UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, D.C. 20549

_______________

FORM 10-Q

_______________

~~[X]~~x QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended ~~September~~March 3031, ~~2015~~ 2016

~~[_]~~o TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

HALO COMPANIES, INC.

(Exact name of registrant as specified in Charter)

Delaware

000-15862

13-3018466

(State or other jurisdiction of

incorporation or organization)

(Commission File No.)

(IRS Employee Identification No.)

18451 N. Dallas Parkway, Suite 100

Dallas, Texas 75287

(Address of Principal Executive Offices)

_______________

214-644-0065

(Issuer Telephone number)

_______________

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Exchange Act during the preceding 12 months (or for such shorter period that the issuer was required to file such reports), and (2)has been subject to such filing requirements for the past 90 days.

Yes ~~[X]~~ x No ~~[_]~~ o

Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Web site, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files).

Yes ~~[X]~~ x No ~~[_]~~ o

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer or a smaller reporting company filer. See definition of “accelerated filer” and “large accelerated filer” in Rule 12b-2 of the Exchange Act (Check one):

Large ~~Accelerated~~ Accelerated Filer ~~[_]~~o Accelerated Filer ~~[_]~~o Non-Accelerated Filer ~~[_]~~o Smaller Reporting Company ~~[X]~~x

Indicate by check mark whether the registrant is a shell company as defined in Rule 12b-2 of the Exchange Act.

Yes ~~[_]~~ o No ~~[X]~~x

State the number of shares outstanding of each of the issuer’s classes of common equity, ~~November~~May 616, ~~2015~~2016: 48,562,750 shares of Common Stock, $.001 par value per share outstanding.

Halo Companies, Inc.

INDEX

PART I. FINANCIAL INFORMATION

Item 1.	Financial Statements
	Consolidated Balance Sheets at September 30, 2015 (unaudited) and December 31, 2014	3
	Consolidated Balance Sheets at March 31, 2016 (unaudited) and December 31, 2015	3
	Consolidated Statements of Operations (unaudited) for the three and nine months ended September 30, 2015 and 2014	4
	Consolidated Statements of Operations (unaudited) for the three months ended March 31, 2016 and 2015	4
	Consolidated Statements of Changes in Shareholders’ Deficit (unaudited) for the nine months ended September 30, 2015 and 2014	5
	Consolidated Statements of Changes in Shareholders’ Deficit (unaudited) for the three months ended March 31, 2016 and 2015	5
	Consolidated Statements of Cash Flows (unaudited) for the nine months ended September 30, 2015 and 2014	6
	Consolidated Statements of Cash Flows (unaudited) for the three months ended March 31, 2016 and 2015	6
	Notes to Consolidated Financial Statements	7-2319
Item 2.	Management’s Discussion and Analysis of Financial Condition and Results of Operations	2420-2924
Item 3.	Quantitative and Qualitative Disclosures about Market Risk	2924
Item 4T.	Controls and Procedures	2924
PART II. OTHER INFORMATION
Item 1.	Legal Proceedings	25
Item 1A.	Risk Factors	26-27
Item 2.	Unregistered Sales of Equity Securities and Use of Proceeds	28
Item 3.	Defaults upon Senior Securities	28
Item 4.	Mine Safety Disclosures	28
Item 5.	Other Information	28
Item 6.	Exhibits	28
	SIGNATURES	29

PART II. OTHER INFORMATION

Item 1.	Legal Proceedings	30-31
Item 1A.	Risk Factors	31-34
Item 2.	Unregistered Sales of Equity Securities and Use of Proceeds	34
Item 3.	Defaults upon Senior Securities	34
Item 4.	Mine Safety Disclosures	34
Item 5.	Other Information	34
Item 6.	Exhibits	34
	SIGNATURES	35

