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<P STYLE="margin: 0"><B>&nbsp;</B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: center"><B>UNITED STATES</B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: center"><B>SECURITIES AND EXCHANGE COMMISSION</B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: center"><B>Washington, D.C. 20549</B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: center"><B>&nbsp;</B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: center"><B>FORM 8-K</B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: center"><B>CURRENT REPORT</B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: center"><B>Pursuant to Section 13 or 15(d) of the</B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: center"><B>Securities Exchange Act of 1934</B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: center">Date of Report (Date of earliest event reported):
<B>February 22, 2012</B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0">&nbsp;</P>

<P STYLE="font: 18pt Times New Roman, Times, Serif; margin: 0; text-align: center"><B>Grandparents.com, Inc.</B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: center">(Exact name of registrant as specified in its
charter)</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0">&nbsp;</P>

<TABLE CELLSPACING="0" CELLPADDING="0" STYLE="font: 10pt Times New Roman, Times, Serif; width: 100%; border-collapse: collapse">
<TR STYLE="vertical-align: top">
    <TD NOWRAP STYLE="width: 32%; border-bottom: windowtext 1pt solid; font-weight: bold; text-align: center">Delaware</TD>
    <TD NOWRAP STYLE="width: 2%">&nbsp;</TD>
    <TD NOWRAP STYLE="width: 32%; border-bottom: windowtext 1pt solid; font-weight: bold; text-align: center">000-21537</TD>
    <TD NOWRAP STYLE="width: 2%">&nbsp;</TD>
    <TD NOWRAP STYLE="width: 32%; border-bottom: windowtext 1pt solid; font-weight: bold; text-align: center">93-1211114</TD></TR>
<TR STYLE="vertical-align: top">
    <TD NOWRAP STYLE="text-align: center">(State or other jurisdiction of</TD>
    <TD NOWRAP STYLE="text-align: center">&nbsp;</TD>
    <TD NOWRAP STYLE="text-align: center">(Commission File Number)</TD>
    <TD NOWRAP STYLE="text-align: center">&nbsp;</TD>
    <TD NOWRAP STYLE="text-align: center">(IRS Employer Identification No.)</TD></TR>
<TR STYLE="vertical-align: top">
    <TD NOWRAP STYLE="text-align: center">incorporation)</TD>
    <TD NOWRAP STYLE="text-align: center">&nbsp;</TD>
    <TD NOWRAP STYLE="text-align: center">&nbsp;</TD>
    <TD NOWRAP STYLE="text-align: center">&nbsp;</TD>
    <TD NOWRAP STYLE="text-align: center">&nbsp;</TD></TR>
</TABLE>
<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0">&nbsp;</P>

<TABLE ALIGN="CENTER" CELLSPACING="0" CELLPADDING="0" STYLE="font: 10pt Times New Roman, Times, Serif; width: 90%; border-collapse: collapse">
<TR>
    <TD STYLE="width: 66%; vertical-align: bottom; border-bottom: windowtext 1pt solid">
        <P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: center"><B>589 Eighth Avenue, 6th Floor</B></P>
        <P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: center"><B>New York, New York</B></P></TD>
    <TD STYLE="width: 2%; vertical-align: top">&nbsp;</TD>
    <TD STYLE="width: 32%; vertical-align: bottom; border-bottom: windowtext 1pt solid; font-weight: bold; text-align: center">10018</TD></TR>
<TR STYLE="vertical-align: top">
    <TD STYLE="text-align: center">(Address of principal executive offices)</TD>
    <TD>&nbsp;</TD>
    <TD STYLE="text-align: center">(Zip Code)</TD></TR>
</TABLE>
<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: center">Registrant&rsquo;s telephone number, including
area code:<B> 646-839-8800</B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: center"><B>&nbsp;</B></P>

<TABLE ALIGN="CENTER" CELLSPACING="0" CELLPADDING="0" STYLE="font: 10pt Times New Roman, Times, Serif; width: 60%; border-collapse: collapse">
<TR STYLE="vertical-align: bottom">
    <TD NOWRAP STYLE="width: 100%; border-bottom: windowtext 1pt solid">
        <P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: center"><B>NorWesTech, Inc.</B></P>
        <P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: center"><B>220 West Harrison St., Seattle, Washington
        98119</B></P></TD></TR>
<TR STYLE="vertical-align: top">
    <TD NOWRAP STYLE="text-align: center">(Former name or former address, if changed since last report)</TD></TR>
</TABLE>
<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0">Check the appropriate box below if the Form 8-K filing is intended
to simultaneously satisfy the filing obligation of the registrant under any of the following provisions (<U>see</U> General Instruction
A.2. below):</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0">&nbsp;</P>

<TABLE CELLPADDING="0" CELLSPACING="0" WIDTH="100%" STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0; margin-bottom: 0"><TR STYLE="vertical-align: top">
<TD STYLE="width: 0"></TD><TD STYLE="width: 0.25in"><FONT STYLE="font-family: Wingdings">&uml;</FONT></TD><TD>Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)</TD></TR></TABLE>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0">&nbsp;</P>

<TABLE CELLPADDING="0" CELLSPACING="0" WIDTH="100%" STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0; margin-bottom: 0"><TR STYLE="vertical-align: top">
<TD STYLE="width: 0"></TD><TD STYLE="width: 0.25in"><FONT STYLE="font-family: Wingdings">&uml;</FONT></TD><TD>Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a -12)</TD></TR></TABLE>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0">&nbsp;</P>

<TABLE CELLPADDING="0" CELLSPACING="0" WIDTH="100%" STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0; margin-bottom: 0"><TR STYLE="vertical-align: top">
<TD STYLE="width: 0"></TD><TD STYLE="width: 0.25in"><FONT STYLE="font-family: Wingdings">&uml;</FONT></TD><TD>Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d -2(b))</TD></TR></TABLE>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0">&nbsp;</P>

<TABLE CELLPADDING="0" CELLSPACING="0" WIDTH="100%" STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0; margin-bottom: 0"><TR STYLE="vertical-align: top">
<TD STYLE="width: 0"></TD><TD STYLE="width: 0.25in"><FONT STYLE="font-family: Wingdings">&uml;</FONT></TD><TD>Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e -4(c))</TD></TR></TABLE>

<P STYLE="font: bold 10pt Times New Roman, Times, Serif; margin: 0; text-align: center">&nbsp;&nbsp;</P>

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<P STYLE="font: bold 10pt Times New Roman, Times, Serif; margin: 0; text-align: center">&nbsp;</P>

<P STYLE="font: bold 10pt Times New Roman, Times, Serif; margin: 0; text-align: center">CAUTIONARY NOTE REGARDING FORWARD LOOKING
STATEMENTS</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0">This Current Report on Form 8-K (this &ldquo;Report&rdquo;) contains
forward-looking statements. The forward-looking statements are contained principally in the sections entitled &ldquo;Description
of Business,&rdquo; &ldquo;Risk Factors,&rdquo; and &ldquo;Management&rsquo;s Discussion and Analysis of Financial Condition and
Results of Operations.&rdquo; These statements involve known and unknown risks, uncertainties and other factors which may cause
our actual results, performance or achievements to be materially different from any future results, performances or achievements
expressed or implied by the forward-looking statements. In some cases, you can identify forward-looking statements by terms such
as &ldquo;anticipates,&rdquo; &ldquo;believes,&rdquo; &ldquo;seeks,&rdquo; &ldquo;could,&rdquo; &ldquo;estimates,&rdquo; &ldquo;expects,&rdquo;
&ldquo;intends,&rdquo; &ldquo;may,&rdquo; &ldquo;plans,&rdquo; &ldquo;will,&rdquo; &ldquo;potential,&rdquo; &ldquo;predicts,&rdquo;
&ldquo;projects,&rdquo; &ldquo;should,&rdquo; &ldquo;would&rdquo; and similar expressions intended to identify forward-looking
statements. Forward-looking statements reflect our current views with respect to future events and are based on assumptions and
subject to risks and uncertainties. These risks and uncertainties include, but are not limited to, the factors described in the
section captioned &ldquo;Risk Factors&rdquo; below. Given these uncertainties, you should not place undue reliance on these forward-looking
statements.&nbsp;&nbsp;Such statements may include, but are not limited to, information related to: anticipated operating results;
relationships with our marketing partners and members; demand for our website; financial resources and condition; changes in revenues;
changes in profitability; changes in accounting treatment; cost of sales; selling, general and administrative expenses; interest
expense; the ability to produce the liquidity or enter into agreements to acquire the capital necessary to continue our operations
and take advantage of opportunities; legal proceedings and claims.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0">Also, forward-looking statements represent our estimates and assumptions
only as of the date of this Report. You should read this Report and the documents that we reference and file or furnish as exhibits
to this Report completely and with the understanding that our actual future results may be materially different from what we expect.
Except as required by law, we assume no obligation to update any forward-looking statements publicly, or to update the reasons
actual results could differ materially from those anticipated in any forward-looking statements, even if new information becomes
available in the future.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0">&nbsp;</P>

<P STYLE="font: bold 10pt Times New Roman, Times, Serif; margin: 0; text-align: center">EXPLANATORY NOTE</P>

<P STYLE="font: bold 10pt Times New Roman, Times, Serif; margin: 0; text-align: center">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0">Effective on February 23, 2012, we changed our name to Grandparents.com,
Inc. and our new corporate address is 589 Eighth Avenue, 6th Floor, New York, New York and our telephone number is 646-839-8800.
Previously, our corporate name was NorWesTech, Inc.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0">Unless otherwise indicated or the context otherwise requires, all
references in this Report to the &ldquo;Company,&rdquo; &ldquo;we,&rdquo; &ldquo;us,&rdquo; and &ldquo;our&rdquo; are to Grandparents.com,
Inc., formerly known as NorWesTech, Inc., a Delaware corporation. All references to &ldquo;Grandparents.com&rdquo; are to Grandparents.com,
LLC, a Florida limited liability company with whom we completed an asset contribution on February 23, 2012.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0"></P>

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<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0 0 0 0.75in; text-indent: -0.75in"><B>&nbsp;</B></P>

<TABLE CELLPADDING="0" CELLSPACING="0" WIDTH="100%" STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0; margin-bottom: 0"><TR STYLE="vertical-align: top">
<TD STYLE="width: 0"></TD><TD STYLE="width: 0.75in"><B>Item 1.01</B></TD><TD><B>Entry into a Material Definitive Agreement.</B></TD></TR></TABLE>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0"><B>The Transaction</B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0">On February 23, 2012 (the &ldquo;Closing Date&rdquo;),
NorWesTech, Inc. (which we refer to as &ldquo;Company,&rdquo; &ldquo;we,&rdquo; &ldquo;us&rdquo; or &ldquo;our&rdquo;)
entered into an Asset Contribution Agreement (the &ldquo;Contribution Agreement&rdquo;) with Grandparents.com, LLC, a Florida
limited liability company (which we refer to as &ldquo;Grandparents.com&rdquo;). Under the terms of the Contribution
Agreement, Grandparents.com contributed substantially all of its assets, including the grandparents.com domain name, other
related domain names, trademarks and related assets, to us in exchange for our assumption of certain liabilities of
Grandparents.com and our issuance to Grandparents.com of one (1) share of our newly designated Series A Convertible Preferred
Stock, par value $0.01 per share (&ldquo;Series A Convertible Preferred Stock&rdquo;), and a warrant (the &ldquo;GP
Warrant&rdquo;) to purchase shares of our common stock, par value $0.01 per share (&ldquo;Common Stock&rdquo;), upon the
occurrence of certain events more fully described below (the &ldquo;Transaction&rdquo;). Grandparents.com also assigned
certain of its contracts to us. As of the closing of the Transaction but excluding the net proceeds from the private
placement discussed below, the Company had approximately $1,540,000 in cash which remained in the Company immediately
following the Transaction.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0">As of the Closing Date and after giving effect to the issuance of
shares of our Series B Convertible Preferred Stock pursuant to the private placement more fully described below, the one (1) share
of Series A Convertible Preferred Stock represented approximately 65% of our issued and outstanding shares of Common Stock on
an as-converted basis of the Series A and Series B Convertible Preferred Stock. The rights and preferences of the Series A Convertible
Preferred Stock are more fully described in Item 5.03 of this Report, which such description is incorporated herein by reference.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0">The Contribution Agreement contains customary representations and
warranties and covenants of the parties thereto. The Contribution Agreement also contains a covenant restricting competition by
Grandparents.com and indemnification provisions by Grandparents.com for breaches of its representations and warranties and covenants
under the Contribution Agreement. In addition, the Contribution Agreement contains provisions requiring us to continue to afford
our former officers and directors immediately prior to the closing of the Transaction certain rights to exculpation and indemnification
for acts or omissions occurring prior to the Closing Date and requiring us to maintain directors&rsquo; and officers&rsquo; insurance
in favor of such former directors and officers.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0">The Contribution Agreement contains an adjustment provision pursuant
to which the number of shares for which the GP Warrant is exercisable will be adjusted from time to time to the extent the Shortfall
Amount (as defined in the Contribution Agreement) calculated as of the Closing Date changes based on a calculation of same from
time to time after the Closing Date. However, there will be no such adjustments after the third anniversary of the Closing Date.
In addition, the number of shares of Common Stock for which the GP Warrant will be exercisable, if at all, will be increased from
time to time in the event that any of the warrants to purchase an aggregate of 342,813 shares of Common Stock outstanding immediately
prior to the closing of the Transaction are exercised. The GP Warrant has an exercise price of $0.01 per share and is exercisable
for five (5) years from the Closing Date.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0">Other than the bridge loan described below and with respect
to the Contribution Agreement and the ancillary agreements referred to therein and the transactions contemplated thereby, there
are no material relationships between us or any of our affiliates, directors or officers, or any associate of any such director
or officer, on the one hand, and Grandparents.com, on the other hand. On December 30, 2011, we provided a $500,000 bridge loan
to Grandparents.com secured by a first priority security interest in all of Grandparents.com&rsquo;s assets (the &ldquo;Bridge
Loan&rdquo;). The purpose of the Bridge Loan was to provide loan financing and working capital to Grandparents.com in advance of
negotiation and closing of the Contribution Agreement. The Bridge Loan was governed by the terms of a 4% Senior Secured Note and
a Security Agreement and Trademark Security Agreement. Upon closing of the Transaction, we cancelled the 4% Senior Secured Note
and terminated the Security Agreement and the Trademark Security Agreement. All liens with respect to the Bridge Loan were released
in connection with the closing of the Transaction.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0">The foregoing descriptions of the Contribution Agreement and the
GP Warrant do not purport to be complete and are qualified in their entirety by reference to the provisions of the Contribution
Agreement and GP Warrant, copies of which are filed as Exhibits 2.1 and 4.1, respectively, to this Report and incorporated herein
by reference.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0"><B>Private Placement</B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0">On the Closing Date and simultaneously with the closing of the
Transaction, the Company entered into a Securities Purchase Agreement (the &ldquo;Securities Purchase Agreement&rdquo;) with
certain accredited investors signatory to the Securities Purchase Agreement (collectively, the &ldquo;Purchasers&rdquo;) for
the issuance and sale in a private placement (the &ldquo;Private Placement&rdquo;) of 3,000,000 shares of the Company&rsquo;s
newly designated Series B Convertible Preferred Stock, par value $0.01 per share (&ldquo;Series B Convertible Preferred
Stock&rdquo;) for aggregate gross proceeds to the Company of $3,000,000. Certain of the Company&rsquo;s newly appointed
directors and executive officers and their affiliates purchased shares of Series B Convertible Preferred Stock in the Private
Placement on the same terms and conditions as other Purchasers.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0">&nbsp;</P>

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<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0">As of the Closing Date and after giving effect to the issuance of
Series A Convertible Preferred Stock pursuant to the Transaction, the 3,000,000 shares of Series B Convertible Preferred Stock
represented approximately 15% of our issued and outstanding shares of Common Stock, on an as-converted basis of the Series A and
Series B Convertible Preferred Stock. The rights and preferences of the Series B Convertible Preferred Stock are more fully described
in Item 5.03 of this Report, which such description is incorporated herein by reference.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0">Pursuant to the Securities Purchase Agreement, the Purchasers may
not sell or otherwise transfer the shares of Series B Convertible Preferred Stock purchased in the Private Placement or any of
the shares of Common Stock issued upon conversion thereof for a period of one hundred twenty (120) days following the Closing Date.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0">The foregoing description of the Securities Purchase Agreement and
the transactions contemplated thereby does not purport to be complete and is qualified in its entirety by reference to the provisions
of the Securities Purchase Agreement, a copy of which is filed as Exhibit 10.1 to this Report and incorporated herein by reference.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0"><B>Registration Rights Agreement</B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0"><B>&nbsp;</B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0">On the Closing Date, we entered into a Registration Rights Agreement
(the &ldquo;Registration Rights Agreement&rdquo;) with Grandparents.com, the Purchasers and John Thomas Financial, Inc. (&ldquo;JTF&rdquo;)
in which we agreed to file a registration statement (the &ldquo;Registration Statement&rdquo;) with the Securities and Exchange
Commission (&ldquo;SEC&rdquo;) to register for resale: (i) the shares of Common Stock issuable upon conversion of the Series A
Convertible Preferred Stock, (ii) the shares of Common Stock issuable upon conversion of the Series B Convertible Preferred Stock,
(iii) the shares of Common Stock issuable upon exercise of the GP Warrant, (iv) the shares of Common Stock issuable upon exercise
of a warrant to purchase 5,588,749 shares of Common Stock issued to JTF for its services as investment banking advisor to Grandparents.com
in connection with the Transaction, and (v) the shares of Common Stock issuable upon exercise of a warrant to purchase 1,289,711
shares of Common Stock issued to JTF for its services as placement agent in the Private Placement. Pursuant to the Registration
Rights Agreement, we agreed to file the Registration Statement as soon as practicable following the Closing Date but in no event
later than forty five (45) calendar days following the conversion of the Series A Convertible Preferred Stock and Series B Convertible
Preferred Stock.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0"><B>&nbsp;</B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0">The foregoing description of the Registration Rights Agreement and
the transactions contemplated thereby does not purport to be complete and is qualified in its entirety by reference to the provisions
of the Registration Rights Agreement, a copy of which is filed as Exhibit 10.2 to this Report and incorporated herein by reference.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0"><B>&nbsp;</B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0"><B>Lock-Up Agreements</B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0">On the Closing Date, we entered into separate lock-up agreements
(collectively, the &ldquo;Lock-Up Agreements&rdquo;) with each of Grandparents.com and JTF prohibiting them, for a period of twelve
(12) months from the Closing Date, from transferring or otherwise disposing any equity securities of the Company beneficially owned
by them. Notwithstanding the foregoing, Grandparents.com and JTF may transfer or dispose of such equity securities to certain &ldquo;permitted
transferees&rdquo; (as contemplated in the Lock-Up Agreements), provided that any such permitted transferees execute a lock-up agreement
in favor of the Company on substantially similar terms as the Lock-Up Agreements.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0">The Lock-Up Agreements will automatically terminate upon the final
closing of an offering of Common Stock or other equity interest of the Company for the account of the Company having a price per
share of at least $2.00 and resulting in at least $25,000,000 in gross proceeds (before underwriters&rsquo; discounts and selling
commissions) to the Company.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0">The foregoing description of the Lock-Up Agreements and the transactions
contemplated thereby does not purport to be complete and is qualified in its entirety by reference to the provisions of the Lock-Up
Agreement between the Company and Grandparents.com, a copy of which is filed as Exhibit 10.3 to this Report and incorporated herein
by reference, and the provisions of the Lock-Up Agreement between the Company and JTF, a copy of which is filed as Exhibit 10.4
to this Report and incorporated herein by reference.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0">&nbsp;</P>

<P STYLE="font: bold 10pt Times New Roman, Times, Serif; margin: 0">Promissory Notes</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0">Pursuant to the Contribution Agreement, on the Closing Date we entered
into unsecured promissory notes with certain of our newly appointed directors and officers with respect to certain liabilities
of Grandparents.com that we assumed in connection with the Transaction. Specifically, we entered into the following:</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0">&nbsp;</P>

<TABLE CELLPADDING="0" CELLSPACING="0" WIDTH="100%" STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0; margin-bottom: 0"><TR STYLE="vertical-align: top">
<TD STYLE="width: 0.25in"></TD><TD STYLE="width: 0.25in"><FONT STYLE="font-family: Symbol">&middot;</FONT></TD><TD>Amended and Restated Promissory Note in favor of Steven E. Leber, a Managing Director of Grandparents.com and newly appointed
director and executive officer of the Company, in the principal amount of $78,543 (the &ldquo;Leber Note&rdquo;). The Leber Note
reflects amounts outstanding under a promissory note previously issued by Grandparents.com to Mr. Leber and a revolving note
issued by Grandparents.com to Mr. Leber and Joseph Bernstein that we assumed in connection with the Transaction.</TD></TR></TABLE>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0 0 0 0.25in; text-indent: 0in">&nbsp;</P>

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<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0 0 0 0.25in; text-indent: 0in">&nbsp;</P>

<TABLE CELLPADDING="0" CELLSPACING="0" WIDTH="100%" STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0; margin-bottom: 0"><TR STYLE="vertical-align: top">
<TD STYLE="width: 0.25in"></TD><TD STYLE="width: 0.25in"><FONT STYLE="font-family: Symbol">&middot;</FONT></TD><TD>Amended and Restated Promissory Note in favor of Joseph Bernstein, a Managing Director of Grandparents.com and newly appointed
director and executive officer of the Company, in the principal amount of $78,543 (the &ldquo;Bernstein Note&rdquo;). The Bernstein Note reflects amounts outstanding under a promissory note previously
issued by Grandparents.com to Mr. Bernstein and a revolving note issued by Grandparents.com to Messrs. Leber and Bernstein that
we assumed in connection with the Transaction.</TD></TR></TABLE>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0; text-indent: 0in">&nbsp;</P>

<TABLE CELLPADDING="0" CELLSPACING="0" WIDTH="100%" STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0; margin-bottom: 0"><TR STYLE="vertical-align: top">
<TD STYLE="width: 0.25in"></TD><TD STYLE="width: 0.25in"><FONT STYLE="font-family: Symbol">&middot;</FONT></TD><TD>Amended and Restated Promissory Note in favor of Meadows Capital, LLC (&ldquo;Meadows&rdquo;), an entity controlled by Dr.
Robert Cohen, a Managing Director of Grandparents.com and newly appointed director of the Company, in the principal amount of $308,914<B>
</B>(the &ldquo;Meadows Note&rdquo;). The Meadows Note reflects amounts outstanding under promissory notes previously issued
by Grandparents.com to Meadows that we assumed in connection with the Transaction.</TD></TR></TABLE>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0; text-indent: 0in">&nbsp;</P>

<TABLE CELLPADDING="0" CELLSPACING="0" WIDTH="100%" STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0; margin-bottom: 0"><TR STYLE="vertical-align: top">
<TD STYLE="width: 0.25in"></TD><TD STYLE="width: 0.25in"><FONT STYLE="font-family: Symbol">&middot;</FONT></TD><TD>Promissory Note in favor of Leber-Bernstein Group, LLC, an entity controlled by Messrs. Leber and Bernstein (&ldquo;LBG&rdquo;),
in the principal amount of $612,500<B> </B>(the &ldquo;LBG Note&rdquo;). The LBG Note reflects the amount of accrued but unpaid
management fees of Grandparents.com payable to LBG that we assumed in connection with the Transaction.</TD></TR></TABLE>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0">The Leber Note, the Bernstein Note, the Meadows Note and the LBG
Note are collectively referred to herein as the &ldquo;Promissory Notes.&rdquo; The Promissory Notes accrue interest at the rate
of 5% per annum and mature upon the earlier of (i) the Company having EBITDA of at least $2,500,000 as reflected
on its quarterly or annual financial statements filed with the SEC, but in no event earlier than April 1, 2013, or (ii) the Company
closing a financing with gross proceeds to the Company of at least $10 million. Payment of the Promissory Notes is guaranteed by
Grandparents.com. In addition, payment of the Meadows Note is guaranteed by Messrs. Leber and Bernstein. The Leber Note, Bernstein
Note and LBG Note are subordinate in right of payment to the Meadows Note and rank pari passu with each other. The Meadows Note
is secured by a first priority security interest in the assets of Grandparents.com.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0">The foregoing descriptions of the Promissory Notes do not purport
to be complete and are qualified in their entireties by reference to the provisions of such Promissory Notes, copies of which are
filed as Exhibits 10.8, 10.9, 10.10 and 10.11 to this Report and incorporated herein by reference.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0"><B>John Thomas Financial Warrants</B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0">The Company issued to John Thomas Financial, Inc. (&ldquo;JTF&rdquo;),
as partial compensation for its advisory services to Grandparents.com in connection with the Transaction, a warrant to purchase
5,588,749 shares of Common Stock (the &ldquo;Advisory Warrant&rdquo;) and, as partial compensation for its services as the Company&rsquo;s
placement agent in connection with the Private Placement, a warrant to purchase 1,289,711 shares of Common Stock (the &ldquo;Placement
Agent Warrant&rdquo;). The Advisory Warrant and Placement Agent Warrant each have a term of five (5) years and an exercise price
of $0.23261 per share.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0">The foregoing descriptions of the Advisory Warrant and Placement
Agent Warrant do not purport to be complete and are qualified in their entireties by reference to the provisions of the Advisory
Warrant and Placement Agent Warrant, copies of which are filed as Exhibits 4.2 and 4.3 to this Report and incorporated herein by
reference.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0">&nbsp;</P>

<TABLE CELLPADDING="0" CELLSPACING="0" WIDTH="100%" STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0; margin-bottom: 0"><TR STYLE="vertical-align: top">
<TD STYLE="width: 0"></TD><TD STYLE="width: 0.75in"><B>Item 1.02</B></TD><TD><B>Termination of Material Definitive Agreement.</B></TD></TR></TABLE>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0">On the Closing Date and upon the closing of the Transaction, the
4% Senior Secured Note was cancelled and the Security Agreement and Trademark Security Agreement were terminated. The disclosure
in Item 1.01 of this Report regarding the Bridge Loan is incorporated herein by reference in its entirety.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0">&nbsp;</P>

<TABLE CELLPADDING="0" CELLSPACING="0" WIDTH="100%" STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0; margin-bottom: 0"><TR STYLE="vertical-align: top">
<TD STYLE="width: 0"></TD><TD STYLE="width: 0.75in"><B>Item 2.01</B></TD><TD><B>Completion of Acquisition or Disposition of Assets.</B></TD></TR></TABLE>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0">The disclosure in Item 1.01 of this Report regarding the Transaction
is incorporated herein by reference in its entirety.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0">We were a &ldquo;shell company&rdquo; (as defined in Rule 12b-2
under the Securities Exchange Act of 1934, as amended (the &ldquo;Exchange Act&rdquo;)) immediately before the closing of the Transaction.
Accordingly, pursuant to Item 2.01(f) of Form 8-K, we are providing below the information that we would be required to disclose
on Form 10 under the Exchange Act, if we were to file such form, reflecting our Common Stock, which is the only class of our securities
subject to the reporting requirements of Section 13 or Section 15(d) of the Exchange Act.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0">The information provided below relates to the Company and its securities
upon consummation of the Transaction, except that information relating to our new business and operations for periods prior to
the Transaction relates to Grandparents.com and its predecessors. Accordingly, references in this Item 2.01 to &ldquo;we,&rdquo;
&ldquo;us,&rdquo; &ldquo;our&rdquo; or &ldquo;the Company&rdquo; with respect to our new business for periods prior to the Transaction
refer to Grandparents.com and its predecessors.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0">&nbsp;</P>

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<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0">&nbsp;</P>

<P STYLE="font: bold 10pt Times New Roman, Times, Serif; margin: 0; text-align: center">DESCRIPTION OF BUSINESS</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0">&nbsp;</P>

<P STYLE="font: bold 10pt Times New Roman, Times, Serif; margin: 0">General</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0">Our website, www.grandparents.com, is a family-oriented social media
website with a core mission of enhancing relationships between the generations and enriching the lives of grandparents by providing
tools to foster connections among grandparents, parents and grandchildren. We primarily target the 70 million grandparents in
the U.S., but we also target the 50 million &ldquo;boomers&rdquo; and seniors that are not grandparents. We believe that our website
is one of the leading online communities for our market and that our website is the premier social media platform targeting active,
involved grandparents.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0">&nbsp;</P>

<P STYLE="font: bold 10pt Times New Roman, Times, Serif; margin: 0">Historical Information</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0">We were incorporated under the laws of Delaware in May 1996. Prior
to the sale of substantially all of our assets to Emerald Star Holdings, LLC (&ldquo;Emerald Star&rdquo;) on August 31, 2011, as
more fully described below, we were formerly a provider of specialty reference laboratory services to the pharmaceutical, biotechnology,
and diagnostics industries. Coupled with our specialty testing, we had central laboratory capability and provided full-service
central laboratory support for multi-center clinical trials, including routine safety lab tests. We also performed clinical biomarker
services for novel biomarkers, as well as custom assay services for our pharmaceutical and biotechnology clients.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0">On August 31, 2011 we sold all of our former business and
operating assets to Emerald Star and Emerald Star assumed substantially all of the liabilities related to such assets and our
former business. These liabilities included our accounts payable, obligations under our leases and contracts, tax
liabilities, the remaining obligations under our $4 million secured loan, and all employee-related liabilities. In addition,
upon closing of the asset sale, all of our employees were terminated and were hired as employees of Emerald Star. In
connection with the closing, we changed our corporate name to NorWesTech, Inc.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0">From September 1, 2011 until the Closing Date, we had no active
operations and our assets primarily consisted of the net cash proceeds we received from the sale of our former business and certain
dormant technology and intellectual property held by our subsidiaries. During this time, our primary focus was to seek an acceptable
operating company with which to complete a business combination.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0">On December 30, 2011, we entered into a non-binding letter of intent
with Grandparents.com regarding a proposed transaction. In connection with the non-binding letter of intent, we provided a $500,000
Bridge Loan to Grandparents.com secured by a first priority security interest in all of the assets of Grandparents.com, which was
assumed by us pursuant to the Transaction and then cancelled.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0">On February 23, 2012, we entered into the Asset Contribution Agreement
with Grandparents.com and consummated the Transaction pursuant to which Grandparents.com contributed substantially all of its assets
to us in exchange for our assumption of certain liabilities of Grandparents.com and our issuance to Grandparents.com of one (1)
share of our newly designated Series A Convertible Preferred Stock, which as of the Closing Date represented approximately 65%
of our issued and outstanding shares of Common Stock, on an as-converted basis of the Series A and Series B Convertible Preferred
Stock, and the GP Warrant. In addition, our former directors and officers resigned upon the closing of the Transaction and the
designees of Grandparents.com were appointed to fill the vacancies created by such resignations. As a result of the Transaction,
we now own and operate the www.grandparents.com website and own all of the related trademarks and intellectual property. <FONT STYLE="color: black; background-color: white">Immediately
following the Transaction, GP MergeCo, Inc., a wholly owned subsidiary of the Company, was merged with and into the Company and
in connection with the merger we changed our name to Grandparents.com, Inc. In connection with the closing of the Transaction,
we changed our corporate address to 589 Eighth Avenue, 6th Floor, New York, New York and our telephone number to 646-839-8800.</FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0"><FONT STYLE="background-color: white">&nbsp;</FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0">Grandparents.com was formed as a Florida limited liability company
on April 20, 2010, under the name of &ldquo;Grandparents Acquisition Company, LLC&rdquo; for the purpose of acquiring the grandparents.com
domain name, trademarks and related business assets from GPOC Holdings, LLC (&ldquo;GPOC&rdquo;). Pursuant to an Asset Purchase
Agreement by and between Grandparents.com and GPOC (the &ldquo;2010 Purchase Agreement&rdquo;), effective May 2010, Grandparents.com
acquired substantially all of the assets and assumed certain liabilities of GPOC in exchange for the issuance of 3,000,000 Class
A Units of Grandparents.com to GPOC, then representing a 30% ownership in Grandparents.com (the &ldquo;2010 Purchase Transaction&rdquo;).
In connection with the 2010 Purchase Agreement, the managing members of Grandparents.com received a 68% ownership interest in Grandparents.com
in exchange for the payment by them of transaction costs. In addition, in connection with the 2010 Purchase Agreement, a member
of GPOC contributed $250,000 in cash in exchange for a 2% ownership interest in Grandparents.com.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0">On February 23, 2012 and simultaneously with the closing of the
Transaction, we completed the Private Placement of 3,000,000 shares of our newly designated Series B Convertible Preferred Stock
for aggregate gross proceeds to the Company of $3,000,000.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0">&nbsp;</P>

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<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0">As of the Closing Date, we do not have a sufficient number
of authorized shares of Common Stock available for issuance upon the conversion of the Series A and Series B Preferred Stock
and other securities exercisable for shares of our Common Stock. As a result, we intend to file an amendment to our Second
Amended and Restated Certificate of Incorporation, as amended (the &ldquo;Certificate of Incorporation&rdquo;), to increase the
authorized number of shares of Common Stock to 150,000,000 shares (the &ldquo;Amendment&rdquo;). On
the Closing Date and immediately following the closings of the Transaction and Private Placement, our newly appointed Board of
Directors approved the Amendment and Grandparents.com, which then owned approximately 65% of the voting control of the Company,
approved, by written consent, the Amendment.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0">&nbsp;</P>

<P STYLE="font: bold 10pt Times New Roman, Times, Serif; margin: 0">Our Market</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0">Grandparents are one of the largest groups in the U.S. and are growing
exponentially. In 2011, the number of grandparents in the U.S. increased at more than double the rate of increase of the overall
population. Studies show that by 2020 there will be 80 million grandparents in the U.S., with one in every three adults being a
grandparent. Grandparents control approximately 50% of the nation&rsquo;s wealth and are one of the most powerful drivers of the
U.S. economy. In 2010, grandparents purchased $2 trillion of goods and services. Along with boomers and seniors, the age 50+ markets
include 120 million people who control 75% of the economy.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0">&nbsp;</P>

<P STYLE="font: bold 10pt Times New Roman, Times, Serif; margin: 0">Our Website</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0">Our website offers advice, recipes, travel tips and recommended
activities for grandparents, boomers and seniors. Members of our website have access to a range of features including groups, discussions,
blogs, photo sharing and video chat applications. Members also have access to discounts and other benefits offered through our
Grandparents.com Benefits Club. We also distribute a biweekly electronic newsletter that has attracted over 400,000 subscribers.
We also maintain a social network with dozens of groups and thousands of participants. In 2010, we had over 10 million
unique visitors to our website and Examiner.com ranked our website second among commercial websites serving the age 50+ demographic
markets. In January 2011, we launched the Grandparents.com Benefits Club through which our marketing partners offer
discounts and other benefits to our members on all a variety of consumer products and services. In the fourth quarter of 2011, we launched the Grandparents.com Online Book Shop which features over one
million book titles, including e-books, and approximately 400,000 CD/DVD&rsquo;s. We also have a Grandparents.com Jewelry Store
and Toy Shop.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0">Our website was initially launched in 2007 and was operated until
May 2010 by Grandparents.com&rsquo;s predecessor. Although Grandparents.com&rsquo;s predecessor spent great effort in developing
content and in researching the grandparent market, its focus on selling advertisements as its sole revenue stream could not sustain
the business. Since May 2010, Grandparents.com has focused on redesigning the website, attracting new members and developing new
revenue streams.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0">We are now focused on creating multiple revenue streams driven primarily
by the Grandparents.com Benefits Club. <FONT STYLE="font-size: 10pt; color: black"> </FONT>We expect to continue to nurture the
vertical grandparent-parent-grandchild niche on which the website was founded, however we believe substantial opportunity exists
to partner with marketing and commercial sponsors who wish to engage directly with our market through the Grandparents.com Benefits
Club<FONT STYLE="color: black">. We believe that our new focus will attract more visitors which we believe will in turn attract
more marketing and commercial sponsors which we expect will result in multiple new revenue streams.</FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0">As of December 31, 2011, we had approximately 400,000 email
newsletter subscribers. Subscribers to our newsletter do not enjoy the same benefits as members of our website. We are
offering free lifetime memberships to those subscribers. Our <FONT STYLE="color: black">growth strategy is also based, in
part, on an aggressive membership drive and celebrity endorsements that we hope to attract. Through our growth strategy, we
hope to increase our membership base to one million lifetime members by the end of 2012 and achieve over 20 million members
within the next ten years. To reach our goal for 2012, we intend to give away one million free lifetime memberships through
December 2012.</FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0"><FONT STYLE="color: black">In 2010, our</FONT> <FONT STYLE="color: black">website
averaged approximately 800,000 unique monthly visitors (an aggregate of approximately 10 million in 2010).</FONT> However, the
average of unique monthly visitors decreased in 2011 to approximately 500,000. In 2011, Grandparents.com significantly decreased
the marketing spend of its predecessor, which Grandparents.com&rsquo;s management believed did not result in meaningful visits
to its website. Instead, Grandparents.com focused in 2011 on obtaining an audience that was more engaged in the website. Under
that new strategy, Grandparents.com believes it received more meaningful page views per visit than its predecessor.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0">&nbsp;</P>

<P STYLE="font: bold 10pt Times New Roman, Times, Serif; margin: 0"><I>Website Redesign</I></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0">We are redesigning our website in an effort to attract a substantial
number of new members within the next year. <FONT STYLE="color: black">We</FONT> anticipate launching our redesigned website on
Grandparents Day, September 9, 2012. Until the launch of the redesigned website, our website will remain operational in its current
format. Our redesigned website will focus on the four actions we encourage members to take as they interact with our offerings:
<B>Learn, Discuss, Share, and Save</B>.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0">&nbsp;</P>

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<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0">&nbsp;</P>

<TABLE CELLPADDING="0" CELLSPACING="0" WIDTH="100%" STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0; margin-bottom: 0"><TR STYLE="vertical-align: top">
<TD STYLE="width: 0.25in"></TD><TD STYLE="width: 0.25in"><FONT STYLE="font-family: Symbol">&middot;</FONT></TD><TD><B><I>Learn</I></B> will encompass all of our editorial content, including feature articles, columns, recipes, activity ideas,
health and financial advice. Content will be &ldquo;pushed,&rdquo; or broadcast, beyond our website through Facebook, Twitter,
and our syndication partners to attract more visitors to our website. Our current syndication partnerships include AOL, Huffington
Post, Tribune, Meredith, Manhattan Media, and Yahoo Shine. All such partnerships are content swap based.</TD></TR></TABLE>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0; text-indent: 0.5in">&nbsp;</P>

<TABLE CELLPADDING="0" CELLSPACING="0" WIDTH="100%" STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0; margin-bottom: 0"><TR STYLE="vertical-align: top">
<TD STYLE="width: 0.25in"></TD><TD STYLE="width: 0.25in"><FONT STYLE="font-family: Symbol">&middot;</FONT></TD><TD><B><I>Discuss</I></B> will include our &ldquo;Groups&rdquo; community and user comments to articles posted on our website.
In Groups, thousands of users discuss important issues such as family conflict, grandparent rights, health and shared interests
such as religion, cooking, and special-needs grandchildren. We believe the redesigned website will improve this functionality by
allowing users to comment on articles using their Facebook accounts. Tying a user&rsquo;s membership login to that member&rsquo;s
Facebook account will enable us to simultaneously distribute our content on that user&rsquo;s Facebook page, which we believe will
attract the attention of the user&rsquo;s Facebook friends, and eventually drive more visitors to our website. Popular Facebook
comments and most-active group discussions will be promoted throughout our website which we believe will drive more people into
discussions and further encourage engagement within our user community.</TD></TR></TABLE>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0">&nbsp;</P>

<TABLE CELLPADDING="0" CELLSPACING="0" WIDTH="100%" STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0; margin-bottom: 0"><TR STYLE="vertical-align: top">
<TD STYLE="width: 0.25in"></TD><TD STYLE="width: 0.25in"><FONT STYLE="font-family: Symbol">&middot;</FONT></TD><TD><B><I>Share </I></B>will allow users to share photos and other mementos on &ldquo;Brag Boards.&rdquo; Built-in social-media
integration will make it simple for users to extend their &ldquo;Shares&rdquo; to their outside networks.</TD></TR></TABLE>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0">&nbsp;</P>

<TABLE CELLPADDING="0" CELLSPACING="0" WIDTH="100%" STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0; margin-bottom: 0"><TR STYLE="vertical-align: top">
<TD STYLE="width: 0.25in"></TD><TD STYLE="width: 0.25in"><FONT STYLE="font-family: Symbol">&middot;</FONT></TD><TD><B><I>Save </I></B>will<I> </I>incorporate the Grandparents.com Benefits Club, Book Shop, Jewelry Store, Toy Store, Image
                                                                                                               Store and other initiatives, including discounts and cash rebates on products. We intend to expand the reach of the
                                                                                                               Grandparents.com Benefits Club by syndicating membership through other websites.</TD></TR></TABLE>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0">&nbsp;</P>

<P STYLE="font: bold 10pt Times New Roman, Times, Serif; margin: 0"><I>Grandparents.com Benefits Club</I></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0">The Grandparents.com Benefits Club offers discounts and other benefits
to our members on a variety of consumer products and services including insurance, financial and other products and services provided
by our marketing partners. Marketing partners are asked to provide deals on their products or services that are better than they
otherwise provide on the Internet. We expect that the Benefits Club will eventually provide discounts on a variety of insurance
products (life, health, disability, property, casualty, auto, travel) and financial products (annuities, personal investments,
mutual funds, mortgages, reverse mortgages, retirement plans), travel (safaris, bike tours, cruises, hotels, car rentals), entertainment,
dining, and online shopping (jewelry, toys, apparel, gifts, etc.). In order to initially attract marketing partners to our Benefits
Club, we deferred executing revenue sharing agreements with our marketing partners. This strategy enabled Grandparents.com to engage
over 250 marketing partners as of December 31, 2011 with whom we maintain a direct relationship.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0">We offer our marketing partners exposure for their deals and giveaways
on our website, our newsletter, on Facebook and through Twitter. The newsletter is sent twice-weekly each Tuesday and Thursday
to our approximately 400,000 subscribers. Our Facebook promotions are viewable daily by our approximately 17,000 fans. Our daily
tweets are viewable by our approximately 4,500 followers. Additional website &ldquo;real estate&rdquo; is reserved for deals and
giveaway promotions on our home page as well as on the site-wide right rail promotional space. To maintain a more regular flow
of repeat traffic to the Benefits Club area, we promote products and services that members can purchase more often (books, gifts,
jewelry, toys, apparel, vitamins, eyewear, flowers, and more). We also promote travel partners (hotels, cruise ships, car rentals),
entertainment opportunities (theaters, circuses, and amusement parks) and education services (for both adults and children).</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0">The Benefits Club business model is similar to that of AARP Services,
Inc., a marketing arm of AARP. AARP is the largest membership organization in the U.S., and its affiliates serve approximately
40 million members with discounts on insurance, financial, travel, health and other products and services. According to AARP, AARP
Services, Inc. and its affiliates generated more than $10 billion dollars in 2010 in sales for its marketing partners, including
United Healthcare, New York Life, The Hartford, Aetna, Genworth Financial, MetLife, JPMorganChase and Charles Schwab, and received
approximately $1 billion dollars in 2010 from various sources, including approximately $680 million in commercial royalties and
approximately $247 million in annual membership fees. According to AARP, these figures represent in excess of $250 per member per
year in gross revenues generated by AARP for its marketing partners and approximately $17 per member in commercial royalties. Currently,
AARP charges a fee of $16 for an annual membership, including a spouse or significant other. We are not a social welfare advocate
or lobbyist organization and do not take a position on political or social issues.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0">We seek to apply the AARP business model to our business by engaging
marketing partners, particularly in the insurance and financial industries, in a strategic relationship in which our website will
become a co-brand for marketing insurance and financial products. The lines we intend to market will include traditional insurance
products &ndash; health, life, personal lines and specialty, and over time, we plan to also market family-oriented insurance products,
with family discounts.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0">&nbsp;</P>

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<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0">We believe that AARP&rsquo;s exclusivity (only a handful of insurance
companies are permitted to offer their product lines to AARP&rsquo;s 40 million members) creates an opportunity for us to develop
relationships with insurance and financial service companies that do not do business with AARP and that are interested in increasing
their market share in the age 50+ market by associating with us. We believe we can become a meaningful marketing force in the age
50+ markets by teaming with insurance companies and financial institutions who are not currently exclusive sponsors at AARP. We
anticipate, in the same manner that AARP&rsquo;s exclusive marketing partners work with AARP, that our sponsors will market their
co-branded insurance products in a campaign designed to drive prospective buyers in the age 50+ markets to conversion by becoming
members of our website.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0">We have entered into initial discussions with a select number of
national insurance companies focused on the lines we plan to make available to our members &ndash; primarily health, life, long
term care, auto and home. We have also entered into initial discussions with a major financial services company to offer annuity,
mutual fund, retirement planning and other financial products and services through us. We have not entered into any formal agreements
with any insurance or financial services companies as of the Closing Date.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0">&nbsp;</P>

<P STYLE="font: bold 10pt Times New Roman, Times, Serif; margin: 0"><I>Grandparents.com Online Book Shop</I></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0">In the fourth quarter of 2011, Grandparents.com launched the Grandparents.com
Online Book Shop. The Book Shop features over one million book titles, including e-books, and approximately 400,000 CD/DVD&rsquo;s.
All order fulfillment is done by Baker-Taylor Ltd., the largest independent wholesale book distributor in the U.S., under our name.
We receive a commission of 3.5% of all sales. We expect the Book Shop to compete with major online booksellers.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0">&nbsp;</P>

<P STYLE="font: bold 10pt Times New Roman, Times, Serif; margin: 0">Our Revenue Streams</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0">Historically, Grandparents.com generated revenue through the sale
of advertisements on its website. We intend to expand our revenue streams to include royalties on offerings by our insurance, financial
services and other marketing partners in the Grandparents.com Benefits Club, commissions on book sales in the Grandparents.com
Online Book Shop and, in the future, from membership fees.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0">&nbsp;</P>

<P STYLE="font: bold 10pt Times New Roman, Times, Serif; margin: 0"><I>Benefits Club</I></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0">We have not yet generated any revenue through the Benefits Club.
In 2011, in order to accelerate the buildup of marketing partners in the Benefits Club, we accepted pilot programs and waived revenue
sharing arrangements for our partners. Through this pilot program, we attracted more than 250 marketing partners as of December
31, 2011. As we build our audience and membership base, we will seek to enter into revenue sharing arrangements with our marketing
partners. We expect that each revenue sharing arrangement will be negotiated based on the category of the product and service and
the accompanying discount or benefits offered to our members. There can be no guarantee that we will be able to enter into revenue
sharing arrangements with our marketing partners or that, if we are, the terms of such arrangements will be on terms advantageous
to us. To the extent we are able to enter into revenue sharing agreements with our marketing partners, revenues,
if any, from such arrangements may be limited in the near term.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0">We intend to increase traffic to the Benefits Club through affiliate
marketing partnerships. These newly-created partnerships will be incentivized to promote the Benefits Club on their own websites
by a revenue share. We expect that partner sites generating sales through their own traffic-driving efforts will be entitled to
receive a to-be-determined percentage of the revenues earned from such sales.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0">&nbsp;</P>

<P STYLE="font: bold 10pt Times New Roman, Times, Serif; margin: 0"><I>On-Site Advertising</I></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0">We will continue to actively pursue advertising from companies that
target the 50+ market. Advertisers on our website have included AARP, Abbott Labs, Aetna, American Greetings, American Express,
Ancestry.com, ASPCA, AstraZeneca Global, Bank of America, Blue Cross Blue Shield, Chase, Boston Market, Chrysler, Colonial Williamsburg,
Disney, Dodge, Fidelity, Hallmark, Hasbro, Johnson &amp; Johnson, Kellogg&rsquo;s, Leapfrog, Lincoln Financial Group, Procter &amp;
Gamble, Penguin Publishing, Pepsi, Playskool, Princess Cruises, Ralph Lauren, Random House, Royal Caribbean International, Sesame
Street, Texas Tourism, United Healthcare, and Wyndham Hotels &amp; Resorts. In the past two years, Grandparents.com&rsquo;s largest
advertisers have been Goldman Sachs and Abbott Labs. During 2011, Grandparents.com&rsquo;s average CPM (cost per thousand views)
rate for all of its advertisements was $3.72.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0">&nbsp;</P>

<P STYLE="font: bold 10pt Times New Roman, Times, Serif; margin: 0"><I>Membership Fees</I></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0">We intend to give away one million lifetime memberships through 2012.
Promotional codes to receive free lifetime memberships will be made available to our newsletter subscribers and certain groups
and organizations and through marketing partnerships. In the future, we intend to charge new members an annual fee for membership,
which would include up to four household and extended family members.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0">&nbsp;</P>

<P STYLE="font: bold 10pt Times New Roman, Times, Serif; margin: 0"><I>Online Book Shop</I></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0">We receive a commission of 3.5% of all sales in the Book Shop. We
expect the Book Shop to compete with major online booksellers.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0">&nbsp;</P>

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<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0">&nbsp;</P>

<P STYLE="font: bold 10pt Times New Roman, Times, Serif; margin: 0"><I>Content Syndication</I></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0">We syndicate content from time to time to other major sites or portals
that reach our demographic and we are working to expand this initiative in 2012. We believe this strategy broadens the reach of
our website and establishes our website as the authority on &ldquo;grandparenting.&rdquo; Through syndication, we believe our website
gains attention as a place for content on all things that relate to grandparents. We seek to convert first-time visitors to newsletter
subscribers and members of our website. Some of Grandparents.com&rsquo;s recent content-exchange relationships have been with AOL/Huffington
Post, Tribune newspapers, and Yahoo.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0">&nbsp;</P>

<P STYLE="font: bold 10pt Times New Roman, Times, Serif; margin: 0">Marketing Strategy</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0">Viral marketing and celebrity endorsements will be the foundation
for growing our membership base over the next several years. Growth of our membership base is dependent on our ability to solicit
significant marketing dollars from our marketing partners and to effectively allocate marketing efforts on television, print, Internet
and other media, and to attract celebrities. Off site advertising and public relations is important to drive prospective members
to our website. In 2012, we will be giving free memberships to up to one million members. Thereafter, we intend to provide members
with incentives and benefits for signups.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0">In order to pursue accelerated membership growth, and concomitantly
the development of <FONT STYLE="color: black">our</FONT> royalty revenue base from our marketing partners, <FONT STYLE="color: black">we
believe we </FONT>must engage in a broad public relations and viral marketing campaign in 2012, and continue the program going
forward.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0"><FONT STYLE="color: black">In addition to our website, we</FONT>
plan to market insurance plans through the following channels, with the marketing budget allocations and placements to be agreed
upon with each insurance partner&rsquo;s marketing agency:</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0 0 0 0.5in">1. Television and radio</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0 0 0 0.5in">2. Internet - Age 50+ sites and various sites of particular
interest to this segment</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0 0 0 0.5in">3. Insurance agencies and independent agents nationwide</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0 0 0 0.5in">4. Print - Newspapers, magazines</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0 0 0 0.5in">5. Direct Mail - Subscriber and acquired lists</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0 0 0 0.5in">6. Groups - Unions, corporations, associations, membership
groups</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0">&nbsp;</P>

<P STYLE="font: bold 10pt Times New Roman, Times, Serif; margin: 0"><I>Social Media Marketing</I></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0">Social media activity is a key component in driving visitors to
our website and increasing our membership base.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0">&nbsp;</P>

<P STYLE="font: italic 10pt Times New Roman, Times, Serif; margin: 0">Facebook</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0">&nbsp;</P>

<TABLE CELLPADDING="0" CELLSPACING="0" WIDTH="100%" STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0; margin-bottom: 0"><TR STYLE="vertical-align: top">
<TD STYLE="width: 0.25in"></TD><TD STYLE="width: 0.25in"><FONT STYLE="font-family: Symbol">&middot;</FONT></TD><TD>Facebook is used to attract visitors to our website and new members of the Benefits Club. Each Facebook user who clicks
                                                                                                               on our website advertisement and that is not recognized as &ldquo;friend&rdquo; on Facebook will be asked to
                                                                                                               &ldquo;Like&rdquo; our website on Facebook and receive a free trial membership to the Benefits Club. Once a person
                                                                                                               &ldquo;Likes&rdquo; our website on Facebook, he or she receives a new deal and giveaway promotion each day in their
                                                                                                               newsfeed.</TD></TR></TABLE>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0">&nbsp;</P>

<TABLE CELLPADDING="0" CELLSPACING="0" WIDTH="100%" STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0; margin-bottom: 0"><TR STYLE="vertical-align: top">
<TD STYLE="width: 0.25in"></TD><TD STYLE="width: 0.25in"><FONT STYLE="font-family: Symbol">&middot;</FONT></TD><TD>Content from our website and from around the Internet is posted on our Facebook Wall multiple times a day and Facebook reports
that our fans are highly engaged with the posts on our Facebook Wall, meaning they click on, comment on and repost them consistently
each day. We use our Facebook page to cross-promote the products and services of our marketing partners in exchange for their help
driving traffic to the Benefits Club by their own means.</TD></TR></TABLE>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0">Since Grandparents.com began marketing the Benefits Club on Facebook
on June 1, 2011, its engagement there has<B> </B>grown from:</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0">&nbsp;</P>

<TABLE CELLPADDING="0" CELLSPACING="0" WIDTH="100%" STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0; margin-bottom: 0"><TR STYLE="vertical-align: top">
<TD STYLE="width: 0.25in"></TD><TD STYLE="width: 0.25in"><FONT STYLE="font-family: Symbol">&middot;</FONT></TD><TD>4,400 average monthly active users before June 2011 to more than 12,000 average monthly active users as of December 2011 &ndash;
a 173% increase.</TD></TR></TABLE>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0; text-indent: 0in">&nbsp;</P>

<TABLE CELLPADDING="0" CELLSPACING="0" WIDTH="100%" STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0; margin-bottom: 0"><TR STYLE="vertical-align: top">
<TD STYLE="width: 0.25in"></TD><TD STYLE="width: 0.25in"><FONT STYLE="font-family: Symbol">&middot;</FONT></TD><TD>12,640 daily post views before June 2011 to approximately 27,500 daily post views as of December 31, 2011 &ndash; an over 200%
increase.</TD></TR></TABLE>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0">Further:</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0">&nbsp;</P>

<TABLE CELLPADDING="0" CELLSPACING="0" WIDTH="100%" STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0; margin-bottom: 0"><TR STYLE="vertical-align: top">
<TD STYLE="width: 0.25in"></TD><TD STYLE="width: 0.25in"><FONT STYLE="font-family: Symbol">&middot;</FONT></TD><TD>We have a 10.6% engagement rate (the number of people interacting with our Facebook page over number of total page &ldquo;Likes&rdquo;).
By comparison, AARP&rsquo;s engagement rate hovers around 5%, according to the same metrics posted by Facebook.</TD></TR></TABLE>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0; text-indent: 0in">&nbsp;</P>

<TABLE CELLPADDING="0" CELLSPACING="0" WIDTH="100%" STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0; margin-bottom: 0"><TR STYLE="vertical-align: top">
<TD STYLE="width: 0.25in"></TD><TD STYLE="width: 0.25in"><FONT STYLE="font-family: Symbol">&middot;</FONT></TD><TD>We post at least four times a day during the week and at least once a day during the weekends.</TD></TR></TABLE>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0; text-indent: 0in">&nbsp;</P>

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<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0; text-indent: 0in">&nbsp;</P>

<TABLE CELLPADDING="0" CELLSPACING="0" WIDTH="100%" STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0; margin-bottom: 0"><TR STYLE="vertical-align: top">
<TD STYLE="width: 0.25in"></TD><TD STYLE="width: 0.25in"><FONT STYLE="font-family: Symbol">&middot;</FONT></TD><TD>Our 11am-to-noon slot (the most popular reading time for our audience on Facebook) is always dedicated to an article or Benefits
Club deal.</TD></TR></TABLE>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0; text-indent: 0in">&nbsp;</P>

<P STYLE="font: italic 10pt Times New Roman, Times, Serif; margin: 0">Twitter</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0">&nbsp;</P>

<TABLE CELLPADDING="0" CELLSPACING="0" WIDTH="100%" STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0; margin-bottom: 0"><TR STYLE="vertical-align: top">
<TD STYLE="width: 0.25in"></TD><TD STYLE="width: 0.25in"><FONT STYLE="font-family: Symbol">&middot;</FONT></TD><TD>We use our Twitter feed as a business-to-business platform, meaning that we &ldquo;tweet&rdquo; specifically to the brands
we want to partner with for the Benefits Club. We believe our engagement via Twitter is often more effective in getting the attention
of a potential marketing partner than through traditional channels.</TD></TR></TABLE>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0">&nbsp;</P>

<TABLE CELLPADDING="0" CELLSPACING="0" WIDTH="100%" STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0; margin-bottom: 0"><TR STYLE="vertical-align: top">
<TD STYLE="width: 0.25in"></TD><TD STYLE="width: 0.25in"><FONT STYLE="font-family: Symbol">&middot;</FONT></TD><TD>We tweet all of our giveaways daily and tweet about our content twice a day.</TD></TR></TABLE>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0">Since we began actively using Twitter to form marketing partnerships<B>
</B>on July 11, 2011, we have achieved a 1.252% increase in followers from<B> </B>326 to approximately 4,500 followers.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0">Further:</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0">&nbsp;</P>

<TABLE CELLPADDING="0" CELLSPACING="0" WIDTH="100%" STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0; margin-bottom: 0"><TR STYLE="vertical-align: top">
<TD STYLE="width: 0.25in"></TD><TD STYLE="width: 0.25in"><FONT STYLE="font-family: Symbol">&middot;</FONT></TD><TD>Twitter reports that each of our tweets garners an average of more than 2,000 impressions.</TD></TR></TABLE>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0">&nbsp;</P>

<TABLE CELLPADDING="0" CELLSPACING="0" WIDTH="100%" STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0; margin-bottom: 0"><TR STYLE="vertical-align: top">
<TD STYLE="width: 0.25in"></TD><TD STYLE="width: 0.25in"><FONT STYLE="font-family: Symbol">&middot;</FONT></TD><TD>Twitter reports that our presence ranks within the top 1% of all users.</TD></TR></TABLE>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0">&nbsp;</P>

<TABLE CELLPADDING="0" CELLSPACING="0" WIDTH="100%" STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0; margin-bottom: 0"><TR STYLE="vertical-align: top">
<TD STYLE="width: 0.25in"></TD><TD STYLE="width: 0.25in"><FONT STYLE="font-family: Symbol">&middot;</FONT></TD><TD>Tweet content includes Benefits Club deals and giveaways, recipes, and articles.</TD></TR></TABLE>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0; text-indent: 0in">&nbsp;</P>

<P STYLE="font: italic 10pt Times New Roman, Times, Serif; margin: 0">YouTube</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0">&nbsp;</P>

<TABLE CELLPADDING="0" CELLSPACING="0" WIDTH="100%" STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0; margin-bottom: 0"><TR STYLE="vertical-align: top">
<TD STYLE="width: 0.25in"></TD><TD STYLE="width: 0.25in"><FONT STYLE="font-family: Symbol">&middot;</FONT></TD><TD>Total upload views: 4,677,765 since December 31, 2009.</TD></TR></TABLE>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0">&nbsp;</P>

<TABLE CELLPADDING="0" CELLSPACING="0" WIDTH="100%" STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0; margin-bottom: 0"><TR STYLE="vertical-align: top">
<TD STYLE="width: 0.25in"></TD><TD STYLE="width: 0.25in"><FONT STYLE="font-family: Symbol">&middot;</FONT></TD><TD>Our website became an official YouTube partner as of December 31, 2011.</TD></TR></TABLE>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0">&nbsp;</P>

<TABLE CELLPADDING="0" CELLSPACING="0" WIDTH="100%" STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0; margin-bottom: 0"><TR STYLE="vertical-align: top">
<TD STYLE="width: 0.25in"></TD><TD STYLE="width: 0.25in"><FONT STYLE="font-family: Symbol">&middot;</FONT></TD><TD>We intend to implement a bi-monthly YouTube video submission contest with each contest having a new theme. The best video clips
submitted will be edited into a compilation video which we will promote on our website and our other social-media outlets.
Winners will receive various prizes for each contest.</TD></TR></TABLE>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0">&nbsp;</P>

<P STYLE="font: bold 10pt Times New Roman, Times, Serif; margin: 0">Grandparents.com and Satellite Traffic Statistics</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0">As of December 31, 2011, Grandparents.com increased the total number
of people who come in contact directly with our website or hear about our website through their friends by 50% via social media.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0">&nbsp;</P>

<TABLE CELLPADDING="0" CELLSPACING="0" WIDTH="100%" STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0; margin-bottom: 0"><TR STYLE="vertical-align: top">
<TD STYLE="width: 0.25in"></TD><TD STYLE="width: 0.25in"><FONT STYLE="font-family: Symbol">&middot;</FONT></TD><TD>Our homepage had 506,000 average unique visitors per month in 2011</TD></TR></TABLE>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0">&nbsp;</P>

<TABLE CELLPADDING="0" CELLSPACING="0" WIDTH="100%" STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0; margin-bottom: 0"><TR STYLE="vertical-align: top">
<TD STYLE="width: 0.25in"></TD><TD STYLE="width: 0.25in"><FONT STYLE="font-family: Symbol">&middot;</FONT></TD><TD>Our Facebook page had 27,500 average daily post views as of December 31, 2011.</TD></TR></TABLE>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0">&nbsp;</P>

<TABLE CELLPADDING="0" CELLSPACING="0" WIDTH="100%" STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0; margin-bottom: 0"><TR STYLE="vertical-align: top">
<TD STYLE="width: 0.25in"></TD><TD STYLE="width: 0.25in"><FONT STYLE="font-family: Symbol">&middot;</FONT></TD><TD>Our Twitter account had 4,405 followers on December 31, 2011.</TD></TR></TABLE>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0">&nbsp;</P>

<TABLE CELLPADDING="0" CELLSPACING="0" WIDTH="100%" STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0; margin-bottom: 0"><TR STYLE="vertical-align: top">
<TD STYLE="width: 0.25in"></TD><TD STYLE="width: 0.25in"><FONT STYLE="font-family: Symbol">&middot;</FONT></TD><TD>Our YouTube channel had more than 4.9 million video views as of December 31, 2011.</TD></TR></TABLE>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0">&nbsp;</P>

<P STYLE="font: bold 10pt Times New Roman, Times, Serif; margin: 0">Sales, Marketing and Customer Support</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0">For advertising sales, direct and outsourced sales teams focus on
advertising agencies, large brand advertisers and performance advertisers that want to target the age 50+ market. We use our marketing
solutions to launch and manage their advertising campaigns.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0">We have been able to build our brand with relatively low marketing
costs. The quality of the products and solutions we offer is our most effective marketing tool, and word-of-mouth momentum continues
to drive member awareness and trust.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0">&nbsp;</P>

<P STYLE="font: bold 10pt Times New Roman, Times, Serif; margin: 0">Technology Infrastructure</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0">Our website&rsquo;s technology platform is designed to create an
engaging experience for members of our website. We are working to scale the site in order to deploy it for the surge in membership
we anticipate will occur as we announce new social media products and services and new business relationships and strategic alliances.
We intend to employ technological innovations whenever possible to increase efficiency and to be able to properly scale our business.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0">&nbsp;</P>

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<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0">Our offerings rely upon and leverage the massive amounts of data
in our network. This dataset has grown exponentially, requiring scalable computing resources. We will continue to invest in building
proprietary technologies and using open sourced technologies around its data, search and solutions whenever possible.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0; text-indent: 0in"><B>Operations</B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0; text-indent: 0in"><B>&nbsp;</B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0">We developed our website and related infrastructure with the goal
of maximizing the availability of our website to our members and marketing partners. Our website and related infrastructure, content
management system and data storage are hosted by, and the material data center facilities are provided by, Amazon pursuant to a
master service agreement we maintain with our web and content management system developer, Mediapolis, Inc.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0">Our website is hosted in the Amazon Cloud in two geographically
different Amazon server centers in Virginia. Each of these two &ldquo;instances&rdquo; of the website has both the content database
as well as the content management system with one version of the database used to power the site and the other as a backup. These
two copies of the database are maintained automatically such that when any data is changed on the site, the master database automatically
updates it to the back-up version. Any change to the content management system is made manually to both instances. In addition
to this fully redundant serving of the site, a complete backup of both the database and content management system are made each
evening to a server at another Amazon center in Virginia.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0">&nbsp;</P>

<P STYLE="font: bold 10pt Times New Roman, Times, Serif; margin: 0">Intellectual Property</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0">We protect our intellectual property rights by relying on federal,
state and common law rights, as well as contractual restrictions. We control access to our proprietary technology, in part, by
entering into confidentiality and invention assignment agreements with our employees and contractors, and confidentiality agreements
with third parties.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0">In addition to these contractual arrangements, we also rely on a
combination of trade secret, copyright, trademark and trade dress to protect our intellectual property. We pursue the registration
of our domain names, trademarks, and service marks in the U.S. Our registered trademarks in the U.S. include &ldquo;Grandparents.com&rdquo;
and the &ldquo;Grandparents.com It&rsquo;s great to be grand&rdquo; design mark, as well as others.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0">Circumstances outside our control could pose a threat to our intellectual
property rights. For example, effective intellectual property protection may not be available in the U.S. or other countries in
which our products and solutions are or may in the future be distributed. Also, the efforts taken to protect our proprietary rights
may not be sufficient or effective. Any significant impairment of our intellectual property rights could harm our business or its
ability to compete. Also, protecting such intellectual property rights may be costly and time-consuming. Any unauthorized disclosure
or use of our intellectual property could make it more expensive to do business and harm operating results.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0">Companies in the Internet, social media technology and other industries
may own large numbers of patents, copyrights, and trademarks and may frequently request license agreements, threaten litigation,
or file suit against other companies based on allegations of infringement or other violations of intellectual property rights.
There are no such claims against us and none are threatened as of the date hereof.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0">&nbsp;</P>

<P STYLE="font: bold 10pt Times New Roman, Times, Serif; margin: 0">Competition</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0">We face significant competition in all aspects of our business.
Specifically, we compete for members, advertisers and partners. The bases upon which we compete differ among these areas as discussed
below.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0">&nbsp;</P>

<TABLE CELLPADDING="0" CELLSPACING="0" WIDTH="100%" STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0; margin-bottom: 0"><TR STYLE="vertical-align: top">
<TD STYLE="width: 0.25in"></TD><TD STYLE="width: 0.25in"><FONT STYLE="font-family: Symbol">&middot;</FONT></TD><TD><B>Members.</B> We have modeled our Benefits Club in part after our principal competitor, the AARP member benefits program.
AARP has approximately 40 million members and greater financial and other resources than we have. There are other sites seeking
to grow in the age 50+ markets, including the 60 Plus Association, American Seniors Association, and The Association of Mature
American Citizens. Other
companies such as Facebook, Google, Microsoft and Twitter could develop competing offerings. These companies also could partner
with third parties to offer products and services that could compete with the products and services we offer. We intend to compete
primarily on the basis of the value and relevance of the products for our members, ease of use and availability of our website.</TD></TR></TABLE>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0">&nbsp;</P>

<TABLE CELLPADDING="0" CELLSPACING="0" WIDTH="100%" STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0; margin-bottom: 0"><TR STYLE="vertical-align: top">
<TD STYLE="width: 0.25in"></TD><TD STYLE="width: 0.25in"><FONT STYLE="font-family: Symbol">&middot;</FONT></TD><TD><B>Advertising and Marketing.</B> With respect to advertising, we compete with online and offline outlets that generate revenue
from advertisers and marketers. In this area, we compete to attract and retain advertisers by giving them access to the most relevant
and targeted audiences for their products or services.</TD></TR></TABLE>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0">&nbsp;</P>

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<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0">Other companies could develop
more compelling offerings that compete with our website and adversely impact our ability to obtain and retain our members.
Additionally, companies that currently focus primarily on social networking could expand into our space or users of social networks
could choose to use, or increase the use of, those networks.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0">We believe that we have competitive strengths that position us favorably
in our markets, particularly our URL, grandparents.com. However, our industry is evolving rapidly and is becoming increasingly
competitive. Larger and more established companies may focus on the age 50+ market and could directly compete with us.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0">&nbsp;</P>

<P STYLE="font: bold 10pt Times New Roman, Times, Serif; margin: 0">Government Regulation</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0">We are subject to a number of foreign and domestic laws and regulations
that affect companies conducting business on the Internet, many of which are still evolving and could be interpreted in ways that
could harm our business. In the U.S. and abroad, laws relating to the liability of providers of online services for activities
of their users and other third parties are currently being tested by a number of claims, including actions based on invasion of
privacy and other torts, unfair competition, copyright and trademark infringement, and other theories based on the nature and content
of the materials searched, the ads posted, or the content provided by users. Any court ruling or other governmental action that
imposes liability on providers of online services for the activities of their users and other third parties could harm our business.
In addition, rising concern about the use of social networking technologies for illegal conduct, such as the unauthorized dissemination
of national security information, money laundering or supporting terrorist activities may in the future produce legislation or
other governmental action that could require changes to our products or services, restrict or impose additional costs upon the
conduct of our business or cause users to abandon material aspects of our service.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0">In the area of information security and data protection, many states
have passed laws requiring notification to users when there is a security breach for personal data, such as the 2002 amendment
to California&rsquo;s Information Practices Act, or requiring the adoption of minimum information security standards that are often
vaguely defined and difficult to practically implement. The costs of compliance with these laws may increase in the future as a
result of changes in interpretation. Furthermore, any failure on our part to comply with these laws may subject us to significant
liabilities.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0">We are also subject to federal, state and foreign laws
regarding privacy and protection of member data. We post our privacy policy and user agreement on our website which
describe practices concerning the use, transmission and disclosure of member data. Any failure by us to comply with our
posted privacy policy or privacy related laws and regulations could result in proceedings against us by governmental
authorities or others, which could harm our business. In addition, the interpretation of data protection laws, and their
application to the Internet is unclear and in a state of flux. There is a risk that these laws may be interpreted and applied
in conflicting ways from state to state, country to country, or region to region, and in a manner that is not consistent with
our data protection practices. Complying with these varying international requirements could cause us to incur additional
costs and change our business practices. Further, any failure by us to adequately protect our members&rsquo; privacy and data
could result in a loss of member confidence in our services and ultimately in a loss of members, which could
adversely affect our business.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0">In addition, because our services are accessible worldwide, certain
foreign jurisdictions may claim that we are required to comply with their laws, including jurisdictions
where we have no local entity, employees or infrastructure.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0">&nbsp;</P>

<P STYLE="font: bold 10pt Times New Roman, Times, Serif; margin: 0">Employees</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0">We believe we have assembled a talented group of employees and we
strive to hire the best employees to solve very significant challenges. As of the Closing Date, we had fifteen (15) employees and
a number of interns. We intend to increase staffing in our internal audit and financial reporting functions to comply with our
increased public company reporting obligations, management functions and in other areas commensurate with the success of our marketing
programs and marketing partnerships.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0">&nbsp;</P>

<P STYLE="font: bold 10pt Times New Roman, Times, Serif; margin: 0; text-align: center">RISK FACTORS</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0">&nbsp;</P>

<P STYLE="font: italic 10pt Times New Roman, Times, Serif; margin: 0">An investment in our Common Stock involves a high degree
of risk. You should carefully consider the risks described below, together with all of the other information included in this Report,
before making an investment decision. If any of the following risks actually occurs, our business, financial condition or results
of operations could suffer. In that case, the trading price of our shares of Common Stock could decline and you may lose all or
part of your investment. See &ldquo;Cautionary Note Regarding Forward Looking Statements&rdquo; above for a discussion of forward-looking
statements and the significance of such statements in the context of this Report.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0">&nbsp;</P>

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<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0">&nbsp;</P>

<P STYLE="font: bold 10pt Times New Roman, Times, Serif; margin: 0">Risks Related to our Business and Industry</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0">&nbsp;</P>

<P STYLE="font: bold 10pt Times New Roman, Times, Serif; margin: 0"><I>We may encounter numerous difficulties frequently encountered
by companies in the early stage of operations.</I></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0">We have a limited operating history upon which any investor may
evaluate our current business and future prospects. Any potential investor must consider the risks and difficulties frequently
encountered by early-stage companies. Historically, there has been a high failure rate among early-stage companies. Our future
performance will depend upon a number of factors, including our ability to:</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0">&nbsp;</P>

<TABLE CELLPADDING="0" CELLSPACING="0" WIDTH="100%" STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0; margin-bottom: 0"><TR STYLE="vertical-align: top">
<TD STYLE="width: 0.25in"></TD><TD STYLE="width: 0.25in"><FONT STYLE="font-family: Symbol">&middot;</FONT></TD><TD>generate revenues and implement our growth strategy;</TD></TR></TABLE>

<TABLE CELLPADDING="0" CELLSPACING="0" WIDTH="100%" STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0; margin-bottom: 0"><TR STYLE="vertical-align: top">
<TD STYLE="width: 0.25in"></TD><TD STYLE="width: 0.25in"><FONT STYLE="font-family: Symbol">&middot;</FONT></TD><TD>aggressively counter and respond to actions by our competitors;</TD></TR></TABLE>

<TABLE CELLPADDING="0" CELLSPACING="0" WIDTH="100%" STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0; margin-bottom: 0"><TR STYLE="vertical-align: top">
<TD STYLE="width: 0.25in"></TD><TD STYLE="width: 0.25in"><FONT STYLE="font-family: Symbol">&middot;</FONT></TD><TD>pursue new users and members of our website and maintain relationships with current users and members;</TD></TR></TABLE>

<TABLE CELLPADDING="0" CELLSPACING="0" WIDTH="100%" STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0; margin-bottom: 0"><TR STYLE="vertical-align: top">
<TD STYLE="width: 0.25in"></TD><TD STYLE="width: 0.25in"><FONT STYLE="font-family: Symbol">&middot;</FONT></TD><TD>maintain adequate control of our expenses;</TD></TR></TABLE>

<TABLE CELLPADDING="0" CELLSPACING="0" WIDTH="100%" STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0; margin-bottom: 0"><TR STYLE="vertical-align: top">
<TD STYLE="width: 0.25in"></TD><TD STYLE="width: 0.25in"><FONT STYLE="font-family: Symbol">&middot;</FONT></TD><TD>attract, retain and motivate qualified personnel;</TD></TR></TABLE>

<TABLE CELLPADDING="0" CELLSPACING="0" WIDTH="100%" STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0; margin-bottom: 0"><TR STYLE="vertical-align: top">
<TD STYLE="width: 0.25in"></TD><TD STYLE="width: 0.25in"><FONT STYLE="font-family: Symbol">&middot;</FONT></TD><TD>react to users and members preferences and demands;</TD></TR></TABLE>

<TABLE CELLPADDING="0" CELLSPACING="0" WIDTH="100%" STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0; margin-bottom: 0"><TR STYLE="vertical-align: top">
<TD STYLE="width: 0.25in"></TD><TD STYLE="width: 0.25in"><FONT STYLE="font-family: Symbol">&middot;</FONT></TD><TD>maintain regulatory compliance; and</TD></TR></TABLE>

<TABLE CELLPADDING="0" CELLSPACING="0" WIDTH="100%" STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0; margin-bottom: 0"><TR STYLE="vertical-align: top">
<TD STYLE="width: 0.25in"></TD><TD STYLE="width: 0.25in"><FONT STYLE="font-family: Symbol">&middot;</FONT></TD><TD>generate sufficient working capital through our operations or through issuance of additional debt or equity financing, and
to continue as a going concern.</TD></TR></TABLE>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0">We cannot assure investors that we will successfully address any
of these factors, and our failure to do so could have a material adverse effect on our business, financial condition, results of
operations and future prospects.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0">&nbsp;</P>

<P STYLE="font: bold 10pt Times New Roman, Times, Serif; margin: 0"><I>We will need to attract and retain members in order to be
successful.</I></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0">We must attract and retain members in order to increase
revenue and achieve profitability. We expect revenue to be generated primarily from the purchase of products and services
offered in the Grandparents.com Benefits Club, advertisements on our website and, in the future, membership fees. If we are
unable to attract and retain members, we may not be able to attract marketing and commercial sponsors to the Grandparents.com
Benefits Club or advertisers to our website. Accordingly, the revenue we generate may decrease and our operating results
will be adversely affected.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0">The growth of our membership base could be adversely affected by
various factors, including:</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0">&nbsp;</P>

<TABLE CELLPADDING="0" CELLSPACING="0" WIDTH="100%" STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0; margin-bottom: 0"><TR STYLE="vertical-align: top">
<TD STYLE="width: 0.25in"></TD><TD STYLE="width: 0.25in"><FONT STYLE="font-family: Symbol">&middot;</FONT></TD><TD>unwillingness of users or members to implement the products and services we offer;</TD></TR></TABLE>

<TABLE CELLPADDING="0" CELLSPACING="0" WIDTH="100%" STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0; margin-bottom: 0"><TR STYLE="vertical-align: top">
<TD STYLE="width: 0.25in"></TD><TD STYLE="width: 0.25in"><FONT STYLE="font-family: Symbol">&middot;</FONT></TD><TD>any delays or difficulties that we may incur in completing the development and introduction of our planned products, product
enhancements or services;</TD></TR></TABLE>

<TABLE CELLPADDING="0" CELLSPACING="0" WIDTH="100%" STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0; margin-bottom: 0"><TR STYLE="vertical-align: top">
<TD STYLE="width: 0.25in"></TD><TD STYLE="width: 0.25in"><FONT STYLE="font-family: Symbol">&middot;</FONT></TD><TD>new products or services introduced by our competitors;</TD></TR></TABLE>

<TABLE CELLPADDING="0" CELLSPACING="0" WIDTH="100%" STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0; margin-bottom: 0"><TR STYLE="vertical-align: top">
<TD STYLE="width: 0.25in"></TD><TD STYLE="width: 0.25in"><FONT STYLE="font-family: Symbol">&middot;</FONT></TD><TD>any failure of the products and services we offer to perform as expected; or</TD></TR></TABLE>

<TABLE CELLPADDING="0" CELLSPACING="0" WIDTH="100%" STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0; margin-bottom: 0"><TR STYLE="vertical-align: top">
<TD STYLE="width: 0.25in"></TD><TD STYLE="width: 0.25in"><FONT STYLE="font-family: Symbol">&middot;</FONT></TD><TD>any difficulty we may incur in meeting users and members requirements.</TD></TR></TABLE>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0">&nbsp;</P>

<P STYLE="font: bold 10pt Times New Roman, Times, Serif; margin: 0"><I>We will need to attract and retain marketing and commercial
sponsors in order to be successful.</I></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0">We must attract, retain and enter into future revenue
sharing agreements with marketing and commercial sponsors in order to increase revenue and achieve profitability. If marketing
and commercial sponsors do not find our marketing and promotional services effective or do not believe that utilizing the Benefits Club provides them with increases in customers, revenue or profit, they may not make, or continue to make, offers through
the Benefits Club. We have not entered into revenue sharing agreements with any of our existing commercial and
marketing sponsors and there can be no assurance that any of our existing commercial and marketing sponsors will enter into such
revenue sharing agreements. If we are unable to attract, retain and enter into revenue sharing agreements with marketing and commercial
sponsors in numbers sufficient to grow our business, or if too many marketing and commercial sponsors are unwilling to offer products
or services through the Benefits Club or offer favorable revenue sharing terms to us, we may sell fewer products
and services through the Benefits Club and our operating results will be adversely affected.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0">&nbsp;</P>

