<SEC-DOCUMENT>0001144204-13-037357.txt : 20130701
<SEC-HEADER>0001144204-13-037357.hdr.sgml : 20130701
<ACCEPTANCE-DATETIME>20130701093054
ACCESSION NUMBER:		0001144204-13-037357
CONFORMED SUBMISSION TYPE:	8-K
PUBLIC DOCUMENT COUNT:		5
CONFORMED PERIOD OF REPORT:	20130701
ITEM INFORMATION:		Entry into a Material Definitive Agreement
ITEM INFORMATION:		Completion of Acquisition or Disposition of Assets
ITEM INFORMATION:		Changes in Control of Registrant
ITEM INFORMATION:		Departure of Directors or Certain Officers; Election of Directors; Appointment of Certain Officers: Compensatory Arrangements of Certain Officers
ITEM INFORMATION:		Amendments to Articles of Incorporation or Bylaws; Change in Fiscal Year
ITEM INFORMATION:		Other Events
ITEM INFORMATION:		Financial Statements and Exhibits
FILED AS OF DATE:		20130701
DATE AS OF CHANGE:		20130701

FILER:

	COMPANY DATA:	
		COMPANY CONFORMED NAME:			DOCUMENT SECURITY SYSTEMS INC
		CENTRAL INDEX KEY:			0000771999
		STANDARD INDUSTRIAL CLASSIFICATION:	SERVICES-COMPUTER INTEGRATED SYSTEMS DESIGN [7373]
		IRS NUMBER:				161229730
		STATE OF INCORPORATION:			NY
		FISCAL YEAR END:			1231

	FILING VALUES:
		FORM TYPE:		8-K
		SEC ACT:		1934 Act
		SEC FILE NUMBER:	001-32146
		FILM NUMBER:		13942840

	BUSINESS ADDRESS:	
		STREET 1:		36 WEST MAIN ST
		STREET 2:		SUITE 710
		CITY:			ROCHESTER
		STATE:			NY
		ZIP:			14614
		BUSINESS PHONE:		585 232 1500

	MAIL ADDRESS:	
		STREET 1:		36 W MAIN ST
		STREET 2:		SUITE 710
		CITY:			ROCHESTER
		STATE:			NY
		ZIP:			14614

	FORMER COMPANY:	
		FORMER CONFORMED NAME:	NEW SKY COMMUNICATIONS INC
		DATE OF NAME CHANGE:	19920703

	FORMER COMPANY:	
		FORMER CONFORMED NAME:	THOROUGHBREDS USA INC
		DATE OF NAME CHANGE:	19861118
</SEC-HEADER>
<DOCUMENT>
<TYPE>8-K
<SEQUENCE>1
<FILENAME>v348980_8k.htm
<DESCRIPTION>FORM 8-K
<TEXT>
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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>UNITED STATES</B>&nbsp;</P>

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

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center"><B>Washington, D.C. 20549</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>FORM 8-K</B></P>

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

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

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

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center"><B>Pursuant to Section 13 or 15(d) of the
Securities Exchange Act of 1934</B></P>

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

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center">Date of Report (Date of earliest event reported):
<B>July 1, 2013</B></P>

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

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

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

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

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center; text-indent: 0.5in">&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: 33%; text-align: center"><FONT STYLE="font-size: 10pt"><B>New York</B></FONT></TD>
    <TD STYLE="width: 1%">&nbsp;</TD>
    <TD STYLE="width: 32%; text-align: center"><FONT STYLE="font-size: 10pt"><B>001-32146</B></FONT></TD>
    <TD STYLE="width: 1%">&nbsp;</TD>
    <TD STYLE="width: 33%; text-align: center"><FONT STYLE="font-size: 10pt"><B>16-1229730</B></FONT></TD></TR>
<TR STYLE="vertical-align: top">
    <TD STYLE="text-align: center"><FONT STYLE="font-size: 10pt"><B>(State or other jurisdiction of incorporation)</B></FONT></TD>
    <TD>&nbsp;</TD>
    <TD STYLE="text-align: center"><FONT STYLE="font-size: 10pt"><B>(Commission File Number)</B></FONT></TD>
    <TD>&nbsp;</TD>
    <TD STYLE="text-align: center"><FONT STYLE="font-size: 10pt"><B>(IRS Employer Identification No.)</B></FONT></TD></TR>
</TABLE>
<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.5in">&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: 45%; text-align: center"><FONT STYLE="font-size: 10pt"><B>First Federal Plaza, Suite 1525</B></FONT></TD>
    <TD STYLE="width: 10%; text-align: center">&nbsp;</TD>
    <TD STYLE="width: 45%; text-align: center">&nbsp;</TD></TR>
<TR STYLE="vertical-align: top">
    <TD STYLE="text-align: center"><FONT STYLE="font-size: 10pt"><B>28 East Main Street</B></FONT></TD>
    <TD STYLE="text-align: center">&nbsp;</TD>
    <TD STYLE="text-align: center">&nbsp;</TD></TR>
<TR STYLE="vertical-align: top">
    <TD STYLE="text-align: center"><FONT STYLE="font-size: 10pt"><B>Rochester, NY</B></FONT></TD>
    <TD STYLE="text-align: center">&nbsp;</TD>
    <TD STYLE="text-align: center"><FONT STYLE="font-size: 10pt"><B>14614</B></FONT></TD></TR>
<TR STYLE="vertical-align: top">
    <TD STYLE="text-align: center"><FONT STYLE="font-size: 10pt"><B>(Address of principal executive offices)</B></FONT></TD>
    <TD STYLE="text-align: center">&nbsp;</TD>
    <TD STYLE="text-align: center"><FONT STYLE="font-size: 10pt"><B>(Zip Code)</B></FONT></TD></TR>
</TABLE>
<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center; text-indent: 0.5in">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center">Registrant&rsquo;s telephone number, including
area code: <B>(585) 325-3610</B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center">&nbsp;&nbsp;</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>(Former name or former address, if changed
since last report.)</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-indent: 0.5in">&nbsp;</P>

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

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.5in">&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"></TD><TD STYLE="width: 0.5in"><FONT STYLE="font-family: Wingdings">&uml;</FONT></TD><TD STYLE="text-align: justify"><FONT STYLE="font-size: 10pt">Written communications pursuant to Rule 425 under the Securities
Act (17 CFR 230.425)</FONT></TD></TR></TABLE>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 0.5in; text-align: justify; text-indent: -0.5in">&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"></TD><TD STYLE="width: 0.5in"><FONT STYLE="font-family: Wingdings">&uml;</FONT></TD><TD STYLE="text-align: justify"><FONT STYLE="font-size: 10pt">Soliciting material pursuant to Rule 14a-12 under the Exchange Act
(17 CFR 240.14a-12)</FONT></TD></TR></TABLE>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 0.5in; text-align: justify; text-indent: -0.5in">&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"></TD><TD STYLE="width: 0.5in"><FONT STYLE="font-family: Wingdings">&uml;</FONT></TD><TD STYLE="text-align: justify"><FONT STYLE="font-size: 10pt">Pre-commencement communications pursuant to Rule 14d-2(b) under the
Exchange Act (17 CFR 240.14d-2(b))</FONT></TD></TR></TABLE>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 0.5in; text-align: justify; text-indent: -0.5in">&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"></TD><TD STYLE="width: 0.5in"><FONT STYLE="font-family: Wingdings">&uml;</FONT></TD><TD STYLE="text-align: justify"><FONT STYLE="font-size: 10pt">Pre-commencement communications pursuant to Rule 13e-4(c) under the
Exchange Act (17 CFR 240.13e-4(c))</FONT></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"><B>&nbsp;</B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"><B>Forward-Looking Statements</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-indent: 27pt"><I>Statements contained in this Current Report
on Form 8-K relating to Document Security Systems, Inc.&rsquo;s or management&rsquo;s intentions, hopes, beliefs, expectations
or predictions of the future, including statements relating to the combined company&rsquo;s management and board of directors and
any other statements about Document Security Systems, Inc.&rsquo;s management team&rsquo;s future expectations, beliefs, goals,
plans or prospects are forward-looking statements. Document Security Systems, Inc.&rsquo;s actual results could differ materially
from those projected in these forward-looking statements. Additional factors that could cause actual results to differ materially
from those described in the forward-looking statements are set forth in the 424(b)(3) proxy statement/prospectus of Document Security
Systems, Inc. (File No.&nbsp;333-185134), filed with the SEC on May 15, 2013, and in subsequent reports on Forms 10-Q and 8-K and
other filings made with the SEC by Document Security Systems, Inc. Document Security Systems, Inc. disclaims any intention or obligation
to revise any forward-looking statements, including financial estimates, whether as a result of new information, future events
or otherwise.</I></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="font: 10pt Times New Roman, Times, Serif; margin-top: 0; margin-bottom: 0"><TR STYLE="vertical-align: top; text-align: justify">
<TD STYLE="width: 0in"></TD><TD STYLE="width: 1in; text-align: left"><B>Item 1.01</B></TD><TD STYLE="text-align: justify"><B>Entry into a Material Definitive Agreement.</B></TD>
</TR></TABLE>

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

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 27.5pt">The disclosure in Item 2.01 of this Current
Report on Form 8-K (the &ldquo;<U>Current Report</U>&rdquo;) is incorporated herein by reference.</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="font: 10pt Times New Roman, Times, Serif; margin-top: 0; margin-bottom: 0"><TR STYLE="vertical-align: top; text-align: justify">
<TD STYLE="width: 0in"></TD><TD STYLE="width: 1in; text-align: left"><B>Item 2.01</B></TD><TD STYLE="text-align: justify"><B>Completion of Acquisition or Disposition of Assets.</B></TD>
</TR></TABLE>

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

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 27.5pt"><B><I>Completion of Merger with Lexington</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-indent: 27.5pt"><FONT STYLE="color: black">On July 1, 2013
(the &ldquo;<U>Closing Date</U>&rdquo;), DSSIP, Inc., a Delaware corporation (&ldquo;<U>Merger Sub</U>&rdquo;) and a wholly-owned
subsidiary of Document Security Systems, Inc. (the &ldquo;<U>Company</U>&rdquo; or &ldquo;<U>DSS</U>&rdquo;) merged with and into
Lexington Technology Group, Inc., a Delaware corporation (&ldquo;<U>Lexington</U>&rdquo;), pursuant to the terms and conditions
of the previously announced Agreement and Plan of Merger, dated as of October 1, 2012 (as amended, the &ldquo;<U>Merger Agreement</U>&rdquo;),
by and among the Company, Lexington, Merger Sub and Hudson Bay Master Fund Ltd. (&ldquo;<U>Hudson Bay</U>&rdquo;), as representative
of Lexington&rsquo;s stockholders (the &ldquo;<U>Merger</U>&rdquo;). In connection with the Merger, the Company issued on the Closing
Date, its securities to Lexington&rsquo;s stockholders in exchange for the capital stock owned by Lexington&rsquo;s stockholders,
as follows (the &ldquo;<U>Merger Consideration</U>&rdquo;): (i) an aggregate of 16,558,387 shares of the Company&rsquo;s common
stock, par value $0.02 per share (the &ldquo;<U>Common Stock</U>&rdquo;)</FONT> <FONT STYLE="color: black">(which includes 2,500,000
Additional Shares and 240,559 Exchanged Shares, as such terms are defined in the Merger Agreement); (ii) 7,100,000 shares of the
Company&rsquo;s Common Stock to be held in escrow pursuant to an escrow agreement, dated July 1, 2013, entered into by and among
the Company, Hudson Bay and American Stock Transfer &amp; Trust Company, LLC</FONT>, as escrow agent (the &ldquo;<U>Escrow Agreement</U>&rdquo;)<FONT STYLE="color: black">;
(iii) warrants to purchase up to an aggregate of 4,859,894 shares of the Company&rsquo;s Common Stock, at an exercise price of
$4.80 per share and expiring on July 1, 2018; and (iv) warrants to purchase up to an aggregate of 3,432,170 shares of the Company&rsquo;s
Common Stock, at an exercise price of $0.02 per share and expiring on July 1, 2023 (the &ldquo;<U>$.02 Warrants</U>&rdquo;), to
Lexington&rsquo;s preferred stockholders that would beneficially own more than 9.99% of the shares of the Company&rsquo;s Common
Stock as a result of the Merger (the &ldquo;</FONT><U>Beneficial Ownership Condition</U>&rdquo;)<FONT STYLE="color: black">. In
addition, the Company assumed options to purchase an aggregate of 2,000,000 shares of the Company&rsquo;s Common Stock at an exercise
price of $3.00 per share, in exchange for 3,600,000 outstanding and unexercised stock options to purchase shares of Lexington&rsquo;s
common stock.</FONT> In addition, the Company issued an aggregate of 786,678 shares of Common Stock to Palladium Capital Advisors,
LLC as compensation for their services in connection with the transactions contemplated by the Merger Agreement. Of such shares,
400,000 shall be held in escrow pursuant to the same terms and conditions as those set forth in the Escrow Agreement.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 27.5pt">&nbsp;</P>


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<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 27.5pt">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 27.5pt"><FONT STYLE="color: black">As a result
of the consummation of the Merger, </FONT> <FONT STYLE="color: black">as of the Closing Date, </FONT>the former stockholders of
Lexington own approximately 51% of the outstanding common stock of the combined company and the stockholders of the Company prior
to the completion of the Merger own approximately 49% of the outstanding common stock of the combined company<FONT STYLE="color: black">.</FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 27.5pt">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 27.5pt">Pursuant to the Escrow Agreement, the shares
of the Company&rsquo;s Common Stock deposited in the escrow account will be released to the holders of the Lexington common stock
(pro rata on a fully-diluted basis as of the effective time of the Merger) if and when the closing price per share of the Company&rsquo;s
Common Stock exceeds $5.00 per share (as adjusted for stock splits, stock dividends and similar events) for 40 trading days within
a continuous 90 trading day period following the closing of the Merger. If within one year following the closing of the Merger,
such threshold is not achieved, the shares of the Company&rsquo;s Common Stock held in escrow shall be cancelled and returned to
the treasury of the Company. Lexington stockholders will have voting rights with respect to the Company&rsquo;s shares owned by
such stockholders and held in escrow for one year following the closing of the Merger even though such shares may be cancelled
and returned to the treasury of the Company if the condition for release of the shares held in escrow is not met.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 27.5pt">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 27.5pt">If after one year, the shares held in escrow
are cancelled because the conditions discussed above were not met, the former stockholders of Lexington are expected to own approximately
42 % of the outstanding common stock of the combined company and the stockholders of the Company prior to the completion of the
Merger are expected to own approximately 58% of the outstanding common stock of the combined company (without taking into account
any shares of the Company&rsquo;s Common Stock held by Lexington&rsquo;s stockholders prior to the completion of the Merger, and
excluding the exercise of any options and warrants).</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 27.5pt">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 27pt">The Company has not finalized its determination
of which of the combining entities in Merger is the accounting acquirer in accordance with FASB Topic ASC 805 &ldquo;Business Combinations&rdquo;.
If Lexington is determined to be the accounting acquirer, then the transaction will be accounted for as a reverse acquisition.
In the post-combination consolidated financial statements, Lexington&rsquo;s assets and liabilities will be presented at its pre-combination
carrying amounts, and DSS&rsquo;s assets and liabilities will be measured and recorded at fair value in accordance with FASB ASC
805. In addition, the consolidated equity will reflect DSS&rsquo;s common stock, at par value, as DSS is
the legal acquirer. The total consolidated equity will consist of Lexington&rsquo;s equity just before the Merger, along with DSS
issued and outstanding common stock prior to the transaction at the quoted price the day the transaction is consummated. Goodwill
will be allocated to each reporting unit that is expected to benefit from the synergies created by the business combination.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 15pt">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 27pt">If DSS is determined to be the accounting
acquirer then the transaction will be accounted for as a business combination in accordance with the Business Combination Topic
of the FASB ASC 805. Under the guidance, the assets and liabilities of the acquired business, Lexington, are recorded at their
fair value at the date of acquisition. The excess of the purchase price over the estimated fair values is recorded as goodwill,
if any. If the fair value of the assets acquired exceeds the purchase price and the liabilities assumed, then a gain on acquisition
is recorded.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 27pt">&nbsp;&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 27.5pt">The Merger Consideration was registered
under the Securities Act of 1933, as amended (the &ldquo;<U>Securities Act</U>&rdquo;), pursuant to a registration statement on
Form S-4 (File No.&nbsp;333-185134), originally filed with the U.S. Securities and Exchange Commission (the &ldquo;<U>SEC</U>&rdquo;)
on November 26, 2012, as amended, and declared effective on May&nbsp;10, 2013 (the &ldquo;<U>Form S-4</U>&rdquo;). The prospectus
included in the Form S-4 contains additional information about the Merger and the related transactions. The Form S-4 also included
the proxy statement for the Special Meeting of Stockholders of the Company, held on June&nbsp;20, 2013 (the &ldquo;<U>Proxy Statement</U>&rdquo;).</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 51.7pt">&nbsp;</P>


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<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 51.7pt">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 27pt">The foregoing description of the Merger Agreement
is not complete and is subject to, and qualified in its entirety by, the full text of the Merger Agreement, which was attached
as Exhibit 2.1 to the Company&rsquo;s Current Report on Form 8-K filed with the SEC on October 4, 2012, as amended, the terms of
which are incorporated herein by reference.&nbsp;</P>

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

<TABLE CELLPADDING="0" CELLSPACING="0" STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0; margin-bottom: 0"><TR STYLE="vertical-align: top; text-align: justify">
<TD STYLE="width: 0in"></TD><TD STYLE="width: 1in; text-align: left"><B>Item 5.01</B></TD><TD STYLE="text-align: justify"><B>Changes in Control of Registrant.</B></TD>
</TR></TABLE>

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

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 27.5pt">As a result of the transactions under
the Merger Agreement, a change of control of the Company may be deemed to have occurred. The disclosure of Item 2.01 of
this Current Report is incorporated herein by reference</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 27.5pt">&nbsp;</P>

<TABLE CELLPADDING="0" CELLSPACING="0" STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0; margin-bottom: 0"><TR STYLE="vertical-align: top; text-align: justify">
<TD STYLE="width: 0in"></TD><TD STYLE="width: 1in; text-align: left"><B>Item 5.02</B></TD><TD STYLE="text-align: justify"><B>Departure of Directors or Certain Officers; Election
of Directors; Appointment of Certain Officers; Compensatory Arrangement of Certain Officers.</B></TD>
</TR></TABLE>

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

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 27pt">On July 1, 2013, pursuant to the Merger Agreement
and in connection with the completion of the Merger, Messrs. David Wicker, Roger O&rsquo;Brien, and John Cronin resigned from the
board of directors of the Company (the &ldquo;<U>Board</U>&rdquo;) and Messrs. <FONT STYLE="color: black">Jeffrey Ronaldi, Peter
Hardigan, Jonathon Perrelli and Warren Hurwitz were appointed to the Board</FONT>.<FONT STYLE="color: black"> </FONT>Messrs. <FONT STYLE="color: black">David
Klein, Ira A. Greenstein, Robert B. Bzdick and Robert B. Fagenson will continue to serve as members of the Board.</FONT></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-indent: 27pt">On July 1, 2013, pursuant to the Merger Agreement
and in connection with the completion of the Merger, Robert B. Bzdick resigned from his position as the Company&rsquo;s Chief Executive
Officer.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 27pt">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 27pt">On July 1, 2013, the Board elected the following
persons to the offices set forth opposite their names, to hold office in accordance with the by-laws of the Company:</P>

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

<TABLE CELLSPACING="0" CELLPADDING="0" STYLE="font: 10pt Times New Roman, Times, Serif; width: 85%; border-collapse: collapse; margin-left: 0.6in">
<TR STYLE="vertical-align: top">
    <TD STYLE="width: 30%"><FONT STYLE="font-size: 10pt">Jeffrey Ronaldi</FONT></TD>
    <TD STYLE="width: 70%"><FONT STYLE="font-size: 10pt">Chief Executive Officer</FONT></TD></TR>
<TR STYLE="vertical-align: top">
    <TD><FONT STYLE="font-size: 10pt">Peter Hardigan</FONT></TD>
    <TD><FONT STYLE="font-size: 10pt">Chief Operating Officer</FONT></TD></TR>
<TR STYLE="vertical-align: top">
    <TD><FONT STYLE="font-size: 10pt">Philip Jones</FONT></TD>
    <TD><FONT STYLE="font-size: 10pt">Chief Financial Officer </FONT></TD></TR>
<TR STYLE="vertical-align: top">
    <TD><FONT STYLE="font-size: 10pt">Robert B. Bzdick</FONT></TD>
    <TD><FONT STYLE="font-size: 10pt">President</FONT></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-indent: 27pt">The information relating to Messrs. Ronaldi,
Hardigan, Jones and Bzdick required by Item 5.02(c)(2) and (3) of Form 8-K are incorporated herein by reference to the relevant
sections of the Proxy Statement.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 27pt">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 27pt">On July 1, 2013, the Company assumed all
of the duties, obligations and liabilities of Lexington under (i) the employment agreement with Jeffrey Ronaldi, dated November
20, 2012 (the &ldquo;<U>Ronaldi Agreement</U>&rdquo;), and (ii) the amended employment agreement with Peter Hardigan, dated November
20, 2012 (the &ldquo;<U>Hardigan Agreement</U>&rdquo;).</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-indent: 27pt">The Ronaldi Agreement has an initial term
of three years, commencing on November 9, 2012, and is automatically renewable for additional consecutive one year terms, unless
at least ninety days written notice is given by either the Company or Mr. Ronaldi prior to the commencement of the next renewal
term. The Ronaldi Agreement provides for an annual base salary of $350,000 and an annual discretionary bonus based upon Mr. Ronaldi&rsquo;s
and the Company&rsquo;s achievement of annual performance objectives, as determined by the Board. The Company also assumed the
non-statutory option to purchase shares of Lexington&rsquo;s common stock previously granted to Mr. Ronaldi. The Ronaldi Agreement
also provides for Mr. Ronaldi&rsquo;s participation in all benefit programs the Company establishes and makes available to its
executive employees, and for reimbursement to Mr. Ronaldi for reasonable travel, entertainment, mileage and other business expenses.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 27pt">&nbsp;</P>


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    <!-- Field: /Page -->

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 27pt">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 27pt">The Ronaldi Agreement is terminable by the
Company for cause or upon thirty days prior written notice without cause, and terminable at Mr. Ronaldi&rsquo;s election upon thirty
days prior written notice. If the Company terminates Mr. Ronaldi without cause, then the Company will pay Mr. Ronaldi: (i) a lump
sum amount equal to his base salary for the balance of the then-remaining term of the Ronaldi Agreement, but no less than six months&rsquo;
base salary (ii) the Company&rsquo;s share of the cost of health insurance coverage pursuant to COBRA for the then-remaining term
of the Ronaldi Agreement and (iii) reimbursement of business expenses incurred by Mr. Ronaldi prior to termination.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 27pt">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 27pt">The Ronaldi Agreement also includes certain
confidentiality, non-compete and non-solicitation provisions effective for a period of twelve months following the termination
of Mr. Ronaldi&rsquo;s employment with the Company. The Hardigan Agreement has an initial term of one year, commencing on August
1, 2012, and is automatically renewable for additional consecutive one year terms, unless at least ninety days written notice is
given by either the Company or Mr. Hardigan prior to the commencement of the next renewal term. The Hardigan Agreement provides
for an annual base salary of $250,000, effective August 1, 2012, and an annual discretionary bonus based upon Mr. Hardigan&rsquo;s
and the Company&rsquo;s achievement of annual performance objectives, as determined by the Board.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 27pt">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 27pt">The Company also assumed the non-statutory
option to purchase shares of Lexington&rsquo;s common stock previously granted to Mr. Hardigan. The Hardigan Agreement also provides
for Mr. Hardigan&rsquo;s participation in all benefit programs the Company establishes and makes available to its executive employees,
and for reimbursement to Mr. Hardigan for reasonable travel, entertainment, mileage and other business expenses.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 27pt">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 27pt">The Hardigan Agreement is terminable by the
Company for cause or upon thirty days prior written notice without cause, and terminable at Mr. Hardigan&rsquo;s election upon
thirty days prior written notice. If the Company terminates Mr. Hardigan without cause, then the Company will pay Mr. Hardigan:
(i) a lump sum amount equal to his base salary for the balance of the then-remaining term of the Hardigan Agreement, but no less
than six months&rsquo; base salary, (ii) the Company&rsquo;s share of the cost of health insurance coverage pursuant to COBRA for
the then-remaining term of the Hardigan Agreement and (iii) reimbursement of business expenses incurred by Mr. Hardigan prior to
termination.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 27pt">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 27pt">The Hardigan Agreement also includes certain
confidentiality, non-compete and non-solicitation provisions effective for a period of twelve months following the termination
of Mr. Hardigan&rsquo;s employment with the Company.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 27pt">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 27pt">The foregoing descriptions of the employment
agreements are not complete and are subject to, and qualified in their entirety by, the full text of the employment agreements
with Messrs. Ronaldi and Hardigan, which are attached to this Current Report as Exhibit 10.2 and Exhibit 10.3, respectively, and
are incorporated herein by reference.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 27pt">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 27pt">As disclosed in Item 5.07 of the Current
Report on Form 8-K filed with the Securities and Exchange Commission on June 21, 2013, at the Company&rsquo;s Special Meeting of
Stockholders held on June 20, 2013, the stockholders of the Company approved the Document Security Systems, Inc. 2013 Employee,
Director and Consultant Equity Incentive Plan (the &ldquo;<U>2013 Plan</U>&rdquo;).</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 27pt">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 27pt">The description of the 2013 Plan is qualified
in its entirety by reference to the 2013 Plan, a copy of which is attached hereto as Exhibit 10.1 and is incorporated herein by
reference. Further information about the 2013 Plan is included in the Proxy Statement.</P>

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


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

<TABLE CELLPADDING="0" CELLSPACING="0" STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0; margin-bottom: 0"><TR STYLE="vertical-align: top; text-align: justify">
<TD STYLE="width: 0in"></TD><TD STYLE="width: 1in; text-align: left"><B>Item 5.03</B></TD><TD STYLE="text-align: justify"><B>Amendments to Articles of Incorporation or Bylaws;
Change in Fiscal Year.</B></TD>
</TR></TABLE>

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

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 27.5pt">The disclosure in Item 3.03 of this Current
Report is incorporated herein by reference.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 27.5pt">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 27.5pt">On July 1, 2013, the Board approved an
amendment and restatement of the Company's Amended and Restated Bylaws (the &quot;<U>Third Amended and Restated Bylaws</U>&quot;),
effective as of the same date. Among other changes, the Third Amended and Restated Bylaws (i) increase the number of members on
the Board from eight to nine (Section 2.1); (ii) reduce the notice period for special meetings of the Board from five business
days to 24 hours (Section 3.2); (iii) reduce the written shareholder consent requirement from unanimous written consent to the
minimum number of votes necessary to take action (Section 5.7(d)); (iv) redefine the Company&rsquo;s executive officers to include
a chief executive officer, chief operating officer, president and chief financial officer (Article 6); and (v) permit the removal
of Directors by shareholders or the Board for cause only (Section 2.9).</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 27.5pt">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 27.5pt">The Third Amended and Restated Bylaws is
qualified in its entirety by reference thereto, which is attached hereto as Exhibit 3.1 and is incorporated herein by reference.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 27.5pt"><B>&nbsp;</B></P>

<TABLE CELLPADDING="0" CELLSPACING="0" STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0; margin-bottom: 0"><TR STYLE="vertical-align: top; text-align: justify">
<TD STYLE="width: 0in"></TD><TD STYLE="width: 1in; text-align: left"><B>Item 8.01</B></TD><TD STYLE="text-align: justify"><B>Other Events.</B></TD>
</TR></TABLE>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 27.5pt">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 27.5pt">On July 1, 2013, the Company issued a press
release announcing the completion of the previously announced Merger, pursuant to the Merger Agreement. A copy of the press release
is attached hereto as Exhibit 99.1 and is incorporated herein by reference.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 27.5pt">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 27.5pt">As required by Item 9.01, the Company has
also filed as Exhibit 99.2 the audited consolidated balance sheets as of December 31, 2012, the related consolidated statements
of operations, statement of changes in stockholders&rsquo; equity and statements of cash flows for the period from May 10, 2012
(Inception) to December 31, 2012, and related notes thereto, filed pursuant to Item 9.01(a) of this Current Report.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 27.5pt">&nbsp;</P>

<TABLE CELLPADDING="0" CELLSPACING="0" STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0; margin-bottom: 0"><TR STYLE="vertical-align: top; text-align: justify">
<TD STYLE="width: 0in"></TD><TD STYLE="width: 1in; text-align: left"><B>Item 9.01</B></TD><TD STYLE="text-align: justify"><B>Financial Statements and Exhibits</B></TD>
</TR></TABLE>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; 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"><TR STYLE="vertical-align: top; text-align: justify">
<TD STYLE="width: 0in"></TD><TD STYLE="width: 0.5in; text-align: left">(a)</TD><TD STYLE="text-align: justify"><B><I>Financial Statements of business acquired</I></B>.</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-indent: 27.5pt">The audited consolidated financial statements
of Lexington for the period from May 10, 2012 (Inception) to December 31, 2012 required to be filed pursuant to Item 9.01(a) of
Form 8-K are filed herewith as Exhibit 99.2 and are incorporated into this Current Report by reference.&nbsp;The unaudited interim
financial statements of Lexington for the three month period ended March 31, 2013 required to be filed pursuant to Item 9.01(a)
of Form 8-K <FONT STYLE="background-color: white">will be reported on an amended Current Report on Form 8-K not later than September
13, 2013.</FONT></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="font: 10pt Times New Roman, Times, Serif; margin-top: 0; margin-bottom: 0"><TR STYLE="vertical-align: top; text-align: justify">
<TD STYLE="width: 0in"></TD><TD STYLE="width: 0.5in; text-align: left">(b)</TD><TD STYLE="text-align: justify"><B><I>Pro forma financial information</I></B>.</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-indent: 27.5pt">The unaudited pro forma financial information
required to be filed pursuant to Item 9.01(b) of Form 8-K <FONT STYLE="background-color: white">will be reported on an amended
Current Report on Form 8-K not later than September 13, 2013.</FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 27.5pt">&nbsp;</P>

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


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<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"><TR STYLE="vertical-align: top; text-align: justify">
<TD STYLE="width: 0in"></TD><TD STYLE="width: 0.5in; text-align: left">(d)</TD><TD STYLE="text-align: justify">Exhibits.</TD>
</TR></TABLE>

<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: bottom">
    <TD NOWRAP STYLE="width: 12%; border-bottom: black 1pt solid"><FONT STYLE="font-size: 10pt; color: black"><B>Exhibit <BR>
Number</B></FONT></TD>
    <TD NOWRAP STYLE="width: 1%; padding-left: 5.5pt">&nbsp;</TD>
    <TD NOWRAP STYLE="width: 87%; border-bottom: black 1pt solid"><FONT STYLE="font-size: 10pt; color: black"><B>Description</B></FONT></TD></TR>
<TR STYLE="vertical-align: top">
    <TD><FONT STYLE="font-size: 10pt; color: black">2.1</FONT></TD>
    <TD STYLE="padding-left: 5.5pt">&nbsp;</TD>
    <TD><FONT STYLE="font-size: 10pt; color: black">Agreement and Plan of Merger by and among Document Security Systems, Inc., DSSIP, Inc. and Lexington Technology Group, Inc. and Hudson Bay Master Fund Ltd., dated as of October 1, 2012 (incorporated by reference to Exhibit 2.1 to the Company&rsquo;s Current Report on Form 8-K filed on October 4, 2012)</FONT></TD></TR>
<TR STYLE="vertical-align: top">
    <TD><FONT STYLE="font-size: 10pt; color: black">3.1</FONT></TD>
    <TD STYLE="padding-left: 5.5pt">&nbsp;</TD>
    <TD><FONT STYLE="font-size: 10pt; color: black">Third Amended and Restated By-Laws of Document Security Systems, Inc.</FONT></TD></TR>
<TR STYLE="vertical-align: top">
    <TD><FONT STYLE="font-size: 10pt; color: black">4.1</FONT></TD>
    <TD STYLE="padding-left: 5.5pt">&nbsp;</TD>
    <TD><FONT STYLE="font-size: 10pt; color: black">Form of Warrant (incorporated by reference to Annex D to Definitive Proxy Statement/Prospectus (File No. 333-185134) filed on May 15, 2013)</FONT></TD></TR>
<TR STYLE="vertical-align: top">
    <TD><FONT STYLE="font-size: 10pt; color: black">4.2</FONT></TD>
    <TD STYLE="padding-left: 5.5pt">&nbsp;</TD>
    <TD><FONT STYLE="font-size: 10pt; color: black">Form of $.02 Warrant (incorporated by reference to Annex C to Definitive Proxy Statement/Prospectus (File No. 333-185134) filed on May 15, 2013)</FONT></TD></TR>
<TR STYLE="vertical-align: top">
    <TD><FONT STYLE="font-size: 10pt; color: black">10.1</FONT></TD>
    <TD STYLE="padding-left: 5.5pt">&nbsp;</TD>
    <TD><FONT STYLE="font-size: 10pt; color: black">Document Security Systems, Inc. 2013 Employee, Director and Consultant Equity Incentive Plan (incorporated by reference to Annex H to Definitive Proxy Statement/Prospectus (File No. 333-185134) filed on May 15, 2013)</FONT></TD></TR>
<TR STYLE="vertical-align: top">
    <TD><FONT STYLE="font-size: 10pt; color: black">10.2</FONT></TD>
    <TD STYLE="padding-left: 5.5pt">&nbsp;</TD>
    <TD><FONT STYLE="font-size: 10pt; color: black">Employment Agreement, dated November 20, 2012, by and between Lexington Technology Group, Inc. and Jeffrey Ronaldi (incorporated by reference to exhibit 10.71 to Registration Statement on Form S-4 (File No. 333-185134) filed on November 23, 2012)</FONT></TD></TR>
<TR STYLE="vertical-align: top">
    <TD><FONT STYLE="font-size: 10pt; color: black">10.3</FONT></TD>
    <TD STYLE="padding-left: 5.5pt">&nbsp;</TD>
    <TD><FONT STYLE="font-size: 10pt; color: black">Amended Employment Agreement, dated November 20, 2012, by and between Lexington Technology Group, Inc. and Peter Hardigan (incorporated by reference to exhibit 10.70 to Registration Statement on Form S-4 (File No. 333-185134) filed on November 23, 2012)</FONT></TD></TR>
<TR STYLE="vertical-align: top">
    <TD>&nbsp;</TD>
    <TD STYLE="padding-left: 5.5pt">&nbsp;</TD>
    <TD>&nbsp;</TD></TR>
<TR STYLE="vertical-align: top">
    <TD><FONT STYLE="font-size: 10pt; color: black">99.1</FONT></TD>
    <TD STYLE="padding-left: 5.5pt">&nbsp;</TD>
    <TD><FONT STYLE="font-size: 10pt; color: black">Press Release, dated July 1, 2013</FONT></TD></TR>
<TR STYLE="vertical-align: top">
    <TD><FONT STYLE="font-size: 10pt; color: black">99.2</FONT></TD>
    <TD STYLE="padding-left: 5.5pt">&nbsp;</TD>
    <TD><FONT STYLE="font-size: 10pt; color: black">Lexington Technology Group, Inc. audited consolidated balance sheets as of December 31, 2012, the related consolidated statements of operations, statement of changes in stockholders&rsquo; equity and statements of cash flows for the period from May 10, 2012 (Inception) to December 31, 2012, and related notes thereto</FONT></TD></TR>
</TABLE>
<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"><B>&nbsp;</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"><B>SIGNATURES</B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 25.3pt">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 27.5pt">Pursuant to the requirements of the Securities
Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 27.5pt">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.5in">&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>&nbsp;</TD>
    <TD COLSPAN="3"><FONT STYLE="font-size: 10pt; color: black"><B>DOCUMENT SECURITY SYSTEMS, INC.</B></FONT></TD></TR>
<TR STYLE="vertical-align: top">
    <TD>&nbsp;</TD>
    <TD COLSPAN="3">&nbsp;</TD></TR>
<TR STYLE="vertical-align: top">
    <TD><FONT STYLE="font-size: 10pt; color: black">Dated: July 1, 2013</FONT></TD>
    <TD><FONT STYLE="font-size: 10pt; color: black">By:</FONT></TD>
    <TD COLSPAN="2">
        <P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; border-bottom: Black 0.75pt solid">/s/ Jeffrey Ronaldi</P></TD></TR>
<TR STYLE="vertical-align: top">
    <TD STYLE="width: 50%">&nbsp;</TD>
    <TD STYLE="width: 4%">&nbsp;</TD>
    <TD STYLE="width: 5%"><FONT STYLE="font-size: 10pt; color: black">Name:</FONT></TD>
    <TD STYLE="width: 41%"><FONT STYLE="font-size: 10pt; color: black">Jeffrey Ronaldi</FONT></TD></TR>
<TR STYLE="vertical-align: top">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD><FONT STYLE="font-size: 10pt; color: black">Title:</FONT></TD>
    <TD><FONT STYLE="font-size: 10pt; color: black">Chief Executive Officer</FONT></TD></TR>
</TABLE>
<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"><B>&nbsp;</B></P>



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

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<DOCUMENT>
<TYPE>EX-3.1
<SEQUENCE>2
<FILENAME>v348980_ex3-1.htm
<DESCRIPTION>EXHIBIT 3.1
<TEXT>
<HTML>
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<P STYLE="margin: 0">&nbsp;</P>

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

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center"><B>THIRD AMENDED AND RESTATED BY-LAWS</B></P>

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

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center"><B>DOCUMENT SECURTTY SYSTEMS, INC.</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: center">(A New York Corporation)</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: center"><B><U>ARTICLE 1 - CORPORATE OFFICES</U></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: 0.5in"><B>(1.1) <U>Location</U>.</B>
The principal office of the Corporation shall be located at:</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center">First Federal Plaza, Suite 1525</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center">28 East Main Street</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center">Rochester, New York 14614</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: justify; text-indent: 0.5in"><B>(1.2) <U>Change
of Location</U>.</B> The Board of Directors (the &ldquo;Board&rdquo;) of Document Security Systems, Inc. (the &ldquo;Corporation&rdquo;)
may relocate the principal office of the Corporation, to a location within or without the state of incorporation, as the Board
may designate, by resolution adopted by the affirmative vote of a majority of the entire Board. As used in these Third Amended
and Restated By-Laws of the Corporation (the &ldquo;By-Laws&rdquo;), the term &ldquo;entire Board&rdquo; means the total authorized
number of directors which the Corporation would have if there were no vacancies.</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; text-indent: 0.5in"><B>(1.3) <U>Other Offices</U>.</B>
In addition to its principal office, the Corporation may establish and maintain such other offices, either within or without the
state of incorporation, as the Board may designate, by resolution adopted by the affirmative vote of a majority of the entire Board.</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: center"><B><U>ARTICLE 2 &ndash; BOARD OF DIRECTORS</U></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; text-indent: 0.5in"><B>(2.1) </B> <B><U>Number</U>.</B>
The number of directors of the Corporation shall be fixed from time to time by action of the shareholders or by resolution adopted
by the affirmative vote of a majority of the entire Board; provided that such number of directors shall not be less than three
nor more than nine, unless and until otherwise determined by vote of a majority of the entire Board; and provided further that
no decrease in the number of directors shall shorten the term of any incumbent director.</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: 0.5in"><B>(2.2)</B> <B><U>Election
of Directors</U></B>. Except as may otherwise be provided herein or in the Corporation&rsquo;s Certificate of Incorporation, as
amended (such Certificate of Incorporation, and any amendments thereof, hereinafter collectively referred to as the &ldquo;Certificate&rdquo;),
the members of the Board, who need not be shareholders of the Corporation, shall each be elected by receiving a majority of the
votes cast by the holders of shares of such class entitled to vote generally in the election of directors at each succeeding annual
meeting of the shareholders of the Corporation.</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: 0.5in"><B>(2.3)</B> <B><U>Term
of Office</U>.</B> A director shall hold office until the next year&rsquo;s annual meeting and until his or her successor has been
elected and qualified, subject, however, to such director&rsquo;s earlier death, resignation, retirement, disqualification or removal.</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"></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"><B>(2.4) <U>Duties
and Powers</U>.</B> The Board shall be responsible for the control and management of the affairs, property and interests of the
Corporation, and may exercise all powers of the Corporation, except as are in the Certificate or by statute expressly conferred
upon or reserved to the shareholders.</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: 0.5in"><B>(2.5) <U>Qualification</U>.</B>
No person shall serve as a director unless such person is at least twenty-one years of age.</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"><B>(2.6) <U>Notices</U>.</B>
Upon taking office, each director shall file with the Secretary a written designation of the address that the director desires
to be used for the purpose of giving notices to him. Until the director shall have effectively done so, he shall be deemed to have
designated either the principal office of the Corporation or any other address that the sender of the notice could reasonably believe
to be an appropriate address. Any designated address may be re-designated by similar filing with the Secretary. The Secretary shall
give each of the other directors prompt notice of every designation or re-designation filed. The designation or re-designation
shall be effective three business days after the Secretary&rsquo;s action or upon earlier receipt. Any notice to a director shall
be valid if sent to either (a) the director&rsquo;s designated address or (b) any other address used in good faith unless it be
shown that prejudice resulted from use of such other address. All notices must be in writing. Any notice may be delivered by hand
or sent by telecommunications device, by e-mail, by regular mail, by overnight courier, or by similar means.</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: 0.5in"><B>(2.7) <U>Resignation</U>.</B>
A director may resign at any time by giving notice to each of the other directors or to the Corporation. Unless otherwise specified,
the notice shall be effective immediately and acceptance shall not be necessary to make it effective. A director need not assign
cause for resigning.</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; text-indent: 0.5in"><B>(2.8) <U>Newly Created
Directorships; Vacancies</U>.</B> Newly created directorships resulting from an increase in the number of directors and any vacancies
on the Board resulting from death, resignation, retirement, disqualification, removal or other cause may be filled solely by a
majority vote of the remaining directors then in office, even if less than a quorum, or by a sole remaining director, and any director
so chosen shall hold office for the remainder of the full term of the departed director and until his or her successor has been
elected and qualified, subject, however, to such director&rsquo;s earlier death, resignation, retirement, disqualification or removal.</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"><B>(2.9) <U>Removal</U>.
</B>(i) Any director, or the entire Board, may be removed by the shareholders from office at any time prior to the expiration of
his or their respective terms of office, but only for cause, and only by the affirmative vote of the holders of record of outstanding
shares representing a majority of the voting power of all the outstanding shares of capital stock of the Corporation entitled to
vote generally in the election of directors, and (ii) any director may be removed from office by the affirmative vote of a majority
of the entire Board, at any time prior to the expiration of his term of office, but only for cause.</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: 0.5in"><B>(2.10) <U>Rights
of Preferred Shareholders</U></B>. Notwithstanding any other provision of this Section 2, and except as otherwise required by law,
whenever the holders of one or more series of Preferred Stock shall have the right, voting separately by class or series, to elect
one or more directors, the term of office, the filling of vacancies, the removal from office and other features of such directorships
shall be governed by the terms of such series of Preferred Stock.</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: center"><B><U>ARTICLE 3 &ndash;BOARD MEETINGS; PROCEDURES;
COMPENSATION; COMMITTEES</U></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; text-indent: 0.5in"><B>(3.1) <U>Regular
Meetings</U>.</B> A regular meeting of the Board shall be held immediately after the annual meeting of shareholders. The Board
may provide for other regular meetings. Notice need not be given of any regular meeting.</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; text-indent: 0.5in"><B>(3.2) <U>Special
Meetings</U>.</B> The Chairman or Chief Executive Officer, or any two directors together, may call a special meeting. The special
meeting notice does not have to specify the business to be transacted. Special meetings of the Board shall be held upon notice
to the directors not less than twenty-four (24) hours before the meeting.</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"><B>(3.3) <U>Adjourned
Meetings</U>.</B> Whether or not a quorum is present, a majority of the directors present may adjourn any meeting to such time
and place as they shall decide. Notice of any adjourned meeting need not be given at any adjourned meeting, whether adjourned once
or more, and any business may be transacted that might have been transacted at the meeting of which there is an adjournment. Additional
business may also be transacted if proper notice shall have been given.</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: 0.5in"><B>(3.4) <U>Chairman</U>.</B>
At all meetings of the Board, the Chairman of the Board, if any and if present, shall preside and, if there shall be no Chairman,
or he shall be absent, then the Chief Executive Officer shall preside, and in his absence, a chairman chosen by the directors then
present shall preside.</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-indent: 0.5in"><B>(3.5) <U>Quorum and Adjournments</U>.</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; text-indent: 0.5in">(a) At all meetings
of the Board, the presence of a majority of the entire Board shall be necessary and sufficient to constitute a quorum for the transaction
of business, except as otherwise provided by law, by the Certificate, or by these By-Laws.</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: 0.5in">(b) A majority of the
directors present at the time and place of any regular or special meeting, although less than a quorum, may adjourn the same from
time to time without notice, until a quorum shall be present.</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-indent: 0.5in"><B>(3.6) <U>Manner of Acting</U>.</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; text-indent: 0.5in">(a) At all meetings
of the Board, or any committee thereof, each director present shall have one vote, irrespective of the number of shares of the
Corporation&rsquo;s capital stock, if any, he may hold.</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: 0.5in"></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">(b) Except as otherwise
provided by statute, by the Certificate, or by these By-Laws, the action of a majority of the directors present at any meeting
at which a quorum is present shall be the act of the Board. Any action authorized, in writing, by all of the directors entitled
to vote thereon and filed with the minutes of the Corporation shall be the act of the Board with the same force and effect as if
the same had been passed by unanimous vote at a duly called meeting of the Board.</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: 0.5in">(c) Where appropriate
communication facilities are reasonably available, any or all directors shall have the right to participate in any Board meeting,
or committee meeting, by means of a conference telephone or any means of communication by which all persons participating in the
meeting are able to hear each other, and such participation shall constitute presence in person at any such meeting.</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"><B>(3.7) <U>Compensation</U>.</B>
The Board is authorized to make provision for reasonable compensation to its members for their services as directors and to fix
the basis and conditions upon which this compensation shall be paid. Any director may also serve the Corporation in any other capacity
and receive compensation therefor in any form.</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-indent: 0.5in"><B>(3.8) <U>Contracts</U>.</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; text-indent: 0.5in">(a) No contract or
other transaction between this Corporation and any other corporation or entity shall be impaired, affected or invalidated nor shall
any director be liable in any way by reason of the fact that any one or more of the directors of this Corporation is or are interested
in, or is a director or officer, or are directors or officers of such other corporation or other entity, provided that such material
facts are disclosed or made known to the Board.</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: 0.5in">(b) Any director, personally
and individually, may be a party to or may be interested in any contract or transaction of this Corporation, and no director shall
be liable in any way by reason of such interest, provided that the fact of such interest be disclosed or made known to the Board,
and provided that the Board shall authorize, approve or ratify such contract or transaction by the vote (not counting the vote
of any such interested director) of a majority of a quorum, notwithstanding the presence of any such director at the meeting at
which such action is taken. Such interested director or directors may be counted in determining the presence of a quorum at such
meeting. This Section 3.8 shall not be construed to impair or invalidate or in any way affect any contract or other transaction
which would otherwise be valid under the law (common, statutory or otherwise) applicable thereto.</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-indent: 0.5in"></P>

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<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: 0.5in"><B>(3.9) <U>Committees</U>.</B>
The Board, by resolution adopted by a majority of the entire Board, may from time to time designate from among its members an executive,
audit, nominating, corporate governance or compensation committee and such other committees, and alternate members thereof, as
they deem desirable, each consisting of three or more directors, with such powers and authority (to the extent permitted by law)
as may be provided in such resolution. Each such committee shall serve at the pleasure of the Board. At all meetings of a committee,
the presence of all members of the committee shall be necessary to constitute a quorum for the transaction of business, except
as otherwise provided by said resolution or by these By-Laws. Participation of any one or more members of the committee by means
of a conference telephone or similar communications equipment allowing all persons participating in the meeting to hear each other
at the same time, shall constitute presence in person at any such meeting. Any action authorized in writing by all of the members
of a committee entitled to vote thereon and filed with the minutes of the committee shall be the act of the committee with the
same force and effect as if the same had been passed by unanimous vote at a duly called meeting of the 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; text-indent: 0.5in"><B>(3.10) <U>Regulations</U>.</B>
The Board may adopt rules and regulations, not inconsistent with law, the Certificate or these By-Laws, for the conduct of its
meetings and the management of all aspects of the affairs of the Corporation.</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: 0.5in"><B>(3.11) <U>Reliance
on Books and Records</U>.</B> A member of the Board or of any committee thereof designated by the Board as provided in these By-Laws,
shall, in the performance of his duties, be fully protected in relying in good faith upon the books of account or reports made
to the Corporation by any of its officers, or by an independent certified public accountant or by an appraiser selected with reasonable
care by the Board or by any such committee, or in relying in good faith upon other records of the Corporation.</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: center"><B><U>ARTICLE 4 - SHARES AND CERTIFICATES</U></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; text-indent: 0.5in"><B>(4.1) <U>Form of
Certificates</U>.</B> Certificates representing shares of capital stock of the Corporation shall be in the form determined by the
Board. All certificates issued shall be consecutively numbered or otherwise appropriately identified.</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"><B>(4.2) <U>Share Transfer
Ledger</U>.</B> There shall be kept a share transfer ledger in which shall be entered full and accurate records including the names
and addresses of all shareholders, the number of shares issued to each shareholder and the dates of issuance. All transfers of
shares shall be promptly reflected in the share transfer ledger. Unless otherwise directed by the Board, the share transfer ledger
shall be kept at the principal office of the Corporation and any shareholder of the Corporation is entitled to inspect such list
under the Business Corporation Law of New York.</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: 0.5in"><B>(4.3) <U>Transfer
of Shares</U>.</B> Upon (a) receipt of the certificate representing the shares to be transferred, either duly endorsed or accompanied
by proper evidence of succession, assignment or authority to transfer, (b) payment of any required transfer taxes, and (c) payment
of any reasonable charge the Board may have established, the surrendered certificate shall be canceled and a new certificate or
certificates shall be issued to the person(s) entitled to it.</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: 0.5in"><B>(4.4) <U>Replacement
Certificates</U>.</B> Replacement certificates will be issued at the request of the shareholder upon payment of any reasonable
charge the Board may have established. In case of a lost, mislaid, destroyed or mutilated certificate, proof of the facts, by affidavit
or otherwise, may also be required, as may be a bond or other proper indemnification for the Corporation and its agents.</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"></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: justify; text-indent: 0.5in"><B>(4.5) <U>Record
Owner to be Treated as Owner</U>.</B> Unless otherwise directed by a court of competent jurisdiction, the Corporation shall treat
the holder of record of any share as the holder in fact and accordingly shall not recognize any equitable or other claim to or
interest in the shares on the part of any other persons, whether or not it shall have express or other notice of it.</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: center"><B><U>ARTICLE 5 &ndash; SHAREHOLDER MEETINGS</U></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; text-indent: 0.5in"><B>(5.1) <U>Annual
Meetings</U>.</B> The Corporation shall hold an annual meeting of shareholders no later than one year after the end of its fiscal
year.</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: 0.5in"><B>(5.2) <U>Notice
of Meetings</U>.</B> Written notice of each meeting of shareholders, stating the place, date and hour thereof, and, in the case
of a special meeting, specifying the purpose or purposes thereof, shall be given to each shareholder entitled to vote thereat not
less than ten (10) days nor more than sixty (60) days prior to the meeting, except that where the matter to be acted on is a merger
or consolidation of the Corporation or a sale, lease or exchange of all or substantially all of its assets, such notice shall be
given not less than twenty (20) days nor more than sixty (60) days prior to such meeting. If a meeting is adjourned to another
time and place, notice need not be given of the adjourned meeting if the time and place thereof was announced at the meeting at
which the adjournment is taken. If the adjournment is for more than thirty (30) days, or if after the adjournment a new record
date is fixed for the adjourned meeting, a notice of the adjourned meeting shall be given to each shareholder of record entitled
to vote at the meeting.</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: 0.5in"><B>(5.3) <U>Special
Meetings</U>.</B> A special meeting of the shareholders may be called by any two or more directors, the Chairman or Chief Executive
Officer, or the holders of no less than 10% of all the outstanding shares of the Corporation&rsquo;s capital stock entitled to
vote at the meeting.</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: 0.5in"><B>(5.4) <U>Adjourned
Meetings</U>.</B> Whether or not a quorum is present, a majority in voting power of the shareholders present in person or by proxy
and entitled to vote may adjourn any meeting to a time and place as they shall decide. Notice of any adjourned meeting need not
be given. At any adjourned meeting, whether adjourned once or more, any business may be transacted that might have been transacted
at the meeting of which it is an adjournment. Additional business may also be transacted if proper notice shall have been given.</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: 0.5in"><B>(5.5) <U>Organization</U>.</B>
The Chairman of the Board shall be the chairman of the meeting. The Secretary shall be secretary of the meeting. If the Chairman
is not present, the Chief Executive Officer shall preside at the meeting. If none of such persons are present, then the shareholders
shall choose a chairman of the meeting. If neither the Secretary nor any assistant secretary is present, the chairman of the meeting
shall appoint a secretary of the meeting.</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-indent: 0.5in"></P>

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<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-indent: 0.5in">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.5in"><B>(5.6) <U>Quorum</U>.</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; text-indent: 0.5in">(a) Except as otherwise
provided herein, or by statute, or in the Certificate, at all meetings of shareholders of the Corporation, the presence at the
commencement of such meetings in person or by proxy of shareholders holding of record a majority of the total number of shares
of the Corporation then issued and outstanding and entitled to vote, shall be necessary and sufficient to constitute a quorum for
the transaction of any business. The withdrawal of any shareholder after the commencement of a meeting shall have no effect on
the existence of a quorum, after a quorum has been established at such meeting.</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: 0.5in">(b) Despite the absence
of a quorum at any annual or special meeting of shareholders, the shareholders, by a majority of the votes cast by the holders
of shares entitled to vote thereon, may adjourn the meeting. At any such adjourned meeting at which a quorum is present, any business
may be transacted which might have been transacted at the meeting as originally called if a quorum had been present.</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-indent: 0.5in"><B>(5.7) <U>Voting</U>.</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; text-indent: 0.5in">(a) Except as otherwise
provided by statute or by the Certificate, all elections of directors at any meeting of shareholders shall be determined by a majority
of the votes cast in such election, and any other corporate action to be taken by vote of the shareholders at a meeting of shareholders
shall be authorized by a majority of the votes cast for each proposal by the holders of record of the shares present and entitled
to vote thereon.</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: 0.5in">(b) Except as otherwise
provided by statute or by the Certificate, at each meeting of shareholders, each holder of record of capital stock of the Corporation
entitled to vote thereat, shall be entitled to one vote for each share of capital stock registered in his name on the books of
the Corporation.</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: 0.5in">(c) Each shareholder
entitled to vote or to express consent or dissent without a meeting, may do so by proxy; provided, however, that the instrument
authorizing such proxy to act shall have been executed in writing by the shareholder himself, or by his attorney-in-fact thereunto
duly authorized in writing. No proxy shall be valid after the expiration of eleven months from the date of its execution, unless
the persons executing it shall have specified therein the length of time it is to continue in force. Such instrument shall be exhibited
to the Secretary at the meeting and shall be filed with the records of the Corporation.</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">(d) Any resolution
in writing, signed by the holders of outstanding shares having not less than the minimum number of votes that would be necessary
to authorized or take such action at a meeting at which all shares entitled to vote thereon were present and voted, shall be and
constitute action by such shareholders to the effect therein expressed, with the same force and effect as if the same had been
duly passed at a duly called meeting of shareholders and such resolution so signed shall be included in the minutes of the Corporation.</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"></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: justify; text-indent: 0.5in">(e) There shall be
one or more inspectors at any shareholders meeting, appointed by the Board to act at any such meeting or any adjournment and make
a written report thereof. The Board may appoint an alternate inspector or inspectors to replace any inspector who fails to perform
his job in a satisfactory way. If no alternate inspector has been appointed and the person or persons appointed as inspector is
unable to act at a shareholders meeting, the person presiding at the meeting shall appoint one or more inspectors to act at the
meeting.</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: 0.5in">(f) The date and time
of the opening and closing of the polls for each matter upon which the shareholders will vote at a shareholders meeting shall be
announced by the person presiding at the meeting at the beginning of the meeting and, if no such opening and closing date and time
is announced, the polls shall close at the end of the meeting, including any adjournment thereof. No ballots, proxies or consents,
not any revocation thereof or changes thereto shall be accepted by the inspectors after the closing of the polls unless the New
York Supreme Court at a special term held within the judicial district where the Corporation&rsquo;s office is located upon application
by a shareholder of the Corporation, shall determine otherwise.</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: 0.5in"><B>(5.8) <U>Business
Before a Meeting</U>.</B> To be properly brought before the meeting, business must be either (a) specified in the notice of meeting
(or any supplement thereto) given by or at the direction of the Board, (b) otherwise properly brought before the meeting by or
at the direction of the Board, or (c) otherwise properly brought before the meeting by a shareholder. In addition to any other
applicable requirements, for business to be properly brought before an annual meeting by a shareholder, the shareholder must have
given timely notice thereof in writing, either by personal delivery or by United States mail, postage prepaid, to the Secretary
of the Corporation not later than 90 days prior to the meeting anniversary date of the immediately preceding annual meeting or
if no annual meeting was held for any reason in the preceding year, 90 days prior to the first Wednesday in December. A shareholder&rsquo;s
notice to the Secretary shall set forth as to each matter the shareholder proposes to bring before the meeting (i) a brief description
of the business desired to be brought before the annual meeting and the reasons for conducting such business at the annual meeting,
(ii) the name and record address of the shareholder proposing such business, (iii) the class and number of shares of capital stock
of the Corporation which are beneficially owned by the shareholder, and (iv) any material interest of the shareholder in such business.</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: 0.5in">Notwithstanding anything
in the By-Laws to the contrary, no business shall be conducted at the annual meeting except in accordance with the procedures set
forth in this Section 5.8, provided, however, that nothing in this Section 5.8 shall be deemed to preclude discussion by any shareholder
of any business properly brought before the annual meeting.</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: 0.5in">The Chairman of an
annual meeting shall, if the facts warrant, determine and declare to the meeting that business was not properly brought before
the meeting in accordance with the provisions of this Section 5.8, and if he should so determine, which determination shall be
conclusive, he shall so declare to the meeting and any such business not properly brought before the meeting shall not be transacted.</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"></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: justify; text-indent: 0.5in"><B>(5.9) <U>Shareholder
List</U></B>. The Secretary of the Corporation shall prepare and make, or cause to be prepared and made, at least ten days before
every meeting of shareholders, a complete list of the shareholders, arranged in alphabetical order, and showing the address of
each shareholder and the number of shares registered in the name of each shareholder. Such list shall be open to the examination
of any shareholder, for any purpose germane to the meeting, during ordinary business hours, for a period of at least ten days prior
to the meeting, either at a place within the city or other municipality or community where the meeting is to be held, which place
shall be specified in the notice of the meeting, or if not so specified, at the place where the meeting is to be held. The list
shall also be produced and kept at the time and place of the meeting during the whole time thereof, and may be inspected by any
shareholder who is present. The stock ledger shall be the only evidence as to who are the shareholders entitled to examine the
stock ledger, the list required by this subsection or the books of the Corporation, or to vote in person or by proxy at any meeting
of shareholders.</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: center"><B><U>ARTICLE 6 - OFFICERS</U></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-indent: 0.5in"><B>(6.1) <U>Descriptions; Election; Term
of Office</U>.</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; text-indent: 0.5in">(a) The officers of
the Corporation shall consist of a Chief Executive Officer, a President, a Chief Operating Officer, and a Chief Financial Officer
(the aforementioned collectively hereinafter referred to as the &ldquo;Executive Officers&rdquo;), a Secretary, a Treasurer, and
such other officers, including, but not limited to, a non-executive Chairman of the Board, and one or more Vice Presidents, as
the Board may from time to time deem advisable. Any officer of the Corporation may be, but is not required to be, a director of
the Corporation. Any two or more offices may be held by the same person.</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: 0.5in">(b) The Executive Officers
of the Corporation shall be elected and appointed by the Board at the regular annual meeting of the Board following the annual
meeting of shareholders.</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: 0.5in">(c) Each Executive
Officer shall hold office until the annual meeting of the Board next succeeding his election, and until his successor shall have
been elected and qualified, or until his death, resignation or removal.</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: 0.5in"><B>(6.2) <U>Resignation</U>.</B>
Any officer may resign at any time by giving written notice of such resignation to the Board or Chief Executive Officer of the
Corporation. Unless otherwise specified in such written notice, such resignation shall take effect upon receipt thereof by the
Board or Chief Executive Officer, and the acceptance of such resignation shall not be necessary to make it effective.</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: 0.5in"><B>(6.3) <U>Removal</U>.</B>
Any officer may be removed by the Board, with or without cause, and a successor elected by the Board at any time, by resolution
passed by a majority of the members of the entire Board, unless such officer has an agreement with the Corporation which states
specific requirements for removal of such officer.</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: 0.5in"><B>(6.4) <U>Vacancies</U>.</B>
A vacancy in any office by reason of death, resignation, inability to act, disqualification, or any other cause, may at any time
be filled for the unexpired portion of the term by the Board, by resolution passed by a majority of the members of the entire Board.</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"><B>(6.5) <U>Continuation
in Office</U>.</B> Unless otherwise provided by the Board, each Executive Officer, and other officers of the Corporation who serve
at the pleasure of the Board, shall serve until death, incapacity, resignation or removal by the Board. Any resignation or removal
shall be without prejudice to any contractual rights of the Corporation or the officer.</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: 0.5in"><B>(6.6) <U>Duties
in General</U>.</B> Subject to these By-Laws, the authority and duties of all officers shall be determined by, or in the manner
prescribed by, the Board. Except as may be specifically restricted by the Board, any officer may delegate any of his authority
and duties to any subordinate officer.</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"><B>(6.7) <U>Duties
of Chief Executive Officer</U>.</B> The Chief Executive Officer (CEO), or in the absence of a Chief Executive Officer, the Chief
Operating Officer (COO), shall be the principal executive officer of the Corporation and, subject to the control of the Board,
shall in general supervise and control all of the day-to-day business and affairs of the Corporation. The CEO may sign, with the
Secretary or any other proper officer of the Corporation thereunto authorized by the Board, certificates for shares of the Corporation,
any deeds, mortgages, bonds, contracts, or other instruments that the Board has authorized to be executed, except in cases where
the signing and execution shall be expressly delegated by the Board, the CEO, or by these By-Laws to some other officer or agent
of the Corporation or shall be required by law to be otherwise signed or executed, and in general shall perform all duties incident
to the office of CEO and such other duties as may be prescribed by the Board from time to time.</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"><B>(6.8) <U>Duties
of President;Vice Presidents</U>.</B> The President, or in the absence or incapacity of the President, a Vice President or Vice
Presidents designated by the President, shall perform the duties of the President and, when so acting, shall have all the powers
of and be subject to all the restrictions upon the President. The President shall oversee all the day-to-day operations of the
Corporation&rsquo;s business and its subsidiaries, and shall report to the CEO. The Corporation&rsquo;s Vice President &amp; General
Counsel, charged with the oversight of the Corporation&rsquo;s legal matters, shall report to the CEO. Each of the Corporation&rsquo;s
other Vice Presidents, and the heads of each of the Corporation&rsquo;s other subsidiaries, shall perform the duties assigned to
them by the CEO, COO or President, as applicable, and shall report to the Executive Officer designated by the CEO.</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: 0.5in"><B>(6.9) <U>Duties
of Secretary</U>.</B> The Secretary shall record the minutes of the shareholders and Board meetings, see that all notices are duly
given in accordance with the provisions of these By-Laws or as otherwise required, be custodian of the corporate records and of
the seal of the Corporation (if any), keep a register of the post office addresses of each shareholder, have general charge of
the share transfer books of the Corporation, and in general perform all duties incident to the office of Secretary and other duties
as may be assigned by the CEO or the Board.</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"><B>(6.10) <U>Duties
of Chief Financial Officer and Treasurer</U>.</B> The Corporation&rsquo;s Chief Financial Officer (CFO), who shall also serve as
the Corporation&rsquo;s Treasurer, shall be charged with the oversight of the Corporation&rsquo;s fiscal operations and financial
reporting. The CFO shall have charge and custody of and be responsible for all funds and securities of the Corporation and its
subsidiaries, shall receive and give receipts for monies due and payable to the Corporation from any source whatsoever, and deposit
all such monies in the name of the Corporation in the banks, trust companies or other depositories as shall be selected in accordance
with these By-Laws, and in general perform all the duties incident to the office of CFO and Treasurer and such other duties as
may be assigned by the CEO. The CFO shall report directly to the CEO and the Board.</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"><B>(6.11) <U>Shares
of Other Corporations</U>.</B> Whenever the Corporation is the holder of shares of any other corporation, any right or power of
the Corporation as such shareholder (including the attendance, acting and voting at shareholder meetings and execution of waivers,
consents, proxies or other instruments) may be exercised on behalf of the Corporation by the appropriate Executive Officer, or
his authorized designee.</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><U>ARTICLE 7 - DIVIDENDS</U></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; text-indent: 0.5in"><B>(7.1) <U>Dividends</U>.</B>
Subject to applicable law and the Certificate, dividends may be declared and paid out of any funds available therefor, as often,
in such amounts, and at such time or times as the Board may determine, provided, however, that the Corporation is not insolvent
when such dividend is paid or rendered insolvent by the payment of such dividend.</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: center"><B><U>ARTICLE 8 - FISCAL YEAR</U></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; text-indent: 0.5in"><B>(8.1) <U>Fiscal
Year</U>.</B> The fiscal year of the Corporation shall be fixed by the Board from time to time, subject to applicable law.</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><U>ARTICLE 9 - CORPORATE SEAL</U></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; text-indent: 0.5in"><B>(9.1) <U>Form</U>.</B>
The corporate seal, if any, shall be in such form as shall be approved from time to time by the Board.</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"><B>(9.2) <U>Use</U>.
</B>The seal, if any, may be used by causing it to be impressed directly on the instrument or writing to be sealed, or upon an
adhesive substance annexed. The seal on certificates for shares or other documents may be a facsimile, engraved or imprinted.</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>