Part 1 – Financial Information

Item 1. Financial Statements

Halo Companies, Inc. and Subsidiaries

CONSOLIDATED BALANCE SHEETS

ASSETS
	March 31, 2016			December 31, 2015
	September 30, 2015			December 31, 2014
	(Unaudited)
ASSETS
CURRENT ASSETS
Cash and cash equivalents	$	8814,~~044~~251		$	7220,~~982~~544
Trade accounts receivable, net of allowance for doubtful
Trade accounts receivable ($71,894 and $42,965 due from related party), net of allowance for doubtful accounts of $0 and $0, respectively		82,644			43,365
accounts of $0 and $375,665, respectively		90,953			141,634
Total current assets		96,895			63,909
Total current assets		178,997			214,616
PROPERTY, EQUIPMENT AND SOFTWARE, net		41,835			47,172
PROPERTY, EQUIPMENT AND SOFTWARE, net		52,833			70,526
TOTAL ASSETS	$	138,730		$	111,081
OTHER ASSETS		13,333			23,333
TOTAL ASSETS	$	245,163		$	308,475
LIABILITIES AND SHAREHOLDERS' DEFICIT
CURRENT LIABILITIES
Accounts payable	$	~~625~~474,~~230~~121		$	~~485~~488,~~869~~253
Accrued and other liabilities (including $299,321 and
Accrued and other liabilities (including $251,313 and$121,853 to related parties, respectively)		1,460,985			1,328,662
$166,992 to related parties, respectively)		1,941,950			915,900
Deferred revenue		20,000			20,000
Deferred revenue		53,500			1,800
Current portion of subordinated debt		20,000			20,000
Current portion of subordinated debt		20,000			31,250
Current portion of note payable		2,172,395			2,089,475
Current portion of notes payable to related parties		12,~~222~~822,~~270~~452			~~959~~2,~~365~~822,452
Total current liabilities		36,~~862~~969,~~950~~953			26,~~394~~768,~~184~~842
SUBORDINATED DEBT, LESS CURRENT PORTION		7060,000			8565,000
NOTES PAYABLE TO RELATED PARTIES, LESS CURRENT PORTION		—			179,358
NOTE PAYABLE		2,021,009			1,805,000
DERIVATIVE LIABILITY		2,434			2,434
Total liabilities		57,~~956~~032,~~393~~387			46,~~465~~836,~~976~~276
SHAREHOLDERS' DEFICIT
Series Z Convertible Preferred Stock, par value $0.01 per share; 82,508 shares
Series Z Convertible Preferred Stock, par value $0.01 per share; 82,508 shares authorized; 0 shares issued and outstanding at March 31, 2016 and December 31, 2015		–			–
authorized; 0 shares issued and outstanding at September 30, 2015 and December 31, 2014		—			—
Preferred Stock, par value $0.001 per share; 917,492 shares authorized; 0 shares issued and outstanding at March 31, 2016 and December 31, 2015		–			–
Preferred Stock, par value $0.001 per share; 917,492 shares
Series X Convertible Preferred Stock, par value $0.01 per share; 53,677 and 143,677 shares authorized; 0 and 143,677 shares issued and outstanding, liquidation preference of $0 and $1,436,770 at March 31, 2016 and December 31, 2015, respectively		–			–
authorized; 0 shares issued and outstanding at September 30, 2015 and December 31, 2014		—			—
Series E Convertible Preferred Stock, par value $0.001 per share; 100,000 shares authorized;70,000 shares issued and outstanding at March 31, 2016 and December 31, 2015, liquidation preference of $700,000		70			70
Series X Convertible Preferred Stock, par value $0.01 per share; 53,677 and 143,677 shares authorized;
53,677 and 143,677 shares issued and outstanding, liquidation preference of $536,770 and		537			1,437
$1,436,770 at September 30, 2015 and December 31, 2014, respectively
Series E Convertible Preferred Stock, par value $0.001 per share; 100,000 shares authorized;
70,000 shares issued and outstanding at September 30, 2015 and December 31, 2014,
liquidation preference of $700,000		70			70
Halo Group, Inc. Preferred Stock, par value $0.001 per share; 2,000,000 shares authorized
Series A Convertible Preferred Stock;
Series A Convertible Preferred Stock; 372,999 shares issued and outstanding at March 31, 2016 and December 31, 2015, liquidation preference of $788,572		373			373
372,999 shares issued and outstanding at September 30, 2015 and December 31, 2014,
Series B Convertible Preferred Stock; 229,956 shares issued and outstanding at March 31, 2016 and December 31, 2015, liquidation preference of $647,767		230			230
liquidation preference of $753,826		373			373
Series C Convertible Preferred Stock;124,000 shares issued and outstanding at March 31, 2016 and December 31, 2015, liquidation preference of $436,702		124			124
Series B Convertible Preferred Stock;
Common Stock, par value $0.001 per share; 375,000,000 shares authorized; 48,562,750 and 48,562,750 shares issued and outstanding at March 31, 2016 and December 31, 2015, respectively		48,563			48,563
229,956 shares issued and outstanding at September 30, 2015 and December 31, 2014,
Additional paid-in capital		6,871,298			6,871,298
liquidation preference of $621,553		230			230
Accumulated deficit		(13,814,315	)		(13,645,853	)
Series C Convertible Preferred Stock;
Total shareholders' deficit		(6,893,657	)		(6,725,195	)
124,000 shares issued and outstanding at September 30, 2015 and December 31, 2014,
TOTAL LIABILITIES AND SHAREHOLDERS' DEFICIT	$	138,730		$	111,081
liquidation preference of $418,745		124			124
Common Stock, par value $0.001 per share; 375,000,000 shares authorized;
48,562,750 and 66,364,083 shares issued and outstanding
at September 30, 2015 and December 31, 2014, respectively		48,563			66,364
Additional paid-in capital		7,407,532			7,638,764
Accumulated deficit		(13,168,659	)		(11,864,863	)
Total shareholders' deficit		(5,711,230	)		(4,157,501	)
TOTAL LIABILITIES AND SHAREHOLDERS' DEFICIT	$	245,163		$	308,475

The accompanying notes are an integral part of these consolidated financial statements.

