PROPOSAL NO. 1

REVERSE STOCK SPLIT OF COMMON SHARES

General Information Regarding Reverse Stock Split

The Board and Majority Shareholder have approved a proposal to amend our amended and restated Certificate of Incorporation (“Certificate”) to authorize our Board to effect a Reverse Stock Split of all of our issued and outstanding Common Stock at a ratio of not less than 1-for-2 and not more than 1-for-500, with our Board having the discretion as to whether or not the Reverse Stock Split is to be effected, when such Reverse Stock Split would be effected (on or prior to December 31, 2019) and the exact ratio of the Reverse Stock Split to be set at a whole number within the above range as determined by our Board in its sole discretion. The Board believes that the availability of alternative reverse split ratios will provide it with the flexibility to implement the Reverse Stock Split in a manner designed to maximize the anticipated benefits for us and our stockholders. In determining whether to implement the Reverse Stock Split, our Board may consider, among other things, factors such as:

If the Board determines that effecting the Reverse Stock Split is in the best interest of the Company, the Reverse Stock Split will become effective upon the filing of an amendment to our Certificate with the Secretary of State of the State of Delaware. The amendment filed thereby will set forth the number of issued and outstanding shares to be combined into one share of our Common Stock within the limits set forth in this proposal. Except for adjustments that may result from the treatment of fractional shares as described below, each stockholder will hold the same percentage of our issued and outstanding Common Stock immediately following the Reverse Stock Split as such stockholder holds immediately prior to the Reverse Stock Split.

Principal Reasons for Reverse Stock Split

The Board and Majority Shareholder of the Company believe that it is advisable and in the best interests of the Company and its shareholders to effect the Reverse Stock Split in order to reduce the number of issued and outstanding shares of capital stock. The Company believes that an increased market price of its stock will encourage interest and trading in the stock. Due to the trading volatility often associated with low-priced stocks, many brokerage houses and institutional investors have internal policies and practices that either prohibit them from investing in low priced (sub-penny) stocks or tend to discourage individual brokers from recommending low-priced stocks to their customers. Some of those policies and practices may function to make the processing of trades in low-priced stocks economically unattractive to brokers. Additionally, because brokers’ commissions on low-priced stocks generally represent a higher percentage of the stock price than commissions on higher-priced stocks, the current average price per share of the common stock can result in individual shareholders paying transaction costs representing a higher percentage of their total share value than would be the case if the share price were substantially higher. It should be noted that the liquidity of the Common Stock may be adversely affected by the Reverse Stock Split given the reduced number of shares that would be outstanding after the Reverse Stock Split. The Board anticipates, however, that the expected higher market price will reduce, to some extent, the negative effects on the liquidity and marketability of the stock inherent in some of the policies and practices of institutional investors and brokerage houses described above.

Additionally, as of January 7, 2019, the Company has 122,313,929 shares of Common Stock issued and outstanding out of a maximum of 150,000,000 shares of Common Stock authorized. The Company currently has outstanding convertible debentures (collectively, the “Debentures”) of (i) $2,197,749 in principal issued in our September 2016 private placement and (ii) $515,000 in principal issued in our July 2018 private placement. The Debentures are convertible into Common Stock at a conversion price equal to the lower of (i) $0.33 per share, or (ii) 85% of the lesser of (a) the volume weighted average price on the trading day immediately preceding a conversion date and (b) the volume weighted average price on a conversion date. As a result, the Reverse Stock Split, if and when effected by the Board, will decrease our issued and outstanding shares of Common Stock and allow us to continue to meet the obligations of our outstanding Debentures without being subjected to penalties in the event that we have insufficient authorized shares to meet the ongoing conversion obligations.

Effect of Reverse Stock Split

The Reverse Stock Split will affect all of our shareholders uniformly and will not affect any shareholder’s proportion voting power or percentage ownership interest of the Company, except to the extent that the Reverse Stock Split results in any of our shareholders owning a fractional of a share which shall be rounded up the next whole share as discussed below.