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<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"><B><U>ARTICLE 10 &ndash; INDEMNIFICATION
OF DIRECTORS AND OFFICERS</U></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; text-indent: 0.5in"><B>(10.1) <U>Indemnification
of Directors and Officers</U>.</B> Except to the extent expressly prohibited by the Business Corporation Law of New York, the Corporation
shall indemnify each person made or threatened to be made a party to any action or proceeding, whether civil or criminal, by reason
of the fact that such person or such person&rsquo;s testator or intestate is or was a director, officer or employee of the Corporation,
or serves or served at the request of the Corporation, any other Corporation, partnership, joint venture, trust, employee benefit
plan or other enterprise in any capacity, against judgment, fines, penalties, amounts paid in settlement and reasonable expenses,
including attorneys&rsquo; fees, incurred in connection with such action or proceeding, or any appeal therein, provided that no
such indemnification shall be made if a judgment or other final adjudication adverse to such person establishes that his or her
acts were committed in bad faith or were the result of active and deliberate dishonesty and were material to the cause of action
so adjudicated, or that he or she personally gained in fact a financial profit or other advantage to which he or she was not legally
entitled, and provided further that no such indemnification shall be required with respect to any settlement or other non-adjudicated
disposition of any threatened or pending action or proceeding unless the Corporation has given its prior consent to such settlement
or other disposition.</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: 0.5in">The Corporation may
advance or promptly reimburse upon request any person entitled to indemnification hereunder for all expenses, including attorneys&rsquo;
fees, reasonably incurred in defending any action or proceeding in advance of the final disposition thereof upon receipt of an
undertaking by or on behalf of such person to repay such amount if such person is ultimately found not to be entitled to indemnification
or, where indemnification is granted, to the extent the expenses so advanced or reimbursed exceed the amount to which such person
is entitled, provided, however, that such person shall cooperate in good faith with any request by the Corporation that common
counsel be utilized by the parties to an action or proceeding who are similarly situated unless to do so would be inappropriate
due to actual or potential differing interests between or among such parties.</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">Nothing herein shall
limit or affect any right of any person otherwise than hereunder to indemnification or expenses, including attorneys&rsquo; fees,
under any statute, rule, regulation, certificate of incorporation, by-law, insurance policy, contract or otherwise.</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: 0.5in">Anything in these By-Laws
to the contrary notwithstanding, no elimination of these By-Laws, and no amendment of these By-Laws adversely affecting the right
of any person to indemnification or advancement of expenses hereunder shall be effective until the 60<SUP>th</SUP> day following
notice to such person or such action, and no elimination of or amendment to these By-Laws shall deprive any person of his or her
rights hereunder arising out of alleged or actual occurrences, acts or failures to act prior to such 60<SUP>th</SUP> day.</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">The Corporation shall
not, except by elimination or amendment of this by law in a manner consistent with the preceding paragraph, take any corporate
action or enter into any agreement which prohibits, or otherwise limits the rights of any person to, indemnification in accordance
with the provisions of these By-Laws. The indemnification of any person provided by these By-Laws shall continue after such person
has ceased to be a director, officer or employee of the Corporation and shall inure to the benefit of such person&rsquo;s heirs,
executors, administrators and legal representatives.</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"></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: justify; text-indent: 0.5in">The Corporation is
authorized to enter into agreements with any of its directors, officers or employees extending rights to indemnification and advancement
of expenses to such person to the fullest extent permitted by applicable law, but the failure to enter into any such agreement
shall not affect or limit the rights of such person pursuant to these By-Laws, it being expressly recognized hereby that all directors,
officers and employees of the Corporation, by serving as such after the adoption hereof, are acting in reliance hereon and that
the Corporation is stopped to contend otherwise.</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">In case any provision
in these By-Laws shall be determined at any time to be unenforceable in any respect, the other provisions shall not in any way
be affected or impaired thereby, and the affected provision shall be given the fullest possible enforcement in the circumstances,
it being the intention of the Corporation to afford indemnification and advancement of expenses to its directors, officers and
employees, acting in such capacities or in the other capacities mentioned herein, to the fullest extent permitted by law.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">For purposes of these
By-Laws, the Corporation shall be deemed to have requested a person to serve an employee benefit plan where the performance by
such person of his or her duties to the Corporation also imposes duties on, or otherwise involves services by, such person to the
plan or participants or beneficiaries of the plan, and excise taxes assessed on a person with respect to an employee benefit plan
pursuant to applicable law shall be considered indemnifiable expenses. For purposes of these By-Laws, the term &ldquo;Corporation&rdquo;
shall include any legal successor to the Corporation, including any corporation which acquires all or substantially all of the
assets of the Corporation in one or more transactions.</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: 0.5in"><B>(10.2) <U>Insurance
For Indemnification of Directors and Officers</U>.</B> The Corporation shall have the power to purchase and maintain insurance
for its directors and officers subject to the provisions of Section 726 of the Business Corporation Law of New York.</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: center"><B><U>ARTICLE 11 - AMENDMENTS</U></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; text-indent: 0.5in"><B>(11.1) <U>By Directors</U>.</B>
The Board shall have power to make, adopt, alter, amend and repeal, from time to time, the By-Laws of the Corporation; provided,
however, that the shareholders entitled to vote with respect thereto as in Article 10 above-provided may alter, amend or repeal
the By-Laws made by the Board, except that the Board shall have no power to change the quorum for meetings of shareholders or of
the Board, or to change any provisions of the By-Laws with respect to the removal of directors or the filling of vacancies in the
Board resulting from the removal by the shareholders. If any By-Laws regulating an impending election of directors is adopted,
amended or repealed by the Board, there shall be set forth in the notice of the next meeting of shareholders for the election of
Directors, the By-Laws so adopted, amended or repealed, together with a concise statement of the changes made.</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"></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><U>ARTICLE 12 &ndash;WAIVER OF NOTICE</U></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; text-indent: 0.5in"><B>(12.1) <U>Shareholders</U>.</B>
Whenever any notice is required to be given by law, the Certificate or these By-Laws to the shareholders of the Corporation of
a meeting of shareholders, a written waiver of notice submitted to the Corporation before or after the meeting or the attendance
at the meeting by any shareholder, shall constitute a waiver of notice of such meeting, except when the person attends the meeting
for the express purpose of objecting to the lack of notice thereof, prior to the conclusion of the meeting.</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"><B>(12.2) <U>Directors</U>.</B>
Whenever any notice is required to be given by law, the Certificate or these By-Laws to the directors of the Corporation of a special
meeting of the Board, a written waiver of notice submitted to the Corporation before or after the meeting or the attendance at
the meeting by any director, shall constitute a waiver of notice of such meeting, except when the person attends the meeting for
the express purpose of objecting the lack of notice thereof, prior to the commencement of the meeting.</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>ADOPTED BY THE BOARD OF DIRECTORS OF THE CORPORATION AND
EFFECTIVE AS OF JULY 1, 2013.</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"></P>

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



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<DOCUMENT>
<TYPE>EX-99.1
<SEQUENCE>3
<FILENAME>v348980_ex99-1.htm
<DESCRIPTION>EXHIBIT 99.1
<TEXT>
<HTML>
<HEAD>
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<BODY STYLE="font: 10pt Times New Roman, Times, Serif">

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

<P STYLE="font: 18pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center"><B>Document Security Systems Completes Merger
with Lexington Technology Group</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">ROCHESTER, NY&mdash;July 1, 2013 &mdash;
Document Security Systems, Inc. (NYSE MKT: DSS) announced today the successful closing of its previously announced merger with
Lexington Technology Group, Inc. (LTG), an intellectual property management firm that seeks to maximize the value of intellectual
property and technology assets. DSS will continue to trade on the NYSE MKT under the symbol &ldquo;DSS&rdquo;.</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">This strategic combination increases DSS&rsquo;s
intellectual property portfolio and enhances the Company&rsquo;s ability to monetize its anti-counterfeit and authentication technology,
as well as its industrial and other intellectual property assets. The boards of directors of both DSS and LTG unanimously approved
the merger, which was subsequently approved by LTG&rsquo;s and DSS&rsquo;s stockholders. The Company will be managed by an executive
team led by Chief Executive Officer, Jeff Ronaldi.</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">&ldquo;After months of planning and hard
work, DSS and LTG are excited to be moving forward as a combined company&rdquo; stated DSS&rsquo;s President, Robert Bzdick. &ldquo;Through
our anti-counterfeit and authentication service offering, we have laid groundwork on which the management team believes we can
generate increased revenue and licensing opportunities.&rdquo;</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">&ldquo;Today is a milestone for DSS. Through
our new business model, we see exciting opportunities to potentially grow our technology business and intellectual property assets&rdquo;
stated DSS&rsquo;s Chief Executive Officer, Jeff Ronaldi. &ldquo;As a combined company, we believe that we are better positioned
to take on new challenges and opportunities ahead.&rdquo;</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>DSS will host a conference call to discuss
the merger and introduce investors to the combined company on Monday, July 8 at 4:30 PM Eastern Time. </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; background-color: white"><B>CONFERENCE CALL DETAILS:</B></P>

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

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; background-color: white">Time: 4:30 p.m. ET<BR>
Date: Monday, July 8, 2013<BR>
Investor Dial In (Toll Free):&nbsp;&nbsp;877-407-9205<BR>
Investor Dial In (International):&nbsp;&nbsp;201-689-8054</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; background-color: white">Live Webcast URL: <U>http://www.investorcalendar.com/IC/CEPage.asp?ID=171177</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; background-color: white"><FONT STYLE="font-family: Times New Roman, Times, Serif">A
replay of the teleconference will be available until 07/22/13,</FONT> <FONT STYLE="font-family: Times New Roman, Times, Serif">which
can be accessed by dialing&nbsp;877-660-6853</FONT> <FONT STYLE="font-family: Times New Roman, Times, Serif">within the United
States or&nbsp;(201)612-7415&nbsp;if calling internationally. Please enter account #286 and conference ID #417344 to access the
replay.&nbsp;</FONT></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: center">###</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><B><U>About Document Security Systems,
Inc.</U></B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">Document Security Systems, Inc.&rsquo;s
(NYSE MKT: DSS) products and solutions are used to defeat counterfeiting and fraud and protect brands and digital information from
the expanding world-wide counterfeiting problem. In addition, its recent merger with Lexington Technology Group, Inc. has increased
its intellectual property portfolio and enhanced its ability to monetize its intellectual property portfolio.</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">DSS continually invests in research and
development to meet the ever changing security needs of its clients and implements these patented solutions through strategic licensing
arrangements and through its operating groups that focus on secure printing, packaging, plastics and RFID, intellectual property
monetization and digital information</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">Through these divisions, DSS provides counterfeit
deterrence and authentication capabilities and digital information solutions to its customers. When implemented, DSS&rsquo;s technologies
help ensure the authenticity of manufactured products, sensitive documents and digital information.</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">For more information on DSS and its subsidiaries,
please visit <U>www.DSSsecure.com</U>.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">Follow DSS on Facebook, click <U>HERE</U>.</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">For more information:</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">Investor Relations</P>

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

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">(585) 325-3610</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">Email: <U>ir@documentsecurity.com</U></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>Cautionary Note Regarding Forward-Looking
Statements</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">Effective on July 1, 2013, Lexington Technology
Group, Inc. (&ldquo;LTG&rdquo;) became a wholly-owned subsidiary of Document Security Systems, Inc. (&ldquo;DSS&rdquo;). The combined
company is herein referred to as the &ldquo;Company&rdquo;. Forward-looking statements in this press release, including without
limitation, statements related to the Company&rsquo;s plans, strategies, objectives, expectations, potential value, intentions
and adequacy of resources, are made pursuant to the safe harbor provisions of the Private Securities Litigation Reform Act and
contain words such as &ldquo;believes&rdquo;, &ldquo;anticipates&rdquo;, &ldquo;expects&rdquo;, &ldquo;plans&rdquo;, &ldquo;intends&rdquo;
and similar words and phrases. These forward-looking statements are subject to risks and uncertainties that could cause actual
results to differ materially from the results projected in any forward-looking statement. In addition to the factors specifically
noted in the forward-looking statements, other important factors, risks and uncertainties that could result in those differences
include, but are not limited to, those disclosed in the &ldquo;Risk Factors&rdquo; section of the Company&rsquo;s Annual Report
on Form 10-K for the year ended December 31, 2012, previously filed with the Securities and Exchange Commission (&ldquo;SEC&rdquo;),
and the &ldquo;Risk Factors&rdquo; section of the Company&rsquo;s definitive proxy statement/prospectus previously filed with the
SEC in connection with LTG merger. The forward-looking statements made herein are made as of the date of this press release, and
the Company assumes no obligation to update the forward-looking statements, or to update the reasons why actual results could differ
from those projected in the forward-looking statements.</P>



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<DOCUMENT>
<TYPE>EX-99.2
<SEQUENCE>4
<FILENAME>v348980_ex99-2.htm
<DESCRIPTION>EXHIBIT 99.2
<TEXT>
<HTML>
<HEAD>
     <TITLE></TITLE>
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<BODY STYLE="font: 10pt Times New Roman, Times, Serif">

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

<DIV style="text-align: center; min-width: 708"><DIV STYLE="width: 708px; border-top: 1pt white solid; border-bottom: 1pt white solid; border-right: 1pt white solid; border-left: 1pt white solid; padding-top: 9pt; padding-bottom: 9pt; padding-right: 3pt; padding-left:6pt; margin-top:6pt; margin-right: 0pt; margin-left:0pt; margin-bottom:6pt" ALIGN="CENTER"><DIV style="text-align: center"><DIV STYLE="width: 708px; border-top: 1pt white solid; border-bottom: 1pt white solid; border-right: 1pt white solid; border-left: 1pt white solid; padding-top: 9pt; padding-bottom: 9pt; padding-right: 3pt; padding-left:6pt; margin-top:6pt; margin-right: 0pt; margin-left:0pt; margin-bottom:6pt" ALIGN="CENTER"><P STYLE="text-align: left; font: normal bold 8pt Times New Roman, Times, Serif"><A HREF="#TOC">TABLE OF CONTENTS</A></P>

<H1 STYLE="text-indent: 0pt; text-align: center; font: normal bold 10pt/12pt Times New Roman, Times, Serif; margin: 0pt; padding: 9pt 0pt 3pt; text-transform: none">LEXINGTON TECHNOLOGY GROUP, INC. AND SUBSIDIARY </H1>

<H1 STYLE="text-indent: 0pt; text-align: center; font: normal bold 10pt/12pt Times New Roman, Times, Serif; margin: 0pt; padding: 9pt 0pt 3pt; text-transform: none">CONSOLIDATED FINANCIAL STATEMENTS </H1>

<H1 STYLE="text-indent: 0pt; text-align: center; font: normal bold 10pt/12pt Times New Roman, Times, Serif; margin: 0pt; padding: 9pt 0pt 3pt; text-transform: none">AS OF DECEMBER 31, 2012 AND JUNE 30, 2012 AND<BR> FOR THE PERIOD FROM MAY 10, 2012 (INCEPTION) THROUGH JUNE 30, 2012,<BR> FOR THE SIX MONTHS ENDED DECEMBER, 2012 AND<BR> FOR THE PERIOD FROM MAY 10, 2012 (INCEPTION) THROUGH DECEMBER 31, 2012 </H1>

<H1 STYLE="text-indent: 0pt; text-align: center; font: normal bold 10pt/12pt Times New Roman, Times, Serif; margin: 0pt; padding: 9pt 0pt 3pt; text-transform: none">Table of Contents </H1>

<P STYLE="text-indent: 0pt; text-align: left; font: normal 10pt/12pt Times New Roman, Times, Serif; margin: 0pt; padding: 3pt 0pt 3pt 4px; text-transform: none"></P>

<DIV STYLE="text-align: center"><TABLE CELLSPACING="0" CELLPADDING="0" WIDTH="608" STYLE="vertical-align: text-bottom; text-indent: 0px; text-align: left; font: normal 10pt Times New Roman, Times, Serif; margin: -24pt 0pt 0pt; padding: 3pt 0pt; text-transform: none">

<TR>

          <TD><IMG HEIGHT="1" SRC="spacer.gif" WIDTH="520"></TD>

          <TD STYLE="width: 12px; vertical-align: text-bottom; text-align: center; border-bottom-style: none"><!-- GUTTER -->&nbsp;</TD>

          <TD COLSPAN="3"><IMG HEIGHT="1" SRC="spacer.gif" WIDTH="72"></TD>

</TR>

<TR>

          <TD ROWSPAN="1" COLSPAN="1" STYLE="line-height: normal; vertical-align: text-bottom; font-weight: bold; font-size: 8pt; text-align: left"></TD>

          <TD ROWSPAN="1" STYLE="width: 6px; vertical-align: text-bottom; text-align: center"><!-- GUTTER -->&nbsp;</TD>

          <TD ROWSPAN="1" COLSPAN="3" STYLE="line-height: normal; vertical-align: text-bottom; font-weight: bold; font-size: 8pt; text-align: center; border-bottom: black 1pt solid">Page</TD>

</TR>

<TR STYLE="background-color: #CCFFCC"><TD ROWSPAN="1" COLSPAN="1" STYLE="padding-left: 10pt; text-indent: -10pt; vertical-align: text-bottom"><A HREF="#tRIR1">Report of Independent Registered Public Accounting Firm</A></TD>

<TD ROWSPAN="1" STYLE="width: 6px; vertical-align: text-bottom; text-align: center"><!-- GUTTER -->&nbsp;</TD>

<TD ROWSPAN="1" STYLE="width: 6px; vertical-align: text-bottom; text-align: left"><!-- $ -->&nbsp;</TD>

<TD ROWSPAN="1" COLSPAN="1" STYLE="vertical-align: text-bottom; text-align: right"><A HREF="#tRIR1">F-37</A></TD>

<TD STYLE="white-space: nowrap; vertical-align: text-bottom; text-align: left"><!-- PERCENT -->&nbsp;</TD>

</TR>

<TR STYLE="background-color: white"><TD ROWSPAN="1" COLSPAN="1" STYLE="padding-left: 10pt; text-indent: -10pt; vertical-align: text-bottom"><A HREF="#tCBS1">Consolidated Balance Sheets as of December 31, 2012 and June 30, 2012</A></TD>

<TD ROWSPAN="1" STYLE="width: 6px; vertical-align: text-bottom; text-align: center"><!-- GUTTER -->&nbsp;</TD>

<TD ROWSPAN="1" STYLE="width: 6px; vertical-align: text-bottom; text-align: left"><!-- $ -->&nbsp;</TD>

<TD ROWSPAN="1" COLSPAN="1" STYLE="vertical-align: text-bottom; text-align: right"><A HREF="#tCBS1">F-38</A></TD>

<TD STYLE="white-space: nowrap; vertical-align: text-bottom; text-align: left"><!-- PERCENT -->&nbsp;</TD>

</TR>

<TR STYLE="background-color: #CCFFCC"><TD ROWSPAN="1" COLSPAN="1" STYLE="padding-left: 10pt; text-indent: -10pt; vertical-align: text-bottom"><A HREF="#tCSO1">Consolidated Statements of Operations for the period from May 10, 2012 (inception) to December 31, 2012, for the six months ended December 31, 2012 and for the period from May 10, 2012 (inception) to December 31, 2012</A></TD>

<TD ROWSPAN="1" STYLE="width: 6px; vertical-align: text-bottom; text-align: center"><!-- GUTTER -->&nbsp;</TD>

<TD ROWSPAN="1" STYLE="width: 6px; vertical-align: text-bottom; text-align: left"><!-- $ -->&nbsp;</TD>

<TD ROWSPAN="1" COLSPAN="1" STYLE="vertical-align: text-bottom; text-align: right"><A HREF="#tCSO1">F-39</A></TD>

<TD STYLE="white-space: nowrap; vertical-align: text-bottom; text-align: left"><!-- PERCENT -->&nbsp;</TD>

</TR>

<TR STYLE="background-color: white"><TD ROWSPAN="1" COLSPAN="1" STYLE="padding-left: 10pt; text-indent: -10pt; vertical-align: text-bottom"><A HREF="#tCSC1">Consolidated Statement of Changes in Stockholders&#146; Equity for the period from May 10, 2012 (inception) to June 30, 2012 and for the six months ended December 31, 2012</A></TD>

<TD ROWSPAN="1" STYLE="width: 6px; vertical-align: text-bottom; text-align: center"><!-- GUTTER -->&nbsp;</TD>

<TD ROWSPAN="1" STYLE="width: 6px; vertical-align: text-bottom; text-align: left"><!-- $ -->&nbsp;</TD>

<TD ROWSPAN="1" COLSPAN="1" STYLE="vertical-align: text-bottom; text-align: right"><A HREF="#tCSC1">F-40</A></TD>

<TD STYLE="white-space: nowrap; vertical-align: text-bottom; text-align: left"><!-- PERCENT -->&nbsp;</TD>

</TR>

<TR STYLE="background-color: #CCFFCC"><TD ROWSPAN="1" COLSPAN="1" STYLE="padding-left: 10pt; text-indent: -10pt; vertical-align: text-bottom"><A HREF="#tCSCF1">Consolidated Statements of Cash Flows for the period from May 10, 2012 (inception) to December 31, 2012, for the six months ended December 31, 2012 and for the period from May 10, 2012 (inception) to December 31, 2012</A></TD>

<TD ROWSPAN="1" STYLE="width: 6px; vertical-align: text-bottom; text-align: center"><!-- GUTTER -->&nbsp;</TD>

<TD ROWSPAN="1" STYLE="width: 6px; vertical-align: text-bottom; text-align: left"><!-- $ -->&nbsp;</TD>

<TD ROWSPAN="1" COLSPAN="1" STYLE="vertical-align: text-bottom; text-align: right"><A HREF="#tCSCF1">F-41</A></TD>

<TD STYLE="white-space: nowrap; vertical-align: text-bottom; text-align: left"><!-- PERCENT -->&nbsp;</TD>

</TR>

<TR STYLE="background-color: white"><TD ROWSPAN="1" COLSPAN="1" STYLE="padding-left: 10pt; text-indent: -10pt; vertical-align: text-bottom"><A HREF="#tNCFS1">Notes to Consolidated Financial Statements</A></TD>

<TD ROWSPAN="1" STYLE="width: 6px; vertical-align: text-bottom; text-align: center"><!-- GUTTER -->&nbsp;</TD>

<TD ROWSPAN="1" STYLE="width: 6px; vertical-align: text-bottom; text-align: left"><!-- $ -->&nbsp;</TD>

<TD ROWSPAN="1" COLSPAN="1" STYLE="vertical-align: text-bottom; text-align: center"><A HREF="#tNCFS1">F-42&nbsp;&#150;&nbsp;F-57</A></TD>

<TD STYLE="white-space: nowrap; vertical-align: text-bottom; text-align: left"><!-- PERCENT -->&nbsp;</TD>

</TR>

</TABLE></DIV>

</DIV>

<P STYLE="width: 708px; text-indent: 0px; text-align: center; font: normal 10pt/12pt Times New Roman, Times, Serif; margin: 0pt; padding: 12pt 0pt 3pt; color: black; text-transform: none; text-decoration: none">F-36</P>

<HR STYLE="width: 708px; height: 2px; text-align: center">

<DIV ID="PN" STYLE="page-break-after: always">&nbsp;</DIV>

<DIV ID="HDR">&nbsp;</DIV>

<DIV ALIGN="CENTER" STYLE="width: 708px; border: white 1pt solid; margin: 6pt 0pt; padding: 9pt 3pt 9pt 6pt">

<P STYLE="text-align: left; font: normal bold 8pt Times New Roman, Times, Serif"><A HREF="#TOC">TABLE OF CONTENTS</A></P>

<H1 STYLE="text-indent: 0pt; text-align: center; font: normal bold 10pt/12pt Times New Roman, Times, Serif; margin: 0pt; padding: 9pt 0pt 3pt; text-transform: none">REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM </H1>

<P STYLE="text-indent: 0pt; text-align: left; font: normal 10pt/12pt Times New Roman, Times, Serif; margin: 0pt; padding: 3pt 0pt 3pt 4px; text-transform: none">To the Board of Directors and Stockholders of<BR> <B>Lexington Technology Group, Inc. and Subsidiary</B> </P>

<P STYLE="text-indent: 0pt; text-align: left; font: normal 10pt/12pt Times New Roman, Times, Serif; margin: 0pt; padding: 3pt 0pt 3pt 4px; text-transform: none">We have audited the accompanying consolidated balance sheets of Lexington Technology Group, Inc. and Subsidiary (a development stage company) (the &#147;Company&#148;) as of December 31, 2012 and June 30, 2012 and the related consolidated statements of operations and cash flows for the period from May 10, 2012 (inception) through June 30, 2012, six months ended December 31, 2012 and period from May 10, 2012 (inception) through December 31, 2012 and consolidated statement of changes in stockholders&#146; equity for the period from May 10, 2012 (inception) through June 30, 2012 and six months ended December 31, 2012. These
consolidated financial statements are the responsibility of the Company&#146;s management. Our responsibility is to express an opinion on these financial statements based on our audits. </P>

<P STYLE="text-indent: 0pt; text-align: left; font: normal 10pt/12pt Times New Roman, Times, Serif; margin: 0pt; padding: 3pt 0pt 3pt 4px; text-transform: none">We conducted our audits in accordance with generally accepted accounting standards as established by the Auditing Standards Board (United States) and in accordance with the auditing 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. The Company 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 the Company&#146;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, assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audits provide a reasonable basis for our opinion. </P>

<P STYLE="text-indent: 0pt; text-align: left; font: normal 10pt/12pt Times New Roman, Times, Serif; margin: 0pt; padding: 3pt 0pt 3pt 4px; text-transform: none">In our opinion, the consolidated financial statements referred to above present fairly, in all material respects, the consolidated financial position of Lexington Technology Group, Inc. and Subsidiary (a development stage company) as of December 31, 2012 and June 30, 2012, and the results of its operations and its cash flows for the period from May 10, 2012 (inception) through June 30, 2012, six months ended December 31, 2012 and period from May 10, 2012 (inception) through December 31, 2012, in conformity with accounting principles generally accepted in the United States of America. </P>

<P STYLE="text-indent: 0pt; text-align: left; font: normal 10pt/12pt Times New Roman, Times, Serif; margin: 0pt; padding: 3pt 0pt 3pt 4px; text-transform: none">/s/ Marcum LLP </P>

<P STYLE="text-indent: 0pt; text-align: left; font: normal 10pt/12pt Times New Roman, Times, Serif; margin: 0pt; padding: 3pt 0pt 3pt 4px; text-transform: none">New York, New York<BR> March 29, 2013 </P>

</DIV>

<P STYLE="width: 708px; text-indent: 0px; text-align: center; font: normal 10pt/12pt Times New Roman, Times, Serif; margin: 0pt; padding: 12pt 0pt 3pt; color: black; text-transform: none; text-decoration: none">F-37</P>

<HR STYLE="width: 708px; height: 2px; text-align: center">

<DIV ID="PN" STYLE="page-break-after: always">&nbsp;</DIV>

<DIV ID="HDR">&nbsp;</DIV>

<DIV ALIGN="CENTER" STYLE="width: 708px; border: white 1pt solid; margin: 6pt 0pt; padding: 9pt 3pt 9pt 6pt">

<P STYLE="text-align: left; font: normal bold 8pt Times New Roman, Times, Serif"><A HREF="#TOC">TABLE OF CONTENTS</A></P>

<H1 STYLE="text-indent: 0pt; text-align: center; font: normal bold 10pt/12pt Times New Roman, Times, Serif; margin: 0pt; padding: 9pt 0pt 3pt; text-transform: none">LEXINGTON TECHNOLOGY GROUP, INC. AND SUBSIDIARY<BR> (A Development Stage Company)<BR> CONSOLIDATED BALANCE SHEETS<BR> ($ IN THOUSANDS) </H1>

<P STYLE="text-indent: 0pt; text-align: left; font: normal 10pt/12pt Times New Roman, Times, Serif; margin: 0pt; padding: 3pt 0pt 3pt 4px; text-transform: none"></P>

<DIV STYLE="text-align: center"><TABLE CELLSPACING="0" CELLPADDING="0" WIDTH="608" STYLE="vertical-align: text-bottom; text-indent: 0px; text-align: left; font: normal 10pt Times New Roman, Times, Serif; margin: -24pt 0pt 0pt; padding: 3pt 0pt; text-transform: none">

<TR>

          <TD><IMG HEIGHT="1" SRC="spacer.gif" WIDTH="424"></TD>

          <TD STYLE="width: 12px; vertical-align: text-bottom; text-align: center; border-bottom-style: none"><!-- GUTTER -->&nbsp;</TD>

          <TD COLSPAN="3"><IMG HEIGHT="1" SRC="spacer.gif" WIDTH="72"></TD>

          <TD STYLE="width: 12px; vertical-align: text-bottom; text-align: center; border-bottom-style: none"><!-- GUTTER -->&nbsp;</TD>

          <TD COLSPAN="3"><IMG HEIGHT="1" SRC="spacer.gif" WIDTH="80"></TD>

</TR>

<TR>

          <TD ROWSPAN="1" COLSPAN="1" STYLE="line-height: normal; vertical-align: text-bottom; font-weight: bold; font-size: 8pt; text-align: left"></TD>

          <TD ROWSPAN="1" STYLE="width: 6px; vertical-align: text-bottom; text-align: center"><!-- GUTTER -->&nbsp;</TD>

          <TD ROWSPAN="1" COLSPAN="3" STYLE="line-height: normal; vertical-align: text-bottom; font-weight: bold; font-size: 8pt; text-align: center; border-bottom: black 1pt solid">December 31, 2012</TD>

          <TD ROWSPAN="1" STYLE="width: 6px; vertical-align: text-bottom; text-align: center"><!-- GUTTER -->&nbsp;</TD>

          <TD ROWSPAN="1" COLSPAN="3" STYLE="line-height: normal; vertical-align: text-bottom; font-weight: bold; font-size: 8pt; text-align: center; border-bottom: black 1pt solid">June 30,<BR> 2012</TD>

</TR>

<TR STYLE="background-color: #CCFFCC">

          <TD ROWSPAN="1" COLSPAN="1" STYLE="padding-left: 10pt; text-indent: -10pt; vertical-align: text-bottom; font-weight: bold">ASSETS<BR></TD>

          <TD ROWSPAN="1" STYLE="width: 6px; vertical-align: text-bottom; text-align: center"><!-- GUTTER -->&nbsp;</TD>

          <TD ROWSPAN="1" STYLE="width: 6px; vertical-align: text-bottom; text-align: left"><!-- $ -->&nbsp;</TD>

          <TD ROWSPAN="1" COLSPAN="1" STYLE="vertical-align: text-bottom; text-align: right">&nbsp;&nbsp;</TD>

          <TD STYLE="white-space: nowrap; vertical-align: text-bottom; text-align: left"><!-- PERCENT -->&nbsp;</TD>

          <TD ROWSPAN="1" STYLE="width: 6px; vertical-align: text-bottom; text-align: center"><!-- GUTTER -->&nbsp;</TD>

          <TD ROWSPAN="1" STYLE="width: 6px; vertical-align: text-bottom; text-align: left"><!-- $ -->&nbsp;</TD>

          <TD ROWSPAN="1" COLSPAN="1" STYLE="vertical-align: text-bottom; text-align: right">&nbsp;&nbsp;</TD>

          <TD STYLE="white-space: nowrap; vertical-align: text-bottom; text-align: left"><!-- PERCENT -->&nbsp;</TD>

</TR>

<TR STYLE="background-color: white">

          <TD ROWSPAN="1" COLSPAN="1" STYLE="padding-left: 20pt; text-indent: -10pt; vertical-align: text-bottom">Current Assets:<BR></TD>

          <TD ROWSPAN="1" STYLE="width: 6px; vertical-align: text-bottom; text-align: center"><!-- GUTTER -->&nbsp;</TD>

          <TD ROWSPAN="1" STYLE="width: 6px; vertical-align: text-bottom; text-align: left"><!-- $ -->&nbsp;</TD>

          <TD ROWSPAN="1" COLSPAN="1" STYLE="vertical-align: text-bottom; text-align: right">&nbsp;&nbsp;</TD>

          <TD STYLE="white-space: nowrap; vertical-align: text-bottom; text-align: left"><!-- PERCENT -->&nbsp;</TD>

          <TD ROWSPAN="1" STYLE="width: 6px; vertical-align: text-bottom; text-align: center"><!-- GUTTER -->&nbsp;</TD>

          <TD ROWSPAN="1" STYLE="width: 6px; vertical-align: text-bottom; text-align: left"><!-- $ -->&nbsp;</TD>

          <TD ROWSPAN="1" COLSPAN="1" STYLE="vertical-align: text-bottom; text-align: right">&nbsp;&nbsp;</TD>

          <TD STYLE="white-space: nowrap; vertical-align: text-bottom; text-align: left"><!-- PERCENT -->&nbsp;</TD>

</TR>

<TR STYLE="background-color: #CCFFCC">

          <TD ROWSPAN="1" COLSPAN="1" STYLE="padding-left: 30pt; text-indent: -10pt; vertical-align: text-bottom">Cash</TD>

          <TD ROWSPAN="1" STYLE="width: 6px; vertical-align: text-bottom; text-align: center"><!-- GUTTER -->&nbsp;</TD>

          <TD ROWSPAN="1" STYLE="width: 6px; vertical-align: text-bottom; text-align: left"><!-- $ -->$</TD>

          <TD ROWSPAN="1" COLSPAN="1" STYLE="vertical-align: text-bottom; text-align: right"> 10,031</TD>

          <TD STYLE="white-space: nowrap; vertical-align: text-bottom; text-align: left"><!-- PERCENT -->&nbsp;</TD>

          <TD ROWSPAN="1" STYLE="width: 6px; vertical-align: text-bottom; text-align: center"><!-- GUTTER -->&nbsp;</TD>

          <TD ROWSPAN="1" STYLE="width: 6px; vertical-align: text-bottom; text-align: left"><!-- $ -->$</TD>

          <TD ROWSPAN="1" COLSPAN="1" STYLE="vertical-align: text-bottom; text-align: right"> 3,627</TD>

          <TD STYLE="white-space: nowrap; vertical-align: text-bottom; text-align: left"><!-- PERCENT -->&nbsp;</TD>

</TR>

<TR STYLE="background-color: white">

          <TD ROWSPAN="1" COLSPAN="1" STYLE="padding-left: 30pt; text-indent: -10pt; vertical-align: text-bottom">Other assets</TD>

          <TD ROWSPAN="1" STYLE="width: 6px; vertical-align: text-bottom; text-align: center"><!-- GUTTER -->&nbsp;</TD>

          <TD ROWSPAN="1" STYLE="width: 6px; vertical-align: text-bottom; text-align: left"><!-- $ -->&nbsp;</TD>

          <TD ROWSPAN="1" COLSPAN="1" STYLE="vertical-align: text-bottom; text-align: right">1</TD>

          <TD STYLE="white-space: nowrap; vertical-align: text-bottom; text-align: left"><!-- PERCENT -->&nbsp;</TD>

          <TD ROWSPAN="1" STYLE="width: 6px; vertical-align: text-bottom; text-align: center"><!-- GUTTER -->&nbsp;</TD>

          <TD ROWSPAN="1" STYLE="width: 6px; vertical-align: text-bottom; text-align: left"><!-- $ -->&nbsp;</TD>

          <TD ROWSPAN="1" COLSPAN="1" STYLE="vertical-align: text-bottom; text-align: right">&#151;</TD>

          <TD STYLE="white-space: nowrap; vertical-align: text-bottom; text-align: left"><!-- PERCENT -->&nbsp;</TD>

</TR>

<TR STYLE="background-color: #CCFFCC">

          <TD ROWSPAN="1" COLSPAN="1" STYLE="padding-left: 30pt; text-indent: -10pt; vertical-align: text-bottom">Investments at fair value</TD>

          <TD ROWSPAN="1" STYLE="width: 6px; vertical-align: text-bottom; text-align: center"><!-- GUTTER -->&nbsp;</TD>

          <TD ROWSPAN="1" STYLE="width: 6px; vertical-align: text-bottom; text-align: left"><!-- $ -->&nbsp;</TD>

          <TD ROWSPAN="1" COLSPAN="1" STYLE="vertical-align: text-bottom; text-align: right">423</TD>

          <TD STYLE="white-space: nowrap; vertical-align: text-bottom; text-align: left"><!-- PERCENT -->&nbsp;</TD>

          <TD ROWSPAN="1" STYLE="width: 6px; vertical-align: text-bottom; text-align: center"><!-- GUTTER -->&nbsp;</TD>

          <TD ROWSPAN="1" STYLE="width: 6px; vertical-align: text-bottom; text-align: left"><!-- $ -->&nbsp;</TD>

          <TD ROWSPAN="1" COLSPAN="1" STYLE="vertical-align: text-bottom; text-align: right">&#151;</TD>

          <TD STYLE="white-space: nowrap; vertical-align: text-bottom; text-align: left"><!-- PERCENT -->&nbsp;</TD>

</TR>

<TR STYLE="background-color: white">

          <TD ROWSPAN="1" COLSPAN="1" STYLE="padding-left: 30pt; text-indent: -10pt; vertical-align: text-bottom; border-bottom: white 1pt solid">Intangible assets, net of accumulated amortization of $207<BR> and 0, respectively</TD>

          <TD ROWSPAN="1" STYLE="width: 6px; vertical-align: text-bottom; text-align: center; border-bottom: white 1pt solid"><!-- GUTTER -->&nbsp;</TD>

          <TD ROWSPAN="1" STYLE="width: 6px; vertical-align: text-bottom; text-align: left; border-bottom: black 1pt solid"><!-- $ -->&nbsp;</TD>

          <TD ROWSPAN="1" COLSPAN="1" STYLE="vertical-align: text-bottom; text-align: right; border-bottom: black 1pt solid">1,968</TD>

          <TD STYLE="white-space: nowrap; vertical-align: text-bottom; text-align: left; border-bottom: white 1pt solid"><!-- PERCENT -->&nbsp;</TD>

          <TD ROWSPAN="1" STYLE="width: 6px; vertical-align: text-bottom; text-align: center; border-bottom: white 1pt solid"><!-- GUTTER -->&nbsp;</TD>

          <TD ROWSPAN="1" STYLE="width: 6px; vertical-align: text-bottom; text-align: left; border-bottom: black 1pt solid"><!-- $ -->&nbsp;</TD>

          <TD ROWSPAN="1" COLSPAN="1" STYLE="vertical-align: text-bottom; text-align: right; border-bottom: black 1pt solid">45</TD>

          <TD STYLE="white-space: nowrap; vertical-align: text-bottom; text-align: left; border-bottom: white 1pt solid"><!-- PERCENT -->&nbsp;</TD>

</TR>

<TR STYLE="background-color: #CCFFCC">

          <TD ROWSPAN="1" COLSPAN="1" STYLE="padding-left: 10pt; text-indent: -10pt; vertical-align: text-bottom; font-weight: bold; border-bottom: white 3pt double">Total assets </TD>

          <TD ROWSPAN="1" STYLE="width: 6px; vertical-align: text-bottom; text-align: center; border-bottom: white 3pt double"><!-- GUTTER -->&nbsp;</TD>

          <TD ROWSPAN="1" STYLE="width: 6px; vertical-align: text-bottom; text-align: left; border-bottom: black 3pt double"><!-- $ -->$</TD>

          <TD ROWSPAN="1" COLSPAN="1" STYLE="vertical-align: text-bottom; text-align: right; border-bottom: black 3pt double"> 12,423</TD>

          <TD STYLE="white-space: nowrap; vertical-align: text-bottom; text-align: left; border-bottom: white 3pt double"><!-- PERCENT -->&nbsp;</TD>

          <TD ROWSPAN="1" STYLE="width: 6px; vertical-align: text-bottom; text-align: center; border-bottom: white 3pt double"><!-- GUTTER -->&nbsp;</TD>

          <TD ROWSPAN="1" STYLE="width: 6px; vertical-align: text-bottom; text-align: left; border-bottom: black 3pt double"><!-- $ -->$</TD>

          <TD ROWSPAN="1" COLSPAN="1" STYLE="vertical-align: text-bottom; text-align: right; border-bottom: black 3pt double"> 3,672</TD>

          <TD STYLE="white-space: nowrap; vertical-align: text-bottom; text-align: left; border-bottom: white 3pt double"><!-- PERCENT -->&nbsp;</TD>

</TR>

<TR STYLE="background-color: white">

          <TD ROWSPAN="1" COLSPAN="1" STYLE="padding-left: 10pt; text-indent: -10pt; vertical-align: text-bottom; font-weight: bold">LIABILITIES AND STOCKHOLDERS' EQUITY<BR></TD>

          <TD ROWSPAN="1" STYLE="width: 6px; vertical-align: text-bottom; text-align: center"><!-- GUTTER -->&nbsp;</TD>

          <TD ROWSPAN="1" STYLE="width: 6px; vertical-align: text-bottom; text-align: left"><!-- $ -->&nbsp;</TD>

          <TD ROWSPAN="1" COLSPAN="1" STYLE="vertical-align: text-bottom; text-align: right">&nbsp;&nbsp;</TD>

          <TD STYLE="white-space: nowrap; vertical-align: text-bottom; text-align: left"><!-- PERCENT -->&nbsp;</TD>

          <TD ROWSPAN="1" STYLE="width: 6px; vertical-align: text-bottom; text-align: center"><!-- GUTTER -->&nbsp;</TD>

          <TD ROWSPAN="1" STYLE="width: 6px; vertical-align: text-bottom; text-align: left"><!-- $ -->&nbsp;</TD>

          <TD ROWSPAN="1" COLSPAN="1" STYLE="vertical-align: text-bottom; text-align: right">&nbsp;&nbsp;</TD>

          <TD STYLE="white-space: nowrap; vertical-align: text-bottom; text-align: left"><!-- PERCENT -->&nbsp;</TD>

</TR>

<TR STYLE="background-color: #CCFFCC">

          <TD ROWSPAN="1" COLSPAN="1" STYLE="padding-left: 20pt; text-indent: -10pt; vertical-align: text-bottom">Current Liabilities:<BR></TD>

          <TD ROWSPAN="1" STYLE="width: 6px; vertical-align: text-bottom; text-align: center"><!-- GUTTER -->&nbsp;</TD>

          <TD ROWSPAN="1" STYLE="width: 6px; vertical-align: text-bottom; text-align: left"><!-- $ -->&nbsp;</TD>

          <TD ROWSPAN="1" COLSPAN="1" STYLE="vertical-align: text-bottom; text-align: right">&nbsp;&nbsp;</TD>

          <TD STYLE="white-space: nowrap; vertical-align: text-bottom; text-align: left"><!-- PERCENT -->&nbsp;</TD>

          <TD ROWSPAN="1" STYLE="width: 6px; vertical-align: text-bottom; text-align: center"><!-- GUTTER -->&nbsp;</TD>

          <TD ROWSPAN="1" STYLE="width: 6px; vertical-align: text-bottom; text-align: left"><!-- $ -->&nbsp;</TD>

          <TD ROWSPAN="1" COLSPAN="1" STYLE="vertical-align: text-bottom; text-align: right">&nbsp;&nbsp;</TD>

          <TD STYLE="white-space: nowrap; vertical-align: text-bottom; text-align: left"><!-- PERCENT -->&nbsp;</TD>

</TR>

<TR STYLE="background-color: white">

          <TD ROWSPAN="1" COLSPAN="1" STYLE="padding-left: 30pt; text-indent: -10pt; vertical-align: text-bottom">Accounts payable and accrued expenses</TD>

          <TD ROWSPAN="1" STYLE="width: 6px; vertical-align: text-bottom; text-align: center"><!-- GUTTER -->&nbsp;</TD>

          <TD ROWSPAN="1" STYLE="width: 6px; vertical-align: text-bottom; text-align: left"><!-- $ -->$</TD>

          <TD ROWSPAN="1" COLSPAN="1" STYLE="vertical-align: text-bottom; text-align: right"> 213</TD>

          <TD STYLE="white-space: nowrap; vertical-align: text-bottom; text-align: left"><!-- PERCENT -->&nbsp;</TD>

          <TD ROWSPAN="1" STYLE="width: 6px; vertical-align: text-bottom; text-align: center"><!-- GUTTER -->&nbsp;</TD>

          <TD ROWSPAN="1" STYLE="width: 6px; vertical-align: text-bottom; text-align: left"><!-- $ -->$</TD>

          <TD ROWSPAN="1" COLSPAN="1" STYLE="vertical-align: text-bottom; text-align: right"> 173</TD>

          <TD STYLE="white-space: nowrap; vertical-align: text-bottom; text-align: left"><!-- PERCENT -->&nbsp;</TD>

</TR>

<TR STYLE="background-color: #CCFFCC">

          <TD ROWSPAN="1" COLSPAN="1" STYLE="padding-left: 30pt; text-indent: -10pt; vertical-align: text-bottom">Patent liability</TD>

          <TD ROWSPAN="1" STYLE="width: 6px; vertical-align: text-bottom; text-align: center"><!-- GUTTER -->&nbsp;</TD>

          <TD ROWSPAN="1" STYLE="width: 6px; vertical-align: text-bottom; text-align: left"><!-- $ -->&nbsp;</TD>

          <TD ROWSPAN="1" COLSPAN="1" STYLE="vertical-align: text-bottom; text-align: right">&#151;</TD>

          <TD STYLE="white-space: nowrap; vertical-align: text-bottom; text-align: left"><!-- PERCENT -->&nbsp;</TD>

          <TD ROWSPAN="1" STYLE="width: 6px; vertical-align: text-bottom; text-align: center"><!-- GUTTER -->&nbsp;</TD>

          <TD ROWSPAN="1" STYLE="width: 6px; vertical-align: text-bottom; text-align: left"><!-- $ -->&nbsp;</TD>

          <TD ROWSPAN="1" COLSPAN="1" STYLE="vertical-align: text-bottom; text-align: right">45</TD>

          <TD STYLE="white-space: nowrap; vertical-align: text-bottom; text-align: left"><!-- PERCENT -->&nbsp;</TD>

</TR>

<TR STYLE="background-color: white">

          <TD ROWSPAN="1" COLSPAN="1" STYLE="padding-left: 20pt; text-indent: -10pt; vertical-align: text-bottom">Senior notes payable&nbsp;&#150;&nbsp;related parties, net of deferred debt discount of $848 and $1,164, respectively</TD>

          <TD ROWSPAN="1" STYLE="width: 6px; vertical-align: text-bottom; text-align: center"><!-- GUTTER -->&nbsp;</TD>

          <TD ROWSPAN="1" STYLE="width: 6px; vertical-align: text-bottom; text-align: left"><!-- $ -->&nbsp;</TD>

          <TD ROWSPAN="1" COLSPAN="1" STYLE="vertical-align: text-bottom; text-align: right">2,590</TD>

          <TD STYLE="white-space: nowrap; vertical-align: text-bottom; text-align: left"><!-- PERCENT -->&nbsp;</TD>

          <TD ROWSPAN="1" STYLE="width: 6px; vertical-align: text-bottom; text-align: center"><!-- GUTTER -->&nbsp;</TD>

          <TD ROWSPAN="1" STYLE="width: 6px; vertical-align: text-bottom; text-align: left"><!-- $ -->&nbsp;</TD>

          <TD ROWSPAN="1" COLSPAN="1" STYLE="vertical-align: text-bottom; text-align: right">2,461</TD>

          <TD STYLE="white-space: nowrap; vertical-align: text-bottom; text-align: left"><!-- PERCENT -->&nbsp;</TD>

</TR>

<TR STYLE="background-color: #CCFFCC">

          <TD ROWSPAN="1" COLSPAN="1" STYLE="padding-left: 20pt; text-indent: -10pt; vertical-align: text-bottom; border-bottom: white 1pt solid">Warrant liability</TD>

          <TD ROWSPAN="1" STYLE="width: 6px; vertical-align: text-bottom; text-align: center; border-bottom: white 1pt solid"><!-- GUTTER -->&nbsp;</TD>

          <TD ROWSPAN="1" STYLE="width: 6px; vertical-align: text-bottom; text-align: left; border-bottom: black 1pt solid"><!-- $ -->&nbsp;</TD>

          <TD ROWSPAN="1" COLSPAN="1" STYLE="vertical-align: text-bottom; text-align: right; border-bottom: black 1pt solid">&#151;</TD>

          <TD STYLE="white-space: nowrap; vertical-align: text-bottom; text-align: left; border-bottom: white 1pt solid"><!-- PERCENT -->&nbsp;</TD>

          <TD ROWSPAN="1" STYLE="width: 6px; vertical-align: text-bottom; text-align: center; border-bottom: white 1pt solid"><!-- GUTTER -->&nbsp;</TD>

          <TD ROWSPAN="1" STYLE="width: 6px; vertical-align: text-bottom; text-align: left; border-bottom: black 1pt solid"><!-- $ -->&nbsp;</TD>

          <TD ROWSPAN="1" COLSPAN="1" STYLE="vertical-align: text-bottom; text-align: right; border-bottom: black 1pt solid">252</TD>

          <TD STYLE="white-space: nowrap; vertical-align: text-bottom; text-align: left; border-bottom: white 1pt solid"><!-- PERCENT -->&nbsp;</TD>

</TR>

<TR STYLE="background-color: white">

          <TD ROWSPAN="1" COLSPAN="1" STYLE="padding-left: 40pt; text-indent: -10pt; vertical-align: text-bottom; border-bottom: white 1pt solid">Total liabilities</TD>

          <TD ROWSPAN="1" STYLE="width: 6px; vertical-align: text-bottom; text-align: center; border-bottom: white 1pt solid"><!-- GUTTER -->&nbsp;</TD>

          <TD ROWSPAN="1" STYLE="width: 6px; vertical-align: text-bottom; text-align: left; border-bottom: black 1pt solid"><!-- $ -->&nbsp;</TD>

          <TD ROWSPAN="1" COLSPAN="1" STYLE="vertical-align: text-bottom; text-align: right; border-bottom: black 1pt solid">2,803</TD>

          <TD STYLE="white-space: nowrap; vertical-align: text-bottom; text-align: left; border-bottom: white 1pt solid"><!-- PERCENT -->&nbsp;</TD>

          <TD ROWSPAN="1" STYLE="width: 6px; vertical-align: text-bottom; text-align: center; border-bottom: white 1pt solid"><!-- GUTTER -->&nbsp;</TD>

          <TD ROWSPAN="1" STYLE="width: 6px; vertical-align: text-bottom; text-align: left; border-bottom: black 1pt solid"><!-- $ -->&nbsp;</TD>

          <TD ROWSPAN="1" COLSPAN="1" STYLE="vertical-align: text-bottom; text-align: right; border-bottom: black 1pt solid">2,931</TD>

          <TD STYLE="white-space: nowrap; vertical-align: text-bottom; text-align: left; border-bottom: white 1pt solid"><!-- PERCENT -->&nbsp;</TD>

</TR>

<TR STYLE="background-color: #CCFFCC">

          <TD ROWSPAN="1" COLSPAN="1" STYLE="padding-left: 20pt; text-indent: -10pt; vertical-align: text-bottom">Stockholders' Equity<BR></TD>

          <TD ROWSPAN="1" STYLE="width: 6px; vertical-align: text-bottom; text-align: center"><!-- GUTTER -->&nbsp;</TD>

          <TD ROWSPAN="1" STYLE="width: 6px; vertical-align: text-bottom; text-align: left"><!-- $ -->&nbsp;</TD>

          <TD ROWSPAN="1" COLSPAN="1" STYLE="vertical-align: text-bottom; text-align: right">&nbsp;&nbsp;</TD>

          <TD STYLE="white-space: nowrap; vertical-align: text-bottom; text-align: left"><!-- PERCENT -->&nbsp;</TD>

          <TD ROWSPAN="1" STYLE="width: 6px; vertical-align: text-bottom; text-align: center"><!-- GUTTER -->&nbsp;</TD>

          <TD ROWSPAN="1" STYLE="width: 6px; vertical-align: text-bottom; text-align: left"><!-- $ -->&nbsp;</TD>

          <TD ROWSPAN="1" COLSPAN="1" STYLE="vertical-align: text-bottom; text-align: right">&nbsp;&nbsp;</TD>

          <TD STYLE="white-space: nowrap; vertical-align: text-bottom; text-align: left"><!-- PERCENT -->&nbsp;</TD>

</TR>

<TR STYLE="background-color: white">

          <TD ROWSPAN="1" COLSPAN="1" STYLE="padding-left: 30pt; text-indent: -10pt; vertical-align: text-bottom">Preferred stock&nbsp;&#150;&nbsp;29,000,000 shares authorized;<BR> par value $0.00001 per share.</TD>

          <TD ROWSPAN="1" STYLE="width: 6px; vertical-align: text-bottom; text-align: center"><!-- GUTTER -->&nbsp;</TD>

          <TD ROWSPAN="1" STYLE="width: 6px; vertical-align: text-bottom; text-align: left"><!-- $ -->&nbsp;</TD>

          <TD ROWSPAN="1" COLSPAN="1" STYLE="vertical-align: text-bottom; text-align: right">&nbsp;&nbsp;</TD>

          <TD STYLE="white-space: nowrap; vertical-align: text-bottom; text-align: left"><!-- PERCENT -->&nbsp;</TD>

          <TD ROWSPAN="1" STYLE="width: 6px; vertical-align: text-bottom; text-align: center"><!-- GUTTER -->&nbsp;</TD>

          <TD ROWSPAN="1" STYLE="width: 6px; vertical-align: text-bottom; text-align: left"><!-- $ -->&nbsp;</TD>

          <TD ROWSPAN="1" COLSPAN="1" STYLE="vertical-align: text-bottom; text-align: right">&nbsp;&nbsp;</TD>

          <TD STYLE="white-space: nowrap; vertical-align: text-bottom; text-align: left"><!-- PERCENT -->&nbsp;</TD>

</TR>

<TR STYLE="background-color: #CCFFCC">

          <TD ROWSPAN="1" COLSPAN="1" STYLE="padding-left: 40pt; text-indent: -10pt; vertical-align: text-bottom">Series A preferred stock&nbsp;&#150;&nbsp;27,225,000 shares authorized; par value $0.00001 per share; 17,913,727 and 0 shares issued and outstanding, respectively.</TD>

          <TD ROWSPAN="1" STYLE="width: 6px; vertical-align: text-bottom; text-align: center"><!-- GUTTER -->&nbsp;</TD>

          <TD ROWSPAN="1" STYLE="width: 6px; vertical-align: text-bottom; text-align: left"><!-- $ -->&nbsp;</TD>

          <TD ROWSPAN="1" COLSPAN="1" STYLE="vertical-align: text-bottom; text-align: right">&#151;</TD>

          <TD STYLE="white-space: nowrap; vertical-align: text-bottom; text-align: left"><!-- PERCENT -->&nbsp;</TD>

          <TD ROWSPAN="1" STYLE="width: 6px; vertical-align: text-bottom; text-align: center"><!-- GUTTER -->&nbsp;</TD>

          <TD ROWSPAN="1" STYLE="width: 6px; vertical-align: text-bottom; text-align: left"><!-- $ -->&nbsp;</TD>

          <TD ROWSPAN="1" COLSPAN="1" STYLE="vertical-align: text-bottom; text-align: right">&#151;</TD>

          <TD STYLE="white-space: nowrap; vertical-align: text-bottom; text-align: left"><!-- PERCENT -->&nbsp;</TD>

</TR>

<TR STYLE="background-color: white">

          <TD ROWSPAN="1" COLSPAN="1" STYLE="padding-left: 30pt; text-indent: -10pt; vertical-align: text-bottom">Common stock&nbsp;&#150;&nbsp;100,000,000 shares authorized; par value $0.00001 per share; 14,064,825 and 16,571,529 shares issued and outstanding, respectively</TD>

          <TD ROWSPAN="1" STYLE="width: 6px; vertical-align: text-bottom; text-align: center"><!-- GUTTER -->&nbsp;</TD>

          <TD ROWSPAN="1" STYLE="width: 6px; vertical-align: text-bottom; text-align: left"><!-- $ -->&nbsp;</TD>

          <TD ROWSPAN="1" COLSPAN="1" STYLE="vertical-align: text-bottom; text-align: right">&#151;</TD>

          <TD STYLE="white-space: nowrap; vertical-align: text-bottom; text-align: left"><!-- PERCENT -->&nbsp;</TD>

          <TD ROWSPAN="1" STYLE="width: 6px; vertical-align: text-bottom; text-align: center"><!-- GUTTER -->&nbsp;</TD>

          <TD ROWSPAN="1" STYLE="width: 6px; vertical-align: text-bottom; text-align: left"><!-- $ -->&nbsp;</TD>

          <TD ROWSPAN="1" COLSPAN="1" STYLE="vertical-align: text-bottom; text-align: right">&#151;</TD>

          <TD STYLE="white-space: nowrap; vertical-align: text-bottom; text-align: left"><!-- PERCENT -->&nbsp;</TD>

</TR>

<TR STYLE="background-color: #CCFFCC">

          <TD ROWSPAN="1" COLSPAN="1" STYLE="padding-left: 30pt; text-indent: -10pt; vertical-align: text-bottom">Additional paid-in capital</TD>

          <TD ROWSPAN="1" STYLE="width: 6px; vertical-align: text-bottom; text-align: center"><!-- GUTTER -->&nbsp;</TD>

          <TD ROWSPAN="1" STYLE="width: 6px; vertical-align: text-bottom; text-align: left"><!-- $ -->&nbsp;</TD>

          <TD ROWSPAN="1" COLSPAN="1" STYLE="vertical-align: text-bottom; text-align: right">18,626</TD>

          <TD STYLE="white-space: nowrap; vertical-align: text-bottom; text-align: left"><!-- PERCENT -->&nbsp;</TD>

          <TD ROWSPAN="1" STYLE="width: 6px; vertical-align: text-bottom; text-align: center"><!-- GUTTER -->&nbsp;</TD>

          <TD ROWSPAN="1" STYLE="width: 6px; vertical-align: text-bottom; text-align: left"><!-- $ -->&nbsp;</TD>

          <TD ROWSPAN="1" COLSPAN="1" STYLE="vertical-align: text-bottom; text-align: right">953</TD>

          <TD STYLE="white-space: nowrap; vertical-align: text-bottom; text-align: left"><!-- PERCENT -->&nbsp;</TD>

</TR>

<TR STYLE="background-color: white">

          <TD ROWSPAN="1" COLSPAN="1" STYLE="padding-left: 30pt; text-indent: -10pt; vertical-align: text-bottom; border-bottom: white 1pt solid">Deficit accumulated during the development stage</TD>

          <TD ROWSPAN="1" STYLE="width: 6px; vertical-align: text-bottom; text-align: center; border-bottom: white 1pt solid"><!-- GUTTER -->&nbsp;</TD>

          <TD ROWSPAN="1" STYLE="width: 6px; vertical-align: text-bottom; text-align: left; border-bottom: black 1pt solid"><!-- $ -->&nbsp;</TD>

          <TD ROWSPAN="1" COLSPAN="1" STYLE="vertical-align: text-bottom; text-align: right; border-bottom: black 1pt solid">(9,006</TD>

          <TD STYLE="white-space: nowrap; vertical-align: text-bottom; text-align: left; border-bottom: white 1pt solid">)<!-- PERCENT -->&nbsp;</TD>

          <TD ROWSPAN="1" STYLE="width: 6px; vertical-align: text-bottom; text-align: center; border-bottom: white 1pt solid"><!-- GUTTER -->&nbsp;</TD>

          <TD ROWSPAN="1" STYLE="width: 6px; vertical-align: text-bottom; text-align: left; border-bottom: black 1pt solid"><!-- $ -->&nbsp;</TD>

          <TD ROWSPAN="1" COLSPAN="1" STYLE="vertical-align: text-bottom; text-align: right; border-bottom: black 1pt solid">(212</TD>

          <TD STYLE="white-space: nowrap; vertical-align: text-bottom; text-align: left; border-bottom: white 1pt solid">)<!-- PERCENT -->&nbsp;</TD>

</TR>

<TR STYLE="background-color: #CCFFCC">

          <TD ROWSPAN="1" COLSPAN="1" STYLE="padding-left: 40pt; text-indent: -10pt; vertical-align: text-bottom; border-bottom: white 1pt solid">Total stockholders' equity</TD>

          <TD ROWSPAN="1" STYLE="width: 6px; vertical-align: text-bottom; text-align: center; border-bottom: white 1pt solid"><!-- GUTTER -->&nbsp;</TD>

          <TD ROWSPAN="1" STYLE="width: 6px; vertical-align: text-bottom; text-align: left; border-bottom: black 1pt solid"><!-- $ -->&nbsp;</TD>

          <TD ROWSPAN="1" COLSPAN="1" STYLE="vertical-align: text-bottom; text-align: right; border-bottom: black 1pt solid">9,620</TD>

          <TD STYLE="white-space: nowrap; vertical-align: text-bottom; text-align: left; border-bottom: white 1pt solid"><!-- PERCENT -->&nbsp;</TD>

          <TD ROWSPAN="1" STYLE="width: 6px; vertical-align: text-bottom; text-align: center; border-bottom: white 1pt solid"><!-- GUTTER -->&nbsp;</TD>

          <TD ROWSPAN="1" STYLE="width: 6px; vertical-align: text-bottom; text-align: left; border-bottom: black 1pt solid"><!-- $ -->&nbsp;</TD>

          <TD ROWSPAN="1" COLSPAN="1" STYLE="vertical-align: text-bottom; text-align: right; border-bottom: black 1pt solid">741</TD>

          <TD STYLE="white-space: nowrap; vertical-align: text-bottom; text-align: left; border-bottom: white 1pt solid"><!-- PERCENT -->&nbsp;</TD>

</TR>

<TR STYLE="background-color: white">

          <TD ROWSPAN="1" COLSPAN="1" STYLE="padding-left: 10pt; text-indent: -10pt; vertical-align: text-bottom; font-weight: bold; border-bottom: white 3pt double">Total liabilities and stockholders' equity</TD>

          <TD ROWSPAN="1" STYLE="width: 6px; vertical-align: text-bottom; text-align: center; border-bottom: white 3pt double"><!-- GUTTER -->&nbsp;</TD>