<P STYLE="font: bold 10pt Times New Roman, Times, Serif; margin: 0"><I>If our redesigned website or the Grandparents.com Benefits
Club do not achieve market acceptance, our business will be materially and adversely affected.</I></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0">Our success will depend upon widespread market acceptance of our
website and the products and services and any future products and services that we may offer through the Benefits
Club. There can be no assurance that the market for these services will develop or be sustained.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0">&nbsp;</P>

<P STYLE="font: bold 10pt Times New Roman, Times, Serif; margin: 0"><I>If products and services offered through the Grandparents.com
Benefits Club do not meet the needs and expectations of our members, our business could suffer.</I></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0">Our business depends in part on products and services provided by
third parties and our reputation may be harmed by actions taken by such third parties that are outside our control. Any shortcomings
of one or more of such third parties may be attributed by our members to us, thus damaging our reputation, brand value and potentially
affecting our results of operations. In addition, negative publicity and sentiment generated as a result of fraudulent or deceptive
conduct by such third party providers could damage our reputation, reduce our ability to attract new members or retain existing
members, and diminish the value of our brand.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0">&nbsp;</P>

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<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0">&nbsp;</P>

<P STYLE="font: bold 10pt Times New Roman, Times, Serif; margin: 0"><I>We may need additional debt or equity financing in the future.</I></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0">Although we expect to be able to generate operating
revenues necessary to finance our operations, there is no certainty that such operating revenues will be sufficient.
Accordingly, we may need to obtain additional financing to operate and implement our business plan and growth strategy.
Additional financing may not be available to us or, if available, such financing may not be on terms acceptable to us. If we
obtain additional financing through the issuance of equity or convertible debt securities, it may be significantly dilutive
to our stockholders and such additional equity or convertible debt securities may have rights, preferences or privileges
senior to those of our existing securities. In addition, our ability to issue debt securities or to service any debt may also be
limited by our inability to generate consistent cash flow. If additional financing is not available on acceptable terms, we
may not be able to fund our on-going operations or any future expansion of our business, develop or enhance our products or
services, or respond effectively to competitive pressures. The inability to raise additional capital in the future may force
us to curtail future business opportunities or cease operations entirely.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0">&nbsp;</P>

<P STYLE="font: bold 10pt Times New Roman, Times, Serif; margin: 0"><I>We may continue to incur substantial losses and negative
operating cash flows and may not achieve or maintain positive cash</I> <I>flow or profitability in the future.</I></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0">We have incurred significant losses and negative operating cash
flow from inception and may continue to incur significant losses and negative operating cash flow into the future. As of September
30, 2011, we had a net loss of approximately $2,000,000 and used approximately $600,000 in cash for operating activities. In addition,
as of September 30, 2011, we had a working capital deficit of approximately $1,400,000. In order to reach our business growth objectives,
we expect to incur significant expenses for sales, marketing, product development and other operating and capital costs. As a result,
we will need to generate and grow our revenues significantly to achieve positive cash flow and profitability. We may not be successful
in generating and increasing our revenues, and we may never achieve or maintain positive cash flow or profitability. The uncertainties
regarding the commencement of adequate commercial revenues raise substantial doubt about our ability to continue as a going concern.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0"><B>&nbsp;</B></P>

<P STYLE="font: bold 10pt Times New Roman, Times, Serif; margin: 0"><I>Our independent registered public accounting firm has expressed
doubt about our ability to continue as a going concern.</I></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0">Our financial statements have been prepared under the assumption
that we will continue as a going concern. Our independent registered public accounting firm has issued a report that included an
explanatory paragraph referring to our net losses, negative cash flows from operations and working capital deficiency and expressing
substantial doubt about our ability to continue as a going concern. Our ability to continue as a going concern is dependent upon
our ability to obtain additional equity financing or other capital, attain further operating efficiencies, reduce expenditures,
and, ultimately, to generate additional revenue. Our financial statements do not include any adjustments that might result from
the outcome of this uncertainty. However, if adequate funds are not available to us when needed, and we are unable to enter into
some form of strategic relationship that will give us access to additional cash resources, we will be required to curtail our operations
which would, in turn, further raise substantial doubt about our ability to continue as a going concern.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0">&nbsp;</P>

<P STYLE="font: bold 10pt Times New Roman, Times, Serif; margin: 0"><I>We have a limited operating history and, therefore, we cannot
accurately project our future revenues and operating expenses.</I></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0">Due to our limited operating history, we cannot accurately project
future revenues based on historical results. Our business, operating results and financial condition will be materially and adversely
affected if revenues do not meet projections, which would cause net losses in a particular fiscal period to be greater than expected.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0">With such a limited operating history, our past results do not provide
a meaningful basis for us to project our revenues or operating results. Our business should be considered in light of the risks,
expenses and difficulties that we have encountered to date and that we expect to continue to encounter.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0">&nbsp;</P>

<P STYLE="font: bold 10pt Times New Roman, Times, Serif; margin: 0"><I>We may have difficulty increasing our revenue.</I></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0">Our ability to increase our revenue depends on a variety
of factors, including general market conditions, overall online usage, our ability to increase our unique visitors and page
view inventory, our ability to attract members, our ability to enter into revenue sharing agreements with our marketing
partners, our ability to attract advertisers to advertise on our website and our ability to win our share of
advertisers&rsquo; total advertising budgets from other websites. While we expect to increase our revenue, there can be no
assurance that such increase will occur. If our revenue does not increase or decreases, or does not keep pace with our
operating expense, our business, results of operations and financial condition could be materially adversely affected.</P>

<P STYLE="font: bold 10pt Times New Roman, Times, Serif; margin: 0"><I>&nbsp;</I></P>

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<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0">&nbsp;</P>

<P STYLE="font: bold 10pt Times New Roman, Times, Serif; margin: 0"><I>We depend on certain key employees to operate our business.</I></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0">We believe that our continued success will depend to a
significant extent upon the efforts and abilities of our senior management team, particularly: Steven E. Leber, Joseph
Bernstein, Jeffrey Mahl and Matthew Schwartz. At closing of the Transaction, we entered into one-year employment agreements
with Messrs. Leber, Bernstein, Mahl and Schwartz but we cannot guarantee that any of them will continue to provide services
to us for any particular length of time. If we lose the services of one or more of these key executives, our business could
be significantly harmed. We do not currently carry key-man life insurance.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0">&nbsp;</P>

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<P STYLE="font: bold 10pt Times New Roman, Times, Serif; margin: 0"><I>&nbsp;</I></P>

<P STYLE="font: bold 10pt Times New Roman, Times, Serif; margin: 0"><I>We may not be able to recruit, train and retain sufficient
qualified personnel to succeed.</I></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0">Our future success depends upon our ability to hire and retain
qualified personnel with experience in the sales, financial and social networking industries. As of the Closing Date, we have
fifteen (15) employees. We cannot provide assurance that we will be able to attract, train or retain enough qualified
personnel to satisfy demand or any expansion of our business and operations. Because of our limited resources, we may
experience difficulty in hiring and retaining personnel with the necessary qualifications. The failure to attract and retain
the necessary qualified personnel will have a material and adverse effect on our business, operations and financial
condition.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0">&nbsp;</P>

<P STYLE="font: bold 10pt Times New Roman, Times, Serif; margin: 0"><I>We may not be able to manage our growth effectively.</I></P>

<P STYLE="font: bold 10pt Times New Roman, Times, Serif; margin: 0"><I>&nbsp;</I></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0">The rapid expansion necessary for us to fully exploit the market
window for our website requires an effective planning and management process. Rapid growth, if it occurs, will likely
place a significant strain on our managerial, operational and financial resources. To manage our growth, we must implement and
improve our operational and financial systems and expand, train and manage our employee base. There can be no assurance that our
systems, procedures or controls will be adequate to support operations or that management will be able to achieve the rapid expansion
necessary to fully exploit the market window for our website and the failure to do so would have a material adverse
effect on our business, operations and financial condition. In addition, our management team has limited experience in the social networking industry.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0">&nbsp;</P>

<P STYLE="font: bold 10pt Times New Roman, Times, Serif; margin: 0"><I>We may not be able to protect the security and privacy of
our members&rsquo; financial and business data, which could expose us to liability.</I></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0">We collect and maintain private and confidential data from our members.
This private and confidential data consists primarily of the personal and financial information of our members. We will incur significant
costs to protect against the threat of security breaches or to alleviate problems caused by any breaches that occur. We have implemented
security systems and protocols that we feel are appropriate and sufficient to protect the privacy and confidential information
of our members and we intend to continue such protocols; however, there can be no assurance that our security systems or protocols
will be sufficient to protect such private and confidential data or that our privacy policies will be deemed sufficient by our
members or that it satisfies applicable federal or state laws or regulations governing privacy, which may be in effect from time
to time. The failure to adequately protect member data or to comply with any federal or state laws or regulations relating to the
use of this data could expose us to costly litigation or administrative action.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0">&nbsp;</P>

<P STYLE="font: bold 10pt Times New Roman, Times, Serif; margin: 0"><I>System failure or interruption experienced by our data center,
internet service providers, online service providers or website operators may result in reduced traffic, reduced revenue and harm
to our reputation.</I></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0">We depend on third-party data center and servers providers to provide
and maintain efficient and uninterrupted operation of our website for our members. Since we depend on third-party providers for
our data center and servers, any dispute with such third-party providers could materially hinder our operations and switching third-party
providers of such services may be a cumbersome process that negatively impacts the operation of our website. Our operations depend
in part on the protection of our data systems and those of third-party providers against damage from human error, natural disasters,
fire, power loss, water damage, telecommunications failure, computer viruses, terrorist acts, vandalism, sabotage, and other adverse
events. Although we utilize the services of third-party providers with both physical and procedural security systems and have put
in place certain other disaster recovery measures, including offsite storage of backup data, there is no guarantee that our Internet
access and other data operations will be uninterrupted, error-free or secure. Any sustained or repeated system failure, including
network, software or hardware failure, that causes an interruption in the availability of our website or a decrease in responsiveness
of our website could result in reduced traffic, reduced revenue and harm to our reputation, brand and relations with our members,
advertisers and marketing partners. An increase in the volume of users of our website could strain the capacity of the software
and hardware we have deployed, including server and network capacity, which could lead to slower response time or system failures,
and adversely affect the market acceptance of our website. In addition, our members will depend on Internet service providers,
online service providers and other website operators for access to our website. These providers and operators could experience
outages, delays and other difficulties due to system failures unrelated to our systems.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0">&nbsp;</P>

<P STYLE="font: bold 10pt Times New Roman, Times, Serif; margin: 0"><I>We may have difficulty scaling and adapting our existing
technology architecture to accommodate increased traffic and technology advances or requirements of our members.</I></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0">Our future success will depend on our ability to adapt to rapidly
changing technologies, to improve the performance and reliability of our website and to adapt our website to evolving industry
standards. Rapid increases in the levels or types of use of our website could result in delays or interruptions in our service.
Widespread adoption of new Internet technologies or other technological changes could require substantial expenditures to appropriately
modify or adapt our website and infrastructure. The technology architectures utilized for our website are highly complex and may
not provide satisfactory support in the future, as usage increases and our website expands, changes and becomes more complex over
time. In the future, we may make changes to our architectures and systems, including moving to completely new architectures and
systems. Such changes may be technologically challenging to develop and implement, take time to test and deploy, cause us to incur
substantial costs or data loss, and cause users, advertisers, and partners to experience delays or interruptions in services. These
changes, delays or interruptions in our service may cause our users, advertisers and partners to become dissatisfied with our products
and service and move to competing providers of similar products and services. Further, to the extent that the number of visitors
to and members of our website increase, we will need to expand our infrastructure, including the capacity of the servers we utilize
and the sophistication of our software. This expansion is likely to be expensive and complex and require additional technical expertise.
Any difficulties experienced in adapting our architectures and infrastructure to accommodate increased traffic, store user data
and track user preferences, together with the associated costs and potential loss of traffic, could harm our operating results,
cash flows from operations and financial condition.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0">&nbsp;</P>

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<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0">&nbsp;</P>

<P STYLE="font: bold 10pt Times New Roman, Times, Serif; margin: 0"><I>If we do not respond rapidly to technological changes or
to changes in industry standards, our products and services could become obsolete.</I></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0">The market for social networking websites is likely to be characterized
by rapid technological change and frequent new product and service introductions. We may be unable to respond quickly or effectively
to these developments. We may experience difficulties with software development or marketing that could delay or prevent our development,
introduction or marketing of new features, products, services and enhancements. The introduction of new products and services by
our competitors, the market acceptance of products and services based on new or alternative technologies or the emergence of new
industry standards could render our existing or future products and services obsolete. If the standards adopted are different from
those that we have chosen to support, market acceptance of our products and services may be significantly reduced or delayed. If
our products and services become technologically obsolete, we may be unable to sell our products or services or generate meaningful
revenues.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0">&nbsp;</P>

<P STYLE="font: bold 10pt Times New Roman, Times, Serif; margin: 0"><I>Our business may be adversely affected by malicious applications
that interfere with, or exploit security flaws in, our products and services.</I></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0">Our business may be adversely affected by malicious applications
that make changes to our users&rsquo; computers and interfere with their experience with our website. These applications may attempt
to change our users&rsquo; Internet experience, including hijacking queries to our website, altering or replacing search results
or otherwise interfering with our ability to connect with our users. The interference often occurs without disclosure or consent,
resulting in a negative experience that users may associate with us. These applications may be difficult or impossible to uninstall
or disable, may reinstall themselves and may circumvent other applications&rsquo; efforts to block or remove them. The ability
to reach users and provide them with a superior experience is critical to our success. If our efforts to combat these malicious
applications are unsuccessful our reputation may be harmed and user traffic could decline, which would damage our business.</P>

<P STYLE="font: bold 10pt Times New Roman, Times, Serif; margin: 0"><I>&nbsp;</I></P>

<P STYLE="font: bold 10pt Times New Roman, Times, Serif; margin: 0"><I>We may not be able to secure all rights to our intellectual
property or our rights may be subject to claims of infringement by others.</I></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0">We will rely on a combination of trade secret, trademark and copyright
laws, as well as employee and third party non-disclosure agreements and other protective measures, to protect intellectual property
rights. There can be no assurance, however, that these measures will provide meaningful protection of our member list, trademarks,
service marks, copyrights, trade dress, trade secrets, proprietary technology and similar intellectual property in the event of
any unauthorized use, misappropriation or disclosure.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0">We may be unable to prevent third parties from acquiring and using
trademarks, trade names or domain names that are similar to, infringe upon or diminish the value of our trademarks, trade names,
service marks and other proprietary rights. We may be unable to prevent third parties from using and registering our trademarks
or trade names, or trademarks or trade names that are similar to, or diminish the value of, our trademarks or trade names in some
countries.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0">There can also be no assurance that others will not independently
develop similar technologies or duplicate any technology that we develop or have developed without violating our intellectual property
rights. In addition, there can be no assurance that our intellectual property rights will be held to be valid, will not be successfully
challenged or will otherwise be of value.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0">The protection of our intellectual property may require the expenditure
of significant financial and managerial resources. Moreover, the steps we take to protect our intellectual property may not adequately
protect our rights or prevent third parties from infringing or misappropriating our proprietary rights.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0">While we do not believe that our website and technologies infringe
on any intellectual property rights of third parties, there can be no assurance that a court will not find that such infringement
has occurred or that such infringement will not occur in the future. The costs of defending an intellectual property claim could
be substantial and could materially and adversely affect our operations and financial position, even if we were ultimately successful
in defending any such claims. Conversely, in order to enforce or protect our intellectual property rights, we may have to initiate
legal proceedings against third parties. These proceedings are typically expensive, take significant time and divert management&rsquo;s
attention from other business concerns. Further, if we do not prevail in an infringement lawsuit brought against us, we might have
to pay substantial damages, including treble damages, and we may be required to stop the infringing activity or obtain a license
to use the intellectual property of others. The cost associated with any such changes may be substantial and could materially and
adversely affect our market position, operations and financial position.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0">&nbsp;</P>

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<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0">&nbsp;</P>

<P STYLE="font: bold 10pt Times New Roman, Times, Serif; margin: 0"><I>We may be involved in legal claims which could materially
adversely affect us.</I></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0">Claims or disputes against the Company may arise in the future.
Results of legal proceedings are subject to significant uncertainty and, regardless of the merit of the claims, litigation may
be expensive, time-consuming, disruptive to our operations and distracting to management.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0">Although our management considers the likelihood of such an outcome
to be remote, if one or more of these legal matters were resolved against us for amounts in excess of management&rsquo;s expectations,
our results of operations could be materially adversely affected. Further, such outcome could result in significant compensatory,
punitive or trebled monetary damages, disgorgement of revenue or profits, remedial corporate measures or injunctive relief against
us, all of which could have a material impact on our business, intellectual property, results of operations or cause us financial
harm.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0">&nbsp;</P>

<P STYLE="font: bold 10pt Times New Roman, Times, Serif; margin: 0"><I>Our market is new and still emerging.</I></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0">The market for social media websites as well as product and service
marketing websites, such as Facebook or Twitter is new and evolving. We believe that there is a need for intensive marketing and
sales efforts to inform prospective members about the uses and benefits of the products and services we offer and to develop the
overall market. Accordingly, there can be no assurance that these efforts will be successful and that a viable market for our website
or the products and services we offer will emerge or be sustainable.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0">&nbsp;</P>

<P STYLE="font: bold 10pt Times New Roman, Times, Serif; margin: 0"><I>There are no significant barriers to entry in our market.</I></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0">While we will take reasonable steps to protect our intellectual
property, retain our employees and increase our position in the market, there are few barriers to entry to creating a website that
directly or indirectly competes with us and our business. If one or more large on-line business, such as LinkedIn, Facebook, Google
or Yahoo, decides to compete directly or indirectly with us, it may result in lower market share and reduce our financial returns.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0">&nbsp;</P>

<P STYLE="font: bold 10pt Times New Roman, Times, Serif; margin: 0"><I>Our industry is competitive and competition could reduce
our market share and adversely affect our growth and financial performance.</I></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0">There are many companies in the social networking industry, such
as Facebook, Twitter and Google. In addition, we compete with companies that specifically target the age 50+ market, in particular
AARP. These competitors compete with us for visitor traffic, members, advertising dollars and partners, including marketing and
commercial sponsors. Competition is intense and expected to increase in the future. Many of our competitors may have certain competitive
advantages over us in terms of:</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0">&nbsp;</P>

<TABLE CELLPADDING="0" CELLSPACING="0" WIDTH="100%" STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0; margin-bottom: 0"><TR STYLE="vertical-align: top">
<TD STYLE="width: 0.25in"></TD><TD STYLE="width: 0.25in"><FONT STYLE="font-family: Symbol">&middot;</FONT></TD><TD>substantially greater financial and technical resources;</TD></TR></TABLE>

<TABLE CELLPADDING="0" CELLSPACING="0" WIDTH="100%" STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0; margin-bottom: 0"><TR STYLE="vertical-align: top">
<TD STYLE="width: 0.25in"></TD><TD STYLE="width: 0.25in"><FONT STYLE="font-family: Symbol">&middot;</FONT></TD><TD>more extensive and well developed marketing and sales networks;</TD></TR></TABLE>

<TABLE CELLPADDING="0" CELLSPACING="0" WIDTH="100%" STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0; margin-bottom: 0"><TR STYLE="vertical-align: top">
<TD STYLE="width: 0.25in"></TD><TD STYLE="width: 0.25in"><FONT STYLE="font-family: Symbol">&middot;</FONT></TD><TD>better access to information;</TD></TR></TABLE>

<TABLE CELLPADDING="0" CELLSPACING="0" WIDTH="100%" STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0; margin-bottom: 0"><TR STYLE="vertical-align: top">
<TD STYLE="width: 0.25in"></TD><TD STYLE="width: 0.25in"><FONT STYLE="font-family: Symbol">&middot;</FONT></TD><TD>greater global brand recognition among consumers; and</TD></TR></TABLE>

<TABLE CELLPADDING="0" CELLSPACING="0" WIDTH="100%" STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0; margin-bottom: 0"><TR STYLE="vertical-align: top">
<TD STYLE="width: 0.25in"></TD><TD STYLE="width: 0.25in"><FONT STYLE="font-family: Symbol">&middot;</FONT></TD><TD>larger user and member bases.</TD></TR></TABLE>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0">We consider AARP our primary competitor. In 2010, AARP was ranked
first by Examiner.com among websites serving the age 50+ demographic markets. AARP is the largest membership organization in the
U.S. and its affiliates serve approximately 40 million members. AARP has significantly greater financial, technical and human resources
than us and has an established market for its services and products. These and other factors allow AARP to engage in more extensive
research and development efforts, undertake more far-reaching marketing campaigns, adopt more aggressive pricing policies, attract
additional partners or enter into arrangements with partners on terms more favorable than us, which may allow them to retain and
build an even larger membership base or generate revenue from their members and partners more effectively than we do. Other competitors
may enjoy similar advantages and benefits.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0">It is also possible that new competitors may emerge and acquire
significant market share. Further, increased competition could result in price reductions, reduced margins or loss of market share,
any of which could adversely affect our business and operations. Due to these and other factors, we may not be able to compete
successfully in our market and the failure to do so could have a material adverse effect on the viability of our business.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0">&nbsp;</P>

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<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0">&nbsp;</P>

<P STYLE="font: bold 10pt Times New Roman, Times, Serif; margin: 0"><I>We are subject to U.S. and foreign government regulations
on Internet services which could subject us to claims and remedies including monetary liabilities and limitations on our business
practices.</I></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0">We are subject to various U.S. and foreign regulations directly
applicable to providers of Internet services and products, particularly with respect to the solicitation, collection or processing
of personal/consumer information over the Internet. The application of existing laws and regulations relating to issues such as
user privacy and data protection, defamation, pricing, advertising, taxation, promotions, billing, consumer protection, content
regulation, quality of services, and intellectual property ownership and infringement to Internet companies is unclear and/or unsettled.
Further, the application of existing laws regulating or requiring licenses for certain businesses of our advertisers including,
for example, insurance and securities brokerage and legal services, can be unclear. We may incur substantial liabilities for expenses
necessary to comply with these laws and regulations or penalties for any failure to comply. Compliance with these laws and regulations
may also cause us to change or limit our business practices in a manner adverse to our business.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0">&nbsp;</P>

<P STYLE="font: bold 10pt Times New Roman, Times, Serif; margin: 0"><I>Changes in regulations or user concerns regarding privacy
and protection of user data could adversely affect our business.</I></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0">Federal, state and foreign laws and regulations govern the collection,
use, retention, sharing and security of data that we receive from our customers. In addition, we post on our website our own privacy
policies and practices concerning the collection, use and disclosure of customer data. Any failure, or perceived failure, by us
to comply with our posted privacy policies or with any data- related consent orders, Federal Trade Commission requirements or other
federal or state privacy- related laws and regulations could result in proceedings or actions against us by governmental entities
or others, which could potentially have an adverse effect on our business.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0">Further, failure or perceived failure to comply with our policies
or applicable requirements related to the collection, use, sharing or security of personal information or other privacy-related
matters could result in a loss of customer confidence in us, damage to our reputation and the loss of users, partners or advertisers,
which could adversely affect our business.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0">Additionally, a large number of legislative proposals are pending
before the U.S. Congress and various state legislative bodies concerning data privacy and retention issues that may impact our
business. It is not possible to predict whether or when such legislation may be adopted. Certain proposals, if adopted, could impose
requirements that may result in a decrease in our user registrations and revenues. In addition, the interpretation and application
of user data protection laws are in a state of flux. These laws may be interpreted and applied inconsistently from state to state
and inconsistently with our current data protection policies and practices. Complying with these varying requirements could cause
us to incur substantial costs or require us to change our business practices in a manner adverse to our business.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0">&nbsp;</P>

<P STYLE="font: bold 10pt Times New Roman, Times, Serif; margin: 0"><I>Fluctuations in our financial results may occur as the result
of various factors beyond our control.</I></P>

<P STYLE="font: bold 10pt Times New Roman, Times, Serif; margin: 0"><I>&nbsp;</I></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0">Management expects that financial results will vary significantly
from period to period due to a number of factors, including:</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0">&nbsp;</P>

<TABLE CELLPADDING="0" CELLSPACING="0" WIDTH="100%" STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0; margin-bottom: 0"><TR STYLE="vertical-align: top">
<TD STYLE="width: 0.25in"></TD><TD STYLE="width: 0.25in"><FONT STYLE="font-family: Symbol">&middot;</FONT></TD><TD>costs related to the redesign of our website;</TD></TR></TABLE>

<TABLE CELLPADDING="0" CELLSPACING="0" WIDTH="100%" STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0; margin-bottom: 0"><TR STYLE="vertical-align: top">
<TD STYLE="width: 0.25in"></TD><TD STYLE="width: 0.25in"><FONT STYLE="font-family: Symbol">&middot;</FONT></TD><TD>costs related to the introduction of new products, services and methods of doing business;</TD></TR></TABLE>

<TABLE CELLPADDING="0" CELLSPACING="0" WIDTH="100%" STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0; margin-bottom: 0"><TR STYLE="vertical-align: top">
<TD STYLE="width: 0.25in"></TD><TD STYLE="width: 0.25in"><FONT STYLE="font-family: Symbol">&middot;</FONT></TD><TD>costs related to the continued expansion of our business;</TD></TR></TABLE>

<TABLE CELLPADDING="0" CELLSPACING="0" WIDTH="100%" STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0; margin-bottom: 0"><TR STYLE="vertical-align: top">
<TD STYLE="width: 0.25in"></TD><TD STYLE="width: 0.25in"><FONT STYLE="font-family: Symbol">&middot;</FONT></TD><TD>income, loss or amortization of goodwill resulting from its acquisition or divestiture of business assets and other material
transactions;</TD></TR></TABLE>

<TABLE CELLPADDING="0" CELLSPACING="0" WIDTH="100%" STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0; margin-bottom: 0"><TR STYLE="vertical-align: top">
<TD STYLE="width: 0.25in"></TD><TD STYLE="width: 0.25in"><FONT STYLE="font-family: Symbol">&middot;</FONT></TD><TD>gain or loss resulting from accounting rules changes or accounting adjustments required for initial public offerings, other
financings, mergers or other changes in the capitalization; and</TD></TR></TABLE>

<TABLE CELLPADDING="0" CELLSPACING="0" WIDTH="100%" STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0; margin-bottom: 0"><TR STYLE="vertical-align: top">
<TD STYLE="width: 0.25in"></TD><TD STYLE="width: 0.25in"><FONT STYLE="font-family: Symbol">&middot;</FONT></TD><TD>increases in taxation resulting from its disposition of interests or from other extraordinary events.</TD></TR></TABLE>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0">Our financial position may impair our ability to develop our business
model. Our ability to attract the funding necessary to launch our redesigned website, purchase equipment and hardware, hire personnel,
develop cost-efficient operations and market and sell our products and services are critical to our future success. Our ability
to accomplish these objectives is likely to be significantly impaired if the financial markets continue to be in turmoil, or if
prospective lenders, investors or partners become uncomfortable with our prospects for survival given a weak financial condition,
volatile markets or adverse events in business operations. Our limited ability to generate cash through our operations may be insufficient
to fully fund our growth. The costs for business and product development may significantly impact our overall financial strength.
These factors can negatively impact our ability to finance the performance of our business operations and to attract additional
funding.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0">&nbsp;</P>

<P STYLE="font: bold 10pt Times New Roman, Times, Serif; margin: 0"><I>The requirements of being a public company will require
us to incur substantial costs, which may adversely affect our operating results and divert management&rsquo;s attention.</I></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0">As a public company, we will incur significant legal, accounting
and other expenses that Grandparents.com did not incur as a private company. In addition, the Sarbanes-Oxley Act of 2002 and rules
subsequently adopted by the SEC implementing Sarbanes-Oxley have required changes in corporate governance practices of public companies.
We expect these rules and regulations to significantly increase our legal and financial compliance costs and to make some activities
more time consuming and costly. As a &ldquo;shell company&rdquo; as defined in Rule 12b-2 under the Exchange Act, the Company&rsquo;s
prior internal controls were less complicated than those needed for an operating business. Following closing of the Transaction
and the appointment of a new management team, the Company intends to revise its existing policies and adopt new policies regarding
internal controls and disclosure controls and procedures with regard to our new business. The Company&rsquo;s new management team
does not have substantial public company experience, and compliance with applicable securities rules and regulations may divert
management&rsquo;s attention from other business concerns, which could harm our business and operating results.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0">&nbsp;</P>

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<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0">In addition, changing laws, regulations and standards relating to
corporate governance and public disclosure are creating uncertainty for public companies, increasing legal and financial compliance
costs and making some activities more time consuming. These laws, regulations and standards are subject to varying interpretations,
in many cases due to their lack of specificity, and, as a result, their application in practice may evolve over time as new guidance
is provided by regulatory and governing bodies. This could result in continuing uncertainty regarding compliance matters and higher
costs necessitated by ongoing revisions to disclosure and governance practices. We intend to invest resources to comply with evolving
laws, regulations and standards, and this investment may result in increased general and administrative expenses and a diversion
of management&rsquo;s time and attention from revenue-generating activities to compliance activities. If our efforts with new laws,
regulations and standards differ from the activities intended by regulatory or governing bodies due to ambiguities related to practice,
regulatory authorities may initiate legal proceedings against us and our business may be harmed.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0">&nbsp;</P>

<P STYLE="font: bold 10pt Times New Roman, Times, Serif; margin: 0"><I>We may become involved in legal proceedings that may result
in adverse outcomes. </I></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0">We may become subject to claims, suits, government investigations,
and other proceedings involving competition and antitrust, intellectual property, privacy, tax, labor and employment, commercial
disputes, content generated by our users, goods and services offered by advertisers or publishers using our platforms, and other
matters. Such claims, suits, government investigations, and proceedings are inherently uncertain and their results cannot be predicted
with certainty. Regardless of the outcome, such legal proceedings can have an adverse impact on us because of legal costs, diversion
of management resources, and other factors. Determining reserves for our pending litigation is a complex, fact-intensive process
that requires significant judgment. It is possible that a resolution of one or more such proceedings could result in substantial
fines and penalties that could adversely affect our business, consolidated financial position, results of operations, or cash flows
in a particular period. These proceedings could also result in criminal sanctions, consent decrees, or orders preventing us from
offering certain features, functionalities, products, or services, requiring a change in our business practices, or requiring development
of non-infringing products or technologies, which could also adversely affect our business and results of operations.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0">&nbsp;</P>

<P STYLE="font: bold 10pt Times New Roman, Times, Serif; margin: 0"><I>If we are unable to maintain effective internal controls
over financial reporting in accordance with Section 404 of the Sarbanes-Oxley Act, it could have a material adverse effect on the
Company&rsquo;s business.</I></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0">As a private company, Grandparents.com was not required to and did
not maintain such internal controls. Following closing of the Transaction, the Company and its new management team intend to begin
the process of documenting internal control procedures with respect to its new business, including establishing formal policies,
processes and practices related to financial reporting and to the identification of key financial reporting risks, assessment of
their potential impact and linkage of those risks to specific areas and activities within its organization.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0">As a public entity, the Company is required to provide a quarterly
management certification and an annual management assessment of the effectiveness of its internal controls over financial reporting.
If the Company is not able to implement and document the necessary policies, processes, and controls to mitigate financial reporting
risks, the Company may not be able to comply with requirements of Section 404(a) in a timely manner or with adequate compliance.
Matters impacting the Company&rsquo;s internal controls may cause it to be unable to report its financial information on a timely
basis and thereby subject it to adverse regulatory consequences, including sanctions by the SEC or violations of applicable stock
exchange listing rules. There could also be a negative reaction in the financial markets due to a loss of investor confidence in
the Company and the reliability of its financial statements. Confidence in the reliability of the Company&rsquo;s financial statements
could also suffer if the Company were to report a material weakness in its internal controls over financial reporting. This could
materially adversely affect the Company and lead to a decline in the price of its Common Stock.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0">&nbsp;</P>

<P STYLE="font: bold 10pt Times New Roman, Times, Serif; margin: 0">Risks Related to an Investment in our Securities</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0">&nbsp;</P>

<P STYLE="font: bold 10pt Times New Roman, Times, Serif; margin: 0"><I>Grandparents.com will have significant voting power and
may take actions that may not be in the best interest of other stockholders.</I></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0">Grandparents.com controls approximately 65% of the total voting
power of our securities. Steven E. Leber, Joseph Bernstein and Dr. Robert Cohen comprise the board of managers of Grandparents.com
and therefore control Grandparents.com. For the foreseeable future, Grandparents.com will be able to exert significant control
over all matters requiring approval by our Board of Directors and stockholders, including the approval of mergers or other business
combination transactions. Because Grandparents.com&rsquo;s interests and the interests of Messrs. Leber and Bernstein and Dr. Cohen
may not always coincide with the interests of our other stockholders, they may cause us to take actions which the other stockholders
may disagree with or which may not be in the best interests of such other stockholders.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0">&nbsp;</P>

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<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0">&nbsp;</P>

<P STYLE="font: bold 10pt Times New Roman, Times, Serif; margin: 0"><I>There are limitations on the liabilities of our directors
and executive officers. Under certain circumstances, we are obligated to indemnify our directors and executive officers against
liability and expenses incurred by them in their service to us.</I></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0">Pursuant to our Certificate of Incorporation and under Delaware
law, our directors are not liable to us or our stockholders for monetary damages for breach of fiduciary duty, except for liability
for breach of a director&rsquo;s duty of loyalty, acts or omissions by a director not in good faith or which involve intentional
misconduct or a knowing violation of law, dividend payments or stock repurchases that are unlawful under Delaware law or any transaction
in which a director has derived an improper personal benefit. In addition, we intend to enter into indemnification agreements with
each of our directors and executive officers. These agreements, among other things, will require us to indemnify each director
and executive officer for certain expenses, including attorneys&rsquo; fees, judgments, fines and settlement amounts, incurred
by any such person in any action or proceeding, including any action by us or in our right, arising out of the person&rsquo;s services
as one of our directors or executive officers. The costs associated with providing indemnification under these agreements could
be harmful to our business.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0">&nbsp;</P>

<P STYLE="font: bold 10pt Times New Roman, Times, Serif; margin: 0"><I>Provisions of our corporate charter documents could delay
or prevent change of control.</I></P>

<P STYLE="font: bold 10pt Times New Roman, Times, Serif; margin: 0"><I>&nbsp;</I></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0">Our Certificate of Incorporation currently authorizes our
Board of Directors to issue up to 1,999,999 shares of &ldquo;blank check&rdquo; preferred stock without stockholder approval,
in one or more series and to fix the dividend rights, terms, conversion rights, voting rights, redemption rights and terms,
liquidation preferences, and any other rights, preferences, privileges, and restrictions applicable to each new series of
preferred stock. The designation of preferred stock in the future could make it difficult for third parties to gain control
of our company, prevent or substantially delay a change in control, discourage bids for our Common Stock at a premium, or
otherwise adversely affect the market price of our Common Stock.</P>

<P STYLE="font: bold 10pt Times New Roman, Times, Serif; margin: 0"><I>&nbsp;</I></P>

<P STYLE="font: bold 10pt Times New Roman, Times, Serif; margin: 0"><I>We do not anticipate paying cash dividends on our Common
Stock or Preferred Stock.</I></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0">You should not rely on an investment in our securities to provide
dividend income, as we currently do not plan to pay any in the foreseeable future. Instead, we plan to retain any earnings to maintain
and expand our operations. Accordingly, investors must rely on sales of our securities after price appreciation, which may never
occur, as the only way to realize any return on their investment.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0">&nbsp;</P>

<P STYLE="font: bold 10pt Times New Roman, Times, Serif; margin: 0"><I>The market price of our Common Stock is volatile.</I></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0">The publicly traded shares of our Common Stock do not have significant
trading volume, and experience significant price and volume fluctuations. This market volatility could reduce the market price
of our Common Stock, regardless of our operating performance. In addition, the trading price of our Common Stock could change significantly
over short periods of time in response to actual or anticipated variations in our quarterly operating results, announcements by
us, our competitors, factors affecting our market generally and/or changes in national or regional economic conditions, making
it more difficult for shares of our Common Stock to be sold at a favorable price or at all. The market price of our Common Stock
could also be reduced by general market price declines or market volatility in the future or future declines or volatility in the
prices of stocks for companies in the markets in which we compete.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0">&nbsp;</P>

<P STYLE="font: bold 10pt Times New Roman, Times, Serif; margin: 0"><I>Future sales of our Common Stock in the public market or
the issuance of our Common Stock or securities convertible into our Common Stock could adversely affect the trading price of our
Common Stock.</I></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0">We intend to increase the number of authorized shares of Common
Stock to 150,000,000 shares. This increase in the Common Stock will be sufficient to allow for the conversion of all shares of
Series A Convertible Preferred Stock and Series B Convertible Preferred Stock, with a significant number of shares of Common Stock
available for future issuance. In addition, our Board of Directors has the authority under our Certificate of Incorporation to
issue up to 1,999,999 shares of blank check preferred stock. Upon the conversion of the one (1) share of Series A Convertible Preferred
Stock and the 3,000,000 shares of Series B Convertible Preferred Stock currently outstanding, such shares will be cancelled and
retired and will become shares of blank check preferred stock available for issuance. Any additional issuances of any of our authorized
but unissued shares of Common Stock or blank check preferred stock will not require the approval of stockholders and will have
the effect of further diluting the equity interest of stockholders.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0">We may issue Common Stock or preferred stock in the future for a
number of reasons, including to attract and retain key personnel, to lenders, investment banks, or investors in order to achieve
more favorable terms from these parties and align their interests with our common equity holders, to management and/or employees
to reward performance to finance our operations and growth strategy, to adjust our ratio of debt to equity, to satisfy outstanding
obligations or for other reasons. If we issue securities, our existing stockholders may experience dilution. Future sales of our
Common Stock, the perception that such sales could occur or the availability for future sale of shares of our Common Stock or securities
convertible into or exercisable for our Common Stock could adversely affect the market prices of our Common Stock prevailing from
time to time. The sale of shares issued upon the exercise of our derivative securities could also further dilute the holdings of
our then existing stockholders, including holders of the convertible notes that receive shares of our Common Stock upon conversion
of their notes. In addition, future public sales of shares of our Common Stock could impair our ability to raise capital by offering
equity securities.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0">&nbsp;</P>

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<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0">&nbsp;</P>

<P STYLE="font: bold 10pt Times New Roman, Times, Serif; margin: 0"><I>Our Common Stock is not currently traded at high volume,
and you may be unable to sell at or near ask prices or at all if you need to sell or liquidate a substantial number of shares at
one time.</I></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0">Our Common Stock is currently traded, but with very low, if any,
volume, based on quotations on the OTC Bulletin Board, meaning that the number of persons interested in purchasing our Common Stock
at or near bid prices at any given time may be relatively small or non-existent. This situation is attributable to a number of
factors, including the fact that we are a small company which is still unknown to investors and others in the investment community
that generate or influence sales volume, and that even if we came to the attention of such persons, they tend to be risk-averse
and would be reluctant to follow an unproven company such as ours or purchase or recommend the purchase of our shares until such
time as we became more seasoned and viable. In addition, many institutional investors, which account for significant trading activity,
are restricted from investing in stocks that trade below specified prices, have less than specified market capitalizations, or
have less than specified trading volume. As a consequence, there may be periods of several days or more when trading activity in
our shares is minimal or non-existent, as compared to a seasoned issuer which has a large and steady volume of trading activity
that will generally support continuous sales without an adverse effect on share price. We cannot give you any assurance that a
broader or more active public trading market for our Common Stock will develop or be sustained, or that trading levels will be
sustained.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0">Stockholders should be aware that, according to SEC Release No.
34-29093, the market for &ldquo;penny stocks&rdquo; has suffered in recent years from patterns of fraud and abuse. Such patterns
include (i) control of the market for the security by one or a few broker-dealers that are often related to the promoter or issuer,
(ii) manipulation of prices through prearranged matching of purchases and sales and false and misleading press releases, (iii)
boiler room practices involving high-pressure sales tactics and unrealistic price projections by inexperienced sales persons, (iv)
excessive and undisclosed bid-ask differential and markups by selling broker-dealers, and (v) the wholesale dumping of the same
securities by promoters and broker-dealers after prices have been manipulated to a desired level, along with the resulting inevitable
collapse of those prices and with consequent investor losses. Our management is aware of the abuses that have occurred historically
in the penny stock market. Although we do not expect to be in a position to dictate the behavior of the market or of broker-dealers
who participate in the market, management will strive within the confines of practical limitations to prevent the described patterns
from being established with respect to our securities. The occurrence of these patterns or practices could increase the future
volatility of our share price.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0">&nbsp;</P>

<P STYLE="font: bold 10pt Times New Roman, Times, Serif; margin: 0"><I>We are subject to the penny stock rules adopted by the SEC
that require brokers to provide extensive disclosure to its customers prior to executing trades in penny stocks. These disclosure
requirements may make it difficult for our stockholders to sell their shares.</I></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0">Our shares of Common Stock are considered a &ldquo;penny stock,&rdquo;
which is generally defined as any equity security that has a minimum bid price of less than $5.00 per share and that is not listed
for trading on a national stock exchange. This classification adversely affects the market liquidity for our Common Stock.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0">For any transaction involving a penny stock, unless exempt, the
penny stock rules require that a broker or dealer approve a person&rsquo;s account for transactions in penny stocks and the broker
or dealer receive from the investor a written agreement to the transaction setting forth the identity and quantity of the penny
stock to be purchased. In order to approve a person&rsquo;s account for transactions in penny stocks, the broker or dealer must
obtain financial information and investment experience and objectives of the person and make a reasonable determination that the
transactions in penny stocks are suitable for that person and that that person has sufficient knowledge and experience in financial
matters to be capable of evaluating the risks of transactions in penny stocks.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0">The broker or dealer must also deliver, prior to any transaction
in a penny stock, a disclosure schedule prepared by the SEC relating to the penny stock market, which, in highlight form, sets
forth the basis on which the broker or dealer made the suitability determination and that the broker or dealer received a signed,
written agreement from the investor prior to the transaction.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0">Disclosure must also be made about the risks of investing in penny
stocks in both public offerings and in secondary trading and commission payable to both the broker-dealer and the registered representative,
current quotations for the securities and the rights and remedies available to an investor in cases of fraud in penny stock transactions.
Finally, monthly statements have to be sent disclosing recent price information for the penny stock held in the account and information
on the limited market in penny stocks.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0">Because of these regulations, broker-dealers may not wish to engage
in the necessary paperwork and disclosures and/or may encounter difficulties in their attempt to sell shares of our Common Stock,
which may affect the ability of stockholders to sell their shares in any secondary market and have the effect of reducing the level
of trading activity in any secondary market. These additional sales practice and disclosure requirements could impede the sale
of our Common Stock. Our Common Stock, in all probability, will be subject to such penny stock rules for the foreseeable future
and our stockholders will, in all likelihood, find it difficult to sell their Common Stock.</P>

<P STYLE="font: bold 10pt Times New Roman, Times, Serif; margin: 0"><I>&nbsp;</I></P>

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<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0">&nbsp;</P>

<P STYLE="font: bold 10pt Times New Roman, Times, Serif; margin: 0"><I>Restrictions on the Use of Rule 144 by Shell Companies or
Former Shell Companies.</I></P>

<P STYLE="font: bold 10pt Times New Roman, Times, Serif; margin: 0; text-indent: 0.5in">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0">The SEC prohibits the use of Rule 144 under the Securities
Act for resale of securities issued by shell companies (other than business transaction related shell companies) or issuers
that have been at any time previously a shell company. The SEC has provided an important exception to this prohibition,
however, if the following conditions are met: (i) the issuer of the securities that was formerly a shell company has ceased
to be a shell company, (ii) the issuer of the securities is subject to the reporting requirements of Section 13 or 15(d)
of the Exchange Act, (iii) the issuer of the securities has filed all Exchange Act reports and material required to be
filed, as applicable, during the preceding twelve (12) months (or such shorter period that the issuer was required to file
such reports and materials), other than Form 8-K reports, and (iv) at least one year has elapsed from the time that the
issuer filed current Form 10 type information with the SEC reflecting its status as an entity that is not a shell company. As
such, due to the fact that we had been a shell company immediately prior to the Transaction, holders of
&ldquo;restricted securities&rdquo; within the meaning of Rule 144, when reselling their shares pursuant to Rule 144, will be
subject to the conditions set forth therein.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0">&nbsp;</P>

<P STYLE="font: bold 10pt Times New Roman, Times, Serif; margin: 0; text-align: center">MANAGEMENT&rsquo;S DISCUSSION AND ANALYSIS
OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0"><I>The following discussion and analysis of the results of operations
and financial condition of Grandparents.com for the years ended December 31, 2010, December 31, 2009 and for the nine months ended
September 30, 2011 and 2010 should be read in conjunction with the financial statements of Grandparents.com and the notes to those
financial statements that are filed with this Report as Exhibits 99.1 and 99.2. All statements other than statements of historical
fact, including statements regarding future events, our future financial performance, business strategy and plans and objectives
of management for future operations, are forward-looking statements. These statements are only predictions and involve known and
unknown risks, uncertainties and other factors, including the risks outlined under &ldquo;Risk Factors&rdquo; or elsewhere in this
Report, which could negatively affect our business, operating results, financial condition and stock price. New risks emerge from
time to time and it is not possible for us to predict all risk factors, nor can we address the impact of all factors on our business
or the extent to which any factor, or combination of factors, may cause our actual results to differ materially from those contained
in any forward-looking statements. All forward-looking statements included in this document are based on information available
to us on the date hereof. You should not place undue
reliance on any forward-looking statement, each of which applies only as of the date of this Report. We undertake no obligation
to update or revise publicly any of the forward-looking statements after the date of this Report to conform our statements to actual
results or changed expectations. See &ldquo;Cautionary Note Regarding Forward-Looking Statements&rdquo; in this Report.</I></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0"><I>&nbsp;</I></P>

<P STYLE="font: bold 10pt Times New Roman, Times, Serif; margin: 0">Overview</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0">As discussed in this Report, on the Closing Date and pursuant to
the Contribution Agreement, Grandparents.com contributed substantially all of its assets to the Company in exchange for the assumption
of certain liabilities and the issuance by the Company to Grandparents.com of one (1) share of Series A Convertible Preferred Stock,
representing a controlling interest in our voting securities, and the GP Warrant. As a result of the Transaction, we now own the
grandparents.com domain name, other related domain names, trademarks and related assets formerly owned by Grandparents.com. Immediately
prior to the Transaction, we were a non-operating shell company and our principal asset was the cash we received in connection
with the sale of our former business.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0">Our website, www.grandparents.com, is a family-oriented social media
website with a core mission of enhancing relationships between the generations, and enriching the lives of grandparents by providing
tools to foster connections among grandparents, parents, and grandchildren. We primarily target the 70 million grandparents in
the U.S., but we also target the 50 million &ldquo;boomers&rdquo; and seniors that are not grandparents. We believe that our website
is one of the leading online communities for our market and that our website is the premier social media platform targeting active,
involved grandparents.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0">In 2010, we had over 10 million unique visitors to our website and
Examiner.com ranked our website second among commercial websites serving the age 50+ demographic markets. In January 2011, we launched
the Grandparents.com Benefits Club through which our marketing partners offer discounts and other benefits to our members on all
a variety of consumer products and services. In the fourth quarter
of 2011, we launched the Grandparents.com Online Book Shop which features over one million book titles, including e-books, and approximately
400,000 CD/DVD&rsquo;s. We also have a Jewelry Store and Toy Store.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0">Our website was launched initially in 2007 and was operated until
May 2010 by Grandparents.com&rsquo;s predecessor, which focused on selling advertisements as its sole revenue stream. Since May
2010, we have focused on redesigning the website, attracting new members and developing new revenue streams. Accordingly, management
does not believe the past results are indicative of future performance. <FONT STYLE="color: black">We</FONT> anticipate launching
our redesigned website on Grandparents Day, September 9, 2012. Until the launch of the redesigned website, our website will remain
operational in its current format.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0">&nbsp;</P>

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<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0">Grandparents.com incurred a net loss of approximately $2,000,000
for the nine months ended September 30, 2011 and used approximately $600,000 in cash for operating activities. In addition, Grandparents.com
had a working capital deficit of approximately $1,400,000 as of September 30, 2011. Accordingly,<B> </B>Grandparents.com&rsquo;s
independent registered public accounting firm has issued an audit report on Grandparents.com&rsquo;s 2010 financial statements
that included an explanatory paragraph referring to Grandparents.com&rsquo;s net losses, negative cash flows from operations and
working capital deficiency and expressing substantial doubt about Grandparents.com&rsquo;s ability to continue as a going concern.
Grandparents.com&rsquo;s financial statements do not include any adjustments that might result from the outcome of this uncertainty.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0">&nbsp;</P>

<P STYLE="font: bold 10pt Times New Roman, Times, Serif; margin: 0">Revenue Streams</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0">Historically, Grandparents.com generated revenue through the sale
of <FONT STYLE="font-family: Times New Roman, Times, Serif">advertising on its website. </FONT>Although we expect to continue generating
revenue from advertisements, we are now focused on creating multiple revenue streams.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0">We have not yet generated any revenue through the Benefits Club.
In order to initially attract marketing partners to the Benefits Club, Grandparents.com deferred entering into revenue sharing
arrangements with our marketing partners. As a result, however, Grandparents.com was able to attract more than 250 marketing partners
as of December 31, 2011. We ultimately expect to receive a share of the revenue received by marketing partners who offer products
and services to our members. We will seek to enter into revenue sharing arrangements with our marketing partners in 2012. To the
extent we are able to enter into revenue sharing agreements with our marketing partners, revenues, if any, from
such arrangements may be limited in the near term.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0">In addition, we have entered into initial stages of discussions
with a select number of national insurance companies focused on the insurance lines we plan to make available to our members &ndash;
primarily health, life, long term care, auto and home. We have also entered into initial stages of discussions with a major financial
services company to offer annuity, mutual fund, retirement planning and other financial products and services through us.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0">In the fourth quarter of 2011, Grandparents.com launched the Grandparents.com
Online Book Shop. Order fulfillment takes place through Baker-Taylor Ltd. under our name and we receive a commission of 3.5% of
all sales. We expect the Book Shop to compete with major online booksellers.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0">We expect to generate revenue through membership fees which we plan
to implement in after 2012. However, because implementing our plan includes initially giving free memberships, we do not expect
to generate membership fee revenue in 2012.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0">&nbsp;</P>

<P STYLE="font: bold 10pt Times New Roman, Times, Serif; margin: 0">Certain Factors Affecting our Performance</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0">In addition to the Risk Factors discussed above, we consider the
following to be significant factors affecting our future performance and financial results.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0"><I>Our Ability to Attract and Retain Members.</I> We must attract
and retain members in order to increase revenue and achieve profitability. We expect revenue to be generated primarily from the
purchase of products and services by our members offered in the Grandparents.com Benefits Club, advertisements on our website and,
in the future, membership fees. If we are unable to attract and retain members, we may not be able to attract marketing and commercial
sponsors to the Benefits Club. Likewise, if we cannot attract and retain members, we may not be able to attract advertisers to
our website.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0"><I>Our Ability to Enter into Revenue Sharing Agreements with our
Marketing Partners.</I> We must attract, retain and enter into revenue sharing agreements with marketing and commercial sponsors
in order to increase revenue and achieve profitability. If marketing and commercial sponsors do not find our marketing and promotional
services effective or do not believe that utilizing our website provides them with increases in customers, revenue or profit, they
may not make, or continue to make, offers through our website in which case we may sell fewer products and services through the
our website.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0"><I>Competition.</I> We compete with companies in the social networking
industry such as Facebook, Twitter and Google and other companies that specifically target the age 50+ market, in particular AARP.
These competitors compete with us for visitor traffic, members, advertising dollars and partners, including marketing and commercial
sponsors, and many of our competitors have competitive advantages over us. It is also possible that new competitors may emerge and
acquire significant market share.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0"><I>Additional Financing.</I> To effectively implement our business
plan, we may need to obtain additional financing. If we obtain financing, we would expect to accelerate our business plan and increase
our advertising and marketing budget, hire additional staff members and increase our office space and operations all of which we
believe would result in the generation of revenue and development of our business.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0">&nbsp;</P>

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<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0">&nbsp;</P>

<P STYLE="font: bold 10pt Times New Roman, Times, Serif; margin: 0">Results of Operations of Grandparents.com</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0">The following discusses the results of operations and financial
condition of Grandparents.com and its predecessor for the periods indicated below.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0">Grandparents.com has separated its historical financial results
into predecessor and successor periods, which is required under generally accepted accounting principles when there is a change
in accounting basis as occurred when purchase accounting was applied to the acquisition of the business of GPOC following the 2010
Purchase Transaction. Although presenting 2010 on a combined basis may be helpful for purposes of evaluating operating results,
the reader is cautioned that these are considered to be separate periods for financial reporting purposes and they should be evaluated
separately. We do not believe that successor periods are comparable to predecessor periods due to changes in management.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0">Periods prior to consummation of the 2010 Purchase Transaction are
sometimes referred to herein as predecessor periods and periods from and after the consummation of the 2010 Purchase Transaction
are sometimes referred to herein as successor periods. &ldquo;Predecessor&rdquo; refers to GPOC. &ldquo;Successor&rdquo; refers
to Grandparents.com.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0">We do not believe our prior periods, particularly predecessor periods,
are comparable to or indicative of our present and future operations. As discussed elsewhere in this Report, we are now focused
on creating multiple new revenue streams through the Benefits Club and our marketing partners whereas our prior operations derived
revenue solely from advertisements.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0">&nbsp;</P>

<P STYLE="font: italic 10pt Times New Roman, Times, Serif; margin: 0"><B>Three Months Ended September 30, 2011 Compared with Three
Months Ended September 30, 2010</B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0">&nbsp;</P>

<TABLE CELLPADDING="0" CELLSPACING="0" STYLE="width: 100%; font: 10pt Times New Roman, Times, Serif">
<TR STYLE="vertical-align: bottom">
    <TD NOWRAP STYLE="text-align: center">&nbsp;</TD><TD NOWRAP STYLE="font-weight: bold; padding-bottom: 1pt">&nbsp;</TD>
    <TD COLSPAN="6" NOWRAP STYLE="font-weight: bold; text-align: center; border-bottom: Black 1pt solid">Three months ended September 30,</TD><TD NOWRAP STYLE="padding-bottom: 1pt; font-weight: bold">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom">
    <TD NOWRAP STYLE="text-align: center">&nbsp;</TD><TD NOWRAP STYLE="font-weight: bold; padding-bottom: 1pt">&nbsp;</TD>
    <TD COLSPAN="2" NOWRAP STYLE="font-weight: bold; text-align: center; border-bottom: Black 1pt solid">2011</TD><TD NOWRAP STYLE="padding-bottom: 1pt; font-weight: bold">&nbsp;</TD><TD NOWRAP STYLE="font-weight: bold; padding-bottom: 1pt">&nbsp;</TD>
    <TD COLSPAN="2" NOWRAP STYLE="font-weight: bold; text-align: center; border-bottom: Black 1pt solid">2010</TD><TD NOWRAP STYLE="padding-bottom: 1pt; font-weight: bold">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,255,204)">
    <TD>Revenue:</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD STYLE="width: 70%; text-align: left; padding-bottom: 1pt; padding-left: 9pt">Advertising revenue</TD><TD STYLE="width: 1%; padding-bottom: 1pt">&nbsp;</TD>
    <TD STYLE="width: 1%; border-bottom: Black 1pt solid; text-align: left">$</TD><TD STYLE="width: 12%; border-bottom: Black 1pt solid; text-align: right">83,228</TD><TD STYLE="width: 1%; padding-bottom: 1pt; text-align: left">&nbsp;</TD><TD STYLE="width: 1%; padding-bottom: 1pt">&nbsp;</TD>
    <TD STYLE="width: 1%; border-bottom: Black 1pt solid; text-align: left">$</TD><TD STYLE="width: 12%; border-bottom: Black 1pt solid; text-align: right">177,160</TD><TD STYLE="width: 1%; padding-bottom: 1pt; text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,255,204)">
    <TD STYLE="text-align: left; padding-bottom: 1pt; padding-left: 0.25in">Total Revenues</TD><TD STYLE="padding-bottom: 1pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 1pt solid; text-align: left">&nbsp;</TD><TD STYLE="border-bottom: Black 1pt solid; text-align: right">83,228</TD><TD STYLE="padding-bottom: 1pt; text-align: left">&nbsp;</TD><TD STYLE="padding-bottom: 1pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 1pt solid; text-align: left">&nbsp;</TD><TD STYLE="border-bottom: Black 1pt solid; text-align: right">177,160</TD><TD STYLE="padding-bottom: 1pt; text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD>&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,255,204)">
    <TD STYLE="text-align: left">Operating Expenses:</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD STYLE="text-align: left; padding-left: 9pt">Selling and marketing</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">29,864</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">71,300</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,255,204)">
    <TD STYLE="padding-left: 9pt">Salaries</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">172,103</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">207,747</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD STYLE="padding-left: 9pt">Rent</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">40,000</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">44,391</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,255,204)">
    <TD STYLE="padding-left: 9pt">Consulting</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">-</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">4,005</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD STYLE="padding-left: 9pt">Equity-based compensation</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">12,688</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">-</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,255,204)">
    <TD STYLE="text-align: left; padding-left: 9pt">Management fees</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">150,000</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">50,000</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD STYLE="text-align: left; padding-left: 9pt">Other general and administrative</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">97,240</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">128,197</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,255,204)">
    <TD STYLE="text-align: left; padding-bottom: 1pt; padding-left: 9pt">Depreciation and amortization</TD><TD STYLE="padding-bottom: 1pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 1pt solid; text-align: left">&nbsp;</TD><TD STYLE="border-bottom: Black 1pt solid; text-align: right">217,314</TD><TD STYLE="padding-bottom: 1pt; text-align: left">&nbsp;</TD><TD STYLE="padding-bottom: 1pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 1pt solid; text-align: left">&nbsp;</TD><TD STYLE="border-bottom: Black 1pt solid; text-align: right">216,760</TD><TD STYLE="padding-bottom: 1pt; text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD STYLE="text-align: left; padding-bottom: 1pt; padding-left: 0.25in">Total operating expenses</TD><TD STYLE="padding-bottom: 1pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 1pt solid; text-align: left">&nbsp;</TD><TD STYLE="border-bottom: Black 1pt solid; text-align: right">719,209</TD><TD STYLE="padding-bottom: 1pt; text-align: left">&nbsp;</TD><TD STYLE="padding-bottom: 1pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 1pt solid; text-align: left">&nbsp;</TD><TD STYLE="border-bottom: Black 1pt solid; text-align: right">722,400</TD><TD STYLE="padding-bottom: 1pt; text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,255,204)">
    <TD>&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD STYLE="text-align: left">Other income (expenses):</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,255,204)">
    <TD STYLE="text-align: left; padding-left: 9pt">Interest income (expense), net</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">(8,402</TD><TD STYLE="text-align: left">)</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">3</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD STYLE="text-align: left; padding-bottom: 1pt; padding-left: 9pt">Other income (loss), net</TD><TD STYLE="padding-bottom: 1pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 1pt solid; text-align: left">&nbsp;</TD><TD STYLE="border-bottom: Black 1pt solid; text-align: right">6,231</TD><TD STYLE="padding-bottom: 1pt; text-align: left">&nbsp;</TD><TD STYLE="padding-bottom: 1pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 1pt solid; text-align: left">&nbsp;</TD><TD STYLE="border-bottom: Black 1pt solid; text-align: right">(478</TD><TD STYLE="padding-bottom: 1pt; text-align: left">)</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,255,204)">
    <TD STYLE="text-align: left; padding-bottom: 1pt; padding-left: 0.25in">Total other expense</TD><TD STYLE="padding-bottom: 1pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 1pt solid; text-align: left">&nbsp;</TD><TD STYLE="border-bottom: Black 1pt solid; text-align: right">(2,171</TD><TD STYLE="padding-bottom: 1pt; text-align: left">)</TD><TD STYLE="padding-bottom: 1pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 1pt solid; text-align: left">&nbsp;</TD><TD STYLE="border-bottom: Black 1pt solid; text-align: right">(478</TD><TD STYLE="padding-bottom: 1pt; text-align: left">)</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD>&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,255,204)">
    <TD STYLE="text-align: left; padding-bottom: 1pt">Loss from operations</TD><TD STYLE="padding-bottom: 1pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 1pt solid; text-align: left">&nbsp;</TD><TD STYLE="border-bottom: Black 1pt solid; text-align: right">(638,152</TD><TD STYLE="padding-bottom: 1pt; text-align: left">)</TD><TD STYLE="padding-bottom: 1pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 1pt solid; text-align: left">&nbsp;</TD><TD STYLE="border-bottom: Black 1pt solid; text-align: right">(545,718</TD><TD STYLE="padding-bottom: 1pt; text-align: left">)</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD>&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,255,204)">
    <TD STYLE="text-align: left; padding-bottom: 1pt">Preferred return expense</TD><TD STYLE="padding-bottom: 1pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 1pt solid; text-align: left">&nbsp;</TD><TD STYLE="border-bottom: Black 1pt solid; text-align: right">(23,602</TD><TD STYLE="padding-bottom: 1pt; text-align: left">)</TD><TD STYLE="padding-bottom: 1pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 1pt solid; text-align: left">&nbsp;</TD><TD STYLE="border-bottom: Black 1pt solid; text-align: right">(3,091</TD><TD STYLE="padding-bottom: 1pt; text-align: left">)</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD>&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,255,204)">
    <TD STYLE="text-align: left; padding-bottom: 2.5pt">Net loss</TD><TD STYLE="padding-bottom: 2.5pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 2.5pt double; text-align: left">$</TD><TD STYLE="border-bottom: Black 2.5pt double; text-align: right">(661,754</TD><TD STYLE="padding-bottom: 2.5pt; text-align: left">)</TD><TD STYLE="padding-bottom: 2.5pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 2.5pt double; text-align: left">$</TD><TD STYLE="border-bottom: Black 2.5pt double; text-align: right">(548,809</TD><TD STYLE="padding-bottom: 2.5pt; text-align: left">)</TD></TR>
</TABLE>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0">&nbsp;</P>

<P STYLE="font: italic 10pt Times New Roman, Times, Serif; margin: 0">Revenue</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0">Revenue for the three months ended September 30, 2011 decreased
$93,932, or 53.0%, to $83,228 compared to $177,160 for the comparable prior year period. During the three months ended September
30, 2011 and 2010, Grandparents.com derived revenue solely from advertisements on its website. In 2011, Grandparents.com reduced
marketing expenditures which in turn resulted in a decrease in the number of visitors to its website in 2011 compared to 2010.
As a result, Grandparents.com experienced a decline in revenue for the three months ended September 30, 2011 compared to the prior
year period.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0"><B>&nbsp;</B></P>

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<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0"><B>&nbsp;</B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0"><I>Operating Expenses</I></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0">Total operating expenses for the three months ended September 30,
2011 decreased $3,191, or 0.4%, to $719,209 compared to $722,400 for the comparable prior year period.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0"><I>Selling and marketing.</I> Selling and marketing expense decreased
<FONT STYLE="color: black">$41,436, or 58.1%, to $29,864 for the three months ended September 30, 2011 compared to $71,300 </FONT>for
the comparable prior year period. In 2011, Grandparents.com reduced its marketing spend due, in part, to reduced capital resources.
In addition, in Grandparents.com allocated marketing dollars toward attracting more meaningful page impressions as opposed to generating
a greater volume of page impressions.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify"><I>Salaries.</I> Salary expense decreased <FONT STYLE="color: black">$35,644,
or 17.2%, to $172,103 for the three months ended September 30, 2011 compared to $207,747 </FONT>for the comparable prior year period
due to reductions in payroll and staff.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify"><I>Rent.</I> Rent expense decreased <FONT STYLE="color: black">$4,391,
or 9.9%, to $40,000 for the three months ended September 30, 2011 compared to $44,391 </FONT>for the comparable prior year period.
In the fourth quarter of 2010, Grandparents.com moved its office to a new location and entered into a new lease at a lower monthly
rent payment.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0"><I>Consulting.</I> Grandparents.com had no cash consulting expense
for the <FONT STYLE="color: black">three months ended September 30, 2011 compared to $4,005 </FONT>for the comparable prior year
period. This was due to consulting arrangements entered into during 2011 being paid in warrants to purchase equity, with the related
compensation expense being charged to equity-based compensation.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0"><I>Equity-based compensation.</I> Grandparents.com incurred equity-based
compensation expense of $12,688 for the <FONT STYLE="color: black">three months ended September 30, 2011</FONT>. Grandparents.com
had no equity-based compensation expense for the comparable prior year period. In the fourth quarter of 2010, Grandparents.com
granted options to purchase 252,500 Class A Units under its 2010 Stock Option Plan to its officers and employees. In 2011, Grandparents.com
issued warrants to purchase an aggregate of 437,500 Class A Units. The options and warrants are recorded to expense over the requisite
service period, which generally is the vesting period.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0"><I>Management fees.</I> Management fees increased $100,000, or 200.0%,
to $150,000 <FONT STYLE="color: black">for the three months ended September 30, 2011 compared to $50,000 </FONT>for the comparable
prior year period. Grandparents.com pays a monthly management fee to LBG for management services provided to Grandparents.com.
The monthly payments commenced in August 2010 and for 2010 were $25,000 per month compared to $50,000 per month in 2011. Only two
payments of $25,000 each were payable during the three months ended September 30, 2010 compared to four payments of $50,000 each
payable during the three months ended September 30, 2011.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0"><I>Other general and administrative.</I> Other general and administrative
expense decreased $30,957, or 24.1%, to $97,240 <FONT STYLE="color: black">for the three months ended September 30, 2011 compared
to $128,197 </FONT>for the comparable prior year period. The decrease in other general and administrative expense was comprised
primarily of a $6,162 decrease in insurance premiums and a $11,997 decrease in technology licensing fees.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0"><I>Depreciation and amortization.</I> Depreciation and amortization
increased $554, or 0.3%, to $217,314 <FONT STYLE="color: black">for the three months ended September 30, 2011 compared to $216,760
</FONT>for the comparable prior year period.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0"><I>Other Expense</I></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0">Grandparents.com had other expenses of $2,171 for the three months
ended September 30, 2011 compared to $478 for the prior year period. Other expense for the three months ended September 30, 2011
was comprised of interest expense of $8,402, partially offset by other income of $6,231.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0"><I>Preferred Return Expense</I></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0"><I>&nbsp;</I></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0">Preferred return expense was $23,602 for the three months ended
September 30, 2011 compared to $3,091 for the prior year period. During 2010, Grandparents.com sold 918,000 Class A Preferred Units
in exchange for $918,000 in cash. Holders of the Class A Preferred Units are entitled to a 10% cumulative return on the principal
investment (&ldquo;Minimum Annual Return&rdquo;) and unpaid Minimum Annual Returns.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0"><I>Loss from Operations</I></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0">Loss from operations for the three months ended September 30, 2011
was $638,152 compared to $545,718 for the prior year period.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0"><I>Net Loss</I></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0"><I>&nbsp;</I></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0">Net loss for the three months ended September 30, 2011 was $661,754
compared to $548,809 for the prior year period.</P>

<P STYLE="font: italic 10pt Times New Roman, Times, Serif; margin: 0"><B>&nbsp;</B></P>

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<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0">&nbsp;</P>

<P STYLE="font: italic 10pt Times New Roman, Times, Serif; margin: 0"><B>Nine Months Ended September 30, 2011 Compared with Combined
Nine Months Ended September 30, 2010</B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0">&nbsp;</P>

<TABLE CELLPADDING="0" CELLSPACING="0" STYLE="width: 100%; font: 10pt Times New Roman, Times, Serif">
<TR STYLE="vertical-align: bottom">
    <TD NOWRAP STYLE="text-align: center">&nbsp;</TD><TD NOWRAP STYLE="font-weight: bold; padding-bottom: 1pt">&nbsp;</TD>
    <TD COLSPAN="6" NOWRAP STYLE="font-weight: bold; text-align: center; border-bottom: Black 1pt solid">Successor</TD><TD NOWRAP STYLE="padding-bottom: 1pt; font-weight: bold; border-right: Black 1pt solid">&nbsp;</TD><TD NOWRAP STYLE="font-weight: bold; padding-bottom: 1pt">&nbsp;</TD>
    <TD COLSPAN="2" NOWRAP STYLE="font-weight: bold; text-align: center; border-bottom: Black 1pt solid">Predecessor</TD><TD NOWRAP STYLE="padding-bottom: 1pt; font-weight: bold; border-right: Black 1pt solid">&nbsp;</TD><TD NOWRAP STYLE="padding-bottom: 1pt">&nbsp;</TD>
    <TD COLSPAN="2" NOWRAP STYLE="text-align: center">&nbsp;</TD><TD NOWRAP STYLE="padding-bottom: 1pt">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom">
    <TD NOWRAP STYLE="text-align: center">&nbsp;</TD><TD NOWRAP>&nbsp;</TD>
    <TD COLSPAN="2" NOWRAP STYLE="text-align: center">&nbsp;</TD><TD NOWRAP>&nbsp;</TD><TD NOWRAP>&nbsp;</TD>
    <TD COLSPAN="2" NOWRAP STYLE="text-align: center">&nbsp;</TD><TD NOWRAP STYLE="border-right: Black 1pt solid">&nbsp;</TD><TD NOWRAP>&nbsp;</TD>
    <TD COLSPAN="2" NOWRAP STYLE="text-align: center">&nbsp;</TD><TD NOWRAP STYLE="border-right: Black 1pt solid">&nbsp;</TD><TD NOWRAP>&nbsp;</TD>
    <TD COLSPAN="2" NOWRAP STYLE="text-align: center">Combined (1)</TD><TD NOWRAP>&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom">
    <TD NOWRAP STYLE="text-align: center">&nbsp;</TD><TD NOWRAP STYLE="padding-bottom: 1pt">&nbsp;</TD>
    <TD COLSPAN="2" NOWRAP STYLE="text-align: center; border-bottom: Black 1pt solid">2011</TD><TD NOWRAP STYLE="padding-bottom: 1pt">&nbsp;</TD><TD NOWRAP STYLE="padding-bottom: 1pt">&nbsp;</TD>
    <TD COLSPAN="2" NOWRAP STYLE="text-align: center; border-bottom: Black 1pt solid">2010</TD><TD NOWRAP STYLE="padding-bottom: 1pt; border-right: Black 1pt solid">&nbsp;</TD><TD NOWRAP STYLE="padding-bottom: 1pt">&nbsp;</TD>
    <TD COLSPAN="2" NOWRAP STYLE="text-align: center; border-bottom: Black 1pt solid">2010</TD><TD NOWRAP STYLE="padding-bottom: 1pt; border-right: Black 1pt solid">&nbsp;</TD><TD NOWRAP STYLE="padding-bottom: 1pt">&nbsp;</TD>
    <TD COLSPAN="2" NOWRAP STYLE="text-align: center; border-bottom: Black 1pt solid">2010</TD><TD NOWRAP STYLE="padding-bottom: 1pt">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom">
    <TD NOWRAP STYLE="text-align: center">&nbsp;</TD><TD NOWRAP STYLE="padding-bottom: 1pt">&nbsp;</TD>
    <TD COLSPAN="2" NOWRAP STYLE="text-align: center; border-bottom: Black 1pt solid">January 1 <BR>to <BR>September 30</TD><TD NOWRAP STYLE="padding-bottom: 1pt">&nbsp;</TD><TD NOWRAP STYLE="padding-bottom: 1pt">&nbsp;</TD>
    <TD COLSPAN="2" NOWRAP STYLE="text-align: center; border-bottom: Black 1pt solid">May 6 <BR>to <BR>September 30</TD><TD NOWRAP STYLE="padding-bottom: 1pt; border-right: Black 1pt solid">&nbsp;</TD><TD NOWRAP STYLE="padding-bottom: 1pt">&nbsp;</TD>
    <TD COLSPAN="2" NOWRAP STYLE="text-align: center; border-bottom: Black 1pt solid">January 1 <BR>to <BR>May 5</TD><TD NOWRAP STYLE="padding-bottom: 1pt; border-right: Black 1pt solid">&nbsp;</TD><TD NOWRAP STYLE="padding-bottom: 1pt">&nbsp;</TD>
    <TD COLSPAN="2" NOWRAP STYLE="text-align: center; border-bottom: Black 1pt solid">January 1 <BR>to <BR>September 30</TD><TD NOWRAP STYLE="padding-bottom: 1pt">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,255,204)">
    <TD>Revenue:</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left; border-right: Black 1pt solid">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left; border-right: Black 1pt solid">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD STYLE="width: 48%; text-align: left; padding-bottom: 1pt; padding-left: 9pt">Advertising revenue</TD><TD STYLE="width: 1%; padding-bottom: 1pt">&nbsp;</TD>
    <TD STYLE="width: 1%; border-bottom: Black 1pt solid; text-align: left">$</TD><TD STYLE="width: 10%; border-bottom: Black 1pt solid; text-align: right">322,228</TD><TD STYLE="width: 1%; padding-bottom: 1pt; text-align: left">&nbsp;</TD><TD STYLE="width: 1%; padding-bottom: 1pt">&nbsp;</TD>
    <TD STYLE="width: 1%; border-bottom: Black 1pt solid; text-align: left">$</TD><TD STYLE="width: 10%; border-bottom: Black 1pt solid; text-align: right">230,916</TD><TD STYLE="width: 1%; padding-bottom: 1pt; text-align: left; border-right: Black 1pt solid">&nbsp;</TD><TD STYLE="width: 1%; padding-bottom: 1pt">&nbsp;</TD>
    <TD STYLE="width: 1%; border-bottom: Black 1pt solid; text-align: left">$</TD><TD STYLE="width: 10%; border-bottom: Black 1pt solid; text-align: right">111,543</TD><TD STYLE="width: 1%; padding-bottom: 1pt; text-align: left; border-right: Black 1pt solid">&nbsp;</TD><TD STYLE="width: 1%; padding-bottom: 1pt">&nbsp;</TD>
    <TD STYLE="width: 1%; border-bottom: Black 1pt solid; text-align: left">$</TD><TD STYLE="width: 10%; border-bottom: Black 1pt solid; text-align: right">342,459</TD><TD STYLE="width: 1%; padding-bottom: 1pt; text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,255,204)">
    <TD STYLE="text-align: left; padding-bottom: 1pt; padding-left: 0.25in">Total Revenues</TD><TD STYLE="padding-bottom: 1pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 1pt solid; text-align: left">&nbsp;</TD><TD STYLE="border-bottom: Black 1pt solid; text-align: right">322,228</TD><TD STYLE="padding-bottom: 1pt; text-align: left">&nbsp;</TD><TD STYLE="padding-bottom: 1pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 1pt solid; text-align: left">&nbsp;</TD><TD STYLE="border-bottom: Black 1pt solid; text-align: right">230,916</TD><TD STYLE="padding-bottom: 1pt; text-align: left; border-right: Black 1pt solid">&nbsp;</TD><TD STYLE="padding-bottom: 1pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 1pt solid; text-align: left">&nbsp;</TD><TD STYLE="border-bottom: Black 1pt solid; text-align: right">111,543</TD><TD STYLE="padding-bottom: 1pt; text-align: left; border-right: Black 1pt solid">&nbsp;</TD><TD STYLE="padding-bottom: 1pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 1pt solid; text-align: left">&nbsp;</TD><TD STYLE="border-bottom: Black 1pt solid; text-align: right">342,459</TD><TD STYLE="padding-bottom: 1pt; text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD>&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left; border-right: Black 1pt solid">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left; border-right: Black 1pt solid">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,255,204)">
    <TD STYLE="text-align: left">Operating Expenses:</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left; border-right: Black 1pt solid">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left; border-right: Black 1pt solid">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD STYLE="text-align: left; padding-left: 9pt">Selling and marketing</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">84,110</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">133,010</TD><TD STYLE="text-align: left; border-right: Black 1pt solid">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">444,300</TD><TD STYLE="text-align: left; border-right: Black 1pt solid">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">577,310</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,255,204)">
    <TD STYLE="padding-left: 9pt">Salaries</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">613,358</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">366,695</TD><TD STYLE="text-align: left; border-right: Black 1pt solid">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">818,372</TD><TD STYLE="text-align: left; border-right: Black 1pt solid">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">1,185,067</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD STYLE="padding-left: 9pt">Rent</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">119,999</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">76,326</TD><TD STYLE="text-align: left; border-right: Black 1pt solid">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">69,601</TD><TD STYLE="text-align: left; border-right: Black 1pt solid">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">145,927</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,255,204)">
    <TD STYLE="padding-left: 9pt">Consulting</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">-</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">4,005</TD><TD STYLE="text-align: left; border-right: Black 1pt solid">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">10,000</TD><TD STYLE="text-align: left; border-right: Black 1pt solid">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">14,005</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD STYLE="padding-left: 9pt">Equity-based compensation</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">50,518</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">-</TD><TD STYLE="text-align: left; border-right: Black 1pt solid">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">-</TD><TD STYLE="text-align: left; border-right: Black 1pt solid">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">-</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,255,204)">
    <TD STYLE="text-align: left; padding-left: 9pt">Transaction costs</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">-</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">4,250,000</TD><TD STYLE="text-align: left; border-right: Black 1pt solid">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">-</TD><TD STYLE="text-align: left; border-right: Black 1pt solid">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">4,250,000</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD STYLE="text-align: left; padding-left: 9pt">Management fees</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">450,000</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">50,000</TD><TD STYLE="text-align: left; border-right: Black 1pt solid">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">-</TD><TD STYLE="text-align: left; border-right: Black 1pt solid">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">50,000</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,255,204)">
    <TD STYLE="text-align: left; padding-left: 9pt">Other general and administrative</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">335,465</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">221,185</TD><TD STYLE="text-align: left; border-right: Black 1pt solid">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">126,346</TD><TD STYLE="text-align: left; border-right: Black 1pt solid">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">347,531</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD STYLE="text-align: left; padding-bottom: 1pt; padding-left: 9pt">Depreciation and amortization</TD><TD STYLE="padding-bottom: 1pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 1pt solid; text-align: left">&nbsp;</TD><TD STYLE="border-bottom: Black 1pt solid; text-align: right">651,939</TD><TD STYLE="padding-bottom: 1pt; text-align: left">&nbsp;</TD><TD STYLE="padding-bottom: 1pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 1pt solid; text-align: left">&nbsp;</TD><TD STYLE="border-bottom: Black 1pt solid; text-align: right">343,341</TD><TD STYLE="padding-bottom: 1pt; text-align: left; border-right: Black 1pt solid">&nbsp;</TD><TD STYLE="padding-bottom: 1pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 1pt solid; text-align: left">&nbsp;</TD><TD STYLE="border-bottom: Black 1pt solid; text-align: right">67,988</TD><TD STYLE="padding-bottom: 1pt; text-align: left; border-right: Black 1pt solid">&nbsp;</TD><TD STYLE="padding-bottom: 1pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 1pt solid; text-align: left">&nbsp;</TD><TD STYLE="border-bottom: Black 1pt solid; text-align: right">411,329</TD><TD STYLE="padding-bottom: 1pt; text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,255,204)">
    <TD STYLE="text-align: left; padding-bottom: 1pt; padding-left: 0.25in">Total operating expenses</TD><TD STYLE="padding-bottom: 1pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 1pt solid; text-align: left">&nbsp;</TD><TD STYLE="border-bottom: Black 1pt solid; text-align: right">2,305,389</TD><TD STYLE="padding-bottom: 1pt; text-align: left">&nbsp;</TD><TD STYLE="padding-bottom: 1pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 1pt solid; text-align: left">&nbsp;</TD><TD STYLE="border-bottom: Black 1pt solid; text-align: right">5,444,562</TD><TD STYLE="padding-bottom: 1pt; text-align: left; border-right: Black 1pt solid">&nbsp;</TD><TD STYLE="padding-bottom: 1pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 1pt solid; text-align: left">&nbsp;</TD><TD STYLE="border-bottom: Black 1pt solid; text-align: right">1,536,607</TD><TD STYLE="padding-bottom: 1pt; text-align: left; border-right: Black 1pt solid">&nbsp;</TD><TD STYLE="padding-bottom: 1pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 1pt solid; text-align: left">&nbsp;</TD><TD STYLE="border-bottom: Black 1pt solid; text-align: right">6,981,169</TD><TD STYLE="padding-bottom: 1pt; text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD>&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left; border-right: Black 1pt solid">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left; border-right: Black 1pt solid">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,255,204)">
    <TD STYLE="text-align: left">Other income (expenses):</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left; border-right: Black 1pt solid">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left; border-right: Black 1pt solid">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD STYLE="text-align: left; padding-left: 9pt">Interest income (expense), net</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">(12,393</TD><TD STYLE="text-align: left">)</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">3</TD><TD STYLE="text-align: left; border-right: Black 1pt solid">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">-</TD><TD STYLE="text-align: left; border-right: Black 1pt solid">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">3</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,255,204)">
    <TD STYLE="text-align: left; padding-left: 9pt">Gain on purchase of business</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">-</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">3,565,408</TD><TD STYLE="text-align: left; border-right: Black 1pt solid">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">-</TD><TD STYLE="text-align: left; border-right: Black 1pt solid">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">3,565,408</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD STYLE="text-align: left; padding-bottom: 1pt; padding-left: 9pt">Other income, net</TD><TD STYLE="padding-bottom: 1pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 1pt solid; text-align: left">&nbsp;</TD><TD STYLE="border-bottom: Black 1pt solid; text-align: right">17,443</TD><TD STYLE="padding-bottom: 1pt; text-align: left">&nbsp;</TD><TD STYLE="padding-bottom: 1pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 1pt solid; text-align: left">&nbsp;</TD><TD STYLE="border-bottom: Black 1pt solid; text-align: right">35,191</TD><TD STYLE="padding-bottom: 1pt; text-align: left; border-right: Black 1pt solid">&nbsp;</TD><TD STYLE="padding-bottom: 1pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 1pt solid; text-align: left">&nbsp;</TD><TD STYLE="border-bottom: Black 1pt solid; text-align: right">108,000</TD><TD STYLE="padding-bottom: 1pt; text-align: left; border-right: Black 1pt solid">&nbsp;</TD><TD STYLE="padding-bottom: 1pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 1pt solid; text-align: left">&nbsp;</TD><TD STYLE="border-bottom: Black 1pt solid; text-align: right">143,191</TD><TD STYLE="padding-bottom: 1pt; text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,255,204)">
    <TD STYLE="text-align: left; padding-bottom: 1pt; padding-left: 0.25in">Total other income</TD><TD STYLE="padding-bottom: 1pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 1pt solid; text-align: left">&nbsp;</TD><TD STYLE="border-bottom: Black 1pt solid; text-align: right">5,050</TD><TD STYLE="padding-bottom: 1pt; text-align: left">&nbsp;</TD><TD STYLE="padding-bottom: 1pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 1pt solid; text-align: left">&nbsp;</TD><TD STYLE="border-bottom: Black 1pt solid; text-align: right">3,600,602</TD><TD STYLE="padding-bottom: 1pt; text-align: left; border-right: Black 1pt solid">&nbsp;</TD><TD STYLE="padding-bottom: 1pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 1pt solid; text-align: left">&nbsp;</TD><TD STYLE="border-bottom: Black 1pt solid; text-align: right">108,000</TD><TD STYLE="padding-bottom: 1pt; text-align: left; border-right: Black 1pt solid">&nbsp;</TD><TD STYLE="padding-bottom: 1pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 1pt solid; text-align: left">&nbsp;</TD><TD STYLE="border-bottom: Black 1pt solid; text-align: right">3,708,602</TD><TD STYLE="padding-bottom: 1pt; text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD>&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left; border-right: Black 1pt solid">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left; border-right: Black 1pt solid">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,255,204)">
    <TD STYLE="text-align: left; padding-bottom: 1pt">Loss from operations</TD><TD STYLE="padding-bottom: 1pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 1pt solid; text-align: left">&nbsp;</TD><TD STYLE="border-bottom: Black 1pt solid; text-align: right">(1,978,111</TD><TD STYLE="padding-bottom: 1pt; text-align: left">)</TD><TD STYLE="padding-bottom: 1pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 1pt solid; text-align: left">&nbsp;</TD><TD STYLE="border-bottom: Black 1pt solid; text-align: right">(1,613,044</TD><TD STYLE="padding-bottom: 1pt; text-align: left; border-right: Black 1pt solid">)</TD><TD STYLE="padding-bottom: 1pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 1pt solid; text-align: left">&nbsp;</TD><TD STYLE="border-bottom: Black 1pt solid; text-align: right">(1,317,064</TD><TD STYLE="padding-bottom: 1pt; text-align: left; border-right: Black 1pt solid">)</TD><TD STYLE="color: black; padding-bottom: 1pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 1pt solid; color: black; text-align: left">&nbsp;</TD><TD STYLE="border-bottom: Black 1pt solid; color: black; text-align: right">(2,930,108</TD><TD STYLE="padding-bottom: 1pt; color: black; text-align: left">)</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD>&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left; border-right: Black 1pt solid">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left; border-right: Black 1pt solid">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,255,204)">
    <TD STYLE="text-align: left; padding-bottom: 1pt">Preferred return expense</TD><TD STYLE="padding-bottom: 1pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 1pt solid; text-align: left">&nbsp;</TD><TD STYLE="border-bottom: Black 1pt solid; text-align: right">(70,806</TD><TD STYLE="padding-bottom: 1pt; text-align: left">)</TD><TD STYLE="padding-bottom: 1pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 1pt solid; text-align: left">&nbsp;</TD><TD STYLE="border-bottom: Black 1pt solid; text-align: right">(3,091</TD><TD STYLE="padding-bottom: 1pt; text-align: left; border-right: Black 1pt solid">)</TD><TD STYLE="padding-bottom: 1pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 1pt solid; text-align: left">&nbsp;</TD><TD STYLE="border-bottom: Black 1pt solid; text-align: right">(137,572</TD><TD STYLE="padding-bottom: 1pt; text-align: left; border-right: Black 1pt solid">)</TD><TD STYLE="color: black; padding-bottom: 1pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 1pt solid; color: black; text-align: left">&nbsp;</TD><TD STYLE="border-bottom: Black 1pt solid; color: black; text-align: right">(140,663</TD><TD STYLE="padding-bottom: 1pt; color: black; text-align: left">)</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD>&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left; border-right: Black 1pt solid">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left; border-right: Black 1pt solid">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,255,204)">
    <TD STYLE="text-align: left; padding-bottom: 2.5pt">Net loss</TD><TD STYLE="padding-bottom: 2.5pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 2.5pt double; text-align: left">$</TD><TD STYLE="border-bottom: Black 2.5pt double; text-align: right">(2,048,917</TD><TD STYLE="padding-bottom: 2.5pt; text-align: left">)</TD><TD STYLE="padding-bottom: 2.5pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 2.5pt double; text-align: left">$</TD><TD STYLE="border-bottom: Black 2.5pt double; text-align: right">(1,616,135</TD><TD STYLE="padding-bottom: 2.5pt; text-align: left; border-right: Black 1pt solid">)</TD><TD STYLE="padding-bottom: 2.5pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 2.5pt double; text-align: left">$</TD><TD STYLE="border-bottom: Black 2.5pt double; text-align: right">(1,454,636</TD><TD STYLE="padding-bottom: 2.5pt; text-align: left; border-right: Black 1pt solid">)</TD><TD STYLE="padding-bottom: 2.5pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 2.5pt double; text-align: left">$</TD><TD STYLE="border-bottom: Black 2.5pt double; text-align: right">(3,070,771</TD><TD STYLE="padding-bottom: 2.5pt; text-align: left">)</TD></TR>
</TABLE>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0">(1) The combination of Successor and Predecessor periods in
2010 is a non-GAAP measure. Grandparents.com has included the separate periods in this presentation to enable the comparative
nine month reconciliation of the information to its GAAP presentation in the condensed financial statements.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0">&nbsp;</P>

