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<P STYLE="margin-top: 0; margin-bottom: 0; text-align: center"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt"><B>As filed
with the U.S. Securities and Exchange Commission on September 16, 2019</B></FONT><FONT STYLE="font: 10pt Times New Roman, Times, Serif"><B></B></FONT></P>

<P STYLE="margin-top: 0; margin-bottom: 0; text-align: right"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt"><B>Registration
No. 333- &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;</B></FONT></P>



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

<P STYLE="font: 18pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt"><B>UNITED
STATES</B></FONT></P>

<P STYLE="font: 18pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt"><B>SECURITIES
AND EXCHANGE COMMISSION</B></FONT></P>

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

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<P STYLE="font: 18pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt"><B>FORM
S-1</B></FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt"><B>REGISTRATION
STATEMENT UNDER THE SECURITIES ACT OF 1933</B></FONT></P>

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

<P STYLE="font: 18pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt"><B>DIGERATI
TECHNOLOGIES, INC.</B></FONT></P>

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

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

<TABLE CELLSPACING="0" CELLPADDING="0" STYLE="font: 10pt Times New Roman, Times, Serif; width: 100%; border-collapse: collapse">
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    <TD STYLE="width: 32%; border-bottom: black 1.5pt solid; text-align: center"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt"><B>Nevada</B></FONT></TD>
    <TD STYLE="width: 2%; padding-bottom: 1.5pt; text-align: center"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">&nbsp;</FONT></TD>
    <TD STYLE="width: 32%; border-bottom: black 1.5pt solid; text-align: center"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt"><B>4813</B></FONT></TD>
    <TD STYLE="width: 2%; padding-bottom: 1.5pt; text-align: center"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">&nbsp;</FONT></TD>
    <TD STYLE="width: 32%; border-bottom: black 1.5pt solid; text-align: center"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt"><B>74-2849995</B></FONT></TD></TR>
<TR STYLE="vertical-align: top">
    <TD STYLE="text-align: center"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">(State of Incorporation)</FONT></TD>
    <TD STYLE="text-align: center"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">&nbsp;</FONT></TD>
    <TD><P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">(Primary
        Standard Industrial</FONT></P>
        <P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">Classification
        Number)</FONT></P></TD>
    <TD STYLE="text-align: center"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">&nbsp;</FONT></TD>
    <TD><P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">(IRS
        Employer</FONT></P>
        <P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">Identification
        Number)</FONT></P></TD></TR>
</TABLE>
<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">&nbsp;</FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt"><B>825
W. Bitters, Suite 104</B></FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt"><B>San
Antonio, Texas 78216</B></FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt"><B>(210)
614-7240</B></FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">(Address,
including zip code, and telephone number, including area code,</FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">of
registrant&rsquo;s principal executive offices)</FONT></P>

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

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">Please
send copies of all communications to:</FONT></P>

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

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt"><B>Lucosky
Brookman LLP</B><BR>
<B>101 Wood Avenue South, 5</B><SUP>th</SUP> <B>Floor</B><BR>
<B>Woodbridge, NJ 08830</B><BR>
<B>Tel. No.: (732) 395-4400</B><BR>
<B>Fax No.: (732) 395-4401</B></FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">(Address,
including zip code, and telephone, including area code)</FONT></P>

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

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">Approximate
date of proposed sale to the public: <B>From time to time after the effective date of this registration statement.</B></FONT></P>

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

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">If
any of the securities being registered on this Form are to be offered on a delayed or continuous basis pursuant to Rule 415 under
the Securities Act of 1933, check the following box.&nbsp;&nbsp;&#9746;</FONT></P>

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

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">If
this Form is filed to register additional securities for an offering pursuant to Rule 462(b) under the Securities Act, please
check the following box and list the Securities Act registration statement number of the earlier effective registration statement
for the same offering.&nbsp;&nbsp;&#9744;</FONT></P>

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

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">If
this Form is a post-effective amendment filed pursuant to rule 462(c) under the Securities Act, check the following box and list
the Securities Act registration statement number of the earlier effective registration statement for the same offering.&nbsp;&nbsp;&#9744;</FONT></P>

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

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">If
this Form is a post-effective amendment filed pursuant to Rule 462(d) under the Securities Act, check the following box and list
the Securities Act registration statement number of the earlier effective registration statement for the same offering.&nbsp;&nbsp;&#9744;</FONT></P>

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

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">Indicate
by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, smaller reporting
company, or an emerging growth company. See the definitions of &ldquo;large accelerated filer,&rdquo; &ldquo;accelerated filer,&rdquo;
&ldquo;smaller reporting company,&rdquo; and &ldquo;emerging growth company&rdquo; in Rule 12b-2 of the Exchange Act.</FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">&nbsp;</FONT></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 STYLE="width: 30%"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">Large accelerated filer</FONT></TD>
    <TD STYLE="width: 15%"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#9744;</FONT></TD>
    <TD STYLE="width: 30%"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">Accelerated filer</FONT></TD>
    <TD><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#9744;</FONT></TD></TR>
<TR STYLE="vertical-align: top">
    <TD><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">Non-accelerated filer</FONT></TD>
    <TD><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#9746;</FONT></TD>
    <TD><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">Smaller reporting company</FONT></TD>
    <TD><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#9746;</FONT></TD></TR>
<TR STYLE="vertical-align: top">
    <TD COLSPAN="2"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">&nbsp;</FONT></TD>
    <TD><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">Emerging Growth Company</FONT></TD>
    <TD><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#9744;</FONT></TD></TR>
</TABLE>
<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">&nbsp;&nbsp;</FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">If
an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for
complying with any new or revised financial accounting standards provided pursuant to Section 7(a)(2)(B) of the Securities Act.&nbsp;&nbsp;&#9744;</FONT></P>

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

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<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt"><B>CALCULATION
OF REGISTRATION FEE</B></FONT></P>

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

<TABLE CELLPADDING="0" CELLSPACING="0" STYLE="border-collapse: collapse; width: 100%; font: 10pt Times New Roman, Times, Serif">
<TR STYLE="vertical-align: bottom">
    <TD STYLE="text-align: center; border-bottom: Black 1.5pt solid"><P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: left"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt"><B>Title
of Each Class of securities to be registered</B></FONT></P></TD><TD STYLE="padding-bottom: 1.5pt">&nbsp;</TD>
    <TD COLSPAN="2" STYLE="text-align: center; border-bottom: Black 1.5pt solid"><P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center"></P><P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt"><B>Number of shares of</B></FONT></P> <P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt"><B>common stock to be registered (1)</B></FONT></P></TD><TD STYLE="padding-bottom: 1.5pt">&nbsp;</TD><TD STYLE="padding-bottom: 1.5pt">&nbsp;</TD>
    <TD COLSPAN="2" STYLE="text-align: center; border-bottom: Black 1.5pt solid"><P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center"></P><P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt"><B>Proposed</B></FONT></P> <P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt"><B>Maximum</B></FONT></P> <P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt"><B>Offering</B></FONT></P> <P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt"><B>Price Per</B></FONT></P> <P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt"><B>Share </B></FONT></P></TD><TD STYLE="padding-bottom: 1.5pt">&nbsp;</TD><TD STYLE="padding-bottom: 1.5pt">&nbsp;</TD>
    <TD COLSPAN="2" STYLE="text-align: center; border-bottom: Black 1.5pt solid"><P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt"></FONT></P><P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt"><B>Proposed</B></FONT></P> <P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt"><B>Maximum</B></FONT></P> <P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt"><B>Aggregate</B></FONT></P> <P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt"><B>Offering</B></FONT></P> <P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt"><B>Price</B></FONT></P></TD><TD STYLE="padding-bottom: 1.5pt">&nbsp;</TD><TD STYLE="padding-bottom: 1.5pt">&nbsp;</TD>
    <TD COLSPAN="2" STYLE="text-align: center; border-bottom: Black 1.5pt solid"><P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center"></P><P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt"><B>Amount of</B></FONT></P> <P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt"><B>Registration</B></FONT></P> <P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt"><B>Fee (2)</B></FONT></P></TD><TD STYLE="padding-bottom: 1.5pt">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom">
    <TD>&nbsp;</TD><TD>&nbsp;</TD>
    <TD COLSPAN="2" STYLE="text-align: right">&nbsp;</TD><TD>&nbsp;</TD><TD>&nbsp;</TD>
    <TD COLSPAN="2" STYLE="text-align: right">&nbsp;</TD><TD>&nbsp;</TD><TD>&nbsp;</TD>
    <TD COLSPAN="2" STYLE="text-align: right">&nbsp;</TD><TD>&nbsp;</TD><TD>&nbsp;</TD>
    <TD COLSPAN="2" STYLE="text-align: right">&nbsp;</TD><TD>&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,238,255)">
    <TD STYLE="width: 52%; text-align: left">Common Stock</TD><TD STYLE="width: 1%">&nbsp;</TD>
    <TD STYLE="width: 1%; text-align: left">&nbsp;</TD><TD STYLE="width: 9%; text-align: right">6,074,142</TD><TD STYLE="width: 1%; text-align: left">&nbsp;</TD><TD STYLE="width: 1%">&nbsp;</TD>
    <TD STYLE="width: 1%; text-align: left">$</TD><TD STYLE="width: 9%; text-align: right">0.10</TD><TD STYLE="width: 1%; text-align: left; white-space: nowrap">(3)</TD><TD STYLE="width: 1%">&nbsp;</TD>
    <TD STYLE="width: 1%; text-align: left">$</TD><TD STYLE="width: 9%; text-align: right">607,414.20</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: 9%; text-align: right">73.62</TD><TD STYLE="width: 1%; text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD STYLE="text-align: left">Common Stock</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">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">0.09</TD><TD STYLE="text-align: left">(4)</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">22,500.00</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">2.73</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,238,255)">
    <TD>Total</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">6,324,142</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">629,914.20</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">76.35</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
</TABLE>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">&nbsp;</FONT></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 STYLE="width: 24px"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">(1)</FONT></TD>
    <TD STYLE="text-align: justify"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">Includes up to an
    aggregate of 6,324,142 shares of the Company&rsquo;s common stock, par value $0.001 (the &ldquo;Common Stock&rdquo;) including
    (i) 250,000 shares of Common Stock issued to Peak One Opportunity Fund, L.P. (&ldquo;Peak One&rdquo;) as commitment shares
    (the &ldquo;Commitment Shares&rdquo;); and (ii) 6,074,142 shares of Common Stock to be issued in connection with an equity
    purchase agreement.</FONT></TD></TR>
<TR STYLE="vertical-align: top">
    <TD><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">&nbsp;</FONT></TD>
    <TD STYLE="text-align: justify"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">&nbsp;</FONT></TD></TR>
<TR STYLE="vertical-align: top">
    <TD><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">(2)</FONT></TD>
    <TD STYLE="text-align: justify"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">The fee is calculated
    by multiplying the aggregate offering amount by .0001212, pursuant to Section 6(b) of the Securities Act of 1933. </FONT></TD></TR>
<TR STYLE="vertical-align: top">
    <TD><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">&nbsp;</FONT></TD>
    <TD STYLE="text-align: justify"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">&nbsp;</FONT></TD></TR>
<TR STYLE="vertical-align: top">
    <TD><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">(3)</FONT></TD>
    <TD STYLE="text-align: justify"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">Based on the reported
    closing price for our common stock on the trading day period immediately preceding the filing of this Registration Statement
    of $0.10. The shares offered, hereunder, may be sold by the selling stockholder from time to time in the open market, through
    privately negotiated transactions, or a combination of these methods at market prices prevailing at the time of sale or at
    negotiated prices.</FONT></TD></TR>
<TR STYLE="vertical-align: top">
    <TD><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">&nbsp;</FONT></TD>
    <TD STYLE="text-align: justify"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">&nbsp;</FONT></TD></TR>
<TR STYLE="vertical-align: top">
    <TD><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">(4)</FONT></TD>
    <TD STYLE="text-align: justify"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">Estimated solely
    for purposes of calculating the registration fee pursuant to Rule 457(c) and (g) under the Securities Act, based on the average
    of the high and low prices reported for the shares of Common Stock as reported on the OTC Marketplace on September 9, 2019.</FONT></TD></TR>
</TABLE>
<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">&nbsp;</FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt"><B>The
registrant hereby may amend this registration statement on such date or dates as may be necessary to delay our effective date
until the registrant shall file a further amendment which specifically states that this registration statement shall, thereafter,
become effective in accordance with Section 8(a) of the Securities Act of 1933, or until the registration statement shall become
effective on such date as the Commission, acting pursuant to Section 8(a) may determine.</B></FONT></P>

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



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

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



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

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

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt; color: Red"><B>PRELIMINARY
PROSPECTUS SUBJECT TO COMPLETION DATED September 16, 2019</B></FONT></P>

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

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt; color: Red"><B><I>The
information in this prospectus is not complete and may be changed. These securities may not be sold until the registration statement
filed with the Securities and Exchange Commission is effective. This preliminary prospectus is not an offer to sell these securities
and is not soliciting an offer to buy these securities in any state where the offer or sale is not permitted.</I></B></FONT></P>

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

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt"><B>Digerati
Technologies, Inc.</B></FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt"><B>6,324,142
Shares of Common Stock</B></FONT></P>

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

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">The
selling stockholder identified in this prospectus may offer an indeterminate number of shares of its common stock, which will
consist of up to 6,324,142 shares of common stock to be sold by Peak One pursuant to an Equity Purchase Agreement (the &ldquo;Financing
Agreement&rdquo;) dated January 12, 2018. If issued presently, the 6,324,142 of common stock registered for resale by Peak One
would represent approximately 25% of our issued and outstanding shares of common stock as of September 12, 2019. Additionally,
as of the date hereof, the 6,324,142 shares of our common stock registered for resale herein would represent approximately 31%
of the Company&rsquo;s public float.</FONT></P>

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

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">The
selling stockholder may sell all or a portion of the shares being offered pursuant to this prospectus at fixed prices and prevailing
market prices at the time of sale, at varying prices, or at negotiated prices.</FONT></P>

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

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">We
will not receive any proceeds from the sale of the shares of our common stock by Peak One. However, we will receive proceeds from
our initial sale of shares to Peak One pursuant to the Financing Agreement. We will sell shares to Peak One at a price equal to
88% of the lowest closing price of our common stock during the ten (10) consecutive trading day period beginning on the date on
which we deliver a put notice to Peak One (the &ldquo;Market Price&rdquo;).</FONT></P>

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

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">Peak
One is an &ldquo;underwriter&rdquo; within the meaning of the Securities Act of 1933, and any broker-dealers or agents that are
involved in selling the shares may be deemed to be &ldquo;underwriters&rdquo; within the meaning of the Securities Act of 1933
in connection with such sales. In such event, any commissions received by such broker-dealers or agents and any profit on the
resale of the shares purchased by them may be deemed to be underwriting commissions or discounts under the Securities Act of 1933.</FONT></P>

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

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">Peak
One may sell the shares of common stock described in this Prospectus in a number of different ways and at varying prices. See
&ldquo;Plan of Distribution&rdquo; for more information about how the Selling Shareholder may sell the shares of common stock
being registered pursuant to this Prospectus.</FONT></P>

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

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">Our
common stock is traded on OTC Markets under the symbol &ldquo;DTGI&rdquo;. On September 12, 2019, the reported closing price for
our common stock was $0.10 per share.</FONT></P>

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

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">Prior
to this offering, there has been a very limited market for our securities. While our common stock is on the OTC Markets, there
has been negligible trading volume. There is no guarantee that an active trading market will develop in our securities.</FONT></P>

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

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt"><B>This
offering is highly speculative and these securities involve a high degree of risk and should be considered only by persons who
can afford the loss of their entire investment. See &ldquo;Risk Factors&rdquo; beginning on page 10. Neither the Securities and
Exchange Commission nor any state securities commission has approved or disapproved of these securities or passed upon the accuracy
or adequacy of this prospectus. Any representation to the contrary is a criminal offense.</B></FONT></P>

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

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">The
date of this prospectus is _____ __, 2019.</FONT></P>

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

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

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<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">&nbsp;</FONT></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 COLSPAN="2" STYLE="text-align: center"></TD></TR>
</TABLE>
<P STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; text-align: center"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt"><B><U>Table
of Contents</U></B></FONT></P>

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

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">The
following table of contents has been designed to help you find information contained in this prospectus. We encourage you to read
the entire prospectus.</FONT></P>

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

<TABLE CELLSPACING="0" CELLPADDING="0" STYLE="font: 10pt Times New Roman, Times, Serif; width: 100%; border-collapse: collapse">
<TR STYLE="background-color: #CCEEFF; font-family: Times New Roman, Times, Serif">
    <TD STYLE="font-family: Times New Roman, Times, Serif"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt; text-decoration: none"><A HREF="#a_001">Prospectus
    Summary</A></FONT></TD>
    <TD STYLE="width: 48px; text-align: center; font-family: Times New Roman, Times, Serif"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt; text-decoration: none">1</FONT></TD></TR>
<TR STYLE="background-color: white; font-family: Times New Roman, Times, Serif">
    <TD STYLE="font-family: Times New Roman, Times, Serif"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt; text-decoration: none"><A HREF="#a_002">Summary
    Consolidated Financial Information</A></FONT></TD>
    <TD STYLE="text-align: center; font-family: Times New Roman, Times, Serif"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt; text-decoration: none">7</FONT></TD></TR>
<TR STYLE="background-color: #CCEEFF; font-family: Times New Roman, Times, Serif">
    <TD STYLE="font-family: Times New Roman, Times, Serif"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt; text-decoration: none"><A HREF="#a_003">Risk
    Factors</A></FONT></TD>
    <TD STYLE="text-align: center; font-family: Times New Roman, Times, Serif"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt; text-decoration: none">10</FONT></TD></TR>
<TR STYLE="background-color: white; font-family: Times New Roman, Times, Serif">
    <TD STYLE="font-family: Times New Roman, Times, Serif"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt; text-decoration: none"><A HREF="#a_004">Cautionary
    Note Regarding Forward-Looking Statements</A></FONT></TD>
    <TD STYLE="text-align: center; font-family: Times New Roman, Times, Serif"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt; text-decoration: none">18</FONT></TD></TR>
<TR STYLE="background-color: #CCEEFF; font-family: Times New Roman, Times, Serif">
    <TD STYLE="font-family: Times New Roman, Times, Serif"><FONT STYLE="font-family: Times New Roman, Times, Serif"><A HREF="#a_005"><FONT STYLE="font-size: 10pt; text-decoration: none">Use
    of Proceeds</FONT></A></FONT></TD>
    <TD STYLE="text-align: center; font-family: Times New Roman, Times, Serif"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt; text-decoration: none">19</FONT></TD></TR>
<TR STYLE="background-color: white; font-family: Times New Roman, Times, Serif">
    <TD STYLE="font-family: Times New Roman, Times, Serif"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt; text-decoration: none"><A HREF="#a_006">Determination
    of Offering Price</A></FONT></TD>
    <TD STYLE="text-align: center; font-family: Times New Roman, Times, Serif"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt; text-decoration: none">19</FONT></TD></TR>
<TR STYLE="background-color: #CCEEFF; font-family: Times New Roman, Times, Serif">
    <TD STYLE="font-family: Times New Roman, Times, Serif"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt; text-decoration: none"><A HREF="#a_007">Selling
    Stockholders</A></FONT></TD>
    <TD STYLE="text-align: center; font-family: Times New Roman, Times, Serif"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt; text-decoration: none">20</FONT></TD></TR>
<TR STYLE="background-color: white; font-family: Times New Roman, Times, Serif">
    <TD STYLE="font-family: Times New Roman, Times, Serif"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt; text-decoration: none"><A HREF="#a_008">Plan
    of Distribution</A></FONT></TD>
    <TD STYLE="text-align: center; font-family: Times New Roman, Times, Serif"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt; text-decoration: none">22</FONT></TD></TR>
<TR STYLE="background-color: #CCEEFF; font-family: Times New Roman, Times, Serif">
    <TD STYLE="font-family: Times New Roman, Times, Serif"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt; text-decoration: none"><A HREF="#a_009">Experts</A></FONT></TD>
    <TD STYLE="text-align: center; font-family: Times New Roman, Times, Serif"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt; text-decoration: none">26</FONT></TD></TR>
<TR STYLE="background-color: white; font-family: Times New Roman, Times, Serif">
    <TD STYLE="font-family: Times New Roman, Times, Serif"><FONT STYLE="font-family: Times New Roman, Times, Serif"><A HREF="#a_010"><FONT STYLE="font-size: 10pt; text-decoration: none">Market
    for Our Common Stock and Related Stockholder Matters</FONT></A></FONT></TD>
    <TD STYLE="text-align: center; font-family: Times New Roman, Times, Serif"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt; text-decoration: none">32</FONT></TD></TR>
<TR STYLE="background-color: #CCEEFF; font-family: Times New Roman, Times, Serif">
    <TD STYLE="font-family: Times New Roman, Times, Serif"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt; text-decoration: none"><A HREF="#a_011">Management&rsquo;s
    Discussion and Analysis of Financial Condition and Results of Operations</A></FONT></TD>
    <TD STYLE="text-align: center; font-family: Times New Roman, Times, Serif"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt; text-decoration: none">33</FONT></TD></TR>
<TR STYLE="background-color: white; font-family: Times New Roman, Times, Serif">
    <TD STYLE="font-family: Times New Roman, Times, Serif"><FONT STYLE="font-family: Times New Roman, Times, Serif"><A HREF="#a_012"><FONT STYLE="font-size: 10pt; text-decoration: none">Directors,
    Executive Officers and Key Employees</FONT></A></FONT></TD>
    <TD STYLE="text-align: center; font-family: Times New Roman, Times, Serif"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt; text-decoration: none">39</FONT></TD></TR>
<TR STYLE="background-color: #CCEEFF; font-family: Times New Roman, Times, Serif">
    <TD STYLE="font-family: Times New Roman, Times, Serif"><FONT STYLE="font-family: Times New Roman, Times, Serif"><A HREF="#a_013"><FONT STYLE="font-size: 10pt; text-decoration: none">Executive
    Compensation</FONT></A></FONT></TD>
    <TD STYLE="text-align: center; font-family: Times New Roman, Times, Serif"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt; text-decoration: none">41</FONT></TD></TR>
<TR STYLE="background-color: white; font-family: Times New Roman, Times, Serif">
    <TD STYLE="font-family: Times New Roman, Times, Serif"><FONT STYLE="font-family: Times New Roman, Times, Serif"><A HREF="#a_014"><FONT STYLE="font-size: 10pt; text-decoration: none">Security
    Ownership of Certain Beneficial Owners and Management</FONT></A></FONT></TD>
    <TD STYLE="text-align: center; font-family: Times New Roman, Times, Serif"><FONT STYLE="font-family: Times New Roman, Times, Serif">44</FONT></TD></TR>
<TR STYLE="background-color: #CCEEFF; font-family: Times New Roman, Times, Serif">
    <TD STYLE="font-family: Times New Roman, Times, Serif"><FONT STYLE="font-family: Times New Roman, Times, Serif"><A HREF="#a_015"><FONT STYLE="font-size: 10pt; text-decoration: none">Index
    to Consolidated Financial Statements</FONT></A></FONT></TD>
    <TD STYLE="text-align: center; font-family: Times New Roman, Times, Serif"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt; text-decoration: none">F-1</FONT></TD></TR>
</TABLE>
<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">&nbsp;</FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt"><B>You
may only rely on the information contained in this prospectus or that we have referred you to. We have not authorized any person
to give you any supplemental information or to make any representations for us. This prospectus does not constitute an offer to
sell or a solicitation of an offer to buy any securities other than the Common Stock offered by this prospectus. This prospectus
does not constitute an offer to sell or a solicitation of an offer to buy any Common Stock in any circumstances in which such
offer or solicitation is unlawful. Neither the delivery of this prospectus nor any sale made in connection with this prospectus
shall, under any circumstances, create any implication that there has been no change in our affairs since the date of this prospectus
is correct as of any time after its date. You should not rely upon any information about our company that is not contained in
this prospectus. Information contained in this prospectus may become stale. You should not assume the information contained in
this prospectus or any prospectus supplement is accurate as of any date other than their respective dates, regardless of the time
of delivery of this prospectus, any prospectus supplement or of any sale of the shares. Our business, financial condition, results
of operations, and prospects may have changed since those dates. The selling stockholders are offering to sell and seeking offers
to buy shares of our common stock only in jurisdictions where offers and sales are permitted.</B></FONT></P>

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

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">In
this prospectus, &ldquo;Digerati&rdquo; the &ldquo;Company,&rdquo; &ldquo;we,&rdquo; &ldquo;us,&rdquo; and &ldquo;our&rdquo; refer
to Digerati Technologies, Inc., a Nevada corporation.</FONT></P>

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

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

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<DIV>

<DIV STYLE="border: Black 1.5pt solid; padding: 5pt">

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

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><FONT STYLE="font: 10pt Times New Roman, Times, Serif"></FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt"><B><A NAME="a_001"></A>PROSPECTUS
SUMMARY</B></FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 7pt">&nbsp;</FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">You
should carefully read all information in the prospectus, including the financial statements and their explanatory notes under
the Financial Statements prior to making an investment decision.</FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 7pt">&nbsp;</FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt"><I>This
summary highlights selected information appearing elsewhere in this prospectus. While this summary highlights what we consider
to be important information about us, you should carefully read this entire prospectus before investing in our Common Stock, especially
the risks and other information we discuss under the headings &ldquo;Risk Factors&rdquo; and &ldquo;Management&rsquo;s Discussion
and Analysis of Financial Condition and Results of Operation&rdquo; and our consolidated financial statements and related notes
beginning on page F-1. Our fiscal year end is July 31 and our fiscal years ended July 31, 2017 and 2018 are sometimes referred
to herein as fiscal years 2017 and 2018, respectively. Some of the statements made in this prospectus discuss future events and
developments, including our future strategy and our ability to generate revenue, income and cash flow. These forward-looking statements
involve risks and uncertainties which could cause actual results to differ materially from those contemplated in these forward-looking
statements. See &ldquo;Cautionary Note Regarding Forward-Looking Statements&rdquo;. Unless otherwise indicated or the context
requires otherwise, the words &ldquo;we,&rdquo; &ldquo;us,&rdquo; &ldquo;our&rdquo;, the &ldquo;Company&rdquo; or &ldquo;our Company&rdquo;
or &ldquo;Digerati&rdquo; refer to Digerati Technologies, Inc., a Nevada corporation, and our each of our subsidiaries.</I></FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 7pt">&nbsp;</FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">When
used in this prospectus the following terms have the following meanings related to our subsidiaries.</FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 7pt">&nbsp;</FONT></P>

<TABLE CELLPADDING="0" CELLSPACING="0" STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0; margin-bottom: 0; width: 100%"><TR STYLE="vertical-align: top">
<TD STYLE="width: 0.25in"></TD><TD STYLE="width: 0.25in; text-align: left"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#9679;</FONT></TD><TD STYLE="text-align: justify"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">&ldquo;Shift8
                                         Technologies&rdquo; refers to Shift8 Technologies, Inc a company organized under the
                                         laws of the state of Nevada. On April 10, 2019, Shift8 Technologies changed its name
                                         to T3 Communications, Inc.</FONT></TD>
</TR></TABLE>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 7pt">&nbsp;</FONT></P>

<TABLE CELLPADDING="0" CELLSPACING="0" STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0; margin-bottom: 0; width: 100%"><TR STYLE="vertical-align: top">
<TD STYLE="width: 0.25in"></TD><TD STYLE="width: 0.25in; text-align: left"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#9679;</FONT></TD><TD STYLE="text-align: justify"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">&ldquo;Shift8
                                         Networks&rdquo; refers to Shift8 Networks, Inc a company organized under the laws of
                                         the state of Texas.</FONT></TD>
</TR></TABLE>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 7pt">&nbsp;</FONT></P>

<TABLE CELLPADDING="0" CELLSPACING="0" STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0; margin-bottom: 0; width: 100%"><TR STYLE="vertical-align: top">
<TD STYLE="width: 0.25in"></TD><TD STYLE="width: 0.25in; text-align: left"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#9679;</FONT></TD><TD STYLE="text-align: justify"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">&ldquo;T3
                                         Communications&rdquo; refers to T3 Communications, Inc. a company organized under the
                                         laws of the state of Florida.</FONT></TD>
</TR></TABLE>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 7pt">&nbsp;</FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt"><B>Corporate
History</B></FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 7pt">&nbsp;</FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">Digerati
Technologies, Inc. (&ldquo;we&rdquo;, &ldquo;our&rdquo;, &ldquo;Company&rdquo; or &ldquo;Digerati&rdquo;) was incorporated in
the state of Nevada on May 24, 2004. Digerati is a diversified holding company that has no independent operations apart from its
subsidiaries. Through our operating subsidiaries, T3 Communications, Inc., and Shift8 Networks, Inc., dba, Synergy Telecom, we
are an established <FONT STYLE="background-color: white">provider of cloud services specializing in UCaaS (Unified Communications
as a Service) solutions for the small to medium-sized business (&ldquo;SMB&rdquo;) market. We </FONT>offer a comprehensive suite
of cloud communication services to meet the global needs of businesses that are seeking simple, flexible, and cost-effective communication
solutions. Our services <FONT STYLE="background-color: white">include cloud PBX, cloud mobile, Internet broadband, cloud WAN,
SIP trunking, and customized VoIP services, all delivered on its global carrier-grade network and&nbsp;<B><I>Only in the Cloud&trade;</I>.</B></FONT></FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 7pt"><B>&nbsp;</B></FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">On
December 1, 2017, Shift8 Technologies, Inc., a Nevada corporation (&ldquo;Shift8&rdquo;), a wholly owned subsidiary of Digerati
Technologies, Inc., a Nevada corporation (the &ldquo;Company&rdquo;), and Synergy Telecom, Inc., a Texas corporation (&ldquo;Synergy&rdquo;),
closed a transaction to acquire all the assets, assumed all customers, and critical vendor arrangements from Synergy.</FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 7pt">&nbsp;</FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">On
May 2, 2018, Shift8 completed the acquisition of T3 Communications, Inc., an established UCaaS and Internet broadband provider
serving a high-growth corridor in Southwest Florida. On April 10, 2019, Shift8 changed its name to T3 Communications, Inc.</FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 7pt">&nbsp;</FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt"><B>Overview</B></FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 7pt">&nbsp;</FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">As
a provider of cloud communications solutions to the SMB, we are seeking to capitalize on the migration by businesses from the
legacy telephone network to the Internet Protocol (&ldquo;IP&rdquo;) telecommunication network and the migration from hardware-based
on-premise telephone systems to software-based communication systems in the cloud. Most SMBs are lagging in technical capabilities
and advancement and seldom reach the economies of scale that their larger counterparts enjoy, due to their achievement of a critical
mass and ability to deploy a single solution to a large number of workers. SMBs are typically unable to afford comprehensive enterprise
solutions and, therefore, need to integrate a combination of business solutions to meet their needs. Cloud computing has revolutionized
the industry and opened the door for businesses of all sizes to gain access to enterprise applications with affordable pricing.
This especially holds true for cloud telephony applications, but SMBs are still a higher-touch sale that requires customer support
for system integration, network installation, cabling, and troubleshooting. We have placed a significant emphasis on that &ldquo;local&rdquo;
touch when selling, delivering, and supporting our services which we believe will differentiate us from the national providers
that are experiencing high attrition rates due to poor customer support model.</FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 7pt">&nbsp;</FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">The
adoption of cloud communication services is being driven by the convergence of several market trends, including the increasing
costs of maintaining installed legacy communications systems, the fragmentation resulting from use of multiple on-premise systems,
and the proliferation of personal smartphones used in the workplace. Today, businesses are increasingly looking for an affordable
path to modernizing their communications system to improve productivity, business performance and customer experience.</FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 7pt">&nbsp;</FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">Our
cloud solutions offer the SMB reliable, robust, and full-featured services at affordable monthly rates that eliminates high-cost
capital expenditures and provides for integration with other cloud-based systems.</FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 7pt">&nbsp;</FONT></P>

</DIV>

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

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<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><FONT STYLE="font: 7pt Times New Roman, Times, Serif">&nbsp;</FONT></P>

<DIV STYLE="border: Black 1.5pt solid; padding: 5pt"><P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><FONT STYLE="font: 10pt Times New Roman, Times, Serif"><B>Products
and Services</B></FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><FONT STYLE="font: 7pt Times New Roman, Times, Serif">&nbsp;</FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><FONT STYLE="font: 10pt Times New Roman, Times, Serif">We
provide a comprehensive suite of Internet-based communication services to meet the global needs of businesses that are seeking
simple, flexible, and cost-effective communication solutions. Our Internet-based services include fully hosted IP/PBX services,
SIP trunking, call center applications, interactive voice response auto attendant, voice and web conferencing, call recording,
simultaneous calling, voicemail to email conversion, integrated mobility applications that are device and location agnostic, and
multiple customized IP/PBX features in a hosted or cloud environment. Our services, known as UCaaS or cloud communications, are
specifically designed for the needs of the small to medium-sized business, enterprise customers, call centers, and telephony service
providers that do not have the scale or expertise necessary to deploy their own cloud telephony infrastructure.</FONT></P>


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

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">Through
our recent acquisitions, we have enhanced our product portfolio with the addition of enterprise-class data and connectivity solutions
through multiple broadband technologies including cloud WAN or SD-WAN (Software-defined Wide Area Network), fiber, and Ethernet
over copper. Other services include remote network monitoring, data backup and disaster recovery. The addition of these new products
and services allows us to increase our value-proposition through product bundles that go beyond the voice application and to serve
as a one-stop-shop for business customers seeking a comprehensive voice and data solution.</FONT></P>

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

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt"><B>Voice
over Internet Protocol Networks </B></FONT></P>

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

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">The
basic technology of traditional telecommunications systems was designed for slow mechanical switches. Communications over the
traditional telephone network are routed through circuits that must dedicate all circuit resources to each call from its inception
until the call ends, regardless of whether anyone is actually talking on the circuit. This circuit-switching technology incurs
a significant cost per call and does not efficiently support the integration of voice with data services. Data networks, however,
were designed for electronic switching. They break the data stream into small, individually addressed packages of data (&ldquo;packets&rdquo;)
that are routed independently of each other from the origin to the destination. Therefore, they do not require a fixed amount
of bandwidth to be reserved between the origin and destination of each call and they do not waste bandwidth when it is not being
used for actual transmission of information. This allows multiple voice or voice and data calls to be pooled, resulting in these
networks being able to carry more calls with an equal amount of bandwidth. Moreover, they do not require the same complex switching
methods required by traditional voice telephone networks, instead using a multiplicity of routers to direct each packet to its
destination and automatically routing packets around blockages, congestion or outages.</FONT></P>

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

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">Packet
switching can be used within a data network or across networks, including the public Internet. The Internet itself is not a single
data network owned by any single entity, but rather a loose interconnection of networks belonging to many owners that communicate
using the Internet Protocol. By converting voice signals to digital data and handling the voice signals as data, it can be transmitted
through the more efficient switching networks designed for data transmissions and through the Internet using the Internet Protocol.
The transmission of voice signals as digitalized data streams over the Internet is known as Voice over Internet Protocol or &ldquo;VoIP&rdquo;.
A VoIP network has the following advantages over traditional networks:</FONT></P>

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

<TABLE CELLPADDING="0" CELLSPACING="0" STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0; margin-bottom: 0; width: 100%"><TR STYLE="vertical-align: top; text-align: justify">
<TD STYLE="width: 0.25in"></TD><TD STYLE="width: 0.25in; text-align: left"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#9679;</FONT></TD><TD STYLE="text-align: justify"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt"><B>Simplification:
</B>An integrated infrastructure that supports all forms of communication allows more standardization, a smaller equipment complement,
and less equipment management.</FONT></TD>
</TR></TABLE>
<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">&nbsp;</FONT></P>

<TABLE CELLPADDING="0" CELLSPACING="0" STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0; margin-bottom: 0; width: 100%"><TR STYLE="vertical-align: top; text-align: justify">
<TD STYLE="width: 0.25in"></TD><TD STYLE="width: 0.25in; text-align: left"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#9679;</FONT></TD><TD STYLE="text-align: justify"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt"><B>Network
Efficiency: </B>The integration of voice and data fills up the data communication channels efficiently, thus providing bandwidth
consolidation and reduction of the costs associated with idle bandwidth. This combined infrastructure can support dynamic bandwidth
optimization and a fault tolerant design. The differences between the traffic patterns of voice and data offer further opportunities
for significant efficiency improvements.</FONT></TD>
</TR></TABLE>
<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt"><B>&nbsp;</B></FONT></P>

<TABLE CELLPADDING="0" CELLSPACING="0" STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0; margin-bottom: 0; width: 100%"><TR STYLE="vertical-align: top; text-align: justify">
<TD STYLE="width: 0.25in"></TD><TD STYLE="width: 0.25in; text-align: left"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#9679;</FONT></TD><TD STYLE="text-align: justify"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt"><B>Co-existence
with traditional communication mediums: </B>IP telephony can be used in conjunction with existing public telephone system switches,
leased and dial-up lines, PBXs and other customer premise equipment, enterprise LANs, and Internet connections. IP telephony applications
can be implemented through dedicated gateways, which in turn can be based on open standards platforms for reliability and scalability.</FONT></TD>
</TR></TABLE>
<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt"><B>&nbsp;</B></FONT></P>

<TABLE CELLPADDING="0" CELLSPACING="0" STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0; margin-bottom: 0; width: 100%"><TR STYLE="vertical-align: top; text-align: justify">
<TD STYLE="width: 0.25in"></TD><TD STYLE="width: 0.25in; text-align: left"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#9679;</FONT></TD><TD STYLE="text-align: justify"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt"><B>Cost
reduction: </B>Under the VoIP network, the connection is directly to the Internet backbone and as a result the telephony access
charges and settlement fees are avoided.</FONT></TD>
</TR></TABLE>
<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">&nbsp;</FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">The
growth of voice over the Internet was limited in the past due to poor sound quality caused by technical issues such as delays
in packet transmission and by bandwidth limitations related to Internet network capacity and local access constraints. However,
the expansion of Internet Protocol network infrastructure, improvements in packet switching and compression technology, new software
algorithms and improved hardware have substantially reduced delays in packet transmissions and resulted in superior sound quality
to that of the legacy telephone network.</FONT></P>

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

</DIV>

</DIV>

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

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt"><B>Cloud
Communications</B></FONT></P>

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

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; background-color: white"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt; background-color: white">Cloud
communications&nbsp;are Internet-based voice and data communications where telecommunications applications, switching and storage
are hosted by a third-party service provider outside of the organization using the services. Services are accessed by the user
over the public Internet.&nbsp;Cloud telephony&nbsp;refers specifically to voice services and more specifically the replacement
of conventional business telephone equipment (such as a&nbsp;PBX) with VoIP service hosted by a third-party service provider and
delivered over the Internet.</FONT></P>

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

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; background-color: white"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">We
operate a cloud communication network that consists of a VoIP switching system and cloud telephony application platform. Our network
allows us to provide end-to-end cloud telephony solutions designed to provide significant benefits to businesses of all sizes,
with single or multiple locations. The integration of our cloud communication platform and global VoIP network allows us to provide
our customers with virtually any type of telephony solution on a global basis.</FONT></P>

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

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; background-color: white"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">Our
cloud communication solutions, also known as UCaaS, are designed to minimize upfront capital costs, increase the scalability and
flexibility of the customer&rsquo;s communications network and service environment, provide robust features and functionality
to increase productivity and reduce the overall cost of communications.</FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in; background-color: white"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">&nbsp;</FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt"><B>Strategy</B></FONT></P>

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

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">Our
strategy is to target the small to medium-sized business market and capitalize on the wave of migration from the legacy telephone
network to cloud telephony. We will continue to concentrate our sales and marketing efforts on developing vertically oriented
solutions for targeted markets primarily focusing on municipalities, banking, healthcare, legal services and real estate. In addition,
we will continue to partner with our distributors and Value-Added Resellers (&ldquo;VARs&rdquo;) to expand our customer base.
Our typical VAR is an information technology services firm, traditional PBX vendor, managed service provider, or systems integrator
that has established relationships with businesses in its local market. These VARs are currently providing local customer support
for other IT or PBX services but lack the technology infrastructure to provide cloud communication and VoIP services to their
customers. Our strategy allows these VARs to focus on their strength of providing first tier support to their customers while
we provide the second and third tier technical support required to operate a cloud communication and VoIP network. In addition,
we transform our VARs&rsquo; business model by introducing new cloud telephony services and adding a new and lucrative recurring
revenue stream that increases the VARs&rsquo; value proposition for its current and prospective customers.</FONT></P>

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

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">Our
cloud-based technology platform enables us and our VARs to deliver enhanced voice services to their business customers. The features
supported on our cloud communication platform include all standard telephone features and value-added applications such as voicemail
to email, VoIP peering, teleconferencing, IVR auto attendant, and dial-by-name directory. Our system provides our customers and
VARs with a migration path from a traditional PBX system to a complete cloud-based PBX solution.</FONT></P>

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

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">Our
strategic initiatives to successfully meet our long-term business objectives include:</FONT></P>

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

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    <TD STYLE="width: 0.25in"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">&nbsp;</FONT></TD>
    <TD STYLE="width: 0.25in"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#9679;</FONT></TD>
    <TD STYLE="text-align: justify"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">A disciplined approach
    to evaluating additional acquisitions as we build on the foundation created by our most recent acquisitions in Texas and Florida.
    We will continue to target local and/or regional UCaaS/cloud telephony providers which have excelled in their market with
    that &ldquo;local&rdquo; touch when serving their business customers. We believe the experience gained in integrating products,
    personnel, and customers will facilitate continued growth via acquisition.</FONT></TD></TR>
</TABLE>
<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">&nbsp;</FONT></P>

<TABLE CELLPADDING="0" CELLSPACING="0" STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0; margin-bottom: 0; width: 100%">
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    <TD STYLE="width: 0.25in"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">&nbsp;</FONT></TD>
    <TD STYLE="width: 0.25in"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#9679;</FONT></TD>
    <TD STYLE="text-align: justify"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">A continued emphasis
    on our UCaaS/cloud communication business which operates in a segment of the telecommunication industry that continues to
    experience significant growth as businesses migrate from legacy phone systems to cloud-based telephony systems. </FONT></TD></TR>
</TABLE>
<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 0.75in; text-align: justify"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">&nbsp;</FONT></P>

</DIV>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 0.75in; text-align: justify"></P>

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<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 0.75in; text-align: justify"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">&nbsp;</FONT></P>

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    <TD STYLE="width: 0.25in"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">&nbsp;</FONT></TD>
    <TD STYLE="width: 0.25in"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#9679;</FONT></TD>
    <TD STYLE="text-align: justify"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">Enhancements to
    our broadband product portfolio with an emphasis on marketing leading-edge network and business continuity solutions like
    cloud WAN, also known as SD-WAN (Software Defined Wide-Area Network), to our customers which we anticipate will increase average
    revenue per customer.</FONT></TD></TR>
</TABLE>
<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 0.5in"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">&nbsp;</FONT></P>

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    <TD STYLE="width: 0.25in"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">&nbsp;</FONT></TD>
    <TD STYLE="width: 0.25in"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#9679;</FONT></TD>
    <TD STYLE="text-align: justify"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">Implementing a total
    support model (pre and post sales) for building a world-class service delivery and help desk organization.</FONT></TD></TR>
</TABLE>
<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 0.75in; text-align: justify"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">&nbsp;</FONT></P>

<TABLE CELLPADDING="0" CELLSPACING="0" STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0; margin-bottom: 0; width: 100%">
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    <TD STYLE="width: 0.25in"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">&nbsp;</FONT></TD>
    <TD STYLE="width: 0.25in"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#9679;</FONT></TD>
    <TD STYLE="text-align: justify"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">Emphasis on our
    sales distribution model that enables our VARs to offer cloud and session-based communication services to the enterprise market
    in various regions and industries.</FONT></TD></TR>
</TABLE>
<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 0.75in; text-align: justify"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">&nbsp;</FONT></P>

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    <TD STYLE="width: 0.25in"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">&nbsp;</FONT></TD>
    <TD STYLE="width: 0.25in"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#9679;</FONT></TD>
    <TD STYLE="text-align: justify"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">Continue enhancing
    our infrastructure and back office system to streamline operations, automate key processes, and support the scalability of
    our VAR distribution model.</FONT></TD></TR>
</TABLE>
<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 0.5in; text-align: justify"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">&nbsp;</FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt"><B>Competitive
Conditions</B></FONT></P>

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

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt; background-color: white">The
cloud services industry, including the provisioning of cloud communications services, cloud connectivity, cloud storage and cloud
computing, as well as carrier voice and data services, is highly competitive, rapidly evolving and subject to constant technological
change and intense marketing by providers with similar products and services. We expect that new, smaller, but very agile competitors,
specializing in providing service to regional and emerging markets at low margin and hence low cost, may have an impact on our
market. Similarly, the business services market includes competitors who may be significantly larger and have substantially greater
market presence, financial, technical, operational and marketing resources than we do, including Tier 1 carriers, cable companies
and premise-based solutions providers that are implementing cloud communication services. In the event that such a competitor
expends significant sales and marketing resources in one or several markets where we compete with them, we may not be able to
compete successfully in those markets. Specialized cloud services providers, who focus on one or more cloud service or application,
could adopt aggressive pricing and promotion practices that could impact our ability to compete. We also believe that competition
will continue to increase, placing downward pressure on prices. Such pressure could adversely affect our gross margins if we are
not able to reduce our costs commensurate with the price reductions of our competitors. In addition, the pace of technological
change makes it impossible for us to predict whether we will face new competitors using different technologies to provide the
same or similar services offered or proposed to be offered by us. If our competitors were to provide better and more cost-effective
services than ours, we may not be able to increase our revenues or capture any significant market share.</FONT></P>

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

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">The
VoIP and Internet telephony market are highly competitive. Our competitors include major telecommunications carriers in the U.S.,
national UCaaS providers, and numerous small cloud telephony operators. We expect to face continuing competition based on price
and service offerings from existing competitors and new market entrants in the future. The principal competitive factors in our
market include price, coverage, customer service, technical response times, reliability, and network size/capacity. The competitive
landscape is rapidly altering the number, identity and competitiveness of the marketplace, and we are unable to determine with
certainty the impact of potential consolidation in our industry.</FONT></P>

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

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">Many
of our competitors have substantially greater financial, technical and marketing resources, larger customer bases, longer operating
histories, greater name recognition and more established relationships in the industry than we have. As a result, certain of these
competitors may be able to adopt more aggressive pricing policies that could hinder our ability to market our services. We believe
that our key competitive advantages are our ability to deliver reliable, high quality voice service over the Internet in a cost-effective
manner, superior customers service and our VAR distribution model. We cannot provide assurances, however, that these advantages
will enable us to succeed against comparable service offerings from our competitors.</FONT></P>

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

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt"><B>Government
Regulation</B></FONT></P>

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<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">VoIP
and other communications services, like ours, have been subject to less regulation at the state and federal levels than traditional
telecommunications services. Providers of traditional telecommunications services are subject to the highest degree of regulation,
while providers of VoIP and other information services are largely exempt from most federal and state regulations governing traditional
common carriers. The FCC has subjected VoIP service providers to a smaller subset of regulations that apply to traditional telecommunications
service providers and has not yet classified VoIP services as either telecommunications or information. The FCC is currently examining
the status of VoIP service providers and the services they provide in multiple open proceedings. In addition, many state regulatory
agencies impose taxes and other surcharges on VoIP services, and certain states take the position that offerings by VoIP providers
are intrastate telecommunications services and therefore subject to state regulation. These states argue that if the beginning
and end points of communications are known, and if some of these communications occur entirely within the boundaries of a state,
the state can regulate that offering. We believe that the FCC has preempted states from regulating VoIP offerings in the same
manner as providers of traditional telecommunications services. However, this issue has not been resolved definitively as a matter
of law, and it remains possible that the FCC could determine that such services are not information services, or that there could
be a judicial or legislative determination that the states are not preempted from regulating VoIP services as traditional telecommunications
services. We cannot predict how or when these issues will be resolved or its potential future impact on our business at this time.</FONT></P>

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

</DIV>

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<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">The
effect of any future laws, regulations and orders on our operations, including, but not limited to, our cloud-based communications
and collaboration services, cannot be determined. But as a general matter, increased regulation and the imposition of additional
funding obligations increases service costs that may or may not be recoverable from our customers, which could result in making
our services less competitive with traditional telecommunications services if we increase our prices or decreasing our profit
margins if we attempt to absorb such costs.</FONT></P>

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<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">Federal,
state, local and foreign governmental organizations are considering other legislative and regulatory proposals that would regulate
and/or tax applications running over the Internet. We cannot predict whether new taxes will be imposed on our services, and depending
on the type of taxes imposed, whether and how our services would be affected thereafter. Increased regulation of the Internet
may decrease its growth and hinder technological development, which may negatively impact the cost of doing business via the Internet
or otherwise materially adversely affect our business, financial condition and results of operations.</FONT></P>

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

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; background-color: white"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt"><I>Regulation
of Internet-based Telecommunication Services in the United States</I></FONT></P>

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

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">We
have the necessary authority under Section 214 of the Communications Act to operate as a domestic and international carrier. We
are considered a non-dominant domestic interstate carrier subject to minimal regulation by the FCC. We are not required to obtain
FCC authority to initiate or expand our domestic interstate operations, but we are required to obtain FCC approval to transfer
control or discontinue service and are required to file various reports and pay various fees and assessments. In addition, we
must offer service on a nondiscriminatory basis at just and reasonable rates and are subject to the FCC&rsquo;s complaint jurisdiction.
Generally, our international voice traffic is subject to minimal regulation by state and local jurisdictions.</FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in; background-color: white"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">&nbsp;</FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; background-color: white"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">The
FCC requires Internet voice communications service providers, such as our company, to provide E-911 service in all geographic
areas covered by the traditional wire-line E-911 network. Under the FCC&rsquo;s rules, Internet voice communications providers
must transmit the caller&rsquo;s phone number and registered location information to the appropriate public safety answering point,
or PSAP, for the caller&rsquo;s registered location. The FCC also requires interconnected VoIP service providers to make Universal
Service Fund (&ldquo;USF&rdquo;) contributions. We believe that our services are currently compliant with all applicable requirements
of the FCC, and we have made and are making the required contributions to the USF. However, should we at some time fail to meet
certain requirements or fail to make required contributions, we could be subject to revocation of our authority to operate or
to fines or penalties.</FONT></P>

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

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; background-color: white"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">As
a result of the FCC&rsquo;s preemption of states&rsquo; ability to regulate certain aspects of VoIP service, and a trend in state
legislatures to affirmatively deregulate VoIP services for most purposes, our VoIP services are subject to relatively few state
regulatory requirements aside from collection of state and local E911 fees and state Universal Service support obligations. We
believe that our VoIP services are currently compliant with all applicable state requirements, and we have made and are making
the required contributions to E911, state USF, and other funds. The state regulatory framework for our VoIP services continues
to evolve, so we, in conjunction with our professional advisors, monitor the actions of the various state regulatory agencies
and endeavor to ensure that we are in compliance with applicable state law, including any new statutes or regulations that may
be passed. However, there can be no assurance that we will become aware of all applicable requirements on a timely basis, or that
we will always be fully compliant with applicable rules and regulations. Should we fail to be compliant with applicable state
regulations, or to file required reports with state regulatory agencies, we could be subject to fines and/or penalties.</FONT></P>

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

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; background-color: white"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt"></FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; background-color: white"><FONT STYLE="font: 10pt Times New Roman, Times, Serif">In
addition to regulations addressing Internet telephony and broadband services, other regulatory issues relating to the Internet
generally could affect our ability to provide our services. Congress has adopted legislation that regulates certain aspects of
the Internet including online content, user privacy, taxation, liability for third-party activities and jurisdiction. In addition,
a number of initiatives pending in Congress and state legislatures would prohibit or restrict advertising or sale of certain products
and services on the Internet, which may have the effect of raising the cost of doing business on the Internet generally.</FONT></P>

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


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<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in; background-color: white"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">&nbsp;</FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt"><I>International
Regulation</I></FONT></P>

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

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">The
regulatory treatment of Internet telephony outside of the U.S. varies widely from country to country. A number of countries that
currently prohibit competition in the provision of voice telephony also prohibit Internet telephony. Other countries permit but
regulate Internet telephony. Some countries will evaluate proposed Internet telephony service on a case-by-case basis and determine
whether it should be regulated as a voice service or as another telecommunications service. In many countries, Internet telephony
has not yet been addressed by legislation or regulation. Increased regulation of the Internet and/or Internet telephony providers
or the prohibition of Internet telephony in one or more countries could adversely affect our business and future prospects if
we decide to expand globally.</FONT></P>

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

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt"><B>Customers
and Suppliers</B></FONT></P>

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

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">We
rely on various suppliers to provide services in connection with our Voice over Internet Protocol (&ldquo;VoIP&rdquo;) or Unified
Communication as a Service (&ldquo;UCaaS&rdquo;) offerings. Our customers include businesses in various industries including Healthcare,
Banking, Financial Services, Legal, Real Estate, and Construction. We are not dependent upon any single supplier or customer.</FONT></P>

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

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">During
the year ended July 31, 2018, the Company did not derived a significant amount of revenue from one single customer. During the
year ended July 31, 2017, the Company derived a significant amount revenue from four customers, comprising 24%, 24%, 11%, and
8% of the total revenue for the year.</FONT></P>

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

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">As of the year ended July 31, 2018, the
company derived 13% and 23% total accounts receivable from two customers. As of the year ended July 31, 2017, the Company derived
a significant amount of accounts receivable from three customers, comprising 37%, 27% and 14% of the total accounts receivable
as of the year ended July 31, 2017.</P>

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

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt"><B>Employees</B></FONT></P>

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

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">As
of September 12, 2019, we had 23 employees, all of whom performed sales, operational, technical and administrative functions.
We believe our future success will depend to a large extent on our continued ability to attract and retain highly skilled and
qualified employees. We consider our employee relations to be good. None of these aforementioned employees belong to labor unions.</FONT></P>

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

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

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt"><B>Peak
One Equity Purchase Agreement and Registration Rights Agreement</B></FONT></P>

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

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt"><B>Summary
of the Offering</B></FONT></P>

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

<TABLE CELLSPACING="0" CELLPADDING="0" STYLE="font: 10pt Times New Roman, Times, Serif; width: 100%; border-collapse: collapse">
<TR STYLE="vertical-align: top; background-color: #CCEEFF">
    <TD STYLE="width: 36%"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">Shares currently outstanding
    (1):</FONT></TD>
    <TD STYLE="width: 1%"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">&nbsp;</FONT></TD>
    <TD STYLE="width: 63%; text-align: justify"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">25,240,222</FONT></TD></TR>
<TR STYLE="vertical-align: top; background-color: white">
    <TD><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">&nbsp;</FONT></TD>
    <TD><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">&nbsp;</FONT></TD>
    <TD><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">&nbsp;</FONT></TD></TR>
<TR STYLE="vertical-align: top; background-color: #CCEEFF">
    <TD><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">Shares being offered:</FONT></TD>
    <TD><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">&nbsp;</FONT></TD>
    <TD STYLE="text-align: justify"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">6,324,142</FONT></TD></TR>
<TR STYLE="vertical-align: top; background-color: white">
    <TD><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">&nbsp;</FONT></TD>
    <TD><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">&nbsp;</FONT></TD>
    <TD><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">&nbsp;</FONT></TD></TR>
<TR STYLE="vertical-align: top; background-color: rgb(204,238,255)">
    <TD><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">Shares Outstanding after the offering:</FONT></TD>
    <TD><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">&nbsp;</FONT></TD>
    <TD><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">31,564,364 assuming each share offered for resale
hereby is sold.</FONT></TD></TR>
<TR STYLE="vertical-align: top; background-color: White">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD></TR>
<TR STYLE="vertical-align: top; background-color: rgb(204,238,255)">
    <TD><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">Offering Price per share:</FONT></TD>
    <TD><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">&nbsp;</FONT></TD>
    <TD STYLE="text-align: justify"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">The selling stockholders
    may sell all or a portion of the shares being offered pursuant to this prospectus at fixed prices and prevailing market prices
    at the time of sale, at varying prices or at negotiated prices.</FONT></TD></TR>
<TR STYLE="vertical-align: top; background-color: White">
    <TD><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">&nbsp;</FONT></TD>
    <TD><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">&nbsp;</FONT></TD>
    <TD><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">&nbsp;</FONT></TD></TR>
<TR STYLE="vertical-align: top; background-color: rgb(204,238,255)">
    <TD><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">Use of Proceeds:</FONT></TD>
    <TD><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">&nbsp;</FONT></TD>
    <TD STYLE="text-align: justify"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">We will not receive
    any proceeds from the sale of the shares of our common stock by the selling stockholder. However, we will receive proceeds
    from our initial sale of shares to Peak One, pursuant to the Financing Agreement. The proceeds from the initial sale of shares
    will be used for the purpose of working capital and that the Board of Directors, in good faith deem to be in the best interest
    of the Company.</FONT></TD></TR>
<TR STYLE="vertical-align: top; background-color: White">
    <TD><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">&nbsp;</FONT></TD>
    <TD><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">&nbsp;</FONT></TD>
    <TD><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">&nbsp;</FONT></TD></TR>
<TR STYLE="vertical-align: top; background-color: rgb(204,238,255)">
    <TD><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">Trading Symbol:</FONT></TD>
    <TD><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">&nbsp;</FONT></TD>
    <TD STYLE="text-align: justify"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">DTGI</FONT></TD></TR>
<TR STYLE="vertical-align: top; background-color: White">
    <TD><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">&nbsp;</FONT></TD>
    <TD><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">&nbsp;</FONT></TD>
    <TD><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">&nbsp;</FONT></TD></TR>
<TR STYLE="vertical-align: top; background-color: rgb(204,238,255)">
    <TD><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">Risk Factors:</FONT></TD>
    <TD><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">&nbsp;</FONT></TD>
    <TD STYLE="text-align: justify"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">See &ldquo;Risk
    Factors&rdquo; beginning on page 10 and the other information in this prospectus for a discussion of the factors you should
    consider before deciding to invest in shares of our common stock.</FONT></TD></TR>
</TABLE>
<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">&nbsp;</FONT></P>

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

<TABLE CELLPADDING="0" CELLSPACING="0" STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0; margin-bottom: 0; width: 100%"><TR STYLE="vertical-align: top; text-align: justify">
<TD STYLE="width: 0"></TD><TD STYLE="width: 0.25in; text-align: left"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">(1)</FONT></TD><TD STYLE="text-align: justify"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">The
number of shares of our Common Stock outstanding prior to and to be outstanding immediately after this offering, as set forth
in the table above, is based on 25,240,222 shares outstanding as of September 12, 2019, and excluding 6,324,142 shares of Common
Stock issuable in this offering as well as the 250,000 shares of Common Stock issued to Peak One as commitment shares for entering
into the Equity Purchase Agreement (the &ldquo;Commitment Shares&rdquo;).</FONT></TD>
</TR></TABLE>
<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 0.5in; text-align: justify"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">&nbsp;</FONT></P>

</DIV>

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

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

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt"><B><A NAME="a_002"></A>SUMMARY
CONSOLIDATED FINANCIAL INFORMATION</B></FONT></P>

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

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt"><I>The
following summary consolidated statements of operations data for the quarter ended April 30, 2019 and fiscal year ended July 31,
2018 have been derived from our audited consolidated financial statements included elsewhere in this prospectus. Additionally,
the nine months ended April 30, 2019 and 2018 have been derived from our unaudited consolidated financial statements included
elsewhere in this prospectus. The summary consolidated balance sheet data as of April 30, 2019 are derived from our consolidated
financial statements that are included elsewhere in this prospectus. The historical financial data presented below is not necessarily
indicative of our financial results in future periods, and the results for the quarter ended April 30, 2019 is not necessarily
indicative of our operating results to be expected for the full fiscal year ending July 31, 2019 or any other period. You should
read the summary consolidated financial data in conjunction with those financial statements and the accompanying notes and &ldquo;Management&rsquo;s
Discussion and Analysis of Financial Condition and Results of Operations.&rdquo; Our consolidated financial statements are prepared
and presented in accordance with United States generally accepted accounting principles, or U.S. GAAP. Our consolidated financial
statements have been prepared on a basis consistent with our audited financial statements and include all adjustments, consisting
of normal and recurring adjustments that we consider necessary for a fair presentation of the financial position and results of
operations as of and for such periods.</I></FONT></P>

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

</DIV>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><FONT STYLE="font: 10pt Times New Roman, Times, Serif"></FONT></P>

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

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">DIGERATI
TECHNOLOGIES, INC. AND SUBSIDIARIES</FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">CONSOLIDATED
BALANCE SHEETS</FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">(In
thousands, unaudited)</FONT></P>

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

<TABLE CELLPADDING="0" CELLSPACING="0" STYLE="border-collapse: collapse; width: 100%; font: 10pt Times New Roman, Times, Serif">
<TR STYLE="vertical-align: bottom">
    <TD STYLE="padding: 0; text-indent: 0"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">&nbsp;</FONT></TD><TD STYLE="padding: 0; text-indent: 0"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">&nbsp;</FONT></TD>
    <TD COLSPAN="2" STYLE="text-align: center; padding: 0; text-indent: 0"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">April
    30,</FONT></TD><TD STYLE="padding: 0; text-indent: 0"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">&nbsp;</FONT></TD><TD STYLE="padding: 0; text-indent: 0"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">&nbsp;</FONT></TD>
    <TD COLSPAN="2" STYLE="text-align: center; padding: 0; text-indent: 0"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">July
    31,</FONT></TD><TD STYLE="padding: 0; text-indent: 0"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">&nbsp;</FONT></TD></TR>
<TR STYLE="vertical-align: bottom">
    <TD STYLE="padding: 0; text-indent: 0"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">&nbsp;</FONT></TD><TD STYLE="padding: 0; text-indent: 0"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">&nbsp;</FONT></TD>
    <TD COLSPAN="2" STYLE="text-align: center; border-bottom: Black 1.5pt solid; padding: 0; text-indent: 0"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">2019</FONT></TD><TD STYLE="padding: 0; text-indent: 0"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">&nbsp;</FONT></TD><TD STYLE="padding: 0; text-indent: 0"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">&nbsp;</FONT></TD>
    <TD COLSPAN="2" STYLE="text-align: center; border-bottom: Black 1.5pt solid; padding: 0; text-indent: 0"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">2018</FONT></TD><TD STYLE="padding: 0; text-indent: 0"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">&nbsp;</FONT></TD></TR>
<TR STYLE="vertical-align: bottom">
    <TD STYLE="padding: 0; text-indent: 0"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">&nbsp;</FONT></TD><TD STYLE="padding: 0; text-indent: 0"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">&nbsp;</FONT></TD>
    <TD COLSPAN="2" STYLE="text-align: center; padding: 0; text-indent: 0"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">&nbsp;</FONT></TD><TD STYLE="padding: 0; text-indent: 0"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">&nbsp;</FONT></TD><TD STYLE="padding: 0; text-indent: 0"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">&nbsp;</FONT></TD>
    <TD COLSPAN="2" STYLE="text-align: center; padding: 0; text-indent: 0"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">&nbsp;</FONT></TD><TD STYLE="padding: 0; text-indent: 0"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">&nbsp;</FONT></TD></TR>
<TR STYLE="vertical-align: bottom">
    <TD STYLE="padding: 0; text-indent: 0"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt"><U>ASSETS</U></FONT></TD><TD STYLE="padding: 0; text-indent: 0"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">&nbsp;</FONT></TD>
    <TD COLSPAN="2" STYLE="text-align: right; padding: 0; text-indent: 0"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">&nbsp;</FONT></TD><TD STYLE="padding: 0; text-indent: 0"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">&nbsp;</FONT></TD><TD STYLE="padding: 0; text-indent: 0"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">&nbsp;</FONT></TD>
    <TD COLSPAN="2" STYLE="text-align: right; padding: 0; text-indent: 0"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">&nbsp;</FONT></TD><TD STYLE="padding: 0; text-indent: 0"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">&nbsp;</FONT></TD></TR>
<TR STYLE="vertical-align: bottom">
    <TD STYLE="padding: 0; text-indent: 0"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">CURRENT ASSETS:</FONT></TD><TD STYLE="padding: 0; text-indent: 0"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">&nbsp;</FONT></TD>
    <TD COLSPAN="2" STYLE="text-align: right; padding: 0; text-indent: 0"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">&nbsp;</FONT></TD><TD STYLE="padding: 0; text-indent: 0"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">&nbsp;</FONT></TD><TD STYLE="padding: 0; text-indent: 0"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">&nbsp;</FONT></TD>
    <TD COLSPAN="2" STYLE="text-align: right; padding: 0; text-indent: 0"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">&nbsp;</FONT></TD><TD STYLE="padding: 0; text-indent: 0"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">&nbsp;</FONT></TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,238,255)">
    <TD STYLE="width: 76%; text-align: left; padding: 0; text-indent: 0"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">Cash
    and cash equivalents</FONT></TD><TD STYLE="width: 1%; padding: 0; text-indent: 0"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">&nbsp;</FONT></TD>
    <TD STYLE="width: 1%; text-align: left; padding: 0; text-indent: 0"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">$</FONT></TD><TD STYLE="width: 9%; text-align: right; padding: 0; text-indent: 0"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">460</FONT></TD><TD STYLE="width: 1%; text-align: left; padding: 0; text-indent: 0"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">&nbsp;</FONT></TD><TD STYLE="width: 1%; padding: 0; text-indent: 0"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">&nbsp;</FONT></TD>
    <TD STYLE="width: 1%; text-align: left; padding: 0; text-indent: 0"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">$</FONT></TD><TD STYLE="width: 9%; text-align: right; padding: 0; text-indent: 0"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">388</FONT></TD><TD STYLE="width: 1%; text-align: left; padding: 0; text-indent: 0"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">&nbsp;</FONT></TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD STYLE="text-align: left; padding: 0; text-indent: 0"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">Accounts
    receivable, net</FONT></TD><TD STYLE="padding: 0; text-indent: 0"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">&nbsp;</FONT></TD>
    <TD STYLE="text-align: left; padding: 0; text-indent: 0"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">&nbsp;</FONT></TD><TD STYLE="text-align: right; padding: 0; text-indent: 0"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">245</FONT></TD><TD STYLE="text-align: left; padding: 0; text-indent: 0"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">&nbsp;</FONT></TD><TD STYLE="padding: 0; text-indent: 0"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">&nbsp;</FONT></TD>
    <TD STYLE="text-align: left; padding: 0; text-indent: 0"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">&nbsp;</FONT></TD><TD STYLE="text-align: right; padding: 0; text-indent: 0"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">229</FONT></TD><TD STYLE="text-align: left; padding: 0; text-indent: 0"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">&nbsp;</FONT></TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,238,255)">
    <TD STYLE="text-align: left; padding: 0; text-indent: 0"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">Prepaid
    and other current assets</FONT></TD><TD STYLE="padding: 0; text-indent: 0"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">&nbsp;</FONT></TD>
    <TD STYLE="text-align: left; padding: 0; text-indent: 0"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">&nbsp;</FONT></TD><TD STYLE="text-align: right; padding: 0; text-indent: 0"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">80</FONT></TD><TD STYLE="text-align: left; padding: 0; text-indent: 0"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">&nbsp;</FONT></TD><TD STYLE="padding: 0; text-indent: 0"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">&nbsp;</FONT></TD>
    <TD STYLE="text-align: left; padding: 0; text-indent: 0"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">&nbsp;</FONT></TD><TD STYLE="text-align: right; padding: 0; text-indent: 0"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">124</FONT></TD><TD STYLE="text-align: left; padding: 0; text-indent: 0"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">&nbsp;</FONT></TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD STYLE="padding: 0; text-indent: 0"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">Deposits</FONT></TD><TD STYLE="padding: 0; text-indent: 0"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">&nbsp;</FONT></TD>
    <TD STYLE="border-bottom: Black 1.5pt solid; padding: 0; text-align: left; text-indent: 0"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">&nbsp;</FONT></TD><TD STYLE="border-bottom: Black 1.5pt solid; padding: 0; text-align: right; text-indent: 0"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">55</FONT></TD><TD STYLE="padding: 0; text-align: left; text-indent: 0"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">&nbsp;</FONT></TD><TD STYLE="padding: 0; text-indent: 0"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">&nbsp;</FONT></TD>
    <TD STYLE="border-bottom: Black 1.5pt solid; padding: 0; text-align: left; text-indent: 0"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">&nbsp;</FONT></TD><TD STYLE="border-bottom: Black 1.5pt solid; padding: 0; text-align: right; text-indent: 0"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">-</FONT></TD><TD STYLE="padding: 0; text-align: left; text-indent: 0"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">&nbsp;</FONT></TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,238,255)">
    <TD STYLE="padding: 0; text-indent: 0"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">&nbsp;</FONT></TD><TD STYLE="padding: 0; text-indent: 0"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">&nbsp;</FONT></TD>
    <TD STYLE="text-align: left; padding: 0; text-indent: 0"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">&nbsp;</FONT></TD><TD STYLE="text-align: right; padding: 0; text-indent: 0"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">&nbsp;</FONT></TD><TD STYLE="text-align: left; padding: 0; text-indent: 0"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">&nbsp;</FONT></TD><TD STYLE="padding: 0; text-indent: 0"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">&nbsp;</FONT></TD>
    <TD STYLE="text-align: left; padding: 0; text-indent: 0"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">&nbsp;</FONT></TD><TD STYLE="text-align: right; padding: 0; text-indent: 0"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">&nbsp;</FONT></TD><TD STYLE="text-align: left; padding: 0; text-indent: 0"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">&nbsp;</FONT></TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD STYLE="text-align: left; padding: 0 0 0 0.125in; text-indent: 0"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">Total
    current assets</FONT></TD><TD STYLE="padding: 0; text-indent: 0"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">&nbsp;</FONT></TD>
    <TD STYLE="border-bottom: Black 1.5pt solid; padding: 0; text-align: left; text-indent: 0"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">&nbsp;</FONT></TD><TD STYLE="border-bottom: Black 1.5pt solid; padding: 0; text-align: right; text-indent: 0"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">840</FONT></TD><TD STYLE="padding: 0; text-align: left; text-indent: 0"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">&nbsp;</FONT></TD><TD STYLE="padding: 0; text-indent: 0"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">&nbsp;</FONT></TD>
    <TD STYLE="border-bottom: Black 1.5pt solid; padding: 0; text-align: left; text-indent: 0"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">&nbsp;</FONT></TD><TD STYLE="border-bottom: Black 1.5pt solid; padding: 0; text-align: right; text-indent: 0"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">741</FONT></TD><TD STYLE="padding: 0; text-align: left; text-indent: 0"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">&nbsp;</FONT></TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,238,255)">
    <TD STYLE="padding: 0; text-indent: 0"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">&nbsp;</FONT></TD><TD STYLE="padding: 0; text-indent: 0"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">&nbsp;</FONT></TD>
    <TD STYLE="text-align: left; padding: 0; text-indent: 0"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">&nbsp;</FONT></TD><TD STYLE="text-align: right; padding: 0; text-indent: 0"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">&nbsp;</FONT></TD><TD STYLE="text-align: left; padding: 0; text-indent: 0"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">&nbsp;</FONT></TD><TD STYLE="padding: 0; text-indent: 0"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">&nbsp;</FONT></TD>
    <TD STYLE="text-align: left; padding: 0; text-indent: 0"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">&nbsp;</FONT></TD><TD STYLE="text-align: right; padding: 0; text-indent: 0"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">&nbsp;</FONT></TD><TD STYLE="text-align: left; padding: 0; text-indent: 0"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">&nbsp;</FONT></TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD STYLE="text-align: left; padding: 0; text-indent: 0"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">LONG-TERM
    ASSETS:</FONT></TD><TD STYLE="padding: 0; text-indent: 0"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">&nbsp;</FONT></TD>
    <TD STYLE="text-align: left; padding: 0; text-indent: 0"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">&nbsp;</FONT></TD><TD STYLE="text-align: right; padding: 0; text-indent: 0"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">&nbsp;</FONT></TD><TD STYLE="text-align: left; padding: 0; text-indent: 0"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">&nbsp;</FONT></TD><TD STYLE="padding: 0; text-indent: 0"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">&nbsp;</FONT></TD>
    <TD STYLE="text-align: left; padding: 0; text-indent: 0"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">&nbsp;</FONT></TD><TD STYLE="text-align: right; padding: 0; text-indent: 0"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">&nbsp;</FONT></TD><TD STYLE="text-align: left; padding: 0; text-indent: 0"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">&nbsp;</FONT></TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,238,255)">
    <TD STYLE="text-align: left; padding: 0; text-indent: 0"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">Intangible
    assets, net</FONT></TD><TD STYLE="padding: 0; text-indent: 0"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">&nbsp;</FONT></TD>
    <TD STYLE="text-align: left; padding: 0; text-indent: 0"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">&nbsp;</FONT></TD><TD STYLE="text-align: right; padding: 0; text-indent: 0"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">2,736</FONT></TD><TD STYLE="text-align: left; padding: 0; text-indent: 0"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">&nbsp;</FONT></TD><TD STYLE="padding: 0; text-indent: 0"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">&nbsp;</FONT></TD>
    <TD STYLE="text-align: left; padding: 0; text-indent: 0"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">&nbsp;</FONT></TD><TD STYLE="text-align: right; padding: 0; text-indent: 0"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">3,046</FONT></TD><TD STYLE="text-align: left; padding: 0; text-indent: 0"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">&nbsp;</FONT></TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD STYLE="text-align: left; padding: 0; text-indent: 0"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">Property
    and equipment, net</FONT></TD><TD STYLE="padding: 0; text-indent: 0"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">&nbsp;</FONT></TD>
    <TD STYLE="text-align: left; padding: 0; text-indent: 0"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">&nbsp;</FONT></TD><TD STYLE="text-align: right; padding: 0; text-indent: 0"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">535</FONT></TD><TD STYLE="text-align: left; padding: 0; text-indent: 0"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">&nbsp;</FONT></TD><TD STYLE="padding: 0; text-indent: 0"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">&nbsp;</FONT></TD>
    <TD STYLE="text-align: left; padding: 0; text-indent: 0"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">&nbsp;</FONT></TD><TD STYLE="text-align: right; padding: 0; text-indent: 0"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">713</FONT></TD><TD STYLE="text-align: left; padding: 0; text-indent: 0"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">&nbsp;</FONT></TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,238,255)">
    <TD STYLE="text-align: left; padding: 0; text-indent: 0"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">Other
    assets</FONT></TD><TD STYLE="padding: 0; text-indent: 0"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">&nbsp;</FONT></TD>
    <TD STYLE="border-bottom: Black 1.5pt solid; padding: 0; text-align: left; text-indent: 0"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">&nbsp;</FONT></TD><TD STYLE="border-bottom: Black 1.5pt solid; padding: 0; text-align: right; text-indent: 0"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">58</FONT></TD><TD STYLE="padding: 0; text-align: left; text-indent: 0"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">&nbsp;</FONT></TD><TD STYLE="padding: 0; text-indent: 0"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">&nbsp;</FONT></TD>
    <TD STYLE="border-bottom: Black 1.5pt solid; padding: 0; text-align: left; text-indent: 0"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">&nbsp;</FONT></TD><TD STYLE="border-bottom: Black 1.5pt solid; padding: 0; text-align: right; text-indent: 0"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">59</FONT></TD><TD STYLE="padding: 0; text-align: left; text-indent: 0"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">&nbsp;</FONT></TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD STYLE="padding: 0; text-indent: 0"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">&nbsp;</FONT></TD><TD STYLE="padding: 0; text-indent: 0"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">&nbsp;</FONT></TD>
    <TD STYLE="text-align: left; padding: 0; text-indent: 0"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">&nbsp;</FONT></TD><TD STYLE="text-align: right; padding: 0; text-indent: 0"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">&nbsp;</FONT></TD><TD STYLE="text-align: left; padding: 0; text-indent: 0"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">&nbsp;</FONT></TD><TD STYLE="padding: 0; text-indent: 0"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">&nbsp;</FONT></TD>
    <TD STYLE="text-align: left; padding: 0; text-indent: 0"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">&nbsp;</FONT></TD><TD STYLE="text-align: right; padding: 0; text-indent: 0"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">&nbsp;</FONT></TD><TD STYLE="text-align: left; padding: 0; text-indent: 0"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">&nbsp;</FONT></TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,238,255)">
    <TD STYLE="text-align: left; padding: 0 0 0 0.125in; text-indent: 0"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">Total
    assets</FONT></TD><TD STYLE="padding: 0; text-indent: 0"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">&nbsp;</FONT></TD>
    <TD STYLE="border-bottom: Black 4pt double; padding: 0; text-align: left; text-indent: 0"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">$</FONT></TD><TD STYLE="border-bottom: Black 4pt double; padding: 0; text-align: right; text-indent: 0"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">4,169</FONT></TD><TD STYLE="padding: 0; text-align: left; text-indent: 0"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">&nbsp;</FONT></TD><TD STYLE="padding: 0; text-indent: 0"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">&nbsp;</FONT></TD>
    <TD STYLE="border-bottom: Black 4pt double; padding: 0; text-align: left; text-indent: 0"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">$</FONT></TD><TD STYLE="border-bottom: Black 4pt double; padding: 0; text-align: right; text-indent: 0"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">4,559</FONT></TD><TD STYLE="padding: 0; text-align: left; text-indent: 0"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">&nbsp;</FONT></TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD STYLE="padding: 0; text-indent: 0"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">&nbsp;</FONT></TD><TD STYLE="padding: 0; text-indent: 0"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">&nbsp;</FONT></TD>
    <TD STYLE="text-align: left; padding: 0; text-indent: 0"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">&nbsp;</FONT></TD><TD STYLE="text-align: right; padding: 0; text-indent: 0"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">&nbsp;</FONT></TD><TD STYLE="text-align: left; padding: 0; text-indent: 0"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">&nbsp;</FONT></TD><TD STYLE="padding: 0; text-indent: 0"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">&nbsp;</FONT></TD>
    <TD STYLE="text-align: left; padding: 0; text-indent: 0"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">&nbsp;</FONT></TD><TD STYLE="text-align: right; padding: 0; text-indent: 0"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">&nbsp;</FONT></TD><TD STYLE="text-align: left; padding: 0; text-indent: 0"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">&nbsp;</FONT></TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,238,255)">
    <TD STYLE="text-decoration: underline; text-align: left; padding: 0; text-indent: 0"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">LIABILITIES
    AND STOCKHOLDERS&rsquo; DEFICIT</FONT></TD><TD STYLE="padding: 0; text-indent: 0"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">&nbsp;</FONT></TD>
    <TD STYLE="text-align: left; padding: 0; text-indent: 0"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">&nbsp;</FONT></TD><TD STYLE="text-align: right; padding: 0; text-indent: 0"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">&nbsp;</FONT></TD><TD STYLE="text-align: left; padding: 0; text-indent: 0"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">&nbsp;</FONT></TD><TD STYLE="padding: 0; text-indent: 0"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">&nbsp;</FONT></TD>
    <TD STYLE="text-align: left; padding: 0; text-indent: 0"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">&nbsp;</FONT></TD><TD STYLE="text-align: right; padding: 0; text-indent: 0"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">&nbsp;</FONT></TD><TD STYLE="text-align: left; padding: 0; text-indent: 0"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">&nbsp;</FONT></TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD STYLE="text-align: left; padding: 0; text-indent: 0"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">CURRENT
    LIABILITIES:</FONT></TD><TD STYLE="padding: 0; text-indent: 0"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">&nbsp;</FONT></TD>
    <TD STYLE="text-align: left; padding: 0; text-indent: 0"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">&nbsp;</FONT></TD><TD STYLE="text-align: right; padding: 0; text-indent: 0"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">&nbsp;</FONT></TD><TD STYLE="text-align: left; padding: 0; text-indent: 0"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">&nbsp;</FONT></TD><TD STYLE="padding: 0; text-indent: 0"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">&nbsp;</FONT></TD>
    <TD STYLE="text-align: left; padding: 0; text-indent: 0"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">&nbsp;</FONT></TD><TD STYLE="text-align: right; padding: 0; text-indent: 0"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">&nbsp;</FONT></TD><TD STYLE="text-align: left; padding: 0; text-indent: 0"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">&nbsp;</FONT></TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,238,255)">
    <TD STYLE="text-align: left; padding: 0; text-indent: 0"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">Accounts
    payable</FONT></TD><TD STYLE="padding: 0; text-indent: 0"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">&nbsp;</FONT></TD>
    <TD STYLE="text-align: left; padding: 0; text-indent: 0"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">$</FONT></TD><TD STYLE="text-align: right; padding: 0; text-indent: 0"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">1,173</FONT></TD><TD STYLE="text-align: left; padding: 0; text-indent: 0"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">&nbsp;</FONT></TD><TD STYLE="padding: 0; text-indent: 0"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">&nbsp;</FONT></TD>
    <TD STYLE="text-align: left; padding: 0; text-indent: 0"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">$</FONT></TD><TD STYLE="text-align: right; padding: 0; text-indent: 0"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">1,177</FONT></TD><TD STYLE="text-align: left; padding: 0; text-indent: 0"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">&nbsp;</FONT></TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD STYLE="text-align: left; padding: 0; text-indent: 0"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">Accrued
    liabilities</FONT></TD><TD STYLE="padding: 0; text-indent: 0"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">&nbsp;</FONT></TD>
    <TD STYLE="text-align: left; padding: 0; text-indent: 0"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">&nbsp;</FONT></TD><TD STYLE="text-align: right; padding: 0; text-indent: 0"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">1,432</FONT></TD><TD STYLE="text-align: left; padding: 0; text-indent: 0"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">&nbsp;</FONT></TD><TD STYLE="padding: 0; text-indent: 0"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">&nbsp;</FONT></TD>
    <TD STYLE="text-align: left; padding: 0; text-indent: 0"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">&nbsp;</FONT></TD><TD STYLE="text-align: right; padding: 0; text-indent: 0"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">893</FONT></TD><TD STYLE="text-align: left; padding: 0; text-indent: 0"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">&nbsp;</FONT></TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,238,255)">
    <TD STYLE="text-align: left; padding: 0; text-indent: 0"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">Current
    portion of capital lease obligations</FONT></TD><TD STYLE="padding: 0; text-indent: 0"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">&nbsp;</FONT></TD>
    <TD STYLE="text-align: left; padding: 0; text-indent: 0"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">&nbsp;</FONT></TD><TD STYLE="text-align: right; padding: 0; text-indent: 0"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">32</FONT></TD><TD STYLE="text-align: left; padding: 0; text-indent: 0"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">&nbsp;</FONT></TD><TD STYLE="padding: 0; text-indent: 0"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">&nbsp;</FONT></TD>
    <TD STYLE="text-align: left; padding: 0; text-indent: 0"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">&nbsp;</FONT></TD><TD STYLE="text-align: right; padding: 0; text-indent: 0"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">30</FONT></TD><TD STYLE="text-align: left; padding: 0; text-indent: 0"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">&nbsp;</FONT></TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD STYLE="text-align: left; padding: 0; text-indent: 0"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">Convertible
    note payable, current, net $11 and $187, respectively</FONT></TD><TD STYLE="padding: 0; text-indent: 0"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">&nbsp;</FONT></TD>
    <TD STYLE="text-align: left; padding: 0; text-indent: 0"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">&nbsp;</FONT></TD><TD STYLE="text-align: right; padding: 0; text-indent: 0"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">761</FONT></TD><TD STYLE="text-align: left; padding: 0; text-indent: 0"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">&nbsp;</FONT></TD><TD STYLE="padding: 0; text-indent: 0"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">&nbsp;</FONT></TD>
    <TD STYLE="text-align: left; padding: 0; text-indent: 0"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">&nbsp;</FONT></TD><TD STYLE="text-align: right; padding: 0; text-indent: 0"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">585</FONT></TD><TD STYLE="text-align: left; padding: 0; text-indent: 0"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">&nbsp;</FONT></TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,238,255)">
    <TD STYLE="text-align: left; padding: 0; text-indent: 0"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">Note
    payable, current, related party</FONT></TD><TD STYLE="padding: 0; text-indent: 0"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">&nbsp;</FONT></TD>
    <TD STYLE="text-align: left; padding: 0; text-indent: 0"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">&nbsp;</FONT></TD><TD STYLE="text-align: right; padding: 0; text-indent: 0"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">425</FONT></TD><TD STYLE="text-align: left; padding: 0; text-indent: 0"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">&nbsp;</FONT></TD><TD STYLE="padding: 0; text-indent: 0"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">&nbsp;</FONT></TD>
    <TD STYLE="text-align: left; padding: 0; text-indent: 0"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">&nbsp;</FONT></TD><TD STYLE="text-align: right; padding: 0; text-indent: 0"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">126</FONT></TD><TD STYLE="text-align: left; padding: 0; text-indent: 0"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">&nbsp;</FONT></TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD STYLE="text-align: left; padding: 0; text-indent: 0"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">Note
    payable, current, net $0 and $0, respectively</FONT></TD><TD STYLE="padding: 0; text-indent: 0"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">&nbsp;</FONT></TD>
    <TD STYLE="text-align: left; padding: 0; text-indent: 0"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">&nbsp;</FONT></TD><TD STYLE="text-align: right; padding: 0; text-indent: 0"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">1,200</FONT></TD><TD STYLE="text-align: left; padding: 0; text-indent: 0"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">&nbsp;</FONT></TD><TD STYLE="padding: 0; text-indent: 0"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">&nbsp;</FONT></TD>
    <TD STYLE="text-align: left; padding: 0; text-indent: 0"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">&nbsp;</FONT></TD><TD STYLE="text-align: right; padding: 0; text-indent: 0"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">725</FONT></TD><TD STYLE="text-align: left; padding: 0; text-indent: 0"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">&nbsp;</FONT></TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,238,255)">
    <TD STYLE="text-align: left; padding: 0; text-indent: 0"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">Convertible
    note payable, current, net $345 and $273, respectively</FONT></TD><TD STYLE="padding: 0; text-indent: 0"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">&nbsp;</FONT></TD>
    <TD STYLE="text-align: left; padding: 0; text-indent: 0"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">&nbsp;</FONT></TD><TD STYLE="text-align: right; padding: 0; text-indent: 0"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">235</FONT></TD><TD STYLE="text-align: left; padding: 0; text-indent: 0"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">&nbsp;</FONT></TD><TD STYLE="padding: 0; text-indent: 0"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">&nbsp;</FONT></TD>
    <TD STYLE="text-align: left; padding: 0; text-indent: 0"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">&nbsp;</FONT></TD><TD STYLE="text-align: right; padding: 0; text-indent: 0"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">33</FONT></TD><TD STYLE="text-align: left; padding: 0; text-indent: 0"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">&nbsp;</FONT></TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD STYLE="text-align: left; padding: 0; text-indent: 0"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">Deferred
    income</FONT></TD><TD STYLE="padding: 0; text-indent: 0"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">&nbsp;</FONT></TD>
    <TD STYLE="text-align: left; padding: 0; text-indent: 0"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">&nbsp;</FONT></TD><TD STYLE="text-align: right; padding: 0; text-indent: 0"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">314</FONT></TD><TD STYLE="text-align: left; padding: 0; text-indent: 0"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">&nbsp;</FONT></TD><TD STYLE="padding: 0; text-indent: 0"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">&nbsp;</FONT></TD>
    <TD STYLE="text-align: left; padding: 0; text-indent: 0"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">&nbsp;</FONT></TD><TD STYLE="text-align: right; padding: 0; text-indent: 0"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">262</FONT></TD><TD STYLE="text-align: left; padding: 0; text-indent: 0"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">&nbsp;</FONT></TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,238,255)">
    <TD STYLE="text-align: left; padding: 0; text-indent: 0"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">Derivative
    liability</FONT></TD><TD STYLE="padding: 0; text-indent: 0"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">&nbsp;</FONT></TD>
    <TD STYLE="border-bottom: Black 1.5pt solid; padding: 0; text-align: left; text-indent: 0"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">&nbsp;</FONT></TD><TD STYLE="border-bottom: Black 1.5pt solid; padding: 0; text-align: right; text-indent: 0"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">1,303</FONT></TD><TD STYLE="padding: 0; text-align: left; text-indent: 0"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">&nbsp;</FONT></TD><TD STYLE="padding: 0; text-indent: 0"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">&nbsp;</FONT></TD>
    <TD STYLE="border-bottom: Black 1.5pt solid; padding: 0; text-align: left; text-indent: 0"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">&nbsp;</FONT></TD><TD STYLE="border-bottom: Black 1.5pt solid; padding: 0; text-align: right; text-indent: 0"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">632</FONT></TD><TD STYLE="padding: 0; text-align: left; text-indent: 0"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">&nbsp;</FONT></TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD STYLE="text-align: left; padding: 0 0 0 0.125in; text-indent: 0"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">Total
    current liabilities</FONT></TD><TD STYLE="padding: 0; text-indent: 0"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">&nbsp;</FONT></TD>
    <TD STYLE="border-bottom: Black 1.5pt solid; padding: 0; text-align: left; text-indent: 0"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">&nbsp;</FONT></TD><TD STYLE="border-bottom: Black 1.5pt solid; padding: 0; text-align: right; text-indent: 0"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">6,875</FONT></TD><TD STYLE="padding: 0; text-align: left; text-indent: 0"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">&nbsp;</FONT></TD><TD STYLE="padding: 0; text-indent: 0"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">&nbsp;</FONT></TD>
    <TD STYLE="border-bottom: Black 1.5pt solid; padding: 0; text-align: left; text-indent: 0"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">&nbsp;</FONT></TD><TD STYLE="border-bottom: Black 1.5pt solid; padding: 0; text-align: right; text-indent: 0"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">4,463</FONT></TD><TD STYLE="padding: 0; text-align: left; text-indent: 0"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">&nbsp;</FONT></TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,238,255)">
    <TD STYLE="padding: 0; text-indent: 0"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">&nbsp;</FONT></TD><TD STYLE="padding: 0; text-indent: 0"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">&nbsp;</FONT></TD>
    <TD STYLE="text-align: left; padding: 0; text-indent: 0"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">&nbsp;</FONT></TD><TD STYLE="text-align: right; padding: 0; text-indent: 0"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">&nbsp;</FONT></TD><TD STYLE="text-align: left; padding: 0; text-indent: 0"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">&nbsp;</FONT></TD><TD STYLE="padding: 0; text-indent: 0"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">&nbsp;</FONT></TD>
    <TD STYLE="text-align: left; padding: 0; text-indent: 0"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">&nbsp;</FONT></TD><TD STYLE="text-align: right; padding: 0; text-indent: 0"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">&nbsp;</FONT></TD><TD STYLE="text-align: left; padding: 0; text-indent: 0"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">&nbsp;</FONT></TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD STYLE="text-align: left; padding: 0; text-indent: 0"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">LONG-TERM
    LIABILITIES:</FONT></TD><TD STYLE="padding: 0; text-indent: 0"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">&nbsp;</FONT></TD>
    <TD STYLE="text-align: left; padding: 0; text-indent: 0"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">&nbsp;</FONT></TD><TD STYLE="text-align: right; padding: 0; text-indent: 0"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">&nbsp;</FONT></TD><TD STYLE="text-align: left; padding: 0; text-indent: 0"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">&nbsp;</FONT></TD><TD STYLE="padding: 0; text-indent: 0"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">&nbsp;</FONT></TD>
    <TD STYLE="text-align: left; padding: 0; text-indent: 0"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">&nbsp;</FONT></TD><TD STYLE="text-align: right; padding: 0; text-indent: 0"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">&nbsp;</FONT></TD><TD STYLE="text-align: left; padding: 0; text-indent: 0"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">&nbsp;</FONT></TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,238,255)">
    <TD STYLE="text-align: left; padding: 0; text-indent: 0"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">Convertible
    debenture, net $99 and $273, respectively</FONT></TD><TD STYLE="padding: 0; text-indent: 0"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">&nbsp;</FONT></TD>
    <TD STYLE="text-align: left; padding: 0; text-indent: 0"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">&nbsp;</FONT></TD><TD STYLE="text-align: right; padding: 0; text-indent: 0"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">51</FONT></TD><TD STYLE="text-align: left; padding: 0; text-indent: 0"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">&nbsp;</FONT></TD><TD STYLE="padding: 0; text-indent: 0"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">&nbsp;</FONT></TD>
    <TD STYLE="text-align: left; padding: 0; text-indent: 0"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">&nbsp;</FONT></TD><TD STYLE="text-align: right; padding: 0; text-indent: 0"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">27</FONT></TD><TD STYLE="text-align: left; padding: 0; text-indent: 0"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">&nbsp;</FONT></TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD STYLE="text-align: left; padding: 0; text-indent: 0"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">Notes
    payable, related party, net $27 and $38, respectively</FONT></TD><TD STYLE="padding: 0; text-indent: 0"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">&nbsp;</FONT></TD>
    <TD STYLE="text-align: left; padding: 0; text-indent: 0"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">&nbsp;</FONT></TD><TD STYLE="text-align: right; padding: 0; text-indent: 0"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">147</FONT></TD><TD STYLE="text-align: left; padding: 0; text-indent: 0"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">&nbsp;</FONT></TD><TD STYLE="padding: 0; text-indent: 0"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">&nbsp;</FONT></TD>
    <TD STYLE="text-align: left; padding: 0; text-indent: 0"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">&nbsp;</FONT></TD><TD STYLE="text-align: right; padding: 0; text-indent: 0"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">505</FONT></TD><TD STYLE="text-align: left; padding: 0; text-indent: 0"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">&nbsp;</FONT></TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,238,255)">
    <TD STYLE="text-align: left; padding: 0; text-indent: 0"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">Note
    payable</FONT></TD><TD STYLE="padding: 0; text-indent: 0"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">&nbsp;</FONT></TD>
    <TD STYLE="text-align: left; padding: 0; text-indent: 0"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">&nbsp;</FONT></TD><TD STYLE="text-align: right; padding: 0; text-indent: 0"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">-</FONT></TD><TD STYLE="text-align: left; padding: 0; text-indent: 0"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">&nbsp;</FONT></TD><TD STYLE="padding: 0; text-indent: 0"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">&nbsp;</FONT></TD>
    <TD STYLE="text-align: left; padding: 0; text-indent: 0"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">&nbsp;</FONT></TD><TD STYLE="text-align: right; padding: 0; text-indent: 0"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">500</FONT></TD><TD STYLE="text-align: left; padding: 0; text-indent: 0"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">&nbsp;</FONT></TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD STYLE="text-align: left; padding: 0; text-indent: 0"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">Obligations
    under capital leases</FONT></TD><TD STYLE="padding: 0; text-indent: 0"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">&nbsp;</FONT></TD>
    <TD STYLE="border-bottom: Black 1.5pt solid; padding: 0; text-align: left; text-indent: 0"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">&nbsp;</FONT></TD><TD STYLE="border-bottom: Black 1.5pt solid; padding: 0; text-align: right; text-indent: 0"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">40</FONT></TD><TD STYLE="padding: 0; text-align: left; text-indent: 0"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">&nbsp;</FONT></TD><TD STYLE="padding: 0; text-indent: 0"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">&nbsp;</FONT></TD>
    <TD STYLE="border-bottom: Black 1.5pt solid; padding: 0; text-align: left; text-indent: 0"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">&nbsp;</FONT></TD><TD STYLE="border-bottom: Black 1.5pt solid; padding: 0; text-align: right; text-indent: 0"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">64</FONT></TD><TD STYLE="padding: 0; text-align: left; text-indent: 0"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">&nbsp;</FONT></TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,238,255)">
    <TD STYLE="text-align: left; padding: 0 0 0 0.125in; text-indent: 0"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">Total
    long-term liabilities</FONT></TD><TD STYLE="padding: 0; text-indent: 0"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">&nbsp;</FONT></TD>
    <TD STYLE="border-bottom: Black 1.5pt solid; padding: 0; text-align: left; text-indent: 0"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">&nbsp;</FONT></TD><TD STYLE="border-bottom: Black 1.5pt solid; padding: 0; text-align: right; text-indent: 0"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">238</FONT></TD><TD STYLE="padding: 0; text-align: left; text-indent: 0"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">&nbsp;</FONT></TD><TD STYLE="padding: 0; text-indent: 0"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">&nbsp;</FONT></TD>
    <TD STYLE="border-bottom: Black 1.5pt solid; padding: 0; text-align: left; text-indent: 0"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">&nbsp;</FONT></TD><TD STYLE="border-bottom: Black 1.5pt solid; padding: 0; text-align: right; text-indent: 0"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">1,096</FONT></TD><TD STYLE="padding: 0; text-align: left; text-indent: 0"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">&nbsp;</FONT></TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD STYLE="padding: 0; text-indent: 0"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">&nbsp;</FONT></TD><TD STYLE="padding: 0; text-indent: 0"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">&nbsp;</FONT></TD>
    <TD STYLE="text-align: left; padding: 0; text-indent: 0"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">&nbsp;</FONT></TD><TD STYLE="text-align: right; padding: 0; text-indent: 0"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">&nbsp;</FONT></TD><TD STYLE="text-align: left; padding: 0; text-indent: 0"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">&nbsp;</FONT></TD><TD STYLE="padding: 0; text-indent: 0"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">&nbsp;</FONT></TD>
    <TD STYLE="text-align: left; padding: 0; text-indent: 0"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">&nbsp;</FONT></TD><TD STYLE="text-align: right; padding: 0; text-indent: 0"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">&nbsp;</FONT></TD><TD STYLE="text-align: left; padding: 0; text-indent: 0"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">&nbsp;</FONT></TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,238,255)">
    <TD STYLE="text-align: left; padding: 0; text-indent: 0"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">Total
    liabilities</FONT></TD><TD STYLE="padding: 0; text-indent: 0"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">&nbsp;</FONT></TD>
    <TD STYLE="border-bottom: Black 1.5pt solid; padding: 0; text-align: left; text-indent: 0"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">&nbsp;</FONT></TD><TD STYLE="border-bottom: Black 1.5pt solid; padding: 0; text-align: right; text-indent: 0"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">7,113</FONT></TD><TD STYLE="padding: 0; text-align: left; text-indent: 0"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">&nbsp;</FONT></TD><TD STYLE="padding: 0; text-indent: 0"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">&nbsp;</FONT></TD>
    <TD STYLE="border-bottom: Black 1.5pt solid; padding: 0; text-align: left; text-indent: 0"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">&nbsp;</FONT></TD><TD STYLE="border-bottom: Black 1.5pt solid; padding: 0; text-align: right; text-indent: 0"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">5,559</FONT></TD><TD STYLE="padding: 0; text-align: left; text-indent: 0"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">&nbsp;</FONT></TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD STYLE="padding: 0; text-indent: 0"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">&nbsp;</FONT></TD><TD STYLE="padding: 0; text-indent: 0"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">&nbsp;</FONT></TD>
    <TD STYLE="text-align: left; padding: 0; text-indent: 0"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">&nbsp;</FONT></TD><TD STYLE="text-align: right; padding: 0; text-indent: 0"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">&nbsp;</FONT></TD><TD STYLE="text-align: left; padding: 0; text-indent: 0"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">&nbsp;</FONT></TD><TD STYLE="padding: 0; text-indent: 0"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">&nbsp;</FONT></TD>
    <TD STYLE="text-align: left; padding: 0; text-indent: 0"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">&nbsp;</FONT></TD><TD STYLE="text-align: right; padding: 0; text-indent: 0"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">&nbsp;</FONT></TD><TD STYLE="text-align: left; padding: 0; text-indent: 0"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">&nbsp;</FONT></TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,238,255)">
    <TD STYLE="text-align: left; padding: 0; text-indent: 0"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">Commitments
    and contingencies</FONT></TD><TD STYLE="padding: 0; text-indent: 0"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">&nbsp;</FONT></TD>
    <TD STYLE="text-align: left; padding: 0; text-indent: 0"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">&nbsp;</FONT></TD><TD STYLE="text-align: right; padding: 0; text-indent: 0"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">&nbsp;</FONT></TD><TD STYLE="text-align: left; padding: 0; text-indent: 0"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">&nbsp;</FONT></TD><TD STYLE="padding: 0; text-indent: 0"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">&nbsp;</FONT></TD>
    <TD STYLE="text-align: left; padding: 0; text-indent: 0"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">&nbsp;</FONT></TD><TD STYLE="text-align: right; padding: 0; text-indent: 0"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">&nbsp;</FONT></TD><TD STYLE="text-align: left; padding: 0; text-indent: 0"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">&nbsp;</FONT></TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD STYLE="padding: 0; text-indent: 0"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">&nbsp;</FONT></TD><TD STYLE="padding: 0; text-indent: 0"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">&nbsp;</FONT></TD>
    <TD STYLE="text-align: left; padding: 0; text-indent: 0"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">&nbsp;</FONT></TD><TD STYLE="text-align: right; padding: 0; text-indent: 0"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">&nbsp;</FONT></TD><TD STYLE="text-align: left; padding: 0; text-indent: 0"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">&nbsp;</FONT></TD><TD STYLE="padding: 0; text-indent: 0"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">&nbsp;</FONT></TD>
    <TD STYLE="text-align: left; padding: 0; text-indent: 0"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">&nbsp;</FONT></TD><TD STYLE="text-align: right; padding: 0; text-indent: 0"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">&nbsp;</FONT></TD><TD STYLE="text-align: left; padding: 0; text-indent: 0"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">&nbsp;</FONT></TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,238,255)">
    <TD STYLE="text-align: left; padding: 0; text-indent: 0"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">STOCKHOLDERS&rsquo;
    DEFICIT:</FONT></TD><TD STYLE="padding: 0; text-indent: 0"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">&nbsp;</FONT></TD>
    <TD STYLE="text-align: left; padding: 0; text-indent: 0"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">&nbsp;</FONT></TD><TD STYLE="text-align: right; padding: 0; text-indent: 0"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">&nbsp;</FONT></TD><TD STYLE="text-align: left; padding: 0; text-indent: 0"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">&nbsp;</FONT></TD><TD STYLE="padding: 0; text-indent: 0"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">&nbsp;</FONT></TD>
    <TD STYLE="text-align: left; padding: 0; text-indent: 0"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">&nbsp;</FONT></TD><TD STYLE="text-align: right; padding: 0; text-indent: 0"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">&nbsp;</FONT></TD><TD STYLE="text-align: left; padding: 0; text-indent: 0"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">&nbsp;</FONT></TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD STYLE="text-align: left; text-indent: -0.125in; padding: 0 0 0 0.125in"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">Preferred
    stock, $0.001, 50,000,000 shares authorized, 50,000 and 0 issued and outstanding, respectively</FONT></TD><TD STYLE="padding: 0; text-indent: 0"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">&nbsp;</FONT></TD>
    <TD STYLE="text-align: left; padding: 0; text-indent: 0"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">&nbsp;</FONT></TD><TD STYLE="text-align: right; padding: 0; text-indent: 0"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">-</FONT></TD><TD STYLE="text-align: left; padding: 0; text-indent: 0"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">&nbsp;</FONT></TD><TD STYLE="padding: 0; text-indent: 0"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">&nbsp;</FONT></TD>
    <TD STYLE="text-align: left; padding: 0; text-indent: 0"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">&nbsp;</FONT></TD><TD STYLE="text-align: right; padding: 0; text-indent: 0"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">-</FONT></TD><TD STYLE="text-align: left; padding: 0; text-indent: 0"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">&nbsp;</FONT></TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,238,255)">
    <TD STYLE="text-align: left; text-indent: -0.125in; padding: 0 0 0 0.125in"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">Common
    stock, $0.001, 150,000,000 shares authorized, 18,876,431 and 12,775,143 issued and outstanding, respectively</FONT></TD><TD STYLE="padding: 0; text-indent: 0"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">&nbsp;</FONT></TD>
    <TD STYLE="text-align: left; padding: 0; text-indent: 0"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">&nbsp;</FONT></TD><TD STYLE="text-align: right; padding: 0; text-indent: 0"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">19</FONT></TD><TD STYLE="text-align: left; padding: 0; text-indent: 0"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">&nbsp;</FONT></TD><TD STYLE="padding: 0; text-indent: 0"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">&nbsp;</FONT></TD>
    <TD STYLE="text-align: left; padding: 0; text-indent: 0"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">&nbsp;</FONT></TD><TD STYLE="text-align: right; padding: 0; text-indent: 0"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">13</FONT></TD><TD STYLE="text-align: left; padding: 0; text-indent: 0"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">&nbsp;</FONT></TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD STYLE="text-align: left; padding: 0; text-indent: 0"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">Additional
    paid in capital</FONT></TD><TD STYLE="padding: 0; text-indent: 0"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">&nbsp;</FONT></TD>
    <TD STYLE="text-align: left; padding: 0; text-indent: 0"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">&nbsp;</FONT></TD><TD STYLE="text-align: right; padding: 0; text-indent: 0"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">81,764</FONT></TD><TD STYLE="text-align: left; padding: 0; text-indent: 0"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">&nbsp;</FONT></TD><TD STYLE="padding: 0; text-indent: 0"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">&nbsp;</FONT></TD>
    <TD STYLE="text-align: left; padding: 0; text-indent: 0"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">&nbsp;</FONT></TD><TD STYLE="text-align: right; padding: 0; text-indent: 0"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">79,993</FONT></TD><TD STYLE="text-align: left; padding: 0; text-indent: 0"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">&nbsp;</FONT></TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,238,255)">
    <TD STYLE="text-align: left; padding: 0; text-indent: 0"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">Accumulated
    deficit</FONT></TD><TD STYLE="padding: 0; text-indent: 0"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">&nbsp;</FONT></TD>
    <TD STYLE="text-align: left; padding: 0; text-indent: 0"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">&nbsp;</FONT></TD><TD STYLE="text-align: right; padding: 0; text-indent: 0"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">(84,434</FONT></TD><TD STYLE="text-align: left; padding: 0; text-indent: 0"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">)</FONT></TD><TD STYLE="padding: 0; text-indent: 0"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">&nbsp;</FONT></TD>
    <TD STYLE="text-align: left; padding: 0; text-indent: 0"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">&nbsp;</FONT></TD><TD STYLE="text-align: right; padding: 0; text-indent: 0"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">(80,800</FONT></TD><TD STYLE="text-align: left; padding: 0; text-indent: 0"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">)</FONT></TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD STYLE="text-align: left; padding: 0; text-indent: 0"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">Other
    comprehensive income</FONT></TD><TD STYLE="padding: 0; text-indent: 0"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">&nbsp;</FONT></TD>
    <TD STYLE="border-bottom: Black 1.5pt solid; padding: 0; text-align: left; text-indent: 0"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">&nbsp;</FONT></TD><TD STYLE="border-bottom: Black 1.5pt solid; padding: 0; text-align: right; text-indent: 0"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">1</FONT></TD><TD STYLE="padding: 0; text-align: left; text-indent: 0"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">&nbsp;</FONT></TD><TD STYLE="padding: 0; text-indent: 0"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">&nbsp;</FONT></TD>
    <TD STYLE="border-bottom: Black 1.5pt solid; padding: 0; text-align: left; text-indent: 0"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">&nbsp;</FONT></TD><TD STYLE="border-bottom: Black 1.5pt solid; padding: 0; text-align: right; text-indent: 0"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">1</FONT></TD><TD STYLE="padding: 0; text-align: left; text-indent: 0"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">&nbsp;</FONT></TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,238,255)">
    <TD STYLE="text-align: left; padding: 0 0 0 0.125in; text-indent: 0"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">Total
    Digerati&rsquo;s stockholders&rsquo; deficit</FONT></TD><TD STYLE="padding: 0; text-indent: 0"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">&nbsp;</FONT></TD>
    <TD STYLE="border-bottom: Black 1.5pt solid; padding: 0; text-align: left; text-indent: 0"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">&nbsp;</FONT></TD><TD STYLE="border-bottom: Black 1.5pt solid; padding: 0; text-align: right; text-indent: 0"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">(2,650</FONT></TD><TD STYLE="padding: 0; text-align: left; text-indent: 0"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">)</FONT></TD><TD STYLE="padding: 0; text-indent: 0"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">&nbsp;</FONT></TD>
    <TD STYLE="border-bottom: Black 1.5pt solid; padding: 0; text-align: left; text-indent: 0"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">&nbsp;</FONT></TD><TD STYLE="border-bottom: Black 1.5pt solid; padding: 0; text-align: right; text-indent: 0"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">(793</FONT></TD><TD STYLE="padding: 0; text-align: left; text-indent: 0"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">)</FONT></TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD STYLE="text-align: left; padding: 0; text-indent: 0"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">Noncontrolling
    interest</FONT></TD><TD STYLE="padding: 0; text-indent: 0"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">&nbsp;</FONT></TD>
    <TD STYLE="border-bottom: Black 1.5pt solid; padding: 0; text-align: left; text-indent: 0"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">&nbsp;</FONT></TD><TD STYLE="border-bottom: Black 1.5pt solid; padding: 0; text-align: right; text-indent: 0"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">(294</FONT></TD><TD STYLE="padding: 0; text-align: left; text-indent: 0"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">)</FONT></TD><TD STYLE="padding: 0; text-indent: 0"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">&nbsp;</FONT></TD>
    <TD STYLE="border-bottom: Black 1.5pt solid; padding: 0; text-align: left; text-indent: 0"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">&nbsp;</FONT></TD><TD STYLE="border-bottom: Black 1.5pt solid; padding: 0; text-align: right; text-indent: 0"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">(207</FONT></TD><TD STYLE="padding: 0; text-align: left; text-indent: 0"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">)</FONT></TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,238,255)">
    <TD STYLE="text-align: left; padding: 0 0 0 0.125in; text-indent: 0"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">Total
    stockholders&rsquo; deficit</FONT></TD><TD STYLE="padding: 0; text-indent: 0"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">&nbsp;</FONT></TD>
    <TD STYLE="border-bottom: Black 1.5pt solid; padding: 0; text-align: left; text-indent: 0"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">&nbsp;</FONT></TD><TD STYLE="border-bottom: Black 1.5pt solid; padding: 0; text-align: right; text-indent: 0"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">(2,944</FONT></TD><TD STYLE="padding: 0; text-align: left; text-indent: 0"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">)</FONT></TD><TD STYLE="padding: 0; text-indent: 0"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">&nbsp;</FONT></TD>
    <TD STYLE="border-bottom: Black 1.5pt solid; padding: 0; text-align: left; text-indent: 0"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">&nbsp;</FONT></TD><TD STYLE="border-bottom: Black 1.5pt solid; padding: 0; text-align: right; text-indent: 0"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">(1,000</FONT></TD><TD STYLE="padding: 0; text-align: left; text-indent: 0"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">)</FONT></TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD STYLE="text-align: left; padding: 0; text-indent: 0"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">Total
    liabilities and stockholders&rsquo; deficit</FONT></TD><TD STYLE="padding: 0; text-indent: 0"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">&nbsp;</FONT></TD>
    <TD STYLE="border-bottom: Black 4pt double; padding: 0; text-align: left; text-indent: 0"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">$</FONT></TD><TD STYLE="border-bottom: Black 4pt double; padding: 0; text-align: right; text-indent: 0"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">4,169</FONT></TD><TD STYLE="padding: 0; text-align: left; text-indent: 0"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">&nbsp;</FONT></TD><TD STYLE="padding: 0; text-indent: 0"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">&nbsp;</FONT></TD>
    <TD STYLE="border-bottom: Black 4pt double; padding: 0; text-align: left; text-indent: 0"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">$</FONT></TD><TD STYLE="border-bottom: Black 4pt double; padding: 0; text-align: right; text-indent: 0"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">4,559</FONT></TD><TD STYLE="padding: 0; text-align: left; text-indent: 0"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">&nbsp;</FONT></TD></TR>
</TABLE>

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

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">See
accompanying notes to unaudited consolidated financial statements</FONT></P>

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

</DIV>

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

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<DIV STYLE="border: Black 1.5pt solid; padding: 5pt">

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

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">&nbsp;
DIGERATI TECHNOLOGIES, INC. AND SUBSIDIARIES</FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">&nbsp;
CONSOLIDATED STATEMENTS OF OPERATIONS&nbsp;</FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">&nbsp;
(In thousands, except per share amounts, unaudited)</FONT></P>

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

<TABLE CELLPADDING="0" CELLSPACING="0" STYLE="border-collapse: collapse; width: 100%; font: 10pt Times New Roman, Times, Serif">
<TR STYLE="vertical-align: bottom">
    <TD STYLE="padding: 0; text-indent: 0"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">&nbsp;</FONT></TD><TD STYLE="padding: 0; text-indent: 0"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">&nbsp;</FONT></TD>
    <TD COLSPAN="6" STYLE="text-align: center; border-bottom: Black 1.5pt solid; padding: 0; text-indent: 0"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">Three
    months ended<BR> April 30,</FONT></TD><TD STYLE="padding: 0; text-indent: 0"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">&nbsp;</FONT></TD><TD STYLE="padding: 0; text-indent: 0"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">&nbsp;</FONT></TD>
    <TD COLSPAN="6" STYLE="text-align: center; border-bottom: Black 1.5pt solid; padding: 0; text-indent: 0"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">Nine
    months ended <BR> April 30,</FONT></TD><TD STYLE="padding: 0; text-indent: 0"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">&nbsp;</FONT></TD></TR>
<TR STYLE="vertical-align: bottom">
    <TD STYLE="text-align: center; padding: 0; text-indent: 0"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">&nbsp;</FONT></TD><TD STYLE="padding: 0; text-indent: 0"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">&nbsp;</FONT></TD>
    <TD COLSPAN="2" STYLE="text-align: center; border-bottom: Black 1.5pt solid; padding: 0; text-indent: 0"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">2019</FONT></TD><TD STYLE="padding: 0; text-indent: 0"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">&nbsp;</FONT></TD><TD STYLE="padding: 0; text-indent: 0"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">&nbsp;</FONT></TD>
    <TD COLSPAN="2" STYLE="text-align: center; border-bottom: Black 1.5pt solid; padding: 0; text-indent: 0"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">2018</FONT></TD><TD STYLE="padding: 0; text-indent: 0"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">&nbsp;</FONT></TD><TD STYLE="padding: 0; text-indent: 0"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">&nbsp;</FONT></TD>
    <TD COLSPAN="2" STYLE="text-align: center; border-bottom: Black 1.5pt solid; padding: 0; text-indent: 0"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">2019</FONT></TD><TD STYLE="padding: 0; text-indent: 0"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">&nbsp;</FONT></TD><TD STYLE="padding: 0; text-indent: 0"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">&nbsp;</FONT></TD>
    <TD COLSPAN="2" STYLE="text-align: center; border-bottom: Black 1.5pt solid; padding: 0; text-indent: 0"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">2018</FONT></TD><TD STYLE="padding: 0; text-indent: 0"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">&nbsp;</FONT></TD></TR>
<TR STYLE="vertical-align: bottom">
    <TD STYLE="padding: 0; text-indent: 0"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">OPERATING
    REVENUES:</FONT></TD><TD STYLE="padding: 0; text-indent: 0"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">&nbsp;</FONT></TD>
    <TD COLSPAN="2" STYLE="padding: 0; text-indent: 0"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">&nbsp;</FONT></TD><TD STYLE="padding: 0; text-indent: 0"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">&nbsp;</FONT></TD><TD STYLE="padding: 0; text-indent: 0"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">&nbsp;</FONT></TD>
    <TD COLSPAN="2" STYLE="padding: 0; text-indent: 0"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">&nbsp;</FONT></TD><TD STYLE="padding: 0; text-indent: 0"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">&nbsp;</FONT></TD><TD STYLE="padding: 0; text-indent: 0"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">&nbsp;</FONT></TD>
    <TD COLSPAN="2" STYLE="padding: 0; text-indent: 0"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">&nbsp;</FONT></TD><TD STYLE="padding: 0; text-indent: 0"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">&nbsp;</FONT></TD><TD STYLE="padding: 0; text-indent: 0"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">&nbsp;</FONT></TD>
    <TD COLSPAN="2" STYLE="padding: 0; text-indent: 0"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">&nbsp;</FONT></TD><TD STYLE="padding: 0; text-indent: 0"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">&nbsp;</FONT></TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,238,255)">
    <TD STYLE="width: 52%; text-align: left; padding: 0 0 0 0.125in; text-indent: 0"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">Cloud-based
    hosted services</FONT></TD><TD STYLE="width: 1%; padding: 0; text-indent: 0"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">&nbsp;</FONT></TD>
    <TD STYLE="width: 1%; border-bottom: Black 1.5pt solid; padding: 0; text-align: left; text-indent: 0"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">$</FONT></TD><TD STYLE="width: 9%; border-bottom: Black 1.5pt solid; padding: 0; text-align: right; text-indent: 0"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">1,485</FONT></TD><TD STYLE="width: 1%; padding: 0; text-align: left; text-indent: 0"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">&nbsp;</FONT></TD><TD STYLE="width: 1%; padding: 0; text-indent: 0"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">&nbsp;</FONT></TD>
    <TD STYLE="width: 1%; border-bottom: Black 1.5pt solid; padding: 0; text-align: left; text-indent: 0"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">$</FONT></TD><TD STYLE="width: 9%; border-bottom: Black 1.5pt solid; padding: 0; text-align: right; text-indent: 0"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">196</FONT></TD><TD STYLE="width: 1%; padding: 0; text-align: left; text-indent: 0"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">&nbsp;</FONT></TD><TD STYLE="width: 1%; padding: 0; text-indent: 0"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">&nbsp;</FONT></TD>
    <TD STYLE="width: 1%; border-bottom: Black 1.5pt solid; padding: 0; text-align: left; text-indent: 0"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">$</FONT></TD><TD STYLE="width: 9%; border-bottom: Black 1.5pt solid; padding: 0; text-align: right; text-indent: 0"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">4,493</FONT></TD><TD STYLE="width: 1%; padding: 0; text-align: left; text-indent: 0"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">&nbsp;</FONT></TD><TD STYLE="width: 1%; padding: 0; text-indent: 0"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">&nbsp;</FONT></TD>
    <TD STYLE="width: 1%; border-bottom: Black 1.5pt solid; padding: 0; text-align: left; text-indent: 0"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">$</FONT></TD><TD STYLE="width: 9%; border-bottom: Black 1.5pt solid; padding: 0; text-align: right; text-indent: 0"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">403</FONT></TD><TD STYLE="width: 1%; padding: 0; text-align: left; text-indent: 0"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">&nbsp;</FONT></TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD STYLE="padding: 0; text-indent: 0"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">&nbsp;</FONT></TD><TD STYLE="padding: 0; text-indent: 0"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">&nbsp;</FONT></TD>
    <TD STYLE="text-align: left; padding: 0; text-indent: 0"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">&nbsp;</FONT></TD><TD STYLE="text-align: right; padding: 0; text-indent: 0"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">&nbsp;</FONT></TD><TD STYLE="text-align: left; padding: 0; text-indent: 0"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">&nbsp;</FONT></TD><TD STYLE="padding: 0; text-indent: 0"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">&nbsp;</FONT></TD>
    <TD STYLE="text-align: left; padding: 0; text-indent: 0"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">&nbsp;</FONT></TD><TD STYLE="text-align: right; padding: 0; text-indent: 0"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">&nbsp;</FONT></TD><TD STYLE="text-align: left; padding: 0; text-indent: 0"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">&nbsp;</FONT></TD><TD STYLE="padding: 0; text-indent: 0"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">&nbsp;</FONT></TD>
    <TD STYLE="text-align: left; padding: 0; text-indent: 0"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">&nbsp;</FONT></TD><TD STYLE="text-align: right; padding: 0; text-indent: 0"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">&nbsp;</FONT></TD><TD STYLE="text-align: left; padding: 0; text-indent: 0"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">&nbsp;</FONT></TD><TD STYLE="padding: 0; text-indent: 0"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">&nbsp;</FONT></TD>
    <TD STYLE="text-align: left; padding: 0; text-indent: 0"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">&nbsp;</FONT></TD><TD STYLE="text-align: right; padding: 0; text-indent: 0"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">&nbsp;</FONT></TD><TD STYLE="text-align: left; padding: 0; text-indent: 0"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">&nbsp;</FONT></TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,238,255)">
    <TD STYLE="text-align: left; padding: 0 0 0 0.25in; text-indent: 0"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">Total
    operating revenues</FONT></TD><TD STYLE="padding: 0; text-indent: 0"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">&nbsp;</FONT></TD>
    <TD STYLE="border-bottom: Black 1.5pt solid; padding: 0; text-align: left; text-indent: 0"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">&nbsp;</FONT></TD><TD STYLE="border-bottom: Black 1.5pt solid; padding: 0; text-align: right; text-indent: 0"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">1,485</FONT></TD><TD STYLE="padding: 0; text-align: left; text-indent: 0"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">&nbsp;</FONT></TD><TD STYLE="padding: 0; text-indent: 0"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">&nbsp;</FONT></TD>
    <TD STYLE="border-bottom: Black 1.5pt solid; padding: 0; text-align: left; text-indent: 0"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">&nbsp;</FONT></TD><TD STYLE="border-bottom: Black 1.5pt solid; padding: 0; text-align: right; text-indent: 0"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">196</FONT></TD><TD STYLE="padding: 0; text-align: left; text-indent: 0"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">&nbsp;</FONT></TD><TD STYLE="padding: 0; text-indent: 0"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">&nbsp;</FONT></TD>
    <TD STYLE="border-bottom: Black 1.5pt solid; padding: 0; text-align: left; text-indent: 0"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">&nbsp;</FONT></TD><TD STYLE="border-bottom: Black 1.5pt solid; padding: 0; text-align: right; text-indent: 0"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">4,493</FONT></TD><TD STYLE="padding: 0; text-align: left; text-indent: 0"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">&nbsp;</FONT></TD><TD STYLE="padding: 0; text-indent: 0"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">&nbsp;</FONT></TD>
    <TD STYLE="border-bottom: Black 1.5pt solid; padding: 0; text-align: left; text-indent: 0"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">&nbsp;</FONT></TD><TD STYLE="border-bottom: Black 1.5pt solid; padding: 0; text-align: right; text-indent: 0"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">403</FONT></TD><TD STYLE="padding: 0; text-align: left; text-indent: 0"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">&nbsp;</FONT></TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD STYLE="text-align: right; padding: 0; text-indent: 0"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">&nbsp;</FONT></TD><TD STYLE="padding: 0; text-indent: 0"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">&nbsp;</FONT></TD>
    <TD STYLE="text-align: left; padding: 0; text-indent: 0"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">&nbsp;</FONT></TD><TD STYLE="text-align: right; padding: 0; text-indent: 0"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">&nbsp;</FONT></TD><TD STYLE="text-align: left; padding: 0; text-indent: 0"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">&nbsp;</FONT></TD><TD STYLE="padding: 0; text-indent: 0"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">&nbsp;</FONT></TD>
    <TD STYLE="text-align: left; padding: 0; text-indent: 0"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">&nbsp;</FONT></TD><TD STYLE="text-align: right; padding: 0; text-indent: 0"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">&nbsp;</FONT></TD><TD STYLE="text-align: left; padding: 0; text-indent: 0"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">&nbsp;</FONT></TD><TD STYLE="padding: 0; text-indent: 0"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">&nbsp;</FONT></TD>
    <TD STYLE="text-align: left; padding: 0; text-indent: 0"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">&nbsp;</FONT></TD><TD STYLE="text-align: right; padding: 0; text-indent: 0"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">&nbsp;</FONT></TD><TD STYLE="text-align: left; padding: 0; text-indent: 0"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">&nbsp;</FONT></TD><TD STYLE="padding: 0; text-indent: 0"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">&nbsp;</FONT></TD>
    <TD STYLE="text-align: left; padding: 0; text-indent: 0"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">&nbsp;</FONT></TD><TD STYLE="text-align: right; padding: 0; text-indent: 0"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">&nbsp;</FONT></TD><TD STYLE="text-align: left; padding: 0; text-indent: 0"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">&nbsp;</FONT></TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,238,255)">
    <TD STYLE="text-align: left; padding: 0; text-indent: 0"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">OPERATING
    EXPENSES:</FONT></TD><TD STYLE="padding: 0; text-indent: 0"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">&nbsp;</FONT></TD>
    <TD STYLE="text-align: left; padding: 0; text-indent: 0"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">&nbsp;</FONT></TD><TD STYLE="text-align: right; padding: 0; text-indent: 0"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">&nbsp;</FONT></TD><TD STYLE="text-align: left; padding: 0; text-indent: 0"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">&nbsp;</FONT></TD><TD STYLE="padding: 0; text-indent: 0"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">&nbsp;</FONT></TD>
    <TD STYLE="text-align: left; padding: 0; text-indent: 0"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">&nbsp;</FONT></TD><TD STYLE="text-align: right; padding: 0; text-indent: 0"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">&nbsp;</FONT></TD><TD STYLE="text-align: left; padding: 0; text-indent: 0"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">&nbsp;</FONT></TD><TD STYLE="padding: 0; text-indent: 0"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">&nbsp;</FONT></TD>
    <TD STYLE="text-align: left; padding: 0; text-indent: 0"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">&nbsp;</FONT></TD><TD STYLE="text-align: right; padding: 0; text-indent: 0"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">&nbsp;</FONT></TD><TD STYLE="text-align: left; padding: 0; text-indent: 0"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">&nbsp;</FONT></TD><TD STYLE="padding: 0; text-indent: 0"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">&nbsp;</FONT></TD>
    <TD STYLE="text-align: left; padding: 0; text-indent: 0"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">&nbsp;</FONT></TD><TD STYLE="text-align: right; padding: 0; text-indent: 0"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">&nbsp;</FONT></TD><TD STYLE="text-align: left; padding: 0; text-indent: 0"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">&nbsp;</FONT></TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD STYLE="padding: 0 0 0 0.125in; text-align: left; text-indent: 0"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">Cost
    of services (exclusive of depreciation and amortization)</FONT></TD><TD STYLE="padding: 0; text-indent: 0"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">&nbsp;</FONT></TD>
    <TD STYLE="text-align: left; padding: 0; text-indent: 0"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">&nbsp;</FONT></TD><TD STYLE="text-align: right; padding: 0; text-indent: 0"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">770</FONT></TD><TD STYLE="text-align: left; padding: 0; text-indent: 0"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">&nbsp;</FONT></TD><TD STYLE="padding: 0; text-indent: 0"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">&nbsp;</FONT></TD>
    <TD STYLE="text-align: left; padding: 0; text-indent: 0"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">&nbsp;</FONT></TD><TD STYLE="text-align: right; padding: 0; text-indent: 0"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">106</FONT></TD><TD STYLE="text-align: left; padding: 0; text-indent: 0"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">&nbsp;</FONT></TD><TD STYLE="padding: 0; text-indent: 0"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">&nbsp;</FONT></TD>
    <TD STYLE="text-align: left; padding: 0; text-indent: 0"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">&nbsp;</FONT></TD><TD STYLE="text-align: right; padding: 0; text-indent: 0"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">2,322</FONT></TD><TD STYLE="text-align: left; padding: 0; text-indent: 0"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">&nbsp;</FONT></TD><TD STYLE="padding: 0; text-indent: 0"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">&nbsp;</FONT></TD>
    <TD STYLE="text-align: left; padding: 0; text-indent: 0"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">&nbsp;</FONT></TD><TD STYLE="text-align: right; padding: 0; text-indent: 0"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">249</FONT></TD><TD STYLE="text-align: left; padding: 0; text-indent: 0"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">&nbsp;</FONT></TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,238,255)">
    <TD STYLE="padding: 0 0 0 0.125in; text-align: left; text-indent: 0"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">Selling,
    general and administrative expense</FONT></TD><TD STYLE="padding: 0; text-indent: 0"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">&nbsp;</FONT></TD>
    <TD STYLE="text-align: left; padding: 0; text-indent: 0"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">&nbsp;</FONT></TD><TD STYLE="text-align: right; padding: 0; text-indent: 0"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">875</FONT></TD><TD STYLE="text-align: left; padding: 0; text-indent: 0"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">&nbsp;</FONT></TD><TD STYLE="padding: 0; text-indent: 0"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">&nbsp;</FONT></TD>
    <TD STYLE="text-align: left; padding: 0; text-indent: 0"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">&nbsp;</FONT></TD><TD STYLE="text-align: right; padding: 0; text-indent: 0"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">332</FONT></TD><TD STYLE="text-align: left; padding: 0; text-indent: 0"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">&nbsp;</FONT></TD><TD STYLE="padding: 0; text-indent: 0"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">&nbsp;</FONT></TD>
    <TD STYLE="text-align: left; padding: 0; text-indent: 0"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">&nbsp;</FONT></TD><TD STYLE="text-align: right; padding: 0; text-indent: 0"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">2,309</FONT></TD><TD STYLE="text-align: left; padding: 0; text-indent: 0"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">&nbsp;</FONT></TD><TD STYLE="padding: 0; text-indent: 0"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">&nbsp;</FONT></TD>
    <TD STYLE="text-align: left; padding: 0; text-indent: 0"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">&nbsp;</FONT></TD><TD STYLE="text-align: right; padding: 0; text-indent: 0"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">830</FONT></TD><TD STYLE="text-align: left; padding: 0; text-indent: 0"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">&nbsp;</FONT></TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD STYLE="padding: 0 0 0 0.125in; text-align: left; text-indent: 0"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">Stock
    compensation &amp; warrant expense</FONT></TD><TD STYLE="padding: 0; text-indent: 0"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">&nbsp;</FONT></TD>
    <TD STYLE="text-align: left; padding: 0; text-indent: 0"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">&nbsp;</FONT></TD><TD STYLE="text-align: right; padding: 0; text-indent: 0"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">345</FONT></TD><TD STYLE="text-align: left; padding: 0; text-indent: 0"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">&nbsp;</FONT></TD><TD STYLE="padding: 0; text-indent: 0"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">&nbsp;</FONT></TD>
    <TD STYLE="text-align: left; padding: 0; text-indent: 0"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">&nbsp;</FONT></TD><TD STYLE="text-align: right; padding: 0; text-indent: 0"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">354</FONT></TD><TD STYLE="text-align: left; padding: 0; text-indent: 0"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">&nbsp;</FONT></TD><TD STYLE="padding: 0; text-indent: 0"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">&nbsp;</FONT></TD>
    <TD STYLE="text-align: left; padding: 0; text-indent: 0"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">&nbsp;</FONT></TD><TD STYLE="text-align: right; padding: 0; text-indent: 0"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">731</FONT></TD><TD STYLE="text-align: left; padding: 0; text-indent: 0"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">&nbsp;</FONT></TD><TD STYLE="padding: 0; text-indent: 0"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">&nbsp;</FONT></TD>
    <TD STYLE="text-align: left; padding: 0; text-indent: 0"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">&nbsp;</FONT></TD><TD STYLE="text-align: right; padding: 0; text-indent: 0"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">1,328</FONT></TD><TD STYLE="text-align: left; padding: 0; text-indent: 0"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">&nbsp;</FONT></TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,238,255)">
    <TD STYLE="padding: 0 0 0 0.125in; text-align: left; text-indent: 0"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">Legal
    and professional fees</FONT></TD><TD STYLE="padding: 0; text-indent: 0"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">&nbsp;</FONT></TD>
    <TD STYLE="text-align: left; padding: 0; text-indent: 0"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">&nbsp;</FONT></TD><TD STYLE="text-align: right; padding: 0; text-indent: 0"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">95</FONT></TD><TD STYLE="text-align: left; padding: 0; text-indent: 0"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">&nbsp;</FONT></TD><TD STYLE="padding: 0; text-indent: 0"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">&nbsp;</FONT></TD>
    <TD STYLE="text-align: left; padding: 0; text-indent: 0"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">&nbsp;</FONT></TD><TD STYLE="text-align: right; padding: 0; text-indent: 0"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">68</FONT></TD><TD STYLE="text-align: left; padding: 0; text-indent: 0"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">&nbsp;</FONT></TD><TD STYLE="padding: 0; text-indent: 0"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">&nbsp;</FONT></TD>
    <TD STYLE="text-align: left; padding: 0; text-indent: 0"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">&nbsp;</FONT></TD><TD STYLE="text-align: right; padding: 0; text-indent: 0"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">305</FONT></TD><TD STYLE="text-align: left; padding: 0; text-indent: 0"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">&nbsp;</FONT></TD><TD STYLE="padding: 0; text-indent: 0"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">&nbsp;</FONT></TD>
    <TD STYLE="text-align: left; padding: 0; text-indent: 0"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">&nbsp;</FONT></TD><TD STYLE="text-align: right; padding: 0; text-indent: 0"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">359</FONT></TD><TD STYLE="text-align: left; padding: 0; text-indent: 0"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">&nbsp;</FONT></TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD STYLE="padding: 0 0 0 0.125in; text-align: left; text-indent: 0"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">Bad
    debt</FONT></TD><TD STYLE="padding: 0; text-indent: 0"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">&nbsp;</FONT></TD>
    <TD STYLE="text-align: left; padding: 0; text-indent: 0"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">&nbsp;</FONT></TD><TD STYLE="text-align: right; padding: 0; text-indent: 0"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">-</FONT></TD><TD STYLE="text-align: left; padding: 0; text-indent: 0"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">&nbsp;</FONT></TD><TD STYLE="padding: 0; text-indent: 0"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">&nbsp;</FONT></TD>
    <TD STYLE="text-align: left; padding: 0; text-indent: 0"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">&nbsp;</FONT></TD><TD STYLE="text-align: right; padding: 0; text-indent: 0"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">-</FONT></TD><TD STYLE="text-align: left; padding: 0; text-indent: 0"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">&nbsp;</FONT></TD><TD STYLE="padding: 0; text-indent: 0"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">&nbsp;</FONT></TD>
    <TD STYLE="text-align: left; padding: 0; text-indent: 0"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">&nbsp;</FONT></TD><TD STYLE="text-align: right; padding: 0; text-indent: 0"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">(3</FONT></TD><TD STYLE="text-align: left; padding: 0; text-indent: 0"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">)</FONT></TD><TD STYLE="padding: 0; text-indent: 0"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">&nbsp;</FONT></TD>
    <TD STYLE="text-align: left; padding: 0; text-indent: 0"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">&nbsp;</FONT></TD><TD STYLE="text-align: right; padding: 0; text-indent: 0"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">-</FONT></TD><TD STYLE="text-align: left; padding: 0; text-indent: 0"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">&nbsp;</FONT></TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,238,255)">
    <TD STYLE="padding: 0 0 0 0.125in; text-align: left; text-indent: 0"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">Depreciation
    and amortization expense</FONT></TD><TD STYLE="padding: 0; text-indent: 0"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">&nbsp;</FONT></TD>
    <TD STYLE="border-bottom: Black 1.5pt solid; padding: 0; text-align: left; text-indent: 0"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">&nbsp;</FONT></TD><TD STYLE="border-bottom: Black 1.5pt solid; padding: 0; text-align: right; text-indent: 0"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">167</FONT></TD><TD STYLE="padding: 0; text-align: left; text-indent: 0"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">&nbsp;</FONT></TD><TD STYLE="padding: 0; text-indent: 0"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">&nbsp;</FONT></TD>
    <TD STYLE="border-bottom: Black 1.5pt solid; padding: 0; text-align: left; text-indent: 0"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">&nbsp;</FONT></TD><TD STYLE="border-bottom: Black 1.5pt solid; padding: 0; text-align: right; text-indent: 0"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">50</FONT></TD><TD STYLE="padding: 0; text-align: left; text-indent: 0"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">&nbsp;</FONT></TD><TD STYLE="padding: 0; text-indent: 0"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">&nbsp;</FONT></TD>
    <TD STYLE="border-bottom: Black 1.5pt solid; padding: 0; text-align: left; text-indent: 0"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">&nbsp;</FONT></TD><TD STYLE="border-bottom: Black 1.5pt solid; padding: 0; text-align: right; text-indent: 0"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">505</FONT></TD><TD STYLE="padding: 0; text-align: left; text-indent: 0"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">&nbsp;</FONT></TD><TD STYLE="padding: 0; text-indent: 0"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">&nbsp;</FONT></TD>
    <TD STYLE="border-bottom: Black 1.5pt solid; padding: 0; text-align: left; text-indent: 0"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">&nbsp;</FONT></TD><TD STYLE="border-bottom: Black 1.5pt solid; padding: 0; text-align: right; text-indent: 0"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">89</FONT></TD><TD STYLE="padding: 0; text-align: left; text-indent: 0"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">&nbsp;</FONT></TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD STYLE="text-align: left; padding: 0 0 0 0.25in; text-indent: 0"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">Total
    operating expenses</FONT></TD><TD STYLE="padding: 0; text-indent: 0"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">&nbsp;</FONT></TD>
    <TD STYLE="border-bottom: Black 1.5pt solid; padding: 0; text-align: left; text-indent: 0"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">&nbsp;</FONT></TD><TD STYLE="border-bottom: Black 1.5pt solid; padding: 0; text-align: right; text-indent: 0"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">2,252</FONT></TD><TD STYLE="padding: 0; text-align: left; text-indent: 0"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">&nbsp;</FONT></TD><TD STYLE="padding: 0; text-indent: 0"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">&nbsp;</FONT></TD>
    <TD STYLE="border-bottom: Black 1.5pt solid; padding: 0; text-align: left; text-indent: 0"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">&nbsp;</FONT></TD><TD STYLE="border-bottom: Black 1.5pt solid; padding: 0; text-align: right; text-indent: 0"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">910</FONT></TD><TD STYLE="padding: 0; text-align: left; text-indent: 0"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">&nbsp;</FONT></TD><TD STYLE="padding: 0; text-indent: 0"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">&nbsp;</FONT></TD>
    <TD STYLE="border-bottom: Black 1.5pt solid; padding: 0; text-align: left; text-indent: 0"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">&nbsp;</FONT></TD><TD STYLE="border-bottom: Black 1.5pt solid; padding: 0; text-align: right; text-indent: 0"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">6,169</FONT></TD><TD STYLE="padding: 0; text-align: left; text-indent: 0"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">&nbsp;</FONT></TD><TD STYLE="padding: 0; text-indent: 0"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">&nbsp;</FONT></TD>
    <TD STYLE="border-bottom: Black 1.5pt solid; padding: 0; text-align: left; text-indent: 0"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">&nbsp;</FONT></TD><TD STYLE="border-bottom: Black 1.5pt solid; padding: 0; text-align: right; text-indent: 0"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">2,855</FONT></TD><TD STYLE="padding: 0; text-align: left; text-indent: 0"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">&nbsp;</FONT></TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,238,255)">
    <TD STYLE="padding: 0; text-indent: 0"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">&nbsp;</FONT></TD><TD STYLE="padding: 0; text-indent: 0"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">&nbsp;</FONT></TD>
    <TD STYLE="text-align: left; padding: 0; text-indent: 0"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">&nbsp;</FONT></TD><TD STYLE="text-align: right; padding: 0; text-indent: 0"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">&nbsp;</FONT></TD><TD STYLE="text-align: left; padding: 0; text-indent: 0"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">&nbsp;</FONT></TD><TD STYLE="padding: 0; text-indent: 0"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">&nbsp;</FONT></TD>
    <TD STYLE="text-align: left; padding: 0; text-indent: 0"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">&nbsp;</FONT></TD><TD STYLE="text-align: right; padding: 0; text-indent: 0"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">&nbsp;</FONT></TD><TD STYLE="text-align: left; padding: 0; text-indent: 0"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">&nbsp;</FONT></TD><TD STYLE="padding: 0; text-indent: 0"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">&nbsp;</FONT></TD>
    <TD STYLE="text-align: left; padding: 0; text-indent: 0"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">&nbsp;</FONT></TD><TD STYLE="text-align: right; padding: 0; text-indent: 0"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">&nbsp;</FONT></TD><TD STYLE="text-align: left; padding: 0; text-indent: 0"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">&nbsp;</FONT></TD><TD STYLE="padding: 0; text-indent: 0"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">&nbsp;</FONT></TD>
    <TD STYLE="text-align: left; padding: 0; text-indent: 0"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">&nbsp;</FONT></TD><TD STYLE="text-align: right; padding: 0; text-indent: 0"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">&nbsp;</FONT></TD><TD STYLE="text-align: left; padding: 0; text-indent: 0"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">&nbsp;</FONT></TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD STYLE="text-align: left; padding: 0; text-indent: 0"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">OPERATING
    LOSS</FONT></TD><TD STYLE="padding: 0; text-indent: 0"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">&nbsp;</FONT></TD>
    <TD STYLE="border-bottom: Black 1.5pt solid; padding: 0; text-align: left; text-indent: 0"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">&nbsp;</FONT></TD><TD STYLE="border-bottom: Black 1.5pt solid; padding: 0; text-align: right; text-indent: 0"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">(767</FONT></TD><TD STYLE="padding: 0; text-align: left; text-indent: 0"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">)</FONT></TD><TD STYLE="padding: 0; text-indent: 0"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">&nbsp;</FONT></TD>
    <TD STYLE="border-bottom: Black 1.5pt solid; padding: 0; text-align: left; text-indent: 0"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">&nbsp;</FONT></TD><TD STYLE="border-bottom: Black 1.5pt solid; padding: 0; text-align: right; text-indent: 0"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">(714</FONT></TD><TD STYLE="padding: 0; text-align: left; text-indent: 0"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">)</FONT></TD><TD STYLE="padding: 0; text-indent: 0"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">&nbsp;</FONT></TD>
    <TD STYLE="border-bottom: Black 1.5pt solid; padding: 0; text-align: left; text-indent: 0"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">&nbsp;</FONT></TD><TD STYLE="border-bottom: Black 1.5pt solid; padding: 0; text-align: right; text-indent: 0"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">(1,676</FONT></TD><TD STYLE="padding: 0; text-align: left; text-indent: 0"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">)</FONT></TD><TD STYLE="padding: 0; text-indent: 0"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">&nbsp;</FONT></TD>
    <TD STYLE="border-bottom: Black 1.5pt solid; padding: 0; text-align: left; text-indent: 0"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">&nbsp;</FONT></TD><TD STYLE="border-bottom: Black 1.5pt solid; padding: 0; text-align: right; text-indent: 0"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">(2,452</FONT></TD><TD STYLE="padding: 0; text-align: left; text-indent: 0"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">)</FONT></TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,238,255)">
    <TD STYLE="padding: 0; text-indent: 0"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">&nbsp;</FONT></TD><TD STYLE="padding: 0; text-indent: 0"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">&nbsp;</FONT></TD>
    <TD STYLE="text-align: left; padding: 0; text-indent: 0"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">&nbsp;</FONT></TD><TD STYLE="text-align: right; padding: 0; text-indent: 0"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">&nbsp;</FONT></TD><TD STYLE="text-align: left; padding: 0; text-indent: 0"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">&nbsp;</FONT></TD><TD STYLE="padding: 0; text-indent: 0"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">&nbsp;</FONT></TD>
    <TD STYLE="text-align: left; padding: 0; text-indent: 0"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">&nbsp;</FONT></TD><TD STYLE="text-align: right; padding: 0; text-indent: 0"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">&nbsp;</FONT></TD><TD STYLE="text-align: left; padding: 0; text-indent: 0"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">&nbsp;</FONT></TD><TD STYLE="padding: 0; text-indent: 0"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">&nbsp;</FONT></TD>
    <TD STYLE="text-align: left; padding: 0; text-indent: 0"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">&nbsp;</FONT></TD><TD STYLE="text-align: right; padding: 0; text-indent: 0"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">&nbsp;</FONT></TD><TD STYLE="text-align: left; padding: 0; text-indent: 0"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">&nbsp;</FONT></TD><TD STYLE="padding: 0; text-indent: 0"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">&nbsp;</FONT></TD>
    <TD STYLE="text-align: left; padding: 0; text-indent: 0"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">&nbsp;</FONT></TD><TD STYLE="text-align: right; padding: 0; text-indent: 0"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">&nbsp;</FONT></TD><TD STYLE="text-align: left; padding: 0; text-indent: 0"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">&nbsp;</FONT></TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD STYLE="text-align: left; padding: 0; text-indent: 0"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">OTHER
    INCOME (EXPENSE):</FONT></TD><TD STYLE="padding: 0; text-indent: 0"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">&nbsp;</FONT></TD>
    <TD STYLE="text-align: left; padding: 0; text-indent: 0"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">&nbsp;</FONT></TD><TD STYLE="text-align: right; padding: 0; text-indent: 0"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">&nbsp;</FONT></TD><TD STYLE="text-align: left; padding: 0; text-indent: 0"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">&nbsp;</FONT></TD><TD STYLE="padding: 0; text-indent: 0"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">&nbsp;</FONT></TD>
    <TD STYLE="text-align: left; padding: 0; text-indent: 0"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">&nbsp;</FONT></TD><TD STYLE="text-align: right; padding: 0; text-indent: 0"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">&nbsp;</FONT></TD><TD STYLE="text-align: left; padding: 0; text-indent: 0"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">&nbsp;</FONT></TD><TD STYLE="padding: 0; text-indent: 0"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">&nbsp;</FONT></TD>
    <TD STYLE="text-align: left; padding: 0; text-indent: 0"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">&nbsp;</FONT></TD><TD STYLE="text-align: right; padding: 0; text-indent: 0"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">&nbsp;</FONT></TD><TD STYLE="text-align: left; padding: 0; text-indent: 0"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">&nbsp;</FONT></TD><TD STYLE="padding: 0; text-indent: 0"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">&nbsp;</FONT></TD>
    <TD STYLE="text-align: left; padding: 0; text-indent: 0"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">&nbsp;</FONT></TD><TD STYLE="text-align: right; padding: 0; text-indent: 0"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">&nbsp;</FONT></TD><TD STYLE="text-align: left; padding: 0; text-indent: 0"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">&nbsp;</FONT></TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,238,255)">
    <TD STYLE="text-align: left; padding: 0 0 0 0.125in; text-indent: 0"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">Gain
    (loss) on derivative instruments</FONT></TD><TD STYLE="padding: 0; text-indent: 0"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">&nbsp;</FONT></TD>
    <TD STYLE="text-align: left; padding: 0; text-indent: 0"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">&nbsp;</FONT></TD><TD STYLE="text-align: right; padding: 0; text-indent: 0"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">903</FONT></TD><TD STYLE="text-align: left; padding: 0; text-indent: 0"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">&nbsp;</FONT></TD><TD STYLE="padding: 0; text-indent: 0"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">&nbsp;</FONT></TD>
    <TD STYLE="text-align: left; padding: 0; text-indent: 0"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">&nbsp;</FONT></TD><TD STYLE="text-align: right; padding: 0; text-indent: 0"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">47</FONT></TD><TD STYLE="text-align: left; padding: 0; text-indent: 0"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">&nbsp;</FONT></TD><TD STYLE="padding: 0; text-indent: 0"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">&nbsp;</FONT></TD>
    <TD STYLE="text-align: left; padding: 0; text-indent: 0"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">&nbsp;</FONT></TD><TD STYLE="text-align: right; padding: 0; text-indent: 0"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">(594</FONT></TD><TD STYLE="text-align: left; padding: 0; text-indent: 0"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">)</FONT></TD><TD STYLE="padding: 0; text-indent: 0"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">&nbsp;</FONT></TD>
    <TD STYLE="text-align: left; padding: 0; text-indent: 0"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">&nbsp;</FONT></TD><TD STYLE="text-align: right; padding: 0; text-indent: 0"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">155</FONT></TD><TD STYLE="text-align: left; padding: 0; text-indent: 0"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">&nbsp;</FONT></TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD STYLE="text-align: left; padding: 0 0 0 0.125in; text-indent: 0"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">Income
    tax</FONT></TD><TD STYLE="padding: 0; text-indent: 0"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">&nbsp;</FONT></TD>
    <TD STYLE="text-align: left; padding: 0; text-indent: 0"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">&nbsp;</FONT></TD><TD STYLE="text-align: right; padding: 0; text-indent: 0"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">(10</FONT></TD><TD STYLE="text-align: left; padding: 0; text-indent: 0"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">)</FONT></TD><TD STYLE="padding: 0; text-indent: 0"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">&nbsp;</FONT></TD>
    <TD STYLE="text-align: left; padding: 0; text-indent: 0"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">&nbsp;</FONT></TD><TD STYLE="text-align: right; padding: 0; text-indent: 0"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">-</FONT></TD><TD STYLE="text-align: left; padding: 0; text-indent: 0"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">&nbsp;</FONT></TD><TD STYLE="padding: 0; text-indent: 0"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">&nbsp;</FONT></TD>
    <TD STYLE="text-align: left; padding: 0; text-indent: 0"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">&nbsp;</FONT></TD><TD STYLE="text-align: right; padding: 0; text-indent: 0"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">(37</FONT></TD><TD STYLE="text-align: left; padding: 0; text-indent: 0"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">)</FONT></TD><TD STYLE="padding: 0; text-indent: 0"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">&nbsp;</FONT></TD>
    <TD STYLE="text-align: left; padding: 0; text-indent: 0"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">&nbsp;</FONT></TD><TD STYLE="text-align: right; padding: 0; text-indent: 0"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">-</FONT></TD><TD STYLE="text-align: left; padding: 0; text-indent: 0"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">&nbsp;</FONT></TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,238,255)">
    <TD STYLE="text-align: left; padding: 0 0 0 0.125in; text-indent: 0"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">Interest
    income (expense)</FONT></TD><TD STYLE="padding: 0; text-indent: 0"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">&nbsp;</FONT></TD>
    <TD STYLE="border-bottom: Black 1.5pt solid; padding: 0; text-align: left; text-indent: 0"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">&nbsp;</FONT></TD><TD STYLE="border-bottom: Black 1.5pt solid; padding: 0; text-align: right; text-indent: 0"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">(376</FONT></TD><TD STYLE="padding: 0; text-align: left; text-indent: 0"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">)</FONT></TD><TD STYLE="padding: 0; text-indent: 0"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">&nbsp;</FONT></TD>
    <TD STYLE="border-bottom: Black 1.5pt solid; padding: 0; text-align: left; text-indent: 0"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">&nbsp;</FONT></TD><TD STYLE="border-bottom: Black 1.5pt solid; padding: 0; text-align: right; text-indent: 0"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">(41</FONT></TD><TD STYLE="padding: 0; text-align: left; text-indent: 0"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">)</FONT></TD><TD STYLE="padding: 0; text-indent: 0"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">&nbsp;</FONT></TD>
    <TD STYLE="border-bottom: Black 1.5pt solid; padding: 0; text-align: left; text-indent: 0"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">&nbsp;</FONT></TD><TD STYLE="border-bottom: Black 1.5pt solid; padding: 0; text-align: right; text-indent: 0"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">(1,414</FONT></TD><TD STYLE="padding: 0; text-align: left; text-indent: 0"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">)</FONT></TD><TD STYLE="padding: 0; text-indent: 0"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">&nbsp;</FONT></TD>
    <TD STYLE="border-bottom: Black 1.5pt solid; padding: 0; text-align: left; text-indent: 0"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">&nbsp;</FONT></TD><TD STYLE="border-bottom: Black 1.5pt solid; padding: 0; text-align: right; text-indent: 0"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">(250</FONT></TD><TD STYLE="padding: 0; text-align: left; text-indent: 0"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">)</FONT></TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD STYLE="text-align: left; padding: 0 0 0 0.25in; text-indent: 0"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">Total
    other income (expense)</FONT></TD><TD STYLE="padding: 0; text-indent: 0"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">&nbsp;</FONT></TD>
    <TD STYLE="border-bottom: Black 1.5pt solid; padding: 0; text-align: left; text-indent: 0"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">&nbsp;</FONT></TD><TD STYLE="border-bottom: Black 1.5pt solid; padding: 0; text-align: right; text-indent: 0"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">517</FONT></TD><TD STYLE="padding: 0; text-align: left; text-indent: 0"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">&nbsp;</FONT></TD><TD STYLE="padding: 0; text-indent: 0"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">&nbsp;</FONT></TD>
    <TD STYLE="border-bottom: Black 1.5pt solid; padding: 0; text-align: left; text-indent: 0"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">&nbsp;</FONT></TD><TD STYLE="border-bottom: Black 1.5pt solid; padding: 0; text-align: right; text-indent: 0"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">6</FONT></TD><TD STYLE="padding: 0; text-align: left; text-indent: 0"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">&nbsp;</FONT></TD><TD STYLE="padding: 0; text-indent: 0"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">&nbsp;</FONT></TD>
    <TD STYLE="border-bottom: Black 1.5pt solid; padding: 0; text-align: left; text-indent: 0"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">&nbsp;</FONT></TD><TD STYLE="border-bottom: Black 1.5pt solid; padding: 0; text-align: right; text-indent: 0"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">(2,045</FONT></TD><TD STYLE="padding: 0; text-align: left; text-indent: 0"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">)</FONT></TD><TD STYLE="padding: 0; text-indent: 0"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">&nbsp;</FONT></TD>
    <TD STYLE="border-bottom: Black 1.5pt solid; padding: 0; text-align: left; text-indent: 0"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">&nbsp;</FONT></TD><TD STYLE="border-bottom: Black 1.5pt solid; padding: 0; text-align: right; text-indent: 0"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">(95</FONT></TD><TD STYLE="padding: 0; text-align: left; text-indent: 0"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">)</FONT></TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,238,255)">
    <TD STYLE="padding: 0; text-indent: 0"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">&nbsp;</FONT></TD><TD STYLE="padding: 0; text-indent: 0"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">&nbsp;</FONT></TD>
    <TD STYLE="text-align: left; padding: 0; text-indent: 0"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">&nbsp;</FONT></TD><TD STYLE="text-align: right; padding: 0; text-indent: 0"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">&nbsp;</FONT></TD><TD STYLE="text-align: left; padding: 0; text-indent: 0"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">&nbsp;</FONT></TD><TD STYLE="padding: 0; text-indent: 0"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">&nbsp;</FONT></TD>
    <TD STYLE="text-align: left; padding: 0; text-indent: 0"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">&nbsp;</FONT></TD><TD STYLE="text-align: right; padding: 0; text-indent: 0"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">&nbsp;</FONT></TD><TD STYLE="text-align: left; padding: 0; text-indent: 0"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">&nbsp;</FONT></TD><TD STYLE="padding: 0; text-indent: 0"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">&nbsp;</FONT></TD>
    <TD STYLE="text-align: left; padding: 0; text-indent: 0"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">&nbsp;</FONT></TD><TD STYLE="text-align: right; padding: 0; text-indent: 0"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">&nbsp;</FONT></TD><TD STYLE="text-align: left; padding: 0; text-indent: 0"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">&nbsp;</FONT></TD><TD STYLE="padding: 0; text-indent: 0"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">&nbsp;</FONT></TD>
    <TD STYLE="text-align: left; padding: 0; text-indent: 0"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">&nbsp;</FONT></TD><TD STYLE="text-align: right; padding: 0; text-indent: 0"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">&nbsp;</FONT></TD><TD STYLE="text-align: left; padding: 0; text-indent: 0"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">&nbsp;</FONT></TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD STYLE="text-align: left; padding: 0; text-indent: 0"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">NET
    LOSS INCLUDING NONCONTROLLING INTEREST</FONT></TD><TD STYLE="padding: 0; text-indent: 0"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">&nbsp;</FONT></TD>
    <TD STYLE="border-bottom: Black 1.5pt solid; padding: 0; text-align: left; text-indent: 0"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">&nbsp;</FONT></TD><TD STYLE="border-bottom: Black 1.5pt solid; padding: 0; text-align: right; text-indent: 0"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">(250</FONT></TD><TD STYLE="padding: 0; text-align: left; text-indent: 0"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">)</FONT></TD><TD STYLE="padding: 0; text-indent: 0"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">&nbsp;</FONT></TD>
    <TD STYLE="border-bottom: Black 1.5pt solid; padding: 0; text-align: left; text-indent: 0"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">&nbsp;</FONT></TD><TD STYLE="border-bottom: Black 1.5pt solid; padding: 0; text-align: right; text-indent: 0"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">(708</FONT></TD><TD STYLE="padding: 0; text-align: left; text-indent: 0"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">)</FONT></TD><TD STYLE="padding: 0; text-indent: 0"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">&nbsp;</FONT></TD>
    <TD STYLE="border-bottom: Black 1.5pt solid; padding: 0; text-align: left; text-indent: 0"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">&nbsp;</FONT></TD><TD STYLE="border-bottom: Black 1.5pt solid; padding: 0; text-align: right; text-indent: 0"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">(3,721</FONT></TD><TD STYLE="padding: 0; text-align: left; text-indent: 0"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">)</FONT></TD><TD STYLE="padding: 0; text-indent: 0"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">&nbsp;</FONT></TD>
    <TD STYLE="border-bottom: Black 1.5pt solid; padding: 0; text-align: left; text-indent: 0"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">&nbsp;</FONT></TD><TD STYLE="border-bottom: Black 1.5pt solid; padding: 0; text-align: right; text-indent: 0"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">(2,547</FONT></TD><TD STYLE="padding: 0; text-align: left; text-indent: 0"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">)</FONT></TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,238,255)">
    <TD STYLE="padding: 0; text-indent: 0"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">&nbsp;</FONT></TD><TD STYLE="padding: 0; text-indent: 0"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">&nbsp;</FONT></TD>
    <TD STYLE="text-align: left; padding: 0; text-indent: 0"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">&nbsp;</FONT></TD><TD STYLE="text-align: right; padding: 0; text-indent: 0"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">&nbsp;</FONT></TD><TD STYLE="text-align: left; padding: 0; text-indent: 0"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">&nbsp;</FONT></TD><TD STYLE="padding: 0; text-indent: 0"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">&nbsp;</FONT></TD>
    <TD STYLE="text-align: left; padding: 0; text-indent: 0"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">&nbsp;</FONT></TD><TD STYLE="text-align: right; padding: 0; text-indent: 0"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">&nbsp;</FONT></TD><TD STYLE="text-align: left; padding: 0; text-indent: 0"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">&nbsp;</FONT></TD><TD STYLE="padding: 0; text-indent: 0"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">&nbsp;</FONT></TD>
    <TD STYLE="text-align: left; padding: 0; text-indent: 0"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">&nbsp;</FONT></TD><TD STYLE="text-align: right; padding: 0; text-indent: 0"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">&nbsp;</FONT></TD><TD STYLE="text-align: left; padding: 0; text-indent: 0"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">&nbsp;</FONT></TD><TD STYLE="padding: 0; text-indent: 0"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">&nbsp;</FONT></TD>
    <TD STYLE="text-align: left; padding: 0; text-indent: 0"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">&nbsp;</FONT></TD><TD STYLE="text-align: right; padding: 0; text-indent: 0"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">&nbsp;</FONT></TD><TD STYLE="text-align: left; padding: 0; text-indent: 0"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">&nbsp;</FONT></TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD STYLE="text-align: left; padding: 0 0 0 0.125in; text-indent: 0"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">Less:
    Net loss attributable to the noncontrolling interest</FONT></TD><TD STYLE="padding: 0; text-indent: 0"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">&nbsp;</FONT></TD>
    <TD STYLE="border-bottom: Black 1.5pt solid; padding: 0; text-align: left; text-indent: 0"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">&nbsp;</FONT></TD><TD STYLE="border-bottom: Black 1.5pt solid; padding: 0; text-align: right; text-indent: 0"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">29</FONT></TD><TD STYLE="padding: 0; text-align: left; text-indent: 0"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">&nbsp;</FONT></TD><TD STYLE="padding: 0; text-indent: 0"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">&nbsp;</FONT></TD>
    <TD STYLE="border-bottom: Black 1.5pt solid; padding: 0; text-align: left; text-indent: 0"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">&nbsp;</FONT></TD><TD STYLE="border-bottom: Black 1.5pt solid; padding: 0; text-align: right; text-indent: 0"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">-</FONT></TD><TD STYLE="padding: 0; text-align: left; text-indent: 0"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">&nbsp;</FONT></TD><TD STYLE="padding: 0; text-indent: 0"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">&nbsp;</FONT></TD>
    <TD STYLE="border-bottom: Black 1.5pt solid; padding: 0; text-align: left; text-indent: 0"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">&nbsp;</FONT></TD><TD STYLE="border-bottom: Black 1.5pt solid; padding: 0; text-align: right; text-indent: 0"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">87</FONT></TD><TD STYLE="padding: 0; text-align: left; text-indent: 0"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">&nbsp;</FONT></TD><TD STYLE="padding: 0; text-indent: 0"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">&nbsp;</FONT></TD>
    <TD STYLE="border-bottom: Black 1.5pt solid; padding: 0; text-align: left; text-indent: 0"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">&nbsp;</FONT></TD><TD STYLE="border-bottom: Black 1.5pt solid; padding: 0; text-align: right; text-indent: 0"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">-</FONT></TD><TD STYLE="padding: 0; text-align: left; text-indent: 0"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">&nbsp;</FONT></TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,238,255)">
    <TD STYLE="padding: 0; text-indent: 0"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">&nbsp;</FONT></TD><TD STYLE="padding: 0; text-indent: 0"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">&nbsp;</FONT></TD>
    <TD STYLE="text-align: left; padding: 0; text-indent: 0"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">&nbsp;</FONT></TD><TD STYLE="text-align: right; padding: 0; text-indent: 0"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">&nbsp;</FONT></TD><TD STYLE="text-align: left; padding: 0; text-indent: 0"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">&nbsp;</FONT></TD><TD STYLE="padding: 0; text-indent: 0"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">&nbsp;</FONT></TD>
    <TD STYLE="text-align: left; padding: 0; text-indent: 0"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">&nbsp;</FONT></TD><TD STYLE="text-align: right; padding: 0; text-indent: 0"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">&nbsp;</FONT></TD><TD STYLE="text-align: left; padding: 0; text-indent: 0"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">&nbsp;</FONT></TD><TD STYLE="padding: 0; text-indent: 0"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">&nbsp;</FONT></TD>
    <TD STYLE="text-align: left; padding: 0; text-indent: 0"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">&nbsp;</FONT></TD><TD STYLE="text-align: right; padding: 0; text-indent: 0"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">&nbsp;</FONT></TD><TD STYLE="text-align: left; padding: 0; text-indent: 0"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">&nbsp;</FONT></TD><TD STYLE="padding: 0; text-indent: 0"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">&nbsp;</FONT></TD>
    <TD STYLE="text-align: left; padding: 0; text-indent: 0"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">&nbsp;</FONT></TD><TD STYLE="text-align: right; padding: 0; text-indent: 0"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">&nbsp;</FONT></TD><TD STYLE="text-align: left; padding: 0; text-indent: 0"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">&nbsp;</FONT></TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD STYLE="text-align: left; padding: 0; text-indent: 0"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">NET
    LOSS</FONT></TD><TD STYLE="padding: 0; text-indent: 0"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">&nbsp;</FONT></TD>
    <TD STYLE="border-bottom: Black 4pt double; padding: 0; text-align: left; text-indent: 0"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">$</FONT></TD><TD STYLE="border-bottom: Black 4pt double; padding: 0; text-align: right; text-indent: 0"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">(221</FONT></TD><TD STYLE="padding: 0; text-align: left; text-indent: 0"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">)</FONT></TD><TD STYLE="padding: 0; text-indent: 0"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">&nbsp;</FONT></TD>
    <TD STYLE="border-bottom: Black 4pt double; padding: 0; text-align: left; text-indent: 0"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">$</FONT></TD><TD STYLE="border-bottom: Black 4pt double; padding: 0; text-align: right; text-indent: 0"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">(708</FONT></TD><TD STYLE="padding: 0; text-align: left; text-indent: 0"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">)</FONT></TD><TD STYLE="padding: 0; text-indent: 0"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">&nbsp;</FONT></TD>
    <TD STYLE="border-bottom: Black 4pt double; padding: 0; text-align: left; text-indent: 0"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">$</FONT></TD><TD STYLE="border-bottom: Black 4pt double; padding: 0; text-align: right; text-indent: 0"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">(3,634</FONT></TD><TD STYLE="padding: 0; text-align: left; text-indent: 0"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">)</FONT></TD><TD STYLE="padding: 0; text-indent: 0"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">&nbsp;</FONT></TD>
    <TD STYLE="border-bottom: Black 4pt double; padding: 0; text-align: left; text-indent: 0"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">$</FONT></TD><TD STYLE="border-bottom: Black 4pt double; padding: 0; text-align: right; text-indent: 0"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">(2,547</FONT></TD><TD STYLE="padding: 0; text-align: left; text-indent: 0"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">)</FONT></TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,238,255)">
    <TD STYLE="padding: 0; text-indent: 0"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">&nbsp;</FONT></TD><TD STYLE="padding: 0; text-indent: 0"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">&nbsp;</FONT></TD>
    <TD STYLE="text-align: left; padding: 0; text-indent: 0"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">&nbsp;</FONT></TD><TD STYLE="text-align: right; padding: 0; text-indent: 0"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">&nbsp;</FONT></TD><TD STYLE="text-align: left; padding: 0; text-indent: 0"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">&nbsp;</FONT></TD><TD STYLE="padding: 0; text-indent: 0"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">&nbsp;</FONT></TD>
    <TD STYLE="text-align: left; padding: 0; text-indent: 0"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">&nbsp;</FONT></TD><TD STYLE="text-align: right; padding: 0; text-indent: 0"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">&nbsp;</FONT></TD><TD STYLE="text-align: left; padding: 0; text-indent: 0"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">&nbsp;</FONT></TD><TD STYLE="padding: 0; text-indent: 0"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">&nbsp;</FONT></TD>
    <TD STYLE="text-align: left; padding: 0; text-indent: 0"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">&nbsp;</FONT></TD><TD STYLE="text-align: right; padding: 0; text-indent: 0"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">&nbsp;</FONT></TD><TD STYLE="text-align: left; padding: 0; text-indent: 0"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">&nbsp;</FONT></TD><TD STYLE="padding: 0; text-indent: 0"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">&nbsp;</FONT></TD>
    <TD STYLE="text-align: left; padding: 0; text-indent: 0"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">&nbsp;</FONT></TD><TD STYLE="text-align: right; padding: 0; text-indent: 0"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">&nbsp;</FONT></TD><TD STYLE="text-align: left; padding: 0; text-indent: 0"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">&nbsp;</FONT></TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD STYLE="text-align: left; padding: 0 0 0 0.125in; text-indent: 0"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">Deemed
    dividend on Series A Convertible preferred stock</FONT></TD><TD STYLE="padding: 0; text-indent: 0"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">&nbsp;</FONT></TD>
    <TD STYLE="border-bottom: Black 1.5pt solid; padding: 0; text-align: left; text-indent: 0"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">&nbsp;</FONT></TD><TD STYLE="border-bottom: Black 1.5pt solid; padding: 0; text-align: right; text-indent: 0"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">(2</FONT></TD><TD STYLE="padding: 0; text-align: left; text-indent: 0"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">)</FONT></TD><TD STYLE="padding: 0; text-indent: 0"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">&nbsp;</FONT></TD>
    <TD STYLE="border-bottom: Black 1.5pt solid; padding: 0; text-align: left; text-indent: 0"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">&nbsp;</FONT></TD><TD STYLE="border-bottom: Black 1.5pt solid; padding: 0; text-align: right; text-indent: 0"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">-</FONT></TD><TD STYLE="padding: 0; text-align: left; text-indent: 0"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">&nbsp;</FONT></TD><TD STYLE="padding: 0; text-indent: 0"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">&nbsp;</FONT></TD>
    <TD STYLE="border-bottom: Black 1.5pt solid; padding: 0; text-align: left; text-indent: 0"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">&nbsp;</FONT></TD><TD STYLE="border-bottom: Black 1.5pt solid; padding: 0; text-align: right; text-indent: 0"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">(2</FONT></TD><TD STYLE="padding: 0; text-align: left; text-indent: 0"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">)</FONT></TD><TD STYLE="padding: 0; text-indent: 0"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">&nbsp;</FONT></TD>
    <TD STYLE="border-bottom: Black 1.5pt solid; padding: 0; text-align: left; text-indent: 0"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">&nbsp;</FONT></TD><TD STYLE="border-bottom: Black 1.5pt solid; padding: 0; text-align: right; text-indent: 0"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">-</FONT></TD><TD STYLE="padding: 0; text-align: left; text-indent: 0"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">&nbsp;</FONT></TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,238,255)">
    <TD STYLE="padding: 0; text-indent: 0"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">&nbsp;</FONT></TD><TD STYLE="padding: 0; text-indent: 0"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">&nbsp;</FONT></TD>
    <TD STYLE="text-align: left; padding: 0; text-indent: 0"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">&nbsp;</FONT></TD><TD STYLE="text-align: right; padding: 0; text-indent: 0"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">&nbsp;</FONT></TD><TD STYLE="text-align: left; padding: 0; text-indent: 0"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">&nbsp;</FONT></TD><TD STYLE="padding: 0; text-indent: 0"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">&nbsp;</FONT></TD>
    <TD STYLE="text-align: left; padding: 0; text-indent: 0"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">&nbsp;</FONT></TD><TD STYLE="text-align: right; padding: 0; text-indent: 0"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">&nbsp;</FONT></TD><TD STYLE="text-align: left; padding: 0; text-indent: 0"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">&nbsp;</FONT></TD><TD STYLE="padding: 0; text-indent: 0"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">&nbsp;</FONT></TD>
    <TD STYLE="text-align: left; padding: 0; text-indent: 0"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">&nbsp;</FONT></TD><TD STYLE="text-align: right; padding: 0; text-indent: 0"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">&nbsp;</FONT></TD><TD STYLE="text-align: left; padding: 0; text-indent: 0"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">&nbsp;</FONT></TD><TD STYLE="padding: 0; text-indent: 0"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">&nbsp;</FONT></TD>
    <TD STYLE="text-align: left; padding: 0; text-indent: 0"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">&nbsp;</FONT></TD><TD STYLE="text-align: right; padding: 0; text-indent: 0"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">&nbsp;</FONT></TD><TD STYLE="text-align: left; padding: 0; text-indent: 0"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">&nbsp;</FONT></TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD STYLE="text-align: left; padding: 0 0 0 0.125in; text-indent: -0.125in"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">NET
    LOSS ATTRIBUTABLE TO DIGERATI&rsquo;S COMMON SHAREHOLDERS</FONT></TD><TD STYLE="padding: 0; text-indent: 0"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">&nbsp;</FONT></TD>
    <TD STYLE="border-bottom: Black 4pt double; padding: 0; text-align: left; text-indent: 0"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">$</FONT></TD><TD STYLE="border-bottom: Black 4pt double; padding: 0; text-align: right; text-indent: 0"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">(223</FONT></TD><TD STYLE="padding: 0; text-align: left; text-indent: 0"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">)</FONT></TD><TD STYLE="padding: 0; text-indent: 0"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">&nbsp;</FONT></TD>
    <TD STYLE="border-bottom: Black 4pt double; padding: 0; text-align: left; text-indent: 0"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">$</FONT></TD><TD STYLE="border-bottom: Black 4pt double; padding: 0; text-align: right; text-indent: 0"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">(708</FONT></TD><TD STYLE="padding: 0; text-align: left; text-indent: 0"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">)</FONT></TD><TD STYLE="padding: 0; text-indent: 0"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">&nbsp;</FONT></TD>
    <TD STYLE="border-bottom: Black 4pt double; padding: 0; text-align: left; text-indent: 0"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">$</FONT></TD><TD STYLE="border-bottom: Black 4pt double; padding: 0; text-align: right; text-indent: 0"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">(3,636</FONT></TD><TD STYLE="padding: 0; text-align: left; text-indent: 0"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">)</FONT></TD><TD STYLE="padding: 0; text-indent: 0"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">&nbsp;</FONT></TD>
    <TD STYLE="border-bottom: Black 4pt double; padding: 0; text-align: left; text-indent: 0"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">$</FONT></TD><TD STYLE="border-bottom: Black 4pt double; padding: 0; text-align: right; text-indent: 0"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">(2,547</FONT></TD><TD STYLE="padding: 0; text-align: left; text-indent: 0"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">)</FONT></TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,238,255)">
    <TD STYLE="padding: 0; text-indent: 0"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">&nbsp;</FONT></TD><TD STYLE="padding: 0; text-indent: 0"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">&nbsp;</FONT></TD>
    <TD STYLE="text-align: left; padding: 0; text-indent: 0"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">&nbsp;</FONT></TD><TD STYLE="text-align: right; padding: 0; text-indent: 0"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">&nbsp;</FONT></TD><TD STYLE="text-align: left; padding: 0; text-indent: 0"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">&nbsp;</FONT></TD><TD STYLE="padding: 0; text-indent: 0"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">&nbsp;</FONT></TD>
    <TD STYLE="text-align: left; padding: 0; text-indent: 0"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">&nbsp;</FONT></TD><TD STYLE="text-align: right; padding: 0; text-indent: 0"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">&nbsp;</FONT></TD><TD STYLE="text-align: left; padding: 0; text-indent: 0"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">&nbsp;</FONT></TD><TD STYLE="padding: 0; text-indent: 0"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">&nbsp;</FONT></TD>
    <TD STYLE="text-align: left; padding: 0; text-indent: 0"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">&nbsp;</FONT></TD><TD STYLE="text-align: right; padding: 0; text-indent: 0"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">&nbsp;</FONT></TD><TD STYLE="text-align: left; padding: 0; text-indent: 0"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">&nbsp;</FONT></TD><TD STYLE="padding: 0; text-indent: 0"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">&nbsp;</FONT></TD>
    <TD STYLE="text-align: left; padding: 0; text-indent: 0"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">&nbsp;</FONT></TD><TD STYLE="text-align: right; padding: 0; text-indent: 0"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">&nbsp;</FONT></TD><TD STYLE="text-align: left; padding: 0; text-indent: 0"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">&nbsp;</FONT></TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD STYLE="text-align: left; padding: 0; text-indent: 0"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">INCOME
    (LOSS) PER COMMON SHARE - BASIC</FONT></TD><TD STYLE="padding: 0; text-indent: 0"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">&nbsp;</FONT></TD>
    <TD STYLE="border-bottom: Black 4pt double; padding: 0; text-align: left; text-indent: 0"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">$</FONT></TD><TD STYLE="border-bottom: Black 4pt double; padding: 0; text-align: right; text-indent: 0"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">(0.01</FONT></TD><TD STYLE="padding: 0; text-align: left; text-indent: 0"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">)</FONT></TD><TD STYLE="padding: 0; text-indent: 0"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">&nbsp;</FONT></TD>
    <TD STYLE="border-bottom: Black 4pt double; padding: 0; text-align: left; text-indent: 0"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">$</FONT></TD><TD STYLE="border-bottom: Black 4pt double; padding: 0; text-align: right; text-indent: 0"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">(0.06</FONT></TD><TD STYLE="padding: 0; text-align: left; text-indent: 0"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">)</FONT></TD><TD STYLE="padding: 0; text-indent: 0"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">&nbsp;</FONT></TD>
    <TD STYLE="border-bottom: Black 4pt double; padding: 0; text-align: left; text-indent: 0"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">$</FONT></TD><TD STYLE="border-bottom: Black 4pt double; padding: 0; text-align: right; text-indent: 0"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">(0.24</FONT></TD><TD STYLE="padding: 0; text-align: left; text-indent: 0"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">)</FONT></TD><TD STYLE="padding: 0; text-indent: 0"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">&nbsp;</FONT></TD>
    <TD STYLE="border-bottom: Black 4pt double; padding: 0; text-align: left; text-indent: 0"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">$</FONT></TD><TD STYLE="border-bottom: Black 4pt double; padding: 0; text-align: right; text-indent: 0"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">(0.26</FONT></TD><TD STYLE="padding: 0; text-align: left; text-indent: 0"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">)</FONT></TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,238,255)">
    <TD STYLE="padding: 0; text-indent: 0"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">&nbsp;</FONT></TD><TD STYLE="padding: 0; text-indent: 0"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">&nbsp;</FONT></TD>
    <TD STYLE="text-align: left; padding: 0; text-indent: 0"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">&nbsp;</FONT></TD><TD STYLE="text-align: right; padding: 0; text-indent: 0"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">&nbsp;</FONT></TD><TD STYLE="text-align: left; padding: 0; text-indent: 0"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">&nbsp;</FONT></TD><TD STYLE="padding: 0; text-indent: 0"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">&nbsp;</FONT></TD>
    <TD STYLE="text-align: left; padding: 0; text-indent: 0"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">&nbsp;</FONT></TD><TD STYLE="text-align: right; padding: 0; text-indent: 0"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">&nbsp;</FONT></TD><TD STYLE="text-align: left; padding: 0; text-indent: 0"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">&nbsp;</FONT></TD><TD STYLE="padding: 0; text-indent: 0"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">&nbsp;</FONT></TD>
    <TD STYLE="text-align: left; padding: 0; text-indent: 0"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">&nbsp;</FONT></TD><TD STYLE="text-align: right; padding: 0; text-indent: 0"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">&nbsp;</FONT></TD><TD STYLE="text-align: left; padding: 0; text-indent: 0"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">&nbsp;</FONT></TD><TD STYLE="padding: 0; text-indent: 0"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">&nbsp;</FONT></TD>
    <TD STYLE="text-align: left; padding: 0; text-indent: 0"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">&nbsp;</FONT></TD><TD STYLE="text-align: right; padding: 0; text-indent: 0"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">&nbsp;</FONT></TD><TD STYLE="text-align: left; padding: 0; text-indent: 0"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">&nbsp;</FONT></TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD STYLE="text-align: left; padding: 0; text-indent: 0"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">INCOME
    (LOSS) PER COMMON SHARE - DILUTED</FONT></TD><TD STYLE="padding: 0; text-indent: 0"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">&nbsp;</FONT></TD>
    <TD STYLE="border-bottom: Black 4pt double; padding: 0; text-align: left; text-indent: 0"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">$</FONT></TD><TD STYLE="border-bottom: Black 4pt double; padding: 0; text-align: right; text-indent: 0"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">(0.01</FONT></TD><TD STYLE="padding: 0; text-align: left; text-indent: 0"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">)</FONT></TD><TD STYLE="padding: 0; text-indent: 0"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">&nbsp;</FONT></TD>
    <TD STYLE="border-bottom: Black 4pt double; padding: 0; text-align: left; text-indent: 0"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">$</FONT></TD><TD STYLE="border-bottom: Black 4pt double; padding: 0; text-align: right; text-indent: 0"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">(0.06</FONT></TD><TD STYLE="padding: 0; text-align: left; text-indent: 0"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">)</FONT></TD><TD STYLE="padding: 0; text-indent: 0"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">&nbsp;</FONT></TD>
    <TD STYLE="border-bottom: Black 4pt double; padding: 0; text-align: left; text-indent: 0"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">$</FONT></TD><TD STYLE="border-bottom: Black 4pt double; padding: 0; text-align: right; text-indent: 0"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">(0.24</FONT></TD><TD STYLE="padding: 0; text-align: left; text-indent: 0"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">)</FONT></TD><TD STYLE="padding: 0; text-indent: 0"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">&nbsp;</FONT></TD>
    <TD STYLE="border-bottom: Black 4pt double; padding: 0; text-align: left; text-indent: 0"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">$</FONT></TD><TD STYLE="border-bottom: Black 4pt double; padding: 0; text-align: right; text-indent: 0"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">(0.26</FONT></TD><TD STYLE="padding: 0; text-align: left; text-indent: 0"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">)</FONT></TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,238,255)">
    <TD STYLE="padding: 0; text-indent: 0"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">&nbsp;</FONT></TD><TD STYLE="padding: 0; text-indent: 0"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">&nbsp;</FONT></TD>
    <TD STYLE="text-align: left; padding: 0; text-indent: 0"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">&nbsp;</FONT></TD><TD STYLE="text-align: right; padding: 0; text-indent: 0"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">&nbsp;</FONT></TD><TD STYLE="text-align: left; padding: 0; text-indent: 0"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">&nbsp;</FONT></TD><TD STYLE="padding: 0; text-indent: 0"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">&nbsp;</FONT></TD>
    <TD STYLE="text-align: left; padding: 0; text-indent: 0"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">&nbsp;</FONT></TD><TD STYLE="text-align: right; padding: 0; text-indent: 0"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">&nbsp;</FONT></TD><TD STYLE="text-align: left; padding: 0; text-indent: 0"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">&nbsp;</FONT></TD><TD STYLE="padding: 0; text-indent: 0"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">&nbsp;</FONT></TD>
    <TD STYLE="text-align: left; padding: 0; text-indent: 0"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">&nbsp;</FONT></TD><TD STYLE="text-align: right; padding: 0; text-indent: 0"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">&nbsp;</FONT></TD><TD STYLE="text-align: left; padding: 0; text-indent: 0"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">&nbsp;</FONT></TD><TD STYLE="padding: 0; text-indent: 0"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">&nbsp;</FONT></TD>
    <TD STYLE="text-align: left; padding: 0; text-indent: 0"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">&nbsp;</FONT></TD><TD STYLE="text-align: right; padding: 0; text-indent: 0"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">&nbsp;</FONT></TD><TD STYLE="text-align: left; padding: 0; text-indent: 0"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">&nbsp;</FONT></TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD STYLE="padding: 0 0 0 0.125in; text-indent: -0.125in"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">WEIGHTED
    AVERAGE COMMON SHARES OUTSTANDING - BASIC</FONT></TD><TD STYLE="padding: 0; text-indent: 0"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">&nbsp;</FONT></TD>
    <TD STYLE="border-bottom: Black 4pt double; padding: 0; text-align: left; text-indent: 0"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">&nbsp;</FONT></TD><TD STYLE="border-bottom: Black 4pt double; padding: 0; text-align: right; text-indent: 0"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">18,184,442</FONT></TD><TD STYLE="padding: 0; text-align: left; text-indent: 0"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">&nbsp;</FONT></TD><TD STYLE="padding: 0; text-indent: 0"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">&nbsp;</FONT></TD>
    <TD STYLE="border-bottom: Black 4pt double; padding: 0; text-align: left; text-indent: 0"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">&nbsp;</FONT></TD><TD STYLE="border-bottom: Black 4pt double; padding: 0; text-align: right; text-indent: 0"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">11,063,326</FONT></TD><TD STYLE="padding: 0; text-align: left; text-indent: 0"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">&nbsp;</FONT></TD><TD STYLE="padding: 0; text-indent: 0"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">&nbsp;</FONT></TD>
    <TD STYLE="border-bottom: Black 4pt double; padding: 0; text-align: left; text-indent: 0"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">&nbsp;</FONT></TD><TD STYLE="border-bottom: Black 4pt double; padding: 0; text-align: right; text-indent: 0"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">15,163,082</FONT></TD><TD STYLE="padding: 0; text-align: left; text-indent: 0"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">&nbsp;</FONT></TD><TD STYLE="padding: 0; text-indent: 0"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">&nbsp;</FONT></TD>
    <TD STYLE="border-bottom: Black 4pt double; padding: 0; text-align: left; text-indent: 0"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">&nbsp;</FONT></TD><TD STYLE="border-bottom: Black 4pt double; padding: 0; text-align: right; text-indent: 0"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">9,903,152</FONT></TD><TD STYLE="padding: 0; text-align: left; text-indent: 0"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">&nbsp;</FONT></TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,238,255)">
    <TD STYLE="padding: 0; text-indent: 0"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">&nbsp;</FONT></TD><TD STYLE="padding: 0; text-indent: 0"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">&nbsp;</FONT></TD>
    <TD STYLE="text-align: left; padding: 0; text-indent: 0"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">&nbsp;</FONT></TD><TD STYLE="text-align: right; padding: 0; text-indent: 0"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">&nbsp;</FONT></TD><TD STYLE="text-align: left; padding: 0; text-indent: 0"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">&nbsp;</FONT></TD><TD STYLE="padding: 0; text-indent: 0"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">&nbsp;</FONT></TD>
    <TD STYLE="text-align: left; padding: 0; text-indent: 0"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">&nbsp;</FONT></TD><TD STYLE="text-align: right; padding: 0; text-indent: 0"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">&nbsp;</FONT></TD><TD STYLE="text-align: left; padding: 0; text-indent: 0"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">&nbsp;</FONT></TD><TD STYLE="padding: 0; text-indent: 0"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">&nbsp;</FONT></TD>
    <TD STYLE="text-align: left; padding: 0; text-indent: 0"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">&nbsp;</FONT></TD><TD STYLE="text-align: right; padding: 0; text-indent: 0"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">&nbsp;</FONT></TD><TD STYLE="text-align: left; padding: 0; text-indent: 0"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">&nbsp;</FONT></TD><TD STYLE="padding: 0; text-indent: 0"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">&nbsp;</FONT></TD>
    <TD STYLE="text-align: left; padding: 0; text-indent: 0"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">&nbsp;</FONT></TD><TD STYLE="text-align: right; padding: 0; text-indent: 0"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">&nbsp;</FONT></TD><TD STYLE="text-align: left; padding: 0; text-indent: 0"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">&nbsp;</FONT></TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD STYLE="padding: 0 0 0 0.125in; text-indent: -0.125in"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">WEIGHTED
    AVERAGE COMMON SHARES OUTSTANDING - DILUTED</FONT></TD><TD STYLE="padding: 0; text-indent: 0"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">&nbsp;</FONT></TD>
    <TD STYLE="border-bottom: Black 4pt double; padding: 0; text-align: left; text-indent: 0"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">&nbsp;</FONT></TD><TD STYLE="border-bottom: Black 4pt double; padding: 0; text-align: right; text-indent: 0"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">18,184,442</FONT></TD><TD STYLE="padding: 0; text-align: left; text-indent: 0"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">&nbsp;</FONT></TD><TD STYLE="padding: 0; text-indent: 0"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">&nbsp;</FONT></TD>
    <TD STYLE="border-bottom: Black 4pt double; padding: 0; text-align: left; text-indent: 0"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">&nbsp;</FONT></TD><TD STYLE="border-bottom: Black 4pt double; padding: 0; text-align: right; text-indent: 0"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">11,063,326</FONT></TD><TD STYLE="padding: 0; text-align: left; text-indent: 0"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">&nbsp;</FONT></TD><TD STYLE="padding: 0; text-indent: 0"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">&nbsp;</FONT></TD>
    <TD STYLE="border-bottom: Black 4pt double; padding: 0; text-align: left; text-indent: 0"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">&nbsp;</FONT></TD><TD STYLE="border-bottom: Black 4pt double; padding: 0; text-align: right; text-indent: 0"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">15,163,082</FONT></TD><TD STYLE="padding: 0; text-align: left; text-indent: 0"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">&nbsp;</FONT></TD><TD STYLE="padding: 0; text-indent: 0"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">&nbsp;</FONT></TD>
    <TD STYLE="border-bottom: Black 4pt double; padding: 0; text-align: left; text-indent: 0"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">&nbsp;</FONT></TD><TD STYLE="border-bottom: Black 4pt double; padding: 0; text-align: right; text-indent: 0"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">9,903,152</FONT></TD><TD STYLE="padding: 0; text-align: left; text-indent: 0"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">&nbsp;</FONT></TD></TR>
</TABLE>

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

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">See
accompanying notes to unaudited consolidated financial statements</FONT></P>

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

</DIV>

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

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

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt"><B><A NAME="a_003"></A>RISK
FACTORS</B></FONT></P>

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

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt"><I>This
investment has a high degree of risk. Before you invest you should carefully consider the risks and uncertainties described below
and the other information in this prospectus. If any of the following risks actually occur, our business, operating results and
financial condition could be harmed and the value of our stock could go down. This means you could lose all or a part of your
investment.</I></FONT></P>

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

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt"><B>Special
Information Regarding Forward-Looking Statements</B></FONT></P>

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

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">Some
of the statements in this prospectus are &ldquo;forward-looking statements.&rdquo; These forward-looking statements involve certain
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, performance or achievements expressed or implied by these forward-looking statements.
These factors include, among others, the factors set forth herein under &ldquo;Risk Factors.&rdquo; The words &ldquo;believe,&rdquo;
&ldquo;expect,&rdquo; &ldquo;anticipate,&rdquo; &ldquo;intend,&rdquo; &ldquo;plan,&rdquo; and similar expressions identify forward-looking
statements. We caution you not to place undue reliance on these forward-looking statements. We undertake no obligation to update
and revise any forward-looking statements or to publicly announce the result of any revisions to any of the forward-looking statements
in this document to reflect any future or developments. However, the Private Securities Litigation Reform Act of 1995 is not available
to us as a non-reporting issuer. Further, Section 27A(b)(2)(D) of the Securities Act and Section 21E(b)(2)(D) of the Securities
Exchange Act expressly state that the safe harbor for forward looking statements does not apply to statements made in connection
with an initial public offering.</FONT></P>

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

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt"><B>Risks
Related to Our Business</B></FONT></P>

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

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt"><B>WE
HAVE A HISTORY OF OPERATING LOSSES, ANTICIPATE FUTURE LOSSES AND MAY NEVER BE PROFITABLE.</B></FONT></P>

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

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">We
have experienced significant operating losses in our Company&rsquo;s recent history. Our ability to achieve annual profitability
in the future depends on a number of factors, including our ability to attract and service customers on a profitable basis and
the growth of the video surveillance industry. If we are unable to achieve annual profitability, we may not be able to execute
our business plan, our prospects may be harmed, and our stock price could be materially and adversely affected.</FONT></P>

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

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt"><B>THE
MARKETS IN WHICH WE COMPETE ARE HIGHLY COMPETITIVE.</B></FONT></P>

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

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">The
cloud services and internet-based telephony products and services markets in which we primarily compete are highly competitive
and are influenced by competitive factors including:</FONT></P>

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

<TABLE CELLPADDING="0" CELLSPACING="0" STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0; margin-bottom: 0; width: 100%">
<TR STYLE="vertical-align: top">
    <TD STYLE="width: 0.25in">&nbsp;</TD>
    <TD STYLE="width: 0.25in; text-align: justify"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#9679;</FONT></TD>
    <TD STYLE="text-align: justify"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">our ability to rapidly
    develop and introduce new high performance integrated solutions;</FONT></TD></TR>
<TR STYLE="vertical-align: top">
    <TD>&nbsp;</TD>
    <TD STYLE="text-align: justify"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">&nbsp;</FONT></TD>
    <TD STYLE="text-align: justify"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">&nbsp;</FONT></TD></TR>
<TR STYLE="vertical-align: top">
    <TD>&nbsp;</TD>
    <TD STYLE="text-align: justify"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#9679;</FONT></TD>
    <TD STYLE="text-align: justify"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">the price and total
    cost of ownership and return on investment associated with the solutions;</FONT></TD></TR>
<TR STYLE="vertical-align: top">
    <TD>&nbsp;</TD>
    <TD STYLE="text-align: justify"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">&nbsp;</FONT></TD>
    <TD STYLE="text-align: justify"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">&nbsp;</FONT></TD></TR>
<TR STYLE="vertical-align: top">
    <TD>&nbsp;</TD>
    <TD STYLE="text-align: justify"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#9679;</FONT></TD>
    <TD STYLE="text-align: justify"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">the simplicity of
    deployment and use of the solutions;</FONT></TD></TR>
<TR STYLE="vertical-align: top">
    <TD>&nbsp;</TD>
    <TD STYLE="text-align: justify"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">&nbsp;</FONT></TD>
    <TD STYLE="text-align: justify"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">&nbsp;</FONT></TD></TR>
<TR STYLE="vertical-align: top">
    <TD>&nbsp;</TD>
    <TD STYLE="text-align: justify"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#9679;</FONT></TD>
    <TD STYLE="text-align: justify"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">the reliability
    and scalability of the solutions;</FONT></TD></TR>
<TR STYLE="vertical-align: top">
    <TD>&nbsp;</TD>
    <TD STYLE="text-align: justify"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">&nbsp;</FONT></TD>
    <TD STYLE="text-align: justify"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">&nbsp;</FONT></TD></TR>
<TR STYLE="vertical-align: top">
    <TD>&nbsp;</TD>
    <TD STYLE="text-align: justify"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#9679;</FONT></TD>
    <TD STYLE="text-align: justify"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">the market awareness
    of a particular brand;</FONT></TD></TR>
<TR STYLE="vertical-align: top">
    <TD>&nbsp;</TD>
    <TD STYLE="text-align: justify"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">&nbsp;</FONT></TD>
    <TD STYLE="text-align: justify"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">&nbsp;</FONT></TD></TR>
<TR STYLE="vertical-align: top">
    <TD>&nbsp;</TD>
    <TD STYLE="text-align: justify"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#9679;</FONT></TD>
    <TD STYLE="text-align: justify"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">our ability to provide
    secure access to wireless networks;</FONT></TD></TR>
<TR STYLE="vertical-align: top">
    <TD>&nbsp;</TD>
    <TD STYLE="text-align: justify"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">&nbsp;</FONT></TD>
    <TD STYLE="text-align: justify"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">&nbsp;</FONT></TD></TR>
<TR STYLE="vertical-align: top">
    <TD>&nbsp;</TD>
    <TD STYLE="text-align: justify"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#9679;</FONT></TD>
    <TD STYLE="text-align: justify"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">our ability to offer
    a suite of products and solutions;</FONT></TD></TR>
<TR STYLE="vertical-align: top">
    <TD>&nbsp;</TD>
    <TD STYLE="text-align: justify"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">&nbsp;</FONT></TD>
    <TD STYLE="text-align: justify"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">&nbsp;</FONT></TD></TR>
<TR STYLE="vertical-align: top">
    <TD>&nbsp;</TD>
    <TD STYLE="text-align: justify"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#9679;</FONT></TD>
    <TD STYLE="text-align: justify"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">our ability to allow
    centralized management of the solutions; and</FONT></TD></TR>
<TR STYLE="vertical-align: top">
    <TD>&nbsp;</TD>
    <TD STYLE="text-align: justify"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">&nbsp;</FONT></TD>
    <TD STYLE="text-align: justify"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">&nbsp;</FONT></TD></TR>
<TR STYLE="vertical-align: top">
    <TD>&nbsp;</TD>
    <TD STYLE="text-align: justify"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#9679;</FONT></TD>
    <TD STYLE="text-align: justify"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">our ability to provide
    quality product support.</FONT></TD></TR>
</TABLE>
<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">&nbsp;</FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">New
entrants seeking to gain market share by introducing new technology and new products may also make it more difficult for us to
sell our products and could create increased pricing pressure.</FONT></P>

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

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">We
expect competition to continuously intensify as other established and new companies introduce new products in the same markets
that we serve or intend to enter, as these markets consolidate. Our business will suffer if we do not maintain our competitiveness.</FONT></P>

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

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">A
number of our current or potential competitors have longer operating histories, greater brand recognition, larger customer bases
and significantly greater resources than we do.</FONT></P>

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

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

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

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">As
we move into new markets for different types of products, our brand may not be as well-known as incumbents in those markets. Potential
customers may prefer to purchase from their existing suppliers or well-known brands rather than a new supplier, regardless of
product performance or features. We expect increased competition from other established and emerging companies if our markets
continue to develop and expand. As we enter new markets, we expect to face competition from incumbent and new market participants
and there is no assurance that our entry into new markets will be successful.</FONT></P>

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

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt"><B>MANY
OF THESE COMPANIES HAVE SIGNIFICANTLY GREATER FINANCIAL, TECHNICAL, MARKETING, DISTRIBUTION AND OTHER RESOURCES THAN WE DO AND
ARE BETTER POSITIONED TO ACQUIRE AND OFFER COMPLEMENTARY PRODUCTS AND TECHNOLOGIES.</B></FONT></P>

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

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">Industry
consolidation, acquisitions and other arrangements among competitors may adversely affect our competitiveness because it may be
more difficult to compete with entities that have access to their combined resources. As a result of such consolidation, acquisition
or other arrangements, our current and potential competitors might be able to adapt more quickly to new technologies and consumer
preference, devote greater resources to the marketing and promotion of their products, initiate or withstand price competition,
and take advantage of acquisitions or other opportunities more readily and develop and expand their products more quickly than
we do. These combinations may also affect customers&rsquo; perceptions regarding the viability of companies our size and, consequently,
affect their willingness to purchase our products.</FONT></P>

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

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt"><B>THE
COMPLEXITY OF OUR PRODUCTS COULD RESULT IN UNFORESEEN DELAYS OR EXPENSES CAUSED BY UNDETECTED DEFECTS OR BUGS.</B></FONT></P>

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

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">Our
products may contain defects and bugs when they are introduced, or as new versions are released. We have focused, and intend to
focus in the future, on getting our new products to market quickly. Due to our rapid product introductions, defects and bugs that
may be contained in our products may not yet have manifested. We have in the past experienced, and may in the future experience,
defects and bugs. If any of our products contain material defects or bugs, or has reliability, quality or compatibility problems,
we may not be able to promptly or successfully correct these problems. The existence of defects or bugs in our products may damage
our reputation and disrupt our sales. If any of these problems are not found until after we have commenced commercial production
and distribution of a new product, we may be required to incur additional development costs, repair or replacement costs, and
other costs relating to regulatory proceedings, product recalls and litigation, which could harm our reputation and operating
results. Undetected defects or bugs may lead to negative online Internet reviews of our products, which are increasingly becoming
a significant factor in the success of our new product launches, especially for our consumer products. If we are unable to quickly
respond to negative reviews, including end user reviews posted on various prominent online retailers, our ability to sell these
products will be harmed. Moreover, we may offer stock rotation rights to our distributors. If we experience greater returns from
retailers or end customers, or greater warranty claims, in excess of our reserves, our business, revenue and operating results
could be harmed.</FONT></P>

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

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt"><B>SECURITY
VULNERABILITIES IN OUR PRODUCTS, SERVICES AND SYSTEMS COULD LEAD TO REDUCED REVENUES AND CLAIMS AGAINST US.</B></FONT></P>

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

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">The
quality and performance of some of our products and services may depend upon their ability to withstand cyber attacks. Third parties
may develop and deploy viruses, worms and other malicious software programs, some of which may be designed to attack our products,
systems, or networks. Some of our products and services also involve the storage and transmission of users&rsquo; and customers&rsquo;
proprietary information which may be the target of cyber attacks. Hardware and software that we produce or procure from third
parties also may contain defects in manufacture or design, including bugs and other problems, which could compromise their ability
to withstand cyber attacks.</FONT></P>

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

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">The
costs to us to eliminate or alleviate security vulnerabilities can be significant, and our efforts to address these problems may
not be successful and could result in interruptions, delays, cessation of service and loss of existing or potential customers
that may impede our sales, manufacturing, distribution or other critical functions, as well as potential liability to the company.
The risk that these types of events could seriously harm our business is likely to increase as we expand the web-based products
and services that we offer.</FONT></P>

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

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

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

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt"><B>WE
HAVE AN ACCUMULATED DEFICIT AND WE ANTICIPATE CONTINUING LOSSES THAT WILL RESULT IN SIGNIFICANT LIQUIDITY AND CASH FLOW PROBLEMS
AND WE MAY BE FORCED TO CEASE OPERATIONS.</B></FONT></P>

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

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt"></FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify">We have incurred losses since our inception
and have an accumulated deficit of $84,434,000 as of April 30, 2019. Our operations have been financed primarily through the issuance
of equity and debt. For the year ended July 31, 2018, net loss and cash used in operations were $3,220,000 and $985,000, respectively.
We are constantly evaluating our cash needs and our burn rate, in order to make appropriate adjustments in operating expenses.
We anticipate that our cash used in operations will continue to increase as a result of becoming a public company due to increased
professional fees. Our continued existence is dependent upon, among other things, our ability to raise capital and to market and
sell our products and services successfully. While we are attempting to increase sales, growth has not been significant enough
to support daily operations, there is no assurance that we will continue as a going concern. If we are unable to continue as a
going concern and were forced to cease operations, it is likely that our stockholders would lose their entire investment in our
company.</P>



<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><FONT STYLE="font: 10pt Times New Roman, Times, Serif"></FONT></P>

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

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt"><B>OUR
AUDITORS HAVE EXPRESSED DOUBTS ABOUT OUR ABILITY TO CONTINUE AS A GOING CONCERN. IF WE WERE FORCED TO CEASE OUR BUSINESS AND OPERATIONS,
YOU WOULD LOSE YOUR INVESTMENT IN OUR COMPANY.</B></FONT></P>

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

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">Our
revenues are not sufficient to enable us to meet our operating expenses and otherwise implement our business plan. The report
of our independent registered public accounting firm on our financial statements for the year ended July 31, 2018 contains an
explanatory paragraph raising doubt as to our ability to continue as a going concern as a result of our losses from operations,
stockholders&rsquo; deficit and negative working capital. Our consolidated financial statements, which appear elsewhere in this
Form 10-K, are prepared assuming we will continue as a going concern. The financial statements do not include any adjustments
to reflect future adverse effects on the recoverability and classification of assets or amounts and classification of liabilities
that may result if we are not successful.</FONT></P>

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

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt"><B>WE
WILL NEED ADDITIONAL FINANCING WHICH WE MAY NOT BE ABLE TO OBTAIN ON ACCEPTABLE TERMS IF AT ALL. DUE TO THE SIZE OF OUR COMPANY
AND THE LACK OF A PUBLIC MARKET FOR OUR COMMON STOCK IT IS LIKELY THAT THE TERMS OF ANY FINANCING WE MAY BE ABLE TO SECURE WILL
BE DETRIMENTAL TO OUR CURRENT STOCKHOLDERS.</B></FONT></P>