          <TD ROWSPAN="1" STYLE="width: 6px; vertical-align: text-bottom; text-align: left; border-bottom: black 3pt double"><!-- $ -->$</TD>

          <TD ROWSPAN="1" COLSPAN="1" STYLE="vertical-align: text-bottom; text-align: right; border-bottom: black 3pt double"> 12,423</TD>

          <TD STYLE="white-space: nowrap; vertical-align: text-bottom; text-align: left; border-bottom: white 3pt double"><!-- PERCENT -->&nbsp;</TD>

          <TD ROWSPAN="1" STYLE="width: 6px; vertical-align: text-bottom; text-align: center; border-bottom: white 3pt double"><!-- GUTTER -->&nbsp;</TD>

          <TD ROWSPAN="1" STYLE="width: 6px; vertical-align: text-bottom; text-align: left; border-bottom: black 3pt double"><!-- $ -->$</TD>

          <TD ROWSPAN="1" COLSPAN="1" STYLE="vertical-align: text-bottom; text-align: right; border-bottom: black 3pt double"> 3,672</TD>

          <TD STYLE="white-space: nowrap; vertical-align: text-bottom; text-align: left; border-bottom: white 3pt double"><!-- PERCENT -->&nbsp;</TD>

</TR>

</TABLE></DIV>

<P STYLE="text-indent: 0pt; text-align: center; font: normal 10pt/12pt Times New Roman, Times, Serif; margin: 0pt; padding: 3pt 0pt 3pt 4px; text-transform: none">&nbsp;<BR>&nbsp;<BR>The accompanying notes are an integral part of the condensed consolidated financial statements. </P>

</DIV>

<P STYLE="width: 708px; text-indent: 0px; text-align: center; font: normal 10pt/12pt Times New Roman, Times, Serif; margin: 0pt; padding: 12pt 0pt 3pt; color: black; text-transform: none; text-decoration: none">F-38</P>

<HR STYLE="width: 708px; height: 2px; text-align: center">

<DIV ID="PN" STYLE="page-break-after: always">&nbsp;</DIV>

<DIV ID="HDR">&nbsp;</DIV>

<DIV ALIGN="CENTER" STYLE="width: 708px; border: white 1pt solid; margin: 6pt 0pt; padding: 9pt 3pt 9pt 6pt">

<P STYLE="text-align: left; font: normal bold 8pt Times New Roman, Times, Serif"><A HREF="#TOC">TABLE OF CONTENTS</A></P>

<H1 STYLE="text-indent: 0pt; text-align: center; font: normal bold 10pt/12pt Times New Roman, Times, Serif; margin: 0pt; padding: 9pt 0pt 3pt; text-transform: none">LEXINGTON TECHNOLOGY GROUP, INC. AND SUBSIDIARY<BR> (A Development Stage Company)<BR> CONSOLIDATED STATEMENTS OF OPERATIONS<BR> ($ IN THOUSANDS) </H1>

<P STYLE="text-indent: 0pt; text-align: left; font: normal 10pt/12pt Times New Roman, Times, Serif; margin: 0pt; padding: 3pt 0pt 3pt 4px; text-transform: none"></P>

<DIV STYLE="text-align: center"><TABLE CELLSPACING="0" CELLPADDING="0" WIDTH="608" STYLE="vertical-align: text-bottom; text-indent: 0px; text-align: left; font: normal 10pt Times New Roman, Times, Serif; margin: -24pt 0pt 0pt; padding: 3pt 0pt; text-transform: none">

<TR>

          <TD><IMG HEIGHT="1" SRC="spacer.gif" WIDTH="292"></TD>

          <TD STYLE="width: 12px; vertical-align: text-bottom; text-align: center; border-bottom-style: none"><!-- GUTTER -->&nbsp;</TD>

          <TD COLSPAN="3"><IMG HEIGHT="1" SRC="spacer.gif" WIDTH="86"></TD>

          <TD STYLE="width: 12px; vertical-align: text-bottom; text-align: center; border-bottom-style: none"><!-- GUTTER -->&nbsp;</TD>

          <TD COLSPAN="3"><IMG HEIGHT="1" SRC="spacer.gif" WIDTH="86"></TD>

          <TD STYLE="width: 12px; vertical-align: text-bottom; text-align: center; border-bottom-style: none"><!-- GUTTER -->&nbsp;</TD>

          <TD COLSPAN="3"><IMG HEIGHT="1" SRC="spacer.gif" WIDTH="94"></TD>

</TR>

<TR>

          <TD ROWSPAN="1" COLSPAN="1" STYLE="line-height: normal; vertical-align: text-bottom; font-weight: bold; font-size: 8pt; text-align: left"></TD>

          <TD ROWSPAN="1" STYLE="width: 6px; vertical-align: text-bottom; text-align: center"><!-- GUTTER -->&nbsp;</TD>

          <TD ROWSPAN="1" COLSPAN="3" STYLE="line-height: normal; vertical-align: text-bottom; font-weight: bold; font-size: 8pt; text-align: center; border-bottom: black 1pt solid">Period from May 10, 2012 (inception) through<BR> June 30,<BR> 2012</TD>

          <TD ROWSPAN="1" STYLE="width: 6px; vertical-align: text-bottom; text-align: center"><!-- GUTTER -->&nbsp;</TD>

          <TD ROWSPAN="1" COLSPAN="3" STYLE="line-height: normal; vertical-align: text-bottom; font-weight: bold; font-size: 8pt; text-align: center; border-bottom: black 1pt solid">Six months<BR> ended December 31, 2012</TD>

          <TD ROWSPAN="1" STYLE="width: 6px; vertical-align: text-bottom; text-align: center"><!-- GUTTER -->&nbsp;</TD>

          <TD ROWSPAN="1" COLSPAN="3" STYLE="line-height: normal; vertical-align: text-bottom; font-weight: bold; font-size: 8pt; text-align: center; border-bottom: black 1pt solid">Period from May 10, 2012 (inception) through December 31,<BR> 2012</TD>

</TR>

<TR STYLE="background-color: #CCFFCC">

          <TD ROWSPAN="1" COLSPAN="1" STYLE="padding-left: 10pt; text-indent: -10pt; vertical-align: text-bottom; font-weight: bold">Operating expenses:<BR></TD>

          <TD ROWSPAN="1" STYLE="width: 6px; vertical-align: text-bottom; text-align: center"><!-- GUTTER -->&nbsp;</TD>

          <TD ROWSPAN="1" STYLE="width: 6px; vertical-align: text-bottom; text-align: left"><!-- $ -->&nbsp;</TD>

          <TD ROWSPAN="1" COLSPAN="1" STYLE="vertical-align: text-bottom; text-align: right">&nbsp;&nbsp;</TD>

          <TD STYLE="white-space: nowrap; vertical-align: text-bottom; text-align: left"><!-- PERCENT -->&nbsp;</TD>

          <TD ROWSPAN="1" STYLE="width: 6px; vertical-align: text-bottom; text-align: center"><!-- GUTTER -->&nbsp;</TD>

          <TD ROWSPAN="1" STYLE="width: 6px; vertical-align: text-bottom; text-align: left"><!-- $ -->&nbsp;</TD>

          <TD ROWSPAN="1" COLSPAN="1" STYLE="vertical-align: text-bottom; text-align: right">&nbsp;&nbsp;</TD>

          <TD STYLE="white-space: nowrap; vertical-align: text-bottom; text-align: left"><!-- PERCENT -->&nbsp;</TD>

          <TD ROWSPAN="1" STYLE="width: 6px; vertical-align: text-bottom; text-align: center"><!-- GUTTER -->&nbsp;</TD>

          <TD ROWSPAN="1" STYLE="width: 6px; vertical-align: text-bottom; text-align: left"><!-- $ -->&nbsp;</TD>

          <TD ROWSPAN="1" COLSPAN="1" STYLE="vertical-align: text-bottom; text-align: right">&nbsp;&nbsp;</TD>

          <TD STYLE="white-space: nowrap; vertical-align: text-bottom; text-align: left"><!-- PERCENT -->&nbsp;</TD>

</TR>

<TR STYLE="background-color: white">

          <TD ROWSPAN="1" COLSPAN="1" STYLE="padding-left: 20pt; text-indent: -10pt; vertical-align: text-bottom">Compensation and benefits</TD>

          <TD ROWSPAN="1" STYLE="width: 6px; vertical-align: text-bottom; text-align: center"><!-- GUTTER -->&nbsp;</TD>

          <TD ROWSPAN="1" STYLE="width: 6px; vertical-align: text-bottom; text-align: left"><!-- $ -->$</TD>

          <TD ROWSPAN="1" COLSPAN="1" STYLE="vertical-align: text-bottom; text-align: right"> 8</TD>

          <TD STYLE="white-space: nowrap; vertical-align: text-bottom; text-align: left"><!-- PERCENT -->&nbsp;</TD>

          <TD ROWSPAN="1" STYLE="width: 6px; vertical-align: text-bottom; text-align: center"><!-- GUTTER -->&nbsp;</TD>

          <TD ROWSPAN="1" STYLE="width: 6px; vertical-align: text-bottom; text-align: left"><!-- $ -->$</TD>

          <TD ROWSPAN="1" COLSPAN="1" STYLE="vertical-align: text-bottom; text-align: right"> 743</TD>

          <TD STYLE="white-space: nowrap; vertical-align: text-bottom; text-align: left"><!-- PERCENT -->&nbsp;</TD>

          <TD ROWSPAN="1" STYLE="width: 6px; vertical-align: text-bottom; text-align: center"><!-- GUTTER -->&nbsp;</TD>

          <TD ROWSPAN="1" STYLE="width: 6px; vertical-align: text-bottom; text-align: left"><!-- $ -->$</TD>

          <TD ROWSPAN="1" COLSPAN="1" STYLE="vertical-align: text-bottom; text-align: right"> 751</TD>

          <TD STYLE="white-space: nowrap; vertical-align: text-bottom; text-align: left"><!-- PERCENT -->&nbsp;</TD>

</TR>

<TR STYLE="background-color: #CCFFCC">

          <TD ROWSPAN="1" COLSPAN="1" STYLE="padding-left: 20pt; text-indent: -10pt; vertical-align: text-bottom">Legal and professional fees</TD>

          <TD ROWSPAN="1" STYLE="width: 6px; vertical-align: text-bottom; text-align: center"><!-- GUTTER -->&nbsp;</TD>

          <TD ROWSPAN="1" STYLE="width: 6px; vertical-align: text-bottom; text-align: left"><!-- $ -->&nbsp;</TD>

          <TD ROWSPAN="1" COLSPAN="1" STYLE="vertical-align: text-bottom; text-align: right">165</TD>

          <TD STYLE="white-space: nowrap; vertical-align: text-bottom; text-align: left"><!-- PERCENT -->&nbsp;</TD>

          <TD ROWSPAN="1" STYLE="width: 6px; vertical-align: text-bottom; text-align: center"><!-- GUTTER -->&nbsp;</TD>

          <TD ROWSPAN="1" STYLE="width: 6px; vertical-align: text-bottom; text-align: left"><!-- $ -->&nbsp;</TD>

          <TD ROWSPAN="1" COLSPAN="1" STYLE="vertical-align: text-bottom; text-align: right">1,486</TD>

          <TD STYLE="white-space: nowrap; vertical-align: text-bottom; text-align: left"><!-- PERCENT -->&nbsp;</TD>

          <TD ROWSPAN="1" STYLE="width: 6px; vertical-align: text-bottom; text-align: center"><!-- GUTTER -->&nbsp;</TD>

          <TD ROWSPAN="1" STYLE="width: 6px; vertical-align: text-bottom; text-align: left"><!-- $ -->&nbsp;</TD>

          <TD ROWSPAN="1" COLSPAN="1" STYLE="vertical-align: text-bottom; text-align: right">1,651</TD>

          <TD STYLE="white-space: nowrap; vertical-align: text-bottom; text-align: left"><!-- PERCENT -->&nbsp;</TD>

</TR>

<TR STYLE="background-color: white">

          <TD ROWSPAN="1" COLSPAN="1" STYLE="padding-left: 20pt; text-indent: -10pt; vertical-align: text-bottom">General and administrative</TD>

          <TD ROWSPAN="1" STYLE="width: 6px; vertical-align: text-bottom; text-align: center"><!-- GUTTER -->&nbsp;</TD>

          <TD ROWSPAN="1" STYLE="width: 6px; vertical-align: text-bottom; text-align: left"><!-- $ -->&nbsp;</TD>

          <TD ROWSPAN="1" COLSPAN="1" STYLE="vertical-align: text-bottom; text-align: right">&#151;</TD>

          <TD STYLE="white-space: nowrap; vertical-align: text-bottom; text-align: left"><!-- PERCENT -->&nbsp;</TD>

          <TD ROWSPAN="1" STYLE="width: 6px; vertical-align: text-bottom; text-align: center"><!-- GUTTER -->&nbsp;</TD>

          <TD ROWSPAN="1" STYLE="width: 6px; vertical-align: text-bottom; text-align: left"><!-- $ -->&nbsp;</TD>

          <TD ROWSPAN="1" COLSPAN="1" STYLE="vertical-align: text-bottom; text-align: right">161</TD>

          <TD STYLE="white-space: nowrap; vertical-align: text-bottom; text-align: left"><!-- PERCENT -->&nbsp;</TD>

          <TD ROWSPAN="1" STYLE="width: 6px; vertical-align: text-bottom; text-align: center"><!-- GUTTER -->&nbsp;</TD>

          <TD ROWSPAN="1" STYLE="width: 6px; vertical-align: text-bottom; text-align: left"><!-- $ -->&nbsp;</TD>

          <TD ROWSPAN="1" COLSPAN="1" STYLE="vertical-align: text-bottom; text-align: right">161</TD>

          <TD STYLE="white-space: nowrap; vertical-align: text-bottom; text-align: left"><!-- PERCENT -->&nbsp;</TD>

</TR>

<TR STYLE="background-color: #CCFFCC">

          <TD ROWSPAN="1" COLSPAN="1" STYLE="padding-left: 20pt; text-indent: -10pt; vertical-align: text-bottom; border-bottom: white 1pt solid">Amortization</TD>

          <TD ROWSPAN="1" STYLE="width: 6px; vertical-align: text-bottom; text-align: center; border-bottom: white 1pt solid"><!-- GUTTER -->&nbsp;</TD>

          <TD ROWSPAN="1" STYLE="width: 6px; vertical-align: text-bottom; text-align: left; border-bottom: black 1pt solid"><!-- $ -->&nbsp;</TD>

          <TD ROWSPAN="1" COLSPAN="1" STYLE="vertical-align: text-bottom; text-align: right; border-bottom: black 1pt solid">&#151;</TD>

          <TD STYLE="white-space: nowrap; vertical-align: text-bottom; text-align: left; border-bottom: white 1pt solid"><!-- PERCENT -->&nbsp;</TD>

          <TD ROWSPAN="1" STYLE="width: 6px; vertical-align: text-bottom; text-align: center; border-bottom: white 1pt solid"><!-- GUTTER -->&nbsp;</TD>

          <TD ROWSPAN="1" STYLE="width: 6px; vertical-align: text-bottom; text-align: left; border-bottom: black 1pt solid"><!-- $ -->&nbsp;</TD>

          <TD ROWSPAN="1" COLSPAN="1" STYLE="vertical-align: text-bottom; text-align: right; border-bottom: black 1pt solid">207</TD>

          <TD STYLE="white-space: nowrap; vertical-align: text-bottom; text-align: left; border-bottom: white 1pt solid"><!-- PERCENT -->&nbsp;</TD>

          <TD ROWSPAN="1" STYLE="width: 6px; vertical-align: text-bottom; text-align: center; border-bottom: white 1pt solid"><!-- GUTTER -->&nbsp;</TD>

          <TD ROWSPAN="1" STYLE="width: 6px; vertical-align: text-bottom; text-align: left; border-bottom: black 1pt solid"><!-- $ -->&nbsp;</TD>

          <TD ROWSPAN="1" COLSPAN="1" STYLE="vertical-align: text-bottom; text-align: right; border-bottom: black 1pt solid">207</TD>

          <TD STYLE="white-space: nowrap; vertical-align: text-bottom; text-align: left; border-bottom: white 1pt solid"><!-- PERCENT -->&nbsp;</TD>

</TR>

<TR STYLE="background-color: white">

          <TD ROWSPAN="1" COLSPAN="1" STYLE="padding-left: 30pt; text-indent: -10pt; vertical-align: text-bottom; border-bottom: white 1pt solid">Loss from operations</TD>

          <TD ROWSPAN="1" STYLE="width: 6px; vertical-align: text-bottom; text-align: center; border-bottom: white 1pt solid"><!-- GUTTER -->&nbsp;</TD>

          <TD ROWSPAN="1" STYLE="width: 6px; vertical-align: text-bottom; text-align: left; border-bottom: black 1pt solid"><!-- $ -->&nbsp;</TD>

          <TD ROWSPAN="1" COLSPAN="1" STYLE="vertical-align: text-bottom; text-align: right; border-bottom: black 1pt solid">173</TD>

          <TD STYLE="white-space: nowrap; vertical-align: text-bottom; text-align: left; border-bottom: white 1pt solid"><!-- PERCENT -->&nbsp;</TD>

          <TD ROWSPAN="1" STYLE="width: 6px; vertical-align: text-bottom; text-align: center; border-bottom: white 1pt solid"><!-- GUTTER -->&nbsp;</TD>

          <TD ROWSPAN="1" STYLE="width: 6px; vertical-align: text-bottom; text-align: left; border-bottom: black 1pt solid"><!-- $ -->&nbsp;</TD>

          <TD ROWSPAN="1" COLSPAN="1" STYLE="vertical-align: text-bottom; text-align: right; border-bottom: black 1pt solid">2,597</TD>

          <TD STYLE="white-space: nowrap; vertical-align: text-bottom; text-align: left; border-bottom: white 1pt solid"><!-- PERCENT -->&nbsp;</TD>

          <TD ROWSPAN="1" STYLE="width: 6px; vertical-align: text-bottom; text-align: center; border-bottom: white 1pt solid"><!-- GUTTER -->&nbsp;</TD>

          <TD ROWSPAN="1" STYLE="width: 6px; vertical-align: text-bottom; text-align: left; border-bottom: black 1pt solid"><!-- $ -->&nbsp;</TD>

          <TD ROWSPAN="1" COLSPAN="1" STYLE="vertical-align: text-bottom; text-align: right; border-bottom: black 1pt solid">2,770</TD>

          <TD STYLE="white-space: nowrap; vertical-align: text-bottom; text-align: left; border-bottom: white 1pt solid"><!-- PERCENT -->&nbsp;</TD>

</TR>

<TR STYLE="background-color: #CCFFCC">

          <TD ROWSPAN="1" COLSPAN="1" STYLE="padding-left: 10pt; text-indent: -10pt; vertical-align: text-bottom; font-weight: bold">Other expenses:<BR></TD>

          <TD ROWSPAN="1" STYLE="width: 6px; vertical-align: text-bottom; text-align: center"><!-- GUTTER -->&nbsp;</TD>

          <TD ROWSPAN="1" STYLE="width: 6px; vertical-align: text-bottom; text-align: left"><!-- $ -->&nbsp;</TD>

          <TD ROWSPAN="1" COLSPAN="1" STYLE="vertical-align: text-bottom; text-align: right">&nbsp;&nbsp;</TD>

          <TD STYLE="white-space: nowrap; vertical-align: text-bottom; text-align: left"><!-- PERCENT -->&nbsp;</TD>

          <TD ROWSPAN="1" STYLE="width: 6px; vertical-align: text-bottom; text-align: center"><!-- GUTTER -->&nbsp;</TD>

          <TD ROWSPAN="1" STYLE="width: 6px; vertical-align: text-bottom; text-align: left"><!-- $ -->&nbsp;</TD>

          <TD ROWSPAN="1" COLSPAN="1" STYLE="vertical-align: text-bottom; text-align: right">&nbsp;&nbsp;</TD>

          <TD STYLE="white-space: nowrap; vertical-align: text-bottom; text-align: left"><!-- PERCENT -->&nbsp;</TD>

          <TD ROWSPAN="1" STYLE="width: 6px; vertical-align: text-bottom; text-align: center"><!-- GUTTER -->&nbsp;</TD>

          <TD ROWSPAN="1" STYLE="width: 6px; vertical-align: text-bottom; text-align: left"><!-- $ -->&nbsp;</TD>

          <TD ROWSPAN="1" COLSPAN="1" STYLE="vertical-align: text-bottom; text-align: right">&nbsp;&nbsp;</TD>

          <TD STYLE="white-space: nowrap; vertical-align: text-bottom; text-align: left"><!-- PERCENT -->&nbsp;</TD>

</TR>

<TR STYLE="background-color: white">

          <TD ROWSPAN="1" COLSPAN="1" STYLE="padding-left: 20pt; text-indent: -10pt; vertical-align: text-bottom">Interest</TD>

          <TD ROWSPAN="1" STYLE="width: 6px; vertical-align: text-bottom; text-align: center"><!-- GUTTER -->&nbsp;</TD>

          <TD ROWSPAN="1" STYLE="width: 6px; vertical-align: text-bottom; text-align: left"><!-- $ -->&nbsp;</TD>

          <TD ROWSPAN="1" COLSPAN="1" STYLE="vertical-align: text-bottom; text-align: right">30</TD>

          <TD STYLE="white-space: nowrap; vertical-align: text-bottom; text-align: left"><!-- PERCENT -->&nbsp;</TD>

          <TD ROWSPAN="1" STYLE="width: 6px; vertical-align: text-bottom; text-align: center"><!-- GUTTER -->&nbsp;</TD>

          <TD ROWSPAN="1" STYLE="width: 6px; vertical-align: text-bottom; text-align: left"><!-- $ -->&nbsp;</TD>

          <TD ROWSPAN="1" COLSPAN="1" STYLE="vertical-align: text-bottom; text-align: right">577</TD>

          <TD STYLE="white-space: nowrap; vertical-align: text-bottom; text-align: left"><!-- PERCENT -->&nbsp;</TD>

          <TD ROWSPAN="1" STYLE="width: 6px; vertical-align: text-bottom; text-align: center"><!-- GUTTER -->&nbsp;</TD>

          <TD ROWSPAN="1" STYLE="width: 6px; vertical-align: text-bottom; text-align: left"><!-- $ -->&nbsp;</TD>

          <TD ROWSPAN="1" COLSPAN="1" STYLE="vertical-align: text-bottom; text-align: right">607</TD>

          <TD STYLE="white-space: nowrap; vertical-align: text-bottom; text-align: left"><!-- PERCENT -->&nbsp;</TD>

</TR>

<TR STYLE="background-color: #CCFFCC">

          <TD ROWSPAN="1" COLSPAN="1" STYLE="padding-left: 20pt; text-indent: -10pt; vertical-align: text-bottom">Unrealized loss on investment</TD>

          <TD ROWSPAN="1" STYLE="width: 6px; vertical-align: text-bottom; text-align: center"><!-- GUTTER -->&nbsp;</TD>

          <TD ROWSPAN="1" STYLE="width: 6px; vertical-align: text-bottom; text-align: left"><!-- $ -->&nbsp;</TD>

          <TD ROWSPAN="1" COLSPAN="1" STYLE="vertical-align: text-bottom; text-align: right">&#151;</TD>

          <TD STYLE="white-space: nowrap; vertical-align: text-bottom; text-align: left"><!-- PERCENT -->&nbsp;</TD>

          <TD ROWSPAN="1" STYLE="width: 6px; vertical-align: text-bottom; text-align: center"><!-- GUTTER -->&nbsp;</TD>

          <TD ROWSPAN="1" STYLE="width: 6px; vertical-align: text-bottom; text-align: left"><!-- $ -->&nbsp;</TD>

          <TD ROWSPAN="1" COLSPAN="1" STYLE="vertical-align: text-bottom; text-align: right">300</TD>

          <TD STYLE="white-space: nowrap; vertical-align: text-bottom; text-align: left"><!-- PERCENT -->&nbsp;</TD>

          <TD ROWSPAN="1" STYLE="width: 6px; vertical-align: text-bottom; text-align: center"><!-- GUTTER -->&nbsp;</TD>

          <TD ROWSPAN="1" STYLE="width: 6px; vertical-align: text-bottom; text-align: left"><!-- $ -->&nbsp;</TD>

          <TD ROWSPAN="1" COLSPAN="1" STYLE="vertical-align: text-bottom; text-align: right">300</TD>

          <TD STYLE="white-space: nowrap; vertical-align: text-bottom; text-align: left"><!-- PERCENT -->&nbsp;</TD>

</TR>

<TR STYLE="background-color: white">

          <TD ROWSPAN="1" COLSPAN="1" STYLE="padding-left: 20pt; text-indent: -10pt; vertical-align: text-bottom; border-bottom: white 1pt solid">Change in fair value of warrant liability</TD>

          <TD ROWSPAN="1" STYLE="width: 6px; vertical-align: text-bottom; text-align: center; border-bottom: white 1pt solid"><!-- GUTTER -->&nbsp;</TD>

          <TD ROWSPAN="1" STYLE="width: 6px; vertical-align: text-bottom; text-align: left; border-bottom: black 1pt solid"><!-- $ -->&nbsp;</TD>

          <TD ROWSPAN="1" COLSPAN="1" STYLE="vertical-align: text-bottom; text-align: right; border-bottom: black 1pt solid">9</TD>

          <TD STYLE="white-space: nowrap; vertical-align: text-bottom; text-align: left; border-bottom: white 1pt solid"><!-- PERCENT -->&nbsp;</TD>

          <TD ROWSPAN="1" STYLE="width: 6px; vertical-align: text-bottom; text-align: center; border-bottom: white 1pt solid"><!-- GUTTER -->&nbsp;</TD>

          <TD ROWSPAN="1" STYLE="width: 6px; vertical-align: text-bottom; text-align: left; border-bottom: black 1pt solid"><!-- $ -->&nbsp;</TD>

          <TD ROWSPAN="1" COLSPAN="1" STYLE="vertical-align: text-bottom; text-align: right; border-bottom: black 1pt solid">5,320</TD>

          <TD STYLE="white-space: nowrap; vertical-align: text-bottom; text-align: left; border-bottom: white 1pt solid"><!-- PERCENT -->&nbsp;</TD>

          <TD ROWSPAN="1" STYLE="width: 6px; vertical-align: text-bottom; text-align: center; border-bottom: white 1pt solid"><!-- GUTTER -->&nbsp;</TD>

          <TD ROWSPAN="1" STYLE="width: 6px; vertical-align: text-bottom; text-align: left; border-bottom: black 1pt solid"><!-- $ -->&nbsp;</TD>

          <TD ROWSPAN="1" COLSPAN="1" STYLE="vertical-align: text-bottom; text-align: right; border-bottom: black 1pt solid">5,329</TD>

          <TD STYLE="white-space: nowrap; vertical-align: text-bottom; text-align: left; border-bottom: white 1pt solid"><!-- PERCENT -->&nbsp;</TD>

</TR>

<TR STYLE="background-color: #CCFFCC">

          <TD ROWSPAN="1" COLSPAN="1" STYLE="padding-left: 30pt; text-indent: -10pt; vertical-align: text-bottom; border-bottom: white 1pt solid">Total other expenses</TD>

          <TD ROWSPAN="1" STYLE="width: 6px; vertical-align: text-bottom; text-align: center; border-bottom: white 1pt solid"><!-- GUTTER -->&nbsp;</TD>

          <TD ROWSPAN="1" STYLE="width: 6px; vertical-align: text-bottom; text-align: left; border-bottom: black 1pt solid"><!-- $ -->&nbsp;</TD>

          <TD ROWSPAN="1" COLSPAN="1" STYLE="vertical-align: text-bottom; text-align: right; border-bottom: black 1pt solid">39</TD>

          <TD STYLE="white-space: nowrap; vertical-align: text-bottom; text-align: left; border-bottom: white 1pt solid"><!-- PERCENT -->&nbsp;</TD>

          <TD ROWSPAN="1" STYLE="width: 6px; vertical-align: text-bottom; text-align: center; border-bottom: white 1pt solid"><!-- GUTTER -->&nbsp;</TD>

          <TD ROWSPAN="1" STYLE="width: 6px; vertical-align: text-bottom; text-align: left; border-bottom: black 1pt solid"><!-- $ -->&nbsp;</TD>

          <TD ROWSPAN="1" COLSPAN="1" STYLE="vertical-align: text-bottom; text-align: right; border-bottom: black 1pt solid">6,197</TD>

          <TD STYLE="white-space: nowrap; vertical-align: text-bottom; text-align: left; border-bottom: white 1pt solid"><!-- PERCENT -->&nbsp;</TD>

          <TD ROWSPAN="1" STYLE="width: 6px; vertical-align: text-bottom; text-align: center; border-bottom: white 1pt solid"><!-- GUTTER -->&nbsp;</TD>

          <TD ROWSPAN="1" STYLE="width: 6px; vertical-align: text-bottom; text-align: left; border-bottom: black 1pt solid"><!-- $ -->&nbsp;</TD>

          <TD ROWSPAN="1" COLSPAN="1" STYLE="vertical-align: text-bottom; text-align: right; border-bottom: black 1pt solid">6,236</TD>

          <TD STYLE="white-space: nowrap; vertical-align: text-bottom; text-align: left; border-bottom: white 1pt solid"><!-- PERCENT -->&nbsp;</TD>

</TR>

<TR STYLE="background-color: white">

          <TD ROWSPAN="1" COLSPAN="1" STYLE="padding-left: 10pt; text-indent: -10pt; vertical-align: text-bottom; border-bottom: white 3pt double">Net loss</TD>

          <TD ROWSPAN="1" STYLE="width: 6px; vertical-align: text-bottom; text-align: center; border-bottom: white 3pt double"><!-- GUTTER -->&nbsp;</TD>

          <TD ROWSPAN="1" STYLE="width: 6px; vertical-align: text-bottom; text-align: left; border-bottom: black 3pt double"><!-- $ -->$</TD>

          <TD ROWSPAN="1" COLSPAN="1" STYLE="vertical-align: text-bottom; text-align: right; border-bottom: black 3pt double"> (212</TD>

          <TD STYLE="white-space: nowrap; vertical-align: text-bottom; text-align: left; border-bottom: white 3pt double">)<!-- PERCENT -->&nbsp;</TD>

          <TD ROWSPAN="1" STYLE="width: 6px; vertical-align: text-bottom; text-align: center; border-bottom: white 3pt double"><!-- GUTTER -->&nbsp;</TD>

          <TD ROWSPAN="1" STYLE="width: 6px; vertical-align: text-bottom; text-align: left; border-bottom: black 3pt double"><!-- $ -->$</TD>

          <TD ROWSPAN="1" COLSPAN="1" STYLE="vertical-align: text-bottom; text-align: right; border-bottom: black 3pt double"> (8,794</TD>

          <TD STYLE="white-space: nowrap; vertical-align: text-bottom; text-align: left; border-bottom: white 3pt double">)<!-- PERCENT -->&nbsp;</TD>

          <TD ROWSPAN="1" STYLE="width: 6px; vertical-align: text-bottom; text-align: center; border-bottom: white 3pt double"><!-- GUTTER -->&nbsp;</TD>

          <TD ROWSPAN="1" STYLE="width: 6px; vertical-align: text-bottom; text-align: left; border-bottom: black 3pt double"><!-- $ -->$</TD>

          <TD ROWSPAN="1" COLSPAN="1" STYLE="vertical-align: text-bottom; text-align: right; border-bottom: black 3pt double"> (9,006</TD>

          <TD STYLE="white-space: nowrap; vertical-align: text-bottom; text-align: left; border-bottom: white 3pt double">)<!-- PERCENT -->&nbsp;</TD>

</TR>

</TABLE></DIV>

<P STYLE="text-indent: 0pt; text-align: center; font: normal 10pt/12pt Times New Roman, Times, Serif; margin: 0pt; padding: 3pt 0pt 3pt 4px; text-transform: none">&nbsp;<BR>&nbsp;<BR>The accompanying notes are an integral part of the condensed consolidated financial statements. </P>

</DIV>

<P STYLE="width: 708px; text-indent: 0px; text-align: center; font: normal 10pt/12pt Times New Roman, Times, Serif; margin: 0pt; padding: 12pt 0pt 3pt; color: black; text-transform: none; text-decoration: none">F-39</P>

<HR STYLE="width: 708px; height: 2px; text-align: center">

<DIV ID="PN" STYLE="page-break-after: always">&nbsp;</DIV>

<DIV ID="HDR">&nbsp;</DIV>

<DIV ALIGN="CENTER" STYLE="width: 708px; border: white 1pt solid; margin: 6pt 0pt; padding: 9pt 3pt 9pt 6pt">

<P STYLE="text-align: left; font: normal bold 8pt Times New Roman, Times, Serif"><A HREF="#TOC">TABLE OF CONTENTS</A></P>

<H1 STYLE="text-indent: 0pt; text-align: center; font: normal bold 10pt/12pt Times New Roman, Times, Serif; margin: 0pt; padding: 9pt 0pt 3pt; text-transform: none">LEXINGTON TECHNOLOGY GROUP, INC. AND SUBSIDIARY<BR> (A Development Stage Company)<BR> CONSOLIDATED STATEMENT OF CHANGES IN STOCKHOLDERS' EQUITY<BR> ($ IN THOUSANDS) </H1>

<P STYLE="text-indent: 0pt; text-align: left; font: normal 10pt/12pt Times New Roman, Times, Serif; margin: 0pt; padding: 3pt 0pt 3pt 4px; text-transform: none"></P>

<DIV STYLE="text-align: center"><TABLE CELLSPACING="0" CELLPADDING="0" WIDTH="608" STYLE="vertical-align: text-bottom; text-indent: 0px; text-align: left; font: normal 9pt Times New Roman, Times, Serif; margin: -24pt 0pt 0pt; padding: 3pt 0pt; text-transform: none">

<TR>

          <TD><IMG HEIGHT="1" SRC="spacer.gif" WIDTH="168"></TD>

          <TD STYLE="width: 12px; vertical-align: text-bottom; text-align: center; border-bottom-style: none"><!-- GUTTER -->&nbsp;</TD>

          <TD COLSPAN="3"><IMG HEIGHT="1" SRC="spacer.gif" WIDTH="58"></TD>

          <TD STYLE="width: 12px; vertical-align: text-bottom; text-align: center; border-bottom-style: none"><!-- GUTTER -->&nbsp;</TD>

          <TD COLSPAN="3"><IMG HEIGHT="1" SRC="spacer.gif" WIDTH="42"></TD>

          <TD STYLE="width: 12px; vertical-align: text-bottom; text-align: center; border-bottom-style: none"><!-- GUTTER -->&nbsp;</TD>

          <TD COLSPAN="3"><IMG HEIGHT="1" SRC="spacer.gif" WIDTH="80"></TD>

          <TD STYLE="width: 12px; vertical-align: text-bottom; text-align: center; border-bottom-style: none"><!-- GUTTER -->&nbsp;</TD>

          <TD COLSPAN="3"><IMG HEIGHT="1" SRC="spacer.gif" WIDTH="42"></TD>

          <TD STYLE="width: 12px; vertical-align: text-bottom; text-align: center; border-bottom-style: none"><!-- GUTTER -->&nbsp;</TD>

          <TD COLSPAN="3"><IMG HEIGHT="1" SRC="spacer.gif" WIDTH="58"></TD>

          <TD STYLE="width: 12px; vertical-align: text-bottom; text-align: center; border-bottom-style: none"><!-- GUTTER -->&nbsp;</TD>

          <TD COLSPAN="3"><IMG HEIGHT="1" SRC="spacer.gif" WIDTH="58"></TD>

          <TD STYLE="width: 12px; vertical-align: text-bottom; text-align: center; border-bottom-style: none"><!-- GUTTER -->&nbsp;</TD>

          <TD COLSPAN="3"><IMG HEIGHT="1" SRC="spacer.gif" WIDTH="61"></TD>

</TR>

<TR>

          <TD ROWSPAN="1" COLSPAN="1" STYLE="line-height: normal; vertical-align: text-bottom; font-weight: bold; font-size: 8pt; text-align: left"></TD>

          <TD ROWSPAN="1" STYLE="width: 6px; vertical-align: text-bottom; text-align: center"><!-- GUTTER -->&nbsp;</TD>

          <TD ROWSPAN="1" COLSPAN="7" STYLE="line-height: normal; vertical-align: text-bottom; font-weight: bold; font-size: 8pt; text-align: center; border-bottom: black 1pt solid">Series A Preferred</TD>

          <TD ROWSPAN="1" STYLE="width: 6px; vertical-align: text-bottom; text-align: center"><!-- GUTTER -->&nbsp;</TD>

          <TD ROWSPAN="1" COLSPAN="7" STYLE="line-height: normal; vertical-align: text-bottom; font-weight: bold; font-size: 8pt; text-align: center; border-bottom: black 1pt solid">Common</TD>

          <TD ROWSPAN="2" STYLE="width: 6px; vertical-align: text-bottom; text-align: center"><!-- GUTTER -->&nbsp;</TD>

          <TD ROWSPAN="2" COLSPAN="3" STYLE="line-height: normal; vertical-align: text-bottom; font-weight: bold; font-size: 8pt; text-align: center; border-bottom: black 1pt solid">Additional paid-in capital</TD>

          <TD ROWSPAN="2" STYLE="width: 6px; vertical-align: text-bottom; text-align: center"><!-- GUTTER -->&nbsp;</TD>

          <TD ROWSPAN="2" COLSPAN="3" STYLE="line-height: normal; vertical-align: text-bottom; font-weight: bold; font-size: 8pt; text-align: center; border-bottom: black 1pt solid">Deficit accumulated during development stage</TD>

          <TD ROWSPAN="2" STYLE="width: 6px; vertical-align: text-bottom; text-align: center"><!-- GUTTER -->&nbsp;</TD>

          <TD ROWSPAN="2" COLSPAN="3" STYLE="line-height: normal; vertical-align: text-bottom; font-weight: bold; font-size: 8pt; text-align: center; border-bottom: black 1pt solid">Total stockholders' equity</TD>

</TR>

<TR>

          <TD ROWSPAN="1" COLSPAN="1" STYLE="line-height: normal; vertical-align: text-bottom; font-weight: bold; font-size: 8pt; text-align: left">&nbsp;&nbsp;</TD>

          <TD ROWSPAN="1" STYLE="width: 6px; vertical-align: text-bottom; text-align: center"><!-- GUTTER -->&nbsp;</TD>

          <TD ROWSPAN="1" COLSPAN="3" STYLE="line-height: normal; vertical-align: text-bottom; font-weight: bold; font-size: 8pt; text-align: center; border-bottom: black 1pt solid">Share</TD>

          <TD ROWSPAN="1" STYLE="width: 6px; vertical-align: text-bottom; text-align: center"><!-- GUTTER -->&nbsp;</TD>

          <TD ROWSPAN="1" COLSPAN="3" STYLE="line-height: normal; vertical-align: text-bottom; font-weight: bold; font-size: 8pt; text-align: center; border-bottom: black 1pt solid">Amount</TD>

          <TD ROWSPAN="1" STYLE="width: 6px; vertical-align: text-bottom; text-align: center"><!-- GUTTER -->&nbsp;</TD>

          <TD ROWSPAN="1" COLSPAN="3" STYLE="line-height: normal; vertical-align: text-bottom; font-weight: bold; font-size: 8pt; text-align: center; border-bottom: black 1pt solid">Shares</TD>

          <TD ROWSPAN="1" STYLE="width: 6px; vertical-align: text-bottom; text-align: center"><!-- GUTTER -->&nbsp;</TD>

          <TD ROWSPAN="1" COLSPAN="3" STYLE="line-height: normal; vertical-align: text-bottom; font-weight: bold; font-size: 8pt; text-align: center; border-bottom: black 1pt solid">Amount</TD>

</TR>

<TR STYLE="background-color: white">

          <TD ROWSPAN="1" COLSPAN="1" STYLE="padding-left: 10pt; text-indent: -10pt; vertical-align: text-bottom; font-weight: bold">Balance&nbsp;&#150;&nbsp;May 10, 2012 (inception)</TD>

          <TD ROWSPAN="1" STYLE="width: 6px; vertical-align: text-bottom; text-align: center"><!-- GUTTER -->&nbsp;</TD>

          <TD ROWSPAN="1" STYLE="width: 6px; vertical-align: text-bottom; text-align: left"><!-- $ -->&nbsp;</TD>

          <TD ROWSPAN="1" COLSPAN="1" STYLE="vertical-align: text-bottom; text-align: right">&#151;</TD>

          <TD STYLE="white-space: nowrap; vertical-align: text-bottom; text-align: left"><!-- PERCENT -->&nbsp;</TD>

          <TD ROWSPAN="1" STYLE="width: 6px; vertical-align: text-bottom; text-align: center"><!-- GUTTER -->&nbsp;</TD>

          <TD ROWSPAN="1" STYLE="width: 6px; vertical-align: text-bottom; text-align: left"><!-- $ -->$</TD>

          <TD ROWSPAN="1" COLSPAN="1" STYLE="vertical-align: text-bottom; text-align: right">&#151;</TD>

          <TD STYLE="white-space: nowrap; vertical-align: text-bottom; text-align: left"><!-- PERCENT -->&nbsp;</TD>

          <TD ROWSPAN="1" STYLE="width: 6px; vertical-align: text-bottom; text-align: center"><!-- GUTTER -->&nbsp;</TD>

          <TD ROWSPAN="1" STYLE="width: 6px; vertical-align: text-bottom; text-align: left"><!-- $ -->&nbsp;</TD>

          <TD ROWSPAN="1" COLSPAN="1" STYLE="vertical-align: text-bottom; text-align: right">&#151;</TD>

          <TD STYLE="white-space: nowrap; vertical-align: text-bottom; text-align: left"><!-- PERCENT -->&nbsp;</TD>

          <TD ROWSPAN="1" STYLE="width: 6px; vertical-align: text-bottom; text-align: center"><!-- GUTTER -->&nbsp;</TD>

          <TD ROWSPAN="1" STYLE="width: 6px; vertical-align: text-bottom; text-align: left"><!-- $ -->$</TD>

          <TD ROWSPAN="1" COLSPAN="1" STYLE="vertical-align: text-bottom; text-align: right">&#151;</TD>

          <TD STYLE="white-space: nowrap; vertical-align: text-bottom; text-align: left"><!-- PERCENT -->&nbsp;</TD>

          <TD ROWSPAN="1" STYLE="width: 6px; vertical-align: text-bottom; text-align: center"><!-- GUTTER -->&nbsp;</TD>

          <TD ROWSPAN="1" STYLE="width: 6px; vertical-align: text-bottom; text-align: left"><!-- $ -->$</TD>

          <TD ROWSPAN="1" COLSPAN="1" STYLE="vertical-align: text-bottom; text-align: right">&#151;</TD>

          <TD STYLE="white-space: nowrap; vertical-align: text-bottom; text-align: left"><!-- PERCENT -->&nbsp;</TD>

          <TD ROWSPAN="1" STYLE="width: 6px; vertical-align: text-bottom; text-align: center"><!-- GUTTER -->&nbsp;</TD>

          <TD ROWSPAN="1" STYLE="width: 6px; vertical-align: text-bottom; text-align: left"><!-- $ -->$</TD>

          <TD ROWSPAN="1" COLSPAN="1" STYLE="vertical-align: text-bottom; text-align: right">&#151;</TD>

          <TD STYLE="white-space: nowrap; vertical-align: text-bottom; text-align: left"><!-- PERCENT -->&nbsp;</TD>

          <TD ROWSPAN="1" STYLE="width: 6px; vertical-align: text-bottom; text-align: center"><!-- GUTTER -->&nbsp;</TD>

          <TD ROWSPAN="1" STYLE="width: 6px; vertical-align: text-bottom; text-align: left"><!-- $ -->$</TD>

          <TD ROWSPAN="1" COLSPAN="1" STYLE="vertical-align: text-bottom; text-align: right">&#151;</TD>

          <TD STYLE="white-space: nowrap; vertical-align: text-bottom; text-align: left"><!-- PERCENT -->&nbsp;</TD>

</TR>

<TR STYLE="background-color: #CCFFCC">

          <TD ROWSPAN="1" COLSPAN="1" STYLE="padding-left: 10pt; text-indent: -10pt; vertical-align: text-bottom">Issuance of shares of common stock for cash on May 16, 2012 at $0.00001</TD>

          <TD ROWSPAN="1" STYLE="width: 6px; vertical-align: text-bottom; text-align: center"><!-- GUTTER -->&nbsp;</TD>

          <TD ROWSPAN="1" STYLE="width: 6px; vertical-align: text-bottom; text-align: left"><!-- $ -->&nbsp;</TD>

          <TD ROWSPAN="1" COLSPAN="1" STYLE="vertical-align: text-bottom; text-align: right">&#151;</TD>

          <TD STYLE="white-space: nowrap; vertical-align: text-bottom; text-align: left"><!-- PERCENT -->&nbsp;</TD>

          <TD ROWSPAN="1" STYLE="width: 6px; vertical-align: text-bottom; text-align: center"><!-- GUTTER -->&nbsp;</TD>

          <TD ROWSPAN="1" STYLE="width: 6px; vertical-align: text-bottom; text-align: left"><!-- $ -->&nbsp;</TD>

          <TD ROWSPAN="1" COLSPAN="1" STYLE="vertical-align: text-bottom; text-align: right">&#151;</TD>

          <TD STYLE="white-space: nowrap; vertical-align: text-bottom; text-align: left"><!-- PERCENT -->&nbsp;</TD>

          <TD ROWSPAN="1" STYLE="width: 6px; vertical-align: text-bottom; text-align: center"><!-- GUTTER -->&nbsp;</TD>

          <TD ROWSPAN="1" STYLE="width: 6px; vertical-align: text-bottom; text-align: left"><!-- $ -->&nbsp;</TD>

          <TD ROWSPAN="1" COLSPAN="1" STYLE="vertical-align: text-bottom; text-align: right">100</TD>

          <TD STYLE="white-space: nowrap; vertical-align: text-bottom; text-align: left"><!-- PERCENT -->&nbsp;</TD>

          <TD ROWSPAN="1" STYLE="width: 6px; vertical-align: text-bottom; text-align: center"><!-- GUTTER -->&nbsp;</TD>

          <TD ROWSPAN="1" STYLE="width: 6px; vertical-align: text-bottom; text-align: left"><!-- $ -->&nbsp;</TD>

          <TD ROWSPAN="1" COLSPAN="1" STYLE="vertical-align: text-bottom; text-align: right">&#151;</TD>

          <TD STYLE="white-space: nowrap; vertical-align: text-bottom; text-align: left"><!-- PERCENT -->&nbsp;</TD>

          <TD ROWSPAN="1" STYLE="width: 6px; vertical-align: text-bottom; text-align: center"><!-- GUTTER -->&nbsp;</TD>

          <TD ROWSPAN="1" STYLE="width: 6px; vertical-align: text-bottom; text-align: left"><!-- $ -->&nbsp;</TD>

          <TD ROWSPAN="1" COLSPAN="1" STYLE="vertical-align: text-bottom; text-align: right">&#151;</TD>

          <TD STYLE="white-space: nowrap; vertical-align: text-bottom; text-align: left"><!-- PERCENT -->&nbsp;</TD>

          <TD ROWSPAN="1" STYLE="width: 6px; vertical-align: text-bottom; text-align: center"><!-- GUTTER -->&nbsp;</TD>

          <TD ROWSPAN="1" STYLE="width: 6px; vertical-align: text-bottom; text-align: left"><!-- $ -->&nbsp;</TD>

          <TD ROWSPAN="1" COLSPAN="1" STYLE="vertical-align: text-bottom; text-align: right">&#151;</TD>

          <TD STYLE="white-space: nowrap; vertical-align: text-bottom; text-align: left"><!-- PERCENT -->&nbsp;</TD>

          <TD ROWSPAN="1" STYLE="width: 6px; vertical-align: text-bottom; text-align: center"><!-- GUTTER -->&nbsp;</TD>

          <TD ROWSPAN="1" STYLE="width: 6px; vertical-align: text-bottom; text-align: left"><!-- $ -->&nbsp;</TD>

          <TD ROWSPAN="1" COLSPAN="1" STYLE="vertical-align: text-bottom; text-align: right">&#151;</TD>

          <TD STYLE="white-space: nowrap; vertical-align: text-bottom; text-align: left"><!-- PERCENT -->&nbsp;</TD>

</TR>

<TR STYLE="background-color: white">

          <TD ROWSPAN="1" COLSPAN="1" STYLE="padding-left: 10pt; text-indent: -10pt; vertical-align: text-bottom">Issuance of shares of common stock in connection with May 10, 2012, senior note offering&nbsp;&#150;&nbsp;closed on June 12, 2012 at a commitment date fair value of $0.057</TD>

          <TD ROWSPAN="1" STYLE="width: 6px; vertical-align: text-bottom; text-align: center"><!-- GUTTER -->&nbsp;</TD>

          <TD ROWSPAN="1" STYLE="width: 6px; vertical-align: text-bottom; text-align: left"><!-- $ -->&nbsp;</TD>

          <TD ROWSPAN="1" COLSPAN="1" STYLE="vertical-align: text-bottom; text-align: right">&#151;</TD>

          <TD STYLE="white-space: nowrap; vertical-align: text-bottom; text-align: left"><!-- PERCENT -->&nbsp;</TD>

          <TD ROWSPAN="1" STYLE="width: 6px; vertical-align: text-bottom; text-align: center"><!-- GUTTER -->&nbsp;</TD>

          <TD ROWSPAN="1" STYLE="width: 6px; vertical-align: text-bottom; text-align: left"><!-- $ -->&nbsp;</TD>

          <TD ROWSPAN="1" COLSPAN="1" STYLE="vertical-align: text-bottom; text-align: right">&#151;</TD>

          <TD STYLE="white-space: nowrap; vertical-align: text-bottom; text-align: left"><!-- PERCENT -->&nbsp;</TD>

          <TD ROWSPAN="1" STYLE="width: 6px; vertical-align: text-bottom; text-align: center"><!-- GUTTER -->&nbsp;</TD>

          <TD ROWSPAN="1" STYLE="width: 6px; vertical-align: text-bottom; text-align: left"><!-- $ -->&nbsp;</TD>

          <TD ROWSPAN="1" COLSPAN="1" STYLE="vertical-align: text-bottom; text-align: right">16,571,429</TD>

          <TD STYLE="white-space: nowrap; vertical-align: text-bottom; text-align: left"><!-- PERCENT -->&nbsp;</TD>

          <TD ROWSPAN="1" STYLE="width: 6px; vertical-align: text-bottom; text-align: center"><!-- GUTTER -->&nbsp;</TD>

          <TD ROWSPAN="1" STYLE="width: 6px; vertical-align: text-bottom; text-align: left"><!-- $ -->&nbsp;</TD>

          <TD ROWSPAN="1" COLSPAN="1" STYLE="vertical-align: text-bottom; text-align: right">&#151;</TD>

          <TD STYLE="white-space: nowrap; vertical-align: text-bottom; text-align: left"><!-- PERCENT -->&nbsp;</TD>

          <TD ROWSPAN="1" STYLE="width: 6px; vertical-align: text-bottom; text-align: center"><!-- GUTTER -->&nbsp;</TD>

          <TD ROWSPAN="1" STYLE="width: 6px; vertical-align: text-bottom; text-align: left"><!-- $ -->&nbsp;</TD>

          <TD ROWSPAN="1" COLSPAN="1" STYLE="vertical-align: text-bottom; text-align: right">953</TD>

          <TD STYLE="white-space: nowrap; vertical-align: text-bottom; text-align: left"><!-- PERCENT -->&nbsp;</TD>

          <TD ROWSPAN="1" STYLE="width: 6px; vertical-align: text-bottom; text-align: center"><!-- GUTTER -->&nbsp;</TD>

          <TD ROWSPAN="1" STYLE="width: 6px; vertical-align: text-bottom; text-align: left"><!-- $ -->&nbsp;</TD>

          <TD ROWSPAN="1" COLSPAN="1" STYLE="vertical-align: text-bottom; text-align: right">&#151;</TD>

          <TD STYLE="white-space: nowrap; vertical-align: text-bottom; text-align: left"><!-- PERCENT -->&nbsp;</TD>

          <TD ROWSPAN="1" STYLE="width: 6px; vertical-align: text-bottom; text-align: center"><!-- GUTTER -->&nbsp;</TD>

          <TD ROWSPAN="1" STYLE="width: 6px; vertical-align: text-bottom; text-align: left"><!-- $ -->&nbsp;</TD>

          <TD ROWSPAN="1" COLSPAN="1" STYLE="vertical-align: text-bottom; text-align: right">953</TD>

          <TD STYLE="white-space: nowrap; vertical-align: text-bottom; text-align: left"><!-- PERCENT -->&nbsp;</TD>

</TR>

<TR STYLE="background-color: #CCFFCC">

          <TD ROWSPAN="1" COLSPAN="1" STYLE="padding-left: 10pt; text-indent: -10pt; vertical-align: text-bottom; border-bottom: white 1pt solid">Net loss</TD>

          <TD ROWSPAN="1" STYLE="width: 6px; vertical-align: text-bottom; text-align: center; border-bottom: white 1pt solid"><!-- GUTTER -->&nbsp;</TD>

          <TD ROWSPAN="1" STYLE="width: 6px; vertical-align: text-bottom; text-align: left; border-bottom: black 1pt solid"><!-- $ -->&nbsp;</TD>

          <TD ROWSPAN="1" COLSPAN="1" STYLE="vertical-align: text-bottom; text-align: right; border-bottom: black 1pt solid">&nbsp;&nbsp;</TD>

          <TD STYLE="white-space: nowrap; vertical-align: text-bottom; text-align: left; border-bottom: white 1pt solid"><!-- PERCENT -->&nbsp;</TD>

          <TD ROWSPAN="1" STYLE="width: 6px; vertical-align: text-bottom; text-align: center; border-bottom: white 1pt solid"><!-- GUTTER -->&nbsp;</TD>

          <TD ROWSPAN="1" STYLE="width: 6px; vertical-align: text-bottom; text-align: left; border-bottom: black 1pt solid"><!-- $ -->&nbsp;</TD>

          <TD ROWSPAN="1" COLSPAN="1" STYLE="vertical-align: text-bottom; text-align: right; border-bottom: black 1pt solid">&nbsp;&nbsp;</TD>

          <TD STYLE="white-space: nowrap; vertical-align: text-bottom; text-align: left; border-bottom: white 1pt solid"><!-- PERCENT -->&nbsp;</TD>

          <TD ROWSPAN="1" STYLE="width: 6px; vertical-align: text-bottom; text-align: center; border-bottom: white 1pt solid"><!-- GUTTER -->&nbsp;</TD>

          <TD ROWSPAN="1" STYLE="width: 6px; vertical-align: text-bottom; text-align: left; border-bottom: black 1pt solid"><!-- $ -->&nbsp;</TD>

          <TD ROWSPAN="1" COLSPAN="1" STYLE="vertical-align: text-bottom; text-align: right; border-bottom: black 1pt solid">&nbsp;&nbsp;</TD>

          <TD STYLE="white-space: nowrap; vertical-align: text-bottom; text-align: left; border-bottom: white 1pt solid"><!-- PERCENT -->&nbsp;</TD>

          <TD ROWSPAN="1" STYLE="width: 6px; vertical-align: text-bottom; text-align: center; border-bottom: white 1pt solid"><!-- GUTTER -->&nbsp;</TD>

          <TD ROWSPAN="1" STYLE="width: 6px; vertical-align: text-bottom; text-align: left; border-bottom: black 1pt solid"><!-- $ -->&nbsp;</TD>

          <TD ROWSPAN="1" COLSPAN="1" STYLE="vertical-align: text-bottom; text-align: right; border-bottom: black 1pt solid">&nbsp;&nbsp;</TD>

          <TD STYLE="white-space: nowrap; vertical-align: text-bottom; text-align: left; border-bottom: white 1pt solid"><!-- PERCENT -->&nbsp;</TD>

          <TD ROWSPAN="1" STYLE="width: 6px; vertical-align: text-bottom; text-align: center; border-bottom: white 1pt solid"><!-- GUTTER -->&nbsp;</TD>

          <TD ROWSPAN="1" STYLE="width: 6px; vertical-align: text-bottom; text-align: left; border-bottom: black 1pt solid"><!-- $ -->&nbsp;</TD>

          <TD ROWSPAN="1" COLSPAN="1" STYLE="vertical-align: text-bottom; text-align: right; border-bottom: black 1pt solid">&nbsp;&nbsp;</TD>

          <TD STYLE="white-space: nowrap; vertical-align: text-bottom; text-align: left; border-bottom: white 1pt solid"><!-- PERCENT -->&nbsp;</TD>

          <TD ROWSPAN="1" STYLE="width: 6px; vertical-align: text-bottom; text-align: center; border-bottom: white 1pt solid"><!-- GUTTER -->&nbsp;</TD>

          <TD ROWSPAN="1" STYLE="width: 6px; vertical-align: text-bottom; text-align: left; border-bottom: black 1pt solid"><!-- $ -->&nbsp;</TD>

          <TD ROWSPAN="1" COLSPAN="1" STYLE="vertical-align: text-bottom; text-align: right; border-bottom: black 1pt solid">(212</TD>

          <TD STYLE="white-space: nowrap; vertical-align: text-bottom; text-align: left; border-bottom: white 1pt solid">)<!-- PERCENT -->&nbsp;</TD>

          <TD ROWSPAN="1" STYLE="width: 6px; vertical-align: text-bottom; text-align: center; border-bottom: white 1pt solid"><!-- GUTTER -->&nbsp;</TD>

          <TD ROWSPAN="1" STYLE="width: 6px; vertical-align: text-bottom; text-align: left; border-bottom: black 1pt solid"><!-- $ -->&nbsp;</TD>

          <TD ROWSPAN="1" COLSPAN="1" STYLE="vertical-align: text-bottom; text-align: right; border-bottom: black 1pt solid">(212</TD>

          <TD STYLE="white-space: nowrap; vertical-align: text-bottom; text-align: left; border-bottom: white 1pt solid">)<!-- PERCENT -->&nbsp;</TD>

</TR>

<TR STYLE="background-color: white">

          <TD ROWSPAN="1" COLSPAN="1" STYLE="padding-left: 10pt; text-indent: -10pt; vertical-align: text-bottom; font-weight: bold">Balance&nbsp;&#150;&nbsp;June 30, 2012</TD>

          <TD ROWSPAN="1" STYLE="width: 6px; vertical-align: text-bottom; text-align: center"><!-- GUTTER -->&nbsp;</TD>

          <TD ROWSPAN="1" STYLE="width: 6px; vertical-align: text-bottom; text-align: left"><!-- $ -->&nbsp;</TD>

          <TD ROWSPAN="1" COLSPAN="1" STYLE="vertical-align: text-bottom; text-align: right">&#151;</TD>

          <TD STYLE="white-space: nowrap; vertical-align: text-bottom; text-align: left"><!-- PERCENT -->&nbsp;</TD>

          <TD ROWSPAN="1" STYLE="width: 6px; vertical-align: text-bottom; text-align: center"><!-- GUTTER -->&nbsp;</TD>

          <TD ROWSPAN="1" STYLE="width: 6px; vertical-align: text-bottom; text-align: left"><!-- $ -->&nbsp;</TD>

          <TD ROWSPAN="1" COLSPAN="1" STYLE="vertical-align: text-bottom; text-align: right">&#151;</TD>

          <TD STYLE="white-space: nowrap; vertical-align: text-bottom; text-align: left"><!-- PERCENT -->&nbsp;</TD>

          <TD ROWSPAN="1" STYLE="width: 6px; vertical-align: text-bottom; text-align: center"><!-- GUTTER -->&nbsp;</TD>

          <TD ROWSPAN="1" STYLE="width: 6px; vertical-align: text-bottom; text-align: left"><!-- $ -->&nbsp;</TD>

          <TD ROWSPAN="1" COLSPAN="1" STYLE="vertical-align: text-bottom; text-align: right">16,571,529</TD>

          <TD STYLE="white-space: nowrap; vertical-align: text-bottom; text-align: left"><!-- PERCENT -->&nbsp;</TD>

          <TD ROWSPAN="1" STYLE="width: 6px; vertical-align: text-bottom; text-align: center"><!-- GUTTER -->&nbsp;</TD>

          <TD ROWSPAN="1" STYLE="width: 6px; vertical-align: text-bottom; text-align: left"><!-- $ -->&nbsp;</TD>

          <TD ROWSPAN="1" COLSPAN="1" STYLE="vertical-align: text-bottom; text-align: right">&#151;</TD>

          <TD STYLE="white-space: nowrap; vertical-align: text-bottom; text-align: left"><!-- PERCENT -->&nbsp;</TD>

          <TD ROWSPAN="1" STYLE="width: 6px; vertical-align: text-bottom; text-align: center"><!-- GUTTER -->&nbsp;</TD>

          <TD ROWSPAN="1" STYLE="width: 6px; vertical-align: text-bottom; text-align: left"><!-- $ -->&nbsp;</TD>

          <TD ROWSPAN="1" COLSPAN="1" STYLE="vertical-align: text-bottom; text-align: right">953</TD>

          <TD STYLE="white-space: nowrap; vertical-align: text-bottom; text-align: left"><!-- PERCENT -->&nbsp;</TD>

          <TD ROWSPAN="1" STYLE="width: 6px; vertical-align: text-bottom; text-align: center"><!-- GUTTER -->&nbsp;</TD>

          <TD ROWSPAN="1" STYLE="width: 6px; vertical-align: text-bottom; text-align: left"><!-- $ -->&nbsp;</TD>

          <TD ROWSPAN="1" COLSPAN="1" STYLE="vertical-align: text-bottom; text-align: right">(212</TD>

          <TD STYLE="white-space: nowrap; vertical-align: text-bottom; text-align: left">)<!-- PERCENT -->&nbsp;</TD>

          <TD ROWSPAN="1" STYLE="width: 6px; vertical-align: text-bottom; text-align: center"><!-- GUTTER -->&nbsp;</TD>

          <TD ROWSPAN="1" STYLE="width: 6px; vertical-align: text-bottom; text-align: left"><!-- $ -->&nbsp;</TD>

          <TD ROWSPAN="1" COLSPAN="1" STYLE="vertical-align: text-bottom; text-align: right">741</TD>

          <TD STYLE="white-space: nowrap; vertical-align: text-bottom; text-align: left"><!-- PERCENT -->&nbsp;</TD>

</TR>

<TR STYLE="background-color: #CCFFCC">

          <TD ROWSPAN="1" COLSPAN="1" STYLE="padding-left: 10pt; text-indent: -10pt; vertical-align: text-bottom">Exchange of 13,799,440 shares of common stock into series A preferred stock</TD>

          <TD ROWSPAN="1" STYLE="width: 6px; vertical-align: text-bottom; text-align: center"><!-- GUTTER -->&nbsp;</TD>

          <TD ROWSPAN="1" STYLE="width: 6px; vertical-align: text-bottom; text-align: left"><!-- $ -->&nbsp;</TD>

          <TD ROWSPAN="1" COLSPAN="1" STYLE="vertical-align: text-bottom; text-align: right">13,799,440</TD>

          <TD STYLE="white-space: nowrap; vertical-align: text-bottom; text-align: left"><!-- PERCENT -->&nbsp;</TD>

          <TD ROWSPAN="1" STYLE="width: 6px; vertical-align: text-bottom; text-align: center"><!-- GUTTER -->&nbsp;</TD>

          <TD ROWSPAN="1" STYLE="width: 6px; vertical-align: text-bottom; text-align: left"><!-- $ -->&nbsp;</TD>

          <TD ROWSPAN="1" COLSPAN="1" STYLE="vertical-align: text-bottom; text-align: right">&#151;</TD>

          <TD STYLE="white-space: nowrap; vertical-align: text-bottom; text-align: left"><!-- PERCENT -->&nbsp;</TD>

          <TD ROWSPAN="1" STYLE="width: 6px; vertical-align: text-bottom; text-align: center"><!-- GUTTER -->&nbsp;</TD>

          <TD ROWSPAN="1" STYLE="width: 6px; vertical-align: text-bottom; text-align: left"><!-- $ -->&nbsp;</TD>

          <TD ROWSPAN="1" COLSPAN="1" STYLE="vertical-align: text-bottom; text-align: right">(13,799,440</TD>

          <TD STYLE="white-space: nowrap; vertical-align: text-bottom; text-align: left">)<!-- PERCENT -->&nbsp;</TD>