The Reverse Stock Split will not affect the number of shares of Common Stock that we are authorized to issue, but will reduce the number of shares each Company shareholder held prior to the Reverse Stock Split, if and when it occurs. As of the Written Consent Date, the Company was authorized to issue 150,000,000 shares of Common Stock, par value $0.0001 and 30,000,000 shares of preferred stock, par value $0.0001. Of this amount, (i) 122,313,929 shares of Common Stock were issued and outstanding, (ii) 133.8125 shares of Series A Convertible Preferred Stock were outstanding, (iii) 71 shares of Series B Convertible Preferred Stock were outstanding, (iv) 290.4138 shares of Series C Convertible Preferred Stock were issued and outstanding and (v) and 5,000 shares of Series D Preferred Stock were issued and outstanding. Each share of outstanding Common Stock is entitled to one (1) vote and each share of outstanding Series D Preferred Stock is entitled to thirty thousand one (30,001) votes to approve the Reverse Stock Split. The Series A, B, and C Convertible Preferred Stock are not entitled to vote on the Reverse Stock Split.

Upon completion of the of the Reverse Stock Split, the Company will be authorized to issue 150,000,000 shares of Common Stock, par value $0.0001, and 30,000,000 shares of preferred stock, par value $0.0001. Of this amount, it is estimated that (i) 291,207 shares of Common Stock, (ii) warrants to purchase 5,260 shares of Common Stock at an average exercise price of $2,655, and (iii) options to purchase 340 shares of Common Stock at an average exercise price of $5,070 will be outstanding upon completion of the Reverse Stock Split assuming the maximum reverse split. The table below summarizes the potential minimum and maximum Reverse Stock Split information:

Fractional Shares

No fractional shares of Common Stock will be issued as a result of the Reverse Stock Split. Instead, shareholders who otherwise would be entitled to receive fractional shares will be entitled to receive an additional share by rounding up to the nearest whole number of shares.

Potential Anti-Takeover Effects

The Reverse Stock Split will have the effect of increasing the proportion of unissued authorized shares to issued shares.  Under certain circumstances this may have an anti-takeover effect.   These  authorized  but unissued  shares could be used by the Company to oppose a hostile  takeover  attempt or to delay or prevent a change of control or changes in or removal of the Board,  including a  transaction  that may be favored by a majority of our  shareholders  or in which our  shareholders  might receive a premium for their shares over then-current market prices or benefit in some other manner. For example, without further stockholder approval, the Board could issue and sell shares thereby diluting the stock ownership of a person seeking to effect a change in the composition of our Board or to propose or complete a tender offer or business combination involving us and potentially strategically placing shares with purchasers who would oppose such a change in the Board or such a transaction.

Although an increased proportion of unissued authorized shares to issued shares could, under certain circumstances, have a potential anti-takeover effect, the Reverse Stock Split is not in response to any effort of which we are aware to accumulate the shares of our Common Stock or obtain control of the Company.  There are no plans or proposals to adopt other provisions or enter into other arrangements that may have material anti-takeover consequences.

The Board does not intend for this transaction to be the first step in a series of plans or proposals of a “going private transaction” within the meaning of Rule 13e-3 of the Exchange Act. Moreover, we are currently not engaged in any negotiations or otherwise have no specific plans to use additional authorized shares of for any future acquisition, merger or consolidation.

Board Discretion to Implement or Abandon Reverse Stock Split

The Reverse Stock Split will be effected, if at all, only upon a determination by the Board that the Reverse Stock Split (with an exchange ratio determined by Board as described above) is in the best interest of our Company and its stockholders. Such determination shall be based upon certain factors, including, but not limited to, existing and expected marketability and liquidity of our Common Stock, the number of remaining authorized shares of Common Stock, and the expense of effecting the Reverse Stock Split. Notwithstanding approval of the Reverse Stock Split by our shareholders, the Board may, in its sole discretion, abandon the proposal and determine, prior to the effectiveness of any filing with the Secretary of State of the State of Delaware, not to effect the Reverse Stock Split. If the Board fails to implement the Reverse Stock Split on or prior to December 31, 2019, stockholder approval again would be required prior to implementing any Reverse Stock Split.

Effective Date

The Board of Directors will have discretion as to whether or not to effect the Reverse Stock Split at any time on or prior to December 31, 2019. If implemented by the Board, the Reverse Stock Split would become effective upon the filing of an amendment to our Certificate with the Secretary of State of the State of Delaware. Except as explained below with respect to fractional shares, on the effective date, shares of Common Stock issued and outstanding immediately prior thereto will be combined and converted, automatically and without any action on the part of the stockholders, into new shares of Common Stock in accordance with the Reverse Stock Split ratio determined by the Board within the limits set forth in this proposal.