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

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">Our
current operations are not sufficient to fund our operating expenses and we will need to raise additional working capital to continue
our current business and to provide funds for marketing to support our efforts to increase our revenues. Generally, small businesses
such as ours which lack a public market for their securities, face significant difficulties in their efforts to raise equity capital.
While to date we have relied upon the relationships of our executive officers in our capital raising efforts, there are no assurances
that we will be successful utilizing these existing sources. In such an event, we could be required to engage a broker-dealer
to assist us in our capital raising efforts. Even if we are successful in finding a broker-dealer willing to assist us in raising
capital, there are no assurances that the terms of financings offered by a broker-dealer will be as favorable as those we have
offered our investors to date. While we do not have any commitments to provide additional capital, if we are able to raise capital,
the structure of that capital raise could impact our company and our stockholders in a variety of ways. If we raise additional
capital through the issuance of debt, this will result in interest expense. If we raise additional funds through the issuance
of equity or convertible debt securities, the percentage ownership of our company held by existing stockholders will be reduced
and those stockholders may experience significant dilution. In addition, new securities may contain certain rights, preferences
or privileges that are senior to those of our common stock. We cannot assure you that we will be able to raise the working capital
as needed in the future on terms acceptable to us, if at all. If we do not raise funds as needed, we may not be able to continue
our operations and it is likely that you would lose your entire investment in our company.</FONT></P>

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

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt"><B>WE
MAY NEED TO RAISE CAPITAL OVER THE NEXT TWELVE MONTHS TO FUND OUR OPERATIONS.</B></FONT></P>

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

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">We
do not have any additional commitments to provide capital and we cannot assure you that funds are available to us upon terms acceptable
to us, if at all. If we do not raise funds as needed, our ability to provide for current working capital needs and satisfy our
obligations is in jeopardy. In this event, you could lose all of your investment in our company.</FONT></P>

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

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

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

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt"><B>WE
DEPEND ON OUR KEY MANAGEMENT PERSONNEL AND THE LOSS OF THEIR SERVICES COULD ADVERSELY AFFECT OUR BUSINESS.</B></FONT></P>

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

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">We
place substantial reliance upon the efforts and abilities of our executive officers Arthur L. Smith, our President and Chief Executive
Officer, and Antonio Estrada Jr., our Chief Financial Officer. The loss of the services of any of our executive officers could
have a material adverse effect on our business, operations, revenues or prospects. We do not maintain key man life insurance on
the lives of these individuals.</FONT></P>

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

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt"><B>MANAGEMENT
EXERCISES SIGNIFICANT CONTROL OVER MATTERS REQUIRING SHAREHOLDER APPROVAL WHICH MAY RESULT IN THE DELAY OR PREVENTION OF A CHANGE
IN OUR CONTROL.</B></FONT></P>

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

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">Arthur
L. Smith, our President and Chief Executive Officer, Antonio Estrada Jr., our Chief Financial Officer and Craig K. Clement, Chairman
of the Board, have voting power equal to approximately 20% of our voting securities. As a result, management through such stock
ownership rights has the ability to exercise significant control over all matters requiring shareholder approval, including the
election of directors and approval of significant corporate transactions. This concentration of ownership in management may also
have the effect of delaying or preventing a change in control of us that may be otherwise viewed as beneficial by shareholders
other than management.</FONT></P>

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

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt"><B>OUR
REVENUES, OPERATING MARGINS, CASH FLOWS AND OTHER OPERATING RESULTS COULD VARY SIGNIFICANTLY FROM PERIOD TO PERIOD AS A RESULT
OF VARIOUS FACTORS, MANY OF WHICH ARE OUTSIDE OF OUR CONTROL.</B></FONT></P>

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

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">Our
revenues, operating margins, cash flows and other operating results could vary significantly from period to period as a result
of various factors, many of which are outside of our control. Our customers also have the choice of entering into agreements for
term licenses and agreements for our cloud services.</FONT></P>

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

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt"><B>WE
EMPLOY MULTIPLE AND EVOLVING PRICING MODELS FOR OUR OFFERINGS.</B></FONT></P>

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

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">We
offer a subscription model for cloud services, which each have different payment schedules, and depending on the mix of such licenses
and cloud subscriptions, our revenues or deferred revenues could be adversely affected.</FONT></P>

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

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt"><B>IT
MAY BE DIFFICULT TO EVALUATE OUR FUTURE PROPSOECTS AND MAY INCREASE RISK THAT WE WILL NOT BE SUCCESSFUL.</B></FONT></P>

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

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">Some
of the risks include:</FONT></P>

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

<TABLE CELLPADDING="0" CELLSPACING="0" WIDTH="100%" STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt"><TR STYLE="vertical-align: top">
<TD STYLE="width: 0.25in"></TD><TD STYLE="width: 0.25in"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#9679;</FONT></TD><TD STYLE="text-align: justify"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">respond
                                         timely and effectively to competitor offerings and pricing models;</FONT></TD></TR>                                                                                                                                                                                                                                   <TR STYLE="vertical-align: top">
<TD><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">&nbsp;</FONT></TD><TD><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">&nbsp;</FONT></TD><TD STYLE="text-align: justify"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">&nbsp;</FONT></TD></TR>
</TABLE>

<TABLE CELLPADDING="0" CELLSPACING="0" WIDTH="100%" STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt"><TR STYLE="vertical-align: top">
<TD STYLE="width: 0.25in"></TD><TD STYLE="width: 0.25in"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#9679;</FONT></TD><TD STYLE="text-align: justify"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">appropriately
                                         price our offerings;</FONT></TD></TR>                                                                                                                                                                                           <TR STYLE="vertical-align: top">
<TD><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">&nbsp;</FONT></TD><TD><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">&nbsp;</FONT></TD><TD STYLE="text-align: justify"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">&nbsp;</FONT></TD></TR>
</TABLE>

<TABLE CELLPADDING="0" CELLSPACING="0" WIDTH="100%" STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt"><TR STYLE="vertical-align: top">
<TD STYLE="width: 0.25in"></TD><TD STYLE="width: 0.25in"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#9679;</FONT></TD><TD STYLE="text-align: justify"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">manage
                                         the costs of providing our cloud services;</FONT></TD></TR>                                                                                                                                                                                                          <TR STYLE="vertical-align: top">
<TD><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">&nbsp;</FONT></TD><TD><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">&nbsp;</FONT></TD><TD STYLE="text-align: justify"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">&nbsp;</FONT></TD></TR>
</TABLE>

<TABLE CELLPADDING="0" CELLSPACING="0" WIDTH="100%" STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt"><TR STYLE="vertical-align: top">
<TD STYLE="width: 0.25in"></TD><TD STYLE="width: 0.25in"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#9679;</FONT></TD><TD STYLE="text-align: justify"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">generate
                                         leads and convert users of the trial versions of our offerings to paying customers;</FONT></TD></TR>                                                                                                                                                                                                                                                     <TR STYLE="vertical-align: top">
<TD><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">&nbsp;</FONT></TD><TD><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">&nbsp;</FONT></TD><TD STYLE="text-align: justify"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">&nbsp;</FONT></TD></TR>
</TABLE>

<TABLE CELLPADDING="0" CELLSPACING="0" WIDTH="100%" STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt"><TR STYLE="vertical-align: top">
<TD STYLE="width: 0.25in"></TD><TD STYLE="width: 0.25in"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#9679;</FONT></TD><TD STYLE="text-align: justify"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">prevent
                                         users from circumventing the terms of their licenses and cloud subscriptions;</FONT></TD></TR>                                                                                                                                                                                                                                              <TR STYLE="vertical-align: top">
<TD><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">&nbsp;</FONT></TD><TD><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">&nbsp;</FONT></TD><TD STYLE="text-align: justify"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">&nbsp;</FONT></TD></TR>
</TABLE>

<TABLE CELLPADDING="0" CELLSPACING="0" WIDTH="100%" STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt"><TR STYLE="vertical-align: top">
<TD STYLE="width: 0.25in"></TD><TD STYLE="width: 0.25in"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#9679;</FONT></TD><TD STYLE="text-align: justify"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">continue
                                         to invest in our platform to deliver additional enhancements and content for our offerings
                                         and to foster an ecosystem of developers and users to expand the use cases of our offerings;</FONT></TD></TR>                                                                                                      <TR STYLE="vertical-align: top">
<TD><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">&nbsp;</FONT></TD><TD><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">&nbsp;</FONT></TD><TD STYLE="text-align: justify"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">&nbsp;</FONT></TD></TR>
</TABLE>

<TABLE CELLPADDING="0" CELLSPACING="0" WIDTH="100%" STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt"><TR STYLE="vertical-align: top">
<TD STYLE="width: 0.25in"></TD><TD STYLE="width: 0.25in"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#9679;</FONT></TD><TD STYLE="text-align: justify"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">maintain
                                         and enhance our website and cloud services infrastructure to minimize interruptions when
                                         accessing our offerings;</FONT></TD></TR>                                  <TR STYLE="vertical-align: top">
<TD><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">&nbsp;</FONT></TD><TD><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">&nbsp;</FONT></TD><TD STYLE="text-align: justify"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">&nbsp;</FONT></TD></TR>
</TABLE>

<TABLE CELLPADDING="0" CELLSPACING="0" WIDTH="100%" STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt"><TR STYLE="vertical-align: top">
<TD STYLE="width: 0.25in"></TD><TD STYLE="width: 0.25in"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#9679;</FONT></TD><TD STYLE="text-align: justify"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">process,
                                         store and use our employees, customers&rsquo; and other third parties&rsquo; data in compliance
                                         with applicable governmental regulations and other legal obligations related to data
                                         privacy, data protection, data transfer, data residency, encryption and security;</FONT></TD></TR>                                             <TR STYLE="vertical-align: top">
<TD><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">&nbsp;</FONT></TD><TD><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">&nbsp;</FONT></TD><TD STYLE="text-align: justify"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">&nbsp;</FONT></TD></TR>
</TABLE>

<TABLE CELLPADDING="0" CELLSPACING="0" WIDTH="100%" STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt"><TR STYLE="vertical-align: top">
<TD STYLE="width: 0.25in"></TD><TD STYLE="width: 0.25in"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#9679;</FONT></TD><TD STYLE="text-align: justify"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">hire,
                                         integrate and retain world-class professional and technical talent; and</FONT></TD></TR>                                                                                                                                                                                                                                      <TR STYLE="vertical-align: top">
<TD><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">&nbsp;</FONT></TD><TD><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">&nbsp;</FONT></TD><TD STYLE="text-align: justify"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">&nbsp;</FONT></TD></TR>
</TABLE>

<TABLE CELLPADDING="0" CELLSPACING="0" WIDTH="100%" STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt"><TR STYLE="vertical-align: top">
<TD STYLE="width: 0.25in"></TD><TD STYLE="width: 0.25in"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#9679;</FONT></TD><TD STYLE="text-align: justify"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">successfully
                                         integrate acquired businesses and technologies.</FONT></TD></TR></TABLE>

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

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

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

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt"><B>IF
WE OR OUR THIRD-PARTY SERVICE PROVIDERS EXPERIENCE A SECURITY BREACH OR UNAUTHORIZED PARTIES OTHERWISE OBTAIN ACCESS TO OUR
CUSTOMERS&rsquo; NETWORK, OUR DATA, OR OUR CLOUD SERVICES, OUR OFFERINGS MAY BE PERCEIVED AS NOT BEING SECURE, OUR REPUTATION
MAY BE HARMED, DEMAND FOR OUR OFFERINGS MAY BE REDUCED, AND WE MAY INCUR SIGNIFICANT LIABILITIES.</B></FONT></P>

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

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">Our
offerings involve the storage and transmission of data, and security breaches could result in the loss of this information, litigation,
indemnity obligations and other liability. We may become the target of cyber-attacks by third parties seeking unauthorized access
to our data or users&rsquo; data or to disrupt our ability to provide service. While we have taken steps to protect the confidential
information that we have access to, including confidential information we may obtain through our customer support services or
customer usage of our cloud services, our security measures or those of our third-party service providers could be breached or
we could suffer data loss. Computer malware, viruses, social engineering (predominantly spear phishing attacks), and general hacking
have become more prevalent in our industry, particularly against cloud services. In addition, we do not directly control content
that customers store in our offerings. If customers use our offerings for the transmission or storage of personally identifiable
information and our security measures are or are believed to have been breached as a result of third-party action, employee error,
malfeasance or otherwise, our reputation could be damaged, our business may suffer, and we could incur significant liability.</FONT></P>

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

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">We
also process, store and transmit our own data as part of our business and operations. This data may include personally identifiable,
confidential or proprietary information. There can be no assurance that any security measures that we or our third-party service
providers have implemented will be effective against current or future security threats. While we have developed systems and processes
to protect the integrity, confidentiality and security of our data, our security measures or those of our third-party service
providers could fail and result in unauthorized access to or disclosure, modification, misuse, loss or destruction of such data.</FONT></P>

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

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">Because
there are many different security breach techniques and such techniques continue to evolve, we may be unable to anticipate attempted
security breaches and implement adequate preventative measures. Third parties may also conduct attacks designed to temporarily
deny customers access to our cloud services. Any security breach or other security incident, or the perception that one has occurred,
could result in a loss of customer confidence in the security of our offerings and damage to our brand, reduce the demand for
our offerings, disrupt normal business operations, require us to spend material resources to investigate or correct the breach,
expose us to legal liabilities, including litigation, regulatory enforcement, and indemnity obligations, and adversely affect
our revenues and operating results. These risks may increase as we continue to grow the number and scale of our cloud services,
and process, store, and transmit increasingly large amounts of data.</FONT></P>

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

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt"><B>WE
USE THIRD-PARTY TECHNOLOGY AND SYSTEMS FOR A VARIETY OF REASONS, INCLUDING, WITHOUT LIMITATION, ENCRYPTION AND AUTHENTICATION
TECHNOLOGY, EMPLOYEE EMAIL, CONTENT DELIVERY TO CUSTOMERS, BACK-OFFICE SUPPORT, CREDIT CARD PROCESSING AND OTHER FUNCTIONS. </B></FONT></P>

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

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">Although
we have developed systems and processes that are designed to protect customer information and prevent data loss and other security
breaches, including systems and processes designed to reduce the impact of a security breach at a third-party vendor, such measures
cannot provide absolute security.</FONT></P>

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

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">Interruptions
or performance problems associated with our technology and infrastructure, and our reliance on Unified Communications as a Service
(&ldquo;UCaaS&rdquo;) technologies from third parties, may adversely affect our business operations and financial results.</FONT></P>

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

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">Our
continued growth depends in part on the ability of our existing and potential customers to use and access our website or our cloud
services in order to download our on-premises software or encrypted access keys for our software within an acceptable amount of
time. We have experienced, and may in the future experience, website and cloud service disruptions, storage failures, outages
and other performance problems due to a variety of factors, including infrastructure changes, human or software errors, capacity
constraints due to an overwhelming number of users accessing our website and services simultaneously, unauthorized access, denial
of service, security or ransomware attacks. In some instances, we may not be able to identify the cause or causes of these website
or service performance problems within an acceptable period of time. It may become increasingly difficult to maintain and improve
our website and service performance, especially during peak usage times and as our offerings become more complex and our user
traffic increases. If our website or cloud services are unavailable or if our users are unable to download our software or encrypted
access keys within a reasonable amount of time or at all, our business would be negatively affected. We expect to continue to
make significant investments to maintain and improve website and service performance and to enable rapid releases of new features
and apps for our offerings. To the extent that we do not effectively address capacity constraints, upgrade our systems as needed
and continually develop our technology and network architecture to accommodate actual and anticipated changes in technology, our
business and operating results may be adversely affected.</FONT></P>

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

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

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

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt"><B>Risks
Related to Our Stock</B></FONT></P>

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

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt"><B>OUR
STOCK PRICE MAY BE VOLATILE, WHICH COULD RESULT IN SUBSTANTIAL LOSSES FOR INVESTORS.</B></FONT></P>

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

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">The
market price of our common stock is likely to be highly volatile and could fluctuate widely in response to various factors, many
of which are beyond our control, including the following:</FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">&nbsp;</FONT></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 STYLE="width: 0.25in; text-align: justify"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">&nbsp;</FONT></TD>
    <TD STYLE="width: 0.25in; text-align: justify"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#9679;</FONT></TD>
    <TD STYLE="text-align: justify"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">technological innovations
    or new products and services by us or our competitors;</FONT></TD></TR>
<TR STYLE="vertical-align: top">
    <TD STYLE="text-align: justify"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">&nbsp;</FONT></TD>
    <TD STYLE="text-align: justify"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">&nbsp;</FONT></TD>
    <TD STYLE="text-align: justify"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">&nbsp;</FONT></TD></TR>
<TR STYLE="vertical-align: top">
    <TD><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">&nbsp;</FONT></TD>
    <TD><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#9679;</FONT></TD>
    <TD STYLE="text-align: justify"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">additions or departures
    of key personnel;</FONT></TD></TR>
<TR STYLE="vertical-align: top">
    <TD><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">&nbsp;</FONT></TD>
    <TD><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">&nbsp;</FONT></TD>
    <TD STYLE="text-align: justify"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">&nbsp;</FONT></TD></TR>
<TR STYLE="vertical-align: top">
    <TD><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">&nbsp;</FONT></TD>
    <TD><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#9679;</FONT></TD>
    <TD STYLE="text-align: justify"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">sales of our common
    stock, particularly under any registration statement for the purposes of selling any other securities, including management
    shares;</FONT></TD></TR>
<TR STYLE="vertical-align: top">
    <TD><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">&nbsp;</FONT></TD>
    <TD><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">&nbsp;</FONT></TD>
    <TD STYLE="text-align: justify"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">&nbsp;</FONT></TD></TR>
<TR STYLE="vertical-align: top">
    <TD><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">&nbsp;</FONT></TD>
    <TD><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#9679;</FONT></TD>
    <TD STYLE="text-align: justify"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">negative sentiment
    from investors, customers, vendors and strategic partners due to doubt about our ability to continue as a going concern;</FONT></TD></TR>
<TR STYLE="vertical-align: top">
    <TD><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">&nbsp;</FONT></TD>
    <TD><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">&nbsp;</FONT></TD>
    <TD STYLE="text-align: justify"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">&nbsp;</FONT></TD></TR>
<TR STYLE="vertical-align: top">
    <TD><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">&nbsp;</FONT></TD>
    <TD><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#9679;</FONT></TD>
    <TD STYLE="text-align: justify"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">our ability to execute
    our business plan;</FONT></TD></TR>
<TR STYLE="vertical-align: top">
    <TD><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">&nbsp;</FONT></TD>
    <TD><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">&nbsp;</FONT></TD>
    <TD STYLE="text-align: justify"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">&nbsp;</FONT></TD></TR>
<TR STYLE="vertical-align: top">
    <TD><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">&nbsp;</FONT></TD>
    <TD><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#9679;</FONT></TD>
    <TD STYLE="text-align: justify"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">operating results
    that fall below expectations;</FONT></TD></TR>
<TR STYLE="vertical-align: top">
    <TD><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">&nbsp;</FONT></TD>
    <TD><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">&nbsp;</FONT></TD>
    <TD STYLE="text-align: justify"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">&nbsp;</FONT></TD></TR>
<TR STYLE="vertical-align: top">
    <TD><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">&nbsp;</FONT></TD>
    <TD><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#9679;</FONT></TD>
    <TD STYLE="text-align: justify"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">loss of any strategic
    relationship;</FONT></TD></TR>
<TR STYLE="vertical-align: top">
    <TD><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">&nbsp;</FONT></TD>
    <TD><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">&nbsp;</FONT></TD>
    <TD STYLE="text-align: justify"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">&nbsp;</FONT></TD></TR>
<TR STYLE="vertical-align: top">
    <TD><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">&nbsp;</FONT></TD>
    <TD><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#9679;</FONT></TD>
    <TD STYLE="text-align: justify"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">industry developments;</FONT></TD></TR>
<TR STYLE="vertical-align: top">
    <TD><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">&nbsp;</FONT></TD>
    <TD><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">&nbsp;</FONT></TD>
    <TD STYLE="text-align: justify"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">&nbsp;</FONT></TD></TR>
<TR STYLE="vertical-align: top">
    <TD><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">&nbsp;</FONT></TD>
    <TD><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#9679;</FONT></TD>
    <TD STYLE="text-align: justify"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">economic and other
    external factors; and</FONT></TD></TR>
<TR STYLE="vertical-align: top">
    <TD><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">&nbsp;</FONT></TD>
    <TD><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">&nbsp;</FONT></TD>
    <TD STYLE="text-align: justify"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">&nbsp;</FONT></TD></TR>
<TR STYLE="vertical-align: top">
    <TD><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">&nbsp;</FONT></TD>
    <TD><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#9679;</FONT></TD>
    <TD STYLE="text-align: justify"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">period-to-period
    fluctuations in our financial results.</FONT></TD></TR>
</TABLE>
<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">&nbsp;</FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">In
addition, the securities markets have from time to time experienced significant price and volume fluctuations that are unrelated
to the operating performance of particular companies. These market fluctuations may also significantly affect the market price
of our common stock.</FONT></P>

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

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt"><B>WE
ARE SUBJECT TO PENNY STOCK RULES WHICH WILL MAKE THE SHARES OF OUR COMMON STOCK MORE DIFFICULT TO SELL.</B></FONT></P>

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

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">We
are subject to the Securities and Exchange Commission&rsquo;s &ldquo;penny stock&rdquo; rules since our shares of common stock
sell below $5.00 per share. Penny stocks generally are equity securities with a per share price of less than $5.00. The penny
stock rules require broker-dealers to deliver a standardized risk disclosure document prepared by the Securities and Exchange
Commission that provides information about penny stocks and the nature and level of risks in the penny stock market. The broker-dealer
must also provide the customer with current bid and offer quotations for the penny stock, the compensation of the broker-dealer
and its salesperson, and monthly account statements showing the market value of each penny stock held in the customer&rsquo;s
account. The bid and offer quotations, and the broker-dealer and salesperson compensation information must be given to the customer
orally or in writing prior to completing the transaction and must be given to the customer in writing before or with the customer&rsquo;s
confirmation.</FONT></P>

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

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

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

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">In
addition, the penny stock rules require that prior to a transaction the broker-dealer must make a special written determination
that the penny stock is a suitable investment for the purchaser and receive the purchaser&rsquo;s written agreement to the transaction.
The penny stock rules are burdensome and may reduce purchases of any offerings and reduce the trading activity for shares of our
common stock. As long as our shares of common stock are subject to the penny stock rules, the holders of such shares of common
stock may find it more difficult to sell their securities.</FONT></P>

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

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt"><B>THERE
IS, AT PRESENT, ONLY A LIMITED MARKET FOR OUR COMMON STOCK AND WE CANNOT ENSURE INVESTORS THAT AN ACTIVE MARKET FOR OUR COMMON
STOCK WILL EVER DEVELOP OR BE SUSTAINED.</B></FONT></P>

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

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">Our
shares of common stock are thinly traded. Due to the illiquidity, the market price may not accurately reflect our relative value.
There can be no assurance that there will be an active market for our shares of common stock either now or in the future. Because
our common stock is so thinly traded, a large block of shares traded can lead to a dramatic fluctuation in the share price and
investors may not be able to liquidate their investment in us at all or at a price that reflects the value of the business. In
addition, our common stock currently trades on the OTC QB, which generally lacks the liquidity, research coverage and institutional
investor following of a national securities exchange like the NYSE MKT, the New York Stock Exchange or the Nasdaq Stock Market.
While we intend to list our common stock on a national securities exchange once we satisfy the initial listing standards for such
an exchange, we currently do not, and may not ever, satisfy such initial listing standards.</FONT></P>

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

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt"><B>OUR
BOARD OF DIRECTORS CAN AUTHORIZE THE ISSUANCE OF PREFERRED STOCK, WHICH COULD DIMINISH THE RIGHTS OF HOLDERS OF OUR COMMON STOCK
AND MAKE A CHANGE OF CONTROL OF US MORE DIFFICULT EVEN IF IT MIGHT BENEFIT OUR SHAREHOLDERS.</B></FONT></P>

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

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">Our
board of directors is authorized to issue up to 50,000,000 shares of preferred stock in one or more series and to fix the voting
powers, preferences and other rights and limitations of the preferred stock. We currently have no shares of preferred stock issued
and outstanding. We may issue additional shares of preferred stock with a preference over our common stock with respect to dividends
or distributions on liquidation or dissolution, or that may otherwise adversely affect the voting or other rights of the holders
of common stock. Issuances of preferred stock, depending upon the rights, preferences and designations of the preferred stock,
may have the effect of delaying, deterring or preventing a change of control, even if that change of control might benefit our
shareholders.</FONT></P>

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

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt"><B>OFFERS
OR AVAILABILITY FOR SALE OF A SUBSTANTIAL NUMBER OF SHARES OF OUR COMMON STOCK MAY CAUSE THE PRICE OF OUR COMMON STOCK TO DECLINE.</B></FONT></P>

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

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">Sales
of a significant number of shares of our common stock in the public market could harm the market price of our common stock and
make it more difficult for us to raise funds through future offerings of common stock. As additional shares of our common stock
become available for resale in the public market, the supply of our common stock will increase, which could decrease the price
of our common stock.</FONT></P>

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

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">In
addition, if our shareholders sell substantial amounts of our common stock in the public market, upon the expiration of any statutory
holding period under Rule 144, upon the expiration of lock-up periods applicable to outstanding shares, or upon the exercise of
outstanding options or warrants, it could create a circumstance commonly referred to as an &ldquo;overhang,&rdquo; in anticipation
of which the market price of our common stock could fall. The existence of an overhang, whether or not sales have occurred or
are occurring, could also make it more difficult for us to raise additional financing through the sale of equity or equity-related
securities in the future at a time and price that we deem reasonable or appropriate.</FONT></P>

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

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt"><B>WE
DO NOT EXPECT TO PAY DIVIDENDS IN THE FUTURE. AS A RESULT, ANY RETURN ON INVESTMENT MAY BE LIMITED TO THE VALUE OF OUR COMMON
STOCK.</B></FONT></P>

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

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">We
do not anticipate paying cash dividends on our common stock in the foreseeable future. The payment of dividends on our common
stock will depend on our earnings, financial condition and other business and economic factors as our board of directors may consider
relevant. If we do not pay dividends, our common stock may be less valuable because a return on an investment in our common stock
will only occur if our stock price appreciates.</FONT></P>

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

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

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

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt"><B>WE
HAVE NOT VOLUNTARILY IMPLEMENTED VARIOUS CORPORATE GOVERNANCE MEASURES, IN THE ABSENCE OF WHICH, STOCKHOLDERS MAY HAVE MORE LIMITED
PROTECTIONS AGAINST INTERESTED DIRECTOR TRANSACTIONS, CONFLICTS OF INTEREST AND SIMILAR MATTERS.</B></FONT></P>

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

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">Federal
legislation, including the Sarbanes-Oxley Act of 2002, has resulted in the adoption of various corporate governance measures designed
to promote the integrity of the corporate management and the securities markets. Some of these measures have been adopted in response
to legal requirements. Others have been adopted by companies in response to the requirements of national securities exchanges,
such as the NYSE or the NASDAQ Stock Market, on which their securities are listed. Among the corporate governance measures that
are required under the rules of national securities exchanges are those that address board of directors&rsquo; independence, audit
committee oversight, and the adoption of a code of ethics. While we have adopted certain corporate governance measures such as
a Code of Ethics, we presently do not have any independent directors. It is possible that if we were to have independent directors
on our board, stockholders would benefit from somewhat greater assurances that internal corporate decisions were being made by
disinterested directors and that policies had been implemented to define responsible conduct. For example, in the absence of audit,
nominating and compensation committees comprised of at least a majority of independent directors, decisions concerning matters
such as compensation packages to our senior officers and recommendations for director nominees may be made by our directors who
have an interest in the outcome of the matters being decided. Prospective investors should bear in mind our current lack of corporate
governance measures and independent directors in formulating their investment decisions.</FONT></P>

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

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><B>OUR BUSINESS&#9; COULD BE ADVERSELY
AFFECTED IF WE FAIL TO IMPLEMENT AND MAINTAIN EFFECTIVE DISCLOSURE CONTROLS AND PROCEDURES AND INTERNAL CONTROL OVER FINANCIAL
REPORTING</B></P>

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

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">We concluded that as of July 31, 2018, our disclosure controls and procedures and our internal control over
financial reporting were not effective. We have determined that we have deficiencies in the design or operation of our internal
controls under the Securities Exchange Act of 1934, as amended (the &ldquo;Exchange Act&rdquo;) within the required time periods
and that material weaknesses in our internal control over financial reporting exist relating to not being able to provide for adequate
review of our financial statements. If we are unable to implement and maintain effective disclosure controls and procedures and
remediate the material weaknesses in a timely manner, or if we identify other material weaknesses in the future, our ability to
produce accurate and timely financial statements and public reports could be impaired, which could adversely affect our business
and financial condition. We identified a lack of sufficient segregation of duties. In addition, investors may lose confidence in
our reported information and the market price of our Common Stock may decline.</P>

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

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt"><B>Risks
Related to the Offering</B></FONT></P>

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

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt"><B>OUR
EXISTING STOCKHOLDERS MAY EXPERIENCE SIGNIFICANT DILUTION FROM THE SALE OF OUR COMMON STOCK PURSUANT TO THE PEAK ONE FINANCING
AGREEMENT.</B></FONT></P>

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

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">The
sale of our common stock to Peak One in accordance with the Financing Agreement may have a dilutive impact on our shareholders.
As a result, the market price of our common stock could decline. In addition, the lower our stock price is at the time we exercise
our put options, the more shares of our common stock we will have to issue to Peak One in order to exercise a put under the Financing
Agreement. If our stock price decreases, then our existing shareholders would experience greater dilution for any given dollar
amount raised through the offering.</FONT></P>

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

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">The
perceived risk of dilution may cause our stockholders to sell their shares, which may cause a decline in the price of our common
stock. Moreover, the perceived risk of dilution and the resulting downward pressure on our stock price could encourage investors
to engage in short sales of our common stock. By increasing the number of shares offered for sale, material amounts of short selling
could further contribute to progressive price declines in our common stock.</FONT></P>

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

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

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

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt"><B>THE
ISSUANCE OF SHARES PURSUANT TO THE PEAK ONE FINANCING AGREEMENT MAY HAVE A SIGNIFICANT DILUTIVE EFFECT.</B></FONT></P>

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

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">Depending
on the number of shares we issue pursuant to the Peak One Financing Agreement, it could have a significant dilutive effect upon
our existing shareholders. Although the number of shares that we may issue pursuant to the Financing Agreement will vary based
on our stock price (the higher our stock price, the less shares we have to issue), there may be a potential dilutive effect to
our shareholders, based on different potential future stock prices, if the full amount of the Financing Agreement is realized.
Dilution is based upon common stock put to Peak One and the stock price discounted to 88% purchase price of the lowest closing
price during the pricing period.</FONT></P>

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

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt"><B>PEAK
ONE WILL PAY LESS THAN THE THEN-PREVAILING MARKET PRICE OF OUR COMMON STOCK WHICH COULD CAUSE THE PRICE OF OUR COMMON STOCK TO
DECLINE.</B></FONT></P>

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

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">Our
common stock to be issued under the Peak One Financing Agreement will be purchased at a 12% discount, or 88% of the lowest closing
price for the Company&rsquo;s common stock during the ten (10) consecutive trading days immediately preceding the Purchase Date
(as defined in the Peak one Financing Agreement).</FONT></P>

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

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">Peak
One has a financial incentive to sell our shares immediately upon receiving them to realize the profit between the discounted
price and the market price. If Peak One sells our shares, the price of our common stock may decrease. If our stock price decreases,
Peak One may have further incentive to sell such shares. Accordingly, the discounted sales price in the Financing Agreement may
cause the price of our common stock to decline.</FONT></P>

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

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt"><B>WE
MAY NOT HAVE ACCESS TO THE FULL AMOUNT UNDER THE FINANCING AGREEMENT.</B></FONT></P>

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

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">The
lowest closing price of the Company&rsquo;s common stock during the ten (10) consecutive trading day period immediately preceding
the filing of this Registration Statement was approximately $0.09. At that price we would be able to sell shares to Peak One under
the Financing Agreement at the discounted price of $0.08. At that discounted price, the 6,074,142 shares would only represent
approximately $546,675, which is far below $5,000,000 (the full amount of the Financing Agreement).</FONT></P>

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

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt"><B><A NAME="a_004"></A>CAUTIONARY
NOTE REGARDING FORWARD-LOOKING STATEMENTS</B></FONT></P>

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

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">This
prospectus contains forward-looking statements. Forward-looking statements give our current expectations or forecasts of future
events. You can identify these statements by the fact that they do not relate strictly to historical or current facts. Forward-looking
statements involve risks and uncertainties and include statements regarding, among other things, our projected revenue growth
and profitability, our growth strategies and opportunity, anticipated trends in our market and our anticipated needs for working
capital. They are generally identifiable by use of the words &ldquo;may,&rdquo; &ldquo;will,&rdquo; &ldquo;should,&rdquo; &ldquo;anticipate,&rdquo;
&ldquo;estimate,&rdquo; &ldquo;plans,&rdquo; &ldquo;potential,&rdquo; &ldquo;projects,&rdquo; &ldquo;continuing,&rdquo; &ldquo;ongoing,&rdquo;
&ldquo;expects,&rdquo; &ldquo;management believes,&rdquo; &ldquo;we believe,&rdquo; &ldquo;we intend&rdquo; or the negative of
these words or other variations on these words or comparable terminology. These statements may be found under the sections entitled
&ldquo;Management&rsquo;s Discussion and Analysis of Financial Condition and Results of Operations&rdquo; and &ldquo;Business,&rdquo;
as well as in this prospectus generally. In particular, these include statements relating to future actions, prospective products,
market acceptance, future performance or results of current and anticipated products, sales efforts, expenses, and the outcome
of contingencies such as legal proceedings and financial results.</FONT></P>

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

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">Examples
of forward-looking statements in this prospectus include, but are not limited to, our expectations regarding our business strategy,
business prospects, operating results, operating expenses, working capital, liquidity and capital expenditure requirements. Important
assumptions relating to the forward-looking statements include, among others, assumptions regarding demand for our products, the
cost, terms and availability of components, pricing levels, the timing and cost of capital expenditures, competitive conditions
and general economic conditions. These statements are based on our management&rsquo;s expectations, beliefs and assumptions concerning
future events affecting us, which in turn are based on currently available information. These assumptions could prove inaccurate.
Although we believe that the estimates and projections reflected in the forward-looking statements are reasonable, our expectations
may prove to be incorrect.</FONT></P>

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

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

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

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">Important
factors that could cause actual results to differ materially from the results and events anticipated or implied by such forward-looking
statements include, but are not limited to:</FONT></P>

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

<TABLE CELLPADDING="0" CELLSPACING="0" STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0; margin-bottom: 0; width: 100%">
<TR STYLE="vertical-align: top">
    <TD STYLE="width: 0.25in"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">&nbsp;</FONT></TD>
    <TD STYLE="width: 0.25in"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#9679;</FONT></TD>
    <TD STYLE="text-align: justify"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">changes in the market
    acceptance of our products;</FONT></TD></TR>
<TR STYLE="vertical-align: top">
    <TD><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">&nbsp;</FONT></TD>
    <TD><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">&nbsp;</FONT></TD>
    <TD STYLE="text-align: justify"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">&nbsp;</FONT></TD></TR>
<TR STYLE="vertical-align: top">
    <TD><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">&nbsp;</FONT></TD>
    <TD><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#9679;</FONT></TD>
    <TD STYLE="text-align: justify"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">increased levels
    of competition;</FONT></TD></TR>
<TR STYLE="vertical-align: top">
    <TD><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">&nbsp;</FONT></TD>
    <TD><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">&nbsp;</FONT></TD>
    <TD STYLE="text-align: justify"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">&nbsp;</FONT></TD></TR>
<TR STYLE="vertical-align: top">
    <TD><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">&nbsp;</FONT></TD>
    <TD><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#9679;</FONT></TD>
    <TD STYLE="text-align: justify"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">changes in political,
    economic or regulatory conditions generally and in the markets in which we operate;</FONT></TD></TR>
<TR STYLE="vertical-align: top">
    <TD><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">&nbsp;</FONT></TD>
    <TD><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">&nbsp;</FONT></TD>
    <TD STYLE="text-align: justify"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">&nbsp;</FONT></TD></TR>
<TR STYLE="vertical-align: top">
    <TD><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">&nbsp;</FONT></TD>
    <TD><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#9679;</FONT></TD>
    <TD STYLE="text-align: justify"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">our relationships
    with our key customers;</FONT></TD></TR>
<TR STYLE="vertical-align: top">
    <TD><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">&nbsp;</FONT></TD>
    <TD><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">&nbsp;</FONT></TD>
    <TD STYLE="text-align: justify"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">&nbsp;</FONT></TD></TR>
<TR STYLE="vertical-align: top">
    <TD><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">&nbsp;</FONT></TD>
    <TD><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#9679;</FONT></TD>
    <TD STYLE="text-align: justify"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">our ability to retain
    and attract senior management and other key employees;</FONT></TD></TR>
<TR STYLE="vertical-align: top">
    <TD><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">&nbsp;</FONT></TD>
    <TD><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">&nbsp;</FONT></TD>
    <TD STYLE="text-align: justify"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">&nbsp;</FONT></TD></TR>
<TR STYLE="vertical-align: top">
    <TD><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">&nbsp;</FONT></TD>
    <TD><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#9679;</FONT></TD>
    <TD STYLE="text-align: justify"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">our ability to quickly
    and effectively respond to new technological developments;</FONT></TD></TR>
<TR STYLE="vertical-align: top">
    <TD><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">&nbsp;</FONT></TD>
    <TD><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">&nbsp;</FONT></TD>
    <TD STYLE="text-align: justify"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">&nbsp;</FONT></TD></TR>
<TR STYLE="vertical-align: top">
    <TD><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">&nbsp;</FONT></TD>
    <TD><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#9679;</FONT></TD>
    <TD STYLE="text-align: justify"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">our ability to protect
    our trade secrets or other proprietary rights, operate without infringing upon the proprietary rights of others and prevent
    others from infringing on the proprietary rights of the Company; and</FONT></TD></TR>
<TR STYLE="vertical-align: top">
    <TD><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">&nbsp;</FONT></TD>
    <TD><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">&nbsp;</FONT></TD>
    <TD STYLE="text-align: justify"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">&nbsp;</FONT></TD></TR>
<TR STYLE="vertical-align: top">
    <TD><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">&nbsp;</FONT></TD>
    <TD><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#9679;</FONT></TD>
    <TD STYLE="text-align: justify"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">other risks, including
    those described in the &ldquo;Risk Factors&rdquo; discussion of this prospectus.</FONT></TD></TR>
</TABLE>
<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">&nbsp;</FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">We
operate in a very competitive and rapidly changing environment. New risks emerge from time to time. It is not possible for us
to predict all of those risks, nor can we assess the impact of all of those risks on our business or the extent to which any factor
may cause actual results to differ materially from those contained in any forward-looking statement. The forward-looking statements
in this prospectus are based on assumptions management believes are reasonable. However, due to the uncertainties associated with
forward-looking statements, you should not place undue reliance on any forward-looking statements. Further, forward-looking statements
speak only as of the date they are made, and unless required by law, we expressly disclaim any obligation or undertaking to publicly
update any of them in light of new information, future events, or otherwise.</FONT></P>

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

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt"><B><A NAME="a_005"></A>USE
OF PROCEEDS</B></FONT></P>

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

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">We
will not receive any proceeds from the sale of the shares of our Common Stock by the Selling Stockholder. However, we will receive
proceeds from our initial sale of shares to Peak One, pursuant to the Financing Agreement. The proceeds from the initial sale
of shares will be used for the purpose of working capital or for other purposes that the Board of Directors, in good faith deem
to be in the best interest of the Company.</FONT></P>

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

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt"><B><A NAME="a_006"></A>DETERMINATION
OF OFFERING PRICE</B></FONT></P>

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

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">We
have not set an offering price for the shares registered hereunder, as the only shares being registered are those sold pursuant
to the Peak One Financing Agreement. Peak One may sell all or a portion of the shares being offered pursuant to this prospectus
at fixed prices and prevailing market prices at the time of sale, at varying prices or at negotiated prices.</FONT></P>

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

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

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

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">Not
applicable. The shares registered under this registration statement are not being offered for purchase. The shares are being registered
on behalf of our selling shareholders pursuant to the Peak One Financing Agreement.</FONT></P>

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

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

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

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

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt"><B><A NAME="a_007"></A>SELLING
SECURITY HOLDER</B></FONT></P>

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

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">The
selling stockholder identified in this prospectus may offer and sell up to 6,324,142 shares of our common stock, which consists
of shares of common stock to be sold by Peak One pursuant to the Financing Agreement. If issued presently, the shares of common
stock registered for resale by Peak One would represent approximately 25% of our issued and outstanding shares of common stock
as of September 12, 2019.</FONT></P>

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


<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">We
may require the selling stockholder to suspend the sales of the shares of our common stock being offered pursuant to this prospectus
upon the occurrence of any event that makes any statement in this prospectus or the related registration statement untrue in any
material respect or that requires the changing of statements in those documents in order to make statements in those documents
not misleading.</FONT></P>

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

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">The
selling stockholder identified in the table below may from time to time offer and sell under this prospectus any or all of the
shares of common stock described under the column &ldquo;Shares of Common Stock Being Offered&rdquo; in the table below.</FONT></P>

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

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">Peak
One will be deemed to be an underwriter within the meaning of the Securities Act. Any profits realized by such selling stockholder
may be deemed to be underwriting commissions.</FONT></P>

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

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">Information
concerning the selling stockholder may change from time to time and, if necessary, we will amend or supplement this prospectus
accordingly. We cannot give an estimate as to the number of shares of common stock that will actually be held by the selling stockholder
upon termination of this offering, because the selling stockholders may offer some or all of the common stock under the offering
contemplated by this prospectus or acquire additional shares of common stock. The total number of shares that may be sold, hereunder,
will not exceed the number of shares offered, hereby. Please read the section entitled &ldquo;Plan of Distribution&rdquo; in this
prospectus.</FONT></P>

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

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">The
manner in which the selling stockholder acquired or will acquire shares of our common stock is discussed below under &ldquo;The
Offering.&rdquo;</FONT></P>

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

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">The
following table sets forth the name of each selling stockholder, the number of shares of our common stock beneficially owned by
such stockholder before this offering, the number of shares to be offered for such stockholder&rsquo;s account and the number
and (if one percent or more) the percentage of the class to be beneficially owned by such stockholder after completion of the
offering. The number of shares owned are those beneficially owned, as determined under the rules of the SEC, and such information
is not necessarily indicative of beneficial ownership for any other purpose. Under such rules, beneficial ownership includes any
shares of our common stock as to which a person has sole or shared voting power or investment power and any shares of common stock
which the person has the right to acquire within 60 days, through the exercise of any option, warrant or right, through conversion
of any security or pursuant to the automatic termination of a power of attorney or revocation of a trust, discretionary account
or similar arrangement, and such shares are deemed to be beneficially owned and outstanding for computing the share ownership
and percentage of the person holding such options, warrants or other rights, but are not deemed outstanding for computing the
percentage of any other person. Beneficial ownership percentages are calculated based on 25,240,222 shares of our common stock
outstanding as of September 12, 2019.</FONT></P>

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

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">Unless
otherwise set forth below, (a) the persons and entities named in the table have sole voting and sole investment power with respect
to the shares set forth opposite the selling stockholder&rsquo;s name, subject to community property laws, where applicable, and
(b) no selling stockholder had any position, office or other material relationship within the past three years, with us or with
any of our predecessors or affiliates. The number of shares of common stock shown as beneficially owned before the offering is
based on information furnished to us or otherwise based on information available to us at the timing of the filing of the registration
statement of which this prospectus forms a part.</FONT></P>

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

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

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

<TABLE CELLPADDING="0" CELLSPACING="0" STYLE="border-collapse: collapse; width: 100%; font: 10pt Times New Roman, Times, Serif">
<TR STYLE="vertical-align: bottom">
    <TD STYLE="text-align: center"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">&nbsp;</FONT></TD><TD STYLE="padding-bottom: 1.5pt"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">&nbsp;</FONT></TD>
    <TD STYLE="text-align: center; padding-bottom: 1.5pt"><P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt"><B>Shares</B></FONT></P> <P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt"><B>Owned
                                         by</B></FONT></P> <P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt"><B>the
                                         Selling</B></FONT></P> <P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt"><B>Stockholders</B></FONT></P></TD><TD STYLE="font-weight: bold; padding-bottom: 1.5pt"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">&nbsp;</FONT></TD>
    <TD COLSPAN="2" STYLE="font-weight: bold; text-align: center; padding-bottom: 1.5pt"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">Shares
    of <BR>
Common Stock</FONT></TD><TD STYLE="padding-bottom: 1.5pt; font-weight: bold"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">&nbsp;</FONT></TD><TD STYLE="font-weight: bold; padding-bottom: 1.5pt"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">&nbsp;</FONT></TD>
    <TD COLSPAN="6" STYLE="font-weight: bold; text-align: center; border-bottom: Black 1.5pt solid"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">Number
    of Shares to be Owned by Selling Stockholder After the Offering and Percent of Total Issued and Outstanding Shares</FONT></TD><TD STYLE="padding-bottom: 1.5pt; font-weight: bold"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">&nbsp;</FONT></TD></TR>
<TR STYLE="vertical-align: bottom">
    <TD STYLE="font-weight: bold; text-align: center; border-bottom: Black 1.5pt solid"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">Name&nbsp;of&nbsp;Selling&nbsp;Stockholder</FONT></TD><TD STYLE="padding-bottom: 1.5pt"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">&nbsp;</FONT></TD>
    <TD STYLE="text-align: center; border-bottom: Black 1.5pt solid"><P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt"><B>before
                                         the</B></FONT></P> <P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt"><B>Offering
                                         (1)</B></FONT></P></TD><TD STYLE="font-weight: bold; padding-bottom: 1.5pt"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">&nbsp;</FONT></TD>
    <TD COLSPAN="2" STYLE="font-weight: bold; text-align: center; border-bottom: Black 1.5pt solid"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">Being
    <BR> Offered</FONT></TD><TD STYLE="padding-bottom: 1.5pt; font-weight: bold"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">&nbsp;</FONT></TD><TD STYLE="font-weight: bold; padding-bottom: 1.5pt"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">&nbsp;</FONT></TD>
    <TD COLSPAN="2" STYLE="font-weight: bold; text-align: center; border-bottom: Black 1.5pt solid"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">#
    of <BR> Shares (2)</FONT></TD><TD STYLE="padding-bottom: 1.5pt; font-weight: bold"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">&nbsp;</FONT></TD><TD STYLE="font-weight: bold; padding-bottom: 1.5pt"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">&nbsp;</FONT></TD>
    <TD COLSPAN="2" STYLE="font-weight: bold; text-align: center; border-bottom: Black 1.5pt solid"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">%
    of <BR> Class (2)</FONT></TD><TD STYLE="padding-bottom: 1.5pt; font-weight: bold"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">&nbsp;</FONT></TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,238,255)">
    <TD STYLE="width: 25%; text-align: left; padding-left: 0.125in; text-indent: -0.125in"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">Peak One
    Opportunity Fund, L.P. (3)</FONT></TD><TD STYLE="width: 1%"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">&nbsp;</FONT></TD>
    <TD STYLE="width: 20%; text-align: right"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">250,000</FONT></TD><TD STYLE="width: 1%"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">&nbsp;</FONT></TD>
    <TD STYLE="width: 1%; text-align: left"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">&nbsp;</FONT></TD><TD STYLE="width: 15%; text-align: right"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">(4</FONT></TD><TD STYLE="width: 1%; text-align: left"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">)</FONT></TD><TD STYLE="width: 1%"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">&nbsp;</FONT></TD>
    <TD STYLE="width: 1%; text-align: left"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">&nbsp;</FONT></TD><TD STYLE="width: 15%; text-align: right"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">0</FONT></TD><TD STYLE="width: 1%; text-align: left"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">&nbsp;</FONT></TD><TD STYLE="width: 1%"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">&nbsp;</FONT></TD>
    <TD STYLE="width: 1%; text-align: left"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">&nbsp;</FONT></TD><TD STYLE="width: 15%; text-align: right"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">0</FONT></TD><TD STYLE="width: 1%; text-align: left"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">%</FONT></TD></TR>
</TABLE>

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

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">Notes:</FONT></P>

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

<TABLE CELLPADDING="0" CELLSPACING="0" STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0; margin-bottom: 0; width: 100%"><TR STYLE="vertical-align: top; text-align: justify">
<TD STYLE="width: 0"></TD><TD STYLE="width: 0.25in; text-align: left"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">(1)</FONT></TD><TD STYLE="text-align: justify"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">Beneficial
ownership is determined in accordance with Securities and Exchange Commission rules and generally includes voting or investment
power with respect to shares of common stock. Shares of common stock subject to options, warrants and convertible debentures currently
exercisable or convertible, or exercisable or convertible within 60 days, are counted as outstanding. The actual number of shares
of common stock issuable upon the conversion of the convertible debentures is subject to adjustment depending on, among other
factors, the future market price of our common stock, and could be materially less or more than the number estimated in the table.</FONT></TD>
</TR></TABLE>

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

<TABLE CELLPADDING="0" CELLSPACING="0" STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0; margin-bottom: 0; width: 100%"><TR STYLE="vertical-align: top; text-align: justify">
<TD STYLE="width: 0"></TD><TD STYLE="width: 0.25in; text-align: left"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">(2)</FONT></TD><TD STYLE="text-align: justify"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">Because
the selling stockholders may offer and sell all or only some portion of the 6,324,142 shares of our common stock being offered
pursuant to this prospectus and may acquire additional shares of our common stock in the future, we can only estimate the number
and percentage of shares of our common stock that any of the selling stockholders will hold upon termination of the offering.</FONT></TD>
</TR></TABLE>

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

<TABLE CELLPADDING="0" CELLSPACING="0" STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0; margin-bottom: 0; width: 100%"><TR STYLE="vertical-align: top; text-align: justify">
<TD STYLE="width: 0"></TD><TD STYLE="width: 0.25in; text-align: left"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">(3)</FONT></TD><TD STYLE="text-align: justify"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">Jason
Goldstein, Manager of Peak One Opportunity Fun, L.P. exercises voting and dispositive power with respect to the shares of our
common stock that are beneficially owned by Peak One Opportunity Fund, L.P.</FONT></TD>
</TR></TABLE>

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

<TABLE CELLPADDING="0" CELLSPACING="0" STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0; margin-bottom: 0; width: 100%"><TR STYLE="vertical-align: top; text-align: justify">
<TD STYLE="width: 0"></TD><TD STYLE="width: 0.25in; text-align: left"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">(4)</FONT></TD><TD STYLE="text-align: justify"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">Consists
of up to (i) 250,000 shares of Common Stock issued to Peak One Opportunity Fund, L.P. (&ldquo;Peak One&rdquo;) as commitment shares
(the &ldquo;Commitment Shares&rdquo;); and (ii) 6,074,142 shares of Common Stock to be issued in connection with the Financing
Agreement.</FONT></TD>
</TR></TABLE>

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

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt"><B>THE
OFFERING</B></FONT></P>

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

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">On
January 12, 2018, we entered into an Equity Purchase Agreement (the &ldquo;Financing Agreement&rdquo;) with Peak One Opportunity
Fund, L.P. (&ldquo;Peak One&rdquo;) Although we are not mandated to sell shares under the Financing Agreement, the Financing Agreement
gives us the option to sell to Peak One, up to $5,000,000 worth of our common stock over the period ending twenty-four (24) months
after the date this Registration Statement is deemed effective. In consideration for peak One&rsquo;s execution and performance
under the Financing Agreement, the Company issued 250,000 shares of Common Stock, as Commitment Shares (as defined in the Financing
Agreement), to Peak One.</FONT></P>

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

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">There
is no assurance the market price of our common stock will increase in the future. The number of common shares that remain issuable
may not be sufficient, dependent upon the share price, to allow us to access the full amount contemplated under the Financing
Agreement. If the bid/ask spread remains the same we will not be able to place a put for the full commitment under the Financing
Agreement. Based on the lowest closing price of our common stock during the ten (10) consecutive trading day period preceding
the filing date of this registration statement was approximately $0.09, the registration statement covers the offer and possible
sale of approximately $546,675 worth of our shares. At that price we would be able to sell shares to Peak One under the Financing
Agreement at the discounted price of $0.08. At that discounted price, the 6,074,142 shares would only represent approximately
$546,675, which is far below $5,000,000 (the full amount of the Financing Agreement).</FONT></P>

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

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">The
purchase price of the common stock will be set at _______ (_____%) of the lowest closing bid price of the common stock during
the ten (10) consecutive trading day period immediately preceding the date on which the Company delivers a put notice to _______.
In addition, there is an ownership limit for _____ of 4.99%.</FONT></P>

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

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">Peak
One is not permitted to engage in short sales involving our common stock during the term of the commitment period. In accordance
with Regulation SHO, however, sales of our common stock by Peak One after delivery of a put notice of such number of shares reasonably
expected to be purchased by Peak One under a put will not be deemed a short sale.</FONT></P>

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

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

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

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><FONT STYLE="font: 10pt Times New Roman, Times, Serif">In
addition, we must deliver the other required documents, instruments and writings required. Peak One is not required to purchase
the put shares unless:</FONT></P>

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

<TABLE CELLPADDING="0" CELLSPACING="0" STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0; margin-bottom: 0; width: 100%"><TR STYLE="vertical-align: top">
<TD STYLE="width: 0.25in"></TD><TD STYLE="width: 0.25in; text-align: left"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#9679;</FONT></TD><TD STYLE="text-align: justify"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">Our
registration statement with respect to the resale of the shares of common stock delivered in connection with the applicable put
shall have been declared effective;</FONT></TD>
</TR></TABLE>

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

<TABLE CELLPADDING="0" CELLSPACING="0" STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0; margin-bottom: 0; width: 100%"><TR STYLE="vertical-align: top">
<TD STYLE="width: 0.25in; text-align: justify"></TD><TD STYLE="width: 0.25in; text-align: justify"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#9679;</FONT></TD><TD STYLE="text-align: justify"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">We
shall have obtained all material permits and qualifications required by any applicable state for the offer and sale of the registrable
securities; and</FONT></TD>
</TR></TABLE>

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

<TABLE CELLPADDING="0" CELLSPACING="0" STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0; margin-bottom: 0; width: 100%"><TR STYLE="vertical-align: top">
<TD STYLE="width: 0.25in; text-align: justify"></TD><TD STYLE="width: 0.25in; text-align: justify"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#9679;</FONT></TD><TD STYLE="text-align: justify"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">We
shall have filed all requisite reports, notices, and other documents with the SEC in a timely manner.</FONT></TD>
</TR></TABLE>

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

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">As
we draw down on the equity line of credit, shares of our common stock will be sold into the market by Peak One. The sale of these
shares could cause our stock price to decline. In turn, if our stock price declines and we issue more puts, more shares will come
into the market, which could cause a further drop in our stock price. You should be aware that there is an inverse relationship
between the market price of our common stock and the number of shares to be issued under the equity line of credit. If our stock
price declines, we will be required to issue a greater number of shares under the equity line of credit. We have no obligation
to utilize the full amount available under the equity line of credit.</FONT></P>

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

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">Neither
the Financing Agreement nor any of our rights or Peak One&rsquo;s rights thereunder may be assigned to any other person.</FONT></P>

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

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt"><B><A NAME="a_008"></A>PLAN
OF DISTRIBUTION</B></FONT></P>

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

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">Each
of the selling stockholders named above and any of their pledgees and successors-in-interest may, from time to time, sell any
or all of their shares of common stock on OTC Markets or any other stock exchange, market or trading facility on which the shares
of our common stock are traded or in private transactions. These sales may be at fixed prices and prevailing market prices at
the time of sale, at varying prices or at negotiated prices. The selling stockholders may use any one or more of the following
methods when selling shares:</FONT></P>

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

<TABLE CELLPADDING="0" CELLSPACING="0" STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0; margin-bottom: 0; width: 100%"><TR STYLE="vertical-align: top">
<TD STYLE="width: 0.25in"></TD><TD STYLE="width: 0.25in; text-align: left"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#9679;</FONT></TD><TD STYLE="text-align: justify"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">ordinary
                                         brokerage transactions and transactions in which the broker-dealer solicits purchasers;</FONT></TD>
</TR></TABLE>

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

<TABLE CELLPADDING="0" CELLSPACING="0" STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0; margin-bottom: 0; width: 100%"><TR STYLE="vertical-align: top">
<TD STYLE="width: 0.25in"></TD><TD STYLE="width: 0.25in; text-align: left"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#9679;</FONT></TD><TD STYLE="text-align: justify"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">block
                                         trades in which the broker-dealer will attempt to sell the shares as agent but may position
                                         and resell a portion of the block as principal to facilitate the transaction;</FONT></TD>
</TR></TABLE>

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

<TABLE CELLPADDING="0" CELLSPACING="0" STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0; margin-bottom: 0; width: 100%"><TR STYLE="vertical-align: top">
<TD STYLE="width: 0.25in"></TD><TD STYLE="width: 0.25in; text-align: left"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#9679;</FONT></TD><TD><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">purchases
                                         by a broker-dealer as principal and resale by the broker-dealer for its account;</FONT></TD>
</TR></TABLE>

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

<TABLE CELLPADDING="0" CELLSPACING="0" STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0; margin-bottom: 0; width: 100%"><TR STYLE="vertical-align: top">
<TD STYLE="width: 0.25in"></TD><TD STYLE="width: 0.25in; text-align: left"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#9679;</FONT></TD><TD><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">privately
                                         negotiated transactions;</FONT></TD>
</TR></TABLE>

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

<TABLE CELLPADDING="0" CELLSPACING="0" STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0; margin-bottom: 0; width: 100%"><TR STYLE="vertical-align: top">
<TD STYLE="width: 0.25in"></TD><TD STYLE="width: 0.25in; text-align: left"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#9679;</FONT></TD><TD STYLE="text-align: justify"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">broker-dealers
                                         may agree with the selling stockholders to sell a specified number of such shares at
                                         a stipulated price per share; or</FONT></TD>
</TR></TABLE>

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

<TABLE CELLPADDING="0" CELLSPACING="0" STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0; margin-bottom: 0; width: 100%"><TR STYLE="vertical-align: top">
<TD STYLE="width: 0.25in"></TD><TD STYLE="width: 0.25in; text-align: left"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#9679;</FONT></TD><TD><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">a
                                         combination of any such methods of sale.</FONT></TD>
</TR></TABLE>

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

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">Broker-dealers
engaged by the selling stockholders may arrange for other brokers-dealers to participate in sales. Broker-dealers may receive
commissions or discounts from the selling stockholders (or, if any broker-dealer acts as agent for the purchaser of shares, from
the purchaser) in amounts to be negotiated, but, except as set forth in a supplement to this prospectus, in the case of an agency
transaction not in excess of a customary brokerage commission in compliance with FINRA Rule 2440; and in the case of a principal
transaction a markup or markdown in compliance with FINRA IM-2440.</FONT></P>

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

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><FONT STYLE="font: 10pt Times New Roman, Times, Serif">Peak
One is an underwriter within the meaning of the Securities Act of 1933 and any broker-dealers or agents that are involved in selling
the shares may be deemed to be &ldquo;underwriters&rdquo; within the meaning of the Securities Act of 1933 in connection with
such sales. In such event, any commissions received by such broker-dealers or agents and any profit on the resale of the shares
purchased by them may be deemed to be underwriting commissions or discounts under the Securities Act of 1933. Peak One has informed
us that it does not have any written or oral agreement or understanding, directly or indirectly, with any person to distribute
the common stock of our company. Pursuant to a requirement by FINRA, the maximum commission or discount to be received by any
FINRA member or independent broker-dealer may not be greater than 8% of the gross proceeds received by us for the sale of any
securities being registered pursuant to Rule 415 promulgated under the Securities Act of 1933.</FONT></P>

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

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

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

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">Discounts,
concessions, commissions and similar selling expenses, if any, attributable to the sale of shares will be borne by the selling
stockholder. The selling stockholder may agree to indemnify any agent, dealer, or broker-dealer that participates in transactions
involving sales of the shares if liabilities are imposed on that person under the Securities Act of 1933.</FONT></P>

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

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">We
are required to pay certain fees and expenses incurred by us incident to the registration of the shares covered by this prospectus.
We have agreed to indemnify the selling stockholders against certain losses, claims, damages and liabilities, including liabilities
under the Securities Act of 1933. We will not receive any proceeds from the resale of any of the shares of our common stock by
the selling stockholders. We may, however, receive proceeds from the sale of our common stock under the Financing Agreement with
Peak One. Neither the Financing Agreement with Peak One nor any rights of the parties under the Financing Agreement with Peak
One may be assigned or delegated to any other person.</FONT></P>

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

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">We
have entered into an agreement with Peak One to keep this prospectus effective until Peak One has sold all of the common shares
purchased by it under the Financing Agreement and has no right to acquire any additional shares of common stock under the Financing
Agreement.</FONT></P>

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

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">The
resale shares will be sold only through registered or licensed brokers or dealers if required under applicable state securities
laws. In addition, in certain states, the resale shares may not be sold unless they have been registered or qualified for sale
in the applicable state or an exemption from the registration or qualification requirement is available and is complied with.</FONT></P>

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

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">Under
applicable rules and regulations under the Securities Exchange Act of 1934, any person engaged in the distribution of the resale
shares may not simultaneously engage in market making activities with respect to the common stock for the applicable restricted
period, as defined in Regulation M, prior to the commencement of the distribution. In addition, the selling stockholders will
be subject to applicable provisions of the Securities Exchange Act of 1934 and the rules and regulations thereunder, including
Regulation M, which may limit the timing of purchases and sales of shares of the common stock by the selling stockholders or any
other person. We will make copies of this prospectus available to the selling stockholders.</FONT></P>

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

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt"><B>DESCRIPTION
OF SECURITIES TO BE REGISTERED</B></FONT></P>

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

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt"><B>General</B></FONT></P>

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

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">We
are authorized to issue an aggregate of 150,000,000 shares of common stock, $0.001 par value per share and 50,000,000 shares of
preferred stock in one or more series and to fix the voting powers, preferences and other rights and limitations of the preferred
stock. As of September 12, 2019, we had 25,240,222 shares of common stock outstanding and no shares of preferred stock outstanding.</FONT></P>

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

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">Each
share of common stock shall have one (1) vote per share. Our common stock does not provide a preemptive, subscription or conversion
rights and there are no redemption or sinking fund provisions or rights. Our common stock holders are not entitled to cumulative
voting for election of Board of Directors.</FONT></P>

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

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt"><B>Dividends</B></FONT></P>

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

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">We
have not paid any dividends on our common stock since our inception and do not intend to pay any dividends in the foreseeable
future.</FONT></P>

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

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">The
declaration of any future cash dividends is at the discretion of our board of directors and depends upon our earnings, if any,
our capital requirements and financial position, our general economic conditions, and other pertinent conditions. It is our present
intention not to pay any cash dividends in the foreseeable future, but rather to reinvest earnings, if any, in our business operations.</FONT></P>

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

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

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

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

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

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

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify">As of September 12, 2019, we have issued warrants
to purchase 2,350,000 shares of Common Stock issuable with a weighted average exercise price of $0.34. Of which 2,050,000 warrants
are exercisable immediately, have a weighted-average remaining life of 2.21 years and a weighted-average exercise price of $0.25
as of September 12, 2019.</P>

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

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

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

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify">As of September 12, 2019, we have issued
options to purchase 5,240,000 shares of Common Stock issuable with a weighted average exercise price of $0.28. Of which
3,156,000 options are exercisable immediately, have a weighted-average remaining life of 3.38 years and a weighted-average
exercise price of $0.30 as of September 12, 2019.</P>



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

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

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt"><B>Securities
Authorized for Issuance Under Equity Compensation Plans</B></FONT></P>

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

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">In
November 2015, Digerati adopted the Digerati Technologies, Inc. 2015 Equity Compensation Plan (the &ldquo;Plan&rdquo;). The Plan
authorizes the grant of up to 7.5 million stock options, restricted common shares, non-restricted common shares and other awards
to employees, directors, and certain other persons. The Plan is intended to permit Digerati to retain and attract qualified individuals
who will contribute to the overall success of Digerati. Digerati&rsquo;s Board of Directors determines the terms of any grants
under the Plan. Exercise prices of all stock options and other awards vary based on the market price of the shares of common stock
as of the date of grant. The stock options, restricted common stock, non-restricted common stock and other awards vest based on
the terms of the individual grant. On November 18, 2015, the Company filed a Registration Statement on Form S-8 to register with
the U.S. Securities and Exchange Commission 7,500,000 shares of the Company&rsquo;s common stock, which may be issued by the Company
upon the exercise of options granted, or other awards made, pursuant to the terms of the Plan. Please see the Plan filed as Exhibit
4.1 to the Company&rsquo;s Registration Statement on Form S-8 filed with the U.S. Securities and Exchange Commission on November
18, 2015.&nbsp;</FONT></P>

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

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt"><B>Preferred
Stock</B></FONT></P>

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

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">The
Company has authorized 50,000,000 shares of preferred stock. The board of directors has the authority to issue these shares and
to set dividends, voting and conversion rights, redemption provisions, liquidation preferences, and other rights and restrictions.</FONT></P>

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

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt"><B>Anti-Takeover
Effects of Various Provisions of Nevada Law </B></FONT></P>

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

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">Provisions
of the Nevada Revised Statutes, our articles of incorporation, as amended, and bylaws could make it more difficult to acquire
us by means of a tender offer, a proxy contest or otherwise, or to remove incumbent officers and directors. These provisions,
summarized below, would be expected to discourage certain types of takeover practices and takeover bids our Board may consider
inadequate and to encourage persons seeking to acquire control of us to first negotiate with us. We believe that the benefits
of increased protection of our ability to negotiate with the proponent of an unfriendly or unsolicited proposal to acquire or
restructure us will outweigh the disadvantages of discouraging takeover or acquisition proposals because, among other things,
negotiation of these proposals could result in an improvement of their terms.</FONT></P>

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

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt"><I>Blank
Check Preferred </I></FONT></P>

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

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">Our
articles of incorporation permit our Board to issue preferred stock with voting, conversion and exchange rights that could negatively
affect the voting power or other rights of our Common Stockholders. The issuance of our preferred stock could delay or prevent
a change of control of our Company.</FONT></P>

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

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt"><I>Amendments
to our Articles of Incorporation and Bylaws</I></FONT></P>

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

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">Under
the Nevada Revised Statutes, our articles of incorporation may not be amended by stockholder action alone.</FONT></P>

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

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt"><I>Nevada
Anti-Takeover Statute</I></FONT></P>

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

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">We
may be subject to Nevada&rsquo;s Combination with Interested Stockholders Statute (Nevada Corporation Law Sections 78.411-78.444)
which prohibits an &ldquo;interested stockholder&rdquo; from entering into a &ldquo;combination&rdquo; with the corporation, unless
certain conditions are met. An &ldquo;interested stockholder&rdquo; is a person who, together with affiliates and associates,
beneficially owns (or within the prior two years, did beneficially own) 10% or more of the corporation&rsquo;s capital stock entitled
to vote.</FONT></P>

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

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

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

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt"><B>Limitations
on Liability and Indemnification of Officers and Directors</B></FONT></P>

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

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">The
Nevada Revised Statutes limits or eliminates the personal liability of directors to corporations and their stockholders for monetary
damages for breaches of directors&rsquo; fiduciary duties as directors.</FONT></P>

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

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">The
limitation of liability and indemnification provisions under the Nevada Revised Statutes and in our articles of incorporation
and bylaws may discourage stockholders from bringing a lawsuit against directors for breach of their fiduciary duties. These provisions
may also have the effect of reducing the likelihood of derivative litigation against directors and officers, even though such
an action, if successful, might otherwise benefit us and our stockholders. However, these provisions do not limit or eliminate
our rights, or those of any stockholder, to seek non-monetary relief such as injunction or rescission in the event of a breach
of a director&rsquo;s fiduciary duties. Moreover, the provisions do not alter the liability of directors under the federal securities
laws. In addition, your investment may be adversely affected to the extent that, in a class action or direct suit, we pay the
costs of settlement and damage awards against directors and officers pursuant to these indemnification provisions.</FONT></P>

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

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt"><B>Authorized
but Unissued Shares</B></FONT></P>

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

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">Our
authorized but unissued shares of Common Stock and preferred stock will be available for future issuance without stockholder approval,
except as may be required under the listing rules of any stock exchange on which our Common Stock is then listed. We may use additional
shares for a variety of corporate purposes, including future public offerings to raise additional capital, corporate acquisitions
and employee benefit plans. The existence of authorized but unissued shares of Common Stock and preferred stock could render more
difficult or discourage an attempt to obtain control of us by means of a proxy contest, tender offer, merger or otherwise.</FONT></P>

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

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt"><B>Penny
Stock Considerations</B></FONT></P>

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

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">Our
shares will be &ldquo;penny stocks&rdquo; as that term is generally defined in the Securities Exchange Act of 1934 to mean equity
securities with a price of less than $5.00 per share. Thus, our shares will be subject to rules that impose sales practice and
disclosure requirements on broker-dealers who engage in certain transactions involving a penny stock. Under the penny stock regulations,
a broker-dealer selling a penny stock to anyone other than an established customer must make a special suitability determination
regarding the purchaser and must receive the purchaser&rsquo;s written consent to the transaction prior to the sale, unless the
broker-dealer is otherwise exempt.</FONT></P>

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

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">In
addition, under the penny stock regulations, the broker-dealer is required to:</FONT></P>

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

<TABLE CELLPADDING="0" CELLSPACING="0" STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0; margin-bottom: 0; width: 100%"><TR STYLE="vertical-align: top">
<TD STYLE="width: 0.25in"></TD><TD STYLE="width: 0.25in; text-align: left"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#9679;</FONT></TD><TD STYLE="text-align: justify"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">Deliver,
                                         prior to any transaction involving a penny stock, a disclosure schedule prepared by the
                                         Securities and Exchange Commission relating to the penny stock market, unless the broker-dealer
                                         or the transaction is otherwise exempt;</FONT></TD>
</TR></TABLE>

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

<TABLE CELLPADDING="0" CELLSPACING="0" STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0; margin-bottom: 0; width: 100%"><TR STYLE="vertical-align: top">
<TD STYLE="width: 0.25in"></TD><TD STYLE="width: 0.25in; text-align: left"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#9679;</FONT></TD><TD STYLE="text-align: justify"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">Disclose
                                         commissions payable to the broker-dealer and our registered representatives and current
                                         bid and offer quotations for the securities;</FONT></TD>
</TR></TABLE>

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

<TABLE CELLPADDING="0" CELLSPACING="0" STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0; margin-bottom: 0; width: 100%"><TR STYLE="vertical-align: top">
<TD STYLE="width: 0.25in"></TD><TD STYLE="width: 0.25in; text-align: left"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#9679;</FONT></TD><TD STYLE="text-align: justify"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">Send
                                         monthly statements disclosing recent price information pertaining to the penny stock
                                         held in a customer&rsquo;s account, the account&rsquo;s value, and information regarding
                                         the limited market in penny stocks; and</FONT></TD>
</TR></TABLE>

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

<TABLE CELLPADDING="0" CELLSPACING="0" STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0; margin-bottom: 0; width: 100%"><TR STYLE="vertical-align: top">
<TD STYLE="width: 0.25in"></TD><TD STYLE="width: 0.25in; text-align: left"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#9679;</FONT></TD><TD STYLE="text-align: justify"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">Make
                                         a special written determination that the penny stock is a suitable investment for the
                                         purchaser and receive the purchaser&rsquo;s written agreement to the transaction, prior
                                         to conducting any penny stock transaction in the customer&rsquo;s account.</FONT></TD>
</TR></TABLE>

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

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">Because
of these regulations, broker-dealers may encounter difficulties in their attempt to sell shares of our common stock, which may
affect the ability of selling shareholders or other holders to sell their shares in the secondary market and have the effect of
reducing the level of trading activity in the secondary market. These additional sales practice and disclosure requirements could
impede the sale of our securities, if our securities become publicly traded. In addition, the liquidity for our securities may
be decreased, with a corresponding decrease in the price of our securities. Our shares in all probability will be subject to such
penny stock rules and our shareholders will, in all likelihood, find it difficult to sell their securities.</FONT></P>



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

<P STYLE="margin: 0"></P>

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

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

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 33.75pt">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0">The transfer agent
of our Common Stock is American Stock Transfer &amp; Trust Company. Their address is 6201 15th Avenue, Brooklyn, NY 11219.</P>

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

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

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

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0">Lucosky Brookman
LLP, Woodbridge, New Jersey, will pass upon the validity of the securities being offered by this prospectus.</P>

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

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center"><B><A NAME="a_009"></A>EXPERTS</B></P>

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

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0">The consolidated financial statements for
the Company as of July 31, 2018 and for the year then ended included in this prospectus have been audited by Malone Bailey, LLP,
an independent registered public accounting firm, to the extent and for the periods set forth in our report and are incorporated
herein in reliance upon such report given upon the authority of said firm as experts in auditing and accounting.</P>

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

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0">The consolidated financial
statements for the Company as of July 31, 2017 and for the year then ended included in this prospectus have been audited by LBB
&amp; Associates Ltd., LLP, an independent registered public accounting firm, to the extent and for the periods set forth in our
report and are incorporated herein in reliance upon such report given upon the authority of said firm as experts in auditing and
accounting.</P>

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

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0">The legality of the shares offered under
this registration statement will be passed upon by Lucosky Brookman LLP.</P>

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

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

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

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

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

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0">Digerati Technologies,
Inc., a Nevada corporation (including our subsidiaries, &ldquo;we,&rdquo; &ldquo;us,&rdquo; &ldquo;Company&rdquo; or &ldquo;Digerati&rdquo;),
through its operating subsidiaries, Shift8 Networks, Inc., dba Synergy Telecom (&ldquo;Shift8&rdquo;) and T3 Communications, Inc.
(&ldquo;T3&rdquo;), provides cloud services specializing in Unified Communications as a Service (&ldquo;UCaaS&rdquo;) solutions
for the business market. Our product line includes a portfolio of Internet-based telephony products and services delivered through
our cloud application platform and session-based communication network and network services including Internet broadband, fiber,
and cloud WAN solutions. Our services are designed to provide enterprise-class, carrier-grade services to the small-to-medium-sized
business (&ldquo;SMB&rdquo;) at cost-effective monthly rates. Our UCaaS or cloud communication services include fully hosted IP/PBX,
mobile applications, Voice over Internet Protocol (&ldquo;VoIP&rdquo;) transport, SIP trunking, and customized VoIP services all
delivered <B><I>Only in the Cloud&trade;</I></B>.</P>

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

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0">As a provider of cloud
communications solutions to the SMB, we are seeking to capitalize on the migration by businesses from the legacy telephone network
to the Internet Protocol (&ldquo;IP&rdquo;) telecommunication network and the migration from hardware-based on-premise telephone
systems to software-based communication systems in the cloud. Most SMBs are lagging in technical capabilities and advancement and
seldom reach the economies of scale that their larger counterparts enjoy, due to their achievement of a critical mass and ability
to deploy a single solution to a large number of workers. SMBs are typically unable to afford comprehensive enterprise solutions
and, therefore, need to integrate a combination of business solutions to meet their needs. Cloud computing has revolutionized the
industry and opened the door for businesses of all sizes to gain access to enterprise applications with affordable pricing. This
especially holds true for cloud telephony applications, but SMBs are still a higher-touch sale that requires customer support for
system integration, network installation, cabling, and troubleshooting. We have placed a significant emphasis on that &ldquo;local&rdquo;
touch when selling, delivering, and supporting our services which we believe will differentiate us from the national providers
that are experiencing high attrition rates due to poor customer support model.</P>

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

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

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

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0">The adoption of cloud
communication services is being driven by the convergence of several market trends, including the increasing costs of maintaining
installed legacy communications systems, the fragmentation resulting from use of multiple on-premise systems, and the proliferation
of personal smartphones used in the workplace. Today, businesses are increasingly looking for an affordable path to modernizing
their communications system to improve productivity, business performance and customer experience.</P>

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

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0">Our cloud solutions
offer the SMB reliable, robust, and full-featured services at affordable monthly rates that eliminates high-cost capital expenditures
and provides for integration with other cloud-based systems.</P>

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

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><B>Products and Services</B></P>

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

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0">We provide a comprehensive
suite of Internet-based communication services to meet the global needs of businesses that are seeking simple, flexible, and cost-effective
communication solutions. Our Internet-based services include fully hosted IP/PBX services, SIP trunking, call center applications,
interactive voice response auto attendant, voice and web conferencing, call recording, simultaneous calling, voicemail to email
conversion, integrated mobility applications that are device and location agnostic, and multiple customized IP/PBX features in
a hosted or cloud environment. Our services, known as UCaaS or cloud communications, are specifically designed for the needs of
the small to medium-sized business, enterprise customers, call centers, and telephony service providers that do not have the scale
or expertise necessary to deploy their own cloud telephony infrastructure.</P>

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

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0">Through our recent
acquisitions, we have enhanced our product portfolio with the addition of enterprise-class data and connectivity solutions through
multiple broadband technologies including cloud WAN or SD-WAN (Software-defined Wide Area Network), fiber, and Ethernet over copper.
Other services include remote network monitoring, data backup and disaster recovery. The addition of these new products and services
allows us to increase our value-proposition through product bundles that go beyond the voice application and to serve as a one-stop-shop
for business customers seeking a comprehensive voice and data solution.</P>

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

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><B>Voice over Internet Protocol Networks
</B></P>

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

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0">The basic technology
of traditional telecommunications systems was designed for slow mechanical switches. Communications over the traditional telephone
network are routed through circuits that must dedicate all circuit resources to each call from its inception until the call ends,
regardless of whether anyone is actually talking on the circuit. This circuit-switching technology incurs a significant cost per
call and does not efficiently support the integration of voice with data services. Data networks, however, were designed for electronic
switching. They break the data stream into small, individually addressed packages of data (&ldquo;packets&rdquo;) that are routed
independently of each other from the origin to the destination. Therefore, they do not require a fixed amount of bandwidth to be
reserved between the origin and destination of each call and they do not waste bandwidth when it is not being used for actual transmission
of information. This allows multiple voice or voice and data calls to be pooled, resulting in these networks being able to carry
more calls with an equal amount of bandwidth. Moreover, they do not require the same complex switching methods required by traditional
voice telephone networks, instead using a multiplicity of routers to direct each packet to its destination and automatically routing
packets around blockages, congestion or outages.</P>

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

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

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

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0">Packet switching can
be used within a data network or across networks, including the public Internet. The Internet itself is not a single data network
owned by any single entity, but rather a loose interconnection of networks belonging to many owners that communicate using the
Internet Protocol. By converting voice signals to digital data and handling the voice signals as data, it can be transmitted through
the more efficient switching networks designed for data transmissions and through the Internet using the Internet Protocol. The
transmission of voice signals as digitalized data streams over the Internet is known as Voice over Internet Protocol or &ldquo;VoIP&rdquo;.
A VoIP network has the following advantages over traditional networks:</P>

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

<TABLE CELLPADDING="0" CELLSPACING="0" STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0; margin-bottom: 0; width: 100%"><TR STYLE="vertical-align: top; text-align: justify">
<TD STYLE="width: 0.25in"></TD><TD STYLE="width: 0.25in; text-align: left"><FONT STYLE="font-size: 10pt">&#9679;</FONT></TD><TD STYLE="text-align: justify"><FONT STYLE="font-size: 10pt"><B>Simplification: </B>An
integrated infrastructure that supports all forms of communication allows more standardization, a smaller equipment complement,
and less equipment management.</FONT></TD>
</TR></TABLE>
<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&nbsp;</P>

<TABLE CELLPADDING="0" CELLSPACING="0" STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0; margin-bottom: 0; width: 100%"><TR STYLE="vertical-align: top; text-align: justify">
<TD STYLE="width: 0.25in"></TD><TD STYLE="width: 0.25in; text-align: left"><FONT STYLE="font-size: 10pt">&#9679;</FONT></TD><TD STYLE="text-align: justify"><FONT STYLE="font-size: 10pt"><B>Network Efficiency:
</B>The integration of voice and data fills up the data communication channels efficiently, thus providing bandwidth consolidation
and reduction of the costs associated with idle bandwidth. This combined infrastructure can support dynamic bandwidth optimization
and a fault tolerant design. The differences between the traffic patterns of voice and data offer further opportunities for significant
efficiency improvements.</FONT></TD>
</TR></TABLE>
<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><B>&nbsp;</B></P>

<TABLE CELLPADDING="0" CELLSPACING="0" STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0; margin-bottom: 0; width: 100%"><TR STYLE="vertical-align: top; text-align: justify">
<TD STYLE="width: 0.25in"></TD><TD STYLE="width: 0.25in; text-align: left"><FONT STYLE="font-size: 10pt">&#9679;</FONT></TD><TD STYLE="text-align: justify"><FONT STYLE="font-size: 10pt"><B>Co-existence with
traditional communication mediums: </B>IP telephony can be used in conjunction with existing public telephone system switches,
leased and dial-up lines, PBXs and other customer premise equipment, enterprise LANs, and Internet connections. IP telephony applications
can be implemented through dedicated gateways, which in turn can be based on open standards platforms for reliability and scalability.</FONT></TD>
</TR></TABLE>
<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><B>&nbsp;</B></P>

<TABLE CELLPADDING="0" CELLSPACING="0" STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0; margin-bottom: 0; width: 100%"><TR STYLE="vertical-align: top; text-align: justify">
<TD STYLE="width: 0.25in"></TD><TD STYLE="width: 0.25in; text-align: left"><FONT STYLE="font-size: 10pt">&#9679;</FONT></TD><TD STYLE="text-align: justify"><FONT STYLE="font-size: 10pt"><B>Cost reduction:</B>
Under the VoIP network, the connection is directly to the Internet backbone and as a result the telephony access charges and settlement
fees are avoided.</FONT></TD>
</TR></TABLE>
<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0">The growth of voice
over the Internet was limited in the past due to poor sound quality caused by technical issues such as delays in packet transmission
and by bandwidth limitations related to Internet network capacity and local access constraints. However, the expansion of Internet
Protocol network infrastructure, improvements in packet switching and compression technology, new software algorithms and improved
hardware have substantially reduced delays in packet transmissions and resulted in superior sound quality to that of the legacy
telephone network.</P>

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

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><B>Cloud Communications</B></P>

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

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0"><FONT STYLE="background-color: white">Cloud
communications&nbsp;are Internet-based voice and data communications where telecommunications applications, switching and storage
are hosted by a third-party service provider outside of the organization using the services. Services are accessed by the user
over the public Internet.&nbsp;Cloud telephony&nbsp;refers specifically to voice services and more specifically the replacement
of conventional business telephone equipment (such as a&nbsp;PBX) with VoIP service hosted by a third-party service provider and
delivered over the Internet.</FONT></P>

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

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0">We
operate a cloud communication network that consists of a VoIP switching system and cloud telephony application platform. Our network
allows us to provide end-to-end cloud telephony solutions designed to provide significant benefits to businesses of all sizes,
with single or multiple locations. The integration of our cloud communication platform and global VoIP network allows us to provide
our customers with virtually any type of telephony solution on a global basis.</P>

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

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0">Our
cloud communication solutions, also known as UCaaS, are designed to minimize upfront capital costs, increase the scalability and
flexibility of the customer&rsquo;s communications network and service environment, provide robust features and functionality to
increase productivity and reduce the overall cost of communications.</P>

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

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

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

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0">Our strategy is to
target the small to medium-sized business market and capitalize on the wave of migration from the legacy telephone network to cloud
telephony. We will continue to concentrate our sales and marketing efforts on developing vertically oriented solutions for targeted
markets primarily focusing on municipalities, banking, healthcare, legal services and real estate. In addition, we will continue
to partner with our distributors and Value-Added Resellers (&ldquo;VARs&rdquo;) to expand our customer base. Our typical VAR is
an information technology services firm, traditional PBX vendor, managed service provider, or systems integrator that has established
relationships with businesses in its local market. These VARs are currently providing local customer support for other IT or PBX
services but lack the technology infrastructure to provide cloud communication and VoIP services to their customers. Our strategy
allows these VARs to focus on their strength of providing first tier support to their customers while we provide the second and
third tier technical support required to operate a cloud communication and VoIP network. In addition, we transform our VARs&rsquo;
business model by introducing new cloud telephony services and adding a new and lucrative recurring revenue stream that increases
the VARs&rsquo; value proposition for its current and prospective customers.</P>

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

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

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

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0">Our cloud-based technology
platform enables us and our VARs to deliver enhanced voice services to their business customers. The features supported on our
cloud communication platform include all standard telephone features and value-added applications such as voicemail to email, VoIP
peering, teleconferencing, IVR auto attendant, and dial-by-name directory. Our system provides our customers and VARs with a migration
path from a traditional PBX system to a complete cloud-based PBX solution.</P>

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

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0">Our strategic initiatives
to successfully meet our long-term business objectives include:</P>

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

<TABLE CELLPADDING="0" CELLSPACING="0" STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0; margin-bottom: 0; width: 100%"><TR STYLE="vertical-align: top; text-align: justify">
<TD STYLE="width: 0.25in"></TD><TD STYLE="width: 0.25in; text-align: left"><FONT STYLE="font-size: 10pt">&#9679;</FONT></TD><TD STYLE="text-align: justify"><FONT STYLE="font-size: 10pt">A disciplined approach
to evaluating additional acquisitions as we build on the foundation created by our most recent acquisitions in Texas and Florida.
We will continue to target local and/or regional UCaaS/cloud telephony providers which have excelled in their market with that
&ldquo;local&rdquo; touch when serving their business customers. We believe the experience gained in integrating products, personnel,
and customers will facilitate continued growth via acquisition.</FONT></TD>
</TR></TABLE>
<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&nbsp;</P>

<TABLE CELLPADDING="0" CELLSPACING="0" STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0; margin-bottom: 0; width: 100%"><TR STYLE="vertical-align: top; text-align: justify">
<TD STYLE="width: 0.25in"></TD><TD STYLE="width: 0.25in; text-align: left"><FONT STYLE="font-size: 10pt">&#9679;</FONT></TD><TD STYLE="text-align: justify"><FONT STYLE="font-size: 10pt">A continued emphasis
on our UCaaS/cloud communication business which operates in a segment of the telecommunication industry that continues to experience
significant growth as businesses migrate from legacy phone systems to cloud-based telephony systems.</FONT></TD>
</TR></TABLE>
<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 0.75in; text-align: justify">&nbsp;</P>

<TABLE CELLPADDING="0" CELLSPACING="0" STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0; margin-bottom: 0; width: 100%"><TR STYLE="vertical-align: top; text-align: justify">
<TD STYLE="width: 0.25in"></TD><TD STYLE="width: 0.25in; text-align: left"><FONT STYLE="font-size: 10pt">&#9679;</FONT></TD><TD STYLE="text-align: justify"><FONT STYLE="font-size: 10pt">Enhancements to our broadband
product portfolio with an emphasis on marketing leading-edge network and business continuity solutions like cloud WAN, also known
as SD-WAN (Software Defined Wide-Area Network), to our customers which we anticipate will increase average revenue per customer.</FONT></TD>
</TR></TABLE>
<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 0.5in">&nbsp;</P>

<TABLE CELLPADDING="0" CELLSPACING="0" STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0; margin-bottom: 0; width: 100%"><TR STYLE="vertical-align: top; text-align: justify">
<TD STYLE="width: 0.25in"></TD><TD STYLE="width: 0.25in; text-align: left"><FONT STYLE="font-size: 10pt">&#9679;</FONT></TD><TD STYLE="text-align: justify"><FONT STYLE="font-size: 10pt">Implementing a total
support model (pre and post sales) for building a world-class service delivery and help desk organization.</FONT></TD>
</TR></TABLE>
<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 0.75in; text-align: justify">&nbsp;</P>

<TABLE CELLPADDING="0" CELLSPACING="0" STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0; margin-bottom: 0; width: 100%"><TR STYLE="vertical-align: top; text-align: justify">
<TD STYLE="width: 0.25in"></TD><TD STYLE="width: 0.25in; text-align: left"><FONT STYLE="font-size: 10pt">&#9679;</FONT></TD><TD STYLE="text-align: justify"><FONT STYLE="font-size: 10pt">Emphasis on our sales
distribution model that enables our VARs to offer cloud and session-based communication services to the enterprise market in various
regions and industries.</FONT></TD>
</TR></TABLE>
<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 0.75in; text-align: justify">&nbsp;</P>

<TABLE CELLPADDING="0" CELLSPACING="0" STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0; margin-bottom: 0; width: 100%"><TR STYLE="vertical-align: top; text-align: justify">
<TD STYLE="width: 0.25in"></TD><TD STYLE="width: 0.25in; text-align: left"><FONT STYLE="font-size: 10pt">&#9679;</FONT></TD><TD STYLE="text-align: justify"><FONT STYLE="font-size: 10pt">Continue enhancing our
infrastructure and back office system to streamline operations, automate key processes, and support the scalability of our VAR
distribution model.</FONT></TD>
</TR></TABLE>
<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 0.5in; text-align: justify">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><B>Competitive Conditions</B></P>

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

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0"><FONT STYLE="background-color: white">The
cloud services industry, including the provisioning of cloud communications services, cloud connectivity, cloud storage and cloud
computing, as well as carrier voice and data services, is highly competitive, rapidly evolving and subject to constant technological
change and intense marketing by providers with similar products and services. We expect that new, smaller, but very agile competitors,
specializing in providing service to regional and emerging markets at low margin and hence low cost, may have an impact on our
market. Similarly, the business services market includes competitors who may be significantly larger and have substantially greater
market presence, financial, technical, operational and marketing resources than we do, including Tier 1 carriers, cable companies
and premise-based solutions providers that are implementing cloud communication services. In the event that such a competitor expends
significant sales and marketing resources in one or several markets where we compete with them, we may not be able to compete successfully
in those markets. Specialized cloud services providers, who focus on one or more cloud service or application, could adopt aggressive
pricing and promotion practices that could impact our ability to compete. We also believe that competition will continue to increase,
placing downward pressure on prices. Such pressure could adversely affect our gross margins if we are not able to reduce our costs
commensurate with the price reductions of our competitors. In addition, the pace of technological change makes it impossible for
us to predict whether we will face new competitors using different technologies to provide the same or similar services offered
or proposed to be offered by us. If our competitors were to provide better and more cost-effective services than ours, we may not
be able to increase our revenues or capture any significant market share.</FONT></P>

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

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

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

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0">The VoIP and Internet
telephony market are highly competitive. Our competitors include major telecommunications carriers in the U.S., national UCaaS
providers, and numerous small cloud telephony operators. We expect to face continuing competition based on price and service offerings
from existing competitors and new market entrants in the future. The principal competitive factors in our market include price,
coverage, customer service, technical response times, reliability, and network size/capacity. The competitive landscape is rapidly
altering the number, identity and competitiveness of the marketplace, and we are unable to determine with certainty the impact
of potential consolidation in our industry.</P>

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

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0">Many of our competitors
have substantially greater financial, technical and marketing resources, larger customer bases, longer operating histories, greater
name recognition and more established relationships in the industry than we have. As a result, certain of these competitors may
be able to adopt more aggressive pricing policies that could hinder our ability to market our services. We believe that our key
competitive advantages are our ability to deliver reliable, high quality voice service over the Internet in a cost-effective manner,
superior customers service and our VAR distribution model. We cannot provide assurances, however, that these advantages will enable
us to succeed against comparable service offerings from our competitors.</P>

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

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><B>Government Regulation</B></P>

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

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0">VoIP and other communications
services, like ours, have been subject to less regulation at the state and federal levels than traditional telecommunications services.
Providers of traditional telecommunications services are subject to the highest degree of regulation, while providers of VoIP and
other information services are largely exempt from most federal and state regulations governing traditional common carriers. The
FCC has subjected VoIP service providers to a smaller subset of regulations that apply to traditional telecommunications service
providers and has not yet classified VoIP services as either telecommunications or information. The FCC is currently examining
the status of VoIP service providers and the services they provide in multiple open proceedings. In addition, many state regulatory
agencies impose taxes and other surcharges on VoIP services, and certain states take the position that offerings by VoIP providers
are intrastate telecommunications services and therefore subject to state regulation. These states argue that if the beginning
and end points of communications are known, and if some of these communications occur entirely within the boundaries of a state,
the state can regulate that offering. We believe that the FCC has preempted states from regulating VoIP offerings in the same manner
as providers of traditional telecommunications services. However, this issue has not been resolved definitively as a matter of
law, and it remains possible that the FCC could determine that such services are not information services, or that there could
be a judicial or legislative determination that the states are not preempted from regulating VoIP services as traditional telecommunications
services. We cannot predict how or when these issues will be resolved or its potential future impact on our business at this time.</P>

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

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0">The effect of any future
laws, regulations and orders on our operations, including, but not limited to, our cloud-based communications and collaboration
services, cannot be determined. But as a general matter, increased regulation and the imposition of additional funding obligations
increases service costs that may or may not be recoverable from our customers, which could result in making our services less competitive
with traditional telecommunications services if we increase our prices or decreasing our profit margins if we attempt to absorb
such costs.</P>

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

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0">Federal, state, local
and foreign governmental organizations are considering other legislative and regulatory proposals that would regulate and/or tax
applications running over the Internet. We cannot predict whether new taxes will be imposed on our services, and depending on the
type of taxes imposed, whether and how our services would be affected thereafter. Increased regulation of the Internet may decrease
its growth and hinder technological development, which may negatively impact the cost of doing business via the Internet or otherwise
materially adversely affect our business, financial condition and results of operations.</P>

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

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; background-color: white"><I>Regulation
of Internet-based Telecommunication Services in the United States</I></P>

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

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0">We have the necessary
authority under Section 214 of the Communications Act to operate as a domestic and international carrier. We are considered a non-dominant
domestic interstate carrier subject to minimal regulation by the FCC. We are not required to obtain FCC authority to initiate or
expand our domestic interstate operations, but we are required to obtain FCC approval to transfer control or discontinue service
and are required to file various reports and pay various fees and assessments. In addition, we must offer service on a nondiscriminatory
basis at just and reasonable rates and are subject to the FCC&rsquo;s complaint jurisdiction. Generally, our international voice
traffic is subject to minimal regulation by state and local jurisdictions.</P>

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

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in; background-color: white"></P>

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

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0">The
FCC requires Internet voice communications service providers, such as our company, to provide E-911 service in all geographic areas
covered by the traditional wire-line E-911 network. Under the FCC&rsquo;s rules, Internet voice communications providers must transmit
the caller&rsquo;s phone number and registered location information to the appropriate public safety answering point, or PSAP,
for the caller&rsquo;s registered location. The FCC also requires interconnected VoIP service providers to make Universal Service
Fund (&ldquo;USF&rdquo;) contributions. We believe that our services are currently compliant with all applicable requirements of
the FCC, and we have made and are making the required contributions to the USF. However, should we at some time fail to meet certain
requirements or fail to make required contributions, we could be subject to revocation of our authority to operate or to fines
or penalties.</P>

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

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0">As
a result of the FCC&rsquo;s preemption of states&rsquo; ability to regulate certain aspects of VoIP service, and a trend in state
legislatures to affirmatively deregulate VoIP services for most purposes, our VoIP services are subject to relatively few state
regulatory requirements aside from collection of state and local E911 fees and state Universal Service support obligations. We
believe that our VoIP services are currently compliant with all applicable state requirements, and we have made and are making
the required contributions to E911, state USF, and other funds. The state regulatory framework for our VoIP services continues
to evolve, so we, in conjunction with our professional advisors, monitor the actions of the various state regulatory agencies and
endeavor to ensure that we are in compliance with applicable state law, including any new statutes or regulations that may be passed.
However, there can be no assurance that we will become aware of all applicable requirements on a timely basis, or that we will
always be fully compliant with applicable rules and regulations. Should we fail to be compliant with applicable state regulations,
or to file required reports with state regulatory agencies, we could be subject to fines and/or penalties.</P>

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

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0">In
addition to regulations addressing Internet telephony and broadband services, other regulatory issues relating to the Internet
generally could affect our ability to provide our services. Congress has adopted legislation that regulates certain aspects of
the Internet including online content, user privacy, taxation, liability for third-party activities and jurisdiction. In addition,
a number of initiatives pending in Congress and state legislatures would prohibit or restrict advertising or sale of certain products
and services on the Internet, which may have the effect of raising the cost of doing business on the Internet generally.</P>

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

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><I>International Regulation</I></P>

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

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0">The regulatory treatment
of Internet telephony outside of the U.S. varies widely from country to country. A number of countries that currently prohibit
competition in the provision of voice telephony also prohibit Internet telephony. Other countries permit but regulate Internet
telephony. Some countries will evaluate proposed Internet telephony service on a case-by-case basis and determine whether it should
be regulated as a voice service or as another telecommunications service. In many countries, Internet telephony has not yet been
addressed by legislation or regulation. Increased regulation of the Internet and/or Internet telephony providers or the prohibition
of Internet telephony in one or more countries could adversely affect our business and future prospects if we decide to expand
globally.</P>

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

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><B>Customers and Suppliers</B></P>

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

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0">We rely on various
suppliers to provide services in connection with our Voice over Internet Protocol (&ldquo;VoIP&rdquo;) or Unified Communication
as a Service (&ldquo;UCaaS&rdquo;) offerings. Our customers include businesses in various industries including Healthcare, Banking,
Financial Services, Legal, Real Estate, and Construction. We are not dependent upon any single supplier or customer.</P>

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

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0">During the year ended
July 31, 2018, the Company did not derived a significant amount of revenue from one single customer. During the year ended July
31, 2017, the Company derived a significant amount revenue from four customers, comprising 24%, 24%, 11%, and 8% of the total revenue
for the year.</P>

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

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0">As of the year ended July 31, 2018, the company derived 13% and 23% total accounts receivable from two customers.
As of the year ended July 31, 2017, the Company derived a significant amount of accounts receivable from three customers, comprising
37%, 27% and 14% of the total accounts receivable as of the year ended July 31, 2017.</P>

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

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

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

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

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

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify">As of September 12, 2019, we had 23 employees,
all of whom performed sales, operational, technical and administrative functions. We believe our future success will depend to
a large extent on our continued ability to attract and retain highly skilled and qualified employees. We consider our employee
relations to be good. None of these aforementioned employees belong to labor unions.</P>



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

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

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; text-align: center"><B><A NAME="a_010"></A>MARKET PRICE OF THE REGISTRANT&rsquo;S
COMMON EQUITY AND RELATED STOCKHOLDER MATTERS</B></P>

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

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><B>Market for Common Equity</B></P>

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

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">Our common stock is quoted on the OTCQB
under the symbol &ldquo;DTGI&rdquo;. The following table sets forth the high and low bid prices for our common stock for the two
most recently completed fiscal years, as reported by Bloomberg, LP. Price quotations on the OTCQB reflect inter-dealer prices,
without retail mark-up, markdown or commission, and may not necessarily represent actual transactions.</P>

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

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">The following table sets forth the high
and low price for our common stock for each quarter during the 2018 and 2017 fiscal years. The prices reflect inter-dealer quotations,
do not include retail mark-ups, markdowns or commissions and do not necessarily reflect actual transactions.</P>

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

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

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

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0">As of September 12,
2019, there were approximately 336 record holders of our Common Stock.</P>

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

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

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

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0">We have not paid cash
dividends on our common stock and we do not anticipate paying a dividend in the foreseeable future.</P>

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

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><B>Equity Compensation Plans</B></P>

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

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0">The following table
provides information regarding securities that have been or are authorized to be issued under our equity compensation plans as
of July 31, 2018.</P>

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

<TABLE CELLPADDING="0" CELLSPACING="0" STYLE="border-collapse: collapse; width: 100%; font: 10pt Times New Roman, Times, Serif">
<TR STYLE="vertical-align: bottom">
    <TD STYLE="text-align: justify">&nbsp;</TD><TD STYLE="font-weight: bold; padding-bottom: 1.5pt">&nbsp;</TD>
    <TD COLSPAN="2" STYLE="font-weight: bold; text-align: center; border-bottom: Black 1.5pt solid">Number of Securities to be Issued Upon Exercise of Outstanding Options, Warrants and Rights</TD><TD STYLE="padding-bottom: 1.5pt; font-weight: bold">&nbsp;</TD><TD STYLE="font-weight: bold; padding-bottom: 1.5pt">&nbsp;</TD>
    <TD COLSPAN="2" STYLE="font-weight: bold; text-align: center; border-bottom: Black 1.5pt solid">Weighted-Average Exercise Price of Outstanding Options, Warrants and Rights</TD><TD STYLE="padding-bottom: 1.5pt; font-weight: bold">&nbsp;</TD><TD STYLE="font-weight: bold; padding-bottom: 1.5pt">&nbsp;</TD>
    <TD COLSPAN="2" STYLE="font-weight: bold; text-align: center; border-bottom: Black 1.5pt solid">Number of Securities Remaining Available for Future Issuance Under Equity Compensation Plans</TD><TD STYLE="padding-bottom: 1.5pt; font-weight: bold">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom">
    <TD STYLE="text-align: justify">&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(204,238,255)">
    <TD STYLE="width: 64%; font-weight: bold; text-align: left; text-indent: -0.1in; padding-left: 0.1in">Equity Compensation plans approved by security holders</TD><TD STYLE="width: 1%">&nbsp;</TD>
    <TD STYLE="width: 1%; text-align: left">&nbsp;</TD><TD STYLE="width: 9%; text-align: right">-0-</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: 9%; text-align: right">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;--</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: 9%; text-align: right">-0-</TD><TD STYLE="width: 1%; text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD STYLE="text-indent: -0.1in; padding-left: 0.1in">&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(204,238,255)">
    <TD STYLE="font-weight: bold; text-align: left; text-indent: -0.1in; padding-left: 0.1in">Equity Compensation Plans not approved by security holders</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">3,415,000</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">$</TD><TD STYLE="text-align: right">0.33</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">200,023</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD>&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,238,255)">
    <TD STYLE="font-weight: bold">Total</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">3,415,000</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">$</TD><TD STYLE="text-align: right">0.33</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">200,023</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
</TABLE>

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

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; text-align: center"><B><A NAME="a_011"></A>MANAGEMENT&rsquo;S DISCUSSION AND ANALYSIS
OF FINANCIAL CONDITION AND RESULTS OF OPERATION</B></P>

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

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><I>You should read the following discussion
of our financial condition and results of operations in conjunction with financial statements and notes thereto included elsewhere
in this prospectus. The following discussion contains forward-looking statements that reflect our plans, estimates and beliefs.
Our actual results could differ materially from those discussed in the forward-looking statements. Factors that could cause or
contribute to these differences include those discussed below and elsewhere in this prospectus, particularly in the section labeled
&ldquo;Risk Factors.&rdquo;</I></P>

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

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><I>This section of the prospectus includes
a number of forward-looking statements that reflect our current views with respect to future events and financial performance.
Forward-looking statements are often identified by words like &ldquo;believe,&rdquo; &ldquo;expect,&rdquo; &ldquo;estimate,&rdquo;
&ldquo;anticipate,&rdquo; &ldquo;intend,&rdquo; &ldquo;project,&rdquo; and similar expressions, or words that, by their nature,
refer to future events. You should not place undue certainty on these forward-looking statements, which apply only as of the date
of this prospectus. These forward-looking statements are subject to certain risks and uncertainties that could cause actual results
to differ materially from historical results or our predictions.</I></P>

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

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><I>The following is a discussion of the
unaudited interim consolidated financial condition and results of operations of Digerati for the three and nine months ended April
30, 2019 and 2018. It should be read in conjunction with our audited Consolidated Financial Statements, the Notes thereto, and
the other financial information included in the Company&rsquo;s Annual Report on Form 10-Kfor the fiscal year ended July 31, 2018
filed with the Securities and Exchange Commission on November 16, 2018. For purposes of the following discussion, fiscal 2019 or
2019 refers to the year ended July 31, 2019 and fiscal 2018 or 2018 refers to the year ended July 31, 2018. </I></P>

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

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

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

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">Digerati Technologies, Inc., a Nevada corporation
(including our subsidiaries, &ldquo;we,&rdquo; &ldquo;us,&rdquo; &ldquo;Company&rdquo; or &ldquo;Digerati&rdquo;), through its
operating subsidiaries in Texas and Florida, Shift8 Networks, Inc., dba, T3 Communications (&ldquo;T3&rdquo;) and T3 Communications,
Inc. (&ldquo;T3&rdquo;), provides cloud services specializing in Unified Communications as a Service (&ldquo;UCaaS&rdquo;) solutions
for the business market. Our product line includes a portfolio of Internet-based telephony products and services delivered through
our cloud application platform and session-based communication network and network services including Internet broadband, fiber,
and cloud WAN solutions. Our services are designed to provide enterprise-class, carrier-grade services to the small-to-medium-sized
business (&ldquo;SMB&rdquo;) at cost-effective monthly rates. Our UCaaS or cloud communication services include fully hosted IP/PBX,
mobile applications, Voice over Internet Protocol (&ldquo;VoIP&rdquo;) transport, SIP trunking, and customized VoIP services all
delivered <B><I>Only in the Cloud&trade;</I></B>.</P>

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

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">As a provider of cloud communications solutions
to the SMB, we are seeking to capitalize on the migration by businesses from the legacy telephone network to the Internet Protocol
(&ldquo;IP&rdquo;) telecommunication network and the migration from hardware-based on-premise telephone systems to software-based
communication systems in the cloud. Most SMBs are lagging in technical capabilities and advancement and seldom reach the economies
of scale that their larger counterparts enjoy, due to their achievement of a critical mass and ability to deploy a single solution
to a large number of workers. SMBs are typically unable to afford comprehensive enterprise solutions and, therefore, need to integrate
a combination of business solutions to meet their needs. Cloud computing has revolutionized the industry and opened the door for
businesses of all sizes to gain access to enterprise applications with affordable pricing. This especially holds true for cloud
telephony applications, but SMBs are still a higher-touch sale that requires customer support for system integration, network installation,
cabling, and troubleshooting. We have placed a significant emphasis on that &ldquo;local&rdquo; touch when selling, delivering,
and supporting our services which we believe will differentiate us from the national providers that are experiencing high attrition
rates due to poor customer support model.</P>

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

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">The adoption of cloud communication services
is being driven by the convergence of several market trends, including the increasing costs of maintaining installed legacy communications
systems, the fragmentation resulting from use of multiple on-premise systems, and the proliferation of personal smart phones used
in the workplace. Today, businesses are increasingly looking for an affordable path to modernizing their communications system
to improve productivity, business performance and customer experience.</P>

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

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">Our cloud solutions offer the SMB reliable,
robust, and full-featured services at affordable monthly rates that eliminates high-cost capital expenditures and provides for
integration with other cloud-based systems.</P>

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

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

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

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><B>Recent Acquisitions </B></P>

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

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">In December 2017, we closed a transaction
to acquire all the assets, assumed all customers, and critical vendor arrangements from Synergy Telecom, Inc. Synergy provides
UCaaS or cloud communication services to small and medium-sized business and municipalities, primarily in Texas.</P>

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

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">In May 2018, we completed the acquisition
of T3 Communications, Inc., an established UCaaS and Internet broadband provider serving a high-growth corridor in Southwest Florida.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 344.25pt">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><B><I>Sources of revenue: </I></B></P>

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

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><U>Cloud-based hosted Services</U>: We
provide UCaaS or cloud communication services and managed cloud-based solutions to small and medium size enterprise customers and
to other resellers. Our Internet-based services include fully hosted IP/PBX services, SIP trunking, call center applications, auto
attendant, voice and web conferencing, call recording, messaging, voicemail to email conversion, integrated mobility applications
that are device and location agnostic, and other customized IP/PBX features in a hosted or cloud environment. Other services include
enterprise-class data and connectivity solutions through multiple broadband technologies including cloud WAN or SD-WAN (Software-defined
Wide Area Network), fiber, and Ethernet over copper. We also offer remote network monitoring, data backup and disaster recovery.</P>

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

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><B><I>Direct Costs: </I></B></P>

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

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><U>Cloud-based hosted Services</U>: We
incur bandwidth and colocation charges in connection with our UCaaS or cloud communication services. The bandwidth charges are
incurred as part of the connectivity between our customers to allow them access to our various services. We also incur costs from
underlying providers for fiber, Internet broadband, and telecommunication circuits in connection with our data and connectivity
solutions.</P>

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

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

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

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"><B><I>Three Months ended April 30, 2019 Compared to Three Months
ended April 30, 2018</I></B></P>

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

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><I>Cloud-based hosted Services</I>. Cloud-based
hosted services revenue increased by $1,289,000, or 658% from the three months ended April 30, 2018 to the three months ended April
30, 2019. The increase in revenue between periods is primarily attributed to the increase in total customers acquired from the
acquisitions of T3 Communications, Inc. and Synergy Telecom&rsquo;s assets. Our total number of customers increased from 145 customers
for the three months ended April 30, 2018 to 688 customers for the three months ended April 30, 2019. Additionally, our average
monthly revenue per customer increased from $466 for the three months ended April 30, 2018 to $723 for the three months ended April
30, 2019.</P>

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

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">C<I>ost of Services (exclusive of depreciation
and amortization).</I> The cost of services increased by $664,000, or 627%, from the three months ended April 30, 2018 to the three
months ended April 30, 2019. The increase in cost of services between periods is primarily attributed to the additional costs arising
from our acquisitions and the acquired customers. Although our consolidated cost of services increased between periods, our consolidated
gross margin increased from 46% during the three months ended April 30, 2018 to 48% during the three months ended April 30, 2019.
The increase in gross margin between periods is attributed to a higher concentration of enterprise customers revenue, which generate
a slightly higher margin than services provided via resellers.</P>

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

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><I>Selling, General and Administrative
(SG&amp;A) Expenses (exclusive of legal and professional fees). </I>SG&amp;A expenses increased by $543,000, or 164%, from the
three months ended April 30, 2018 to the three months ended April 30, 2019. The increase in SG&amp;A expenses between periods is
primarily attributed to the additional salaries and other employee related expenses of approximately $417,000 attributable to the
T3 Communications, Inc. acquisition.</P>

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

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

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

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><I>Stock Compensation expense. </I>Stock
compensation expense decreased by $9,000, from the three months ended April 30, 2018 to the three months ended April 30, 2019.
The decrease between periods is attributed to recognition of stock option expense of $82,000 associated to the stock options granted
to various employees during FY2018. In addition, during the three months ended April 30, 2018 the Company recognized $271,000 in
warrant expense for warrants issued in conjunction with various promissory notes secured during the quarter ended April 30, 2018.
During the three months ended April 30, 2019 the Company recognized $178,000 as stock compensation expense for shares of common
stock issued for consulting services and the recognition of stock option expense of $153,000 associated to the stock options granted
to various employees during FY2018 and FY2019.</P>

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

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><I>Legal and professional fees</I>. Legal
and professional fees increased by $27,000, or 40%, from three months ended April 30, 2018 to the three months ended April 30,
2019. The increase between periods is attributed to the recognition during FY 2019 of $20,000 in professional expenses incurred
related to investor relations services. In addition, during the quarter ended April 30, 2019 the Company recognized $8,000 in legal
expenses associated with the preparation of the consolidated tax return for 2018.</P>

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

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><I>Depreciation and amortization</I>. Depreciation
and amortization increased by $117,000, from the three months ended April 30, 2018 to the three months ended April 30, 2019, mainly
due to increase in amortization expense and depreciation expense related to the intangible and tangible assets obtained in the
acquisitions of T3 Communications Inc., and Synergy Telecom.</P>

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

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><I>Operating loss.</I> The Company reported
an operating loss of $767,000 for the three months ended April 30, 2019 compared to an operating loss of $714,000 for the three
months ended April 30, 2018. The increase in operating loss between periods is primarily due to the increase of $543,000 in SG&amp;A
expenses, increase in legal expenses of $27,000 and the increase of $117,000 in depreciation and amortization. These increases
were slightly offset by the increase of $625,000 in gross margin and the decrease of $9,000 in stock compensation expense.</P>

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

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><I>Gain (loss) on derivative instruments.
</I>Gain (loss) on derivative instruments increased by $856,000 from three months ended April 30, 2018 to the three months ended
April 30, 2019. We are required to re-measure all derivative instruments at the end of each reporting period and adjust those instruments
to market, as a result of the re- measurement of all derivative instruments we recognized a loss between periods.</P>

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

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"><I>Income tax expense. </I>During the three months ended April
30, 2019, the Company recognized an income tax expense of $10,000. The primary reason for the income tax expense is due to the
accrual of state income tax.</P>

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

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><I>Interest expense</I>. Interest income
(expense) increased by $335,000 from the three months ended April 30, 2018 to the three months ended April 30, 2019. The primary
reason for the increase in interest expenses is attributed to the recognition of non-cash interest / accretion expense of $248,000
related to the adjustment to the present value of various convertible notes and debentures. Additionally, the company recognized
$90,000 in interest expense for cash interest payments on various promissory notes, accrual of $43,000 for interest expense for
various promissory notes and interest income of $2,400.</P>

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

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><I>Net income (loss) including noncontrolling
interest. </I>Net loss including noncontrolling interest for the three months ended April 30, 2019 was $250,000 compared to a net
loss for the three months ended April 30, 2018 of $708,000. The improvement in net loss including noncontrolling interest between
periods is primarily due to the improvement of $856,000 in loss on derivative instruments and the improvement of $625,000 in gross
margin. These improvements were offset between periods by the increase in SG&amp;A of $543,000, the increase in legal and professional
fees of $27,000 and the increase of $117,000 in depreciation and amortization.</P>

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

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><I>Net income attributable to the noncontrolling
interest. </I>During the three months ended April 30, 2019, the consolidated entity recognized net income in noncontrolling interest
of $29,000. The noncontrolling interest is presented as a separate line item in the Company&rsquo;s stockholders equity section
of the balance sheet.</P>

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

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><I>Net income (loss). </I>Net loss for
the three months ended April 30, 2019 was $221,000 compared to a net loss for the three months ended April 30, 2018 of $708,000.</P>

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

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

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

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><I>Deemed dividend on Series A Convertible
Preferred Stock Net income (loss). </I>Deemed dividend on convertible preferred stock for the three months ended April 30, 2019
was $2,000 compared to a Deemed dividend on convertible preferred stock for the three months ended April 30, 2018 of $0.</P>

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

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><I>Net income (loss) attributable to Digerati&rsquo;s
common shareholders. </I>Net loss for the three months ended April 30, 2019 was $223,000 compared to a net loss for the three months
ended April 30, 2018 of $708,000.</P>

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

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"><B><I>Nine Months ended April 30, 2019 Compared to Nine Months
ended April 30, 2018</I></B></P>

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

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><I>Cloud-based hosted Services</I>. Cloud-based
hosted services revenue increased by $4,090,000, or 1015% from the nine months ended April 30, 2018 to the nine months ended April
30, 2019. The increase in revenue between periods is primarily attributed to the increase in total customers acquired from the
acquisitions of T3 Communications, Inc. and Synergy Telecom&rsquo;s assets. Our total number of customers increased from 145 customers
for the nine months ended April 30, 2018 to 688 customers for the nine months ended April 30, 2019. Additionally, our average monthly
revenue per customer increased from $418 for the nine months ended April 30, 2018 to $738 for the nine months ended April 30, 2019.</P>

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

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">C<I>ost of Services (exclusive of depreciation
and amortization).</I> The cost of services increased by $2,073,000, or 833%, from the nine months ended April 30, 2018 to the
nine months ended April 30, 2019. The increase in cost of services between periods is primarily attributed to the additional costs
arising from our acquisitions and the acquired customers. Although our consolidated cost of services increased between periods,
our consolidated gross margin increased from 38% during the nine months ended April 30, 2018 to 48% during the nine months ended
April 30, 2019. The increase in gross margin between periods is attributed to a higher concentration of enterprise customers revenue,
which generate a higher margin than services provided via resellers.</P>

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

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><I>Selling, General and Administrative
(SG&amp;A) Expenses (exclusive of legal and professional fees). </I>SG&amp;A expenses increased by $1,479,000, or 178%, from the
nine months ended April 30, 2018 to the nine months ended April 30, 2019. The increase in SG&amp;A expenses between periods is
primarily attributed to the additional salaries and other employee related expenses of approximately $1,246,000 attributable to
the T3 Communications, Inc. acquisition and $136,000 increase in additional salaries and other related expenses attributable to
the asset acquisition from Synergy Telecom.</P>

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

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><I>Stock Compensation expense. </I>Stock
compensation expense decreased by $597,000, from the nine months ended April 30, 2018 to the nine months ended April 30, 2019.
The decrease between periods is attributed to the recognition during FY 2018 of stock compensation expense of $226,000 associated
with the Profit-Sharing Plan contribution and stock compensation expense of $155,000 for the stock issued in lieu of cash to the
Company&rsquo;s management team. In addition, during the nine months ended April 30, 2018 the Company recognized $292,000 in warrant
expense for warrants issued to various professionals. During the nine months ending April 30, 2019 the Company only recognized
$64,000 in warrant expense for warrants issued to professionals. Additionally, during the nine months ended April 30, 2019, the
Company recognized as stock compensation expense $114,000 associated with the Profit-Sharing Plan contribution, $289,000 in other
stock-based compensation to the employees and recognized $249,000 as stock compensation expense for shares of common stock issued
for consulting services.</P>

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

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><I>Legal and professional fees</I>. Legal
and professional fees decreased by $54,000, or 15%, from nine months ended April 30, 2018 to the nine months ended April 30, 2019.
The decrease between periods is attributed to the recognition during FY 2018 of $159,000 in professional and legal expenses incurred
related to the professionals conducting the due diligence and audit work on the acquisition of T3 Communications. The Company only
recognized $34,000 in legal and professional expenses associated with due diligence for other potential acquisitions during the
nine months ending April 30, 2019. In addition, during FY2019 the Company recognized $62,500 in professional fees related to investor
relations services. Also, during the period ended April 30, 2019 the Company recognized $8,000 in legal expenses associated with
the preparation of the consolidated tax return for 2018.</P>

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

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><I>Bad debt</I>. Bad debt improved by $3,000
between periods. During the nine months ended April 30, 2019 the Company recognized a recovery of bad debt of $3,000 for accounts
that were previously deemed uncollectable.</P>

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

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

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

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"><I>Depreciation and amortization</I>. Depreciation and
amortization increased by $416,000, from the nine months ended April 30, 2018 to the nine months ended April 30, 2019, mainly due
to increase in amortization expense and depreciation expense related to the intangible and tangible assets obtained in the acquisitions
of T3 Communications Inc., and Synergy Telecom during fiscal 2018.</P>

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

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><I>Operating loss.</I> The Company reported
an operating loss of $1,676,000 for the nine months ended April 30, 2019 compared to an operating loss of $2,452,000 for the nine
months ended April 30, 2018. The improvement in operating loss between periods is primarily due to the increase of $2,017,000 in
gross margin, the decrease of $597,000 in stock compensation expense and the decrease of $54,000 in legal and professional fees.
These positive improvements were slightly offset by the increase of $1,479,000 in SG&amp;A and the increase of $416,000 in depreciation
and amortization.</P>

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

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><I>Gain (loss) on derivative instruments.
</I>Gain on derivative instruments increased by $749,000 between periods. We are required to re-measure all derivative instruments
at the end of each reporting period and adjust those instruments to market, as a result of the re- measurement of all derivative
instruments we recognized a loss between the nine months ended April 30, 2018 and 2019.</P>

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

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><I>Income tax expense. </I>During the nine
months ended April 30, 2019, the Company recognized an income tax expense of $37,000. The primary reason for the income tax expense
is due to the accrual of state income tax.</P>

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

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><I>Interest expense</I>. Interest income
(expense) increased by $1,164,000 from the nine months ended April 30, 2018 to the nine months ended April 30, 2019. The primary
reason for the increase in interest expenses is attributed to the recognition of non-cash interest / accretion expense of $971,000
related to the adjustment to the present value of various convertible notes and debentures. Additionally, the company recognized
$355,000 in interest expense for cash interest payments on various promissory notes, accrual of $96,000 for interest expense for
various promissory notes and interest income of $5,400.</P>

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

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><I>Net income (loss) including noncontrolling
interest. </I>Net loss including noncontrolling interest for the nine months ended April 30, 2019 was $3,721,000 compared to a
net loss for the nine months ended April 30, 2018 of $2,547,000. The increase in net loss between periods is primarily attributed
to the increase of $1,479,000 in SG&amp;A, the increase of $416,000 in depreciation and amortization, the increase of $749,000
in loss on derivative instruments and the increase of $1,164,000 in interest expense. The increases were slightly offset by the
increase of $2,017,000 in gross margin, the decrease of $597,000 in stock compensation expense and the decrease of $54,000 in legal
and professional fees and professional fees and the recognition of $3,000 in recovery of bad debt for accounts that were previously
deemed uncollectable.</P>

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

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><I>Net income (loss) attributable to the
noncontrolling interest. </I>During the nine months ended April 30, 2019, the consolidated entity recognized income in noncontrolling
interest of $87,000. The noncontrolling interest is presented as a separate line item in the Company&rsquo;s stockholders equity
section of the balance sheet.</P>

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

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><I>Net income (loss). </I>Net loss for
the nine months ended April 30, 2019 was $3,634,000 compared to a net loss for the nine months ended April 30, 2018 of $2,547,000.</P>

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

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><I>Deemed dividend on Series A Convertible
Preferred Stock Net income (loss). </I>Deemed dividend on convertible preferred stock for the nine months ended April 30, 2019
was $2,000 compared to a Deemed dividend on convertible preferred stock for the nine months ended April 30, 2018 of $0.</P>

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

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><I>Net income (loss) attributable to Digerati&rsquo;s
common shareholders. </I>Net loss for the nine months ended April 30, 2019 was $3,636,000 compared to a net loss for the nine months
ended April 30, 2018 of $2,547,000.</P>

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

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

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

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><I>Cash Position:</I> We had a consolidated
cash balance of $460,000 as of April 30, 2019. Net cash consumed by operating activities during the nine months ended April 30,
2019 was approximately $299,000, primarily as a result of operating expenses, that included $716,000 in stock compensation and
warrant expense, amortization of debt discount of $959,000, interest expense from stock issued for debt extension of $24,000, loss
on derivative liability of $594,000 depreciation and amortization expense of $505,000. Additionally, we had an increase of $54,000
in accounts payable, increase in accrued expenses of $539,000, decrease in accounts receivables of $13,000, increase in deferred
income of $52,000, a decrease in prepaid expenses and other current assets of $45,000 and an increase in escrow deposits of $55,000.</P>

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

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

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

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">Cash used in investing activities during
the nine months ended April 30, 2019 was $43,000 for the purchase of equipment.</P>

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

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">Cash provided by financing activities during
the nine months ended April 30, 2019 was $414,000, the Company secured $40,000 from an accredited investor through the issuance
of 80,000 restricted common shares with a price of $0.50 per share and 15,000 warrants with an exercise price of $0.50 per share.
Also, the Company secured $75,000 from an accredited investor through the issuance of 258,621 restricted common shares with a price
of $0.29 per share. The Company also secured $150,000 from an accredited investor through the issuance of 600,000 restricted common
shares with a price of $0.25 per share. Furthermore, the Company secured $50,000 from accredited investors under a private placement
and issued 50,000 shares of Series A Convertible Preferred Stock at an conversion price of $0.30 per share and warrants to purchase
an additional 100,000 shares of its common stock at an exercise price of $0.20 per share. The Company also secured $7,500 for the
exercise of 75,000 warrants, with an exercise price of $0.10 per warrant. In addition, the Company secured $100,000 from 3rd party
promissory notes. The Company also secured $509,000 from convertible notes, net of issuance costs and discounts. Furthermore, the
Company secured $25,000 from a promissory note with a related party. Also, the Company made principal payments of $94,000 on related
party notes, $301,000 in principal payments on convertible notes, $125,000 in principal payments on 3rd party promissory notes
and $22,000 in principal payments on financing leases. Overall, our net operating, investing and financing activities during the
nine months ended April 30, 2019 provided approximately $72,000 of our available cash.</P>

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

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">We are currently taking initiatives to
reduce our overall cash deficiencies on a monthly basis. During fiscal 2019 we anticipate reducing fixed costs and general expenses,
in addition, certain members of our management team have taken a significant portion of their compensation in common stock to reduce
the depletion of our available cash. To strengthen our business, we intend to invest in a new marketing and sales strategy to grow
our monthly recurring revenue; we anticipate utilizing our value-added resellers to tap into new sources of revenue streams, we
have also secured various agent agreements to accelerate revenue growth. In addition, we will continue to focus on selling a greater
number of comprehensive services to our existing customer base. Further, in an effort to increase our revenues, we will continue
to evaluate the acquisition of various assets with emphasis in VoIP Services and Cloud Communication Services. As a result, during
the due diligence process we anticipate incurring significant legal and professional fees. During the year ended fiscal 2018, the
Company acquired T3 Communications, Inc., a leading provider of cloud communication and Internet broadband solutions in Southwest
Florida. The acquisition of T3 allowed the Company to accelerate its revenue growth and expand into new markets.</P>

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

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">Management believes that current available
resources will not be sufficient to fund the Company&rsquo;s operations over the next 12 months. The Company&rsquo;s ability to
continue to meet its obligations and to achieve its business objectives is dependent upon, among other things, raising additional
capital, issuing stock-based compensation to certain members of the executive management team in lieu of cash, or generating sufficient
revenue in excess of costs. At such time as the Company requires additional funding, the Company will seek to secure such best-efforts
funding from various possible sources, including equity or debt financing, sales of assets, or collaborative arrangements. If the
Company raises additional capital through the issuance of equity securities or securities convertible into equity, stockholders
will experience dilution, and such securities may have rights, preferences or privileges senior to those of the holders of common
stock or convertible senior notes. If the Company raises additional funds by issuing debt, the Company may be subject to limitations
on its operations, through debt covenants or other restrictions. If the Company obtains additional funds through arrangements with
collaborators or strategic partners, the Company may be required to relinquish its rights to certain technologies. There can be
no assurance that the Company will be able to raise additional funds or raise them on acceptable terms. If the Company is unable
to obtain financing on acceptable terms, it may be unable to execute its business plan, the Company could be required to curtail
its operations, and the Company may not be able to pay off its obligations, if and when they come due.</P>

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

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">Our current cash expenses are expected
to be approximately $95,000 per month, including wages, rent, utilities and corporate professional fees. As described elsewhere
herein, we are not generating sufficient cash from operations to pay for our ongoing operating expenses, or to pay our current
liabilities. As of April 30, 2019, our total liabilities were approximately $7,113,000, which included $1,303,000 in derivative
liabilities. We will continue to use our available cash on hand to cover our deficiencies in operating expenses.</P>

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

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

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

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">We estimate that we need approximately
$500,000 of additional working capital to fund our ongoing operations during Fiscal 2019. We used proceeds secured from 3rd party
promissory notes to pay existing notes and we anticipate raising additional debt financing to meet our working capital needs.</P>

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

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; background-color: white">Digerati&rsquo;s
consolidated financial statements for the nine months ending April 30, 2019 have been prepared on a going concern basis, which
contemplates the realization of assets and the settlement of liabilities in the normal course of business. Since the Company&rsquo;s
inception in 1993, Digerati has incurred net losses and accumulated a deficit of approximately $84,434,000 and a working capital
deficit of approximately $6,035,000 which raises doubt about Digerati&rsquo;s ability to continue as a going concern.</P>

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

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><B><A NAME="a_012"></A>Directors, Executive Officers, Promoters,
and Control Persons</B></P>

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

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">The following table contains the name,
age of our Directors and executive officers as of September 12, 2019.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><B>&nbsp;</B></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 STYLE="width: 22%; border-bottom: black 1.5pt solid; text-align: justify"><FONT STYLE="font-size: 10pt"><B>Name</B></FONT></TD>
    <TD STYLE="width: 1%; text-align: center">&nbsp;</TD>
    <TD STYLE="width: 8%; border-bottom: black 1.5pt solid; text-align: center"><FONT STYLE="font-size: 10pt"><B>Age</B></FONT></TD>
    <TD STYLE="width: 1%; text-align: center">&nbsp;</TD>
    <TD STYLE="width: 50%; border-bottom: black 1.5pt solid; text-align: center"><FONT STYLE="font-size: 10pt"><B>Position Held</B></FONT></TD>
    <TD STYLE="width: 1%; text-align: center">&nbsp;</TD>
    <TD STYLE="width: 17%; border-bottom: black 1.5pt solid; text-align: center"><FONT STYLE="font-size: 10pt"><B>Held Office Since</B></FONT></TD></TR>
<TR STYLE="vertical-align: top; background-color: #CCEEFF">
    <TD STYLE="text-align: justify"><FONT STYLE="font-size: 10pt">Arthur L. Smith </FONT></TD>
    <TD STYLE="text-align: justify">&nbsp;</TD>
    <TD STYLE="text-align: center"><FONT STYLE="font-size: 10pt">53</FONT></TD>
    <TD STYLE="text-align: justify">&nbsp;</TD>
    <TD STYLE="text-align: justify"><FONT STYLE="font-size: 10pt">President, Chief Executive Officer &amp; Director &nbsp;&nbsp;</FONT></TD>
    <TD STYLE="text-align: justify">&nbsp;</TD>
    <TD STYLE="text-align: center"><FONT STYLE="font-size: 10pt">2003</FONT></TD></TR>
<TR STYLE="vertical-align: top; background-color: white">
    <TD STYLE="text-align: justify"><FONT STYLE="font-size: 10pt">Craig K. Clement &nbsp;</FONT></TD>
    <TD STYLE="text-align: justify">&nbsp;</TD>
    <TD STYLE="text-align: center"><FONT STYLE="font-size: 10pt">60</FONT></TD>
    <TD STYLE="text-align: justify">&nbsp;</TD>
    <TD STYLE="text-align: justify"><FONT STYLE="font-size: 10pt">Chairman of the Board</FONT></TD>
    <TD STYLE="text-align: justify">&nbsp;</TD>
    <TD STYLE="text-align: center"><FONT STYLE="font-size: 10pt">2014</FONT></TD></TR>
<TR STYLE="vertical-align: top; background-color: #CCEEFF">
    <TD STYLE="text-align: justify"><FONT STYLE="font-size: 10pt">Maxwell A. Polinsky</FONT></TD>
    <TD STYLE="text-align: justify">&nbsp;</TD>
    <TD STYLE="text-align: center"><FONT STYLE="font-size: 10pt">60</FONT></TD>
    <TD STYLE="text-align: justify">&nbsp;</TD>
    <TD STYLE="text-align: justify"><FONT STYLE="font-size: 10pt">Director </FONT></TD>
    <TD STYLE="text-align: justify">&nbsp;</TD>
    <TD STYLE="text-align: center"><FONT STYLE="font-size: 10pt">2014</FONT></TD></TR>
<TR STYLE="vertical-align: top; background-color: white">
    <TD STYLE="text-align: justify"><FONT STYLE="font-size: 10pt">Antonio Estrada Jr. </FONT></TD>
    <TD STYLE="text-align: justify">&nbsp;</TD>
    <TD STYLE="text-align: center"><FONT STYLE="font-size: 10pt">43</FONT></TD>
    <TD STYLE="text-align: justify">&nbsp;</TD>
    <TD STYLE="text-align: justify"><FONT STYLE="font-size: 10pt">Chief Financial Officer</FONT></TD>
    <TD STYLE="text-align: justify">&nbsp;</TD>
    <TD STYLE="text-align: center"><FONT STYLE="font-size: 10pt">2007</FONT></TD></TR>
</TABLE>
<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><I>Arthur L. Smith</I>&nbsp;(53) is our
Chief Executive Officer, President, and Director.&nbsp;Mr. Smith has over 25 years of specialized experience in the telecommunications,
technology, and oil and gas industries.&nbsp; As the founder of Digerati, formerly known as ATSI Communications, Inc. (&ldquo;ATSI&rdquo;),
he led the Company&rsquo;s start-up operation focused on the USA &ndash; Mexico telecommunications corridor to over US$65 million
in annual revenue and a&nbsp;listing on the American Stock Exchange that resulted in a market value of over US$450 million.&nbsp;Between
1999 and 2009, ATSI was a three-time recipient of Deloitte and Touche&rsquo;s Fast 500 Award for recognition as one of the 500
fastest growing technology companies in North America.&nbsp; As CEO of ATSI, Mr. Smith also co-founded the Company&rsquo;s highly
successful Internet software subsidiary, GlobalSCAPE, Inc., in 1996 (NYSE MKT: GSB).&nbsp; As Chairman of the Board of GlobalSCAPE,
he led the Company&rsquo;s strategic and business development efforts from inception through its growth strategy that resulted
in a listing on a public stock exchange&nbsp;and the subsequent sale of ATSI&rsquo;s ownership to private investors in&nbsp;June
2002.&nbsp; Mr. Smith is currently President and CEO of the Company&rsquo;s cloud communications subsidiary, Shift8 Technologies,
Inc.</P>

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

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><I>Craig K. Clement </I>(60) is the Executive
Chairman of Digerati Technologies. Craig has over thirty-five years of executive and director experience with Technology (telecom,
Internet software) and Oil Exploration and Production (E&amp;P) entities where he has been responsible for asset management, acquisitions
and divestitures, strategic and tactical planning, financial operations, corporate finance, legal, transaction structuring, business
development, and investor relations. He assisted in the growth of a San Antonio-based telecom provider (AMEX: AI) from 10 employees
to 500, achieving a public market valuation of US$500 million. Craig was the founding CEO of GlobalSCAPE, Inc. (NYSE: GSB),&nbsp;and
was the former COO of XPEL Technologies Corp. (TSXV:DAP.U).&nbsp;Craig was also the former Chairman of the South Texas Regional
Center for Innovation and Commercialization, which screened and supported entrepreneurs through the Texas Emerging Technology Fund
managed by the Texas Governor&rsquo;s office, which invested more than $350 million in Texas-based technology start-ups.</P>

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

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><I>Maxwell A. Polinsky</I> (60) is our
Director. Mr. Polinsky is currently the President, CFO and a Director of Winston Gold Corp, a Canadian-based mineral exploration
company that is traded on the CSE Exchange, and a principal in Venbanc Investment and Management Group Inc., an investment and
merchant bank he co-founded in 1994. From 2009 to 2011, Mr. Polinsky was the Chief Financial Officer and a director of RX Exploration
Inc., a company that successfully re opened the previous old historic Drumlummon gold mine in Montana. Mr. Polinsky also served
as a director of Nerium Biotechnology from 2006 to 2010, XPEL Technologies from 2003 to 2009, and Nighthawk Systems from 2001 to
2007 and Cougar Minerals from 2012 to 2014. Mr. Polinsky holds a Bachelor of Commerce degree from the University of Manitoba.</P>

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

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

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

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><I>Antonio Estrada Jr.</I> (43) is our
Chief Financial Officer and Treasurer. Mr. Estrada is a seasoned financial executive with over 19 years of experience in the telecommunications
and oil and gas industries. Mr. Estrada&rsquo;s vast experience includes financial reporting and modeling, strategic planning,
grant writing, and cash management. Mr. Estrada served as the Sr. VP of Finance and Corporate Controller of Digerati, formerly
known as ATSI Communications, Inc., from 2008 to 2013. From 1999 to 2008, Mr. Estrada served in various roles within ATSI, including
International Accounting Manager, Treasurer, Internal Auditor, and Controller. Mr. Estrada graduated from the University of Texas
at San Antonio, with a Bachelors of Business Administration, with a concentration in Accounting.</P>

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

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><B><I>Section 16(a) Beneficial Ownership
Reporting Compliance</I></B></P>

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

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">Section 16(a) of the Securities Exchange
Act of 1934, as amended, requires our Directors and executive officers and persons who own more than 10% of a registered class
of our equity securities to file various reports with the Securities and Exchange Commission concerning their holdings of, and
transactions in, securities we issued. Each such person is required to provide us with copies of the reports filed. Based on a
review of the copies of such forms furnished to us and other information, we believe that none of our officers, Directors or owners
of 10% of any class of our securities failed to report transactions in our securities or reported transactions in our securities
late.</P>

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

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><B><I>Code of Ethics</I></B></P>

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

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">We adopted an Executive Code of Ethics
that applies to the Chief Executive Officer, Chief Financial Officer, Controller and other members of our management team. The
Executive Code of Ethics may be viewed on our Website, www.digerati-inc.com. A copy of the Executive Code of Ethics will be provided
without charge upon written request to Digerati Technologies, Inc., 825 W. Bitters, Suite 104, San Antonio, Texas 78216.</P>

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

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><B><I>Nominating Committee and Nomination
of Directors</I></B></P>

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

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">We do not have a nominating committee because
the size of our Board of Directors is too small to establish separate standing committees. Our Directors perform the function of
a nominating committee.</P>

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

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">The Directors consider candidates recommended
by other members of the Board of Directors, by executive officers and by one or more substantial, long-term stockholders. In addition,
the Board of Directors may seek candidates through a third-party recruiter. Generally, stockholders who individually or as a group
have held 5% of our shares for over one year will be considered substantial, long-term stockholders. In considering candidates,
the Directors take into consideration the needs of the Board of Directors and the qualifications of the candidate. The Board of
Directors has not established a set of criteria or minimum qualifications for candidacy and each candidate is considered based
on the demonstrated competence and knowledge of the individual. To have a candidate considered by the Directors, a stockholder
must submit the recommendation in writing and must include the following information:</P>

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

<TABLE CELLPADDING="0" CELLSPACING="0" STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0; margin-bottom: 0; width: 100%"><TR STYLE="vertical-align: top; text-align: justify">
<TD STYLE="width: 0.25in"></TD><TD STYLE="width: 0.25in; text-align: left">&#9679;</TD><TD STYLE="text-align: justify"><FONT STYLE="font-size: 10pt">The name of the stockholder
and evidence of ownership of our shares, including the number of shares owned and the length of time of ownership; and</FONT></TD>
</TR></TABLE>
<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&nbsp;</P>

<TABLE CELLPADDING="0" CELLSPACING="0" STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0; margin-bottom: 0; width: 100%"><TR STYLE="vertical-align: top; text-align: justify">
<TD STYLE="width: 0.25in"></TD><TD STYLE="width: 0.25in; text-align: left">&#9679;</TD><TD STYLE="text-align: justify"><FONT STYLE="font-size: 10pt">The name of the candidate,
the candidate&rsquo;s resume or a listing of her or his qualifications to be one of our Directors and the person&rsquo;s consent
to be named as a Director if nominated by the Directors.</FONT></TD>
</TR></TABLE>
<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">The stockholder&rsquo;s recommendation
and information described above must be sent to us at 1600 NE Loop 410, Suite 126, San Antonio, Texas 78209.</P>

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

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><B><I>Audit Committee and Audit Committee
Financial Expert</I></B></P>

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

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">We do not have an audit or other committee
of our Board of Directors that performs equivalent functions. Our Board of Directors performs all functions of the audit committee.
Mr. Maxwell A. Polinsky served as the Audit Committee Financial Expert during the year ended July 31, 2018.</P>

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

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

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

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><B>Involvement in Certain Legal Proceedings</B></P>

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

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0">There are no known pending legal proceedings
to which the Company is a party or in which any director, officer or affiliate of the Company, any owner of record or beneficially
of more than 5% of any class of voting securities of the Company, or security holder is a party adverse to the Company or has a
material interest adverse to the Company. The Company&rsquo;s property is not the subject of any other pending legal proceedings</P>

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

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><B><I><A NAME="a_013"></A>Executive Compensation</I></B></P>

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

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0">The compensation programs
presently in effect with respect to the Chief Executive Officer, Chief Financial Officer and Chairman of the Board were established
by the Board of Directors.</P>

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

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0">Arthur Smith serves
as our President and Chief Executive Officer. Mr. Smith does not have a written employment agreement with the Company. Effective
October 1, 2015, Mr. Smith&rsquo;s annual salary was approved by the Board of Directors to be set at $165,000. The Board of Directors
also approved the reimbursement of monthly expenses up to $1,667. During FY2018 the Board of Directors approved the issuance of
common stock in lieu of cash compensation equivalent to 40% of Mr. Smith&rsquo;s annual salary. No other cash compensation is presently
being paid to Mr. Smith.</P>

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

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">Antonio Estrada Jr.,
serves as our Chief Financial Officer. Mr. Estrada does not have a written employment agreement with the Company. Effective October
1, 2015, Mr. Estrada&rsquo;s annual salary was approved by the Board of Directors to be set at $165,000. The Board of Directors
also approved the reimbursement of monthly expenses up to $1,667. During FY2018 the Board of Directors approved the issuance of
common stock in lieu of cash compensation equivalent to 40% of Mr. Estrada&rsquo;s annual salary. No other cash compensation is
presently being paid to Mr. Estrada.</P>

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

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0">Craig K. Clement, serves
as our Chairman of the Board, Chief Executive Officer and President of Flagship Energy Company, a wholly-owned subsidiary of Digerati.
Mr. Clement does not have a written employment agreement with the Company. Effective October 1, 2015, Mr. Clement&rsquo;s annual
salary was approved by the Board of Directors to be set at $195,000. During FY2018 the Board of Directors approved the issuance
of common stock in lieu of cash compensation equivalent to 40% of Mr. Clement&rsquo;s annual salary. No other cash compensation
is presently being paid to Mr. Clement.</P>

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

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><B><I>Compensation Discussion and Analysis</I></B></P>

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

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0">Our compensation programs
are designed to meet the following objectives:</P>

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

<TABLE CELLPADDING="0" CELLSPACING="0" STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0; margin-bottom: 0; width: 100%"><TR STYLE="vertical-align: top; text-align: justify">
<TD STYLE="width: 0.25in"></TD><TD STYLE="width: 0.25in; text-align: left">&#9679;</TD><TD STYLE="text-align: justify"><FONT STYLE="font-size: 10pt">Offer compensation opportunities
that attract highly qualified executives, reward outstanding initiative and achievement, and retain the leadership and skills
necessary to build long-term stockholder value;</FONT></TD>
</TR></TABLE>
<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 0.75in; text-align: justify">&nbsp;</P>

<TABLE CELLPADDING="0" CELLSPACING="0" STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0; margin-bottom: 0; width: 100%"><TR STYLE="vertical-align: top; text-align: justify">
<TD STYLE="width: 0.25in"></TD><TD STYLE="width: 0.25in; text-align: left">&#9679;</TD><TD STYLE="text-align: justify"><FONT STYLE="font-size: 10pt">Emphasize pay-for-performance
by maintaining a portion of executives&rsquo; total compensation at risk, tied to both our annual and long-term financial performance
and the creation of stockholder value; and</FONT></TD>
</TR></TABLE>
<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 0.75in; text-align: justify">&nbsp;</P>

<TABLE CELLPADDING="0" CELLSPACING="0" STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0; margin-bottom: 0; width: 100%"><TR STYLE="vertical-align: top; text-align: justify">
<TD STYLE="width: 0.25in"></TD><TD STYLE="width: 0.25in; text-align: left">&#9679;</TD><TD STYLE="text-align: justify"><FONT STYLE="font-size: 10pt">Further our short and
long-term strategic goals and values by aligning executive officer compensation with business objectives and individual performance.</FONT></TD>
</TR></TABLE>
<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">&nbsp;&nbsp;&nbsp;&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0">Our Board of Directors
believes that an executive&rsquo;s compensation should be tied to the performance of the individual and the performance of the
complete executive team against both financial and non-financial goals, some of which are subjective and within the discretion
of the Board of Directors.</P>

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

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0">Our executive compensation
program is intended to be simple and clear, and consists of the following elements (depending on individual performance):</P>

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

<TABLE CELLPADDING="0" CELLSPACING="0" STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0; margin-bottom: 0; width: 100%"><TR STYLE="vertical-align: top; text-align: justify">
<TD STYLE="width: 0.25in"></TD><TD STYLE="width: 0.25in; text-align: left">&#9679;</TD><TD STYLE="text-align: justify"><FONT STYLE="font-size: 10pt">Base salary;</FONT></TD>
</TR></TABLE>
<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>

<TABLE CELLPADDING="0" CELLSPACING="0" STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0; margin-bottom: 0; width: 100%"><TR STYLE="vertical-align: top; text-align: justify">
<TD STYLE="width: 0.25in"></TD><TD STYLE="width: 0.25in; text-align: left">&#9679;</TD><TD STYLE="text-align: justify"><FONT STYLE="font-size: 10pt">Annual performance-based
cash bonus;</FONT></TD>
</TR></TABLE>
<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>

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

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

<TABLE CELLPADDING="0" CELLSPACING="0" STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0; margin-bottom: 0; width: 100%"><TR STYLE="vertical-align: top; text-align: justify">
<TD STYLE="width: 0.25in"></TD><TD STYLE="width: 0.25in; text-align: left">&#9679;</TD><TD STYLE="text-align: justify"><FONT STYLE="font-size: 10pt">Long-term incentives
in the form of stock options; and</FONT></TD>
</TR></TABLE>
<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>

<TABLE CELLPADDING="0" CELLSPACING="0" STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0; margin-bottom: 0; width: 100%"><TR STYLE="vertical-align: top; text-align: justify">
<TD STYLE="width: 0.25in"></TD><TD STYLE="width: 0.25in; text-align: left">&#9679;</TD><TD STYLE="text-align: justify"><FONT STYLE="font-size: 10pt">Benefits that are offered
to executives on the same basis as our non-executive employees.</FONT></TD>
</TR></TABLE>
<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 0.5in; text-align: justify">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><B><I>Role of Management in Determining
Compensation Decisions </I></B></P>

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

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0">At the request of our
Board of Directors, our management makes recommendations to our Board of Directors relating to executive compensation program design,
specific compensation amounts, bonus targets, incentive plan structure and other executive compensation related matters for each
of our executive officers, including our Chief Executive Officer. Our Board of Directors maintains decision-making authority with
respect to these executive compensation matters.</P>

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

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0">Our Board of Directors
reviews the recommendations of our management with respect to total executive compensation and each element of compensation when
making pay decisions. In allocating compensation among compensation elements, we emphasize incentive, not fixed compensation to
ensure that executives only receive superior pay for superior results. We equally value short- and long-term compensation because
both short- and long-term results are critical to our success. In addition, our compensation program includes various benefits
provided to all employees, including life insurance, health insurance and other customary benefits. The objectives and details
of why each element of compensation is paid are described below.</P>

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

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0"><I>Base Salary. </I>Our
objective for paying base salaries to executives is to reward them for performing the core responsibilities of their positions
and to provide a level of security with respect to a portion of their compensation. We consider a number of factors when setting
base salaries for executives, including:</P>

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

<TABLE CELLPADDING="0" CELLSPACING="0" STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0; margin-bottom: 0; width: 100%"><TR STYLE="vertical-align: top; text-align: justify">
<TD STYLE="width: 0.25in"></TD><TD STYLE="width: 0.25in; text-align: left">&#9679;</TD><TD STYLE="text-align: justify"><FONT STYLE="font-size: 10pt">Existing salary levels;</FONT></TD>
</TR></TABLE>
<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>

<TABLE CELLPADDING="0" CELLSPACING="0" STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0; margin-bottom: 0; width: 100%"><TR STYLE="vertical-align: top; text-align: justify">
<TD STYLE="width: 0.25in"></TD><TD STYLE="width: 0.25in; text-align: left">&#9679;</TD><TD STYLE="text-align: justify"><FONT STYLE="font-size: 10pt">Competitive pay practices;</FONT></TD>
</TR></TABLE>
<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>

<TABLE CELLPADDING="0" CELLSPACING="0" STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0; margin-bottom: 0; width: 100%"><TR STYLE="vertical-align: top; text-align: justify">
<TD STYLE="width: 0.25in"></TD><TD STYLE="width: 0.25in; text-align: left">&#9679;</TD><TD STYLE="text-align: justify"><FONT STYLE="font-size: 10pt">Individual and corporate
performance; and</FONT></TD>
</TR></TABLE>
<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>

<TABLE CELLPADDING="0" CELLSPACING="0" STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0; margin-bottom: 0; width: 100%"><TR STYLE="vertical-align: top; text-align: justify">
<TD STYLE="width: 0.25in"></TD><TD STYLE="width: 0.25in; text-align: left">&#9679;</TD><TD STYLE="text-align: justify"><FONT STYLE="font-size: 10pt">Internal equity among
our executives, taking into consideration their relative contributions to our success.</FONT></TD>
</TR></TABLE>
<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 0.5in; text-align: justify"><I>&nbsp;</I></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0"><I>Long-term Incentive
Awards. </I>We award long-term incentive compensation to focus our executives on our long-term growth and stockholder return, as
well as to encourage our executives to remain with us for the long-term. Long-term incentive awards are primarily in the form of
grants of stock options and/or stock award pursuant to our 2015 Equity Compensation Plan (the &ldquo;Plan&rdquo;). We selected
this form because of the favorable accounting and tax treatment and the expectation of key employees in our industry that they
would receive stock options and/or stock grants. We do not have pre-established target award amounts for long-term incentive grants.
In determining long-term incentive awards for the Named Executive Officers, our Board of Directors relies on recommendations from
our Chief Executive Officer, who considers the individual performance of the executives, the relation of the award to base salary
and annual incentive compensation, and associated accounting expense. The terms of and amount of awards are made by our Board of
Directors in accordance with the Stock Option Plan.</P>

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

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

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

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0">The following table
sets forth the compensation paid to each of our principal executive officers (the &ldquo;Named Executive Officers&rdquo;) during
the last two completed fiscal years:</P>

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

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

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

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

<TABLE CELLPADDING="0" CELLSPACING="0" STYLE="border-collapse: collapse; width: 100%; font: 10pt Times New Roman, Times, Serif">
<TR STYLE="vertical-align: bottom">
    <TD STYLE="font-weight: bold; border-bottom: Black 1.5pt solid">Name and Principal Position</TD><TD STYLE="font-weight: bold; padding-bottom: 1.5pt">&nbsp;</TD>
    <TD COLSPAN="2" STYLE="font-weight: bold; text-align: center; border-bottom: Black 1.5pt solid">Year</TD><TD STYLE="padding-bottom: 1.5pt; font-weight: bold">&nbsp;</TD><TD STYLE="padding-bottom: 1.5pt">&nbsp;</TD>
    <TD COLSPAN="2" STYLE="text-align: center; border-bottom: Black 1.5pt solid"><P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center"><B>Salary</B></P> <P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center"><B>($)</B></P></TD><TD STYLE="padding-bottom: 1.5pt">&nbsp;</TD><TD STYLE="font-weight: bold; padding-bottom: 1.5pt">&nbsp;</TD>
    <TD COLSPAN="2" STYLE="font-weight: bold; text-align: center; border-bottom: Black 1.5pt solid">Bonus ($)</TD><TD STYLE="padding-bottom: 1.5pt; font-weight: bold">&nbsp;</TD><TD STYLE="font-weight: bold; padding-bottom: 1.5pt">&nbsp;</TD>
    <TD COLSPAN="2" STYLE="font-weight: bold; text-align: center; border-bottom: Black 1.5pt solid">Stock Awards<BR> ($) (1)</TD><TD STYLE="padding-bottom: 1.5pt; font-weight: bold">&nbsp;</TD><TD STYLE="font-weight: bold; padding-bottom: 1.5pt">&nbsp;</TD>
    <TD COLSPAN="2" STYLE="font-weight: bold; text-align: center; border-bottom: Black 1.5pt solid">Option Awards<BR> ($) (2)</TD><TD STYLE="padding-bottom: 1.5pt; font-weight: bold">&nbsp;</TD><TD STYLE="font-weight: bold; padding-bottom: 1.5pt">&nbsp;</TD>
    <TD COLSPAN="2" STYLE="font-weight: bold; text-align: center; border-bottom: Black 1.5pt solid">All Other Compensation ($)</TD><TD STYLE="padding-bottom: 1.5pt; font-weight: bold">&nbsp;</TD><TD STYLE="padding-bottom: 1.5pt">&nbsp;</TD>
    <TD COLSPAN="2" STYLE="text-align: center; border-bottom: Black 1.5pt solid"><P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center"><B>Total</B></P> <P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center"><B>($)</B></P></TD><TD STYLE="padding-bottom: 1.5pt">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom">
    <TD>&nbsp;</TD><TD>&nbsp;</TD>
    <TD COLSPAN="2">&nbsp;</TD><TD>&nbsp;</TD><TD>&nbsp;</TD>
    <TD COLSPAN="2">&nbsp;</TD><TD>&nbsp;</TD><TD>&nbsp;</TD>
    <TD COLSPAN="2">&nbsp;</TD><TD>&nbsp;</TD><TD>&nbsp;</TD>
    <TD COLSPAN="2">&nbsp;</TD><TD>&nbsp;</TD><TD>&nbsp;</TD>
    <TD COLSPAN="2">&nbsp;</TD><TD>&nbsp;</TD><TD>&nbsp;</TD>
    <TD COLSPAN="2">&nbsp;</TD><TD>&nbsp;</TD><TD>&nbsp;</TD>
    <TD COLSPAN="2">&nbsp;</TD><TD>&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,238,255)">
    <TD STYLE="width: 16%; text-align: left; text-indent: -9pt; padding-left: 9pt">Arthur L. Smith</TD><TD STYLE="width: 1%">&nbsp;</TD>
    <TD STYLE="width: 1%; text-align: left">&nbsp;</TD><TD STYLE="width: 9%; text-align: right">2019</TD><TD STYLE="width: 1%; text-align: left">&nbsp;</TD><TD STYLE="width: 1%">&nbsp;</TD>
    <TD STYLE="width: 1%; text-align: left">$</TD><TD STYLE="width: 9%; text-align: right">113,410</TD><TD STYLE="width: 1%; text-align: left">&nbsp;</TD><TD STYLE="width: 1%">&nbsp;</TD>
    <TD STYLE="width: 1%; text-align: left">$</TD><TD STYLE="width: 9%; text-align: right">-0-</TD><TD STYLE="width: 1%; text-align: left">&nbsp;</TD><TD STYLE="width: 1%">&nbsp;</TD>
    <TD STYLE="width: 1%; text-align: left">$</TD><TD STYLE="width: 9%; text-align: right">217,500</TD><TD STYLE="width: 1%; text-align: left">&nbsp;</TD><TD STYLE="width: 1%">&nbsp;</TD>
    <TD STYLE="width: 1%; text-align: left">$</TD><TD STYLE="width: 9%; text-align: right">73,680</TD><TD STYLE="width: 1%; text-align: left">&nbsp;</TD><TD STYLE="width: 1%">&nbsp;</TD>
    <TD STYLE="width: 1%; text-align: left">$</TD><TD STYLE="width: 9%; text-align: right">-0-</TD><TD STYLE="width: 1%; text-align: left">&nbsp;</TD><TD STYLE="width: 1%">&nbsp;</TD>
    <TD STYLE="width: 1%; text-align: left">$</TD><TD STYLE="width: 9%; text-align: right">404,590</TD><TD STYLE="width: 1%; text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,238,255)">
    <TD STYLE="text-align: left; text-indent: -9pt; padding-left: 9pt">President, <BR> Chief Executive Officer &amp; Director</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">2018</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">$</TD><TD STYLE="text-align: right">96,000</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">$</TD><TD STYLE="text-align: right">-0-</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">$</TD><TD STYLE="text-align: right">144,000</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">$</TD><TD STYLE="text-align: right">64,000</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">$</TD><TD STYLE="text-align: right">-0-</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">$</TD><TD STYLE="text-align: right">304,000</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD STYLE="text-align: left; text-indent: -9pt; padding-left: 9pt">Antonio Estrada Jr.</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">2019</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">$</TD><TD STYLE="text-align: right">106,517</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">$</TD><TD STYLE="text-align: right">-0-</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">$</TD><TD STYLE="text-align: right">198,500</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">$</TD><TD STYLE="text-align: right">65,494</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">$</TD><TD STYLE="text-align: right">-0-</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">$</TD><TD STYLE="text-align: right">370,511</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD STYLE="text-align: left; text-indent: -9pt; padding-left: 9pt">Chief Financial Officer</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">2018</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">$</TD><TD STYLE="text-align: right">96,000</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">$</TD><TD STYLE="text-align: right">-0-</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">$</TD><TD STYLE="text-align: right">132,000</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">$</TD><TD STYLE="text-align: right">64,000</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">$</TD><TD STYLE="text-align: right">-0-</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">$</TD><TD STYLE="text-align: right">292,000</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,238,255)">
    <TD STYLE="text-align: left; text-indent: -9pt; padding-left: 9pt">Craig K. Clement</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">2019</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">$</TD><TD STYLE="text-align: right">123,875</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">$</TD><TD STYLE="text-align: right">-0-</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">$</TD><TD STYLE="text-align: right">236,500</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">$</TD><TD STYLE="text-align: right">78,089</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">$</TD><TD STYLE="text-align: right">-0-</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">$</TD><TD STYLE="text-align: right">438,464</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,238,255)">
    <TD STYLE="text-align: left; text-indent: -9pt; padding-left: 9pt">Chairman of the Board</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">2018</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">$</TD><TD STYLE="text-align: right">117,000</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">$</TD><TD STYLE="text-align: right">-0-</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">$</TD><TD STYLE="text-align: right">252,000</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">$</TD><TD STYLE="text-align: right">64,000</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">$</TD><TD STYLE="text-align: right">-0-</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">$</TD><TD STYLE="text-align: right">433,000</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
</TABLE>



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

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

<TABLE CELLSPACING="0" CELLPADDING="0" STYLE="font: 10pt Times New Roman, Times, Serif; width: 100%">
<TR STYLE="vertical-align: top">
    <TD STYLE="width: 24px; font-size: 10pt"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">(1)</FONT></TD>
    <TD STYLE="text-align: justify; font-size: 10pt"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">During the year ended July 31, 2019 and 2018, Digerati issued common shares as part of the Company&rsquo;s profit-sharing plan contribution. In addition, during the year ended July 31, 2018 and July 31, 2017, Digerati issued common stock in lieu of cash compensation to its Officers.</FONT></TD></TR>
</TABLE>
<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>

<TABLE CELLSPACING="0" CELLPADDING="0" STYLE="font: 10pt Times New Roman, Times, Serif; width: 100%">
<TR STYLE="vertical-align: top">
    <TD STYLE="width: 24px; font-size: 10pt"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">(2)</FONT></TD>
    <TD STYLE="text-align: justify; font-size: 10pt"><FONT STYLE="font-family: Times New Roman, Times, Serif">During the year
    ended July 31, 2019, Digerati issued 1,725,000 options to its Officers to acquire common shares at an exercise price of $0.22
    and a fair value at the time issuance of $217,263. The options vest ratably on a monthly basis through February 14, 2020.
    During the year ended July 31, 2018, Digerati issued 900,000 options to its Officers to acquire common shares at an exercise
    price of $0.35 and a fair value at the time issuance of $192,000, all of these options have vested.</FONT></TD></TR>
</TABLE>


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

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

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">Our Board of Directors adopted the 2015
Equity Compensation Plan (the &ldquo;Plan&rdquo;). Under the Plan the Board of Directors may grant up to 7.5 million shares of
our common stock to our officers, Directors, employees and consultants. Grants may be in the form of incentive stock options, non-statutory
stock options, restricted stock awards, and/or unrestricted stock awards. The number and terms of each award is determined by the
Board of Directors, subject to the limitation that the exercise price of any option may not be less than the fair market value
of the common stock on the date of grant.</P>

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

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">We currently provide a Non-Standardized
Profit-Sharing Plan (the &ldquo;Profit-Sharing Plan&rdquo;). The Board of Directors approved the Profit-Sharing Plan on September
15, 2006. Under the Profit-Sharing Plan our employees qualified to participate in the Profit-Sharing Plan after one year of employment.
Contribution under the Profit-Sharing Plan by us is based on 25% of the annual base salary of each eligible employee up to $54,000
per year. Contributions under the Profit Sharing Plan are fully vested upon funding.&nbsp;</P>

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

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center"><B>OUTSTANDING EQUITY AWARDS AS OF JULY
31, 2019</B></P>

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

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

<TABLE CELLPADDING="0" CELLSPACING="0" STYLE="border-collapse: collapse; width: 100%; font: 10pt Times New Roman, Times, Serif">
<TR STYLE="vertical-align: bottom">
    <TD STYLE="text-align: center">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD COLSPAN="13" STYLE="border-bottom: black 1.5pt solid; text-align: center"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt"><B>Option Awards</B></FONT></TD>
    <TD>&nbsp;</TD>
    <TD COLSPAN="6" STYLE="border-bottom: black 1.5pt solid; text-align: center"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt"><B>Stock Awards</B></FONT></TD>
    <TD>&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom">
    <TD STYLE="border-bottom: black 1.5pt solid"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt"><B>Name</B></FONT></TD>
    <TD>&nbsp;</TD>
    <TD COLSPAN="2" STYLE="border-bottom: black 1.5pt solid">
        <P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center"><B>Number of Securities Underlying Unexercised
        Options</B></P>
        <P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center"><B>(#)</B></P>
        <P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center"><B>Exercisable</B></P></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD COLSPAN="2" STYLE="border-bottom: black 1.5pt solid">
        <P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center"><B>Number of Securities Underlying Unexercised
        Options</B></P>
        <P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center"><B>(#)</B></P>
        <P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center"><B>Unexercisable</B></P></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD COLSPAN="2" STYLE="border-bottom: black 1.5pt solid">
        <P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center"><B>Option Exercise Price</B></P>
        <P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center"><B>($)</B></P></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD STYLE="border-bottom: black 1.5pt solid; text-align: center"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt"><B>Option Expiration Date</B></FONT></TD>
    <TD>&nbsp;</TD>
    <TD COLSPAN="2" STYLE="border-bottom: black 1.5pt solid">
        <P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center"><B>Number of Shares or Units of Stock That
        Have Not Vested</B></P>
        <P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center"><B>(#)</B></P></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD COLSPAN="2" STYLE="border-bottom: black 1.5pt solid">
        <P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center"><B>Market Value of Shares or Units of Stock
        That Have Not Vested</B></P>
        <P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center"><B>($)</B></P></TD>
    <TD>&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 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></TR>
<TR STYLE="vertical-align: bottom; background-color: #CCEEFF">
    <TD STYLE="width: 28%">&nbsp;</TD>
    <TD STYLE="width: 1%">&nbsp;</TD>
    <TD STYLE="width: 1%">&nbsp;</TD>
    <TD STYLE="width: 9%; text-align: right"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">195,000</FONT></TD>
    <TD STYLE="width: 1%">&nbsp;</TD>
    <TD STYLE="width: 1%">&nbsp;</TD>
    <TD STYLE="width: 1%">&nbsp;</TD>
    <TD STYLE="width: 9%; text-align: right"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">390,000</FONT></TD>
    <TD STYLE="width: 1%">&nbsp;</TD>
    <TD STYLE="width: 1%">&nbsp;</TD>
    <TD STYLE="width: 1%"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">$</FONT></TD>
    <TD STYLE="width: 9%; text-align: right"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">0.22</FONT></TD>
    <TD STYLE="width: 1%">&nbsp;</TD>
    <TD STYLE="width: 1%">&nbsp;</TD>
    <TD STYLE="width: 11%; text-align: right"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">2/14/2024</FONT></TD>
    <TD STYLE="width: 1%">&nbsp;</TD>
    <TD STYLE="width: 1%">&nbsp;</TD>
    <TD STYLE="width: 9%; text-align: right">&nbsp;</TD>
    <TD STYLE="width: 1%">&nbsp;</TD>
    <TD STYLE="width: 1%">&nbsp;</TD>
    <TD STYLE="width: 1%">&nbsp;</TD>
    <TD STYLE="width: 9%; text-align: right">&nbsp;</TD>
    <TD STYLE="width: 1%">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: #CCEEFF">
    <TD><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">Arthur L. Smith</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD STYLE="text-align: right"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">300,000</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD STYLE="text-align: right"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">-</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">$</FONT></TD>
    <TD STYLE="text-align: right"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">0.35</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD STYLE="text-align: right"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">12/01/2022</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD STYLE="text-align: right"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">-</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD STYLE="text-align: right"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">-</FONT></TD>
    <TD>&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: #CCEEFF">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD STYLE="text-align: right"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">300,000</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">$</FONT></TD>
    <TD STYLE="text-align: right"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">0.24</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD STYLE="text-align: right"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">11/21/2021</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD STYLE="text-align: right"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">-</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD STYLE="text-align: right"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">-</FONT></TD>
    <TD>&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: white">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD STYLE="text-align: right"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">173,336</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD STYLE="text-align: right"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">346,664</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">$</FONT></TD>
    <TD STYLE="text-align: right"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">0.22</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD STYLE="text-align: right"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">2/14/2024</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD STYLE="text-align: right">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD STYLE="text-align: right">&nbsp;</TD>
    <TD>&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: white">
    <TD><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">Antonio Estrada Jr.</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD STYLE="text-align: right"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">300,000</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD STYLE="text-align: right"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">-</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">$</FONT></TD>
    <TD STYLE="text-align: right"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">0.35</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD STYLE="text-align: right"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">12/01/2022</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD STYLE="text-align: right"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">-</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD STYLE="text-align: right"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">-</FONT></TD>
    <TD>&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: white">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD STYLE="text-align: right"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">300,000</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">$</FONT></TD>
    <TD STYLE="text-align: right"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">0.24</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD STYLE="text-align: right"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">11/21/2021</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD STYLE="text-align: right"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">-</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD STYLE="text-align: right"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">-</FONT></TD>
    <TD>&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: #CCEEFF">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD STYLE="text-align: right"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">206,664</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD STYLE="text-align: right"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">413,336</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">$</FONT></TD>
    <TD STYLE="text-align: right"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">0.22</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD STYLE="text-align: right"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">2/14/2024</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD STYLE="text-align: right">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD STYLE="text-align: right">&nbsp;</TD>
    <TD>&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: #CCEEFF">
    <TD><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">Craig K. Clement</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD STYLE="text-align: right"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">300,000</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD STYLE="text-align: right"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">-</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">$</FONT></TD>
    <TD STYLE="text-align: right"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">0.35</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD STYLE="text-align: right"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">12/01/2022</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD STYLE="text-align: right"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">-</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD STYLE="text-align: right"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">-</FONT></TD>
    <TD>&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: #CCEEFF">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD STYLE="text-align: right"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">300,000</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">$</FONT></TD>
    <TD STYLE="text-align: right"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">0.24</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD STYLE="text-align: right"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">11/21/2021</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD STYLE="text-align: right"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">-</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD STYLE="text-align: right"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">-</FONT></TD>
    <TD>&nbsp;</TD></TR>
</TABLE>


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

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

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

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><I></I></P>

<TABLE CELLSPACING="0" CELLPADDING="0" STYLE="font: 10pt Times New Roman, Times, Serif; width: 100%">
<TR STYLE="vertical-align: top">
    <TD STYLE="width: 24px; font-size: 10pt"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">(1)</FONT></TD>
    <TD STYLE="text-align: justify; font-size: 10pt"><FONT STYLE="font-family: Times New Roman, Times, Serif">During the year
    ended July 31, 2019, Digerati issued 1,725,000 options to its Officers to acquire common shares at an exercise price of $0.22
    and a fair value at the time issuance of $217,263. The options vest ratably on a monthly basis through February 14, 2020.
    During the year ended July 31, 2018, Digerati issued 900,000 options to its Officers to acquire common shares at an exercise
    price of $0.35 and a fair value at the time issuance of $192,000, all of these options have vested. During the year ended
    July 31, 2017, Digerati issued 900,000 options to its Officers to acquire common shares at an exercise price of $0.24 and
    a fair value at the time of issuance of $169,000, all of these options have vested.</FONT></TD></TR>
</TABLE>


<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><I></I></P>

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

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><B><I>Compensation of Directors </I></B></P>

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

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0">Each Director that
is not an officer is reimbursed the reasonable out-of-pocket expenses in connection with their travel to attend meetings of the
Board of Directors. Each Director that is not an officer was paid $1,000 per month.</P>

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

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><B><I>Compensation Committee Interlocks
and Insider Participation</I></B></P>

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

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0">We do not have a compensation
committee of our Board of Directors or other committee that performs the same functions. Mr. Arthur L. Smith is presently our Chief
Executive Officer and participates in deliberations concerning executive compensation.</P>

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

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><B><I>Compensation Committee Report</I></B></P>

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

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0">Our Board of Directors
reviewed and discussed the Compensation Discussion and Analysis with management and, based on such discussion, included the Compensation
Discussion and Analysis in this Registration Statement on Form S-1.</P>

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

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; text-align: center"><B><A NAME="a_014"></A>Security Ownership of Certain Beneficial
Owners and Management and Related Stockholder Matters</B></P>

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

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0">Information regarding securities authorized
to be issued under equity compensation plans is set forth under Item 5 Market for Registrant&rsquo;s Common Equity, Related Stockholder
Matters and Issuer Purchases of Equity Securities.</P>

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

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">The following table lists the beneficial
ownership of shares of our Common Stock by (i) each person known to own more than 5% of our outstanding voting securities, (ii)
each Director and nominee, (iii) the Named Executive Officers and (iv) all Directors and officers as a group. Information with
respect to officers, Directors and their families is as of September 12, 2019 and is based on our books and records and information
obtained from each individual. Information with respect to other stockholders is based upon the Schedule 13D or Schedule 13G filed
by such stockholders with the Securities and Exchange Commission. Unless otherwise stated, the business address of each individual
or group is the same as the address of our principal executive office and all securities are beneficially owned solely by the person
indicated<I>.</I></P>

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

<TABLE CELLPADDING="0" CELLSPACING="0" STYLE="border-collapse: collapse; width: 100%; font: 10pt Times New Roman, Times, Serif">
<TR STYLE="vertical-align: bottom">
    <TD STYLE="font-weight: bold; border-bottom: Black 1.5pt solid">Name of Beneficial Owner</TD><TD STYLE="font-weight: bold; padding-bottom: 1.5pt">&nbsp;</TD>
    <TD COLSPAN="2" STYLE="font-weight: bold; text-align: center; border-bottom: Black 1.5pt solid">Shares <BR> Owned</TD><TD STYLE="padding-bottom: 1.5pt; font-weight: bold">&nbsp;</TD><TD STYLE="font-weight: bold; padding-bottom: 1.5pt">&nbsp;</TD>
    <TD COLSPAN="2" STYLE="font-weight: bold; text-align: center; border-bottom: Black 1.5pt solid">Vested <BR> Warrants and <BR> Options</TD><TD STYLE="padding-bottom: 1.5pt; font-weight: bold">&nbsp;</TD><TD STYLE="padding-bottom: 1.5pt">&nbsp;</TD>
    <TD COLSPAN="2" STYLE="text-align: center; border-bottom: Black 1.5pt solid"><P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center"><B>Total</B></P> <P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center"><B>Beneficial<BR> Ownership</B></P></TD><TD STYLE="padding-bottom: 1.5pt">&nbsp;</TD><TD STYLE="font-weight: bold; padding-bottom: 1.5pt">&nbsp;</TD>
    <TD COLSPAN="2" STYLE="font-weight: bold; text-align: center; border-bottom: Black 1.5pt solid">% Of <BR> Class (1)</TD><TD STYLE="padding-bottom: 1.5pt; font-weight: bold">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom">
    <TD STYLE="font-weight: bold">INDIVIDUAL OFFICERS AND DIRECTORS</TD><TD>&nbsp;</TD>
    <TD COLSPAN="2">&nbsp;</TD><TD>&nbsp;</TD><TD>&nbsp;</TD>
    <TD COLSPAN="2">&nbsp;</TD><TD>&nbsp;</TD><TD>&nbsp;</TD>
    <TD COLSPAN="2">&nbsp;</TD><TD>&nbsp;</TD><TD>&nbsp;</TD>
    <TD COLSPAN="2">&nbsp;</TD><TD>&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom">
    <TD>&nbsp;</TD><TD>&nbsp;</TD>
    <TD COLSPAN="2">&nbsp;</TD><TD>&nbsp;</TD><TD>&nbsp;</TD>
    <TD COLSPAN="2">&nbsp;</TD><TD>&nbsp;</TD><TD>&nbsp;</TD>
    <TD COLSPAN="2">&nbsp;</TD><TD>&nbsp;</TD><TD>&nbsp;</TD>
    <TD COLSPAN="2">&nbsp;</TD><TD>&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,238,255)">
    <TD>Arthur L. Smith</TD><TD>&nbsp;</TD>
    <TD COLSPAN="2">&nbsp;</TD><TD>&nbsp;</TD><TD>&nbsp;</TD>
    <TD COLSPAN="2">&nbsp;</TD><TD>&nbsp;</TD><TD>&nbsp;</TD>
    <TD COLSPAN="2">&nbsp;</TD><TD>&nbsp;</TD><TD>&nbsp;</TD>
    <TD COLSPAN="2">&nbsp;</TD><TD>&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,238,255)">
    <TD STYLE="width: 52%; text-align: left">President, Chief Executive Officer Director</TD><TD STYLE="width: 1%">&nbsp;</TD>
    <TD STYLE="width: 1%; text-align: left">&nbsp;</TD><TD STYLE="width: 9%; text-align: right">3,315,851</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: 9%; text-align: right">941,250</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: 9%; text-align: right">4,257,101</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: 9%; text-align: right">16.26</TD><TD STYLE="width: 1%; 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></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,238,255)">
    <TD STYLE="text-align: left">Antonio Estrada Jr.</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(204,238,255)">
    <TD STYLE="text-align: left">Chief Financial Officer</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">2,608,666</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">903,333</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">3,511,999</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">13.43</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></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,238,255)">
    <TD STYLE="text-align: left">Craig K. Clement (2)(3)<BR> Chairman of the Board</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">2,420,845</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">861,667</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">3,282,512</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">12.58</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></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,238,255)">
    <TD STYLE="text-align: left">Maxwell Polinsky <BR> Director</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">81,594</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">254,032</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">335,626</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">1.31</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></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,238,255)">
    <TD STYLE="font-weight: bold; text-align: left; padding-bottom: 1.5pt">ALL INDIVIDUAL OFFICERS AND DIRECTORS AS A GROUP</TD><TD STYLE="padding-bottom: 1.5pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 1.5pt solid; text-align: left">&nbsp;</TD><TD STYLE="border-bottom: Black 1.5pt solid; text-align: right">8,426,956</TD><TD STYLE="padding-bottom: 1.5pt; text-align: left">&nbsp;</TD><TD STYLE="padding-bottom: 1.5pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 1.5pt solid; text-align: left">&nbsp;</TD><TD STYLE="border-bottom: Black 1.5pt solid; text-align: right">2,960,282</TD><TD STYLE="padding-bottom: 1.5pt; text-align: left">&nbsp;</TD><TD STYLE="padding-bottom: 1.5pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 1.5pt solid; text-align: left">&nbsp;</TD><TD STYLE="border-bottom: Black 1.5pt solid; text-align: right">11,387,238</TD><TD STYLE="padding-bottom: 1.5pt; text-align: left">&nbsp;</TD><TD STYLE="padding-bottom: 1.5pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 1.5pt solid; text-align: left">&nbsp;</TD><TD STYLE="border-bottom: Black 1.5pt solid; text-align: right">40.38</TD><TD STYLE="padding-bottom: 1.5pt; 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></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,238,255)">
    <TD STYLE="font-weight: bold">5% HOLDERS</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">Graham Gardner</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">1,308,621</TD><TD STYLE="text-align: left">&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">1,458,621</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">5.74</TD><TD STYLE="text-align: left">%</TD></TR>
</TABLE>


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

<TABLE CELLPADDING="0" CELLSPACING="0" STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0; margin-bottom: 0; width: 100%"><TR STYLE="vertical-align: top; text-align: justify">
<TD STYLE="width: 0"></TD><TD STYLE="width: 0.25in; text-align: left">(1)</TD><TD STYLE="text-align: justify">Based upon 25,240,222 shares of common stock outstanding
as of September 12, 2019.</TD>
</TR></TABLE>

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

<TABLE CELLPADDING="0" CELLSPACING="0" STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0; margin-bottom: 0; width: 100%"><TR STYLE="vertical-align: top; text-align: justify">
<TD STYLE="width: 0"></TD><TD STYLE="width: 0.25in; text-align: left">(2)</TD><TD STYLE="text-align: justify">Mr. Clement holds 146,941 shares jointly with Jayne K. Clement</TD>
</TR></TABLE>

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

<TABLE CELLPADDING="0" CELLSPACING="0" STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0; margin-bottom: 0; width: 100%"><TR STYLE="vertical-align: top; text-align: justify">
<TD STYLE="width: 0"></TD><TD STYLE="width: 0.25in; text-align: left">(3)</TD><TD STYLE="text-align: justify">Mr. Clement holds 323,917 shares through Flagship Oil and
Gas Corp, an entity controlled by Clement.</TD>
</TR></TABLE>

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

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

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

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><B>Transactions with Related Persons</B></P>

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

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&nbsp;On April 30, 2018, Shift8 Technologies,
Inc. (&ldquo;Shift8&rdquo;) entered into a convertible promissory note for $525,000 with an effective annual interest rate of 8%
and a maturity date of April 30, 2020. With a principal payment of $100,000 due on June 1, 2018 and a principal payment of $280,823
due on April 30, 2020. Payment are based on a 60-month repayment schedule. At any time while this Note is outstanding, but only
upon: (i) the occurrence of an Event of Default under the Note or the Pledge and Escrow Agreement; or (ii) mutual agreement between
the Borrower and the Holder, the Holder may convert all or any portion of the outstanding principal, accrued and unpaid interest,
Premium, if applicable, and any other sums due and payable hereunder (such total amount, the &ldquo;Conversion Amount&rdquo;) into
shares of Common Stock (the &ldquo;Conversion Shares&rdquo;) at a price equal to: (i) the Conversion Amount (the numerator); <I>divided
by </I>(ii) a conversion price of $1.50 per share of Common Stock, which price shall be indicated in the conversion notice (in
the form attached hereto as Exhibit &ldquo;B&rdquo;, the &ldquo;Conversion Notice&rdquo;) (the denominator) (the &ldquo;Conversion
Price&rdquo;). The Holder shall submit a Conversion Notice indicating the Conversion Amount, the number of Conversion Shares issuable
upon such conversion, and where the Conversion Shares should be delivered. The promissory note is secured by a Pledge and Escrow
Agreement, whereby Shift8 agreed to pledge 51% of the securities owned in T3 until the principal payment is paid in full. In conjunction
with the promissory note, the Company issued 3-year warrants to purchase 75,000 shares of common stock at an exercise price of
$0.50 per share. Under a Black-Scholes valuation the relative fair market value of the warrants at time of issuance was approximately
$19,000 and was recognized as a discount on the two promissory notes, the company amortized $6,000 as interest expense during the
year ended July 31, 2018. During the year ended July 31, 2018, the Company paid $119,000 of the principal balance. The total principal
outstanding and unamortized discount as of July 31, 2018 were $406,000 and $13,000, respectively. One of the note holders also
serves as President, CEO and Board Member of T3 Communications, Inc., one of our operating subsidiaries.</P>

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

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">On May 1, 2018, Shift8 Technologies, Inc.
(&ldquo;Shift8&rdquo;) entered into a Stock Purchase Agreement (&ldquo;SPA&rdquo;), whereby in an exchange for $250,000, Shift8
agreed to sell to the buyer 199,900 shares of common stock equivalent to 19.99% of the issued and outstanding common share of Shift8
Technologies, Inc. The $250,000 of the cash received under this transaction was recognized as an adjustment to the carrying amount
of the noncontrolling interest and as an increase in additional paid-in capital in Shift8. For the year ending July 31, 2018, the
Company accounted for a noncontrolling interest of $57,000. Additionally, one of the buyers serves as President, CEO and Board
Member of T3 Communications, Inc., one of our operating subsidiaries.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 1in">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">On May 1, 2018, Shift8 entered into a promissory
note for $275,000 with an effective annual interest rate of 0% with an interest and principal payment of $6,000 per month and shall
continue perpetuity until the entire principal amount is paid in full. The promissory note is guaranteed to the lender by 15% of
the stock owned by Shift8 in T3, the secured interest will continue until the principal balance is paid in full. In conjunction
with the promissory note, the Company issued 3-year warrants to purchase 100,000 shares of common stock at an exercise price of
$0.50 per share. Under a Black-Scholes valuation the relative fair market value of the warrants at time of issuance was approximately
$27,000 and was recognized as a discount on the promissory note, the company amortized $2,000 as interest expense during the year
ended July 31, 2018. During the year ended July 31, 2018, the Company paid $13,000 of the principal balance. The total principal
outstanding and unamortized discount as of July 31, 2018 were $262,000 and $25,000, respectively. The note holder also serves as
Board Member of T3 Communications, Inc., one of our operating subsidiaries.</P>

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

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><B>Director Independence</B></P>

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

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">The common stock of the Company is currently
quoted on the OTCQB which currently do not have director independence requirements. On an annual basis, each director and executive
officer will be obligated to disclose any transactions with the Company in which a director or executive officer, or any member
of his or her immediate family, have a direct or indirect material interest in accordance with Item 407(a) of Regulation S-K. Following
completion of these disclosures, the Board will make an annual determination as to the independence of each director using the
current standards for &ldquo;independence&rdquo; that satisfy the criteria for the Nasdaq.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 1in; text-indent: -1in"><B>&nbsp;</B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">For a director to be considered independent
according to the standards set forth in Section 303A.02 of the New York Stock Exchange Listed Company Manual (the &ldquo;NYSE Manual&rdquo;),
the Board of Directors must affirmatively determine that the director has no material relationship with Digerati, either directly
or as a partner, shareholder or officer of an organization that has a relationship with Digerati. In addition, the NYSE Manual
provides that a director will not be considered independent if, within the preceding three years, the director or an immediate
family member (i)&nbsp;was an employee of Digerati, (ii)&nbsp;received more than $120,000 per year in direct compensation from
Digerati, (iii)&nbsp;is affiliated with or employed by a present or former internal or external auditor of Digerati, (iv)&nbsp;employed
as an executive officer of another company for which an executive officer of Digerati serves on the compensation committee or (v)&nbsp;is
an executive officer or employee that makes payments to or receives payments from Digerati of more than $1,000,000 or two percent
of such other company&rsquo;s gross revenues.</P>

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



<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0">The Board has determined
that Mr. Maxwell A. Polinsky satisfies the independence requirements in the NYSE Manual.</P>

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

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

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

<TABLE CELLSPACING="0" CELLPADDING="0" STYLE="font: 10pt Times New Roman, Times, Serif; width: 100%; border-collapse: collapse">
<TR>
    <TD STYLE="vertical-align: top; padding: 0; text-indent: 0; width: 89%"><FONT STYLE="font-family: Times New Roman, Times, Serif">&nbsp;</FONT></TD>
    <TD STYLE="vertical-align: bottom; width: 11%; border-bottom: black 1.5pt solid; padding: 0; text-align: center; text-indent: 0"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt"><B>Page
    No.</B></FONT></TD></TR>
<TR>
    <TD STYLE="vertical-align: top; padding: 0; text-indent: 0"><FONT STYLE="font-family: Times New Roman, Times, Serif">&nbsp;</FONT></TD>
    <TD STYLE="vertical-align: bottom; text-align: center; padding: 0; text-indent: 0"><FONT STYLE="font-family: Times New Roman, Times, Serif">&nbsp;</FONT></TD></TR>
<TR STYLE="background-color: White">
    <TD STYLE="vertical-align: top; text-align: center; padding: 0; text-indent: 0"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt"><B><U><A NAME="a_015"></A>PART
    I. Financial Information</U></B></FONT></TD>
    <TD STYLE="vertical-align: bottom; text-align: center; padding: 0; text-indent: 0"><FONT STYLE="font-family: Times New Roman, Times, Serif">&nbsp;</FONT></TD></TR>
<TR STYLE="background-color: White">
    <TD STYLE="vertical-align: top; padding: 0; text-indent: 0"><FONT STYLE="font-family: Times New Roman, Times, Serif">&nbsp;</FONT></TD>
    <TD STYLE="vertical-align: bottom; text-align: center; padding: 0; text-indent: 0"><FONT STYLE="font-family: Times New Roman, Times, Serif">&nbsp;</FONT></TD></TR>
<TR STYLE="background-color: rgb(204,238,255)">
    <TD STYLE="vertical-align: top; padding: 0; text-indent: 0"><FONT STYLE="font-family: Times New Roman, Times, Serif"><A HREF="#ff_026">Report of Independent
    Registered Public Accounting Firm</A></FONT></TD>
    <TD STYLE="vertical-align: bottom; text-align: center; padding: 0; text-indent: 0"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">F-2</FONT></TD></TR>
<TR STYLE="background-color: White">
    <TD STYLE="vertical-align: top; padding: 0; text-indent: 0">&nbsp;</TD>
    <TD STYLE="vertical-align: bottom; text-align: center; padding: 0; text-indent: 0">&nbsp;</TD></TR>
<TR STYLE="background-color: rgb(204,238,255)">
    <TD STYLE="vertical-align: top; padding: 0; text-indent: 0"><P STYLE="margin: 0pt 0"><A HREF="#ff_032">Report of Independent Registered Public Accounting Firm</A></P>


</TD>
    <TD STYLE="vertical-align: bottom; text-align: center; padding: 0; text-indent: 0">F-3</TD></TR>
<TR STYLE="background-color: White">
    <TD STYLE="vertical-align: top; padding: 0; text-indent: 0"><FONT STYLE="font-family: Times New Roman, Times, Serif">&nbsp;</FONT></TD>
    <TD STYLE="vertical-align: bottom; text-align: center; padding: 0; text-indent: 0"><FONT STYLE="font-family: Times New Roman, Times, Serif">&nbsp;</FONT></TD></TR>
<TR STYLE="background-color: rgb(204,238,255)">
    <TD STYLE="vertical-align: top; padding: 0; text-indent: 0"><FONT STYLE="font-family: Times New Roman, Times, Serif"><A HREF="#ff_027">Consolidated balance
    sheets as of July 31, 2018 and 2017</A></FONT></TD>
    <TD STYLE="vertical-align: bottom; text-align: center; padding: 0; text-indent: 0"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">F-4</FONT></TD></TR>
<TR STYLE="background-color: White">
    <TD STYLE="vertical-align: top; padding: 0; text-indent: 0"><FONT STYLE="font-family: Times New Roman, Times, Serif">&nbsp;</FONT></TD>
    <TD STYLE="vertical-align: bottom; text-align: center; padding: 0; text-indent: 0"><FONT STYLE="font-family: Times New Roman, Times, Serif">&nbsp;</FONT></TD></TR>
<TR STYLE="background-color: rgb(204,238,255)">
    <TD STYLE="vertical-align: top; padding: 0; text-indent: 0"><FONT STYLE="font-family: Times New Roman, Times, Serif"><A HREF="#ff_028">Consolidated
    statements of operations for the years ended July 31, 2018 and 2017</A></FONT></TD>
    <TD STYLE="vertical-align: bottom; text-align: center; padding: 0; text-indent: 0"><FONT STYLE="font-family: Times New Roman, Times, Serif">F-5</FONT></TD></TR>
<TR STYLE="background-color: White">
    <TD STYLE="vertical-align: top; padding: 0; text-indent: 0"><FONT STYLE="font-family: Times New Roman, Times, Serif">&nbsp;</FONT></TD>
    <TD STYLE="vertical-align: bottom; text-align: center; padding: 0; text-indent: 0"><FONT STYLE="font-family: Times New Roman, Times, Serif">&nbsp;</FONT></TD></TR>
<TR STYLE="background-color: rgb(204,238,255)">
    <TD STYLE="vertical-align: top; padding: 0; text-indent: 0"><FONT STYLE="font-family: Times New Roman, Times, Serif"><A HREF="#ff_029">Consolidated statements
    of stockholders&rsquo; deficit for the years ended July 31, 2018 and 2017</A></FONT></TD>
    <TD STYLE="vertical-align: bottom; text-align: center; padding: 0; text-indent: 0"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">F-6</FONT></TD></TR>
<TR STYLE="background-color: White">
    <TD STYLE="vertical-align: top; padding: 0; text-indent: 0"><FONT STYLE="font-family: Times New Roman, Times, Serif">&nbsp;</FONT></TD>
    <TD STYLE="vertical-align: bottom; text-align: center; padding: 0; text-indent: 0"><FONT STYLE="font-family: Times New Roman, Times, Serif">&nbsp;</FONT></TD></TR>
<TR STYLE="background-color: rgb(204,238,255)">
    <TD STYLE="vertical-align: top; padding: 0; text-indent: 0"><FONT STYLE="font-family: Times New Roman, Times, Serif"><A HREF="#ff_030">Consolidated statements
    of cash flows for the years ended July 31, 2018 and 2017</A></FONT></TD>
    <TD STYLE="vertical-align: bottom; text-align: center; padding: 0; text-indent: 0"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">F-7</FONT></TD></TR>
<TR STYLE="background-color: White">
    <TD STYLE="vertical-align: top; padding: 0; text-indent: 0"><FONT STYLE="font-family: Times New Roman, Times, Serif">&nbsp;</FONT></TD>
    <TD STYLE="vertical-align: bottom; text-align: center; padding: 0; text-indent: 0"><FONT STYLE="font-family: Times New Roman, Times, Serif">&nbsp;</FONT></TD></TR>
<TR STYLE="background-color: rgb(204,238,255)">
    <TD STYLE="vertical-align: top; padding: 0; text-indent: 0"><FONT STYLE="font-family: Times New Roman, Times, Serif"><A HREF="#ff_031">Notes to consolidated
    financial statements</A></FONT></TD>
    <TD STYLE="vertical-align: bottom; text-align: center; padding: 0; text-indent: 0"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">F-8</FONT></TD></TR>
<TR STYLE="background-color: White">
    <TD STYLE="vertical-align: top; padding: 0; text-indent: 0"><FONT STYLE="font-family: Times New Roman, Times, Serif">&nbsp;</FONT></TD>
    <TD STYLE="vertical-align: bottom; text-align: center; padding: 0; text-indent: 0"><FONT STYLE="font-family: Times New Roman, Times, Serif">&nbsp;</FONT></TD></TR>
<TR STYLE="background-color: rgb(204,238,255)">
    <TD STYLE="vertical-align: top; padding: 0; text-indent: 0"><FONT STYLE="font-family: Times New Roman, Times, Serif"><A HREF="#ff_033">Condensed consolidated balance sheets as of April 30, 2019 (unaudited) and July 31, 2018</A></FONT></TD>
    <TD STYLE="vertical-align: bottom; text-align: center; padding: 0; text-indent: 0"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">F-29</FONT></TD></TR>
<TR STYLE="background-color: White">
    <TD STYLE="vertical-align: top; padding: 0; text-indent: 0"><FONT STYLE="font-family: Times New Roman, Times, Serif">&nbsp;</FONT></TD>
    <TD STYLE="vertical-align: bottom; text-align: center; padding: 0; text-indent: 0"><FONT STYLE="font-family: Times New Roman, Times, Serif">&nbsp;</FONT></TD></TR>
<TR STYLE="background-color: rgb(204,238,255)">
    <TD STYLE="vertical-align: top; padding: 0 0 0 0.125in; text-indent: -0.125in"><A HREF="#ff_034"><FONT STYLE="font-family: Times New Roman, Times, Serif">Condensed consolidated statements of operations for the three and nine months ended April 30, 2019 and 2018 (unaudited)</FONT></A></TD>
    <TD STYLE="vertical-align: bottom; text-align: center; padding: 0; text-indent: 0"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">F-</FONT>30</TD></TR>
<TR STYLE="background-color: White">
    <TD STYLE="vertical-align: top; padding: 0; text-indent: 0"><FONT STYLE="font-family: Times New Roman, Times, Serif">&nbsp;</FONT></TD>
    <TD STYLE="vertical-align: bottom; text-align: center; padding: 0; text-indent: 0"><FONT STYLE="font-family: Times New Roman, Times, Serif">&nbsp;</FONT></TD></TR>
<TR STYLE="background-color: rgb(204,238,255)">
    <TD STYLE="vertical-align: top; padding: 0 0 0 0.125in; text-indent: -0.125in"><A HREF="#ff_035"><FONT STYLE="font-family: Times New Roman, Times, Serif">Condensed consolidated statement of stockholders&rsquo; deficit for the three and nine months ended April 30, 2019 (unaudited)</FONT></A></TD>
    <TD STYLE="vertical-align: bottom; text-align: center; padding: 0; text-indent: 0"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">F-31
    &ndash;</FONT> F-32</TD></TR>
<TR STYLE="background-color: White">
    <TD STYLE="vertical-align: top; padding: 0; text-indent: 0"><FONT STYLE="font-family: Times New Roman, Times, Serif">&nbsp;</FONT></TD>
    <TD STYLE="vertical-align: bottom; text-align: center; padding: 0; text-indent: 0"><FONT STYLE="font-family: Times New Roman, Times, Serif">&nbsp;</FONT></TD></TR>
<TR STYLE="background-color: rgb(204,238,255)">
    <TD STYLE="vertical-align: top; padding: 0 0 0 0.125in; text-indent: -0.125in"><A HREF="#ff_036"><FONT STYLE="font-family: Times New Roman, Times, Serif">Condensed consolidated statements of cash flows for the nine months ended April 30, 2019 and 2018 (unaudited)</FONT></A></TD>
    <TD STYLE="vertical-align: bottom; text-align: center; padding: 0; text-indent: 0"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">F-33</FONT></TD></TR>
<TR STYLE="background-color: White">
    <TD STYLE="vertical-align: top; padding: 0; text-indent: 0"><FONT STYLE="font-family: Times New Roman, Times, Serif">&nbsp;</FONT></TD>
    <TD STYLE="vertical-align: bottom; text-align: center; padding: 0; text-indent: 0"><FONT STYLE="font-family: Times New Roman, Times, Serif">&nbsp;</FONT></TD></TR>
<TR STYLE="background-color: rgb(204,238,255)">
    <TD STYLE="vertical-align: top; padding: 0; text-indent: 0"><A HREF="#ff_037"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">Notes to condensed consolidated financial statements (unaudited)</FONT></A></TD>
    <TD STYLE="vertical-align: bottom; text-align: center; padding: 0; text-indent: 0"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">F-34</FONT></TD></TR>
</TABLE>
<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&nbsp;</P>

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

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

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center"><B><A NAME="ff_026"></A>REPORT OF INDEPENDENT REGISTERED PUBLIC
ACCOUNTING FIRM</B></P>

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

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">To the Board of Directors and Stockholders</P>

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

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

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

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 36.2pt 0pt 0"><B><I>Opinion on the Financial Statements</I></B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 36.2pt 0pt 0.5in"><B>&nbsp;</B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0">We have audited the accompanying consolidated
balance sheet of Digerati Technologies, Inc. and its subsidiaries (collectively, the &ldquo;Company&rdquo;) as of July 31, 2018,
and the related consolidated statements of operations, stockholders&rsquo; deficit, and cash flows for the year then ended, and
the related notes (collectively referred to as the &ldquo;financial statements&rdquo;). In our opinion, the financial statements
present fairly, in all material respects, the financial position of the Company as of July 31, 2018, and the results of their operations
and their cash flows for the year then ended, in conformity with accounting principles generally accepted in the United States
of America.</P>

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

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><B><I>Going Concern Matter</I></B></P>

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

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0">The accompanying financial statements have
been prepared assuming that the Company will continue as a going concern. As discussed in Note 2 to the financial statements, the
Company has suffered recurring losses from operations and has a net capital deficiency that raises substantial doubt about its
ability to continue as a going concern. Management&rsquo;s plans in regard to these matters are also described in Note 2. The 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: 0pt 0 0pt 0.5in; text-align: justify">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><B><I>Basis for Opinion</I></B></P>

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

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0">These financial statements are the responsibility
of the Company&rsquo;s management. Our responsibility is to express an opinion on the Company&rsquo;s financial statements based
on our audit. We are a public accounting firm registered with the Public Company Accounting Oversight Board (United States) (&ldquo;PCAOB&rdquo;)
and are required to be independent with respect to the Company in accordance with the U.S. federal securities laws and the applicable
rules and regulations of the Securities and Exchange Commission and the PCAOB.</P>

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

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0">We conducted our audit in accordance with
the standards of the PCAOB. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether
the financial statements are free of material misstatement, whether due to error or fraud. The Company is not required to have,
nor were we engaged to perform, an audit of its internal control over financial reporting. As part of our audit we are required
to obtain an understanding of internal control over financial reporting but not for the purpose of expressing an opinion on the
effectiveness of the Company&rsquo;s internal control over financial reporting. Accordingly, we express no such opinion.</P>

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

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0">Our audits included performing procedures
to assess the risks of material misstatement of the financial statements, whether due to error or fraud, and performing procedures
that respond to those risks. Such procedures included examining, on a test basis, evidence regarding the amounts and disclosures
in the financial statements. Our audit also included evaluating the accounting principles used and significant estimates made by
management, as well as evaluating the overall presentation of the financial statements. We believe that our audit provides a reasonable
basis for our opinion.</P>

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

<TABLE CELLPADDING="0" CELLSPACING="0" STYLE="border-collapse: collapse; width: 100%; font: 10pt Times New Roman, Times, Serif">
<TR STYLE="vertical-align: bottom; background-color: rgb(204,238,255)">
    <TD STYLE="width: 40%; font-style: italic; background-color: White">/s/ MaloneBailey, LLP</TD>
    <TD STYLE="width: 60%; background-color: White">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD STYLE="background-color: White">www.malonebailey.com</TD>
    <TD STYLE="background-color: White">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,238,255)">
    <TD STYLE="background-color: White">We have served as the Company&rsquo;s auditor since 2018.</TD>
    <TD STYLE="background-color: White">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD STYLE="background-color: White">Houston, Texas</TD>
    <TD STYLE="background-color: White">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,238,255)">
    <TD STYLE="background-color: White">November 15, 2018</TD>
    <TD STYLE="background-color: White">&nbsp;</TD></TR>
</TABLE>


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

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

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    <!-- Field: /Page -->

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

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center"><B><A NAME="ff_032"></A>REPORT OF INDEPENDENT REGISTERED PUBLIC
ACCOUNTING FIRM</B></P>

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

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">To the Board of Directors and Stockholders</P>

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

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

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

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0">We have audited the accompanying consolidated
balance sheets of Digerati Technologies, Inc. and its subsidiaries (collectively, &ldquo;Digerati&rdquo;) as of July&nbsp;31, 2017
and the related consolidated statements of operations, stockholders&rsquo; deficit and cash flows for the year then ended. Digerati
Technologies, Inc.&rsquo;s management is responsible for these financial statements. Our responsibility is to express an opinion
on these consolidated financial statements.</P>

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

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0">We conducted our audit in accordance with standards of the Public Company Accounting Oversight Board (United
States). Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial
statements are free of material misstatement. Digerati is not required to have, nor were we engaged to perform, an audit of its
internal control over financial reporting. Our audit included consideration of internal control over financial reporting as a basis
for designing audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the
effectiveness of Digerati&rsquo;s internal control over financial reporting. Accordingly, we express no such opinion. An audit
also includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements. An audit
also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the
overall financial statement presentation. We believe that our audit provides a reasonable basis for our opinion.</P>

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

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0">In our opinion, the consolidated financial
statements referred to above present fairly, in all material respects, the consolidated financial position of Digerati as of July
31, 2017 and the consolidated results of their operations and their cash flows for year then ended in conformity with accounting
principles generally accepted in the United States of America.</P>

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

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0">The accompanying consolidated financial
statements have been prepared assuming that Digerati will continue as a going concern. As discussed in Note 2 to the consolidated
financial statements, Digerati suffered losses from operations and has a working capital deficit, which raises substantial doubt
about its ability to continue as a going concern. Management&rsquo;s plans regarding those matters are also described in Note 2.
The consolidated 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: 0pt 0">&nbsp;</P>

<TABLE CELLPADDING="0" CELLSPACING="0" STYLE="border-collapse: collapse; width: 100%; font: 10pt Times New Roman, Times, Serif">
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD STYLE="width: 40%; background-color: White">/s/ LBB &amp; Associates Ltd., LLP</TD>
    <TD STYLE="width: 60%; background-color: White">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD STYLE="background-color: White">LBB &amp; Associates Ltd., LLP</TD>
    <TD STYLE="background-color: White">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,238,255)">
    <TD STYLE="background-color: White">Houston, Texas</TD>
    <TD STYLE="background-color: White">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD STYLE="background-color: White">&nbsp;</TD>
    <TD STYLE="background-color: White">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,238,255)">
    <TD STYLE="background-color: White">December 13, 2017</TD>
    <TD STYLE="background-color: White">&nbsp;</TD></TR>
</TABLE>

<P STYLE="margin-top: 0; margin-bottom: 0">&nbsp;</P>


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




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




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


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

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center"><B>PART 1. FINANCIAL INFORMATION</B></P>

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

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-right: 0; margin-bottom: 0pt; text-align: left"><B>ITEM
1. FINANCIAL STATEMENTS</B></P>