          <TD ROWSPAN="1" STYLE="width: 6px; vertical-align: text-bottom; text-align: center"><!-- GUTTER -->&nbsp;</TD>

          <TD ROWSPAN="1" STYLE="width: 6px; vertical-align: text-bottom; text-align: left"><!-- $ -->&nbsp;</TD>

          <TD ROWSPAN="1" COLSPAN="1" STYLE="vertical-align: text-bottom; text-align: right">&#151;</TD>

          <TD STYLE="white-space: nowrap; vertical-align: text-bottom; text-align: left"><!-- PERCENT -->&nbsp;</TD>

          <TD ROWSPAN="1" STYLE="width: 6px; vertical-align: text-bottom; text-align: center"><!-- GUTTER -->&nbsp;</TD>

          <TD ROWSPAN="1" STYLE="width: 6px; vertical-align: text-bottom; text-align: left"><!-- $ -->&nbsp;</TD>

          <TD ROWSPAN="1" COLSPAN="1" STYLE="vertical-align: text-bottom; text-align: right">&nbsp;&nbsp;</TD>

          <TD STYLE="white-space: nowrap; vertical-align: text-bottom; text-align: left"><!-- PERCENT -->&nbsp;</TD>

          <TD ROWSPAN="1" STYLE="width: 6px; vertical-align: text-bottom; text-align: center"><!-- GUTTER -->&nbsp;</TD>

          <TD ROWSPAN="1" STYLE="width: 6px; vertical-align: text-bottom; text-align: left"><!-- $ -->&nbsp;</TD>

          <TD ROWSPAN="1" COLSPAN="1" STYLE="vertical-align: text-bottom; text-align: right">&nbsp;&nbsp;</TD>

          <TD STYLE="white-space: nowrap; vertical-align: text-bottom; text-align: left"><!-- PERCENT -->&nbsp;</TD>

          <TD ROWSPAN="1" STYLE="width: 6px; vertical-align: text-bottom; text-align: center"><!-- GUTTER -->&nbsp;</TD>

          <TD ROWSPAN="1" STYLE="width: 6px; vertical-align: text-bottom; text-align: left"><!-- $ -->&nbsp;</TD>

          <TD ROWSPAN="1" COLSPAN="1" STYLE="vertical-align: text-bottom; text-align: right">&#151;</TD>

          <TD STYLE="white-space: nowrap; vertical-align: text-bottom; text-align: left"><!-- PERCENT -->&nbsp;</TD>

</TR>

<TR STYLE="background-color: white">

          <TD ROWSPAN="1" COLSPAN="1" STYLE="padding-left: 10pt; text-indent: -10pt; vertical-align: text-bottom">Issuance of shares of common stock in connection with May 10, 2012, senior notes offering&nbsp;&#150;&nbsp;closed on July 26, 2012 at a commitment date fair value of $0.057</TD>

          <TD ROWSPAN="1" STYLE="width: 6px; vertical-align: text-bottom; text-align: center"><!-- GUTTER -->&nbsp;</TD>

          <TD ROWSPAN="1" STYLE="width: 6px; vertical-align: text-bottom; text-align: left"><!-- $ -->&nbsp;</TD>

          <TD ROWSPAN="1" COLSPAN="1" STYLE="vertical-align: text-bottom; text-align: right">&#151;</TD>

          <TD STYLE="white-space: nowrap; vertical-align: text-bottom; text-align: left"><!-- PERCENT -->&nbsp;</TD>

          <TD ROWSPAN="1" STYLE="width: 6px; vertical-align: text-bottom; text-align: center"><!-- GUTTER -->&nbsp;</TD>

          <TD ROWSPAN="1" STYLE="width: 6px; vertical-align: text-bottom; text-align: left"><!-- $ -->&nbsp;</TD>

          <TD ROWSPAN="1" COLSPAN="1" STYLE="vertical-align: text-bottom; text-align: right">&#151;</TD>

          <TD STYLE="white-space: nowrap; vertical-align: text-bottom; text-align: left"><!-- PERCENT -->&nbsp;</TD>

          <TD ROWSPAN="1" STYLE="width: 6px; vertical-align: text-bottom; text-align: center"><!-- GUTTER -->&nbsp;</TD>

          <TD ROWSPAN="1" STYLE="width: 6px; vertical-align: text-bottom; text-align: left"><!-- $ -->&nbsp;</TD>

          <TD ROWSPAN="1" COLSPAN="1" STYLE="vertical-align: text-bottom; text-align: right">3,428,571</TD>

          <TD STYLE="white-space: nowrap; vertical-align: text-bottom; text-align: left"><!-- PERCENT -->&nbsp;</TD>

          <TD ROWSPAN="1" STYLE="width: 6px; vertical-align: text-bottom; text-align: center"><!-- GUTTER -->&nbsp;</TD>

          <TD ROWSPAN="1" STYLE="width: 6px; vertical-align: text-bottom; text-align: left"><!-- $ -->&nbsp;</TD>

          <TD ROWSPAN="1" COLSPAN="1" STYLE="vertical-align: text-bottom; text-align: right">&#151;</TD>

          <TD STYLE="white-space: nowrap; vertical-align: text-bottom; text-align: left"><!-- PERCENT -->&nbsp;</TD>

          <TD ROWSPAN="1" STYLE="width: 6px; vertical-align: text-bottom; text-align: center"><!-- GUTTER -->&nbsp;</TD>

          <TD ROWSPAN="1" STYLE="width: 6px; vertical-align: text-bottom; text-align: left"><!-- $ -->&nbsp;</TD>

          <TD ROWSPAN="1" COLSPAN="1" STYLE="vertical-align: text-bottom; text-align: right">195</TD>

          <TD STYLE="white-space: nowrap; vertical-align: text-bottom; text-align: left"><!-- PERCENT -->&nbsp;</TD>

          <TD ROWSPAN="1" STYLE="width: 6px; vertical-align: text-bottom; text-align: center"><!-- GUTTER -->&nbsp;</TD>

          <TD ROWSPAN="1" STYLE="width: 6px; vertical-align: text-bottom; text-align: left"><!-- $ -->&nbsp;</TD>

          <TD ROWSPAN="1" COLSPAN="1" STYLE="vertical-align: text-bottom; text-align: right">&nbsp;&nbsp;</TD>

          <TD STYLE="white-space: nowrap; vertical-align: text-bottom; text-align: left"><!-- PERCENT -->&nbsp;</TD>

          <TD ROWSPAN="1" STYLE="width: 6px; vertical-align: text-bottom; text-align: center"><!-- GUTTER -->&nbsp;</TD>

          <TD ROWSPAN="1" STYLE="width: 6px; vertical-align: text-bottom; text-align: left"><!-- $ -->&nbsp;</TD>

          <TD ROWSPAN="1" COLSPAN="1" STYLE="vertical-align: text-bottom; text-align: right">195</TD>

          <TD STYLE="white-space: nowrap; vertical-align: text-bottom; text-align: left"><!-- PERCENT -->&nbsp;</TD>

</TR>

<TR STYLE="background-color: #CCFFCC">

          <TD ROWSPAN="1" COLSPAN="1" STYLE="padding-left: 10pt; text-indent: -10pt; vertical-align: text-bottom">Exercise of warrants for preferred and common stock on August 9, 2012 at $0.75 per share</TD>

          <TD ROWSPAN="1" STYLE="width: 6px; vertical-align: text-bottom; text-align: center"><!-- GUTTER -->&nbsp;</TD>

          <TD ROWSPAN="1" STYLE="width: 6px; vertical-align: text-bottom; text-align: left"><!-- $ -->&nbsp;</TD>

          <TD ROWSPAN="1" COLSPAN="1" STYLE="vertical-align: text-bottom; text-align: right">4,114,287</TD>

          <TD STYLE="white-space: nowrap; vertical-align: text-bottom; text-align: left"><!-- PERCENT -->&nbsp;</TD>

          <TD ROWSPAN="1" STYLE="width: 6px; vertical-align: text-bottom; text-align: center"><!-- GUTTER -->&nbsp;</TD>

          <TD ROWSPAN="1" STYLE="width: 6px; vertical-align: text-bottom; text-align: left"><!-- $ -->&nbsp;</TD>

          <TD ROWSPAN="1" COLSPAN="1" STYLE="vertical-align: text-bottom; text-align: right">&#151;</TD>

          <TD STYLE="white-space: nowrap; vertical-align: text-bottom; text-align: left"><!-- PERCENT -->&nbsp;</TD>

          <TD ROWSPAN="1" STYLE="width: 6px; vertical-align: text-bottom; text-align: center"><!-- GUTTER -->&nbsp;</TD>

          <TD ROWSPAN="1" STYLE="width: 6px; vertical-align: text-bottom; text-align: left"><!-- $ -->&nbsp;</TD>

          <TD ROWSPAN="1" COLSPAN="1" STYLE="vertical-align: text-bottom; text-align: right">3,387,713</TD>

          <TD STYLE="white-space: nowrap; vertical-align: text-bottom; text-align: left"><!-- PERCENT -->&nbsp;</TD>

          <TD ROWSPAN="1" STYLE="width: 6px; vertical-align: text-bottom; text-align: center"><!-- GUTTER -->&nbsp;</TD>

          <TD ROWSPAN="1" STYLE="width: 6px; vertical-align: text-bottom; text-align: left"><!-- $ -->&nbsp;</TD>

          <TD ROWSPAN="1" COLSPAN="1" STYLE="vertical-align: text-bottom; text-align: right">&#151;</TD>

          <TD STYLE="white-space: nowrap; vertical-align: text-bottom; text-align: left"><!-- PERCENT -->&nbsp;</TD>

          <TD ROWSPAN="1" STYLE="width: 6px; vertical-align: text-bottom; text-align: center"><!-- GUTTER -->&nbsp;</TD>

          <TD ROWSPAN="1" STYLE="width: 6px; vertical-align: text-bottom; text-align: left"><!-- $ -->&nbsp;</TD>

          <TD ROWSPAN="1" COLSPAN="1" STYLE="vertical-align: text-bottom; text-align: right">5,625</TD>

          <TD STYLE="white-space: nowrap; vertical-align: text-bottom; text-align: left"><!-- PERCENT -->&nbsp;</TD>

          <TD ROWSPAN="1" STYLE="width: 6px; vertical-align: text-bottom; text-align: center"><!-- GUTTER -->&nbsp;</TD>

          <TD ROWSPAN="1" STYLE="width: 6px; vertical-align: text-bottom; text-align: left"><!-- $ -->&nbsp;</TD>

          <TD ROWSPAN="1" COLSPAN="1" STYLE="vertical-align: text-bottom; text-align: right">&nbsp;&nbsp;</TD>

          <TD STYLE="white-space: nowrap; vertical-align: text-bottom; text-align: left"><!-- PERCENT -->&nbsp;</TD>

          <TD ROWSPAN="1" STYLE="width: 6px; vertical-align: text-bottom; text-align: center"><!-- GUTTER -->&nbsp;</TD>

          <TD ROWSPAN="1" STYLE="width: 6px; vertical-align: text-bottom; text-align: left"><!-- $ -->&nbsp;</TD>

          <TD ROWSPAN="1" COLSPAN="1" STYLE="vertical-align: text-bottom; text-align: right">5,625</TD>

          <TD STYLE="white-space: nowrap; vertical-align: text-bottom; text-align: left"><!-- PERCENT -->&nbsp;</TD>

</TR>

<TR STYLE="background-color: white">

          <TD ROWSPAN="1" COLSPAN="1" STYLE="padding-left: 10pt; text-indent: -10pt; vertical-align: text-bottom">Reclassification of warrant liability upon exercise of warrants</TD>

          <TD ROWSPAN="1" STYLE="width: 6px; vertical-align: text-bottom; text-align: center"><!-- GUTTER -->&nbsp;</TD>

          <TD ROWSPAN="1" STYLE="width: 6px; vertical-align: text-bottom; text-align: left"><!-- $ -->&nbsp;</TD>

          <TD ROWSPAN="1" COLSPAN="1" STYLE="vertical-align: text-bottom; text-align: right">&nbsp;&nbsp;</TD>

          <TD STYLE="white-space: nowrap; vertical-align: text-bottom; text-align: left"><!-- PERCENT -->&nbsp;</TD>

          <TD ROWSPAN="1" STYLE="width: 6px; vertical-align: text-bottom; text-align: center"><!-- GUTTER -->&nbsp;</TD>

          <TD ROWSPAN="1" STYLE="width: 6px; vertical-align: text-bottom; text-align: left"><!-- $ -->&nbsp;</TD>

          <TD ROWSPAN="1" COLSPAN="1" STYLE="vertical-align: text-bottom; text-align: right">&nbsp;&nbsp;</TD>

          <TD STYLE="white-space: nowrap; vertical-align: text-bottom; text-align: left"><!-- PERCENT -->&nbsp;</TD>

          <TD ROWSPAN="1" STYLE="width: 6px; vertical-align: text-bottom; text-align: center"><!-- GUTTER -->&nbsp;</TD>

          <TD ROWSPAN="1" STYLE="width: 6px; vertical-align: text-bottom; text-align: left"><!-- $ -->&nbsp;</TD>

          <TD ROWSPAN="1" COLSPAN="1" STYLE="vertical-align: text-bottom; text-align: right">&nbsp;&nbsp;</TD>

          <TD STYLE="white-space: nowrap; vertical-align: text-bottom; text-align: left"><!-- PERCENT -->&nbsp;</TD>

          <TD ROWSPAN="1" STYLE="width: 6px; vertical-align: text-bottom; text-align: center"><!-- GUTTER -->&nbsp;</TD>

          <TD ROWSPAN="1" STYLE="width: 6px; vertical-align: text-bottom; text-align: left"><!-- $ -->&nbsp;</TD>

          <TD ROWSPAN="1" COLSPAN="1" STYLE="vertical-align: text-bottom; text-align: right">&nbsp;&nbsp;</TD>

          <TD STYLE="white-space: nowrap; vertical-align: text-bottom; text-align: left"><!-- PERCENT -->&nbsp;</TD>

          <TD ROWSPAN="1" STYLE="width: 6px; vertical-align: text-bottom; text-align: center"><!-- GUTTER -->&nbsp;</TD>

          <TD ROWSPAN="1" STYLE="width: 6px; vertical-align: text-bottom; text-align: left"><!-- $ -->&nbsp;</TD>

          <TD ROWSPAN="1" COLSPAN="1" STYLE="vertical-align: text-bottom; text-align: right">5,625</TD>

          <TD STYLE="white-space: nowrap; vertical-align: text-bottom; text-align: left"><!-- PERCENT -->&nbsp;</TD>

          <TD ROWSPAN="1" STYLE="width: 6px; vertical-align: text-bottom; text-align: center"><!-- GUTTER -->&nbsp;</TD>

          <TD ROWSPAN="1" STYLE="width: 6px; vertical-align: text-bottom; text-align: left"><!-- $ -->&nbsp;</TD>

          <TD ROWSPAN="1" COLSPAN="1" STYLE="vertical-align: text-bottom; text-align: right">&nbsp;&nbsp;</TD>

          <TD STYLE="white-space: nowrap; vertical-align: text-bottom; text-align: left"><!-- PERCENT -->&nbsp;</TD>

          <TD ROWSPAN="1" STYLE="width: 6px; vertical-align: text-bottom; text-align: center"><!-- GUTTER -->&nbsp;</TD>

          <TD ROWSPAN="1" STYLE="width: 6px; vertical-align: text-bottom; text-align: left"><!-- $ -->&nbsp;</TD>

          <TD ROWSPAN="1" COLSPAN="1" STYLE="vertical-align: text-bottom; text-align: right">5,625</TD>

          <TD STYLE="white-space: nowrap; vertical-align: text-bottom; text-align: left"><!-- PERCENT -->&nbsp;</TD>

</TR>

<TR STYLE="background-color: #CCFFCC">

          <TD ROWSPAN="1" COLSPAN="1" STYLE="padding-left: 10pt; text-indent: -10pt; vertical-align: text-bottom">Issuance of shares of common stock for cash on August 16, 2012 at $1.50 per share, net of issuance cost of $381</TD>

          <TD ROWSPAN="1" STYLE="width: 6px; vertical-align: text-bottom; text-align: center"><!-- GUTTER -->&nbsp;</TD>

          <TD ROWSPAN="1" STYLE="width: 6px; vertical-align: text-bottom; text-align: left"><!-- $ -->&nbsp;</TD>

          <TD ROWSPAN="1" COLSPAN="1" STYLE="vertical-align: text-bottom; text-align: right">&#151;</TD>

          <TD STYLE="white-space: nowrap; vertical-align: text-bottom; text-align: left"><!-- PERCENT -->&nbsp;</TD>

          <TD ROWSPAN="1" STYLE="width: 6px; vertical-align: text-bottom; text-align: center"><!-- GUTTER -->&nbsp;</TD>

          <TD ROWSPAN="1" STYLE="width: 6px; vertical-align: text-bottom; text-align: left"><!-- $ -->&nbsp;</TD>

          <TD ROWSPAN="1" COLSPAN="1" STYLE="vertical-align: text-bottom; text-align: right">&#151;</TD>

          <TD STYLE="white-space: nowrap; vertical-align: text-bottom; text-align: left"><!-- PERCENT -->&nbsp;</TD>

          <TD ROWSPAN="1" STYLE="width: 6px; vertical-align: text-bottom; text-align: center"><!-- GUTTER -->&nbsp;</TD>

          <TD ROWSPAN="1" STYLE="width: 6px; vertical-align: text-bottom; text-align: left"><!-- $ -->&nbsp;</TD>

          <TD ROWSPAN="1" COLSPAN="1" STYLE="vertical-align: text-bottom; text-align: right">3,651,316</TD>

          <TD STYLE="white-space: nowrap; vertical-align: text-bottom; text-align: left"><!-- PERCENT -->&nbsp;</TD>

          <TD ROWSPAN="1" STYLE="width: 6px; vertical-align: text-bottom; text-align: center"><!-- GUTTER -->&nbsp;</TD>

          <TD ROWSPAN="1" STYLE="width: 6px; vertical-align: text-bottom; text-align: left"><!-- $ -->&nbsp;</TD>

          <TD ROWSPAN="1" COLSPAN="1" STYLE="vertical-align: text-bottom; text-align: right">&#151;</TD>

          <TD STYLE="white-space: nowrap; vertical-align: text-bottom; text-align: left"><!-- PERCENT -->&nbsp;</TD>

          <TD ROWSPAN="1" STYLE="width: 6px; vertical-align: text-bottom; text-align: center"><!-- GUTTER -->&nbsp;</TD>

          <TD ROWSPAN="1" STYLE="width: 6px; vertical-align: text-bottom; text-align: left"><!-- $ -->&nbsp;</TD>

          <TD ROWSPAN="1" COLSPAN="1" STYLE="vertical-align: text-bottom; text-align: right">5,086</TD>

          <TD STYLE="white-space: nowrap; vertical-align: text-bottom; text-align: left"><!-- PERCENT -->&nbsp;</TD>

          <TD ROWSPAN="1" STYLE="width: 6px; vertical-align: text-bottom; text-align: center"><!-- GUTTER -->&nbsp;</TD>

          <TD ROWSPAN="1" STYLE="width: 6px; vertical-align: text-bottom; text-align: left"><!-- $ -->&nbsp;</TD>

          <TD ROWSPAN="1" COLSPAN="1" STYLE="vertical-align: text-bottom; text-align: right">&nbsp;&nbsp;</TD>

          <TD STYLE="white-space: nowrap; vertical-align: text-bottom; text-align: left"><!-- PERCENT -->&nbsp;</TD>

          <TD ROWSPAN="1" STYLE="width: 6px; vertical-align: text-bottom; text-align: center"><!-- GUTTER -->&nbsp;</TD>

          <TD ROWSPAN="1" STYLE="width: 6px; vertical-align: text-bottom; text-align: left"><!-- $ -->&nbsp;</TD>

          <TD ROWSPAN="1" COLSPAN="1" STYLE="vertical-align: text-bottom; text-align: right">5,086</TD>

          <TD STYLE="white-space: nowrap; vertical-align: text-bottom; text-align: left"><!-- PERCENT -->&nbsp;</TD>

</TR>

<TR STYLE="background-color: white">

          <TD ROWSPAN="1" COLSPAN="1" STYLE="padding-left: 10pt; text-indent: -10pt; vertical-align: text-bottom">Conversion of senior notes into shares of common stock at $1.50 per share</TD>

          <TD ROWSPAN="1" STYLE="width: 6px; vertical-align: text-bottom; text-align: center"><!-- GUTTER -->&nbsp;</TD>

          <TD ROWSPAN="1" STYLE="width: 6px; vertical-align: text-bottom; text-align: left"><!-- $ -->&nbsp;</TD>

          <TD ROWSPAN="1" COLSPAN="1" STYLE="vertical-align: text-bottom; text-align: right">&#151;</TD>

          <TD STYLE="white-space: nowrap; vertical-align: text-bottom; text-align: left"><!-- PERCENT -->&nbsp;</TD>

          <TD ROWSPAN="1" STYLE="width: 6px; vertical-align: text-bottom; text-align: center"><!-- GUTTER -->&nbsp;</TD>

          <TD ROWSPAN="1" STYLE="width: 6px; vertical-align: text-bottom; text-align: left"><!-- $ -->&nbsp;</TD>

          <TD ROWSPAN="1" COLSPAN="1" STYLE="vertical-align: text-bottom; text-align: right">&#151;</TD>

          <TD STYLE="white-space: nowrap; vertical-align: text-bottom; text-align: left"><!-- PERCENT -->&nbsp;</TD>

          <TD ROWSPAN="1" STYLE="width: 6px; vertical-align: text-bottom; text-align: center"><!-- GUTTER -->&nbsp;</TD>

          <TD ROWSPAN="1" STYLE="width: 6px; vertical-align: text-bottom; text-align: left"><!-- $ -->&nbsp;</TD>

          <TD ROWSPAN="1" COLSPAN="1" STYLE="vertical-align: text-bottom; text-align: right">625,136</TD>

          <TD STYLE="white-space: nowrap; vertical-align: text-bottom; text-align: left"><!-- PERCENT -->&nbsp;</TD>

          <TD ROWSPAN="1" STYLE="width: 6px; vertical-align: text-bottom; text-align: center"><!-- GUTTER -->&nbsp;</TD>

          <TD ROWSPAN="1" STYLE="width: 6px; vertical-align: text-bottom; text-align: left"><!-- $ -->&nbsp;</TD>

          <TD ROWSPAN="1" COLSPAN="1" STYLE="vertical-align: text-bottom; text-align: right">&#151;</TD>

          <TD STYLE="white-space: nowrap; vertical-align: text-bottom; text-align: left"><!-- PERCENT -->&nbsp;</TD>

          <TD ROWSPAN="1" STYLE="width: 6px; vertical-align: text-bottom; text-align: center"><!-- GUTTER -->&nbsp;</TD>

          <TD ROWSPAN="1" STYLE="width: 6px; vertical-align: text-bottom; text-align: left"><!-- $ -->&nbsp;</TD>

          <TD ROWSPAN="1" COLSPAN="1" STYLE="vertical-align: text-bottom; text-align: right">937</TD>

          <TD STYLE="white-space: nowrap; vertical-align: text-bottom; text-align: left"><!-- PERCENT -->&nbsp;</TD>

          <TD ROWSPAN="1" STYLE="width: 6px; vertical-align: text-bottom; text-align: center"><!-- GUTTER -->&nbsp;</TD>

          <TD ROWSPAN="1" STYLE="width: 6px; vertical-align: text-bottom; text-align: left"><!-- $ -->&nbsp;</TD>

          <TD ROWSPAN="1" COLSPAN="1" STYLE="vertical-align: text-bottom; text-align: right">&nbsp;&nbsp;</TD>

          <TD STYLE="white-space: nowrap; vertical-align: text-bottom; text-align: left"><!-- PERCENT -->&nbsp;</TD>

          <TD ROWSPAN="1" STYLE="width: 6px; vertical-align: text-bottom; text-align: center"><!-- GUTTER -->&nbsp;</TD>

          <TD ROWSPAN="1" STYLE="width: 6px; vertical-align: text-bottom; text-align: left"><!-- $ -->&nbsp;</TD>

          <TD ROWSPAN="1" COLSPAN="1" STYLE="vertical-align: text-bottom; text-align: right">937</TD>

          <TD STYLE="white-space: nowrap; vertical-align: text-bottom; text-align: left"><!-- PERCENT -->&nbsp;</TD>

</TR>

<TR STYLE="background-color: #CCFFCC">

          <TD ROWSPAN="1" COLSPAN="1" STYLE="padding-left: 10pt; text-indent: -10pt; vertical-align: text-bottom">Stock based compensation&nbsp;&#150;&nbsp;Restricted stock to employees</TD>

          <TD ROWSPAN="1" STYLE="width: 6px; vertical-align: text-bottom; text-align: center"><!-- GUTTER -->&nbsp;</TD>

          <TD ROWSPAN="1" STYLE="width: 6px; vertical-align: text-bottom; text-align: left"><!-- $ -->&nbsp;</TD>

          <TD ROWSPAN="1" COLSPAN="1" STYLE="vertical-align: text-bottom; text-align: right">&#151;</TD>

          <TD STYLE="white-space: nowrap; vertical-align: text-bottom; text-align: left"><!-- PERCENT -->&nbsp;</TD>

          <TD ROWSPAN="1" STYLE="width: 6px; vertical-align: text-bottom; text-align: center"><!-- GUTTER -->&nbsp;</TD>

          <TD ROWSPAN="1" STYLE="width: 6px; vertical-align: text-bottom; text-align: left"><!-- $ -->&nbsp;</TD>

          <TD ROWSPAN="1" COLSPAN="1" STYLE="vertical-align: text-bottom; text-align: right">&#151;</TD>

          <TD STYLE="white-space: nowrap; vertical-align: text-bottom; text-align: left"><!-- PERCENT -->&nbsp;</TD>

          <TD ROWSPAN="1" STYLE="width: 6px; vertical-align: text-bottom; text-align: center"><!-- GUTTER -->&nbsp;</TD>

          <TD ROWSPAN="1" STYLE="width: 6px; vertical-align: text-bottom; text-align: left"><!-- $ -->&nbsp;</TD>

          <TD ROWSPAN="1" COLSPAN="1" STYLE="vertical-align: text-bottom; text-align: right">200,000</TD>

          <TD STYLE="white-space: nowrap; vertical-align: text-bottom; text-align: left"><!-- PERCENT -->&nbsp;</TD>

          <TD ROWSPAN="1" STYLE="width: 6px; vertical-align: text-bottom; text-align: center"><!-- GUTTER -->&nbsp;</TD>

          <TD ROWSPAN="1" STYLE="width: 6px; vertical-align: text-bottom; text-align: left"><!-- $ -->&nbsp;</TD>

          <TD ROWSPAN="1" COLSPAN="1" STYLE="vertical-align: text-bottom; text-align: right">&#151;</TD>

          <TD STYLE="white-space: nowrap; vertical-align: text-bottom; text-align: left"><!-- PERCENT -->&nbsp;</TD>

          <TD ROWSPAN="1" STYLE="width: 6px; vertical-align: text-bottom; text-align: center"><!-- GUTTER -->&nbsp;</TD>

          <TD ROWSPAN="1" STYLE="width: 6px; vertical-align: text-bottom; text-align: left"><!-- $ -->&nbsp;</TD>

          <TD ROWSPAN="1" COLSPAN="1" STYLE="vertical-align: text-bottom; text-align: right">157</TD>

          <TD STYLE="white-space: nowrap; vertical-align: text-bottom; text-align: left"><!-- PERCENT -->&nbsp;</TD>

          <TD ROWSPAN="1" STYLE="width: 6px; vertical-align: text-bottom; text-align: center"><!-- GUTTER -->&nbsp;</TD>

          <TD ROWSPAN="1" STYLE="width: 6px; vertical-align: text-bottom; text-align: left"><!-- $ -->&nbsp;</TD>

          <TD ROWSPAN="1" COLSPAN="1" STYLE="vertical-align: text-bottom; text-align: right">&nbsp;&nbsp;</TD>

          <TD STYLE="white-space: nowrap; vertical-align: text-bottom; text-align: left"><!-- PERCENT -->&nbsp;</TD>

          <TD ROWSPAN="1" STYLE="width: 6px; vertical-align: text-bottom; text-align: center"><!-- GUTTER -->&nbsp;</TD>

          <TD ROWSPAN="1" STYLE="width: 6px; vertical-align: text-bottom; text-align: left"><!-- $ -->&nbsp;</TD>

          <TD ROWSPAN="1" COLSPAN="1" STYLE="vertical-align: text-bottom; text-align: right">157</TD>

          <TD STYLE="white-space: nowrap; vertical-align: text-bottom; text-align: left"><!-- PERCENT -->&nbsp;</TD>

</TR>

<TR STYLE="background-color: white">

          <TD ROWSPAN="1" COLSPAN="1" STYLE="padding-left: 10pt; text-indent: -10pt; vertical-align: text-bottom">Stock based compensation&nbsp;&#150;&nbsp;Stock options to employees</TD>

          <TD ROWSPAN="1" STYLE="width: 6px; vertical-align: text-bottom; text-align: center"><!-- GUTTER -->&nbsp;</TD>

          <TD ROWSPAN="1" STYLE="width: 6px; vertical-align: text-bottom; text-align: left"><!-- $ -->&nbsp;</TD>

          <TD ROWSPAN="1" COLSPAN="1" STYLE="vertical-align: text-bottom; text-align: right">&nbsp;&nbsp;</TD>

          <TD STYLE="white-space: nowrap; vertical-align: text-bottom; text-align: left"><!-- PERCENT -->&nbsp;</TD>

          <TD ROWSPAN="1" STYLE="width: 6px; vertical-align: text-bottom; text-align: center"><!-- GUTTER -->&nbsp;</TD>

          <TD ROWSPAN="1" STYLE="width: 6px; vertical-align: text-bottom; text-align: left"><!-- $ -->&nbsp;</TD>

          <TD ROWSPAN="1" COLSPAN="1" STYLE="vertical-align: text-bottom; text-align: right">&nbsp;&nbsp;</TD>

          <TD STYLE="white-space: nowrap; vertical-align: text-bottom; text-align: left"><!-- PERCENT -->&nbsp;</TD>

          <TD ROWSPAN="1" STYLE="width: 6px; vertical-align: text-bottom; text-align: center"><!-- GUTTER -->&nbsp;</TD>

          <TD ROWSPAN="1" STYLE="width: 6px; vertical-align: text-bottom; text-align: left"><!-- $ -->&nbsp;</TD>

          <TD ROWSPAN="1" COLSPAN="1" STYLE="vertical-align: text-bottom; text-align: right">&nbsp;&nbsp;</TD>

          <TD STYLE="white-space: nowrap; vertical-align: text-bottom; text-align: left"><!-- PERCENT -->&nbsp;</TD>

          <TD ROWSPAN="1" STYLE="width: 6px; vertical-align: text-bottom; text-align: center"><!-- GUTTER -->&nbsp;</TD>

          <TD ROWSPAN="1" STYLE="width: 6px; vertical-align: text-bottom; text-align: left"><!-- $ -->&nbsp;</TD>

          <TD ROWSPAN="1" COLSPAN="1" STYLE="vertical-align: text-bottom; text-align: right">&nbsp;&nbsp;</TD>

          <TD STYLE="white-space: nowrap; vertical-align: text-bottom; text-align: left"><!-- PERCENT -->&nbsp;</TD>

          <TD ROWSPAN="1" STYLE="width: 6px; vertical-align: text-bottom; text-align: center"><!-- GUTTER -->&nbsp;</TD>

          <TD ROWSPAN="1" STYLE="width: 6px; vertical-align: text-bottom; text-align: left"><!-- $ -->&nbsp;</TD>

          <TD ROWSPAN="1" COLSPAN="1" STYLE="vertical-align: text-bottom; text-align: right">48</TD>

          <TD STYLE="white-space: nowrap; vertical-align: text-bottom; text-align: left"><!-- PERCENT -->&nbsp;</TD>

          <TD ROWSPAN="1" STYLE="width: 6px; vertical-align: text-bottom; text-align: center"><!-- GUTTER -->&nbsp;</TD>

          <TD ROWSPAN="1" STYLE="width: 6px; vertical-align: text-bottom; text-align: left"><!-- $ -->&nbsp;</TD>

          <TD ROWSPAN="1" COLSPAN="1" STYLE="vertical-align: text-bottom; text-align: right">&nbsp;&nbsp;</TD>

          <TD STYLE="white-space: nowrap; vertical-align: text-bottom; text-align: left"><!-- PERCENT -->&nbsp;</TD>

          <TD ROWSPAN="1" STYLE="width: 6px; vertical-align: text-bottom; text-align: center"><!-- GUTTER -->&nbsp;</TD>

          <TD ROWSPAN="1" STYLE="width: 6px; vertical-align: text-bottom; text-align: left"><!-- $ -->&nbsp;</TD>

          <TD ROWSPAN="1" COLSPAN="1" STYLE="vertical-align: text-bottom; text-align: right">48</TD>

          <TD STYLE="white-space: nowrap; vertical-align: text-bottom; text-align: left"><!-- PERCENT -->&nbsp;</TD>

</TR>

<TR STYLE="background-color: #CCFFCC">

          <TD ROWSPAN="1" COLSPAN="1" STYLE="padding-left: 10pt; text-indent: -10pt; vertical-align: text-bottom; border-bottom: white 1pt solid">Net loss</TD>

          <TD ROWSPAN="1" STYLE="width: 6px; vertical-align: text-bottom; text-align: center; border-bottom: white 1pt solid"><!-- GUTTER -->&nbsp;</TD>

          <TD ROWSPAN="1" STYLE="width: 6px; vertical-align: text-bottom; text-align: left; border-bottom: black 1pt solid"><!-- $ -->&nbsp;</TD>

          <TD ROWSPAN="1" COLSPAN="1" STYLE="vertical-align: text-bottom; text-align: right; border-bottom: black 1pt solid">&nbsp;&nbsp;</TD>

          <TD STYLE="white-space: nowrap; vertical-align: text-bottom; text-align: left; border-bottom: white 1pt solid"><!-- PERCENT -->&nbsp;</TD>

          <TD ROWSPAN="1" STYLE="width: 6px; vertical-align: text-bottom; text-align: center; border-bottom: white 1pt solid"><!-- GUTTER -->&nbsp;</TD>

          <TD ROWSPAN="1" STYLE="width: 6px; vertical-align: text-bottom; text-align: left; border-bottom: black 1pt solid"><!-- $ -->&nbsp;</TD>

          <TD ROWSPAN="1" COLSPAN="1" STYLE="vertical-align: text-bottom; text-align: right; border-bottom: black 1pt solid">&nbsp;&nbsp;</TD>

          <TD STYLE="white-space: nowrap; vertical-align: text-bottom; text-align: left; border-bottom: white 1pt solid"><!-- PERCENT -->&nbsp;</TD>

          <TD ROWSPAN="1" STYLE="width: 6px; vertical-align: text-bottom; text-align: center; border-bottom: white 1pt solid"><!-- GUTTER -->&nbsp;</TD>

          <TD ROWSPAN="1" STYLE="width: 6px; vertical-align: text-bottom; text-align: left; border-bottom: black 1pt solid"><!-- $ -->&nbsp;</TD>

          <TD ROWSPAN="1" COLSPAN="1" STYLE="vertical-align: text-bottom; text-align: right; border-bottom: black 1pt solid">&nbsp;&nbsp;</TD>

          <TD STYLE="white-space: nowrap; vertical-align: text-bottom; text-align: left; border-bottom: white 1pt solid"><!-- PERCENT -->&nbsp;</TD>

          <TD ROWSPAN="1" STYLE="width: 6px; vertical-align: text-bottom; text-align: center; border-bottom: white 1pt solid"><!-- GUTTER -->&nbsp;</TD>

          <TD ROWSPAN="1" STYLE="width: 6px; vertical-align: text-bottom; text-align: left; border-bottom: black 1pt solid"><!-- $ -->&nbsp;</TD>

          <TD ROWSPAN="1" COLSPAN="1" STYLE="vertical-align: text-bottom; text-align: right; border-bottom: black 1pt solid">&nbsp;&nbsp;</TD>

          <TD STYLE="white-space: nowrap; vertical-align: text-bottom; text-align: left; border-bottom: white 1pt solid"><!-- PERCENT -->&nbsp;</TD>

          <TD ROWSPAN="1" STYLE="width: 6px; vertical-align: text-bottom; text-align: center; border-bottom: white 1pt solid"><!-- GUTTER -->&nbsp;</TD>

          <TD ROWSPAN="1" STYLE="width: 6px; vertical-align: text-bottom; text-align: left; border-bottom: black 1pt solid"><!-- $ -->&nbsp;</TD>

          <TD ROWSPAN="1" COLSPAN="1" STYLE="vertical-align: text-bottom; text-align: right; border-bottom: black 1pt solid">&nbsp;&nbsp;</TD>

          <TD STYLE="white-space: nowrap; vertical-align: text-bottom; text-align: left; border-bottom: white 1pt solid"><!-- PERCENT -->&nbsp;</TD>

          <TD ROWSPAN="1" STYLE="width: 6px; vertical-align: text-bottom; text-align: center; border-bottom: white 1pt solid"><!-- GUTTER -->&nbsp;</TD>

          <TD ROWSPAN="1" STYLE="width: 6px; vertical-align: text-bottom; text-align: left; border-bottom: black 1pt solid"><!-- $ -->&nbsp;</TD>

          <TD ROWSPAN="1" COLSPAN="1" STYLE="vertical-align: text-bottom; text-align: right; border-bottom: black 1pt solid">(8,794</TD>

          <TD STYLE="white-space: nowrap; vertical-align: text-bottom; text-align: left; border-bottom: white 1pt solid">)<!-- PERCENT -->&nbsp;</TD>

          <TD ROWSPAN="1" STYLE="width: 6px; vertical-align: text-bottom; text-align: center; border-bottom: white 1pt solid"><!-- GUTTER -->&nbsp;</TD>

          <TD ROWSPAN="1" STYLE="width: 6px; vertical-align: text-bottom; text-align: left; border-bottom: black 1pt solid"><!-- $ -->&nbsp;</TD>

          <TD ROWSPAN="1" COLSPAN="1" STYLE="vertical-align: text-bottom; text-align: right; border-bottom: black 1pt solid">(8,794</TD>

          <TD STYLE="white-space: nowrap; vertical-align: text-bottom; text-align: left; border-bottom: white 1pt solid">)<!-- PERCENT -->&nbsp;</TD>

</TR>

<TR STYLE="background-color: white">

          <TD ROWSPAN="1" COLSPAN="1" STYLE="padding-left: 10pt; text-indent: -10pt; vertical-align: text-bottom; font-weight: bold; border-bottom: white 3pt double">Balance&nbsp;&#150;&nbsp;December 31, 2012</TD>

          <TD ROWSPAN="1" STYLE="width: 6px; vertical-align: text-bottom; text-align: center; border-bottom: white 3pt double"><!-- GUTTER -->&nbsp;</TD>

          <TD ROWSPAN="1" STYLE="width: 6px; vertical-align: text-bottom; text-align: left; border-bottom: black 3pt double"><!-- $ -->&nbsp;</TD>

          <TD ROWSPAN="1" COLSPAN="1" STYLE="vertical-align: text-bottom; text-align: right; border-bottom: black 3pt double">17,913,727</TD>

          <TD STYLE="white-space: nowrap; vertical-align: text-bottom; text-align: left; border-bottom: white 3pt double"><!-- PERCENT -->&nbsp;</TD>

          <TD ROWSPAN="1" STYLE="width: 6px; vertical-align: text-bottom; text-align: center; border-bottom: white 3pt double"><!-- GUTTER -->&nbsp;</TD>

          <TD ROWSPAN="1" STYLE="width: 6px; vertical-align: text-bottom; text-align: left; border-bottom: black 3pt double"><!-- $ -->$</TD>

          <TD ROWSPAN="1" COLSPAN="1" STYLE="vertical-align: text-bottom; text-align: right; border-bottom: black 3pt double"> &#151;</TD>

          <TD STYLE="white-space: nowrap; vertical-align: text-bottom; text-align: left; border-bottom: white 3pt double"><!-- PERCENT -->&nbsp;</TD>

          <TD ROWSPAN="1" STYLE="width: 6px; vertical-align: text-bottom; text-align: center; border-bottom: white 3pt double"><!-- GUTTER -->&nbsp;</TD>

          <TD ROWSPAN="1" STYLE="width: 6px; vertical-align: text-bottom; text-align: left; border-bottom: black 3pt double"><!-- $ -->&nbsp;</TD>

          <TD ROWSPAN="1" COLSPAN="1" STYLE="vertical-align: text-bottom; text-align: right; border-bottom: black 3pt double">14,064,825</TD>

          <TD STYLE="white-space: nowrap; vertical-align: text-bottom; text-align: left; border-bottom: white 3pt double"><!-- PERCENT -->&nbsp;</TD>

          <TD ROWSPAN="1" STYLE="width: 6px; vertical-align: text-bottom; text-align: center; border-bottom: white 3pt double"><!-- GUTTER -->&nbsp;</TD>

          <TD ROWSPAN="1" STYLE="width: 6px; vertical-align: text-bottom; text-align: left; border-bottom: black 3pt double"><!-- $ -->$</TD>

          <TD ROWSPAN="1" COLSPAN="1" STYLE="vertical-align: text-bottom; text-align: right; border-bottom: black 3pt double"> &#151;</TD>

          <TD STYLE="white-space: nowrap; vertical-align: text-bottom; text-align: left; border-bottom: white 3pt double"><!-- PERCENT -->&nbsp;</TD>

          <TD ROWSPAN="1" STYLE="width: 6px; vertical-align: text-bottom; text-align: center; border-bottom: white 3pt double"><!-- GUTTER -->&nbsp;</TD>

          <TD ROWSPAN="1" STYLE="width: 6px; vertical-align: text-bottom; text-align: left; border-bottom: black 3pt double"><!-- $ -->$</TD>

          <TD ROWSPAN="1" COLSPAN="1" STYLE="vertical-align: text-bottom; text-align: right; border-bottom: black 3pt double"> 18,626</TD>

          <TD STYLE="white-space: nowrap; vertical-align: text-bottom; text-align: left; border-bottom: white 3pt double"><!-- PERCENT -->&nbsp;</TD>

          <TD ROWSPAN="1" STYLE="width: 6px; vertical-align: text-bottom; text-align: center; border-bottom: white 3pt double"><!-- GUTTER -->&nbsp;</TD>

          <TD ROWSPAN="1" STYLE="width: 6px; vertical-align: text-bottom; text-align: left; border-bottom: black 3pt double"><!-- $ -->$</TD>

          <TD ROWSPAN="1" COLSPAN="1" STYLE="vertical-align: text-bottom; text-align: right; border-bottom: black 3pt double"> (9,006</TD>

          <TD STYLE="white-space: nowrap; vertical-align: text-bottom; text-align: left; border-bottom: white 3pt double">)<!-- PERCENT -->&nbsp;</TD>

          <TD ROWSPAN="1" STYLE="width: 6px; vertical-align: text-bottom; text-align: center; border-bottom: white 3pt double"><!-- GUTTER -->&nbsp;</TD>

          <TD ROWSPAN="1" STYLE="width: 6px; vertical-align: text-bottom; text-align: left; border-bottom: black 3pt double"><!-- $ -->$</TD>

          <TD ROWSPAN="1" COLSPAN="1" STYLE="vertical-align: text-bottom; text-align: right; border-bottom: black 3pt double"> 9,620</TD>

          <TD STYLE="white-space: nowrap; vertical-align: text-bottom; text-align: left; border-bottom: white 3pt double"><!-- PERCENT -->&nbsp;</TD>

</TR>

</TABLE></DIV>

<P STYLE="text-indent: 0pt; text-align: center; font: normal 10pt/12pt Times New Roman, Times, Serif; margin: 0pt; padding: 3pt 0pt 3pt 4px; text-transform: none">&nbsp;<BR>&nbsp;<BR>The accompanying notes are an integral part of the condensed consolidated financial statements. </P>

</DIV>

<P STYLE="width: 708px; text-indent: 0px; text-align: center; font: normal 10pt/12pt Times New Roman, Times, Serif; margin: 0pt; padding: 12pt 0pt 3pt; color: black; text-transform: none; text-decoration: none">F-40</P>

<HR STYLE="width: 708px; height: 2px; text-align: center">

<DIV ID="PN" STYLE="page-break-after: always">&nbsp;</DIV>

<DIV ID="HDR">&nbsp;</DIV>

<DIV ALIGN="CENTER" STYLE="width: 708px; border: white 1pt solid; margin: 6pt 0pt; padding: 9pt 3pt 9pt 6pt">

<P STYLE="text-align: left; font: normal bold 8pt Times New Roman, Times, Serif"><A HREF="#TOC">TABLE OF CONTENTS</A></P>

<H1 STYLE="text-indent: 0pt; text-align: center; font: normal bold 10pt/12pt Times New Roman, Times, Serif; margin: 0pt; padding: 9pt 0pt 3pt; text-transform: none">LEXINGTON TECHNOLOGY GROUP, INC. AND SUBSIDIARY<BR> (A Development Stage Company)<BR> CONSOLIDATED STATEMENTS OF CASH FLOWS<BR> ($ IN THOUSANDS) </H1>

<P STYLE="text-indent: 0pt; text-align: left; font: normal 10pt/12pt Times New Roman, Times, Serif; margin: 0pt; padding: 3pt 0pt 3pt 4px; text-transform: none"></P>

<DIV STYLE="text-align: center"><TABLE CELLSPACING="0" CELLPADDING="0" WIDTH="608" STYLE="vertical-align: text-bottom; text-indent: 0px; text-align: left; font: normal 10pt Times New Roman, Times, Serif; margin: -24pt 0pt 0pt; padding: 3pt 0pt; text-transform: none">

<TR>

          <TD><IMG HEIGHT="1" SRC="spacer.gif" WIDTH="344"></TD>

          <TD STYLE="width: 12px; vertical-align: text-bottom; text-align: center; border-bottom-style: none"><!-- GUTTER -->&nbsp;</TD>

          <TD COLSPAN="3"><IMG HEIGHT="1" SRC="spacer.gif" WIDTH="72"></TD>

          <TD STYLE="width: 12px; vertical-align: text-bottom; text-align: center; border-bottom-style: none"><!-- GUTTER -->&nbsp;</TD>

          <TD COLSPAN="3"><IMG HEIGHT="1" SRC="spacer.gif" WIDTH="72"></TD>

          <TD STYLE="width: 12px; vertical-align: text-bottom; text-align: center; border-bottom-style: none"><!-- GUTTER -->&nbsp;</TD>

          <TD COLSPAN="3"><IMG HEIGHT="1" SRC="spacer.gif" WIDTH="72"></TD>

</TR>

<TR>

          <TD ROWSPAN="1" COLSPAN="1" STYLE="line-height: normal; vertical-align: text-bottom; font-weight: bold; font-size: 8pt; text-align: left"></TD>

          <TD ROWSPAN="1" STYLE="width: 6px; vertical-align: text-bottom; text-align: center"><!-- GUTTER -->&nbsp;</TD>

          <TD ROWSPAN="1" COLSPAN="3" STYLE="line-height: normal; vertical-align: text-bottom; font-weight: bold; font-size: 8pt; text-align: center; border-bottom: black 1pt solid">Period from May 10, 2012 (inception) through June 30, 2012</TD>

          <TD ROWSPAN="1" STYLE="width: 6px; vertical-align: text-bottom; text-align: center"><!-- GUTTER -->&nbsp;</TD>

          <TD ROWSPAN="1" COLSPAN="3" STYLE="line-height: normal; vertical-align: text-bottom; font-weight: bold; font-size: 8pt; text-align: center; border-bottom: black 1pt solid">Six months ended December 31, 2012</TD>

          <TD ROWSPAN="1" STYLE="width: 6px; vertical-align: text-bottom; text-align: center"><!-- GUTTER -->&nbsp;</TD>

          <TD ROWSPAN="1" COLSPAN="3" STYLE="line-height: normal; vertical-align: text-bottom; font-weight: bold; font-size: 8pt; text-align: center; border-bottom: black 1pt solid">Period from May 10, 2012 (inception) through December 31, 2012</TD>

</TR>

<TR STYLE="background-color: #CCFFCC">

          <TD ROWSPAN="1" COLSPAN="1" STYLE="padding-left: 10pt; text-indent: -10pt; vertical-align: text-bottom">Net loss</TD>

          <TD ROWSPAN="1" STYLE="width: 6px; vertical-align: text-bottom; text-align: center"><!-- GUTTER -->&nbsp;</TD>

          <TD ROWSPAN="1" STYLE="width: 6px; vertical-align: text-bottom; text-align: left"><!-- $ -->$</TD>

          <TD ROWSPAN="1" COLSPAN="1" STYLE="vertical-align: text-bottom; text-align: right"> (212</TD>

          <TD STYLE="white-space: nowrap; vertical-align: text-bottom; text-align: left">)<!-- PERCENT -->&nbsp;</TD>

          <TD ROWSPAN="1" STYLE="width: 6px; vertical-align: text-bottom; text-align: center"><!-- GUTTER -->&nbsp;</TD>

          <TD ROWSPAN="1" STYLE="width: 6px; vertical-align: text-bottom; text-align: left"><!-- $ -->$</TD>

          <TD ROWSPAN="1" COLSPAN="1" STYLE="vertical-align: text-bottom; text-align: right"> (8,794</TD>

          <TD STYLE="white-space: nowrap; vertical-align: text-bottom; text-align: left">)<!-- PERCENT -->&nbsp;</TD>

          <TD ROWSPAN="1" STYLE="width: 6px; vertical-align: text-bottom; text-align: center"><!-- GUTTER -->&nbsp;</TD>

          <TD ROWSPAN="1" STYLE="width: 6px; vertical-align: text-bottom; text-align: left"><!-- $ -->$</TD>

          <TD ROWSPAN="1" COLSPAN="1" STYLE="vertical-align: text-bottom; text-align: right"> (9,006</TD>

          <TD STYLE="white-space: nowrap; vertical-align: text-bottom; text-align: left">)<!-- PERCENT -->&nbsp;</TD>

</TR>

<TR STYLE="background-color: white">

          <TD ROWSPAN="1" COLSPAN="1" STYLE="padding-left: 10pt; text-indent: -10pt; vertical-align: text-bottom">Adjustment to reconcile net loss to net cash used in operating activities<BR></TD>

          <TD ROWSPAN="1" STYLE="width: 6px; vertical-align: text-bottom; text-align: center"><!-- GUTTER -->&nbsp;</TD>

          <TD ROWSPAN="1" STYLE="width: 6px; vertical-align: text-bottom; text-align: left"><!-- $ -->&nbsp;</TD>

          <TD ROWSPAN="1" COLSPAN="1" STYLE="vertical-align: text-bottom; text-align: right">&nbsp;&nbsp;</TD>

          <TD STYLE="white-space: nowrap; vertical-align: text-bottom; text-align: left"><!-- PERCENT -->&nbsp;</TD>

          <TD ROWSPAN="1" STYLE="width: 6px; vertical-align: text-bottom; text-align: center"><!-- GUTTER -->&nbsp;</TD>

          <TD ROWSPAN="1" STYLE="width: 6px; vertical-align: text-bottom; text-align: left"><!-- $ -->&nbsp;</TD>

          <TD ROWSPAN="1" COLSPAN="1" STYLE="vertical-align: text-bottom; text-align: right">&nbsp;&nbsp;</TD>

          <TD STYLE="white-space: nowrap; vertical-align: text-bottom; text-align: left"><!-- PERCENT -->&nbsp;</TD>

          <TD ROWSPAN="1" STYLE="width: 6px; vertical-align: text-bottom; text-align: center"><!-- GUTTER -->&nbsp;</TD>

          <TD ROWSPAN="1" STYLE="width: 6px; vertical-align: text-bottom; text-align: left"><!-- $ -->&nbsp;</TD>

          <TD ROWSPAN="1" COLSPAN="1" STYLE="vertical-align: text-bottom; text-align: right">&nbsp;&nbsp;</TD>

          <TD STYLE="white-space: nowrap; vertical-align: text-bottom; text-align: left"><!-- PERCENT -->&nbsp;</TD>

</TR>

<TR STYLE="background-color: #CCFFCC">

          <TD ROWSPAN="1" COLSPAN="1" STYLE="padding-left: 20pt; text-indent: -10pt; vertical-align: text-bottom">Stock based compensation</TD>

          <TD ROWSPAN="1" STYLE="width: 6px; vertical-align: text-bottom; text-align: center"><!-- GUTTER -->&nbsp;</TD>

          <TD ROWSPAN="1" STYLE="width: 6px; vertical-align: text-bottom; text-align: left"><!-- $ -->&nbsp;</TD>

          <TD ROWSPAN="1" COLSPAN="1" STYLE="vertical-align: text-bottom; text-align: right">&#151;</TD>

          <TD STYLE="white-space: nowrap; vertical-align: text-bottom; text-align: left"><!-- PERCENT -->&nbsp;</TD>

          <TD ROWSPAN="1" STYLE="width: 6px; vertical-align: text-bottom; text-align: center"><!-- GUTTER -->&nbsp;</TD>

          <TD ROWSPAN="1" STYLE="width: 6px; vertical-align: text-bottom; text-align: left"><!-- $ -->&nbsp;</TD>

          <TD ROWSPAN="1" COLSPAN="1" STYLE="vertical-align: text-bottom; text-align: right">205</TD>

          <TD STYLE="white-space: nowrap; vertical-align: text-bottom; text-align: left"><!-- PERCENT -->&nbsp;</TD>

          <TD ROWSPAN="1" STYLE="width: 6px; vertical-align: text-bottom; text-align: center"><!-- GUTTER -->&nbsp;</TD>

          <TD ROWSPAN="1" STYLE="width: 6px; vertical-align: text-bottom; text-align: left"><!-- $ -->&nbsp;</TD>

          <TD ROWSPAN="1" COLSPAN="1" STYLE="vertical-align: text-bottom; text-align: right">205</TD>

          <TD STYLE="white-space: nowrap; vertical-align: text-bottom; text-align: left"><!-- PERCENT -->&nbsp;</TD>

</TR>

<TR STYLE="background-color: white">

          <TD ROWSPAN="1" COLSPAN="1" STYLE="padding-left: 20pt; text-indent: -10pt; vertical-align: text-bottom">Unrealized loss on investments</TD>

          <TD ROWSPAN="1" STYLE="width: 6px; vertical-align: text-bottom; text-align: center"><!-- GUTTER -->&nbsp;</TD>

          <TD ROWSPAN="1" STYLE="width: 6px; vertical-align: text-bottom; text-align: left"><!-- $ -->&nbsp;</TD>

          <TD ROWSPAN="1" COLSPAN="1" STYLE="vertical-align: text-bottom; text-align: right">&#151;</TD>

          <TD STYLE="white-space: nowrap; vertical-align: text-bottom; text-align: left"><!-- PERCENT -->&nbsp;</TD>

          <TD ROWSPAN="1" STYLE="width: 6px; vertical-align: text-bottom; text-align: center"><!-- GUTTER -->&nbsp;</TD>

          <TD ROWSPAN="1" STYLE="width: 6px; vertical-align: text-bottom; text-align: left"><!-- $ -->&nbsp;</TD>

          <TD ROWSPAN="1" COLSPAN="1" STYLE="vertical-align: text-bottom; text-align: right">300</TD>

          <TD STYLE="white-space: nowrap; vertical-align: text-bottom; text-align: left"><!-- PERCENT -->&nbsp;</TD>

          <TD ROWSPAN="1" STYLE="width: 6px; vertical-align: text-bottom; text-align: center"><!-- GUTTER -->&nbsp;</TD>

          <TD ROWSPAN="1" STYLE="width: 6px; vertical-align: text-bottom; text-align: left"><!-- $ -->&nbsp;</TD>

          <TD ROWSPAN="1" COLSPAN="1" STYLE="vertical-align: text-bottom; text-align: right">300</TD>

          <TD STYLE="white-space: nowrap; vertical-align: text-bottom; text-align: left"><!-- PERCENT -->&nbsp;</TD>

</TR>

<TR STYLE="background-color: #CCFFCC">

          <TD ROWSPAN="1" COLSPAN="1" STYLE="padding-left: 20pt; text-indent: -10pt; vertical-align: text-bottom">Amortization&nbsp;&#150;&nbsp;intangibles</TD>

          <TD ROWSPAN="1" STYLE="width: 6px; vertical-align: text-bottom; text-align: center"><!-- GUTTER -->&nbsp;</TD>

          <TD ROWSPAN="1" STYLE="width: 6px; vertical-align: text-bottom; text-align: left"><!-- $ -->&nbsp;</TD>

          <TD ROWSPAN="1" COLSPAN="1" STYLE="vertical-align: text-bottom; text-align: right">&#151;</TD>

          <TD STYLE="white-space: nowrap; vertical-align: text-bottom; text-align: left"><!-- PERCENT -->&nbsp;</TD>

          <TD ROWSPAN="1" STYLE="width: 6px; vertical-align: text-bottom; text-align: center"><!-- GUTTER -->&nbsp;</TD>

          <TD ROWSPAN="1" STYLE="width: 6px; vertical-align: text-bottom; text-align: left"><!-- $ -->&nbsp;</TD>

          <TD ROWSPAN="1" COLSPAN="1" STYLE="vertical-align: text-bottom; text-align: right">207</TD>

          <TD STYLE="white-space: nowrap; vertical-align: text-bottom; text-align: left"><!-- PERCENT -->&nbsp;</TD>

          <TD ROWSPAN="1" STYLE="width: 6px; vertical-align: text-bottom; text-align: center"><!-- GUTTER -->&nbsp;</TD>

          <TD ROWSPAN="1" STYLE="width: 6px; vertical-align: text-bottom; text-align: left"><!-- $ -->&nbsp;</TD>

          <TD ROWSPAN="1" COLSPAN="1" STYLE="vertical-align: text-bottom; text-align: right">207</TD>

          <TD STYLE="white-space: nowrap; vertical-align: text-bottom; text-align: left"><!-- PERCENT -->&nbsp;</TD>

</TR>

<TR STYLE="background-color: white">

          <TD ROWSPAN="1" COLSPAN="1" STYLE="padding-left: 20pt; text-indent: -10pt; vertical-align: text-bottom">Accretion of note discount</TD>

          <TD ROWSPAN="1" STYLE="width: 6px; vertical-align: text-bottom; text-align: center"><!-- GUTTER -->&nbsp;</TD>

          <TD ROWSPAN="1" STYLE="width: 6px; vertical-align: text-bottom; text-align: left"><!-- $ -->&nbsp;</TD>

          <TD ROWSPAN="1" COLSPAN="1" STYLE="vertical-align: text-bottom; text-align: right">30</TD>

          <TD STYLE="white-space: nowrap; vertical-align: text-bottom; text-align: left"><!-- PERCENT -->&nbsp;</TD>

          <TD ROWSPAN="1" STYLE="width: 6px; vertical-align: text-bottom; text-align: center"><!-- GUTTER -->&nbsp;</TD>

          <TD ROWSPAN="1" STYLE="width: 6px; vertical-align: text-bottom; text-align: left"><!-- $ -->&nbsp;</TD>

          <TD ROWSPAN="1" COLSPAN="1" STYLE="vertical-align: text-bottom; text-align: right">564</TD>

          <TD STYLE="white-space: nowrap; vertical-align: text-bottom; text-align: left"><!-- PERCENT -->&nbsp;</TD>

          <TD ROWSPAN="1" STYLE="width: 6px; vertical-align: text-bottom; text-align: center"><!-- GUTTER -->&nbsp;</TD>

          <TD ROWSPAN="1" STYLE="width: 6px; vertical-align: text-bottom; text-align: left"><!-- $ -->&nbsp;</TD>

          <TD ROWSPAN="1" COLSPAN="1" STYLE="vertical-align: text-bottom; text-align: right">594</TD>

          <TD STYLE="white-space: nowrap; vertical-align: text-bottom; text-align: left"><!-- PERCENT -->&nbsp;</TD>

</TR>

<TR STYLE="background-color: #CCFFCC">

          <TD ROWSPAN="1" COLSPAN="1" STYLE="padding-left: 20pt; text-indent: -10pt; vertical-align: text-bottom">Change in fair value of warrant liability</TD>

          <TD ROWSPAN="1" STYLE="width: 6px; vertical-align: text-bottom; text-align: center"><!-- GUTTER -->&nbsp;</TD>

          <TD ROWSPAN="1" STYLE="width: 6px; vertical-align: text-bottom; text-align: left"><!-- $ -->&nbsp;</TD>

          <TD ROWSPAN="1" COLSPAN="1" STYLE="vertical-align: text-bottom; text-align: right">9</TD>

          <TD STYLE="white-space: nowrap; vertical-align: text-bottom; text-align: left"><!-- PERCENT -->&nbsp;</TD>

          <TD ROWSPAN="1" STYLE="width: 6px; vertical-align: text-bottom; text-align: center"><!-- GUTTER -->&nbsp;</TD>

          <TD ROWSPAN="1" STYLE="width: 6px; vertical-align: text-bottom; text-align: left"><!-- $ -->&nbsp;</TD>

          <TD ROWSPAN="1" COLSPAN="1" STYLE="vertical-align: text-bottom; text-align: right">5,320</TD>

          <TD STYLE="white-space: nowrap; vertical-align: text-bottom; text-align: left"><!-- PERCENT -->&nbsp;</TD>

          <TD ROWSPAN="1" STYLE="width: 6px; vertical-align: text-bottom; text-align: center"><!-- GUTTER -->&nbsp;</TD>

          <TD ROWSPAN="1" STYLE="width: 6px; vertical-align: text-bottom; text-align: left"><!-- $ -->&nbsp;</TD>

          <TD ROWSPAN="1" COLSPAN="1" STYLE="vertical-align: text-bottom; text-align: right">5,329</TD>

          <TD STYLE="white-space: nowrap; vertical-align: text-bottom; text-align: left"><!-- PERCENT -->&nbsp;</TD>

</TR>

<TR STYLE="background-color: white">

          <TD ROWSPAN="1" COLSPAN="1" STYLE="padding-left: 20pt; text-indent: -10pt; vertical-align: text-bottom">Changes in operating assets and liabilities<BR></TD>

          <TD ROWSPAN="1" STYLE="width: 6px; vertical-align: text-bottom; text-align: center"><!-- GUTTER -->&nbsp;</TD>

          <TD ROWSPAN="1" STYLE="width: 6px; vertical-align: text-bottom; text-align: left"><!-- $ -->&nbsp;</TD>

          <TD ROWSPAN="1" COLSPAN="1" STYLE="vertical-align: text-bottom; text-align: right">&nbsp;&nbsp;</TD>

          <TD STYLE="white-space: nowrap; vertical-align: text-bottom; text-align: left"><!-- PERCENT -->&nbsp;</TD>

          <TD ROWSPAN="1" STYLE="width: 6px; vertical-align: text-bottom; text-align: center"><!-- GUTTER -->&nbsp;</TD>

          <TD ROWSPAN="1" STYLE="width: 6px; vertical-align: text-bottom; text-align: left"><!-- $ -->&nbsp;</TD>

          <TD ROWSPAN="1" COLSPAN="1" STYLE="vertical-align: text-bottom; text-align: right">&nbsp;&nbsp;</TD>

          <TD STYLE="white-space: nowrap; vertical-align: text-bottom; text-align: left"><!-- PERCENT -->&nbsp;</TD>

          <TD ROWSPAN="1" STYLE="width: 6px; vertical-align: text-bottom; text-align: center"><!-- GUTTER -->&nbsp;</TD>

          <TD ROWSPAN="1" STYLE="width: 6px; vertical-align: text-bottom; text-align: left"><!-- $ -->&nbsp;</TD>

          <TD ROWSPAN="1" COLSPAN="1" STYLE="vertical-align: text-bottom; text-align: right">&nbsp;&nbsp;</TD>

          <TD STYLE="white-space: nowrap; vertical-align: text-bottom; text-align: left"><!-- PERCENT -->&nbsp;</TD>

</TR>

<TR STYLE="background-color: #CCFFCC">

          <TD ROWSPAN="1" COLSPAN="1" STYLE="padding-left: 20pt; text-indent: -10pt; vertical-align: text-bottom">Increase in other assets</TD>