Authorized Shares of Common Stock

The Reverse Stock Split will not change the number of authorized shares of Common Stock but by virtue of the total number of shares decreasing, it will increase the number of shares available for future issuance for corporate needs such as equity financing, stock splits and stock dividends, employee benefit plans, or other corporate purposes as may be deemed by the Board to be in the best interests of the Company. The Board believes that such increase in available shares for future issuance as a result of the Reverse Stock Split will assist in the funding of our future operations. It will also provide us with greater flexibility in the future to take advantage of market conditions or favorable opportunities without the potential expense or delay incident to obtaining stockholder approval to increase our authorized capital.

Other Effects

If approved, the Reverse Stock Split may result in some stockholders owning “odd-lots” of fewer than 100 shares of Common Stock. Brokerage commissions and other costs of transactions in odd-lots are generally somewhat higher than the costs of transactions in “round-lots” of even multiples of 100 shares.

Exchange of Stock Certificates

As soon as practicable after the effective date, stockholders will be notified that the Reverse Stock Split has been effected. Our transfer agent will act as exchange agent for purposes of implementing the exchange of stock certificates. We refer to such person as the “Exchange Agent.” Holders of pre-Reverse Stock Split shares (“Old Shares”) will be asked to surrender to the Exchange Agent certificates representing the Old Shares in exchange for certificates representing post-Reverse Stock Split shares (“New Shares”) in accordance with the procedures to be set forth in a letter of transmittal to be sent by us. No new certificates will be issued to a stockholder until such stockholder has surrendered such stockholder’s outstanding certificate(s) together with the properly completed and executed letter of transmittal to the Exchange Agent. Stockholders should not destroy any stock certificate and should not submit any certificates until requested to do so.

No Appraisal Rights

Under applicable Delaware law, our stockholders are not entitled to dissenter’s or appraisal rights with respect to the Reverse Stock Split and we would not independently provide our stockholders with any such right.

Material U.S. Federal Income Tax Consequences

The following summary describes the material U.S. federal income tax consequences of the proposed Reverse Stock Split to holders of our Common Stock, but does not purport to be a complete analysis of all potential tax effects. This discussion is based on the Internal Revenue Code of 1986, as amended (the “Code”), Treasury Regulations promulgated thereunder, judicial decisions, and published rulings and administrative pronouncements of the U.S. Internal Revenue Service (“IRS”) in effect as of the date of this proxy statement. These authorities may change or be subject to differing interpretations. Any such change may be applied retroactively in a manner that could adversely affect a holder of our common stock. We have not sought and will not seek any rulings from the IRS regarding the matters discussed below. There can be no assurance that the IRS or a court will not take a contrary position regarding the tax consequences of the proposed Reverse Stock Split.

This discussion is limited to holders that hold our Common Stock as a “capital asset” within the meaning of Section 1221 of the Code (generally, property held for investment). This discussion does not address all U.S. federal income tax consequences relevant to a holder’s particular circumstances, including the impact of the Medicare contribution tax. In addition, it does not address consequences relevant to holders subject to special rules or to holders that are partnerships for U.S. federal income tax purposes. Holders should consult their own tax advisors regarding the U.S. federal, state, local, and foreign income and other tax consequences of the proposed Reverse Stock Split.

Tax Consequences to U.S. Holders

For purposes of this discussion, a “U.S. holder” is a beneficial owner of our common stock who is for U.S. federal income tax purposes: (i) an individual who is a citizen or resident of the United States; (ii) a corporation (or other entity treated as a corporation for U.S. federal income tax purposes) created or organized under the laws of the United States, any state thereof, or the District of Columbia; or (iii) an estate or trust the income of which is subject to U.S. federal income taxation regardless of its source.

The proposed Reverse Stock Split should be treated as a recapitalization for U.S. federal income tax purposes. Therefore, except as described below with respect to cash received in lieu of fractional shares, no gain or loss will be recognized upon the proposed Reverse Stock Split. Accordingly, the aggregate tax basis in the New Shares should equal the aggregate tax basis in the Old Shares (excluding the portion of the tax basis that is allocable to any fractional share), and the holding period for the New Shares should include the holding period for the Old Shares.

A U.S. holder who receives cash in lieu of a fractional share of our Common Stock pursuant to the proposed Reverse Stock Split should recognize capital gain or loss in an amount equal to the difference between the amount of cash received and the U.S. holder’s tax basis in the Old Shares that is allocated to such fractional share of our common stock. Such capital gain or loss will be long-term capital gain or loss if the U.S. holder has held the Old Shares for more than one year as of the effective date of the proposed Reverse Stock Split. The deductibility of capital losses is subject to limitations.