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

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 5.4pt; text-align: center"><B><A NAME="ff_027"></A>DIGERATI TECHNOLOGIES, INC.
AND SUBSIDIARIES</B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 5.4pt; text-align: center"><B>CONSOLIDATED BALANCE SHEETS</B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 5.4pt; text-align: center"><B>(In thousands)</B></P>

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

<TABLE CELLPADDING="0" CELLSPACING="0" STYLE="border-collapse: collapse; width: 100%; font: 10pt Times New Roman, Times, Serif">
<TR STYLE="vertical-align: bottom">
    <TD><B>&nbsp;</B></TD><TD><B>&nbsp;</B></TD>
    <TD COLSPAN="2" STYLE="text-align: center"><B>July 31,</B></TD><TD><B>&nbsp;</B></TD><TD><B>&nbsp;</B></TD>
    <TD COLSPAN="2" STYLE="text-align: center"><B>July 31,</B></TD><TD><B>&nbsp;</B></TD></TR>
<TR STYLE="vertical-align: bottom">
    <TD><B>&nbsp;</B></TD><TD STYLE="padding-bottom: 1.5pt"><B>&nbsp;</B></TD>
    <TD COLSPAN="2" STYLE="text-align: center; border-bottom: Black 1.5pt solid"><B>2018</B></TD><TD STYLE="padding-bottom: 1.5pt"><B>&nbsp;</B></TD><TD STYLE="padding-bottom: 1.5pt"><B>&nbsp;</B></TD>
    <TD COLSPAN="2" STYLE="text-align: center; border-bottom: Black 1.5pt solid"><B>2017</B></TD><TD STYLE="padding-bottom: 1.5pt"><B>&nbsp;</B></TD></TR>
<TR STYLE="vertical-align: bottom">
    <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">
    <TD STYLE="padding-bottom: 1.5pt"><U>ASSETS</U></TD><TD STYLE="padding-bottom: 1.5pt">&nbsp;</TD>
    <TD COLSPAN="2" STYLE="text-align: center">&nbsp;</TD><TD STYLE="padding-bottom: 1.5pt">&nbsp;</TD><TD STYLE="padding-bottom: 1.5pt">&nbsp;</TD>
    <TD COLSPAN="2" STYLE="text-align: center">&nbsp;</TD><TD STYLE="padding-bottom: 1.5pt">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom">
    <TD>CURRENT ASSETS:</TD><TD>&nbsp;</TD>
    <TD COLSPAN="2">&nbsp;</TD><TD>&nbsp;</TD><TD>&nbsp;</TD>
    <TD COLSPAN="2">&nbsp;</TD><TD>&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,238,255)">
    <TD STYLE="width: 80%; text-align: left">Cash and cash equivalents</TD><TD STYLE="width: 1%">&nbsp;</TD>
    <TD STYLE="width: 1%; text-align: left">$</TD><TD STYLE="width: 7%; text-align: right">388</TD><TD STYLE="width: 1%; text-align: left">&nbsp;</TD><TD STYLE="width: 1%">&nbsp;</TD>
    <TD STYLE="width: 1%; text-align: left">$</TD><TD STYLE="width: 7%; text-align: right">673</TD><TD STYLE="width: 1%; text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD STYLE="text-align: left">Accounts receivable, net</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">229</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">15</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,238,255)">
    <TD STYLE="text-align: left">Prepaid and other current assets</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">124</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">9</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD STYLE="padding-bottom: 1.5pt">&nbsp;</TD><TD STYLE="padding-bottom: 1.5pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 1.5pt solid; text-align: left">&nbsp;</TD><TD STYLE="border-bottom: Black 1.5pt solid; text-align: right">&nbsp;</TD><TD STYLE="padding-bottom: 1.5pt; text-align: left">&nbsp;</TD><TD STYLE="padding-bottom: 1.5pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 1.5pt solid; text-align: left">&nbsp;</TD><TD STYLE="border-bottom: Black 1.5pt solid; text-align: right">&nbsp;</TD><TD STYLE="padding-bottom: 1.5pt; text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,238,255)">
    <TD STYLE="text-align: left; padding-bottom: 1.5pt; padding-left: 9pt">Total current assets</TD><TD STYLE="padding-bottom: 1.5pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 1.5pt solid; text-align: left">&nbsp;</TD><TD STYLE="border-bottom: Black 1.5pt solid; text-align: right">741</TD><TD STYLE="padding-bottom: 1.5pt; text-align: left">&nbsp;</TD><TD STYLE="padding-bottom: 1.5pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 1.5pt solid; text-align: left">&nbsp;</TD><TD STYLE="border-bottom: Black 1.5pt solid; text-align: right">697</TD><TD STYLE="padding-bottom: 1.5pt; 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(204,238,255)">
    <TD STYLE="text-align: left">LONG-TERM ASSETS:</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">Intangible assets, net</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">3,046</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">14</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,238,255)">
    <TD STYLE="text-align: left">Property and equipment, net</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">713</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">2</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD STYLE="text-align: left">Other assets</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">59</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(204,238,255)">
    <TD STYLE="padding-bottom: 1.5pt">&nbsp;</TD><TD STYLE="padding-bottom: 1.5pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 1.5pt solid; text-align: left">&nbsp;</TD><TD STYLE="border-bottom: Black 1.5pt solid; text-align: right">&nbsp;</TD><TD STYLE="padding-bottom: 1.5pt; text-align: left">&nbsp;</TD><TD STYLE="padding-bottom: 1.5pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 1.5pt solid; text-align: left">&nbsp;</TD><TD STYLE="border-bottom: Black 1.5pt solid; text-align: right">&nbsp;</TD><TD STYLE="padding-bottom: 1.5pt; text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD STYLE="text-align: left; padding-bottom: 4pt; padding-left: 9pt">Total assets</TD><TD STYLE="padding-bottom: 4pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 4pt double; text-align: left">$</TD><TD STYLE="border-bottom: Black 4pt double; text-align: right">4,559</TD><TD STYLE="padding-bottom: 4pt; text-align: left">&nbsp;</TD><TD STYLE="padding-bottom: 4pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 4pt double; text-align: left">$</TD><TD STYLE="border-bottom: Black 4pt double; text-align: right">713</TD><TD STYLE="padding-bottom: 4pt; text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,238,255)">
    <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-decoration: underline; text-align: left">LIABILITIES AND STOCKHOLDERS&rsquo; DEFICIT</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(204,238,255)">
    <TD STYLE="text-align: left">CURRENT LIABILITIES:</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">Accounts payable</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">$</TD><TD STYLE="text-align: right">1,177</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">$</TD><TD STYLE="text-align: right">859</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,238,255)">
    <TD STYLE="text-align: left">Accrued liabilities</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">893</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">365</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD STYLE="text-align: left">Current portion of capital lease obligations</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">30</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(204,238,255)">
    <TD STYLE="text-align: left">Convertible note payable, current, net $187 and $0, respectively</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">585</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">Note payable, current, related party</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">126</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(204,238,255)">
    <TD STYLE="text-align: left">Note payable, current</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">725</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">Convertible note payable, current, net $273 and $0, respectively</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">33</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(204,238,255)">
    <TD STYLE="text-align: left">Deferred income</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">262</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: 1.5pt">Derivative liability</TD><TD STYLE="padding-bottom: 1.5pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 1.5pt solid; text-align: left">&nbsp;</TD><TD STYLE="border-bottom: Black 1.5pt solid; text-align: right">632</TD><TD STYLE="padding-bottom: 1.5pt; text-align: left">&nbsp;</TD><TD STYLE="padding-bottom: 1.5pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 1.5pt solid; text-align: left">&nbsp;</TD><TD STYLE="border-bottom: Black 1.5pt solid; text-align: right">-</TD><TD STYLE="padding-bottom: 1.5pt; text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,238,255)">
    <TD STYLE="text-align: left; padding-bottom: 1.5pt; padding-left: 9pt">Total current liabilities</TD><TD STYLE="padding-bottom: 1.5pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 1.5pt solid; text-align: left">&nbsp;</TD><TD STYLE="border-bottom: Black 1.5pt solid; text-align: right">4,463</TD><TD STYLE="padding-bottom: 1.5pt; text-align: left">&nbsp;</TD><TD STYLE="padding-bottom: 1.5pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 1.5pt solid; text-align: left">&nbsp;</TD><TD STYLE="border-bottom: Black 1.5pt solid; text-align: right">1,224</TD><TD STYLE="padding-bottom: 1.5pt; 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(204,238,255)">
    <TD STYLE="text-align: left">LONG-TERM LIABILITIES:</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">Convertible debenture, net $273 and $0, respectively</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">27</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(204,238,255)">
    <TD STYLE="text-align: left">Notes payable, related party, net $38 and $0, respectively</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">505</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">Deferred income</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">131</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,238,255)">
    <TD STYLE="text-align: left">Note payable</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">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></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD STYLE="text-align: left; padding-bottom: 1.5pt">Obligations under capital leases</TD><TD STYLE="padding-bottom: 1.5pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 1.5pt solid; text-align: left">&nbsp;</TD><TD STYLE="border-bottom: Black 1.5pt solid; text-align: right">64</TD><TD STYLE="padding-bottom: 1.5pt; text-align: left">&nbsp;</TD><TD STYLE="padding-bottom: 1.5pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 1.5pt solid; text-align: left">&nbsp;</TD><TD STYLE="border-bottom: Black 1.5pt solid; text-align: right">-</TD><TD STYLE="padding-bottom: 1.5pt; text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,238,255)">
    <TD STYLE="text-align: left; padding-bottom: 1.5pt; padding-left: 9pt">Total long-term liabilities</TD><TD STYLE="padding-bottom: 1.5pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 1.5pt solid; text-align: left">&nbsp;</TD><TD STYLE="border-bottom: Black 1.5pt solid; text-align: right">1,096</TD><TD STYLE="padding-bottom: 1.5pt; text-align: left">&nbsp;</TD><TD STYLE="padding-bottom: 1.5pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 1.5pt solid; text-align: left">&nbsp;</TD><TD STYLE="border-bottom: Black 1.5pt solid; text-align: right">131</TD><TD STYLE="padding-bottom: 1.5pt; 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(204,238,255)">
    <TD STYLE="text-align: left; padding-bottom: 1.5pt">Total liabilities</TD><TD STYLE="padding-bottom: 1.5pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 1.5pt solid; text-align: left">&nbsp;</TD><TD STYLE="border-bottom: Black 1.5pt solid; text-align: right">5,559</TD><TD STYLE="padding-bottom: 1.5pt; text-align: left">&nbsp;</TD><TD STYLE="padding-bottom: 1.5pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 1.5pt solid; text-align: left">&nbsp;</TD><TD STYLE="border-bottom: Black 1.5pt solid; text-align: right">1,355</TD><TD STYLE="padding-bottom: 1.5pt; 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(204,238,255)">
    <TD STYLE="text-align: left">Commitments and contingencies</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></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,238,255)">
    <TD STYLE="text-align: left">STOCKHOLDERS&rsquo; DEFICIT:</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">Preferred stock, $0.001, 50,000,000 shares authorized, none issued and outstanding</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(204,238,255)">
    <TD STYLE="text-align: left; padding-left: 0.125in; text-indent: -0.125in">Common stock, $0.001, 150,000,000 shares authorized, 12,775,143 and 8,386,056 issued and outstanding, respectively</TD>
    <TD>&nbsp; </TD>
    <TD STYLE="text-align: left">&nbsp;</TD>
    <TD STYLE="text-align: right">13</TD>
    <TD STYLE="text-align: left"></TD>
    <TD></TD>
    <TD STYLE="text-align: left"></TD>
    <TD STYLE="text-align: right">8</TD>
    <TD STYLE="text-align: left">&nbsp; &nbsp;</TD>
</TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD STYLE="text-align: left">Additional paid in capital</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">79,993</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">76,986</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,238,255)">
    <TD STYLE="text-align: left">Accumulated deficit</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">(80,800</TD><TD STYLE="text-align: left">)</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">(77,637</TD><TD STYLE="text-align: left">)</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD STYLE="text-align: left; padding-bottom: 1.5pt">Other comprehensive income</TD><TD STYLE="padding-bottom: 1.5pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 1.5pt solid; text-align: left">&nbsp;</TD><TD STYLE="border-bottom: Black 1.5pt solid; text-align: right">1</TD><TD STYLE="padding-bottom: 1.5pt; text-align: left">&nbsp;</TD><TD STYLE="padding-bottom: 1.5pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 1.5pt solid; text-align: left">&nbsp;</TD><TD STYLE="border-bottom: Black 1.5pt solid; text-align: right">1</TD><TD STYLE="padding-bottom: 1.5pt; text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,238,255)">
    <TD STYLE="text-align: left; padding-bottom: 1.5pt; padding-left: 9pt">Total Digerati&rsquo;s stockholders&rsquo; deficit</TD><TD STYLE="padding-bottom: 1.5pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 1.5pt solid; text-align: left">&nbsp;</TD><TD STYLE="border-bottom: Black 1.5pt solid; text-align: right">(793</TD><TD STYLE="padding-bottom: 1.5pt; text-align: left">)</TD><TD STYLE="padding-bottom: 1.5pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 1.5pt solid; text-align: left">&nbsp;</TD><TD STYLE="border-bottom: Black 1.5pt solid; text-align: right">(642</TD><TD STYLE="padding-bottom: 1.5pt; text-align: left">)</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD STYLE="text-align: left; padding-bottom: 1.5pt">Noncontrolling interest</TD><TD STYLE="padding-bottom: 1.5pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 1.5pt solid; text-align: left">&nbsp;</TD><TD STYLE="border-bottom: Black 1.5pt solid; text-align: right">(207</TD><TD STYLE="padding-bottom: 1.5pt; text-align: left">)</TD><TD STYLE="padding-bottom: 1.5pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 1.5pt solid; text-align: left">&nbsp;</TD><TD STYLE="border-bottom: Black 1.5pt solid; text-align: right">-</TD><TD STYLE="padding-bottom: 1.5pt; text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,238,255)">
    <TD STYLE="text-align: left; padding-bottom: 1.5pt; padding-left: 9pt">Total stockholders&rsquo; deficit</TD><TD STYLE="padding-bottom: 1.5pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 1.5pt solid; text-align: left">&nbsp;</TD><TD STYLE="border-bottom: Black 1.5pt solid; text-align: right">(1,000</TD><TD STYLE="padding-bottom: 1.5pt; text-align: left">)</TD><TD STYLE="padding-bottom: 1.5pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 1.5pt solid; text-align: left">&nbsp;</TD><TD STYLE="border-bottom: Black 1.5pt solid; text-align: right">(642</TD><TD STYLE="padding-bottom: 1.5pt; text-align: left">)</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD STYLE="text-align: left; padding-bottom: 4pt">Total liabilities and stockholders&rsquo; deficit</TD><TD STYLE="padding-bottom: 4pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 4pt double; text-align: left">$</TD><TD STYLE="border-bottom: Black 4pt double; text-align: right">4,559</TD><TD STYLE="padding-bottom: 4pt; text-align: left">&nbsp;</TD><TD STYLE="padding-bottom: 4pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 4pt double; text-align: left">$</TD><TD STYLE="border-bottom: Black 4pt double; text-align: right">713</TD><TD STYLE="padding-bottom: 4pt; text-align: left">&nbsp;</TD></TR>
</TABLE>

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

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 5.4pt; text-align: center">See accompanying notes to consolidated
financial statements</P>

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


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    <DIV STYLE="page-break-before: always; margin-top: 6pt; margin-bottom: 12pt"><P STYLE="margin: 0pt">&nbsp;</P></DIV>
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<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 5.4pt; text-align: center"><B><A NAME="ff_028"></A>DIGERATI TECHNOLOGIES, INC.
AND SUBSIDIARIES</B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 5.4pt; text-align: center"><B>CONSOLIDATED STATEMENTS OF
OPERATIONS</B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 5.4pt; text-align: center"><B>(In thousands, except per
share amounts)</B></P>

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

<TABLE CELLPADDING="0" CELLSPACING="0" STYLE="border-collapse: collapse; width: 100%; font: 10pt Times New Roman, Times, Serif">
<TR STYLE="vertical-align: bottom">
    <TD STYLE="padding-bottom: 1.5pt"><B>&nbsp;</B></TD><TD STYLE="padding-bottom: 1.5pt"><B>&nbsp;</B></TD>
    <TD COLSPAN="6" STYLE="text-align: center; border-bottom: Black 1.5pt solid"><B>For the Years ended<BR>
July 31,</B></TD><TD STYLE="padding-bottom: 1.5pt"><B>&nbsp;</B></TD></TR>
<TR STYLE="vertical-align: bottom">
    <TD><B>&nbsp;</B></TD><TD STYLE="padding-bottom: 1.5pt"><B>&nbsp;</B></TD>
    <TD COLSPAN="2" STYLE="text-align: center; border-bottom: Black 1.5pt solid"><B>2018</B></TD><TD STYLE="padding-bottom: 1.5pt"><B>&nbsp;</B></TD><TD STYLE="padding-bottom: 1.5pt"><B>&nbsp;</B></TD>
    <TD COLSPAN="2" STYLE="text-align: center; border-bottom: Black 1.5pt solid"><B>2017</B></TD><TD STYLE="padding-bottom: 1.5pt"><B>&nbsp;</B></TD></TR>
<TR STYLE="vertical-align: bottom">
    <TD>OPERATING REVENUES:</TD><TD>&nbsp;</TD>
    <TD COLSPAN="2">&nbsp;</TD><TD>&nbsp;</TD><TD>&nbsp;</TD>
    <TD COLSPAN="2">&nbsp;</TD><TD>&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,238,255)">
    <TD STYLE="width: 80%; text-align: left; padding-left: 9pt">Cloud-based hosted services</TD><TD STYLE="width: 1%">&nbsp;</TD>
    <TD STYLE="width: 1%; text-align: left">$</TD><TD STYLE="width: 7%; text-align: right">2,001</TD><TD STYLE="width: 1%; text-align: left">&nbsp;</TD><TD STYLE="width: 1%">&nbsp;</TD>
    <TD STYLE="width: 1%; text-align: left">$</TD><TD STYLE="width: 7%; text-align: right">193</TD><TD STYLE="width: 1%; text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD STYLE="padding-bottom: 1.5pt">&nbsp;</TD><TD STYLE="padding-bottom: 1.5pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 1.5pt solid; text-align: left">&nbsp;</TD><TD STYLE="border-bottom: Black 1.5pt solid; text-align: right">&nbsp;</TD><TD STYLE="padding-bottom: 1.5pt; text-align: left">&nbsp;</TD><TD STYLE="padding-bottom: 1.5pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 1.5pt solid; text-align: left">&nbsp;</TD><TD STYLE="border-bottom: Black 1.5pt solid; text-align: right">&nbsp;</TD><TD STYLE="padding-bottom: 1.5pt; text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,238,255)">
    <TD STYLE="text-align: left; padding-bottom: 1.5pt; padding-left: 0.25in">Total operating revenues</TD><TD STYLE="padding-bottom: 1.5pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 1.5pt solid; text-align: left">&nbsp;</TD><TD STYLE="border-bottom: Black 1.5pt solid; text-align: right">2,001</TD><TD STYLE="padding-bottom: 1.5pt; text-align: left">&nbsp;</TD><TD STYLE="padding-bottom: 1.5pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 1.5pt solid; text-align: left">&nbsp;</TD><TD STYLE="border-bottom: Black 1.5pt solid; text-align: right">193</TD><TD STYLE="padding-bottom: 1.5pt; 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(204,238,255)">
    <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">Cost of services (exclusive of depreciation and amortization)</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">1,053</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">134</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,238,255)">
    <TD STYLE="text-align: left; padding-left: 9pt">Loss on disposal of unproven oil and gas properties</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">248</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, general and administrative expense</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">1,563</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">914</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,238,255)">
    <TD STYLE="text-align: left; padding-left: 9pt">Stock compensation &amp; warrant expense</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">1,521</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">773</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">Legal and professional fees</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">490</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">290</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,238,255)">
    <TD STYLE="text-align: left; padding-left: 9pt">Bad debt</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">15</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: 1.5pt; padding-left: 9pt">Depreciation and amortization expense</TD><TD STYLE="padding-bottom: 1.5pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 1.5pt solid; text-align: left">&nbsp;</TD><TD STYLE="border-bottom: Black 1.5pt solid; text-align: right">227</TD><TD STYLE="padding-bottom: 1.5pt; text-align: left">&nbsp;</TD><TD STYLE="padding-bottom: 1.5pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 1.5pt solid; text-align: left">&nbsp;</TD><TD STYLE="border-bottom: Black 1.5pt solid; text-align: right">18</TD><TD STYLE="padding-bottom: 1.5pt; text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,238,255)">
    <TD STYLE="text-align: left; padding-bottom: 1.5pt; padding-left: 0.25in">Total operating expenses</TD><TD STYLE="padding-bottom: 1.5pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 1.5pt solid; text-align: left">&nbsp;</TD><TD STYLE="border-bottom: Black 1.5pt solid; text-align: right">4,869</TD><TD STYLE="padding-bottom: 1.5pt; text-align: left">&nbsp;</TD><TD STYLE="padding-bottom: 1.5pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 1.5pt solid; text-align: left">&nbsp;</TD><TD STYLE="border-bottom: Black 1.5pt solid; text-align: right">2,377</TD><TD STYLE="padding-bottom: 1.5pt; 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(204,238,255)">
    <TD STYLE="text-align: left; padding-bottom: 1.5pt">OPERATING LOSS</TD><TD STYLE="padding-bottom: 1.5pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 1.5pt solid; text-align: left">&nbsp;</TD><TD STYLE="border-bottom: Black 1.5pt solid; text-align: right">(2,868</TD><TD STYLE="padding-bottom: 1.5pt; text-align: left">)</TD><TD STYLE="padding-bottom: 1.5pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 1.5pt solid; text-align: left">&nbsp;</TD><TD STYLE="border-bottom: Black 1.5pt solid; text-align: right">(2,184</TD><TD STYLE="padding-bottom: 1.5pt; 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(204,238,255)">
    <TD STYLE="text-align: left">OTHER INCOME (EXPENSE):</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">Loss on derivative instruments</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">(91</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></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,238,255)">
    <TD STYLE="text-align: left; padding-left: 9pt">Miscellaneous gain</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">2,623</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">Income tax benefit</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">118</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(204,238,255)">
    <TD STYLE="text-align: left; padding-bottom: 1.5pt; padding-left: 9pt">Interest income (expense)</TD><TD STYLE="padding-bottom: 1.5pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 1.5pt solid; text-align: left">&nbsp;</TD><TD STYLE="border-bottom: Black 1.5pt solid; text-align: right">(379</TD><TD STYLE="padding-bottom: 1.5pt; text-align: left">)</TD><TD STYLE="padding-bottom: 1.5pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 1.5pt solid; text-align: left">&nbsp;</TD><TD STYLE="border-bottom: Black 1.5pt solid; text-align: right">-</TD><TD STYLE="padding-bottom: 1.5pt; text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD STYLE="text-align: left; padding-bottom: 1.5pt; padding-left: 0.25in">Total other income (expense)</TD><TD STYLE="padding-bottom: 1.5pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 1.5pt solid; text-align: left">&nbsp;</TD><TD STYLE="border-bottom: Black 1.5pt solid; text-align: right">(352</TD><TD STYLE="padding-bottom: 1.5pt; text-align: left">)</TD><TD STYLE="padding-bottom: 1.5pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 1.5pt solid; text-align: left">&nbsp;</TD><TD STYLE="border-bottom: Black 1.5pt solid; text-align: right">2,623</TD><TD STYLE="padding-bottom: 1.5pt; text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,238,255)">
    <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; padding-bottom: 1.5pt">NET INCOME (LOSS) INCLUDING NONCONTROLLING INTEREST</TD><TD STYLE="padding-bottom: 1.5pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 1.5pt solid; text-align: left">&nbsp;</TD><TD STYLE="border-bottom: Black 1.5pt solid; text-align: right">(3,220</TD><TD STYLE="padding-bottom: 1.5pt; text-align: left">)</TD><TD STYLE="padding-bottom: 1.5pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 1.5pt solid; text-align: left">&nbsp;</TD><TD STYLE="border-bottom: Black 1.5pt solid; text-align: right">439</TD><TD STYLE="padding-bottom: 1.5pt; text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,238,255)">
    <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; padding-left: 9pt">Less: Net  loss attributable to the noncontrolling interest</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">57</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(204,238,255)">
    <TD STYLE="padding-bottom: 1.5pt">&nbsp;</TD><TD STYLE="padding-bottom: 1.5pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 1.5pt solid; text-align: left">&nbsp;</TD><TD STYLE="border-bottom: Black 1.5pt solid; text-align: right">&nbsp;</TD><TD STYLE="padding-bottom: 1.5pt; text-align: left">&nbsp;</TD><TD STYLE="padding-bottom: 1.5pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 1.5pt solid; text-align: left">&nbsp;</TD><TD STYLE="border-bottom: Black 1.5pt solid; text-align: right">&nbsp;</TD><TD STYLE="padding-bottom: 1.5pt; text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD STYLE="text-align: left; padding-bottom: 4pt">NET INCOME / (LOSS) ATTRIBUTABLE TO DIGERATI&rsquo;S SHAREHOLDERS</TD><TD STYLE="padding-bottom: 4pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 4pt double; text-align: left">$</TD><TD STYLE="border-bottom: Black 4pt double; text-align: right">(3,163</TD><TD STYLE="padding-bottom: 4pt; text-align: left">)</TD><TD STYLE="padding-bottom: 4pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 4pt double; text-align: left">$</TD><TD STYLE="border-bottom: Black 4pt double; text-align: right">439</TD><TD STYLE="padding-bottom: 4pt; text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,238,255)">
    <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="padding-bottom: 4pt">INCOME (LOSS) PER SHARE - BASIC</TD><TD STYLE="padding-bottom: 4pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 4pt double; text-align: left">$</TD><TD STYLE="border-bottom: Black 4pt double; text-align: right">(0.31</TD><TD STYLE="padding-bottom: 4pt; text-align: left">)</TD><TD STYLE="padding-bottom: 4pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 4pt double; text-align: left">$</TD><TD STYLE="border-bottom: Black 4pt double; text-align: right">0.07</TD><TD STYLE="padding-bottom: 4pt; text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,238,255)">
    <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="padding-bottom: 4pt">INCOME (LOSS) PER SHARE - DILUTED</TD><TD STYLE="padding-bottom: 4pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 4pt double; text-align: left">$</TD><TD STYLE="border-bottom: Black 4pt double; text-align: right">(0.31</TD><TD STYLE="padding-bottom: 4pt; text-align: left">)</TD><TD STYLE="padding-bottom: 4pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 4pt double; text-align: left">$</TD><TD STYLE="border-bottom: Black 4pt double; text-align: right">0.06</TD><TD STYLE="padding-bottom: 4pt; text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,238,255)">
    <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="padding-bottom: 4pt">WEIGHTED AVERAGE COMMON SHARES OUTSTANDING - BASIC</TD><TD STYLE="padding-bottom: 4pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 4pt double; text-align: left">&nbsp;</TD><TD STYLE="border-bottom: Black 4pt double; text-align: right">10,339,371</TD><TD STYLE="padding-bottom: 4pt; text-align: left">&nbsp;</TD><TD STYLE="padding-bottom: 4pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 4pt double; text-align: left">&nbsp;</TD><TD STYLE="border-bottom: Black 4pt double; text-align: right">6,339,906</TD><TD STYLE="padding-bottom: 4pt; text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,238,255)">
    <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="padding-bottom: 4pt">WEIGHTED AVERAGE COMMON SHARES OUTSTANDING - DILUTED</TD><TD STYLE="padding-bottom: 4pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 4pt double; text-align: left">&nbsp;</TD><TD STYLE="border-bottom: Black 4pt double; text-align: right">10,339,371</TD><TD STYLE="padding-bottom: 4pt; text-align: left">&nbsp;</TD><TD STYLE="padding-bottom: 4pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 4pt double; text-align: left">&nbsp;</TD><TD STYLE="border-bottom: Black 4pt double; text-align: right">6,982,081</TD><TD STYLE="padding-bottom: 4pt; text-align: left">&nbsp;</TD></TR>
</TABLE>

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

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center">See accompanying notes to consolidated financial
statements</P>

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


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

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center"><B><A NAME="ff_029"></A>DIGERATI TECHNOLOGIES, INC. AND SUBSIDIARIES</B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center"><B>CONSOLIDATED STATEMENTS OF STOCKHOLDERS&rsquo;
DEFICIT</B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center"><B>YEARS ENDED JULY 31, 2017 AND 2018</B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center"><B>(In thousands, except for share amounts)</B></P>

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

<TABLE CELLPADDING="0" CELLSPACING="0" STYLE="border-collapse: collapse; width: 100%; font: 10pt Times New Roman, Times, Serif">
<TR STYLE="vertical-align: bottom">
    <TD STYLE="text-indent: -10pt; padding-left: 10pt">&nbsp;</TD><TD STYLE="font-weight: bold; padding-bottom: 1.5pt">&nbsp;</TD>
    <TD COLSPAN="18" STYLE="border-bottom: Black 1.5pt solid; font-weight: bold; text-align: center">Equity Digerati&rsquo;s Shareholders</TD>
    <TD STYLE="padding-bottom: 1.5pt; font-weight: bold; text-align: center">&nbsp;</TD>
    <TD COLSPAN="3" STYLE="padding-bottom: 1.5pt; font-weight: bold; text-align: center">&nbsp;</TD><TD STYLE="padding-bottom: 1.5pt; font-weight: bold">&nbsp;</TD><TD STYLE="padding-bottom: 1.5pt">&nbsp;</TD>
    <TD COLSPAN="2">&nbsp;</TD><TD STYLE="padding-bottom: 1.5pt">&nbsp;</TD><TD STYLE="padding-bottom: 1.5pt">&nbsp;</TD>
    <TD COLSPAN="2">&nbsp;</TD><TD STYLE="padding-bottom: 1.5pt">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom">
    <TD STYLE="text-indent: -10pt; padding-left: 10pt">&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 STYLE="font-weight: bold">&nbsp;</TD>
    <TD COLSPAN="2" STYLE="font-weight: bold; text-align: center">Additional</TD><TD STYLE="font-weight: bold">&nbsp;</TD><TD>&nbsp;</TD>
    <TD COLSPAN="2" STYLE="text-align: center">&nbsp;</TD><TD>&nbsp;</TD><TD STYLE="font-weight: bold">&nbsp;</TD>
    <TD COLSPAN="2" STYLE="font-weight: bold; text-align: center">Other</TD><TD STYLE="font-weight: bold">&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">
    <TD STYLE="text-indent: -10pt; padding-left: 10pt">&nbsp;</TD><TD STYLE="font-weight: bold">&nbsp;</TD>
    <TD COLSPAN="6" STYLE="font-weight: bold; text-align: center">Common</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">Paid-in</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">Accumulated</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">Comprehensive</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">Stockholders</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">Noncontrolling</TD><TD STYLE="font-weight: bold">&nbsp;</TD><TD>&nbsp;</TD>
    <TD COLSPAN="2" STYLE="text-align: center">&nbsp;</TD><TD>&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom">
    <TD STYLE="text-indent: -10pt; padding-left: 10pt">&nbsp;</TD><TD STYLE="font-weight: bold; padding-bottom: 1.5pt">&nbsp;</TD>
    <TD COLSPAN="2" STYLE="font-weight: bold; text-align: center; border-bottom: Black 1.5pt solid">Shares</TD><TD STYLE="padding-bottom: 1.5pt; font-weight: bold">&nbsp;</TD><TD STYLE="font-weight: bold; padding-bottom: 1.5pt">&nbsp;</TD>
    <TD COLSPAN="2" STYLE="font-weight: bold; text-align: center; border-bottom: Black 1.5pt solid">Par</TD><TD STYLE="padding-bottom: 1.5pt; font-weight: bold">&nbsp;</TD><TD STYLE="font-weight: bold; padding-bottom: 1.5pt">&nbsp;</TD>
    <TD COLSPAN="2" STYLE="font-weight: bold; text-align: center; border-bottom: Black 1.5pt solid">Capital</TD><TD STYLE="padding-bottom: 1.5pt; font-weight: bold">&nbsp;</TD><TD STYLE="font-weight: bold; padding-bottom: 1.5pt">&nbsp;</TD>
    <TD COLSPAN="2" STYLE="font-weight: bold; text-align: center; border-bottom: Black 1.5pt solid">Deficit</TD><TD STYLE="padding-bottom: 1.5pt; font-weight: bold">&nbsp;</TD><TD STYLE="font-weight: bold; padding-bottom: 1.5pt">&nbsp;</TD>
    <TD COLSPAN="2" STYLE="font-weight: bold; text-align: center; border-bottom: Black 1.5pt solid">Income</TD><TD STYLE="padding-bottom: 1.5pt; font-weight: bold">&nbsp;</TD><TD STYLE="font-weight: bold; padding-bottom: 1.5pt">&nbsp;</TD>
    <TD COLSPAN="2" STYLE="font-weight: bold; text-align: center; border-bottom: Black 1.5pt solid">Equity</TD><TD STYLE="padding-bottom: 1.5pt; font-weight: bold">&nbsp;</TD><TD STYLE="font-weight: bold; padding-bottom: 1.5pt">&nbsp;</TD>
    <TD COLSPAN="2" STYLE="font-weight: bold; text-align: center; border-bottom: Black 1.5pt solid">Interest</TD><TD STYLE="padding-bottom: 1.5pt; font-weight: bold">&nbsp;</TD><TD STYLE="font-weight: bold; padding-bottom: 1.5pt">&nbsp;</TD>
    <TD COLSPAN="2" STYLE="font-weight: bold; text-align: center; border-bottom: Black 1.5pt solid">Totals</TD><TD STYLE="padding-bottom: 1.5pt; font-weight: bold">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,238,255)">
    <TD STYLE="width: 32%; font-weight: bold; padding-bottom: 1.5pt; text-indent: -10pt; padding-left: 10pt">BALANCE, July 31, 2016</TD><TD STYLE="width: 0.5%; font-weight: bold; padding-bottom: 1.5pt">&nbsp;</TD>
    <TD STYLE="width: 0.5%; border-bottom: Black 1.5pt solid; font-weight: bold; text-align: left">&nbsp;</TD><TD STYLE="width: 7%; border-bottom: Black 1.5pt solid; font-weight: bold; text-align: right">5,234,158</TD><TD STYLE="width: 0.5%; padding-bottom: 1.5pt; font-weight: bold; text-align: left">&nbsp;</TD><TD STYLE="width: 0.5%; font-weight: bold; padding-bottom: 1.5pt">&nbsp;</TD>
    <TD STYLE="width: 0.5%; border-bottom: Black 1.5pt solid; font-weight: bold; text-align: left">$</TD><TD STYLE="width: 7%; border-bottom: Black 1.5pt solid; font-weight: bold; text-align: right">5</TD><TD STYLE="width: 0.5%; padding-bottom: 1.5pt; font-weight: bold; text-align: left">&nbsp;</TD><TD STYLE="width: 0.5%; font-weight: bold; padding-bottom: 1.5pt">&nbsp;</TD>
    <TD STYLE="width: 0.5%; border-bottom: Black 1.5pt solid; font-weight: bold; text-align: left">$</TD><TD STYLE="width: 7%; border-bottom: Black 1.5pt solid; font-weight: bold; text-align: right">75,656</TD><TD STYLE="width: 0.5%; padding-bottom: 1.5pt; font-weight: bold; text-align: left">&nbsp;</TD><TD STYLE="width: 0.5%; font-weight: bold; padding-bottom: 1.5pt">&nbsp;</TD>
    <TD STYLE="width: 0.5%; border-bottom: Black 1.5pt solid; font-weight: bold; text-align: left">$</TD><TD STYLE="width: 7%; border-bottom: Black 1.5pt solid; font-weight: bold; text-align: right">(78,076</TD><TD STYLE="width: 0.5%; padding-bottom: 1.5pt; font-weight: bold; text-align: left">)</TD><TD STYLE="width: 0.5%; font-weight: bold; padding-bottom: 1.5pt">&nbsp;</TD>
    <TD STYLE="width: 0.5%; border-bottom: Black 1.5pt solid; font-weight: bold; text-align: left">$</TD><TD STYLE="width: 7%; border-bottom: Black 1.5pt solid; font-weight: bold; text-align: right">1</TD><TD STYLE="width: 0.5%; padding-bottom: 1.5pt; font-weight: bold; text-align: left">&nbsp;</TD><TD STYLE="width: 0.5%; font-weight: bold; padding-bottom: 1.5pt">&nbsp;</TD>
    <TD STYLE="width: 0.5%; border-bottom: Black 1.5pt solid; font-weight: bold; text-align: left">&nbsp;</TD><TD STYLE="width: 7%; border-bottom: Black 1.5pt solid; font-weight: bold; text-align: right">(2,414</TD><TD STYLE="width: 0.5%; padding-bottom: 1.5pt; font-weight: bold; text-align: left">)</TD><TD STYLE="width: 0.5%; font-weight: bold; padding-bottom: 1.5pt">&nbsp;</TD>
    <TD STYLE="width: 0.5%; border-bottom: Black 1.5pt solid; font-weight: bold; text-align: left">$</TD><TD STYLE="width: 7%; border-bottom: Black 1.5pt solid; font-weight: bold; text-align: right">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;-</TD><TD STYLE="width: 0.5%; padding-bottom: 1.5pt; font-weight: bold; text-align: left">&nbsp;</TD><TD STYLE="width: 0.5%; font-weight: bold; padding-bottom: 1.5pt">&nbsp;</TD>
    <TD STYLE="width: 0.5%; border-bottom: Black 1.5pt solid; font-weight: bold; text-align: left">$</TD><TD STYLE="width: 7%; border-bottom: Black 1.5pt solid; font-weight: bold; text-align: right">(2,414</TD><TD STYLE="width: 0.5%; padding-bottom: 1.5pt; font-weight: bold; text-align: left">)</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD STYLE="font-weight: bold; text-align: left; text-indent: -10pt; padding-left: 10pt">Stock issued for services, to employees</TD><TD STYLE="font-weight: bold">&nbsp;</TD>
    <TD STYLE="font-weight: bold; text-align: left">&nbsp;</TD><TD STYLE="font-weight: bold; text-align: right">1,956,898</TD><TD STYLE="font-weight: bold; text-align: left">&nbsp;</TD><TD STYLE="font-weight: bold">&nbsp;</TD>
    <TD STYLE="font-weight: bold; text-align: left">&nbsp;</TD><TD STYLE="font-weight: bold; text-align: right">2</TD><TD STYLE="font-weight: bold; text-align: left">&nbsp;</TD><TD STYLE="font-weight: bold">&nbsp;</TD>
    <TD STYLE="font-weight: bold; text-align: left">&nbsp;</TD><TD STYLE="font-weight: bold; text-align: right">727</TD><TD STYLE="font-weight: bold; text-align: left">&nbsp;</TD><TD STYLE="font-weight: bold">&nbsp;</TD>
    <TD STYLE="font-weight: bold; text-align: left">&nbsp;</TD><TD STYLE="font-weight: bold; text-align: right">-</TD><TD STYLE="font-weight: bold; text-align: left">&nbsp;</TD><TD STYLE="font-weight: bold">&nbsp;</TD>
    <TD STYLE="font-weight: bold; text-align: left">&nbsp;</TD><TD STYLE="font-weight: bold; text-align: right">-</TD><TD STYLE="font-weight: bold; text-align: left">&nbsp;</TD><TD STYLE="font-weight: bold">&nbsp;</TD>
    <TD STYLE="font-weight: bold; text-align: left">&nbsp;</TD><TD STYLE="font-weight: bold; text-align: right">729</TD><TD STYLE="font-weight: bold; text-align: left">&nbsp;</TD><TD STYLE="font-weight: bold">&nbsp;</TD>
    <TD STYLE="font-weight: bold; text-align: left">&nbsp;</TD><TD STYLE="font-weight: bold; text-align: right">-</TD><TD STYLE="font-weight: bold; text-align: left">&nbsp;</TD><TD STYLE="font-weight: bold">&nbsp;</TD>
    <TD STYLE="font-weight: bold; text-align: left">&nbsp;</TD><TD STYLE="font-weight: bold; text-align: right">729</TD><TD STYLE="font-weight: bold; text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,238,255)">
    <TD STYLE="font-weight: bold; text-align: left; text-indent: -10pt; padding-left: 10pt">Stock issued for professional services</TD><TD STYLE="font-weight: bold">&nbsp;</TD>
    <TD STYLE="font-weight: bold; text-align: left">&nbsp;</TD><TD STYLE="font-weight: bold; text-align: right">75,000</TD><TD STYLE="font-weight: bold; text-align: left">&nbsp;</TD><TD STYLE="font-weight: bold">&nbsp;</TD>
    <TD STYLE="font-weight: bold; text-align: left">&nbsp;</TD><TD STYLE="font-weight: bold; text-align: right">-</TD><TD STYLE="font-weight: bold; text-align: left">&nbsp;</TD><TD STYLE="font-weight: bold">&nbsp;</TD>
    <TD STYLE="font-weight: bold; text-align: left">&nbsp;</TD><TD STYLE="font-weight: bold; text-align: right">44</TD><TD STYLE="font-weight: bold; text-align: left">&nbsp;</TD><TD STYLE="font-weight: bold">&nbsp;</TD>
    <TD STYLE="font-weight: bold; text-align: left">&nbsp;</TD><TD STYLE="font-weight: bold; text-align: right">-</TD><TD STYLE="font-weight: bold; text-align: left">&nbsp;</TD><TD STYLE="font-weight: bold">&nbsp;</TD>
    <TD STYLE="font-weight: bold; text-align: left">&nbsp;</TD><TD STYLE="font-weight: bold; text-align: right">-</TD><TD STYLE="font-weight: bold; text-align: left">&nbsp;</TD><TD STYLE="font-weight: bold">&nbsp;</TD>
    <TD STYLE="font-weight: bold; text-align: left">&nbsp;</TD><TD STYLE="font-weight: bold; text-align: right">44</TD><TD STYLE="font-weight: bold; text-align: left">&nbsp;</TD><TD STYLE="font-weight: bold">&nbsp;</TD>
    <TD STYLE="font-weight: bold; text-align: left">&nbsp;</TD><TD STYLE="font-weight: bold; text-align: right">-</TD><TD STYLE="font-weight: bold; text-align: left">&nbsp;</TD><TD STYLE="font-weight: bold">&nbsp;</TD>
    <TD STYLE="font-weight: bold; text-align: left">&nbsp;</TD><TD STYLE="font-weight: bold; text-align: right">44</TD><TD STYLE="font-weight: bold; text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD STYLE="font-weight: bold; text-align: left; text-indent: -10pt; padding-left: 10pt">Stock issued for cash</TD><TD STYLE="font-weight: bold">&nbsp;</TD>
    <TD STYLE="font-weight: bold; text-align: left">&nbsp;</TD><TD STYLE="font-weight: bold; text-align: right">1,120,000</TD><TD STYLE="font-weight: bold; text-align: left">&nbsp;</TD><TD STYLE="font-weight: bold">&nbsp;</TD>
    <TD STYLE="font-weight: bold; text-align: left">&nbsp;</TD><TD STYLE="font-weight: bold; text-align: right">1</TD><TD STYLE="font-weight: bold; text-align: left">&nbsp;</TD><TD STYLE="font-weight: bold">&nbsp;</TD>
    <TD STYLE="font-weight: bold; text-align: left">&nbsp;</TD><TD STYLE="font-weight: bold; text-align: right">559</TD><TD STYLE="font-weight: bold; text-align: left">&nbsp;</TD><TD STYLE="font-weight: bold">&nbsp;</TD>
    <TD STYLE="font-weight: bold; text-align: left">&nbsp;</TD><TD STYLE="font-weight: bold; text-align: right">-</TD><TD STYLE="font-weight: bold; text-align: left">&nbsp;</TD><TD STYLE="font-weight: bold">&nbsp;</TD>
    <TD STYLE="font-weight: bold; text-align: left">&nbsp;</TD><TD STYLE="font-weight: bold; text-align: right">-</TD><TD STYLE="font-weight: bold; text-align: left">&nbsp;</TD><TD STYLE="font-weight: bold">&nbsp;</TD>
    <TD STYLE="font-weight: bold; text-align: left">&nbsp;</TD><TD STYLE="font-weight: bold; text-align: right">560</TD><TD STYLE="font-weight: bold; text-align: left">&nbsp;</TD><TD STYLE="font-weight: bold">&nbsp;</TD>
    <TD STYLE="font-weight: bold; text-align: left">&nbsp;</TD><TD STYLE="font-weight: bold; text-align: right">-</TD><TD STYLE="font-weight: bold; text-align: left">&nbsp;</TD><TD STYLE="font-weight: bold">&nbsp;</TD>
    <TD STYLE="font-weight: bold; text-align: left">&nbsp;</TD><TD STYLE="font-weight: bold; text-align: right">560</TD><TD STYLE="font-weight: bold; text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,238,255)">
    <TD STYLE="font-weight: bold; text-align: left; padding-bottom: 1.5pt; text-indent: -10pt; padding-left: 10pt">Net Income</TD><TD STYLE="font-weight: bold; padding-bottom: 1.5pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 1.5pt solid; font-weight: bold; text-align: left">&nbsp;</TD><TD STYLE="border-bottom: Black 1.5pt solid; font-weight: bold; text-align: right">-</TD><TD STYLE="padding-bottom: 1.5pt; font-weight: bold; text-align: left">&nbsp;</TD><TD STYLE="font-weight: bold; padding-bottom: 1.5pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 1.5pt solid; font-weight: bold; text-align: left">&nbsp;</TD><TD STYLE="border-bottom: Black 1.5pt solid; font-weight: bold; text-align: right">-</TD><TD STYLE="padding-bottom: 1.5pt; font-weight: bold; text-align: left">&nbsp;</TD><TD STYLE="font-weight: bold; padding-bottom: 1.5pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 1.5pt solid; font-weight: bold; text-align: left">&nbsp;</TD><TD STYLE="border-bottom: Black 1.5pt solid; font-weight: bold; text-align: right">-</TD><TD STYLE="padding-bottom: 1.5pt; font-weight: bold; text-align: left">&nbsp;</TD><TD STYLE="font-weight: bold; padding-bottom: 1.5pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 1.5pt solid; font-weight: bold; text-align: left">&nbsp;</TD><TD STYLE="border-bottom: Black 1.5pt solid; font-weight: bold; text-align: right">439</TD><TD STYLE="padding-bottom: 1.5pt; font-weight: bold; text-align: left">&nbsp;</TD><TD STYLE="font-weight: bold; padding-bottom: 1.5pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 1.5pt solid; font-weight: bold; text-align: left">&nbsp;</TD><TD STYLE="border-bottom: Black 1.5pt solid; font-weight: bold; text-align: right">-</TD><TD STYLE="padding-bottom: 1.5pt; font-weight: bold; text-align: left">&nbsp;</TD><TD STYLE="font-weight: bold; padding-bottom: 1.5pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 1.5pt solid; font-weight: bold; text-align: left">&nbsp;</TD><TD STYLE="border-bottom: Black 1.5pt solid; font-weight: bold; text-align: right">439</TD><TD STYLE="padding-bottom: 1.5pt; font-weight: bold; text-align: left">&nbsp;</TD><TD STYLE="font-weight: bold; padding-bottom: 1.5pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 1.5pt solid; font-weight: bold; text-align: left">&nbsp;</TD><TD STYLE="border-bottom: Black 1.5pt solid; font-weight: bold; text-align: right">-</TD><TD STYLE="padding-bottom: 1.5pt; font-weight: bold; text-align: left">&nbsp;</TD><TD STYLE="font-weight: bold; padding-bottom: 1.5pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 1.5pt solid; font-weight: bold; text-align: left">&nbsp;</TD><TD STYLE="border-bottom: Black 1.5pt solid; font-weight: bold; text-align: right">439</TD><TD STYLE="padding-bottom: 1.5pt; font-weight: bold; text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD STYLE="font-weight: bold; padding-bottom: 1.5pt; text-indent: -10pt; padding-left: 10pt">BALANCE, July 31, 2017</TD><TD STYLE="font-weight: bold; padding-bottom: 1.5pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 1.5pt solid; font-weight: bold; text-align: left">&nbsp;</TD><TD STYLE="border-bottom: Black 1.5pt solid; font-weight: bold; text-align: right">8,386,056</TD><TD STYLE="padding-bottom: 1.5pt; font-weight: bold; text-align: left">&nbsp;</TD><TD STYLE="font-weight: bold; padding-bottom: 1.5pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 1.5pt solid; font-weight: bold; text-align: left">$</TD><TD STYLE="border-bottom: Black 1.5pt solid; font-weight: bold; text-align: right">8</TD><TD STYLE="padding-bottom: 1.5pt; font-weight: bold; text-align: left">&nbsp;</TD><TD STYLE="font-weight: bold; padding-bottom: 1.5pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 1.5pt solid; font-weight: bold; text-align: left">$</TD><TD STYLE="border-bottom: Black 1.5pt solid; font-weight: bold; text-align: right">76,986</TD><TD STYLE="padding-bottom: 1.5pt; font-weight: bold; text-align: left">&nbsp;</TD><TD STYLE="font-weight: bold; padding-bottom: 1.5pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 1.5pt solid; font-weight: bold; text-align: left">$</TD><TD STYLE="border-bottom: Black 1.5pt solid; font-weight: bold; text-align: right">(77,637</TD><TD STYLE="padding-bottom: 1.5pt; font-weight: bold; text-align: left">)</TD><TD STYLE="font-weight: bold; padding-bottom: 1.5pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 1.5pt solid; font-weight: bold; text-align: left">$</TD><TD STYLE="border-bottom: Black 1.5pt solid; font-weight: bold; text-align: right">1</TD><TD STYLE="padding-bottom: 1.5pt; font-weight: bold; text-align: left">&nbsp;</TD><TD STYLE="font-weight: bold; padding-bottom: 1.5pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 1.5pt solid; font-weight: bold; text-align: left">$</TD><TD STYLE="border-bottom: Black 1.5pt solid; font-weight: bold; text-align: right">(642</TD><TD STYLE="padding-bottom: 1.5pt; font-weight: bold; text-align: left">)</TD><TD STYLE="font-weight: bold; padding-bottom: 1.5pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 1.5pt solid; font-weight: bold; text-align: left">$</TD><TD STYLE="border-bottom: Black 1.5pt solid; font-weight: bold; text-align: right">-</TD><TD STYLE="padding-bottom: 1.5pt; font-weight: bold; text-align: left">&nbsp;</TD><TD STYLE="font-weight: bold; padding-bottom: 1.5pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 1.5pt solid; font-weight: bold; text-align: left">$</TD><TD STYLE="border-bottom: Black 1.5pt solid; font-weight: bold; text-align: right">(642</TD><TD STYLE="padding-bottom: 1.5pt; font-weight: bold; text-align: left">)</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,238,255)">
    <TD STYLE="font-weight: bold; text-align: left; text-indent: -10pt; padding-left: 10pt">Stock issued for services, to employees</TD><TD STYLE="font-weight: bold">&nbsp;</TD>
    <TD STYLE="font-weight: bold; text-align: left">&nbsp;</TD><TD STYLE="font-weight: bold; text-align: right">1,807,012</TD><TD STYLE="font-weight: bold; text-align: left">&nbsp;</TD><TD STYLE="font-weight: bold">&nbsp;</TD>
    <TD STYLE="font-weight: bold; text-align: left">&nbsp;</TD><TD STYLE="font-weight: bold; text-align: right">2</TD><TD STYLE="font-weight: bold; text-align: left">&nbsp;</TD><TD STYLE="font-weight: bold">&nbsp;</TD>
    <TD STYLE="font-weight: bold; text-align: left">&nbsp;</TD><TD STYLE="font-weight: bold; text-align: right">1,052</TD><TD STYLE="font-weight: bold; text-align: left">&nbsp;</TD><TD STYLE="font-weight: bold">&nbsp;</TD>
    <TD STYLE="font-weight: bold; text-align: left">&nbsp;</TD><TD STYLE="font-weight: bold; text-align: right">-</TD><TD STYLE="font-weight: bold; text-align: left">&nbsp;</TD><TD STYLE="font-weight: bold">&nbsp;</TD>
    <TD STYLE="font-weight: bold; text-align: left">&nbsp;</TD><TD STYLE="font-weight: bold; text-align: right">-</TD><TD STYLE="font-weight: bold; text-align: left">&nbsp;</TD><TD STYLE="font-weight: bold">&nbsp;</TD>
    <TD STYLE="font-weight: bold; text-align: left">&nbsp;</TD><TD STYLE="font-weight: bold; text-align: right">1,054</TD><TD STYLE="font-weight: bold; text-align: left">&nbsp;</TD><TD STYLE="font-weight: bold">&nbsp;</TD>
    <TD STYLE="font-weight: bold; text-align: left">&nbsp;</TD><TD STYLE="font-weight: bold; text-align: right">-</TD><TD STYLE="font-weight: bold; text-align: left">&nbsp;</TD><TD STYLE="font-weight: bold">&nbsp;</TD>
    <TD STYLE="font-weight: bold; text-align: left">&nbsp;</TD><TD STYLE="font-weight: bold; text-align: right">1,054</TD><TD STYLE="font-weight: bold; text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD STYLE="font-weight: bold; text-align: left; text-indent: -10pt; padding-left: 10pt">Stock issued for services</TD><TD STYLE="font-weight: bold">&nbsp;</TD>
    <TD STYLE="font-weight: bold; text-align: left">&nbsp;</TD><TD STYLE="font-weight: bold; text-align: right">406,500</TD><TD STYLE="font-weight: bold; text-align: left">&nbsp;</TD><TD STYLE="font-weight: bold">&nbsp;</TD>
    <TD STYLE="font-weight: bold; text-align: left">&nbsp;</TD><TD STYLE="font-weight: bold; text-align: right">-</TD><TD STYLE="font-weight: bold; text-align: left">&nbsp;</TD><TD STYLE="font-weight: bold">&nbsp;</TD>
    <TD STYLE="font-weight: bold; text-align: left">&nbsp;</TD><TD STYLE="font-weight: bold; text-align: right">186</TD><TD STYLE="font-weight: bold; text-align: left">&nbsp;</TD><TD STYLE="font-weight: bold">&nbsp;</TD>
    <TD STYLE="font-weight: bold; text-align: left">&nbsp;</TD><TD STYLE="font-weight: bold; text-align: right">-</TD><TD STYLE="font-weight: bold; text-align: left">&nbsp;</TD><TD STYLE="font-weight: bold">&nbsp;</TD>
    <TD STYLE="font-weight: bold; text-align: left">&nbsp;</TD><TD STYLE="font-weight: bold; text-align: right">-</TD><TD STYLE="font-weight: bold; text-align: left">&nbsp;</TD><TD STYLE="font-weight: bold">&nbsp;</TD>
    <TD STYLE="font-weight: bold; text-align: left">&nbsp;</TD><TD STYLE="font-weight: bold; text-align: right">186</TD><TD STYLE="font-weight: bold; text-align: left">&nbsp;</TD><TD STYLE="font-weight: bold">&nbsp;</TD>
    <TD STYLE="font-weight: bold; text-align: left">&nbsp;</TD><TD STYLE="font-weight: bold; text-align: right">-</TD><TD STYLE="font-weight: bold; text-align: left">&nbsp;</TD><TD STYLE="font-weight: bold">&nbsp;</TD>
    <TD STYLE="font-weight: bold; text-align: left">&nbsp;</TD><TD STYLE="font-weight: bold; text-align: right">186</TD><TD STYLE="font-weight: bold; text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,238,255)">
    <TD STYLE="font-weight: bold; text-align: left; text-indent: -10pt; padding-left: 10pt">Stock issued for AP settlement</TD><TD STYLE="font-weight: bold">&nbsp;</TD>
    <TD STYLE="font-weight: bold; text-align: left">&nbsp;</TD><TD STYLE="font-weight: bold; text-align: right">35,575</TD><TD STYLE="font-weight: bold; text-align: left">&nbsp;</TD><TD STYLE="font-weight: bold">&nbsp;</TD>
    <TD STYLE="font-weight: bold; text-align: left">&nbsp;</TD><TD STYLE="font-weight: bold; text-align: right">-</TD><TD STYLE="font-weight: bold; text-align: left">&nbsp;</TD><TD STYLE="font-weight: bold">&nbsp;</TD>
    <TD STYLE="font-weight: bold; text-align: left">&nbsp;</TD><TD STYLE="font-weight: bold; text-align: right">15</TD><TD STYLE="font-weight: bold; text-align: left">&nbsp;</TD><TD STYLE="font-weight: bold">&nbsp;</TD>
    <TD STYLE="font-weight: bold; text-align: left">&nbsp;</TD><TD STYLE="font-weight: bold; text-align: right">-</TD><TD STYLE="font-weight: bold; text-align: left">&nbsp;</TD><TD STYLE="font-weight: bold">&nbsp;</TD>
    <TD STYLE="font-weight: bold; text-align: left">&nbsp;</TD><TD STYLE="font-weight: bold; text-align: right">-</TD><TD STYLE="font-weight: bold; text-align: left">&nbsp;</TD><TD STYLE="font-weight: bold">&nbsp;</TD>
    <TD STYLE="font-weight: bold; text-align: left">&nbsp;</TD><TD STYLE="font-weight: bold; text-align: right">15</TD><TD STYLE="font-weight: bold; text-align: left">&nbsp;</TD><TD STYLE="font-weight: bold">&nbsp;</TD>
    <TD STYLE="font-weight: bold; text-align: left">&nbsp;</TD><TD STYLE="font-weight: bold; text-align: right">-</TD><TD STYLE="font-weight: bold; text-align: left">&nbsp;</TD><TD STYLE="font-weight: bold">&nbsp;</TD>
    <TD STYLE="font-weight: bold; text-align: left">&nbsp;</TD><TD STYLE="font-weight: bold; text-align: right">15</TD><TD STYLE="font-weight: bold; text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD STYLE="font-weight: bold; text-align: left; text-indent: -10pt; padding-left: 10pt">Stock issued for cash</TD><TD STYLE="font-weight: bold">&nbsp;</TD>
    <TD STYLE="font-weight: bold; text-align: left">&nbsp;</TD><TD STYLE="font-weight: bold; text-align: right">960,000</TD><TD STYLE="font-weight: bold; text-align: left">&nbsp;</TD><TD STYLE="font-weight: bold">&nbsp;</TD>
    <TD STYLE="font-weight: bold; text-align: left">&nbsp;</TD><TD STYLE="font-weight: bold; text-align: right">1</TD><TD STYLE="font-weight: bold; text-align: left">&nbsp;</TD><TD STYLE="font-weight: bold">&nbsp;</TD>
    <TD STYLE="font-weight: bold; text-align: left">&nbsp;</TD><TD STYLE="font-weight: bold; text-align: right">479</TD><TD STYLE="font-weight: bold; text-align: left">&nbsp;</TD><TD STYLE="font-weight: bold">&nbsp;</TD>
    <TD STYLE="font-weight: bold; text-align: left">&nbsp;</TD><TD STYLE="font-weight: bold; text-align: right">-</TD><TD STYLE="font-weight: bold; text-align: left">&nbsp;</TD><TD STYLE="font-weight: bold">&nbsp;</TD>
    <TD STYLE="font-weight: bold; text-align: left">&nbsp;</TD><TD STYLE="font-weight: bold; text-align: right">-</TD><TD STYLE="font-weight: bold; text-align: left">&nbsp;</TD><TD STYLE="font-weight: bold">&nbsp;</TD>
    <TD STYLE="font-weight: bold; text-align: left">&nbsp;</TD><TD STYLE="font-weight: bold; text-align: right">480</TD><TD STYLE="font-weight: bold; text-align: left">&nbsp;</TD><TD STYLE="font-weight: bold">&nbsp;</TD>
    <TD STYLE="font-weight: bold; text-align: left">&nbsp;</TD><TD STYLE="font-weight: bold; text-align: right">-</TD><TD STYLE="font-weight: bold; text-align: left">&nbsp;</TD><TD STYLE="font-weight: bold">&nbsp;</TD>
    <TD STYLE="font-weight: bold; text-align: left">&nbsp;</TD><TD STYLE="font-weight: bold; text-align: right">480</TD><TD STYLE="font-weight: bold; text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,238,255)">
    <TD STYLE="font-weight: bold; text-align: left; text-indent: -10pt; padding-left: 10pt">Stock issued for convertible debt</TD><TD STYLE="font-weight: bold">&nbsp;</TD>
    <TD STYLE="font-weight: bold; text-align: left">&nbsp;</TD><TD STYLE="font-weight: bold; text-align: right">505,000</TD><TD STYLE="font-weight: bold; text-align: left">&nbsp;</TD><TD STYLE="font-weight: bold">&nbsp;</TD>
    <TD STYLE="font-weight: bold; text-align: left">&nbsp;</TD><TD STYLE="font-weight: bold; text-align: right">1</TD><TD STYLE="font-weight: bold; text-align: left">&nbsp;</TD><TD STYLE="font-weight: bold">&nbsp;</TD>
    <TD STYLE="font-weight: bold; text-align: left">&nbsp;</TD><TD STYLE="font-weight: bold; text-align: right">3</TD><TD STYLE="font-weight: bold; text-align: left">&nbsp;</TD><TD STYLE="font-weight: bold">&nbsp;</TD>
    <TD STYLE="font-weight: bold; text-align: left">&nbsp;</TD><TD STYLE="font-weight: bold; text-align: right">-</TD><TD STYLE="font-weight: bold; text-align: left">&nbsp;</TD><TD STYLE="font-weight: bold">&nbsp;</TD>
    <TD STYLE="font-weight: bold; text-align: left">&nbsp;</TD><TD STYLE="font-weight: bold; text-align: right">-</TD><TD STYLE="font-weight: bold; text-align: left">&nbsp;</TD><TD STYLE="font-weight: bold">&nbsp;</TD>
    <TD STYLE="font-weight: bold; text-align: left">&nbsp;</TD><TD STYLE="font-weight: bold; text-align: right">4</TD><TD STYLE="font-weight: bold; text-align: left">&nbsp;</TD><TD STYLE="font-weight: bold">&nbsp;</TD>
    <TD STYLE="font-weight: bold; text-align: left">&nbsp;</TD><TD STYLE="font-weight: bold; text-align: right">-</TD><TD STYLE="font-weight: bold; text-align: left">&nbsp;</TD><TD STYLE="font-weight: bold">&nbsp;</TD>
    <TD STYLE="font-weight: bold; text-align: left">&nbsp;</TD><TD STYLE="font-weight: bold; text-align: right">4</TD><TD STYLE="font-weight: bold; text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD STYLE="font-weight: bold; text-align: left; text-indent: -10pt; padding-left: 10pt">Stock issued, extension of debt</TD><TD STYLE="font-weight: bold">&nbsp;</TD>
    <TD STYLE="font-weight: bold; text-align: left">&nbsp;</TD><TD STYLE="font-weight: bold; text-align: right">25,000</TD><TD STYLE="font-weight: bold; text-align: left">&nbsp;</TD><TD STYLE="font-weight: bold">&nbsp;</TD>
    <TD STYLE="font-weight: bold; text-align: left">&nbsp;</TD><TD STYLE="font-weight: bold; text-align: right">-</TD><TD STYLE="font-weight: bold; text-align: left">&nbsp;</TD><TD STYLE="font-weight: bold">&nbsp;</TD>
    <TD STYLE="font-weight: bold; text-align: left">&nbsp;</TD><TD STYLE="font-weight: bold; text-align: right">13</TD><TD STYLE="font-weight: bold; text-align: left">&nbsp;</TD><TD STYLE="font-weight: bold">&nbsp;</TD>
    <TD STYLE="font-weight: bold; text-align: left">&nbsp;</TD><TD STYLE="font-weight: bold; text-align: right">-</TD><TD STYLE="font-weight: bold; text-align: left">&nbsp;</TD><TD STYLE="font-weight: bold">&nbsp;</TD>
    <TD STYLE="font-weight: bold; text-align: left">&nbsp;</TD><TD STYLE="font-weight: bold; text-align: right">-</TD><TD STYLE="font-weight: bold; text-align: left">&nbsp;</TD><TD STYLE="font-weight: bold">&nbsp;</TD>
    <TD STYLE="font-weight: bold; text-align: left">&nbsp;</TD><TD STYLE="font-weight: bold; text-align: right">13</TD><TD STYLE="font-weight: bold; text-align: left">&nbsp;</TD><TD STYLE="font-weight: bold">&nbsp;</TD>
    <TD STYLE="font-weight: bold; text-align: left">&nbsp;</TD><TD STYLE="font-weight: bold; text-align: right">-</TD><TD STYLE="font-weight: bold; text-align: left">&nbsp;</TD><TD STYLE="font-weight: bold">&nbsp;</TD>
    <TD STYLE="font-weight: bold; text-align: left">&nbsp;</TD><TD STYLE="font-weight: bold; text-align: right">13</TD><TD STYLE="font-weight: bold; text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,238,255)">
    <TD STYLE="font-weight: bold; text-align: left; text-indent: -10pt; padding-left: 10pt">Stock issued for Acquisition</TD><TD STYLE="font-weight: bold">&nbsp;</TD>
    <TD STYLE="font-weight: bold; text-align: left">&nbsp;</TD><TD STYLE="font-weight: bold; text-align: right">500,000</TD><TD STYLE="font-weight: bold; text-align: left">&nbsp;</TD><TD STYLE="font-weight: bold">&nbsp;</TD>
    <TD STYLE="font-weight: bold; text-align: left">&nbsp;</TD><TD STYLE="font-weight: bold; text-align: right">1</TD><TD STYLE="font-weight: bold; text-align: left">&nbsp;</TD><TD STYLE="font-weight: bold">&nbsp;</TD>
    <TD STYLE="font-weight: bold; text-align: left">&nbsp;</TD><TD STYLE="font-weight: bold; text-align: right">174</TD><TD STYLE="font-weight: bold; text-align: left">&nbsp;</TD><TD STYLE="font-weight: bold">&nbsp;</TD>
    <TD STYLE="font-weight: bold; text-align: left">&nbsp;</TD><TD STYLE="font-weight: bold; text-align: right">-</TD><TD STYLE="font-weight: bold; text-align: left">&nbsp;</TD><TD STYLE="font-weight: bold">&nbsp;</TD>
    <TD STYLE="font-weight: bold; text-align: left">&nbsp;</TD><TD STYLE="font-weight: bold; text-align: right">-</TD><TD STYLE="font-weight: bold; text-align: left">&nbsp;</TD><TD STYLE="font-weight: bold">&nbsp;</TD>
    <TD STYLE="font-weight: bold; text-align: left">&nbsp;</TD><TD STYLE="font-weight: bold; text-align: right">175</TD><TD STYLE="font-weight: bold; text-align: left">&nbsp;</TD><TD STYLE="font-weight: bold">&nbsp;</TD>
    <TD STYLE="font-weight: bold; text-align: left">&nbsp;</TD><TD STYLE="font-weight: bold; text-align: right">-</TD><TD STYLE="font-weight: bold; text-align: left">&nbsp;</TD><TD STYLE="font-weight: bold">&nbsp;</TD>
    <TD STYLE="font-weight: bold; text-align: left">&nbsp;</TD><TD STYLE="font-weight: bold; text-align: right">175</TD><TD STYLE="font-weight: bold; text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD STYLE="font-weight: bold; text-indent: -10pt; padding-left: 10pt">Stock issued, exercise of warrants</TD><TD STYLE="font-weight: bold">&nbsp;</TD>
    <TD STYLE="font-weight: bold; text-align: left">&nbsp;</TD><TD STYLE="font-weight: bold; text-align: right">150,000</TD><TD STYLE="font-weight: bold; text-align: left">&nbsp;</TD><TD STYLE="font-weight: bold">&nbsp;</TD>
    <TD STYLE="font-weight: bold; text-align: left">&nbsp;</TD><TD STYLE="font-weight: bold; text-align: right">-</TD><TD STYLE="font-weight: bold; text-align: left">&nbsp;</TD><TD STYLE="font-weight: bold">&nbsp;</TD>
    <TD STYLE="font-weight: bold; text-align: left">&nbsp;</TD><TD STYLE="font-weight: bold; text-align: right">15</TD><TD STYLE="font-weight: bold; text-align: left">&nbsp;</TD><TD STYLE="font-weight: bold">&nbsp;</TD>
    <TD STYLE="font-weight: bold; text-align: left">&nbsp;</TD><TD STYLE="font-weight: bold; text-align: right">-</TD><TD STYLE="font-weight: bold; text-align: left">&nbsp;</TD><TD STYLE="font-weight: bold">&nbsp;</TD>
    <TD STYLE="font-weight: bold; text-align: left">&nbsp;</TD><TD STYLE="font-weight: bold; text-align: right">-</TD><TD STYLE="font-weight: bold; text-align: left">&nbsp;</TD><TD STYLE="font-weight: bold">&nbsp;</TD>
    <TD STYLE="font-weight: bold; text-align: left">&nbsp;</TD><TD STYLE="font-weight: bold; text-align: right">15</TD><TD STYLE="font-weight: bold; text-align: left">&nbsp;</TD><TD STYLE="font-weight: bold">&nbsp;</TD>
    <TD STYLE="font-weight: bold; text-align: left">&nbsp;</TD><TD STYLE="font-weight: bold; text-align: right">-</TD><TD STYLE="font-weight: bold; text-align: left">&nbsp;</TD><TD STYLE="font-weight: bold">&nbsp;</TD>
    <TD STYLE="font-weight: bold; text-align: left">&nbsp;</TD><TD STYLE="font-weight: bold; text-align: right">15</TD><TD STYLE="font-weight: bold; text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,238,255)">
    <TD STYLE="font-weight: bold; text-indent: -10pt; padding-left: 10pt">Value of warrants issued</TD><TD STYLE="font-weight: bold">&nbsp;</TD>
    <TD STYLE="font-weight: bold; text-align: left">&nbsp;</TD><TD STYLE="font-weight: bold; text-align: right">-</TD><TD STYLE="font-weight: bold; text-align: left">&nbsp;</TD><TD STYLE="font-weight: bold">&nbsp;</TD>
    <TD STYLE="font-weight: bold; text-align: left">&nbsp;</TD><TD STYLE="font-weight: bold; text-align: right">-</TD><TD STYLE="font-weight: bold; text-align: left">&nbsp;</TD><TD STYLE="font-weight: bold">&nbsp;</TD>
    <TD STYLE="font-weight: bold; text-align: left">&nbsp;</TD><TD STYLE="font-weight: bold; text-align: right">670</TD><TD STYLE="font-weight: bold; text-align: left">&nbsp;</TD><TD STYLE="font-weight: bold">&nbsp;</TD>
    <TD STYLE="font-weight: bold; text-align: left">&nbsp;</TD><TD STYLE="font-weight: bold; text-align: right">-</TD><TD STYLE="font-weight: bold; text-align: left">&nbsp;</TD><TD STYLE="font-weight: bold">&nbsp;</TD>
    <TD STYLE="font-weight: bold; text-align: left">&nbsp;</TD><TD STYLE="font-weight: bold; text-align: right">-</TD><TD STYLE="font-weight: bold; text-align: left">&nbsp;</TD><TD STYLE="font-weight: bold">&nbsp;</TD>
    <TD STYLE="font-weight: bold; text-align: left">&nbsp;</TD><TD STYLE="font-weight: bold; text-align: right">670</TD><TD STYLE="font-weight: bold; text-align: left">&nbsp;</TD><TD STYLE="font-weight: bold">&nbsp;</TD>
    <TD STYLE="font-weight: bold; text-align: left">&nbsp;</TD><TD STYLE="font-weight: bold; text-align: right">-</TD><TD STYLE="font-weight: bold; text-align: left">&nbsp;</TD><TD STYLE="font-weight: bold">&nbsp;</TD>
    <TD STYLE="font-weight: bold; text-align: left">&nbsp;</TD><TD STYLE="font-weight: bold; text-align: right">670</TD><TD STYLE="font-weight: bold; text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD STYLE="font-weight: bold; text-align: left; text-indent: -10pt; padding-left: 10pt">Sale of subsidiary shares to a noncontrolling interest</TD><TD STYLE="font-weight: bold">&nbsp;</TD>
    <TD STYLE="font-weight: bold; text-align: left">&nbsp;</TD><TD STYLE="font-weight: bold; text-align: right">-</TD><TD STYLE="font-weight: bold; text-align: left">&nbsp;</TD><TD STYLE="font-weight: bold">&nbsp;</TD>
    <TD STYLE="font-weight: bold; text-align: left">&nbsp;</TD><TD STYLE="font-weight: bold; text-align: right">-</TD><TD STYLE="font-weight: bold; text-align: left">&nbsp;</TD><TD STYLE="font-weight: bold">&nbsp;</TD>
    <TD STYLE="font-weight: bold; text-align: left">&nbsp;</TD><TD STYLE="font-weight: bold; text-align: right">400</TD><TD STYLE="font-weight: bold; text-align: left">&nbsp;</TD><TD STYLE="font-weight: bold">&nbsp;</TD>
    <TD STYLE="font-weight: bold; text-align: left">&nbsp;</TD><TD STYLE="font-weight: bold; text-align: right">-</TD><TD STYLE="font-weight: bold; text-align: left">&nbsp;</TD><TD STYLE="font-weight: bold">&nbsp;</TD>
    <TD STYLE="font-weight: bold; text-align: left">&nbsp;</TD><TD STYLE="font-weight: bold; text-align: right">-</TD><TD STYLE="font-weight: bold; text-align: left">&nbsp;</TD><TD STYLE="font-weight: bold">&nbsp;</TD>
    <TD STYLE="font-weight: bold; text-align: left">&nbsp;</TD><TD STYLE="font-weight: bold; text-align: right">400</TD><TD STYLE="font-weight: bold; text-align: left">&nbsp;</TD><TD STYLE="font-weight: bold">&nbsp;</TD>
    <TD STYLE="font-weight: bold; text-align: left">&nbsp;</TD><TD STYLE="font-weight: bold; text-align: right">(150</TD><TD STYLE="font-weight: bold; text-align: left">)</TD><TD STYLE="font-weight: bold">&nbsp;</TD>
    <TD STYLE="font-weight: bold; text-align: left">&nbsp;</TD><TD STYLE="font-weight: bold; text-align: right">250</TD><TD STYLE="font-weight: bold; text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,238,255)">
    <TD STYLE="font-weight: bold; text-align: left; padding-bottom: 1.5pt; text-indent: -10pt; padding-left: 10pt">Net Ioss</TD><TD STYLE="font-weight: bold; padding-bottom: 1.5pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 1.5pt solid; font-weight: bold; text-align: left">&nbsp;</TD><TD STYLE="border-bottom: Black 1.5pt solid; font-weight: bold; text-align: right">-</TD><TD STYLE="padding-bottom: 1.5pt; font-weight: bold; text-align: left">&nbsp;</TD><TD STYLE="font-weight: bold; padding-bottom: 1.5pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 1.5pt solid; font-weight: bold; text-align: left">&nbsp;</TD><TD STYLE="border-bottom: Black 1.5pt solid; font-weight: bold; text-align: right">-</TD><TD STYLE="padding-bottom: 1.5pt; font-weight: bold; text-align: left">&nbsp;</TD><TD STYLE="font-weight: bold; padding-bottom: 1.5pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 1.5pt solid; font-weight: bold; text-align: left">&nbsp;</TD><TD STYLE="border-bottom: Black 1.5pt solid; font-weight: bold; text-align: right">-</TD><TD STYLE="padding-bottom: 1.5pt; font-weight: bold; text-align: left">&nbsp;</TD><TD STYLE="font-weight: bold; padding-bottom: 1.5pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 1.5pt solid; font-weight: bold; text-align: left">&nbsp;</TD><TD STYLE="border-bottom: Black 1.5pt solid; font-weight: bold; text-align: right">(3,163</TD><TD STYLE="padding-bottom: 1.5pt; font-weight: bold; text-align: left">)</TD><TD STYLE="font-weight: bold; padding-bottom: 1.5pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 1.5pt solid; font-weight: bold; text-align: left">&nbsp;</TD><TD STYLE="border-bottom: Black 1.5pt solid; font-weight: bold; text-align: right">-</TD><TD STYLE="padding-bottom: 1.5pt; font-weight: bold; text-align: left">&nbsp;</TD><TD STYLE="font-weight: bold; padding-bottom: 1.5pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 1.5pt solid; font-weight: bold; text-align: left">&nbsp;</TD><TD STYLE="border-bottom: Black 1.5pt solid; font-weight: bold; text-align: right">(3,163</TD><TD STYLE="padding-bottom: 1.5pt; font-weight: bold; text-align: left">)</TD><TD STYLE="font-weight: bold; padding-bottom: 1.5pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 1.5pt solid; font-weight: bold; text-align: left">&nbsp;</TD><TD STYLE="border-bottom: Black 1.5pt solid; font-weight: bold; text-align: right">(57</TD><TD STYLE="padding-bottom: 1.5pt; font-weight: bold; text-align: left">)</TD><TD STYLE="font-weight: bold; padding-bottom: 1.5pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 1.5pt solid; font-weight: bold; text-align: left">&nbsp;</TD><TD STYLE="border-bottom: Black 1.5pt solid; font-weight: bold; text-align: right">(3,220</TD><TD STYLE="padding-bottom: 1.5pt; font-weight: bold; text-align: left">)</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD STYLE="font-weight: bold; padding-bottom: 1.5pt; text-indent: -10pt; padding-left: 10pt">BALANCE, July 31, 2018</TD><TD STYLE="font-weight: bold; padding-bottom: 1.5pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 1.5pt solid; font-weight: bold; text-align: left">&nbsp;</TD><TD STYLE="border-bottom: Black 1.5pt solid; font-weight: bold; text-align: right">12,775,143</TD><TD STYLE="padding-bottom: 1.5pt; font-weight: bold; text-align: left">&nbsp;</TD><TD STYLE="font-weight: bold; padding-bottom: 1.5pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 1.5pt solid; font-weight: bold; text-align: left">$</TD><TD STYLE="border-bottom: Black 1.5pt solid; font-weight: bold; text-align: right">13</TD><TD STYLE="padding-bottom: 1.5pt; font-weight: bold; text-align: left">&nbsp;</TD><TD STYLE="font-weight: bold; padding-bottom: 1.5pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 1.5pt solid; font-weight: bold; text-align: left">$</TD><TD STYLE="border-bottom: Black 1.5pt solid; font-weight: bold; text-align: right">79,993</TD><TD STYLE="padding-bottom: 1.5pt; font-weight: bold; text-align: left">&nbsp;</TD><TD STYLE="font-weight: bold; padding-bottom: 1.5pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 1.5pt solid; font-weight: bold; text-align: left">$</TD><TD STYLE="border-bottom: Black 1.5pt solid; font-weight: bold; text-align: right">(80,800</TD><TD STYLE="padding-bottom: 1.5pt; font-weight: bold; text-align: left">)</TD><TD STYLE="font-weight: bold; padding-bottom: 1.5pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 1.5pt solid; font-weight: bold; text-align: left">$</TD><TD STYLE="border-bottom: Black 1.5pt solid; font-weight: bold; text-align: right">1</TD><TD STYLE="padding-bottom: 1.5pt; font-weight: bold; text-align: left">&nbsp;</TD><TD STYLE="font-weight: bold; padding-bottom: 1.5pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 1.5pt solid; font-weight: bold; text-align: left">$</TD><TD STYLE="border-bottom: Black 1.5pt solid; font-weight: bold; text-align: right">(793</TD><TD STYLE="padding-bottom: 1.5pt; font-weight: bold; text-align: left">)</TD><TD STYLE="font-weight: bold; padding-bottom: 1.5pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 1.5pt solid; font-weight: bold; text-align: left">$</TD><TD STYLE="border-bottom: Black 1.5pt solid; font-weight: bold; text-align: right">(207</TD><TD STYLE="padding-bottom: 1.5pt; font-weight: bold; text-align: left">)</TD><TD STYLE="font-weight: bold; padding-bottom: 1.5pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 1.5pt solid; font-weight: bold; text-align: left">$</TD><TD STYLE="border-bottom: Black 1.5pt solid; font-weight: bold; text-align: right">(1,000</TD><TD STYLE="padding-bottom: 1.5pt; font-weight: bold; text-align: left">)</TD></TR>
</TABLE>

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

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center">See accompanying notes to consolidated
financial statements</P>

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


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<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 5.4pt; text-align: center"><B><A NAME="ff_030"></A>DIGERATI TECHNOLOGIES, INC.
AND SUBSIDIARIES</B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 5.4pt; text-align: center"><B>CONSOLIDATED STATEMENTS OF
CASH FLOWS</B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 5.4pt; text-align: center"><B>(In thousands)</B></P>

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

<TABLE CELLPADDING="0" CELLSPACING="0" STYLE="border-collapse: collapse; width: 100%; font: 10pt Times New Roman, Times, Serif">
<TR STYLE="vertical-align: bottom">
    <TD STYLE="text-align: center"><B>&nbsp;</B></TD><TD STYLE="padding-bottom: 1.5pt"><B>&nbsp;</B></TD>
    <TD COLSPAN="6" STYLE="text-align: center; border-bottom: Black 1.5pt solid"><B>For the Years ended<BR>
    July 31,</B></TD><TD STYLE="padding-bottom: 1.5pt"><B>&nbsp;</B></TD></TR>
<TR STYLE="vertical-align: bottom">
    <TD STYLE="text-align: center"><B>&nbsp;</B></TD><TD STYLE="padding-bottom: 1.5pt"><B>&nbsp;</B></TD>
    <TD COLSPAN="2" STYLE="text-align: center; border-bottom: Black 1.5pt solid"><B>2018</B></TD><TD STYLE="padding-bottom: 1.5pt"><B>&nbsp;</B></TD><TD STYLE="padding-bottom: 1.5pt"><B>&nbsp;</B></TD>
    <TD COLSPAN="2" STYLE="text-align: center; border-bottom: Black 1.5pt solid"><B>2017</B></TD><TD STYLE="padding-bottom: 1.5pt"><B>&nbsp;</B></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></TR>
<TR STYLE="vertical-align: bottom">
    <TD>CASH FLOWS FROM OPERATING ACTIVITIES:</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(204,238,255)">
    <TD STYLE="width: 76%; text-align: left">Net income (loss)</TD><TD STYLE="width: 1%">&nbsp;</TD>
    <TD STYLE="width: 1%; text-align: left">$</TD><TD STYLE="width: 9%; text-align: right">(3,220</TD><TD STYLE="width: 1%; text-align: left">)</TD><TD STYLE="width: 1%">&nbsp;</TD>
    <TD STYLE="width: 1%; text-align: left">$</TD><TD STYLE="width: 9%; text-align: right">439</TD><TD STYLE="width: 1%; text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD STYLE="text-align: left">Adjustments to reconcile net loss to cash used in by operating activities:</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(204,238,255)">
    <TD STYLE="text-align: left; padding-left: 9pt">Loss on disposal of unproven oil and gas properties</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">248</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">Deferred tax benefit</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">(159</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></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,238,255)">
    <TD STYLE="text-align: left; padding-left: 9pt">Depreciation and amortization</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">227</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></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD STYLE="text-align: left; padding-left: 9pt">Stock compensation and warrant expense</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">1,508</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">773</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,238,255)">
    <TD STYLE="text-align: left; padding-left: 9pt">Stock issued for extension of debt</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">13</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">Amortization of debt discount</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">277</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(204,238,255)">
    <TD STYLE="text-align: left; padding-left: 9pt">Loss (Gain) on derivative liabilities</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">91</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">Changes in operating assets and liabilities:</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(204,238,255)">
    <TD STYLE="text-align: left; padding-left: 0.25in">Accounts receivable</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">56</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">(13</TD><TD STYLE="text-align: left">)</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD STYLE="text-align: left; padding-left: 0.25in">Prepaid expenses and other current assets</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">(18</TD><TD STYLE="text-align: left">)</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">(1</TD><TD STYLE="text-align: left">)</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,238,255)">
    <TD STYLE="text-align: left; padding-left: 0.25in">Accounts payable</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">181</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">70</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD STYLE="text-align: left; padding-left: 0.25in">Accrued expenses</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">120</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(204,238,255)">
    <TD STYLE="text-align: left; padding-bottom: 1.5pt; padding-left: 0.25in">Deferred income</TD><TD STYLE="padding-bottom: 1.5pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 1.5pt solid; text-align: left">&nbsp;</TD><TD STYLE="border-bottom: Black 1.5pt solid; text-align: right">(61</TD><TD STYLE="padding-bottom: 1.5pt; text-align: left">)</TD><TD STYLE="padding-bottom: 1.5pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 1.5pt solid; text-align: left">&nbsp;</TD><TD STYLE="border-bottom: Black 1.5pt solid; text-align: right">(2,550</TD><TD STYLE="padding-bottom: 1.5pt; text-align: left">)</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD STYLE="text-align: left; padding-bottom: 1.5pt">Net cash used in operating activities</TD><TD STYLE="padding-bottom: 1.5pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 1.5pt solid; text-align: left">&nbsp;</TD><TD STYLE="border-bottom: Black 1.5pt solid; text-align: right">(985</TD><TD STYLE="padding-bottom: 1.5pt; text-align: left">)</TD><TD STYLE="padding-bottom: 1.5pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 1.5pt solid; text-align: left">&nbsp;</TD><TD STYLE="border-bottom: Black 1.5pt solid; text-align: right">(1,016</TD><TD STYLE="padding-bottom: 1.5pt; text-align: left">)</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,238,255)">
    <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">CASH FLOWS FROM INVESTING ACTIVITIES:</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(204,238,255)">
    <TD STYLE="text-align: left; padding-left: 9pt">Acquisition of oil and gas property</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">(38</TD><TD STYLE="text-align: left">)</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD STYLE="text-align: left; padding-left: 9pt">Purchases of property &amp; equipment</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">(2</TD><TD STYLE="text-align: left">)</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,238,255)">
    <TD STYLE="text-align: left; padding-left: 9pt">Cash received from selling of noncontrolling interest</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">250</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: 1.5pt; padding-left: 9pt">Cash paid in business acquisition, net of cash acquired</TD><TD STYLE="padding-bottom: 1.5pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 1.5pt solid; text-align: left">&nbsp;</TD><TD STYLE="border-bottom: Black 1.5pt solid; text-align: right">(1,788</TD><TD STYLE="padding-bottom: 1.5pt; text-align: left">)</TD><TD STYLE="padding-bottom: 1.5pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 1.5pt solid; text-align: left">&nbsp;</TD><TD STYLE="border-bottom: Black 1.5pt solid; text-align: right">-</TD><TD STYLE="padding-bottom: 1.5pt; text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,238,255)">
    <TD STYLE="text-align: left; padding-bottom: 1.5pt">Net cash used in investing activities</TD><TD STYLE="padding-bottom: 1.5pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 1.5pt solid; text-align: left">&nbsp;</TD><TD STYLE="border-bottom: Black 1.5pt solid; text-align: right">(1,538</TD><TD STYLE="padding-bottom: 1.5pt; text-align: left">)</TD><TD STYLE="padding-bottom: 1.5pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 1.5pt solid; text-align: left">&nbsp;</TD><TD STYLE="border-bottom: Black 1.5pt solid; text-align: right">(40</TD><TD STYLE="padding-bottom: 1.5pt; 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(204,238,255)">
    <TD STYLE="text-align: left">CASH FLOWS FROM FINANCING ACTIVITIES:</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">Proceeds from sale of stock</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">480</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">560</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,238,255)">
    <TD STYLE="padding-left: 9pt">Proceeds from exercise of warrants</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">15</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">Borrowings from 3rd party promissory notes, net</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">890</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(204,238,255)">
    <TD STYLE="text-align: left; padding-left: 9pt">Borrowings from related party notes, net</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">525</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">Borrowings from convertible notes, net</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">1,397</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(204,238,255)">
    <TD STYLE="text-align: left; padding-left: 9pt">Principal payments on promissory notes, net</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">(815</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></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD STYLE="text-align: left; padding-left: 9pt">Principal payments on related party notes, net</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">(131</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></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,238,255)">
    <TD STYLE="text-align: left; padding-left: 9pt">Principal payments on convertible notes, net</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">(120</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>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD STYLE="text-align: left; padding-bottom: 1.5pt; padding-left: 9pt">Principal payment on financing leases</TD><TD STYLE="padding-bottom: 1.5pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 1.5pt solid; text-align: left">&nbsp;</TD><TD STYLE="border-bottom: Black 1.5pt solid; text-align: right">(3</TD><TD STYLE="padding-bottom: 1.5pt; text-align: left">)</TD><TD STYLE="padding-bottom: 1.5pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 1.5pt solid; text-align: left">&nbsp;</TD><TD STYLE="border-bottom: Black 1.5pt solid; text-align: right">-</TD><TD STYLE="padding-bottom: 1.5pt; text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,238,255)">
    <TD STYLE="text-align: left; padding-bottom: 1.5pt">Net cash provided by financing activities</TD><TD STYLE="padding-bottom: 1.5pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 1.5pt solid; text-align: left">&nbsp;</TD><TD STYLE="border-bottom: Black 1.5pt solid; text-align: right">2,238</TD><TD STYLE="padding-bottom: 1.5pt; text-align: left">&nbsp;</TD><TD STYLE="padding-bottom: 1.5pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 1.5pt solid; text-align: left">&nbsp;</TD><TD STYLE="border-bottom: Black 1.5pt solid; text-align: right">560</TD><TD STYLE="padding-bottom: 1.5pt; 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(204,238,255)">
    <TD STYLE="text-align: left">INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">(285</TD><TD STYLE="text-align: left">)</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">(496</TD><TD STYLE="text-align: left">)</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD STYLE="text-align: left; padding-bottom: 1.5pt">CASH AND CASH EQUIVALENTS, beginning of period</TD><TD STYLE="padding-bottom: 1.5pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 1.5pt solid; text-align: left">&nbsp;</TD><TD STYLE="border-bottom: Black 1.5pt solid; text-align: right">673</TD><TD STYLE="padding-bottom: 1.5pt; text-align: left">&nbsp;</TD><TD STYLE="padding-bottom: 1.5pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 1.5pt solid; text-align: left">&nbsp;</TD><TD STYLE="border-bottom: Black 1.5pt solid; text-align: right">1,169</TD><TD STYLE="padding-bottom: 1.5pt; text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,238,255)">
    <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; padding-bottom: 4pt">CASH AND CASH EQUIVALENTS, end of period</TD><TD STYLE="padding-bottom: 4pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 4pt double; text-align: left">$</TD><TD STYLE="border-bottom: Black 4pt double; text-align: right">388</TD><TD STYLE="padding-bottom: 4pt; text-align: left">&nbsp;</TD><TD STYLE="padding-bottom: 4pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 4pt double; text-align: left">$</TD><TD STYLE="border-bottom: Black 4pt double; text-align: right">673</TD><TD STYLE="padding-bottom: 4pt; text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,238,255)">
    <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">SUPPLEMENTAL DISCLOSURES:</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(204,238,255)">
    <TD STYLE="text-align: left; padding-bottom: 4pt; padding-left: 9pt">Cash paid for interest</TD><TD STYLE="padding-bottom: 4pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 4pt double; text-align: left">$</TD><TD STYLE="border-bottom: Black 4pt double; text-align: right">143</TD><TD STYLE="padding-bottom: 4pt; text-align: left">&nbsp;</TD><TD STYLE="padding-bottom: 4pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 4pt double; text-align: left">$</TD><TD STYLE="border-bottom: Black 4pt double; text-align: right">-</TD><TD STYLE="padding-bottom: 4pt; text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD STYLE="text-align: left; padding-bottom: 4pt; padding-left: 9pt">Income taxes paid</TD><TD STYLE="padding-bottom: 4pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 4pt double; text-align: left">$</TD><TD STYLE="border-bottom: Black 4pt double; text-align: right">116</TD><TD STYLE="padding-bottom: 4pt; text-align: left">&nbsp;</TD><TD STYLE="padding-bottom: 4pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 4pt double; text-align: left">$</TD><TD STYLE="border-bottom: Black 4pt double; text-align: right">-</TD><TD STYLE="padding-bottom: 4pt; text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,238,255)">
    <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">SUPPLEMENTAL DISCLOSURES OF NON-CASH INVESTING AND FINANCING ACTIVITIES</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(204,238,255)">
    <TD STYLE="text-align: left; padding-bottom: 4pt">Debt discount from derivative liabilities</TD><TD STYLE="padding-bottom: 4pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 4pt double; text-align: left">$</TD><TD STYLE="border-bottom: Black 4pt double; text-align: right">542</TD><TD STYLE="padding-bottom: 4pt; text-align: left">&nbsp;</TD><TD STYLE="padding-bottom: 4pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 4pt double; text-align: left">$</TD><TD STYLE="border-bottom: Black 4pt double; text-align: right">-</TD><TD STYLE="padding-bottom: 4pt; text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD STYLE="text-align: left; padding-bottom: 4pt">Debt discount from BCF on convertible debt and warrants issued with debt</TD><TD STYLE="padding-bottom: 4pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 4pt double; text-align: left">$</TD><TD STYLE="border-bottom: Black 4pt double; text-align: right">402</TD><TD STYLE="padding-bottom: 4pt; text-align: left">&nbsp;</TD><TD STYLE="padding-bottom: 4pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 4pt double; text-align: left">$</TD><TD STYLE="border-bottom: Black 4pt double; text-align: right">-</TD><TD STYLE="padding-bottom: 4pt; text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,238,255)">
    <TD STYLE="text-align: left; padding-bottom: 4pt">Debt discount from common stock issued with debt</TD><TD STYLE="padding-bottom: 4pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 4pt double; text-align: left">$</TD><TD STYLE="border-bottom: Black 4pt double; text-align: right">4</TD><TD STYLE="padding-bottom: 4pt; text-align: left">&nbsp;</TD><TD STYLE="padding-bottom: 4pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 4pt double; text-align: left">$</TD><TD STYLE="border-bottom: Black 4pt double; text-align: right">-</TD><TD STYLE="padding-bottom: 4pt; text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD STYLE="text-align: left; padding-bottom: 4pt">Stock issued for business acquisition</TD><TD STYLE="padding-bottom: 4pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 4pt double; text-align: left">$</TD><TD STYLE="border-bottom: Black 4pt double; text-align: right">175</TD><TD STYLE="padding-bottom: 4pt; text-align: left">&nbsp;</TD><TD STYLE="padding-bottom: 4pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 4pt double; text-align: left">$</TD><TD STYLE="border-bottom: Black 4pt double; text-align: right">-</TD><TD STYLE="padding-bottom: 4pt; text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,238,255)">
    <TD STYLE="text-align: left; padding-bottom: 4pt">Financing lease on purchased assets</TD><TD STYLE="padding-bottom: 4pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 4pt double; text-align: left">$</TD><TD STYLE="border-bottom: Black 4pt double; text-align: right">98</TD><TD STYLE="padding-bottom: 4pt; text-align: left">&nbsp;</TD><TD STYLE="padding-bottom: 4pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 4pt double; text-align: left">$</TD><TD STYLE="border-bottom: Black 4pt double; text-align: right">-</TD><TD STYLE="padding-bottom: 4pt; text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD STYLE="text-align: left; padding-bottom: 4pt">Common Stock issued to settle AP</TD><TD STYLE="padding-bottom: 4pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 4pt double; text-align: left">$</TD><TD STYLE="border-bottom: Black 4pt double; text-align: right">15</TD><TD STYLE="padding-bottom: 4pt; text-align: left">&nbsp;</TD><TD STYLE="padding-bottom: 4pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 4pt double; text-align: left">$</TD><TD STYLE="border-bottom: Black 4pt double; text-align: right">-</TD><TD STYLE="padding-bottom: 4pt; text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,238,255)">
    <TD STYLE="text-align: left; padding-bottom: 4pt">Note payable issued for business acquisition</TD><TD STYLE="padding-bottom: 4pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 4pt double; text-align: left">$</TD><TD STYLE="border-bottom: Black 4pt double; text-align: right">1,425</TD><TD STYLE="padding-bottom: 4pt; text-align: left">&nbsp;</TD><TD STYLE="padding-bottom: 4pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 4pt double; text-align: left">$</TD><TD STYLE="border-bottom: Black 4pt double; text-align: right">-</TD><TD STYLE="padding-bottom: 4pt; text-align: left">&nbsp;</TD></TR>
</TABLE>


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

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; text-align: center"><FONT STYLE="font: 10pt Times New Roman, Times, Serif">See accompanying notes to consolidated financial statements</FONT></P>

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

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center"><B><A NAME="ff_031"></A>DIGERATI TECHNOLOGIES, INC.</B></P>

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

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center"><B>NOTES TO CONSOLIDATED FINANCIAL STATEMENTS</B></P>

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

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><B>NOTE 1 &ndash; SUMMARY OF SIGNIFICANT
ACCOUNTING POLICIES</B></P>

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

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0"><B><I>Description of Business. </I></B>Digerati
Technologies, Inc. (&ldquo;we&rdquo;, &ldquo;our&rdquo;, &ldquo;Company&rdquo; or &ldquo;Digerati&rdquo;) was incorporated in the
state of Nevada on May 24, 2004. Digerati is a diversified holding company that has no independent operations apart from its subsidiaries.
Through our operating subsidiaries, T3 Communications, Inc., and Shift8 Networks, Inc., dba, Synergy Telecom, we are an established
<FONT STYLE="color: #333333; background-color: white">provider of cloud services specializing in UCaaS (Unified Communications
as a Service) solutions for the small to medium-sized business (&ldquo;SMB&rdquo;) market. We </FONT>offer a comprehensive suite
of cloud communication services to meet the global needs of businesses that are seeking simple, flexible, and cost-effective communication
solutions. Our services <FONT STYLE="background-color: white">include cloud PBX, cloud mobile, Internet broadband, cloud WAN, SIP
trunking, and customized VoIP services, all delivered on its global carrier-grade network and&nbsp;<FONT STYLE="color: #333333"><B><I>Only
in the Cloud&trade;</I>.</B></FONT></FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; color: #333333"><B>&nbsp;</B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0">In December 2017, we
closed a transaction to acquire all the assets, assumed all customers, and critical vendor arrangements from Synergy Telecom, Inc.
Synergy provides UCaaS or cloud communication services to small and medium-sized businesses and municipalities, primarily in Texas.</P>

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

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0">In May 2018, we completed
the acquisition of T3 Communications, Inc., an established UCaaS and Internet broadband provider serving a high-growth corridor
in Southwest Florida.</P>

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

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0"><B><I>Principles of Consolidation. </I></B>The
consolidated financial statements include the accounts of Digerati, and its subsidiaries, which are majority owned by Digerati
In accordance with ASC 810-10-05. All significant inter-company transactions and balances have been eliminated.</P>

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

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0"><B><I>Reclassifications.</I></B> Certain
amounts in the consolidated financial statements of the prior year have been reclassified to conform to the presentation of the
current year for comparative purposes.</P>

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

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0"><B><I>Use of Estimates.</I></B> In preparing
financial statements, management makes estimates and assumptions that affect the reported amounts of assets and liabilities in
the balance sheet and revenue and expenses in the statement of operations. Actual results could differ from those estimates.</P>

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

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0"><B><I>Concentration of Credit Risk. </I></B>Financial
instruments that potentially subject Digerati to concentration of credit risk consist primarily of trade receivables. In the normal
course of business, Digerati provides credit terms to its customers. Accordingly, Digerati performs ongoing credit evaluations
of its customers and maintains allowances for possible losses, which, when realized, have been within the range of management&rsquo;s
expectations. Digerati maintains cash in bank deposit accounts, which, at times, may exceed federally insured limits. Digerati
has not experienced any losses in such accounts and Digerati does not believe it&rsquo;s exposed to any significant credit risk
on cash and cash equivalents.</P>

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

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0"><B><I>Revenue Recognition. </I></B>Digerati
derives revenue from UCaaS or cloud communication services and managed cloud-based services. Our services include fully hosted
IP/PBX services, SIP trunking, call center applications, interactive voice response auto attendant, call recording, simultaneous
calling, voicemail to email conversion, disaster recovery services and multiple customized IP/PBX features in a hosted or cloud
environment. Revenue is recognized when persuasive evidence of an arrangement exists, service or network capacity has been provided,
the price is fixed or determinable, collectability is reasonably assured and there are no significant obligations remaining.</P>

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

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0">Digerati records and reports its revenue
on the gross amount billed to its customers in accordance with the following indicators:</P>

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

<TABLE CELLPADDING="0" CELLSPACING="0" WIDTH="100%" STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt"><TR STYLE="vertical-align: top">
<TD STYLE="width: 0.5in"></TD><TD STYLE="width: 0.25in">&#9679;</TD><TD STYLE="text-align: justify">Digerati is the primary obligor in its arrangements,</TD></TR></TABLE>

<P STYLE="margin-top: 0; margin-bottom: 0">&nbsp;</P>

<TABLE CELLPADDING="0" CELLSPACING="0" WIDTH="100%" STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt"><TR STYLE="vertical-align: top">
<TD STYLE="width: 0.5in"></TD><TD STYLE="width: 0.25in">&#9679;</TD><TD STYLE="text-align: justify">Digerati has latitude in establishing pricing,</TD></TR></TABLE>

<P STYLE="margin-top: 0; margin-bottom: 0">&nbsp;</P>

<TABLE CELLPADDING="0" CELLSPACING="0" WIDTH="100%" STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt"><TR STYLE="vertical-align: top">
<TD STYLE="width: 0.5in"></TD><TD STYLE="width: 0.25in">&#9679;</TD><TD STYLE="text-align: justify">Digerati changes the product or performs part of the service and is involved in the determination
of the product or service specifications,</TD></TR></TABLE>

<P STYLE="margin-top: 0; margin-bottom: 0">&nbsp;</P>

<TABLE CELLPADDING="0" CELLSPACING="0" WIDTH="100%" STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt"><TR STYLE="vertical-align: top">
<TD STYLE="width: 0.5in"></TD><TD STYLE="width: 0.25in">&#9679;</TD><TD STYLE="text-align: justify">Digerati has discretion in supplier selection and</TD></TR></TABLE>

<P STYLE="margin-top: 0; margin-bottom: 0">&nbsp;</P>

<TABLE CELLPADDING="0" CELLSPACING="0" WIDTH="100%" STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt"><TR STYLE="vertical-align: top">
<TD STYLE="width: 0.5in"></TD><TD STYLE="width: 0.25in">&#9679;</TD><TD STYLE="text-align: justify">Digerati assumes credit risk for the amount billed to the customer.</TD></TR></TABLE>

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

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

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

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><B><I>Sources of revenue: </I></B></P>

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

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0"><U>Cloud-based hosted
Services</U>: We provide UCaaS or cloud communication services and managed cloud-based solutions to small and medium size enterprise
customers and to other resellers. Our Internet-based services include fully hosted IP/PBX services, SIP trunking, call center applications,
interactive voice response auto attendant, voice and web conferencing, call recording, simultaneous calling, voicemail to email
conversion, integrated mobility applications that are device and location agnostic, and multiple customized IP/PBX features in
a hosted or cloud environment. Other services include enterprise-class data and connectivity solutions through multiple broadband
technologies including cloud WAN or SD-WAN (Software-defined Wide Area Network), fiber, and Ethernet over copper. We also offer
remote network monitoring, data backup and disaster recovery.</P>

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

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><B><I>Direct Costs: </I></B></P>

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

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0"><U>Cloud-based hosted
Services</U>: We incur bandwidth and colocation charges in connection with our UCaaS or cloud communication services. The bandwidth
charges are incurred as part of the connectivity between our customers to allow them access to our various services. We also incur
costs from underlying providers for fiber, Internet broadband, and telecommunication circuits in connection with our data and connectivity
solutions.</P>

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

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0"><B><I>Cash and cash equivalents.
</I></B>The Company considers all bank deposits and highly liquid investments with original maturities of three months or less
to be cash and cash equivalents.</P>

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

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0in"><B><I>Allowance for Doubtful
Accounts.</I></B></P>

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

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0">Bad debt expense is recognized based on
management&rsquo;s estimate of likely losses each year based on past experience and an estimate of current year uncollectible amounts.
As of July 31, 2018 and 2017, Digerati&rsquo;s allowance for doubtful accounts balance was $122,000 and $0, respectively.</P>

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

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0in"><B><I>Customer deposits.</I></B></P>

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

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0">The Company in some instances requires
customers to make deposits for equipment, installation charges and training. As equipment is installed and training takes places
the deposits are then applied to revenue. As of July 31, 2018 and 2017, Digerati&rsquo;s customer deposits balance was $262,000
and $131,000, respectively.</P>

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

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0"><B><I>Property and equipment. </I></B>Property
and equipment is recorded at cost. Additions are capitalized and maintenance and repairs are charged to expense as incurred. Gains
and losses on dispositions of equipment are reflected in operations. Depreciation is provided using the straight-line method over
the estimated useful lives of the assets, which are one to five years.</P>

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

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><B><I>Goodwill,&nbsp;Intangible Assets,
and Long-Lived Assets</I></B></P>

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

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0">Goodwill is carried at cost and is not
amortized. The Company tests goodwill for impairment on an annual basis at the end of each fiscal year, relying on a number of
factors including operating results, business plans, economic projections, anticipated future cash flows and marketplace data.
Company management uses its judgment in assessing whether goodwill has become impaired between annual impairment tests according
to specifications set forth in ASC 350. The Company completed an evaluation of goodwill at July 31, 2018 and determined that there
was no impairment. We did not have any goodwill during the year ended July 31, 2017.</P>

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

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0">The fair value of the Company&rsquo;s reporting
unit is dependent upon the Company&rsquo;s estimate of future cash flows and other factors. The Company&rsquo;s estimates of future
cash flows include assumptions concerning future operating performance and economic conditions and may differ from actual future
cash flows. Estimated future cash flows are adjusted by an appropriate discount rate derived from the Company&rsquo;s market capitalization
plus a suitable control premium at date of the evaluation.</P>

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

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

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

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0">The financial and credit market volatility
directly impacts the Company&rsquo;s fair value measurement through the Company&rsquo;s weighted average cost of capital that the
Company uses to determine its discount rate and through the Company&rsquo;s stock price that the Company uses to determine its
market capitalization. Therefore, changes in the stock price may also affect the amount of impairment recorded.</P>

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

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0">The Company recognizes an acquired intangible
asset apart from goodwill whenever the intangible asset arises from contractual or other legal rights, or when it can be separated
or divided from the acquired entity and sold, transferred, licensed, rented or exchanged, either individually or in combination
with a related contract, asset or liability. Such intangibles are amortized over their useful lives. Impairment losses are recognized
if the carrying amount of an intangible asset subject to amortization is not recoverable from expected future cash flows and its
carrying amount exceeds its fair value.</P>

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

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0">The Company reviews its long-lived assets,
including property and equipment, identifiable intangibles, and goodwill annually or whenever events or changes in circumstances
indicate that the carrying amount of the assets may not be fully recoverable. To determine recoverability of its long-lived assets,
the Company evaluates the probability that future undiscounted net cash flows will be less than the carrying amount of the assets.</P>

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

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0"><B><I>Impairment of Long-Lived Assets.</I></B>
Digerati reviews the carrying value of its long-lived assets annually or whenever events or changes in circumstances indicate that
the value of an asset may no longer be appropriate. Digerati assesses recoverability of the carrying value of the asset by estimating
the future net cash flows expected to result from the asset, including eventual disposition. If the future net cash flows are less
than the carrying value of the asset, an impairment loss is recorded equal to the difference between the asset&rsquo;s carrying
value and fair value.</P>

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

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0"><B><I>Derivative financial instruments</I></B>.
Digerati does not use derivative instruments to hedge exposures to cash flow, market, or foreign currency risks. However, Digerati
analyzes its convertible instruments and free-standing instruments such as warrants for derivative liability accounting.</P>

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

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0">For derivative
financial instruments that are accounted for as liabilities, the derivative instrument is initially recorded at its fair value
and is then re-valued at each reporting date, any changes in fair value is recorded as non-operating, non-cash income or expense
for each reporting period. For option-based derivative financial instruments, warrants and notes payable conversion options Digerati
uses the Black-Scholes option-pricing model to value the derivative instruments.</P>

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

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0">The classification of derivative instruments,
including whether such instruments should be recorded as liabilities or as equity, is re-assessed at the end of each reporting
period. Derivative instrument liabilities are classified in the balance sheet as current or non-current based on whether or not
net-cash settlement of the derivative instrument is probable within the next 12 months from the balance sheet date.</P>

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

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0">Notes payable
conversion options are recorded as debt discounts and are amortized as interest expense over the term of the related debt instrument.</P>

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

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; background-color: white"><U>Sequencing Policy</U></P>

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

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0">In January 2018,
as a result of entering into a convertible debenture which contained a variable conversion feature with no floor, we adopted a
sequencing policy in accordance with ASC 815-40-35-12 The Company retrospectively is adopting the sequencing policy so all warrants
with fixed exercise price, and convertible notes with fixed conversion price or with a conversion price floor are sequenced by
issue date thus excluded from derivative consideration.</P>

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

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0"><B><I>Fair Value of Financial Instruments.</I></B>
Fair value is defined as the exchange price that would be received for an asset or paid to transfer a liability (an exit price)
in the principal or most advantageous market for the asset or liability in an orderly transaction between market participants on
the measurement date. A fair value hierarchy is used which requires an entity to maximize the use of observable inputs and minimize
the use of unobservable inputs when measuring fair value. The fair value hierarchy based on the three levels of inputs that may
be used to measure fair value are as follows:</P>

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

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0"><I>Level 1 </I>&ndash; Quoted prices in
active markets for identical assets or liabilities.</P>

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

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0"><I>Level 2 </I>&ndash; Observable inputs
other than Level 1 prices, such as quoted prices for similar assets or liabilities; or other inputs that are observable or can
be corroborated by observable market data for substantially the full term of the assets or liabilities.</P>

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

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><I></I></P>

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

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0"><I>Level 3 </I>&ndash; Unobservable inputs
that are supported by little or no market activity and that are financial instruments whose values are determined using pricing
models, discounted cash flow methodologies, or similar techniques, as well as instruments for which the determination of fair value
requires significant judgment or estimation.</P>

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

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0">For certain of our financial instruments,
including cash and cash equivalents, accounts receivable, accounts payable and accrued expenses, the carrying amounts approximate
fair value due to the short maturity of these instruments. The carrying value of our long-term debt approximates its fair value
based on the quoted market prices for the same or similar issues or the current rates offered to us for debt of the same remaining
maturities.</P>

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

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0">Our derivative liabilities as of July 31,
2018 and 2017 of $632,000 and $0, respectively, were valued using Level 3 inputs.</P>

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

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0">The following table provides a summary
of the changes in fair value of the derivative financial instruments measured at fair value on a recurring basis using significant
unobservable inputs:</P>

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

<TABLE CELLPADDING="0" CELLSPACING="0" STYLE="border-collapse: collapse; width: 100%; font: 10pt Times New Roman, Times, Serif">
<TR STYLE="vertical-align: bottom; background-color: rgb(204,238,255)">
    <TD STYLE="text-align: justify; padding-bottom: 1.5pt">Balance at July 31, 2017</TD><TD STYLE="padding-bottom: 1.5pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 1.5pt solid; text-align: left">$</TD><TD STYLE="border-bottom: Black 1.5pt solid; text-align: right">-</TD><TD STYLE="padding-bottom: 1.5pt; text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD STYLE="width: 88%; text-align: justify; padding-bottom: 1.5pt">Derivative discount - convertible debt</TD><TD STYLE="width: 1%; padding-bottom: 1.5pt">&nbsp;</TD>
    <TD STYLE="width: 1%; border-bottom: Black 1.5pt solid; text-align: left">&nbsp;</TD><TD STYLE="width: 9%; border-bottom: Black 1.5pt solid; text-align: right">541,000</TD><TD STYLE="width: 1%; padding-bottom: 1.5pt; text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,238,255)">
    <TD STYLE="text-align: justify; padding-bottom: 1.5pt">Derivative loss</TD><TD STYLE="padding-bottom: 1.5pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 1.5pt solid; text-align: left">&nbsp;</TD><TD STYLE="border-bottom: Black 1.5pt solid; text-align: right">91,000</TD><TD STYLE="padding-bottom: 1.5pt; text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD STYLE="text-align: justify; padding-bottom: 4pt">Balance at July 31, 2018</TD><TD STYLE="padding-bottom: 4pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 4pt double; text-align: left">$</TD><TD STYLE="border-bottom: Black 4pt double; text-align: right">632,000</TD><TD STYLE="padding-bottom: 4pt; text-align: left">&nbsp;</TD></TR>
</TABLE>


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

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0"><B><I>Income taxes.</I></B> Digerati recognizes
deferred tax assets and liabilities based on differences between the financial reporting and tax bases of assets and liabilities
using the enacted tax rates and laws that are expected to be in effect when the differences are expected to be recovered. Digerati
provides a valuation allowance for deferred tax assets for which it does not consider realization of such assets to be more likely
than not.</P>

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

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0">Since January 1, 2007, Digerati accounts
for uncertain tax positions in accordance with the authoritative guidance issued by the Financial Accounting Standards Board on
income taxes which addresses how an entity should recognize, measure and present in the financial statements uncertain tax positions
that have been taken or are expected to be taken in a tax return. Pursuant to this guidance, Digerati recognizes a tax benefit
only if it is &ldquo;more likely than not&rdquo; that a particular tax position will be sustained upon examination or audit. To
the extent the &ldquo;more likely than not&rdquo; standard has been satisfied, the benefit associated with a tax position is measured
as the largest amount that is greater than 50% likely of being realized upon settlement. As of July 31, 2017 we have no liability
for unrecognized tax benefits.</P>

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

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0"><B><I>Stock-based compensation.</I></B>
In June 2018 FASB adopted the Accounting Standards Update&nbsp;No.&nbsp;2018-07,&nbsp;<I>Compensation &ndash; Stock Compensation
(Topic 718): Improvements to Non-employee Share-Based Payment Accounting.&nbsp;</I>This update simplifies the accounting for non
employee share-based payment transactions by expanding the scope of Topic 718, Compensation-Stock Compensation, to include share-based
payment transactions for acquiring goods and services from non-employees. The guidance is effective for annual periods beginning
after December&nbsp;15, 2018, and interim periods within that reporting period. The Company adopted the updated standard as of
May 1, 2018 and adopting this guidance did not have a material effect on its consolidated financial statements. During fiscal 2017
and 2018, the Company issued 1,003,970 common shares and 2,213,512 common shares, respectively to various employees as part of
our profit-sharing plan contribution and stock in lieu of cash. At the time of issuance during fiscal 2017 and 2018 we recognized
stock-based compensation expense of approximately $241,000 and $1,240,000, respectively equivalent to the market value of the shares
issued calculated based on the share&rsquo;s closing price at the grant dates.</P>

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

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; color: red"><B><I></I></B></P>

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

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0"><B><I>Basic and diluted net income (loss)
per share.</I></B> The basic net loss per common share is computed by dividing the net loss by the weighted average number of common
shares outstanding. Diluted net loss per common share is computed by dividing the net loss adjusted on an &ldquo;as if converted&rdquo;
basis, by the weighted average number of common shares outstanding plus potential dilutive securities. For the year ended July
31, 2017, potential dilutive securities including options and warrants had dilutive effect and were included in the calculation
of diluted net income (loss) per common share. For the year ended July 31, 2018, potential dilutive securities including options
and warrants were not included in the calculation of diluted net (loss) per common share. Potential dilutive securities, which
are not included in dilutive weighted average shares are as follows:</P>

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

<TABLE CELLPADDING="0" CELLSPACING="0" STYLE="border-collapse: collapse; width: 100%; font: 10pt Times New Roman, Times, Serif">
<TR STYLE="vertical-align: bottom">
    <TD STYLE="text-align: center">&nbsp;</TD>
    <TD STYLE="text-align: center">&nbsp;</TD>
    <TD COLSPAN="2" STYLE="border-bottom: black 1.5pt solid; text-align: center"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt"><B>7/31/2018</B></FONT></TD>
    <TD STYLE="text-align: center">&nbsp;</TD>
    <TD STYLE="text-align: center">&nbsp;</TD>
    <TD COLSPAN="2" STYLE="border-bottom: black 1.5pt solid; text-align: center"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt"><B>7/31/2017</B></FONT></TD>
    <TD STYLE="text-align: center">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: #CCEEFF">
    <TD STYLE="width: 76%"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">Options to purchase common stock</FONT></TD>
    <TD STYLE="width: 1%">&nbsp;</TD>
    <TD STYLE="width: 1%">&nbsp;</TD>
    <TD STYLE="width: 9%; text-align: right"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">3,415,000</FONT></TD>
    <TD STYLE="width: 1%">&nbsp;</TD>
    <TD STYLE="width: 1%">&nbsp;</TD>
    <TD STYLE="width: 1%">&nbsp;</TD>
    <TD STYLE="width: 9%">&nbsp;</TD>
    <TD STYLE="width: 1%">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: white">
    <TD><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">Warrants to purchase common stock</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD STYLE="text-align: right"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">2,370,000</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD STYLE="text-align: right"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">210,000</FONT></TD>
    <TD>&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: #CCEEFF">
    <TD><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">Convertible debt</FONT></TD>
    <TD>&nbsp;</TD>
    <TD STYLE="border-bottom: black 1.5pt solid; text-align: right">&nbsp;</TD>
    <TD STYLE="border-bottom: black 1.5pt solid; text-align: right"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">3,268,214</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD STYLE="border-bottom: black 1.5pt solid; text-align: right">&nbsp;</TD>
    <TD STYLE="border-bottom: black 1.5pt solid; text-align: right"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">-</FONT></TD>
    <TD>&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: white">
    <TD><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">Total:</FONT></TD>
    <TD>&nbsp;</TD>
    <TD STYLE="border-bottom: black 4.5pt double; text-align: right">&nbsp;</TD>
    <TD STYLE="border-bottom: black 4.5pt double; text-align: right"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">9,053,214</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD STYLE="border-bottom: black 4.5pt double; text-align: right">&nbsp;</TD>
    <TD STYLE="border-bottom: black 4.5pt double; text-align: right"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">210,000</FONT></TD>
    <TD>&nbsp;</TD></TR>
</TABLE>


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

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><B><I>Noncontrolling interest</I></B></P>

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

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0">The Company follows
Financial Accounting Standards Board (&ldquo;FASB&rdquo;) Accounting Standards Codification (&ldquo;ASC&rdquo;) Topic 810,&nbsp;<I>Consolidation,</I>&nbsp;which
governs the accounting for and reporting of non-controlling interests (&ldquo;NCIs&rdquo;) in partially owned consolidated subsidiaries
and the loss of control of subsidiaries. Certain provisions of this standard indicate, among other things, that NCIs be treated
as a separate component of equity, not as a liability, that increases and decreases in the parent&rsquo;s ownership interest that
leave control intact be treated as equity transactions rather than as step acquisitions or dilution gains or losses, and that losses
of a partially owned consolidated subsidiary be allocated to the NCI even when such allocation might result in a deficit balance.</P>

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

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0">The net income
(loss) attributed to the NCI is separately designated in the accompanying consolidated statements of operations and other comprehensive
income (loss). For the year ended July 31, 2018 and 2017, the Company recognized a noncontrolling deficits of $57,000 and $0, respectively.</P>

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

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><FONT STYLE="font-size: 10pt"><B><I>Recently
issued accounting pronouncements. </I></B></FONT></P>

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

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0"><FONT STYLE="background-color: white">I<FONT STYLE="font-size: 10pt">n
May 2014, the FASB issued ASU&nbsp;2014-09,&nbsp;Revenue from Contracts with Customers (Topic 606), which supersedes the revenue
recognition requirements in Topic 605, Revenue Recognition, and most industry-specific revenue recognition guidance throughout
the Industry Topics of the Accounting Standards Codification. The updated guidance states that an entity should recognize revenue
to depict the transfer of promised goods or services to customers in an amount that reflects the consideration to which the entity
expects to be entitled in exchange for those goods or services. The guidance also provides for additional disclosures with respect
to revenues and cash flows arising from contracts with customers. The standard will be effective for the first interim period within
annual reporting periods beginning after December&nbsp;15, 2017, and the Company adopted the standard effective August 1, 2018.</FONT></FONT></P>

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

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

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

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0">In&nbsp;February 2016, the FASB issued
ASU No. 2016-02,&nbsp;<I>Leases</I>&nbsp;(Topic 842). The amendments under this pronouncement will change the way all leases with
a duration of one year or more are treated. Under this guidance, lessees will be required to capitalize virtually all leases on
the balance sheet as a right-of-use asset and an associated financing lease liability or capital lease liability. The right-of-use
asset represents the lessee&rsquo;s right to use, or control the use of, a specified asset for the specified lease term. The lease
liability represents the lessee&rsquo;s obligation to make lease payments arising from the lease, measured on a discounted basis.
Based on certain characteristics, leases are classified as financing leases or operating leases. Financing lease liabilities, those
that contain provisions similar to capitalized leases, are amortized like capital leases are under current accounting, as amortization
expense and interest expense in the statement of operations. Operating lease liabilities are amortized on a straight-line basis
over the life of the lease as lease expense in the statement of operations. This update is effective for annual reporting periods,
and interim periods within those reporting periods, beginning after December 15, 2018.&nbsp; In July 2018 the FASB issued ASU No.
2018-10, Codification Improvements to Topic 842, Leases and ASU 2018-11, Leases (Topic 842), Targeted Improvements, which provided
additional implementation guidance on the previously issued ASU.&nbsp; The Company is currently assessing the impact of adopting
this guidance on its consolidated financial statements.</P>

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

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0">In&nbsp;June 2018, the FASB issued Accounting
Standards Update&nbsp;No.&nbsp;2018-07,&nbsp;<I>Compensation &ndash; Stock Compensation (Topic 718): Improvements to Non-employee
Share-Based Payment Accounting.&nbsp;</I>This update simplifies the accounting for non-employee share-based payment transactions
by expanding the scope of Topic 718, Compensation-Stock Compensation, to include share-based payment transactions for acquiring
goods and services from non-employees. The guidance is effective for annual periods beginning after December&nbsp;15, 2018, and
interim periods within that reporting period. The Company adopted this updated standard as of May 1, 2018, and adopting this guidance
did not have a material effect on the presentation of our consolidated financial statements.</P>

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

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><B>NOTE 2 &ndash; GOING CONCERN</B></P>

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

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><B><I>Financial Condition</I></B></P>

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

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0">Digerati&rsquo;s consolidated financial
statements for the year ending July 31, 2018 have been prepared on a going concern basis, which contemplates the realization of
assets and the settlement of liabilities in the normal course of business. Digerati has incurred net losses and accumulated a deficit
of approximately $80,800,000 and a working capital deficit of approximately $3,722,000which raises substantial doubt about Digerati&rsquo;s
ability to continue as a going concern.</P>

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

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><B><I>Management Plans to Continue as a
Going Concern</I></B></P>

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

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0">Management believes that current available
resources will not be sufficient to fund the Company&rsquo;s operations over the next 12 months. The Company&rsquo;s ability to
continue to meet its obligations and to achieve its business objectives is dependent upon, among other things, raising additional
capital or generating sufficient revenue in excess of costs. At such time as the Company requires additional funding, the Company
will seek to secure such additional funding from various possible sources, including the public equity market, private financings,
sales of assets, collaborative arrangements and debt. If the Company raises additional capital through the issuance of equity securities
or securities convertible into equity, stockholders will experience dilution, and such securities may have rights, preferences
or privileges senior to those of the holders of common stock or convertible senior notes. If the Company raises additional funds
by issuing debt, the Company may be subject to limitations on its operations, through debt covenants or other restrictions. If
the Company obtains additional funds through arrangements with collaborators or strategic partners, the Company may be required
to relinquish its rights to certain technologies. There can be no assurance that the Company will be able to raise additional funds
or raise them on acceptable terms. If the Company is unable to obtain financing on acceptable terms, it may be unable to execute
its business plan, the Company could be required to delay or reduce the scope of its operations, and the Company may not be able
to pay off its obligations, if and when they come due.</P>

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

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0">The Company will continue to work with
various funding sources to secure additional debt and equity financings. However, Digerati cannot offer any assurance that it will
be successful in executing the aforementioned plans to continue as a going concern.</P>

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

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0">Digerati&rsquo;s consolidated financial
statements as of July 31, 2018 do not include any adjustments that might result from the inability to implement or execute Digerati&rsquo;s
plans to improve our ability to continue as a going concern.</P>

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

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

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

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><B>NOTE 3 &ndash; INTANGIBLE ASSETS </B></P>

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

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0">During fiscal 2008, Digerati made a loan
of $150,000 to NetSapiens Inc. The note receivable had a maturity date of June 26, 2008 with interest at 8% per year. The note
was secured by NetSapiens&rsquo; proprietary Starter Platform License and SNAPsolution modules. On June 26, 2008 Digerati converted
the outstanding interest and principal balance into a lifetime and perpetual NetSapiens&rsquo; License. The License provides Digerati
with the ability to offer Hosted PBX <B>(</B>Private Branch eXchange), IP Centrex application, prepaid calling, call center, conferencing,
messaging and other innovative telephony functionality necessary to offer standard and/or custom services to enterprise markets.
The NetSapiens&rsquo; License, in the amount of $150,000, is being amortized equally over a period of 10 years. For the years ended
July 31, 2018 and 2017, amortization totaled approximately $13,750 and $15,000, respectively. As of July 31, 2018 the NetSapiens&rsquo;
License is fully amortized.</P>

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

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0">On December 1, 2017,
Shift8 and Synergy Telecom, Inc., a Delaware corporation (&ldquo;Synergy&rdquo;), closed a transaction to acquire all the assets,
assumed all customers, and critical vendor arrangements from Synergy. The total purchase price was $425,000, the acquisition was
accounted for under the purchase method of accounting, with Digerati identified as the acquirer. Under the purchase method of accounting,
the aggregate amount of consideration assumed by Digerati was allocated to customer contracts acquired, software licenses, and
goodwill based on their fair values as of July 31, 2018.</P>

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

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0">The following information summarizes the
allocation of the fair values assigned to the assets. The allocation of fair values is based on an extensive analysis and is subject
to changes in the future during the measurement period.</P>

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

<TABLE CELLPADDING="0" CELLSPACING="0" STYLE="border-collapse: collapse; width: 100%; font: 10pt Times New Roman, Times, Serif">
<TR STYLE="vertical-align: bottom">
    <TD>&nbsp;</TD><TD STYLE="font-weight: bold; padding-bottom: 1.5pt">&nbsp;</TD>
    <TD COLSPAN="2" STYLE="font-weight: bold; text-align: center; border-bottom: Black 1.5pt solid">Synergy</TD><TD STYLE="padding-bottom: 1.5pt; font-weight: bold">&nbsp;</TD><TD STYLE="font-weight: bold; padding-bottom: 1.5pt">&nbsp;</TD>
    <TD STYLE="font-weight: bold; text-align: center; border-bottom: Black 1.5pt solid">Useful life <BR> (years)</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,238,255)">
    <TD STYLE="width: 76%; text-align: left">Customer relatiosnhips</TD><TD STYLE="width: 1%">&nbsp;</TD>
    <TD STYLE="width: 1%; text-align: left">$</TD><TD STYLE="width: 9%; text-align: right">40,000</TD><TD STYLE="width: 1%; text-align: left">&nbsp;</TD><TD STYLE="width: 1%">&nbsp;</TD>
    <TD STYLE="width: 11%; text-align: center">5</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD STYLE="text-align: left">License - software</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">105,000</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: center">3</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,238,255)">
    <TD STYLE="padding-bottom: 1.5pt">Goodwill</TD><TD STYLE="padding-bottom: 1.5pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 1.5pt solid; text-align: left">&nbsp;</TD><TD STYLE="border-bottom: Black 1.5pt solid; text-align: right">280,000</TD><TD STYLE="padding-bottom: 1.5pt; text-align: left">&nbsp;</TD><TD STYLE="padding-bottom: 1.5pt">&nbsp;</TD>
    <TD STYLE="text-align: center; padding-bottom: 1.5pt">-</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD STYLE="padding-bottom: 4pt">Total Purchase price</TD><TD STYLE="padding-bottom: 4pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 4pt double; text-align: left">$</TD><TD STYLE="border-bottom: Black 4pt double; text-align: right">425,000</TD><TD STYLE="padding-bottom: 4pt; text-align: left">&nbsp;</TD><TD STYLE="padding-bottom: 4pt">&nbsp;</TD>
    <TD STYLE="text-align: center; padding-bottom: 4pt">&nbsp;</TD></TR>
</TABLE>




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

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0">For the years ended July 31, 2018 and 2017,
amortization expense for the acquired intangible was $25,000 and $0, respectively.</P>

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

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0">On May 2, 2018, the Company closed on the
Merger Agreement with T3 Communications, Inc. to increase its customer base and obtain higher efficiency of its existing infrastructure.</P>

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

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0">The total purchase price was $3,211,945
paid in cash at closing. The acquisition was accounted for under the purchase method of accounting, with the Company identified
as the acquirer. Under the purchase method of accounting, the aggregate amount of consideration assumed by the Company was allocated
to cash, customer contracts acquired, current assets, property plant and equipment and assumed payables based on their estimated
fair values as of May 2, 2018.</P>

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

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0">The following information summarizes the
allocation of the purchase price assigned to intangible assets. The allocation of fair values is based on an extensive analysis
and is subject to changes in the future during the measurement period.</P>

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

<TABLE CELLPADDING="0" CELLSPACING="0" STYLE="border-collapse: collapse; width: 100%; font: 10pt Times New Roman, Times, Serif">
<TR STYLE="vertical-align: bottom">
    <TD>&nbsp;</TD><TD STYLE="font-weight: bold; padding-bottom: 1.5pt">&nbsp;</TD>
    <TD COLSPAN="2" STYLE="font-weight: bold; text-align: center; border-bottom: Black 1.5pt solid">Synergy</TD><TD STYLE="padding-bottom: 1.5pt; font-weight: bold">&nbsp;</TD><TD STYLE="font-weight: bold; padding-bottom: 1.5pt">&nbsp;</TD>
    <TD STYLE="font-weight: bold; text-align: center; border-bottom: Black 1.5pt solid">Useful life (years)</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,238,255)">
    <TD STYLE="width: 76%; text-align: left; padding-left: 0.8pt">Customer relationships</TD><TD STYLE="width: 1%">&nbsp;</TD>
    <TD STYLE="width: 1%; text-align: left">$</TD><TD STYLE="width: 9%; text-align: right">1,480,000</TD><TD STYLE="width: 1%; text-align: left">&nbsp;</TD><TD STYLE="width: 1%">&nbsp;</TD>
    <TD STYLE="width: 11%; text-align: center">7</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD STYLE="text-align: left; padding-left: 0.8pt">Marketing &amp; Non-compete</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">800,000</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: center">5</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,238,255)">
    <TD STYLE="padding-bottom: 1.5pt; padding-left: 0.8pt">Goodwill</TD><TD STYLE="padding-bottom: 1.5pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 1.5pt solid; text-align: left">&nbsp;</TD><TD STYLE="border-bottom: Black 1.5pt solid; text-align: right">554,828</TD><TD STYLE="padding-bottom: 1.5pt; text-align: left">&nbsp;</TD><TD STYLE="padding-bottom: 1.5pt">&nbsp;</TD>
    <TD STYLE="text-align: center; padding-bottom: 1.5pt">-</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD STYLE="padding-bottom: 4pt; padding-left: 0.8pt">Total</TD><TD STYLE="padding-bottom: 4pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 4pt double; text-align: left">$</TD><TD STYLE="border-bottom: Black 4pt double; text-align: right">2,834,828</TD><TD STYLE="padding-bottom: 4pt; text-align: left">&nbsp;</TD><TD STYLE="padding-bottom: 4pt">&nbsp;</TD>
    <TD STYLE="text-align: center; padding-bottom: 4pt">&nbsp;</TD></TR>
</TABLE>




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

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

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

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0">For the years ended July 31, 2018 and 2017,
amortization expense for the acquired assets totaled approximately $93,000 and $0, respectively.</P>

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

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0">Intangible assets at July 31, 2018 and
2017 are summarized in the tables below:</P>

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

<TABLE CELLPADDING="0" CELLSPACING="0" STYLE="border-collapse: collapse; width: 100%; font: 10pt Times New Roman, Times, Serif">
<TR STYLE="vertical-align: bottom">
    <TD STYLE="text-align: left; padding: 0; text-indent: 0; border-bottom: Black 1.5pt solid; white-space: nowrap"><B>July 31, 2018</B></TD><TD STYLE="padding: 0; text-align: center; text-indent: 0; white-space: nowrap"><B>&nbsp;</B></TD>
    <TD COLSPAN="2" STYLE="text-align: center; border-bottom: Black 1.5pt solid; padding: 0; text-indent: 0; white-space: nowrap"><B>Gross <BR> Carrying <BR> Value</B></TD><TD STYLE="padding: 0; text-align: center; text-indent: 0; white-space: nowrap"><B>&nbsp;</B></TD><TD STYLE="padding: 0; text-align: center; text-indent: 0; white-space: nowrap"><B>&nbsp;</B></TD>
    <TD COLSPAN="2" STYLE="text-align: center; border-bottom: Black 1.5pt solid; padding: 0; text-indent: 0; white-space: nowrap"><B>Accumulated <BR> Amortization</B></TD><TD STYLE="padding: 0; text-align: center; text-indent: 0; white-space: nowrap"><B>&nbsp;</B></TD><TD STYLE="padding: 0; text-align: center; text-indent: 0; white-space: nowrap"><B>&nbsp;</B></TD>
    <TD COLSPAN="2" STYLE="text-align: center; border-bottom: Black 1.5pt solid; padding: 0; text-indent: 0; white-space: nowrap"><B>Net<BR>
 Carrying <BR> Amount</B></TD><TD STYLE="padding: 0; text-align: center; text-indent: 0; white-space: nowrap"><B>&nbsp;</B></TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,238,255)">
    <TD STYLE="width: 64%; text-align: left; padding-left: 0; text-indent: 0">NetSapeins - license, 10 years</TD><TD STYLE="width: 1%">&nbsp;</TD>
    <TD STYLE="width: 1%; text-align: left">$</TD><TD STYLE="width: 9%; text-align: right">150,000</TD><TD STYLE="width: 1%; text-align: left">&nbsp;</TD><TD STYLE="width: 1%">&nbsp;</TD>
    <TD STYLE="width: 1%; text-align: left">$</TD><TD STYLE="width: 9%; text-align: right">(150,000</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: 9%; text-align: right">-</TD><TD STYLE="width: 1%; text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD STYLE="text-align: left; padding-left: 0; text-indent: 0">Customer relationships, 5 years</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">(4,667</TD><TD STYLE="text-align: left">)</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">35,333</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,238,255)">
    <TD STYLE="text-align: left; padding-left: 0; text-indent: 0">Customer relationships, 7 years</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">1,480,000</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">(64,652</TD><TD STYLE="text-align: left">)</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">1,415,348</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD STYLE="text-align: left; padding-bottom: 1.5pt; padding-left: 0; text-indent: 0">Marketing &amp; Non-compete, 5 years</TD><TD STYLE="padding-bottom: 1.5pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 1.5pt solid; text-align: left">&nbsp;</TD><TD STYLE="border-bottom: Black 1.5pt solid; text-align: right">800,000</TD><TD STYLE="padding-bottom: 1.5pt; text-align: left">&nbsp;</TD><TD STYLE="padding-bottom: 1.5pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 1.5pt solid; text-align: left">&nbsp;</TD><TD STYLE="border-bottom: Black 1.5pt solid; text-align: right">(40,000</TD><TD STYLE="padding-bottom: 1.5pt; text-align: left">)</TD><TD STYLE="padding-bottom: 1.5pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 1.5pt solid; text-align: left">&nbsp;</TD><TD STYLE="border-bottom: Black 1.5pt solid; text-align: right">760,000</TD><TD STYLE="padding-bottom: 1.5pt; text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,238,255)">
    <TD STYLE="text-align: left; padding-bottom: 1.5pt; padding-left: 0; text-indent: 0">Total Define-lived Assets</TD><TD STYLE="padding-bottom: 1.5pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 1.5pt solid; text-align: left">&nbsp;</TD><TD STYLE="border-bottom: Black 1.5pt solid; text-align: right">2,470,000</TD><TD STYLE="padding-bottom: 1.5pt; text-align: left">&nbsp;</TD><TD STYLE="padding-bottom: 1.5pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 1.5pt solid; text-align: left">&nbsp;</TD><TD STYLE="border-bottom: Black 1.5pt solid; text-align: right">(259,319</TD><TD STYLE="padding-bottom: 1.5pt; text-align: left">)</TD><TD STYLE="padding-bottom: 1.5pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 1.5pt solid; text-align: left">&nbsp;</TD><TD STYLE="border-bottom: Black 1.5pt solid; text-align: right">2,210,681</TD><TD STYLE="padding-bottom: 1.5pt; text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD STYLE="text-align: left; padding-bottom: 1.5pt; padding-left: 0; text-indent: 0">Goodwill, Indefinite</TD><TD STYLE="padding-bottom: 1.5pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 1.5pt solid; text-align: left">&nbsp;</TD><TD STYLE="border-bottom: Black 1.5pt solid; text-align: right">834,828</TD><TD STYLE="padding-bottom: 1.5pt; text-align: left">&nbsp;</TD><TD STYLE="padding-bottom: 1.5pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 1.5pt solid; text-align: left">&nbsp;</TD><TD STYLE="border-bottom: Black 1.5pt solid; text-align: right">-</TD><TD STYLE="padding-bottom: 1.5pt; text-align: left">&nbsp;</TD><TD STYLE="padding-bottom: 1.5pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 1.5pt solid; text-align: left">&nbsp;</TD><TD STYLE="border-bottom: Black 1.5pt solid; text-align: right">834,828</TD><TD STYLE="padding-bottom: 1.5pt; text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,238,255)">
    <TD STYLE="padding-left: 0; padding-bottom: 4pt; text-indent: 0">Balance, July 31, 2018</TD><TD STYLE="padding-bottom: 4pt">&nbsp;</TD>
    <TD STYLE="text-align: left; border-bottom: Black 4pt double">&nbsp;</TD><TD STYLE="text-align: right; border-bottom: Black 4pt double">3,304,828</TD><TD STYLE="text-align: left; padding-bottom: 4pt">&nbsp;</TD><TD STYLE="padding-bottom: 4pt">&nbsp;</TD>
    <TD STYLE="text-align: left; border-bottom: Black 4pt double">&nbsp;</TD><TD STYLE="text-align: right; border-bottom: Black 4pt double">(259,319</TD><TD STYLE="text-align: left; padding-bottom: 4pt">)</TD><TD STYLE="padding-bottom: 4pt">&nbsp;</TD>
    <TD STYLE="text-align: left; border-bottom: Black 4pt double">&nbsp;</TD><TD STYLE="text-align: right; border-bottom: Black 4pt double">3,045,509</TD><TD STYLE="text-align: left; padding-bottom: 4pt">&nbsp;</TD></TR>
</TABLE>


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

<TABLE CELLPADDING="0" CELLSPACING="0" STYLE="border-collapse: collapse; width: 100%; font: 10pt Times New Roman, Times, Serif">
<TR STYLE="vertical-align: bottom">
    <TD STYLE="text-align: center; padding: 0; text-indent: 0; white-space: nowrap"><B>&nbsp;</B></TD><TD STYLE="text-align: center; padding: 0; text-indent: 0; white-space: nowrap"><B>&nbsp;</B></TD>
    <TD COLSPAN="2" STYLE="text-align: center; padding: 0; text-indent: 0; white-space: nowrap"><B>Gross</B></TD><TD STYLE="text-align: center; padding: 0; text-indent: 0; white-space: nowrap"><B>&nbsp;</B></TD><TD STYLE="text-align: center; padding: 0; text-indent: 0; white-space: nowrap"><B>&nbsp;</B></TD>
    <TD COLSPAN="2" STYLE="text-align: center; padding: 0; text-indent: 0; white-space: nowrap"><B>&nbsp;</B></TD><TD STYLE="text-align: center; padding: 0; text-indent: 0; white-space: nowrap"><B>&nbsp;</B></TD><TD STYLE="text-align: center; padding: 0; text-indent: 0; white-space: nowrap"><B>&nbsp;</B></TD>
    <TD COLSPAN="2" STYLE="text-align: center; padding: 0; text-indent: 0; white-space: nowrap"><B>Net</B></TD><TD STYLE="text-align: center; padding: 0; text-indent: 0; white-space: nowrap"><B>&nbsp;</B></TD></TR>
<TR STYLE="vertical-align: bottom">
    <TD STYLE="text-align: center; padding: 0; text-indent: 0; white-space: nowrap"><B>&nbsp;</B></TD><TD STYLE="text-align: center; padding: 0; text-indent: 0; white-space: nowrap"><B>&nbsp;</B></TD>
    <TD COLSPAN="2" STYLE="text-align: center; padding: 0; text-indent: 0; white-space: nowrap"><B>Carrying</B></TD><TD STYLE="text-align: center; padding: 0; text-indent: 0; white-space: nowrap"><B>&nbsp;</B></TD><TD STYLE="text-align: center; padding: 0; text-indent: 0; white-space: nowrap"><B>&nbsp;</B></TD>
    <TD COLSPAN="2" STYLE="text-align: center; padding: 0; text-indent: 0; white-space: nowrap"><B>Accumulated</B></TD><TD STYLE="text-align: center; padding: 0; text-indent: 0; white-space: nowrap"><B>&nbsp;</B></TD><TD STYLE="text-align: center; padding: 0; text-indent: 0; white-space: nowrap"><B>&nbsp;</B></TD>
    <TD COLSPAN="2" STYLE="text-align: center; padding: 0; text-indent: 0; white-space: nowrap"><B>Carrying</B></TD><TD STYLE="text-align: center; padding: 0; text-indent: 0; white-space: nowrap"><B>&nbsp;</B></TD></TR>
<TR STYLE="vertical-align: bottom">
    <TD STYLE="text-align: left; border-bottom: Black 1.5pt solid; padding: 0; text-indent: 0; white-space: nowrap"><B>July 31, 2017</B></TD><TD STYLE="text-align: center; padding: 0; text-indent: 0; white-space: nowrap"><B>&nbsp;</B></TD>
    <TD COLSPAN="2" STYLE="text-align: center; border-bottom: Black 1.5pt solid; padding: 0; text-indent: 0; white-space: nowrap"><B>Value</B></TD><TD STYLE="text-align: center; padding: 0; text-indent: 0; white-space: nowrap"><B>&nbsp;</B></TD><TD STYLE="text-align: center; padding: 0; text-indent: 0; white-space: nowrap"><B>&nbsp;</B></TD>
    <TD COLSPAN="2" STYLE="text-align: center; border-bottom: Black 1.5pt solid; padding: 0; text-indent: 0; white-space: nowrap"><B>Amortization</B></TD><TD STYLE="text-align: center; padding: 0; text-indent: 0; white-space: nowrap"><B>&nbsp;</B></TD><TD STYLE="text-align: center; padding: 0; text-indent: 0; white-space: nowrap"><B>&nbsp;</B></TD>
    <TD COLSPAN="2" STYLE="text-align: center; border-bottom: Black 1.5pt solid; padding: 0; text-indent: 0; white-space: nowrap"><B>Amount</B></TD><TD STYLE="text-align: center; padding: 0; text-indent: 0; white-space: nowrap"><B>&nbsp;</B></TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,238,255)">
    <TD STYLE="width: 64%; text-align: left; padding-bottom: 1.5pt; padding-left: 0; text-indent: 0">NetSapeins - license, 10 years</TD><TD STYLE="width: 1%; padding-bottom: 1.5pt">&nbsp;</TD>
    <TD STYLE="width: 1%; border-bottom: Black 1.5pt solid; text-align: left">$</TD><TD STYLE="width: 9%; border-bottom: Black 1.5pt solid; text-align: right">150,000</TD><TD STYLE="width: 1%; padding-bottom: 1.5pt; text-align: left">&nbsp;</TD><TD STYLE="width: 1%; padding-bottom: 1.5pt">&nbsp;</TD>
    <TD STYLE="width: 1%; border-bottom: Black 1.5pt solid; text-align: left">$</TD><TD STYLE="width: 9%; border-bottom: Black 1.5pt solid; text-align: right">(136,500</TD><TD STYLE="width: 1%; padding-bottom: 1.5pt; text-align: left">)</TD><TD STYLE="width: 1%; padding-bottom: 1.5pt">&nbsp;</TD>
    <TD STYLE="width: 1%; border-bottom: Black 1.5pt solid; text-align: left">$</TD><TD STYLE="width: 9%; border-bottom: Black 1.5pt solid; text-align: right">13,500</TD><TD STYLE="width: 1%; padding-bottom: 1.5pt; text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD STYLE="text-align: left; padding-bottom: 1.5pt; padding-left: 0; text-indent: 0">Total Define-lived Assets</TD><TD STYLE="padding-bottom: 1.5pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 1.5pt solid; text-align: left">&nbsp;</TD><TD STYLE="border-bottom: Black 1.5pt solid; text-align: right">150,000</TD><TD STYLE="padding-bottom: 1.5pt; text-align: left">&nbsp;</TD><TD STYLE="padding-bottom: 1.5pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 1.5pt solid; text-align: left">&nbsp;</TD><TD STYLE="border-bottom: Black 1.5pt solid; text-align: right">(136,500</TD><TD STYLE="padding-bottom: 1.5pt; text-align: left">)</TD><TD STYLE="padding-bottom: 1.5pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 1.5pt solid; text-align: left">&nbsp;</TD><TD STYLE="border-bottom: Black 1.5pt solid; text-align: right">13,500</TD><TD STYLE="padding-bottom: 1.5pt; text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,238,255)">
    <TD STYLE="text-align: left; padding-bottom: 1.5pt; padding-left: 0; text-indent: 0">Goodwill, Indefinite</TD><TD STYLE="padding-bottom: 1.5pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 1.5pt solid; text-align: left">&nbsp;</TD><TD STYLE="border-bottom: Black 1.5pt solid; text-align: right">-</TD><TD STYLE="padding-bottom: 1.5pt; text-align: left">&nbsp;</TD><TD STYLE="padding-bottom: 1.5pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 1.5pt solid; text-align: left">&nbsp;</TD><TD STYLE="border-bottom: Black 1.5pt solid; text-align: right">-</TD><TD STYLE="padding-bottom: 1.5pt; text-align: left">&nbsp;</TD><TD STYLE="padding-bottom: 1.5pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 1.5pt solid; text-align: left">&nbsp;</TD><TD STYLE="border-bottom: Black 1.5pt solid; text-align: right">-</TD><TD STYLE="padding-bottom: 1.5pt; text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD STYLE="padding-bottom: 4pt; padding-left: 0; text-indent: 0">Balance, July 31, 2017</TD><TD STYLE="padding-bottom: 4pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 4pt double; text-align: left">&nbsp;</TD><TD STYLE="border-bottom: Black 4pt double; text-align: right">150,000</TD><TD STYLE="padding-bottom: 4pt; text-align: left">&nbsp;</TD><TD STYLE="padding-bottom: 4pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 4pt double; text-align: left">&nbsp;</TD><TD STYLE="border-bottom: Black 4pt double; text-align: right">(136,500</TD><TD STYLE="padding-bottom: 4pt; text-align: left">)</TD><TD STYLE="padding-bottom: 4pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 4pt double; text-align: left">&nbsp;</TD><TD STYLE="border-bottom: Black 4pt double; text-align: right">13,500</TD><TD STYLE="padding-bottom: 4pt; text-align: left">&nbsp;</TD></TR>
</TABLE>



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

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0">Total amortization expense for the periods
ended July 31, 2018 and 2017 was approximately $123,000 and $15,000, respectively.</P>

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

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><B>NOTE 4 &ndash; PROPERTY AND EQUIPMENT</B></P>

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

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0">Following is a summary of Digerati&rsquo;s
property and equipment at July 31, 2018 and 2017 (in thousands):</P>

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

<TABLE CELLPADDING="0" CELLSPACING="0" STYLE="border-collapse: collapse; width: 100%; font: 10pt Times New Roman, Times, Serif">
<TR STYLE="vertical-align: bottom">
    <TD STYLE="font-weight: bold">&nbsp;</TD><TD STYLE="font-weight: bold; padding-bottom: 1.5pt">&nbsp;</TD>
    <TD STYLE="font-weight: bold; text-align: center; border-bottom: Black 1.5pt solid">Useful lives</TD><TD STYLE="font-weight: bold; padding-bottom: 1.5pt">&nbsp;</TD>
    <TD COLSPAN="2" STYLE="font-weight: bold; text-align: center; border-bottom: Black 1.5pt solid">2018</TD><TD STYLE="padding-bottom: 1.5pt; font-weight: bold">&nbsp;</TD><TD STYLE="font-weight: bold; padding-bottom: 1.5pt">&nbsp;</TD>
    <TD COLSPAN="2" STYLE="font-weight: bold; text-align: center; border-bottom: Black 1.5pt solid">2017</TD><TD STYLE="padding-bottom: 1.5pt; font-weight: bold">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,238,255)">
    <TD STYLE="width: 60%; text-align: left">Telecom equipment &amp; software</TD><TD STYLE="width: 1%">&nbsp;</TD>
    <TD STYLE="width: 15%; text-align: center">1-5 years</TD><TD STYLE="width: 1%">&nbsp;</TD>
    <TD STYLE="width: 1%; text-align: left">$</TD><TD STYLE="width: 9%; text-align: right">831</TD><TD STYLE="width: 1%; text-align: left">&nbsp;</TD><TD STYLE="width: 1%">&nbsp;</TD>
    <TD STYLE="width: 1%; text-align: left">$</TD><TD STYLE="width: 9%; text-align: right">16</TD><TD STYLE="width: 1%; text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD STYLE="text-align: left; padding-bottom: 1.5pt">Less: accumulated depreciation</TD><TD STYLE="padding-bottom: 1.5pt">&nbsp;</TD>
    <TD STYLE="text-align: right; padding-bottom: 1.5pt">&nbsp;</TD><TD STYLE="padding-bottom: 1.5pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 1.5pt solid; text-align: left">&nbsp;</TD><TD STYLE="border-bottom: Black 1.5pt solid; text-align: right">(118</TD><TD STYLE="padding-bottom: 1.5pt; text-align: left">)</TD><TD STYLE="padding-bottom: 1.5pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 1.5pt solid; text-align: left">&nbsp;</TD><TD STYLE="border-bottom: Black 1.5pt solid; text-align: right">(14</TD><TD STYLE="padding-bottom: 1.5pt; text-align: left">)</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,238,255)">
    <TD STYLE="text-align: left; padding-bottom: 4pt">Net&ndash;property and equipment</TD><TD STYLE="padding-bottom: 4pt">&nbsp;</TD>
    <TD STYLE="text-align: right; padding-bottom: 4pt">&nbsp;</TD><TD STYLE="padding-bottom: 4pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 4pt double; text-align: left">$</TD><TD STYLE="border-bottom: Black 4pt double; text-align: right">713</TD><TD STYLE="padding-bottom: 4pt; text-align: left">&nbsp;</TD><TD STYLE="padding-bottom: 4pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 4pt double; text-align: left">$</TD><TD STYLE="border-bottom: Black 4pt double; text-align: right">2</TD><TD STYLE="padding-bottom: 4pt; text-align: left">&nbsp;</TD></TR>
</TABLE>


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

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0">The Company uses straight-line depreciation,
for the years ended July 31, 2018 and 2017, depreciation totaled approximately $104,000 and $3,000, respectively.</P>

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

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><B>NOTE 5 &ndash; INCOME TAXES</B></P>

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

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0">Digerati files a consolidated tax return.
The current tax year is subject to examination by the Internal Revenue Service and certain state taxing authorities. As of July
31, 2018, Digerati had net operating loss carry-forwards of approximately $5,956,000 to reduce future federal income tax liabilities;
the loss carryforwards will start to expire in 2020. Under the recently enacted Tax Cuts and Jobs Act (TCJA), the new effective
Corporate flat tax rate is 21% (effective for tax years beginning after December 31, 2017). Income tax benefit (provision) for
the years ended July 31, 2018 and 2017 are as follows:</P>

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

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0"><FONT STYLE="font-size: 10pt">The effective tax rate for Digerati is reconciled to statutory rates as follows:</FONT></P>

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

<TABLE CELLPADDING="0" CELLSPACING="0" STYLE="border-collapse: collapse; width: 100%; font: 10pt Times New Roman, Times, Serif">
<TR STYLE="vertical-align: bottom">
    <TD STYLE="padding-left: 0; text-indent: 0">&nbsp;</TD><TD STYLE="font-weight: bold; padding-bottom: 1.5pt">&nbsp;</TD>
    <TD COLSPAN="2" STYLE="font-weight: bold; text-align: center; border-bottom: Black 1.5pt solid">2018</TD><TD STYLE="padding-bottom: 1.5pt; font-weight: bold">&nbsp;</TD><TD STYLE="font-weight: bold; padding-bottom: 1.5pt">&nbsp;</TD>
    <TD COLSPAN="2" STYLE="font-weight: bold; text-align: center; border-bottom: Black 1.5pt solid">2017</TD><TD STYLE="padding-bottom: 1.5pt; font-weight: bold">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,238,255)">
    <TD STYLE="width: 76%; text-align: left; padding-left: 0; text-indent: 0">Expected Federal benefit (provision), at statutory rate</TD><TD STYLE="width: 1%">&nbsp;</TD>
    <TD STYLE="width: 1%; text-align: left">&nbsp;</TD><TD STYLE="width: 9%; text-align: right">21.0</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: 9%; text-align: right">35.0</TD><TD STYLE="width: 1%; text-align: left">%</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD STYLE="text-align: left; padding-bottom: 1.5pt; padding-left: 0; text-indent: 0">Change in valuation allowance</TD><TD STYLE="padding-bottom: 1.5pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 1.5pt solid; text-align: left">&nbsp;</TD><TD STYLE="border-bottom: Black 1.5pt solid; text-align: right">(21.0</TD><TD STYLE="padding-bottom: 1.5pt; text-align: left">)%</TD><TD STYLE="padding-bottom: 1.5pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 1.5pt solid; text-align: left">&nbsp;</TD><TD STYLE="border-bottom: Black 1.5pt solid; text-align: right">(35.0</TD><TD STYLE="padding-bottom: 1.5pt; text-align: left">)%</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,238,255)">
    <TD STYLE="padding-bottom: 4pt; padding-left: 0; text-indent: 0">&nbsp;</TD><TD STYLE="padding-bottom: 4pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 4pt double; text-align: left">&nbsp;</TD><TD STYLE="border-bottom: Black 4pt double; text-align: right">0.0</TD><TD STYLE="padding-bottom: 4pt; text-align: left">%</TD><TD STYLE="padding-bottom: 4pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 4pt double; text-align: left">&nbsp;</TD><TD STYLE="border-bottom: Black 4pt double; text-align: right">0.0</TD><TD STYLE="padding-bottom: 4pt; text-align: left">%</TD></TR>
</TABLE>

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

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

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    <DIV STYLE="page-break-before: always; margin-top: 6pt; margin-bottom: 12pt"><P STYLE="margin: 0pt">&nbsp;</P></DIV>
    <!-- Field: /Page -->

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

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0">Deferred tax assets are comprised of the
following as of July 31, 2018 and 2016:</P>

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

<TABLE CELLPADDING="0" CELLSPACING="0" STYLE="border-collapse: collapse; width: 100%; font: 10pt Times New Roman, Times, Serif">
<TR STYLE="vertical-align: bottom">
    <TD><B>&nbsp;</B></TD><TD STYLE="padding-bottom: 1.5pt"><B>&nbsp;</B></TD>
    <TD COLSPAN="2" STYLE="text-align: center; border-bottom: Black 1.5pt solid"><B>2018</B></TD><TD STYLE="padding-bottom: 1.5pt"><B>&nbsp;</B></TD><TD STYLE="padding-bottom: 1.5pt"><B>&nbsp;</B></TD>
    <TD COLSPAN="2" STYLE="text-align: center; border-bottom: Black 1.5pt solid"><B>2017</B></TD><TD STYLE="padding-bottom: 1.5pt"><B>&nbsp;</B></TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,238,255)">
    <TD STYLE="width: 76%; text-align: left; padding-left: 0.75pt">Net operating loss carryover</TD><TD STYLE="width: 1%">&nbsp;</TD>
    <TD STYLE="width: 1%; text-align: left">$</TD><TD STYLE="width: 9%; text-align: right">1,090,700</TD><TD STYLE="width: 1%; text-align: left">&nbsp;</TD><TD STYLE="width: 1%">&nbsp;</TD>
    <TD STYLE="width: 1%; text-align: left">$</TD><TD STYLE="width: 9%; text-align: right">1,282,000</TD><TD STYLE="width: 1%; text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD STYLE="text-align: left; padding-bottom: 1.5pt; padding-left: 0.75pt">Valuation allowance</TD><TD STYLE="padding-bottom: 1.5pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 1.5pt solid; text-align: left">&nbsp;</TD><TD STYLE="border-bottom: Black 1.5pt solid; text-align: right">(1,090,700</TD><TD STYLE="padding-bottom: 1.5pt; text-align: left">)</TD><TD STYLE="padding-bottom: 1.5pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 1.5pt solid; text-align: left">&nbsp;</TD><TD STYLE="border-bottom: Black 1.5pt solid; text-align: right">(1,282,000</TD><TD STYLE="padding-bottom: 1.5pt; text-align: left">)</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,238,255)">
    <TD STYLE="text-align: left; padding-bottom: 4pt; padding-left: 0.75pt">Total deferred tax asset, net</TD><TD STYLE="padding-bottom: 4pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 4pt double; text-align: left">$</TD><TD STYLE="border-bottom: Black 4pt double; text-align: right">-</TD><TD STYLE="padding-bottom: 4pt; text-align: left">&nbsp;</TD><TD STYLE="padding-bottom: 4pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 4pt double; text-align: left">$</TD><TD STYLE="border-bottom: Black 4pt double; text-align: right">-</TD><TD STYLE="padding-bottom: 4pt; text-align: left">&nbsp;</TD></TR>
</TABLE>

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

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0">At July 31, 2018, realization of Digerati&rsquo;s
deferred tax assets was not considered likely to be realized. The change in the valuation allowance for 2018 was resulted in a
decrease of approximately $191,000. Management has evaluated and concluded that there are no significant uncertain tax positions
requiring recognition in Digerati&rsquo;s combined financial statements. The current year remains open to examination by the major
taxing jurisdictions in which Digerati is subject to tax. The Company files a calendar year return and the net operating loss was
adjusted for the fiscal year ended July 31, 2018.</P>

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

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0">During the year ended July 31, 2018 the
Company issued 4,389,086 common shares, and under our initial assessment this will likely result in a change of control and the
net operation loss (NOL&rsquo;s) became subject to the separate return limitation year. We will evaluate during the tax year and consider
the limitations.</P>

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

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0">We record unrecognized tax benefits as
liabilities in accordance with ASC 740 and adjust these liabilities when our judgment changes as a result of the evaluate on new
information not previously available. Because of the complexity of some of these uncertainties, the ultimate resolution may result
in a payment that is materially different from our current estimate of the unrecognized tax benefit liabilities. These differences
will be reflected as increases or decreases to income tax expense in the period in which new information is available.</P>

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

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><B>NOTE 6 &ndash; COMMITMENTS AND CONTINGENCIES</B></P>

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

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><B><I>Commitments </I></B></P>

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

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0">Digerati leases its corporate facilities,
sales office and network facilities in Texas and Florida. The annual rent expense under the operating leases was $81,670 and $6,996,
for 2018 and 2017, respectively. Below is a list of our primary operating leases:</P>

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

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0">The future minimum lease payment under
the operating leases are as follows:</P>

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

<TABLE CELLPADDING="0" CELLSPACING="0" STYLE="border-collapse: collapse; width: 100%; font: 10pt Times New Roman, Times, Serif">
<TR STYLE="vertical-align: bottom">
    <TD STYLE="font-weight: bold; text-align: left; border-bottom: Black 1.5pt solid">Location</TD><TD STYLE="font-weight: bold; padding-bottom: 1.5pt">&nbsp;</TD>
    <TD STYLE="font-weight: bold; text-align: center; border-bottom: Black 1.5pt solid; vertical-align: bottom">Lease Expiration Date</TD><TD STYLE="font-weight: bold; padding-bottom: 1.5pt">&nbsp;</TD>
    <TD COLSPAN="2" STYLE="font-weight: bold; text-align: center; border-bottom: Black 1.5pt solid">Annual<BR>
Rent</TD><TD STYLE="font-weight: bold; padding-bottom: 1.5pt">&nbsp;</TD><TD STYLE="font-weight: bold; padding-bottom: 1.5pt">&nbsp;</TD>
    <TD STYLE="font-weight: bold; text-align: center; border-bottom: Black 1.5pt solid; vertical-align: bottom">Business Use</TD><TD STYLE="font-weight: bold; padding-bottom: 1.5pt">&nbsp;</TD>
    <TD STYLE="font-weight: bold; text-align: center; border-bottom: Black 1.5pt solid; vertical-align: bottom">Approx. Sq. Ft.</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,238,255)">
    <TD STYLE="width: 36%; text-align: left">1600 NE Loop 410, Suite 126, San <BR> Antonio, TX 78209</TD><TD STYLE="width: 1%">&nbsp;</TD>
    <TD STYLE="width: 12%; text-align: center; vertical-align: top">Apr-19</TD><TD STYLE="width: 1%">&nbsp;</TD>
    <TD STYLE="width: 1%; text-align: left">$</TD><TD STYLE="width: 9%; text-align: right">27,300</TD><TD STYLE="width: 1%; text-align: left">&nbsp;</TD><TD STYLE="width: 1%">&nbsp;</TD>
    <TD STYLE="width: 25%; text-align: center; vertical-align: top">Executive offices</TD><TD STYLE="width: 1%">&nbsp;</TD>
    <TD STYLE="width: 12%; text-align: center; vertical-align: top">1,453</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD STYLE="text-align: left">2401 First Street, Suite 300,<BR>
Ft. Myers, FL 34901</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: center; vertical-align: top">Nov-20</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">$</TD><TD STYLE="text-align: right">107,534</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: center; vertical-align: top">Lease of network facilitie<BR>
 and office space</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: center; vertical-align: top">6,800</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,238,255)">
    <TD STYLE="text-align: left">7218 McNeail Dr, Austin, TX 78729</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: center; vertical-align: top">Aug-21</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">$</TD><TD STYLE="text-align: right">14,222</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: center; vertical-align: top">Lease of network facilities</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: center; vertical-align: top">25</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD STYLE="text-align: left; padding-left: 0">6606 Lyndon B. Johnson, Fwy., FL1,<BR>
Suite 125, Dallas, TX 75240</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: center; vertical-align: top">Sep-21</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">$</TD><TD STYLE="text-align: right">25,161</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: center; vertical-align: top">Lease of network facilities</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: center; vertical-align: top">25</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,238,255)">
    <TD STYLE="text-align: left">9701 S. John Young Parkway, &nbsp;Orlando,<BR>
FL 32819</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: center; vertical-align: top">May-23</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">$</TD><TD STYLE="text-align: right">30,528</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: center; vertical-align: top">Lease of network facilities</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: center; vertical-align: top">540</TD></TR>
</TABLE>



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

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    <DIV STYLE="page-break-before: always; margin-top: 6pt; margin-bottom: 12pt"><P STYLE="margin: 0pt">&nbsp;</P></DIV>
    <!-- Field: /Page -->

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

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

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><B>NOTE 7 &ndash; STOCK -BASED COMPENSATION
</B></P>

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

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0">In November 2015, Digerati adopted the
Digerati Technologies, Inc. 2015 Equity Compensation Plan (the &ldquo;Plan&rdquo;). The Plan authorizes the grant of up to 7.5
million stock options, restricted common shares, non-restricted common shares and other awards to employees, directors, and certain
other persons. The Plan is intended to permit Digerati to retain and attract qualified individuals who will contribute to the overall
success of Digerati. Digerati&rsquo;s Board of Directors determines the terms of any grants under the Plan. Exercise prices of
all stock options and other awards vary based on the market price of the shares of common stock as of the date of grant. The stock
options, restricted common stock, non-restricted common stock and other awards vest based on the terms of the individual grant.</P>

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

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0">During the year ended July 31, 2018, we
issued:</P>

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

<TABLE CELLPADDING="0" CELLSPACING="0" STYLE="width: 100%; font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt"><TR STYLE="vertical-align: top">
<TD STYLE="width: 0.5in"></TD><TD STYLE="width: 0.25in">&#9679;</TD><TD STYLE="text-align: justify"><FONT STYLE="font-family: Times New Roman, Times, Serif">644,732 common shares to various employees
as part of the Company&rsquo;s profit-sharing plan contribution. The Company recognized stock-based compensation expense of approximately
$226,000 equivalent to the value of the shares calculated based on the share&rsquo;s closing price at the grant dates. </FONT></TD></TR></TABLE>

<P STYLE="margin-top: 0; margin-bottom: 0">&nbsp;</P>

<TABLE CELLPADDING="0" CELLSPACING="0" STYLE="width: 100%; font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt"><TR STYLE="vertical-align: top">
<TD STYLE="width: 0.5in"></TD><TD STYLE="width: 0.25in">&#9679;</TD><TD STYLE="text-align: justify"><FONT STYLE="font-family: Times New Roman, Times, Serif">515,493 common shares to management for
services in lieu of cash compensation. The Company recognized stock-based compensation expense of approximately $222,000 equivalent
to the value of the shares calculated based on the share&rsquo;s closing price at the grant dates. </FONT></TD></TR></TABLE>

<P STYLE="margin-top: 0; margin-bottom: 0">&nbsp;</P>

<TABLE CELLPADDING="0" CELLSPACING="0" STYLE="width: 100%; font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt"><TR STYLE="vertical-align: top">
<TD STYLE="width: 0.5in"></TD><TD STYLE="width: 0.25in">&#9679;</TD><TD STYLE="text-align: justify"><FONT STYLE="font-family: Times New Roman, Times, Serif">646,787 common shares to management for
services in lieu of cash compensation. The Company recognized stock-based compensation expense of approximately $306,000 equivalent
to the value of the shares calculated based on the share&rsquo;s closing price at the grant dates. </FONT></TD></TR></TABLE>

<P STYLE="margin-top: 0; margin-bottom: 0">&nbsp;</P>

<TABLE CELLPADDING="0" CELLSPACING="0" STYLE="width: 100%; font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt"><TR STYLE="vertical-align: top">
<TD STYLE="width: 0.5in"></TD><TD STYLE="width: 0.25in">&#9679;</TD><TD STYLE="text-align: justify"><FONT STYLE="font-family: Times New Roman, Times, Serif">1,025,000 options to purchase common shares
to various employees with an exercise price of $0.35 per share and a term of 5 years. The options vest equally over a period of
one year. The options have a fair market value of $218,200. </FONT></TD></TR></TABLE>

<P STYLE="margin-top: 0; margin-bottom: 0">&nbsp;</P>

<TABLE CELLPADDING="0" CELLSPACING="0" STYLE="width: 100%; font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt"><TR STYLE="vertical-align: top">
<TD STYLE="width: 0.5in"></TD><TD STYLE="width: 0.25in"><P STYLE="margin-top: 0; margin-bottom: 0">&#9679;</P>
                                                        <P STYLE="margin-top: 0; margin-bottom: 0">&nbsp;</P></TD><TD STYLE="text-align: justify"><FONT STYLE="font-family: Times New Roman, Times, Serif">275,000 options to purchase common shares
to various employees with an exercise price of $0.35 per share and a term of 5 years. The options vest equally over a period of
two years. The options have a fair market value of $74,600. </FONT></TD></TR></TABLE>

<P STYLE="margin-top: 0; margin-bottom: 0">&nbsp;</P>

<TABLE CELLPADDING="0" CELLSPACING="0" STYLE="width: 100%; font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt"><TR STYLE="vertical-align: top">
<TD STYLE="width: 0.5in"></TD><TD STYLE="width: 0.25in">&#9679;</TD><TD STYLE="text-align: justify"><FONT STYLE="font-family: Times New Roman, Times, Serif">545,000 options to purchase common shares
to various employees with an exercise price of $0.35 per share and a term of 5 years. The options vest equally over a period of
three years. The options have a fair market value of $164,600. </FONT></TD></TR></TABLE>

<P STYLE="margin-top: 0; margin-bottom: 0">&nbsp;</P>

<TABLE CELLPADDING="0" CELLSPACING="0" STYLE="width: 100%; font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt"><TR STYLE="vertical-align: top">
<TD STYLE="width: 0.5in"></TD><TD STYLE="width: 0.25in">&#9679;</TD><TD STYLE="text-align: justify"><FONT STYLE="font-family: Times New Roman, Times, Serif">420,000 options to purchase common shares
to various employees with an exercise price of $0.45 per share and a term of 5 years. The options vest equally over a period of
three years. The options have a fair market value of $160,000. </FONT></TD></TR></TABLE>

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

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0">The fair market value of all options issued was determined
using the Black-Scholes option pricing model which used the following assumptions:</P>

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

<TABLE CELLPADDING="0" CELLSPACING="0" STYLE="border-collapse: collapse; width: 100%; font: 10pt Times New Roman, Times, Serif">
<TR STYLE="vertical-align: bottom; background-color: rgb(204,238,255)">
    <TD STYLE="width: 88%; text-align: left">Expected dividend yield</TD><TD STYLE="width: 1%">&nbsp;</TD>
    <TD STYLE="width: 11%; text-align: right; white-space: nowrap">0.00%</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD STYLE="text-align: left">Expected stock price volatility</TD><TD>&nbsp;</TD>
    <TD STYLE="white-space: nowrap; text-align: right">162.72% - 169.76%</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,238,255)">
    <TD STYLE="text-align: left">Risk-free interest rate</TD><TD>&nbsp;</TD>
    <TD STYLE="white-space: nowrap; text-align: right">2.13% -2.78%</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD STYLE="text-align: left">Expected term</TD><TD>&nbsp;</TD>
    <TD STYLE="white-space: nowrap; text-align: right">1.0 - 3.0 years</TD></TR>
</TABLE>

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


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

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0">During the year ended July 31, 2018 we
issued the following to non-employee professionals:</P>

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

<TABLE CELLPADDING="0" CELLSPACING="0" STYLE="width: 100%; font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt"><TR STYLE="vertical-align: top">
<TD STYLE="width: 0.5in"></TD><TD STYLE="width: 0.25in">&#9679;</TD><TD STYLE="text-align: justify">In September 2017, the Company issued an aggregate of 12,500 shares of common stock with a market
value at time of issuance of $4,375. The shares were issued for consulting services.</TD></TR></TABLE>

<P STYLE="margin-top: 0; margin-bottom: 0">&nbsp;</P>

<TABLE CELLPADDING="0" CELLSPACING="0" STYLE="width: 100%; font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt"><TR STYLE="vertical-align: top">
<TD STYLE="width: 0.5in"></TD><TD STYLE="width: 0.25in">&#9679;</TD><TD STYLE="text-align: justify">In December 2017, the Company issued an aggregate of 100,000 shares of common stock with a market
value at time of issuance of $40,000. The shares were issued for consulting services.</TD></TR></TABLE>

<P STYLE="margin-top: 0; margin-bottom: 0">&nbsp;</P>

<TABLE CELLPADDING="0" CELLSPACING="0" STYLE="width: 100%; font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt"><TR STYLE="vertical-align: top">
<TD STYLE="width: 0.5in"></TD><TD STYLE="width: 0.25in">&#9679;</TD><TD STYLE="text-align: justify">In June 2018, the Company issued an aggregate of 100,000 shares of common stock with a market value
at time of issuance of $48,000. The shares were issued for consulting services.</TD></TR></TABLE>

<P STYLE="margin-top: 0; margin-bottom: 0">&nbsp;</P>

<TABLE CELLPADDING="0" CELLSPACING="0" STYLE="width: 100%; font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt"><TR STYLE="vertical-align: top">
<TD STYLE="width: 0.5in"></TD><TD STYLE="width: 0.25in">&#9679;</TD><TD STYLE="text-align: justify">In July 2018, the Company issued an aggregate of 194,000 shares of common stock with a market value
at time of issuance of $93,720. The shares were issued to various professionals for consulting services.</TD></TR></TABLE>

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

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0">Also, during the year
ended July 31, 2018 we issued the following to settle accounts payables:</P>

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

<TABLE CELLPADDING="0" CELLSPACING="0" STYLE="width: 100%; font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt"><TR STYLE="vertical-align: top">
<TD STYLE="width: 0.5in"></TD><TD STYLE="width: 0.25in">&#9679;</TD><TD STYLE="text-align: justify">In June 2018, the Company issued an aggregate of 35,575 shares of common stock with a market value
at time of issuance of $15,288. The shares were issued to settle accounts payables with various professionals, the Company recognized
a loss of $5,700 upon issuance of the shares.</TD></TR></TABLE>

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

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0">During fiscal 2018, the
Company recognized $1,054,000 as employee stock compensation expense and $186,000 as non-employee stock compensation expense. Unamortized
compensation cost totaled $397,000 and $88,000, respectively as of July 31, 2018 and July 31, 2017.</P>

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

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0">A summary of the stock options of July
31, 2018 and 2017 and the changes during the years ended July 3, 2018 and 2017 are presented below:</P>

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

<TABLE CELLPADDING="0" CELLSPACING="0" STYLE="border-collapse: collapse; width: 100%; font: 10pt Times New Roman, Times, Serif">
<TR STYLE="vertical-align: bottom">
    <TD STYLE="font-weight: bold; text-align: right">&nbsp;</TD><TD STYLE="font-weight: bold">&nbsp;</TD>
    <TD COLSPAN="2" STYLE="font-weight: bold; text-align: right">&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: right">&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">Weighted-average</TD><TD STYLE="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">Weighted-average</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">remaining contractual</TD><TD STYLE="font-weight: bold">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom">
    <TD STYLE="font-weight: bold">&nbsp;</TD><TD STYLE="font-weight: bold; padding-bottom: 1.5pt">&nbsp;</TD>
    <TD COLSPAN="2" STYLE="font-weight: bold; text-align: center; border-bottom: Black 1.5pt solid">Options</TD><TD STYLE="padding-bottom: 1.5pt; font-weight: bold">&nbsp;</TD><TD STYLE="font-weight: bold; padding-bottom: 1.5pt">&nbsp;</TD>
    <TD COLSPAN="2" STYLE="font-weight: bold; text-align: center; border-bottom: Black 1.5pt solid">exercise price</TD><TD STYLE="padding-bottom: 1.5pt; font-weight: bold">&nbsp;</TD><TD STYLE="font-weight: bold; padding-bottom: 1.5pt">&nbsp;</TD>
    <TD COLSPAN="2" STYLE="font-weight: bold; text-align: center; border-bottom: Black 1.5pt solid">term (years)</TD><TD STYLE="padding-bottom: 1.5pt; font-weight: bold">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom">
    <TD STYLE="text-align: right">&nbsp;</TD><TD>&nbsp;</TD>
    <TD COLSPAN="2" STYLE="text-align: right">&nbsp;</TD><TD>&nbsp;</TD><TD>&nbsp;</TD>
    <TD COLSPAN="2" STYLE="text-align: right">&nbsp;</TD><TD>&nbsp;</TD><TD>&nbsp;</TD>
    <TD COLSPAN="2" STYLE="text-align: right">&nbsp;</TD><TD>&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,238,255)">
    <TD STYLE="padding-bottom: 1.5pt; text-indent: -0.125in; padding-left: 0.125in">Outstanding at July 31, 2016</TD><TD STYLE="padding-bottom: 1.5pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 1.5pt solid; text-align: left">&nbsp;</TD><TD STYLE="border-bottom: Black 1.5pt solid; text-align: right">-</TD><TD STYLE="padding-bottom: 1.5pt; text-align: left">&nbsp;</TD><TD STYLE="padding-bottom: 1.5pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 1.5pt solid; text-align: left">$</TD><TD STYLE="border-bottom: Black 1.5pt solid; text-align: right">-</TD><TD STYLE="padding-bottom: 1.5pt; text-align: left">&nbsp;</TD><TD STYLE="padding-bottom: 1.5pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 1.5pt solid; text-align: left">&nbsp;</TD><TD STYLE="border-bottom: Black 1.5pt solid; text-align: right">-</TD><TD STYLE="padding-bottom: 1.5pt; text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD STYLE="width: 64%; text-indent: -0.125in; padding-left: 0.125in">Granted</TD><TD STYLE="width: 1%">&nbsp;</TD>
    <TD STYLE="width: 1%; text-align: left">&nbsp;</TD><TD STYLE="width: 9%; text-align: right">1,170,000</TD><TD STYLE="width: 1%; text-align: left">&nbsp;</TD><TD STYLE="width: 1%">&nbsp;</TD>
    <TD STYLE="width: 1%; text-align: left">$</TD><TD STYLE="width: 9%; text-align: right">0.24</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: 9%; text-align: right">5.00</TD><TD STYLE="width: 1%; text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,238,255)">
    <TD STYLE="text-indent: -0.125in; padding-left: 0.125in">Exercised</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="text-align: left; padding-bottom: 1.5pt; text-indent: -0.125in; padding-left: 0.125in">Forfeited and cancelled</TD><TD STYLE="padding-bottom: 1.5pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 1.5pt solid; text-align: left">&nbsp;</TD><TD STYLE="border-bottom: Black 1.5pt solid; text-align: right">-</TD><TD STYLE="padding-bottom: 1.5pt; text-align: left">&nbsp;</TD><TD STYLE="padding-bottom: 1.5pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 1.5pt solid; text-align: left">&nbsp;</TD><TD STYLE="border-bottom: Black 1.5pt solid; text-align: right">-</TD><TD STYLE="padding-bottom: 1.5pt; text-align: left">&nbsp;</TD><TD STYLE="padding-bottom: 1.5pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 1.5pt solid; text-align: left">&nbsp;</TD><TD STYLE="border-bottom: Black 1.5pt solid; text-align: right">-</TD><TD STYLE="padding-bottom: 1.5pt; text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,238,255)">
    <TD STYLE="padding-bottom: 1.5pt; text-indent: -0.125in; padding-left: 0.125in">Outstanding at July 31, 2017</TD><TD STYLE="padding-bottom: 1.5pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 1.5pt solid; text-align: left">&nbsp;</TD><TD STYLE="border-bottom: Black 1.5pt solid; text-align: right">1,170,000</TD><TD STYLE="padding-bottom: 1.5pt; text-align: left">&nbsp;</TD><TD STYLE="padding-bottom: 1.5pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 1.5pt solid; text-align: left">$</TD><TD STYLE="border-bottom: Black 1.5pt solid; text-align: right">0.24</TD><TD STYLE="padding-bottom: 1.5pt; text-align: left">&nbsp;</TD><TD STYLE="padding-bottom: 1.5pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 1.5pt solid; text-align: left">&nbsp;</TD><TD STYLE="border-bottom: Black 1.5pt solid; text-align: right">4.30</TD><TD STYLE="padding-bottom: 1.5pt; text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD STYLE="text-indent: -0.125in; padding-left: 0.125in">Granted</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">2,265,000</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">$</TD><TD STYLE="text-align: right">0.37</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">5.00</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,238,255)">
    <TD STYLE="text-indent: -0.125in; padding-left: 0.125in">Exercised</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="text-align: left; padding-bottom: 1.5pt; text-indent: -0.125in; padding-left: 0.125in">Forfeited and cancelled</TD><TD STYLE="padding-bottom: 1.5pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 1.5pt solid; text-align: left">&nbsp;</TD><TD STYLE="border-bottom: Black 1.5pt solid; text-align: right">(20,000</TD><TD STYLE="padding-bottom: 1.5pt; text-align: left">)</TD><TD STYLE="padding-bottom: 1.5pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 1.5pt solid; text-align: left">$</TD><TD STYLE="border-bottom: Black 1.5pt solid; text-align: right">0.24</TD><TD STYLE="padding-bottom: 1.5pt; text-align: left">&nbsp;</TD><TD STYLE="padding-bottom: 1.5pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 1.5pt solid; text-align: left">&nbsp;</TD><TD STYLE="border-bottom: Black 1.5pt solid; text-align: right">3.30</TD><TD STYLE="padding-bottom: 1.5pt; text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,238,255)">
    <TD STYLE="padding-bottom: 4pt; text-indent: -0.125in; padding-left: 0.125in">Outstanding at July 31, 2018</TD><TD STYLE="padding-bottom: 4pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 4pt double; text-align: left">&nbsp;</TD><TD STYLE="border-bottom: Black 4pt double; text-align: right">3,415,000</TD><TD STYLE="padding-bottom: 4pt; text-align: left">&nbsp;</TD><TD STYLE="padding-bottom: 4pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 4pt double; text-align: left">$</TD><TD STYLE="border-bottom: Black 4pt double; text-align: right">0.33</TD><TD STYLE="padding-bottom: 4pt; text-align: left">&nbsp;</TD><TD STYLE="padding-bottom: 4pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 4pt double; text-align: left">&nbsp;</TD><TD STYLE="border-bottom: Black 4pt double; text-align: right">4.58</TD><TD STYLE="padding-bottom: 4pt; text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD STYLE="padding-bottom: 4pt; text-indent: -0.125in; padding-left: 0.125in">Exercisable at July 31, 2018</TD><TD STYLE="padding-bottom: 4pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 4pt double; text-align: left">&nbsp;</TD><TD STYLE="border-bottom: Black 4pt double; text-align: right">2,006,111</TD><TD STYLE="padding-bottom: 4pt; text-align: left">&nbsp;</TD><TD STYLE="padding-bottom: 4pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 4pt double; text-align: left">$</TD><TD STYLE="border-bottom: Black 4pt double; text-align: right">0.29</TD><TD STYLE="padding-bottom: 4pt; text-align: left">&nbsp;</TD><TD STYLE="padding-bottom: 4pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 4pt double; text-align: left">&nbsp;</TD><TD STYLE="border-bottom: Black 4pt double; text-align: right">4.58</TD><TD STYLE="padding-bottom: 4pt; text-align: left">&nbsp;</TD></TR>
</TABLE>


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

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0">The aggregate intrinsic value (the difference between the Company&rsquo;s
closing stock price on the last trading day of the period and the exercise price, multiplied by the number of in-the-money options)
of the 1,170,000 and 3,415,000 stock options outstanding at July 31, 2017 and July 31, 2018 was $339,000 and $706,372 , respectively.</P>

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

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0">The aggregate intrinsic value of 721,111 and 2,006,111 stock
options exercisable at July 31, 2017 and July 31, 2018 was $209,000 and $587,389, respectively.</P>

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

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><B>NOTE 8 &ndash; WARRANTS </B></P>

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

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0">During the year ended July 31, 2017, the
Company issued the following warrants:</P>

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

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0">The Company secured $560,000
from various accredited investors under a private placement and issued 1,120,000 shares of its common stock at a price of $0.50
per share and warrants to purchase an additional 210,000 shares of its common stock at an exercise price of $0.50 per share. We
determined that the warrants issued in connection with the private placement were equity instruments and did not represent derivative
instruments.</P>

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


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

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0"><B>&nbsp;</B>During the year ended July 31, 2018, the
Company issued the following warrants:</P>

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

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0">The Company secured $480,000
from various accredited investors under a private placement and issued 960,000 shares of its common stock at a price of $0.50 per
share and warrants to purchase an additional 180,000 shares of its common stock at an exercise price of $0.50 per share. We determined
that the warrants issued in connection with the private placement were equity instruments and did not represent derivative instruments.</P>

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

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0">In December 2017, Digerati
issued 100,000 warrants to a consultant for services, the warrants vested at time of issuance. The warrants have a term of 5 years,
with an exercise price of $0.50.&#9;Under a Black-Scholes valuation the fair market value of the warrants at time of issuance was
approximately $49,000, the company will amortize the fair market value as warrant expense over 12 months. Additionally, Digerati
committed to issue 100,000 warrants if the Company&rsquo;s stock price traded at $0.75 per share for 10 consecutive days, to issue
100,000 warrants if the Company&rsquo;s stock price traded at $1.00 per share for 10 consecutive days, and to issue 100,000 warrants
if the Company&rsquo;s stock price traded at $1.25 per share for 10 consecutive days. Under a Black-Scholes valuation the fair
market value of the warrants at time of issuance was approximately $143,000, the company will amortize the fair market value as
warrant expense over 12 months. During the year ended July 31, 2018 the Company amortized $128,000 in warrant expense related to
these warrants.</P>

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

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0">In January 2018, Digerati
issued 220,000 warrants to a consultant for services, the warrants vested at time of issuance. The warrants have a term of 5 years,
with an exercise price of $0.001. At time of issuance the company recognized approximately $119,000 in warrant expense using Black-Scholes
valuation.</P>

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

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0">In March 2018, Digerati
issued 300,000 warrants under two promissory notes and, the warrants vested at time of issuance. The warrants have a term of 3
years, with an exercise price of $0.10. Under a Black-Scholes valuation the relative fair market value of the warrants at time
of issuance was approximately $127,000 and was recognized as a discount on the two promissory notes, the company will amortize
the fair market value as interest expense over 9 months.</P>

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

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0">In March 2018, Digerati
issued 30,000 warrants under various promissory notes, the warrants vested at time of issuance. The warrants have a term of 3 years,
with an exercise price of $0.15. Under a Black-Scholes valuation the relative fair market value of the warrants at time of issuance
was approximately $12,000 and was recognized as a discount on the two promissory notes, the company will amortize the fair market
value as interest expense over 4 months.</P>

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

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0">In April 2018, Digerati
issued 400,000 warrants under various promissory notes, the warrants vested at time of issuance. The warrants have a term of 5
years, with an exercise price of $0.15. Under a Black-Scholes valuation the relative fair market value of the warrants at time
of issuance was approximately $107,000 and was recognized as a discount on the promissory notes, the company will amortize the
fair market value as interest expense over 4 months.</P>

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

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0">In April 2018, Digerati
issued 100,000 warrants under a promissory note, the warrants vested at time of issuance. The warrants have a term of 3 years,
with an exercise price of $0.50.Under a Black-Scholes valuation the relative fair market value of the warrants at time of issuance
was approximately $27,000 and was recognized as a discount on the promissory notes, the company will amortize the fair market value
as interest expense over 55 months.</P>

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

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0">In April 2018, Digerati
issued 75,000 warrants under a promissory note, the warrants vested at time of issuance. The warrants have a term of 3 years, with
an exercise price of $0.50.Under a Black-Scholes valuation the relative fair market value of the warrants at time of issuance was
approximately $19,000 and was recognized as a discount on the promissory notes, the company will amortize the fair market value
as interest expense over 25 months.</P>

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

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0">In June 2018, Digerati
issued 255,000 warrants under various promissory notes, the warrants vested at time of issuance. The warrants have a term of 3
years, with an exercise price of $0.10.Under a Black-Scholes valuation the relative fair market value of the warrants at time of
issuance was approximately $110,000 and was recognized as a discount on the promissory notes, the company will amortize the fair
market value as interest expense over 9 months.</P>

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

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0">In July 2018, Digerati
issued 50,000 warrants to a consultant for services, the warrants vested at time of issuance. The warrants have a term of 3 years,
with an exercise price of $0.50. At time of issuance the company recognized approximately $21,000 in warrant expense using Black-Scholes
valuation.</P>

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

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0">In July 2018, Digerati
received $15,000 for the exercise of 150,000 warrants, with an exercise price of $0.10 per warrant.</P>

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


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

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0">The fair market value of all warrants issued was determined
using the Black-Scholes option pricing model which used the following assumptions:</P>

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

<TABLE CELLPADDING="0" CELLSPACING="0" STYLE="border-collapse: collapse; width: 100%; font: 10pt Times New Roman, Times, Serif">
<TR STYLE="vertical-align: bottom; background-color: rgb(204,238,255)">
    <TD STYLE="width: 88%; text-align: justify">Expected dividend yield</TD><TD STYLE="width: 1%">&nbsp;</TD>
    <TD STYLE="width: 11%; text-align: center; white-space: nowrap">0.00%</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD STYLE="text-align: justify">Expected stock price volatility</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: center; white-space: nowrap">153.99% - 176.56%</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,238,255)">
    <TD STYLE="text-align: justify">Risk-free interest rate</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: center; white-space: nowrap">2.05% -2.80%</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD STYLE="text-align: justify">Expected term</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: center; white-space: nowrap">3.0 - 5.0 years</TD></TR>
</TABLE>

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

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0">A summary of the warrants as of July 31,
2018 and 2017 and the changes during the years ended July 31, 2018 and 2017 are presented below:</P>

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

<TABLE CELLPADDING="0" CELLSPACING="0" STYLE="border-collapse: collapse; width: 100%; font: 10pt Times New Roman, Times, Serif">
<TR STYLE="vertical-align: bottom">
    <TD STYLE="text-align: right"><B>&nbsp;</B></TD><TD><B>&nbsp;</B></TD>
    <TD COLSPAN="2" STYLE="text-align: right"><B>&nbsp;</B></TD><TD><B>&nbsp;</B></TD><TD><B>&nbsp;</B></TD>
    <TD COLSPAN="2" STYLE="text-align: right"><B>&nbsp;</B></TD><TD><B>&nbsp;</B></TD><TD><B>&nbsp;</B></TD>
    <TD COLSPAN="2" STYLE="text-align: center"><B>Weighted-average</B></TD><TD><B>&nbsp;</B></TD></TR>
<TR STYLE="vertical-align: bottom">
    <TD STYLE="text-align: center"><B>&nbsp;</B></TD><TD><B>&nbsp;</B></TD>
    <TD COLSPAN="2" STYLE="text-align: center"><B>&nbsp;</B></TD><TD><B>&nbsp;</B></TD><TD><B>&nbsp;</B></TD>
    <TD COLSPAN="2" STYLE="text-align: center"><B>Weighted-average</B></TD><TD><B>&nbsp;</B></TD><TD><B>&nbsp;</B></TD>
    <TD COLSPAN="2" STYLE="text-align: center"><B>remaining contractual</B></TD><TD><B>&nbsp;</B></TD></TR>
<TR STYLE="vertical-align: bottom">
    <TD><B>&nbsp;</B></TD><TD STYLE="padding-bottom: 1.5pt"><B>&nbsp;</B></TD>
    <TD COLSPAN="2" STYLE="text-align: center; border-bottom: Black 1.5pt solid"><B>Warrants</B></TD><TD STYLE="padding-bottom: 1.5pt"><B>&nbsp;</B></TD><TD STYLE="padding-bottom: 1.5pt"><B>&nbsp;</B></TD>
    <TD COLSPAN="2" STYLE="text-align: center; border-bottom: Black 1.5pt solid"><B>exercise price</B></TD><TD STYLE="padding-bottom: 1.5pt"><B>&nbsp;</B></TD><TD STYLE="padding-bottom: 1.5pt"><B>&nbsp;</B></TD>
    <TD COLSPAN="2" STYLE="text-align: center; border-bottom: Black 1.5pt solid"><B>term (years)</B></TD><TD STYLE="padding-bottom: 1.5pt"><B>&nbsp;</B></TD></TR>
<TR STYLE="vertical-align: bottom">
    <TD STYLE="text-align: right">&nbsp;</TD><TD>&nbsp;</TD>
    <TD COLSPAN="2" STYLE="text-align: right">&nbsp;</TD><TD>&nbsp;</TD><TD>&nbsp;</TD>
    <TD COLSPAN="2" STYLE="text-align: right">&nbsp;</TD><TD>&nbsp;</TD><TD>&nbsp;</TD>
    <TD COLSPAN="2" STYLE="text-align: right">&nbsp;</TD><TD>&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,238,255)">
    <TD STYLE="width: 64%; padding-bottom: 1.5pt">Outstanding at July 31, 2016</TD><TD STYLE="width: 1%; padding-bottom: 1.5pt">&nbsp;</TD>
    <TD STYLE="width: 1%; border-bottom: Black 1.5pt solid; text-align: left">&nbsp;</TD><TD STYLE="width: 9%; border-bottom: Black 1.5pt solid; text-align: right">300,000</TD><TD STYLE="width: 1%; padding-bottom: 1.5pt; text-align: left">&nbsp;</TD><TD STYLE="width: 1%; padding-bottom: 1.5pt">&nbsp;</TD>
    <TD STYLE="width: 1%; border-bottom: Black 1.5pt solid; text-align: left">$</TD><TD STYLE="width: 9%; border-bottom: Black 1.5pt solid; text-align: right">0.14</TD><TD STYLE="width: 1%; padding-bottom: 1.5pt; text-align: left">&nbsp;</TD><TD STYLE="width: 1%; padding-bottom: 1.5pt">&nbsp;</TD>
    <TD STYLE="width: 1%; border-bottom: Black 1.5pt solid; text-align: left">&nbsp;</TD><TD STYLE="width: 9%; border-bottom: Black 1.5pt solid; text-align: right">3.45</TD><TD STYLE="width: 1%; padding-bottom: 1.5pt; text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD STYLE="padding-bottom: 1.5pt">Granted</TD><TD STYLE="padding-bottom: 1.5pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 1.5pt solid; text-align: left">&nbsp;</TD><TD STYLE="border-bottom: Black 1.5pt solid; text-align: right">210,000</TD><TD STYLE="padding-bottom: 1.5pt; text-align: left">&nbsp;</TD><TD STYLE="padding-bottom: 1.5pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 1.5pt solid; text-align: left">$</TD><TD STYLE="border-bottom: Black 1.5pt solid; text-align: right">0.50</TD><TD STYLE="padding-bottom: 1.5pt; text-align: left">&nbsp;</TD><TD STYLE="padding-bottom: 1.5pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 1.5pt solid; text-align: left">&nbsp;</TD><TD STYLE="border-bottom: Black 1.5pt solid; text-align: right">3.00</TD><TD STYLE="padding-bottom: 1.5pt; text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,238,255)">
    <TD>Exercised</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="text-align: left; padding-bottom: 1.5pt">Forfeited and cancelled</TD><TD STYLE="padding-bottom: 1.5pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 1.5pt solid; text-align: left">&nbsp;</TD><TD STYLE="border-bottom: Black 1.5pt solid; text-align: right">-</TD><TD STYLE="padding-bottom: 1.5pt; text-align: left">&nbsp;</TD><TD STYLE="padding-bottom: 1.5pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 1.5pt solid; text-align: left">&nbsp;</TD><TD STYLE="border-bottom: Black 1.5pt solid; text-align: right">-</TD><TD STYLE="padding-bottom: 1.5pt; text-align: left">&nbsp;</TD><TD STYLE="padding-bottom: 1.5pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 1.5pt solid; text-align: left">&nbsp;</TD><TD STYLE="border-bottom: Black 1.5pt solid; text-align: right">-</TD><TD STYLE="padding-bottom: 1.5pt; text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,238,255)">
    <TD STYLE="padding-bottom: 1.5pt">Outstanding at July 31, 2017</TD><TD STYLE="padding-bottom: 1.5pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 1.5pt solid; text-align: left">&nbsp;</TD><TD STYLE="border-bottom: Black 1.5pt solid; text-align: right">510,000</TD><TD STYLE="padding-bottom: 1.5pt; text-align: left">&nbsp;</TD><TD STYLE="padding-bottom: 1.5pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 1.5pt solid; text-align: left">$</TD><TD STYLE="border-bottom: Black 1.5pt solid; text-align: right">0.29</TD><TD STYLE="padding-bottom: 1.5pt; text-align: left">&nbsp;</TD><TD STYLE="padding-bottom: 1.5pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 1.5pt solid; text-align: left">&nbsp;</TD><TD STYLE="border-bottom: Black 1.5pt solid; text-align: right">2.87</TD><TD STYLE="padding-bottom: 1.5pt; text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD>Granted</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">2,010,000</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">$</TD><TD STYLE="text-align: right">0.26</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">3.34</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,238,255)">
    <TD>Exercised</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">(150,000</TD><TD STYLE="text-align: left">)</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">$</TD><TD STYLE="text-align: right">0.10</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">3.00</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD STYLE="text-align: left; padding-bottom: 1.5pt">Forfeited and cancelled</TD><TD STYLE="padding-bottom: 1.5pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 1.5pt solid; text-align: left">&nbsp;</TD><TD STYLE="border-bottom: Black 1.5pt solid; text-align: right">-</TD><TD STYLE="padding-bottom: 1.5pt; text-align: left">&nbsp;</TD><TD STYLE="padding-bottom: 1.5pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 1.5pt solid; text-align: left">&nbsp;</TD><TD STYLE="border-bottom: Black 1.5pt solid; text-align: right">-</TD><TD STYLE="padding-bottom: 1.5pt; text-align: left">&nbsp;</TD><TD STYLE="padding-bottom: 1.5pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 1.5pt solid; text-align: left">&nbsp;</TD><TD STYLE="border-bottom: Black 1.5pt solid; text-align: right">-</TD><TD STYLE="padding-bottom: 1.5pt; text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,238,255)">
    <TD STYLE="padding-bottom: 4pt">Outstanding at July 31, 2018</TD><TD STYLE="padding-bottom: 4pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 4pt double; text-align: left">&nbsp;</TD><TD STYLE="border-bottom: Black 4pt double; text-align: right">2,370,000</TD><TD STYLE="padding-bottom: 4pt; text-align: left">&nbsp;</TD><TD STYLE="padding-bottom: 4pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 4pt double; text-align: left">$</TD><TD STYLE="border-bottom: Black 4pt double; text-align: right">0.28</TD><TD STYLE="padding-bottom: 4pt; text-align: left">&nbsp;</TD><TD STYLE="padding-bottom: 4pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 4pt double; text-align: left">&nbsp;</TD><TD STYLE="border-bottom: Black 4pt double; text-align: right">2.90</TD><TD STYLE="padding-bottom: 4pt; text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD STYLE="padding-bottom: 4pt">Exercisable at July 31, 2018</TD><TD STYLE="padding-bottom: 4pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 4pt double; text-align: left">&nbsp;</TD><TD STYLE="border-bottom: Black 4pt double; text-align: right">2,070,000</TD><TD STYLE="padding-bottom: 4pt; text-align: left">&nbsp;</TD><TD STYLE="padding-bottom: 4pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 4pt double; text-align: left">$</TD><TD STYLE="border-bottom: Black 4pt double; text-align: right">0.24</TD><TD STYLE="padding-bottom: 4pt; text-align: left">&nbsp;</TD><TD STYLE="padding-bottom: 4pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 4pt double; text-align: left">&nbsp;</TD><TD STYLE="border-bottom: Black 4pt double; text-align: right">2.90</TD><TD STYLE="padding-bottom: 4pt; text-align: left">&nbsp;</TD></TR>
</TABLE>

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

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0">The aggregate intrinsic value (the difference between the Company&rsquo;s closing stock price on the last
trading day of the period and the exercise price, multiplied by the number of in-the-money warrants) of the 510,000 and 2,370,000
stock options outstanding at July 31, 2017 and July 31, 2018 was $124,800 and $607,557 , respectively.</P>

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

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0">The aggregate intrinsic value of 510,000 and 2,070,000 stock options exercisable at July 31, 2017 and July
31, 2018 was $124,800 and $597,927, respectively.</P>

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

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0">Warrant expense for the
years ended July 31, 2018 and 2017 was $268,000 and $0, respectively. Unamortized warrant expense totaled $64,000 and $0, respectively
as of July 31, 2018 and July 31, 2017.</P>

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

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><B>NOTE 9 &ndash; NON-STANDARDIZED PROFIT-SHARING
PLAN </B></P>

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

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0">We currently provide a Non-Standardized
Profit-Sharing Plan, adopted September 15, 2006. Under the plan our employees qualify to participate in the plan after one year
of employment. Contributions under the plan are based on 25% of the annual base salary of each eligible employee up to $54,000
per year. Contributions under the plan are fully vested upon funding. During the years ended July 31, 2018 and July 31, 2017, the
Company issued 644,732 and 1,003,966 respectively, common shares to various employees as part of the Company&rsquo;s profit-sharing
plan contribution. The Company recognized stock-based compensation expense for July 31, 2018 and July 31, 2017 of $226,000 and
$241,000, respectively, equivalent to the value of the shares calculated based on the share&rsquo;s closing price at the grant
dates.</P>

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

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0in"><B>NOTE 10 &ndash; SIGNIFICANT
CUSTOMERS</B></P>

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

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0">During the year ended July 31, 2018, the Company did not derive a significant amount of revenue from one single
customer. During the year ended July 31, 2017, the Company derived a significant amount revenue from four customers, comprising
24%, 24%, 11%, and 8% of the total revenue for the year.</P>

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

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0">As of the year ended July 31, 2018, the company derived 13% and 23% total accounts receivable from two customers.
As of the year ended July 31, 2017, the Company derived a significant amount of accounts receivables from three customers, comprising
37%, 27% and 14% of the total accounts receivable as of the year ended July 31, 2017.</P>



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

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


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

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0in"><B>NOTE 11 &ndash; DEBT </B></P>

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

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0in"><B><U>Non-convertible
 debt </U></B></P>