          <TD ROWSPAN="1" STYLE="width: 6px; vertical-align: text-bottom; text-align: center"><!-- GUTTER -->&nbsp;</TD>

          <TD ROWSPAN="1" STYLE="width: 6px; vertical-align: text-bottom; text-align: left"><!-- $ -->&nbsp;</TD>

          <TD ROWSPAN="1" COLSPAN="1" STYLE="vertical-align: text-bottom; text-align: right">&#151;</TD>

          <TD STYLE="white-space: nowrap; vertical-align: text-bottom; text-align: left"><!-- PERCENT -->&nbsp;</TD>

          <TD ROWSPAN="1" STYLE="width: 6px; vertical-align: text-bottom; text-align: center"><!-- GUTTER -->&nbsp;</TD>

          <TD ROWSPAN="1" STYLE="width: 6px; vertical-align: text-bottom; text-align: left"><!-- $ -->&nbsp;</TD>

          <TD ROWSPAN="1" COLSPAN="1" STYLE="vertical-align: text-bottom; text-align: right">(1</TD>

          <TD STYLE="white-space: nowrap; vertical-align: text-bottom; text-align: left">)<!-- PERCENT -->&nbsp;</TD>

          <TD ROWSPAN="1" STYLE="width: 6px; vertical-align: text-bottom; text-align: center"><!-- GUTTER -->&nbsp;</TD>

          <TD ROWSPAN="1" STYLE="width: 6px; vertical-align: text-bottom; text-align: left"><!-- $ -->&nbsp;</TD>

          <TD ROWSPAN="1" COLSPAN="1" STYLE="vertical-align: text-bottom; text-align: right">(1</TD>

          <TD STYLE="white-space: nowrap; vertical-align: text-bottom; text-align: left">)<!-- PERCENT -->&nbsp;</TD>

</TR>

<TR STYLE="background-color: white">

          <TD ROWSPAN="1" COLSPAN="1" STYLE="padding-left: 20pt; text-indent: -10pt; vertical-align: text-bottom; border-bottom: white 1pt solid">Increase in accounts payable and accrued expenses</TD>

          <TD ROWSPAN="1" STYLE="width: 6px; vertical-align: text-bottom; text-align: center; border-bottom: white 1pt solid"><!-- GUTTER -->&nbsp;</TD>

          <TD ROWSPAN="1" STYLE="width: 6px; vertical-align: text-bottom; text-align: left; border-bottom: black 1pt solid"><!-- $ -->&nbsp;</TD>

          <TD ROWSPAN="1" COLSPAN="1" STYLE="vertical-align: text-bottom; text-align: right; border-bottom: black 1pt solid">173</TD>

          <TD STYLE="white-space: nowrap; vertical-align: text-bottom; text-align: left; border-bottom: white 1pt solid"><!-- PERCENT -->&nbsp;</TD>

          <TD ROWSPAN="1" STYLE="width: 6px; vertical-align: text-bottom; text-align: center; border-bottom: white 1pt solid"><!-- GUTTER -->&nbsp;</TD>

          <TD ROWSPAN="1" STYLE="width: 6px; vertical-align: text-bottom; text-align: left; border-bottom: black 1pt solid"><!-- $ -->&nbsp;</TD>

          <TD ROWSPAN="1" COLSPAN="1" STYLE="vertical-align: text-bottom; text-align: right; border-bottom: black 1pt solid">40</TD>

          <TD STYLE="white-space: nowrap; vertical-align: text-bottom; text-align: left; border-bottom: white 1pt solid"><!-- PERCENT -->&nbsp;</TD>

          <TD ROWSPAN="1" STYLE="width: 6px; vertical-align: text-bottom; text-align: center; border-bottom: white 1pt solid"><!-- GUTTER -->&nbsp;</TD>

          <TD ROWSPAN="1" STYLE="width: 6px; vertical-align: text-bottom; text-align: left; border-bottom: black 1pt solid"><!-- $ -->&nbsp;</TD>

          <TD ROWSPAN="1" COLSPAN="1" STYLE="vertical-align: text-bottom; text-align: right; border-bottom: black 1pt solid">213</TD>

          <TD STYLE="white-space: nowrap; vertical-align: text-bottom; text-align: left; border-bottom: white 1pt solid"><!-- PERCENT -->&nbsp;</TD>

</TR>

<TR STYLE="background-color: #CCFFCC">

          <TD ROWSPAN="1" COLSPAN="1" STYLE="padding-left: 10pt; text-indent: -10pt; vertical-align: text-bottom; font-weight: bold; border-bottom: white 1pt solid">Net cash used in operating activities</TD>

          <TD ROWSPAN="1" STYLE="width: 6px; vertical-align: text-bottom; text-align: center; border-bottom: white 1pt solid"><!-- GUTTER -->&nbsp;</TD>

          <TD ROWSPAN="1" STYLE="width: 6px; vertical-align: text-bottom; text-align: left; border-bottom: black 1pt solid"><!-- $ -->&nbsp;</TD>

          <TD ROWSPAN="1" COLSPAN="1" STYLE="vertical-align: text-bottom; text-align: right; border-bottom: black 1pt solid">&#151;</TD>

          <TD STYLE="white-space: nowrap; vertical-align: text-bottom; text-align: left; border-bottom: white 1pt solid"><!-- PERCENT -->&nbsp;</TD>

          <TD ROWSPAN="1" STYLE="width: 6px; vertical-align: text-bottom; text-align: center; border-bottom: white 1pt solid"><!-- GUTTER -->&nbsp;</TD>

          <TD ROWSPAN="1" STYLE="width: 6px; vertical-align: text-bottom; text-align: left; border-bottom: black 1pt solid"><!-- $ -->&nbsp;</TD>

          <TD ROWSPAN="1" COLSPAN="1" STYLE="vertical-align: text-bottom; text-align: right; border-bottom: black 1pt solid">(2,159</TD>

          <TD STYLE="white-space: nowrap; vertical-align: text-bottom; text-align: left; border-bottom: white 1pt solid">)<!-- PERCENT -->&nbsp;</TD>

          <TD ROWSPAN="1" STYLE="width: 6px; vertical-align: text-bottom; text-align: center; border-bottom: white 1pt solid"><!-- GUTTER -->&nbsp;</TD>

          <TD ROWSPAN="1" STYLE="width: 6px; vertical-align: text-bottom; text-align: left; border-bottom: black 1pt solid"><!-- $ -->&nbsp;</TD>

          <TD ROWSPAN="1" COLSPAN="1" STYLE="vertical-align: text-bottom; text-align: right; border-bottom: black 1pt solid">(2,159</TD>

          <TD STYLE="white-space: nowrap; vertical-align: text-bottom; text-align: left; border-bottom: white 1pt solid">)<!-- PERCENT -->&nbsp;</TD>

</TR>

<TR STYLE="background-color: white">

          <TD ROWSPAN="1" COLSPAN="1" STYLE="padding-left: 10pt; text-indent: -10pt; vertical-align: text-bottom; font-weight: bold">Cash flow used in investing activities<BR></TD>

          <TD ROWSPAN="1" STYLE="width: 6px; vertical-align: text-bottom; text-align: center"><!-- GUTTER -->&nbsp;</TD>

          <TD ROWSPAN="1" STYLE="width: 6px; vertical-align: text-bottom; text-align: left"><!-- $ -->&nbsp;</TD>

          <TD ROWSPAN="1" COLSPAN="1" STYLE="vertical-align: text-bottom; text-align: right">&nbsp;&nbsp;</TD>

          <TD STYLE="white-space: nowrap; vertical-align: text-bottom; text-align: left"><!-- PERCENT -->&nbsp;</TD>

          <TD ROWSPAN="1" STYLE="width: 6px; vertical-align: text-bottom; text-align: center"><!-- GUTTER -->&nbsp;</TD>

          <TD ROWSPAN="1" STYLE="width: 6px; vertical-align: text-bottom; text-align: left"><!-- $ -->&nbsp;</TD>

          <TD ROWSPAN="1" COLSPAN="1" STYLE="vertical-align: text-bottom; text-align: right">&nbsp;&nbsp;</TD>

          <TD STYLE="white-space: nowrap; vertical-align: text-bottom; text-align: left"><!-- PERCENT -->&nbsp;</TD>

          <TD ROWSPAN="1" STYLE="width: 6px; vertical-align: text-bottom; text-align: center"><!-- GUTTER -->&nbsp;</TD>

          <TD ROWSPAN="1" STYLE="width: 6px; vertical-align: text-bottom; text-align: left"><!-- $ -->&nbsp;</TD>

          <TD ROWSPAN="1" COLSPAN="1" STYLE="vertical-align: text-bottom; text-align: right">&nbsp;&nbsp;</TD>

          <TD STYLE="white-space: nowrap; vertical-align: text-bottom; text-align: left"><!-- PERCENT -->&nbsp;</TD>

</TR>

<TR STYLE="background-color: #CCFFCC">

          <TD ROWSPAN="1" COLSPAN="1" STYLE="padding-left: 20pt; text-indent: -10pt; vertical-align: text-bottom">Investments</TD>

          <TD ROWSPAN="1" STYLE="width: 6px; vertical-align: text-bottom; text-align: center"><!-- GUTTER -->&nbsp;</TD>

          <TD ROWSPAN="1" STYLE="width: 6px; vertical-align: text-bottom; text-align: left"><!-- $ -->&nbsp;</TD>

          <TD ROWSPAN="1" COLSPAN="1" STYLE="vertical-align: text-bottom; text-align: right">&#151;</TD>

          <TD STYLE="white-space: nowrap; vertical-align: text-bottom; text-align: left"><!-- PERCENT -->&nbsp;</TD>

          <TD ROWSPAN="1" STYLE="width: 6px; vertical-align: text-bottom; text-align: center"><!-- GUTTER -->&nbsp;</TD>

          <TD ROWSPAN="1" STYLE="width: 6px; vertical-align: text-bottom; text-align: left"><!-- $ -->&nbsp;</TD>

          <TD ROWSPAN="1" COLSPAN="1" STYLE="vertical-align: text-bottom; text-align: right">(723</TD>

          <TD STYLE="white-space: nowrap; vertical-align: text-bottom; text-align: left">)<!-- PERCENT -->&nbsp;</TD>

          <TD ROWSPAN="1" STYLE="width: 6px; vertical-align: text-bottom; text-align: center"><!-- GUTTER -->&nbsp;</TD>

          <TD ROWSPAN="1" STYLE="width: 6px; vertical-align: text-bottom; text-align: left"><!-- $ -->&nbsp;</TD>

          <TD ROWSPAN="1" COLSPAN="1" STYLE="vertical-align: text-bottom; text-align: right">(723</TD>

          <TD STYLE="white-space: nowrap; vertical-align: text-bottom; text-align: left">)<!-- PERCENT -->&nbsp;</TD>

</TR>

<TR STYLE="background-color: white">

          <TD ROWSPAN="1" COLSPAN="1" STYLE="padding-left: 20pt; text-indent: -10pt; vertical-align: text-bottom; border-bottom: white 1pt solid">Acquisition of intangible assets</TD>

          <TD ROWSPAN="1" STYLE="width: 6px; vertical-align: text-bottom; text-align: center; border-bottom: white 1pt solid"><!-- GUTTER -->&nbsp;</TD>

          <TD ROWSPAN="1" STYLE="width: 6px; vertical-align: text-bottom; text-align: left; border-bottom: black 1pt solid"><!-- $ -->&nbsp;</TD>

          <TD ROWSPAN="1" COLSPAN="1" STYLE="vertical-align: text-bottom; text-align: right; border-bottom: black 1pt solid">&#151;</TD>

          <TD STYLE="white-space: nowrap; vertical-align: text-bottom; text-align: left; border-bottom: white 1pt solid"><!-- PERCENT -->&nbsp;</TD>

          <TD ROWSPAN="1" STYLE="width: 6px; vertical-align: text-bottom; text-align: center; border-bottom: white 1pt solid"><!-- GUTTER -->&nbsp;</TD>

          <TD ROWSPAN="1" STYLE="width: 6px; vertical-align: text-bottom; text-align: left; border-bottom: black 1pt solid"><!-- $ -->&nbsp;</TD>

          <TD ROWSPAN="1" COLSPAN="1" STYLE="vertical-align: text-bottom; text-align: right; border-bottom: black 1pt solid">(2,175</TD>

          <TD STYLE="white-space: nowrap; vertical-align: text-bottom; text-align: left; border-bottom: white 1pt solid">)<!-- PERCENT -->&nbsp;</TD>

          <TD ROWSPAN="1" STYLE="width: 6px; vertical-align: text-bottom; text-align: center; border-bottom: white 1pt solid"><!-- GUTTER -->&nbsp;</TD>

          <TD ROWSPAN="1" STYLE="width: 6px; vertical-align: text-bottom; text-align: left; border-bottom: black 1pt solid"><!-- $ -->&nbsp;</TD>

          <TD ROWSPAN="1" COLSPAN="1" STYLE="vertical-align: text-bottom; text-align: right; border-bottom: black 1pt solid">(2,175</TD>

          <TD STYLE="white-space: nowrap; vertical-align: text-bottom; text-align: left; border-bottom: white 1pt solid">)<!-- PERCENT -->&nbsp;</TD>

</TR>

<TR STYLE="background-color: #CCFFCC">

          <TD ROWSPAN="1" COLSPAN="1" STYLE="padding-left: 10pt; text-indent: -10pt; vertical-align: text-bottom; font-weight: bold">Cash flow used in investing activities</TD>

          <TD ROWSPAN="1" STYLE="width: 6px; vertical-align: text-bottom; text-align: center"><!-- GUTTER -->&nbsp;</TD>

          <TD ROWSPAN="1" STYLE="width: 6px; vertical-align: text-bottom; text-align: left"><!-- $ -->&nbsp;</TD>

          <TD ROWSPAN="1" COLSPAN="1" STYLE="vertical-align: text-bottom; text-align: right">&#151;</TD>

          <TD STYLE="white-space: nowrap; vertical-align: text-bottom; text-align: left"><!-- PERCENT -->&nbsp;</TD>

          <TD ROWSPAN="1" STYLE="width: 6px; vertical-align: text-bottom; text-align: center"><!-- GUTTER -->&nbsp;</TD>

          <TD ROWSPAN="1" STYLE="width: 6px; vertical-align: text-bottom; text-align: left"><!-- $ -->&nbsp;</TD>

          <TD ROWSPAN="1" COLSPAN="1" STYLE="vertical-align: text-bottom; text-align: right">(2,898</TD>

          <TD STYLE="white-space: nowrap; vertical-align: text-bottom; text-align: left">)<!-- PERCENT -->&nbsp;</TD>

          <TD ROWSPAN="1" STYLE="width: 6px; vertical-align: text-bottom; text-align: center"><!-- GUTTER -->&nbsp;</TD>

          <TD ROWSPAN="1" STYLE="width: 6px; vertical-align: text-bottom; text-align: left"><!-- $ -->&nbsp;</TD>

          <TD ROWSPAN="1" COLSPAN="1" STYLE="vertical-align: text-bottom; text-align: right">(2,898</TD>

          <TD STYLE="white-space: nowrap; vertical-align: text-bottom; text-align: left">)<!-- PERCENT -->&nbsp;</TD>

</TR>

<TR STYLE="background-color: white">

          <TD ROWSPAN="1" COLSPAN="1" STYLE="padding-left: 10pt; text-indent: -10pt; vertical-align: text-bottom; font-weight: bold">Cash flow from financing activities<BR></TD>

          <TD ROWSPAN="1" STYLE="width: 6px; vertical-align: text-bottom; text-align: center"><!-- GUTTER -->&nbsp;</TD>

          <TD ROWSPAN="1" STYLE="width: 6px; vertical-align: text-bottom; text-align: left"><!-- $ -->&nbsp;</TD>

          <TD ROWSPAN="1" COLSPAN="1" STYLE="vertical-align: text-bottom; text-align: right">&nbsp;&nbsp;</TD>

          <TD STYLE="white-space: nowrap; vertical-align: text-bottom; text-align: left"><!-- PERCENT -->&nbsp;</TD>

          <TD ROWSPAN="1" STYLE="width: 6px; vertical-align: text-bottom; text-align: center"><!-- GUTTER -->&nbsp;</TD>

          <TD ROWSPAN="1" STYLE="width: 6px; vertical-align: text-bottom; text-align: left"><!-- $ -->&nbsp;</TD>

          <TD ROWSPAN="1" COLSPAN="1" STYLE="vertical-align: text-bottom; text-align: right">&nbsp;&nbsp;</TD>

          <TD STYLE="white-space: nowrap; vertical-align: text-bottom; text-align: left"><!-- PERCENT -->&nbsp;</TD>

          <TD ROWSPAN="1" STYLE="width: 6px; vertical-align: text-bottom; text-align: center"><!-- GUTTER -->&nbsp;</TD>

          <TD ROWSPAN="1" STYLE="width: 6px; vertical-align: text-bottom; text-align: left"><!-- $ -->&nbsp;</TD>

          <TD ROWSPAN="1" COLSPAN="1" STYLE="vertical-align: text-bottom; text-align: right">&nbsp;&nbsp;</TD>

          <TD STYLE="white-space: nowrap; vertical-align: text-bottom; text-align: left"><!-- PERCENT -->&nbsp;</TD>

</TR>

<TR STYLE="background-color: #CCFFCC">

          <TD ROWSPAN="1" COLSPAN="1" STYLE="padding-left: 20pt; text-indent: -10pt; vertical-align: text-bottom">Proceeds from issuance of senior notes and common shares to related parties on July 26, 2012 and on June 2012 private placement</TD>

          <TD ROWSPAN="1" STYLE="width: 6px; vertical-align: text-bottom; text-align: center"><!-- GUTTER -->&nbsp;</TD>

          <TD ROWSPAN="1" STYLE="width: 6px; vertical-align: text-bottom; text-align: left"><!-- $ -->&nbsp;</TD>

          <TD ROWSPAN="1" COLSPAN="1" STYLE="vertical-align: text-bottom; text-align: right">3,627</TD>

          <TD STYLE="white-space: nowrap; vertical-align: text-bottom; text-align: left"><!-- PERCENT -->&nbsp;</TD>

          <TD ROWSPAN="1" STYLE="width: 6px; vertical-align: text-bottom; text-align: center"><!-- GUTTER -->&nbsp;</TD>

          <TD ROWSPAN="1" STYLE="width: 6px; vertical-align: text-bottom; text-align: left"><!-- $ -->&nbsp;</TD>

          <TD ROWSPAN="1" COLSPAN="1" STYLE="vertical-align: text-bottom; text-align: right">750</TD>

          <TD STYLE="white-space: nowrap; vertical-align: text-bottom; text-align: left"><!-- PERCENT -->&nbsp;</TD>

          <TD ROWSPAN="1" STYLE="width: 6px; vertical-align: text-bottom; text-align: center"><!-- GUTTER -->&nbsp;</TD>

          <TD ROWSPAN="1" STYLE="width: 6px; vertical-align: text-bottom; text-align: left"><!-- $ -->&nbsp;</TD>

          <TD ROWSPAN="1" COLSPAN="1" STYLE="vertical-align: text-bottom; text-align: right">4,377</TD>

          <TD STYLE="white-space: nowrap; vertical-align: text-bottom; text-align: left"><!-- PERCENT -->&nbsp;</TD>

</TR>

<TR STYLE="background-color: white">

          <TD ROWSPAN="1" COLSPAN="1" STYLE="padding-left: 20pt; text-indent: -10pt; vertical-align: text-bottom">Proceeds from exercise of warrants</TD>

          <TD ROWSPAN="1" STYLE="width: 6px; vertical-align: text-bottom; text-align: center"><!-- GUTTER -->&nbsp;</TD>

          <TD ROWSPAN="1" STYLE="width: 6px; vertical-align: text-bottom; text-align: left"><!-- $ -->&nbsp;</TD>

          <TD ROWSPAN="1" COLSPAN="1" STYLE="vertical-align: text-bottom; text-align: right">&#151;</TD>

          <TD STYLE="white-space: nowrap; vertical-align: text-bottom; text-align: left"><!-- PERCENT -->&nbsp;</TD>

          <TD ROWSPAN="1" STYLE="width: 6px; vertical-align: text-bottom; text-align: center"><!-- GUTTER -->&nbsp;</TD>

          <TD ROWSPAN="1" STYLE="width: 6px; vertical-align: text-bottom; text-align: left"><!-- $ -->&nbsp;</TD>

          <TD ROWSPAN="1" COLSPAN="1" STYLE="vertical-align: text-bottom; text-align: right">5,625</TD>

          <TD STYLE="white-space: nowrap; vertical-align: text-bottom; text-align: left"><!-- PERCENT -->&nbsp;</TD>

          <TD ROWSPAN="1" STYLE="width: 6px; vertical-align: text-bottom; text-align: center"><!-- GUTTER -->&nbsp;</TD>

          <TD ROWSPAN="1" STYLE="width: 6px; vertical-align: text-bottom; text-align: left"><!-- $ -->&nbsp;</TD>

          <TD ROWSPAN="1" COLSPAN="1" STYLE="vertical-align: text-bottom; text-align: right">5,625</TD>

          <TD STYLE="white-space: nowrap; vertical-align: text-bottom; text-align: left"><!-- PERCENT -->&nbsp;</TD>

</TR>

<TR STYLE="background-color: #CCFFCC">

          <TD ROWSPAN="1" COLSPAN="1" STYLE="padding-left: 20pt; text-indent: -10pt; vertical-align: text-bottom; border-bottom: white 1pt solid">Net proceeds from issuance of shares of common stock</TD>

          <TD ROWSPAN="1" STYLE="width: 6px; vertical-align: text-bottom; text-align: center; border-bottom: white 1pt solid"><!-- GUTTER -->&nbsp;</TD>

          <TD ROWSPAN="1" STYLE="width: 6px; vertical-align: text-bottom; text-align: left; border-bottom: black 1pt solid"><!-- $ -->&nbsp;</TD>

          <TD ROWSPAN="1" COLSPAN="1" STYLE="vertical-align: text-bottom; text-align: right; border-bottom: black 1pt solid">&#151;</TD>

          <TD STYLE="white-space: nowrap; vertical-align: text-bottom; text-align: left; border-bottom: white 1pt solid"><!-- PERCENT -->&nbsp;</TD>

          <TD ROWSPAN="1" STYLE="width: 6px; vertical-align: text-bottom; text-align: center; border-bottom: white 1pt solid"><!-- GUTTER -->&nbsp;</TD>

          <TD ROWSPAN="1" STYLE="width: 6px; vertical-align: text-bottom; text-align: left; border-bottom: black 1pt solid"><!-- $ -->&nbsp;</TD>

          <TD ROWSPAN="1" COLSPAN="1" STYLE="vertical-align: text-bottom; text-align: right; border-bottom: black 1pt solid">5,086</TD>

          <TD STYLE="white-space: nowrap; vertical-align: text-bottom; text-align: left; border-bottom: white 1pt solid"><!-- PERCENT -->&nbsp;</TD>

          <TD ROWSPAN="1" STYLE="width: 6px; vertical-align: text-bottom; text-align: center; border-bottom: white 1pt solid"><!-- GUTTER -->&nbsp;</TD>

          <TD ROWSPAN="1" STYLE="width: 6px; vertical-align: text-bottom; text-align: left; border-bottom: black 1pt solid"><!-- $ -->&nbsp;</TD>

          <TD ROWSPAN="1" COLSPAN="1" STYLE="vertical-align: text-bottom; text-align: right; border-bottom: black 1pt solid">5,086</TD>

          <TD STYLE="white-space: nowrap; vertical-align: text-bottom; text-align: left; border-bottom: white 1pt solid"><!-- PERCENT -->&nbsp;</TD>

</TR>

<TR STYLE="background-color: white">

          <TD ROWSPAN="1" COLSPAN="1" STYLE="padding-left: 10pt; text-indent: -10pt; vertical-align: text-bottom; font-weight: bold; border-bottom: white 1pt solid">Cash flow provided from financing activities</TD>

          <TD ROWSPAN="1" STYLE="width: 6px; vertical-align: text-bottom; text-align: center; border-bottom: white 1pt solid"><!-- GUTTER -->&nbsp;</TD>

          <TD ROWSPAN="1" STYLE="width: 6px; vertical-align: text-bottom; text-align: left; border-bottom: black 1pt solid"><!-- $ -->&nbsp;</TD>

          <TD ROWSPAN="1" COLSPAN="1" STYLE="vertical-align: text-bottom; text-align: right; border-bottom: black 1pt solid">3,627</TD>

          <TD STYLE="white-space: nowrap; vertical-align: text-bottom; text-align: left; border-bottom: white 1pt solid"><!-- PERCENT -->&nbsp;</TD>

          <TD ROWSPAN="1" STYLE="width: 6px; vertical-align: text-bottom; text-align: center; border-bottom: white 1pt solid"><!-- GUTTER -->&nbsp;</TD>

          <TD ROWSPAN="1" STYLE="width: 6px; vertical-align: text-bottom; text-align: left; border-bottom: black 1pt solid"><!-- $ -->&nbsp;</TD>

          <TD ROWSPAN="1" COLSPAN="1" STYLE="vertical-align: text-bottom; text-align: right; border-bottom: black 1pt solid">11,461</TD>

          <TD STYLE="white-space: nowrap; vertical-align: text-bottom; text-align: left; border-bottom: white 1pt solid"><!-- PERCENT -->&nbsp;</TD>

          <TD ROWSPAN="1" STYLE="width: 6px; vertical-align: text-bottom; text-align: center; border-bottom: white 1pt solid"><!-- GUTTER -->&nbsp;</TD>

          <TD ROWSPAN="1" STYLE="width: 6px; vertical-align: text-bottom; text-align: left; border-bottom: black 1pt solid"><!-- $ -->&nbsp;</TD>

          <TD ROWSPAN="1" COLSPAN="1" STYLE="vertical-align: text-bottom; text-align: right; border-bottom: black 1pt solid">15,088</TD>

          <TD STYLE="white-space: nowrap; vertical-align: text-bottom; text-align: left; border-bottom: white 1pt solid"><!-- PERCENT -->&nbsp;</TD>

</TR>

<TR STYLE="background-color: #CCFFCC">

          <TD ROWSPAN="1" COLSPAN="1" STYLE="padding-left: 10pt; text-indent: -10pt; vertical-align: text-bottom">Net increase in cash</TD>

          <TD ROWSPAN="1" STYLE="width: 6px; vertical-align: text-bottom; text-align: center"><!-- GUTTER -->&nbsp;</TD>

          <TD ROWSPAN="1" STYLE="width: 6px; vertical-align: text-bottom; text-align: left"><!-- $ -->&nbsp;</TD>

          <TD ROWSPAN="1" COLSPAN="1" STYLE="vertical-align: text-bottom; text-align: right">3,627</TD>

          <TD STYLE="white-space: nowrap; vertical-align: text-bottom; text-align: left"><!-- PERCENT -->&nbsp;</TD>

          <TD ROWSPAN="1" STYLE="width: 6px; vertical-align: text-bottom; text-align: center"><!-- GUTTER -->&nbsp;</TD>

          <TD ROWSPAN="1" STYLE="width: 6px; vertical-align: text-bottom; text-align: left"><!-- $ -->&nbsp;</TD>

          <TD ROWSPAN="1" COLSPAN="1" STYLE="vertical-align: text-bottom; text-align: right">6,404</TD>

          <TD STYLE="white-space: nowrap; vertical-align: text-bottom; text-align: left"><!-- PERCENT -->&nbsp;</TD>

          <TD ROWSPAN="1" STYLE="width: 6px; vertical-align: text-bottom; text-align: center"><!-- GUTTER -->&nbsp;</TD>

          <TD ROWSPAN="1" STYLE="width: 6px; vertical-align: text-bottom; text-align: left"><!-- $ -->&nbsp;</TD>

          <TD ROWSPAN="1" COLSPAN="1" STYLE="vertical-align: text-bottom; text-align: right">10,031</TD>

          <TD STYLE="white-space: nowrap; vertical-align: text-bottom; text-align: left"><!-- PERCENT -->&nbsp;</TD>

</TR>

<TR STYLE="background-color: white">

          <TD ROWSPAN="1" COLSPAN="1" STYLE="padding-left: 10pt; text-indent: -10pt; vertical-align: text-bottom; border-bottom: white 1pt solid">Cash at the beginning of the period</TD>

          <TD ROWSPAN="1" STYLE="width: 6px; vertical-align: text-bottom; text-align: center; border-bottom: white 1pt solid"><!-- GUTTER -->&nbsp;</TD>

          <TD ROWSPAN="1" STYLE="width: 6px; vertical-align: text-bottom; text-align: left; border-bottom: black 1pt solid"><!-- $ -->&nbsp;</TD>

          <TD ROWSPAN="1" COLSPAN="1" STYLE="vertical-align: text-bottom; text-align: right; border-bottom: black 1pt solid">&#151;</TD>

          <TD STYLE="white-space: nowrap; vertical-align: text-bottom; text-align: left; border-bottom: white 1pt solid"><!-- PERCENT -->&nbsp;</TD>

          <TD ROWSPAN="1" STYLE="width: 6px; vertical-align: text-bottom; text-align: center; border-bottom: white 1pt solid"><!-- GUTTER -->&nbsp;</TD>

          <TD ROWSPAN="1" STYLE="width: 6px; vertical-align: text-bottom; text-align: left; border-bottom: black 1pt solid"><!-- $ -->&nbsp;</TD>

          <TD ROWSPAN="1" COLSPAN="1" STYLE="vertical-align: text-bottom; text-align: right; border-bottom: black 1pt solid">3,627</TD>

          <TD STYLE="white-space: nowrap; vertical-align: text-bottom; text-align: left; border-bottom: white 1pt solid"><!-- PERCENT -->&nbsp;</TD>

          <TD ROWSPAN="1" STYLE="width: 6px; vertical-align: text-bottom; text-align: center; border-bottom: white 1pt solid"><!-- GUTTER -->&nbsp;</TD>

          <TD ROWSPAN="1" STYLE="width: 6px; vertical-align: text-bottom; text-align: left; border-bottom: black 1pt solid"><!-- $ -->&nbsp;</TD>

          <TD ROWSPAN="1" COLSPAN="1" STYLE="vertical-align: text-bottom; text-align: right; border-bottom: black 1pt solid">&#151;</TD>

          <TD STYLE="white-space: nowrap; vertical-align: text-bottom; text-align: left; border-bottom: white 1pt solid"><!-- PERCENT -->&nbsp;</TD>

</TR>

<TR STYLE="background-color: #CCFFCC">

          <TD ROWSPAN="1" COLSPAN="1" STYLE="padding-left: 10pt; text-indent: -10pt; vertical-align: text-bottom; border-bottom: white 3pt double">Cash at the end of the period</TD>

          <TD ROWSPAN="1" STYLE="width: 6px; vertical-align: text-bottom; text-align: center; border-bottom: white 3pt double"><!-- GUTTER -->&nbsp;</TD>

          <TD ROWSPAN="1" STYLE="width: 6px; vertical-align: text-bottom; text-align: left; border-bottom: black 3pt double"><!-- $ -->$</TD>

          <TD ROWSPAN="1" COLSPAN="1" STYLE="vertical-align: text-bottom; text-align: right; border-bottom: black 3pt double"> 3,627</TD>

          <TD STYLE="white-space: nowrap; vertical-align: text-bottom; text-align: left; border-bottom: white 3pt double"><!-- PERCENT -->&nbsp;</TD>

          <TD ROWSPAN="1" STYLE="width: 6px; vertical-align: text-bottom; text-align: center; border-bottom: white 3pt double"><!-- GUTTER -->&nbsp;</TD>

          <TD ROWSPAN="1" STYLE="width: 6px; vertical-align: text-bottom; text-align: left; border-bottom: black 3pt double"><!-- $ -->$</TD>

          <TD ROWSPAN="1" COLSPAN="1" STYLE="vertical-align: text-bottom; text-align: right; border-bottom: black 3pt double"> 10,031</TD>

          <TD STYLE="white-space: nowrap; vertical-align: text-bottom; text-align: left; border-bottom: white 3pt double"><!-- PERCENT -->&nbsp;</TD>

          <TD ROWSPAN="1" STYLE="width: 6px; vertical-align: text-bottom; text-align: center; border-bottom: white 3pt double"><!-- GUTTER -->&nbsp;</TD>

          <TD ROWSPAN="1" STYLE="width: 6px; vertical-align: text-bottom; text-align: left; border-bottom: black 3pt double"><!-- $ -->$</TD>

          <TD ROWSPAN="1" COLSPAN="1" STYLE="vertical-align: text-bottom; text-align: right; border-bottom: black 3pt double"> 10,031</TD>

          <TD STYLE="white-space: nowrap; vertical-align: text-bottom; text-align: left; border-bottom: white 3pt double"><!-- PERCENT -->&nbsp;</TD>

</TR>

<TR STYLE="background-color: white">

          <TD ROWSPAN="1" COLSPAN="1" STYLE="padding-left: 10pt; text-indent: -10pt; vertical-align: text-bottom; font-weight: bold">Supplemental Disclosure of Cash Flow Information:<BR></TD>

          <TD ROWSPAN="1" STYLE="width: 6px; vertical-align: text-bottom; text-align: center"><!-- GUTTER -->&nbsp;</TD>

          <TD ROWSPAN="1" STYLE="width: 6px; vertical-align: text-bottom; text-align: left"><!-- $ -->&nbsp;</TD>

          <TD ROWSPAN="1" COLSPAN="1" STYLE="vertical-align: text-bottom; text-align: right">&nbsp;&nbsp;</TD>

          <TD STYLE="white-space: nowrap; vertical-align: text-bottom; text-align: left"><!-- PERCENT -->&nbsp;</TD>

          <TD ROWSPAN="1" STYLE="width: 6px; vertical-align: text-bottom; text-align: center"><!-- GUTTER -->&nbsp;</TD>

          <TD ROWSPAN="1" STYLE="width: 6px; vertical-align: text-bottom; text-align: left"><!-- $ -->&nbsp;</TD>

          <TD ROWSPAN="1" COLSPAN="1" STYLE="vertical-align: text-bottom; text-align: right">&nbsp;&nbsp;</TD>

          <TD STYLE="white-space: nowrap; vertical-align: text-bottom; text-align: left"><!-- PERCENT -->&nbsp;</TD>

          <TD ROWSPAN="1" STYLE="width: 6px; vertical-align: text-bottom; text-align: center"><!-- GUTTER -->&nbsp;</TD>

          <TD ROWSPAN="1" STYLE="width: 6px; vertical-align: text-bottom; text-align: left"><!-- $ -->&nbsp;</TD>

          <TD ROWSPAN="1" COLSPAN="1" STYLE="vertical-align: text-bottom; text-align: right">&nbsp;&nbsp;</TD>

          <TD STYLE="white-space: nowrap; vertical-align: text-bottom; text-align: left"><!-- PERCENT -->&nbsp;</TD>

</TR>

<TR STYLE="background-color: #CCFFCC">

          <TD ROWSPAN="1" COLSPAN="1" STYLE="padding-left: 20pt; text-indent: -10pt; vertical-align: text-bottom; border-bottom: white 3pt double">Cash paid for income taxes</TD>

          <TD ROWSPAN="1" STYLE="width: 6px; vertical-align: text-bottom; text-align: center; border-bottom: white 3pt double"><!-- GUTTER -->&nbsp;</TD>

          <TD ROWSPAN="1" STYLE="width: 6px; vertical-align: text-bottom; text-align: left; border-bottom: black 3pt double"><!-- $ -->$</TD>

          <TD ROWSPAN="1" COLSPAN="1" STYLE="vertical-align: text-bottom; text-align: right; border-bottom: black 3pt double">&#151;</TD>

          <TD STYLE="white-space: nowrap; vertical-align: text-bottom; text-align: left; border-bottom: white 3pt double"><!-- PERCENT -->&nbsp;</TD>

          <TD ROWSPAN="1" STYLE="width: 6px; vertical-align: text-bottom; text-align: center; border-bottom: white 3pt double"><!-- GUTTER -->&nbsp;</TD>

          <TD ROWSPAN="1" STYLE="width: 6px; vertical-align: text-bottom; text-align: left; border-bottom: black 3pt double"><!-- $ -->$</TD>

          <TD ROWSPAN="1" COLSPAN="1" STYLE="vertical-align: text-bottom; text-align: right; border-bottom: black 3pt double">&#151;</TD>

          <TD STYLE="white-space: nowrap; vertical-align: text-bottom; text-align: left; border-bottom: white 3pt double"><!-- PERCENT -->&nbsp;</TD>

          <TD ROWSPAN="1" STYLE="width: 6px; vertical-align: text-bottom; text-align: center; border-bottom: white 3pt double"><!-- GUTTER -->&nbsp;</TD>

          <TD ROWSPAN="1" STYLE="width: 6px; vertical-align: text-bottom; text-align: left; border-bottom: black 3pt double"><!-- $ -->$</TD>

          <TD ROWSPAN="1" COLSPAN="1" STYLE="vertical-align: text-bottom; text-align: right; border-bottom: black 3pt double">&#151;</TD>

          <TD STYLE="white-space: nowrap; vertical-align: text-bottom; text-align: left; border-bottom: white 3pt double"><!-- PERCENT -->&nbsp;</TD>

</TR>

<TR STYLE="background-color: white">

          <TD ROWSPAN="1" COLSPAN="1" STYLE="padding-left: 20pt; text-indent: -10pt; vertical-align: text-bottom; border-bottom: white 3pt double">Cash paid for interest</TD>

          <TD ROWSPAN="1" STYLE="width: 6px; vertical-align: text-bottom; text-align: center; border-bottom: white 3pt double"><!-- GUTTER -->&nbsp;</TD>

          <TD ROWSPAN="1" STYLE="width: 6px; vertical-align: text-bottom; text-align: left; border-bottom: black 3pt double"><!-- $ -->$</TD>

          <TD ROWSPAN="1" COLSPAN="1" STYLE="vertical-align: text-bottom; text-align: right; border-bottom: black 3pt double">&#151;</TD>

          <TD STYLE="white-space: nowrap; vertical-align: text-bottom; text-align: left; border-bottom: white 3pt double"><!-- PERCENT -->&nbsp;</TD>

          <TD ROWSPAN="1" STYLE="width: 6px; vertical-align: text-bottom; text-align: center; border-bottom: white 3pt double"><!-- GUTTER -->&nbsp;</TD>

          <TD ROWSPAN="1" STYLE="width: 6px; vertical-align: text-bottom; text-align: left; border-bottom: black 3pt double"><!-- $ -->$</TD>

          <TD ROWSPAN="1" COLSPAN="1" STYLE="vertical-align: text-bottom; text-align: right; border-bottom: black 3pt double">&#151;</TD>

          <TD STYLE="white-space: nowrap; vertical-align: text-bottom; text-align: left; border-bottom: white 3pt double"><!-- PERCENT -->&nbsp;</TD>

          <TD ROWSPAN="1" STYLE="width: 6px; vertical-align: text-bottom; text-align: center; border-bottom: white 3pt double"><!-- GUTTER -->&nbsp;</TD>

          <TD ROWSPAN="1" STYLE="width: 6px; vertical-align: text-bottom; text-align: left; border-bottom: black 3pt double"><!-- $ -->$</TD>

          <TD ROWSPAN="1" COLSPAN="1" STYLE="vertical-align: text-bottom; text-align: right; border-bottom: black 3pt double">&#151;</TD>

          <TD STYLE="white-space: nowrap; vertical-align: text-bottom; text-align: left; border-bottom: white 3pt double"><!-- PERCENT -->&nbsp;</TD>

</TR>

<TR STYLE="background-color: #CCFFCC">

          <TD ROWSPAN="1" COLSPAN="1" STYLE="padding-left: 10pt; text-indent: -10pt; vertical-align: text-bottom; font-weight: bold">Non-Cash investing and financing activities:<BR></TD>

          <TD ROWSPAN="1" STYLE="width: 6px; vertical-align: text-bottom; text-align: center"><!-- GUTTER -->&nbsp;</TD>

          <TD ROWSPAN="1" STYLE="width: 6px; vertical-align: text-bottom; text-align: left"><!-- $ -->&nbsp;</TD>

          <TD ROWSPAN="1" COLSPAN="1" STYLE="vertical-align: text-bottom; text-align: right">&nbsp;&nbsp;</TD>

          <TD STYLE="white-space: nowrap; vertical-align: text-bottom; text-align: left"><!-- PERCENT -->&nbsp;</TD>

          <TD ROWSPAN="1" STYLE="width: 6px; vertical-align: text-bottom; text-align: center"><!-- GUTTER -->&nbsp;</TD>

          <TD ROWSPAN="1" STYLE="width: 6px; vertical-align: text-bottom; text-align: left"><!-- $ -->&nbsp;</TD>

          <TD ROWSPAN="1" COLSPAN="1" STYLE="vertical-align: text-bottom; text-align: right">&nbsp;&nbsp;</TD>

          <TD STYLE="white-space: nowrap; vertical-align: text-bottom; text-align: left"><!-- PERCENT -->&nbsp;</TD>

          <TD ROWSPAN="1" STYLE="width: 6px; vertical-align: text-bottom; text-align: center"><!-- GUTTER -->&nbsp;</TD>

          <TD ROWSPAN="1" STYLE="width: 6px; vertical-align: text-bottom; text-align: left"><!-- $ -->&nbsp;</TD>

          <TD ROWSPAN="1" COLSPAN="1" STYLE="vertical-align: text-bottom; text-align: right">&nbsp;&nbsp;</TD>

          <TD STYLE="white-space: nowrap; vertical-align: text-bottom; text-align: left"><!-- PERCENT -->&nbsp;</TD>

</TR>

<TR STYLE="background-color: white">

          <TD ROWSPAN="1" COLSPAN="1" STYLE="padding-left: 10pt; text-indent: -10pt; vertical-align: text-bottom; border-bottom: white 3pt double">Liability&nbsp;&#150;&nbsp;Patents</TD>

          <TD ROWSPAN="1" STYLE="width: 6px; vertical-align: text-bottom; text-align: center; border-bottom: white 3pt double"><!-- GUTTER -->&nbsp;</TD>

          <TD ROWSPAN="1" STYLE="width: 6px; vertical-align: text-bottom; text-align: left; border-bottom: black 3pt double"><!-- $ -->$</TD>

          <TD ROWSPAN="1" COLSPAN="1" STYLE="vertical-align: text-bottom; text-align: right; border-bottom: black 3pt double"> 45</TD>

          <TD STYLE="white-space: nowrap; vertical-align: text-bottom; text-align: left; border-bottom: white 3pt double"><!-- PERCENT -->&nbsp;</TD>

          <TD ROWSPAN="1" STYLE="width: 6px; vertical-align: text-bottom; text-align: center; border-bottom: white 3pt double"><!-- GUTTER -->&nbsp;</TD>

          <TD ROWSPAN="1" STYLE="width: 6px; vertical-align: text-bottom; text-align: left; border-bottom: black 3pt double"><!-- $ -->$</TD>

          <TD ROWSPAN="1" COLSPAN="1" STYLE="vertical-align: text-bottom; text-align: right; border-bottom: black 3pt double">&#151;</TD>

          <TD STYLE="white-space: nowrap; vertical-align: text-bottom; text-align: left; border-bottom: white 3pt double"><!-- PERCENT -->&nbsp;</TD>

          <TD ROWSPAN="1" STYLE="width: 6px; vertical-align: text-bottom; text-align: center; border-bottom: white 3pt double"><!-- GUTTER -->&nbsp;</TD>

          <TD ROWSPAN="1" STYLE="width: 6px; vertical-align: text-bottom; text-align: left; border-bottom: black 3pt double"><!-- $ -->$</TD>

          <TD ROWSPAN="1" COLSPAN="1" STYLE="vertical-align: text-bottom; text-align: right; border-bottom: black 3pt double"> 45</TD>

          <TD STYLE="white-space: nowrap; vertical-align: text-bottom; text-align: left; border-bottom: white 3pt double"><!-- PERCENT -->&nbsp;</TD>

</TR>

<TR STYLE="background-color: #CCFFCC">

          <TD ROWSPAN="1" COLSPAN="1" STYLE="padding-left: 10pt; text-indent: -10pt; vertical-align: text-bottom; border-bottom: white 3pt double">Conversion of senior notes into shares of common stock</TD>

          <TD ROWSPAN="1" STYLE="width: 6px; vertical-align: text-bottom; text-align: center; border-bottom: white 3pt double"><!-- GUTTER -->&nbsp;</TD>

          <TD ROWSPAN="1" STYLE="width: 6px; vertical-align: text-bottom; text-align: left; border-bottom: black 3pt double"><!-- $ -->$</TD>

          <TD ROWSPAN="1" COLSPAN="1" STYLE="vertical-align: text-bottom; text-align: right; border-bottom: black 3pt double">&#151;</TD>

          <TD STYLE="white-space: nowrap; vertical-align: text-bottom; text-align: left; border-bottom: white 3pt double"><!-- PERCENT -->&nbsp;</TD>

          <TD ROWSPAN="1" STYLE="width: 6px; vertical-align: text-bottom; text-align: center; border-bottom: white 3pt double"><!-- GUTTER -->&nbsp;</TD>

          <TD ROWSPAN="1" STYLE="width: 6px; vertical-align: text-bottom; text-align: left; border-bottom: black 3pt double"><!-- $ -->$</TD>

          <TD ROWSPAN="1" COLSPAN="1" STYLE="vertical-align: text-bottom; text-align: right; border-bottom: black 3pt double"> 937</TD>

          <TD STYLE="white-space: nowrap; vertical-align: text-bottom; text-align: left; border-bottom: white 3pt double"><!-- PERCENT -->&nbsp;</TD>

          <TD ROWSPAN="1" STYLE="width: 6px; vertical-align: text-bottom; text-align: center; border-bottom: white 3pt double"><!-- GUTTER -->&nbsp;</TD>

          <TD ROWSPAN="1" STYLE="width: 6px; vertical-align: text-bottom; text-align: left; border-bottom: black 3pt double"><!-- $ -->$</TD>

          <TD ROWSPAN="1" COLSPAN="1" STYLE="vertical-align: text-bottom; text-align: right; border-bottom: black 3pt double"> 937</TD>

          <TD STYLE="white-space: nowrap; vertical-align: text-bottom; text-align: left; border-bottom: white 3pt double"><!-- PERCENT -->&nbsp;</TD>

</TR>

<TR STYLE="background-color: white">

          <TD ROWSPAN="1" COLSPAN="1" STYLE="padding-left: 10pt; text-indent: -10pt; vertical-align: text-bottom; border-bottom: white 3pt double">Reclassification of warrant liability upon<BR> exercise of warrants</TD>

          <TD ROWSPAN="1" STYLE="width: 6px; vertical-align: text-bottom; text-align: center; border-bottom: white 3pt double"><!-- GUTTER -->&nbsp;</TD>

          <TD ROWSPAN="1" STYLE="width: 6px; vertical-align: text-bottom; text-align: left; border-bottom: black 3pt double"><!-- $ -->$</TD>

          <TD ROWSPAN="1" COLSPAN="1" STYLE="vertical-align: text-bottom; text-align: right; border-bottom: black 3pt double">&#151;</TD>

          <TD STYLE="white-space: nowrap; vertical-align: text-bottom; text-align: left; border-bottom: white 3pt double"><!-- PERCENT -->&nbsp;</TD>

          <TD ROWSPAN="1" STYLE="width: 6px; vertical-align: text-bottom; text-align: center; border-bottom: white 3pt double"><!-- GUTTER -->&nbsp;</TD>

          <TD ROWSPAN="1" STYLE="width: 6px; vertical-align: text-bottom; text-align: left; border-bottom: black 3pt double"><!-- $ -->$</TD>

          <TD ROWSPAN="1" COLSPAN="1" STYLE="vertical-align: text-bottom; text-align: right; border-bottom: black 3pt double"> 5,625</TD>

          <TD STYLE="white-space: nowrap; vertical-align: text-bottom; text-align: left; border-bottom: white 3pt double"><!-- PERCENT -->&nbsp;</TD>

          <TD ROWSPAN="1" STYLE="width: 6px; vertical-align: text-bottom; text-align: center; border-bottom: white 3pt double"><!-- GUTTER -->&nbsp;</TD>

          <TD ROWSPAN="1" STYLE="width: 6px; vertical-align: text-bottom; text-align: left; border-bottom: black 3pt double"><!-- $ -->$</TD>

          <TD ROWSPAN="1" COLSPAN="1" STYLE="vertical-align: text-bottom; text-align: right; border-bottom: black 3pt double"> 5,625</TD>

          <TD STYLE="white-space: nowrap; vertical-align: text-bottom; text-align: left; border-bottom: white 3pt double"><!-- PERCENT -->&nbsp;</TD>

</TR>

</TABLE></DIV>

<P STYLE="text-indent: 0pt; text-align: center; font: normal 10pt/12pt Times New Roman, Times, Serif; margin: 0pt; padding: 3pt 0pt 3pt 4px; text-transform: none">&nbsp;<BR>&nbsp;<BR>The accompanying notes are an integral part of the condensed consolidated financial statements. </P>

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<H1 STYLE="text-indent: 0pt; text-align: center; font: normal bold 10pt/12pt Times New Roman, Times, Serif; margin: 0pt; padding: 9pt 0pt 3pt; text-transform: none">LEXINGTON TECHNOLOGY GROUP, INC. AND SUBSIDIARY<BR> (A Development Stage Company)<BR>&nbsp;&nbsp;<BR> Notes to Consolidated Financial Statements </H1>

<H2 STYLE="text-indent: 0pt; text-align: left; font: normal bold 10pt/12pt Times New Roman, Times, Serif; margin: 0pt; padding: 5pt 0pt 3pt 4px; text-transform: none">NOTE 1&nbsp;&#151;&nbsp;ORGANIZATION AND NATURE OF BUSINESS </H2>

<H3 STYLE="text-indent: 0pt; text-align: left; font: normal italic bold 10pt/12pt Times New Roman, Times, Serif; margin: 0pt; padding: 5pt 0pt 3pt 4px; text-transform: none">Organization &amp; Business Activities </H3>

<P STYLE="text-indent: 20px; text-align: left; font: normal 10pt/12pt Times New Roman, Times, Serif; margin: 0pt; padding: 3pt 0pt 3pt 4px; text-transform: none">Lexington Technology Group, Inc. (&#147;LTG&#148; or &#147;the Company&#148; or the &#147;Parent&#148;), was incorporated as a Delaware corporation on May 10, 2012 under the name Snip Inc. On September 10, 2012, Snip Inc. changed its name to Lexington Technology Group, Inc. LTG is a holding company that owns 100% of the membership interests of Bascom Research, LLC (&#147;Bascom&#148;). Bascom was incorporated in Virginia on June 6, 2012 under the name of Bascom Linking Intellectual Property, LLC, for the purpose of acquiring and/or developing patented technologies and intellectual property. On August 29, 2012, Bascom Linking
Intellectual Property, LLC changed its name to Bascom Research, LLC. LTG and its wholly-owned subsidiary Bascom are herein collectively referred to as the &#147;Company&#148;.</P>

<P STYLE="text-indent: 20px; text-align: left; font: normal 10pt/12pt Times New Roman, Times, Serif; margin: 0pt; padding: 3pt 0pt 3pt 4px; text-transform: none">LTG is a development stage company that has no revenues to date. LTG&#146;s strategic objective is to maximize, for inventors and investors, the economic benefits of intellectual property assets. LTG&#146;s business model is to leverage the extensive background and expertise of its management and advisors to acquire or internally develop patented technology or intellectual property assets (or interests therein), and to then monetize these assets for the benefit of its stockholders and the developers of the acquired technology through a variety of value-enhancing initiatives, including, but not limited to, investment in the
development and commercialization of patented technologies, licensing, strategic partnerships and commercial litigation. </P>

<P STYLE="text-indent: 20px; text-align: left; font: normal 10pt/12pt Times New Roman, Times, Serif; margin: 0pt; padding: 3pt 0pt 3pt 4px; text-transform: none">On October 1, 2012, the Company and Hudson Bay Master Fund Ltd. (as representative of Lexington&#146;s stockholders solely for certain purposes) entered into an Agreement and Plan of Merger with Document Security Systems, Inc (&#147;DSS&#148;). Under the planned Merger (&#147;Merger&#148;), LTG will execute a merger with Document Security Systems and its wholly-owned subsidiary, DSSIP. LTG will survive the merger as a wholly-owned subsidiary of DSS, a publically traded company, while LTG shareholders will receive DSS equity as consideration. The merger has been approved both by the Board of Directors of DSS and the Board of
Directors of LTG. The completion of the proposed merger is subject to a number of conditions, including but not necessarily limited to, the approval of the public company&#146;s stockholders. There is no assurance that the proposed merger will actually be consummated. </P>

<P STYLE="text-indent: 20px; text-align: left; font: normal 10pt/12pt Times New Roman, Times, Serif; margin: 0pt; padding: 3pt 0pt 3pt 4px; text-transform: none">Upon completion of the merger, each share of then-issued and outstanding LTG Common Stock and each share of then-issued and outstanding LTG Preferred Stock (other than shares of LTG common Stock and LTG preferred stock held in treasury or owned by DSS or any direct or indirect wholly owned subsidiary of DSS or LTG that will be canceled and retired at the Effective Time) will be automatically converted into (i) shares of DSS common stock, (ii) warrants, and (iii) a pro rata portion of 7,100,000 shares of DSS common stock to be held in (&#147;Escrow Shares&#148;) and, as applicable, shares of DSS preferred stock, determined by
multiplying each of (x) 17,250,000 shares plus the number of Additional Shares (calculated by dividing any cash held by LTG in excess of $7,500,000 (up to $1,500,000) by $3.00) and exchanged shares (shares of DSS common stock issued in the private placement to LTG), if any, (y) 4,859,894 warrants, and (z) 7,100,000 shares by a fraction, the numerator of which shall be one and the denominator of which shall be the sum of (A) the number of shares of LTG common stock plus (B) the number of LTG preferred stock.</P>

<P STYLE="text-indent: 20px; text-align: left; font: normal 10pt/12pt Times New Roman, Times, Serif; margin: 0pt; padding: 3pt 0pt 3pt 4px; text-transform: none">Immediately following the completion of the Merger, the former stockholders of LTG are expected to own approximately 51% of the outstanding common and preferred stock (if approved, or $.02 Warrants) of the combined company (on a fully-diluted basis including options and warrants without taking into effect the Beneficial Ownership Condition) and the current stockholders of DSS are expected to own approximately 49% of the outstanding common stock and preferred stock of the combined company. These calculations exclude DSS common stock held by LTG&#146;s stockholders prior to the completion of the Merger. These percentages of
ownership include the 7,100,000 shares held in escrow, which are eligible to be voted while in escrow. </P>

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<H1 STYLE="text-indent: 0pt; text-align: center; font: normal bold 10pt/12pt Times New Roman, Times, Serif; margin: 0pt; padding: 9pt 0pt 3pt; text-transform: none">LEXINGTON TECHNOLOGY GROUP, INC. AND SUBSIDIARY<BR> (A Development Stage Company)<BR>&nbsp;&nbsp;<BR> Notes to Consolidated Financial Statements </H1>

<H2 STYLE="text-indent: 0pt; text-align: left; font: normal bold 10pt/12pt Times New Roman, Times, Serif; margin: 0pt; padding: 5pt 0pt 3pt 4px; text-transform: none">NOTE 1&nbsp;&#151;&nbsp;ORGANIZATION AND NATURE OF BUSINESS &nbsp;&#150;&nbsp;(continued)</H2>

<H3 STYLE="text-indent: 0pt; text-align: left; font: normal italic bold 10pt/12pt Times New Roman, Times, Serif; margin: 0pt; padding: 5pt 0pt 3pt 4px; text-transform: none">Change in Year End </H3>

<P STYLE="text-indent: 20px; text-align: left; font: normal 10pt/12pt Times New Roman, Times, Serif; margin: 0pt; padding: 3pt 0pt 3pt 4px; text-transform: none">On December 31, 2012, LTG&#146;s Board of Directors approved a change in the Company&#146;s fiscal reporting year to a December 31<SUP>st</SUP> calendar year end from a June 30<SUP>th</SUP> fiscal year end. Accordingly, financial information presented in this report is as of and for the six months ended December 31, 2012. </P>

<H2 STYLE="text-indent: 0pt; text-align: left; font: normal bold 10pt/12pt Times New Roman, Times, Serif; margin: 0pt; padding: 5pt 0pt 3pt 4px; text-transform: none">NOTE 2&nbsp;&#151;&nbsp;LIQUIDITY AND MANAGEMENT&#146;S BUSINESS PLANS </H2>

<P STYLE="text-indent: 20px; text-align: left; font: normal 10pt/12pt Times New Roman, Times, Serif; margin: 0pt; padding: 3pt 0pt 3pt 4px; text-transform: none">The business will require significant amounts of capital to sustain operations and make the investments it needs to execute its longer term business plan. The Company has cash of $10.0 million and net working capital of $7.7 million at December 31, 2012. The Company believes that it has enough liquidity to sustain operations through at least January 1, 2014. The Company&#146;s cash and working capital amounts were derived from the proceeds of an initial financing transaction in which it raised aggregate proceeds of $4.3 million (Note 4) through the issuance of senior notes, common stock and common stock purchase warrants to
founding stockholders, proceeds of $5.6 million from the exercise of warrants by the investors and net proceeds of $5.1 million from the private placement of shares of Company&#146;s common stock. The Company&#146;s net losses for the period of May 10, 2012 (inception) through June 30, 2012, for the six months ended December 31, 2012 and for the period of May 10, 2012 (inception) through December 31, 2012 were $0.2 million, $8.8 million and $9.0 million, respectively and the deficit accumulated by the Company since inception amounts to $9.0 million. During the six month period ended December 31, 2012, the Company used $2.1 million of its available funds to purchase patents and to invest in commercialization and licensing of the patents. </P>

<P STYLE="text-indent: 20px; text-align: left; font: normal 10pt/12pt Times New Roman, Times, Serif; margin: 0pt; padding: 3pt 0pt 3pt 4px; text-transform: none">To license or otherwise monetize the patent assets LTG acquired from Thomas Bascom, LTG has commenced legal proceedings against five companies, including Facebook, Inc. and LinkedIn Corporation, pursuant to which LTG alleges that such companies infringe on one or more of LTG&#146;s patents. (See Note 4) LTG&#146;s viability is highly dependent on the outcome of this litigation, and there is a risk that LTG may be unable to achieve the results it desires from such litigation, which failure would harm LTG&#146;s business to a great degree. In addition, the defendants in this litigation are much larger than LTG and have
substantially more resources than LTG does, which could make LTG&#146;s litigation efforts more difficult.</P>

<P STYLE="text-indent: 20px; text-align: left; font: normal 10pt/12pt Times New Roman, Times, Serif; margin: 0pt; padding: 3pt 0pt 3pt 4px; text-transform: none">LTG anticipates that these legal proceedings may continue for several years and may require significant expenditures for legal fees and other expenses. Disputes regarding the assertion of patents and other intellectual property rights are highly complex and technical. Once initiated, LTG may be forced to litigate against others to enforce or defend LTG&#146;s intellectual property rights or to determine the validity and scope of other parties&#146; proprietary rights. The defendants or other third parties involved in the lawsuits in which LTG is involved may allege defenses and/or file counterclaims in an effort to avoid or
limit liability and damages for patent infringement. If such defenses or counterclaims are successful, they may have a great impact on the value of the patents and preclude LTG&#146;s ability to derive licensing revenue from the patents, or any revenue.</P>

<P STYLE="text-indent: 20px; text-align: left; font: normal 10pt/12pt Times New Roman, Times, Serif; margin: 0pt; padding: 3pt 0pt 3pt 4px; text-transform: none">Therefore, a negative outcome of any such litigation, or one or more claims contained within any such Litigation, could materially and adversely impact LTG&#146;s business. Additionally, LTG anticipates that its legal fees and other expenses will be material and will negatively impact LTG&#146;s financial condition and results of operations and may result in its inability to continue its business. LTG estimates that its legal fees over the next twelve months will be approximately $2,000,000. Expenses thereafter are dependent on the outcome of the litigation; in the event the case is appealed, legal fees over the course of the
subsequent twelve months would be approximately $2,000,000. The costs of enforcing LTG&#146;s patent rights may exceed its recoveries from such enforcement activities. In addition, the primary law firm being utilized by LTG for such litigation would be entitled to a certain percentage of any recoveries from the litigation or licensing of the patents. The inventor of the patents is likewise entitled to a percentage of such recoveries, as is IP Navigation Group, the intellectual property consulting firm engaged by LTG in connection with its efforts to acquire and monetize </P>

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<P STYLE="width: 708px; text-indent: 0px; text-align: center; font: normal 10pt/12pt Times New Roman, Times, Serif; margin: 0pt; padding: 12pt 0pt 3pt; color: black; text-transform: none; text-decoration: none">F-43</P>

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<H1 STYLE="text-indent: 0pt; text-align: center; font: normal bold 10pt/12pt Times New Roman, Times, Serif; margin: 0pt; padding: 9pt 0pt 3pt; text-transform: none">LEXINGTON TECHNOLOGY GROUP, INC. AND SUBSIDIARY<BR> (A Development Stage Company)<BR>&nbsp;&nbsp;<BR> Notes to Consolidated Financial Statements </H1>

<H2 STYLE="text-indent: 0pt; text-align: left; font: normal bold 10pt/12pt Times New Roman, Times, Serif; margin: 0pt; padding: 5pt 0pt 3pt 4px; text-transform: none">NOTE 2&nbsp;&#151;&nbsp;LIQUIDITY AND MANAGEMENT&#146;S BUSINESS PLANS &nbsp;&#150;&nbsp;(continued)</H2>

<P STYLE="text-indent: 0pt; text-align: left; font: normal 10pt/12pt Times New Roman, Times, Serif; margin: 0pt; padding: 3pt 0pt 3pt 4px; text-transform: none">this portfolio of patents. Accordingly, in order for LTG to generate a profit from its patent enforcement and monetization activities, the revenues from such enforcement and monetization activities must be high enough to offset both the cash outlays and the contingent fees payable from such revenues. LTG&#146;s failure to monetize its patent assets would significantly harm its business.</P>

<P STYLE="text-indent: 20px; text-align: left; font: normal 10pt/12pt Times New Roman, Times, Serif; margin: 0pt; padding: 3pt 0pt 3pt 4px; text-transform: none">LTG will receive between 60 to 65% of the total consideration (including cash payments, equity, assets, or any other form of consideration) received from any license, settlement, judgment or other award relating to the Bascom Research patents. For all consideration earned outside of litigation, LTG will receive 65% of the total consideration with the other 35% paid to three other parties (the &#147;Monetization Partners&#148;): (i) Kramer Levin Naftalis &amp; Frankel, LLP (&#147;Kramer Levin&#148;), which firm is national counsel for Bascom Research; (ii) IP Navigation, LLC (&#147;IP Navigation&#148;), which is the
monetization advisor for Bascom Research; and (iii) Thomas Bascom, the inventor of the Bascom Research patents. For all consideration earned within litigation but prior to the empanelment of a Jury, LTG will earn 60% of the total consideration with the other 40% paid to the Monetization Partners. For all consideration earned within litigation and after the empanelment of a jury, LTG will earn 65% of the total consideration with the other 35% paid to the Monetization Partners. Of such amounts to be paid to the Monetization Partners, LTG will pay 10% of the total consideration to Thomas Bascom pursuant to the Patent Purchase Agreement between LTG and Mr. Bascom and the remainder of such consideration shall be apportioned among Kramer Levin and IP Navigation, the service providers to LTG. LTG is not obligated to use IP Navigation with respect to any patent portfolio other than the Bascom Portfolio and LTG is free to not use IP Navigation&#146;s services in connection with the Bascom
Portfolio, provided, however, that IP Navigation will remain entitled to its share of the total consideration generated by the Bascom Portfolio unless IP Navigation materially breaches its agreement with LTG. </P>

<P STYLE="text-indent: 20px; text-align: left; font: normal 10pt/12pt Times New Roman, Times, Serif; margin: 0pt; padding: 3pt 0pt 3pt 4px; text-transform: none">Under certain circumstances, if the Merger is terminated by either DSS or LTG, then DSS will pay to LTG a termination fee in cash equal to the sum of (i) $3,000,000 plus (ii) 5% of the consideration paid to all security holders of DSS in connection with a superior proposal in the same form as such consideration is paid to such security holders. In addition, under certain circumstances, if the Merger is terminated by LTG, then LTG will pay DSS a termination fee equal to $5,000,000. </P>