Information Reporting and Backup Withholding .  Information returns generally will be required to be filed with the IRS with respect to the receipt of cash in lieu of a fractional share of our Common Stock by a U.S. holder pursuant to the proposed Reverse Stock Split unless such U.S. holder is an exempt recipient. In addition, U.S. holders may be subject to backup withholding on the payment of such cash if they do not provide their taxpayer identification numbers in the manner required or otherwise fail to comply with applicable backup withholding rules. Backup withholding is not an additional tax. Any amounts withheld under the backup withholding rules may be refunded or allowed as a credit against a U.S. holder’s U.S. federal income tax liability, if any, provided the required information is timely furnished to the IRS.

Tax Consequences to Non-U.S. Holders

For purposes of this discussion, a “non-U.S. holder” is a beneficial owner of our common stock that is neither a U.S. holder nor a partnership (or an entity treated as a partnership for U.S. federal income tax purposes).

Generally, a non-U.S. holder will not recognize any gain or loss upon the proposed Reverse Stock Split. In particular, any gain or loss realized with respect to cash received in lieu of a fractional share generally will not be subject to U.S. federal income or withholding tax unless (a) such gain or loss is effectively connected with the non-U.S. holder’s conduct of a trade or business in the United States (and, if required by an applicable income tax treaty, is attributable to a U.S. permanent establishment maintained by the non-U.S. holder), (b) the non-U.S. holder is a nonresident alien individual present in the United States for 183 days or more during the taxable year of the proposed Reverse Stock Split and certain other conditions are met, or (c) our common stock constitutes a U.S. real property interest by reason of our status as U.S. real property holding corporation for U.S. federal income tax purposes.

Gain described in clause (a) above generally will be subject to U.S. federal income tax on a net income basis in the same manner as if the non-U.S. holder were a U.S. holder. A non-U.S. holder that is a foreign corporation also may be subject to a branch profits tax at a rate of 30% (or such lower rate specified by an applicable income tax treaty) on such effectively connected gain, as adjusted for certain items. A non-U.S. holder described in clause (b) above will be subject to U.S. federal income tax at a rate of 30% (or, if applicable, a lower treaty rate) on the gain realized with respect to cash received in lieu of a fractional share, which may be offset by certain U.S. source capital losses, even though the non-U.S. holder is not considered a resident of the United States. With respect to clause (c) above, we believe we are not currently and do not anticipate becoming a U.S. real property holding corporation. If we are or have been a U.S. real property holding corporation, any gain realized with respect to cash received in lieu of a fractional share may be treated as effectively connected with the conduct a trade or business in the United States subject to U.S. federal income tax and the cash proceeds may also be subject to a 10% withholding tax.

Information Reporting and Backup Withholding .  In general, backup withholding and information reporting will not apply to payment of cash in lieu of a fractional share of our common stock to a non-U.S. holder pursuant to the proposed Reverse Stock Split if the non-U.S. holder certifies under penalties of perjury that it is a non-U.S. holder and the applicable withholding agent does not have actual knowledge to the contrary. Backup withholding is not an additional tax. Any amounts withheld under the backup withholding rules may be refunded or allowed as a credit against the non-U.S. holder’s U.S. federal income tax liability, if any, provided that certain required information is timely furnished to the IRS.

FORWARD-LOOKING STATEMENTS

This Information Statement may contain certain “forward-looking” statements as such term is defined by the U.S. Securities and Exchange Commission in its rules, regulations and releases, which represent our expectations or beliefs, including but not limited to, statements concerning our operations, economic performance, financial condition, growth and acquisition strategies, investments, and future operational plans. For this purpose, any statements contained herein that are not statements of historical fact may be deemed to be forward-looking statements. Without limiting the generality of the foregoing, words such as “may,” “will,” “expect,” “believe,” “anticipate,” “intend,” “could,” “estimate,” “might,” or “continue” or the negative or other variations thereof or comparable terminology are intended to identify forward-looking statements. These statements, by their nature, involve substantial risks and uncertainties, certain of which are beyond our control, and actual results may differ materially depending on a variety of important factors, including uncertainty related to acquisitions, governmental regulation, managing and maintaining growth, volatility of stock prices and any other factors discussed in this and other of our filings with the Securities and Exchange Commission.

January [*], 2019