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

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0">On December 1, 2017,
Shift8 and Synergy Telecom, Inc., a Delaware corporation (&ldquo;Synergy&rdquo;), closed a transaction to acquire all the assets,
assumed all customers, and critical vendor arrangements from Synergy. In conjunction with the transaction, Shift8 entered into
a promissory note for $125,000 with an effective annual interest rate of 6% with 5 quarterly payments and a maturity date of February
28, 2019. The note holder agreed to extend two of the quarterly payment until January 15, 2019. During the year ended July 31,
2018, the Company made a principal payment of $50,000, the balance outstanding as of July 31, 2018 was $75,000.</P>

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

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0">On January 17, 2018, the Company entered
into a Promissory Note for $30,000, bearing interest at a rate of 5% per annum, with maturity date of January 19, 2018. The Company
paid the full principal amount outstanding and accrued interest on January 19, 2018.</P>

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

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0">On February 21, 2018, the Company entered
into a Promissory Note for $35,000, bearing interest at a rate of 5% per annum, with maturity date of March 2, 2018. The Company
paid the full principal amount outstanding and accrued interest on March 2, 2018.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; background-color: white; text-indent: 0.5in"><B><I>&nbsp;</I></B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0">On March 13, 2018, the Company entered
into various Promissory Notes (the &ldquo;Notes&rdquo;) for $200,000, bearing interest at a rate of 12% per annum, with maturity
date of April 13, 2018. The Company paid the full principal amount outstanding and accrued interest on April 13, 2018. In conjunction
with the Notes, the Company issued 30,000 warrants under the promissory notes, the warrants vested at time of issuance. The warrants
have a term of 3 years, with an exercise price of $0.15. Under a Black-Scholes valuation the relative fair market value of the
warrants at time of issuance was approximately $12,000 and was recognized as a discount on the promissory notes, the company amortized
the relative fair market value as interest expense during the year ended July 31, 2018. During the year ended July 31, 2018, the
Company paid the full principal amount outstanding and accrued interest.</P>

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

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0">On April 30, 2018, Shift8
entered into a promissory note for $650,000 with an effective annual interest rate of 0% and a maturity date of May 14, 2018, provided,
however, the Maturity Date will automatically be extended by one (1) additional period of thirty (30) days, until June 14, 2018.
In addition, Shift8 entered into a Security Agreement, whereby Shift8 Agreed to pledge one third of the outstanding shares of T3,
the secured interest will continue until the principal balance is paid in full. Furthermore, a late fee of $3,000 per calendar
week will be accessed beginning on May 15, 2018 and will continue until he principal balance is paid in full. The lender agreed
to extend the maturity date until November 30, 2018, we are currently paying a $3,000 per week late fee. As of July 31, 2018, the
outstanding principal balance was $650,000.</P>

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

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


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

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0">On April 30, 2018, Shift8
Networks, Inc. (&ldquo;Shift8&rdquo;), a subsidiary of Digerati Technologies, Inc. entered into a credit facility under a promissory
note of $500,000, interest payment for the first twenty-three months with a balloon payment on the twenty-fourth month and a maturity
date of April 30, 2020. Collateralized by Shift8 and T3&rsquo;s accounts receivables and with an effective annual interest rate of prime
plus 5.25%, adjusted quarterly on the first day of each calendar quarter. However, the rate will never be less than 9.50% per annum.
In the event of default, the interest rate will be the maximum nonusurious rate of interest per annum permitted by whichever of
applicable United States federal law or Louisiana law permits the higher interest rate. Shift8 agreed to pay the lender a commitment
fee of 1.00% upon payment of the first interest payment under the credit facility and 1.00% on the first anniversary of the credit
facility. In addition, Shift8 agreed to pay a monitoring fee of 0.33% of the credit facility, payable in arrears monthly. Shift8
also agreed to pay an over-advance fee of 3.00% of the amount advanced in excess of the borrowing base or maximum amount of the
credit facility, payable in arrears monthly. Shift8 is required to maintain the following financial covenants: 1) A consolidated
debt service coverage ratio, as of the last day of each fiscal quarter, of at least 1.25 to 1.00, 2) A fixed charge coverage ratio,
as of the last day of each fiscal quarter, of at least 1.25 to 1.00, and 3) A tangible net worth, at all times of at least $100,000.
As of July 31, 2018, the outstanding principal balance was $500,000.</P>

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

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0">On May 1, 2018, Shift8
entered into a promissory note for $150,000 with an effective annual interest rate of 3% and a maturity date of May 7, 2018. On
May 4, 2018 the promissory note was paid in full.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 1in; color: red">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0">On April 27, 2018, Shift8
entered into a promissory note for $350,000 with an effective annual interest rate of 12% and a maturity date of June 27, 2018.
With a principal payment of $200,000 due on May 31, 2018 and a principal payment of $150,000 due on June 27, 2018. The promissory
note is secured by a Pledge and Security Agreement, whereby Shift8 agreed to pledge the cash on hand at one of the bank accounts
owned by T3 until the principal payment is paid in full.</P>

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

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0">In conjunction with the
Notes, the Company issued 3-year warrants to purchase 400,000 shares of common stock each at an exercise price of $0.15 per share.
Under a Black-Scholes valuation the relative fair market value of the warrants at time of issuance was approximately $107,000 and
was recognized as a discount on the promissory notes during the year ended July 31, 2018. During the year ended July 31, 2018,
the promissory note was paid in full.</P>

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

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><B><U>Notes payable, related party </U></B></P>

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

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0">On April 30, 2018, Shift8
Technologies, Inc. (&ldquo;Shift8&rdquo;) entered into a convertible promissory note for $525,000 with an effective annual
interest rate of 8% and a maturity date of April 30, 2020. With a principal payment of $100,000 due on June 1, 2018 and a
principal payment of $280,823 due on April 30, 2020. Payment are based on a 60-month repayment schedule. At any time while
this Note is outstanding, but only upon: (i) the occurrence of an Event of Default under the Note or the Pledge and Escrow
Agreement; or (ii) mutual agreement between the Borrower and the Holder, the Holder may convert all or any portion of the
outstanding principal, accrued and unpaid interest, Premium, if applicable, and any other sums due and payable hereunder
(such total amount, the &ldquo;Conversion Amount&rdquo;) into shares of Common Stock (the &ldquo;Conversion Shares&rdquo;) at
a price equal to: (i) the Conversion Amount (the numerator); <I>divided by </I>(ii) a conversion price of $1.50 per share of
Common Stock, which price shall be indicated in the conversion notice (in the form attached hereto as Exhibit
&ldquo;B&rdquo;, the &ldquo;Conversion Notice&rdquo;) (the denominator) (the &ldquo;Conversion Price&rdquo;). The Holder
shall submit a Conversion Notice indicating the Conversion Amount, the number of Conversion Shares issuable upon such
conversion, and where the Conversion Shares should be delivered. The promissory note is secured by a Pledge and
Escrow Agreement, whereby Shift8 agreed to pledge 51% of the securities owned in T3 until the principal payment is paid in
full. In conjunction with the promissory note, the Company issued 3-year warrants to purchase 75,000 shares of common stock
at an exercise price of $0.50 per share. Under a Black-Scholes valuation the relative fair market value of the warrants at
time of issuance was approximately $19,000 and was recognized as a discount on the two promissory notes, the company
amortized $6,000 as interest expense during the year ended July 31, 2018. During the year ended July 31, 2018, the Company
paid $119,000 of the principal balance. The total principal outstanding and unamortized discount as of July 31, 2018 were
$406,000 and $13,000, respectively. One of the note holders also serves as President, CEO and Board Member of T3
Communications, Inc., one of our operating subsidiaries.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 0in; text-indent: 1in">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0">On May 1, 2018, Shift8
entered into a promissory note for $275,000 with an effective annual interest rate of 0% with an interest and principal payment
of $6,000 per month and shall continue perpetuity until the entire principal amount is paid in full. The promissory note is guaranteed
to the lender by 15% of the stock owned by Shift8 in T3, the secured interest will continue until the principal balance is paid
in full. In conjunction with the promissory note, the Company issued 3-year warrants to purchase 100,000 shares of common stock
at an exercise price of $0.50 per share. Under a Black-Scholes valuation the relative fair market value of the warrants at time
of issuance was approximately $27,000 and was recognized as a discount on the promissory note, the company amortized $2,000 as
interest expense during the year ended July 31, 2018. During the year ended July 31, 2018, the Company paid $13,000 of the principal
balance. The total principal outstanding and unamortized discount as of July 31, 2018 were $262,000 and $25,000, respectively.
The note holder also serves as Board Member of T3 Communications, Inc., one of our operating subsidiaries.</P>

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


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

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><B><U>Convertible debt non-derivative </U></B></P>

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

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0">In March 2018, the Company
entered into two (2) Promissory Notes (the &ldquo;Notes&rdquo;) for $250,000 each, bearing interest at a rate of 12% per annum. The
Notes have a maturity date of September 15, 2018, provided, however, the Company shall have the right to request that the maturity
date to be extended by one (1) additional period of ninety (90) days, until December 14, 2018. The Notes are payable every month,
commencing April 15, 2018, in monthly payments of interest only and a single payment of the principal amount outstanding plus accrued
interes<FONT STYLE="background-color: white">t on September 15, 2018. T</FONT>he Company agreed to repay the Notes from the proceeds
from the Company&rsquo;s current private placement. As proceeds from the Private Placement are received, the Company shall direct all
funds to the Note Holders until the principal amount outstanding and accrued interest are paid in full. In addition, on March 15,
2018, the Company entered into a Note Conversion Agreement (the &ldquo;Agreement&rdquo;) with the Note holders, whereby, the holders
may elect to convert up to 50% of the principal amount outstanding on the Notes into Common Stock of Digerati at any time after
90 days of funding the Notes. The Conversion Price shall be the greater of: (i) the Variable Conversion Price (as defined herein)
or (ii) the Fixed Conversion Price (as defined herein). The <I>&ldquo;<B>Variable Conversion Price</B>&rdquo; </I>shall be equal
to the average closing price for Digerati&rsquo;s Common Stock (the &ldquo;<B><I>Shares</I></B>&rdquo;) for the ten (10) Trading Day
period immediately preceding the Conversion Date. &ldquo;Trading Day&rdquo; shall mean any day on which the Common Stock is tradable
for any period on the OTCQB, or on the principal securities exchange or other securities market on which the Common Stock is then
being traded. The <I>&ldquo;<B>Fixed Conversion Price</B>&rdquo; </I>shall mean $0.50. In conjunction with the notes, the Company
issued 300,000 warrants, the warrants vested at time of issuance. The warrants have a term of 3 years, with an exercise price of
$0.10. Under a Black-Scholes valuation the relative fair market value of the warrants at time of issuance was approximately $127,000
and was recognized as a discount on the promissory notes, the company amortized $42,000 as a non-cash interest during the year
ended July 31, 2018. The total principal outstanding and unamortized discount as of July 31, 2018 were $500,000 and $85,000, respectively.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 1in; color: red">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0">On June 19, 2018, the
Company entered into various Promissory Notes (the &ldquo;Notes&rdquo;) for $272,000, bearing interest at a rate of 10% per annum,
with maturity date of April 10, 2019. In conjunction with the Notes, the Company issued 240,000 warrants under the promissory notes,
the warrants vested at time of issuance. The warrants have a term of 3 years, with an exercise price of $0.10. Under a Black-Scholes
valuation the relative fair market value of the warrants at time of issuance was approximately $111,000 and was recognized as a
discount on the promissory notes. The company amortized $9,000 as interest expense during the year ended July 31, 2018. The total
principal outstanding and unamortized discount as of July 31, 2018 were $272,000 and $102,000, respectively.</P>

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

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0in"><B><U>Convertible debt
- derivative </U></B></P>

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

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0">On January 12, 2018, the Company entered
into a securities purchase agreement with Peak One Opportunity Fund, L.P., a Delaware limited partnership (&ldquo;Peak One&rdquo;).
Under the agreement, Peak One agreed to purchase from us up to $600,000 aggregate principal amount of our convertible debentures
(together the &ldquo;Debentures&rdquo; and each individual issuance a &ldquo;Debenture&rdquo;), bearing interest at a rate of 0%
per annum, with maturity on the third anniversary of the respective date of issuance. On July 25, 2018, the securities purchase
agreement was amended to increase to $620,000 the aggregate principal amount of the convertible debentures.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 1in">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0">The Company issued the
first debenture (the &ldquo;Debenture&rdquo;) to Peak One on January 17, 2018 in the principal amount of $200,000 for a purchase
price of $180,000 and 0% percent stated interest rate. The Company paid Peak One $6,000 for legal and compliance fees. In addition,
the Company paid $14,400 in other closing costs, these fees were deducted from the proceeds at time of issuance. The Company recorded
these discounts and cost of $40,400 as a discount to the Debenture was amortized to interest expense.</P>

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

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0">The Debenture provides Peak One with the
option to convert any outstanding balance under the Debenture into shares of Common Stock of the Company at a conversion price
for each share of Common Stock equal to either: (i) if the date of conversion is prior to the date that is 180 days after the issuance
date, $0.50, or (ii) if the date of conversion is on or after the date that is 180 days after the issuance date, the lesser of
(a) $0.50 or (b) at 70% of the lowest closing bid price of the Company&rsquo;s Common Stock during the twenty trading days prior
to conversion, provided, further, that if either the Company is not DWAC operational at the time of conversion or the Common Stock
is traded on the OTC Pink at the time of conversion, then 70% shall automatically adjust to 65% of the lowest closing bid price.</P>

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

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0">The Company may at its option call for
redemption all or part of the Debentures, with the exception of any portion thereof which is the subject of a previously-delivered
notice of conversion, prior to the maturity date for an amount equal to: (i) if the redemption date is 90 days or less from the
date of issuance, 110% of the sum of the principal amount so redeemed plus accrued interest, if any; (ii) if the redemption date
is greater than or equal to 91 days from the date of issuance and less than or equal to 120 days from the date of issuance, 115%
of the sum of the principal amount so redeemed plus accrued interest, if any; (iii) if the redemption date is greater than or equal
to 121 days from the date of issuance and less than or equal to 50 days from the date of issuance, 120% of the sum of the principal
amount so redeemed plus accrued interest, if any; (iv) if the redemption date is greater than or equal to 151 days from the date
of issuance and less than or equal to 180 days from the date of issuance, 130% of the sum of the principal amount so redeemed plus
accrued interest, if any; and (v) if the redemption date is greater than or equal to 181 days from the date of issuance, 140% of
the sum of the principal amount so redeemed plus accrued interest, if any. During the year ending July 31, 2018, the Company redeemed
$120,000 of the principal outstanding, at a redemption price of $156,000. The Company recognized the redemption price as interest
expense during the period.</P>

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


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

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0">The Company analyzed
the Debenture for derivative accounting consideration and determined that the embedded conversion option qualified as a derivative
instrument, due to the variable conversion price. Therefore, as of the year ending July 31, 2018, the company recognized derivative
liability of $112,000 at July 31, 2018, of which $80,000 was recorded as debt discount and will be amortized during the term of
the note, and $32,000 was recorded as derivative loss. The total principal balance outstanding as of July 31, 2018 was $80,000.
I<FONT STYLE="background-color: white">n connection with the execution of the Debenture, we issued&nbsp;250,000 shares of our common
stock to Peak One, the shares were recorded with a relative fair value of $0, the Company also recorded debt discount of $80,000
and will be amortized to interest expense. </FONT></P>

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

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0">The Company issued a
second debenture (the &ldquo;Debenture&rdquo;) to Peak One on July 31, 2018 in the principal amount of $220,000 for a purchase
price of $198,000 and 0% percent stated interest rate. The Company paid Peak One $5,000 for legal and compliance fees, these fees
were deducted from the proceeds at time of issuance. The Company recorded these discounts and cost of $22,000 as a discount to
the Debenture and amortized to interest expense.</P>

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

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0">The Company analyzed
the Debenture for derivative accounting consideration and determined that the embedded conversion option qualified as a derivative
instrument, due to the variable conversion price. As of July 31, 2018, the Company recorded a derivative liability of $189,000
and had an outstanding principal balance of $220,000 I<FONT STYLE="background-color: white">n connection with the execution of
the Debenture, we issued 130,000 shares of our common stock to Peak One, the shares were recorded with a relative fair value of
$3,627 the Company also recorded debt discount of $192,798 and will be amortized to interest expense. </FONT></P>

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

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0">On May 30, 2018, the
Company entered into a securities purchase agreement with Firstfire Global Opportunities Fund, LLC, a Delaware limited liability
company (&ldquo;Firstfire&rdquo;). Under the agreement, we issued Firstfire a $305,556 principal amount of a convertible promissory
note for a cash purchase price of $275,000 (&ldquo;Promissory note&rdquo;), bearing interest at a rate of 6% per annum, with maturity
on the first anniversary of the date of issuance. The Company paid Firstfire $2,500 for legal and compliance fees. The Company
recorded the legal fees and other cost for a total of $33,000 as a discount to the Promissory note and they will be amortized over
the term to interest expense. I<FONT STYLE="background-color: white">n connection with the execution of the securities purchase
agreement, we issued&nbsp;125,000 shares of our common stock to Firstfire as a commitment fee, the shares were recorded with a
relative fair value of $0, the Company also recorded debt discount of $272,500 and will be amortized to interest expense. </FONT></P>

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

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0">The Promissory note provides Firstfire
with the option to convert at any time on or after the 180th calendar day after the issue date, to convert all or any portion of
the then outstanding and unpaid principal amount and interest under the Promissory note into shares of Common Stock of the Company
at a conversion price for each share of Common Stock equal to the lower of (i) $0.50 (the &ldquo;Fixed Conversion Price&rdquo;) ,
or (ii) 65% of the lowest closing bid price of the Company&rsquo;s Common Stock during the twenty (20) consecutive trading day
period immediately preceding the trading day that the Company receives a Notice of Conversion (the &ldquo;Alternate Conversion
Price&rdquo;).</P>

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

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0">The Company may Prepay at any time prior
to the 180th calendar day after the funding of the Promissory note all or part of the outstanding principal balance, with the exception
of any portion thereof which is the subject of a previously-delivered notice of conversion, prior to the maturity date for an amount
equal to: (i) if the prepayment date is 90 days or less from the date of issuance, 105% of the sum of the principal amount to be
prepaid plus accrued interest, if any; (ii) if the prepayment date is greater than or equal to 91 days from the date of issuance
and less than or equal to 120 days from the date of issuance, 110% of the sum of the principal amount to be prepaid plus accrued
interest, if any; (iii) if the prepayment date is greater than or equal to 121 days from the date of issuance and less than or
equal to 180 days from the date of issuance, 115% of the sum of the principal amount to be prepaid plus accrued interest, if any.</P>

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

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0">In the event of
default, the note shall become immediately due and paid in full in an amount (the &ldquo;Default Amount&rdquo;) equal to the principal
amount then outstanding plus accrued interest through the date of full repayment multiplied by 150%. The holder may, at its sole
discretion, determine to accept payment part in Common Stock and part in cash.</P>

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


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

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0">The Company analyzed the Promissory note
for derivative accounting consideration and determined that the embedded conversion option qualified as a derivative instrument,
due to the variable conversion price. Therefore, as of the year ending July 31, 2018, the company recognized a debt discount of
$272,500 and recorded a $58,000 as a loss in derivative liability. In addition, the Company has a derivative liability of $331,000
at July 31, 2018. As of the year the ended July 31, 2018, the principal balance outstanding was $306,000.</P>

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

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0">The future principal payments for the Company&rsquo;s
debts is as follows:</P>

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

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

<TABLE CELLPADDING="0" CELLSPACING="0" STYLE="border-collapse: collapse; width: 100%; font: 10pt Times New Roman, Times, Serif">
<TR STYLE="vertical-align: bottom">
    <TD STYLE="text-align: left; border-bottom: Black 1.5pt solid"><B>FY</B></TD><TD STYLE="padding-bottom: 1.5pt"><B>&nbsp;</B></TD>
    <TD COLSPAN="2" STYLE="text-align: center; border-bottom: Black 1.5pt solid"><B>Payments</B></TD><TD STYLE="padding-bottom: 1.5pt"><B>&nbsp;</B></TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,238,255)">
    <TD STYLE="width: 88%; text-align: left">2019</TD><TD STYLE="width: 1%">&nbsp;</TD>
    <TD STYLE="width: 1%; text-align: left">$</TD><TD STYLE="width: 9%; text-align: right">1,928,501</TD><TD STYLE="width: 1%; text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD STYLE="text-align: left">2020</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">890,083</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,238,255)">
    <TD STYLE="text-align: left">2021</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">361,924</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD STYLE="text-align: left">2022</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">67,114</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,238,255)">
    <TD STYLE="text-align: left; padding-bottom: 1.5pt">2023</TD><TD STYLE="padding-bottom: 1.5pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 1.5pt solid; text-align: left">&nbsp;</TD><TD STYLE="border-bottom: Black 1.5pt solid; text-align: right">23,596</TD><TD STYLE="padding-bottom: 1.5pt; text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD STYLE="text-align: left; padding-bottom: 4pt">Total Principal Payments</TD><TD STYLE="padding-bottom: 4pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 4pt double; text-align: left">$</TD><TD STYLE="border-bottom: Black 4pt double; text-align: right">3,271,218</TD><TD STYLE="padding-bottom: 4pt; text-align: left">&nbsp;</TD></TR>
</TABLE>



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

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

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

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; background-color: white"><B>NOTE 12 &ndash; CAPITAL
LEASES </B></P>

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

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0">The Company entered
into two leases for equipment all of which are classified as capital leases. The Company financed the equipment with a leasing
entity. Under the terms of these transactions, assets with a cost of approximately $37,255 and $60,408, leases were financed under
two separate lease agreements as of the May 2018 and June 2018, respectively. The leases are net leases as all of the costs associated
with the assets such as maintenance, insurance and property taxes are for the account of the Company. Under each of these transactions,
the Company can elect to purchase the assets from the lessor at the end of a fixed term. These terms are for 36 months, with the
first lease payments starting June 20, 2018 and July 20, 2018, respectively and monthly lease principal and interest payments of
$1,176 and $1,856, respectively. The Company will own the equipment at the end of the term. The interest rate under the leases
range from 6.65% to 8.50% per annum. The Company has accounted for its repayment obligations under these transactions as capital
lease obligations. The assets are included in Leased Equipment and Net investment in finance leases and the capital lease obligation
is included in Long-term capital lease obligations and current maturities of capital leases on the accompanying Balance Sheet as
of July 31, 2018.</P>

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

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0">During the year ended July 31, 2018, the
Company made total principal payments of $3,032. The future capital lease payments under the financing agreements are as follows:</P>

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

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

<TABLE CELLPADDING="0" CELLSPACING="0" STYLE="border-collapse: collapse; width: 100%; font: 10pt Times New Roman, Times, Serif">
<TR STYLE="vertical-align: bottom">
    <TD STYLE="border-bottom: Black 1.5pt solid; text-align: left; padding-right: 0; padding-left: 0"><B>Year</B></TD><TD STYLE="padding-bottom: 1.5pt; text-align: center"><B>&nbsp;</B></TD>
    <TD COLSPAN="2" STYLE="text-align: center; border-bottom: Black 1.5pt solid"><B>Amount</B></TD><TD STYLE="padding-bottom: 1.5pt; text-align: center"><B>&nbsp;</B></TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,238,255)">
    <TD STYLE="width: 88%; text-align: left; padding-right: 0; padding-left: 0">2019</TD><TD STYLE="width: 1%">&nbsp;</TD>
    <TD STYLE="width: 1%; text-align: left">$</TD><TD STYLE="width: 9%; text-align: right">36,381</TD><TD STYLE="width: 1%; text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD STYLE="text-align: left; padding-right: 0; padding-left: 0">2020</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">36,381</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,238,255)">
    <TD STYLE="text-align: left; padding-bottom: 1.5pt; padding-right: 0; padding-left: 0">2021</TD><TD STYLE="padding-bottom: 1.5pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 1.5pt solid; text-align: left">&nbsp;</TD><TD STYLE="border-bottom: Black 1.5pt solid; text-align: right">32,152</TD><TD STYLE="padding-bottom: 1.5pt; text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD STYLE="text-align: left; padding-bottom: 4pt; padding-left: 0; padding-right: 0">Total future payments:</TD><TD STYLE="padding-bottom: 4pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 4pt double; text-align: left">$</TD><TD STYLE="border-bottom: Black 4pt double; text-align: right">104,914</TD><TD STYLE="padding-bottom: 4pt; text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,238,255)">
    <TD STYLE="text-align: left; padding-bottom: 1.5pt; padding-left: 0; padding-right: 0">Less: amounts representing interest</TD><TD STYLE="padding-bottom: 1.5pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 1.5pt solid; text-align: left">$</TD><TD STYLE="border-bottom: Black 1.5pt solid; text-align: right">10,622</TD><TD STYLE="padding-bottom: 1.5pt; text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD STYLE="text-align: left; padding-bottom: 1.5pt; padding-left: 0; padding-right: 0">Present value of net minimum lease payments</TD><TD STYLE="padding-bottom: 1.5pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 1.5pt solid; text-align: left">$</TD><TD STYLE="border-bottom: Black 1.5pt solid; text-align: right">94,292</TD><TD STYLE="padding-bottom: 1.5pt; text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,238,255)">
    <TD STYLE="text-align: left; padding-bottom: 1.5pt; padding-left: 0; padding-right: 0">Less current maturities</TD><TD STYLE="padding-bottom: 1.5pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 1.5pt solid; text-align: left">$</TD><TD STYLE="border-bottom: Black 1.5pt solid; text-align: right">30,465</TD><TD STYLE="padding-bottom: 1.5pt; text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD STYLE="text-align: left; padding-bottom: 4pt; padding-left: 0; padding-right: 0">Long-term capital lease obligation</TD><TD STYLE="padding-bottom: 4pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 4pt double; text-align: left">$</TD><TD STYLE="border-bottom: Black 4pt double; text-align: right">63,827</TD><TD STYLE="padding-bottom: 4pt; text-align: left">&nbsp;</TD></TR>
</TABLE>



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

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


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    <DIV STYLE="page-break-before: always; margin-top: 6pt; margin-bottom: 12pt"><P STYLE="margin: 0pt">&nbsp;</P></DIV>
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<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>

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

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">N<B>OTE 13 &ndash; BUSINESS ACQUISITIONS
</B></P>

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

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0">On December 1, 2017,
Shift8 and Synergy Telecom, Inc., a Delaware corporation (&ldquo;Synergy&rdquo;), closed a transaction to acquire all the assets,
assumed all customers, and critical vendor arrangements from Synergy. Shift8 acquired Synergy to increase its customer base and
obtain higher efficiency of its existing infrastructure. Shift8 paid $125,000 upon execution of the agreement, issued 500,000 shares
of common stock with a market value of $175,000, and entered into a promissory note for $125,000 with an effective annual interest
rate of 6% with 5 quarterly payments and a maturity date of February 28, 2019.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 1in">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0">The total purchase price was $425,000,
the acquisition was accounted for under the purchase method of accounting, with Digerati identified as the acquirer. Under the
purchase method of accounting, the aggregate amount of consideration assumed by Digerati was allocated to customer contracts acquired,
software licenses, and goodwill based on their fair values as of July 31, 2018.</P>

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

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0">The following information summarizes the
allocation of the fair values assigned to the assets. The allocation of fair values is based on an extensive analysis and is subject
to changes in the future during the measurement period.</P>

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

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

<TABLE CELLPADDING="0" CELLSPACING="0" STYLE="border-collapse: collapse; width: 100%; font: 10pt Times New Roman, Times, Serif">
<TR STYLE="vertical-align: bottom">
    <TD STYLE="padding-left: 0.125in; text-indent: -0.125in">&nbsp;</TD><TD STYLE="font-weight: bold; padding-bottom: 1.5pt">&nbsp;</TD>
    <TD COLSPAN="2" STYLE="font-weight: bold; text-align: center; border-bottom: Black 1.5pt solid">Synergy</TD><TD STYLE="padding-bottom: 1.5pt; font-weight: bold">&nbsp;</TD><TD STYLE="font-weight: bold; padding-bottom: 1.5pt">&nbsp;</TD>
    <TD COLSPAN="2" STYLE="font-weight: bold; border-bottom: Black 1.5pt solid; text-align: center">Useful life (years)</TD><TD STYLE="padding-bottom: 1.5pt; font-weight: bold">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,238,255)">
    <TD STYLE="width: 76%; text-align: left; padding-left: 0.125in; text-indent: -0.125in">Customer relatiosnhips</TD><TD STYLE="width: 1%">&nbsp;</TD>
    <TD STYLE="width: 1%; text-align: left">$</TD><TD STYLE="width: 9%; text-align: right">40,000</TD><TD STYLE="width: 1%; text-align: left">&nbsp;</TD><TD STYLE="width: 1%">&nbsp;</TD>
    <TD STYLE="width: 1%; text-align: left">&nbsp;</TD><TD STYLE="width: 9%; text-align: center">5</TD><TD STYLE="width: 1%; text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD STYLE="text-align: left; padding-left: 0.125in; text-indent: -0.125in">License - software</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">105,000</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: center">3</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,238,255)">
    <TD STYLE="padding-bottom: 1.5pt; padding-left: 0.125in; text-indent: -0.125in">Goodwill</TD><TD STYLE="padding-bottom: 1.5pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 1.5pt solid; text-align: left">&nbsp;</TD><TD STYLE="border-bottom: Black 1.5pt solid; text-align: right">280,000</TD><TD STYLE="padding-bottom: 1.5pt; text-align: left">&nbsp;</TD><TD STYLE="padding-bottom: 1.5pt">&nbsp;</TD>
    <TD STYLE="padding-bottom: 1.5pt; text-align: left">&nbsp;</TD><TD STYLE="padding-bottom: 1.5pt; text-align: center">-</TD><TD STYLE="padding-bottom: 1.5pt; text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD STYLE="padding-bottom: 1.5pt; padding-left: 0.125in; text-indent: -0.125in">Total Purchase price</TD><TD STYLE="padding-bottom: 1.5pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 1.5pt solid; text-align: left">$</TD><TD STYLE="border-bottom: Black 1.5pt solid; text-align: right">425,000</TD><TD STYLE="padding-bottom: 1.5pt; text-align: left">&nbsp;</TD><TD STYLE="padding-bottom: 1.5pt">&nbsp;</TD>
    <TD STYLE="padding-bottom: 1.5pt; text-align: left">&nbsp;</TD><TD STYLE="padding-bottom: 1.5pt; text-align: center">&nbsp;</TD><TD STYLE="padding-bottom: 1.5pt; text-align: left">&nbsp;</TD></TR>
</TABLE>



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

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

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0">The Company incurred approximately $10,000
in costs associated with the acquisition. These included legal, and accounting. The Company expensed these costs during the year
ended July 31, 2018.</P>

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

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0">Additionally, on May 2, 2018, the Company
closed on the Merger Agreement with T3 Communications, Inc. to increase its customer base and obtain higher efficiency of its existing
infrastructure.</P>

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

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0">The total purchase price was $3,211,945,
paid in cash upon closing, the acquisition was accounted for under the purchase method of accounting, with the Company identified
as the acquirer. Under the purchase method of accounting, the aggregate amount of consideration assumed by the Company was allocated
to cash, customer contracts acquired, current assets, property plant and equipment and assumed payables based on their estimated
fair values as of May 2, 2018. Allocation of the purchase price is preliminary and based on the best estimates of management.</P>

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

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0">The allocation of fair values is based
on an extensive analysis and is subject to changes in the future during the measurement period.</P>

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

<TABLE CELLPADDING="0" CELLSPACING="0" STYLE="border-collapse: collapse; width: 100%; font: 10pt Times New Roman, Times, Serif">
<TR STYLE="vertical-align: bottom">
    <TD><B>&nbsp;</B></TD><TD><B>&nbsp;</B></TD>
    <TD COLSPAN="2" STYLE="text-align: center"><B>(in thousands)</B></TD><TD><B>&nbsp;</B></TD></TR>
<TR STYLE="vertical-align: bottom">
    <TD>&nbsp;</TD><TD STYLE="font-weight: bold; padding-bottom: 1.5pt">&nbsp;</TD>
    <TD COLSPAN="2" STYLE="font-weight: bold; text-align: center; border-bottom: Black 1.5pt solid">T3</TD><TD STYLE="padding-bottom: 1.5pt; font-weight: bold">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom">
    <TD>&nbsp;</TD><TD>&nbsp;</TD>
    <TD COLSPAN="2" STYLE="text-align: justify">&nbsp;</TD><TD>&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,238,255)">
    <TD STYLE="width: 88%">Cash</TD><TD STYLE="width: 1%">&nbsp;</TD>
    <TD STYLE="width: 1%; text-align: left">$</TD><TD STYLE="width: 9%; text-align: right">250</TD><TD STYLE="width: 1%; text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD STYLE="color: black; text-align: left">Accounts receivable &amp; other current assets</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">367</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,238,255)">
    <TD STYLE="color: black; text-align: left">Intangible assets and Goodwill</TD><TD STYLE="color: black">&nbsp;</TD>
    <TD STYLE="color: black; text-align: left">&nbsp;</TD><TD STYLE="color: black; text-align: right">2,835</TD><TD STYLE="color: black; text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD STYLE="color: black; text-align: left">Property and equipment, net</TD><TD STYLE="color: black">&nbsp;</TD>
    <TD STYLE="color: black; text-align: left">&nbsp;</TD><TD STYLE="color: black; text-align: right">568</TD><TD STYLE="color: black; text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,238,255)">
    <TD STYLE="color: black; text-align: left">Other Assets</TD><TD STYLE="color: black">&nbsp;</TD>
    <TD STYLE="color: black; text-align: left">&nbsp;</TD><TD STYLE="color: black; text-align: right">140</TD><TD STYLE="color: black; text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD STYLE="padding-bottom: 1.5pt">&nbsp;</TD><TD STYLE="padding-bottom: 1.5pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 1.5pt solid; text-align: left">&nbsp;</TD><TD STYLE="border-bottom: Black 1.5pt solid; text-align: right">&nbsp;</TD><TD STYLE="padding-bottom: 1.5pt; text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,238,255)">
    <TD STYLE="color: black; text-align: left">Total identifiable net assets</TD><TD STYLE="color: black">&nbsp;</TD>
    <TD STYLE="color: black; text-align: left">$</TD><TD STYLE="color: black; text-align: right">4,160</TD><TD STYLE="color: black; 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></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,238,255)">
    <TD STYLE="color: black; text-align: left">Less: liabilities assumed</TD><TD STYLE="color: black">&nbsp;</TD>
    <TD STYLE="color: black; text-align: left">&nbsp;</TD><TD STYLE="color: black; text-align: right">(948</TD><TD STYLE="color: black; text-align: left">)</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD STYLE="padding-bottom: 1.5pt">&nbsp;</TD><TD STYLE="color: black; padding-bottom: 1.5pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 1.5pt solid; color: black; text-align: left">&nbsp;</TD><TD STYLE="border-bottom: Black 1.5pt solid; color: black; text-align: right">&nbsp;</TD><TD STYLE="padding-bottom: 1.5pt; color: black; text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,238,255)">
    <TD STYLE="color: black; padding-bottom: 4pt">Total Purchase price</TD><TD STYLE="color: black; padding-bottom: 4pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 4pt double; color: black; text-align: left">$</TD><TD STYLE="border-bottom: Black 4pt double; color: black; text-align: right">3,212</TD><TD STYLE="padding-bottom: 4pt; color: black; text-align: left">&nbsp;</TD></TR>
</TABLE>

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


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

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0">The following table summarizes the cost
of amortizable intangible assets related to the acquisition:</P>

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

<TABLE CELLPADDING="0" CELLSPACING="0" STYLE="border-collapse: collapse; width: 100%; font: 10pt Times New Roman, Times, Serif">
<TR STYLE="vertical-align: bottom">
    <TD>&nbsp;</TD><TD STYLE="padding-bottom: 1.5pt">&nbsp;</TD>
    <TD COLSPAN="2" STYLE="text-align: center; border-bottom: Black 1.5pt solid"><P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center"><B>Cost </B></P> <P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center"><B>(in thousands) </B></P></TD><TD STYLE="padding-bottom: 1.5pt">&nbsp;</TD><TD STYLE="font-weight: bold; padding-bottom: 1.5pt">&nbsp;</TD>
    <TD COLSPAN="2" STYLE="font-weight: bold; text-align: center; border-bottom: Black 1.5pt solid">Useful life (years)</TD><TD STYLE="padding-bottom: 1.5pt; font-weight: bold">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,238,255)">
    <TD STYLE="width: 76%; text-align: left">Customer relationships</TD><TD STYLE="width: 1%">&nbsp;</TD>
    <TD STYLE="width: 1%; text-align: left">$</TD><TD STYLE="width: 9%; text-align: right">1,480</TD><TD STYLE="width: 1%; text-align: left">&nbsp;</TD><TD STYLE="width: 1%">&nbsp;</TD>
    <TD STYLE="width: 1%; text-align: left; text-decoration: none"></TD><TD STYLE="width: 9%; text-align: center">7</TD><TD STYLE="width: 1%; text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD STYLE="text-align: left">Marketing &amp; Non-compete</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">800</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left"><U></U></TD><TD STYLE="text-align: center">5</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,238,255)">
    <TD STYLE="padding-bottom: 1.5pt">Goodwill</TD><TD STYLE="padding-bottom: 1.5pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 1.5pt solid; text-align: left">&nbsp;</TD><TD STYLE="border-bottom: Black 1.5pt solid; text-align: right">601</TD><TD STYLE="padding-bottom: 1.5pt; text-align: left">&nbsp;</TD><TD STYLE="padding-bottom: 1.5pt">&nbsp;</TD>
    <TD STYLE="padding-bottom: 1.5pt; text-align: left"></TD><TD STYLE="padding-bottom: 1.5pt; text-align: center">-</TD><TD STYLE="padding-bottom: 1.5pt; text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD STYLE="padding-bottom: 4pt">Total</TD><TD STYLE="padding-bottom: 4pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 4pt double; text-align: left">$</TD><TD STYLE="border-bottom: Black 4pt double; text-align: right">2,881</TD><TD STYLE="padding-bottom: 4pt; text-align: left">&nbsp;</TD><TD STYLE="padding-bottom: 4pt">&nbsp;</TD>
    <TD STYLE="padding-bottom: 4pt; text-align: left"></TD><TD STYLE="padding-bottom: 4pt; text-align: center">&nbsp;</TD><TD STYLE="padding-bottom: 4pt; text-align: left">&nbsp;</TD></TR>
</TABLE>

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

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0">The Company incurred approximately $160,000
in costs associated with the acquisition. These included legal, and accounting. The Company expensed these costs during the year
ended July 31, 2018.</P>

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

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0"><B><I>Proforma</I></B></P>

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

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0">The following is the unaudited proforma
results of operations for both acquisitions for the years ended July 31, 2018 and 2017 as if the acquisition occurred on August
1, 2016. The proforma results of operations are presented for informational purposes only and are not indicative of the results
of operations that would have been achieved if the acquisition had taken place on August 1, 2016, or of results that may occur
in the future.</P>

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

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

<TABLE CELLPADDING="0" CELLSPACING="0" STYLE="border-collapse: collapse; width: 100%; font: 10pt Times New Roman, Times, Serif">
<TR STYLE="vertical-align: bottom">
    <TD><B>&nbsp;</B></TD><TD STYLE="padding-bottom: 1.5pt"><B>&nbsp;</B></TD>
    <TD COLSPAN="6" STYLE="text-align: center; border-bottom: Black 1.5pt solid"><B>For the Years Ended <BR> July 31,</B></TD><TD STYLE="padding-bottom: 1.5pt"><B>&nbsp;</B></TD></TR>
<TR STYLE="vertical-align: bottom">
    <TD><B>&nbsp;</B></TD><TD STYLE="padding-bottom: 1.5pt"><B>&nbsp;</B></TD>
    <TD COLSPAN="2" STYLE="text-align: center; border-bottom: Black 1.5pt solid"><B>2018</B></TD><TD STYLE="padding-bottom: 1.5pt"><B>&nbsp;</B></TD><TD STYLE="padding-bottom: 1.5pt"><B>&nbsp;</B></TD>
    <TD COLSPAN="2" STYLE="text-align: center; border-bottom: Black 1.5pt solid"><B>2017</B></TD><TD STYLE="padding-bottom: 1.5pt"><B>&nbsp;</B></TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,238,255)">
    <TD STYLE="width: 76%">Revenue</TD><TD STYLE="width: 1%">&nbsp;</TD>
    <TD STYLE="width: 1%; text-align: left">$</TD><TD STYLE="width: 9%; text-align: right">5,674</TD><TD STYLE="width: 1%; text-align: left">&nbsp;</TD><TD STYLE="width: 1%">&nbsp;</TD>
    <TD STYLE="width: 1%; text-align: left">$</TD><TD STYLE="width: 9%; text-align: right">5,729</TD><TD STYLE="width: 1%; text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD STYLE="text-align: left">Loss from operations</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">8,705</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">4,785</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,238,255)">
    <TD STYLE="text-align: left; padding-bottom: 1.5pt">Net Income (loss)</TD><TD STYLE="padding-bottom: 1.5pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 1.5pt solid; text-align: left">&nbsp;</TD><TD STYLE="border-bottom: Black 1.5pt solid; text-align: right">(3,031</TD><TD STYLE="padding-bottom: 1.5pt; text-align: left">)</TD><TD STYLE="padding-bottom: 1.5pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 1.5pt solid; text-align: left">&nbsp;</TD><TD STYLE="border-bottom: Black 1.5pt solid; text-align: right">944</TD><TD STYLE="padding-bottom: 1.5pt; text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD STYLE="text-align: left; padding-bottom: 4pt">Earnings (loss) per common shares outstanding - Basic and Diluted</TD><TD STYLE="padding-bottom: 4pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 4pt double; text-align: left">$</TD><TD STYLE="border-bottom: Black 4pt double; text-align: right">(0.34</TD><TD STYLE="padding-bottom: 4pt; text-align: left">)</TD><TD STYLE="padding-bottom: 4pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 4pt double; text-align: left">$</TD><TD STYLE="border-bottom: Black 4pt double; text-align: right">0.14</TD><TD STYLE="padding-bottom: 4pt; text-align: left">&nbsp;</TD></TR>
</TABLE>



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

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



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

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

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0in"><B>NOTE 14 &ndash; NONCONTROLLING
INTEREST </B></P>

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

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0">On May 1, 2018, Shift8
Technologies, Inc. (&ldquo;Shift8&rdquo;) entered into a Stock Purchase Agreement (&rsquo;SPA&rdquo;), whereby in an exchange for $250,000,
Shift8 agreed to sell to the buyer 199,900 shares of common stock equivalent to 19.99% of the issued and outstanding common share
of Shift8 Technologies, Inc. The $250,000 of the cash received under this transaction was recognized as an adjustment to the carrying
amount of the noncontrolling interest and as an increase in additional paid-in capital in Shift8. At the option of the Company,
and for a period of five years following the date of the SPA, the 199,900 shares of common stock in Shift8 may be converted into
Common Stock of Digerati at a ratio of 3.4 shares of DTGI Common stock for every one (1) share of Shift8 at any time after the
DTGI Common Stock has a current market price of $1.50 or more per share for 20 consecutive trading days. For the year ending July
31, 2018, the Company accounted for a noncontrolling interest of $57,000. Additionally, one of the buyers serves as President,
CEO and Board Member of T3 Communications, Inc., one of our operating subsidiaries.</P>

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


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

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><B>NOTE 15 &ndash; MISCELLANEOUS GAIN </B></P>

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

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0">The Company received a tax refund in July
2015. The Company recorded the funds as an accrued liability until such time as it could determine the proper accounting for the
refund. Subsequent to its receipt, management has determined that the Company is the legal owner of the refund which has been recorded
as a miscellaneous gain during fiscal 2017. The refund did not result from taxes paid by the Company and will not be taxed as it
originated from the Internal Revenue Service.</P>

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

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><B>NOTE 16 &ndash; LOSS ON DISPOSAL OF
UNPROVEN OIL AND GAS PROPERTIES&nbsp;</B></P>

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

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0">On February 29, 2016 Flagship Energy Company
(&ldquo;Flagship&rdquo;), a wholly-owned subsidiary of Digerati, entered into an Agreement with a Texas-based contract-for-hire oil
and gas operator (&ldquo;Operator&rdquo;). Under the Agreement, Flagship utilized the Operator for the drilling, completion and
the initial operations of a shallow oil and gas well in conjunction with the purchase of 100% of Operator&rsquo;s working interest
and 80% of its Net Revenue Interest. Under the Agreement, the Operator agreed to transfer all field-level operations and assign
100% of a certain oil, gas and mineral lease to Flagship upon demand, which included a tract of land located in South Texas. Additionally,
Flagship entered into a Joint Operating Agreement (&ldquo;JOA&rdquo;) with Operator, whereby the parties agreed to develop the oil
and gas well or wells for the production and retrieval of oil and gas commodities as provided for in the oil, gas and mineral lease.
&nbsp;</P>

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

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0">During the fiscal year ended July 31, 2017
the Company recognized a loss on disposal of unproven oil and gas properties of $248,000 for the total capitalized investment amount
in the oil and gas properties.</P>

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

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><B>NOTE 17 &ndash; SUBSEQUENT EVENTS </B></P>

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

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0">On August 1, 2018, the
Company secured $40,000 from an accredited investor under a private placement and issued 80,000 shares of its common stock at a
price of $0.50 per share and warrants to purchase an additional 15,000 shares of its common stock at an exercise price of $0.50
per share. We determined that the warrants issued in connection with the private placement were equity instruments and did not
represent derivative instruments.</P>

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

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0">On October 12, 2018,
the Company entered into a Promissory Note (the &ldquo;Note&rdquo;) for $25,000, bearing interest at a rate of 8% per annum, with
maturity date of November 12, 2019. In conjunction with the Note, the Company issued 140,000 common shares, the shares vested at
time of issuance. The relative fair market value of the common shares at time of issuance was approximately $31,000 and was recognized
as a discount on the promissory notes, the company will amortize the fair market value as interest expense over the term of the
note.</P>

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

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0">On October 18, 2018,
the Company entered into a Promissory Note (the &ldquo;Note&rdquo;) for $25,000, bearing interest at a rate of 8% per annum, with
maturity date of November 18, 2019. In conjunction with the Note, the Company issued 100,000 common shares, the shares vested at
time of issuance. The relative fair market value of the common shares at time of issuance was approximately $25,000 and was recognized
as a discount on the promissory notes, the company will amortize the fair market value as interest expense over the term of the
note.</P>

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

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0">On October 22, 2018,
the Company entered into a Promissory Note (the &ldquo;Note&rdquo;) for $50,000, bearing interest at a rate of 8% per annum, with
maturity date of December 31, 2019. The promissory note is secured by a Pledge and Escrow Agreement, whereby the Company agreed
to pledge rights to a collateral due under certain Agreement.</P>

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

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<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&nbsp;<FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt"><B>&nbsp;
&nbsp;</B> &nbsp; &nbsp;</FONT></P>

<P STYLE="text-align: center; font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt"><FONT STYLE="font: 10pt Times New Roman, Times, Serif"><A NAME="ff_033"></A>DIGERATI TECHNOLOGIES, INC. AND SUBSIDIARIES</FONT></P>

<P STYLE="text-align: center; font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt"><FONT STYLE="font: 10pt Times New Roman, Times, Serif">CONSOLIDATED BALANCE SHEETS</FONT></P>

<P STYLE="text-align: center; font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt"><FONT STYLE="font: 10pt Times New Roman, Times, Serif">(In thousands, unaudited)</FONT></P>



<P STYLE="margin: 0; font: 10pt Times New Roman, Times, Serif"><FONT STYLE="font: 10pt Times New Roman, Times, Serif">&nbsp;</FONT></P>

<TABLE CELLPADDING="0" CELLSPACING="0" STYLE="border-collapse: collapse; width: 100%; font: 10pt Times New Roman, Times, Serif">
<TR STYLE="vertical-align: bottom">
    <TD STYLE="font: 10pt Times New Roman, Times, Serif">&nbsp;</TD><TD STYLE="font: 10pt Times New Roman, Times, Serif">&nbsp;</TD>
    <TD COLSPAN="2" STYLE="font: 10pt Times New Roman, Times, Serif; text-align: center">April 30,</TD><TD STYLE="font: 10pt Times New Roman, Times, Serif">&nbsp;</TD><TD STYLE="font: 10pt Times New Roman, Times, Serif">&nbsp;</TD>
    <TD COLSPAN="2" STYLE="font: 10pt Times New Roman, Times, Serif; text-align: center">July 31,</TD><TD STYLE="font: 10pt Times New Roman, Times, Serif">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom">
    <TD STYLE="font: 10pt Times New Roman, Times, Serif">&nbsp;</TD><TD STYLE="font: 10pt Times New Roman, Times, Serif; padding-bottom: 1.5pt">&nbsp;</TD>
    <TD COLSPAN="2" STYLE="font: 10pt Times New Roman, Times, Serif; text-align: center; border-bottom: Black 1.5pt solid">2019</TD><TD STYLE="padding-bottom: 1.5pt; font: 10pt Times New Roman, Times, Serif">&nbsp;</TD><TD STYLE="font: 10pt Times New Roman, Times, Serif; padding-bottom: 1.5pt">&nbsp;</TD>
    <TD COLSPAN="2" STYLE="font: 10pt Times New Roman, Times, Serif; text-align: center; border-bottom: Black 1.5pt solid">2018</TD><TD STYLE="padding-bottom: 1.5pt; font: 10pt Times New Roman, Times, Serif">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom">
    <TD STYLE="font: 10pt Times New Roman, Times, Serif"><FONT STYLE="font-size: 7pt">&nbsp;</FONT></TD><TD STYLE="font: 10pt Times New Roman, Times, Serif"><FONT STYLE="font-size: 7pt">&nbsp;</FONT></TD>
    <TD COLSPAN="2" STYLE="font: 10pt Times New Roman, Times, Serif; text-align: center"><FONT STYLE="font-size: 7pt">&nbsp;</FONT></TD><TD STYLE="font: 10pt Times New Roman, Times, Serif"><FONT STYLE="font-size: 7pt">&nbsp;</FONT></TD><TD STYLE="font: 10pt Times New Roman, Times, Serif"><FONT STYLE="font-size: 7pt">&nbsp;</FONT></TD>
    <TD COLSPAN="2" STYLE="font: 10pt Times New Roman, Times, Serif; text-align: center"><FONT STYLE="font-size: 7pt">&nbsp;</FONT></TD><TD STYLE="font: 10pt Times New Roman, Times, Serif"><FONT STYLE="font-size: 7pt">&nbsp;</FONT></TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD STYLE="font: 10pt Times New Roman, Times, Serif; text-decoration: underline">ASSETS</TD><TD STYLE="font: 10pt Times New Roman, Times, Serif">&nbsp;</TD>
    <TD STYLE="font: 10pt Times New Roman, Times, Serif; text-align: left">&nbsp;</TD><TD STYLE="font: 10pt Times New Roman, Times, Serif; text-align: right">&nbsp;</TD><TD STYLE="font: 10pt Times New Roman, Times, Serif; text-align: left">&nbsp;</TD><TD STYLE="font: 10pt Times New Roman, Times, Serif">&nbsp;</TD>
    <TD STYLE="font: 10pt Times New Roman, Times, Serif; text-align: left">&nbsp;</TD><TD STYLE="font: 10pt Times New Roman, Times, Serif; text-align: right">&nbsp;</TD><TD STYLE="font: 10pt Times New Roman, Times, Serif; text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD STYLE="font: 10pt Times New Roman, Times, Serif; text-align: left">CURRENT ASSETS:</TD><TD STYLE="font: 10pt Times New Roman, Times, Serif">&nbsp;</TD>
    <TD STYLE="font: 10pt Times New Roman, Times, Serif; text-align: left">&nbsp;</TD><TD STYLE="font: 10pt Times New Roman, Times, Serif; text-align: right">&nbsp;</TD><TD STYLE="font: 10pt Times New Roman, Times, Serif; text-align: left">&nbsp;</TD><TD STYLE="font: 10pt Times New Roman, Times, Serif">&nbsp;</TD>
    <TD STYLE="font: 10pt Times New Roman, Times, Serif; text-align: left">&nbsp;</TD><TD STYLE="font: 10pt Times New Roman, Times, Serif; text-align: right">&nbsp;</TD><TD STYLE="font: 10pt Times New Roman, Times, Serif; text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,238,255)">
    <TD STYLE="width: 76%; font: 10pt Times New Roman, Times, Serif; text-align: left">Cash and cash equivalents</TD><TD STYLE="width: 1%; font: 10pt Times New Roman, Times, Serif">&nbsp;</TD>
    <TD STYLE="width: 1%; font: 10pt Times New Roman, Times, Serif; text-align: left">$</TD><TD STYLE="width: 9%; font: 10pt Times New Roman, Times, Serif; text-align: right">460</TD><TD STYLE="width: 1%; font: 10pt Times New Roman, Times, Serif; text-align: left">&nbsp;</TD><TD STYLE="width: 1%; font: 10pt Times New Roman, Times, Serif">&nbsp;</TD>
    <TD STYLE="width: 1%; font: 10pt Times New Roman, Times, Serif; text-align: left">$</TD><TD STYLE="width: 9%; font: 10pt Times New Roman, Times, Serif; text-align: right">388</TD><TD STYLE="width: 1%; font: 10pt Times New Roman, Times, Serif; text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD STYLE="font: 10pt Times New Roman, Times, Serif; text-align: left">Accounts receivable, net</TD><TD STYLE="font: 10pt Times New Roman, Times, Serif">&nbsp;</TD>
    <TD STYLE="font: 10pt Times New Roman, Times, Serif; text-align: left">&nbsp;</TD><TD STYLE="font: 10pt Times New Roman, Times, Serif; text-align: right">245</TD><TD STYLE="font: 10pt Times New Roman, Times, Serif; text-align: left">&nbsp;</TD><TD STYLE="font: 10pt Times New Roman, Times, Serif">&nbsp;</TD>
    <TD STYLE="font: 10pt Times New Roman, Times, Serif; text-align: left">&nbsp;</TD><TD STYLE="font: 10pt Times New Roman, Times, Serif; text-align: right">229</TD><TD STYLE="font: 10pt Times New Roman, Times, Serif; text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,238,255)">
    <TD STYLE="font: 10pt Times New Roman, Times, Serif; text-align: left">Prepaid and other current assets</TD><TD STYLE="font: 10pt Times New Roman, Times, Serif">&nbsp;</TD>
    <TD STYLE="font: 10pt Times New Roman, Times, Serif; text-align: left">&nbsp;</TD><TD STYLE="font: 10pt Times New Roman, Times, Serif; text-align: right">80</TD><TD STYLE="font: 10pt Times New Roman, Times, Serif; text-align: left">&nbsp;</TD><TD STYLE="font: 10pt Times New Roman, Times, Serif">&nbsp;</TD>
    <TD STYLE="font: 10pt Times New Roman, Times, Serif; text-align: left">&nbsp;</TD><TD STYLE="font: 10pt Times New Roman, Times, Serif; text-align: right">124</TD><TD STYLE="font: 10pt Times New Roman, Times, Serif; text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD STYLE="font: 10pt Times New Roman, Times, Serif; padding-bottom: 1.5pt">Deposits</TD><TD STYLE="font: 10pt Times New Roman, Times, Serif; padding-bottom: 1.5pt">&nbsp;</TD>
    <TD STYLE="font: 10pt Times New Roman, Times, Serif; text-align: left; border-bottom: Black 1.5pt solid">&nbsp;</TD><TD STYLE="font: 10pt Times New Roman, Times, Serif; text-align: right; border-bottom: Black 1.5pt solid">55</TD><TD STYLE="font: 10pt Times New Roman, Times, Serif; text-align: left; padding-bottom: 1.5pt">&nbsp;</TD><TD STYLE="font: 10pt Times New Roman, Times, Serif; padding-bottom: 1.5pt">&nbsp;</TD>
    <TD STYLE="font: 10pt Times New Roman, Times, Serif; text-align: left; border-bottom: Black 1.5pt solid">&nbsp;</TD><TD STYLE="font: 10pt Times New Roman, Times, Serif; text-align: right; border-bottom: Black 1.5pt solid">-</TD><TD STYLE="font: 10pt Times New Roman, Times, Serif; text-align: left; padding-bottom: 1.5pt">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,238,255)">
    <TD STYLE="font: 10pt Times New Roman, Times, Serif"><FONT STYLE="font-size: 7pt">&nbsp;</FONT></TD><TD STYLE="font: 10pt Times New Roman, Times, Serif"><FONT STYLE="font-size: 7pt">&nbsp;</FONT></TD>
    <TD STYLE="font: 10pt Times New Roman, Times, Serif; text-align: left"><FONT STYLE="font-size: 7pt">&nbsp;</FONT></TD><TD STYLE="font: 10pt Times New Roman, Times, Serif; text-align: right"><FONT STYLE="font-size: 7pt">&nbsp;</FONT></TD><TD STYLE="font: 10pt Times New Roman, Times, Serif; text-align: left"><FONT STYLE="font-size: 7pt">&nbsp;</FONT></TD><TD STYLE="font: 10pt Times New Roman, Times, Serif"><FONT STYLE="font-size: 7pt">&nbsp;</FONT></TD>
    <TD STYLE="font: 10pt Times New Roman, Times, Serif; text-align: left"><FONT STYLE="font-size: 7pt">&nbsp;</FONT></TD><TD STYLE="font: 10pt Times New Roman, Times, Serif; text-align: right"><FONT STYLE="font-size: 7pt">&nbsp;</FONT></TD><TD STYLE="font: 10pt Times New Roman, Times, Serif; text-align: left"><FONT STYLE="font-size: 7pt">&nbsp;</FONT></TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD STYLE="font: 10pt Times New Roman, Times, Serif; text-align: left; padding-bottom: 1.5pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Total current assets</TD><TD STYLE="font: 10pt Times New Roman, Times, Serif; padding-bottom: 1.5pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 1.5pt solid; font: 10pt Times New Roman, Times, Serif; text-align: left">&nbsp;</TD><TD STYLE="border-bottom: Black 1.5pt solid; font: 10pt Times New Roman, Times, Serif; text-align: right">840</TD><TD STYLE="padding-bottom: 1.5pt; font: 10pt Times New Roman, Times, Serif; text-align: left">&nbsp;</TD><TD STYLE="font: 10pt Times New Roman, Times, Serif; padding-bottom: 1.5pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 1.5pt solid; font: 10pt Times New Roman, Times, Serif; text-align: left">&nbsp;</TD><TD STYLE="border-bottom: Black 1.5pt solid; font: 10pt Times New Roman, Times, Serif; text-align: right">741</TD><TD STYLE="padding-bottom: 1.5pt; font: 10pt Times New Roman, Times, Serif; text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,238,255)">
    <TD STYLE="font: 10pt Times New Roman, Times, Serif"><FONT STYLE="font-size: 7pt">&nbsp;</FONT></TD><TD STYLE="font: 10pt Times New Roman, Times, Serif"><FONT STYLE="font-size: 7pt">&nbsp;</FONT></TD>
    <TD STYLE="font: 10pt Times New Roman, Times, Serif; text-align: left"><FONT STYLE="font-size: 7pt">&nbsp;</FONT></TD><TD STYLE="font: 10pt Times New Roman, Times, Serif; text-align: right"><FONT STYLE="font-size: 7pt">&nbsp;</FONT></TD><TD STYLE="font: 10pt Times New Roman, Times, Serif; text-align: left"><FONT STYLE="font-size: 7pt">&nbsp;</FONT></TD><TD STYLE="font: 10pt Times New Roman, Times, Serif"><FONT STYLE="font-size: 7pt">&nbsp;</FONT></TD>
    <TD STYLE="font: 10pt Times New Roman, Times, Serif; text-align: left"><FONT STYLE="font-size: 7pt">&nbsp;</FONT></TD><TD STYLE="font: 10pt Times New Roman, Times, Serif; text-align: right"><FONT STYLE="font-size: 7pt">&nbsp;</FONT></TD><TD STYLE="font: 10pt Times New Roman, Times, Serif; text-align: left"><FONT STYLE="font-size: 7pt">&nbsp;</FONT></TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD STYLE="font: 10pt Times New Roman, Times, Serif; text-align: left">LONG-TERM ASSETS:</TD><TD STYLE="font: 10pt Times New Roman, Times, Serif">&nbsp;</TD>
    <TD STYLE="font: 10pt Times New Roman, Times, Serif; text-align: left">&nbsp;</TD><TD STYLE="font: 10pt Times New Roman, Times, Serif; text-align: right">&nbsp;</TD><TD STYLE="font: 10pt Times New Roman, Times, Serif; text-align: left">&nbsp;</TD><TD STYLE="font: 10pt Times New Roman, Times, Serif">&nbsp;</TD>
    <TD STYLE="font: 10pt Times New Roman, Times, Serif; text-align: left">&nbsp;</TD><TD STYLE="font: 10pt Times New Roman, Times, Serif; text-align: right">&nbsp;</TD><TD STYLE="font: 10pt Times New Roman, Times, Serif; text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,238,255)">
    <TD STYLE="font: 10pt Times New Roman, Times, Serif; text-align: left">Intangible assets, net</TD><TD STYLE="font: 10pt Times New Roman, Times, Serif">&nbsp;</TD>
    <TD STYLE="font: 10pt Times New Roman, Times, Serif; text-align: left">&nbsp;</TD><TD STYLE="font: 10pt Times New Roman, Times, Serif; text-align: right">2,736</TD><TD STYLE="font: 10pt Times New Roman, Times, Serif; text-align: left">&nbsp;</TD><TD STYLE="font: 10pt Times New Roman, Times, Serif">&nbsp;</TD>
    <TD STYLE="font: 10pt Times New Roman, Times, Serif; text-align: left">&nbsp;</TD><TD STYLE="font: 10pt Times New Roman, Times, Serif; text-align: right">3,046</TD><TD STYLE="font: 10pt Times New Roman, Times, Serif; text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD STYLE="font: 10pt Times New Roman, Times, Serif; text-align: left">Property and equipment, net</TD><TD STYLE="font: 10pt Times New Roman, Times, Serif">&nbsp;</TD>
    <TD STYLE="font: 10pt Times New Roman, Times, Serif; text-align: left">&nbsp;</TD><TD STYLE="font: 10pt Times New Roman, Times, Serif; text-align: right">535</TD><TD STYLE="font: 10pt Times New Roman, Times, Serif; text-align: left">&nbsp;</TD><TD STYLE="font: 10pt Times New Roman, Times, Serif">&nbsp;</TD>
    <TD STYLE="font: 10pt Times New Roman, Times, Serif; text-align: left">&nbsp;</TD><TD STYLE="font: 10pt Times New Roman, Times, Serif; text-align: right">713</TD><TD STYLE="font: 10pt Times New Roman, Times, Serif; text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,238,255)">
    <TD STYLE="font: 10pt Times New Roman, Times, Serif; text-align: left; padding-bottom: 1.5pt">Other assets</TD><TD STYLE="font: 10pt Times New Roman, Times, Serif; padding-bottom: 1.5pt">&nbsp;</TD>
    <TD STYLE="font: 10pt Times New Roman, Times, Serif; text-align: left; border-bottom: Black 1.5pt solid">&nbsp;</TD><TD STYLE="font: 10pt Times New Roman, Times, Serif; text-align: right; border-bottom: Black 1.5pt solid">58</TD><TD STYLE="font: 10pt Times New Roman, Times, Serif; text-align: left; padding-bottom: 1.5pt">&nbsp;</TD><TD STYLE="font: 10pt Times New Roman, Times, Serif; padding-bottom: 1.5pt">&nbsp;</TD>
    <TD STYLE="font: 10pt Times New Roman, Times, Serif; text-align: left; border-bottom: Black 1.5pt solid">&nbsp;</TD><TD STYLE="font: 10pt Times New Roman, Times, Serif; text-align: right; border-bottom: Black 1.5pt solid">59</TD><TD STYLE="font: 10pt Times New Roman, Times, Serif; text-align: left; padding-bottom: 1.5pt">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD STYLE="font: 10pt Times New Roman, Times, Serif"><FONT STYLE="font-size: 7pt">&nbsp;</FONT></TD><TD STYLE="font: 10pt Times New Roman, Times, Serif"><FONT STYLE="font-size: 7pt">&nbsp;</FONT></TD>
    <TD STYLE="font: 10pt Times New Roman, Times, Serif; text-align: left"><FONT STYLE="font-size: 7pt">&nbsp;</FONT></TD><TD STYLE="font: 10pt Times New Roman, Times, Serif; text-align: right"><FONT STYLE="font-size: 7pt">&nbsp;</FONT></TD><TD STYLE="font: 10pt Times New Roman, Times, Serif; text-align: left"><FONT STYLE="font-size: 7pt">&nbsp;</FONT></TD><TD STYLE="font: 10pt Times New Roman, Times, Serif"><FONT STYLE="font-size: 7pt">&nbsp;</FONT></TD>
    <TD STYLE="font: 10pt Times New Roman, Times, Serif; text-align: left"><FONT STYLE="font-size: 7pt">&nbsp;</FONT></TD><TD STYLE="font: 10pt Times New Roman, Times, Serif; text-align: right"><FONT STYLE="font-size: 7pt">&nbsp;</FONT></TD><TD STYLE="font: 10pt Times New Roman, Times, Serif; text-align: left"><FONT STYLE="font-size: 7pt">&nbsp;</FONT></TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,238,255)">
    <TD STYLE="font: 10pt Times New Roman, Times, Serif; text-align: left; padding-bottom: 4pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Total assets</TD><TD STYLE="font: 10pt Times New Roman, Times, Serif; padding-bottom: 4pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 4pt double; font: 10pt Times New Roman, Times, Serif; text-align: left">$</TD><TD STYLE="border-bottom: Black 4pt double; font: 10pt Times New Roman, Times, Serif; text-align: right">4,169</TD><TD STYLE="padding-bottom: 4pt; font: 10pt Times New Roman, Times, Serif; text-align: left">&nbsp;</TD><TD STYLE="font: 10pt Times New Roman, Times, Serif; padding-bottom: 4pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 4pt double; font: 10pt Times New Roman, Times, Serif; text-align: left">$</TD><TD STYLE="border-bottom: Black 4pt double; font: 10pt Times New Roman, Times, Serif; text-align: right">4,559</TD><TD STYLE="padding-bottom: 4pt; font: 10pt Times New Roman, Times, Serif; text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD STYLE="font: 10pt Times New Roman, Times, Serif"><FONT STYLE="font-size: 7pt">&nbsp;</FONT></TD><TD STYLE="font: 10pt Times New Roman, Times, Serif"><FONT STYLE="font-size: 7pt">&nbsp;</FONT></TD>
    <TD STYLE="font: 10pt Times New Roman, Times, Serif; text-align: left"><FONT STYLE="font-size: 7pt">&nbsp;</FONT></TD><TD STYLE="font: 10pt Times New Roman, Times, Serif; text-align: right"><FONT STYLE="font-size: 7pt">&nbsp;</FONT></TD><TD STYLE="font: 10pt Times New Roman, Times, Serif; text-align: left"><FONT STYLE="font-size: 7pt">&nbsp;</FONT></TD><TD STYLE="font: 10pt Times New Roman, Times, Serif"><FONT STYLE="font-size: 7pt">&nbsp;</FONT></TD>
    <TD STYLE="font: 10pt Times New Roman, Times, Serif; text-align: left"><FONT STYLE="font-size: 7pt">&nbsp;</FONT></TD><TD STYLE="font: 10pt Times New Roman, Times, Serif; text-align: right"><FONT STYLE="font-size: 7pt">&nbsp;</FONT></TD><TD STYLE="font: 10pt Times New Roman, Times, Serif; text-align: left"><FONT STYLE="font-size: 7pt">&nbsp;</FONT></TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,238,255)">
    <TD STYLE="font: 10pt Times New Roman, Times, Serif; text-decoration: underline; text-align: left">LIABILITIES AND STOCKHOLDERS&rsquo; DEFICIT</TD><TD STYLE="font: 10pt Times New Roman, Times, Serif">&nbsp;</TD>
    <TD STYLE="font: 10pt Times New Roman, Times, Serif; text-align: left">&nbsp;</TD><TD STYLE="font: 10pt Times New Roman, Times, Serif; text-align: right">&nbsp;</TD><TD STYLE="font: 10pt Times New Roman, Times, Serif; text-align: left">&nbsp;</TD><TD STYLE="font: 10pt Times New Roman, Times, Serif">&nbsp;</TD>
    <TD STYLE="font: 10pt Times New Roman, Times, Serif; text-align: left">&nbsp;</TD><TD STYLE="font: 10pt Times New Roman, Times, Serif; text-align: right">&nbsp;</TD><TD STYLE="font: 10pt Times New Roman, Times, Serif; text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD STYLE="font: 10pt Times New Roman, Times, Serif; text-align: left">CURRENT LIABILITIES:</TD><TD STYLE="font: 10pt Times New Roman, Times, Serif">&nbsp;</TD>
    <TD STYLE="font: 10pt Times New Roman, Times, Serif; text-align: left">&nbsp;</TD><TD STYLE="font: 10pt Times New Roman, Times, Serif; text-align: right">&nbsp;</TD><TD STYLE="font: 10pt Times New Roman, Times, Serif; text-align: left">&nbsp;</TD><TD STYLE="font: 10pt Times New Roman, Times, Serif">&nbsp;</TD>
    <TD STYLE="font: 10pt Times New Roman, Times, Serif; text-align: left">&nbsp;</TD><TD STYLE="font: 10pt Times New Roman, Times, Serif; text-align: right">&nbsp;</TD><TD STYLE="font: 10pt Times New Roman, Times, Serif; text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,238,255)">
    <TD STYLE="font: 10pt Times New Roman, Times, Serif; text-align: left">Accounts payable</TD><TD STYLE="font: 10pt Times New Roman, Times, Serif">&nbsp;</TD>
    <TD STYLE="font: 10pt Times New Roman, Times, Serif; text-align: left">$</TD><TD STYLE="font: 10pt Times New Roman, Times, Serif; text-align: right">1,173</TD><TD STYLE="font: 10pt Times New Roman, Times, Serif; text-align: left">&nbsp;</TD><TD STYLE="font: 10pt Times New Roman, Times, Serif">&nbsp;</TD>
    <TD STYLE="font: 10pt Times New Roman, Times, Serif; text-align: left">$</TD><TD STYLE="font: 10pt Times New Roman, Times, Serif; text-align: right">1,177</TD><TD STYLE="font: 10pt Times New Roman, Times, Serif; text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD STYLE="font: 10pt Times New Roman, Times, Serif; text-align: left">Accrued liabilities</TD><TD STYLE="font: 10pt Times New Roman, Times, Serif">&nbsp;</TD>
    <TD STYLE="font: 10pt Times New Roman, Times, Serif; text-align: left">&nbsp;</TD><TD STYLE="font: 10pt Times New Roman, Times, Serif; text-align: right">1,432</TD><TD STYLE="font: 10pt Times New Roman, Times, Serif; text-align: left">&nbsp;</TD><TD STYLE="font: 10pt Times New Roman, Times, Serif">&nbsp;</TD>
    <TD STYLE="font: 10pt Times New Roman, Times, Serif; text-align: left">&nbsp;</TD><TD STYLE="font: 10pt Times New Roman, Times, Serif; text-align: right">893</TD><TD STYLE="font: 10pt Times New Roman, Times, Serif; text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,238,255)">
    <TD STYLE="font: 10pt Times New Roman, Times, Serif; text-align: left">Current portion of capital lease obligations</TD><TD STYLE="font: 10pt Times New Roman, Times, Serif">&nbsp;</TD>
    <TD STYLE="font: 10pt Times New Roman, Times, Serif; text-align: left">&nbsp;</TD><TD STYLE="font: 10pt Times New Roman, Times, Serif; text-align: right">32</TD><TD STYLE="font: 10pt Times New Roman, Times, Serif; text-align: left">&nbsp;</TD><TD STYLE="font: 10pt Times New Roman, Times, Serif">&nbsp;</TD>
    <TD STYLE="font: 10pt Times New Roman, Times, Serif; text-align: left">&nbsp;</TD><TD STYLE="font: 10pt Times New Roman, Times, Serif; text-align: right">30</TD><TD STYLE="font: 10pt Times New Roman, Times, Serif; text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD STYLE="font: 10pt Times New Roman, Times, Serif; text-align: left">Convertible note payable, current, net $11 and $187, respectively</TD><TD STYLE="font: 10pt Times New Roman, Times, Serif">&nbsp;</TD>
    <TD STYLE="font: 10pt Times New Roman, Times, Serif; text-align: left">&nbsp;</TD><TD STYLE="font: 10pt Times New Roman, Times, Serif; text-align: right">761</TD><TD STYLE="font: 10pt Times New Roman, Times, Serif; text-align: left">&nbsp;</TD><TD STYLE="font: 10pt Times New Roman, Times, Serif">&nbsp;</TD>
    <TD STYLE="font: 10pt Times New Roman, Times, Serif; text-align: left">&nbsp;</TD><TD STYLE="font: 10pt Times New Roman, Times, Serif; text-align: right">585</TD><TD STYLE="font: 10pt Times New Roman, Times, Serif; text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,238,255)">
    <TD STYLE="font: 10pt Times New Roman, Times, Serif; text-align: left">Note payable, current, related party</TD><TD STYLE="font: 10pt Times New Roman, Times, Serif">&nbsp;</TD>
    <TD STYLE="font: 10pt Times New Roman, Times, Serif; text-align: left">&nbsp;</TD><TD STYLE="font: 10pt Times New Roman, Times, Serif; text-align: right">425</TD><TD STYLE="font: 10pt Times New Roman, Times, Serif; text-align: left">&nbsp;</TD><TD STYLE="font: 10pt Times New Roman, Times, Serif">&nbsp;</TD>
    <TD STYLE="font: 10pt Times New Roman, Times, Serif; text-align: left">&nbsp;</TD><TD STYLE="font: 10pt Times New Roman, Times, Serif; text-align: right">126</TD><TD STYLE="font: 10pt Times New Roman, Times, Serif; text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD STYLE="font: 10pt Times New Roman, Times, Serif; text-align: left">Note payable, current, net $0 and $0, respectively</TD><TD STYLE="font: 10pt Times New Roman, Times, Serif">&nbsp;</TD>
    <TD STYLE="font: 10pt Times New Roman, Times, Serif; text-align: left">&nbsp;</TD><TD STYLE="font: 10pt Times New Roman, Times, Serif; text-align: right">1,200</TD><TD STYLE="font: 10pt Times New Roman, Times, Serif; text-align: left">&nbsp;</TD><TD STYLE="font: 10pt Times New Roman, Times, Serif">&nbsp;</TD>
    <TD STYLE="font: 10pt Times New Roman, Times, Serif; text-align: left">&nbsp;</TD><TD STYLE="font: 10pt Times New Roman, Times, Serif; text-align: right">725</TD><TD STYLE="font: 10pt Times New Roman, Times, Serif; text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,238,255)">
    <TD STYLE="font: 10pt Times New Roman, Times, Serif; text-align: left">Convertible note payable, current, net $345 and $273, respectively</TD><TD STYLE="font: 10pt Times New Roman, Times, Serif">&nbsp;</TD>
    <TD STYLE="font: 10pt Times New Roman, Times, Serif; text-align: left">&nbsp;</TD><TD STYLE="font: 10pt Times New Roman, Times, Serif; text-align: right">235</TD><TD STYLE="font: 10pt Times New Roman, Times, Serif; text-align: left">&nbsp;</TD><TD STYLE="font: 10pt Times New Roman, Times, Serif">&nbsp;</TD>
    <TD STYLE="font: 10pt Times New Roman, Times, Serif; text-align: left">&nbsp;</TD><TD STYLE="font: 10pt Times New Roman, Times, Serif; text-align: right">33</TD><TD STYLE="font: 10pt Times New Roman, Times, Serif; text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD STYLE="font: 10pt Times New Roman, Times, Serif; text-align: left">Deferred income</TD><TD STYLE="font: 10pt Times New Roman, Times, Serif">&nbsp;</TD>
    <TD STYLE="font: 10pt Times New Roman, Times, Serif; text-align: left">&nbsp;</TD><TD STYLE="font: 10pt Times New Roman, Times, Serif; text-align: right">314</TD><TD STYLE="font: 10pt Times New Roman, Times, Serif; text-align: left">&nbsp;</TD><TD STYLE="font: 10pt Times New Roman, Times, Serif">&nbsp;</TD>
    <TD STYLE="font: 10pt Times New Roman, Times, Serif; text-align: left">&nbsp;</TD><TD STYLE="font: 10pt Times New Roman, Times, Serif; text-align: right">262</TD><TD STYLE="font: 10pt Times New Roman, Times, Serif; text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,238,255)">
    <TD STYLE="font: 10pt Times New Roman, Times, Serif; text-align: left; padding-bottom: 1.5pt">Derivative liability</TD><TD STYLE="font: 10pt Times New Roman, Times, Serif; padding-bottom: 1.5pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 1.5pt solid; font: 10pt Times New Roman, Times, Serif; text-align: left">&nbsp;</TD><TD STYLE="border-bottom: Black 1.5pt solid; font: 10pt Times New Roman, Times, Serif; text-align: right">1,303</TD><TD STYLE="padding-bottom: 1.5pt; font: 10pt Times New Roman, Times, Serif; text-align: left">&nbsp;</TD><TD STYLE="font: 10pt Times New Roman, Times, Serif; padding-bottom: 1.5pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 1.5pt solid; font: 10pt Times New Roman, Times, Serif; text-align: left">&nbsp;</TD><TD STYLE="border-bottom: Black 1.5pt solid; font: 10pt Times New Roman, Times, Serif; text-align: right">632</TD><TD STYLE="padding-bottom: 1.5pt; font: 10pt Times New Roman, Times, Serif; text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD STYLE="font: 10pt Times New Roman, Times, Serif; text-align: left; padding-bottom: 1.5pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Total current liabilities</TD><TD STYLE="font: 10pt Times New Roman, Times, Serif; padding-bottom: 1.5pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 1.5pt solid; font: 10pt Times New Roman, Times, Serif; text-align: left">&nbsp;</TD><TD STYLE="border-bottom: Black 1.5pt solid; font: 10pt Times New Roman, Times, Serif; text-align: right">6,875</TD><TD STYLE="padding-bottom: 1.5pt; font: 10pt Times New Roman, Times, Serif; text-align: left">&nbsp;</TD><TD STYLE="font: 10pt Times New Roman, Times, Serif; padding-bottom: 1.5pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 1.5pt solid; font: 10pt Times New Roman, Times, Serif; text-align: left">&nbsp;</TD><TD STYLE="border-bottom: Black 1.5pt solid; font: 10pt Times New Roman, Times, Serif; text-align: right">4,463</TD><TD STYLE="padding-bottom: 1.5pt; font: 10pt Times New Roman, Times, Serif; text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,238,255)">
    <TD STYLE="font: 10pt Times New Roman, Times, Serif"><FONT STYLE="font-size: 7pt">&nbsp;</FONT></TD><TD STYLE="font: 10pt Times New Roman, Times, Serif"><FONT STYLE="font-size: 7pt">&nbsp;</FONT></TD>
    <TD STYLE="font: 10pt Times New Roman, Times, Serif; text-align: left"><FONT STYLE="font-size: 7pt">&nbsp;</FONT></TD><TD STYLE="font: 10pt Times New Roman, Times, Serif; text-align: right"><FONT STYLE="font-size: 7pt">&nbsp;</FONT></TD><TD STYLE="font: 10pt Times New Roman, Times, Serif; text-align: left"><FONT STYLE="font-size: 7pt">&nbsp;</FONT></TD><TD STYLE="font: 10pt Times New Roman, Times, Serif"><FONT STYLE="font-size: 7pt">&nbsp;</FONT></TD>
    <TD STYLE="font: 10pt Times New Roman, Times, Serif; text-align: left"><FONT STYLE="font-size: 7pt">&nbsp;</FONT></TD><TD STYLE="font: 10pt Times New Roman, Times, Serif; text-align: right"><FONT STYLE="font-size: 7pt">&nbsp;</FONT></TD><TD STYLE="font: 10pt Times New Roman, Times, Serif; text-align: left"><FONT STYLE="font-size: 7pt">&nbsp;</FONT></TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD STYLE="font: 10pt Times New Roman, Times, Serif; text-align: left">LONG-TERM LIABILITIES:</TD><TD STYLE="font: 10pt Times New Roman, Times, Serif">&nbsp;</TD>
    <TD STYLE="font: 10pt Times New Roman, Times, Serif; text-align: left">&nbsp;</TD><TD STYLE="font: 10pt Times New Roman, Times, Serif; text-align: right">&nbsp;</TD><TD STYLE="font: 10pt Times New Roman, Times, Serif; text-align: left">&nbsp;</TD><TD STYLE="font: 10pt Times New Roman, Times, Serif">&nbsp;</TD>
    <TD STYLE="font: 10pt Times New Roman, Times, Serif; text-align: left">&nbsp;</TD><TD STYLE="font: 10pt Times New Roman, Times, Serif; text-align: right">&nbsp;</TD><TD STYLE="font: 10pt Times New Roman, Times, Serif; text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,238,255)">
    <TD STYLE="font: 10pt Times New Roman, Times, Serif; text-align: left">Convertible debenture, net $99 and $273, respectively</TD><TD STYLE="font: 10pt Times New Roman, Times, Serif">&nbsp;</TD>
    <TD STYLE="font: 10pt Times New Roman, Times, Serif; text-align: left">&nbsp;</TD><TD STYLE="font: 10pt Times New Roman, Times, Serif; text-align: right">51</TD><TD STYLE="font: 10pt Times New Roman, Times, Serif; text-align: left">&nbsp;</TD><TD STYLE="font: 10pt Times New Roman, Times, Serif">&nbsp;</TD>
    <TD STYLE="font: 10pt Times New Roman, Times, Serif; text-align: left">&nbsp;</TD><TD STYLE="font: 10pt Times New Roman, Times, Serif; text-align: right">27</TD><TD STYLE="font: 10pt Times New Roman, Times, Serif; text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD STYLE="font: 10pt Times New Roman, Times, Serif; text-align: left">Notes payable, related party, net $27 and $38, respectively</TD><TD STYLE="font: 10pt Times New Roman, Times, Serif">&nbsp;</TD>
    <TD STYLE="font: 10pt Times New Roman, Times, Serif; text-align: left">&nbsp;</TD><TD STYLE="font: 10pt Times New Roman, Times, Serif; text-align: right">147</TD><TD STYLE="font: 10pt Times New Roman, Times, Serif; text-align: left">&nbsp;</TD><TD STYLE="font: 10pt Times New Roman, Times, Serif">&nbsp;</TD>
    <TD STYLE="font: 10pt Times New Roman, Times, Serif; text-align: left">&nbsp;</TD><TD STYLE="font: 10pt Times New Roman, Times, Serif; text-align: right">505</TD><TD STYLE="font: 10pt Times New Roman, Times, Serif; text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,238,255)">
    <TD STYLE="font: 10pt Times New Roman, Times, Serif; text-align: left">Note payable</TD><TD STYLE="font: 10pt Times New Roman, Times, Serif">&nbsp;</TD>
    <TD STYLE="font: 10pt Times New Roman, Times, Serif; text-align: left">&nbsp;</TD><TD STYLE="font: 10pt Times New Roman, Times, Serif; text-align: right">-</TD><TD STYLE="font: 10pt Times New Roman, Times, Serif; text-align: left">&nbsp;</TD><TD STYLE="font: 10pt Times New Roman, Times, Serif">&nbsp;</TD>
    <TD STYLE="font: 10pt Times New Roman, Times, Serif; text-align: left">&nbsp;</TD><TD STYLE="font: 10pt Times New Roman, Times, Serif; text-align: right">500</TD><TD STYLE="font: 10pt Times New Roman, Times, Serif; text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD STYLE="font: 10pt Times New Roman, Times, Serif; text-align: left; padding-bottom: 1.5pt">Obligations under capital leases</TD><TD STYLE="font: 10pt Times New Roman, Times, Serif; padding-bottom: 1.5pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 1.5pt solid; font: 10pt Times New Roman, Times, Serif; text-align: left">&nbsp;</TD><TD STYLE="border-bottom: Black 1.5pt solid; font: 10pt Times New Roman, Times, Serif; text-align: right">40</TD><TD STYLE="padding-bottom: 1.5pt; font: 10pt Times New Roman, Times, Serif; text-align: left">&nbsp;</TD><TD STYLE="font: 10pt Times New Roman, Times, Serif; padding-bottom: 1.5pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 1.5pt solid; font: 10pt Times New Roman, Times, Serif; text-align: left">&nbsp;</TD><TD STYLE="border-bottom: Black 1.5pt solid; font: 10pt Times New Roman, Times, Serif; text-align: right">64</TD><TD STYLE="padding-bottom: 1.5pt; font: 10pt Times New Roman, Times, Serif; text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,238,255)">
    <TD STYLE="font: 10pt Times New Roman, Times, Serif; text-align: left; padding-bottom: 1.5pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Total long-term liabilities</TD><TD STYLE="font: 10pt Times New Roman, Times, Serif; padding-bottom: 1.5pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 1.5pt solid; font: 10pt Times New Roman, Times, Serif; text-align: left">&nbsp;</TD><TD STYLE="border-bottom: Black 1.5pt solid; font: 10pt Times New Roman, Times, Serif; text-align: right">238</TD><TD STYLE="padding-bottom: 1.5pt; font: 10pt Times New Roman, Times, Serif; text-align: left">&nbsp;</TD><TD STYLE="font: 10pt Times New Roman, Times, Serif; padding-bottom: 1.5pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 1.5pt solid; font: 10pt Times New Roman, Times, Serif; text-align: left">&nbsp;</TD><TD STYLE="border-bottom: Black 1.5pt solid; font: 10pt Times New Roman, Times, Serif; text-align: right">1,096</TD><TD STYLE="padding-bottom: 1.5pt; font: 10pt Times New Roman, Times, Serif; text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD STYLE="font: 10pt Times New Roman, Times, Serif"><FONT STYLE="font-size: 7pt">&nbsp;</FONT></TD><TD STYLE="font: 10pt Times New Roman, Times, Serif"><FONT STYLE="font-size: 7pt">&nbsp;</FONT></TD>
    <TD STYLE="font: 10pt Times New Roman, Times, Serif; text-align: left"><FONT STYLE="font-size: 7pt">&nbsp;</FONT></TD><TD STYLE="font: 10pt Times New Roman, Times, Serif; text-align: right"><FONT STYLE="font-size: 7pt">&nbsp;</FONT></TD><TD STYLE="font: 10pt Times New Roman, Times, Serif; text-align: left"><FONT STYLE="font-size: 7pt">&nbsp;</FONT></TD><TD STYLE="font: 10pt Times New Roman, Times, Serif"><FONT STYLE="font-size: 7pt">&nbsp;</FONT></TD>
    <TD STYLE="font: 10pt Times New Roman, Times, Serif; text-align: left"><FONT STYLE="font-size: 7pt">&nbsp;</FONT></TD><TD STYLE="font: 10pt Times New Roman, Times, Serif; text-align: right"><FONT STYLE="font-size: 7pt">&nbsp;</FONT></TD><TD STYLE="font: 10pt Times New Roman, Times, Serif; text-align: left"><FONT STYLE="font-size: 7pt">&nbsp;</FONT></TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,238,255)">
    <TD STYLE="font: 10pt Times New Roman, Times, Serif; text-align: left; padding-bottom: 1.5pt">Total liabilities</TD><TD STYLE="font: 10pt Times New Roman, Times, Serif; padding-bottom: 1.5pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 1.5pt solid; font: 10pt Times New Roman, Times, Serif; text-align: left">&nbsp;</TD><TD STYLE="border-bottom: Black 1.5pt solid; font: 10pt Times New Roman, Times, Serif; text-align: right">7,113</TD><TD STYLE="padding-bottom: 1.5pt; font: 10pt Times New Roman, Times, Serif; text-align: left">&nbsp;</TD><TD STYLE="font: 10pt Times New Roman, Times, Serif; padding-bottom: 1.5pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 1.5pt solid; font: 10pt Times New Roman, Times, Serif; text-align: left">&nbsp;</TD><TD STYLE="border-bottom: Black 1.5pt solid; font: 10pt Times New Roman, Times, Serif; text-align: right">5,559</TD><TD STYLE="padding-bottom: 1.5pt; font: 10pt Times New Roman, Times, Serif; text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD STYLE="font: 10pt Times New Roman, Times, Serif"><FONT STYLE="font-size: 7pt">&nbsp;</FONT></TD><TD STYLE="font: 10pt Times New Roman, Times, Serif"><FONT STYLE="font-size: 7pt">&nbsp;</FONT></TD>
    <TD STYLE="font: 10pt Times New Roman, Times, Serif; text-align: left"><FONT STYLE="font-size: 7pt">&nbsp;</FONT></TD><TD STYLE="font: 10pt Times New Roman, Times, Serif; text-align: right"><FONT STYLE="font-size: 7pt">&nbsp;</FONT></TD><TD STYLE="font: 10pt Times New Roman, Times, Serif; text-align: left"><FONT STYLE="font-size: 7pt">&nbsp;</FONT></TD><TD STYLE="font: 10pt Times New Roman, Times, Serif"><FONT STYLE="font-size: 7pt">&nbsp;</FONT></TD>
    <TD STYLE="font: 10pt Times New Roman, Times, Serif; text-align: left"><FONT STYLE="font-size: 7pt">&nbsp;</FONT></TD><TD STYLE="font: 10pt Times New Roman, Times, Serif; text-align: right"><FONT STYLE="font-size: 7pt">&nbsp;</FONT></TD><TD STYLE="font: 10pt Times New Roman, Times, Serif; text-align: left"><FONT STYLE="font-size: 7pt">&nbsp;</FONT></TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,238,255)">
    <TD STYLE="font: 10pt Times New Roman, Times, Serif; text-align: left">Commitments and contingencies</TD><TD STYLE="font: 10pt Times New Roman, Times, Serif">&nbsp;</TD>
    <TD STYLE="font: 10pt Times New Roman, Times, Serif; text-align: left">&nbsp;</TD><TD STYLE="font: 10pt Times New Roman, Times, Serif; text-align: right">&nbsp;</TD><TD STYLE="font: 10pt Times New Roman, Times, Serif; text-align: left">&nbsp;</TD><TD STYLE="font: 10pt Times New Roman, Times, Serif">&nbsp;</TD>
    <TD STYLE="font: 10pt Times New Roman, Times, Serif; text-align: left">&nbsp;</TD><TD STYLE="font: 10pt Times New Roman, Times, Serif; text-align: right">&nbsp;</TD><TD STYLE="font: 10pt Times New Roman, Times, Serif; text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD STYLE="font: 10pt Times New Roman, Times, Serif"><FONT STYLE="font-size: 7pt">&nbsp;</FONT></TD><TD STYLE="font: 10pt Times New Roman, Times, Serif"><FONT STYLE="font-size: 7pt">&nbsp;</FONT></TD>
    <TD STYLE="font: 10pt Times New Roman, Times, Serif; text-align: left"><FONT STYLE="font-size: 7pt">&nbsp;</FONT></TD><TD STYLE="font: 10pt Times New Roman, Times, Serif; text-align: right"><FONT STYLE="font-size: 7pt">&nbsp;</FONT></TD><TD STYLE="font: 10pt Times New Roman, Times, Serif; text-align: left"><FONT STYLE="font-size: 7pt">&nbsp;</FONT></TD><TD STYLE="font: 10pt Times New Roman, Times, Serif"><FONT STYLE="font-size: 7pt">&nbsp;</FONT></TD>
    <TD STYLE="font: 10pt Times New Roman, Times, Serif; text-align: left"><FONT STYLE="font-size: 7pt">&nbsp;</FONT></TD><TD STYLE="font: 10pt Times New Roman, Times, Serif; text-align: right"><FONT STYLE="font-size: 7pt">&nbsp;</FONT></TD><TD STYLE="font: 10pt Times New Roman, Times, Serif; text-align: left"><FONT STYLE="font-size: 7pt">&nbsp;</FONT></TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,238,255)">
    <TD STYLE="font: 10pt Times New Roman, Times, Serif; text-align: left">STOCKHOLDERS&rsquo; DEFICIT:</TD><TD STYLE="font: 10pt Times New Roman, Times, Serif">&nbsp;</TD>
    <TD STYLE="font: 10pt Times New Roman, Times, Serif; text-align: left">&nbsp;</TD><TD STYLE="font: 10pt Times New Roman, Times, Serif; text-align: right">&nbsp;</TD><TD STYLE="font: 10pt Times New Roman, Times, Serif; text-align: left">&nbsp;</TD><TD STYLE="font: 10pt Times New Roman, Times, Serif">&nbsp;</TD>
    <TD STYLE="font: 10pt Times New Roman, Times, Serif; text-align: left">&nbsp;</TD><TD STYLE="font: 10pt Times New Roman, Times, Serif; text-align: right">&nbsp;</TD><TD STYLE="font: 10pt Times New Roman, Times, Serif; text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD STYLE="font: 10pt Times New Roman, Times, Serif; text-align: left; text-indent: -0.125in; padding-left: 0.125in">Preferred stock, $0.001, 50,000,000 shares authorized,
    50,000 and 0 issued and outstanding, respectively</TD><TD STYLE="font: 10pt Times New Roman, Times, Serif">&nbsp;</TD>
    <TD STYLE="font: 10pt Times New Roman, Times, Serif; text-align: left">&nbsp;</TD><TD STYLE="font: 10pt Times New Roman, Times, Serif; text-align: right">-</TD><TD STYLE="font: 10pt Times New Roman, Times, Serif; text-align: left">&nbsp;</TD><TD STYLE="font: 10pt Times New Roman, Times, Serif">&nbsp;</TD>
    <TD STYLE="font: 10pt Times New Roman, Times, Serif; text-align: left">&nbsp;</TD><TD STYLE="font: 10pt Times New Roman, Times, Serif; text-align: right">-</TD><TD STYLE="font: 10pt Times New Roman, Times, Serif; text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,238,255)">
    <TD STYLE="font: 10pt Times New Roman, Times, Serif; text-align: left; padding-left: 0.125in; text-indent: -0.125in">Common stock, $0.001, 150,000,000 shares authorized,
    18,876,431 and 12,775,143 issued and outstanding, respectively</TD><TD STYLE="font: 10pt Times New Roman, Times, Serif">&nbsp;</TD>
    <TD STYLE="font: 10pt Times New Roman, Times, Serif; text-align: left">&nbsp;</TD><TD STYLE="font: 10pt Times New Roman, Times, Serif; text-align: right">19</TD><TD STYLE="font: 10pt Times New Roman, Times, Serif; text-align: left">&nbsp;</TD><TD STYLE="font: 10pt Times New Roman, Times, Serif">&nbsp;</TD>
    <TD STYLE="font: 10pt Times New Roman, Times, Serif; text-align: left">&nbsp;</TD><TD STYLE="font: 10pt Times New Roman, Times, Serif; text-align: right">13</TD><TD STYLE="font: 10pt Times New Roman, Times, Serif; text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD STYLE="font: 10pt Times New Roman, Times, Serif; text-align: left">Additional paid in capital</TD><TD STYLE="font: 10pt Times New Roman, Times, Serif">&nbsp;</TD>
    <TD STYLE="font: 10pt Times New Roman, Times, Serif; text-align: left">&nbsp;</TD><TD STYLE="font: 10pt Times New Roman, Times, Serif; text-align: right">81,764</TD><TD STYLE="font: 10pt Times New Roman, Times, Serif; text-align: left">&nbsp;</TD><TD STYLE="font: 10pt Times New Roman, Times, Serif">&nbsp;</TD>
    <TD STYLE="font: 10pt Times New Roman, Times, Serif; text-align: left">&nbsp;</TD><TD STYLE="font: 10pt Times New Roman, Times, Serif; text-align: right">79,993</TD><TD STYLE="font: 10pt Times New Roman, Times, Serif; text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,238,255)">
    <TD STYLE="font: 10pt Times New Roman, Times, Serif; text-align: left">Accumulated deficit</TD><TD STYLE="font: 10pt Times New Roman, Times, Serif">&nbsp;</TD>
    <TD STYLE="font: 10pt Times New Roman, Times, Serif; text-align: left">&nbsp;</TD><TD STYLE="font: 10pt Times New Roman, Times, Serif; text-align: right">(84,434</TD><TD STYLE="font: 10pt Times New Roman, Times, Serif; text-align: left">)</TD><TD STYLE="font: 10pt Times New Roman, Times, Serif">&nbsp;</TD>
    <TD STYLE="font: 10pt Times New Roman, Times, Serif; text-align: left">&nbsp;</TD><TD STYLE="font: 10pt Times New Roman, Times, Serif; text-align: right">(80,800</TD><TD STYLE="font: 10pt Times New Roman, Times, Serif; text-align: left">)</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD STYLE="font: 10pt Times New Roman, Times, Serif; text-align: left; padding-bottom: 1.5pt">Other comprehensive income</TD><TD STYLE="font: 10pt Times New Roman, Times, Serif; padding-bottom: 1.5pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 1.5pt solid; font: 10pt Times New Roman, Times, Serif; text-align: left">&nbsp;</TD><TD STYLE="border-bottom: Black 1.5pt solid; font: 10pt Times New Roman, Times, Serif; text-align: right">1</TD><TD STYLE="padding-bottom: 1.5pt; font: 10pt Times New Roman, Times, Serif; text-align: left">&nbsp;</TD><TD STYLE="font: 10pt Times New Roman, Times, Serif; padding-bottom: 1.5pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 1.5pt solid; font: 10pt Times New Roman, Times, Serif; text-align: left">&nbsp;</TD><TD STYLE="border-bottom: Black 1.5pt solid; font: 10pt Times New Roman, Times, Serif; text-align: right">1</TD><TD STYLE="padding-bottom: 1.5pt; font: 10pt Times New Roman, Times, Serif; text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,238,255)">
    <TD STYLE="font: 10pt Times New Roman, Times, Serif; text-align: left; padding-bottom: 1.5pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Total Digerati&rsquo;s stockholders&rsquo; deficit</TD><TD STYLE="font: 10pt Times New Roman, Times, Serif; padding-bottom: 1.5pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 1.5pt solid; font: 10pt Times New Roman, Times, Serif; text-align: left">&nbsp;</TD><TD STYLE="border-bottom: Black 1.5pt solid; font: 10pt Times New Roman, Times, Serif; text-align: right">(2,650</TD><TD STYLE="padding-bottom: 1.5pt; font: 10pt Times New Roman, Times, Serif; text-align: left">)</TD><TD STYLE="font: 10pt Times New Roman, Times, Serif; padding-bottom: 1.5pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 1.5pt solid; font: 10pt Times New Roman, Times, Serif; text-align: left">&nbsp;</TD><TD STYLE="border-bottom: Black 1.5pt solid; font: 10pt Times New Roman, Times, Serif; text-align: right">(793</TD><TD STYLE="padding-bottom: 1.5pt; font: 10pt Times New Roman, Times, Serif; text-align: left">)</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD STYLE="font: 10pt Times New Roman, Times, Serif; text-align: left; padding-bottom: 1.5pt">Noncontrolling interest</TD><TD STYLE="font: 10pt Times New Roman, Times, Serif; padding-bottom: 1.5pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 1.5pt solid; font: 10pt Times New Roman, Times, Serif; text-align: left">&nbsp;</TD><TD STYLE="border-bottom: Black 1.5pt solid; font: 10pt Times New Roman, Times, Serif; text-align: right">(294</TD><TD STYLE="padding-bottom: 1.5pt; font: 10pt Times New Roman, Times, Serif; text-align: left">)</TD><TD STYLE="font: 10pt Times New Roman, Times, Serif; padding-bottom: 1.5pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 1.5pt solid; font: 10pt Times New Roman, Times, Serif; text-align: left">&nbsp;</TD><TD STYLE="border-bottom: Black 1.5pt solid; font: 10pt Times New Roman, Times, Serif; text-align: right">(207</TD><TD STYLE="padding-bottom: 1.5pt; font: 10pt Times New Roman, Times, Serif; text-align: left">)</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,238,255)">
    <TD STYLE="font: 10pt Times New Roman, Times, Serif; text-align: left; padding-bottom: 1.5pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Total stockholders&rsquo; deficit</TD><TD STYLE="font: 10pt Times New Roman, Times, Serif; padding-bottom: 1.5pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 1.5pt solid; font: 10pt Times New Roman, Times, Serif; text-align: left">&nbsp;</TD><TD STYLE="border-bottom: Black 1.5pt solid; font: 10pt Times New Roman, Times, Serif; text-align: right">(2,944</TD><TD STYLE="padding-bottom: 1.5pt; font: 10pt Times New Roman, Times, Serif; text-align: left">)</TD><TD STYLE="font: 10pt Times New Roman, Times, Serif; padding-bottom: 1.5pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 1.5pt solid; font: 10pt Times New Roman, Times, Serif; text-align: left">&nbsp;</TD><TD STYLE="border-bottom: Black 1.5pt solid; font: 10pt Times New Roman, Times, Serif; text-align: right">(1,000</TD><TD STYLE="padding-bottom: 1.5pt; font: 10pt Times New Roman, Times, Serif; text-align: left">)</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD STYLE="font: 10pt Times New Roman, Times, Serif; text-align: left; padding-bottom: 4pt">Total liabilities and stockholders&rsquo; deficit</TD><TD STYLE="font: 10pt Times New Roman, Times, Serif; padding-bottom: 4pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 4pt double; font: 10pt Times New Roman, Times, Serif; text-align: left">$</TD><TD STYLE="border-bottom: Black 4pt double; font: 10pt Times New Roman, Times, Serif; text-align: right">4,169</TD><TD STYLE="padding-bottom: 4pt; font: 10pt Times New Roman, Times, Serif; text-align: left">&nbsp;</TD><TD STYLE="font: 10pt Times New Roman, Times, Serif; padding-bottom: 4pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 4pt double; font: 10pt Times New Roman, Times, Serif; text-align: left">$</TD><TD STYLE="border-bottom: Black 4pt double; font: 10pt Times New Roman, Times, Serif; text-align: right">4,559</TD><TD STYLE="padding-bottom: 4pt; font: 10pt Times New Roman, Times, Serif; text-align: left">&nbsp;</TD></TR>
</TABLE>


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<P STYLE="text-align: center; font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt"><FONT STYLE="font: 10pt Times New Roman, Times, Serif">See
accompanying notes to unaudited consolidated financial statements</FONT></P>

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<P STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; text-align: center"><FONT STYLE="font: 10pt Times New Roman, Times, Serif">&nbsp;</FONT> <FONT STYLE="font: 10pt Times New Roman, Times, Serif"><A NAME="ff_034"></A>DIGERATI TECHNOLOGIES, INC. AND SUBSIDIARIES</FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; text-align: center"><FONT STYLE="font: 10pt Times New Roman, Times, Serif">&nbsp;</FONT> <FONT STYLE="font: 10pt Times New Roman, Times, Serif">CONSOLIDATED STATEMENTS OF OPERATIONS&nbsp;</FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; text-align: center"><FONT STYLE="font: 10pt Times New Roman, Times, Serif">&nbsp;</FONT> <FONT STYLE="font: 10pt Times New Roman, Times, Serif">(In thousands, except per share amounts, unaudited)</FONT></P>



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    <TD STYLE="font: 10pt Times New Roman, Times, Serif; padding-bottom: 1.5pt">&nbsp;</TD><TD STYLE="font: 10pt Times New Roman, Times, Serif; padding-bottom: 1.5pt">&nbsp;</TD>
    <TD COLSPAN="6" STYLE="font: 10pt Times New Roman, Times, Serif; text-align: center; border-bottom: Black 1.5pt solid">Three months ended<BR>
 April 30,</TD><TD STYLE="font: 10pt Times New Roman, Times, Serif; padding-bottom: 1.5pt">&nbsp;</TD><TD STYLE="font: 10pt Times New Roman, Times, Serif; padding-bottom: 1.5pt">&nbsp;</TD>
    <TD COLSPAN="6" STYLE="font: 10pt Times New Roman, Times, Serif; text-align: center; border-bottom: Black 1.5pt solid">Nine months ended <BR>
April 30,</TD><TD STYLE="font: 10pt Times New Roman, Times, Serif; padding-bottom: 1.5pt">&nbsp;</TD></TR>
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    <TD STYLE="font: 10pt Times New Roman, Times, Serif; text-align: center">&nbsp;</TD><TD STYLE="font: 10pt Times New Roman, Times, Serif; padding-bottom: 1.5pt">&nbsp;</TD>
    <TD COLSPAN="2" STYLE="font: 10pt Times New Roman, Times, Serif; text-align: center; border-bottom: Black 1.5pt solid">2019</TD><TD STYLE="padding-bottom: 1.5pt; font: 10pt Times New Roman, Times, Serif">&nbsp;</TD><TD STYLE="font: 10pt Times New Roman, Times, Serif; padding-bottom: 1.5pt">&nbsp;</TD>
    <TD COLSPAN="2" STYLE="font: 10pt Times New Roman, Times, Serif; text-align: center; border-bottom: Black 1.5pt solid">2018</TD><TD STYLE="padding-bottom: 1.5pt; font: 10pt Times New Roman, Times, Serif">&nbsp;</TD><TD STYLE="font: 10pt Times New Roman, Times, Serif; padding-bottom: 1.5pt">&nbsp;</TD>
    <TD COLSPAN="2" STYLE="font: 10pt Times New Roman, Times, Serif; text-align: center; border-bottom: Black 1.5pt solid">2019</TD><TD STYLE="padding-bottom: 1.5pt; font: 10pt Times New Roman, Times, Serif">&nbsp;</TD><TD STYLE="font: 10pt Times New Roman, Times, Serif; padding-bottom: 1.5pt">&nbsp;</TD>
    <TD COLSPAN="2" STYLE="font: 10pt Times New Roman, Times, Serif; text-align: center; border-bottom: Black 1.5pt solid">2018</TD><TD STYLE="padding-bottom: 1.5pt; font: 10pt Times New Roman, Times, Serif">&nbsp;</TD></TR>
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    <TD STYLE="font: 10pt Times New Roman, Times, Serif">OPERATING REVENUES:</TD><TD STYLE="font: 10pt Times New Roman, Times, Serif">&nbsp;</TD>
    <TD COLSPAN="2" STYLE="font: 10pt Times New Roman, Times, Serif">&nbsp;</TD><TD STYLE="font: 10pt Times New Roman, Times, Serif">&nbsp;</TD><TD STYLE="font: 10pt Times New Roman, Times, Serif">&nbsp;</TD>
    <TD COLSPAN="2" STYLE="font: 10pt Times New Roman, Times, Serif">&nbsp;</TD><TD STYLE="font: 10pt Times New Roman, Times, Serif">&nbsp;</TD><TD STYLE="font: 10pt Times New Roman, Times, Serif">&nbsp;</TD>
    <TD COLSPAN="2" STYLE="font: 10pt Times New Roman, Times, Serif">&nbsp;</TD><TD STYLE="font: 10pt Times New Roman, Times, Serif">&nbsp;</TD><TD STYLE="font: 10pt Times New Roman, Times, Serif">&nbsp;</TD>
    <TD COLSPAN="2" STYLE="font: 10pt Times New Roman, Times, Serif">&nbsp;</TD><TD STYLE="font: 10pt Times New Roman, Times, Serif">&nbsp;</TD></TR>
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    <TD STYLE="width: 52%; font: 10pt Times New Roman, Times, Serif; text-align: left; padding-bottom: 1.5pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Cloud-based hosted services</TD><TD STYLE="width: 1%; font: 10pt Times New Roman, Times, Serif; padding-bottom: 1.5pt">&nbsp;</TD>
    <TD STYLE="width: 1%; font: 10pt Times New Roman, Times, Serif; text-align: left; border-bottom: Black 1.5pt solid">$</TD><TD STYLE="width: 9%; font: 10pt Times New Roman, Times, Serif; text-align: right; border-bottom: Black 1.5pt solid">1,485</TD><TD STYLE="width: 1%; font: 10pt Times New Roman, Times, Serif; text-align: left; padding-bottom: 1.5pt">&nbsp;</TD><TD STYLE="width: 1%; font: 10pt Times New Roman, Times, Serif; padding-bottom: 1.5pt">&nbsp;</TD>
    <TD STYLE="width: 1%; font: 10pt Times New Roman, Times, Serif; text-align: left; border-bottom: Black 1.5pt solid">$</TD><TD STYLE="width: 9%; font: 10pt Times New Roman, Times, Serif; text-align: right; border-bottom: Black 1.5pt solid">196</TD><TD STYLE="width: 1%; font: 10pt Times New Roman, Times, Serif; text-align: left; padding-bottom: 1.5pt">&nbsp;</TD><TD STYLE="width: 1%; font: 10pt Times New Roman, Times, Serif; padding-bottom: 1.5pt">&nbsp;</TD>
    <TD STYLE="width: 1%; font: 10pt Times New Roman, Times, Serif; text-align: left; border-bottom: Black 1.5pt solid">$</TD><TD STYLE="width: 9%; font: 10pt Times New Roman, Times, Serif; text-align: right; border-bottom: Black 1.5pt solid">4,493</TD><TD STYLE="width: 1%; font: 10pt Times New Roman, Times, Serif; text-align: left; padding-bottom: 1.5pt">&nbsp;</TD><TD STYLE="width: 1%; font: 10pt Times New Roman, Times, Serif; padding-bottom: 1.5pt">&nbsp;</TD>
    <TD STYLE="width: 1%; font: 10pt Times New Roman, Times, Serif; text-align: left; border-bottom: Black 1.5pt solid">$</TD><TD STYLE="width: 9%; font: 10pt Times New Roman, Times, Serif; text-align: right; border-bottom: Black 1.5pt solid">403</TD><TD STYLE="width: 1%; font: 10pt Times New Roman, Times, Serif; text-align: left; padding-bottom: 1.5pt">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD STYLE="font: 10pt Times New Roman, Times, Serif">&nbsp;</TD><TD STYLE="font: 10pt Times New Roman, Times, Serif">&nbsp;</TD>
    <TD STYLE="font: 10pt Times New Roman, Times, Serif; text-align: left">&nbsp;</TD><TD STYLE="font: 10pt Times New Roman, Times, Serif; text-align: right">&nbsp;</TD><TD STYLE="font: 10pt Times New Roman, Times, Serif; text-align: left">&nbsp;</TD><TD STYLE="font: 10pt Times New Roman, Times, Serif">&nbsp;</TD>
    <TD STYLE="font: 10pt Times New Roman, Times, Serif; text-align: left">&nbsp;</TD><TD STYLE="font: 10pt Times New Roman, Times, Serif; text-align: right">&nbsp;</TD><TD STYLE="font: 10pt Times New Roman, Times, Serif; text-align: left">&nbsp;</TD><TD STYLE="font: 10pt Times New Roman, Times, Serif">&nbsp;</TD>
    <TD STYLE="font: 10pt Times New Roman, Times, Serif; text-align: left">&nbsp;</TD><TD STYLE="font: 10pt Times New Roman, Times, Serif; text-align: right">&nbsp;</TD><TD STYLE="font: 10pt Times New Roman, Times, Serif; text-align: left">&nbsp;</TD><TD STYLE="font: 10pt Times New Roman, Times, Serif">&nbsp;</TD>
    <TD STYLE="font: 10pt Times New Roman, Times, Serif; text-align: left">&nbsp;</TD><TD STYLE="font: 10pt Times New Roman, Times, Serif; text-align: right">&nbsp;</TD><TD STYLE="font: 10pt Times New Roman, Times, Serif; text-align: left">&nbsp;</TD></TR>
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    <TD STYLE="font: 10pt Times New Roman, Times, Serif; text-align: left; padding-bottom: 1.5pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Total operating revenues</TD><TD STYLE="font: 10pt Times New Roman, Times, Serif; padding-bottom: 1.5pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 1.5pt solid; font: 10pt Times New Roman, Times, Serif; text-align: left">&nbsp;</TD><TD STYLE="border-bottom: Black 1.5pt solid; font: 10pt Times New Roman, Times, Serif; text-align: right">1,485</TD><TD STYLE="padding-bottom: 1.5pt; font: 10pt Times New Roman, Times, Serif; text-align: left">&nbsp;</TD><TD STYLE="font: 10pt Times New Roman, Times, Serif; padding-bottom: 1.5pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 1.5pt solid; font: 10pt Times New Roman, Times, Serif; text-align: left">&nbsp;</TD><TD STYLE="border-bottom: Black 1.5pt solid; font: 10pt Times New Roman, Times, Serif; text-align: right">196</TD><TD STYLE="padding-bottom: 1.5pt; font: 10pt Times New Roman, Times, Serif; text-align: left">&nbsp;</TD><TD STYLE="font: 10pt Times New Roman, Times, Serif; padding-bottom: 1.5pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 1.5pt solid; font: 10pt Times New Roman, Times, Serif; text-align: left">&nbsp;</TD><TD STYLE="border-bottom: Black 1.5pt solid; font: 10pt Times New Roman, Times, Serif; text-align: right">4,493</TD><TD STYLE="padding-bottom: 1.5pt; font: 10pt Times New Roman, Times, Serif; text-align: left">&nbsp;</TD><TD STYLE="font: 10pt Times New Roman, Times, Serif; padding-bottom: 1.5pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 1.5pt solid; font: 10pt Times New Roman, Times, Serif; text-align: left">&nbsp;</TD><TD STYLE="border-bottom: Black 1.5pt solid; font: 10pt Times New Roman, Times, Serif; text-align: right">403</TD><TD STYLE="padding-bottom: 1.5pt; font: 10pt Times New Roman, Times, Serif; text-align: left">&nbsp;</TD></TR>
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    <TD STYLE="font: 10pt Times New Roman, Times, Serif; text-align: right">&nbsp;</TD><TD STYLE="font: 10pt Times New Roman, Times, Serif">&nbsp;</TD>
    <TD STYLE="font: 10pt Times New Roman, Times, Serif; text-align: left">&nbsp;</TD><TD STYLE="font: 10pt Times New Roman, Times, Serif; text-align: right">&nbsp;</TD><TD STYLE="font: 10pt Times New Roman, Times, Serif; text-align: left">&nbsp;</TD><TD STYLE="font: 10pt Times New Roman, Times, Serif">&nbsp;</TD>
    <TD STYLE="font: 10pt Times New Roman, Times, Serif; text-align: left">&nbsp;</TD><TD STYLE="font: 10pt Times New Roman, Times, Serif; text-align: right">&nbsp;</TD><TD STYLE="font: 10pt Times New Roman, Times, Serif; text-align: left">&nbsp;</TD><TD STYLE="font: 10pt Times New Roman, Times, Serif">&nbsp;</TD>
    <TD STYLE="font: 10pt Times New Roman, Times, Serif; text-align: left">&nbsp;</TD><TD STYLE="font: 10pt Times New Roman, Times, Serif; text-align: right">&nbsp;</TD><TD STYLE="font: 10pt Times New Roman, Times, Serif; text-align: left">&nbsp;</TD><TD STYLE="font: 10pt Times New Roman, Times, Serif">&nbsp;</TD>
    <TD STYLE="font: 10pt Times New Roman, Times, Serif; text-align: left">&nbsp;</TD><TD STYLE="font: 10pt Times New Roman, Times, Serif; text-align: right">&nbsp;</TD><TD STYLE="font: 10pt Times New Roman, Times, Serif; text-align: left">&nbsp;</TD></TR>
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    <TD STYLE="font: 10pt Times New Roman, Times, Serif; text-align: left">OPERATING EXPENSES:</TD><TD STYLE="font: 10pt Times New Roman, Times, Serif">&nbsp;</TD>
    <TD STYLE="font: 10pt Times New Roman, Times, Serif; text-align: left">&nbsp;</TD><TD STYLE="font: 10pt Times New Roman, Times, Serif; text-align: right">&nbsp;</TD><TD STYLE="font: 10pt Times New Roman, Times, Serif; text-align: left">&nbsp;</TD><TD STYLE="font: 10pt Times New Roman, Times, Serif">&nbsp;</TD>
    <TD STYLE="font: 10pt Times New Roman, Times, Serif; text-align: left">&nbsp;</TD><TD STYLE="font: 10pt Times New Roman, Times, Serif; text-align: right">&nbsp;</TD><TD STYLE="font: 10pt Times New Roman, Times, Serif; text-align: left">&nbsp;</TD><TD STYLE="font: 10pt Times New Roman, Times, Serif">&nbsp;</TD>
    <TD STYLE="font: 10pt Times New Roman, Times, Serif; text-align: left">&nbsp;</TD><TD STYLE="font: 10pt Times New Roman, Times, Serif; text-align: right">&nbsp;</TD><TD STYLE="font: 10pt Times New Roman, Times, Serif; text-align: left">&nbsp;</TD><TD STYLE="font: 10pt Times New Roman, Times, Serif">&nbsp;</TD>
    <TD STYLE="font: 10pt Times New Roman, Times, Serif; text-align: left">&nbsp;</TD><TD STYLE="font: 10pt Times New Roman, Times, Serif; text-align: right">&nbsp;</TD><TD STYLE="font: 10pt Times New Roman, Times, Serif; text-align: left">&nbsp;</TD></TR>
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    <TD STYLE="font: 10pt Times New Roman, Times, Serif; text-align: left; text-indent: -0.25in; padding-left: 0.25in">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Cost of services (exclusive of depreciation and amortization)</TD><TD STYLE="font: 10pt Times New Roman, Times, Serif">&nbsp;</TD>
    <TD STYLE="font: 10pt Times New Roman, Times, Serif; text-align: left">&nbsp;</TD><TD STYLE="font: 10pt Times New Roman, Times, Serif; text-align: right">770</TD><TD STYLE="font: 10pt Times New Roman, Times, Serif; text-align: left">&nbsp;</TD><TD STYLE="font: 10pt Times New Roman, Times, Serif">&nbsp;</TD>
    <TD STYLE="font: 10pt Times New Roman, Times, Serif; text-align: left">&nbsp;</TD><TD STYLE="font: 10pt Times New Roman, Times, Serif; text-align: right">106</TD><TD STYLE="font: 10pt Times New Roman, Times, Serif; text-align: left">&nbsp;</TD><TD STYLE="font: 10pt Times New Roman, Times, Serif">&nbsp;</TD>
    <TD STYLE="font: 10pt Times New Roman, Times, Serif; text-align: left">&nbsp;</TD><TD STYLE="font: 10pt Times New Roman, Times, Serif; text-align: right">2,322</TD><TD STYLE="font: 10pt Times New Roman, Times, Serif; text-align: left">&nbsp;</TD><TD STYLE="font: 10pt Times New Roman, Times, Serif">&nbsp;</TD>
    <TD STYLE="font: 10pt Times New Roman, Times, Serif; text-align: left">&nbsp;</TD><TD STYLE="font: 10pt Times New Roman, Times, Serif; text-align: right">249</TD><TD STYLE="font: 10pt Times New Roman, Times, Serif; text-align: left">&nbsp;</TD></TR>
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    <TD STYLE="font: 10pt Times New Roman, Times, Serif; text-align: left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Selling, general and administrative expense</TD><TD STYLE="font: 10pt Times New Roman, Times, Serif">&nbsp;</TD>
    <TD STYLE="font: 10pt Times New Roman, Times, Serif; text-align: left">&nbsp;</TD><TD STYLE="font: 10pt Times New Roman, Times, Serif; text-align: right">875</TD><TD STYLE="font: 10pt Times New Roman, Times, Serif; text-align: left">&nbsp;</TD><TD STYLE="font: 10pt Times New Roman, Times, Serif">&nbsp;</TD>
    <TD STYLE="font: 10pt Times New Roman, Times, Serif; text-align: left">&nbsp;</TD><TD STYLE="font: 10pt Times New Roman, Times, Serif; text-align: right">332</TD><TD STYLE="font: 10pt Times New Roman, Times, Serif; text-align: left">&nbsp;</TD><TD STYLE="font: 10pt Times New Roman, Times, Serif">&nbsp;</TD>
    <TD STYLE="font: 10pt Times New Roman, Times, Serif; text-align: left">&nbsp;</TD><TD STYLE="font: 10pt Times New Roman, Times, Serif; text-align: right">2,309</TD><TD STYLE="font: 10pt Times New Roman, Times, Serif; text-align: left">&nbsp;</TD><TD STYLE="font: 10pt Times New Roman, Times, Serif">&nbsp;</TD>
    <TD STYLE="font: 10pt Times New Roman, Times, Serif; text-align: left">&nbsp;</TD><TD STYLE="font: 10pt Times New Roman, Times, Serif; text-align: right">830</TD><TD STYLE="font: 10pt Times New Roman, Times, Serif; text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD STYLE="font: 10pt Times New Roman, Times, Serif; text-align: left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Stock compensation &amp; warrant expense</TD><TD STYLE="font: 10pt Times New Roman, Times, Serif">&nbsp;</TD>
    <TD STYLE="font: 10pt Times New Roman, Times, Serif; text-align: left">&nbsp;</TD><TD STYLE="font: 10pt Times New Roman, Times, Serif; text-align: right">345</TD><TD STYLE="font: 10pt Times New Roman, Times, Serif; text-align: left">&nbsp;</TD><TD STYLE="font: 10pt Times New Roman, Times, Serif">&nbsp;</TD>
    <TD STYLE="font: 10pt Times New Roman, Times, Serif; text-align: left">&nbsp;</TD><TD STYLE="font: 10pt Times New Roman, Times, Serif; text-align: right">354</TD><TD STYLE="font: 10pt Times New Roman, Times, Serif; text-align: left">&nbsp;</TD><TD STYLE="font: 10pt Times New Roman, Times, Serif">&nbsp;</TD>
    <TD STYLE="font: 10pt Times New Roman, Times, Serif; text-align: left">&nbsp;</TD><TD STYLE="font: 10pt Times New Roman, Times, Serif; text-align: right">731</TD><TD STYLE="font: 10pt Times New Roman, Times, Serif; text-align: left">&nbsp;</TD><TD STYLE="font: 10pt Times New Roman, Times, Serif">&nbsp;</TD>
    <TD STYLE="font: 10pt Times New Roman, Times, Serif; text-align: left">&nbsp;</TD><TD STYLE="font: 10pt Times New Roman, Times, Serif; text-align: right">1,328</TD><TD STYLE="font: 10pt Times New Roman, Times, Serif; text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,238,255)">
    <TD STYLE="font: 10pt Times New Roman, Times, Serif; text-align: left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Legal and professional fees</TD><TD STYLE="font: 10pt Times New Roman, Times, Serif">&nbsp;</TD>
    <TD STYLE="font: 10pt Times New Roman, Times, Serif; text-align: left">&nbsp;</TD><TD STYLE="font: 10pt Times New Roman, Times, Serif; text-align: right">95</TD><TD STYLE="font: 10pt Times New Roman, Times, Serif; text-align: left">&nbsp;</TD><TD STYLE="font: 10pt Times New Roman, Times, Serif">&nbsp;</TD>
    <TD STYLE="font: 10pt Times New Roman, Times, Serif; text-align: left">&nbsp;</TD><TD STYLE="font: 10pt Times New Roman, Times, Serif; text-align: right">68</TD><TD STYLE="font: 10pt Times New Roman, Times, Serif; text-align: left">&nbsp;</TD><TD STYLE="font: 10pt Times New Roman, Times, Serif">&nbsp;</TD>
    <TD STYLE="font: 10pt Times New Roman, Times, Serif; text-align: left">&nbsp;</TD><TD STYLE="font: 10pt Times New Roman, Times, Serif; text-align: right">305</TD><TD STYLE="font: 10pt Times New Roman, Times, Serif; text-align: left">&nbsp;</TD><TD STYLE="font: 10pt Times New Roman, Times, Serif">&nbsp;</TD>
    <TD STYLE="font: 10pt Times New Roman, Times, Serif; text-align: left">&nbsp;</TD><TD STYLE="font: 10pt Times New Roman, Times, Serif; text-align: right">359</TD><TD STYLE="font: 10pt Times New Roman, Times, Serif; text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD STYLE="font: 10pt Times New Roman, Times, Serif; text-align: left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Bad debt</TD><TD STYLE="font: 10pt Times New Roman, Times, Serif">&nbsp;</TD>
    <TD STYLE="font: 10pt Times New Roman, Times, Serif; text-align: left">&nbsp;</TD><TD STYLE="font: 10pt Times New Roman, Times, Serif; text-align: right">-</TD><TD STYLE="font: 10pt Times New Roman, Times, Serif; text-align: left">&nbsp;</TD><TD STYLE="font: 10pt Times New Roman, Times, Serif">&nbsp;</TD>
    <TD STYLE="font: 10pt Times New Roman, Times, Serif; text-align: left">&nbsp;</TD><TD STYLE="font: 10pt Times New Roman, Times, Serif; text-align: right">-</TD><TD STYLE="font: 10pt Times New Roman, Times, Serif; text-align: left">&nbsp;</TD><TD STYLE="font: 10pt Times New Roman, Times, Serif">&nbsp;</TD>
    <TD STYLE="font: 10pt Times New Roman, Times, Serif; text-align: left">&nbsp;</TD><TD STYLE="font: 10pt Times New Roman, Times, Serif; text-align: right">(3</TD><TD STYLE="font: 10pt Times New Roman, Times, Serif; text-align: left">)</TD><TD STYLE="font: 10pt Times New Roman, Times, Serif">&nbsp;</TD>
    <TD STYLE="font: 10pt Times New Roman, Times, Serif; text-align: left">&nbsp;</TD><TD STYLE="font: 10pt Times New Roman, Times, Serif; text-align: right">-</TD><TD STYLE="font: 10pt Times New Roman, Times, Serif; text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,238,255)">
    <TD STYLE="font: 10pt Times New Roman, Times, Serif; text-align: left; padding-bottom: 1.5pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Depreciation and amortization expense</TD><TD STYLE="font: 10pt Times New Roman, Times, Serif; padding-bottom: 1.5pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 1.5pt solid; font: 10pt Times New Roman, Times, Serif; text-align: left">&nbsp;</TD><TD STYLE="border-bottom: Black 1.5pt solid; font: 10pt Times New Roman, Times, Serif; text-align: right">167</TD><TD STYLE="padding-bottom: 1.5pt; font: 10pt Times New Roman, Times, Serif; text-align: left">&nbsp;</TD><TD STYLE="font: 10pt Times New Roman, Times, Serif; padding-bottom: 1.5pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 1.5pt solid; font: 10pt Times New Roman, Times, Serif; text-align: left">&nbsp;</TD><TD STYLE="border-bottom: Black 1.5pt solid; font: 10pt Times New Roman, Times, Serif; text-align: right">50</TD><TD STYLE="padding-bottom: 1.5pt; font: 10pt Times New Roman, Times, Serif; text-align: left">&nbsp;</TD><TD STYLE="font: 10pt Times New Roman, Times, Serif; padding-bottom: 1.5pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 1.5pt solid; font: 10pt Times New Roman, Times, Serif; text-align: left">&nbsp;</TD><TD STYLE="border-bottom: Black 1.5pt solid; font: 10pt Times New Roman, Times, Serif; text-align: right">505</TD><TD STYLE="padding-bottom: 1.5pt; font: 10pt Times New Roman, Times, Serif; text-align: left">&nbsp;</TD><TD STYLE="font: 10pt Times New Roman, Times, Serif; padding-bottom: 1.5pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 1.5pt solid; font: 10pt Times New Roman, Times, Serif; text-align: left">&nbsp;</TD><TD STYLE="border-bottom: Black 1.5pt solid; font: 10pt Times New Roman, Times, Serif; text-align: right">89</TD><TD STYLE="padding-bottom: 1.5pt; font: 10pt Times New Roman, Times, Serif; text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD STYLE="font: 10pt Times New Roman, Times, Serif; text-align: left; padding-bottom: 1.5pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Total operating expenses</TD><TD STYLE="font: 10pt Times New Roman, Times, Serif; padding-bottom: 1.5pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 1.5pt solid; font: 10pt Times New Roman, Times, Serif; text-align: left">&nbsp;</TD><TD STYLE="border-bottom: Black 1.5pt solid; font: 10pt Times New Roman, Times, Serif; text-align: right">2,252</TD><TD STYLE="padding-bottom: 1.5pt; font: 10pt Times New Roman, Times, Serif; text-align: left">&nbsp;</TD><TD STYLE="font: 10pt Times New Roman, Times, Serif; padding-bottom: 1.5pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 1.5pt solid; font: 10pt Times New Roman, Times, Serif; text-align: left">&nbsp;</TD><TD STYLE="border-bottom: Black 1.5pt solid; font: 10pt Times New Roman, Times, Serif; text-align: right">910</TD><TD STYLE="padding-bottom: 1.5pt; font: 10pt Times New Roman, Times, Serif; text-align: left">&nbsp;</TD><TD STYLE="font: 10pt Times New Roman, Times, Serif; padding-bottom: 1.5pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 1.5pt solid; font: 10pt Times New Roman, Times, Serif; text-align: left">&nbsp;</TD><TD STYLE="border-bottom: Black 1.5pt solid; font: 10pt Times New Roman, Times, Serif; text-align: right">6,169</TD><TD STYLE="padding-bottom: 1.5pt; font: 10pt Times New Roman, Times, Serif; text-align: left">&nbsp;</TD><TD STYLE="font: 10pt Times New Roman, Times, Serif; padding-bottom: 1.5pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 1.5pt solid; font: 10pt Times New Roman, Times, Serif; text-align: left">&nbsp;</TD><TD STYLE="border-bottom: Black 1.5pt solid; font: 10pt Times New Roman, Times, Serif; text-align: right">2,855</TD><TD STYLE="padding-bottom: 1.5pt; font: 10pt Times New Roman, Times, Serif; text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,238,255)">
    <TD STYLE="font: 10pt Times New Roman, Times, Serif">&nbsp;</TD><TD STYLE="font: 10pt Times New Roman, Times, Serif">&nbsp;</TD>
    <TD STYLE="font: 10pt Times New Roman, Times, Serif; text-align: left">&nbsp;</TD><TD STYLE="font: 10pt Times New Roman, Times, Serif; text-align: right">&nbsp;</TD><TD STYLE="font: 10pt Times New Roman, Times, Serif; text-align: left">&nbsp;</TD><TD STYLE="font: 10pt Times New Roman, Times, Serif">&nbsp;</TD>
    <TD STYLE="font: 10pt Times New Roman, Times, Serif; text-align: left">&nbsp;</TD><TD STYLE="font: 10pt Times New Roman, Times, Serif; text-align: right">&nbsp;</TD><TD STYLE="font: 10pt Times New Roman, Times, Serif; text-align: left">&nbsp;</TD><TD STYLE="font: 10pt Times New Roman, Times, Serif">&nbsp;</TD>
    <TD STYLE="font: 10pt Times New Roman, Times, Serif; text-align: left">&nbsp;</TD><TD STYLE="font: 10pt Times New Roman, Times, Serif; text-align: right">&nbsp;</TD><TD STYLE="font: 10pt Times New Roman, Times, Serif; text-align: left">&nbsp;</TD><TD STYLE="font: 10pt Times New Roman, Times, Serif">&nbsp;</TD>
    <TD STYLE="font: 10pt Times New Roman, Times, Serif; text-align: left">&nbsp;</TD><TD STYLE="font: 10pt Times New Roman, Times, Serif; text-align: right">&nbsp;</TD><TD STYLE="font: 10pt Times New Roman, Times, Serif; text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD STYLE="font: 10pt Times New Roman, Times, Serif; text-align: left; padding-bottom: 1.5pt">OPERATING LOSS</TD><TD STYLE="font: 10pt Times New Roman, Times, Serif; padding-bottom: 1.5pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 1.5pt solid; font: 10pt Times New Roman, Times, Serif; text-align: left">&nbsp;</TD><TD STYLE="border-bottom: Black 1.5pt solid; font: 10pt Times New Roman, Times, Serif; text-align: right">(767</TD><TD STYLE="padding-bottom: 1.5pt; font: 10pt Times New Roman, Times, Serif; text-align: left">)</TD><TD STYLE="font: 10pt Times New Roman, Times, Serif; padding-bottom: 1.5pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 1.5pt solid; font: 10pt Times New Roman, Times, Serif; text-align: left">&nbsp;</TD><TD STYLE="border-bottom: Black 1.5pt solid; font: 10pt Times New Roman, Times, Serif; text-align: right">(714</TD><TD STYLE="padding-bottom: 1.5pt; font: 10pt Times New Roman, Times, Serif; text-align: left">)</TD><TD STYLE="font: 10pt Times New Roman, Times, Serif; padding-bottom: 1.5pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 1.5pt solid; font: 10pt Times New Roman, Times, Serif; text-align: left">&nbsp;</TD><TD STYLE="border-bottom: Black 1.5pt solid; font: 10pt Times New Roman, Times, Serif; text-align: right">(1,676</TD><TD STYLE="padding-bottom: 1.5pt; font: 10pt Times New Roman, Times, Serif; text-align: left">)</TD><TD STYLE="font: 10pt Times New Roman, Times, Serif; padding-bottom: 1.5pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 1.5pt solid; font: 10pt Times New Roman, Times, Serif; text-align: left">&nbsp;</TD><TD STYLE="border-bottom: Black 1.5pt solid; font: 10pt Times New Roman, Times, Serif; text-align: right">(2,452</TD><TD STYLE="padding-bottom: 1.5pt; font: 10pt Times New Roman, Times, Serif; text-align: left">)</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,238,255)">
    <TD STYLE="font: 10pt Times New Roman, Times, Serif">&nbsp;</TD><TD STYLE="font: 10pt Times New Roman, Times, Serif">&nbsp;</TD>
    <TD STYLE="font: 10pt Times New Roman, Times, Serif; text-align: left">&nbsp;</TD><TD STYLE="font: 10pt Times New Roman, Times, Serif; text-align: right">&nbsp;</TD><TD STYLE="font: 10pt Times New Roman, Times, Serif; text-align: left">&nbsp;</TD><TD STYLE="font: 10pt Times New Roman, Times, Serif">&nbsp;</TD>
    <TD STYLE="font: 10pt Times New Roman, Times, Serif; text-align: left">&nbsp;</TD><TD STYLE="font: 10pt Times New Roman, Times, Serif; text-align: right">&nbsp;</TD><TD STYLE="font: 10pt Times New Roman, Times, Serif; text-align: left">&nbsp;</TD><TD STYLE="font: 10pt Times New Roman, Times, Serif">&nbsp;</TD>
    <TD STYLE="font: 10pt Times New Roman, Times, Serif; text-align: left">&nbsp;</TD><TD STYLE="font: 10pt Times New Roman, Times, Serif; text-align: right">&nbsp;</TD><TD STYLE="font: 10pt Times New Roman, Times, Serif; text-align: left">&nbsp;</TD><TD STYLE="font: 10pt Times New Roman, Times, Serif">&nbsp;</TD>
    <TD STYLE="font: 10pt Times New Roman, Times, Serif; text-align: left">&nbsp;</TD><TD STYLE="font: 10pt Times New Roman, Times, Serif; text-align: right">&nbsp;</TD><TD STYLE="font: 10pt Times New Roman, Times, Serif; text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD STYLE="font: 10pt Times New Roman, Times, Serif; text-align: left">OTHER INCOME (EXPENSE):</TD><TD STYLE="font: 10pt Times New Roman, Times, Serif">&nbsp;</TD>
    <TD STYLE="font: 10pt Times New Roman, Times, Serif; text-align: left">&nbsp;</TD><TD STYLE="font: 10pt Times New Roman, Times, Serif; text-align: right">&nbsp;</TD><TD STYLE="font: 10pt Times New Roman, Times, Serif; text-align: left">&nbsp;</TD><TD STYLE="font: 10pt Times New Roman, Times, Serif">&nbsp;</TD>
    <TD STYLE="font: 10pt Times New Roman, Times, Serif; text-align: left">&nbsp;</TD><TD STYLE="font: 10pt Times New Roman, Times, Serif; text-align: right">&nbsp;</TD><TD STYLE="font: 10pt Times New Roman, Times, Serif; text-align: left">&nbsp;</TD><TD STYLE="font: 10pt Times New Roman, Times, Serif">&nbsp;</TD>
    <TD STYLE="font: 10pt Times New Roman, Times, Serif; text-align: left">&nbsp;</TD><TD STYLE="font: 10pt Times New Roman, Times, Serif; text-align: right">&nbsp;</TD><TD STYLE="font: 10pt Times New Roman, Times, Serif; text-align: left">&nbsp;</TD><TD STYLE="font: 10pt Times New Roman, Times, Serif">&nbsp;</TD>
    <TD STYLE="font: 10pt Times New Roman, Times, Serif; text-align: left">&nbsp;</TD><TD STYLE="font: 10pt Times New Roman, Times, Serif; text-align: right">&nbsp;</TD><TD STYLE="font: 10pt Times New Roman, Times, Serif; text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,238,255)">
    <TD STYLE="font: 10pt Times New Roman, Times, Serif; text-align: left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Gain (loss) on derivative instruments</TD><TD STYLE="font: 10pt Times New Roman, Times, Serif">&nbsp;</TD>
    <TD STYLE="font: 10pt Times New Roman, Times, Serif; text-align: left">&nbsp;</TD><TD STYLE="font: 10pt Times New Roman, Times, Serif; text-align: right">903</TD><TD STYLE="font: 10pt Times New Roman, Times, Serif; text-align: left">&nbsp;</TD><TD STYLE="font: 10pt Times New Roman, Times, Serif">&nbsp;</TD>
    <TD STYLE="font: 10pt Times New Roman, Times, Serif; text-align: left">&nbsp;</TD><TD STYLE="font: 10pt Times New Roman, Times, Serif; text-align: right">47</TD><TD STYLE="font: 10pt Times New Roman, Times, Serif; text-align: left">&nbsp;</TD><TD STYLE="font: 10pt Times New Roman, Times, Serif">&nbsp;</TD>
    <TD STYLE="font: 10pt Times New Roman, Times, Serif; text-align: left">&nbsp;</TD><TD STYLE="font: 10pt Times New Roman, Times, Serif; text-align: right">(594</TD><TD STYLE="font: 10pt Times New Roman, Times, Serif; text-align: left">)</TD><TD STYLE="font: 10pt Times New Roman, Times, Serif">&nbsp;</TD>
    <TD STYLE="font: 10pt Times New Roman, Times, Serif; text-align: left">&nbsp;</TD><TD STYLE="font: 10pt Times New Roman, Times, Serif; text-align: right">155</TD><TD STYLE="font: 10pt Times New Roman, Times, Serif; text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD STYLE="font: 10pt Times New Roman, Times, Serif; text-align: left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Income tax</TD><TD STYLE="font: 10pt Times New Roman, Times, Serif">&nbsp;</TD>
    <TD STYLE="font: 10pt Times New Roman, Times, Serif; text-align: left">&nbsp;</TD><TD STYLE="font: 10pt Times New Roman, Times, Serif; text-align: right">(10</TD><TD STYLE="font: 10pt Times New Roman, Times, Serif; text-align: left">)</TD><TD STYLE="font: 10pt Times New Roman, Times, Serif">&nbsp;</TD>
    <TD STYLE="font: 10pt Times New Roman, Times, Serif; text-align: left">&nbsp;</TD><TD STYLE="font: 10pt Times New Roman, Times, Serif; text-align: right">-</TD><TD STYLE="font: 10pt Times New Roman, Times, Serif; text-align: left">&nbsp;</TD><TD STYLE="font: 10pt Times New Roman, Times, Serif">&nbsp;</TD>
    <TD STYLE="font: 10pt Times New Roman, Times, Serif; text-align: left">&nbsp;</TD><TD STYLE="font: 10pt Times New Roman, Times, Serif; text-align: right">(37</TD><TD STYLE="font: 10pt Times New Roman, Times, Serif; text-align: left">)</TD><TD STYLE="font: 10pt Times New Roman, Times, Serif">&nbsp;</TD>
    <TD STYLE="font: 10pt Times New Roman, Times, Serif; text-align: left">&nbsp;</TD><TD STYLE="font: 10pt Times New Roman, Times, Serif; text-align: right">-</TD><TD STYLE="font: 10pt Times New Roman, Times, Serif; text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,238,255)">
    <TD STYLE="font: 10pt Times New Roman, Times, Serif; text-align: left; padding-bottom: 1.5pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Interest income (expense)</TD><TD STYLE="font: 10pt Times New Roman, Times, Serif; padding-bottom: 1.5pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 1.5pt solid; font: 10pt Times New Roman, Times, Serif; text-align: left">&nbsp;</TD><TD STYLE="border-bottom: Black 1.5pt solid; font: 10pt Times New Roman, Times, Serif; text-align: right">(376</TD><TD STYLE="padding-bottom: 1.5pt; font: 10pt Times New Roman, Times, Serif; text-align: left">)</TD><TD STYLE="font: 10pt Times New Roman, Times, Serif; padding-bottom: 1.5pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 1.5pt solid; font: 10pt Times New Roman, Times, Serif; text-align: left">&nbsp;</TD><TD STYLE="border-bottom: Black 1.5pt solid; font: 10pt Times New Roman, Times, Serif; text-align: right">(41</TD><TD STYLE="padding-bottom: 1.5pt; font: 10pt Times New Roman, Times, Serif; text-align: left">)</TD><TD STYLE="font: 10pt Times New Roman, Times, Serif; padding-bottom: 1.5pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 1.5pt solid; font: 10pt Times New Roman, Times, Serif; text-align: left">&nbsp;</TD><TD STYLE="border-bottom: Black 1.5pt solid; font: 10pt Times New Roman, Times, Serif; text-align: right">(1,414</TD><TD STYLE="padding-bottom: 1.5pt; font: 10pt Times New Roman, Times, Serif; text-align: left">)</TD><TD STYLE="font: 10pt Times New Roman, Times, Serif; padding-bottom: 1.5pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 1.5pt solid; font: 10pt Times New Roman, Times, Serif; text-align: left">&nbsp;</TD><TD STYLE="border-bottom: Black 1.5pt solid; font: 10pt Times New Roman, Times, Serif; text-align: right">(250</TD><TD STYLE="padding-bottom: 1.5pt; font: 10pt Times New Roman, Times, Serif; text-align: left">)</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD STYLE="font: 10pt Times New Roman, Times, Serif; text-align: left; padding-bottom: 1.5pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Total other income (expense)</TD><TD STYLE="font: 10pt Times New Roman, Times, Serif; padding-bottom: 1.5pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 1.5pt solid; font: 10pt Times New Roman, Times, Serif; text-align: left">&nbsp;</TD><TD STYLE="border-bottom: Black 1.5pt solid; font: 10pt Times New Roman, Times, Serif; text-align: right">517</TD><TD STYLE="padding-bottom: 1.5pt; font: 10pt Times New Roman, Times, Serif; text-align: left">&nbsp;</TD><TD STYLE="font: 10pt Times New Roman, Times, Serif; padding-bottom: 1.5pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 1.5pt solid; font: 10pt Times New Roman, Times, Serif; text-align: left">&nbsp;</TD><TD STYLE="border-bottom: Black 1.5pt solid; font: 10pt Times New Roman, Times, Serif; text-align: right">6</TD><TD STYLE="padding-bottom: 1.5pt; font: 10pt Times New Roman, Times, Serif; text-align: left">&nbsp;</TD><TD STYLE="font: 10pt Times New Roman, Times, Serif; padding-bottom: 1.5pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 1.5pt solid; font: 10pt Times New Roman, Times, Serif; text-align: left">&nbsp;</TD><TD STYLE="border-bottom: Black 1.5pt solid; font: 10pt Times New Roman, Times, Serif; text-align: right">(2,045</TD><TD STYLE="padding-bottom: 1.5pt; font: 10pt Times New Roman, Times, Serif; text-align: left">)</TD><TD STYLE="font: 10pt Times New Roman, Times, Serif; padding-bottom: 1.5pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 1.5pt solid; font: 10pt Times New Roman, Times, Serif; text-align: left">&nbsp;</TD><TD STYLE="border-bottom: Black 1.5pt solid; font: 10pt Times New Roman, Times, Serif; text-align: right">(95</TD><TD STYLE="padding-bottom: 1.5pt; font: 10pt Times New Roman, Times, Serif; text-align: left">)</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,238,255)">
    <TD STYLE="font: 10pt Times New Roman, Times, Serif">&nbsp;</TD><TD STYLE="font: 10pt Times New Roman, Times, Serif">&nbsp;</TD>
    <TD STYLE="font: 10pt Times New Roman, Times, Serif; text-align: left">&nbsp;</TD><TD STYLE="font: 10pt Times New Roman, Times, Serif; text-align: right">&nbsp;</TD><TD STYLE="font: 10pt Times New Roman, Times, Serif; text-align: left">&nbsp;</TD><TD STYLE="font: 10pt Times New Roman, Times, Serif">&nbsp;</TD>
    <TD STYLE="font: 10pt Times New Roman, Times, Serif; text-align: left">&nbsp;</TD><TD STYLE="font: 10pt Times New Roman, Times, Serif; text-align: right">&nbsp;</TD><TD STYLE="font: 10pt Times New Roman, Times, Serif; text-align: left">&nbsp;</TD><TD STYLE="font: 10pt Times New Roman, Times, Serif">&nbsp;</TD>
    <TD STYLE="font: 10pt Times New Roman, Times, Serif; text-align: left">&nbsp;</TD><TD STYLE="font: 10pt Times New Roman, Times, Serif; text-align: right">&nbsp;</TD><TD STYLE="font: 10pt Times New Roman, Times, Serif; text-align: left">&nbsp;</TD><TD STYLE="font: 10pt Times New Roman, Times, Serif">&nbsp;</TD>
    <TD STYLE="font: 10pt Times New Roman, Times, Serif; text-align: left">&nbsp;</TD><TD STYLE="font: 10pt Times New Roman, Times, Serif; text-align: right">&nbsp;</TD><TD STYLE="font: 10pt Times New Roman, Times, Serif; text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD STYLE="font: 10pt Times New Roman, Times, Serif; text-align: left; padding-bottom: 1.5pt">NET LOSS INCLUDING NONCONTROLLING INTEREST</TD><TD STYLE="font: 10pt Times New Roman, Times, Serif; padding-bottom: 1.5pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 1.5pt solid; font: 10pt Times New Roman, Times, Serif; text-align: left">&nbsp;</TD><TD STYLE="border-bottom: Black 1.5pt solid; font: 10pt Times New Roman, Times, Serif; text-align: right">(250</TD><TD STYLE="padding-bottom: 1.5pt; font: 10pt Times New Roman, Times, Serif; text-align: left">)</TD><TD STYLE="font: 10pt Times New Roman, Times, Serif; padding-bottom: 1.5pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 1.5pt solid; font: 10pt Times New Roman, Times, Serif; text-align: left">&nbsp;</TD><TD STYLE="border-bottom: Black 1.5pt solid; font: 10pt Times New Roman, Times, Serif; text-align: right">(708</TD><TD STYLE="padding-bottom: 1.5pt; font: 10pt Times New Roman, Times, Serif; text-align: left">)</TD><TD STYLE="font: 10pt Times New Roman, Times, Serif; padding-bottom: 1.5pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 1.5pt solid; font: 10pt Times New Roman, Times, Serif; text-align: left">&nbsp;</TD><TD STYLE="border-bottom: Black 1.5pt solid; font: 10pt Times New Roman, Times, Serif; text-align: right">(3,721</TD><TD STYLE="padding-bottom: 1.5pt; font: 10pt Times New Roman, Times, Serif; text-align: left">)</TD><TD STYLE="font: 10pt Times New Roman, Times, Serif; padding-bottom: 1.5pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 1.5pt solid; font: 10pt Times New Roman, Times, Serif; text-align: left">&nbsp;</TD><TD STYLE="border-bottom: Black 1.5pt solid; font: 10pt Times New Roman, Times, Serif; text-align: right">(2,547</TD><TD STYLE="padding-bottom: 1.5pt; font: 10pt Times New Roman, Times, Serif; text-align: left">)</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,238,255)">
    <TD STYLE="font: 10pt Times New Roman, Times, Serif">&nbsp;</TD><TD STYLE="font: 10pt Times New Roman, Times, Serif">&nbsp;</TD>
    <TD STYLE="font: 10pt Times New Roman, Times, Serif; text-align: left">&nbsp;</TD><TD STYLE="font: 10pt Times New Roman, Times, Serif; text-align: right">&nbsp;</TD><TD STYLE="font: 10pt Times New Roman, Times, Serif; text-align: left">&nbsp;</TD><TD STYLE="font: 10pt Times New Roman, Times, Serif">&nbsp;</TD>
    <TD STYLE="font: 10pt Times New Roman, Times, Serif; text-align: left">&nbsp;</TD><TD STYLE="font: 10pt Times New Roman, Times, Serif; text-align: right">&nbsp;</TD><TD STYLE="font: 10pt Times New Roman, Times, Serif; text-align: left">&nbsp;</TD><TD STYLE="font: 10pt Times New Roman, Times, Serif">&nbsp;</TD>
    <TD STYLE="font: 10pt Times New Roman, Times, Serif; text-align: left">&nbsp;</TD><TD STYLE="font: 10pt Times New Roman, Times, Serif; text-align: right">&nbsp;</TD><TD STYLE="font: 10pt Times New Roman, Times, Serif; text-align: left">&nbsp;</TD><TD STYLE="font: 10pt Times New Roman, Times, Serif">&nbsp;</TD>
    <TD STYLE="font: 10pt Times New Roman, Times, Serif; text-align: left">&nbsp;</TD><TD STYLE="font: 10pt Times New Roman, Times, Serif; text-align: right">&nbsp;</TD><TD STYLE="font: 10pt Times New Roman, Times, Serif; text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD STYLE="font: 10pt Times New Roman, Times, Serif; text-align: left; padding-bottom: 1.5pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Less: Net loss attributable to the noncontrolling interest</TD><TD STYLE="font: 10pt Times New Roman, Times, Serif; padding-bottom: 1.5pt">&nbsp;</TD>
    <TD STYLE="font: 10pt Times New Roman, Times, Serif; text-align: left; border-bottom: Black 1.5pt solid">&nbsp;</TD><TD STYLE="font: 10pt Times New Roman, Times, Serif; text-align: right; border-bottom: Black 1.5pt solid">29</TD><TD STYLE="font: 10pt Times New Roman, Times, Serif; text-align: left; padding-bottom: 1.5pt">&nbsp;</TD><TD STYLE="font: 10pt Times New Roman, Times, Serif; padding-bottom: 1.5pt">&nbsp;</TD>
    <TD STYLE="font: 10pt Times New Roman, Times, Serif; text-align: left; border-bottom: Black 1.5pt solid">&nbsp;</TD><TD STYLE="font: 10pt Times New Roman, Times, Serif; text-align: right; border-bottom: Black 1.5pt solid">-</TD><TD STYLE="font: 10pt Times New Roman, Times, Serif; text-align: left; padding-bottom: 1.5pt">&nbsp;</TD><TD STYLE="font: 10pt Times New Roman, Times, Serif; padding-bottom: 1.5pt">&nbsp;</TD>
    <TD STYLE="font: 10pt Times New Roman, Times, Serif; text-align: left; border-bottom: Black 1.5pt solid">&nbsp;</TD><TD STYLE="font: 10pt Times New Roman, Times, Serif; text-align: right; border-bottom: Black 1.5pt solid">87</TD><TD STYLE="font: 10pt Times New Roman, Times, Serif; text-align: left; padding-bottom: 1.5pt">&nbsp;</TD><TD STYLE="font: 10pt Times New Roman, Times, Serif; padding-bottom: 1.5pt">&nbsp;</TD>
    <TD STYLE="font: 10pt Times New Roman, Times, Serif; text-align: left; border-bottom: Black 1.5pt solid">&nbsp;</TD><TD STYLE="font: 10pt Times New Roman, Times, Serif; text-align: right; border-bottom: Black 1.5pt solid">-</TD><TD STYLE="font: 10pt Times New Roman, Times, Serif; text-align: left; padding-bottom: 1.5pt">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,238,255)">
    <TD STYLE="font: 10pt Times New Roman, Times, Serif">&nbsp;</TD><TD STYLE="font: 10pt Times New Roman, Times, Serif">&nbsp;</TD>
    <TD STYLE="font: 10pt Times New Roman, Times, Serif; text-align: left">&nbsp;</TD><TD STYLE="font: 10pt Times New Roman, Times, Serif; text-align: right">&nbsp;</TD><TD STYLE="font: 10pt Times New Roman, Times, Serif; text-align: left">&nbsp;</TD><TD STYLE="font: 10pt Times New Roman, Times, Serif">&nbsp;</TD>
    <TD STYLE="font: 10pt Times New Roman, Times, Serif; text-align: left">&nbsp;</TD><TD STYLE="font: 10pt Times New Roman, Times, Serif; text-align: right">&nbsp;</TD><TD STYLE="font: 10pt Times New Roman, Times, Serif; text-align: left">&nbsp;</TD><TD STYLE="font: 10pt Times New Roman, Times, Serif">&nbsp;</TD>
    <TD STYLE="font: 10pt Times New Roman, Times, Serif; text-align: left">&nbsp;</TD><TD STYLE="font: 10pt Times New Roman, Times, Serif; text-align: right">&nbsp;</TD><TD STYLE="font: 10pt Times New Roman, Times, Serif; text-align: left">&nbsp;</TD><TD STYLE="font: 10pt Times New Roman, Times, Serif">&nbsp;</TD>
    <TD STYLE="font: 10pt Times New Roman, Times, Serif; text-align: left">&nbsp;</TD><TD STYLE="font: 10pt Times New Roman, Times, Serif; text-align: right">&nbsp;</TD><TD STYLE="font: 10pt Times New Roman, Times, Serif; text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD STYLE="font: 10pt Times New Roman, Times, Serif; text-align: left; padding-bottom: 4pt">NET LOSS</TD><TD STYLE="font: 10pt Times New Roman, Times, Serif; padding-bottom: 4pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 4pt double; font: 10pt Times New Roman, Times, Serif; text-align: left">$</TD><TD STYLE="border-bottom: Black 4pt double; font: 10pt Times New Roman, Times, Serif; text-align: right">(221</TD><TD STYLE="padding-bottom: 4pt; font: 10pt Times New Roman, Times, Serif; text-align: left">)</TD><TD STYLE="font: 10pt Times New Roman, Times, Serif; padding-bottom: 4pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 4pt double; font: 10pt Times New Roman, Times, Serif; text-align: left">$</TD><TD STYLE="border-bottom: Black 4pt double; font: 10pt Times New Roman, Times, Serif; text-align: right">(708</TD><TD STYLE="padding-bottom: 4pt; font: 10pt Times New Roman, Times, Serif; text-align: left">)</TD><TD STYLE="font: 10pt Times New Roman, Times, Serif; padding-bottom: 4pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 4pt double; font: 10pt Times New Roman, Times, Serif; text-align: left">$</TD><TD STYLE="border-bottom: Black 4pt double; font: 10pt Times New Roman, Times, Serif; text-align: right">(3,634</TD><TD STYLE="padding-bottom: 4pt; font: 10pt Times New Roman, Times, Serif; text-align: left">)</TD><TD STYLE="font: 10pt Times New Roman, Times, Serif; padding-bottom: 4pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 4pt double; font: 10pt Times New Roman, Times, Serif; text-align: left">$</TD><TD STYLE="border-bottom: Black 4pt double; font: 10pt Times New Roman, Times, Serif; text-align: right">(2,547</TD><TD STYLE="padding-bottom: 4pt; font: 10pt Times New Roman, Times, Serif; text-align: left">)</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,238,255)">
    <TD STYLE="font: 10pt Times New Roman, Times, Serif">&nbsp;</TD><TD STYLE="font: 10pt Times New Roman, Times, Serif">&nbsp;</TD>
    <TD STYLE="font: 10pt Times New Roman, Times, Serif; text-align: left">&nbsp;</TD><TD STYLE="font: 10pt Times New Roman, Times, Serif; text-align: right">&nbsp;</TD><TD STYLE="font: 10pt Times New Roman, Times, Serif; text-align: left">&nbsp;</TD><TD STYLE="font: 10pt Times New Roman, Times, Serif">&nbsp;</TD>
    <TD STYLE="font: 10pt Times New Roman, Times, Serif; text-align: left">&nbsp;</TD><TD STYLE="font: 10pt Times New Roman, Times, Serif; text-align: right">&nbsp;</TD><TD STYLE="font: 10pt Times New Roman, Times, Serif; text-align: left">&nbsp;</TD><TD STYLE="font: 10pt Times New Roman, Times, Serif">&nbsp;</TD>
    <TD STYLE="font: 10pt Times New Roman, Times, Serif; text-align: left">&nbsp;</TD><TD STYLE="font: 10pt Times New Roman, Times, Serif; text-align: right">&nbsp;</TD><TD STYLE="font: 10pt Times New Roman, Times, Serif; text-align: left">&nbsp;</TD><TD STYLE="font: 10pt Times New Roman, Times, Serif">&nbsp;</TD>
    <TD STYLE="font: 10pt Times New Roman, Times, Serif; text-align: left">&nbsp;</TD><TD STYLE="font: 10pt Times New Roman, Times, Serif; text-align: right">&nbsp;</TD><TD STYLE="font: 10pt Times New Roman, Times, Serif; text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD STYLE="font: 10pt Times New Roman, Times, Serif; text-align: left; padding-bottom: 1.5pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Deemed dividend on Series A Convertible preferred stock</TD><TD STYLE="font: 10pt Times New Roman, Times, Serif; padding-bottom: 1.5pt">&nbsp;</TD>
    <TD STYLE="font: 10pt Times New Roman, Times, Serif; text-align: left; border-bottom: Black 1.5pt solid">&nbsp;</TD><TD STYLE="font: 10pt Times New Roman, Times, Serif; text-align: right; border-bottom: Black 1.5pt solid">(2</TD><TD STYLE="font: 10pt Times New Roman, Times, Serif; text-align: left; padding-bottom: 1.5pt">)</TD><TD STYLE="font: 10pt Times New Roman, Times, Serif; padding-bottom: 1.5pt">&nbsp;</TD>
    <TD STYLE="font: 10pt Times New Roman, Times, Serif; text-align: left; border-bottom: Black 1.5pt solid">&nbsp;</TD><TD STYLE="font: 10pt Times New Roman, Times, Serif; text-align: right; border-bottom: Black 1.5pt solid">-</TD><TD STYLE="font: 10pt Times New Roman, Times, Serif; text-align: left; padding-bottom: 1.5pt"></TD><TD STYLE="font: 10pt Times New Roman, Times, Serif; padding-bottom: 1.5pt">&nbsp;</TD>
    <TD STYLE="font: 10pt Times New Roman, Times, Serif; text-align: left; border-bottom: Black 1.5pt solid">&nbsp;</TD><TD STYLE="font: 10pt Times New Roman, Times, Serif; text-align: right; border-bottom: Black 1.5pt solid">(2</TD><TD STYLE="font: 10pt Times New Roman, Times, Serif; text-align: left; padding-bottom: 1.5pt">)</TD><TD STYLE="font: 10pt Times New Roman, Times, Serif; padding-bottom: 1.5pt">&nbsp;</TD>
    <TD STYLE="font: 10pt Times New Roman, Times, Serif; text-align: left; border-bottom: Black 1.5pt solid">&nbsp;</TD><TD STYLE="font: 10pt Times New Roman, Times, Serif; text-align: right; border-bottom: Black 1.5pt solid">-</TD><TD STYLE="font: 10pt Times New Roman, Times, Serif; text-align: left; padding-bottom: 1.5pt">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,238,255)">
    <TD STYLE="font: 10pt Times New Roman, Times, Serif">&nbsp;</TD><TD STYLE="font: 10pt Times New Roman, Times, Serif">&nbsp;</TD>
    <TD STYLE="font: 10pt Times New Roman, Times, Serif; text-align: left">&nbsp;</TD><TD STYLE="font: 10pt Times New Roman, Times, Serif; text-align: right">&nbsp;</TD><TD STYLE="font: 10pt Times New Roman, Times, Serif; text-align: left">&nbsp;</TD><TD STYLE="font: 10pt Times New Roman, Times, Serif">&nbsp;</TD>
    <TD STYLE="font: 10pt Times New Roman, Times, Serif; text-align: left">&nbsp;</TD><TD STYLE="font: 10pt Times New Roman, Times, Serif; text-align: right">&nbsp;</TD><TD STYLE="font: 10pt Times New Roman, Times, Serif; text-align: left">&nbsp;</TD><TD STYLE="font: 10pt Times New Roman, Times, Serif">&nbsp;</TD>
    <TD STYLE="font: 10pt Times New Roman, Times, Serif; text-align: left">&nbsp;</TD><TD STYLE="font: 10pt Times New Roman, Times, Serif; text-align: right">&nbsp;</TD><TD STYLE="font: 10pt Times New Roman, Times, Serif; text-align: left">&nbsp;</TD><TD STYLE="font: 10pt Times New Roman, Times, Serif">&nbsp;</TD>
    <TD STYLE="font: 10pt Times New Roman, Times, Serif; text-align: left">&nbsp;</TD><TD STYLE="font: 10pt Times New Roman, Times, Serif; text-align: right">&nbsp;</TD><TD STYLE="font: 10pt Times New Roman, Times, Serif; text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD STYLE="font: 10pt Times New Roman, Times, Serif; text-align: left; padding-bottom: 4pt; padding-left: 0.125in; text-indent: -0.125in">NET LOSS ATTRIBUTABLE TO DIGERATI&rsquo;S COMMON SHAREHOLDERS</TD><TD STYLE="font: 10pt Times New Roman, Times, Serif; padding-bottom: 4pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 4pt double; font: 10pt Times New Roman, Times, Serif; text-align: left">$</TD><TD STYLE="border-bottom: Black 4pt double; font: 10pt Times New Roman, Times, Serif; text-align: right">(223</TD><TD STYLE="padding-bottom: 4pt; font: 10pt Times New Roman, Times, Serif; text-align: left">)</TD><TD STYLE="font: 10pt Times New Roman, Times, Serif; padding-bottom: 4pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 4pt double; font: 10pt Times New Roman, Times, Serif; text-align: left">$</TD><TD STYLE="border-bottom: Black 4pt double; font: 10pt Times New Roman, Times, Serif; text-align: right">(708</TD><TD STYLE="padding-bottom: 4pt; font: 10pt Times New Roman, Times, Serif; text-align: left">)</TD><TD STYLE="font: 10pt Times New Roman, Times, Serif; padding-bottom: 4pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 4pt double; font: 10pt Times New Roman, Times, Serif; text-align: left">$</TD><TD STYLE="border-bottom: Black 4pt double; font: 10pt Times New Roman, Times, Serif; text-align: right">(3,636</TD><TD STYLE="padding-bottom: 4pt; font: 10pt Times New Roman, Times, Serif; text-align: left">)</TD><TD STYLE="font: 10pt Times New Roman, Times, Serif; padding-bottom: 4pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 4pt double; font: 10pt Times New Roman, Times, Serif; text-align: left">$</TD><TD STYLE="border-bottom: Black 4pt double; font: 10pt Times New Roman, Times, Serif; text-align: right">(2,547</TD><TD STYLE="padding-bottom: 4pt; font: 10pt Times New Roman, Times, Serif; text-align: left">)</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,238,255)">
    <TD STYLE="font: 10pt Times New Roman, Times, Serif">&nbsp;</TD><TD STYLE="font: 10pt Times New Roman, Times, Serif">&nbsp;</TD>
    <TD STYLE="font: 10pt Times New Roman, Times, Serif; text-align: left">&nbsp;</TD><TD STYLE="font: 10pt Times New Roman, Times, Serif; text-align: right">&nbsp;</TD><TD STYLE="font: 10pt Times New Roman, Times, Serif; text-align: left">&nbsp;</TD><TD STYLE="font: 10pt Times New Roman, Times, Serif">&nbsp;</TD>
    <TD STYLE="font: 10pt Times New Roman, Times, Serif; text-align: left">&nbsp;</TD><TD STYLE="font: 10pt Times New Roman, Times, Serif; text-align: right">&nbsp;</TD><TD STYLE="font: 10pt Times New Roman, Times, Serif; text-align: left">&nbsp;</TD><TD STYLE="font: 10pt Times New Roman, Times, Serif">&nbsp;</TD>
    <TD STYLE="font: 10pt Times New Roman, Times, Serif; text-align: left">&nbsp;</TD><TD STYLE="font: 10pt Times New Roman, Times, Serif; text-align: right">&nbsp;</TD><TD STYLE="font: 10pt Times New Roman, Times, Serif; text-align: left">&nbsp;</TD><TD STYLE="font: 10pt Times New Roman, Times, Serif">&nbsp;</TD>
    <TD STYLE="font: 10pt Times New Roman, Times, Serif; text-align: left">&nbsp;</TD><TD STYLE="font: 10pt Times New Roman, Times, Serif; text-align: right">&nbsp;</TD><TD STYLE="font: 10pt Times New Roman, Times, Serif; text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD STYLE="font: 10pt Times New Roman, Times, Serif; text-align: left; padding-bottom: 4pt">INCOME (LOSS) PER COMMON SHARE - BASIC</TD><TD STYLE="font: 10pt Times New Roman, Times, Serif; padding-bottom: 4pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 4pt double; font: 10pt Times New Roman, Times, Serif; text-align: left">$</TD><TD STYLE="border-bottom: Black 4pt double; font: 10pt Times New Roman, Times, Serif; text-align: right">(0.01</TD><TD STYLE="padding-bottom: 4pt; font: 10pt Times New Roman, Times, Serif; text-align: left">)</TD><TD STYLE="font: 10pt Times New Roman, Times, Serif; padding-bottom: 4pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 4pt double; font: 10pt Times New Roman, Times, Serif; text-align: left">$</TD><TD STYLE="border-bottom: Black 4pt double; font: 10pt Times New Roman, Times, Serif; text-align: right">(0.06</TD><TD STYLE="padding-bottom: 4pt; font: 10pt Times New Roman, Times, Serif; text-align: left">)</TD><TD STYLE="font: 10pt Times New Roman, Times, Serif; padding-bottom: 4pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 4pt double; font: 10pt Times New Roman, Times, Serif; text-align: left">$</TD><TD STYLE="border-bottom: Black 4pt double; font: 10pt Times New Roman, Times, Serif; text-align: right">(0.24</TD><TD STYLE="padding-bottom: 4pt; font: 10pt Times New Roman, Times, Serif; text-align: left">)</TD><TD STYLE="font: 10pt Times New Roman, Times, Serif; padding-bottom: 4pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 4pt double; font: 10pt Times New Roman, Times, Serif; text-align: left">$</TD><TD STYLE="border-bottom: Black 4pt double; font: 10pt Times New Roman, Times, Serif; text-align: right">(0.26</TD><TD STYLE="padding-bottom: 4pt; font: 10pt Times New Roman, Times, Serif; text-align: left">)</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,238,255)">
    <TD STYLE="font: 10pt Times New Roman, Times, Serif; text-align: left">&nbsp;</TD><TD STYLE="font: 10pt Times New Roman, Times, Serif">&nbsp;</TD>
    <TD STYLE="font: 10pt Times New Roman, Times, Serif; text-align: left">&nbsp;</TD><TD STYLE="font: 10pt Times New Roman, Times, Serif; text-align: right">&nbsp;</TD><TD STYLE="font: 10pt Times New Roman, Times, Serif; text-align: left">&nbsp;</TD><TD STYLE="font: 10pt Times New Roman, Times, Serif">&nbsp;</TD>
    <TD STYLE="font: 10pt Times New Roman, Times, Serif; text-align: left">&nbsp;</TD><TD STYLE="font: 10pt Times New Roman, Times, Serif; text-align: right">&nbsp;</TD><TD STYLE="font: 10pt Times New Roman, Times, Serif; text-align: left">&nbsp;</TD><TD STYLE="font: 10pt Times New Roman, Times, Serif">&nbsp;</TD>
    <TD STYLE="font: 10pt Times New Roman, Times, Serif; text-align: left">&nbsp;</TD><TD STYLE="font: 10pt Times New Roman, Times, Serif; text-align: right">&nbsp;</TD><TD STYLE="font: 10pt Times New Roman, Times, Serif; text-align: left">&nbsp;</TD><TD STYLE="font: 10pt Times New Roman, Times, Serif">&nbsp;</TD>
    <TD STYLE="font: 10pt Times New Roman, Times, Serif; text-align: left">&nbsp;</TD><TD STYLE="font: 10pt Times New Roman, Times, Serif; text-align: right">&nbsp;</TD><TD STYLE="font: 10pt Times New Roman, Times, Serif; text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD STYLE="font: 10pt Times New Roman, Times, Serif; text-align: left; padding-bottom: 4pt">INCOME (LOSS) PER COMMON SHARE - DILUTED</TD><TD STYLE="font: 10pt Times New Roman, Times, Serif; padding-bottom: 4pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 4pt double; font: 10pt Times New Roman, Times, Serif; text-align: left">$</TD><TD STYLE="border-bottom: Black 4pt double; font: 10pt Times New Roman, Times, Serif; text-align: right">(0.01</TD><TD STYLE="padding-bottom: 4pt; font: 10pt Times New Roman, Times, Serif; text-align: left">)</TD><TD STYLE="font: 10pt Times New Roman, Times, Serif; padding-bottom: 4pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 4pt double; font: 10pt Times New Roman, Times, Serif; text-align: left">$</TD><TD STYLE="border-bottom: Black 4pt double; font: 10pt Times New Roman, Times, Serif; text-align: right">(0.06</TD><TD STYLE="padding-bottom: 4pt; font: 10pt Times New Roman, Times, Serif; text-align: left">)</TD><TD STYLE="font: 10pt Times New Roman, Times, Serif; padding-bottom: 4pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 4pt double; font: 10pt Times New Roman, Times, Serif; text-align: left">$</TD><TD STYLE="border-bottom: Black 4pt double; font: 10pt Times New Roman, Times, Serif; text-align: right">(0.24</TD><TD STYLE="padding-bottom: 4pt; font: 10pt Times New Roman, Times, Serif; text-align: left">)</TD><TD STYLE="font: 10pt Times New Roman, Times, Serif; padding-bottom: 4pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 4pt double; font: 10pt Times New Roman, Times, Serif; text-align: left">$</TD><TD STYLE="border-bottom: Black 4pt double; font: 10pt Times New Roman, Times, Serif; text-align: right">(0.26</TD><TD STYLE="padding-bottom: 4pt; font: 10pt Times New Roman, Times, Serif; text-align: left">)</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,238,255)">
    <TD STYLE="font: 10pt Times New Roman, Times, Serif">&nbsp;</TD><TD STYLE="font: 10pt Times New Roman, Times, Serif">&nbsp;</TD>
    <TD STYLE="font: 10pt Times New Roman, Times, Serif; text-align: left">&nbsp;</TD><TD STYLE="font: 10pt Times New Roman, Times, Serif; text-align: right">&nbsp;</TD><TD STYLE="font: 10pt Times New Roman, Times, Serif; text-align: left">&nbsp;</TD><TD STYLE="font: 10pt Times New Roman, Times, Serif">&nbsp;</TD>
    <TD STYLE="font: 10pt Times New Roman, Times, Serif; text-align: left">&nbsp;</TD><TD STYLE="font: 10pt Times New Roman, Times, Serif; text-align: right">&nbsp;</TD><TD STYLE="font: 10pt Times New Roman, Times, Serif; text-align: left">&nbsp;</TD><TD STYLE="font: 10pt Times New Roman, Times, Serif">&nbsp;</TD>
    <TD STYLE="font: 10pt Times New Roman, Times, Serif; text-align: left">&nbsp;</TD><TD STYLE="font: 10pt Times New Roman, Times, Serif; text-align: right">&nbsp;</TD><TD STYLE="font: 10pt Times New Roman, Times, Serif; text-align: left">&nbsp;</TD><TD STYLE="font: 10pt Times New Roman, Times, Serif">&nbsp;</TD>
    <TD STYLE="font: 10pt Times New Roman, Times, Serif; text-align: left">&nbsp;</TD><TD STYLE="font: 10pt Times New Roman, Times, Serif; text-align: right">&nbsp;</TD><TD STYLE="font: 10pt Times New Roman, Times, Serif; text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD STYLE="font: 10pt Times New Roman, Times, Serif; padding-bottom: 4pt; text-indent: -0.125in; padding-left: 0.125in">WEIGHTED AVERAGE COMMON SHARES OUTSTANDING - BASIC</TD><TD STYLE="font: 10pt Times New Roman, Times, Serif; padding-bottom: 4pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 4pt double; font: 10pt Times New Roman, Times, Serif; text-align: left">&nbsp;</TD><TD STYLE="border-bottom: Black 4pt double; font: 10pt Times New Roman, Times, Serif; text-align: right">18,184,442</TD><TD STYLE="padding-bottom: 4pt; font: 10pt Times New Roman, Times, Serif; text-align: left">&nbsp;</TD><TD STYLE="font: 10pt Times New Roman, Times, Serif; padding-bottom: 4pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 4pt double; font: 10pt Times New Roman, Times, Serif; text-align: left">&nbsp;</TD><TD STYLE="border-bottom: Black 4pt double; font: 10pt Times New Roman, Times, Serif; text-align: right">11,063,326</TD><TD STYLE="padding-bottom: 4pt; font: 10pt Times New Roman, Times, Serif; text-align: left">&nbsp;</TD><TD STYLE="font: 10pt Times New Roman, Times, Serif; padding-bottom: 4pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 4pt double; font: 10pt Times New Roman, Times, Serif; text-align: left">&nbsp;</TD><TD STYLE="border-bottom: Black 4pt double; font: 10pt Times New Roman, Times, Serif; text-align: right">15,163,082</TD><TD STYLE="padding-bottom: 4pt; font: 10pt Times New Roman, Times, Serif; text-align: left">&nbsp;</TD><TD STYLE="font: 10pt Times New Roman, Times, Serif; padding-bottom: 4pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 4pt double; font: 10pt Times New Roman, Times, Serif; text-align: left">&nbsp;</TD><TD STYLE="border-bottom: Black 4pt double; font: 10pt Times New Roman, Times, Serif; text-align: right">9,903,152</TD><TD STYLE="padding-bottom: 4pt; font: 10pt Times New Roman, Times, Serif; text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,238,255)">
    <TD STYLE="font: 10pt Times New Roman, Times, Serif">&nbsp;</TD><TD STYLE="font: 10pt Times New Roman, Times, Serif">&nbsp;</TD>
    <TD STYLE="font: 10pt Times New Roman, Times, Serif; text-align: left">&nbsp;</TD><TD STYLE="font: 10pt Times New Roman, Times, Serif; text-align: right">&nbsp;</TD><TD STYLE="font: 10pt Times New Roman, Times, Serif; text-align: left">&nbsp;</TD><TD STYLE="font: 10pt Times New Roman, Times, Serif">&nbsp;</TD>
    <TD STYLE="font: 10pt Times New Roman, Times, Serif; text-align: left">&nbsp;</TD><TD STYLE="font: 10pt Times New Roman, Times, Serif; text-align: right">&nbsp;</TD><TD STYLE="font: 10pt Times New Roman, Times, Serif; text-align: left">&nbsp;</TD><TD STYLE="font: 10pt Times New Roman, Times, Serif">&nbsp;</TD>
    <TD STYLE="font: 10pt Times New Roman, Times, Serif; text-align: left">&nbsp;</TD><TD STYLE="font: 10pt Times New Roman, Times, Serif; text-align: right">&nbsp;</TD><TD STYLE="font: 10pt Times New Roman, Times, Serif; text-align: left">&nbsp;</TD><TD STYLE="font: 10pt Times New Roman, Times, Serif">&nbsp;</TD>
    <TD STYLE="font: 10pt Times New Roman, Times, Serif; text-align: left">&nbsp;</TD><TD STYLE="font: 10pt Times New Roman, Times, Serif; text-align: right">&nbsp;</TD><TD STYLE="font: 10pt Times New Roman, Times, Serif; text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD STYLE="font: 10pt Times New Roman, Times, Serif; padding-bottom: 4pt; padding-left: 0.125in; text-indent: -0.125in">WEIGHTED AVERAGE COMMON SHARES OUTSTANDING - DILUTED</TD><TD STYLE="font: 10pt Times New Roman, Times, Serif; padding-bottom: 4pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 4pt double; font: 10pt Times New Roman, Times, Serif; text-align: left">&nbsp;</TD><TD STYLE="border-bottom: Black 4pt double; font: 10pt Times New Roman, Times, Serif; text-align: right">18,184,442</TD><TD STYLE="padding-bottom: 4pt; font: 10pt Times New Roman, Times, Serif; text-align: left">&nbsp;</TD><TD STYLE="font: 10pt Times New Roman, Times, Serif; padding-bottom: 4pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 4pt double; font: 10pt Times New Roman, Times, Serif; text-align: left">&nbsp;</TD><TD STYLE="border-bottom: Black 4pt double; font: 10pt Times New Roman, Times, Serif; text-align: right">11,063,326</TD><TD STYLE="padding-bottom: 4pt; font: 10pt Times New Roman, Times, Serif; text-align: left">&nbsp;</TD><TD STYLE="font: 10pt Times New Roman, Times, Serif; padding-bottom: 4pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 4pt double; font: 10pt Times New Roman, Times, Serif; text-align: left">&nbsp;</TD><TD STYLE="border-bottom: Black 4pt double; font: 10pt Times New Roman, Times, Serif; text-align: right">15,163,082</TD><TD STYLE="padding-bottom: 4pt; font: 10pt Times New Roman, Times, Serif; text-align: left">&nbsp;</TD><TD STYLE="font: 10pt Times New Roman, Times, Serif; padding-bottom: 4pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 4pt double; font: 10pt Times New Roman, Times, Serif; text-align: left">&nbsp;</TD><TD STYLE="border-bottom: Black 4pt double; font: 10pt Times New Roman, Times, Serif; text-align: right">9,903,152</TD><TD STYLE="padding-bottom: 4pt; font: 10pt Times New Roman, Times, Serif; text-align: left">&nbsp;</TD></TR>
</TABLE>


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<P STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0; margin-bottom: 0; text-align: center"><FONT STYLE="font: 10pt Times New Roman, Times, Serif">See
accompanying notes to unaudited consolidated financial statements</FONT></P>


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<P STYLE="margin: 0; font: 10pt Times New Roman, Times, Serif"><FONT STYLE="font: 10pt Times New Roman, Times, Serif">&nbsp;&nbsp;</FONT></P>

<P STYLE="margin: 0; font: 10pt Times New Roman, Times, Serif"></P>

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<P STYLE="text-align: center; font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt"><A NAME="ff_035"></A><FONT STYLE="font: 10pt Times New Roman, Times, Serif">DIGERATI TECHNOLOGIES, INC. AND SUBSIDIARIES</FONT></P>

<P STYLE="text-align: center; font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt"><FONT STYLE="font: 10pt Times New Roman, Times, Serif">CONSOLIDATED STATEMENTS OF STOCKHOLDERS&rsquo; DEFICIT&nbsp;</FONT></P>

<P STYLE="text-align: center; font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt"><FONT STYLE="font: 10pt Times New Roman, Times, Serif">Nine-Month Period Ended April 30, 2019</FONT></P>

<P STYLE="text-align: center; font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt"><FONT STYLE="font: 10pt Times New Roman, Times, Serif">(In thousands, except for share amounts, unaudited)</FONT></P>



