the Company’s
own operations before the succession appear insignificant to the operations acquired.</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">On September 12, 2016, the Company
cancelled the licensing agreement with Labor Smart, Inc and, as such, no longer operates under the Labor Smart trademarked name.
The Company currently operates under its legal name, The Staffing Group Ltd.</p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify"><font style="font-variant: small-caps"><b>Note
2 - Summary of Significant Accounting Policies </b></font></p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify; text-indent: 0.5in"><font style="font-variant: small-caps"><b> </b></font></p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify"><font style="font-variant: small-caps"><b><i>Basis
of presentation</i></b></font></p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify; text-indent: 0.5in"> </p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify">The consolidated financial statements
of the Company have been prepared in accordance with accounting principles generally accepted in the United States of America (“GAAP”)
for annual financial statements and with Form 10-K and article 8 of the Regulation S-X of the United States Securities and Exchange
Commission (“SEC”).</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">As a result of the split-off of
EmployUs, Ltd. the consolidated balance sheets as of December 31, 2015 and 2015 and the related consolidated statements of operations
and cash flows present the results and accounts of EmployUs, Ltd. as discontinued operations. All prior periods presented in the
consolidated statements of operations and consolidated statement of cash flows discussed herein have been restated to conform to
such presentation.</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">The carve-out financial statements
have been prepared to demonstrate the historical results of operations, financial position, equity and cash flows of the Four Branches
for the indicated periods under the Seller’s management. Accordingly, the carve-out financial statements do not reflect the
presentation and classification of the Four Branches’ operations in the same manner as the Company. These financial statements
were prepared on a "carve-out" basis from Labor Smart's accounts and reflects the historical accounts directly attributable
to these four branches together with allocations of costs and expenses. The predecessor financial statement may not be indicative
of future performance and my not reflect what their results of operations, financial position and cash flows would have been had
those four units operated as an independent entity. Certain estimates, including allocation from Labor Smart, have been made to
provide financial statements for stand-alone reporting purposes. Allocation of cost was based on the percentage of revenue. All
inter-company transactions between Labor Smart and these four units are classified as net transfer to parent in the financial statements.</p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify; text-indent: 0.5in"> </p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify"><font style="font-variant: small-caps"><b><i>Principles
of Consolidation</i></b></font></p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify; text-indent: 0.5in"> </p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify">The consolidated financial statements
include the accounts of the Company and its wholly owned subsidiaries. All significant intercompany transactions are eliminated.</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-variant: small-caps"><b><i>Use
of Estimates</i></b></font></p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify; text-indent: 0.5in"> </p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify">The preparation of consolidated
financial statements in conformity with GAAP requires management to make estimates and assumptions that affect the reported amounts
of assets and liabilities, the disclosure of contingent assets and liabilities, and the reported amounts of revenues and expenses
during the period. Actual results could differ from those estimates. Significant matters requiring the use of estimates and assumptions
include, but may not be limited to, accounts receivable allowances, evaluation of impairment of long lived assets, valuation allowance
for deferred tax assets and valuation of derivative liabilities. Management believes that its estimates and assumptions are reasonable,
based on information that is available at the time they are made.</p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify; text-indent: 0.5in"><i> </i></p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify"><font style="font-variant: small-caps"><b><i>Revenue
Recognition</i></b></font></p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify; text-indent: 0.5in"> </p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify">Contract staffing service revenues
are recognized when services are rendered. The Company recognizes revenue in accordance with Accounting Standards Codification
(“ASC”) 605 “Revenue Recognition”, which requires that four basic criteria be met before revenue can be
recognized: (i) persuasive evidence that an arrangement exists; (ii) the price is fixed or determinable; (iii) collectability is
reasonably assured; and (iv) services have been rendered.</p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify; text-indent: 0.5in"><i> </i></p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify"><font style="font-variant: small-caps"><b><i>Cost
of Contract Staffing Services</i></b></font></p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify; text-indent: 0.5in"> </p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify">The cost of contract staffing services
includes the wages, related payroll taxes, and employee benefits of the Company’s employees while they work on contract assignments
for the period in which the related revenue is recognized.</p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify; text-indent: 0.5in"><font style="font-variant: small-caps"><b><i> </i></b></font></p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify"><font style="font-variant: small-caps"><b><i>Cash
and Cash Equivalents</i></b></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">The Company considers highly liquid
investments with original maturities of three months or less when purchased as cash equivalents. At times throughout the year,
the Company might maintain bank balances that may exceed Federal Deposit Insurance Corporation (FDIC) insured limits. Periodically,
the Company evaluates the credit worthiness of the financial institutions, and has not experienced any losses in such accounts.
As of December 31, 2016 and 2015, the Company did not have any cash equivalents.</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-variant: small-caps"><b><i>Cash
- Restricted</i></b></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">Restricted cash represents cash
in a lockbox account by held by TCA Global Credit Master Fund, LP in accordance with the Senior Secured Revolving Credit Facility
Agreement. No cash was considered restricted at December 31, 2016 and 2015. (See Note 8)</p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0"> </p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify"><font style="font-variant: small-caps"><b><i>Accounts
Receivable</i></b></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">The Company extends credit to its
customers based on an evaluation of the customer’s financial condition and ability to pay the Company in accordance with
the payment terms. An allowance for doubtful accounts is recorded as a charge to bad debt expense where collection is considered
doubtful due to credit issues. This allowance reflects management’s estimate of the potential losses inherent in the accounts
receivable balance, based on historical loss statistics and known factors impacting its customers. The nature of the contract service
business, where companies are dependent on employees for their production cycle, generally results in a nominal provision for doubtful
accounts. Based on management’s review of accounts receivable, an allowance for doubtful accounts of $44,978, and $0 (Predecessor)
at December 31, 2016 and 2015, respectively, was recorded in these consolidated financial statements. The Company charges uncollectible
accounts against the allowance once the invoices are deemed unlikely to be collectible. The Company does not accrue interest on
past due receivables.</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-variant: small-caps"><b><i>Net
(Loss) Income per Common Share</i></b></font></p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-indent: 0.5in"> </p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify">Net (loss) income per common share
is computed pursuant to section 260-10-45 of the FASB Accounting Standards Codification.  Basic net (loss) income per
common share is computed by dividing net (loss) income by the weighted average number of shares of common stock outstanding during
the period.  Diluted net (loss) income per common share is computed by dividing net (loss) income by the weighted average
number of shares of common stock and potentially dilutive outstanding shares of common stock during the period to reflect the potential
dilution that could occur from common shares issuable through contingent share arrangements, stock options and warrants. For the
year ended December 31, 2016, the Company had potentially 14,522,170 dilutive shares of common stock related to convertible notes
payable as determined using the if-converted method and no potentially dilutive securities for the year ended December 31, 2015.</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-variant: small-caps"><b><i>Property
and Equipment</i></b></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">Property and equipment is stated
at cost, less accumulated depreciation and amortization. Expenditures for maintenance and repairs are charged to expense when incurred,
while renewals and betterments that materially extend the life of an asset are capitalized.</p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0"> </p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify">The costs of assets sold, retired,
or otherwise disposed of, and the related allowance for depreciation, are eliminated from the accounts, and any resulting gain
or loss is recognized in the results from operations. Depreciation is provided using the straight-line method over the estimated
useful lives of the assets, which are as follows:</p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify"> </p>
<table cellspacing="0" cellpadding="0" style="width: 100%; border-collapse: collapse">
<tr style="vertical-align: top">
<td style="width: 43%; padding-left: 0.35in; font: 12pt Times New Roman, Times, Serif; text-align: justify"><font style="font-size: 10pt">Computer and office equipment</font></td>
<td style="width: 57%; padding-left: 0.35in; font: 12pt Times New Roman, Times, Serif; text-align: right"><font style="font-size: 10pt">5 years</font></td></tr>
<tr style="vertical-align: top">
<td style="padding-left: 0.35in; font: 12pt Times New Roman, Times, Serif; text-align: justify"><font style="font-size: 10pt">Furniture and fixtures</font></td>
<td style="padding-left: 0.35in; font: 12pt Times New Roman, Times, Serif; text-align: right"><font style="font-size: 10pt">7 years</font></td></tr>
<tr style="vertical-align: top">
<td style="padding-left: 0.35in; font: 12pt Times New Roman, Times, Serif; text-align: justify"><font style="font-size: 10pt">Leasehold improvements</font></td>
<td style="padding-left: 0.35in; font: 12pt Times New Roman, Times, Serif; text-align: right"><font style="font-size: 10pt">Shorter of improvements’ useful life</font><br />
<font style="font-size: 10pt">or remaining lease term</font></td></tr>
</table>
<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-variant: small-caps"><b><i>Long-Lived
Assets</i></b></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">On a periodic basis, management
assesses whether there are any indicators that the value of the Company’s long-lived assets may be impaired. An asset’s
value may be impaired only if management’s estimate of the aggregate future cash flows, on an undiscounted basis, to be generated
by the asset are less than the carrying value of the asset.</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">If impairment has occurred, the
loss is measured as the excess of the carrying amount of the asset over its fair value. The Company’s estimates of aggregate
future cash flows expected to be generated by each long-lived asset are based on a number of assumptions that are subject to economic
and market uncertainties. As these factors are difficult to predict and are subject to future events that may alter management’s
assumptions, the future cash flows estimated by management in their impairment analyses may not be achieved.</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-variant: small-caps"><b><i>Identifiable
Intangible Assets</i></b></font></p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0"> </p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify">Identifiable intangible assets consist
primarily of customer relationships and non-compete contracts. These assets are tested for impairment using undiscounted cash flow
methodology annually and whenever there is an impairment indicator. Estimating future cash flows requires significant judgment
and projections may vary from cash flows eventually realized. Several impairment indicators are beyond the Company’s control,
and determining whether or not they will occur cannot be predicted with any certainty. Customer relationships and non-compete contracts
are amortized on a straight-line basis over an estimated life of five years.</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">An identifiable intangible assets
impairment charge of $613,000 (comprising customer relationships of $577,000 and non-compete agreements of $36,000) was recorded
as at December 31, 2016.</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-variant: small-caps"><b><i>Goodwill</i></b></font></p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify; text-indent: 0.5in"> </p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify">Goodwill represents the premium
paid over the fair value of the net tangible and identifiable intangible assets acquired in the Company’s business combinations.
The Company performs a goodwill impairment test on at least an annual basis at the reporting unit level. Application of the goodwill
impairment test requires significant judgments, including estimation of future cash flows, which is dependent on internal forecasts,
estimation of the long-term rate of growth for the businesses, the useful life over which cash flows will occur and determination
of our weighted average cost of capital. Changes in these estimates and assumptions could materially affect the determination of
fair value and/or conclusions on goodwill impairment for each reporting unit. The Company will conduct its annual goodwill impairment
test as of December 31 of each year or more frequently if indicators of impairment exist. The Company periodically analyzes whether
any such indicators of impairment exist. A significant amount of judgment is involved in determining if an indicator of impairment
has occurred. Such indicators may include a sustained significant decline in our stock price and market capitalization, a significant
adverse change in legal factors or in the business climate, unanticipated competition and/or slower expected growth rates, adverse
actions or assessments by a regulator, among others. The Company compares the fair value of its reporting unit to its respective
carrying value, including related goodwill.</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">A goodwill impairment charge of
$761,000 was recorded as at December 31, 2016. The impairment of goodwill was due to the loss of significantly all of the customers
at the Nashville, TN and Raleigh, NC branches acquired on April 1, 2016. See Note 4 – Business Acquisition.</p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify"> </p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify"></p>
<table cellspacing="0" cellpadding="0" style="width: 100%; font: 12pt Times New Roman, Times, Serif; border-collapse: collapse">
<tr style="vertical-align: top; background-color: rgb(204,238,255)">
<td style="width: 75%; padding-right: 5.4pt; padding-left: 5.4pt; text-align: justify"><font style="font-size: 10pt">Opening balance at December 31, 2015</font></td>
<td style="width: 25%; padding-right: 5.4pt; padding-left: 5.4pt; text-align: right"><font style="font-size: 10pt">$                0</font></td></tr>
<tr style="vertical-align: top; background-color: White">
<td style="padding-right: 5.4pt; padding-left: 5.4pt; text-align: justify"><font style="font-size: 10pt">Purchase of goodwill</font></td>
<td style="padding-right: 5.4pt; padding-left: 5.4pt; text-align: right"><font style="font-size: 10pt">1,466,000</font></td></tr>
<tr style="vertical-align: top; background-color: rgb(204,238,255)">
<td style="padding-right: 5.4pt; padding-left: 5.4pt; text-align: justify"><font style="font-size: 10pt">Impairment of goodwill</font></td>
<td style="border-bottom: Black 1pt solid; padding-right: 5.4pt; padding-left: 5.4pt; text-align: right"><font style="font-size: 10pt">(761,000)</font></td></tr>
<tr style="vertical-align: top; background-color: White">
<td style="padding-right: 5.4pt; padding-left: 5.4pt; text-align: justify"><font style="font-size: 10pt">Closing balance at December 31, 2016</font></td>
<td style="border-bottom: Black 1.5pt double; padding-right: 5.4pt; padding-left: 5.4pt; text-align: right"><font style="font-size: 10pt">$    705,000</font></td></tr>
</table>
<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">Future changes in the industry could
impact the results of future annual impairment tests. There can be no assurance that future tests of goodwill impairment will not
result in additional impairment charges.</p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify"><font style="font-variant: small-caps"><b><i> </i></b></font></p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify"><font style="font-variant: small-caps"><b><i>Fair
Value Measurement</i></b></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">As required by the Fair Value Measurements
and Disclosures Topic of the FASB ASC (“ASC 820-10”), fair value is measured based on a three-tier fair value hierarchy,
which prioritizes the inputs used in measuring fair value as follows: (Level 1) observable inputs such as quoted prices in active
markets; (Level 2) inputs, other than the quoted prices in active markets, that are observable either directly or indirectly; and
(Level 3) unobservable inputs in which there is little or no market data, which require the reporting entity to develop its own
assumptions.</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">The three levels of the fair value
hierarchy are described below:</p>
<p style="font: 12pt Times New Roman, Times, Serif; margin: 0; text-align: justify"> </p>
<table cellspacing="0" cellpadding="0" style="font: 12pt Times New Roman, Times, Serif; width: 100%; border-collapse: collapse">
<tr>
<td style="width: 1%; padding-left: 0.35in"> </td>
<td style="vertical-align: top; width: 11%; padding-left: 0.35in"><font style="font-size: 10pt">Level 1</font></td>
<td style="vertical-align: top; width: 88%; padding-left: 0.35in; text-align: justify"><font style="font-size: 10pt">Unadjusted quoted prices in active markets that are accessible at the measurement date for identical, unrestricted assets or liabilities; </font></td></tr>
<tr>
<td style="padding-left: 0.35in"> </td>
<td style="vertical-align: top; padding-left: 0.35in"><font style="font-size: 10pt">Level 2</font></td>
<td style="vertical-align: top; padding-left: 0.35in; text-align: justify"><font style="font-size: 10pt">Quoted prices in markets that are not active, or inputs that are observable, either directly or indirectly, for substantially the full term of the asset or liability; </font></td></tr>
<tr>
<td style="padding-left: 0.35in"> </td>
<td style="vertical-align: top; padding-left: 0.35in"><font style="font-size: 10pt">Level 3</font></td>
<td style="vertical-align: top; padding-left: 0.35in; text-align: justify"><font style="font-size: 10pt">Prices or valuation techniques that require inputs that are both significant to the fair value measurement and unobservable (supported by little or no market activity). </font></td></tr>
</table>
<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"> </p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify">The carrying amounts reported in
the Company’s consolidated financial statements for accounts receivable, prepaid expenses, accounts payable, accrued expenses,
and payroll liabilities approximate their fair value because of the immediate or short-term nature of these consolidated financial
instruments. The carrying amounts reported in the consolidated balance sheet for its line of credit and convertible notes payable
approximates fair value as the contractual interest rate and features are consistent with similar instruments of similar risk in
the market place.</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-right: 0"> Impairment</p>
<p style="font: 10pt Times New Roman, Times, Serif; margin-right: 0; text-align: justify">Goodwill and other indefinite-lived intangible
assets are tested for impairment annually, at the end of the fourth quarter of each fiscal year, and between annual tests if an
event occurs or circumstances change that would indicate it is more likely than not that the carrying amount may be impaired. Additionally,
the Company continually evaluates whether events or changes in circumstances might indicate that the remaining estimated useful
life of long-lived assets may warrant revision, or that the remaining balance may not be recoverable. The factors used to determine
fair value are subject to management’s judgement and expertise and include, but are not limited to, the present value of
future cash flows, net of estimated operating costs, internal forecasts, anticipated capital expenditures and various discount
rates commensurate with the risk and current market conditions associated with realizing the expected cash flows projected.</p>
<p style="font: 10pt Times New Roman, Times, Serif; margin-right: 0; text-align: justify">These assumptions represent level 3 inputs.
Impairment of the Company’s goodwill and intangibles for the year ended December 31, 2016 was $761,000 and 613,000, respectively.