<H2 STYLE="text-indent: 0pt; text-align: left; font: normal bold 10pt/12pt Times New Roman, Times, Serif; margin: 0pt; padding: 5pt 0pt 3pt 4px; text-transform: none">NOTE 3&nbsp;&#151;&nbsp;SUMMARY OF SIGNIFCANT ACCOUNTING POLICIES </H2>

<H3 STYLE="text-indent: 0pt; text-align: left; font: normal italic bold 10pt/12pt Times New Roman, Times, Serif; margin: 0pt; padding: 5pt 0pt 3pt 4px; text-transform: none">Principles of Consolidation </H3>

<P STYLE="text-indent: 20px; text-align: left; font: normal 10pt/12pt Times New Roman, Times, Serif; margin: 0pt; padding: 3pt 0pt 3pt 4px; text-transform: none">The consolidated financial statements include the accounts of LTG and its wholly-owned subsidiary. All intercompany balances and transactions have been eliminated in consolidation. </P>

<H3 STYLE="text-indent: 0pt; text-align: left; font: normal italic bold 10pt/12pt Times New Roman, Times, Serif; margin: 0pt; padding: 5pt 0pt 3pt 4px; text-transform: none">Cash and Cash Equivalents </H3>

<P STYLE="text-indent: 20px; text-align: left; font: normal 10pt/12pt Times New Roman, Times, Serif; margin: 0pt; padding: 3pt 0pt 3pt 4px; text-transform: none">For purposes of the statement of cash flows, the Company considers financial instruments with maturities of less than three months when purchased to be cash equivalents. There are no cash equivalents as of the balance sheet date. </P>

<H3 STYLE="text-indent: 0pt; text-align: left; font: normal italic bold 10pt/12pt Times New Roman, Times, Serif; margin: 0pt; padding: 5pt 0pt 3pt 4px; text-transform: none">Use of Estimates </H3>

<P STYLE="text-indent: 20px; text-align: left; font: normal 10pt/12pt Times New Roman, Times, Serif; margin: 0pt; padding: 3pt 0pt 3pt 4px; text-transform: none">The preparation of financial statements in conformity with accounting principles generally accepted in the United States of America (&#147;US GAAP&#148;) requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the consolidated financial statements and the reported amounts of revenues and expenses during the reporting period. Actual results could differ from those estimates. Key accounting estimates include the assumptions used to calculate the fair values of securities issued in the financing transaction.
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<H1 STYLE="text-indent: 0pt; text-align: center; font: normal bold 10pt/12pt Times New Roman, Times, Serif; margin: 0pt; padding: 9pt 0pt 3pt; text-transform: none">LEXINGTON TECHNOLOGY GROUP, INC. AND SUBSIDIARY<BR> (A Development Stage Company)<BR>&nbsp;&nbsp;<BR> Notes to Consolidated Financial Statements </H1>

<H2 STYLE="text-indent: 0pt; text-align: left; font: normal bold 10pt/12pt Times New Roman, Times, Serif; margin: 0pt; padding: 5pt 0pt 3pt 4px; text-transform: none">NOTE 3&nbsp;&#151;&nbsp;SUMMARY OF SIGNIFCANT ACCOUNTING POLICIES &nbsp;&#150;&nbsp;(continued)</H2>

<H3 STYLE="text-indent: 0pt; text-align: left; font: normal italic bold 10pt/12pt Times New Roman, Times, Serif; margin: 0pt; padding: 5pt 0pt 3pt 4px; text-transform: none">Development Stage Reporting </H3>

<P STYLE="text-indent: 20px; text-align: left; font: normal 10pt/12pt Times New Roman, Times, Serif; margin: 0pt; padding: 3pt 0pt 3pt 4px; text-transform: none">The Company is a development stage enterprise as defined in Accounting Standards Codification (&#147;ASC&#148;) 915 &#147;Development Stage Entities&#148; (&#147;ASC 915&#148;). The Company is currently attempting to raise additional funds it would use to purchase intellectual properties and implement its operating plan. Accordingly, the Company has not yet commenced its fully planned operations. The Company is subject to all of the risks and uncertainties that are typical in the life-cycle stage of its business. There is no assurance that the Company will be successful in its efforts to commence its fully planned operations
or that the commencement will actually result in the realization of its business objectives. </P>

<H3 STYLE="text-indent: 0pt; text-align: left; font: normal italic bold 10pt/12pt Times New Roman, Times, Serif; margin: 0pt; padding: 5pt 0pt 3pt 4px; text-transform: none">Intangible Assets </H3>

<P STYLE="text-indent: 20px; text-align: left; font: normal 10pt/12pt Times New Roman, Times, Serif; margin: 0pt; padding: 3pt 0pt 3pt 4px; text-transform: none">The Company accounts for purchases of intangible assets in accordance with the provisions of ASC 350 &#147;Intangibles&#148; (&#147;ASC 350&#148;) and ASC 360 &#147;Fixed Assets&#148; (&#147;ASC 360&#148;). The useful lives of intangible assets are determined at the date of purchase and are periodically evaluated for reasonableness. The assets will be tested for impairment at least annually, if determined to have an indefinite life, or whenever events or changes in circumstances indicate that the carrying amount may no longer be recoverable. Costs to investigate potential purchases of intangible assets will be treated as
expense when incurred, until or unless the purchase of the respective assets will be deemed viable, after which time the costs to further investigate and purchase the assets will be capitalized. Subsequent to purchase, legal and associated costs incurred in prosecuting alleged infringements of the patents will be recognized as expense when incurred. </P>

<H3 STYLE="text-indent: 0pt; text-align: left; font: normal italic bold 10pt/12pt Times New Roman, Times, Serif; margin: 0pt; padding: 5pt 0pt 3pt 4px; text-transform: none">Concentrations of Risk </H3>

<P STYLE="text-indent: 20px; text-align: left; font: normal 10pt/12pt Times New Roman, Times, Serif; margin: 0pt; padding: 3pt 0pt 3pt 4px; text-transform: none">Financial instruments that potentially subject the Company to significant concentrations of credit risk consist of cash. At times, the Company&#146;s cash balances may be uninsured or in deposit accounts that exceed the Federal Deposit Insurance Corporation (&#147;FDIC&#148;) insurance limits. As of December 31, 2012, the Company had cash and cash equivalent balances of $10.0 million in excess of the federally insured limit of $250,000. All of the Company's cash in banks at December 31, 2012 was deposited in non-interest bearing checking accounts. </P>

<H3 STYLE="text-indent: 0pt; text-align: left; font: normal italic bold 10pt/12pt Times New Roman, Times, Serif; margin: 0pt; padding: 5pt 0pt 3pt 4px; text-transform: none">Common Stock Purchase Warrants </H3>

<P STYLE="text-indent: 20px; text-align: left; font: normal 10pt/12pt Times New Roman, Times, Serif; margin: 0pt; padding: 3pt 0pt 3pt 4px; text-transform: none">The Company accounts for the issuance of common stock purchase warrants issued in connection with capital financing transactions in accordance with the provisions of ASC 815 &#147;Derivatives and Hedging&#148; (&#147;ASC 815&#148;). The Company classifies as equity any contracts that (i) require physical settlement or net-share settlement, or (ii) gives the Company a choice of net-cash settlement or settlement in its own shares (physical settlement or net-share settlement). The Company classifies as assets or liabilities any contracts that (i) require net-cash settlement (including a requirement to net-cash settle the contract
if an event occurs and if that event is outside the control of the Company), or (ii) gives the counterparty a choice of net-cash settlement or settlement in shares (physical settlement or net-share settlement). The Company also classifies as liabilities, any contracts that contain variable settlement provisions that cannot be measured as explicit or implicit inputs in a standard option pricing model. </P>

<P STYLE="text-indent: 20px; text-align: left; font: normal 10pt/12pt Times New Roman, Times, Serif; margin: 0pt; padding: 3pt 0pt 3pt 4px; text-transform: none">As more fully described in Note 4, the Company classified certain common stock purchase warrants that contain variable settlement provisions as liabilities in the accompanying consolidated balance sheet as of June 30, 2012. On August 1, 2012, the warrant holders elected to accelerate the expiration date of all the subscription warrants to August 9, 2012. On August 9, 2012, all the outstanding common stock purchase warrants were exercised and accordingly the fair value of such warrants on the date of exercise was classified to additional paid-in capital. </P>

</DIV>

<P STYLE="width: 708px; text-indent: 0px; text-align: center; font: normal 10pt/12pt Times New Roman, Times, Serif; margin: 0pt; padding: 12pt 0pt 3pt; color: black; text-transform: none; text-decoration: none">F-45</P>

<HR STYLE="width: 708px; height: 2px; text-align: center">

<DIV ID="PN" STYLE="page-break-after: always">&nbsp;</DIV>

<DIV ID="HDR">&nbsp;</DIV>

<DIV ALIGN="CENTER" STYLE="width: 708px; border: white 1pt solid; margin: 6pt 0pt; padding: 9pt 3pt 9pt 6pt">

<P STYLE="text-align: left; font: normal bold 8pt Times New Roman, Times, Serif"><A HREF="#TOC">TABLE OF CONTENTS</A></P>

<H1 STYLE="text-indent: 0pt; text-align: center; font: normal bold 10pt/12pt Times New Roman, Times, Serif; margin: 0pt; padding: 9pt 0pt 3pt; text-transform: none">LEXINGTON TECHNOLOGY GROUP, INC. AND SUBSIDIARY<BR> (A Development Stage Company)<BR>&nbsp;&nbsp;<BR> Notes to Consolidated Financial Statements </H1>

<H2 STYLE="text-indent: 0pt; text-align: left; font: normal bold 10pt/12pt Times New Roman, Times, Serif; margin: 0pt; padding: 5pt 0pt 3pt 4px; text-transform: none">NOTE 3&nbsp;&#151;&nbsp;SUMMARY OF SIGNIFCANT ACCOUNTING POLICIES &nbsp;&#150;&nbsp;(continued)</H2>

<H3 STYLE="text-indent: 0pt; text-align: left; font: normal italic bold 10pt/12pt Times New Roman, Times, Serif; margin: 0pt; padding: 5pt 0pt 3pt 4px; text-transform: none">Fair Value Measurement </H3>

<P STYLE="text-indent: 20px; text-align: left; font: normal 10pt/12pt Times New Roman, Times, Serif; margin: 0pt; padding: 3pt 0pt 3pt 4px; text-transform: none">The Company adopted Financial Accounting Standards Board (&#147;FASB&#148;) ASC 820, &#147;Fair Value Measurements and Disclosures&#148; (&#147;ASC 820&#148;), for assets and liabilities measured at fair value on a recurring basis. ASC 820 establishes a common definition for fair value to be applied to existing US GAAP that requires the use of fair value measurements which establishes a framework for measuring fair value and expands disclosure about such fair value measurements. </P>

<P STYLE="text-indent: 20px; text-align: left; font: normal 10pt/12pt Times New Roman, Times, Serif; margin: 0pt; padding: 3pt 0pt 3pt 4px; text-transform: none">ASC 820 defines fair value as the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date. Additionally, ASC 820 requires the use of valuation techniques that maximize the use of observable inputs and minimize the use of unobservable inputs. These inputs are prioritized below: </P>

<P STYLE="text-indent: 20px; text-align: left; font: normal 10pt/12pt Times New Roman, Times, Serif; margin: 0pt; padding: 3pt 0pt 3pt 4px; text-transform: none"><I>Level 1</I>:&nbsp;Observable inputs such as quoted market prices in active markets for identical assets or liabilities. </P>

<P STYLE="text-indent: 20px; text-align: left; font: normal 10pt/12pt Times New Roman, Times, Serif; margin: 0pt; padding: 3pt 0pt 3pt 4px; text-transform: none"><I>Level 2</I>:&nbsp;Observable market based inputs or unobservable inputs that are corroborated by market data. </P>

<P STYLE="text-indent: 20px; text-align: left; font: normal 10pt/12pt Times New Roman, Times, Serif; margin: 0pt; padding: 3pt 0pt 3pt 4px; text-transform: none"><I>Level 3</I>:&nbsp;Unobservable inputs for which there is little or no market data, which require the use of the reporting entity&#146;s own assumptions. </P>

<P STYLE="text-indent: 20px; text-align: left; font: normal 10pt/12pt Times New Roman, Times, Serif; margin: 0pt; padding: 3pt 0pt 3pt 4px; text-transform: none">The carrying amounts reported in the balance sheet for cash, prepaid expenses, accounts payable, and accrued expenses approximate their estimated fair value based on the short-term maturity of these instruments. The carrying amount of the notes payable at December 31, 2012, approximate their respective fair value based on the Company&#146;s incremental borrowing rate. As described in Note 5, the Company measured the fair value of the warrant liability using the Binomial Lattice option pricing model, which requires the use of significant assumptions. Accordingly, the warrant liability is classified in level 3 of the valuation
hierarchy. </P>

<P STYLE="text-indent: 20px; text-align: left; font: normal 10pt/12pt Times New Roman, Times, Serif; margin: 0pt; padding: 3pt 0pt 3pt 4px; text-transform: none">In addition, FASB ASC 825-10-25 &#147;Fair Value Option&#148; was effective for January 1, 2008. ASC 825-10-25 expands opportunities to use fair value measurements in financial reporting and permits entities to choose to measure many financial instruments and certain other items at fair value. </P>

<P STYLE="text-indent: 20px; text-align: left; font: normal 10pt/12pt Times New Roman, Times, Serif; margin: 0pt; padding: 3pt 0pt 3pt 4px; text-transform: none">The following table provides the assets and liabilities at fair value measured as of December 31, 2012 and June 30, 2012 (in thousands): </P>

<P STYLE="text-indent: 0pt; text-align: left; font: normal 10pt/12pt Times New Roman, Times, Serif; margin: 0pt; padding: 3pt 0pt 3pt 4px; text-transform: none"></P>

<DIV STYLE="text-align: center"><TABLE CELLSPACING="0" CELLPADDING="0" WIDTH="608" STYLE="vertical-align: text-bottom; text-indent: 0px; text-align: left; font: normal 10pt Times New Roman, Times, Serif; margin: -24pt 0pt 0pt; padding: 3pt 0pt; text-transform: none">

<TR>

          <TD><IMG HEIGHT="1" SRC="spacer.gif" WIDTH="210"></TD>

          <TD STYLE="width: 12px; vertical-align: text-bottom; text-align: center; border-bottom-style: none"><!-- GUTTER -->&nbsp;</TD>

          <TD COLSPAN="3"><IMG HEIGHT="1" SRC="spacer.gif" WIDTH="92"></TD>

          <TD STYLE="width: 12px; vertical-align: text-bottom; text-align: center; border-bottom-style: none"><!-- GUTTER -->&nbsp;</TD>

          <TD COLSPAN="3"><IMG HEIGHT="1" SRC="spacer.gif" WIDTH="80"></TD>

          <TD STYLE="width: 12px; vertical-align: text-bottom; text-align: center; border-bottom-style: none"><!-- GUTTER -->&nbsp;</TD>

          <TD COLSPAN="3"><IMG HEIGHT="1" SRC="spacer.gif" WIDTH="80"></TD>

          <TD STYLE="width: 12px; vertical-align: text-bottom; text-align: center; border-bottom-style: none"><!-- GUTTER -->&nbsp;</TD>

          <TD COLSPAN="3"><IMG HEIGHT="1" SRC="spacer.gif" WIDTH="98"></TD>

</TR>

<TR>

          <TD ROWSPAN="1" COLSPAN="1" STYLE="line-height: normal; vertical-align: text-bottom; font-weight: bold; font-size: 8pt; text-align: left"></TD>

          <TD ROWSPAN="1" STYLE="width: 6px; vertical-align: text-bottom; text-align: center"><!-- GUTTER -->&nbsp;</TD>

          <TD ROWSPAN="1" COLSPAN="15" STYLE="line-height: normal; vertical-align: text-bottom; font-weight: bold; font-size: 8pt; text-align: center; border-bottom: black 1pt solid">Fair value measured at December 31, 2012</TD>

</TR>

<TR>

          <TD ROWSPAN="1" COLSPAN="1" STYLE="line-height: normal; vertical-align: text-bottom; font-weight: bold; font-size: 8pt; text-align: left">&nbsp;&nbsp;</TD>

          <TD ROWSPAN="1" STYLE="width: 6px; vertical-align: text-bottom; text-align: center"><!-- GUTTER -->&nbsp;</TD>

          <TD ROWSPAN="1" COLSPAN="3" STYLE="line-height: normal; vertical-align: text-bottom; font-weight: bold; font-size: 8pt; text-align: center; border-bottom: black 1pt solid">Total carrying value at December 31, 2012</TD>

          <TD ROWSPAN="1" STYLE="width: 6px; vertical-align: text-bottom; text-align: center"><!-- GUTTER -->&nbsp;</TD>

          <TD ROWSPAN="1" COLSPAN="3" STYLE="line-height: normal; vertical-align: text-bottom; font-weight: bold; font-size: 8pt; text-align: center; border-bottom: black 1pt solid">Quoted prices in active markets (Level 1)</TD>

          <TD ROWSPAN="1" STYLE="width: 6px; vertical-align: text-bottom; text-align: center"><!-- GUTTER -->&nbsp;</TD>

          <TD ROWSPAN="1" COLSPAN="3" STYLE="line-height: normal; vertical-align: text-bottom; font-weight: bold; font-size: 8pt; text-align: center; border-bottom: black 1pt solid">Significant other observable inputs (Level 2)</TD>

          <TD ROWSPAN="1" STYLE="width: 6px; vertical-align: text-bottom; text-align: center"><!-- GUTTER -->&nbsp;</TD>

          <TD ROWSPAN="1" COLSPAN="3" STYLE="line-height: normal; vertical-align: text-bottom; font-weight: bold; font-size: 8pt; text-align: center; border-bottom: black 1pt solid">Significant unobservable inputs (Level 3)</TD>

</TR>

<TR STYLE="background-color: white">

          <TD ROWSPAN="1" COLSPAN="1" STYLE="padding-left: 10pt; text-indent: -10pt; vertical-align: text-bottom">Cash</TD>

          <TD ROWSPAN="1" STYLE="width: 6px; vertical-align: text-bottom; text-align: center"><!-- GUTTER -->&nbsp;</TD>

          <TD ROWSPAN="1" STYLE="width: 6px; vertical-align: text-bottom; text-align: left"><!-- $ -->$</TD>

          <TD ROWSPAN="1" COLSPAN="1" STYLE="vertical-align: text-bottom; text-align: right">10,031</TD>

          <TD STYLE="white-space: nowrap; vertical-align: text-bottom; text-align: left"><!-- PERCENT -->&nbsp;</TD>

          <TD ROWSPAN="1" STYLE="width: 6px; vertical-align: text-bottom; text-align: center"><!-- GUTTER -->&nbsp;</TD>

          <TD ROWSPAN="1" STYLE="width: 6px; vertical-align: text-bottom; text-align: left"><!-- $ -->$</TD>

          <TD ROWSPAN="1" COLSPAN="1" STYLE="vertical-align: text-bottom; text-align: right"> 10,031</TD>

          <TD STYLE="white-space: nowrap; vertical-align: text-bottom; text-align: left"><!-- PERCENT -->&nbsp;</TD>

          <TD ROWSPAN="1" STYLE="width: 6px; vertical-align: text-bottom; text-align: center"><!-- GUTTER -->&nbsp;</TD>

          <TD ROWSPAN="1" STYLE="width: 6px; vertical-align: text-bottom; text-align: left"><!-- $ -->$</TD>

          <TD ROWSPAN="1" COLSPAN="1" STYLE="vertical-align: text-bottom; text-align: right">&#151;</TD>

          <TD STYLE="white-space: nowrap; vertical-align: text-bottom; text-align: left"><!-- PERCENT -->&nbsp;</TD>

          <TD ROWSPAN="1" STYLE="width: 6px; vertical-align: text-bottom; text-align: center"><!-- GUTTER -->&nbsp;</TD>

          <TD ROWSPAN="1" STYLE="width: 6px; vertical-align: text-bottom; text-align: left"><!-- $ -->$</TD>

          <TD ROWSPAN="1" COLSPAN="1" STYLE="vertical-align: text-bottom; text-align: right">&#151;</TD>

          <TD STYLE="white-space: nowrap; vertical-align: text-bottom; text-align: left"><!-- PERCENT -->&nbsp;</TD>

</TR>

<TR STYLE="background-color: #CCFFCC">

          <TD ROWSPAN="1" COLSPAN="1" STYLE="padding-left: 10pt; text-indent: -10pt; vertical-align: text-bottom">Investment in Restricted common stk.</TD>

          <TD ROWSPAN="1" STYLE="width: 6px; vertical-align: text-bottom; text-align: center"><!-- GUTTER -->&nbsp;</TD>

          <TD ROWSPAN="1" STYLE="width: 6px; vertical-align: text-bottom; text-align: left"><!-- $ -->$</TD>

          <TD ROWSPAN="1" COLSPAN="1" STYLE="vertical-align: text-bottom; text-align: right"> 423</TD>

          <TD STYLE="white-space: nowrap; vertical-align: text-bottom; text-align: left"><!-- PERCENT -->&nbsp;</TD>

          <TD ROWSPAN="1" STYLE="width: 6px; vertical-align: text-bottom; text-align: center"><!-- GUTTER -->&nbsp;</TD>

          <TD ROWSPAN="1" STYLE="width: 6px; vertical-align: text-bottom; text-align: left"><!-- $ -->$</TD>

          <TD ROWSPAN="1" COLSPAN="1" STYLE="vertical-align: text-bottom; text-align: right"></TD>

          <TD STYLE="white-space: nowrap; vertical-align: text-bottom; text-align: left"><!-- PERCENT -->&nbsp;</TD>

          <TD ROWSPAN="1" STYLE="width: 6px; vertical-align: text-bottom; text-align: center"><!-- GUTTER -->&nbsp;</TD>

          <TD ROWSPAN="1" STYLE="width: 6px; vertical-align: text-bottom; text-align: left"><!-- $ -->$</TD>

          <TD ROWSPAN="1" COLSPAN="1" STYLE="vertical-align: text-bottom; text-align: right"> 423</TD>

          <TD STYLE="white-space: nowrap; vertical-align: text-bottom; text-align: left"><!-- PERCENT -->&nbsp;</TD>

          <TD ROWSPAN="1" STYLE="width: 6px; vertical-align: text-bottom; text-align: center"><!-- GUTTER -->&nbsp;</TD>

          <TD ROWSPAN="1" STYLE="width: 6px; vertical-align: text-bottom; text-align: left"><!-- $ -->$</TD>

          <TD ROWSPAN="1" COLSPAN="1" STYLE="vertical-align: text-bottom; text-align: right"></TD>

          <TD STYLE="white-space: nowrap; vertical-align: text-bottom; text-align: left"><!-- PERCENT -->&nbsp;</TD>

</TR>

</TABLE></DIV>

<P STYLE="text-indent: 0pt; text-align: left; font: normal 10pt/12pt Times New Roman, Times, Serif; margin: 0pt; padding: 3pt 0pt 3pt 4px; text-transform: none"></P>

<DIV STYLE="text-align: center"><TABLE CELLSPACING="0" CELLPADDING="0" WIDTH="608" STYLE="vertical-align: text-bottom; text-indent: 0px; text-align: left; font: normal 10pt Times New Roman, Times, Serif; margin: -24pt 0pt 0pt; padding: 3pt 0pt; text-transform: none">

<TR>

          <TD><IMG HEIGHT="1" SRC="spacer.gif" WIDTH="210"></TD>

          <TD STYLE="width: 12px; vertical-align: text-bottom; text-align: center; border-bottom-style: none"><!-- GUTTER -->&nbsp;</TD>

          <TD COLSPAN="3"><IMG HEIGHT="1" SRC="spacer.gif" WIDTH="92"></TD>

          <TD STYLE="width: 12px; vertical-align: text-bottom; text-align: center; border-bottom-style: none"><!-- GUTTER -->&nbsp;</TD>

          <TD COLSPAN="3"><IMG HEIGHT="1" SRC="spacer.gif" WIDTH="80"></TD>

          <TD STYLE="width: 12px; vertical-align: text-bottom; text-align: center; border-bottom-style: none"><!-- GUTTER -->&nbsp;</TD>

          <TD COLSPAN="3"><IMG HEIGHT="1" SRC="spacer.gif" WIDTH="80"></TD>

          <TD STYLE="width: 12px; vertical-align: text-bottom; text-align: center; border-bottom-style: none"><!-- GUTTER -->&nbsp;</TD>

          <TD COLSPAN="3"><IMG HEIGHT="1" SRC="spacer.gif" WIDTH="98"></TD>

</TR>

<TR>

          <TD ROWSPAN="1" COLSPAN="1" STYLE="line-height: normal; vertical-align: text-bottom; font-weight: bold; font-size: 8pt; text-align: left"></TD>

          <TD ROWSPAN="1" STYLE="width: 6px; vertical-align: text-bottom; text-align: center"><!-- GUTTER -->&nbsp;</TD>

          <TD ROWSPAN="1" COLSPAN="15" STYLE="line-height: normal; vertical-align: text-bottom; font-weight: bold; font-size: 8pt; text-align: center; border-bottom: black 1pt solid">Fair value measured at June 30, 2012</TD>

</TR>

<TR>

          <TD ROWSPAN="1" COLSPAN="1" STYLE="line-height: normal; vertical-align: text-bottom; font-weight: bold; font-size: 8pt; text-align: left">&nbsp;&nbsp;</TD>

          <TD ROWSPAN="1" STYLE="width: 6px; vertical-align: text-bottom; text-align: center"><!-- GUTTER -->&nbsp;</TD>

          <TD ROWSPAN="1" COLSPAN="3" STYLE="line-height: normal; vertical-align: text-bottom; font-weight: bold; font-size: 8pt; text-align: center; border-bottom: black 1pt solid">Total carrying value at June 30, 2012</TD>

          <TD ROWSPAN="1" STYLE="width: 6px; vertical-align: text-bottom; text-align: center"><!-- GUTTER -->&nbsp;</TD>

          <TD ROWSPAN="1" COLSPAN="3" STYLE="line-height: normal; vertical-align: text-bottom; font-weight: bold; font-size: 8pt; text-align: center; border-bottom: black 1pt solid">Quoted prices in active markets (Level 1)</TD>

          <TD ROWSPAN="1" STYLE="width: 6px; vertical-align: text-bottom; text-align: center"><!-- GUTTER -->&nbsp;</TD>

          <TD ROWSPAN="1" COLSPAN="3" STYLE="line-height: normal; vertical-align: text-bottom; font-weight: bold; font-size: 8pt; text-align: center; border-bottom: black 1pt solid">Significant other observable inputs (Level 2)</TD>

          <TD ROWSPAN="1" STYLE="width: 6px; vertical-align: text-bottom; text-align: center"><!-- GUTTER -->&nbsp;</TD>

          <TD ROWSPAN="1" COLSPAN="3" STYLE="line-height: normal; vertical-align: text-bottom; font-weight: bold; font-size: 8pt; text-align: center; border-bottom: black 1pt solid">Significant unobservable inputs (Level 3)</TD>

</TR>

<TR STYLE="background-color: white">

          <TD ROWSPAN="1" COLSPAN="1" STYLE="padding-left: 10pt; text-indent: -10pt; vertical-align: text-bottom">Cash</TD>

          <TD ROWSPAN="1" STYLE="width: 6px; vertical-align: text-bottom; text-align: center"><!-- GUTTER -->&nbsp;</TD>

          <TD ROWSPAN="1" STYLE="width: 6px; vertical-align: text-bottom; text-align: left"><!-- $ -->$</TD>

          <TD ROWSPAN="1" COLSPAN="1" STYLE="vertical-align: text-bottom; text-align: right">3,627</TD>

          <TD STYLE="white-space: nowrap; vertical-align: text-bottom; text-align: left"><!-- PERCENT -->&nbsp;</TD>

          <TD ROWSPAN="1" STYLE="width: 6px; vertical-align: text-bottom; text-align: center"><!-- GUTTER -->&nbsp;</TD>

          <TD ROWSPAN="1" STYLE="width: 6px; vertical-align: text-bottom; text-align: left"><!-- $ -->$</TD>

          <TD ROWSPAN="1" COLSPAN="1" STYLE="vertical-align: text-bottom; text-align: right"> 3,627</TD>

          <TD STYLE="white-space: nowrap; vertical-align: text-bottom; text-align: left"><!-- PERCENT -->&nbsp;</TD>

          <TD ROWSPAN="1" STYLE="width: 6px; vertical-align: text-bottom; text-align: center"><!-- GUTTER -->&nbsp;</TD>

          <TD ROWSPAN="1" STYLE="width: 6px; vertical-align: text-bottom; text-align: left"><!-- $ -->$</TD>

          <TD ROWSPAN="1" COLSPAN="1" STYLE="vertical-align: text-bottom; text-align: right">&#151;</TD>

          <TD STYLE="white-space: nowrap; vertical-align: text-bottom; text-align: left"><!-- PERCENT -->&nbsp;</TD>

          <TD ROWSPAN="1" STYLE="width: 6px; vertical-align: text-bottom; text-align: center"><!-- GUTTER -->&nbsp;</TD>

          <TD ROWSPAN="1" STYLE="width: 6px; vertical-align: text-bottom; text-align: left"><!-- $ -->$</TD>

          <TD ROWSPAN="1" COLSPAN="1" STYLE="vertical-align: text-bottom; text-align: right">&#151;</TD>

          <TD STYLE="white-space: nowrap; vertical-align: text-bottom; text-align: left"><!-- PERCENT -->&nbsp;</TD>

</TR>

<TR STYLE="background-color: #CCFFCC">

          <TD ROWSPAN="1" COLSPAN="1" STYLE="padding-left: 10pt; text-indent: -10pt; vertical-align: text-bottom">Warrant liability</TD>

          <TD ROWSPAN="1" STYLE="width: 6px; vertical-align: text-bottom; text-align: center"><!-- GUTTER -->&nbsp;</TD>

          <TD ROWSPAN="1" STYLE="width: 6px; vertical-align: text-bottom; text-align: left"><!-- $ -->$</TD>

          <TD ROWSPAN="1" COLSPAN="1" STYLE="vertical-align: text-bottom; text-align: right">252</TD>

          <TD STYLE="white-space: nowrap; vertical-align: text-bottom; text-align: left"><!-- PERCENT -->&nbsp;</TD>

          <TD ROWSPAN="1" STYLE="width: 6px; vertical-align: text-bottom; text-align: center"><!-- GUTTER -->&nbsp;</TD>

          <TD ROWSPAN="1" STYLE="width: 6px; vertical-align: text-bottom; text-align: left"><!-- $ -->$</TD>

          <TD ROWSPAN="1" COLSPAN="1" STYLE="vertical-align: text-bottom; text-align: right">&#151;</TD>

          <TD STYLE="white-space: nowrap; vertical-align: text-bottom; text-align: left"><!-- PERCENT -->&nbsp;</TD>

          <TD ROWSPAN="1" STYLE="width: 6px; vertical-align: text-bottom; text-align: center"><!-- GUTTER -->&nbsp;</TD>

          <TD ROWSPAN="1" STYLE="width: 6px; vertical-align: text-bottom; text-align: left"><!-- $ -->$</TD>

          <TD ROWSPAN="1" COLSPAN="1" STYLE="vertical-align: text-bottom; text-align: right">&#151;</TD>

          <TD STYLE="white-space: nowrap; vertical-align: text-bottom; text-align: left"><!-- PERCENT -->&nbsp;</TD>

          <TD ROWSPAN="1" STYLE="width: 6px; vertical-align: text-bottom; text-align: center"><!-- GUTTER -->&nbsp;</TD>

          <TD ROWSPAN="1" STYLE="width: 6px; vertical-align: text-bottom; text-align: left"><!-- $ -->$</TD>

          <TD ROWSPAN="1" COLSPAN="1" STYLE="vertical-align: text-bottom; text-align: right">252</TD>

          <TD STYLE="white-space: nowrap; vertical-align: text-bottom; text-align: left"><!-- PERCENT -->&nbsp;</TD>

</TR>

</TABLE></DIV>

</DIV>

<P STYLE="width: 708px; text-indent: 0px; text-align: center; font: normal 10pt/12pt Times New Roman, Times, Serif; margin: 0pt; padding: 12pt 0pt 3pt; color: black; text-transform: none; text-decoration: none">F-46</P>

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<DIV ID="HDR">&nbsp;</DIV>

<DIV ALIGN="CENTER" STYLE="width: 708px; border: white 1pt solid; margin: 6pt 0pt; padding: 9pt 3pt 9pt 6pt">

<P STYLE="text-align: left; font: normal bold 8pt Times New Roman, Times, Serif"><A HREF="#TOC">TABLE OF CONTENTS</A></P>

<H1 STYLE="text-indent: 0pt; text-align: center; font: normal bold 10pt/12pt Times New Roman, Times, Serif; margin: 0pt; padding: 9pt 0pt 3pt; text-transform: none">LEXINGTON TECHNOLOGY GROUP, INC. AND SUBSIDIARY<BR> (A Development Stage Company)<BR>&nbsp;&nbsp;<BR> Notes to Consolidated Financial Statements </H1>

<H2 STYLE="text-indent: 0pt; text-align: left; font: normal bold 10pt/12pt Times New Roman, Times, Serif; margin: 0pt; padding: 5pt 0pt 3pt 4px; text-transform: none">NOTE 3&nbsp;&#151;&nbsp;SUMMARY OF SIGNIFCANT ACCOUNTING POLICIES &nbsp;&#150;&nbsp;(continued)</H2>

<P STYLE="text-indent: 20px; text-align: left; font: normal 10pt/12pt Times New Roman, Times, Serif; margin: 0pt; padding: 3pt 0pt 3pt 4px; text-transform: none">The table below provides a reconciliation of the beginning and ending balances for the liabilities measured using fair significant unobservable inputs (Level 3). </P>

<P STYLE="text-indent: 0pt; text-align: left; font: normal 10pt/12pt Times New Roman, Times, Serif; margin: 0pt; padding: 3pt 0pt 3pt 4px; text-transform: none"></P>

<DIV STYLE="text-align: center"><TABLE CELLSPACING="0" CELLPADDING="0" WIDTH="608" STYLE="vertical-align: text-bottom; text-indent: 0px; text-align: left; font: normal 10pt Times New Roman, Times, Serif; margin: -24pt 0pt 0pt; padding: 3pt 0pt; text-transform: none">

<TR>

          <TD><IMG HEIGHT="1" SRC="spacer.gif" WIDTH="520"></TD>

          <TD STYLE="width: 12px; vertical-align: text-bottom; text-align: center; border-bottom-style: none"><!-- GUTTER -->&nbsp;</TD>

          <TD COLSPAN="3"><IMG HEIGHT="1" SRC="spacer.gif" WIDTH="72"></TD>

</TR>

<TR STYLE="background-color: white">

          <TD ROWSPAN="1" COLSPAN="1" STYLE="padding-left: 10pt; text-indent: -10pt; vertical-align: text-bottom">Balance&nbsp;&#150;&nbsp;May 10, 2012 (inception)</TD>

          <TD ROWSPAN="1" STYLE="width: 6px; vertical-align: text-bottom; text-align: center"><!-- GUTTER -->&nbsp;</TD>

          <TD ROWSPAN="1" STYLE="width: 6px; vertical-align: text-bottom; text-align: left"><!-- $ -->$</TD>

          <TD ROWSPAN="1" COLSPAN="1" STYLE="vertical-align: text-bottom; text-align: right">&#151;</TD>

          <TD STYLE="white-space: nowrap; vertical-align: text-bottom; text-align: left"><!-- PERCENT -->&nbsp;</TD>

</TR>

<TR STYLE="background-color: #CCFFCC">

          <TD ROWSPAN="1" COLSPAN="1" STYLE="padding-left: 10pt; text-indent: -10pt; vertical-align: text-bottom">Warrant liability recognized on June 12, 2012</TD>

          <TD ROWSPAN="1" STYLE="width: 6px; vertical-align: text-bottom; text-align: center"><!-- GUTTER -->&nbsp;</TD>

          <TD ROWSPAN="1" STYLE="width: 6px; vertical-align: text-bottom; text-align: left"><!-- $ -->&nbsp;</TD>

          <TD ROWSPAN="1" COLSPAN="1" STYLE="vertical-align: text-bottom; text-align: right">243</TD>

          <TD STYLE="white-space: nowrap; vertical-align: text-bottom; text-align: left"><!-- PERCENT -->&nbsp;</TD>

</TR>

<TR STYLE="background-color: white">

          <TD ROWSPAN="1" COLSPAN="1" STYLE="padding-left: 10pt; text-indent: -10pt; vertical-align: text-bottom; border-bottom: white 1pt solid">Change in fair value of warrant liability on June 30, 2012</TD>

          <TD ROWSPAN="1" STYLE="width: 6px; vertical-align: text-bottom; text-align: center; border-bottom: white 1pt solid"><!-- GUTTER -->&nbsp;</TD>

          <TD ROWSPAN="1" STYLE="width: 6px; vertical-align: text-bottom; text-align: left; border-bottom: black 1pt solid"><!-- $ -->&nbsp;</TD>

          <TD ROWSPAN="1" COLSPAN="1" STYLE="vertical-align: text-bottom; text-align: right; border-bottom: black 1pt solid">9</TD>

          <TD STYLE="white-space: nowrap; vertical-align: text-bottom; text-align: left; border-bottom: white 1pt solid"><!-- PERCENT -->&nbsp;</TD>

</TR>

<TR STYLE="background-color: #CCFFCC">

          <TD ROWSPAN="1" COLSPAN="1" STYLE="padding-left: 10pt; text-indent: -10pt; vertical-align: text-bottom">Balance&nbsp;&#150;&nbsp;June 30, 2012</TD>

          <TD ROWSPAN="1" STYLE="width: 6px; vertical-align: text-bottom; text-align: center"><!-- GUTTER -->&nbsp;</TD>

          <TD ROWSPAN="1" STYLE="width: 6px; vertical-align: text-bottom; text-align: left"><!-- $ -->&nbsp;</TD>

          <TD ROWSPAN="1" COLSPAN="1" STYLE="vertical-align: text-bottom; text-align: right">252</TD>

          <TD STYLE="white-space: nowrap; vertical-align: text-bottom; text-align: left"><!-- PERCENT -->&nbsp;</TD>

</TR>

<TR STYLE="background-color: white">

          <TD ROWSPAN="1" COLSPAN="1" STYLE="padding-left: 10pt; text-indent: -10pt; vertical-align: text-bottom">Warrant liability recognized on July 26, 2012</TD>

          <TD ROWSPAN="1" STYLE="width: 6px; vertical-align: text-bottom; text-align: center"><!-- GUTTER -->&nbsp;</TD>

          <TD ROWSPAN="1" STYLE="width: 6px; vertical-align: text-bottom; text-align: left"><!-- $ -->&nbsp;</TD>

          <TD ROWSPAN="1" COLSPAN="1" STYLE="vertical-align: text-bottom; text-align: right">53</TD>

          <TD STYLE="white-space: nowrap; vertical-align: text-bottom; text-align: left"><!-- PERCENT -->&nbsp;</TD>

</TR>

<TR STYLE="background-color: #CCFFCC">

          <TD ROWSPAN="1" COLSPAN="1" STYLE="padding-left: 10pt; text-indent: -10pt; vertical-align: text-bottom">Change in fair value of warrant liability on August 9, 2012</TD>

          <TD ROWSPAN="1" STYLE="width: 6px; vertical-align: text-bottom; text-align: center"><!-- GUTTER -->&nbsp;</TD>

          <TD ROWSPAN="1" STYLE="width: 6px; vertical-align: text-bottom; text-align: left"><!-- $ -->&nbsp;</TD>

          <TD ROWSPAN="1" COLSPAN="1" STYLE="vertical-align: text-bottom; text-align: right">5320</TD>

          <TD STYLE="white-space: nowrap; vertical-align: text-bottom; text-align: left"><!-- PERCENT -->&nbsp;</TD>

</TR>

<TR STYLE="background-color: white">

          <TD ROWSPAN="1" COLSPAN="1" STYLE="padding-left: 10pt; text-indent: -10pt; vertical-align: text-bottom; border-bottom: white 1pt solid">Reclassification of warrant liability on August 9, 2012</TD>

          <TD ROWSPAN="1" STYLE="width: 6px; vertical-align: text-bottom; text-align: center; border-bottom: white 1pt solid"><!-- GUTTER -->&nbsp;</TD>

          <TD ROWSPAN="1" STYLE="width: 6px; vertical-align: text-bottom; text-align: left; border-bottom: black 1pt solid"><!-- $ -->&nbsp;</TD>

          <TD ROWSPAN="1" COLSPAN="1" STYLE="vertical-align: text-bottom; text-align: right; border-bottom: black 1pt solid">(5,625</TD>

          <TD STYLE="white-space: nowrap; vertical-align: text-bottom; text-align: left; border-bottom: white 1pt solid">)<!-- PERCENT -->&nbsp;</TD>

</TR>

<TR STYLE="background-color: #CCFFCC">

          <TD ROWSPAN="1" COLSPAN="1" STYLE="padding-left: 10pt; text-indent: -10pt; vertical-align: text-bottom; border-bottom: white 3pt double">Balance&nbsp;&#150;&nbsp;December 31, 2012</TD>

          <TD ROWSPAN="1" STYLE="width: 6px; vertical-align: text-bottom; text-align: center; border-bottom: white 3pt double"><!-- GUTTER -->&nbsp;</TD>

          <TD ROWSPAN="1" STYLE="width: 6px; vertical-align: text-bottom; text-align: left; border-bottom: black 3pt double"><!-- $ -->$</TD>

          <TD ROWSPAN="1" COLSPAN="1" STYLE="vertical-align: text-bottom; text-align: right; border-bottom: black 3pt double">&#151;</TD>

          <TD STYLE="white-space: nowrap; vertical-align: text-bottom; text-align: left; border-bottom: white 3pt double"><!-- PERCENT -->&nbsp;</TD>

</TR>

</TABLE></DIV>

<H3 STYLE="text-indent: 0pt; text-align: left; font: normal italic bold 10pt/12pt Times New Roman, Times, Serif; margin: 0pt; padding: 5pt 0pt 3pt 4px; text-transform: none">Income Taxes </H3>

<P STYLE="text-indent: 20px; text-align: left; font: normal 10pt/12pt Times New Roman, Times, Serif; margin: 0pt; padding: 3pt 0pt 3pt 4px; text-transform: none">Income taxes are accounted for under the asset and liability method in accordance with ASC 740, Income Taxes (&#147;ASC 740&#148;). Deferred tax assets and liabilities are recognized for the future tax consequences attributable to differences between the financial carrying amounts of existing assets and liabilities and their respective tax bases as well as operating loss and tax credit carry forwards. Deferred tax assets and liabilities are measured using enacted tax rates expected to apply to taxable income in the periods in which those temporary differences are expected to be recovered or settled. The effect on deferred tax
assets and liabilities of a change in tax rates is recognized in income in the period that includes the enactment date. Deferred tax assets are reduced by a valuation allowance to the extent that the recoverability of the asset is unlikely to be recognized. </P>

<P STYLE="text-indent: 20px; text-align: left; font: normal 10pt/12pt Times New Roman, Times, Serif; margin: 0pt; padding: 3pt 0pt 3pt 4px; text-transform: none">The Company accounts for uncertain tax positions in accordance with ASC 740, which prescribes a recognition threshold and measurement process for financial statement recognition and measurement of a tax position taken or expected to be taken in a return. Management has evaluated and concluded that there were no material uncertain tax positions requiring recognition in the Company&#146;s financial statements as of December 31, 2012 and June 30, 2012. The Company does not expect any significant changes in the unrecognized tax benefits within twelve months of the reporting date. </P>

<P STYLE="text-indent: 20px; text-align: left; font: normal 10pt/12pt Times New Roman, Times, Serif; margin: 0pt; padding: 3pt 0pt 3pt 4px; text-transform: none">Interest costs and penalties related to income taxes are classified as interest expense and selling, general and administrative costs, respectively, in the Company's consolidated financial statements. For the period from May 10, 2012 (inception) to December 31, 2012, the Company did not recognize any interest or penalties related to income taxes. The Company will file income tax returns in the U.S. federal jurisdiction and states in which it does business. These tax returns will be subject to examination by tax authorities for three years from the date the returns are filed. </P>

<H3 STYLE="text-indent: 0pt; text-align: left; font: normal italic bold 10pt/12pt Times New Roman, Times, Serif; margin: 0pt; padding: 5pt 0pt 3pt 4px; text-transform: none">Stock-Based Compensation </H3>

<P STYLE="text-indent: 20px; text-align: left; font: normal 10pt/12pt Times New Roman, Times, Serif; margin: 0pt; padding: 3pt 0pt 3pt 4px; text-transform: none">The Company measures its compensation cost for all stock-based awards at fair value on the date of grant, taking into account any post vesting selling restrictions, and recognizes the compensation expense over the requisite service period pursuant to the provisions of ASC Topic 718, Compensation&nbsp;&#151;&nbsp;Stock Compensation. Expenses associated with such grants are generally recognized on a straight-line basis over the requisite service period, net of estimated forfeitures. Deferred stock based compensation costs with respect to shares of restricted stock and stock options granted are presented as part of additional
paid in capital in the Consolidated Statement of Changes of Stockholders&#146; Equity. </P>

<H3 STYLE="text-indent: 0pt; text-align: left; font: normal italic bold 10pt/12pt Times New Roman, Times, Serif; margin: 0pt; padding: 5pt 0pt 3pt 4px; text-transform: none">Recently Issued Accounting Pronouncements </H3>

<P STYLE="text-indent: 20px; text-align: left; font: normal 10pt/12pt Times New Roman, Times, Serif; margin: 0pt; padding: 3pt 0pt 3pt 4px; text-transform: none">Management does not believe that any recently issued, but not yet effective accounting pronouncements, if adopted, would have a significant effect to the accompanying consolidated financial statements. </P>

</DIV>

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<H1 STYLE="text-indent: 0pt; text-align: center; font: normal bold 10pt/12pt Times New Roman, Times, Serif; margin: 0pt; padding: 9pt 0pt 3pt; text-transform: none">LEXINGTON TECHNOLOGY GROUP, INC. AND SUBSIDIARY<BR> (A Development Stage Company)<BR>&nbsp;&nbsp;<BR> Notes to Consolidated Financial Statements </H1>

<H2 STYLE="text-indent: 0pt; text-align: left; font: normal bold 10pt/12pt Times New Roman, Times, Serif; margin: 0pt; padding: 5pt 0pt 3pt 4px; text-transform: none">NOTE 3&nbsp;&#151;&nbsp;SUMMARY OF SIGNIFCANT ACCOUNTING POLICIES &nbsp;&#150;&nbsp;(continued)</H2>

<H3 STYLE="text-indent: 0pt; text-align: left; font: normal italic bold 10pt/12pt Times New Roman, Times, Serif; margin: 0pt; padding: 5pt 0pt 3pt 4px; text-transform: none">Subsequent Events </H3>

<P STYLE="text-indent: 20px; text-align: left; font: normal 10pt/12pt Times New Roman, Times, Serif; margin: 0pt; padding: 3pt 0pt 3pt 4px; text-transform: none">Management has evaluated subsequent events to determine if events or transactions occurring through the date these consolidated financial statements were issued, require potential adjustment to or disclosure in the consolidated financial statements and has concluded that no subsequent events have occurred except as described in Note 9 that would require recognition in the consolidated financial statements or disclosure in the notes to the consolidated financial statements. </P>

<H2 STYLE="text-indent: 0pt; text-align: left; font: normal bold 10pt/12pt Times New Roman, Times, Serif; margin: 0pt; padding: 5pt 0pt 3pt 4px; text-transform: none">NOTE 4&nbsp;&#151;&nbsp;INTANGIBLE ASSETS, NET </H2>

<P STYLE="text-indent: 20px; text-align: left; font: normal 10pt/12pt Times New Roman, Times, Serif; margin: 0pt; padding: 3pt 0pt 3pt 4px; text-transform: none"><B><I>Purchase of Patents:&nbsp;&nbsp;</I></B>On June 20, 2012, Bascom entered in to a non-binding patent purchase agreement (&#147;PPA&#148;) with an unrelated individual to purchase certain patents and patent applications for a cash consideration of $2.1 million in cash plus a portion of any future cash compensation received by LTG in consideration for the sale, licensing and/or enforcement of the acquired patents, subject to certain conditions. In connection with such patent purchase agreement, LTG entered into a license agreement, dated as of July 9, 2012, with LinkSpace LLC (&#147;<B>LinkSpace</B>&#148;), a company
controlled by Mr. Thomas Bascom, former President and Chief Technology Officer of LTG&#146;s wholly-owned subsidiary, Bascom Research, pursuant to which LTG granted to LinkSpace a royalty-free, perpetual, non-exclusive (without the right to sublicense) worldwide license under the acquired patents relating to software, products or services designed, made, sold, offered for sale, imported or distributed by or for LinkSpace or LinkSpace&#146;s affiliates and any integrated system that incorporates or includes a Licensed Product and in which system. The transaction was finalized on July 9, 2012. Amortization is provided using straight-line method over the estimated useful life of five years of the patents. Amortization expense for these patents and applications for the period ended May 10 2012 (inception) through June 30, 2012, for the six months ended December 31, 2012 and for the period ended May 10 2012 (inception) through December 31, 2012 was approximately $0, $0.2 million, and $0.2
million, respectively. Estimated amortization expense for each of the next five years through July 2016 is approximately $0.5 million. </P>

<P STYLE="text-indent: 20px; text-align: left; font: normal 10pt/12pt Times New Roman, Times, Serif; margin: 0pt; padding: 3pt 0pt 3pt 4px; text-transform: none">The Company evaluated ASC 805 &#147;Business Combinations&#148; (&#147;ASC 805&#148;) guidance and determined that the acquisition of patents and patent applications is considered an asset acquisition as there were no productive inputs or processes that accompanied the patents for them to be used in conducting a business. </P>

<P STYLE="text-indent: 20px; text-align: left; font: normal 10pt/12pt Times New Roman, Times, Serif; margin: 0pt; padding: 3pt 0pt 3pt 4px; text-transform: none">Purchased intangible assets subject to amortization, are reviewed for impairment whenever events or changes in circumstances indicate that the carrying amount of an asset may not be recoverable. If circumstances require an intangible asset to be tested for possible impairment, the Company first compares undiscounted cash flows expected to be generated by that asset or asset group to its carrying value. If the carrying value of the intangible asset is not recoverable on an undiscounted cash flow basis, impairment is recognized to the extent that the carrying value exceeds its fair value. Fair value is to be determined through
various valuation techniques including discounted cash flow models, quoted market values and third-party independent appraisals, as considered necessary. As of December 31, 2012 there were no events or changes in circumstances that indicate that the carrying amount of the intangible assets may not be recoverable. </P>

<H2 STYLE="text-indent: 0pt; text-align: left; font: normal bold 10pt/12pt Times New Roman, Times, Serif; margin: 0pt; padding: 5pt 0pt 3pt 4px; text-transform: none">NOTE 5&nbsp;&#151;&nbsp;FINANCING TRANSACTIONS </H2>

<H3 STYLE="text-indent: 0pt; text-align: left; font: normal italic bold 10pt/12pt Times New Roman, Times, Serif; margin: 0pt; padding: 5pt 0pt 3pt 4px; text-transform: none">June 12, 2012 Financing Transaction </H3>

<P STYLE="text-indent: 20px; text-align: left; font: normal 10pt/12pt Times New Roman, Times, Serif; margin: 0pt; padding: 3pt 0pt 3pt 4px; text-transform: none">Pursuant to the sole directors&#146; consent on May 30, 2012, on June 12, 2012, the Company completed first closing of a financing transaction in which it raised $3.6 million of gross proceeds upon the issuance of senior notes (the &#147;Notes&#148;) with 16,571,429 shares of common stock (the &#147;Shares&#148;) at a fair value of approximately $0.057 per share and 6,214,286 common stock purchase warrants (the &#147;Note Warrants&#148;) with a fair value of $0.039 per warrant. </P>

</DIV>

<P STYLE="width: 708px; text-indent: 0px; text-align: center; font: normal 10pt/12pt Times New Roman, Times, Serif; margin: 0pt; padding: 12pt 0pt 3pt; color: black; text-transform: none; text-decoration: none">F-48</P>

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<H1 STYLE="text-indent: 0pt; text-align: center; font: normal bold 10pt/12pt Times New Roman, Times, Serif; margin: 0pt; padding: 9pt 0pt 3pt; text-transform: none">LEXINGTON TECHNOLOGY GROUP, INC. AND SUBSIDIARY<BR> (A Development Stage Company)<BR>&nbsp;&nbsp;<BR> Notes to Consolidated Financial Statements </H1>

<H2 STYLE="text-indent: 0pt; text-align: left; font: normal bold 10pt/12pt Times New Roman, Times, Serif; margin: 0pt; padding: 5pt 0pt 3pt 4px; text-transform: none">NOTE 5&nbsp;&#151;&nbsp;FINANCING TRANSACTIONS &nbsp;&#150;&nbsp;(continued)</H2>

<P STYLE="text-indent: 20px; text-align: left; font: normal 10pt/12pt Times New Roman, Times, Serif; margin: 0pt; padding: 3pt 0pt 3pt 4px; text-transform: none">The Notes bear interest at the rate of 0.28% per annum, payable once annually on a stated principal amount of $3.6 million. The Notes mature on June 12, 2014, at which time the Company is required to redeem them for a single balloon payment of the principal, $3.6 million, plus any unpaid interest. The Notes do not contain any financial statement covenants, however there are standard events of default. In the event of a default, which is not subsequently cured or waived, the interest rate would increase to a rate of 10% per annum. At the option of the note holders and upon notice, the entire unpaid principal balance together
with all accrued interest thereon would be immediately due and payable. The note holders have the right to require the Company to redeem the Notes in the event of a change of control or in event of default at a redemption price, pursuant to a formula equal to the unpaid principal amount and any accrued and unpaid interest. As of the initial closing, a number of shares of common stock have been authorized and reserved for issuance which equals or exceeds 130% of the maximum number of shares of common stock issuable upon exercise of the Note Warrants without taking into account any limitation on the exercise of the Note Warrants. Pursuant to the note agreement, in the event the Company completes a subsequent financing transaction, the Company is obligated to deliver a notice of offer to redeem the principal amount of the Notes plus accrued and unpaid interest to the note holders. On August 16, 2012, the Company sold shares of common stock in a subsequent financing transaction. The note
holders consented to waive the requirements for the Company to deliver such notice solely with this specific sale of common stock that occurred on August 16, 2012. </P>

<P STYLE="text-indent: 20px; text-align: left; font: normal 10pt/12pt Times New Roman, Times, Serif; margin: 0pt; padding: 3pt 0pt 3pt 4px; text-transform: none">The Note Warrants are exercisable for a period of seven years from their date of issuance at an exercise price of $0.75 per share. The Note Warrants also feature full ratchet anti-dilution protection in the event that the Company issues equity or equity linked securities at issuance or exercise prices below the exercise price featured in the Note Warrants. The Company conducted a classification assessment of the Note Warrants in accordance with the applicable provisions of ASC 815. The Company determined that the Note Warrants are not indexed to the Company&#146;s own stock and therefore require liability classification at
fair value in the accompanying consolidated balance sheet. The Company allocated the proceeds received in this transaction in accordance with the applicable provisions of ASC 470 &#147;Debt&#148; (&#147;ASC 470&#148;). Accordingly, the Company allocated $1.0 million to the Shares by recording an increase to par value and additional paid-in-capital in stockholders equity, $0.2 million to the Note Warrants as a warrant liability and the remaining proceeds of $2.4 million to the Notes. The discount on the Notes, which amounts to $1.2 million on the date of the financing transaction, is being accreted over the term of the Notes to the contractual maturity amount of $3.6 million. Accretion is being recorded as a periodic increase to the Notes balance and component of interest expense in the accompanying consolidated statement of operations. </P>

<P STYLE="text-indent: 20px; text-align: left; font: normal 10pt/12pt Times New Roman, Times, Serif; margin: 0pt; padding: 3pt 0pt 3pt 4px; text-transform: none">Management determined that the fair value of the June 12, 2012 Note Warrants amounted to approximately $243,000 and $252,000 on their date of issuance, and June 30, 2012, respectively. Change to the fair value of the Note Warrants of approximately $9,000 was recorded as a loss on change in fair value of warrant liability in the statement of operations for the period from May 10, 2012 (inception) to June 30, 2012. </P>

<P STYLE="text-indent: 20px; text-align: left; font: normal 10pt/12pt Times New Roman, Times, Serif; margin: 0pt; padding: 3pt 0pt 3pt 4px; text-transform: none">On August 1, 2012, the warrant holders elected to accelerate the expiration date of all the subscription warrants to August 9, 2012. On August 9, 2012, all outstanding Note Warrants from the June 12, 2012 Financing Transaction were exercised for common stock. The exercise of the Note Warrants resulted in the reclassification of the associated Warrant Liability of approximately $4,661,000 (at fair value) as equity. The change to the fair value of the Note Warrants of approximately $4,409,000 was recorded as a loss on change in fair value of warrant liability in the statement of operations for the six month period ended December
31, 2012. </P>

</DIV>

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<P STYLE="text-align: left; font: normal bold 8pt Times New Roman, Times, Serif">TABLE OF CONTENTS</P>

<H1 STYLE="text-indent: 0pt; text-align: center; font: normal bold 10pt/12pt Times New Roman, Times, Serif; margin: 0pt; padding: 9pt 0pt 3pt; text-transform: none">LEXINGTON TECHNOLOGY GROUP, INC. AND SUBSIDIARY<BR> (A Development Stage Company)<BR>&nbsp;&nbsp;<BR> Notes to Consolidated Financial Statements </H1>

<H2 STYLE="text-indent: 0pt; text-align: left; font: normal bold 10pt/12pt Times New Roman, Times, Serif; margin: 0pt; padding: 5pt 0pt 3pt 4px; text-transform: none">NOTE 5&nbsp;&#151;&nbsp;FINANCING TRANSACTIONS &nbsp;&#150;&nbsp;(continued)</H2>

<P STYLE="text-indent: 20px; text-align: left; font: normal 10pt/12pt Times New Roman, Times, Serif; margin: 0pt; padding: 3pt 0pt 3pt 4px; text-transform: none">The Company used the Binomial Lattice model to compute the fair value of the Note Warrants. The key assumptions used to calculate the fair values of the Note Warrants on the date of issuance, on June 30, 2012 and the exercise date of August 9, 2012 are as follows: </P>

<P STYLE="text-indent: 0pt; text-align: left; font: normal 10pt/12pt Times New Roman, Times, Serif; margin: 0pt; padding: 3pt 0pt 3pt 4px; text-transform: none"></P>

<DIV STYLE="text-align: center"><TABLE CELLSPACING="0" CELLPADDING="0" WIDTH="554" STYLE="vertical-align: text-bottom; text-indent: 0px; text-align: left; font: normal 10pt Times New Roman, Times, Serif; margin: -24pt 0pt 0pt; padding: 3pt 0pt; text-transform: none">

<TR>

          <TD><IMG HEIGHT="1" SRC="spacer.gif" WIDTH="258"></TD>

          <TD STYLE="width: 12px; vertical-align: text-bottom; text-align: center; border-bottom-style: none"><!-- GUTTER -->&nbsp;</TD>

          <TD COLSPAN="3"><IMG HEIGHT="1" SRC="spacer.gif" WIDTH="80"></TD>

          <TD STYLE="width: 12px; vertical-align: text-bottom; text-align: center; border-bottom-style: none"><!-- GUTTER -->&nbsp;</TD>

          <TD COLSPAN="3"><IMG HEIGHT="1" SRC="spacer.gif" WIDTH="80"></TD>

          <TD STYLE="width: 12px; vertical-align: text-bottom; text-align: center; border-bottom-style: none"><!-- GUTTER -->&nbsp;</TD>

          <TD COLSPAN="3"><IMG HEIGHT="1" SRC="spacer.gif" WIDTH="88"></TD>

</TR>

<TR>

          <TD ROWSPAN="1" COLSPAN="1" STYLE="line-height: normal; vertical-align: text-bottom; font-weight: bold; font-size: 8pt; text-align: left; border-bottom: black 1pt solid">June 12, 2012 Note Warrant</TD>

          <TD ROWSPAN="1" STYLE="width: 6px; vertical-align: text-bottom; text-align: center"><!-- GUTTER -->&nbsp;</TD>

          <TD ROWSPAN="1" COLSPAN="3" STYLE="line-height: normal; vertical-align: text-bottom; font-weight: bold; font-size: 8pt; text-align: center; border-bottom: black 1pt solid">Date of issuance June 12, 2012</TD>

          <TD ROWSPAN="1" STYLE="width: 6px; vertical-align: text-bottom; text-align: center"><!-- GUTTER -->&nbsp;</TD>

          <TD ROWSPAN="1" COLSPAN="3" STYLE="line-height: normal; vertical-align: text-bottom; font-weight: bold; font-size: 8pt; text-align: center; border-bottom: black 1pt solid">Reporting date June 30, 2012</TD>

          <TD ROWSPAN="1" STYLE="width: 6px; vertical-align: text-bottom; text-align: center"><!-- GUTTER -->&nbsp;</TD>

          <TD ROWSPAN="1" COLSPAN="3" STYLE="line-height: normal; vertical-align: text-bottom; font-weight: bold; font-size: 8pt; text-align: center; border-bottom: black 1pt solid">Exercise Date August 9, 2012</TD>

</TR>

<TR STYLE="background-color: #CCFFCC">

          <TD ROWSPAN="1" COLSPAN="1" STYLE="padding-left: 10pt; text-indent: -10pt; vertical-align: text-bottom">Market price of common stock</TD>

          <TD ROWSPAN="1" STYLE="width: 6px; vertical-align: text-bottom; text-align: center"><!-- GUTTER -->&nbsp;</TD>

          <TD ROWSPAN="1" STYLE="width: 6px; vertical-align: text-bottom; text-align: left"><!-- $ -->$</TD>

          <TD ROWSPAN="1" COLSPAN="1" STYLE="vertical-align: text-bottom; text-align: right"> 0.057</TD>

          <TD STYLE="white-space: nowrap; vertical-align: text-bottom; text-align: left"><!-- PERCENT -->&nbsp;</TD>

          <TD ROWSPAN="1" STYLE="width: 6px; vertical-align: text-bottom; text-align: center"><!-- GUTTER -->&nbsp;</TD>

          <TD ROWSPAN="1" STYLE="width: 6px; vertical-align: text-bottom; text-align: left"><!-- $ -->$</TD>

          <TD ROWSPAN="1" COLSPAN="1" STYLE="vertical-align: text-bottom; text-align: right"> 0.057</TD>

          <TD STYLE="white-space: nowrap; vertical-align: text-bottom; text-align: left"><!-- PERCENT -->&nbsp;</TD>

          <TD ROWSPAN="1" STYLE="width: 6px; vertical-align: text-bottom; text-align: center"><!-- GUTTER -->&nbsp;</TD>

          <TD ROWSPAN="1" STYLE="width: 6px; vertical-align: text-bottom; text-align: left"><!-- $ -->$</TD>

          <TD ROWSPAN="1" COLSPAN="1" STYLE="vertical-align: text-bottom; text-align: right"> 1.50</TD>

          <TD STYLE="white-space: nowrap; vertical-align: text-bottom; text-align: left"><!-- PERCENT -->&nbsp;</TD>

</TR>

<TR STYLE="background-color: white">

          <TD ROWSPAN="1" COLSPAN="1" STYLE="padding-left: 10pt; text-indent: -10pt; vertical-align: text-bottom">Exercise price of Note Warrants</TD>

          <TD ROWSPAN="1" STYLE="width: 6px; vertical-align: text-bottom; text-align: center"><!-- GUTTER -->&nbsp;</TD>

          <TD ROWSPAN="1" STYLE="width: 6px; vertical-align: text-bottom; text-align: left"><!-- $ -->$</TD>

          <TD ROWSPAN="1" COLSPAN="1" STYLE="vertical-align: text-bottom; text-align: right">0.75</TD>

          <TD STYLE="white-space: nowrap; vertical-align: text-bottom; text-align: left"><!-- PERCENT -->&nbsp;</TD>