<P STYLE="margin: 0">&nbsp;</P>

<TABLE CELLPADDING="0" CELLSPACING="0" STYLE="border-collapse: collapse; width: 100%; font: 10pt Times New Roman, Times, Serif">
<TR STYLE="vertical-align: bottom">
    <TD STYLE="font: 10pt Times New Roman, Times, Serif; text-align: center; padding-left: 5pt; text-indent: -5pt"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">&nbsp;</FONT></TD><TD STYLE="font: 10pt Times New Roman, Times, Serif; padding-bottom: 1.5pt; text-align: center"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">&nbsp;</FONT></TD>
    <TD COLSPAN="26" STYLE="font: 10pt Times New Roman, Times, Serif; text-align: center; border-bottom: Black 1.5pt solid"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">Equity
    Digerati&rsquo;s Shareholders</FONT></TD><TD STYLE="padding-bottom: 1.5pt; font: 10pt Times New Roman, Times, Serif; text-align: center"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">&nbsp;</FONT></TD><TD STYLE="font: 10pt Times New Roman, Times, Serif; padding-bottom: 1.5pt; text-align: center"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">&nbsp;</FONT></TD>
    <TD COLSPAN="2" STYLE="font: 10pt Times New Roman, Times, Serif; text-align: center"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">&nbsp;</FONT></TD><TD STYLE="padding-bottom: 1.5pt; font: 10pt Times New Roman, Times, Serif; text-align: center"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">&nbsp;</FONT></TD><TD STYLE="font: 10pt Times New Roman, Times, Serif; padding-bottom: 1.5pt; text-align: center"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">&nbsp;</FONT></TD>
    <TD COLSPAN="2" STYLE="font: 10pt Times New Roman, Times, Serif; text-align: center"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">&nbsp;</FONT></TD><TD STYLE="padding-bottom: 1.5pt; font: 10pt Times New Roman, Times, Serif; text-align: center"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">&nbsp;</FONT></TD><TD STYLE="font: 10pt Times New Roman, Times, Serif; padding-bottom: 1.5pt; text-align: center"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">&nbsp;</FONT></TD>
    <TD COLSPAN="2" STYLE="font: 10pt Times New Roman, Times, Serif; text-align: center"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">&nbsp;</FONT></TD><TD STYLE="padding-bottom: 1.5pt; font: 10pt Times New Roman, Times, Serif; text-align: center"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">&nbsp;</FONT></TD></TR>
<TR STYLE="vertical-align: bottom">
    <TD STYLE="font: 10pt Times New Roman, Times, Serif; text-align: center; padding-left: 5pt; text-indent: -5pt"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">&nbsp;</FONT></TD><TD STYLE="font: 10pt Times New Roman, Times, Serif; text-align: center"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">&nbsp;</FONT></TD>
    <TD COLSPAN="6" STYLE="font: 10pt Times New Roman, Times, Serif; text-align: center; border-bottom: Black 1.5pt solid"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">Convertible
    Preferred</FONT></TD><TD STYLE="font: 10pt Times New Roman, Times, Serif; text-align: center"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">&nbsp;</FONT></TD><TD STYLE="font: 10pt Times New Roman, Times, Serif; text-align: center"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">&nbsp;</FONT></TD>
    <TD COLSPAN="6" STYLE="font: 10pt Times New Roman, Times, Serif; text-align: center; border-bottom: Black 1.5pt solid"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">Common</FONT></TD><TD STYLE="font: 10pt Times New Roman, Times, Serif; text-align: center"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">&nbsp;</FONT></TD><TD STYLE="font: 10pt Times New Roman, Times, Serif; text-align: center"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">&nbsp;</FONT></TD>
    <TD COLSPAN="2" STYLE="font: 10pt Times New Roman, Times, Serif; text-align: center"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">Additional<BR>
    Paid-in</FONT></TD><TD STYLE="font: 10pt Times New Roman, Times, Serif; text-align: center"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">&nbsp;</FONT></TD><TD STYLE="font: 10pt Times New Roman, Times, Serif; text-align: center"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">&nbsp;</FONT></TD>
    <TD COLSPAN="2" STYLE="font: 10pt Times New Roman, Times, Serif; text-align: center"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">Accumulated</FONT></TD><TD STYLE="font: 10pt Times New Roman, Times, Serif; text-align: center"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">&nbsp;</FONT></TD><TD STYLE="font: 10pt Times New Roman, Times, Serif; text-align: center"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">&nbsp;</FONT></TD>
    <TD COLSPAN="2" STYLE="font: 10pt Times New Roman, Times, Serif; text-align: center"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">Other<BR>
    Comprehensive</FONT></TD><TD STYLE="font: 10pt Times New Roman, Times, Serif; text-align: center"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">&nbsp;</FONT></TD><TD STYLE="font: 10pt Times New Roman, Times, Serif; text-align: center"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">&nbsp;</FONT></TD>
    <TD COLSPAN="2" STYLE="font: 10pt Times New Roman, Times, Serif; text-align: center"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">Stockholders</FONT></TD><TD STYLE="font: 10pt Times New Roman, Times, Serif; text-align: center"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">&nbsp;</FONT></TD><TD STYLE="font: 10pt Times New Roman, Times, Serif; text-align: center"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">&nbsp;</FONT></TD>
    <TD COLSPAN="2" STYLE="font: 10pt Times New Roman, Times, Serif; text-align: center"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">Noncontrolling</FONT></TD><TD STYLE="font: 10pt Times New Roman, Times, Serif; text-align: center"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">&nbsp;</FONT></TD><TD STYLE="font: 10pt Times New Roman, Times, Serif; text-align: center"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">&nbsp;</FONT></TD>
    <TD COLSPAN="2" STYLE="font: 10pt Times New Roman, Times, Serif; text-align: center"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">&nbsp;</FONT></TD><TD STYLE="font: 10pt Times New Roman, Times, Serif; text-align: center"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">&nbsp;</FONT></TD></TR>
<TR STYLE="vertical-align: bottom">
    <TD STYLE="font: 10pt Times New Roman, Times, Serif; text-align: center; padding-left: 5pt; text-indent: -5pt"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">&nbsp;</FONT></TD><TD STYLE="font: 10pt Times New Roman, Times, Serif; padding-bottom: 1.5pt; text-align: center"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">&nbsp;</FONT></TD>
    <TD COLSPAN="2" STYLE="font: 10pt Times New Roman, Times, Serif; text-align: center; border-bottom: Black 1.5pt solid"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">Shares</FONT></TD><TD STYLE="padding-bottom: 1.5pt; font: 10pt Times New Roman, Times, Serif; text-align: center"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">&nbsp;</FONT></TD><TD STYLE="font: 10pt Times New Roman, Times, Serif; padding-bottom: 1.5pt; text-align: center"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">&nbsp;</FONT></TD>
    <TD COLSPAN="2" STYLE="font: 10pt Times New Roman, Times, Serif; text-align: center; border-bottom: Black 1.5pt solid"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">Par</FONT></TD><TD STYLE="padding-bottom: 1.5pt; font: 10pt Times New Roman, Times, Serif; text-align: center"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">&nbsp;</FONT></TD><TD STYLE="font: 10pt Times New Roman, Times, Serif; padding-bottom: 1.5pt; text-align: center"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">&nbsp;</FONT></TD>
    <TD COLSPAN="2" STYLE="font: 10pt Times New Roman, Times, Serif; text-align: center; border-bottom: Black 1.5pt solid"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">Shares</FONT></TD><TD STYLE="padding-bottom: 1.5pt; font: 10pt Times New Roman, Times, Serif; text-align: center"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">&nbsp;</FONT></TD><TD STYLE="font: 10pt Times New Roman, Times, Serif; padding-bottom: 1.5pt; text-align: center"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">&nbsp;</FONT></TD>
    <TD COLSPAN="2" STYLE="font: 10pt Times New Roman, Times, Serif; text-align: center; border-bottom: Black 1.5pt solid"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">Par</FONT></TD><TD STYLE="padding-bottom: 1.5pt; font: 10pt Times New Roman, Times, Serif; text-align: center"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">&nbsp;</FONT></TD><TD STYLE="font: 10pt Times New Roman, Times, Serif; padding-bottom: 1.5pt; text-align: center"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">&nbsp;</FONT></TD>
    <TD COLSPAN="2" STYLE="font: 10pt Times New Roman, Times, Serif; text-align: center; border-bottom: Black 1.5pt solid"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">Capital</FONT></TD><TD STYLE="padding-bottom: 1.5pt; font: 10pt Times New Roman, Times, Serif; text-align: center"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">&nbsp;</FONT></TD><TD STYLE="font: 10pt Times New Roman, Times, Serif; padding-bottom: 1.5pt; text-align: center"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">&nbsp;</FONT></TD>
    <TD COLSPAN="2" STYLE="font: 10pt Times New Roman, Times, Serif; text-align: center; border-bottom: Black 1.5pt solid"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">Deficit</FONT></TD><TD STYLE="padding-bottom: 1.5pt; font: 10pt Times New Roman, Times, Serif; text-align: center"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">&nbsp;</FONT></TD><TD STYLE="font: 10pt Times New Roman, Times, Serif; padding-bottom: 1.5pt; text-align: center"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">&nbsp;</FONT></TD>
    <TD COLSPAN="2" STYLE="font: 10pt Times New Roman, Times, Serif; text-align: center; border-bottom: Black 1.5pt solid"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">Income</FONT></TD><TD STYLE="padding-bottom: 1.5pt; font: 10pt Times New Roman, Times, Serif; text-align: center"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">&nbsp;</FONT></TD><TD STYLE="font: 10pt Times New Roman, Times, Serif; padding-bottom: 1.5pt; text-align: center"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">&nbsp;</FONT></TD>
    <TD COLSPAN="2" STYLE="font: 10pt Times New Roman, Times, Serif; text-align: center; border-bottom: Black 1.5pt solid"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">Equity</FONT></TD><TD STYLE="padding-bottom: 1.5pt; font: 10pt Times New Roman, Times, Serif; text-align: center"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">&nbsp;</FONT></TD><TD STYLE="font: 10pt Times New Roman, Times, Serif; padding-bottom: 1.5pt; text-align: center"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">&nbsp;</FONT></TD>
    <TD COLSPAN="2" STYLE="font: 10pt Times New Roman, Times, Serif; text-align: center; border-bottom: Black 1.5pt solid"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">Interest</FONT></TD><TD STYLE="padding-bottom: 1.5pt; font: 10pt Times New Roman, Times, Serif; text-align: center"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">&nbsp;</FONT></TD><TD STYLE="font: 10pt Times New Roman, Times, Serif; padding-bottom: 1.5pt; text-align: center"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">&nbsp;</FONT></TD>
    <TD COLSPAN="2" STYLE="font: 10pt Times New Roman, Times, Serif; text-align: center; border-bottom: Black 1.5pt solid"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">Totals</FONT></TD><TD STYLE="padding-bottom: 1.5pt; font: 10pt Times New Roman, Times, Serif; text-align: center"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">&nbsp;</FONT></TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,238,255)">
    <TD STYLE="font: 10pt Times New Roman, Times, Serif; padding-bottom: 1.5pt; width: 30%; padding-left: 5pt; text-indent: -5pt"><FONT STYLE="font-size: 10pt">BALANCE,
    July 31, 2018</FONT></TD><TD STYLE="width: 1%; font: 10pt Times New Roman, Times, Serif; padding-bottom: 1.5pt"><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD>
    <TD STYLE="width: 1%; border-bottom: Black 1.5pt solid; font: 10pt Times New Roman, Times, Serif; text-align: left"><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD><TD STYLE="width: 4%; border-bottom: Black 1.5pt solid; font: 10pt Times New Roman, Times, Serif; text-align: right"><FONT STYLE="font-size: 10pt">-</FONT></TD><TD STYLE="width: 1%; padding-bottom: 1.5pt; font: 10pt Times New Roman, Times, Serif; text-align: left"><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD><TD STYLE="width: 1%; font: 10pt Times New Roman, Times, Serif; padding-bottom: 1.5pt"><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD>
    <TD STYLE="width: 1%; border-bottom: Black 1.5pt solid; font: 10pt Times New Roman, Times, Serif; text-align: left"><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD><TD STYLE="width: 4%; border-bottom: Black 1.5pt solid; font: 10pt Times New Roman, Times, Serif; text-align: right"><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD><TD STYLE="width: 1%; padding-bottom: 1.5pt; font: 10pt Times New Roman, Times, Serif; text-align: left"><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD><TD STYLE="width: 1%; font: 10pt Times New Roman, Times, Serif; padding-bottom: 1.5pt"><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD>
    <TD STYLE="width: 1%; border-bottom: Black 1.5pt solid; font: 10pt Times New Roman, Times, Serif; text-align: left"><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD><TD STYLE="width: 4%; border-bottom: Black 1.5pt solid; font: 10pt Times New Roman, Times, Serif; text-align: right"><FONT STYLE="font-size: 10pt">12,775,143</FONT></TD><TD STYLE="width: 1%; padding-bottom: 1.5pt; font: 10pt Times New Roman, Times, Serif; text-align: left"><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD><TD STYLE="width: 1%; font: 10pt Times New Roman, Times, Serif; padding-bottom: 1.5pt"><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD>
    <TD STYLE="width: 1%; border-bottom: Black 1.5pt solid; font: 10pt Times New Roman, Times, Serif; text-align: left"><FONT STYLE="font-size: 10pt">$</FONT></TD><TD STYLE="width: 4%; border-bottom: Black 1.5pt solid; font: 10pt Times New Roman, Times, Serif; text-align: right"><FONT STYLE="font-size: 10pt">13</FONT></TD><TD STYLE="width: 1%; padding-bottom: 1.5pt; font: 10pt Times New Roman, Times, Serif; text-align: left"><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD><TD STYLE="width: 1%; font: 10pt Times New Roman, Times, Serif; padding-bottom: 1.5pt"><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD>
    <TD STYLE="width: 1%; border-bottom: Black 1.5pt solid; font: 10pt Times New Roman, Times, Serif; text-align: left"><FONT STYLE="font-size: 10pt">$</FONT></TD><TD STYLE="width: 4%; border-bottom: Black 1.5pt solid; font: 10pt Times New Roman, Times, Serif; text-align: right"><FONT STYLE="font-size: 10pt">79,993</FONT></TD><TD STYLE="width: 1%; padding-bottom: 1.5pt; font: 10pt Times New Roman, Times, Serif; text-align: left"><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD><TD STYLE="width: 1%; font: 10pt Times New Roman, Times, Serif; padding-bottom: 1.5pt"><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD>
    <TD STYLE="width: 1%; border-bottom: Black 1.5pt solid; font: 10pt Times New Roman, Times, Serif; text-align: left"><FONT STYLE="font-size: 10pt">$</FONT></TD><TD STYLE="width: 4%; border-bottom: Black 1.5pt solid; font: 10pt Times New Roman, Times, Serif; text-align: right"><FONT STYLE="font-size: 10pt">(80,800</FONT></TD><TD STYLE="width: 1%; padding-bottom: 1.5pt; font: 10pt Times New Roman, Times, Serif; text-align: left"><FONT STYLE="font-size: 10pt">)</FONT></TD><TD STYLE="width: 1%; font: 10pt Times New Roman, Times, Serif; padding-bottom: 1.5pt"><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD>
    <TD STYLE="width: 1%; border-bottom: Black 1.5pt solid; font: 10pt Times New Roman, Times, Serif; text-align: left"><FONT STYLE="font-size: 10pt">$</FONT></TD><TD STYLE="width: 4%; border-bottom: Black 1.5pt solid; font: 10pt Times New Roman, Times, Serif; text-align: right"><FONT STYLE="font-size: 10pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;1</FONT></TD><TD STYLE="width: 1%; padding-bottom: 1.5pt; font: 10pt Times New Roman, Times, Serif; text-align: left"><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD><TD STYLE="width: 1%; font: 10pt Times New Roman, Times, Serif; padding-bottom: 1.5pt"><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD>
    <TD STYLE="width: 1%; border-bottom: Black 1.5pt solid; font: 10pt Times New Roman, Times, Serif; text-align: left"><FONT STYLE="font-size: 10pt">$</FONT></TD><TD STYLE="width: 4%; border-bottom: Black 1.5pt solid; font: 10pt Times New Roman, Times, Serif; text-align: right"><FONT STYLE="font-size: 10pt">(793</FONT></TD><TD STYLE="width: 1%; padding-bottom: 1.5pt; font: 10pt Times New Roman, Times, Serif; text-align: left"><FONT STYLE="font-size: 10pt">)</FONT></TD><TD STYLE="width: 1%; font: 10pt Times New Roman, Times, Serif; padding-bottom: 1.5pt"><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD>
    <TD STYLE="width: 1%; border-bottom: Black 1.5pt solid; font: 10pt Times New Roman, Times, Serif; text-align: left"><FONT STYLE="font-size: 10pt">$</FONT></TD><TD STYLE="width: 4%; border-bottom: Black 1.5pt solid; font: 10pt Times New Roman, Times, Serif; text-align: right"><FONT STYLE="font-size: 10pt">(207</FONT></TD><TD STYLE="width: 1%; padding-bottom: 1.5pt; font: 10pt Times New Roman, Times, Serif; text-align: left"><FONT STYLE="font-size: 10pt">)</FONT></TD><TD STYLE="width: 1%; font: 10pt Times New Roman, Times, Serif; padding-bottom: 1.5pt"><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD>
    <TD STYLE="width: 1%; border-bottom: Black 1.5pt solid; font: 10pt Times New Roman, Times, Serif; text-align: left"><FONT STYLE="font-size: 10pt">$</FONT></TD><TD STYLE="width: 4%; border-bottom: Black 1.5pt solid; font: 10pt Times New Roman, Times, Serif; text-align: right"><FONT STYLE="font-size: 10pt">(1,000</FONT></TD><TD STYLE="width: 1%; padding-bottom: 1.5pt; font: 10pt Times New Roman, Times, Serif; text-align: left"><FONT STYLE="font-size: 10pt">)</FONT></TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD STYLE="font: 10pt Times New Roman, Times, Serif; text-align: left; padding-left: 5pt; text-indent: -5pt"><FONT STYLE="font-size: 10pt">Amortization
    of employee stock options</FONT></TD><TD STYLE="font: 10pt Times New Roman, Times, Serif"><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD>
    <TD STYLE="font: 10pt Times New Roman, Times, Serif; text-align: left"><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD><TD STYLE="font: 10pt Times New Roman, Times, Serif; text-align: right"><FONT STYLE="font-size: 10pt">-</FONT></TD><TD STYLE="font: 10pt Times New Roman, Times, Serif; text-align: left"><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD><TD STYLE="font: 10pt Times New Roman, Times, Serif"><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD>
    <TD STYLE="font: 10pt Times New Roman, Times, Serif; text-align: left"><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD><TD STYLE="font: 10pt Times New Roman, Times, Serif; text-align: right"><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD><TD STYLE="font: 10pt Times New Roman, Times, Serif; text-align: left"><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD><TD STYLE="font: 10pt Times New Roman, Times, Serif"><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD>
    <TD STYLE="font: 10pt Times New Roman, Times, Serif; text-align: left"><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD><TD STYLE="font: 10pt Times New Roman, Times, Serif; text-align: right"><FONT STYLE="font-size: 10pt">-</FONT></TD><TD STYLE="font: 10pt Times New Roman, Times, Serif; text-align: left"><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD><TD STYLE="font: 10pt Times New Roman, Times, Serif"><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD>
    <TD STYLE="font: 10pt Times New Roman, Times, Serif; text-align: left"><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD><TD STYLE="font: 10pt Times New Roman, Times, Serif; text-align: right"><FONT STYLE="font-size: 10pt">-</FONT></TD><TD STYLE="font: 10pt Times New Roman, Times, Serif; text-align: left"><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD><TD STYLE="font: 10pt Times New Roman, Times, Serif"><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD>
    <TD STYLE="font: 10pt Times New Roman, Times, Serif; text-align: left"><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD><TD STYLE="font: 10pt Times New Roman, Times, Serif; text-align: right"><FONT STYLE="font-size: 10pt">95</FONT></TD><TD STYLE="font: 10pt Times New Roman, Times, Serif; text-align: left"><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD><TD STYLE="font: 10pt Times New Roman, Times, Serif"><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD>
    <TD STYLE="font: 10pt Times New Roman, Times, Serif; text-align: left"><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD><TD STYLE="font: 10pt Times New Roman, Times, Serif; text-align: right"><FONT STYLE="font-size: 10pt">-</FONT></TD><TD STYLE="font: 10pt Times New Roman, Times, Serif; text-align: left"><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD><TD STYLE="font: 10pt Times New Roman, Times, Serif"><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD>
    <TD STYLE="font: 10pt Times New Roman, Times, Serif; text-align: left"><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD><TD STYLE="font: 10pt Times New Roman, Times, Serif; text-align: right"><FONT STYLE="font-size: 10pt">-</FONT></TD><TD STYLE="font: 10pt Times New Roman, Times, Serif; text-align: left"><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD><TD STYLE="font: 10pt Times New Roman, Times, Serif"><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD>
    <TD STYLE="font: 10pt Times New Roman, Times, Serif; text-align: left"><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD><TD STYLE="font: 10pt Times New Roman, Times, Serif; text-align: right"><FONT STYLE="font-size: 10pt">95</FONT></TD><TD STYLE="font: 10pt Times New Roman, Times, Serif; text-align: left"><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD><TD STYLE="font: 10pt Times New Roman, Times, Serif"><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD>
    <TD STYLE="font: 10pt Times New Roman, Times, Serif; text-align: left"><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD><TD STYLE="font: 10pt Times New Roman, Times, Serif; text-align: right"><FONT STYLE="font-size: 10pt">-</FONT></TD><TD STYLE="font: 10pt Times New Roman, Times, Serif; text-align: left"><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD><TD STYLE="font: 10pt Times New Roman, Times, Serif"><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD>
    <TD STYLE="font: 10pt Times New Roman, Times, Serif; text-align: left"><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD><TD STYLE="font: 10pt Times New Roman, Times, Serif; text-align: right"><FONT STYLE="font-size: 10pt">95</FONT></TD><TD STYLE="font: 10pt Times New Roman, Times, Serif; text-align: left"><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,238,255)">
    <TD STYLE="font: 10pt Times New Roman, Times, Serif; text-align: left; padding-left: 5pt; text-indent: -5pt"><FONT STYLE="font-size: 10pt">Stock
    issued for AP settlement</FONT></TD><TD STYLE="font: 10pt Times New Roman, Times, Serif"><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD>
    <TD STYLE="font: 10pt Times New Roman, Times, Serif; text-align: left"><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD><TD STYLE="font: 10pt Times New Roman, Times, Serif; text-align: right"><FONT STYLE="font-size: 10pt">-</FONT></TD><TD STYLE="font: 10pt Times New Roman, Times, Serif; text-align: left"><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD><TD STYLE="font: 10pt Times New Roman, Times, Serif"><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD>
    <TD STYLE="font: 10pt Times New Roman, Times, Serif; text-align: left"><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD><TD STYLE="font: 10pt Times New Roman, Times, Serif; text-align: right"><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD><TD STYLE="font: 10pt Times New Roman, Times, Serif; text-align: left"><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD><TD STYLE="font: 10pt Times New Roman, Times, Serif"><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD>
    <TD STYLE="font: 10pt Times New Roman, Times, Serif; text-align: left"><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD><TD STYLE="font: 10pt Times New Roman, Times, Serif; text-align: right"><FONT STYLE="font-size: 10pt">21,672</FONT></TD><TD STYLE="font: 10pt Times New Roman, Times, Serif; text-align: left"><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD><TD STYLE="font: 10pt Times New Roman, Times, Serif"><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD>
    <TD STYLE="font: 10pt Times New Roman, Times, Serif; text-align: left"><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD><TD STYLE="font: 10pt Times New Roman, Times, Serif; text-align: right"><FONT STYLE="font-size: 10pt">-</FONT></TD><TD STYLE="font: 10pt Times New Roman, Times, Serif; text-align: left"><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD><TD STYLE="font: 10pt Times New Roman, Times, Serif"><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD>
    <TD STYLE="font: 10pt Times New Roman, Times, Serif; text-align: left"><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD><TD STYLE="font: 10pt Times New Roman, Times, Serif; text-align: right"><FONT STYLE="font-size: 10pt">6</FONT></TD><TD STYLE="font: 10pt Times New Roman, Times, Serif; text-align: left"><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD><TD STYLE="font: 10pt Times New Roman, Times, Serif"><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD>
    <TD STYLE="font: 10pt Times New Roman, Times, Serif; text-align: left"><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD><TD STYLE="font: 10pt Times New Roman, Times, Serif; text-align: right"><FONT STYLE="font-size: 10pt">-</FONT></TD><TD STYLE="font: 10pt Times New Roman, Times, Serif; text-align: left"><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD><TD STYLE="font: 10pt Times New Roman, Times, Serif"><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD>
    <TD STYLE="font: 10pt Times New Roman, Times, Serif; text-align: left"><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD><TD STYLE="font: 10pt Times New Roman, Times, Serif; text-align: right"><FONT STYLE="font-size: 10pt">-</FONT></TD><TD STYLE="font: 10pt Times New Roman, Times, Serif; text-align: left"><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD><TD STYLE="font: 10pt Times New Roman, Times, Serif"><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD>
    <TD STYLE="font: 10pt Times New Roman, Times, Serif; text-align: left"><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD><TD STYLE="font: 10pt Times New Roman, Times, Serif; text-align: right"><FONT STYLE="font-size: 10pt">6</FONT></TD><TD STYLE="font: 10pt Times New Roman, Times, Serif; text-align: left"><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD><TD STYLE="font: 10pt Times New Roman, Times, Serif"><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD>
    <TD STYLE="font: 10pt Times New Roman, Times, Serif; text-align: left"><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD><TD STYLE="font: 10pt Times New Roman, Times, Serif; text-align: right"><FONT STYLE="font-size: 10pt">-</FONT></TD><TD STYLE="font: 10pt Times New Roman, Times, Serif; text-align: left"><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD><TD STYLE="font: 10pt Times New Roman, Times, Serif"><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD>
    <TD STYLE="font: 10pt Times New Roman, Times, Serif; text-align: left"><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD><TD STYLE="font: 10pt Times New Roman, Times, Serif; text-align: right"><FONT STYLE="font-size: 10pt">6</FONT></TD><TD STYLE="font: 10pt Times New Roman, Times, Serif; text-align: left"><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD STYLE="font: 10pt Times New Roman, Times, Serif; text-align: left; padding-left: 5pt; text-indent: -5pt"><FONT STYLE="font-size: 10pt">Stock
    issued for cash</FONT></TD><TD STYLE="font: 10pt Times New Roman, Times, Serif"><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD>
    <TD STYLE="font: 10pt Times New Roman, Times, Serif; text-align: left"><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD><TD STYLE="font: 10pt Times New Roman, Times, Serif; text-align: right"><FONT STYLE="font-size: 10pt">-</FONT></TD><TD STYLE="font: 10pt Times New Roman, Times, Serif; text-align: left"><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD><TD STYLE="font: 10pt Times New Roman, Times, Serif"><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD>
    <TD STYLE="font: 10pt Times New Roman, Times, Serif; text-align: left"><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD><TD STYLE="font: 10pt Times New Roman, Times, Serif; text-align: right"><FONT STYLE="font-size: 10pt">-</FONT></TD><TD STYLE="font: 10pt Times New Roman, Times, Serif; text-align: left"><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD><TD STYLE="font: 10pt Times New Roman, Times, Serif"><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD>
    <TD STYLE="font: 10pt Times New Roman, Times, Serif; text-align: left"><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD><TD STYLE="font: 10pt Times New Roman, Times, Serif; text-align: right"><FONT STYLE="font-size: 10pt">80,000</FONT></TD><TD STYLE="font: 10pt Times New Roman, Times, Serif; text-align: left"><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD><TD STYLE="font: 10pt Times New Roman, Times, Serif"><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD>
    <TD STYLE="font: 10pt Times New Roman, Times, Serif; text-align: left"><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD><TD STYLE="font: 10pt Times New Roman, Times, Serif; text-align: right"><FONT STYLE="font-size: 10pt">-</FONT></TD><TD STYLE="font: 10pt Times New Roman, Times, Serif; text-align: left"><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD><TD STYLE="font: 10pt Times New Roman, Times, Serif"><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD>
    <TD STYLE="font: 10pt Times New Roman, Times, Serif; text-align: left"><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD><TD STYLE="font: 10pt Times New Roman, Times, Serif; text-align: right"><FONT STYLE="font-size: 10pt">47</FONT></TD><TD STYLE="font: 10pt Times New Roman, Times, Serif; text-align: left"><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD><TD STYLE="font: 10pt Times New Roman, Times, Serif"><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD>
    <TD STYLE="font: 10pt Times New Roman, Times, Serif; text-align: left"><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD><TD STYLE="font: 10pt Times New Roman, Times, Serif; text-align: right"><FONT STYLE="font-size: 10pt">-</FONT></TD><TD STYLE="font: 10pt Times New Roman, Times, Serif; text-align: left"><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD><TD STYLE="font: 10pt Times New Roman, Times, Serif"><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD>
    <TD STYLE="font: 10pt Times New Roman, Times, Serif; text-align: left"><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD><TD STYLE="font: 10pt Times New Roman, Times, Serif; text-align: right"><FONT STYLE="font-size: 10pt">-</FONT></TD><TD STYLE="font: 10pt Times New Roman, Times, Serif; text-align: left"><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD><TD STYLE="font: 10pt Times New Roman, Times, Serif"><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD>
    <TD STYLE="font: 10pt Times New Roman, Times, Serif; text-align: left"><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD><TD STYLE="font: 10pt Times New Roman, Times, Serif; text-align: right"><FONT STYLE="font-size: 10pt">47</FONT></TD><TD STYLE="font: 10pt Times New Roman, Times, Serif; text-align: left"><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD><TD STYLE="font: 10pt Times New Roman, Times, Serif"><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD>
    <TD STYLE="font: 10pt Times New Roman, Times, Serif; text-align: left"><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD><TD STYLE="font: 10pt Times New Roman, Times, Serif; text-align: right"><FONT STYLE="font-size: 10pt">-</FONT></TD><TD STYLE="font: 10pt Times New Roman, Times, Serif; text-align: left"><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD><TD STYLE="font: 10pt Times New Roman, Times, Serif"><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD>
    <TD STYLE="font: 10pt Times New Roman, Times, Serif; text-align: left"><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD><TD STYLE="font: 10pt Times New Roman, Times, Serif; text-align: right"><FONT STYLE="font-size: 10pt">47</FONT></TD><TD STYLE="font: 10pt Times New Roman, Times, Serif; text-align: left"><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,238,255)">
    <TD STYLE="font: 10pt Times New Roman, Times, Serif; text-align: left; padding-left: 5pt; text-indent: -5pt"><FONT STYLE="font-size: 10pt">Stock
    issued, for debt</FONT></TD><TD STYLE="font: 10pt Times New Roman, Times, Serif"><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD>
    <TD STYLE="font: 10pt Times New Roman, Times, Serif; text-align: left"><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD><TD STYLE="font: 10pt Times New Roman, Times, Serif; text-align: right"><FONT STYLE="font-size: 10pt">-</FONT></TD><TD STYLE="font: 10pt Times New Roman, Times, Serif; text-align: left"><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD><TD STYLE="font: 10pt Times New Roman, Times, Serif"><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD>
    <TD STYLE="font: 10pt Times New Roman, Times, Serif; text-align: left"><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD><TD STYLE="font: 10pt Times New Roman, Times, Serif; text-align: right"><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD><TD STYLE="font: 10pt Times New Roman, Times, Serif; text-align: left"><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD><TD STYLE="font: 10pt Times New Roman, Times, Serif"><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD>
    <TD STYLE="font: 10pt Times New Roman, Times, Serif; text-align: left"><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD><TD STYLE="font: 10pt Times New Roman, Times, Serif; text-align: right"><FONT STYLE="font-size: 10pt">240,000</FONT></TD><TD STYLE="font: 10pt Times New Roman, Times, Serif; text-align: left"><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD><TD STYLE="font: 10pt Times New Roman, Times, Serif"><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD>
    <TD STYLE="font: 10pt Times New Roman, Times, Serif; text-align: left"><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD><TD STYLE="font: 10pt Times New Roman, Times, Serif; text-align: right"><FONT STYLE="font-size: 10pt">-</FONT></TD><TD STYLE="font: 10pt Times New Roman, Times, Serif; text-align: left"><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD><TD STYLE="font: 10pt Times New Roman, Times, Serif"><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD>
    <TD STYLE="font: 10pt Times New Roman, Times, Serif; text-align: left"><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD><TD STYLE="font: 10pt Times New Roman, Times, Serif; text-align: right"><FONT STYLE="font-size: 10pt">36</FONT></TD><TD STYLE="font: 10pt Times New Roman, Times, Serif; text-align: left"><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD><TD STYLE="font: 10pt Times New Roman, Times, Serif"><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD>
    <TD STYLE="font: 10pt Times New Roman, Times, Serif; text-align: left"><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD><TD STYLE="font: 10pt Times New Roman, Times, Serif; text-align: right"><FONT STYLE="font-size: 10pt">-</FONT></TD><TD STYLE="font: 10pt Times New Roman, Times, Serif; text-align: left"><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD><TD STYLE="font: 10pt Times New Roman, Times, Serif"><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD>
    <TD STYLE="font: 10pt Times New Roman, Times, Serif; text-align: left"><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD><TD STYLE="font: 10pt Times New Roman, Times, Serif; text-align: right"><FONT STYLE="font-size: 10pt">-</FONT></TD><TD STYLE="font: 10pt Times New Roman, Times, Serif; text-align: left"><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD><TD STYLE="font: 10pt Times New Roman, Times, Serif"><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD>
    <TD STYLE="font: 10pt Times New Roman, Times, Serif; text-align: left"><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD><TD STYLE="font: 10pt Times New Roman, Times, Serif; text-align: right"><FONT STYLE="font-size: 10pt">36</FONT></TD><TD STYLE="font: 10pt Times New Roman, Times, Serif; text-align: left"><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD><TD STYLE="font: 10pt Times New Roman, Times, Serif"><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD>
    <TD STYLE="font: 10pt Times New Roman, Times, Serif; text-align: left"><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD><TD STYLE="font: 10pt Times New Roman, Times, Serif; text-align: right"><FONT STYLE="font-size: 10pt">-</FONT></TD><TD STYLE="font: 10pt Times New Roman, Times, Serif; text-align: left"><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD><TD STYLE="font: 10pt Times New Roman, Times, Serif"><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD>
    <TD STYLE="font: 10pt Times New Roman, Times, Serif; text-align: left"><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD><TD STYLE="font: 10pt Times New Roman, Times, Serif; text-align: right"><FONT STYLE="font-size: 10pt">36</FONT></TD><TD STYLE="font: 10pt Times New Roman, Times, Serif; text-align: left"><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD STYLE="font: 10pt Times New Roman, Times, Serif; padding-left: 5pt; text-indent: -5pt"><FONT STYLE="font-size: 10pt">Value
    of warrants issued</FONT></TD><TD STYLE="font: 10pt Times New Roman, Times, Serif"><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD>
    <TD STYLE="font: 10pt Times New Roman, Times, Serif; text-align: left"><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD><TD STYLE="font: 10pt Times New Roman, Times, Serif; text-align: right"><FONT STYLE="font-size: 10pt">-</FONT></TD><TD STYLE="font: 10pt Times New Roman, Times, Serif; text-align: left"><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD><TD STYLE="font: 10pt Times New Roman, Times, Serif"><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD>
    <TD STYLE="font: 10pt Times New Roman, Times, Serif; text-align: left"><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD><TD STYLE="font: 10pt Times New Roman, Times, Serif; text-align: right"><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD><TD STYLE="font: 10pt Times New Roman, Times, Serif; text-align: left"><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD><TD STYLE="font: 10pt Times New Roman, Times, Serif"><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD>
    <TD STYLE="font: 10pt Times New Roman, Times, Serif; text-align: left"><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD><TD STYLE="font: 10pt Times New Roman, Times, Serif; text-align: right"><FONT STYLE="font-size: 10pt">-</FONT></TD><TD STYLE="font: 10pt Times New Roman, Times, Serif; text-align: left"><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD><TD STYLE="font: 10pt Times New Roman, Times, Serif"><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD>
    <TD STYLE="font: 10pt Times New Roman, Times, Serif; text-align: left"><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD><TD STYLE="font: 10pt Times New Roman, Times, Serif; text-align: right"><FONT STYLE="font-size: 10pt">-</FONT></TD><TD STYLE="font: 10pt Times New Roman, Times, Serif; text-align: left"><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD><TD STYLE="font: 10pt Times New Roman, Times, Serif"><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD>
    <TD STYLE="font: 10pt Times New Roman, Times, Serif; text-align: left"><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD><TD STYLE="font: 10pt Times New Roman, Times, Serif; text-align: right"><FONT STYLE="font-size: 10pt">79</FONT></TD><TD STYLE="font: 10pt Times New Roman, Times, Serif; text-align: left"><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD><TD STYLE="font: 10pt Times New Roman, Times, Serif"><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD>
    <TD STYLE="font: 10pt Times New Roman, Times, Serif; text-align: left"><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD><TD STYLE="font: 10pt Times New Roman, Times, Serif; text-align: right"><FONT STYLE="font-size: 10pt">-</FONT></TD><TD STYLE="font: 10pt Times New Roman, Times, Serif; text-align: left"><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD><TD STYLE="font: 10pt Times New Roman, Times, Serif"><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD>
    <TD STYLE="font: 10pt Times New Roman, Times, Serif; text-align: left"><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD><TD STYLE="font: 10pt Times New Roman, Times, Serif; text-align: right"><FONT STYLE="font-size: 10pt">-</FONT></TD><TD STYLE="font: 10pt Times New Roman, Times, Serif; text-align: left"><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD><TD STYLE="font: 10pt Times New Roman, Times, Serif"><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD>
    <TD STYLE="font: 10pt Times New Roman, Times, Serif; text-align: left"><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD><TD STYLE="font: 10pt Times New Roman, Times, Serif; text-align: right"><FONT STYLE="font-size: 10pt">79</FONT></TD><TD STYLE="font: 10pt Times New Roman, Times, Serif; text-align: left"><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD><TD STYLE="font: 10pt Times New Roman, Times, Serif"><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD>
    <TD STYLE="font: 10pt Times New Roman, Times, Serif; text-align: left"><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD><TD STYLE="font: 10pt Times New Roman, Times, Serif; text-align: right"><FONT STYLE="font-size: 10pt">-</FONT></TD><TD STYLE="font: 10pt Times New Roman, Times, Serif; text-align: left"><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD><TD STYLE="font: 10pt Times New Roman, Times, Serif"><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD>
    <TD STYLE="font: 10pt Times New Roman, Times, Serif; text-align: left"><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD><TD STYLE="font: 10pt Times New Roman, Times, Serif; text-align: right"><FONT STYLE="font-size: 10pt">79</FONT></TD><TD STYLE="font: 10pt Times New Roman, Times, Serif; text-align: left"><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,238,255)">
    <TD STYLE="font: 10pt Times New Roman, Times, Serif; text-align: left; padding-bottom: 1.5pt; padding-left: 5pt; text-indent: -5pt"><FONT STYLE="font-size: 10pt">Net
    Ioss</FONT></TD><TD STYLE="font: 10pt Times New Roman, Times, Serif; padding-bottom: 1.5pt"><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD>
    <TD STYLE="border-bottom: Black 1.5pt solid; font: 10pt Times New Roman, Times, Serif; text-align: left"><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD><TD STYLE="border-bottom: Black 1.5pt solid; font: 10pt Times New Roman, Times, Serif; text-align: right"><FONT STYLE="font-size: 10pt">-</FONT></TD><TD STYLE="padding-bottom: 1.5pt; font: 10pt Times New Roman, Times, Serif; text-align: left"><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD><TD STYLE="font: 10pt Times New Roman, Times, Serif; padding-bottom: 1.5pt"><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD>
    <TD STYLE="border-bottom: Black 1.5pt solid; font: 10pt Times New Roman, Times, Serif; text-align: left"><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD><TD STYLE="border-bottom: Black 1.5pt solid; font: 10pt Times New Roman, Times, Serif; text-align: right"><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD><TD STYLE="padding-bottom: 1.5pt; font: 10pt Times New Roman, Times, Serif; text-align: left"><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD><TD STYLE="font: 10pt Times New Roman, Times, Serif; padding-bottom: 1.5pt"><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD>
    <TD STYLE="border-bottom: Black 1.5pt solid; font: 10pt Times New Roman, Times, Serif; text-align: left"><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD><TD STYLE="border-bottom: Black 1.5pt solid; font: 10pt Times New Roman, Times, Serif; text-align: right"><FONT STYLE="font-size: 10pt">-</FONT></TD><TD STYLE="padding-bottom: 1.5pt; font: 10pt Times New Roman, Times, Serif; text-align: left"><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD><TD STYLE="font: 10pt Times New Roman, Times, Serif; padding-bottom: 1.5pt"><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD>
    <TD STYLE="border-bottom: Black 1.5pt solid; font: 10pt Times New Roman, Times, Serif; text-align: left"><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD><TD STYLE="border-bottom: Black 1.5pt solid; font: 10pt Times New Roman, Times, Serif; text-align: right"><FONT STYLE="font-size: 10pt">-</FONT></TD><TD STYLE="padding-bottom: 1.5pt; font: 10pt Times New Roman, Times, Serif; text-align: left"><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD><TD STYLE="font: 10pt Times New Roman, Times, Serif; padding-bottom: 1.5pt"><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD>
    <TD STYLE="border-bottom: Black 1.5pt solid; font: 10pt Times New Roman, Times, Serif; text-align: left"><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD><TD STYLE="border-bottom: Black 1.5pt solid; font: 10pt Times New Roman, Times, Serif; text-align: right"><FONT STYLE="font-size: 10pt">-</FONT></TD><TD STYLE="padding-bottom: 1.5pt; font: 10pt Times New Roman, Times, Serif; text-align: left"><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD><TD STYLE="font: 10pt Times New Roman, Times, Serif; padding-bottom: 1.5pt"><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD>
    <TD STYLE="border-bottom: Black 1.5pt solid; font: 10pt Times New Roman, Times, Serif; text-align: left"><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD><TD STYLE="border-bottom: Black 1.5pt solid; font: 10pt Times New Roman, Times, Serif; text-align: right"><FONT STYLE="font-size: 10pt">(914</FONT></TD><TD STYLE="padding-bottom: 1.5pt; font: 10pt Times New Roman, Times, Serif; text-align: left"><FONT STYLE="font-size: 10pt">)</FONT></TD><TD STYLE="font: 10pt Times New Roman, Times, Serif; padding-bottom: 1.5pt"><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD>
    <TD STYLE="border-bottom: Black 1.5pt solid; font: 10pt Times New Roman, Times, Serif; text-align: left"><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD><TD STYLE="border-bottom: Black 1.5pt solid; font: 10pt Times New Roman, Times, Serif; text-align: right"><FONT STYLE="font-size: 10pt">-</FONT></TD><TD STYLE="padding-bottom: 1.5pt; font: 10pt Times New Roman, Times, Serif; text-align: left"><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD><TD STYLE="font: 10pt Times New Roman, Times, Serif; padding-bottom: 1.5pt"><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD>
    <TD STYLE="border-bottom: Black 1.5pt solid; font: 10pt Times New Roman, Times, Serif; text-align: left"><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD><TD STYLE="border-bottom: Black 1.5pt solid; font: 10pt Times New Roman, Times, Serif; text-align: right"><FONT STYLE="font-size: 10pt">(914</FONT></TD><TD STYLE="padding-bottom: 1.5pt; font: 10pt Times New Roman, Times, Serif; text-align: left"><FONT STYLE="font-size: 10pt">)</FONT></TD><TD STYLE="font: 10pt Times New Roman, Times, Serif; padding-bottom: 1.5pt"><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD>
    <TD STYLE="border-bottom: Black 1.5pt solid; font: 10pt Times New Roman, Times, Serif; text-align: left"><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD><TD STYLE="border-bottom: Black 1.5pt solid; font: 10pt Times New Roman, Times, Serif; text-align: right"><FONT STYLE="font-size: 10pt">(27</FONT></TD><TD STYLE="padding-bottom: 1.5pt; font: 10pt Times New Roman, Times, Serif; text-align: left"><FONT STYLE="font-size: 10pt">)</FONT></TD><TD STYLE="font: 10pt Times New Roman, Times, Serif; padding-bottom: 1.5pt"><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD>
    <TD STYLE="border-bottom: Black 1.5pt solid; font: 10pt Times New Roman, Times, Serif; text-align: left"><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD><TD STYLE="border-bottom: Black 1.5pt solid; font: 10pt Times New Roman, Times, Serif; text-align: right"><FONT STYLE="font-size: 10pt">(941</FONT></TD><TD STYLE="padding-bottom: 1.5pt; font: 10pt Times New Roman, Times, Serif; text-align: left"><FONT STYLE="font-size: 10pt">)</FONT></TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD STYLE="font: 10pt Times New Roman, Times, Serif; padding-bottom: 1.5pt; padding-left: 5pt; text-indent: -5pt"><FONT STYLE="font-size: 10pt">BALANCE,
    October 31,&nbsp;2018</FONT></TD><TD STYLE="font: 10pt Times New Roman, Times, Serif; padding-bottom: 1.5pt"><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD>
    <TD STYLE="border-bottom: Black 1.5pt solid; font: 10pt Times New Roman, Times, Serif; text-align: left"><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD><TD STYLE="border-bottom: Black 1.5pt solid; font: 10pt Times New Roman, Times, Serif; text-align: right"><FONT STYLE="font-size: 10pt">-</FONT></TD><TD STYLE="padding-bottom: 1.5pt; font: 10pt Times New Roman, Times, Serif; text-align: left"><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD><TD STYLE="font: 10pt Times New Roman, Times, Serif; padding-bottom: 1.5pt"><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD>
    <TD STYLE="border-bottom: Black 1.5pt solid; font: 10pt Times New Roman, Times, Serif; text-align: left"><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD><TD STYLE="border-bottom: Black 1.5pt solid; font: 10pt Times New Roman, Times, Serif; text-align: right"><FONT STYLE="font-size: 10pt">-</FONT></TD><TD STYLE="padding-bottom: 1.5pt; font: 10pt Times New Roman, Times, Serif; text-align: left"><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD><TD STYLE="font: 10pt Times New Roman, Times, Serif; padding-bottom: 1.5pt"><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD>
    <TD STYLE="border-bottom: Black 1.5pt solid; font: 10pt Times New Roman, Times, Serif; text-align: left"><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD><TD STYLE="border-bottom: Black 1.5pt solid; font: 10pt Times New Roman, Times, Serif; text-align: right"><FONT STYLE="font-size: 10pt">13,116,815</FONT></TD><TD STYLE="padding-bottom: 1.5pt; font: 10pt Times New Roman, Times, Serif; text-align: left"><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD><TD STYLE="font: 10pt Times New Roman, Times, Serif; padding-bottom: 1.5pt"><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD>
    <TD STYLE="border-bottom: Black 1.5pt solid; font: 10pt Times New Roman, Times, Serif; text-align: left"><FONT STYLE="font-size: 10pt">$</FONT></TD><TD STYLE="border-bottom: Black 1.5pt solid; font: 10pt Times New Roman, Times, Serif; text-align: right"><FONT STYLE="font-size: 10pt">13</FONT></TD><TD STYLE="padding-bottom: 1.5pt; font: 10pt Times New Roman, Times, Serif; text-align: left"><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD><TD STYLE="font: 10pt Times New Roman, Times, Serif; padding-bottom: 1.5pt"><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD>
    <TD STYLE="border-bottom: Black 1.5pt solid; font: 10pt Times New Roman, Times, Serif; text-align: left"><FONT STYLE="font-size: 10pt">$</FONT></TD><TD STYLE="border-bottom: Black 1.5pt solid; font: 10pt Times New Roman, Times, Serif; text-align: right"><FONT STYLE="font-size: 10pt">80,256</FONT></TD><TD STYLE="padding-bottom: 1.5pt; font: 10pt Times New Roman, Times, Serif; text-align: left"><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD><TD STYLE="font: 10pt Times New Roman, Times, Serif; padding-bottom: 1.5pt"><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD>
    <TD STYLE="border-bottom: Black 1.5pt solid; font: 10pt Times New Roman, Times, Serif; text-align: left"><FONT STYLE="font-size: 10pt">$</FONT></TD><TD STYLE="border-bottom: Black 1.5pt solid; font: 10pt Times New Roman, Times, Serif; text-align: right"><FONT STYLE="font-size: 10pt">(81,714</FONT></TD><TD STYLE="padding-bottom: 1.5pt; font: 10pt Times New Roman, Times, Serif; text-align: left"><FONT STYLE="font-size: 10pt">)</FONT></TD><TD STYLE="font: 10pt Times New Roman, Times, Serif; padding-bottom: 1.5pt"><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD>
    <TD STYLE="border-bottom: Black 1.5pt solid; font: 10pt Times New Roman, Times, Serif; text-align: left"><FONT STYLE="font-size: 10pt">$</FONT></TD><TD STYLE="border-bottom: Black 1.5pt solid; font: 10pt Times New Roman, Times, Serif; text-align: right"><FONT STYLE="font-size: 10pt">1</FONT></TD><TD STYLE="padding-bottom: 1.5pt; font: 10pt Times New Roman, Times, Serif; text-align: left"><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD><TD STYLE="font: 10pt Times New Roman, Times, Serif; padding-bottom: 1.5pt"><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD>
    <TD STYLE="border-bottom: Black 1.5pt solid; font: 10pt Times New Roman, Times, Serif; text-align: left"><FONT STYLE="font-size: 10pt">$</FONT></TD><TD STYLE="border-bottom: Black 1.5pt solid; font: 10pt Times New Roman, Times, Serif; text-align: right"><FONT STYLE="font-size: 10pt">(1,444</FONT></TD><TD STYLE="padding-bottom: 1.5pt; font: 10pt Times New Roman, Times, Serif; text-align: left"><FONT STYLE="font-size: 10pt">)</FONT></TD><TD STYLE="font: 10pt Times New Roman, Times, Serif; padding-bottom: 1.5pt"><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD>
    <TD STYLE="border-bottom: Black 1.5pt solid; font: 10pt Times New Roman, Times, Serif; text-align: left"><FONT STYLE="font-size: 10pt">$</FONT></TD><TD STYLE="border-bottom: Black 1.5pt solid; font: 10pt Times New Roman, Times, Serif; text-align: right"><FONT STYLE="font-size: 10pt">(234</FONT></TD><TD STYLE="padding-bottom: 1.5pt; font: 10pt Times New Roman, Times, Serif; text-align: left"><FONT STYLE="font-size: 10pt">)</FONT></TD><TD STYLE="font: 10pt Times New Roman, Times, Serif; padding-bottom: 1.5pt"><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD>
    <TD STYLE="border-bottom: Black 1.5pt solid; font: 10pt Times New Roman, Times, Serif; text-align: left"><FONT STYLE="font-size: 10pt">$</FONT></TD><TD STYLE="border-bottom: Black 1.5pt solid; font: 10pt Times New Roman, Times, Serif; text-align: right"><FONT STYLE="font-size: 10pt">(1,678</FONT></TD><TD STYLE="padding-bottom: 1.5pt; font: 10pt Times New Roman, Times, Serif; text-align: left"><FONT STYLE="font-size: 10pt">)</FONT></TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,238,255)">
    <TD STYLE="font: 10pt Times New Roman, Times, Serif; text-align: left; padding-left: 5pt; text-indent: -5pt"><FONT STYLE="font-size: 10pt">Amortization
    of employee stock options</FONT></TD><TD STYLE="font: 10pt Times New Roman, Times, Serif"><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD>
    <TD STYLE="font: 10pt Times New Roman, Times, Serif; text-align: left"><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD><TD STYLE="font: 10pt Times New Roman, Times, Serif; text-align: right"><FONT STYLE="font-size: 10pt">-</FONT></TD><TD STYLE="font: 10pt Times New Roman, Times, Serif; text-align: left"><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD><TD STYLE="font: 10pt Times New Roman, Times, Serif"><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD>
    <TD STYLE="font: 10pt Times New Roman, Times, Serif; text-align: left"><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD><TD STYLE="font: 10pt Times New Roman, Times, Serif; text-align: right"><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD><TD STYLE="font: 10pt Times New Roman, Times, Serif; text-align: left"><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD><TD STYLE="font: 10pt Times New Roman, Times, Serif"><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD>
    <TD STYLE="font: 10pt Times New Roman, Times, Serif; text-align: left"><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD><TD STYLE="font: 10pt Times New Roman, Times, Serif; text-align: right"><FONT STYLE="font-size: 10pt">-</FONT></TD><TD STYLE="font: 10pt Times New Roman, Times, Serif; text-align: left"><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD><TD STYLE="font: 10pt Times New Roman, Times, Serif"><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD>
    <TD STYLE="font: 10pt Times New Roman, Times, Serif; text-align: left"><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD><TD STYLE="font: 10pt Times New Roman, Times, Serif; text-align: right"><FONT STYLE="font-size: 10pt">-</FONT></TD><TD STYLE="font: 10pt Times New Roman, Times, Serif; text-align: left"><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD><TD STYLE="font: 10pt Times New Roman, Times, Serif"><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD>
    <TD STYLE="font: 10pt Times New Roman, Times, Serif; text-align: left"><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD><TD STYLE="font: 10pt Times New Roman, Times, Serif; text-align: right"><FONT STYLE="font-size: 10pt">41</FONT></TD><TD STYLE="font: 10pt Times New Roman, Times, Serif; text-align: left"><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD><TD STYLE="font: 10pt Times New Roman, Times, Serif"><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD>
    <TD STYLE="font: 10pt Times New Roman, Times, Serif; text-align: left"><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD><TD STYLE="font: 10pt Times New Roman, Times, Serif; text-align: right"><FONT STYLE="font-size: 10pt">-</FONT></TD><TD STYLE="font: 10pt Times New Roman, Times, Serif; text-align: left"><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD><TD STYLE="font: 10pt Times New Roman, Times, Serif"><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD>
    <TD STYLE="font: 10pt Times New Roman, Times, Serif; text-align: left"><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD><TD STYLE="font: 10pt Times New Roman, Times, Serif; text-align: right"><FONT STYLE="font-size: 10pt">-</FONT></TD><TD STYLE="font: 10pt Times New Roman, Times, Serif; text-align: left"><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD><TD STYLE="font: 10pt Times New Roman, Times, Serif"><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD>
    <TD STYLE="font: 10pt Times New Roman, Times, Serif; text-align: left"><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD><TD STYLE="font: 10pt Times New Roman, Times, Serif; text-align: right"><FONT STYLE="font-size: 10pt">41</FONT></TD><TD STYLE="font: 10pt Times New Roman, Times, Serif; text-align: left"><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD><TD STYLE="font: 10pt Times New Roman, Times, Serif"><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD>
    <TD STYLE="font: 10pt Times New Roman, Times, Serif; text-align: left"><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD><TD STYLE="font: 10pt Times New Roman, Times, Serif; text-align: right"><FONT STYLE="font-size: 10pt">-</FONT></TD><TD STYLE="font: 10pt Times New Roman, Times, Serif; text-align: left"><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD><TD STYLE="font: 10pt Times New Roman, Times, Serif"><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD>
    <TD STYLE="font: 10pt Times New Roman, Times, Serif; text-align: left"><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD><TD STYLE="font: 10pt Times New Roman, Times, Serif; text-align: right"><FONT STYLE="font-size: 10pt">41</FONT></TD><TD STYLE="font: 10pt Times New Roman, Times, Serif; text-align: left"><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD STYLE="font: 10pt Times New Roman, Times, Serif; text-align: left; padding-left: 5pt; text-indent: -5pt"><FONT STYLE="font-size: 10pt">Stock
    issued for services, to employees</FONT></TD><TD STYLE="font: 10pt Times New Roman, Times, Serif"><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD>
    <TD STYLE="font: 10pt Times New Roman, Times, Serif; text-align: left"><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD><TD STYLE="font: 10pt Times New Roman, Times, Serif; text-align: right"><FONT STYLE="font-size: 10pt">-</FONT></TD><TD STYLE="font: 10pt Times New Roman, Times, Serif; text-align: left"><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD><TD STYLE="font: 10pt Times New Roman, Times, Serif"><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD>
    <TD STYLE="font: 10pt Times New Roman, Times, Serif; text-align: left"><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD><TD STYLE="font: 10pt Times New Roman, Times, Serif; text-align: right"><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD><TD STYLE="font: 10pt Times New Roman, Times, Serif; text-align: left"><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD><TD STYLE="font: 10pt Times New Roman, Times, Serif"><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD>
    <TD STYLE="font: 10pt Times New Roman, Times, Serif; text-align: left"><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD><TD STYLE="font: 10pt Times New Roman, Times, Serif; text-align: right"><FONT STYLE="font-size: 10pt">635,156</FONT></TD><TD STYLE="font: 10pt Times New Roman, Times, Serif; text-align: left"><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD><TD STYLE="font: 10pt Times New Roman, Times, Serif"><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD>
    <TD STYLE="font: 10pt Times New Roman, Times, Serif; text-align: left"><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD><TD STYLE="font: 10pt Times New Roman, Times, Serif; text-align: right"><FONT STYLE="font-size: 10pt">1</FONT></TD><TD STYLE="font: 10pt Times New Roman, Times, Serif; text-align: left"><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD><TD STYLE="font: 10pt Times New Roman, Times, Serif"><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD>
    <TD STYLE="font: 10pt Times New Roman, Times, Serif; text-align: left"><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD><TD STYLE="font: 10pt Times New Roman, Times, Serif; text-align: right"><FONT STYLE="font-size: 10pt">113</FONT></TD><TD STYLE="font: 10pt Times New Roman, Times, Serif; text-align: left"><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD><TD STYLE="font: 10pt Times New Roman, Times, Serif"><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD>
    <TD STYLE="font: 10pt Times New Roman, Times, Serif; text-align: left"><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD><TD STYLE="font: 10pt Times New Roman, Times, Serif; text-align: right"><FONT STYLE="font-size: 10pt">-</FONT></TD><TD STYLE="font: 10pt Times New Roman, Times, Serif; text-align: left"><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD><TD STYLE="font: 10pt Times New Roman, Times, Serif"><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD>
    <TD STYLE="font: 10pt Times New Roman, Times, Serif; text-align: left"><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD><TD STYLE="font: 10pt Times New Roman, Times, Serif; text-align: right"><FONT STYLE="font-size: 10pt">-</FONT></TD><TD STYLE="font: 10pt Times New Roman, Times, Serif; text-align: left"><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD><TD STYLE="font: 10pt Times New Roman, Times, Serif"><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD>
    <TD STYLE="font: 10pt Times New Roman, Times, Serif; text-align: left"><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD><TD STYLE="font: 10pt Times New Roman, Times, Serif; text-align: right"><FONT STYLE="font-size: 10pt">114</FONT></TD><TD STYLE="font: 10pt Times New Roman, Times, Serif; text-align: left"><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD><TD STYLE="font: 10pt Times New Roman, Times, Serif"><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD>
    <TD STYLE="font: 10pt Times New Roman, Times, Serif; text-align: left"><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD><TD STYLE="font: 10pt Times New Roman, Times, Serif; text-align: right"><FONT STYLE="font-size: 10pt">-</FONT></TD><TD STYLE="font: 10pt Times New Roman, Times, Serif; text-align: left"><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD><TD STYLE="font: 10pt Times New Roman, Times, Serif"><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD>
    <TD STYLE="font: 10pt Times New Roman, Times, Serif; text-align: left"><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD><TD STYLE="font: 10pt Times New Roman, Times, Serif; text-align: right"><FONT STYLE="font-size: 10pt">114</FONT></TD><TD STYLE="font: 10pt Times New Roman, Times, Serif; text-align: left"><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,238,255)">
    <TD STYLE="font: 10pt Times New Roman, Times, Serif; text-align: left; padding-left: 5pt; text-indent: -5pt"><FONT STYLE="font-size: 10pt">Stock
    issued for services</FONT></TD><TD STYLE="font: 10pt Times New Roman, Times, Serif"><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD>
    <TD STYLE="font: 10pt Times New Roman, Times, Serif; text-align: left"><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD><TD STYLE="font: 10pt Times New Roman, Times, Serif; text-align: right"><FONT STYLE="font-size: 10pt">-</FONT></TD><TD STYLE="font: 10pt Times New Roman, Times, Serif; text-align: left"><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD><TD STYLE="font: 10pt Times New Roman, Times, Serif"><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD>
    <TD STYLE="font: 10pt Times New Roman, Times, Serif; text-align: left"><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD><TD STYLE="font: 10pt Times New Roman, Times, Serif; text-align: right"><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD><TD STYLE="font: 10pt Times New Roman, Times, Serif; text-align: left"><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD><TD STYLE="font: 10pt Times New Roman, Times, Serif"><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD>
    <TD STYLE="font: 10pt Times New Roman, Times, Serif; text-align: left"><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD><TD STYLE="font: 10pt Times New Roman, Times, Serif; text-align: right"><FONT STYLE="font-size: 10pt">200,000</FONT></TD><TD STYLE="font: 10pt Times New Roman, Times, Serif; text-align: left"><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD><TD STYLE="font: 10pt Times New Roman, Times, Serif"><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD>
    <TD STYLE="font: 10pt Times New Roman, Times, Serif; text-align: left"><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD><TD STYLE="font: 10pt Times New Roman, Times, Serif; text-align: right"><FONT STYLE="font-size: 10pt">-</FONT></TD><TD STYLE="font: 10pt Times New Roman, Times, Serif; text-align: left"><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD><TD STYLE="font: 10pt Times New Roman, Times, Serif"><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD>
    <TD STYLE="font: 10pt Times New Roman, Times, Serif; text-align: left"><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD><TD STYLE="font: 10pt Times New Roman, Times, Serif; text-align: right"><FONT STYLE="font-size: 10pt">70</FONT></TD><TD STYLE="font: 10pt Times New Roman, Times, Serif; text-align: left"><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD><TD STYLE="font: 10pt Times New Roman, Times, Serif"><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD>
    <TD STYLE="font: 10pt Times New Roman, Times, Serif; text-align: left"><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD><TD STYLE="font: 10pt Times New Roman, Times, Serif; text-align: right"><FONT STYLE="font-size: 10pt">-</FONT></TD><TD STYLE="font: 10pt Times New Roman, Times, Serif; text-align: left"><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD><TD STYLE="font: 10pt Times New Roman, Times, Serif"><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD>
    <TD STYLE="font: 10pt Times New Roman, Times, Serif; text-align: left"><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD><TD STYLE="font: 10pt Times New Roman, Times, Serif; text-align: right"><FONT STYLE="font-size: 10pt">-</FONT></TD><TD STYLE="font: 10pt Times New Roman, Times, Serif; text-align: left"><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD><TD STYLE="font: 10pt Times New Roman, Times, Serif"><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD>
    <TD STYLE="font: 10pt Times New Roman, Times, Serif; text-align: left"><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD><TD STYLE="font: 10pt Times New Roman, Times, Serif; text-align: right"><FONT STYLE="font-size: 10pt">70</FONT></TD><TD STYLE="font: 10pt Times New Roman, Times, Serif; text-align: left"><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD><TD STYLE="font: 10pt Times New Roman, Times, Serif"><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD>
    <TD STYLE="font: 10pt Times New Roman, Times, Serif; text-align: left"><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD><TD STYLE="font: 10pt Times New Roman, Times, Serif; text-align: right"><FONT STYLE="font-size: 10pt">-</FONT></TD><TD STYLE="font: 10pt Times New Roman, Times, Serif; text-align: left"><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD><TD STYLE="font: 10pt Times New Roman, Times, Serif"><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD>
    <TD STYLE="font: 10pt Times New Roman, Times, Serif; text-align: left"><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD><TD STYLE="font: 10pt Times New Roman, Times, Serif; text-align: right"><FONT STYLE="font-size: 10pt">70</FONT></TD><TD STYLE="font: 10pt Times New Roman, Times, Serif; text-align: left"><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD STYLE="font: 10pt Times New Roman, Times, Serif; text-align: left; padding-left: 5pt; text-indent: -5pt"><FONT STYLE="font-size: 10pt">Stock
    issued for AP settlement</FONT></TD><TD STYLE="font: 10pt Times New Roman, Times, Serif"><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD>
    <TD STYLE="font: 10pt Times New Roman, Times, Serif; text-align: left"><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD><TD STYLE="font: 10pt Times New Roman, Times, Serif; text-align: right"><FONT STYLE="font-size: 10pt">-</FONT></TD><TD STYLE="font: 10pt Times New Roman, Times, Serif; text-align: left"><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD><TD STYLE="font: 10pt Times New Roman, Times, Serif"><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD>
    <TD STYLE="font: 10pt Times New Roman, Times, Serif; text-align: left"><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD><TD STYLE="font: 10pt Times New Roman, Times, Serif; text-align: right"><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD><TD STYLE="font: 10pt Times New Roman, Times, Serif; text-align: left"><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD><TD STYLE="font: 10pt Times New Roman, Times, Serif"><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD>
    <TD STYLE="font: 10pt Times New Roman, Times, Serif; text-align: left"><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD><TD STYLE="font: 10pt Times New Roman, Times, Serif; text-align: right"><FONT STYLE="font-size: 10pt">56,327</FONT></TD><TD STYLE="font: 10pt Times New Roman, Times, Serif; text-align: left"><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD><TD STYLE="font: 10pt Times New Roman, Times, Serif"><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD>
    <TD STYLE="font: 10pt Times New Roman, Times, Serif; text-align: left"><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD><TD STYLE="font: 10pt Times New Roman, Times, Serif; text-align: right"><FONT STYLE="font-size: 10pt">-</FONT></TD><TD STYLE="font: 10pt Times New Roman, Times, Serif; text-align: left"><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD><TD STYLE="font: 10pt Times New Roman, Times, Serif"><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD>
    <TD STYLE="font: 10pt Times New Roman, Times, Serif; text-align: left"><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD><TD STYLE="font: 10pt Times New Roman, Times, Serif; text-align: right"><FONT STYLE="font-size: 10pt">18</FONT></TD><TD STYLE="font: 10pt Times New Roman, Times, Serif; text-align: left"><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD><TD STYLE="font: 10pt Times New Roman, Times, Serif"><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD>
    <TD STYLE="font: 10pt Times New Roman, Times, Serif; text-align: left"><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD><TD STYLE="font: 10pt Times New Roman, Times, Serif; text-align: right"><FONT STYLE="font-size: 10pt">-</FONT></TD><TD STYLE="font: 10pt Times New Roman, Times, Serif; text-align: left"><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD><TD STYLE="font: 10pt Times New Roman, Times, Serif"><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD>
    <TD STYLE="font: 10pt Times New Roman, Times, Serif; text-align: left"><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD><TD STYLE="font: 10pt Times New Roman, Times, Serif; text-align: right"><FONT STYLE="font-size: 10pt">-</FONT></TD><TD STYLE="font: 10pt Times New Roman, Times, Serif; text-align: left"><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD><TD STYLE="font: 10pt Times New Roman, Times, Serif"><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD>
    <TD STYLE="font: 10pt Times New Roman, Times, Serif; text-align: left"><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD><TD STYLE="font: 10pt Times New Roman, Times, Serif; text-align: right"><FONT STYLE="font-size: 10pt">18</FONT></TD><TD STYLE="font: 10pt Times New Roman, Times, Serif; text-align: left"><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD><TD STYLE="font: 10pt Times New Roman, Times, Serif"><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD>
    <TD STYLE="font: 10pt Times New Roman, Times, Serif; text-align: left"><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD><TD STYLE="font: 10pt Times New Roman, Times, Serif; text-align: right"><FONT STYLE="font-size: 10pt">-</FONT></TD><TD STYLE="font: 10pt Times New Roman, Times, Serif; text-align: left"><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD><TD STYLE="font: 10pt Times New Roman, Times, Serif"><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD>
    <TD STYLE="font: 10pt Times New Roman, Times, Serif; text-align: left"><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD><TD STYLE="font: 10pt Times New Roman, Times, Serif; text-align: right"><FONT STYLE="font-size: 10pt">18</FONT></TD><TD STYLE="font: 10pt Times New Roman, Times, Serif; text-align: left"><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,238,255)">
    <TD STYLE="font: 10pt Times New Roman, Times, Serif; text-align: left; padding-left: 5pt; text-indent: -5pt"><FONT STYLE="font-size: 10pt">Stock
    issued for cash</FONT></TD><TD STYLE="font: 10pt Times New Roman, Times, Serif"><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD>
    <TD STYLE="font: 10pt Times New Roman, Times, Serif; text-align: left"><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD><TD STYLE="font: 10pt Times New Roman, Times, Serif; text-align: right"><FONT STYLE="font-size: 10pt">-</FONT></TD><TD STYLE="font: 10pt Times New Roman, Times, Serif; text-align: left"><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD><TD STYLE="font: 10pt Times New Roman, Times, Serif"><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD>
    <TD STYLE="font: 10pt Times New Roman, Times, Serif; text-align: left"><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD><TD STYLE="font: 10pt Times New Roman, Times, Serif; text-align: right"><FONT STYLE="font-size: 10pt">-</FONT></TD><TD STYLE="font: 10pt Times New Roman, Times, Serif; text-align: left"><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD><TD STYLE="font: 10pt Times New Roman, Times, Serif"><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD>
    <TD STYLE="font: 10pt Times New Roman, Times, Serif; text-align: left"><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD><TD STYLE="font: 10pt Times New Roman, Times, Serif; text-align: right"><FONT STYLE="font-size: 10pt">258,621</FONT></TD><TD STYLE="font: 10pt Times New Roman, Times, Serif; text-align: left"><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD><TD STYLE="font: 10pt Times New Roman, Times, Serif"><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD>
    <TD STYLE="font: 10pt Times New Roman, Times, Serif; text-align: left"><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD><TD STYLE="font: 10pt Times New Roman, Times, Serif; text-align: right"><FONT STYLE="font-size: 10pt">-</FONT></TD><TD STYLE="font: 10pt Times New Roman, Times, Serif; text-align: left"><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD><TD STYLE="font: 10pt Times New Roman, Times, Serif"><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD>
    <TD STYLE="font: 10pt Times New Roman, Times, Serif; text-align: left"><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD><TD STYLE="font: 10pt Times New Roman, Times, Serif; text-align: right"><FONT STYLE="font-size: 10pt">75</FONT></TD><TD STYLE="font: 10pt Times New Roman, Times, Serif; text-align: left"><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD><TD STYLE="font: 10pt Times New Roman, Times, Serif"><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD>
    <TD STYLE="font: 10pt Times New Roman, Times, Serif; text-align: left"><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD><TD STYLE="font: 10pt Times New Roman, Times, Serif; text-align: right"><FONT STYLE="font-size: 10pt">-</FONT></TD><TD STYLE="font: 10pt Times New Roman, Times, Serif; text-align: left"><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD><TD STYLE="font: 10pt Times New Roman, Times, Serif"><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD>
    <TD STYLE="font: 10pt Times New Roman, Times, Serif; text-align: left"><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD><TD STYLE="font: 10pt Times New Roman, Times, Serif; text-align: right"><FONT STYLE="font-size: 10pt">-</FONT></TD><TD STYLE="font: 10pt Times New Roman, Times, Serif; text-align: left"><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD><TD STYLE="font: 10pt Times New Roman, Times, Serif"><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD>
    <TD STYLE="font: 10pt Times New Roman, Times, Serif; text-align: left"><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD><TD STYLE="font: 10pt Times New Roman, Times, Serif; text-align: right"><FONT STYLE="font-size: 10pt">75</FONT></TD><TD STYLE="font: 10pt Times New Roman, Times, Serif; text-align: left"><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD><TD STYLE="font: 10pt Times New Roman, Times, Serif"><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD>
    <TD STYLE="font: 10pt Times New Roman, Times, Serif; text-align: left"><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD><TD STYLE="font: 10pt Times New Roman, Times, Serif; text-align: right"><FONT STYLE="font-size: 10pt">-</FONT></TD><TD STYLE="font: 10pt Times New Roman, Times, Serif; text-align: left"><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD><TD STYLE="font: 10pt Times New Roman, Times, Serif"><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD>
    <TD STYLE="font: 10pt Times New Roman, Times, Serif; text-align: left"><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD><TD STYLE="font: 10pt Times New Roman, Times, Serif; text-align: right"><FONT STYLE="font-size: 10pt">75</FONT></TD><TD STYLE="font: 10pt Times New Roman, Times, Serif; text-align: left"><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD STYLE="font: 10pt Times New Roman, Times, Serif; text-align: left; padding-left: 5pt; text-indent: -5pt"><FONT STYLE="font-size: 10pt">Stock
    issued, for debt</FONT></TD><TD STYLE="font: 10pt Times New Roman, Times, Serif"><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD>
    <TD STYLE="font: 10pt Times New Roman, Times, Serif; text-align: left"><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD><TD STYLE="font: 10pt Times New Roman, Times, Serif; text-align: right"><FONT STYLE="font-size: 10pt">-</FONT></TD><TD STYLE="font: 10pt Times New Roman, Times, Serif; text-align: left"><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD><TD STYLE="font: 10pt Times New Roman, Times, Serif"><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD>
    <TD STYLE="font: 10pt Times New Roman, Times, Serif; text-align: left"><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD><TD STYLE="font: 10pt Times New Roman, Times, Serif; text-align: right"><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD><TD STYLE="font: 10pt Times New Roman, Times, Serif; text-align: left"><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD><TD STYLE="font: 10pt Times New Roman, Times, Serif"><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD>
    <TD STYLE="font: 10pt Times New Roman, Times, Serif; text-align: left"><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD><TD STYLE="font: 10pt Times New Roman, Times, Serif; text-align: right"><FONT STYLE="font-size: 10pt">28,000</FONT></TD><TD STYLE="font: 10pt Times New Roman, Times, Serif; text-align: left"><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD><TD STYLE="font: 10pt Times New Roman, Times, Serif"><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD>
    <TD STYLE="font: 10pt Times New Roman, Times, Serif; text-align: left"><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD><TD STYLE="font: 10pt Times New Roman, Times, Serif; text-align: right"><FONT STYLE="font-size: 10pt">-</FONT></TD><TD STYLE="font: 10pt Times New Roman, Times, Serif; text-align: left"><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD><TD STYLE="font: 10pt Times New Roman, Times, Serif"><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD>
    <TD STYLE="font: 10pt Times New Roman, Times, Serif; text-align: left"><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD><TD STYLE="font: 10pt Times New Roman, Times, Serif; text-align: right"><FONT STYLE="font-size: 10pt">-</FONT></TD><TD STYLE="font: 10pt Times New Roman, Times, Serif; text-align: left"><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD><TD STYLE="font: 10pt Times New Roman, Times, Serif"><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD>
    <TD STYLE="font: 10pt Times New Roman, Times, Serif; text-align: left"><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD><TD STYLE="font: 10pt Times New Roman, Times, Serif; text-align: right"><FONT STYLE="font-size: 10pt">-</FONT></TD><TD STYLE="font: 10pt Times New Roman, Times, Serif; text-align: left"><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD><TD STYLE="font: 10pt Times New Roman, Times, Serif"><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD>
    <TD STYLE="font: 10pt Times New Roman, Times, Serif; text-align: left"><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD><TD STYLE="font: 10pt Times New Roman, Times, Serif; text-align: right"><FONT STYLE="font-size: 10pt">-</FONT></TD><TD STYLE="font: 10pt Times New Roman, Times, Serif; text-align: left"><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD><TD STYLE="font: 10pt Times New Roman, Times, Serif"><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD>
    <TD STYLE="font: 10pt Times New Roman, Times, Serif; text-align: left"><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD><TD STYLE="font: 10pt Times New Roman, Times, Serif; text-align: right"><FONT STYLE="font-size: 10pt">-</FONT></TD><TD STYLE="font: 10pt Times New Roman, Times, Serif; text-align: left"><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD><TD STYLE="font: 10pt Times New Roman, Times, Serif"><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD>
    <TD STYLE="font: 10pt Times New Roman, Times, Serif; text-align: left"><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD><TD STYLE="font: 10pt Times New Roman, Times, Serif; text-align: right"><FONT STYLE="font-size: 10pt">-</FONT></TD><TD STYLE="font: 10pt Times New Roman, Times, Serif; text-align: left"><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD><TD STYLE="font: 10pt Times New Roman, Times, Serif"><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD>
    <TD STYLE="font: 10pt Times New Roman, Times, Serif; text-align: left"><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD><TD STYLE="font: 10pt Times New Roman, Times, Serif; text-align: right"><FONT STYLE="font-size: 10pt">-</FONT></TD><TD STYLE="font: 10pt Times New Roman, Times, Serif; text-align: left"><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,238,255)">
    <TD STYLE="font: 10pt Times New Roman, Times, Serif; text-align: left; padding-left: 5pt; text-indent: -5pt"><FONT STYLE="font-size: 10pt">Stock
    issued for convertible debt</FONT></TD><TD STYLE="font: 10pt Times New Roman, Times, Serif"><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD>
    <TD STYLE="font: 10pt Times New Roman, Times, Serif; text-align: left"><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD><TD STYLE="font: 10pt Times New Roman, Times, Serif; text-align: right"><FONT STYLE="font-size: 10pt">-</FONT></TD><TD STYLE="font: 10pt Times New Roman, Times, Serif; text-align: left"><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD><TD STYLE="font: 10pt Times New Roman, Times, Serif"><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD>
    <TD STYLE="font: 10pt Times New Roman, Times, Serif; text-align: left"><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD><TD STYLE="font: 10pt Times New Roman, Times, Serif; text-align: right"><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD><TD STYLE="font: 10pt Times New Roman, Times, Serif; text-align: left"><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD><TD STYLE="font: 10pt Times New Roman, Times, Serif"><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD>
    <TD STYLE="font: 10pt Times New Roman, Times, Serif; text-align: left"><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD><TD STYLE="font: 10pt Times New Roman, Times, Serif; text-align: right"><FONT STYLE="font-size: 10pt">1,642,020</FONT></TD><TD STYLE="font: 10pt Times New Roman, Times, Serif; text-align: left"><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD><TD STYLE="font: 10pt Times New Roman, Times, Serif"><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD>
    <TD STYLE="font: 10pt Times New Roman, Times, Serif; text-align: left"><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD><TD STYLE="font: 10pt Times New Roman, Times, Serif; text-align: right"><FONT STYLE="font-size: 10pt">2</FONT></TD><TD STYLE="font: 10pt Times New Roman, Times, Serif; text-align: left"><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD><TD STYLE="font: 10pt Times New Roman, Times, Serif"><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD>
    <TD STYLE="font: 10pt Times New Roman, Times, Serif; text-align: left"><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD><TD STYLE="font: 10pt Times New Roman, Times, Serif; text-align: right"><FONT STYLE="font-size: 10pt">225</FONT></TD><TD STYLE="font: 10pt Times New Roman, Times, Serif; text-align: left"><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD><TD STYLE="font: 10pt Times New Roman, Times, Serif"><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD>
    <TD STYLE="font: 10pt Times New Roman, Times, Serif; text-align: left"><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD><TD STYLE="font: 10pt Times New Roman, Times, Serif; text-align: right"><FONT STYLE="font-size: 10pt">-</FONT></TD><TD STYLE="font: 10pt Times New Roman, Times, Serif; text-align: left"><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD><TD STYLE="font: 10pt Times New Roman, Times, Serif"><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD>
    <TD STYLE="font: 10pt Times New Roman, Times, Serif; text-align: left"><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD><TD STYLE="font: 10pt Times New Roman, Times, Serif; text-align: right"><FONT STYLE="font-size: 10pt">-</FONT></TD><TD STYLE="font: 10pt Times New Roman, Times, Serif; text-align: left"><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD><TD STYLE="font: 10pt Times New Roman, Times, Serif"><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD>
    <TD STYLE="font: 10pt Times New Roman, Times, Serif; text-align: left"><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD><TD STYLE="font: 10pt Times New Roman, Times, Serif; text-align: right"><FONT STYLE="font-size: 10pt">227</FONT></TD><TD STYLE="font: 10pt Times New Roman, Times, Serif; text-align: left"><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD><TD STYLE="font: 10pt Times New Roman, Times, Serif"><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD>
    <TD STYLE="font: 10pt Times New Roman, Times, Serif; text-align: left"><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD><TD STYLE="font: 10pt Times New Roman, Times, Serif; text-align: right"><FONT STYLE="font-size: 10pt">-</FONT></TD><TD STYLE="font: 10pt Times New Roman, Times, Serif; text-align: left"><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD><TD STYLE="font: 10pt Times New Roman, Times, Serif"><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD>
    <TD STYLE="font: 10pt Times New Roman, Times, Serif; text-align: left"><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD><TD STYLE="font: 10pt Times New Roman, Times, Serif; text-align: right"><FONT STYLE="font-size: 10pt">227</FONT></TD><TD STYLE="font: 10pt Times New Roman, Times, Serif; text-align: left"><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD STYLE="font: 10pt Times New Roman, Times, Serif; text-align: left; padding-left: 5pt; text-indent: -5pt"><FONT STYLE="font-size: 10pt">Stock
    issued, extension of debt</FONT></TD><TD STYLE="font: 10pt Times New Roman, Times, Serif"><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD>
    <TD STYLE="font: 10pt Times New Roman, Times, Serif; text-align: left"><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD><TD STYLE="font: 10pt Times New Roman, Times, Serif; text-align: right"><FONT STYLE="font-size: 10pt">-</FONT></TD><TD STYLE="font: 10pt Times New Roman, Times, Serif; text-align: left"><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD><TD STYLE="font: 10pt Times New Roman, Times, Serif"><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD>
    <TD STYLE="font: 10pt Times New Roman, Times, Serif; text-align: left"><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD><TD STYLE="font: 10pt Times New Roman, Times, Serif; text-align: right"><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD><TD STYLE="font: 10pt Times New Roman, Times, Serif; text-align: left"><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD><TD STYLE="font: 10pt Times New Roman, Times, Serif"><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD>
    <TD STYLE="font: 10pt Times New Roman, Times, Serif; text-align: left"><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD><TD STYLE="font: 10pt Times New Roman, Times, Serif; text-align: right"><FONT STYLE="font-size: 10pt">105,000</FONT></TD><TD STYLE="font: 10pt Times New Roman, Times, Serif; text-align: left"><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD><TD STYLE="font: 10pt Times New Roman, Times, Serif"><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD>
    <TD STYLE="font: 10pt Times New Roman, Times, Serif; text-align: left"><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD><TD STYLE="font: 10pt Times New Roman, Times, Serif; text-align: right"><FONT STYLE="font-size: 10pt">-</FONT></TD><TD STYLE="font: 10pt Times New Roman, Times, Serif; text-align: left"><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD><TD STYLE="font: 10pt Times New Roman, Times, Serif"><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD>
    <TD STYLE="font: 10pt Times New Roman, Times, Serif; text-align: left"><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD><TD STYLE="font: 10pt Times New Roman, Times, Serif; text-align: right"><FONT STYLE="font-size: 10pt">24</FONT></TD><TD STYLE="font: 10pt Times New Roman, Times, Serif; text-align: left"><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD><TD STYLE="font: 10pt Times New Roman, Times, Serif"><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD>
    <TD STYLE="font: 10pt Times New Roman, Times, Serif; text-align: left"><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD><TD STYLE="font: 10pt Times New Roman, Times, Serif; text-align: right"><FONT STYLE="font-size: 10pt">-</FONT></TD><TD STYLE="font: 10pt Times New Roman, Times, Serif; text-align: left"><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD><TD STYLE="font: 10pt Times New Roman, Times, Serif"><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD>
    <TD STYLE="font: 10pt Times New Roman, Times, Serif; text-align: left"><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD><TD STYLE="font: 10pt Times New Roman, Times, Serif; text-align: right"><FONT STYLE="font-size: 10pt">-</FONT></TD><TD STYLE="font: 10pt Times New Roman, Times, Serif; text-align: left"><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD><TD STYLE="font: 10pt Times New Roman, Times, Serif"><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD>
    <TD STYLE="font: 10pt Times New Roman, Times, Serif; text-align: left"><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD><TD STYLE="font: 10pt Times New Roman, Times, Serif; text-align: right"><FONT STYLE="font-size: 10pt">24</FONT></TD><TD STYLE="font: 10pt Times New Roman, Times, Serif; text-align: left"><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD><TD STYLE="font: 10pt Times New Roman, Times, Serif"><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD>
    <TD STYLE="font: 10pt Times New Roman, Times, Serif; text-align: left"><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD><TD STYLE="font: 10pt Times New Roman, Times, Serif; text-align: right"><FONT STYLE="font-size: 10pt">-</FONT></TD><TD STYLE="font: 10pt Times New Roman, Times, Serif; text-align: left"><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD><TD STYLE="font: 10pt Times New Roman, Times, Serif"><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD>
    <TD STYLE="font: 10pt Times New Roman, Times, Serif; text-align: left"><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD><TD STYLE="font: 10pt Times New Roman, Times, Serif; text-align: right"><FONT STYLE="font-size: 10pt">24</FONT></TD><TD STYLE="font: 10pt Times New Roman, Times, Serif; text-align: left"><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,238,255)">
    <TD STYLE="font: 10pt Times New Roman, Times, Serif; padding-left: 5pt; text-indent: -5pt"><FONT STYLE="font-size: 10pt">Value
    of warrants issued</FONT></TD><TD STYLE="font: 10pt Times New Roman, Times, Serif"><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD>
    <TD STYLE="font: 10pt Times New Roman, Times, Serif; text-align: left"><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD><TD STYLE="font: 10pt Times New Roman, Times, Serif; text-align: right"><FONT STYLE="font-size: 10pt">-</FONT></TD><TD STYLE="font: 10pt Times New Roman, Times, Serif; text-align: left"><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD><TD STYLE="font: 10pt Times New Roman, Times, Serif"><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD>
    <TD STYLE="font: 10pt Times New Roman, Times, Serif; text-align: left"><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD><TD STYLE="font: 10pt Times New Roman, Times, Serif; text-align: right"><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD><TD STYLE="font: 10pt Times New Roman, Times, Serif; text-align: left"><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD><TD STYLE="font: 10pt Times New Roman, Times, Serif"><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD>
    <TD STYLE="font: 10pt Times New Roman, Times, Serif; text-align: left"><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD><TD STYLE="font: 10pt Times New Roman, Times, Serif; text-align: right"><FONT STYLE="font-size: 10pt">-</FONT></TD><TD STYLE="font: 10pt Times New Roman, Times, Serif; text-align: left"><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD><TD STYLE="font: 10pt Times New Roman, Times, Serif"><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD>
    <TD STYLE="font: 10pt Times New Roman, Times, Serif; text-align: left"><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD><TD STYLE="font: 10pt Times New Roman, Times, Serif; text-align: right"><FONT STYLE="font-size: 10pt">-</FONT></TD><TD STYLE="font: 10pt Times New Roman, Times, Serif; text-align: left"><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD><TD STYLE="font: 10pt Times New Roman, Times, Serif"><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD>
    <TD STYLE="font: 10pt Times New Roman, Times, Serif; text-align: left"><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD><TD STYLE="font: 10pt Times New Roman, Times, Serif; text-align: right"><FONT STYLE="font-size: 10pt">16</FONT></TD><TD STYLE="font: 10pt Times New Roman, Times, Serif; text-align: left"><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD><TD STYLE="font: 10pt Times New Roman, Times, Serif"><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD>
    <TD STYLE="font: 10pt Times New Roman, Times, Serif; text-align: left"><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD><TD STYLE="font: 10pt Times New Roman, Times, Serif; text-align: right"><FONT STYLE="font-size: 10pt">-</FONT></TD><TD STYLE="font: 10pt Times New Roman, Times, Serif; text-align: left"><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD><TD STYLE="font: 10pt Times New Roman, Times, Serif"><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD>
    <TD STYLE="font: 10pt Times New Roman, Times, Serif; text-align: left"><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD><TD STYLE="font: 10pt Times New Roman, Times, Serif; text-align: right"><FONT STYLE="font-size: 10pt">-</FONT></TD><TD STYLE="font: 10pt Times New Roman, Times, Serif; text-align: left"><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD><TD STYLE="font: 10pt Times New Roman, Times, Serif"><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD>
    <TD STYLE="font: 10pt Times New Roman, Times, Serif; text-align: left"><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD><TD STYLE="font: 10pt Times New Roman, Times, Serif; text-align: right"><FONT STYLE="font-size: 10pt">16</FONT></TD><TD STYLE="font: 10pt Times New Roman, Times, Serif; text-align: left"><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD><TD STYLE="font: 10pt Times New Roman, Times, Serif"><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD>
    <TD STYLE="font: 10pt Times New Roman, Times, Serif; text-align: left"><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD><TD STYLE="font: 10pt Times New Roman, Times, Serif; text-align: right"><FONT STYLE="font-size: 10pt">-</FONT></TD><TD STYLE="font: 10pt Times New Roman, Times, Serif; text-align: left"><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD><TD STYLE="font: 10pt Times New Roman, Times, Serif"><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD>
    <TD STYLE="font: 10pt Times New Roman, Times, Serif; text-align: left"><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD><TD STYLE="font: 10pt Times New Roman, Times, Serif; text-align: right"><FONT STYLE="font-size: 10pt">16</FONT></TD><TD STYLE="font: 10pt Times New Roman, Times, Serif; text-align: left"><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD STYLE="font: 10pt Times New Roman, Times, Serif; text-align: left; padding-bottom: 1.5pt; padding-left: 5pt; text-indent: -5pt"><FONT STYLE="font-size: 10pt">Net
    Ioss</FONT></TD><TD STYLE="font: 10pt Times New Roman, Times, Serif; padding-bottom: 1.5pt"><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD>
    <TD STYLE="border-bottom: Black 1.5pt solid; font: 10pt Times New Roman, Times, Serif; text-align: left"><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD><TD STYLE="border-bottom: Black 1.5pt solid; font: 10pt Times New Roman, Times, Serif; text-align: right"><FONT STYLE="font-size: 10pt">-</FONT></TD><TD STYLE="padding-bottom: 1.5pt; font: 10pt Times New Roman, Times, Serif; text-align: left"><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD><TD STYLE="font: 10pt Times New Roman, Times, Serif; padding-bottom: 1.5pt"><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD>
    <TD STYLE="border-bottom: Black 1.5pt solid; font: 10pt Times New Roman, Times, Serif; text-align: left"><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD><TD STYLE="border-bottom: Black 1.5pt solid; font: 10pt Times New Roman, Times, Serif; text-align: right"><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD><TD STYLE="padding-bottom: 1.5pt; font: 10pt Times New Roman, Times, Serif; text-align: left"><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD><TD STYLE="font: 10pt Times New Roman, Times, Serif; padding-bottom: 1.5pt"><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD>
    <TD STYLE="border-bottom: Black 1.5pt solid; font: 10pt Times New Roman, Times, Serif; text-align: left"><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD><TD STYLE="border-bottom: Black 1.5pt solid; font: 10pt Times New Roman, Times, Serif; text-align: right"><FONT STYLE="font-size: 10pt">-</FONT></TD><TD STYLE="padding-bottom: 1.5pt; font: 10pt Times New Roman, Times, Serif; text-align: left"><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD><TD STYLE="font: 10pt Times New Roman, Times, Serif; padding-bottom: 1.5pt"><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD>
    <TD STYLE="border-bottom: Black 1.5pt solid; font: 10pt Times New Roman, Times, Serif; text-align: left"><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD><TD STYLE="border-bottom: Black 1.5pt solid; font: 10pt Times New Roman, Times, Serif; text-align: right"><FONT STYLE="font-size: 10pt">-</FONT></TD><TD STYLE="padding-bottom: 1.5pt; font: 10pt Times New Roman, Times, Serif; text-align: left"><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD><TD STYLE="font: 10pt Times New Roman, Times, Serif; padding-bottom: 1.5pt"><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD>
    <TD STYLE="border-bottom: Black 1.5pt solid; font: 10pt Times New Roman, Times, Serif; text-align: left"><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD><TD STYLE="border-bottom: Black 1.5pt solid; font: 10pt Times New Roman, Times, Serif; text-align: right"><FONT STYLE="font-size: 10pt">-</FONT></TD><TD STYLE="padding-bottom: 1.5pt; font: 10pt Times New Roman, Times, Serif; text-align: left"><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD><TD STYLE="font: 10pt Times New Roman, Times, Serif; padding-bottom: 1.5pt"><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD>
    <TD STYLE="border-bottom: Black 1.5pt solid; font: 10pt Times New Roman, Times, Serif; text-align: left"><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD><TD STYLE="border-bottom: Black 1.5pt solid; font: 10pt Times New Roman, Times, Serif; text-align: right"><FONT STYLE="font-size: 10pt">(2,499</FONT></TD><TD STYLE="padding-bottom: 1.5pt; font: 10pt Times New Roman, Times, Serif; text-align: left"><FONT STYLE="font-size: 10pt">)</FONT></TD><TD STYLE="font: 10pt Times New Roman, Times, Serif; padding-bottom: 1.5pt"><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD>
    <TD STYLE="border-bottom: Black 1.5pt solid; font: 10pt Times New Roman, Times, Serif; text-align: left"><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD><TD STYLE="border-bottom: Black 1.5pt solid; font: 10pt Times New Roman, Times, Serif; text-align: right"><FONT STYLE="font-size: 10pt">-</FONT></TD><TD STYLE="padding-bottom: 1.5pt; font: 10pt Times New Roman, Times, Serif; text-align: left"><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD><TD STYLE="font: 10pt Times New Roman, Times, Serif; padding-bottom: 1.5pt"><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD>
    <TD STYLE="border-bottom: Black 1.5pt solid; font: 10pt Times New Roman, Times, Serif; text-align: left"><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD><TD STYLE="border-bottom: Black 1.5pt solid; font: 10pt Times New Roman, Times, Serif; text-align: right"><FONT STYLE="font-size: 10pt">(2,499</FONT></TD><TD STYLE="padding-bottom: 1.5pt; font: 10pt Times New Roman, Times, Serif; text-align: left"><FONT STYLE="font-size: 10pt">)</FONT></TD><TD STYLE="font: 10pt Times New Roman, Times, Serif; padding-bottom: 1.5pt"><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD>
    <TD STYLE="border-bottom: Black 1.5pt solid; font: 10pt Times New Roman, Times, Serif; text-align: left"><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD><TD STYLE="border-bottom: Black 1.5pt solid; font: 10pt Times New Roman, Times, Serif; text-align: right"><FONT STYLE="font-size: 10pt">(31</FONT></TD><TD STYLE="padding-bottom: 1.5pt; font: 10pt Times New Roman, Times, Serif; text-align: left"><FONT STYLE="font-size: 10pt">)</FONT></TD><TD STYLE="font: 10pt Times New Roman, Times, Serif; padding-bottom: 1.5pt"><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD>
    <TD STYLE="border-bottom: Black 1.5pt solid; font: 10pt Times New Roman, Times, Serif; text-align: left"><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD><TD STYLE="border-bottom: Black 1.5pt solid; font: 10pt Times New Roman, Times, Serif; text-align: right"><FONT STYLE="font-size: 10pt">(2,530</FONT></TD><TD STYLE="padding-bottom: 1.5pt; font: 10pt Times New Roman, Times, Serif; text-align: left"><FONT STYLE="font-size: 10pt">)</FONT></TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,238,255)">
    <TD STYLE="font: 10pt Times New Roman, Times, Serif; padding-bottom: 1.5pt; padding-left: 5pt; text-indent: -5pt"><FONT STYLE="font-size: 10pt">BALANCE,
    January 31, 2019</FONT></TD><TD STYLE="font: 10pt Times New Roman, Times, Serif; padding-bottom: 1.5pt"><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD>
    <TD STYLE="border-bottom: Black 1.5pt solid; font: 10pt Times New Roman, Times, Serif; text-align: left"><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD><TD STYLE="border-bottom: Black 1.5pt solid; font: 10pt Times New Roman, Times, Serif; text-align: right"><FONT STYLE="font-size: 10pt">-</FONT></TD><TD STYLE="padding-bottom: 1.5pt; font: 10pt Times New Roman, Times, Serif; text-align: left"><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD><TD STYLE="font: 10pt Times New Roman, Times, Serif; padding-bottom: 1.5pt"><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD>
    <TD STYLE="border-bottom: Black 1.5pt solid; font: 10pt Times New Roman, Times, Serif; text-align: left"><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD><TD STYLE="border-bottom: Black 1.5pt solid; font: 10pt Times New Roman, Times, Serif; text-align: right"><FONT STYLE="font-size: 10pt">-</FONT></TD><TD STYLE="padding-bottom: 1.5pt; font: 10pt Times New Roman, Times, Serif; text-align: left"><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD><TD STYLE="font: 10pt Times New Roman, Times, Serif; padding-bottom: 1.5pt"><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD>
    <TD STYLE="border-bottom: Black 1.5pt solid; font: 10pt Times New Roman, Times, Serif; text-align: left"><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD><TD STYLE="border-bottom: Black 1.5pt solid; font: 10pt Times New Roman, Times, Serif; text-align: right"><FONT STYLE="font-size: 10pt">16,041,939</FONT></TD><TD STYLE="padding-bottom: 1.5pt; font: 10pt Times New Roman, Times, Serif; text-align: left"><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD><TD STYLE="font: 10pt Times New Roman, Times, Serif; padding-bottom: 1.5pt"><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD>
    <TD STYLE="border-bottom: Black 1.5pt solid; font: 10pt Times New Roman, Times, Serif; text-align: left"><FONT STYLE="font-size: 10pt">$</FONT></TD><TD STYLE="border-bottom: Black 1.5pt solid; font: 10pt Times New Roman, Times, Serif; text-align: right"><FONT STYLE="font-size: 10pt">16</FONT></TD><TD STYLE="padding-bottom: 1.5pt; font: 10pt Times New Roman, Times, Serif; text-align: left"><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD><TD STYLE="font: 10pt Times New Roman, Times, Serif; padding-bottom: 1.5pt"><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD>
    <TD STYLE="border-bottom: Black 1.5pt solid; font: 10pt Times New Roman, Times, Serif; text-align: left"><FONT STYLE="font-size: 10pt">$</FONT></TD><TD STYLE="border-bottom: Black 1.5pt solid; font: 10pt Times New Roman, Times, Serif; text-align: right"><FONT STYLE="font-size: 10pt">80,838</FONT></TD><TD STYLE="padding-bottom: 1.5pt; font: 10pt Times New Roman, Times, Serif; text-align: left"><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD><TD STYLE="font: 10pt Times New Roman, Times, Serif; padding-bottom: 1.5pt"><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD>
    <TD STYLE="border-bottom: Black 1.5pt solid; font: 10pt Times New Roman, Times, Serif; text-align: left"><FONT STYLE="font-size: 10pt">$</FONT></TD><TD STYLE="border-bottom: Black 1.5pt solid; font: 10pt Times New Roman, Times, Serif; text-align: right"><FONT STYLE="font-size: 10pt">(84,213</FONT></TD><TD STYLE="padding-bottom: 1.5pt; font: 10pt Times New Roman, Times, Serif; text-align: left"><FONT STYLE="font-size: 10pt">)</FONT></TD><TD STYLE="font: 10pt Times New Roman, Times, Serif; padding-bottom: 1.5pt"><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD>
    <TD STYLE="border-bottom: Black 1.5pt solid; font: 10pt Times New Roman, Times, Serif; text-align: left"><FONT STYLE="font-size: 10pt">$</FONT></TD><TD STYLE="border-bottom: Black 1.5pt solid; font: 10pt Times New Roman, Times, Serif; text-align: right"><FONT STYLE="font-size: 10pt">1</FONT></TD><TD STYLE="padding-bottom: 1.5pt; font: 10pt Times New Roman, Times, Serif; text-align: left"><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD><TD STYLE="font: 10pt Times New Roman, Times, Serif; padding-bottom: 1.5pt"><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD>
    <TD STYLE="border-bottom: Black 1.5pt solid; font: 10pt Times New Roman, Times, Serif; text-align: left"><FONT STYLE="font-size: 10pt">$</FONT></TD><TD STYLE="border-bottom: Black 1.5pt solid; font: 10pt Times New Roman, Times, Serif; text-align: right"><FONT STYLE="font-size: 10pt">(3,358</FONT></TD><TD STYLE="padding-bottom: 1.5pt; font: 10pt Times New Roman, Times, Serif; text-align: left"><FONT STYLE="font-size: 10pt">)</FONT></TD><TD STYLE="font: 10pt Times New Roman, Times, Serif; padding-bottom: 1.5pt"><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD>
    <TD STYLE="border-bottom: Black 1.5pt solid; font: 10pt Times New Roman, Times, Serif; text-align: left"><FONT STYLE="font-size: 10pt">$</FONT></TD><TD STYLE="border-bottom: Black 1.5pt solid; font: 10pt Times New Roman, Times, Serif; text-align: right"><FONT STYLE="font-size: 10pt">(265</FONT></TD><TD STYLE="padding-bottom: 1.5pt; font: 10pt Times New Roman, Times, Serif; text-align: left"><FONT STYLE="font-size: 10pt">)</FONT></TD><TD STYLE="font: 10pt Times New Roman, Times, Serif; padding-bottom: 1.5pt"><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD>
    <TD STYLE="border-bottom: Black 1.5pt solid; font: 10pt Times New Roman, Times, Serif; text-align: left"><FONT STYLE="font-size: 10pt">$</FONT></TD><TD STYLE="border-bottom: Black 1.5pt solid; font: 10pt Times New Roman, Times, Serif; text-align: right"><FONT STYLE="font-size: 10pt">(3,623</FONT></TD><TD STYLE="padding-bottom: 1.5pt; font: 10pt Times New Roman, Times, Serif; text-align: left"><FONT STYLE="font-size: 10pt">)</FONT></TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD STYLE="font: 10pt Times New Roman, Times, Serif; text-align: left; padding-left: 5pt; text-indent: -5pt"><FONT STYLE="font-size: 10pt">Amortization
    of employee stock options</FONT></TD><TD STYLE="font: 10pt Times New Roman, Times, Serif"><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD>
    <TD STYLE="font: 10pt Times New Roman, Times, Serif; text-align: left"><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD><TD STYLE="font: 10pt Times New Roman, Times, Serif; text-align: right"><FONT STYLE="font-size: 10pt">-</FONT></TD><TD STYLE="font: 10pt Times New Roman, Times, Serif; text-align: left"><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD><TD STYLE="font: 10pt Times New Roman, Times, Serif"><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD>
    <TD STYLE="font: 10pt Times New Roman, Times, Serif; text-align: left"><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD><TD STYLE="font: 10pt Times New Roman, Times, Serif; text-align: right"><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD><TD STYLE="font: 10pt Times New Roman, Times, Serif; text-align: left"><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD><TD STYLE="font: 10pt Times New Roman, Times, Serif"><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD>
    <TD STYLE="font: 10pt Times New Roman, Times, Serif; text-align: left"><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD><TD STYLE="font: 10pt Times New Roman, Times, Serif; text-align: right"><FONT STYLE="font-size: 10pt">-</FONT></TD><TD STYLE="font: 10pt Times New Roman, Times, Serif; text-align: left"><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD><TD STYLE="font: 10pt Times New Roman, Times, Serif"><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD>
    <TD STYLE="font: 10pt Times New Roman, Times, Serif; text-align: left"><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD><TD STYLE="font: 10pt Times New Roman, Times, Serif; text-align: right"><FONT STYLE="font-size: 10pt">-</FONT></TD><TD STYLE="font: 10pt Times New Roman, Times, Serif; text-align: left"><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD><TD STYLE="font: 10pt Times New Roman, Times, Serif"><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD>
    <TD STYLE="font: 10pt Times New Roman, Times, Serif; text-align: left"><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD><TD STYLE="font: 10pt Times New Roman, Times, Serif; text-align: right"><FONT STYLE="font-size: 10pt">153</FONT></TD><TD STYLE="font: 10pt Times New Roman, Times, Serif; text-align: left"><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD><TD STYLE="font: 10pt Times New Roman, Times, Serif"><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD>
    <TD STYLE="font: 10pt Times New Roman, Times, Serif; text-align: left"><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD><TD STYLE="font: 10pt Times New Roman, Times, Serif; text-align: right"><FONT STYLE="font-size: 10pt">-</FONT></TD><TD STYLE="font: 10pt Times New Roman, Times, Serif; text-align: left"><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD><TD STYLE="font: 10pt Times New Roman, Times, Serif"><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD>
    <TD STYLE="font: 10pt Times New Roman, Times, Serif; text-align: left"><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD><TD STYLE="font: 10pt Times New Roman, Times, Serif; text-align: right"><FONT STYLE="font-size: 10pt">-</FONT></TD><TD STYLE="font: 10pt Times New Roman, Times, Serif; text-align: left"><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD><TD STYLE="font: 10pt Times New Roman, Times, Serif"><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD>
    <TD STYLE="font: 10pt Times New Roman, Times, Serif; text-align: left"><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD><TD STYLE="font: 10pt Times New Roman, Times, Serif; text-align: right"><FONT STYLE="font-size: 10pt">153</FONT></TD><TD STYLE="font: 10pt Times New Roman, Times, Serif; text-align: left"><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD><TD STYLE="font: 10pt Times New Roman, Times, Serif"><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD>
    <TD STYLE="font: 10pt Times New Roman, Times, Serif; text-align: left"><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD><TD STYLE="font: 10pt Times New Roman, Times, Serif; text-align: right"><FONT STYLE="font-size: 10pt">-</FONT></TD><TD STYLE="font: 10pt Times New Roman, Times, Serif; text-align: left"><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD><TD STYLE="font: 10pt Times New Roman, Times, Serif"><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD>
    <TD STYLE="font: 10pt Times New Roman, Times, Serif; text-align: left"><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD><TD STYLE="font: 10pt Times New Roman, Times, Serif; text-align: right"><FONT STYLE="font-size: 10pt">153</FONT></TD><TD STYLE="font: 10pt Times New Roman, Times, Serif; text-align: left"><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,238,255)">
    <TD STYLE="font: 10pt Times New Roman, Times, Serif; text-align: left; padding-left: 5pt; text-indent: -5pt"><FONT STYLE="font-size: 10pt">Stock
    issued for services</FONT></TD><TD STYLE="font: 10pt Times New Roman, Times, Serif"><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD>
    <TD STYLE="font: 10pt Times New Roman, Times, Serif; text-align: left"><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD><TD STYLE="font: 10pt Times New Roman, Times, Serif; text-align: right"><FONT STYLE="font-size: 10pt">-</FONT></TD><TD STYLE="font: 10pt Times New Roman, Times, Serif; text-align: left"><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD><TD STYLE="font: 10pt Times New Roman, Times, Serif"><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD>
    <TD STYLE="font: 10pt Times New Roman, Times, Serif; text-align: left"><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD><TD STYLE="font: 10pt Times New Roman, Times, Serif; text-align: right"><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD><TD STYLE="font: 10pt Times New Roman, Times, Serif; text-align: left"><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD><TD STYLE="font: 10pt Times New Roman, Times, Serif"><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD>
    <TD STYLE="font: 10pt Times New Roman, Times, Serif; text-align: left"><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD><TD STYLE="font: 10pt Times New Roman, Times, Serif; text-align: right"><FONT STYLE="font-size: 10pt">725,000</FONT></TD><TD STYLE="font: 10pt Times New Roman, Times, Serif; text-align: left"><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD><TD STYLE="font: 10pt Times New Roman, Times, Serif"><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD>
    <TD STYLE="font: 10pt Times New Roman, Times, Serif; text-align: left"><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD><TD STYLE="font: 10pt Times New Roman, Times, Serif; text-align: right"><FONT STYLE="font-size: 10pt">1</FONT></TD><TD STYLE="font: 10pt Times New Roman, Times, Serif; text-align: left"><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD><TD STYLE="font: 10pt Times New Roman, Times, Serif"><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD>
    <TD STYLE="font: 10pt Times New Roman, Times, Serif; text-align: left"><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD><TD STYLE="font: 10pt Times New Roman, Times, Serif; text-align: right"><FONT STYLE="font-size: 10pt">178</FONT></TD><TD STYLE="font: 10pt Times New Roman, Times, Serif; text-align: left"><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD><TD STYLE="font: 10pt Times New Roman, Times, Serif"><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD>
    <TD STYLE="font: 10pt Times New Roman, Times, Serif; text-align: left"><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD><TD STYLE="font: 10pt Times New Roman, Times, Serif; text-align: right"><FONT STYLE="font-size: 10pt">-</FONT></TD><TD STYLE="font: 10pt Times New Roman, Times, Serif; text-align: left"><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD><TD STYLE="font: 10pt Times New Roman, Times, Serif"><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD>
    <TD STYLE="font: 10pt Times New Roman, Times, Serif; text-align: left"><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD><TD STYLE="font: 10pt Times New Roman, Times, Serif; text-align: right"><FONT STYLE="font-size: 10pt">-</FONT></TD><TD STYLE="font: 10pt Times New Roman, Times, Serif; text-align: left"><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD><TD STYLE="font: 10pt Times New Roman, Times, Serif"><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD>
    <TD STYLE="font: 10pt Times New Roman, Times, Serif; text-align: left"><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD><TD STYLE="font: 10pt Times New Roman, Times, Serif; text-align: right"><FONT STYLE="font-size: 10pt">179</FONT></TD><TD STYLE="font: 10pt Times New Roman, Times, Serif; text-align: left"><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD><TD STYLE="font: 10pt Times New Roman, Times, Serif"><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD>
    <TD STYLE="font: 10pt Times New Roman, Times, Serif; text-align: left"><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD><TD STYLE="font: 10pt Times New Roman, Times, Serif; text-align: right"><FONT STYLE="font-size: 10pt">-</FONT></TD><TD STYLE="font: 10pt Times New Roman, Times, Serif; text-align: left"><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD><TD STYLE="font: 10pt Times New Roman, Times, Serif"><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD>
    <TD STYLE="font: 10pt Times New Roman, Times, Serif; text-align: left"><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD><TD STYLE="font: 10pt Times New Roman, Times, Serif; text-align: right"><FONT STYLE="font-size: 10pt">179</FONT></TD><TD STYLE="font: 10pt Times New Roman, Times, Serif; text-align: left"><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD STYLE="font: 10pt Times New Roman, Times, Serif; text-align: left; padding-left: 5pt; text-indent: -5pt"><FONT STYLE="font-size: 10pt">Stock
    issued for AP settlement</FONT></TD><TD STYLE="font: 10pt Times New Roman, Times, Serif"><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD>
    <TD STYLE="font: 10pt Times New Roman, Times, Serif; text-align: left"><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD><TD STYLE="font: 10pt Times New Roman, Times, Serif; text-align: right"><FONT STYLE="font-size: 10pt">-</FONT></TD><TD STYLE="font: 10pt Times New Roman, Times, Serif; text-align: left"><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD><TD STYLE="font: 10pt Times New Roman, Times, Serif"><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD>
    <TD STYLE="font: 10pt Times New Roman, Times, Serif; text-align: left"><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD><TD STYLE="font: 10pt Times New Roman, Times, Serif; text-align: right"><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD><TD STYLE="font: 10pt Times New Roman, Times, Serif; text-align: left"><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD><TD STYLE="font: 10pt Times New Roman, Times, Serif"><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD>
    <TD STYLE="font: 10pt Times New Roman, Times, Serif; text-align: left"><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD><TD STYLE="font: 10pt Times New Roman, Times, Serif; text-align: right"><FONT STYLE="font-size: 10pt">60,715</FONT></TD><TD STYLE="font: 10pt Times New Roman, Times, Serif; text-align: left"><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD><TD STYLE="font: 10pt Times New Roman, Times, Serif"><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD>
    <TD STYLE="font: 10pt Times New Roman, Times, Serif; text-align: left"><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD><TD STYLE="font: 10pt Times New Roman, Times, Serif; text-align: right"><FONT STYLE="font-size: 10pt">-</FONT></TD><TD STYLE="font: 10pt Times New Roman, Times, Serif; text-align: left"><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD><TD STYLE="font: 10pt Times New Roman, Times, Serif"><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD>
    <TD STYLE="font: 10pt Times New Roman, Times, Serif; text-align: left"><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD><TD STYLE="font: 10pt Times New Roman, Times, Serif; text-align: right"><FONT STYLE="font-size: 10pt">13</FONT></TD><TD STYLE="font: 10pt Times New Roman, Times, Serif; text-align: left"><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD><TD STYLE="font: 10pt Times New Roman, Times, Serif"><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD>
    <TD STYLE="font: 10pt Times New Roman, Times, Serif; text-align: left"><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD><TD STYLE="font: 10pt Times New Roman, Times, Serif; text-align: right"><FONT STYLE="font-size: 10pt">-</FONT></TD><TD STYLE="font: 10pt Times New Roman, Times, Serif; text-align: left"><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD><TD STYLE="font: 10pt Times New Roman, Times, Serif"><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD>
    <TD STYLE="font: 10pt Times New Roman, Times, Serif; text-align: left"><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD><TD STYLE="font: 10pt Times New Roman, Times, Serif; text-align: right"><FONT STYLE="font-size: 10pt">-</FONT></TD><TD STYLE="font: 10pt Times New Roman, Times, Serif; text-align: left"><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD><TD STYLE="font: 10pt Times New Roman, Times, Serif"><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD>
    <TD STYLE="font: 10pt Times New Roman, Times, Serif; text-align: left"><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD><TD STYLE="font: 10pt Times New Roman, Times, Serif; text-align: right"><FONT STYLE="font-size: 10pt">13</FONT></TD><TD STYLE="font: 10pt Times New Roman, Times, Serif; text-align: left"><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD><TD STYLE="font: 10pt Times New Roman, Times, Serif"><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD>
    <TD STYLE="font: 10pt Times New Roman, Times, Serif; text-align: left"><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD><TD STYLE="font: 10pt Times New Roman, Times, Serif; text-align: right"><FONT STYLE="font-size: 10pt">-</FONT></TD><TD STYLE="font: 10pt Times New Roman, Times, Serif; text-align: left"><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD><TD STYLE="font: 10pt Times New Roman, Times, Serif"><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD>
    <TD STYLE="font: 10pt Times New Roman, Times, Serif; text-align: left"><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD><TD STYLE="font: 10pt Times New Roman, Times, Serif; text-align: right"><FONT STYLE="font-size: 10pt">13</FONT></TD><TD STYLE="font: 10pt Times New Roman, Times, Serif; text-align: left"><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,238,255)">
    <TD STYLE="font: 10pt Times New Roman, Times, Serif; text-align: left; padding-left: 5pt; text-indent: -5pt"><FONT STYLE="font-size: 10pt">Stock
    issued for cash</FONT></TD><TD STYLE="font: 10pt Times New Roman, Times, Serif"><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD>
    <TD STYLE="font: 10pt Times New Roman, Times, Serif; text-align: left"><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD><TD STYLE="font: 10pt Times New Roman, Times, Serif; text-align: right"><FONT STYLE="font-size: 10pt">-</FONT></TD><TD STYLE="font: 10pt Times New Roman, Times, Serif; text-align: left"><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD><TD STYLE="font: 10pt Times New Roman, Times, Serif"><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD>
    <TD STYLE="font: 10pt Times New Roman, Times, Serif; text-align: left"><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD><TD STYLE="font: 10pt Times New Roman, Times, Serif; text-align: right"><FONT STYLE="font-size: 10pt">-</FONT></TD><TD STYLE="font: 10pt Times New Roman, Times, Serif; text-align: left"><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD><TD STYLE="font: 10pt Times New Roman, Times, Serif"><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD>
    <TD STYLE="font: 10pt Times New Roman, Times, Serif; text-align: left"><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD><TD STYLE="font: 10pt Times New Roman, Times, Serif; text-align: right"><FONT STYLE="font-size: 10pt">600,000</FONT></TD><TD STYLE="font: 10pt Times New Roman, Times, Serif; text-align: left"><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD><TD STYLE="font: 10pt Times New Roman, Times, Serif"><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD>
    <TD STYLE="font: 10pt Times New Roman, Times, Serif; text-align: left"><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD><TD STYLE="font: 10pt Times New Roman, Times, Serif; text-align: right"><FONT STYLE="font-size: 10pt">1</FONT></TD><TD STYLE="font: 10pt Times New Roman, Times, Serif; text-align: left"><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD><TD STYLE="font: 10pt Times New Roman, Times, Serif"><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD>
    <TD STYLE="font: 10pt Times New Roman, Times, Serif; text-align: left"><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD><TD STYLE="font: 10pt Times New Roman, Times, Serif; text-align: right"><FONT STYLE="font-size: 10pt">149</FONT></TD><TD STYLE="font: 10pt Times New Roman, Times, Serif; text-align: left"><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD><TD STYLE="font: 10pt Times New Roman, Times, Serif"><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD>
    <TD STYLE="font: 10pt Times New Roman, Times, Serif; text-align: left"><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD><TD STYLE="font: 10pt Times New Roman, Times, Serif; text-align: right"><FONT STYLE="font-size: 10pt">-</FONT></TD><TD STYLE="font: 10pt Times New Roman, Times, Serif; text-align: left"><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD><TD STYLE="font: 10pt Times New Roman, Times, Serif"><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD>
    <TD STYLE="font: 10pt Times New Roman, Times, Serif; text-align: left"><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD><TD STYLE="font: 10pt Times New Roman, Times, Serif; text-align: right"><FONT STYLE="font-size: 10pt">-</FONT></TD><TD STYLE="font: 10pt Times New Roman, Times, Serif; text-align: left"><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD><TD STYLE="font: 10pt Times New Roman, Times, Serif"><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD>
    <TD STYLE="font: 10pt Times New Roman, Times, Serif; text-align: left"><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD><TD STYLE="font: 10pt Times New Roman, Times, Serif; text-align: right"><FONT STYLE="font-size: 10pt">150</FONT></TD><TD STYLE="font: 10pt Times New Roman, Times, Serif; text-align: left"><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD><TD STYLE="font: 10pt Times New Roman, Times, Serif"><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD>
    <TD STYLE="font: 10pt Times New Roman, Times, Serif; text-align: left"><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD><TD STYLE="font: 10pt Times New Roman, Times, Serif; text-align: right"><FONT STYLE="font-size: 10pt">-</FONT></TD><TD STYLE="font: 10pt Times New Roman, Times, Serif; text-align: left"><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD><TD STYLE="font: 10pt Times New Roman, Times, Serif"><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD>
    <TD STYLE="font: 10pt Times New Roman, Times, Serif; text-align: left"><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD><TD STYLE="font: 10pt Times New Roman, Times, Serif; text-align: right"><FONT STYLE="font-size: 10pt">150</FONT></TD><TD STYLE="font: 10pt Times New Roman, Times, Serif; text-align: left"><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD STYLE="font: 10pt Times New Roman, Times, Serif; text-align: left; padding-left: 5pt; text-indent: -5pt"><FONT STYLE="font-size: 10pt">Preferred
    stock issued for cash</FONT></TD><TD STYLE="font: 10pt Times New Roman, Times, Serif"><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD>
    <TD STYLE="font: 10pt Times New Roman, Times, Serif; text-align: left"><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD><TD STYLE="font: 10pt Times New Roman, Times, Serif; text-align: right"><FONT STYLE="font-size: 10pt">50,000</FONT></TD><TD STYLE="font: 10pt Times New Roman, Times, Serif; text-align: left"><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD><TD STYLE="font: 10pt Times New Roman, Times, Serif"><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD>
    <TD STYLE="font: 10pt Times New Roman, Times, Serif; text-align: left"><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD><TD STYLE="font: 10pt Times New Roman, Times, Serif; text-align: right"><FONT STYLE="font-size: 10pt">-</FONT></TD><TD STYLE="font: 10pt Times New Roman, Times, Serif; text-align: left"><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD><TD STYLE="font: 10pt Times New Roman, Times, Serif"><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD>
    <TD STYLE="font: 10pt Times New Roman, Times, Serif; text-align: left"><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD><TD STYLE="font: 10pt Times New Roman, Times, Serif; text-align: right"><FONT STYLE="font-size: 10pt">-</FONT></TD><TD STYLE="font: 10pt Times New Roman, Times, Serif; text-align: left"><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD><TD STYLE="font: 10pt Times New Roman, Times, Serif"><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD>
    <TD STYLE="font: 10pt Times New Roman, Times, Serif; text-align: left"><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD><TD STYLE="font: 10pt Times New Roman, Times, Serif; text-align: right"><FONT STYLE="font-size: 10pt">-</FONT></TD><TD STYLE="font: 10pt Times New Roman, Times, Serif; text-align: left"><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD><TD STYLE="font: 10pt Times New Roman, Times, Serif"><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD>
    <TD STYLE="font: 10pt Times New Roman, Times, Serif; text-align: left"><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD><TD STYLE="font: 10pt Times New Roman, Times, Serif; text-align: right"><FONT STYLE="font-size: 10pt">50</FONT></TD><TD STYLE="font: 10pt Times New Roman, Times, Serif; text-align: left"><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD><TD STYLE="font: 10pt Times New Roman, Times, Serif"><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD>
    <TD STYLE="font: 10pt Times New Roman, Times, Serif; text-align: left"><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD><TD STYLE="font: 10pt Times New Roman, Times, Serif; text-align: right"><FONT STYLE="font-size: 10pt">-</FONT></TD><TD STYLE="font: 10pt Times New Roman, Times, Serif; text-align: left"><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD><TD STYLE="font: 10pt Times New Roman, Times, Serif"><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD>
    <TD STYLE="font: 10pt Times New Roman, Times, Serif; text-align: left"><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD><TD STYLE="font: 10pt Times New Roman, Times, Serif; text-align: right"><FONT STYLE="font-size: 10pt">-</FONT></TD><TD STYLE="font: 10pt Times New Roman, Times, Serif; text-align: left"><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD><TD STYLE="font: 10pt Times New Roman, Times, Serif"><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD>
    <TD STYLE="font: 10pt Times New Roman, Times, Serif; text-align: left"><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD><TD STYLE="font: 10pt Times New Roman, Times, Serif; text-align: right"><FONT STYLE="font-size: 10pt">50</FONT></TD><TD STYLE="font: 10pt Times New Roman, Times, Serif; text-align: left"><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD><TD STYLE="font: 10pt Times New Roman, Times, Serif"><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD>
    <TD STYLE="font: 10pt Times New Roman, Times, Serif; text-align: left"><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD><TD STYLE="font: 10pt Times New Roman, Times, Serif; text-align: right"><FONT STYLE="font-size: 10pt">-</FONT></TD><TD STYLE="font: 10pt Times New Roman, Times, Serif; text-align: left"><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD><TD STYLE="font: 10pt Times New Roman, Times, Serif"><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD>
    <TD STYLE="font: 10pt Times New Roman, Times, Serif; text-align: left"><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD><TD STYLE="font: 10pt Times New Roman, Times, Serif; text-align: right"><FONT STYLE="font-size: 10pt">50</FONT></TD><TD STYLE="font: 10pt Times New Roman, Times, Serif; text-align: left"><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,238,255)">
    <TD STYLE="font: 10pt Times New Roman, Times, Serif; text-align: left; padding-left: 5pt; text-indent: -5pt"><FONT STYLE="font-size: 10pt">Stock
    issued for convertible debt</FONT></TD><TD STYLE="font: 10pt Times New Roman, Times, Serif"><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD>
    <TD STYLE="font: 10pt Times New Roman, Times, Serif; text-align: left"><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD><TD STYLE="font: 10pt Times New Roman, Times, Serif; text-align: right"><FONT STYLE="font-size: 10pt">-</FONT></TD><TD STYLE="font: 10pt Times New Roman, Times, Serif; text-align: left"><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD><TD STYLE="font: 10pt Times New Roman, Times, Serif"><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD>
    <TD STYLE="font: 10pt Times New Roman, Times, Serif; text-align: left"><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD><TD STYLE="font: 10pt Times New Roman, Times, Serif; text-align: right"><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD><TD STYLE="font: 10pt Times New Roman, Times, Serif; text-align: left"><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD><TD STYLE="font: 10pt Times New Roman, Times, Serif"><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD>
    <TD STYLE="font: 10pt Times New Roman, Times, Serif; text-align: left"><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD><TD STYLE="font: 10pt Times New Roman, Times, Serif; text-align: right"><FONT STYLE="font-size: 10pt">1,288,777</FONT></TD><TD STYLE="font: 10pt Times New Roman, Times, Serif; text-align: left"><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD><TD STYLE="font: 10pt Times New Roman, Times, Serif"><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD>
    <TD STYLE="font: 10pt Times New Roman, Times, Serif; text-align: left"><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD><TD STYLE="font: 10pt Times New Roman, Times, Serif; text-align: right"><FONT STYLE="font-size: 10pt">1</FONT></TD><TD STYLE="font: 10pt Times New Roman, Times, Serif; text-align: left"><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD><TD STYLE="font: 10pt Times New Roman, Times, Serif"><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD>
    <TD STYLE="font: 10pt Times New Roman, Times, Serif; text-align: left"><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD><TD STYLE="font: 10pt Times New Roman, Times, Serif; text-align: right"><FONT STYLE="font-size: 10pt">360</FONT></TD><TD STYLE="font: 10pt Times New Roman, Times, Serif; text-align: left"><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD><TD STYLE="font: 10pt Times New Roman, Times, Serif"><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD>
    <TD STYLE="font: 10pt Times New Roman, Times, Serif; text-align: left"><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD><TD STYLE="font: 10pt Times New Roman, Times, Serif; text-align: right"><FONT STYLE="font-size: 10pt">-</FONT></TD><TD STYLE="font: 10pt Times New Roman, Times, Serif; text-align: left"><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD><TD STYLE="font: 10pt Times New Roman, Times, Serif"><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD>
    <TD STYLE="font: 10pt Times New Roman, Times, Serif; text-align: left"><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD><TD STYLE="font: 10pt Times New Roman, Times, Serif; text-align: right"><FONT STYLE="font-size: 10pt">-</FONT></TD><TD STYLE="font: 10pt Times New Roman, Times, Serif; text-align: left"><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD><TD STYLE="font: 10pt Times New Roman, Times, Serif"><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD>
    <TD STYLE="font: 10pt Times New Roman, Times, Serif; text-align: left"><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD><TD STYLE="font: 10pt Times New Roman, Times, Serif; text-align: right"><FONT STYLE="font-size: 10pt">361</FONT></TD><TD STYLE="font: 10pt Times New Roman, Times, Serif; text-align: left"><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD><TD STYLE="font: 10pt Times New Roman, Times, Serif"><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD>
    <TD STYLE="font: 10pt Times New Roman, Times, Serif; text-align: left"><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD><TD STYLE="font: 10pt Times New Roman, Times, Serif; text-align: right"><FONT STYLE="font-size: 10pt">-</FONT></TD><TD STYLE="font: 10pt Times New Roman, Times, Serif; text-align: left"><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD><TD STYLE="font: 10pt Times New Roman, Times, Serif"><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD>
    <TD STYLE="font: 10pt Times New Roman, Times, Serif; text-align: left"><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD><TD STYLE="font: 10pt Times New Roman, Times, Serif; text-align: right"><FONT STYLE="font-size: 10pt">361</FONT></TD><TD STYLE="font: 10pt Times New Roman, Times, Serif; text-align: left"><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD STYLE="font: 10pt Times New Roman, Times, Serif; text-align: left; padding-left: 5pt; text-indent: -5pt"><FONT STYLE="font-size: 10pt">Stock
    issued, extension of debt</FONT></TD><TD STYLE="font: 10pt Times New Roman, Times, Serif"><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD>
    <TD STYLE="font: 10pt Times New Roman, Times, Serif; text-align: left"><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD><TD STYLE="font: 10pt Times New Roman, Times, Serif; text-align: right"><FONT STYLE="font-size: 10pt">-</FONT></TD><TD STYLE="font: 10pt Times New Roman, Times, Serif; text-align: left"><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD><TD STYLE="font: 10pt Times New Roman, Times, Serif"><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD>
    <TD STYLE="font: 10pt Times New Roman, Times, Serif; text-align: left"><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD><TD STYLE="font: 10pt Times New Roman, Times, Serif; text-align: right"><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD><TD STYLE="font: 10pt Times New Roman, Times, Serif; text-align: left"><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD><TD STYLE="font: 10pt Times New Roman, Times, Serif"><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD>
    <TD STYLE="font: 10pt Times New Roman, Times, Serif; text-align: left"><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD><TD STYLE="font: 10pt Times New Roman, Times, Serif; text-align: right"><FONT STYLE="font-size: 10pt">85,000</FONT></TD><TD STYLE="font: 10pt Times New Roman, Times, Serif; text-align: left"><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD><TD STYLE="font: 10pt Times New Roman, Times, Serif"><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD>
    <TD STYLE="font: 10pt Times New Roman, Times, Serif; text-align: left"><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD><TD STYLE="font: 10pt Times New Roman, Times, Serif; text-align: right"><FONT STYLE="font-size: 10pt">-</FONT></TD><TD STYLE="font: 10pt Times New Roman, Times, Serif; text-align: left"><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD><TD STYLE="font: 10pt Times New Roman, Times, Serif"><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD>
    <TD STYLE="font: 10pt Times New Roman, Times, Serif; text-align: left"><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD><TD STYLE="font: 10pt Times New Roman, Times, Serif; text-align: right"><FONT STYLE="font-size: 10pt">16</FONT></TD><TD STYLE="font: 10pt Times New Roman, Times, Serif; text-align: left"><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD><TD STYLE="font: 10pt Times New Roman, Times, Serif"><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD>
    <TD STYLE="font: 10pt Times New Roman, Times, Serif; text-align: left"><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD><TD STYLE="font: 10pt Times New Roman, Times, Serif; text-align: right"><FONT STYLE="font-size: 10pt">-</FONT></TD><TD STYLE="font: 10pt Times New Roman, Times, Serif; text-align: left"><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD><TD STYLE="font: 10pt Times New Roman, Times, Serif"><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD>
    <TD STYLE="font: 10pt Times New Roman, Times, Serif; text-align: left"><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD><TD STYLE="font: 10pt Times New Roman, Times, Serif; text-align: right"><FONT STYLE="font-size: 10pt">-</FONT></TD><TD STYLE="font: 10pt Times New Roman, Times, Serif; text-align: left"><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD><TD STYLE="font: 10pt Times New Roman, Times, Serif"><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD>
    <TD STYLE="font: 10pt Times New Roman, Times, Serif; text-align: left"><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD><TD STYLE="font: 10pt Times New Roman, Times, Serif; text-align: right"><FONT STYLE="font-size: 10pt">16</FONT></TD><TD STYLE="font: 10pt Times New Roman, Times, Serif; text-align: left"><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD><TD STYLE="font: 10pt Times New Roman, Times, Serif"><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD>
    <TD STYLE="font: 10pt Times New Roman, Times, Serif; text-align: left"><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD><TD STYLE="font: 10pt Times New Roman, Times, Serif; text-align: right"><FONT STYLE="font-size: 10pt">-</FONT></TD><TD STYLE="font: 10pt Times New Roman, Times, Serif; text-align: left"><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD><TD STYLE="font: 10pt Times New Roman, Times, Serif"><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD>
    <TD STYLE="font: 10pt Times New Roman, Times, Serif; text-align: left"><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD><TD STYLE="font: 10pt Times New Roman, Times, Serif; text-align: right"><FONT STYLE="font-size: 10pt">16</FONT></TD><TD STYLE="font: 10pt Times New Roman, Times, Serif; text-align: left"><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,238,255)">
    <TD STYLE="font: 10pt Times New Roman, Times, Serif; padding-left: 5pt; text-indent: -5pt"><FONT STYLE="font-size: 10pt">Stock
    issued, exercise of warrants</FONT></TD><TD STYLE="font: 10pt Times New Roman, Times, Serif"><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD>
    <TD STYLE="font: 10pt Times New Roman, Times, Serif; text-align: left"><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD><TD STYLE="font: 10pt Times New Roman, Times, Serif; text-align: right"><FONT STYLE="font-size: 10pt">-</FONT></TD><TD STYLE="font: 10pt Times New Roman, Times, Serif; text-align: left"><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD><TD STYLE="font: 10pt Times New Roman, Times, Serif"><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD>
    <TD STYLE="font: 10pt Times New Roman, Times, Serif; text-align: left"><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD><TD STYLE="font: 10pt Times New Roman, Times, Serif; text-align: right"><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD><TD STYLE="font: 10pt Times New Roman, Times, Serif; text-align: left"><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD><TD STYLE="font: 10pt Times New Roman, Times, Serif"><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD>
    <TD STYLE="font: 10pt Times New Roman, Times, Serif; text-align: left"><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD><TD STYLE="font: 10pt Times New Roman, Times, Serif; text-align: right"><FONT STYLE="font-size: 10pt">75,000</FONT></TD><TD STYLE="font: 10pt Times New Roman, Times, Serif; text-align: left"><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD><TD STYLE="font: 10pt Times New Roman, Times, Serif"><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD>
    <TD STYLE="font: 10pt Times New Roman, Times, Serif; text-align: left"><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD><TD STYLE="font: 10pt Times New Roman, Times, Serif; text-align: right"><FONT STYLE="font-size: 10pt">-</FONT></TD><TD STYLE="font: 10pt Times New Roman, Times, Serif; text-align: left"><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD><TD STYLE="font: 10pt Times New Roman, Times, Serif"><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD>
    <TD STYLE="font: 10pt Times New Roman, Times, Serif; text-align: left"><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD><TD STYLE="font: 10pt Times New Roman, Times, Serif; text-align: right"><FONT STYLE="font-size: 10pt">7</FONT></TD><TD STYLE="font: 10pt Times New Roman, Times, Serif; text-align: left"><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD><TD STYLE="font: 10pt Times New Roman, Times, Serif"><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD>
    <TD STYLE="font: 10pt Times New Roman, Times, Serif; text-align: left"><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD><TD STYLE="font: 10pt Times New Roman, Times, Serif; text-align: right"><FONT STYLE="font-size: 10pt">-</FONT></TD><TD STYLE="font: 10pt Times New Roman, Times, Serif; text-align: left"><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD><TD STYLE="font: 10pt Times New Roman, Times, Serif"><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD>
    <TD STYLE="font: 10pt Times New Roman, Times, Serif; text-align: left"><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD><TD STYLE="font: 10pt Times New Roman, Times, Serif; text-align: right"><FONT STYLE="font-size: 10pt">-</FONT></TD><TD STYLE="font: 10pt Times New Roman, Times, Serif; text-align: left"><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD><TD STYLE="font: 10pt Times New Roman, Times, Serif"><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD>
    <TD STYLE="font: 10pt Times New Roman, Times, Serif; text-align: left"><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD><TD STYLE="font: 10pt Times New Roman, Times, Serif; text-align: right"><FONT STYLE="font-size: 10pt">7</FONT></TD><TD STYLE="font: 10pt Times New Roman, Times, Serif; text-align: left"><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD><TD STYLE="font: 10pt Times New Roman, Times, Serif"><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD>
    <TD STYLE="font: 10pt Times New Roman, Times, Serif; text-align: left"><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD><TD STYLE="font: 10pt Times New Roman, Times, Serif; text-align: right"><FONT STYLE="font-size: 10pt">-</FONT></TD><TD STYLE="font: 10pt Times New Roman, Times, Serif; text-align: left"><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD><TD STYLE="font: 10pt Times New Roman, Times, Serif"><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD>
    <TD STYLE="font: 10pt Times New Roman, Times, Serif; text-align: left"><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD><TD STYLE="font: 10pt Times New Roman, Times, Serif; text-align: right"><FONT STYLE="font-size: 10pt">7</FONT></TD><TD STYLE="font: 10pt Times New Roman, Times, Serif; text-align: left"><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD STYLE="font: 10pt Times New Roman, Times, Serif; text-align: left; padding-left: 5pt; text-indent: -5pt"><FONT STYLE="font-size: 10pt">Beneficial
    conversion feature on convertible preferred stock</FONT></TD><TD STYLE="font: 10pt Times New Roman, Times, Serif"><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD>
    <TD STYLE="font: 10pt Times New Roman, Times, Serif; text-align: left"><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD><TD STYLE="font: 10pt Times New Roman, Times, Serif; text-align: right"><FONT STYLE="font-size: 10pt">-</FONT></TD><TD STYLE="font: 10pt Times New Roman, Times, Serif; text-align: left"><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD><TD STYLE="font: 10pt Times New Roman, Times, Serif"><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD>
    <TD STYLE="font: 10pt Times New Roman, Times, Serif; text-align: left"><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD><TD STYLE="font: 10pt Times New Roman, Times, Serif; text-align: right"><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD><TD STYLE="font: 10pt Times New Roman, Times, Serif; text-align: left"><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD><TD STYLE="font: 10pt Times New Roman, Times, Serif"><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD>
    <TD STYLE="font: 10pt Times New Roman, Times, Serif; text-align: left"><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD><TD STYLE="font: 10pt Times New Roman, Times, Serif; text-align: right"><FONT STYLE="font-size: 10pt">-</FONT></TD><TD STYLE="font: 10pt Times New Roman, Times, Serif; text-align: left"><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD><TD STYLE="font: 10pt Times New Roman, Times, Serif"><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD>
    <TD STYLE="font: 10pt Times New Roman, Times, Serif; text-align: left"><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD><TD STYLE="font: 10pt Times New Roman, Times, Serif; text-align: right"><FONT STYLE="font-size: 10pt">-</FONT></TD><TD STYLE="font: 10pt Times New Roman, Times, Serif; text-align: left"><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD><TD STYLE="font: 10pt Times New Roman, Times, Serif"><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD>
    <TD STYLE="font: 10pt Times New Roman, Times, Serif; text-align: left"><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD><TD STYLE="font: 10pt Times New Roman, Times, Serif; text-align: right"><FONT STYLE="font-size: 10pt">2</FONT></TD><TD STYLE="font: 10pt Times New Roman, Times, Serif; text-align: left"><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD><TD STYLE="font: 10pt Times New Roman, Times, Serif"><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD>
    <TD STYLE="font: 10pt Times New Roman, Times, Serif; text-align: left"><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD><TD STYLE="font: 10pt Times New Roman, Times, Serif; text-align: right"><FONT STYLE="font-size: 10pt">-</FONT></TD><TD STYLE="font: 10pt Times New Roman, Times, Serif; text-align: left"><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD><TD STYLE="font: 10pt Times New Roman, Times, Serif"><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD>
    <TD STYLE="font: 10pt Times New Roman, Times, Serif; text-align: left"><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD><TD STYLE="font: 10pt Times New Roman, Times, Serif; text-align: right"><FONT STYLE="font-size: 10pt">-</FONT></TD><TD STYLE="font: 10pt Times New Roman, Times, Serif; text-align: left"><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD><TD STYLE="font: 10pt Times New Roman, Times, Serif"><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD>
    <TD STYLE="font: 10pt Times New Roman, Times, Serif; text-align: left"><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD><TD STYLE="font: 10pt Times New Roman, Times, Serif; text-align: right"><FONT STYLE="font-size: 10pt">2</FONT></TD><TD STYLE="font: 10pt Times New Roman, Times, Serif; text-align: left"><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD><TD STYLE="font: 10pt Times New Roman, Times, Serif"><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD>
    <TD STYLE="font: 10pt Times New Roman, Times, Serif; text-align: left"><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD><TD STYLE="font: 10pt Times New Roman, Times, Serif; text-align: right"><FONT STYLE="font-size: 10pt">-</FONT></TD><TD STYLE="font: 10pt Times New Roman, Times, Serif; text-align: left"><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD><TD STYLE="font: 10pt Times New Roman, Times, Serif"><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD>
    <TD STYLE="font: 10pt Times New Roman, Times, Serif; text-align: left"><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD><TD STYLE="font: 10pt Times New Roman, Times, Serif; text-align: right"><FONT STYLE="font-size: 10pt">2</FONT></TD><TD STYLE="font: 10pt Times New Roman, Times, Serif; text-align: left"><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,238,255)">
    <TD STYLE="font: 10pt Times New Roman, Times, Serif; text-align: left; padding-left: 5pt; text-indent: -5pt"><FONT STYLE="font-size: 10pt">Deemed
    dividend on Series A Convertible preferred stock</FONT></TD><TD STYLE="font: 10pt Times New Roman, Times, Serif"><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD>
    <TD STYLE="font: 10pt Times New Roman, Times, Serif; text-align: left"><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD><TD STYLE="font: 10pt Times New Roman, Times, Serif; text-align: right"><FONT STYLE="font-size: 10pt">-</FONT></TD><TD STYLE="font: 10pt Times New Roman, Times, Serif; text-align: left"><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD><TD STYLE="font: 10pt Times New Roman, Times, Serif"><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD>
    <TD STYLE="font: 10pt Times New Roman, Times, Serif; text-align: left"><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD><TD STYLE="font: 10pt Times New Roman, Times, Serif; text-align: right"><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD><TD STYLE="font: 10pt Times New Roman, Times, Serif; text-align: left"><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD><TD STYLE="font: 10pt Times New Roman, Times, Serif"><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD>
    <TD STYLE="font: 10pt Times New Roman, Times, Serif; text-align: left"><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD><TD STYLE="font: 10pt Times New Roman, Times, Serif; text-align: right"><FONT STYLE="font-size: 10pt">-</FONT></TD><TD STYLE="font: 10pt Times New Roman, Times, Serif; text-align: left"><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD><TD STYLE="font: 10pt Times New Roman, Times, Serif"><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD>
    <TD STYLE="font: 10pt Times New Roman, Times, Serif; text-align: left"><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD><TD STYLE="font: 10pt Times New Roman, Times, Serif; text-align: right"><FONT STYLE="font-size: 10pt">-</FONT></TD><TD STYLE="font: 10pt Times New Roman, Times, Serif; text-align: left"><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD><TD STYLE="font: 10pt Times New Roman, Times, Serif"><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD>
    <TD STYLE="font: 10pt Times New Roman, Times, Serif; text-align: left"><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD><TD STYLE="font: 10pt Times New Roman, Times, Serif; text-align: right"><FONT STYLE="font-size: 10pt">(2</FONT></TD><TD STYLE="font: 10pt Times New Roman, Times, Serif; text-align: left"><FONT STYLE="font-size: 10pt">)</FONT></TD><TD STYLE="font: 10pt Times New Roman, Times, Serif"><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD>
    <TD STYLE="font: 10pt Times New Roman, Times, Serif; text-align: left"><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD><TD STYLE="font: 10pt Times New Roman, Times, Serif; text-align: right"><FONT STYLE="font-size: 10pt">-</FONT></TD><TD STYLE="font: 10pt Times New Roman, Times, Serif; text-align: left"><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD><TD STYLE="font: 10pt Times New Roman, Times, Serif"><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD>
    <TD STYLE="font: 10pt Times New Roman, Times, Serif; text-align: left"><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD><TD STYLE="font: 10pt Times New Roman, Times, Serif; text-align: right"><FONT STYLE="font-size: 10pt">-</FONT></TD><TD STYLE="font: 10pt Times New Roman, Times, Serif; text-align: left"><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD><TD STYLE="font: 10pt Times New Roman, Times, Serif"><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD>
    <TD STYLE="font: 10pt Times New Roman, Times, Serif; text-align: left"><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD><TD STYLE="font: 10pt Times New Roman, Times, Serif; text-align: right"><FONT STYLE="font-size: 10pt">(2</FONT></TD><TD STYLE="font: 10pt Times New Roman, Times, Serif; text-align: left"><FONT STYLE="font-size: 10pt">)</FONT></TD><TD STYLE="font: 10pt Times New Roman, Times, Serif"><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD>
    <TD STYLE="font: 10pt Times New Roman, Times, Serif; text-align: left"><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD><TD STYLE="font: 10pt Times New Roman, Times, Serif; text-align: right"><FONT STYLE="font-size: 10pt">-</FONT></TD><TD STYLE="font: 10pt Times New Roman, Times, Serif; text-align: left"><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD><TD STYLE="font: 10pt Times New Roman, Times, Serif"><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD>
    <TD STYLE="font: 10pt Times New Roman, Times, Serif; text-align: left"><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD><TD STYLE="font: 10pt Times New Roman, Times, Serif; text-align: right"><FONT STYLE="font-size: 10pt">(2</FONT></TD><TD STYLE="font: 10pt Times New Roman, Times, Serif; text-align: left"><FONT STYLE="font-size: 10pt">)</FONT></TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD STYLE="font: 10pt Times New Roman, Times, Serif; text-align: left; padding-bottom: 1.5pt; padding-left: 5pt; text-indent: -5pt"><FONT STYLE="font-size: 10pt">Net
    loss</FONT></TD><TD STYLE="font: 10pt Times New Roman, Times, Serif; padding-bottom: 1.5pt"><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD>
    <TD STYLE="border-bottom: Black 1.5pt solid; font: 10pt Times New Roman, Times, Serif; text-align: left"><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD><TD STYLE="border-bottom: Black 1.5pt solid; font: 10pt Times New Roman, Times, Serif; text-align: right"><FONT STYLE="font-size: 10pt">-</FONT></TD><TD STYLE="padding-bottom: 1.5pt; font: 10pt Times New Roman, Times, Serif; text-align: left"><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD><TD STYLE="font: 10pt Times New Roman, Times, Serif; padding-bottom: 1.5pt"><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD>
    <TD STYLE="border-bottom: Black 1.5pt solid; font: 10pt Times New Roman, Times, Serif; text-align: left"><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD><TD STYLE="border-bottom: Black 1.5pt solid; font: 10pt Times New Roman, Times, Serif; text-align: right"><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD><TD STYLE="padding-bottom: 1.5pt; font: 10pt Times New Roman, Times, Serif; text-align: left"><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD><TD STYLE="font: 10pt Times New Roman, Times, Serif; padding-bottom: 1.5pt"><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD>
    <TD STYLE="border-bottom: Black 1.5pt solid; font: 10pt Times New Roman, Times, Serif; text-align: left"><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD><TD STYLE="border-bottom: Black 1.5pt solid; font: 10pt Times New Roman, Times, Serif; text-align: right"><FONT STYLE="font-size: 10pt">-</FONT></TD><TD STYLE="padding-bottom: 1.5pt; font: 10pt Times New Roman, Times, Serif; text-align: left"><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD><TD STYLE="font: 10pt Times New Roman, Times, Serif; padding-bottom: 1.5pt"><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD>
    <TD STYLE="border-bottom: Black 1.5pt solid; font: 10pt Times New Roman, Times, Serif; text-align: left"><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD><TD STYLE="border-bottom: Black 1.5pt solid; font: 10pt Times New Roman, Times, Serif; text-align: right"><FONT STYLE="font-size: 10pt">-</FONT></TD><TD STYLE="padding-bottom: 1.5pt; font: 10pt Times New Roman, Times, Serif; text-align: left"><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD><TD STYLE="font: 10pt Times New Roman, Times, Serif; padding-bottom: 1.5pt"><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD>
    <TD STYLE="border-bottom: Black 1.5pt solid; font: 10pt Times New Roman, Times, Serif; text-align: left"><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD><TD STYLE="border-bottom: Black 1.5pt solid; font: 10pt Times New Roman, Times, Serif; text-align: right"><FONT STYLE="font-size: 10pt">-</FONT></TD><TD STYLE="padding-bottom: 1.5pt; font: 10pt Times New Roman, Times, Serif; text-align: left"><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD><TD STYLE="font: 10pt Times New Roman, Times, Serif; padding-bottom: 1.5pt"><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD>
    <TD STYLE="border-bottom: Black 1.5pt solid; font: 10pt Times New Roman, Times, Serif; text-align: left"><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD><TD STYLE="border-bottom: Black 1.5pt solid; font: 10pt Times New Roman, Times, Serif; text-align: right"><FONT STYLE="font-size: 10pt">(221</FONT></TD><TD STYLE="padding-bottom: 1.5pt; font: 10pt Times New Roman, Times, Serif; text-align: left"><FONT STYLE="font-size: 10pt">)</FONT></TD><TD STYLE="font: 10pt Times New Roman, Times, Serif; padding-bottom: 1.5pt"><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD>
    <TD STYLE="border-bottom: Black 1.5pt solid; font: 10pt Times New Roman, Times, Serif; text-align: left"><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD><TD STYLE="border-bottom: Black 1.5pt solid; font: 10pt Times New Roman, Times, Serif; text-align: right"><FONT STYLE="font-size: 10pt">-</FONT></TD><TD STYLE="padding-bottom: 1.5pt; font: 10pt Times New Roman, Times, Serif; text-align: left"><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD><TD STYLE="font: 10pt Times New Roman, Times, Serif; padding-bottom: 1.5pt"><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD>
    <TD STYLE="border-bottom: Black 1.5pt solid; font: 10pt Times New Roman, Times, Serif; text-align: left"><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD><TD STYLE="border-bottom: Black 1.5pt solid; font: 10pt Times New Roman, Times, Serif; text-align: right"><FONT STYLE="font-size: 10pt">(221</FONT></TD><TD STYLE="padding-bottom: 1.5pt; font: 10pt Times New Roman, Times, Serif; text-align: left"><FONT STYLE="font-size: 10pt">)</FONT></TD><TD STYLE="font: 10pt Times New Roman, Times, Serif; padding-bottom: 1.5pt"><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD>
    <TD STYLE="border-bottom: Black 1.5pt solid; font: 10pt Times New Roman, Times, Serif; text-align: left"><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD><TD STYLE="border-bottom: Black 1.5pt solid; font: 10pt Times New Roman, Times, Serif; text-align: right"><FONT STYLE="font-size: 10pt">(29</FONT></TD><TD STYLE="padding-bottom: 1.5pt; font: 10pt Times New Roman, Times, Serif; text-align: left"><FONT STYLE="font-size: 10pt">)</FONT></TD><TD STYLE="font: 10pt Times New Roman, Times, Serif; padding-bottom: 1.5pt"><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD>
    <TD STYLE="border-bottom: Black 1.5pt solid; font: 10pt Times New Roman, Times, Serif; text-align: left"><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD><TD STYLE="border-bottom: Black 1.5pt solid; font: 10pt Times New Roman, Times, Serif; text-align: right"><FONT STYLE="font-size: 10pt">(250</FONT></TD><TD STYLE="padding-bottom: 1.5pt; font: 10pt Times New Roman, Times, Serif; text-align: left"><FONT STYLE="font-size: 10pt">)</FONT></TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,238,255)">
    <TD STYLE="font: 10pt Times New Roman, Times, Serif; padding-bottom: 1.5pt; padding-left: 5pt; text-indent: -5pt"><FONT STYLE="font-size: 10pt">BALANCE,
    April 30, 2019</FONT></TD><TD STYLE="font: 10pt Times New Roman, Times, Serif; padding-bottom: 1.5pt"><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD>
    <TD STYLE="border-bottom: Black 1.5pt solid; font: 10pt Times New Roman, Times, Serif; text-align: left"><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD><TD STYLE="border-bottom: Black 1.5pt solid; font: 10pt Times New Roman, Times, Serif; text-align: right"><FONT STYLE="font-size: 10pt">50,000</FONT></TD><TD STYLE="padding-bottom: 1.5pt; font: 10pt Times New Roman, Times, Serif; text-align: left"><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD><TD STYLE="font: 10pt Times New Roman, Times, Serif; padding-bottom: 1.5pt"><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD>
    <TD STYLE="border-bottom: Black 1.5pt solid; font: 10pt Times New Roman, Times, Serif; text-align: left"><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD><TD STYLE="border-bottom: Black 1.5pt solid; font: 10pt Times New Roman, Times, Serif; text-align: right"><FONT STYLE="font-size: 10pt">-</FONT></TD><TD STYLE="padding-bottom: 1.5pt; font: 10pt Times New Roman, Times, Serif; text-align: left"><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD><TD STYLE="font: 10pt Times New Roman, Times, Serif; padding-bottom: 1.5pt"><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD>
    <TD STYLE="border-bottom: Black 1.5pt solid; font: 10pt Times New Roman, Times, Serif; text-align: left"><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD><TD STYLE="border-bottom: Black 1.5pt solid; font: 10pt Times New Roman, Times, Serif; text-align: right"><FONT STYLE="font-size: 10pt">18,876,431</FONT></TD><TD STYLE="padding-bottom: 1.5pt; font: 10pt Times New Roman, Times, Serif; text-align: left"><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD><TD STYLE="font: 10pt Times New Roman, Times, Serif; padding-bottom: 1.5pt"><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD>
    <TD STYLE="border-bottom: Black 1.5pt solid; font: 10pt Times New Roman, Times, Serif; text-align: left"><FONT STYLE="font-size: 10pt">$</FONT></TD><TD STYLE="border-bottom: Black 1.5pt solid; font: 10pt Times New Roman, Times, Serif; text-align: right"><FONT STYLE="font-size: 10pt">19</FONT></TD><TD STYLE="padding-bottom: 1.5pt; font: 10pt Times New Roman, Times, Serif; text-align: left"><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD><TD STYLE="font: 10pt Times New Roman, Times, Serif; padding-bottom: 1.5pt"><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD>
    <TD STYLE="border-bottom: Black 1.5pt solid; font: 10pt Times New Roman, Times, Serif; text-align: left"><FONT STYLE="font-size: 10pt">$</FONT></TD><TD STYLE="border-bottom: Black 1.5pt solid; font: 10pt Times New Roman, Times, Serif; text-align: right"><FONT STYLE="font-size: 10pt">81,764</FONT></TD><TD STYLE="padding-bottom: 1.5pt; font: 10pt Times New Roman, Times, Serif; text-align: left"><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD><TD STYLE="font: 10pt Times New Roman, Times, Serif; padding-bottom: 1.5pt"><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD>
    <TD STYLE="border-bottom: Black 1.5pt solid; font: 10pt Times New Roman, Times, Serif; text-align: left"><FONT STYLE="font-size: 10pt">$</FONT></TD><TD STYLE="border-bottom: Black 1.5pt solid; font: 10pt Times New Roman, Times, Serif; text-align: right"><FONT STYLE="font-size: 10pt">(84,434</FONT></TD><TD STYLE="padding-bottom: 1.5pt; font: 10pt Times New Roman, Times, Serif; text-align: left"><FONT STYLE="font-size: 10pt">)</FONT></TD><TD STYLE="font: 10pt Times New Roman, Times, Serif; padding-bottom: 1.5pt"><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD>
    <TD STYLE="border-bottom: Black 1.5pt solid; font: 10pt Times New Roman, Times, Serif; text-align: left"><FONT STYLE="font-size: 10pt">$</FONT></TD><TD STYLE="border-bottom: Black 1.5pt solid; font: 10pt Times New Roman, Times, Serif; text-align: right"><FONT STYLE="font-size: 10pt">1</FONT></TD><TD STYLE="padding-bottom: 1.5pt; font: 10pt Times New Roman, Times, Serif; text-align: left"><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD><TD STYLE="font: 10pt Times New Roman, Times, Serif; padding-bottom: 1.5pt"><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD>
    <TD STYLE="border-bottom: Black 1.5pt solid; font: 10pt Times New Roman, Times, Serif; text-align: left"><FONT STYLE="font-size: 10pt">$</FONT></TD><TD STYLE="border-bottom: Black 1.5pt solid; font: 10pt Times New Roman, Times, Serif; text-align: right"><FONT STYLE="font-size: 10pt">(2,650</FONT></TD><TD STYLE="padding-bottom: 1.5pt; font: 10pt Times New Roman, Times, Serif; text-align: left"><FONT STYLE="font-size: 10pt">)</FONT></TD><TD STYLE="font: 10pt Times New Roman, Times, Serif; padding-bottom: 1.5pt"><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD>
    <TD STYLE="border-bottom: Black 1.5pt solid; font: 10pt Times New Roman, Times, Serif; text-align: left"><FONT STYLE="font-size: 10pt">$</FONT></TD><TD STYLE="border-bottom: Black 1.5pt solid; font: 10pt Times New Roman, Times, Serif; text-align: right"><FONT STYLE="font-size: 10pt">(294</FONT></TD><TD STYLE="padding-bottom: 1.5pt; font: 10pt Times New Roman, Times, Serif; text-align: left"><FONT STYLE="font-size: 10pt">)</FONT></TD><TD STYLE="font: 10pt Times New Roman, Times, Serif; padding-bottom: 1.5pt"><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD>
    <TD STYLE="border-bottom: Black 1.5pt solid; font: 10pt Times New Roman, Times, Serif; text-align: left"><FONT STYLE="font-size: 10pt">$</FONT></TD><TD STYLE="border-bottom: Black 1.5pt solid; font: 10pt Times New Roman, Times, Serif; text-align: right"><FONT STYLE="font-size: 10pt">(2,944</FONT></TD><TD STYLE="padding-bottom: 1.5pt; font: 10pt Times New Roman, Times, Serif; text-align: left"><FONT STYLE="font-size: 10pt">)</FONT></TD></TR>
</TABLE>

<P STYLE="margin: 0">&nbsp;</P>

<P STYLE="margin-top: 0; text-align: center; margin-bottom: 0">See accompanying notes to consolidated financial statements &nbsp; &nbsp;</P>

<P STYLE="margin: 0">&nbsp;</P>

<P STYLE="margin: 0"></P>

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<P STYLE="margin: 0"></P>

<P STYLE="margin: 0">&nbsp;</P>

<P STYLE="margin: 0; font: 10pt Times New Roman, Times, Serif"></P>

<P STYLE="text-align: center; font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt"><FONT STYLE="font: 10pt Times New Roman, Times, Serif">DIGERATI TECHNOLOGIES, INC. AND SUBSIDIARIES</FONT></P>

<P STYLE="text-align: center; font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt"><FONT STYLE="font: 10pt Times New Roman, Times, Serif">CONSOLIDATED STATEMENTS OF STOCKHOLDERS&rsquo; DEFICIT&nbsp;</FONT></P>

<P STYLE="text-align: center; font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt"><FONT STYLE="font: 10pt Times New Roman, Times, Serif">Nine-Month Period Ended April 30, 2018</FONT></P>

<P STYLE="text-align: center; font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt"><FONT STYLE="font: 10pt Times New Roman, Times, Serif">(In thousands, except for share amounts, unaudited)</FONT></P>



<P STYLE="margin: 0">&nbsp;</P>

<TABLE CELLPADDING="0" CELLSPACING="0" STYLE="border-collapse: collapse; width: 100%; font: 10pt Times New Roman, Times, Serif">
<TR STYLE="vertical-align: bottom">
    <TD STYLE="font: 10pt Times New Roman, Times, Serif; text-align: center; padding-left: 5pt; text-indent: -5pt"><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD><TD STYLE="font: 10pt Times New Roman, Times, Serif; padding-bottom: 1.5pt; text-align: center"><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD>
    <TD COLSPAN="26" STYLE="font: 10pt Times New Roman, Times, Serif; text-align: center; border-bottom: Black 1.5pt solid"><FONT STYLE="font-size: 10pt">Equity
    Digerati&rsquo;s Shareholders</FONT></TD><TD STYLE="padding-bottom: 1.5pt; font: 10pt Times New Roman, Times, Serif; text-align: center"><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD><TD STYLE="font: 10pt Times New Roman, Times, Serif; padding-bottom: 1.5pt; text-align: center"><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD>
    <TD COLSPAN="2" STYLE="font: 10pt Times New Roman, Times, Serif; text-align: center"><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD><TD STYLE="padding-bottom: 1.5pt; font: 10pt Times New Roman, Times, Serif; text-align: center"><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD><TD STYLE="font: 10pt Times New Roman, Times, Serif; padding-bottom: 1.5pt; text-align: center"><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD>
    <TD COLSPAN="2" STYLE="font: 10pt Times New Roman, Times, Serif; text-align: center"><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD><TD STYLE="padding-bottom: 1.5pt; font: 10pt Times New Roman, Times, Serif; text-align: center"><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD><TD STYLE="font: 10pt Times New Roman, Times, Serif; padding-bottom: 1.5pt; text-align: center"><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD>
    <TD COLSPAN="2" STYLE="font: 10pt Times New Roman, Times, Serif; text-align: center"><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD><TD STYLE="padding-bottom: 1.5pt; font: 10pt Times New Roman, Times, Serif; text-align: center"><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD></TR>
<TR STYLE="vertical-align: bottom">
    <TD STYLE="font: 10pt Times New Roman, Times, Serif; text-align: center; padding-left: 5pt; text-indent: -5pt"><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD><TD STYLE="font: 10pt Times New Roman, Times, Serif; text-align: center"><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD>
    <TD COLSPAN="6" STYLE="font: 10pt Times New Roman, Times, Serif; text-align: center; border-bottom: Black 1.5pt solid"><FONT STYLE="font-size: 10pt">Convertible
    Preferred</FONT></TD><TD STYLE="font: 10pt Times New Roman, Times, Serif; text-align: center"><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD><TD STYLE="font: 10pt Times New Roman, Times, Serif; text-align: center"><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD>
    <TD COLSPAN="6" STYLE="font: 10pt Times New Roman, Times, Serif; text-align: center; border-bottom: Black 1.5pt solid"><FONT STYLE="font-size: 10pt">Common</FONT></TD><TD STYLE="font: 10pt Times New Roman, Times, Serif; text-align: center"><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD><TD STYLE="font: 10pt Times New Roman, Times, Serif; text-align: center"><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD>
    <TD COLSPAN="2" STYLE="font: 10pt Times New Roman, Times, Serif; text-align: center"><FONT STYLE="font-size: 10pt">Additional<BR>
    Paid-in</FONT></TD><TD STYLE="font: 10pt Times New Roman, Times, Serif; text-align: center"><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD><TD STYLE="font: 10pt Times New Roman, Times, Serif; text-align: center"><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD>
    <TD COLSPAN="2" STYLE="font: 10pt Times New Roman, Times, Serif; text-align: center"><FONT STYLE="font-size: 10pt">Accumulated</FONT></TD><TD STYLE="font: 10pt Times New Roman, Times, Serif; text-align: center"><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD><TD STYLE="font: 10pt Times New Roman, Times, Serif; text-align: center"><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD>
    <TD COLSPAN="2" STYLE="font: 10pt Times New Roman, Times, Serif; text-align: center"><FONT STYLE="font-size: 10pt">Other<BR>
    Comprehensive</FONT></TD><TD STYLE="font: 10pt Times New Roman, Times, Serif; text-align: center"><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD><TD STYLE="font: 10pt Times New Roman, Times, Serif; text-align: center"><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD>
    <TD COLSPAN="2" STYLE="font: 10pt Times New Roman, Times, Serif; text-align: center"><FONT STYLE="font-size: 10pt">Stockholders</FONT></TD><TD STYLE="font: 10pt Times New Roman, Times, Serif; text-align: center"><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD><TD STYLE="font: 10pt Times New Roman, Times, Serif; text-align: center"><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD>
    <TD COLSPAN="2" STYLE="font: 10pt Times New Roman, Times, Serif; text-align: center"><FONT STYLE="font-size: 10pt">Noncontrolling</FONT></TD><TD STYLE="font: 10pt Times New Roman, Times, Serif; text-align: center"><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD><TD STYLE="font: 10pt Times New Roman, Times, Serif; text-align: center"><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD>
    <TD COLSPAN="2" STYLE="font: 10pt Times New Roman, Times, Serif; text-align: center"><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD><TD STYLE="font: 10pt Times New Roman, Times, Serif; text-align: center"><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD></TR>
<TR STYLE="vertical-align: bottom">
    <TD STYLE="font: 10pt Times New Roman, Times, Serif; text-align: center; padding-left: 5pt; text-indent: -5pt"><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD><TD STYLE="font: 10pt Times New Roman, Times, Serif; padding-bottom: 1.5pt; text-align: center"><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD>
    <TD COLSPAN="2" STYLE="font: 10pt Times New Roman, Times, Serif; text-align: center; border-bottom: Black 1.5pt solid"><FONT STYLE="font-size: 10pt">Shares</FONT></TD><TD STYLE="padding-bottom: 1.5pt; font: 10pt Times New Roman, Times, Serif; text-align: center"><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD><TD STYLE="font: 10pt Times New Roman, Times, Serif; padding-bottom: 1.5pt; text-align: center"><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD>
    <TD COLSPAN="2" STYLE="font: 10pt Times New Roman, Times, Serif; text-align: center; border-bottom: Black 1.5pt solid"><FONT STYLE="font-size: 10pt">Par</FONT></TD><TD STYLE="padding-bottom: 1.5pt; font: 10pt Times New Roman, Times, Serif; text-align: center"><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD><TD STYLE="font: 10pt Times New Roman, Times, Serif; padding-bottom: 1.5pt; text-align: center"><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD>
    <TD COLSPAN="2" STYLE="font: 10pt Times New Roman, Times, Serif; text-align: center; border-bottom: Black 1.5pt solid"><FONT STYLE="font-size: 10pt">Shares</FONT></TD><TD STYLE="padding-bottom: 1.5pt; font: 10pt Times New Roman, Times, Serif; text-align: center"><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD><TD STYLE="font: 10pt Times New Roman, Times, Serif; padding-bottom: 1.5pt; text-align: center"><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD>
    <TD COLSPAN="2" STYLE="font: 10pt Times New Roman, Times, Serif; text-align: center; border-bottom: Black 1.5pt solid"><FONT STYLE="font-size: 10pt">Par</FONT></TD><TD STYLE="padding-bottom: 1.5pt; font: 10pt Times New Roman, Times, Serif; text-align: center"><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD><TD STYLE="font: 10pt Times New Roman, Times, Serif; padding-bottom: 1.5pt; text-align: center"><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD>
    <TD COLSPAN="2" STYLE="font: 10pt Times New Roman, Times, Serif; text-align: center; border-bottom: Black 1.5pt solid"><FONT STYLE="font-size: 10pt">Capital</FONT></TD><TD STYLE="padding-bottom: 1.5pt; font: 10pt Times New Roman, Times, Serif; text-align: center"><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD><TD STYLE="font: 10pt Times New Roman, Times, Serif; padding-bottom: 1.5pt; text-align: center"><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD>
    <TD COLSPAN="2" STYLE="font: 10pt Times New Roman, Times, Serif; text-align: center; border-bottom: Black 1.5pt solid"><FONT STYLE="font-size: 10pt">Deficit</FONT></TD><TD STYLE="padding-bottom: 1.5pt; font: 10pt Times New Roman, Times, Serif; text-align: center"><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD><TD STYLE="font: 10pt Times New Roman, Times, Serif; padding-bottom: 1.5pt; text-align: center"><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD>
    <TD COLSPAN="2" STYLE="font: 10pt Times New Roman, Times, Serif; text-align: center; border-bottom: Black 1.5pt solid"><FONT STYLE="font-size: 10pt">Income</FONT></TD><TD STYLE="padding-bottom: 1.5pt; font: 10pt Times New Roman, Times, Serif; text-align: center"><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD><TD STYLE="font: 10pt Times New Roman, Times, Serif; padding-bottom: 1.5pt; text-align: center"><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD>
    <TD COLSPAN="2" STYLE="font: 10pt Times New Roman, Times, Serif; text-align: center; border-bottom: Black 1.5pt solid"><FONT STYLE="font-size: 10pt">Equity</FONT></TD><TD STYLE="padding-bottom: 1.5pt; font: 10pt Times New Roman, Times, Serif; text-align: center"><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD><TD STYLE="font: 10pt Times New Roman, Times, Serif; padding-bottom: 1.5pt; text-align: center"><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD>
    <TD COLSPAN="2" STYLE="font: 10pt Times New Roman, Times, Serif; text-align: center; border-bottom: Black 1.5pt solid"><FONT STYLE="font-size: 10pt">Interest</FONT></TD><TD STYLE="padding-bottom: 1.5pt; font: 10pt Times New Roman, Times, Serif; text-align: center"><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD><TD STYLE="font: 10pt Times New Roman, Times, Serif; padding-bottom: 1.5pt; text-align: center"><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD>
    <TD COLSPAN="2" STYLE="font: 10pt Times New Roman, Times, Serif; text-align: center; border-bottom: Black 1.5pt solid"><FONT STYLE="font-size: 10pt">Totals</FONT></TD><TD STYLE="padding-bottom: 1.5pt; font: 10pt Times New Roman, Times, Serif; text-align: center"><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,238,255)">
    <TD STYLE="font: 10pt Times New Roman, Times, Serif; padding-bottom: 1.5pt; width: 30%; padding-left: 5pt; text-indent: -5pt"><FONT STYLE="font-size: 10pt">BALANCE,
    July 31, 2017</FONT></TD><TD STYLE="width: 1%; font: 10pt Times New Roman, Times, Serif; padding-bottom: 1.5pt"><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD>
    <TD STYLE="width: 1%; border-bottom: Black 1.5pt solid; font: 10pt Times New Roman, Times, Serif; text-align: left"><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD><TD STYLE="width: 4%; border-bottom: Black 1.5pt solid; font: 10pt Times New Roman, Times, Serif; text-align: right"><FONT STYLE="font-size: 10pt">-</FONT></TD><TD STYLE="width: 1%; padding-bottom: 1.5pt; font: 10pt Times New Roman, Times, Serif; text-align: left"><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD><TD STYLE="width: 1%; font: 10pt Times New Roman, Times, Serif; padding-bottom: 1.5pt"><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD>
    <TD STYLE="width: 1%; border-bottom: Black 1.5pt solid; font: 10pt Times New Roman, Times, Serif; text-align: left"><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD><TD STYLE="width: 4%; border-bottom: Black 1.5pt solid; font: 10pt Times New Roman, Times, Serif; text-align: right"><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD><TD STYLE="width: 1%; padding-bottom: 1.5pt; font: 10pt Times New Roman, Times, Serif; text-align: left"><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD><TD STYLE="width: 1%; font: 10pt Times New Roman, Times, Serif; padding-bottom: 1.5pt"><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD>
    <TD STYLE="width: 1%; border-bottom: Black 1.5pt solid; font: 10pt Times New Roman, Times, Serif; text-align: left"><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD><TD STYLE="width: 4%; border-bottom: Black 1.5pt solid; font: 10pt Times New Roman, Times, Serif; text-align: right"><FONT STYLE="font-size: 10pt">8,386,056</FONT></TD><TD STYLE="width: 1%; padding-bottom: 1.5pt; font: 10pt Times New Roman, Times, Serif; text-align: left"><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD><TD STYLE="width: 1%; font: 10pt Times New Roman, Times, Serif; padding-bottom: 1.5pt"><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD>
    <TD STYLE="width: 1%; border-bottom: Black 1.5pt solid; font: 10pt Times New Roman, Times, Serif; text-align: left"><FONT STYLE="font-size: 10pt">$</FONT></TD><TD STYLE="width: 4%; border-bottom: Black 1.5pt solid; font: 10pt Times New Roman, Times, Serif; text-align: right"><FONT STYLE="font-size: 10pt">8</FONT></TD><TD STYLE="width: 1%; padding-bottom: 1.5pt; font: 10pt Times New Roman, Times, Serif; text-align: left"><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD><TD STYLE="width: 1%; font: 10pt Times New Roman, Times, Serif; padding-bottom: 1.5pt"><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD>
    <TD STYLE="width: 1%; border-bottom: Black 1.5pt solid; font: 10pt Times New Roman, Times, Serif; text-align: left"><FONT STYLE="font-size: 10pt">$</FONT></TD><TD STYLE="width: 4%; border-bottom: Black 1.5pt solid; font: 10pt Times New Roman, Times, Serif; text-align: right"><FONT STYLE="font-size: 10pt">76,986</FONT></TD><TD STYLE="width: 1%; padding-bottom: 1.5pt; font: 10pt Times New Roman, Times, Serif; text-align: left"><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD><TD STYLE="width: 1%; font: 10pt Times New Roman, Times, Serif; padding-bottom: 1.5pt"><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD>
    <TD STYLE="width: 1%; border-bottom: Black 1.5pt solid; font: 10pt Times New Roman, Times, Serif; text-align: left"><FONT STYLE="font-size: 10pt">$</FONT></TD><TD STYLE="width: 4%; border-bottom: Black 1.5pt solid; font: 10pt Times New Roman, Times, Serif; text-align: right"><FONT STYLE="font-size: 10pt">(77,637</FONT></TD><TD STYLE="width: 1%; padding-bottom: 1.5pt; font: 10pt Times New Roman, Times, Serif; text-align: left"><FONT STYLE="font-size: 10pt">)</FONT></TD><TD STYLE="width: 1%; font: 10pt Times New Roman, Times, Serif; padding-bottom: 1.5pt"><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD>
    <TD STYLE="width: 1%; border-bottom: Black 1.5pt solid; font: 10pt Times New Roman, Times, Serif; text-align: left"><FONT STYLE="font-size: 10pt">$</FONT></TD><TD STYLE="width: 4%; border-bottom: Black 1.5pt solid; font: 10pt Times New Roman, Times, Serif; text-align: right"><FONT STYLE="font-size: 10pt">1</FONT></TD><TD STYLE="width: 1%; padding-bottom: 1.5pt; font: 10pt Times New Roman, Times, Serif; text-align: left"><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD><TD STYLE="width: 1%; font: 10pt Times New Roman, Times, Serif; padding-bottom: 1.5pt"><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD>
    <TD STYLE="width: 1%; border-bottom: Black 1.5pt solid; font: 10pt Times New Roman, Times, Serif; text-align: left"><FONT STYLE="font-size: 10pt">$</FONT></TD><TD STYLE="width: 4%; border-bottom: Black 1.5pt solid; font: 10pt Times New Roman, Times, Serif; text-align: right"><FONT STYLE="font-size: 10pt">(642</FONT></TD><TD STYLE="width: 1%; padding-bottom: 1.5pt; font: 10pt Times New Roman, Times, Serif; text-align: left"><FONT STYLE="font-size: 10pt">)</FONT></TD><TD STYLE="width: 1%; font: 10pt Times New Roman, Times, Serif; padding-bottom: 1.5pt"><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD>
    <TD STYLE="width: 1%; border-bottom: Black 1.5pt solid; font: 10pt Times New Roman, Times, Serif; text-align: left"><FONT STYLE="font-size: 10pt">$</FONT></TD><TD STYLE="width: 4%; border-bottom: Black 1.5pt solid; font: 10pt Times New Roman, Times, Serif; text-align: right"><FONT STYLE="font-size: 10pt">-</FONT></TD><TD STYLE="width: 1%; padding-bottom: 1.5pt; font: 10pt Times New Roman, Times, Serif; text-align: left"><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD><TD STYLE="width: 1%; font: 10pt Times New Roman, Times, Serif; padding-bottom: 1.5pt"><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD>
    <TD STYLE="width: 1%; border-bottom: Black 1.5pt solid; font: 10pt Times New Roman, Times, Serif; text-align: left"><FONT STYLE="font-size: 10pt">$</FONT></TD><TD STYLE="width: 4%; border-bottom: Black 1.5pt solid; font: 10pt Times New Roman, Times, Serif; text-align: right"><FONT STYLE="font-size: 10pt">(642</FONT></TD><TD STYLE="width: 1%; padding-bottom: 1.5pt; font: 10pt Times New Roman, Times, Serif; text-align: left"><FONT STYLE="font-size: 10pt">)</FONT></TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD STYLE="font: 10pt Times New Roman, Times, Serif; text-align: left; padding-left: 5pt; text-indent: -5pt"><FONT STYLE="font-size: 10pt">Amortization
    of employee stock options</FONT></TD><TD STYLE="font: 10pt Times New Roman, Times, Serif"><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD>
    <TD STYLE="font: 10pt Times New Roman, Times, Serif; text-align: left"><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD><TD STYLE="font: 10pt Times New Roman, Times, Serif; text-align: right"><FONT STYLE="font-size: 10pt">-</FONT></TD><TD STYLE="font: 10pt Times New Roman, Times, Serif; text-align: left"><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD><TD STYLE="font: 10pt Times New Roman, Times, Serif"><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD>
    <TD STYLE="font: 10pt Times New Roman, Times, Serif; text-align: left"><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD><TD STYLE="font: 10pt Times New Roman, Times, Serif; text-align: right"><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD><TD STYLE="font: 10pt Times New Roman, Times, Serif; text-align: left"><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD><TD STYLE="font: 10pt Times New Roman, Times, Serif"><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD>
    <TD STYLE="font: 10pt Times New Roman, Times, Serif; text-align: left"><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD><TD STYLE="font: 10pt Times New Roman, Times, Serif; text-align: right"><FONT STYLE="font-size: 10pt">-</FONT></TD><TD STYLE="font: 10pt Times New Roman, Times, Serif; text-align: left"><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD><TD STYLE="font: 10pt Times New Roman, Times, Serif"><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD>
    <TD STYLE="font: 10pt Times New Roman, Times, Serif; text-align: left"><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD><TD STYLE="font: 10pt Times New Roman, Times, Serif; text-align: right"><FONT STYLE="font-size: 10pt">-</FONT></TD><TD STYLE="font: 10pt Times New Roman, Times, Serif; text-align: left"><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD><TD STYLE="font: 10pt Times New Roman, Times, Serif"><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD>
    <TD STYLE="font: 10pt Times New Roman, Times, Serif; text-align: left"><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD><TD STYLE="font: 10pt Times New Roman, Times, Serif; text-align: right"><FONT STYLE="font-size: 10pt">51</FONT></TD><TD STYLE="font: 10pt Times New Roman, Times, Serif; text-align: left"><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD><TD STYLE="font: 10pt Times New Roman, Times, Serif"><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD>
    <TD STYLE="font: 10pt Times New Roman, Times, Serif; text-align: left"><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD><TD STYLE="font: 10pt Times New Roman, Times, Serif; text-align: right"><FONT STYLE="font-size: 10pt">-</FONT></TD><TD STYLE="font: 10pt Times New Roman, Times, Serif; text-align: left"><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD><TD STYLE="font: 10pt Times New Roman, Times, Serif"><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD>
    <TD STYLE="font: 10pt Times New Roman, Times, Serif; text-align: left"><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD><TD STYLE="font: 10pt Times New Roman, Times, Serif; text-align: right"><FONT STYLE="font-size: 10pt">-</FONT></TD><TD STYLE="font: 10pt Times New Roman, Times, Serif; text-align: left"><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD><TD STYLE="font: 10pt Times New Roman, Times, Serif"><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD>
    <TD STYLE="font: 10pt Times New Roman, Times, Serif; text-align: left"><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD><TD STYLE="font: 10pt Times New Roman, Times, Serif; text-align: right"><FONT STYLE="font-size: 10pt">51</FONT></TD><TD STYLE="font: 10pt Times New Roman, Times, Serif; text-align: left"><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD><TD STYLE="font: 10pt Times New Roman, Times, Serif"><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD>
    <TD STYLE="font: 10pt Times New Roman, Times, Serif; text-align: left"><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD><TD STYLE="font: 10pt Times New Roman, Times, Serif; text-align: right"><FONT STYLE="font-size: 10pt">-</FONT></TD><TD STYLE="font: 10pt Times New Roman, Times, Serif; text-align: left"><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD><TD STYLE="font: 10pt Times New Roman, Times, Serif"><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD>
    <TD STYLE="font: 10pt Times New Roman, Times, Serif; text-align: left"><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD><TD STYLE="font: 10pt Times New Roman, Times, Serif; text-align: right"><FONT STYLE="font-size: 10pt">51</FONT></TD><TD STYLE="font: 10pt Times New Roman, Times, Serif; text-align: left"><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,238,255)">
    <TD STYLE="font: 10pt Times New Roman, Times, Serif; text-align: left; padding-left: 5pt; text-indent: -5pt"><FONT STYLE="font-size: 10pt">Stock
    issued for services</FONT></TD><TD STYLE="font: 10pt Times New Roman, Times, Serif"><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD>
    <TD STYLE="font: 10pt Times New Roman, Times, Serif; text-align: left"><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD><TD STYLE="font: 10pt Times New Roman, Times, Serif; text-align: right"><FONT STYLE="font-size: 10pt">-</FONT></TD><TD STYLE="font: 10pt Times New Roman, Times, Serif; text-align: left"><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD><TD STYLE="font: 10pt Times New Roman, Times, Serif"><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD>
    <TD STYLE="font: 10pt Times New Roman, Times, Serif; text-align: left"><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD><TD STYLE="font: 10pt Times New Roman, Times, Serif; text-align: right"><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD><TD STYLE="font: 10pt Times New Roman, Times, Serif; text-align: left"><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD><TD STYLE="font: 10pt Times New Roman, Times, Serif"><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD>
    <TD STYLE="font: 10pt Times New Roman, Times, Serif; text-align: left"><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD><TD STYLE="font: 10pt Times New Roman, Times, Serif; text-align: right"><FONT STYLE="font-size: 10pt">12,500</FONT></TD><TD STYLE="font: 10pt Times New Roman, Times, Serif; text-align: left"><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD><TD STYLE="font: 10pt Times New Roman, Times, Serif"><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD>
    <TD STYLE="font: 10pt Times New Roman, Times, Serif; text-align: left"><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD><TD STYLE="font: 10pt Times New Roman, Times, Serif; text-align: right"><FONT STYLE="font-size: 10pt">-</FONT></TD><TD STYLE="font: 10pt Times New Roman, Times, Serif; text-align: left"><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD><TD STYLE="font: 10pt Times New Roman, Times, Serif"><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD>
    <TD STYLE="font: 10pt Times New Roman, Times, Serif; text-align: left"><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD><TD STYLE="font: 10pt Times New Roman, Times, Serif; text-align: right"><FONT STYLE="font-size: 10pt">4</FONT></TD><TD STYLE="font: 10pt Times New Roman, Times, Serif; text-align: left"><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD><TD STYLE="font: 10pt Times New Roman, Times, Serif"><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD>
    <TD STYLE="font: 10pt Times New Roman, Times, Serif; text-align: left"><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD><TD STYLE="font: 10pt Times New Roman, Times, Serif; text-align: right"><FONT STYLE="font-size: 10pt">-</FONT></TD><TD STYLE="font: 10pt Times New Roman, Times, Serif; text-align: left"><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD><TD STYLE="font: 10pt Times New Roman, Times, Serif"><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD>
    <TD STYLE="font: 10pt Times New Roman, Times, Serif; text-align: left"><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD><TD STYLE="font: 10pt Times New Roman, Times, Serif; text-align: right"><FONT STYLE="font-size: 10pt">-</FONT></TD><TD STYLE="font: 10pt Times New Roman, Times, Serif; text-align: left"><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD><TD STYLE="font: 10pt Times New Roman, Times, Serif"><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD>
    <TD STYLE="font: 10pt Times New Roman, Times, Serif; text-align: left"><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD><TD STYLE="font: 10pt Times New Roman, Times, Serif; text-align: right"><FONT STYLE="font-size: 10pt">4</FONT></TD><TD STYLE="font: 10pt Times New Roman, Times, Serif; text-align: left"><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD><TD STYLE="font: 10pt Times New Roman, Times, Serif"><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD>
    <TD STYLE="font: 10pt Times New Roman, Times, Serif; text-align: left"><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD><TD STYLE="font: 10pt Times New Roman, Times, Serif; text-align: right"><FONT STYLE="font-size: 10pt">-</FONT></TD><TD STYLE="font: 10pt Times New Roman, Times, Serif; text-align: left"><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD><TD STYLE="font: 10pt Times New Roman, Times, Serif"><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD>
    <TD STYLE="font: 10pt Times New Roman, Times, Serif; text-align: left"><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD><TD STYLE="font: 10pt Times New Roman, Times, Serif; text-align: right"><FONT STYLE="font-size: 10pt">4</FONT></TD><TD STYLE="font: 10pt Times New Roman, Times, Serif; text-align: left"><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD STYLE="font: 10pt Times New Roman, Times, Serif; text-align: left; padding-left: 5pt; text-indent: -5pt"><FONT STYLE="font-size: 10pt">Stock
    issued for cash</FONT></TD><TD STYLE="font: 10pt Times New Roman, Times, Serif"><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD>
    <TD STYLE="font: 10pt Times New Roman, Times, Serif; text-align: left"><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD><TD STYLE="font: 10pt Times New Roman, Times, Serif; text-align: right"><FONT STYLE="font-size: 10pt">-</FONT></TD><TD STYLE="font: 10pt Times New Roman, Times, Serif; text-align: left"><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD><TD STYLE="font: 10pt Times New Roman, Times, Serif"><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD>
    <TD STYLE="font: 10pt Times New Roman, Times, Serif; text-align: left"><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD><TD STYLE="font: 10pt Times New Roman, Times, Serif; text-align: right"><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD><TD STYLE="font: 10pt Times New Roman, Times, Serif; text-align: left"><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD><TD STYLE="font: 10pt Times New Roman, Times, Serif"><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD>
    <TD STYLE="font: 10pt Times New Roman, Times, Serif; text-align: left"><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD><TD STYLE="font: 10pt Times New Roman, Times, Serif; text-align: right"><FONT STYLE="font-size: 10pt">560,000</FONT></TD><TD STYLE="font: 10pt Times New Roman, Times, Serif; text-align: left"><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD><TD STYLE="font: 10pt Times New Roman, Times, Serif"><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD>
    <TD STYLE="font: 10pt Times New Roman, Times, Serif; text-align: left"><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD><TD STYLE="font: 10pt Times New Roman, Times, Serif; text-align: right"><FONT STYLE="font-size: 10pt">1</FONT></TD><TD STYLE="font: 10pt Times New Roman, Times, Serif; text-align: left"><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD><TD STYLE="font: 10pt Times New Roman, Times, Serif"><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD>
    <TD STYLE="font: 10pt Times New Roman, Times, Serif; text-align: left"><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD><TD STYLE="font: 10pt Times New Roman, Times, Serif; text-align: right"><FONT STYLE="font-size: 10pt">280</FONT></TD><TD STYLE="font: 10pt Times New Roman, Times, Serif; text-align: left"><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD><TD STYLE="font: 10pt Times New Roman, Times, Serif"><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD>
    <TD STYLE="font: 10pt Times New Roman, Times, Serif; text-align: left"><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD><TD STYLE="font: 10pt Times New Roman, Times, Serif; text-align: right"><FONT STYLE="font-size: 10pt">-</FONT></TD><TD STYLE="font: 10pt Times New Roman, Times, Serif; text-align: left"><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD><TD STYLE="font: 10pt Times New Roman, Times, Serif"><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD>
    <TD STYLE="font: 10pt Times New Roman, Times, Serif; text-align: left"><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD><TD STYLE="font: 10pt Times New Roman, Times, Serif; text-align: right"><FONT STYLE="font-size: 10pt">-</FONT></TD><TD STYLE="font: 10pt Times New Roman, Times, Serif; text-align: left"><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD><TD STYLE="font: 10pt Times New Roman, Times, Serif"><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD>
    <TD STYLE="font: 10pt Times New Roman, Times, Serif; text-align: left"><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD><TD STYLE="font: 10pt Times New Roman, Times, Serif; text-align: right"><FONT STYLE="font-size: 10pt">281</FONT></TD><TD STYLE="font: 10pt Times New Roman, Times, Serif; text-align: left"><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD><TD STYLE="font: 10pt Times New Roman, Times, Serif"><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD>
    <TD STYLE="font: 10pt Times New Roman, Times, Serif; text-align: left"><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD><TD STYLE="font: 10pt Times New Roman, Times, Serif; text-align: right"><FONT STYLE="font-size: 10pt">-</FONT></TD><TD STYLE="font: 10pt Times New Roman, Times, Serif; text-align: left"><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD><TD STYLE="font: 10pt Times New Roman, Times, Serif"><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD>
    <TD STYLE="font: 10pt Times New Roman, Times, Serif; text-align: left"><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD><TD STYLE="font: 10pt Times New Roman, Times, Serif; text-align: right"><FONT STYLE="font-size: 10pt">281</FONT></TD><TD STYLE="font: 10pt Times New Roman, Times, Serif; text-align: left"><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,238,255)">
    <TD STYLE="font: 10pt Times New Roman, Times, Serif; text-align: left; padding-bottom: 1.5pt; padding-left: 5pt; text-indent: -5pt"><FONT STYLE="font-size: 10pt">Net
    loss</FONT></TD><TD STYLE="font: 10pt Times New Roman, Times, Serif; padding-bottom: 1.5pt"><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD>
    <TD STYLE="border-bottom: Black 1.5pt solid; font: 10pt Times New Roman, Times, Serif; text-align: left"><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD><TD STYLE="border-bottom: Black 1.5pt solid; font: 10pt Times New Roman, Times, Serif; text-align: right"><FONT STYLE="font-size: 10pt">-</FONT></TD><TD STYLE="padding-bottom: 1.5pt; font: 10pt Times New Roman, Times, Serif; text-align: left"><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD><TD STYLE="font: 10pt Times New Roman, Times, Serif; padding-bottom: 1.5pt"><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD>
    <TD STYLE="border-bottom: Black 1.5pt solid; font: 10pt Times New Roman, Times, Serif; text-align: left"><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD><TD STYLE="border-bottom: Black 1.5pt solid; font: 10pt Times New Roman, Times, Serif; text-align: right"><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD><TD STYLE="padding-bottom: 1.5pt; font: 10pt Times New Roman, Times, Serif; text-align: left"><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD><TD STYLE="font: 10pt Times New Roman, Times, Serif; padding-bottom: 1.5pt"><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD>
    <TD STYLE="border-bottom: Black 1.5pt solid; font: 10pt Times New Roman, Times, Serif; text-align: left"><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD><TD STYLE="border-bottom: Black 1.5pt solid; font: 10pt Times New Roman, Times, Serif; text-align: right"><FONT STYLE="font-size: 10pt">-</FONT></TD><TD STYLE="padding-bottom: 1.5pt; font: 10pt Times New Roman, Times, Serif; text-align: left"><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD><TD STYLE="font: 10pt Times New Roman, Times, Serif; padding-bottom: 1.5pt"><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD>
    <TD STYLE="border-bottom: Black 1.5pt solid; font: 10pt Times New Roman, Times, Serif; text-align: left"><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD><TD STYLE="border-bottom: Black 1.5pt solid; font: 10pt Times New Roman, Times, Serif; text-align: right"><FONT STYLE="font-size: 10pt">-</FONT></TD><TD STYLE="padding-bottom: 1.5pt; font: 10pt Times New Roman, Times, Serif; text-align: left"><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD><TD STYLE="font: 10pt Times New Roman, Times, Serif; padding-bottom: 1.5pt"><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD>
    <TD STYLE="border-bottom: Black 1.5pt solid; font: 10pt Times New Roman, Times, Serif; text-align: left"><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD><TD STYLE="border-bottom: Black 1.5pt solid; font: 10pt Times New Roman, Times, Serif; text-align: right"><FONT STYLE="font-size: 10pt">-</FONT></TD><TD STYLE="padding-bottom: 1.5pt; font: 10pt Times New Roman, Times, Serif; text-align: left"><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD><TD STYLE="font: 10pt Times New Roman, Times, Serif; padding-bottom: 1.5pt"><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD>
    <TD STYLE="border-bottom: Black 1.5pt solid; font: 10pt Times New Roman, Times, Serif; text-align: left"><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD><TD STYLE="border-bottom: Black 1.5pt solid; font: 10pt Times New Roman, Times, Serif; text-align: right"><FONT STYLE="font-size: 10pt">(370</FONT></TD><TD STYLE="padding-bottom: 1.5pt; font: 10pt Times New Roman, Times, Serif; text-align: left"><FONT STYLE="font-size: 10pt">)</FONT></TD><TD STYLE="font: 10pt Times New Roman, Times, Serif; padding-bottom: 1.5pt"><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD>
    <TD STYLE="border-bottom: Black 1.5pt solid; font: 10pt Times New Roman, Times, Serif; text-align: left"><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD><TD STYLE="border-bottom: Black 1.5pt solid; font: 10pt Times New Roman, Times, Serif; text-align: right"><FONT STYLE="font-size: 10pt">-</FONT></TD><TD STYLE="padding-bottom: 1.5pt; font: 10pt Times New Roman, Times, Serif; text-align: left"><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD><TD STYLE="font: 10pt Times New Roman, Times, Serif; padding-bottom: 1.5pt"><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD>
    <TD STYLE="border-bottom: Black 1.5pt solid; font: 10pt Times New Roman, Times, Serif; text-align: left"><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD><TD STYLE="border-bottom: Black 1.5pt solid; font: 10pt Times New Roman, Times, Serif; text-align: right"><FONT STYLE="font-size: 10pt">(370</FONT></TD><TD STYLE="padding-bottom: 1.5pt; font: 10pt Times New Roman, Times, Serif; text-align: left"><FONT STYLE="font-size: 10pt">)</FONT></TD><TD STYLE="font: 10pt Times New Roman, Times, Serif; padding-bottom: 1.5pt"><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD>
    <TD STYLE="border-bottom: Black 1.5pt solid; font: 10pt Times New Roman, Times, Serif; text-align: left"><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD><TD STYLE="border-bottom: Black 1.5pt solid; font: 10pt Times New Roman, Times, Serif; text-align: right"><FONT STYLE="font-size: 10pt">-</FONT></TD><TD STYLE="padding-bottom: 1.5pt; font: 10pt Times New Roman, Times, Serif; text-align: left"><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD><TD STYLE="font: 10pt Times New Roman, Times, Serif; padding-bottom: 1.5pt"><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD>
    <TD STYLE="border-bottom: Black 1.5pt solid; font: 10pt Times New Roman, Times, Serif; text-align: left"><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD><TD STYLE="border-bottom: Black 1.5pt solid; font: 10pt Times New Roman, Times, Serif; text-align: right"><FONT STYLE="font-size: 10pt">(370</FONT></TD><TD STYLE="padding-bottom: 1.5pt; font: 10pt Times New Roman, Times, Serif; text-align: left"><FONT STYLE="font-size: 10pt">)</FONT></TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD STYLE="font: 10pt Times New Roman, Times, Serif; padding-bottom: 1.5pt; padding-left: 5pt; text-indent: -5pt"><FONT STYLE="font-size: 10pt">BALANCE,
    October 31, 2017</FONT></TD><TD STYLE="font: 10pt Times New Roman, Times, Serif; padding-bottom: 1.5pt"><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD>
    <TD STYLE="border-bottom: Black 1.5pt solid; font: 10pt Times New Roman, Times, Serif; text-align: left"><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD><TD STYLE="border-bottom: Black 1.5pt solid; font: 10pt Times New Roman, Times, Serif; text-align: right"><FONT STYLE="font-size: 10pt">-</FONT></TD><TD STYLE="padding-bottom: 1.5pt; font: 10pt Times New Roman, Times, Serif; text-align: left"><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD><TD STYLE="font: 10pt Times New Roman, Times, Serif; padding-bottom: 1.5pt"><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD>
    <TD STYLE="border-bottom: Black 1.5pt solid; font: 10pt Times New Roman, Times, Serif; text-align: left"><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD><TD STYLE="border-bottom: Black 1.5pt solid; font: 10pt Times New Roman, Times, Serif; text-align: right"><FONT STYLE="font-size: 10pt">-</FONT></TD><TD STYLE="padding-bottom: 1.5pt; font: 10pt Times New Roman, Times, Serif; text-align: left"><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD><TD STYLE="font: 10pt Times New Roman, Times, Serif; padding-bottom: 1.5pt"><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD>
    <TD STYLE="border-bottom: Black 1.5pt solid; font: 10pt Times New Roman, Times, Serif; text-align: left"><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD><TD STYLE="border-bottom: Black 1.5pt solid; font: 10pt Times New Roman, Times, Serif; text-align: right"><FONT STYLE="font-size: 10pt">8,958,556</FONT></TD><TD STYLE="padding-bottom: 1.5pt; font: 10pt Times New Roman, Times, Serif; text-align: left"><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD><TD STYLE="font: 10pt Times New Roman, Times, Serif; padding-bottom: 1.5pt"><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD>
    <TD STYLE="border-bottom: Black 1.5pt solid; font: 10pt Times New Roman, Times, Serif; text-align: left"><FONT STYLE="font-size: 10pt">$</FONT></TD><TD STYLE="border-bottom: Black 1.5pt solid; font: 10pt Times New Roman, Times, Serif; text-align: right"><FONT STYLE="font-size: 10pt">9</FONT></TD><TD STYLE="padding-bottom: 1.5pt; font: 10pt Times New Roman, Times, Serif; text-align: left"><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD><TD STYLE="font: 10pt Times New Roman, Times, Serif; padding-bottom: 1.5pt"><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD>
    <TD STYLE="border-bottom: Black 1.5pt solid; font: 10pt Times New Roman, Times, Serif; text-align: left"><FONT STYLE="font-size: 10pt">$</FONT></TD><TD STYLE="border-bottom: Black 1.5pt solid; font: 10pt Times New Roman, Times, Serif; text-align: right"><FONT STYLE="font-size: 10pt">77,321</FONT></TD><TD STYLE="padding-bottom: 1.5pt; font: 10pt Times New Roman, Times, Serif; text-align: left"><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD><TD STYLE="font: 10pt Times New Roman, Times, Serif; padding-bottom: 1.5pt"><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD>
    <TD STYLE="border-bottom: Black 1.5pt solid; font: 10pt Times New Roman, Times, Serif; text-align: left"><FONT STYLE="font-size: 10pt">$</FONT></TD><TD STYLE="border-bottom: Black 1.5pt solid; font: 10pt Times New Roman, Times, Serif; text-align: right"><FONT STYLE="font-size: 10pt">(78,007</FONT></TD><TD STYLE="padding-bottom: 1.5pt; font: 10pt Times New Roman, Times, Serif; text-align: left"><FONT STYLE="font-size: 10pt">)</FONT></TD><TD STYLE="font: 10pt Times New Roman, Times, Serif; padding-bottom: 1.5pt"><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD>
    <TD STYLE="border-bottom: Black 1.5pt solid; font: 10pt Times New Roman, Times, Serif; text-align: left"><FONT STYLE="font-size: 10pt">$</FONT></TD><TD STYLE="border-bottom: Black 1.5pt solid; font: 10pt Times New Roman, Times, Serif; text-align: right"><FONT STYLE="font-size: 10pt">1</FONT></TD><TD STYLE="padding-bottom: 1.5pt; font: 10pt Times New Roman, Times, Serif; text-align: left"><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD><TD STYLE="font: 10pt Times New Roman, Times, Serif; padding-bottom: 1.5pt"><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD>
    <TD STYLE="border-bottom: Black 1.5pt solid; font: 10pt Times New Roman, Times, Serif; text-align: left"><FONT STYLE="font-size: 10pt">$</FONT></TD><TD STYLE="border-bottom: Black 1.5pt solid; font: 10pt Times New Roman, Times, Serif; text-align: right"><FONT STYLE="font-size: 10pt">(676</FONT></TD><TD STYLE="padding-bottom: 1.5pt; font: 10pt Times New Roman, Times, Serif; text-align: left"><FONT STYLE="font-size: 10pt">)</FONT></TD><TD STYLE="font: 10pt Times New Roman, Times, Serif; padding-bottom: 1.5pt"><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD>
    <TD STYLE="border-bottom: Black 1.5pt solid; font: 10pt Times New Roman, Times, Serif; text-align: left"><FONT STYLE="font-size: 10pt">$</FONT></TD><TD STYLE="border-bottom: Black 1.5pt solid; font: 10pt Times New Roman, Times, Serif; text-align: right"><FONT STYLE="font-size: 10pt">-</FONT></TD><TD STYLE="padding-bottom: 1.5pt; font: 10pt Times New Roman, Times, Serif; text-align: left"><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD><TD STYLE="font: 10pt Times New Roman, Times, Serif; padding-bottom: 1.5pt"><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD>
    <TD STYLE="border-bottom: Black 1.5pt solid; font: 10pt Times New Roman, Times, Serif; text-align: left"><FONT STYLE="font-size: 10pt">$</FONT></TD><TD STYLE="border-bottom: Black 1.5pt solid; font: 10pt Times New Roman, Times, Serif; text-align: right"><FONT STYLE="font-size: 10pt">(676</FONT></TD><TD STYLE="padding-bottom: 1.5pt; font: 10pt Times New Roman, Times, Serif; text-align: left"><FONT STYLE="font-size: 10pt">)</FONT></TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,238,255)">
    <TD STYLE="font: 10pt Times New Roman, Times, Serif; text-align: left; padding-left: 5pt; text-indent: -5pt"><FONT STYLE="font-size: 10pt">Amortization
    of employee stock options</FONT></TD><TD STYLE="font: 10pt Times New Roman, Times, Serif"><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD>
    <TD STYLE="font: 10pt Times New Roman, Times, Serif; text-align: left"><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD><TD STYLE="font: 10pt Times New Roman, Times, Serif; text-align: right"><FONT STYLE="font-size: 10pt">-</FONT></TD><TD STYLE="font: 10pt Times New Roman, Times, Serif; text-align: left"><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD><TD STYLE="font: 10pt Times New Roman, Times, Serif"><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD>
    <TD STYLE="font: 10pt Times New Roman, Times, Serif; text-align: left"><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD><TD STYLE="font: 10pt Times New Roman, Times, Serif; text-align: right"><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD><TD STYLE="font: 10pt Times New Roman, Times, Serif; text-align: left"><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD><TD STYLE="font: 10pt Times New Roman, Times, Serif"><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD>
    <TD STYLE="font: 10pt Times New Roman, Times, Serif; text-align: left"><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD><TD STYLE="font: 10pt Times New Roman, Times, Serif; text-align: right"><FONT STYLE="font-size: 10pt">-</FONT></TD><TD STYLE="font: 10pt Times New Roman, Times, Serif; text-align: left"><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD><TD STYLE="font: 10pt Times New Roman, Times, Serif"><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD>
    <TD STYLE="font: 10pt Times New Roman, Times, Serif; text-align: left"><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD><TD STYLE="font: 10pt Times New Roman, Times, Serif; text-align: right"><FONT STYLE="font-size: 10pt">-</FONT></TD><TD STYLE="font: 10pt Times New Roman, Times, Serif; text-align: left"><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD><TD STYLE="font: 10pt Times New Roman, Times, Serif"><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD>
    <TD STYLE="font: 10pt Times New Roman, Times, Serif; text-align: left"><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD><TD STYLE="font: 10pt Times New Roman, Times, Serif; text-align: right"><FONT STYLE="font-size: 10pt">72</FONT></TD><TD STYLE="font: 10pt Times New Roman, Times, Serif; text-align: left"><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD><TD STYLE="font: 10pt Times New Roman, Times, Serif"><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD>
    <TD STYLE="font: 10pt Times New Roman, Times, Serif; text-align: left"><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD><TD STYLE="font: 10pt Times New Roman, Times, Serif; text-align: right"><FONT STYLE="font-size: 10pt">-</FONT></TD><TD STYLE="font: 10pt Times New Roman, Times, Serif; text-align: left"><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD><TD STYLE="font: 10pt Times New Roman, Times, Serif"><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD>
    <TD STYLE="font: 10pt Times New Roman, Times, Serif; text-align: left"><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD><TD STYLE="font: 10pt Times New Roman, Times, Serif; text-align: right"><FONT STYLE="font-size: 10pt">-</FONT></TD><TD STYLE="font: 10pt Times New Roman, Times, Serif; text-align: left"><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD><TD STYLE="font: 10pt Times New Roman, Times, Serif"><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD>
    <TD STYLE="font: 10pt Times New Roman, Times, Serif; text-align: left"><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD><TD STYLE="font: 10pt Times New Roman, Times, Serif; text-align: right"><FONT STYLE="font-size: 10pt">72</FONT></TD><TD STYLE="font: 10pt Times New Roman, Times, Serif; text-align: left"><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD><TD STYLE="font: 10pt Times New Roman, Times, Serif"><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD>
    <TD STYLE="font: 10pt Times New Roman, Times, Serif; text-align: left"><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD><TD STYLE="font: 10pt Times New Roman, Times, Serif; text-align: right"><FONT STYLE="font-size: 10pt">-</FONT></TD><TD STYLE="font: 10pt Times New Roman, Times, Serif; text-align: left"><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD><TD STYLE="font: 10pt Times New Roman, Times, Serif"><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD>
    <TD STYLE="font: 10pt Times New Roman, Times, Serif; text-align: left"><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD><TD STYLE="font: 10pt Times New Roman, Times, Serif; text-align: right"><FONT STYLE="font-size: 10pt">72</FONT></TD><TD STYLE="font: 10pt Times New Roman, Times, Serif; text-align: left"><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD STYLE="font: 10pt Times New Roman, Times, Serif; text-align: left; padding-left: 5pt; text-indent: -5pt"><FONT STYLE="font-size: 10pt">Stock
    issued for services, to employees</FONT></TD><TD STYLE="font: 10pt Times New Roman, Times, Serif"><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD>
    <TD STYLE="font: 10pt Times New Roman, Times, Serif; text-align: left"><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD><TD STYLE="font: 10pt Times New Roman, Times, Serif; text-align: right"><FONT STYLE="font-size: 10pt">-</FONT></TD><TD STYLE="font: 10pt Times New Roman, Times, Serif; text-align: left"><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD><TD STYLE="font: 10pt Times New Roman, Times, Serif"><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD>
    <TD STYLE="font: 10pt Times New Roman, Times, Serif; text-align: left"><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD><TD STYLE="font: 10pt Times New Roman, Times, Serif; text-align: right"><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD><TD STYLE="font: 10pt Times New Roman, Times, Serif; text-align: left"><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD><TD STYLE="font: 10pt Times New Roman, Times, Serif"><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD>
    <TD STYLE="font: 10pt Times New Roman, Times, Serif; text-align: left"><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD><TD STYLE="font: 10pt Times New Roman, Times, Serif; text-align: right"><FONT STYLE="font-size: 10pt">1,160,225</FONT></TD><TD STYLE="font: 10pt Times New Roman, Times, Serif; text-align: left"><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD><TD STYLE="font: 10pt Times New Roman, Times, Serif"><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD>
    <TD STYLE="font: 10pt Times New Roman, Times, Serif; text-align: left"><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD><TD STYLE="font: 10pt Times New Roman, Times, Serif; text-align: right"><FONT STYLE="font-size: 10pt">1</FONT></TD><TD STYLE="font: 10pt Times New Roman, Times, Serif; text-align: left"><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD><TD STYLE="font: 10pt Times New Roman, Times, Serif"><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD>
    <TD STYLE="font: 10pt Times New Roman, Times, Serif; text-align: left"><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD><TD STYLE="font: 10pt Times New Roman, Times, Serif; text-align: right"><FONT STYLE="font-size: 10pt">446</FONT></TD><TD STYLE="font: 10pt Times New Roman, Times, Serif; text-align: left"><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD><TD STYLE="font: 10pt Times New Roman, Times, Serif"><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD>
    <TD STYLE="font: 10pt Times New Roman, Times, Serif; text-align: left"><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD><TD STYLE="font: 10pt Times New Roman, Times, Serif; text-align: right"><FONT STYLE="font-size: 10pt">-</FONT></TD><TD STYLE="font: 10pt Times New Roman, Times, Serif; text-align: left"><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD><TD STYLE="font: 10pt Times New Roman, Times, Serif"><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD>
    <TD STYLE="font: 10pt Times New Roman, Times, Serif; text-align: left"><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD><TD STYLE="font: 10pt Times New Roman, Times, Serif; text-align: right"><FONT STYLE="font-size: 10pt">-</FONT></TD><TD STYLE="font: 10pt Times New Roman, Times, Serif; text-align: left"><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD><TD STYLE="font: 10pt Times New Roman, Times, Serif"><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD>
    <TD STYLE="font: 10pt Times New Roman, Times, Serif; text-align: left"><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD><TD STYLE="font: 10pt Times New Roman, Times, Serif; text-align: right"><FONT STYLE="font-size: 10pt">447</FONT></TD><TD STYLE="font: 10pt Times New Roman, Times, Serif; text-align: left"><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD><TD STYLE="font: 10pt Times New Roman, Times, Serif"><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD>
    <TD STYLE="font: 10pt Times New Roman, Times, Serif; text-align: left"><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD><TD STYLE="font: 10pt Times New Roman, Times, Serif; text-align: right"><FONT STYLE="font-size: 10pt">-</FONT></TD><TD STYLE="font: 10pt Times New Roman, Times, Serif; text-align: left"><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD><TD STYLE="font: 10pt Times New Roman, Times, Serif"><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD>
    <TD STYLE="font: 10pt Times New Roman, Times, Serif; text-align: left"><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD><TD STYLE="font: 10pt Times New Roman, Times, Serif; text-align: right"><FONT STYLE="font-size: 10pt">447</FONT></TD><TD STYLE="font: 10pt Times New Roman, Times, Serif; text-align: left"><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,238,255)">
    <TD STYLE="font: 10pt Times New Roman, Times, Serif; text-align: left; padding-left: 5pt; text-indent: -5pt"><FONT STYLE="font-size: 10pt">Stock
    issued for services</FONT></TD><TD STYLE="font: 10pt Times New Roman, Times, Serif"><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD>
    <TD STYLE="font: 10pt Times New Roman, Times, Serif; text-align: left"><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD><TD STYLE="font: 10pt Times New Roman, Times, Serif; text-align: right"><FONT STYLE="font-size: 10pt">-</FONT></TD><TD STYLE="font: 10pt Times New Roman, Times, Serif; text-align: left"><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD><TD STYLE="font: 10pt Times New Roman, Times, Serif"><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD>
    <TD STYLE="font: 10pt Times New Roman, Times, Serif; text-align: left"><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD><TD STYLE="font: 10pt Times New Roman, Times, Serif; text-align: right"><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD><TD STYLE="font: 10pt Times New Roman, Times, Serif; text-align: left"><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD><TD STYLE="font: 10pt Times New Roman, Times, Serif"><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD>
    <TD STYLE="font: 10pt Times New Roman, Times, Serif; text-align: left"><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD><TD STYLE="font: 10pt Times New Roman, Times, Serif; text-align: right"><FONT STYLE="font-size: 10pt">100,000</FONT></TD><TD STYLE="font: 10pt Times New Roman, Times, Serif; text-align: left"><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD><TD STYLE="font: 10pt Times New Roman, Times, Serif"><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD>
    <TD STYLE="font: 10pt Times New Roman, Times, Serif; text-align: left"><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD><TD STYLE="font: 10pt Times New Roman, Times, Serif; text-align: right"><FONT STYLE="font-size: 10pt">-</FONT></TD><TD STYLE="font: 10pt Times New Roman, Times, Serif; text-align: left"><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD><TD STYLE="font: 10pt Times New Roman, Times, Serif"><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD>
    <TD STYLE="font: 10pt Times New Roman, Times, Serif; text-align: left"><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD><TD STYLE="font: 10pt Times New Roman, Times, Serif; text-align: right"><FONT STYLE="font-size: 10pt">40</FONT></TD><TD STYLE="font: 10pt Times New Roman, Times, Serif; text-align: left"><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD><TD STYLE="font: 10pt Times New Roman, Times, Serif"><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD>
    <TD STYLE="font: 10pt Times New Roman, Times, Serif; text-align: left"><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD><TD STYLE="font: 10pt Times New Roman, Times, Serif; text-align: right"><FONT STYLE="font-size: 10pt">-</FONT></TD><TD STYLE="font: 10pt Times New Roman, Times, Serif; text-align: left"><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD><TD STYLE="font: 10pt Times New Roman, Times, Serif"><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD>
    <TD STYLE="font: 10pt Times New Roman, Times, Serif; text-align: left"><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD><TD STYLE="font: 10pt Times New Roman, Times, Serif; text-align: right"><FONT STYLE="font-size: 10pt">-</FONT></TD><TD STYLE="font: 10pt Times New Roman, Times, Serif; text-align: left"><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD><TD STYLE="font: 10pt Times New Roman, Times, Serif"><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD>
    <TD STYLE="font: 10pt Times New Roman, Times, Serif; text-align: left"><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD><TD STYLE="font: 10pt Times New Roman, Times, Serif; text-align: right"><FONT STYLE="font-size: 10pt">40</FONT></TD><TD STYLE="font: 10pt Times New Roman, Times, Serif; text-align: left"><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD><TD STYLE="font: 10pt Times New Roman, Times, Serif"><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD>
    <TD STYLE="font: 10pt Times New Roman, Times, Serif; text-align: left"><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD><TD STYLE="font: 10pt Times New Roman, Times, Serif; text-align: right"><FONT STYLE="font-size: 10pt">-</FONT></TD><TD STYLE="font: 10pt Times New Roman, Times, Serif; text-align: left"><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD><TD STYLE="font: 10pt Times New Roman, Times, Serif"><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD>
    <TD STYLE="font: 10pt Times New Roman, Times, Serif; text-align: left"><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD><TD STYLE="font: 10pt Times New Roman, Times, Serif; text-align: right"><FONT STYLE="font-size: 10pt">40</FONT></TD><TD STYLE="font: 10pt Times New Roman, Times, Serif; text-align: left"><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD STYLE="font: 10pt Times New Roman, Times, Serif; text-align: left; padding-left: 5pt; text-indent: -5pt"><FONT STYLE="font-size: 10pt">Stock
    issued for convertible debt</FONT></TD><TD STYLE="font: 10pt Times New Roman, Times, Serif"><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD>
    <TD STYLE="font: 10pt Times New Roman, Times, Serif; text-align: left"><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD><TD STYLE="font: 10pt Times New Roman, Times, Serif; text-align: right"><FONT STYLE="font-size: 10pt">-</FONT></TD><TD STYLE="font: 10pt Times New Roman, Times, Serif; text-align: left"><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD><TD STYLE="font: 10pt Times New Roman, Times, Serif"><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD>
    <TD STYLE="font: 10pt Times New Roman, Times, Serif; text-align: left"><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD><TD STYLE="font: 10pt Times New Roman, Times, Serif; text-align: right"><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD><TD STYLE="font: 10pt Times New Roman, Times, Serif; text-align: left"><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD><TD STYLE="font: 10pt Times New Roman, Times, Serif"><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD>
    <TD STYLE="font: 10pt Times New Roman, Times, Serif; text-align: left"><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD><TD STYLE="font: 10pt Times New Roman, Times, Serif; text-align: right"><FONT STYLE="font-size: 10pt">250,000</FONT></TD><TD STYLE="font: 10pt Times New Roman, Times, Serif; text-align: left"><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD><TD STYLE="font: 10pt Times New Roman, Times, Serif"><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD>
    <TD STYLE="font: 10pt Times New Roman, Times, Serif; text-align: left"><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD><TD STYLE="font: 10pt Times New Roman, Times, Serif; text-align: right"><FONT STYLE="font-size: 10pt">-</FONT></TD><TD STYLE="font: 10pt Times New Roman, Times, Serif; text-align: left"><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD><TD STYLE="font: 10pt Times New Roman, Times, Serif"><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD>
    <TD STYLE="font: 10pt Times New Roman, Times, Serif; text-align: left"><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD><TD STYLE="font: 10pt Times New Roman, Times, Serif; text-align: right"><FONT STYLE="font-size: 10pt">-</FONT></TD><TD STYLE="font: 10pt Times New Roman, Times, Serif; text-align: left"><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD><TD STYLE="font: 10pt Times New Roman, Times, Serif"><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD>
    <TD STYLE="font: 10pt Times New Roman, Times, Serif; text-align: left"><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD><TD STYLE="font: 10pt Times New Roman, Times, Serif; text-align: right"><FONT STYLE="font-size: 10pt">-</FONT></TD><TD STYLE="font: 10pt Times New Roman, Times, Serif; text-align: left"><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD><TD STYLE="font: 10pt Times New Roman, Times, Serif"><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD>
    <TD STYLE="font: 10pt Times New Roman, Times, Serif; text-align: left"><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD><TD STYLE="font: 10pt Times New Roman, Times, Serif; text-align: right"><FONT STYLE="font-size: 10pt">-</FONT></TD><TD STYLE="font: 10pt Times New Roman, Times, Serif; text-align: left"><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD><TD STYLE="font: 10pt Times New Roman, Times, Serif"><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD>
    <TD STYLE="font: 10pt Times New Roman, Times, Serif; text-align: left"><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD><TD STYLE="font: 10pt Times New Roman, Times, Serif; text-align: right"><FONT STYLE="font-size: 10pt">-</FONT></TD><TD STYLE="font: 10pt Times New Roman, Times, Serif; text-align: left"><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD><TD STYLE="font: 10pt Times New Roman, Times, Serif"><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD>
    <TD STYLE="font: 10pt Times New Roman, Times, Serif; text-align: left"><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD><TD STYLE="font: 10pt Times New Roman, Times, Serif; text-align: right"><FONT STYLE="font-size: 10pt">-</FONT></TD><TD STYLE="font: 10pt Times New Roman, Times, Serif; text-align: left"><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD><TD STYLE="font: 10pt Times New Roman, Times, Serif"><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD>
    <TD STYLE="font: 10pt Times New Roman, Times, Serif; text-align: left"><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD><TD STYLE="font: 10pt Times New Roman, Times, Serif; text-align: right"><FONT STYLE="font-size: 10pt">-</FONT></TD><TD STYLE="font: 10pt Times New Roman, Times, Serif; text-align: left"><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,238,255)">
    <TD STYLE="font: 10pt Times New Roman, Times, Serif; text-align: left; padding-left: 5pt; text-indent: -5pt"><FONT STYLE="font-size: 10pt">Stock
    issued for Acquisition</FONT></TD><TD STYLE="font: 10pt Times New Roman, Times, Serif"><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD>
    <TD STYLE="font: 10pt Times New Roman, Times, Serif; text-align: left"><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD><TD STYLE="font: 10pt Times New Roman, Times, Serif; text-align: right"><FONT STYLE="font-size: 10pt">-</FONT></TD><TD STYLE="font: 10pt Times New Roman, Times, Serif; text-align: left"><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD><TD STYLE="font: 10pt Times New Roman, Times, Serif"><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD>
    <TD STYLE="font: 10pt Times New Roman, Times, Serif; text-align: left"><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD><TD STYLE="font: 10pt Times New Roman, Times, Serif; text-align: right"><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD><TD STYLE="font: 10pt Times New Roman, Times, Serif; text-align: left"><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD><TD STYLE="font: 10pt Times New Roman, Times, Serif"><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD>
    <TD STYLE="font: 10pt Times New Roman, Times, Serif; text-align: left"><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD><TD STYLE="font: 10pt Times New Roman, Times, Serif; text-align: right"><FONT STYLE="font-size: 10pt">500,000</FONT></TD><TD STYLE="font: 10pt Times New Roman, Times, Serif; text-align: left"><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD><TD STYLE="font: 10pt Times New Roman, Times, Serif"><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD>
    <TD STYLE="font: 10pt Times New Roman, Times, Serif; text-align: left"><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD><TD STYLE="font: 10pt Times New Roman, Times, Serif; text-align: right"><FONT STYLE="font-size: 10pt">1</FONT></TD><TD STYLE="font: 10pt Times New Roman, Times, Serif; text-align: left"><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD><TD STYLE="font: 10pt Times New Roman, Times, Serif"><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD>
    <TD STYLE="font: 10pt Times New Roman, Times, Serif; text-align: left"><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD><TD STYLE="font: 10pt Times New Roman, Times, Serif; text-align: right"><FONT STYLE="font-size: 10pt">175</FONT></TD><TD STYLE="font: 10pt Times New Roman, Times, Serif; text-align: left"><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD><TD STYLE="font: 10pt Times New Roman, Times, Serif"><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD>
    <TD STYLE="font: 10pt Times New Roman, Times, Serif; text-align: left"><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD><TD STYLE="font: 10pt Times New Roman, Times, Serif; text-align: right"><FONT STYLE="font-size: 10pt">-</FONT></TD><TD STYLE="font: 10pt Times New Roman, Times, Serif; text-align: left"><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD><TD STYLE="font: 10pt Times New Roman, Times, Serif"><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD>
    <TD STYLE="font: 10pt Times New Roman, Times, Serif; text-align: left"><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD><TD STYLE="font: 10pt Times New Roman, Times, Serif; text-align: right"><FONT STYLE="font-size: 10pt">-</FONT></TD><TD STYLE="font: 10pt Times New Roman, Times, Serif; text-align: left"><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD><TD STYLE="font: 10pt Times New Roman, Times, Serif"><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD>
    <TD STYLE="font: 10pt Times New Roman, Times, Serif; text-align: left"><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD><TD STYLE="font: 10pt Times New Roman, Times, Serif; text-align: right"><FONT STYLE="font-size: 10pt">176</FONT></TD><TD STYLE="font: 10pt Times New Roman, Times, Serif; text-align: left"><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD><TD STYLE="font: 10pt Times New Roman, Times, Serif"><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD>
    <TD STYLE="font: 10pt Times New Roman, Times, Serif; text-align: left"><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD><TD STYLE="font: 10pt Times New Roman, Times, Serif; text-align: right"><FONT STYLE="font-size: 10pt">-</FONT></TD><TD STYLE="font: 10pt Times New Roman, Times, Serif; text-align: left"><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD><TD STYLE="font: 10pt Times New Roman, Times, Serif"><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD>
    <TD STYLE="font: 10pt Times New Roman, Times, Serif; text-align: left"><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD><TD STYLE="font: 10pt Times New Roman, Times, Serif; text-align: right"><FONT STYLE="font-size: 10pt">176</FONT></TD><TD STYLE="font: 10pt Times New Roman, Times, Serif; text-align: left"><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD STYLE="font: 10pt Times New Roman, Times, Serif; padding-left: 5pt; text-indent: -5pt"><FONT STYLE="font-size: 10pt">Value
    of warrants issued</FONT></TD><TD STYLE="font: 10pt Times New Roman, Times, Serif"><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD>
    <TD STYLE="font: 10pt Times New Roman, Times, Serif; text-align: left"><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD><TD STYLE="font: 10pt Times New Roman, Times, Serif; text-align: right"><FONT STYLE="font-size: 10pt">-</FONT></TD><TD STYLE="font: 10pt Times New Roman, Times, Serif; text-align: left"><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD><TD STYLE="font: 10pt Times New Roman, Times, Serif"><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD>
    <TD STYLE="font: 10pt Times New Roman, Times, Serif; text-align: left"><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD><TD STYLE="font: 10pt Times New Roman, Times, Serif; text-align: right"><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD><TD STYLE="font: 10pt Times New Roman, Times, Serif; text-align: left"><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD><TD STYLE="font: 10pt Times New Roman, Times, Serif"><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD>
    <TD STYLE="font: 10pt Times New Roman, Times, Serif; text-align: left"><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD><TD STYLE="font: 10pt Times New Roman, Times, Serif; text-align: right"><FONT STYLE="font-size: 10pt">-</FONT></TD><TD STYLE="font: 10pt Times New Roman, Times, Serif; text-align: left"><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD><TD STYLE="font: 10pt Times New Roman, Times, Serif"><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD>
    <TD STYLE="font: 10pt Times New Roman, Times, Serif; text-align: left"><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD><TD STYLE="font: 10pt Times New Roman, Times, Serif; text-align: right"><FONT STYLE="font-size: 10pt">-</FONT></TD><TD STYLE="font: 10pt Times New Roman, Times, Serif; text-align: left"><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD><TD STYLE="font: 10pt Times New Roman, Times, Serif"><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD>
    <TD STYLE="font: 10pt Times New Roman, Times, Serif; text-align: left"><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD><TD STYLE="font: 10pt Times New Roman, Times, Serif; text-align: right"><FONT STYLE="font-size: 10pt">283</FONT></TD><TD STYLE="font: 10pt Times New Roman, Times, Serif; text-align: left"><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD><TD STYLE="font: 10pt Times New Roman, Times, Serif"><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD>
    <TD STYLE="font: 10pt Times New Roman, Times, Serif; text-align: left"><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD><TD STYLE="font: 10pt Times New Roman, Times, Serif; text-align: right"><FONT STYLE="font-size: 10pt">-</FONT></TD><TD STYLE="font: 10pt Times New Roman, Times, Serif; text-align: left"><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD><TD STYLE="font: 10pt Times New Roman, Times, Serif"><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD>
    <TD STYLE="font: 10pt Times New Roman, Times, Serif; text-align: left"><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD><TD STYLE="font: 10pt Times New Roman, Times, Serif; text-align: right"><FONT STYLE="font-size: 10pt">-</FONT></TD><TD STYLE="font: 10pt Times New Roman, Times, Serif; text-align: left"><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD><TD STYLE="font: 10pt Times New Roman, Times, Serif"><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD>
    <TD STYLE="font: 10pt Times New Roman, Times, Serif; text-align: left"><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD><TD STYLE="font: 10pt Times New Roman, Times, Serif; text-align: right"><FONT STYLE="font-size: 10pt">283</FONT></TD><TD STYLE="font: 10pt Times New Roman, Times, Serif; text-align: left"><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD><TD STYLE="font: 10pt Times New Roman, Times, Serif"><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD>
    <TD STYLE="font: 10pt Times New Roman, Times, Serif; text-align: left"><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD><TD STYLE="font: 10pt Times New Roman, Times, Serif; text-align: right"><FONT STYLE="font-size: 10pt">-</FONT></TD><TD STYLE="font: 10pt Times New Roman, Times, Serif; text-align: left"><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD><TD STYLE="font: 10pt Times New Roman, Times, Serif"><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD>
    <TD STYLE="font: 10pt Times New Roman, Times, Serif; text-align: left"><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD><TD STYLE="font: 10pt Times New Roman, Times, Serif; text-align: right"><FONT STYLE="font-size: 10pt">283</FONT></TD><TD STYLE="font: 10pt Times New Roman, Times, Serif; text-align: left"><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,238,255)">
    <TD STYLE="font: 10pt Times New Roman, Times, Serif; text-align: left; padding-bottom: 1.5pt; padding-left: 5pt; text-indent: -5pt"><FONT STYLE="font-size: 10pt">Net
    loss</FONT></TD><TD STYLE="font: 10pt Times New Roman, Times, Serif; padding-bottom: 1.5pt"><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD>
    <TD STYLE="border-bottom: Black 1.5pt solid; font: 10pt Times New Roman, Times, Serif; text-align: left"><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD><TD STYLE="border-bottom: Black 1.5pt solid; font: 10pt Times New Roman, Times, Serif; text-align: right"><FONT STYLE="font-size: 10pt">-</FONT></TD><TD STYLE="padding-bottom: 1.5pt; font: 10pt Times New Roman, Times, Serif; text-align: left"><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD><TD STYLE="font: 10pt Times New Roman, Times, Serif; padding-bottom: 1.5pt"><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD>
    <TD STYLE="border-bottom: Black 1.5pt solid; font: 10pt Times New Roman, Times, Serif; text-align: left"><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD><TD STYLE="border-bottom: Black 1.5pt solid; font: 10pt Times New Roman, Times, Serif; text-align: right"><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD><TD STYLE="padding-bottom: 1.5pt; font: 10pt Times New Roman, Times, Serif; text-align: left"><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD><TD STYLE="font: 10pt Times New Roman, Times, Serif; padding-bottom: 1.5pt"><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD>
    <TD STYLE="border-bottom: Black 1.5pt solid; font: 10pt Times New Roman, Times, Serif; text-align: left"><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD><TD STYLE="border-bottom: Black 1.5pt solid; font: 10pt Times New Roman, Times, Serif; text-align: right"><FONT STYLE="font-size: 10pt">-</FONT></TD><TD STYLE="padding-bottom: 1.5pt; font: 10pt Times New Roman, Times, Serif; text-align: left"><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD><TD STYLE="font: 10pt Times New Roman, Times, Serif; padding-bottom: 1.5pt"><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD>
    <TD STYLE="border-bottom: Black 1.5pt solid; font: 10pt Times New Roman, Times, Serif; text-align: left"><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD><TD STYLE="border-bottom: Black 1.5pt solid; font: 10pt Times New Roman, Times, Serif; text-align: right"><FONT STYLE="font-size: 10pt">-</FONT></TD><TD STYLE="padding-bottom: 1.5pt; font: 10pt Times New Roman, Times, Serif; text-align: left"><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD><TD STYLE="font: 10pt Times New Roman, Times, Serif; padding-bottom: 1.5pt"><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD>
    <TD STYLE="border-bottom: Black 1.5pt solid; font: 10pt Times New Roman, Times, Serif; text-align: left"><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD><TD STYLE="border-bottom: Black 1.5pt solid; font: 10pt Times New Roman, Times, Serif; text-align: right"><FONT STYLE="font-size: 10pt">-</FONT></TD><TD STYLE="padding-bottom: 1.5pt; font: 10pt Times New Roman, Times, Serif; text-align: left"><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD><TD STYLE="font: 10pt Times New Roman, Times, Serif; padding-bottom: 1.5pt"><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD>
    <TD STYLE="border-bottom: Black 1.5pt solid; font: 10pt Times New Roman, Times, Serif; text-align: left"><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD><TD STYLE="border-bottom: Black 1.5pt solid; font: 10pt Times New Roman, Times, Serif; text-align: right"><FONT STYLE="font-size: 10pt">(1,468</FONT></TD><TD STYLE="padding-bottom: 1.5pt; font: 10pt Times New Roman, Times, Serif; text-align: left"><FONT STYLE="font-size: 10pt">)</FONT></TD><TD STYLE="font: 10pt Times New Roman, Times, Serif; padding-bottom: 1.5pt"><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD>
    <TD STYLE="border-bottom: Black 1.5pt solid; font: 10pt Times New Roman, Times, Serif; text-align: left"><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD><TD STYLE="border-bottom: Black 1.5pt solid; font: 10pt Times New Roman, Times, Serif; text-align: right"><FONT STYLE="font-size: 10pt">-</FONT></TD><TD STYLE="padding-bottom: 1.5pt; font: 10pt Times New Roman, Times, Serif; text-align: left"><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD><TD STYLE="font: 10pt Times New Roman, Times, Serif; padding-bottom: 1.5pt"><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD>
    <TD STYLE="border-bottom: Black 1.5pt solid; font: 10pt Times New Roman, Times, Serif; text-align: left"><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD><TD STYLE="border-bottom: Black 1.5pt solid; font: 10pt Times New Roman, Times, Serif; text-align: right"><FONT STYLE="font-size: 10pt">(1,468</FONT></TD><TD STYLE="padding-bottom: 1.5pt; font: 10pt Times New Roman, Times, Serif; text-align: left"><FONT STYLE="font-size: 10pt">)</FONT></TD><TD STYLE="font: 10pt Times New Roman, Times, Serif; padding-bottom: 1.5pt"><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD>
    <TD STYLE="border-bottom: Black 1.5pt solid; font: 10pt Times New Roman, Times, Serif; text-align: left"><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD><TD STYLE="border-bottom: Black 1.5pt solid; font: 10pt Times New Roman, Times, Serif; text-align: right"><FONT STYLE="font-size: 10pt">-</FONT></TD><TD STYLE="padding-bottom: 1.5pt; font: 10pt Times New Roman, Times, Serif; text-align: left"><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD><TD STYLE="font: 10pt Times New Roman, Times, Serif; padding-bottom: 1.5pt"><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD>
    <TD STYLE="border-bottom: Black 1.5pt solid; font: 10pt Times New Roman, Times, Serif; text-align: left"><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD><TD STYLE="border-bottom: Black 1.5pt solid; font: 10pt Times New Roman, Times, Serif; text-align: right"><FONT STYLE="font-size: 10pt">(1,468</FONT></TD><TD STYLE="padding-bottom: 1.5pt; font: 10pt Times New Roman, Times, Serif; text-align: left"><FONT STYLE="font-size: 10pt">)</FONT></TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD STYLE="font: 10pt Times New Roman, Times, Serif; padding-bottom: 1.5pt; padding-left: 5pt; text-indent: -5pt"><FONT STYLE="font-size: 10pt">BALANCE,
    January 31, 2018</FONT></TD><TD STYLE="font: 10pt Times New Roman, Times, Serif; padding-bottom: 1.5pt"><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD>
    <TD STYLE="border-bottom: Black 1.5pt solid; font: 10pt Times New Roman, Times, Serif; text-align: left"><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD><TD STYLE="border-bottom: Black 1.5pt solid; font: 10pt Times New Roman, Times, Serif; text-align: right"><FONT STYLE="font-size: 10pt">-</FONT></TD><TD STYLE="padding-bottom: 1.5pt; font: 10pt Times New Roman, Times, Serif; text-align: left"><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD><TD STYLE="font: 10pt Times New Roman, Times, Serif; padding-bottom: 1.5pt"><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD>
    <TD STYLE="border-bottom: Black 1.5pt solid; font: 10pt Times New Roman, Times, Serif; text-align: left"><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD><TD STYLE="border-bottom: Black 1.5pt solid; font: 10pt Times New Roman, Times, Serif; text-align: right"><FONT STYLE="font-size: 10pt">-</FONT></TD><TD STYLE="padding-bottom: 1.5pt; font: 10pt Times New Roman, Times, Serif; text-align: left"><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD><TD STYLE="font: 10pt Times New Roman, Times, Serif; padding-bottom: 1.5pt"><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD>
    <TD STYLE="border-bottom: Black 1.5pt solid; font: 10pt Times New Roman, Times, Serif; text-align: left"><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD><TD STYLE="border-bottom: Black 1.5pt solid; font: 10pt Times New Roman, Times, Serif; text-align: right"><FONT STYLE="font-size: 10pt">10,968,781</FONT></TD><TD STYLE="padding-bottom: 1.5pt; font: 10pt Times New Roman, Times, Serif; text-align: left"><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD><TD STYLE="font: 10pt Times New Roman, Times, Serif; padding-bottom: 1.5pt"><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD>
    <TD STYLE="border-bottom: Black 1.5pt solid; font: 10pt Times New Roman, Times, Serif; text-align: left"><FONT STYLE="font-size: 10pt">$</FONT></TD><TD STYLE="border-bottom: Black 1.5pt solid; font: 10pt Times New Roman, Times, Serif; text-align: right"><FONT STYLE="font-size: 10pt">11</FONT></TD><TD STYLE="padding-bottom: 1.5pt; font: 10pt Times New Roman, Times, Serif; text-align: left"><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD><TD STYLE="font: 10pt Times New Roman, Times, Serif; padding-bottom: 1.5pt"><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD>
    <TD STYLE="border-bottom: Black 1.5pt solid; font: 10pt Times New Roman, Times, Serif; text-align: left"><FONT STYLE="font-size: 10pt">$</FONT></TD><TD STYLE="border-bottom: Black 1.5pt solid; font: 10pt Times New Roman, Times, Serif; text-align: right"><FONT STYLE="font-size: 10pt">78,337</FONT></TD><TD STYLE="padding-bottom: 1.5pt; font: 10pt Times New Roman, Times, Serif; text-align: left"><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD><TD STYLE="font: 10pt Times New Roman, Times, Serif; padding-bottom: 1.5pt"><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD>
    <TD STYLE="border-bottom: Black 1.5pt solid; font: 10pt Times New Roman, Times, Serif; text-align: left"><FONT STYLE="font-size: 10pt">$</FONT></TD><TD STYLE="border-bottom: Black 1.5pt solid; font: 10pt Times New Roman, Times, Serif; text-align: right"><FONT STYLE="font-size: 10pt">(79,475</FONT></TD><TD STYLE="padding-bottom: 1.5pt; font: 10pt Times New Roman, Times, Serif; text-align: left"><FONT STYLE="font-size: 10pt">)</FONT></TD><TD STYLE="font: 10pt Times New Roman, Times, Serif; padding-bottom: 1.5pt"><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD>
    <TD STYLE="border-bottom: Black 1.5pt solid; font: 10pt Times New Roman, Times, Serif; text-align: left"><FONT STYLE="font-size: 10pt">$</FONT></TD><TD STYLE="border-bottom: Black 1.5pt solid; font: 10pt Times New Roman, Times, Serif; text-align: right"><FONT STYLE="font-size: 10pt">1</FONT></TD><TD STYLE="padding-bottom: 1.5pt; font: 10pt Times New Roman, Times, Serif; text-align: left"><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD><TD STYLE="font: 10pt Times New Roman, Times, Serif; padding-bottom: 1.5pt"><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD>
    <TD STYLE="border-bottom: Black 1.5pt solid; font: 10pt Times New Roman, Times, Serif; text-align: left"><FONT STYLE="font-size: 10pt">$</FONT></TD><TD STYLE="border-bottom: Black 1.5pt solid; font: 10pt Times New Roman, Times, Serif; text-align: right"><FONT STYLE="font-size: 10pt">(1,126</FONT></TD><TD STYLE="padding-bottom: 1.5pt; font: 10pt Times New Roman, Times, Serif; text-align: left"><FONT STYLE="font-size: 10pt">)</FONT></TD><TD STYLE="font: 10pt Times New Roman, Times, Serif; padding-bottom: 1.5pt"><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD>
    <TD STYLE="border-bottom: Black 1.5pt solid; font: 10pt Times New Roman, Times, Serif; text-align: left"><FONT STYLE="font-size: 10pt">$</FONT></TD><TD STYLE="border-bottom: Black 1.5pt solid; font: 10pt Times New Roman, Times, Serif; text-align: right"><FONT STYLE="font-size: 10pt">-</FONT></TD><TD STYLE="padding-bottom: 1.5pt; font: 10pt Times New Roman, Times, Serif; text-align: left"><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD><TD STYLE="font: 10pt Times New Roman, Times, Serif; padding-bottom: 1.5pt"><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD>
    <TD STYLE="border-bottom: Black 1.5pt solid; font: 10pt Times New Roman, Times, Serif; text-align: left"><FONT STYLE="font-size: 10pt">$</FONT></TD><TD STYLE="border-bottom: Black 1.5pt solid; font: 10pt Times New Roman, Times, Serif; text-align: right"><FONT STYLE="font-size: 10pt">(1,126</FONT></TD><TD STYLE="padding-bottom: 1.5pt; font: 10pt Times New Roman, Times, Serif; text-align: left"><FONT STYLE="font-size: 10pt">)</FONT></TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,238,255)">
    <TD STYLE="font: 10pt Times New Roman, Times, Serif; text-align: left; padding-left: 5pt; text-indent: -5pt"><FONT STYLE="font-size: 10pt">Amortization
    of employee stock options</FONT></TD><TD STYLE="font: 10pt Times New Roman, Times, Serif"><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD>
    <TD STYLE="font: 10pt Times New Roman, Times, Serif; text-align: left"><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD><TD STYLE="font: 10pt Times New Roman, Times, Serif; text-align: right"><FONT STYLE="font-size: 10pt">-</FONT></TD><TD STYLE="font: 10pt Times New Roman, Times, Serif; text-align: left"><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD><TD STYLE="font: 10pt Times New Roman, Times, Serif"><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD>
    <TD STYLE="font: 10pt Times New Roman, Times, Serif; text-align: left"><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD><TD STYLE="font: 10pt Times New Roman, Times, Serif; text-align: right"><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD><TD STYLE="font: 10pt Times New Roman, Times, Serif; text-align: left"><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD><TD STYLE="font: 10pt Times New Roman, Times, Serif"><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD>
    <TD STYLE="font: 10pt Times New Roman, Times, Serif; text-align: left"><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD><TD STYLE="font: 10pt Times New Roman, Times, Serif; text-align: right"><FONT STYLE="font-size: 10pt">-</FONT></TD><TD STYLE="font: 10pt Times New Roman, Times, Serif; text-align: left"><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD><TD STYLE="font: 10pt Times New Roman, Times, Serif"><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD>
    <TD STYLE="font: 10pt Times New Roman, Times, Serif; text-align: left"><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD><TD STYLE="font: 10pt Times New Roman, Times, Serif; text-align: right"><FONT STYLE="font-size: 10pt">-</FONT></TD><TD STYLE="font: 10pt Times New Roman, Times, Serif; text-align: left"><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD><TD STYLE="font: 10pt Times New Roman, Times, Serif"><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD>
    <TD STYLE="font: 10pt Times New Roman, Times, Serif; text-align: left"><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD><TD STYLE="font: 10pt Times New Roman, Times, Serif; text-align: right"><FONT STYLE="font-size: 10pt">82</FONT></TD><TD STYLE="font: 10pt Times New Roman, Times, Serif; text-align: left"><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD><TD STYLE="font: 10pt Times New Roman, Times, Serif"><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD>
    <TD STYLE="font: 10pt Times New Roman, Times, Serif; text-align: left"><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD><TD STYLE="font: 10pt Times New Roman, Times, Serif; text-align: right"><FONT STYLE="font-size: 10pt">-</FONT></TD><TD STYLE="font: 10pt Times New Roman, Times, Serif; text-align: left"><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD><TD STYLE="font: 10pt Times New Roman, Times, Serif"><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD>
    <TD STYLE="font: 10pt Times New Roman, Times, Serif; text-align: left"><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD><TD STYLE="font: 10pt Times New Roman, Times, Serif; text-align: right"><FONT STYLE="font-size: 10pt">-</FONT></TD><TD STYLE="font: 10pt Times New Roman, Times, Serif; text-align: left"><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD><TD STYLE="font: 10pt Times New Roman, Times, Serif"><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD>
    <TD STYLE="font: 10pt Times New Roman, Times, Serif; text-align: left"><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD><TD STYLE="font: 10pt Times New Roman, Times, Serif; text-align: right"><FONT STYLE="font-size: 10pt">82</FONT></TD><TD STYLE="font: 10pt Times New Roman, Times, Serif; text-align: left"><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD><TD STYLE="font: 10pt Times New Roman, Times, Serif"><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD>
    <TD STYLE="font: 10pt Times New Roman, Times, Serif; text-align: left"><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD><TD STYLE="font: 10pt Times New Roman, Times, Serif; text-align: right"><FONT STYLE="font-size: 10pt">-</FONT></TD><TD STYLE="font: 10pt Times New Roman, Times, Serif; text-align: left"><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD><TD STYLE="font: 10pt Times New Roman, Times, Serif"><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD>
    <TD STYLE="font: 10pt Times New Roman, Times, Serif; text-align: left"><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD><TD STYLE="font: 10pt Times New Roman, Times, Serif; text-align: right"><FONT STYLE="font-size: 10pt">82</FONT></TD><TD STYLE="font: 10pt Times New Roman, Times, Serif; text-align: left"><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD STYLE="font: 10pt Times New Roman, Times, Serif; text-align: left; padding-left: 5pt; text-indent: -5pt"><FONT STYLE="font-size: 10pt">Stock
    issued for cash</FONT></TD><TD STYLE="font: 10pt Times New Roman, Times, Serif"><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD>
    <TD STYLE="font: 10pt Times New Roman, Times, Serif; text-align: left"><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD><TD STYLE="font: 10pt Times New Roman, Times, Serif; text-align: right"><FONT STYLE="font-size: 10pt">-</FONT></TD><TD STYLE="font: 10pt Times New Roman, Times, Serif; text-align: left"><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD><TD STYLE="font: 10pt Times New Roman, Times, Serif"><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD>
    <TD STYLE="font: 10pt Times New Roman, Times, Serif; text-align: left"><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD><TD STYLE="font: 10pt Times New Roman, Times, Serif; text-align: right"><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD><TD STYLE="font: 10pt Times New Roman, Times, Serif; text-align: left"><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD><TD STYLE="font: 10pt Times New Roman, Times, Serif"><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD>
    <TD STYLE="font: 10pt Times New Roman, Times, Serif; text-align: left"><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD><TD STYLE="font: 10pt Times New Roman, Times, Serif; text-align: right"><FONT STYLE="font-size: 10pt">160,000</FONT></TD><TD STYLE="font: 10pt Times New Roman, Times, Serif; text-align: left"><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD><TD STYLE="font: 10pt Times New Roman, Times, Serif"><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD>
    <TD STYLE="font: 10pt Times New Roman, Times, Serif; text-align: left"><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD><TD STYLE="font: 10pt Times New Roman, Times, Serif; text-align: right"><FONT STYLE="font-size: 10pt">-</FONT></TD><TD STYLE="font: 10pt Times New Roman, Times, Serif; text-align: left"><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD><TD STYLE="font: 10pt Times New Roman, Times, Serif"><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD>
    <TD STYLE="font: 10pt Times New Roman, Times, Serif; text-align: left"><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD><TD STYLE="font: 10pt Times New Roman, Times, Serif; text-align: right"><FONT STYLE="font-size: 10pt">80</FONT></TD><TD STYLE="font: 10pt Times New Roman, Times, Serif; text-align: left"><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD><TD STYLE="font: 10pt Times New Roman, Times, Serif"><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD>
    <TD STYLE="font: 10pt Times New Roman, Times, Serif; text-align: left"><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD><TD STYLE="font: 10pt Times New Roman, Times, Serif; text-align: right"><FONT STYLE="font-size: 10pt">-</FONT></TD><TD STYLE="font: 10pt Times New Roman, Times, Serif; text-align: left"><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD><TD STYLE="font: 10pt Times New Roman, Times, Serif"><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD>
    <TD STYLE="font: 10pt Times New Roman, Times, Serif; text-align: left"><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD><TD STYLE="font: 10pt Times New Roman, Times, Serif; text-align: right"><FONT STYLE="font-size: 10pt">-</FONT></TD><TD STYLE="font: 10pt Times New Roman, Times, Serif; text-align: left"><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD><TD STYLE="font: 10pt Times New Roman, Times, Serif"><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD>
    <TD STYLE="font: 10pt Times New Roman, Times, Serif; text-align: left"><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD><TD STYLE="font: 10pt Times New Roman, Times, Serif; text-align: right"><FONT STYLE="font-size: 10pt">80</FONT></TD><TD STYLE="font: 10pt Times New Roman, Times, Serif; text-align: left"><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD><TD STYLE="font: 10pt Times New Roman, Times, Serif"><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD>
    <TD STYLE="font: 10pt Times New Roman, Times, Serif; text-align: left"><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD><TD STYLE="font: 10pt Times New Roman, Times, Serif; text-align: right"><FONT STYLE="font-size: 10pt">-</FONT></TD><TD STYLE="font: 10pt Times New Roman, Times, Serif; text-align: left"><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD><TD STYLE="font: 10pt Times New Roman, Times, Serif"><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD>
    <TD STYLE="font: 10pt Times New Roman, Times, Serif; text-align: left"><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD><TD STYLE="font: 10pt Times New Roman, Times, Serif; text-align: right"><FONT STYLE="font-size: 10pt">80</FONT></TD><TD STYLE="font: 10pt Times New Roman, Times, Serif; text-align: left"><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,238,255)">
    <TD STYLE="font: 10pt Times New Roman, Times, Serif; padding-left: 5pt; text-indent: -5pt"><FONT STYLE="font-size: 10pt">Value
    of warrants issued</FONT></TD><TD STYLE="font: 10pt Times New Roman, Times, Serif"><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD>
    <TD STYLE="font: 10pt Times New Roman, Times, Serif; text-align: left"><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD><TD STYLE="font: 10pt Times New Roman, Times, Serif; text-align: right"><FONT STYLE="font-size: 10pt">-</FONT></TD><TD STYLE="font: 10pt Times New Roman, Times, Serif; text-align: left"><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD><TD STYLE="font: 10pt Times New Roman, Times, Serif"><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD>
    <TD STYLE="font: 10pt Times New Roman, Times, Serif; text-align: left"><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD><TD STYLE="font: 10pt Times New Roman, Times, Serif; text-align: right"><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD><TD STYLE="font: 10pt Times New Roman, Times, Serif; text-align: left"><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD><TD STYLE="font: 10pt Times New Roman, Times, Serif"><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD>
    <TD STYLE="font: 10pt Times New Roman, Times, Serif; text-align: left"><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD><TD STYLE="font: 10pt Times New Roman, Times, Serif; text-align: right"><FONT STYLE="font-size: 10pt">-</FONT></TD><TD STYLE="font: 10pt Times New Roman, Times, Serif; text-align: left"><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD><TD STYLE="font: 10pt Times New Roman, Times, Serif"><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD>
    <TD STYLE="font: 10pt Times New Roman, Times, Serif; text-align: left"><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD><TD STYLE="font: 10pt Times New Roman, Times, Serif; text-align: right"><FONT STYLE="font-size: 10pt">-</FONT></TD><TD STYLE="font: 10pt Times New Roman, Times, Serif; text-align: left"><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD><TD STYLE="font: 10pt Times New Roman, Times, Serif"><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD>
    <TD STYLE="font: 10pt Times New Roman, Times, Serif; text-align: left"><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD><TD STYLE="font: 10pt Times New Roman, Times, Serif; text-align: right"><FONT STYLE="font-size: 10pt">272</FONT></TD><TD STYLE="font: 10pt Times New Roman, Times, Serif; text-align: left"><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD><TD STYLE="font: 10pt Times New Roman, Times, Serif"><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD>
    <TD STYLE="font: 10pt Times New Roman, Times, Serif; text-align: left"><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD><TD STYLE="font: 10pt Times New Roman, Times, Serif; text-align: right"><FONT STYLE="font-size: 10pt">-</FONT></TD><TD STYLE="font: 10pt Times New Roman, Times, Serif; text-align: left"><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD><TD STYLE="font: 10pt Times New Roman, Times, Serif"><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD>
    <TD STYLE="font: 10pt Times New Roman, Times, Serif; text-align: left"><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD><TD STYLE="font: 10pt Times New Roman, Times, Serif; text-align: right"><FONT STYLE="font-size: 10pt">-</FONT></TD><TD STYLE="font: 10pt Times New Roman, Times, Serif; text-align: left"><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD><TD STYLE="font: 10pt Times New Roman, Times, Serif"><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD>
    <TD STYLE="font: 10pt Times New Roman, Times, Serif; text-align: left"><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD><TD STYLE="font: 10pt Times New Roman, Times, Serif; text-align: right"><FONT STYLE="font-size: 10pt">272</FONT></TD><TD STYLE="font: 10pt Times New Roman, Times, Serif; text-align: left"><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD><TD STYLE="font: 10pt Times New Roman, Times, Serif"><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD>
    <TD STYLE="font: 10pt Times New Roman, Times, Serif; text-align: left"><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD><TD STYLE="font: 10pt Times New Roman, Times, Serif; text-align: right"><FONT STYLE="font-size: 10pt">-</FONT></TD><TD STYLE="font: 10pt Times New Roman, Times, Serif; text-align: left"><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD><TD STYLE="font: 10pt Times New Roman, Times, Serif"><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD>
    <TD STYLE="font: 10pt Times New Roman, Times, Serif; text-align: left"><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD><TD STYLE="font: 10pt Times New Roman, Times, Serif; text-align: right"><FONT STYLE="font-size: 10pt">272</FONT></TD><TD STYLE="font: 10pt Times New Roman, Times, Serif; text-align: left"><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD STYLE="font: 10pt Times New Roman, Times, Serif; text-align: left; padding-bottom: 1.5pt; padding-left: 5pt; text-indent: -5pt"><FONT STYLE="font-size: 10pt">Net
    loss</FONT></TD><TD STYLE="font: 10pt Times New Roman, Times, Serif; padding-bottom: 1.5pt"><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD>
    <TD STYLE="border-bottom: Black 1.5pt solid; font: 10pt Times New Roman, Times, Serif; text-align: left"><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD><TD STYLE="border-bottom: Black 1.5pt solid; font: 10pt Times New Roman, Times, Serif; text-align: right"><FONT STYLE="font-size: 10pt">-</FONT></TD><TD STYLE="padding-bottom: 1.5pt; font: 10pt Times New Roman, Times, Serif; text-align: left"><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD><TD STYLE="font: 10pt Times New Roman, Times, Serif; padding-bottom: 1.5pt"><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD>
    <TD STYLE="border-bottom: Black 1.5pt solid; font: 10pt Times New Roman, Times, Serif; text-align: left"><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD><TD STYLE="border-bottom: Black 1.5pt solid; font: 10pt Times New Roman, Times, Serif; text-align: right"><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD><TD STYLE="padding-bottom: 1.5pt; font: 10pt Times New Roman, Times, Serif; text-align: left"><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD><TD STYLE="font: 10pt Times New Roman, Times, Serif; padding-bottom: 1.5pt"><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD>
    <TD STYLE="border-bottom: Black 1.5pt solid; font: 10pt Times New Roman, Times, Serif; text-align: left"><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD><TD STYLE="border-bottom: Black 1.5pt solid; font: 10pt Times New Roman, Times, Serif; text-align: right"><FONT STYLE="font-size: 10pt">-</FONT></TD><TD STYLE="padding-bottom: 1.5pt; font: 10pt Times New Roman, Times, Serif; text-align: left"><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD><TD STYLE="font: 10pt Times New Roman, Times, Serif; padding-bottom: 1.5pt"><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD>
    <TD STYLE="border-bottom: Black 1.5pt solid; font: 10pt Times New Roman, Times, Serif; text-align: left"><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD><TD STYLE="border-bottom: Black 1.5pt solid; font: 10pt Times New Roman, Times, Serif; text-align: right"><FONT STYLE="font-size: 10pt">-</FONT></TD><TD STYLE="padding-bottom: 1.5pt; font: 10pt Times New Roman, Times, Serif; text-align: left"><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD><TD STYLE="font: 10pt Times New Roman, Times, Serif; padding-bottom: 1.5pt"><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD>
    <TD STYLE="border-bottom: Black 1.5pt solid; font: 10pt Times New Roman, Times, Serif; text-align: left"><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD><TD STYLE="border-bottom: Black 1.5pt solid; font: 10pt Times New Roman, Times, Serif; text-align: right"><FONT STYLE="font-size: 10pt">-</FONT></TD><TD STYLE="padding-bottom: 1.5pt; font: 10pt Times New Roman, Times, Serif; text-align: left"><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD><TD STYLE="font: 10pt Times New Roman, Times, Serif; padding-bottom: 1.5pt"><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD>
    <TD STYLE="border-bottom: Black 1.5pt solid; font: 10pt Times New Roman, Times, Serif; text-align: left"><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD><TD STYLE="border-bottom: Black 1.5pt solid; font: 10pt Times New Roman, Times, Serif; text-align: right"><FONT STYLE="font-size: 10pt">(709</FONT></TD><TD STYLE="padding-bottom: 1.5pt; font: 10pt Times New Roman, Times, Serif; text-align: left"><FONT STYLE="font-size: 10pt">)</FONT></TD><TD STYLE="font: 10pt Times New Roman, Times, Serif; padding-bottom: 1.5pt"><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD>
    <TD STYLE="border-bottom: Black 1.5pt solid; font: 10pt Times New Roman, Times, Serif; text-align: left"><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD><TD STYLE="border-bottom: Black 1.5pt solid; font: 10pt Times New Roman, Times, Serif; text-align: right"><FONT STYLE="font-size: 10pt">-</FONT></TD><TD STYLE="padding-bottom: 1.5pt; font: 10pt Times New Roman, Times, Serif; text-align: left"><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD><TD STYLE="font: 10pt Times New Roman, Times, Serif; padding-bottom: 1.5pt"><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD>
    <TD STYLE="border-bottom: Black 1.5pt solid; font: 10pt Times New Roman, Times, Serif; text-align: left"><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD><TD STYLE="border-bottom: Black 1.5pt solid; font: 10pt Times New Roman, Times, Serif; text-align: right"><FONT STYLE="font-size: 10pt">(709</FONT></TD><TD STYLE="padding-bottom: 1.5pt; font: 10pt Times New Roman, Times, Serif; text-align: left"><FONT STYLE="font-size: 10pt">)</FONT></TD><TD STYLE="font: 10pt Times New Roman, Times, Serif; padding-bottom: 1.5pt"><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD>
    <TD STYLE="border-bottom: Black 1.5pt solid; font: 10pt Times New Roman, Times, Serif; text-align: left"><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD><TD STYLE="border-bottom: Black 1.5pt solid; font: 10pt Times New Roman, Times, Serif; text-align: right"><FONT STYLE="font-size: 10pt">-</FONT></TD><TD STYLE="padding-bottom: 1.5pt; font: 10pt Times New Roman, Times, Serif; text-align: left"><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD><TD STYLE="font: 10pt Times New Roman, Times, Serif; padding-bottom: 1.5pt"><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD>
    <TD STYLE="border-bottom: Black 1.5pt solid; font: 10pt Times New Roman, Times, Serif; text-align: left"><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD><TD STYLE="border-bottom: Black 1.5pt solid; font: 10pt Times New Roman, Times, Serif; text-align: right"><FONT STYLE="font-size: 10pt">(709</FONT></TD><TD STYLE="padding-bottom: 1.5pt; font: 10pt Times New Roman, Times, Serif; text-align: left"><FONT STYLE="font-size: 10pt">)</FONT></TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,238,255)">
    <TD STYLE="font: 10pt Times New Roman, Times, Serif; padding-bottom: 1.5pt; padding-left: 5pt; text-indent: -5pt"><FONT STYLE="font-size: 10pt">BALANCE,
    April 30, 2018</FONT></TD><TD STYLE="font: 10pt Times New Roman, Times, Serif; padding-bottom: 1.5pt"><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD>
    <TD STYLE="border-bottom: Black 1.5pt solid; font: 10pt Times New Roman, Times, Serif; text-align: left"><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD><TD STYLE="border-bottom: Black 1.5pt solid; font: 10pt Times New Roman, Times, Serif; text-align: right"><FONT STYLE="font-size: 10pt">-</FONT></TD><TD STYLE="padding-bottom: 1.5pt; font: 10pt Times New Roman, Times, Serif; text-align: left"><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD><TD STYLE="font: 10pt Times New Roman, Times, Serif; padding-bottom: 1.5pt"><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD>
    <TD STYLE="border-bottom: Black 1.5pt solid; font: 10pt Times New Roman, Times, Serif; text-align: left"><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD><TD STYLE="border-bottom: Black 1.5pt solid; font: 10pt Times New Roman, Times, Serif; text-align: right"><FONT STYLE="font-size: 10pt">-</FONT></TD><TD STYLE="padding-bottom: 1.5pt; font: 10pt Times New Roman, Times, Serif; text-align: left"><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD><TD STYLE="font: 10pt Times New Roman, Times, Serif; padding-bottom: 1.5pt"><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD>
    <TD STYLE="border-bottom: Black 1.5pt solid; font: 10pt Times New Roman, Times, Serif; text-align: left"><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD><TD STYLE="border-bottom: Black 1.5pt solid; font: 10pt Times New Roman, Times, Serif; text-align: right"><FONT STYLE="font-size: 10pt">11,128,781</FONT></TD><TD STYLE="padding-bottom: 1.5pt; font: 10pt Times New Roman, Times, Serif; text-align: left"><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD><TD STYLE="font: 10pt Times New Roman, Times, Serif; padding-bottom: 1.5pt"><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD>
    <TD STYLE="border-bottom: Black 1.5pt solid; font: 10pt Times New Roman, Times, Serif; text-align: left"><FONT STYLE="font-size: 10pt">$</FONT></TD><TD STYLE="border-bottom: Black 1.5pt solid; font: 10pt Times New Roman, Times, Serif; text-align: right"><FONT STYLE="font-size: 10pt">11</FONT></TD><TD STYLE="padding-bottom: 1.5pt; font: 10pt Times New Roman, Times, Serif; text-align: left"><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD><TD STYLE="font: 10pt Times New Roman, Times, Serif; padding-bottom: 1.5pt"><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD>
    <TD STYLE="border-bottom: Black 1.5pt solid; font: 10pt Times New Roman, Times, Serif; text-align: left"><FONT STYLE="font-size: 10pt">$</FONT></TD><TD STYLE="border-bottom: Black 1.5pt solid; font: 10pt Times New Roman, Times, Serif; text-align: right"><FONT STYLE="font-size: 10pt">78,771</FONT></TD><TD STYLE="padding-bottom: 1.5pt; font: 10pt Times New Roman, Times, Serif; text-align: left"><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD><TD STYLE="font: 10pt Times New Roman, Times, Serif; padding-bottom: 1.5pt"><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD>
    <TD STYLE="border-bottom: Black 1.5pt solid; font: 10pt Times New Roman, Times, Serif; text-align: left"><FONT STYLE="font-size: 10pt">$</FONT></TD><TD STYLE="border-bottom: Black 1.5pt solid; font: 10pt Times New Roman, Times, Serif; text-align: right"><FONT STYLE="font-size: 10pt">(80,184</FONT></TD><TD STYLE="padding-bottom: 1.5pt; font: 10pt Times New Roman, Times, Serif; text-align: left"><FONT STYLE="font-size: 10pt">)</FONT></TD><TD STYLE="font: 10pt Times New Roman, Times, Serif; padding-bottom: 1.5pt"><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD>
    <TD STYLE="border-bottom: Black 1.5pt solid; font: 10pt Times New Roman, Times, Serif; text-align: left"><FONT STYLE="font-size: 10pt">$</FONT></TD><TD STYLE="border-bottom: Black 1.5pt solid; font: 10pt Times New Roman, Times, Serif; text-align: right"><FONT STYLE="font-size: 10pt">1</FONT></TD><TD STYLE="padding-bottom: 1.5pt; font: 10pt Times New Roman, Times, Serif; text-align: left"><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD><TD STYLE="font: 10pt Times New Roman, Times, Serif; padding-bottom: 1.5pt"><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD>
    <TD STYLE="border-bottom: Black 1.5pt solid; font: 10pt Times New Roman, Times, Serif; text-align: left"><FONT STYLE="font-size: 10pt">$</FONT></TD><TD STYLE="border-bottom: Black 1.5pt solid; font: 10pt Times New Roman, Times, Serif; text-align: right"><FONT STYLE="font-size: 10pt">(1,401</FONT></TD><TD STYLE="padding-bottom: 1.5pt; font: 10pt Times New Roman, Times, Serif; text-align: left"><FONT STYLE="font-size: 10pt">)</FONT></TD><TD STYLE="font: 10pt Times New Roman, Times, Serif; padding-bottom: 1.5pt"><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD>
    <TD STYLE="border-bottom: Black 1.5pt solid; font: 10pt Times New Roman, Times, Serif; text-align: left"><FONT STYLE="font-size: 10pt">$</FONT></TD><TD STYLE="border-bottom: Black 1.5pt solid; font: 10pt Times New Roman, Times, Serif; text-align: right"><FONT STYLE="font-size: 10pt">-</FONT></TD><TD STYLE="padding-bottom: 1.5pt; font: 10pt Times New Roman, Times, Serif; text-align: left"><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD><TD STYLE="font: 10pt Times New Roman, Times, Serif; padding-bottom: 1.5pt"><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD>
    <TD STYLE="border-bottom: Black 1.5pt solid; font: 10pt Times New Roman, Times, Serif; text-align: left"><FONT STYLE="font-size: 10pt">$</FONT></TD><TD STYLE="border-bottom: Black 1.5pt solid; font: 10pt Times New Roman, Times, Serif; text-align: right"><FONT STYLE="font-size: 10pt">(1,401</FONT></TD><TD STYLE="padding-bottom: 1.5pt; font: 10pt Times New Roman, Times, Serif; text-align: left"><FONT STYLE="font-size: 10pt">)</FONT></TD></TR>
</TABLE>