<P STYLE="font: italic 10pt Times New Roman, Times, Serif; margin: 0">Revenue</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0">Revenue for the nine months ended September 30, 2011 decreased $<FONT STYLE="color: black">20,231</FONT>,
or 5.9%, to $322,228 compared to $342,459 for the comparable prior year period. During the nine months ended September 30, 2011
and 2010, Grandparents.com derived revenue solely from advertisements on its website. In 2011, Grandparents.com reduced marketing
expenditures which in turn resulted in a decrease in the number of visitors to its website in 2011 compared to 2010. As a result,
Grandparents.com experienced a decline in revenue for the nine months ended September 30, 2011 compared to the prior year period.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0"><B>&nbsp;</B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0"><I>Operating Expenses</I></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0">Total operating expenses for the nine months ended September 30,
2011 decreased $4,675,780, or 67.0%, to $2,305,389 compared to $6,981,169 for the comparable prior year period.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0"><I>Selling and marketing.</I> Selling and marketing expense decreased
<FONT STYLE="color: black">$493,200, or 85.4%, to $84,110 for the nine months ended September 30, 2011 compared to $577,310 </FONT>for
the comparable prior year period. In 2011, Grandparents.com reduced its marketing spend due, in part, to reduced capital resources.
In addition, in Grandparents.com allocated marketing dollars toward attracting more meaningful page impressions as opposed to generating
a greater volume of page impressions.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0">&nbsp;</P>

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<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify"><I>Salaries.</I> Salary expense decreased <FONT STYLE="color: black">$571,709,
or 48.2%, to $613,358 for the nine months ended September 30, 2011 compared to $1,185,067 </FONT>for the comparable prior year
period due to reductions in payroll and staff.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify"><I>Rent.</I> Rent expense decreased <FONT STYLE="color: black">$25,928,
or 17.8%, to $119,999 for the nine months ended September 30, 2011 compared to $145,927 </FONT>for the comparable prior year period.
In the fourth quarter of 2010, Grandparents.com moved its office to a new location and entered into a new lease at a lower monthly
rent payment.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0"><I>Consulting.</I> Grandparents.com had no cash consulting expense
for the <FONT STYLE="color: black">nine months ended September 30, 2011 compared to $14,005 </FONT>for the comparable prior year
period. This was due to consulting arrangements entered into during 2011 being paid in warrants to purchase equity, with the related
compensation expense being charged to equity-based compensation.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0"><I>Equity-based compensation.</I> Grandparents.com incurred equity-based
compensation expense of $<FONT STYLE="color: black">50,518 </FONT>for the <FONT STYLE="color: black">nine months ended September
30, 2011</FONT>. Grandparents.com had no equity-based compensation expense for the comparable prior year period. In the fourth
quarter of 2010, Grandparents.com granted options to purchase 252,500 Class A Units under its 2010 Stock Option Plan to its officers
and employees. In 2011, Grandparents.com issued warrants to purchase an aggregate of 437,000 Class A Units. The options and warrants
are recorded to expense over the requisite service period, which generally is the vesting period.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0"><I>Transaction Costs.</I> Grandparents.com incurred $4,250,000 for
the nine months ended September 30, 2010 in connection with the 2010 Purchase Transaction. Grandparents.com had no such expense
for the nine months ended September 30, 2011.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0"><I>Management fees.</I> Management fees increased $400,000, or 800.0%,
to $450,000 <FONT STYLE="color: black">for the nine months ended September 30, 2011 compared to $50,000 </FONT>for the comparable
prior year period. Grandparents.com pays a monthly management fee to LBG for management services provided to Grandparents.com.
The monthly payments commenced in August 2010 and for 2010 were $25,000 per month compared to $50,000 per month in 2011. Only two
payments of $25,000 each were payable during the nine months ended September 30, 2010 compared to nine payments of $50,000 each
payable during the nine months ended September 30, 2011.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0"><I>Other general and administrative.</I> Other general and administrative
expense decreased $<FONT STYLE="color: black">12,066</FONT>, or 3.5%, to $<FONT STYLE="color: black">335,465 for the nine months
ended September 30, 2011 compared to $347,531 </FONT>for the comparable prior year period.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0"><I>Depreciation and amortization.</I> Depreciation and amortization
increased $<FONT STYLE="color: black">240,610</FONT>, or 58.5%, to $<FONT STYLE="color: black">651,939 for the nine months ended
September 30, 2011 compared to $411,329 </FONT>for the comparable prior year period.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0"><I>Other Income (Expense)</I></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0">Grandparents.com had other income of $5,050 for the nine months
ended September 30, 2011 compared to $<FONT STYLE="color: black">3,708,602</FONT> for the prior year period. Other income for
the nine months ended September 30, 2010 included gain on purchase of business of $3,565,408 which was not present in the comparable
period of 2011.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0"><I>Preferred Return Expense</I></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0"><I>&nbsp;</I></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0">Preferred return expense was $70,806 for the nine months ended September
30, 2011 compared to $3,091 for the prior year period. During 2010, Grandparents.com sold 918,000 Class A Preferred Units in exchange
for $918,000 in cash. Holders of the Class A Preferred Units are entitled to a 10% Minimum Annual Return and unpaid Minimum Annual
Returns.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0"><I>&nbsp;</I></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0"><I>Loss from Operations</I></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0"><I>&nbsp;</I></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0">Loss from operations for the nine months ended September 30, 2011
was $1,978,111 compared to $2,930,108 for the prior year period.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0"><I>&nbsp;</I></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0"><I>Net Loss</I></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0"><I>&nbsp;</I></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0">Net loss for the nine months ended September 30, 2011 was $2,048,917
compared to $3,070,771 for the prior year period.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0">&nbsp;</P>

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<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0">&nbsp;</P>

<P STYLE="font: italic 10pt Times New Roman, Times, Serif; margin: 0"><B>Combined Fiscal Year Ended December 31, 2010 Compared
with Predecessor Fiscal Year Ended December 31, 2009</B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0">&nbsp;</P>

<TABLE CELLPADDING="0" CELLSPACING="0" STYLE="width: 100%; font: 10pt Times New Roman, Times, Serif">
<TR STYLE="vertical-align: bottom">
    <TD NOWRAP STYLE="text-align: center">&nbsp;</TD><TD NOWRAP STYLE="font-weight: bold; padding-bottom: 1pt">&nbsp;</TD>
    <TD COLSPAN="2" NOWRAP STYLE="font-weight: bold; text-align: center; border-bottom: Black 1pt solid">Successor</TD><TD NOWRAP STYLE="padding-bottom: 1pt; font-weight: bold; border-right: Black 1pt solid">&nbsp;</TD><TD NOWRAP STYLE="font-weight: bold; padding-bottom: 1pt">&nbsp;</TD>
    <TD COLSPAN="2" NOWRAP STYLE="font-weight: bold; text-align: center; border-bottom: Black 1pt solid">Predecessor</TD><TD NOWRAP STYLE="padding-bottom: 1pt; font-weight: bold">&nbsp;</TD><TD NOWRAP STYLE="padding-bottom: 1pt">&nbsp;</TD>
    <TD COLSPAN="2" NOWRAP STYLE="text-align: center">&nbsp;</TD><TD NOWRAP STYLE="padding-bottom: 1pt">&nbsp;</TD><TD NOWRAP STYLE="font-weight: bold; padding-bottom: 1pt">&nbsp;</TD>
    <TD COLSPAN="2" NOWRAP STYLE="font-weight: bold; text-align: center; border-bottom: Black 1pt solid">Predecessor</TD><TD NOWRAP STYLE="padding-bottom: 1pt; font-weight: bold">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom">
    <TD NOWRAP STYLE="text-align: center">&nbsp;</TD><TD NOWRAP STYLE="font-weight: bold">&nbsp;</TD>
    <TD COLSPAN="2" NOWRAP STYLE="font-weight: bold; text-align: center">&nbsp;</TD><TD NOWRAP STYLE="font-weight: bold; border-right: Black 1pt solid">&nbsp;</TD><TD NOWRAP STYLE="font-weight: bold">&nbsp;</TD>
    <TD COLSPAN="2" NOWRAP STYLE="font-weight: bold; text-align: center">&nbsp;</TD><TD NOWRAP STYLE="font-weight: bold">&nbsp;</TD><TD NOWRAP>&nbsp;</TD>
    <TD COLSPAN="2" NOWRAP STYLE="text-align: center">Combined (1)</TD><TD NOWRAP>&nbsp;</TD><TD NOWRAP STYLE="font-weight: bold">&nbsp;</TD>
    <TD COLSPAN="2" NOWRAP STYLE="font-weight: bold; text-align: center">&nbsp;</TD><TD NOWRAP STYLE="font-weight: bold">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom">
    <TD NOWRAP STYLE="text-align: center">&nbsp;</TD><TD NOWRAP STYLE="padding-bottom: 1pt">&nbsp;</TD>
    <TD COLSPAN="2" NOWRAP STYLE="text-align: center; border-bottom: Black 1pt solid">2010</TD><TD NOWRAP STYLE="padding-bottom: 1pt; border-right: Black 1pt solid">&nbsp;</TD><TD NOWRAP STYLE="padding-bottom: 1pt">&nbsp;</TD>
    <TD COLSPAN="2" NOWRAP STYLE="text-align: center; border-bottom: Black 1pt solid">2010</TD><TD NOWRAP STYLE="padding-bottom: 1pt">&nbsp;</TD><TD NOWRAP STYLE="padding-bottom: 1pt">&nbsp;</TD>
    <TD COLSPAN="2" NOWRAP STYLE="text-align: center; border-bottom: Black 1pt solid">2010</TD><TD NOWRAP STYLE="padding-bottom: 1pt">&nbsp;</TD><TD NOWRAP STYLE="padding-bottom: 1pt">&nbsp;</TD>
    <TD COLSPAN="2" NOWRAP STYLE="text-align: center; border-bottom: Black 1pt solid">2009</TD><TD NOWRAP STYLE="padding-bottom: 1pt">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom">
    <TD NOWRAP STYLE="text-align: center">&nbsp;</TD><TD NOWRAP STYLE="padding-bottom: 1pt">&nbsp;</TD>
    <TD COLSPAN="2" NOWRAP STYLE="text-align: center; border-bottom: Black 1pt solid">May 6 <BR>to <BR>December 31</TD><TD NOWRAP STYLE="padding-bottom: 1pt; border-right: Black 1pt solid">&nbsp;</TD><TD NOWRAP STYLE="padding-bottom: 1pt">&nbsp;</TD>
    <TD COLSPAN="2" NOWRAP STYLE="text-align: center; border-bottom: Black 1pt solid">January 1 <BR>to <BR>May 5</TD><TD NOWRAP STYLE="padding-bottom: 1pt">&nbsp;</TD><TD NOWRAP STYLE="padding-bottom: 1pt">&nbsp;</TD>
    <TD COLSPAN="2" NOWRAP STYLE="text-align: center; border-bottom: Black 1pt solid">January 1 <BR>to <BR>December 31</TD><TD NOWRAP STYLE="padding-bottom: 1pt">&nbsp;</TD><TD NOWRAP STYLE="padding-bottom: 1pt">&nbsp;</TD>
    <TD COLSPAN="2" NOWRAP STYLE="text-align: center; border-bottom: Black 1pt solid">January 1 <BR>to <BR>December 31</TD><TD NOWRAP STYLE="padding-bottom: 1pt">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,255,204)">
    <TD>Revenue:</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left; border-right: Black 1pt solid">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD STYLE="width: 48%; text-align: left; padding-bottom: 1pt; padding-left: 9pt">Advertising revenue</TD><TD STYLE="width: 1%; padding-bottom: 1pt">&nbsp;</TD>
    <TD STYLE="width: 1%; border-bottom: Black 1pt solid; text-align: left">$</TD><TD STYLE="width: 10%; border-bottom: Black 1pt solid; text-align: right">646,512</TD><TD STYLE="width: 1%; padding-bottom: 1pt; text-align: left; border-right: Black 1pt solid">&nbsp;</TD><TD STYLE="width: 1%; padding-bottom: 1pt">&nbsp;</TD>
    <TD STYLE="width: 1%; border-bottom: Black 1pt solid; text-align: left">$</TD><TD STYLE="width: 10%; border-bottom: Black 1pt solid; text-align: right">111,543</TD><TD STYLE="width: 1%; padding-bottom: 1pt; text-align: left">&nbsp;</TD><TD STYLE="width: 1%; padding-bottom: 1pt">&nbsp;</TD>
    <TD STYLE="width: 1%; border-bottom: Black 1pt solid; text-align: left">$</TD><TD STYLE="width: 10%; border-bottom: Black 1pt solid; text-align: right">758,055</TD><TD STYLE="width: 1%; padding-bottom: 1pt; text-align: left">&nbsp;</TD><TD STYLE="width: 1%; padding-bottom: 1pt">&nbsp;</TD>
    <TD STYLE="width: 1%; border-bottom: Black 1pt solid; text-align: left">$</TD><TD STYLE="width: 10%; border-bottom: Black 1pt solid; text-align: right">512,389</TD><TD STYLE="width: 1%; padding-bottom: 1pt; text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,255,204)">
    <TD STYLE="text-align: left; padding-bottom: 1pt; padding-left: 0.25in">Total Revenues</TD><TD STYLE="padding-bottom: 1pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 1pt solid; text-align: left">&nbsp;</TD><TD STYLE="border-bottom: Black 1pt solid; text-align: right">646,512</TD><TD STYLE="padding-bottom: 1pt; text-align: left; border-right: Black 1pt solid">&nbsp;</TD><TD STYLE="padding-bottom: 1pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 1pt solid; text-align: left">&nbsp;</TD><TD STYLE="border-bottom: Black 1pt solid; text-align: right">111,543</TD><TD STYLE="padding-bottom: 1pt; text-align: left">&nbsp;</TD><TD STYLE="padding-bottom: 1pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 1pt solid; text-align: left">&nbsp;</TD><TD STYLE="border-bottom: Black 1pt solid; text-align: right">758,055</TD><TD STYLE="padding-bottom: 1pt; text-align: left">&nbsp;</TD><TD STYLE="padding-bottom: 1pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 1pt solid; text-align: left">&nbsp;</TD><TD STYLE="border-bottom: Black 1pt solid; text-align: right">512,389</TD><TD STYLE="padding-bottom: 1pt; text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD>&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left; border-right: Black 1pt solid">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,255,204)">
    <TD STYLE="text-align: left">Operating Expenses:</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left; border-right: Black 1pt solid">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD STYLE="text-align: left; padding-left: 9pt">Selling and marketing</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">246,838</TD><TD STYLE="text-align: left; border-right: Black 1pt solid">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">444,300</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">691,138</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">1,476,290</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,255,204)">
    <TD STYLE="padding-left: 9pt">Salaries</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">657,975</TD><TD STYLE="text-align: left; border-right: Black 1pt solid">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">818,372</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">1,476,347</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">3,276,844</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD STYLE="padding-left: 9pt">Rent</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">84,090</TD><TD STYLE="text-align: left; border-right: Black 1pt solid">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">69,601</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">153,691</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">227,211</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,255,204)">
    <TD STYLE="padding-left: 9pt">Consulting</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">6,005</TD><TD STYLE="text-align: left; border-right: Black 1pt solid">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">10,000</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">16,005</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">258,000</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD STYLE="padding-left: 9pt">Equity-based compensation</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">9,549</TD><TD STYLE="text-align: left; border-right: Black 1pt solid">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">-</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">9,549</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">-</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,255,204)">
    <TD STYLE="text-align: left; padding-left: 9pt">Transaction costs</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">4,250,000</TD><TD STYLE="text-align: left; border-right: Black 1pt solid">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">-</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">4,250,000</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">-</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD STYLE="text-align: left; padding-left: 9pt">Management fees</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">125,000</TD><TD STYLE="text-align: left; border-right: Black 1pt solid">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">-</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">125,000</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">-</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,255,204)">
    <TD STYLE="text-align: left; padding-left: 9pt">Other general and administrative</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">477,249</TD><TD STYLE="text-align: left; border-right: Black 1pt solid">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">126,346</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">603,595</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">525,380</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD STYLE="text-align: left; padding-bottom: 1pt; padding-left: 9pt">Depreciation and amortization</TD><TD STYLE="padding-bottom: 1pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 1pt solid; text-align: left">&nbsp;</TD><TD STYLE="border-bottom: Black 1pt solid; text-align: right">560,101</TD><TD STYLE="padding-bottom: 1pt; text-align: left; border-right: Black 1pt solid">&nbsp;</TD><TD STYLE="padding-bottom: 1pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 1pt solid; text-align: left">&nbsp;</TD><TD STYLE="border-bottom: Black 1pt solid; text-align: right">67,988</TD><TD STYLE="padding-bottom: 1pt; text-align: left">&nbsp;</TD><TD STYLE="padding-bottom: 1pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 1pt solid; text-align: left">&nbsp;</TD><TD STYLE="border-bottom: Black 1pt solid; text-align: right">628,089</TD><TD STYLE="padding-bottom: 1pt; text-align: left">&nbsp;</TD><TD STYLE="padding-bottom: 1pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 1pt solid; text-align: left">&nbsp;</TD><TD STYLE="border-bottom: Black 1pt solid; text-align: right">274,765</TD><TD STYLE="padding-bottom: 1pt; text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,255,204)">
    <TD STYLE="text-align: left; padding-bottom: 1pt; padding-left: 0.25in">Total operating expenses</TD><TD STYLE="padding-bottom: 1pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 1pt solid; text-align: left">&nbsp;</TD><TD STYLE="border-bottom: Black 1pt solid; text-align: right">6,416,807</TD><TD STYLE="padding-bottom: 1pt; text-align: left; border-right: Black 1pt solid">&nbsp;</TD><TD STYLE="padding-bottom: 1pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 1pt solid; text-align: left">&nbsp;</TD><TD STYLE="border-bottom: Black 1pt solid; text-align: right">1,536,607</TD><TD STYLE="padding-bottom: 1pt; text-align: left">&nbsp;</TD><TD STYLE="padding-bottom: 1pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 1pt solid; text-align: left">&nbsp;</TD><TD STYLE="border-bottom: Black 1pt solid; text-align: right">7,953,414</TD><TD STYLE="padding-bottom: 1pt; text-align: left">&nbsp;</TD><TD STYLE="padding-bottom: 1pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 1pt solid; text-align: left">&nbsp;</TD><TD STYLE="border-bottom: Black 1pt solid; text-align: right">6,038,490</TD><TD STYLE="padding-bottom: 1pt; text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD>&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left; border-right: Black 1pt solid">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,255,204)">
    <TD STYLE="text-align: left">Other income:</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left; border-right: Black 1pt solid">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD STYLE="text-align: left; padding-left: 9pt">Interest income, net</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">18</TD><TD STYLE="text-align: left; border-right: Black 1pt solid">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">-</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">18</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">-</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,255,204)">
    <TD STYLE="text-align: left; padding-left: 9pt">Gain on purchase of business</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">3,565,408</TD><TD STYLE="text-align: left; border-right: Black 1pt solid">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">-</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">3,565,408</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">-</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD STYLE="text-align: left; padding-bottom: 1pt; padding-left: 9pt">Other income, net</TD><TD STYLE="padding-bottom: 1pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 1pt solid; text-align: left">&nbsp;</TD><TD STYLE="border-bottom: Black 1pt solid; text-align: right">51,184</TD><TD STYLE="padding-bottom: 1pt; text-align: left; border-right: Black 1pt solid">&nbsp;</TD><TD STYLE="padding-bottom: 1pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 1pt solid; text-align: left">&nbsp;</TD><TD STYLE="border-bottom: Black 1pt solid; text-align: right">108,000</TD><TD STYLE="padding-bottom: 1pt; text-align: left">&nbsp;</TD><TD STYLE="padding-bottom: 1pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 1pt solid; text-align: left">&nbsp;</TD><TD STYLE="border-bottom: Black 1pt solid; text-align: right">159,184</TD><TD STYLE="padding-bottom: 1pt; text-align: left">&nbsp;</TD><TD STYLE="padding-bottom: 1pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 1pt solid; text-align: left">&nbsp;</TD><TD STYLE="border-bottom: Black 1pt solid; text-align: right">-</TD><TD STYLE="padding-bottom: 1pt; text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,255,204)">
    <TD STYLE="text-align: left; padding-bottom: 1pt; padding-left: 0.25in">Total other income</TD><TD STYLE="padding-bottom: 1pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 1pt solid; text-align: left">&nbsp;</TD><TD STYLE="border-bottom: Black 1pt solid; text-align: right">3,616,610</TD><TD STYLE="padding-bottom: 1pt; text-align: left; border-right: Black 1pt solid">&nbsp;</TD><TD STYLE="padding-bottom: 1pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 1pt solid; text-align: left">&nbsp;</TD><TD STYLE="border-bottom: Black 1pt solid; text-align: right">108,000</TD><TD STYLE="padding-bottom: 1pt; text-align: left">&nbsp;</TD><TD STYLE="padding-bottom: 1pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 1pt solid; text-align: left">&nbsp;</TD><TD STYLE="border-bottom: Black 1pt solid; text-align: right">3,724,610</TD><TD STYLE="padding-bottom: 1pt; text-align: left">&nbsp;</TD><TD STYLE="padding-bottom: 1pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 1pt solid; text-align: left">&nbsp;</TD><TD STYLE="border-bottom: Black 1pt solid; text-align: right">-</TD><TD STYLE="padding-bottom: 1pt; text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD>&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left; border-right: Black 1pt solid">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,255,204)">
    <TD STYLE="text-align: left; padding-bottom: 1pt">Loss from operations</TD><TD STYLE="padding-bottom: 1pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 1pt solid; text-align: left">&nbsp;</TD><TD STYLE="border-bottom: Black 1pt solid; text-align: right">(2,153,685</TD><TD STYLE="padding-bottom: 1pt; text-align: left; border-right: Black 1pt solid">)</TD><TD STYLE="padding-bottom: 1pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 1pt solid; text-align: left">&nbsp;</TD><TD STYLE="border-bottom: Black 1pt solid; text-align: right">(1,317,064</TD><TD STYLE="padding-bottom: 1pt; text-align: left">)</TD><TD STYLE="padding-bottom: 1pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 1pt solid; text-align: left">&nbsp;</TD><TD STYLE="border-bottom: Black 1pt solid; text-align: right">(3,470,749</TD><TD STYLE="padding-bottom: 1pt; text-align: left">)</TD><TD STYLE="padding-bottom: 1pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 1pt solid; text-align: left">&nbsp;</TD><TD STYLE="border-bottom: Black 1pt solid; text-align: right">(5,526,101</TD><TD STYLE="padding-bottom: 1pt; text-align: left">)</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD>&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left; border-right: Black 1pt solid">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,255,204)">
    <TD STYLE="text-align: left; padding-bottom: 1pt; text-indent: -9pt; padding-left: 9pt">Loss from operations before preferred return</TD><TD STYLE="padding-bottom: 1pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 1pt solid; text-align: left">&nbsp;</TD><TD STYLE="border-bottom: Black 1pt solid; text-align: right">(26,080</TD><TD STYLE="padding-bottom: 1pt; text-align: left; border-right: Black 1pt solid">)</TD><TD STYLE="padding-bottom: 1pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 1pt solid; text-align: left">&nbsp;</TD><TD STYLE="border-bottom: Black 1pt solid; text-align: right">(137,572</TD><TD STYLE="padding-bottom: 1pt; text-align: left">)</TD><TD STYLE="padding-bottom: 1pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 1pt solid; text-align: left">&nbsp;</TD><TD STYLE="border-bottom: Black 1pt solid; text-align: right">(163,652</TD><TD STYLE="padding-bottom: 1pt; text-align: left">)</TD><TD STYLE="padding-bottom: 1pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 1pt solid; text-align: left">&nbsp;</TD><TD STYLE="border-bottom: Black 1pt solid; text-align: right">-</TD><TD STYLE="padding-bottom: 1pt; text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD>&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left; border-right: Black 1pt solid">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,255,204)">
    <TD STYLE="text-align: left; padding-bottom: 2.5pt">Net loss</TD><TD STYLE="padding-bottom: 2.5pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 2.5pt double; text-align: left">$</TD><TD STYLE="border-bottom: Black 2.5pt double; text-align: right">(2,179,765</TD><TD STYLE="padding-bottom: 2.5pt; text-align: left; border-right: Black 1pt solid">)</TD><TD STYLE="padding-bottom: 2.5pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 2.5pt double; text-align: left">$</TD><TD STYLE="border-bottom: Black 2.5pt double; text-align: right">(1,454,636</TD><TD STYLE="padding-bottom: 2.5pt; text-align: left">)</TD><TD STYLE="padding-bottom: 2.5pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 2.5pt double; text-align: left">$</TD><TD STYLE="border-bottom: Black 2.5pt double; text-align: right">(3,634,401</TD><TD STYLE="padding-bottom: 2.5pt; text-align: left">)</TD><TD STYLE="padding-bottom: 2.5pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 2.5pt double; text-align: left">$</TD><TD STYLE="border-bottom: Black 2.5pt double; text-align: right">(5,526,101</TD><TD STYLE="padding-bottom: 2.5pt; text-align: left">)</TD></TR>
</TABLE>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0">(1) The combination of Successor and Predecessor periods in
2010 is a non-GAAP measure. Grandparents.com has included the separate periods in this presentation to enable the comparative
twelve month reconciliation of the information to its GAAP presentation in the financial statements.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0">&nbsp;</P>

<P STYLE="font: italic 10pt Times New Roman, Times, Serif; margin: 0">Revenue</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0">Revenue for the year ended December 31, 2010 increased $<FONT STYLE="color: black">245,666</FONT>,
or 47.9%, to $758,055 compared to $512,389 for the comparable prior year period. The increase in revenue over the prior year period
was attributable to the addition of two large advertising accounts in 2010 that were not present during 2009.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0"><B>&nbsp;</B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0"><I>Operating Expenses</I></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0">Total operating expenses for the year ended December 31, 2010 increased
$1,914,924, or 31.7%, to $7,953,414 compared to $6,038,490 for the comparable prior year period.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0"><I>Selling and marketing.</I> Selling and marketing expense decreased
<FONT STYLE="color: black">$785,152, or 53.2%, to $691,138 for the year ended December 31, 2010 compared to $1,476,290 </FONT>for
the comparable prior year period. In 2010, Grandparents.com reduced its marketing spend due, in part, to reduced capital resources.
In addition, in Grandparents.com allocated marketing dollars toward attracting more meaningful page impressions as opposed to generating
a greater volume of page impressions.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify"><I>Salaries.</I> Salary expense decreased <FONT STYLE="color: black">$1,800,497,
or 54.9%, to $1,476,347 for the year ended December 31, 2010 compared to $3,276,844 </FONT>for the comparable prior year period
due to reductions in payroll and staff.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify"><I>Rent.</I> Rent expense decreased <FONT STYLE="color: black">$73,520,
or 32.4%, to $153,691 for the year ended December 31, 2010 compared to $227,211 </FONT>for the comparable prior year period. In
2010, Grandparents.com settled a dispute with the Predecessor&rsquo;s former landlord for less than the amount due which resulted
in a decrease in rent expense for 2010.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify"><I>Consulting.</I> Consulting expense decreased
<FONT STYLE="color: black">$241,995, or 93.8%, to $16,005 for the year ended December 31, 2010 compared to $258,000 </FONT>for
the comparable prior year period.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0">&nbsp;</P>

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<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0"><I>Equity-based compensation.</I> Equity-based compensation expense
was $<FONT STYLE="color: black">9,549 </FONT>for the <FONT STYLE="color: black">year ended December 31, 2010. </FONT>There was
no equity-based compensation expense for the comparable prior year period. In the fourth quarter of 2010, Grandparents.com granted
options to purchase 252,500 Class A Units under its 2010 Stock Option Plan to its officers and employees. The options had an exercise
price of $0.625 per Class A Unit and a grant-date fair value of $0.45 per option. The options expire five years from the date of
grant. The options are recorded to expense over the requisite service period, which generally is the vesting period.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0"><I>Transaction Costs.</I> Grandparents.com incurred transaction
costs of $4,250,000 for the year ended December 31, 2010 in connection with the 2010 Purchase Transaction. There were no such costs
for the year ended December 31, 2009.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0"><I>Management fees.</I> Grandparents.com incurred management fees
of $125,000 for the year ended December 31, 2010. In 2010, Grandparents.com paid a monthly management fee of $25,000 to LBG for
management services provided to Grandparents.com. The monthly payments commenced in August 2010. Accordingly, there were no such
fees for the year ended December 31, 2009.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0"><I>Other general and administrative.</I> Other general and administrative
expense increased $78,215, or 14.9%, to $<FONT STYLE="color: black">603,595 for the year ended December 31, 2010 compared to $525,380
</FONT>for the comparable prior year period.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0"><I>Depreciation and amortization.</I> Depreciation and amortization
increased $<FONT STYLE="color: black">353,324</FONT>, or 128.6%, to $<FONT STYLE="color: black">628,089 for the year ended December
31, 2010 compared to $274,765 </FONT>for the comparable prior year period.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0"><I>Other Income</I></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0">Grandparents.com had other income of $3,724,610 for the year ended
December 31, 2010 compared to $0 for the prior year period. Other income for the year ended December 31, 2010 included gain on
purchase of business of $3,565,408, interest income of $18 and other income of $159,184 which consisted primarily of income derived
from settlements of existing liabilities for less than the amount owed.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0"><I>Preferred Return Expense</I></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0"><I>&nbsp;</I></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0">Preferred return expense was $<FONT STYLE="color: black">163,652
</FONT>for the year ended December 31, 2010 compared to $0 for the prior year period. During 2010, Grandparents.com sold 918,000
Class A Preferred Units in exchange for $918,000 in cash. Holders of the Class A Preferred Units are entitled to a 10% Minimum
Annual Return and unpaid Minimum Annual Returns. In February 2010, $6,974,135 of advances from one of Predecessor&rsquo;s members
was converted to 3,867,019 Class D 10% Preferred Units, in May 2010, $750,000 of advances from three of Predecessor&rsquo;s members
was converted to 415,500 Class C 10% Preferred Units and in March 2010, two of Predecessor&rsquo;s members contributed cash of
$225,000 in exchange for 124,758 Class C 10% Preferred Units.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0"><I>&nbsp;</I></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0"><I>Loss from Operations</I></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0"><I>&nbsp;</I></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0">Loss from operations for the year ended December 31, 2010 was $3,470,749
compared to $<FONT STYLE="color: black">5,526,101 </FONT>for the prior year period.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0"><I>&nbsp;</I></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0"><I>Net Loss</I></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0"><I>&nbsp;</I></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0">Net loss for the year ended December 31, 2010 was $<FONT STYLE="color: black">3,634,401
</FONT>compared to $<FONT STYLE="color: black">5,526,101 </FONT>for the prior year period.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0">&nbsp;</P>

<P STYLE="font: bold 10pt Times New Roman, Times, Serif; margin: 0">Liquidity and Capital Resources</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0">We raised approximately $3,000,000 in gross proceeds in the Private
Placement, but before deducting any expenses incurred by us in connection with the Private Placement. After deducting expenses,
we received approximately $2,400,000 in net proceeds from the Private Placement. We had cash of approximately $1,540,000 as
of the closing of the Transaction prior to the net proceeds from the Private Placement. We expect to finance our operations over
the next twelve months primarily through our existing cash and our operations. However, to effectively implement our business plan,
we may need to obtain additional financing.<B> </B>If we obtain financing, we would expect to accelerate our business plan and
increase our advertising and marketing budget, hire additional staff members and increase our office space and operations all of
which we believe would result in the generation of revenue and development of our business. We cannot be certain that financing
will be available on acceptable terms, or available at all. To the extent that we raise additional funds by issuing debt or equity
securities or through bank financing, our stockholders may experience significant dilution. If we are unable to raise funds when
required or on acceptable terms, we may have to significantly scale back, or discontinue, our operations.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0">Prior to the Transaction, Grandparents.com funded its working capital
requirements primarily through cash flow from operations, private sales of capital units and advances from its members and managers.
During 2010, Grandparents.com sold 918,000 Class A Preferred Units in exchange for $918,000 in cash. In August 2010, Grandparents.com
sold 800,000 Class A Units to an investor, representing an 8% ownership interest in GP, for $500,000 cash. In October 2011 Grandparents.com
sold 290,512 Class A Units to an investor for $250,000 in cash.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0">&nbsp;</P>

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<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0">During 2011, Messrs. Leber and Bernstein advanced an aggregate of
$126,000 to Grandparents.com. In March 2011, Grandparents.com entered into a $300,000 note payable agreement with Meadows, which
was secured by substantially all of the assets of Grandparents.com. In July 2011, Messrs. Leber and Bernstein and Meadows provided
short-term loans to Grandparents.com in the aggregate amount of $40,000. All of such loans were assumed by us upon the closing
of the Transaction and are evidenced by the Leber Note, Bernstein Note and Meadows Note, which are not secured by any assets of
the Company.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0">Upon the closing of the Transaction we assumed Grandparent&rsquo;s
liabilities for $612,500 of accrued but unpaid management fees in favor of LBG and issued the LBG Note to LBG.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0">In July 2011, Grandparents.com issued a zero coupon note payable
to a consultant. The note provided $225,000 to Grandparents.com in exchange for repayment of $275,000 on August 30, 2012, the maturity
date of the note. The discount from the maturity value of $275,000, initially $50,000, is being amortized to interest expense by
the effective interest method over the life of the note, with an effective interest rate of 20.04%. During the nine months ended
September 30, 2011, $4,209 was added to the promissory note balance. At September 30, 2011, the remaining discount was $45,791.
This obligation was assumed by us upon the closing of the Transaction and these payment obligations are the Company&rsquo;s going
forward.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0">In December 2011, we entered into a $500,000 secured
Bridge Loan with Grandparents.com. Upon the closing of the Transaction, we assumed and cancelled the Bridge Loan and released
all liens.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0">Although we can provide no assurances, we believe that the net proceeds
from the Private Placement, the cash of the Company on hand as of the closing of the Transaction together with cash generated from
operations should be sufficient to meet working capital requirements and capital expenditures for the next twelve months.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0"><B>Cash Flow</B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0">Net cash flow from operating, investing and financing activities
for the periods below were as follows:</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0">&nbsp;</P>

<TABLE CELLPADDING="0" CELLSPACING="0" STYLE="width: 100%; font: 10pt Times New Roman, Times, Serif">
<TR STYLE="vertical-align: bottom">
    <TD NOWRAP STYLE="text-align: center">&nbsp;</TD><TD NOWRAP STYLE="font-weight: bold; padding-bottom: 1pt">&nbsp;</TD>
    <TD COLSPAN="6" NOWRAP STYLE="font-weight: bold; text-align: center; border-bottom: Black 1pt solid">Successor</TD><TD NOWRAP STYLE="padding-bottom: 1pt; font-weight: bold; border-right: Black 1pt solid">&nbsp;</TD><TD NOWRAP STYLE="font-weight: bold; padding-bottom: 1pt">&nbsp;</TD>
    <TD COLSPAN="2" NOWRAP STYLE="font-weight: bold; text-align: center; border-bottom: Black 1pt solid">Predecessor</TD><TD NOWRAP STYLE="padding-bottom: 1pt; font-weight: bold; border-right: Black 1pt solid">&nbsp;</TD><TD NOWRAP STYLE="padding-bottom: 1pt">&nbsp;</TD>
    <TD COLSPAN="2" NOWRAP STYLE="text-align: center">&nbsp;</TD><TD NOWRAP STYLE="padding-bottom: 1pt">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom">
    <TD NOWRAP STYLE="text-align: center">&nbsp;</TD><TD NOWRAP>&nbsp;</TD>
    <TD COLSPAN="2" NOWRAP STYLE="text-align: center">&nbsp;</TD><TD NOWRAP>&nbsp;</TD><TD NOWRAP>&nbsp;</TD>
    <TD COLSPAN="2" NOWRAP STYLE="text-align: center">&nbsp;</TD><TD NOWRAP STYLE="border-right: Black 1pt solid">&nbsp;</TD><TD NOWRAP>&nbsp;</TD>
    <TD COLSPAN="2" NOWRAP STYLE="text-align: center">&nbsp;</TD><TD NOWRAP STYLE="border-right: Black 1pt solid">&nbsp;</TD><TD NOWRAP>&nbsp;</TD>
    <TD COLSPAN="2" NOWRAP STYLE="text-align: center">Combined (1)</TD><TD NOWRAP>&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom">
    <TD NOWRAP STYLE="text-align: center">&nbsp;</TD><TD NOWRAP STYLE="padding-bottom: 1pt">&nbsp;</TD>
    <TD COLSPAN="2" NOWRAP STYLE="text-align: center; border-bottom: Black 1pt solid">2011</TD><TD NOWRAP STYLE="padding-bottom: 1pt">&nbsp;</TD><TD NOWRAP STYLE="padding-bottom: 1pt">&nbsp;</TD>
    <TD COLSPAN="2" NOWRAP STYLE="text-align: center; border-bottom: Black 1pt solid">2010</TD><TD NOWRAP STYLE="padding-bottom: 1pt; border-right: Black 1pt solid">&nbsp;</TD><TD NOWRAP STYLE="padding-bottom: 1pt">&nbsp;</TD>
    <TD COLSPAN="2" NOWRAP STYLE="text-align: center; border-bottom: Black 1pt solid">2010</TD><TD NOWRAP STYLE="padding-bottom: 1pt; border-right: Black 1pt solid">&nbsp;</TD><TD NOWRAP STYLE="padding-bottom: 1pt">&nbsp;</TD>
    <TD COLSPAN="2" NOWRAP STYLE="text-align: center; border-bottom: Black 1pt solid">2010</TD><TD NOWRAP STYLE="padding-bottom: 1pt">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom">
    <TD NOWRAP STYLE="text-align: center">&nbsp;</TD><TD NOWRAP STYLE="padding-bottom: 1pt">&nbsp;</TD>
    <TD COLSPAN="2" NOWRAP STYLE="text-align: center; border-bottom: Black 1pt solid">January 1 <BR>to <BR>September 30</TD><TD NOWRAP STYLE="padding-bottom: 1pt">&nbsp;</TD><TD NOWRAP STYLE="padding-bottom: 1pt">&nbsp;</TD>
    <TD COLSPAN="2" NOWRAP STYLE="text-align: center; border-bottom: Black 1pt solid">May 6 <BR>to <BR>September 30</TD><TD NOWRAP STYLE="padding-bottom: 1pt; border-right: Black 1pt solid">&nbsp;</TD><TD NOWRAP STYLE="padding-bottom: 1pt">&nbsp;</TD>
    <TD COLSPAN="2" NOWRAP STYLE="text-align: center; border-bottom: Black 1pt solid">January 1 <BR>to <BR>May 5</TD><TD NOWRAP STYLE="padding-bottom: 1pt; border-right: Black 1pt solid">&nbsp;</TD><TD NOWRAP STYLE="padding-bottom: 1pt">&nbsp;</TD>
    <TD COLSPAN="2" NOWRAP STYLE="text-align: center; border-bottom: Black 1pt solid">January 1 <BR>to <BR>September 30</TD><TD NOWRAP STYLE="padding-bottom: 1pt">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,255,204)">
    <TD STYLE="text-align: left">Cash provided by (used in):</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left; border-right: Black 1pt solid">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left; border-right: Black 1pt solid">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD STYLE="width: 48%; text-align: left">Operating activities</TD><TD STYLE="width: 1%">&nbsp;</TD>
    <TD STYLE="width: 1%; text-align: left">$</TD><TD STYLE="width: 10%; text-align: right">(645,477</TD><TD STYLE="width: 1%; text-align: left">)</TD><TD STYLE="width: 1%">&nbsp;</TD>
    <TD STYLE="width: 1%; text-align: left">$</TD><TD STYLE="width: 10%; text-align: right">(915,352</TD><TD STYLE="width: 1%; text-align: left; border-right: Black 1pt solid">)</TD><TD STYLE="width: 1%">&nbsp;</TD>
    <TD STYLE="width: 1%; text-align: left">$</TD><TD STYLE="width: 10%; text-align: right">(1,023,087</TD><TD STYLE="width: 1%; text-align: left; border-right: Black 1pt solid">)</TD><TD STYLE="width: 1%">&nbsp;</TD>
    <TD STYLE="width: 1%; text-align: left">$</TD><TD STYLE="width: 10%; text-align: right">(1,938,439</TD><TD STYLE="width: 1%; text-align: left">)</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,255,204)">
    <TD STYLE="text-align: left">Investing activities</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">(3,247</TD><TD STYLE="text-align: left">)</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">(436,211</TD><TD STYLE="text-align: left; border-right: Black 1pt solid">)</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">212,343</TD><TD STYLE="text-align: left; border-right: Black 1pt solid">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">(223,868</TD><TD STYLE="text-align: left">)</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD STYLE="text-align: left">Financing activities</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">691,000</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">1,618,000</TD><TD STYLE="text-align: left; border-right: Black 1pt solid">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">818,000</TD><TD STYLE="text-align: left; border-right: Black 1pt solid">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">2,436,000</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,255,204)">
    <TD STYLE="text-align: left">Net increase in cash</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">42,276</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">266,437</TD><TD STYLE="text-align: left; border-right: Black 1pt solid">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">7 ,256</TD><TD STYLE="text-align: left; border-right: Black 1pt solid">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">273,693</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
</TABLE>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0">&nbsp;</P>

<TABLE CELLPADDING="0" CELLSPACING="0" STYLE="width: 100%; font: 10pt Times New Roman, Times, Serif">
<TR STYLE="vertical-align: bottom">
    <TD NOWRAP STYLE="text-align: center">&nbsp;</TD><TD NOWRAP STYLE="font-weight: bold; padding-bottom: 1pt">&nbsp;</TD>
    <TD COLSPAN="2" NOWRAP STYLE="font-weight: bold; text-align: center; border-bottom: Black 1pt solid">Successor</TD><TD NOWRAP STYLE="padding-bottom: 1pt; font-weight: bold; border-right: Black 1pt solid">&nbsp;</TD><TD NOWRAP STYLE="font-weight: bold; padding-bottom: 1pt">&nbsp;</TD>
    <TD COLSPAN="2" NOWRAP STYLE="font-weight: bold; text-align: center; border-bottom: Black 1pt solid">Predecessor</TD><TD NOWRAP STYLE="padding-bottom: 1pt; font-weight: bold">&nbsp;</TD><TD NOWRAP STYLE="padding-bottom: 1pt">&nbsp;</TD>
    <TD COLSPAN="2" NOWRAP STYLE="text-align: center">&nbsp;</TD><TD NOWRAP STYLE="padding-bottom: 1pt">&nbsp;</TD><TD NOWRAP STYLE="font-weight: bold; padding-bottom: 1pt">&nbsp;</TD>
    <TD COLSPAN="2" NOWRAP STYLE="font-weight: bold; text-align: center; border-bottom: Black 1pt solid">Predecessor</TD><TD NOWRAP STYLE="padding-bottom: 1pt; font-weight: bold">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom">
    <TD NOWRAP STYLE="text-align: center">&nbsp;</TD><TD NOWRAP STYLE="font-weight: bold">&nbsp;</TD>
    <TD COLSPAN="2" NOWRAP STYLE="font-weight: bold; text-align: center">&nbsp;</TD><TD NOWRAP STYLE="font-weight: bold; border-right: Black 1pt solid">&nbsp;</TD><TD NOWRAP STYLE="font-weight: bold">&nbsp;</TD>
    <TD COLSPAN="2" NOWRAP STYLE="font-weight: bold; text-align: center">&nbsp;</TD><TD NOWRAP STYLE="font-weight: bold">&nbsp;</TD><TD NOWRAP>&nbsp;</TD>
    <TD COLSPAN="2" NOWRAP STYLE="text-align: center">Combined (1)</TD><TD NOWRAP>&nbsp;</TD><TD NOWRAP STYLE="font-weight: bold">&nbsp;</TD>
    <TD COLSPAN="2" NOWRAP STYLE="font-weight: bold; text-align: center">&nbsp;</TD><TD NOWRAP STYLE="font-weight: bold">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom">
    <TD NOWRAP STYLE="text-align: center">&nbsp;</TD><TD NOWRAP STYLE="padding-bottom: 1pt">&nbsp;</TD>
    <TD COLSPAN="2" NOWRAP STYLE="text-align: center; border-bottom: Black 1pt solid">2010</TD><TD NOWRAP STYLE="padding-bottom: 1pt; border-right: Black 1pt solid">&nbsp;</TD><TD NOWRAP STYLE="padding-bottom: 1pt">&nbsp;</TD>
    <TD COLSPAN="2" NOWRAP STYLE="text-align: center; border-bottom: Black 1pt solid">2010</TD><TD NOWRAP STYLE="padding-bottom: 1pt">&nbsp;</TD><TD NOWRAP STYLE="padding-bottom: 1pt">&nbsp;</TD>
    <TD COLSPAN="2" NOWRAP STYLE="text-align: center; border-bottom: Black 1pt solid">2010</TD><TD NOWRAP STYLE="padding-bottom: 1pt">&nbsp;</TD><TD NOWRAP STYLE="padding-bottom: 1pt">&nbsp;</TD>
    <TD COLSPAN="2" NOWRAP STYLE="text-align: center; border-bottom: Black 1pt solid">2009</TD><TD NOWRAP STYLE="padding-bottom: 1pt">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom">
    <TD NOWRAP STYLE="text-align: center">&nbsp;</TD><TD NOWRAP STYLE="padding-bottom: 1pt">&nbsp;</TD>
    <TD COLSPAN="2" NOWRAP STYLE="text-align: center; border-bottom: Black 1pt solid">May 6 <BR>to <BR>December 31</TD><TD NOWRAP STYLE="padding-bottom: 1pt; border-right: Black 1pt solid">&nbsp;</TD><TD NOWRAP STYLE="padding-bottom: 1pt">&nbsp;</TD>
    <TD COLSPAN="2" NOWRAP STYLE="text-align: center; border-bottom: Black 1pt solid">January 1 <BR>to <BR>May 5</TD><TD NOWRAP STYLE="padding-bottom: 1pt">&nbsp;</TD><TD NOWRAP STYLE="padding-bottom: 1pt">&nbsp;</TD>
    <TD COLSPAN="2" NOWRAP STYLE="text-align: center; border-bottom: Black 1pt solid">January 1 <BR>to <BR>December 31</TD><TD NOWRAP STYLE="padding-bottom: 1pt">&nbsp;</TD><TD NOWRAP STYLE="padding-bottom: 1pt">&nbsp;</TD>
    <TD COLSPAN="2" NOWRAP STYLE="text-align: center; border-bottom: Black 1pt solid">January 1 <BR>to <BR>December 31</TD><TD NOWRAP STYLE="padding-bottom: 1pt">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,255,204)">
    <TD STYLE="text-align: left">Cash provided by (used in):</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left; border-right: Black 1pt solid">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD STYLE="width: 48%; text-align: left">Operating activities</TD><TD STYLE="width: 1%">&nbsp;</TD>
    <TD STYLE="width: 1%; text-align: left">&nbsp;</TD><TD STYLE="width: 10%; text-align: right">(1,344,798</TD><TD STYLE="width: 1%; text-align: left; border-right: Black 1pt solid">)</TD><TD STYLE="width: 1%">&nbsp;</TD>
    <TD STYLE="width: 1%; text-align: left">&nbsp;</TD><TD STYLE="width: 10%; text-align: right">(1,023,087</TD><TD STYLE="width: 1%; text-align: left">)</TD><TD STYLE="width: 1%">&nbsp;</TD>
    <TD STYLE="width: 1%; text-align: left">&nbsp;</TD><TD STYLE="width: 10%; text-align: right">(2,367,885</TD><TD STYLE="width: 1%; text-align: left">)</TD><TD STYLE="width: 1%">&nbsp;</TD>
    <TD STYLE="width: 1%; text-align: left">&nbsp;</TD><TD STYLE="width: 10%; text-align: right">(6,058,735</TD><TD STYLE="width: 1%; text-align: left">)</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,255,204)">
    <TD STYLE="text-align: left">Investing activities</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">(436,211</TD><TD STYLE="text-align: left; border-right: Black 1pt solid">)</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">212,343</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">(223,868</TD><TD STYLE="text-align: left">)</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">(41,526</TD><TD STYLE="text-align: left">)</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD STYLE="text-align: left">Financing activities</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">1,668,000</TD><TD STYLE="text-align: left; border-right: Black 1pt solid">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">818,000</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">2,486,000</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">6,050,457</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,255,204)">
    <TD STYLE="text-align: left">Net increase (decrease) in cash</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">(113,009</TD><TD STYLE="text-align: left; border-right: Black 1pt solid">)</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">7,256</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">(105,753</TD><TD STYLE="text-align: left">)</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">(49,804</TD><TD STYLE="text-align: left">)</TD></TR>
</TABLE>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0">(1) The combination of Successor and Predecessor periods in
2010 is a non-GAAP measure. Grandparents.com has included the separate periods in this presentation to enable the nine month
and twelve month comparative reconciliation of the information to its GAAP presentation in the financial statements.
Grandparents.com has presented the information on a combined basis to provide a reasonable basis of comparison to 2011. The
2010 Purchase Transaction did not affect the nature of either our business or operations.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0"><I>&nbsp;</I></P>

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<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0"><I>&nbsp;</I></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0"><B><I>Cash Used In Operating Activities</I></B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0">Cash used in operating activities primarily consists of net loss
adjusted for certain non-cash items, including depreciation and amortization, transaction costs, gain on purchase of business and
the effect of changes in working capital and other items.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0">For the nine months ended September 30, 2011, net cash used in operating
activities of $645,477 consisted of net loss of $ 2,048,917, offset by $708,840 in adjustments for non-cash items and $694,600
in cash provided by changes in working capital and other activities. For the nine months ended September 30, 2010, net cash used
in operating activities of $1,938,439 consisted of net loss of $3,070,771, offset by $412,429 in adjustments for non-cash items
and  $719,903 in cash provided by changes in working capital and other activities.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0">For the year ended December 31, 2010, net cash used in operating
activities of $2,367,885 consisted of net loss of $3,634,401, offset by $638,738 in adjustments for non-cash items and $627,778
in cash provided by changes in working capital and other activities. For the year ended December 31, 2009, net cash used in operating
activities of $6,058,735 consisted of net loss of $5,526,101 and $807,399 in cash used in changes in working capital and other
activities, offset by $274,765 in adjustments for non-cash items.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0"><B><I>Cash Provided by (Used In) Investing Activities</I></B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0">Cash used in investing activities primarily consists of changes
in the balances of restricted cash, acquisitions of businesses and purchases of property and equipment.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0">For the nine months ended September 30, 2011, net cash used in investing
activities was $3,247 compared to net cash used in investing activities of $223,868 for the nine months ended September 30, 2010.
For the year ended December 31, 2010, net cash used in investing activities was $223,868 compared to net cash used in investing
activities of $41,526 for the year ended December 31, 2009.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0"><B><I>Cash Provided By Financing Activities</I></B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0">Cash provided by financing activities primarily consists of net
proceeds from the issuance of Class A Preferred Units, Class A Units, capital contributions, proceeds from short-term advances
and Proceeds from issuance of promissory notes.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0">For the nine months ended September 30, 2011, net cash provided
by financing activities was $691,000 compared to net cash provided by financing activities of $2,436,000 for the nine months ended
September 30, 2010. For the year ended December 31, 2010, net cash provided by financing activities was $2,486,000 compared to
net cash provided by financing activities of $6,050,457 for the year ended December 31, 2009.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0"><B>Off-Balance Sheet Arrangements</B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0">We do not have any off-balance sheet arrangements and Grandparents.com
did not have any off-balance sheet arrangements.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0"><B>Significant Accounting Policies</B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0"><B><I>&nbsp;</I></B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0"><B><I>Cash and Cash Equivalents</I></B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0">Grandparents.com considers all highly liquid investments purchased
with an original maturity of three months or less to be cash equivalents. At September 30, 2011 and December 31, 2010, there were
no cash equivalents.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0"><B><I>Accounts Receivable</I></B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0">Accounts receivable are reported in the balance sheet net of an
allowance for doubtful accounts. Grandparents.com estimates the allowance based on an analysis of specific clients, taking into
consideration the age of past due accounts, the client&rsquo;s payment history and an assessment of the client&rsquo;s ability
to pay. At September 30, 2011 and December 31, 2010, Grandparents.com determined that no allowance for doubtful accounts was necessary.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0"><B><I>Property and Equipment</I></B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0">Property and equipment are stated at cost and depreciated using
the straight-line method over the estimated useful lives of the assets, ranging from three to seven years. Incidental expenditures
for maintenance and repairs are charged against operations. Renewals and betterment that materially extend the life of assets are
capitalized. Grandparents.com reviews the valuation of fixed assets and the remaining economic lives annually and adjusts depreciation
accordingly.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0">&nbsp;</P>

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<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0"><B><I>Impairment of Long-Lived Assets</I></B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0">Grandparents.com assesses the impairment of long-lived assets, which
include property and equipment and identifiable intangible assets, whenever events or changes in circumstances indicate that such
assets might be impaired and the carrying value may not be recoverable. Events and circumstances that may indicate that an asset
is impaired may include significant decreases in the market value of an asset, a change in the extent or manner in which an asset
is used, shifts in technology, loss of key management or personnel, changes in Grandparents.com&rsquo;s operating model or strategy
and competitive forces as well as other factors.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0">If events and circumstances indicate that the carrying amount of
an asset may not be recoverable and the expected undiscounted future cash flows attributable to the asset are less than the carrying
amount of the asset, an impairment loss equal to the excess of the asset&rsquo;s carrying value over its fair value is recorded.
Fair value is determined based on the present value of estimated expected future cash flows using a discount rate commensurate
with the risk involved, quoted market prices or appraised values, depending on the nature of the assets. In testing for a potential
impairment of goodwill, Grandparents.com will first compare the estimated fair value of each reporting unit with book value, including
goodwill. If the estimated fair value exceeds book value, goodwill is considered not to be impaired and no additional steps are
necessary. If, however, the fair value of the respective reporting units of Grandparents.com is less than book value, then Grandparents.com
is required to compare the carrying amount of the goodwill with its implied fair value. The estimate of implied fair value of goodwill
may require independent valuations of certain internally generated and unrecognized intangible assets such as its customer base,
software and technology and trademarks. If the carrying amount of the goodwill exceeds the implied fair value of that goodwill,
an impairment loss would be recognized in an amount equal to the excess.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0"><B><I>Revenue Recognition</I></B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0">Grandparents.com recognizes revenue from arrangements with advertisers
and third-party affiliates, generally on the basis of impressions, at an agreed upon cost per thousand impressions.
This revenue is recognized on a net basis in the period in which the impressions occur. Revenue is recognized in accordance with
Financial Accounting Standards Board (&ldquo;FASB&rdquo;) Accounting Standards Codification (&ldquo;ASC&rdquo;) 605, Revenue Recognition.
Grandparents.com considers amounts to be earned when persuasive evidence of an arrangement exists, delivery of services has occurred,
price is fixed or determinable, and collectability is reasonably assured.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0"><B><I>Advertising</I></B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0">Grandparents.com&rsquo;s policy is to report advertising costs
as expensed in the periods in which the costs are incurred. The total amounts charged to advertising expenses were
approximately $29,864 and $71,300 for the three months ended September 30, 2011 and 2010, respectively, $323,040 for the nine
months ended September 30, 2011, $444,300 for the period January 1 to May 5, 2010, and $133,010 for the period May 6, 2010 to
September 30, 2010.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0"><B><I>Fair Value of Financial Instruments</I></B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0">Grandparents.com&rsquo;s financial instruments consist mainly of
cash, short-term accounts receivable, and payables. Grandparents.com believes that the carrying amounts approximate fair value
due to their short-term nature and market interest rates.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0"><B><I>Equity-Based Compensation</I></B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0">Grandparents.com accounts for equity-based awards to employees and
others at fair value, measured at the grant date (based upon an estimate of the fair value of the compensation granted) and recorded
to expense over the requisite service period, which generally is the vesting period. Fair value of equity based compensation arrangements
are estimated using the Black-Scholes option pricing model.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0"><B><I>Income Taxes</I></B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0">Grandparents.com has elected to be treated as Limited Liability
Company for Federal and State income tax purposes. Under this election, all taxable income, losses and credits pass through to
its members and are reflected on their individual income tax returns. Consequently, no provision for income taxes has been provided
by Grandparents.com.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0">Grandparents.com accounts for income taxes in accordance with ASC
740, Income Taxes. Grandparents.com records a liability for uncertain tax positions when it is probable that a loss has been incurred
and the amount can be reasonably estimated. As of December 31, 2010, Grandparents.com has no liabilities for uncertain tax positions.
Grandparents.com&rsquo;s policy is to recognize interest and penalties related to income tax matters as a component of income tax
expense. Grandparents.com continually evaluates expiring statutes of limitations, audits, proposed settlements, and changes in
tax law and new authoritative rulings. Grandparents.com is not subject to examinations by income tax authorities prior to 2010.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0"><I>&nbsp;</I></P>

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<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0"><I>&nbsp;</I></P>

<P STYLE="font: bold 10pt Times New Roman, Times, Serif; margin: 0; text-align: center">DESCRIPTION OF PROPERTY</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0">As of the Closing Date, we assumed Grandparents.com&rsquo;s
lease of approximately 5,000 square feet in its headquarters located at 589 Eighth Avenue, 6th Floor, New York, New
York. The  lease expires in 2013. Our monthly rent payment under the lease is currently $13,667 per month. Steven E.
Leber and Joseph Bernstein have personally guaranteed the performance of the lease by us. We believe that our properties are
generally suitable to meet our needs for the foreseeable future. However, we will continue to seek additional space as needed
to satisfy our growth.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0">Following our asset sale on August 31, 2011, we had an arrangement
with Emerald Star for us to continue using its office located at 220 West Harrison Street, Seattle, Washington 98119 as our mailing
address and for holding our corporate records. Upon closing of the Transaction, we terminated this arrangement.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0">&nbsp;</P>

<P STYLE="font: bold 10pt Times New Roman, Times, Serif; margin: 0; text-align: center">SECURITY OWNERSHIP OF CERTAIN BENEFICIAL
OWNERS AND MANAGEMENT</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0">The following table sets forth certain information regarding our
shares of Series A Convertible Preferred Stock, Series B Convertible Preferred Stock and Common Stock beneficially owned after
giving effect to the Transaction and the Private Placement, for (i) each stockholder known to be the beneficial owner of 5% or
more of our outstanding shares of our voting securities, (ii) each Current Named Executive Officer (as defined below) and each
director, and (iii) all executive officers and directors as a group. A person is considered to beneficially own any shares over
which such person, directly or indirectly, exercises sole or shared voting or investment power, or of which such person has the
right to acquire beneficial ownership at any time within sixty (60) days through an exercise of stock options or warrants. Unless
otherwise indicated, voting and investment power relating to the shares shown in the table for directors and executive officers
will be exercised solely by the beneficial owner or shared by the owner and the owner&rsquo;s spouse or children.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0">For purposes of computing the percentage of shares of our securities
expected to be held by each person or group of persons named above, any shares that such person has or persons have the right to
acquire within sixty (60) days of the Closing Date is deemed to be outstanding, but is not deemed to be outstanding for the purpose
of computing the percentage ownership of any other person. The inclusion herein of any shares listed as beneficially owned does
not constitute an admission of beneficial ownership.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0">&nbsp;</P>

<TABLE CELLPADDING="0" CELLSPACING="0" STYLE="width: 100%; font: 8pt Times New Roman, Times, Serif">
<TR STYLE="vertical-align: bottom">
    <TD NOWRAP STYLE="text-align: center">&nbsp;</TD><TD NOWRAP STYLE="font-weight: bold; padding-bottom: 1pt">&nbsp;</TD>
    <TD COLSPAN="6" NOWRAP STYLE="font-weight: bold; text-align: center; border-bottom: Black 1pt solid">Series&nbsp;A&nbsp;Convertible <BR>Preferred&nbsp;Stock</TD><TD NOWRAP STYLE="padding-bottom: 1pt; font-weight: bold">&nbsp;</TD><TD NOWRAP STYLE="font-weight: bold; padding-bottom: 1pt">&nbsp;</TD>
    <TD COLSPAN="6" NOWRAP STYLE="font-weight: bold; text-align: center; border-bottom: Black 1pt solid">Series&nbsp;B&nbsp;Convertible <BR>Preferred&nbsp;Stock</TD><TD NOWRAP STYLE="padding-bottom: 1pt; font-weight: bold">&nbsp;</TD><TD NOWRAP STYLE="font-weight: bold; padding-bottom: 1pt">&nbsp;</TD>
    <TD COLSPAN="6" NOWRAP STYLE="font-weight: bold; text-align: center; border-bottom: Black 1pt solid">Common&nbsp;Stock
    (3)</TD><TD NOWRAP STYLE="padding-bottom: 1pt; font-weight: bold">&nbsp;</TD><TD NOWRAP STYLE="font-weight: bold; padding-bottom: 1pt">&nbsp;</TD>
    <TD COLSPAN="2" NOWRAP STYLE="font-weight: bold; text-align: center">&nbsp;</TD><TD NOWRAP STYLE="padding-bottom: 1pt; font-weight: bold">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom">
    <TD NOWRAP STYLE="text-align: center">&nbsp;</TD><TD NOWRAP STYLE="font-weight: bold; padding-bottom: 1pt">&nbsp;</TD>
    <TD COLSPAN="2" NOWRAP STYLE="font-weight: bold; text-align: center; border-bottom: Black 1pt solid">Number&nbsp;of <BR>Shares <BR>Beneficially <BR>Owned&nbsp;(1)</TD><TD NOWRAP STYLE="padding-bottom: 1pt; font-weight: bold">&nbsp;</TD><TD NOWRAP STYLE="font-weight: bold; padding-bottom: 1pt">&nbsp;</TD>
    <TD COLSPAN="2" NOWRAP STYLE="font-weight: bold; text-align: center; border-bottom: Black 1pt solid">%&nbsp;of&nbsp;Shares <BR>Beneficially <BR>Owned</TD><TD NOWRAP STYLE="padding-bottom: 1pt; font-weight: bold">&nbsp;</TD><TD NOWRAP STYLE="font-weight: bold; padding-bottom: 1pt">&nbsp;</TD>
    <TD COLSPAN="2" NOWRAP STYLE="font-weight: bold; text-align: center; border-bottom: Black 1pt solid">Number&nbsp;of <BR>Shares <BR>Beneficially <BR>Owned&nbsp;(2)</TD><TD NOWRAP STYLE="padding-bottom: 1pt; font-weight: bold">&nbsp;</TD><TD NOWRAP STYLE="font-weight: bold; padding-bottom: 1pt">&nbsp;</TD>
    <TD COLSPAN="2" NOWRAP STYLE="font-weight: bold; text-align: center; border-bottom: Black 1pt solid">%&nbsp;of&nbsp;Shares <BR>Beneficially <BR>Owned</TD><TD NOWRAP STYLE="padding-bottom: 1pt; font-weight: bold">&nbsp;</TD><TD NOWRAP STYLE="font-weight: bold; padding-bottom: 1pt">&nbsp;</TD>
    <TD COLSPAN="2" NOWRAP STYLE="font-weight: bold; text-align: center; border-bottom: Black 1pt solid">Number&nbsp;of <BR>Shares <BR>Beneficially <BR>Owned</TD><TD NOWRAP STYLE="padding-bottom: 1pt; font-weight: bold">&nbsp;</TD><TD NOWRAP STYLE="font-weight: bold; padding-bottom: 1pt">&nbsp;</TD>
    <TD COLSPAN="2" NOWRAP STYLE="font-weight: bold; text-align: center; border-bottom: Black 1pt solid">%&nbsp;of&nbsp;Shares <BR>Beneficially <BR>Owned</TD><TD NOWRAP STYLE="padding-bottom: 1pt; font-weight: bold">&nbsp;</TD><TD NOWRAP STYLE="font-weight: bold; padding-bottom: 1pt">&nbsp;</TD>
    <TD COLSPAN="2" NOWRAP STYLE="font-weight: bold; text-align: center; border-bottom: Black 1pt solid">%&nbsp;of&nbsp;Total <BR>Voting <BR>Rights&nbsp;(1), <BR>(2),&nbsp;(4)</TD><TD NOWRAP STYLE="padding-bottom: 1pt; font-weight: bold">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,255,204)">
    <TD STYLE="font-weight: bold; text-align: left">Executive Officers and Directors</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD STYLE="width: 30%; text-align: left">Steven E. Leber (5) (6)</TD><TD STYLE="width: 1%">&nbsp;</TD>
    <TD STYLE="width: 1%; text-align: left">&nbsp;</TD><TD STYLE="width: 7%; text-align: right">1</TD><TD STYLE="width: 1%; text-align: left">&nbsp;</TD><TD STYLE="width: 1%">&nbsp;</TD>
    <TD STYLE="width: 1%; text-align: left">&nbsp;</TD><TD STYLE="width: 7%; text-align: right">100</TD><TD STYLE="width: 1%; text-align: left">%</TD><TD STYLE="width: 1%">&nbsp;</TD>
    <TD STYLE="width: 1%; text-align: left">&nbsp;</TD><TD STYLE="width: 7%; text-align: right">-</TD><TD STYLE="width: 1%; text-align: left">&nbsp;</TD><TD STYLE="width: 1%">&nbsp;</TD>
    <TD STYLE="width: 1%; text-align: left">&nbsp;</TD><TD STYLE="width: 7%; text-align: right">-</TD><TD STYLE="width: 1%; text-align: left">&nbsp;</TD><TD STYLE="width: 1%">&nbsp;</TD>
    <TD STYLE="width: 1%; text-align: left">&nbsp;</TD><TD STYLE="width: 7%; text-align: right">55,887,491</TD><TD STYLE="width: 1%; text-align: left">&nbsp;</TD><TD STYLE="width: 1%">&nbsp;</TD>
    <TD STYLE="width: 1%; text-align: left">&nbsp;</TD><TD STYLE="width: 7%; text-align: right">65.15</TD><TD STYLE="width: 1%; text-align: left">%</TD><TD STYLE="width: 1%">&nbsp;</TD>
    <TD STYLE="width: 1%; text-align: left">&nbsp;</TD><TD STYLE="width: 7%; text-align: right">65.15</TD><TD STYLE="width: 1%; text-align: left">%</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,255,204)">
    <TD STYLE="text-align: left">Joseph Bernstein (5) (6)</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">1</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">100</TD><TD STYLE="text-align: left">%</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">-</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">-</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">55,887,491</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">65.15</TD><TD STYLE="text-align: left">%</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">65.15</TD><TD STYLE="text-align: left">%</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD STYLE="text-align: left">Jeffrey S. Mahl</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">-</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right"></TD><TD STYLE="text-align: right">-</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">-</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">-</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">-</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right"></TD><TD STYLE="text-align: right">-</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right"></TD><TD STYLE="text-align: right">-</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,255,204)">
    <TD STYLE="text-align: left">Matthew Schwartz</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">-</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right"></TD><TD STYLE="text-align: right">&nbsp;-</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">25,000</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">*</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">107,476</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right"></TD><TD STYLE="text-align: left">*&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right"></TD><TD STYLE="text-align: left">&nbsp;*</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD STYLE="text-align: left">Dr. Robert Cohen (5) (6)</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">1</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">100</TD><TD STYLE="text-align: left">%</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">-</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">-</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">55,887,491</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">65.15</TD><TD STYLE="text-align: left">%</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">65.15</TD><TD STYLE="text-align: left">%</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,255,204)">
    <TD STYLE="text-align: left">Jeremy Office</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">-</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right"></TD><TD STYLE="text-align: right">&nbsp;-</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">-</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">-</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">-</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right"></TD><TD STYLE="text-align: right">&nbsp;-</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right"></TD><TD STYLE="text-align: right">&nbsp;-</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD STYLE="text-align: left">Jeffrey L. Wasserman</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">-</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right"></TD><TD STYLE="text-align: right">&nbsp;-</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">25,000</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">*</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">107,476</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right"></TD><TD STYLE="text-align: left">&nbsp;*</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right"></TD><TD STYLE="text-align: left">*&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,255,204)">
    <TD STYLE="font-weight: bold; text-align: left">Directors and executive officers as a group (7 persons) (5) (6)</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">1</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">100</TD><TD STYLE="text-align: left">%</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">50,000</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">*</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">56,102,442</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">65.40</TD><TD STYLE="text-align: left">%</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">65.40</TD><TD STYLE="text-align: left">%</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD>&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,255,204)">
    <TD STYLE="font-weight: bold; text-align: left">Other 5% stockholders:</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD STYLE="text-align: left">Grandparents.com, LLC (5) (6)</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">1</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">100</TD><TD STYLE="text-align: left">%</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">-</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">-</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">55,887,491</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">65.15</TD><TD STYLE="text-align: left">%</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">65.15</TD><TD STYLE="text-align: left">%</TD></TR>
</TABLE>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0">* Less than 1%</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0">&nbsp;</P>

<TABLE CELLPADDING="0" CELLSPACING="0" WIDTH="100%" STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0; margin-bottom: 0"><TR STYLE="vertical-align: top">
<TD STYLE="width: 0"></TD><TD STYLE="width: 17.05pt">(1)</TD><TD STYLE="text-align: justify">See &ldquo;Description of Securities &ndash; Series A Convertible Preferred Stock&rdquo; below
for a description of the voting and conversion rights of the Series A Convertible Preferred Stock.</TD></TR></TABLE>

<TABLE CELLPADDING="0" CELLSPACING="0" WIDTH="100%" STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0; margin-bottom: 0"><TR STYLE="vertical-align: top">
<TD STYLE="width: 0"></TD><TD STYLE="width: 17.05pt">(2)</TD><TD STYLE="text-align: justify">See &ldquo;Description of Securities &ndash; Series B Convertible Preferred Stock&rdquo; below
for a description of the voting and conversion rights of the Series B Convertible Preferred Stock.</TD></TR></TABLE>

<TABLE CELLPADDING="0" CELLSPACING="0" WIDTH="100%" STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0; margin-bottom: 0"><TR STYLE="vertical-align: top">
<TD STYLE="width: 0"></TD><TD STYLE="width: 17.05pt">(3)</TD><TD STYLE="text-align: justify">Based on 16,996,151 shares of Common Stock issued and outstanding as of the Closing Date. The Company
intends to file the Amendment within sixty (60) days of the Closing Date. Accordingly, persons holding shares of Series A Convertible
Preferred Stock or Series B Convertible Preferred Stock are deemed to beneficially own the shares of Common Stock into which such
securities will be converted.</TD></TR></TABLE>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0 0 0 17.05pt; text-align: justify; text-indent: -17.05pt">&nbsp;</P>

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<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0 0 0 17.05pt; text-align: justify; text-indent: -17.05pt">&nbsp;</P>

<TABLE CELLPADDING="0" CELLSPACING="0" WIDTH="100%" STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0; margin-bottom: 0"><TR STYLE="vertical-align: top">
<TD STYLE="width: 0"></TD><TD STYLE="width: 17.05pt">(4)</TD><TD STYLE="text-align: justify">Reflects (i) the combined voting power with respect to shares of Series A Convertible Preferred
Stock, Series B Convertible Preferred Stock and Common Stock prior to the filing of the Amendment; and (ii) total voting power
with respect to shares of Common Stock following the automatic conversion of the Series A Convertible Preferred Stock and Series
B Common Stock upon the filing of the Amendment.</TD></TR></TABLE>