Halo Companies, Inc. and Subsidiaries

CONSOLIDATED STATEMENTS OF OPERATIONS

(Unaudited)

	For the Three Months Ended						~~For the Nine Months Ended~~
	September 30,						September 30,
	March 31,
	2015			2014			2015			2014
	2016			2015
REVENUE (including $104,153, $107,900, $334,538 and
REVENUE (including $25,226 and $110,217 from related parties, respectively)	$	186,356		$	1,493,517
$326,155 from related parties, respectively)	$	1,024,960		$	555,466		$	3,023,625		$	1,975,659
OPERATING EXPENSES
OPERATING EXPENSES
Sales and marketing expenses		21,539			707,892
Sales and marketing expenses		366,006			300,992			1,244,843			767,197
General and administrative expenses (including $0 and $46,780 to related parties, respectively)		96,664			231,032
General and administrative expenses (including $111,780, $29,751,
Salaries, wages, and benefits		76,000			905,941
$245,339 and $89,244 to related parties, respectively)		200,067			160,084			642,429			535,748
Total operating expenses		194,203			1,844,865
Salaries, wages, and benefits		307,619			386,103			1,952,782			1,311,525
OPERATING LOSS		(7,847	)		(351,348	)
Total operating expenses		873,692			847,179			3,840,054			2,614,470
OTHER INCOME (EXPENSE)
OPERATING INCOME (LOSS)		151,268			(291,713	)		(816,429	)		(638,811	)
Interest expense (including $73,354 and $32,667 to related parties, respectively)		(160,615	)		(116,078	)
OTHER INCOME (EXPENSE)
Net loss from operations, before income tax provision		(168,462	)		(467,426	)
Gain on change in fair value of derivative		—			—			—			13,533
INCOME TAX PROVISION		–			–
Interest expense (including $92,619, $29,075, $215,875 and
NET LOSS	$	(168,462	)	$	(467,426	)
$78,085 to related parties, respectively)		(181,689	)		(107,143	)		(474,223	)		(303,609	)
Loss per share:
Net income (loss) from operations, before income tax provision		(30,421	)		(398,856	)		(1,290,652	)		(928,887	)
Basic & Diluted	$	(0.00	)	$	(0.01	)
INCOME TAX PROVISION		—			9,870			13,144			31,995
Weighted Average Shares Outstanding
NET INCOME (LOSS)	$	(30,421	)	$	(408,726	)	$	(1,303,796	)	$	(960,882	)
Basic & Diluted		48,562,750			57,460,083
Loss per share:
Basic & Diluted	$	(0.00	)	$	(0.01	)	$	(0.02	)	$	(0.01	)
Weighted Average Shares Outstanding
Basic & Diluted		48,562,750			66,364,083			57,463,417			66,364,083

The accompanying notes are an integral part of these consolidated financial statements.

Halo Companies, Inc. and Subsidiaries

CONSOLIDATED STATEMENTS OF CHANGES IN SHAREHOLDERS' DEFICIT

For the ~~Nine~~Three Months Ended ~~September 30~~March 31, ~~2015~~2016 and ~~2014~~2015

(Unaudited)