<P STYLE="margin: 0; font: 10pt Times New Roman, Times, Serif"><FONT STYLE="font: 10pt Times New Roman, Times, Serif">&nbsp;</FONT></P>

<P STYLE="margin-top: 0; text-align: center; margin-bottom: 0; font: 10pt Times New Roman, Times, Serif"><FONT STYLE="font: 10pt Times New Roman, Times, Serif">See
accompanying notes to consolidated financial statements</FONT></P>

<P STYLE="margin-top: 0; text-align: center; margin-bottom: 0; font: 10pt Times New Roman, Times, Serif"><FONT STYLE="font: 10pt Times New Roman, Times, Serif">&nbsp;</FONT></P>

<P STYLE="margin: 0; font: 10pt Times New Roman, Times, Serif"></P>

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<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"><FONT STYLE="font: 10pt Times New Roman, Times, Serif">&nbsp;</FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; text-align: center"><FONT STYLE="font: 10pt Times New Roman, Times, Serif"><A NAME="ff_036"></A>DIGERATI
TECHNOLOGIES, INC. AND SUBSIDIARIES</FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; text-align: center"><FONT STYLE="font: 10pt Times New Roman, Times, Serif">CONSOLIDATED
STATEMENTS OF CASH FLOWS</FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; text-align: center"><FONT STYLE="font: 10pt Times New Roman, Times, Serif">(In
thousands, unaudited)</FONT></P>



<P STYLE="margin: 0">&nbsp;</P>

<TABLE CELLPADDING="0" CELLSPACING="0" STYLE="border-collapse: collapse; width: 100%; font: 10pt Times New Roman, Times, Serif">
<TR STYLE="vertical-align: bottom">
    <TD STYLE="font: 10pt Times New Roman, Times, Serif; text-align: center">&nbsp;</TD><TD STYLE="font: 10pt Times New Roman, Times, Serif; padding-bottom: 1.5pt">&nbsp;</TD>
    <TD COLSPAN="6" STYLE="font: 10pt Times New Roman, Times, Serif; text-align: center; border-bottom: Black 1.5pt solid">Nine months ended<BR>
 April 30,</TD><TD STYLE="padding-bottom: 1.5pt; font: 10pt Times New Roman, Times, Serif">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom">
    <TD STYLE="font: 10pt Times New Roman, Times, Serif; text-align: center">&nbsp;</TD><TD STYLE="font: 10pt Times New Roman, Times, Serif; padding-bottom: 1.5pt">&nbsp;</TD>
    <TD COLSPAN="2" STYLE="font: 10pt Times New Roman, Times, Serif; text-align: center; border-bottom: Black 1.5pt solid">2019</TD><TD STYLE="padding-bottom: 1.5pt; font: 10pt Times New Roman, Times, Serif">&nbsp;</TD><TD STYLE="font: 10pt Times New Roman, Times, Serif; padding-bottom: 1.5pt">&nbsp;</TD>
    <TD COLSPAN="2" STYLE="font: 10pt Times New Roman, Times, Serif; text-align: center; border-bottom: Black 1.5pt solid">2018</TD><TD STYLE="padding-bottom: 1.5pt; font: 10pt Times New Roman, Times, Serif">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom">
    <TD STYLE="font: 10pt Times New Roman, Times, Serif; text-align: center">&nbsp;</TD><TD STYLE="font: 10pt Times New Roman, Times, Serif">&nbsp;</TD>
    <TD COLSPAN="2" STYLE="font: 10pt Times New Roman, Times, Serif; text-align: center">&nbsp;</TD><TD STYLE="font: 10pt Times New Roman, Times, Serif">&nbsp;</TD><TD STYLE="font: 10pt Times New Roman, Times, Serif">&nbsp;</TD>
    <TD COLSPAN="2" STYLE="font: 10pt Times New Roman, Times, Serif; text-align: center">&nbsp;</TD><TD STYLE="font: 10pt Times New Roman, Times, Serif">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD STYLE="font: 10pt Times New Roman, Times, Serif; text-align: left">CASH FLOWS FROM OPERATING ACTIVITIES:</TD><TD STYLE="font: 10pt Times New Roman, Times, Serif">&nbsp;</TD>
    <TD STYLE="font: 10pt Times New Roman, Times, Serif; text-align: left">&nbsp;</TD><TD STYLE="font: 10pt Times New Roman, Times, Serif; text-align: right">&nbsp;</TD><TD STYLE="font: 10pt Times New Roman, Times, Serif; text-align: left">&nbsp;</TD><TD STYLE="font: 10pt Times New Roman, Times, Serif">&nbsp;</TD>
    <TD STYLE="font: 10pt Times New Roman, Times, Serif; text-align: left">&nbsp;</TD><TD STYLE="font: 10pt Times New Roman, Times, Serif; text-align: right">&nbsp;</TD><TD STYLE="font: 10pt Times New Roman, Times, Serif; text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,238,255)">
    <TD STYLE="width: 76%; font: 10pt Times New Roman, Times, Serif; text-align: left">Net loss</TD><TD STYLE="width: 1%; font: 10pt Times New Roman, Times, Serif">&nbsp;</TD>
    <TD STYLE="width: 1%; font: 10pt Times New Roman, Times, Serif; text-align: left">$</TD><TD STYLE="width: 9%; font: 10pt Times New Roman, Times, Serif; text-align: right">(3,721</TD><TD STYLE="width: 1%; font: 10pt Times New Roman, Times, Serif; text-align: left">)</TD><TD STYLE="width: 1%; font: 10pt Times New Roman, Times, Serif">&nbsp;</TD>
    <TD STYLE="width: 1%; font: 10pt Times New Roman, Times, Serif; text-align: left">$</TD><TD STYLE="width: 9%; font: 10pt Times New Roman, Times, Serif; text-align: right">(2,547</TD><TD STYLE="width: 1%; font: 10pt Times New Roman, Times, Serif; text-align: left">)</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD STYLE="font: 10pt Times New Roman, Times, Serif; text-align: left">Adjustments to reconcile net loss to cash used in by operating activities:</TD><TD STYLE="font: 10pt Times New Roman, Times, Serif">&nbsp;</TD>
    <TD STYLE="font: 10pt Times New Roman, Times, Serif; text-align: left">&nbsp;</TD><TD STYLE="font: 10pt Times New Roman, Times, Serif; text-align: right">&nbsp;</TD><TD STYLE="font: 10pt Times New Roman, Times, Serif; text-align: left">&nbsp;</TD><TD STYLE="font: 10pt Times New Roman, Times, Serif">&nbsp;</TD>
    <TD STYLE="font: 10pt Times New Roman, Times, Serif; text-align: left">&nbsp;</TD><TD STYLE="font: 10pt Times New Roman, Times, Serif; text-align: right">&nbsp;</TD><TD STYLE="font: 10pt Times New Roman, Times, Serif; text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,238,255)">
    <TD STYLE="font: 10pt Times New Roman, Times, Serif; text-align: left; padding-left: 0.25in">Depreciation and amortization</TD><TD STYLE="font: 10pt Times New Roman, Times, Serif">&nbsp;</TD>
    <TD STYLE="font: 10pt Times New Roman, Times, Serif; text-align: left">&nbsp;</TD><TD STYLE="font: 10pt Times New Roman, Times, Serif; text-align: right">505</TD><TD STYLE="font: 10pt Times New Roman, Times, Serif; text-align: left">&nbsp;</TD><TD STYLE="font: 10pt Times New Roman, Times, Serif">&nbsp;</TD>
    <TD STYLE="font: 10pt Times New Roman, Times, Serif; text-align: left">&nbsp;</TD><TD STYLE="font: 10pt Times New Roman, Times, Serif; text-align: right">89</TD><TD STYLE="font: 10pt Times New Roman, Times, Serif; text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD STYLE="font: 10pt Times New Roman, Times, Serif; text-align: left; padding-left: 0.25in">Stock compensation and warrant expense</TD><TD STYLE="font: 10pt Times New Roman, Times, Serif">&nbsp;</TD>
    <TD STYLE="font: 10pt Times New Roman, Times, Serif; text-align: left">&nbsp;</TD><TD STYLE="font: 10pt Times New Roman, Times, Serif; text-align: right">716</TD><TD STYLE="font: 10pt Times New Roman, Times, Serif; text-align: left">&nbsp;</TD><TD STYLE="font: 10pt Times New Roman, Times, Serif">&nbsp;</TD>
    <TD STYLE="font: 10pt Times New Roman, Times, Serif; text-align: left">&nbsp;</TD><TD STYLE="font: 10pt Times New Roman, Times, Serif; text-align: right">1,328</TD><TD STYLE="font: 10pt Times New Roman, Times, Serif; text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,238,255)">
    <TD STYLE="font: 10pt Times New Roman, Times, Serif; text-align: left; padding-left: 0.25in">Bad debt recovery</TD><TD STYLE="font: 10pt Times New Roman, Times, Serif">&nbsp;</TD>
    <TD STYLE="font: 10pt Times New Roman, Times, Serif; text-align: left">&nbsp;</TD><TD STYLE="font: 10pt Times New Roman, Times, Serif; text-align: right">(3</TD><TD STYLE="font: 10pt Times New Roman, Times, Serif; text-align: left">)</TD><TD STYLE="font: 10pt Times New Roman, Times, Serif">&nbsp;</TD>
    <TD STYLE="font: 10pt Times New Roman, Times, Serif; text-align: left">&nbsp;</TD><TD STYLE="font: 10pt Times New Roman, Times, Serif; text-align: right">-</TD><TD STYLE="font: 10pt Times New Roman, Times, Serif; text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD STYLE="font: 10pt Times New Roman, Times, Serif; text-align: left; padding-left: 0.25in">Loss on AP settled with stock</TD><TD STYLE="font: 10pt Times New Roman, Times, Serif">&nbsp;</TD>
    <TD STYLE="font: 10pt Times New Roman, Times, Serif; text-align: left">&nbsp;</TD><TD STYLE="font: 10pt Times New Roman, Times, Serif; text-align: right">5</TD><TD STYLE="font: 10pt Times New Roman, Times, Serif; text-align: left">&nbsp;</TD><TD STYLE="font: 10pt Times New Roman, Times, Serif">&nbsp;</TD>
    <TD STYLE="font: 10pt Times New Roman, Times, Serif; text-align: left">&nbsp;</TD><TD STYLE="font: 10pt Times New Roman, Times, Serif; text-align: right">-</TD><TD STYLE="font: 10pt Times New Roman, Times, Serif; text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,238,255)">
    <TD STYLE="font: 10pt Times New Roman, Times, Serif; text-align: left; padding-left: 0.25in">Interest expense from stock issued for debt extension</TD><TD STYLE="font: 10pt Times New Roman, Times, Serif">&nbsp;</TD>
    <TD STYLE="font: 10pt Times New Roman, Times, Serif; text-align: left">&nbsp;</TD><TD STYLE="font: 10pt Times New Roman, Times, Serif; text-align: right">24</TD><TD STYLE="font: 10pt Times New Roman, Times, Serif; text-align: left">&nbsp;</TD><TD STYLE="font: 10pt Times New Roman, Times, Serif">&nbsp;</TD>
    <TD STYLE="font: 10pt Times New Roman, Times, Serif; text-align: left">&nbsp;</TD><TD STYLE="font: 10pt Times New Roman, Times, Serif; text-align: right">-</TD><TD STYLE="font: 10pt Times New Roman, Times, Serif; text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD STYLE="font: 10pt Times New Roman, Times, Serif; text-align: left; padding-left: 0.25in">Amortization of debt discount</TD><TD STYLE="font: 10pt Times New Roman, Times, Serif">&nbsp;</TD>
    <TD STYLE="font: 10pt Times New Roman, Times, Serif; text-align: left">&nbsp;</TD><TD STYLE="font: 10pt Times New Roman, Times, Serif; text-align: right">959</TD><TD STYLE="font: 10pt Times New Roman, Times, Serif; text-align: left">&nbsp;</TD><TD STYLE="font: 10pt Times New Roman, Times, Serif">&nbsp;</TD>
    <TD STYLE="font: 10pt Times New Roman, Times, Serif; text-align: left">&nbsp;</TD><TD STYLE="font: 10pt Times New Roman, Times, Serif; text-align: right">242</TD><TD STYLE="font: 10pt Times New Roman, Times, Serif; text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,238,255)">
    <TD STYLE="font: 10pt Times New Roman, Times, Serif; text-align: left; padding-left: 0.25in">Loss (Gain) on derivative liabilities</TD><TD STYLE="font: 10pt Times New Roman, Times, Serif">&nbsp;</TD>
    <TD STYLE="font: 10pt Times New Roman, Times, Serif; text-align: left">&nbsp;</TD><TD STYLE="font: 10pt Times New Roman, Times, Serif; text-align: right">594</TD><TD STYLE="font: 10pt Times New Roman, Times, Serif; text-align: left">&nbsp;</TD><TD STYLE="font: 10pt Times New Roman, Times, Serif">&nbsp;</TD>
    <TD STYLE="font: 10pt Times New Roman, Times, Serif; text-align: left">&nbsp;</TD><TD STYLE="font: 10pt Times New Roman, Times, Serif; text-align: right">(155</TD><TD STYLE="font: 10pt Times New Roman, Times, Serif; text-align: left">)</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD STYLE="font: 10pt Times New Roman, Times, Serif; text-align: left; padding-left: 0.25in">Changes in operating assets and liabilities:</TD><TD STYLE="font: 10pt Times New Roman, Times, Serif">&nbsp;</TD>
    <TD STYLE="font: 10pt Times New Roman, Times, Serif; text-align: left">&nbsp;</TD><TD STYLE="font: 10pt Times New Roman, Times, Serif; text-align: right">&nbsp;</TD><TD STYLE="font: 10pt Times New Roman, Times, Serif; text-align: left">&nbsp;</TD><TD STYLE="font: 10pt Times New Roman, Times, Serif">&nbsp;</TD>
    <TD STYLE="font: 10pt Times New Roman, Times, Serif; text-align: left">&nbsp;</TD><TD STYLE="font: 10pt Times New Roman, Times, Serif; text-align: right">&nbsp;</TD><TD STYLE="font: 10pt Times New Roman, Times, Serif; text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,238,255)">
    <TD STYLE="font: 10pt Times New Roman, Times, Serif; text-align: left; padding-left: 0.375in">Accounts receivable</TD><TD STYLE="font: 10pt Times New Roman, Times, Serif">&nbsp;</TD>
    <TD STYLE="font: 10pt Times New Roman, Times, Serif; text-align: left">&nbsp;</TD><TD STYLE="font: 10pt Times New Roman, Times, Serif; text-align: right">(13</TD><TD STYLE="font: 10pt Times New Roman, Times, Serif; text-align: left">)</TD><TD STYLE="font: 10pt Times New Roman, Times, Serif">&nbsp;</TD>
    <TD STYLE="font: 10pt Times New Roman, Times, Serif; text-align: left">&nbsp;</TD><TD STYLE="font: 10pt Times New Roman, Times, Serif; text-align: right">7</TD><TD STYLE="font: 10pt Times New Roman, Times, Serif; text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD STYLE="font: 10pt Times New Roman, Times, Serif; text-align: left; padding-left: 0.375in">Escrow deposit related to acquisition</TD><TD STYLE="font: 10pt Times New Roman, Times, Serif">&nbsp;</TD>
    <TD STYLE="font: 10pt Times New Roman, Times, Serif; text-align: left">&nbsp;</TD><TD STYLE="font: 10pt Times New Roman, Times, Serif; text-align: right">(55</TD><TD STYLE="font: 10pt Times New Roman, Times, Serif; text-align: left">)</TD><TD STYLE="font: 10pt Times New Roman, Times, Serif">&nbsp;</TD>
    <TD STYLE="font: 10pt Times New Roman, Times, Serif; text-align: left">&nbsp;</TD><TD STYLE="font: 10pt Times New Roman, Times, Serif; text-align: right">(1,495</TD><TD STYLE="font: 10pt Times New Roman, Times, Serif; text-align: left">)</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,238,255)">
    <TD STYLE="font: 10pt Times New Roman, Times, Serif; text-align: left; padding-left: 0.375in">Prepaid expenses and other current assets</TD><TD STYLE="font: 10pt Times New Roman, Times, Serif">&nbsp;</TD>
    <TD STYLE="font: 10pt Times New Roman, Times, Serif; text-align: left">&nbsp;</TD><TD STYLE="font: 10pt Times New Roman, Times, Serif; text-align: right">45</TD><TD STYLE="font: 10pt Times New Roman, Times, Serif; text-align: left">&nbsp;</TD><TD STYLE="font: 10pt Times New Roman, Times, Serif">&nbsp;</TD>
    <TD STYLE="font: 10pt Times New Roman, Times, Serif; text-align: left">&nbsp;</TD><TD STYLE="font: 10pt Times New Roman, Times, Serif; text-align: right">(28</TD><TD STYLE="font: 10pt Times New Roman, Times, Serif; text-align: left">)</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD STYLE="font: 10pt Times New Roman, Times, Serif; text-align: left; padding-left: 0.375in">Accounts payable</TD><TD STYLE="font: 10pt Times New Roman, Times, Serif">&nbsp;</TD>
    <TD STYLE="font: 10pt Times New Roman, Times, Serif; text-align: left">&nbsp;</TD><TD STYLE="font: 10pt Times New Roman, Times, Serif; text-align: right">54</TD><TD STYLE="font: 10pt Times New Roman, Times, Serif; text-align: left">&nbsp;</TD><TD STYLE="font: 10pt Times New Roman, Times, Serif">&nbsp;</TD>
    <TD STYLE="font: 10pt Times New Roman, Times, Serif; text-align: left">&nbsp;</TD><TD STYLE="font: 10pt Times New Roman, Times, Serif; text-align: right">106</TD><TD STYLE="font: 10pt Times New Roman, Times, Serif; text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,238,255)">
    <TD STYLE="font: 10pt Times New Roman, Times, Serif; text-align: left; padding-left: 0.375in">Accrued expenses</TD><TD STYLE="font: 10pt Times New Roman, Times, Serif">&nbsp;</TD>
    <TD STYLE="font: 10pt Times New Roman, Times, Serif; text-align: left">&nbsp;</TD><TD STYLE="font: 10pt Times New Roman, Times, Serif; text-align: right">539</TD><TD STYLE="font: 10pt Times New Roman, Times, Serif; text-align: left">&nbsp;</TD><TD STYLE="font: 10pt Times New Roman, Times, Serif">&nbsp;</TD>
    <TD STYLE="font: 10pt Times New Roman, Times, Serif; text-align: left">&nbsp;</TD><TD STYLE="font: 10pt Times New Roman, Times, Serif; text-align: right">115</TD><TD STYLE="font: 10pt Times New Roman, Times, Serif; text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD STYLE="font: 10pt Times New Roman, Times, Serif; text-align: left; padding-left: 0.375in">Deferred income</TD><TD STYLE="font: 10pt Times New Roman, Times, Serif; padding-bottom: 1.5pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 1.5pt solid; font: 10pt Times New Roman, Times, Serif; text-align: left">&nbsp;</TD><TD STYLE="border-bottom: Black 1.5pt solid; font: 10pt Times New Roman, Times, Serif; text-align: right">52</TD><TD STYLE="padding-bottom: 1.5pt; font: 10pt Times New Roman, Times, Serif; text-align: left">&nbsp;</TD><TD STYLE="font: 10pt Times New Roman, Times, Serif; padding-bottom: 1.5pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 1.5pt solid; font: 10pt Times New Roman, Times, Serif; text-align: left">&nbsp;</TD><TD STYLE="border-bottom: Black 1.5pt solid; font: 10pt Times New Roman, Times, Serif; text-align: right">-</TD><TD STYLE="padding-bottom: 1.5pt; font: 10pt Times New Roman, Times, Serif; text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,238,255)">
    <TD STYLE="font: 10pt Times New Roman, Times, Serif; text-align: left; padding-bottom: 1.5pt">Net cash provided (used in) operating activities</TD><TD STYLE="font: 10pt Times New Roman, Times, Serif; padding-bottom: 1.5pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 1.5pt solid; font: 10pt Times New Roman, Times, Serif; text-align: left">&nbsp;</TD><TD STYLE="border-bottom: Black 1.5pt solid; font: 10pt Times New Roman, Times, Serif; text-align: right">(299</TD><TD STYLE="padding-bottom: 1.5pt; font: 10pt Times New Roman, Times, Serif; text-align: left">)</TD><TD STYLE="font: 10pt Times New Roman, Times, Serif; padding-bottom: 1.5pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 1.5pt solid; font: 10pt Times New Roman, Times, Serif; text-align: left">&nbsp;</TD><TD STYLE="border-bottom: Black 1.5pt solid; font: 10pt Times New Roman, Times, Serif; text-align: right">(2,338</TD><TD STYLE="padding-bottom: 1.5pt; font: 10pt Times New Roman, Times, Serif; text-align: left">)</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD STYLE="font: 10pt Times New Roman, Times, Serif">&nbsp;</TD><TD STYLE="font: 10pt Times New Roman, Times, Serif">&nbsp;</TD>
    <TD STYLE="font: 10pt Times New Roman, Times, Serif; text-align: left">&nbsp;</TD><TD STYLE="font: 10pt Times New Roman, Times, Serif; text-align: right">&nbsp;</TD><TD STYLE="font: 10pt Times New Roman, Times, Serif; text-align: left">&nbsp;</TD><TD STYLE="font: 10pt Times New Roman, Times, Serif">&nbsp;</TD>
    <TD STYLE="font: 10pt Times New Roman, Times, Serif; text-align: left">&nbsp;</TD><TD STYLE="font: 10pt Times New Roman, Times, Serif; text-align: right">&nbsp;</TD><TD STYLE="font: 10pt Times New Roman, Times, Serif; text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,238,255)">
    <TD STYLE="font: 10pt Times New Roman, Times, Serif; text-align: left">CASH FLOWS FROM INVESTING ACTIVITIES:</TD><TD STYLE="font: 10pt Times New Roman, Times, Serif">&nbsp;</TD>
    <TD STYLE="font: 10pt Times New Roman, Times, Serif; text-align: left">&nbsp;</TD><TD STYLE="font: 10pt Times New Roman, Times, Serif; text-align: right">&nbsp;</TD><TD STYLE="font: 10pt Times New Roman, Times, Serif; text-align: left">&nbsp;</TD><TD STYLE="font: 10pt Times New Roman, Times, Serif">&nbsp;</TD>
    <TD STYLE="font: 10pt Times New Roman, Times, Serif; text-align: left">&nbsp;</TD><TD STYLE="font: 10pt Times New Roman, Times, Serif; text-align: right">&nbsp;</TD><TD STYLE="font: 10pt Times New Roman, Times, Serif; text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD STYLE="font: 10pt Times New Roman, Times, Serif; text-align: left; padding-left: 0.125in">Acquisition of VoIP assets</TD><TD STYLE="font: 10pt Times New Roman, Times, Serif">&nbsp;</TD>
    <TD STYLE="font: 10pt Times New Roman, Times, Serif; text-align: left">&nbsp;</TD><TD STYLE="font: 10pt Times New Roman, Times, Serif; text-align: right">-</TD><TD STYLE="font: 10pt Times New Roman, Times, Serif; text-align: left">&nbsp;</TD><TD STYLE="font: 10pt Times New Roman, Times, Serif">&nbsp;</TD>
    <TD STYLE="font: 10pt Times New Roman, Times, Serif; text-align: left">&nbsp;</TD><TD STYLE="font: 10pt Times New Roman, Times, Serif; text-align: right">(125</TD><TD STYLE="font: 10pt Times New Roman, Times, Serif; text-align: left">)</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,238,255)">
    <TD STYLE="font: 10pt Times New Roman, Times, Serif; text-align: left; padding-left: 0.125in">Cash paid in acquisition of equipment</TD><TD STYLE="font: 10pt Times New Roman, Times, Serif; padding-bottom: 1.5pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 1.5pt solid; font: 10pt Times New Roman, Times, Serif; text-align: left">&nbsp;</TD><TD STYLE="border-bottom: Black 1.5pt solid; font: 10pt Times New Roman, Times, Serif; text-align: right">(43</TD><TD STYLE="padding-bottom: 1.5pt; font: 10pt Times New Roman, Times, Serif; text-align: left">)</TD><TD STYLE="font: 10pt Times New Roman, Times, Serif; padding-bottom: 1.5pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 1.5pt solid; font: 10pt Times New Roman, Times, Serif; text-align: left">&nbsp;</TD><TD STYLE="border-bottom: Black 1.5pt solid; font: 10pt Times New Roman, Times, Serif; text-align: right">-</TD><TD STYLE="padding-bottom: 1.5pt; font: 10pt Times New Roman, Times, Serif; text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD STYLE="font: 10pt Times New Roman, Times, Serif; text-align: left; padding-bottom: 1.5pt">Net cash used in investing activities</TD><TD STYLE="font: 10pt Times New Roman, Times, Serif; padding-bottom: 1.5pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 1.5pt solid; font: 10pt Times New Roman, Times, Serif; text-align: left">&nbsp;</TD><TD STYLE="border-bottom: Black 1.5pt solid; font: 10pt Times New Roman, Times, Serif; text-align: right">(43</TD><TD STYLE="padding-bottom: 1.5pt; font: 10pt Times New Roman, Times, Serif; text-align: left">)</TD><TD STYLE="font: 10pt Times New Roman, Times, Serif; padding-bottom: 1.5pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 1.5pt solid; font: 10pt Times New Roman, Times, Serif; text-align: left">&nbsp;</TD><TD STYLE="border-bottom: Black 1.5pt solid; font: 10pt Times New Roman, Times, Serif; text-align: right">(125</TD><TD STYLE="padding-bottom: 1.5pt; font: 10pt Times New Roman, Times, Serif; text-align: left">)</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,238,255)">
    <TD STYLE="font: 10pt Times New Roman, Times, Serif">&nbsp;</TD><TD STYLE="font: 10pt Times New Roman, Times, Serif">&nbsp;</TD>
    <TD STYLE="font: 10pt Times New Roman, Times, Serif; text-align: left">&nbsp;</TD><TD STYLE="font: 10pt Times New Roman, Times, Serif; text-align: right">&nbsp;</TD><TD STYLE="font: 10pt Times New Roman, Times, Serif; text-align: left">&nbsp;</TD><TD STYLE="font: 10pt Times New Roman, Times, Serif">&nbsp;</TD>
    <TD STYLE="font: 10pt Times New Roman, Times, Serif; text-align: left">&nbsp;</TD><TD STYLE="font: 10pt Times New Roman, Times, Serif; text-align: right">&nbsp;</TD><TD STYLE="font: 10pt Times New Roman, Times, Serif; text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD STYLE="font: 10pt Times New Roman, Times, Serif; text-align: left">CASH FLOWS FROM FINANCING ACTIVITIES:</TD><TD STYLE="font: 10pt Times New Roman, Times, Serif">&nbsp;</TD>
    <TD STYLE="font: 10pt Times New Roman, Times, Serif; text-align: left">&nbsp;</TD><TD STYLE="font: 10pt Times New Roman, Times, Serif; text-align: right">&nbsp;</TD><TD STYLE="font: 10pt Times New Roman, Times, Serif; text-align: left">&nbsp;</TD><TD STYLE="font: 10pt Times New Roman, Times, Serif">&nbsp;</TD>
    <TD STYLE="font: 10pt Times New Roman, Times, Serif; text-align: left">&nbsp;</TD><TD STYLE="font: 10pt Times New Roman, Times, Serif; text-align: right">&nbsp;</TD><TD STYLE="font: 10pt Times New Roman, Times, Serif; text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,238,255)">
    <TD STYLE="font: 10pt Times New Roman, Times, Serif; text-align: left; padding-left: 24px">Proceeds from sale of stock and warrants</TD><TD STYLE="font: 10pt Times New Roman, Times, Serif">&nbsp;</TD>
    <TD STYLE="font: 10pt Times New Roman, Times, Serif; text-align: left">&nbsp;</TD><TD STYLE="font: 10pt Times New Roman, Times, Serif; text-align: right">322</TD><TD STYLE="font: 10pt Times New Roman, Times, Serif; text-align: left">&nbsp;</TD><TD STYLE="font: 10pt Times New Roman, Times, Serif">&nbsp;</TD>
    <TD STYLE="font: 10pt Times New Roman, Times, Serif; text-align: left">&nbsp;</TD><TD STYLE="font: 10pt Times New Roman, Times, Serif; text-align: right">360</TD><TD STYLE="font: 10pt Times New Roman, Times, Serif; text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD STYLE="font: 10pt Times New Roman, Times, Serif; text-align: left; padding-left: 24px">Borrowings from convertible debt, net of original issuance cost and discounts</TD><TD STYLE="font: 10pt Times New Roman, Times, Serif">&nbsp;</TD>
    <TD STYLE="font: 10pt Times New Roman, Times, Serif; text-align: left">&nbsp;</TD><TD STYLE="font: 10pt Times New Roman, Times, Serif; text-align: right">509</TD><TD STYLE="font: 10pt Times New Roman, Times, Serif; text-align: left">&nbsp;</TD><TD STYLE="font: 10pt Times New Roman, Times, Serif">&nbsp;</TD>
    <TD STYLE="font: 10pt Times New Roman, Times, Serif; text-align: left">&nbsp;</TD><TD STYLE="font: 10pt Times New Roman, Times, Serif; text-align: right">159</TD><TD STYLE="font: 10pt Times New Roman, Times, Serif; text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,238,255)">
    <TD STYLE="font: 10pt Times New Roman, Times, Serif; text-align: left; padding-left: 24px">Borrowings from related party note, net</TD><TD STYLE="font: 10pt Times New Roman, Times, Serif">&nbsp;</TD>
    <TD STYLE="font: 10pt Times New Roman, Times, Serif; text-align: left">&nbsp;</TD><TD STYLE="font: 10pt Times New Roman, Times, Serif; text-align: right">25</TD><TD STYLE="font: 10pt Times New Roman, Times, Serif; text-align: left">&nbsp;</TD><TD STYLE="font: 10pt Times New Roman, Times, Serif">&nbsp;</TD>
    <TD STYLE="font: 10pt Times New Roman, Times, Serif; text-align: left">&nbsp;</TD><TD STYLE="font: 10pt Times New Roman, Times, Serif; text-align: right">-</TD><TD STYLE="font: 10pt Times New Roman, Times, Serif; text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD STYLE="font: 10pt Times New Roman, Times, Serif; text-align: left; padding-left: 24px">Borrowings from 3rd party promissory notes, net</TD><TD STYLE="font: 10pt Times New Roman, Times, Serif">&nbsp;</TD>
    <TD STYLE="font: 10pt Times New Roman, Times, Serif; text-align: left">&nbsp;</TD><TD STYLE="font: 10pt Times New Roman, Times, Serif; text-align: right">100</TD><TD STYLE="font: 10pt Times New Roman, Times, Serif; text-align: left">&nbsp;</TD><TD STYLE="font: 10pt Times New Roman, Times, Serif">&nbsp;</TD>
    <TD STYLE="font: 10pt Times New Roman, Times, Serif; text-align: left">&nbsp;</TD><TD STYLE="font: 10pt Times New Roman, Times, Serif; text-align: right">2,233</TD><TD STYLE="font: 10pt Times New Roman, Times, Serif; text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,238,255)">
    <TD STYLE="font: 10pt Times New Roman, Times, Serif; text-align: left; padding-left: 24px">Principal payments on convertible notes, net</TD><TD STYLE="font: 10pt Times New Roman, Times, Serif">&nbsp;</TD>
    <TD STYLE="font: 10pt Times New Roman, Times, Serif; text-align: left">&nbsp;</TD><TD STYLE="font: 10pt Times New Roman, Times, Serif; text-align: right">(301</TD><TD STYLE="font: 10pt Times New Roman, Times, Serif; text-align: left">)</TD><TD STYLE="font: 10pt Times New Roman, Times, Serif">&nbsp;</TD>
    <TD STYLE="font: 10pt Times New Roman, Times, Serif; text-align: left">&nbsp;</TD><TD STYLE="font: 10pt Times New Roman, Times, Serif; text-align: right">-</TD><TD STYLE="font: 10pt Times New Roman, Times, Serif; text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD STYLE="font: 10pt Times New Roman, Times, Serif; text-align: left; padding-left: 24px">Principal payments on related party notes, net</TD><TD STYLE="font: 10pt Times New Roman, Times, Serif">&nbsp;</TD>
    <TD STYLE="font: 10pt Times New Roman, Times, Serif; text-align: left">&nbsp;</TD><TD STYLE="font: 10pt Times New Roman, Times, Serif; text-align: right">(94</TD><TD STYLE="font: 10pt Times New Roman, Times, Serif; text-align: left">)</TD><TD STYLE="font: 10pt Times New Roman, Times, Serif">&nbsp;</TD>
    <TD STYLE="font: 10pt Times New Roman, Times, Serif; text-align: left">&nbsp;</TD><TD STYLE="font: 10pt Times New Roman, Times, Serif; text-align: right">-</TD><TD STYLE="font: 10pt Times New Roman, Times, Serif; text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,238,255)">
    <TD STYLE="font: 10pt Times New Roman, Times, Serif; text-align: left; padding-left: 24px">Principal payments on 3rd party promissory notes, net</TD><TD STYLE="font: 10pt Times New Roman, Times, Serif">&nbsp;</TD>
    <TD STYLE="font: 10pt Times New Roman, Times, Serif; text-align: left">&nbsp;</TD><TD STYLE="font: 10pt Times New Roman, Times, Serif; text-align: right">(125</TD><TD STYLE="font: 10pt Times New Roman, Times, Serif; text-align: left">)</TD><TD STYLE="font: 10pt Times New Roman, Times, Serif">&nbsp;</TD>
    <TD STYLE="font: 10pt Times New Roman, Times, Serif; text-align: left">&nbsp;</TD><TD STYLE="font: 10pt Times New Roman, Times, Serif; text-align: right">(235</TD><TD STYLE="font: 10pt Times New Roman, Times, Serif; text-align: left">)</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD STYLE="font: 10pt Times New Roman, Times, Serif; text-align: left; padding-bottom: 1.5pt; padding-left: 24px">Principal payment on financing leases</TD><TD STYLE="font: 10pt Times New Roman, Times, Serif; padding-bottom: 1.5pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 1.5pt solid; font: 10pt Times New Roman, Times, Serif; text-align: left">&nbsp;</TD><TD STYLE="border-bottom: Black 1.5pt solid; font: 10pt Times New Roman, Times, Serif; text-align: right">(22</TD><TD STYLE="padding-bottom: 1.5pt; font: 10pt Times New Roman, Times, Serif; text-align: left">)</TD><TD STYLE="font: 10pt Times New Roman, Times, Serif; padding-bottom: 1.5pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 1.5pt solid; font: 10pt Times New Roman, Times, Serif; text-align: left">&nbsp;</TD><TD STYLE="border-bottom: Black 1.5pt solid; font: 10pt Times New Roman, Times, Serif; text-align: right">-</TD><TD STYLE="padding-bottom: 1.5pt; font: 10pt Times New Roman, Times, Serif; text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,238,255)">
    <TD STYLE="font: 10pt Times New Roman, Times, Serif; text-align: left; padding-bottom: 1.5pt">Net cash provided by financing activities</TD><TD STYLE="font: 10pt Times New Roman, Times, Serif; padding-bottom: 1.5pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 1.5pt solid; font: 10pt Times New Roman, Times, Serif; text-align: left">&nbsp;</TD><TD STYLE="border-bottom: Black 1.5pt solid; font: 10pt Times New Roman, Times, Serif; text-align: right">414</TD><TD STYLE="padding-bottom: 1.5pt; font: 10pt Times New Roman, Times, Serif; text-align: left">&nbsp;</TD><TD STYLE="font: 10pt Times New Roman, Times, Serif; padding-bottom: 1.5pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 1.5pt solid; font: 10pt Times New Roman, Times, Serif; text-align: left">&nbsp;</TD><TD STYLE="border-bottom: Black 1.5pt solid; font: 10pt Times New Roman, Times, Serif; text-align: right">2,517</TD><TD STYLE="padding-bottom: 1.5pt; font: 10pt Times New Roman, Times, Serif; text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD STYLE="font: 10pt Times New Roman, Times, Serif">&nbsp;</TD><TD STYLE="font: 10pt Times New Roman, Times, Serif">&nbsp;</TD>
    <TD STYLE="font: 10pt Times New Roman, Times, Serif; text-align: left">&nbsp;</TD><TD STYLE="font: 10pt Times New Roman, Times, Serif; text-align: right">&nbsp;</TD><TD STYLE="font: 10pt Times New Roman, Times, Serif; text-align: left">&nbsp;</TD><TD STYLE="font: 10pt Times New Roman, Times, Serif">&nbsp;</TD>
    <TD STYLE="font: 10pt Times New Roman, Times, Serif; text-align: left">&nbsp;</TD><TD STYLE="font: 10pt Times New Roman, Times, Serif; text-align: right">&nbsp;</TD><TD STYLE="font: 10pt Times New Roman, Times, Serif; text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,238,255)">
    <TD STYLE="font: 10pt Times New Roman, Times, Serif; text-align: left">INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS</TD><TD STYLE="font: 10pt Times New Roman, Times, Serif">&nbsp;</TD>
    <TD STYLE="font: 10pt Times New Roman, Times, Serif; text-align: left">&nbsp;</TD><TD STYLE="font: 10pt Times New Roman, Times, Serif; text-align: right">72</TD><TD STYLE="font: 10pt Times New Roman, Times, Serif; text-align: left">&nbsp;</TD><TD STYLE="font: 10pt Times New Roman, Times, Serif">&nbsp;</TD>
    <TD STYLE="font: 10pt Times New Roman, Times, Serif; text-align: left">&nbsp;</TD><TD STYLE="font: 10pt Times New Roman, Times, Serif; text-align: right">54</TD><TD STYLE="font: 10pt Times New Roman, Times, Serif; text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD STYLE="font: 10pt Times New Roman, Times, Serif; text-align: left; padding-bottom: 1.5pt">CASH AND CASH EQUIVALENTS, beginning of period</TD><TD STYLE="font: 10pt Times New Roman, Times, Serif; padding-bottom: 1.5pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 1.5pt solid; font: 10pt Times New Roman, Times, Serif; text-align: left">&nbsp;</TD><TD STYLE="border-bottom: Black 1.5pt solid; font: 10pt Times New Roman, Times, Serif; text-align: right">388</TD><TD STYLE="padding-bottom: 1.5pt; font: 10pt Times New Roman, Times, Serif; text-align: left">&nbsp;</TD><TD STYLE="font: 10pt Times New Roman, Times, Serif; padding-bottom: 1.5pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 1.5pt solid; font: 10pt Times New Roman, Times, Serif; text-align: left">&nbsp;</TD><TD STYLE="border-bottom: Black 1.5pt solid; font: 10pt Times New Roman, Times, Serif; text-align: right">673</TD><TD STYLE="padding-bottom: 1.5pt; font: 10pt Times New Roman, Times, Serif; text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,238,255)">
    <TD STYLE="font: 10pt Times New Roman, Times, Serif">&nbsp;</TD><TD STYLE="font: 10pt Times New Roman, Times, Serif">&nbsp;</TD>
    <TD STYLE="font: 10pt Times New Roman, Times, Serif; text-align: left">&nbsp;</TD><TD STYLE="font: 10pt Times New Roman, Times, Serif; text-align: right">&nbsp;</TD><TD STYLE="font: 10pt Times New Roman, Times, Serif; text-align: left">&nbsp;</TD><TD STYLE="font: 10pt Times New Roman, Times, Serif">&nbsp;</TD>
    <TD STYLE="font: 10pt Times New Roman, Times, Serif; text-align: left">&nbsp;</TD><TD STYLE="font: 10pt Times New Roman, Times, Serif; text-align: right">&nbsp;</TD><TD STYLE="font: 10pt Times New Roman, Times, Serif; text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD STYLE="font: 10pt Times New Roman, Times, Serif; text-align: left; padding-bottom: 4pt">CASH AND CASH EQUIVALENTS, end of period</TD><TD STYLE="font: 10pt Times New Roman, Times, Serif; padding-bottom: 4pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 4pt double; font: 10pt Times New Roman, Times, Serif; text-align: left">$</TD><TD STYLE="border-bottom: Black 4pt double; font: 10pt Times New Roman, Times, Serif; text-align: right">460</TD><TD STYLE="padding-bottom: 4pt; font: 10pt Times New Roman, Times, Serif; text-align: left">&nbsp;</TD><TD STYLE="font: 10pt Times New Roman, Times, Serif; padding-bottom: 4pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 4pt double; font: 10pt Times New Roman, Times, Serif; text-align: left">$</TD><TD STYLE="border-bottom: Black 4pt double; font: 10pt Times New Roman, Times, Serif; text-align: right">727</TD><TD STYLE="padding-bottom: 4pt; font: 10pt Times New Roman, Times, Serif; text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,238,255)">
    <TD STYLE="font: 10pt Times New Roman, Times, Serif">&nbsp;</TD><TD STYLE="font: 10pt Times New Roman, Times, Serif">&nbsp;</TD>
    <TD STYLE="font: 10pt Times New Roman, Times, Serif; text-align: left">&nbsp;</TD><TD STYLE="font: 10pt Times New Roman, Times, Serif; text-align: right">&nbsp;</TD><TD STYLE="font: 10pt Times New Roman, Times, Serif; text-align: left">&nbsp;</TD><TD STYLE="font: 10pt Times New Roman, Times, Serif">&nbsp;</TD>
    <TD STYLE="font: 10pt Times New Roman, Times, Serif; text-align: left">&nbsp;</TD><TD STYLE="font: 10pt Times New Roman, Times, Serif; text-align: right">&nbsp;</TD><TD STYLE="font: 10pt Times New Roman, Times, Serif; text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD STYLE="font: 10pt Times New Roman, Times, Serif; text-align: left">SUPPLEMENTAL DISCLOSURES:</TD><TD STYLE="font: 10pt Times New Roman, Times, Serif">&nbsp;</TD>
    <TD STYLE="font: 10pt Times New Roman, Times, Serif; text-align: left">&nbsp;</TD><TD STYLE="font: 10pt Times New Roman, Times, Serif; text-align: right">&nbsp;</TD><TD STYLE="font: 10pt Times New Roman, Times, Serif; text-align: left">&nbsp;</TD><TD STYLE="font: 10pt Times New Roman, Times, Serif">&nbsp;</TD>
    <TD STYLE="font: 10pt Times New Roman, Times, Serif; text-align: left">&nbsp;</TD><TD STYLE="font: 10pt Times New Roman, Times, Serif; text-align: right">&nbsp;</TD><TD STYLE="font: 10pt Times New Roman, Times, Serif; text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,238,255)">
    <TD STYLE="font: 10pt Times New Roman, Times, Serif; text-align: left; padding-bottom: 4pt; padding-left: 0.125in">Cash paid for interest</TD><TD STYLE="font: 10pt Times New Roman, Times, Serif; padding-bottom: 4pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 4pt double; font: 10pt Times New Roman, Times, Serif; text-align: left">$</TD><TD STYLE="border-bottom: Black 4pt double; font: 10pt Times New Roman, Times, Serif; text-align: right">355</TD><TD STYLE="padding-bottom: 4pt; font: 10pt Times New Roman, Times, Serif; text-align: left">&nbsp;</TD><TD STYLE="font: 10pt Times New Roman, Times, Serif; padding-bottom: 4pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 4pt double; font: 10pt Times New Roman, Times, Serif; text-align: left">$</TD><TD STYLE="border-bottom: Black 4pt double; font: 10pt Times New Roman, Times, Serif; text-align: right">7</TD><TD STYLE="padding-bottom: 4pt; font: 10pt Times New Roman, Times, Serif; text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD STYLE="font: 10pt Times New Roman, Times, Serif; text-align: left; padding-bottom: 4pt; padding-left: 0.125in">Income tax paid</TD><TD STYLE="font: 10pt Times New Roman, Times, Serif; padding-bottom: 4pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 4pt double; font: 10pt Times New Roman, Times, Serif; text-align: left">$</TD><TD STYLE="border-bottom: Black 4pt double; font: 10pt Times New Roman, Times, Serif; text-align: right">-</TD><TD STYLE="padding-bottom: 4pt; font: 10pt Times New Roman, Times, Serif; text-align: left">&nbsp;</TD><TD STYLE="font: 10pt Times New Roman, Times, Serif; padding-bottom: 4pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 4pt double; font: 10pt Times New Roman, Times, Serif; text-align: left">$</TD><TD STYLE="border-bottom: Black 4pt double; font: 10pt Times New Roman, Times, Serif; text-align: right">-</TD><TD STYLE="padding-bottom: 4pt; font: 10pt Times New Roman, Times, Serif; text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,238,255)">
    <TD STYLE="font: 10pt Times New Roman, Times, Serif">&nbsp;</TD><TD STYLE="font: 10pt Times New Roman, Times, Serif">&nbsp;</TD>
    <TD STYLE="font: 10pt Times New Roman, Times, Serif; text-align: left">&nbsp;</TD><TD STYLE="font: 10pt Times New Roman, Times, Serif; text-align: right">&nbsp;</TD><TD STYLE="font: 10pt Times New Roman, Times, Serif; text-align: left">&nbsp;</TD><TD STYLE="font: 10pt Times New Roman, Times, Serif">&nbsp;</TD>
    <TD STYLE="font: 10pt Times New Roman, Times, Serif; text-align: left">&nbsp;</TD><TD STYLE="font: 10pt Times New Roman, Times, Serif; text-align: right">&nbsp;</TD><TD STYLE="font: 10pt Times New Roman, Times, Serif; text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD STYLE="font: 10pt Times New Roman, Times, Serif; text-align: left; padding-left: 0.125in; text-indent: -0.125in">SUPPLEMENTAL DISCLOSURES OF NON-CASH INVESTING AND FINANCING ACTIVITIES</TD><TD STYLE="font: 10pt Times New Roman, Times, Serif">&nbsp;</TD>
    <TD STYLE="font: 10pt Times New Roman, Times, Serif; text-align: left">&nbsp;</TD><TD STYLE="font: 10pt Times New Roman, Times, Serif; text-align: right">&nbsp;</TD><TD STYLE="font: 10pt Times New Roman, Times, Serif; text-align: left">&nbsp;</TD><TD STYLE="font: 10pt Times New Roman, Times, Serif">&nbsp;</TD>
    <TD STYLE="font: 10pt Times New Roman, Times, Serif; text-align: left">&nbsp;</TD><TD STYLE="font: 10pt Times New Roman, Times, Serif; text-align: right">&nbsp;</TD><TD STYLE="font: 10pt Times New Roman, Times, Serif; text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,238,255)">
    <TD STYLE="font: 10pt Times New Roman, Times, Serif; text-align: left; padding-bottom: 4pt">Debt discount from derivative liabilities</TD><TD STYLE="font: 10pt Times New Roman, Times, Serif; padding-bottom: 4pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 4pt double; font: 10pt Times New Roman, Times, Serif; text-align: left">$</TD><TD STYLE="border-bottom: Black 4pt double; font: 10pt Times New Roman, Times, Serif; text-align: right">509</TD><TD STYLE="padding-bottom: 4pt; font: 10pt Times New Roman, Times, Serif; text-align: left">&nbsp;</TD><TD STYLE="font: 10pt Times New Roman, Times, Serif; padding-bottom: 4pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 4pt double; font: 10pt Times New Roman, Times, Serif; text-align: left">$</TD><TD STYLE="border-bottom: Black 4pt double; font: 10pt Times New Roman, Times, Serif; text-align: right">-</TD><TD STYLE="padding-bottom: 4pt; font: 10pt Times New Roman, Times, Serif; text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD STYLE="font: 10pt Times New Roman, Times, Serif; text-align: left; padding-bottom: 4pt">Debt discount from warrants issued with debt</TD><TD STYLE="font: 10pt Times New Roman, Times, Serif; padding-bottom: 4pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 4pt double; font: 10pt Times New Roman, Times, Serif; text-align: left">$</TD><TD STYLE="border-bottom: Black 4pt double; font: 10pt Times New Roman, Times, Serif; text-align: right">38</TD><TD STYLE="padding-bottom: 4pt; font: 10pt Times New Roman, Times, Serif; text-align: left">&nbsp;</TD><TD STYLE="font: 10pt Times New Roman, Times, Serif; padding-bottom: 4pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 4pt double; font: 10pt Times New Roman, Times, Serif; text-align: left">$</TD><TD STYLE="border-bottom: Black 4pt double; font: 10pt Times New Roman, Times, Serif; text-align: right">-</TD><TD STYLE="padding-bottom: 4pt; font: 10pt Times New Roman, Times, Serif; text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,238,255)">
    <TD STYLE="font: 10pt Times New Roman, Times, Serif; text-align: left; padding-bottom: 4pt">Debt discount from common stock issued with debt</TD><TD STYLE="font: 10pt Times New Roman, Times, Serif; padding-bottom: 4pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 4pt double; font: 10pt Times New Roman, Times, Serif; text-align: left">$</TD><TD STYLE="border-bottom: Black 4pt double; font: 10pt Times New Roman, Times, Serif; text-align: right">36</TD><TD STYLE="padding-bottom: 4pt; font: 10pt Times New Roman, Times, Serif; text-align: left">&nbsp;</TD><TD STYLE="font: 10pt Times New Roman, Times, Serif; padding-bottom: 4pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 4pt double; font: 10pt Times New Roman, Times, Serif; text-align: left">$</TD><TD STYLE="border-bottom: Black 4pt double; font: 10pt Times New Roman, Times, Serif; text-align: right">-</TD><TD STYLE="padding-bottom: 4pt; font: 10pt Times New Roman, Times, Serif; text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD STYLE="font: 10pt Times New Roman, Times, Serif; text-align: left; padding-bottom: 4pt">Common Stock issued for debt conversion</TD><TD STYLE="font: 10pt Times New Roman, Times, Serif; padding-bottom: 4pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 4pt double; font: 10pt Times New Roman, Times, Serif; text-align: left">$</TD><TD STYLE="border-bottom: Black 4pt double; font: 10pt Times New Roman, Times, Serif; text-align: right">155</TD><TD STYLE="padding-bottom: 4pt; font: 10pt Times New Roman, Times, Serif; text-align: left">&nbsp;</TD><TD STYLE="font: 10pt Times New Roman, Times, Serif; padding-bottom: 4pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 4pt double; font: 10pt Times New Roman, Times, Serif; text-align: left">$</TD><TD STYLE="border-bottom: Black 4pt double; font: 10pt Times New Roman, Times, Serif; text-align: right">-</TD><TD STYLE="padding-bottom: 4pt; font: 10pt Times New Roman, Times, Serif; text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,238,255)">
    <TD STYLE="font: 10pt Times New Roman, Times, Serif; text-align: left; padding-bottom: 4pt">Derivative liability resolved to APIC due to debt conversion</TD><TD STYLE="font: 10pt Times New Roman, Times, Serif; padding-bottom: 4pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 4pt double; font: 10pt Times New Roman, Times, Serif; text-align: left">$</TD><TD STYLE="border-bottom: Black 4pt double; font: 10pt Times New Roman, Times, Serif; text-align: right">432</TD><TD STYLE="padding-bottom: 4pt; font: 10pt Times New Roman, Times, Serif; text-align: left">&nbsp;</TD><TD STYLE="font: 10pt Times New Roman, Times, Serif; padding-bottom: 4pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 4pt double; font: 10pt Times New Roman, Times, Serif; text-align: left">$</TD><TD STYLE="border-bottom: Black 4pt double; font: 10pt Times New Roman, Times, Serif; text-align: right">-</TD><TD STYLE="padding-bottom: 4pt; font: 10pt Times New Roman, Times, Serif; text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD STYLE="font: 10pt Times New Roman, Times, Serif; text-align: left; padding-bottom: 4pt">Deemed dividend on Series A Convertible preferred stock</TD><TD STYLE="font: 10pt Times New Roman, Times, Serif; padding-bottom: 4pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 4pt double; font: 10pt Times New Roman, Times, Serif; text-align: left">$</TD><TD STYLE="border-bottom: Black 4pt double; font: 10pt Times New Roman, Times, Serif; text-align: right">2</TD><TD STYLE="padding-bottom: 4pt; font: 10pt Times New Roman, Times, Serif; text-align: left">&nbsp;</TD><TD STYLE="font: 10pt Times New Roman, Times, Serif; padding-bottom: 4pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 4pt double; font: 10pt Times New Roman, Times, Serif; text-align: left">$</TD><TD STYLE="border-bottom: Black 4pt double; font: 10pt Times New Roman, Times, Serif; text-align: right">-</TD><TD STYLE="padding-bottom: 4pt; font: 10pt Times New Roman, Times, Serif; text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,238,255)">
    <TD STYLE="font: 10pt Times New Roman, Times, Serif; text-align: left; padding-bottom: 4pt">Common Stock issued for debt extension</TD><TD STYLE="font: 10pt Times New Roman, Times, Serif; padding-bottom: 4pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 4pt double; font: 10pt Times New Roman, Times, Serif; text-align: left">$</TD><TD STYLE="border-bottom: Black 4pt double; font: 10pt Times New Roman, Times, Serif; text-align: right">17</TD><TD STYLE="padding-bottom: 4pt; font: 10pt Times New Roman, Times, Serif; text-align: left">&nbsp;</TD><TD STYLE="font: 10pt Times New Roman, Times, Serif; padding-bottom: 4pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 4pt double; font: 10pt Times New Roman, Times, Serif; text-align: left">$</TD><TD STYLE="border-bottom: Black 4pt double; font: 10pt Times New Roman, Times, Serif; text-align: right">-</TD><TD STYLE="padding-bottom: 4pt; font: 10pt Times New Roman, Times, Serif; text-align: left">&nbsp;</TD></TR>
</TABLE>

<P STYLE="margin: 0">&nbsp;</P>

<P STYLE="text-align: center; font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt">See accompanying notes to unaudited consolidated financial statements</P>


<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"><FONT STYLE="font: 10pt Times New Roman, Times, Serif">&nbsp;</FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"><FONT STYLE="font: 10pt Times New Roman, Times, Serif"></FONT></P>

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<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"><FONT STYLE="font: 10pt Times New Roman, Times, Serif">&nbsp;</FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt"><B><A NAME="ff_037"></A>DIGERATI
TECHNOLOGIES, INC. AND SUBSIDIARIES</B></FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt"><B>NOTES
TO CONSOLIDATED FINANCIAL STATEMENTS</B></FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">(Unaudited)</FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">&nbsp;</FONT></P>

<P STYLE="font: bold 10pt Times New Roman, Times, Serif; margin: 0pt 0"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">NOTE
1 &ndash; BASIS OF PRESENTATION</FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">&nbsp;</FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">The
accompanying unaudited interim consolidated financial statements of Digerati Technologies, Inc. (&ldquo;we;&rdquo; &ldquo;us,&rdquo;
&ldquo;our,&rdquo; or the &ldquo;Company&rdquo;) have been prepared in accordance with accounting principles generally accepted in
the United States of America and the rules of the United States Securities and Exchange Commission. In the opinion of management,
these interim financial statements contain all adjustments, consisting of normal recurring adjustments necessary for a fair presentation
of financial position and the results of operations for the interim periods presented. The results of operations for interim periods
are not necessarily indicative of the results to be expected for the full year. Notes to the consolidated financial statements,
which would substantially duplicate the disclosure contained in the audited consolidated financial statements for the year ended
July 31, 2018 contained in the Company&rsquo;s Form 10-K filed on November 16, 2018 have been omitted.</FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt"><B>&nbsp;</B></FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt"><I>Revenue
Recognition</I></FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt"><I>&nbsp;</I></FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">On
August 1, 2018, we adopted Topic 606 using the modified retrospective method applied to those contracts which were not completed
as of August 1, 2018. Results for reporting periods beginning after August 1, 2018 are presented under Topic 606, while prior
period amounts are not adjusted and continue to be reported in accordance with our historic accounting under Topic 605. There
was no impact to the opening balance of accumulated deficit or revenues for the nine months ended April 30, 2019 as a result of
applying Topic 606.</FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">&nbsp;</FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">The
Company recognizes cloud-based hosted services revenue, mainly from subscription services for its cloud telephony applications
that includes hosted IP/PBX services, SIP trunking, call center applications, auto attendant, voice and web conferencing, call
recording, messaging, voicemail to email conversion, integrated mobility applications that are device and location agnostic, and
other customized applications. Other services include enterprise-class data and connectivity solutions through multiple broadband
technologies including cloud WAN or SD-WAN (Software-defined Wide Area Network), fiber, and Ethernet over copper. We also offer
remote network monitoring, data backup and disaster recovery services. The Company applies a five-step approach in determining
the amount and timing of revenue to be recognized: (1) identifying the contract with a customer, (2) identifying the performance
obligations in the contract, (3) determining the transaction price, (4) allocating the transaction price to the performance obligations
in the contract and (5) recognizing revenue when the performance obligation is satisfied. Substantially all of the Company&rsquo;s
revenue is recognized at the time control of the products transfers to the customer.</FONT></P>

<P STYLE="color: #333333; font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify;"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">&nbsp;</FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">Service&nbsp;Revenue</FONT></P>

<P STYLE="color: #333333; font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; background-color: white"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">&nbsp;</FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">Service
revenue from subscriptions to the Company&rsquo;s cloud-based technology platform is recognized over time on a ratable basis over the
contractual subscription term beginning on the date that the platform is made available to the customer. Payments received in
advance of subscription services being rendered are recorded as a deferred revenue. Usage fees, either bundled or not bundled,
are recognized when the Company has a right to invoice. Professional services for configuration, system integration, optimization,
customer training and/or education are primarily billed on a fixed-fee basis and are performed by the Company directly. Alternatively,
customers may choose to perform these services themselves or engage their own third-party service providers. Professional services
revenue is recognized over time, generally as services are activated for the customer.</FONT></P>

<P STYLE="color: #333333; font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; background-color: white"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">&nbsp;</FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">Product
Revenue</FONT></P>

<P STYLE="color: #333333; font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; background-color: white"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">&nbsp;</FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">The
Company recognizes product revenue for telephony equipment at a point in time, when transfer of control has occurred, which is
generally upon delivery. Sales returns are recorded as a reduction to revenue estimated based on historical experience.</FONT></P>

<P STYLE="color: #333333; font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; background-color: white"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt"></FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"></P>

<P STYLE="color: #333333; font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&nbsp;</P>

<P STYLE="color: #333333; font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"></P>

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<P STYLE="color: #333333; font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">&nbsp;</FONT></P>

<P STYLE="color: #333333; font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">Disaggregation&nbsp;of&nbsp;Revenue</FONT></P>

<P STYLE="color: #333333; font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">&nbsp;</FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">Summary
of disaggregated revenue is as follows (in thousands):</FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">&nbsp;</FONT><FONT STYLE="font-family: Times New Roman, Times, Serif">&nbsp;</FONT></P>

<TABLE CELLPADDING="0" CELLSPACING="0" STYLE="border-collapse: collapse; width: 100%; font: 10pt Times New Roman, Times, Serif">
<TR STYLE="vertical-align: bottom">
    <TD STYLE="font-size: 10pt; padding: 0; text-align: center"><FONT STYLE="font-family: Times New Roman, Times, Serif">&nbsp;</FONT></TD><TD STYLE="font-size: 10pt; padding-bottom: 1.5pt; text-align: center"><FONT STYLE="font-family: Times New Roman, Times, Serif">&nbsp;</FONT></TD>
    <TD COLSPAN="6" STYLE="font-size: 10pt; text-align: center; border-bottom: Black 1.5pt solid"><FONT STYLE="font-family: Times New Roman, Times, Serif">Three
    months ended <BR>
April 30,</FONT></TD><TD STYLE="padding-bottom: 1.5pt; font-size: 10pt; text-align: center"><FONT STYLE="font-family: Times New Roman, Times, Serif">&nbsp;</FONT></TD><TD STYLE="font-size: 10pt; padding-bottom: 1.5pt; text-align: center"><FONT STYLE="font-family: Times New Roman, Times, Serif">&nbsp;</FONT></TD>
    <TD COLSPAN="6" STYLE="font-size: 10pt; text-align: center; border-bottom: Black 1.5pt solid"><FONT STYLE="font-family: Times New Roman, Times, Serif">Nine
    months ended<BR>
 April 30,</FONT></TD><TD STYLE="padding-bottom: 1.5pt; font-size: 10pt; text-align: center"><FONT STYLE="font-family: Times New Roman, Times, Serif">&nbsp;</FONT></TD></TR>
<TR STYLE="vertical-align: bottom">
    <TD STYLE="font-size: 10pt; padding: 0; text-align: center"><FONT STYLE="font-family: Times New Roman, Times, Serif">&nbsp;</FONT></TD><TD STYLE="font-size: 10pt; padding-bottom: 1.5pt; text-align: center"><FONT STYLE="font-family: Times New Roman, Times, Serif">&nbsp;</FONT></TD>
    <TD COLSPAN="2" STYLE="font-size: 10pt; text-align: center; border-bottom: Black 1.5pt solid"><FONT STYLE="font-family: Times New Roman, Times, Serif">2019</FONT></TD><TD STYLE="padding-bottom: 1.5pt; font-size: 10pt; text-align: center"><FONT STYLE="font-family: Times New Roman, Times, Serif">&nbsp;</FONT></TD><TD STYLE="font-size: 10pt; padding-bottom: 1.5pt; text-align: center"><FONT STYLE="font-family: Times New Roman, Times, Serif">&nbsp;</FONT></TD>
    <TD COLSPAN="2" STYLE="font-size: 10pt; text-align: center; border-bottom: Black 1.5pt solid"><FONT STYLE="font-family: Times New Roman, Times, Serif">2018</FONT></TD><TD STYLE="padding-bottom: 1.5pt; font-size: 10pt; text-align: center"><FONT STYLE="font-family: Times New Roman, Times, Serif">&nbsp;</FONT></TD><TD STYLE="font-size: 10pt; padding-bottom: 1.5pt; text-align: center"><FONT STYLE="font-family: Times New Roman, Times, Serif">&nbsp;</FONT></TD>
    <TD COLSPAN="2" STYLE="font-size: 10pt; text-align: center; border-bottom: Black 1.5pt solid"><FONT STYLE="font-family: Times New Roman, Times, Serif">2019</FONT></TD><TD STYLE="padding-bottom: 1.5pt; font-size: 10pt; text-align: center"><FONT STYLE="font-family: Times New Roman, Times, Serif">&nbsp;</FONT></TD><TD STYLE="font-size: 10pt; padding-bottom: 1.5pt; text-align: center"><FONT STYLE="font-family: Times New Roman, Times, Serif">&nbsp;</FONT></TD>
    <TD COLSPAN="2" STYLE="font-size: 10pt; text-align: center; border-bottom: Black 1.5pt solid"><FONT STYLE="font-family: Times New Roman, Times, Serif">2018</FONT></TD><TD STYLE="padding-bottom: 1.5pt; font-size: 10pt; text-align: center"><FONT STYLE="font-family: Times New Roman, Times, Serif">&nbsp;</FONT></TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,238,255)">
    <TD STYLE="width: 52%; font-size: 10pt; text-align: left; padding: 0; text-indent: 0"><FONT STYLE="font-family: Times New Roman, Times, Serif">Service
    revenue</FONT></TD><TD STYLE="width: 1%; font-size: 10pt"><FONT STYLE="font-family: Times New Roman, Times, Serif">&nbsp;</FONT></TD>
    <TD STYLE="width: 1%; font-size: 10pt; text-align: left"><FONT STYLE="font-family: Times New Roman, Times, Serif">$</FONT></TD><TD STYLE="width: 9%; font-size: 10pt; text-align: right"><FONT STYLE="font-family: Times New Roman, Times, Serif">1,455</FONT></TD><TD STYLE="width: 1%; font-size: 10pt; text-align: left"><FONT STYLE="font-family: Times New Roman, Times, Serif">&nbsp;</FONT></TD><TD STYLE="width: 1%; font-size: 10pt"><FONT STYLE="font-family: Times New Roman, Times, Serif">&nbsp;</FONT></TD>
    <TD STYLE="width: 1%; font-size: 10pt; text-align: left"><FONT STYLE="font-family: Times New Roman, Times, Serif">$</FONT></TD><TD STYLE="width: 9%; font-size: 10pt; text-align: right"><FONT STYLE="font-family: Times New Roman, Times, Serif">189</FONT></TD><TD STYLE="width: 1%; font-size: 10pt; text-align: left"><FONT STYLE="font-family: Times New Roman, Times, Serif">&nbsp;</FONT></TD><TD STYLE="width: 1%; font-size: 10pt"><FONT STYLE="font-family: Times New Roman, Times, Serif">&nbsp;</FONT></TD>
    <TD STYLE="width: 1%; font-size: 10pt; text-align: left"><FONT STYLE="font-family: Times New Roman, Times, Serif">$</FONT></TD><TD STYLE="width: 9%; font-size: 10pt; text-align: right"><FONT STYLE="font-family: Times New Roman, Times, Serif">4,340</FONT></TD><TD STYLE="width: 1%; font-size: 10pt; text-align: left"><FONT STYLE="font-family: Times New Roman, Times, Serif">&nbsp;</FONT></TD><TD STYLE="width: 1%; font-size: 10pt"><FONT STYLE="font-family: Times New Roman, Times, Serif">&nbsp;</FONT></TD>
    <TD STYLE="width: 1%; font-size: 10pt; text-align: left"><FONT STYLE="font-family: Times New Roman, Times, Serif">$</FONT></TD><TD STYLE="width: 9%; font-size: 10pt; text-align: right"><FONT STYLE="font-family: Times New Roman, Times, Serif">373</FONT></TD><TD STYLE="width: 1%; font-size: 10pt; text-align: left"><FONT STYLE="font-family: Times New Roman, Times, Serif">&nbsp;</FONT></TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD STYLE="font-size: 10pt; text-align: left; padding: 0; text-indent: 0"><FONT STYLE="font-family: Times New Roman, Times, Serif">Product
    revenue</FONT></TD><TD STYLE="font-size: 10pt; padding-bottom: 1.5pt"><FONT STYLE="font-family: Times New Roman, Times, Serif">&nbsp;</FONT></TD>
    <TD STYLE="border-bottom: Black 1.5pt solid; font-size: 10pt; text-align: left"><FONT STYLE="font-family: Times New Roman, Times, Serif">&nbsp;</FONT></TD><TD STYLE="border-bottom: Black 1.5pt solid; font-size: 10pt; text-align: right"><FONT STYLE="font-family: Times New Roman, Times, Serif">30</FONT></TD><TD STYLE="padding-bottom: 1.5pt; font-size: 10pt; text-align: left"><FONT STYLE="font-family: Times New Roman, Times, Serif">&nbsp;</FONT></TD><TD STYLE="font-size: 10pt; padding-bottom: 1.5pt"><FONT STYLE="font-family: Times New Roman, Times, Serif">&nbsp;</FONT></TD>
    <TD STYLE="border-bottom: Black 1.5pt solid; font-size: 10pt; text-align: left"><FONT STYLE="font-family: Times New Roman, Times, Serif">&nbsp;</FONT></TD><TD STYLE="border-bottom: Black 1.5pt solid; font-size: 10pt; text-align: right"><FONT STYLE="font-family: Times New Roman, Times, Serif">7</FONT></TD><TD STYLE="padding-bottom: 1.5pt; font-size: 10pt; text-align: left"><FONT STYLE="font-family: Times New Roman, Times, Serif">&nbsp;</FONT></TD><TD STYLE="font-size: 10pt; padding-bottom: 1.5pt"><FONT STYLE="font-family: Times New Roman, Times, Serif">&nbsp;</FONT></TD>
    <TD STYLE="border-bottom: Black 1.5pt solid; font-size: 10pt; text-align: left"><FONT STYLE="font-family: Times New Roman, Times, Serif">&nbsp;</FONT></TD><TD STYLE="border-bottom: Black 1.5pt solid; font-size: 10pt; text-align: right"><FONT STYLE="font-family: Times New Roman, Times, Serif">153</FONT></TD><TD STYLE="padding-bottom: 1.5pt; font-size: 10pt; text-align: left"><FONT STYLE="font-family: Times New Roman, Times, Serif">&nbsp;</FONT></TD><TD STYLE="font-size: 10pt; padding-bottom: 1.5pt"><FONT STYLE="font-family: Times New Roman, Times, Serif">&nbsp;</FONT></TD>
    <TD STYLE="border-bottom: Black 1.5pt solid; font-size: 10pt; text-align: left"><FONT STYLE="font-family: Times New Roman, Times, Serif">&nbsp;</FONT></TD><TD STYLE="border-bottom: Black 1.5pt solid; font-size: 10pt; text-align: right"><FONT STYLE="font-family: Times New Roman, Times, Serif">30</FONT></TD><TD STYLE="padding-bottom: 1.5pt; font-size: 10pt; text-align: left"><FONT STYLE="font-family: Times New Roman, Times, Serif">&nbsp;</FONT></TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,238,255)">
    <TD STYLE="font-size: 10pt; text-align: left; padding: 0; text-indent: 0"><FONT STYLE="font-family: Times New Roman, Times, Serif">Total
    operating revenues</FONT></TD><TD STYLE="font-size: 10pt; padding-bottom: 1.5pt"><FONT STYLE="font-family: Times New Roman, Times, Serif">&nbsp;</FONT></TD>
    <TD STYLE="border-bottom: Black 1.5pt solid; font-size: 10pt; text-align: left"><FONT STYLE="font-family: Times New Roman, Times, Serif">$</FONT></TD><TD STYLE="border-bottom: Black 1.5pt solid; font-size: 10pt; text-align: right"><FONT STYLE="font-family: Times New Roman, Times, Serif">1,485</FONT></TD><TD STYLE="padding-bottom: 1.5pt; font-size: 10pt; text-align: left"><FONT STYLE="font-family: Times New Roman, Times, Serif">&nbsp;</FONT></TD><TD STYLE="font-size: 10pt; padding-bottom: 1.5pt"><FONT STYLE="font-family: Times New Roman, Times, Serif">&nbsp;</FONT></TD>
    <TD STYLE="border-bottom: Black 1.5pt solid; font-size: 10pt; text-align: left"><FONT STYLE="font-family: Times New Roman, Times, Serif">$</FONT></TD><TD STYLE="border-bottom: Black 1.5pt solid; font-size: 10pt; text-align: right"><FONT STYLE="font-family: Times New Roman, Times, Serif">196</FONT></TD><TD STYLE="padding-bottom: 1.5pt; font-size: 10pt; text-align: left"><FONT STYLE="font-family: Times New Roman, Times, Serif">&nbsp;</FONT></TD><TD STYLE="font-size: 10pt; padding-bottom: 1.5pt"><FONT STYLE="font-family: Times New Roman, Times, Serif">&nbsp;</FONT></TD>
    <TD STYLE="border-bottom: Black 1.5pt solid; font-size: 10pt; text-align: left"><FONT STYLE="font-family: Times New Roman, Times, Serif">$</FONT></TD><TD STYLE="border-bottom: Black 1.5pt solid; font-size: 10pt; text-align: right"><FONT STYLE="font-family: Times New Roman, Times, Serif">4,493</FONT></TD><TD STYLE="padding-bottom: 1.5pt; font-size: 10pt; text-align: left"><FONT STYLE="font-family: Times New Roman, Times, Serif">&nbsp;</FONT></TD><TD STYLE="font-size: 10pt; padding-bottom: 1.5pt"><FONT STYLE="font-family: Times New Roman, Times, Serif">&nbsp;</FONT></TD>
    <TD STYLE="border-bottom: Black 1.5pt solid; font-size: 10pt; text-align: left"><FONT STYLE="font-family: Times New Roman, Times, Serif">$</FONT></TD><TD STYLE="border-bottom: Black 1.5pt solid; font-size: 10pt; text-align: right"><FONT STYLE="font-family: Times New Roman, Times, Serif">403</FONT></TD><TD STYLE="padding-bottom: 1.5pt; font-size: 10pt; text-align: left"><FONT STYLE="font-family: Times New Roman, Times, Serif">&nbsp;</FONT></TD></TR>
</TABLE>



<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center"></P>

<P STYLE="color: #333333; font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; background-color: white"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">&nbsp;</FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">Contract&nbsp;Assets</FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><BR>
<FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">Contract assets are recorded for those parts of the
contract consideration not yet invoiced but for which the performance obligations are completed. The revenue is recognized when
the customer receives services or equipment for a reduced consideration at the onset of an arrangement; for example, when the
initial month&rsquo;s services or equipment are discounted. Contract assets are included in prepaid and other current assets in the
consolidated balance sheets, depending on if their reduction is recognized during the succeeding 12-month period or beyond. Contract
assets as of April 30, 2019 and July 31, 2018, were $20,558 and $12,155, respectively.</FONT></P>

<P STYLE="color: #333333; font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; background-color: white"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">&nbsp;</FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">Deferred&nbsp;Income</FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><BR>
<FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">Deferred income represents billings or payment received
in advance of revenue recognition and is recognized upon transfer of control. Balances consist primarily of annual plan subscription
services, for services not yet provided as of the balance sheet date. Deferred revenues that will be recognized during the succeeding
12-month period are recorded as current deferred revenues in the consolidated balance sheets, with the remainder recorded as other
noncurrent liabilities in the consolidated balance sheets. Deferred income as of April 30, 2019 and July 31, 2018, were $314,000
and $262,000, respectively.</FONT></P>

<P STYLE="color: #333333; font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; background-color: white"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">&nbsp;</FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">Costs&nbsp;to&nbsp;Obtain&nbsp;a&nbsp;Customer&nbsp;Contract</FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><BR>
<FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">Sales commissions are paid upon collections of related
revenue and are expensed during the same period. Sales commissions for the nine months ended April 30, 2019 and the nine months
ended April 30, 2018, were $39,828 and $25,717, respectively.</FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt"><B>&nbsp;</B></FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt"><B>NOTE
2 &ndash; GOING CONCERN</B></FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">&nbsp;</FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt"><B><I>Financial
Condition</I></B></FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt"><I>&nbsp;</I></FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">Digerati&rsquo;s
consolidated financial statements for the nine months ending April 30, 2019 have been prepared on a going concern basis, which
contemplates the realization of assets and the settlement of liabilities in the normal course of business. Since the Company&rsquo;s
inception in 1993, Digerati has incurred net losses and accumulated a deficit of approximately $84,434,000 and a working capital
deficit of approximately $6,035,000 which raises doubt about Digerati&rsquo;s ability to continue as a going concern.</FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">&nbsp;</FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt"><B><I>Management
Plans to Continue as a Going Concern</I></B></FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt"><I>&nbsp;</I></FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">Management
believes that current available resources will not be sufficient to fund the Company&rsquo;s operations over the next 12 months.
The Company&rsquo;s ability to continue to meet its obligations and to achieve its business objectives is dependent upon, among
other things, raising additional capital or generating sufficient revenue in excess of costs. At such time as the Company requires
additional funding, the Company will seek to secure such additional funding from various possible sources, including the public
equity market, private financings, sales of assets, collaborative arrangements and debt. If the Company raises additional capital
through the issuance of equity securities or securities convertible into equity, stockholders will experience dilution, and such
securities may have rights, preferences or privileges senior to those of the holders of common stock or convertible senior notes.
If the Company raises additional funds by issuing debt, the Company may be subject to limitations on its operations, through debt
covenants or other restrictions. If the Company obtains additional funds through arrangements with collaborators or strategic
partners, the Company may be required to relinquish its rights to certain technologies. There can be no assurance that the Company
will be able to raise additional funds or raise them on acceptable terms. If the Company is unable to obtain financing on acceptable
terms, it may be unable to execute its business plan, the Company could be required to delay or reduce the scope of its operations,
and the Company may not be able to pay off its obligations, if and when they come due.</FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"></P>

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<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">&nbsp;</FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">The
Company will continue to work with various funding sources to secure additional debt and equity financings. However, Digerati
cannot offer any assurance that it will be successful in executing the aforementioned plans to continue as a going concern.</FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">&nbsp;</FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">Digerati&rsquo;s
consolidated financial statements as of April 30, 2019 do not include any adjustments that might result from the inability to
implement or execute Digerati&rsquo;s plans to improve our ability to continue as a going concern.</FONT></P>

<P STYLE="font: bold 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">&nbsp;</FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt"><B>NOTE
3 &ndash; INTANGIBLE ASSETS </B></FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">&nbsp;</FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">Below
are summarized changes in intangible assets at April 30, 2019 and July 31, 2018:</FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center"></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center"></P>

<TABLE CELLPADDING="0" CELLSPACING="0" STYLE="border-collapse: collapse; width: 100%; font: 10pt Times New Roman, Times, Serif">
<TR STYLE="vertical-align: bottom">
    <TD STYLE="font-size: 10pt; text-align: center">&nbsp;</TD><TD STYLE="font-size: 10pt">&nbsp;</TD>
    <TD COLSPAN="2" STYLE="font-size: 10pt; text-align: center">Gross <BR> Carrying</TD><TD STYLE="font-size: 10pt">&nbsp;</TD><TD STYLE="font-size: 10pt">&nbsp;</TD>
    <TD COLSPAN="2" STYLE="font-size: 10pt; text-align: center">Accumulated</TD><TD STYLE="font-size: 10pt">&nbsp;</TD><TD STYLE="font-size: 10pt">&nbsp;</TD>
    <TD COLSPAN="2" STYLE="font-size: 10pt; text-align: center">Net Carrying</TD><TD STYLE="font-size: 10pt">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom">
    <TD STYLE="font-size: 10pt; text-align: left; border-bottom: Black 1.5pt solid">April 30, 2019</TD><TD STYLE="font-size: 10pt; padding-bottom: 1.5pt">&nbsp;</TD>
    <TD COLSPAN="2" STYLE="font-size: 10pt; text-align: center; border-bottom: Black 1.5pt solid">Value</TD><TD STYLE="padding-bottom: 1.5pt; font-size: 10pt">&nbsp;</TD><TD STYLE="font-size: 10pt; padding-bottom: 1.5pt">&nbsp;</TD>
    <TD COLSPAN="2" STYLE="font-size: 10pt; text-align: center; border-bottom: Black 1.5pt solid">Amortization</TD><TD STYLE="padding-bottom: 1.5pt; font-size: 10pt">&nbsp;</TD><TD STYLE="font-size: 10pt; padding-bottom: 1.5pt">&nbsp;</TD>
    <TD COLSPAN="2" STYLE="font-size: 10pt; text-align: center; border-bottom: Black 1.5pt solid">Amount</TD><TD STYLE="padding-bottom: 1.5pt; font-size: 10pt">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,238,255)">
    <TD STYLE="width: 64%; font-size: 10pt; text-align: left; padding-left: 0in">NetSapiens - license, 10 years</TD><TD STYLE="width: 1%; font-size: 10pt">&nbsp;</TD>
    <TD STYLE="width: 1%; font-size: 10pt; text-align: left">$</TD><TD STYLE="width: 9%; font-size: 10pt; text-align: right">150,000</TD><TD STYLE="width: 1%; font-size: 10pt; text-align: left">&nbsp;</TD><TD STYLE="width: 1%; font-size: 10pt">&nbsp;</TD>
    <TD STYLE="width: 1%; font-size: 10pt; text-align: left">$</TD><TD STYLE="width: 9%; font-size: 10pt; text-align: right">(150,000</TD><TD STYLE="width: 1%; font-size: 10pt; text-align: left">)</TD><TD STYLE="width: 1%; font-size: 10pt">&nbsp;</TD>
    <TD STYLE="width: 1%; font-size: 10pt; text-align: left">$</TD><TD STYLE="width: 9%; font-size: 10pt; text-align: right">-</TD><TD STYLE="width: 1%; font-size: 10pt; text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD STYLE="font-size: 10pt; text-align: left; padding-left: 0in">Customer relationships, 5 years</TD><TD STYLE="font-size: 10pt">&nbsp;</TD>
    <TD STYLE="font-size: 10pt; text-align: left">&nbsp;</TD><TD STYLE="font-size: 10pt; text-align: right">40,000</TD><TD STYLE="font-size: 10pt; text-align: left">&nbsp;</TD><TD STYLE="font-size: 10pt">&nbsp;</TD>
    <TD STYLE="font-size: 10pt; text-align: left">&nbsp;</TD><TD STYLE="font-size: 10pt; text-align: right">(10,666</TD><TD STYLE="font-size: 10pt; text-align: left">)</TD><TD STYLE="font-size: 10pt">&nbsp;</TD>
    <TD STYLE="font-size: 10pt; text-align: left">&nbsp;</TD><TD STYLE="font-size: 10pt; text-align: right">29,334</TD><TD STYLE="font-size: 10pt; text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,238,255)">
    <TD STYLE="font-size: 10pt; text-align: left; padding-left: 0in">Customer relationships, 7 years</TD><TD STYLE="font-size: 10pt">&nbsp;</TD>
    <TD STYLE="font-size: 10pt; text-align: left">&nbsp;</TD><TD STYLE="font-size: 10pt; text-align: right">1,480,000</TD><TD STYLE="font-size: 10pt; text-align: left">&nbsp;</TD><TD STYLE="font-size: 10pt">&nbsp;</TD>
    <TD STYLE="font-size: 10pt; text-align: left">&nbsp;</TD><TD STYLE="font-size: 10pt; text-align: right">(223,224</TD><TD STYLE="font-size: 10pt; text-align: left">)</TD><TD STYLE="font-size: 10pt">&nbsp;</TD>
    <TD STYLE="font-size: 10pt; text-align: left">&nbsp;</TD><TD STYLE="font-size: 10pt; text-align: right">1,256,776</TD><TD STYLE="font-size: 10pt; text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD STYLE="font-size: 10pt; text-align: left; padding-bottom: 1.5pt; padding-left: 0in">Marketing &amp; Non-compete, 5 years</TD><TD STYLE="font-size: 10pt; padding-bottom: 1.5pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 1.5pt solid; font-size: 10pt; text-align: left">&nbsp;</TD><TD STYLE="border-bottom: Black 1.5pt solid; font-size: 10pt; text-align: right">800,000</TD><TD STYLE="padding-bottom: 1.5pt; font-size: 10pt; text-align: left">&nbsp;</TD><TD STYLE="font-size: 10pt; padding-bottom: 1.5pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 1.5pt solid; font-size: 10pt; text-align: left">&nbsp;</TD><TD STYLE="border-bottom: Black 1.5pt solid; font-size: 10pt; text-align: right">(160,000</TD><TD STYLE="padding-bottom: 1.5pt; font-size: 10pt; text-align: left">)</TD><TD STYLE="font-size: 10pt; padding-bottom: 1.5pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 1.5pt solid; font-size: 10pt; text-align: left">&nbsp;</TD><TD STYLE="border-bottom: Black 1.5pt solid; font-size: 10pt; text-align: right">640,000</TD><TD STYLE="padding-bottom: 1.5pt; font-size: 10pt; text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,238,255)">
    <TD STYLE="font-size: 10pt; text-align: left; padding-bottom: 1.5pt; padding-left: 0in">Total Define-lived Assets</TD><TD STYLE="font-size: 10pt; padding-bottom: 1.5pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 1.5pt solid; font-size: 10pt; text-align: left">&nbsp;</TD><TD STYLE="border-bottom: Black 1.5pt solid; font-size: 10pt; text-align: right">2,470,000</TD><TD STYLE="padding-bottom: 1.5pt; font-size: 10pt; text-align: left">&nbsp;</TD><TD STYLE="font-size: 10pt; padding-bottom: 1.5pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 1.5pt solid; font-size: 10pt; text-align: left">&nbsp;</TD><TD STYLE="border-bottom: Black 1.5pt solid; font-size: 10pt; text-align: right">(543,890</TD><TD STYLE="padding-bottom: 1.5pt; font-size: 10pt; text-align: left">)</TD><TD STYLE="font-size: 10pt; padding-bottom: 1.5pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 1.5pt solid; font-size: 10pt; text-align: left">&nbsp;</TD><TD STYLE="border-bottom: Black 1.5pt solid; font-size: 10pt; text-align: right">1,926,110</TD><TD STYLE="padding-bottom: 1.5pt; font-size: 10pt; text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD STYLE="font-size: 10pt; text-align: left; padding-bottom: 1.5pt; padding-left: 0in">Goodwill, Indefinite</TD><TD STYLE="font-size: 10pt; padding-bottom: 1.5pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 1.5pt solid; font-size: 10pt; text-align: left">&nbsp;</TD><TD STYLE="border-bottom: Black 1.5pt solid; font-size: 10pt; text-align: right">809,828</TD><TD STYLE="padding-bottom: 1.5pt; font-size: 10pt; text-align: left">&nbsp;</TD><TD STYLE="font-size: 10pt; padding-bottom: 1.5pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 1.5pt solid; font-size: 10pt; text-align: left">&nbsp;</TD><TD STYLE="border-bottom: Black 1.5pt solid; font-size: 10pt; text-align: right">-</TD><TD STYLE="padding-bottom: 1.5pt; font-size: 10pt; text-align: left">&nbsp;</TD><TD STYLE="font-size: 10pt; padding-bottom: 1.5pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 1.5pt solid; font-size: 10pt; text-align: left">&nbsp;</TD><TD STYLE="border-bottom: Black 1.5pt solid; font-size: 10pt; text-align: right">809,828</TD><TD STYLE="padding-bottom: 1.5pt; font-size: 10pt; text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,238,255)">
    <TD STYLE="font-size: 10pt; padding-bottom: 1.5pt; padding-left: 0in">Balance, April 30, 2019</TD><TD STYLE="font-size: 10pt; padding-bottom: 1.5pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 1.5pt solid; font-size: 10pt; text-align: left">$</TD><TD STYLE="border-bottom: Black 1.5pt solid; font-size: 10pt; text-align: right">3,279,828</TD><TD STYLE="padding-bottom: 1.5pt; font-size: 10pt; text-align: left">&nbsp;</TD><TD STYLE="font-size: 10pt; padding-bottom: 1.5pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 1.5pt solid; font-size: 10pt; text-align: left">$</TD><TD STYLE="border-bottom: Black 1.5pt solid; font-size: 10pt; text-align: right">(543,890</TD><TD STYLE="padding-bottom: 1.5pt; font-size: 10pt; text-align: left">)</TD><TD STYLE="font-size: 10pt; padding-bottom: 1.5pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 1.5pt solid; font-size: 10pt; text-align: left">$</TD><TD STYLE="border-bottom: Black 1.5pt solid; font-size: 10pt; text-align: right">2,735,938</TD><TD STYLE="padding-bottom: 1.5pt; font-size: 10pt; text-align: left">&nbsp;</TD></TR>
</TABLE>



<P STYLE="margin: 0">&nbsp;</P>

<TABLE CELLPADDING="0" CELLSPACING="0" STYLE="border-collapse: collapse; width: 100%; font: 10pt Times New Roman, Times, Serif">
<TR STYLE="vertical-align: bottom">
    <TD STYLE="font-size: 10pt; text-align: center">&nbsp;</TD><TD STYLE="font-size: 10pt">&nbsp;</TD>
    <TD COLSPAN="2" STYLE="font-size: 10pt; text-align: center">Gross<FONT STYLE="font-size: 10pt"><BR> Carrying</FONT></TD><TD STYLE="font-size: 10pt">&nbsp;</TD><TD STYLE="font-size: 10pt">&nbsp;</TD>
    <TD COLSPAN="2" STYLE="font-size: 10pt; text-align: center">Accumulated</TD><TD STYLE="font-size: 10pt">&nbsp;</TD><TD STYLE="font-size: 10pt">&nbsp;</TD>
    <TD COLSPAN="2" STYLE="font-size: 10pt; text-align: center">Net Carrying</TD><TD STYLE="font-size: 10pt">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom">
    <TD STYLE="font-size: 10pt; text-align: left; border-bottom: Black 1.5pt solid">July 31, 2018</TD><TD STYLE="font-size: 10pt; padding-bottom: 1.5pt">&nbsp;</TD>
    <TD COLSPAN="2" STYLE="font-size: 10pt; text-align: center; border-bottom: Black 1.5pt solid">Value</TD><TD STYLE="padding-bottom: 1.5pt; font-size: 10pt">&nbsp;</TD><TD STYLE="font-size: 10pt; padding-bottom: 1.5pt">&nbsp;</TD>
    <TD COLSPAN="2" STYLE="font-size: 10pt; text-align: center; border-bottom: Black 1.5pt solid">Amortization</TD><TD STYLE="padding-bottom: 1.5pt; font-size: 10pt">&nbsp;</TD><TD STYLE="font-size: 10pt; padding-bottom: 1.5pt">&nbsp;</TD>
    <TD COLSPAN="2" STYLE="font-size: 10pt; text-align: center; border-bottom: Black 1.5pt solid">Amount</TD><TD STYLE="padding-bottom: 1.5pt; font-size: 10pt">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,238,255)">
    <TD STYLE="width: 64%; font-size: 10pt; text-align: left; padding-left: 0in">NetSapiens - license, 10 years</TD><TD STYLE="width: 1%; font-size: 10pt">&nbsp;</TD>
    <TD STYLE="width: 1%; font-size: 10pt; text-align: left">$</TD><TD STYLE="width: 9%; font-size: 10pt; text-align: right">150,000</TD><TD STYLE="width: 1%; font-size: 10pt; text-align: left">&nbsp;</TD><TD STYLE="width: 1%; font-size: 10pt">&nbsp;</TD>
    <TD STYLE="width: 1%; font-size: 10pt; text-align: left">$</TD><TD STYLE="width: 9%; font-size: 10pt; text-align: right">(150,000</TD><TD STYLE="width: 1%; font-size: 10pt; text-align: left">)</TD><TD STYLE="width: 1%; font-size: 10pt">&nbsp;</TD>
    <TD STYLE="width: 1%; font-size: 10pt; text-align: left">$</TD><TD STYLE="width: 9%; font-size: 10pt; text-align: right">-</TD><TD STYLE="width: 1%; font-size: 10pt; text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD STYLE="font-size: 10pt; text-align: left; padding-left: 0in">Customer relationships, 5 years</TD><TD STYLE="font-size: 10pt">&nbsp;</TD>
    <TD STYLE="font-size: 10pt; text-align: left">&nbsp;</TD><TD STYLE="font-size: 10pt; text-align: right">40,000</TD><TD STYLE="font-size: 10pt; text-align: left">&nbsp;</TD><TD STYLE="font-size: 10pt">&nbsp;</TD>
    <TD STYLE="font-size: 10pt; text-align: left">&nbsp;</TD><TD STYLE="font-size: 10pt; text-align: right">(4,667</TD><TD STYLE="font-size: 10pt; text-align: left">)</TD><TD STYLE="font-size: 10pt">&nbsp;</TD>
    <TD STYLE="font-size: 10pt; text-align: left">&nbsp;</TD><TD STYLE="font-size: 10pt; text-align: right">35,333</TD><TD STYLE="font-size: 10pt; text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,238,255)">
    <TD STYLE="font-size: 10pt; text-align: left; padding-left: 0in">Customer relationships, 7 years</TD><TD STYLE="font-size: 10pt">&nbsp;</TD>
    <TD STYLE="font-size: 10pt; text-align: left">&nbsp;</TD><TD STYLE="font-size: 10pt; text-align: right">1,480,000</TD><TD STYLE="font-size: 10pt; text-align: left">&nbsp;</TD><TD STYLE="font-size: 10pt">&nbsp;</TD>
    <TD STYLE="font-size: 10pt; text-align: left">&nbsp;</TD><TD STYLE="font-size: 10pt; text-align: right">(64,652</TD><TD STYLE="font-size: 10pt; text-align: left">)</TD><TD STYLE="font-size: 10pt">&nbsp;</TD>
    <TD STYLE="font-size: 10pt; text-align: left">&nbsp;</TD><TD STYLE="font-size: 10pt; text-align: right">1,415,348</TD><TD STYLE="font-size: 10pt; text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD STYLE="font-size: 10pt; text-align: left; padding-bottom: 1.5pt; padding-left: 0in">Marketing &amp; Non-compete, 5 years</TD><TD STYLE="font-size: 10pt; padding-bottom: 1.5pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 1.5pt solid; font-size: 10pt; text-align: left">&nbsp;</TD><TD STYLE="border-bottom: Black 1.5pt solid; font-size: 10pt; text-align: right">800,000</TD><TD STYLE="padding-bottom: 1.5pt; font-size: 10pt; text-align: left">&nbsp;</TD><TD STYLE="font-size: 10pt; padding-bottom: 1.5pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 1.5pt solid; font-size: 10pt; text-align: left">&nbsp;</TD><TD STYLE="border-bottom: Black 1.5pt solid; font-size: 10pt; text-align: right">(40,000</TD><TD STYLE="padding-bottom: 1.5pt; font-size: 10pt; text-align: left">)</TD><TD STYLE="font-size: 10pt; padding-bottom: 1.5pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 1.5pt solid; font-size: 10pt; text-align: left">&nbsp;</TD><TD STYLE="border-bottom: Black 1.5pt solid; font-size: 10pt; text-align: right">760,000</TD><TD STYLE="padding-bottom: 1.5pt; font-size: 10pt; text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,238,255)">
    <TD STYLE="font-size: 10pt; text-align: left; padding-bottom: 1.5pt; padding-left: 0in">Total Define-lived Assets</TD><TD STYLE="font-size: 10pt; padding-bottom: 1.5pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 1.5pt solid; font-size: 10pt; text-align: left">&nbsp;</TD><TD STYLE="border-bottom: Black 1.5pt solid; font-size: 10pt; text-align: right">2,470,000</TD><TD STYLE="padding-bottom: 1.5pt; font-size: 10pt; text-align: left">&nbsp;</TD><TD STYLE="font-size: 10pt; padding-bottom: 1.5pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 1.5pt solid; font-size: 10pt; text-align: left">&nbsp;</TD><TD STYLE="border-bottom: Black 1.5pt solid; font-size: 10pt; text-align: right">(259,319</TD><TD STYLE="padding-bottom: 1.5pt; font-size: 10pt; text-align: left">)</TD><TD STYLE="font-size: 10pt; padding-bottom: 1.5pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 1.5pt solid; font-size: 10pt; text-align: left">&nbsp;</TD><TD STYLE="border-bottom: Black 1.5pt solid; font-size: 10pt; text-align: right">2,210,681</TD><TD STYLE="padding-bottom: 1.5pt; font-size: 10pt; text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD STYLE="font-size: 10pt; text-align: left; padding-bottom: 1.5pt; padding-left: 0in">Goodwill, Indefinite</TD><TD STYLE="font-size: 10pt; padding-bottom: 1.5pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 1.5pt solid; font-size: 10pt; text-align: left">&nbsp;</TD><TD STYLE="border-bottom: Black 1.5pt solid; font-size: 10pt; text-align: right">834,828</TD><TD STYLE="padding-bottom: 1.5pt; font-size: 10pt; text-align: left">&nbsp;</TD><TD STYLE="font-size: 10pt; padding-bottom: 1.5pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 1.5pt solid; font-size: 10pt; text-align: left">&nbsp;</TD><TD STYLE="border-bottom: Black 1.5pt solid; font-size: 10pt; text-align: right">-</TD><TD STYLE="padding-bottom: 1.5pt; font-size: 10pt; text-align: left">&nbsp;</TD><TD STYLE="font-size: 10pt; padding-bottom: 1.5pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 1.5pt solid; font-size: 10pt; text-align: left">&nbsp;</TD><TD STYLE="border-bottom: Black 1.5pt solid; font-size: 10pt; text-align: right">834,828</TD><TD STYLE="padding-bottom: 1.5pt; font-size: 10pt; text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,238,255)">
    <TD STYLE="font-size: 10pt; padding-bottom: 1.5pt; padding-left: 0in">Balance, July 31, 2018</TD><TD STYLE="font-size: 10pt; padding-bottom: 1.5pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 1.5pt solid; font-size: 10pt; text-align: left">$</TD><TD STYLE="border-bottom: Black 1.5pt solid; font-size: 10pt; text-align: right">3,304,828</TD><TD STYLE="padding-bottom: 1.5pt; font-size: 10pt; text-align: left">&nbsp;</TD><TD STYLE="font-size: 10pt; padding-bottom: 1.5pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 1.5pt solid; font-size: 10pt; text-align: left">$</TD><TD STYLE="border-bottom: Black 1.5pt solid; font-size: 10pt; text-align: right">(259,319</TD><TD STYLE="padding-bottom: 1.5pt; font-size: 10pt; text-align: left">)</TD><TD STYLE="font-size: 10pt; padding-bottom: 1.5pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 1.5pt solid; font-size: 10pt; text-align: left">$</TD><TD STYLE="border-bottom: Black 1.5pt solid; font-size: 10pt; text-align: right">3,045,509</TD><TD STYLE="padding-bottom: 1.5pt; font-size: 10pt; text-align: left">&nbsp;</TD></TR>
</TABLE>




<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center"></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">&nbsp;</FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">Total
amortization expense for the periods ended April 30, 2019 and 2018 was approximately $284,571 and $15,000, respectively. Additional
details on intangible assets are disclosed in the Company&rsquo;s Form 10-K filed on November 16, 2018.</FONT></P>

<P STYLE="font: bold 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&nbsp;</P>

<P STYLE="font: bold 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"></P>

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<P STYLE="font: bold 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">&nbsp;</FONT></P>

<P STYLE="font: bold 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">NOTE
4 &ndash; STOCK-BASED COMPENSATION</FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">&nbsp;</FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">In
November 2015, Digerati adopted the Digerati Technologies, Inc. 2015 Equity Compensation Plan (the &ldquo;Plan&rdquo;). The Plan
authorizes the grant of up to 7.5 million stock options, restricted common shares, non-restricted common shares and other awards
to employees, directors, and certain other persons. The Plan is intended to permit Digerati to retain and attract qualified individuals
who will contribute to the overall success of Digerati. Digerati&rsquo;s Board of Directors determines the terms of any grants
under the Plan. Exercise prices of all stock options and other awards vary based on the market price of the shares of common stock
as of the date of grant. The stock options, restricted common stock, non-restricted common stock and other awards vest based on
the terms of the individual grant.</FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">&nbsp;</FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">During
the nine months ended April 30, 2019, we issued:</FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">&nbsp;</FONT></P>

<TABLE CELLPADDING="0" CELLSPACING="0" STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0; margin-bottom: 0; width: 100%"><TR STYLE="vertical-align: top; text-align: justify">
<TD STYLE="width: 0.25in"></TD><TD STYLE="width: 0.25in; text-align: left"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#9679;</FONT></TD><TD STYLE="text-align: justify"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">635,155
common shares to various employees as part of the Company&rsquo;s Non-Standardized profit-sharing plan contribution. The Company
recognized stock-based compensation expense of approximately $115,000 equivalent to the value of the shares calculated based on
the share&rsquo;s closing price at the grant dates.</FONT></TD>
</TR></TABLE>

<P STYLE="margin-top: 0; margin-bottom: 0">&nbsp;</P>

<TABLE CELLPADDING="0" CELLSPACING="0" STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0; margin-bottom: 0; width: 100%"><TR STYLE="vertical-align: top; text-align: justify">
<TD STYLE="width: 0.25in"></TD><TD STYLE="width: 0.25in; text-align: left"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#9679;</FONT></TD><TD STYLE="text-align: justify"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">100,000
options to purchase common shares to a member of the Board of Directors with an exercise price of $0.18 per share and a term of
5 years. The options vest equally over a period of one year. The options have a fair market value of $11,406.</FONT></TD>
</TR></TABLE>

<P STYLE="margin-top: 0; margin-bottom: 0">&nbsp;</P>

<TABLE CELLPADDING="0" CELLSPACING="0" STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0; margin-bottom: 0; width: 100%"><TR STYLE="vertical-align: top; text-align: justify">
<TD STYLE="width: 0.25in"></TD><TD STYLE="width: 0.25in; text-align: left"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#9679;</FONT></TD><TD STYLE="text-align: justify"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">1,725,000
options to purchase common shares to members of the Management team with an exercise price of $0.19 per share and a term of 5
years. The options vest equally over a period of one year. The options have a fair market value of $217,263.</FONT></TD>
</TR></TABLE>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 0.5in; text-align: justify"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">&nbsp;</FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-right: 0; margin-bottom: 0pt; text-align: left"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">The
fair market value of all options issued was determined using the Black-Scholes option pricing model which used the following assumptions:</FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-right: 0; margin-bottom: 0pt; text-align: left"><FONT STYLE="font: 10pt Times New Roman, Times, Serif">&nbsp;</FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.5in"></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in"></P>

<TABLE CELLPADDING="0" CELLSPACING="0" STYLE="border-collapse: collapse; width: 100%; font: 10pt Times New Roman, Times, Serif">
<TR STYLE="vertical-align: bottom; background-color: rgb(204,238,255)">
    <TD STYLE="width: 88%; text-align: justify">Expected dividend yield</TD><TD STYLE="width: 1%">&nbsp;</TD>
    <TD STYLE="width: 1%; text-align: left">&nbsp;</TD><TD STYLE="width: 12%; text-align: right">0.00</TD><TD STYLE="width: 1%; text-align: left">%</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD STYLE="text-align: justify">Expected stock price volatility</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right; white-space: nowrap"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">178.79% - 190.27</FONT></TD><TD STYLE="text-align: left">%</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,238,255)">
    <TD STYLE="text-align: justify">Risk-free interest rate</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">2.55% - 2.73</FONT></TD><TD STYLE="text-align: left">%</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD STYLE="text-align: justify">Expected term</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">1.0 year</FONT></TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
</TABLE>



<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in"></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">&nbsp;</FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">Digerati
recognized approximately $403,000 and $585,000 in stock-based compensation expense to employees during the nine months ended April
30, 2019 and 2018, respectively. Unamortized compensation cost totaled $388,732 and $338,000 at April 30, 2019 and April 30, 2018,
respectively.</FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">&nbsp;</FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">A
summary of the stock options as of April 30, 2019 and July 31, 2018 and the changes during the nine months ended April 30, 2019
and July 31,2018:</FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><FONT STYLE="font: 10pt Times New Roman, Times, Serif">&nbsp;</FONT></P>

<TABLE CELLPADDING="0" CELLSPACING="0" STYLE="border-collapse: collapse; width: 100%; font: 10pt Times New Roman, Times, Serif">
<TR STYLE="vertical-align: bottom">
    <TD STYLE="text-align: right">&nbsp;</TD><TD>&nbsp;</TD>
    <TD COLSPAN="2" STYLE="text-align: right">&nbsp;</TD><TD>&nbsp;</TD><TD>&nbsp;</TD>
    <TD COLSPAN="2" STYLE="text-align: right">&nbsp;</TD><TD>&nbsp;</TD><TD>&nbsp;</TD>
    <TD COLSPAN="2" STYLE="text-align: center">Weighted-average</TD><TD>&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">Weighted-average</TD><TD>&nbsp;</TD><TD>&nbsp;</TD>
    <TD COLSPAN="2" STYLE="text-align: center">remaining<BR>
&nbsp;contractual</TD><TD>&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom">
    <TD>&nbsp;</TD><TD STYLE="padding-bottom: 1.5pt">&nbsp;</TD>
    <TD COLSPAN="2" STYLE="text-align: center; border-bottom: Black 1.5pt solid">Options</TD><TD STYLE="padding-bottom: 1.5pt">&nbsp;</TD><TD STYLE="padding-bottom: 1.5pt">&nbsp;</TD>
    <TD COLSPAN="2" STYLE="text-align: center; border-bottom: Black 1.5pt solid">exercise price</TD><TD STYLE="padding-bottom: 1.5pt">&nbsp;</TD><TD STYLE="padding-bottom: 1.5pt">&nbsp;</TD>
    <TD COLSPAN="2" STYLE="text-align: center; border-bottom: Black 1.5pt solid">term (years)</TD><TD STYLE="padding-bottom: 1.5pt">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom">
    <TD STYLE="text-align: right">&nbsp;</TD><TD>&nbsp;</TD>
    <TD COLSPAN="2" STYLE="text-align: right">&nbsp;</TD><TD>&nbsp;</TD><TD>&nbsp;</TD>
    <TD COLSPAN="2" STYLE="text-align: right">&nbsp;</TD><TD>&nbsp;</TD><TD>&nbsp;</TD>
    <TD COLSPAN="2" STYLE="text-align: right">&nbsp;</TD><TD>&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,238,255)">
    <TD STYLE="width: 64%; padding-bottom: 1.5pt">Outstanding at July 31, 2018</TD><TD STYLE="width: 1%; padding-bottom: 1.5pt">&nbsp;</TD>
    <TD STYLE="width: 1%; border-bottom: Black 1.5pt solid; text-align: left">&nbsp;</TD><TD STYLE="width: 9%; border-bottom: Black 1.5pt solid; text-align: right">3,415,000</TD><TD STYLE="width: 1%; padding-bottom: 1.5pt; text-align: left">&nbsp;</TD><TD STYLE="width: 1%; padding-bottom: 1.5pt">&nbsp;</TD>
    <TD STYLE="width: 1%; border-bottom: Black 1.5pt solid; text-align: left">$</TD><TD STYLE="width: 9%; border-bottom: Black 1.5pt solid; text-align: right">0.33</TD><TD STYLE="width: 1%; padding-bottom: 1.5pt; text-align: left">&nbsp;</TD><TD STYLE="width: 1%; padding-bottom: 1.5pt">&nbsp;</TD>
    <TD STYLE="width: 1%; border-bottom: Black 1.5pt solid; text-align: left">&nbsp;</TD><TD STYLE="width: 9%; border-bottom: Black 1.5pt solid; text-align: right">4.58</TD><TD STYLE="width: 1%; padding-bottom: 1.5pt; text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD>Granted</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">1,825,000</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">$</TD><TD STYLE="text-align: right">0.19</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">4.79</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,238,255)">
    <TD>Exercised</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="text-align: left; padding-bottom: 1.5pt">Forfeited and cancelled</TD><TD STYLE="padding-bottom: 1.5pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 1.5pt solid; text-align: left">&nbsp;</TD><TD STYLE="border-bottom: Black 1.5pt solid; text-align: right">-</TD><TD STYLE="padding-bottom: 1.5pt; text-align: left">&nbsp;</TD><TD STYLE="padding-bottom: 1.5pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 1.5pt solid; text-align: left">&nbsp;</TD><TD STYLE="border-bottom: Black 1.5pt solid; text-align: right">-</TD><TD STYLE="padding-bottom: 1.5pt; text-align: left">&nbsp;</TD><TD STYLE="padding-bottom: 1.5pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 1.5pt solid; text-align: left">&nbsp;</TD><TD STYLE="border-bottom: Black 1.5pt solid; text-align: right">-</TD><TD STYLE="padding-bottom: 1.5pt; text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,238,255)">
    <TD STYLE="padding-bottom: 4pt">Outstanding at April 30, 2019</TD><TD STYLE="padding-bottom: 4pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 4pt double; text-align: left">&nbsp;</TD><TD STYLE="border-bottom: Black 4pt double; text-align: right">5,240,000</TD><TD STYLE="padding-bottom: 4pt; text-align: left">&nbsp;</TD><TD STYLE="padding-bottom: 4pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 4pt double; text-align: left">$</TD><TD STYLE="border-bottom: Black 4pt double; text-align: right">0.28</TD><TD STYLE="padding-bottom: 4pt; text-align: left">&nbsp;</TD><TD STYLE="padding-bottom: 4pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 4pt double; text-align: left">&nbsp;</TD><TD STYLE="border-bottom: Black 4pt double; text-align: right">3.81</TD><TD STYLE="padding-bottom: 4pt; text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD STYLE="padding-bottom: 4pt">Exercisable at April 30, 2019</TD><TD STYLE="padding-bottom: 4pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 4pt double; text-align: left">&nbsp;</TD><TD STYLE="border-bottom: Black 4pt double; text-align: right">3,156,341</TD><TD STYLE="padding-bottom: 4pt; text-align: left">&nbsp;</TD><TD STYLE="padding-bottom: 4pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 4pt double; text-align: left">$</TD><TD STYLE="border-bottom: Black 4pt double; text-align: right">0.30</TD><TD STYLE="padding-bottom: 4pt; text-align: left">&nbsp;</TD><TD STYLE="padding-bottom: 4pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 4pt double; text-align: left">&nbsp;</TD><TD STYLE="border-bottom: Black 4pt double; text-align: right">3.38</TD><TD STYLE="padding-bottom: 4pt; text-align: left">&nbsp;</TD></TR>
</TABLE>


<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">&nbsp;</FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">The
aggregate intrinsic value (the difference between the Company&rsquo;s closing stock price on the last trading day of the nine
months and the exercise price, multiplied by the number of in-the-money options) of the 5,240,000 and 3,415,000 stock options
outstanding at April 30, 2019 and July 31, 2018 was $55,750 and $706,372, respectively.</FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><FONT STYLE="font: 10pt Times New Roman, Times, Serif">The
aggregate intrinsic value of 3,156,341 and 2,006,111 stock options exercisable at April 30, 2019 and July 31, 2018 was $12,156
and $587,389, respectively.</FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>

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<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">&nbsp;</FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt"><B>NOTE
5 &ndash; WARRANTS </B></FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt"><B>&nbsp;</B></FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">During
the nine months ended April 30, 2019, the Company issued the following warrants:</FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">&nbsp;</FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; background-color: white"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">In
August 2018, Digerati secured $40,000 from an accredited investor under a private placement and issued 80,000 shares of its common
stock at a price of $0.50 per share and warrants to purchase an additional 15,000 shares of its common stock at an exercise price
of $0.50 per share. We determined that the warrants issued in connection with the private placement were equity instruments and
did not represent derivative instruments. The Company adopted a sequencing policy and determined that the warrants with fixed
exercise price were excluded from derivative consideration.</FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0in"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">&nbsp;</FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; background-color: white"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">In
October 2018, Digerati issued 200,000 warrants under an extension of payments to existing promissory notes, with a combined current
principal balance of $75,000, the warrants vested at time of issuance. The warrants have a term of 3 years, with an exercise price
of $0.10. Under a Black-Scholes valuation the relative fair market value of the warrants at time of issuance was approximately
$38,000 and was recognized as a discount on the promissory note, the company will amortize the fair market value as interest expense
over 3 months. The Company adopted a sequencing policy and determined that the warrants with fixed exercise price were excluded
from derivative consideration.</FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; background-color: white"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">&nbsp;</FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; background-color: white"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">In
January 2019, Digerati cancelled 260,000 warrants with an exercise price of $0.15. Additionally, the Company issued 260,000 common
shares to replace these warrants, in conjunction with two promissory notes with a principal balance of $50,000, in addition at
the time of issuance we recognized a discount of $36,000.</FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; background-color: white"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">&nbsp;</FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; background-color: white"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">In
February 2019, the Company secured $50,000 from accredited investors under a private placement and issued 50,000 shares of Series
A Convertible Preferred Stock at an conversion price of $0.30 per share and warrants to purchase an additional 100,000 shares
of its common stock at an exercise price of $0.20 per share. We determined that the warrants issued in connection with the private
placement were equity instruments and did not represent derivative instruments. The Company adopted a sequencing policy and determined
that the warrants with fixed exercise price were excluded from derivative consideration.</FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; background-color: white"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">&nbsp;</FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0in"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">In
February 2019, the Company received $1,500 for the exercise of 15,000 warrants, with an exercise price of $0.10 per warrant.</FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0in"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">&nbsp;</FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0in"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">In
March 2019, the Company received $6,000 for the exercise of 60,000 warrants, with an exercise price of $0.10 per warrant.</FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0in"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">&nbsp;</FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-right: 0; margin-bottom: 0pt; text-align: left"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">The
fair market value of all warrants issued was determined using the Black-Scholes option pricing model which used the following
assumptions:</FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.5in">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"></P>

<TABLE CELLPADDING="0" CELLSPACING="0" STYLE="border-collapse: collapse; width: 100%; font: 10pt Times New Roman, Times, Serif">
<TR STYLE="vertical-align: bottom; background-color: rgb(204,238,255)">
    <TD STYLE="width: 88%; text-align: justify">Expected dividend yield</TD><TD STYLE="width: 1%">&nbsp;</TD>
    <TD STYLE="width: 1%; text-align: left">&nbsp;</TD><TD STYLE="width: 9%; text-align: right">0.00</TD><TD STYLE="width: 1%; text-align: left">%</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD STYLE="text-align: justify">Expected stock price volatility</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right; white-space: nowrap"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">153.99% - 237.00</FONT></TD><TD STYLE="text-align: left">%</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,238,255)">
    <TD STYLE="text-align: justify">Risk-free interest rate</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right; white-space: nowrap"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">2.05% -2.93</FONT></TD><TD STYLE="text-align: left">%</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD STYLE="text-align: justify">Expected term</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">3.0 - 5.0 years </FONT></TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
</TABLE>




<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">&nbsp;</FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">A
summary of the warrants as of April 30, 2019 and July 31, 2018 and the changes during the nine months ended April 30, 2019 and
July 31, 2018 are presented below:</FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><FONT STYLE="font: 10pt Times New Roman, Times, Serif">&nbsp;</FONT></P>

<TABLE CELLPADDING="0" CELLSPACING="0" STYLE="border-collapse: collapse; width: 100%; font: 10pt Times New Roman, Times, Serif">
<TR STYLE="vertical-align: bottom">
    <TD STYLE="text-align: right">&nbsp;</TD><TD>&nbsp;</TD>
    <TD COLSPAN="2" STYLE="text-align: right">&nbsp;</TD><TD>&nbsp;</TD><TD>&nbsp;</TD>
    <TD COLSPAN="2" STYLE="text-align: right">&nbsp;</TD><TD>&nbsp;</TD><TD>&nbsp;</TD>
    <TD COLSPAN="2" STYLE="text-align: center">Weighted-average</TD><TD>&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">Weighted-average</TD><TD>&nbsp;</TD><TD>&nbsp;</TD>
    <TD COLSPAN="2" STYLE="text-align: center">remaining <BR>
contractual</TD><TD>&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom">
    <TD>&nbsp;</TD><TD STYLE="padding-bottom: 1.5pt">&nbsp;</TD>
    <TD COLSPAN="2" STYLE="text-align: center; border-bottom: Black 1.5pt solid">Warrants</TD><TD STYLE="padding-bottom: 1.5pt">&nbsp;</TD><TD STYLE="padding-bottom: 1.5pt">&nbsp;</TD>
    <TD COLSPAN="2" STYLE="text-align: center; border-bottom: Black 1.5pt solid">exercise price</TD><TD STYLE="padding-bottom: 1.5pt">&nbsp;</TD><TD STYLE="padding-bottom: 1.5pt">&nbsp;</TD>
    <TD COLSPAN="2" STYLE="text-align: center; border-bottom: Black 1.5pt solid">term (years)</TD><TD STYLE="padding-bottom: 1.5pt">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom">
    <TD>&nbsp;</TD><TD>&nbsp;</TD>
    <TD COLSPAN="2" STYLE="text-align: right">&nbsp;</TD><TD>&nbsp;</TD><TD>&nbsp;</TD>
    <TD COLSPAN="2" STYLE="text-align: right">&nbsp;</TD><TD>&nbsp;</TD><TD>&nbsp;</TD>
    <TD COLSPAN="2" STYLE="text-align: right">&nbsp;</TD><TD>&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,238,255)">
    <TD STYLE="width: 64%; padding-bottom: 1.5pt">Outstanding at July 31, 2018</TD><TD STYLE="width: 1%; padding-bottom: 1.5pt">&nbsp;</TD>
    <TD STYLE="width: 1%; border-bottom: Black 1.5pt solid; text-align: left">&nbsp;</TD><TD STYLE="width: 9%; border-bottom: Black 1.5pt solid; text-align: right">2,370,000</TD><TD STYLE="width: 1%; padding-bottom: 1.5pt; text-align: left">&nbsp;</TD><TD STYLE="width: 1%; padding-bottom: 1.5pt">&nbsp;</TD>
    <TD STYLE="width: 1%; border-bottom: Black 1.5pt solid; text-align: left">$</TD><TD STYLE="width: 9%; border-bottom: Black 1.5pt solid; text-align: right">0.28</TD><TD STYLE="width: 1%; padding-bottom: 1.5pt; text-align: left">&nbsp;</TD><TD STYLE="width: 1%; padding-bottom: 1.5pt">&nbsp;</TD>
    <TD STYLE="width: 1%; border-bottom: Black 1.5pt solid; text-align: left">&nbsp;</TD><TD STYLE="width: 9%; border-bottom: Black 1.5pt solid; text-align: right">2.90</TD><TD STYLE="width: 1%; padding-bottom: 1.5pt; text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD>Granted</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">315,000</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">$</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">2.65</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,238,255)">
    <TD>Exercised</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">(75,000</TD><TD STYLE="text-align: left">)</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">$</TD><TD STYLE="text-align: right">0.10</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">2.15</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD STYLE="text-align: left; padding-bottom: 1.5pt">Forfeited and cancelled</TD><TD STYLE="padding-bottom: 1.5pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 1.5pt solid; text-align: left">&nbsp;</TD><TD STYLE="border-bottom: Black 1.5pt solid; text-align: right">(260,000</TD><TD STYLE="padding-bottom: 1.5pt; text-align: left">)</TD><TD STYLE="padding-bottom: 1.5pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 1.5pt solid; text-align: left">$</TD><TD STYLE="border-bottom: Black 1.5pt solid; text-align: right">0.15</TD><TD STYLE="padding-bottom: 1.5pt; text-align: left">&nbsp;</TD><TD STYLE="padding-bottom: 1.5pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 1.5pt solid; text-align: left">&nbsp;</TD><TD STYLE="border-bottom: Black 1.5pt solid; text-align: right">3.75</TD><TD STYLE="padding-bottom: 1.5pt; text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,238,255)">
    <TD STYLE="padding-bottom: 4pt">Outstanding at April 30, 2019</TD><TD STYLE="padding-bottom: 4pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 4pt double; text-align: left">&nbsp;</TD><TD STYLE="border-bottom: Black 4pt double; text-align: right">2,350,000</TD><TD STYLE="padding-bottom: 4pt; text-align: left">&nbsp;</TD><TD STYLE="padding-bottom: 4pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 4pt double; text-align: left">$</TD><TD STYLE="border-bottom: Black 4pt double; text-align: right">0.34</TD><TD STYLE="padding-bottom: 4pt; text-align: left">&nbsp;</TD><TD STYLE="padding-bottom: 4pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 4pt double; text-align: left">&nbsp;</TD><TD STYLE="border-bottom: Black 4pt double; text-align: right">2.34</TD><TD STYLE="padding-bottom: 4pt; text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD STYLE="padding-bottom: 4pt">Exercisable at April 30, 2019</TD><TD STYLE="padding-bottom: 4pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 4pt double; text-align: left">&nbsp;</TD><TD STYLE="border-bottom: Black 4pt double; text-align: right">2,050,000</TD><TD STYLE="padding-bottom: 4pt; text-align: left">&nbsp;</TD><TD STYLE="padding-bottom: 4pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 4pt double; text-align: left">$</TD><TD STYLE="border-bottom: Black 4pt double; text-align: right">0.25</TD><TD STYLE="padding-bottom: 4pt; text-align: left">&nbsp;</TD><TD STYLE="padding-bottom: 4pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 4pt double; text-align: left">&nbsp;</TD><TD STYLE="border-bottom: Black 4pt double; text-align: right">2.21</TD><TD STYLE="padding-bottom: 4pt; text-align: left">&nbsp;</TD></TR>
</TABLE>


<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"></P>

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<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">&nbsp;</FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">The
aggregate intrinsic value (the difference between the Company&rsquo;s closing stock price on the last trading day of the period
and the exercise price, multiplied by the number of in-the-money warrants) of the 2,350,000 and 2,370,000 warrants outstanding
at April 30, 2019 and July 31, 2018 was $150,880 and $607,557, respectively.</FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">&nbsp;</FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">The
aggregate intrinsic value of 2,050,000 and 2,070,000 warrants exercisable at April 30, 2019 and July 31, 2018 was $150,880 and
$597,927, respectively.</FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">&nbsp;</FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0in"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">In
December 2017, Digerati issued 100,000 warrants to a consultant for services, the warrants vested at time of issuance. The warrants
have a term of 5 years, with an exercise price of $0.50. Under a Black-Scholes valuation the fair market value of the warrants
at time of issuance was approximately $49,000, the company will amortize the fair market value as warrant expense over 12 months.
Additionally, Digerati committed to issue 100,000 warrants if the Company&rsquo;s stock price traded at $0.75 per share for 10
consecutive days, to issue 100,000 warrants if the Company&rsquo;s stock price traded at $1.00 per share for 10 consecutive days,
and to issue 100,000 warrants if the Company&rsquo;s stock price traded at $1.25 per share for 10 consecutive days. Under a Black-Scholes
valuation the fair market value of the warrants at time of issuance was approximately $143,000, the company will amortize the
fair market value as warrant expense over 12 months. During the nine months ended April 30, 2019 and 2018, the Company amortized
$64,000 and $0, respectively in stock-based compensation expense related to these warrants. Unamortized warrant expense totaled
$0 and $0, respectively as of April 30, 2019 and 2018.</FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt"><B>&nbsp;</B></FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0in"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt"><B>NOTE
6 &ndash; DEBT </B></FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0in"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt"><B>&nbsp;</B></FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0in"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt"><B><U>Non-convertible
- debt</U></B></FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0in"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">&nbsp;</FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">On
December 1, 2017, Shift8 Networks, Inc., dba, T3 Communications (&ldquo;T3&rdquo;) and Synergy Telecom, Inc., a Delaware corporation
(&ldquo;Synergy&rdquo;), closed a transaction to acquire all the assets, assumed all customers, and critical vendor arrangements
from Synergy. In conjunction with the transaction, T3 entered into a promissory note for $125,000 with an effective annual interest
rate of 6% with 5 quarterly payments and a maturity date of February 28, 2019. The note holder agreed to extend three of the quarterly
payment until March 31, 2019. During the period ended April 30, 2019 the Company paid in full the principal outstanding balance
of $75,000 and accrued interest of $3,105.</FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">&nbsp;</FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">On
April 30, 2018, T3 entered into a secured promissory note for $650,000 with an effective annual interest rate of 0% and a maturity
date of May 14, 2018, provided, however, the Maturity Date will automatically be extended by one (1) additional period of thirty
(30) days, until June 14, 2018. In addition, T3 entered into a Security Agreement, whereby T3 agreed to pledge one third of the
outstanding shares of its Florida operations, T3 Communications, Inc., the secured interest will continue until the principal
balance is paid in full. Furthermore, a late fee of $3,000 per calendar week will be accessed beginning on May 15, 2018 and will
continue until he principal balance is paid in full. The lender agreed to extend the maturity date until July 31, 2019, we are
currently paying a $3,000 per week late fee. As of April 30, 2019, the outstanding principal balance was $650,000.</FONT></P>

<P STYLE="color: red; font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">&nbsp;</FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">On
April 30, 2018, T3 entered into a credit facility under a secured promissory note of $500,000, interest payment for the first
twenty-three months with a balloon payment on the twenty-fourth month and a maturity date of April 30, 2020. Collateralized by
T3&rsquo;s accounts receivables and with an effective annual interest rate of prime plus 5.25%, adjusted quarterly on the first day
of each calendar quarter. However, the rate will never be less than 9.50% per annum. In the event of default, the interest rate
will be the maximum nonusurious rate of interest per annum permitted by whichever of applicable United States federal law or Louisiana
law permits the higher interest rate. T3 agreed to pay the lender a commitment fee of 1.00% upon payment of the first interest
payment under the credit facility and 1.00% on the first anniversary of the credit facility. In addition, T3 agreed to pay a monitoring
fee of 0.33% of the credit facility, payable in arrears monthly. T3 also agreed to pay an over-advance fee of 3.00% of the amount
advanced in excess of the borrowing base or maximum amount of the credit facility, payable in arrears monthly. T3 is required
to maintain the following financial covenants: 1) A consolidated debt service coverage ratio, as of the last day of each fiscal
quarter, of at least 1.25 to 1.00, 2) A fixed charge coverage ratio, as of the last day of each fiscal quarter, of at least 1.25
to 1.00, and 3) A tangible net worth, at all times of at least $100,000. As of April 30, 2019, the outstanding principal balance
was $500,000.</FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0in">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0in"></P>

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<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0in"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">&nbsp;</FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">On
October 12, 2018, the Company issued an unsecured promissory note for $25,000, bearing interest at a rate of 8% per annum, with
maturity date of November 12, 2018, subsequently the maturity date was extended to December 10, 2018. In conjunction with the
promissory note, the Company issued 140,000 common shares, the shares vested at time of issuance, these shares replaced previously
issued warrants with an exercise price of $0.15, therefore the exercise price of $21,000 was recognized as a discount on the promissory
note. On December 10, 2018, the Company paid in full the principal amount of $25,000 and accrued interest of $323. In addition,
the Company amortized $21,000 of the debt discount as interest expense related to the note.</FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0in"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">&nbsp;</FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">On
October 18, 2018, the Company issued an unsecured promissory note for $25,000, bearing interest at a rate of 8% per annum, with
maturity date of November 18, 2018. In conjunction with the promissory note, the Company issued 100,000 common shares, the shares
vested at time of issuance, these shares replace previously issued warrants with an exercise price of $0.15, therefore the exercise
price of $15,000 was recognized as a discount on the promissory note. On November 16, 2018, the Company paid in full the principal
amount of $25,000 and accrued interest of $159. In addition, the Company amortized $15,000 of the debt discount as interest expense
related to the note.</FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0in"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">&nbsp;</FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">On
October 22, 2018, the Company issued a secured promissory note for $50,000, bearing interest at a rate of 8% per annum, with maturity
date of December 31, 2018. The promissory note is secured by a Pledge and Escrow Agreement, whereby the Company agreed to pledge
rights to a collateral due under certain Agreement. In June 2019, the maturity date was extended to July 31, 2019. As of April
30, 2019, the outstanding principal balance was $50,000.</FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0in"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">&nbsp;</FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt"><B><U>Notes
payable, related party</U></B></FONT></P>

<P STYLE="color: red; font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0in"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">&nbsp;</FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">On
April 30, 2018, T3 entered into a convertible secured promissory note for $525,000 with an effective annual interest rate of 8%
and a maturity date of April 30, 2020. With a principal payment of $100,000 due on June 1, 2018 and a principal payment of $280,823
due on April 30, 2020. Payment are based on a 60-month repayment schedule. At any time while this Note is outstanding, but only
upon: (i) the occurrence of an Event of Default under the Note or the Pledge and Escrow Agreement; or (ii) mutual agreement between
the Borrower and the Holder, the Holder may convert all or any portion of the outstanding principal, accrued and unpaid interest,
Premium, if applicable, and any other sums due and payable hereunder (such total amount, the &ldquo;Conversion Amount&rdquo;)
into shares of Common Stock (the &ldquo;Conversion Shares&rdquo;) at a price equal to: (i) the Conversion Amount (the numerator);
<I>divided by </I>(ii) a conversion price of $1.50 per share of Common Stock, which price shall be indicated in the conversion
notice (in the form attached hereto as Exhibit &ldquo;B&rdquo;, the &ldquo;Conversion Notice&rdquo;) (the denominator) (the &ldquo;Conversion
Price&rdquo;). The Holder shall submit a Conversion Notice indicating the Conversion Amount, the number of Conversion Shares issuable
upon such conversion, and where the Conversion Shares should be delivered. The promissory note is secured by a Pledge and Escrow
Agreement, whereby T3 agreed to pledge 51% of the securities owned in its Florida operations, T3 Communications, Inc., until the
principal payment is paid in full. In conjunction with the promissory note, the Company issued 3-year warrants to purchase 75,000
shares of common stock at an exercise price of $0.50 per share. Under a Black-Scholes valuation the relative fair market value
of the warrants at time of issuance was approximately $19,000 and was recognized as a discount on the promissory note, the company
amortized $4,879 as interest expense during the nine months ended April 30, 2019. During the nine months ended April 30, 2019,
the Company paid $54,000 of the principal balance. The total principal outstanding and unamortized discount as of April 30, 2019
were $352,000 and $8,814, respectively. One of the note holders also serves as President, CEO and Board Member of T3 Communications,
Inc., one of our operating subsidiaries.</FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">&nbsp;</FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">On
May 1, 2018, T3 entered into a secured promissory note for $275,000 with an effective annual interest rate of 0% with an interest
and principal payment of $6,000 per month and shall continue perpetuity until the entire principal amount is paid in full. The
promissory note is guaranteed to the lender by 15% of the stock owned by T3 in its Florida operations, T3 Communications, Inc.,
the secured interest will continue until the principal balance is paid in full. In conjunction with the promissory note, the Company
issued 3-year warrants to purchase 100,000 shares of common stock at an exercise price of $0.50 per share. Under a Black-Scholes
valuation the relative fair market value of the warrants at time of issuance was approximately $27,000 and was recognized as a
discount on the promissory note, the company amortized $5,934 as interest expense during the nine months ended April 30, 2019.
During the nine months ended April 30, 2019, the Company paid $39,000 of the principal balance. The total principal outstanding
and unamortized discount as of April 30, 2019 were $223,000 and $18,490, respectively. The note holder also serves as Board Member
of T3 Communications, Inc., one of our operating subsidiaries.</FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0in">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0in"></P>

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<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0in"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">&nbsp;</FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">On
December 7, 2018, Digerati entered into an unsecured promissory note for $28,000 with an effective annual interest rate of 0%,
and a maturity date of January 21, 2019. Subsequently, the maturity date was extended to May 06, 2019. In conjunction with the
note, the Company issued 28,000 shares of Common Stock, the shares vested at time of issuance. Under a Black-Scholes valuation
the relative fair market value of the shares of Common Stock at time of issuance was approximately $3,000 and was recognized as
a discount on the promissory note, the company amortized $3,000 as interest expense during the nine months ended April 30, 2019.
The total principal outstanding and unamortized discount as of April 30, 2019 were $28,000 and $0, respectively. On May 5, 2019,
the Company paid in full the principal amount of $28,000 and accrued interest of $1,334. The note holder also serves as Board
Member of T3 Communications, Inc., one of our operating subsidiaries.</FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0in"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">&nbsp;</FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt"><B><U>Convertible
debt non-derivative</U></B></FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">&nbsp;</FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">In
March 2018, the Company entered into two (2) Promissory Notes (the &ldquo;Notes&rdquo;) for $250,000 each, bearing interest at a
rate of 12% per annum. The Notes have a maturity date of September 15, 2018, provided, however, the Company shall have the right
to request that the maturity date to be extended by one (1) additional period of ninety (90) days, until December 14, 2018. The
Notes are payable every month, commencing April 15, 2018, in monthly payments of interest only and a single payment of the principal
amount outstanding plus accrued interest on September 15, 2018. The Company agreed to repay the Notes from the proceeds from the
Company&rsquo;s current private placement. As proceeds from the Private Placement are received, the Company shall direct all funds to
the Note Holders until the principal amount outstanding and accrued interest are paid in full. In addition, on March 15, 2018,
the Company entered into a Note Conversion Agreement (the &ldquo;Agreement&rdquo;) with the Note holders, whereby, the holders may
elect to convert up to 50% of the principal amount outstanding on the Notes into Common Stock of Digerati at any time after 90
days of funding the Notes. The Conversion Price shall be the greater of: (i) the Variable Conversion Price (as defined herein)
or (ii) the Fixed Conversion Price (as defined herein). The <I>&ldquo;<B>Variable Conversion Price</B>&rdquo; </I>shall be equal
to the average closing price for Digerati&rsquo;s Common Stock (the &ldquo;<B><I>Shares</I></B>&rdquo;) for the ten (10) Trading Day
period immediately preceding the Conversion Date. &ldquo;Trading Day&rdquo; shall mean any day on which the Common Stock is tradable
for any period on the OTCQB, or on the principal securities exchange or other securities market on which the Common Stock is then
being traded. The <I>&ldquo;<B>Fixed Conversion Price</B>&rdquo; </I>shall mean $0.50. In conjunction with the notes, the Company
issued 300,000 warrants, the warrants vested at time of issuance. The warrants have a term of 3 years, with an exercise price
of $0.10. Under a Black-Scholes valuation the relative fair market value of the warrants at time of issuance was approximately
$127,000 and was recognized as a discount on the promissory notes, the company amortized $84,433 as a non-cash interest during
the period ended April 30, 2019. The total principal outstanding and unamortized discount as of April 30, 2019 were $500,000 and
$0, respectively. On December 27, 2018, the Company entered into an Amendment to the Loan Agreements, under the amendments the
note holders agreed to extend the maturity date until September 14, 2019. In addition, as part of the amendment, the Company agreed
to modify the <B><I>&ldquo;Fixed Conversion Price&rdquo;</I></B> to $0.35, all other terms under the Promissory Notes remained the
same. We accounted for the extensions to the Notes as debt modifications and not extinguishment of debt since the changes in fair
value are not substantial in accordance with ASC 470-50.</FONT></P>

<P STYLE="color: red; font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0in"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">&nbsp;</FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">On
June 19, 2018, the Company entered into various Promissory Notes (the &ldquo;Notes&rdquo;) for $272,000, bearing interest at a rate
of 10% per annum, with maturity date of April 10, 2019. In conjunction with the Notes, the Company issued 255,000 warrants under
the promissory notes, the warrants vested at time of issuance. The warrants have a term of 3 years, with an exercise price of
$0.10. Under a Black-Scholes valuation the relative fair market value of the warrants at time of issuance was approximately $119,000
and was recognized as a discount on the promissory notes. On March 29, 2019, the Company entered into an Amendment to the Promissory
Notes, under the amendments the note holders agreed to extend the maturity date until June 30, 2019. In addition, as part of the
amendments, the Company agreed to issue 85,000 shares of common stock. The shares were recorded as debt discount and amortized
over the remaining term of the notes. The company amortized $115,548 as interest expense during the nine months ended April 30,
2019. The total principal outstanding and unamortized discount as of April 30, 2019 were $272,000 and $11,429, respectively. </FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0in">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0in"></P>

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<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0in"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">&nbsp;</FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0in"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt"><B><U>Convertible
debt - derivative</U></B></FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">&nbsp;</FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">On
August 2, 2018, the Company redeemed $40,000 of the principal outstanding under the convertible debenture, dated January 12, 2018
with Peak One Opportunity Fund, L. P., at a redemption price of $56,000. The Company recognized the deference between the redemption
price and principal balance paid as interest expense of $16,000. On November 26, 2018, the Company issued 139,860 shares of common
stock for the conversion of $20,000 of the principal outstanding under the convertible debenture. On December 20, 2018, the Company
issued 356,007 shares of common stock for the conversion of $20,000 of the principal outstanding under the convertible debenture.
In addition, during the nine months ended April 30, 2019, the Company amortized $80,000 of the debt discount as interest expense
related to the convertible debenture. The total principal outstanding and unamortized discount as of April 30, 2019 were $0 and
$0, respectively.</FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">&nbsp;</FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">On
February 12, 2019, the Company issued 475,511 shares of common stock for the conversion of $20,000 of the principal outstanding
under the convertible debenture. On March 8, 2019, the Company issued 356,633 shares of common stock for the conversion of $25,000
of the principal outstanding under the convertible debenture. On April 9, 2019, the Company issued 356,633 shares of common stock
for the conversion of $25,000 of the principal outstanding under the convertible debenture. During the nine months ended April
30, 2019, the Company amortized $94,207 of the debt discount as interest expense related to the convertible debenture dated July
31, 2018 with Peak One Opportunity Fund L.P. The total principal outstanding and unamortized discount as of April 30, 2019 were
$150,000 and $98,592, respectively.</FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">&nbsp;</FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">During
the nine months ended April 30, 2019, the Company amortized $272,500 of the debt discount as interest expense related to the convertible
note dated May 30, 2018 with Firstfire Global Opportunities Fund, LLC. On November 21, 2018 the Company issued 85,000 shares of
common stock for a debt amendment and recorded the fair market of the shares of $23,800 as interest expense. On January 3, 2019,
the Company issued 218,181 shares of common stock for the conversion of $15,000 of the principal outstanding under the convertible
debenture. On January 11, 2019, the Company issued 427,972 shares of common stock for the conversion of $30,000 of the principal
outstanding under the convertible debenture. On January 18, 2019, the Company redeemed the full outstanding principal balance
on the convertible debenture of $260,556, at a redemption price of $370,000. The Company recognized the difference between the
redemption price and principal balance paid as interest expense of $109,444. The total principal outstanding and unamortized discount
as of April 30, 2019 were $0 and $0, respectively.</FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">&nbsp;</FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">On
January 16, 2019, the Company entered into various Securities Purchase Agreements (the SPAs&rdquo;) with four (4) different investors
(each an &ldquo;Investor&rdquo;, and together the &ldquo;Investors&rdquo;) pursuant to which each Investor purchased a 10% unsecured
convertible promissory note (each a &ldquo;Note&rdquo;, and together the &ldquo;Notes&rdquo;) from the Company. Three of the notes
are in the aggregate principal amount of $140,000 each and a maturity date of October 16, 2019. One of the notes is in the aggregate
principal amount of $57,750 and a maturity date of January 24, 2020. The purchase price of $140,000 of each of three Notes were
paid in cash on January 16, 2019. After payment of transaction-related expenses of $51,000, net proceeds to the Company from the
three Notes totaled $369,000. The purchase price of $57,750 Note was paid in cash on January 24, 2019. After payment of transaction-related
expenses of $7,750, net proceeds to the Company from Note totaled $50,000. The Company recorded these discounts and cost of $58,750
as a discount to the Notes and fully amortized as interest expense during the period.</FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">&nbsp;</FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">The
Company analyzed the Notes for derivative accounting consideration and determined that the embedded conversion option qualified
as a derivative instrument, due to the variable conversion price. Therefore, as of the nine months ending April 30, 2019, the
company recognized derivative liability for the four (4) new convertible notes of $655,345, of which $419,000 was recorded as
debt discount and will be amortized during the term of the Notes, and $236,345 was recorded as day 1 derivative loss. The total
principal balance outstanding and unamortized discount on the Notes as of April 30, 2019 were $477,750 and $263,000, respectively.
The company amortized $156,000 discount from derivative liabilities as interest expense during the nine months ended April 30,
2019. In connection with the execution of the Notes, we issued&nbsp;500,000 shares of our common stock to the Note holders, the
shares were recorded with a relative fair value of $0 as the notes were fully discounted by derivative liability. </FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"></P>

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<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">&nbsp;</FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">On
February 22, 2019, the Company entered into a Securities Purchase Agreement (the SPA&rdquo;) with an investor (an &ldquo;Investor&rdquo;)
the Investor purchased a 10% unsecured convertible promissory note (the &ldquo;Note&rdquo;) from the Company. The note is in the
aggregate principal amount of $57,500 and a maturity date of February 22, 2020. After payment of transaction-related expenses
of $7,750, net proceeds to the Company from the Note totaled $50,000. The Company recorded these discounts and cost of $7,750
as a discount to the Note and fully amortized as interest expense during the period.</FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">&nbsp;</FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">The
Company analyzed the Note for derivative accounting consideration and determined that the embedded conversion option qualified
as a derivative instrument, due to the variable conversion price. Therefore, as of the nine months ending April 30, 2019, the
company recognized derivative liability for the convertible note of $79,729, of which $50,000 was recorded as debt discount and
will be amortized during the term of the Note, and $29,729 was recorded as day 1 derivative loss. The total principal balance
outstanding and unamortized discount on the Note as of April 30, 2019 were $57,750 and $41,667, respectively. The company amortized
$8,333 discount from derivative liabilities as interest expense during the nine months ended April 30, 2019. In connection with
the execution of the Note, we issued&nbsp;50,000 shares of our common stock to the Note holder, the shares were recorded with
a relative fair value of $0 as the notes were fully discounted by derivative liability. </FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">&nbsp;</FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">On
April 20, 2019, the Company entered into a Securities Purchase Agreement (the SPA&rdquo;) with an investor (an &ldquo;Investor&rdquo;)
the Investor purchased a 10% unsecured convertible promissory note (the &ldquo;Note&rdquo;) from the Company. The note is in the
aggregate principal amount of $44,000 and a maturity date of January 19, 2020. After payment of transaction-related expenses of
$4,000, net proceeds to the Company from the Note totaled $40,000. The Company recorded these discounts and cost of $4,000 as
a discount to the Note and fully amortized as interest expense during the period.</FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">&nbsp;</FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">The
Company analyzed the Note for derivative accounting consideration and determined that the embedded conversion option qualified
as a derivative instrument, due to the variable conversion price. Therefore, as of the nine months ending April 30, 2019, the
Company recognized derivative liability for the convertible note of $55,592, of which $40,000 was recorded as debt discount and
will be amortized during the term of the Note, and $15,592 was recorded as day 1 derivative loss. The total principal balance
outstanding and unamortized discount on the Note as of April 30, 2019 were $44,000 and $40,000, respectively. The Company amortized
$0 discount from derivative liabilities as interest expense during the nine months ended April 30, 2019. In connection with the
execution of the Note, we issued&nbsp;50,000 shares of our common stock to the Note holder, the shares were recorded with a relative
fair value of $0 as the notes were fully discounted by derivative liability.</FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">&nbsp;</FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">Each
Note shall bear interest at a rate of ten percent (10%) per annum (the &ldquo;Interest Rate&rdquo;), which interest shall be paid
by the Company to each Investor in shares of Common Stock at any time an Investor sends a notice of conversion to the Company.
Each of the four Investor is entitled to, at its option, convert all or any amount of the principal amount and any accrued but
unpaid interest of the Note into shares of the Company&rsquo;s Common Stock, at any time, at a conversion price for each share
of Common Stock equal to (i) the lowest trading price of the Common Stock (as defined in the Note) as reported on the National
Quotations Bureau OTC Marketplace exchange upon which the Company&rsquo;s shares are traded during the twenty (20) consecutive
Trading Day period immediately preceding the issuance date of each Note; or (ii) 60% multiplied by the lowest traded price of
the Common Stock during the twenty (20) consecutive Trading Day period immediately preceding the Trading Day that the Company
receives a notice of conversion (the &ldquo;Variable Conversion Price&rdquo;). The Variable Conversion Price may further be adjusted
in connection with the terms of the Notes.</FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">&nbsp;</FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">Each
of the Notes may be prepaid until 180 days from the issuance date with the following penalties: (i) if a Note is prepaid within
ninety (90) days of the issuance date, then the prepayment premium shall be 125% of the outstanding principal amount plus any
accrued and unpaid interest; (ii) if a Note is prepaid during the period beginning on the date which is ninety-one (91) days following
the issuance date, and ending on the date which is one hundred eighty (180) days following the issuance date, then the prepayment
premium shall be 130% of the outstanding principal amount plus any accrued and unpaid interest. Such prepayment redemptions must
be closed and funded within three days of giving notice of prepayment or the right to prepay shall be forfeited.</FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">&nbsp;&nbsp;</FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">The
Company shall at all times reserve a minimum of six (6) times the number of its authorized and unissued common stock (the &ldquo;Reserved
Amounts&rdquo;), free from preemptive rights, to provide for the issuance of Common Stock upon the full conversion of the each
of the Notes. Upon full conversion of each Note, any shares remaining in such reserve shall be cancelled. The Company will, from
time to time, increases the Reserved Amount in accordance with the Company&rsquo;s obligations under each of the Notes.</FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"></P>

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<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">&nbsp;</FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">Pursuant
to the terms of the SPAs, for so long as any of the Investors owns any shares of Common Stock issued upon conversion of a Note
(the &ldquo;Conversion Shares&rdquo;), the Company covenants to secure and maintain the listing of such shares of Common Stock.
The Company is also subject to certain customary negative covenants under the Notes and the SPAs, including but not limited to
the requirement to maintain its corporate existence and assets, subject to certain exceptions, and not to make any offers or sales
of any security under circumstances that would require registration of or stockholder approval for the Notes or the Conversion
Shares.</FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">&nbsp;</FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt"><B><I>Fair
Value of Financial Instruments.</I></B> Fair value is defined as the exchange price that would be received for an asset or paid
to transfer a liability (an exit price) in the principal or most advantageous market for the asset or liability in an orderly
transaction between market participants on the measurement date. A fair value hierarchy is used which requires an entity to maximize
the use of observable inputs and minimize the use of unobservable inputs when measuring fair value. The fair value hierarchy based
on the three levels of inputs that may be used to measure fair value are as follows:</FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">&nbsp;</FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt"><I>Level
1 </I>&ndash; Quoted prices in active markets for identical assets or liabilities.</FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt"><I>&nbsp;</I></FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 0.5in; text-align: justify; text-indent: 0in"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt"><I>Level
2 </I>&ndash; Observable inputs other than Level 1 prices, such as quoted prices for similar assets or liabilities; or other inputs
that are observable or can be corroborated by observable market data for substantially the full term of the assets or liabilities.</FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt"><I>&nbsp;</I></FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 0.5in; text-align: justify; text-indent: 0in"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt"><I>Level
3 </I>&ndash; Unobservable inputs that are supported by little or no market activity and that are financial instruments whose
values are determined using pricing models, discounted cash flow methodologies, or similar techniques, as well as instruments
for which the determination of fair value requires significant judgment or estimation.</FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt"><B>&nbsp;</B></FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">For
certain of our financial instruments, including cash and cash equivalents, accounts receivable, accounts payable and accrued expenses,
the carrying amounts approximate fair value due to the short maturity of these instruments. The carrying value of our long-term
debt approximates its fair value based on the quoted market prices for the same or similar issues or the current rates offered
to us for debt of the same remaining maturities.</FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">&nbsp;</FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">Our
derivative liabilities as of April 30, 2019 and July 31, 2018 were $1,302,597 and $632,268, respectively.</FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">&nbsp;</FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">The
fair market value of all derivatives during the nine months ended April 30, 2019 was determined using the Black-Scholes option
pricing model which used the following assumptions:</FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.5in"></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in"></P>

<TABLE CELLPADDING="0" CELLSPACING="0" STYLE="border-collapse: collapse; width: 100%; font: 10pt Times New Roman, Times, Serif">
<TR STYLE="vertical-align: bottom; background-color: rgb(204,238,255)">
    <TD STYLE="width: 88%; text-align: justify">Expected dividend yield</TD><TD STYLE="width: 1%">&nbsp;</TD>
    <TD STYLE="width: 1%; text-align: left">&nbsp;</TD><TD STYLE="width: 9%; text-align: right">0.00</TD><TD STYLE="width: 1%; text-align: left">%</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD STYLE="text-align: justify">Expected stock price volatility</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right; white-space: nowrap"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">165.84% - 190.31</FONT></TD><TD STYLE="text-align: left">%</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,238,255)">
    <TD STYLE="text-align: justify">Risk-free interest rate</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">2.21% -2.93</FONT></TD><TD STYLE="text-align: left">%</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD STYLE="text-align: justify">Expected term</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">0.58 - 2.75 years </FONT></TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
</TABLE>



<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in"></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">&nbsp;</FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">Level
3 inputs.</FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">&nbsp;</FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">The
following table provides a summary of the changes in fair value of the derivative financial instruments measured at fair value
on a recurring basis using significant unobservable inputs:</FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">&nbsp;</FONT></P>

<TABLE CELLPADDING="0" CELLSPACING="0" STYLE="border-collapse: collapse; width: 100%; font: 10pt Times New Roman, Times, Serif">
<TR STYLE="vertical-align: bottom; background-color: rgb(204,238,255)">
    <TD STYLE="width: 88%; text-align: justify; padding-bottom: 1.5pt">Balance at July 31, 2018</TD><TD STYLE="width: 1%; padding-bottom: 1.5pt">&nbsp;</TD>
    <TD STYLE="width: 1%; border-bottom: Black 1.5pt solid; text-align: left">$</TD><TD STYLE="width: 9%; border-bottom: Black 1.5pt solid; text-align: right">632,268</TD><TD STYLE="width: 1%; padding-bottom: 1.5pt; text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD STYLE="text-align: justify; padding-bottom: 1.5pt">Derivative from new convertible promissory notes</TD><TD STYLE="padding-bottom: 1.5pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 1.5pt solid; text-align: left">&nbsp;</TD><TD STYLE="border-bottom: Black 1.5pt solid; text-align: right">509,000</TD><TD STYLE="padding-bottom: 1.5pt; text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,238,255)">
    <TD STYLE="text-align: justify; padding-bottom: 1.5pt">Derivative liability resolved to additional paid in capital due to debt conversion </TD><TD STYLE="padding-bottom: 1.5pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 1.5pt solid; text-align: left">&nbsp;</TD><TD STYLE="border-bottom: Black 1.5pt solid; text-align: right">(432,276</TD><TD STYLE="padding-bottom: 1.5pt; text-align: left">)</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD STYLE="text-align: justify; padding-bottom: 1.5pt">Derivative loss</TD><TD STYLE="padding-bottom: 1.5pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 1.5pt solid; text-align: left">&nbsp;</TD><TD STYLE="border-bottom: Black 1.5pt solid; text-align: right">593,605</TD><TD STYLE="padding-bottom: 1.5pt; text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,238,255)">
    <TD STYLE="text-align: justify; padding-bottom: 4pt">Balance at April 30, 2019</TD><TD STYLE="padding-bottom: 4pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 4pt double; text-align: left">$</TD><TD STYLE="border-bottom: Black 4pt double; text-align: right">1,302,597</TD><TD STYLE="padding-bottom: 4pt; text-align: left">&nbsp;</TD></TR>
</TABLE>

<P STYLE="margin: 0">&nbsp;</P>

<P STYLE="margin: 0"></P>

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<P STYLE="margin: 0">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0in"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt"><B>NOTE
7 &ndash; EQUITY</B></FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0in"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">&nbsp;</FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">During
the nine months ended April 30, 2019, the Company issued the following shares of common stock:</FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0in"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">&nbsp;</FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">On
August 1, 2018, the Company secured $40,000 from an accredited investor under a private placement and issued 80,000 shares of
its common stock at a price of $0.50 per share and warrants to purchase an additional 15,000 shares of its common stock at an
exercise price of $0.50 per share. We determined that the warrants issued in connection with the private placement were equity
instruments and did not represent derivative instruments. The Company adopted a sequencing policy and determined that the warrants
with fixed exercise price were excluded from derivative consideration.</FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0in"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">&nbsp;</FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">On
September 28, 2018, the Company issued an aggregate of 21,672 shares of common stock with a market value at time of issuance of
$5,794. The shares were issued to settle accounts payables of $5,287 to a professional, the Company recognized a loss of $507
upon issuance of the shares.</FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0in"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">&nbsp;</FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">On
November 1, 2018 the Company issued an aggregate of 200,000 shares of common stock with a market value at time of issuance of
$69,600 and recognized the total fair market value as stock-based compensation expense at the time of issuance. The shares were
issued for consulting services.</FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: left; text-indent: 0in"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">&nbsp;</FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">On
November 5, 2018, the Company issued an aggregate of 16,883 shares of common stock with a market value at time of issuance of
$5,875. The shares were issued to settle accounts payables of $5,287 to a professional, the Company recognized a loss of $587
upon issuance of the shares.</FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0in"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">&nbsp;</FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">On
November 14, 2018, the Company secured $75,000 from an accredited investor under a Securities Purchase Agreement and issued 258,621
shares of its common stock at a price of $0.29.</FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">&nbsp;</FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">On
November 29, 2018, the Company issued an aggregate of 39,444 shares of common stock with a market value at time of issuance of
$11,833. The shares were issued to settle accounts payables of $10,545 to a professional, the Company recognized a loss of $1,288
upon issuance of the shares.</FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">&nbsp;</FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">On
February 1, 2019 the Company issued an aggregate of 325,000 shares of common stock with a market value at time of issuance of
$78,000 and recognized the total fair market value as stock-based compensation expense at the time of issuance. The shares were
issued for consulting services.</FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: left; text-indent: 0in"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">&nbsp;</FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">On
February 8, 2019, the Company secured $150,000 from an accredited investor under a Securities Purchase Agreement and issued 600,000
shares of its common stock at a price of $0.25.</FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0in"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt"><B><I>&nbsp;</I></B></FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">On
February 8, 2019 the Company issued an aggregate of 400,000 shares of common stock with a market value at time of issuance of
$100,000 and recognized the total fair market value as stock-based compensation expense at the time of issuance. The shares were
issued for consulting services.</FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0in"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">&nbsp;</FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">On
March 7, 2019, the Company issued an aggregate of 60,715 shares of common stock with a market value at time of issuance of $13,357.
The shares were issued to settle accounts payables of $10,382 to a professional, the Company recognized a loss of $3,000 upon
issuance of the shares.</FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">&nbsp;</FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0in"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt"><B>NOTE
8 &ndash; SUBSEQUENT EVENTS </B></FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">&nbsp;</FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt"><B><I><U>Series
A Convertible Preferred Stock</U></I></B></FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">&nbsp;</FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">On
May 10, 2019, the Company secured $25,000 from accredited investors under a private placement and issued 25,000 shares of Series
A Convertible Preferred Stock at an conversion price of $0.30 per share and warrants to purchase an additional 50,000 shares of
its common stock at an exercise price of $0.20 per share. We determined that the warrants issued in connection with the private
placement were equity instruments and did not represent derivative instruments. The Company adopted a sequencing policy and determined
that the warrants with fixed exercise price were excluded from derivative consideration.</FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0"><FONT STYLE="font: 10pt Times New Roman, Times, Serif">On
May 20, 2019, the Company secured $25,000 from accredited investors under a private placement and issued 25,000 shares of Series
A Convertible Preferred Stock at an conversion price of $0.30 per share and warrants to purchase an additional 50,000 shares of
its common stock at an exercise price of $0.20 per share. We determined that the warrants issued in connection with the private
placement were equity instruments and did not represent derivative instruments. The Company adopted a sequencing policy and determined
that the warrants with fixed exercise price were excluded from derivative consideration.</FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; background-color: white"><FONT STYLE="font: 10pt Times New Roman, Times, Serif">&nbsp;</FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0"><FONT STYLE="font: 10pt Times New Roman, Times, Serif">On
May 30, 2019, the Company secured $75,000 from accredited investors under a private placement and issued 75,000 shares of Series
A Convertible Preferred Stock at an conversion price of $0.30 per share and warrants to purchase an additional 150,000 shares
of its common stock at an exercise price of $0.20 per share. We determined that the warrants issued in connection with the private
placement were equity instruments and did not represent derivative instruments. The Company adopted a sequencing policy and determined
that the warrants with fixed exercise price were excluded from derivative consideration.</FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0in"><B><I><U>Equity Issuance</U></I></B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0in"><B><I>&nbsp;</I></B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0"></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">In June 2019 the Company issued an aggregate
of 1,192,770 shares of common stock with a market value at time of issuance of $198,000 and recognized the total fair market value
as stock-based compensation expense at the time of issuance. The shares were issued for consulting services.</P>



<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><B><I>&nbsp;</I></B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0">In June 2019 the Company
issued an aggregate of 85,000 shares of common stock with a market value at time of issuance of $14,450. The shares were issued
in conjunction with a note extension agreement.</P>


<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0in"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">&nbsp;</FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0in"><FONT STYLE="font: 10pt Times New Roman, Times, Serif"></FONT></P>

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<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0in"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">&nbsp;</FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0"></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">In June 2019 the Company issued an aggregate
of 500,000 shares of common stock with a market value at time of issuance of $83,000. The shares were issued in conjunction with
an acquisition of a 12% minority interest in a VoIP Services provider. In addition, the Company paid $82,500 in cash and issued
a promissory note for $17,500, with a maturity date of September 15, 2019 and annual interest rate of 8%.</P>



<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0">In July 2019 the Company
issued an aggregate of 825,000 shares of common stock with a market value at time of issuance of $145,500. The shares were issued
in conjunction with various convertible promissory notes and interest payments.</P>



<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0"><FONT STYLE="font: 10pt Times New Roman, Times, Serif"></FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0in"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt"><B><I>&nbsp;</I></B></FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0in"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt"><B><I><U>Convertible
debentures - conversions</U></I></B></FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0in"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">&nbsp;</FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">On
May 10, 2019, the Company issued 713,266 shares of common stock for the conversion of $50,000 of the principal outstanding under
the convertible debenture.</FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; background-color: white"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">&nbsp;</FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0in">In June 2019, the Company
issued 1,079,237 shares of common stock for the conversion of $79,000 of the principal outstanding under various convertible notes.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0in">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0in">In July 2019, the Company
issued 468,702 shares of common stock for the conversion of $30,000 of the principal outstanding under various convertible notes.</P>



<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt"><B><I>&nbsp;</I></B></FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt"><B><I><U>Convertible
Promissory Note</U></I></B></FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">&nbsp;</FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">On May 5, 2019, the Company entered into
a 10% unsecured convertible promissory note (the &ldquo;Note&rdquo;) with an investor (an &ldquo;Investor&rdquo;). The note is
in the aggregate principal amount of $29,334 and a maturity date of April 30, 2020.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in; background-color: white">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; background-color: white">The Company analyzed
the Note for derivative accounting consideration and determined that the embedded conversion option qualified as a derivative instrument,
due to the variable conversion price. Therefore, as of the date of the Note, the company recognized derivative liability of $50,700,
of which $29,334 was recorded as debt discount and will be amortized during the term of the Note and $21,366 was recorded as derivative
loss.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; background-color: white">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; background-color: white">On July 11, 2019,
the Company entered into various 10% unsecured convertible promissory notes (the &ldquo;Notes&rdquo;) with various investors (the
&quot;Investors&quot;). The notes are in the aggregate principal amount of $579,875 and a maturity date of April 11, 2020.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; background-color: white">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; background-color: white">The Company analyzed
the Notes for derivative accounting consideration and determined that the embedded conversion option qualified as a derivative
instrument, due to the variable conversion price. Therefore, as of the date of the Notes, the company recognized derivative liability
of $959,180, of which $505,500 was recorded as debt discount and will be amortized during the term of the Notes and $453,680 was
recorded as derivative loss.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; background-color: white">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; background-color: white">On August 30,
2019, the Company entered into a 10% unsecured convertible promissory note (the &ldquo;Note&rdquo;) with an investor (an &quot;Investor&quot;).
The notes are in the aggregate principal amount of $93,500 and a maturity date of May 30, 2020.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; background-color: white">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; background-color: white">The Company analyzed
the Note for derivative accounting consideration and determined that the embedded conversion option qualified as a derivative instrument,
due to the variable conversion price. Therefore, as of the date of the Note, the company recognized derivative liability of $100,978,
of which $85,000 was recorded as debt discount and will be amortized during the term of the Note and $15,978 was recorded as derivative
loss.</P>



<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">&nbsp;</FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">The
Note shall bear interest at a rate of ten percent (10%) per annum (the &ldquo;Interest Rate&rdquo;), which interest shall be paid
by the Company to the Investor in shares of Common Stock at any time an Investor sends a notice of conversion to the Company.
The Investor is entitled to, at its option, convert all or any amount of the principal amount and any accrued but unpaid interest
of the Note into shares of the Company&rsquo;s Common Stock, at any time, at a conversion price for each share of Common Stock
equal to (i) 60% multiplied by the lowest trading price of the Common Stock (as defined in the Note) as reported on the National
Quotations Bureau OTC Marketplace exchange upon which the Company&rsquo;s shares are traded during the twenty (20) consecutive
Trading Day period immediately preceding the issuance date of each Note; or (ii) 60% multiplied by the lowest traded price of
the Common Stock during the twenty (20) consecutive Trading Day period immediately preceding the Trading Day that the Company
receives a notice of conversion (the &ldquo;Variable Conversion Price&rdquo;). The Variable Conversion Price may further be adjusted
in connection with the terms of the Notes.</FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">&nbsp;</FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">The
Note may be prepaid until 180 days from the issuance date with the following penalties: (i) if a Note is prepaid within ninety
(90) days of the issuance date, then the prepayment premium shall be 125% of the outstanding principal amount plus any accrued
and unpaid interest; (ii) if a Note is prepaid during the period beginning on the date which is ninety-one (91) days following
the issuance date, and ending on the date which is one hundred eighty (180) days following the issuance date, then the prepayment
premium shall be 130% of the outstanding principal amount plus any accrued and unpaid interest. Such prepayment redemptions must
be closed and funded within three days of giving notice of prepayment or the right to prepay shall be forfeited.</FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">&nbsp;&nbsp;</FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">The
Company shall at all times reserve a minimum of six (6) times the number of its authorized and unissued common stock (the &ldquo;Reserved
Amounts&rdquo;), free from preemptive rights, to provide for the issuance of Common Stock upon the full conversion of the Note.
Upon full conversion of the Note, any shares remaining in such reserve shall be cancelled. The Company will, from time to time,
increases the Reserved Amount in accordance with the Company&rsquo;s obligations under the Note.</FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">&nbsp;</FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0in"></P>

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<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0in">&nbsp;&nbsp;<B>&nbsp;</B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0in"><B></B></P>

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<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0in"><B>&nbsp;</B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0in"><B>&nbsp;</B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center"><B>&nbsp;</B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center"><B>&nbsp;</B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center"><B>&nbsp;</B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center"><B>&nbsp;</B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center"><B>&nbsp;</B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center"><B>&nbsp;</B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center"><B>&nbsp;</B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center"><B>&nbsp;</B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center"><B>&nbsp;</B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center"><B>&nbsp;</B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center"><B>&nbsp;</B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center"><B>6,324,142 Shares of Common Stock</B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center">The date of this prospectus is _______,
2019</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center"><B>&nbsp;</B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center"><B>&nbsp;</B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center"><B>&nbsp;</B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center"><B>&nbsp;</B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center"><B>&nbsp;</B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center"><B>&nbsp;</B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center"><B>&nbsp;</B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center"><B>&nbsp;</B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center"><B>&nbsp;</B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center"><B>&nbsp;</B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center"><B>&nbsp;</B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center"><B>&nbsp;</B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center"><B>&nbsp;</B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center"><B>&nbsp;</B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center"><B>&nbsp;</B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center"><B>&nbsp;</B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center"><B></B></P>

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<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center"><B>&nbsp;</B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center"></P>

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    <!-- Field: /Page -->

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center"><B>&nbsp;</B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center"><B>PART II - INFORMATION NOT REQUIRED IN
PROSPECTUS</B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center"><B>INFORMATION NOT REQUIRED IN PROSPECTUS</B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><B>Item 13. Other Expenses of Issuance
and Distribution</B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0">The following table
sets forth the costs and expenses, other than underwriting discounts and commissions, to be paid by the Registrant in connection
with the issuance and distribution of the Common Stock being registered. All amounts other than the SEC registration fees and FINRA
fees are estimates.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&nbsp;</P>