<TABLE CELLPADDING="0" CELLSPACING="0" WIDTH="100%" STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0; margin-bottom: 0"><TR STYLE="vertical-align: top">
<TD STYLE="width: 0"></TD><TD STYLE="width: 17.05pt">(5)</TD><TD STYLE="text-align: justify">The board of managers of Grandparents.com has voting and investment power with respect to securities
owned by Grandparents.com. In order to take any action, the approval of a majority of the members of the board of managers is required.
Messrs. Leber and Bernstein and Dr. Cohen serve as the only members of the Grandparents.com board of managers. As a result, Messrs.
Leber and Bernstein and Dr. Cohen may be deemed to have shared voting and investment power with respect to securities owned by
Grandparents.com. Messrs. Leber and Bernstein and Dr. Cohen each disclaim beneficial ownership of securities owned by Grandparents.com,
except to the extent of his pecuniary interest therein.</TD></TR></TABLE>

<TABLE CELLPADDING="0" CELLSPACING="0" WIDTH="100%" STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0; margin-bottom: 0"><TR STYLE="vertical-align: top">
<TD STYLE="width: 0"></TD><TD STYLE="width: 17.05pt">(6)</TD><TD STYLE="text-align: justify">Grandparents.com entered into a lock-up agreement with us prohibiting the transfer of our equity
securities beneficially owned by Grandparents.com, subject to certain exceptions, for a period of twelve (12) months following
the closing of the Transaction. The lock-up agreement automatically terminates upon the upon the final closing of an offering of
Common Stock or other equity interest of the Company for the account of the Company having a price per share of at least $2.00
and resulting in at least $25,000,000 in gross proceeds (before underwriters&rsquo; discounts and selling commissions) to the Company.</TD></TR></TABLE>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0">&nbsp;&nbsp;</P>

<P STYLE="font: bold 10pt Times New Roman, Times, Serif; margin: 0; text-align: center">DIRECTORS AND EXECUTIVE OFFICERS</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0">The following table sets forth the names, ages, and positions of
our new executive officers and directors as of the Closing Date. Upon the closing of the Transaction, our former directors and
officers resigned and the designees of Grandparents.com were appointed to fill the vacancies created by such resignations. Executive
officers are appointed by our Board of Directors. Each executive officer holds his office until he resigns, is removed by our Board
of Directors, or his successor is elected and qualified. Directors are elected annually by our stockholders at the annual meeting.
Each director holds his office until his successor is elected and qualified or his earlier resignation or removal. Our Board of
Directors has designated Messrs. Leber, Bernstein, Mahl and Schwartz as executive officers for purposes of Section 16 of the Exchange
Act.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0">&nbsp;</P>

<TABLE CELLSPACING="0" CELLPADDING="0" ALIGN="CENTER" STYLE="font: 10pt Times New Roman, Times, Serif; width: 85%; border-collapse: collapse">
<TR STYLE="vertical-align: top">
    <TD STYLE="width: 35%; font-weight: bold; text-decoration: none; text-align: left; vertical-align: bottom; border-bottom: Black 1pt solid">Name</TD>
    <TD STYLE="width: 2%; font-weight: bold; padding-bottom: 1pt">&nbsp;</TD>
    <TD STYLE="width: 10%; font-weight: bold; text-decoration: none; text-align: center; border-bottom: Black 1pt solid">Age</TD>
    <TD STYLE="width: 2%; font-weight: bold; text-align: center; padding-bottom: 1pt">&nbsp;</TD>
    <TD STYLE="width: 51%; font-weight: bold; text-decoration: none; text-align: center; border-bottom: Black 1pt solid">Position</TD></TR>
<TR STYLE="vertical-align: top">
    <TD STYLE="text-align: left; vertical-align: bottom">Steven E. Leber</TD>
    <TD STYLE="text-align: center">&nbsp;</TD>
    <TD STYLE="text-align: center">70</TD>
    <TD STYLE="text-align: center">&nbsp;</TD>
    <TD STYLE="text-align: center">Chairman, Co-Chief Executive Officer</TD></TR>
<TR STYLE="vertical-align: top">
    <TD STYLE="text-align: left; vertical-align: bottom">Joseph Bernstein</TD>
    <TD STYLE="text-align: center">&nbsp;</TD>
    <TD STYLE="text-align: center">63</TD>
    <TD STYLE="text-align: center">&nbsp;</TD>
    <TD>
        <P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: center">Co-Chief Executive Officer,</P>
        <P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: center">Chief Financial Officer, Treasurer, Director</P></TD></TR>
<TR STYLE="vertical-align: top">
    <TD STYLE="text-align: left; vertical-align: bottom">Jeffrey S. Mahl</TD>
    <TD STYLE="text-align: center">&nbsp;</TD>
    <TD STYLE="text-align: center">60</TD>
    <TD STYLE="text-align: center">&nbsp;</TD>
    <TD STYLE="text-align: center">President</TD></TR>
<TR STYLE="vertical-align: top">
    <TD STYLE="text-align: left; vertical-align: bottom">Matthew Schwartz</TD>
    <TD STYLE="text-align: center">&nbsp;</TD>
    <TD STYLE="text-align: center">39</TD>
    <TD STYLE="text-align: center">&nbsp;</TD>
    <TD>
        <P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: center">Vice President &ndash; Administration,</P>
        <P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: center">Chief Compliance Officer, Secretary</P></TD></TR>
<TR STYLE="vertical-align: top">
    <TD STYLE="text-align: left; vertical-align: bottom">Dr. Robert Cohen</TD>
    <TD STYLE="text-align: center">&nbsp;</TD>
    <TD STYLE="text-align: center">68</TD>
    <TD STYLE="text-align: center">&nbsp;</TD>
    <TD STYLE="text-align: center">Director</TD></TR>
<TR STYLE="vertical-align: top">
    <TD STYLE="text-align: left; vertical-align: bottom">Jeremy Office</TD>
    <TD STYLE="text-align: center">&nbsp;</TD>
    <TD STYLE="text-align: center">35</TD>
    <TD STYLE="text-align: center">&nbsp;</TD>
    <TD STYLE="text-align: center">Director</TD></TR>
<TR STYLE="vertical-align: top">
    <TD STYLE="text-align: left; vertical-align: bottom">Jeffrey L. Wasserman</TD>
    <TD STYLE="text-align: center">&nbsp;</TD>
    <TD STYLE="text-align: center">41</TD>
    <TD STYLE="text-align: center">&nbsp;</TD>
    <TD STYLE="text-align: center">Director, Assistant Secretary</TD></TR>
</TABLE>
<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0">The business background descriptions of the newly appointed directors
and officers are as follows:</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0"><B>Steven E. Leber</B> was appointed as our Co-Chief Executive Officer
and Chairman of our Board of Directors upon closing of the Transaction. Mr. Leber is also a Managing Director of Grandparents.com.
He joined Grandparents.com along with Messrs. Bernstein, Mahl and Schwartz in May 2010. In his renowned career, Mr. Leber earned
a reputation as one of the most innovative forces in the entertainment industry. His groundbreaking projects include:</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0 0 0 0.25in">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0 0 0 0.25in"></P>

<TABLE CELLPADDING="0" CELLSPACING="0" WIDTH="100%" STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0; margin-bottom: 0"><TR STYLE="vertical-align: top">
<TD STYLE="width: 0.25in"></TD><TD STYLE="width: 0.25in"><FONT STYLE="font-family: Symbol">&middot;</FONT></TD><TD STYLE="text-align: justify">As the agent for the Rolling Stones in the United States, Mr. Leber toured with the group for eight
years while at the William Morris Agency (WMA).</TD></TR></TABLE>

<P STYLE="font: 10pt Symbol; margin: 0 0 0 0.5in; text-align: justify; text-indent: -0.25in">&nbsp;</P>

<TABLE CELLPADDING="0" CELLSPACING="0" WIDTH="100%" STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0; margin-bottom: 0"><TR STYLE="vertical-align: top">
<TD STYLE="width: 0.25in"></TD><TD STYLE="width: 0.25in"><FONT STYLE="font-family: Symbol">&middot;</FONT></TD><TD STYLE="text-align: justify"><I>Jesus Christ Superstar </I>US arena tour, which became an innovative model for marketing musicals.</TD></TR></TABLE>

<P STYLE="font: 10pt Symbol; margin: 0 0 0 0.5in; text-align: justify; text-indent: -0.25in">&nbsp;</P>

<TABLE CELLPADDING="0" CELLSPACING="0" WIDTH="100%" STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0; margin-bottom: 0"><TR STYLE="vertical-align: top">
<TD STYLE="width: 0.25in"></TD><TD STYLE="width: 0.25in"><FONT STYLE="font-family: Symbol">&middot;</FONT></TD><TD STYLE="text-align: justify"><I>Beatlemania</I>, considered the first &ldquo;juke-box musical&rdquo; and the highest-grossing
musical of its time ($100,000,000 worldwide), and the first Broadway musical to be fully sponsored (Pepsi-Cola).</TD></TR></TABLE>

<P STYLE="font: 10pt Symbol; margin: 0 0 0 0.5in; text-align: justify; text-indent: -0.25in">&nbsp;</P>

<TABLE CELLPADDING="0" CELLSPACING="0" WIDTH="100%" STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0; margin-bottom: 0"><TR STYLE="vertical-align: top">
<TD STYLE="width: 0.25in"></TD><TD STYLE="width: 0.25in"><FONT STYLE="font-family: Symbol">&middot;</FONT></TD><TD STYLE="text-align: justify"><I>The Concert for Bangladesh</I>, produced at George Harrison&rsquo;s request and which paved
the way for fundraising concerts such as <I>BandAid</I>, <I>LiveAid</I>, <I>We Are the World</I>, and others.</TD></TR></TABLE>

<P STYLE="font: 10pt Symbol; margin: 0 0 0 0.5in; text-align: justify; text-indent: -0.25in">&nbsp;</P>

<TABLE CELLPADDING="0" CELLSPACING="0" WIDTH="100%" STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0; margin-bottom: 0"><TR STYLE="vertical-align: top">
<TD STYLE="width: 0.25in"></TD><TD STYLE="width: 0.25in"><FONT STYLE="font-family: Symbol">&middot;</FONT></TD><TD STYLE="text-align: justify"><I>The Texxas World Music Festival</I>, which blazed the trail for current festivals such as <I>Bonnaroo</I>
and <I>Lollapalooza.</I></TD></TR></TABLE>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0">&nbsp;</P>

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<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0">&nbsp;</P>

<TABLE CELLPADDING="0" CELLSPACING="0" WIDTH="100%" STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0; margin-bottom: 0"><TR STYLE="vertical-align: top">
<TD STYLE="width: 0.25in"></TD><TD STYLE="width: 0.25in"><FONT STYLE="font-family: Symbol">&middot;</FONT></TD><TD STYLE="text-align: justify">The Teenage Mutant Ninja Turtles <I>Coming Out of Their Shells</I> tour, which not only was among
the first to employ interactive technology but, more importantly, Mr. Leber structured a deal with Pizza Hut that established a
new industry model for corporate sponsorship.</TD></TR></TABLE>

<P STYLE="font: 10pt Symbol; margin: 0 0 0 0.5in; text-align: justify; text-indent: -0.25in">&nbsp;</P>

<TABLE CELLPADDING="0" CELLSPACING="0" WIDTH="100%" STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0; margin-bottom: 0"><TR STYLE="vertical-align: top">
<TD STYLE="width: 0.25in"></TD><TD STYLE="width: 0.25in"><FONT STYLE="font-family: Symbol">&middot;</FONT></TD><TD STYLE="text-align: justify">The North American tour of the <I>Moscow Circus</I>, which was sponsored by American Express, broke
box off records and was named Family Show of the Year by Performance Magazine for three consecutive years.</TD></TR></TABLE>



<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0 0 0 0.25in">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0">At WMA, Mr. Leber launched the music division and became
the youngest member of the Executive Committee and stockholder. Mr. Leber later founded Contemporary Communications Corporation
(CCC)/Leber-Krebs, creating one of the largest and most profitable artist management firms in the industry. Artists handled by
CCC/Leber-Krebs included AC/DC, Aerosmith, Def Leppard, Michael Bolton, Joan Jett, the Scorpions, Parliament Funkadelic, Cameo,
Dionne Warwick, Ted Nugent, and dozens more. Of Billboards 100 Best Selling Albums at the time, 13 were produced by Leber-Krebs,
including AC/DC&rsquo;s <I>Back In</I> <I>Black</I>, the second-highest selling album in music history. Mr. Leber also launched
<I>Pro-Skate</I>, the first show to highlight professional ice skating as a team sport for ABC&rsquo;s Wide World of Sports. The
show ran for six years, was hosted by Dick Button, and introduced Peggy Fleming and Dorothy Hamill to American television audiences.
Currently, Mr. Leber is on the Advisory Board of Brooklyn Bagel Water Company, Inc. and a director of New Age Producers Group,
Inc., a holding company for his investment and entertainment ventures. Mr. Leber holds a B.A. in Accounting from Northeastern
University.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0"><B>Joseph Bernstein</B> was appointed as our Co-Chief Executive
Officer, Chief Financial Officer, Treasurer and member of our Board of Directors upon closing of the Transaction. Mr. Bernstein
is also a Managing Director of Grandparents.com. He joined Grandparents.com along with Messrs. Leber, Mahl and Schwartz in May
2010. Mr. Bernstein started his career as a tax attorney at Cahill Gordon &amp; Reindel (1975-1978) and Rosenman &amp; Colin (1978-1981),
and later founded Bernstein Carter &amp; Deyo, specializing in international taxation and foreign investments in the United States.
Mr. Bernstein also founded The New York Land Company and Americas Partners LLC, private real estate companies that initiated over
$1 billion in office and retail development projects in New York City, including: Americas Tower, the 50-story office tower at
1177 Avenue of the Americas, world headquarters to PriceWaterhouseCoopers; The Crown Building, at the corner of Fifth Avenue and
57th Street; 40 Wall Street, a 70-story office tower; and Herald Center, a vertical retail center at Broadway and 34th Street.
The company has also initiated development projects in Israel, including an entertainment city and a golf resort. From 1995-2004,
Mr. Bernstein was a joint venture partner of the Monticello Raceway in Sullivan County, NY, which included development of a Native
American and a NY State Lottery casino project. The Raceway was merged in 2004 into Empire Resorts, Inc., a public company, where
Mr. Bernstein served as CEO in 2009. From 2004-2010, Mr. Bernstein served as Co-Trustee, of the Catskill Litigation Trust, a publicly
registered trust, with Dennis Vacco, former Attorney General of the State of New York. Mr. Bernstein is currently a director of
Curator, LLC, a special opportunity fund, and Colorado, LLC, a wine in a can manufacturing company. Mr. Bernstein holds a B.A.
in Economics and a B.A. in Agricultural Business Management from the University of California at Davis (1970); an M.B.A. in Finance
from the University of California at Los Angeles Graduate School of Management (1971); a J.D. from the University of California
at Davis School of Law (1974); and a Master of Laws Degree (L.L.M.) in Taxation from the New York University Graduate School of
Law (1975).</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0"><B>Jeffrey S. Mahl</B> was appointed as our President upon closing
of the Transaction. Mr. Mahl is also President at Grandparents.com. Mr. Mahl has been in the Internet sales business for over two
decades. He joined Grandparents.com along with Messrs. Leber, Bernstein and Schwartz in May 2010. Mr. Mahl was formerly Senior
Vice President at ESPN, Inc., where he was responsible for building $200 million in sales revenue to over $1 billion in just a
few years. Mr. Mahl led advertising sales, media sales, media research, event marketing and promotion for ESPN, ESPN2, ESPN Classic,
ESPNews, E.R.T., and ESPN Internet Ventures (ESPN.com, NASCAR.COM, NFL.COM, NBA.COM). Mr. Mahl has also held positions as Senior
Vice President of Online and Mobile Advertising at National Cinemedia and President of Media Directions, L.L.C. He also served
as Executive Vice President, Ad Sales, with Mail.com Media Corporation and held senior management positions at AskJeeves, Gemstar-TV
Guide, and OCC Sports. At Gemstar-TV Guide, he served as President of the Media Sales Group and at AskJeeves as Executive Vice
President, bringing over 100 new clients to the site. Mr. Mahl holds a B.A. in Economics from Northeastern University in Boston.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0"><B>Matthew Schwartz</B> was appointed as our Vice President &ndash;
Administration, Chief Compliance Officer and Secretary upon closing of the Transaction. Mr. Schwartz is also Vice President &ndash;
Finance &amp; Operations and Chief Compliance Officer at Grandparents.com. He joined Grandparents.com along with Messrs. Leber,
Bernstein and Mahl in May 2010. Mr. Schwartz was previously in charge of finance and operations at Americas Partners LLC and other
venture companies owned by Joseph Bernstein, and for the publicly registered Catskill Litigation Trust, as financial administrator,
where he reported directly to former NY Attorney General Dennis Vacco and Joseph Bernstein, co-trustees. Mr. Schwartz also previously
served as Assistant to the CEO at Empire Resorts, Inc., a public company. Mr. Schwartz started his career in 1994 at North Shore
University Hospital in Manhasset, NY, where he was an EMT in the mobile intensive care transport unit for the North Shore Hospital
Emergency Department. Mr. Schwartz graduated from Hofstra University with a B.A. in Psychology in 1995.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0">&nbsp;</P>

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<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0"><B>Dr. Robert Cohen</B> was appointed to our Board of
Directors upon closing of the Transaction. Dr. Cohen is also a Managing Director of Grandparents.com. Dr. Cohen has been
engaged in the retail and wholesale optical business since 1968. He has served as Chief Executive Officer of Cohen Fashion
Optical, LLC and its predecessors (&ldquo;Cohen Optical&rdquo;) since 1978. Cohen Optical is a leading eyewear chain consisting of 116 retail
optical stores. Twenty-four stores are located in high visibility locations in Manhattan. The remaining stores are located
throughout the northeast and Florida, most of which are sited in regional shopping centers. Dr. Cohen and his family are
principal members of EMVI Holdings, LLC the parent company of Emerging Vision, Inc., a national retail optical chain
comprised of approximately 120 locations operating primarily under the name Sterling Optical. Dr. Cohen and members of his
family are the principal members of General Vision Services, LLC (&ldquo;GVS&rdquo;). GVS is the largest managed care
third-party vision provider and is comprised of a network of over 250 providers and company stores with locations in the New
York Metropolitan area. Dr. Cohen and members of his immediate family are also the principal members of Vision World, LLC,
which is comprised of over 50 provider locations throughout Long Island and the metropolitan area. In 2010, Dr. Cohen and
members of his immediate family formed Beyond Readers, LLC, a company that holds the North American license to distribute a
unique multi-focal reading glass product that distributes their product through large retail chains. Dr. Cohen is a Managing
Partner and Director of ERA Realty Company, a real estate management and investment company, with real estate holdings in
commercial and residential properties. Dr. Cohen serves as an officer and director of several management and real
estate companies, as well as various other optical and non-optical related businesses.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0"><B>Jeremy Office</B> was appointed to our Board of Directors upon
closing of the Transaction. Mr. Office is a principal of Maclendon Wealth Management, an independent Registered Investment Advisor
Firm offering financial planning services to high net worth individuals, where he has been engaged in such capacity since June
2011. Mr. Office is also Managing Partner of SJO Worldwide, a venture capital fund, where he has been engaged in such capacity
since June 2011. From April 2002 to June 2011, Mr. Office was a Vice-President and the Associate Director at Merrill Lynch where
he helped to build one of the most successful business units of the firm. Prior to that, he was a business consultant working with
corporations throughout the Caribbean, Latin America and the United States. Mr. Office has served as a Vice-President of the Boys
and Girls Club of America and been a past board member of the City of Delray Beach&rsquo;s Neighborhood Advisory Council. Mr. Office
earned his Ph.D., with honors, from Lynn University in Boca Raton, Florida. His work focused on Global Leadership and Management.
He achieved his Masters of Business Administration (M.B.A.) at the University of Florida in Gainesville, and he holds a Bachelor
of Business Administration in Finance from Miami University, Oxford, Ohio. Mr. Office is a Certified Financial Planner (CFP), Certified
Investment Management Analyst (CIMA), Chartered Financial Consultant (ChFC) and Chartered Retirement Planning Counselor (CRPC).
He holds FINRA Licenses 7, 9, and 10, and State License 66 as well as his Life, Health and Variable Annuity Insurance License (this
is commonly referred to as the 2-15 Agents License). He also completed the prestigious Bloomberg Certifications in Equities, Fixed
Income and Foreign Exchange.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0"><B>Jeffrey L. Wasserman </B>was appointed to our Board
of Directors and as Assistant Secretary upon closing of the Transaction. Mr. Wasserman is a member of the law firm of
Sills Cummis &amp; Gross. P.C. Mr. Wasserman joined the firm in May 2009 and is a member of its Corporate, Securities,
Banking and Finance, and Life Sciences Practice Groups. Mr. Wasserman provides corporate counseling to private equity and
venture capital funds, and public and private companies. His expertise includes the structuring and negotiating of leveraged
buy-outs, investments, complex acquisitions, secured and unsecured lending, and joint ventures/collaborations. Mr. Wasserman
also provides general corporate advice. Prior to joining Sills Cummis &amp; Gross, Mr. Wasserman was a founder and Chief
Executive Officer of Caldwell Consumer Health, LLC, a privately owned pharmaceutical company, from August 2008 to April 2009.
He also served in senior management positions for other pharmaceutical start-ups. He was a founding general partner and
served as Senior Vice President and General Counsel to Laser Partners, L.P., a Boca Raton, Florida-based private
equity/venture capital fund. Mr. Wasserman started his career in the corporate and securities practice groups at Morgan Lewis
and Mayer Brown &amp; Platt in New York. Mr. Wasserman received his J.D. from the Seton Hall University School of Law in
1998, magna cum laude, and received his B.A. from Tulane University in 1993.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0">&nbsp;</P>

<P STYLE="font: bold 10pt Times New Roman, Times, Serif; margin: 0">Family Relationships</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0">There are no family relationships among any of our officers or directors.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0">&nbsp;</P>

<P STYLE="font: bold 10pt Times New Roman, Times, Serif; margin: 0">Director Independence</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0">Because our common stock is not currently listed on a national securities
exchange, we have used the definition of &ldquo;independence&rdquo; of The NASDAQ Stock Market to determine whether our directors
are independent. The Board of Directors has determined that Dr. Cohen and Messrs. Office and Wasserman qualify as &ldquo;independent&rdquo;
in accordance with the published listing requirements of the NASDAQ Stock Market and for purposes of Section 16 of the Exchange
Act.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0">NASDAQ Listing Rule 5605(a)(2) provides that an &ldquo;independent
director&rdquo; is a person other than an officer or employee of the Company or any other individual having a relationship which,
in the opinion of our Board of Directors, would interfere with the exercise of independent judgment in carrying out the responsibilities
of a director. The NASDAQ listing rules provide that a director cannot be considered independent if:</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0">&nbsp;</P>

<TABLE CELLPADDING="0" CELLSPACING="0" WIDTH="100%" STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0; margin-bottom: 0"><TR STYLE="vertical-align: top">
<TD STYLE="width: 0.25in"></TD><TD STYLE="width: 0.25in"><FONT STYLE="font-family: Symbol">&middot;</FONT></TD><TD>the director is, or at any time during the past three years was, an employee of the Company;</TD></TR></TABLE>

<P STYLE="font: 10pt Symbol; margin: 0 0 0 0.5in; text-indent: -0.25in">&nbsp;</P>

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<P STYLE="font: 10pt Symbol; margin: 0 0 0 0.5in; text-indent: -0.25in">&nbsp;</P>

<TABLE CELLPADDING="0" CELLSPACING="0" WIDTH="100%" STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0; margin-bottom: 0"><TR STYLE="vertical-align: top">
<TD STYLE="width: 0.25in"></TD><TD STYLE="width: 0.25in"><FONT STYLE="font-family: Symbol">&middot;</FONT></TD><TD>the director or a family member of the director accepted any compensation from the Company in excess of $120,000 during
                                                                                                               any period of twelve consecutive months within the three years preceding the independence determination (subject to
                                                                                                               certain exclusions, including, among other things, compensation for board or board committee service);</TD></TR></TABLE>

<TABLE CELLPADDING="0" CELLSPACING="0" WIDTH="100%" STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0; margin-bottom: 0"><TR STYLE="vertical-align: top">
<TD STYLE="width: 0.25in"></TD><TD STYLE="width: 0.25in"><FONT STYLE="font-family: Symbol">&middot;</FONT></TD><TD>a family member of the director is, or at any time during the past three years was, an executive officer of the Company;</TD></TR></TABLE>

<TABLE CELLPADDING="0" CELLSPACING="0" WIDTH="100%" STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0; margin-bottom: 0"><TR STYLE="vertical-align: top">
<TD STYLE="width: 0.25in"></TD><TD STYLE="width: 0.25in"><FONT STYLE="font-family: Symbol">&middot;</FONT></TD><TD>the director or a family member of the director is a partner in, controlling stockholder of, or an executive officer of an
entity to which the Company made, or from which the Company received, payments in the current or any of the past three fiscal years
that exceed 5% of the recipient&rsquo;s consolidated gross revenue for that year or $200,000, whichever is greater (subject to
certain exclusions);</TD></TR></TABLE>

<TABLE CELLPADDING="0" CELLSPACING="0" WIDTH="100%" STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0; margin-bottom: 0"><TR STYLE="vertical-align: top">
<TD STYLE="width: 0.25in"></TD><TD STYLE="width: 0.25in"><FONT STYLE="font-family: Symbol">&middot;</FONT></TD><TD>the director or a family member of the director is employed as an executive officer of an entity where, at any time during
the past three years, any of the executive officers of the Company served on the compensation committee of such other entity; or</TD></TR></TABLE>

<TABLE CELLPADDING="0" CELLSPACING="0" WIDTH="100%" STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0; margin-bottom: 0"><TR STYLE="vertical-align: top">
<TD STYLE="width: 0.25in"></TD><TD STYLE="width: 0.25in"><FONT STYLE="font-family: Symbol">&middot;</FONT></TD><TD>the director or a family member of the director is a current partner of the Company&rsquo;s outside auditor, or at any time
during the past three years was a partner or employee of the Company&rsquo;s outside auditor, and who worked on the company&rsquo;s
audit.</TD></TR></TABLE>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0"><B>Board Committees</B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0">We do not currently have a separately designated audit, nominating
or compensation committee. We intend, however, to establish such committees in the future.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0">&nbsp;</P>

<P STYLE="font: bold 10pt Times New Roman, Times, Serif; margin: 0">Involvement in Certain Legal Proceedings</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0">To the best of our knowledge, none of our current directors or executive
officers has, during the past ten years:</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0">&nbsp;</P>

<TABLE CELLPADDING="0" CELLSPACING="0" WIDTH="100%" STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0; margin-bottom: 0"><TR STYLE="vertical-align: top">
<TD STYLE="width: 0.25in"></TD><TD STYLE="width: 0.25in"><FONT STYLE="font-family: Symbol">&middot;</FONT></TD><TD>been convicted in a criminal proceeding or been subject to a pending criminal proceeding (excluding traffic violations and
other minor offenses);</TD></TR></TABLE>

<TABLE CELLPADDING="0" CELLSPACING="0" WIDTH="100%" STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0; margin-bottom: 0"><TR STYLE="vertical-align: top">
<TD STYLE="width: 0.25in"></TD><TD STYLE="width: 0.25in"><FONT STYLE="font-family: Symbol">&middot;</FONT></TD><TD>had any bankruptcy petition filed by or against the business or property of the person, or of any partnership, corporation
or business association of which he was a general partner or executive officer, either at the time of the bankruptcy filing or
within two years prior to that time;</TD></TR></TABLE>

<TABLE CELLPADDING="0" CELLSPACING="0" WIDTH="100%" STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0; margin-bottom: 0"><TR STYLE="vertical-align: top">
<TD STYLE="width: 0.25in"></TD><TD STYLE="width: 0.25in"><FONT STYLE="font-family: Symbol">&middot;</FONT></TD><TD>been subject to any order, judgment, or decree, not subsequently reversed, suspended or vacated, of any court of competent
jurisdiction or federal or state authority, permanently or temporarily enjoining, barring, suspending or otherwise limiting, his
involvement in any type of business, securities, futures, commodities, investment, banking, savings and loan, or insurance activities,
or to be associated with persons engaged in any such activity;</TD></TR></TABLE>

<TABLE CELLPADDING="0" CELLSPACING="0" WIDTH="100%" STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0; margin-bottom: 0"><TR STYLE="vertical-align: top">
<TD STYLE="width: 0.25in"></TD><TD STYLE="width: 0.25in"><FONT STYLE="font-family: Symbol">&middot;</FONT></TD><TD>been found by a court of competent jurisdiction in a civil action or by the SEC or the Commodity Futures Trading Commission
to have violated a federal or state securities or commodities law, and the judgment has not been reversed, suspended, or vacated;</TD></TR></TABLE>

<TABLE CELLPADDING="0" CELLSPACING="0" WIDTH="100%" STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0; margin-bottom: 0"><TR STYLE="vertical-align: top">
<TD STYLE="width: 0.25in"></TD><TD STYLE="width: 0.25in"><FONT STYLE="font-family: Symbol">&middot;</FONT></TD><TD>been the subject of, or a party to, any federal or state judicial or administrative order, judgment, decree, or finding, not
subsequently reversed, suspended or vacated (not including any settlement of a civil proceeding among private litigants), relating
to an alleged violation of any federal or state securities or commodities law or regulation, any law or regulation respecting financial
institutions or insurance companies including, but not limited to, a temporary or permanent injunction, order of disgorgement or
restitution, civil money penalty or temporary or permanent cease-and-desist order, or removal or prohibition order, or any law
or regulation prohibiting mail or wire fraud or fraud in connection with any business entity; or</TD></TR></TABLE>

<TABLE CELLPADDING="0" CELLSPACING="0" WIDTH="100%" STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0; margin-bottom: 0"><TR STYLE="vertical-align: top">
<TD STYLE="width: 0.25in"></TD><TD STYLE="width: 0.25in"><FONT STYLE="font-family: Symbol">&middot;</FONT></TD><TD>been the subject of, or a party to, any sanction or order, not subsequently reversed, suspended or vacated, of any self-regulatory
organization (as defined in Section 3(a)(26) of the Exchange Act), any registered entity (as defined in Section 1(a)(29) of the
Commodity Exchange Act), or any equivalent exchange, association, entity or organization that has disciplinary authority over its
members or persons associated with a member.</TD></TR></TABLE>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0">Except as set forth in our discussion below in &ldquo;Certain Relationships
and Related Transactions,&rdquo; none of our directors or executive officers has been involved in any transactions with us or any
of our directors, executive officers, affiliates or associates which are required to be disclosed pursuant to the rules and regulations
of the SEC.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0"><B>Code of Ethics</B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0">The former members of our Board of Directors adopted a Code of Ethics
applicable to our principal executive officer, principal financial officer, controller and other employees performing similar functions.
Although our newly appointed executive officers are subject to this Code of Ethics, the newly appointed members of our Board of
Directors intend to adopt of new Code of Ethics. However, no formal steps have been taken by the Board of Directors in this regard.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0">&nbsp;</P>

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<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0">&nbsp;</P>

<P STYLE="font: bold 10pt Times New Roman, Times, Serif; margin: 0; text-align: center">EXECUTIVE COMPENSATION</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0">&nbsp;</P>

<P STYLE="font: bold 10pt Times New Roman, Times, Serif; margin: 0">Compensation of New Executive Officers of the Company</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0">&nbsp;</P>

<P STYLE="font: bold 10pt Times New Roman, Times, Serif; margin: 0"><I>Employment Agreements with Current Executive Officers</I></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0; background-color: white">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0; background-color: white">In connection with the closing of
the Transaction, we entered into employment agreements with each of (i) Steven E. Leber, our newly appointed Co-Chief
Executive Officer and Chairman, (ii) Joseph Bernstein, our newly appointed Co-Chief Executive Officer, Chief Financial
Officer and Treasurer and member of our Board of Directors, (iii) Jeffrey S. Mahl, our newly appointed President, and (iv)
Matthew Schwartz, our newly appointed Vice President &ndash; Administration, Chief Compliance Officer and  Secretary
(collectively, the &ldquo;Current Named Executive Officers&rdquo;). The following sets forth a summary of such employment
agreements.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0; background-color: white"><B><I>&nbsp;</I></B></P>

<P STYLE="font: italic 10pt Times New Roman, Times, Serif; margin: 0">Steven E. Leber</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0">On the Closing Date, we entered into an employment agreement with
Steven E. Leber, our newly appointed Chairman and Co-Chief Executive Officer. The term of the agreement commenced on the Closing
Date and expires on the one year anniversary of the Closing Date. The agreement provides for an annual base salary of $225,000.
Mr. Leber was also granted non-qualified stock options to purchase 1,000,000 shares of Common Stock under the 2012 Stock Incentive
Plan. The options are exercisable for a period of ten (10) years from the date of grant with one-third (1/3) of such options vesting
and becoming exercisable on the first anniversary of the date of grant and the remaining two-thirds (2/3) of such options becoming
vested and exercisable in eight (8) equal quarterly installments thereafter. Mr. Leber is also entitled to participate in any bonus,
incentive, pension or profit sharing plan or other type of additional benefits provided by the Company for the benefit of officers
and/or regular employees. The options are exercisable at a price per share of $0.60, which was the closing trading price of
our Common Stock on February 24, 2012, the date of grant.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0">We may terminate Mr. Leber&rsquo;s employment for
&ldquo;cause&rdquo; which shall be deemed to exist if Mr. Leber (i) is in breach of any material obligation owed to us under
his employment agreement, or (ii) engages in a criminal act or engages in any act of moral turpitude. We may terminate his
employment for cause upon five (5) day&rsquo;s prior written notice to Mr. Leber. In the event of termination of his
employment for cause, Mr. Leber will be paid only at the then applicable base salary rate up to and including the date of
termination.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0">Mr. Leber may terminate his employment at his discretion by providing
at least thirty (30) days prior written notice to us. In the event of termination of his employment by Mr. Leber, we may immediately
relieve Mr. Leber of all duties and immediately terminate his employment agreement, provided that we pay Mr. Leber at the then
applicable base salary rate to the date of termination set forth in Mr. Leber&rsquo;s original notice of his termination.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0">In the event we are acquired, or is the non-surviving party in a
merger, or sells all or substantially all of its assets, we will pay Mr. Leber two (2) times the then applicable base salary rate
less any money to be received by Mr. Leber from the surviving entity or buyer.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0">In the event we terminate Mr. Leber without cause, we shall be bound
to pay the unpaid salary and vacation amounts remaining under his employment agreement and pay a pro rata amount of any bonus earned
as of the date of termination.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0">The agreement contains customary confidentiality provisions and
provides that Mr. Leber will be subject to noncompetition and nonsolicitation covenants for a period of one year following the
termination of his employment. The agreement also contains a mandatory arbitration provision.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0">&nbsp;</P>

<P STYLE="font: italic 10pt Times New Roman, Times, Serif; margin: 0">Joseph Bernstein</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0">On the Closing Date, we entered into an employment agreement with
Joseph Bernstein, our newly Co-Chief Executive Officer, Chief Financial Officer and Treasurer and member of our Board of Directors.
The term of the agreement commenced on the Closing Date and expires on the one year anniversary of the Closing Date. The agreement
provides for an annual base salary of $225,000. Mr. Bernstein was also granted non-qualified stock options to purchase 1,000,000
shares of Common Stock under the 2012 Stock Incentive Plan. The options are exercisable for a period of ten (10) years from the
date of grant with one-third (1/3) of such options vesting and becoming exercisable on the first anniversary of the date of grant
and the remaining two-thirds (2/3) of such options becoming vested and exercisable in eight (8) equal quarterly installments thereafter.
Mr. Bernstein is also entitled to participate in any bonus, incentive, pension or profit sharing plan or other type of additional
benefits provided by us for the benefit of officers and/or regular employees. The options are exercisable at a price per share
of $0.60, which was the closing trading price of our Common Stock on February 24, 2012, the date of grant.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0">We may terminate Mr. Bernstein&rsquo;s employment for &ldquo;cause&rdquo;
which shall be deemed to exist if Mr. Bernstein (i) is in breach of any material obligation owed to the Company under his employment
agreement, or (ii) engages in a criminal act or engages in any act of moral turpitude. We may terminate his
employment for cause
upon five (5) day&rsquo;s prior written notice to Mr. Bernstein. In the event of termination of his employment for cause, Mr. Bernstein
will be paid only at the then applicable base salary rate up to and including the date of termination.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0">&nbsp;</P>

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<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0">Mr. Bernstein may terminate his employment at his discretion by
providing at least thirty (30) days prior written notice to us. In the event of termination of his employment by Mr. Bernstein,
we may immediately relieve Mr. Bernstein of all duties and immediately terminate his employment agreement, provided that we pay
Mr. Bernstein at the then applicable base salary rate to the date of termination set forth in Mr. Bernstein&rsquo;s original notice
of his termination.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0">In the event we are is acquired, or is the non-surviving party in
a merger, or sells all or substantially all of its assets, we will pay Mr. Bernstein two (2) times the then applicable base salary
rate less any money to be received by Mr. Bernstein from the surviving entity or buyer.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0">In the event we terminate Mr. Bernstein without cause, we shall
be bound to pay the unpaid salary and vacation amounts remaining under his employment agreement and pay a pro rata amount of any
bonus earned as of the date of termination.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0">The agreement contains customary confidentiality provisions and
provides that Mr. Bernstein will be subject to noncompetition and nonsolicitation covenants for a period of one year following
the termination of his employment. The agreement also contains a mandatory arbitration provision.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0">&nbsp;</P>

<P STYLE="font: italic 10pt Times New Roman, Times, Serif; margin: 0">Jeffrey S. Mahl</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0">On the Closing Date, we entered into an employment agreement
with Jeffrey S. Mahl, our newly appointed President. The term of the agreement commenced on the Closing Date and expires on
the one year anniversary of the Closing Date. The agreement provides for an annual base salary of $150,000. Mr. Mahl was also
granted non-qualified stock options to purchase 250,000 shares of Common Stock under the 2012 Stock Incentive Plan. The
options are exercisable for a period of ten (10) years from the date of grant with one-third (1/3) of such options vesting
and becoming exercisable on the first anniversary of the date of grant and the remaining two-thirds (2/3) of such options
becoming vested and exercisable in eight (8) equal quarterly installments thereafter. Mr. Mahl is also entitled to
participate in any bonus, incentive, pension or profit sharing plan or other type of additional benefits provided by us for
the benefit of officers and/or regular employees. The options are exercisable at a price per share of $0.60, which was the
closing trading price of our Common Stock on February 24, 2012, the date of grant.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0">We may terminate Mr. Mahl&rsquo;s employment for
&ldquo;cause&rdquo; which shall be deemed to exist if Mr. Mahl (i) is in breach of any material obligation owed to us under
his employment agreement, or (ii) engages in a criminal act or engages in any act of moral turpitude. We may terminate  his
employment for cause upon five (5) day&rsquo;s prior written notice to Mr. Mahl. In the event of termination of his
employment for cause, Mr. Mahl will be paid only at the then applicable base salary rate up to and including the date of
termination.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0">Mr. Mahl may terminate his employment at his discretion by providing
at least thirty (30) days prior written notice to us. In the event of termination of his employment by Mr. Mahl, we may immediately
relieve Mr. Mahl of all duties and immediately terminate his employment agreement, provided that we pay Mr. Mahl at the then applicable
base salary rate to the date of termination set forth in Mr. Mahl&rsquo;s original notice of his termination.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0">In the event we are acquired, or is the non-surviving party in a
merger, or sells all or substantially all of its assets, we will pay Mr. Mahl two (2) times the then applicable base salary rate
less any money to be received by Mr. Mahl from the surviving entity or buyer.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0">In the event we terminate Mr. Mahl without cause, we shall be bound
to pay the unpaid salary and vacation amounts remaining under his employment agreement and pay a pro rata amount of any bonus earned
as of the date of termination.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0">The agreement contains customary confidentiality provisions and
provides that Mr. Mahl will be subject to noncompetition and nonsolicitation covenants for a period of one year following the termination
of his employment. The agreement also contains a mandatory arbitration provision.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0">&nbsp;</P>

<P STYLE="font: italic 10pt Times New Roman, Times, Serif; margin: 0">Matthew Schwartz</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0">On the Closing Date, we entered into an employment agreement with
Matthew Schwartz, our newly appointed Vice President &ndash; Administration, Chief Compliance Officer and Secretary. The term
of the agreement commenced on the Closing Date and expires on the one year anniversary of the Closing Date. The agreement provides
for an annual base salary of $100,000. Mr. Schwartz was also granted non-qualified stock options to purchase 200,000 shares of
Common Stock under the 2012 Stock Incentive Plan. The options are exercisable for a period of ten (10) years from the date of
grant with one-third (1/3) of such options vesting and becoming exercisable on the first anniversary of the date of grant and
the remaining two-thirds (2/3) of such options becoming vested and exercisable in eight (8) equal quarterly installments thereafter.
Mr. Schwartz is also entitled to participate in any bonus, incentive, pension or profit sharing plan or other type of additional
benefits provided by us for the benefit of officers and/or regular employees. The options are exercisable at a price per share
of $0.60 which was the closing trading price of our Common Stock on February 24, 2012, the date of grant.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0">&nbsp;</P>

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<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0">We may terminate Mr. Schwartz&rsquo;s employment for &ldquo;cause&rdquo;
which shall be deemed to exist if Mr. Schwartz (i) is in breach of any material obligation owed to the Company under his employment
agreement, or (ii) engages in a criminal act or engages in any act of moral turpitude. We may terminate his
employment for cause
upon five (5) day&rsquo;s prior written notice to Mr. Schwartz. In the event of termination of his employment for cause, Mr. Schwartz
will be paid only at the then applicable base salary rate up to and including the date of termination.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0">Mr. Schwartz may terminate his employment at his discretion by providing
at least thirty (30) days prior written notice to us. In the event of termination of his employment by Mr. Schwartz, we may immediately
relieve Mr. Schwartz of all duties and immediately terminate his employment agreement, provided that we shall pay Mr. Schwartz
at the then applicable base salary rate to the date of termination set forth in Mr. Schwartz&rsquo;s original notice of his termination.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0">In the event we are acquired, or is the non-surviving party in a
merger, or sells all or substantially all of its assets, we will pay Mr. Schwartz two (2) times the then applicable base salary
rate less any money to be received by Mr. Schwartz from the surviving entity or buyer.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0">In the event we terminate Mr. Schwartz without cause, we shall be
bound to pay the unpaid salary and vacation amounts remaining under his employment agreement and pay a pro rata amount of any bonus
earned as of the date of termination.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0">The agreement contains customary confidentiality provisions and
provides that Mr. Schwartz will be subject to noncompetition and nonsolicitation covenants for a period of one year following the
termination of his employment. The agreement also contains a mandatory arbitration provision.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0">&nbsp;</P>

<P STYLE="font: bold 10pt Times New Roman, Times, Serif; margin: 0"><I>Equity Incentive Plans</I></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0">In connection with the closing of the Transaction, we adopted a
new stock incentive plan (the &ldquo;2012 Stock Incentive Plan&rdquo;). The 2012 Stock Incentive Plan permits the Company to make
awards of stock options or grants of restricted stock to its employees, directors, officers, consultants, agents, advisors and
independent contractors. A maximum of 10,317,691 shares of Common Stock are available for issuance under the 2012 Stock Incentive
Plan. The Contribution Agreement contains a prohibition on the ability of the Company to grant any options, stock awards or issue
any other securities to any insiders, officers or directors of the Company that would give such persons a right to sell such securities
prior to the first anniversary of the Closing Date.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0">The Stock Incentive Plan is administered by the Board of Directors.
The Board of Directors may make awards under the Plan in the form of stock options (both qualified and non-qualified) and restricted
stock. The Board of Directors has authority to designate the recipients of such awards, to grant awards, to determine the form
of award and to fix all terms of awards granted all in accordance with the 2012 Stock Incentive Plan. Incentive stock options intended
to qualify under Section 422A of the Internal Revenue Code may be granted only to employees of the Company and must have an exercise
price equal to 100% of the fair market value of our common stock on the grant date (110% in the case of incentive options granted
to any 10% stockholder of the Company) and may not exceed a term of ten years (five years in the case of incentive options granted
to any 10% stockholder of the Company). Non-qualified stock options and other awards may be granted on such terms as the Board
of Directors may determine.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0">On the Closing Date and immediately following the closings of the
Transaction and Private Placement, Grandparents.com, which then owned approximately 65% of the voting control of the Company, approved,
by written consent, the 2012 Stock Incentive Plan. The 2012 Stock Incentive Plan was approved by our newly appointed Board of Directors
on the Closing Date.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0">Effective at closing of the Transaction, we terminated our 2005
Stock Incentive Plan, except that all outstanding options will continue in accordance with their terms. As of the Closing Date,
there are outstanding stock options for 200,000 shares under the 2005 Stock Incentive Plan and these options vested and became
fully exercisable immediately prior to the closing of the Transaction.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0">&nbsp;</P>

<P STYLE="font: bold 10pt Times New Roman, Times, Serif; margin: 0"><I>Grandparents.com Summary Compensation Table</I></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0; background-color: white">The following table shows for each of the
two fiscal years of Grandparents.com ended December 31, 2011 and 2010, respectively, compensation awarded or paid by Grandparents.com
to, or earned from Grandparents.com by our Current Named Executive Officers.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0">&nbsp;</P>

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<TABLE CELLPADDING="0" CELLSPACING="0" STYLE="width: 100%; font: 10pt Times New Roman, Times, Serif">
<TR STYLE="vertical-align: bottom">
    <TD NOWRAP STYLE="text-align: left; border-bottom: Black 1pt solid">Name&nbsp;and&nbsp;Principal&nbsp;Position</TD><TD NOWRAP STYLE="font-weight: bold; padding-bottom: 1pt">&nbsp;</TD>
    <TD COLSPAN="2" NOWRAP STYLE="font-weight: bold; text-align: center; border-bottom: Black 1pt solid">Fiscal&nbsp;<BR> Year</TD><TD NOWRAP STYLE="padding-bottom: 1pt; font-weight: bold">&nbsp;</TD><TD NOWRAP STYLE="font-weight: bold; padding-bottom: 1pt">&nbsp;</TD>
    <TD COLSPAN="2" NOWRAP STYLE="font-weight: bold; text-align: center; border-bottom: Black 1pt solid">Salary&nbsp;<BR> &nbsp;($)</TD><TD NOWRAP STYLE="padding-bottom: 1pt; font-weight: bold">&nbsp;</TD><TD NOWRAP STYLE="font-weight: bold; padding-bottom: 1pt">&nbsp;</TD>
    <TD COLSPAN="2" NOWRAP STYLE="font-weight: bold; text-align: center; border-bottom: Black 1pt solid">Option&nbsp;<BR> Awards&nbsp;(1)&nbsp;<BR> ($)</TD><TD NOWRAP STYLE="padding-bottom: 1pt; font-weight: bold">&nbsp;</TD><TD NOWRAP STYLE="font-weight: bold; padding-bottom: 1pt">&nbsp;</TD>
    <TD COLSPAN="2" NOWRAP STYLE="font-weight: bold; text-align: center; border-bottom: Black 1pt solid">All&nbsp; <BR>Other&nbsp; <BR>Compensation <BR>($)</TD><TD NOWRAP STYLE="padding-bottom: 1pt; font-weight: bold">&nbsp;</TD><TD NOWRAP STYLE="font-weight: bold; padding-bottom: 1pt">&nbsp;</TD>
    <TD COLSPAN="2" NOWRAP STYLE="font-weight: bold; text-align: center; border-bottom: Black 1pt solid">Total&nbsp;<BR> ($)</TD><TD NOWRAP STYLE="padding-bottom: 1pt; font-weight: bold">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom">
    <TD STYLE="font-style: italic; text-align: center">&nbsp;</TD><TD>&nbsp;</TD>
    <TD COLSPAN="2" STYLE="text-align: center">&nbsp;</TD><TD>&nbsp;</TD><TD>&nbsp;</TD>
    <TD COLSPAN="2" STYLE="text-align: center">&nbsp;</TD><TD>&nbsp;</TD><TD>&nbsp;</TD>
    <TD COLSPAN="2" STYLE="text-align: center">&nbsp;</TD><TD>&nbsp;</TD><TD>&nbsp;</TD>
    <TD COLSPAN="2" STYLE="text-align: center">&nbsp;</TD><TD>&nbsp;</TD><TD>&nbsp;</TD>
    <TD COLSPAN="2" STYLE="text-align: center">&nbsp;</TD><TD>&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,255,204)">
    <TD STYLE="font-style: italic; text-align: left">Steven E. Leber (2)</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">2011</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">-</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">-</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">-</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">-</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,255,204)">
    <TD STYLE="font-style: italic; text-align: left">Co-Chief Executive Officer</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">2010</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">-</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">-</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">-</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">-</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD STYLE="font-style: italic">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,255,204)">
    <TD STYLE="font-style: italic; text-align: left">Joseph Bernstein (2)</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">2011</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">-</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">-</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">-</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">-</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,255,204)">
    <TD STYLE="font-style: italic; text-align: left">Co-Chief Executive Officer,</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">2010</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">-</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">-</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">-</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">-</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,255,204)">
    <TD STYLE="font-style: italic; text-align: left">Chief Financial Officer and</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,255,204)">
    <TD STYLE="font-style: italic">Treasurer</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD STYLE="font-style: italic">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,255,204)">
    <TD STYLE="width: 35%; font-style: italic; text-align: left">Jeffrey S. Mahl</TD><TD STYLE="width: 1%">&nbsp;</TD>
    <TD STYLE="width: 1%; text-align: left">&nbsp;</TD><TD STYLE="width: 10%; text-align: right">2011</TD><TD STYLE="width: 1%; text-align: left">&nbsp;</TD><TD STYLE="width: 1%">&nbsp;</TD>
    <TD STYLE="width: 1%; text-align: left">$</TD><TD STYLE="width: 10%; text-align: right">120,000</TD><TD STYLE="width: 1%; text-align: left">&nbsp;</TD><TD STYLE="width: 1%">&nbsp;</TD>
    <TD STYLE="width: 1%; text-align: left">$</TD><TD STYLE="width: 10%; text-align: right">45,000</TD><TD STYLE="width: 1%; text-align: left">&nbsp;</TD><TD STYLE="width: 1%">&nbsp;</TD>
    <TD STYLE="width: 1%; text-align: left">$</TD><TD STYLE="width: 10%; text-align: right">20,736</TD><TD STYLE="width: 1%; text-align: left">(3)</TD><TD STYLE="width: 1%">&nbsp;</TD>
    <TD STYLE="width: 1%; text-align: left">$</TD><TD STYLE="width: 10%; text-align: right">185,736</TD><TD STYLE="width: 1%; text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,255,204)">
    <TD STYLE="font-style: italic">President</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">2010</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">61,875</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">90,000</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">13,625</TD><TD STYLE="text-align: left">(3)</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">165,500</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD STYLE="font-style: italic">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,255,204)">
    <TD STYLE="font-style: italic; text-align: left">Matthew Schwartz</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">2011</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">75,000</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">18,000</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">-</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">93,000</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,255,204)">
    <TD STYLE="font-style: italic; text-align: left">VP &ndash; Administration,</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">2010</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">32,083</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">4,500</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">-</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">36,583</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,255,204)">
    <TD STYLE="font-style: italic; text-align: left">Chief Compliance Officer and</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,255,204)">
    <TD STYLE="font-style: italic">Secretary</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
</TABLE>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0">&nbsp;</P>

<TABLE CELLPADDING="0" CELLSPACING="0" WIDTH="100%" STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0; margin-bottom: 0"><TR STYLE="vertical-align: top">
<TD STYLE="width: 0"></TD><TD STYLE="width: 17.05pt">(1)</TD><TD>The amounts reported in the Option Awards column represent the grant date fair value of such awards to the Current Named Executive
Officers, computed in accordance with Financial Accounting Standards Board Accounting Standards Codification Topic 718. In 2011,
Grandparents.com granted Mr. Mahl an option to purchase 100,000 of its Class B Units at an exercise price of $0.86 and granted
Mr. Schwartz an option to purchase 40,000 Class B Units at an exercise price of $0.86. The estimated grant date fair market value
of the options granted in 2011 was $0.45 per option. In 2010, Grandparents.com granted Mr. Mahl an option to purchase 200,000 of
its Class A Units at an exercise price of $0.625 and granted Mr. Schwartz an option to purchase 10,000 Class A Units at an exercise
price of $0.625. The grant date fair market value of the options granted in 2010 was $0.45 per option. Grandparents.com uses the
Black-Scholes option-pricing model with the following assumptions: (i) risk-free interest rate 1.18%, (ii) expected life (years)
5.0, (iii) expected volatility 95.00%, and (iv) dividend yield 0.00%.</TD></TR></TABLE>

<TABLE CELLPADDING="0" CELLSPACING="0" WIDTH="100%" STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0; margin-bottom: 0"><TR STYLE="vertical-align: top">
<TD STYLE="width: 0"></TD><TD STYLE="width: 17.05pt">(2)</TD><TD>Grandparents.com did not award or pay any compensation directly to Messrs. Leber and Bernstein in 2011 or 2010. Grandparents.com
paid management fees to LBG, an entity controlled by Messrs. Leber and Bernstein. See &ldquo;Certain Relationships and Related
Transactions &ndash; Transactions between Grandparents.com and its Managers, Executive Officers and 5% Members prior to the Transaction
&ndash; Management Fees.&rdquo;</TD></TR></TABLE>

<TABLE CELLPADDING="0" CELLSPACING="0" WIDTH="100%" STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0; margin-bottom: 0"><TR STYLE="vertical-align: top">
<TD STYLE="width: 0"></TD><TD STYLE="width: 17.05pt">(3)</TD><TD>Reflects commission of five percent (5%) on gross advertising revenues actually received by Grandparents.com during the applicable
fiscal year.</TD></TR></TABLE>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify; background-color: white">&nbsp;</P>

<P STYLE="font: bold 10pt Times New Roman, Times, Serif; margin: 0"><I>Grandparents.com Outstanding Equity Awards at 2011 Fiscal
Year-End</I></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify; background-color: white">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify; background-color: white">The following table
presents information about unexercised options in Grandparents.com held by each of the Current Named Executive Officers as of December
31, 2011. There were no unvested equity awards of Grandparents.com as of December 31, 2011. In addition, none of the Current Named
Executive Officers held any equity awards in the Company as of December 31, 2011.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0; background-color: white">&nbsp;</P>

<TABLE CELLPADDING="0" CELLSPACING="0" STYLE="width: 80%; font: 10pt Times New Roman, Times, Serif">
<TR STYLE="vertical-align: bottom">
    <TD NOWRAP STYLE="text-align: center">&nbsp;</TD><TD NOWRAP STYLE="font-weight: bold; padding-bottom: 1pt">&nbsp;</TD>
    <TD COLSPAN="14" NOWRAP STYLE="font-weight: bold; text-align: center; border-bottom: Black 1pt solid">Option&nbsp;Awards</TD><TD NOWRAP STYLE="padding-bottom: 1pt; font-weight: bold">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom">
    <TD NOWRAP STYLE="font-weight: bold; text-align: center">&nbsp;</TD><TD NOWRAP STYLE="font-weight: bold">&nbsp;</TD>
    <TD COLSPAN="2" NOWRAP STYLE="font-weight: bold; text-align: center">Number of</TD><TD NOWRAP STYLE="font-weight: bold">&nbsp;</TD><TD NOWRAP STYLE="font-weight: bold">&nbsp;</TD>
    <TD COLSPAN="2" NOWRAP STYLE="font-weight: bold; text-align: center">Number of</TD><TD NOWRAP STYLE="font-weight: bold">&nbsp;</TD><TD NOWRAP>&nbsp;</TD>
    <TD COLSPAN="2" NOWRAP STYLE="text-align: center">&nbsp;</TD><TD NOWRAP>&nbsp;</TD><TD NOWRAP>&nbsp;</TD>
    <TD COLSPAN="2" NOWRAP STYLE="text-align: center">&nbsp;</TD><TD NOWRAP>&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom">
    <TD NOWRAP STYLE="text-align: center">&nbsp;</TD><TD NOWRAP STYLE="font-weight: bold">&nbsp;</TD>
    <TD COLSPAN="2" NOWRAP STYLE="font-weight: bold; text-align: center">Securities</TD><TD NOWRAP STYLE="font-weight: bold">&nbsp;</TD><TD NOWRAP STYLE="font-weight: bold">&nbsp;</TD>
    <TD COLSPAN="2" NOWRAP STYLE="font-weight: bold; text-align: center">Securities</TD><TD NOWRAP STYLE="font-weight: bold">&nbsp;</TD><TD NOWRAP>&nbsp;</TD>
    <TD COLSPAN="2" NOWRAP STYLE="text-align: center">&nbsp;</TD><TD NOWRAP>&nbsp;</TD><TD NOWRAP>&nbsp;</TD>
    <TD COLSPAN="2" NOWRAP STYLE="text-align: center">&nbsp;</TD><TD NOWRAP>&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom">
    <TD NOWRAP STYLE="text-align: center">&nbsp;</TD><TD NOWRAP STYLE="font-weight: bold">&nbsp;</TD>
    <TD COLSPAN="2" NOWRAP STYLE="font-weight: bold; text-align: center">Underlying</TD><TD NOWRAP STYLE="font-weight: bold">&nbsp;</TD><TD NOWRAP STYLE="font-weight: bold">&nbsp;</TD>
    <TD COLSPAN="2" NOWRAP STYLE="font-weight: bold; text-align: center">Underlying</TD><TD NOWRAP STYLE="font-weight: bold">&nbsp;</TD><TD NOWRAP>&nbsp;</TD>
    <TD COLSPAN="2" NOWRAP STYLE="text-align: center">&nbsp;</TD><TD NOWRAP>&nbsp;</TD><TD NOWRAP>&nbsp;</TD>
    <TD COLSPAN="2" NOWRAP STYLE="text-align: center">&nbsp;</TD><TD NOWRAP>&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom">
    <TD NOWRAP STYLE="text-align: center">&nbsp;</TD><TD NOWRAP STYLE="font-weight: bold">&nbsp;</TD>
    <TD COLSPAN="2" NOWRAP STYLE="font-weight: bold; text-align: center">Unexercised</TD><TD NOWRAP STYLE="font-weight: bold">&nbsp;</TD><TD NOWRAP STYLE="font-weight: bold">&nbsp;</TD>
    <TD COLSPAN="2" NOWRAP STYLE="font-weight: bold; text-align: center">Unexercised</TD><TD NOWRAP STYLE="font-weight: bold">&nbsp;</TD><TD NOWRAP>&nbsp;</TD>
    <TD COLSPAN="2" NOWRAP STYLE="text-align: center">&nbsp;</TD><TD NOWRAP>&nbsp;</TD><TD NOWRAP>&nbsp;</TD>
    <TD COLSPAN="2" NOWRAP STYLE="text-align: center">&nbsp;</TD><TD NOWRAP>&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom">
    <TD NOWRAP STYLE="text-align: center">&nbsp;</TD><TD NOWRAP STYLE="font-weight: bold">&nbsp;</TD>
    <TD COLSPAN="2" NOWRAP STYLE="font-weight: bold; text-align: center">Options</TD><TD NOWRAP STYLE="font-weight: bold">&nbsp;</TD><TD NOWRAP STYLE="font-weight: bold">&nbsp;</TD>
    <TD COLSPAN="2" NOWRAP STYLE="font-weight: bold; text-align: center">Options</TD><TD NOWRAP STYLE="font-weight: bold">&nbsp;</TD><TD NOWRAP STYLE="font-weight: bold">&nbsp;</TD>
    <TD COLSPAN="2" NOWRAP STYLE="font-weight: bold; text-align: center">Option</TD><TD NOWRAP STYLE="font-weight: bold">&nbsp;</TD><TD NOWRAP STYLE="font-weight: bold">&nbsp;</TD>
    <TD COLSPAN="2" NOWRAP STYLE="font-weight: bold; text-align: center">Option</TD><TD NOWRAP STYLE="font-weight: bold">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom">
    <TD NOWRAP STYLE="text-align: center">&nbsp;</TD><TD NOWRAP STYLE="font-weight: bold">&nbsp;</TD>
    <TD COLSPAN="2" NOWRAP STYLE="font-weight: bold; text-align: center">(#)</TD><TD NOWRAP STYLE="font-weight: bold">&nbsp;</TD><TD NOWRAP STYLE="font-weight: bold">&nbsp;</TD>
    <TD COLSPAN="2" NOWRAP STYLE="font-weight: bold; text-align: center">(#)</TD><TD NOWRAP STYLE="font-weight: bold">&nbsp;</TD><TD NOWRAP STYLE="font-weight: bold">&nbsp;</TD>
    <TD COLSPAN="2" NOWRAP STYLE="font-weight: bold; text-align: center">Exercise</TD><TD NOWRAP STYLE="font-weight: bold">&nbsp;</TD><TD NOWRAP STYLE="font-weight: bold">&nbsp;</TD>
    <TD COLSPAN="2" NOWRAP STYLE="font-weight: bold; text-align: center">Expiration</TD><TD NOWRAP STYLE="font-weight: bold">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom">
    <TD NOWRAP STYLE="font-weight: bold; text-align: left; border-bottom: Black 1pt solid">Name</TD><TD NOWRAP STYLE="font-weight: bold; padding-bottom: 1pt">&nbsp;</TD>
    <TD COLSPAN="2" NOWRAP STYLE="font-weight: bold; text-align: center; border-bottom: Black 1pt solid">Exercisable</TD><TD NOWRAP STYLE="padding-bottom: 1pt; font-weight: bold">&nbsp;</TD><TD NOWRAP STYLE="font-weight: bold; padding-bottom: 1pt">&nbsp;</TD>
    <TD COLSPAN="2" NOWRAP STYLE="font-weight: bold; text-align: center; border-bottom: Black 1pt solid">Unexercisable</TD><TD NOWRAP STYLE="padding-bottom: 1pt; font-weight: bold">&nbsp;</TD><TD NOWRAP STYLE="font-weight: bold; padding-bottom: 1pt">&nbsp;</TD>
    <TD COLSPAN="2" NOWRAP STYLE="font-weight: bold; text-align: center; border-bottom: Black 1pt solid">Price</TD><TD NOWRAP STYLE="padding-bottom: 1pt; font-weight: bold">&nbsp;</TD><TD NOWRAP STYLE="font-weight: bold; padding-bottom: 1pt">&nbsp;</TD>
    <TD COLSPAN="2" NOWRAP STYLE="font-weight: bold; text-align: center; border-bottom: Black 1pt solid">Date</TD><TD NOWRAP STYLE="padding-bottom: 1pt; font-weight: bold">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom">
    <TD STYLE="font-weight: bold; text-align: center">&nbsp;</TD><TD STYLE="font-weight: bold">&nbsp;</TD>
    <TD COLSPAN="2" STYLE="font-weight: bold; text-align: center">&nbsp;</TD><TD STYLE="font-weight: bold">&nbsp;</TD><TD STYLE="font-weight: bold">&nbsp;</TD>
    <TD COLSPAN="2" STYLE="font-weight: bold; text-align: center">&nbsp;</TD><TD STYLE="font-weight: bold">&nbsp;</TD><TD STYLE="font-weight: bold">&nbsp;</TD>
    <TD COLSPAN="2" STYLE="font-weight: bold; text-align: center">$</TD><TD STYLE="font-weight: bold">&nbsp;</TD><TD STYLE="font-weight: bold">&nbsp;</TD>
    <TD COLSPAN="2" STYLE="font-weight: bold; text-align: center">&nbsp;</TD><TD STYLE="font-weight: bold">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,255,204)">
    <TD STYLE="width: 40%; text-align: left">Jeffrey S. Mahl</TD><TD STYLE="width: 1%">&nbsp;</TD>
    <TD STYLE="width: 1%; text-align: left">&nbsp;</TD><TD STYLE="width: 12%; text-align: right">66,667</TD><TD STYLE="width: 1%; text-align: left">&nbsp;</TD><TD STYLE="width: 1%">&nbsp;</TD>
    <TD STYLE="width: 1%; text-align: left">&nbsp;</TD><TD STYLE="width: 12%; text-align: right">133,333</TD><TD STYLE="width: 1%; text-align: left">&nbsp;</TD><TD STYLE="width: 1%">&nbsp;</TD>
    <TD STYLE="width: 1%; text-align: left">&nbsp;</TD><TD STYLE="width: 12%; text-align: right">0.625</TD><TD STYLE="width: 1%; text-align: left">&nbsp;</TD><TD STYLE="width: 1%">&nbsp;</TD>
    <TD STYLE="width: 1%; text-align: left">&nbsp;</TD><TD STYLE="width: 12%; text-align: right">10/1/2015</TD><TD STYLE="width: 1%; text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,255,204)">
    <TD>&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">-</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">100,000</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">0.86</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">10/1/2015</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD STYLE="text-align: left">Matthew Schwartz</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">3,337</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">6,663</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">0.86</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">10/14/2016</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD>&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">-</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">40,000</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">0.86</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">10/14/2016</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
</TABLE>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0">&nbsp;</P>

<P STYLE="font: bold 10pt Times New Roman, Times, Serif; margin: 0">Compensation of Former Executive Officers of the Company</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0">&nbsp;</P>

<P STYLE="font: bold 10pt Times New Roman, Times, Serif; margin: 0"><I>Summary Compensation Table</I></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0">The following table shows for each of the two fiscal years of the
Company ended June 30, 2011 and 2010, respectively, compensation awarded or paid to, or earned by, Ronald R. Helm, our former Chief
Executive Officer and Chairman, Elizabeth T. Leary, Ph.D., our former Chief Scientific Officer and Michael P. Murphy, Ph.D., our
former Chief Operating Officer, each of which resigned on August 31, 2011, in connection with the sale of substantially all of
our assets to Emerald Star (collectively, the &ldquo;Former Named Executive Officers&rdquo;).</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0">&nbsp;</P>

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<TABLE CELLPADDING="0" CELLSPACING="0" STYLE="width: 100%; font: 7pt Times New Roman, Times, Serif">
<TR STYLE="vertical-align: bottom">
    <TD NOWRAP STYLE="font-weight: bold; text-align: left">Name&nbsp;and&nbsp;Principal&nbsp;<BR> Position</TD><TD NOWRAP STYLE="font-weight: bold">&nbsp;</TD>
    <TD COLSPAN="2" NOWRAP STYLE="font-weight: bold; text-align: center">Fiscal&nbsp;<BR> Year</TD><TD NOWRAP STYLE="font-weight: bold">&nbsp;</TD><TD NOWRAP STYLE="font-weight: bold">&nbsp;</TD>
    <TD COLSPAN="2" NOWRAP STYLE="font-weight: bold; text-align: center">Salary&nbsp;<BR> &nbsp;($)</TD><TD NOWRAP STYLE="font-weight: bold">&nbsp;</TD><TD NOWRAP STYLE="font-weight: bold">&nbsp;</TD>
    <TD COLSPAN="2" NOWRAP STYLE="font-weight: bold; text-align: center">Bonus&nbsp;<BR> &nbsp;($)</TD><TD NOWRAP STYLE="font-weight: bold">&nbsp;</TD><TD NOWRAP STYLE="font-weight: bold">&nbsp;</TD>
    <TD COLSPAN="2" NOWRAP STYLE="font-weight: bold; text-align: center">Stock&nbsp;<BR> Awards&nbsp;<BR> ($)</TD><TD NOWRAP STYLE="font-weight: bold">&nbsp;</TD><TD NOWRAP STYLE="font-weight: bold">&nbsp;</TD>
    <TD COLSPAN="2" NOWRAP STYLE="font-weight: bold; text-align: center">Option&nbsp;<BR> Awards(1)&nbsp;<BR> ($)</TD><TD NOWRAP STYLE="font-weight: bold">&nbsp;</TD><TD NOWRAP STYLE="font-weight: bold">&nbsp;</TD>
    <TD COLSPAN="2" NOWRAP STYLE="font-weight: bold; text-align: center">Nonequity&nbsp;<BR> Incentive&nbsp;Plan&nbsp;<BR> Compensation&nbsp;<BR> ($)</TD><TD NOWRAP STYLE="font-weight: bold">&nbsp;</TD><TD NOWRAP STYLE="font-weight: bold">&nbsp;</TD>
    <TD COLSPAN="2" NOWRAP STYLE="font-weight: bold; text-align: center">All&nbsp;<BR> Other&nbsp;<BR> Comp.&nbsp;<BR> ($)</TD><TD NOWRAP STYLE="font-weight: bold">&nbsp;</TD><TD NOWRAP STYLE="font-weight: bold">&nbsp;</TD>
    <TD COLSPAN="2" NOWRAP STYLE="font-weight: bold; text-align: center">Total&nbsp;<BR> ($)</TD><TD NOWRAP STYLE="font-weight: bold">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom">
    <TD STYLE="text-align: center">&nbsp;</TD><TD>&nbsp;</TD>
    <TD COLSPAN="2" STYLE="text-align: center">&nbsp;</TD><TD>&nbsp;</TD><TD>&nbsp;</TD>
    <TD COLSPAN="2" STYLE="text-align: center">&nbsp;</TD><TD>&nbsp;</TD><TD>&nbsp;</TD>
    <TD COLSPAN="2" STYLE="text-align: center">&nbsp;</TD><TD>&nbsp;</TD><TD>&nbsp;</TD>
    <TD COLSPAN="2" STYLE="text-align: center">&nbsp;</TD><TD>&nbsp;</TD><TD>&nbsp;</TD>
    <TD COLSPAN="2" STYLE="text-align: center">&nbsp;</TD><TD>&nbsp;</TD><TD>&nbsp;</TD>
    <TD COLSPAN="2" STYLE="text-align: center">&nbsp;</TD><TD>&nbsp;</TD><TD>&nbsp;</TD>
    <TD COLSPAN="2" STYLE="text-align: center">&nbsp;</TD><TD>&nbsp;</TD><TD>&nbsp;</TD>
    <TD COLSPAN="2" STYLE="text-align: center">&nbsp;</TD><TD>&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,255,204)">
    <TD STYLE="width: 28%; text-align: left">Ronald R. Helm</TD><TD STYLE="width: 1%">&nbsp;</TD>
    <TD STYLE="width: 1%; text-align: left">&nbsp;</TD><TD STYLE="width: 6%; text-align: right">2011</TD><TD STYLE="width: 1%; text-align: left">&nbsp;</TD><TD STYLE="width: 1%">&nbsp;</TD>
    <TD STYLE="width: 1%; text-align: left">$</TD><TD STYLE="width: 6%; text-align: right">308,833</TD><TD STYLE="width: 1%; text-align: left">&nbsp;</TD><TD STYLE="width: 1%">&nbsp;</TD>
    <TD STYLE="width: 1%; text-align: left">&nbsp;</TD><TD STYLE="width: 6%; text-align: right">-</TD><TD STYLE="width: 1%; text-align: left">&nbsp;</TD><TD STYLE="width: 1%">&nbsp;</TD>
    <TD STYLE="width: 1%; text-align: left">&nbsp;</TD><TD STYLE="width: 6%; text-align: right">-</TD><TD STYLE="width: 1%; text-align: left">&nbsp;</TD><TD STYLE="width: 1%">&nbsp;</TD>
    <TD STYLE="width: 1%; text-align: left">$</TD><TD STYLE="width: 6%; text-align: right">234,000</TD><TD STYLE="width: 1%; text-align: left">&nbsp;</TD><TD STYLE="width: 1%">&nbsp;</TD>
    <TD STYLE="width: 1%; text-align: left">&nbsp;</TD><TD STYLE="width: 6%; text-align: right">-</TD><TD STYLE="width: 1%; text-align: left">&nbsp;</TD><TD STYLE="width: 1%">&nbsp;</TD>
    <TD STYLE="width: 1%; text-align: left">$</TD><TD STYLE="width: 6%; text-align: right">5,865</TD><TD STYLE="width: 1%; text-align: left">(2)</TD><TD STYLE="width: 1%">&nbsp;</TD>
    <TD STYLE="width: 1%; text-align: left">$</TD><TD STYLE="width: 6%; text-align: right">548,698</TD><TD STYLE="width: 1%; text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,255,204)">
    <TD STYLE="font-style: italic; text-align: left">Former Chief Executive</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">2010</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">285,417</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">-</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">$</TD><TD STYLE="text-align: right">88,000</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">174,000</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">$</TD><TD STYLE="text-align: right">56,250</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">7,983</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">611,650</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,255,204)">
    <TD STYLE="font-style: italic; text-align: left">Officer and Chairman</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD>&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,255,204)">
    <TD STYLE="text-align: left">Elizabeth T. Leary</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">2011</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">139,809</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">-</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">-</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">25,500</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">-</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">3,209</TD><TD STYLE="text-align: left">(3)</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">168,517</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,255,204)">
    <TD STYLE="font-style: italic; text-align: left">Former Chief Scientific</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">2010</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">142,500</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">-</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">5,400</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">12,325</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">15,818</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">5,875</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">181,918</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,255,204)">
    <TD STYLE="font-style: italic">Officer</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD>&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,255,204)">
    <TD STYLE="text-align: left">Michael P. Murphy</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">2011</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">170,674</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">-</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">-</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">25,500</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">-</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">10,960</TD><TD STYLE="text-align: left">(4)</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">207,134</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,255,204)">
    <TD STYLE="font-style: italic; text-align: left">Former Chief</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">2010</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">170,231</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">-</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">15,000</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">12,325</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">21,852</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">7,351</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">226,759</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,255,204)">
    <TD STYLE="font-style: italic; text-align: left">Operating Officer</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
</TABLE>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0">&nbsp;</P>

<TABLE CELLPADDING="0" CELLSPACING="0" WIDTH="100%" STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0; margin-bottom: 0"><TR STYLE="vertical-align: top">
<TD STYLE="width: 0"></TD><TD STYLE="width: 17.05pt">(1)</TD><TD>The amounts reported in the Stock Awards and Option Awards columns represent the grant date fair value of such awards to the
Former Named Executive Officers, computed in accordance with Financial Accounting Standards Board Accounting Standards Codification
Topic 718. We use the Black-Scholes option-pricing model to estimate the calculated value of our share-based payments. Stock options
are valued as of the date of grant. The volatility assumption used in the Black-Scholes formula is based on the volatility of our
common stock. For the stock option awards made to the Former Named Executive Officers in fiscal 2011, we used the following assumptions
to compute fair value: (i) expected volatility of 117-148%, (ii) expected dividend yield of 0.00%, (iii) risk-free interest rate
of 2.54-2.96%, and (iv) expected life of 10 years.</TD></TR></TABLE>

<TABLE CELLPADDING="0" CELLSPACING="0" WIDTH="100%" STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0; margin-bottom: 0"><TR STYLE="vertical-align: top">
<TD STYLE="width: 0"></TD><TD STYLE="width: 17.05pt">(2)</TD><TD>The amount listed under &ldquo;All Other Compensation&rdquo; in fiscal 2011 consists of $2,615 in life insurance premiums paid
by us for Mr. Helm&rsquo;s benefit and $3,250 in company-contributions for Mr. Helm&rsquo;s account in the 401(k) plan.</TD></TR></TABLE>

<TABLE CELLPADDING="0" CELLSPACING="0" WIDTH="100%" STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0; margin-bottom: 0"><TR STYLE="vertical-align: top">
<TD STYLE="width: 0"></TD><TD STYLE="width: 17.05pt">(3)</TD><TD>The amount listed under &ldquo;All Other Compensation&rdquo; in fiscal 2011 consists of $2,120 of life insurance premiums paid
by us for Dr. Leary&rsquo;s benefit and $1,088 in company-contributions for Dr. Leary&rsquo;s account in the 401(k) plan.</TD></TR></TABLE>

<TABLE CELLPADDING="0" CELLSPACING="0" WIDTH="100%" STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0; margin-bottom: 0"><TR STYLE="vertical-align: top">
<TD STYLE="width: 0"></TD><TD STYLE="width: 17.05pt">(4)</TD><TD>The amount listed under &ldquo;All Other Compensation&rdquo; in fiscal 2011 consists of $2,464 in life insurance premiums paid
by us for Dr. Murphy&rsquo;s benefit and $8,497 in company-contributions for Dr. Murphy&rsquo;s account in the 401(k) plan.</TD></TR></TABLE>

<P STYLE="font: italic 10pt Times New Roman, Times, Serif; margin: 0">&nbsp;</P>

<P STYLE="font: bold 10pt Times New Roman, Times, Serif; margin: 0"><I>Outstanding Equity Awards at 2011 Fiscal Year-End</I></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0">The following table presents information about unexercised stock
options and unvested stock awards held by each of the Former Named Executive Officers as of June 30, 2011. All of the stock options
terminated and stock awards vested in full upon the sale of substantially all of our assets to Emerald Star.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0"></P>