	Halo Companies, Inc. Common Stock	~~Halo Companies, Inc. Common Stock~~					Halo Companies, Inc. Series X Convertible Preferred Stock					~~Halo Companies, Inc. Series E Convertible Preferred Stock~~	Halo Companies, Inc. Series E Convertible Preferred Stock				~~Halo Group, Inc. Series A Convertible Preferred Stock~~	Halo Group, Inc. Series A Convertible Preferred Stock		~~Halo Group, Inc. Series B Convertible Preferred Stock~~			Halo Group, Inc. Series B Convertible Preferred Stock		~~Halo Group, Inc. Series C Convertible Preferred Stock~~				Halo Group, Inc. Series C Convertible Preferred Stock	~~Additional Paid-in Capital~~			~~Accumulated Deficit~~		Additional Paid-in Capital	~~Total~~		Accumulated Deficit			Total
	Shares	~~Shares~~		Amount			Shares		~~Amount~~	Amount		~~Shares~~	Shares	~~Amount~~		Amount	~~Shares~~	~~Amount~~Shares		~~Shares~~Amount		~~Amount~~	Shares		~~Shares~~	Amount	~~Amount~~		Shares			Amount
Balance at December 31, 2013		66,364,083		$	66,364		143,677		$	1,437		70,000		$	70		372,999	$	373	229,956		$	230		124,000		$	124		$	7,638,764		$	(10,600,783	)	$	(2,893,421	)
Balance at December 31, 2014		66,364,083		$	66,364			143,677		$	1,437			70,000		$	70		372,999	$	373			229,956		$	230			124,000		$	124		$	7,638,764		$	(11,864,863	)	$	(4,157,501	)
Net loss		—			—		—			—		—			—		—		—	—			—		—			—			—			(960,882	)		(960,882	)
Redemption of Series X Convertible Preferred Stock per settlement agreement (FN 16)		–			–			(90,000	)		(900	)		–			–		–		–			–			–			–			–			(249,100	)		–			(250,000	)
Balance at September 30, 2014		66,364,083		$	66,364		143,677		$	1,437		70,000		$	70		372,999	$	373	229,956		$	230		124,000		$	124		$	7,638,764		$	(11,561,665	)	$	(3,854,303	)
Cancellation of Common Shares per settlement agreement (FN 16)		(17,808,000	)		(17,808	)		–			–			–			–		–		–			–			–			–			–			17,808			–			–
Balance at December 31, 2014		66,364,083		$	66,364		143,677		$	1,437		70,000		$	70		372,999	$	373	229,956		$	230		124,000		$	124		$	7,638,764		$	(11,864,863	)	$	(4,157,501	)
Net loss		–			–			–			–			–			–		–		–			–			–			–			–			–			(467,426	)		(467,426	)
Redemption of Series X Convertible Preferred
Balance at March 31, 2015		48,556,083		$	48,556			53,677		$	537			70,000		$	70		372,999	$	373			229,956		$	230			124,000		$	124		$	7,407,472		$	(12,332,289	)	$	(4,874,927	)
Stock per settlement agreement (FN 16)		—			—		(90,000	)		(900	)	—			—		—		—	—			—		—			—			(249,100	)		—			(250,000	)
Redemption of Series X Convertible Preferred Stock (FN 16)		–			–			(53,677	)		(537	)		–			–		–		–			–			–			–			–			(536,234	)		–			(536,771	)
Issuance of Common Shares		6,667			7		—	–		—	–	—		–	—		—–		—–	—	–		—	–	—		–	—		–	60		–	—		60	67		–			67
Cancellation of Common Shares per
Net loss		–			–			–			–			–			–		–		–			–			–			–			–			–			(1,313,564	)		(1,313,564	)
settlement agreement (FN 16)		(17,808,000	)		(17,808	)	—			—		—			—		—		—	—			—		—			—			17,808			—			—
Balance at December 31, 2015		48,562,750		$	48,563			–		$	–			70,000		$	70		372,999	$	373			229,956		$	230			124,000		$	124		$	6,871,298		$	(13,645,853	)	$	(6,725,195	)
Net loss		—–			—–		—	–		—	–	—		–	—		—–		—–	—	–		—	–	—		–	—		–	—		–	~~(1,303,796~~	)	–	~~(1,303,796~~	)	(168,462	)		(168,462	)
Balance at September 30, 2015		48,562,750		$	48,563		53,677		$	537		70,000		$	70		372,999	$	373	229,956		$	230		124,000		$	124		$	7,407,532		$	(13,168,659	)	$	(5,711,230	)
Balance at March 31, 2016		48,562,750		$	48,563			–		$	–			70,000		$	70		372,999	$	373			229,956		$	230			124,000		$	124		$	6,871,298		$	(13,814,315	)	$	(6,893,657	)

The accompanying notes are an integral part of these consolidated financial statements.

Halo Companies, Inc. and Subsidiaries

CONSOLIDATED STATEMENTS OF CASH FLOWS

For the ~~Nine~~Three Months Ended ~~September~~March 3031, ~~2015~~2016 and ~~2014~~2015

(Unaudited)

	September 30, 2015			September 30, 2014
	For the Three Months Ended
	March 31, 2016			March 31, 2015
CASH FLOWS FROM OPERATIONS
Net (loss) income	$	(1,303,796	)	$	(960,882	)
Net loss	$	(168,462	)	$	(467,426	)
Adjustments to reconcile net income (loss) to net cash
Adjustments to reconcile net loss to net cash provided by (used in) operating activities:
provided by (used in) operating activities:
Depreciation		5,337			6,223
Depreciation		17,693			37,558
Amortization of loan origination costs		–			3,333
Amortization of loan origination costs		10,000			10,000
Capitalization of interest into note payable and notes payable to related parties		82,920			71,343
Capitalization of interest into note payable and notes payable to related parties		224,556			190,228
Bad debt expense		116			111
Gain on change in fair value of derivative		—			(13,533	)
Notes receivable write off		125,000			—
Changes in operating assets and liabilities:
Trade accounts receivable		50(39,~~565~~279	)		211,~~890~~009
Other assets		—			2,922
Accounts payable		(14,132	)		(160,652	)
Accounts payable		(110,639	)		(63,014	)
Accrued and other liabilities		132,323			554,466
Accrued and other liabilities		1,026,050			383,368
Deferred revenue		–			111,050
Deferred rent		—			(169,349	)
Net cash provided by (used in) operating activities		(1,293	)		119,346
Deferred revenue		51,700			—
Net cash provided by (used in) operating activities		91,245			(560,701	)
CASH FLOWS FROM INVESTING ACTIVITIES
Investment in affiliate		(125,000	)		—
Purchases of property and equipment		—			(700	)
Net cash used in investing activities		(125,000	)		(700	)
CASH FLOWS FROM FINANCING ACTIVITIES
Proceeds from notes payable to related parties		100,000			480,000
Principal payments on notes payable to related parties		–			(25,000	)
Principal payments on notes payable to related parties		(25,000	)		(6,117	)
Principal payments on subordinated debt		(5,000	)		(1,667	)
Principal payments on subordinated debt		(26,250	)		(4,167	)
Net cash used in financing activities		(5,000	)		(26,667	)
Proceeds received from issuance of common stock		67			—
Net (decrease) increase in cash and cash equivalents		(6,293	)		92,680
Net cash provided by financing activities		48,817			469,716
CASH AND CASH EQUIVALENTS, beginning of period		20,544			72,982
Net increase (decrease) in cash and cash equivalents		15,062			(91,685	)
CASH AND CASH EQUIVALENTS, end of period	$	14,251		$	165,662
CASH AND CASH EQUIVALENTS, beginning of period		72,982			127,048
CASH AND CASH EQUIVALENTS, end of period	$	88,044		$	35,363
SUPPLEMENTAL INFORMATION
Cash paid for taxes - Texas Margin Tax	$	13,144		$	~~31,995~~–
Cash paid for interest	$	924,~~858~~106		$	5182,~~216~~899
NONCASH SUPPLEMENTAL INFORMATION
Cancellation of stock for settlement payment	$	~~250,000~~–		$	—250,000