<TABLE CELLPADDING="0" CELLSPACING="0" STYLE="border-collapse: collapse; width: 100%; font: 10pt Times New Roman, Times, Serif">
<TR STYLE="vertical-align: bottom">
    <TD>&nbsp;</TD><TD STYLE="font-weight: bold; padding-bottom: 1.5pt">&nbsp;</TD>
    <TD COLSPAN="2" STYLE="font-weight: bold; text-align: center; border-bottom: Black 1.5pt solid">Amount to be Paid</TD><TD STYLE="padding-bottom: 1.5pt; font-weight: bold">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,238,255)">
    <TD STYLE="width: 88%; text-align: left">SEC Registration Fees</TD><TD STYLE="width: 1%">&nbsp;</TD>
    <TD STYLE="width: 1%; text-align: left">$</TD><TD STYLE="width: 9%; text-align: right">76.30</TD><TD STYLE="width: 1%; text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD STYLE="text-align: left">Printing and Engraving Expenses</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right"><FONT STYLE="font-size: 10pt">*</FONT></TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,238,255)">
    <TD STYLE="text-align: left">Legal Fees and Expenses</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right"><FONT STYLE="font-size: 10pt">*</FONT></TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD STYLE="text-align: left">Accounting Fees and Expenses</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right"><FONT STYLE="font-size: 10pt">*</FONT></TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,238,255)">
    <TD STYLE="text-align: left">Transfer Agent Fees</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right"><FONT STYLE="font-size: 10pt">*</FONT></TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD STYLE="padding-bottom: 1.5pt">Miscellaneous</TD><TD STYLE="padding-bottom: 1.5pt">&nbsp;</TD>
    <TD STYLE="text-align: left; border-bottom: Black 1.5pt solid">&nbsp;</TD><TD STYLE="text-align: right; border-bottom: Black 1.5pt solid"><FONT STYLE="font-size: 10pt">*</FONT></TD><TD STYLE="text-align: left; padding-bottom: 1.5pt">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,238,255)">
    <TD STYLE="padding-bottom: 4pt">Total</TD><TD STYLE="padding-bottom: 4pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 4pt double; text-align: left">$</TD><TD STYLE="border-bottom: Black 4pt double; text-align: right"><FONT STYLE="font-size: 10pt">*</FONT></TD><TD STYLE="padding-bottom: 4pt; text-align: left">&nbsp;</TD></TR>
</TABLE>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&nbsp;</P>

<TABLE CELLPADDING="0" CELLSPACING="0" STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0; margin-bottom: 0; width: 100%"><TR STYLE="vertical-align: top; text-align: justify">
<TD STYLE="width: 0"></TD><TD STYLE="width: 0.25in; text-align: left">*</TD><TD STYLE="text-align: justify">To be provided by amendment.</TD>
</TR></TABLE>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><B>Item 14.&nbsp;Indemnification of Officers
And Directors</B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><I>Nevada Law</I></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">The Nevada Revised Statutes limits or eliminates
the personal liability of directors to corporations and their stockholders for monetary damages for breaches of directors&rsquo;
fiduciary duties as directors. Our bylaws include provisions that require the company to indemnify our directors or officers against
monetary damages for actions taken as a director or officer of our Company. We are also expressly authorized to carry directors&rsquo;
and officers&rsquo; insurance to protect our directors, officers, employees and agents for certain liabilities. Our articles of
incorporation do not contain any limiting language regarding director immunity from liability.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">The limitation of liability and indemnification
provisions under the Nevada Revise Statutes and our bylaws may discourage stockholders from bringing a lawsuit against directors
for breach of their fiduciary duties. These provisions may also have the effect of reducing the likelihood of derivative litigation
against directors and officers, even though such an action, if successful, might otherwise benefit us and our stockholders. However,
these provisions do not limit or eliminate our rights, or those of any stockholder, to seek non-monetary relief such as injunction
or rescission in the event of a breach of a director&rsquo;s fiduciary duties. Moreover, the provisions do not alter the liability
of directors under the federal securities laws. In addition, your investment may be adversely affected to the extent that, in a
class action or direct suit, we pay the costs of settlement and damage awards against directors and officers pursuant to these
indemnification provisions.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&nbsp;&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"></P>

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<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"><B>Item 15. Recent Sales of Unregistered Securities</B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">The sales and issuances of the securities
described below were made pursuant to the exemptions from registration contained in to Section 4(a)(2) of the Securities Act and
Regulation D under the Securities Act. Each purchaser represented that such purchaser&rsquo;s intention to acquire the shares for
investment only and not with a view toward distribution. We requested our stock transfer agent to affix appropriate legends to
the stock certificate issued to each purchaser and the transfer agent affixed the appropriate legends. Each purchaser was given
adequate access to sufficient information about us to make an informed investment decision. Except as described in this prospectus,
none of the securities were sold through an underwriter and accordingly, there were no underwriting discounts or commissions involved.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">In August 2018, the Company secured $40,000
from an accredited investor under a private placement and issued 80,000 shares of its common stock at a price of $0.50 per share
and warrants to purchase an additional 15,000 shares of its common stock at an exercise price of $0.50 per share. We determined
that the warrants issued in connection with the private placement were equity instruments and did not represent derivative instruments.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&nbsp;&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">In September 2018, the Company issued an
aggregate of 21,672 shares of common stock with a market value at time of issuance of $5,794. The shares were issued to settle
accounts payables with a professional, the Company recognized a loss of $507 upon issuance of the shares, this loss is immaterial,
thus presented in stock-based compensation expense on the statement of cash flows.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">In October 2018, the Company secured a
promissory note for $25,000, bearing interest at a rate of 8% per annum, with maturity date of November 12, 2018. In conjunction
with the Note, the Company issued 140,000 common shares, the shares vested at time of issuance, these shares replace previously
issued warrants with an exercise price of $0.15, therefore the exercise price of $21,000 was recognized as a discount on the promissory
note. The company will amortize the fair market value as interest expense over the term of the note.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&nbsp;&nbsp;&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">In October 2018, the Company secured a
promissory note for $25,000, bearing interest at a rate of 8% per annum, with maturity date of November 18, 2018. In conjunction
with the Note, the Company issued 100,000 common shares, the shares vested at time of issuance, these shares replace previously
issued warrants with an exercise price of $0.15, therefore the exercise price of $15,000 was recognized as a discount on the promissory
note. The company will amortize the fair market value as interest expense over the term of the note.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">In November 2018, the Company issued an
aggregate of 16,883 shares of common stock with a market value at time of issuance of $5,875. The shares were issued to settle
accounts payables of $5,287 to a professional, the Company recognized a loss of $587 upon issuance of the shares. This loss is
immaterial, thus presented in stock-based compensation expense on the statement of cash flows.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"></P>

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<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">In November 2018, the Company issued an
aggregate of 39,444 shares of common stock with a market value at time of issuance of $11,833. The shares were issued to settle
accounts payables of $10,545 to a professional, the Company recognized a loss of $1,288 upon issuance of the shares. This loss
is immaterial, thus presented in stock-based compensation expense on the statement of cash flows.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">In November 2018, the Company received
$75,000 for the issuance of 258,621 shares of Common Stock. At the time of issuance, the shares of Common Stock were priced at
$0.29.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">In November 2018, the Company entered into
an Amendment to the Convertible Promissory Note dated May 30, 2018 with FirstFire Global Opportunity Fund, LLC. (&ldquo;FirstFire&rdquo;).
Under the Amendment FirstFire agreed to extend the &ldquo;conversion period&rdquo; from 180 days after the issuance date to 210
days after the issuance date. No other changes were made to the Convertible Promissory Note. In conjunction with the Amendment,
the Company issued 85,000 shares of Common Stock at price per share of $0.28.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">In November 2018, the Company issued an
aggregate of 200,000 shares of common stock at a price per share of $0.35. The shares were issued as compensation of $69,600 under
a consulting agreement for professional services.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">In November 2018, the Company issued an
aggregate of 139,860 shares of common stock. The shares were issued in conjunction with a conversion of $20,000 of principal on
a convertible debenture.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">In December 2018, the Company issued an
aggregate of 28,000 shares of common stock. The shares were issued in conjunction with promissory note $25,000.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">In December 2018, the Company issued an
aggregate of 356,007 shares of common stock. The shares were issued in conjunction with a conversion of $20,000 of principal on
a convertible debenture.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">In December 2018, the Company issued an
aggregate of 20,000 shares of common stock at a price per share of $0.20. The shares were issued to replace previously issued warrants
under various promissory notes.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">In January 2019, the Company issued an
aggregate of 218,181 shares of common stock. The shares were issued in conjunction with a conversion of $15,000 of principal on
a convertible debenture.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&nbsp;&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">In January 2019, the Company issued an
aggregate of 427,972 shares of common stock. The shares were issued in conjunction with a conversion of $30,000 of principal on
a convertible debenture.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">In January 2019, the Company issued an
aggregate of 450,000 shares of common stock. The shares were issued in conjunction with various convertible promissory notes for
$420,000.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">In January 2019, the Company issued an
aggregate of 50,000 shares of common stock. The shares were issued in conjunction with a convertible promissory note for $57,750.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">In February 2019, the Company issued an
aggregate of 50,000 shares of common stock. The shares were issued in conjunction with a convertible promissory note for $57,750.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">In February 2019, the Company issued an
aggregate of 475,511 shares of common stock. The shares were issued in conjunction with a conversion of $20,000 of principal on
a Convertible debenture with Peak One Opportunity Fund, LP., dated July 31, 2018.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">In February 2019, the Company secured $150,000
from an accredited investor under a Securities Purchase Agreement and issued 600,000 shares of its common stock at a price of $0.25.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><B><I>&nbsp;</I></B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">In February 2019 the Company issued an
aggregate of 325,000 shares of common stock with a market value at time of issuance of $78,000 and recognized the total fair market
value as stock-based compensation expense at the time of issuance. The shares were issued for consulting services.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"></P>

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<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">In February 2019 the Company issued an
aggregate of 400,000 shares of common stock with a market value at time of issuance of $100,000 and recognized the total fair market
value as stock-based compensation expense at the time of issuance. The shares were issued for consulting services.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">In March 2019, the Company issued an aggregate
of 60,715 shares of common stock with a market value at time of issuance of $11,536. The shares were issued to settle accounts
payables of $10,382 to a professional, the Company recognized a loss of $1,154 upon issuance of the shares. This loss is immaterial,
thus presented in stock-based compensation expense on the statement of cash flows.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">In March 2019, the Company issued an aggregate
of 356,633 shares of common stock. The shares were issued in conjunction with a conversion of $25,000 of principal on a convertible
debenture.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">In March 2019, the Company issued 75,000
shares of common stock. The shares were issued in conjunction with the exercise of 75,000 warrants with an exercise price of $0.10
per warrant.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">In March 2019, the Company issued an aggregate
of 85,000 shares of common stock at a price per share of $0.21. The shares were issued in conjunction with an extension of various
promissory notes.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><B><I>&nbsp;</I></B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">In April 2019, the Company issued an aggregate
of 356,633 shares of common stock. The shares were issued in conjunction with a conversion of $25,000 of principal on a convertible
debenture.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">In April 2019, the Company issued an aggregate
of 50,000 shares of common stock. The shares were issued in conjunction with a convertible promissory note for $44,000.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">In May 2019, the Company issued 713,266
shares of common stock. The shares were issued in conjunction with a conversion of $50,000 of the principal outstanding under a
convertible debenture.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">In June 2019, the Company issued 189,008
shares of common stock for the conversion of $15,000 of the principal outstanding under the convertible debenture.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"><B>&nbsp;</B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"><B>Item 16.&nbsp;Exhibits<FONT STYLE="font-size: 10pt">&nbsp;
</FONT></B></P>




<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"><B>&nbsp;</B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"><B></B></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>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD COLSPAN="2" STYLE="text-align: center"><FONT STYLE="font-size: 10pt"><B>Incorporated by</B></FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD></TR>
<TR STYLE="vertical-align: top">
    <TD><B>Exhibit</B></TD>
    <TD><B>&nbsp;</B></TD>
    <TD COLSPAN="2" STYLE="text-align: center; border-bottom: Black 1pt solid"><B>Reference</B></TD>
    <TD>&nbsp;</TD>
    <TD COLSPAN="2" STYLE="text-align: center; border-bottom: Black 1pt solid"><B>Filed or Furnished</B></TD></TR>
<TR STYLE="vertical-align: top">
    <TD STYLE="border-bottom: Black 1pt solid"><B>Number</B></TD>
    <TD STYLE="border-bottom: Black 1pt solid"><B>Exhibit Description</B></TD>
    <TD STYLE="text-align: center; border-bottom: Black 1pt solid"><B>Form</B></TD>
    <TD STYLE="text-align: center; border-bottom: Black 1pt solid"><B>Exhibit</B></TD>
    <TD>&nbsp;</TD>
    <TD STYLE="text-align: center; border-bottom: Black 1pt solid"><B>Filing Date</B></TD>
    <TD STYLE="text-align: center; border-bottom: Black 1pt solid"><B>Herewith</B></TD></TR>
<TR STYLE="vertical-align: top; background-color: rgb(204,238,255)">
    <TD STYLE="width: 7%"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt; color: Black">2.1</FONT></TD>
    <TD STYLE="width: 56%"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt; color: Black"><A HREF="http://www.sec.gov/Archives/edgar/data/1014052/000121390014002314/f8k041014ex2i_digerati.htm" STYLE="-sec-extract: exhibit">Agreed Order Confirming Joint Plan of Reorganization filed &nbsp;by Plan Proponents</A></FONT></TD>
    <TD STYLE="width: 7%"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt; color: Black">8-K</FONT></TD>
    <TD STYLE="width: 7%"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt; color: Black">2.1</FONT></TD>
    <TD STYLE="width: 1%">&nbsp;</TD>
    <TD STYLE="width: 7%"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt; color: Black">04/11/14</FONT></TD>
    <TD STYLE="width: 7%"><FONT STYLE="color: Black">&nbsp;</FONT></TD></TR>
<TR STYLE="vertical-align: top; background-color: White">
    <TD><FONT STYLE="color: Black">&nbsp;</FONT></TD>
    <TD><FONT STYLE="color: Black">&nbsp;</FONT></TD>
    <TD><FONT STYLE="color: Black">&nbsp;</FONT></TD>
    <TD><FONT STYLE="color: Black">&nbsp;</FONT></TD>
    <TD>&nbsp;</TD>
    <TD><FONT STYLE="color: Black">&nbsp;</FONT></TD>
    <TD><FONT STYLE="color: Black">&nbsp;</FONT></TD></TR>
<TR STYLE="vertical-align: top; background-color: rgb(204,238,255)">
    <TD><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt; color: Black">2.2</FONT></TD>
    <TD><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt; color: Black"><A HREF="http://www.sec.gov/Archives/edgar/data/1014052/000121390014002314/f8k041014ex2ii_digerati.htm" STYLE="-sec-extract: exhibit">Plan Proponents&rsquo; Joint Chapter 11 Plan of Reorganization as &nbsp;Modified on the Record on 4/4/14</A></FONT></TD>
    <TD><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt; color: Black">8-K</FONT></TD>
    <TD><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt; color: Black">2.2</FONT></TD>
    <TD>&nbsp;</TD>
    <TD><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt; color: Black">4/11/14</FONT></TD>
    <TD><FONT STYLE="color: Black">&nbsp;</FONT></TD></TR>
<TR STYLE="vertical-align: top; background-color: White">
    <TD><FONT STYLE="color: Black">&nbsp;</FONT></TD>
    <TD><FONT STYLE="color: Black">&nbsp;</FONT></TD>
    <TD><FONT STYLE="color: Black">&nbsp;</FONT></TD>
    <TD><FONT STYLE="color: Black">&nbsp;</FONT></TD>
    <TD>&nbsp;</TD>
    <TD><FONT STYLE="color: Black">&nbsp;</FONT></TD>
    <TD><FONT STYLE="color: Black">&nbsp;</FONT></TD></TR>
<TR STYLE="vertical-align: top; background-color: rgb(204,238,255)">
    <TD><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt; color: Black">2.3</FONT></TD>
    <TD><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt; color: Black"><A HREF="http://www.sec.gov/Archives/edgar/data/1014052/000121390014002314/f8k041014ex2iii_digerati.htm" STYLE="-sec-extract: exhibit">Plan Supplement Naming Independent Director in Connection &nbsp;With Plan Proponents&rsquo; Joint Chapter 11 Plan of Reorganization</A></FONT></TD>
    <TD><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt; color: Black">8-K</FONT></TD>
    <TD><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt; color: Black">2.3</FONT></TD>
    <TD>&nbsp;</TD>
    <TD><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt; color: Black">4/11/14</FONT></TD>
    <TD><FONT STYLE="color: Black">&nbsp;</FONT></TD></TR>
<TR STYLE="vertical-align: top; background-color: White">
    <TD><FONT STYLE="color: Black">&nbsp;</FONT></TD>
    <TD><FONT STYLE="color: Black">&nbsp;</FONT></TD>
    <TD><FONT STYLE="color: Black">&nbsp;</FONT></TD>
    <TD><FONT STYLE="color: Black">&nbsp;</FONT></TD>
    <TD>&nbsp;</TD>
    <TD><FONT STYLE="color: Black">&nbsp;</FONT></TD>
    <TD><FONT STYLE="color: Black">&nbsp;</FONT></TD></TR>
<TR STYLE="vertical-align: top; background-color: rgb(204,238,255)">
    <TD><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt; color: Black">2.4</FONT></TD>
    <TD><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt; color: Black"><A HREF="http://www.sec.gov/Archives/edgar/data/1014052/000121390014002314/f8k041014ex2iv_digerati.htm" STYLE="-sec-extract: exhibit">Disclosure Statement Under 11 U.S.C. &sect; 1125 and Bankruptcy &nbsp;Rule 3016 in Support of Plan Proponents&rsquo; Joint Chapter 11 Plan of Reorganization.</A></FONT></TD>
    <TD><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt; color: Black">8-K</FONT></TD>
    <TD><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt; color: Black">2.4</FONT></TD>
    <TD>&nbsp;</TD>
    <TD><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt; color: Black">4/11/14</FONT></TD>
    <TD><FONT STYLE="color: Black">&nbsp;</FONT></TD></TR>
<TR STYLE="vertical-align: top; background-color: White">
    <TD><FONT STYLE="color: Black">&nbsp;</FONT></TD>
    <TD><FONT STYLE="color: Black">&nbsp;</FONT></TD>
    <TD><FONT STYLE="color: Black">&nbsp;</FONT></TD>
    <TD><FONT STYLE="color: Black">&nbsp;</FONT></TD>
    <TD>&nbsp;</TD>
    <TD><FONT STYLE="color: Black">&nbsp;</FONT></TD>
    <TD><FONT STYLE="color: Black">&nbsp;</FONT></TD></TR>
<TR STYLE="vertical-align: top; background-color: rgb(204,238,255)">
    <TD><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt; color: Black">2.5</FONT></TD>
    <TD><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt; color: Black"><A HREF="http://www.sec.gov/Archives/edgar/data/1014052/000121390014000396/f8k011514ex10i_digerati.htm" STYLE="-sec-extract: exhibit">Bankruptcy Settlement Agreement dated January 15, 2014</A></FONT></TD>
    <TD><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt; color: Black">8-K</FONT></TD>
    <TD><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt; color: Black">10.1</FONT></TD>
    <TD>&nbsp;</TD>
    <TD><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt; color: Black">1/23/14</FONT></TD>
    <TD><FONT STYLE="color: Black">&nbsp;</FONT></TD></TR>
<TR STYLE="vertical-align: top; background-color: White">
    <TD><FONT STYLE="color: Black">&nbsp;</FONT></TD>
    <TD><FONT STYLE="color: Black">&nbsp;</FONT></TD>
    <TD><FONT STYLE="color: Black">&nbsp;</FONT></TD>
    <TD><FONT STYLE="color: Black">&nbsp;</FONT></TD>
    <TD>&nbsp;</TD>
    <TD><FONT STYLE="color: Black">&nbsp;</FONT></TD>
    <TD><FONT STYLE="color: Black">&nbsp;</FONT></TD></TR>
<TR STYLE="vertical-align: top; background-color: rgb(204,238,255)">
    <TD><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt; color: Black">2.6</FONT></TD>
    <TD><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt; color: Black"><A HREF="http://www.sec.gov/Archives/edgar/data/1014052/000121390014004707/f8k070114ex2vi_digeratitech.htm" STYLE="-sec-extract: exhibit">Order Authorizing the Sale of 100% Equity Interests of Dishon &nbsp;Disposal, Inc. and Granting Related Relief approving the Stock Purchase Agreement dated 6/27/14</A></FONT></TD>
    <TD><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt; color: Black">8-K</FONT></TD>
    <TD><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt; color: Black">2.6</FONT></TD>
    <TD>&nbsp;</TD>
    <TD><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt; color: Black">7/7/14</FONT></TD>
    <TD><FONT STYLE="color: Black">&nbsp;</FONT></TD></TR>
<TR STYLE="vertical-align: top; background-color: White">
    <TD><FONT STYLE="color: Black">&nbsp;</FONT></TD>
    <TD><FONT STYLE="color: Black">&nbsp;</FONT></TD>
    <TD><FONT STYLE="color: Black">&nbsp;</FONT></TD>
    <TD><FONT STYLE="color: Black">&nbsp;</FONT></TD>
    <TD>&nbsp;</TD>
    <TD><FONT STYLE="color: Black">&nbsp;</FONT></TD>
    <TD><FONT STYLE="color: Black">&nbsp;</FONT></TD></TR>
<TR STYLE="vertical-align: top; background-color: rgb(204,238,255)">
    <TD><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt; color: Black">2.7</FONT></TD>
    <TD><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt; color: Black"><A HREF="http://www.sec.gov/Archives/edgar/data/1014052/000121390014005108/f8k072214ex2vii_digerati.htm" STYLE="-sec-extract: exhibit">Order Authorizing the Sale of 100% Equity Interests of Hurley &nbsp;Enterprises, Inc. and Granting Related Relief approving the Stock Purchase Agreement dated 6/26/14</A></FONT></TD>
    <TD><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt; color: Black">8-K</FONT></TD>
    <TD><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt; color: Black">2.7</FONT></TD>
    <TD>&nbsp;</TD>
    <TD><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt; color: Black">7/24/14</FONT></TD>
    <TD><FONT STYLE="color: Black">&nbsp;</FONT></TD></TR>
<TR STYLE="vertical-align: top; background-color: White">
    <TD><FONT STYLE="color: Black">&nbsp;</FONT></TD>
    <TD><FONT STYLE="color: Black">&nbsp;</FONT></TD>
    <TD><FONT STYLE="color: Black">&nbsp;</FONT></TD>
    <TD><FONT STYLE="color: Black">&nbsp;</FONT></TD>
    <TD>&nbsp;</TD>
    <TD><FONT STYLE="color: Black">&nbsp;</FONT></TD>
    <TD><FONT STYLE="color: Black">&nbsp;</FONT></TD></TR>
<TR STYLE="vertical-align: top; background-color: rgb(204,238,255)">
    <TD><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt; color: Black">3.1</FONT></TD>
    <TD><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt; color: Black"><A HREF="http://www.sec.gov/Archives/edgar/data/1014052/000121390014002314/f8k041014ex3i_digerati.htm" STYLE="-sec-extract: exhibit">Amended and Restated Articles of Incorporation</A></FONT></TD>
    <TD><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt; color: Black">8-K</FONT></TD>
    <TD><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt; color: Black">3.1</FONT></TD>
    <TD>&nbsp;</TD>
    <TD><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt; color: Black">4/11/14</FONT></TD>
    <TD><FONT STYLE="color: Black">&nbsp;</FONT></TD></TR>
<TR STYLE="vertical-align: top; background-color: White">
    <TD><FONT STYLE="color: Black">&nbsp;</FONT></TD>
    <TD><FONT STYLE="color: Black">&nbsp;</FONT></TD>
    <TD><FONT STYLE="color: Black">&nbsp;</FONT></TD>
    <TD><FONT STYLE="color: Black">&nbsp;</FONT></TD>
    <TD>&nbsp;</TD>
    <TD><FONT STYLE="color: Black">&nbsp;</FONT></TD>
    <TD><FONT STYLE="color: Black">&nbsp;</FONT></TD></TR>
<TR STYLE="vertical-align: top; background-color: rgb(204,238,255)">
    <TD><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt; color: Black">3.2</FONT></TD>
    <TD><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt; color: Black"><A HREF="http://www.sec.gov/Archives/edgar/data/1014052/000121390014002314/f8k041014ex3ii_digerati.htm">First Amended and Restated Bylaws</A></FONT></TD>
    <TD><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">8-K</FONT></TD>
    <TD><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">3.2</FONT></TD>
    <TD>&nbsp;</TD>
    <TD><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">4/11/14</FONT></TD>
    <TD>&nbsp;</TD></TR>
</TABLE>


<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"><B>&nbsp;</B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>


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<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;&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; background-color: #CCEEFF">
    <TD STYLE="width: 7%"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt; color: Black">3.3</FONT></TD>
    <TD STYLE="width: 56%"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt; color: Black"><A HREF="http://www.sec.gov/Archives/edgar/data/1014052/000121390014002670/f8k040414a1ex3ii_digerati.htm" STYLE="-sec-extract: exhibit">Amended and Restated Bylaws.</A></FONT></TD>
    <TD STYLE="width: 7%"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt; color: Black">8-KA</FONT></TD>
    <TD STYLE="width: 7%"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt; color: Black">3.2</FONT></TD>
    <TD STYLE="width: 1%">&nbsp;</TD>
    <TD STYLE="width: 7%"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt; color: Black">4/25/14</FONT></TD>
    <TD STYLE="width: 7%"><FONT STYLE="color: Black">&nbsp;</FONT></TD></TR>
<TR STYLE="vertical-align: top; background-color: white">
    <TD><FONT STYLE="color: Black">&nbsp;</FONT></TD>
    <TD><FONT STYLE="color: Black">&nbsp;</FONT></TD>
    <TD><FONT STYLE="color: Black">&nbsp;</FONT></TD>
    <TD><FONT STYLE="color: Black">&nbsp;</FONT></TD>
    <TD>&nbsp;</TD>
    <TD><FONT STYLE="color: Black">&nbsp;</FONT></TD>
    <TD><FONT STYLE="color: Black">&nbsp;</FONT></TD></TR>
<TR STYLE="vertical-align: top; background-color: #CCEEFF">
    <TD><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt; color: Black">3.4</FONT></TD>
    <TD><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt; color: Black"><A HREF="http://www.sec.gov/Archives/edgar/data/1014052/000121390015000447/f8k103114ex3i_digeratitech.htm" STYLE="-sec-extract: exhibit">Second Amended and Restated Bylaws, effective as of 1/13/15</A></FONT></TD>
    <TD><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt; color: Black">8-K</FONT></TD>
    <TD><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt; color: Black">3.1</FONT></TD>
    <TD>&nbsp;</TD>
    <TD><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt; color: Black">1/21/15</FONT></TD>
    <TD><FONT STYLE="color: Black">&nbsp;</FONT></TD></TR>
<TR STYLE="vertical-align: top; background-color: white">
    <TD><FONT STYLE="color: Black">&nbsp;</FONT></TD>
    <TD><FONT STYLE="color: Black">&nbsp;</FONT></TD>
    <TD><FONT STYLE="color: Black">&nbsp;</FONT></TD>
    <TD><FONT STYLE="color: Black">&nbsp;</FONT></TD>
    <TD>&nbsp;</TD>
    <TD><FONT STYLE="color: Black">&nbsp;</FONT></TD>
    <TD><FONT STYLE="color: Black">&nbsp;</FONT></TD></TR>
<TR STYLE="vertical-align: top; background-color: #CCEEFF">
    <TD><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt; color: Black">5.1*</FONT></TD>
    <TD><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt; color: Black">Lucosky Brookman LLP Opinion</FONT></TD>
    <TD><FONT STYLE="color: Black">&nbsp;</FONT></TD>
    <TD><FONT STYLE="color: Black">&nbsp;</FONT></TD>
    <TD>&nbsp;</TD>
    <TD><FONT STYLE="color: Black">&nbsp;</FONT></TD>
    <TD><FONT STYLE="color: Black">&nbsp;</FONT></TD></TR>
<TR STYLE="vertical-align: top; background-color: white">
    <TD><FONT STYLE="color: Black">&nbsp;</FONT></TD>
    <TD><FONT STYLE="color: Black">&nbsp;</FONT></TD>
    <TD><FONT STYLE="color: Black">&nbsp;</FONT></TD>
    <TD><FONT STYLE="color: Black">&nbsp;</FONT></TD>
    <TD>&nbsp;</TD>
    <TD><FONT STYLE="color: Black">&nbsp;</FONT></TD>
    <TD><FONT STYLE="color: Black">&nbsp;</FONT></TD></TR>
<TR STYLE="vertical-align: top; background-color: #CCEEFF">
    <TD><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt; color: Black">10.1</FONT></TD>
    <TD><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt; color: Black"><A HREF="http://www.sec.gov/Archives/edgar/data/1014052/000121390018003300/f10q0118ex10-3_digerati.htm" STYLE="-sec-extract: exhibit">Equity Purchase Agreement with Peak One Opportunity Fund, L.P. dated January 12, 2018</A></FONT></TD>
    <TD><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt; color: Black">10-Q</FONT></TD>
    <TD><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt; color: Black">10.3</FONT></TD>
    <TD>&nbsp;</TD>
    <TD><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt; color: Black">3/22/18</FONT></TD>
    <TD><FONT STYLE="color: Black">&nbsp;</FONT></TD></TR>
<TR STYLE="vertical-align: top; background-color: white">
    <TD><FONT STYLE="color: Black">&nbsp;</FONT></TD>
    <TD><FONT STYLE="color: Black">&nbsp;</FONT></TD>
    <TD><FONT STYLE="color: Black">&nbsp;</FONT></TD>
    <TD><FONT STYLE="color: Black">&nbsp;</FONT></TD>
    <TD>&nbsp;</TD>
    <TD><FONT STYLE="color: Black">&nbsp;</FONT></TD>
    <TD><FONT STYLE="color: Black">&nbsp;</FONT></TD></TR>
<TR STYLE="vertical-align: top; background-color: #CCEEFF">
    <TD><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt; color: Black">10.2+</FONT></TD>
    <TD><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt; color: Black"><A HREF="http://www.sec.gov/Archives/edgar/data/1014052/000121390015000447/f8k103114ex10vii_digerati.htm" STYLE="-sec-extract: exhibit">Form of stock award agreement under the Company&rsquo;s 2015 Stock &nbsp;Compensation Plan for grants to qualifying employees&rsquo; 401K Retirement Accounts</A></FONT></TD>
    <TD><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt; color: Black">8-K</FONT></TD>
    <TD><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt; color: Black">10.7</FONT></TD>
    <TD>&nbsp;</TD>
    <TD><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt; color: Black">1/21/15</FONT></TD>
    <TD><FONT STYLE="color: Black">&nbsp;</FONT></TD></TR>
<TR STYLE="vertical-align: top; background-color: white">
    <TD><FONT STYLE="color: Black">&nbsp;</FONT></TD>
    <TD><FONT STYLE="color: Black">&nbsp;</FONT></TD>
    <TD><FONT STYLE="color: Black">&nbsp;</FONT></TD>
    <TD><FONT STYLE="color: Black">&nbsp;</FONT></TD>
    <TD>&nbsp;</TD>
    <TD><FONT STYLE="color: Black">&nbsp;</FONT></TD>
    <TD><FONT STYLE="color: Black">&nbsp;</FONT></TD></TR>
<TR STYLE="vertical-align: top; background-color: #CCEEFF">
    <TD><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt; color: Black">10.3</FONT></TD>
    <TD><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt; color: Black"><A HREF="http://www.sec.gov/Archives/edgar/data/1014052/000121390015000447/f8k103114ex10vi_digerati.htm" STYLE="-sec-extract: exhibit">Stock Purchase Agreement</A></FONT></TD>
    <TD><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt; color: Black">8-K</FONT></TD>
    <TD><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt; color: Black">10.6</FONT></TD>
    <TD>&nbsp;</TD>
    <TD><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt; color: Black">1/21/15</FONT></TD>
    <TD><FONT STYLE="color: Black">&nbsp;</FONT></TD></TR>
<TR STYLE="vertical-align: top; background-color: white">
    <TD><FONT STYLE="color: Black">&nbsp;</FONT></TD>
    <TD><FONT STYLE="color: Black">&nbsp;</FONT></TD>
    <TD><FONT STYLE="color: Black">&nbsp;</FONT></TD>
    <TD><FONT STYLE="color: Black">&nbsp;</FONT></TD>
    <TD>&nbsp;</TD>
    <TD><FONT STYLE="color: Black">&nbsp;</FONT></TD>
    <TD><FONT STYLE="color: Black">&nbsp;</FONT></TD></TR>
<TR STYLE="vertical-align: top; background-color: #CCEEFF">
    <TD><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt; color: Black">10.4+</FONT></TD>
    <TD><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt; color: Black"><A HREF="http://www.sec.gov/Archives/edgar/data/1014052/000121390015008839/fs82015ex4i_digeratitechno.htm" STYLE="-sec-extract: exhibit">2015 Equity Compensation Plan.</A></FONT></TD>
    <TD><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt; color: Black">S-8</FONT></TD>
    <TD><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt; color: Black">10.2</FONT></TD>
    <TD>&nbsp;</TD>
    <TD><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt; color: Black">11/18/15</FONT></TD>
    <TD><FONT STYLE="color: Black">&nbsp;</FONT></TD></TR>
<TR STYLE="vertical-align: top; background-color: white">
    <TD><FONT STYLE="color: Black">&nbsp;</FONT></TD>
    <TD><FONT STYLE="color: Black">&nbsp;</FONT></TD>
    <TD><FONT STYLE="color: Black">&nbsp;</FONT></TD>
    <TD><FONT STYLE="color: Black">&nbsp;</FONT></TD>
    <TD>&nbsp;</TD>
    <TD><FONT STYLE="color: Black">&nbsp;</FONT></TD>
    <TD><FONT STYLE="color: Black">&nbsp;</FONT></TD></TR>
<TR STYLE="vertical-align: top; background-color: #CCEEFF">
    <TD><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt; color: Black">10.5</FONT></TD>
    <TD><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt; color: Black"><A HREF="http://www.sec.gov/Archives/edgar/data/1014052/000121390018003300/f10q0118ex10-2_digerati.htm" STYLE="-sec-extract: exhibit">Debenture issued to Peak One dated 1/17/18</A></FONT></TD>
    <TD><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt; color: Black">10-Q</FONT></TD>
    <TD><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt; color: Black">10.2</FONT></TD>
    <TD>&nbsp;</TD>
    <TD><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt; color: Black">3/22/18</FONT></TD>
    <TD><FONT STYLE="color: Black">&nbsp;</FONT></TD></TR>
<TR STYLE="vertical-align: top; background-color: white">
    <TD><FONT STYLE="color: Black">&nbsp;</FONT></TD>
    <TD><FONT STYLE="color: Black">&nbsp;</FONT></TD>
    <TD><FONT STYLE="color: Black">&nbsp;</FONT></TD>
    <TD><FONT STYLE="color: Black">&nbsp;</FONT></TD>
    <TD>&nbsp;</TD>
    <TD><FONT STYLE="color: Black">&nbsp;</FONT></TD>
    <TD><FONT STYLE="color: Black">&nbsp;</FONT></TD></TR>
<TR STYLE="vertical-align: top; background-color: #CCEEFF">
    <TD><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt; color: Black">10.6</FONT></TD>
    <TD><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt; color: Black"><A HREF="http://www.sec.gov/Archives/edgar/data/1014052/000121390018003300/f10q0118ex10-4_digerati.htm" STYLE="-sec-extract: exhibit">Registration Rights Agreement with Peak One dated 1/12/18</A></FONT></TD>
    <TD><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt; color: Black">10-Q</FONT></TD>
    <TD><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt; color: Black">10.4</FONT></TD>
    <TD>&nbsp;</TD>
    <TD><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt; color: Black">3/22/18</FONT></TD>
    <TD><FONT STYLE="color: Black">&nbsp;</FONT></TD></TR>
<TR STYLE="vertical-align: top; background-color: white">
    <TD><FONT STYLE="color: Black">&nbsp;</FONT></TD>
    <TD><FONT STYLE="color: Black">&nbsp;</FONT></TD>
    <TD><FONT STYLE="color: Black">&nbsp;</FONT></TD>
    <TD><FONT STYLE="color: Black">&nbsp;</FONT></TD>
    <TD>&nbsp;</TD>
    <TD><FONT STYLE="color: Black">&nbsp;</FONT></TD>
    <TD><FONT STYLE="color: Black">&nbsp;</FONT></TD></TR>
<TR STYLE="vertical-align: top; background-color: #CCEEFF">
    <TD><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt; color: Black">10.7</FONT></TD>
    <TD><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt; color: Black"><A HREF="http://www.sec.gov/Archives/edgar/data/1014052/000121390018005679/f8k050718ex10-1_digerati.htm" STYLE="-sec-extract: exhibit">Articles of Merger T3 Communications and T3 Acquisition dated 5/18/18</A></FONT></TD>
    <TD><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt; color: Black">8-K</FONT></TD>
    <TD><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt; color: Black">10.1</FONT></TD>
    <TD>&nbsp;</TD>
    <TD><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt; color: Black">5/8/18</FONT></TD>
    <TD><FONT STYLE="color: Black">&nbsp;</FONT></TD></TR>
<TR STYLE="vertical-align: top; background-color: white">
    <TD><FONT STYLE="color: Black">&nbsp;</FONT></TD>
    <TD><FONT STYLE="color: Black">&nbsp;</FONT></TD>
    <TD><FONT STYLE="color: Black">&nbsp;</FONT></TD>
    <TD><FONT STYLE="color: Black">&nbsp;</FONT></TD>
    <TD>&nbsp;</TD>
    <TD><FONT STYLE="color: Black">&nbsp;</FONT></TD>
    <TD><FONT STYLE="color: Black">&nbsp;</FONT></TD></TR>
<TR STYLE="vertical-align: top; background-color: #CCEEFF">
    <TD><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt; color: Black">10.8</FONT></TD>
    <TD><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt; color: Black"><A HREF="http://www.sec.gov/Archives/edgar/data/1014052/000121390018005679/f8k050718ex10-2_digerati.htm" STYLE="-sec-extract: exhibit">Promissory Note dated 4/30/18</A></FONT></TD>
    <TD><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt; color: Black">8-K</FONT></TD>
    <TD><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt; color: Black">10.2</FONT></TD>
    <TD>&nbsp;</TD>
    <TD><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt; color: Black">5/8/18</FONT></TD>
    <TD><FONT STYLE="color: Black">&nbsp;</FONT></TD></TR>
<TR STYLE="vertical-align: top; background-color: white">
    <TD><FONT STYLE="color: Black">&nbsp;</FONT></TD>
    <TD><FONT STYLE="color: Black">&nbsp;</FONT></TD>
    <TD><FONT STYLE="color: Black">&nbsp;</FONT></TD>
    <TD><FONT STYLE="color: Black">&nbsp;</FONT></TD>
    <TD>&nbsp;</TD>
    <TD><FONT STYLE="color: Black">&nbsp;</FONT></TD>
    <TD><FONT STYLE="color: Black">&nbsp;</FONT></TD></TR>
<TR STYLE="vertical-align: top; background-color: #CCEEFF">
    <TD><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt; color: Black">10.9</FONT></TD>
    <TD><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt; color: Black"><A HREF="http://www.sec.gov/Archives/edgar/data/1014052/000121390018005679/f8k050718ex10-3_digerati.htm" STYLE="-sec-extract: exhibit">Promissory Note dated 4/30/18</A></FONT></TD>
    <TD><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt; color: Black">8-K</FONT></TD>
    <TD><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt; color: Black">10.3</FONT></TD>
    <TD>&nbsp;</TD>
    <TD><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt; color: Black">5/8/18</FONT></TD>
    <TD><FONT STYLE="color: Black">&nbsp;</FONT></TD></TR>
<TR STYLE="vertical-align: top; background-color: white">
    <TD><FONT STYLE="color: Black">&nbsp;</FONT></TD>
    <TD><FONT STYLE="color: Black">&nbsp;</FONT></TD>
    <TD><FONT STYLE="color: Black">&nbsp;</FONT></TD>
    <TD><FONT STYLE="color: Black">&nbsp;</FONT></TD>
    <TD>&nbsp;</TD>
    <TD><FONT STYLE="color: Black">&nbsp;</FONT></TD>
    <TD><FONT STYLE="color: Black">&nbsp;</FONT></TD></TR>
<TR STYLE="vertical-align: top; background-color: #CCEEFF">
    <TD><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt; color: Black">10.10</FONT></TD>
    <TD><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt; color: Black"><A HREF="http://www.sec.gov/Archives/edgar/data/1014052/000121390018005679/f8k050718ex10-4_digerati.htm">Promissory Note dated 4/30/18</A></FONT></TD>
    <TD><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt; color: Black">8-K</FONT></TD>
    <TD><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt; color: Black">10.4</FONT></TD>
    <TD>&nbsp;</TD>
    <TD><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt; color: Black">5/8/18</FONT></TD>
    <TD><FONT STYLE="color: Black">&nbsp;</FONT></TD></TR>
<TR STYLE="vertical-align: top; background-color: white">
    <TD><FONT STYLE="color: Black">&nbsp;</FONT></TD>
    <TD><FONT STYLE="color: Black">&nbsp;</FONT></TD>
    <TD><FONT STYLE="color: Black">&nbsp;</FONT></TD>
    <TD><FONT STYLE="color: Black">&nbsp;</FONT></TD>
    <TD>&nbsp;</TD>
    <TD><FONT STYLE="color: Black">&nbsp;</FONT></TD>
    <TD><FONT STYLE="color: Black">&nbsp;</FONT></TD></TR>
<TR STYLE="vertical-align: top; background-color: #CCEEFF">
    <TD><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt; color: Black">10.11</FONT></TD>
    <TD><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt; color: Black"><A HREF="http://www.sec.gov/Archives/edgar/data/1014052/000121390018005679/f8k050718ex10-6_digerati.htm">Promissory Note dated 4/30/18</A></FONT></TD>
    <TD><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt; color: Black">8-K</FONT></TD>
    <TD><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt; color: Black">10.6</FONT></TD>
    <TD>&nbsp;</TD>
    <TD><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt; color: Black">5/8/18</FONT></TD>
    <TD><FONT STYLE="color: Black">&nbsp;</FONT></TD></TR>
<TR STYLE="vertical-align: top; background-color: white">
    <TD><FONT STYLE="color: Black">&nbsp;</FONT></TD>
    <TD><FONT STYLE="color: Black">&nbsp;</FONT></TD>
    <TD><FONT STYLE="color: Black">&nbsp;</FONT></TD>
    <TD><FONT STYLE="color: Black">&nbsp;</FONT></TD>
    <TD>&nbsp;</TD>
    <TD><FONT STYLE="color: Black">&nbsp;</FONT></TD>
    <TD><FONT STYLE="color: Black">&nbsp;</FONT></TD></TR>
<TR STYLE="vertical-align: top; background-color: #CCEEFF">
    <TD><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt; color: Black">10.12</FONT></TD>
    <TD><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt; color: Black"><A HREF="http://www.sec.gov/Archives/edgar/data/1014052/000121390018007652/f10q0418ex10-1_digerati.htm" STYLE="-sec-extract: exhibit">Securities Purchase Agreement dated 5/30/18</A></FONT></TD>
    <TD><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt; color: Black">10-Q</FONT></TD>
    <TD><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt; color: Black">10.1</FONT></TD>
    <TD>&nbsp;</TD>
    <TD><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt; color: Black">6/14/18</FONT></TD>
    <TD><FONT STYLE="color: Black">&nbsp;</FONT></TD></TR>
<TR STYLE="vertical-align: top; background-color: white">
    <TD><FONT STYLE="color: Black">&nbsp;</FONT></TD>
    <TD><FONT STYLE="color: Black">&nbsp;</FONT></TD>
    <TD><FONT STYLE="color: Black">&nbsp;</FONT></TD>
    <TD><FONT STYLE="color: Black">&nbsp;</FONT></TD>
    <TD>&nbsp;</TD>
    <TD><FONT STYLE="color: Black">&nbsp;</FONT></TD>
    <TD><FONT STYLE="color: Black">&nbsp;</FONT></TD></TR>
<TR STYLE="vertical-align: top; background-color: #CCEEFF">
    <TD><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt; color: Black">10.13</FONT></TD>
    <TD><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt; color: Black"><A HREF="http://www.sec.gov/Archives/edgar/data/1014052/000121390018007652/f10q0418ex10-3_digerati.htm" STYLE="-sec-extract: exhibit">Stock Purchase Agreement dated 4/30/18</A></FONT></TD>
    <TD><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt; color: Black">10-Q</FONT></TD>
    <TD><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt; color: Black">10.3</FONT></TD>
    <TD>&nbsp;</TD>
    <TD><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt; color: Black">6/14/18</FONT></TD>
    <TD><FONT STYLE="color: Black">&nbsp;</FONT></TD></TR>
<TR STYLE="vertical-align: top; background-color: white">
    <TD><FONT STYLE="color: Black">&nbsp;</FONT></TD>
    <TD><FONT STYLE="color: Black">&nbsp;</FONT></TD>
    <TD><FONT STYLE="color: Black">&nbsp;</FONT></TD>
    <TD><FONT STYLE="color: Black">&nbsp;</FONT></TD>
    <TD>&nbsp;</TD>
    <TD><FONT STYLE="color: Black">&nbsp;</FONT></TD>
    <TD><FONT STYLE="color: Black">&nbsp;</FONT></TD></TR>
<TR STYLE="vertical-align: top; background-color: #CCEEFF">
    <TD><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt; color: Black">10.14</FONT></TD>
    <TD><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt; color: Black"><A HREF="http://www.sec.gov/Archives/edgar/data/1014052/000121390018016037/f10k2018ex10-3_digeratitech.htm" STYLE="-sec-extract: exhibit">Debenture issued to Peak One dated 7/31/18</A></FONT></TD>
    <TD><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt; color: Black">10-K</FONT></TD>
    <TD><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt; color: Black">10.3</FONT></TD>
    <TD>&nbsp;</TD>
    <TD><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt; color: Black">11/16/18</FONT></TD>
    <TD><FONT STYLE="color: Black">&nbsp;</FONT></TD></TR>
<TR STYLE="vertical-align: top; background-color: white">
    <TD><FONT STYLE="color: Black">&nbsp;</FONT></TD>
    <TD><FONT STYLE="color: Black">&nbsp;</FONT></TD>
    <TD><FONT STYLE="color: Black">&nbsp;</FONT></TD>
    <TD><FONT STYLE="color: Black">&nbsp;</FONT></TD>
    <TD>&nbsp;</TD>
    <TD><FONT STYLE="color: Black">&nbsp;</FONT></TD>
    <TD><FONT STYLE="color: Black">&nbsp;</FONT></TD></TR>
<TR STYLE="vertical-align: top; background-color: #CCEEFF">
    <TD><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt; color: Black">10.15</FONT></TD>
    <TD><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt; color: Black"><A HREF="http://www.sec.gov/Archives/edgar/data/1014052/000121390018016037/f10k2018ex10-4_digeratitech.htm" STYLE="-sec-extract: exhibit">Promissory Note dated 10/12/18.</A></FONT></TD>
    <TD><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt; color: Black">10-K</FONT></TD>
    <TD><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt; color: Black">10.4</FONT></TD>
    <TD>&nbsp;</TD>
    <TD><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt; color: Black">11/16/18</FONT></TD>
    <TD><FONT STYLE="color: Black">&nbsp;</FONT></TD></TR>
<TR STYLE="vertical-align: top; background-color: white">
    <TD><FONT STYLE="color: Black">&nbsp;</FONT></TD>
    <TD><FONT STYLE="color: Black">&nbsp;</FONT></TD>
    <TD><FONT STYLE="color: Black">&nbsp;</FONT></TD>
    <TD><FONT STYLE="color: Black">&nbsp;</FONT></TD>
    <TD>&nbsp;</TD>
    <TD><FONT STYLE="color: Black">&nbsp;</FONT></TD>
    <TD><FONT STYLE="color: Black">&nbsp;</FONT></TD></TR>
<TR STYLE="vertical-align: top; background-color: #CCEEFF">
    <TD><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt; color: Black">10.16</FONT></TD>
    <TD><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt; color: Black"><A HREF="http://www.sec.gov/Archives/edgar/data/1014052/000121390018016037/f10k2018ex10-5_digeratitech.htm" STYLE="-sec-extract: exhibit">Promissory Note dated 10/18/18.</A></FONT></TD>
    <TD><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt; color: Black">10-K</FONT></TD>
    <TD><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt; color: Black">10.5</FONT></TD>
    <TD>&nbsp;</TD>
    <TD><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt; color: Black">11/16/18</FONT></TD>
    <TD><FONT STYLE="color: Black">&nbsp;</FONT></TD></TR>
<TR STYLE="vertical-align: top; background-color: white">
    <TD><FONT STYLE="color: Black">&nbsp;</FONT></TD>
    <TD><FONT STYLE="color: Black">&nbsp;</FONT></TD>
    <TD><FONT STYLE="color: Black">&nbsp;</FONT></TD>
    <TD><FONT STYLE="color: Black">&nbsp;</FONT></TD>
    <TD>&nbsp;</TD>
    <TD><FONT STYLE="color: Black">&nbsp;</FONT></TD>
    <TD><FONT STYLE="color: Black">&nbsp;</FONT></TD></TR>
<TR STYLE="vertical-align: top; background-color: #CCEEFF">
    <TD><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt; color: Black">10.17</FONT></TD>
    <TD><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt; color: Black"><A HREF="http://www.sec.gov/Archives/edgar/data/1014052/000121390018016037/f10k2018ex10-6_digeratitech.htm" STYLE="-sec-extract: exhibit">Promissory Note dated 10/22/18.</A></FONT></TD>
    <TD><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt; color: Black">10-K</FONT></TD>
    <TD><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt; color: Black">10.6</FONT></TD>
    <TD>&nbsp;</TD>
    <TD><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt; color: Black">11/16/18</FONT></TD>
    <TD><FONT STYLE="color: Black">&nbsp;</FONT></TD></TR>
<TR STYLE="vertical-align: top; background-color: white">
    <TD><FONT STYLE="color: Black">&nbsp;</FONT></TD>
    <TD><FONT STYLE="color: Black">&nbsp;</FONT></TD>
    <TD><FONT STYLE="color: Black">&nbsp;</FONT></TD>
    <TD><FONT STYLE="color: Black">&nbsp;</FONT></TD>
    <TD>&nbsp;</TD>
    <TD><FONT STYLE="color: Black">&nbsp;</FONT></TD>
    <TD><FONT STYLE="color: Black">&nbsp;</FONT></TD></TR>
<TR STYLE="vertical-align: top; background-color: #CCEEFF">
    <TD><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt; color: Black">10.18</FONT></TD>
    <TD><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt; color: Black"><A HREF="http://www.sec.gov/Archives/edgar/data/1014052/000121390018017369/f10q1018ex10-3_digerati.htm" STYLE="-sec-extract: exhibit">Promissory Note dated 11/22/18</A></FONT></TD>
    <TD><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt; color: Black">10-Q</FONT></TD>
    <TD><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt; color: Black">10.3</FONT></TD>
    <TD>&nbsp;</TD>
    <TD><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt; color: Black">12/14/18</FONT></TD>
    <TD><FONT STYLE="color: Black">&nbsp;</FONT></TD></TR>
<TR STYLE="vertical-align: top; background-color: white">
    <TD><FONT STYLE="color: Black">&nbsp;</FONT></TD>
    <TD><FONT STYLE="color: Black">&nbsp;</FONT></TD>
    <TD><FONT STYLE="color: Black">&nbsp;</FONT></TD>
    <TD><FONT STYLE="color: Black">&nbsp;</FONT></TD>
    <TD>&nbsp;</TD>
    <TD><FONT STYLE="color: Black">&nbsp;</FONT></TD>
    <TD><FONT STYLE="color: Black">&nbsp;</FONT></TD></TR>
<TR STYLE="vertical-align: top; background-color: #CCEEFF">
    <TD><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt; color: Black">10.19</FONT></TD>
    <TD><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt; color: Black"><A HREF="http://www.sec.gov/Archives/edgar/data/1014052/000121390019003444/f8k011619ex4-2_digerati.htm" STYLE="-sec-extract: exhibit">Promissory Note dated 1/16/19</A></FONT></TD>
    <TD><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt; color: Black">8-K</FONT></TD>
    <TD><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt; color: Black">4.1</FONT></TD>
    <TD>&nbsp;</TD>
    <TD><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt; color: Black">3/1/19</FONT></TD>
    <TD><FONT STYLE="color: Black">&nbsp;</FONT></TD></TR>
<TR STYLE="vertical-align: top; background-color: white">
    <TD><FONT STYLE="color: Black">&nbsp;</FONT></TD>
    <TD><FONT STYLE="color: Black">&nbsp;</FONT></TD>
    <TD><FONT STYLE="color: Black">&nbsp;</FONT></TD>
    <TD><FONT STYLE="color: Black">&nbsp;</FONT></TD>
    <TD>&nbsp;</TD>
    <TD><FONT STYLE="color: Black">&nbsp;</FONT></TD>
    <TD><FONT STYLE="color: Black">&nbsp;</FONT></TD></TR>
<TR STYLE="vertical-align: top; background-color: #CCEEFF">
    <TD><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt; color: Black">10.20</FONT></TD>
    <TD><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt; color: Black"><A HREF="http://www.sec.gov/Archives/edgar/data/1014052/000121390019003444/f8k011619ex4-2_digerati.htm" STYLE="-sec-extract: exhibit">Promissory Note dated 1/16/19</A></FONT></TD>
    <TD><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt; color: Black">8-K</FONT></TD>
    <TD><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt; color: Black">4.2</FONT></TD>
    <TD>&nbsp;</TD>
    <TD><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt; color: Black">3/1/19</FONT></TD>
    <TD><FONT STYLE="color: Black">&nbsp;</FONT></TD></TR>
<TR STYLE="vertical-align: top; background-color: white">
    <TD><FONT STYLE="color: Black">&nbsp;</FONT></TD>
    <TD><FONT STYLE="color: Black">&nbsp;</FONT></TD>
    <TD><FONT STYLE="color: Black">&nbsp;</FONT></TD>
    <TD><FONT STYLE="color: Black">&nbsp;</FONT></TD>
    <TD>&nbsp;</TD>
    <TD><FONT STYLE="color: Black">&nbsp;</FONT></TD>
    <TD><FONT STYLE="color: Black">&nbsp;</FONT></TD></TR>
<TR STYLE="vertical-align: top; background-color: #CCEEFF">
    <TD><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt; color: Black">10.21</FONT></TD>
    <TD><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt; color: Black"><A HREF="http://www.sec.gov/Archives/edgar/data/1014052/000121390019003444/f8k011619ex4-3_digerati.htm" STYLE="-sec-extract: exhibit">Promissory Note dated 1/16/19</A></FONT></TD>
    <TD><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt; color: Black">8-K</FONT></TD>
    <TD><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt; color: Black">4.3</FONT></TD>
    <TD>&nbsp;</TD>
    <TD><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt; color: Black">3/1/19</FONT></TD>
    <TD><FONT STYLE="color: Black">&nbsp;</FONT></TD></TR>
<TR STYLE="vertical-align: top; background-color: white">
    <TD><FONT STYLE="color: Black">&nbsp;</FONT></TD>
    <TD><FONT STYLE="color: Black">&nbsp;</FONT></TD>
    <TD><FONT STYLE="color: Black">&nbsp;</FONT></TD>
    <TD><FONT STYLE="color: Black">&nbsp;</FONT></TD>
    <TD>&nbsp;</TD>
    <TD><FONT STYLE="color: Black">&nbsp;</FONT></TD>
    <TD><FONT STYLE="color: Black">&nbsp;</FONT></TD></TR>
<TR STYLE="vertical-align: top; background-color: #CCEEFF">
    <TD><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt; color: Black">10.22</FONT></TD>
    <TD><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt; color: Black"><A HREF="http://www.sec.gov/Archives/edgar/data/1014052/000121390019003444/f8k011619ex4-4_digerati.htm" STYLE="-sec-extract: exhibit">Promissory Note dated 1/24/19</A></FONT></TD>
    <TD><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt; color: Black">8-K</FONT></TD>
    <TD><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt; color: Black">4.4</FONT></TD>
    <TD>&nbsp;</TD>
    <TD><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt; color: Black">3/1/19</FONT></TD>
    <TD><FONT STYLE="color: Black">&nbsp;</FONT></TD></TR>
<TR STYLE="vertical-align: top; background-color: white">
    <TD><FONT STYLE="color: Black">&nbsp;</FONT></TD>
    <TD><FONT STYLE="color: Black">&nbsp;</FONT></TD>
    <TD><FONT STYLE="color: Black">&nbsp;</FONT></TD>
    <TD><FONT STYLE="color: Black">&nbsp;</FONT></TD>
    <TD>&nbsp;</TD>
    <TD><FONT STYLE="color: Black">&nbsp;</FONT></TD>
    <TD><FONT STYLE="color: Black">&nbsp;</FONT></TD></TR>
<TR STYLE="vertical-align: top; background-color: #CCEEFF">
    <TD><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt; color: Black">10.23</FONT></TD>
    <TD><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt; color: Black"><A HREF="http://www.sec.gov/Archives/edgar/data/1014052/000121390019003444/f8k011619ex4-5_digerati.htm" STYLE="-sec-extract: exhibit">Promissory Note dated 1/24/19</A></FONT></TD>
    <TD><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt; color: Black">8-K</FONT></TD>
    <TD><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt; color: Black">4.5</FONT></TD>
    <TD>&nbsp;</TD>
    <TD><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt; color: Black">3/1/19</FONT></TD>
    <TD><FONT STYLE="color: Black">&nbsp;</FONT></TD></TR>
<TR STYLE="vertical-align: top; background-color: white">
    <TD><FONT STYLE="color: Black">&nbsp;</FONT></TD>
    <TD><FONT STYLE="color: Black">&nbsp;</FONT></TD>
    <TD><FONT STYLE="color: Black">&nbsp;</FONT></TD>
    <TD><FONT STYLE="color: Black">&nbsp;</FONT></TD>
    <TD>&nbsp;</TD>
    <TD><FONT STYLE="color: Black">&nbsp;</FONT></TD>
    <TD><FONT STYLE="color: Black">&nbsp;</FONT></TD></TR>
<TR STYLE="vertical-align: top; background-color: #CCEEFF">
    <TD><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt; color: Black">10.24</FONT></TD>
    <TD><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt; color: Black"><A HREF="http://www.sec.gov/Archives/edgar/data/1014052/000121390018005679/f8k050718ex10-1_digerati.htm" STYLE="-sec-extract: exhibit">Securities Purchase Agreement dated 1/16/19</A></FONT></TD>
    <TD><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">8-K</FONT></TD>
    <TD><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">10.1</FONT></TD>
    <TD>&nbsp;</TD>
    <TD><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">3/1/19</FONT></TD>
    <TD>&nbsp;</TD></TR>
</TABLE>


<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>




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<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;&nbsp;&nbsp;&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; background-color: #CCEEFF">
    <TD STYLE="width: 7%"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">10.25</FONT></TD>
    <TD STYLE="width: 56%"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt; color: Black"><A HREF="http://www.sec.gov/Archives/edgar/data/1014052/000121390018005679/f8k050718ex10-2_digerati.htm" STYLE="-sec-extract: exhibit">Securities Purchase Agreement dated 1/16/19</A></FONT></TD>
    <TD STYLE="width: 7%"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt; color: Black">8-K</FONT></TD>
    <TD STYLE="width: 7%"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt; color: Black">10.2</FONT></TD>
    <TD STYLE="width: 1%">&nbsp;</TD>
    <TD STYLE="width: 7%"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt; color: Black">3/1/19</FONT></TD>
    <TD STYLE="width: 7%"><FONT STYLE="color: Black">&nbsp;</FONT></TD></TR>
<TR STYLE="vertical-align: top; background-color: white">
    <TD><FONT STYLE="color: Black">&nbsp;</FONT></TD>
    <TD><FONT STYLE="color: Black">&nbsp;</FONT></TD>
    <TD><FONT STYLE="color: Black">&nbsp;</FONT></TD>
    <TD><FONT STYLE="color: Black">&nbsp;</FONT></TD>
    <TD>&nbsp;</TD>
    <TD><FONT STYLE="color: Black">&nbsp;</FONT></TD>
    <TD><FONT STYLE="color: Black">&nbsp;</FONT></TD></TR>
<TR STYLE="vertical-align: top; background-color: #CCEEFF">
    <TD><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt; color: Black">10.26</FONT></TD>
    <TD><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt; color: Black"><A HREF="http://www.sec.gov/Archives/edgar/data/1014052/000121390018005679/f8k050718ex10-3_digerati.htm">Securities Purchase Agreement dated 1/16/19</A></FONT></TD>
    <TD><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt; color: Black">8-K</FONT></TD>
    <TD><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt; color: Black">10.3</FONT></TD>
    <TD>&nbsp;</TD>
    <TD><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt; color: Black">3/1/19</FONT></TD>
    <TD><FONT STYLE="color: Black">&nbsp;</FONT></TD></TR>
<TR STYLE="vertical-align: top; background-color: white">
    <TD><FONT STYLE="color: Black">&nbsp;</FONT></TD>
    <TD><FONT STYLE="color: Black">&nbsp;</FONT></TD>
    <TD><FONT STYLE="color: Black">&nbsp;</FONT></TD>
    <TD><FONT STYLE="color: Black">&nbsp;</FONT></TD>
    <TD>&nbsp;</TD>
    <TD><FONT STYLE="color: Black">&nbsp;</FONT></TD>
    <TD><FONT STYLE="color: Black">&nbsp;</FONT></TD></TR>
<TR STYLE="vertical-align: top; background-color: #CCEEFF">
    <TD><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt; color: Black">10.27</FONT></TD>
    <TD><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt; color: Black"><A HREF="http://www.sec.gov/Archives/edgar/data/1014052/000121390018005679/f8k050718ex10-4_digerati.htm">Securities Purchase Agreement dated 1/24/19</A></FONT></TD>
    <TD><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt; color: Black">8-K</FONT></TD>
    <TD><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt; color: Black">10.4</FONT></TD>
    <TD>&nbsp;</TD>
    <TD><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt; color: Black">3/1/19</FONT></TD>
    <TD><FONT STYLE="color: Black">&nbsp;</FONT></TD></TR>
<TR STYLE="vertical-align: top; background-color: white">
    <TD><FONT STYLE="color: Black">&nbsp;</FONT></TD>
    <TD><FONT STYLE="color: Black">&nbsp;</FONT></TD>
    <TD><FONT STYLE="color: Black">&nbsp;</FONT></TD>
    <TD><FONT STYLE="color: Black">&nbsp;</FONT></TD>
    <TD>&nbsp;</TD>
    <TD><FONT STYLE="color: Black">&nbsp;</FONT></TD>
    <TD><FONT STYLE="color: Black">&nbsp;</FONT></TD></TR>
<TR STYLE="vertical-align: top; background-color: #CCEEFF">
    <TD><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt; color: Black">10.28</FONT></TD>
    <TD><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt; color: Black"><A HREF="http://www.sec.gov/Archives/edgar/data/1014052/000121390018005679/f8k050718ex10-5_digerati.htm" STYLE="-sec-extract: exhibit">Securities Purchase Agreement dated 2/22/19</A></FONT></TD>
    <TD><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt; color: Black">8-K</FONT></TD>
    <TD><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt; color: Black">10.5</FONT></TD>
    <TD>&nbsp;</TD>
    <TD><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt; color: Black">3/1/19</FONT></TD>
    <TD><FONT STYLE="color: Black">&nbsp;</FONT></TD></TR>
<TR STYLE="vertical-align: top; background-color: white">
    <TD><FONT STYLE="color: Black">&nbsp;</FONT></TD>
    <TD><FONT STYLE="color: Black">&nbsp;</FONT></TD>
    <TD><FONT STYLE="color: Black">&nbsp;</FONT></TD>
    <TD><FONT STYLE="color: Black">&nbsp;</FONT></TD>
    <TD>&nbsp;</TD>
    <TD><FONT STYLE="color: Black">&nbsp;</FONT></TD>
    <TD><FONT STYLE="color: Black">&nbsp;</FONT></TD></TR>
<TR STYLE="vertical-align: top; background-color: #CCEEFF">
    <TD><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt; color: Black">10.29+</FONT></TD>
    <TD><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt; color: Black"><A HREF="http://www.sec.gov/Archives/edgar/data/1014052/000121390019004372/f10q0119ex10-1_digerati.htm" STYLE="-sec-extract: exhibit">Employment Agreement between Digerati and Craig K. Clement Dated 2/14/19</A></FONT></TD>
    <TD><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt; color: Black">10-Q</FONT></TD>
    <TD><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt; color: Black">10.1</FONT></TD>
    <TD>&nbsp;</TD>
    <TD><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt; color: Black">3/18/19</FONT></TD>
    <TD><FONT STYLE="color: Black">&nbsp;</FONT></TD></TR>
<TR STYLE="vertical-align: top; background-color: white">
    <TD><FONT STYLE="color: Black">&nbsp;</FONT></TD>
    <TD><FONT STYLE="color: Black">&nbsp;</FONT></TD>
    <TD><FONT STYLE="color: Black">&nbsp;</FONT></TD>
    <TD><FONT STYLE="color: Black">&nbsp;</FONT></TD>
    <TD>&nbsp;</TD>
    <TD><FONT STYLE="color: Black">&nbsp;</FONT></TD>
    <TD><FONT STYLE="color: Black">&nbsp;</FONT></TD></TR>
<TR STYLE="vertical-align: top; background-color: #CCEEFF">
    <TD><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt; color: Black">10.30+</FONT></TD>
    <TD><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt; color: Black"><A HREF="http://www.sec.gov/Archives/edgar/data/1014052/000121390019004372/f10q0119ex10-2_digerati.htm" STYLE="-sec-extract: exhibit">Employment Agreement between Digerati and Arthur L. Smith Dated 2/14/19</A></FONT></TD>
    <TD><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt; color: Black">10-Q</FONT></TD>
    <TD><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt; color: Black">10.2</FONT></TD>
    <TD>&nbsp;</TD>
    <TD><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt; color: Black">3/18/19</FONT></TD>
    <TD><FONT STYLE="color: Black">&nbsp;</FONT></TD></TR>
<TR STYLE="vertical-align: top; background-color: white">
    <TD><FONT STYLE="color: Black">&nbsp;</FONT></TD>
    <TD><FONT STYLE="color: Black">&nbsp;</FONT></TD>
    <TD><FONT STYLE="color: Black">&nbsp;</FONT></TD>
    <TD><FONT STYLE="color: Black">&nbsp;</FONT></TD>
    <TD>&nbsp;</TD>
    <TD><FONT STYLE="color: Black">&nbsp;</FONT></TD>
    <TD><FONT STYLE="color: Black">&nbsp;</FONT></TD></TR>
<TR STYLE="vertical-align: top; background-color: #CCEEFF">
    <TD><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt; color: Black">10.31+</FONT></TD>
    <TD><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt; color: Black"><A HREF="http://www.sec.gov/Archives/edgar/data/1014052/000121390019004372/f10q0119ex10-3_digerati.htm" STYLE="-sec-extract: exhibit">Employment Agreement between Digerati and Antonio Estrada Jr. Dated 2/14/19</A></FONT></TD>
    <TD><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt; color: Black">10-Q</FONT></TD>
    <TD><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt; color: Black">10.3</FONT></TD>
    <TD>&nbsp;</TD>
    <TD><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt; color: Black">3/18/19</FONT></TD>
    <TD><FONT STYLE="color: Black">&nbsp;</FONT></TD></TR>
<TR STYLE="vertical-align: top; background-color: white">
    <TD><FONT STYLE="color: Black">&nbsp;</FONT></TD>
    <TD><FONT STYLE="color: Black">&nbsp;</FONT></TD>
    <TD><FONT STYLE="color: Black">&nbsp;</FONT></TD>
    <TD><FONT STYLE="color: Black">&nbsp;</FONT></TD>
    <TD>&nbsp;</TD>
    <TD><FONT STYLE="color: Black">&nbsp;</FONT></TD>
    <TD><FONT STYLE="color: Black">&nbsp;</FONT></TD></TR>
<TR STYLE="vertical-align: top; background-color: #CCEEFF">
    <TD><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt; color: Black">10.32</FONT></TD>
    <TD><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt; color: Black"><A HREF="http://www.sec.gov/Archives/edgar/data/1014052/000121390019010796/f10q0419ex4-6_digerati.htm">Promissory Note dated 4/20/19</A></FONT></TD>
    <TD><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt; color: Black">10-Q</FONT></TD>
    <TD><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt; color: Black">4.6</FONT></TD>
    <TD>&nbsp;</TD>
    <TD><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt; color: Black">6/14/19</FONT></TD>
    <TD><FONT STYLE="color: Black">&nbsp;</FONT></TD></TR>
<TR STYLE="vertical-align: top; background-color: white">
    <TD><FONT STYLE="color: Black">&nbsp;</FONT></TD>
    <TD><FONT STYLE="color: Black">&nbsp;</FONT></TD>
    <TD><FONT STYLE="color: Black">&nbsp;</FONT></TD>
    <TD><FONT STYLE="color: Black">&nbsp;</FONT></TD>
    <TD>&nbsp;</TD>
    <TD><FONT STYLE="color: Black">&nbsp;</FONT></TD>
    <TD><FONT STYLE="color: Black">&nbsp;</FONT></TD></TR>
<TR STYLE="vertical-align: top; background-color: #CCEEFF">
    <TD><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt; color: Black">10.33</FONT></TD>
    <TD><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt; color: Black"><A HREF="http://www.sec.gov/Archives/edgar/data/1014052/000121390019010796/f10q0419ex10-6_digerati.htm" STYLE="-sec-extract: exhibit">Securities Purchase Agreement dated 4/20/19</A></FONT></TD>
    <TD><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">10-Q</FONT></TD>
    <TD><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">10.6</FONT></TD>
    <TD>&nbsp;</TD>
    <TD><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">6/14/19</FONT></TD>
    <TD>&nbsp;</TD></TR>
<TR STYLE="vertical-align: top; background-color: white">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD></TR>
<TR STYLE="vertical-align: top; background-color: #CCEEFF">
    <TD><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">21.1</FONT></TD>
    <TD><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">Subsidiaries List.</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;X</FONT></TD></TR>
<TR STYLE="vertical-align: top; background-color: white">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD></TR>
<TR STYLE="vertical-align: top; background-color: #CCEEFF">
    <TD><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">23.1</FONT></TD>
    <TD><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt"><A HREF="fs12019ex23-1_digeratitech.htm">Consent of MaloneBailey, LLP, Auditor for 2018.</A></FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;X</FONT></TD></TR>
<TR STYLE="vertical-align: top; background-color: white">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD></TR>
<TR STYLE="vertical-align: top; background-color: #CCEEFF">
    <TD><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">23.2</FONT></TD>
    <TD><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt"><A HREF="fs12019ex23-2_digeratitech.htm">Consent of LBB &amp; Associates Ltd, LLP for 2017.</A></FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;X</FONT></TD></TR>
<TR STYLE="vertical-align: top; background-color: white">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD></TR>
<TR STYLE="vertical-align: top; background-color: #CCEEFF">
    <TD><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">23.3*</FONT></TD>
    <TD><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">Consent of Counsel (Exhibit 5.1 Incorporated by Reference to 5.1).</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD></TR>
</TABLE>


<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;&nbsp;&nbsp;</P>

<TABLE CELLPADDING="0" CELLSPACING="0" STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0; margin-bottom: 0; width: 100%"><TR STYLE="vertical-align: top; text-align: justify">
<TD STYLE="width: 0"></TD><TD STYLE="width: 0.25in; text-align: left">*</TD><TD STYLE="text-align: justify">To be filed by amendment.</TD>
</TR></TABLE>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&nbsp;</P>

<TABLE CELLPADDING="0" CELLSPACING="0" STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0; margin-bottom: 0; width: 100%"><TR STYLE="vertical-align: top; text-align: justify">
<TD STYLE="width: 0"></TD><TD STYLE="width: 0.25in; text-align: left">+</TD><TD STYLE="text-align: justify">Indicates management contract or compensatory plan</TD>
</TR></TABLE>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&nbsp;&nbsp;&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"><B>ITEM 17. Undertakings</B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">The undersigned registrant hereby undertakes</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&nbsp;</P>

<TABLE CELLPADDING="0" CELLSPACING="0" STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0; margin-bottom: 0; width: 100%"><TR STYLE="vertical-align: top; text-align: justify">
<TD STYLE="width: 0.5in"></TD><TD STYLE="width: 0.25in; text-align: left"><FONT STYLE="font-size: 10pt">1.</FONT></TD><TD STYLE="text-align: justify"><FONT STYLE="font-size: 10pt">To file, during any
period in which offers or sales are being made, a post-effective amendment to this registration statement:</FONT></TD>
</TR></TABLE>
<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&nbsp;</P>

<TABLE CELLPADDING="0" CELLSPACING="0" STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0; margin-bottom: 0; width: 100%"><TR STYLE="vertical-align: top; text-align: justify">
<TD STYLE="width: 0.75in"></TD><TD STYLE="width: 0.25in; text-align: left"><FONT STYLE="font-size: 10pt">i.</FONT></TD><TD STYLE="text-align: justify"><FONT STYLE="font-size: 10pt">To include any Prospectus
required by section 10(a)(3) of the Securities Act of 1933;</FONT></TD>
</TR></TABLE>
<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>

<TABLE CELLPADDING="0" CELLSPACING="0" STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0; margin-bottom: 0; width: 100%"><TR STYLE="vertical-align: top; text-align: justify">
<TD STYLE="width: 0.75in"></TD><TD STYLE="width: 0.25in; text-align: left"><FONT STYLE="font-size: 10pt">ii.</FONT></TD><TD STYLE="text-align: justify">To reflect in the Prospectus any facts or events arising
after the effective date of the registration statement (or the most recent post-effective amendment thereof) which, individually
or in the aggregate, represent a fundamental change in the information set forth in the registration statement. Notwithstanding
the foregoing, any increase or decrease in volume of securities offered (if the total dollar value of securities offered would
not exceed that which was registered) and any deviation from the low or high end of the estimated maximum offering range may be
reflected in the form of Prospectus filed with the Commission pursuant to Rule 424(b) if, in the aggregate, the changes in volume
and price represent no more than 20% change in the maximum aggregate offering price set forth in the &ldquo;Calculation of Registration
Fee&rdquo; table in the effective registration statement.</TD>
</TR></TABLE>
        <P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&nbsp;&nbsp;</P>

<TABLE CELLPADDING="0" CELLSPACING="0" STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0; margin-bottom: 0; width: 100%"><TR STYLE="vertical-align: top; text-align: justify">
<TD STYLE="width: 0.75in"></TD><TD STYLE="width: 0.25in; text-align: left">iii.</TD><TD STYLE="text-align: justify">To include any material information with respect to
the plan of distribution not previously disclosed in the registration statement or any material change to such information in
the registration statement;</TD>
</TR></TABLE>
<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"></P>

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    <DIV STYLE="page-break-before: always; margin-top: 6pt; margin-bottom: 12pt"><P STYLE="margin: 0pt">&nbsp;</P></DIV>
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<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&nbsp;&nbsp;&nbsp;</P>

<TABLE CELLPADDING="0" CELLSPACING="0" STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0; margin-bottom: 0; width: 100%"><TR STYLE="vertical-align: top; text-align: justify">
<TD STYLE="width: 0.5in"></TD><TD STYLE="width: 0.25in; text-align: left"><FONT STYLE="font-size: 10pt">2.</FONT></TD><TD STYLE="text-align: justify">That, for the purpose of determining any liability
under the Securities Act of 1933, each such post-effective amendment shall be deemed to be a new registration statement relating
to the securities offered therein, and the offering of such securities at that time shall be deemed to be the initial bona fide
offering thereof.</TD>
</TR></TABLE>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt">&nbsp;</P>

<TABLE CELLPADDING="0" CELLSPACING="0" STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0; margin-bottom: 0; width: 100%"><TR STYLE="vertical-align: top; text-align: justify">
<TD STYLE="width: 0.5in"></TD><TD STYLE="width: 0.25in; text-align: left"><FONT STYLE="font-size: 10pt">3.</FONT></TD><TD STYLE="text-align: justify"><FONT STYLE="font-size: 10pt">To remove from registration
by means of a post-effective amendment any of the securities being registered which remain unsold at the termination of the offering.</FONT></TD>
</TR></TABLE>


<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&nbsp;</P>

<TABLE CELLPADDING="0" CELLSPACING="0" STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0; margin-bottom: 0; width: 100%"><TR STYLE="vertical-align: top; text-align: justify">
<TD STYLE="width: 0.5in"></TD><TD STYLE="width: 0.25in; text-align: left"><FONT STYLE="font-size: 10pt">4.</FONT></TD><TD STYLE="text-align: justify"><FONT STYLE="font-size: 10pt">That, for the purpose
of determining liability of the registrant under the Securities Act of 1933 to any purchaser in the initial distribution of the
securities: The undersigned registrant undertakes that in a primary offering of securities of the undersigned registrant pursuant
to this registration statement, regardless of the underwriting method used to sell the securities to the purchaser, if the securities
are offered or sold to such purchaser by means of any of the following communications, the undersigned registrant will be a seller
to the purchaser and will be considered to offer or sell such securities to such purchaser:</FONT></TD>
</TR></TABLE>
<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;&nbsp;</P>

<TABLE CELLPADDING="0" CELLSPACING="0" STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0; margin-bottom: 0; width: 100%"><TR STYLE="vertical-align: top; text-align: justify">
<TD STYLE="width: 0.75in"></TD><TD STYLE="width: 0.25in; text-align: left"><FONT STYLE="font-size: 10pt">i.</FONT></TD><TD STYLE="text-align: justify">Any Preliminary Prospectus or Prospectus of the undersigned
registrant relating to the offering required to be filed pursuant to Rule 424;</TD>
</TR></TABLE>



<P STYLE="margin: 0">&nbsp;</P>

<TABLE CELLPADDING="0" CELLSPACING="0" STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0; margin-bottom: 0; width: 100%"><TR STYLE="vertical-align: top; text-align: justify">
<TD STYLE="width: 0.75in"></TD><TD STYLE="width: 0.25in; text-align: left"><FONT STYLE="font-size: 10pt">ii.</FONT></TD><TD STYLE="text-align: justify"><FONT STYLE="font-size: 10pt">Any free writing Prospectus
relating to the offering prepared by or on behalf of the undersigned registrant or used or referred to by the undersigned registrant;</FONT></TD>
</TR></TABLE>
<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>

<TABLE CELLPADDING="0" CELLSPACING="0" STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0; margin-bottom: 0; width: 100%"><TR STYLE="vertical-align: top; text-align: justify">
<TD STYLE="width: 0.75in"></TD><TD STYLE="width: 0.25in; text-align: left"><FONT STYLE="font-size: 10pt">iii.</FONT></TD><TD STYLE="text-align: justify">The portion of any other free writing Prospectus relating
to the offering containing material information about the undersigned registrant or its securities provided by or on behalf of
the undersigned registrant; and</TD>
</TR></TABLE>



<P STYLE="margin: 0">&nbsp;</P>

<TABLE CELLPADDING="0" CELLSPACING="0" STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0; margin-bottom: 0; width: 100%"><TR STYLE="vertical-align: top; text-align: justify">
<TD STYLE="width: 0.75in"></TD><TD STYLE="width: 0.25in; text-align: left"><FONT STYLE="font-size: 10pt">iv.</FONT></TD><TD STYLE="text-align: justify"><FONT STYLE="font-size: 10pt">Any other communication
that is an offer in the offering made by the undersigned registrant to the purchaser.</FONT></TD>
</TR></TABLE>
<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&nbsp;</P>

<TABLE CELLPADDING="0" CELLSPACING="0" STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0; margin-bottom: 0; width: 100%"><TR STYLE="vertical-align: top; text-align: justify">
<TD STYLE="width: 0.5in"></TD><TD STYLE="width: 0.25in; text-align: left"><FONT STYLE="font-size: 10pt">5.</FONT></TD><TD STYLE="text-align: justify"><FONT STYLE="font-size: 10pt">That, for the purpose
of determining liability under the Securities Act of 1933 to any purchaser: Each Prospectus filed pursuant to Rule 424(b) as part
of a registration statement relating to an offering, other than registration statements relying on Rule 430B or other than Prospectuses
filed in reliance on Rule 430A, shall be deemed to be part of and included in the registration statement as of the date it is
first used after effectiveness. Provided, however, that no statement made in a registration statement or Prospectus that is part
of the registration statement or made in a document incorporated or deemed incorporated by reference into the registration statement
or Prospectus that is part of the registration statement will, as to a purchaser with a time of contract of sale prior to such
first use, supersede or modify any statement that was made in the registration statement or Prospectus that was part of the registration
statement or made in any such document immediately prior to such date of first use.</FONT></TD>
</TR></TABLE>
<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">Insofar as indemnification for liabilities
arising under the Securities Act of 1933 may be permitted to our directors, officers and controlling persons, we have been advised
that in the opinion of the Securities and Exchange Commission, such indemnification is against public policy as expressed in the
Securities Act of 1933 and is, therefore, unenforceable. In the event that a claim for indemnification against such liabilities
(other than the payment by us of expenses incurred or paid by a director, officer or controlling person of the corporation in the
successful defense of any action, suit or proceeding) is asserted by such director, officer or controlling person in connection
with the securities being registered, we will, unless in the opinion of our counsel the matter has been settled by a controlling
precedent, submit to a court of appropriate jurisdiction the question of whether such indemnification by us is against public policy
as expressed in the Securities Act of 1933, as amended, and will be governed by the final adjudication of such case.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center"></P>

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<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; text-align: center"><B>SIGNATURES</B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">Pursuant to the requirements of the Securities
Act of 1933, the registrant has duly caused this registration statement to be signed on its behalf by the undersigned, thereunto
duly authorized on September 16, 2019.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&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 STYLE="width: 34%; border-bottom: black 1.5pt solid"><FONT STYLE="font-size: 10pt">DATE</FONT></TD>
    <TD STYLE="width: 1%; padding-bottom: 1.5pt">&nbsp;</TD>
    <TD STYLE="width: 32%; border-bottom: black 1.5pt solid; text-align: center"><FONT STYLE="font-size: 10pt">SIGNATURE</FONT></TD>
    <TD STYLE="width: 1%; padding-bottom: 1.5pt">&nbsp;</TD>
    <TD STYLE="width: 32%; border-bottom: black 1.5pt solid; text-align: center"><FONT STYLE="font-size: 10pt">TITLE</FONT></TD></TR>
<TR STYLE="vertical-align: top">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD></TR>
<TR STYLE="vertical-align: top">
    <TD><FONT STYLE="font-size: 10pt">September 16, 2019</FONT></TD>
    <TD>&nbsp;</TD>
    <TD STYLE="border-bottom: black 1.5pt solid">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD><FONT STYLE="font-size: 10pt">Chief Executive Officer and President</FONT></TD></TR>
<TR STYLE="vertical-align: top">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD><FONT STYLE="font-size: 10pt">Arthur L. Smith</FONT></TD>
    <TD>&nbsp;</TD>
    <TD><FONT STYLE="font-size: 10pt">(Principal Executive Officer)</FONT></TD></TR>
</TABLE>
<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">In accordance with the requirements of
the Securities Act of 1933, this registration statement was signed by the following persons in the capacities and on the dates
stated:</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 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 STYLE="width: 34%; border-bottom: black 1.5pt solid"><FONT STYLE="font-size: 10pt">DATE</FONT></TD>
    <TD STYLE="width: 1%; padding-bottom: 1.5pt">&nbsp;</TD>
    <TD STYLE="width: 32%; border-bottom: black 1.5pt solid; text-align: center"><FONT STYLE="font-size: 10pt">SIGNATURE</FONT></TD>
    <TD STYLE="width: 1%; padding-bottom: 1.5pt; text-align: center">&nbsp;</TD>
    <TD STYLE="width: 32%; border-bottom: black 1.5pt solid; text-align: center"><FONT STYLE="font-size: 10pt">TITLE</FONT></TD></TR>
<TR STYLE="vertical-align: top">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD></TR>
<TR STYLE="vertical-align: top">
    <TD><FONT STYLE="font-size: 10pt">September 16, 2019</FONT></TD>
    <TD>&nbsp;</TD>
    <TD STYLE="border-bottom: black 1.5pt solid"><FONT STYLE="font-size: 10pt"><I>/s/ Arthur L. Smith</I></FONT></TD>
    <TD>&nbsp;</TD>
    <TD><FONT STYLE="font-size: 10pt">Chief Executive Officer, President, </FONT></TD></TR>
<TR STYLE="vertical-align: top">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD><FONT STYLE="font-size: 10pt">Arthur L. Smith</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>and Director</TD></TR>
<TR STYLE="vertical-align: top">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD></TR>
<TR STYLE="vertical-align: top">
    <TD><FONT STYLE="font-size: 10pt">September 16, 2019</FONT></TD>
    <TD>&nbsp;</TD>
    <TD STYLE="border-bottom: black 1.5pt solid"><FONT STYLE="font-size: 10pt"><I>/s/ Antonio Estrada Jr</I></FONT></TD>
    <TD>&nbsp;</TD>
    <TD><FONT STYLE="font-size: 10pt">Chief Financial Officer </FONT></TD></TR>
<TR STYLE="vertical-align: top">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD STYLE="padding-bottom: 1.5pt"><FONT STYLE="font-size: 10pt">Antonio Estrada Jr</FONT></TD>
    <TD>&nbsp;</TD>
    <TD><FONT STYLE="font-size: 10pt">(Principal Financial Officer) <BR>
(Principal Accounting Officer)</FONT></TD></TR>
<TR STYLE="vertical-align: top">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD STYLE="padding-bottom: 1.5pt">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD></TR>
<TR STYLE="vertical-align: top">
    <TD STYLE="padding-bottom: 1.5pt">&nbsp;</TD>
    <TD STYLE="padding-bottom: 1.5pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 1.5pt solid"><I>/s/ Craig K. Clement</I></TD>
    <TD STYLE="padding-bottom: 1.5pt">&nbsp;</TD>
    <TD>
        <P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"></P>
        <P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">Chairman</P></TD></TR>
<TR STYLE="vertical-align: top">
    <TD STYLE="padding-bottom: 1.5pt">September 16, 2019</TD>
    <TD>&nbsp;</TD>
    <TD STYLE="padding-bottom: 1.5pt">
        <P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"></P>
        <P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">Craig K. Clement</P></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD></TR>
<TR STYLE="vertical-align: top">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD STYLE="padding-bottom: 1.5pt">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD></TR>
<TR STYLE="vertical-align: top">
    <TD STYLE="padding-bottom: 1.5pt">&nbsp;</TD>
    <TD STYLE="padding-bottom: 1.5pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 1.5pt solid"><I>/s/ Maxwell A. Polinsky</I></TD>
    <TD STYLE="padding-bottom: 1.5pt">&nbsp;</TD>
    <TD>
        <P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"></P>
        <P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">Director</P></TD></TR>
<TR STYLE="vertical-align: top">
    <TD STYLE="padding-bottom: 1.5pt">September 16, 2019</TD>
    <TD>&nbsp;</TD>
    <TD STYLE="padding-bottom: 1.5pt">
        <P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"></P>
        <P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">Maxwell A. Polinsky</P></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD></TR>
</TABLE>
<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; text-align: center; margin-bottom: 0pt">II-8</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"></P>

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<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"></P>

