Under the Acquisition Agreement dated September 3, 2015, the Company issued a total of 42,605,680 restricted shares of common stock. Under this
Agreement, the Company is obligated to issue additional shares to the 4 companies controlled by John Acunto so that they collectively own 70% of the issued and outstanding common stock of the Company. The Company will make the determination in the near future as to when to issue these additional shares of common stock. Under the Agreement, the Company also issued a total of 4,725 shares of Series A preferred stock. Each share of convertible preferred stock is convertible,
at the option of the holder, at any time into the number of fully paid and nonassessable shares of Company common stock as determined by dividing 1,000 by the
amount that is a 10% discount to the average of the closing price per share of the Company’s common stock on the exchange on which this common stock is traded
over the 10 trading day period ending immediately prior to the conversion date. These issuances result in substantial dilution to existing stockholders of the
Company.
Any further acquisition effected by the Company may also result in the issuance of additional securities without stockholder approval and may result in
substantial dilution in the percentage of the Company’s common stock held by its then existing stockholders. Moreover, the common stock issued in any such
merger or acquisition transaction may be valued on an arbitrary or non-arm’s-length basis by our management, resulting in an additional reduction in the
percentage of common stock held by the Company’s then existing stockholders. The Company’s Board of Directors has the power to issue any or all of such
authorized but unissued shares without stockholder approval. To the extent that additional shares of common stock or preferred stock are issued in connection with
a business combination or otherwise, dilution to the interests of its stockholders will occur and the rights of the holders of common stock might be materially and
adversely affected.