There were no impairment charges during the year ended December 31, 2015.</p>
<p style="font: 10pt Times New Roman, Times, Serif; text-align: justify; margin-right: 0">Assets and liabilities
measured at fair value on a recurring basis are as follows (in thousands):</p>
<table cellpadding="0" cellspacing="0" style="border-collapse: collapse; width: 100%; font: 10pt Times New Roman, Times, Serif">
<tr style="vertical-align: bottom">
<td style="font-size: 12pt"> </td><td> </td>
<td colspan="11" style="text-align: center">December 31, 2016</td></tr>
<tr style="vertical-align: bottom">
<td style="font-size: 12pt"> </td><td> </td>
<td colspan="3" style="text-align: center">Level 1</td><td> </td>
<td colspan="3" style="text-align: center">Level 2</td><td> </td>
<td colspan="3" style="text-align: center">Level 3</td></tr>
<tr style="vertical-align: bottom">
<td>Liabilities:</td><td style="font-size: 12pt"> </td>
<td colspan="3" style="font-size: 12pt"> </td><td style="font-size: 12pt"> </td>
<td colspan="3" style="font-size: 12pt"> </td><td style="font-size: 12pt"> </td>
<td colspan="3" style="font-size: 12pt"> </td></tr>
<tr style="vertical-align: bottom; background-color: rgb(204,238,255)">
<td style="width: 46%; text-align: left; padding-left: 5.4pt">Derivative liability</td><td style="width: 5%"> </td>
<td style="width: 1%; text-align: left">$</td><td style="width: 11%; text-align: right">—  </td><td style="width: 1%; text-align: left"> </td><td style="width: 5%"> </td>
<td style="width: 1%; text-align: left">$</td><td style="width: 11%; text-align: right">—  </td><td style="width: 1%; text-align: left"> </td><td style="width: 5%"> </td>
<td style="width: 1%; text-align: left">$</td><td style="width: 11%; text-align: right">1,099,376</td><td style="width: 1%; text-align: left"> </td></tr>
<tr style="vertical-align: bottom">
<td style="font-size: 12pt; padding-left: 5.4pt"> </td><td style="font-size: 12pt"> </td>
<td style="font-size: 12pt; text-align: left"> </td><td style="font-size: 12pt; text-align: right"> </td><td style="font-size: 12pt; text-align: left"> </td><td style="font-size: 12pt"> </td>
<td style="font-size: 12pt; text-align: left"> </td><td style="font-size: 12pt; text-align: right"> </td><td style="font-size: 12pt; text-align: left"> </td><td style="font-size: 12pt"> </td>
<td style="font-size: 12pt; text-align: left"> </td><td style="font-size: 12pt; text-align: right"> </td><td style="font-size: 12pt; text-align: left"> </td></tr>
<tr style="vertical-align: bottom">
<td style="font-size: 12pt; padding-left: 5.4pt"> </td><td> </td>
<td style="text-align: left"> </td><td colspan="9" style="text-align: center; vertical-align: bottom"><font style="font-size: 10pt">December 31, 2015</font></td><td style="text-align: left"> </td></tr>
<tr style="vertical-align: bottom">
<td style="font-size: 12pt; padding-left: 5.4pt"> </td><td> </td>
<td style="text-align: left"> </td><td style="text-align: right"><font style="font-size: 10pt">Level 1</font></td><td style="text-align: left"> </td><td> </td>
<td style="text-align: left"> </td><td style="text-align: right"><font style="font-size: 10pt"> Level 2</font></td><td style="text-align: left"> </td><td> </td>
<td style="text-align: left"> </td><td style="text-align: right"><font style="font-size: 10pt"> Level 3</font></td><td style="text-align: left"> </td></tr>
<tr style="vertical-align: bottom">
<td style="padding-left: 5.4pt">Liabilities:</td><td style="font-size: 12pt"> </td>
<td style="font-size: 12pt; text-align: left"> </td><td style="font-size: 12pt; text-align: right"> </td><td style="font-size: 12pt; text-align: left"> </td><td style="font-size: 12pt"> </td>
<td style="font-size: 12pt; text-align: left"> </td><td style="font-size: 12pt; text-align: right"> </td><td style="font-size: 12pt; text-align: left"> </td><td style="font-size: 12pt"> </td>
<td style="font-size: 12pt; text-align: left"> </td><td style="font-size: 12pt; text-align: right"> </td><td style="font-size: 12pt; text-align: left"> </td></tr>
<tr style="vertical-align: bottom; background-color: rgb(204,238,255)">
<td style="text-align: left; padding-left: 5.4pt">Derivative liability</td><td> </td>
<td style="text-align: left">$</td><td style="text-align: right">—  </td><td style="text-align: left"> </td><td> </td>
<td style="text-align: left">$</td><td style="text-align: right">—  </td><td style="text-align: left"> </td><td> </td>
<td style="text-align: left">$</td><td style="text-align: right">178,958</td><td style="text-align: left"> </td></tr>
</table>
<p style="font: 9pt 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">Assets measured at fair value on a non-recurring
basis are as follows:</p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify"> </p>
<table cellspacing="0" cellpadding="0" style="width: 100%; font: 12pt Times New Roman, Times, Serif; border-collapse: collapse">
<tr style="vertical-align: bottom">
<td nowrap="nowrap" style="padding-right: 5.4pt; padding-left: 5.4pt"> </td>
<td nowrap="nowrap" colspan="3" style="padding-right: 5.4pt; padding-left: 5.4pt; text-align: center"><font style="font-size: 10pt">December 31, 2016</font></td>
<td nowrap="nowrap" style="padding-right: 5.4pt; padding-left: 5.4pt"> </td></tr>
<tr style="vertical-align: bottom">
<td nowrap="nowrap" style="padding-right: 5.4pt; padding-left: 5.4pt"> </td>
<td nowrap="nowrap" style="padding-right: 5.4pt; padding-left: 5.4pt; text-align: center"><font style="font-size: 10pt">Level 1</font></td>
<td nowrap="nowrap" style="padding-right: 5.4pt; padding-left: 5.4pt; text-align: center"><font style="font-size: 10pt"> Level 2</font></td>
<td nowrap="nowrap" style="padding-right: 5.4pt; padding-left: 5.4pt; text-align: center"><font style="font-size: 10pt"> Level 3</font></td>
<td nowrap="nowrap" style="padding-right: 5.4pt; padding-left: 5.4pt; text-align: center"><font style="font-size: 10pt"> Total Impairments</font></td></tr>
<tr style="vertical-align: bottom">
<td nowrap="nowrap" style="padding-right: 5.4pt; padding-left: 5.4pt"><font style="font-size: 10pt">Assets:</font></td>
<td nowrap="nowrap" style="padding-right: 5.4pt; padding-left: 5.4pt"> </td>
<td nowrap="nowrap" style="padding-right: 5.4pt; padding-left: 5.4pt"> </td>
<td nowrap="nowrap" style="padding-right: 5.4pt; padding-left: 5.4pt"> </td>
<td nowrap="nowrap" style="padding-right: 5.4pt; padding-left: 5.4pt"> </td></tr>
<tr style="vertical-align: bottom; background-color: rgb(204,238,255)">
<td nowrap="nowrap" style="padding-right: 5.4pt; padding-left: 5.4pt"><font style="font-size: 10pt">Intangible assets</font></td>
<td nowrap="nowrap" style="padding-right: 5.4pt; padding-left: 5.4pt"><font style="font-size: 10pt"> $           -   </font></td>
<td nowrap="nowrap" style="padding-right: 5.4pt; padding-left: 5.4pt"><font style="font-size: 10pt"> $           -   </font></td>
<td nowrap="nowrap" style="padding-right: 5.4pt; padding-left: 5.4pt"><font style="font-size: 10pt"> $            407,000 </font></td>
<td nowrap="nowrap" style="padding-right: 5.4pt; padding-left: 5.4pt"><font style="font-size: 10pt"> $                    613,000 </font></td></tr>
<tr style="vertical-align: bottom; background-color: White">
<td nowrap="nowrap" style="padding-right: 5.4pt; padding-left: 5.4pt"><font style="font-size: 10pt">Goodwill</font></td>
<td nowrap="nowrap" style="padding-right: 5.4pt; padding-left: 5.4pt"><font style="font-size: 10pt"> $           -   </font></td>
<td nowrap="nowrap" style="padding-right: 5.4pt; padding-left: 5.4pt"><font style="font-size: 10pt"> $           -   </font></td>
<td nowrap="nowrap" style="padding-right: 5.4pt; padding-left: 5.4pt"><font style="font-size: 10pt"> $            705,000 </font></td>
<td nowrap="nowrap" style="padding-right: 5.4pt; padding-left: 5.4pt"><font style="font-size: 10pt"> $                    761,000 </font></td></tr>
<tr style="vertical-align: bottom; background-color: rgb(204,238,255)">
<td nowrap="nowrap" style="padding-right: 5.4pt; padding-left: 5.4pt"><font style="font-size: 10pt">Total assets </font></td>
<td nowrap="nowrap" style="border-top: Black 1pt solid; border-bottom: Black 2.25pt double; padding-right: 5.4pt; padding-left: 5.4pt"><font style="font-size: 10pt"> $           -   </font></td>
<td nowrap="nowrap" style="border-top: Black 1pt solid; border-bottom: Black 2.25pt double; padding-right: 5.4pt; padding-left: 5.4pt"><font style="font-size: 10pt"> $           -   </font></td>
<td nowrap="nowrap" style="border-top: Black 1pt solid; border-bottom: Black 2.25pt double; padding-right: 5.4pt; padding-left: 5.4pt"><font style="font-size: 10pt"> $        1,112,000 </font></td>
<td nowrap="nowrap" style="border-top: Black 1pt solid; border-bottom: Black 2.25pt double; padding-right: 5.4pt; padding-left: 5.4pt"><font style="font-size: 10pt"> $                1,374,000 </font></td></tr>
</table>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify"><font style="font-variant: small-caps"><b><i> </i></b></font></p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify"><font style="font-variant: small-caps"><b><i>Advertising</i></b></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">The Company charges advertising
costs to expense as incurred. Advertising costs were $8,231 and $11,614 (Predecessor) for the years ended December 31, 2016 and
2015, respectively.</p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify"><font style="font-variant: small-caps"><b><i> </i></b></font></p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify"><font style="font-variant: small-caps"><b><i>Concentration
of Credit Risk</i></b></font></p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify; text-indent: 0.5in"> </p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify">The Company did not have any other
customers that exceeded 10% of either revenue or accounts receivable in either 2016 or 2015.</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"><font style="font-variant: small-caps"><b>Convertible
Promissory Notes</b></font></p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0"><font style="font-variant: small-caps"> </font></p>
<table cellpadding="0" cellspacing="0" style="width: 100%; font: 12pt Times New Roman, Times, Serif; margin-top: 0; margin-bottom: 0"><tr style="vertical-align: top">
<td style="width: 27pt"></td><td style="width: 27pt"><font style="font-size: 10pt">i)</font></td><td style="text-align: justify"><font style="font-size: 10pt"><u>Beneficial Conversion Feature</u></font></td></tr></table>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0 0 0 27pt; text-align: justify">If the conversion features of conventional
convertible debt provides for a rate of conversion that is below market value, this feature is characterized as a beneficial conversion
feature (“BCF”). A BCF is recorded by the Company as a debt discount pursuant to ASC Topic 470-20 “Debt
with Conversion and Other Options.” In those circumstances, the convertible debt is recorded net of the discount related
to the BCF and the Company amortizes the discount to interest expense over the life of the debt using the effective interest method.</p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0 0 0 27pt; text-align: justify"> </p>
<table cellpadding="0" cellspacing="0" style="width: 100%; font: 12pt Times New Roman, Times, Serif; margin-top: 0; margin-bottom: 0"><tr style="vertical-align: top">
<td style="width: 27pt"></td><td style="width: 27pt"><font style="font-size: 10pt">ii)</font></td><td style="text-align: justify"><font style="font-size: 10pt"><u>Debt Discount</u></font></td></tr></table>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0 0 0 27pt; text-align: justify">The Company determines if the convertible
debenture should be accounted for as liability or equity under ASC 480, Liabilities — Distinguishing Liabilities from Equity.
ASC 480, applies to certain contracts involving a Company's own equity, and requires that issuers classify the following freestanding
financial instruments as liabilities. Mandatorily redeemable financial instruments, obligations that require or may require repurchase
of the issuer's equity shares by transferring assets (e.g., written put options and forward purchase contracts), and certain obligations
where at inception the monetary value of the obligation is based solely or predominantly on:</p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0 0 0 27pt; text-align: justify">– A fixed monetary amount known
at inception, for example, a payable settleable with a variable number of the issuer's equity shares with an issuance date fair
value equal to a fixed dollar amount,</p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0 0 0 27pt; text-align: justify">– Variations in something other
than the fair value of the issuer's equity shares, for example, a financial instrument indexed to the S&P 500 and settleable
with a variable number of the issuer's equity shares, or</p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0 0 0 27pt; text-align: justify">– Variations inversely related
to changes in the fair value of the issuer's equity shares, for example, a written put that could be net share settled.</p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0 0 0 27pt; text-align: justify">If the entity determined the instrument
meets the guidance under ASC 480 the instrument is accounted for as a liability with a respective debt discount. The Company records
debt discounts in connection with raising funds through the issuance of convertible debt. These costs are amortized to non-cash
interest expense over the life of the debt. If a conversion of the underlying debt occurs, a proportionate share of the unamortized
amounts is immediately expensed.</p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0 0 0 27pt; text-align: justify"> </p>
<table cellpadding="0" cellspacing="0" style="width: 100%; font: 12pt Times New Roman, Times, Serif; margin-top: 0; margin-bottom: 0"><tr style="vertical-align: top">
<td style="width: 27pt"></td><td style="width: 27pt"><font style="font-size: 10pt">iii)</font></td><td style="text-align: justify"><font style="font-size: 10pt"><u>Derivative Financial Instruments</u></font></td></tr></table>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0 0 0 27pt; text-align: justify">Derivative financial instruments,
as defined in ASC 815, “Accounting for Derivative Financial Instruments and Hedging Activities”, consist of financial
instruments or other contracts that contain a notional amount and one or more underlying (e.g. interest rate, security price or
other variable), require no initial net investment and permit net settlement. Derivative financial instruments may be free-standing
or embedded in other financial instruments. Further, derivative financial instruments are initially, and subsequently, measured
at fair value and recorded as liabilities or, in rare instances, assets.</p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0 0 0 27pt; text-align: justify"> </p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0 0 0 27pt; text-align: justify">The Company does not use derivative
financial instruments to hedge exposures to cash-flow, market or foreign-currency risks. However, the Company has issued financial
instruments including senior convertible promissory notes payable and freestanding stock purchase warrants with features that are
either (i) not afforded equity classification, (ii) embody risks not clearly and closely related to host contracts, or (iii) may
be net-cash settled by the counterparty. As required by ASC 815, in certain instances, these instruments are required to be carried
as derivative liabilities, at fair value, in our consolidated financial statements.</p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0 0 0 0.5in; text-align: justify"> </p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify"><font style="font-variant: small-caps"><b><i>Income
Taxes</i></b></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">For the period prior to July 1,
2013, the Company was not subject to Federal and State income taxes, as it was a limited liability company. Each member was responsible
for the tax liability, if any, related to its proportionate share of the Company’s taxable income. Accordingly, no provision
for income taxes was reflected in the accompanying consolidated financial statements through June 30, 2013. The Company had concluded
that it was a pass-through entity through June 30, 2013 and a taxable entity thereafter.</p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify; text-indent: 0.5in"> </p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify">Effective July 1, 2013, the Company
changed its corporate status from a limited liability company to a “C” corporation and its state of registration from
Delaware to Nevada. The Company is subject to file tax returns in the states of North Carolina, Indiana, Tennessee, Louisiana,
Alabama and Mississippi. Generally, federal, state and local authorities may examine the Company’s tax returns for three
years from the date of filing and the current and prior three years remain subject to examination as of December 31, 2016.</p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify; text-indent: 0.5in"> </p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify">There were no uncertain tax positions
that would require recognition in the financial statements through December 31, 2016. The Company’s conclusions regarding
uncertain tax positions may be subject to review and adjustment as a later date based upon ongoing analyses of tax laws, regulations
and interpretations thereof as well as other factors.</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">The Company accounts for income
taxes under ASC 740-10-30.  Deferred income tax assets and liabilities are determined based upon differences between
the financial reporting and tax bases of assets and liabilities and are measured using the enacted tax rates and laws that will
be in effect when the differences are expected to reverse.  Deferred tax assets are reduced by a valuation allowance
to the extent management concludes it is more likely than not that the assets will not be realized.  Deferred tax assets
and liabilities are measured using enacted tax rates expected to apply to taxable income in the years in which those temporary
differences are expected to be recovered or settled. The effect on deferred tax assets and liabilities of a change in tax rates
is recognized in the statements of operations in the period that includes the enactment date.</p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify; text-indent: 0.5in"> </p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify"><font style="font-variant: small-caps"><b><i>Recent
Accounting Pronouncements </i></b></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">In May 2014, the FASB issued
ASU 2014-09, “Revenue from Contracts with Customers (Topic 606)” (“ASU 2014-09”). ASU 2014-09
supersedes the revenue recognition requirements in ASC Topic 605, “Revenue Recognition” and some cost guidance
included in ASC Subtopic 605-35, “Revenue Recognition - Construction-Type and Production-Type Contracts.” The
core principle of ASU 2014-09 is that revenue is recognized when the transfer of goods or services to customers occurs in an
amount that reflects the consideration to which the Company expects to be entitled in exchange for those goods or services.
ASU 2014-09 requires the disclosure of sufficient information to enable readers of the Company’s financial statements
to understand the nature, amount, timing and uncertainty of revenue and cash flows arising from customer contracts. ASU
2014-09 also requires disclosure of information regarding significant judgments and changes in judgments, and assets
recognized from costs incurred to obtain or fulfill a contract. ASU 2014-09 provides two methods of retrospective
application. The first method would require the Company to apply ASU 2014-09 to each prior reporting period presented. The
second method would require the Company to retrospectively apply ASU 2014-09 with the cumulative effect recognized at the
date of initial application. ASU 2014-09 will be effective for the Company beginning in fiscal 2019 as a result of ASU
2015-14, “Revenue from Contracts with Customers (Topic 606): Deferral of the Effective Date,” which was issued by
the FASB in August 2015 and extended the original effective date by one year. The Company is currently evaluating the
impact of adopting the available methodologies of ASU 2014-09 and 2015-14 upon its financial statements in future reporting
periods. The Company has not yet selected a transition method. The Company is in the process of evaluating the new standard
against its existing accounting policies, including the timing of revenue recognition, and its contracts with customers to
determine the effect the guidance will have on its financial statements and what changes to systems and controls may be
warranted.</p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0 0 0 27pt; text-align: justify"> </p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify">There have been four new ASUs issued
amending certain aspects of ASU 2014-09, ASU 2016-08, “Principal versus Agent Considerations (Reporting Revenue Gross Versus
Net),” was issued in March, 2016 to clarify certain aspects of the principal versus agent guidance in ASU 2014-09. In addition,
ASU 2016-10, “Identifying Performance Obligations and licensing,” issued in April 2016, amends other sections of ASU
2014-09 including clarifying guidance related to identifying performance obligations and licensing implementation. ASU 2016-12,
“Revenue from Contracts with Customers - Narrow Scope Improvements and Practical Expedients” provides amendments and
practical expedients to the guidance in ASU 2014-09 in the areas of assessing collectability, presentation of sales taxes received
from customers, noncash consideration, contract modification and clarification of using the full retrospective approach to adopt
ASU 2014-09. Finally, ASU 2016-20, “Technical Corrections and Improvements to Topic 606, Revenue from Contracts with Customers,”
was issued in December 2016, and provides elections regarding the disclosures required for remaining performance obligations in
certain cases and also makes other technical corrections and improvements to the standard. With its evaluation of the impact of
ASU 2014-09, the Company will also consider the impact on its financial statements related to the updated guidance provided by
these four new ASUs. </p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify">In November 2015, the FASB issued
ASU 2015-17, Income Taxes. The new standard simplifies the presentation of deferred tax assets and liabilities on the balance sheet.
 Previous GAAP required an entity to separate deferred income tax liabilities and assets into current and noncurrent amounts
on the balance sheet.  The amendment requires that deferred tax liabilities and assets be classified as noncurrent in a classified
balance sheet.  This ASU is effective for annual periods beginning after December 15, 2017, and interim periods within annual
periods beginning after December 15, 2018.  Early adoption is permitted. The Company is currently evaluating the impact of
this guidance on its consolidated financial statements</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">In February 2016, the FASB issued
ASU 2016-02, Leases. The new standard establishes a right-of-use model that requires a lessee to record a right-of-use asset and
a lease liability on the balance sheet for all leases with terms longer than twelve months. Leases will be classified as either
finance or operating, with classification affecting the pattern of expense recognition in the income statement. The new standard
is effective for fiscal years beginning after December 15, 2018, including interim periods within those fiscal years. A modified
retrospective transition approach is required for lessees for capital and operating leases existing at, or entered into after,
the beginning of the earliest comparative period presented in the financial statements, with certain practical expedients available.
Early adoption is permitted. The Company is currently evaluating the impact of this guidance on its consolidated financial statements</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">In August 2016, the FASB issued
ASU No. 2016-15, “Statement of Cash Flows (Topic 230), Classification of Certain Cash Receipts and Cash Payments” (“ASU
2016-15”). ASU 2016-15 is intended to address how certain cash receipts and cash payments are presented and classified in
the statement of cash flows. This update addresses eight specific cash flow issues with the objective of reducing the existing
diversity in practice. The amendments are effective for public business entities for fiscal years beginning after December 15,
2017, and interim periods within those fiscal years. The Company is currently evaluating the effect that ASU 2016-15 will have
on the Company’s consolidated financial position and results of operations.</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">In January 2017, the FASB issued
ASU 2017-01, “Business Combinations (Topic 805) Clarifying the Definition of a Business” (“ASU 2017-01”).
The amendments in ASU 2017-01 is to clarify the definition of a business with the objective of adding guidance to assist entities
with evaluating whether transactions should be accounted for as acquisitions (or disposals) of assets or businesses. The definition
of a business affects many areas of accounting including acquisitions, disposals, goodwill, and consolidation. The guidance is
effective for annual periods beginning after December 15, 2017, including interim periods within those periods. The Company is
currently evaluating the impact of adopting this guidance.</p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-indent: 27pt"> </p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify">In January 2017, the FASB issued
ASU 2017-04, Intangibles - Goodwill and Other (Topic 350): Simplifying the Test for Goodwill Impairment” (“ASU 2017-04”).