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{"company-data": {"conformed-name": "Digerati Technologies, Inc.", "cik": "0001014052", "assigned-sic": "7374", "irs-number": "742849995", "state-of-incorporation": "NV", "fiscal-year-end": "0731"}, "filing-values": {"form-type": "S-1", "act": "33", "file-number": "333-233806", "film-number": "191096915"}, "business-address": {"street1": "825 W. BITTERS RD.,", "street2": "SUITE 104", "city": "SAN ANTONIO", "state": "TX", "zip": "78216", "phone": "(210) 775-0888"}, "mail-address": {"street1": "825 W. BITTERS RD.,", "street2": "SUITE 104", "city": "SAN ANTONIO", "state": "TX", "zip": "78216"}, "former-company": [{"former-conformed-name": "ATSI COMMUNICATIONS INC/DE", "date-changed": "20010925"}, {"former-conformed-name": "AMERICAN TELESOURCE INTERNATIONAL INC", "date-changed": "19960511"}]}
As filed
with the U.S. Securities and Exchange Commission on September 16, 2019
Registration
No. 333-
UNITED
STATES
SECURITIES
AND EXCHANGE COMMISSION
Washington,
D.C. 20549
FORM
S-1
REGISTRATION
STATEMENT UNDER THE SECURITIES ACT OF 1933
DIGERATI
TECHNOLOGIES, INC.
(Exact
name of registrant as specified in its charter)
Nevada
4813
74-2849995
(State of Incorporation)
(Primary
        Standard Industrial
Classification
        Number)
(IRS
        Employer
Identification
        Number)
825
W. Bitters, Suite 104
San
Antonio, Texas 78216
(210)
614-7240
(Address,
including zip code, and telephone number, including area code,
of
registrant's principal executive offices)
Please
send copies of all communications to:
Lucosky
Brookman LLP
101 Wood Avenue South, 5
th
Floor
Woodbridge, NJ 08830
Tel. No.: (732) 395-4400
Fax No.: (732) 395-4401
(Address,
including zip code, and telephone, including area code)
Approximate
date of proposed sale to the public:
From time to time after the effective date of this registration statement.
If
any of the securities being registered on this Form are to be offered on a delayed or continuous basis pursuant to Rule 415 under
the Securities Act of 1933, check the following box.  ☒
If
this Form is filed to register additional securities for an offering pursuant to Rule 462(b) under the Securities Act, please
check the following box and list the Securities Act registration statement number of the earlier effective registration statement
for the same offering.  ☐
If
this Form is a post-effective amendment filed pursuant to rule 462(c) under the Securities Act, check the following box and list
the Securities Act registration statement number of the earlier effective registration statement for the same offering.  ☐
If
this Form is a post-effective amendment filed pursuant to Rule 462(d) under the Securities Act, check the following box and list
the Securities Act registration statement number of the earlier effective registration statement for the same offering.  ☐
Indicate
by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, smaller reporting
company, or an emerging growth company. See the definitions of "large accelerated filer," "accelerated filer,"
"smaller reporting company," and "emerging growth company" in Rule 12b-2 of the Exchange Act.
Large accelerated filer
☐
Accelerated filer
☐
Non-accelerated filer
☒
Smaller reporting company
☒
Emerging Growth Company
☐
If
an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for
complying with any new or revised financial accounting standards provided pursuant to Section 7(a)(2)(B) of the Securities Act.  ☐
CALCULATION
OF REGISTRATION FEE
Title
of Each Class of securities to be registered
Number of shares of
common stock to be registered (1)
Proposed
Maximum
Offering
Price Per
Share
Proposed
Maximum
Aggregate
Offering
Price
Amount of
Registration
Fee (2)
Common Stock
6,074,142
$
0.10
(3)
$
607,414.20
$
73.62
Common Stock
250,000
0.09
(4)
22,500.00
2.73
Total
6,324,142
629,914.20
76.35
(1)
Includes up to an
    aggregate of 6,324,142 shares of the Company's common stock, par value $0.001 (the "Common Stock") including
    (i) 250,000 shares of Common Stock issued to Peak One Opportunity Fund, L.P. ("Peak One") as commitment shares
    (the "Commitment Shares"); and (ii) 6,074,142 shares of Common Stock to be issued in connection with an equity
    purchase agreement.
(2)
The fee is calculated
    by multiplying the aggregate offering amount by .0001212, pursuant to Section 6(b) of the Securities Act of 1933.
(3)
Based on the reported
    closing price for our common stock on the trading day period immediately preceding the filing of this Registration Statement
    of $0.10. The shares offered, hereunder, may be sold by the selling stockholder from time to time in the open market, through
    privately negotiated transactions, or a combination of these methods at market prices prevailing at the time of sale or at
    negotiated prices.
(4)
Estimated solely
    for purposes of calculating the registration fee pursuant to Rule 457(c) and (g) under the Securities Act, based on the average
    of the high and low prices reported for the shares of Common Stock as reported on the OTC Marketplace on September 9, 2019.
The
registrant hereby may amend this registration statement on such date or dates as may be necessary to delay our effective date
until the registrant shall file a further amendment which specifically states that this registration statement shall, thereafter,
become effective in accordance with Section 8(a) of the Securities Act of 1933, or until the registration statement shall become
effective on such date as the Commission, acting pursuant to Section 8(a) may determine.
PRELIMINARY
PROSPECTUS SUBJECT TO COMPLETION DATED September 16, 2019
The
information in this prospectus is not complete and may be changed. These securities may not be sold until the registration statement
filed with the Securities and Exchange Commission is effective. This preliminary prospectus is not an offer to sell these securities
and is not soliciting an offer to buy these securities in any state where the offer or sale is not permitted.
Digerati
Technologies, Inc.
6,324,142
Shares of Common Stock
The
selling stockholder identified in this prospectus may offer an indeterminate number of shares of its common stock, which will
consist of up to 6,324,142 shares of common stock to be sold by Peak One pursuant to an Equity Purchase Agreement (the "Financing
Agreement") dated January 12, 2018. If issued presently, the 6,324,142 of common stock registered for resale by Peak One
would represent approximately 25% of our issued and outstanding shares of common stock as of September 12, 2019. Additionally,
as of the date hereof, the 6,324,142 shares of our common stock registered for resale herein would represent approximately 31%
of the Company's public float.
The
selling stockholder may sell all or a portion of the shares being offered pursuant to this prospectus at fixed prices and prevailing
market prices at the time of sale, at varying prices, or at negotiated prices.
We
will not receive any proceeds from the sale of the shares of our common stock by Peak One. However, we will receive proceeds from
our initial sale of shares to Peak One pursuant to the Financing Agreement. We will sell shares to Peak One at a price equal to
88% of the lowest closing price of our common stock during the ten (10) consecutive trading day period beginning on the date on
which we deliver a put notice to Peak One (the "Market Price").
Peak
One is an "underwriter" within the meaning of the Securities Act of 1933, and any broker-dealers or agents that are
involved in selling the shares may be deemed to be "underwriters" within the meaning of the Securities Act of 1933
in connection with such sales. In such event, any commissions received by such broker-dealers or agents and any profit on the
resale of the shares purchased by them may be deemed to be underwriting commissions or discounts under the Securities Act of 1933.
Peak
One may sell the shares of common stock described in this Prospectus in a number of different ways and at varying prices. See
"Plan of Distribution" for more information about how the Selling Shareholder may sell the shares of common stock
being registered pursuant to this Prospectus.
Our
common stock is traded on OTC Markets under the symbol "DTGI". On September 12, 2019, the reported closing price for
our common stock was $0.10 per share.
Prior
to this offering, there has been a very limited market for our securities. While our common stock is on the OTC Markets, there
has been negligible trading volume. There is no guarantee that an active trading market will develop in our securities.
This
offering is highly speculative and these securities involve a high degree of risk and should be considered only by persons who
can afford the loss of their entire investment. See "Risk Factors" beginning on page 10. Neither the Securities and
Exchange Commission nor any state securities commission has approved or disapproved of these securities or passed upon the accuracy
or adequacy of this prospectus. Any representation to the contrary is a criminal offense.
The
date of this prospectus is _____ __, 2019.
Table
of Contents
The
following table of contents has been designed to help you find information contained in this prospectus. We encourage you to read
the entire prospectus.
Prospectus
    Summary
1
Summary
    Consolidated Financial Information
7
Risk
    Factors
10
Cautionary
    Note Regarding Forward-Looking Statements
18
Use
    of Proceeds
19
Determination
    of Offering Price
19
Selling
    Stockholders
20
Plan
    of Distribution
22
Experts
26
Market
    for Our Common Stock and Related Stockholder Matters
32
Management's
    Discussion and Analysis of Financial Condition and Results of Operations
33
Directors,
    Executive Officers and Key Employees
39
Executive
    Compensation
41
Security
    Ownership of Certain Beneficial Owners and Management
44
Index
    to Consolidated Financial Statements
F-1
You
may only rely on the information contained in this prospectus or that we have referred you to. We have not authorized any person
to give you any supplemental information or to make any representations for us. This prospectus does not constitute an offer to
sell or a solicitation of an offer to buy any securities other than the Common Stock offered by this prospectus. This prospectus
does not constitute an offer to sell or a solicitation of an offer to buy any Common Stock in any circumstances in which such
offer or solicitation is unlawful. Neither the delivery of this prospectus nor any sale made in connection with this prospectus
shall, under any circumstances, create any implication that there has been no change in our affairs since the date of this prospectus
is correct as of any time after its date. You should not rely upon any information about our company that is not contained in
this prospectus. Information contained in this prospectus may become stale. You should not assume the information contained in
this prospectus or any prospectus supplement is accurate as of any date other than their respective dates, regardless of the time
of delivery of this prospectus, any prospectus supplement or of any sale of the shares. Our business, financial condition, results
of operations, and prospects may have changed since those dates. The selling stockholders are offering to sell and seeking offers
to buy shares of our common stock only in jurisdictions where offers and sales are permitted.
In
this prospectus, "Digerati" the "Company," "we," "us," and "our" refer
to Digerati Technologies, Inc., a Nevada corporation.
i
PROSPECTUS
SUMMARY
You
should carefully read all information in the prospectus, including the financial statements and their explanatory notes under
the Financial Statements prior to making an investment decision.
This
summary highlights selected information appearing elsewhere in this prospectus. While this summary highlights what we consider
to be important information about us, you should carefully read this entire prospectus before investing in our Common Stock, especially
the risks and other information we discuss under the headings "Risk Factors" and "Management's Discussion
and Analysis of Financial Condition and Results of Operation" and our consolidated financial statements and related notes
beginning on page F-1. Our fiscal year end is July 31 and our fiscal years ended July 31, 2017 and 2018 are sometimes referred
to herein as fiscal years 2017 and 2018, respectively. Some of the statements made in this prospectus discuss future events and
developments, including our future strategy and our ability to generate revenue, income and cash flow. These forward-looking statements
involve risks and uncertainties which could cause actual results to differ materially from those contemplated in these forward-looking
statements. See "Cautionary Note Regarding Forward-Looking Statements". Unless otherwise indicated or the context
requires otherwise, the words "we," "us," "our", the "Company" or "our Company"
or "Digerati" refer to Digerati Technologies, Inc., a Nevada corporation, and our each of our subsidiaries.
When
used in this prospectus the following terms have the following meanings related to our subsidiaries.
●
"Shift8
                                         Technologies" refers to Shift8 Technologies, Inc a company organized under the
                                         laws of the state of Nevada. On April 10, 2019, Shift8 Technologies changed its name
                                         to T3 Communications, Inc.
●
"Shift8
                                         Networks" refers to Shift8 Networks, Inc a company organized under the laws of
                                         the state of Texas.
●
"T3
                                         Communications" refers to T3 Communications, Inc. a company organized under the
                                         laws of the state of Florida.
Corporate
History
Digerati
Technologies, Inc. ("we", "our", "Company" or "Digerati") was incorporated in
the state of Nevada on May 24, 2004. Digerati is a diversified holding company that has no independent operations apart from its
subsidiaries. Through our operating subsidiaries, T3 Communications, Inc., and Shift8 Networks, Inc., dba, Synergy Telecom, we
are an established
provider of cloud services specializing in UCaaS (Unified Communications
as a Service) solutions for the small to medium-sized business ("SMB") market. We
offer a comprehensive suite
of cloud communication services to meet the global needs of businesses that are seeking simple, flexible, and cost-effective communication
solutions. Our services
include cloud PBX, cloud mobile, Internet broadband, cloud WAN,
SIP trunking, and customized VoIP services, all delivered on its global carrier-grade network and
Only in the Cloud™
.
On
December 1, 2017, Shift8 Technologies, Inc., a Nevada corporation ("Shift8"), a wholly owned subsidiary of Digerati
Technologies, Inc., a Nevada corporation (the "Company"), and Synergy Telecom, Inc., a Texas corporation ("Synergy"),
closed a transaction to acquire all the assets, assumed all customers, and critical vendor arrangements from Synergy.
On
May 2, 2018, Shift8 completed the acquisition of T3 Communications, Inc., an established UCaaS and Internet broadband provider
serving a high-growth corridor in Southwest Florida. On April 10, 2019, Shift8 changed its name to T3 Communications, Inc.
Overview
As
a provider of cloud communications solutions to the SMB, we are seeking to capitalize on the migration by businesses from the
legacy telephone network to the Internet Protocol ("IP") telecommunication network and the migration from hardware-based
on-premise telephone systems to software-based communication systems in the cloud. Most SMBs are lagging in technical capabilities
and advancement and seldom reach the economies of scale that their larger counterparts enjoy, due to their achievement of a critical
mass and ability to deploy a single solution to a large number of workers. SMBs are typically unable to afford comprehensive enterprise
solutions and, therefore, need to integrate a combination of business solutions to meet their needs. Cloud computing has revolutionized
the industry and opened the door for businesses of all sizes to gain access to enterprise applications with affordable pricing.
This especially holds true for cloud telephony applications, but SMBs are still a higher-touch sale that requires customer support
for system integration, network installation, cabling, and troubleshooting. We have placed a significant emphasis on that "local"
touch when selling, delivering, and supporting our services which we believe will differentiate us from the national providers
that are experiencing high attrition rates due to poor customer support model.
The
adoption of cloud communication services is being driven by the convergence of several market trends, including the increasing
costs of maintaining installed legacy communications systems, the fragmentation resulting from use of multiple on-premise systems,
and the proliferation of personal smartphones used in the workplace. Today, businesses are increasingly looking for an affordable
path to modernizing their communications system to improve productivity, business performance and customer experience.
Our
cloud solutions offer the SMB reliable, robust, and full-featured services at affordable monthly rates that eliminates high-cost
capital expenditures and provides for integration with other cloud-based systems.
1
Products
and Services
We
provide a comprehensive suite of Internet-based communication services to meet the global needs of businesses that are seeking
simple, flexible, and cost-effective communication solutions. Our Internet-based services include fully hosted IP/PBX services,
SIP trunking, call center applications, interactive voice response auto attendant, voice and web conferencing, call recording,
simultaneous calling, voicemail to email conversion, integrated mobility applications that are device and location agnostic, and
multiple customized IP/PBX features in a hosted or cloud environment. Our services, known as UCaaS or cloud communications, are
specifically designed for the needs of the small to medium-sized business, enterprise customers, call centers, and telephony service
providers that do not have the scale or expertise necessary to deploy their own cloud telephony infrastructure.
Through
our recent acquisitions, we have enhanced our product portfolio with the addition of enterprise-class data and connectivity solutions
through multiple broadband technologies including cloud WAN or SD-WAN (Software-defined Wide Area Network), fiber, and Ethernet
over copper. Other services include remote network monitoring, data backup and disaster recovery. The addition of these new products
and services allows us to increase our value-proposition through product bundles that go beyond the voice application and to serve
as a one-stop-shop for business customers seeking a comprehensive voice and data solution.
Voice
over Internet Protocol Networks
The
basic technology of traditional telecommunications systems was designed for slow mechanical switches. Communications over the
traditional telephone network are routed through circuits that must dedicate all circuit resources to each call from its inception
until the call ends, regardless of whether anyone is actually talking on the circuit. This circuit-switching technology incurs
a significant cost per call and does not efficiently support the integration of voice with data services. Data networks, however,
were designed for electronic switching. They break the data stream into small, individually addressed packages of data ("packets")
that are routed independently of each other from the origin to the destination. Therefore, they do not require a fixed amount
of bandwidth to be reserved between the origin and destination of each call and they do not waste bandwidth when it is not being
used for actual transmission of information. This allows multiple voice or voice and data calls to be pooled, resulting in these
networks being able to carry more calls with an equal amount of bandwidth. Moreover, they do not require the same complex switching
methods required by traditional voice telephone networks, instead using a multiplicity of routers to direct each packet to its
destination and automatically routing packets around blockages, congestion or outages.
Packet
switching can be used within a data network or across networks, including the public Internet. The Internet itself is not a single
data network owned by any single entity, but rather a loose interconnection of networks belonging to many owners that communicate
using the Internet Protocol. By converting voice signals to digital data and handling the voice signals as data, it can be transmitted
through the more efficient switching networks designed for data transmissions and through the Internet using the Internet Protocol.
The transmission of voice signals as digitalized data streams over the Internet is known as Voice over Internet Protocol or "VoIP".
A VoIP network has the following advantages over traditional networks:
●
Simplification:
An integrated infrastructure that supports all forms of communication allows more standardization, a smaller equipment complement,
and less equipment management.
●
Network
Efficiency:
The integration of voice and data fills up the data communication channels efficiently, thus providing bandwidth
consolidation and reduction of the costs associated with idle bandwidth. This combined infrastructure can support dynamic bandwidth
optimization and a fault tolerant design. The differences between the traffic patterns of voice and data offer further opportunities
for significant efficiency improvements.
●
Co-existence
with traditional communication mediums:
IP telephony can be used in conjunction with existing public telephone system switches,
leased and dial-up lines, PBXs and other customer premise equipment, enterprise LANs, and Internet connections. IP telephony applications
can be implemented through dedicated gateways, which in turn can be based on open standards platforms for reliability and scalability.
●
Cost
reduction:
Under the VoIP network, the connection is directly to the Internet backbone and as a result the telephony access
charges and settlement fees are avoided.
The
growth of voice over the Internet was limited in the past due to poor sound quality caused by technical issues such as delays
in packet transmission and by bandwidth limitations related to Internet network capacity and local access constraints. However,
the expansion of Internet Protocol network infrastructure, improvements in packet switching and compression technology, new software
algorithms and improved hardware have substantially reduced delays in packet transmissions and resulted in superior sound quality
to that of the legacy telephone network.
2
Cloud
Communications
Cloud
communications are Internet-based voice and data communications where telecommunications applications, switching and storage
are hosted by a third-party service provider outside of the organization using the services. Services are accessed by the user
over the public Internet. Cloud telephony refers specifically to voice services and more specifically the replacement
of conventional business telephone equipment (such as a PBX) with VoIP service hosted by a third-party service provider and
delivered over the Internet.
We
operate a cloud communication network that consists of a VoIP switching system and cloud telephony application platform. Our network
allows us to provide end-to-end cloud telephony solutions designed to provide significant benefits to businesses of all sizes,
with single or multiple locations. The integration of our cloud communication platform and global VoIP network allows us to provide
our customers with virtually any type of telephony solution on a global basis.
Our
cloud communication solutions, also known as UCaaS, are designed to minimize upfront capital costs, increase the scalability and
flexibility of the customer's communications network and service environment, provide robust features and functionality
to increase productivity and reduce the overall cost of communications.
Strategy
Our
strategy is to target the small to medium-sized business market and capitalize on the wave of migration from the legacy telephone
network to cloud telephony. We will continue to concentrate our sales and marketing efforts on developing vertically oriented
solutions for targeted markets primarily focusing on municipalities, banking, healthcare, legal services and real estate. In addition,
we will continue to partner with our distributors and Value-Added Resellers ("VARs") to expand our customer base.
Our typical VAR is an information technology services firm, traditional PBX vendor, managed service provider, or systems integrator
that has established relationships with businesses in its local market. These VARs are currently providing local customer support
for other IT or PBX services but lack the technology infrastructure to provide cloud communication and VoIP services to their
customers. Our strategy allows these VARs to focus on their strength of providing first tier support to their customers while
we provide the second and third tier technical support required to operate a cloud communication and VoIP network. In addition,
we transform our VARs' business model by introducing new cloud telephony services and adding a new and lucrative recurring
revenue stream that increases the VARs' value proposition for its current and prospective customers.
Our
cloud-based technology platform enables us and our VARs to deliver enhanced voice services to their business customers. The features
supported on our cloud communication platform include all standard telephone features and value-added applications such as voicemail
to email, VoIP peering, teleconferencing, IVR auto attendant, and dial-by-name directory. Our system provides our customers and
VARs with a migration path from a traditional PBX system to a complete cloud-based PBX solution.
Our
strategic initiatives to successfully meet our long-term business objectives include:
●
A disciplined approach
    to evaluating additional acquisitions as we build on the foundation created by our most recent acquisitions in Texas and Florida.
    We will continue to target local and/or regional UCaaS/cloud telephony providers which have excelled in their market with
    that "local" touch when serving their business customers. We believe the experience gained in integrating products,
    personnel, and customers will facilitate continued growth via acquisition.
●
A continued emphasis
    on our UCaaS/cloud communication business which operates in a segment of the telecommunication industry that continues to
    experience significant growth as businesses migrate from legacy phone systems to cloud-based telephony systems.
3
●
Enhancements to
    our broadband product portfolio with an emphasis on marketing leading-edge network and business continuity solutions like
    cloud WAN, also known as SD-WAN (Software Defined Wide-Area Network), to our customers which we anticipate will increase average
    revenue per customer.
●
Implementing a total
    support model (pre and post sales) for building a world-class service delivery and help desk organization.
●
Emphasis on our
    sales distribution model that enables our VARs to offer cloud and session-based communication services to the enterprise market
    in various regions and industries.
●
Continue enhancing
    our infrastructure and back office system to streamline operations, automate key processes, and support the scalability of
    our VAR distribution model.
Competitive
Conditions
The
cloud services industry, including the provisioning of cloud communications services, cloud connectivity, cloud storage and cloud
computing, as well as carrier voice and data services, is highly competitive, rapidly evolving and subject to constant technological
change and intense marketing by providers with similar products and services. We expect that new, smaller, but very agile competitors,
specializing in providing service to regional and emerging markets at low margin and hence low cost, may have an impact on our
market. Similarly, the business services market includes competitors who may be significantly larger and have substantially greater
market presence, financial, technical, operational and marketing resources than we do, including Tier 1 carriers, cable companies
and premise-based solutions providers that are implementing cloud communication services. In the event that such a competitor
expends significant sales and marketing resources in one or several markets where we compete with them, we may not be able to
compete successfully in those markets. Specialized cloud services providers, who focus on one or more cloud service or application,
could adopt aggressive pricing and promotion practices that could impact our ability to compete. We also believe that competition
will continue to increase, placing downward pressure on prices. Such pressure could adversely affect our gross margins if we are
not able to reduce our costs commensurate with the price reductions of our competitors. In addition, the pace of technological
change makes it impossible for us to predict whether we will face new competitors using different technologies to provide the
same or similar services offered or proposed to be offered by us. If our competitors were to provide better and more cost-effective
services than ours, we may not be able to increase our revenues or capture any significant market share.
The
VoIP and Internet telephony market are highly competitive. Our competitors include major telecommunications carriers in the U.S.,
national UCaaS providers, and numerous small cloud telephony operators. We expect to face continuing competition based on price
and service offerings from existing competitors and new market entrants in the future. The principal competitive factors in our
market include price, coverage, customer service, technical response times, reliability, and network size/capacity. The competitive
landscape is rapidly altering the number, identity and competitiveness of the marketplace, and we are unable to determine with
certainty the impact of potential consolidation in our industry.
Many
of our competitors have substantially greater financial, technical and marketing resources, larger customer bases, longer operating
histories, greater name recognition and more established relationships in the industry than we have. As a result, certain of these
competitors may be able to adopt more aggressive pricing policies that could hinder our ability to market our services. We believe
that our key competitive advantages are our ability to deliver reliable, high quality voice service over the Internet in a cost-effective
manner, superior customers service and our VAR distribution model. We cannot provide assurances, however, that these advantages
will enable us to succeed against comparable service offerings from our competitors.
Government
Regulation
VoIP
and other communications services, like ours, have been subject to less regulation at the state and federal levels than traditional
telecommunications services. Providers of traditional telecommunications services are subject to the highest degree of regulation,
while providers of VoIP and other information services are largely exempt from most federal and state regulations governing traditional
common carriers. The FCC has subjected VoIP service providers to a smaller subset of regulations that apply to traditional telecommunications
service providers and has not yet classified VoIP services as either telecommunications or information. The FCC is currently examining
the status of VoIP service providers and the services they provide in multiple open proceedings. In addition, many state regulatory
agencies impose taxes and other surcharges on VoIP services, and certain states take the position that offerings by VoIP providers
are intrastate telecommunications services and therefore subject to state regulation. These states argue that if the beginning
and end points of communications are known, and if some of these communications occur entirely within the boundaries of a state,
the state can regulate that offering. We believe that the FCC has preempted states from regulating VoIP offerings in the same
manner as providers of traditional telecommunications services. However, this issue has not been resolved definitively as a matter
of law, and it remains possible that the FCC could determine that such services are not information services, or that there could
be a judicial or legislative determination that the states are not preempted from regulating VoIP services as traditional telecommunications
services. We cannot predict how or when these issues will be resolved or its potential future impact on our business at this time.
4
The
effect of any future laws, regulations and orders on our operations, including, but not limited to, our cloud-based communications
and collaboration services, cannot be determined. But as a general matter, increased regulation and the imposition of additional
funding obligations increases service costs that may or may not be recoverable from our customers, which could result in making
our services less competitive with traditional telecommunications services if we increase our prices or decreasing our profit
margins if we attempt to absorb such costs.
Federal,
state, local and foreign governmental organizations are considering other legislative and regulatory proposals that would regulate
and/or tax applications running over the Internet. We cannot predict whether new taxes will be imposed on our services, and depending
on the type of taxes imposed, whether and how our services would be affected thereafter. Increased regulation of the Internet
may decrease its growth and hinder technological development, which may negatively impact the cost of doing business via the Internet
or otherwise materially adversely affect our business, financial condition and results of operations.
Regulation
of Internet-based Telecommunication Services in the United States
We
have the necessary authority under Section 214 of the Communications Act to operate as a domestic and international carrier. We
are considered a non-dominant domestic interstate carrier subject to minimal regulation by the FCC. We are not required to obtain
FCC authority to initiate or expand our domestic interstate operations, but we are required to obtain FCC approval to transfer
control or discontinue service and are required to file various reports and pay various fees and assessments. In addition, we
must offer service on a nondiscriminatory basis at just and reasonable rates and are subject to the FCC's complaint jurisdiction.
Generally, our international voice traffic is subject to minimal regulation by state and local jurisdictions.
The
FCC requires Internet voice communications service providers, such as our company, to provide E-911 service in all geographic
areas covered by the traditional wire-line E-911 network. Under the FCC's rules, Internet voice communications providers
must transmit the caller's phone number and registered location information to the appropriate public safety answering point,
or PSAP, for the caller's registered location. The FCC also requires interconnected VoIP service providers to make Universal
Service Fund ("USF") contributions. We believe that our services are currently compliant with all applicable requirements
of the FCC, and we have made and are making the required contributions to the USF. However, should we at some time fail to meet
certain requirements or fail to make required contributions, we could be subject to revocation of our authority to operate or
to fines or penalties.
As
a result of the FCC's preemption of states' ability to regulate certain aspects of VoIP service, and a trend in state
legislatures to affirmatively deregulate VoIP services for most purposes, our VoIP services are subject to relatively few state
regulatory requirements aside from collection of state and local E911 fees and state Universal Service support obligations. We
believe that our VoIP services are currently compliant with all applicable state requirements, and we have made and are making
the required contributions to E911, state USF, and other funds. The state regulatory framework for our VoIP services continues
to evolve, so we, in conjunction with our professional advisors, monitor the actions of the various state regulatory agencies
and endeavor to ensure that we are in compliance with applicable state law, including any new statutes or regulations that may
be passed. However, there can be no assurance that we will become aware of all applicable requirements on a timely basis, or that
we will always be fully compliant with applicable rules and regulations. Should we fail to be compliant with applicable state
regulations, or to file required reports with state regulatory agencies, we could be subject to fines and/or penalties.
In
addition to regulations addressing Internet telephony and broadband services, other regulatory issues relating to the Internet
generally could affect our ability to provide our services. Congress has adopted legislation that regulates certain aspects of
the Internet including online content, user privacy, taxation, liability for third-party activities and jurisdiction. In addition,
a number of initiatives pending in Congress and state legislatures would prohibit or restrict advertising or sale of certain products
and services on the Internet, which may have the effect of raising the cost of doing business on the Internet generally.
5
International
Regulation
The
regulatory treatment of Internet telephony outside of the U.S. varies widely from country to country. A number of countries that
currently prohibit competition in the provision of voice telephony also prohibit Internet telephony. Other countries permit but
regulate Internet telephony. Some countries will evaluate proposed Internet telephony service on a case-by-case basis and determine
whether it should be regulated as a voice service or as another telecommunications service. In many countries, Internet telephony
has not yet been addressed by legislation or regulation. Increased regulation of the Internet and/or Internet telephony providers
or the prohibition of Internet telephony in one or more countries could adversely affect our business and future prospects if
we decide to expand globally.
Customers
and Suppliers
We
rely on various suppliers to provide services in connection with our Voice over Internet Protocol ("VoIP") or Unified
Communication as a Service ("UCaaS") offerings. Our customers include businesses in various industries including Healthcare,
Banking, Financial Services, Legal, Real Estate, and Construction. We are not dependent upon any single supplier or customer.
During
the year ended July 31, 2018, the Company did not derived a significant amount of revenue from one single customer. During the
year ended July 31, 2017, the Company derived a significant amount revenue from four customers, comprising 24%, 24%, 11%, and
8% of the total revenue for the year.
As of the year ended July 31, 2018, the
company derived 13% and 23% total accounts receivable from two customers. As of the year ended July 31, 2017, the Company derived
a significant amount of accounts receivable from three customers, comprising 37%, 27% and 14% of the total accounts receivable
as of the year ended July 31, 2017.
Employees
As
of September 12, 2019, we had 23 employees, all of whom performed sales, operational, technical and administrative functions.
We believe our future success will depend to a large extent on our continued ability to attract and retain highly skilled and
qualified employees. We consider our employee relations to be good. None of these aforementioned employees belong to labor unions.
Peak
One Equity Purchase Agreement and Registration Rights Agreement
Summary
of the Offering
Shares currently outstanding
    (1):
25,240,222
Shares being offered:
6,324,142
Shares Outstanding after the offering:
31,564,364 assuming each share offered for resale
hereby is sold.
Offering Price per share:
The selling stockholders
    may sell all or a portion of the shares being offered pursuant to this prospectus at fixed prices and prevailing market prices
    at the time of sale, at varying prices or at negotiated prices.
Use of Proceeds:
We will not receive
    any proceeds from the sale of the shares of our common stock by the selling stockholder. However, we will receive proceeds
    from our initial sale of shares to Peak One, pursuant to the Financing Agreement. The proceeds from the initial sale of shares
    will be used for the purpose of working capital and that the Board of Directors, in good faith deem to be in the best interest
    of the Company.
Trading Symbol:
DTGI
Risk Factors:
See "Risk
    Factors" beginning on page 10 and the other information in this prospectus for a discussion of the factors you should
    consider before deciding to invest in shares of our common stock.
(1)
The
number of shares of our Common Stock outstanding prior to and to be outstanding immediately after this offering, as set forth
in the table above, is based on 25,240,222 shares outstanding as of September 12, 2019, and excluding 6,324,142 shares of Common
Stock issuable in this offering as well as the 250,000 shares of Common Stock issued to Peak One as commitment shares for entering
into the Equity Purchase Agreement (the "Commitment Shares").
6
SUMMARY
CONSOLIDATED FINANCIAL INFORMATION
The
following summary consolidated statements of operations data for the quarter ended April 30, 2019 and fiscal year ended July 31,
2018 have been derived from our audited consolidated financial statements included elsewhere in this prospectus. Additionally,
the nine months ended April 30, 2019 and 2018 have been derived from our unaudited consolidated financial statements included
elsewhere in this prospectus. The summary consolidated balance sheet data as of April 30, 2019 are derived from our consolidated
financial statements that are included elsewhere in this prospectus. The historical financial data presented below is not necessarily
indicative of our financial results in future periods, and the results for the quarter ended April 30, 2019 is not necessarily
indicative of our operating results to be expected for the full fiscal year ending July 31, 2019 or any other period. You should
read the summary consolidated financial data in conjunction with those financial statements and the accompanying notes and "Management's
Discussion and Analysis of Financial Condition and Results of Operations." Our consolidated financial statements are prepared
and presented in accordance with United States generally accepted accounting principles, or U.S. GAAP. Our consolidated financial
statements have been prepared on a basis consistent with our audited financial statements and include all adjustments, consisting
of normal and recurring adjustments that we consider necessary for a fair presentation of the financial position and results of
operations as of and for such periods.
7
DIGERATI
TECHNOLOGIES, INC. AND SUBSIDIARIES
CONSOLIDATED
BALANCE SHEETS
(In
thousands, unaudited)
April
    30,
July
    31,
2019
2018
ASSETS
CURRENT ASSETS:
Cash
    and cash equivalents
$
460
$
388
Accounts
    receivable, net
245
229
Prepaid
    and other current assets
80
124
Deposits
55
-
Total
    current assets
840
741
LONG-TERM
    ASSETS:
Intangible
    assets, net
2,736
3,046
Property
    and equipment, net
535
713
Other
    assets
58
59
Total
    assets
$
4,169
$
4,559
LIABILITIES
    AND STOCKHOLDERS' DEFICIT
CURRENT
    LIABILITIES:
Accounts
    payable
$
1,173
$
1,177
Accrued
    liabilities
1,432
893
Current
    portion of capital lease obligations
32
30
Convertible
    note payable, current, net $11 and $187, respectively
761
585
Note
    payable, current, related party
425
126
Note
    payable, current, net $0 and $0, respectively
1,200
725
Convertible
    note payable, current, net $345 and $273, respectively
235
33
Deferred
    income
314
262
Derivative
    liability
1,303
632
Total
    current liabilities
6,875
4,463
LONG-TERM
    LIABILITIES:
Convertible
    debenture, net $99 and $273, respectively
51
27
Notes
    payable, related party, net $27 and $38, respectively
147
505
Note
    payable
-
500
Obligations
    under capital leases
40
64
Total
    long-term liabilities
238
1,096
Total
    liabilities
7,113
5,559
Commitments
    and contingencies
STOCKHOLDERS'
    DEFICIT:
Preferred
    stock, $0.001, 50,000,000 shares authorized, 50,000 and 0 issued and outstanding, respectively
-
-
Common
    stock, $0.001, 150,000,000 shares authorized, 18,876,431 and 12,775,143 issued and outstanding, respectively
19
13
Additional
    paid in capital
81,764
79,993
Accumulated
    deficit
(84,434
)
(80,800
)
Other
    comprehensive income
1
1
Total
    Digerati's stockholders' deficit
(2,650
)
(793
)
Noncontrolling
    interest
(294
)
(207
)
Total
    stockholders' deficit
(2,944
)
(1,000
)
Total
    liabilities and stockholders' deficit
$
4,169
$
4,559
See
accompanying notes to unaudited consolidated financial statements
8
DIGERATI TECHNOLOGIES, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF OPERATIONS
(In thousands, except per share amounts, unaudited)
Three
    months ended
April 30,
Nine
    months ended
April 30,
2019
2018
2019
2018
OPERATING
    REVENUES:
Cloud-based
    hosted services
$
1,485
$
196
$
4,493
$
403
Total
    operating revenues
1,485
196
4,493
403
OPERATING
    EXPENSES:
Cost
    of services (exclusive of depreciation and amortization)
770
106
2,322
249
Selling,
    general and administrative expense
875
332
2,309
830
Stock
    compensation & warrant expense
345
354
731
1,328
Legal
    and professional fees
95
68
305
359
Bad
    debt
-
-
(3
)
-
Depreciation
    and amortization expense
167
50
505
89
Total
    operating expenses
2,252
910
6,169
2,855
OPERATING
    LOSS
(767
)
(714
)
(1,676
)
(2,452
)
OTHER
    INCOME (EXPENSE):
Gain
    (loss) on derivative instruments
903
47
(594
)
155
Income
    tax
(10
)
-
(37
)
-
Interest
    income (expense)
(376
)
(41
)
(1,414
)
(250
)
Total
    other income (expense)
517
6
(2,045
)
(95
)
NET
    LOSS INCLUDING NONCONTROLLING INTEREST
(250
)
(708
)
(3,721
)
(2,547
)
Less:
    Net loss attributable to the noncontrolling interest
29
-
87
-
NET
    LOSS
$
(221
)
$
(708
)
$
(3,634
)
$
(2,547
)
Deemed
    dividend on Series A Convertible preferred stock
(2
)
-
(2
)
-
NET
    LOSS ATTRIBUTABLE TO DIGERATI'S COMMON SHAREHOLDERS
$
(223
)
$
(708
)
$
(3,636
)
$
(2,547
)
INCOME
    (LOSS) PER COMMON SHARE - BASIC
$
(0.01
)
$
(0.06
)
$
(0.24
)
$
(0.26
)
INCOME
    (LOSS) PER COMMON SHARE - DILUTED
$
(0.01
)
$
(0.06
)
$
(0.24
)
$
(0.26
)
WEIGHTED
    AVERAGE COMMON SHARES OUTSTANDING - BASIC
18,184,442
11,063,326
15,163,082
9,903,152
WEIGHTED
    AVERAGE COMMON SHARES OUTSTANDING - DILUTED
18,184,442
11,063,326
15,163,082
9,903,152
See
accompanying notes to unaudited consolidated financial statements
9
RISK
FACTORS
This
investment has a high degree of risk. Before you invest you should carefully consider the risks and uncertainties described below
and the other information in this prospectus. If any of the following risks actually occur, our business, operating results and
financial condition could be harmed and the value of our stock could go down. This means you could lose all or a part of your
investment.
Special
Information Regarding Forward-Looking Statements
Some
of the statements in this prospectus are "forward-looking statements." These forward-looking statements involve certain
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, performance or achievements expressed or implied by these forward-looking statements.
These factors include, among others, the factors set forth herein under "Risk Factors." The words "believe,"
"expect," "anticipate," "intend," "plan," and similar expressions identify forward-looking
statements. We caution you not to place undue reliance on these forward-looking statements. We undertake no obligation to update
and revise any forward-looking statements or to publicly announce the result of any revisions to any of the forward-looking statements
in this document to reflect any future or developments. However, the Private Securities Litigation Reform Act of 1995 is not available
to us as a non-reporting issuer. Further, Section 27A(b)(2)(D) of the Securities Act and Section 21E(b)(2)(D) of the Securities
Exchange Act expressly state that the safe harbor for forward looking statements does not apply to statements made in connection
with an initial public offering.
Risks
Related to Our Business
WE
HAVE A HISTORY OF OPERATING LOSSES, ANTICIPATE FUTURE LOSSES AND MAY NEVER BE PROFITABLE.
We
have experienced significant operating losses in our Company's recent history. Our ability to achieve annual profitability
in the future depends on a number of factors, including our ability to attract and service customers on a profitable basis and
the growth of the video surveillance industry. If we are unable to achieve annual profitability, we may not be able to execute
our business plan, our prospects may be harmed, and our stock price could be materially and adversely affected.
THE
MARKETS IN WHICH WE COMPETE ARE HIGHLY COMPETITIVE.
The
cloud services and internet-based telephony products and services markets in which we primarily compete are highly competitive
and are influenced by competitive factors including:
●
our ability to rapidly
    develop and introduce new high performance integrated solutions;
●
the price and total
    cost of ownership and return on investment associated with the solutions;
●
the simplicity of
    deployment and use of the solutions;
●
the reliability
    and scalability of the solutions;
●
the market awareness
    of a particular brand;
●
our ability to provide
    secure access to wireless networks;
●
our ability to offer
    a suite of products and solutions;
●
our ability to allow
    centralized management of the solutions; and
●
our ability to provide
    quality product support.
New
entrants seeking to gain market share by introducing new technology and new products may also make it more difficult for us to
sell our products and could create increased pricing pressure.
We
expect competition to continuously intensify as other established and new companies introduce new products in the same markets
that we serve or intend to enter, as these markets consolidate. Our business will suffer if we do not maintain our competitiveness.
A
number of our current or potential competitors have longer operating histories, greater brand recognition, larger customer bases
and significantly greater resources than we do.
10
As
we move into new markets for different types of products, our brand may not be as well-known as incumbents in those markets. Potential
customers may prefer to purchase from their existing suppliers or well-known brands rather than a new supplier, regardless of
product performance or features. We expect increased competition from other established and emerging companies if our markets
continue to develop and expand. As we enter new markets, we expect to face competition from incumbent and new market participants
and there is no assurance that our entry into new markets will be successful.
MANY
OF THESE COMPANIES HAVE SIGNIFICANTLY GREATER FINANCIAL, TECHNICAL, MARKETING, DISTRIBUTION AND OTHER RESOURCES THAN WE DO AND
ARE BETTER POSITIONED TO ACQUIRE AND OFFER COMPLEMENTARY PRODUCTS AND TECHNOLOGIES.
Industry
consolidation, acquisitions and other arrangements among competitors may adversely affect our competitiveness because it may be
more difficult to compete with entities that have access to their combined resources. As a result of such consolidation, acquisition
or other arrangements, our current and potential competitors might be able to adapt more quickly to new technologies and consumer
preference, devote greater resources to the marketing and promotion of their products, initiate or withstand price competition,
and take advantage of acquisitions or other opportunities more readily and develop and expand their products more quickly than
we do. These combinations may also affect customers' perceptions regarding the viability of companies our size and, consequently,
affect their willingness to purchase our products.
THE
COMPLEXITY OF OUR PRODUCTS COULD RESULT IN UNFORESEEN DELAYS OR EXPENSES CAUSED BY UNDETECTED DEFECTS OR BUGS.
Our
products may contain defects and bugs when they are introduced, or as new versions are released. We have focused, and intend to
focus in the future, on getting our new products to market quickly. Due to our rapid product introductions, defects and bugs that
may be contained in our products may not yet have manifested. We have in the past experienced, and may in the future experience,
defects and bugs. If any of our products contain material defects or bugs, or has reliability, quality or compatibility problems,
we may not be able to promptly or successfully correct these problems. The existence of defects or bugs in our products may damage
our reputation and disrupt our sales. If any of these problems are not found until after we have commenced commercial production
and distribution of a new product, we may be required to incur additional development costs, repair or replacement costs, and
other costs relating to regulatory proceedings, product recalls and litigation, which could harm our reputation and operating
results. Undetected defects or bugs may lead to negative online Internet reviews of our products, which are increasingly becoming
a significant factor in the success of our new product launches, especially for our consumer products. If we are unable to quickly
respond to negative reviews, including end user reviews posted on various prominent online retailers, our ability to sell these
products will be harmed. Moreover, we may offer stock rotation rights to our distributors. If we experience greater returns from
retailers or end customers, or greater warranty claims, in excess of our reserves, our business, revenue and operating results
could be harmed.
SECURITY
VULNERABILITIES IN OUR PRODUCTS, SERVICES AND SYSTEMS COULD LEAD TO REDUCED REVENUES AND CLAIMS AGAINST US.
The
quality and performance of some of our products and services may depend upon their ability to withstand cyber attacks. Third parties
may develop and deploy viruses, worms and other malicious software programs, some of which may be designed to attack our products,
systems, or networks. Some of our products and services also involve the storage and transmission of users' and customers'
proprietary information which may be the target of cyber attacks. Hardware and software that we produce or procure from third
parties also may contain defects in manufacture or design, including bugs and other problems, which could compromise their ability
to withstand cyber attacks.
The
costs to us to eliminate or alleviate security vulnerabilities can be significant, and our efforts to address these problems may
not be successful and could result in interruptions, delays, cessation of service and loss of existing or potential customers
that may impede our sales, manufacturing, distribution or other critical functions, as well as potential liability to the company.
The risk that these types of events could seriously harm our business is likely to increase as we expand the web-based products
and services that we offer.
11
WE
HAVE AN ACCUMULATED DEFICIT AND WE ANTICIPATE CONTINUING LOSSES THAT WILL RESULT IN SIGNIFICANT LIQUIDITY AND CASH FLOW PROBLEMS
AND WE MAY BE FORCED TO CEASE OPERATIONS.
We have incurred losses since our inception
and have an accumulated deficit of $84,434,000 as of April 30, 2019. Our operations have been financed primarily through the issuance
of equity and debt. For the year ended July 31, 2018, net loss and cash used in operations were $3,220,000 and $985,000, respectively.
We are constantly evaluating our cash needs and our burn rate, in order to make appropriate adjustments in operating expenses.
We anticipate that our cash used in operations will continue to increase as a result of becoming a public company due to increased
professional fees. Our continued existence is dependent upon, among other things, our ability to raise capital and to market and
sell our products and services successfully. While we are attempting to increase sales, growth has not been significant enough
to support daily operations, there is no assurance that we will continue as a going concern. If we are unable to continue as a
going concern and were forced to cease operations, it is likely that our stockholders would lose their entire investment in our
company.
OUR
AUDITORS HAVE EXPRESSED DOUBTS ABOUT OUR ABILITY TO CONTINUE AS A GOING CONCERN. IF WE WERE FORCED TO CEASE OUR BUSINESS AND OPERATIONS,
YOU WOULD LOSE YOUR INVESTMENT IN OUR COMPANY.
Our
revenues are not sufficient to enable us to meet our operating expenses and otherwise implement our business plan. The report
of our independent registered public accounting firm on our financial statements for the year ended July 31, 2018 contains an
explanatory paragraph raising doubt as to our ability to continue as a going concern as a result of our losses from operations,
stockholders' deficit and negative working capital. Our consolidated financial statements, which appear elsewhere in this
Form 10-K, are prepared assuming we will continue as a going concern. The financial statements do not include any adjustments
to reflect future adverse effects on the recoverability and classification of assets or amounts and classification of liabilities
that may result if we are not successful.
WE
WILL NEED ADDITIONAL FINANCING WHICH WE MAY NOT BE ABLE TO OBTAIN ON ACCEPTABLE TERMS IF AT ALL. DUE TO THE SIZE OF OUR COMPANY
AND THE LACK OF A PUBLIC MARKET FOR OUR COMMON STOCK IT IS LIKELY THAT THE TERMS OF ANY FINANCING WE MAY BE ABLE TO SECURE WILL
BE DETRIMENTAL TO OUR CURRENT STOCKHOLDERS.
Our
current operations are not sufficient to fund our operating expenses and we will need to raise additional working capital to continue
our current business and to provide funds for marketing to support our efforts to increase our revenues. Generally, small businesses
such as ours which lack a public market for their securities, face significant difficulties in their efforts to raise equity capital.
While to date we have relied upon the relationships of our executive officers in our capital raising efforts, there are no assurances
that we will be successful utilizing these existing sources. In such an event, we could be required to engage a broker-dealer
to assist us in our capital raising efforts. Even if we are successful in finding a broker-dealer willing to assist us in raising
capital, there are no assurances that the terms of financings offered by a broker-dealer will be as favorable as those we have
offered our investors to date. While we do not have any commitments to provide additional capital, if we are able to raise capital,
the structure of that capital raise could impact our company and our stockholders in a variety of ways. If we raise additional
capital through the issuance of debt, this will result in interest expense. If we raise additional funds through the issuance
of equity or convertible debt securities, the percentage ownership of our company held by existing stockholders will be reduced
and those stockholders may experience significant dilution. In addition, new securities may contain certain rights, preferences
or privileges that are senior to those of our common stock. We cannot assure you that we will be able to raise the working capital
as needed in the future on terms acceptable to us, if at all. If we do not raise funds as needed, we may not be able to continue
our operations and it is likely that you would lose your entire investment in our company.
WE
MAY NEED TO RAISE CAPITAL OVER THE NEXT TWELVE MONTHS TO FUND OUR OPERATIONS.
We
do not have any additional commitments to provide capital and we cannot assure you that funds are available to us upon terms acceptable
to us, if at all. If we do not raise funds as needed, our ability to provide for current working capital needs and satisfy our
obligations is in jeopardy. In this event, you could lose all of your investment in our company.
12
WE
DEPEND ON OUR KEY MANAGEMENT PERSONNEL AND THE LOSS OF THEIR SERVICES COULD ADVERSELY AFFECT OUR BUSINESS.
We
place substantial reliance upon the efforts and abilities of our executive officers Arthur L. Smith, our President and Chief Executive
Officer, and Antonio Estrada Jr., our Chief Financial Officer. The loss of the services of any of our executive officers could
have a material adverse effect on our business, operations, revenues or prospects. We do not maintain key man life insurance on
the lives of these individuals.
MANAGEMENT
EXERCISES SIGNIFICANT CONTROL OVER MATTERS REQUIRING SHAREHOLDER APPROVAL WHICH MAY RESULT IN THE DELAY OR PREVENTION OF A CHANGE
IN OUR CONTROL.
Arthur
L. Smith, our President and Chief Executive Officer, Antonio Estrada Jr., our Chief Financial Officer and Craig K. Clement, Chairman
of the Board, have voting power equal to approximately 20% of our voting securities. As a result, management through such stock
ownership rights has the ability to exercise significant control over all matters requiring shareholder approval, including the
election of directors and approval of significant corporate transactions. This concentration of ownership in management may also
have the effect of delaying or preventing a change in control of us that may be otherwise viewed as beneficial by shareholders
other than management.
OUR
REVENUES, OPERATING MARGINS, CASH FLOWS AND OTHER OPERATING RESULTS COULD VARY SIGNIFICANTLY FROM PERIOD TO PERIOD AS A RESULT
OF VARIOUS FACTORS, MANY OF WHICH ARE OUTSIDE OF OUR CONTROL.
Our
revenues, operating margins, cash flows and other operating results could vary significantly from period to period as a result
of various factors, many of which are outside of our control. Our customers also have the choice of entering into agreements for
term licenses and agreements for our cloud services.
WE
EMPLOY MULTIPLE AND EVOLVING PRICING MODELS FOR OUR OFFERINGS.
We
offer a subscription model for cloud services, which each have different payment schedules, and depending on the mix of such licenses
and cloud subscriptions, our revenues or deferred revenues could be adversely affected.
IT
MAY BE DIFFICULT TO EVALUATE OUR FUTURE PROPSOECTS AND MAY INCREASE RISK THAT WE WILL NOT BE SUCCESSFUL.
Some
of the risks include:
●
respond
                                         timely and effectively to competitor offerings and pricing models;
●
appropriately
                                         price our offerings;
●
manage
                                         the costs of providing our cloud services;
●
generate
                                         leads and convert users of the trial versions of our offerings to paying customers;
●
prevent
                                         users from circumventing the terms of their licenses and cloud subscriptions;
●
continue
                                         to invest in our platform to deliver additional enhancements and content for our offerings
                                         and to foster an ecosystem of developers and users to expand the use cases of our offerings;
●
maintain
                                         and enhance our website and cloud services infrastructure to minimize interruptions when
                                         accessing our offerings;
●
process,
                                         store and use our employees, customers' and other third parties' data in compliance
                                         with applicable governmental regulations and other legal obligations related to data
                                         privacy, data protection, data transfer, data residency, encryption and security;
●
hire,
                                         integrate and retain world-class professional and technical talent; and
●
successfully
                                         integrate acquired businesses and technologies.
13
IF
WE OR OUR THIRD-PARTY SERVICE PROVIDERS EXPERIENCE A SECURITY BREACH OR UNAUTHORIZED PARTIES OTHERWISE OBTAIN ACCESS TO OUR
CUSTOMERS' NETWORK, OUR DATA, OR OUR CLOUD SERVICES, OUR OFFERINGS MAY BE PERCEIVED AS NOT BEING SECURE, OUR REPUTATION
MAY BE HARMED, DEMAND FOR OUR OFFERINGS MAY BE REDUCED, AND WE MAY INCUR SIGNIFICANT LIABILITIES.
Our
offerings involve the storage and transmission of data, and security breaches could result in the loss of this information, litigation,
indemnity obligations and other liability. We may become the target of cyber-attacks by third parties seeking unauthorized access
to our data or users' data or to disrupt our ability to provide service. While we have taken steps to protect the confidential
information that we have access to, including confidential information we may obtain through our customer support services or
customer usage of our cloud services, our security measures or those of our third-party service providers could be breached or
we could suffer data loss. Computer malware, viruses, social engineering (predominantly spear phishing attacks), and general hacking
have become more prevalent in our industry, particularly against cloud services. In addition, we do not directly control content
that customers store in our offerings. If customers use our offerings for the transmission or storage of personally identifiable
information and our security measures are or are believed to have been breached as a result of third-party action, employee error,
malfeasance or otherwise, our reputation could be damaged, our business may suffer, and we could incur significant liability.
We
also process, store and transmit our own data as part of our business and operations. This data may include personally identifiable,
confidential or proprietary information. There can be no assurance that any security measures that we or our third-party service
providers have implemented will be effective against current or future security threats. While we have developed systems and processes
to protect the integrity, confidentiality and security of our data, our security measures or those of our third-party service
providers could fail and result in unauthorized access to or disclosure, modification, misuse, loss or destruction of such data.
Because
there are many different security breach techniques and such techniques continue to evolve, we may be unable to anticipate attempted
security breaches and implement adequate preventative measures. Third parties may also conduct attacks designed to temporarily
deny customers access to our cloud services. Any security breach or other security incident, or the perception that one has occurred,
could result in a loss of customer confidence in the security of our offerings and damage to our brand, reduce the demand for
our offerings, disrupt normal business operations, require us to spend material resources to investigate or correct the breach,
expose us to legal liabilities, including litigation, regulatory enforcement, and indemnity obligations, and adversely affect
our revenues and operating results. These risks may increase as we continue to grow the number and scale of our cloud services,
and process, store, and transmit increasingly large amounts of data.
WE
USE THIRD-PARTY TECHNOLOGY AND SYSTEMS FOR A VARIETY OF REASONS, INCLUDING, WITHOUT LIMITATION, ENCRYPTION AND AUTHENTICATION
TECHNOLOGY, EMPLOYEE EMAIL, CONTENT DELIVERY TO CUSTOMERS, BACK-OFFICE SUPPORT, CREDIT CARD PROCESSING AND OTHER FUNCTIONS.
Although
we have developed systems and processes that are designed to protect customer information and prevent data loss and other security
breaches, including systems and processes designed to reduce the impact of a security breach at a third-party vendor, such measures
cannot provide absolute security.
Interruptions
or performance problems associated with our technology and infrastructure, and our reliance on Unified Communications as a Service
("UCaaS") technologies from third parties, may adversely affect our business operations and financial results.
Our
continued growth depends in part on the ability of our existing and potential customers to use and access our website or our cloud
services in order to download our on-premises software or encrypted access keys for our software within an acceptable amount of
time. We have experienced, and may in the future experience, website and cloud service disruptions, storage failures, outages
and other performance problems due to a variety of factors, including infrastructure changes, human or software errors, capacity
constraints due to an overwhelming number of users accessing our website and services simultaneously, unauthorized access, denial
of service, security or ransomware attacks. In some instances, we may not be able to identify the cause or causes of these website
or service performance problems within an acceptable period of time. It may become increasingly difficult to maintain and improve
our website and service performance, especially during peak usage times and as our offerings become more complex and our user
traffic increases. If our website or cloud services are unavailable or if our users are unable to download our software or encrypted
access keys within a reasonable amount of time or at all, our business would be negatively affected. We expect to continue to
make significant investments to maintain and improve website and service performance and to enable rapid releases of new features
and apps for our offerings. To the extent that we do not effectively address capacity constraints, upgrade our systems as needed
and continually develop our technology and network architecture to accommodate actual and anticipated changes in technology, our
business and operating results may be adversely affected.
14
Risks
Related to Our Stock
OUR
STOCK PRICE MAY BE VOLATILE, WHICH COULD RESULT IN SUBSTANTIAL LOSSES FOR INVESTORS.
The
market price of our common stock is likely to be highly volatile and could fluctuate widely in response to various factors, many
of which are beyond our control, including the following:
●
technological innovations
    or new products and services by us or our competitors;
●
additions or departures
    of key personnel;
●
sales of our common
    stock, particularly under any registration statement for the purposes of selling any other securities, including management
    shares;
●
negative sentiment
    from investors, customers, vendors and strategic partners due to doubt about our ability to continue as a going concern;
●
our ability to execute
    our business plan;
●
operating results
    that fall below expectations;
●
loss of any strategic
    relationship;
●
industry developments;
●
economic and other
    external factors; and
●
period-to-period
    fluctuations in our financial results.
In
addition, the securities markets have from time to time experienced significant price and volume fluctuations that are unrelated
to the operating performance of particular companies. These market fluctuations may also significantly affect the market price
of our common stock.
WE
ARE SUBJECT TO PENNY STOCK RULES WHICH WILL MAKE THE SHARES OF OUR COMMON STOCK MORE DIFFICULT TO SELL.
We
are subject to the Securities and Exchange Commission's "penny stock" rules since our shares of common stock
sell below $5.00 per share. Penny stocks generally are equity securities with a per share price of less than $5.00. The penny
stock rules require broker-dealers to deliver a standardized risk disclosure document prepared by the Securities and Exchange
Commission that provides information about penny stocks and the nature and level of risks in the penny stock market. The broker-dealer
must also provide the customer with current bid and offer quotations for the penny stock, the compensation of the broker-dealer
and its salesperson, and monthly account statements showing the market value of each penny stock held in the customer's
account. The bid and offer quotations, and the broker-dealer and salesperson compensation information must be given to the customer
orally or in writing prior to completing the transaction and must be given to the customer in writing before or with the customer's
confirmation.
15
In
addition, the penny stock rules require that prior to a transaction the broker-dealer must make a special written determination
that the penny stock is a suitable investment for the purchaser and receive the purchaser's written agreement to the transaction.
The penny stock rules are burdensome and may reduce purchases of any offerings and reduce the trading activity for shares of our
common stock. As long as our shares of common stock are subject to the penny stock rules, the holders of such shares of common
stock may find it more difficult to sell their securities.
THERE
IS, AT PRESENT, ONLY A LIMITED MARKET FOR OUR COMMON STOCK AND WE CANNOT ENSURE INVESTORS THAT AN ACTIVE MARKET FOR OUR COMMON
STOCK WILL EVER DEVELOP OR BE SUSTAINED.
Our
shares of common stock are thinly traded. Due to the illiquidity, the market price may not accurately reflect our relative value.
There can be no assurance that there will be an active market for our shares of common stock either now or in the future. Because
our common stock is so thinly traded, a large block of shares traded can lead to a dramatic fluctuation in the share price and
investors may not be able to liquidate their investment in us at all or at a price that reflects the value of the business. In
addition, our common stock currently trades on the OTC QB, which generally lacks the liquidity, research coverage and institutional
investor following of a national securities exchange like the NYSE MKT, the New York Stock Exchange or the Nasdaq Stock Market.
While we intend to list our common stock on a national securities exchange once we satisfy the initial listing standards for such
an exchange, we currently do not, and may not ever, satisfy such initial listing standards.
OUR
BOARD OF DIRECTORS CAN AUTHORIZE THE ISSUANCE OF PREFERRED STOCK, WHICH COULD DIMINISH THE RIGHTS OF HOLDERS OF OUR COMMON STOCK
AND MAKE A CHANGE OF CONTROL OF US MORE DIFFICULT EVEN IF IT MIGHT BENEFIT OUR SHAREHOLDERS.
Our
board of directors is authorized to issue up to 50,000,000 shares of preferred stock in one or more series and to fix the voting
powers, preferences and other rights and limitations of the preferred stock. We currently have no shares of preferred stock issued
and outstanding. We may issue additional shares of preferred stock with a preference over our common stock with respect to dividends
or distributions on liquidation or dissolution, or that may otherwise adversely affect the voting or other rights of the holders
of common stock. Issuances of preferred stock, depending upon the rights, preferences and designations of the preferred stock,
may have the effect of delaying, deterring or preventing a change of control, even if that change of control might benefit our
shareholders.
OFFERS
OR AVAILABILITY FOR SALE OF A SUBSTANTIAL NUMBER OF SHARES OF OUR COMMON STOCK MAY CAUSE THE PRICE OF OUR COMMON STOCK TO DECLINE.
Sales
of a significant number of shares of our common stock in the public market could harm the market price of our common stock and
make it more difficult for us to raise funds through future offerings of common stock. As additional shares of our common stock
become available for resale in the public market, the supply of our common stock will increase, which could decrease the price
of our common stock.
In
addition, if our shareholders sell substantial amounts of our common stock in the public market, upon the expiration of any statutory
holding period under Rule 144, upon the expiration of lock-up periods applicable to outstanding shares, or upon the exercise of
outstanding options or warrants, it could create a circumstance commonly referred to as an "overhang," in anticipation
of which the market price of our common stock could fall. The existence of an overhang, whether or not sales have occurred or
are occurring, could also make it more difficult for us to raise additional financing through the sale of equity or equity-related
securities in the future at a time and price that we deem reasonable or appropriate.
WE
DO NOT EXPECT TO PAY DIVIDENDS IN THE FUTURE. AS A RESULT, ANY RETURN ON INVESTMENT MAY BE LIMITED TO THE VALUE OF OUR COMMON
STOCK.
We
do not anticipate paying cash dividends on our common stock in the foreseeable future. The payment of dividends on our common
stock will depend on our earnings, financial condition and other business and economic factors as our board of directors may consider
relevant. If we do not pay dividends, our common stock may be less valuable because a return on an investment in our common stock
will only occur if our stock price appreciates.
16
WE
HAVE NOT VOLUNTARILY IMPLEMENTED VARIOUS CORPORATE GOVERNANCE MEASURES, IN THE ABSENCE OF WHICH, STOCKHOLDERS MAY HAVE MORE LIMITED
PROTECTIONS AGAINST INTERESTED DIRECTOR TRANSACTIONS, CONFLICTS OF INTEREST AND SIMILAR MATTERS.
Federal
legislation, including the Sarbanes-Oxley Act of 2002, has resulted in the adoption of various corporate governance measures designed
to promote the integrity of the corporate management and the securities markets. Some of these measures have been adopted in response
to legal requirements. Others have been adopted by companies in response to the requirements of national securities exchanges,
such as the NYSE or the NASDAQ Stock Market, on which their securities are listed. Among the corporate governance measures that
are required under the rules of national securities exchanges are those that address board of directors' independence, audit
committee oversight, and the adoption of a code of ethics. While we have adopted certain corporate governance measures such as
a Code of Ethics, we presently do not have any independent directors. It is possible that if we were to have independent directors
on our board, stockholders would benefit from somewhat greater assurances that internal corporate decisions were being made by
disinterested directors and that policies had been implemented to define responsible conduct. For example, in the absence of audit,
nominating and compensation committees comprised of at least a majority of independent directors, decisions concerning matters
such as compensation packages to our senior officers and recommendations for director nominees may be made by our directors who
have an interest in the outcome of the matters being decided. Prospective investors should bear in mind our current lack of corporate
governance measures and independent directors in formulating their investment decisions.
OUR BUSINESS	 COULD BE ADVERSELY
AFFECTED IF WE FAIL TO IMPLEMENT AND MAINTAIN EFFECTIVE DISCLOSURE CONTROLS AND PROCEDURES AND INTERNAL CONTROL OVER FINANCIAL
REPORTING
We concluded that as of July 31, 2018, our disclosure controls and procedures and our internal control over
financial reporting were not effective. We have determined that we have deficiencies in the design or operation of our internal
controls under the Securities Exchange Act of 1934, as amended (the "Exchange Act") within the required time periods
and that material weaknesses in our internal control over financial reporting exist relating to not being able to provide for adequate
review of our financial statements. If we are unable to implement and maintain effective disclosure controls and procedures and
remediate the material weaknesses in a timely manner, or if we identify other material weaknesses in the future, our ability to
produce accurate and timely financial statements and public reports could be impaired, which could adversely affect our business
and financial condition. We identified a lack of sufficient segregation of duties. In addition, investors may lose confidence in
our reported information and the market price of our Common Stock may decline.
Risks
Related to the Offering
OUR
EXISTING STOCKHOLDERS MAY EXPERIENCE SIGNIFICANT DILUTION FROM THE SALE OF OUR COMMON STOCK PURSUANT TO THE PEAK ONE FINANCING
AGREEMENT.
The
sale of our common stock to Peak One in accordance with the Financing Agreement may have a dilutive impact on our shareholders.
As a result, the market price of our common stock could decline. In addition, the lower our stock price is at the time we exercise
our put options, the more shares of our common stock we will have to issue to Peak One in order to exercise a put under the Financing
Agreement. If our stock price decreases, then our existing shareholders would experience greater dilution for any given dollar
amount raised through the offering.
The
perceived risk of dilution may cause our stockholders to sell their shares, which may cause a decline in the price of our common
stock. Moreover, the perceived risk of dilution and the resulting downward pressure on our stock price could encourage investors
to engage in short sales of our common stock. By increasing the number of shares offered for sale, material amounts of short selling
could further contribute to progressive price declines in our common stock.
17
THE
ISSUANCE OF SHARES PURSUANT TO THE PEAK ONE FINANCING AGREEMENT MAY HAVE A SIGNIFICANT DILUTIVE EFFECT.
Depending
on the number of shares we issue pursuant to the Peak One Financing Agreement, it could have a significant dilutive effect upon
our existing shareholders. Although the number of shares that we may issue pursuant to the Financing Agreement will vary based
on our stock price (the higher our stock price, the less shares we have to issue), there may be a potential dilutive effect to
our shareholders, based on different potential future stock prices, if the full amount of the Financing Agreement is realized.
Dilution is based upon common stock put to Peak One and the stock price discounted to 88% purchase price of the lowest closing
price during the pricing period.
PEAK
ONE WILL PAY LESS THAN THE THEN-PREVAILING MARKET PRICE OF OUR COMMON STOCK WHICH COULD CAUSE THE PRICE OF OUR COMMON STOCK TO
DECLINE.
Our
common stock to be issued under the Peak One Financing Agreement will be purchased at a 12% discount, or 88% of the lowest closing
price for the Company's common stock during the ten (10) consecutive trading days immediately preceding the Purchase Date
(as defined in the Peak one Financing Agreement).
Peak
One has a financial incentive to sell our shares immediately upon receiving them to realize the profit between the discounted
price and the market price. If Peak One sells our shares, the price of our common stock may decrease. If our stock price decreases,
Peak One may have further incentive to sell such shares. Accordingly, the discounted sales price in the Financing Agreement may
cause the price of our common stock to decline.
WE
MAY NOT HAVE ACCESS TO THE FULL AMOUNT UNDER THE FINANCING AGREEMENT.
The
lowest closing price of the Company's common stock during the ten (10) consecutive trading day period immediately preceding
the filing of this Registration Statement was approximately $0.09. At that price we would be able to sell shares to Peak One under
the Financing Agreement at the discounted price of $0.08. At that discounted price, the 6,074,142 shares would only represent
approximately $546,675, which is far below $5,000,000 (the full amount of the Financing Agreement).
CAUTIONARY
NOTE REGARDING FORWARD-LOOKING STATEMENTS
This
prospectus contains forward-looking statements. Forward-looking statements give our current expectations or forecasts of future
events. You can identify these statements by the fact that they do not relate strictly to historical or current facts. Forward-looking
statements involve risks and uncertainties and include statements regarding, among other things, our projected revenue growth
and profitability, our growth strategies and opportunity, anticipated trends in our market and our anticipated needs for working
capital. They are generally identifiable by use of the words "may," "will," "should," "anticipate,"
"estimate," "plans," "potential," "projects," "continuing," "ongoing,"
"expects," "management believes," "we believe," "we intend" or the negative of
these words or other variations on these words or comparable terminology. These statements may be found under the sections entitled
"Management's Discussion and Analysis of Financial Condition and Results of Operations" and "Business,"
as well as in this prospectus generally. In particular, these include statements relating to future actions, prospective products,
market acceptance, future performance or results of current and anticipated products, sales efforts, expenses, and the outcome
of contingencies such as legal proceedings and financial results.
Examples
of forward-looking statements in this prospectus include, but are not limited to, our expectations regarding our business strategy,
business prospects, operating results, operating expenses, working capital, liquidity and capital expenditure requirements. Important
assumptions relating to the forward-looking statements include, among others, assumptions regarding demand for our products, the
cost, terms and availability of components, pricing levels, the timing and cost of capital expenditures, competitive conditions
and general economic conditions. These statements are based on our management's expectations, beliefs and assumptions concerning
future events affecting us, which in turn are based on currently available information. These assumptions could prove inaccurate.
Although we believe that the estimates and projections reflected in the forward-looking statements are reasonable, our expectations
may prove to be incorrect.
18
Important
factors that could cause actual results to differ materially from the results and events anticipated or implied by such forward-looking
statements include, but are not limited to:
●
changes in the market
    acceptance of our products;
●
increased levels
    of competition;
●
changes in political,
    economic or regulatory conditions generally and in the markets in which we operate;
●
our relationships
    with our key customers;
●
our ability to retain
    and attract senior management and other key employees;
●
our ability to quickly
    and effectively respond to new technological developments;
●
our ability to protect
    our trade secrets or other proprietary rights, operate without infringing upon the proprietary rights of others and prevent
    others from infringing on the proprietary rights of the Company; and
●
other risks, including
    those described in the "Risk Factors" discussion of this prospectus.
We
operate in a very competitive and rapidly changing environment. New risks emerge from time to time. It is not possible for us
to predict all of those risks, nor can we assess the impact of all of those risks on our business or the extent to which any factor
may cause actual results to differ materially from those contained in any forward-looking statement. The forward-looking statements
in this prospectus are based on assumptions management believes are reasonable. However, due to the uncertainties associated with
forward-looking statements, you should not place undue reliance on any forward-looking statements. Further, forward-looking statements
speak only as of the date they are made, and unless required by law, we expressly disclaim any obligation or undertaking to publicly
update any of them in light of new information, future events, or otherwise.
USE
OF PROCEEDS
We
will not receive any proceeds from the sale of the shares of our Common Stock by the Selling Stockholder. However, we will receive
proceeds from our initial sale of shares to Peak One, pursuant to the Financing Agreement. The proceeds from the initial sale
of shares will be used for the purpose of working capital or for other purposes that the Board of Directors, in good faith deem
to be in the best interest of the Company.
DETERMINATION
OF OFFERING PRICE
We
have not set an offering price for the shares registered hereunder, as the only shares being registered are those sold pursuant
to the Peak One Financing Agreement. Peak One may sell all or a portion of the shares being offered pursuant to this prospectus
at fixed prices and prevailing market prices at the time of sale, at varying prices or at negotiated prices.
DILUTION
Not
applicable. The shares registered under this registration statement are not being offered for purchase. The shares are being registered
on behalf of our selling shareholders pursuant to the Peak One Financing Agreement.
19
SELLING
SECURITY HOLDER
The
selling stockholder identified in this prospectus may offer and sell up to 6,324,142 shares of our common stock, which consists
of shares of common stock to be sold by Peak One pursuant to the Financing Agreement. If issued presently, the shares of common
stock registered for resale by Peak One would represent approximately 25% of our issued and outstanding shares of common stock
as of September 12, 2019.
We
may require the selling stockholder to suspend the sales of the shares of our common stock being offered pursuant to this prospectus
upon the occurrence of any event that makes any statement in this prospectus or the related registration statement untrue in any
material respect or that requires the changing of statements in those documents in order to make statements in those documents
not misleading.
The
selling stockholder identified in the table below may from time to time offer and sell under this prospectus any or all of the
shares of common stock described under the column "Shares of Common Stock Being Offered" in the table below.
Peak
One will be deemed to be an underwriter within the meaning of the Securities Act. Any profits realized by such selling stockholder
may be deemed to be underwriting commissions.
Information
concerning the selling stockholder may change from time to time and, if necessary, we will amend or supplement this prospectus
accordingly. We cannot give an estimate as to the number of shares of common stock that will actually be held by the selling stockholder
upon termination of this offering, because the selling stockholders may offer some or all of the common stock under the offering
contemplated by this prospectus or acquire additional shares of common stock. The total number of shares that may be sold, hereunder,
will not exceed the number of shares offered, hereby. Please read the section entitled "Plan of Distribution" in this
prospectus.
The
manner in which the selling stockholder acquired or will acquire shares of our common stock is discussed below under "The
Offering."
The
following table sets forth the name of each selling stockholder, the number of shares of our common stock beneficially owned by
such stockholder before this offering, the number of shares to be offered for such stockholder's account and the number
and (if one percent or more) the percentage of the class to be beneficially owned by such stockholder after completion of the
offering. The number of shares owned are those beneficially owned, as determined under the rules of the SEC, and such information
is not necessarily indicative of beneficial ownership for any other purpose. Under such rules, beneficial ownership includes any
shares of our common stock as to which a person has sole or shared voting power or investment power and any shares of common stock
which the person has the right to acquire within 60 days, through the exercise of any option, warrant or right, through conversion
of any security or pursuant to the automatic termination of a power of attorney or revocation of a trust, discretionary account
or similar arrangement, and such shares are deemed to be beneficially owned and outstanding for computing the share ownership
and percentage of the person holding such options, warrants or other rights, but are not deemed outstanding for computing the
percentage of any other person. Beneficial ownership percentages are calculated based on 25,240,222 shares of our common stock
outstanding as of September 12, 2019.
Unless
otherwise set forth below, (a) the persons and entities named in the table have sole voting and sole investment power with respect
to the shares set forth opposite the selling stockholder's name, subject to community property laws, where applicable, and
(b) no selling stockholder had any position, office or other material relationship within the past three years, with us or with
any of our predecessors or affiliates. The number of shares of common stock shown as beneficially owned before the offering is
based on information furnished to us or otherwise based on information available to us at the timing of the filing of the registration
statement of which this prospectus forms a part.
20
Shares
Owned
                                         by
the
                                         Selling
Stockholders
Shares
    of
Common Stock
Number
    of Shares to be Owned by Selling Stockholder After the Offering and Percent of Total Issued and Outstanding Shares
Name of Selling Stockholder
before
                                         the
Offering
                                         (1)
Being
Offered
#
    of
Shares (2)
%
    of
Class (2)
Peak One
    Opportunity Fund, L.P. (3)
250,000
(4
)
0
0
%
Notes:
(1)
Beneficial
ownership is determined in accordance with Securities and Exchange Commission rules and generally includes voting or investment
power with respect to shares of common stock. Shares of common stock subject to options, warrants and convertible debentures currently
exercisable or convertible, or exercisable or convertible within 60 days, are counted as outstanding. The actual number of shares
of common stock issuable upon the conversion of the convertible debentures is subject to adjustment depending on, among other
factors, the future market price of our common stock, and could be materially less or more than the number estimated in the table.
(2)
Because
the selling stockholders may offer and sell all or only some portion of the 6,324,142 shares of our common stock being offered
pursuant to this prospectus and may acquire additional shares of our common stock in the future, we can only estimate the number
and percentage of shares of our common stock that any of the selling stockholders will hold upon termination of the offering.
(3)
Jason
Goldstein, Manager of Peak One Opportunity Fun, L.P. exercises voting and dispositive power with respect to the shares of our
common stock that are beneficially owned by Peak One Opportunity Fund, L.P.
(4)
Consists
of up to (i) 250,000 shares of Common Stock issued to Peak One Opportunity Fund, L.P. ("Peak One") as commitment shares
(the "Commitment Shares"); and (ii) 6,074,142 shares of Common Stock to be issued in connection with the Financing
Agreement.
THE
OFFERING
On
January 12, 2018, we entered into an Equity Purchase Agreement (the "Financing Agreement") with Peak One Opportunity
Fund, L.P. ("Peak One") Although we are not mandated to sell shares under the Financing Agreement, the Financing Agreement
gives us the option to sell to Peak One, up to $5,000,000 worth of our common stock over the period ending twenty-four (24) months
after the date this Registration Statement is deemed effective. In consideration for peak One's execution and performance
under the Financing Agreement, the Company issued 250,000 shares of Common Stock, as Commitment Shares (as defined in the Financing
Agreement), to Peak One.
There
is no assurance the market price of our common stock will increase in the future. The number of common shares that remain issuable
may not be sufficient, dependent upon the share price, to allow us to access the full amount contemplated under the Financing
Agreement. If the bid/ask spread remains the same we will not be able to place a put for the full commitment under the Financing
Agreement. Based on the lowest closing price of our common stock during the ten (10) consecutive trading day period preceding
the filing date of this registration statement was approximately $0.09, the registration statement covers the offer and possible
sale of approximately $546,675 worth of our shares. At that price we would be able to sell shares to Peak One under the Financing
Agreement at the discounted price of $0.08. At that discounted price, the 6,074,142 shares would only represent approximately
$546,675, which is far below $5,000,000 (the full amount of the Financing Agreement).
The
purchase price of the common stock will be set at _______ (_____%) of the lowest closing bid price of the common stock during
the ten (10) consecutive trading day period immediately preceding the date on which the Company delivers a put notice to _______.
In addition, there is an ownership limit for _____ of 4.99%.
Peak
One is not permitted to engage in short sales involving our common stock during the term of the commitment period. In accordance
with Regulation SHO, however, sales of our common stock by Peak One after delivery of a put notice of such number of shares reasonably
expected to be purchased by Peak One under a put will not be deemed a short sale.
21
In
addition, we must deliver the other required documents, instruments and writings required. Peak One is not required to purchase
the put shares unless:
●
Our
registration statement with respect to the resale of the shares of common stock delivered in connection with the applicable put
shall have been declared effective;
●
We
shall have obtained all material permits and qualifications required by any applicable state for the offer and sale of the registrable
securities; and
●
We
shall have filed all requisite reports, notices, and other documents with the SEC in a timely manner.
As
we draw down on the equity line of credit, shares of our common stock will be sold into the market by Peak One. The sale of these
shares could cause our stock price to decline. In turn, if our stock price declines and we issue more puts, more shares will come
into the market, which could cause a further drop in our stock price. You should be aware that there is an inverse relationship
between the market price of our common stock and the number of shares to be issued under the equity line of credit. If our stock
price declines, we will be required to issue a greater number of shares under the equity line of credit. We have no obligation
to utilize the full amount available under the equity line of credit.
Neither
the Financing Agreement nor any of our rights or Peak One's rights thereunder may be assigned to any other person.
PLAN
OF DISTRIBUTION
Each
of the selling stockholders named above and any of their pledgees and successors-in-interest may, from time to time, sell any
or all of their shares of common stock on OTC Markets or any other stock exchange, market or trading facility on which the shares
of our common stock are traded or in private transactions. These sales may be at fixed prices and prevailing market prices at
the time of sale, at varying prices or at negotiated prices. The selling stockholders may use any one or more of the following
methods when selling shares:
●
ordinary
                                         brokerage transactions and transactions in which the broker-dealer solicits purchasers;
●
block
                                         trades in which the broker-dealer will attempt to sell the shares as agent but may position
                                         and resell a portion of the block as principal to facilitate the transaction;
●
purchases
                                         by a broker-dealer as principal and resale by the broker-dealer for its account;
●
privately
                                         negotiated transactions;
●
broker-dealers
                                         may agree with the selling stockholders to sell a specified number of such shares at
                                         a stipulated price per share; or
●
a
                                         combination of any such methods of sale.
Broker-dealers
engaged by the selling stockholders may arrange for other brokers-dealers to participate in sales. Broker-dealers may receive
commissions or discounts from the selling stockholders (or, if any broker-dealer acts as agent for the purchaser of shares, from
the purchaser) in amounts to be negotiated, but, except as set forth in a supplement to this prospectus, in the case of an agency
transaction not in excess of a customary brokerage commission in compliance with FINRA Rule 2440; and in the case of a principal
transaction a markup or markdown in compliance with FINRA IM-2440.
Peak
One is an underwriter within the meaning of the Securities Act of 1933 and any broker-dealers or agents that are involved in selling
the shares may be deemed to be "underwriters" within the meaning of the Securities Act of 1933 in connection with
such sales. In such event, any commissions received by such broker-dealers or agents and any profit on the resale of the shares
purchased by them may be deemed to be underwriting commissions or discounts under the Securities Act of 1933. Peak One has informed
us that it does not have any written or oral agreement or understanding, directly or indirectly, with any person to distribute
the common stock of our company. Pursuant to a requirement by FINRA, the maximum commission or discount to be received by any
FINRA member or independent broker-dealer may not be greater than 8% of the gross proceeds received by us for the sale of any
securities being registered pursuant to Rule 415 promulgated under the Securities Act of 1933.
22
Discounts,
concessions, commissions and similar selling expenses, if any, attributable to the sale of shares will be borne by the selling
stockholder. The selling stockholder may agree to indemnify any agent, dealer, or broker-dealer that participates in transactions
involving sales of the shares if liabilities are imposed on that person under the Securities Act of 1933.
We
are required to pay certain fees and expenses incurred by us incident to the registration of the shares covered by this prospectus.
We have agreed to indemnify the selling stockholders against certain losses, claims, damages and liabilities, including liabilities
under the Securities Act of 1933. We will not receive any proceeds from the resale of any of the shares of our common stock by
the selling stockholders. We may, however, receive proceeds from the sale of our common stock under the Financing Agreement with
Peak One. Neither the Financing Agreement with Peak One nor any rights of the parties under the Financing Agreement with Peak
One may be assigned or delegated to any other person.
We
have entered into an agreement with Peak One to keep this prospectus effective until Peak One has sold all of the common shares
purchased by it under the Financing Agreement and has no right to acquire any additional shares of common stock under the Financing
Agreement.
The
resale shares will be sold only through registered or licensed brokers or dealers if required under applicable state securities
laws. In addition, in certain states, the resale shares may not be sold unless they have been registered or qualified for sale
in the applicable state or an exemption from the registration or qualification requirement is available and is complied with.
Under
applicable rules and regulations under the Securities Exchange Act of 1934, any person engaged in the distribution of the resale
shares may not simultaneously engage in market making activities with respect to the common stock for the applicable restricted
period, as defined in Regulation M, prior to the commencement of the distribution. In addition, the selling stockholders will
be subject to applicable provisions of the Securities Exchange Act of 1934 and the rules and regulations thereunder, including
Regulation M, which may limit the timing of purchases and sales of shares of the common stock by the selling stockholders or any
other person. We will make copies of this prospectus available to the selling stockholders.
DESCRIPTION
OF SECURITIES TO BE REGISTERED
General
We
are authorized to issue an aggregate of 150,000,000 shares of common stock, $0.001 par value per share and 50,000,000 shares of
preferred stock in one or more series and to fix the voting powers, preferences and other rights and limitations of the preferred
stock. As of September 12, 2019, we had 25,240,222 shares of common stock outstanding and no shares of preferred stock outstanding.
Each
share of common stock shall have one (1) vote per share. Our common stock does not provide a preemptive, subscription or conversion
rights and there are no redemption or sinking fund provisions or rights. Our common stock holders are not entitled to cumulative
voting for election of Board of Directors.
Dividends
We
have not paid any dividends on our common stock since our inception and do not intend to pay any dividends in the foreseeable
future.
The
declaration of any future cash dividends is at the discretion of our board of directors and depends upon our earnings, if any,
our capital requirements and financial position, our general economic conditions, and other pertinent conditions. It is our present
intention not to pay any cash dividends in the foreseeable future, but rather to reinvest earnings, if any, in our business operations.
23
Warrants
As of September 12, 2019, we have issued warrants
to purchase 2,350,000 shares of Common Stock issuable with a weighted average exercise price of $0.34. Of which 2,050,000 warrants
are exercisable immediately, have a weighted-average remaining life of 2.21 years and a weighted-average exercise price of $0.25
as of September 12, 2019.
Options
As of September 12, 2019, we have issued
options to purchase 5,240,000 shares of Common Stock issuable with a weighted average exercise price of $0.28. Of which
3,156,000 options are exercisable immediately, have a weighted-average remaining life of 3.38 years and a weighted-average
exercise price of $0.30 as of September 12, 2019.
Securities
Authorized for Issuance Under Equity Compensation Plans
In
November 2015, Digerati adopted the Digerati Technologies, Inc. 2015 Equity Compensation Plan (the "Plan"). The Plan
authorizes the grant of up to 7.5 million stock options, restricted common shares, non-restricted common shares and other awards
to employees, directors, and certain other persons. The Plan is intended to permit Digerati to retain and attract qualified individuals
who will contribute to the overall success of Digerati. Digerati's Board of Directors determines the terms of any grants
under the Plan. Exercise prices of all stock options and other awards vary based on the market price of the shares of common stock
as of the date of grant. The stock options, restricted common stock, non-restricted common stock and other awards vest based on
the terms of the individual grant. On November 18, 2015, the Company filed a Registration Statement on Form S-8 to register with
the U.S. Securities and Exchange Commission 7,500,000 shares of the Company's common stock, which may be issued by the Company
upon the exercise of options granted, or other awards made, pursuant to the terms of the Plan. Please see the Plan filed as Exhibit
4.1 to the Company's Registration Statement on Form S-8 filed with the U.S. Securities and Exchange Commission on November
18, 2015.
Preferred
Stock
The
Company has authorized 50,000,000 shares of preferred stock. The board of directors has the authority to issue these shares and
to set dividends, voting and conversion rights, redemption provisions, liquidation preferences, and other rights and restrictions.
Anti-Takeover
Effects of Various Provisions of Nevada Law
Provisions
of the Nevada Revised Statutes, our articles of incorporation, as amended, and bylaws could make it more difficult to acquire
us by means of a tender offer, a proxy contest or otherwise, or to remove incumbent officers and directors. These provisions,
summarized below, would be expected to discourage certain types of takeover practices and takeover bids our Board may consider
inadequate and to encourage persons seeking to acquire control of us to first negotiate with us. We believe that the benefits
of increased protection of our ability to negotiate with the proponent of an unfriendly or unsolicited proposal to acquire or
restructure us will outweigh the disadvantages of discouraging takeover or acquisition proposals because, among other things,
negotiation of these proposals could result in an improvement of their terms.
Blank
Check Preferred
Our
articles of incorporation permit our Board to issue preferred stock with voting, conversion and exchange rights that could negatively
affect the voting power or other rights of our Common Stockholders. The issuance of our preferred stock could delay or prevent
a change of control of our Company.
Amendments
to our Articles of Incorporation and Bylaws
Under
the Nevada Revised Statutes, our articles of incorporation may not be amended by stockholder action alone.
Nevada
Anti-Takeover Statute
We
may be subject to Nevada's Combination with Interested Stockholders Statute (Nevada Corporation Law Sections 78.411-78.444)
which prohibits an "interested stockholder" from entering into a "combination" with the corporation, unless
certain conditions are met. An "interested stockholder" is a person who, together with affiliates and associates,
beneficially owns (or within the prior two years, did beneficially own) 10% or more of the corporation's capital stock entitled
to vote.
24
Limitations
on Liability and Indemnification of Officers and Directors
The
Nevada Revised Statutes limits or eliminates the personal liability of directors to corporations and their stockholders for monetary
damages for breaches of directors' fiduciary duties as directors.
The
limitation of liability and indemnification provisions under the Nevada Revised Statutes and in our articles of incorporation
and bylaws may discourage stockholders from bringing a lawsuit against directors for breach of their fiduciary duties. These provisions
may also have the effect of reducing the likelihood of derivative litigation against directors and officers, even though such
an action, if successful, might otherwise benefit us and our stockholders. However, these provisions do not limit or eliminate
our rights, or those of any stockholder, to seek non-monetary relief such as injunction or rescission in the event of a breach
of a director's fiduciary duties. Moreover, the provisions do not alter the liability of directors under the federal securities
laws. In addition, your investment may be adversely affected to the extent that, in a class action or direct suit, we pay the
costs of settlement and damage awards against directors and officers pursuant to these indemnification provisions.
Authorized
but Unissued Shares
Our
authorized but unissued shares of Common Stock and preferred stock will be available for future issuance without stockholder approval,
except as may be required under the listing rules of any stock exchange on which our Common Stock is then listed. We may use additional
shares for a variety of corporate purposes, including future public offerings to raise additional capital, corporate acquisitions
and employee benefit plans. The existence of authorized but unissued shares of Common Stock and preferred stock could render more
difficult or discourage an attempt to obtain control of us by means of a proxy contest, tender offer, merger or otherwise.
Penny
Stock Considerations
Our
shares will be "penny stocks" as that term is generally defined in the Securities Exchange Act of 1934 to mean equity
securities with a price of less than $5.00 per share. Thus, our shares will be subject to rules that impose sales practice and
disclosure requirements on broker-dealers who engage in certain transactions involving a penny stock. Under the penny stock regulations,
a broker-dealer selling a penny stock to anyone other than an established customer must make a special suitability determination
regarding the purchaser and must receive the purchaser's written consent to the transaction prior to the sale, unless the
broker-dealer is otherwise exempt.
In
addition, under the penny stock regulations, the broker-dealer is required to:
●
Deliver,
                                         prior to any transaction involving a penny stock, a disclosure schedule prepared by the
                                         Securities and Exchange Commission relating to the penny stock market, unless the broker-dealer
                                         or the transaction is otherwise exempt;
●
Disclose
                                         commissions payable to the broker-dealer and our registered representatives and current
                                         bid and offer quotations for the securities;
●
Send
                                         monthly statements disclosing recent price information pertaining to the penny stock
                                         held in a customer's account, the account's value, and information regarding
                                         the limited market in penny stocks; and
●
Make
                                         a special written determination that the penny stock is a suitable investment for the
                                         purchaser and receive the purchaser's written agreement to the transaction, prior
                                         to conducting any penny stock transaction in the customer's account.
Because
of these regulations, broker-dealers may encounter difficulties in their attempt to sell shares of our common stock, which may
affect the ability of selling shareholders or other holders to sell their shares in the secondary market and have the effect of
reducing the level of trading activity in the secondary market. These additional sales practice and disclosure requirements could
impede the sale of our securities, if our securities become publicly traded. In addition, the liquidity for our securities may
be decreased, with a corresponding decrease in the price of our securities. Our shares in all probability will be subject to such
penny stock rules and our shareholders will, in all likelihood, find it difficult to sell their securities.
25
TRANSFER AGENT AND REGISTRAR
The transfer agent
of our Common Stock is American Stock Transfer & Trust Company. Their address is 6201 15th Avenue, Brooklyn, NY 11219.
LEGAL MATTERS
Lucosky Brookman
LLP, Woodbridge, New Jersey, will pass upon the validity of the securities being offered by this prospectus.
EXPERTS
The consolidated financial statements for
the Company as of July 31, 2018 and for the year then ended included in this prospectus have been audited by Malone Bailey, LLP,
an independent registered public accounting firm, to the extent and for the periods set forth in our report and are incorporated
herein in reliance upon such report given upon the authority of said firm as experts in auditing and accounting.
The consolidated financial
statements for the Company as of July 31, 2017 and for the year then ended included in this prospectus have been audited by LBB
& Associates Ltd., LLP, an independent registered public accounting firm, to the extent and for the periods set forth in our
report and are incorporated herein in reliance upon such report given upon the authority of said firm as experts in auditing and
accounting.
The legality of the shares offered under
this registration statement will be passed upon by Lucosky Brookman LLP.
BUSINESS
Overview
Digerati Technologies,
Inc., a Nevada corporation (including our subsidiaries, "we," "us," "Company" or "Digerati"),
through its operating subsidiaries, Shift8 Networks, Inc., dba Synergy Telecom ("Shift8") and T3 Communications, Inc.
("T3"), provides cloud services specializing in Unified Communications as a Service ("UCaaS") solutions
for the business market. Our product line includes a portfolio of Internet-based telephony products and services delivered through
our cloud application platform and session-based communication network and network services including Internet broadband, fiber,
and cloud WAN solutions. Our services are designed to provide enterprise-class, carrier-grade services to the small-to-medium-sized
business ("SMB") at cost-effective monthly rates. Our UCaaS or cloud communication services include fully hosted IP/PBX,
mobile applications, Voice over Internet Protocol ("VoIP") transport, SIP trunking, and customized VoIP services all
delivered
Only in the Cloud™
.
As a provider of cloud
communications solutions to the SMB, we are seeking to capitalize on the migration by businesses from the legacy telephone network
to the Internet Protocol ("IP") telecommunication network and the migration from hardware-based on-premise telephone
systems to software-based communication systems in the cloud. Most SMBs are lagging in technical capabilities and advancement and
seldom reach the economies of scale that their larger counterparts enjoy, due to their achievement of a critical mass and ability
to deploy a single solution to a large number of workers. SMBs are typically unable to afford comprehensive enterprise solutions
and, therefore, need to integrate a combination of business solutions to meet their needs. Cloud computing has revolutionized the
industry and opened the door for businesses of all sizes to gain access to enterprise applications with affordable pricing. This
especially holds true for cloud telephony applications, but SMBs are still a higher-touch sale that requires customer support for
system integration, network installation, cabling, and troubleshooting. We have placed a significant emphasis on that "local"
touch when selling, delivering, and supporting our services which we believe will differentiate us from the national providers
that are experiencing high attrition rates due to poor customer support model.
26
The adoption of cloud
communication services is being driven by the convergence of several market trends, including the increasing costs of maintaining
installed legacy communications systems, the fragmentation resulting from use of multiple on-premise systems, and the proliferation
of personal smartphones used in the workplace. Today, businesses are increasingly looking for an affordable path to modernizing
their communications system to improve productivity, business performance and customer experience.
Our cloud solutions
offer the SMB reliable, robust, and full-featured services at affordable monthly rates that eliminates high-cost capital expenditures
and provides for integration with other cloud-based systems.
Products and Services
We provide a comprehensive
suite of Internet-based communication services to meet the global needs of businesses that are seeking simple, flexible, and cost-effective
communication solutions. Our Internet-based services include fully hosted IP/PBX services, SIP trunking, call center applications,
interactive voice response auto attendant, voice and web conferencing, call recording, simultaneous calling, voicemail to email
conversion, integrated mobility applications that are device and location agnostic, and multiple customized IP/PBX features in
a hosted or cloud environment. Our services, known as UCaaS or cloud communications, are specifically designed for the needs of
the small to medium-sized business, enterprise customers, call centers, and telephony service providers that do not have the scale
or expertise necessary to deploy their own cloud telephony infrastructure.
Through our recent
acquisitions, we have enhanced our product portfolio with the addition of enterprise-class data and connectivity solutions through
multiple broadband technologies including cloud WAN or SD-WAN (Software-defined Wide Area Network), fiber, and Ethernet over copper.
Other services include remote network monitoring, data backup and disaster recovery. The addition of these new products and services
allows us to increase our value-proposition through product bundles that go beyond the voice application and to serve as a one-stop-shop
for business customers seeking a comprehensive voice and data solution.
Voice over Internet Protocol Networks
The basic technology
of traditional telecommunications systems was designed for slow mechanical switches. Communications over the traditional telephone
network are routed through circuits that must dedicate all circuit resources to each call from its inception until the call ends,
regardless of whether anyone is actually talking on the circuit. This circuit-switching technology incurs a significant cost per
call and does not efficiently support the integration of voice with data services. Data networks, however, were designed for electronic
switching. They break the data stream into small, individually addressed packages of data ("packets") that are routed
independently of each other from the origin to the destination. Therefore, they do not require a fixed amount of bandwidth to be
reserved between the origin and destination of each call and they do not waste bandwidth when it is not being used for actual transmission
of information. This allows multiple voice or voice and data calls to be pooled, resulting in these networks being able to carry
more calls with an equal amount of bandwidth. Moreover, they do not require the same complex switching methods required by traditional
voice telephone networks, instead using a multiplicity of routers to direct each packet to its destination and automatically routing
packets around blockages, congestion or outages.
27
Packet switching can
be used within a data network or across networks, including the public Internet. The Internet itself is not a single data network
owned by any single entity, but rather a loose interconnection of networks belonging to many owners that communicate using the
Internet Protocol. By converting voice signals to digital data and handling the voice signals as data, it can be transmitted through
the more efficient switching networks designed for data transmissions and through the Internet using the Internet Protocol. The
transmission of voice signals as digitalized data streams over the Internet is known as Voice over Internet Protocol or "VoIP".
A VoIP network has the following advantages over traditional networks:
●
Simplification:
An
integrated infrastructure that supports all forms of communication allows more standardization, a smaller equipment complement,
and less equipment management.
●
Network Efficiency:
The integration of voice and data fills up the data communication channels efficiently, thus providing bandwidth consolidation
and reduction of the costs associated with idle bandwidth. This combined infrastructure can support dynamic bandwidth optimization
and a fault tolerant design. The differences between the traffic patterns of voice and data offer further opportunities for significant
efficiency improvements.
●
Co-existence with
traditional communication mediums:
IP telephony can be used in conjunction with existing public telephone system switches,
leased and dial-up lines, PBXs and other customer premise equipment, enterprise LANs, and Internet connections. IP telephony applications
can be implemented through dedicated gateways, which in turn can be based on open standards platforms for reliability and scalability.
●
Cost reduction:
Under the VoIP network, the connection is directly to the Internet backbone and as a result the telephony access charges and settlement
fees are avoided.
The growth of voice
over the Internet was limited in the past due to poor sound quality caused by technical issues such as delays in packet transmission
and by bandwidth limitations related to Internet network capacity and local access constraints. However, the expansion of Internet
Protocol network infrastructure, improvements in packet switching and compression technology, new software algorithms and improved
hardware have substantially reduced delays in packet transmissions and resulted in superior sound quality to that of the legacy
telephone network.
Cloud Communications
Cloud
communications are Internet-based voice and data communications where telecommunications applications, switching and storage
are hosted by a third-party service provider outside of the organization using the services. Services are accessed by the user
over the public Internet. Cloud telephony refers specifically to voice services and more specifically the replacement
of conventional business telephone equipment (such as a PBX) with VoIP service hosted by a third-party service provider and
delivered over the Internet.
We
operate a cloud communication network that consists of a VoIP switching system and cloud telephony application platform. Our network
allows us to provide end-to-end cloud telephony solutions designed to provide significant benefits to businesses of all sizes,
with single or multiple locations. The integration of our cloud communication platform and global VoIP network allows us to provide
our customers with virtually any type of telephony solution on a global basis.
Our
cloud communication solutions, also known as UCaaS, are designed to minimize upfront capital costs, increase the scalability and
flexibility of the customer's communications network and service environment, provide robust features and functionality to
increase productivity and reduce the overall cost of communications.
Strategy
Our strategy is to
target the small to medium-sized business market and capitalize on the wave of migration from the legacy telephone network to cloud
telephony. We will continue to concentrate our sales and marketing efforts on developing vertically oriented solutions for targeted
markets primarily focusing on municipalities, banking, healthcare, legal services and real estate. In addition, we will continue
to partner with our distributors and Value-Added Resellers ("VARs") to expand our customer base. Our typical VAR is
an information technology services firm, traditional PBX vendor, managed service provider, or systems integrator that has established
relationships with businesses in its local market. These VARs are currently providing local customer support for other IT or PBX
services but lack the technology infrastructure to provide cloud communication and VoIP services to their customers. Our strategy
allows these VARs to focus on their strength of providing first tier support to their customers while we provide the second and
third tier technical support required to operate a cloud communication and VoIP network. In addition, we transform our VARs'
business model by introducing new cloud telephony services and adding a new and lucrative recurring revenue stream that increases
the VARs' value proposition for its current and prospective customers.
28
Our cloud-based technology
platform enables us and our VARs to deliver enhanced voice services to their business customers. The features supported on our
cloud communication platform include all standard telephone features and value-added applications such as voicemail to email, VoIP
peering, teleconferencing, IVR auto attendant, and dial-by-name directory. Our system provides our customers and VARs with a migration
path from a traditional PBX system to a complete cloud-based PBX solution.
Our strategic initiatives
to successfully meet our long-term business objectives include:
●
A disciplined approach
to evaluating additional acquisitions as we build on the foundation created by our most recent acquisitions in Texas and Florida.
We will continue to target local and/or regional UCaaS/cloud telephony providers which have excelled in their market with that
"local" touch when serving their business customers. We believe the experience gained in integrating products, personnel,
and customers will facilitate continued growth via acquisition.
●
A continued emphasis
on our UCaaS/cloud communication business which operates in a segment of the telecommunication industry that continues to experience
significant growth as businesses migrate from legacy phone systems to cloud-based telephony systems.
●
Enhancements to our broadband
product portfolio with an emphasis on marketing leading-edge network and business continuity solutions like cloud WAN, also known
as SD-WAN (Software Defined Wide-Area Network), to our customers which we anticipate will increase average revenue per customer.
●
Implementing a total
support model (pre and post sales) for building a world-class service delivery and help desk organization.
●
Emphasis on our sales
distribution model that enables our VARs to offer cloud and session-based communication services to the enterprise market in various
regions and industries.
●
Continue enhancing our
infrastructure and back office system to streamline operations, automate key processes, and support the scalability of our VAR
distribution model.
Competitive Conditions
The
cloud services industry, including the provisioning of cloud communications services, cloud connectivity, cloud storage and cloud
computing, as well as carrier voice and data services, is highly competitive, rapidly evolving and subject to constant technological
change and intense marketing by providers with similar products and services. We expect that new, smaller, but very agile competitors,
specializing in providing service to regional and emerging markets at low margin and hence low cost, may have an impact on our
market. Similarly, the business services market includes competitors who may be significantly larger and have substantially greater
market presence, financial, technical, operational and marketing resources than we do, including Tier 1 carriers, cable companies
and premise-based solutions providers that are implementing cloud communication services. In the event that such a competitor expends
significant sales and marketing resources in one or several markets where we compete with them, we may not be able to compete successfully
in those markets. Specialized cloud services providers, who focus on one or more cloud service or application, could adopt aggressive
pricing and promotion practices that could impact our ability to compete. We also believe that competition will continue to increase,
placing downward pressure on prices. Such pressure could adversely affect our gross margins if we are not able to reduce our costs
commensurate with the price reductions of our competitors. In addition, the pace of technological change makes it impossible for
us to predict whether we will face new competitors using different technologies to provide the same or similar services offered
or proposed to be offered by us. If our competitors were to provide better and more cost-effective services than ours, we may not
be able to increase our revenues or capture any significant market share.
29
The VoIP and Internet
telephony market are highly competitive. Our competitors include major telecommunications carriers in the U.S., national UCaaS
providers, and numerous small cloud telephony operators. We expect to face continuing competition based on price and service offerings
from existing competitors and new market entrants in the future. The principal competitive factors in our market include price,
coverage, customer service, technical response times, reliability, and network size/capacity. The competitive landscape is rapidly
altering the number, identity and competitiveness of the marketplace, and we are unable to determine with certainty the impact
of potential consolidation in our industry.
Many of our competitors
have substantially greater financial, technical and marketing resources, larger customer bases, longer operating histories, greater
name recognition and more established relationships in the industry than we have. As a result, certain of these competitors may
be able to adopt more aggressive pricing policies that could hinder our ability to market our services. We believe that our key
competitive advantages are our ability to deliver reliable, high quality voice service over the Internet in a cost-effective manner,
superior customers service and our VAR distribution model. We cannot provide assurances, however, that these advantages will enable
us to succeed against comparable service offerings from our competitors.
Government Regulation
VoIP and other communications
services, like ours, have been subject to less regulation at the state and federal levels than traditional telecommunications services.
Providers of traditional telecommunications services are subject to the highest degree of regulation, while providers of VoIP and
other information services are largely exempt from most federal and state regulations governing traditional common carriers. The
FCC has subjected VoIP service providers to a smaller subset of regulations that apply to traditional telecommunications service
providers and has not yet classified VoIP services as either telecommunications or information. The FCC is currently examining
the status of VoIP service providers and the services they provide in multiple open proceedings. In addition, many state regulatory
agencies impose taxes and other surcharges on VoIP services, and certain states take the position that offerings by VoIP providers
are intrastate telecommunications services and therefore subject to state regulation. These states argue that if the beginning
and end points of communications are known, and if some of these communications occur entirely within the boundaries of a state,
the state can regulate that offering. We believe that the FCC has preempted states from regulating VoIP offerings in the same manner
as providers of traditional telecommunications services. However, this issue has not been resolved definitively as a matter of
law, and it remains possible that the FCC could determine that such services are not information services, or that there could
be a judicial or legislative determination that the states are not preempted from regulating VoIP services as traditional telecommunications
services. We cannot predict how or when these issues will be resolved or its potential future impact on our business at this time.
The effect of any future
laws, regulations and orders on our operations, including, but not limited to, our cloud-based communications and collaboration
services, cannot be determined. But as a general matter, increased regulation and the imposition of additional funding obligations
increases service costs that may or may not be recoverable from our customers, which could result in making our services less competitive
with traditional telecommunications services if we increase our prices or decreasing our profit margins if we attempt to absorb
such costs.
Federal, state, local
and foreign governmental organizations are considering other legislative and regulatory proposals that would regulate and/or tax
applications running over the Internet. We cannot predict whether new taxes will be imposed on our services, and depending on the
type of taxes imposed, whether and how our services would be affected thereafter. Increased regulation of the Internet may decrease
its growth and hinder technological development, which may negatively impact the cost of doing business via the Internet or otherwise
materially adversely affect our business, financial condition and results of operations.
Regulation
of Internet-based Telecommunication Services in the United States
We have the necessary
authority under Section 214 of the Communications Act to operate as a domestic and international carrier. We are considered a non-dominant
domestic interstate carrier subject to minimal regulation by the FCC. We are not required to obtain FCC authority to initiate or
expand our domestic interstate operations, but we are required to obtain FCC approval to transfer control or discontinue service
and are required to file various reports and pay various fees and assessments. In addition, we must offer service on a nondiscriminatory
basis at just and reasonable rates and are subject to the FCC's complaint jurisdiction. Generally, our international voice
traffic is subject to minimal regulation by state and local jurisdictions.
30
The
FCC requires Internet voice communications service providers, such as our company, to provide E-911 service in all geographic areas
covered by the traditional wire-line E-911 network. Under the FCC's rules, Internet voice communications providers must transmit
the caller's phone number and registered location information to the appropriate public safety answering point, or PSAP,
for the caller's registered location. The FCC also requires interconnected VoIP service providers to make Universal Service
Fund ("USF") contributions. We believe that our services are currently compliant with all applicable requirements of
the FCC, and we have made and are making the required contributions to the USF. However, should we at some time fail to meet certain
requirements or fail to make required contributions, we could be subject to revocation of our authority to operate or to fines
or penalties.
As
a result of the FCC's preemption of states' ability to regulate certain aspects of VoIP service, and a trend in state
legislatures to affirmatively deregulate VoIP services for most purposes, our VoIP services are subject to relatively few state
regulatory requirements aside from collection of state and local E911 fees and state Universal Service support obligations. We
believe that our VoIP services are currently compliant with all applicable state requirements, and we have made and are making
the required contributions to E911, state USF, and other funds. The state regulatory framework for our VoIP services continues
to evolve, so we, in conjunction with our professional advisors, monitor the actions of the various state regulatory agencies and
endeavor to ensure that we are in compliance with applicable state law, including any new statutes or regulations that may be passed.
However, there can be no assurance that we will become aware of all applicable requirements on a timely basis, or that we will
always be fully compliant with applicable rules and regulations. Should we fail to be compliant with applicable state regulations,
or to file required reports with state regulatory agencies, we could be subject to fines and/or penalties.
In
addition to regulations addressing Internet telephony and broadband services, other regulatory issues relating to the Internet
generally could affect our ability to provide our services. Congress has adopted legislation that regulates certain aspects of
the Internet including online content, user privacy, taxation, liability for third-party activities and jurisdiction. In addition,
a number of initiatives pending in Congress and state legislatures would prohibit or restrict advertising or sale of certain products
and services on the Internet, which may have the effect of raising the cost of doing business on the Internet generally.
International Regulation
The regulatory treatment
of Internet telephony outside of the U.S. varies widely from country to country. A number of countries that currently prohibit
competition in the provision of voice telephony also prohibit Internet telephony. Other countries permit but regulate Internet
telephony. Some countries will evaluate proposed Internet telephony service on a case-by-case basis and determine whether it should
be regulated as a voice service or as another telecommunications service. In many countries, Internet telephony has not yet been
addressed by legislation or regulation. Increased regulation of the Internet and/or Internet telephony providers or the prohibition
of Internet telephony in one or more countries could adversely affect our business and future prospects if we decide to expand
globally.
Customers and Suppliers
We rely on various
suppliers to provide services in connection with our Voice over Internet Protocol ("VoIP") or Unified Communication
as a Service ("UCaaS") offerings. Our customers include businesses in various industries including Healthcare, Banking,
Financial Services, Legal, Real Estate, and Construction. We are not dependent upon any single supplier or customer.
During the year ended
July 31, 2018, the Company did not derived a significant amount of revenue from one single customer. During the year ended July
31, 2017, the Company derived a significant amount revenue from four customers, comprising 24%, 24%, 11%, and 8% of the total revenue
for the year.
As of the year ended July 31, 2018, the company derived 13% and 23% total accounts receivable from two customers.
As of the year ended July 31, 2017, the Company derived a significant amount of accounts receivable from three customers, comprising
37%, 27% and 14% of the total accounts receivable as of the year ended July 31, 2017.
31
Employees
As of September 12, 2019, we had 23 employees,
all of whom performed sales, operational, technical and administrative functions. We believe our future success will depend to
a large extent on our continued ability to attract and retain highly skilled and qualified employees. We consider our employee
relations to be good. None of these aforementioned employees belong to labor unions.
MARKET PRICE OF THE REGISTRANT'S
COMMON EQUITY AND RELATED STOCKHOLDER MATTERS
Market for Common Equity
Our common stock is quoted on the OTCQB
under the symbol "DTGI". The following table sets forth the high and low bid prices for our common stock for the two
most recently completed fiscal years, as reported by Bloomberg, LP. Price quotations on the OTCQB reflect inter-dealer prices,
without retail mark-up, markdown or commission, and may not necessarily represent actual transactions.
The following table sets forth the high
and low price for our common stock for each quarter during the 2018 and 2017 fiscal years. The prices reflect inter-dealer quotations,
do not include retail mark-ups, markdowns or commissions and do not necessarily reflect actual transactions.
Holders
As of September 12,
2019, there were approximately 336 record holders of our Common Stock.
Dividends
We have not paid cash
dividends on our common stock and we do not anticipate paying a dividend in the foreseeable future.
Equity Compensation Plans
The following table
provides information regarding securities that have been or are authorized to be issued under our equity compensation plans as
of July 31, 2018.
Number of Securities to be Issued Upon Exercise of Outstanding Options, Warrants and Rights
Weighted-Average Exercise Price of Outstanding Options, Warrants and Rights
Number of Securities Remaining Available for Future Issuance Under Equity Compensation Plans
Equity Compensation plans approved by security holders
-0-
--
-0-
Equity Compensation Plans not approved by security holders
3,415,000
$
0.33
200,023
Total
3,415,000
$
0.33
200,023
32
MANAGEMENT'S DISCUSSION AND ANALYSIS
OF FINANCIAL CONDITION AND RESULTS OF OPERATION
You should read the following discussion
of our financial condition and results of operations in conjunction with financial statements and notes thereto included elsewhere
in this prospectus. The following discussion contains forward-looking statements that reflect our plans, estimates and beliefs.
Our actual results could differ materially from those discussed in the forward-looking statements. Factors that could cause or
contribute to these differences include those discussed below and elsewhere in this prospectus, particularly in the section labeled
"Risk Factors."
This section of the prospectus includes
a number of forward-looking statements that reflect our current views with respect to future events and financial performance.
Forward-looking statements are often identified by words like "believe," "expect," "estimate,"
"anticipate," "intend," "project," and similar expressions, or words that, by their nature,
refer to future events. You should not place undue certainty on these forward-looking statements, which apply only as of the date
of this prospectus. These forward-looking statements are subject to certain risks and uncertainties that could cause actual results
to differ materially from historical results or our predictions.
The following is a discussion of the
unaudited interim consolidated financial condition and results of operations of Digerati for the three and nine months ended April
30, 2019 and 2018. It should be read in conjunction with our audited Consolidated Financial Statements, the Notes thereto, and
the other financial information included in the Company's Annual Report on Form 10-Kfor the fiscal year ended July 31, 2018
filed with the Securities and Exchange Commission on November 16, 2018. For purposes of the following discussion, fiscal 2019 or
2019 refers to the year ended July 31, 2019 and fiscal 2018 or 2018 refers to the year ended July 31, 2018.
Overview
Digerati Technologies, Inc., a Nevada corporation
(including our subsidiaries, "we," "us," "Company" or "Digerati"), through its
operating subsidiaries in Texas and Florida, Shift8 Networks, Inc., dba, T3 Communications ("T3") and T3 Communications,
Inc. ("T3"), provides cloud services specializing in Unified Communications as a Service ("UCaaS") solutions
for the business market. Our product line includes a portfolio of Internet-based telephony products and services delivered through
our cloud application platform and session-based communication network and network services including Internet broadband, fiber,
and cloud WAN solutions. Our services are designed to provide enterprise-class, carrier-grade services to the small-to-medium-sized
business ("SMB") at cost-effective monthly rates. Our UCaaS or cloud communication services include fully hosted IP/PBX,
mobile applications, Voice over Internet Protocol ("VoIP") transport, SIP trunking, and customized VoIP services all
delivered
Only in the Cloud™
.
As a provider of cloud communications solutions
to the SMB, we are seeking to capitalize on the migration by businesses from the legacy telephone network to the Internet Protocol
("IP") telecommunication network and the migration from hardware-based on-premise telephone systems to software-based
communication systems in the cloud. Most SMBs are lagging in technical capabilities and advancement and seldom reach the economies
of scale that their larger counterparts enjoy, due to their achievement of a critical mass and ability to deploy a single solution
to a large number of workers. SMBs are typically unable to afford comprehensive enterprise solutions and, therefore, need to integrate
a combination of business solutions to meet their needs. Cloud computing has revolutionized the industry and opened the door for
businesses of all sizes to gain access to enterprise applications with affordable pricing. This especially holds true for cloud
telephony applications, but SMBs are still a higher-touch sale that requires customer support for system integration, network installation,
cabling, and troubleshooting. We have placed a significant emphasis on that "local" touch when selling, delivering,
and supporting our services which we believe will differentiate us from the national providers that are experiencing high attrition
rates due to poor customer support model.
The adoption of cloud communication services
is being driven by the convergence of several market trends, including the increasing costs of maintaining installed legacy communications
systems, the fragmentation resulting from use of multiple on-premise systems, and the proliferation of personal smart phones used
in the workplace. Today, businesses are increasingly looking for an affordable path to modernizing their communications system
to improve productivity, business performance and customer experience.
Our cloud solutions offer the SMB reliable,
robust, and full-featured services at affordable monthly rates that eliminates high-cost capital expenditures and provides for
integration with other cloud-based systems.
33
Recent Acquisitions
In December 2017, we closed a transaction
to acquire all the assets, assumed all customers, and critical vendor arrangements from Synergy Telecom, Inc. Synergy provides
UCaaS or cloud communication services to small and medium-sized business and municipalities, primarily in Texas.
In May 2018, we completed the acquisition
of T3 Communications, Inc., an established UCaaS and Internet broadband provider serving a high-growth corridor in Southwest Florida.
Sources of revenue:
Cloud-based hosted Services
: We
provide UCaaS or cloud communication services and managed cloud-based solutions to small and medium size enterprise customers and
to other resellers. Our Internet-based services include fully hosted IP/PBX services, SIP trunking, call center applications, auto
attendant, voice and web conferencing, call recording, messaging, voicemail to email conversion, integrated mobility applications
that are device and location agnostic, and other customized IP/PBX features in a hosted or cloud environment. Other services include
enterprise-class data and connectivity solutions through multiple broadband technologies including cloud WAN or SD-WAN (Software-defined
Wide Area Network), fiber, and Ethernet over copper. We also offer remote network monitoring, data backup and disaster recovery.
Direct Costs:
Cloud-based hosted Services
: We
incur bandwidth and colocation charges in connection with our UCaaS or cloud communication services. The bandwidth charges are
incurred as part of the connectivity between our customers to allow them access to our various services. We also incur costs from
underlying providers for fiber, Internet broadband, and telecommunication circuits in connection with our data and connectivity
solutions.
Results of Operations
Three Months ended April 30, 2019 Compared to Three Months
ended April 30, 2018
Cloud-based hosted Services
. Cloud-based
hosted services revenue increased by $1,289,000, or 658% from the three months ended April 30, 2018 to the three months ended April
30, 2019. The increase in revenue between periods is primarily attributed to the increase in total customers acquired from the
acquisitions of T3 Communications, Inc. and Synergy Telecom's assets. Our total number of customers increased from 145 customers
for the three months ended April 30, 2018 to 688 customers for the three months ended April 30, 2019. Additionally, our average
monthly revenue per customer increased from $466 for the three months ended April 30, 2018 to $723 for the three months ended April
30, 2019.
C
ost of Services (exclusive of depreciation
and amortization).
The cost of services increased by $664,000, or 627%, from the three months ended April 30, 2018 to the three
months ended April 30, 2019. The increase in cost of services between periods is primarily attributed to the additional costs arising
from our acquisitions and the acquired customers. Although our consolidated cost of services increased between periods, our consolidated
gross margin increased from 46% during the three months ended April 30, 2018 to 48% during the three months ended April 30, 2019.
The increase in gross margin between periods is attributed to a higher concentration of enterprise customers revenue, which generate
a slightly higher margin than services provided via resellers.
Selling, General and Administrative
(SG&A) Expenses (exclusive of legal and professional fees).
SG&A expenses increased by $543,000, or 164%, from the
three months ended April 30, 2018 to the three months ended April 30, 2019. The increase in SG&A expenses between periods is
primarily attributed to the additional salaries and other employee related expenses of approximately $417,000 attributable to the
T3 Communications, Inc. acquisition.
34
Stock Compensation expense.
Stock
compensation expense decreased by $9,000, from the three months ended April 30, 2018 to the three months ended April 30, 2019.
The decrease between periods is attributed to recognition of stock option expense of $82,000 associated to the stock options granted
to various employees during FY2018. In addition, during the three months ended April 30, 2018 the Company recognized $271,000 in
warrant expense for warrants issued in conjunction with various promissory notes secured during the quarter ended April 30, 2018.
During the three months ended April 30, 2019 the Company recognized $178,000 as stock compensation expense for shares of common
stock issued for consulting services and the recognition of stock option expense of $153,000 associated to the stock options granted
to various employees during FY2018 and FY2019.
Legal and professional fees
. Legal
and professional fees increased by $27,000, or 40%, from three months ended April 30, 2018 to the three months ended April 30,
2019. The increase between periods is attributed to the recognition during FY 2019 of $20,000 in professional expenses incurred
related to investor relations services. In addition, during the quarter ended April 30, 2019 the Company recognized $8,000 in legal
expenses associated with the preparation of the consolidated tax return for 2018.
Depreciation and amortization
. Depreciation
and amortization increased by $117,000, from the three months ended April 30, 2018 to the three months ended April 30, 2019, mainly
due to increase in amortization expense and depreciation expense related to the intangible and tangible assets obtained in the
acquisitions of T3 Communications Inc., and Synergy Telecom.
Operating loss.
The Company reported
an operating loss of $767,000 for the three months ended April 30, 2019 compared to an operating loss of $714,000 for the three
months ended April 30, 2018. The increase in operating loss between periods is primarily due to the increase of $543,000 in SG&A
expenses, increase in legal expenses of $27,000 and the increase of $117,000 in depreciation and amortization. These increases
were slightly offset by the increase of $625,000 in gross margin and the decrease of $9,000 in stock compensation expense.
Gain (loss) on derivative instruments.
Gain (loss) on derivative instruments increased by $856,000 from three months ended April 30, 2018 to the three months ended
April 30, 2019. We are required to re-measure all derivative instruments at the end of each reporting period and adjust those instruments
to market, as a result of the re- measurement of all derivative instruments we recognized a loss between periods.
Income tax expense.
During the three months ended April
30, 2019, the Company recognized an income tax expense of $10,000. The primary reason for the income tax expense is due to the
accrual of state income tax.
Interest expense
. Interest income
(expense) increased by $335,000 from the three months ended April 30, 2018 to the three months ended April 30, 2019. The primary
reason for the increase in interest expenses is attributed to the recognition of non-cash interest / accretion expense of $248,000
related to the adjustment to the present value of various convertible notes and debentures. Additionally, the company recognized
$90,000 in interest expense for cash interest payments on various promissory notes, accrual of $43,000 for interest expense for
various promissory notes and interest income of $2,400.
Net income (loss) including noncontrolling
interest.
Net loss including noncontrolling interest for the three months ended April 30, 2019 was $250,000 compared to a net
loss for the three months ended April 30, 2018 of $708,000. The improvement in net loss including noncontrolling interest between
periods is primarily due to the improvement of $856,000 in loss on derivative instruments and the improvement of $625,000 in gross
margin. These improvements were offset between periods by the increase in SG&A of $543,000, the increase in legal and professional
fees of $27,000 and the increase of $117,000 in depreciation and amortization.
Net income attributable to the noncontrolling
interest.
During the three months ended April 30, 2019, the consolidated entity recognized net income in noncontrolling interest
of $29,000. The noncontrolling interest is presented as a separate line item in the Company's stockholders equity section
of the balance sheet.
Net income (loss).
Net loss for
the three months ended April 30, 2019 was $221,000 compared to a net loss for the three months ended April 30, 2018 of $708,000.
35
Deemed dividend on Series A Convertible
Preferred Stock Net income (loss).
Deemed dividend on convertible preferred stock for the three months ended April 30, 2019
was $2,000 compared to a Deemed dividend on convertible preferred stock for the three months ended April 30, 2018 of $0.
Net income (loss) attributable to Digerati's
common shareholders.
Net loss for the three months ended April 30, 2019 was $223,000 compared to a net loss for the three months
ended April 30, 2018 of $708,000.
Nine Months ended April 30, 2019 Compared to Nine Months
ended April 30, 2018
Cloud-based hosted Services
. Cloud-based
hosted services revenue increased by $4,090,000, or 1015% from the nine months ended April 30, 2018 to the nine months ended April
30, 2019. The increase in revenue between periods is primarily attributed to the increase in total customers acquired from the
acquisitions of T3 Communications, Inc. and Synergy Telecom's assets. Our total number of customers increased from 145 customers
for the nine months ended April 30, 2018 to 688 customers for the nine months ended April 30, 2019. Additionally, our average monthly
revenue per customer increased from $418 for the nine months ended April 30, 2018 to $738 for the nine months ended April 30, 2019.
C
ost of Services (exclusive of depreciation
and amortization).
The cost of services increased by $2,073,000, or 833%, from the nine months ended April 30, 2018 to the
nine months ended April 30, 2019. The increase in cost of services between periods is primarily attributed to the additional costs
arising from our acquisitions and the acquired customers. Although our consolidated cost of services increased between periods,
our consolidated gross margin increased from 38% during the nine months ended April 30, 2018 to 48% during the nine months ended
April 30, 2019. The increase in gross margin between periods is attributed to a higher concentration of enterprise customers revenue,
which generate a higher margin than services provided via resellers.
Selling, General and Administrative
(SG&A) Expenses (exclusive of legal and professional fees).
SG&A expenses increased by $1,479,000, or 178%, from the
nine months ended April 30, 2018 to the nine months ended April 30, 2019. The increase in SG&A expenses between periods is
primarily attributed to the additional salaries and other employee related expenses of approximately $1,246,000 attributable to
the T3 Communications, Inc. acquisition and $136,000 increase in additional salaries and other related expenses attributable to
the asset acquisition from Synergy Telecom.
Stock Compensation expense.
Stock
compensation expense decreased by $597,000, from the nine months ended April 30, 2018 to the nine months ended April 30, 2019.
The decrease between periods is attributed to the recognition during FY 2018 of stock compensation expense of $226,000 associated
with the Profit-Sharing Plan contribution and stock compensation expense of $155,000 for the stock issued in lieu of cash to the
Company's management team. In addition, during the nine months ended April 30, 2018 the Company recognized $292,000 in warrant
expense for warrants issued to various professionals. During the nine months ending April 30, 2019 the Company only recognized
$64,000 in warrant expense for warrants issued to professionals. Additionally, during the nine months ended April 30, 2019, the
Company recognized as stock compensation expense $114,000 associated with the Profit-Sharing Plan contribution, $289,000 in other
stock-based compensation to the employees and recognized $249,000 as stock compensation expense for shares of common stock issued
for consulting services.
Legal and professional fees
. Legal
and professional fees decreased by $54,000, or 15%, from nine months ended April 30, 2018 to the nine months ended April 30, 2019.
The decrease between periods is attributed to the recognition during FY 2018 of $159,000 in professional and legal expenses incurred
related to the professionals conducting the due diligence and audit work on the acquisition of T3 Communications. The Company only
recognized $34,000 in legal and professional expenses associated with due diligence for other potential acquisitions during the
nine months ending April 30, 2019. In addition, during FY2019 the Company recognized $62,500 in professional fees related to investor
relations services. Also, during the period ended April 30, 2019 the Company recognized $8,000 in legal expenses associated with
the preparation of the consolidated tax return for 2018.
Bad debt
. Bad debt improved by $3,000
between periods. During the nine months ended April 30, 2019 the Company recognized a recovery of bad debt of $3,000 for accounts
that were previously deemed uncollectable.
36
Depreciation and amortization
. Depreciation and
amortization increased by $416,000, from the nine months ended April 30, 2018 to the nine months ended April 30, 2019, mainly due
to increase in amortization expense and depreciation expense related to the intangible and tangible assets obtained in the acquisitions
of T3 Communications Inc., and Synergy Telecom during fiscal 2018.
Operating loss.
The Company reported
an operating loss of $1,676,000 for the nine months ended April 30, 2019 compared to an operating loss of $2,452,000 for the nine
months ended April 30, 2018. The improvement in operating loss between periods is primarily due to the increase of $2,017,000 in
gross margin, the decrease of $597,000 in stock compensation expense and the decrease of $54,000 in legal and professional fees.
These positive improvements were slightly offset by the increase of $1,479,000 in SG&A and the increase of $416,000 in depreciation
and amortization.
Gain (loss) on derivative instruments.
Gain on derivative instruments increased by $749,000 between periods. We are required to re-measure all derivative instruments
at the end of each reporting period and adjust those instruments to market, as a result of the re- measurement of all derivative
instruments we recognized a loss between the nine months ended April 30, 2018 and 2019.
Income tax expense.
During the nine
months ended April 30, 2019, the Company recognized an income tax expense of $37,000. The primary reason for the income tax expense
is due to the accrual of state income tax.
Interest expense
. Interest income
(expense) increased by $1,164,000 from the nine months ended April 30, 2018 to the nine months ended April 30, 2019. The primary
reason for the increase in interest expenses is attributed to the recognition of non-cash interest / accretion expense of $971,000
related to the adjustment to the present value of various convertible notes and debentures. Additionally, the company recognized
$355,000 in interest expense for cash interest payments on various promissory notes, accrual of $96,000 for interest expense for
various promissory notes and interest income of $5,400.
Net income (loss) including noncontrolling
interest.
Net loss including noncontrolling interest for the nine months ended April 30, 2019 was $3,721,000 compared to a
net loss for the nine months ended April 30, 2018 of $2,547,000. The increase in net loss between periods is primarily attributed
to the increase of $1,479,000 in SG&A, the increase of $416,000 in depreciation and amortization, the increase of $749,000
in loss on derivative instruments and the increase of $1,164,000 in interest expense. The increases were slightly offset by the
increase of $2,017,000 in gross margin, the decrease of $597,000 in stock compensation expense and the decrease of $54,000 in legal
and professional fees and professional fees and the recognition of $3,000 in recovery of bad debt for accounts that were previously
deemed uncollectable.
Net income (loss) attributable to the
noncontrolling interest.
During the nine months ended April 30, 2019, the consolidated entity recognized income in noncontrolling
interest of $87,000. The noncontrolling interest is presented as a separate line item in the Company's stockholders equity
section of the balance sheet.
Net income (loss).
Net loss for
the nine months ended April 30, 2019 was $3,634,000 compared to a net loss for the nine months ended April 30, 2018 of $2,547,000.
Deemed dividend on Series A Convertible
Preferred Stock Net income (loss).
Deemed dividend on convertible preferred stock for the nine months ended April 30, 2019
was $2,000 compared to a Deemed dividend on convertible preferred stock for the nine months ended April 30, 2018 of $0.
Net income (loss) attributable to Digerati's
common shareholders.
Net loss for the nine months ended April 30, 2019 was $3,636,000 compared to a net loss for the nine months
ended April 30, 2018 of $2,547,000.
Liquidity and Capital Resources
Cash Position:
We had a consolidated
cash balance of $460,000 as of April 30, 2019. Net cash consumed by operating activities during the nine months ended April 30,
2019 was approximately $299,000, primarily as a result of operating expenses, that included $716,000 in stock compensation and
warrant expense, amortization of debt discount of $959,000, interest expense from stock issued for debt extension of $24,000, loss
on derivative liability of $594,000 depreciation and amortization expense of $505,000. Additionally, we had an increase of $54,000
in accounts payable, increase in accrued expenses of $539,000, decrease in accounts receivables of $13,000, increase in deferred
income of $52,000, a decrease in prepaid expenses and other current assets of $45,000 and an increase in escrow deposits of $55,000.
37
Cash used in investing activities during
the nine months ended April 30, 2019 was $43,000 for the purchase of equipment.
Cash provided by financing activities during
the nine months ended April 30, 2019 was $414,000, the Company secured $40,000 from an accredited investor through the issuance
of 80,000 restricted common shares with a price of $0.50 per share and 15,000 warrants with an exercise price of $0.50 per share.
Also, the Company secured $75,000 from an accredited investor through the issuance of 258,621 restricted common shares with a price
of $0.29 per share. The Company also secured $150,000 from an accredited investor through the issuance of 600,000 restricted common
shares with a price of $0.25 per share. Furthermore, the Company secured $50,000 from accredited investors under a private placement
and issued 50,000 shares of Series A Convertible Preferred Stock at an conversion price of $0.30 per share and warrants to purchase
an additional 100,000 shares of its common stock at an exercise price of $0.20 per share. The Company also secured $7,500 for the
exercise of 75,000 warrants, with an exercise price of $0.10 per warrant. In addition, the Company secured $100,000 from 3rd party
promissory notes. The Company also secured $509,000 from convertible notes, net of issuance costs and discounts. Furthermore, the
Company secured $25,000 from a promissory note with a related party. Also, the Company made principal payments of $94,000 on related
party notes, $301,000 in principal payments on convertible notes, $125,000 in principal payments on 3rd party promissory notes
and $22,000 in principal payments on financing leases. Overall, our net operating, investing and financing activities during the
nine months ended April 30, 2019 provided approximately $72,000 of our available cash.
We are currently taking initiatives to
reduce our overall cash deficiencies on a monthly basis. During fiscal 2019 we anticipate reducing fixed costs and general expenses,
in addition, certain members of our management team have taken a significant portion of their compensation in common stock to reduce
the depletion of our available cash. To strengthen our business, we intend to invest in a new marketing and sales strategy to grow
our monthly recurring revenue; we anticipate utilizing our value-added resellers to tap into new sources of revenue streams, we
have also secured various agent agreements to accelerate revenue growth. In addition, we will continue to focus on selling a greater
number of comprehensive services to our existing customer base. Further, in an effort to increase our revenues, we will continue
to evaluate the acquisition of various assets with emphasis in VoIP Services and Cloud Communication Services. As a result, during
the due diligence process we anticipate incurring significant legal and professional fees. During the year ended fiscal 2018, the
Company acquired T3 Communications, Inc., a leading provider of cloud communication and Internet broadband solutions in Southwest
Florida. The acquisition of T3 allowed the Company to accelerate its revenue growth and expand into new markets.
Management believes that current available
resources will not be sufficient to fund the Company's operations over the next 12 months. The Company's ability to
continue to meet its obligations and to achieve its business objectives is dependent upon, among other things, raising additional
capital, issuing stock-based compensation to certain members of the executive management team in lieu of cash, or generating sufficient
revenue in excess of costs. At such time as the Company requires additional funding, the Company will seek to secure such best-efforts
funding from various possible sources, including equity or debt financing, sales of assets, or collaborative arrangements. If the
Company raises additional capital through the issuance of equity securities or securities convertible into equity, stockholders
will experience dilution, and such securities may have rights, preferences or privileges senior to those of the holders of common
stock or convertible senior notes. If the Company raises additional funds by issuing debt, the Company may be subject to limitations
on its operations, through debt covenants or other restrictions. If the Company obtains additional funds through arrangements with
collaborators or strategic partners, the Company may be required to relinquish its rights to certain technologies. There can be
no assurance that the Company will be able to raise additional funds or raise them on acceptable terms. If the Company is unable
to obtain financing on acceptable terms, it may be unable to execute its business plan, the Company could be required to curtail
its operations, and the Company may not be able to pay off its obligations, if and when they come due.
Our current cash expenses are expected
to be approximately $95,000 per month, including wages, rent, utilities and corporate professional fees. As described elsewhere
herein, we are not generating sufficient cash from operations to pay for our ongoing operating expenses, or to pay our current
liabilities. As of April 30, 2019, our total liabilities were approximately $7,113,000, which included $1,303,000 in derivative
liabilities. We will continue to use our available cash on hand to cover our deficiencies in operating expenses.
38
We estimate that we need approximately
$500,000 of additional working capital to fund our ongoing operations during Fiscal 2019. We used proceeds secured from 3rd party
promissory notes to pay existing notes and we anticipate raising additional debt financing to meet our working capital needs.
Digerati's
consolidated financial statements for the nine months ending April 30, 2019 have been prepared on a going concern basis, which
contemplates the realization of assets and the settlement of liabilities in the normal course of business. Since the Company's
inception in 1993, Digerati has incurred net losses and accumulated a deficit of approximately $84,434,000 and a working capital
deficit of approximately $6,035,000 which raises doubt about Digerati's ability to continue as a going concern.
Directors, Executive Officers, Promoters,
and Control Persons
The following table contains the name,
age of our Directors and executive officers as of September 12, 2019.
Name
Age
Position Held
Held Office Since
Arthur L. Smith
53
President, Chief Executive Officer & Director
2003
Craig K. Clement
60
Chairman of the Board
2014
Maxwell A. Polinsky
60
Director
2014
Antonio Estrada Jr.
43
Chief Financial Officer
2007
Arthur L. Smith
(53) is our
Chief Executive Officer, President, and Director. Mr. Smith has over 25 years of specialized experience in the telecommunications,
technology, and oil and gas industries.  As the founder of Digerati, formerly known as ATSI Communications, Inc. ("ATSI"),
he led the Company's start-up operation focused on the USA – Mexico telecommunications corridor to over US$65 million
in annual revenue and a listing on the American Stock Exchange that resulted in a market value of over US$450 million. Between
1999 and 2009, ATSI was a three-time recipient of Deloitte and Touche's Fast 500 Award for recognition as one of the 500
fastest growing technology companies in North America.  As CEO of ATSI, Mr. Smith also co-founded the Company's highly
successful Internet software subsidiary, GlobalSCAPE, Inc., in 1996 (NYSE MKT: GSB).  As Chairman of the Board of GlobalSCAPE,
he led the Company's strategic and business development efforts from inception through its growth strategy that resulted
in a listing on a public stock exchange and the subsequent sale of ATSI's ownership to private investors in June
2002.  Mr. Smith is currently President and CEO of the Company's cloud communications subsidiary, Shift8 Technologies,
Inc.
Craig K. Clement
(60) is the Executive
Chairman of Digerati Technologies. Craig has over thirty-five years of executive and director experience with Technology (telecom,
Internet software) and Oil Exploration and Production (E&P) entities where he has been responsible for asset management, acquisitions
and divestitures, strategic and tactical planning, financial operations, corporate finance, legal, transaction structuring, business
development, and investor relations. He assisted in the growth of a San Antonio-based telecom provider (AMEX: AI) from 10 employees
to 500, achieving a public market valuation of US$500 million. Craig was the founding CEO of GlobalSCAPE, Inc. (NYSE: GSB), and
was the former COO of XPEL Technologies Corp. (TSXV:DAP.U). Craig was also the former Chairman of the South Texas Regional
Center for Innovation and Commercialization, which screened and supported entrepreneurs through the Texas Emerging Technology Fund
managed by the Texas Governor's office, which invested more than $350 million in Texas-based technology start-ups.
Maxwell A. Polinsky
(60) is our
Director. Mr. Polinsky is currently the President, CFO and a Director of Winston Gold Corp, a Canadian-based mineral exploration
company that is traded on the CSE Exchange, and a principal in Venbanc Investment and Management Group Inc., an investment and
merchant bank he co-founded in 1994. From 2009 to 2011, Mr. Polinsky was the Chief Financial Officer and a director of RX Exploration
Inc., a company that successfully re opened the previous old historic Drumlummon gold mine in Montana. Mr. Polinsky also served
as a director of Nerium Biotechnology from 2006 to 2010, XPEL Technologies from 2003 to 2009, and Nighthawk Systems from 2001 to
2007 and Cougar Minerals from 2012 to 2014. Mr. Polinsky holds a Bachelor of Commerce degree from the University of Manitoba.
39
Antonio Estrada Jr.
(43) is our
Chief Financial Officer and Treasurer. Mr. Estrada is a seasoned financial executive with over 19 years of experience in the telecommunications
and oil and gas industries. Mr. Estrada's vast experience includes financial reporting and modeling, strategic planning,
grant writing, and cash management. Mr. Estrada served as the Sr. VP of Finance and Corporate Controller of Digerati, formerly
known as ATSI Communications, Inc., from 2008 to 2013. From 1999 to 2008, Mr. Estrada served in various roles within ATSI, including
International Accounting Manager, Treasurer, Internal Auditor, and Controller. Mr. Estrada graduated from the University of Texas
at San Antonio, with a Bachelors of Business Administration, with a concentration in Accounting.
Section 16(a) Beneficial Ownership
Reporting Compliance
Section 16(a) of the Securities Exchange
Act of 1934, as amended, requires our Directors and executive officers and persons who own more than 10% of a registered class
of our equity securities to file various reports with the Securities and Exchange Commission concerning their holdings of, and
transactions in, securities we issued. Each such person is required to provide us with copies of the reports filed. Based on a
review of the copies of such forms furnished to us and other information, we believe that none of our officers, Directors or owners
of 10% of any class of our securities failed to report transactions in our securities or reported transactions in our securities
late.
Code of Ethics
We adopted an Executive Code of Ethics
that applies to the Chief Executive Officer, Chief Financial Officer, Controller and other members of our management team. The
Executive Code of Ethics may be viewed on our Website, www.digerati-inc.com. A copy of the Executive Code of Ethics will be provided
without charge upon written request to Digerati Technologies, Inc., 825 W. Bitters, Suite 104, San Antonio, Texas 78216.
Nominating Committee and Nomination
of Directors
We do not have a nominating committee because
the size of our Board of Directors is too small to establish separate standing committees. Our Directors perform the function of
a nominating committee.
The Directors consider candidates recommended
by other members of the Board of Directors, by executive officers and by one or more substantial, long-term stockholders. In addition,
the Board of Directors may seek candidates through a third-party recruiter. Generally, stockholders who individually or as a group
have held 5% of our shares for over one year will be considered substantial, long-term stockholders. In considering candidates,
the Directors take into consideration the needs of the Board of Directors and the qualifications of the candidate. The Board of
Directors has not established a set of criteria or minimum qualifications for candidacy and each candidate is considered based
on the demonstrated competence and knowledge of the individual. To have a candidate considered by the Directors, a stockholder
must submit the recommendation in writing and must include the following information:
●
The name of the stockholder
and evidence of ownership of our shares, including the number of shares owned and the length of time of ownership; and
●
The name of the candidate,
the candidate's resume or a listing of her or his qualifications to be one of our Directors and the person's consent
to be named as a Director if nominated by the Directors.
The stockholder's recommendation
and information described above must be sent to us at 1600 NE Loop 410, Suite 126, San Antonio, Texas 78209.
Audit Committee and Audit Committee
Financial Expert
We do not have an audit or other committee
of our Board of Directors that performs equivalent functions. Our Board of Directors performs all functions of the audit committee.
Mr. Maxwell A. Polinsky served as the Audit Committee Financial Expert during the year ended July 31, 2018.
40
Involvement in Certain Legal Proceedings
There are no known pending legal proceedings
to which the Company is a party or in which any director, officer or affiliate of the Company, any owner of record or beneficially
of more than 5% of any class of voting securities of the Company, or security holder is a party adverse to the Company or has a
material interest adverse to the Company. The Company's property is not the subject of any other pending legal proceedings
Executive Compensation
The compensation programs
presently in effect with respect to the Chief Executive Officer, Chief Financial Officer and Chairman of the Board were established
by the Board of Directors.
Arthur Smith serves
as our President and Chief Executive Officer. Mr. Smith does not have a written employment agreement with the Company. Effective
October 1, 2015, Mr. Smith's annual salary was approved by the Board of Directors to be set at $165,000. The Board of Directors
also approved the reimbursement of monthly expenses up to $1,667. During FY2018 the Board of Directors approved the issuance of
common stock in lieu of cash compensation equivalent to 40% of Mr. Smith's annual salary. No other cash compensation is presently
being paid to Mr. Smith.
Antonio Estrada Jr.,
serves as our Chief Financial Officer. Mr. Estrada does not have a written employment agreement with the Company. Effective October
1, 2015, Mr. Estrada's annual salary was approved by the Board of Directors to be set at $165,000. The Board of Directors
also approved the reimbursement of monthly expenses up to $1,667. During FY2018 the Board of Directors approved the issuance of
common stock in lieu of cash compensation equivalent to 40% of Mr. Estrada's annual salary. No other cash compensation is
presently being paid to Mr. Estrada.
Craig K. Clement, serves
as our Chairman of the Board, Chief Executive Officer and President of Flagship Energy Company, a wholly-owned subsidiary of Digerati.
Mr. Clement does not have a written employment agreement with the Company. Effective October 1, 2015, Mr. Clement's annual
salary was approved by the Board of Directors to be set at $195,000. During FY2018 the Board of Directors approved the issuance
of common stock in lieu of cash compensation equivalent to 40% of Mr. Clement's annual salary. No other cash compensation
is presently being paid to Mr. Clement.
Compensation Discussion and Analysis
Our compensation programs
are designed to meet the following objectives:
●
Offer compensation opportunities
that attract highly qualified executives, reward outstanding initiative and achievement, and retain the leadership and skills
necessary to build long-term stockholder value;
●
Emphasize pay-for-performance
by maintaining a portion of executives' total compensation at risk, tied to both our annual and long-term financial performance
and the creation of stockholder value; and
●
Further our short and
long-term strategic goals and values by aligning executive officer compensation with business objectives and individual performance.
Our Board of Directors
believes that an executive's compensation should be tied to the performance of the individual and the performance of the
complete executive team against both financial and non-financial goals, some of which are subjective and within the discretion
of the Board of Directors.
Our executive compensation
program is intended to be simple and clear, and consists of the following elements (depending on individual performance):
●
Base salary;
●
Annual performance-based
cash bonus;
41
●
Long-term incentives
in the form of stock options; and
●
Benefits that are offered
to executives on the same basis as our non-executive employees.
Role of Management in Determining
Compensation Decisions
At the request of our
Board of Directors, our management makes recommendations to our Board of Directors relating to executive compensation program design,
specific compensation amounts, bonus targets, incentive plan structure and other executive compensation related matters for each
of our executive officers, including our Chief Executive Officer. Our Board of Directors maintains decision-making authority with
respect to these executive compensation matters.
Our Board of Directors
reviews the recommendations of our management with respect to total executive compensation and each element of compensation when
making pay decisions. In allocating compensation among compensation elements, we emphasize incentive, not fixed compensation to
ensure that executives only receive superior pay for superior results. We equally value short- and long-term compensation because
both short- and long-term results are critical to our success. In addition, our compensation program includes various benefits
provided to all employees, including life insurance, health insurance and other customary benefits. The objectives and details
of why each element of compensation is paid are described below.
Base Salary.
Our
objective for paying base salaries to executives is to reward them for performing the core responsibilities of their positions
and to provide a level of security with respect to a portion of their compensation. We consider a number of factors when setting
base salaries for executives, including:
●
Existing salary levels;
●
Competitive pay practices;
●
Individual and corporate
performance; and
●
Internal equity among
our executives, taking into consideration their relative contributions to our success.
Long-term Incentive
Awards.
We award long-term incentive compensation to focus our executives on our long-term growth and stockholder return, as
well as to encourage our executives to remain with us for the long-term. Long-term incentive awards are primarily in the form of
grants of stock options and/or stock award pursuant to our 2015 Equity Compensation Plan (the "Plan"). We selected
this form because of the favorable accounting and tax treatment and the expectation of key employees in our industry that they
would receive stock options and/or stock grants. We do not have pre-established target award amounts for long-term incentive grants.
In determining long-term incentive awards for the Named Executive Officers, our Board of Directors relies on recommendations from
our Chief Executive Officer, who considers the individual performance of the executives, the relation of the award to base salary
and annual incentive compensation, and associated accounting expense. The terms of and amount of awards are made by our Board of
Directors in accordance with the Stock Option Plan.
42
The following table
sets forth the compensation paid to each of our principal executive officers (the "Named Executive Officers") during
the last two completed fiscal years:
SUMMARY COMPENSATION TABLE
Name and Principal Position
Year
Salary
($)
Bonus ($)
Stock Awards
($) (1)
Option Awards
($) (2)
All Other Compensation ($)
Total
($)
Arthur L. Smith
2019
$
113,410
$
-0-
$
217,500
$
73,680
$
-0-
$
404,590
President,
Chief Executive Officer & Director
2018
$
96,000
$
-0-
$
144,000
$
64,000
$
-0-
$
304,000
Antonio Estrada Jr.
2019
$
106,517
$
-0-
$
198,500
$
65,494
$
-0-
$
370,511
Chief Financial Officer
2018
$
96,000
$
-0-
$
132,000
$
64,000
$
-0-
$
292,000
Craig K. Clement
2019
$
123,875
$
-0-
$
236,500
$
78,089
$
-0-
$
438,464
Chairman of the Board
2018
$
117,000
$
-0-
$
252,000
$
64,000
$
-0-
$
433,000
(1)
During the year ended July 31, 2019 and 2018, Digerati issued common shares as part of the Company's profit-sharing plan contribution. In addition, during the year ended July 31, 2018 and July 31, 2017, Digerati issued common stock in lieu of cash compensation to its Officers.
(2)
During the year
    ended July 31, 2019, Digerati issued 1,725,000 options to its Officers to acquire common shares at an exercise price of $0.22
    and a fair value at the time issuance of $217,263. The options vest ratably on a monthly basis through February 14, 2020.
    During the year ended July 31, 2018, Digerati issued 900,000 options to its Officers to acquire common shares at an exercise
    price of $0.35 and a fair value at the time issuance of $192,000, all of these options have vested.
Our Board of Directors adopted the 2015
Equity Compensation Plan (the "Plan"). Under the Plan the Board of Directors may grant up to 7.5 million shares of
our common stock to our officers, Directors, employees and consultants. Grants may be in the form of incentive stock options, non-statutory
stock options, restricted stock awards, and/or unrestricted stock awards. The number and terms of each award is determined by the
Board of Directors, subject to the limitation that the exercise price of any option may not be less than the fair market value
of the common stock on the date of grant.
We currently provide a Non-Standardized
Profit-Sharing Plan (the "Profit-Sharing Plan"). The Board of Directors approved the Profit-Sharing Plan on September
15, 2006. Under the Profit-Sharing Plan our employees qualified to participate in the Profit-Sharing Plan after one year of employment.
Contribution under the Profit-Sharing Plan by us is based on 25% of the annual base salary of each eligible employee up to $54,000
per year. Contributions under the Profit Sharing Plan are fully vested upon funding.
OUTSTANDING EQUITY AWARDS AS OF JULY
31, 2019
Option Awards
Stock Awards
Name
Number of Securities Underlying Unexercised
        Options
(#)
Exercisable
Number of Securities Underlying Unexercised
        Options
(#)
Unexercisable
Option Exercise Price
($)
Option Expiration Date
Number of Shares or Units of Stock That
        Have Not Vested
(#)
Market Value of Shares or Units of Stock
        That Have Not Vested
($)
195,000
390,000
$
0.22
2/14/2024
Arthur L. Smith
300,000
-
$
0.35
12/01/2022
-
-
300,000
$
0.24
11/21/2021
-
-
173,336
346,664
$
0.22
2/14/2024
Antonio Estrada Jr.
300,000
-
$
0.35
12/01/2022
-
-
300,000
$
0.24
11/21/2021
-
-
206,664
413,336
$
0.22
2/14/2024
Craig K. Clement
300,000
-
$
0.35
12/01/2022
-
-
300,000
$
0.24
11/21/2021
-
-
43
(1)
During the year
    ended July 31, 2019, Digerati issued 1,725,000 options to its Officers to acquire common shares at an exercise price of $0.22
    and a fair value at the time issuance of $217,263. The options vest ratably on a monthly basis through February 14, 2020.
    During the year ended July 31, 2018, Digerati issued 900,000 options to its Officers to acquire common shares at an exercise
    price of $0.35 and a fair value at the time issuance of $192,000, all of these options have vested. During the year ended
    July 31, 2017, Digerati issued 900,000 options to its Officers to acquire common shares at an exercise price of $0.24 and
    a fair value at the time of issuance of $169,000, all of these options have vested.
Compensation of Directors
Each Director that
is not an officer is reimbursed the reasonable out-of-pocket expenses in connection with their travel to attend meetings of the
Board of Directors. Each Director that is not an officer was paid $1,000 per month.
Compensation Committee Interlocks
and Insider Participation
We do not have a compensation
committee of our Board of Directors or other committee that performs the same functions. Mr. Arthur L. Smith is presently our Chief
Executive Officer and participates in deliberations concerning executive compensation.
Compensation Committee Report
Our Board of Directors
reviewed and discussed the Compensation Discussion and Analysis with management and, based on such discussion, included the Compensation
Discussion and Analysis in this Registration Statement on Form S-1.
Security Ownership of Certain Beneficial
Owners and Management and Related Stockholder Matters
Information regarding securities authorized
to be issued under equity compensation plans is set forth under Item 5 Market for Registrant's Common Equity, Related Stockholder
Matters and Issuer Purchases of Equity Securities.
The following table lists the beneficial
ownership of shares of our Common Stock by (i) each person known to own more than 5% of our outstanding voting securities, (ii)
each Director and nominee, (iii) the Named Executive Officers and (iv) all Directors and officers as a group. Information with
respect to officers, Directors and their families is as of September 12, 2019 and is based on our books and records and information
obtained from each individual. Information with respect to other stockholders is based upon the Schedule 13D or Schedule 13G filed
by such stockholders with the Securities and Exchange Commission. Unless otherwise stated, the business address of each individual
or group is the same as the address of our principal executive office and all securities are beneficially owned solely by the person
indicated
.
Name of Beneficial Owner
Shares
Owned
Vested
Warrants and
Options
Total
Beneficial
Ownership
% Of
Class (1)
INDIVIDUAL OFFICERS AND DIRECTORS
Arthur L. Smith
President, Chief Executive Officer Director
3,315,851
941,250
4,257,101
16.26
%
Antonio Estrada Jr.
Chief Financial Officer
2,608,666
903,333
3,511,999
13.43
%
Craig K. Clement (2)(3)
Chairman of the Board
2,420,845
861,667
3,282,512
12.58
%
Maxwell Polinsky
Director
81,594
254,032
335,626
1.31
%
ALL INDIVIDUAL OFFICERS AND DIRECTORS AS A GROUP
8,426,956
2,960,282
11,387,238
40.38
%
5% HOLDERS
Graham Gardner
1,308,621
150,000
1,458,621
5.74
%
(1)
Based upon 25,240,222 shares of common stock outstanding
as of September 12, 2019.
(2)
Mr. Clement holds 146,941 shares jointly with Jayne K. Clement
(3)
Mr. Clement holds 323,917 shares through Flagship Oil and
Gas Corp, an entity controlled by Clement.
44
Transactions with Related Persons
On April 30, 2018, Shift8 Technologies,
Inc. ("Shift8") entered into a convertible promissory note for $525,000 with an effective annual interest rate of 8%
and a maturity date of April 30, 2020. With a principal payment of $100,000 due on June 1, 2018 and a principal payment of $280,823
due on April 30, 2020. Payment are based on a 60-month repayment schedule. At any time while this Note is outstanding, but only
upon: (i) the occurrence of an Event of Default under the Note or the Pledge and Escrow Agreement; or (ii) mutual agreement between
the Borrower and the Holder, the Holder may convert all or any portion of the outstanding principal, accrued and unpaid interest,
Premium, if applicable, and any other sums due and payable hereunder (such total amount, the "Conversion Amount") into
shares of Common Stock (the "Conversion Shares") at a price equal to: (i) the Conversion Amount (the numerator);
divided
by
(ii) a conversion price of $1.50 per share of Common Stock, which price shall be indicated in the conversion notice (in
the form attached hereto as Exhibit "B", the "Conversion Notice") (the denominator) (the "Conversion
Price"). The Holder shall submit a Conversion Notice indicating the Conversion Amount, the number of Conversion Shares issuable
upon such conversion, and where the Conversion Shares should be delivered. The promissory note is secured by a Pledge and Escrow
Agreement, whereby Shift8 agreed to pledge 51% of the securities owned in T3 until the principal payment is paid in full. In conjunction
with the promissory note, the Company issued 3-year warrants to purchase 75,000 shares of common stock at an exercise price of
$0.50 per share. Under a Black-Scholes valuation the relative fair market value of the warrants at time of issuance was approximately
$19,000 and was recognized as a discount on the two promissory notes, the company amortized $6,000 as interest expense during the
year ended July 31, 2018. During the year ended July 31, 2018, the Company paid $119,000 of the principal balance. The total principal
outstanding and unamortized discount as of July 31, 2018 were $406,000 and $13,000, respectively. One of the note holders also
serves as President, CEO and Board Member of T3 Communications, Inc., one of our operating subsidiaries.
On May 1, 2018, Shift8 Technologies, Inc.
("Shift8") entered into a Stock Purchase Agreement ("SPA"), whereby in an exchange for $250,000, Shift8
agreed to sell to the buyer 199,900 shares of common stock equivalent to 19.99% of the issued and outstanding common share of Shift8
Technologies, Inc. The $250,000 of the cash received under this transaction was recognized as an adjustment to the carrying amount
of the noncontrolling interest and as an increase in additional paid-in capital in Shift8. For the year ending July 31, 2018, the
Company accounted for a noncontrolling interest of $57,000. Additionally, one of the buyers serves as President, CEO and Board
Member of T3 Communications, Inc., one of our operating subsidiaries.
On May 1, 2018, Shift8 entered into a promissory
note for $275,000 with an effective annual interest rate of 0% with an interest and principal payment of $6,000 per month and shall
continue perpetuity until the entire principal amount is paid in full. The promissory note is guaranteed to the lender by 15% of
the stock owned by Shift8 in T3, the secured interest will continue until the principal balance is paid in full. In conjunction
with the promissory note, the Company issued 3-year warrants to purchase 100,000 shares of common stock at an exercise price of
$0.50 per share. Under a Black-Scholes valuation the relative fair market value of the warrants at time of issuance was approximately
$27,000 and was recognized as a discount on the promissory note, the company amortized $2,000 as interest expense during the year
ended July 31, 2018. During the year ended July 31, 2018, the Company paid $13,000 of the principal balance. The total principal
outstanding and unamortized discount as of July 31, 2018 were $262,000 and $25,000, respectively. The note holder also serves as
Board Member of T3 Communications, Inc., one of our operating subsidiaries.
Director Independence
The common stock of the Company is currently
quoted on the OTCQB which currently do not have director independence requirements. On an annual basis, each director and executive
officer will be obligated to disclose any transactions with the Company in which a director or executive officer, or any member
of his or her immediate family, have a direct or indirect material interest in accordance with Item 407(a) of Regulation S-K. Following
completion of these disclosures, the Board will make an annual determination as to the independence of each director using the
current standards for "independence" that satisfy the criteria for the Nasdaq.
For a director to be considered independent
according to the standards set forth in Section 303A.02 of the New York Stock Exchange Listed Company Manual (the "NYSE Manual"),
the Board of Directors must affirmatively determine that the director has no material relationship with Digerati, either directly
or as a partner, shareholder or officer of an organization that has a relationship with Digerati. In addition, the NYSE Manual
provides that a director will not be considered independent if, within the preceding three years, the director or an immediate
family member (i) was an employee of Digerati, (ii) received more than $120,000 per year in direct compensation from
Digerati, (iii) is affiliated with or employed by a present or former internal or external auditor of Digerati, (iv) employed
as an executive officer of another company for which an executive officer of Digerati serves on the compensation committee or (v) is
an executive officer or employee that makes payments to or receives payments from Digerati of more than $1,000,000 or two percent
of such other company's gross revenues.
The Board has determined
that Mr. Maxwell A. Polinsky satisfies the independence requirements in the NYSE Manual.
45
Page
    No.
PART
    I. Financial Information
Report of Independent
    Registered Public Accounting Firm
F-2
Report of Independent Registered Public Accounting Firm
F-3
Consolidated balance
    sheets as of July 31, 2018 and 2017
F-4
Consolidated
    statements of operations for the years ended July 31, 2018 and 2017
F-5
Consolidated statements
    of stockholders' deficit for the years ended July 31, 2018 and 2017
F-6
Consolidated statements
    of cash flows for the years ended July 31, 2018 and 2017
F-7
Notes to consolidated
    financial statements
F-8
Condensed consolidated balance sheets as of April 30, 2019 (unaudited) and July 31, 2018
F-29
Condensed consolidated statements of operations for the three and nine months ended April 30, 2019 and 2018 (unaudited)
F-
30
Condensed consolidated statement of stockholders' deficit for the three and nine months ended April 30, 2019 (unaudited)
F-31
    –
F-32
Condensed consolidated statements of cash flows for the nine months ended April 30, 2019 and 2018 (unaudited)
F-33
Notes to condensed consolidated financial statements (unaudited)
F-34
F-
1
REPORT OF INDEPENDENT REGISTERED PUBLIC
ACCOUNTING FIRM
To the Board of Directors and Stockholders
Digerati Technologies, Inc.
San Antonio, Texas
Opinion on the Financial Statements
We have audited the accompanying consolidated
balance sheet of Digerati Technologies, Inc. and its subsidiaries (collectively, the "Company") as of July 31, 2018,
and the related consolidated statements of operations, stockholders' deficit, and cash flows for the year then ended, and
the related notes (collectively referred to as the "financial statements"). In our opinion, the financial statements
present fairly, in all material respects, the financial position of the Company as of July 31, 2018, and the results of their operations
and their cash flows for the year then ended, in conformity with accounting principles generally accepted in the United States
of America.
Going Concern Matter
The accompanying financial statements have
been prepared assuming that the Company will continue as a going concern. As discussed in Note 2 to the financial statements, the
Company has suffered recurring losses from operations and has a net capital deficiency that raises substantial doubt about its
ability to continue as a going concern. Management's plans in regard to these matters are also described in Note 2. The financial
statements do not include any adjustments that might result from the outcome of this uncertainty.
Basis for Opinion
These financial statements are the responsibility
of the Company's management. Our responsibility is to express an opinion on the Company's financial statements based
on our audit. We are a public accounting firm registered with the Public Company Accounting Oversight Board (United States) ("PCAOB")
and are required to be independent with respect to the Company in accordance with the U.S. federal securities laws and the applicable
rules and regulations of the Securities and Exchange Commission and the PCAOB.
We conducted our audit in accordance with
the standards of the PCAOB. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether
the financial statements are free of material misstatement, whether due to error or fraud. The Company is not required to have,
nor were we engaged to perform, an audit of its internal control over financial reporting. As part of our audit we are required
to obtain an understanding of internal control over financial reporting but not for the purpose of expressing an opinion on the
effectiveness of the Company's internal control over financial reporting. Accordingly, we express no such opinion.
Our audits included performing procedures
to assess the risks of material misstatement of the financial statements, whether due to error or fraud, and performing procedures
that respond to those risks. Such procedures included examining, on a test basis, evidence regarding the amounts and disclosures
in the financial statements. Our audit also included evaluating the accounting principles used and significant estimates made by
management, as well as evaluating the overall presentation of the financial statements. We believe that our audit provides a reasonable
basis for our opinion.
/s/ MaloneBailey, LLP
www.malonebailey.com
We have served as the Company's auditor since 2018.
Houston, Texas
November 15, 2018
F-
2
REPORT OF INDEPENDENT REGISTERED PUBLIC
ACCOUNTING FIRM
To the Board of Directors and Stockholders
Digerati Technologies, Inc.
San Antonio, Texas
We have audited the accompanying consolidated
balance sheets of Digerati Technologies, Inc. and its subsidiaries (collectively, "Digerati") as of July 31, 2017
and the related consolidated statements of operations, stockholders' deficit and cash flows for the year then ended. Digerati
Technologies, Inc.'s management is responsible for these financial statements. Our responsibility is to express an opinion
on these consolidated financial statements.
We conducted our audit in accordance with standards of the Public Company Accounting Oversight Board (United
States). Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial
statements are free of material misstatement. Digerati is not required to have, nor were we engaged to perform, an audit of its
internal control over financial reporting. Our audit included consideration of internal control over financial reporting as a basis
for designing audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the
effectiveness of Digerati's internal control over financial reporting. Accordingly, we express no such opinion. An audit
also includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements. An audit
also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the
overall financial statement presentation. We believe that our audit provides a reasonable basis for our opinion.
In our opinion, the consolidated financial
statements referred to above present fairly, in all material respects, the consolidated financial position of Digerati as of July
31, 2017 and the consolidated results of their operations and their cash flows for year then ended in conformity with accounting
principles generally accepted in the United States of America.
The accompanying consolidated financial
statements have been prepared assuming that Digerati will continue as a going concern. As discussed in Note 2 to the consolidated
financial statements, Digerati suffered losses from operations and has a working capital deficit, which raises substantial doubt
about its ability to continue as a going concern. Management's plans regarding those matters are also described in Note 2.
The consolidated financial statements do not include any adjustments that might result from the outcome of this uncertainty.
/s/ LBB & Associates Ltd., LLP
LBB & Associates Ltd., LLP
Houston, Texas
December 13, 2017
F-
3
PART 1. FINANCIAL INFORMATION
ITEM
1. FINANCIAL STATEMENTS
DIGERATI TECHNOLOGIES, INC.
AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
(In thousands)
July 31,
July 31,
2018
2017
ASSETS
CURRENT ASSETS:
Cash and cash equivalents
$
388
$
673
Accounts receivable, net
229
15
Prepaid and other current assets
124
9
Total current assets
741
697
LONG-TERM ASSETS:
Intangible assets, net
3,046
14
Property and equipment, net
713
2
Other assets
59
-
Total assets
$
4,559
$
713
LIABILITIES AND STOCKHOLDERS' DEFICIT
CURRENT LIABILITIES:
Accounts payable
$
1,177
$
859
Accrued liabilities
893
365
Current portion of capital lease obligations
30
-
Convertible note payable, current, net $187 and $0, respectively
585
-
Note payable, current, related party
126
-
Note payable, current
725
-
Convertible note payable, current, net $273 and $0, respectively
33
-
Deferred income
262
-
Derivative liability
632
-
Total current liabilities
4,463
1,224
LONG-TERM LIABILITIES:
Convertible debenture, net $273 and $0, respectively
27
-
Notes payable, related party, net $38 and $0, respectively
505
-
Deferred income
-
131
Note payable
500
-
Obligations under capital leases
64
-
Total long-term liabilities
1,096
131
Total liabilities
5,559
1,355
Commitments and contingencies
STOCKHOLDERS' DEFICIT:
Preferred stock, $0.001, 50,000,000 shares authorized, none issued and outstanding
-
-
Common stock, $0.001, 150,000,000 shares authorized, 12,775,143 and 8,386,056 issued and outstanding, respectively
13
8
Additional paid in capital
79,993
76,986
Accumulated deficit
(80,800
)
(77,637
)
Other comprehensive income
1
1
Total Digerati's stockholders' deficit
(793
)
(642
)
Noncontrolling interest
(207
)
-
Total stockholders' deficit
(1,000
)
(642
)
Total liabilities and stockholders' deficit
$
4,559
$
713
See accompanying notes to consolidated
financial statements
F-
4
DIGERATI TECHNOLOGIES, INC.
AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF
OPERATIONS
(In thousands, except per
share amounts)
For the Years ended
July 31,
2018
2017
OPERATING REVENUES:
Cloud-based hosted services
$
2,001
$
193
Total operating revenues
2,001
193
OPERATING EXPENSES:
Cost of services (exclusive of depreciation and amortization)
1,053
134
Loss on disposal of unproven oil and gas properties
-
248
Selling, general and administrative expense
1,563
914
Stock compensation & warrant expense
1,521
773
Legal and professional fees
490
290
Bad debt
15
-
Depreciation and amortization expense
227
18
Total operating expenses
4,869
2,377
OPERATING LOSS
(2,868
)
(2,184
)
OTHER INCOME (EXPENSE):
Loss on derivative instruments
(91
)
-
Miscellaneous gain
-
2,623
Income tax benefit
118
-
Interest income (expense)
(379
)
-
Total other income (expense)
(352
)
2,623
NET INCOME (LOSS) INCLUDING NONCONTROLLING INTEREST
(3,220
)
439
Less: Net  loss attributable to the noncontrolling interest
57
-
NET INCOME / (LOSS) ATTRIBUTABLE TO DIGERATI'S SHAREHOLDERS
$
(3,163
)
$
439
INCOME (LOSS) PER SHARE - BASIC
$
(0.31
)
$
0.07
INCOME (LOSS) PER SHARE - DILUTED
$
(0.31
)
$
0.06
WEIGHTED AVERAGE COMMON SHARES OUTSTANDING - BASIC
10,339,371
6,339,906
WEIGHTED AVERAGE COMMON SHARES OUTSTANDING - DILUTED
10,339,371
6,982,081
See accompanying notes to consolidated financial
statements
F-
5
DIGERATI TECHNOLOGIES, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF STOCKHOLDERS'
DEFICIT
YEARS ENDED JULY 31, 2017 AND 2018
(In thousands, except for share amounts)
Equity Digerati's Shareholders
Additional
Other
Common
Paid-in
Accumulated
Comprehensive
Stockholders
Noncontrolling
Shares
Par
Capital
Deficit
Income
Equity
Interest
Totals
BALANCE, July 31, 2016
5,234,158
$
5
$
75,656
$
(78,076
)
$
1
(2,414
)
$
-
$
(2,414
)
Stock issued for services, to employees
1,956,898
2
727
-
-
729
-
729
Stock issued for professional services
75,000
-
44
-
-
44
-
44
Stock issued for cash
1,120,000
1
559
-
-
560
-
560
Net Income
-
-
-
439
-
439
-
439
BALANCE, July 31, 2017
8,386,056
$
8
$
76,986
$
(77,637
)
$
1
$
(642
)
$
-
$
(642
)
Stock issued for services, to employees
1,807,012
2
1,052
-
-
1,054
-
1,054
Stock issued for services
406,500
-
186
-
-
186
-
186
Stock issued for AP settlement
35,575
-
15
-
-
15
-
15
Stock issued for cash
960,000
1
479
-
-
480
-
480
Stock issued for convertible debt
505,000
1
3
-
-
4
-
4
Stock issued, extension of debt
25,000
-
13
-
-
13
-
13
Stock issued for Acquisition
500,000
1
174
-
-
175
-
175
Stock issued, exercise of warrants
150,000
-
15
-
-
15
-
15
Value of warrants issued
-
-
670
-
-
670
-
670
Sale of subsidiary shares to a noncontrolling interest
-
-
400
-
-
400
(150
)
250
Net Ioss
-
-
-
(3,163
)
-
(3,163
)
(57
)
(3,220
)
BALANCE, July 31, 2018
12,775,143
$
13
$
79,993
$
(80,800
)
$
1
$
(793
)
$
(207
)
$
(1,000
)
See accompanying notes to consolidated
financial statements
F-
6
DIGERATI TECHNOLOGIES, INC.
AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF
CASH FLOWS
(In thousands)
For the Years ended
July 31,
2018
2017
CASH FLOWS FROM OPERATING ACTIVITIES:
Net income (loss)
$
(3,220
)
$
439
Adjustments to reconcile net loss to cash used in by operating activities:
Loss on disposal of unproven oil and gas properties
-
248
Deferred tax benefit
(159
)
-
Depreciation and amortization
227
18
Stock compensation and warrant expense
1,508
773
Stock issued for extension of debt
13
-
Amortization of debt discount
277
-
Loss (Gain) on derivative liabilities
91
-
Changes in operating assets and liabilities:
Accounts receivable
56
(13
)
Prepaid expenses and other current assets
(18
)
(1
)
Accounts payable
181
70
Accrued expenses
120
-
Deferred income
(61
)
(2,550
)
Net cash used in operating activities
(985
)
(1,016
)
CASH FLOWS FROM INVESTING ACTIVITIES:
Acquisition of oil and gas property
-
(38
)
Purchases of property & equipment
-
(2
)
Cash received from selling of noncontrolling interest
250
-
Cash paid in business acquisition, net of cash acquired
(1,788
)
-
Net cash used in investing activities
(1,538
)
(40
)
CASH FLOWS FROM FINANCING ACTIVITIES:
Proceeds from sale of stock
480
560
Proceeds from exercise of warrants
15
-
Borrowings from 3rd party promissory notes, net
890
-
Borrowings from related party notes, net
525
-
Borrowings from convertible notes, net
1,397
-
Principal payments on promissory notes, net
(815
)
-
Principal payments on related party notes, net
(131
)
-
Principal payments on convertible notes, net
(120
)
Principal payment on financing leases
(3
)
-
Net cash provided by financing activities
2,238
560
INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS
(285
)
(496
)
CASH AND CASH EQUIVALENTS, beginning of period
673
1,169
CASH AND CASH EQUIVALENTS, end of period
$
388
$
673
SUPPLEMENTAL DISCLOSURES:
Cash paid for interest
$
143
$
-
Income taxes paid
$
116
$
-
SUPPLEMENTAL DISCLOSURES OF NON-CASH INVESTING AND FINANCING ACTIVITIES
Debt discount from derivative liabilities
$
542
$
-
Debt discount from BCF on convertible debt and warrants issued with debt
$
402
$
-
Debt discount from common stock issued with debt
$
4
$
-
Stock issued for business acquisition
$
175
$
-
Financing lease on purchased assets
$
98
$
-
Common Stock issued to settle AP
$
15
$
-
Note payable issued for business acquisition
$
1,425
$
-
See accompanying notes to consolidated financial statements
F-
7
DIGERATI TECHNOLOGIES, INC.
AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
NOTE 1 – SUMMARY OF SIGNIFICANT
ACCOUNTING POLICIES
Description of Business.
Digerati
Technologies, Inc. ("we", "our", "Company" or "Digerati") was incorporated in the
state of Nevada on May 24, 2004. Digerati is a diversified holding company that has no independent operations apart from its subsidiaries.
Through our operating subsidiaries, T3 Communications, Inc., and Shift8 Networks, Inc., dba, Synergy Telecom, we are an established
provider of cloud services specializing in UCaaS (Unified Communications
as a Service) solutions for the small to medium-sized business ("SMB") market. We
offer a comprehensive suite
of cloud communication services to meet the global needs of businesses that are seeking simple, flexible, and cost-effective communication
solutions. Our services
include cloud PBX, cloud mobile, Internet broadband, cloud WAN, SIP
trunking, and customized VoIP services, all delivered on its global carrier-grade network and
Only
in the Cloud™
.
In December 2017, we
closed a transaction to acquire all the assets, assumed all customers, and critical vendor arrangements from Synergy Telecom, Inc.
Synergy provides UCaaS or cloud communication services to small and medium-sized businesses and municipalities, primarily in Texas.
In May 2018, we completed
the acquisition of T3 Communications, Inc., an established UCaaS and Internet broadband provider serving a high-growth corridor
in Southwest Florida.
Principles of Consolidation.
The
consolidated financial statements include the accounts of Digerati, and its subsidiaries, which are majority owned by Digerati
In accordance with ASC 810-10-05. All significant inter-company transactions and balances have been eliminated.
Reclassifications.
Certain
amounts in the consolidated financial statements of the prior year have been reclassified to conform to the presentation of the
current year for comparative purposes.
Use of Estimates.
In preparing
financial statements, management makes estimates and assumptions that affect the reported amounts of assets and liabilities in
the balance sheet and revenue and expenses in the statement of operations. Actual results could differ from those estimates.
Concentration of Credit Risk.
Financial
instruments that potentially subject Digerati to concentration of credit risk consist primarily of trade receivables. In the normal
course of business, Digerati provides credit terms to its customers. Accordingly, Digerati performs ongoing credit evaluations
of its customers and maintains allowances for possible losses, which, when realized, have been within the range of management's
expectations. Digerati maintains cash in bank deposit accounts, which, at times, may exceed federally insured limits. Digerati
has not experienced any losses in such accounts and Digerati does not believe it's exposed to any significant credit risk
on cash and cash equivalents.
Revenue Recognition.
Digerati
derives revenue from UCaaS or cloud communication services and managed cloud-based services. Our services include fully hosted
IP/PBX services, SIP trunking, call center applications, interactive voice response auto attendant, call recording, simultaneous
calling, voicemail to email conversion, disaster recovery services and multiple customized IP/PBX features in a hosted or cloud
environment. Revenue is recognized when persuasive evidence of an arrangement exists, service or network capacity has been provided,
the price is fixed or determinable, collectability is reasonably assured and there are no significant obligations remaining.
Digerati records and reports its revenue
on the gross amount billed to its customers in accordance with the following indicators:
●
Digerati is the primary obligor in its arrangements,
●
Digerati has latitude in establishing pricing,
●
Digerati changes the product or performs part of the service and is involved in the determination
of the product or service specifications,
●
Digerati has discretion in supplier selection and
●
Digerati assumes credit risk for the amount billed to the customer.
F-
8
Sources of revenue:
Cloud-based hosted
Services
: We provide UCaaS or cloud communication services and managed cloud-based solutions to small and medium size enterprise
customers and to other resellers. Our Internet-based services include fully hosted IP/PBX services, SIP trunking, call center applications,
interactive voice response auto attendant, voice and web conferencing, call recording, simultaneous calling, voicemail to email
conversion, integrated mobility applications that are device and location agnostic, and multiple customized IP/PBX features in
a hosted or cloud environment. Other services include enterprise-class data and connectivity solutions through multiple broadband
technologies including cloud WAN or SD-WAN (Software-defined Wide Area Network), fiber, and Ethernet over copper. We also offer
remote network monitoring, data backup and disaster recovery.
Direct Costs:
Cloud-based hosted
Services
: We incur bandwidth and colocation charges in connection with our UCaaS or cloud communication services. The bandwidth
charges are incurred as part of the connectivity between our customers to allow them access to our various services. We also incur
costs from underlying providers for fiber, Internet broadband, and telecommunication circuits in connection with our data and connectivity
solutions.
Cash and cash equivalents.
The Company considers all bank deposits and highly liquid investments with original maturities of three months or less
to be cash and cash equivalents.
Allowance for Doubtful
Accounts.
Bad debt expense is recognized based on
management's estimate of likely losses each year based on past experience and an estimate of current year uncollectible amounts.
As of July 31, 2018 and 2017, Digerati's allowance for doubtful accounts balance was $122,000 and $0, respectively.
Customer deposits.
The Company in some instances requires
customers to make deposits for equipment, installation charges and training. As equipment is installed and training takes places
the deposits are then applied to revenue. As of July 31, 2018 and 2017, Digerati's customer deposits balance was $262,000
and $131,000, respectively.
Property and equipment.
Property
and equipment is recorded at cost. Additions are capitalized and maintenance and repairs are charged to expense as incurred. Gains
and losses on dispositions of equipment are reflected in operations. Depreciation is provided using the straight-line method over
the estimated useful lives of the assets, which are one to five years.
Goodwill, Intangible Assets,
and Long-Lived Assets
Goodwill is carried at cost and is not
amortized. The Company tests goodwill for impairment on an annual basis at the end of each fiscal year, relying on a number of
factors including operating results, business plans, economic projections, anticipated future cash flows and marketplace data.
Company management uses its judgment in assessing whether goodwill has become impaired between annual impairment tests according
to specifications set forth in ASC 350. The Company completed an evaluation of goodwill at July 31, 2018 and determined that there
was no impairment. We did not have any goodwill during the year ended July 31, 2017.
The fair value of the Company's reporting
unit is dependent upon the Company's estimate of future cash flows and other factors. The Company's estimates of future
cash flows include assumptions concerning future operating performance and economic conditions and may differ from actual future
cash flows. Estimated future cash flows are adjusted by an appropriate discount rate derived from the Company's market capitalization
plus a suitable control premium at date of the evaluation.
F-
9
The financial and credit market volatility
directly impacts the Company's fair value measurement through the Company's weighted average cost of capital that the
Company uses to determine its discount rate and through the Company's stock price that the Company uses to determine its
market capitalization. Therefore, changes in the stock price may also affect the amount of impairment recorded.
The Company recognizes an acquired intangible
asset apart from goodwill whenever the intangible asset arises from contractual or other legal rights, or when it can be separated
or divided from the acquired entity and sold, transferred, licensed, rented or exchanged, either individually or in combination
with a related contract, asset or liability. Such intangibles are amortized over their useful lives. Impairment losses are recognized
if the carrying amount of an intangible asset subject to amortization is not recoverable from expected future cash flows and its
carrying amount exceeds its fair value.
The Company reviews its long-lived assets,
including property and equipment, identifiable intangibles, and goodwill annually or whenever events or changes in circumstances
indicate that the carrying amount of the assets may not be fully recoverable. To determine recoverability of its long-lived assets,
the Company evaluates the probability that future undiscounted net cash flows will be less than the carrying amount of the assets.
Impairment of Long-Lived Assets.
Digerati reviews the carrying value of its long-lived assets annually or whenever events or changes in circumstances indicate that
the value of an asset may no longer be appropriate. Digerati assesses recoverability of the carrying value of the asset by estimating
the future net cash flows expected to result from the asset, including eventual disposition. If the future net cash flows are less
than the carrying value of the asset, an impairment loss is recorded equal to the difference between the asset's carrying
value and fair value.
Derivative financial instruments
.
Digerati does not use derivative instruments to hedge exposures to cash flow, market, or foreign currency risks. However, Digerati
analyzes its convertible instruments and free-standing instruments such as warrants for derivative liability accounting.
For derivative
financial instruments that are accounted for as liabilities, the derivative instrument is initially recorded at its fair value
and is then re-valued at each reporting date, any changes in fair value is recorded as non-operating, non-cash income or expense
for each reporting period. For option-based derivative financial instruments, warrants and notes payable conversion options Digerati
uses the Black-Scholes option-pricing model to value the derivative instruments.
The classification of derivative instruments,
including whether such instruments should be recorded as liabilities or as equity, is re-assessed at the end of each reporting
period. Derivative instrument liabilities are classified in the balance sheet as current or non-current based on whether or not
net-cash settlement of the derivative instrument is probable within the next 12 months from the balance sheet date.
Notes payable
conversion options are recorded as debt discounts and are amortized as interest expense over the term of the related debt instrument.
Sequencing Policy
In January 2018,
as a result of entering into a convertible debenture which contained a variable conversion feature with no floor, we adopted a
sequencing policy in accordance with ASC 815-40-35-12 The Company retrospectively is adopting the sequencing policy so all warrants
with fixed exercise price, and convertible notes with fixed conversion price or with a conversion price floor are sequenced by
issue date thus excluded from derivative consideration.
Fair Value of Financial Instruments.
Fair value is defined as the exchange price that would be received for an asset or paid to transfer a liability (an exit price)
in the principal or most advantageous market for the asset or liability in an orderly transaction between market participants on
the measurement date. A fair value hierarchy is used which requires an entity to maximize the use of observable inputs and minimize
the use of unobservable inputs when measuring fair value. The fair value hierarchy based on the three levels of inputs that may
be used to measure fair value are as follows:
Level 1
– Quoted prices in
active markets for identical assets or liabilities.
Level 2
– Observable inputs
other than Level 1 prices, such as quoted prices for similar assets or liabilities; or other inputs that are observable or can
be corroborated by observable market data for substantially the full term of the assets or liabilities.
F-
10
Level 3
– Unobservable inputs
that are supported by little or no market activity and that are financial instruments whose values are determined using pricing
models, discounted cash flow methodologies, or similar techniques, as well as instruments for which the determination of fair value
requires significant judgment or estimation.
For certain of our financial instruments,
including cash and cash equivalents, accounts receivable, accounts payable and accrued expenses, the carrying amounts approximate
fair value due to the short maturity of these instruments. The carrying value of our long-term debt approximates its fair value
based on the quoted market prices for the same or similar issues or the current rates offered to us for debt of the same remaining
maturities.
Our derivative liabilities as of July 31,
2018 and 2017 of $632,000 and $0, respectively, were valued using Level 3 inputs.
The following table provides a summary
of the changes in fair value of the derivative financial instruments measured at fair value on a recurring basis using significant
unobservable inputs:
Balance at July 31, 2017
$
-
Derivative discount - convertible debt
541,000
Derivative loss
91,000
Balance at July 31, 2018
$
632,000
Income taxes.
Digerati recognizes
deferred tax assets and liabilities based on differences between the financial reporting and tax bases of assets and liabilities
using the enacted tax rates and laws that are expected to be in effect when the differences are expected to be recovered. Digerati
provides a valuation allowance for deferred tax assets for which it does not consider realization of such assets to be more likely
than not.
Since January 1, 2007, Digerati accounts
for uncertain tax positions in accordance with the authoritative guidance issued by the Financial Accounting Standards Board on
income taxes which addresses how an entity should recognize, measure and present in the financial statements uncertain tax positions
that have been taken or are expected to be taken in a tax return. Pursuant to this guidance, Digerati recognizes a tax benefit
only if it is "more likely than not" that a particular tax position will be sustained upon examination or audit. To
the extent the "more likely than not" standard has been satisfied, the benefit associated with a tax position is measured
as the largest amount that is greater than 50% likely of being realized upon settlement. As of July 31, 2017 we have no liability
for unrecognized tax benefits.
Stock-based compensation.
In June 2018 FASB adopted the Accounting Standards Update No. 2018-07,
Compensation – Stock Compensation
(Topic 718): Improvements to Non-employee Share-Based Payment Accounting.
This update simplifies the accounting for non
employee share-based payment transactions by expanding the scope of Topic 718, Compensation-Stock Compensation, to include share-based
payment transactions for acquiring goods and services from non-employees. The guidance is effective for annual periods beginning
after December 15, 2018, and interim periods within that reporting period. The Company adopted the updated standard as of
May 1, 2018 and adopting this guidance did not have a material effect on its consolidated financial statements. During fiscal 2017
and 2018, the Company issued 1,003,970 common shares and 2,213,512 common shares, respectively to various employees as part of
our profit-sharing plan contribution and stock in lieu of cash. At the time of issuance during fiscal 2017 and 2018 we recognized
stock-based compensation expense of approximately $241,000 and $1,240,000, respectively equivalent to the market value of the shares
issued calculated based on the share's closing price at the grant dates.
F-
11
Basic and diluted net income (loss)
per share.
The basic net loss per common share is computed by dividing the net loss by the weighted average number of common
shares outstanding. Diluted net loss per common share is computed by dividing the net loss adjusted on an "as if converted"
basis, by the weighted average number of common shares outstanding plus potential dilutive securities. For the year ended July
31, 2017, potential dilutive securities including options and warrants had dilutive effect and were included in the calculation
of diluted net income (loss) per common share. For the year ended July 31, 2018, potential dilutive securities including options
and warrants were not included in the calculation of diluted net (loss) per common share. Potential dilutive securities, which
are not included in dilutive weighted average shares are as follows:
7/31/2018
7/31/2017
Options to purchase common stock
3,415,000
Warrants to purchase common stock
2,370,000
210,000
Convertible debt
3,268,214
-
Total:
9,053,214
210,000
Noncontrolling interest
The Company follows
Financial Accounting Standards Board ("FASB") Accounting Standards Codification ("ASC") Topic 810,
Consolidation,
which
governs the accounting for and reporting of non-controlling interests ("NCIs") in partially owned consolidated subsidiaries
and the loss of control of subsidiaries. Certain provisions of this standard indicate, among other things, that NCIs be treated
as a separate component of equity, not as a liability, that increases and decreases in the parent's ownership interest that
leave control intact be treated as equity transactions rather than as step acquisitions or dilution gains or losses, and that losses
of a partially owned consolidated subsidiary be allocated to the NCI even when such allocation might result in a deficit balance.
The net income
(loss) attributed to the NCI is separately designated in the accompanying consolidated statements of operations and other comprehensive
income (loss). For the year ended July 31, 2018 and 2017, the Company recognized a noncontrolling deficits of $57,000 and $0, respectively.
Recently
issued accounting pronouncements.
I
n
May 2014, the FASB issued ASU 2014-09, Revenue from Contracts with Customers (Topic 606), which supersedes the revenue
recognition requirements in Topic 605, Revenue Recognition, and most industry-specific revenue recognition guidance throughout
the Industry Topics of the Accounting Standards Codification. The updated guidance states that an entity should recognize revenue
to depict the transfer of promised goods or services to customers in an amount that reflects the consideration to which the entity
expects to be entitled in exchange for those goods or services. The guidance also provides for additional disclosures with respect
to revenues and cash flows arising from contracts with customers. The standard will be effective for the first interim period within
annual reporting periods beginning after December 15, 2017, and the Company adopted the standard effective August 1, 2018.
F-
12
In February 2016, the FASB issued
ASU No. 2016-02,
Leases
(Topic 842). The amendments under this pronouncement will change the way all leases with
a duration of one year or more are treated. Under this guidance, lessees will be required to capitalize virtually all leases on
the balance sheet as a right-of-use asset and an associated financing lease liability or capital lease liability. The right-of-use
asset represents the lessee's right to use, or control the use of, a specified asset for the specified lease term. The lease
liability represents the lessee's obligation to make lease payments arising from the lease, measured on a discounted basis.
Based on certain characteristics, leases are classified as financing leases or operating leases. Financing lease liabilities, those
that contain provisions similar to capitalized leases, are amortized like capital leases are under current accounting, as amortization
expense and interest expense in the statement of operations. Operating lease liabilities are amortized on a straight-line basis
over the life of the lease as lease expense in the statement of operations. This update is effective for annual reporting periods,
and interim periods within those reporting periods, beginning after December 15, 2018.  In July 2018 the FASB issued ASU No.
2018-10, Codification Improvements to Topic 842, Leases and ASU 2018-11, Leases (Topic 842), Targeted Improvements, which provided
additional implementation guidance on the previously issued ASU.  The Company is currently assessing the impact of adopting
this guidance on its consolidated financial statements.
In June 2018, the FASB issued Accounting
Standards Update No. 2018-07,
Compensation – Stock Compensation (Topic 718): Improvements to Non-employee
Share-Based Payment Accounting.
This update simplifies the accounting for non-employee share-based payment transactions
by expanding the scope of Topic 718, Compensation-Stock Compensation, to include share-based payment transactions for acquiring
goods and services from non-employees. The guidance is effective for annual periods beginning after December 15, 2018, and
interim periods within that reporting period. The Company adopted this updated standard as of May 1, 2018, and adopting this guidance
did not have a material effect on the presentation of our consolidated financial statements.
NOTE 2 – GOING CONCERN
Financial Condition
Digerati's consolidated financial
statements for the year ending July 31, 2018 have been prepared on a going concern basis, which contemplates the realization of
assets and the settlement of liabilities in the normal course of business. Digerati has incurred net losses and accumulated a deficit
of approximately $80,800,000 and a working capital deficit of approximately $3,722,000which raises substantial doubt about Digerati's
ability to continue as a going concern.
Management Plans to Continue as a
Going Concern
Management believes that current available
resources will not be sufficient to fund the Company's operations over the next 12 months. The Company's ability to
continue to meet its obligations and to achieve its business objectives is dependent upon, among other things, raising additional
capital or generating sufficient revenue in excess of costs. At such time as the Company requires additional funding, the Company
will seek to secure such additional funding from various possible sources, including the public equity market, private financings,
sales of assets, collaborative arrangements and debt. If the Company raises additional capital through the issuance of equity securities
or securities convertible into equity, stockholders will experience dilution, and such securities may have rights, preferences
or privileges senior to those of the holders of common stock or convertible senior notes. If the Company raises additional funds
by issuing debt, the Company may be subject to limitations on its operations, through debt covenants or other restrictions. If
the Company obtains additional funds through arrangements with collaborators or strategic partners, the Company may be required
to relinquish its rights to certain technologies. There can be no assurance that the Company will be able to raise additional funds
or raise them on acceptable terms. If the Company is unable to obtain financing on acceptable terms, it may be unable to execute
its business plan, the Company could be required to delay or reduce the scope of its operations, and the Company may not be able
to pay off its obligations, if and when they come due.
The Company will continue to work with
various funding sources to secure additional debt and equity financings. However, Digerati cannot offer any assurance that it will
be successful in executing the aforementioned plans to continue as a going concern.
Digerati's consolidated financial
statements as of July 31, 2018 do not include any adjustments that might result from the inability to implement or execute Digerati's
plans to improve our ability to continue as a going concern.
F-
13
NOTE 3 – INTANGIBLE ASSETS
During fiscal 2008, Digerati made a loan
of $150,000 to NetSapiens Inc. The note receivable had a maturity date of June 26, 2008 with interest at 8% per year. The note
was secured by NetSapiens' proprietary Starter Platform License and SNAPsolution modules. On June 26, 2008 Digerati converted
the outstanding interest and principal balance into a lifetime and perpetual NetSapiens' License. The License provides Digerati
with the ability to offer Hosted PBX
(
Private Branch eXchange), IP Centrex application, prepaid calling, call center, conferencing,
messaging and other innovative telephony functionality necessary to offer standard and/or custom services to enterprise markets.
The NetSapiens' License, in the amount of $150,000, is being amortized equally over a period of 10 years. For the years ended
July 31, 2018 and 2017, amortization totaled approximately $13,750 and $15,000, respectively. As of July 31, 2018 the NetSapiens'
License is fully amortized.
On December 1, 2017,
Shift8 and Synergy Telecom, Inc., a Delaware corporation ("Synergy"), closed a transaction to acquire all the assets,
assumed all customers, and critical vendor arrangements from Synergy. The total purchase price was $425,000, the acquisition was
accounted for under the purchase method of accounting, with Digerati identified as the acquirer. Under the purchase method of accounting,
the aggregate amount of consideration assumed by Digerati was allocated to customer contracts acquired, software licenses, and
goodwill based on their fair values as of July 31, 2018.
The following information summarizes the
allocation of the fair values assigned to the assets. The allocation of fair values is based on an extensive analysis and is subject
to changes in the future during the measurement period.
Synergy
Useful life
(years)
Customer relatiosnhips
$
40,000
5
License - software
105,000
3
Goodwill
280,000
-
Total Purchase price
$
425,000
For the years ended July 31, 2018 and 2017,
amortization expense for the acquired intangible was $25,000 and $0, respectively.
On May 2, 2018, the Company closed on the
Merger Agreement with T3 Communications, Inc. to increase its customer base and obtain higher efficiency of its existing infrastructure.
The total purchase price was $3,211,945
paid in cash at closing. The acquisition was accounted for under the purchase method of accounting, with the Company identified
as the acquirer. Under the purchase method of accounting, the aggregate amount of consideration assumed by the Company was allocated
to cash, customer contracts acquired, current assets, property plant and equipment and assumed payables based on their estimated
fair values as of May 2, 2018.
The following information summarizes the
allocation of the purchase price assigned to intangible assets. The allocation of fair values is based on an extensive analysis
and is subject to changes in the future during the measurement period.
Synergy
Useful life (years)
Customer relationships
$
1,480,000
7
Marketing & Non-compete
800,000
5
Goodwill
554,828
-
Total
$
2,834,828
F-
14
For the years ended July 31, 2018 and 2017,
amortization expense for the acquired assets totaled approximately $93,000 and $0, respectively.
Intangible assets at July 31, 2018 and
2017 are summarized in the tables below:
July 31, 2018
Gross
Carrying
Value
Accumulated
Amortization
Net
Carrying
Amount
NetSapeins - license, 10 years
$
150,000
$
(150,000
)
$
-
Customer relationships, 5 years
40,000
(4,667
)
35,333
Customer relationships, 7 years
1,480,000
(64,652
)
1,415,348
Marketing & Non-compete, 5 years
800,000
(40,000
)
760,000
Total Define-lived Assets
2,470,000
(259,319
)
2,210,681
Goodwill, Indefinite
834,828
-
834,828
Balance, July 31, 2018
3,304,828
(259,319
)
3,045,509
Gross
Net
Carrying
Accumulated
Carrying
July 31, 2017
Value
Amortization
Amount
NetSapeins - license, 10 years
$
150,000
$
(136,500
)
$
13,500
Total Define-lived Assets
150,000
(136,500
)
13,500
Goodwill, Indefinite
-
-
-
Balance, July 31, 2017
150,000
(136,500
)
13,500
Total amortization expense for the periods
ended July 31, 2018 and 2017 was approximately $123,000 and $15,000, respectively.
NOTE 4 – PROPERTY AND EQUIPMENT
Following is a summary of Digerati's
property and equipment at July 31, 2018 and 2017 (in thousands):
Useful lives
2018
2017
Telecom equipment & software
1-5 years
$
831
$
16
Less: accumulated depreciation
(118
)
(14
)
Net–property and equipment
$
713
$
2
The Company uses straight-line depreciation,
for the years ended July 31, 2018 and 2017, depreciation totaled approximately $104,000 and $3,000, respectively.
NOTE 5 – INCOME TAXES
Digerati files a consolidated tax return.
The current tax year is subject to examination by the Internal Revenue Service and certain state taxing authorities. As of July
31, 2018, Digerati had net operating loss carry-forwards of approximately $5,956,000 to reduce future federal income tax liabilities;
the loss carryforwards will start to expire in 2020. Under the recently enacted Tax Cuts and Jobs Act (TCJA), the new effective
Corporate flat tax rate is 21% (effective for tax years beginning after December 31, 2017). Income tax benefit (provision) for
the years ended July 31, 2018 and 2017 are as follows:
The effective tax rate for Digerati is reconciled to statutory rates as follows:
2018
2017
Expected Federal benefit (provision), at statutory rate
21.0
%
35.0
%
Change in valuation allowance
(21.0
)%
(35.0
)%
0.0
%
0.0
%
F-
15
Deferred tax assets are comprised of the
following as of July 31, 2018 and 2016:
2018
2017
Net operating loss carryover
$
1,090,700
$
1,282,000
Valuation allowance
(1,090,700
)
(1,282,000
)
Total deferred tax asset, net
$
-
$
-
At July 31, 2018, realization of Digerati's
deferred tax assets was not considered likely to be realized. The change in the valuation allowance for 2018 was resulted in a
decrease of approximately $191,000. Management has evaluated and concluded that there are no significant uncertain tax positions
requiring recognition in Digerati's combined financial statements. The current year remains open to examination by the major
taxing jurisdictions in which Digerati is subject to tax. The Company files a calendar year return and the net operating loss was
adjusted for the fiscal year ended July 31, 2018.
During the year ended July 31, 2018 the
Company issued 4,389,086 common shares, and under our initial assessment this will likely result in a change of control and the
net operation loss (NOL's) became subject to the separate return limitation year. We will evaluate during the tax year and consider
the limitations.
We record unrecognized tax benefits as
liabilities in accordance with ASC 740 and adjust these liabilities when our judgment changes as a result of the evaluate on new
information not previously available. Because of the complexity of some of these uncertainties, the ultimate resolution may result
in a payment that is materially different from our current estimate of the unrecognized tax benefit liabilities. These differences
will be reflected as increases or decreases to income tax expense in the period in which new information is available.
NOTE 6 – COMMITMENTS AND CONTINGENCIES
Commitments
Digerati leases its corporate facilities,
sales office and network facilities in Texas and Florida. The annual rent expense under the operating leases was $81,670 and $6,996,
for 2018 and 2017, respectively. Below is a list of our primary operating leases:
The future minimum lease payment under
the operating leases are as follows:
Location
Lease Expiration Date
Annual
Rent
Business Use
Approx. Sq. Ft.
1600 NE Loop 410, Suite 126, San
Antonio, TX 78209
Apr-19
$
27,300
Executive offices
1,453
2401 First Street, Suite 300,
Ft. Myers, FL 34901
Nov-20
$
107,534
Lease of network facilitie
and office space
6,800
7218 McNeail Dr, Austin, TX 78729
Aug-21
$
14,222
Lease of network facilities
25
6606 Lyndon B. Johnson, Fwy., FL1,
Suite 125, Dallas, TX 75240
Sep-21
$
25,161
Lease of network facilities
25
9701 S. John Young Parkway,  Orlando,
FL 32819
May-23
$
30,528
Lease of network facilities
540
F-
16
NOTE 7 – STOCK -BASED COMPENSATION
In November 2015, Digerati adopted the
Digerati Technologies, Inc. 2015 Equity Compensation Plan (the "Plan"). The Plan authorizes the grant of up to 7.5
million stock options, restricted common shares, non-restricted common shares and other awards to employees, directors, and certain
other persons. The Plan is intended to permit Digerati to retain and attract qualified individuals who will contribute to the overall
success of Digerati. Digerati's Board of Directors determines the terms of any grants under the Plan. Exercise prices of
all stock options and other awards vary based on the market price of the shares of common stock as of the date of grant. The stock
options, restricted common stock, non-restricted common stock and other awards vest based on the terms of the individual grant.
During the year ended July 31, 2018, we
issued:
●
644,732 common shares to various employees
as part of the Company's profit-sharing plan contribution. The Company recognized stock-based compensation expense of approximately
$226,000 equivalent to the value of the shares calculated based on the share's closing price at the grant dates.
●
515,493 common shares to management for
services in lieu of cash compensation. The Company recognized stock-based compensation expense of approximately $222,000 equivalent
to the value of the shares calculated based on the share's closing price at the grant dates.
●
646,787 common shares to management for
services in lieu of cash compensation. The Company recognized stock-based compensation expense of approximately $306,000 equivalent
to the value of the shares calculated based on the share's closing price at the grant dates.
●
1,025,000 options to purchase common shares
to various employees with an exercise price of $0.35 per share and a term of 5 years. The options vest equally over a period of
one year. The options have a fair market value of $218,200.
●
275,000 options to purchase common shares
to various employees with an exercise price of $0.35 per share and a term of 5 years. The options vest equally over a period of
two years. The options have a fair market value of $74,600.
●
545,000 options to purchase common shares
to various employees with an exercise price of $0.35 per share and a term of 5 years. The options vest equally over a period of
three years. The options have a fair market value of $164,600.
●
420,000 options to purchase common shares
to various employees with an exercise price of $0.45 per share and a term of 5 years. The options vest equally over a period of
three years. The options have a fair market value of $160,000.
The fair market value of all options issued was determined
using the Black-Scholes option pricing model which used the following assumptions:
Expected dividend yield
0.00%
Expected stock price volatility
162.72% - 169.76%
Risk-free interest rate
2.13% -2.78%
Expected term
1.0 - 3.0 years
F-
17
During the year ended July 31, 2018 we
issued the following to non-employee professionals:
●
In September 2017, the Company issued an aggregate of 12,500 shares of common stock with a market
value at time of issuance of $4,375. The shares were issued for consulting services.
●
In December 2017, the Company issued an aggregate of 100,000 shares of common stock with a market
value at time of issuance of $40,000. The shares were issued for consulting services.
●
In June 2018, the Company issued an aggregate of 100,000 shares of common stock with a market value
at time of issuance of $48,000. The shares were issued for consulting services.
●
In July 2018, the Company issued an aggregate of 194,000 shares of common stock with a market value
at time of issuance of $93,720. The shares were issued to various professionals for consulting services.
Also, during the year
ended July 31, 2018 we issued the following to settle accounts payables:
●
In June 2018, the Company issued an aggregate of 35,575 shares of common stock with a market value
at time of issuance of $15,288. The shares were issued to settle accounts payables with various professionals, the Company recognized
a loss of $5,700 upon issuance of the shares.
During fiscal 2018, the
Company recognized $1,054,000 as employee stock compensation expense and $186,000 as non-employee stock compensation expense. Unamortized
compensation cost totaled $397,000 and $88,000, respectively as of July 31, 2018 and July 31, 2017.
A summary of the stock options of July
31, 2018 and 2017 and the changes during the years ended July 3, 2018 and 2017 are presented below:
Weighted-average
Weighted-average
remaining contractual
Options
exercise price
term (years)
Outstanding at July 31, 2016
-
$
-
-
Granted
1,170,000
$
0.24
5.00
Exercised
-
-
-
Forfeited and cancelled
-
-
-
Outstanding at July 31, 2017
1,170,000
$
0.24
4.30
Granted
2,265,000
$
0.37
5.00
Exercised
-
-
-
Forfeited and cancelled
(20,000
)
$
0.24
3.30
Outstanding at July 31, 2018
3,415,000
$
0.33
4.58
Exercisable at July 31, 2018
2,006,111
$
0.29
4.58
The aggregate intrinsic value (the difference between the Company's
closing stock price on the last trading day of the period and the exercise price, multiplied by the number of in-the-money options)
of the 1,170,000 and 3,415,000 stock options outstanding at July 31, 2017 and July 31, 2018 was $339,000 and $706,372 , respectively.
The aggregate intrinsic value of 721,111 and 2,006,111 stock
options exercisable at July 31, 2017 and July 31, 2018 was $209,000 and $587,389, respectively.
NOTE 8 – WARRANTS
During the year ended July 31, 2017, the
Company issued the following warrants:
The Company secured $560,000
from various accredited investors under a private placement and issued 1,120,000 shares of its common stock at a price of $0.50
per share and warrants to purchase an additional 210,000 shares of its common stock at an exercise price of $0.50 per share. We
determined that the warrants issued in connection with the private placement were equity instruments and did not represent derivative
instruments.
F-
18
During the year ended July 31, 2018, the
Company issued the following warrants:
The Company secured $480,000
from various accredited investors under a private placement and issued 960,000 shares of its common stock at a price of $0.50 per
share and warrants to purchase an additional 180,000 shares of its common stock at an exercise price of $0.50 per share. We determined
that the warrants issued in connection with the private placement were equity instruments and did not represent derivative instruments.
In December 2017, Digerati
issued 100,000 warrants to a consultant for services, the warrants vested at time of issuance. The warrants have a term of 5 years,
with an exercise price of $0.50.	Under a Black-Scholes valuation the fair market value of the warrants at time of issuance was
approximately $49,000, the company will amortize the fair market value as warrant expense over 12 months. Additionally, Digerati
committed to issue 100,000 warrants if the Company's stock price traded at $0.75 per share for 10 consecutive days, to issue
100,000 warrants if the Company's stock price traded at $1.00 per share for 10 consecutive days, and to issue 100,000 warrants
if the Company's stock price traded at $1.25 per share for 10 consecutive days. Under a Black-Scholes valuation the fair
market value of the warrants at time of issuance was approximately $143,000, the company will amortize the fair market value as
warrant expense over 12 months. During the year ended July 31, 2018 the Company amortized $128,000 in warrant expense related to
these warrants.
In January 2018, Digerati
issued 220,000 warrants to a consultant for services, the warrants vested at time of issuance. The warrants have a term of 5 years,
with an exercise price of $0.001. At time of issuance the company recognized approximately $119,000 in warrant expense using Black-Scholes
valuation.
In March 2018, Digerati
issued 300,000 warrants under two promissory notes and, the warrants vested at time of issuance. The warrants have a term of 3
years, with an exercise price of $0.10. Under a Black-Scholes valuation the relative fair market value of the warrants at time
of issuance was approximately $127,000 and was recognized as a discount on the two promissory notes, the company will amortize
the fair market value as interest expense over 9 months.
In March 2018, Digerati
issued 30,000 warrants under various promissory notes, the warrants vested at time of issuance. The warrants have a term of 3 years,
with an exercise price of $0.15. Under a Black-Scholes valuation the relative fair market value of the warrants at time of issuance
was approximately $12,000 and was recognized as a discount on the two promissory notes, the company will amortize the fair market
value as interest expense over 4 months.
In April 2018, Digerati
issued 400,000 warrants under various promissory notes, the warrants vested at time of issuance. The warrants have a term of 5
years, with an exercise price of $0.15. Under a Black-Scholes valuation the relative fair market value of the warrants at time
of issuance was approximately $107,000 and was recognized as a discount on the promissory notes, the company will amortize the
fair market value as interest expense over 4 months.
In April 2018, Digerati
issued 100,000 warrants under a promissory note, the warrants vested at time of issuance. The warrants have a term of 3 years,
with an exercise price of $0.50.Under a Black-Scholes valuation the relative fair market value of the warrants at time of issuance
was approximately $27,000 and was recognized as a discount on the promissory notes, the company will amortize the fair market value
as interest expense over 55 months.
In April 2018, Digerati
issued 75,000 warrants under a promissory note, the warrants vested at time of issuance. The warrants have a term of 3 years, with
an exercise price of $0.50.Under a Black-Scholes valuation the relative fair market value of the warrants at time of issuance was
approximately $19,000 and was recognized as a discount on the promissory notes, the company will amortize the fair market value
as interest expense over 25 months.
In June 2018, Digerati
issued 255,000 warrants under various promissory notes, the warrants vested at time of issuance. The warrants have a term of 3
years, with an exercise price of $0.10.Under a Black-Scholes valuation the relative fair market value of the warrants at time of
issuance was approximately $110,000 and was recognized as a discount on the promissory notes, the company will amortize the fair
market value as interest expense over 9 months.
In July 2018, Digerati
issued 50,000 warrants to a consultant for services, the warrants vested at time of issuance. The warrants have a term of 3 years,
with an exercise price of $0.50. At time of issuance the company recognized approximately $21,000 in warrant expense using Black-Scholes
valuation.
In July 2018, Digerati
received $15,000 for the exercise of 150,000 warrants, with an exercise price of $0.10 per warrant.
F-
19
The fair market value of all warrants issued was determined
using the Black-Scholes option pricing model which used the following assumptions:
Expected dividend yield
0.00%
Expected stock price volatility
153.99% - 176.56%
Risk-free interest rate
2.05% -2.80%
Expected term
3.0 - 5.0 years
A summary of the warrants as of July 31,
2018 and 2017 and the changes during the years ended July 31, 2018 and 2017 are presented below:
Weighted-average
Weighted-average
remaining contractual
Warrants
exercise price
term (years)
Outstanding at July 31, 2016
300,000
$
0.14
3.45
Granted
210,000
$
0.50
3.00
Exercised
-
-
-
Forfeited and cancelled
-
-
-
Outstanding at July 31, 2017
510,000
$
0.29
2.87
Granted
2,010,000
$
0.26
3.34
Exercised
(150,000
)
$
0.10
3.00
Forfeited and cancelled
-
-
-
Outstanding at July 31, 2018
2,370,000
$
0.28
2.90
Exercisable at July 31, 2018
2,070,000
$
0.24
2.90
The aggregate intrinsic value (the difference between the Company's closing stock price on the last
trading day of the period and the exercise price, multiplied by the number of in-the-money warrants) of the 510,000 and 2,370,000
stock options outstanding at July 31, 2017 and July 31, 2018 was $124,800 and $607,557 , respectively.
The aggregate intrinsic value of 510,000 and 2,070,000 stock options exercisable at July 31, 2017 and July
31, 2018 was $124,800 and $597,927, respectively.
Warrant expense for the
years ended July 31, 2018 and 2017 was $268,000 and $0, respectively. Unamortized warrant expense totaled $64,000 and $0, respectively
as of July 31, 2018 and July 31, 2017.
NOTE 9 – NON-STANDARDIZED PROFIT-SHARING
PLAN
We currently provide a Non-Standardized
Profit-Sharing Plan, adopted September 15, 2006. Under the plan our employees qualify to participate in the plan after one year
of employment. Contributions under the plan are based on 25% of the annual base salary of each eligible employee up to $54,000
per year. Contributions under the plan are fully vested upon funding. During the years ended July 31, 2018 and July 31, 2017, the
Company issued 644,732 and 1,003,966 respectively, common shares to various employees as part of the Company's profit-sharing
plan contribution. The Company recognized stock-based compensation expense for July 31, 2018 and July 31, 2017 of $226,000 and
$241,000, respectively, equivalent to the value of the shares calculated based on the share's closing price at the grant
dates.
NOTE 10 – SIGNIFICANT
CUSTOMERS
During the year ended July 31, 2018, the Company did not derive a significant amount of revenue from one single
customer. During the year ended July 31, 2017, the Company derived a significant amount revenue from four customers, comprising
24%, 24%, 11%, and 8% of the total revenue for the year.
As of the year ended July 31, 2018, the company derived 13% and 23% total accounts receivable from two customers.
As of the year ended July 31, 2017, the Company derived a significant amount of accounts receivables from three customers, comprising
37%, 27% and 14% of the total accounts receivable as of the year ended July 31, 2017.
F-
20
NOTE 11 – DEBT
Non-convertible
 debt
On December 1, 2017,
Shift8 and Synergy Telecom, Inc., a Delaware corporation ("Synergy"), closed a transaction to acquire all the assets,
assumed all customers, and critical vendor arrangements from Synergy. In conjunction with the transaction, Shift8 entered into
a promissory note for $125,000 with an effective annual interest rate of 6% with 5 quarterly payments and a maturity date of February
28, 2019. The note holder agreed to extend two of the quarterly payment until January 15, 2019. During the year ended July 31,
2018, the Company made a principal payment of $50,000, the balance outstanding as of July 31, 2018 was $75,000.
On January 17, 2018, the Company entered
into a Promissory Note for $30,000, bearing interest at a rate of 5% per annum, with maturity date of January 19, 2018. The Company
paid the full principal amount outstanding and accrued interest on January 19, 2018.
On February 21, 2018, the Company entered
into a Promissory Note for $35,000, bearing interest at a rate of 5% per annum, with maturity date of March 2, 2018. The Company
paid the full principal amount outstanding and accrued interest on March 2, 2018.
On March 13, 2018, the Company entered
into various Promissory Notes (the "Notes") for $200,000, bearing interest at a rate of 12% per annum, with maturity
date of April 13, 2018. The Company paid the full principal amount outstanding and accrued interest on April 13, 2018. In conjunction
with the Notes, the Company issued 30,000 warrants under the promissory notes, the warrants vested at time of issuance. The warrants
have a term of 3 years, with an exercise price of $0.15. Under a Black-Scholes valuation the relative fair market value of the
warrants at time of issuance was approximately $12,000 and was recognized as a discount on the promissory notes, the company amortized
the relative fair market value as interest expense during the year ended July 31, 2018. During the year ended July 31, 2018, the
Company paid the full principal amount outstanding and accrued interest.
On April 30, 2018, Shift8
entered into a promissory note for $650,000 with an effective annual interest rate of 0% and a maturity date of May 14, 2018, provided,
however, the Maturity Date will automatically be extended by one (1) additional period of thirty (30) days, until June 14, 2018.
In addition, Shift8 entered into a Security Agreement, whereby Shift8 Agreed to pledge one third of the outstanding shares of T3,
the secured interest will continue until the principal balance is paid in full. Furthermore, a late fee of $3,000 per calendar
week will be accessed beginning on May 15, 2018 and will continue until he principal balance is paid in full. The lender agreed
to extend the maturity date until November 30, 2018, we are currently paying a $3,000 per week late fee. As of July 31, 2018, the
outstanding principal balance was $650,000.
F-
21
On April 30, 2018, Shift8
Networks, Inc. ("Shift8"), a subsidiary of Digerati Technologies, Inc. entered into a credit facility under a promissory
note of $500,000, interest payment for the first twenty-three months with a balloon payment on the twenty-fourth month and a maturity
date of April 30, 2020. Collateralized by Shift8 and T3's accounts receivables and with an effective annual interest rate of prime
plus 5.25%, adjusted quarterly on the first day of each calendar quarter. However, the rate will never be less than 9.50% per annum.
In the event of default, the interest rate will be the maximum nonusurious rate of interest per annum permitted by whichever of
applicable United States federal law or Louisiana law permits the higher interest rate. Shift8 agreed to pay the lender a commitment
fee of 1.00% upon payment of the first interest payment under the credit facility and 1.00% on the first anniversary of the credit
facility. In addition, Shift8 agreed to pay a monitoring fee of 0.33% of the credit facility, payable in arrears monthly. Shift8
also agreed to pay an over-advance fee of 3.00% of the amount advanced in excess of the borrowing base or maximum amount of the
credit facility, payable in arrears monthly. Shift8 is required to maintain the following financial covenants: 1) A consolidated
debt service coverage ratio, as of the last day of each fiscal quarter, of at least 1.25 to 1.00, 2) A fixed charge coverage ratio,
as of the last day of each fiscal quarter, of at least 1.25 to 1.00, and 3) A tangible net worth, at all times of at least $100,000.
As of July 31, 2018, the outstanding principal balance was $500,000.
On May 1, 2018, Shift8
entered into a promissory note for $150,000 with an effective annual interest rate of 3% and a maturity date of May 7, 2018. On
May 4, 2018 the promissory note was paid in full.
On April 27, 2018, Shift8
entered into a promissory note for $350,000 with an effective annual interest rate of 12% and a maturity date of June 27, 2018.
With a principal payment of $200,000 due on May 31, 2018 and a principal payment of $150,000 due on June 27, 2018. The promissory
note is secured by a Pledge and Security Agreement, whereby Shift8 agreed to pledge the cash on hand at one of the bank accounts
owned by T3 until the principal payment is paid in full.
In conjunction with the
Notes, the Company issued 3-year warrants to purchase 400,000 shares of common stock each at an exercise price of $0.15 per share.
Under a Black-Scholes valuation the relative fair market value of the warrants at time of issuance was approximately $107,000 and
was recognized as a discount on the promissory notes during the year ended July 31, 2018. During the year ended July 31, 2018,
the promissory note was paid in full.
Notes payable, related party
On April 30, 2018, Shift8
Technologies, Inc. ("Shift8") entered into a convertible promissory note for $525,000 with an effective annual
interest rate of 8% and a maturity date of April 30, 2020. With a principal payment of $100,000 due on June 1, 2018 and a
principal payment of $280,823 due on April 30, 2020. Payment are based on a 60-month repayment schedule. At any time while
this Note is outstanding, but only upon: (i) the occurrence of an Event of Default under the Note or the Pledge and Escrow
Agreement; or (ii) mutual agreement between the Borrower and the Holder, the Holder may convert all or any portion of the
outstanding principal, accrued and unpaid interest, Premium, if applicable, and any other sums due and payable hereunder
(such total amount, the "Conversion Amount") into shares of Common Stock (the "Conversion Shares") at
a price equal to: (i) the Conversion Amount (the numerator);
divided by
(ii) a conversion price of $1.50 per share of
Common Stock, which price shall be indicated in the conversion notice (in the form attached hereto as Exhibit
"B", the "Conversion Notice") (the denominator) (the "Conversion Price"). The Holder
shall submit a Conversion Notice indicating the Conversion Amount, the number of Conversion Shares issuable upon such
conversion, and where the Conversion Shares should be delivered. The promissory note is secured by a Pledge and
Escrow Agreement, whereby Shift8 agreed to pledge 51% of the securities owned in T3 until the principal payment is paid in
full. In conjunction with the promissory note, the Company issued 3-year warrants to purchase 75,000 shares of common stock
at an exercise price of $0.50 per share. Under a Black-Scholes valuation the relative fair market value of the warrants at
time of issuance was approximately $19,000 and was recognized as a discount on the two promissory notes, the company
amortized $6,000 as interest expense during the year ended July 31, 2018. During the year ended July 31, 2018, the Company
paid $119,000 of the principal balance. The total principal outstanding and unamortized discount as of July 31, 2018 were
$406,000 and $13,000, respectively. One of the note holders also serves as President, CEO and Board Member of T3
Communications, Inc., one of our operating subsidiaries.
On May 1, 2018, Shift8
entered into a promissory note for $275,000 with an effective annual interest rate of 0% with an interest and principal payment
of $6,000 per month and shall continue perpetuity until the entire principal amount is paid in full. The promissory note is guaranteed
to the lender by 15% of the stock owned by Shift8 in T3, the secured interest will continue until the principal balance is paid
in full. In conjunction with the promissory note, the Company issued 3-year warrants to purchase 100,000 shares of common stock
at an exercise price of $0.50 per share. Under a Black-Scholes valuation the relative fair market value of the warrants at time
of issuance was approximately $27,000 and was recognized as a discount on the promissory note, the company amortized $2,000 as
interest expense during the year ended July 31, 2018. During the year ended July 31, 2018, the Company paid $13,000 of the principal
balance. The total principal outstanding and unamortized discount as of July 31, 2018 were $262,000 and $25,000, respectively.
The note holder also serves as Board Member of T3 Communications, Inc., one of our operating subsidiaries.
F-
22
Convertible debt non-derivative
In March 2018, the Company
entered into two (2) Promissory Notes (the "Notes") for $250,000 each, bearing interest at a rate of 12% per annum. The
Notes have a maturity date of September 15, 2018, provided, however, the Company shall have the right to request that the maturity
date to be extended by one (1) additional period of ninety (90) days, until December 14, 2018. The Notes are payable every month,
commencing April 15, 2018, in monthly payments of interest only and a single payment of the principal amount outstanding plus accrued
interes
t on September 15, 2018. T
he Company agreed to repay the Notes from the proceeds
from the Company's current private placement. As proceeds from the Private Placement are received, the Company shall direct all
funds to the Note Holders until the principal amount outstanding and accrued interest are paid in full. In addition, on March 15,
2018, the Company entered into a Note Conversion Agreement (the "Agreement") with the Note holders, whereby, the holders
may elect to convert up to 50% of the principal amount outstanding on the Notes into Common Stock of Digerati at any time after
90 days of funding the Notes. The Conversion Price shall be the greater of: (i) the Variable Conversion Price (as defined herein)
or (ii) the Fixed Conversion Price (as defined herein). The
"
Variable Conversion Price
"
shall be equal
to the average closing price for Digerati's Common Stock (the "
Shares
") for the ten (10) Trading Day
period immediately preceding the Conversion Date. "Trading Day" shall mean any day on which the Common Stock is tradable
for any period on the OTCQB, or on the principal securities exchange or other securities market on which the Common Stock is then
being traded. The
"
Fixed Conversion Price
"
shall mean $0.50. In conjunction with the notes, the Company
issued 300,000 warrants, the warrants vested at time of issuance. The warrants have a term of 3 years, with an exercise price of
$0.10. Under a Black-Scholes valuation the relative fair market value of the warrants at time of issuance was approximately $127,000
and was recognized as a discount on the promissory notes, the company amortized $42,000 as a non-cash interest during the year
ended July 31, 2018. The total principal outstanding and unamortized discount as of July 31, 2018 were $500,000 and $85,000, respectively.
On June 19, 2018, the
Company entered into various Promissory Notes (the "Notes") for $272,000, bearing interest at a rate of 10% per annum,
with maturity date of April 10, 2019. In conjunction with the Notes, the Company issued 240,000 warrants under the promissory notes,
the warrants vested at time of issuance. The warrants have a term of 3 years, with an exercise price of $0.10. Under a Black-Scholes
valuation the relative fair market value of the warrants at time of issuance was approximately $111,000 and was recognized as a
discount on the promissory notes. The company amortized $9,000 as interest expense during the year ended July 31, 2018. The total
principal outstanding and unamortized discount as of July 31, 2018 were $272,000 and $102,000, respectively.
Convertible debt
- derivative
On January 12, 2018, the Company entered
into a securities purchase agreement with Peak One Opportunity Fund, L.P., a Delaware limited partnership ("Peak One").
Under the agreement, Peak One agreed to purchase from us up to $600,000 aggregate principal amount of our convertible debentures
(together the "Debentures" and each individual issuance a "Debenture"), bearing interest at a rate of 0%
per annum, with maturity on the third anniversary of the respective date of issuance. On July 25, 2018, the securities purchase
agreement was amended to increase to $620,000 the aggregate principal amount of the convertible debentures.
The Company issued the
first debenture (the "Debenture") to Peak One on January 17, 2018 in the principal amount of $200,000 for a purchase
price of $180,000 and 0% percent stated interest rate. The Company paid Peak One $6,000 for legal and compliance fees. In addition,
the Company paid $14,400 in other closing costs, these fees were deducted from the proceeds at time of issuance. The Company recorded
these discounts and cost of $40,400 as a discount to the Debenture was amortized to interest expense.
The Debenture provides Peak One with the
option to convert any outstanding balance under the Debenture into shares of Common Stock of the Company at a conversion price
for each share of Common Stock equal to either: (i) if the date of conversion is prior to the date that is 180 days after the issuance
date, $0.50, or (ii) if the date of conversion is on or after the date that is 180 days after the issuance date, the lesser of
(a) $0.50 or (b) at 70% of the lowest closing bid price of the Company's Common Stock during the twenty trading days prior
to conversion, provided, further, that if either the Company is not DWAC operational at the time of conversion or the Common Stock
is traded on the OTC Pink at the time of conversion, then 70% shall automatically adjust to 65% of the lowest closing bid price.
The Company may at its option call for
redemption all or part of the Debentures, with the exception of any portion thereof which is the subject of a previously-delivered
notice of conversion, prior to the maturity date for an amount equal to: (i) if the redemption date is 90 days or less from the
date of issuance, 110% of the sum of the principal amount so redeemed plus accrued interest, if any; (ii) if the redemption date
is greater than or equal to 91 days from the date of issuance and less than or equal to 120 days from the date of issuance, 115%
of the sum of the principal amount so redeemed plus accrued interest, if any; (iii) if the redemption date is greater than or equal
to 121 days from the date of issuance and less than or equal to 50 days from the date of issuance, 120% of the sum of the principal
amount so redeemed plus accrued interest, if any; (iv) if the redemption date is greater than or equal to 151 days from the date
of issuance and less than or equal to 180 days from the date of issuance, 130% of the sum of the principal amount so redeemed plus
accrued interest, if any; and (v) if the redemption date is greater than or equal to 181 days from the date of issuance, 140% of
the sum of the principal amount so redeemed plus accrued interest, if any. During the year ending July 31, 2018, the Company redeemed
$120,000 of the principal outstanding, at a redemption price of $156,000. The Company recognized the redemption price as interest
expense during the period.
F-
23
The Company analyzed
the Debenture for derivative accounting consideration and determined that the embedded conversion option qualified as a derivative
instrument, due to the variable conversion price. Therefore, as of the year ending July 31, 2018, the company recognized derivative
liability of $112,000 at July 31, 2018, of which $80,000 was recorded as debt discount and will be amortized during the term of
the note, and $32,000 was recorded as derivative loss. The total principal balance outstanding as of July 31, 2018 was $80,000.
I
n connection with the execution of the Debenture, we issued 250,000 shares of our common
stock to Peak One, the shares were recorded with a relative fair value of $0, the Company also recorded debt discount of $80,000
and will be amortized to interest expense.
The Company issued a
second debenture (the "Debenture") to Peak One on July 31, 2018 in the principal amount of $220,000 for a purchase
price of $198,000 and 0% percent stated interest rate. The Company paid Peak One $5,000 for legal and compliance fees, these fees
were deducted from the proceeds at time of issuance. The Company recorded these discounts and cost of $22,000 as a discount to
the Debenture and amortized to interest expense.
The Company analyzed
the Debenture for derivative accounting consideration and determined that the embedded conversion option qualified as a derivative
instrument, due to the variable conversion price. As of July 31, 2018, the Company recorded a derivative liability of $189,000
and had an outstanding principal balance of $220,000 I
n connection with the execution of
the Debenture, we issued 130,000 shares of our common stock to Peak One, the shares were recorded with a relative fair value of
$3,627 the Company also recorded debt discount of $192,798 and will be amortized to interest expense.
On May 30, 2018, the
Company entered into a securities purchase agreement with Firstfire Global Opportunities Fund, LLC, a Delaware limited liability
company ("Firstfire"). Under the agreement, we issued Firstfire a $305,556 principal amount of a convertible promissory
note for a cash purchase price of $275,000 ("Promissory note"), bearing interest at a rate of 6% per annum, with maturity
on the first anniversary of the date of issuance. The Company paid Firstfire $2,500 for legal and compliance fees. The Company
recorded the legal fees and other cost for a total of $33,000 as a discount to the Promissory note and they will be amortized over
the term to interest expense. I
n connection with the execution of the securities purchase
agreement, we issued 125,000 shares of our common stock to Firstfire as a commitment fee, the shares were recorded with a
relative fair value of $0, the Company also recorded debt discount of $272,500 and will be amortized to interest expense.
The Promissory note provides Firstfire
with the option to convert at any time on or after the 180th calendar day after the issue date, to convert all or any portion of
the then outstanding and unpaid principal amount and interest under the Promissory note into shares of Common Stock of the Company
at a conversion price for each share of Common Stock equal to the lower of (i) $0.50 (the "Fixed Conversion Price") ,
or (ii) 65% of the lowest closing bid price of the Company's Common Stock during the twenty (20) consecutive trading day
period immediately preceding the trading day that the Company receives a Notice of Conversion (the "Alternate Conversion
Price").
The Company may Prepay at any time prior
to the 180th calendar day after the funding of the Promissory note all or part of the outstanding principal balance, with the exception
of any portion thereof which is the subject of a previously-delivered notice of conversion, prior to the maturity date for an amount
equal to: (i) if the prepayment date is 90 days or less from the date of issuance, 105% of the sum of the principal amount to be
prepaid plus accrued interest, if any; (ii) if the prepayment date is greater than or equal to 91 days from the date of issuance
and less than or equal to 120 days from the date of issuance, 110% of the sum of the principal amount to be prepaid plus accrued
interest, if any; (iii) if the prepayment date is greater than or equal to 121 days from the date of issuance and less than or
equal to 180 days from the date of issuance, 115% of the sum of the principal amount to be prepaid plus accrued interest, if any.
In the event of
default, the note shall become immediately due and paid in full in an amount (the "Default Amount") equal to the principal
amount then outstanding plus accrued interest through the date of full repayment multiplied by 150%. The holder may, at its sole
discretion, determine to accept payment part in Common Stock and part in cash.
F-
24
The Company analyzed the Promissory note
for derivative accounting consideration and determined that the embedded conversion option qualified as a derivative instrument,
due to the variable conversion price. Therefore, as of the year ending July 31, 2018, the company recognized a debt discount of
$272,500 and recorded a $58,000 as a loss in derivative liability. In addition, the Company has a derivative liability of $331,000
at July 31, 2018. As of the year the ended July 31, 2018, the principal balance outstanding was $306,000.
The future principal payments for the Company's
debts is as follows:
FY
Payments
2019
$
1,928,501
2020
890,083
2021
361,924
2022
67,114
2023
23,596
Total Principal Payments
$
3,271,218
NOTE 12 – CAPITAL
LEASES
The Company entered
into two leases for equipment all of which are classified as capital leases. The Company financed the equipment with a leasing
entity. Under the terms of these transactions, assets with a cost of approximately $37,255 and $60,408, leases were financed under
two separate lease agreements as of the May 2018 and June 2018, respectively. The leases are net leases as all of the costs associated
with the assets such as maintenance, insurance and property taxes are for the account of the Company. Under each of these transactions,
the Company can elect to purchase the assets from the lessor at the end of a fixed term. These terms are for 36 months, with the
first lease payments starting June 20, 2018 and July 20, 2018, respectively and monthly lease principal and interest payments of
$1,176 and $1,856, respectively. The Company will own the equipment at the end of the term. The interest rate under the leases
range from 6.65% to 8.50% per annum. The Company has accounted for its repayment obligations under these transactions as capital
lease obligations. The assets are included in Leased Equipment and Net investment in finance leases and the capital lease obligation
is included in Long-term capital lease obligations and current maturities of capital leases on the accompanying Balance Sheet as
of July 31, 2018.
During the year ended July 31, 2018, the
Company made total principal payments of $3,032. The future capital lease payments under the financing agreements are as follows:
Year
Amount
2019
$
36,381
2020
36,381
2021
32,152
Total future payments:
$
104,914
Less: amounts representing interest
$
10,622
Present value of net minimum lease payments
$
94,292
Less current maturities
$
30,465
Long-term capital lease obligation
$
63,827
F-
25
N
OTE 13 – BUSINESS ACQUISITIONS
On December 1, 2017,
Shift8 and Synergy Telecom, Inc., a Delaware corporation ("Synergy"), closed a transaction to acquire all the assets,
assumed all customers, and critical vendor arrangements from Synergy. Shift8 acquired Synergy to increase its customer base and
obtain higher efficiency of its existing infrastructure. Shift8 paid $125,000 upon execution of the agreement, issued 500,000 shares
of common stock with a market value of $175,000, and entered into a promissory note for $125,000 with an effective annual interest
rate of 6% with 5 quarterly payments and a maturity date of February 28, 2019.
The total purchase price was $425,000,
the acquisition was accounted for under the purchase method of accounting, with Digerati identified as the acquirer. Under the
purchase method of accounting, the aggregate amount of consideration assumed by Digerati was allocated to customer contracts acquired,
software licenses, and goodwill based on their fair values as of July 31, 2018.
The following information summarizes the
allocation of the fair values assigned to the assets. The allocation of fair values is based on an extensive analysis and is subject
to changes in the future during the measurement period.
Synergy
Useful life (years)
Customer relatiosnhips
$
40,000
5
License - software
105,000
3
Goodwill
280,000
-
Total Purchase price
$
425,000
The Company incurred approximately $10,000
in costs associated with the acquisition. These included legal, and accounting. The Company expensed these costs during the year
ended July 31, 2018.
Additionally, on May 2, 2018, the Company
closed on the Merger Agreement with T3 Communications, Inc. to increase its customer base and obtain higher efficiency of its existing
infrastructure.
The total purchase price was $3,211,945,
paid in cash upon closing, the acquisition was accounted for under the purchase method of accounting, with the Company identified
as the acquirer. Under the purchase method of accounting, the aggregate amount of consideration assumed by the Company was allocated
to cash, customer contracts acquired, current assets, property plant and equipment and assumed payables based on their estimated
fair values as of May 2, 2018. Allocation of the purchase price is preliminary and based on the best estimates of management.
The allocation of fair values is based
on an extensive analysis and is subject to changes in the future during the measurement period.
(in thousands)
T3
Cash
$
250
Accounts receivable & other current assets
367
Intangible assets and Goodwill
2,835
Property and equipment, net
568
Other Assets
140
Total identifiable net assets
$
4,160
Less: liabilities assumed
(948
)
Total Purchase price
$
3,212
F-
26
The following table summarizes the cost
of amortizable intangible assets related to the acquisition:
Cost
(in thousands)
Useful life (years)
Customer relationships
$
1,480
7
Marketing & Non-compete
800
5
Goodwill
601
-
Total
$
2,881
The Company incurred approximately $160,000
in costs associated with the acquisition. These included legal, and accounting. The Company expensed these costs during the year
ended July 31, 2018.
Proforma
The following is the unaudited proforma
results of operations for both acquisitions for the years ended July 31, 2018 and 2017 as if the acquisition occurred on August
1, 2016. The proforma results of operations are presented for informational purposes only and are not indicative of the results
of operations that would have been achieved if the acquisition had taken place on August 1, 2016, or of results that may occur
in the future.
For the Years Ended
July 31,
2018
2017
Revenue
$
5,674
$
5,729
Loss from operations
8,705
4,785
Net Income (loss)
(3,031
)
944
Earnings (loss) per common shares outstanding - Basic and Diluted
$
(0.34
)
$
0.14
NOTE 14 – NONCONTROLLING
INTEREST
On May 1, 2018, Shift8
Technologies, Inc. ("Shift8") entered into a Stock Purchase Agreement ('SPA"), whereby in an exchange for $250,000,
Shift8 agreed to sell to the buyer 199,900 shares of common stock equivalent to 19.99% of the issued and outstanding common share
of Shift8 Technologies, Inc. The $250,000 of the cash received under this transaction was recognized as an adjustment to the carrying
amount of the noncontrolling interest and as an increase in additional paid-in capital in Shift8. At the option of the Company,
and for a period of five years following the date of the SPA, the 199,900 shares of common stock in Shift8 may be converted into
Common Stock of Digerati at a ratio of 3.4 shares of DTGI Common stock for every one (1) share of Shift8 at any time after the
DTGI Common Stock has a current market price of $1.50 or more per share for 20 consecutive trading days. For the year ending July
31, 2018, the Company accounted for a noncontrolling interest of $57,000. Additionally, one of the buyers serves as President,
CEO and Board Member of T3 Communications, Inc., one of our operating subsidiaries.
F-
27
NOTE 15 – MISCELLANEOUS GAIN
The Company received a tax refund in July
2015. The Company recorded the funds as an accrued liability until such time as it could determine the proper accounting for the
refund. Subsequent to its receipt, management has determined that the Company is the legal owner of the refund which has been recorded
as a miscellaneous gain during fiscal 2017. The refund did not result from taxes paid by the Company and will not be taxed as it
originated from the Internal Revenue Service.
NOTE 16 – LOSS ON DISPOSAL OF
UNPROVEN OIL AND GAS PROPERTIES
On February 29, 2016 Flagship Energy Company
("Flagship"), a wholly-owned subsidiary of Digerati, entered into an Agreement with a Texas-based contract-for-hire oil
and gas operator ("Operator"). Under the Agreement, Flagship utilized the Operator for the drilling, completion and
the initial operations of a shallow oil and gas well in conjunction with the purchase of 100% of Operator's working interest
and 80% of its Net Revenue Interest. Under the Agreement, the Operator agreed to transfer all field-level operations and assign
100% of a certain oil, gas and mineral lease to Flagship upon demand, which included a tract of land located in South Texas. Additionally,
Flagship entered into a Joint Operating Agreement ("JOA") with Operator, whereby the parties agreed to develop the oil
and gas well or wells for the production and retrieval of oil and gas commodities as provided for in the oil, gas and mineral lease.
During the fiscal year ended July 31, 2017
the Company recognized a loss on disposal of unproven oil and gas properties of $248,000 for the total capitalized investment amount
in the oil and gas properties.
NOTE 17 – SUBSEQUENT EVENTS
On August 1, 2018, the
Company secured $40,000 from an accredited investor under a private placement and issued 80,000 shares of its common stock at a
price of $0.50 per share and warrants to purchase an additional 15,000 shares of its common stock at an exercise price of $0.50
per share. We determined that the warrants issued in connection with the private placement were equity instruments and did not
represent derivative instruments.
On October 12, 2018,
the Company entered into a Promissory Note (the "Note") for $25,000, bearing interest at a rate of 8% per annum, with
maturity date of November 12, 2019. In conjunction with the Note, the Company issued 140,000 common shares, the shares vested at
time of issuance. The relative fair market value of the common shares at time of issuance was approximately $31,000 and was recognized
as a discount on the promissory notes, the company will amortize the fair market value as interest expense over the term of the
note.
On October 18, 2018,
the Company entered into a Promissory Note (the "Note") for $25,000, bearing interest at a rate of 8% per annum, with
maturity date of November 18, 2019. In conjunction with the Note, the Company issued 100,000 common shares, the shares vested at
time of issuance. The relative fair market value of the common shares at time of issuance was approximately $25,000 and was recognized
as a discount on the promissory notes, the company will amortize the fair market value as interest expense over the term of the
note.
On October 22, 2018,
the Company entered into a Promissory Note (the "Note") for $50,000, bearing interest at a rate of 8% per annum, with
maturity date of December 31, 2019. The promissory note is secured by a Pledge and Escrow Agreement, whereby the Company agreed
to pledge rights to a collateral due under certain Agreement.
F-
28
DIGERATI TECHNOLOGIES, INC. AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
(In thousands, unaudited)
April 30,
July 31,
2019
2018
ASSETS
CURRENT ASSETS:
Cash and cash equivalents
$
460
$
388
Accounts receivable, net
245
229
Prepaid and other current assets
80
124
Deposits
55
-
Total current assets
840
741
LONG-TERM ASSETS:
Intangible assets, net
2,736
3,046
Property and equipment, net
535
713
Other assets
58
59
Total assets
$
4,169
$
4,559
LIABILITIES AND STOCKHOLDERS' DEFICIT
CURRENT LIABILITIES:
Accounts payable
$
1,173
$
1,177
Accrued liabilities
1,432
893
Current portion of capital lease obligations
32
30
Convertible note payable, current, net $11 and $187, respectively
761
585
Note payable, current, related party
425
126
Note payable, current, net $0 and $0, respectively
1,200
725
Convertible note payable, current, net $345 and $273, respectively
235
33
Deferred income
314
262
Derivative liability
1,303
632
Total current liabilities
6,875
4,463
LONG-TERM LIABILITIES:
Convertible debenture, net $99 and $273, respectively
51
27
Notes payable, related party, net $27 and $38, respectively
147
505
Note payable
-
500
Obligations under capital leases
40
64
Total long-term liabilities
238
1,096
Total liabilities
7,113
5,559
Commitments and contingencies
STOCKHOLDERS' DEFICIT:
Preferred stock, $0.001, 50,000,000 shares authorized,
    50,000 and 0 issued and outstanding, respectively
-
-
Common stock, $0.001, 150,000,000 shares authorized,
    18,876,431 and 12,775,143 issued and outstanding, respectively
19
13
Additional paid in capital
81,764
79,993
Accumulated deficit
(84,434
)
(80,800
)
Other comprehensive income
1
1
Total Digerati's stockholders' deficit
(2,650
)
(793
)
Noncontrolling interest
(294
)
(207
)
Total stockholders' deficit
(2,944
)
(1,000
)
Total liabilities and stockholders' deficit
$
4,169
$
4,559
See
accompanying notes to unaudited consolidated financial statements
F-
29
DIGERATI TECHNOLOGIES, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF OPERATIONS
(In thousands, except per share amounts, unaudited)
Three months ended
April 30,
Nine months ended
April 30,
2019
2018
2019
2018
OPERATING REVENUES:
Cloud-based hosted services
$
1,485
$
196
$
4,493
$
403
Total operating revenues
1,485
196
4,493
403
OPERATING EXPENSES:
Cost of services (exclusive of depreciation and amortization)
770
106
2,322
249
Selling, general and administrative expense
875
332
2,309
830
Stock compensation & warrant expense
345
354
731
1,328
Legal and professional fees
95
68
305
359
Bad debt
-
-
(3
)
-
Depreciation and amortization expense
167
50
505
89
Total operating expenses
2,252
910
6,169
2,855
OPERATING LOSS
(767
)
(714
)
(1,676
)
(2,452
)
OTHER INCOME (EXPENSE):
Gain (loss) on derivative instruments
903
47
(594
)
155
Income tax
(10
)
-
(37
)
-
Interest income (expense)
(376
)
(41
)
(1,414
)
(250
)
Total other income (expense)
517
6
(2,045
)
(95
)
NET LOSS INCLUDING NONCONTROLLING INTEREST
(250
)
(708
)
(3,721
)
(2,547
)
Less: Net loss attributable to the noncontrolling interest
29
-
87
-
NET LOSS
$
(221
)
$
(708
)
$
(3,634
)
$
(2,547
)
Deemed dividend on Series A Convertible preferred stock
(2
)
-
(2
)
-
NET LOSS ATTRIBUTABLE TO DIGERATI'S COMMON SHAREHOLDERS
$
(223
)
$
(708
)
$
(3,636
)
$
(2,547
)
INCOME (LOSS) PER COMMON SHARE - BASIC
$
(0.01
)
$
(0.06
)
$
(0.24
)
$
(0.26
)
INCOME (LOSS) PER COMMON SHARE - DILUTED
$
(0.01
)
$
(0.06
)
$
(0.24
)
$
(0.26
)
WEIGHTED AVERAGE COMMON SHARES OUTSTANDING - BASIC
18,184,442
11,063,326
15,163,082
9,903,152
WEIGHTED AVERAGE COMMON SHARES OUTSTANDING - DILUTED
18,184,442
11,063,326
15,163,082
9,903,152
See
accompanying notes to unaudited consolidated financial statements
F-
30
DIGERATI TECHNOLOGIES, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF STOCKHOLDERS' DEFICIT
Nine-Month Period Ended April 30, 2019
(In thousands, except for share amounts, unaudited)
Equity
    Digerati's Shareholders
Convertible
    Preferred
Common
Additional
Paid-in
Accumulated
Other
Comprehensive
Stockholders
Noncontrolling
Shares
Par
Shares
Par
Capital
Deficit
Income
Equity
Interest
Totals
BALANCE,
    July 31, 2018
-
12,775,143
$
13
$
79,993
$
(80,800
)
$
1
$
(793
)
$
(207
)
$
(1,000
)
Amortization
    of employee stock options
-
-
-
95
-
-
95
-
95
Stock
    issued for AP settlement
-
21,672
-
6
-
-
6
-
6
Stock
    issued for cash
-
-
80,000
-
47
-
-
47
-
47
Stock
    issued, for debt
-
240,000
-
36
-
-
36
-
36
Value
    of warrants issued
-
-
-
79
-
-
79
-
79
Net
    Ioss
-
-
-
-
(914
)
-
(914
)
(27
)
(941
)
BALANCE,
    October 31, 2018
-
-
13,116,815
$
13
$
80,256
$
(81,714
)
$
1
$
(1,444
)
$
(234
)
$
(1,678
)
Amortization
    of employee stock options
-
-
-
41
-
-
41
-
41
Stock
    issued for services, to employees
-
635,156
1
113
-
-
114
-
114
Stock
    issued for services
-
200,000
-
70
-
-
70
-
70
Stock
    issued for AP settlement
-
56,327
-
18
-
-
18
-
18
Stock
    issued for cash
-
-
258,621
-
75
-
-
75
-
75
Stock
    issued, for debt
-
28,000
-
-
-
-
-
-
-
Stock
    issued for convertible debt
-
1,642,020
2
225
-
-
227
-
227
Stock
    issued, extension of debt
-
105,000
-
24
-
-
24
-
24
Value
    of warrants issued
-
-
-
16
-
-
16
-
16
Net
    Ioss
-
-
-
-
(2,499
)
-
(2,499
)
(31
)
(2,530
)
BALANCE,
    January 31, 2019
-
-
16,041,939
$
16
$
80,838
$
(84,213
)
$
1
$
(3,358
)
$
(265
)
$
(3,623
)
Amortization
    of employee stock options
-
-
-
153
-
-
153
-
153
Stock
    issued for services
-
725,000
1
178
-
-
179
-
179
Stock
    issued for AP settlement
-
60,715
-
13
-
-
13
-
13
Stock
    issued for cash
-
-
600,000
1
149
-
-
150
-
150
Preferred
    stock issued for cash
50,000
-
-
-
50
-
-
50
-
50
Stock
    issued for convertible debt
-
1,288,777
1
360
-
-
361
-
361
Stock
    issued, extension of debt
-
85,000
-
16
-
-
16
-
16
Stock
    issued, exercise of warrants
-
75,000
-
7
-
-
7
-
7
Beneficial
    conversion feature on convertible preferred stock
-
-
-
2
-
-
2
-
2
Deemed
    dividend on Series A Convertible preferred stock
-
-
-
(2
)
-
-
(2
)
-
(2
)
Net
    loss
-
-
-
-
(221
)
-
(221
)
(29
)
(250
)
BALANCE,
    April 30, 2019
50,000
-
18,876,431
$
19
$
81,764
$
(84,434
)
$
1
$
(2,650
)
$
(294
)
$
(2,944
)
See accompanying notes to consolidated financial statements
F-
31
DIGERATI TECHNOLOGIES, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF STOCKHOLDERS' DEFICIT
Nine-Month Period Ended April 30, 2018
(In thousands, except for share amounts, unaudited)
Equity
    Digerati's Shareholders
Convertible
    Preferred
Common
Additional
Paid-in
Accumulated
Other
Comprehensive
Stockholders
Noncontrolling
Shares
Par
Shares
Par
Capital
Deficit
Income
Equity
Interest
Totals
BALANCE,
    July 31, 2017
-
8,386,056
$
8
$
76,986
$
(77,637
)
$
1
$
(642
)
$
-
$
(642
)
Amortization
    of employee stock options
-
-
-
51
-
-
51
-
51
Stock
    issued for services
-
12,500
-
4
-
-
4
-
4
Stock
    issued for cash
-
560,000
1
280
-
-
281
-
281
Net
    loss
-
-
-
-
(370
)
-
(370
)
-
(370
)
BALANCE,
    October 31, 2017
-
-
8,958,556
$
9
$
77,321
$
(78,007
)
$
1
$
(676
)
$
-
$
(676
)
Amortization
    of employee stock options
-
-
-
72
-
-
72
-
72
Stock
    issued for services, to employees
-
1,160,225
1
446
-
-
447
-
447
Stock
    issued for services
-
100,000
-
40
-
-
40
-
40
Stock
    issued for convertible debt
-
250,000
-
-
-
-
-
-
-
Stock
    issued for Acquisition
-
500,000
1
175
-
-
176
-
176
Value
    of warrants issued
-
-
-
283
-
-
283
-
283
Net
    loss
-
-
-
-
(1,468
)
-
(1,468
)
-
(1,468
)
BALANCE,
    January 31, 2018
-
-
10,968,781
$
11
$
78,337
$
(79,475
)
$
1
$
(1,126
)
$
-
$
(1,126
)
Amortization
    of employee stock options
-
-
-
82
-
-
82
-
82
Stock
    issued for cash
-
160,000
-
80
-
-
80
-
80
Value
    of warrants issued
-
-
-
272
-
-
272
-
272
Net
    loss
-
-
-
-
(709
)
-
(709
)
-
(709
)
BALANCE,
    April 30, 2018
-
-
11,128,781
$
11
$
78,771
$
(80,184
)
$
1
$
(1,401
)
$
-
$
(1,401
)
See
accompanying notes to consolidated financial statements
F-
32
DIGERATI
TECHNOLOGIES, INC. AND SUBSIDIARIES
CONSOLIDATED
STATEMENTS OF CASH FLOWS
(In
thousands, unaudited)
Nine months ended
April 30,
2019
2018
CASH FLOWS FROM OPERATING ACTIVITIES:
Net loss
$
(3,721
)
$
(2,547
)
Adjustments to reconcile net loss to cash used in by operating activities:
Depreciation and amortization
505
89
Stock compensation and warrant expense
716
1,328
Bad debt recovery
(3
)
-
Loss on AP settled with stock
5
-
Interest expense from stock issued for debt extension
24
-
Amortization of debt discount
959
242
Loss (Gain) on derivative liabilities
594
(155
)
Changes in operating assets and liabilities:
Accounts receivable
(13
)
7
Escrow deposit related to acquisition
(55
)
(1,495
)
Prepaid expenses and other current assets
45
(28
)
Accounts payable
54
106
Accrued expenses
539
115
Deferred income
52
-
Net cash provided (used in) operating activities
(299
)
(2,338
)
CASH FLOWS FROM INVESTING ACTIVITIES:
Acquisition of VoIP assets
-
(125
)
Cash paid in acquisition of equipment
(43
)
-
Net cash used in investing activities
(43
)
(125
)
CASH FLOWS FROM FINANCING ACTIVITIES:
Proceeds from sale of stock and warrants
322
360
Borrowings from convertible debt, net of original issuance cost and discounts
509
159
Borrowings from related party note, net
25
-
Borrowings from 3rd party promissory notes, net
100
2,233
Principal payments on convertible notes, net
(301
)
-
Principal payments on related party notes, net
(94
)
-
Principal payments on 3rd party promissory notes, net
(125
)
(235
)
Principal payment on financing leases
(22
)
-
Net cash provided by financing activities
414
2,517
INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS
72
54
CASH AND CASH EQUIVALENTS, beginning of period
388
673
CASH AND CASH EQUIVALENTS, end of period
$
460
$
727
SUPPLEMENTAL DISCLOSURES:
Cash paid for interest
$
355
$
7
Income tax paid
$
-
$
-
SUPPLEMENTAL DISCLOSURES OF NON-CASH INVESTING AND FINANCING ACTIVITIES
Debt discount from derivative liabilities
$
509
$
-
Debt discount from warrants issued with debt
$
38
$
-
Debt discount from common stock issued with debt
$
36
$
-
Common Stock issued for debt conversion
$
155
$
-
Derivative liability resolved to APIC due to debt conversion
$
432
$
-
Deemed dividend on Series A Convertible preferred stock
$
2
$
-
Common Stock issued for debt extension
$
17
$
-
See accompanying notes to unaudited consolidated financial statements
F-
33
DIGERATI
TECHNOLOGIES, INC. AND SUBSIDIARIES
NOTES
TO CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited)
NOTE
1 – BASIS OF PRESENTATION
The
accompanying unaudited interim consolidated financial statements of Digerati Technologies, Inc. ("we;" "us,"
"our," or the "Company") have been prepared in accordance with accounting principles generally accepted in
the United States of America and the rules of the United States Securities and Exchange Commission. In the opinion of management,
these interim financial statements contain all adjustments, consisting of normal recurring adjustments necessary for a fair presentation
of financial position and the results of operations for the interim periods presented. The results of operations for interim periods
are not necessarily indicative of the results to be expected for the full year. Notes to the consolidated financial statements,
which would substantially duplicate the disclosure contained in the audited consolidated financial statements for the year ended
July 31, 2018 contained in the Company's Form 10-K filed on November 16, 2018 have been omitted.
Revenue
Recognition
On
August 1, 2018, we adopted Topic 606 using the modified retrospective method applied to those contracts which were not completed
as of August 1, 2018. Results for reporting periods beginning after August 1, 2018 are presented under Topic 606, while prior
period amounts are not adjusted and continue to be reported in accordance with our historic accounting under Topic 605. There
was no impact to the opening balance of accumulated deficit or revenues for the nine months ended April 30, 2019 as a result of
applying Topic 606.
The
Company recognizes cloud-based hosted services revenue, mainly from subscription services for its cloud telephony applications
that includes hosted IP/PBX services, SIP trunking, call center applications, auto attendant, voice and web conferencing, call
recording, messaging, voicemail to email conversion, integrated mobility applications that are device and location agnostic, and
other customized applications. Other services include enterprise-class data and connectivity solutions through multiple broadband
technologies including cloud WAN or SD-WAN (Software-defined Wide Area Network), fiber, and Ethernet over copper. We also offer
remote network monitoring, data backup and disaster recovery services. The Company applies a five-step approach in determining
the amount and timing of revenue to be recognized: (1) identifying the contract with a customer, (2) identifying the performance
obligations in the contract, (3) determining the transaction price, (4) allocating the transaction price to the performance obligations
in the contract and (5) recognizing revenue when the performance obligation is satisfied. Substantially all of the Company's
revenue is recognized at the time control of the products transfers to the customer.
Service Revenue
Service
revenue from subscriptions to the Company's cloud-based technology platform is recognized over time on a ratable basis over the
contractual subscription term beginning on the date that the platform is made available to the customer. Payments received in
advance of subscription services being rendered are recorded as a deferred revenue. Usage fees, either bundled or not bundled,
are recognized when the Company has a right to invoice. Professional services for configuration, system integration, optimization,
customer training and/or education are primarily billed on a fixed-fee basis and are performed by the Company directly. Alternatively,
customers may choose to perform these services themselves or engage their own third-party service providers. Professional services
revenue is recognized over time, generally as services are activated for the customer.
Product
Revenue
The
Company recognizes product revenue for telephony equipment at a point in time, when transfer of control has occurred, which is
generally upon delivery. Sales returns are recorded as a reduction to revenue estimated based on historical experience.
F-
34
Disaggregation of Revenue
Summary
of disaggregated revenue is as follows (in thousands):
Three
    months ended
April 30,
Nine
    months ended
April 30,
2019
2018
2019
2018
Service
    revenue
$
1,455
$
189
$
4,340
$
373
Product
    revenue
30
7
153
30
Total
    operating revenues
$
1,485
$
196
$
4,493
$
403
Contract Assets
Contract assets are recorded for those parts of the
contract consideration not yet invoiced but for which the performance obligations are completed. The revenue is recognized when
the customer receives services or equipment for a reduced consideration at the onset of an arrangement; for example, when the
initial month's services or equipment are discounted. Contract assets are included in prepaid and other current assets in the
consolidated balance sheets, depending on if their reduction is recognized during the succeeding 12-month period or beyond. Contract
assets as of April 30, 2019 and July 31, 2018, were $20,558 and $12,155, respectively.
Deferred Income
Deferred income represents billings or payment received
in advance of revenue recognition and is recognized upon transfer of control. Balances consist primarily of annual plan subscription
services, for services not yet provided as of the balance sheet date. Deferred revenues that will be recognized during the succeeding
12-month period are recorded as current deferred revenues in the consolidated balance sheets, with the remainder recorded as other
noncurrent liabilities in the consolidated balance sheets. Deferred income as of April 30, 2019 and July 31, 2018, were $314,000
and $262,000, respectively.
Costs to Obtain a Customer Contract
Sales commissions are paid upon collections of related
revenue and are expensed during the same period. Sales commissions for the nine months ended April 30, 2019 and the nine months
ended April 30, 2018, were $39,828 and $25,717, respectively.
NOTE
2 – GOING CONCERN
Financial
Condition
Digerati's
consolidated financial statements for the nine months ending April 30, 2019 have been prepared on a going concern basis, which
contemplates the realization of assets and the settlement of liabilities in the normal course of business. Since the Company's
inception in 1993, Digerati has incurred net losses and accumulated a deficit of approximately $84,434,000 and a working capital
deficit of approximately $6,035,000 which raises doubt about Digerati's ability to continue as a going concern.
Management
Plans to Continue as a Going Concern
Management
believes that current available resources will not be sufficient to fund the Company's operations over the next 12 months.
The Company's ability to continue to meet its obligations and to achieve its business objectives is dependent upon, among
other things, raising additional capital or generating sufficient revenue in excess of costs. At such time as the Company requires
additional funding, the Company will seek to secure such additional funding from various possible sources, including the public
equity market, private financings, sales of assets, collaborative arrangements and debt. If the Company raises additional capital
through the issuance of equity securities or securities convertible into equity, stockholders will experience dilution, and such
securities may have rights, preferences or privileges senior to those of the holders of common stock or convertible senior notes.
If the Company raises additional funds by issuing debt, the Company may be subject to limitations on its operations, through debt
covenants or other restrictions. If the Company obtains additional funds through arrangements with collaborators or strategic
partners, the Company may be required to relinquish its rights to certain technologies. There can be no assurance that the Company
will be able to raise additional funds or raise them on acceptable terms. If the Company is unable to obtain financing on acceptable
terms, it may be unable to execute its business plan, the Company could be required to delay or reduce the scope of its operations,
and the Company may not be able to pay off its obligations, if and when they come due.
F-
35
The
Company will continue to work with various funding sources to secure additional debt and equity financings. However, Digerati
cannot offer any assurance that it will be successful in executing the aforementioned plans to continue as a going concern.
Digerati's
consolidated financial statements as of April 30, 2019 do not include any adjustments that might result from the inability to
implement or execute Digerati's plans to improve our ability to continue as a going concern.
NOTE
3 – INTANGIBLE ASSETS
Below
are summarized changes in intangible assets at April 30, 2019 and July 31, 2018:
Gross
Carrying
Accumulated
Net Carrying
April 30, 2019
Value
Amortization
Amount
NetSapiens - license, 10 years
$
150,000
$
(150,000
)
$
-
Customer relationships, 5 years
40,000
(10,666
)
29,334
Customer relationships, 7 years
1,480,000
(223,224
)
1,256,776
Marketing & Non-compete, 5 years
800,000
(160,000
)
640,000
Total Define-lived Assets
2,470,000
(543,890
)
1,926,110
Goodwill, Indefinite
809,828
-
809,828
Balance, April 30, 2019
$
3,279,828
$
(543,890
)
$
2,735,938
Gross
Carrying
Accumulated
Net Carrying
July 31, 2018
Value
Amortization
Amount
NetSapiens - license, 10 years
$
150,000
$
(150,000
)
$
-
Customer relationships, 5 years
40,000
(4,667
)
35,333
Customer relationships, 7 years
1,480,000
(64,652
)
1,415,348
Marketing & Non-compete, 5 years
800,000
(40,000
)
760,000
Total Define-lived Assets
2,470,000
(259,319
)
2,210,681
Goodwill, Indefinite
834,828
-
834,828
Balance, July 31, 2018
$
3,304,828
$
(259,319
)
$
3,045,509
Total
amortization expense for the periods ended April 30, 2019 and 2018 was approximately $284,571 and $15,000, respectively. Additional
details on intangible assets are disclosed in the Company's Form 10-K filed on November 16, 2018.
F-
36
NOTE
4 – STOCK-BASED COMPENSATION
In
November 2015, Digerati adopted the Digerati Technologies, Inc. 2015 Equity Compensation Plan (the "Plan"). The Plan
authorizes the grant of up to 7.5 million stock options, restricted common shares, non-restricted common shares and other awards
to employees, directors, and certain other persons. The Plan is intended to permit Digerati to retain and attract qualified individuals
who will contribute to the overall success of Digerati. Digerati's Board of Directors determines the terms of any grants
under the Plan. Exercise prices of all stock options and other awards vary based on the market price of the shares of common stock
as of the date of grant. The stock options, restricted common stock, non-restricted common stock and other awards vest based on
the terms of the individual grant.
During
the nine months ended April 30, 2019, we issued:
●
635,155
common shares to various employees as part of the Company's Non-Standardized profit-sharing plan contribution. The Company
recognized stock-based compensation expense of approximately $115,000 equivalent to the value of the shares calculated based on
the share's closing price at the grant dates.
●
100,000
options to purchase common shares to a member of the Board of Directors with an exercise price of $0.18 per share and a term of
5 years. The options vest equally over a period of one year. The options have a fair market value of $11,406.
●
1,725,000
options to purchase common shares to members of the Management team with an exercise price of $0.19 per share and a term of 5
years. The options vest equally over a period of one year. The options have a fair market value of $217,263.
The
fair market value of all options issued was determined using the Black-Scholes option pricing model which used the following assumptions:
Expected dividend yield
0.00
%
Expected stock price volatility
178.79% - 190.27
%
Risk-free interest rate
2.55% - 2.73
%
Expected term
1.0 year
Digerati
recognized approximately $403,000 and $585,000 in stock-based compensation expense to employees during the nine months ended April
30, 2019 and 2018, respectively. Unamortized compensation cost totaled $388,732 and $338,000 at April 30, 2019 and April 30, 2018,
respectively.
A
summary of the stock options as of April 30, 2019 and July 31, 2018 and the changes during the nine months ended April 30, 2019
and July 31,2018:
Weighted-average
Weighted-average
remaining
contractual
Options
exercise price
term (years)
Outstanding at July 31, 2018
3,415,000
$
0.33
4.58
Granted
1,825,000
$
0.19
4.79
Exercised
-
-
-
Forfeited and cancelled
-
-
-
Outstanding at April 30, 2019
5,240,000
$
0.28
3.81
Exercisable at April 30, 2019
3,156,341
$
0.30
3.38
The
aggregate intrinsic value (the difference between the Company's closing stock price on the last trading day of the nine
months and the exercise price, multiplied by the number of in-the-money options) of the 5,240,000 and 3,415,000 stock options
outstanding at April 30, 2019 and July 31, 2018 was $55,750 and $706,372, respectively.
The
aggregate intrinsic value of 3,156,341 and 2,006,111 stock options exercisable at April 30, 2019 and July 31, 2018 was $12,156
and $587,389, respectively.
F-
37
NOTE
5 – WARRANTS
During
the nine months ended April 30, 2019, the Company issued the following warrants:
In
August 2018, Digerati secured $40,000 from an accredited investor under a private placement and issued 80,000 shares of its common
stock at a price of $0.50 per share and warrants to purchase an additional 15,000 shares of its common stock at an exercise price
of $0.50 per share. We determined that the warrants issued in connection with the private placement were equity instruments and
did not represent derivative instruments. The Company adopted a sequencing policy and determined that the warrants with fixed
exercise price were excluded from derivative consideration.
In
October 2018, Digerati issued 200,000 warrants under an extension of payments to existing promissory notes, with a combined current
principal balance of $75,000, the warrants vested at time of issuance. The warrants have a term of 3 years, with an exercise price
of $0.10. Under a Black-Scholes valuation the relative fair market value of the warrants at time of issuance was approximately
$38,000 and was recognized as a discount on the promissory note, the company will amortize the fair market value as interest expense
over 3 months. The Company adopted a sequencing policy and determined that the warrants with fixed exercise price were excluded
from derivative consideration.
In
January 2019, Digerati cancelled 260,000 warrants with an exercise price of $0.15. Additionally, the Company issued 260,000 common
shares to replace these warrants, in conjunction with two promissory notes with a principal balance of $50,000, in addition at
the time of issuance we recognized a discount of $36,000.
In
February 2019, the Company secured $50,000 from accredited investors under a private placement and issued 50,000 shares of Series
A Convertible Preferred Stock at an conversion price of $0.30 per share and warrants to purchase an additional 100,000 shares
of its common stock at an exercise price of $0.20 per share. We determined that the warrants issued in connection with the private
placement were equity instruments and did not represent derivative instruments. The Company adopted a sequencing policy and determined
that the warrants with fixed exercise price were excluded from derivative consideration.
In
February 2019, the Company received $1,500 for the exercise of 15,000 warrants, with an exercise price of $0.10 per warrant.
In
March 2019, the Company received $6,000 for the exercise of 60,000 warrants, with an exercise price of $0.10 per warrant.
The
fair market value of all warrants issued was determined using the Black-Scholes option pricing model which used the following
assumptions:
Expected dividend yield
0.00
%
Expected stock price volatility
153.99% - 237.00
%
Risk-free interest rate
2.05% -2.93
%
Expected term
3.0 - 5.0 years
A
summary of the warrants as of April 30, 2019 and July 31, 2018 and the changes during the nine months ended April 30, 2019 and
July 31, 2018 are presented below:
Weighted-average
Weighted-average
remaining
contractual
Warrants
exercise price
term (years)
Outstanding at July 31, 2018
2,370,000
$
0.28
2.90
Granted
315,000
$
0.15
2.65
Exercised
(75,000
)
$
0.10
2.15
Forfeited and cancelled
(260,000
)
$
0.15
3.75
Outstanding at April 30, 2019
2,350,000
$
0.34
2.34
Exercisable at April 30, 2019
2,050,000
$
0.25
2.21
F-
38
The
aggregate intrinsic value (the difference between the Company's closing stock price on the last trading day of the period
and the exercise price, multiplied by the number of in-the-money warrants) of the 2,350,000 and 2,370,000 warrants outstanding
at April 30, 2019 and July 31, 2018 was $150,880 and $607,557, respectively.
The
aggregate intrinsic value of 2,050,000 and 2,070,000 warrants exercisable at April 30, 2019 and July 31, 2018 was $150,880 and
$597,927, respectively.
In
December 2017, Digerati issued 100,000 warrants to a consultant for services, the warrants vested at time of issuance. The warrants
have a term of 5 years, with an exercise price of $0.50. Under a Black-Scholes valuation the fair market value of the warrants
at time of issuance was approximately $49,000, the company will amortize the fair market value as warrant expense over 12 months.
Additionally, Digerati committed to issue 100,000 warrants if the Company's stock price traded at $0.75 per share for 10
consecutive days, to issue 100,000 warrants if the Company's stock price traded at $1.00 per share for 10 consecutive days,
and to issue 100,000 warrants if the Company's stock price traded at $1.25 per share for 10 consecutive days. Under a Black-Scholes
valuation the fair market value of the warrants at time of issuance was approximately $143,000, the company will amortize the
fair market value as warrant expense over 12 months. During the nine months ended April 30, 2019 and 2018, the Company amortized
$64,000 and $0, respectively in stock-based compensation expense related to these warrants. Unamortized warrant expense totaled
$0 and $0, respectively as of April 30, 2019 and 2018.
NOTE
6 – DEBT
Non-convertible
- debt
On
December 1, 2017, Shift8 Networks, Inc., dba, T3 Communications ("T3") and Synergy Telecom, Inc., a Delaware corporation
("Synergy"), closed a transaction to acquire all the assets, assumed all customers, and critical vendor arrangements
from Synergy. In conjunction with the transaction, T3 entered into a promissory note for $125,000 with an effective annual interest
rate of 6% with 5 quarterly payments and a maturity date of February 28, 2019. The note holder agreed to extend three of the quarterly
payment until March 31, 2019. During the period ended April 30, 2019 the Company paid in full the principal outstanding balance
of $75,000 and accrued interest of $3,105.
On
April 30, 2018, T3 entered into a secured promissory note for $650,000 with an effective annual interest rate of 0% and a maturity
date of May 14, 2018, provided, however, the Maturity Date will automatically be extended by one (1) additional period of thirty
(30) days, until June 14, 2018. In addition, T3 entered into a Security Agreement, whereby T3 agreed to pledge one third of the
outstanding shares of its Florida operations, T3 Communications, Inc., the secured interest will continue until the principal
balance is paid in full. Furthermore, a late fee of $3,000 per calendar week will be accessed beginning on May 15, 2018 and will
continue until he principal balance is paid in full. The lender agreed to extend the maturity date until July 31, 2019, we are
currently paying a $3,000 per week late fee. As of April 30, 2019, the outstanding principal balance was $650,000.
On
April 30, 2018, T3 entered into a credit facility under a secured promissory note of $500,000, interest payment for the first
twenty-three months with a balloon payment on the twenty-fourth month and a maturity date of April 30, 2020. Collateralized by
T3's accounts receivables and with an effective annual interest rate of prime plus 5.25%, adjusted quarterly on the first day
of each calendar quarter. However, the rate will never be less than 9.50% per annum. In the event of default, the interest rate
will be the maximum nonusurious rate of interest per annum permitted by whichever of applicable United States federal law or Louisiana
law permits the higher interest rate. T3 agreed to pay the lender a commitment fee of 1.00% upon payment of the first interest
payment under the credit facility and 1.00% on the first anniversary of the credit facility. In addition, T3 agreed to pay a monitoring
fee of 0.33% of the credit facility, payable in arrears monthly. T3 also agreed to pay an over-advance fee of 3.00% of the amount
advanced in excess of the borrowing base or maximum amount of the credit facility, payable in arrears monthly. T3 is required
to maintain the following financial covenants: 1) A consolidated debt service coverage ratio, as of the last day of each fiscal
quarter, of at least 1.25 to 1.00, 2) A fixed charge coverage ratio, as of the last day of each fiscal quarter, of at least 1.25
to 1.00, and 3) A tangible net worth, at all times of at least $100,000. As of April 30, 2019, the outstanding principal balance
was $500,000.
F-
39
On
October 12, 2018, the Company issued an unsecured promissory note for $25,000, bearing interest at a rate of 8% per annum, with
maturity date of November 12, 2018, subsequently the maturity date was extended to December 10, 2018. In conjunction with the
promissory note, the Company issued 140,000 common shares, the shares vested at time of issuance, these shares replaced previously
issued warrants with an exercise price of $0.15, therefore the exercise price of $21,000 was recognized as a discount on the promissory
note. On December 10, 2018, the Company paid in full the principal amount of $25,000 and accrued interest of $323. In addition,
the Company amortized $21,000 of the debt discount as interest expense related to the note.
On
October 18, 2018, the Company issued an unsecured promissory note for $25,000, bearing interest at a rate of 8% per annum, with
maturity date of November 18, 2018. In conjunction with the promissory note, the Company issued 100,000 common shares, the shares
vested at time of issuance, these shares replace previously issued warrants with an exercise price of $0.15, therefore the exercise
price of $15,000 was recognized as a discount on the promissory note. On November 16, 2018, the Company paid in full the principal
amount of $25,000 and accrued interest of $159. In addition, the Company amortized $15,000 of the debt discount as interest expense
related to the note.
On
October 22, 2018, the Company issued a secured promissory note for $50,000, bearing interest at a rate of 8% per annum, with maturity
date of December 31, 2018. The promissory note is secured by a Pledge and Escrow Agreement, whereby the Company agreed to pledge
rights to a collateral due under certain Agreement. In June 2019, the maturity date was extended to July 31, 2019. As of April
30, 2019, the outstanding principal balance was $50,000.
Notes
payable, related party
On
April 30, 2018, T3 entered into a convertible secured promissory note for $525,000 with an effective annual interest rate of 8%
and a maturity date of April 30, 2020. With a principal payment of $100,000 due on June 1, 2018 and a principal payment of $280,823
due on April 30, 2020. Payment are based on a 60-month repayment schedule. At any time while this Note is outstanding, but only
upon: (i) the occurrence of an Event of Default under the Note or the Pledge and Escrow Agreement; or (ii) mutual agreement between
the Borrower and the Holder, the Holder may convert all or any portion of the outstanding principal, accrued and unpaid interest,
Premium, if applicable, and any other sums due and payable hereunder (such total amount, the "Conversion Amount")
into shares of Common Stock (the "Conversion Shares") at a price equal to: (i) the Conversion Amount (the numerator);
divided by
(ii) a conversion price of $1.50 per share of Common Stock, which price shall be indicated in the conversion
notice (in the form attached hereto as Exhibit "B", the "Conversion Notice") (the denominator) (the "Conversion
Price"). The Holder shall submit a Conversion Notice indicating the Conversion Amount, the number of Conversion Shares issuable
upon such conversion, and where the Conversion Shares should be delivered. The promissory note is secured by a Pledge and Escrow
Agreement, whereby T3 agreed to pledge 51% of the securities owned in its Florida operations, T3 Communications, Inc., until the
principal payment is paid in full. In conjunction with the promissory note, the Company issued 3-year warrants to purchase 75,000
shares of common stock at an exercise price of $0.50 per share. Under a Black-Scholes valuation the relative fair market value
of the warrants at time of issuance was approximately $19,000 and was recognized as a discount on the promissory note, the company
amortized $4,879 as interest expense during the nine months ended April 30, 2019. During the nine months ended April 30, 2019,
the Company paid $54,000 of the principal balance. The total principal outstanding and unamortized discount as of April 30, 2019
were $352,000 and $8,814, respectively. One of the note holders also serves as President, CEO and Board Member of T3 Communications,
Inc., one of our operating subsidiaries.
On
May 1, 2018, T3 entered into a secured promissory note for $275,000 with an effective annual interest rate of 0% with an interest
and principal payment of $6,000 per month and shall continue perpetuity until the entire principal amount is paid in full. The
promissory note is guaranteed to the lender by 15% of the stock owned by T3 in its Florida operations, T3 Communications, Inc.,
the secured interest will continue until the principal balance is paid in full. In conjunction with the promissory note, the Company
issued 3-year warrants to purchase 100,000 shares of common stock at an exercise price of $0.50 per share. Under a Black-Scholes
valuation the relative fair market value of the warrants at time of issuance was approximately $27,000 and was recognized as a
discount on the promissory note, the company amortized $5,934 as interest expense during the nine months ended April 30, 2019.
During the nine months ended April 30, 2019, the Company paid $39,000 of the principal balance. The total principal outstanding
and unamortized discount as of April 30, 2019 were $223,000 and $18,490, respectively. The note holder also serves as Board Member
of T3 Communications, Inc., one of our operating subsidiaries.
F-
40
On
December 7, 2018, Digerati entered into an unsecured promissory note for $28,000 with an effective annual interest rate of 0%,
and a maturity date of January 21, 2019. Subsequently, the maturity date was extended to May 06, 2019. In conjunction with the
note, the Company issued 28,000 shares of Common Stock, the shares vested at time of issuance. Under a Black-Scholes valuation
the relative fair market value of the shares of Common Stock at time of issuance was approximately $3,000 and was recognized as
a discount on the promissory note, the company amortized $3,000 as interest expense during the nine months ended April 30, 2019.
The total principal outstanding and unamortized discount as of April 30, 2019 were $28,000 and $0, respectively. On May 5, 2019,
the Company paid in full the principal amount of $28,000 and accrued interest of $1,334. The note holder also serves as Board
Member of T3 Communications, Inc., one of our operating subsidiaries.
Convertible
debt non-derivative
In
March 2018, the Company entered into two (2) Promissory Notes (the "Notes") for $250,000 each, bearing interest at a
rate of 12% per annum. The Notes have a maturity date of September 15, 2018, provided, however, the Company shall have the right
to request that the maturity date to be extended by one (1) additional period of ninety (90) days, until December 14, 2018. The
Notes are payable every month, commencing April 15, 2018, in monthly payments of interest only and a single payment of the principal
amount outstanding plus accrued interest on September 15, 2018. The Company agreed to repay the Notes from the proceeds from the
Company's current private placement. As proceeds from the Private Placement are received, the Company shall direct all funds to
the Note Holders until the principal amount outstanding and accrued interest are paid in full. In addition, on March 15, 2018,
the Company entered into a Note Conversion Agreement (the "Agreement") with the Note holders, whereby, the holders may
elect to convert up to 50% of the principal amount outstanding on the Notes into Common Stock of Digerati at any time after 90
days of funding the Notes. The Conversion Price shall be the greater of: (i) the Variable Conversion Price (as defined herein)
or (ii) the Fixed Conversion Price (as defined herein). The
"
Variable Conversion Price
"
shall be equal
to the average closing price for Digerati's Common Stock (the "
Shares
") for the ten (10) Trading Day
period immediately preceding the Conversion Date. "Trading Day" shall mean any day on which the Common Stock is tradable
for any period on the OTCQB, or on the principal securities exchange or other securities market on which the Common Stock is then
being traded. The
"
Fixed Conversion Price
"
shall mean $0.50. In conjunction with the notes, the Company
issued 300,000 warrants, the warrants vested at time of issuance. The warrants have a term of 3 years, with an exercise price
of $0.10. Under a Black-Scholes valuation the relative fair market value of the warrants at time of issuance was approximately
$127,000 and was recognized as a discount on the promissory notes, the company amortized $84,433 as a non-cash interest during
the period ended April 30, 2019. The total principal outstanding and unamortized discount as of April 30, 2019 were $500,000 and
$0, respectively. On December 27, 2018, the Company entered into an Amendment to the Loan Agreements, under the amendments the
note holders agreed to extend the maturity date until September 14, 2019. In addition, as part of the amendment, the Company agreed
to modify the
"Fixed Conversion Price"
to $0.35, all other terms under the Promissory Notes remained the
same. We accounted for the extensions to the Notes as debt modifications and not extinguishment of debt since the changes in fair
value are not substantial in accordance with ASC 470-50.
On
June 19, 2018, the Company entered into various Promissory Notes (the "Notes") for $272,000, bearing interest at a rate
of 10% per annum, with maturity date of April 10, 2019. In conjunction with the Notes, the Company issued 255,000 warrants under
the promissory notes, the warrants vested at time of issuance. The warrants have a term of 3 years, with an exercise price of
$0.10. Under a Black-Scholes valuation the relative fair market value of the warrants at time of issuance was approximately $119,000
and was recognized as a discount on the promissory notes. On March 29, 2019, the Company entered into an Amendment to the Promissory
Notes, under the amendments the note holders agreed to extend the maturity date until June 30, 2019. In addition, as part of the
amendments, the Company agreed to issue 85,000 shares of common stock. The shares were recorded as debt discount and amortized
over the remaining term of the notes. The company amortized $115,548 as interest expense during the nine months ended April 30,
2019. The total principal outstanding and unamortized discount as of April 30, 2019 were $272,000 and $11,429, respectively.
F-
41
Convertible
debt - derivative
On
August 2, 2018, the Company redeemed $40,000 of the principal outstanding under the convertible debenture, dated January 12, 2018
with Peak One Opportunity Fund, L. P., at a redemption price of $56,000. The Company recognized the deference between the redemption
price and principal balance paid as interest expense of $16,000. On November 26, 2018, the Company issued 139,860 shares of common
stock for the conversion of $20,000 of the principal outstanding under the convertible debenture. On December 20, 2018, the Company
issued 356,007 shares of common stock for the conversion of $20,000 of the principal outstanding under the convertible debenture.
In addition, during the nine months ended April 30, 2019, the Company amortized $80,000 of the debt discount as interest expense
related to the convertible debenture. The total principal outstanding and unamortized discount as of April 30, 2019 were $0 and
$0, respectively.
On
February 12, 2019, the Company issued 475,511 shares of common stock for the conversion of $20,000 of the principal outstanding
under the convertible debenture. On March 8, 2019, the Company issued 356,633 shares of common stock for the conversion of $25,000
of the principal outstanding under the convertible debenture. On April 9, 2019, the Company issued 356,633 shares of common stock
for the conversion of $25,000 of the principal outstanding under the convertible debenture. During the nine months ended April
30, 2019, the Company amortized $94,207 of the debt discount as interest expense related to the convertible debenture dated July
31, 2018 with Peak One Opportunity Fund L.P. The total principal outstanding and unamortized discount as of April 30, 2019 were
$150,000 and $98,592, respectively.
During
the nine months ended April 30, 2019, the Company amortized $272,500 of the debt discount as interest expense related to the convertible
note dated May 30, 2018 with Firstfire Global Opportunities Fund, LLC. On November 21, 2018 the Company issued 85,000 shares of
common stock for a debt amendment and recorded the fair market of the shares of $23,800 as interest expense. On January 3, 2019,
the Company issued 218,181 shares of common stock for the conversion of $15,000 of the principal outstanding under the convertible
debenture. On January 11, 2019, the Company issued 427,972 shares of common stock for the conversion of $30,000 of the principal
outstanding under the convertible debenture. On January 18, 2019, the Company redeemed the full outstanding principal balance
on the convertible debenture of $260,556, at a redemption price of $370,000. The Company recognized the difference between the
redemption price and principal balance paid as interest expense of $109,444. The total principal outstanding and unamortized discount
as of April 30, 2019 were $0 and $0, respectively.
On
January 16, 2019, the Company entered into various Securities Purchase Agreements (the SPAs") with four (4) different investors
(each an "Investor", and together the "Investors") pursuant to which each Investor purchased a 10% unsecured
convertible promissory note (each a "Note", and together the "Notes") from the Company. Three of the notes
are in the aggregate principal amount of $140,000 each and a maturity date of October 16, 2019. One of the notes is in the aggregate
principal amount of $57,750 and a maturity date of January 24, 2020. The purchase price of $140,000 of each of three Notes were
paid in cash on January 16, 2019. After payment of transaction-related expenses of $51,000, net proceeds to the Company from the
three Notes totaled $369,000. The purchase price of $57,750 Note was paid in cash on January 24, 2019. After payment of transaction-related
expenses of $7,750, net proceeds to the Company from Note totaled $50,000. The Company recorded these discounts and cost of $58,750
as a discount to the Notes and fully amortized as interest expense during the period.
The
Company analyzed the Notes for derivative accounting consideration and determined that the embedded conversion option qualified
as a derivative instrument, due to the variable conversion price. Therefore, as of the nine months ending April 30, 2019, the
company recognized derivative liability for the four (4) new convertible notes of $655,345, of which $419,000 was recorded as
debt discount and will be amortized during the term of the Notes, and $236,345 was recorded as day 1 derivative loss. The total
principal balance outstanding and unamortized discount on the Notes as of April 30, 2019 were $477,750 and $263,000, respectively.
The company amortized $156,000 discount from derivative liabilities as interest expense during the nine months ended April 30,
2019. In connection with the execution of the Notes, we issued 500,000 shares of our common stock to the Note holders, the
shares were recorded with a relative fair value of $0 as the notes were fully discounted by derivative liability.
F-
42
On
February 22, 2019, the Company entered into a Securities Purchase Agreement (the SPA") with an investor (an "Investor")
the Investor purchased a 10% unsecured convertible promissory note (the "Note") from the Company. The note is in the
aggregate principal amount of $57,500 and a maturity date of February 22, 2020. After payment of transaction-related expenses
of $7,750, net proceeds to the Company from the Note totaled $50,000. The Company recorded these discounts and cost of $7,750
as a discount to the Note and fully amortized as interest expense during the period.
The
Company analyzed the Note for derivative accounting consideration and determined that the embedded conversion option qualified
as a derivative instrument, due to the variable conversion price. Therefore, as of the nine months ending April 30, 2019, the
company recognized derivative liability for the convertible note of $79,729, of which $50,000 was recorded as debt discount and
will be amortized during the term of the Note, and $29,729 was recorded as day 1 derivative loss. The total principal balance
outstanding and unamortized discount on the Note as of April 30, 2019 were $57,750 and $41,667, respectively. The company amortized
$8,333 discount from derivative liabilities as interest expense during the nine months ended April 30, 2019. In connection with
the execution of the Note, we issued 50,000 shares of our common stock to the Note holder, the shares were recorded with
a relative fair value of $0 as the notes were fully discounted by derivative liability.
On
April 20, 2019, the Company entered into a Securities Purchase Agreement (the SPA") with an investor (an "Investor")
the Investor purchased a 10% unsecured convertible promissory note (the "Note") from the Company. The note is in the
aggregate principal amount of $44,000 and a maturity date of January 19, 2020. After payment of transaction-related expenses of
$4,000, net proceeds to the Company from the Note totaled $40,000. The Company recorded these discounts and cost of $4,000 as
a discount to the Note and fully amortized as interest expense during the period.
The
Company analyzed the Note for derivative accounting consideration and determined that the embedded conversion option qualified
as a derivative instrument, due to the variable conversion price. Therefore, as of the nine months ending April 30, 2019, the
Company recognized derivative liability for the convertible note of $55,592, of which $40,000 was recorded as debt discount and
will be amortized during the term of the Note, and $15,592 was recorded as day 1 derivative loss. The total principal balance
outstanding and unamortized discount on the Note as of April 30, 2019 were $44,000 and $40,000, respectively. The Company amortized
$0 discount from derivative liabilities as interest expense during the nine months ended April 30, 2019. In connection with the
execution of the Note, we issued 50,000 shares of our common stock to the Note holder, the shares were recorded with a relative
fair value of $0 as the notes were fully discounted by derivative liability.
Each
Note shall bear interest at a rate of ten percent (10%) per annum (the "Interest Rate"), which interest shall be paid
by the Company to each Investor in shares of Common Stock at any time an Investor sends a notice of conversion to the Company.
Each of the four Investor is entitled to, at its option, convert all or any amount of the principal amount and any accrued but
unpaid interest of the Note into shares of the Company's Common Stock, at any time, at a conversion price for each share
of Common Stock equal to (i) the lowest trading price of the Common Stock (as defined in the Note) as reported on the National
Quotations Bureau OTC Marketplace exchange upon which the Company's shares are traded during the twenty (20) consecutive
Trading Day period immediately preceding the issuance date of each Note; or (ii) 60% multiplied by the lowest traded price of
the Common Stock during the twenty (20) consecutive Trading Day period immediately preceding the Trading Day that the Company
receives a notice of conversion (the "Variable Conversion Price"). The Variable Conversion Price may further be adjusted
in connection with the terms of the Notes.
Each
of the Notes may be prepaid until 180 days from the issuance date with the following penalties: (i) if a Note is prepaid within
ninety (90) days of the issuance date, then the prepayment premium shall be 125% of the outstanding principal amount plus any
accrued and unpaid interest; (ii) if a Note is prepaid during the period beginning on the date which is ninety-one (91) days following
the issuance date, and ending on the date which is one hundred eighty (180) days following the issuance date, then the prepayment
premium shall be 130% of the outstanding principal amount plus any accrued and unpaid interest. Such prepayment redemptions must
be closed and funded within three days of giving notice of prepayment or the right to prepay shall be forfeited.
The
Company shall at all times reserve a minimum of six (6) times the number of its authorized and unissued common stock (the "Reserved
Amounts"), free from preemptive rights, to provide for the issuance of Common Stock upon the full conversion of the each
of the Notes. Upon full conversion of each Note, any shares remaining in such reserve shall be cancelled. The Company will, from
time to time, increases the Reserved Amount in accordance with the Company's obligations under each of the Notes.
F-
43
Pursuant
to the terms of the SPAs, for so long as any of the Investors owns any shares of Common Stock issued upon conversion of a Note
(the "Conversion Shares"), the Company covenants to secure and maintain the listing of such shares of Common Stock.
The Company is also subject to certain customary negative covenants under the Notes and the SPAs, including but not limited to
the requirement to maintain its corporate existence and assets, subject to certain exceptions, and not to make any offers or sales
of any security under circumstances that would require registration of or stockholder approval for the Notes or the Conversion
Shares.
Fair
Value of Financial Instruments.
Fair value is defined as the exchange price that would be received for an asset or paid
to transfer a liability (an exit price) in the principal or most advantageous market for the asset or liability in an orderly
transaction between market participants on the measurement date. A fair value hierarchy is used which requires an entity to maximize
the use of observable inputs and minimize the use of unobservable inputs when measuring fair value. The fair value hierarchy based
on the three levels of inputs that may be used to measure fair value are as follows:
Level
1
– Quoted prices in active markets for identical assets or liabilities.
Level
2
– Observable inputs other than Level 1 prices, such as quoted prices for similar assets or liabilities; or other inputs
that are observable or can be corroborated by observable market data for substantially the full term of the assets or liabilities.
Level
3
– Unobservable inputs that are supported by little or no market activity and that are financial instruments whose
values are determined using pricing models, discounted cash flow methodologies, or similar techniques, as well as instruments
for which the determination of fair value requires significant judgment or estimation.
For
certain of our financial instruments, including cash and cash equivalents, accounts receivable, accounts payable and accrued expenses,
the carrying amounts approximate fair value due to the short maturity of these instruments. The carrying value of our long-term
debt approximates its fair value based on the quoted market prices for the same or similar issues or the current rates offered
to us for debt of the same remaining maturities.
Our
derivative liabilities as of April 30, 2019 and July 31, 2018 were $1,302,597 and $632,268, respectively.
The
fair market value of all derivatives during the nine months ended April 30, 2019 was determined using the Black-Scholes option
pricing model which used the following assumptions:
Expected dividend yield
0.00
%
Expected stock price volatility
165.84% - 190.31
%
Risk-free interest rate
2.21% -2.93
%
Expected term
0.58 - 2.75 years
Level
3 inputs.
The
following table provides a summary of the changes in fair value of the derivative financial instruments measured at fair value
on a recurring basis using significant unobservable inputs:
Balance at July 31, 2018
$
632,268
Derivative from new convertible promissory notes
509,000
Derivative liability resolved to additional paid in capital due to debt conversion
(432,276
)
Derivative loss
593,605
Balance at April 30, 2019
$
1,302,597
F-
44
NOTE
7 – EQUITY
During
the nine months ended April 30, 2019, the Company issued the following shares of common stock:
On
August 1, 2018, the Company secured $40,000 from an accredited investor under a private placement and issued 80,000 shares of
its common stock at a price of $0.50 per share and warrants to purchase an additional 15,000 shares of its common stock at an
exercise price of $0.50 per share. We determined that the warrants issued in connection with the private placement were equity
instruments and did not represent derivative instruments. The Company adopted a sequencing policy and determined that the warrants
with fixed exercise price were excluded from derivative consideration.
On
September 28, 2018, the Company issued an aggregate of 21,672 shares of common stock with a market value at time of issuance of
$5,794. The shares were issued to settle accounts payables of $5,287 to a professional, the Company recognized a loss of $507
upon issuance of the shares.
On
November 1, 2018 the Company issued an aggregate of 200,000 shares of common stock with a market value at time of issuance of
$69,600 and recognized the total fair market value as stock-based compensation expense at the time of issuance. The shares were
issued for consulting services.
On
November 5, 2018, the Company issued an aggregate of 16,883 shares of common stock with a market value at time of issuance of
$5,875. The shares were issued to settle accounts payables of $5,287 to a professional, the Company recognized a loss of $587
upon issuance of the shares.
On
November 14, 2018, the Company secured $75,000 from an accredited investor under a Securities Purchase Agreement and issued 258,621
shares of its common stock at a price of $0.29.
On
November 29, 2018, the Company issued an aggregate of 39,444 shares of common stock with a market value at time of issuance of
$11,833. The shares were issued to settle accounts payables of $10,545 to a professional, the Company recognized a loss of $1,288
upon issuance of the shares.
On
February 1, 2019 the Company issued an aggregate of 325,000 shares of common stock with a market value at time of issuance of
$78,000 and recognized the total fair market value as stock-based compensation expense at the time of issuance. The shares were
issued for consulting services.
On
February 8, 2019, the Company secured $150,000 from an accredited investor under a Securities Purchase Agreement and issued 600,000
shares of its common stock at a price of $0.25.
On
February 8, 2019 the Company issued an aggregate of 400,000 shares of common stock with a market value at time of issuance of
$100,000 and recognized the total fair market value as stock-based compensation expense at the time of issuance. The shares were
issued for consulting services.
On
March 7, 2019, the Company issued an aggregate of 60,715 shares of common stock with a market value at time of issuance of $13,357.
The shares were issued to settle accounts payables of $10,382 to a professional, the Company recognized a loss of $3,000 upon
issuance of the shares.
NOTE
8 – SUBSEQUENT EVENTS
Series
A Convertible Preferred Stock
On
May 10, 2019, the Company secured $25,000 from accredited investors under a private placement and issued 25,000 shares of Series
A Convertible Preferred Stock at an conversion price of $0.30 per share and warrants to purchase an additional 50,000 shares of
its common stock at an exercise price of $0.20 per share. We determined that the warrants issued in connection with the private
placement were equity instruments and did not represent derivative instruments. The Company adopted a sequencing policy and determined
that the warrants with fixed exercise price were excluded from derivative consideration.
On
May 20, 2019, the Company secured $25,000 from accredited investors under a private placement and issued 25,000 shares of Series
A Convertible Preferred Stock at an conversion price of $0.30 per share and warrants to purchase an additional 50,000 shares of
its common stock at an exercise price of $0.20 per share. We determined that the warrants issued in connection with the private
placement were equity instruments and did not represent derivative instruments. The Company adopted a sequencing policy and determined
that the warrants with fixed exercise price were excluded from derivative consideration.
On
May 30, 2019, the Company secured $75,000 from accredited investors under a private placement and issued 75,000 shares of Series
A Convertible Preferred Stock at an conversion price of $0.30 per share and warrants to purchase an additional 150,000 shares
of its common stock at an exercise price of $0.20 per share. We determined that the warrants issued in connection with the private
placement were equity instruments and did not represent derivative instruments. The Company adopted a sequencing policy and determined
that the warrants with fixed exercise price were excluded from derivative consideration.
Equity Issuance
In June 2019 the Company issued an aggregate
of 1,192,770 shares of common stock with a market value at time of issuance of $198,000 and recognized the total fair market value
as stock-based compensation expense at the time of issuance. The shares were issued for consulting services.
In June 2019 the Company
issued an aggregate of 85,000 shares of common stock with a market value at time of issuance of $14,450. The shares were issued
in conjunction with a note extension agreement.
F-
45
In June 2019 the Company issued an aggregate
of 500,000 shares of common stock with a market value at time of issuance of $83,000. The shares were issued in conjunction with
an acquisition of a 12% minority interest in a VoIP Services provider. In addition, the Company paid $82,500 in cash and issued
a promissory note for $17,500, with a maturity date of September 15, 2019 and annual interest rate of 8%.
In July 2019 the Company
issued an aggregate of 825,000 shares of common stock with a market value at time of issuance of $145,500. The shares were issued
in conjunction with various convertible promissory notes and interest payments.
Convertible
debentures - conversions
On
May 10, 2019, the Company issued 713,266 shares of common stock for the conversion of $50,000 of the principal outstanding under
the convertible debenture.
In June 2019, the Company
issued 1,079,237 shares of common stock for the conversion of $79,000 of the principal outstanding under various convertible notes.
In July 2019, the Company
issued 468,702 shares of common stock for the conversion of $30,000 of the principal outstanding under various convertible notes.
Convertible
Promissory Note
On May 5, 2019, the Company entered into
a 10% unsecured convertible promissory note (the "Note") with an investor (an "Investor"). The note is
in the aggregate principal amount of $29,334 and a maturity date of April 30, 2020.
The Company analyzed
the Note for derivative accounting consideration and determined that the embedded conversion option qualified as a derivative instrument,
due to the variable conversion price. Therefore, as of the date of the Note, the company recognized derivative liability of $50,700,
of which $29,334 was recorded as debt discount and will be amortized during the term of the Note and $21,366 was recorded as derivative
loss.
On July 11, 2019,
the Company entered into various 10% unsecured convertible promissory notes (the "Notes") with various investors (the
"Investors"). The notes are in the aggregate principal amount of $579,875 and a maturity date of April 11, 2020.
The Company analyzed
the Notes for derivative accounting consideration and determined that the embedded conversion option qualified as a derivative
instrument, due to the variable conversion price. Therefore, as of the date of the Notes, the company recognized derivative liability
of $959,180, of which $505,500 was recorded as debt discount and will be amortized during the term of the Notes and $453,680 was
recorded as derivative loss.
On August 30,
2019, the Company entered into a 10% unsecured convertible promissory note (the "Note") with an investor (an "Investor").
The notes are in the aggregate principal amount of $93,500 and a maturity date of May 30, 2020.
The Company analyzed
the Note for derivative accounting consideration and determined that the embedded conversion option qualified as a derivative instrument,
due to the variable conversion price. Therefore, as of the date of the Note, the company recognized derivative liability of $100,978,
of which $85,000 was recorded as debt discount and will be amortized during the term of the Note and $15,978 was recorded as derivative
loss.
The
Note shall bear interest at a rate of ten percent (10%) per annum (the "Interest Rate"), which interest shall be paid
by the Company to the Investor in shares of Common Stock at any time an Investor sends a notice of conversion to the Company.
The Investor is entitled to, at its option, convert all or any amount of the principal amount and any accrued but unpaid interest
of the Note into shares of the Company's Common Stock, at any time, at a conversion price for each share of Common Stock
equal to (i) 60% multiplied by the lowest trading price of the Common Stock (as defined in the Note) as reported on the National
Quotations Bureau OTC Marketplace exchange upon which the Company's shares are traded during the twenty (20) consecutive
Trading Day period immediately preceding the issuance date of each Note; or (ii) 60% multiplied by the lowest traded price of
the Common Stock during the twenty (20) consecutive Trading Day period immediately preceding the Trading Day that the Company
receives a notice of conversion (the "Variable Conversion Price"). The Variable Conversion Price may further be adjusted
in connection with the terms of the Notes.
The
Note may be prepaid until 180 days from the issuance date with the following penalties: (i) if a Note is prepaid within ninety
(90) days of the issuance date, then the prepayment premium shall be 125% of the outstanding principal amount plus any accrued
and unpaid interest; (ii) if a Note is prepaid during the period beginning on the date which is ninety-one (91) days following
the issuance date, and ending on the date which is one hundred eighty (180) days following the issuance date, then the prepayment
premium shall be 130% of the outstanding principal amount plus any accrued and unpaid interest. Such prepayment redemptions must
be closed and funded within three days of giving notice of prepayment or the right to prepay shall be forfeited.
The
Company shall at all times reserve a minimum of six (6) times the number of its authorized and unissued common stock (the "Reserved
Amounts"), free from preemptive rights, to provide for the issuance of Common Stock upon the full conversion of the Note.
Upon full conversion of the Note, any shares remaining in such reserve shall be cancelled. The Company will, from time to time,
increases the Reserved Amount in accordance with the Company's obligations under the Note.
F-
46
6,324,142 Shares of Common Stock
The date of this prospectus is _______,
2019
PART II - INFORMATION NOT REQUIRED IN
PROSPECTUS
INFORMATION NOT REQUIRED IN PROSPECTUS
Item 13. Other Expenses of Issuance
and Distribution
The following table
sets forth the costs and expenses, other than underwriting discounts and commissions, to be paid by the Registrant in connection
with the issuance and distribution of the Common Stock being registered. All amounts other than the SEC registration fees and FINRA
fees are estimates.
Amount to be Paid
SEC Registration Fees
$
76.30
Printing and Engraving Expenses
*
Legal Fees and Expenses
*
Accounting Fees and Expenses
*
Transfer Agent Fees
*
Miscellaneous
*
Total
$
*
*
To be provided by amendment.
Item 14. Indemnification of Officers
And Directors
Nevada Law
The Nevada Revised Statutes limits or eliminates
the personal liability of directors to corporations and their stockholders for monetary damages for breaches of directors'
fiduciary duties as directors. Our bylaws include provisions that require the company to indemnify our directors or officers against
monetary damages for actions taken as a director or officer of our Company. We are also expressly authorized to carry directors'
and officers' insurance to protect our directors, officers, employees and agents for certain liabilities. Our articles of
incorporation do not contain any limiting language regarding director immunity from liability.
The limitation of liability and indemnification
provisions under the Nevada Revise Statutes and our bylaws may discourage stockholders from bringing a lawsuit against directors
for breach of their fiduciary duties. These provisions may also have the effect of reducing the likelihood of derivative litigation
against directors and officers, even though such an action, if successful, might otherwise benefit us and our stockholders. However,
these provisions do not limit or eliminate our rights, or those of any stockholder, to seek non-monetary relief such as injunction
or rescission in the event of a breach of a director's fiduciary duties. Moreover, the provisions do not alter the liability
of directors under the federal securities laws. In addition, your investment may be adversely affected to the extent that, in a
class action or direct suit, we pay the costs of settlement and damage awards against directors and officers pursuant to these
indemnification provisions.
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Item 15. Recent Sales of Unregistered Securities
The sales and issuances of the securities
described below were made pursuant to the exemptions from registration contained in to Section 4(a)(2) of the Securities Act and
Regulation D under the Securities Act. Each purchaser represented that such purchaser's intention to acquire the shares for
investment only and not with a view toward distribution. We requested our stock transfer agent to affix appropriate legends to
the stock certificate issued to each purchaser and the transfer agent affixed the appropriate legends. Each purchaser was given
adequate access to sufficient information about us to make an informed investment decision. Except as described in this prospectus,
none of the securities were sold through an underwriter and accordingly, there were no underwriting discounts or commissions involved.
In August 2018, the Company secured $40,000
from an accredited investor under a private placement and issued 80,000 shares of its common stock at a price of $0.50 per share
and warrants to purchase an additional 15,000 shares of its common stock at an exercise price of $0.50 per share. We determined
that the warrants issued in connection with the private placement were equity instruments and did not represent derivative instruments.
In September 2018, the Company issued an
aggregate of 21,672 shares of common stock with a market value at time of issuance of $5,794. The shares were issued to settle
accounts payables with a professional, the Company recognized a loss of $507 upon issuance of the shares, this loss is immaterial,
thus presented in stock-based compensation expense on the statement of cash flows.
In October 2018, the Company secured a
promissory note for $25,000, bearing interest at a rate of 8% per annum, with maturity date of November 12, 2018. In conjunction
with the Note, the Company issued 140,000 common shares, the shares vested at time of issuance, these shares replace previously
issued warrants with an exercise price of $0.15, therefore the exercise price of $21,000 was recognized as a discount on the promissory
note. The company will amortize the fair market value as interest expense over the term of the note.
In October 2018, the Company secured a
promissory note for $25,000, bearing interest at a rate of 8% per annum, with maturity date of November 18, 2018. In conjunction
with the Note, the Company issued 100,000 common shares, the shares vested at time of issuance, these shares replace previously
issued warrants with an exercise price of $0.15, therefore the exercise price of $15,000 was recognized as a discount on the promissory
note. The company will amortize the fair market value as interest expense over the term of the note.
In November 2018, the Company issued an
aggregate of 16,883 shares of common stock with a market value at time of issuance of $5,875. The shares were issued to settle
accounts payables of $5,287 to a professional, the Company recognized a loss of $587 upon issuance of the shares. This loss is
immaterial, thus presented in stock-based compensation expense on the statement of cash flows.
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In November 2018, the Company issued an
aggregate of 39,444 shares of common stock with a market value at time of issuance of $11,833. The shares were issued to settle
accounts payables of $10,545 to a professional, the Company recognized a loss of $1,288 upon issuance of the shares. This loss
is immaterial, thus presented in stock-based compensation expense on the statement of cash flows.
In November 2018, the Company received
$75,000 for the issuance of 258,621 shares of Common Stock. At the time of issuance, the shares of Common Stock were priced at
$0.29.
In November 2018, the Company entered into
an Amendment to the Convertible Promissory Note dated May 30, 2018 with FirstFire Global Opportunity Fund, LLC. ("FirstFire").
Under the Amendment FirstFire agreed to extend the "conversion period" from 180 days after the issuance date to 210
days after the issuance date. No other changes were made to the Convertible Promissory Note. In conjunction with the Amendment,
the Company issued 85,000 shares of Common Stock at price per share of $0.28.
In November 2018, the Company issued an
aggregate of 200,000 shares of common stock at a price per share of $0.35. The shares were issued as compensation of $69,600 under
a consulting agreement for professional services.
In November 2018, the Company issued an
aggregate of 139,860 shares of common stock. The shares were issued in conjunction with a conversion of $20,000 of principal on
a convertible debenture.
In December 2018, the Company issued an
aggregate of 28,000 shares of common stock. The shares were issued in conjunction with promissory note $25,000.
In December 2018, the Company issued an
aggregate of 356,007 shares of common stock. The shares were issued in conjunction with a conversion of $20,000 of principal on
a convertible debenture.
In December 2018, the Company issued an
aggregate of 20,000 shares of common stock at a price per share of $0.20. The shares were issued to replace previously issued warrants
under various promissory notes.
In January 2019, the Company issued an
aggregate of 218,181 shares of common stock. The shares were issued in conjunction with a conversion of $15,000 of principal on
a convertible debenture.
In January 2019, the Company issued an
aggregate of 427,972 shares of common stock. The shares were issued in conjunction with a conversion of $30,000 of principal on
a convertible debenture.
In January 2019, the Company issued an
aggregate of 450,000 shares of common stock. The shares were issued in conjunction with various convertible promissory notes for
$420,000.
In January 2019, the Company issued an
aggregate of 50,000 shares of common stock. The shares were issued in conjunction with a convertible promissory note for $57,750.
In February 2019, the Company issued an
aggregate of 50,000 shares of common stock. The shares were issued in conjunction with a convertible promissory note for $57,750.
In February 2019, the Company issued an
aggregate of 475,511 shares of common stock. The shares were issued in conjunction with a conversion of $20,000 of principal on
a Convertible debenture with Peak One Opportunity Fund, LP., dated July 31, 2018.
In February 2019, the Company secured $150,000
from an accredited investor under a Securities Purchase Agreement and issued 600,000 shares of its common stock at a price of $0.25.
In February 2019 the Company issued an
aggregate of 325,000 shares of common stock with a market value at time of issuance of $78,000 and recognized the total fair market
value as stock-based compensation expense at the time of issuance. The shares were issued for consulting services.
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3
In February 2019 the Company issued an
aggregate of 400,000 shares of common stock with a market value at time of issuance of $100,000 and recognized the total fair market
value as stock-based compensation expense at the time of issuance. The shares were issued for consulting services.
In March 2019, the Company issued an aggregate
of 60,715 shares of common stock with a market value at time of issuance of $11,536. The shares were issued to settle accounts
payables of $10,382 to a professional, the Company recognized a loss of $1,154 upon issuance of the shares. This loss is immaterial,
thus presented in stock-based compensation expense on the statement of cash flows.
In March 2019, the Company issued an aggregate
of 356,633 shares of common stock. The shares were issued in conjunction with a conversion of $25,000 of principal on a convertible
debenture.
In March 2019, the Company issued 75,000
shares of common stock. The shares were issued in conjunction with the exercise of 75,000 warrants with an exercise price of $0.10
per warrant.
In March 2019, the Company issued an aggregate
of 85,000 shares of common stock at a price per share of $0.21. The shares were issued in conjunction with an extension of various
promissory notes.
In April 2019, the Company issued an aggregate
of 356,633 shares of common stock. The shares were issued in conjunction with a conversion of $25,000 of principal on a convertible
debenture.
In April 2019, the Company issued an aggregate
of 50,000 shares of common stock. The shares were issued in conjunction with a convertible promissory note for $44,000.
In May 2019, the Company issued 713,266
shares of common stock. The shares were issued in conjunction with a conversion of $50,000 of the principal outstanding under a
convertible debenture.
In June 2019, the Company issued 189,008
shares of common stock for the conversion of $15,000 of the principal outstanding under the convertible debenture.
Item 16. Exhibits
Incorporated by
Exhibit
Reference
Filed or Furnished
Number
Exhibit Description
Form
Exhibit
Filing Date
Herewith
2.1
Agreed Order Confirming Joint Plan of Reorganization filed  by Plan Proponents
8-K
2.1
04/11/14
2.2
Plan Proponents' Joint Chapter 11 Plan of Reorganization as  Modified on the Record on 4/4/14
8-K
2.2
4/11/14
2.3
Plan Supplement Naming Independent Director in Connection  With Plan Proponents' Joint Chapter 11 Plan of Reorganization
8-K
2.3
4/11/14
2.4
Disclosure Statement Under 11 U.S.C. § 1125 and Bankruptcy  Rule 3016 in Support of Plan Proponents' Joint Chapter 11 Plan of Reorganization.
8-K
2.4
4/11/14
2.5
Bankruptcy Settlement Agreement dated January 15, 2014
8-K
10.1
1/23/14
2.6
Order Authorizing the Sale of 100% Equity Interests of Dishon  Disposal, Inc. and Granting Related Relief approving the Stock Purchase Agreement dated 6/27/14
8-K
2.6
7/7/14
2.7
Order Authorizing the Sale of 100% Equity Interests of Hurley  Enterprises, Inc. and Granting Related Relief approving the Stock Purchase Agreement dated 6/26/14
8-K
2.7
7/24/14
3.1
Amended and Restated Articles of Incorporation
8-K
3.1
4/11/14
3.2
First Amended and Restated Bylaws
8-K
3.2
4/11/14
II-
4
3.3
Amended and Restated Bylaws.
8-KA
3.2
4/25/14
3.4
Second Amended and Restated Bylaws, effective as of 1/13/15
8-K
3.1
1/21/15
5.1*
Lucosky Brookman LLP Opinion
10.1
Equity Purchase Agreement with Peak One Opportunity Fund, L.P. dated January 12, 2018
10-Q
10.3
3/22/18
10.2+
Form of stock award agreement under the Company's 2015 Stock  Compensation Plan for grants to qualifying employees' 401K Retirement Accounts
8-K
10.7
1/21/15
10.3
Stock Purchase Agreement
8-K
10.6
1/21/15
10.4+
2015 Equity Compensation Plan.
S-8
10.2
11/18/15
10.5
Debenture issued to Peak One dated 1/17/18
10-Q
10.2
3/22/18
10.6
Registration Rights Agreement with Peak One dated 1/12/18
10-Q
10.4
3/22/18
10.7
Articles of Merger T3 Communications and T3 Acquisition dated 5/18/18
8-K
10.1
5/8/18
10.8
Promissory Note dated 4/30/18
8-K
10.2
5/8/18
10.9
Promissory Note dated 4/30/18
8-K
10.3
5/8/18
10.10
Promissory Note dated 4/30/18
8-K
10.4
5/8/18
10.11
Promissory Note dated 4/30/18
8-K
10.6
5/8/18
10.12
Securities Purchase Agreement dated 5/30/18
10-Q
10.1
6/14/18
10.13
Stock Purchase Agreement dated 4/30/18
10-Q
10.3
6/14/18
10.14
Debenture issued to Peak One dated 7/31/18
10-K
10.3
11/16/18
10.15
Promissory Note dated 10/12/18.
10-K
10.4
11/16/18
10.16
Promissory Note dated 10/18/18.
10-K
10.5
11/16/18
10.17
Promissory Note dated 10/22/18.
10-K
10.6
11/16/18
10.18
Promissory Note dated 11/22/18
10-Q
10.3
12/14/18
10.19
Promissory Note dated 1/16/19
8-K
4.1
3/1/19
10.20
Promissory Note dated 1/16/19
8-K
4.2
3/1/19
10.21
Promissory Note dated 1/16/19
8-K
4.3
3/1/19
10.22
Promissory Note dated 1/24/19
8-K
4.4
3/1/19
10.23
Promissory Note dated 1/24/19
8-K
4.5
3/1/19
10.24
Securities Purchase Agreement dated 1/16/19
8-K
10.1
3/1/19
II-
5
10.25
Securities Purchase Agreement dated 1/16/19
8-K
10.2
3/1/19
10.26
Securities Purchase Agreement dated 1/16/19
8-K
10.3
3/1/19
10.27
Securities Purchase Agreement dated 1/24/19
8-K
10.4
3/1/19
10.28
Securities Purchase Agreement dated 2/22/19
8-K
10.5
3/1/19
10.29+
Employment Agreement between Digerati and Craig K. Clement Dated 2/14/19
10-Q
10.1
3/18/19
10.30+
Employment Agreement between Digerati and Arthur L. Smith Dated 2/14/19
10-Q
10.2
3/18/19
10.31+
Employment Agreement between Digerati and Antonio Estrada Jr. Dated 2/14/19
10-Q
10.3
3/18/19
10.32
Promissory Note dated 4/20/19
10-Q
4.6
6/14/19
10.33
Securities Purchase Agreement dated 4/20/19
10-Q
10.6
6/14/19
21.1
Subsidiaries List.
X
23.1
Consent of MaloneBailey, LLP, Auditor for 2018.
X
23.2
Consent of LBB & Associates Ltd, LLP for 2017.
X
23.3*
Consent of Counsel (Exhibit 5.1 Incorporated by Reference to 5.1).
*
To be filed by amendment.
+
Indicates management contract or compensatory plan
ITEM 17. Undertakings
The undersigned registrant hereby undertakes
1.
To file, during any
period in which offers or sales are being made, a post-effective amendment to this registration statement:
i.
To include any Prospectus
required by section 10(a)(3) of the Securities Act of 1933;
ii.
To reflect in the Prospectus any facts or events arising
after the effective date of the registration statement (or the most recent post-effective amendment thereof) which, individually
or in the aggregate, represent a fundamental change in the information set forth in the registration statement. Notwithstanding
the foregoing, any increase or decrease in volume of securities offered (if the total dollar value of securities offered would
not exceed that which was registered) and any deviation from the low or high end of the estimated maximum offering range may be
reflected in the form of Prospectus filed with the Commission pursuant to Rule 424(b) if, in the aggregate, the changes in volume
and price represent no more than 20% change in the maximum aggregate offering price set forth in the "Calculation of Registration
Fee" table in the effective registration statement.
iii.
To include any material information with respect to
the plan of distribution not previously disclosed in the registration statement or any material change to such information in
the registration statement;
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6
2.
That, for the purpose of determining any liability
under the Securities Act of 1933, each such post-effective amendment shall be deemed to be a new registration statement relating
to the securities offered therein, and the offering of such securities at that time shall be deemed to be the initial bona fide
offering thereof.
3.
To remove from registration
by means of a post-effective amendment any of the securities being registered which remain unsold at the termination of the offering.
4.
That, for the purpose
of determining liability of the registrant under the Securities Act of 1933 to any purchaser in the initial distribution of the
securities: The undersigned registrant undertakes that in a primary offering of securities of the undersigned registrant pursuant
to this registration statement, regardless of the underwriting method used to sell the securities to the purchaser, if the securities
are offered or sold to such purchaser by means of any of the following communications, the undersigned registrant will be a seller
to the purchaser and will be considered to offer or sell such securities to such purchaser:
i.
Any Preliminary Prospectus or Prospectus of the undersigned
registrant relating to the offering required to be filed pursuant to Rule 424;
ii.
Any free writing Prospectus
relating to the offering prepared by or on behalf of the undersigned registrant or used or referred to by the undersigned registrant;
iii.
The portion of any other free writing Prospectus relating
to the offering containing material information about the undersigned registrant or its securities provided by or on behalf of
the undersigned registrant; and
iv.
Any other communication
that is an offer in the offering made by the undersigned registrant to the purchaser.
5.
That, for the purpose
of determining liability under the Securities Act of 1933 to any purchaser: Each Prospectus filed pursuant to Rule 424(b) as part
of a registration statement relating to an offering, other than registration statements relying on Rule 430B or other than Prospectuses
filed in reliance on Rule 430A, shall be deemed to be part of and included in the registration statement as of the date it is
first used after effectiveness. Provided, however, that no statement made in a registration statement or Prospectus that is part
of the registration statement or made in a document incorporated or deemed incorporated by reference into the registration statement
or Prospectus that is part of the registration statement will, as to a purchaser with a time of contract of sale prior to such
first use, supersede or modify any statement that was made in the registration statement or Prospectus that was part of the registration
statement or made in any such document immediately prior to such date of first use.
Insofar as indemnification for liabilities
arising under the Securities Act of 1933 may be permitted to our directors, officers and controlling persons, we have been advised
that in the opinion of the Securities and Exchange Commission, such indemnification is against public policy as expressed in the
Securities Act of 1933 and is, therefore, unenforceable. In the event that a claim for indemnification against such liabilities
(other than the payment by us of expenses incurred or paid by a director, officer or controlling person of the corporation in the
successful defense of any action, suit or proceeding) is asserted by such director, officer or controlling person in connection
with the securities being registered, we will, unless in the opinion of our counsel the matter has been settled by a controlling
precedent, submit to a court of appropriate jurisdiction the question of whether such indemnification by us is against public policy
as expressed in the Securities Act of 1933, as amended, and will be governed by the final adjudication of such case.
II-
7
SIGNATURES
Pursuant to the requirements of the Securities
Act of 1933, the registrant has duly caused this registration statement to be signed on its behalf by the undersigned, thereunto
duly authorized on September 16, 2019.
DATE
SIGNATURE
TITLE
September 16, 2019
Chief Executive Officer and President
Arthur L. Smith
(Principal Executive Officer)
In accordance with the requirements of
the Securities Act of 1933, this registration statement was signed by the following persons in the capacities and on the dates
stated:
DATE
SIGNATURE
TITLE
September 16, 2019
/s/ Arthur L. Smith
Chief Executive Officer, President,
Arthur L. Smith
and Director
September 16, 2019
/s/ Antonio Estrada Jr
Chief Financial Officer
Antonio Estrada Jr
(Principal Financial Officer)
(Principal Accounting Officer)
/s/ Craig K. Clement
Chairman
September 16, 2019
Craig K. Clement
/s/ Maxwell A. Polinsky
Director
September 16, 2019
Maxwell A. Polinsky
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