          <TD ROWSPAN="1" STYLE="width: 6px; vertical-align: text-bottom; text-align: center"><!-- GUTTER -->&nbsp;</TD>

          <TD ROWSPAN="1" STYLE="width: 6px; vertical-align: text-bottom; text-align: left"><!-- $ -->$</TD>

          <TD ROWSPAN="1" COLSPAN="1" STYLE="vertical-align: text-bottom; text-align: right">0.75</TD>

          <TD STYLE="white-space: nowrap; vertical-align: text-bottom; text-align: left"><!-- PERCENT -->&nbsp;</TD>

          <TD ROWSPAN="1" STYLE="width: 6px; vertical-align: text-bottom; text-align: center"><!-- GUTTER -->&nbsp;</TD>

          <TD ROWSPAN="1" STYLE="width: 6px; vertical-align: text-bottom; text-align: left"><!-- $ -->$</TD>

          <TD ROWSPAN="1" COLSPAN="1" STYLE="vertical-align: text-bottom; text-align: right">0.75</TD>

          <TD STYLE="white-space: nowrap; vertical-align: text-bottom; text-align: left"><!-- PERCENT -->&nbsp;</TD>

</TR>

<TR STYLE="background-color: #CCFFCC">

          <TD ROWSPAN="1" COLSPAN="1" STYLE="padding-left: 10pt; text-indent: -10pt; vertical-align: text-bottom">Contractual term</TD>

          <TD ROWSPAN="1" STYLE="width: 6px; vertical-align: text-bottom; text-align: center"><!-- GUTTER -->&nbsp;</TD>

          <TD ROWSPAN="1" STYLE="width: 6px; vertical-align: text-bottom; text-align: left"><!-- $ -->&nbsp;</TD>

          <TD ROWSPAN="1" COLSPAN="1" STYLE="vertical-align: text-bottom; text-align: center">7 years</TD>

          <TD STYLE="white-space: nowrap; vertical-align: text-bottom; text-align: left"><!-- PERCENT -->&nbsp;</TD>

          <TD ROWSPAN="1" STYLE="width: 6px; vertical-align: text-bottom; text-align: center"><!-- GUTTER -->&nbsp;</TD>

          <TD ROWSPAN="1" STYLE="width: 6px; vertical-align: text-bottom; text-align: left"><!-- $ -->&nbsp;</TD>

          <TD ROWSPAN="1" COLSPAN="1" STYLE="vertical-align: text-bottom; text-align: center">6.95 years</TD>

          <TD STYLE="white-space: nowrap; vertical-align: text-bottom; text-align: left"><!-- PERCENT -->&nbsp;</TD>

          <TD ROWSPAN="1" STYLE="width: 6px; vertical-align: text-bottom; text-align: center"><!-- GUTTER -->&nbsp;</TD>

          <TD ROWSPAN="1" STYLE="width: 6px; vertical-align: text-bottom; text-align: left"><!-- $ -->&nbsp;</TD>

          <TD ROWSPAN="1" COLSPAN="1" STYLE="vertical-align: text-bottom; text-align: center">0.00 years</TD>

          <TD STYLE="white-space: nowrap; vertical-align: text-bottom; text-align: left"><!-- PERCENT -->&nbsp;</TD>

</TR>

<TR STYLE="background-color: white">

          <TD ROWSPAN="1" COLSPAN="1" STYLE="padding-left: 10pt; text-indent: -10pt; vertical-align: text-bottom">Expected volatility</TD>

          <TD ROWSPAN="1" STYLE="width: 6px; vertical-align: text-bottom; text-align: center"><!-- GUTTER -->&nbsp;</TD>

          <TD ROWSPAN="1" STYLE="width: 6px; vertical-align: text-bottom; text-align: left"><!-- $ -->&nbsp;</TD>

          <TD ROWSPAN="1" COLSPAN="1" STYLE="vertical-align: text-bottom; text-align: right">120</TD>

          <TD STYLE="white-space: nowrap; vertical-align: text-bottom; text-align: left">%<!-- PERCENT -->&nbsp;</TD>

          <TD ROWSPAN="1" STYLE="width: 6px; vertical-align: text-bottom; text-align: center"><!-- GUTTER -->&nbsp;</TD>

          <TD ROWSPAN="1" STYLE="width: 6px; vertical-align: text-bottom; text-align: left"><!-- $ -->&nbsp;</TD>

          <TD ROWSPAN="1" COLSPAN="1" STYLE="vertical-align: text-bottom; text-align: right">124</TD>

          <TD STYLE="white-space: nowrap; vertical-align: text-bottom; text-align: left">%<!-- PERCENT -->&nbsp;</TD>

          <TD ROWSPAN="1" STYLE="width: 6px; vertical-align: text-bottom; text-align: center"><!-- GUTTER -->&nbsp;</TD>

          <TD ROWSPAN="1" STYLE="width: 6px; vertical-align: text-bottom; text-align: left"><!-- $ -->&nbsp;</TD>

          <TD ROWSPAN="1" COLSPAN="1" STYLE="vertical-align: text-bottom; text-align: right">124</TD>

          <TD STYLE="white-space: nowrap; vertical-align: text-bottom; text-align: left">%<!-- PERCENT -->&nbsp;</TD>

</TR>

<TR STYLE="background-color: #CCFFCC">

          <TD ROWSPAN="1" COLSPAN="1" STYLE="padding-left: 10pt; text-indent: -10pt; vertical-align: text-bottom">Expected dividend yield</TD>

          <TD ROWSPAN="1" STYLE="width: 6px; vertical-align: text-bottom; text-align: center"><!-- GUTTER -->&nbsp;</TD>

          <TD ROWSPAN="1" STYLE="width: 6px; vertical-align: text-bottom; text-align: left"><!-- $ -->&nbsp;</TD>

          <TD ROWSPAN="1" COLSPAN="1" STYLE="vertical-align: text-bottom; text-align: right">0</TD>

          <TD STYLE="white-space: nowrap; vertical-align: text-bottom; text-align: left">%<!-- PERCENT -->&nbsp;</TD>

          <TD ROWSPAN="1" STYLE="width: 6px; vertical-align: text-bottom; text-align: center"><!-- GUTTER -->&nbsp;</TD>

          <TD ROWSPAN="1" STYLE="width: 6px; vertical-align: text-bottom; text-align: left"><!-- $ -->&nbsp;</TD>

          <TD ROWSPAN="1" COLSPAN="1" STYLE="vertical-align: text-bottom; text-align: right">0</TD>

          <TD STYLE="white-space: nowrap; vertical-align: text-bottom; text-align: left">%<!-- PERCENT -->&nbsp;</TD>

          <TD ROWSPAN="1" STYLE="width: 6px; vertical-align: text-bottom; text-align: center"><!-- GUTTER -->&nbsp;</TD>

          <TD ROWSPAN="1" STYLE="width: 6px; vertical-align: text-bottom; text-align: left"><!-- $ -->&nbsp;</TD>

          <TD ROWSPAN="1" COLSPAN="1" STYLE="vertical-align: text-bottom; text-align: right">0</TD>

          <TD STYLE="white-space: nowrap; vertical-align: text-bottom; text-align: left">%<!-- PERCENT -->&nbsp;</TD>

</TR>

<TR STYLE="background-color: white">

          <TD ROWSPAN="1" COLSPAN="1" STYLE="padding-left: 10pt; text-indent: -10pt; vertical-align: text-bottom">Risk free interest rate</TD>

          <TD ROWSPAN="1" STYLE="width: 6px; vertical-align: text-bottom; text-align: center"><!-- GUTTER -->&nbsp;</TD>

          <TD ROWSPAN="1" STYLE="width: 6px; vertical-align: text-bottom; text-align: left"><!-- $ -->&nbsp;</TD>

          <TD ROWSPAN="1" COLSPAN="1" STYLE="vertical-align: text-bottom; text-align: right">1.12</TD>

          <TD STYLE="white-space: nowrap; vertical-align: text-bottom; text-align: left">%<!-- PERCENT -->&nbsp;</TD>

          <TD ROWSPAN="1" STYLE="width: 6px; vertical-align: text-bottom; text-align: center"><!-- GUTTER -->&nbsp;</TD>

          <TD ROWSPAN="1" STYLE="width: 6px; vertical-align: text-bottom; text-align: left"><!-- $ -->&nbsp;</TD>

          <TD ROWSPAN="1" COLSPAN="1" STYLE="vertical-align: text-bottom; text-align: right">1.11</TD>

          <TD STYLE="white-space: nowrap; vertical-align: text-bottom; text-align: left">%<!-- PERCENT -->&nbsp;</TD>

          <TD ROWSPAN="1" STYLE="width: 6px; vertical-align: text-bottom; text-align: center"><!-- GUTTER -->&nbsp;</TD>

          <TD ROWSPAN="1" STYLE="width: 6px; vertical-align: text-bottom; text-align: left"><!-- $ -->&nbsp;</TD>

          <TD ROWSPAN="1" COLSPAN="1" STYLE="vertical-align: text-bottom; text-align: right">0.01</TD>

          <TD STYLE="white-space: nowrap; vertical-align: text-bottom; text-align: left">%<!-- PERCENT -->&nbsp;</TD>

</TR>

</TABLE></DIV>

<P STYLE="text-indent: 20px; text-align: left; font: normal 10pt/12pt Times New Roman, Times, Serif; margin: 0pt; padding: 3pt 0pt 3pt 4px; text-transform: none">The fair value of the Company&#146;s common stock as of the commitment date of the financing transaction was based on sales of identical shares that the Company made to unrelated parties for cash at later dates. The Company, where appropriate, adjusted the selling price of the shares as of the date of issuance based on an analysis performed by management. The results of the analysis, which gives effect to intervening events that affected the price of the Company&#146;s shares were assessed for reasonableness by comparing the proceeds allocated to each instrument in the transaction, to the discounted carrying value of the note
and the resulting yield to maturity, which amounted to 20% per annum. The life of the Note Warrants is equal to the contractual life. The expected stock price volatility computed by management was determined by examining the historical volatilities of similar companies for a number of periods at least equal to the contractual term of the Note Warrants since the Company does not have any trading history for its common stock. The risk-free interest rate assumption is based on U.S. Treasury instruments whose term was consistent with the expected term of the Note Warrants. The expected dividend assumption is based on the Company&#146;s history and expectation of dividend payouts. </P>

<H3 STYLE="text-indent: 0pt; text-align: left; font: normal italic bold 10pt/12pt Times New Roman, Times, Serif; margin: 0pt; padding: 5pt 0pt 3pt 4px; text-transform: none">July 26, 2012 Financing Transaction </H3>

<P STYLE="text-indent: 20px; text-align: left; font: normal 10pt/12pt Times New Roman, Times, Serif; margin: 0pt; padding: 3pt 0pt 3pt 4px; text-transform: none">Pursuant to the sole director&#146;s consent on May 30, 2012, the Company, on July 26, 2012, sold additional senior notes to a related party for $750,000 in face value bearing interest at the rate of 0.28% per annum and payable on June 12, 2014. The commitment date of this transaction is May 10, 2012. Simultaneously, on the same date, the Company issued 3,428,571 shares of common stock and warrants to acquire 1,285,714 shares of common stock at an exercise price of $0.75 per share with a life of seven years. The shares of the common stock (including the common stock underlying the warrants) are convertible into Series A
Preferred Stock at the option of the holder in accordance with the exchange agreement in place as of July 16, 2012. </P>

<P STYLE="text-indent: 20px; text-align: left; font: normal 10pt/12pt Times New Roman, Times, Serif; margin: 0pt; padding: 3pt 0pt 3pt 4px; text-transform: none">The warrants issued in connection with July 26, 2012 funds raised by issuing senior notes, are subject to full ratchet anti-dilution protection if the Company sells shares or share-indexed financing instruments at less than the $0.75 exercise price. The warrants issued in this financing arrangement did not meet the conditions for equity classification and are required to be classified as a derivative liability, at fair value using Binomial Lattice option-pricing model. </P>

<P STYLE="text-indent: 20px; text-align: left; font: normal 10pt/12pt Times New Roman, Times, Serif; margin: 0pt; padding: 3pt 0pt 3pt 4px; text-transform: none">The proceeds from the notes payable will be allocated among the fair valuation of the warrants, shares of the common stock and the remaining balance to the notes payable in accordance with the provisions of ASC 470. </P>

<P STYLE="text-indent: 20px; text-align: left; font: normal 10pt/12pt Times New Roman, Times, Serif; margin: 0pt; padding: 3pt 0pt 3pt 4px; text-transform: none">The Company conducted a classification assessment of the Note Warrants in accordance with the applicable provisions of ASC 815. The Company determined that the Note Warrants are not indexed to the Company&#146;s own stock and therefore require liability classification at fair value in the accompanying consolidated balance sheet. The Company allocated the proceeds received in this transaction in accordance with the applicable provisions of ASC 470 &#147;Debt&#148; (&#147;ASC 470&#148;). Accordingly, the Company allocated </P>

</DIV>

<P STYLE="width: 708px; text-indent: 0px; text-align: center; font: normal 10pt/12pt Times New Roman, Times, Serif; margin: 0pt; padding: 12pt 0pt 3pt; color: black; text-transform: none; text-decoration: none">F-50</P>

<HR STYLE="width: 708px; height: 2px; text-align: center">

<DIV ID="PN" STYLE="page-break-after: always">&nbsp;</DIV>

<DIV ID="HDR">&nbsp;</DIV>

<DIV ALIGN="CENTER" STYLE="width: 708px; border: white 1pt solid; margin: 6pt 0pt; padding: 9pt 3pt 9pt 6pt">

<P STYLE="text-align: left; font: normal bold 8pt Times New Roman, Times, Serif"><A HREF="#TOC">TABLE OF CONTENTS</A></P>

<H1 STYLE="text-indent: 0pt; text-align: center; font: normal bold 10pt/12pt Times New Roman, Times, Serif; margin: 0pt; padding: 9pt 0pt 3pt; text-transform: none">LEXINGTON TECHNOLOGY GROUP, INC. AND SUBSIDIARY<BR> (A Development Stage Company)<BR>&nbsp;&nbsp;<BR> Notes to Consolidated Financial Statements </H1>

<H2 STYLE="text-indent: 0pt; text-align: left; font: normal bold 10pt/12pt Times New Roman, Times, Serif; margin: 0pt; padding: 5pt 0pt 3pt 4px; text-transform: none">NOTE 5&nbsp;&#151;&nbsp;FINANCING TRANSACTIONS &nbsp;&#150;&nbsp;(continued)</H2>

<P STYLE="text-indent: 0pt; text-align: left; font: normal 10pt/12pt Times New Roman, Times, Serif; margin: 0pt; padding: 3pt 0pt 3pt 4px; text-transform: none">$0.2 million to the Shares by recording an increase to par value and additional paid-in-capital in stockholders equity, $0.1 million to the Note Warrants as a warrant liability and the remaining proceeds of $0.5 million to the Notes. The discount on the Notes, which amounts to $0.3 million on the date of the financing transaction, is being accreted over the term of the Notes to the contractual maturity amount of $0.8 million. Accretion is being recorded as a periodic increase to the Notes balance and component of interest expense in the accompanying consolidated statement of operations. </P>

<P STYLE="text-indent: 20px; text-align: left; font: normal 10pt/12pt Times New Roman, Times, Serif; margin: 0pt; padding: 3pt 0pt 3pt 4px; text-transform: none">Management determined that the fair value of the July 26, 2012 Note Warrants amounted to approximately $53,000 on their date of issuance and approximately 964,000 on August 9, 2012. On August 1, 2012, the warrant holders elected to accelerate the expiration date of all the subscription warrants to August 9, 2012. On August 9, 2012, all outstanding Note Warrants from the July 26, 2012 Financing Transaction were exercised for common stock. The exercise of Note Warrants resulted in the reclassification of the associated Warrant Liability of approximately 964,000 (at fair value) as equity. The change to the fair value of the Note
Warrants of approximately $911,000 was recorded as a loss on change in fair value of warrant liability in the statement of for the six months ended December 31, 2012. </P>

<P STYLE="text-indent: 20px; text-align: left; font: normal 10pt/12pt Times New Roman, Times, Serif; margin: 0pt; padding: 3pt 0pt 3pt 4px; text-transform: none">The Company used the Binomial Lattice model to compute the fair value of the Note Warrants. The key assumptions used to calculate the fair values of the Note Warrants on the date of issuance and the exercise date of August 9, 2012 are as follows: </P>

<P STYLE="text-indent: 0pt; text-align: left; font: normal 10pt/12pt Times New Roman, Times, Serif; margin: 0pt; padding: 3pt 0pt 3pt 4px; text-transform: none"></P>

<DIV STYLE="text-align: center"><TABLE CELLSPACING="0" CELLPADDING="0" WIDTH="554" STYLE="vertical-align: text-bottom; text-indent: 0px; text-align: left; font: normal 10pt Times New Roman, Times, Serif; margin: -24pt 0pt 0pt; padding: 3pt 0pt; text-transform: none">

<TR>

          <TD><IMG HEIGHT="1" SRC="spacer.gif" WIDTH="354"></TD>

          <TD STYLE="width: 12px; vertical-align: text-bottom; text-align: center; border-bottom-style: none"><!-- GUTTER -->&nbsp;</TD>

          <TD COLSPAN="3"><IMG HEIGHT="1" SRC="spacer.gif" WIDTH="80"></TD>

          <TD STYLE="width: 12px; vertical-align: text-bottom; text-align: center; border-bottom-style: none"><!-- GUTTER -->&nbsp;</TD>

          <TD COLSPAN="3"><IMG HEIGHT="1" SRC="spacer.gif" WIDTH="88"></TD>

</TR>

<TR>

          <TD ROWSPAN="1" COLSPAN="1" STYLE="line-height: normal; vertical-align: text-bottom; font-weight: bold; font-size: 8pt; text-align: left; border-bottom: black 1pt solid">July 26, 2012 Note Warrant</TD>

          <TD ROWSPAN="1" STYLE="width: 6px; vertical-align: text-bottom; text-align: center"><!-- GUTTER -->&nbsp;</TD>

          <TD ROWSPAN="1" COLSPAN="3" STYLE="line-height: normal; vertical-align: text-bottom; font-weight: bold; font-size: 8pt; text-align: center; border-bottom: black 1pt solid">Date of issuance July 26, 2012</TD>

          <TD ROWSPAN="1" STYLE="width: 6px; vertical-align: text-bottom; text-align: center"><!-- GUTTER -->&nbsp;</TD>

          <TD ROWSPAN="1" COLSPAN="3" STYLE="line-height: normal; vertical-align: text-bottom; font-weight: bold; font-size: 8pt; text-align: center; border-bottom: black 1pt solid">Exercise date August 9, 2012</TD>

</TR>

<TR STYLE="background-color: #CCFFCC">

          <TD ROWSPAN="1" COLSPAN="1" STYLE="padding-left: 10pt; text-indent: -10pt; vertical-align: text-bottom">Market price of common stock</TD>

          <TD ROWSPAN="1" STYLE="width: 6px; vertical-align: text-bottom; text-align: center"><!-- GUTTER -->&nbsp;</TD>

          <TD ROWSPAN="1" STYLE="width: 6px; vertical-align: text-bottom; text-align: left"><!-- $ -->$</TD>

          <TD ROWSPAN="1" COLSPAN="1" STYLE="vertical-align: text-bottom; text-align: right"> 0.057</TD>

          <TD STYLE="white-space: nowrap; vertical-align: text-bottom; text-align: left"><!-- PERCENT -->&nbsp;</TD>

          <TD ROWSPAN="1" STYLE="width: 6px; vertical-align: text-bottom; text-align: center"><!-- GUTTER -->&nbsp;</TD>

          <TD ROWSPAN="1" STYLE="width: 6px; vertical-align: text-bottom; text-align: left"><!-- $ -->$</TD>

          <TD ROWSPAN="1" COLSPAN="1" STYLE="vertical-align: text-bottom; text-align: right"> 1.50</TD>

          <TD STYLE="white-space: nowrap; vertical-align: text-bottom; text-align: left"><!-- PERCENT -->&nbsp;</TD>

</TR>

<TR STYLE="background-color: white">

          <TD ROWSPAN="1" COLSPAN="1" STYLE="padding-left: 10pt; text-indent: -10pt; vertical-align: text-bottom">Exercise price of Note Warrants</TD>

          <TD ROWSPAN="1" STYLE="width: 6px; vertical-align: text-bottom; text-align: center"><!-- GUTTER -->&nbsp;</TD>

          <TD ROWSPAN="1" STYLE="width: 6px; vertical-align: text-bottom; text-align: left"><!-- $ -->$</TD>

          <TD ROWSPAN="1" COLSPAN="1" STYLE="vertical-align: text-bottom; text-align: right">0.75</TD>

          <TD STYLE="white-space: nowrap; vertical-align: text-bottom; text-align: left"><!-- PERCENT -->&nbsp;</TD>

          <TD ROWSPAN="1" STYLE="width: 6px; vertical-align: text-bottom; text-align: center"><!-- GUTTER -->&nbsp;</TD>

          <TD ROWSPAN="1" STYLE="width: 6px; vertical-align: text-bottom; text-align: left"><!-- $ -->$</TD>

          <TD ROWSPAN="1" COLSPAN="1" STYLE="vertical-align: text-bottom; text-align: right">0.75</TD>

          <TD STYLE="white-space: nowrap; vertical-align: text-bottom; text-align: left"><!-- PERCENT -->&nbsp;</TD>

</TR>

<TR STYLE="background-color: #CCFFCC">

          <TD ROWSPAN="1" COLSPAN="1" STYLE="padding-left: 10pt; text-indent: -10pt; vertical-align: text-bottom">Contractual term</TD>

          <TD ROWSPAN="1" STYLE="width: 6px; vertical-align: text-bottom; text-align: center"><!-- GUTTER -->&nbsp;</TD>

          <TD ROWSPAN="1" STYLE="width: 6px; vertical-align: text-bottom; text-align: left"><!-- $ -->&nbsp;</TD>

          <TD ROWSPAN="1" COLSPAN="1" STYLE="vertical-align: text-bottom; text-align: center">7 years</TD>

          <TD STYLE="white-space: nowrap; vertical-align: text-bottom; text-align: left"><!-- PERCENT -->&nbsp;</TD>

          <TD ROWSPAN="1" STYLE="width: 6px; vertical-align: text-bottom; text-align: center"><!-- GUTTER -->&nbsp;</TD>

          <TD ROWSPAN="1" STYLE="width: 6px; vertical-align: text-bottom; text-align: left"><!-- $ -->&nbsp;</TD>

          <TD ROWSPAN="1" COLSPAN="1" STYLE="vertical-align: text-bottom; text-align: center">0.00 years</TD>

          <TD STYLE="white-space: nowrap; vertical-align: text-bottom; text-align: left"><!-- PERCENT -->&nbsp;</TD>

</TR>

<TR STYLE="background-color: white">

          <TD ROWSPAN="1" COLSPAN="1" STYLE="padding-left: 10pt; text-indent: -10pt; vertical-align: text-bottom">Expected volatility</TD>

          <TD ROWSPAN="1" STYLE="width: 6px; vertical-align: text-bottom; text-align: center"><!-- GUTTER -->&nbsp;</TD>

          <TD ROWSPAN="1" STYLE="width: 6px; vertical-align: text-bottom; text-align: left"><!-- $ -->&nbsp;</TD>

          <TD ROWSPAN="1" COLSPAN="1" STYLE="vertical-align: text-bottom; text-align: right">124</TD>

          <TD STYLE="white-space: nowrap; vertical-align: text-bottom; text-align: left">%<!-- PERCENT -->&nbsp;</TD>

          <TD ROWSPAN="1" STYLE="width: 6px; vertical-align: text-bottom; text-align: center"><!-- GUTTER -->&nbsp;</TD>

          <TD ROWSPAN="1" STYLE="width: 6px; vertical-align: text-bottom; text-align: left"><!-- $ -->&nbsp;</TD>

          <TD ROWSPAN="1" COLSPAN="1" STYLE="vertical-align: text-bottom; text-align: right">124</TD>

          <TD STYLE="white-space: nowrap; vertical-align: text-bottom; text-align: left">%<!-- PERCENT -->&nbsp;</TD>

</TR>

<TR STYLE="background-color: #CCFFCC">

          <TD ROWSPAN="1" COLSPAN="1" STYLE="padding-left: 10pt; text-indent: -10pt; vertical-align: text-bottom">Expected dividend yield</TD>

          <TD ROWSPAN="1" STYLE="width: 6px; vertical-align: text-bottom; text-align: center"><!-- GUTTER -->&nbsp;</TD>

          <TD ROWSPAN="1" STYLE="width: 6px; vertical-align: text-bottom; text-align: left"><!-- $ -->&nbsp;</TD>

          <TD ROWSPAN="1" COLSPAN="1" STYLE="vertical-align: text-bottom; text-align: right">0</TD>

          <TD STYLE="white-space: nowrap; vertical-align: text-bottom; text-align: left">%<!-- PERCENT -->&nbsp;</TD>

          <TD ROWSPAN="1" STYLE="width: 6px; vertical-align: text-bottom; text-align: center"><!-- GUTTER -->&nbsp;</TD>

          <TD ROWSPAN="1" STYLE="width: 6px; vertical-align: text-bottom; text-align: left"><!-- $ -->&nbsp;</TD>

          <TD ROWSPAN="1" COLSPAN="1" STYLE="vertical-align: text-bottom; text-align: right">0</TD>

          <TD STYLE="white-space: nowrap; vertical-align: text-bottom; text-align: left">%<!-- PERCENT -->&nbsp;</TD>

</TR>

<TR STYLE="background-color: white">

          <TD ROWSPAN="1" COLSPAN="1" STYLE="padding-left: 10pt; text-indent: -10pt; vertical-align: text-bottom">Risk free interest rate</TD>

          <TD ROWSPAN="1" STYLE="width: 6px; vertical-align: text-bottom; text-align: center"><!-- GUTTER -->&nbsp;</TD>

          <TD ROWSPAN="1" STYLE="width: 6px; vertical-align: text-bottom; text-align: left"><!-- $ -->&nbsp;</TD>

          <TD ROWSPAN="1" COLSPAN="1" STYLE="vertical-align: text-bottom; text-align: right">1.12</TD>

          <TD STYLE="white-space: nowrap; vertical-align: text-bottom; text-align: left">%<!-- PERCENT -->&nbsp;</TD>

          <TD ROWSPAN="1" STYLE="width: 6px; vertical-align: text-bottom; text-align: center"><!-- GUTTER -->&nbsp;</TD>

          <TD ROWSPAN="1" STYLE="width: 6px; vertical-align: text-bottom; text-align: left"><!-- $ -->&nbsp;</TD>

          <TD ROWSPAN="1" COLSPAN="1" STYLE="vertical-align: text-bottom; text-align: right">0.1</TD>

          <TD STYLE="white-space: nowrap; vertical-align: text-bottom; text-align: left">%<!-- PERCENT -->&nbsp;</TD>

</TR>

</TABLE></DIV>

<P STYLE="text-indent: 20px; text-align: left; font: normal 10pt/12pt Times New Roman, Times, Serif; margin: 0pt; padding: 3pt 0pt 3pt 4px; text-transform: none">The fair value of the Company&#146;s common stock as of the commitment date of the financing transaction was based on sales of identical shares that the Company made to unrelated parties for cash at later dates. The Company adjusted the selling price of the shares as of the date of issuance based on an analysis performed by management. The results of the analysis, which gives effect to intervening events that affected the price of the Company&#146;s shares were assessed for reasonableness by comparing the proceeds allocated to each instrument in the transaction, to the discounted carrying value of the note and the resulting
yield to maturity, which amounted to 20% per annum. The life of the Note Warrants is equal to the contractual life. The expected stock price volatility computed by management was determined by examining the historical volatilities of similar companies for a number of periods at least equal to the contractual term of the Note Warrants since the Company does not have any trading history for its common stock. The risk-free interest rate assumption is based on U.S. Treasury instruments whose term was consistent with the expected term of the Note Warrants. The expected dividend assumption is based on the Company&#146;s history and expectation of dividend payouts. </P>

<H3 STYLE="text-indent: 0pt; text-align: left; font: normal italic bold 10pt/12pt Times New Roman, Times, Serif; margin: 0pt; padding: 5pt 0pt 3pt 4px; text-transform: none">Note Debt Discount and Interest </H3>

<P STYLE="text-indent: 20px; text-align: left; font: normal 10pt/12pt Times New Roman, Times, Serif; margin: 0pt; padding: 3pt 0pt 3pt 4px; text-transform: none">Contractual interest expense on the Notes was immaterial for the period of May 10, 2012 (inception) through December 31, 2012. Accretion recorded as a component of interest expense amounted to $0.6 million for the period of May 10, 2012 (inception) through December 31, 2012 and $0.6 million for the six months ended December 31, 2012. During the six months ended December 31, 2012, the Company converted approximately $937,000 of senior notes into 625,136 shares of the Company&#146;s common stock at $1.50 per share (see Note 6). Due to conversion of senior notes, the Company proportionately accelerated accretion of the discount
and recorded it as interest expense. The remaining note discount of approximately $0.8 million will be accreted through the contractual term of the senior notes.</P>

</DIV>

<P STYLE="width: 708px; text-indent: 0px; text-align: center; font: normal 10pt/12pt Times New Roman, Times, Serif; margin: 0pt; padding: 12pt 0pt 3pt; color: black; text-transform: none; text-decoration: none">F-51</P>

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<DIV ID="PN" STYLE="page-break-after: always">&nbsp;</DIV>

<DIV ID="HDR">&nbsp;</DIV>

<DIV ALIGN="CENTER" STYLE="width: 708px; border: white 1pt solid; margin: 6pt 0pt; padding: 9pt 3pt 9pt 6pt">

<P STYLE="text-align: left; font: normal bold 8pt Times New Roman, Times, Serif"><A HREF="#TOC">TABLE OF CONTENTS</A></P>

<H1 STYLE="text-indent: 0pt; text-align: center; font: normal bold 10pt/12pt Times New Roman, Times, Serif; margin: 0pt; padding: 9pt 0pt 3pt; text-transform: none">LEXINGTON TECHNOLOGY GROUP, INC. AND SUBSIDIARY<BR> (A Development Stage Company)<BR>&nbsp;&nbsp;<BR> Notes to Consolidated Financial Statements </H1>

<H2 STYLE="text-indent: 0pt; text-align: left; font: normal bold 10pt/12pt Times New Roman, Times, Serif; margin: 0pt; padding: 5pt 0pt 3pt 4px; text-transform: none">NOTE 6&nbsp;&#151;&nbsp;CAPITAL STRUCTURE AND STOCKHOLDERS&#146; DEFICIENCY </H2>

<H3 STYLE="text-indent: 0pt; text-align: left; font: normal italic bold 10pt/12pt Times New Roman, Times, Serif; margin: 0pt; padding: 5pt 0pt 3pt 4px; text-transform: none">Preferred Stock </H3>

<P STYLE="text-indent: 20px; text-align: left; font: normal 10pt/12pt Times New Roman, Times, Serif; margin: 0pt; padding: 3pt 0pt 3pt 4px; text-transform: none">On July 13, 2012 the Company filed a Certificate of Designation with the Secretary of State of Delaware to authorize the issuance of up to 29,000,000 shares (27,225,000 authorized for Series A) of preferred stock, par value $0.0001 which have been designated as Series A Preferred Stock with such rights and preferences designated in the Company&#146;s Certificate of Designation (the &#147;Series A Preferred Stock&#148;). In the event of any liquidation, dissolution, or winding up of the Corporation, whether voluntary or involuntary, or in the event of its insolvency, and after provision for payment of all debts and liabilities
of the Company in accordance with the Delaware General Corporation Law, any remaining assets of the Company shall be distributed pro rata to the holders of common stock and the holders of Series A Preferred Stock as if the Series A Preferred Stock had been converted into shares of common stock. </P>

<P STYLE="text-indent: 20px; text-align: left; font: normal 10pt/12pt Times New Roman, Times, Serif; margin: 0pt; padding: 3pt 0pt 3pt 4px; text-transform: none">On July 16, 2012, the Company entered into an exchange agreement whereby the Company offered to all of its stockholders a right to exchange up to 99% of their shares of common stock for the same number of shares of Series A Preferred Stock, $0.0001 par value and gave the holders of its warrants the right to elect to exchange the common stock underlying such warrants for Series A Preferred Stock. On the same date common stock holders exchanged 13,799,440 shares of $0.0001 par value common stock into 13,799,440 shares of Series A Preferred Stock with a par value of $0.0001 per share. The exchange did not have any impact on the
Company&#146;s consolidated financial statements as the benefit of exchanging the common for the preferred is nominal. </P>

<P STYLE="text-indent: 20px; text-align: left; font: normal 10pt/12pt Times New Roman, Times, Serif; margin: 0pt; padding: 3pt 0pt 3pt 4px; text-transform: none">The holders of Series A Preferred Stock will be entitled to vote together with the holders of the common stock and as a single class on all matters submitted for a vote of holders of common stock. When voting together with the holders of common stock, each share of Series A Preferred Stock shall entitle the holder thereof to such number of votes per share on each such action as will equal the number of shares of common stock into which each share of such Series A Preferred Stock is then convertible. In the event of any liquidation, dissolution, or winding up of the Company and after provision for payment of all debts and
liabilities of the Company, any remaining assets of the Company shall be distributed pro rata to the holders of common stock and the holders of Series A Preferred Stock as if the Series A Preferred Stock had been converted into shares of common stock. </P>

<H3 STYLE="text-indent: 0pt; text-align: left; font: normal italic bold 10pt/12pt Times New Roman, Times, Serif; margin: 0pt; padding: 5pt 0pt 3pt 4px; text-transform: none">Common Stock </H3>

<P STYLE="text-indent: 20px; text-align: left; font: normal 10pt/12pt Times New Roman, Times, Serif; margin: 0pt; padding: 3pt 0pt 3pt 4px; text-transform: none">The authorized common stock of the Company consists of 100,000,000 shares of common stock with par value of $0.0001. </P>

<P STYLE="text-indent: 20px; text-align: left; font: normal 10pt/12pt Times New Roman, Times, Serif; margin: 0pt; padding: 3pt 0pt 3pt 4px; text-transform: none">The voting, dividend and liquidation rights of the holders of the common stock are subject to and qualified by the rights of the holders of the preferred stock of any series. The holders of common stock are entitled to one vote for each share held at all the meetings of stockholders. Upon the dissolution or liquidation of the Company, holders of common stock will be entitled to receive ratably all the assets of the Company available for distribution, subject to any preferential rights of any then outstanding preferred stock. </P>

<P STYLE="text-indent: 20px; text-align: left; font: normal 10pt/12pt Times New Roman, Times, Serif; margin: 0pt; padding: 3pt 0pt 3pt 4px; text-transform: none">On August 9, 2012 all 7,500,000 outstanding Note Warrants (see Note 5) were exercised at a price of $0.75 each for a total of $5,625,000. The Company issued 4,114,287 shares of Series A Preferred Stock and 3,385,713 shares of common stock upon the exercise of warrants. </P>

<P STYLE="text-indent: 20px; text-align: left; font: normal 10pt/12pt Times New Roman, Times, Serif; margin: 0pt; padding: 3pt 0pt 3pt 4px; text-transform: none">On August 16, 2012, the Company sold 3,651,316 shares of common stock in a private placement to certain investors for $1.50 per share for gross proceeds of approximately $5,477,000 before selling commissions of approximately $381,000. </P>

<P STYLE="text-indent: 20px; text-align: left; font: normal 10pt/12pt Times New Roman, Times, Serif; margin: 0pt; padding: 3pt 0pt 3pt 4px; text-transform: none">During the three months ended December 31, 2012, the Company converted $937,000 of notes into 625,136 common shares at a conversion price of $1.50 per share. </P>

</DIV>

<P STYLE="width: 708px; text-indent: 0px; text-align: center; font: normal 10pt/12pt Times New Roman, Times, Serif; margin: 0pt; padding: 12pt 0pt 3pt; color: black; text-transform: none; text-decoration: none">F-52</P>

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<P STYLE="text-align: left; font: normal bold 8pt Times New Roman, Times, Serif"><A HREF="#TOC">TABLE OF CONTENTS</A></P>

<H1 STYLE="text-indent: 0pt; text-align: center; font: normal bold 10pt/12pt Times New Roman, Times, Serif; margin: 0pt; padding: 9pt 0pt 3pt; text-transform: none">LEXINGTON TECHNOLOGY GROUP, INC. AND SUBSIDIARY<BR> (A Development Stage Company)<BR>&nbsp;&nbsp;<BR> Notes to Consolidated Financial Statements </H1>

<H2 STYLE="text-indent: 0pt; text-align: left; font: normal bold 10pt/12pt Times New Roman, Times, Serif; margin: 0pt; padding: 5pt 0pt 3pt 4px; text-transform: none">NOTE 7&nbsp;&#151;&nbsp;INVESTMENTS </H2>

<P STYLE="text-indent: 20px; text-align: left; font: normal 10pt/12pt Times New Roman, Times, Serif; margin: 0pt; padding: 3pt 0pt 3pt 4px; text-transform: none">Concurrently with the execution of the Merger Agreement, on October 1, 2012, DSS entered into subscription agreements with certain accredited investors, pursuant to which DSS agreed to issue and sell to such investors in a private placement an aggregate of 833,651 shares of its common stock, at a purchase price of $3.30 per share, for an aggregate purchase price of $2,751,048 (the &#147;Private Placement&#148;). The Private Placement was completed on October 1, 2012. LTG participated in the private placement and purchased an aggregate of 218,675 shares of DSS common stock, at a purchase price of $3.30 per share, for an
aggregate purchase price of $0.7 million. </P>

<P STYLE="text-indent: 20px; text-align: left; font: normal 10pt/12pt Times New Roman, Times, Serif; margin: 0pt; padding: 3pt 0pt 3pt 4px; text-transform: none">LTG elected to adopt the fair value option because the investment in DSS is a recognized financial asset. LTG recorded this investment at fair value with the change in fair value recorded through earnings. From October 1, 2012 through December 31, 2012, the Company recorded a $0.3 million unrealized loss. </P>

<H2 STYLE="text-indent: 0pt; text-align: left; font: normal bold 10pt/12pt Times New Roman, Times, Serif; margin: 0pt; padding: 5pt 0pt 3pt 4px; text-transform: none">NOTE 8&nbsp;&#151;&nbsp;STOCK BASED COMPENSATION </H2>

<P STYLE="text-indent: 20px; text-align: left; font: normal 10pt/12pt Times New Roman, Times, Serif; margin: 0pt; padding: 3pt 0pt 3pt 4px; text-transform: none">On November 20, 2012 LTG granted 200,000 shares of restricted common stock, of which 100,000 shares vested immediately and 100,000 shares vest in February 2013. LTG also granted on November 20, 2012 non-statutory options to purchase up to 3,600,000 shares of its common stock, at an exercise price of $1.67 per share and a contractual term of ten years. </P>

<P STYLE="text-indent: 20px; text-align: left; font: normal 10pt/12pt Times New Roman, Times, Serif; margin: 0pt; padding: 3pt 0pt 3pt 4px; text-transform: none">The Company recorded stock-based compensation of $0.2 million for the six month periods ended December 31, 2012. The unamortized deferred stock-based compensation balance as of December 31, 2012 was $2.3 million and will be fully amortized through 2015. </P>

<P STYLE="text-indent: 20px; text-align: left; font: normal 10pt/12pt Times New Roman, Times, Serif; margin: 0pt; padding: 3pt 0pt 3pt 4px; text-transform: none">The Company estimates the fair value of stock option grants using a Black-Scholes option pricing model. In applying this model, the Company uses the following assumptions: </P>

<TABLE CELLSPACING="0" CELLPADDING="0" WIDTH="100%" STYLE="text-indent: 0px; text-align: left; font: normal 10pt/12pt Times New Roman, Times, Serif; margin: 0pt; padding: 3pt 0pt; text-transform: none">

<TR STYLE="font-weight: normal; font-style: normal; line-height: 12pt; font-size: 10pt; vertical-align: top; text-align: left">

          <TD STYLE="width: 21px"></TD>

          <TD STYLE="width: 24px; text-align: left">&#149;</TD>

          <TD STYLE="text-align: left"><I>Risk-Free Interest Rate:</I>&nbsp;&nbsp;The Company determined the risk-free interest rate equivalent to the expected term based on the U.S. Treasury constant maturity rate. </TD>

</TR>

</TABLE>

<TABLE CELLSPACING="0" CELLPADDING="0" WIDTH="100%" STYLE="text-indent: 0px; text-align: left; font: normal 10pt/12pt Times New Roman, Times, Serif; margin: 0pt; padding: 3pt 0pt; text-transform: none">

<TR STYLE="font-weight: normal; font-style: normal; line-height: 12pt; font-size: 10pt; vertical-align: top; text-align: left">

          <TD STYLE="width: 21px"></TD>

          <TD STYLE="width: 24px; text-align: left">&#149;</TD>

          <TD STYLE="text-align: left"><I>Expected Volatility:</I>&nbsp;&nbsp;The Company determined its future stock price volatility based on the average historical stock price volatility of comparable peer companies. </TD>

</TR>

</TABLE>

<TABLE CELLSPACING="0" CELLPADDING="0" WIDTH="100%" STYLE="text-indent: 0px; text-align: left; font: normal 10pt/12pt Times New Roman, Times, Serif; margin: 0pt; padding: 3pt 0pt; text-transform: none">

<TR STYLE="font-weight: normal; font-style: normal; line-height: 12pt; font-size: 10pt; vertical-align: top; text-align: left">

          <TD STYLE="width: 21px"></TD>

          <TD STYLE="width: 24px; text-align: left">&#149;</TD>

          <TD STYLE="text-align: left"><I>Expected Term:</I>&nbsp;&nbsp;Due to the limited exercise history of the Company&#146;s stock options, the Company determined the expected term based on the stratification of employee groups and the expected effect of events that have indications on future exercise activity. Expected life for options granted to employees uses the Simplified Method, while option granted to non-employees uses an expected term equal to the life of the contract. </TD>

</TR>

</TABLE>

<TABLE CELLSPACING="0" CELLPADDING="0" WIDTH="100%" STYLE="text-indent: 0px; text-align: left; font: normal 10pt/12pt Times New Roman, Times, Serif; margin: 0pt; padding: 3pt 0pt; text-transform: none">

<TR STYLE="font-weight: normal; font-style: normal; line-height: 12pt; font-size: 10pt; vertical-align: top; text-align: left">

          <TD STYLE="width: 21px"></TD>

          <TD STYLE="width: 24px; text-align: left">&#149;</TD>

          <TD STYLE="text-align: left"><I>Expected Dividend Rate:</I>&nbsp;&nbsp;The Company has not paid and does not anticipate paying any cash dividends in the near future. </TD>

</TR>

</TABLE>

</DIV>

<P STYLE="width: 708px; text-indent: 0px; text-align: center; font: normal 10pt/12pt Times New Roman, Times, Serif; margin: 0pt; padding: 12pt 0pt 3pt; color: black; text-transform: none; text-decoration: none">F-53</P>

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<DIV ID="HDR">&nbsp;</DIV>

<DIV ALIGN="CENTER" STYLE="width: 708px; border: white 1pt solid; margin: 6pt 0pt; padding: 9pt 3pt 9pt 6pt">

<P STYLE="text-align: left; font: normal bold 8pt Times New Roman, Times, Serif">TABLE OF CONTENTS</P>

<H1 STYLE="text-indent: 0pt; text-align: center; font: normal bold 10pt/12pt Times New Roman, Times, Serif; margin: 0pt; padding: 9pt 0pt 3pt; text-transform: none">LEXINGTON TECHNOLOGY GROUP, INC. AND SUBSIDIARY<BR> (A Development Stage Company)<BR>&nbsp;&nbsp;<BR> Notes to Consolidated Financial Statements </H1>

<H2 STYLE="text-indent: 0pt; text-align: left; font: normal bold 10pt/12pt Times New Roman, Times, Serif; margin: 0pt; padding: 5pt 0pt 3pt 4px; text-transform: none">NOTE 8&nbsp;&#151;&nbsp;STOCK BASED COMPENSATION &nbsp;&#150;&nbsp;(continued)</H2>

<P STYLE="text-indent: 20px; text-align: left; font: normal 10pt/12pt Times New Roman, Times, Serif; margin: 0pt; padding: 3pt 0pt 3pt 4px; text-transform: none">The fair value of each option award was estimated on the grant date using the Black Scholes option-pricing model and expensed under the straight line method. The following assumptions were used: </P>

<P STYLE="text-indent: 0pt; text-align: left; font: normal 10pt/12pt Times New Roman, Times, Serif; margin: 0pt; padding: 3pt 0pt 3pt 4px; text-transform: none"></P>

<DIV STYLE="text-align: center"><TABLE CELLSPACING="0" CELLPADDING="0" WIDTH="554" STYLE="vertical-align: text-bottom; text-indent: 0px; text-align: left; font: normal 10pt Times New Roman, Times, Serif; margin: -24pt 0pt 0pt; padding: 3pt 0pt; text-transform: none">

<TR>

          <TD><IMG HEIGHT="1" SRC="spacer.gif" WIDTH="450"></TD>

          <TD STYLE="width: 12px; vertical-align: text-bottom; text-align: center; border-bottom-style: none"><!-- GUTTER -->&nbsp;</TD>

          <TD COLSPAN="3"><IMG HEIGHT="1" SRC="spacer.gif" WIDTH="88"></TD>

</TR>

<TR>

          <TD ROWSPAN="1" COLSPAN="1" STYLE="line-height: normal; vertical-align: text-bottom; font-weight: bold; font-size: 8pt; text-align: left"></TD>

          <TD ROWSPAN="1" STYLE="width: 6px; vertical-align: text-bottom; text-align: center"><!-- GUTTER -->&nbsp;</TD>

          <TD ROWSPAN="1" COLSPAN="3" STYLE="line-height: normal; vertical-align: text-bottom; font-weight: bold; font-size: 8pt; text-align: center; border-bottom: black 1pt solid">2012</TD>

</TR>

<TR STYLE="background-color: #CCFFCC">

          <TD ROWSPAN="1" COLSPAN="1" STYLE="padding-left: 10pt; text-indent: -10pt; vertical-align: text-bottom">Exercise price</TD>

          <TD ROWSPAN="1" STYLE="width: 6px; vertical-align: text-bottom; text-align: center"><!-- GUTTER -->&nbsp;</TD>

          <TD ROWSPAN="1" STYLE="width: 6px; vertical-align: text-bottom; text-align: left"><!-- $ -->$</TD>

          <TD ROWSPAN="1" COLSPAN="1" STYLE="vertical-align: text-bottom; text-align: right">1.67</TD>

          <TD STYLE="white-space: nowrap; vertical-align: text-bottom; text-align: left"><!-- PERCENT -->&nbsp;</TD>

</TR>

<TR STYLE="background-color: white">

          <TD ROWSPAN="1" COLSPAN="1" STYLE="padding-left: 10pt; text-indent: -10pt; vertical-align: text-bottom">Expected stock price volatility</TD>

          <TD ROWSPAN="1" STYLE="width: 6px; vertical-align: text-bottom; text-align: center"><!-- GUTTER -->&nbsp;</TD>

          <TD ROWSPAN="1" STYLE="width: 6px; vertical-align: text-bottom; text-align: left"><!-- $ -->&nbsp;</TD>

          <TD ROWSPAN="1" COLSPAN="1" STYLE="vertical-align: text-bottom; text-align: right">77</TD>

          <TD STYLE="white-space: nowrap; vertical-align: text-bottom; text-align: left">%<!-- PERCENT -->&nbsp;</TD>

</TR>

<TR STYLE="background-color: #CCFFCC">

          <TD ROWSPAN="1" COLSPAN="1" STYLE="padding-left: 10pt; text-indent: -10pt; vertical-align: text-bottom">Risk free rate of interest</TD>

          <TD ROWSPAN="1" STYLE="width: 6px; vertical-align: text-bottom; text-align: center"><!-- GUTTER -->&nbsp;</TD>

          <TD ROWSPAN="1" STYLE="width: 6px; vertical-align: text-bottom; text-align: left"><!-- $ -->&nbsp;</TD>

          <TD ROWSPAN="1" COLSPAN="1" STYLE="vertical-align: text-bottom; text-align: right">0.05</TD>

          <TD STYLE="white-space: nowrap; vertical-align: text-bottom; text-align: left">%<!-- PERCENT -->&nbsp;</TD>

</TR>

<TR STYLE="background-color: white">

          <TD ROWSPAN="1" COLSPAN="1" STYLE="padding-left: 10pt; text-indent: -10pt; vertical-align: text-bottom">Expected life of options</TD>

          <TD ROWSPAN="1" STYLE="width: 6px; vertical-align: text-bottom; text-align: center"><!-- GUTTER -->&nbsp;</TD>

          <TD ROWSPAN="1" STYLE="width: 6px; vertical-align: text-bottom; text-align: left"><!-- $ -->&nbsp;</TD>

          <TD ROWSPAN="1" COLSPAN="1" STYLE="vertical-align: text-bottom; text-align: center">6.5 years</TD>

          <TD STYLE="white-space: nowrap; vertical-align: text-bottom; text-align: left"><!-- PERCENT -->&nbsp;</TD>

</TR>

</TABLE></DIV>

<P STYLE="text-indent: 0pt; text-align: left; font: normal 4pt/6pt Times New Roman, Times, Serif; margin: 0pt; padding: 3pt 0pt 3pt 4px; text-transform: none">&nbsp;&nbsp;</P>

<P STYLE="text-indent: 20px; text-align: left; font: normal 10pt/12pt Times New Roman, Times, Serif; margin: 0pt; padding: 3pt 0pt 3pt 4px; text-transform: none">A summary of stock options outstanding as of June 30, 2012 is as follows: </P>

<P STYLE="text-indent: 0pt; text-align: left; font: normal 10pt/12pt Times New Roman, Times, Serif; margin: 0pt; padding: 3pt 0pt 3pt 4px; text-transform: none"></P>

<DIV STYLE="text-align: center"><TABLE CELLSPACING="0" CELLPADDING="0" WIDTH="608" STYLE="vertical-align: text-bottom; text-indent: 0px; text-align: left; font: normal 10pt Times New Roman, Times, Serif; margin: -24pt 0pt 0pt; padding: 3pt 0pt; text-transform: none">

<TR>

          <TD><IMG HEIGHT="1" SRC="spacer.gif" WIDTH="240"></TD>

          <TD STYLE="width: 12px; vertical-align: text-bottom; text-align: center; border-bottom-style: none"><!-- GUTTER -->&nbsp;</TD>

          <TD COLSPAN="3"><IMG HEIGHT="1" SRC="spacer.gif" WIDTH="56"></TD>

          <TD STYLE="width: 12px; vertical-align: text-bottom; text-align: center; border-bottom-style: none"><!-- GUTTER -->&nbsp;</TD>

          <TD COLSPAN="3"><IMG HEIGHT="1" SRC="spacer.gif" WIDTH="56"></TD>

          <TD STYLE="width: 12px; vertical-align: text-bottom; text-align: center; border-bottom-style: none"><!-- GUTTER -->&nbsp;</TD>

          <TD COLSPAN="3"><IMG HEIGHT="1" SRC="spacer.gif" WIDTH="56"></TD>

          <TD STYLE="width: 12px; vertical-align: text-bottom; text-align: center; border-bottom-style: none"><!-- GUTTER -->&nbsp;</TD>

          <TD COLSPAN="3"><IMG HEIGHT="1" SRC="spacer.gif" WIDTH="56"></TD>

          <TD STYLE="width: 12px; vertical-align: text-bottom; text-align: center; border-bottom-style: none"><!-- GUTTER -->&nbsp;</TD>

          <TD COLSPAN="3"><IMG HEIGHT="1" SRC="spacer.gif" WIDTH="64"></TD>

</TR>

<TR>

          <TD ROWSPAN="1" COLSPAN="1" STYLE="line-height: normal; vertical-align: text-bottom; font-weight: bold; font-size: 8pt; text-align: left; border-bottom: black 1pt solid">Stock Options</TD>

          <TD ROWSPAN="1" STYLE="width: 6px; vertical-align: text-bottom; text-align: center"><!-- GUTTER -->&nbsp;</TD>

          <TD ROWSPAN="1" COLSPAN="3" STYLE="line-height: normal; vertical-align: text-bottom; font-weight: bold; font-size: 8pt; text-align: center; border-bottom: black 1pt solid">Number of Options</TD>

          <TD ROWSPAN="1" STYLE="width: 6px; vertical-align: text-bottom; text-align: center"><!-- GUTTER -->&nbsp;</TD>

          <TD ROWSPAN="1" COLSPAN="3" STYLE="line-height: normal; vertical-align: text-bottom; font-weight: bold; font-size: 8pt; text-align: center; border-bottom: black 1pt solid">Weighted Average Exercise Price</TD>

          <TD ROWSPAN="1" STYLE="width: 6px; vertical-align: text-bottom; text-align: center"><!-- GUTTER -->&nbsp;</TD>

          <TD ROWSPAN="1" COLSPAN="3" STYLE="line-height: normal; vertical-align: text-bottom; font-weight: bold; font-size: 8pt; text-align: center; border-bottom: black 1pt solid">Weighted Average Grant Date Fair Value</TD>

          <TD ROWSPAN="1" STYLE="width: 6px; vertical-align: text-bottom; text-align: center"><!-- GUTTER -->&nbsp;</TD>

          <TD ROWSPAN="1" COLSPAN="3" STYLE="line-height: normal; vertical-align: text-bottom; font-weight: bold; font-size: 8pt; text-align: center; border-bottom: black 1pt solid">Weighted Average Remaining Contractual Life</TD>

          <TD ROWSPAN="1" STYLE="width: 6px; vertical-align: text-bottom; text-align: center"><!-- GUTTER -->&nbsp;</TD>

          <TD ROWSPAN="1" COLSPAN="3" STYLE="line-height: normal; vertical-align: text-bottom; font-weight: bold; font-size: 8pt; text-align: center; border-bottom: black 1pt solid">Aggregate Intrinsic Value</TD>

</TR>

<TR STYLE="background-color: #CCFFCC">

          <TD ROWSPAN="1" COLSPAN="1" STYLE="padding-left: 10pt; text-indent: -10pt; vertical-align: text-bottom; font-weight: bold">Outstanding at June 30, 2012</TD>

          <TD ROWSPAN="1" STYLE="width: 6px; vertical-align: text-bottom; text-align: center"><!-- GUTTER -->&nbsp;</TD>

          <TD ROWSPAN="1" STYLE="width: 6px; vertical-align: text-bottom; text-align: left"><!-- $ -->&nbsp;</TD>

          <TD ROWSPAN="1" COLSPAN="1" STYLE="vertical-align: text-bottom; text-align: right"><B>&#151;</B></TD>

          <TD STYLE="white-space: nowrap; vertical-align: text-bottom; text-align: left"><!-- PERCENT -->&nbsp;</TD>

          <TD ROWSPAN="1" STYLE="width: 6px; vertical-align: text-bottom; text-align: center"><!-- GUTTER -->&nbsp;</TD>

          <TD ROWSPAN="1" STYLE="width: 6px; vertical-align: text-bottom; text-align: left"><!-- $ --><B>$</B></TD>

          <TD ROWSPAN="1" COLSPAN="1" STYLE="vertical-align: text-bottom; text-align: right"><B>&#151;</B></TD>

          <TD STYLE="white-space: nowrap; vertical-align: text-bottom; text-align: left"><!-- PERCENT -->&nbsp;</TD>

          <TD ROWSPAN="1" STYLE="width: 6px; vertical-align: text-bottom; text-align: center"><!-- GUTTER -->&nbsp;</TD>

          <TD ROWSPAN="1" STYLE="width: 6px; vertical-align: text-bottom; text-align: left"><!-- $ --><B>$</B></TD>

          <TD ROWSPAN="1" COLSPAN="1" STYLE="vertical-align: text-bottom; text-align: right"><B>&#151;</B></TD>

          <TD STYLE="white-space: nowrap; vertical-align: text-bottom; text-align: left"><!-- PERCENT -->&nbsp;</TD>

          <TD ROWSPAN="1" STYLE="width: 6px; vertical-align: text-bottom; text-align: center"><!-- GUTTER -->&nbsp;</TD>

          <TD ROWSPAN="1" STYLE="width: 6px; vertical-align: text-bottom; text-align: left"><!-- $ -->&nbsp;</TD>

          <TD ROWSPAN="1" COLSPAN="1" STYLE="vertical-align: text-bottom; text-align: right"><B>&#151;</B></TD>

          <TD STYLE="white-space: nowrap; vertical-align: text-bottom; text-align: left"><!-- PERCENT -->&nbsp;</TD>

          <TD ROWSPAN="1" STYLE="width: 6px; vertical-align: text-bottom; text-align: center"><!-- GUTTER -->&nbsp;</TD>

          <TD ROWSPAN="1" STYLE="width: 6px; vertical-align: text-bottom; text-align: left"><!-- $ --><B>$</B></TD>

          <TD ROWSPAN="1" COLSPAN="1" STYLE="vertical-align: text-bottom; text-align: right"><B>&#151;</B></TD>

          <TD STYLE="white-space: nowrap; vertical-align: text-bottom; text-align: left"><!-- PERCENT -->&nbsp;</TD>

</TR>

<TR STYLE="background-color: white">

          <TD ROWSPAN="1" COLSPAN="1" STYLE="padding-left: 10pt; text-indent: -10pt; vertical-align: text-bottom; border-bottom: white 1pt solid">Issuance of stock options</TD>

          <TD ROWSPAN="1" STYLE="width: 6px; vertical-align: text-bottom; text-align: center; border-bottom: white 1pt solid"><!-- GUTTER -->&nbsp;</TD>

          <TD ROWSPAN="1" STYLE="width: 6px; vertical-align: text-bottom; text-align: left; border-bottom: black 1pt solid"><!-- $ -->&nbsp;</TD>

          <TD ROWSPAN="1" COLSPAN="1" STYLE="vertical-align: text-bottom; text-align: right; border-bottom: black 1pt solid">3,600,000</TD>

          <TD STYLE="white-space: nowrap; vertical-align: text-bottom; text-align: left; border-bottom: white 1pt solid"><!-- PERCENT -->&nbsp;</TD>

          <TD ROWSPAN="1" STYLE="width: 6px; vertical-align: text-bottom; text-align: center; border-bottom: white 1pt solid"><!-- GUTTER -->&nbsp;</TD>

          <TD ROWSPAN="1" STYLE="width: 6px; vertical-align: text-bottom; text-align: left; border-bottom: black 1pt solid"><!-- $ -->&nbsp;</TD>

          <TD ROWSPAN="1" COLSPAN="1" STYLE="vertical-align: text-bottom; text-align: right; border-bottom: black 1pt solid">1.67</TD>

          <TD STYLE="white-space: nowrap; vertical-align: text-bottom; text-align: left; border-bottom: white 1pt solid"><!-- PERCENT -->&nbsp;</TD>

          <TD ROWSPAN="1" STYLE="width: 6px; vertical-align: text-bottom; text-align: center; border-bottom: white 1pt solid"><!-- GUTTER -->&nbsp;</TD>

          <TD ROWSPAN="1" STYLE="width: 6px; vertical-align: text-bottom; text-align: left; border-bottom: black 1pt solid"><!-- $ -->&nbsp;</TD>

          <TD ROWSPAN="1" COLSPAN="1" STYLE="vertical-align: text-bottom; text-align: right; border-bottom: black 1pt solid">1.28</TD>

          <TD STYLE="white-space: nowrap; vertical-align: text-bottom; text-align: left; border-bottom: white 1pt solid"><!-- PERCENT -->&nbsp;</TD>

          <TD ROWSPAN="1" STYLE="width: 6px; vertical-align: text-bottom; text-align: center; border-bottom: white 1pt solid"><!-- GUTTER -->&nbsp;</TD>

          <TD ROWSPAN="1" STYLE="width: 6px; vertical-align: text-bottom; text-align: left; border-bottom: black 1pt solid"><!-- $ -->&nbsp;</TD>

          <TD ROWSPAN="1" COLSPAN="1" STYLE="vertical-align: text-bottom; text-align: center; border-bottom: black 1pt solid">3 years</TD>

          <TD STYLE="white-space: nowrap; vertical-align: text-bottom; text-align: left; border-bottom: white 1pt solid"><!-- PERCENT -->&nbsp;</TD>

          <TD ROWSPAN="1" STYLE="width: 6px; vertical-align: text-bottom; text-align: center; border-bottom: white 1pt solid"><!-- GUTTER -->&nbsp;</TD>

          <TD ROWSPAN="1" STYLE="width: 6px; vertical-align: text-bottom; text-align: left; border-bottom: black 1pt solid"><!-- $ -->$</TD>

          <TD ROWSPAN="1" COLSPAN="1" STYLE="vertical-align: text-bottom; text-align: right; border-bottom: black 1pt solid">&#151;</TD>

          <TD STYLE="white-space: nowrap; vertical-align: text-bottom; text-align: left; border-bottom: white 1pt solid"><!-- PERCENT -->&nbsp;</TD>

</TR>

<TR STYLE="background-color: #CCFFCC">

          <TD ROWSPAN="1" COLSPAN="1" STYLE="padding-left: 10pt; text-indent: -10pt; vertical-align: text-bottom; font-weight: bold; border-bottom: white 3pt double">Outstanding at December 31, 2012</TD>

          <TD ROWSPAN="1" STYLE="width: 6px; vertical-align: text-bottom; text-align: center; border-bottom: white 3pt double"><!-- GUTTER -->&nbsp;</TD>

          <TD ROWSPAN="1" STYLE="width: 6px; vertical-align: text-bottom; text-align: left; border-bottom: black 3pt double"><!-- $ -->&nbsp;</TD>

          <TD ROWSPAN="1" COLSPAN="1" STYLE="vertical-align: text-bottom; text-align: right; border-bottom: black 3pt double"><B>3,600,000</B></TD>

          <TD STYLE="white-space: nowrap; vertical-align: text-bottom; text-align: left; border-bottom: white 3pt double"><!-- PERCENT -->&nbsp;</TD>

          <TD ROWSPAN="1" STYLE="width: 6px; vertical-align: text-bottom; text-align: center; border-bottom: white 3pt double"><!-- GUTTER -->&nbsp;</TD>

          <TD ROWSPAN="1" STYLE="width: 6px; vertical-align: text-bottom; text-align: left; border-bottom: black 3pt double"><!-- $ --><B>$</B></TD>

          <TD ROWSPAN="1" COLSPAN="1" STYLE="vertical-align: text-bottom; text-align: right; border-bottom: black 3pt double"><B>1.67</B></TD>

          <TD STYLE="white-space: nowrap; vertical-align: text-bottom; text-align: left; border-bottom: white 3pt double"><!-- PERCENT -->&nbsp;</TD>

          <TD ROWSPAN="1" STYLE="width: 6px; vertical-align: text-bottom; text-align: center; border-bottom: white 3pt double"><!-- GUTTER -->&nbsp;</TD>

          <TD ROWSPAN="1" STYLE="width: 6px; vertical-align: text-bottom; text-align: left; border-bottom: black 3pt double"><!-- $ --><B>$</B></TD>

          <TD ROWSPAN="1" COLSPAN="1" STYLE="vertical-align: text-bottom; text-align: right; border-bottom: black 3pt double"><B>1.28</B></TD>

          <TD STYLE="white-space: nowrap; vertical-align: text-bottom; text-align: left; border-bottom: white 3pt double"><!-- PERCENT -->&nbsp;</TD>

          <TD ROWSPAN="1" STYLE="width: 6px; vertical-align: text-bottom; text-align: center; border-bottom: white 3pt double"><!-- GUTTER -->&nbsp;</TD>

          <TD ROWSPAN="1" STYLE="width: 6px; vertical-align: text-bottom; text-align: left; border-bottom: black 3pt double"><!-- $ -->&nbsp;</TD>

          <TD ROWSPAN="1" COLSPAN="1" STYLE="vertical-align: text-bottom; text-align: center; border-bottom: black 3pt double"><B>3 years</B></TD>

          <TD STYLE="white-space: nowrap; vertical-align: text-bottom; text-align: left; border-bottom: white 3pt double"><!-- PERCENT -->&nbsp;</TD>

          <TD ROWSPAN="1" STYLE="width: 6px; vertical-align: text-bottom; text-align: center; border-bottom: white 3pt double"><!-- GUTTER -->&nbsp;</TD>