ASU 2017-04 eliminates Step 2 along with amending other parts of the goodwill impairment test. Under ASU 2017-04, an entity should
perform its annual or interim goodwill impairment test by comparing the fair value of the reporting unit with its carrying amount,
and should recognize an impairment charge for the amount by which the carrying amount exceeds the reporting unit’s fair value
with the loss not exceeding the total amount of goodwill allocated to that reporting unit. ASU 2017-04 is effective for annual
periods beginning after December 15, 2019, and interim periods therein with early adoption permitted for interim or annual goodwill
impairment tests performed after January 1, 2017. At adoption, this update will require a prospective approach. The Company is
currently evaluating the impact of adopting this guidance.</p>
<table cellspacing="0" cellpadding="0" style="width: 100%; font: 12pt Times New Roman, Times, Serif; border-collapse: collapse">
<tr style="vertical-align: top; background-color: rgb(204,238,255)">
<td style="width: 81%; padding-right: 5.4pt; padding-left: 5.4pt; text-align: justify"><font style="font-size: 10pt">Customer Relationships</font></td>
<td style="width: 19%; padding-right: 5.4pt; padding-left: 5.4pt; text-align: right"><font style="font-size: 10pt"> $ 1,130,000</font></td></tr>
<tr style="vertical-align: top; background-color: White">
<td style="padding-right: 5.4pt; padding-left: 5.4pt; text-align: justify"><font style="font-size: 10pt">Non-compete Agreements</font></td>
<td style="padding-right: 5.4pt; padding-left: 5.4pt; text-align: right"><font style="font-size: 10pt">70,000</font></td></tr>
<tr style="vertical-align: top; background-color: rgb(204,238,255)">
<td style="padding-right: 5.4pt; padding-left: 5.4pt; text-align: justify"><font style="font-size: 10pt">Goodwill</font></td>
<td style="border-bottom: Black 1pt solid; padding-right: 5.4pt; padding-left: 5.4pt; text-align: right"><font style="font-size: 10pt">1,466,000</font></td></tr>
<tr style="vertical-align: top; background-color: White">
<td style="padding-right: 5.4pt; padding-left: 5.4pt; text-align: justify"><font style="font-size: 10pt">Purchase Price</font></td>
<td style="border-bottom: Black 1.5pt double; padding-right: 5.4pt; padding-left: 5.4pt; text-align: right"><font style="font-size: 10pt">$ 2,666,000</font></td></tr>
</table>
2666000
755000
29110
160000
<table cellpadding="0" cellspacing="0" style="border-collapse: collapse; width: 100%; font: 10pt Times New Roman, Times, Serif">
<tr style="vertical-align: bottom">
<td style="font-size: 10pt"> </td><td style="font-weight: bold; padding-bottom: 1pt"> </td>
<td colspan="3" style="font-weight: bold; text-align: center; border-bottom: Black 1pt solid">December 31, 2016</td><td style="font-weight: bold; padding-bottom: 1pt"> </td>
<td colspan="3" style="font-weight: bold; text-align: center; border-bottom: Black 1pt solid">December 31, 2015</td></tr>
<tr style="vertical-align: bottom; background-color: rgb(204,238,255)">
<td style="width: 56%; text-align: left">Customer relationships</td><td style="width: 8%"> </td>
<td style="width: 1%; text-align: left">$</td><td style="width: 12%; text-align: right">451,000</td><td style="width: 1%; text-align: left"> </td><td style="width: 8%"> </td>
<td style="width: 1%; text-align: left">$</td><td style="width: 12%; text-align: right">—  </td><td style="width: 1%; text-align: left"> </td></tr>
<tr style="vertical-align: bottom; background-color: White">
<td style="text-align: left; padding-bottom: 1pt">Non-compete agreements</td><td style="padding-bottom: 1pt"> </td>
<td style="border-bottom: Black 1pt solid; text-align: left"> </td><td style="border-bottom: Black 1pt solid; text-align: right">28,000</td><td style="padding-bottom: 1pt; text-align: left"> </td><td style="padding-bottom: 1pt"> </td>
<td style="border-bottom: Black 1pt solid; text-align: left"> </td><td style="border-bottom: Black 1pt solid; text-align: right">—  </td><td style="padding-bottom: 1pt; text-align: left"> </td></tr>
<tr style="vertical-align: bottom; background-color: rgb(204,238,255)">
<td style="font-size: 12pt"> </td><td> </td>
<td style="text-align: left"> </td><td style="text-align: right">479,000</td><td style="text-align: left"> </td><td> </td>
<td style="text-align: left"> </td><td style="text-align: right">—  </td><td style="text-align: left"> </td></tr>
<tr style="vertical-align: bottom; background-color: White">
<td style="text-align: left; padding-bottom: 1pt">Accumulated amortization</td><td style="padding-bottom: 1pt"> </td>
<td style="border-bottom: Black 1pt solid; text-align: left"> </td><td style="border-bottom: Black 1pt solid; text-align: right">(72,000</td><td style="padding-bottom: 1pt; text-align: left">)</td><td style="padding-bottom: 1pt"> </td>
<td style="border-bottom: Black 1pt solid; text-align: left"> </td><td style="border-bottom: Black 1pt solid; text-align: right">—  </td><td style="padding-bottom: 1pt; text-align: left"> </td></tr>
<tr style="vertical-align: bottom; background-color: rgb(204,238,255)">
<td style="text-align: left; padding-bottom: 2.5pt">Identifiable Intangible Assets</td><td style="padding-bottom: 2.5pt"> </td>
<td style="border-bottom: Black 2.5pt double; text-align: left">$</td><td style="border-bottom: Black 2.5pt double; text-align: right">407,000</td><td style="padding-bottom: 2.5pt; text-align: left"> </td><td style="padding-bottom: 2.5pt"> </td>
<td style="border-bottom: Black 2.5pt double; text-align: left">$</td><td style="border-bottom: Black 2.5pt double; text-align: right">—  </td><td style="padding-bottom: 2.5pt; text-align: left"> </td></tr>
</table>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0"><font style="font-variant: small-caps"><b>Note 12 –
due to stockholder</b></font></p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0"><font style="font-variant: small-caps"><b> </b></font></p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0">Amounts due to stockholder of $28,500 is non-interest bearing,
unsecured and have no specific terms of repayment.</p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify"><font style="font-variant: small-caps"><b>Note
14 – Stockholders’ Equity</b></font></p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify"><font style="font-variant: small-caps"><b> </b></font></p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify">On March 8, 2016, the Company approved
and effected a 1-for 50 reverse stock split of issued and outstanding common shares. All share information has been revised to
reflect the reverse stock split from the Company’s inception.</p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify"><font style="font-variant: small-caps"><b><i> </i></b></font></p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify"><font style="font-variant: small-caps"><b><i>Preferred
Stock</i></b></font></p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify"><font style="font-variant: small-caps"><b> </b></font></p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify">The Company has authorized 5,000,000
shares of preferred stock, no par value. As these are considered “black check” preferred shares, the terms of the preferred
stock are to be determined by the board of directors of the Company.</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">On November 13, 2015, the Company’s
Board of Directors approved and filed a Certificate of Designation designating five (5) shares of the blank check preferred stock
as Series A Preferred Stock par value $0.001 as defining the rights, preferences and privileges of such series of Preferred Stock.
For each share of Series A Preferred Stock, the holder has a voting right equal to 2 votes for every one share of common stock
outstanding at the time of a vote of shareholders and does not have any additional rights or preferences. The Series A Preferred
Stock does not have the right to receive dividends and distributions and does not have the right to received assets upon any liquidation.
The Series A Preferred Stock may be redeemed by the Company at no consideration.</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">On November 13, 2015, the Board
of Directors approved the issuance of two (2) shares of Series A Preferred Stock to each of its then current directors, Brian McLoone
and Brent Callais.</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">On December 18, 2015, the Board
approved the issuance of one (1) share of Series A Preferred Stock to Labor Smart, Inc., a 18.45% shareholder of common stock,
in conjunction with the issuance of a convertible promissory note dated December 18, 2015.</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">The fair value of Series A Preferred
Stock was determined to be $0 per share as the holders do not have the right to receive dividends or distributions, the holders
do not have the right to receive asset upon any liquidation of the Company and the Company may redeem Series A Preferred Stock
for no consideration.</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">On December 31, 2015, Company entered
into a Stock Purchase Agreement (“SPA”) with Pour Les Enfant, LLC, a Louisiana limited liability company (“Pour
Les Enfant”). Pursuant to the SPA, the Company, as sole shareholder of EmployUS, Ltd. completed the split-off by transferring
to Pour Les Enfant all outstanding shares and tangible assets of EmployUS, Ltd. (the “split-off transaction”). In consideration
thereof, Pour Les Enfant assumes all liabilities of EmployUS, Ltd. associated with monies owed to the Internal Revenue Service
for late payroll taxes; and all corporate, personal, and validity guarantees associated the Crestmark Bank Loan and Security Agreement.
Pursuant to the SPA, Brent Callais and Brian McLoone, directors, executives and controlling shareholders of the Company, each agree
to transfer to the Company 91,000 shares of the Company’s common stock and one share of the Company’s preferred stock,
for immediate cancellation. As a result of the cancellation of the two (2) preferred shares by Brent Callais and Brian McLoone,
there was a change in control of the Company as Labor Smart, Inc. holds the one (1) remaining outstanding preferred share of the
Company.</p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0"> <font style="font-variant: small-caps"><b><i> </i></b></font></p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify"><font style="font-variant: small-caps"><b><i>Common
Stock</i></b></font></p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0"> </p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify">On November 30, 2015, the Company
entered into a private placement securities purchase agreement with Labor Smart, Inc. to which the Company issued 40,000 shares
of its common stock at a price of $2.00 per share for an aggregate purchase price of $80,000 in gross proceeds. </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">On April 1, 2016, the Company issued
600,000 shares of common stock with a fair value of $1,080,000 ($1.80 per share based on the closing price of the Company common
stock on March 31, 2016) in conjunction with the Agreement for Purchase and Sale of Assets (Note 3).</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; background-color: white">On April
1, 2016, as a requirement of the purchase of the operating assets, the one (1) issued and outstanding share of Series A Preferred
Stock owed by Labor Smart, Inc. was transferred to Kimberly Thompson, the Chief Executive Officer of the Company.</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">On April 25, 2016, the Board of Directors
authorized the issuance of 60,000 shares of common stock of the Company to Kimberly Thompson, the Chief Executive Officer of the
Company, for compensation valued at $109,200 ($1.82 per share) is expensed immediately and is included in selling, general and
administrative expense in the consolidated statement of operations.</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">On July 11, 2016, the Company issued
7,000 shares of common stock for $7,000 in cash ($1.00 per share).</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">On December 19, 2016, Group 10 Holdings
LLC, the holder of a Convertible Promissory Note (see Note 10) converted 63,300 shares of common stock of the Company with a fair
value of $12,660 to settle $5,570 of principal and interest.</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-variant: small-caps"><b><i>Non-controlling
interest</i></b></font></p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-indent: 0.5in"> </p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify">During the year ended December 31,
2016, the subsidiary of the Company, Staff Fund I, LLC, issued membership interests for cash proceeds of $14,000.</p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify"> </p>
<table cellpadding="0" cellspacing="0" style="border-collapse: collapse; width: 100%; font: 10pt Times New Roman, Times, Serif">
<tr style="vertical-align: bottom; background-color: rgb(204,238,255)">
<td style="width: 70%; text-align: justify; padding-left: 5.4pt">Opening balance at December 31, 2015</td><td style="width: 10%"> </td>
<td style="width: 1%; text-align: left">$</td><td style="width: 18%; text-align: right">0</td><td style="width: 1%; text-align: left"> </td></tr>
<tr style="vertical-align: bottom; background-color: White">
<td style="text-align: justify; padding-left: 5.4pt">Issue of membership interest</td><td> </td>
<td style="text-align: left"> </td><td style="text-align: right">14,000</td><td style="text-align: left"> </td></tr>
<tr style="vertical-align: bottom; background-color: rgb(204,238,255)">
<td style="text-align: justify; padding-bottom: 1pt; padding-left: 5.4pt">Net loss attributed to non-controlling interest</td><td style="padding-bottom: 1pt"> </td>
<td style="border-bottom: Black 1pt solid; text-align: left"> </td><td style="border-bottom: Black 1pt solid; text-align: right">(1,989</td><td style="padding-bottom: 1pt; text-align: left">)</td></tr>
<tr style="vertical-align: bottom; background-color: White">
<td style="text-align: justify; padding-bottom: 2.5pt; padding-left: 5.4pt">Closing balance at December 31, 2016</td><td style="padding-bottom: 2.5pt"> </td>
<td style="border-bottom: Black 2.5pt double; text-align: left">$</td><td style="border-bottom: Black 2.5pt double; text-align: right">12,011</td><td style="padding-bottom: 2.5pt; text-align: left"> </td></tr>
</table>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0"><font style="font-variant: small-caps"><b>Note 13 –
Series B Preferred Stock</b></font></p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0"><font style="font-variant: small-caps"><b> </b></font></p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify">On March 29, 2016, the Board of Directors
Board designated sixty (60) shares of preferred stock, par value $0.001 per share as Series B Preferred Stock (“Series B
Stock”). The Series B Stock is being issued to the owner of the Series B Preferred Stock (“Holder”) in connection
with the Senior Secured Revolving Credit Facility Agreement between the Company and TCA, effective as of April 5, 2016 (Note 3).
The Series B Stock is non-voting and not entitled to dividends. Upon liquation, dissolution or winding up of the Company, the Holder
is entitled to a liquidation preference of $25,000 per share of Series B Stock. The Holder may convert Series B Stock into shares
of authorized but unissued common stock equal to $25,000 divided by the average VWAP for five business days immediately prior to
the conversion date.</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">The Company has classified Series
B Stock as a liability in these consolidated financial statements in accordance with ASC 480, Liabilities – Distinguishing
Liabilities from Equity, as the Series B Stock has a fixed monetary amount known at inception and is settable in a variable amount
shares based on the fair value of the shares of the Company’s common stock.</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">On April 1, 2016, the Company issued
thirty (30) shares of the Company’s Series B Stock to TCA an advisory fee with a fair value of $750,000. The Series B Stock
was issued in conjunction with the convertible note payable issued to TCA and was recorded as debt discount. The amount was classified
as a current liability as the shares are expected to be redeemed within one year.</p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify; text-indent: 0.35in"><font style="font-variant: small-caps"><b>Note
16 - Contingencies and Commitments</b></font></p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify; text-indent: 0.5in"><font style="font-variant: small-caps"> </font></p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0 0 0 22.5pt; text-align: justify"><font style="font-variant: small-caps"><b><i>Litigation</i></b></font></p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0 0 0 22.5pt; text-align: justify; text-indent: 0.5in"> </p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0 0 0 22.5pt; text-align: justify">The Company may be subject to various
claims relating to matters arising in the ordinary course of business that are typically covered by insurance. The amount of liability,
if any, from these claims cannot be determined with certainty; however, management is of the opinion that the outcomes will not
have a material adverse impact on the Company’s financial position or results of operations.</p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0 0 0 22.5pt; text-align: justify; text-indent: 0.5in"><font style="font-variant: small-caps"><b><i> </i></b></font></p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0 0 0 22.5pt; text-align: justify"><font style="font-variant: small-caps"><b><i>Leases</i></b></font> </p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0 0 0 22.5pt; text-align: justify; text-indent: 0.5in"> </p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0 0 0 22.5pt; text-align: justify">The Company leases space for five
of its branch offices and for its corporate headquarters, located in Kennesaw, Georgia. For the years ended December 31, 2016 and
2015 rent expense was $78,466 and $6,000 (Predecessor), respectively.</p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0 0 0 22.5pt; text-align: justify; text-indent: 0.5in"> </p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0 0 0 22.5pt; text-align: justify">As of December 31, 2016, future
minimum lease payments due under non-cancelable lease agreements having initial terms in excess of one year, including certain
closed offices, are as follows:</p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0 0 0 22.5pt; text-indent: 0.5in"> </p>
<table cellspacing="0" cellpadding="0" style="font: 12pt Times New Roman, Times, Serif; width: 100%; border-collapse: collapse">
<tr>
<td style="vertical-align: bottom; padding-left: 0.25in; text-align: justify"><font style="font-size: 10pt">Years</font></td>
<td style="vertical-align: bottom; padding-bottom: 1pt; padding-left: 0.25in"> </td>
<td colspan="2" style="vertical-align: bottom; padding-left: 0.25in; text-align: center"><font style="font-size: 10pt">Amount</font></td>
<td style="vertical-align: top; padding-left: 0.25in"> </td>
<td style="vertical-align: bottom; padding-bottom: 1pt; padding-left: 0.25in"> </td></tr>
<tr>
<td style="vertical-align: bottom; width: 67%; padding-left: 0.25in; text-align: justify"><font style="font-size: 10pt">2017</font></td>
<td style="vertical-align: bottom; width: 5%; padding-left: 0.25in"> </td>
<td style="vertical-align: bottom; width: 6%; padding-left: 0.25in"><font style="font-size: 10pt">$</font></td>
<td style="vertical-align: bottom; width: 12%; padding-left: 0.25in; text-align: right"><font style="font-size: 10pt">89,626</font></td>
<td style="vertical-align: top; width: 5%; padding-left: 0.25in"> </td>
<td style="vertical-align: bottom; width: 5%; padding-left: 0.25in"> </td></tr>
<tr>
<td style="vertical-align: bottom; padding-left: 0.25in; text-align: justify"><font style="font-size: 10pt">2018</font></td>
<td style="vertical-align: bottom; padding-left: 0.25in"> </td>
<td style="vertical-align: bottom; padding-left: 0.25in"> </td>
<td style="vertical-align: bottom; padding-left: 0.25in; text-align: right"><font style="font-size: 10pt">48,133</font></td>
<td style="vertical-align: top; padding-left: 0.25in"> </td>
<td style="vertical-align: bottom; padding-left: 0.25in"> </td></tr>
<tr>
<td style="vertical-align: bottom; padding-left: 0.25in; text-align: justify"><font style="font-size: 10pt">2019</font></td>
<td style="vertical-align: bottom; padding-left: 0.25in"> </td>
<td style="vertical-align: bottom; padding-left: 0.25in"> </td>
<td style="vertical-align: bottom; border-bottom: Black 1pt solid; padding-left: 0.25in; text-align: right"><font style="font-size: 10pt">16,512</font></td>
<td style="vertical-align: top; padding-left: 0.25in"> </td>
<td style="vertical-align: bottom; padding-left: 0.25in"> </td></tr>
<tr>
<td style="vertical-align: bottom; padding-bottom: 2.5pt; padding-left: 0.25in; text-align: justify"><font style="font-size: 10pt">Total</font></td>
<td style="vertical-align: bottom; padding-bottom: 2.5pt; padding-left: 0.25in"> </td>
<td style="vertical-align: bottom; padding-left: 0.25in"><font style="font-size: 10pt">$</font></td>
<td style="vertical-align: bottom; border-bottom: Black 1.5pt double; padding-left: 0.25in; text-align: right"><font style="font-size: 10pt">154,271</font></td>
<td style="vertical-align: top; padding-left: 0.25in"> </td>
<td style="vertical-align: bottom; padding-bottom: 2.5pt; padding-left: 0.25in"> </td></tr>
</table>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify; text-indent: 27pt"><font style="font-variant: small-caps"><b>Note
17- Subsequent Events</b></font></p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify; text-indent: 27pt"><font style="font-variant: small-caps"><b> </b></font></p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0 0 0 22.5pt; text-align: justify">From January 1, 2017 to May 9, 2017,
the holders of Convertible Promissory Notes (see Note 10) converted 292,100 shares of common stock of the Company to settle $16,344
of principal and interest.</p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0 0 0 22.5pt; text-align: justify"> </p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0 0 0 22.5pt; text-align: justify">On February 26, 2017, the holder
of Series B Preferred Stock (see Note 13) converted 64,870 shares of the Company to settle one-half (0.5) share of Series B Stock
of the Company with a liquidation preference of $12,974.</p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0 0 0 22.5pt; text-align: justify"><font style="font-variant: small-caps"><b><i>Basis
of presentation</i></b></font></p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0 0 0 22.5pt; text-align: justify; text-indent: 0.5in"> </p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0 0 0 22.5pt; text-align: justify">The consolidated financial statements
of the Company have been prepared in accordance with accounting principles generally accepted in the United States of America (“GAAP”)
for annual financial statements and with Form 10-K and article 8 of the Regulation S-X of the United States Securities and Exchange
Commission (“SEC”).</p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0 0 0 22.5pt; text-align: justify"> </p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0 0 0 22.5pt; text-align: justify">As a result of the split-off of
EmployUs, Ltd. the consolidated balance sheets as of December 31, 2015 and 2015 and the related consolidated statements of operations
and cash flows present the results and accounts of EmployUs, Ltd. as discontinued operations. All prior periods presented in the
consolidated statements of operations and consolidated statement of cash flows discussed herein have been restated to conform to
such presentation.</p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0 0 0 22.5pt; text-align: justify">The carve-out financial statements
have been prepared to demonstrate the historical results of operations, financial position, equity and cash flows of the Four Branches
for the indicated periods under the Seller’s management. Accordingly, the carve-out financial statements do not reflect the
presentation and classification of the Four Branches’ operations in the same manner as the Company. These financial statements
were prepared on a "carve-out" basis from Labor Smart's accounts and reflects the historical accounts directly attributable
to these four branches together with allocations of costs and expenses. The predecessor financial statement may not be indicative
of future performance and my not reflect what their results of operations, financial position and cash flows would have been had
those four units operated as an independent entity. Certain estimates, including allocation from Labor Smart, have been made to
provide financial statements for stand-alone reporting purposes. Allocation of cost was based on the percentage of revenue. All
inter-company transactions between Labor Smart and these four units are classified as net transfer to parent in the financial statements.</p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0 0 0 0.35in; text-align: justify"><font style="font-variant: small-caps"><b><i>Principles
of Consolidation</i></b></font></p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0 0 0 0.35in; text-align: justify; text-indent: 0.5in"> </p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0 0 0 0.35in; text-align: justify">The consolidated financial statements
include the accounts of the Company and its wholly owned subsidiaries. All significant intercompany transactions are eliminated.</p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0 0 0 0.35in; text-align: justify"><font style="font-variant: small-caps"><b><i>Use
of Estimates</i></b></font></p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0 0 0 0.35in; text-align: justify; text-indent: 0.5in"> </p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0 0 0 0.35in; text-align: justify">The preparation of consolidated
financial statements in conformity with GAAP requires management to make estimates and assumptions that affect the reported amounts
of assets and liabilities, the disclosure of contingent assets and liabilities, and the reported amounts of revenues and expenses
during the period. Actual results could differ from those estimates. Significant matters requiring the use of estimates and assumptions
include, but may not be limited to, accounts receivable allowances, evaluation of impairment of long lived assets, valuation allowance
for deferred tax assets and valuation of derivative liabilities. Management believes that its estimates and assumptions are reasonable,
based on information that is available at the time they are made.</p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0 0 0 0.35in; text-align: justify"><font style="font-variant: small-caps"><b><i>Revenue
Recognition</i></b></font></p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0 0 0 0.35in; text-align: justify; text-indent: 0.5in"> </p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0 0 0 0.35in; text-align: justify">Contract staffing service revenues
are recognized when services are rendered. The Company recognizes revenue in accordance with Accounting Standards Codification
(“ASC”) 605 “Revenue Recognition”, which requires that four basic criteria be met before revenue can be
recognized: (i) persuasive evidence that an arrangement exists; (ii) the price is fixed or determinable; (iii) collectability is
reasonably assured; and (iv) services have been rendered.</p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0 0 0 0.35in; text-align: justify"><font style="font-variant: small-caps"><b><i>Net
(Loss) Income per Common Share</i></b></font></p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0 0 0 0.35in; text-indent: 0.5in"> </p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0 0 0 0.35in; text-align: justify">Net (loss) income per common share
is computed pursuant to section 260-10-45 of the FASB Accounting Standards Codification.  Basic net (loss) income per
common share is computed by dividing net (loss) income by the weighted average number of shares of common stock outstanding during
the period.  Diluted net (loss) income per common share is computed by dividing net (loss) income by the weighted average
number of shares of common stock and potentially dilutive outstanding shares of common stock during the period to reflect the potential
dilution that could occur from common shares issuable through contingent share arrangements, stock options and warrants. For the
year ended December 31, 2016, the Company had potentially 14,522,170 dilutive shares of common stock related to convertible notes
payable as determined using the if-converted method and no potentially dilutive securities for the year ended December 31, 2015.</p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0 0 0 0.35in; text-align: justify"><font style="font-variant: small-caps"><b><i>Identifiable
Intangible Assets</i></b></font></p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0 0 0 0.35in"> </p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0 0 0 0.35in; text-align: justify">Identifiable intangible assets consist
primarily of customer relationships and non-compete contracts. These assets are tested for impairment using undiscounted cash flow
methodology annually and whenever there is an impairment indicator. Estimating future cash flows requires significant judgment
and projections may vary from cash flows eventually realized. Several impairment indicators are beyond the Company’s control,
and determining whether or not they will occur cannot be predicted with any certainty. Customer relationships and non-compete contracts
are amortized on a straight-line basis over an estimated life of five years.</p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0 0 0 0.35in; text-align: justify"> </p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0 0 0 0.35in; text-align: justify">An identifiable intangible assets
impairment charge of $613,000 (comprising customer relationships of $577,000 and non-compete agreements of $36,000) was recorded
as at December 31, 2016.</p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0 0 0 0.35in; text-align: justify"><font style="font-variant: small-caps"><b><i>Goodwill</i></b></font></p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0 0 0 0.35in; text-align: justify; text-indent: 0.5in"> </p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0 0 0 0.35in; text-align: justify">Goodwill represents the premium
paid over the fair value of the net tangible and identifiable intangible assets acquired in the Company’s business combinations.