<TABLE CELLPADDING="0" CELLSPACING="0" STYLE="width: 100%; font: 8pt Times New Roman, Times, Serif">
<TR STYLE="vertical-align: bottom">
    <TD NOWRAP STYLE="text-align: center">&nbsp;</TD><TD NOWRAP STYLE="font-weight: bold; padding-bottom: 1pt">&nbsp;</TD>
    <TD COLSPAN="14" NOWRAP STYLE="font-weight: bold; text-align: center; border-bottom: Black 1pt solid">Option&nbsp;Awards</TD><TD NOWRAP STYLE="padding-bottom: 1pt; font-weight: bold">&nbsp;</TD><TD NOWRAP STYLE="font-weight: bold; padding-bottom: 1pt">&nbsp;</TD>
    <TD COLSPAN="6" NOWRAP STYLE="font-weight: bold; text-align: center; border-bottom: Black 1pt solid">Stock&nbsp;Awards</TD><TD NOWRAP STYLE="padding-bottom: 1pt; font-weight: bold">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom">
    <TD NOWRAP STYLE="font-weight: bold; text-align: center">&nbsp;</TD><TD NOWRAP STYLE="font-weight: bold">&nbsp;</TD>
    <TD COLSPAN="2" NOWRAP STYLE="font-weight: bold; text-align: center">Number&nbsp;of</TD><TD NOWRAP STYLE="font-weight: bold">&nbsp;</TD><TD NOWRAP STYLE="font-weight: bold">&nbsp;</TD>
    <TD COLSPAN="2" NOWRAP STYLE="font-weight: bold; text-align: center">Number&nbsp;of</TD><TD NOWRAP STYLE="font-weight: bold">&nbsp;</TD><TD NOWRAP>&nbsp;</TD>
    <TD COLSPAN="2" NOWRAP STYLE="text-align: center">&nbsp;</TD><TD NOWRAP>&nbsp;</TD><TD NOWRAP STYLE="font-weight: bold">&nbsp;</TD>
    <TD COLSPAN="2" NOWRAP STYLE="font-weight: bold; text-align: center">&nbsp;</TD><TD NOWRAP STYLE="font-weight: bold">&nbsp;</TD><TD NOWRAP>&nbsp;</TD>
    <TD COLSPAN="2" NOWRAP STYLE="text-align: center">&nbsp;</TD><TD NOWRAP>&nbsp;</TD><TD NOWRAP>&nbsp;</TD>
    <TD COLSPAN="2" NOWRAP STYLE="text-align: center">&nbsp;</TD><TD NOWRAP>&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom">
    <TD NOWRAP STYLE="text-align: center">&nbsp;</TD><TD NOWRAP STYLE="font-weight: bold">&nbsp;</TD>
    <TD COLSPAN="2" NOWRAP STYLE="font-weight: bold; text-align: center">Securities</TD><TD NOWRAP STYLE="font-weight: bold">&nbsp;</TD><TD NOWRAP STYLE="font-weight: bold">&nbsp;</TD>
    <TD COLSPAN="2" NOWRAP STYLE="font-weight: bold; text-align: center">Securities</TD><TD NOWRAP STYLE="font-weight: bold">&nbsp;</TD><TD NOWRAP>&nbsp;</TD>
    <TD COLSPAN="2" NOWRAP STYLE="text-align: center">&nbsp;</TD><TD NOWRAP>&nbsp;</TD><TD NOWRAP>&nbsp;</TD>
    <TD COLSPAN="2" NOWRAP STYLE="text-align: center">&nbsp;</TD><TD NOWRAP>&nbsp;</TD><TD NOWRAP STYLE="font-weight: bold">&nbsp;</TD>
    <TD COLSPAN="2" NOWRAP STYLE="font-weight: bold; text-align: center">&nbsp;</TD><TD NOWRAP STYLE="font-weight: bold">&nbsp;</TD><TD NOWRAP STYLE="font-weight: bold">&nbsp;</TD>
    <TD COLSPAN="2" NOWRAP STYLE="font-weight: bold; text-align: center">Market</TD><TD NOWRAP STYLE="font-weight: bold">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom">
    <TD NOWRAP STYLE="text-align: center">&nbsp;</TD><TD NOWRAP STYLE="font-weight: bold">&nbsp;</TD>
    <TD COLSPAN="2" NOWRAP STYLE="font-weight: bold; text-align: center">Underlying</TD><TD NOWRAP STYLE="font-weight: bold">&nbsp;</TD><TD NOWRAP STYLE="font-weight: bold">&nbsp;</TD>
    <TD COLSPAN="2" NOWRAP STYLE="font-weight: bold; text-align: center">Underlying</TD><TD NOWRAP STYLE="font-weight: bold">&nbsp;</TD><TD NOWRAP>&nbsp;</TD>
    <TD COLSPAN="2" NOWRAP STYLE="text-align: center">&nbsp;</TD><TD NOWRAP>&nbsp;</TD><TD NOWRAP STYLE="font-weight: bold">&nbsp;</TD>
    <TD COLSPAN="2" NOWRAP STYLE="font-weight: bold; text-align: center">&nbsp;</TD><TD NOWRAP STYLE="font-weight: bold">&nbsp;</TD><TD NOWRAP STYLE="font-weight: bold">&nbsp;</TD>
    <TD COLSPAN="2" NOWRAP STYLE="font-weight: bold; text-align: center">Number</TD><TD NOWRAP STYLE="font-weight: bold">&nbsp;</TD><TD NOWRAP STYLE="font-weight: bold">&nbsp;</TD>
    <TD COLSPAN="2" NOWRAP STYLE="font-weight: bold; text-align: center">Value&nbsp;of</TD><TD NOWRAP STYLE="font-weight: bold">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom">
    <TD NOWRAP STYLE="text-align: center">&nbsp;</TD><TD NOWRAP STYLE="font-weight: bold">&nbsp;</TD>
    <TD COLSPAN="2" NOWRAP STYLE="font-weight: bold; text-align: center">Unexercised</TD><TD NOWRAP STYLE="font-weight: bold">&nbsp;</TD><TD NOWRAP STYLE="font-weight: bold">&nbsp;</TD>
    <TD COLSPAN="2" NOWRAP STYLE="font-weight: bold; text-align: center">Unexercised</TD><TD NOWRAP STYLE="font-weight: bold">&nbsp;</TD><TD NOWRAP>&nbsp;</TD>
    <TD COLSPAN="2" NOWRAP STYLE="text-align: center">&nbsp;</TD><TD NOWRAP>&nbsp;</TD><TD NOWRAP STYLE="font-weight: bold">&nbsp;</TD>
    <TD COLSPAN="2" NOWRAP STYLE="font-weight: bold; text-align: center">&nbsp;</TD><TD NOWRAP STYLE="font-weight: bold">&nbsp;</TD><TD NOWRAP STYLE="font-weight: bold">&nbsp;</TD>
    <TD COLSPAN="2" NOWRAP STYLE="font-weight: bold; text-align: center">of&nbsp;Shares</TD><TD NOWRAP STYLE="font-weight: bold">&nbsp;</TD><TD NOWRAP STYLE="font-weight: bold">&nbsp;</TD>
    <TD COLSPAN="2" NOWRAP STYLE="font-weight: bold; text-align: center">Shares&nbsp;of</TD><TD NOWRAP STYLE="font-weight: bold">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom">
    <TD NOWRAP STYLE="text-align: center">&nbsp;</TD><TD NOWRAP STYLE="font-weight: bold">&nbsp;</TD>
    <TD COLSPAN="2" NOWRAP STYLE="font-weight: bold; text-align: center">Options</TD><TD NOWRAP STYLE="font-weight: bold">&nbsp;</TD><TD NOWRAP STYLE="font-weight: bold">&nbsp;</TD>
    <TD COLSPAN="2" NOWRAP STYLE="font-weight: bold; text-align: center">Options</TD><TD NOWRAP STYLE="font-weight: bold">&nbsp;</TD><TD NOWRAP STYLE="font-weight: bold">&nbsp;</TD>
    <TD COLSPAN="2" NOWRAP STYLE="font-weight: bold; text-align: center">Option</TD><TD NOWRAP STYLE="font-weight: bold">&nbsp;</TD><TD NOWRAP STYLE="font-weight: bold">&nbsp;</TD>
    <TD COLSPAN="2" NOWRAP STYLE="font-weight: bold; text-align: center">Option</TD><TD NOWRAP STYLE="font-weight: bold">&nbsp;</TD><TD NOWRAP STYLE="font-weight: bold">&nbsp;</TD>
    <TD COLSPAN="2" NOWRAP STYLE="font-weight: bold; text-align: center">of&nbsp;Stock</TD><TD NOWRAP STYLE="font-weight: bold">&nbsp;</TD><TD NOWRAP STYLE="font-weight: bold">&nbsp;</TD>
    <TD COLSPAN="2" NOWRAP STYLE="font-weight: bold; text-align: center">Stock</TD><TD NOWRAP STYLE="font-weight: bold">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom">
    <TD NOWRAP STYLE="text-align: center">&nbsp;</TD><TD NOWRAP STYLE="font-weight: bold">&nbsp;</TD>
    <TD COLSPAN="2" NOWRAP STYLE="font-weight: bold; text-align: center">(#)</TD><TD NOWRAP STYLE="font-weight: bold">&nbsp;</TD><TD NOWRAP STYLE="font-weight: bold">&nbsp;</TD>
    <TD COLSPAN="2" NOWRAP STYLE="font-weight: bold; text-align: center">(#)</TD><TD NOWRAP STYLE="font-weight: bold">&nbsp;</TD><TD NOWRAP STYLE="font-weight: bold">&nbsp;</TD>
    <TD COLSPAN="2" NOWRAP STYLE="font-weight: bold; text-align: center">Exercise</TD><TD NOWRAP STYLE="font-weight: bold">&nbsp;</TD><TD NOWRAP STYLE="font-weight: bold">&nbsp;</TD>
    <TD COLSPAN="2" NOWRAP STYLE="font-weight: bold; text-align: center">Expiration</TD><TD NOWRAP STYLE="font-weight: bold">&nbsp;</TD><TD NOWRAP STYLE="font-weight: bold">&nbsp;</TD>
    <TD COLSPAN="2" NOWRAP STYLE="font-weight: bold; text-align: center">That&nbsp;Have</TD><TD NOWRAP STYLE="font-weight: bold">&nbsp;</TD><TD NOWRAP STYLE="font-weight: bold">&nbsp;</TD>
    <TD COLSPAN="2" NOWRAP STYLE="font-weight: bold; text-align: center">That&nbsp;Have</TD><TD NOWRAP STYLE="font-weight: bold">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom">
    <TD NOWRAP STYLE="font-weight: bold; text-align: center; border-bottom: Black 1pt solid">Name</TD><TD NOWRAP STYLE="font-weight: bold; padding-bottom: 1pt">&nbsp;</TD>
    <TD COLSPAN="2" NOWRAP STYLE="font-weight: bold; text-align: center; border-bottom: Black 1pt solid">Exercisable</TD><TD NOWRAP STYLE="padding-bottom: 1pt; font-weight: bold">&nbsp;</TD><TD NOWRAP STYLE="font-weight: bold; padding-bottom: 1pt">&nbsp;</TD>
    <TD COLSPAN="2" NOWRAP STYLE="font-weight: bold; text-align: center; border-bottom: Black 1pt solid">Unexercisable</TD><TD NOWRAP STYLE="padding-bottom: 1pt; font-weight: bold">&nbsp;</TD><TD NOWRAP STYLE="font-weight: bold; padding-bottom: 1pt">&nbsp;</TD>
    <TD COLSPAN="2" NOWRAP STYLE="font-weight: bold; text-align: center; border-bottom: Black 1pt solid">Price</TD><TD NOWRAP STYLE="padding-bottom: 1pt; font-weight: bold">&nbsp;</TD><TD NOWRAP STYLE="font-weight: bold; padding-bottom: 1pt">&nbsp;</TD>
    <TD COLSPAN="2" NOWRAP STYLE="font-weight: bold; text-align: center; border-bottom: Black 1pt solid">Date</TD><TD NOWRAP STYLE="padding-bottom: 1pt; font-weight: bold">&nbsp;</TD><TD NOWRAP STYLE="font-weight: bold; padding-bottom: 1pt">&nbsp;</TD>
    <TD COLSPAN="2" NOWRAP STYLE="font-weight: bold; text-align: center; border-bottom: Black 1pt solid">Not&nbsp;Vested</TD><TD NOWRAP STYLE="padding-bottom: 1pt; font-weight: bold">&nbsp;</TD><TD NOWRAP STYLE="font-weight: bold; padding-bottom: 1pt">&nbsp;</TD>
    <TD COLSPAN="2" NOWRAP STYLE="font-weight: bold; text-align: center; border-bottom: Black 1pt solid">Not&nbsp;Vested&nbsp;(1)</TD><TD NOWRAP STYLE="padding-bottom: 1pt; font-weight: bold">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom">
    <TD STYLE="text-align: center">&nbsp;</TD><TD STYLE="text-align: center">&nbsp;</TD>
    <TD STYLE="text-align: center">&nbsp;</TD><TD STYLE="text-align: center">&nbsp;</TD><TD STYLE="text-align: center">&nbsp;</TD><TD STYLE="text-align: center">&nbsp;</TD>
    <TD STYLE="text-align: center">&nbsp;</TD><TD STYLE="text-align: center">&nbsp;</TD><TD STYLE="text-align: center">&nbsp;</TD><TD STYLE="text-align: center">&nbsp;</TD>
    <TD STYLE="text-align: center">&nbsp;</TD><TD STYLE="text-align: center">($)</TD><TD STYLE="text-align: center">&nbsp;</TD><TD STYLE="text-align: center">&nbsp;</TD>
    <TD STYLE="text-align: center">&nbsp;</TD><TD STYLE="text-align: center">&nbsp;</TD><TD STYLE="text-align: center">&nbsp;</TD><TD STYLE="text-align: center">&nbsp;</TD>
    <TD STYLE="text-align: center">&nbsp;</TD><TD STYLE="text-align: center">(#)</TD><TD STYLE="text-align: center">&nbsp;</TD><TD STYLE="text-align: center">&nbsp;</TD>
    <TD STYLE="text-align: center">&nbsp;</TD><TD STYLE="text-align: center">($)</TD><TD STYLE="text-align: center">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,255,204)">
    <TD STYLE="width: 22%; text-align: left">Ronald R. Helm</TD><TD STYLE="width: 1%">&nbsp;</TD>
    <TD STYLE="width: 1%; text-align: left">&nbsp;</TD><TD STYLE="width: 10%; text-align: right">340,000</TD><TD STYLE="width: 1%; text-align: left">&nbsp;</TD><TD STYLE="width: 1%">&nbsp;</TD>
    <TD STYLE="width: 1%; text-align: left">&nbsp;</TD><TD STYLE="width: 10%; text-align: right">-</TD><TD STYLE="width: 1%; text-align: left">&nbsp;</TD><TD STYLE="width: 1%">&nbsp;</TD>
    <TD STYLE="width: 1%; text-align: left">&nbsp;</TD><TD STYLE="width: 10%; text-align: right">0.81</TD><TD STYLE="width: 1%; text-align: left">&nbsp;</TD><TD STYLE="width: 1%">&nbsp;</TD>
    <TD STYLE="width: 1%; text-align: left">&nbsp;</TD><TD STYLE="width: 10%; text-align: right">01/30/2014</TD><TD STYLE="width: 1%; text-align: left">&nbsp;</TD><TD STYLE="width: 1%">&nbsp;</TD>
    <TD STYLE="width: 1%; text-align: left">&nbsp;</TD><TD STYLE="width: 10%; text-align: right">4,167</TD><TD STYLE="width: 1%; text-align: left">&nbsp;</TD><TD STYLE="width: 1%">&nbsp;</TD>
    <TD STYLE="width: 1%; text-align: left">$</TD><TD STYLE="width: 10%; text-align: right">1,042</TD><TD STYLE="width: 1%; text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD>&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">4,049</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">-</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">0.81</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">01/30/2014</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">62,719</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">15,680</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,255,204)">
    <TD>&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">133,333</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">16,667</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">0.41</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">10/01/2018</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD>&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">116,666</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">83,334</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">0.88</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">10/01/2019</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,255,204)">
    <TD>&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">150,000</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">450,000</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">0.39</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">10/01/2020</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD>&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,255,204)">
    <TD STYLE="text-align: left">Elizabeth T. Leary</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">21,922</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">-</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">0.51</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">08/27/2012</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">750</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">188</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD>&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">157,887</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">-</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">0.81</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">01/30/2014</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">5,000</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">1,250</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,255,204)">
    <TD>&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">16,666</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">8,334</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">0.60</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">07/01/2019</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD>&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">25,000</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">50,000</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">0.34</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">07/01/2020</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,255,204)">
    <TD>&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD STYLE="text-align: left">Michael P. Murphy</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">4,000</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">-</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">0.51</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">08/27/2012</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">1,167</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">292</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,255,204)">
    <TD>&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">90,000</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">-</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">0.86</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">08/29/2015</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">13,889</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">3,472</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD>&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">18,000</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">-</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">0.99</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">08/25/2016</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,255,204)">
    <TD>&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">16,666</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">8,334</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">0.60</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">07/01/2019</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD>&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">25,000</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">50,000</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">0.34</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">07/01/2020</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
</TABLE>



<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0">&nbsp;</P>

<TABLE CELLPADDING="0" CELLSPACING="0" WIDTH="100%" STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0; margin-bottom: 0"><TR STYLE="vertical-align: top">
<TD STYLE="width: 0"></TD><TD STYLE="width: 18.7pt">(1)</TD><TD>Market value is calculated on $0.25 per share, the closing price of our common stock on June 30, 2011.</TD></TR></TABLE>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0">&nbsp;</P>

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<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0">&nbsp;</P>

<P STYLE="font: bold 10pt Times New Roman, Times, Serif; margin: 0"><I>Compensation of Officers in Fiscal 2012 following the Emerald
Star Asset Sale</I></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0">Stanley L. Schloz, our former President immediately prior to the
Transaction, and Curtis J. Scheel, our former Secretary and Treasurer immediately prior to the Transaction, did not receive any
compensation for serving as executive officers. Messrs. Schloz and Scheel resigned as officers of the Company effective upon the
closing of the Transaction.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0">&nbsp;</P>

<P STYLE="font: bold 10pt Times New Roman, Times, Serif; margin: 0">Compensation of Current Directors</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0">Our newly appointed non-employee directors will each
receive an annual fee of $25,000, which shall be paid quarterly. Non-employee directors will also earn $1,000 for each meeting
attended in person or $500 for each meeting attended telephonically. On February 24, 2012, we issued the following options to
our newly appointed non-employee directors:</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0">&nbsp;</P>

<TABLE CELLPADDING="0" CELLSPACING="0" WIDTH="100%" STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0; margin-bottom: 0"><TR STYLE="vertical-align: top">
<TD STYLE="width: 0.25in"></TD><TD STYLE="width: 0.25in"><FONT STYLE="font-family: Symbol">&middot;</FONT></TD><TD>A non-qualified stock option to purchase 1,000,000 shares of Common Stock to Dr. Cohen of which one-third (1/3) of such
                                                                                                               shares shall become vested and exercisable upon the one year anniversary of the date of grant and the remaining two-thirds
                                                                                                               (2/3)                                                                                                                of
                                                                                                               such
                                                                                                               shares shall become vested and exercisable in eight (8) equal quarterly installments thereafter.</TD></TR></TABLE>

<TABLE CELLPADDING="0" CELLSPACING="0" WIDTH="100%" STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0; margin-bottom: 0"><TR STYLE="vertical-align: top">
<TD STYLE="width: 0.25in"></TD><TD STYLE="width: 0.25in"><FONT STYLE="font-family: Symbol">&middot;</FONT></TD><TD>A non-qualified stock option to purchase 250,000 shares of Common Stock to Mr. Office of which 150,000 of such option
                                                                                                               shall                                                                                                                become
                                                                                                               vested                                                                                                                and
                                                                                                               exercisable upon the one year anniversary of the date of grant and the remaining
                                                                                                               shares                                                                                                                shall
                                                                                                               become vested and exercisable in eight (8) equal quarterly installments thereafter.</TD></TR></TABLE>

<TABLE CELLPADDING="0" CELLSPACING="0" WIDTH="100%" STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0; margin-bottom: 0"><TR STYLE="vertical-align: top">
<TD STYLE="width: 0.25in"></TD><TD STYLE="width: 0.25in"><FONT STYLE="font-family: Symbol">&middot;</FONT></TD><TD>A non-qualified stock option to purchase 150,000 shares of Common Stock to Mr. Wasserman which shall become fully vested and
exercisable upon the one year anniversary of the date of grant.</TD></TR></TABLE>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0">The options are exercisable for a period of ten (10) years
from the date of grant and shall become fully vested and exercisable upon the one year anniversary of the date of grant. The
options are exercisable at a price per share of $0.60, which was the closing trading price of the Common Stock on February
24, 2012, the date of grant.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0">Directors who are also officers of the Company will not receive
additional compensation for serving on the Board.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0">&nbsp;</P>

<P STYLE="font: bold 10pt Times New Roman, Times, Serif; margin: 0">Compensation of Former Directors</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0">During the fiscal year ended June 30, 2011, we did not separately
pay our former directors who were also our employees any additional compensation for serving as a director, other than customary
reimbursement of expenses. This applied to Ronald R. Helm, our former Chairman and Chief Executive Officer and Kenneth R. Waters,
our former Director of Strategic Planning and Corporate Secretary.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0">The following table presents information about the compensation
that was paid or earned during our fiscal year ended June 30, 2011 by our former directors for their service on the Board (other
than Ronald R. Helm, our former Chairman and Chief Executive Officer, whose compensation is presented in the Summary Compensation
Table under &ldquo;Compensation of Executive Officers &ndash; Compensation of Former Executive Officers&rdquo;).</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0"></P>

<TABLE CELLPADDING="0" CELLSPACING="0" STYLE="width: 100%; font: 10pt Times New Roman, Times, Serif">
<TR STYLE="vertical-align: bottom">
    <TD NOWRAP STYLE="font-weight: bold; text-align: center; border-bottom: Black 1pt solid">Name</TD><TD NOWRAP STYLE="font-weight: bold; padding-bottom: 1pt">&nbsp;</TD>
    <TD COLSPAN="2" NOWRAP STYLE="font-weight: bold; text-align: center; border-bottom: Black 1pt solid">Fees&nbsp;Earned&nbsp;or<BR> Paid&nbsp;in&nbsp;Cash</TD><TD NOWRAP STYLE="padding-bottom: 1pt; font-weight: bold">&nbsp;</TD><TD NOWRAP STYLE="font-weight: bold; padding-bottom: 1pt">&nbsp;</TD>
    <TD COLSPAN="2" NOWRAP STYLE="font-weight: bold; text-align: center; border-bottom: Black 1pt solid">Stock&nbsp;Awards</TD><TD NOWRAP STYLE="padding-bottom: 1pt; font-weight: bold">&nbsp;</TD><TD NOWRAP STYLE="font-weight: bold; padding-bottom: 1pt">&nbsp;</TD>
    <TD COLSPAN="2" NOWRAP STYLE="font-weight: bold; text-align: center; border-bottom: Black 1pt solid">Option&nbsp;Awards</TD><TD NOWRAP STYLE="padding-bottom: 1pt; font-weight: bold">&nbsp;</TD><TD NOWRAP STYLE="font-weight: bold; padding-bottom: 1pt">&nbsp;</TD>
    <TD COLSPAN="2" NOWRAP STYLE="font-weight: bold; text-align: center; border-bottom: Black 1pt solid">Total</TD><TD NOWRAP STYLE="padding-bottom: 1pt; font-weight: bold">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom">
    <TD NOWRAP STYLE="text-align: center">&nbsp;</TD><TD NOWRAP STYLE="padding-bottom: 1pt">&nbsp;</TD>
    <TD COLSPAN="2" NOWRAP STYLE="text-align: center; border-bottom: Black 1pt solid">($)</TD><TD NOWRAP STYLE="padding-bottom: 1pt">&nbsp;</TD><TD NOWRAP STYLE="padding-bottom: 1pt">&nbsp;</TD>
    <TD COLSPAN="2" NOWRAP STYLE="text-align: center; border-bottom: Black 1pt solid">($)(1)</TD><TD NOWRAP STYLE="padding-bottom: 1pt">&nbsp;</TD><TD NOWRAP STYLE="padding-bottom: 1pt">&nbsp;</TD>
    <TD COLSPAN="2" NOWRAP STYLE="text-align: center; border-bottom: Black 1pt solid">($)(1)(2)</TD><TD NOWRAP STYLE="padding-bottom: 1pt">&nbsp;</TD><TD NOWRAP STYLE="padding-bottom: 1pt">&nbsp;</TD>
    <TD COLSPAN="2" NOWRAP STYLE="text-align: center; border-bottom: Black 1pt solid">($)</TD><TD NOWRAP STYLE="padding-bottom: 1pt">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,255,204)">
    <TD STYLE="width: 40%; text-align: left">Mario Ehlers (3)</TD><TD STYLE="width: 1%">&nbsp;</TD>
    <TD STYLE="width: 1%; text-align: left">$</TD><TD STYLE="width: 12%; text-align: right">19,000</TD><TD STYLE="width: 1%; text-align: left">&nbsp;</TD><TD STYLE="width: 1%">&nbsp;</TD>
    <TD STYLE="width: 1%; text-align: left">&nbsp;</TD><TD STYLE="width: 12%; text-align: right">-</TD><TD STYLE="width: 1%; text-align: left">&nbsp;</TD><TD STYLE="width: 1%">&nbsp;</TD>
    <TD STYLE="width: 1%; text-align: left">$</TD><TD STYLE="width: 12%; text-align: right">18,700</TD><TD STYLE="width: 1%; text-align: left">&nbsp;</TD><TD STYLE="width: 1%">&nbsp;</TD>
    <TD STYLE="width: 1%; text-align: left">$</TD><TD STYLE="width: 12%; text-align: right">37,700</TD><TD STYLE="width: 1%; text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD STYLE="text-align: left">Paul G. Kanan (3)</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">15,313</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">-</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">11,900</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">27,213</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,255,204)">
    <TD STYLE="text-align: left">Richard W. Palfreyman (3)</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">23,750</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">-</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">11,900</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">35,650</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD STYLE="text-align: left">Curtis J. Scheel (3)</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">23,750</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">-</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">11,900</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">35,650</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,255,204)">
    <TD STYLE="text-align: left">Stanley L. Schloz (3)</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">21,375</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">-</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">11,900</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">33,275</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD STYLE="text-align: left">Kenneth R. Waters (3)(5)</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">-</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">-</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">-</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">-</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
</TABLE>



<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0">&nbsp;</P>

<TABLE CELLPADDING="0" CELLSPACING="0" WIDTH="100%" STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0; margin-bottom: 0"><TR STYLE="vertical-align: top">
<TD STYLE="width: 0"></TD><TD STYLE="width: 0.25in">(1)</TD><TD>As of the end of the 2011 fiscal year, the directors listed in the Director Compensation Table held the following aggregate
number of stock awards and stock options. All of the stock options terminated and stock awards vested in full upon the sale of
substantially all of our assets to Emerald Star.</TD></TR></TABLE>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0">&nbsp;</P>

<TABLE CELLPADDING="0" CELLSPACING="0" WIDTH="100%" STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0; margin-bottom: 0"><TR STYLE="vertical-align: top">
<TD STYLE="width: 0.5in"></TD><TD STYLE="width: 0.25in"><FONT STYLE="font-family: Symbol">&middot;</FONT></TD><TD>Dr. Ehlers held 17,500 shares of restricted stock and 176,178 stock options.</TD></TR></TABLE>

<TABLE CELLPADDING="0" CELLSPACING="0" WIDTH="100%" STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0; margin-bottom: 0"><TR STYLE="vertical-align: top">
<TD STYLE="width: 0.5in"></TD><TD STYLE="width: 0.25in"><FONT STYLE="font-family: Symbol">&middot;</FONT></TD><TD>Mr. Kanan held zero shares of restricted stock and zero stock options.</TD></TR></TABLE>

<TABLE CELLPADDING="0" CELLSPACING="0" WIDTH="100%" STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0; margin-bottom: 0"><TR STYLE="vertical-align: top">
<TD STYLE="width: 0.5in"></TD><TD STYLE="width: 0.25in"><FONT STYLE="font-family: Symbol">&middot;</FONT></TD><TD>Mr. Palfreyman held 30,000 shares of restricted stock and 106,761 stock options.</TD></TR></TABLE>

<TABLE CELLPADDING="0" CELLSPACING="0" WIDTH="100%" STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0; margin-bottom: 0"><TR STYLE="vertical-align: top">
<TD STYLE="width: 0.5in"></TD><TD STYLE="width: 0.25in"><FONT STYLE="font-family: Symbol">&middot;</FONT></TD><TD>Mr. Scheel held 30,000 shares of restricted stock and 60,000 stock options.</TD></TR></TABLE>

<TABLE CELLPADDING="0" CELLSPACING="0" WIDTH="100%" STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0; margin-bottom: 0"><TR STYLE="vertical-align: top">
<TD STYLE="width: 0.5in"></TD><TD STYLE="width: 0.25in"><FONT STYLE="font-family: Symbol">&middot;</FONT></TD><TD>Mr. Schloz held 30,000 shares of restricted stock and 35,000 stock options.</TD></TR></TABLE>

<TABLE CELLPADDING="0" CELLSPACING="0" WIDTH="100%" STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0; margin-bottom: 0"><TR STYLE="vertical-align: top">
<TD STYLE="width: 0.5in"></TD><TD STYLE="width: 0.25in"><FONT STYLE="font-family: Symbol">&middot;</FONT></TD><TD>Mr. Waters held 39,000 shares of restricted stock and 238,043 stock options.</TD></TR></TABLE>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0">&nbsp;</P>

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<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0">&nbsp;</P>

<TABLE CELLPADDING="0" CELLSPACING="0" WIDTH="100%" STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0; margin-bottom: 0"><TR STYLE="vertical-align: top">
<TD STYLE="width: 0"></TD><TD STYLE="width: 0.25in">(2)</TD><TD>The amounts reported in the Option Awards columns represent the grant date fair value of their awards, computed in accordance
with Financial Accounting Standards Board Accounting Standards Codification Topic 718.&nbsp;&nbsp;We use the Black-Scholes option-pricing
model to estimate the calculated value of these Option Awards as of the date of grant. The volatility assumption used in the Black-Scholes
formula is based on the volatility of our common stock.&nbsp;&nbsp;For the Option Awards granted to the directors in fiscal 2011,
we used the following assumptions to compute the fair value,&nbsp;&nbsp;(i)&nbsp;expected volatility of 117%, (ii)&nbsp;expected
dividend yield of 0.00%, (iii)&nbsp;risk-free interest rate of 2.96%, and (iv)&nbsp;expected life of ten (10) years.</TD></TR></TABLE>

<TABLE CELLPADDING="0" CELLSPACING="0" WIDTH="100%" STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0; margin-bottom: 0"><TR STYLE="vertical-align: top">
<TD STYLE="width: 0"></TD><TD STYLE="width: 0.25in">(3)</TD><TD>Dr. Ehlers, Mr. Palfreyman and Mr. Water resigned from the Board of Directors on August 31, 2011.&nbsp;&nbsp;Mr. Kanan resigned
from the Board of Directors on February 26, 2011. Messrs. Scheel and Schloz resigned from the Board of Directors on the Closing
Date.</TD></TR></TABLE>

<TABLE CELLPADDING="0" CELLSPACING="0" WIDTH="100%" STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0; margin-bottom: 0"><TR STYLE="vertical-align: top">
<TD STYLE="width: 0"></TD><TD STYLE="width: 0.25in">(4)</TD><TD>During fiscal year 2011, Mr. Waters was an employee, serving as our Director of Strategic Planning, and he received no
                                                            separate cash or equity compensation for serving on the Board of Directors.</TD></TR></TABLE>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0">&nbsp;</P>

<P STYLE="font: bold 10pt Times New Roman, Times, Serif; margin: 0"><I>Compensation of Former Directors in Fiscal 2012 following
the Emerald Star Asset Sale</I></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0">Effective on September 1, 2011, immediately following closing of
the asset sale to Emerald Star, our Board of Directors consisted of four directors &ndash; Curtis J. Scheel, Stanley L. Schloz,
Fred Burstein and Andrew Ecclestone. On September 16, 2011, our former Board approved compensation to the directors consisting
of a grant of performance based stock options and cash compensation. All former directors were treated equally and there was no
separate compensation for directors who served as executive officers. Specifically, our former Board approved an award of 3-year
stock options for 100,000 shares of Common Stock to each former director at an exercise price of $0.30 per share. These options
are performance based such that they would vest and become exercisable only upon consummation of an acquisition transaction with
an operating company, with the effect of the transaction that we would longer be deemed a shell company. Such options became fully
vested and exercisable upon the closing of the Transaction. The former Board also approved monthly cash compensation to each director
in the amount of $1,500. We paid a bonus of $5,000 to each of our directors upon the closing of the Transaction.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0">&nbsp;</P>

<P STYLE="font: bold 10pt Times New Roman, Times, Serif; margin: 0; text-align: center">CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS,
AND DIRECTOR INDEPENDENCE</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0">&nbsp;</P>

<P STYLE="font: italic bold 10pt Times New Roman, Times, Serif; margin: 0">Transactions between the Company and Grandparents.com
prior to the Transaction</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0">On December 30, 2011, we entered into a non-binding letter of intent
(the &ldquo;Letter of Intent&rdquo;) with Grandparents.com for a proposed transaction. Also on December 30, 2011, in connection
with the Letter of Intent, we provided a $500,000 Bridge Loan to Grandparents.com, secured by a first priority security interest
in all of the assets of Grandparents.com. The purpose of this Bridge Loan was to provide financing and working capital to Grandparents.com
in advance of negotiation and closing of a definitive acquisition agreement. We previously announced the Letter of Intent and Bridge
Loan in our Current Report on Form 8-K filed on January 5, 2012. The Bridge Loan was assumed by us pursuant to the Transaction
and then cancelled and all liens related thereto were released.</P>

<P STYLE="font: italic bold 10pt Times New Roman, Times, Serif; margin: 0">&nbsp;</P>

<P STYLE="font: italic bold 10pt Times New Roman, Times, Serif; margin: 0">Transactions with our Newly Appointed Directors, Executive
Officers and 5% Stockholders</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0">&nbsp;</P>

<P STYLE="font: italic 10pt Times New Roman, Times, Serif; margin: 0">Promissory Notes</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0">Reference is made to the disclosure set forth under Item 2.03 of
this Report regarding the Promissory Notes, which disclosure is incorporated herein by reference.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0">&nbsp;</P>

<P STYLE="font: italic 10pt Times New Roman, Times, Serif; margin: 0">Jeremy Office</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0">Upon closing of the Transaction, Jeremy Office was appointed as
a member of our Board of Directors. In October 2011, Grandparents.com entered into an Investment Agreement with SJO Worldwide,
Inc. (&ldquo;SJO&rdquo;), an entity controlled by Mr. Office, pursuant to which SJO purchased $250,000 of Class A Units of Grandparents.com.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0">&nbsp;</P>

<P STYLE="font: italic 10pt Times New Roman, Times, Serif; margin: 0">Jeffrey L. Wasserman</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0">Upon closing of the Transaction, Jeffrey L. Wasserman
was appointed as a member of our Board of Directors and our Assistant Secretary. Mr. Wasserman is a member of Sills Cummis
&amp; Gross, P.C. Since January 1, 2011, Grandparents.com incurred legal fees of $46,000 in favor of Sills Cummis &amp;
Gross, P.C. Grandparents.com incurred an additional $104,000 in legal fees in favor of Sills Cummis &amp; Gross, P.C. in
connection with the Transaction and Private Placement through the Closing Date. In addition, we retained Sills Cummis &amp;
Gross, P.C. as our outside counsel following the closing of the Transaction.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0">&nbsp;</P>

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<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0">&nbsp;</P>

<P STYLE="font: italic bold 10pt Times New Roman, Times, Serif; margin: 0">Transactions with our Former Directors, Executive Officers
and 5% Stockholders</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0">&nbsp;</P>

<P STYLE="font: italic 10pt Times New Roman, Times, Serif; margin: 0">Indemnification and Exculpation Obligations of the Company
pursuant to the Contribution Agreement</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0">The Contribution Agreement contains provisions requiring us to continue
to afford our former officers and directors immediately prior to the closing of the Transaction certain rights to exculpation and
indemnification for acts or omissions occurring prior to the Closing Date and requiring us to maintain directors&rsquo; and officers&rsquo;
insurance in favor of such former directors and officers.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0">&nbsp;</P>

<P STYLE="font: italic 10pt Times New Roman, Times, Serif; margin: 0">Asset Purchase Agreement with Emerald Star</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0">On May 23, 2011, we entered into an asset purchase agreement with
Emerald Star, an entity newly formed and controlled by Ronald R. Helm, our then President, Chief Executive Officer and Director.
On August 31, 2011, pursuant to the asset purchase agreement, we sold to Emerald Star substantially all of the assets and liabilities
related to our core business of providing specialty reference laboratory services and clinical biomarker services, including the
term loan with Mr. Giles described below.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0">&nbsp;</P>

<P STYLE="font: italic 10pt Times New Roman, Times, Serif; margin: 0">Loan with Terry Giles</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0">On September 1, 2009, we closed a $4 million term loan with Terry
M. Giles, a then-member of our Board of Directors. The loan was secured by a blanket security interest on our assets and the assets
of our subsidiaries. The loan bore interest at a fixed rate of 12.0% per annum, and was originally due and payable over 48 months
with the first 8 months of payments being interest only ($40,000 per month, beginning September 30, 2009) and the remaining 40
months at a monthly payment of $121,822 of principal and interest. We were obligated to pay a quarterly finance fee of $12,000
to Mr. Giles during the 48-month term of the loan. In connection with and as required by the loan, on September 1, 2009, we repurchased
2,391,906 shares of common stock from Mr. Giles and certain other stockholders at a price of $0.70 per share, pursuant to a Stock
Redemption Agreement. We received net loan proceeds of $2,325,666, after payment of the stock repurchase, but excluding our legal
and other expenses for the transaction. Effective upon closing of the loan transaction, Mr. Giles resigned from our Board of Directors.
Mr. Giles was entitled to certain ongoing Board of Directors observation rights while the loan remained outstanding.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0">Our loan with Mr. Giles was approved by all of the members of Board
of Directors (with Mr. Giles abstaining), and the Board of Directors determined that the terms of the loan transaction were more
favorable than we could have obtained from an unaffiliated third party, and that the terms of the loan were fair to and in the
best interest of our stockholders.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0">On October 1, 2010, we amended the loan with Mr. Giles to extend
the term of the loan on a portion of the principal balance and to reamortize the loan, reducing the required monthly payment, as
follows: (i) for the remainder of the original 48-month term of the loan (thru August 31, 2013), we were required to make monthly
payments of principal and interest in the amount of $104,644.68, (ii) for an extended 19 month term (thru March 31 , 2015), we
were required to make monthly payments of principal and interest in the amount of $20,000.00, and (iii) on April 30, 2015, we were
required to make a final balloon payment in the amount of $600,000.00.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0">On December 9, 2010, we further amended the loan (i) to decrease
the interest rate on a portion of the loan from 12.0% to 11.5% per annum and to adjust the amortization schedule accordingly, and
(ii) to add an event of default for a Change of Control, in the event that a majority of the directors on the Board of Directors
changes following a person or group owning 25% or more of the voting stock of the Company.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0">On August 31, 2011, the loan with Mr. Giles was assigned to Emerald
Star in connection with closing of the asset sale.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0">&nbsp;</P>

<P STYLE="font: italic bold 10pt Times New Roman, Times, Serif; margin: 0">Transactions between Grandparents.com and its Managers,
Executive Officers and 5% Members prior to the Transaction</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0">&nbsp;</P>

<P STYLE="font: italic 10pt Times New Roman, Times, Serif; margin: 0">Management Fees</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0">Pursuant to an oral agreement, Grandparents.com has agreed to pay
$50,000 per month to LBG, an entity controlled by Messrs. Leber and Bernstein, each a Managing Director of Grandparents.com and
each a newly appointed director and executive officer of the Company upon the closing of the 2010 Purchase Agreement, for management
services provided to Grandparents.com. LBG is also a member of Grandparents.com. Grandparents.com has accrued but has not paid
$562,500 in management fees through February 2012 in favor of LBG pursuant to this agreement. The accrued and unpaid management
fees payable by Grandparents.com to LBG were assumed by the Company at the closing of the Transaction and the Company issued a
promissory note therefore.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0">&nbsp;</P>

<P STYLE="font: italic 10pt Times New Roman, Times, Serif; margin: 0">Guaranty of Lease</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0">Messrs. Leber and Bernstein each entered into a personal guaranty
in favor of the landlord under Grandparents.com&rsquo;s office lease. As of January 1, 2011, the remaining term of the lease was
thirty three (33) months and the aggregate amount of all lease payments due under the lease after such date was approximately $452,000.
The lease was assigned to the Company pursuant to the Transaction and Messrs. Leber and Bernstein have agreed to personally guaranty
our performance thereunder.</P>

<P STYLE="font: italic 10pt Times New Roman, Times, Serif; margin: 0">&nbsp;</P>

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<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0">&nbsp;</P>

<P STYLE="font: italic 10pt Times New Roman, Times, Serif; margin: 0">Advances and Loans from Members</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0">Since January 1, 2011, Messrs. Leber and Bernstein advanced an aggregate
of $126,000 to Grandparents.com under a revolving note. The advances accrued interest at 5% per annum and were due and payable
on December 31, 2012.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0">In March 2011, Grandparents.com entered into a $300,000 note payable
agreement with Meadows, an entity controlled by Dr. Cohen, a Managing Director of Grandparents.com and a newly appointed director
of the Company upon the closing of the Transaction. Meadows is also a member of Grandparents.com. The note accrues interest at
5% per annum, with interest-only payments commencing on May 1, 2011 through the maturity date, April 1, 2013. The note is secured
by substantially all of Grandparents.com&rsquo;s assets. Grandparents.com also issued to Meadows a warrant to purchase 50,000 of
its Class A Units. The warrant is exercisable for a period of five (5) years from the date of issuance at an exercise price of
$1.60 per unit. Immediately prior to the closing of the Transaction, $300,000 in principal, together with accrued interest, was
outstanding under the note.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0">In July 2011, Meadows and Messrs. Leber and Bernstein each provided
short-term loans to Grandparents.com in the amounts of $8,914, $15,543 and $15,543, respectively. The loans were evidenced by promissory
notes issued by Grandparents.com. The loans accrued interest at 5% per annum and matured on December 31, 2011. The loans are convertible
into Class A Units of Grandparents.com at a conversion price of $1.60 per unit. Immediately prior to the closing of the Transaction,
the principal amount of each loan, together with accrued interest, remained outstanding as of the date hereof.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0">Upon closing of the Transaction, the Company issued to each of
Meadows and Messrs. Leber and Bernstein new amended and restated promissory notes to replace their respective promissory
notes issued by Grandparents.com.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0"><B>&nbsp;</B></P>

<P STYLE="font: italic 10pt Times New Roman, Times, Serif; margin: 0">Employment Agreements</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0">Grandparents.com entered into an employment agreement with Jeffrey
Mahl, Grandparents.com&rsquo;s President. Under the terms of the agreement, Mr. Mahl received compensation in the amount of $120,000
annually. In addition, Mr. Mahl received a commission of five percent (5%) on gross advertising revenues actually received by Grandparents.com
during the term of his employment. The employment agreement expired on December 31, 2011, but Grandparents.com and Mr. Mahl have
agreed to continue his employment on the same terms until the closing of the Proposed Transaction. Mr. Mahl&rsquo;s accrued sales
commission for 2011 and 2012 through the Closing Date is $20,736.  In
addition, Grandparents.com granted Mr. Mahl an option to purchase 200,000 Class A Units of Grandparents.com for an exercise price
of $0.625 per unit and an option to purchase 100,000 Class A Units of Grandparents.com for an exercise price of $0.86. Upon closing
of the Transaction, Mr. Mahl was appointed as the Company&rsquo;s President and we entered into a new employment agreement with
him. See &ldquo;Executive Compensation &ndash; Employment Agreements.&rdquo;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0">Matthew Schwartz, Grandparents.com&rsquo;s Vice President &ndash;
Finance &amp; Operations and Chief Compliance Officer, received and annual base salary of $75,000. Upon closing of the Transaction,
Mr. Schwartz was appointed as the Company&rsquo;s Vice President &ndash; Administration, Chief Compliance Officer and Secretary
and we entered into a new employment agreement with him. See &ldquo;Executive Compensation &ndash; Employment Agreements.&rdquo;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0">&nbsp;</P>

<P STYLE="font: bold 10pt Times New Roman, Times, Serif; margin: 0; text-align: center">LEGAL PROCEEDINGS</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0">From time to time, we may become involved in various lawsuits and
legal proceedings which arise in the ordinary course of business. However, litigation is subject to inherent uncertainties and
an adverse result in these or other matters may arise from time to time that may harm our business. We are currently not aware
of any such legal proceedings or claims that we believe will have a material adverse affect on our business, financial condition
or operating results.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0">&nbsp;</P>

<P STYLE="font: bold 10pt Times New Roman, Times, Serif; margin: 0; text-align: center">MARKET PRICE AND DIVIDENDS ON OUR COMMON
EQUITY AND RELATED STOCKHOLDER MATTERS</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0">During the 2010 and 2011 and through September 14, 2011, our Common
Stock was quoted for trading on the OTC Bulletin Board under the symbol &ldquo;PBMC.&rdquo; With our name change to NorWesTech,
Inc., we applied for and obtained a new trading symbol. Effective September 15, 2011, our Common Stock was quoted for trading on
the OTC Bulletin Board under the new symbol &ldquo;NWTH.&rdquo; We have applied for a new trading symbol to reflect our name
change to Grandparents.com, Inc.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0">Prior to the Transaction, our fiscal year end was June 30. In connection
with the Transaction, we changed our fiscal year end to December 31. Accordingly, the following table shows the range of reported
high and low bid quotations of our Common Stock as reported by the OTC Bulletin Board for each quarter of 2011 and 2010 based on
our new fiscal year. The quotations from the OTC Bulletin Board reflect inter-dealer prices without retail mark-up, mark-down,
or commissions and may not represent actual transactions.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0">&nbsp;</P>

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<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0">&nbsp;</P>

<TABLE CELLPADDING="0" CELLSPACING="0" ALIGN="CENTER" STYLE="width: 90%; font: 10pt Times New Roman, Times, Serif">
<TR STYLE="vertical-align: bottom">
    <TD STYLE="text-align: center">&nbsp;</TD><TD STYLE="padding-bottom: 1pt">&nbsp;</TD>
    <TD COLSPAN="2" STYLE="text-align: center; border-bottom: Black 1pt solid">Low</TD><TD STYLE="padding-bottom: 1pt">&nbsp;</TD><TD STYLE="padding-bottom: 1pt">&nbsp;</TD>
    <TD COLSPAN="2" STYLE="text-align: center; border-bottom: Black 1pt solid">High</TD><TD STYLE="padding-bottom: 1pt">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,255,204)">
    <TD STYLE="font-weight: bold; text-align: left">Fiscal 2011:</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD STYLE="width: 70%">Fourth quarter ended December 31, 2011</TD><TD STYLE="width: 1%">&nbsp;</TD>
    <TD STYLE="width: 1%; text-align: left">$</TD><TD STYLE="width: 12%; text-align: right">0.19</TD><TD STYLE="width: 1%; text-align: left">&nbsp;</TD><TD STYLE="width: 1%">&nbsp;</TD>
    <TD STYLE="width: 1%; text-align: left">$</TD><TD STYLE="width: 12%; text-align: right">0.28</TD><TD STYLE="width: 1%; text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,255,204)">
    <TD>Third quarter ended September 30, 2011</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">0.11</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">0.30</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD>Second quarter, ended June 30, 2011</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">0.10</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">0.25</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,255,204)">
    <TD>First quarter, ended March 31, 2011</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">0.15</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">0.32</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD>&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,255,204)">
    <TD STYLE="font-weight: bold; text-align: left">Fiscal 2010:</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD>Fourth quarter ended December 31, 2010</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">$</TD><TD STYLE="text-align: right">0.18</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">$</TD><TD STYLE="text-align: right">0.23</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,255,204)">
    <TD>Third quarter ended September 30, 2010</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">0.28</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">0.40</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD>Second quarter, ended June 30, 2010</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">0.46</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">0.55</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,255,204)">
    <TD>First quarter, ended March 31, 2010</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">0.60</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">0.66</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
</TABLE>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0">The following sets forth the number of shares of Common Stock underlying
preferred stock, warrants, options and other securities exercisable for or convertible into shares of our Common Stock as of the
Closing Date:</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0">&nbsp;</P>

<TABLE CELLPADDING="0" CELLSPACING="0" WIDTH="100%" STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0; margin-bottom: 0"><TR STYLE="vertical-align: top">
<TD STYLE="width: 0.25in"></TD><TD STYLE="width: 0.25in"><FONT STYLE="font-family: Symbol">&middot;</FONT></TD><TD>the Series A Convertible Preferred Stock is convertible into 55,887,491 shares of our Common Stock;</TD></TR></TABLE>

<TABLE CELLPADDING="0" CELLSPACING="0" WIDTH="100%" STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0; margin-bottom: 0"><TR STYLE="vertical-align: top">
<TD STYLE="width: 0.25in"></TD><TD STYLE="width: 0.25in"><FONT STYLE="font-family: Symbol">&middot;</FONT></TD><TD>the Series B Convertible Preferred Stock is convertible into 12,897,113 shares of our Common Stock;</TD></TR></TABLE>

<TABLE CELLPADDING="0" CELLSPACING="0" WIDTH="100%" STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0; margin-bottom: 0"><TR STYLE="vertical-align: top">
<TD STYLE="width: 0.25in"></TD><TD STYLE="width: 0.25in"><FONT STYLE="font-family: Symbol">&middot;</FONT></TD><TD>the GP Warrant is exercisable for an estimate of 222,000 shares of our Common Stock at an exercise price of $0.01 per
share for a period of ten (10) years from the Closing Date;</TD></TR></TABLE>

<TABLE CELLPADDING="0" CELLSPACING="0" WIDTH="100%" STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0; margin-bottom: 0"><TR STYLE="vertical-align: top">
<TD STYLE="width: 0.25in"></TD><TD STYLE="width: 0.25in"><FONT STYLE="font-family: Symbol">&middot;</FONT></TD><TD>the Advisory Warrant is exercisable for an aggregate of 5,588,749 shares of our Common Stock at an exercise price of $0.23261
per share for a period of five (5) years from the Closing Date;</TD></TR></TABLE>

<TABLE CELLPADDING="0" CELLSPACING="0" WIDTH="100%" STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0; margin-bottom: 0"><TR STYLE="vertical-align: top">
<TD STYLE="width: 0.25in"></TD><TD STYLE="width: 0.25in"><FONT STYLE="font-family: Symbol">&middot;</FONT></TD><TD>the Placement Agent Warrant is exercisable for an aggregate of 1,289,711 shares of our Common Stock at an exercise price of
$0.23261 per share for a period of five (5) years from the Closing Date;</TD></TR></TABLE>

<TABLE CELLPADDING="0" CELLSPACING="0" WIDTH="100%" STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0; margin-bottom: 0"><TR STYLE="vertical-align: top">
<TD STYLE="width: 0.25in"></TD><TD STYLE="width: 0.25in"><FONT STYLE="font-family: Symbol">&middot;</FONT></TD><TD>Warrants outstanding prior to the Closing Date exercisable for an aggregate of 117,625 shares of Common Stock at an exercise
price of $0.51 per share, which expire on August 27, 2012;</TD></TR></TABLE>

<TABLE CELLPADDING="0" CELLSPACING="0" WIDTH="100%" STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0; margin-bottom: 0"><TR STYLE="vertical-align: top">
<TD STYLE="width: 0.25in"></TD><TD STYLE="width: 0.25in"><FONT STYLE="font-family: Symbol">&middot;</FONT></TD><TD>Warrants outstanding prior to the Closing Date exercisable for an aggregate of 225,188 shares of Common Stock at an exercise
price of $1.60 which expire on March 8, 2013; and</TD></TR></TABLE>

<TABLE CELLPADDING="0" CELLSPACING="0" WIDTH="100%" STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0; margin-bottom: 0"><TR STYLE="vertical-align: top">
<TD STYLE="width: 0.25in"></TD><TD STYLE="width: 0.25in"><FONT STYLE="font-family: Symbol">&middot;</FONT></TD><TD>Options to purchase 200,000 shares of Common Stock which vested and became exercisable as of the Closing Date.</TD></TR></TABLE>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0">None of the options granted under the 2012 Stock Incentive Plan
have vested as of the Closing Date.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0">Thus, as of the Closing Date, the conversion of all preferred
stock and the exercise of all outstanding warrants and other securities to purchase shares of our Common Stock, excluding
options granted under the 2012 Stock Incentive Plan which have not vested, may, if converted or exercised, as applicable,
result in the issuance of approximately 76,205,877 shares of our Common Stock (excluding shares issuable upon exercise of the
GP Warrant). We do not currently have a sufficient number of authorized shares of Common Stock available for issuance upon the
conversion of the Series A and Series B Preferred Stock and other securities exercisable for shares of our Common Stock. On
the Closing Date and immediately following the closings of the Transaction and Private Placement, our newly appointed Board
of Directors approved the Amendment and Grandparents.com, which then owned approximately 65% of the voting control of the
Company, approved, by written consent, the Amendment.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0">Grandparents.com, JTF and the Purchasers are entitled to certain
registration rights with respect to our shares of Common Stock underlying the Series A Convertible Preferred Stock, the Series
B Convertible Preferred Stock, the GP Warrant, the Advisory Warrant and the Placement Agent Warrant.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0">&nbsp;</P>

<P STYLE="font: bold 10pt Times New Roman, Times, Serif; margin: 0">Holders of Common Stock</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0">As of the Closing Date, there were 16,996,151 shares of Common Stock
issued and outstanding, held by approximately seventy five (75) holders of record.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0">&nbsp;</P>

<P STYLE="font: bold 10pt Times New Roman, Times, Serif; margin: 0">Dividends</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0">We have never declared or paid any cash dividends with respect to
our common stock, and do not plan to do so in the foreseeable future. Any future determination with regard to the payment of dividends
will be at the discretion of our Board of Directors and will be dependent upon our future earnings, financial condition, applicable
dividend restrictions and capital requirements and other factors deemed relevant by the Company&rsquo;s Board of Directors.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0">&nbsp;</P>

<P STYLE="font: bold 10pt Times New Roman, Times, Serif; margin: 0">Securities Authorized for Issuance under Equity Compensation
Plans</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0">The following table gives information as of February 24, 2012,
regarding our common stock that may be issued upon the exercise of options, warrants and other rights under our equity
compensation plans.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0">&nbsp;</P>

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    <!-- Field: /Page -->

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0">&nbsp;</P>

<TABLE CELLPADDING="0" CELLSPACING="0" STYLE="width: 100%; font: 10pt Times New Roman, Times, Serif">
<TR STYLE="vertical-align: bottom">
    <TD NOWRAP STYLE="text-align: center">&nbsp;</TD><TD NOWRAP STYLE="font-weight: bold">&nbsp;</TD>
    <TD COLSPAN="2" NOWRAP STYLE="font-weight: bold; text-align: center">(a)</TD><TD NOWRAP STYLE="font-weight: bold">&nbsp;</TD><TD NOWRAP STYLE="font-weight: bold">&nbsp;</TD>
    <TD COLSPAN="2" NOWRAP STYLE="font-weight: bold; text-align: center">(b)</TD><TD NOWRAP STYLE="font-weight: bold">&nbsp;</TD><TD NOWRAP STYLE="font-weight: bold">&nbsp;</TD>
    <TD COLSPAN="2" NOWRAP STYLE="font-weight: bold; text-align: center">(c)</TD><TD NOWRAP STYLE="font-weight: bold">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom">
    <TD NOWRAP STYLE="text-align: left">Plan&nbsp;Category</TD><TD NOWRAP>&nbsp;</TD>
    <TD COLSPAN="2" NOWRAP STYLE="text-align: center">No.&nbsp;of&nbsp;Shares <BR>to&nbsp;be&nbsp;Issued <BR>Upon&nbsp;Exercise&nbsp;of <BR>Outstanding&nbsp;Options, <BR>Warrants&nbsp;and&nbsp;Rights</TD><TD NOWRAP>&nbsp;</TD><TD NOWRAP>&nbsp;</TD>
    <TD COLSPAN="2" NOWRAP STYLE="text-align: center">Weighted&nbsp;Average <BR>Exercise&nbsp;Price&nbsp;of <BR>Outstanding&nbsp;Options, <BR>Warrants&nbsp;and&nbsp;Rights</TD><TD NOWRAP>&nbsp;</TD><TD NOWRAP>&nbsp;</TD>
    <TD COLSPAN="2" NOWRAP STYLE="text-align: center">No.&nbsp;of&nbsp;Shares&nbsp;Available <BR>for&nbsp;Future&nbsp;Issuance, <BR>excluding&nbsp;securities <BR>reflected&nbsp;in&nbsp;Column&nbsp;(a)</TD><TD NOWRAP>&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,255,204)">
    <TD STYLE="width: 55%; text-align: left">Equity Compensation Plans Approved by Stockholders (1)</TD><TD STYLE="width: 1%">&nbsp;</TD>
    <TD STYLE="width: 1%; text-align: left">&nbsp;</TD><TD STYLE="width: 12%; text-align: right">200,000</TD><TD STYLE="width: 1%; text-align: left">&nbsp;</TD><TD STYLE="width: 1%">&nbsp;</TD>
    <TD STYLE="width: 1%; text-align: left">$</TD><TD STYLE="width: 12%; text-align: right">0.30</TD><TD STYLE="width: 1%; text-align: left">&nbsp;</TD><TD STYLE="width: 1%">&nbsp;</TD>
    <TD STYLE="width: 1%; text-align: left">&nbsp;</TD><TD STYLE="width: 12%; text-align: right">-</TD><TD STYLE="width: 1%; text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD>&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,255,204)">
    <TD STYLE="text-align: left">Equity Compensation Plans Approved by Stockholders (2)</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">5,360,000</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">$</TD><TD STYLE="text-align: right">0.60</TD><TD STYLE="text-align: left"></TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">4,717,690</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD>&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,255,204)">
    <TD>TOTAL</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">5,560,000</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">$</TD><TD STYLE="text-align: right">0.59</TD><TD STYLE="text-align: left"></TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
</TABLE>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0">&nbsp;</P>

<TABLE CELLPADDING="0" CELLSPACING="0" WIDTH="100%" STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0; margin-bottom: 0"><TR STYLE="vertical-align: top">
<TD STYLE="width: 0"></TD><TD STYLE="width: 17.05pt">(1)</TD><TD>Consists solely of our 2005 Stock Incentive Plan, which was terminated upon closing of the Transaction. Upon closing of the
Transaction, all outstanding options under the 2005 Plan became vested and fully exercisable and will continue in accordance with
their terms after the Transaction.</TD></TR></TABLE>

<TABLE CELLPADDING="0" CELLSPACING="0" WIDTH="100%" STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0; margin-bottom: 0"><TR STYLE="vertical-align: top">
<TD STYLE="width: 0"></TD><TD STYLE="width: 17.05pt">(2)</TD><TD>Consists solely of our newly adopted 2012 Stock Incentive Plan. On the Closing Date, the 2012 Stock Incentive Plan was adopted
by our Board of Directors and approved by written consent of our stockholders.</TD></TR></TABLE>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0">&nbsp;</P>

<P STYLE="font: bold 10pt Times New Roman, Times, Serif; margin: 0; text-align: center">RECENT SALES OF UNREGISTERED SECURITIES</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0">Reference is made to the disclosure set forth under Item 3.02 of
this Report, which disclosure is incorporated by reference into this section.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0">&nbsp;</P>

<P STYLE="font: bold 10pt Times New Roman, Times, Serif; margin: 0; text-align: center">DESCRIPTION OF SECURITIES</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0">As of the Closing Date, the Company is authorized to issue up to
30,000,000 shares of Common Stock and 5,000,000 shares of preferred stock, par value $0.01 per share (&ldquo;Preferred Stock&rdquo;).
As of the Closing Date, there were outstanding 16,996,151 shares of Common Stock, one (1) share designated as Series A Convertible
Preferred Stock held by Grandparents.com, and 3,000,000 shares designated as Series B Convertible Preferred Stock held by the Purchasers.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0">We intend to file an amendment to our Certificate of Incorporation
to increase the authorized number of shares of Common Stock to an amount equal to at least 150,000,000 shares.
As described below, the Series A Convertible Preferred Stock and the Series B Convertible Preferred Stock will automatically convert
into shares of Common Stock upon the filing of the Amendment. The Company intends to file the Amendment as soon as practicable
and in no event later than April 1, 2012.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0">&nbsp;</P>

<P STYLE="font: bold 10pt Times New Roman, Times, Serif; margin: 0">Common Stock</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0">Holders of the Common Stock are entitled to one vote per share and
to receive dividends when and as declared by the Board of Directors, and to share ratably in the assets of the Company legally
available for distribution in the event of the liquidation, dissolution or winding up of the Company.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0">&nbsp;</P>

<P STYLE="font: bold 10pt Times New Roman, Times, Serif; margin: 0">Preferred Stock</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0">Preferred Stock may be issued with such rights, preferences, privileges
and restrictions (including redemption and voting rights) as the Board of Directors of the Company may, from time to time, determine.
Any or all of such rights may be greater than the rights granted to holders of the Common Stock, Series A Convertible Preferred
Stock or Series B Convertible Preferred Stock. As of the Closing Date, there are 5,000,000 authorized shares of Preferred Stock,
of which one (1) share is designated as Series A Convertible Preferred Stock and 3,000,000 shares are designated as Series B Convertible
Preferred Stock. Accordingly, as of the Closing Date, there are 1,999,999 shares of undesignated blank check Preferred Stock available
for future issuance on terms determined by the Board of Directors, without further stockholder approval.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0">&nbsp;</P>

<P STYLE="font: bold 10pt Times New Roman, Times, Serif; margin: 0"><I>Series A Convertible Preferred Stock</I></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0">Reference is made to the disclosure set forth under Item 5.03 of
this Report regarding the Series A Convertible Preferred Stock, which disclosure is incorporated herein by reference.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0">&nbsp;</P>

<P STYLE="font: bold 10pt Times New Roman, Times, Serif; margin: 0"><I>Series B Convertible Preferred Stock</I></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0">Reference is made to the disclosure set forth under Item 5.03 of
this Report regarding the Series B Convertible Preferred Stock, which disclosure is incorporated herein by reference.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0">&nbsp;</P>

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<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0">&nbsp;</P>

<P STYLE="font: bold 10pt Times New Roman, Times, Serif; margin: 0">Warrants</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0">&nbsp;</P>

<P STYLE="font: bold 10pt Times New Roman, Times, Serif; margin: 0"><I>GP Warrant</I></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0">In addition to the one (1) share of Series A Convertible Preferred
Stock issued by the Company to Grandparents.com pursuant to the Transaction, the Company issued to Grandparents.com the
GP Warrant. The GP Warrant has an exercise price of $0.01 per share and is exercisable for five (5) years from the date
of issuance. The number of shares of Common Stock for which the GP Warrant will be exercisable, if at all, will (i) be increased
from time to time in the event that any of the Other Warrants (as described below) are exercised prior to termination, and (ii)
pursuant to the Contribution Agreement, be adjusted from time to time following the closing of the Transaction to the extent that
the Company has less than $1,500,000 of cash after deduction of pre- and post-closing liabilities of the Company that existed or
arose on or prior to the closing of the Transaction.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0">&nbsp;</P>

<P STYLE="font: bold 10pt Times New Roman, Times, Serif; margin: 0"><I>Advisory Warrant</I></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0">As partial compensation for its advisory services to Grandparents.com
in connection with the Transaction, the Company issued to JTF a warrant to purchase 5,588,749 shares of Common Stock having a term
of five (5) years and an exercise price equal to $0.23261 (the &ldquo;Advisory Warrant&rdquo;).</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0">&nbsp;</P>

<P STYLE="font: bold 10pt Times New Roman, Times, Serif; margin: 0"><I>Placement Agent Warrant</I></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0">As partial compensation for its services as the Company&rsquo;s
placement agent in connection with the Private Placement, the Company issued to JTF a warrant to purchase 1,289,711 shares of Common
Stock having a term of five (5) years and an exercise price equal to the effective price per share of Common Stock paid in the
Private Placement, or $0.23261 (the &ldquo;Placement Agent Warrant&rdquo;).</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0">&nbsp;</P>

<P STYLE="font: bold 10pt Times New Roman, Times, Serif; margin: 0"><I>Other Warrants</I></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0">As of the Closing Date, the Company has outstanding (i) warrants
exercisable for an aggregate of 117,625 shares of Common Stock at an exercise price of $0.51 per share which expire on August 27,
2012, and (ii) warrants exercisable for an aggregate of 225,188 shares of Common Stock at an exercise price of $1.60 which expire
on March 8, 2013.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0">&nbsp;</P>

<P STYLE="font: bold 10pt Times New Roman, Times, Serif; margin: 0; text-align: center">INDEMNIFICATION OF DIRECTORS AND OFFICERS</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0; background-color: white">Section 145 of the Delaware General Corporation
Law (&ldquo;DGCL&rdquo;) provides that a corporation may indemnify directors and officers as well as other employees and individuals
against expenses including attorneys&rsquo; fees, judgments, fines and amounts paid in settlement in connection with various actions,
suits or proceedings, whether civil, criminal, administrative or investigative (other than an action by or in the right of the
corporation, such as a derivative action), if they acted in good faith and in a manner they reasonably believed to be in or not
opposed to the best interests of the corporation, and, with respect to any criminal action or proceeding, if they had no reasonable
cause to believe their conduct was unlawful. A similar standard is applicable in the case of any actions by or in the right of
the corporation, except that indemnification only extends to expenses, including attorneys&rsquo; fees, incurred in connection
with the defense or settlement of such actions, and the statute requires court approval before there can be any indemnification
where the person seeking indemnification has been found liable to the corporation. The statute provides that it is not exclusive
of other indemnification that may be granted by a corporation&rsquo;s certificate of incorporation, bylaws, agreement, a vote of
stockholders or disinterested directors or otherwise.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0; background-color: white">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0; background-color: white">Our Certificate of Incorporation
provides that we will, to the fullest extent permitted by the provisions of Section 145 of the DGCL, as the same may be
amended and supplemented, indemnify any and all persons whom the Company shall have power to indemnify under said section
from and against any and all expenses, liabilities, or other matters referred to in or covered by said section, and the
indemnification provided for therein shall not be deemed exclusive of any other rights to which those indemnified may be
entitled under any bylaw, agreement, vote of stockholders or disinterested directors or otherwise, both as to action in his
official capacity and as to action in another capacity while holding such office, and shall continue as to a person who has
ceased to be a director, officer, employee, or agent and shall inure to the benefit of the heirs, executors, and
administrators of such a person.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0; background-color: white">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0; background-color: white">Delaware law also authorizes Delaware corporations
to limit or eliminate the personal liability of their directors to them and their stockholders for monetary damages for breach
of a director&rsquo;s fiduciary duty of care. The duty of care requires that, when acting on behalf of the corporation, directors
must exercise an informed business judgment based on all material information reasonably available to them. Absent the limitations
Delaware law authorizes, directors of Delaware corporations are accountable to those corporations and their stockholders for monetary
damages for conduct constituting gross negligence in the exercise of their duty of care. Delaware law enables Delaware corporations
to limit available relief to equitable remedies such as injunction or rescission.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0; background-color: white">&nbsp;</P>

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<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0; background-color: white">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0; background-color: white">Our Certificate of Incorporation provides
that no director of the Company shall be personally liable to the Company or its stockholders for monetary damages for breach of
fiduciary duty as a director except for (i) for breach of the director&rsquo;s duty of loyalty to the Company or its stockholders,
(ii) for acts or omissions not in good faith or which involve intentional misconduct or knowing violation of law, (iii) under Section
174 of the DGCL, or (iv) for any transaction from which the director derived an improper personal benefit.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0; background-color: white">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0; background-color: white">This provision could have the effect of
reducing the likelihood of derivative litigation against our directors and may discourage or deter our stockholders or management
from bringing a lawsuit against our directors for breach of their duty of care, even though such an action, if successful, might
otherwise have benefited us and our stockholders.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0">The Contribution Agreement contains provisions requiring us to continue
to afford our former officers and directors immediately prior to the closing of the Transaction certain rights to exculpation and
indemnification for acts or omissions occurring prior to the Closing Date and requiring us to maintain directors&rsquo; and officers&rsquo;
insurance in favor of such former directors and officers.&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0">&nbsp;</P>

<P STYLE="font: bold 10pt Times New Roman, Times, Serif; margin: 0; text-align: center">CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS
ON ACCOUNTING AND FINANCIAL DISCLOSURE</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0">Reference is made to the disclosure set forth under Item 4.01 of
this Report, which disclosure is incorporated herein by reference.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0">&nbsp;</P>

<TABLE CELLPADDING="0" CELLSPACING="0" WIDTH="100%" STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0; margin-bottom: 0"><TR STYLE="vertical-align: top">
<TD STYLE="width: 0"></TD><TD STYLE="width: 0.75in"><B>Item 2.03</B></TD><TD><B>Creation of a Direct Financial Obligation or an Obligation under an Off-Balance Sheet Arrangement of a Registrant.</B></TD></TR></TABLE>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0">The disclosure in Item 1.01 of this Report regarding the Promissory
Notes is incorporated herein by reference in its entirety.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0">&nbsp;</P>

<TABLE CELLPADDING="0" CELLSPACING="0" WIDTH="100%" STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0; margin-bottom: 0"><TR STYLE="vertical-align: top">
<TD STYLE="width: 0"></TD><TD STYLE="width: 0.75in"><B>Item 3.02</B></TD><TD><B>Unregistered Sales of Equity Securities.</B></TD></TR></TABLE>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0">The information contained in Item 1.01 of this Report is incorporated
herein by reference in response to this Item 3.02.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0">The share of Series A Convertible Preferred Stock and GP Warrant
issued to Grandparents.com in connection with the Transaction were offered and sold in a private transaction in reliance upon
exemptions from registration pursuant to Section 4(2) of the Securities Act. Our reliance on Section 4(2) of the Securities Act
was based upon the following factors: (i) the issuance of the securities was an isolated private transaction by us which did not
involve a public offering, (ii) there was only one offeree, (iii) there were no subsequent or contemporaneous public offerings
of the securities by us, and (iv) the negotiations for the Transaction and the issuance of the securities took place directly
between Grandparents.com and us.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0"><FONT STYLE="background-color: white">&nbsp;</FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0">The shares of Series B Convertible Preferred Stock issued to the
Purchasers in connection with the Private Placement were offered and sold in reliance upon exemptions from registration pursuant
to Section 4(2) of the Securities Act and Rule 506 of Regulation D (&ldquo;Regulation D&rdquo;) promulgated under the Securities
Act. The Company made this determination based on the representations of each Purchaser which included that each such Purchaser
(i) is an &ldquo;accredited investor&rdquo; within the meaning of Rule 501 of Regulation D, (ii) is acquiring the securities for
investment and not with a view to or for distribution, and (iii) had access to adequate information about the Company. Neither
the shares of Series B Convertible Stock nor the Common Stock into which such shares are convertible may be sold unless they are
registered under the Securities Act and any applicable state securities laws, or an exemption or exemptions from such registration
are available. In addition, there was no general solicitation or advertising for securities issued in reliance upon Regulation
D.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0">The Advisory Warrant and Placement Agent Warrant issued to JTF
were offered and sold in a private transaction in reliance upon exemptions from registration pursuant to Section 4(2) of the Securities
Act. Our reliance on Section 4(2) of the Securities Act was based upon the following factors: (i) the issuance of the securities
was an isolated private transaction by us which did not involve a public offering, (ii) there was only one offeree, (iii) there
were no subsequent or contemporaneous public offerings of the securities by us, and (iv) the negotiations for the issuance of
the securities took place directly between JTF and us.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0">The foregoing descriptions of the Advisory Warrant and the Placement
Agent Warrant does not purport to be complete and is qualified in its entirety by reference to the provisions of the Advisory Warrant
and the Placement Agent Warrant, copies of which are filed as Exhibits 4.2 and 4.3, respectively, to this Report and incorporated
herein by reference.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0">&nbsp;</P>

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<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0">&nbsp;</P>

<TABLE CELLPADDING="0" CELLSPACING="0" WIDTH="100%" STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0; margin-bottom: 0"><TR STYLE="vertical-align: top">
<TD STYLE="width: 0"></TD><TD STYLE="width: 0.75in"><B>Item 3.03</B></TD><TD><B>Material Modification to Rights of Security Holders.</B></TD></TR></TABLE>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0">The disclosure in Item 5.03 of this Report regarding the rights
and preferences of the Series A Convertible Preferred Stock and Series B Convertible Preferred Stock and is incorporated herein
by reference in its entirety.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0">&nbsp;</P>

<TABLE CELLPADDING="0" CELLSPACING="0" WIDTH="100%" STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0; margin-bottom: 0"><TR STYLE="vertical-align: top">
<TD STYLE="width: 0"></TD><TD STYLE="width: 0.75in"><B>Item 4.01</B></TD><TD><B>Changes in Registrant&rsquo;s Certifying Accountant.</B></TD></TR></TABLE>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0"><B>Dismissal of Previous Independent Registered Public Accounting
Firm</B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0">On February 23, 2012, our Board of Directors approved the
dismissal of PMB Helin Donovan, LLP (&ldquo;PMBHD&rdquo;) as our independent registered public accounting firm, effective immediately.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0">PMBHD&rsquo;s reports on our financial statements as of and for
the fiscal years ended June 30, 2011 and 2010 did not contain an adverse opinion or disclaimer of opinion and were not qualified
or modified as to uncertainty, audit scope, or accounting principles.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0">During the fiscal years ended June 30, 2011 and 2010 and through
PMBHD&rsquo;s dismissal on the Closing Date, there were (i) no disagreements with PMBHD on any matter of accounting principles
or practices, financial statement disclosure, or auditing scope or procedures, which disagreements, if not resolved to the satisfaction
of PMBHD, would have caused PMBHD to make reference to the subject matter of the disagreements in connection with its reports,
and (ii) no events of the type listed in paragraphs (A) through (D) of Item 304(a)(1)(v) of Regulation S-K.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0">We furnished PMBHD with a copy of this disclosure on the Closing
Date, providing PMBHD with the opportunity to furnish the Company with a letter addressed to the SEC stating whether it agrees
with the statements made by us herein in response to Item 304(a) of Regulation S-K and, if not, stating the respect in which it
does not agree.&nbsp;&nbsp;A copy of PMBHD&rsquo;s letter to the SEC is filed as Exhibit 16.1 to this Report.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0"><B>Engagement of New Independent Registered Public Accounting Firm</B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0">Concurrent with the decision to dismiss PMBHD as our independent
registered public accounting firm, the Board of Directors appointed Daszkal Bolton LLP (&ldquo;Daszkal&rdquo;) as our independent
registered public accounting firm.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0">During the fiscal years ended June 30, 2011 and 2010 and through
the date hereof, neither the Company nor anyone acting on its behalf consulted Daszkal with respect to (i) the application of accounting
principles to a specified transaction, either completed or proposed, or the type of audit opinion that might be rendered on the
Company&rsquo;s financial statements, and neither a written report was provided to the Company or oral advice was provided that
Daszkal concluded was an important factor considered by the Company in reaching a decision as to the accounting, auditing or financial
reporting issue, or (ii) any matter that was the subject of a disagreement or reportable events set forth in Item 304(a)(1)(iv)
and (v), respectively, of Regulation S-K.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0">&nbsp;</P>

<TABLE CELLPADDING="0" CELLSPACING="0" WIDTH="100%" STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0; margin-bottom: 0"><TR STYLE="vertical-align: top">
<TD STYLE="width: 0"></TD><TD STYLE="width: 0.75in"><B>Item 5.01</B></TD><TD><B>Changes in Control of Registrant.</B></TD></TR></TABLE>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0">Reference is made to the disclosure set forth under Item 2.01 of
this Report, which disclosure is incorporated herein by reference.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0">As explained more fully described in Items 1.01 and 2.01 of this
Report, in connection with the Transaction, on the Closing Date, we issued one (1) share of Series A Convertible Preferred Stock
to Grandparents.com. As more fully described in Item 5.03 of this Report, the one (1) share of Series A Convertible Preferred Stock
is entitled to cast 55,887,491 votes. As such, immediately following the Transaction and the Private Placement, Grandparents.com
held approximately 65% of the total voting power of our voting securities.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0">&nbsp;</P>

<TABLE CELLPADDING="0" CELLSPACING="0" WIDTH="100%" STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0; margin-bottom: 0"><TR STYLE="vertical-align: top">
<TD STYLE="width: 0"></TD><TD STYLE="width: 0.75in"><B>Item 5.02</B></TD><TD><B>Departure of Directors or Certain Officers; Election of Directors; Appointment of Certain Officers; Compensatory Arrangements
of Certain Officers.</B></TD></TR></TABLE>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0"><B>Resignation of Directors and Officers</B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0">On the Closing Date, Messrs. Stanley L. Schloz, Curtis J. Scheel,
Fred Burstein and<B> </B>Andrew Ecclestone<B> </B>resigned from our Board of Directors. The resignations were not the result of
any disagreement with us on any matter relating to our operations, policies or practices. In addition, Mr. Stanley L. Schloz resigned
as our President and Mr. Curtis J. Scheel resigned as our Secretary and Treasurer.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0"><B>Appointment of Directors and Officers</B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0">The following persons were appointed as our officers and directors
at the closing of the Transaction:</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0">&nbsp;</P>

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<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0">&nbsp;</P>

<TABLE ALIGN="CENTER" CELLSPACING="0" CELLPADDING="0" STYLE="font: 10pt Times New Roman, Times, Serif; width: 85%; border-collapse: collapse">
<TR STYLE="vertical-align: top">
    <TD STYLE="width: 35%; border-bottom: windowtext 1pt solid; font-weight: bold">Name</TD>
    <TD STYLE="width: 2%; font-weight: bold">&nbsp;</TD>
    <TD STYLE="width: 10%; border-bottom: windowtext 1pt solid; font-weight: bold; text-align: center">Age</TD>
    <TD STYLE="width: 2%; font-weight: bold; text-align: center">&nbsp;</TD>
    <TD STYLE="width: 51%; border-bottom: windowtext 1pt solid; font-weight: bold; text-align: center">Position</TD></TR>
<TR STYLE="vertical-align: bottom">
    <TD>Steven E. Leber</TD>
    <TD STYLE="text-align: center">&nbsp;</TD>
    <TD STYLE="text-align: center">70</TD>
    <TD STYLE="text-align: center">&nbsp;</TD>
    <TD STYLE="text-align: center">Chairman, Co-Chief Executive Officer</TD></TR>
<TR STYLE="vertical-align: bottom">
    <TD>Joseph Bernstein</TD>
    <TD STYLE="text-align: center">&nbsp;</TD>
    <TD STYLE="text-align: center">63</TD>
    <TD STYLE="text-align: center">&nbsp;</TD>
    <TD>
        <P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: center">Co-Chief Executive Officer,</P>
        <P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: center">Chief Financial Officer, Treasurer, Director</P></TD></TR>
<TR STYLE="vertical-align: bottom">
    <TD>Jeffrey S. Mahl</TD>
    <TD STYLE="text-align: center">&nbsp;</TD>
    <TD STYLE="text-align: center">60</TD>
    <TD STYLE="text-align: center">&nbsp;</TD>
    <TD STYLE="text-align: center">President</TD></TR>
<TR STYLE="vertical-align: bottom">
    <TD>Matthew Schwartz</TD>
    <TD STYLE="text-align: center">&nbsp;</TD>
    <TD STYLE="text-align: center">39</TD>
    <TD STYLE="text-align: center">&nbsp;</TD>
    <TD>
        <P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: center">Vice President &ndash; Administration,</P>
        <P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: center">Chief Compliance Officer, Secretary</P></TD></TR>
<TR STYLE="vertical-align: bottom">
    <TD>Dr. Robert Cohen</TD>
    <TD STYLE="text-align: center">&nbsp;</TD>
    <TD STYLE="text-align: center">68</TD>
    <TD STYLE="text-align: center">&nbsp;</TD>
    <TD STYLE="text-align: center">Director</TD></TR>
<TR STYLE="vertical-align: bottom">
    <TD>Jeremy Office</TD>
    <TD STYLE="text-align: center">&nbsp;</TD>
    <TD STYLE="text-align: center">35</TD>
    <TD STYLE="text-align: center">&nbsp;</TD>
    <TD STYLE="text-align: center">Director</TD></TR>
<TR STYLE="vertical-align: bottom">
    <TD>Jeffrey L. Wasserman</TD>
    <TD STYLE="text-align: center">&nbsp;</TD>
    <TD STYLE="text-align: center">41</TD>
    <TD STYLE="text-align: center">&nbsp;</TD>
    <TD STYLE="text-align: center">Director, Assistant Secretary</TD></TR>
</TABLE>
<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0">The business background descriptions of the newly appointed directors
and officers as set forth in Item 2.01 of this Report are hereby incorporated in this Item 5.02 by reference.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0"><B>Employment Agreements of New Executive Officers</B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0">The description of the employment agreements as set forth in Item
2.01 of this Report are hereby incorporated in this Item 5.02 by reference.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0">The descriptions of the employment agreements do not purport to
be complete and are qualified in their entireties by reference to the provisions of the employment agreements, copies of which
are filed as Exhibits 10.5, 10.6 and 10.7 to this Report and incorporated herein by reference.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0">&nbsp;</P>