          <TD ROWSPAN="1" STYLE="width: 6px; vertical-align: text-bottom; text-align: left; border-bottom: black 3pt double"><!-- $ --><B>$</B></TD>

          <TD ROWSPAN="1" COLSPAN="1" STYLE="vertical-align: text-bottom; text-align: right; border-bottom: black 3pt double"><B>&#151;</B></TD>

          <TD STYLE="white-space: nowrap; vertical-align: text-bottom; text-align: left; border-bottom: white 3pt double"><!-- PERCENT -->&nbsp;</TD>

</TR>

</TABLE></DIV>

<P STYLE="text-indent: 20px; text-align: left; font: normal 10pt/12pt Times New Roman, Times, Serif; margin: 0pt; padding: 3pt 0pt 3pt 4px; text-transform: none">The following tables detail the activity of restricted stock: </P>

<H2 STYLE="text-indent: 0pt; text-align: left; font: normal bold 10pt/12pt Times New Roman, Times, Serif; margin: 0pt; padding: 5pt 0pt 3pt 4px; text-transform: none">Restricted Stock </H2>

<P STYLE="text-indent: 0pt; text-align: left; font: normal 10pt/12pt Times New Roman, Times, Serif; margin: 0pt; padding: 3pt 0pt 3pt 4px; text-transform: none"></P>

<DIV STYLE="text-align: center"><TABLE CELLSPACING="0" CELLPADDING="0" WIDTH="608" STYLE="vertical-align: text-bottom; text-indent: 0px; text-align: left; font: normal 10pt Times New Roman, Times, Serif; margin: -24pt 0pt 0pt; padding: 3pt 0pt; text-transform: none">

<TR>

          <TD><IMG HEIGHT="1" SRC="spacer.gif" WIDTH="280"></TD>

          <TD STYLE="width: 12px; vertical-align: text-bottom; text-align: center; border-bottom-style: none"><!-- GUTTER -->&nbsp;</TD>

          <TD COLSPAN="3"><IMG HEIGHT="1" SRC="spacer.gif" WIDTH="64"></TD>

          <TD STYLE="width: 12px; vertical-align: text-bottom; text-align: center; border-bottom-style: none"><!-- GUTTER -->&nbsp;</TD>

          <TD COLSPAN="3"><IMG HEIGHT="1" SRC="spacer.gif" WIDTH="64"></TD>

          <TD STYLE="width: 12px; vertical-align: text-bottom; text-align: center; border-bottom-style: none"><!-- GUTTER -->&nbsp;</TD>

          <TD COLSPAN="3"><IMG HEIGHT="1" SRC="spacer.gif" WIDTH="64"></TD>

          <TD STYLE="width: 12px; vertical-align: text-bottom; text-align: center; border-bottom-style: none"><!-- GUTTER -->&nbsp;</TD>

          <TD COLSPAN="3"><IMG HEIGHT="1" SRC="spacer.gif" WIDTH="72"></TD>

</TR>

<TR>

          <TD ROWSPAN="1" COLSPAN="1" STYLE="line-height: normal; vertical-align: text-bottom; font-weight: bold; font-size: 8pt; text-align: left"></TD>

          <TD ROWSPAN="1" STYLE="width: 6px; vertical-align: text-bottom; text-align: center"><!-- GUTTER -->&nbsp;</TD>

          <TD ROWSPAN="1" COLSPAN="7" STYLE="line-height: normal; vertical-align: text-bottom; font-weight: bold; font-size: 8pt; text-align: center; border-bottom: black 1pt solid">Shares</TD>

          <TD ROWSPAN="1" STYLE="width: 6px; vertical-align: text-bottom; text-align: center"><!-- GUTTER -->&nbsp;</TD>

          <TD ROWSPAN="1" COLSPAN="7" STYLE="line-height: normal; vertical-align: text-bottom; font-weight: bold; font-size: 8pt; text-align: center; border-bottom: black 1pt solid">Weighted Average Grant Date Fair Value</TD>

</TR>

<TR>

          <TD ROWSPAN="1" COLSPAN="1" STYLE="line-height: normal; vertical-align: text-bottom; font-weight: bold; font-size: 8pt; text-align: left">&nbsp;&nbsp;</TD>

          <TD ROWSPAN="1" STYLE="width: 6px; vertical-align: text-bottom; text-align: center"><!-- GUTTER -->&nbsp;</TD>

          <TD ROWSPAN="1" COLSPAN="3" STYLE="line-height: normal; vertical-align: text-bottom; font-weight: bold; font-size: 8pt; text-align: center; border-bottom: black 1pt solid">Future Service Required</TD>

          <TD ROWSPAN="1" STYLE="width: 6px; vertical-align: text-bottom; text-align: center"><!-- GUTTER -->&nbsp;</TD>

          <TD ROWSPAN="1" COLSPAN="3" STYLE="line-height: normal; vertical-align: text-bottom; font-weight: bold; font-size: 8pt; text-align: center; border-bottom: black 1pt solid">No Future Service Required</TD>

          <TD ROWSPAN="1" STYLE="width: 6px; vertical-align: text-bottom; text-align: center"><!-- GUTTER -->&nbsp;</TD>

          <TD ROWSPAN="1" COLSPAN="3" STYLE="line-height: normal; vertical-align: text-bottom; font-weight: bold; font-size: 8pt; text-align: center; border-bottom: black 1pt solid">Future Service Required</TD>

          <TD ROWSPAN="1" STYLE="width: 6px; vertical-align: text-bottom; text-align: center"><!-- GUTTER -->&nbsp;</TD>

          <TD ROWSPAN="1" COLSPAN="3" STYLE="line-height: normal; vertical-align: text-bottom; font-weight: bold; font-size: 8pt; text-align: center; border-bottom: black 1pt solid">No Future Service Required</TD>

</TR>

<TR STYLE="background-color: white">

          <TD ROWSPAN="1" COLSPAN="1" STYLE="padding-left: 10pt; text-indent: -10pt; vertical-align: text-bottom; font-weight: bold">Balance at June 30, 2012</TD>

          <TD ROWSPAN="1" STYLE="width: 6px; vertical-align: text-bottom; text-align: center"><!-- GUTTER -->&nbsp;</TD>

          <TD ROWSPAN="1" STYLE="width: 6px; vertical-align: text-bottom; text-align: left"><!-- $ -->&nbsp;</TD>

          <TD ROWSPAN="1" COLSPAN="1" STYLE="vertical-align: text-bottom; text-align: right"><B>&#151;</B></TD>

          <TD STYLE="white-space: nowrap; vertical-align: text-bottom; text-align: left"><!-- PERCENT -->&nbsp;</TD>

          <TD ROWSPAN="1" STYLE="width: 6px; vertical-align: text-bottom; text-align: center"><!-- GUTTER -->&nbsp;</TD>

          <TD ROWSPAN="1" STYLE="width: 6px; vertical-align: text-bottom; text-align: left"><!-- $ -->&nbsp;</TD>

          <TD ROWSPAN="1" COLSPAN="1" STYLE="vertical-align: text-bottom; text-align: right"><B>&#151;</B></TD>

          <TD STYLE="white-space: nowrap; vertical-align: text-bottom; text-align: left"><!-- PERCENT -->&nbsp;</TD>

          <TD ROWSPAN="1" STYLE="width: 6px; vertical-align: text-bottom; text-align: center"><!-- GUTTER -->&nbsp;</TD>

          <TD ROWSPAN="1" STYLE="width: 6px; vertical-align: text-bottom; text-align: left"><!-- $ --><B>$</B></TD>

          <TD ROWSPAN="1" COLSPAN="1" STYLE="vertical-align: text-bottom; text-align: right"><B>&#151;</B></TD>

          <TD STYLE="white-space: nowrap; vertical-align: text-bottom; text-align: left"><!-- PERCENT -->&nbsp;</TD>

          <TD ROWSPAN="1" STYLE="width: 6px; vertical-align: text-bottom; text-align: center"><!-- GUTTER -->&nbsp;</TD>

          <TD ROWSPAN="1" STYLE="width: 6px; vertical-align: text-bottom; text-align: left"><!-- $ --><B>$</B></TD>

          <TD ROWSPAN="1" COLSPAN="1" STYLE="vertical-align: text-bottom; text-align: right"><B>&#151;</B></TD>

          <TD STYLE="white-space: nowrap; vertical-align: text-bottom; text-align: left"><!-- PERCENT -->&nbsp;</TD>

</TR>

<TR STYLE="background-color: #CCFFCC">

          <TD ROWSPAN="1" COLSPAN="1" STYLE="padding-left: 10pt; text-indent: -10pt; vertical-align: text-bottom; border-bottom: white 1pt solid">Granted</TD>

          <TD ROWSPAN="1" STYLE="width: 6px; vertical-align: text-bottom; text-align: center; border-bottom: white 1pt solid"><!-- GUTTER -->&nbsp;</TD>

          <TD ROWSPAN="1" STYLE="width: 6px; vertical-align: text-bottom; text-align: left; border-bottom: black 1pt solid"><!-- $ -->&nbsp;</TD>

          <TD ROWSPAN="1" COLSPAN="1" STYLE="vertical-align: text-bottom; text-align: right; border-bottom: black 1pt solid">100,000</TD>

          <TD STYLE="white-space: nowrap; vertical-align: text-bottom; text-align: left; border-bottom: white 1pt solid"><!-- PERCENT -->&nbsp;</TD>

          <TD ROWSPAN="1" STYLE="width: 6px; vertical-align: text-bottom; text-align: center; border-bottom: white 1pt solid"><!-- GUTTER -->&nbsp;</TD>

          <TD ROWSPAN="1" STYLE="width: 6px; vertical-align: text-bottom; text-align: left; border-bottom: black 1pt solid"><!-- $ -->&nbsp;</TD>

          <TD ROWSPAN="1" COLSPAN="1" STYLE="vertical-align: text-bottom; text-align: right; border-bottom: black 1pt solid">100,000</TD>

          <TD STYLE="white-space: nowrap; vertical-align: text-bottom; text-align: left; border-bottom: white 1pt solid"><!-- PERCENT -->&nbsp;</TD>

          <TD ROWSPAN="1" STYLE="width: 6px; vertical-align: text-bottom; text-align: center; border-bottom: white 1pt solid"><!-- GUTTER -->&nbsp;</TD>

          <TD ROWSPAN="1" STYLE="width: 6px; vertical-align: text-bottom; text-align: left; border-bottom: black 1pt solid"><!-- $ -->&nbsp;</TD>

          <TD ROWSPAN="1" COLSPAN="1" STYLE="vertical-align: text-bottom; text-align: right; border-bottom: black 1pt solid">1.08</TD>

          <TD STYLE="white-space: nowrap; vertical-align: text-bottom; text-align: left; border-bottom: white 1pt solid"><!-- PERCENT -->&nbsp;</TD>

          <TD ROWSPAN="1" STYLE="width: 6px; vertical-align: text-bottom; text-align: center; border-bottom: white 1pt solid"><!-- GUTTER -->&nbsp;</TD>

          <TD ROWSPAN="1" STYLE="width: 6px; vertical-align: text-bottom; text-align: left; border-bottom: black 1pt solid"><!-- $ -->&nbsp;</TD>

          <TD ROWSPAN="1" COLSPAN="1" STYLE="vertical-align: text-bottom; text-align: right; border-bottom: black 1pt solid">1.08</TD>

          <TD STYLE="white-space: nowrap; vertical-align: text-bottom; text-align: left; border-bottom: white 1pt solid"><!-- PERCENT -->&nbsp;</TD>

</TR>

<TR STYLE="background-color: white">

          <TD ROWSPAN="1" COLSPAN="1" STYLE="padding-left: 10pt; text-indent: -10pt; vertical-align: text-bottom; font-weight: bold; border-bottom: white 3pt double">Balance at December 31, 2012</TD>

          <TD ROWSPAN="1" STYLE="width: 6px; vertical-align: text-bottom; text-align: center; border-bottom: white 3pt double"><!-- GUTTER -->&nbsp;</TD>

          <TD ROWSPAN="1" STYLE="width: 6px; vertical-align: text-bottom; text-align: left; border-bottom: black 3pt double"><!-- $ -->&nbsp;</TD>

          <TD ROWSPAN="1" COLSPAN="1" STYLE="vertical-align: text-bottom; text-align: right; border-bottom: black 3pt double"><B>100,000</B></TD>

          <TD STYLE="white-space: nowrap; vertical-align: text-bottom; text-align: left; border-bottom: white 3pt double"><!-- PERCENT -->&nbsp;</TD>

          <TD ROWSPAN="1" STYLE="width: 6px; vertical-align: text-bottom; text-align: center; border-bottom: white 3pt double"><!-- GUTTER -->&nbsp;</TD>

          <TD ROWSPAN="1" STYLE="width: 6px; vertical-align: text-bottom; text-align: left; border-bottom: black 3pt double"><!-- $ -->&nbsp;</TD>

          <TD ROWSPAN="1" COLSPAN="1" STYLE="vertical-align: text-bottom; text-align: right; border-bottom: black 3pt double"><B>100,000</B></TD>

          <TD STYLE="white-space: nowrap; vertical-align: text-bottom; text-align: left; border-bottom: white 3pt double"><!-- PERCENT -->&nbsp;</TD>

          <TD ROWSPAN="1" STYLE="width: 6px; vertical-align: text-bottom; text-align: center; border-bottom: white 3pt double"><!-- GUTTER -->&nbsp;</TD>

          <TD ROWSPAN="1" STYLE="width: 6px; vertical-align: text-bottom; text-align: left; border-bottom: black 3pt double"><!-- $ --><B>$</B></TD>

          <TD ROWSPAN="1" COLSPAN="1" STYLE="vertical-align: text-bottom; text-align: right; border-bottom: black 3pt double"><B>1.08</B></TD>

          <TD STYLE="white-space: nowrap; vertical-align: text-bottom; text-align: left; border-bottom: white 3pt double"><!-- PERCENT -->&nbsp;</TD>

          <TD ROWSPAN="1" STYLE="width: 6px; vertical-align: text-bottom; text-align: center; border-bottom: white 3pt double"><!-- GUTTER -->&nbsp;</TD>

          <TD ROWSPAN="1" STYLE="width: 6px; vertical-align: text-bottom; text-align: left; border-bottom: black 3pt double"><!-- $ --><B>$</B></TD>

          <TD ROWSPAN="1" COLSPAN="1" STYLE="vertical-align: text-bottom; text-align: right; border-bottom: black 3pt double"><B>1.08</B></TD>

          <TD STYLE="white-space: nowrap; vertical-align: text-bottom; text-align: left; border-bottom: white 3pt double"><!-- PERCENT -->&nbsp;</TD>

</TR>

</TABLE></DIV>

<H2 STYLE="text-indent: 0pt; text-align: left; font: normal bold 10pt/12pt Times New Roman, Times, Serif; margin: 0pt; padding: 5pt 0pt 3pt 4px; text-transform: none">NOTE 9&nbsp;&#151;&nbsp;INCOME TAXES </H2>

<P STYLE="text-indent: 20px; text-align: left; font: normal 10pt/12pt Times New Roman, Times, Serif; margin: 0pt; padding: 3pt 0pt 3pt 4px; text-transform: none">The income tax provision (benefit) consists of the following (in thousands): </P>

<P STYLE="text-indent: 20px; text-align: left; font: normal 10pt/12pt Times New Roman, Times, Serif; margin: 0pt; padding: 3pt 0pt 3pt 4px; text-transform: none">Year Ended </P>

<P STYLE="text-indent: 0pt; text-align: left; font: normal 10pt/12pt Times New Roman, Times, Serif; margin: 0pt; padding: 3pt 0pt 3pt 4px; text-transform: none"></P>

<DIV STYLE="text-align: center"><TABLE CELLSPACING="0" CELLPADDING="0" WIDTH="554" STYLE="vertical-align: text-bottom; text-indent: 0px; text-align: left; font: normal 10pt Times New Roman, Times, Serif; margin: -24pt 0pt 0pt; padding: 3pt 0pt; text-transform: none">

<TR>

          <TD><IMG HEIGHT="1" SRC="spacer.gif" WIDTH="386"></TD>

          <TD STYLE="width: 12px; vertical-align: text-bottom; text-align: center; border-bottom-style: none"><!-- GUTTER -->&nbsp;</TD>

          <TD COLSPAN="3"><IMG HEIGHT="1" SRC="spacer.gif" WIDTH="64"></TD>

          <TD STYLE="width: 12px; vertical-align: text-bottom; text-align: center; border-bottom-style: none"><!-- GUTTER -->&nbsp;</TD>

          <TD COLSPAN="3"><IMG HEIGHT="1" SRC="spacer.gif" WIDTH="72"></TD>

</TR>

<TR>

          <TD ROWSPAN="1" COLSPAN="1" STYLE="line-height: normal; vertical-align: text-bottom; font-weight: bold; font-size: 8pt; text-align: left"></TD>

          <TD ROWSPAN="1" STYLE="width: 6px; vertical-align: text-bottom; text-align: center"><!-- GUTTER -->&nbsp;</TD>

          <TD ROWSPAN="1" COLSPAN="3" STYLE="line-height: normal; vertical-align: text-bottom; font-weight: bold; font-size: 8pt; text-align: center; border-bottom: black 1pt solid">December 31, 2012</TD>

          <TD ROWSPAN="1" STYLE="width: 6px; vertical-align: text-bottom; text-align: center"><!-- GUTTER -->&nbsp;</TD>

          <TD ROWSPAN="1" COLSPAN="3" STYLE="line-height: normal; vertical-align: text-bottom; font-weight: bold; font-size: 8pt; text-align: center; border-bottom: black 1pt solid">June 30,<BR> 2012</TD>

</TR>

<TR STYLE="background-color: #CCFFCC">

          <TD ROWSPAN="1" COLSPAN="1" STYLE="padding-left: 10pt; text-indent: -10pt; vertical-align: text-bottom; font-weight: bold">Federal<BR></TD>

          <TD ROWSPAN="1" STYLE="width: 6px; vertical-align: text-bottom; text-align: center"><!-- GUTTER -->&nbsp;</TD>

          <TD ROWSPAN="1" STYLE="width: 6px; vertical-align: text-bottom; text-align: left"><!-- $ -->&nbsp;</TD>

          <TD ROWSPAN="1" COLSPAN="1" STYLE="vertical-align: text-bottom; text-align: right">&nbsp;&nbsp;</TD>

          <TD STYLE="white-space: nowrap; vertical-align: text-bottom; text-align: left"><!-- PERCENT -->&nbsp;</TD>

          <TD ROWSPAN="1" STYLE="width: 6px; vertical-align: text-bottom; text-align: center"><!-- GUTTER -->&nbsp;</TD>

          <TD ROWSPAN="1" STYLE="width: 6px; vertical-align: text-bottom; text-align: left"><!-- $ -->&nbsp;</TD>

          <TD ROWSPAN="1" COLSPAN="1" STYLE="vertical-align: text-bottom; text-align: right">&nbsp;&nbsp;</TD>

          <TD STYLE="white-space: nowrap; vertical-align: text-bottom; text-align: left"><!-- PERCENT -->&nbsp;</TD>

</TR>

<TR STYLE="background-color: white">

          <TD ROWSPAN="1" COLSPAN="1" STYLE="padding-left: 20pt; text-indent: -10pt; vertical-align: text-bottom">Current</TD>

          <TD ROWSPAN="1" STYLE="width: 6px; vertical-align: text-bottom; text-align: center"><!-- GUTTER -->&nbsp;</TD>

          <TD ROWSPAN="1" STYLE="width: 6px; vertical-align: text-bottom; text-align: left"><!-- $ -->$</TD>

          <TD ROWSPAN="1" COLSPAN="1" STYLE="vertical-align: text-bottom; text-align: right">0</TD>

          <TD STYLE="white-space: nowrap; vertical-align: text-bottom; text-align: left"><!-- PERCENT -->&nbsp;</TD>

          <TD ROWSPAN="1" STYLE="width: 6px; vertical-align: text-bottom; text-align: center"><!-- GUTTER -->&nbsp;</TD>

          <TD ROWSPAN="1" STYLE="width: 6px; vertical-align: text-bottom; text-align: left"><!-- $ -->$</TD>

          <TD ROWSPAN="1" COLSPAN="1" STYLE="vertical-align: text-bottom; text-align: right">0</TD>

          <TD STYLE="white-space: nowrap; vertical-align: text-bottom; text-align: left"><!-- PERCENT -->&nbsp;</TD>

</TR>

<TR STYLE="background-color: #CCFFCC">

          <TD ROWSPAN="1" COLSPAN="1" STYLE="padding-left: 20pt; text-indent: -10pt; vertical-align: text-bottom">Deferred</TD>

          <TD ROWSPAN="1" STYLE="width: 6px; vertical-align: text-bottom; text-align: center"><!-- GUTTER -->&nbsp;</TD>

          <TD ROWSPAN="1" STYLE="width: 6px; vertical-align: text-bottom; text-align: left"><!-- $ -->&nbsp;</TD>

          <TD ROWSPAN="1" COLSPAN="1" STYLE="vertical-align: text-bottom; text-align: right">(3,055</TD>

          <TD STYLE="white-space: nowrap; vertical-align: text-bottom; text-align: left">)<!-- PERCENT -->&nbsp;</TD>

          <TD ROWSPAN="1" STYLE="width: 6px; vertical-align: text-bottom; text-align: center"><!-- GUTTER -->&nbsp;</TD>

          <TD ROWSPAN="1" STYLE="width: 6px; vertical-align: text-bottom; text-align: left"><!-- $ -->&nbsp;</TD>

          <TD ROWSPAN="1" COLSPAN="1" STYLE="vertical-align: text-bottom; text-align: right">(69</TD>

          <TD STYLE="white-space: nowrap; vertical-align: text-bottom; text-align: left">)<!-- PERCENT -->&nbsp;</TD>

</TR>

<TR STYLE="background-color: white">

          <TD ROWSPAN="1" COLSPAN="1" STYLE="padding-left: 10pt; text-indent: -10pt; vertical-align: text-bottom; font-weight: bold">State and Local<BR></TD>

          <TD ROWSPAN="1" STYLE="width: 6px; vertical-align: text-bottom; text-align: center"><!-- GUTTER -->&nbsp;</TD>

          <TD ROWSPAN="1" STYLE="width: 6px; vertical-align: text-bottom; text-align: left"><!-- $ -->&nbsp;</TD>

          <TD ROWSPAN="1" COLSPAN="1" STYLE="vertical-align: text-bottom; text-align: right">&nbsp;&nbsp;</TD>

          <TD STYLE="white-space: nowrap; vertical-align: text-bottom; text-align: left"><!-- PERCENT -->&nbsp;</TD>

          <TD ROWSPAN="1" STYLE="width: 6px; vertical-align: text-bottom; text-align: center"><!-- GUTTER -->&nbsp;</TD>

          <TD ROWSPAN="1" STYLE="width: 6px; vertical-align: text-bottom; text-align: left"><!-- $ -->&nbsp;</TD>

          <TD ROWSPAN="1" COLSPAN="1" STYLE="vertical-align: text-bottom; text-align: right">&nbsp;&nbsp;</TD>

          <TD STYLE="white-space: nowrap; vertical-align: text-bottom; text-align: left"><!-- PERCENT -->&nbsp;</TD>

</TR>

<TR STYLE="background-color: #CCFFCC">

          <TD ROWSPAN="1" COLSPAN="1" STYLE="padding-left: 20pt; text-indent: -10pt; vertical-align: text-bottom">Current</TD>

          <TD ROWSPAN="1" STYLE="width: 6px; vertical-align: text-bottom; text-align: center"><!-- GUTTER -->&nbsp;</TD>

          <TD ROWSPAN="1" STYLE="width: 6px; vertical-align: text-bottom; text-align: left"><!-- $ -->&nbsp;</TD>

          <TD ROWSPAN="1" COLSPAN="1" STYLE="vertical-align: text-bottom; text-align: right">0</TD>

          <TD STYLE="white-space: nowrap; vertical-align: text-bottom; text-align: left"><!-- PERCENT -->&nbsp;</TD>

          <TD ROWSPAN="1" STYLE="width: 6px; vertical-align: text-bottom; text-align: center"><!-- GUTTER -->&nbsp;</TD>

          <TD ROWSPAN="1" STYLE="width: 6px; vertical-align: text-bottom; text-align: left"><!-- $ -->&nbsp;</TD>

          <TD ROWSPAN="1" COLSPAN="1" STYLE="vertical-align: text-bottom; text-align: right">0</TD>

          <TD STYLE="white-space: nowrap; vertical-align: text-bottom; text-align: left"><!-- PERCENT -->&nbsp;</TD>

</TR>

<TR STYLE="background-color: white">

          <TD ROWSPAN="1" COLSPAN="1" STYLE="padding-left: 20pt; text-indent: -10pt; vertical-align: text-bottom">Deferred</TD>

          <TD ROWSPAN="1" STYLE="width: 6px; vertical-align: text-bottom; text-align: center"><!-- GUTTER -->&nbsp;</TD>

          <TD ROWSPAN="1" STYLE="width: 6px; vertical-align: text-bottom; text-align: left"><!-- $ -->&nbsp;</TD>

          <TD ROWSPAN="1" COLSPAN="1" STYLE="vertical-align: text-bottom; text-align: right">(449</TD>

          <TD STYLE="white-space: nowrap; vertical-align: text-bottom; text-align: left">)<!-- PERCENT -->&nbsp;</TD>

          <TD ROWSPAN="1" STYLE="width: 6px; vertical-align: text-bottom; text-align: center"><!-- GUTTER -->&nbsp;</TD>

          <TD ROWSPAN="1" STYLE="width: 6px; vertical-align: text-bottom; text-align: left"><!-- $ -->&nbsp;</TD>

          <TD ROWSPAN="1" COLSPAN="1" STYLE="vertical-align: text-bottom; text-align: right">(10</TD>

          <TD STYLE="white-space: nowrap; vertical-align: text-bottom; text-align: left">)<!-- PERCENT -->&nbsp;</TD>

</TR>

<TR STYLE="background-color: #CCFFCC">

          <TD ROWSPAN="1" COLSPAN="1" STYLE="padding-left: 20pt; text-indent: -10pt; vertical-align: text-bottom; border-bottom: white 1pt solid">Change in valuation allowance</TD>

          <TD ROWSPAN="1" STYLE="width: 6px; vertical-align: text-bottom; text-align: center; border-bottom: white 1pt solid"><!-- GUTTER -->&nbsp;</TD>

          <TD ROWSPAN="1" STYLE="width: 6px; vertical-align: text-bottom; text-align: left; border-bottom: black 1pt solid"><!-- $ -->&nbsp;</TD>

          <TD ROWSPAN="1" COLSPAN="1" STYLE="vertical-align: text-bottom; text-align: right; border-bottom: black 1pt solid">3,505</TD>

          <TD STYLE="white-space: nowrap; vertical-align: text-bottom; text-align: left; border-bottom: white 1pt solid"><!-- PERCENT -->&nbsp;</TD>

          <TD ROWSPAN="1" STYLE="width: 6px; vertical-align: text-bottom; text-align: center; border-bottom: white 1pt solid"><!-- GUTTER -->&nbsp;</TD>

          <TD ROWSPAN="1" STYLE="width: 6px; vertical-align: text-bottom; text-align: left; border-bottom: black 1pt solid"><!-- $ -->&nbsp;</TD>

          <TD ROWSPAN="1" COLSPAN="1" STYLE="vertical-align: text-bottom; text-align: right; border-bottom: black 1pt solid">79</TD>

          <TD STYLE="white-space: nowrap; vertical-align: text-bottom; text-align: left; border-bottom: white 1pt solid"><!-- PERCENT -->&nbsp;</TD>

</TR>

<TR STYLE="background-color: white">

          <TD ROWSPAN="1" COLSPAN="1" STYLE="padding-left: 20pt; text-indent: -10pt; vertical-align: text-bottom; border-bottom: white 1pt solid">Income tax provision (benefit)</TD>

          <TD ROWSPAN="1" STYLE="width: 6px; vertical-align: text-bottom; text-align: center; border-bottom: white 1pt solid"><!-- GUTTER -->&nbsp;</TD>

          <TD ROWSPAN="1" STYLE="width: 6px; vertical-align: text-bottom; text-align: left; border-bottom: black 1pt solid"><!-- $ -->$</TD>

          <TD ROWSPAN="1" COLSPAN="1" STYLE="vertical-align: text-bottom; text-align: right; border-bottom: black 1pt solid">&#151;</TD>

          <TD STYLE="white-space: nowrap; vertical-align: text-bottom; text-align: left; border-bottom: white 1pt solid"><!-- PERCENT -->&nbsp;</TD>

          <TD ROWSPAN="1" STYLE="width: 6px; vertical-align: text-bottom; text-align: center; border-bottom: white 1pt solid"><!-- GUTTER -->&nbsp;</TD>

          <TD ROWSPAN="1" STYLE="width: 6px; vertical-align: text-bottom; text-align: left; border-bottom: black 1pt solid"><!-- $ -->$</TD>

          <TD ROWSPAN="1" COLSPAN="1" STYLE="vertical-align: text-bottom; text-align: right; border-bottom: black 1pt solid">&#151;</TD>

          <TD STYLE="white-space: nowrap; vertical-align: text-bottom; text-align: left; border-bottom: white 1pt solid"><!-- PERCENT -->&nbsp;</TD>

</TR>

</TABLE></DIV>

</DIV>

<P STYLE="width: 708px; text-indent: 0px; text-align: center; font: normal 10pt/12pt Times New Roman, Times, Serif; margin: 0pt; padding: 12pt 0pt 3pt; color: black; text-transform: none; text-decoration: none">F-54</P>

<HR STYLE="width: 708px; height: 2px; text-align: center">

<DIV ID="PN" STYLE="page-break-after: always">&nbsp;</DIV>

<DIV ID="HDR">&nbsp;</DIV>

<DIV ALIGN="CENTER" STYLE="width: 708px; border: white 1pt solid; margin: 6pt 0pt; padding: 9pt 3pt 9pt 6pt">

<P STYLE="text-align: left; font: normal bold 8pt Times New Roman, Times, Serif">TABLE OF CONTENTS</P>

<H1 STYLE="text-indent: 0pt; text-align: center; font: normal bold 10pt/12pt Times New Roman, Times, Serif; margin: 0pt; padding: 9pt 0pt 3pt; text-transform: none">LEXINGTON TECHNOLOGY GROUP, INC. AND SUBSIDIARY<BR> (A Development Stage Company)<BR>&nbsp;&nbsp;<BR> Notes to Consolidated Financial Statements </H1>

<H2 STYLE="text-indent: 0pt; text-align: left; font: normal bold 10pt/12pt Times New Roman, Times, Serif; margin: 0pt; padding: 5pt 0pt 3pt 4px; text-transform: none">NOTE 9&nbsp;&#151;&nbsp;INCOME TAXES &nbsp;&#150;&nbsp;(continued)</H2>

<P STYLE="text-indent: 20px; text-align: left; font: normal 10pt/12pt Times New Roman, Times, Serif; margin: 0pt; padding: 3pt 0pt 3pt 4px; text-transform: none">The Company&#146;s deferred tax assets consisted of the effects of temporary differences attributable to the following (in thousands): </P>

<P STYLE="text-indent: 20px; text-align: left; font: normal 10pt/12pt Times New Roman, Times, Serif; margin: 0pt; padding: 3pt 0pt 3pt 4px; text-transform: none">Year Ended </P>

<P STYLE="text-indent: 0pt; text-align: left; font: normal 10pt/12pt Times New Roman, Times, Serif; margin: 0pt; padding: 3pt 0pt 3pt 4px; text-transform: none"></P>

<DIV STYLE="text-align: center"><TABLE CELLSPACING="0" CELLPADDING="0" WIDTH="554" STYLE="vertical-align: text-bottom; text-indent: 0px; text-align: left; font: normal 10pt Times New Roman, Times, Serif; margin: -24pt 0pt 0pt; padding: 3pt 0pt; text-transform: none">

<TR>

          <TD><IMG HEIGHT="1" SRC="spacer.gif" WIDTH="386"></TD>

          <TD STYLE="width: 12px; vertical-align: text-bottom; text-align: center; border-bottom-style: none"><!-- GUTTER -->&nbsp;</TD>

          <TD COLSPAN="3"><IMG HEIGHT="1" SRC="spacer.gif" WIDTH="64"></TD>

          <TD STYLE="width: 12px; vertical-align: text-bottom; text-align: center; border-bottom-style: none"><!-- GUTTER -->&nbsp;</TD>

          <TD COLSPAN="3"><IMG HEIGHT="1" SRC="spacer.gif" WIDTH="72"></TD>

</TR>

<TR>

          <TD ROWSPAN="1" COLSPAN="1" STYLE="line-height: normal; vertical-align: text-bottom; font-weight: bold; font-size: 8pt; text-align: left"></TD>

          <TD ROWSPAN="1" STYLE="width: 6px; vertical-align: text-bottom; text-align: center"><!-- GUTTER -->&nbsp;</TD>

          <TD ROWSPAN="1" COLSPAN="3" STYLE="line-height: normal; vertical-align: text-bottom; font-weight: bold; font-size: 8pt; text-align: center; border-bottom: black 1pt solid">December 31, 2012</TD>

          <TD ROWSPAN="1" STYLE="width: 6px; vertical-align: text-bottom; text-align: center"><!-- GUTTER -->&nbsp;</TD>

          <TD ROWSPAN="1" COLSPAN="3" STYLE="line-height: normal; vertical-align: text-bottom; font-weight: bold; font-size: 8pt; text-align: center; border-bottom: black 1pt solid">June 30,<BR>2012</TD>

</TR>

<TR STYLE="background-color: #CCFFCC">

          <TD ROWSPAN="1" COLSPAN="1" STYLE="padding-left: 10pt; text-indent: -10pt; vertical-align: text-bottom; font-weight: bold">Deferred tax assets<BR></TD>

          <TD ROWSPAN="1" STYLE="width: 6px; vertical-align: text-bottom; text-align: center"><!-- GUTTER -->&nbsp;</TD>

          <TD ROWSPAN="1" STYLE="width: 6px; vertical-align: text-bottom; text-align: left"><!-- $ -->&nbsp;</TD>

          <TD ROWSPAN="1" COLSPAN="1" STYLE="vertical-align: text-bottom; text-align: right">&nbsp;&nbsp;</TD>

          <TD STYLE="white-space: nowrap; vertical-align: text-bottom; text-align: left"><!-- PERCENT -->&nbsp;</TD>

          <TD ROWSPAN="1" STYLE="width: 6px; vertical-align: text-bottom; text-align: center"><!-- GUTTER -->&nbsp;</TD>

          <TD ROWSPAN="1" STYLE="width: 6px; vertical-align: text-bottom; text-align: left"><!-- $ -->&nbsp;</TD>

          <TD ROWSPAN="1" COLSPAN="1" STYLE="vertical-align: text-bottom; text-align: right">&nbsp;&nbsp;</TD>

          <TD STYLE="white-space: nowrap; vertical-align: text-bottom; text-align: left"><!-- PERCENT -->&nbsp;</TD>

</TR>

<TR STYLE="background-color: white">

          <TD ROWSPAN="1" COLSPAN="1" STYLE="padding-left: 20pt; text-indent: -10pt; vertical-align: text-bottom">Stock based compensation</TD>

          <TD ROWSPAN="1" STYLE="width: 6px; vertical-align: text-bottom; text-align: center"><!-- GUTTER -->&nbsp;</TD>

          <TD ROWSPAN="1" STYLE="width: 6px; vertical-align: text-bottom; text-align: left"><!-- $ -->&nbsp;</TD>

          <TD ROWSPAN="1" COLSPAN="1" STYLE="vertical-align: text-bottom; text-align: right">81</TD>

          <TD STYLE="white-space: nowrap; vertical-align: text-bottom; text-align: left"><!-- PERCENT -->&nbsp;</TD>

          <TD ROWSPAN="1" STYLE="width: 6px; vertical-align: text-bottom; text-align: center"><!-- GUTTER -->&nbsp;</TD>

          <TD ROWSPAN="1" STYLE="width: 6px; vertical-align: text-bottom; text-align: left"><!-- $ -->&nbsp;</TD>

          <TD ROWSPAN="1" COLSPAN="1" STYLE="vertical-align: text-bottom; text-align: right">&#151;</TD>

          <TD STYLE="white-space: nowrap; vertical-align: text-bottom; text-align: left"><!-- PERCENT -->&nbsp;</TD>

</TR>

<TR STYLE="background-color: #CCFFCC">

          <TD ROWSPAN="1" COLSPAN="1" STYLE="padding-left: 20pt; text-indent: -10pt; vertical-align: text-bottom">Unrealized loss on Investments</TD>

          <TD ROWSPAN="1" STYLE="width: 6px; vertical-align: text-bottom; text-align: center"><!-- GUTTER -->&nbsp;</TD>

          <TD ROWSPAN="1" STYLE="width: 6px; vertical-align: text-bottom; text-align: left"><!-- $ -->&nbsp;</TD>

          <TD ROWSPAN="1" COLSPAN="1" STYLE="vertical-align: text-bottom; text-align: right">165</TD>

          <TD STYLE="white-space: nowrap; vertical-align: text-bottom; text-align: left"><!-- PERCENT -->&nbsp;</TD>

          <TD ROWSPAN="1" STYLE="width: 6px; vertical-align: text-bottom; text-align: center"><!-- GUTTER -->&nbsp;</TD>

          <TD ROWSPAN="1" STYLE="width: 6px; vertical-align: text-bottom; text-align: left"><!-- $ -->&nbsp;</TD>

          <TD ROWSPAN="1" COLSPAN="1" STYLE="vertical-align: text-bottom; text-align: right">&#151;</TD>

          <TD STYLE="white-space: nowrap; vertical-align: text-bottom; text-align: left"><!-- PERCENT -->&nbsp;</TD>

</TR>

<TR STYLE="background-color: white">

          <TD ROWSPAN="1" COLSPAN="1" STYLE="padding-left: 20pt; text-indent: -10pt; vertical-align: text-bottom">Intangible asset amortization</TD>

          <TD ROWSPAN="1" STYLE="width: 6px; vertical-align: text-bottom; text-align: center"><!-- GUTTER -->&nbsp;</TD>

          <TD ROWSPAN="1" STYLE="width: 6px; vertical-align: text-bottom; text-align: left"><!-- $ -->&nbsp;</TD>

          <TD ROWSPAN="1" COLSPAN="1" STYLE="vertical-align: text-bottom; text-align: right">24</TD>

          <TD STYLE="white-space: nowrap; vertical-align: text-bottom; text-align: left"><!-- PERCENT -->&nbsp;</TD>

          <TD ROWSPAN="1" STYLE="width: 6px; vertical-align: text-bottom; text-align: center"><!-- GUTTER -->&nbsp;</TD>

          <TD ROWSPAN="1" STYLE="width: 6px; vertical-align: text-bottom; text-align: left"><!-- $ -->&nbsp;</TD>

          <TD ROWSPAN="1" COLSPAN="1" STYLE="vertical-align: text-bottom; text-align: right">&nbsp;&nbsp;</TD>

          <TD STYLE="white-space: nowrap; vertical-align: text-bottom; text-align: left"><!-- PERCENT -->&nbsp;</TD>

</TR>

<TR STYLE="background-color: #CCFFCC">

          <TD ROWSPAN="1" COLSPAN="1" STYLE="padding-left: 20pt; text-indent: -10pt; vertical-align: text-bottom; border-bottom: white 1pt solid">Net operating loss carryovers</TD>

          <TD ROWSPAN="1" STYLE="width: 6px; vertical-align: text-bottom; text-align: center; border-bottom: white 1pt solid"><!-- GUTTER -->&nbsp;</TD>

          <TD ROWSPAN="1" STYLE="width: 6px; vertical-align: text-bottom; text-align: left; border-bottom: black 1pt solid"><!-- $ -->$</TD>

          <TD ROWSPAN="1" COLSPAN="1" STYLE="vertical-align: text-bottom; text-align: right; border-bottom: black 1pt solid">3,235</TD>

          <TD STYLE="white-space: nowrap; vertical-align: text-bottom; text-align: left; border-bottom: white 1pt solid"><!-- PERCENT -->&nbsp;</TD>

          <TD ROWSPAN="1" STYLE="width: 6px; vertical-align: text-bottom; text-align: center; border-bottom: white 1pt solid"><!-- GUTTER -->&nbsp;</TD>

          <TD ROWSPAN="1" STYLE="width: 6px; vertical-align: text-bottom; text-align: left; border-bottom: black 1pt solid"><!-- $ -->$</TD>

          <TD ROWSPAN="1" COLSPAN="1" STYLE="vertical-align: text-bottom; text-align: right; border-bottom: black 1pt solid">79</TD>

          <TD STYLE="white-space: nowrap; vertical-align: text-bottom; text-align: left; border-bottom: white 1pt solid"><!-- PERCENT -->&nbsp;</TD>

</TR>

<TR STYLE="background-color: white">

          <TD ROWSPAN="1" COLSPAN="1" STYLE="padding-left: 20pt; text-indent: -10pt; vertical-align: text-bottom">Total deferred tax assets</TD>

          <TD ROWSPAN="1" STYLE="width: 6px; vertical-align: text-bottom; text-align: center"><!-- GUTTER -->&nbsp;</TD>

          <TD ROWSPAN="1" STYLE="width: 6px; vertical-align: text-bottom; text-align: left"><!-- $ -->&nbsp;</TD>

          <TD ROWSPAN="1" COLSPAN="1" STYLE="vertical-align: text-bottom; text-align: right">3,505</TD>

          <TD STYLE="white-space: nowrap; vertical-align: text-bottom; text-align: left"><!-- PERCENT -->&nbsp;</TD>

          <TD ROWSPAN="1" STYLE="width: 6px; vertical-align: text-bottom; text-align: center"><!-- GUTTER -->&nbsp;</TD>

          <TD ROWSPAN="1" STYLE="width: 6px; vertical-align: text-bottom; text-align: left"><!-- $ -->&nbsp;</TD>

          <TD ROWSPAN="1" COLSPAN="1" STYLE="vertical-align: text-bottom; text-align: right">79</TD>

          <TD STYLE="white-space: nowrap; vertical-align: text-bottom; text-align: left"><!-- PERCENT -->&nbsp;</TD>

</TR>

<TR STYLE="background-color: #CCFFCC">

          <TD ROWSPAN="1" COLSPAN="1" STYLE="padding-left: 20pt; text-indent: -10pt; vertical-align: text-bottom; border-bottom: white 1pt solid">Valuation allowance</TD>

          <TD ROWSPAN="1" STYLE="width: 6px; vertical-align: text-bottom; text-align: center; border-bottom: white 1pt solid"><!-- GUTTER -->&nbsp;</TD>

          <TD ROWSPAN="1" STYLE="width: 6px; vertical-align: text-bottom; text-align: left; border-bottom: black 1pt solid"><!-- $ -->&nbsp;</TD>

          <TD ROWSPAN="1" COLSPAN="1" STYLE="vertical-align: text-bottom; text-align: right; border-bottom: black 1pt solid">(3,505</TD>

          <TD STYLE="white-space: nowrap; vertical-align: text-bottom; text-align: left; border-bottom: white 1pt solid">)<!-- PERCENT -->&nbsp;</TD>

          <TD ROWSPAN="1" STYLE="width: 6px; vertical-align: text-bottom; text-align: center; border-bottom: white 1pt solid"><!-- GUTTER -->&nbsp;</TD>

          <TD ROWSPAN="1" STYLE="width: 6px; vertical-align: text-bottom; text-align: left; border-bottom: black 1pt solid"><!-- $ -->&nbsp;</TD>

          <TD ROWSPAN="1" COLSPAN="1" STYLE="vertical-align: text-bottom; text-align: right; border-bottom: black 1pt solid">(79</TD>

          <TD STYLE="white-space: nowrap; vertical-align: text-bottom; text-align: left; border-bottom: white 1pt solid">)<!-- PERCENT -->&nbsp;</TD>

</TR>

<TR STYLE="background-color: white">

          <TD ROWSPAN="1" COLSPAN="1" STYLE="padding-left: 10pt; text-indent: -10pt; vertical-align: text-bottom; border-bottom: white 1pt solid">Deferred tax asset, net of valuation allowance</TD>

          <TD ROWSPAN="1" STYLE="width: 6px; vertical-align: text-bottom; text-align: center; border-bottom: white 1pt solid"><!-- GUTTER -->&nbsp;</TD>

          <TD ROWSPAN="1" STYLE="width: 6px; vertical-align: text-bottom; text-align: left; border-bottom: black 1pt solid"><!-- $ -->$</TD>

          <TD ROWSPAN="1" COLSPAN="1" STYLE="vertical-align: text-bottom; text-align: right; border-bottom: black 1pt solid">&#151;</TD>

          <TD STYLE="white-space: nowrap; vertical-align: text-bottom; text-align: left; border-bottom: white 1pt solid"><!-- PERCENT -->&nbsp;</TD>

          <TD ROWSPAN="1" STYLE="width: 6px; vertical-align: text-bottom; text-align: center; border-bottom: white 1pt solid"><!-- GUTTER -->&nbsp;</TD>

          <TD ROWSPAN="1" STYLE="width: 6px; vertical-align: text-bottom; text-align: left; border-bottom: black 1pt solid"><!-- $ -->$</TD>

          <TD ROWSPAN="1" COLSPAN="1" STYLE="vertical-align: text-bottom; text-align: right; border-bottom: black 1pt solid">&#151;</TD>

          <TD STYLE="white-space: nowrap; vertical-align: text-bottom; text-align: left; border-bottom: white 1pt solid"><!-- PERCENT -->&nbsp;</TD>

</TR>

</TABLE></DIV>

<P STYLE="text-indent: 20px; text-align: left; font: normal 10pt/12pt Times New Roman, Times, Serif; margin: 0pt; padding: 3pt 0pt 3pt 4px; text-transform: none">As of December 31, 2012 and June 30, 2012, the Company had federal and state net operating loss carryovers of approximately $2.2 million and $0.02 million, which expire in 2033. The net operating loss carryover may be subject to limitation under Internal Revenue Code section 382, should there be a greater than 50% ownership change as determined under the regulations. </P>

<P STYLE="text-indent: 20px; text-align: left; font: normal 10pt/12pt Times New Roman, Times, Serif; margin: 0pt; padding: 3pt 0pt 3pt 4px; text-transform: none">In assessing the realization of deferred tax assets, management considers whether it is more likely than not that some portion or all of the deferred tax assets will be realized. The ultimate realization of deferred tax assets is dependent upon the generation of future taxable income during the period in which those temporary differences become deductible. Management considers the scheduled reversal of deferred tax liabilities, projected future taxable income and taxing strategies in making this assessment. The Company has determined that, based on objective evidence currently available, it is more likely than not that the
deferred tax assets will be realized in future periods. Accordingly, the Company has provided a valuation allowance for the full amount of the deferred tax assets at December 31, 2012. As of December 31, 2012 and June 30, 2012, the change in valuation allowance is $1.0 million and $0.01 million, respectively. </P>

<P STYLE="text-indent: 20px; text-align: left; font: normal 10pt/12pt Times New Roman, Times, Serif; margin: 0pt; padding: 3pt 0pt 3pt 4px; text-transform: none">The expected tax expense (benefit) based on the U.S. federal statutory rate is reconciled with actual tax expense (benefit) as follows: </P>

<P STYLE="text-indent: 0pt; text-align: left; font: normal 10pt/12pt Times New Roman, Times, Serif; margin: 0pt; padding: 3pt 0pt 3pt 4px; text-transform: none"></P>

<DIV STYLE="text-align: center"><TABLE CELLSPACING="0" CELLPADDING="0" WIDTH="554" STYLE="vertical-align: text-bottom; text-indent: 0px; text-align: left; font: normal 10pt Times New Roman, Times, Serif; margin: -24pt 0pt 0pt; padding: 3pt 0pt; text-transform: none">

<TR>

          <TD><IMG HEIGHT="1" SRC="spacer.gif" WIDTH="466"></TD>

          <TD STYLE="width: 12px; vertical-align: text-bottom; text-align: center; border-bottom-style: none"><!-- GUTTER -->&nbsp;</TD>

          <TD COLSPAN="3"><IMG HEIGHT="1" SRC="spacer.gif" WIDTH="72"></TD>

</TR>

<TR>

          <TD ROWSPAN="1" COLSPAN="1" STYLE="line-height: normal; vertical-align: text-bottom; font-weight: bold; font-size: 8pt; text-align: left"></TD>

          <TD ROWSPAN="1" STYLE="width: 6px; vertical-align: text-bottom; text-align: center"><!-- GUTTER -->&nbsp;</TD>

          <TD ROWSPAN="1" COLSPAN="3" STYLE="line-height: normal; vertical-align: text-bottom; font-weight: bold; font-size: 8pt; text-align: center; border-bottom: black 1pt solid">December 31, 2012</TD>

</TR>

<TR STYLE="background-color: #CCFFCC">

          <TD ROWSPAN="1" COLSPAN="1" STYLE="padding-left: 10pt; text-indent: -10pt; vertical-align: text-bottom">Statutory federal income tax rate</TD>

          <TD ROWSPAN="1" STYLE="width: 6px; vertical-align: text-bottom; text-align: center"><!-- GUTTER -->&nbsp;</TD>

          <TD ROWSPAN="1" STYLE="width: 6px; vertical-align: text-bottom; text-align: left"><!-- $ -->&nbsp;</TD>

          <TD ROWSPAN="1" COLSPAN="1" STYLE="vertical-align: text-bottom; text-align: right">-34</TD>

          <TD STYLE="white-space: nowrap; vertical-align: text-bottom; text-align: left">%<!-- PERCENT -->&nbsp;</TD>

</TR>

<TR STYLE="background-color: white">

          <TD ROWSPAN="1" COLSPAN="1" STYLE="padding-left: 10pt; text-indent: -10pt; vertical-align: text-bottom">State taxes, net of federal tax benefit</TD>

          <TD ROWSPAN="1" STYLE="width: 6px; vertical-align: text-bottom; text-align: center"><!-- GUTTER -->&nbsp;</TD>

          <TD ROWSPAN="1" STYLE="width: 6px; vertical-align: text-bottom; text-align: left"><!-- $ -->&nbsp;</TD>

          <TD ROWSPAN="1" COLSPAN="1" STYLE="vertical-align: text-bottom; text-align: right">-5</TD>

          <TD STYLE="white-space: nowrap; vertical-align: text-bottom; text-align: left">%<!-- PERCENT -->&nbsp;</TD>

</TR>

<TR STYLE="background-color: #CCFFCC">

          <TD ROWSPAN="1" COLSPAN="1" STYLE="padding-left: 10pt; text-indent: -10pt; vertical-align: text-bottom; border-bottom: white 1pt solid">Change in valuation allowance</TD>

          <TD ROWSPAN="1" STYLE="width: 6px; vertical-align: text-bottom; text-align: center; border-bottom: white 1pt solid"><!-- GUTTER -->&nbsp;</TD>

          <TD ROWSPAN="1" STYLE="width: 6px; vertical-align: text-bottom; text-align: left; border-bottom: black 1pt solid"><!-- $ -->&nbsp;</TD>

          <TD ROWSPAN="1" COLSPAN="1" STYLE="vertical-align: text-bottom; text-align: right; border-bottom: black 1pt solid">39</TD>

          <TD STYLE="white-space: nowrap; vertical-align: text-bottom; text-align: left; border-bottom: white 1pt solid">%<!-- PERCENT -->&nbsp;</TD>

</TR>

<TR STYLE="background-color: white">

          <TD ROWSPAN="1" COLSPAN="1" STYLE="padding-left: 10pt; text-indent: -10pt; vertical-align: text-bottom; border-bottom: white 1pt solid">Income tax provision (benefit)</TD>

          <TD ROWSPAN="1" STYLE="width: 6px; vertical-align: text-bottom; text-align: center; border-bottom: white 1pt solid"><!-- GUTTER -->&nbsp;</TD>

          <TD ROWSPAN="1" STYLE="width: 6px; vertical-align: text-bottom; text-align: left; border-bottom: black 1pt solid"><!-- $ -->&nbsp;</TD>

          <TD ROWSPAN="1" COLSPAN="1" STYLE="vertical-align: text-bottom; text-align: right; border-bottom: black 1pt solid">0</TD>

          <TD STYLE="white-space: nowrap; vertical-align: text-bottom; text-align: left; border-bottom: white 1pt solid">%<!-- PERCENT -->&nbsp;</TD>

</TR>

</TABLE></DIV>

<H2 STYLE="text-indent: 0pt; text-align: left; font: normal bold 10pt/12pt Times New Roman, Times, Serif; margin: 0pt; padding: 5pt 0pt 3pt 4px; text-transform: none">NOTE 10&nbsp;&#151;&nbsp;COMMITMENTS </H2>

<H3 STYLE="text-indent: 0pt; text-align: left; font: normal italic bold 10pt/12pt Times New Roman, Times, Serif; margin: 0pt; padding: 5pt 0pt 3pt 4px; text-transform: none">Peter Hardigan Employment Agreement</H3>

<P STYLE="text-indent: 20px; text-align: left; font: normal 10pt/12pt Times New Roman, Times, Serif; margin: 0pt; padding: 3pt 0pt 3pt 4px; text-transform: none">On November 20, 2012, LTG entered into an amended employment agreement with Peter Hardigan (the &#147;<B>Amended Hardigan Agreement</B>&#148;). The Amended Hardigan Agreement expressly supersedes the terms of the previous employment agreement, dated August 7, 2012, between LTG and Mr. Hardigan. The Amended Hardigan Agreement has an initial term of one year, commencing on August 1, 2012, and is automatically renewable for additional consecutive one year terms, unless at least ninety days written notice is given by either LTG or Mr. Hardigan prior to the commencement of the next renewal term. The Amended Hardigan Agreement
provides for an annual base salary of $250,000, effective August 1, 2012 and an annual discretionary bonus based upon Mr. Hardigan&#146;s and LTG&#146;s achievement of annual performance objectives, as determined by the board of directors.</P>

</DIV>

<P STYLE="width: 708px; text-indent: 0px; text-align: center; font: normal 10pt/12pt Times New Roman, Times, Serif; margin: 0pt; padding: 12pt 0pt 3pt; color: black; text-transform: none; text-decoration: none">F-55</P>

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<P STYLE="text-align: left; font: normal bold 8pt Times New Roman, Times, Serif">TABLE OF CONTENTS</P>

<H1 STYLE="text-indent: 0pt; text-align: center; font: normal bold 10pt/12pt Times New Roman, Times, Serif; margin: 0pt; padding: 9pt 0pt 3pt; text-transform: none">LEXINGTON TECHNOLOGY GROUP, INC. AND SUBSIDIARY<BR> (A Development Stage Company)<BR>&nbsp;&nbsp;<BR> Notes to Consolidated Financial Statements </H1>

<H2 STYLE="text-indent: 0pt; text-align: left; font: normal bold 10pt/12pt Times New Roman, Times, Serif; margin: 0pt; padding: 5pt 0pt 3pt 4px; text-transform: none">NOTE 10&nbsp;&#151;&nbsp;COMMITMENTS &nbsp;&#150;&nbsp;(continued)</H2>

<P STYLE="text-indent: 20px; text-align: left; font: normal 10pt/12pt Times New Roman, Times, Serif; margin: 0pt; padding: 3pt 0pt 3pt 4px; text-transform: none">Upon commencement of the Amended Hardigan Agreement, LTG will grant to Mr. Hardigan 100,000 shares of its common stock, vesting immediately. LTG will also grant to Mr. Hardigan a non-statutory option to purchase up to 1,800,000 shares of its common stock, at an exercise price of $1.67 per share. One half of the option shall vest in 12 equal quarterly tranches, with the first tranche having vested as of November 15, 2012, and the remaining tranches vesting on each of February 15, May 15, August 15, and November 15 thereafter through August 15, 2015. Vesting of the remaining one half of the option shall not commence unless and
until the Merger is completed. Following the completion of the Merger, the remaining one half of the options shall vest in 12 equal tranches, with a tranche to vest on the last day of each calendar quarter commencing on the last day of the calendar quarter in which the Merger is completed. The Amended Hardigan Agreement also provides for Mr. Hardigan&#146;s participation in all benefit programs LTG establishes and makes available to its executive employees, and for reimbursement to Mr. Hardigan for reasonable travel, entertainment, mileage and other business expenses.</P>

<P STYLE="text-indent: 20px; text-align: left; font: normal 10pt/12pt Times New Roman, Times, Serif; margin: 0pt; padding: 3pt 0pt 3pt 4px; text-transform: none">The Amended Hardigan Agreement is terminable by LTG for cause or upon thirty days prior written notice without cause, and terminable at Mr. Hardigan&#146;s election upon thirty days prior written notice. If LTG terminates Mr. Hardigan without cause, then LTG will pay Mr. Hardigan: (i) a lump sum amount equal to his base salary for the balance of the then-remaining term of the Amended Hardigan Agreement, but no less than six months&#146; base salary, (ii) LTG&#146;s share of the cost of health insurance coverage pursuant to COBRA for the then-remaining term of the Amended Hardigan Agreement and (iii) reimbursement of business
expenses incurred by Mr. Hardigan prior to termination. The Amended Hardigan Agreement also includes certain confidentiality, non-compete and non-solicitation provisions effective for a period of twelve months following the termination of Mr. Hardigan&#146;s employment with LTG.</P>

<H3 STYLE="text-indent: 0pt; text-align: left; font: normal italic bold 10pt/12pt Times New Roman, Times, Serif; margin: 0pt; padding: 5pt 0pt 3pt 4px; text-transform: none">Jeffrey Ronaldi Employment Agreement</H3>

<P STYLE="text-indent: 20px; text-align: left; font: normal 10pt/12pt Times New Roman, Times, Serif; margin: 0pt; padding: 3pt 0pt 3pt 4px; text-transform: none">On November 20, 2012, LTG entered into an employment agreement with Jeffrey Ronaldi, LTG&#146;s Chief Executive Officer (the &#147;<B>Ronaldi Agreement</B>&#148;). The Ronaldi Agreement has an initial term of three years, commencing on November 9, 2012, and is automatically renewable for additional consecutive one year terms, unless at least ninety days written notice is given by either LTG or Mr. Ronaldi prior to the commencement of the next renewal term. The Ronaldi Agreement provides for an annual base salary of $350,000, effective November 9, 2012 and an annual discretionary bonus based upon Mr. Ronaldi&#146;s and
LTG&#146;s achievement of annual performance objectives, as determined by the board of directors.</P>

<P STYLE="text-indent: 20px; text-align: left; font: normal 10pt/12pt Times New Roman, Times, Serif; margin: 0pt; padding: 3pt 0pt 3pt 4px; text-transform: none">Upon commencement of the Ronaldi Agreement, LTG will grant to Mr. Ronaldi 100,000 shares of its common stock, vesting immediately. LTG will also grant to Mr. Ronaldi a non-statutory option to purchase up to 1,800,000 shares of its common stock, at an exercise price of $1.67 per share. One half of the option shall vest in 12 equal quarterly tranches, beginning February 15, 2013 and on each May 15, August 15, November 15 and February 15 thereafter through November 15, 2015. Vesting of the remaining one half of the option shall not commence unless and until the Merger is completed. Following the completion of the Merger, the
remaining one half of the options shall vest in 12 equal tranches, with a tranche to vest on the last day of each calendar quarter commencing on the last day of the calendar quarter in which the Merger is completed. The Ronaldi Agreement also provides for Mr. Ronaldi&#146;s participation in all benefit programs LTG establishes and makes available to its executive employees, and for reimbursement to Mr. Ronaldi for reasonable travel, entertainment, mileage and other business expenses. The Ronaldi Agreement is terminable by LTG for cause or upon thirty days prior written notice without cause, and terminable at Mr. Ronaldi&#146;s election upon thirty days prior written notice. If LTG terminates Mr. Ronaldi without cause, then LTG will pay Mr. Ronaldi: (i) a lump sum amount equal to his base salary for the balance of the then-remaining term of the Ronaldi Agreement, but no less than six months&#146; base salary (ii) LTG&#146;s share of the cost of health insurance coverage pursuant to
COBRA for the then-remaining term of the Ronaldi Agreement and (iii) reimbursement of business expenses incurred by Mr. Ronaldi prior to termination. The Ronaldi Agreement </P>

</DIV>

<P STYLE="width: 708px; text-indent: 0px; text-align: center; font: normal 10pt/12pt Times New Roman, Times, Serif; margin: 0pt; padding: 12pt 0pt 3pt; color: black; text-transform: none; text-decoration: none">F-56</P>

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<P STYLE="text-align: left; font: normal bold 8pt Times New Roman, Times, Serif">TABLE OF CONTENTS</P>

<H1 STYLE="text-indent: 0pt; text-align: center; font: normal bold 10pt/12pt Times New Roman, Times, Serif; margin: 0pt; padding: 9pt 0pt 3pt; text-transform: none">LEXINGTON TECHNOLOGY GROUP, INC. AND SUBSIDIARY<BR> (A Development Stage Company)<BR>&nbsp;&nbsp;<BR> Notes to Consolidated Financial Statements </H1>

<H2 STYLE="text-indent: 0pt; text-align: left; font: normal bold 10pt/12pt Times New Roman, Times, Serif; margin: 0pt; padding: 5pt 0pt 3pt 4px; text-transform: none">NOTE 10&nbsp;&#151;&nbsp;COMMITMENTS &nbsp;&#150;&nbsp;(continued)</H2>

<P STYLE="text-indent: 0pt; text-align: left; font: normal 10pt/12pt Times New Roman, Times, Serif; margin: 0pt; padding: 3pt 0pt 3pt 4px; text-transform: none">also includes certain confidentiality, non-compete and non-solicitation provisions effective for a period of twelve months following the termination of Mr. Ronaldi&#146;s employment with LTG. </P>

<H2 STYLE="text-indent: 0pt; text-align: left; font: normal bold 10pt/12pt Times New Roman, Times, Serif; margin: 0pt; padding: 5pt 0pt 3pt 4px; text-transform: none">NOTE 11&nbsp;&#151;&nbsp;SUBSEQUENT EVENTS </H2>

<H5 STYLE="text-indent: 0pt; text-align: left; font: normal 10pt/12pt Times New Roman, Times, Serif; margin: 0pt; padding: 3pt 0pt 3pt 4px; text-transform: none">Rights Offering </H5>

<P STYLE="text-indent: 20px; text-align: left; font: normal 10pt/12pt Times New Roman, Times, Serif; margin: 0pt; padding: 3pt 0pt 3pt 4px; text-transform: none">On February 1, 2013, the Company completed the sale of 4,285,718 shares of its common stock at a purchase price of $0.35 per share to certain of its existing stockholders who elected to participate in an offering conducted by the Company to all of its existing stockholder for aggregate gross proceeds of approximately $1.5 million. </P>

<H5 STYLE="text-indent: 0pt; text-align: left; font: normal 10pt/12pt Times New Roman, Times, Serif; margin: 0pt; padding: 3pt 0pt 3pt 4px; text-transform: none">Repayment of Debt </H5>

<P STYLE="text-indent: 20px; text-align: left; font: normal 10pt/12pt Times New Roman, Times, Serif; margin: 0pt; padding: 3pt 0pt 3pt 4px; text-transform: none">In February 2013, the Company repaid the outstanding balance of senior notes and accrued interest totally $3.4 million.</P>

<H5 STYLE="text-indent: 0pt; text-align: left; font: normal 10pt/12pt Times New Roman, Times, Serif; margin: 0pt; padding: 3pt 0pt 3pt 4px; text-transform: none">Investment</H5>

<P STYLE="text-indent: 20px; text-align: left; font: normal 10pt/12pt Times New Roman, Times, Serif; margin: 0pt; padding: 3pt 0pt 3pt 4px; text-transform: none">In March 2013, Lexington made a strategic investment in VirtualAgility, a developer of programming platforms that facilitate the creation of business applications without programming or coding. The investment by Lexington involves a non-recourse note against the proceeds derived from the patent portfolio owned by VirtualAgility, plus an equity stake of &nbsp;1/8 of 7% of the outstanding common stock of VirtualAgility, for $250,000 cash, plus options to make seven additional quarterly investments of $250,000 apiece, for a total investment of up to $2 million cash. If LTG exercised all of such options, it
would have invested an aggregate of $2 million and, based on the current capitalization of VirtualAgility, would own approximately 7% of the outstanding common stock of VirtualAgility. </P>

</DIV>

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