The Company performs a goodwill impairment test on at least an annual basis at the reporting unit level. Application of the goodwill
impairment test requires significant judgments, including estimation of future cash flows, which is dependent on internal forecasts,
estimation of the long-term rate of growth for the businesses, the useful life over which cash flows will occur and determination
of our weighted average cost of capital. Changes in these estimates and assumptions could materially affect the determination of
fair value and/or conclusions on goodwill impairment for each reporting unit. The Company will conduct its annual goodwill impairment
test as of December 31 of each year or more frequently if indicators of impairment exist. The Company periodically analyzes whether
any such indicators of impairment exist. A significant amount of judgment is involved in determining if an indicator of impairment
has occurred. Such indicators may include a sustained significant decline in our stock price and market capitalization, a significant
adverse change in legal factors or in the business climate, unanticipated competition and/or slower expected growth rates, adverse
actions or assessments by a regulator, among others. The Company compares the fair value of its reporting unit to its respective
carrying value, including related goodwill.</p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0 0 0 0.35in; text-align: justify"> </p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0 0 0 0.35in; text-align: justify">A goodwill impairment charge of
$761,000 was recorded as at December 31, 2016. The impairment of goodwill was due to the loss of significantly all of the customers
at the Nashville, TN and Raleigh, NC branches acquired on April 1, 2016. See Note 4 – Business Acquisition.</p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0 0 0 0.35in; text-align: justify"> </p>
<table cellspacing="0" cellpadding="0" style="width: 100%; font: 12pt Times New Roman, Times, Serif; border-collapse: collapse">
<tr style="vertical-align: top">
<td style="width: 75%; padding-right: 5.4pt; padding-left: 5.4pt; text-align: justify"><font style="font-size: 10pt">Opening balance at December 31, 2015</font></td>
<td style="width: 25%; padding-right: 5.4pt; padding-left: 5.4pt; text-align: right"><font style="font-size: 10pt">$                0</font></td></tr>
<tr style="vertical-align: top">
<td style="padding-right: 5.4pt; padding-left: 5.4pt; text-align: justify"><font style="font-size: 10pt">Purchase of goodwill</font></td>
<td style="padding-right: 5.4pt; padding-left: 5.4pt; text-align: right"><font style="font-size: 10pt">1,466,000</font></td></tr>
<tr style="vertical-align: top">
<td style="padding-right: 5.4pt; padding-left: 0.1pt; text-align: justify"><font style="font-size: 10pt">Impairment of goodwill</font></td>
<td style="border-bottom: Black 1pt solid; padding-right: 5.4pt; padding-left: 5.4pt; text-align: right"><font style="font-size: 10pt">(761,000)</font></td></tr>
<tr style="vertical-align: top">
<td style="padding-right: 5.4pt; padding-left: 5.4pt; text-align: justify"><font style="font-size: 10pt">Closing balance at December 31, 2016</font></td>
<td style="border-bottom: Black 1.5pt double; padding-right: 5.4pt; padding-left: 5.4pt; text-align: right"><font style="font-size: 10pt">$    705,000</font></td></tr>
</table>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0 0 0 0.35in; text-align: justify"> </p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0 0 0 0.35in; text-align: justify">Future changes in the industry could
impact the results of future annual impairment tests. There can be no assurance that future tests of goodwill impairment will not
result in additional impairment charges.</p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0 0 0 0.35in; text-align: justify"><font style="font-variant: small-caps"><b><i>Fair
Value Measurement</i></b></font></p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0 0 0 0.35in; text-align: justify"> </p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0 0 0 0.35in; text-align: justify">As required by the Fair Value Measurements
and Disclosures Topic of the FASB ASC (“ASC 820-10”), fair value is measured based on a three-tier fair value hierarchy,
which prioritizes the inputs used in measuring fair value as follows: (Level 1) observable inputs such as quoted prices in active
markets; (Level 2) inputs, other than the quoted prices in active markets, that are observable either directly or indirectly; and
(Level 3) unobservable inputs in which there is little or no market data, which require the reporting entity to develop its own
assumptions.</p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0 0 0 0.35in; text-align: justify"> </p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0 0 0 0.35in; text-align: justify">The three levels of the fair value
hierarchy are described below:</p>
<p style="font: 12pt Times New Roman, Times, Serif; margin: 0 0 0 0.35in; text-align: justify"> </p>
<table cellspacing="0" cellpadding="0" style="font: 12pt Times New Roman, Times, Serif; width: 100%; border-collapse: collapse">
<tr>
<td style="width: 1%; padding-left: 0.35in"> </td>
<td style="vertical-align: top; width: 11%; padding-left: 0.35in"><font style="font-size: 10pt">Level 1</font></td>
<td style="vertical-align: top; width: 88%; padding-left: 0.35in; text-align: justify"><font style="font-size: 10pt">Unadjusted quoted prices in active markets that are accessible at the measurement date for identical, unrestricted assets or liabilities; </font></td></tr>
<tr>
<td style="padding-left: 0.35in"> </td>
<td style="vertical-align: top; padding-left: 0.35in"><font style="font-size: 10pt">Level 2</font></td>
<td style="vertical-align: top; padding-left: 0.35in; text-align: justify"><font style="font-size: 10pt">Quoted prices in markets that are not active, or inputs that are observable, either directly or indirectly, for substantially the full term of the asset or liability; </font></td></tr>
<tr>
<td style="padding-left: 0.35in"> </td>
<td style="vertical-align: top; padding-left: 0.35in"><font style="font-size: 10pt">Level 3</font></td>
<td style="vertical-align: top; padding-left: 0.35in; text-align: justify"><font style="font-size: 10pt">Prices or valuation techniques that require inputs that are both significant to the fair value measurement and unobservable (supported by little or no market activity). </font></td></tr>
</table>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0 0 0 0.35in; text-align: justify"> </p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0 0 0 0.35in; text-align: justify"> </p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0 0 0 0.35in; text-align: justify">The carrying amounts reported in
the Company’s consolidated financial statements for accounts receivable, prepaid expenses, accounts payable, accrued expenses,
and payroll liabilities approximate their fair value because of the immediate or short-term nature of these consolidated financial
instruments. The carrying amounts reported in the consolidated balance sheet for its line of credit and convertible notes payable
approximates fair value as the contractual interest rate and features are consistent with similar instruments of similar risk in
the market place.</p>
<p style="font: 10pt Times New Roman, Times, Serif; margin-right: 0; margin-left: 0.35in"> Impairment</p>
<p style="font: 10pt Times New Roman, Times, Serif; margin-right: 0; margin-left: 0.35in">Goodwill and other indefinite-lived intangible
assets are tested for impairment annually, at the end of the fourth quarter of each fiscal year, and between annual tests if an
event occurs or circumstances change that would indicate it is more likely than not that the carrying amount may be impaired. Additionally,
the Company continually evaluates whether events or changes in circumstances might indicate that the remaining estimated useful
life of long-lived assets may warrant revision, or that the remaining balance may not be recoverable. The factors used to determine
fair value are subject to management’s judgement and expertise and include, but are not limited to, the present value of
future cash flows, net of estimated operating costs, internal forecasts, anticipated capital expenditures and various discount
rates commensurate with the risk and current market conditions associated with realizing the expected cash flows projected.</p>
<p style="font: 10pt Times New Roman, Times, Serif; margin-right: 0; margin-left: 0.35in">These assumptions represent level 3 inputs.
Impairment of the Company’s goodwill and intangibles for the year ended December 31, 2016 was $761,000 and 613,000, respectively.
There were no impairment charges during the year ended December 31, 2015.</p>
<p style="font: 10pt Times New Roman, Times, Serif; text-align: justify; margin-right: 0; margin-left: 0.35in">Assets and liabilities
measured at fair value on a recurring basis are as follows (in thousands):</p>
<table cellspacing="0" cellpadding="0" style="width: 100%; font: 12pt Times New Roman, Times, Serif; border-collapse: collapse">
<tr style="vertical-align: bottom">
<td nowrap="nowrap" style="padding-right: 5.4pt; padding-left: 5.4pt"> </td>
<td nowrap="nowrap" colspan="3" style="padding-right: 5.4pt; padding-left: 5.4pt; text-align: center"><font style="font-size: 10pt">December 31, 2016</font></td></tr>
<tr style="vertical-align: bottom">
<td nowrap="nowrap" style="padding-right: 5.4pt; padding-left: 5.4pt"> </td>
<td nowrap="nowrap" style="padding-right: 5.4pt; padding-left: 5.4pt; text-align: center"><font style="font-size: 10pt">Level 1</font></td>
<td nowrap="nowrap" style="padding-right: 5.4pt; padding-left: 5.4pt; text-align: center"><font style="font-size: 10pt"> Level 2</font></td>
<td nowrap="nowrap" style="padding-right: 5.4pt; padding-left: 5.4pt; text-align: center"><font style="font-size: 10pt"> Level 3</font></td></tr>
<tr style="vertical-align: bottom">
<td nowrap="nowrap" style="padding-right: 5.4pt; padding-left: 5.4pt"><font style="font-size: 10pt">Liabilities:</font></td>
<td nowrap="nowrap" style="padding-right: 5.4pt; padding-left: 5.4pt"> </td>
<td nowrap="nowrap" style="padding-right: 5.4pt; padding-left: 5.4pt"> </td>
<td nowrap="nowrap" style="padding-right: 5.4pt; padding-left: 5.4pt"> </td></tr>
<tr style="vertical-align: bottom">
<td nowrap="nowrap" style="padding-right: 5.4pt; padding-left: 5.4pt"><font style="font-size: 10pt">Derivative liability</font></td>
<td nowrap="nowrap" style="padding-right: 5.4pt; padding-left: 5.4pt"><font style="font-size: 10pt"> $           -   </font></td>
<td nowrap="nowrap" style="padding-right: 5.4pt; padding-left: 5.4pt"><font style="font-size: 10pt"> $           -   </font></td>
<td nowrap="nowrap" style="padding-right: 5.4pt; padding-left: 5.4pt"><font style="font-size: 10pt"> $        1,099,376 </font></td></tr>
<tr style="vertical-align: bottom">
<td nowrap="nowrap" style="padding-right: 5.4pt; padding-left: 5.4pt"> </td>
<td nowrap="nowrap" style="padding-right: 5.4pt; padding-left: 5.4pt"> </td>
<td nowrap="nowrap" style="padding-right: 5.4pt; padding-left: 5.4pt"> </td>
<td nowrap="nowrap" style="padding-right: 5.4pt; padding-left: 5.4pt"> </td></tr>
<tr style="vertical-align: bottom">
<td nowrap="nowrap" style="padding-right: 5.4pt; padding-left: 5.4pt"> </td>
<td nowrap="nowrap" colspan="3" style="padding-right: 5.4pt; padding-left: 5.4pt; text-align: center"><font style="font-size: 10pt">December 31, 2015</font></td></tr>
<tr style="vertical-align: bottom">
<td nowrap="nowrap" style="padding-right: 5.4pt; padding-left: 5.4pt"> </td>
<td nowrap="nowrap" style="padding-right: 5.4pt; padding-left: 5.4pt; text-align: center"><font style="font-size: 10pt">Level 1</font></td>
<td nowrap="nowrap" style="padding-right: 5.4pt; padding-left: 5.4pt; text-align: center"><font style="font-size: 10pt"> Level 2</font></td>
<td nowrap="nowrap" style="padding-right: 5.4pt; padding-left: 5.4pt; text-align: center"><font style="font-size: 10pt"> Level 3</font></td></tr>
<tr style="vertical-align: bottom">
<td nowrap="nowrap" style="padding-right: 5.4pt; padding-left: 5.4pt"><font style="font-size: 10pt">Liabilities:</font></td>
<td nowrap="nowrap" style="padding-right: 5.4pt; padding-left: 5.4pt"> </td>
<td nowrap="nowrap" style="padding-right: 5.4pt; padding-left: 5.4pt"> </td>
<td nowrap="nowrap" style="padding-right: 5.4pt; padding-left: 5.4pt"> </td></tr>
<tr style="vertical-align: bottom">
<td nowrap="nowrap" style="padding-right: 5.4pt; padding-left: 5.4pt"><font style="font-size: 10pt">Derivative liability</font></td>
<td nowrap="nowrap" style="padding-right: 5.4pt; padding-left: 5.4pt"><font style="font-size: 10pt"> $           -   </font></td>
<td nowrap="nowrap" style="padding-right: 5.4pt; padding-left: 5.4pt"><font style="font-size: 10pt"> $           -   </font></td>
<td nowrap="nowrap" style="padding-right: 5.4pt; padding-left: 5.4pt"><font style="font-size: 10pt"> $            178,958 </font></td></tr>
</table>
<p style="font: 9pt Times New Roman, Times, Serif; margin: 0 0 0 0.35in; text-align: justify"> </p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0 0 0 0.35in; text-align: justify">Assets measured at fair value on
a non-recurring basis are as follows:</p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0 0 0 0.35in; text-align: justify"> </p>
<table cellspacing="0" cellpadding="0" style="width: 100%; font: 12pt Times New Roman, Times, Serif; border-collapse: collapse">
<tr style="vertical-align: bottom">
<td nowrap="nowrap" style="padding-right: 5.4pt; padding-left: 5.4pt"> </td>
<td nowrap="nowrap" colspan="3" style="padding-right: 5.4pt; padding-left: 5.4pt; text-align: center"><font style="font-size: 10pt">December 31, 2016</font></td>
<td nowrap="nowrap" style="padding-right: 5.4pt; padding-left: 5.4pt"> </td></tr>
<tr style="vertical-align: bottom">
<td nowrap="nowrap" style="padding-right: 5.4pt; padding-left: 5.4pt"> </td>
<td nowrap="nowrap" style="padding-right: 5.4pt; padding-left: 5.4pt; text-align: center"><font style="font-size: 10pt">Level 1</font></td>
<td nowrap="nowrap" style="padding-right: 5.4pt; padding-left: 5.4pt; text-align: center"><font style="font-size: 10pt"> Level 2</font></td>
<td nowrap="nowrap" style="padding-right: 5.4pt; padding-left: 5.4pt; text-align: center"><font style="font-size: 10pt"> Level 3</font></td>
<td nowrap="nowrap" style="padding-right: 5.4pt; padding-left: 5.4pt; text-align: center"><font style="font-size: 10pt"> Total Impairments</font></td></tr>
<tr style="vertical-align: bottom">
<td nowrap="nowrap" style="padding-right: 5.4pt; padding-left: 5.4pt"><font style="font-size: 10pt">Assets:</font></td>
<td nowrap="nowrap" style="padding-right: 5.4pt; padding-left: 5.4pt"> </td>
<td nowrap="nowrap" style="padding-right: 5.4pt; padding-left: 5.4pt"> </td>
<td nowrap="nowrap" style="padding-right: 5.4pt; padding-left: 5.4pt"> </td>
<td nowrap="nowrap" style="padding-right: 5.4pt; padding-left: 5.4pt"> </td></tr>
<tr style="vertical-align: bottom">
<td nowrap="nowrap" style="padding-right: 5.4pt; padding-left: 5.4pt"><font style="font-size: 10pt">Intangible assets</font></td>
<td nowrap="nowrap" style="padding-right: 5.4pt; padding-left: 5.4pt"><font style="font-size: 10pt"> $           -   </font></td>
<td nowrap="nowrap" style="padding-right: 5.4pt; padding-left: 5.4pt"><font style="font-size: 10pt"> $           -   </font></td>
<td nowrap="nowrap" style="padding-right: 5.4pt; padding-left: 5.4pt"><font style="font-size: 10pt"> $            407,000 </font></td>
<td nowrap="nowrap" style="padding-right: 5.4pt; padding-left: 5.4pt"><font style="font-size: 10pt"> $                    613,000 </font></td></tr>
<tr style="vertical-align: bottom">
<td nowrap="nowrap" style="padding-right: 5.4pt; padding-left: 5.4pt"><font style="font-size: 10pt">Goodwill</font></td>
<td nowrap="nowrap" style="padding-right: 5.4pt; padding-left: 5.4pt"><font style="font-size: 10pt"> $           -   </font></td>
<td nowrap="nowrap" style="padding-right: 5.4pt; padding-left: 5.4pt"><font style="font-size: 10pt"> $           -   </font></td>
<td nowrap="nowrap" style="padding-right: 5.4pt; padding-left: 5.4pt"><font style="font-size: 10pt"> $            705,000 </font></td>
<td nowrap="nowrap" style="padding-right: 5.4pt; padding-left: 5.4pt"><font style="font-size: 10pt"> $                    761,000 </font></td></tr>
<tr style="vertical-align: bottom">
<td nowrap="nowrap" style="padding-right: 5.4pt; padding-left: 5.4pt"><font style="font-size: 10pt">Total assets </font></td>
<td nowrap="nowrap" style="border-top: Black 1pt solid; border-bottom: Black 2.25pt double; padding-right: 5.4pt; padding-left: 5.4pt"><font style="font-size: 10pt"> $           -   </font></td>
<td nowrap="nowrap" style="border-top: Black 1pt solid; border-bottom: Black 2.25pt double; padding-right: 5.4pt; padding-left: 5.4pt"><font style="font-size: 10pt"> $           -   </font></td>
<td nowrap="nowrap" style="border-top: Black 1pt solid; border-bottom: Black 2.25pt double; padding-right: 5.4pt; padding-left: 5.4pt"><font style="font-size: 10pt"> $        1,112,000 </font></td>
<td nowrap="nowrap" style="border-top: Black 1pt solid; border-bottom: Black 2.25pt double; padding-right: 5.4pt; padding-left: 5.4pt"><font style="font-size: 10pt"> $                1,374,000 </font></td></tr>
</table>
<p style="font: 9pt Times New Roman, Times, Serif; margin: 0 0 0 0.35in; text-align: justify"> </p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0 0 0 0.35in">  <font style="font-variant: small-caps"><b>Convertible
Promissory Notes</b></font></p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0 0 0 0.35in"><font style="font-variant: small-caps"> </font></p>
<table cellpadding="0" cellspacing="0" style="width: 100%; font: 12pt Times New Roman, Times, Serif; margin-top: 0; margin-bottom: 0"><tr style="vertical-align: top">
<td style="width: 27pt"></td><td style="width: 27pt"><font style="font-size: 10pt">i)</font></td><td style="text-align: justify"><font style="font-size: 10pt"><u>Beneficial Conversion Feature</u></font></td></tr></table>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0 0 0 27pt; text-align: justify">If the conversion features of conventional
convertible debt provides for a rate of conversion that is below market value, this feature is characterized as a beneficial conversion
feature (“BCF”). A BCF is recorded by the Company as a debt discount pursuant to ASC Topic 470-20 “Debt
with Conversion and Other Options.” In those circumstances, the convertible debt is recorded net of the discount related
to the BCF and the Company amortizes the discount to interest expense over the life of the debt using the effective interest method.</p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0 0 0 27pt; text-align: justify"> </p>
<table cellpadding="0" cellspacing="0" style="width: 100%; font: 12pt Times New Roman, Times, Serif; margin-top: 0; margin-bottom: 0"><tr style="vertical-align: top">
<td style="width: 27pt"></td><td style="width: 27pt"><font style="font-size: 10pt">ii)</font></td><td style="text-align: justify"><font style="font-size: 10pt"><u>Debt Discount</u></font></td></tr></table>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0 0 0 27pt; text-align: justify">The Company determines if the convertible
debenture should be accounted for as liability or equity under ASC 480, Liabilities — Distinguishing Liabilities from Equity.