<TABLE CELLPADDING="0" CELLSPACING="0" WIDTH="100%" STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0; margin-bottom: 0"><TR STYLE="vertical-align: top">
<TD STYLE="width: 0"></TD><TD STYLE="width: 0.75in"><B>Item 5.03</B></TD><TD><B>Amendments to Articles of Incorporation or Bylaws; Change in Fiscal Year.</B></TD></TR></TABLE>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0"><B>Amendment to Certificate of Incorporation</B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0">On the Closing Date and immediately following the Transaction,
we changed our name to Grandparents.com, Inc. The name change was made pursuant to Section 253 of the Delaware General
Corporation Law by merging a wholly-owned subsidiary of the Company with and into the Company, with the Company as the
surviving corporation in the merger (the &ldquo;Short Form Merger&rdquo;). In connection with the Short Form Merger, we
amended Article First of our Certificate of Incorporation to change our name to Grandparents.com, Inc. pursuant to the
Certificate of Ownership and Merger filed with the Secretary of State of the State of Delaware on the Closing Date. A copy of
the Certificate of Ownership and Merger is attached as Exhibit 3.1 hereto and incorporated herein by reference.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0"><B>Series A Convertible Preferred Stock</B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0"><B>&nbsp;</B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0">On February 22, 2012, the Company filed a certificate of
designation with the Secretary of State of the State of Delaware (the &ldquo;Series A Certificate of Designation&rdquo;) to
create a series of Preferred Stock designated as &ldquo;Series A Convertible
Preferred Stock.&rdquo; The Series A Convertible Preferred Stock consists of one (1) authorized share issued to
Grandparents.com pursuant to the Transaction.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0"><I>Mandatory Conversion. </I>The share of Series A Convertible Preferred
Stock will automatically convert into 55,887,491 shares of Common Stock, upon the date on which the Company files the Amendment.
Until such time, the Series A Convertible Preferred Stock will not be convertible into Common Stock.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0"><I>Voting Rights. </I>On any matter presented to the stockholders
of the Company for their action or consideration at any meeting of stockholders of the Company (or any action by written consent
of stockholders in lieu of meeting), Grandparents.com, as the holder of Series A Convertible Preferred Stock, will be entitled
to cast 55,887,491 votes. Except as provided by law or by the other provisions of the Certificate of Incorporation, Grandparents.com,
as the holder of Series A Convertible Preferred Stock, will vote together with the holders of Common Stock, and with the holders
of any other series of the Company&rsquo;s Preferred Stock, including the Series B Convertible Preferred Stock, the terms of which
so provide, as a single class.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0"><I>Rank. </I>The Series A Convertible Preferred Stock will, as to
distribution of assets upon liquidation, dissolution or winding up of the Company, rank (i) pari passu to the Common Stock and
any other class or series of capital stock (including Preferred Stock) of the Company hereafter created that, by its terms, ranks
pari passu to the Series A Convertible Preferred Stock, and (ii) junior to any class or series of capital stock of the Company
hereafter created which by its terms ranks senior to the Series A Convertible Preferred Stock.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0"><I>Dividends. </I>The Series A Convertible Preferred Stock does
not have separate dividend rights. Rather, the holders of Series A Convertible Preferred Stock, Common Stock, Series B Convertible
Preferred Stock and any other series of Preferred Stock of the Company entitled to participate with the Common Stock in such dividends
or distributions will be entitled to participate pro rata in such dividends or distributions declared with respect to Common Stock
based on the number of shares held by each such holder, treating for this purpose all such securities as if they had been converted
to Common Stock.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0">&nbsp;</P>

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<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0"><I>Liquidation. </I>If the Company suffers a liquidation event prior
to the conversion of Series A Convertible Preferred Stock into Common Stock, the assets of the Company available for distribution
to its stockholders will be distributed among the holders of Series A Convertible Preferred Stock, Common Stock, Series B Convertible
Preferred Stock and any other series of Preferred Stock of the Company entitled to participate with the Common Stock in the distribution
of such remaining assets, pro rata based on the number of shares held by each such holder, treating for this purpose all such securities
as if they had been converted to Common Stock.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0"><I>Required Approvals. </I>So long as the share of Series A Convertible
Preferred Stock is outstanding, the Company may not, without first obtaining the unanimous written consent of Grandparents.com,
as the holder of such share, alter or change the rights, preferences or privileges of the Series A Convertible Preferred Stock
so as to affect adversely such holder. Likewise, so long as any shares of Series A Convertible Preferred Stock are outstanding,
the Company may not, without first obtaining the approval of the holders of a majority of the outstanding shares of Common Stock
(voting as a separate class, without the vote of holders of the Series A Convertible Preferred Stock, Series B Convertible Preferred
Stock or any other series of Preferred Stock), alter or change the rights, preferences or privileges of the Series A Convertible
Preferred Stock. The Company may not make any other distributions (including without limitation the granting of any rights or warrants)
to the holders of the Common Stock without first obtaining the unanimous written consent of Grandparents.com, as the holder of
the Series A Convertible Preferred Stock.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0">The description of the designations, rights and preferences of the
Series A Convertible Preferred Stock does not purport to be complete and is qualified in its entirety by reference to the provisions
of the Series A Certificate of Designation, a copy of which is filed as Exhibit 3.2 to this Report and incorporated herein by reference.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0">&nbsp;</P>

<P STYLE="font: bold 10pt Times New Roman, Times, Serif; margin: 0">Series B Convertible Preferred Stock</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0">On February 22, 2012, the Company filed a certificate of
designation with the Secretary of State of the State of Delaware (the &ldquo;Series B Certificate of Designation&rdquo;) to
create a series of Preferred Stock designated as &ldquo;Series B Convertible
Preferred Stock.&rdquo; The Series B Convertible Preferred Stock consists of 3,000,000 shares issued to the Purchasers.
Immediately following the closing of the Offering, such shares of Series B Convertible Preferred Stock would be convertible
into an aggregate of 12,897,113 shares of Common Stock.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0"><I>Mandatory Conversion. </I>The shares of Series B Convertible
Preferred Stock will automatically convert into the number of shares of the Common Stock determined by dividing $1.00 (the stated
value of the share of Series B Convertible Preferred Stock) by the conversion price of the Series B Convertible Preferred Stock
then in effect, upon the date on which the Company files the Amendment. Until such time, the Series B Convertible Preferred Stock
will not be convertible into Common Stock. The Series B Convertible Preferred Stock will have an initial conversion price of $0.23261
(or 4.299 shares of Common Stock for each share of Series B Convertible Preferred Stock), subject to adjustment. No fractional
shares of Common Stock will be issuable upon conversion of the Series B Convertible Preferred Stock and the number of shares to
be issued will be rounded up to the nearest whole share.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0"><I>Voting Rights.</I> On any matter presented to the stockholders
of the Company for their action or consideration at any meeting of stockholders of the Company (or any action by written consent
of stockholders in lieu of meeting), each holder of Series B Convertible Preferred Stock will be entitled to cast the number of
votes equal to the number determined by dividing $1.00 (the stated value of each share of Series B Convertible Preferred Stock)
by the conversion price of the Series B Convertible Preferred Stock then in effect. Except as provided by law or by the other provisions
of the Certificate of Incorporation, holders of Series B Convertible Preferred Stock will vote together with the holders of Common
Stock, and with the holders of any other series of the Company&rsquo;s Preferred Stock, including the Series A Convertible Preferred
Stock, the terms of which so provide, as a single class.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0"><I>Rank. </I>The Series B Convertible Preferred Stock will, as to
distribution of assets upon liquidation, dissolution or winding up of the Company, rank (i) pari passu to the Common Stock, the
Series A Convertible Preferred Stock and any other class or series of capital stock (including Preferred Stock) of the Company
hereafter created that, by its terms, ranks pari passu to the Series B Convertible Preferred Stock, and (ii) junior to any class
or series of capital stock of the Company hereafter created which by its terms ranks senior to the Series B Convertible Preferred
Stock.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0"><I>Dividends. </I>The Series B Convertible Preferred Stock does
not have separate dividend rights. Rather, the holders of Series B Convertible Preferred Stock, Common Stock, Series A Convertible
Preferred Stock and any other series of Preferred Stock of the Company entitled to participate with the Common Stock in such dividends
or distributions will be entitled to participate pro rata in such dividends or distributions declared with respect to Common Stock
based on the number of shares held by each such holder, treating for this purpose all such securities as if they had been converted
to Common Stock.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0"><I>Liquidation. </I>If the Company suffers a liquidation event prior
to the conversion of Series B Convertible Preferred Stock into Common Stock, the assets of the Company available for distribution
to its stockholders will be distributed among the holders of Series B Convertible Preferred Stock, Common Stock, Series A Convertible
Preferred Stock and any other series of Preferred Stock of the Company entitled to participate with the Common Stock in the distribution
of such remaining assets, pro rata based on the number of shares held by each such holder, treating for this purpose all such securities
as if they had been converted to Common Stock</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0">&nbsp;</P>

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<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0"><I>Required Approvals. </I>So long as any shares of Series B Convertible
Preferred Stock are outstanding, the Company may not, without first obtaining the unanimous written consent of the holders of such
shares, alter or change the rights, preferences or privileges of the Series B Convertible Preferred Stock so as to affect adversely
such holders. Likewise, so long as any shares of Series B Convertible Preferred Stock are outstanding, the Company may not, without
first obtaining the approval of the holders of a majority of the outstanding shares of Common Stock (voting as a separate class,
without the vote of holders of the Series A Convertible Preferred Stock, Series B Convertible Preferred Stock or any other series
of Preferred Stock), alter or change the rights, preferences or privileges of the Series B Convertible Preferred Stock. The Company
may not make any other distributions (including without limitation the granting of any rights or warrants) to the holders of the
Common Stock without first obtaining the unanimous written consent of the holders of the Series B Convertible Preferred Stock.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0">The description of the designations, rights and preferences of the
Series B Convertible Preferred Stock does not purport to be complete and is qualified in its entirety by reference to the provisions
of the Series B Certificate of Designation, a copy of which is filed as Exhibit 3.3 to this Report and incorporated herein by reference.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0">&nbsp;</P>

<P STYLE="font: bold 10pt Times New Roman, Times, Serif; margin: 0">Amendment to Bylaws</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0">Effective upon the closing of the Transaction, we amended Section
7 of our Bylaws regarding voting rights of holders of capital stock. Previously, our Bylaws stated that each stockholder shall
be entitled to one vote for each share of capital stock held by such stockholder. However, pursuant to the Series A Certificate
of Designation, Grandparents.com, as the holder of the one (1) share of Series A Convertible Preferred Stock, is entitled to cast
55,887,491 votes. Accordingly, we amended our Bylaws to clarify that, unless otherwise provided in the Certificate of Incorporation,
each stockholder shall be entitled to one vote for each share of capital stock held by such stockholder.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0">On the Closing Date and immediately following the Transaction, we
amended and restated our Bylaws to reflect our new name. Other than the amendment to Section 7 of our Bylaws prior to the Transaction
and the name change in connection with the Short Form Merger, no changes were made to our Bylaws in effect prior to the Closing
Date. A copy of our Amended and Restated Bylaws is attached as Exhibit 3.4 hereto and incorporated by reference.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0">&nbsp;</P>

<P STYLE="font: bold 10pt Times New Roman, Times, Serif; margin: 0">Change in Fiscal Year</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0">On the Closing Date and in connection with Transaction, our Board
of Directors approved a change in our fiscal year end from June 30 to December 31.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0">&nbsp;</P>

<TABLE CELLPADDING="0" CELLSPACING="0" WIDTH="100%" STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0; margin-bottom: 0"><TR STYLE="vertical-align: top">
<TD STYLE="width: 0"></TD><TD STYLE="width: 0.75in"><B>Item 5.06</B></TD><TD><B>Change in Shell Company Status.</B></TD></TR></TABLE>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0">Reference is made to the disclosure set forth under Items 2.01 and
5.01 of this Report, which disclosure is incorporated herein by reference.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0">&nbsp;</P>

<TABLE CELLPADDING="0" CELLSPACING="0" WIDTH="100%" STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0; margin-bottom: 0"><TR STYLE="vertical-align: top">
<TD STYLE="width: 0"></TD><TD STYLE="width: 0.75in"><B>Item 5.07</B></TD><TD><B>Submission of Matters to a Vote of Security Holders.</B></TD></TR></TABLE>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0">On the Closing Date and immediately following the closings of the
Transaction and Private Placement, Grandparents.com, which then owned approximately 65% of the voting control of the Company, approved,
by written consent, the Amendment and the 2012 Stock Incentive Plan. The Amendment and 2012 Stock Incentive Plan were approved
by our newly appointed Board of Directors on the Closing Date.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0">Reference is made to the disclosure set forth under Item 2.01 of
this Report regarding the 2012 Stock Incentive Plan, which disclosure is incorporated herein by reference.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0">The description of the 2012 Stock Incentive Plan does not purport
to be complete and is qualified in its entirety by reference to the provisions of the 2012 Stock Incentive Plan, a copy of which
is filed as Exhibit 10.12 to this Report and incorporated herein by reference.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0">&nbsp;</P>

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<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0">&nbsp;</P>

<TABLE CELLPADDING="0" CELLSPACING="0" WIDTH="100%" STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0; margin-bottom: 0"><TR STYLE="vertical-align: top">
<TD STYLE="width: 0"></TD><TD STYLE="width: 0.75in"><B>Item 9.01</B></TD><TD><B>Financial Statements and Exhibits.</B></TD></TR></TABLE>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0">&nbsp;</P>

<TABLE CELLPADDING="0" CELLSPACING="0" WIDTH="100%" STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0; margin-bottom: 0"><TR STYLE="vertical-align: top">
<TD STYLE="width: 0"></TD><TD STYLE="width: 0.5in">(a)</TD><TD>Financial Statements of Business Acquired.</TD></TR></TABLE>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0">Filed herewith as Exhibit 99.1 to this Report and incorporated herein
by reference are the Condensed Unaudited Financial Statements of Grandparents.com for the nine months ended September 30, 2011
and 2010.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0">Filed herewith as Exhibit 99.2 to this Report and incorporated herein
by reference are the Audited Financial Statements of Grandparents.com for the years ended December 31, 2010 and 2009.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0">&nbsp;</P>

<TABLE CELLPADDING="0" CELLSPACING="0" WIDTH="100%" STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0; margin-bottom: 0"><TR STYLE="vertical-align: top">
<TD STYLE="width: 0"></TD><TD STYLE="width: 0.5in">(b)</TD><TD>Pro Forma Financial Information.</TD></TR></TABLE>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0">Filed herewith as Exhibit 99.3 to this Report and incorporated herein
by reference is unaudited pro forma financial information of the Company.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0">&nbsp;</P>

<TABLE CELLPADDING="0" CELLSPACING="0" WIDTH="100%" STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0; margin-bottom: 0"><TR STYLE="vertical-align: top">
<TD STYLE="width: 0"></TD><TD STYLE="width: 0.5in">(c)</TD><TD>Shell Company Transactions.</TD></TR></TABLE>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0">Reference is made to Items 9.01(a) and 9.01(b) and the exhibits
referred to therein which are incorporated herein by reference.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0">&nbsp;</P>

<TABLE CELLPADDING="0" CELLSPACING="0" WIDTH="100%" STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0; margin-bottom: 0"><TR STYLE="vertical-align: top">
<TD STYLE="width: 0"></TD><TD STYLE="width: 0.5in">(d)</TD><TD>Exhibits.</TD></TR></TABLE>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0">Certain of the agreements filed as exhibits to this Report contain
representations and warranties by the parties to the agreements that have been made solely for the benefit of the parties to the
agreement. These representations and warranties:</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0">&nbsp;</P>

<TABLE CELLPADDING="0" CELLSPACING="0" WIDTH="100%" STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0; margin-bottom: 0"><TR STYLE="vertical-align: top">
<TD STYLE="width: 0.25in"></TD><TD STYLE="width: 0.25in"><FONT STYLE="font-family: Symbol">&middot;</FONT></TD><TD>may have been qualified by disclosures that were made to the other parties in connection with the negotiation of the agreements,
which disclosures are not necessarily reflected in the agreements;</TD></TR></TABLE>

<TABLE CELLPADDING="0" CELLSPACING="0" WIDTH="100%" STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0; margin-bottom: 0"><TR STYLE="vertical-align: top">
<TD STYLE="width: 0.25in"></TD><TD STYLE="width: 0.25in"><FONT STYLE="font-family: Symbol">&middot;</FONT></TD><TD>may apply standards of materiality that differ from those of a reasonable investor; and</TD></TR></TABLE>

<TABLE CELLPADDING="0" CELLSPACING="0" WIDTH="100%" STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0; margin-bottom: 0"><TR STYLE="vertical-align: top">
<TD STYLE="width: 0.25in"></TD><TD STYLE="width: 0.25in"><FONT STYLE="font-family: Symbol">&middot;</FONT></TD><TD>were made only as of specified dates contained in the agreements and are subject to subsequent developments and changed circumstances.</TD></TR></TABLE>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0">Accordingly, these representations and warranties may not describe
the actual state of affairs as of the date that these representations and warranties were made or at any other time. Investors
should not rely on them as statements of fact.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0">&nbsp;</P>

<TABLE CELLSPACING="0" CELLPADDING="0" STYLE="font: 10pt Times New Roman, Times, Serif; width: 100%; border-collapse: collapse">
<TR>
    <TD STYLE="width: 10%; vertical-align: top; border-bottom: windowtext 1pt solid">
        <P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: center"><B>Exhibit</B></P>
        <P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: center"><B>Number</B></P></TD>
    <TD STYLE="width: 2%; vertical-align: top; text-align: center">&nbsp;</TD>
    <TD STYLE="width: 88%; vertical-align: bottom; border-bottom: windowtext 1pt solid; font-weight: bold">Description</TD></TR>
<TR STYLE="vertical-align: top">
    <TD STYLE="text-align: center">2.1</TD>
    <TD STYLE="text-align: center">&nbsp;</TD>
    <TD>Asset Contribution Agreement dated as of February 23, 2012 by and between the Company and Grandparents.com</TD></TR>
<TR STYLE="vertical-align: top">
    <TD STYLE="text-align: center">3.1</TD>
    <TD STYLE="text-align: center">&nbsp;</TD>
    <TD>Certificate of Ownership and Merger of GP MergeCo, Inc. into the Company</TD></TR>
<TR STYLE="vertical-align: top">
    <TD STYLE="text-align: center">3.2</TD>
    <TD STYLE="text-align: center">&nbsp;</TD>
    <TD>Certificate of Designation of Series A Convertible Preferred Stock</TD></TR>
<TR STYLE="vertical-align: top">
    <TD STYLE="text-align: center">3.3</TD>
    <TD STYLE="text-align: center">&nbsp;</TD>
    <TD>Certificate of Designation of Series B Convertible Preferred Stock</TD></TR>
<TR STYLE="vertical-align: top">
    <TD STYLE="text-align: center">3.4</TD>
    <TD STYLE="text-align: center">&nbsp;</TD>
    <TD>Amended and Restated Bylaws</TD></TR>
<TR STYLE="vertical-align: top">
    <TD STYLE="text-align: center">4.1</TD>
    <TD STYLE="text-align: center">&nbsp;</TD>
    <TD>Grandparents.com Warrant</TD></TR>
<TR STYLE="vertical-align: top">
    <TD STYLE="text-align: center">4.2</TD>
    <TD STYLE="text-align: center">&nbsp;</TD>
    <TD>Advisory Warrant</TD></TR>
<TR STYLE="vertical-align: top">
    <TD STYLE="text-align: center">4.3</TD>
    <TD STYLE="text-align: center">&nbsp;</TD>
    <TD>Placement Agent Warrant</TD></TR>
<TR STYLE="vertical-align: top">
    <TD STYLE="text-align: center">10.1</TD>
    <TD STYLE="text-align: center">&nbsp;</TD>
    <TD>Securities Purchase Agreement dated as of February 23, 2012</TD></TR>
<TR STYLE="vertical-align: top">
    <TD STYLE="text-align: center">10.2</TD>
    <TD STYLE="text-align: center">&nbsp;</TD>
    <TD>Registration Rights Agreement dated as of February 23, 2012</TD></TR>
<TR STYLE="vertical-align: top">
    <TD STYLE="text-align: center">10.3</TD>
    <TD STYLE="text-align: center">&nbsp;</TD>
    <TD>Lock-Up Agreement by and between the Company and Grandparents.com</TD></TR>
<TR STYLE="vertical-align: top">
    <TD STYLE="text-align: center">10.4</TD>
    <TD STYLE="text-align: center">&nbsp;</TD>
    <TD>Lock-Up Agreement by and between the Company and JTF</TD></TR>
<TR STYLE="vertical-align: top">
    <TD STYLE="text-align: center">10.5</TD>
    <TD STYLE="text-align: center">&nbsp;</TD>
    <TD>Employment Agreement dated as of February 23, 2012 by and between the Company and Steven E. Leber</TD></TR>
<TR STYLE="vertical-align: top">
    <TD STYLE="text-align: center">10.6</TD>
    <TD STYLE="text-align: center">&nbsp;</TD>
    <TD>Employment Agreement dated as of February 23, 2012 by and between the Company and Joseph Bernstein</TD></TR>
<TR STYLE="vertical-align: top">
    <TD STYLE="text-align: center">10.7</TD>
    <TD STYLE="text-align: center">&nbsp;</TD>
    <TD>Employment Agreement dated as of February 23, 2012 by and between the Company and Jeffrey S. Mahl</TD></TR>
<TR STYLE="vertical-align: top">
    <TD STYLE="text-align: center">10.8</TD>
    <TD STYLE="text-align: center">&nbsp;</TD>
    <TD>Employment Agreement dated as of February 23, 2012 by and between the Company and Matthew Schwartz</TD></TR>
<TR STYLE="vertical-align: top">
    <TD STYLE="text-align: center">10.9</TD>
    <TD STYLE="text-align: center">&nbsp;</TD>
    <TD>Amended and Restated Promissory Note dated as of February 23, 2012 in favor of Steven E. Leber</TD></TR>
<TR STYLE="vertical-align: top">
    <TD STYLE="text-align: center">10.10</TD>
    <TD STYLE="text-align: center">&nbsp;</TD>
    <TD>Amended and Restated Promissory Note dated as of February 23, 2012 in favor of Joseph Bernstein</TD></TR>
<TR STYLE="vertical-align: top">
    <TD STYLE="text-align: center">10.11</TD>
    <TD STYLE="text-align: center">&nbsp;</TD>
    <TD>Amended and Restated Promissory Note dated as of February 23, 2012 in favor of Meadows Capital, LLC</TD></TR>
<TR STYLE="vertical-align: top">
    <TD STYLE="text-align: center">10.12</TD>
    <TD STYLE="text-align: center">&nbsp;</TD>
    <TD>Promissory Note dated as of February 23, 2012 in favor of Leber-Bernstein Group, LLC</TD></TR>
<TR STYLE="vertical-align: top">
    <TD STYLE="text-align: center">10.13</TD>
    <TD STYLE="text-align: center">&nbsp;</TD>
    <TD>2012 Stock Incentive Plan</TD></TR>
<TR STYLE="vertical-align: top">
    <TD STYLE="text-align: center">10.14</TD>
    <TD STYLE="text-align: center">&nbsp;</TD>
    <TD>Form of Option Grant Letter</TD></TR>
<TR STYLE="vertical-align: top">
    <TD STYLE="text-align: center">14.1</TD>
    <TD STYLE="text-align: center">&nbsp;</TD>
    <TD>Code of Ethics for Financial Officers (1)</TD></TR>
<TR STYLE="vertical-align: top">
    <TD STYLE="text-align: center">16.1</TD>
    <TD STYLE="text-align: center">&nbsp;</TD>
    <TD>Letter from PMB Helin Donovan, LLP</TD></TR>
<TR STYLE="vertical-align: top">
    <TD STYLE="text-align: center">21.1</TD>
    <TD STYLE="text-align: center">&nbsp;</TD>
    <TD>Subsidiaries of the Company (2)</TD></TR>
<TR STYLE="vertical-align: top">
    <TD STYLE="text-align: center">23.1</TD>
    <TD STYLE="text-align: center">&nbsp;</TD>
    <TD>Consent of Daszkal Bolton LLP</TD></TR>
<TR STYLE="vertical-align: top">
    <TD STYLE="text-align: center">99.1</TD>
    <TD STYLE="text-align: center">&nbsp;</TD>
    <TD>Condensed Unaudited Financial Statements of Grandparents.com for the nine months ended September 30, 2011 and 2010</TD></TR>
<TR STYLE="vertical-align: top">
    <TD STYLE="text-align: center">99.2</TD>
    <TD STYLE="text-align: center">&nbsp;</TD>
    <TD>Audited Financial Statements of Grandparents.com for the years ended December 31, 2010 and 2009</TD></TR>
<TR STYLE="vertical-align: top">
    <TD STYLE="text-align: center">99.3</TD>
    <TD STYLE="text-align: center">&nbsp;</TD>
    <TD>Unaudited Pro Forma Financial Information of the Company</TD></TR>
</TABLE>
<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0">&nbsp;</P>

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<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0">(1) Incorporated by reference to Exhibit 14.1 to the Company&rsquo;s
Annual Report on Form 10-K for the fiscal year ended June 30, 2011, filed on September 27, 2011.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0">(2) Incorporated by reference to Exhibit 21.1 to the Company&rsquo;s
Annual Report on Form 10-K for the fiscal year ended June 30, 2011, filed on September 27, 2011.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0">&nbsp;</P>

<P STYLE="font: bold 10pt Times New Roman, Times, Serif; margin: 0; text-align: center">SIGNATURES</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0">Pursuant to the requirements of the Securities Exchange Act of 1934,
the registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0">&nbsp;</P>

<TABLE CELLSPACING="0" CELLPADDING="0" STYLE="font: 10pt Times New Roman, Times, Serif; width: 100%; border-collapse: collapse">
<TR STYLE="vertical-align: top">
    <TD>Dated: February 27, 2012</TD>
    <TD COLSPAN="2" STYLE="font-weight: bold">GRANDPARENTS.COM, INC.</TD></TR>
<TR>
    <TD STYLE="width: 50%; vertical-align: top">&nbsp;</TD>
    <TD STYLE="width: 4%">&nbsp;</TD>
    <TD STYLE="width: 46%">&nbsp;</TD></TR>
<TR>
    <TD STYLE="vertical-align: top">&nbsp;</TD>
    <TD STYLE="vertical-align: top">By:</TD>
    <TD STYLE="border-bottom: windowtext 1pt solid; vertical-align: bottom">/s/ Joseph Bernstein</TD></TR>
<TR STYLE="vertical-align: top">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>Joseph Bernstein</TD></TR>
<TR STYLE="vertical-align: top">
    <TD NOWRAP>&nbsp;</TD>
    <TD NOWRAP>&nbsp;</TD>
    <TD NOWRAP>
        <P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0">Co-Chief Executive Officer, Chief Financial Officer and</P>
        <P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0">Treasurer</P></TD></TR>
</TABLE>
<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0"></P>