The accompanying notes are an integral part of these consolidated financial statements.

Halo Companies, Inc.

Notes To Consolidated Financial Statements

~~September~~March 3031, ~~2015~~2016

NOTE 1. ORGANIZATION AND RECENT DEVELOPMENTS

Halo Companies, Inc. (“Halo”, “HCI” or the “Company”) was incorporated under the laws of the State of Delaware on December 9, 1986. Its principal executive offices are located at 18451 N. Dallas Parkway, Suite 100, Dallas, Texas 75287. ~~On December 15, 2014, the Company moved from its previous office location at 7668 Warren Parkway, Suite 350, Frisco, Texas 75034.~~

Unless otherwise provided in footnotes, all references from this point forward in this Report to “we,” “us,” “our company,” “our,” or the “Company” refer to the combined Halo Companies, Inc. entity, together with its subsidiaries.

Halo has multiple wholly-owned subsidiaries including Halo Group Inc. (“HGI”), Halo Asset Management, LLC (“HAM”), Halo Portfolio Advisors, LLC (“HPA”), and Halo Benefits, Inc. (“HBI”). HGI is the management and shared services operating company. HAM provides asset management and mortgage servicing services to investors and asset owners including all aspects of buying and managing distressed real estate owned (“REO”) and non-performing loans. HPA exists to market the Company’s operations as a turnkey solution for strategic business to business opportunities with HAM’s investors and asset owners, major debt servicers and field service providers, lenders, and mortgage backed securities holders. HBI was originally established as an association benefit services to customers throughout the United States and although a non-operating entity, remains a subsidiary due to its historical net operating loss carryforward.

~~During~~Halo ~~March~~has ~~2015,~~determined ~~the~~that ~~Company~~the ~~entered~~asset ~~into~~management ~~a $250,000 compromise~~ and ~~settlement~~portfolio ~~agreement~~services ~~with~~have ~~the~~threatened ~~court~~sustainability ~~appointed~~long ~~receivership~~term ~~holding~~and ~~17,808,000~~need ~~shares of~~to ~~the~~shift ~~Company’s~~its ~~common~~resources ~~stock. This stock was subject~~ to ~~the~~pursue other ~~unearned~~lines ~~“clawback”~~of ~~provisions discussed in Note 16 below~~revenue. ~~The~~Fortunately, ~~physical~~management ~~stock certificate~~ has been ~~sent~~analyzing ~~to the Company’s transfer agent to immediately cancel those respective outstanding shares of that Agreement. Further,~~ this ~~settlement~~trend ~~agreement calls~~ for asome ~~relinquishment~~time and ~~abandonment~~made ofmoves ~~any and all claims against Halo on 90,000 shares of the Company’s Series X Preferred stock belonging~~ to ~~the~~begin ~~receivership (original~~capitalizing ~~liquidation~~on ~~value~~its ofinternally ~~$10~~developed ~~per~~technology ~~share)~~assets. ~~Lastly,~~As ~~the~~further ~~Company~~discussed ~~had $375,665~~ in ~~accounts~~Note ~~receivable~~2 ~~owed from the receivership which had previously been fully reserved. With the settlement now in place~~below, ~~the~~Halo ~~Company~~has ~~wrote~~successfully ~~off~~secured ~~this~~multiple ~~accounts~~software license ~~receivable balance~~ and ~~released the~~support ~~allowance~~agreements ~~reserve~~and ~~held.~~will ~~The~~continue ~~Settlement requires $250,000~~ to beevaluate ~~paid by~~ the ~~Company~~best method to ~~the~~deliver ~~receivership~~and ~~over~~monetize aHalo’s ~~twelve~~technology ~~month~~assets ~~period with the start date April 1, 2015. As the receivership owed the Company $22,500 for success fees previously earned (this receivable was not part of the $375,665~~ in ~~fully reserved accounts receivable noted above),~~ the ~~first $22,500 of the $250,000 owed was settled via a reduction of the $22,500 accounts receivable balance for the April 1 and part of the May 1, 2015 scheduled payments~~market.