ASC 480, applies to certain contracts involving a Company's own equity, and requires that issuers classify the following freestanding
financial instruments as liabilities. Mandatorily redeemable financial instruments, obligations that require or may require repurchase
of the issuer's equity shares by transferring assets (e.g., written put options and forward purchase contracts), and certain obligations
where at inception the monetary value of the obligation is based solely or predominantly on:</p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0 0 0 27pt; text-align: justify">– A fixed monetary amount known
at inception, for example, a payable settleable with a variable number of the issuer's equity shares with an issuance date fair
value equal to a fixed dollar amount,</p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0 0 0 27pt; text-align: justify">– Variations in something other
than the fair value of the issuer's equity shares, for example, a financial instrument indexed to the S&P 500 and settleable
with a variable number of the issuer's equity shares, or</p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0 0 0 27pt; text-align: justify">– Variations inversely related
to changes in the fair value of the issuer's equity shares, for example, a written put that could be net share settled.</p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0 0 0 27pt; text-align: justify">If the entity determined the instrument
meets the guidance under ASC 480 the instrument is accounted for as a liability with a respective debt discount. The Company records
debt discounts in connection with raising funds through the issuance of convertible debt. These costs are amortized to non-cash
interest expense over the life of the debt. If a conversion of the underlying debt occurs, a proportionate share of the unamortized
amounts is immediately expensed.</p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0 0 0 27pt; text-align: justify"> </p>
<table cellpadding="0" cellspacing="0" style="width: 100%; font: 12pt Times New Roman, Times, Serif; margin-top: 0; margin-bottom: 0"><tr style="vertical-align: top">
<td style="width: 27pt"></td><td style="width: 27pt"><font style="font-size: 10pt">iii)</font></td><td style="text-align: justify"><font style="font-size: 10pt"><u>Derivative Financial Instruments</u></font></td></tr></table>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0 0 0 27pt; text-align: justify">Derivative financial instruments,
as defined in ASC 815, “Accounting for Derivative Financial Instruments and Hedging Activities”, consist of financial
instruments or other contracts that contain a notional amount and one or more underlying (e.g. interest rate, security price or
other variable), require no initial net investment and permit net settlement. Derivative financial instruments may be free-standing
or embedded in other financial instruments. Further, derivative financial instruments are initially, and subsequently, measured
at fair value and recorded as liabilities or, in rare instances, assets.</p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0 0 0 27pt; text-align: justify"> </p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0 0 0 27pt; text-align: justify">The Company does not use derivative
financial instruments to hedge exposures to cash-flow, market or foreign-currency risks. However, the Company has issued financial
instruments including senior convertible promissory notes payable and freestanding stock purchase warrants with features that are
either (i) not afforded equity classification, (ii) embody risks not clearly and closely related to host contracts, or (iii) may
be net-cash settled by the counterparty. As required by ASC 815, in certain instances, these instruments are required to be carried
as derivative liabilities, at fair value, in our consolidated financial statements.</p>
<p style="font: 10pt/normal Times New Roman, Times, Serif; margin: 0; text-align: justify"><font style="font-variant: small-caps"><b><i>Recent
Accounting Pronouncements </i></b></font></p>
<p style="font: 10pt/normal Times New Roman, Times, Serif; margin: 0; text-align: justify"> </p>
<p style="font: 10pt/normal Times New Roman, Times, Serif; margin: 0; text-align: justify">In April 2015, the FASB issued
a new accounting standard which changes the presentation of debt issuance costs in financial statements. Under the new standard,
an entity presents such costs in the balance sheet as a direct deduction from the related debt liability rather than as an asset.
Amortization of the costs is reported as interest expense. The accounting standard is effective for annual reporting periods beginning
after December 15, 2015 and was adopted in the first quarter of 2016.</p>
<p style="font: 10pt/normal Times New Roman, Times, Serif; margin: 0; text-align: justify"> </p>
<p style="font: 10pt/normal Times New Roman, Times, Serif; margin: 0; text-align: justify">In March 2016, the FASB issued
a new accounting standard which is intended to simplify the accounting for share-based compensation. This standard simplifies the
accounting for income taxes in relation to share-based compensation, modifies the accounting for forfeitures, and modifies the
statutory tax withholding requirements. This standard will be effective for fiscal years beginning after December 15, 2016, including
interim periods within those fiscal years. The Company is currently evaluating the impact the adoption of the new accounting standard
will have on its consolidated financial position, results of operations or cash flows.</p>
<table cellspacing="0" cellpadding="0" style="font: 9pt Times New Roman, Times, Serif; width: 100%; border-collapse: collapse">
<tr style="vertical-align: bottom; background-color: #CCEEFF">
<td><b>NET REVENUES</b></td>
<td> </td>
<td> </td>
<td style="text-align: right"> </td>
<td> </td></tr>
<tr style="vertical-align: bottom; background-color: white">
<td style="width: 79%; padding-left: 9pt">Contract staffing services</td>
<td style="width: 1%"> </td>
<td style="width: 1%">$</td>
<td style="width: 18%; text-align: right">13,657,933</td>
<td style="width: 1%"> </td></tr>
<tr style="vertical-align: bottom; background-color: #CCEEFF">
<td> </td>
<td> </td>
<td> </td>
<td style="text-align: right"> </td>
<td> </td></tr>
<tr style="vertical-align: bottom; background-color: white">
<td><b>COST OF SERVICES</b></td>
<td> </td>
<td style="border-bottom: Black 1pt solid"> </td>
<td style="border-bottom: Black 1pt solid; text-align: right">11,125,247</td>
<td> </td></tr>
<tr style="vertical-align: bottom; background-color: #CCEEFF">
<td style="padding-bottom: 1pt"><b>GROSS PROFIT</b></td>
<td style="padding-bottom: 1pt"> </td>
<td style="border-bottom: black 1pt solid"> </td>
<td style="border-bottom: black 1pt solid; text-align: right">2,532,686</td>
<td style="padding-bottom: 1pt"> </td></tr>
<tr style="vertical-align: bottom; background-color: white">
<td style="padding-bottom: 1pt; padding-left: 0.25in"><b>SELLING, GENERAL AND ADMINISTRATIVE</b></td>
<td style="padding-bottom: 1pt"> </td>
<td style="border-bottom: black 1pt solid"> </td>
<td style="border-bottom: black 1pt solid; text-align: right">2,156,504</td>
<td style="padding-bottom: 1pt"> </td></tr>
<tr style="vertical-align: bottom; background-color: #CCEEFF">
<td> </td>
<td> </td>
<td> </td>
<td style="text-align: right"> </td>
<td> </td></tr>
<tr style="vertical-align: bottom; background-color: white">
<td style="padding-bottom: 1pt"><b>INCOME FROM OPERATIONS</b></td>
<td style="padding-bottom: 1pt"> </td>
<td style="border-bottom: black 1pt solid"> </td>
<td style="border-bottom: black 1pt solid; text-align: right">376,182</td>
<td style="padding-bottom: 1pt"> </td></tr>
<tr style="vertical-align: bottom; background-color: #CCEEFF">
<td style="padding-bottom: 1pt; padding-left: 0.25in"><b>OTHER EXPENSE</b></td>
<td style="padding-bottom: 1pt"> </td>
<td style="border-bottom: black 1pt solid"> </td>
<td style="border-bottom: black 1pt solid; text-align: right">(168,808</td>
<td style="padding-bottom: 1pt">)</td></tr>
<tr style="vertical-align: bottom; background-color: white">
<td> </td>
<td> </td>
<td> </td>
<td style="text-align: right"> </td>
<td> </td></tr>
<tr style="vertical-align: bottom; background-color: #CCEEFF">
<td><b>INCOME FROM OPERATIONS BEFORE PROVISION FOR INCOME TAXES</b></td>
<td> </td>
<td> </td>
<td style="text-align: right">207,374</td>
<td> </td></tr>
<tr style="vertical-align: bottom; background-color: white">
<td> </td>
<td> </td>
<td> </td>
<td style="text-align: right"> </td>
<td> </td></tr>
<tr style="vertical-align: bottom; background-color: #CCEEFF">
<td style="padding-bottom: 1pt">(Provision) benefit for income taxes</td>
<td style="padding-bottom: 1pt"> </td>
<td style="border-bottom: black 1pt solid"> </td>
<td style="border-bottom: black 1pt solid; text-align: right">-</td>
<td style="padding-bottom: 1pt"> </td></tr>
<tr style="vertical-align: bottom; background-color: white">
<td> </td>
<td> </td>
<td> </td>
<td style="text-align: right"> </td>
<td> </td></tr>
<tr style="vertical-align: bottom; background-color: #CCEEFF">
<td style="padding-bottom: 1pt"><b>NET  INCOME OF EMPLOYUS, LTD.</b></td>
<td style="padding-bottom: 1pt"> </td>
<td style="border-bottom: black 1.5pt double">$</td>
<td style="border-bottom: black 1.5pt double; text-align: right">207,374</td>
<td style="padding-bottom: 1pt"> </td></tr>
</table>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify">The inputs into the binominal lattice
model are as follows:</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"></p>
<table cellpadding="0" cellspacing="0" style="border-collapse: collapse; width: 100%; font: 10pt Times New Roman, Times, Serif">
<tr style="vertical-align: bottom">
<td style="font-size: 12pt; text-align: justify"><b> </b></td><td style="padding-bottom: 1pt"><b> </b></td>
<td colspan="3" style="text-align: center; border-bottom: Black 1pt solid"><b>Inception</b></td><td style="padding-bottom: 1pt"><b> </b></td>
<td colspan="3" style="text-align: center; border-bottom: Black 1pt solid"><b>December 31, 2015</b></td><td style="padding-bottom: 1pt"><b> </b></td>
<td colspan="3" style="text-align: center; border-bottom: Black 1pt solid"><b>December 31, 2016</b></td></tr>
<tr style="vertical-align: bottom; background-color: rgb(204,238,255)">
<td style="text-align: justify">Conversion price</td><td> </td>
<td colspan="3" style="text-align: right; vertical-align: bottom">$0.0188  - $1.4178 per share</td><td> </td>
<td colspan="3" style="text-align: right; vertical-align: bottom">$0.0225 per share</td><td> </td>
<td colspan="3" style="text-align: right; vertical-align: bottom">$0.099  - $0.135 per share</td></tr>
<tr style="vertical-align: bottom; background-color: White">
<td style="width: 20%; text-align: justify">Risk free rate</td><td style="width: 1%"> </td>
<td style="width: 1%; text-align: left"> </td><td style="width: 15%; text-align: right"><font style="font-size: 10pt"> 0.51% - 0.64</font></td><td style="width: 1%; text-align: left">%</td><td style="width: 1%"> </td>
<td style="width: 1%; text-align: left"> </td><td style="width: 15%; text-align: right">0.64</td><td style="width: 1%; text-align: left">%</td><td style="width: 1%"> </td>
<td style="width: 1%; text-align: left"> </td><td style="width: 15%; text-align: right">0.62</td><td style="width: 1%; text-align: left">%</td></tr>
<tr style="vertical-align: bottom; background-color: rgb(204,238,255)">
<td style="text-align: justify">Expected volatility</td><td> </td>
<td style="text-align: left"> </td><td style="text-align: right"><font style="font-size: 10pt">188%  – 355</font></td><td style="text-align: left">%</td><td> </td>
<td style="text-align: left"> </td><td style="text-align: right">355</td><td style="text-align: left">%</td><td> </td>
<td style="text-align: left"> </td><td style="text-align: right"><font style="font-size: 10pt">185% – 205</font></td><td style="text-align: left">%</td></tr>
<tr style="vertical-align: bottom; background-color: White">
<td style="text-align: justify">Dividend yield</td><td> </td>
<td style="text-align: left"> </td><td style="text-align: right">0</td><td style="text-align: left">%</td><td> </td>
<td style="text-align: left"> </td><td style="text-align: right">0</td><td style="text-align: left">%</td><td> </td>
<td style="text-align: left"> </td><td style="text-align: right">0</td><td style="text-align: left">%</td></tr>
<tr style="vertical-align: bottom; background-color: rgb(204,238,255)">
<td style="text-align: justify">Expected life</td><td> </td>
<td style="text-align: left"> </td><td style="text-align: right"><font style="font-size: 10pt">0.50 – 1.0 years</font></td><td style="text-align: left"> </td><td> </td>
<td style="text-align: left"> </td><td style="text-align: right"><font style="font-size: 10pt">0.96 years</font></td><td style="text-align: left"> </td><td> </td>
<td style="text-align: left"> </td><td style="text-align: right"><font style="font-size: 10pt">0.50 – 0.74 years</font></td><td style="text-align: left"> </td></tr>
</table>
<p style="font: 12pt Times New Roman, Times, Serif; margin: 0; text-align: justify; text-indent: 0.5in"> </p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify; text-indent: -1.8pt">Changes in convertible
promissory note derivative liability during the year ended December 31, 2016 were as follows:</p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify; text-indent: -1.8pt"> </p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify; text-indent: -1.8pt"></p>
<table cellpadding="0" cellspacing="0" style="border-collapse: collapse; width: 100%; font: 10pt Times New Roman, Times, Serif">
<tr style="vertical-align: bottom">
<td style="font-size: 12pt; text-align: justify"> </td><td style="font-weight: bold; padding-bottom: 1pt"> </td>
<td colspan="3" style="font-weight: bold; text-align: center; border-bottom: Black 1pt solid">December 31, 2016</td><td style="font-weight: bold; padding-bottom: 1pt"> </td>
<td colspan="3" style="font-weight: bold; text-align: center; border-bottom: Black 1pt solid">December 31, 2015</td></tr>
<tr style="vertical-align: bottom; background-color: rgb(204,238,255)">
<td style="width: 56%; text-align: justify">Opening balance</td><td style="width: 8%"> </td>
<td style="width: 1%; text-align: left">$</td><td style="width: 12%; text-align: right">178,959</td><td style="width: 1%; text-align: left"> </td><td style="width: 8%"> </td>
<td style="width: 1%; text-align: left">$</td><td style="width: 12%; text-align: right">0</td><td style="width: 1%; text-align: left"> </td></tr>
<tr style="vertical-align: bottom; background-color: White">
<td style="text-align: justify">Initial valuation of derivatives</td><td> </td>
<td style="text-align: left"> </td><td style="text-align: right">1,052,612</td><td style="text-align: left"> </td><td> </td>
<td style="text-align: left"> </td><td style="text-align: right">99,554</td><td style="text-align: left"> </td></tr>
<tr style="vertical-align: bottom; background-color: rgb(204,238,255)">
<td style="text-align: justify">Initial loss on derivatives</td><td> </td>
<td style="text-align: left"> </td><td style="text-align: right">0</td><td style="text-align: left"> </td><td> </td>
<td style="text-align: left"> </td><td style="text-align: right">(19,554</td><td style="text-align: left">)</td></tr>
<tr style="vertical-align: bottom; background-color: White">
<td style="text-align: justify; padding-bottom: 1pt">Change in fair value of derivative <br />Liability</td><td style="padding-bottom: 1pt"> </td>
<td style="border-bottom: Black 1pt solid; text-align: left"> </td><td style="border-bottom: Black 1pt solid; text-align: right">(132,195</td><td style="padding-bottom: 1pt; text-align: left">)</td><td style="padding-bottom: 1pt"> </td>
<td style="border-bottom: Black 1pt solid; text-align: left"> </td><td style="border-bottom: Black 1pt solid; text-align: right">98,959</td><td style="padding-bottom: 1pt; text-align: left"> </td></tr>
<tr style="vertical-align: bottom; background-color: rgb(204,238,255)">
<td style="text-align: justify; padding-bottom: 2.5pt">Closing balance</td><td style="padding-bottom: 2.5pt"> </td>
<td style="border-bottom: Black 2.5pt double; text-align: left">$</td><td style="border-bottom: Black 2.5pt double; text-align: right">1,099,376</td><td style="padding-bottom: 2.5pt; text-align: left"> </td><td style="padding-bottom: 2.5pt"> </td>
<td style="border-bottom: Black 2.5pt double; text-align: left">$</td><td style="border-bottom: Black 2.5pt double; text-align: right">178,959</td><td style="padding-bottom: 2.5pt; text-align: left"> </td></tr>
</table>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify; text-indent: -1.8pt"> </p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify; text-indent: 0.35in"> </p>
<table cellpadding="0" cellspacing="0" style="border-collapse: collapse; width: 100%; font: 10pt Times New Roman, Times, Serif">
<tr style="vertical-align: bottom; background-color: rgb(204,238,255)">
<td style="width: 70%; text-align: justify; padding-left: 5.4pt">Opening balance at December 31, 2015</td><td style="width: 10%"> </td>
<td style="width: 1%; text-align: left">$</td><td style="width: 18%; text-align: right">0</td><td style="width: 1%; text-align: left"> </td></tr>
<tr style="vertical-align: bottom; background-color: White">
<td style="text-align: justify; padding-left: 5.4pt">Issue of membership interest</td><td> </td>
<td style="text-align: left"> </td><td style="text-align: right">14,000</td><td style="text-align: left"> </td></tr>
<tr style="vertical-align: bottom; background-color: rgb(204,238,255)">
<td style="text-align: justify; padding-bottom: 1pt; padding-left: 5.4pt">Net loss attributed to non-controlling interest</td><td style="padding-bottom: 1pt"> </td>
<td style="border-bottom: Black 1pt solid; text-align: left"> </td><td style="border-bottom: Black 1pt solid; text-align: right">(1,989</td><td style="padding-bottom: 1pt; text-align: left">)</td></tr>
<tr style="vertical-align: bottom; background-color: White">
<td style="text-align: justify; padding-bottom: 2.5pt; padding-left: 5.4pt">Closing balance at December 31, 2016</td><td style="padding-bottom: 2.5pt"> </td>
<td style="border-bottom: Black 2.5pt double; text-align: left">$</td><td style="border-bottom: Black 2.5pt double; text-align: right">12,011</td><td style="padding-bottom: 2.5pt; text-align: left"> </td></tr>
</table>
506000
451000
1130000
28000
70000
5617446
5962254
-72000
479000
95865
95865
95865
95865
23940
1.88
3.55
3.55
1.85
2.05
P6M
P1Y
P11M16D
P6M
P8M26D
1052612
99554
16512
<table cellspacing="0" cellpadding="0" style="font: 12pt Times New Roman, Times, Serif; width: 100%; border-collapse: collapse">
<tr>
<td style="vertical-align: bottom; padding-left: 0.25in; text-align: justify"><font style="font-size: 10pt">Years</font></td>
<td style="vertical-align: bottom; padding-bottom: 1pt; padding-left: 0.25in"> </td>
<td colspan="2" style="vertical-align: bottom; padding-left: 0.25in; text-align: center"><font style="font-size: 10pt">Amount</font></td>
<td style="vertical-align: top; padding-left: 0.25in"> </td>
<td style="vertical-align: bottom; padding-bottom: 1pt; padding-left: 0.25in"> </td></tr>
<tr>
<td style="vertical-align: bottom; width: 67%; padding-left: 0.25in; text-align: justify"><font style="font-size: 10pt">2017</font></td>
<td style="vertical-align: bottom; width: 5%; padding-left: 0.25in"> </td>
<td style="vertical-align: bottom; width: 6%; padding-left: 0.25in"><font style="font-size: 10pt">$</font></td>
<td style="vertical-align: bottom; width: 12%; padding-left: 0.25in; text-align: right"><font style="font-size: 10pt">89,626</font></td>
<td style="vertical-align: top; width: 5%; padding-left: 0.25in"> </td>
<td style="vertical-align: bottom; width: 5%; padding-left: 0.25in"> </td></tr>
<tr>
<td style="vertical-align: bottom; padding-left: 0.25in; text-align: justify"><font style="font-size: 10pt">2018</font></td>
<td style="vertical-align: bottom; padding-left: 0.25in"> </td>
<td style="vertical-align: bottom; padding-left: 0.25in"> </td>
<td style="vertical-align: bottom; padding-left: 0.25in; text-align: right"><font style="font-size: 10pt">48,133</font></td>
<td style="vertical-align: top; padding-left: 0.25in"> </td>
<td style="vertical-align: bottom; padding-left: 0.25in"> </td></tr>
<tr>
<td style="vertical-align: bottom; padding-left: 0.25in; text-align: justify"><font style="font-size: 10pt">2019</font></td>
<td style="vertical-align: bottom; padding-left: 0.25in"> </td>
<td style="vertical-align: bottom; padding-left: 0.25in"> </td>
<td style="vertical-align: bottom; border-bottom: Black 1pt solid; padding-left: 0.25in; text-align: right"><font style="font-size: 10pt">16,512</font></td>
<td style="vertical-align: top; padding-left: 0.25in"> </td>
<td style="vertical-align: bottom; padding-left: 0.25in"> </td></tr>
<tr>
<td style="vertical-align: bottom; padding-bottom: 2.5pt; padding-left: 0.25in; text-align: justify"><font style="font-size: 10pt">Total</font></td>
<td style="vertical-align: bottom; padding-bottom: 2.5pt; padding-left: 0.25in"> </td>
<td style="vertical-align: bottom; padding-left: 0.25in"><font style="font-size: 10pt">$</font></td>
<td style="vertical-align: bottom; border-bottom: Black 1.5pt double; padding-left: 0.25in; text-align: right"><font style="font-size: 10pt">154,271</font></td>
<td style="vertical-align: top; padding-left: 0.25in"> </td>
<td style="vertical-align: bottom; padding-bottom: 2.5pt; padding-left: 0.25in"> </td></tr>
</table>
1325558
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0"><font style="font-variant: small-caps"><b>Note 4 –
business acquisition</b></font></p>
<p style="font: 12pt Times New Roman, Times, Serif; margin: 0 0 0 0.25in; text-align: justify"> </p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify">On April 1, 2016, the Company entered
into an Agreement for Purchase and Sale of Assets (the “Agreement”) with Labor Smart, Inc. (the “Seller”),
related party and shareholder of the Company. Pursuant to the Agreement, the Company purchased from the Seller the operating assets
of four (4) branch locations (Charlotte, North Carolina, Indianapolis, Indiana, Nashville, Tennessee and Raleigh, North Carolina),
which includes customer lists, title to certain leases for real or personal property, contracts, fixed assets, and business records
(collectively the “Four Branches”). The Seller retained all open accounts receivable related to the prior operations
of the branch locations and was responsible for all operating liabilities. In consideration for the Four Branches, the Company
paid the Seller total consideration with a fair value of $2,666,000, paid as follows: (i) $890,890 in cash, (ii) 600,000 shares
of the Company’s common stock at a fair value of $1,080,000 ($1.80 per share based on the closing price of the Company common
stock on March 31, 2016), (iii) a non-interest bearing promissory note due on April 1, 2018 with a face amount of $755,000 and
a fair value of $506,000. The Company assumed no liabilities in the business acquisition. In accordance with FASB ASC 835-30 "Imputation
of Interest", interest has been imputed on the promissory note at an annual market interest rate of 20% per annum. (iv) payoff
of certain of the Seller’s outstanding debt totaling $29,110, and (v) direct payment to the IRS on behalf of the Seller in
the amount of $160,000 (the “Purchase Price”).</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; background-color: white">On April
1, 2016, as a requirement of the purchase of the operating assets, the one (1) issued and outstanding share of Series A Preferred
Stock owed by Labor Smart, Inc. was transferred to Kimberly Thompson, the Chief Executive Officer of the Company. Each share of
Series A Preferred Stock gives the holder voting rights equal to 2 votes for every one share of common stock outstanding at the
time of a vote of shareholders and does not have any additional rights or preferences. As such, at December 31, 2016, Kimberly