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[{"type": "8-K", "sequence": "1", "filename": "v303151_8k.htm", "description": "FORM 8-K", "secsgml_size_bytes": 642680}]
{"company-data": {"conformed-name": "GRANDPARENTS.COM, INC.", "cik": "0001020475", "assigned-sic": "8731", "irs-number": "931211114", "state-of-incorporation": "DE", "fiscal-year-end": "1231"}, "filing-values": {"form-type": "8-K", "act": "34", "file-number": "000-21537", "film-number": "12642990"}, "business-address": {"street1": "589 EIGHTH AVENUE, 6TH FLOOR", "city": "NEW YORK", "state": "NY", "zip": "10018", "phone": "646-839-8800"}, "mail-address": {"street1": "589 EIGHTH AVENUE, 6TH FLOOR", "city": "NEW YORK", "state": "NY", "zip": "10018"}, "former-company": [{"former-conformed-name": "NorWesTech, Inc.", "date-changed": "20110913"}, {"former-conformed-name": "Pacific Biomarkers, Inc.", "date-changed": "20100212"}, {"former-conformed-name": "PACIFIC BIOMETRICS INC", "date-changed": "19960813"}]}
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 8-K
CURRENT REPORT
Pursuant to Section 13 or 15(d) of the
Securities Exchange Act of 1934
Date of Report (Date of earliest event reported):
February 22, 2012
Grandparents.com, Inc.
(Exact name of registrant as specified in its
charter)
Delaware
000-21537
93-1211114
(State or other jurisdiction of
(Commission File Number)
(IRS Employer Identification No.)
incorporation)
589 Eighth Avenue, 6th Floor
New York, New York
10018
(Address of principal executive offices)
(Zip Code)
Registrant's telephone number, including
area code:
646-839-8800
NorWesTech, Inc.
220 West Harrison St., Seattle, Washington
        98119
(Former name or former address, if changed since last report)
Check the appropriate box below if the Form 8-K filing is intended
to simultaneously satisfy the filing obligation of the registrant under any of the following provisions (
see
General Instruction
A.2. below):
¨
Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)
¨
Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a -12)
¨
Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d -2(b))
¨
Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e -4(c))
CAUTIONARY NOTE REGARDING FORWARD LOOKING
STATEMENTS
This Current Report on Form 8-K (this "Report") contains
forward-looking statements. The forward-looking statements are contained principally in the sections entitled "Description
of Business," "Risk Factors," and "Management's Discussion and Analysis of Financial Condition and
Results of Operations." These statements involve known and unknown risks, uncertainties and other factors which may cause
our actual results, performance or achievements to be materially different from any future results, performances or achievements
expressed or implied by the forward-looking statements. In some cases, you can identify forward-looking statements by terms such
as "anticipates," "believes," "seeks," "could," "estimates," "expects,"
"intends," "may," "plans," "will," "potential," "predicts,"
"projects," "should," "would" and similar expressions intended to identify forward-looking
statements. Forward-looking statements reflect our current views with respect to future events and are based on assumptions and
subject to risks and uncertainties. These risks and uncertainties include, but are not limited to, the factors described in the
section captioned "Risk Factors" below. Given these uncertainties, you should not place undue reliance on these forward-looking
statements.  Such statements may include, but are not limited to, information related to: anticipated operating results;
relationships with our marketing partners and members; demand for our website; financial resources and condition; changes in revenues;
changes in profitability; changes in accounting treatment; cost of sales; selling, general and administrative expenses; interest
expense; the ability to produce the liquidity or enter into agreements to acquire the capital necessary to continue our operations
and take advantage of opportunities; legal proceedings and claims.
Also, forward-looking statements represent our estimates and assumptions
only as of the date of this Report. You should read this Report and the documents that we reference and file or furnish as exhibits
to this Report completely and with the understanding that our actual future results may be materially different from what we expect.
Except as required by law, we assume no obligation to update any forward-looking statements publicly, or to update the reasons
actual results could differ materially from those anticipated in any forward-looking statements, even if new information becomes
available in the future.
EXPLANATORY NOTE
Effective on February 23, 2012, we changed our name to Grandparents.com,
Inc. and our new corporate address is 589 Eighth Avenue, 6th Floor, New York, New York and our telephone number is 646-839-8800.
Previously, our corporate name was NorWesTech, Inc.
Unless otherwise indicated or the context otherwise requires, all
references in this Report to the "Company," "we," "us," and "our" are to Grandparents.com,
Inc., formerly known as NorWesTech, Inc., a Delaware corporation. All references to "Grandparents.com" are to Grandparents.com,
LLC, a Florida limited liability company with whom we completed an asset contribution on February 23, 2012.
Item 1.01
Entry into a Material Definitive Agreement.
The Transaction
On February 23, 2012 (the "Closing Date"),
NorWesTech, Inc. (which we refer to as "Company," "we," "us" or "our")
entered into an Asset Contribution Agreement (the "Contribution Agreement") with Grandparents.com, LLC, a Florida
limited liability company (which we refer to as "Grandparents.com"). Under the terms of the Contribution
Agreement, Grandparents.com contributed substantially all of its assets, including the grandparents.com domain name, other
related domain names, trademarks and related assets, to us in exchange for our assumption of certain liabilities of
Grandparents.com and our issuance to Grandparents.com of one (1) share of our newly designated Series A Convertible Preferred
Stock, par value $0.01 per share ("Series A Convertible Preferred Stock"), and a warrant (the "GP
Warrant") to purchase shares of our common stock, par value $0.01 per share ("Common Stock"), upon the
occurrence of certain events more fully described below (the "Transaction"). Grandparents.com also assigned
certain of its contracts to us. As of the closing of the Transaction but excluding the net proceeds from the private
placement discussed below, the Company had approximately $1,540,000 in cash which remained in the Company immediately
following the Transaction.
As of the Closing Date and after giving effect to the issuance of
shares of our Series B Convertible Preferred Stock pursuant to the private placement more fully described below, the one (1) share
of Series A Convertible Preferred Stock represented approximately 65% of our issued and outstanding shares of Common Stock on
an as-converted basis of the Series A and Series B Convertible Preferred Stock. The rights and preferences of the Series A Convertible
Preferred Stock are more fully described in Item 5.03 of this Report, which such description is incorporated herein by reference.
The Contribution Agreement contains customary representations and
warranties and covenants of the parties thereto. The Contribution Agreement also contains a covenant restricting competition by
Grandparents.com and indemnification provisions by Grandparents.com for breaches of its representations and warranties and covenants
under the Contribution Agreement. In addition, the Contribution Agreement contains provisions requiring us to continue to afford
our former officers and directors immediately prior to the closing of the Transaction certain rights to exculpation and indemnification
for acts or omissions occurring prior to the Closing Date and requiring us to maintain directors' and officers' insurance
in favor of such former directors and officers.
The Contribution Agreement contains an adjustment provision pursuant
to which the number of shares for which the GP Warrant is exercisable will be adjusted from time to time to the extent the Shortfall
Amount (as defined in the Contribution Agreement) calculated as of the Closing Date changes based on a calculation of same from
time to time after the Closing Date. However, there will be no such adjustments after the third anniversary of the Closing Date.
In addition, the number of shares of Common Stock for which the GP Warrant will be exercisable, if at all, will be increased from
time to time in the event that any of the warrants to purchase an aggregate of 342,813 shares of Common Stock outstanding immediately
prior to the closing of the Transaction are exercised. The GP Warrant has an exercise price of $0.01 per share and is exercisable
for five (5) years from the Closing Date.
Other than the bridge loan described below and with respect
to the Contribution Agreement and the ancillary agreements referred to therein and the transactions contemplated thereby, there
are no material relationships between us or any of our affiliates, directors or officers, or any associate of any such director
or officer, on the one hand, and Grandparents.com, on the other hand. On December 30, 2011, we provided a $500,000 bridge loan
to Grandparents.com secured by a first priority security interest in all of Grandparents.com's assets (the "Bridge
Loan"). The purpose of the Bridge Loan was to provide loan financing and working capital to Grandparents.com in advance of
negotiation and closing of the Contribution Agreement. The Bridge Loan was governed by the terms of a 4% Senior Secured Note and
a Security Agreement and Trademark Security Agreement. Upon closing of the Transaction, we cancelled the 4% Senior Secured Note
and terminated the Security Agreement and the Trademark Security Agreement. All liens with respect to the Bridge Loan were released
in connection with the closing of the Transaction.
The foregoing descriptions of the Contribution Agreement and the
GP Warrant do not purport to be complete and are qualified in their entirety by reference to the provisions of the Contribution
Agreement and GP Warrant, copies of which are filed as Exhibits 2.1 and 4.1, respectively, to this Report and incorporated herein
by reference.
Private Placement
On the Closing Date and simultaneously with the closing of the
Transaction, the Company entered into a Securities Purchase Agreement (the "Securities Purchase Agreement") with
certain accredited investors signatory to the Securities Purchase Agreement (collectively, the "Purchasers") for
the issuance and sale in a private placement (the "Private Placement") of 3,000,000 shares of the Company's
newly designated Series B Convertible Preferred Stock, par value $0.01 per share ("Series B Convertible Preferred
Stock") for aggregate gross proceeds to the Company of $3,000,000. Certain of the Company's newly appointed
directors and executive officers and their affiliates purchased shares of Series B Convertible Preferred Stock in the Private
Placement on the same terms and conditions as other Purchasers.
1
As of the Closing Date and after giving effect to the issuance of
Series A Convertible Preferred Stock pursuant to the Transaction, the 3,000,000 shares of Series B Convertible Preferred Stock
represented approximately 15% of our issued and outstanding shares of Common Stock, on an as-converted basis of the Series A and
Series B Convertible Preferred Stock. The rights and preferences of the Series B Convertible Preferred Stock are more fully described
in Item 5.03 of this Report, which such description is incorporated herein by reference.
Pursuant to the Securities Purchase Agreement, the Purchasers may
not sell or otherwise transfer the shares of Series B Convertible Preferred Stock purchased in the Private Placement or any of
the shares of Common Stock issued upon conversion thereof for a period of one hundred twenty (120) days following the Closing Date.
The foregoing description of the Securities Purchase Agreement and
the transactions contemplated thereby does not purport to be complete and is qualified in its entirety by reference to the provisions
of the Securities Purchase Agreement, a copy of which is filed as Exhibit 10.1 to this Report and incorporated herein by reference.
Registration Rights Agreement
On the Closing Date, we entered into a Registration Rights Agreement
(the "Registration Rights Agreement") with Grandparents.com, the Purchasers and John Thomas Financial, Inc. ("JTF")
in which we agreed to file a registration statement (the "Registration Statement") with the Securities and Exchange
Commission ("SEC") to register for resale: (i) the shares of Common Stock issuable upon conversion of the Series A
Convertible Preferred Stock, (ii) the shares of Common Stock issuable upon conversion of the Series B Convertible Preferred Stock,
(iii) the shares of Common Stock issuable upon exercise of the GP Warrant, (iv) the shares of Common Stock issuable upon exercise
of a warrant to purchase 5,588,749 shares of Common Stock issued to JTF for its services as investment banking advisor to Grandparents.com
in connection with the Transaction, and (v) the shares of Common Stock issuable upon exercise of a warrant to purchase 1,289,711
shares of Common Stock issued to JTF for its services as placement agent in the Private Placement. Pursuant to the Registration
Rights Agreement, we agreed to file the Registration Statement as soon as practicable following the Closing Date but in no event
later than forty five (45) calendar days following the conversion of the Series A Convertible Preferred Stock and Series B Convertible
Preferred Stock.
The foregoing description of the Registration Rights Agreement and
the transactions contemplated thereby does not purport to be complete and is qualified in its entirety by reference to the provisions
of the Registration Rights Agreement, a copy of which is filed as Exhibit 10.2 to this Report and incorporated herein by reference.
Lock-Up Agreements
On the Closing Date, we entered into separate lock-up agreements
(collectively, the "Lock-Up Agreements") with each of Grandparents.com and JTF prohibiting them, for a period of twelve
(12) months from the Closing Date, from transferring or otherwise disposing any equity securities of the Company beneficially owned
by them. Notwithstanding the foregoing, Grandparents.com and JTF may transfer or dispose of such equity securities to certain "permitted
transferees" (as contemplated in the Lock-Up Agreements), provided that any such permitted transferees execute a lock-up agreement
in favor of the Company on substantially similar terms as the Lock-Up Agreements.
The Lock-Up Agreements will automatically terminate upon the final
closing of an offering of Common Stock or other equity interest of the Company for the account of the Company having a price per
share of at least $2.00 and resulting in at least $25,000,000 in gross proceeds (before underwriters' discounts and selling
commissions) to the Company.
The foregoing description of the Lock-Up Agreements and the transactions
contemplated thereby does not purport to be complete and is qualified in its entirety by reference to the provisions of the Lock-Up
Agreement between the Company and Grandparents.com, a copy of which is filed as Exhibit 10.3 to this Report and incorporated herein
by reference, and the provisions of the Lock-Up Agreement between the Company and JTF, a copy of which is filed as Exhibit 10.4
to this Report and incorporated herein by reference.
Promissory Notes
Pursuant to the Contribution Agreement, on the Closing Date we entered
into unsecured promissory notes with certain of our newly appointed directors and officers with respect to certain liabilities
of Grandparents.com that we assumed in connection with the Transaction. Specifically, we entered into the following:
·
Amended and Restated Promissory Note in favor of Steven E. Leber, a Managing Director of Grandparents.com and newly appointed
director and executive officer of the Company, in the principal amount of $78,543 (the "Leber Note"). The Leber Note
reflects amounts outstanding under a promissory note previously issued by Grandparents.com to Mr. Leber and a revolving note
issued by Grandparents.com to Mr. Leber and Joseph Bernstein that we assumed in connection with the Transaction.
2
·
Amended and Restated Promissory Note in favor of Joseph Bernstein, a Managing Director of Grandparents.com and newly appointed
director and executive officer of the Company, in the principal amount of $78,543 (the "Bernstein Note"). The Bernstein Note reflects amounts outstanding under a promissory note previously
issued by Grandparents.com to Mr. Bernstein and a revolving note issued by Grandparents.com to Messrs. Leber and Bernstein that
we assumed in connection with the Transaction.
·
Amended and Restated Promissory Note in favor of Meadows Capital, LLC ("Meadows"), an entity controlled by Dr.
Robert Cohen, a Managing Director of Grandparents.com and newly appointed director of the Company, in the principal amount of $308,914
(the "Meadows Note"). The Meadows Note reflects amounts outstanding under promissory notes previously issued
by Grandparents.com to Meadows that we assumed in connection with the Transaction.
·
Promissory Note in favor of Leber-Bernstein Group, LLC, an entity controlled by Messrs. Leber and Bernstein ("LBG"),
in the principal amount of $612,500
(the "LBG Note"). The LBG Note reflects the amount of accrued but unpaid
management fees of Grandparents.com payable to LBG that we assumed in connection with the Transaction.
The Leber Note, the Bernstein Note, the Meadows Note and the LBG
Note are collectively referred to herein as the "Promissory Notes." The Promissory Notes accrue interest at the rate
of 5% per annum and mature upon the earlier of (i) the Company having EBITDA of at least $2,500,000 as reflected
on its quarterly or annual financial statements filed with the SEC, but in no event earlier than April 1, 2013, or (ii) the Company
closing a financing with gross proceeds to the Company of at least $10 million. Payment of the Promissory Notes is guaranteed by
Grandparents.com. In addition, payment of the Meadows Note is guaranteed by Messrs. Leber and Bernstein. The Leber Note, Bernstein
Note and LBG Note are subordinate in right of payment to the Meadows Note and rank pari passu with each other. The Meadows Note
is secured by a first priority security interest in the assets of Grandparents.com.
The foregoing descriptions of the Promissory Notes do not purport
to be complete and are qualified in their entireties by reference to the provisions of such Promissory Notes, copies of which are
filed as Exhibits 10.8, 10.9, 10.10 and 10.11 to this Report and incorporated herein by reference.
John Thomas Financial Warrants
The Company issued to John Thomas Financial, Inc. ("JTF"),
as partial compensation for its advisory services to Grandparents.com in connection with the Transaction, a warrant to purchase
5,588,749 shares of Common Stock (the "Advisory Warrant") and, as partial compensation for its services as the Company's
placement agent in connection with the Private Placement, a warrant to purchase 1,289,711 shares of Common Stock (the "Placement
Agent Warrant"). The Advisory Warrant and Placement Agent Warrant each have a term of five (5) years and an exercise price
of $0.23261 per share.
The foregoing descriptions of the Advisory Warrant and Placement
Agent Warrant do not purport to be complete and are qualified in their entireties by reference to the provisions of the Advisory
Warrant and Placement Agent Warrant, copies of which are filed as Exhibits 4.2 and 4.3 to this Report and incorporated herein by
reference.
Item 1.02
Termination of Material Definitive Agreement.
On the Closing Date and upon the closing of the Transaction, the
4% Senior Secured Note was cancelled and the Security Agreement and Trademark Security Agreement were terminated. The disclosure
in Item 1.01 of this Report regarding the Bridge Loan is incorporated herein by reference in its entirety.
Item 2.01
Completion of Acquisition or Disposition of Assets.
The disclosure in Item 1.01 of this Report regarding the Transaction
is incorporated herein by reference in its entirety.
We were a "shell company" (as defined in Rule 12b-2
under the Securities Exchange Act of 1934, as amended (the "Exchange Act")) immediately before the closing of the Transaction.
Accordingly, pursuant to Item 2.01(f) of Form 8-K, we are providing below the information that we would be required to disclose
on Form 10 under the Exchange Act, if we were to file such form, reflecting our Common Stock, which is the only class of our securities
subject to the reporting requirements of Section 13 or Section 15(d) of the Exchange Act.
The information provided below relates to the Company and its securities
upon consummation of the Transaction, except that information relating to our new business and operations for periods prior to
the Transaction relates to Grandparents.com and its predecessors. Accordingly, references in this Item 2.01 to "we,"
"us," "our" or "the Company" with respect to our new business for periods prior to the Transaction
refer to Grandparents.com and its predecessors.
3
DESCRIPTION OF BUSINESS
General
Our website, www.grandparents.com, is a family-oriented social media
website with a core mission of enhancing relationships between the generations and enriching the lives of grandparents by providing
tools to foster connections among grandparents, parents and grandchildren. We primarily target the 70 million grandparents in
the U.S., but we also target the 50 million "boomers" and seniors that are not grandparents. We believe that our website
is one of the leading online communities for our market and that our website is the premier social media platform targeting active,
involved grandparents.
Historical Information
We were incorporated under the laws of Delaware in May 1996. Prior
to the sale of substantially all of our assets to Emerald Star Holdings, LLC ("Emerald Star") on August 31, 2011, as
more fully described below, we were formerly a provider of specialty reference laboratory services to the pharmaceutical, biotechnology,
and diagnostics industries. Coupled with our specialty testing, we had central laboratory capability and provided full-service
central laboratory support for multi-center clinical trials, including routine safety lab tests. We also performed clinical biomarker
services for novel biomarkers, as well as custom assay services for our pharmaceutical and biotechnology clients.
On August 31, 2011 we sold all of our former business and
operating assets to Emerald Star and Emerald Star assumed substantially all of the liabilities related to such assets and our
former business. These liabilities included our accounts payable, obligations under our leases and contracts, tax
liabilities, the remaining obligations under our $4 million secured loan, and all employee-related liabilities. In addition,
upon closing of the asset sale, all of our employees were terminated and were hired as employees of Emerald Star. In
connection with the closing, we changed our corporate name to NorWesTech, Inc.
From September 1, 2011 until the Closing Date, we had no active
operations and our assets primarily consisted of the net cash proceeds we received from the sale of our former business and certain
dormant technology and intellectual property held by our subsidiaries. During this time, our primary focus was to seek an acceptable
operating company with which to complete a business combination.
On December 30, 2011, we entered into a non-binding letter of intent
with Grandparents.com regarding a proposed transaction. In connection with the non-binding letter of intent, we provided a $500,000
Bridge Loan to Grandparents.com secured by a first priority security interest in all of the assets of Grandparents.com, which was
assumed by us pursuant to the Transaction and then cancelled.
On February 23, 2012, we entered into the Asset Contribution Agreement
with Grandparents.com and consummated the Transaction pursuant to which Grandparents.com contributed substantially all of its assets
to us in exchange for our assumption of certain liabilities of Grandparents.com and our issuance to Grandparents.com of one (1)
share of our newly designated Series A Convertible Preferred Stock, which as of the Closing Date represented approximately 65%
of our issued and outstanding shares of Common Stock, on an as-converted basis of the Series A and Series B Convertible Preferred
Stock, and the GP Warrant. In addition, our former directors and officers resigned upon the closing of the Transaction and the
designees of Grandparents.com were appointed to fill the vacancies created by such resignations. As a result of the Transaction,
we now own and operate the www.grandparents.com website and own all of the related trademarks and intellectual property.
Immediately
following the Transaction, GP MergeCo, Inc., a wholly owned subsidiary of the Company, was merged with and into the Company and
in connection with the merger we changed our name to Grandparents.com, Inc. In connection with the closing of the Transaction,
we changed our corporate address to 589 Eighth Avenue, 6th Floor, New York, New York and our telephone number to 646-839-8800.
Grandparents.com was formed as a Florida limited liability company
on April 20, 2010, under the name of "Grandparents Acquisition Company, LLC" for the purpose of acquiring the grandparents.com
domain name, trademarks and related business assets from GPOC Holdings, LLC ("GPOC"). Pursuant to an Asset Purchase
Agreement by and between Grandparents.com and GPOC (the "2010 Purchase Agreement"), effective May 2010, Grandparents.com
acquired substantially all of the assets and assumed certain liabilities of GPOC in exchange for the issuance of 3,000,000 Class
A Units of Grandparents.com to GPOC, then representing a 30% ownership in Grandparents.com (the "2010 Purchase Transaction").
In connection with the 2010 Purchase Agreement, the managing members of Grandparents.com received a 68% ownership interest in Grandparents.com
in exchange for the payment by them of transaction costs. In addition, in connection with the 2010 Purchase Agreement, a member
of GPOC contributed $250,000 in cash in exchange for a 2% ownership interest in Grandparents.com.
On February 23, 2012 and simultaneously with the closing of the
Transaction, we completed the Private Placement of 3,000,000 shares of our newly designated Series B Convertible Preferred Stock
for aggregate gross proceeds to the Company of $3,000,000.
4
As of the Closing Date, we do not have a sufficient number
of authorized shares of Common Stock available for issuance upon the conversion of the Series A and Series B Preferred Stock
and other securities exercisable for shares of our Common Stock. As a result, we intend to file an amendment to our Second
Amended and Restated Certificate of Incorporation, as amended (the "Certificate of Incorporation"), to increase the
authorized number of shares of Common Stock to 150,000,000 shares (the "Amendment"). On
the Closing Date and immediately following the closings of the Transaction and Private Placement, our newly appointed Board of
Directors approved the Amendment and Grandparents.com, which then owned approximately 65% of the voting control of the Company,
approved, by written consent, the Amendment.
Our Market
Grandparents are one of the largest groups in the U.S. and are growing
exponentially. In 2011, the number of grandparents in the U.S. increased at more than double the rate of increase of the overall
population. Studies show that by 2020 there will be 80 million grandparents in the U.S., with one in every three adults being a
grandparent. Grandparents control approximately 50% of the nation's wealth and are one of the most powerful drivers of the
U.S. economy. In 2010, grandparents purchased $2 trillion of goods and services. Along with boomers and seniors, the age 50+ markets
include 120 million people who control 75% of the economy.
Our Website
Our website offers advice, recipes, travel tips and recommended
activities for grandparents, boomers and seniors. Members of our website have access to a range of features including groups, discussions,
blogs, photo sharing and video chat applications. Members also have access to discounts and other benefits offered through our
Grandparents.com Benefits Club. We also distribute a biweekly electronic newsletter that has attracted over 400,000 subscribers.
We also maintain a social network with dozens of groups and thousands of participants. In 2010, we had over 10 million
unique visitors to our website and Examiner.com ranked our website second among commercial websites serving the age 50+ demographic
markets. In January 2011, we launched the Grandparents.com Benefits Club through which our marketing partners offer
discounts and other benefits to our members on all a variety of consumer products and services. In the fourth quarter of 2011, we launched the Grandparents.com Online Book Shop which features over one
million book titles, including e-books, and approximately 400,000 CD/DVD's. We also have a Grandparents.com Jewelry Store
and Toy Shop.
Our website was initially launched in 2007 and was operated until
May 2010 by Grandparents.com's predecessor. Although Grandparents.com's predecessor spent great effort in developing
content and in researching the grandparent market, its focus on selling advertisements as its sole revenue stream could not sustain
the business. Since May 2010, Grandparents.com has focused on redesigning the website, attracting new members and developing new
revenue streams.
We are now focused on creating multiple revenue streams driven primarily
by the Grandparents.com Benefits Club.
We expect to continue to nurture the
vertical grandparent-parent-grandchild niche on which the website was founded, however we believe substantial opportunity exists
to partner with marketing and commercial sponsors who wish to engage directly with our market through the Grandparents.com Benefits
Club
. We believe that our new focus will attract more visitors which we believe will in turn attract
more marketing and commercial sponsors which we expect will result in multiple new revenue streams.
As of December 31, 2011, we had approximately 400,000 email
newsletter subscribers. Subscribers to our newsletter do not enjoy the same benefits as members of our website. We are
offering free lifetime memberships to those subscribers. Our
growth strategy is also based, in
part, on an aggressive membership drive and celebrity endorsements that we hope to attract. Through our growth strategy, we
hope to increase our membership base to one million lifetime members by the end of 2012 and achieve over 20 million members
within the next ten years. To reach our goal for 2012, we intend to give away one million free lifetime memberships through
December 2012.
In 2010, our
website
averaged approximately 800,000 unique monthly visitors (an aggregate of approximately 10 million in 2010).
However, the
average of unique monthly visitors decreased in 2011 to approximately 500,000. In 2011, Grandparents.com significantly decreased
the marketing spend of its predecessor, which Grandparents.com's management believed did not result in meaningful visits
to its website. Instead, Grandparents.com focused in 2011 on obtaining an audience that was more engaged in the website. Under
that new strategy, Grandparents.com believes it received more meaningful page views per visit than its predecessor.
Website Redesign
We are redesigning our website in an effort to attract a substantial
number of new members within the next year.
We
anticipate launching our redesigned website on
Grandparents Day, September 9, 2012. Until the launch of the redesigned website, our website will remain operational in its current
format. Our redesigned website will focus on the four actions we encourage members to take as they interact with our offerings:
Learn, Discuss, Share, and Save
.
5
·
Learn
will encompass all of our editorial content, including feature articles, columns, recipes, activity ideas,
health and financial advice. Content will be "pushed," or broadcast, beyond our website through Facebook, Twitter,
and our syndication partners to attract more visitors to our website. Our current syndication partnerships include AOL, Huffington
Post, Tribune, Meredith, Manhattan Media, and Yahoo Shine. All such partnerships are content swap based.
·
Discuss
will include our "Groups" community and user comments to articles posted on our website.
In Groups, thousands of users discuss important issues such as family conflict, grandparent rights, health and shared interests
such as religion, cooking, and special-needs grandchildren. We believe the redesigned website will improve this functionality by
allowing users to comment on articles using their Facebook accounts. Tying a user's membership login to that member's
Facebook account will enable us to simultaneously distribute our content on that user's Facebook page, which we believe will
attract the attention of the user's Facebook friends, and eventually drive more visitors to our website. Popular Facebook
comments and most-active group discussions will be promoted throughout our website which we believe will drive more people into
discussions and further encourage engagement within our user community.
·
Share
will allow users to share photos and other mementos on "Brag Boards." Built-in social-media
integration will make it simple for users to extend their "Shares" to their outside networks.
·
Save
will
incorporate the Grandparents.com Benefits Club, Book Shop, Jewelry Store, Toy Store, Image
                                                                                                               Store and other initiatives, including discounts and cash rebates on products. We intend to expand the reach of the
                                                                                                               Grandparents.com Benefits Club by syndicating membership through other websites.
Grandparents.com Benefits Club
The Grandparents.com Benefits Club offers discounts and other benefits
to our members on a variety of consumer products and services including insurance, financial and other products and services provided
by our marketing partners. Marketing partners are asked to provide deals on their products or services that are better than they
otherwise provide on the Internet. We expect that the Benefits Club will eventually provide discounts on a variety of insurance
products (life, health, disability, property, casualty, auto, travel) and financial products (annuities, personal investments,
mutual funds, mortgages, reverse mortgages, retirement plans), travel (safaris, bike tours, cruises, hotels, car rentals), entertainment,
dining, and online shopping (jewelry, toys, apparel, gifts, etc.). In order to initially attract marketing partners to our Benefits
Club, we deferred executing revenue sharing agreements with our marketing partners. This strategy enabled Grandparents.com to engage
over 250 marketing partners as of December 31, 2011 with whom we maintain a direct relationship.
We offer our marketing partners exposure for their deals and giveaways
on our website, our newsletter, on Facebook and through Twitter. The newsletter is sent twice-weekly each Tuesday and Thursday
to our approximately 400,000 subscribers. Our Facebook promotions are viewable daily by our approximately 17,000 fans. Our daily
tweets are viewable by our approximately 4,500 followers. Additional website "real estate" is reserved for deals and
giveaway promotions on our home page as well as on the site-wide right rail promotional space. To maintain a more regular flow
of repeat traffic to the Benefits Club area, we promote products and services that members can purchase more often (books, gifts,
jewelry, toys, apparel, vitamins, eyewear, flowers, and more). We also promote travel partners (hotels, cruise ships, car rentals),
entertainment opportunities (theaters, circuses, and amusement parks) and education services (for both adults and children).
The Benefits Club business model is similar to that of AARP Services,
Inc., a marketing arm of AARP. AARP is the largest membership organization in the U.S., and its affiliates serve approximately
40 million members with discounts on insurance, financial, travel, health and other products and services. According to AARP, AARP
Services, Inc. and its affiliates generated more than $10 billion dollars in 2010 in sales for its marketing partners, including
United Healthcare, New York Life, The Hartford, Aetna, Genworth Financial, MetLife, JPMorganChase and Charles Schwab, and received
approximately $1 billion dollars in 2010 from various sources, including approximately $680 million in commercial royalties and
approximately $247 million in annual membership fees. According to AARP, these figures represent in excess of $250 per member per
year in gross revenues generated by AARP for its marketing partners and approximately $17 per member in commercial royalties. Currently,
AARP charges a fee of $16 for an annual membership, including a spouse or significant other. We are not a social welfare advocate
or lobbyist organization and do not take a position on political or social issues.
We seek to apply the AARP business model to our business by engaging
marketing partners, particularly in the insurance and financial industries, in a strategic relationship in which our website will
become a co-brand for marketing insurance and financial products. The lines we intend to market will include traditional insurance
products – health, life, personal lines and specialty, and over time, we plan to also market family-oriented insurance products,
with family discounts.
6
We believe that AARP's exclusivity (only a handful of insurance
companies are permitted to offer their product lines to AARP's 40 million members) creates an opportunity for us to develop
relationships with insurance and financial service companies that do not do business with AARP and that are interested in increasing
their market share in the age 50+ market by associating with us. We believe we can become a meaningful marketing force in the age
50+ markets by teaming with insurance companies and financial institutions who are not currently exclusive sponsors at AARP. We
anticipate, in the same manner that AARP's exclusive marketing partners work with AARP, that our sponsors will market their
co-branded insurance products in a campaign designed to drive prospective buyers in the age 50+ markets to conversion by becoming
members of our website.
We have entered into initial discussions with a select number of
national insurance companies focused on the lines we plan to make available to our members – primarily health, life, long
term care, auto and home. We have also entered into initial discussions with a major financial services company to offer annuity,
mutual fund, retirement planning and other financial products and services through us. We have not entered into any formal agreements
with any insurance or financial services companies as of the Closing Date.
Grandparents.com Online Book Shop
In the fourth quarter of 2011, Grandparents.com launched the Grandparents.com
Online Book Shop. The Book Shop features over one million book titles, including e-books, and approximately 400,000 CD/DVD's.
All order fulfillment is done by Baker-Taylor Ltd., the largest independent wholesale book distributor in the U.S., under our name.
We receive a commission of 3.5% of all sales. We expect the Book Shop to compete with major online booksellers.
Our Revenue Streams
Historically, Grandparents.com generated revenue through the sale
of advertisements on its website. We intend to expand our revenue streams to include royalties on offerings by our insurance, financial
services and other marketing partners in the Grandparents.com Benefits Club, commissions on book sales in the Grandparents.com
Online Book Shop and, in the future, from membership fees.
Benefits Club
We have not yet generated any revenue through the Benefits Club.
In 2011, in order to accelerate the buildup of marketing partners in the Benefits Club, we accepted pilot programs and waived revenue
sharing arrangements for our partners. Through this pilot program, we attracted more than 250 marketing partners as of December
31, 2011. As we build our audience and membership base, we will seek to enter into revenue sharing arrangements with our marketing
partners. We expect that each revenue sharing arrangement will be negotiated based on the category of the product and service and
the accompanying discount or benefits offered to our members. There can be no guarantee that we will be able to enter into revenue
sharing arrangements with our marketing partners or that, if we are, the terms of such arrangements will be on terms advantageous
to us. To the extent we are able to enter into revenue sharing agreements with our marketing partners, revenues,
if any, from such arrangements may be limited in the near term.
We intend to increase traffic to the Benefits Club through affiliate
marketing partnerships. These newly-created partnerships will be incentivized to promote the Benefits Club on their own websites
by a revenue share. We expect that partner sites generating sales through their own traffic-driving efforts will be entitled to
receive a to-be-determined percentage of the revenues earned from such sales.
On-Site Advertising
We will continue to actively pursue advertising from companies that
target the 50+ market. Advertisers on our website have included AARP, Abbott Labs, Aetna, American Greetings, American Express,
Ancestry.com, ASPCA, AstraZeneca Global, Bank of America, Blue Cross Blue Shield, Chase, Boston Market, Chrysler, Colonial Williamsburg,
Disney, Dodge, Fidelity, Hallmark, Hasbro, Johnson & Johnson, Kellogg's, Leapfrog, Lincoln Financial Group, Procter &
Gamble, Penguin Publishing, Pepsi, Playskool, Princess Cruises, Ralph Lauren, Random House, Royal Caribbean International, Sesame
Street, Texas Tourism, United Healthcare, and Wyndham Hotels & Resorts. In the past two years, Grandparents.com's largest
advertisers have been Goldman Sachs and Abbott Labs. During 2011, Grandparents.com's average CPM (cost per thousand views)
rate for all of its advertisements was $3.72.
Membership Fees
We intend to give away one million lifetime memberships through 2012.
Promotional codes to receive free lifetime memberships will be made available to our newsletter subscribers and certain groups
and organizations and through marketing partnerships. In the future, we intend to charge new members an annual fee for membership,
which would include up to four household and extended family members.
Online Book Shop
We receive a commission of 3.5% of all sales in the Book Shop. We
expect the Book Shop to compete with major online booksellers.
7
Content Syndication
We syndicate content from time to time to other major sites or portals
that reach our demographic and we are working to expand this initiative in 2012. We believe this strategy broadens the reach of
our website and establishes our website as the authority on "grandparenting." Through syndication, we believe our website
gains attention as a place for content on all things that relate to grandparents. We seek to convert first-time visitors to newsletter
subscribers and members of our website. Some of Grandparents.com's recent content-exchange relationships have been with AOL/Huffington
Post, Tribune newspapers, and Yahoo.
Marketing Strategy
Viral marketing and celebrity endorsements will be the foundation
for growing our membership base over the next several years. Growth of our membership base is dependent on our ability to solicit
significant marketing dollars from our marketing partners and to effectively allocate marketing efforts on television, print, Internet
and other media, and to attract celebrities. Off site advertising and public relations is important to drive prospective members
to our website. In 2012, we will be giving free memberships to up to one million members. Thereafter, we intend to provide members
with incentives and benefits for signups.
In order to pursue accelerated membership growth, and concomitantly
the development of
our
royalty revenue base from our marketing partners,
we
believe we
must engage in a broad public relations and viral marketing campaign in 2012, and continue the program going
forward.
In addition to our website, we
plan to market insurance plans through the following channels, with the marketing budget allocations and placements to be agreed
upon with each insurance partner's marketing agency:
1. Television and radio
2. Internet - Age 50+ sites and various sites of particular
interest to this segment
3. Insurance agencies and independent agents nationwide
4. Print - Newspapers, magazines
5. Direct Mail - Subscriber and acquired lists
6. Groups - Unions, corporations, associations, membership
groups
Social Media Marketing
Social media activity is a key component in driving visitors to
our website and increasing our membership base.
Facebook
·
Facebook is used to attract visitors to our website and new members of the Benefits Club. Each Facebook user who clicks
                                                                                                               on our website advertisement and that is not recognized as "friend" on Facebook will be asked to
                                                                                                               "Like" our website on Facebook and receive a free trial membership to the Benefits Club. Once a person
                                                                                                               "Likes" our website on Facebook, he or she receives a new deal and giveaway promotion each day in their
                                                                                                               newsfeed.
·
Content from our website and from around the Internet is posted on our Facebook Wall multiple times a day and Facebook reports
that our fans are highly engaged with the posts on our Facebook Wall, meaning they click on, comment on and repost them consistently
each day. We use our Facebook page to cross-promote the products and services of our marketing partners in exchange for their help
driving traffic to the Benefits Club by their own means.
Since Grandparents.com began marketing the Benefits Club on Facebook
on June 1, 2011, its engagement there has
grown from:
·
4,400 average monthly active users before June 2011 to more than 12,000 average monthly active users as of December 2011 –
a 173% increase.
·
12,640 daily post views before June 2011 to approximately 27,500 daily post views as of December 31, 2011 – an over 200%
increase.
Further:
·
We have a 10.6% engagement rate (the number of people interacting with our Facebook page over number of total page "Likes").
By comparison, AARP's engagement rate hovers around 5%, according to the same metrics posted by Facebook.
·
We post at least four times a day during the week and at least once a day during the weekends.
8
·
Our 11am-to-noon slot (the most popular reading time for our audience on Facebook) is always dedicated to an article or Benefits
Club deal.
Twitter
·
We use our Twitter feed as a business-to-business platform, meaning that we "tweet" specifically to the brands
we want to partner with for the Benefits Club. We believe our engagement via Twitter is often more effective in getting the attention
of a potential marketing partner than through traditional channels.
·
We tweet all of our giveaways daily and tweet about our content twice a day.
Since we began actively using Twitter to form marketing partnerships
on July 11, 2011, we have achieved a 1.252% increase in followers from
326 to approximately 4,500 followers.
Further:
·
Twitter reports that each of our tweets garners an average of more than 2,000 impressions.
·
Twitter reports that our presence ranks within the top 1% of all users.
·
Tweet content includes Benefits Club deals and giveaways, recipes, and articles.
YouTube
·
Total upload views: 4,677,765 since December 31, 2009.
·
Our website became an official YouTube partner as of December 31, 2011.
·
We intend to implement a bi-monthly YouTube video submission contest with each contest having a new theme. The best video clips
submitted will be edited into a compilation video which we will promote on our website and our other social-media outlets.
Winners will receive various prizes for each contest.
Grandparents.com and Satellite Traffic Statistics
As of December 31, 2011, Grandparents.com increased the total number
of people who come in contact directly with our website or hear about our website through their friends by 50% via social media.
·
Our homepage had 506,000 average unique visitors per month in 2011
·
Our Facebook page had 27,500 average daily post views as of December 31, 2011.
·
Our Twitter account had 4,405 followers on December 31, 2011.
·
Our YouTube channel had more than 4.9 million video views as of December 31, 2011.
Sales, Marketing and Customer Support
For advertising sales, direct and outsourced sales teams focus on
advertising agencies, large brand advertisers and performance advertisers that want to target the age 50+ market. We use our marketing
solutions to launch and manage their advertising campaigns.
We have been able to build our brand with relatively low marketing
costs. The quality of the products and solutions we offer is our most effective marketing tool, and word-of-mouth momentum continues
to drive member awareness and trust.
Technology Infrastructure
Our website's technology platform is designed to create an
engaging experience for members of our website. We are working to scale the site in order to deploy it for the surge in membership
we anticipate will occur as we announce new social media products and services and new business relationships and strategic alliances.
We intend to employ technological innovations whenever possible to increase efficiency and to be able to properly scale our business.
9
Our offerings rely upon and leverage the massive amounts of data
in our network. This dataset has grown exponentially, requiring scalable computing resources. We will continue to invest in building
proprietary technologies and using open sourced technologies around its data, search and solutions whenever possible.
Operations
We developed our website and related infrastructure with the goal
of maximizing the availability of our website to our members and marketing partners. Our website and related infrastructure, content
management system and data storage are hosted by, and the material data center facilities are provided by, Amazon pursuant to a
master service agreement we maintain with our web and content management system developer, Mediapolis, Inc.
Our website is hosted in the Amazon Cloud in two geographically
different Amazon server centers in Virginia. Each of these two "instances" of the website has both the content database
as well as the content management system with one version of the database used to power the site and the other as a backup. These
two copies of the database are maintained automatically such that when any data is changed on the site, the master database automatically
updates it to the back-up version. Any change to the content management system is made manually to both instances. In addition
to this fully redundant serving of the site, a complete backup of both the database and content management system are made each
evening to a server at another Amazon center in Virginia.
Intellectual Property
We protect our intellectual property rights by relying on federal,
state and common law rights, as well as contractual restrictions. We control access to our proprietary technology, in part, by
entering into confidentiality and invention assignment agreements with our employees and contractors, and confidentiality agreements
with third parties.
In addition to these contractual arrangements, we also rely on a
combination of trade secret, copyright, trademark and trade dress to protect our intellectual property. We pursue the registration
of our domain names, trademarks, and service marks in the U.S. Our registered trademarks in the U.S. include "Grandparents.com"
and the "Grandparents.com It's great to be grand" design mark, as well as others.
Circumstances outside our control could pose a threat to our intellectual
property rights. For example, effective intellectual property protection may not be available in the U.S. or other countries in
which our products and solutions are or may in the future be distributed. Also, the efforts taken to protect our proprietary rights
may not be sufficient or effective. Any significant impairment of our intellectual property rights could harm our business or its
ability to compete. Also, protecting such intellectual property rights may be costly and time-consuming. Any unauthorized disclosure
or use of our intellectual property could make it more expensive to do business and harm operating results.
Companies in the Internet, social media technology and other industries
may own large numbers of patents, copyrights, and trademarks and may frequently request license agreements, threaten litigation,
or file suit against other companies based on allegations of infringement or other violations of intellectual property rights.
There are no such claims against us and none are threatened as of the date hereof.
Competition
We face significant competition in all aspects of our business.
Specifically, we compete for members, advertisers and partners. The bases upon which we compete differ among these areas as discussed
below.
·
Members.
We have modeled our Benefits Club in part after our principal competitor, the AARP member benefits program.
AARP has approximately 40 million members and greater financial and other resources than we have. There are other sites seeking
to grow in the age 50+ markets, including the 60 Plus Association, American Seniors Association, and The Association of Mature
American Citizens. Other
companies such as Facebook, Google, Microsoft and Twitter could develop competing offerings. These companies also could partner
with third parties to offer products and services that could compete with the products and services we offer. We intend to compete
primarily on the basis of the value and relevance of the products for our members, ease of use and availability of our website.
·
Advertising and Marketing.
With respect to advertising, we compete with online and offline outlets that generate revenue
from advertisers and marketers. In this area, we compete to attract and retain advertisers by giving them access to the most relevant
and targeted audiences for their products or services.
10
Other companies could develop
more compelling offerings that compete with our website and adversely impact our ability to obtain and retain our members.
Additionally, companies that currently focus primarily on social networking could expand into our space or users of social networks
could choose to use, or increase the use of, those networks.
We believe that we have competitive strengths that position us favorably
in our markets, particularly our URL, grandparents.com. However, our industry is evolving rapidly and is becoming increasingly
competitive. Larger and more established companies may focus on the age 50+ market and could directly compete with us.
Government Regulation
We are subject to a number of foreign and domestic laws and regulations
that affect companies conducting business on the Internet, many of which are still evolving and could be interpreted in ways that
could harm our business. In the U.S. and abroad, laws relating to the liability of providers of online services for activities
of their users and other third parties are currently being tested by a number of claims, including actions based on invasion of
privacy and other torts, unfair competition, copyright and trademark infringement, and other theories based on the nature and content
of the materials searched, the ads posted, or the content provided by users. Any court ruling or other governmental action that
imposes liability on providers of online services for the activities of their users and other third parties could harm our business.
In addition, rising concern about the use of social networking technologies for illegal conduct, such as the unauthorized dissemination
of national security information, money laundering or supporting terrorist activities may in the future produce legislation or
other governmental action that could require changes to our products or services, restrict or impose additional costs upon the
conduct of our business or cause users to abandon material aspects of our service.
In the area of information security and data protection, many states
have passed laws requiring notification to users when there is a security breach for personal data, such as the 2002 amendment
to California's Information Practices Act, or requiring the adoption of minimum information security standards that are often
vaguely defined and difficult to practically implement. The costs of compliance with these laws may increase in the future as a
result of changes in interpretation. Furthermore, any failure on our part to comply with these laws may subject us to significant
liabilities.
We are also subject to federal, state and foreign laws
regarding privacy and protection of member data. We post our privacy policy and user agreement on our website which
describe practices concerning the use, transmission and disclosure of member data. Any failure by us to comply with our
posted privacy policy or privacy related laws and regulations could result in proceedings against us by governmental
authorities or others, which could harm our business. In addition, the interpretation of data protection laws, and their
application to the Internet is unclear and in a state of flux. There is a risk that these laws may be interpreted and applied
in conflicting ways from state to state, country to country, or region to region, and in a manner that is not consistent with
our data protection practices. Complying with these varying international requirements could cause us to incur additional
costs and change our business practices. Further, any failure by us to adequately protect our members' privacy and data
could result in a loss of member confidence in our services and ultimately in a loss of members, which could
adversely affect our business.
In addition, because our services are accessible worldwide, certain
foreign jurisdictions may claim that we are required to comply with their laws, including jurisdictions
where we have no local entity, employees or infrastructure.
Employees
We believe we have assembled a talented group of employees and we
strive to hire the best employees to solve very significant challenges. As of the Closing Date, we had fifteen (15) employees and
a number of interns. We intend to increase staffing in our internal audit and financial reporting functions to comply with our
increased public company reporting obligations, management functions and in other areas commensurate with the success of our marketing
programs and marketing partnerships.
RISK FACTORS
An investment in our Common Stock involves a high degree
of risk. You should carefully consider the risks described below, together with all of the other information included in this Report,
before making an investment decision. If any of the following risks actually occurs, our business, financial condition or results
of operations could suffer. In that case, the trading price of our shares of Common Stock could decline and you may lose all or
part of your investment. See "Cautionary Note Regarding Forward Looking Statements" above for a discussion of forward-looking
statements and the significance of such statements in the context of this Report.
11
Risks Related to our Business and Industry
We may encounter numerous difficulties frequently encountered
by companies in the early stage of operations.
We have a limited operating history upon which any investor may
evaluate our current business and future prospects. Any potential investor must consider the risks and difficulties frequently
encountered by early-stage companies. Historically, there has been a high failure rate among early-stage companies. Our future
performance will depend upon a number of factors, including our ability to:
·
generate revenues and implement our growth strategy;
·
aggressively counter and respond to actions by our competitors;
·
pursue new users and members of our website and maintain relationships with current users and members;
·
maintain adequate control of our expenses;
·
attract, retain and motivate qualified personnel;
·
react to users and members preferences and demands;
·
maintain regulatory compliance; and
·
generate sufficient working capital through our operations or through issuance of additional debt or equity financing, and
to continue as a going concern.
We cannot assure investors that we will successfully address any
of these factors, and our failure to do so could have a material adverse effect on our business, financial condition, results of
operations and future prospects.
We will need to attract and retain members in order to be
successful.
We must attract and retain members in order to increase
revenue and achieve profitability. We expect revenue to be generated primarily from the purchase of products and services
offered in the Grandparents.com Benefits Club, advertisements on our website and, in the future, membership fees. If we are
unable to attract and retain members, we may not be able to attract marketing and commercial sponsors to the Grandparents.com
Benefits Club or advertisers to our website. Accordingly, the revenue we generate may decrease and our operating results
will be adversely affected.
The growth of our membership base could be adversely affected by
various factors, including:
·
unwillingness of users or members to implement the products and services we offer;
·
any delays or difficulties that we may incur in completing the development and introduction of our planned products, product
enhancements or services;
·
new products or services introduced by our competitors;
·
any failure of the products and services we offer to perform as expected; or
·
any difficulty we may incur in meeting users and members requirements.
We will need to attract and retain marketing and commercial
sponsors in order to be successful.
We must attract, retain and enter into future revenue
sharing agreements with marketing and commercial sponsors in order to increase revenue and achieve profitability. If marketing
and commercial sponsors do not find our marketing and promotional services effective or do not believe that utilizing the Benefits Club provides them with increases in customers, revenue or profit, they may not make, or continue to make, offers through
the Benefits Club. We have not entered into revenue sharing agreements with any of our existing commercial and
marketing sponsors and there can be no assurance that any of our existing commercial and marketing sponsors will enter into such
revenue sharing agreements. If we are unable to attract, retain and enter into revenue sharing agreements with marketing and commercial
sponsors in numbers sufficient to grow our business, or if too many marketing and commercial sponsors are unwilling to offer products
or services through the Benefits Club or offer favorable revenue sharing terms to us, we may sell fewer products
and services through the Benefits Club and our operating results will be adversely affected.
If our redesigned website or the Grandparents.com Benefits
Club do not achieve market acceptance, our business will be materially and adversely affected.
Our success will depend upon widespread market acceptance of our
website and the products and services and any future products and services that we may offer through the Benefits
Club. There can be no assurance that the market for these services will develop or be sustained.
If products and services offered through the Grandparents.com
Benefits Club do not meet the needs and expectations of our members, our business could suffer.
Our business depends in part on products and services provided by
third parties and our reputation may be harmed by actions taken by such third parties that are outside our control. Any shortcomings
of one or more of such third parties may be attributed by our members to us, thus damaging our reputation, brand value and potentially
affecting our results of operations. In addition, negative publicity and sentiment generated as a result of fraudulent or deceptive
conduct by such third party providers could damage our reputation, reduce our ability to attract new members or retain existing
members, and diminish the value of our brand.
12
We may need additional debt or equity financing in the future.
Although we expect to be able to generate operating
revenues necessary to finance our operations, there is no certainty that such operating revenues will be sufficient.
Accordingly, we may need to obtain additional financing to operate and implement our business plan and growth strategy.
Additional financing may not be available to us or, if available, such financing may not be on terms acceptable to us. If we
obtain additional financing through the issuance of equity or convertible debt securities, it may be significantly dilutive
to our stockholders and such additional equity or convertible debt securities may have rights, preferences or privileges
senior to those of our existing securities. In addition, our ability to issue debt securities or to service any debt may also be
limited by our inability to generate consistent cash flow. If additional financing is not available on acceptable terms, we
may not be able to fund our on-going operations or any future expansion of our business, develop or enhance our products or
services, or respond effectively to competitive pressures. The inability to raise additional capital in the future may force
us to curtail future business opportunities or cease operations entirely.
We may continue to incur substantial losses and negative
operating cash flows and may not achieve or maintain positive cash
flow or profitability in the future.
We have incurred significant losses and negative operating cash
flow from inception and may continue to incur significant losses and negative operating cash flow into the future. As of September
30, 2011, we had a net loss of approximately $2,000,000 and used approximately $600,000 in cash for operating activities. In addition,
as of September 30, 2011, we had a working capital deficit of approximately $1,400,000. In order to reach our business growth objectives,
we expect to incur significant expenses for sales, marketing, product development and other operating and capital costs. As a result,
we will need to generate and grow our revenues significantly to achieve positive cash flow and profitability. We may not be successful
in generating and increasing our revenues, and we may never achieve or maintain positive cash flow or profitability. The uncertainties
regarding the commencement of adequate commercial revenues raise substantial doubt about our ability to continue as a going concern.
Our independent registered public accounting firm has expressed
doubt about our ability to continue as a going concern.
Our financial statements have been prepared under the assumption
that we will continue as a going concern. Our independent registered public accounting firm has issued a report that included an
explanatory paragraph referring to our net losses, negative cash flows from operations and working capital deficiency and expressing
substantial doubt about our ability to continue as a going concern. Our ability to continue as a going concern is dependent upon
our ability to obtain additional equity financing or other capital, attain further operating efficiencies, reduce expenditures,
and, ultimately, to generate additional revenue. Our financial statements do not include any adjustments that might result from
the outcome of this uncertainty. However, if adequate funds are not available to us when needed, and we are unable to enter into
some form of strategic relationship that will give us access to additional cash resources, we will be required to curtail our operations
which would, in turn, further raise substantial doubt about our ability to continue as a going concern.
We have a limited operating history and, therefore, we cannot
accurately project our future revenues and operating expenses.
Due to our limited operating history, we cannot accurately project
future revenues based on historical results. Our business, operating results and financial condition will be materially and adversely
affected if revenues do not meet projections, which would cause net losses in a particular fiscal period to be greater than expected.
With such a limited operating history, our past results do not provide
a meaningful basis for us to project our revenues or operating results. Our business should be considered in light of the risks,
expenses and difficulties that we have encountered to date and that we expect to continue to encounter.
We may have difficulty increasing our revenue.
Our ability to increase our revenue depends on a variety
of factors, including general market conditions, overall online usage, our ability to increase our unique visitors and page
view inventory, our ability to attract members, our ability to enter into revenue sharing agreements with our marketing
partners, our ability to attract advertisers to advertise on our website and our ability to win our share of
advertisers' total advertising budgets from other websites. While we expect to increase our revenue, there can be no
assurance that such increase will occur. If our revenue does not increase or decreases, or does not keep pace with our
operating expense, our business, results of operations and financial condition could be materially adversely affected.
13
We depend on certain key employees to operate our business.
We believe that our continued success will depend to a
significant extent upon the efforts and abilities of our senior management team, particularly: Steven E. Leber, Joseph
Bernstein, Jeffrey Mahl and Matthew Schwartz. At closing of the Transaction, we entered into one-year employment agreements
with Messrs. Leber, Bernstein, Mahl and Schwartz but we cannot guarantee that any of them will continue to provide services
to us for any particular length of time. If we lose the services of one or more of these key executives, our business could
be significantly harmed. We do not currently carry key-man life insurance.
14
We may not be able to recruit, train and retain sufficient
qualified personnel to succeed.
Our future success depends upon our ability to hire and retain
qualified personnel with experience in the sales, financial and social networking industries. As of the Closing Date, we have
fifteen (15) employees. We cannot provide assurance that we will be able to attract, train or retain enough qualified
personnel to satisfy demand or any expansion of our business and operations. Because of our limited resources, we may
experience difficulty in hiring and retaining personnel with the necessary qualifications. The failure to attract and retain
the necessary qualified personnel will have a material and adverse effect on our business, operations and financial
condition.
We may not be able to manage our growth effectively.
The rapid expansion necessary for us to fully exploit the market
window for our website requires an effective planning and management process. Rapid growth, if it occurs, will likely
place a significant strain on our managerial, operational and financial resources. To manage our growth, we must implement and
improve our operational and financial systems and expand, train and manage our employee base. There can be no assurance that our
systems, procedures or controls will be adequate to support operations or that management will be able to achieve the rapid expansion
necessary to fully exploit the market window for our website and the failure to do so would have a material adverse
effect on our business, operations and financial condition. In addition, our management team has limited experience in the social networking industry.
We may not be able to protect the security and privacy of
our members' financial and business data, which could expose us to liability.
We collect and maintain private and confidential data from our members.
This private and confidential data consists primarily of the personal and financial information of our members. We will incur significant
costs to protect against the threat of security breaches or to alleviate problems caused by any breaches that occur. We have implemented
security systems and protocols that we feel are appropriate and sufficient to protect the privacy and confidential information
of our members and we intend to continue such protocols; however, there can be no assurance that our security systems or protocols
will be sufficient to protect such private and confidential data or that our privacy policies will be deemed sufficient by our
members or that it satisfies applicable federal or state laws or regulations governing privacy, which may be in effect from time
to time. The failure to adequately protect member data or to comply with any federal or state laws or regulations relating to the
use of this data could expose us to costly litigation or administrative action.
System failure or interruption experienced by our data center,
internet service providers, online service providers or website operators may result in reduced traffic, reduced revenue and harm
to our reputation.
We depend on third-party data center and servers providers to provide
and maintain efficient and uninterrupted operation of our website for our members. Since we depend on third-party providers for
our data center and servers, any dispute with such third-party providers could materially hinder our operations and switching third-party
providers of such services may be a cumbersome process that negatively impacts the operation of our website. Our operations depend
in part on the protection of our data systems and those of third-party providers against damage from human error, natural disasters,
fire, power loss, water damage, telecommunications failure, computer viruses, terrorist acts, vandalism, sabotage, and other adverse
events. Although we utilize the services of third-party providers with both physical and procedural security systems and have put
in place certain other disaster recovery measures, including offsite storage of backup data, there is no guarantee that our Internet
access and other data operations will be uninterrupted, error-free or secure. Any sustained or repeated system failure, including
network, software or hardware failure, that causes an interruption in the availability of our website or a decrease in responsiveness
of our website could result in reduced traffic, reduced revenue and harm to our reputation, brand and relations with our members,
advertisers and marketing partners. An increase in the volume of users of our website could strain the capacity of the software
and hardware we have deployed, including server and network capacity, which could lead to slower response time or system failures,
and adversely affect the market acceptance of our website. In addition, our members will depend on Internet service providers,
online service providers and other website operators for access to our website. These providers and operators could experience
outages, delays and other difficulties due to system failures unrelated to our systems.
We may have difficulty scaling and adapting our existing
technology architecture to accommodate increased traffic and technology advances or requirements of our members.
Our future success will depend on our ability to adapt to rapidly
changing technologies, to improve the performance and reliability of our website and to adapt our website to evolving industry
standards. Rapid increases in the levels or types of use of our website could result in delays or interruptions in our service.
Widespread adoption of new Internet technologies or other technological changes could require substantial expenditures to appropriately
modify or adapt our website and infrastructure. The technology architectures utilized for our website are highly complex and may
not provide satisfactory support in the future, as usage increases and our website expands, changes and becomes more complex over
time. In the future, we may make changes to our architectures and systems, including moving to completely new architectures and
systems. Such changes may be technologically challenging to develop and implement, take time to test and deploy, cause us to incur
substantial costs or data loss, and cause users, advertisers, and partners to experience delays or interruptions in services. These
changes, delays or interruptions in our service may cause our users, advertisers and partners to become dissatisfied with our products
and service and move to competing providers of similar products and services. Further, to the extent that the number of visitors
to and members of our website increase, we will need to expand our infrastructure, including the capacity of the servers we utilize
and the sophistication of our software. This expansion is likely to be expensive and complex and require additional technical expertise.
Any difficulties experienced in adapting our architectures and infrastructure to accommodate increased traffic, store user data
and track user preferences, together with the associated costs and potential loss of traffic, could harm our operating results,
cash flows from operations and financial condition.
15
If we do not respond rapidly to technological changes or
to changes in industry standards, our products and services could become obsolete.
The market for social networking websites is likely to be characterized
by rapid technological change and frequent new product and service introductions. We may be unable to respond quickly or effectively
to these developments. We may experience difficulties with software development or marketing that could delay or prevent our development,
introduction or marketing of new features, products, services and enhancements. The introduction of new products and services by
our competitors, the market acceptance of products and services based on new or alternative technologies or the emergence of new
industry standards could render our existing or future products and services obsolete. If the standards adopted are different from
those that we have chosen to support, market acceptance of our products and services may be significantly reduced or delayed. If
our products and services become technologically obsolete, we may be unable to sell our products or services or generate meaningful
revenues.
Our business may be adversely affected by malicious applications
that interfere with, or exploit security flaws in, our products and services.
Our business may be adversely affected by malicious applications
that make changes to our users' computers and interfere with their experience with our website. These applications may attempt
to change our users' Internet experience, including hijacking queries to our website, altering or replacing search results
or otherwise interfering with our ability to connect with our users. The interference often occurs without disclosure or consent,
resulting in a negative experience that users may associate with us. These applications may be difficult or impossible to uninstall
or disable, may reinstall themselves and may circumvent other applications' efforts to block or remove them. The ability
to reach users and provide them with a superior experience is critical to our success. If our efforts to combat these malicious
applications are unsuccessful our reputation may be harmed and user traffic could decline, which would damage our business.
We may not be able to secure all rights to our intellectual
property or our rights may be subject to claims of infringement by others.
We will rely on a combination of trade secret, trademark and copyright
laws, as well as employee and third party non-disclosure agreements and other protective measures, to protect intellectual property
rights. There can be no assurance, however, that these measures will provide meaningful protection of our member list, trademarks,
service marks, copyrights, trade dress, trade secrets, proprietary technology and similar intellectual property in the event of
any unauthorized use, misappropriation or disclosure.
We may be unable to prevent third parties from acquiring and using
trademarks, trade names or domain names that are similar to, infringe upon or diminish the value of our trademarks, trade names,
service marks and other proprietary rights. We may be unable to prevent third parties from using and registering our trademarks
or trade names, or trademarks or trade names that are similar to, or diminish the value of, our trademarks or trade names in some
countries.
There can also be no assurance that others will not independently
develop similar technologies or duplicate any technology that we develop or have developed without violating our intellectual property
rights. In addition, there can be no assurance that our intellectual property rights will be held to be valid, will not be successfully
challenged or will otherwise be of value.
The protection of our intellectual property may require the expenditure
of significant financial and managerial resources. Moreover, the steps we take to protect our intellectual property may not adequately
protect our rights or prevent third parties from infringing or misappropriating our proprietary rights.
While we do not believe that our website and technologies infringe
on any intellectual property rights of third parties, there can be no assurance that a court will not find that such infringement
has occurred or that such infringement will not occur in the future. The costs of defending an intellectual property claim could
be substantial and could materially and adversely affect our operations and financial position, even if we were ultimately successful
in defending any such claims. Conversely, in order to enforce or protect our intellectual property rights, we may have to initiate
legal proceedings against third parties. These proceedings are typically expensive, take significant time and divert management's
attention from other business concerns. Further, if we do not prevail in an infringement lawsuit brought against us, we might have
to pay substantial damages, including treble damages, and we may be required to stop the infringing activity or obtain a license
to use the intellectual property of others. The cost associated with any such changes may be substantial and could materially and
adversely affect our market position, operations and financial position.
16
We may be involved in legal claims which could materially
adversely affect us.
Claims or disputes against the Company may arise in the future.
Results of legal proceedings are subject to significant uncertainty and, regardless of the merit of the claims, litigation may
be expensive, time-consuming, disruptive to our operations and distracting to management.
Although our management considers the likelihood of such an outcome
to be remote, if one or more of these legal matters were resolved against us for amounts in excess of management's expectations,
our results of operations could be materially adversely affected. Further, such outcome could result in significant compensatory,
punitive or trebled monetary damages, disgorgement of revenue or profits, remedial corporate measures or injunctive relief against
us, all of which could have a material impact on our business, intellectual property, results of operations or cause us financial
harm.
Our market is new and still emerging.
The market for social media websites as well as product and service
marketing websites, such as Facebook or Twitter is new and evolving. We believe that there is a need for intensive marketing and
sales efforts to inform prospective members about the uses and benefits of the products and services we offer and to develop the
overall market. Accordingly, there can be no assurance that these efforts will be successful and that a viable market for our website
or the products and services we offer will emerge or be sustainable.
There are no significant barriers to entry in our market.
While we will take reasonable steps to protect our intellectual
property, retain our employees and increase our position in the market, there are few barriers to entry to creating a website that
directly or indirectly competes with us and our business. If one or more large on-line business, such as LinkedIn, Facebook, Google
or Yahoo, decides to compete directly or indirectly with us, it may result in lower market share and reduce our financial returns.
Our industry is competitive and competition could reduce
our market share and adversely affect our growth and financial performance.
There are many companies in the social networking industry, such
as Facebook, Twitter and Google. In addition, we compete with companies that specifically target the age 50+ market, in particular
AARP. These competitors compete with us for visitor traffic, members, advertising dollars and partners, including marketing and
commercial sponsors. Competition is intense and expected to increase in the future. Many of our competitors may have certain competitive
advantages over us in terms of:
·
substantially greater financial and technical resources;
·
more extensive and well developed marketing and sales networks;
·
better access to information;
·
greater global brand recognition among consumers; and
·
larger user and member bases.
We consider AARP our primary competitor. In 2010, AARP was ranked
first by Examiner.com among websites serving the age 50+ demographic markets. AARP is the largest membership organization in the
U.S. and its affiliates serve approximately 40 million members. AARP has significantly greater financial, technical and human resources
than us and has an established market for its services and products. These and other factors allow AARP to engage in more extensive
research and development efforts, undertake more far-reaching marketing campaigns, adopt more aggressive pricing policies, attract
additional partners or enter into arrangements with partners on terms more favorable than us, which may allow them to retain and
build an even larger membership base or generate revenue from their members and partners more effectively than we do. Other competitors
may enjoy similar advantages and benefits.
It is also possible that new competitors may emerge and acquire
significant market share. Further, increased competition could result in price reductions, reduced margins or loss of market share,
any of which could adversely affect our business and operations. Due to these and other factors, we may not be able to compete
successfully in our market and the failure to do so could have a material adverse effect on the viability of our business.
17
We are subject to U.S. and foreign government regulations
on Internet services which could subject us to claims and remedies including monetary liabilities and limitations on our business
practices.
We are subject to various U.S. and foreign regulations directly
applicable to providers of Internet services and products, particularly with respect to the solicitation, collection or processing
of personal/consumer information over the Internet. The application of existing laws and regulations relating to issues such as
user privacy and data protection, defamation, pricing, advertising, taxation, promotions, billing, consumer protection, content
regulation, quality of services, and intellectual property ownership and infringement to Internet companies is unclear and/or unsettled.
Further, the application of existing laws regulating or requiring licenses for certain businesses of our advertisers including,
for example, insurance and securities brokerage and legal services, can be unclear. We may incur substantial liabilities for expenses
necessary to comply with these laws and regulations or penalties for any failure to comply. Compliance with these laws and regulations
may also cause us to change or limit our business practices in a manner adverse to our business.
Changes in regulations or user concerns regarding privacy
and protection of user data could adversely affect our business.
Federal, state and foreign laws and regulations govern the collection,
use, retention, sharing and security of data that we receive from our customers. In addition, we post on our website our own privacy
policies and practices concerning the collection, use and disclosure of customer data. Any failure, or perceived failure, by us
to comply with our posted privacy policies or with any data- related consent orders, Federal Trade Commission requirements or other
federal or state privacy- related laws and regulations could result in proceedings or actions against us by governmental entities
or others, which could potentially have an adverse effect on our business.
Further, failure or perceived failure to comply with our policies
or applicable requirements related to the collection, use, sharing or security of personal information or other privacy-related
matters could result in a loss of customer confidence in us, damage to our reputation and the loss of users, partners or advertisers,
which could adversely affect our business.
Additionally, a large number of legislative proposals are pending
before the U.S. Congress and various state legislative bodies concerning data privacy and retention issues that may impact our
business. It is not possible to predict whether or when such legislation may be adopted. Certain proposals, if adopted, could impose
requirements that may result in a decrease in our user registrations and revenues. In addition, the interpretation and application
of user data protection laws are in a state of flux. These laws may be interpreted and applied inconsistently from state to state
and inconsistently with our current data protection policies and practices. Complying with these varying requirements could cause
us to incur substantial costs or require us to change our business practices in a manner adverse to our business.
Fluctuations in our financial results may occur as the result
of various factors beyond our control.
Management expects that financial results will vary significantly
from period to period due to a number of factors, including:
·
costs related to the redesign of our website;
·
costs related to the introduction of new products, services and methods of doing business;
·
costs related to the continued expansion of our business;
·
income, loss or amortization of goodwill resulting from its acquisition or divestiture of business assets and other material
transactions;
·
gain or loss resulting from accounting rules changes or accounting adjustments required for initial public offerings, other
financings, mergers or other changes in the capitalization; and
·
increases in taxation resulting from its disposition of interests or from other extraordinary events.
Our financial position may impair our ability to develop our business
model. Our ability to attract the funding necessary to launch our redesigned website, purchase equipment and hardware, hire personnel,
develop cost-efficient operations and market and sell our products and services are critical to our future success. Our ability
to accomplish these objectives is likely to be significantly impaired if the financial markets continue to be in turmoil, or if
prospective lenders, investors or partners become uncomfortable with our prospects for survival given a weak financial condition,
volatile markets or adverse events in business operations. Our limited ability to generate cash through our operations may be insufficient
to fully fund our growth. The costs for business and product development may significantly impact our overall financial strength.
These factors can negatively impact our ability to finance the performance of our business operations and to attract additional
funding.
The requirements of being a public company will require
us to incur substantial costs, which may adversely affect our operating results and divert management's attention.
As a public company, we will incur significant legal, accounting
and other expenses that Grandparents.com did not incur as a private company. In addition, the Sarbanes-Oxley Act of 2002 and rules
subsequently adopted by the SEC implementing Sarbanes-Oxley have required changes in corporate governance practices of public companies.
We expect these rules and regulations to significantly increase our legal and financial compliance costs and to make some activities
more time consuming and costly. As a "shell company" as defined in Rule 12b-2 under the Exchange Act, the Company's
prior internal controls were less complicated than those needed for an operating business. Following closing of the Transaction
and the appointment of a new management team, the Company intends to revise its existing policies and adopt new policies regarding
internal controls and disclosure controls and procedures with regard to our new business. The Company's new management team
does not have substantial public company experience, and compliance with applicable securities rules and regulations may divert
management's attention from other business concerns, which could harm our business and operating results.
18
In addition, changing laws, regulations and standards relating to
corporate governance and public disclosure are creating uncertainty for public companies, increasing legal and financial compliance
costs and making some activities more time consuming. These laws, regulations and standards are subject to varying interpretations,
in many cases due to their lack of specificity, and, as a result, their application in practice may evolve over time as new guidance
is provided by regulatory and governing bodies. This could result in continuing uncertainty regarding compliance matters and higher
costs necessitated by ongoing revisions to disclosure and governance practices. We intend to invest resources to comply with evolving
laws, regulations and standards, and this investment may result in increased general and administrative expenses and a diversion
of management's time and attention from revenue-generating activities to compliance activities. If our efforts with new laws,
regulations and standards differ from the activities intended by regulatory or governing bodies due to ambiguities related to practice,
regulatory authorities may initiate legal proceedings against us and our business may be harmed.
We may become involved in legal proceedings that may result
in adverse outcomes.
We may become subject to claims, suits, government investigations,
and other proceedings involving competition and antitrust, intellectual property, privacy, tax, labor and employment, commercial
disputes, content generated by our users, goods and services offered by advertisers or publishers using our platforms, and other
matters. Such claims, suits, government investigations, and proceedings are inherently uncertain and their results cannot be predicted
with certainty. Regardless of the outcome, such legal proceedings can have an adverse impact on us because of legal costs, diversion
of management resources, and other factors. Determining reserves for our pending litigation is a complex, fact-intensive process
that requires significant judgment. It is possible that a resolution of one or more such proceedings could result in substantial
fines and penalties that could adversely affect our business, consolidated financial position, results of operations, or cash flows
in a particular period. These proceedings could also result in criminal sanctions, consent decrees, or orders preventing us from
offering certain features, functionalities, products, or services, requiring a change in our business practices, or requiring development
of non-infringing products or technologies, which could also adversely affect our business and results of operations.
If we are unable to maintain effective internal controls
over financial reporting in accordance with Section 404 of the Sarbanes-Oxley Act, it could have a material adverse effect on the
Company's business.
As a private company, Grandparents.com was not required to and did
not maintain such internal controls. Following closing of the Transaction, the Company and its new management team intend to begin
the process of documenting internal control procedures with respect to its new business, including establishing formal policies,
processes and practices related to financial reporting and to the identification of key financial reporting risks, assessment of
their potential impact and linkage of those risks to specific areas and activities within its organization.
As a public entity, the Company is required to provide a quarterly
management certification and an annual management assessment of the effectiveness of its internal controls over financial reporting.
If the Company is not able to implement and document the necessary policies, processes, and controls to mitigate financial reporting
risks, the Company may not be able to comply with requirements of Section 404(a) in a timely manner or with adequate compliance.
Matters impacting the Company's internal controls may cause it to be unable to report its financial information on a timely
basis and thereby subject it to adverse regulatory consequences, including sanctions by the SEC or violations of applicable stock
exchange listing rules. There could also be a negative reaction in the financial markets due to a loss of investor confidence in
the Company and the reliability of its financial statements. Confidence in the reliability of the Company's financial statements
could also suffer if the Company were to report a material weakness in its internal controls over financial reporting. This could
materially adversely affect the Company and lead to a decline in the price of its Common Stock.
Risks Related to an Investment in our Securities
Grandparents.com will have significant voting power and
may take actions that may not be in the best interest of other stockholders.
Grandparents.com controls approximately 65% of the total voting
power of our securities. Steven E. Leber, Joseph Bernstein and Dr. Robert Cohen comprise the board of managers of Grandparents.com
and therefore control Grandparents.com. For the foreseeable future, Grandparents.com will be able to exert significant control
over all matters requiring approval by our Board of Directors and stockholders, including the approval of mergers or other business
combination transactions. Because Grandparents.com's interests and the interests of Messrs. Leber and Bernstein and Dr. Cohen
may not always coincide with the interests of our other stockholders, they may cause us to take actions which the other stockholders
may disagree with or which may not be in the best interests of such other stockholders.
19
There are limitations on the liabilities of our directors
and executive officers. Under certain circumstances, we are obligated to indemnify our directors and executive officers against
liability and expenses incurred by them in their service to us.
Pursuant to our Certificate of Incorporation and under Delaware
law, our directors are not liable to us or our stockholders for monetary damages for breach of fiduciary duty, except for liability
for breach of a director's duty of loyalty, acts or omissions by a director not in good faith or which involve intentional
misconduct or a knowing violation of law, dividend payments or stock repurchases that are unlawful under Delaware law or any transaction
in which a director has derived an improper personal benefit. In addition, we intend to enter into indemnification agreements with
each of our directors and executive officers. These agreements, among other things, will require us to indemnify each director
and executive officer for certain expenses, including attorneys' fees, judgments, fines and settlement amounts, incurred
by any such person in any action or proceeding, including any action by us or in our right, arising out of the person's services
as one of our directors or executive officers. The costs associated with providing indemnification under these agreements could
be harmful to our business.
Provisions of our corporate charter documents could delay
or prevent change of control.
Our Certificate of Incorporation currently authorizes our
Board of Directors to issue up to 1,999,999 shares of "blank check" preferred stock without stockholder approval,
in one or more series and to fix the dividend rights, terms, conversion rights, voting rights, redemption rights and terms,
liquidation preferences, and any other rights, preferences, privileges, and restrictions applicable to each new series of
preferred stock. The designation of preferred stock in the future could make it difficult for third parties to gain control
of our company, prevent or substantially delay a change in control, discourage bids for our Common Stock at a premium, or
otherwise adversely affect the market price of our Common Stock.
We do not anticipate paying cash dividends on our Common
Stock or Preferred Stock.
You should not rely on an investment in our securities to provide
dividend income, as we currently do not plan to pay any in the foreseeable future. Instead, we plan to retain any earnings to maintain
and expand our operations. Accordingly, investors must rely on sales of our securities after price appreciation, which may never
occur, as the only way to realize any return on their investment.
The market price of our Common Stock is volatile.
The publicly traded shares of our Common Stock do not have significant
trading volume, and experience significant price and volume fluctuations. This market volatility could reduce the market price
of our Common Stock, regardless of our operating performance. In addition, the trading price of our Common Stock could change significantly
over short periods of time in response to actual or anticipated variations in our quarterly operating results, announcements by
us, our competitors, factors affecting our market generally and/or changes in national or regional economic conditions, making
it more difficult for shares of our Common Stock to be sold at a favorable price or at all. The market price of our Common Stock
could also be reduced by general market price declines or market volatility in the future or future declines or volatility in the
prices of stocks for companies in the markets in which we compete.
Future sales of our Common Stock in the public market or
the issuance of our Common Stock or securities convertible into our Common Stock could adversely affect the trading price of our
Common Stock.
We intend to increase the number of authorized shares of Common
Stock to 150,000,000 shares. This increase in the Common Stock will be sufficient to allow for the conversion of all shares of
Series A Convertible Preferred Stock and Series B Convertible Preferred Stock, with a significant number of shares of Common Stock
available for future issuance. In addition, our Board of Directors has the authority under our Certificate of Incorporation to
issue up to 1,999,999 shares of blank check preferred stock. Upon the conversion of the one (1) share of Series A Convertible Preferred
Stock and the 3,000,000 shares of Series B Convertible Preferred Stock currently outstanding, such shares will be cancelled and
retired and will become shares of blank check preferred stock available for issuance. Any additional issuances of any of our authorized
but unissued shares of Common Stock or blank check preferred stock will not require the approval of stockholders and will have
the effect of further diluting the equity interest of stockholders.
We may issue Common Stock or preferred stock in the future for a
number of reasons, including to attract and retain key personnel, to lenders, investment banks, or investors in order to achieve
more favorable terms from these parties and align their interests with our common equity holders, to management and/or employees
to reward performance to finance our operations and growth strategy, to adjust our ratio of debt to equity, to satisfy outstanding
obligations or for other reasons. If we issue securities, our existing stockholders may experience dilution. Future sales of our
Common Stock, the perception that such sales could occur or the availability for future sale of shares of our Common Stock or securities
convertible into or exercisable for our Common Stock could adversely affect the market prices of our Common Stock prevailing from
time to time. The sale of shares issued upon the exercise of our derivative securities could also further dilute the holdings of
our then existing stockholders, including holders of the convertible notes that receive shares of our Common Stock upon conversion
of their notes. In addition, future public sales of shares of our Common Stock could impair our ability to raise capital by offering
equity securities.
20
Our Common Stock is not currently traded at high volume,
and you may be unable to sell at or near ask prices or at all if you need to sell or liquidate a substantial number of shares at
one time.
Our Common Stock is currently traded, but with very low, if any,
volume, based on quotations on the OTC Bulletin Board, meaning that the number of persons interested in purchasing our Common Stock
at or near bid prices at any given time may be relatively small or non-existent. This situation is attributable to a number of
factors, including the fact that we are a small company which is still unknown to investors and others in the investment community
that generate or influence sales volume, and that even if we came to the attention of such persons, they tend to be risk-averse
and would be reluctant to follow an unproven company such as ours or purchase or recommend the purchase of our shares until such
time as we became more seasoned and viable. In addition, many institutional investors, which account for significant trading activity,
are restricted from investing in stocks that trade below specified prices, have less than specified market capitalizations, or
have less than specified trading volume. As a consequence, there may be periods of several days or more when trading activity in
our shares is minimal or non-existent, as compared to a seasoned issuer which has a large and steady volume of trading activity
that will generally support continuous sales without an adverse effect on share price. We cannot give you any assurance that a
broader or more active public trading market for our Common Stock will develop or be sustained, or that trading levels will be
sustained.
Stockholders should be aware that, according to SEC Release No.
34-29093, the market for "penny stocks" has suffered in recent years from patterns of fraud and abuse. Such patterns
include (i) control of the market for the security by one or a few broker-dealers that are often related to the promoter or issuer,
(ii) manipulation of prices through prearranged matching of purchases and sales and false and misleading press releases, (iii)
boiler room practices involving high-pressure sales tactics and unrealistic price projections by inexperienced sales persons, (iv)
excessive and undisclosed bid-ask differential and markups by selling broker-dealers, and (v) the wholesale dumping of the same
securities by promoters and broker-dealers after prices have been manipulated to a desired level, along with the resulting inevitable
collapse of those prices and with consequent investor losses. Our management is aware of the abuses that have occurred historically
in the penny stock market. Although we do not expect to be in a position to dictate the behavior of the market or of broker-dealers
who participate in the market, management will strive within the confines of practical limitations to prevent the described patterns
from being established with respect to our securities. The occurrence of these patterns or practices could increase the future
volatility of our share price.
We are subject to the penny stock rules adopted by the SEC
that require brokers to provide extensive disclosure to its customers prior to executing trades in penny stocks. These disclosure
requirements may make it difficult for our stockholders to sell their shares.
Our shares of Common Stock are considered a "penny stock,"
which is generally defined as any equity security that has a minimum bid price of less than $5.00 per share and that is not listed
for trading on a national stock exchange. This classification adversely affects the market liquidity for our Common Stock.
For any transaction involving a penny stock, unless exempt, the
penny stock rules require that a broker or dealer approve a person's account for transactions in penny stocks and the broker
or dealer receive from the investor a written agreement to the transaction setting forth the identity and quantity of the penny
stock to be purchased. In order to approve a person's account for transactions in penny stocks, the broker or dealer must
obtain financial information and investment experience and objectives of the person and make a reasonable determination that the
transactions in penny stocks are suitable for that person and that that person has sufficient knowledge and experience in financial
matters to be capable of evaluating the risks of transactions in penny stocks.
The broker or dealer must also deliver, prior to any transaction
in a penny stock, a disclosure schedule prepared by the SEC relating to the penny stock market, which, in highlight form, sets
forth the basis on which the broker or dealer made the suitability determination and that the broker or dealer received a signed,
written agreement from the investor prior to the transaction.
Disclosure must also be made about the risks of investing in penny
stocks in both public offerings and in secondary trading and commission payable to both the broker-dealer and the registered representative,
current quotations for the securities and the rights and remedies available to an investor in cases of fraud in penny stock transactions.
Finally, monthly statements have to be sent disclosing recent price information for the penny stock held in the account and information
on the limited market in penny stocks.
Because of these regulations, broker-dealers may not wish to engage
in the necessary paperwork and disclosures and/or may encounter difficulties in their attempt to sell shares of our Common Stock,
which may affect the ability of stockholders to sell their shares in any secondary market and have the effect of reducing the level
of trading activity in any secondary market. These additional sales practice and disclosure requirements could impede the sale
of our Common Stock. Our Common Stock, in all probability, will be subject to such penny stock rules for the foreseeable future
and our stockholders will, in all likelihood, find it difficult to sell their Common Stock.
21
Restrictions on the Use of Rule 144 by Shell Companies or
Former Shell Companies.
The SEC prohibits the use of Rule 144 under the Securities
Act for resale of securities issued by shell companies (other than business transaction related shell companies) or issuers
that have been at any time previously a shell company. The SEC has provided an important exception to this prohibition,
however, if the following conditions are met: (i) the issuer of the securities that was formerly a shell company has ceased
to be a shell company, (ii) the issuer of the securities is subject to the reporting requirements of Section 13 or 15(d)
of the Exchange Act, (iii) the issuer of the securities has filed all Exchange Act reports and material required to be
filed, as applicable, during the preceding twelve (12) months (or such shorter period that the issuer was required to file
such reports and materials), other than Form 8-K reports, and (iv) at least one year has elapsed from the time that the
issuer filed current Form 10 type information with the SEC reflecting its status as an entity that is not a shell company. As
such, due to the fact that we had been a shell company immediately prior to the Transaction, holders of
"restricted securities" within the meaning of Rule 144, when reselling their shares pursuant to Rule 144, will be
subject to the conditions set forth therein.
MANAGEMENT'S DISCUSSION AND ANALYSIS
OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
The following discussion and analysis of the results of operations
and financial condition of Grandparents.com for the years ended December 31, 2010, December 31, 2009 and for the nine months ended
September 30, 2011 and 2010 should be read in conjunction with the financial statements of Grandparents.com and the notes to those
financial statements that are filed with this Report as Exhibits 99.1 and 99.2. All statements other than statements of historical
fact, including statements regarding future events, our future financial performance, business strategy and plans and objectives
of management for future operations, are forward-looking statements. These statements are only predictions and involve known and
unknown risks, uncertainties and other factors, including the risks outlined under "Risk Factors" or elsewhere in this
Report, which could negatively affect our business, operating results, financial condition and stock price. New risks emerge from
time to time and it is not possible for us to predict all risk factors, nor can we address the impact of all factors on our business
or the extent to which any factor, or combination of factors, may cause our actual results to differ materially from those contained
in any forward-looking statements. All forward-looking statements included in this document are based on information available
to us on the date hereof. You should not place undue
reliance on any forward-looking statement, each of which applies only as of the date of this Report. We undertake no obligation
to update or revise publicly any of the forward-looking statements after the date of this Report to conform our statements to actual
results or changed expectations. See "Cautionary Note Regarding Forward-Looking Statements" in this Report.
Overview
As discussed in this Report, on the Closing Date and pursuant to
the Contribution Agreement, Grandparents.com contributed substantially all of its assets to the Company in exchange for the assumption
of certain liabilities and the issuance by the Company to Grandparents.com of one (1) share of Series A Convertible Preferred Stock,
representing a controlling interest in our voting securities, and the GP Warrant. As a result of the Transaction, we now own the
grandparents.com domain name, other related domain names, trademarks and related assets formerly owned by Grandparents.com. Immediately
prior to the Transaction, we were a non-operating shell company and our principal asset was the cash we received in connection
with the sale of our former business.
Our website, www.grandparents.com, is a family-oriented social media
website with a core mission of enhancing relationships between the generations, and enriching the lives of grandparents by providing
tools to foster connections among grandparents, parents, and grandchildren. We primarily target the 70 million grandparents in
the U.S., but we also target the 50 million "boomers" and seniors that are not grandparents. We believe that our website
is one of the leading online communities for our market and that our website is the premier social media platform targeting active,
involved grandparents.
In 2010, we had over 10 million unique visitors to our website and
Examiner.com ranked our website second among commercial websites serving the age 50+ demographic markets. In January 2011, we launched
the Grandparents.com Benefits Club through which our marketing partners offer discounts and other benefits to our members on all
a variety of consumer products and services. In the fourth quarter
of 2011, we launched the Grandparents.com Online Book Shop which features over one million book titles, including e-books, and approximately
400,000 CD/DVD's. We also have a Jewelry Store and Toy Store.
Our website was launched initially in 2007 and was operated until
May 2010 by Grandparents.com's predecessor, which focused on selling advertisements as its sole revenue stream. Since May
2010, we have focused on redesigning the website, attracting new members and developing new revenue streams. Accordingly, management
does not believe the past results are indicative of future performance.
We
anticipate launching
our redesigned website on Grandparents Day, September 9, 2012. Until the launch of the redesigned website, our website will remain
operational in its current format.
22
Grandparents.com incurred a net loss of approximately $2,000,000
for the nine months ended September 30, 2011 and used approximately $600,000 in cash for operating activities. In addition, Grandparents.com
had a working capital deficit of approximately $1,400,000 as of September 30, 2011. Accordingly,
Grandparents.com's
independent registered public accounting firm has issued an audit report on Grandparents.com's 2010 financial statements
that included an explanatory paragraph referring to Grandparents.com's net losses, negative cash flows from operations and
working capital deficiency and expressing substantial doubt about Grandparents.com's ability to continue as a going concern.
Grandparents.com's financial statements do not include any adjustments that might result from the outcome of this uncertainty.
Revenue Streams
Historically, Grandparents.com generated revenue through the sale
of
advertising on its website.
Although we expect to continue generating
revenue from advertisements, we are now focused on creating multiple revenue streams.
We have not yet generated any revenue through the Benefits Club.
In order to initially attract marketing partners to the Benefits Club, Grandparents.com deferred entering into revenue sharing
arrangements with our marketing partners. As a result, however, Grandparents.com was able to attract more than 250 marketing partners
as of December 31, 2011. We ultimately expect to receive a share of the revenue received by marketing partners who offer products
and services to our members. We will seek to enter into revenue sharing arrangements with our marketing partners in 2012. To the
extent we are able to enter into revenue sharing agreements with our marketing partners, revenues, if any, from
such arrangements may be limited in the near term.
In addition, we have entered into initial stages of discussions
with a select number of national insurance companies focused on the insurance lines we plan to make available to our members –
primarily health, life, long term care, auto and home. We have also entered into initial stages of discussions with a major financial
services company to offer annuity, mutual fund, retirement planning and other financial products and services through us.
In the fourth quarter of 2011, Grandparents.com launched the Grandparents.com
Online Book Shop. Order fulfillment takes place through Baker-Taylor Ltd. under our name and we receive a commission of 3.5% of
all sales. We expect the Book Shop to compete with major online booksellers.
We expect to generate revenue through membership fees which we plan
to implement in after 2012. However, because implementing our plan includes initially giving free memberships, we do not expect
to generate membership fee revenue in 2012.
Certain Factors Affecting our Performance
In addition to the Risk Factors discussed above, we consider the
following to be significant factors affecting our future performance and financial results.
Our Ability to Attract and Retain Members.
We must attract
and retain members in order to increase revenue and achieve profitability. We expect revenue to be generated primarily from the
purchase of products and services by our members offered in the Grandparents.com Benefits Club, advertisements on our website and,
in the future, membership fees. If we are unable to attract and retain members, we may not be able to attract marketing and commercial
sponsors to the Benefits Club. Likewise, if we cannot attract and retain members, we may not be able to attract advertisers to
our website.
Our Ability to Enter into Revenue Sharing Agreements with our
Marketing Partners.
We must attract, retain and enter into revenue sharing agreements with marketing and commercial sponsors
in order to increase revenue and achieve profitability. If marketing and commercial sponsors do not find our marketing and promotional
services effective or do not believe that utilizing our website provides them with increases in customers, revenue or profit, they
may not make, or continue to make, offers through our website in which case we may sell fewer products and services through the
our website.
Competition.
We compete with companies in the social networking
industry such as Facebook, Twitter and Google and other companies that specifically target the age 50+ market, in particular AARP.
These competitors compete with us for visitor traffic, members, advertising dollars and partners, including marketing and commercial
sponsors, and many of our competitors have competitive advantages over us. It is also possible that new competitors may emerge and
acquire significant market share.
Additional Financing.
To effectively implement our business
plan, we may need to obtain additional financing. If we obtain financing, we would expect to accelerate our business plan and increase
our advertising and marketing budget, hire additional staff members and increase our office space and operations all of which we
believe would result in the generation of revenue and development of our business.
23
Results of Operations of Grandparents.com
The following discusses the results of operations and financial
condition of Grandparents.com and its predecessor for the periods indicated below.
Grandparents.com has separated its historical financial results
into predecessor and successor periods, which is required under generally accepted accounting principles when there is a change
in accounting basis as occurred when purchase accounting was applied to the acquisition of the business of GPOC following the 2010
Purchase Transaction. Although presenting 2010 on a combined basis may be helpful for purposes of evaluating operating results,
the reader is cautioned that these are considered to be separate periods for financial reporting purposes and they should be evaluated
separately. We do not believe that successor periods are comparable to predecessor periods due to changes in management.
Periods prior to consummation of the 2010 Purchase Transaction are
sometimes referred to herein as predecessor periods and periods from and after the consummation of the 2010 Purchase Transaction
are sometimes referred to herein as successor periods. "Predecessor" refers to GPOC. "Successor" refers
to Grandparents.com.
We do not believe our prior periods, particularly predecessor periods,
are comparable to or indicative of our present and future operations. As discussed elsewhere in this Report, we are now focused
on creating multiple new revenue streams through the Benefits Club and our marketing partners whereas our prior operations derived
revenue solely from advertisements.
Three Months Ended September 30, 2011 Compared with Three
Months Ended September 30, 2010
Three months ended September 30,
2011
2010
Revenue:
Advertising revenue
$
83,228
$
177,160
Total Revenues
83,228
177,160
Operating Expenses:
Selling and marketing
29,864
71,300
Salaries
172,103
207,747
Rent
40,000
44,391
Consulting
-
4,005
Equity-based compensation
12,688
-
Management fees
150,000
50,000
Other general and administrative
97,240
128,197
Depreciation and amortization
217,314
216,760
Total operating expenses
719,209
722,400
Other income (expenses):
Interest income (expense), net
(8,402
)
3
Other income (loss), net
6,231
(478
)
Total other expense
(2,171
)
(478
)
Loss from operations
(638,152
)
(545,718
)
Preferred return expense
(23,602
)
(3,091
)
Net loss
$
(661,754
)
$
(548,809
)
Revenue
Revenue for the three months ended September 30, 2011 decreased
$93,932, or 53.0%, to $83,228 compared to $177,160 for the comparable prior year period. During the three months ended September
30, 2011 and 2010, Grandparents.com derived revenue solely from advertisements on its website. In 2011, Grandparents.com reduced
marketing expenditures which in turn resulted in a decrease in the number of visitors to its website in 2011 compared to 2010.
As a result, Grandparents.com experienced a decline in revenue for the three months ended September 30, 2011 compared to the prior
year period.
24
Operating Expenses
Total operating expenses for the three months ended September 30,
2011 decreased $3,191, or 0.4%, to $719,209 compared to $722,400 for the comparable prior year period.
Selling and marketing.
Selling and marketing expense decreased
$41,436, or 58.1%, to $29,864 for the three months ended September 30, 2011 compared to $71,300
for
the comparable prior year period. In 2011, Grandparents.com reduced its marketing spend due, in part, to reduced capital resources.
In addition, in Grandparents.com allocated marketing dollars toward attracting more meaningful page impressions as opposed to generating
a greater volume of page impressions.
Salaries.
Salary expense decreased
$35,644,
or 17.2%, to $172,103 for the three months ended September 30, 2011 compared to $207,747
for the comparable prior year period
due to reductions in payroll and staff.
Rent.
Rent expense decreased
$4,391,
or 9.9%, to $40,000 for the three months ended September 30, 2011 compared to $44,391
for the comparable prior year period.
In the fourth quarter of 2010, Grandparents.com moved its office to a new location and entered into a new lease at a lower monthly
rent payment.
Consulting.
Grandparents.com had no cash consulting expense
for the
three months ended September 30, 2011 compared to $4,005
for the comparable prior year
period. This was due to consulting arrangements entered into during 2011 being paid in warrants to purchase equity, with the related
compensation expense being charged to equity-based compensation.
Equity-based compensation.
Grandparents.com incurred equity-based
compensation expense of $12,688 for the
three months ended September 30, 2011
. Grandparents.com
had no equity-based compensation expense for the comparable prior year period. In the fourth quarter of 2010, Grandparents.com
granted options to purchase 252,500 Class A Units under its 2010 Stock Option Plan to its officers and employees. In 2011, Grandparents.com
issued warrants to purchase an aggregate of 437,500 Class A Units. The options and warrants are recorded to expense over the requisite
service period, which generally is the vesting period.
Management fees.
Management fees increased $100,000, or 200.0%,
to $150,000
for the three months ended September 30, 2011 compared to $50,000
for the comparable
prior year period. Grandparents.com pays a monthly management fee to LBG for management services provided to Grandparents.com.
The monthly payments commenced in August 2010 and for 2010 were $25,000 per month compared to $50,000 per month in 2011. Only two
payments of $25,000 each were payable during the three months ended September 30, 2010 compared to four payments of $50,000 each
payable during the three months ended September 30, 2011.
Other general and administrative.
Other general and administrative
expense decreased $30,957, or 24.1%, to $97,240
for the three months ended September 30, 2011 compared
to $128,197
for the comparable prior year period. The decrease in other general and administrative expense was comprised
primarily of a $6,162 decrease in insurance premiums and a $11,997 decrease in technology licensing fees.
Depreciation and amortization.
Depreciation and amortization
increased $554, or 0.3%, to $217,314
for the three months ended September 30, 2011 compared to $216,760
for the comparable prior year period.
Other Expense
Grandparents.com had other expenses of $2,171 for the three months
ended September 30, 2011 compared to $478 for the prior year period. Other expense for the three months ended September 30, 2011
was comprised of interest expense of $8,402, partially offset by other income of $6,231.
Preferred Return Expense
Preferred return expense was $23,602 for the three months ended
September 30, 2011 compared to $3,091 for the prior year period. During 2010, Grandparents.com sold 918,000 Class A Preferred Units
in exchange for $918,000 in cash. Holders of the Class A Preferred Units are entitled to a 10% cumulative return on the principal
investment ("Minimum Annual Return") and unpaid Minimum Annual Returns.
Loss from Operations
Loss from operations for the three months ended September 30, 2011
was $638,152 compared to $545,718 for the prior year period.
Net Loss
Net loss for the three months ended September 30, 2011 was $661,754
compared to $548,809 for the prior year period.
25
Nine Months Ended September 30, 2011 Compared with Combined
Nine Months Ended September 30, 2010
Successor
Predecessor
Combined (1)
2011
2010
2010
2010
January 1
to
September 30
May 6
to
September 30
January 1
to
May 5
January 1
to
September 30
Revenue:
Advertising revenue
$
322,228
$
230,916
$
111,543
$
342,459
Total Revenues
322,228
230,916
111,543
342,459
Operating Expenses:
Selling and marketing
84,110
133,010
444,300
577,310
Salaries
613,358
366,695
818,372
1,185,067
Rent
119,999
76,326
69,601
145,927
Consulting
-
4,005
10,000
14,005
Equity-based compensation
50,518
-
-
-
Transaction costs
-
4,250,000
-
4,250,000
Management fees
450,000
50,000
-
50,000
Other general and administrative
335,465
221,185
126,346
347,531
Depreciation and amortization
651,939
343,341
67,988
411,329
Total operating expenses
2,305,389
5,444,562
1,536,607
6,981,169
Other income (expenses):
Interest income (expense), net
(12,393
)
3
-
3
Gain on purchase of business
-
3,565,408
-
3,565,408
Other income, net
17,443
35,191
108,000
143,191
Total other income
5,050
3,600,602
108,000
3,708,602
Loss from operations
(1,978,111
)
(1,613,044
)
(1,317,064
)
(2,930,108
)
Preferred return expense
(70,806
)
(3,091
)
(137,572
)
(140,663
)
Net loss
$
(2,048,917
)
$
(1,616,135
)
$
(1,454,636
)
$
(3,070,771
)
(1) The combination of Successor and Predecessor periods in
2010 is a non-GAAP measure. Grandparents.com has included the separate periods in this presentation to enable the comparative
nine month reconciliation of the information to its GAAP presentation in the condensed financial statements.
Revenue
Revenue for the nine months ended September 30, 2011 decreased $
20,231
,
or 5.9%, to $322,228 compared to $342,459 for the comparable prior year period. During the nine months ended September 30, 2011
and 2010, Grandparents.com derived revenue solely from advertisements on its website. In 2011, Grandparents.com reduced marketing
expenditures which in turn resulted in a decrease in the number of visitors to its website in 2011 compared to 2010. As a result,
Grandparents.com experienced a decline in revenue for the nine months ended September 30, 2011 compared to the prior year period.
Operating Expenses
Total operating expenses for the nine months ended September 30,
2011 decreased $4,675,780, or 67.0%, to $2,305,389 compared to $6,981,169 for the comparable prior year period.
Selling and marketing.
Selling and marketing expense decreased
$493,200, or 85.4%, to $84,110 for the nine months ended September 30, 2011 compared to $577,310
for
the comparable prior year period. In 2011, Grandparents.com reduced its marketing spend due, in part, to reduced capital resources.
In addition, in Grandparents.com allocated marketing dollars toward attracting more meaningful page impressions as opposed to generating
a greater volume of page impressions.
26
Salaries.
Salary expense decreased
$571,709,
or 48.2%, to $613,358 for the nine months ended September 30, 2011 compared to $1,185,067
for the comparable prior year
period due to reductions in payroll and staff.
Rent.
Rent expense decreased
$25,928,
or 17.8%, to $119,999 for the nine months ended September 30, 2011 compared to $145,927
for the comparable prior year period.
In the fourth quarter of 2010, Grandparents.com moved its office to a new location and entered into a new lease at a lower monthly
rent payment.
Consulting.
Grandparents.com had no cash consulting expense
for the
nine months ended September 30, 2011 compared to $14,005