~~During~~NOTE March 2015, an additional 1,272,000 shares of the Company’s common stock, all subject to the clawback provisions of the Agreement (defined in Note 16), have also been sent to the Company’s transfer agent to immediately cancel those respective common shares of that Agreement but as of the time of this filing those shares have not yet been canceled2. ~~The~~SIGNIFICANT ~~Company~~ACCOUNTING ~~expects that to happen shortly. Secondarily,~~POLICIES the Company is actively pursuing the procurement of an additional physical certificate from a respective individual still in possession of the common stock certificate. As of the time of this Form 10-Q, 3,392,000 of the 21,200,000 shares issued as part of the Agreement remain outstanding.

OnThe ~~October~~interim 8consolidated financial statements are unaudited; however, in the opinion of management, all adjustments considered necessary for fair presentation of the results of the interim periods have been included (consisting of normal recurring accruals). The accompanying consolidated financial statements as of March 31, 2016, and for the three months ended March 31, 2016 and 2015, ~~Reif~~include the accounts of the ~~Chron~~Company and have been prepared in accordance with accounting principles generally accepted in the United States of America (“GAAP”) for interim information. Accordingly, ~~President~~the financial statements do not include all of the information and footnotes required by GAAP for complete financial statements and should be read in conjunction with the audited consolidated financial statements and notes thereto included in our Annual Report on Form 10-K. The results of operations for the three months ended March 31, ~~tendered~~2016, are ~~his~~not ~~resignation~~necessarily indicative of the results that may be expected for the year ending December 31, 2016.

7Revenue Recognition, Accounts Receivable and Deferred Revenue

~~NOTE~~The 2Company recognizes revenue in the period in which services are earned and realizable. ~~SIGNIFICANT~~To ~~ACCOUNTING~~further ~~POLICIES~~understand the Company’s business, HAM earns fees from its clients for its boarding and initial asset management fee, success fees, and its monthly servicing fee. The boarding and initial asset management services are performed in the first 30-60 days of assets being boarded and include; IRR analysis of loans boarded, detailed asset level workout exit strategy analysis, boarding the assets onto HAM’s proprietary software platform and the integrated servicing platform, identification and oversight of custodial files, oversight of mortgage/deed assignment from previous servicer, oversight of title policy administration work, and delinquent property tax research and exposure review. HAM’s monthly success fees are earned for completing its default and asset disposition services including note sales, originating owner finance agreements, and cash sales of REO properties owned by the client. HAM’s servicing fees are earned monthly and are calculated on a monthly unit price for assets under management.

The ~~interim consolidated~~Company ~~financial~~is ~~statements~~currently exploring ~~are~~potential ~~unaudited;~~opportunities ~~however,~~with inseveral ~~the~~client ~~opinion~~relationships ofthat ~~management,~~would ~~all~~allow ~~adjustments considered necessary for fair presentation of~~ the ~~results~~Company ofto ~~the~~implement ~~interim~~its ~~periods~~internally ~~have been included (consisting of normal recurring accruals). The~~developed ~~accompanying~~asset ~~consolidated~~management ~~financial~~software ~~statements~~platform as ofan ~~September~~external ~~30,~~service ~~2015, and~~ for ~~the~~those ~~three~~customers. ~~and~~This ~~nine~~is ~~months~~commonly ~~ended~~known ~~September 30,~~as ~~2015~~Software ~~and~~as ~~2014,~~a ~~include the accounts of the Company and have been prepared in accordance with accounting principles~~Service ~~generally accepted in the United States of America~~ (“~~GAAP~~SaaS”) ~~for interim information~~. ~~Accordingly,~~Cash ~~the consolidated~~receipts ~~financial~~from ~~statements~~customers ~~do not include all of the information and footnotes required by GAAP for complete financial statements and should be read~~ in ~~conjunction~~advance ~~with the audited consolidated financial statements and notes thereto included in our Annual Report on Form 10-K. The results~~ of ~~operations~~revenue ~~for~~recognized ~~the three and nine months ended September 30, 2015,~~ are ~~not~~recorded ~~necessarily~~as ~~indicative~~deferred ofrevenue ~~the~~and ~~results~~will ~~that may~~ be ~~expected~~earned ~~for~~over the ~~year~~entire ~~ending~~SaaS ~~December~~contract ~~31, 2015~~period.