Thompson controlled the majority of shareholder votes.</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">Assets acquired and liabilities assumed
in the Agreement were recorded on the Company’s Consolidated Balance Sheet as of the acquisition date of April 1, 2016 based
upon their estimated fair values. The results of operations of businesses acquired by the Company have been included in the statements
of operations since the date of acquisition. The excess of the purchase price over the estimated fair values of the underlying
identifiable assets acquired and liabilities assumed were allocated to goodwill.</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">The preliminary allocation of the
purchase price and the estimated fair market values of the assets acquired and liabilities assumed are shown below:</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"></p>
<table cellspacing="0" cellpadding="0" style="width: 100%; font: 12pt Times New Roman, Times, Serif; border-collapse: collapse">
<tr style="vertical-align: top; background-color: rgb(204,238,255)">
<td style="width: 81%; padding-right: 5.4pt; padding-left: 5.4pt; text-align: justify"><font style="font-size: 10pt">Customer Relationships</font></td>
<td style="width: 19%; padding-right: 5.4pt; padding-left: 5.4pt; text-align: right"><font style="font-size: 10pt"> $ 1,130,000</font></td></tr>
<tr style="vertical-align: top; background-color: White">
<td style="padding-right: 5.4pt; padding-left: 5.4pt; text-align: justify"><font style="font-size: 10pt">Non-compete Agreements</font></td>
<td style="padding-right: 5.4pt; padding-left: 5.4pt; text-align: right"><font style="font-size: 10pt">70,000</font></td></tr>
<tr style="vertical-align: top; background-color: rgb(204,238,255)">
<td style="padding-right: 5.4pt; padding-left: 5.4pt; text-align: justify"><font style="font-size: 10pt">Goodwill</font></td>
<td style="border-bottom: Black 1pt solid; padding-right: 5.4pt; padding-left: 5.4pt; text-align: right"><font style="font-size: 10pt">1,466,000</font></td></tr>
<tr style="vertical-align: top; background-color: White">
<td style="padding-right: 5.4pt; padding-left: 5.4pt; text-align: justify"><font style="font-size: 10pt">Purchase Price</font></td>
<td style="border-bottom: Black 1.5pt double; padding-right: 5.4pt; padding-left: 5.4pt; text-align: right"><font style="font-size: 10pt">$ 2,666,000</font></td></tr>
</table>
<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">Unaudited pro forma results of operations
information for the year ended December 31, 2015 as if the Company and the entities described above had been combined on January
1, 2015 are as follows. The pro forma results include estimates and assumptions which management believes are reasonable. The pro
forma results do not include any anticipated cost savings or other effects of the planned integration of these entities, and are
not necessarily indicative of the results that would have occurred if the business combinations had been in effect on the dates
indicated, or which may result in the future.</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"></p>
<table cellpadding="0" cellspacing="0" style="border-collapse: collapse; width: 100%; font: 10pt Times New Roman, Times, Serif">
<tr style="vertical-align: bottom">
<td style="font-size: 12pt"> </td><td style="font-weight: bold; padding-bottom: 1pt"> </td>
<td colspan="3" style="font-weight: bold; text-align: center; border-bottom: Black 1pt solid">For the Year Ended December 31, 2016</td><td style="font-weight: bold; padding-bottom: 1pt"> </td>
<td colspan="3" style="font-weight: bold; text-align: center; border-bottom: Black 1pt solid">For the Year Ended December 31, 2015</td></tr>
<tr style="vertical-align: bottom; background-color: rgb(204,238,255)">
<td style="width: 56%; text-align: left">Net revenues</td><td style="width: 8%"> </td>
<td style="width: 1%; text-align: left">$</td><td style="width: 12%; text-align: right">5,617,446</td><td style="width: 1%; text-align: left"> </td><td style="width: 8%"> </td>
<td style="width: 1%; text-align: left">$</td><td style="width: 12%; text-align: right">5,962,254</td><td style="width: 1%; text-align: left"> </td></tr>
<tr style="vertical-align: bottom; background-color: White">
<td style="text-align: left">Income (loss) from operations</td><td> </td>
<td style="text-align: left">$</td><td style="text-align: right">(1,518,775</td><td style="text-align: left">)</td><td> </td>
<td style="text-align: left">$</td><td style="text-align: right">(275,909</td><td style="text-align: left">)</td></tr>
<tr style="vertical-align: bottom; background-color: rgb(204,238,255)">
<td style="text-align: left">Net loss</td><td> </td>
<td style="text-align: left">$</td><td style="text-align: right">(3,979,267</td><td style="text-align: left">)</td><td> </td>
<td style="text-align: left">$</td><td style="text-align: right">(346,580</td><td style="text-align: left">)</td></tr>
<tr style="vertical-align: bottom; background-color: White">
<td>Net loss per share</td><td> </td>
<td style="text-align: left">$</td><td style="text-align: right">(3.62</td><td style="text-align: left">)</td><td> </td>
<td style="text-align: left">$</td><td style="text-align: right">(0.47</td><td style="text-align: left">)</td></tr>
</table>
<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">Revenue and costs are generally allocated
using specific identification and include corporate administrative expenses, finance, legal, tax, treasury and other general corporate
services.</p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0"> </p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify">The carve-out financial
information include revenue and expenses of Labor Smart, Inc., allocated to the Four Branches (“Predecessor”) for
certain functions provided by Labor Smart, including compensation and benefits, occupancy, information technology costs,
finance and interest costs, legal, tax, deferred tax, treasury and other general corporate services. These expenses have been
allocated to the results of the Four Branches based on one of four allocation cost drivers:</p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify; text-indent: 0in">1) Revenues attributable
to the Four Branches,</p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify; text-indent: 0in">2) The headcount
of employees within the Four Branches and Labor Smart</p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify; text-indent: 0in">3) The identification
of costs specific to the Four Branches; and</p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify; text-indent: 0in">4) Allocation of
finance and interest costs based on proceeds from the sales of the Four Branches by Labor Smart.</p>
<p style="font: 12pt 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">Management considers the basis on
which the expenses have been allocated to be a reasonable reflection of the utilization of services provided to, or the benefit
received by, the Four Branches, The allocations may not; however, reflect the expenses the Four Branches would have incurred as
an independent entity for the periods presented.</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">Predecessor financial information
has been provided in these consolidated financial statements as the Company acquired the Four Branches and the operations of the
Company before the acquisition of the Four Branches were insignificant relative to the operations acquired. The historical results
of operations, financial position, equity and cash flows of the Four Branches may not be indicative of what they actually would
have been had the Four Branches been a separate stand-alone entity, nor are they indicative of what the Four Branches’ results
of operations, financial position, equity and cash flows may be in the future. The carve-out financial statements have been prepared
to demonstrate the historical results of operations, financial position, equity and cash flows of the Four Branches for the indicated
periods under the Seller’s management. Accordingly, the carve-out financial statements do not reflect the presentation and
classification of the Four Branches’ operations in the same manner as the Company.</p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify"><font style="font-variant: small-caps"><b>Note
3 – going concern and Capital resources</b></font></p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify; text-indent: 0.5in"><font style="font-variant: small-caps"><b> </b></font></p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify">The accompanying consolidated financial
statements have been prepared on a going concern basis, which contemplates the realization of assets and the satisfaction of liabilities
in the normal course of business. As of December 31, 2016, the Company had a stockholders’ deficit of $2,984,065 and a working
capital deficit of $3,506,230. For the year ended December 31, 2016 the Company had a net loss of $3,853,796. The Company’s
stockholders’ deficiency is primarily due to, among other reasons, funding its historical net losses.</p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0">  </p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify">The Company’s principal sources
of liquidity include cash from operations and proceeds from debt and equity financings. As of December 31, 2016, the Company had
$123,156 in bank indebtedness.</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">The Company is funding its operations
primarily through the sale of equity, convertible notes payable and shareholder loans. In the event the Company experiences liquidity
and capital resources constraints because of greater than anticipated sales growth or acquisition needs, the Company may need to
raise additional capital in the form of equity and/or debt financing including refinancing its current debt. Issuances of additional
shares will result in dilution to its existing shareholders. There is no assurance that the Company will achieve any additional
sales of its equity securities or arrange for debt or other financing to fund any potential acquisition needs or increased growth.
If such additional capital is not available on terms acceptable to the Company, or at all, then the Company may need to curtail
its operations and/or take additional measures to conserve and manage its liquidity and capital resources, any of which would have
a material adverse effect on its business, results of operations and financial condition. The ability to successfully resolve these
factors raise substantial doubt about the Company’s ability to continue as a going concern within one year from the date
of this filing. The consolidated financial statements of the Company do not include any adjustments that may result from the outcome
of these aforementioned uncertainties. In order to mitigate the risk related with this uncertainty, the Company plans to issue
additional shares of common stock for cash and services during the next 12 months.</p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify"><font style="font-variant: small-caps"><b>Note
5 – DISCONTINUED OPERATIONS</b></font></p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify"><font style="font-variant: small-caps"><b> </b></font></p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify">On December 31, 2015, the Company
entered into a Stock Purchase Agreement (“SPA”) with Pour Les Enfant, LLC, a Louisiana limited liability company (“Pour
Les Enfant”). Pursuant to the SPA, the Company, as sole shareholder of EmployUS, Ltd. Completed the split-off by transferring
to Pour Les Enfant all outstanding shares and tangible assets of EmployUS, Ltd.. In consideration thereof, Pour Les Enfant assumed
all liabilities of EmployUS, Ltd. Associated with monies owed to the Internal Revenue Service for late payroll taxes; and all corporate,
personal, and validity guarantees associated with the Crestmark Bank Loan and Security Agreement. Pursuant to the SPA, Brent Callais
and Brian McLoone, directors, executives and controlling shareholders of the Company, each agreed to transfer to the Company 91,000
shares of the Company’s common stock and one share of the Company’s preferred stock, for immediate cancellation.</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">The following table summarizes the
results from discontinued operations for the year ended December 31, 2015:</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"></p>
<table cellspacing="0" cellpadding="0" style="font: 9pt Times New Roman, Times, Serif; width: 100%; border-collapse: collapse">
<tr style="vertical-align: bottom; background-color: #CCEEFF">
<td><b>NET REVENUES</b></td>
<td> </td>
<td> </td>
<td style="text-align: right"> </td>
<td> </td></tr>
<tr style="vertical-align: bottom; background-color: white">
<td style="width: 79%; padding-left: 9pt">Contract staffing services</td>
<td style="width: 1%"> </td>
<td style="width: 1%">$</td>
<td style="width: 18%; text-align: right">13,657,933</td>
<td style="width: 1%"> </td></tr>
<tr style="vertical-align: bottom; background-color: #CCEEFF">
<td> </td>
<td> </td>
<td> </td>
<td style="text-align: right"> </td>
<td> </td></tr>
<tr style="vertical-align: bottom; background-color: white">
<td><b>COST OF SERVICES</b></td>
<td> </td>
<td style="border-bottom: Black 1pt solid"> </td>
<td style="border-bottom: Black 1pt solid; text-align: right">11,125,247</td>
<td> </td></tr>
<tr style="vertical-align: bottom; background-color: #CCEEFF">
<td style="padding-bottom: 1pt"><b>GROSS PROFIT</b></td>
<td style="padding-bottom: 1pt"> </td>
<td style="border-bottom: black 1pt solid"> </td>
<td style="border-bottom: black 1pt solid; text-align: right">2,532,686</td>
<td style="padding-bottom: 1pt"> </td></tr>
<tr style="vertical-align: bottom; background-color: white">
<td style="padding-bottom: 1pt; padding-left: 0.25in"><b>SELLING, GENERAL AND ADMINISTRATIVE</b></td>
<td style="padding-bottom: 1pt"> </td>
<td style="border-bottom: black 1pt solid"> </td>
<td style="border-bottom: black 1pt solid; text-align: right">2,156,504</td>
<td style="padding-bottom: 1pt"> </td></tr>
<tr style="vertical-align: bottom; background-color: #CCEEFF">
<td> </td>
<td> </td>
<td> </td>
<td style="text-align: right"> </td>
<td> </td></tr>
<tr style="vertical-align: bottom; background-color: white">
<td style="padding-bottom: 1pt"><b>INCOME FROM OPERATIONS</b></td>
<td style="padding-bottom: 1pt"> </td>
<td style="border-bottom: black 1pt solid"> </td>
<td style="border-bottom: black 1pt solid; text-align: right">376,182</td>
<td style="padding-bottom: 1pt"> </td></tr>
<tr style="vertical-align: bottom; background-color: #CCEEFF">
<td style="padding-bottom: 1pt; padding-left: 0.25in"><b>OTHER EXPENSE</b></td>
<td style="padding-bottom: 1pt"> </td>
<td style="border-bottom: black 1pt solid"> </td>
<td style="border-bottom: black 1pt solid; text-align: right">(168,808</td>
<td style="padding-bottom: 1pt">)</td></tr>
<tr style="vertical-align: bottom; background-color: white">
<td> </td>
<td> </td>
<td> </td>
<td style="text-align: right"> </td>
<td> </td></tr>
<tr style="vertical-align: bottom; background-color: #CCEEFF">
<td><b>INCOME FROM OPERATIONS BEFORE PROVISION FOR INCOME TAXES</b></td>
<td> </td>
<td> </td>
<td style="text-align: right">207,374</td>
<td> </td></tr>
<tr style="vertical-align: bottom; background-color: white">
<td> </td>
<td> </td>
<td> </td>
<td style="text-align: right"> </td>
<td> </td></tr>
<tr style="vertical-align: bottom; background-color: #CCEEFF">
<td style="padding-bottom: 1pt">(Provision) benefit for income taxes</td>
<td style="padding-bottom: 1pt"> </td>
<td style="border-bottom: black 1pt solid"> </td>
<td style="border-bottom: black 1pt solid; text-align: right">-</td>
<td style="padding-bottom: 1pt"> </td></tr>
<tr style="vertical-align: bottom; background-color: white">
<td> </td>
<td> </td>
<td> </td>
<td style="text-align: right"> </td>
<td> </td></tr>
<tr style="vertical-align: bottom; background-color: #CCEEFF">
<td style="padding-bottom: 1pt"><b>NET  INCOME OF EMPLOYUS, LTD.</b></td>
<td style="padding-bottom: 1pt"> </td>
<td style="border-bottom: black 1.5pt double">$</td>
<td style="border-bottom: black 1.5pt double; text-align: right">207,374</td>
<td style="padding-bottom: 1pt"> </td></tr>
</table>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify"><font style="font-variant: small-caps"><b>Note
6 – Identifiable Intangible Assets </b></font></p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify"> </p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify">Intangible assets comprise customer
relationships and non-compete agreements which are recorded at cost.</p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify"> </p>
<table cellpadding="0" cellspacing="0" style="border-collapse: collapse; width: 100%; font: 10pt Times New Roman, Times, Serif">
<tr style="vertical-align: bottom">
<td style="font-size: 10pt"> </td><td style="font-weight: bold; padding-bottom: 1pt"> </td>
<td colspan="3" style="font-weight: bold; text-align: center; border-bottom: Black 1pt solid">December 31, 2016</td><td style="font-weight: bold; padding-bottom: 1pt"> </td>
<td colspan="3" style="font-weight: bold; text-align: center; border-bottom: Black 1pt solid">December 31, 2015</td></tr>
<tr style="vertical-align: bottom; background-color: rgb(204,238,255)">
<td style="width: 56%; text-align: left">Customer relationships</td><td style="width: 8%"> </td>
<td style="width: 1%; text-align: left">$</td><td style="width: 12%; text-align: right">451,000</td><td style="width: 1%; text-align: left"> </td><td style="width: 8%"> </td>
<td style="width: 1%; text-align: left">$</td><td style="width: 12%; text-align: right">—  </td><td style="width: 1%; text-align: left"> </td></tr>
<tr style="vertical-align: bottom; background-color: White">
<td style="text-align: left; padding-bottom: 1pt">Non-compete agreements</td><td style="padding-bottom: 1pt"> </td>
<td style="border-bottom: Black 1pt solid; text-align: left"> </td><td style="border-bottom: Black 1pt solid; text-align: right">28,000</td><td style="padding-bottom: 1pt; text-align: left"> </td><td style="padding-bottom: 1pt"> </td>
<td style="border-bottom: Black 1pt solid; text-align: left"> </td><td style="border-bottom: Black 1pt solid; text-align: right">—  </td><td style="padding-bottom: 1pt; text-align: left"> </td></tr>
<tr style="vertical-align: bottom; background-color: rgb(204,238,255)">
<td style="font-size: 12pt"> </td><td> </td>
<td style="text-align: left"> </td><td style="text-align: right">479,000</td><td style="text-align: left"> </td><td> </td>
<td style="text-align: left"> </td><td style="text-align: right">—  </td><td style="text-align: left"> </td></tr>
<tr style="vertical-align: bottom; background-color: White">
<td style="text-align: left; padding-bottom: 1pt">Accumulated amortization</td><td style="padding-bottom: 1pt"> </td>
<td style="border-bottom: Black 1pt solid; text-align: left"> </td><td style="border-bottom: Black 1pt solid; text-align: right">(72,000</td><td style="padding-bottom: 1pt; text-align: left">)</td><td style="padding-bottom: 1pt"> </td>
<td style="border-bottom: Black 1pt solid; text-align: left"> </td><td style="border-bottom: Black 1pt solid; text-align: right">—  </td><td style="padding-bottom: 1pt; text-align: left"> </td></tr>
<tr style="vertical-align: bottom; background-color: rgb(204,238,255)">
<td style="text-align: left; padding-bottom: 2.5pt">Identifiable Intangible Assets</td><td style="padding-bottom: 2.5pt"> </td>
<td style="border-bottom: Black 2.5pt double; text-align: left">$</td><td style="border-bottom: Black 2.5pt double; text-align: right">407,000</td><td style="padding-bottom: 2.5pt; text-align: left"> </td><td style="padding-bottom: 2.5pt"> </td>
<td style="border-bottom: Black 2.5pt double; text-align: left">$</td><td style="border-bottom: Black 2.5pt double; text-align: right">—  </td><td style="padding-bottom: 2.5pt; text-align: left"> </td></tr>
</table>
<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">On April 1, 2016, the Company acquired
customer relationships and non-compete agreements costing $1,130,000 and $70,000, respectively, and commenced amortization upon
closing of the business acquisition for the Four Branches.</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">An identifiable intangible assets
impairment charge of $613,000 (comprising customer relationships of $577,000 and non-compete agreements of $36,000) was recorded
as at December 31, 2016. The impairment of identifiable intangible assets was due to the loss of significantly all of the customers
at the Nashville, TN and Raleigh, NC branches acquired on April 1, 2016. See Note 4 – Business Acquisition.</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">During the year ended December 31,
2016 and 2015, $180,000 (comprising customer relationships of $169,500 and non-compete agreements of $10,500) and $0, respectively,
was recorded as amortization. The Company estimates amortization over the next four years is $95,865 per annum and amortization
of $23,940 in the fifth year.</p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0"><font style="font-variant: small-caps"><b>Note 7 –
accounts payable – related party </b></font></p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0"><b> </b></p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify">At December 31, 2016 and 2015, $430,978
and $0, respectively, is due to Labor Smart Inc for trade payables related to payroll costs.</p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0"><b>NOTE <font style="text-transform: uppercase">8 – notes payable
– related party</font></b></p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify"><font style="text-transform: uppercase"><b> </b></font></p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify">On May 20, 2014, the Company issued
a promissory note for $94,500 for cash to a shareholder of the Company that is to be repaid in full by May 20, 2015. The note accrues
interest expense at 10% per annum and in accordance with the promissory note, there is a late fee of $100 per day for each day
the note remains unpaid beyond the maturity date. Interest and late fee expense for the years ended December 31, 2016 and 2015
was $46,050 and $15,251, respectively. The Company recorded late fees payable of $59,000 and $22,400 and accrued interest payable
of $24,131 and $14,681, as of December 31, 2016 and December 31, 2015, respectively, and is included in accounts payable and accrued
expenses – related party as of December 31, 2016 and 2015.</p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify; text-indent: 0.5in"> </p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify">On July 14, 2014, the Company issued
a promissory note for $12,500 for cash to a shareholder of the Company that is to be repaid in full by July 14, 2015. The note
accrues interest expense at 10% per annum and in accordance with the promissory note, there is a late fee of $100 per day for each
day the note remains unpaid beyond the maturity date. Interest and late fee expense for the year ended December 31, 2016 and 2015
was $37,850 and $1,833, respectively. The Company recorded late fees payable of $53,500 and $16,900 and accrued interest payable
of $3,083 and $1,833, as of December 31, 2016 and 2015, respectively, and is included in accounts payable and accrued expenses
– related party as of December 31, 2016 and 2015.</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">On April 1, 2016, in conjunction with
Agreement for Purchase and Sale of Assets (Note 4), the Company issued an unsecured non-interest bearing promissory note to Labor
Smart, Inc., due on April 1, 2018 with a face amount of $755,000 and a fair value of $506,000. In accordance with FASB ASC 835-30
"Imputation of Interest", interest has been imputed on the promissory note at a market interest rate of 20% per annum.