for the comparable prior year
period. This was due to consulting arrangements entered into during 2011 being paid in warrants to purchase equity, with the related
compensation expense being charged to equity-based compensation.
Equity-based compensation.
Grandparents.com incurred equity-based
compensation expense of $
50,518
for the
nine months ended September
30, 2011
. Grandparents.com had no equity-based compensation expense for the comparable prior year period. In the fourth
quarter of 2010, Grandparents.com granted options to purchase 252,500 Class A Units under its 2010 Stock Option Plan to its officers
and employees. In 2011, Grandparents.com issued warrants to purchase an aggregate of 437,000 Class A Units. The options and warrants
are recorded to expense over the requisite service period, which generally is the vesting period.
Transaction Costs.
Grandparents.com incurred $4,250,000 for
the nine months ended September 30, 2010 in connection with the 2010 Purchase Transaction. Grandparents.com had no such expense
for the nine months ended September 30, 2011.
Management fees.
Management fees increased $400,000, or 800.0%,
to $450,000
for the nine months ended September 30, 2011 compared to $50,000
for the comparable
prior year period. Grandparents.com pays a monthly management fee to LBG for management services provided to Grandparents.com.
The monthly payments commenced in August 2010 and for 2010 were $25,000 per month compared to $50,000 per month in 2011. Only two
payments of $25,000 each were payable during the nine months ended September 30, 2010 compared to nine payments of $50,000 each
payable during the nine months ended September 30, 2011.
Other general and administrative.
Other general and administrative
expense decreased $
12,066
, or 3.5%, to $
335,465 for the nine months
ended September 30, 2011 compared to $347,531
for the comparable prior year period.
Depreciation and amortization.
Depreciation and amortization
increased $
240,610
, or 58.5%, to $
651,939 for the nine months ended
September 30, 2011 compared to $411,329
for the comparable prior year period.
Other Income (Expense)
Grandparents.com had other income of $5,050 for the nine months
ended September 30, 2011 compared to $
3,708,602
for the prior year period. Other income for
the nine months ended September 30, 2010 included gain on purchase of business of $3,565,408 which was not present in the comparable
period of 2011.
Preferred Return Expense
Preferred return expense was $70,806 for the nine months ended September
30, 2011 compared to $3,091 for the prior year period. During 2010, Grandparents.com sold 918,000 Class A Preferred Units in exchange
for $918,000 in cash. Holders of the Class A Preferred Units are entitled to a 10% Minimum Annual Return and unpaid Minimum Annual
Returns.
Loss from Operations
Loss from operations for the nine months ended September 30, 2011
was $1,978,111 compared to $2,930,108 for the prior year period.
Net Loss
Net loss for the nine months ended September 30, 2011 was $2,048,917
compared to $3,070,771 for the prior year period.
27
Combined Fiscal Year Ended December 31, 2010 Compared
with Predecessor Fiscal Year Ended December 31, 2009
Successor
Predecessor
Predecessor
Combined (1)
2010
2010
2010
2009
May 6
to
December 31
January 1
to
May 5
January 1
to
December 31
January 1
to
December 31
Revenue:
Advertising revenue
$
646,512
$
111,543
$
758,055
$
512,389
Total Revenues
646,512
111,543
758,055
512,389
Operating Expenses:
Selling and marketing
246,838
444,300
691,138
1,476,290
Salaries
657,975
818,372
1,476,347
3,276,844
Rent
84,090
69,601
153,691
227,211
Consulting
6,005
10,000
16,005
258,000
Equity-based compensation
9,549
-
9,549
-
Transaction costs
4,250,000
-
4,250,000
-
Management fees
125,000
-
125,000
-
Other general and administrative
477,249
126,346
603,595
525,380
Depreciation and amortization
560,101
67,988
628,089
274,765
Total operating expenses
6,416,807
1,536,607
7,953,414
6,038,490
Other income:
Interest income, net
18
-
18
-
Gain on purchase of business
3,565,408
-
3,565,408
-
Other income, net
51,184
108,000
159,184
-
Total other income
3,616,610
108,000
3,724,610
-
Loss from operations
(2,153,685
)
(1,317,064
)
(3,470,749
)
(5,526,101
)
Loss from operations before preferred return
(26,080
)
(137,572
)
(163,652
)
-
Net loss
$
(2,179,765
)
$
(1,454,636
)
$
(3,634,401
)
$
(5,526,101
)
(1) The combination of Successor and Predecessor periods in
2010 is a non-GAAP measure. Grandparents.com has included the separate periods in this presentation to enable the comparative
twelve month reconciliation of the information to its GAAP presentation in the financial statements.
Revenue
Revenue for the year ended December 31, 2010 increased $
245,666
,
or 47.9%, to $758,055 compared to $512,389 for the comparable prior year period. The increase in revenue over the prior year period
was attributable to the addition of two large advertising accounts in 2010 that were not present during 2009.
Operating Expenses
Total operating expenses for the year ended December 31, 2010 increased
$1,914,924, or 31.7%, to $7,953,414 compared to $6,038,490 for the comparable prior year period.
Selling and marketing.
Selling and marketing expense decreased
$785,152, or 53.2%, to $691,138 for the year ended December 31, 2010 compared to $1,476,290
for
the comparable prior year period. In 2010, Grandparents.com reduced its marketing spend due, in part, to reduced capital resources.
In addition, in Grandparents.com allocated marketing dollars toward attracting more meaningful page impressions as opposed to generating
a greater volume of page impressions.
Salaries.
Salary expense decreased
$1,800,497,
or 54.9%, to $1,476,347 for the year ended December 31, 2010 compared to $3,276,844
for the comparable prior year period
due to reductions in payroll and staff.
Rent.
Rent expense decreased
$73,520,
or 32.4%, to $153,691 for the year ended December 31, 2010 compared to $227,211
for the comparable prior year period. In
2010, Grandparents.com settled a dispute with the Predecessor's former landlord for less than the amount due which resulted
in a decrease in rent expense for 2010.
Consulting.
Consulting expense decreased
$241,995, or 93.8%, to $16,005 for the year ended December 31, 2010 compared to $258,000
for
the comparable prior year period.
28
Equity-based compensation.
Equity-based compensation expense
was $
9,549
for the
year ended December 31, 2010.
There was
no equity-based compensation expense for the comparable prior year period. In the fourth quarter of 2010, Grandparents.com granted
options to purchase 252,500 Class A Units under its 2010 Stock Option Plan to its officers and employees. The options had an exercise
price of $0.625 per Class A Unit and a grant-date fair value of $0.45 per option. The options expire five years from the date of
grant. The options are recorded to expense over the requisite service period, which generally is the vesting period.
Transaction Costs.
Grandparents.com incurred transaction
costs of $4,250,000 for the year ended December 31, 2010 in connection with the 2010 Purchase Transaction. There were no such costs
for the year ended December 31, 2009.
Management fees.
Grandparents.com incurred management fees
of $125,000 for the year ended December 31, 2010. In 2010, Grandparents.com paid a monthly management fee of $25,000 to LBG for
management services provided to Grandparents.com. The monthly payments commenced in August 2010. Accordingly, there were no such
fees for the year ended December 31, 2009.
Other general and administrative.
Other general and administrative
expense increased $78,215, or 14.9%, to $
603,595 for the year ended December 31, 2010 compared to $525,380
for the comparable prior year period.
Depreciation and amortization.
Depreciation and amortization
increased $
353,324
, or 128.6%, to $
628,089 for the year ended December
31, 2010 compared to $274,765
for the comparable prior year period.
Other Income
Grandparents.com had other income of $3,724,610 for the year ended
December 31, 2010 compared to $0 for the prior year period. Other income for the year ended December 31, 2010 included gain on
purchase of business of $3,565,408, interest income of $18 and other income of $159,184 which consisted primarily of income derived
from settlements of existing liabilities for less than the amount owed.
Preferred Return Expense
Preferred return expense was $
163,652
for the year ended December 31, 2010 compared to $0 for the prior year period. During 2010, Grandparents.com sold 918,000
Class A Preferred Units in exchange for $918,000 in cash. Holders of the Class A Preferred Units are entitled to a 10% Minimum
Annual Return and unpaid Minimum Annual Returns. In February 2010, $6,974,135 of advances from one of Predecessor's members
was converted to 3,867,019 Class D 10% Preferred Units, in May 2010, $750,000 of advances from three of Predecessor's members
was converted to 415,500 Class C 10% Preferred Units and in March 2010, two of Predecessor's members contributed cash of
$225,000 in exchange for 124,758 Class C 10% Preferred Units.
Loss from Operations
Loss from operations for the year ended December 31, 2010 was $3,470,749
compared to $
5,526,101
for the prior year period.
Net Loss
Net loss for the year ended December 31, 2010 was $
3,634,401
compared to $
5,526,101
for the prior year period.
Liquidity and Capital Resources
We raised approximately $3,000,000 in gross proceeds in the Private
Placement, but before deducting any expenses incurred by us in connection with the Private Placement. After deducting expenses,
we received approximately $2,400,000 in net proceeds from the Private Placement. We had cash of approximately $1,540,000 as
of the closing of the Transaction prior to the net proceeds from the Private Placement. We expect to finance our operations over
the next twelve months primarily through our existing cash and our operations. However, to effectively implement our business plan,
we may need to obtain additional financing.
If we obtain financing, we would expect to accelerate our business plan and
increase our advertising and marketing budget, hire additional staff members and increase our office space and operations all of
which we believe would result in the generation of revenue and development of our business. We cannot be certain that financing
will be available on acceptable terms, or available at all. To the extent that we raise additional funds by issuing debt or equity
securities or through bank financing, our stockholders may experience significant dilution. If we are unable to raise funds when
required or on acceptable terms, we may have to significantly scale back, or discontinue, our operations.
Prior to the Transaction, Grandparents.com funded its working capital
requirements primarily through cash flow from operations, private sales of capital units and advances from its members and managers.
During 2010, Grandparents.com sold 918,000 Class A Preferred Units in exchange for $918,000 in cash. In August 2010, Grandparents.com
sold 800,000 Class A Units to an investor, representing an 8% ownership interest in GP, for $500,000 cash. In October 2011 Grandparents.com
sold 290,512 Class A Units to an investor for $250,000 in cash.
29
During 2011, Messrs. Leber and Bernstein advanced an aggregate of
$126,000 to Grandparents.com. In March 2011, Grandparents.com entered into a $300,000 note payable agreement with Meadows, which
was secured by substantially all of the assets of Grandparents.com. In July 2011, Messrs. Leber and Bernstein and Meadows provided
short-term loans to Grandparents.com in the aggregate amount of $40,000. All of such loans were assumed by us upon the closing
of the Transaction and are evidenced by the Leber Note, Bernstein Note and Meadows Note, which are not secured by any assets of
the Company.
Upon the closing of the Transaction we assumed Grandparent's
liabilities for $612,500 of accrued but unpaid management fees in favor of LBG and issued the LBG Note to LBG.
In July 2011, Grandparents.com issued a zero coupon note payable
to a consultant. The note provided $225,000 to Grandparents.com in exchange for repayment of $275,000 on August 30, 2012, the maturity
date of the note. The discount from the maturity value of $275,000, initially $50,000, is being amortized to interest expense by
the effective interest method over the life of the note, with an effective interest rate of 20.04%. During the nine months ended
September 30, 2011, $4,209 was added to the promissory note balance. At September 30, 2011, the remaining discount was $45,791.
This obligation was assumed by us upon the closing of the Transaction and these payment obligations are the Company's going
forward.
In December 2011, we entered into a $500,000 secured
Bridge Loan with Grandparents.com. Upon the closing of the Transaction, we assumed and cancelled the Bridge Loan and released
all liens.
Although we can provide no assurances, we believe that the net proceeds
from the Private Placement, the cash of the Company on hand as of the closing of the Transaction together with cash generated from
operations should be sufficient to meet working capital requirements and capital expenditures for the next twelve months.
Cash Flow
Net cash flow from operating, investing and financing activities
for the periods below were as follows:
Successor
Predecessor
Combined (1)
2011
2010
2010
2010
January 1
to
September 30
May 6
to
September 30
January 1
to
May 5
January 1
to
September 30
Cash provided by (used in):
Operating activities
$
(645,477
)
$
(915,352
)
$
(1,023,087
)
$
(1,938,439
)
Investing activities
(3,247
)
(436,211
)
212,343
(223,868
)
Financing activities
691,000
1,618,000
818,000
2,436,000
Net increase in cash
42,276
266,437
7 ,256
273,693
Successor
Predecessor
Predecessor
Combined (1)
2010
2010
2010
2009
May 6
to
December 31
January 1
to
May 5
January 1
to
December 31
January 1
to
December 31
Cash provided by (used in):
Operating activities
(1,344,798
)
(1,023,087
)
(2,367,885
)
(6,058,735
)
Investing activities
(436,211
)
212,343
(223,868
)
(41,526
)
Financing activities
1,668,000
818,000
2,486,000
6,050,457
Net increase (decrease) in cash
(113,009
)
7,256
(105,753
)
(49,804
)
(1) The combination of Successor and Predecessor periods in
2010 is a non-GAAP measure. Grandparents.com has included the separate periods in this presentation to enable the nine month
and twelve month comparative reconciliation of the information to its GAAP presentation in the financial statements.
Grandparents.com has presented the information on a combined basis to provide a reasonable basis of comparison to 2011. The
2010 Purchase Transaction did not affect the nature of either our business or operations.
30
Cash Used In Operating Activities
Cash used in operating activities primarily consists of net loss
adjusted for certain non-cash items, including depreciation and amortization, transaction costs, gain on purchase of business and
the effect of changes in working capital and other items.
For the nine months ended September 30, 2011, net cash used in operating
activities of $645,477 consisted of net loss of $ 2,048,917, offset by $708,840 in adjustments for non-cash items and $694,600
in cash provided by changes in working capital and other activities. For the nine months ended September 30, 2010, net cash used
in operating activities of $1,938,439 consisted of net loss of $3,070,771, offset by $412,429 in adjustments for non-cash items
and  $719,903 in cash provided by changes in working capital and other activities.
For the year ended December 31, 2010, net cash used in operating
activities of $2,367,885 consisted of net loss of $3,634,401, offset by $638,738 in adjustments for non-cash items and $627,778
in cash provided by changes in working capital and other activities. For the year ended December 31, 2009, net cash used in operating
activities of $6,058,735 consisted of net loss of $5,526,101 and $807,399 in cash used in changes in working capital and other
activities, offset by $274,765 in adjustments for non-cash items.
Cash Provided by (Used In) Investing Activities
Cash used in investing activities primarily consists of changes
in the balances of restricted cash, acquisitions of businesses and purchases of property and equipment.
For the nine months ended September 30, 2011, net cash used in investing
activities was $3,247 compared to net cash used in investing activities of $223,868 for the nine months ended September 30, 2010.
For the year ended December 31, 2010, net cash used in investing activities was $223,868 compared to net cash used in investing
activities of $41,526 for the year ended December 31, 2009.
Cash Provided By Financing Activities
Cash provided by financing activities primarily consists of net
proceeds from the issuance of Class A Preferred Units, Class A Units, capital contributions, proceeds from short-term advances
and Proceeds from issuance of promissory notes.
For the nine months ended September 30, 2011, net cash provided
by financing activities was $691,000 compared to net cash provided by financing activities of $2,436,000 for the nine months ended
September 30, 2010. For the year ended December 31, 2010, net cash provided by financing activities was $2,486,000 compared to
net cash provided by financing activities of $6,050,457 for the year ended December 31, 2009.
Off-Balance Sheet Arrangements
We do not have any off-balance sheet arrangements and Grandparents.com
did not have any off-balance sheet arrangements.
Significant Accounting Policies
Cash and Cash Equivalents
Grandparents.com considers all highly liquid investments purchased
with an original maturity of three months or less to be cash equivalents. At September 30, 2011 and December 31, 2010, there were
no cash equivalents.
Accounts Receivable
Accounts receivable are reported in the balance sheet net of an
allowance for doubtful accounts. Grandparents.com estimates the allowance based on an analysis of specific clients, taking into
consideration the age of past due accounts, the client's payment history and an assessment of the client's ability
to pay. At September 30, 2011 and December 31, 2010, Grandparents.com determined that no allowance for doubtful accounts was necessary.
Property and Equipment
Property and equipment are stated at cost and depreciated using
the straight-line method over the estimated useful lives of the assets, ranging from three to seven years. Incidental expenditures
for maintenance and repairs are charged against operations. Renewals and betterment that materially extend the life of assets are
capitalized. Grandparents.com reviews the valuation of fixed assets and the remaining economic lives annually and adjusts depreciation
accordingly.
31
Impairment of Long-Lived Assets
Grandparents.com assesses the impairment of long-lived assets, which
include property and equipment and identifiable intangible assets, whenever events or changes in circumstances indicate that such
assets might be impaired and the carrying value may not be recoverable. Events and circumstances that may indicate that an asset
is impaired may include significant decreases in the market value of an asset, a change in the extent or manner in which an asset
is used, shifts in technology, loss of key management or personnel, changes in Grandparents.com's operating model or strategy
and competitive forces as well as other factors.
If events and circumstances indicate that the carrying amount of
an asset may not be recoverable and the expected undiscounted future cash flows attributable to the asset are less than the carrying
amount of the asset, an impairment loss equal to the excess of the asset's carrying value over its fair value is recorded.
Fair value is determined based on the present value of estimated expected future cash flows using a discount rate commensurate
with the risk involved, quoted market prices or appraised values, depending on the nature of the assets. In testing for a potential
impairment of goodwill, Grandparents.com will first compare the estimated fair value of each reporting unit with book value, including
goodwill. If the estimated fair value exceeds book value, goodwill is considered not to be impaired and no additional steps are
necessary. If, however, the fair value of the respective reporting units of Grandparents.com is less than book value, then Grandparents.com
is required to compare the carrying amount of the goodwill with its implied fair value. The estimate of implied fair value of goodwill
may require independent valuations of certain internally generated and unrecognized intangible assets such as its customer base,
software and technology and trademarks. If the carrying amount of the goodwill exceeds the implied fair value of that goodwill,
an impairment loss would be recognized in an amount equal to the excess.
Revenue Recognition
Grandparents.com recognizes revenue from arrangements with advertisers
and third-party affiliates, generally on the basis of impressions, at an agreed upon cost per thousand impressions.
This revenue is recognized on a net basis in the period in which the impressions occur. Revenue is recognized in accordance with
Financial Accounting Standards Board ("FASB") Accounting Standards Codification ("ASC") 605, Revenue Recognition.
Grandparents.com considers amounts to be earned when persuasive evidence of an arrangement exists, delivery of services has occurred,
price is fixed or determinable, and collectability is reasonably assured.
Advertising
Grandparents.com's policy is to report advertising costs
as expensed in the periods in which the costs are incurred. The total amounts charged to advertising expenses were
approximately $29,864 and $71,300 for the three months ended September 30, 2011 and 2010, respectively, $323,040 for the nine
months ended September 30, 2011, $444,300 for the period January 1 to May 5, 2010, and $133,010 for the period May 6, 2010 to
September 30, 2010.
Fair Value of Financial Instruments
Grandparents.com's financial instruments consist mainly of
cash, short-term accounts receivable, and payables. Grandparents.com believes that the carrying amounts approximate fair value
due to their short-term nature and market interest rates.
Equity-Based Compensation
Grandparents.com accounts for equity-based awards to employees and
others at fair value, measured at the grant date (based upon an estimate of the fair value of the compensation granted) and recorded
to expense over the requisite service period, which generally is the vesting period. Fair value of equity based compensation arrangements
are estimated using the Black-Scholes option pricing model.
Income Taxes
Grandparents.com has elected to be treated as Limited Liability
Company for Federal and State income tax purposes. Under this election, all taxable income, losses and credits pass through to
its members and are reflected on their individual income tax returns. Consequently, no provision for income taxes has been provided
by Grandparents.com.
Grandparents.com accounts for income taxes in accordance with ASC
740, Income Taxes. Grandparents.com records a liability for uncertain tax positions when it is probable that a loss has been incurred
and the amount can be reasonably estimated. As of December 31, 2010, Grandparents.com has no liabilities for uncertain tax positions.
Grandparents.com's policy is to recognize interest and penalties related to income tax matters as a component of income tax
expense. Grandparents.com continually evaluates expiring statutes of limitations, audits, proposed settlements, and changes in
tax law and new authoritative rulings. Grandparents.com is not subject to examinations by income tax authorities prior to 2010.
32
DESCRIPTION OF PROPERTY
As of the Closing Date, we assumed Grandparents.com's
lease of approximately 5,000 square feet in its headquarters located at 589 Eighth Avenue, 6th Floor, New York, New
York. The  lease expires in 2013. Our monthly rent payment under the lease is currently $13,667 per month. Steven E.
Leber and Joseph Bernstein have personally guaranteed the performance of the lease by us. We believe that our properties are
generally suitable to meet our needs for the foreseeable future. However, we will continue to seek additional space as needed
to satisfy our growth.
Following our asset sale on August 31, 2011, we had an arrangement
with Emerald Star for us to continue using its office located at 220 West Harrison Street, Seattle, Washington 98119 as our mailing
address and for holding our corporate records. Upon closing of the Transaction, we terminated this arrangement.
SECURITY OWNERSHIP OF CERTAIN BENEFICIAL
OWNERS AND MANAGEMENT
The following table sets forth certain information regarding our
shares of Series A Convertible Preferred Stock, Series B Convertible Preferred Stock and Common Stock beneficially owned after
giving effect to the Transaction and the Private Placement, for (i) each stockholder known to be the beneficial owner of 5% or
more of our outstanding shares of our voting securities, (ii) each Current Named Executive Officer (as defined below) and each
director, and (iii) all executive officers and directors as a group. A person is considered to beneficially own any shares over
which such person, directly or indirectly, exercises sole or shared voting or investment power, or of which such person has the
right to acquire beneficial ownership at any time within sixty (60) days through an exercise of stock options or warrants. Unless
otherwise indicated, voting and investment power relating to the shares shown in the table for directors and executive officers
will be exercised solely by the beneficial owner or shared by the owner and the owner's spouse or children.
For purposes of computing the percentage of shares of our securities
expected to be held by each person or group of persons named above, any shares that such person has or persons have the right to
acquire within sixty (60) days of the Closing Date is deemed to be outstanding, but is not deemed to be outstanding for the purpose
of computing the percentage ownership of any other person. The inclusion herein of any shares listed as beneficially owned does
not constitute an admission of beneficial ownership.
Series A Convertible
Preferred Stock
Series B Convertible
Preferred Stock
Common Stock
    (3)
Number of
Shares
Beneficially
Owned (1)
% of Shares
Beneficially
Owned
Number of
Shares
Beneficially
Owned (2)
% of Shares
Beneficially
Owned
Number of
Shares
Beneficially
Owned
% of Shares
Beneficially
Owned
% of Total
Voting
Rights (1),
(2), (4)
Executive Officers and Directors
Steven E. Leber (5) (6)
1
100
%
-
-
55,887,491
65.15
%
65.15
%
Joseph Bernstein (5) (6)
1
100
%
-
-
55,887,491
65.15
%
65.15
%
Jeffrey S. Mahl
-
-
-
-
-
-
-
Matthew Schwartz
-
-
25,000
*
107,476
*
*
Dr. Robert Cohen (5) (6)
1
100
%
-
-
55,887,491
65.15
%
65.15
%
Jeremy Office
-
-
-
-
-
-
-
Jeffrey L. Wasserman
-
-
25,000
*
107,476
*
*
Directors and executive officers as a group (7 persons) (5) (6)
1
100
%
50,000
*
56,102,442
65.40
%
65.40
%
Other 5% stockholders:
Grandparents.com, LLC (5) (6)
1
100
%
-
-
55,887,491
65.15
%
65.15
%
* Less than 1%
(1)
See "Description of Securities – Series A Convertible Preferred Stock" below
for a description of the voting and conversion rights of the Series A Convertible Preferred Stock.
(2)
See "Description of Securities – Series B Convertible Preferred Stock" below
for a description of the voting and conversion rights of the Series B Convertible Preferred Stock.
(3)
Based on 16,996,151 shares of Common Stock issued and outstanding as of the Closing Date. The Company
intends to file the Amendment within sixty (60) days of the Closing Date. Accordingly, persons holding shares of Series A Convertible
Preferred Stock or Series B Convertible Preferred Stock are deemed to beneficially own the shares of Common Stock into which such
securities will be converted.
33
(4)
Reflects (i) the combined voting power with respect to shares of Series A Convertible Preferred
Stock, Series B Convertible Preferred Stock and Common Stock prior to the filing of the Amendment; and (ii) total voting power
with respect to shares of Common Stock following the automatic conversion of the Series A Convertible Preferred Stock and Series
B Common Stock upon the filing of the Amendment.
(5)
The board of managers of Grandparents.com has voting and investment power with respect to securities
owned by Grandparents.com. In order to take any action, the approval of a majority of the members of the board of managers is required.
Messrs. Leber and Bernstein and Dr. Cohen serve as the only members of the Grandparents.com board of managers. As a result, Messrs.
Leber and Bernstein and Dr. Cohen may be deemed to have shared voting and investment power with respect to securities owned by
Grandparents.com. Messrs. Leber and Bernstein and Dr. Cohen each disclaim beneficial ownership of securities owned by Grandparents.com,
except to the extent of his pecuniary interest therein.
(6)
Grandparents.com entered into a lock-up agreement with us prohibiting the transfer of our equity
securities beneficially owned by Grandparents.com, subject to certain exceptions, for a period of twelve (12) months following
the closing of the Transaction. The lock-up agreement automatically terminates upon the upon the final closing of an offering of
Common Stock or other equity interest of the Company for the account of the Company having a price per share of at least $2.00
and resulting in at least $25,000,000 in gross proceeds (before underwriters' discounts and selling commissions) to the Company.
DIRECTORS AND EXECUTIVE OFFICERS
The following table sets forth the names, ages, and positions of
our new executive officers and directors as of the Closing Date. Upon the closing of the Transaction, our former directors and
officers resigned and the designees of Grandparents.com were appointed to fill the vacancies created by such resignations. Executive
officers are appointed by our Board of Directors. Each executive officer holds his office until he resigns, is removed by our Board
of Directors, or his successor is elected and qualified. Directors are elected annually by our stockholders at the annual meeting.
Each director holds his office until his successor is elected and qualified or his earlier resignation or removal. Our Board of
Directors has designated Messrs. Leber, Bernstein, Mahl and Schwartz as executive officers for purposes of Section 16 of the Exchange
Act.
Name
Age
Position
Steven E. Leber
70
Chairman, Co-Chief Executive Officer
Joseph Bernstein
63
Co-Chief Executive Officer,
Chief Financial Officer, Treasurer, Director
Jeffrey S. Mahl
60
President
Matthew Schwartz
39
Vice President – Administration,
Chief Compliance Officer, Secretary
Dr. Robert Cohen
68
Director
Jeremy Office
35
Director
Jeffrey L. Wasserman
41
Director, Assistant Secretary
The business background descriptions of the newly appointed directors
and officers are as follows:
Steven E. Leber
was appointed as our Co-Chief Executive Officer
and Chairman of our Board of Directors upon closing of the Transaction. Mr. Leber is also a Managing Director of Grandparents.com.
He joined Grandparents.com along with Messrs. Bernstein, Mahl and Schwartz in May 2010. In his renowned career, Mr. Leber earned
a reputation as one of the most innovative forces in the entertainment industry. His groundbreaking projects include:
·
As the agent for the Rolling Stones in the United States, Mr. Leber toured with the group for eight
years while at the William Morris Agency (WMA).
·
Jesus Christ Superstar
US arena tour, which became an innovative model for marketing musicals.
·
Beatlemania
, considered the first "juke-box musical" and the highest-grossing
musical of its time ($100,000,000 worldwide), and the first Broadway musical to be fully sponsored (Pepsi-Cola).
·
The Concert for Bangladesh
, produced at George Harrison's request and which paved
the way for fundraising concerts such as
BandAid
,
LiveAid
,
We Are the World
, and others.
·
The Texxas World Music Festival
, which blazed the trail for current festivals such as
Bonnaroo
and
Lollapalooza.
34
·
The Teenage Mutant Ninja Turtles
Coming Out of Their Shells
tour, which not only was among
the first to employ interactive technology but, more importantly, Mr. Leber structured a deal with Pizza Hut that established a
new industry model for corporate sponsorship.
·
The North American tour of the
Moscow Circus
, which was sponsored by American Express, broke
box off records and was named Family Show of the Year by Performance Magazine for three consecutive years.
At WMA, Mr. Leber launched the music division and became
the youngest member of the Executive Committee and stockholder. Mr. Leber later founded Contemporary Communications Corporation
(CCC)/Leber-Krebs, creating one of the largest and most profitable artist management firms in the industry. Artists handled by
CCC/Leber-Krebs included AC/DC, Aerosmith, Def Leppard, Michael Bolton, Joan Jett, the Scorpions, Parliament Funkadelic, Cameo,
Dionne Warwick, Ted Nugent, and dozens more. Of Billboards 100 Best Selling Albums at the time, 13 were produced by Leber-Krebs,
including AC/DC's
Back In
Black
, the second-highest selling album in music history. Mr. Leber also launched
Pro-Skate
, the first show to highlight professional ice skating as a team sport for ABC's Wide World of Sports. The
show ran for six years, was hosted by Dick Button, and introduced Peggy Fleming and Dorothy Hamill to American television audiences.
Currently, Mr. Leber is on the Advisory Board of Brooklyn Bagel Water Company, Inc. and a director of New Age Producers Group,
Inc., a holding company for his investment and entertainment ventures. Mr. Leber holds a B.A. in Accounting from Northeastern
University.
Joseph Bernstein
was appointed as our Co-Chief Executive
Officer, Chief Financial Officer, Treasurer and member of our Board of Directors upon closing of the Transaction. Mr. Bernstein
is also a Managing Director of Grandparents.com. He joined Grandparents.com along with Messrs. Leber, Mahl and Schwartz in May
2010. Mr. Bernstein started his career as a tax attorney at Cahill Gordon & Reindel (1975-1978) and Rosenman & Colin (1978-1981),
and later founded Bernstein Carter & Deyo, specializing in international taxation and foreign investments in the United States.
Mr. Bernstein also founded The New York Land Company and Americas Partners LLC, private real estate companies that initiated over
$1 billion in office and retail development projects in New York City, including: Americas Tower, the 50-story office tower at
1177 Avenue of the Americas, world headquarters to PriceWaterhouseCoopers; The Crown Building, at the corner of Fifth Avenue and
57th Street; 40 Wall Street, a 70-story office tower; and Herald Center, a vertical retail center at Broadway and 34th Street.
The company has also initiated development projects in Israel, including an entertainment city and a golf resort. From 1995-2004,
Mr. Bernstein was a joint venture partner of the Monticello Raceway in Sullivan County, NY, which included development of a Native
American and a NY State Lottery casino project. The Raceway was merged in 2004 into Empire Resorts, Inc., a public company, where
Mr. Bernstein served as CEO in 2009. From 2004-2010, Mr. Bernstein served as Co-Trustee, of the Catskill Litigation Trust, a publicly
registered trust, with Dennis Vacco, former Attorney General of the State of New York. Mr. Bernstein is currently a director of
Curator, LLC, a special opportunity fund, and Colorado, LLC, a wine in a can manufacturing company. Mr. Bernstein holds a B.A.
in Economics and a B.A. in Agricultural Business Management from the University of California at Davis (1970); an M.B.A. in Finance
from the University of California at Los Angeles Graduate School of Management (1971); a J.D. from the University of California
at Davis School of Law (1974); and a Master of Laws Degree (L.L.M.) in Taxation from the New York University Graduate School of
Law (1975).
Jeffrey S. Mahl
was appointed as our President upon closing
of the Transaction. Mr. Mahl is also President at Grandparents.com. Mr. Mahl has been in the Internet sales business for over two
decades. He joined Grandparents.com along with Messrs. Leber, Bernstein and Schwartz in May 2010. Mr. Mahl was formerly Senior
Vice President at ESPN, Inc., where he was responsible for building $200 million in sales revenue to over $1 billion in just a
few years. Mr. Mahl led advertising sales, media sales, media research, event marketing and promotion for ESPN, ESPN2, ESPN Classic,
ESPNews, E.R.T., and ESPN Internet Ventures (ESPN.com, NASCAR.COM, NFL.COM, NBA.COM). Mr. Mahl has also held positions as Senior
Vice President of Online and Mobile Advertising at National Cinemedia and President of Media Directions, L.L.C. He also served
as Executive Vice President, Ad Sales, with Mail.com Media Corporation and held senior management positions at AskJeeves, Gemstar-TV
Guide, and OCC Sports. At Gemstar-TV Guide, he served as President of the Media Sales Group and at AskJeeves as Executive Vice
President, bringing over 100 new clients to the site. Mr. Mahl holds a B.A. in Economics from Northeastern University in Boston.
Matthew Schwartz
was appointed as our Vice President –
Administration, Chief Compliance Officer and Secretary upon closing of the Transaction. Mr. Schwartz is also Vice President –
Finance & Operations and Chief Compliance Officer at Grandparents.com. He joined Grandparents.com along with Messrs. Leber,
Bernstein and Mahl in May 2010. Mr. Schwartz was previously in charge of finance and operations at Americas Partners LLC and other
venture companies owned by Joseph Bernstein, and for the publicly registered Catskill Litigation Trust, as financial administrator,
where he reported directly to former NY Attorney General Dennis Vacco and Joseph Bernstein, co-trustees. Mr. Schwartz also previously
served as Assistant to the CEO at Empire Resorts, Inc., a public company. Mr. Schwartz started his career in 1994 at North Shore
University Hospital in Manhasset, NY, where he was an EMT in the mobile intensive care transport unit for the North Shore Hospital
Emergency Department. Mr. Schwartz graduated from Hofstra University with a B.A. in Psychology in 1995.
35
Dr. Robert Cohen
was appointed to our Board of
Directors upon closing of the Transaction. Dr. Cohen is also a Managing Director of Grandparents.com. Dr. Cohen has been
engaged in the retail and wholesale optical business since 1968. He has served as Chief Executive Officer of Cohen Fashion
Optical, LLC and its predecessors ("Cohen Optical") since 1978. Cohen Optical is a leading eyewear chain consisting of 116 retail
optical stores. Twenty-four stores are located in high visibility locations in Manhattan. The remaining stores are located
throughout the northeast and Florida, most of which are sited in regional shopping centers. Dr. Cohen and his family are
principal members of EMVI Holdings, LLC the parent company of Emerging Vision, Inc., a national retail optical chain
comprised of approximately 120 locations operating primarily under the name Sterling Optical. Dr. Cohen and members of his
family are the principal members of General Vision Services, LLC ("GVS"). GVS is the largest managed care
third-party vision provider and is comprised of a network of over 250 providers and company stores with locations in the New
York Metropolitan area. Dr. Cohen and members of his immediate family are also the principal members of Vision World, LLC,
which is comprised of over 50 provider locations throughout Long Island and the metropolitan area. In 2010, Dr. Cohen and
members of his immediate family formed Beyond Readers, LLC, a company that holds the North American license to distribute a
unique multi-focal reading glass product that distributes their product through large retail chains. Dr. Cohen is a Managing
Partner and Director of ERA Realty Company, a real estate management and investment company, with real estate holdings in
commercial and residential properties. Dr. Cohen serves as an officer and director of several management and real
estate companies, as well as various other optical and non-optical related businesses.
Jeremy Office
was appointed to our Board of Directors upon
closing of the Transaction. Mr. Office is a principal of Maclendon Wealth Management, an independent Registered Investment Advisor
Firm offering financial planning services to high net worth individuals, where he has been engaged in such capacity since June
2011. Mr. Office is also Managing Partner of SJO Worldwide, a venture capital fund, where he has been engaged in such capacity
since June 2011. From April 2002 to June 2011, Mr. Office was a Vice-President and the Associate Director at Merrill Lynch where
he helped to build one of the most successful business units of the firm. Prior to that, he was a business consultant working with
corporations throughout the Caribbean, Latin America and the United States. Mr. Office has served as a Vice-President of the Boys
and Girls Club of America and been a past board member of the City of Delray Beach's Neighborhood Advisory Council. Mr. Office
earned his Ph.D., with honors, from Lynn University in Boca Raton, Florida. His work focused on Global Leadership and Management.
He achieved his Masters of Business Administration (M.B.A.) at the University of Florida in Gainesville, and he holds a Bachelor
of Business Administration in Finance from Miami University, Oxford, Ohio. Mr. Office is a Certified Financial Planner (CFP), Certified
Investment Management Analyst (CIMA), Chartered Financial Consultant (ChFC) and Chartered Retirement Planning Counselor (CRPC).
He holds FINRA Licenses 7, 9, and 10, and State License 66 as well as his Life, Health and Variable Annuity Insurance License (this
is commonly referred to as the 2-15 Agents License). He also completed the prestigious Bloomberg Certifications in Equities, Fixed
Income and Foreign Exchange.
Jeffrey L. Wasserman
was appointed to our Board
of Directors and as Assistant Secretary upon closing of the Transaction. Mr. Wasserman is a member of the law firm of
Sills Cummis & Gross. P.C. Mr. Wasserman joined the firm in May 2009 and is a member of its Corporate, Securities,
Banking and Finance, and Life Sciences Practice Groups. Mr. Wasserman provides corporate counseling to private equity and
venture capital funds, and public and private companies. His expertise includes the structuring and negotiating of leveraged
buy-outs, investments, complex acquisitions, secured and unsecured lending, and joint ventures/collaborations. Mr. Wasserman
also provides general corporate advice. Prior to joining Sills Cummis & Gross, Mr. Wasserman was a founder and Chief
Executive Officer of Caldwell Consumer Health, LLC, a privately owned pharmaceutical company, from August 2008 to April 2009.
He also served in senior management positions for other pharmaceutical start-ups. He was a founding general partner and
served as Senior Vice President and General Counsel to Laser Partners, L.P., a Boca Raton, Florida-based private
equity/venture capital fund. Mr. Wasserman started his career in the corporate and securities practice groups at Morgan Lewis
and Mayer Brown & Platt in New York. Mr. Wasserman received his J.D. from the Seton Hall University School of Law in
1998, magna cum laude, and received his B.A. from Tulane University in 1993.
Family Relationships
There are no family relationships among any of our officers or directors.
Director Independence
Because our common stock is not currently listed on a national securities
exchange, we have used the definition of "independence" of The NASDAQ Stock Market to determine whether our directors
are independent. The Board of Directors has determined that Dr. Cohen and Messrs. Office and Wasserman qualify as "independent"
in accordance with the published listing requirements of the NASDAQ Stock Market and for purposes of Section 16 of the Exchange
Act.
NASDAQ Listing Rule 5605(a)(2) provides that an "independent
director" is a person other than an officer or employee of the Company or any other individual having a relationship which,
in the opinion of our Board of Directors, would interfere with the exercise of independent judgment in carrying out the responsibilities
of a director. The NASDAQ listing rules provide that a director cannot be considered independent if:
·
the director is, or at any time during the past three years was, an employee of the Company;
36
·
the director or a family member of the director accepted any compensation from the Company in excess of $120,000 during
                                                                                                               any period of twelve consecutive months within the three years preceding the independence determination (subject to
                                                                                                               certain exclusions, including, among other things, compensation for board or board committee service);
·
a family member of the director is, or at any time during the past three years was, an executive officer of the Company;
·
the director or a family member of the director is a partner in, controlling stockholder of, or an executive officer of an
entity to which the Company made, or from which the Company received, payments in the current or any of the past three fiscal years
that exceed 5% of the recipient's consolidated gross revenue for that year or $200,000, whichever is greater (subject to
certain exclusions);
·
the director or a family member of the director is employed as an executive officer of an entity where, at any time during
the past three years, any of the executive officers of the Company served on the compensation committee of such other entity; or
·
the director or a family member of the director is a current partner of the Company's outside auditor, or at any time
during the past three years was a partner or employee of the Company's outside auditor, and who worked on the company's
audit.
Board Committees
We do not currently have a separately designated audit, nominating
or compensation committee. We intend, however, to establish such committees in the future.
Involvement in Certain Legal Proceedings
To the best of our knowledge, none of our current directors or executive
officers has, during the past ten years:
·
been convicted in a criminal proceeding or been subject to a pending criminal proceeding (excluding traffic violations and
other minor offenses);
·
had any bankruptcy petition filed by or against the business or property of the person, or of any partnership, corporation
or business association of which he was a general partner or executive officer, either at the time of the bankruptcy filing or
within two years prior to that time;
·
been subject to any order, judgment, or decree, not subsequently reversed, suspended or vacated, of any court of competent
jurisdiction or federal or state authority, permanently or temporarily enjoining, barring, suspending or otherwise limiting, his
involvement in any type of business, securities, futures, commodities, investment, banking, savings and loan, or insurance activities,
or to be associated with persons engaged in any such activity;
·
been found by a court of competent jurisdiction in a civil action or by the SEC or the Commodity Futures Trading Commission
to have violated a federal or state securities or commodities law, and the judgment has not been reversed, suspended, or vacated;
·
been the subject of, or a party to, any federal or state judicial or administrative order, judgment, decree, or finding, not
subsequently reversed, suspended or vacated (not including any settlement of a civil proceeding among private litigants), relating
to an alleged violation of any federal or state securities or commodities law or regulation, any law or regulation respecting financial
institutions or insurance companies including, but not limited to, a temporary or permanent injunction, order of disgorgement or
restitution, civil money penalty or temporary or permanent cease-and-desist order, or removal or prohibition order, or any law
or regulation prohibiting mail or wire fraud or fraud in connection with any business entity; or
·
been the subject of, or a party to, any sanction or order, not subsequently reversed, suspended or vacated, of any self-regulatory
organization (as defined in Section 3(a)(26) of the Exchange Act), any registered entity (as defined in Section 1(a)(29) of the
Commodity Exchange Act), or any equivalent exchange, association, entity or organization that has disciplinary authority over its
members or persons associated with a member.
Except as set forth in our discussion below in "Certain Relationships
and Related Transactions," none of our directors or executive officers has been involved in any transactions with us or any
of our directors, executive officers, affiliates or associates which are required to be disclosed pursuant to the rules and regulations
of the SEC.
Code of Ethics
The former members of our Board of Directors adopted a Code of Ethics
applicable to our principal executive officer, principal financial officer, controller and other employees performing similar functions.
Although our newly appointed executive officers are subject to this Code of Ethics, the newly appointed members of our Board of
Directors intend to adopt of new Code of Ethics. However, no formal steps have been taken by the Board of Directors in this regard.
37
EXECUTIVE COMPENSATION
Compensation of New Executive Officers of the Company
Employment Agreements with Current Executive Officers
In connection with the closing of
the Transaction, we entered into employment agreements with each of (i) Steven E. Leber, our newly appointed Co-Chief
Executive Officer and Chairman, (ii) Joseph Bernstein, our newly appointed Co-Chief Executive Officer, Chief Financial
Officer and Treasurer and member of our Board of Directors, (iii) Jeffrey S. Mahl, our newly appointed President, and (iv)
Matthew Schwartz, our newly appointed Vice President – Administration, Chief Compliance Officer and  Secretary
(collectively, the "Current Named Executive Officers"). The following sets forth a summary of such employment
agreements.
Steven E. Leber
On the Closing Date, we entered into an employment agreement with
Steven E. Leber, our newly appointed Chairman and Co-Chief Executive Officer. The term of the agreement commenced on the Closing
Date and expires on the one year anniversary of the Closing Date. The agreement provides for an annual base salary of $225,000.
Mr. Leber was also granted non-qualified stock options to purchase 1,000,000 shares of Common Stock under the 2012 Stock Incentive
Plan. The options are exercisable for a period of ten (10) years from the date of grant with one-third (1/3) of such options vesting
and becoming exercisable on the first anniversary of the date of grant and the remaining two-thirds (2/3) of such options becoming
vested and exercisable in eight (8) equal quarterly installments thereafter. Mr. Leber is also entitled to participate in any bonus,
incentive, pension or profit sharing plan or other type of additional benefits provided by the Company for the benefit of officers
and/or regular employees. The options are exercisable at a price per share of $0.60, which was the closing trading price of
our Common Stock on February 24, 2012, the date of grant.
We may terminate Mr. Leber's employment for
"cause" which shall be deemed to exist if Mr. Leber (i) is in breach of any material obligation owed to us under
his employment agreement, or (ii) engages in a criminal act or engages in any act of moral turpitude. We may terminate his
employment for cause upon five (5) day's prior written notice to Mr. Leber. In the event of termination of his
employment for cause, Mr. Leber will be paid only at the then applicable base salary rate up to and including the date of
termination.
Mr. Leber may terminate his employment at his discretion by providing
at least thirty (30) days prior written notice to us. In the event of termination of his employment by Mr. Leber, we may immediately
relieve Mr. Leber of all duties and immediately terminate his employment agreement, provided that we pay Mr. Leber at the then
applicable base salary rate to the date of termination set forth in Mr. Leber's original notice of his termination.
In the event we are acquired, or is the non-surviving party in a
merger, or sells all or substantially all of its assets, we will pay Mr. Leber two (2) times the then applicable base salary rate
less any money to be received by Mr. Leber from the surviving entity or buyer.
In the event we terminate Mr. Leber without cause, we shall be bound
to pay the unpaid salary and vacation amounts remaining under his employment agreement and pay a pro rata amount of any bonus earned
as of the date of termination.
The agreement contains customary confidentiality provisions and
provides that Mr. Leber will be subject to noncompetition and nonsolicitation covenants for a period of one year following the
termination of his employment. The agreement also contains a mandatory arbitration provision.
Joseph Bernstein
On the Closing Date, we entered into an employment agreement with
Joseph Bernstein, our newly Co-Chief Executive Officer, Chief Financial Officer and Treasurer and member of our Board of Directors.
The term of the agreement commenced on the Closing Date and expires on the one year anniversary of the Closing Date. The agreement
provides for an annual base salary of $225,000. Mr. Bernstein was also granted non-qualified stock options to purchase 1,000,000
shares of Common Stock under the 2012 Stock Incentive Plan. The options are exercisable for a period of ten (10) years from the
date of grant with one-third (1/3) of such options vesting and becoming exercisable on the first anniversary of the date of grant
and the remaining two-thirds (2/3) of such options becoming vested and exercisable in eight (8) equal quarterly installments thereafter.
Mr. Bernstein is also entitled to participate in any bonus, incentive, pension or profit sharing plan or other type of additional
benefits provided by us for the benefit of officers and/or regular employees. The options are exercisable at a price per share
of $0.60, which was the closing trading price of our Common Stock on February 24, 2012, the date of grant.
We may terminate Mr. Bernstein's employment for "cause"
which shall be deemed to exist if Mr. Bernstein (i) is in breach of any material obligation owed to the Company under his employment
agreement, or (ii) engages in a criminal act or engages in any act of moral turpitude. We may terminate his
employment for cause
upon five (5) day's prior written notice to Mr. Bernstein. In the event of termination of his employment for cause, Mr. Bernstein
will be paid only at the then applicable base salary rate up to and including the date of termination.
38
Mr. Bernstein may terminate his employment at his discretion by
providing at least thirty (30) days prior written notice to us. In the event of termination of his employment by Mr. Bernstein,
we may immediately relieve Mr. Bernstein of all duties and immediately terminate his employment agreement, provided that we pay
Mr. Bernstein at the then applicable base salary rate to the date of termination set forth in Mr. Bernstein's original notice
of his termination.
In the event we are is acquired, or is the non-surviving party in
a merger, or sells all or substantially all of its assets, we will pay Mr. Bernstein two (2) times the then applicable base salary
rate less any money to be received by Mr. Bernstein from the surviving entity or buyer.
In the event we terminate Mr. Bernstein without cause, we shall
be bound to pay the unpaid salary and vacation amounts remaining under his employment agreement and pay a pro rata amount of any
bonus earned as of the date of termination.
The agreement contains customary confidentiality provisions and
provides that Mr. Bernstein will be subject to noncompetition and nonsolicitation covenants for a period of one year following
the termination of his employment. The agreement also contains a mandatory arbitration provision.
Jeffrey S. Mahl
On the Closing Date, we entered into an employment agreement
with Jeffrey S. Mahl, our newly appointed President. The term of the agreement commenced on the Closing Date and expires on
the one year anniversary of the Closing Date. The agreement provides for an annual base salary of $150,000. Mr. Mahl was also
granted non-qualified stock options to purchase 250,000 shares of Common Stock under the 2012 Stock Incentive Plan. The
options are exercisable for a period of ten (10) years from the date of grant with one-third (1/3) of such options vesting
and becoming exercisable on the first anniversary of the date of grant and the remaining two-thirds (2/3) of such options
becoming vested and exercisable in eight (8) equal quarterly installments thereafter. Mr. Mahl is also entitled to
participate in any bonus, incentive, pension or profit sharing plan or other type of additional benefits provided by us for
the benefit of officers and/or regular employees. The options are exercisable at a price per share of $0.60, which was the
closing trading price of our Common Stock on February 24, 2012, the date of grant.
We may terminate Mr. Mahl's employment for
"cause" which shall be deemed to exist if Mr. Mahl (i) is in breach of any material obligation owed to us under
his employment agreement, or (ii) engages in a criminal act or engages in any act of moral turpitude. We may terminate  his
employment for cause upon five (5) day's prior written notice to Mr. Mahl. In the event of termination of his
employment for cause, Mr. Mahl will be paid only at the then applicable base salary rate up to and including the date of
termination.
Mr. Mahl may terminate his employment at his discretion by providing
at least thirty (30) days prior written notice to us. In the event of termination of his employment by Mr. Mahl, we may immediately
relieve Mr. Mahl of all duties and immediately terminate his employment agreement, provided that we pay Mr. Mahl at the then applicable
base salary rate to the date of termination set forth in Mr. Mahl's original notice of his termination.
In the event we are acquired, or is the non-surviving party in a
merger, or sells all or substantially all of its assets, we will pay Mr. Mahl two (2) times the then applicable base salary rate
less any money to be received by Mr. Mahl from the surviving entity or buyer.
In the event we terminate Mr. Mahl without cause, we shall be bound
to pay the unpaid salary and vacation amounts remaining under his employment agreement and pay a pro rata amount of any bonus earned
as of the date of termination.
The agreement contains customary confidentiality provisions and
provides that Mr. Mahl will be subject to noncompetition and nonsolicitation covenants for a period of one year following the termination
of his employment. The agreement also contains a mandatory arbitration provision.
Matthew Schwartz
On the Closing Date, we entered into an employment agreement with
Matthew Schwartz, our newly appointed Vice President – Administration, Chief Compliance Officer and Secretary. The term
of the agreement commenced on the Closing Date and expires on the one year anniversary of the Closing Date. The agreement provides
for an annual base salary of $100,000. Mr. Schwartz was also granted non-qualified stock options to purchase 200,000 shares of
Common Stock under the 2012 Stock Incentive Plan. The options are exercisable for a period of ten (10) years from the date of
grant with one-third (1/3) of such options vesting and becoming exercisable on the first anniversary of the date of grant and
the remaining two-thirds (2/3) of such options becoming vested and exercisable in eight (8) equal quarterly installments thereafter.
Mr. Schwartz is also entitled to participate in any bonus, incentive, pension or profit sharing plan or other type of additional
benefits provided by us for the benefit of officers and/or regular employees. The options are exercisable at a price per share
of $0.60 which was the closing trading price of our Common Stock on February 24, 2012, the date of grant.
39
We may terminate Mr. Schwartz's employment for "cause"
which shall be deemed to exist if Mr. Schwartz (i) is in breach of any material obligation owed to the Company under his employment
agreement, or (ii) engages in a criminal act or engages in any act of moral turpitude. We may terminate his
employment for cause
upon five (5) day's prior written notice to Mr. Schwartz. In the event of termination of his employment for cause, Mr. Schwartz
will be paid only at the then applicable base salary rate up to and including the date of termination.
Mr. Schwartz may terminate his employment at his discretion by providing
at least thirty (30) days prior written notice to us. In the event of termination of his employment by Mr. Schwartz, we may immediately
relieve Mr. Schwartz of all duties and immediately terminate his employment agreement, provided that we shall pay Mr. Schwartz
at the then applicable base salary rate to the date of termination set forth in Mr. Schwartz's original notice of his termination.
In the event we are acquired, or is the non-surviving party in a
merger, or sells all or substantially all of its assets, we will pay Mr. Schwartz two (2) times the then applicable base salary
rate less any money to be received by Mr. Schwartz from the surviving entity or buyer.
In the event we terminate Mr. Schwartz without cause, we shall be
bound to pay the unpaid salary and vacation amounts remaining under his employment agreement and pay a pro rata amount of any bonus
earned as of the date of termination.
The agreement contains customary confidentiality provisions and
provides that Mr. Schwartz will be subject to noncompetition and nonsolicitation covenants for a period of one year following the
termination of his employment. The agreement also contains a mandatory arbitration provision.
Equity Incentive Plans
In connection with the closing of the Transaction, we adopted a
new stock incentive plan (the "2012 Stock Incentive Plan"). The 2012 Stock Incentive Plan permits the Company to make
awards of stock options or grants of restricted stock to its employees, directors, officers, consultants, agents, advisors and
independent contractors. A maximum of 10,317,691 shares of Common Stock are available for issuance under the 2012 Stock Incentive
Plan. The Contribution Agreement contains a prohibition on the ability of the Company to grant any options, stock awards or issue
any other securities to any insiders, officers or directors of the Company that would give such persons a right to sell such securities
prior to the first anniversary of the Closing Date.
The Stock Incentive Plan is administered by the Board of Directors.
The Board of Directors may make awards under the Plan in the form of stock options (both qualified and non-qualified) and restricted
stock. The Board of Directors has authority to designate the recipients of such awards, to grant awards, to determine the form
of award and to fix all terms of awards granted all in accordance with the 2012 Stock Incentive Plan. Incentive stock options intended
to qualify under Section 422A of the Internal Revenue Code may be granted only to employees of the Company and must have an exercise
price equal to 100% of the fair market value of our common stock on the grant date (110% in the case of incentive options granted
to any 10% stockholder of the Company) and may not exceed a term of ten years (five years in the case of incentive options granted
to any 10% stockholder of the Company). Non-qualified stock options and other awards may be granted on such terms as the Board
of Directors may determine.
On the Closing Date and immediately following the closings of the
Transaction and Private Placement, Grandparents.com, which then owned approximately 65% of the voting control of the Company, approved,
by written consent, the 2012 Stock Incentive Plan. The 2012 Stock Incentive Plan was approved by our newly appointed Board of Directors
on the Closing Date.
Effective at closing of the Transaction, we terminated our 2005
Stock Incentive Plan, except that all outstanding options will continue in accordance with their terms. As of the Closing Date,
there are outstanding stock options for 200,000 shares under the 2005 Stock Incentive Plan and these options vested and became
fully exercisable immediately prior to the closing of the Transaction.
Grandparents.com Summary Compensation Table
The following table shows for each of the
two fiscal years of Grandparents.com ended December 31, 2011 and 2010, respectively, compensation awarded or paid by Grandparents.com
to, or earned from Grandparents.com by our Current Named Executive Officers.
40
Name and Principal Position
Fiscal
Year
Salary
($)
Option
Awards (1)
($)
All
Other
Compensation
($)
Total
($)
Steven E. Leber (2)
2011
-
-
-
-
Co-Chief Executive Officer
2010
-
-
-
-
Joseph Bernstein (2)
2011
-
-
-
-
Co-Chief Executive Officer,
2010
-
-
-
-
Chief Financial Officer and
Treasurer
Jeffrey S. Mahl
2011
$
120,000
$
45,000
$
20,736
(3)
$
185,736
President
2010
61,875
90,000
13,625
(3)
165,500
Matthew Schwartz
2011
75,000
18,000
-
93,000
VP – Administration,
2010
32,083
4,500
-
36,583
Chief Compliance Officer and
Secretary
(1)
The amounts reported in the Option Awards column represent the grant date fair value of such awards to the Current Named Executive
Officers, computed in accordance with Financial Accounting Standards Board Accounting Standards Codification Topic 718. In 2011,
Grandparents.com granted Mr. Mahl an option to purchase 100,000 of its Class B Units at an exercise price of $0.86 and granted
Mr. Schwartz an option to purchase 40,000 Class B Units at an exercise price of $0.86. The estimated grant date fair market value
of the options granted in 2011 was $0.45 per option. In 2010, Grandparents.com granted Mr. Mahl an option to purchase 200,000 of
its Class A Units at an exercise price of $0.625 and granted Mr. Schwartz an option to purchase 10,000 Class A Units at an exercise
price of $0.625. The grant date fair market value of the options granted in 2010 was $0.45 per option. Grandparents.com uses the
Black-Scholes option-pricing model with the following assumptions: (i) risk-free interest rate 1.18%, (ii) expected life (years)
5.0, (iii) expected volatility 95.00%, and (iv) dividend yield 0.00%.
(2)
Grandparents.com did not award or pay any compensation directly to Messrs. Leber and Bernstein in 2011 or 2010. Grandparents.com
paid management fees to LBG, an entity controlled by Messrs. Leber and Bernstein. See "Certain Relationships and Related
Transactions – Transactions between Grandparents.com and its Managers, Executive Officers and 5% Members prior to the Transaction
– Management Fees."
(3)
Reflects commission of five percent (5%) on gross advertising revenues actually received by Grandparents.com during the applicable
fiscal year.
Grandparents.com Outstanding Equity Awards at 2011 Fiscal
Year-End
The following table
presents information about unexercised options in Grandparents.com held by each of the Current Named Executive Officers as of December
31, 2011. There were no unvested equity awards of Grandparents.com as of December 31, 2011. In addition, none of the Current Named
Executive Officers held any equity awards in the Company as of December 31, 2011.
Option Awards
Number of
Number of
Securities
Securities
Underlying
Underlying
Unexercised
Unexercised
Options
Options
Option
Option
(#)
(#)
Exercise
Expiration
Name
Exercisable
Unexercisable
Price
Date
$
Jeffrey S. Mahl
66,667
133,333
0.625
10/1/2015
-
100,000
0.86
10/1/2015
Matthew Schwartz
3,337
6,663
0.86
10/14/2016
-
40,000
0.86
10/14/2016
Compensation of Former Executive Officers of the Company
Summary Compensation Table
The following table shows for each of the two fiscal years of the
Company ended June 30, 2011 and 2010, respectively, compensation awarded or paid to, or earned by, Ronald R. Helm, our former Chief
Executive Officer and Chairman, Elizabeth T. Leary, Ph.D., our former Chief Scientific Officer and Michael P. Murphy, Ph.D., our
former Chief Operating Officer, each of which resigned on August 31, 2011, in connection with the sale of substantially all of
our assets to Emerald Star (collectively, the "Former Named Executive Officers").
41
Name and Principal
Position
Fiscal
Year
Salary
($)
Bonus
($)
Stock
Awards
($)
Option
Awards(1)
($)
Nonequity
Incentive Plan
Compensation
($)
All
Other
Comp.
($)
Total
($)
Ronald R. Helm
2011
$
308,833
-
-
$
234,000
-
$
5,865
(2)
$
548,698
Former Chief Executive
2010
285,417
-
$
88,000
174,000
$
56,250
7,983
611,650
Officer and Chairman
Elizabeth T. Leary
2011
139,809
-
-
25,500
-
3,209
(3)
168,517
Former Chief Scientific
2010
142,500
-
5,400
12,325
15,818
5,875
181,918
Officer
Michael P. Murphy
2011
170,674
-
-
25,500
-
10,960
(4)
207,134
Former Chief
2010
170,231
-
15,000
12,325
21,852
7,351
226,759
Operating Officer
(1)
The amounts reported in the Stock Awards and Option Awards columns represent the grant date fair value of such awards to the
Former Named Executive Officers, computed in accordance with Financial Accounting Standards Board Accounting Standards Codification
Topic 718. We use the Black-Scholes option-pricing model to estimate the calculated value of our share-based payments. Stock options
are valued as of the date of grant. The volatility assumption used in the Black-Scholes formula is based on the volatility of our
common stock. For the stock option awards made to the Former Named Executive Officers in fiscal 2011, we used the following assumptions
to compute fair value: (i) expected volatility of 117-148%, (ii) expected dividend yield of 0.00%, (iii) risk-free interest rate
of 2.54-2.96%, and (iv) expected life of 10 years.
(2)
The amount listed under "All Other Compensation" in fiscal 2011 consists of $2,615 in life insurance premiums paid
by us for Mr. Helm's benefit and $3,250 in company-contributions for Mr. Helm's account in the 401(k) plan.
(3)
The amount listed under "All Other Compensation" in fiscal 2011 consists of $2,120 of life insurance premiums paid
by us for Dr. Leary's benefit and $1,088 in company-contributions for Dr. Leary's account in the 401(k) plan.
(4)
The amount listed under "All Other Compensation" in fiscal 2011 consists of $2,464 in life insurance premiums paid
by us for Dr. Murphy's benefit and $8,497 in company-contributions for Dr. Murphy's account in the 401(k) plan.
Outstanding Equity Awards at 2011 Fiscal Year-End
The following table presents information about unexercised stock
options and unvested stock awards held by each of the Former Named Executive Officers as of June 30, 2011. All of the stock options
terminated and stock awards vested in full upon the sale of substantially all of our assets to Emerald Star.
Option Awards
Stock Awards
Number of
Number of
Securities
Securities
Market
Underlying
Underlying
Number
Value of
Unexercised
Unexercised
of Shares
Shares of
Options
Options
Option
Option
of Stock
Stock
(#)
(#)
Exercise
Expiration
That Have
That Have
Name
Exercisable
Unexercisable
Price
Date
Not Vested
Not Vested (1)
($)
(#)
($)
Ronald R. Helm
340,000
-
0.81
01/30/2014
4,167
$
1,042
4,049
-
0.81
01/30/2014
62,719
15,680
133,333
16,667
0.41
10/01/2018
116,666
83,334
0.88
10/01/2019
150,000
450,000
0.39
10/01/2020
Elizabeth T. Leary
21,922
-
0.51
08/27/2012
750
188
157,887
-
0.81
01/30/2014
5,000
1,250
16,666
8,334
0.60
07/01/2019
25,000
50,000
0.34
07/01/2020
Michael P. Murphy
4,000
-
0.51
08/27/2012
1,167
292
90,000
-
0.86
08/29/2015
13,889
3,472
18,000
-
0.99
08/25/2016
16,666
8,334
0.60
07/01/2019
25,000
50,000
0.34
07/01/2020
(1)
Market value is calculated on $0.25 per share, the closing price of our common stock on June 30, 2011.
42
Compensation of Officers in Fiscal 2012 following the Emerald
Star Asset Sale
Stanley L. Schloz, our former President immediately prior to the
Transaction, and Curtis J. Scheel, our former Secretary and Treasurer immediately prior to the Transaction, did not receive any
compensation for serving as executive officers. Messrs. Schloz and Scheel resigned as officers of the Company effective upon the
closing of the Transaction.
Compensation of Current Directors
Our newly appointed non-employee directors will each
receive an annual fee of $25,000, which shall be paid quarterly. Non-employee directors will also earn $1,000 for each meeting
attended in person or $500 for each meeting attended telephonically. On February 24, 2012, we issued the following options to
our newly appointed non-employee directors:
·
A non-qualified stock option to purchase 1,000,000 shares of Common Stock to Dr. Cohen of which one-third (1/3) of such
                                                                                                               shares shall become vested and exercisable upon the one year anniversary of the date of grant and the remaining two-thirds
                                                                                                               (2/3)                                                                                                                of
                                                                                                               such
                                                                                                               shares shall become vested and exercisable in eight (8) equal quarterly installments thereafter.
·
A non-qualified stock option to purchase 250,000 shares of Common Stock to Mr. Office of which 150,000 of such option
                                                                                                               shall                                                                                                                become
                                                                                                               vested                                                                                                                and
                                                                                                               exercisable upon the one year anniversary of the date of grant and the remaining
                                                                                                               shares                                                                                                                shall
                                                                                                               become vested and exercisable in eight (8) equal quarterly installments thereafter.
·
A non-qualified stock option to purchase 150,000 shares of Common Stock to Mr. Wasserman which shall become fully vested and
exercisable upon the one year anniversary of the date of grant.
The options are exercisable for a period of ten (10) years
from the date of grant and shall become fully vested and exercisable upon the one year anniversary of the date of grant. The
options are exercisable at a price per share of $0.60, which was the closing trading price of the Common Stock on February
24, 2012, the date of grant.
Directors who are also officers of the Company will not receive
additional compensation for serving on the Board.
Compensation of Former Directors
During the fiscal year ended June 30, 2011, we did not separately
pay our former directors who were also our employees any additional compensation for serving as a director, other than customary
reimbursement of expenses. This applied to Ronald R. Helm, our former Chairman and Chief Executive Officer and Kenneth R. Waters,
our former Director of Strategic Planning and Corporate Secretary.
The following table presents information about the compensation
that was paid or earned during our fiscal year ended June 30, 2011 by our former directors for their service on the Board (other
than Ronald R. Helm, our former Chairman and Chief Executive Officer, whose compensation is presented in the Summary Compensation
Table under "Compensation of Executive Officers – Compensation of Former Executive Officers").
Name
Fees Earned or
Paid in Cash
Stock Awards
Option Awards
Total
($)
($)(1)
($)(1)(2)
($)
Mario Ehlers (3)
$
19,000
-
$
18,700
$
37,700
Paul G. Kanan (3)
15,313
-
11,900
27,213
Richard W. Palfreyman (3)
23,750
-
11,900
35,650
Curtis J. Scheel (3)
23,750
-
11,900
35,650
Stanley L. Schloz (3)
21,375
-
11,900
33,275
Kenneth R. Waters (3)(5)
-
-
-
-
(1)
As of the end of the 2011 fiscal year, the directors listed in the Director Compensation Table held the following aggregate
number of stock awards and stock options. All of the stock options terminated and stock awards vested in full upon the sale of
substantially all of our assets to Emerald Star.
·
Dr. Ehlers held 17,500 shares of restricted stock and 176,178 stock options.
·
Mr. Kanan held zero shares of restricted stock and zero stock options.
·
Mr. Palfreyman held 30,000 shares of restricted stock and 106,761 stock options.
·
Mr. Scheel held 30,000 shares of restricted stock and 60,000 stock options.
·
Mr. Schloz held 30,000 shares of restricted stock and 35,000 stock options.
·
Mr. Waters held 39,000 shares of restricted stock and 238,043 stock options.
43
(2)
The amounts reported in the Option Awards columns represent the grant date fair value of their awards, computed in accordance
with Financial Accounting Standards Board Accounting Standards Codification Topic 718.  We use the Black-Scholes option-pricing
model to estimate the calculated value of these Option Awards as of the date of grant. The volatility assumption used in the Black-Scholes
formula is based on the volatility of our common stock.  For the Option Awards granted to the directors in fiscal 2011,
we used the following assumptions to compute the fair value,  (i) expected volatility of 117%, (ii) expected
dividend yield of 0.00%, (iii) risk-free interest rate of 2.96%, and (iv) expected life of ten (10) years.
(3)
Dr. Ehlers, Mr. Palfreyman and Mr. Water resigned from the Board of Directors on August 31, 2011.  Mr. Kanan resigned
from the Board of Directors on February 26, 2011. Messrs. Scheel and Schloz resigned from the Board of Directors on the Closing
Date.
(4)
During fiscal year 2011, Mr. Waters was an employee, serving as our Director of Strategic Planning, and he received no
                                                            separate cash or equity compensation for serving on the Board of Directors.
Compensation of Former Directors in Fiscal 2012 following
the Emerald Star Asset Sale
Effective on September 1, 2011, immediately following closing of
the asset sale to Emerald Star, our Board of Directors consisted of four directors – Curtis J. Scheel, Stanley L. Schloz,
Fred Burstein and Andrew Ecclestone. On September 16, 2011, our former Board approved compensation to the directors consisting
of a grant of performance based stock options and cash compensation. All former directors were treated equally and there was no
separate compensation for directors who served as executive officers. Specifically, our former Board approved an award of 3-year
stock options for 100,000 shares of Common Stock to each former director at an exercise price of $0.30 per share. These options
are performance based such that they would vest and become exercisable only upon consummation of an acquisition transaction with
an operating company, with the effect of the transaction that we would longer be deemed a shell company. Such options became fully
vested and exercisable upon the closing of the Transaction. The former Board also approved monthly cash compensation to each director
in the amount of $1,500. We paid a bonus of $5,000 to each of our directors upon the closing of the Transaction.
CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS,
AND DIRECTOR INDEPENDENCE
Transactions between the Company and Grandparents.com
prior to the Transaction
On December 30, 2011, we entered into a non-binding letter of intent
(the "Letter of Intent") with Grandparents.com for a proposed transaction. Also on December 30, 2011, in connection
with the Letter of Intent, we provided a $500,000 Bridge Loan to Grandparents.com, secured by a first priority security interest
in all of the assets of Grandparents.com. The purpose of this Bridge Loan was to provide financing and working capital to Grandparents.com
in advance of negotiation and closing of a definitive acquisition agreement. We previously announced the Letter of Intent and Bridge
Loan in our Current Report on Form 8-K filed on January 5, 2012. The Bridge Loan was assumed by us pursuant to the Transaction
and then cancelled and all liens related thereto were released.
Transactions with our Newly Appointed Directors, Executive
Officers and 5% Stockholders
Promissory Notes
Reference is made to the disclosure set forth under Item 2.03 of
this Report regarding the Promissory Notes, which disclosure is incorporated herein by reference.
Jeremy Office
Upon closing of the Transaction, Jeremy Office was appointed as
a member of our Board of Directors. In October 2011, Grandparents.com entered into an Investment Agreement with SJO Worldwide,
Inc. ("SJO"), an entity controlled by Mr. Office, pursuant to which SJO purchased $250,000 of Class A Units of Grandparents.com.
Jeffrey L. Wasserman
Upon closing of the Transaction, Jeffrey L. Wasserman
was appointed as a member of our Board of Directors and our Assistant Secretary. Mr. Wasserman is a member of Sills Cummis
& Gross, P.C. Since January 1, 2011, Grandparents.com incurred legal fees of $46,000 in favor of Sills Cummis &
Gross, P.C. Grandparents.com incurred an additional $104,000 in legal fees in favor of Sills Cummis & Gross, P.C. in
connection with the Transaction and Private Placement through the Closing Date. In addition, we retained Sills Cummis &
Gross, P.C. as our outside counsel following the closing of the Transaction.
44
Transactions with our Former Directors, Executive Officers
and 5% Stockholders
Indemnification and Exculpation Obligations of the Company
pursuant to the Contribution Agreement
The Contribution Agreement contains provisions requiring us to continue
to afford our former officers and directors immediately prior to the closing of the Transaction certain rights to exculpation and
indemnification for acts or omissions occurring prior to the Closing Date and requiring us to maintain directors' and officers'
insurance in favor of such former directors and officers.
Asset Purchase Agreement with Emerald Star
On May 23, 2011, we entered into an asset purchase agreement with
Emerald Star, an entity newly formed and controlled by Ronald R. Helm, our then President, Chief Executive Officer and Director.
On August 31, 2011, pursuant to the asset purchase agreement, we sold to Emerald Star substantially all of the assets and liabilities
related to our core business of providing specialty reference laboratory services and clinical biomarker services, including the
term loan with Mr. Giles described below.
Loan with Terry Giles
On September 1, 2009, we closed a $4 million term loan with Terry
M. Giles, a then-member of our Board of Directors. The loan was secured by a blanket security interest on our assets and the assets
of our subsidiaries. The loan bore interest at a fixed rate of 12.0% per annum, and was originally due and payable over 48 months
with the first 8 months of payments being interest only ($40,000 per month, beginning September 30, 2009) and the remaining 40
months at a monthly payment of $121,822 of principal and interest. We were obligated to pay a quarterly finance fee of $12,000
to Mr. Giles during the 48-month term of the loan. In connection with and as required by the loan, on September 1, 2009, we repurchased
2,391,906 shares of common stock from Mr. Giles and certain other stockholders at a price of $0.70 per share, pursuant to a Stock
Redemption Agreement. We received net loan proceeds of $2,325,666, after payment of the stock repurchase, but excluding our legal
and other expenses for the transaction. Effective upon closing of the loan transaction, Mr. Giles resigned from our Board of Directors.
Mr. Giles was entitled to certain ongoing Board of Directors observation rights while the loan remained outstanding.
Our loan with Mr. Giles was approved by all of the members of Board
of Directors (with Mr. Giles abstaining), and the Board of Directors determined that the terms of the loan transaction were more
favorable than we could have obtained from an unaffiliated third party, and that the terms of the loan were fair to and in the
best interest of our stockholders.
On October 1, 2010, we amended the loan with Mr. Giles to extend
the term of the loan on a portion of the principal balance and to reamortize the loan, reducing the required monthly payment, as
follows: (i) for the remainder of the original 48-month term of the loan (thru August 31, 2013), we were required to make monthly
payments of principal and interest in the amount of $104,644.68, (ii) for an extended 19 month term (thru March 31 , 2015), we
were required to make monthly payments of principal and interest in the amount of $20,000.00, and (iii) on April 30, 2015, we were
required to make a final balloon payment in the amount of $600,000.00.
On December 9, 2010, we further amended the loan (i) to decrease
the interest rate on a portion of the loan from 12.0% to 11.5% per annum and to adjust the amortization schedule accordingly, and
(ii) to add an event of default for a Change of Control, in the event that a majority of the directors on the Board of Directors
changes following a person or group owning 25% or more of the voting stock of the Company.
On August 31, 2011, the loan with Mr. Giles was assigned to Emerald
Star in connection with closing of the asset sale.
Transactions between Grandparents.com and its Managers,
Executive Officers and 5% Members prior to the Transaction
Management Fees
Pursuant to an oral agreement, Grandparents.com has agreed to pay
$50,000 per month to LBG, an entity controlled by Messrs. Leber and Bernstein, each a Managing Director of Grandparents.com and
each a newly appointed director and executive officer of the Company upon the closing of the 2010 Purchase Agreement, for management
services provided to Grandparents.com. LBG is also a member of Grandparents.com. Grandparents.com has accrued but has not paid
$562,500 in management fees through February 2012 in favor of LBG pursuant to this agreement. The accrued and unpaid management
fees payable by Grandparents.com to LBG were assumed by the Company at the closing of the Transaction and the Company issued a
promissory note therefore.
Guaranty of Lease
Messrs. Leber and Bernstein each entered into a personal guaranty
in favor of the landlord under Grandparents.com's office lease. As of January 1, 2011, the remaining term of the lease was
thirty three (33) months and the aggregate amount of all lease payments due under the lease after such date was approximately $452,000.
The lease was assigned to the Company pursuant to the Transaction and Messrs. Leber and Bernstein have agreed to personally guaranty
our performance thereunder.
45
Advances and Loans from Members
Since January 1, 2011, Messrs. Leber and Bernstein advanced an aggregate
of $126,000 to Grandparents.com under a revolving note. The advances accrued interest at 5% per annum and were due and payable
on December 31, 2012.
In March 2011, Grandparents.com entered into a $300,000 note payable
agreement with Meadows, an entity controlled by Dr. Cohen, a Managing Director of Grandparents.com and a newly appointed director
of the Company upon the closing of the Transaction. Meadows is also a member of Grandparents.com. The note accrues interest at
5% per annum, with interest-only payments commencing on May 1, 2011 through the maturity date, April 1, 2013. The note is secured
by substantially all of Grandparents.com's assets. Grandparents.com also issued to Meadows a warrant to purchase 50,000 of
its Class A Units. The warrant is exercisable for a period of five (5) years from the date of issuance at an exercise price of
$1.60 per unit. Immediately prior to the closing of the Transaction, $300,000 in principal, together with accrued interest, was
outstanding under the note.
In July 2011, Meadows and Messrs. Leber and Bernstein each provided
short-term loans to Grandparents.com in the amounts of $8,914, $15,543 and $15,543, respectively. The loans were evidenced by promissory
notes issued by Grandparents.com. The loans accrued interest at 5% per annum and matured on December 31, 2011. The loans are convertible
into Class A Units of Grandparents.com at a conversion price of $1.60 per unit. Immediately prior to the closing of the Transaction,
the principal amount of each loan, together with accrued interest, remained outstanding as of the date hereof.
Upon closing of the Transaction, the Company issued to each of
Meadows and Messrs. Leber and Bernstein new amended and restated promissory notes to replace their respective promissory
notes issued by Grandparents.com.
Employment Agreements
Grandparents.com entered into an employment agreement with Jeffrey
Mahl, Grandparents.com's President. Under the terms of the agreement, Mr. Mahl received compensation in the amount of $120,000
annually. In addition, Mr. Mahl received a commission of five percent (5%) on gross advertising revenues actually received by Grandparents.com
during the term of his employment. The employment agreement expired on December 31, 2011, but Grandparents.com and Mr. Mahl have
agreed to continue his employment on the same terms until the closing of the Proposed Transaction. Mr. Mahl's accrued sales
commission for 2011 and 2012 through the Closing Date is $20,736.  In
addition, Grandparents.com granted Mr. Mahl an option to purchase 200,000 Class A Units of Grandparents.com for an exercise price
of $0.625 per unit and an option to purchase 100,000 Class A Units of Grandparents.com for an exercise price of $0.86. Upon closing
of the Transaction, Mr. Mahl was appointed as the Company's President and we entered into a new employment agreement with
him. See "Executive Compensation – Employment Agreements."
Matthew Schwartz, Grandparents.com's Vice President –
Finance & Operations and Chief Compliance Officer, received and annual base salary of $75,000. Upon closing of the Transaction,
Mr. Schwartz was appointed as the Company's Vice President – Administration, Chief Compliance Officer and Secretary
and we entered into a new employment agreement with him. See "Executive Compensation – Employment Agreements."
LEGAL PROCEEDINGS
From time to time, we may become involved in various lawsuits and
legal proceedings which arise in the ordinary course of business. However, litigation is subject to inherent uncertainties and
an adverse result in these or other matters may arise from time to time that may harm our business. We are currently not aware
of any such legal proceedings or claims that we believe will have a material adverse affect on our business, financial condition
or operating results.
MARKET PRICE AND DIVIDENDS ON OUR COMMON
EQUITY AND RELATED STOCKHOLDER MATTERS
During the 2010 and 2011 and through September 14, 2011, our Common
Stock was quoted for trading on the OTC Bulletin Board under the symbol "PBMC." With our name change to NorWesTech,
Inc., we applied for and obtained a new trading symbol. Effective September 15, 2011, our Common Stock was quoted for trading on
the OTC Bulletin Board under the new symbol "NWTH." We have applied for a new trading symbol to reflect our name
change to Grandparents.com, Inc.
Prior to the Transaction, our fiscal year end was June 30. In connection
with the Transaction, we changed our fiscal year end to December 31. Accordingly, the following table shows the range of reported
high and low bid quotations of our Common Stock as reported by the OTC Bulletin Board for each quarter of 2011 and 2010 based on
our new fiscal year. The quotations from the OTC Bulletin Board reflect inter-dealer prices without retail mark-up, mark-down,
or commissions and may not represent actual transactions.
46
Low
High
Fiscal 2011:
Fourth quarter ended December 31, 2011
$
0.19
$
0.28
Third quarter ended September 30, 2011
0.11
0.30
Second quarter, ended June 30, 2011
0.10
0.25
First quarter, ended March 31, 2011
0.15
0.32
Fiscal 2010:
Fourth quarter ended December 31, 2010
$
0.18
$
0.23
Third quarter ended September 30, 2010
0.28
0.40
Second quarter, ended June 30, 2010
0.46
0.55
First quarter, ended March 31, 2010
0.60
0.66
The following sets forth the number of shares of Common Stock underlying
preferred stock, warrants, options and other securities exercisable for or convertible into shares of our Common Stock as of the
Closing Date:
·
the Series A Convertible Preferred Stock is convertible into 55,887,491 shares of our Common Stock;
·
the Series B Convertible Preferred Stock is convertible into 12,897,113 shares of our Common Stock;
·
the GP Warrant is exercisable for an estimate of 222,000 shares of our Common Stock at an exercise price of $0.01 per
share for a period of ten (10) years from the Closing Date;
·
the Advisory Warrant is exercisable for an aggregate of 5,588,749 shares of our Common Stock at an exercise price of $0.23261
per share for a period of five (5) years from the Closing Date;
·
the Placement Agent Warrant is exercisable for an aggregate of 1,289,711 shares of our Common Stock at an exercise price of
$0.23261 per share for a period of five (5) years from the Closing Date;
·
Warrants outstanding prior to the Closing Date exercisable for an aggregate of 117,625 shares of Common Stock at an exercise
price of $0.51 per share, which expire on August 27, 2012;
·
Warrants outstanding prior to the Closing Date exercisable for an aggregate of 225,188 shares of Common Stock at an exercise
price of $1.60 which expire on March 8, 2013; and
·
Options to purchase 200,000 shares of Common Stock which vested and became exercisable as of the Closing Date.
None of the options granted under the 2012 Stock Incentive Plan
have vested as of the Closing Date.
Thus, as of the Closing Date, the conversion of all preferred
stock and the exercise of all outstanding warrants and other securities to purchase shares of our Common Stock, excluding
options granted under the 2012 Stock Incentive Plan which have not vested, may, if converted or exercised, as applicable,
result in the issuance of approximately 76,205,877 shares of our Common Stock (excluding shares issuable upon exercise of the
GP Warrant). We do not currently have a sufficient number of authorized shares of Common Stock available for issuance upon the
conversion of the Series A and Series B Preferred Stock and other securities exercisable for shares of our Common Stock. On
the Closing Date and immediately following the closings of the Transaction and Private Placement, our newly appointed Board
of Directors approved the Amendment and Grandparents.com, which then owned approximately 65% of the voting control of the
Company, approved, by written consent, the Amendment.
Grandparents.com, JTF and the Purchasers are entitled to certain
registration rights with respect to our shares of Common Stock underlying the Series A Convertible Preferred Stock, the Series
B Convertible Preferred Stock, the GP Warrant, the Advisory Warrant and the Placement Agent Warrant.
Holders of Common Stock
As of the Closing Date, there were 16,996,151 shares of Common Stock
issued and outstanding, held by approximately seventy five (75) holders of record.
Dividends
We have never declared or paid any cash dividends with respect to
our common stock, and do not plan to do so in the foreseeable future. Any future determination with regard to the payment of dividends
will be at the discretion of our Board of Directors and will be dependent upon our future earnings, financial condition, applicable
dividend restrictions and capital requirements and other factors deemed relevant by the Company's Board of Directors.
Securities Authorized for Issuance under Equity Compensation
Plans
The following table gives information as of February 24, 2012,
regarding our common stock that may be issued upon the exercise of options, warrants and other rights under our equity
compensation plans.
47
(a)
(b)
(c)
Plan Category
No. of Shares
to be Issued
Upon Exercise of
Outstanding Options,
Warrants and Rights
Weighted Average
Exercise Price of
Outstanding Options,
Warrants and Rights
No. of Shares Available
for Future Issuance,
excluding securities
reflected in Column (a)
Equity Compensation Plans Approved by Stockholders (1)
200,000
$
0.30
-
Equity Compensation Plans Approved by Stockholders (2)
5,360,000
$
0.60
4,717,690
TOTAL
5,560,000
$
0.59
(1)
Consists solely of our 2005 Stock Incentive Plan, which was terminated upon closing of the Transaction. Upon closing of the
Transaction, all outstanding options under the 2005 Plan became vested and fully exercisable and will continue in accordance with
their terms after the Transaction.
(2)
Consists solely of our newly adopted 2012 Stock Incentive Plan. On the Closing Date, the 2012 Stock Incentive Plan was adopted
by our Board of Directors and approved by written consent of our stockholders.
RECENT SALES OF UNREGISTERED SECURITIES
Reference is made to the disclosure set forth under Item 3.02 of
this Report, which disclosure is incorporated by reference into this section.
DESCRIPTION OF SECURITIES
As of the Closing Date, the Company is authorized to issue up to
30,000,000 shares of Common Stock and 5,000,000 shares of preferred stock, par value $0.01 per share ("Preferred Stock").
As of the Closing Date, there were outstanding 16,996,151 shares of Common Stock, one (1) share designated as Series A Convertible
Preferred Stock held by Grandparents.com, and 3,000,000 shares designated as Series B Convertible Preferred Stock held by the Purchasers.
We intend to file an amendment to our Certificate of Incorporation
to increase the authorized number of shares of Common Stock to an amount equal to at least 150,000,000 shares.
As described below, the Series A Convertible Preferred Stock and the Series B Convertible Preferred Stock will automatically convert
into shares of Common Stock upon the filing of the Amendment. The Company intends to file the Amendment as soon as practicable
and in no event later than April 1, 2012.
Common Stock
Holders of the Common Stock are entitled to one vote per share and
to receive dividends when and as declared by the Board of Directors, and to share ratably in the assets of the Company legally
available for distribution in the event of the liquidation, dissolution or winding up of the Company.
Preferred Stock
Preferred Stock may be issued with such rights, preferences, privileges
and restrictions (including redemption and voting rights) as the Board of Directors of the Company may, from time to time, determine.
Any or all of such rights may be greater than the rights granted to holders of the Common Stock, Series A Convertible Preferred
Stock or Series B Convertible Preferred Stock. As of the Closing Date, there are 5,000,000 authorized shares of Preferred Stock,
of which one (1) share is designated as Series A Convertible Preferred Stock and 3,000,000 shares are designated as Series B Convertible
Preferred Stock. Accordingly, as of the Closing Date, there are 1,999,999 shares of undesignated blank check Preferred Stock available
for future issuance on terms determined by the Board of Directors, without further stockholder approval.
Series A Convertible Preferred Stock
Reference is made to the disclosure set forth under Item 5.03 of
this Report regarding the Series A Convertible Preferred Stock, which disclosure is incorporated herein by reference.
Series B Convertible Preferred Stock
Reference is made to the disclosure set forth under Item 5.03 of
this Report regarding the Series B Convertible Preferred Stock, which disclosure is incorporated herein by reference.
48
Warrants
GP Warrant
In addition to the one (1) share of Series A Convertible Preferred
Stock issued by the Company to Grandparents.com pursuant to the Transaction, the Company issued to Grandparents.com the
GP Warrant. The GP Warrant has an exercise price of $0.01 per share and is exercisable for five (5) years from the date
of issuance. The number of shares of Common Stock for which the GP Warrant will be exercisable, if at all, will (i) be increased
from time to time in the event that any of the Other Warrants (as described below) are exercised prior to termination, and (ii)
pursuant to the Contribution Agreement, be adjusted from time to time following the closing of the Transaction to the extent that
the Company has less than $1,500,000 of cash after deduction of pre- and post-closing liabilities of the Company that existed or
arose on or prior to the closing of the Transaction.
Advisory Warrant
As partial compensation for its advisory services to Grandparents.com
in connection with the Transaction, the Company issued to JTF a warrant to purchase 5,588,749 shares of Common Stock having a term
of five (5) years and an exercise price equal to $0.23261 (the "Advisory Warrant").
Placement Agent Warrant
As partial compensation for its services as the Company's
placement agent in connection with the Private Placement, the Company issued to JTF a warrant to purchase 1,289,711 shares of Common
Stock having a term of five (5) years and an exercise price equal to the effective price per share of Common Stock paid in the
Private Placement, or $0.23261 (the "Placement Agent Warrant").
Other Warrants
As of the Closing Date, the Company has outstanding (i) warrants
exercisable for an aggregate of 117,625 shares of Common Stock at an exercise price of $0.51 per share which expire on August 27,
2012, and (ii) warrants exercisable for an aggregate of 225,188 shares of Common Stock at an exercise price of $1.60 which expire
on March 8, 2013.
INDEMNIFICATION OF DIRECTORS AND OFFICERS
Section 145 of the Delaware General Corporation
Law ("DGCL") provides that a corporation may indemnify directors and officers as well as other employees and individuals
against expenses including attorneys' fees, judgments, fines and amounts paid in settlement in connection with various actions,
suits or proceedings, whether civil, criminal, administrative or investigative (other than an action by or in the right of the
corporation, such as a derivative action), if they acted in good faith and in a manner they reasonably believed to be in or not
opposed to the best interests of the corporation, and, with respect to any criminal action or proceeding, if they had no reasonable
cause to believe their conduct was unlawful. A similar standard is applicable in the case of any actions by or in the right of
the corporation, except that indemnification only extends to expenses, including attorneys' fees, incurred in connection
with the defense or settlement of such actions, and the statute requires court approval before there can be any indemnification
where the person seeking indemnification has been found liable to the corporation. The statute provides that it is not exclusive
of other indemnification that may be granted by a corporation's certificate of incorporation, bylaws, agreement, a vote of
stockholders or disinterested directors or otherwise.
Our Certificate of Incorporation
provides that we will, to the fullest extent permitted by the provisions of Section 145 of the DGCL, as the same may be
amended and supplemented, indemnify any and all persons whom the Company shall have power to indemnify under said section
from and against any and all expenses, liabilities, or other matters referred to in or covered by said section, and the
indemnification provided for therein shall not be deemed exclusive of any other rights to which those indemnified may be
entitled under any bylaw, agreement, vote of stockholders or disinterested directors or otherwise, both as to action in his
official capacity and as to action in another capacity while holding such office, and shall continue as to a person who has
ceased to be a director, officer, employee, or agent and shall inure to the benefit of the heirs, executors, and
administrators of such a person.
Delaware law also authorizes Delaware corporations
to limit or eliminate the personal liability of their directors to them and their stockholders for monetary damages for breach
of a director's fiduciary duty of care. The duty of care requires that, when acting on behalf of the corporation, directors
must exercise an informed business judgment based on all material information reasonably available to them. Absent the limitations
Delaware law authorizes, directors of Delaware corporations are accountable to those corporations and their stockholders for monetary
damages for conduct constituting gross negligence in the exercise of their duty of care. Delaware law enables Delaware corporations
to limit available relief to equitable remedies such as injunction or rescission.
49
Our Certificate of Incorporation provides
that no director of the Company shall be personally liable to the Company or its stockholders for monetary damages for breach of
fiduciary duty as a director except for (i) for breach of the director's duty of loyalty to the Company or its stockholders,
(ii) for acts or omissions not in good faith or which involve intentional misconduct or knowing violation of law, (iii) under Section
174 of the DGCL, or (iv) for any transaction from which the director derived an improper personal benefit.
This provision could have the effect of
reducing the likelihood of derivative litigation against our directors and may discourage or deter our stockholders or management
from bringing a lawsuit against our directors for breach of their duty of care, even though such an action, if successful, might
otherwise have benefited us and our stockholders.
The Contribution Agreement contains provisions requiring us to continue
to afford our former officers and directors immediately prior to the closing of the Transaction certain rights to exculpation and
indemnification for acts or omissions occurring prior to the Closing Date and requiring us to maintain directors' and officers'
insurance in favor of such former directors and officers.
CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS
ON ACCOUNTING AND FINANCIAL DISCLOSURE
Reference is made to the disclosure set forth under Item 4.01 of
this Report, which disclosure is incorporated herein by reference.
Item 2.03
Creation of a Direct Financial Obligation or an Obligation under an Off-Balance Sheet Arrangement of a Registrant.
The disclosure in Item 1.01 of this Report regarding the Promissory
Notes is incorporated herein by reference in its entirety.
Item 3.02
Unregistered Sales of Equity Securities.
The information contained in Item 1.01 of this Report is incorporated
herein by reference in response to this Item 3.02.
The share of Series A Convertible Preferred Stock and GP Warrant
issued to Grandparents.com in connection with the Transaction were offered and sold in a private transaction in reliance upon
exemptions from registration pursuant to Section 4(2) of the Securities Act. Our reliance on Section 4(2) of the Securities Act
was based upon the following factors: (i) the issuance of the securities was an isolated private transaction by us which did not
involve a public offering, (ii) there was only one offeree, (iii) there were no subsequent or contemporaneous public offerings
of the securities by us, and (iv) the negotiations for the Transaction and the issuance of the securities took place directly
between Grandparents.com and us.
The shares of Series B Convertible Preferred Stock issued to the
Purchasers in connection with the Private Placement were offered and sold in reliance upon exemptions from registration pursuant
to Section 4(2) of the Securities Act and Rule 506 of Regulation D ("Regulation D") promulgated under the Securities
Act. The Company made this determination based on the representations of each Purchaser which included that each such Purchaser
(i) is an "accredited investor" within the meaning of Rule 501 of Regulation D, (ii) is acquiring the securities for
investment and not with a view to or for distribution, and (iii) had access to adequate information about the Company. Neither
the shares of Series B Convertible Stock nor the Common Stock into which such shares are convertible may be sold unless they are
registered under the Securities Act and any applicable state securities laws, or an exemption or exemptions from such registration
are available. In addition, there was no general solicitation or advertising for securities issued in reliance upon Regulation
D.
The Advisory Warrant and Placement Agent Warrant issued to JTF
were offered and sold in a private transaction in reliance upon exemptions from registration pursuant to Section 4(2) of the Securities
Act. Our reliance on Section 4(2) of the Securities Act was based upon the following factors: (i) the issuance of the securities
was an isolated private transaction by us which did not involve a public offering, (ii) there was only one offeree, (iii) there
were no subsequent or contemporaneous public offerings of the securities by us, and (iv) the negotiations for the issuance of
the securities took place directly between JTF and us.
The foregoing descriptions of the Advisory Warrant and the Placement
Agent Warrant does not purport to be complete and is qualified in its entirety by reference to the provisions of the Advisory Warrant
and the Placement Agent Warrant, copies of which are filed as Exhibits 4.2 and 4.3, respectively, to this Report and incorporated
herein by reference.
50
Item 3.03
Material Modification to Rights of Security Holders.
The disclosure in Item 5.03 of this Report regarding the rights
and preferences of the Series A Convertible Preferred Stock and Series B Convertible Preferred Stock and is incorporated herein
by reference in its entirety.
Item 4.01
Changes in Registrant's Certifying Accountant.
Dismissal of Previous Independent Registered Public Accounting
Firm
On February 23, 2012, our Board of Directors approved the
dismissal of PMB Helin Donovan, LLP ("PMBHD") as our independent registered public accounting firm, effective immediately.
PMBHD's reports on our financial statements as of and for
the fiscal years ended June 30, 2011 and 2010 did not contain an adverse opinion or disclaimer of opinion and were not qualified
or modified as to uncertainty, audit scope, or accounting principles.
During the fiscal years ended June 30, 2011 and 2010 and through
PMBHD's dismissal on the Closing Date, there were (i) no disagreements with PMBHD on any matter of accounting principles
or practices, financial statement disclosure, or auditing scope or procedures, which disagreements, if not resolved to the satisfaction
of PMBHD, would have caused PMBHD to make reference to the subject matter of the disagreements in connection with its reports,
and (ii) no events of the type listed in paragraphs (A) through (D) of Item 304(a)(1)(v) of Regulation S-K.
We furnished PMBHD with a copy of this disclosure on the Closing
Date, providing PMBHD with the opportunity to furnish the Company with a letter addressed to the SEC stating whether it agrees
with the statements made by us herein in response to Item 304(a) of Regulation S-K and, if not, stating the respect in which it
does not agree.  A copy of PMBHD's letter to the SEC is filed as Exhibit 16.1 to this Report.
Engagement of New Independent Registered Public Accounting Firm
Concurrent with the decision to dismiss PMBHD as our independent
registered public accounting firm, the Board of Directors appointed Daszkal Bolton LLP ("Daszkal") as our independent
registered public accounting firm.
During the fiscal years ended June 30, 2011 and 2010 and through
the date hereof, neither the Company nor anyone acting on its behalf consulted Daszkal with respect to (i) the application of accounting
principles to a specified transaction, either completed or proposed, or the type of audit opinion that might be rendered on the
Company's financial statements, and neither a written report was provided to the Company or oral advice was provided that
Daszkal concluded was an important factor considered by the Company in reaching a decision as to the accounting, auditing or financial
reporting issue, or (ii) any matter that was the subject of a disagreement or reportable events set forth in Item 304(a)(1)(iv)
and (v), respectively, of Regulation S-K.
Item 5.01
Changes in Control of Registrant.
Reference is made to the disclosure set forth under Item 2.01 of
this Report, which disclosure is incorporated herein by reference.
As explained more fully described in Items 1.01 and 2.01 of this
Report, in connection with the Transaction, on the Closing Date, we issued one (1) share of Series A Convertible Preferred Stock
to Grandparents.com. As more fully described in Item 5.03 of this Report, the one (1) share of Series A Convertible Preferred Stock
is entitled to cast 55,887,491 votes. As such, immediately following the Transaction and the Private Placement, Grandparents.com
held approximately 65% of the total voting power of our voting securities.
Item 5.02
Departure of Directors or Certain Officers; Election of Directors; Appointment of Certain Officers; Compensatory Arrangements
of Certain Officers.
Resignation of Directors and Officers
On the Closing Date, Messrs. Stanley L. Schloz, Curtis J. Scheel,
Fred Burstein and
Andrew Ecclestone
resigned from our Board of Directors. The resignations were not the result of
any disagreement with us on any matter relating to our operations, policies or practices. In addition, Mr. Stanley L. Schloz resigned
as our President and Mr. Curtis J. Scheel resigned as our Secretary and Treasurer.
Appointment of Directors and Officers
The following persons were appointed as our officers and directors
at the closing of the Transaction:
51
Name
Age
Position
Steven E. Leber
70
Chairman, Co-Chief Executive Officer
Joseph Bernstein
63
Co-Chief Executive Officer,
Chief Financial Officer, Treasurer, Director
Jeffrey S. Mahl
60
President
Matthew Schwartz
39
Vice President – Administration,
Chief Compliance Officer, Secretary
Dr. Robert Cohen
68
Director
Jeremy Office
35
Director
Jeffrey L. Wasserman
41
Director, Assistant Secretary
The business background descriptions of the newly appointed directors
and officers as set forth in Item 2.01 of this Report are hereby incorporated in this Item 5.02 by reference.
Employment Agreements of New Executive Officers
The description of the employment agreements as set forth in Item
2.01 of this Report are hereby incorporated in this Item 5.02 by reference.
The descriptions of the employment agreements do not purport to
be complete and are qualified in their entireties by reference to the provisions of the employment agreements, copies of which
are filed as Exhibits 10.5, 10.6 and 10.7 to this Report and incorporated herein by reference.
Item 5.03
Amendments to Articles of Incorporation or Bylaws; Change in Fiscal Year.
Amendment to Certificate of Incorporation
On the Closing Date and immediately following the Transaction,
we changed our name to Grandparents.com, Inc. The name change was made pursuant to Section 253 of the Delaware General
Corporation Law by merging a wholly-owned subsidiary of the Company with and into the Company, with the Company as the
surviving corporation in the merger (the "Short Form Merger"). In connection with the Short Form Merger, we
amended Article First of our Certificate of Incorporation to change our name to Grandparents.com, Inc. pursuant to the
Certificate of Ownership and Merger filed with the Secretary of State of the State of Delaware on the Closing Date. A copy of
the Certificate of Ownership and Merger is attached as Exhibit 3.1 hereto and incorporated herein by reference.
Series A Convertible Preferred Stock
On February 22, 2012, the Company filed a certificate of
designation with the Secretary of State of the State of Delaware (the "Series A Certificate of Designation") to
create a series of Preferred Stock designated as "Series A Convertible
Preferred Stock." The Series A Convertible Preferred Stock consists of one (1) authorized share issued to
Grandparents.com pursuant to the Transaction.
Mandatory Conversion.
The share of Series A Convertible Preferred
Stock will automatically convert into 55,887,491 shares of Common Stock, upon the date on which the Company files the Amendment.
Until such time, the Series A Convertible Preferred Stock will not be convertible into Common Stock.
Voting Rights.
On any matter presented to the stockholders
of the Company for their action or consideration at any meeting of stockholders of the Company (or any action by written consent
of stockholders in lieu of meeting), Grandparents.com, as the holder of Series A Convertible Preferred Stock, will be entitled
to cast 55,887,491 votes. Except as provided by law or by the other provisions of the Certificate of Incorporation, Grandparents.com,
as the holder of Series A Convertible Preferred Stock, will vote together with the holders of Common Stock, and with the holders
of any other series of the Company's Preferred Stock, including the Series B Convertible Preferred Stock, the terms of which
so provide, as a single class.
Rank.
The Series A Convertible Preferred Stock will, as to
distribution of assets upon liquidation, dissolution or winding up of the Company, rank (i) pari passu to the Common Stock and
any other class or series of capital stock (including Preferred Stock) of the Company hereafter created that, by its terms, ranks
pari passu to the Series A Convertible Preferred Stock, and (ii) junior to any class or series of capital stock of the Company
hereafter created which by its terms ranks senior to the Series A Convertible Preferred Stock.
Dividends.
The Series A Convertible Preferred Stock does
not have separate dividend rights. Rather, the holders of Series A Convertible Preferred Stock, Common Stock, Series B Convertible
Preferred Stock and any other series of Preferred Stock of the Company entitled to participate with the Common Stock in such dividends
or distributions will be entitled to participate pro rata in such dividends or distributions declared with respect to Common Stock
based on the number of shares held by each such holder, treating for this purpose all such securities as if they had been converted
to Common Stock.
52
Liquidation.
If the Company suffers a liquidation event prior
to the conversion of Series A Convertible Preferred Stock into Common Stock, the assets of the Company available for distribution
to its stockholders will be distributed among the holders of Series A Convertible Preferred Stock, Common Stock, Series B Convertible
Preferred Stock and any other series of Preferred Stock of the Company entitled to participate with the Common Stock in the distribution
of such remaining assets, pro rata based on the number of shares held by each such holder, treating for this purpose all such securities
as if they had been converted to Common Stock.
Required Approvals.
So long as the share of Series A Convertible
Preferred Stock is outstanding, the Company may not, without first obtaining the unanimous written consent of Grandparents.com,
as the holder of such share, alter or change the rights, preferences or privileges of the Series A Convertible Preferred Stock
so as to affect adversely such holder. Likewise, so long as any shares of Series A Convertible Preferred Stock are outstanding,
the Company may not, without first obtaining the approval of the holders of a majority of the outstanding shares of Common Stock
(voting as a separate class, without the vote of holders of the Series A Convertible Preferred Stock, Series B Convertible Preferred
Stock or any other series of Preferred Stock), alter or change the rights, preferences or privileges of the Series A Convertible
Preferred Stock. The Company may not make any other distributions (including without limitation the granting of any rights or warrants)
to the holders of the Common Stock without first obtaining the unanimous written consent of Grandparents.com, as the holder of
the Series A Convertible Preferred Stock.
The description of the designations, rights and preferences of the
Series A Convertible Preferred Stock does not purport to be complete and is qualified in its entirety by reference to the provisions
of the Series A Certificate of Designation, a copy of which is filed as Exhibit 3.2 to this Report and incorporated herein by reference.
Series B Convertible Preferred Stock
On February 22, 2012, the Company filed a certificate of
designation with the Secretary of State of the State of Delaware (the "Series B Certificate of Designation") to
create a series of Preferred Stock designated as "Series B Convertible
Preferred Stock." The Series B Convertible Preferred Stock consists of 3,000,000 shares issued to the Purchasers.
Immediately following the closing of the Offering, such shares of Series B Convertible Preferred Stock would be convertible
into an aggregate of 12,897,113 shares of Common Stock.
Mandatory Conversion.
The shares of Series B Convertible
Preferred Stock will automatically convert into the number of shares of the Common Stock determined by dividing $1.00 (the stated
value of the share of Series B Convertible Preferred Stock) by the conversion price of the Series B Convertible Preferred Stock
then in effect, upon the date on which the Company files the Amendment. Until such time, the Series B Convertible Preferred Stock
will not be convertible into Common Stock. The Series B Convertible Preferred Stock will have an initial conversion price of $0.23261
(or 4.299 shares of Common Stock for each share of Series B Convertible Preferred Stock), subject to adjustment. No fractional
shares of Common Stock will be issuable upon conversion of the Series B Convertible Preferred Stock and the number of shares to
be issued will be rounded up to the nearest whole share.
Voting Rights.
On any matter presented to the stockholders
of the Company for their action or consideration at any meeting of stockholders of the Company (or any action by written consent
of stockholders in lieu of meeting), each holder of Series B Convertible Preferred Stock will be entitled to cast the number of
votes equal to the number determined by dividing $1.00 (the stated value of each share of Series B Convertible Preferred Stock)
by the conversion price of the Series B Convertible Preferred Stock then in effect. Except as provided by law or by the other provisions
of the Certificate of Incorporation, holders of Series B Convertible Preferred Stock will vote together with the holders of Common
Stock, and with the holders of any other series of the Company's Preferred Stock, including the Series A Convertible Preferred
Stock, the terms of which so provide, as a single class.
Rank.
The Series B Convertible Preferred Stock will, as to
distribution of assets upon liquidation, dissolution or winding up of the Company, rank (i) pari passu to the Common Stock, the
Series A Convertible Preferred Stock and any other class or series of capital stock (including Preferred Stock) of the Company
hereafter created that, by its terms, ranks pari passu to the Series B Convertible Preferred Stock, and (ii) junior to any class
or series of capital stock of the Company hereafter created which by its terms ranks senior to the Series B Convertible Preferred
Stock.
Dividends.
The Series B Convertible Preferred Stock does
not have separate dividend rights. Rather, the holders of Series B Convertible Preferred Stock, Common Stock, Series A Convertible
Preferred Stock and any other series of Preferred Stock of the Company entitled to participate with the Common Stock in such dividends
or distributions will be entitled to participate pro rata in such dividends or distributions declared with respect to Common Stock
based on the number of shares held by each such holder, treating for this purpose all such securities as if they had been converted
to Common Stock.
Liquidation.
If the Company suffers a liquidation event prior
to the conversion of Series B Convertible Preferred Stock into Common Stock, the assets of the Company available for distribution
to its stockholders will be distributed among the holders of Series B Convertible Preferred Stock, Common Stock, Series A Convertible
Preferred Stock and any other series of Preferred Stock of the Company entitled to participate with the Common Stock in the distribution
of such remaining assets, pro rata based on the number of shares held by each such holder, treating for this purpose all such securities
as if they had been converted to Common Stock
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Required Approvals.
So long as any shares of Series B Convertible
Preferred Stock are outstanding, the Company may not, without first obtaining the unanimous written consent of the holders of such
shares, alter or change the rights, preferences or privileges of the Series B Convertible Preferred Stock so as to affect adversely
such holders. Likewise, so long as any shares of Series B Convertible Preferred Stock are outstanding, the Company may not, without
first obtaining the approval of the holders of a majority of the outstanding shares of Common Stock (voting as a separate class,
without the vote of holders of the Series A Convertible Preferred Stock, Series B Convertible Preferred Stock or any other series
of Preferred Stock), alter or change the rights, preferences or privileges of the Series B Convertible Preferred Stock. The Company
may not make any other distributions (including without limitation the granting of any rights or warrants) to the holders of the
Common Stock without first obtaining the unanimous written consent of the holders of the Series B Convertible Preferred Stock.
The description of the designations, rights and preferences of the
Series B Convertible Preferred Stock does not purport to be complete and is qualified in its entirety by reference to the provisions
of the Series B Certificate of Designation, a copy of which is filed as Exhibit 3.3 to this Report and incorporated herein by reference.
Amendment to Bylaws
Effective upon the closing of the Transaction, we amended Section
7 of our Bylaws regarding voting rights of holders of capital stock. Previously, our Bylaws stated that each stockholder shall
be entitled to one vote for each share of capital stock held by such stockholder. However, pursuant to the Series A Certificate
of Designation, Grandparents.com, as the holder of the one (1) share of Series A Convertible Preferred Stock, is entitled to cast
55,887,491 votes. Accordingly, we amended our Bylaws to clarify that, unless otherwise provided in the Certificate of Incorporation,
each stockholder shall be entitled to one vote for each share of capital stock held by such stockholder.
On the Closing Date and immediately following the Transaction, we
amended and restated our Bylaws to reflect our new name. Other than the amendment to Section 7 of our Bylaws prior to the Transaction
and the name change in connection with the Short Form Merger, no changes were made to our Bylaws in effect prior to the Closing
Date. A copy of our Amended and Restated Bylaws is attached as Exhibit 3.4 hereto and incorporated by reference.
Change in Fiscal Year
On the Closing Date and in connection with Transaction, our Board
of Directors approved a change in our fiscal year end from June 30 to December 31.
Item 5.06
Change in Shell Company Status.
Reference is made to the disclosure set forth under Items 2.01 and
5.01 of this Report, which disclosure is incorporated herein by reference.
Item 5.07
Submission of Matters to a Vote of Security Holders.
On the Closing Date and immediately following the closings of the
Transaction and Private Placement, Grandparents.com, which then owned approximately 65% of the voting control of the Company, approved,
by written consent, the Amendment and the 2012 Stock Incentive Plan. The Amendment and 2012 Stock Incentive Plan were approved
by our newly appointed Board of Directors on the Closing Date.
Reference is made to the disclosure set forth under Item 2.01 of
this Report regarding the 2012 Stock Incentive Plan, which disclosure is incorporated herein by reference.
The description of the 2012 Stock Incentive Plan does not purport
to be complete and is qualified in its entirety by reference to the provisions of the 2012 Stock Incentive Plan, a copy of which
is filed as Exhibit 10.12 to this Report and incorporated herein by reference.
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Item 9.01
Financial Statements and Exhibits.
(a)
Financial Statements of Business Acquired.
Filed herewith as Exhibit 99.1 to this Report and incorporated herein
by reference are the Condensed Unaudited Financial Statements of Grandparents.com for the nine months ended September 30, 2011
and 2010.
Filed herewith as Exhibit 99.2 to this Report and incorporated herein
by reference are the Audited Financial Statements of Grandparents.com for the years ended December 31, 2010 and 2009.
(b)
Pro Forma Financial Information.
Filed herewith as Exhibit 99.3 to this Report and incorporated herein
by reference is unaudited pro forma financial information of the Company.
(c)
Shell Company Transactions.
Reference is made to Items 9.01(a) and 9.01(b) and the exhibits
referred to therein which are incorporated herein by reference.
(d)
Exhibits.
Certain of the agreements filed as exhibits to this Report contain
representations and warranties by the parties to the agreements that have been made solely for the benefit of the parties to the
agreement. These representations and warranties:
·
may have been qualified by disclosures that were made to the other parties in connection with the negotiation of the agreements,
which disclosures are not necessarily reflected in the agreements;
·
may apply standards of materiality that differ from those of a reasonable investor; and
·
were made only as of specified dates contained in the agreements and are subject to subsequent developments and changed circumstances.
Accordingly, these representations and warranties may not describe
the actual state of affairs as of the date that these representations and warranties were made or at any other time. Investors
should not rely on them as statements of fact.
Exhibit
Number
Description
2.1
Asset Contribution Agreement dated as of February 23, 2012 by and between the Company and Grandparents.com
3.1
Certificate of Ownership and Merger of GP MergeCo, Inc. into the Company
3.2
Certificate of Designation of Series A Convertible Preferred Stock
3.3
Certificate of Designation of Series B Convertible Preferred Stock
3.4
Amended and Restated Bylaws
4.1
Grandparents.com Warrant
4.2
Advisory Warrant
4.3
Placement Agent Warrant
10.1
Securities Purchase Agreement dated as of February 23, 2012
10.2
Registration Rights Agreement dated as of February 23, 2012
10.3
Lock-Up Agreement by and between the Company and Grandparents.com
10.4
Lock-Up Agreement by and between the Company and JTF
10.5
Employment Agreement dated as of February 23, 2012 by and between the Company and Steven E. Leber
10.6
Employment Agreement dated as of February 23, 2012 by and between the Company and Joseph Bernstein
10.7
Employment Agreement dated as of February 23, 2012 by and between the Company and Jeffrey S. Mahl
10.8
Employment Agreement dated as of February 23, 2012 by and between the Company and Matthew Schwartz
10.9
Amended and Restated Promissory Note dated as of February 23, 2012 in favor of Steven E. Leber
10.10
Amended and Restated Promissory Note dated as of February 23, 2012 in favor of Joseph Bernstein
10.11
Amended and Restated Promissory Note dated as of February 23, 2012 in favor of Meadows Capital, LLC
10.12
Promissory Note dated as of February 23, 2012 in favor of Leber-Bernstein Group, LLC
10.13
2012 Stock Incentive Plan
10.14
Form of Option Grant Letter
14.1
Code of Ethics for Financial Officers (1)
16.1
Letter from PMB Helin Donovan, LLP
21.1
Subsidiaries of the Company (2)
23.1
Consent of Daszkal Bolton LLP
99.1
Condensed Unaudited Financial Statements of Grandparents.com for the nine months ended September 30, 2011 and 2010
99.2
Audited Financial Statements of Grandparents.com for the years ended December 31, 2010 and 2009
99.3
Unaudited Pro Forma Financial Information of the Company
55
(1) Incorporated by reference to Exhibit 14.1 to the Company's
Annual Report on Form 10-K for the fiscal year ended June 30, 2011, filed on September 27, 2011.
(2) Incorporated by reference to Exhibit 21.1 to the Company's
Annual Report on Form 10-K for the fiscal year ended June 30, 2011, filed on September 27, 2011.
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934,
the registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.
Dated: February 27, 2012
GRANDPARENTS.COM, INC.
By:
/s/ Joseph Bernstein
Joseph Bernstein
Co-Chief Executive Officer, Chief Financial Officer and
Treasurer
56