~~Revenue~~HAM ~~Recognition~~and HPA receivables are typically paid the month following services performed. As of March 31, ~~Accounts~~2016 ~~Receivable~~and December 31, 2015, the Company’s accounts receivable are made up of the following percentages; HAM at 21% and ~~Deferred~~55%, ~~Revenue~~HPA at 67% and 45%, and HGI at 12% and 0% respectively.

The Company recognizes revenue in the period in which services are earned and realizable. To further understand the Company’s business, HAM earns fees from its clients for its boarding and initial asset management fee, success fees, and its monthly servicing fee. The boarding and initial asset management services are performed in the first 30-60 days of assets being boarded and include; IRR analysis of loans boarded, detailed asset level workout exit strategy analysis, boarding the assets onto HAM’s proprietary software platform and the integrated servicing platform, identification and oversight of custodial files, oversight of mortgage/deed assignment from previous servicer, oversight of title policy administration work, and delinquent property tax research and exposure review. HAM’s monthly success fees are earned for completing its default and asset disposition services including note sales, originating owner finance agreements, and cash sales of REO properties owned by the client. HAM’s servicing fees are earned monthly and are calculated on a monthly unit price for assets under management.7

The Company ismaintains ~~currently~~allowances ~~exploring~~for ~~potential~~doubtful ~~opportunities~~accounts ~~with~~for ~~several~~estimated ~~client~~losses ~~relationships~~resulting ~~that~~from ~~would~~the ~~allow~~inability ~~the~~of ~~Company~~its customers to ~~implement~~make ~~its~~required ~~internally~~payments. ~~used~~Management ~~asset~~considers ~~management~~the ~~software~~following ~~platform~~factors aswhen andetermining ~~external~~the ~~service~~collectability ~~for~~of ~~those~~specific ~~customers.~~customer ~~This~~accounts: ispast ~~commonly~~transaction ~~known~~history aswith the ~~Software~~customer, ascurrent aeconomic ~~Service (“SaaS”)~~and industry trends, and changes in customer payment terms. The Company ~~entered~~provides ~~into~~for aestimated ~~SaaS~~uncollectible amounts ~~contract~~through ~~with~~an ~~one~~increase ~~client~~to ~~who~~the ~~prepaid~~allowance for doubtful accounts and a 12charge ~~month~~to ~~service~~earnings ~~plan~~based ~~during~~on ~~early~~actual historical trends and ~~2015~~individual account analysis. ~~Cash~~Balances ~~receipts~~that ~~from~~remain ~~customers~~outstanding inafter ~~advance~~the ofCompany ~~revenue~~has ~~recognized~~used ~~are~~reasonable ~~recorded~~collection asefforts ~~deferred~~are ~~revenue~~written-off ~~and~~through ~~will~~a becharge ~~earned~~to ~~over~~ the ~~entire~~allowance ~~SaaS~~for ~~contract~~doubtful ~~period~~accounts. The ~~Company~~below istable ~~still~~summarizes inthe ~~its~~Company’s ~~research~~allowance ~~phase~~for ~~of determining if this~~doubtful ~~service~~accounts ~~line~~as ~~will~~of ~~remain~~March ~~ancillary~~31, or2016 ~~become~~and aDecember ~~primary~~31, ~~business component of the Company.~~2015:

HAM and HPA receivables are typically paid the month following services performed. HGI receivables are due when invoiced. As of September 30, 2015 and December 31, 2014, the Company’s accounts receivable are made up of the following percentages; HAM at 32% and 84%, HPA at 68% and 11%, and HGI at 0% and 5%, respectively.

	Balance at Beginning of Period		Increase in the Provision		Accounts Receivable Write-offs		Balance at End of Period
Three Months ended March 31, 2016
Allowance for doubtful accounts	$	0	$	0	$	0	$	0
Year ended December 31, 2015
Allowance for doubtful accounts	$	375,665	$	0	$	375,655	$	0

~~The~~Net ~~Company~~Income ~~maintains~~(Loss) ~~allowances for~~Per ~~doubtful~~Common ~~accounts~~Share for estimated losses resulting from the inability of its customers to make required payments. Management considers the following factors when determining the collectability of specific customer accounts: past transaction history with the customer, current economic and industry trends, and changes in customer payment terms. The Company provides for estimated uncollectible amounts through an increase to the allowance for doubtful accounts and a charge to earnings based on actual historical trends and individual account analysis. Balances that remain outstanding after the Company has used reasonable collection efforts are written-off through a charge to the allowance for doubtful accounts. The below table summarizes the Company’s allowance for doubtful accounts as of September 30, 2015 and December 31, 2014:

	Balance at Beginning of Period		Increase in the Provision		Accounts Receivable Write-offs		Balance at End of Period
Nine Months ended September 30, 2015
Allowance for doubtful accounts	$	375,665	$	116	$	375,781	$	0
Year ended December 31, 2014
Allowance for doubtful accounts	$	375,665	$	135	$	135	$	375,665

Basic net income (loss) per share is computed by dividing (i) net income (loss) available to common shareholders (numerator), by (ii) the weighted average number of common shares outstanding during the period (denominator). Diluted net income (loss) per share is computed using the weighted average number of common shares and dilutive potential common shares outstanding during the period. At March 31, 2016 and 2015, there were 4,518,626 and 4,630,626 shares, respectively, underlying potentially dilutive convertible preferred stock and stock options outstanding. These shares were not included in dilutive weighted average shares outstanding for the three months ended March 31, 2016 and 2015 because their effect is anti-dilutive due to the Company’s reported net loss.