At December 31, 2016, the promissory note has been recorded net of debt discount of $163,801. Amortization of debt discount of
$85,199 has been included in interest expense in the consolidated statements of loss for the year ended December 31, 2016, respectively.
The debt discount is being amortized on the effective interest method.</p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify"><font style="font-variant: small-caps"><b>Note
9 – convertible promissory note – related party</b></font></p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify"><b> </b></p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify">On December 18, 2015, the Company
entered into a Convertible Promissory Note (“Note”) with Labor Smart Inc. (“Holder”) in the original principal
amount of $80,000 bearing a 12% annual interest rate and maturing on December 16, 2016. . As December 31, 2016, the Note is past
due. In conjunction with the issuance of the Note, as further consideration, the Company issued the Holder one (1) share of Series
A Preferred Stock of the Company. Each share of Series A Preferred Stock gives the holder voting rights equal to 2 votes for every
one share of common stock outstanding at the time of a vote of shareholders and does not have any additional rights or preferences.
This Note together with any unpaid accrued interest is convertible into shares of common stock of the Company at the Holder’s
option at a variable conversion price calculated at 75% of the market price which means the lowest trading price during the thirty
trading day period ending on the latest complete trading day prior to the conversion date. The Company may repay the Note if repaid
within 120 days of date of issue at 125% of the original principal amount plus interest, between 121 days and 150 days at 130%
of the original principal amount plus interest and between 151 days and 180 days at 135% of the original principal amount plus
interest. Thereafter, the Company does not have the right of prepayment. At December 31, 2016, the Note includes principal of $80,000
and accrued interest of $39,431 See Note 11 – Convertible Promissory Note Derivative Liability – Related Party.</p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify"><font style="font-variant: small-caps"><b>Note
10 – convertible promissory notes</b></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">On March 29, 2016, with an effective
date of April 5, 2016, in conjunction with the Agreement for Purchase and Sale of Assets (Note 3), the Company entered into a Senior
Secured Revolving Credit Facility Agreement (the “Credit Agreement”) with TCA Global Credit Master Fund, LP, a Cayman
Islands limited partnership (“TCA”), pursuant to which TCA agreed to loan up to a maximum of three million dollars
($3,000,000) to us for working capital purposes. A total of $1,300,000 was funded by TCA in connection with the closing of the
Agreement. The amounts borrowed pursuant to the Credit Agreement are evidenced by a Senior Secured Revolving Convertible Promissory
Note (the “Revolving Note”), the repayment of which is secured by Security Agreements executed by us and our subsidiary,
The Staff Fund I, LLC. Pursuant to the Security Agreements, the repayment of the Revolving Note is secured by a security interest
in substantially all of our assets in favor of TCA. The initial Revolving Note in the amount of $1,300,000 is due and payable along
with interest thereon on October 5, 2016, and bears interest at the minimum rate of 12% per annum, increasing to 22% per annum
upon the occurrence of an Event of Default, as defined in the Credit Agreement. Upon an Event of Default, TCA shall have the right
to convert all or any portion of the Revolving Note into shares of the Company’s common stock. The conversion rate shall
be 85% of the lowest VWAP of the Company’s stock for the five days preceding the conversion date. The Credit Agreement provides
for certain contractual rights to TCA. TCA has influence and veto power over key decisions which effect operating, investing and
financing activities of the Company including the right to approve the transfer agent, maintenance of insurance, approve the selection
of management after performing background investigations, approve all capital expenditures, approve issuance of stock, approve
opening new bank accounts and approve change in control of the Company.  The Credit Agreement also provides that all cash
receipts from customers are required to be deposited in a lock box account. Distributions from the lock box account are made to
the Company only after obligations to TCA are satisfied. TCA with absolute discretion may withhold cash in the lock box in order
to protect collateral. During the year ended December 31, 2016, the Company paid $620,511 in cash for principal and $129,942 for
interest and fees. At December 31, 2016, the Note includes principal of $679,489 and accrued interest of $203,025 and the Note
is past due. See Note 11 – Convertible Promissory Note Derivative Liability.</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">On May 26, 2016, the Company entered
into a Convertible Promissory Note (“Note”) with Group 10 Holdings, LLC (“Holder”) in the original principal
amount of $100,000 bearing a 10% annual interest rate and maturing December 26, 2016. This Note together with any unpaid accrued
interest is convertible into shares of common stock of the Company at the Holder’s option at a variable conversion price
calculated at 55% of the lowest trading price of any day during the 25 consecutive trading days prior to the date on which the
Holder elects to convert all or part of the Note. The Company may prepay the Note at any time while outstanding for no prepayment
penalty. During the year ended December 31, 2016, the Company issued 63,300 shares of common stock for principal and interest of
$5,570. At December 31, 2016, the Note includes principal of $94,430 and accrued interest of $87,881 See Note 11 – Convertible
Promissory Note Derivative Liability.</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">On September 27, 2016, the Company
entered into a Convertible Promissory Note (“Note”) with Carebourn Capital, L.P. (“Holder”) in the original
principal amount of $236,325 less transaction costs of $36,325 bearing a 12% annual interest rate and maturing September 27, 2017.
This Note together with any unpaid accrued interest is convertible into shares of common stock of the Company at the Holder’s
option at a variable conversion price calculated at 60% of the average of the three lowest trading prices of any day during the
20 consecutive trading days prior to the date on which the Holder elects to convert all or part of the Note. The Company may repay
the Note if repaid within 180 days of date of issue at 130% of the original principal amount plus interest and between 181 days
and 364 days at 150% of the original principal amount plus interest. Thereafter, the Company does not have the right of prepayment.
During the year ended December 31, 2016, the Company paid $58,096 in cash for principal and interest. At December 31, 2016, the
Note includes principal of $178,229 and accrued interest of $42,186 less unamortized debt discount of $174,816. See Note 11 –
Convertible Promissory Note Derivative Liability.</p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify"><font style="text-transform: uppercase"><b>Note
11 – Derivative Liability </b></font></p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify"><font style="text-transform: uppercase"><b> </b></font></p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify">The Convertible Promissory Notes with Labor
Smart, Inc. with an issue date of December 18, 2015, TCA Global Credit Master Fund, LP with an issue date of April 5, 2016, Group
10 Holdings, LLC with an issue date of May 26, 2016 and Carebourn Capital, L.P. with and issue date of September 27, 2016 were
accounted for under ASC 815.  The variable conversion price is not considered predominately based on a fixed monetary amount
settleable with a variable number of shares due to the volatility and trading volume of the Company’s common stock. The Company’s
convertible promissory note derivative liability has been measured at fair value at December 31, 2016 using the binominal lattice
model.</p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0"> </p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify">The inputs into the binominal lattice model
are as follows:</p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify"> </p>
<table cellpadding="0" cellspacing="0" style="border-collapse: collapse; width: 100%; font: 10pt Times New Roman, Times, Serif">
<tr style="vertical-align: bottom">
<td style="font-size: 12pt; text-align: justify"><b> </b></td><td style="padding-bottom: 1pt"><b> </b></td>
<td colspan="3" style="text-align: center; border-bottom: Black 1pt solid"><b>Inception</b></td><td style="padding-bottom: 1pt"><b> </b></td>
<td colspan="3" style="text-align: center; border-bottom: Black 1pt solid"><b>December 31, 2015</b></td><td style="padding-bottom: 1pt"><b> </b></td>
<td colspan="3" style="text-align: center; border-bottom: Black 1pt solid"><b>December 31, 2016</b></td></tr>
<tr style="vertical-align: bottom; background-color: rgb(204,238,255)">
<td style="text-align: justify">Conversion price</td><td> </td>
<td colspan="3" style="text-align: right; vertical-align: bottom">$0.0188  - $1.4178 per share</td><td> </td>
<td colspan="3" style="text-align: right; vertical-align: bottom">$0.0225 per share</td><td> </td>
<td colspan="3" style="text-align: right; vertical-align: bottom">$0.099  - $0.135 per share</td></tr>
<tr style="vertical-align: bottom; background-color: White">
<td style="width: 20%; text-align: justify">Risk free rate</td><td style="width: 1%"> </td>
<td style="width: 1%; text-align: left"> </td><td style="width: 15%; text-align: right"><font style="font-size: 10pt"> 0.51% - 0.64</font></td><td style="width: 1%; text-align: left">%</td><td style="width: 1%"> </td>
<td style="width: 1%; text-align: left"> </td><td style="width: 15%; text-align: right">0.64</td><td style="width: 1%; text-align: left">%</td><td style="width: 1%"> </td>
<td style="width: 1%; text-align: left"> </td><td style="width: 15%; text-align: right">0.62</td><td style="width: 1%; text-align: left">%</td></tr>
<tr style="vertical-align: bottom; background-color: rgb(204,238,255)">
<td style="text-align: justify">Expected volatility</td><td> </td>
<td style="text-align: left"> </td><td style="text-align: right"><font style="font-size: 10pt">188%  – 355</font></td><td style="text-align: left">%</td><td> </td>
<td style="text-align: left"> </td><td style="text-align: right">355</td><td style="text-align: left">%</td><td> </td>
<td style="text-align: left"> </td><td style="text-align: right"><font style="font-size: 10pt">185% – 205</font></td><td style="text-align: left">%</td></tr>
<tr style="vertical-align: bottom; background-color: White">
<td style="text-align: justify">Dividend yield</td><td> </td>
<td style="text-align: left"> </td><td style="text-align: right">0</td><td style="text-align: left">%</td><td> </td>
<td style="text-align: left"> </td><td style="text-align: right">0</td><td style="text-align: left">%</td><td> </td>
<td style="text-align: left"> </td><td style="text-align: right">0</td><td style="text-align: left">%</td></tr>
<tr style="vertical-align: bottom; background-color: rgb(204,238,255)">
<td style="text-align: justify">Expected life</td><td> </td>
<td style="text-align: left"> </td><td style="text-align: right"><font style="font-size: 10pt">0.50 – 1.0 years</font></td><td style="text-align: left"> </td><td> </td>
<td style="text-align: left"> </td><td style="text-align: right"><font style="font-size: 10pt">0.96 years</font></td><td style="text-align: left"> </td><td> </td>
<td style="text-align: left"> </td><td style="text-align: right"><font style="font-size: 10pt">0.50 – 0.74 years</font></td><td style="text-align: left"> </td></tr>
</table>
<p style="font: 12pt Times New Roman, Times, Serif; margin: 0; text-align: justify; text-indent: 0.5in"> </p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify; text-indent: -1.8pt">Changes in convertible
promissory note derivative liability during the year ended December 31, 2016 were as follows:</p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify; text-indent: 0.35in"> </p>
<table cellpadding="0" cellspacing="0" style="border-collapse: collapse; width: 100%; font: 10pt Times New Roman, Times, Serif">
<tr style="vertical-align: bottom">
<td style="font-size: 12pt; text-align: justify"> </td><td style="font-weight: bold; padding-bottom: 1pt"> </td>
<td colspan="3" style="font-weight: bold; text-align: center; border-bottom: Black 1pt solid">December 31, 2016</td><td style="font-weight: bold; padding-bottom: 1pt"> </td>
<td colspan="3" style="font-weight: bold; text-align: center; border-bottom: Black 1pt solid">December 31, 2015</td></tr>
<tr style="vertical-align: bottom; background-color: rgb(204,238,255)">
<td style="width: 56%; text-align: justify">Opening balance</td><td style="width: 8%"> </td>
<td style="width: 1%; text-align: left">$</td><td style="width: 12%; text-align: right">178,959</td><td style="width: 1%; text-align: left"> </td><td style="width: 8%"> </td>
<td style="width: 1%; text-align: left">$</td><td style="width: 12%; text-align: right">0</td><td style="width: 1%; text-align: left"> </td></tr>
<tr style="vertical-align: bottom; background-color: White">
<td style="text-align: justify">Initial valuation of derivatives</td><td> </td>
<td style="text-align: left"> </td><td style="text-align: right">1,052,612</td><td style="text-align: left"> </td><td> </td>
<td style="text-align: left"> </td><td style="text-align: right">99,554</td><td style="text-align: left"> </td></tr>
<tr style="vertical-align: bottom; background-color: rgb(204,238,255)">
<td style="text-align: justify">Initial loss on derivatives</td><td> </td>
<td style="text-align: left"> </td><td style="text-align: right">0</td><td style="text-align: left"> </td><td> </td>
<td style="text-align: left"> </td><td style="text-align: right">(19,554</td><td style="text-align: left">)</td></tr>
<tr style="vertical-align: bottom; background-color: White">
<td style="text-align: justify; padding-bottom: 1pt">Change in fair value of derivative <br />Liability</td><td style="padding-bottom: 1pt"> </td>
<td style="border-bottom: Black 1pt solid; text-align: left"> </td><td style="border-bottom: Black 1pt solid; text-align: right">(132,195</td><td style="padding-bottom: 1pt; text-align: left">)</td><td style="padding-bottom: 1pt"> </td>
<td style="border-bottom: Black 1pt solid; text-align: left"> </td><td style="border-bottom: Black 1pt solid; text-align: right">98,959</td><td style="padding-bottom: 1pt; text-align: left"> </td></tr>
<tr style="vertical-align: bottom; background-color: rgb(204,238,255)">
<td style="text-align: justify; padding-bottom: 2.5pt">Closing balance</td><td style="padding-bottom: 2.5pt"> </td>
<td style="border-bottom: Black 2.5pt double; text-align: left">$</td><td style="border-bottom: Black 2.5pt double; text-align: right">1,099,376</td><td style="padding-bottom: 2.5pt; text-align: left"> </td><td style="padding-bottom: 2.5pt"> </td>
<td style="border-bottom: Black 2.5pt double; text-align: left">$</td><td style="border-bottom: Black 2.5pt double; text-align: right">178,959</td><td style="padding-bottom: 2.5pt; text-align: left"> </td></tr>
</table>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify"><font style="text-transform: uppercase"><b>Note
15 – Income Tax Provision</b></font> </p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify; text-indent: 0.35in"><font style="text-transform: uppercase"><b> </b></font></p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify">The Company had no income tax expense due to
operating losses incurred for the year ended December 31, 2016 and 2015.</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">The reconciliation between the statutory income
tax rate and the effective tax rate is as follows:</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: center; text-indent: 24.5pt"><b></b></p>
<table cellpadding="0" cellspacing="0" style="border-collapse: collapse; width: 100%; font: 12pt Times New Roman, Times, Serif">
<tr style="vertical-align: bottom">
<td> </td><td style="font-size: 10pt"> </td>
<td colspan="3" style="font-size: 10pt; text-align: center"> </td><td style="font-size: 10pt"> </td>
<td colspan="3" style="font-size: 10pt; text-align: center"> </td>
<td> </td><td style="font-size: 10pt"> </td>
<td colspan="3" style="font-size: 10pt; text-align: center">(Predecessor)</td></tr>
<tr style="vertical-align: bottom">
<td> </td><td style="font-size: 10pt"> </td>
<td colspan="3" style="font-size: 10pt; text-align: center">December 31,</td><td style="font-size: 10pt"> </td>
<td colspan="3" style="font-size: 10pt; text-align: center">December 31,</td>
<td> </td><td style="font-size: 10pt; border-left: Black 1pt solid"> </td>
<td colspan="3" style="font-size: 10pt; text-align: center">December 31,</td></tr>
<tr style="vertical-align: bottom">
<td> </td><td style="font-size: 10pt; padding-bottom: 1pt"> </td>
<td colspan="3" style="font-size: 10pt; text-align: center; border-bottom: Black 1pt solid">2016</td><td style="font-size: 10pt; padding-bottom: 1pt"> </td>
<td colspan="3" style="font-size: 10pt; text-align: center; border-bottom: Black 1pt solid">2015</td>
<td> </td><td style="font-size: 10pt; padding-bottom: 1pt; border-left: Black 1pt solid"> </td>
<td colspan="3" style="font-size: 10pt; text-align: center; border-bottom: Black 1pt solid">2015</td></tr>
<tr style="vertical-align: bottom; background-color: rgb(204,238,255)">
<td style="width: 43%; font-size: 10pt; text-align: left">Computed expected tax expense</td><td style="width: 4%; font-size: 10pt"> </td>
<td style="width: 1%; font-size: 10pt; text-align: left"> </td><td style="width: 10%; font-size: 10pt; text-align: right">(34</td><td style="width: 1%; font-size: 10pt; text-align: left">%)</td><td style="width: 4%; font-size: 10pt"> </td>
<td style="width: 1%; font-size: 10pt; text-align: left"> </td><td style="width: 10%; font-size: 10pt; text-align: right">(34</td><td style="width: 1%; font-size: 10pt; text-align: left">%)</td>
<td style="width: 4%"> </td><td style="width: 4%; font-size: 10pt; border-left: Black 1pt solid"> </td>
<td style="width: 1%; font-size: 10pt; text-align: left"> </td><td style="width: 10%; font-size: 10pt; text-align: right">(34</td><td style="width: 1%; font-size: 10pt; text-align: left">%)</td></tr>
<tr style="vertical-align: bottom; background-color: White">
<td style="font-size: 10pt; text-align: left">State taxes, net of federal benefit</td><td style="font-size: 10pt"> </td>
<td style="font-size: 10pt; text-align: left"> </td><td style="font-size: 10pt; text-align: right">(4</td><td style="font-size: 10pt; text-align: left">%)</td><td style="font-size: 10pt"> </td>
<td style="font-size: 10pt; text-align: left"> </td><td style="font-size: 10pt; text-align: right">(1</td><td style="font-size: 10pt; text-align: left">%)</td>
<td> </td><td style="font-size: 10pt; border-left: Black 1pt solid"> </td>
<td style="font-size: 10pt; text-align: left"> </td><td style="font-size: 10pt; text-align: right">(1</td><td style="font-size: 10pt; text-align: left">%)</td></tr>
<tr style="vertical-align: bottom; background-color: rgb(204,238,255)">
<td style="font-size: 10pt; text-align: left">Permanent difference</td><td style="font-size: 10pt"> </td>
<td style="font-size: 10pt; text-align: left"> </td><td style="font-size: 10pt; text-align: right">23</td><td style="font-size: 10pt; text-align: left">%</td><td style="font-size: 10pt"> </td>
<td style="font-size: 10pt; text-align: left"> </td><td style="font-size: 10pt; text-align: right">7</td><td style="font-size: 10pt; text-align: left">%</td>
<td> </td><td style="font-size: 10pt; border-left: Black 1pt solid"> </td>
<td style="font-size: 10pt; text-align: left"> </td><td style="font-size: 10pt; text-align: right">0</td><td style="font-size: 10pt; text-align: left">%</td></tr>
<tr style="vertical-align: bottom; background-color: White">
<td style="font-size: 10pt; text-align: left">Write-off of net operating losses due to Section 382</td><td style="font-size: 10pt"> </td>
<td style="font-size: 10pt; text-align: left"> </td><td style="font-size: 10pt; text-align: right">4</td><td style="font-size: 10pt; text-align: left">%</td><td style="font-size: 10pt"> </td>
<td style="font-size: 10pt; text-align: left"> </td><td style="font-size: 10pt; text-align: right">11</td><td style="font-size: 10pt; text-align: left">%</td>
<td> </td><td style="font-size: 10pt; border-left: Black 1pt solid"> </td>
<td style="font-size: 10pt; text-align: left"> </td><td style="font-size: 10pt; text-align: right">0</td><td style="font-size: 10pt; text-align: left">%</td></tr>
<tr style="vertical-align: bottom; background-color: rgb(204,238,255)">
<td style="font-size: 10pt; text-align: left; padding-bottom: 1pt">Change in valuation allowance</td><td style="font-size: 10pt; padding-bottom: 1pt"> </td>
<td style="border-bottom: Black 1pt solid; font-size: 10pt; text-align: left"> </td><td style="border-bottom: Black 1pt solid; font-size: 10pt; text-align: right">11</td><td style="padding-bottom: 1pt; font-size: 10pt; text-align: left">%</td><td style="font-size: 10pt; padding-bottom: 1pt"> </td>
<td style="border-bottom: Black 1pt solid; font-size: 10pt; text-align: left"> </td><td style="border-bottom: Black 1pt solid; font-size: 10pt; text-align: right">17</td><td style="padding-bottom: 1pt; font-size: 10pt; text-align: left">%</td>
<td> </td><td style="font-size: 10pt; padding-bottom: 1pt; border-left: Black 1pt solid"> </td>
<td style="border-bottom: Black 1pt solid; font-size: 10pt; text-align: left"> </td><td style="border-bottom: Black 1pt solid; font-size: 10pt; text-align: right">35</td><td style="padding-bottom: 1pt; font-size: 10pt; text-align: left">%</td></tr>
<tr style="vertical-align: bottom; background-color: White">
<td style="font-size: 10pt; text-align: left; padding-bottom: 2.5pt">Income tax provision (benefit)</td><td style="font-size: 10pt; padding-bottom: 2.5pt"> </td>
<td style="border-bottom: Black 2.5pt double; font-size: 10pt; text-align: left"> </td><td style="border-bottom: Black 2.5pt double; font-size: 10pt; text-align: right">0</td><td style="padding-bottom: 2.5pt; font-size: 10pt; text-align: left">%</td><td style="font-size: 10pt; padding-bottom: 2.5pt"> </td>
<td style="border-bottom: Black 2.5pt double; font-size: 10pt; text-align: left"> </td><td style="border-bottom: Black 2.5pt double; font-size: 10pt; text-align: right">0</td><td style="padding-bottom: 2.5pt; font-size: 10pt; text-align: left">%</td>
<td> </td><td style="font-size: 10pt; padding-bottom: 2.5pt; border-left: Black 1pt solid"> </td>
<td style="border-bottom: Black 2.5pt double; font-size: 10pt; text-align: left"> </td><td style="border-bottom: Black 2.5pt double; font-size: 10pt; text-align: right">0</td><td style="padding-bottom: 2.5pt; font-size: 10pt; text-align: left">%</td></tr>
</table>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-indent: 24.5pt"> </p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify">The types of temporary differences that give
rise to deferred tax assets and liabilities are as follows:</p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify"> </p>
<table cellpadding="0" cellspacing="0" style="border-collapse: collapse; width: 100%; font: 10pt Times New Roman, Times, Serif">
<tr style="vertical-align: bottom">
<td style="font-size: 12pt"> </td><td> </td>
<td colspan="3" style="text-align: center"> </td><td> </td>
<td colspan="3" style="text-align: center"> </td>
<td> </td><td> </td>
<td colspan="3" style="text-align: center">(Predecessor)</td></tr>
<tr style="vertical-align: bottom">
<td style="font-size: 12pt"> </td><td> </td>
<td colspan="3" style="text-align: center">December 31,</td><td> </td>
<td colspan="3" style="text-align: center">December 31,</td>
<td> </td><td style="border-left: Black 1pt solid"> </td>
<td colspan="3" style="text-align: center">December 31,</td></tr>
<tr style="vertical-align: bottom">
<td style="font-size: 12pt"> </td><td style="padding-bottom: 1pt"> </td>
<td colspan="3" style="text-align: center; border-bottom: Black 1pt solid">2016</td><td style="padding-bottom: 1pt"> </td>
<td colspan="3" style="text-align: center; border-bottom: Black 1pt solid">2015</td>
<td> </td><td style="padding-bottom: 1pt; border-left: Black 1pt solid"> </td>
<td colspan="3" style="text-align: center; border-bottom: Black 1pt solid">2015</td></tr>
<tr style="vertical-align: bottom">
<td style="text-align: left">Deferred tax assets:</td><td style="font-size: 12pt"> </td>
<td style="font-size: 12pt; text-align: left"> </td><td style="font-size: 12pt; text-align: right"> </td><td style="font-size: 12pt; text-align: left"> </td><td style="font-size: 12pt"> </td>
<td style="font-size: 12pt; text-align: left"> </td><td style="font-size: 12pt; text-align: right"> </td><td style="font-size: 12pt; text-align: left"> </td>
<td> </td><td style="font-size: 12pt; border-left: Black 1pt solid"> </td>
<td style="font-size: 12pt; text-align: left"> </td><td style="font-size: 12pt; text-align: right"> </td><td style="font-size: 12pt; text-align: left"> </td></tr>
<tr style="vertical-align: bottom; background-color: rgb(204,238,255)">
<td style="width: 43%; text-align: left">  Net operating loss</td><td style="width: 4%"> </td>
<td style="width: 1%; text-align: left">$</td><td style="width: 10%; text-align: right">182,100</td><td style="width: 1%; text-align: left"> </td><td style="width: 4%"> </td>
<td style="width: 1%; text-align: left">$</td><td style="width: 10%; text-align: right">300,050</td><td style="width: 1%; text-align: left"> </td>
<td style="width: 4%"> </td><td style="width: 4%; border-left: Black 1pt solid"> </td>
<td style="width: 1%; text-align: left">$</td><td style="width: 10%; text-align: right">25,975</td><td style="width: 1%; text-align: left"> </td></tr>
<tr style="vertical-align: bottom; background-color: White">
<td style="text-align: left">  Intangible assets</td><td> </td>
<td style="text-align: left"> </td><td style="text-align: right">535,600</td><td style="text-align: left"> </td><td> </td>
<td style="text-align: left"> </td><td style="text-align: right">—  </td><td style="text-align: left"> </td>
<td> </td><td style="border-left: Black 1pt solid"> </td>
<td style="text-align: left"> </td><td style="text-align: right">—  </td><td style="text-align: left"> </td></tr>
<tr style="vertical-align: bottom; background-color: rgb(204,238,255)">
<td style="text-align: left; padding-bottom: 1pt">  Valuation allowance</td><td style="padding-bottom: 1pt"> </td>
<td style="border-bottom: Black 1pt solid; text-align: left"> </td><td style="border-bottom: Black 1pt solid; text-align: right">(717,700</td><td style="padding-bottom: 1pt; text-align: left">)</td><td style="padding-bottom: 1pt"> </td>
<td style="border-bottom: Black 1pt solid; text-align: left"> </td><td style="border-bottom: Black 1pt solid; text-align: right">(300,050</td><td style="padding-bottom: 1pt; text-align: left">)</td>
<td> </td><td style="padding-bottom: 1pt; border-left: Black 1pt solid"> </td>
<td style="border-bottom: Black 1pt solid; text-align: left"> </td><td style="border-bottom: Black 1pt solid; text-align: right">(25,975</td><td style="padding-bottom: 1pt; text-align: left">)</td></tr>
<tr style="vertical-align: bottom; background-color: White">
<td style="text-align: left; padding-bottom: 2.5pt">Net deferred tax assets</td><td style="padding-bottom: 2.5pt"> </td>
<td style="border-bottom: Black 2.5pt double; text-align: left">$</td><td style="border-bottom: Black 2.5pt double; text-align: right">—  </td><td style="padding-bottom: 2.5pt; text-align: left"> </td><td style="padding-bottom: 2.5pt"> </td>
<td style="border-bottom: Black 2.5pt double; text-align: left">$</td><td style="border-bottom: Black 2.5pt double; text-align: right">—  </td><td style="padding-bottom: 2.5pt; text-align: left"> </td>
<td> </td><td style="padding-bottom: 2.5pt; border-left: Black 1pt solid"> </td>
<td style="border-bottom: Black 2.5pt double; text-align: left">$</td><td style="border-bottom: Black 2.5pt double; text-align: right">—  </td><td style="padding-bottom: 2.5pt; text-align: left"> </td></tr>
</table>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify"><font style="text-transform: uppercase"><b> </b></font></p>
<p style="font: 10pt EYInterstate; margin: 0; text-align: justify">As of December 31, 2016, the Company has net operating loss
carryforwards of approximately $483,200 for federal and state tax purposes, which will be available to offset future taxable income.
If not used, these carryforwards will expire between 2034 and 2036. Based on the Company’s preliminary analysis, management
believes that its ability to utilize previously accumulated net operating loss carryforwards are subject to annual limitations
due to a change in ownership occurred during the year. The estimated annual limitation is approximately $23,000. As of December
31, 2016, the Company recorded the impact of such limitations.</p>
<p style="font: 11pt Times New Roman, Times, Serif; margin: 0"> </p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify; text-indent: 2pt">The Company, after considering
all available evidence, fully reserved its deferred tax asset since it is more likely than not that such benefits will not be realized
in future periods. The Company will continue to evaluate its deferred tax assets to determine whether any changes in circumstances
could affect the realization of their future benefit. During the year ended December 31, 2016, the Company increased its valuation
allowance by $417,650.</p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify; text-indent: 2pt"> </p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify">As required by the provisions of ASC 740, the
Company recognizes the financial statement benefit of a tax position only after determining that the relevant tax authority would
more likely than not sustain the position following an audit. For tax positions meeting the more likely than not threshold, the
amount recognized in the consolidated financial statements is the largest benefit that has a greater than 50 percent likelihood
of being realized upon ultimate settlement with the relevant tax authority. Differences between tax positions taken or expected
to be taken in a tax return and the net benefit recognized and measured pursuant to the interpretation are referred to as “unrecognized
benefits.” A liability is recognized (or amount of NOL or amount of tax refundable is reduced) for an unrecognized tax benefit
because it represents an enterprise’s potential future obligation to the taxing authority for a tax position that was not
recognized as a result of applying the provisions of ASC 740.</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">If applicable, interest costs and penalties
related to unrecognized tax benefits are required to be calculated and would be classified as interest and penalties in general
and administrative expense in the consolidated statements of operations. As of December 31, 2016 and 2015, no liability for
unrecognized tax benefit was required to be reported. No interest or penalties were recorded during the years ended December 31,
2016 and 2015. The Company does not expect any significant changes in its unrecognized tax benefits in the next year.</p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0 0 0 0.35in; text-align: justify"><font style="font-variant: small-caps"><b><i>Cash
and Cash Equivalents</i></b></font></p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0 0 0 0.35in; text-align: justify"> </p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0 0 0 0.35in; text-align: justify">The Company considers highly liquid
investments with original maturities of three months or less when purchased as cash equivalents. At times throughout the year,
the Company might maintain bank balances that may exceed Federal Deposit Insurance Corporation (FDIC) insured limits. Periodically,
the Company evaluates the credit worthiness of the financial institutions, and has not experienced any losses in such accounts.
As of December 31, 2016 and 2015, the Company did not have any cash equivalents.</p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0 0 0 0.35in; text-align: justify"><font style="font-variant: small-caps"><b><i>Cash
- Restricted</i></b></font></p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0 0 0 0.35in; text-align: justify"> </p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0 0 0 0.35in; text-align: justify">Restricted cash represents cash
in a lockbox account by held by TCA Global Credit Master Fund, LP in accordance with the Senior Secured Revolving Credit Facility
Agreement. No cash was considered restricted at December 31, 2016 and 2015. (See Note 8)</p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0 0 0 0.35in; text-align: justify"><font style="font-variant: small-caps"><b><i>Cost
of Contract Staffing Services</i></b></font></p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0 0 0 0.35in; text-align: justify; text-indent: 0.5in"> </p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0 0 0 0.35in; text-align: justify">The cost of contract staffing services
includes the wages, related payroll taxes, and employee benefits of the Company’s employees while they work on contract assignments
for the period in which the related revenue is recognized.</p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0 0 0 0.35in; text-align: justify"><font style="font-variant: small-caps"><b><i>Accounts
Receivable</i></b></font></p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0 0 0 0.35in; text-align: justify"> </p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0 0 0 0.35in; text-align: justify">The Company extends credit to its
customers based on an evaluation of the customer’s financial condition and ability to pay the Company in accordance with
the payment terms. An allowance for doubtful accounts is recorded as a charge to bad debt expense where collection is considered
doubtful due to credit issues. This allowance reflects management’s estimate of the potential losses inherent in the accounts
receivable balance, based on historical loss statistics and known factors impacting its customers. The nature of the contract service
business, where companies are dependent on employees for their production cycle, generally results in a nominal provision for doubtful
accounts. Based on management’s review of accounts receivable, an allowance for doubtful accounts of $44,978, and $0 (Predecessor)
at December 31, 2016 and 2015, respectively, was recorded in these consolidated financial statements. The Company charges uncollectible
accounts against the allowance once the invoices are deemed unlikely to be collectible. The Company does not accrue interest on
past due receivables.</p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0 0 0 0.35in; text-align: justify"><font style="font-variant: small-caps"><b><i>Property
and Equipment</i></b></font></p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0 0 0 0.35in; text-align: justify"> </p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0 0 0 0.35in; text-align: justify">Property and equipment is stated
at cost, less accumulated depreciation and amortization. Expenditures for maintenance and repairs are charged to expense when incurred,
while renewals and betterments that materially extend the life of an asset are capitalized.</p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0 0 0 0.35in"> </p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0 0 0 0.35in; text-align: justify">The costs of assets sold, retired,
or otherwise disposed of, and the related allowance for depreciation, are eliminated from the accounts, and any resulting gain
or loss is recognized in the results from operations. Depreciation is provided using the straight-line method over the estimated
useful lives of the assets, which are as follows:</p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0 0 0 0.35in; text-align: justify"> </p>
<table cellspacing="0" cellpadding="0" style="width: 100%; border-collapse: collapse">
<tr style="vertical-align: top">
<td style="width: 43%; padding-left: 0.35in; font: 12pt Times New Roman, Times, Serif; text-align: justify"><font style="font-size: 10pt">Computer and office equipment</font></td>
<td style="width: 57%; padding-left: 0.35in; font: 12pt Times New Roman, Times, Serif; text-align: right"><font style="font-size: 10pt">5 years</font></td></tr>
<tr style="vertical-align: top">
<td style="padding-left: 0.35in; font: 12pt Times New Roman, Times, Serif; text-align: justify"><font style="font-size: 10pt">Furniture and fixtures</font></td>
<td style="padding-left: 0.35in; font: 12pt Times New Roman, Times, Serif; text-align: right"><font style="font-size: 10pt">7 years</font></td></tr>
<tr style="vertical-align: top">
<td style="padding-left: 0.35in; font: 12pt Times New Roman, Times, Serif; text-align: justify"><font style="font-size: 10pt">Leasehold improvements</font></td>
<td style="padding-left: 0.35in; font: 12pt Times New Roman, Times, Serif; text-align: right"><font style="font-size: 10pt">Shorter of improvements’ useful life</font><br />
<font style="font-size: 10pt">or remaining lease term</font></td></tr>
</table>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0 0 0 0.35in; text-align: justify"><font style="font-variant: small-caps"><b><i>Long-Lived
Assets</i></b></font></p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0 0 0 0.35in; text-align: justify"> </p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0 0 0 0.35in; text-align: justify">On a periodic basis, management
assesses whether there are any indicators that the value of the Company’s long-lived assets may be impaired. An asset’s
value may be impaired only if management’s estimate of the aggregate future cash flows, on an undiscounted basis, to be generated
by the asset are less than the carrying value of the asset.</p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0 0 0 0.35in; text-align: justify"> </p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0 0 0 0.35in; text-align: justify">If impairment has occurred, the
loss is measured as the excess of the carrying amount of the asset over its fair value. The Company’s estimates of aggregate
future cash flows expected to be generated by each long-lived asset are based on a number of assumptions that are subject to economic
and market uncertainties. As these factors are difficult to predict and are subject to future events that may alter management’s
assumptions, the future cash flows estimated by management in their impairment analyses may not be achieved.</p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0 0 0 0.35in; text-align: justify"><font style="font-variant: small-caps"><b><i>Advertising</i></b></font></p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0 0 0 0.35in; text-align: justify"> </p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0 0 0 0.35in; text-align: justify">The Company charges advertising
costs to expense as incurred. Advertising costs were $8,231 and $11,614 (Predecessor) for the years ended December 31, 2016 and
2015, respectively.</p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0 0 0 0.35in; text-align: justify"><font style="font-variant: small-caps"><b><i>Concentration
of Credit Risk</i></b></font></p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0 0 0 0.35in; text-align: justify; text-indent: 0.5in"> </p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0 0 0 0.35in; text-align: justify">The Company did not have any other
customers that exceeded 10% of either revenue or accounts receivable in either 2016 or 2015.</p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0 0 0 0.35in; text-align: justify"><font style="font-variant: small-caps"><b><i>Income
Taxes</i></b></font></p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0 0 0 0.35in; text-align: justify"> </p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0 0 0 0.35in; text-align: justify">For the period prior to July 1,
2013, the Company was not subject to Federal and State income taxes, as it was a limited liability company. Each member was responsible
for the tax liability, if any, related to its proportionate share of the Company’s taxable income. Accordingly, no provision
for income taxes was reflected in the accompanying consolidated financial statements through June 30, 2013. The Company had concluded
that it was a pass-through entity through June 30, 2013 and a taxable entity thereafter.</p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0 0 0 0.35in; text-align: justify; text-indent: 0.5in"> </p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0 0 0 0.35in; text-align: justify">Effective July 1, 2013, the Company
changed its corporate status from a limited liability company to a “C” corporation and its state of registration from
Delaware to Nevada. The Company is subject to file tax returns in the states of North Carolina, Indiana, Tennessee, Louisiana,
Alabama and Mississippi. Generally, federal, state and local authorities may examine the Company’s tax returns for three
years from the date of filing and the current and prior three years remain subject to examination as of December 31, 2016.</p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0 0 0 0.35in; text-align: justify; text-indent: 0.5in"> </p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0 0 0 0.35in; text-align: justify">There were no uncertain tax positions
that would require recognition in the financial statements through December 31, 2016. The Company’s conclusions regarding
uncertain tax positions may be subject to review and adjustment as a later date based upon ongoing analyses of tax laws, regulations
and interpretations thereof as well as other factors.</p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0 0 0 0.35in; text-align: justify"> </p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0 0 0 0.35in; text-align: justify">The Company accounts for income
taxes under ASC 740-10-30.  Deferred income tax assets and liabilities are determined based upon differences between
the financial reporting and tax bases of assets and liabilities and are measured using the enacted tax rates and laws that will
be in effect when the differences are expected to reverse.  Deferred tax assets are reduced by a valuation allowance
to the extent management concludes it is more likely than not that the assets will not be realized.  Deferred tax assets
and liabilities are measured using enacted tax rates expected to apply to taxable income in the years in which those temporary
differences are expected to be recovered or settled. The effect on deferred tax assets and liabilities of a change in tax rates
is recognized in the statements of operations in the period that includes the enactment date.</p>
836797
456296
407000
-123156
139715
55815
1110424
1099376
178959
28500
750000
591199
613000
761000
1
1
602436
1332736
744436
2
7000
7
6993
80000
40
79960
1
684427
-182
684609
-2
-182000
5570
63
5507
1080000
600
1079400
600000
63300
14000
14000
-305819
44978
3971
993
430978
25710
123156
28500
0
0
150000000
150000000
1332736
602421
-8609
<table cellpadding="0" cellspacing="0" style="border-collapse: collapse; width: 100%; font: 10pt Times New Roman, Times, Serif">
<tr style="vertical-align: bottom">
<td style="font-size: 12pt"> </td><td style="font-weight: bold; padding-bottom: 1pt"> </td>
<td colspan="3" style="font-weight: bold; text-align: center; border-bottom: Black 1pt solid">For the Year Ended December 31, 2016</td><td style="font-weight: bold; padding-bottom: 1pt"> </td>
<td colspan="3" style="font-weight: bold; text-align: center; border-bottom: Black 1pt solid">For the Year Ended December 31, 2015</td></tr>
<tr style="vertical-align: bottom; background-color: rgb(204,238,255)">
<td style="width: 56%; text-align: left">Net revenues</td><td style="width: 8%"> </td>
<td style="width: 1%; text-align: left">$</td><td style="width: 12%; text-align: right">5,617,446</td><td style="width: 1%; text-align: left"> </td><td style="width: 8%"> </td>
<td style="width: 1%; text-align: left">$</td><td style="width: 12%; text-align: right">5,962,254</td><td style="width: 1%; text-align: left"> </td></tr>
<tr style="vertical-align: bottom; background-color: White">
<td style="text-align: left">Income (loss) from operations</td><td> </td>
<td style="text-align: left">$</td><td style="text-align: right">(1,518,775</td><td style="text-align: left">)</td><td> </td>
<td style="text-align: left">$</td><td style="text-align: right">(275,909</td><td style="text-align: left">)</td></tr>
<tr style="vertical-align: bottom; background-color: rgb(204,238,255)">
<td style="text-align: left">Net loss</td><td> </td>
<td style="text-align: left">$</td><td style="text-align: right">(3,979,267</td><td style="text-align: left">)</td><td> </td>
<td style="text-align: left">$</td><td style="text-align: right">(346,580</td><td style="text-align: left">)</td></tr>
<tr style="vertical-align: bottom; background-color: White">
<td>Net loss per share</td><td> </td>
<td style="text-align: left">$</td><td style="text-align: right">(3.62</td><td style="text-align: left">)</td><td> </td>
<td style="text-align: left">$</td><td style="text-align: right">(0.47</td><td style="text-align: left">)</td></tr>
</table>
-19554