8Use of Estimates and Assumptions

AsThe preparation of ~~December 31, 2014,~~consolidated ~~the~~financial ~~Company’s~~statements ~~allowance~~in ~~for~~conformity ~~doubtful~~with ~~accounts~~GAAP ~~was~~requires ~~made~~management upto ofmake ~~the~~estimates ~~following percentages; HAM at 96%~~ and ~~HPA~~assumptions atthat ~~4%,~~affect ~~respectively.~~reported amounts ~~The~~of ~~HAM~~assets and ~~HPA~~liabilities ~~allowance~~and ~~was~~disclosure ~~related~~of tocontingent ~~one~~assets ~~client~~and inliabilities aat ~~court~~the ~~appointed~~date ~~receivership.~~of Asthe ~~discussed~~consolidated infinancial ~~Note~~statements and ~~1 above,~~ the ~~March 2015~~reported ~~settlement~~amounts ~~agreement~~of ~~entered~~revenues ~~into~~and byexpenses ~~the~~during ~~Company and~~ the ~~receivership~~reported ~~did~~period. ~~not~~Actual ~~pay~~results ~~the~~could ~~fully~~differ ~~reserved~~from ~~accounts~~those ~~receivable~~estimates. AsSignificant ~~such,~~estimates include the ~~accounts~~Company’s ~~receivable~~revenue ~~balance~~recognition ~~was~~method ~~written off~~ and ~~the~~derivative ~~allowance for doubtful accounts was fully reduced to zero~~liabilities.

~~Net~~Principles ~~Income~~of ~~(Loss)~~Consolidation ~~Per Common Share~~

~~Basic~~The ~~net~~consolidated ~~income (loss)~~financial ~~per~~statements ~~share~~of ~~is computed by dividing (i) net income (loss) available to common shareholders (numerator), by (ii)~~ the ~~weighted~~Company ~~average number~~for ~~of common shares outstanding during~~ the ~~period~~three ~~(denominator).~~months ~~Diluted~~ended ~~net~~March ~~income~~31, ~~(loss)~~2016 ~~per~~and ~~share~~2015 isinclude ~~computed using~~ the ~~weighted~~ ~~average~~financial ~~number~~results of ~~common shares and dilutive potential common shares outstanding during the period. At September 30~~HCI, ~~2015 and 2014~~HGI, ~~there were 4~~HBI,~~623,959~~ ~~and 4,518,626 shares, respectively, underlying potentially dilutive convertible preferred stock~~HPA and ~~stock options outstanding~~HAM. ~~These~~All ~~shares~~significant ~~were~~intercompany ~~not~~transactions ~~included in dilutive weighted average shares outstanding for the three~~ and ~~nine~~ ~~months~~balances ~~ended~~have ~~September~~been ~~30,~~eliminated ~~2015~~in ~~and 2014 because their effect is anti-dilutive due to the Company’s reported net loss~~consolidation.

~~Use~~Cash ~~of Estimates~~ and ~~Assumptions~~Cash Equivalents

The ~~preparation~~Company ofconsiders ~~consolidated~~all ~~financial~~liquid ~~statements~~investments ~~in conformity~~ with ~~GAAP~~a ~~requires~~maturity ~~management to make estimates and assumptions that affect reported amounts~~ of ~~assets~~90 ~~and~~days ~~liabilities~~or ~~and~~less ~~disclosure~~to ofbe ~~contingent~~cash ~~assets and liabilities at the date of the consolidated financial statements and the reported amounts of revenues and expenses during the reported period~~equivalents. ~~Actual results could differ from those estimates. Significant estimates include the Company’s revenue recognition method and derivative liabilities.~~

~~Principles~~Property, ofEquipment ~~Consolidation~~and Software

~~The~~Property, ~~consolidated~~equipment, ~~financial~~and ~~statements~~software ofare ~~the~~stated ~~Company~~at ~~for~~cost. ~~the~~Depreciation ~~three~~is ~~and~~provided ~~nine~~in ~~months~~amounts ~~ended~~sufficient ~~September~~to ~~30,~~relate ~~2015~~the ~~and~~cost ~~2014~~of ~~include~~ the ~~financial~~depreciable ~~results~~assets ofto ~~HCI,~~operations ~~HGI,~~over ~~HBI~~their estimated service lives, ~~HPA~~ranging ~~and~~from ~~HAM.~~three ~~All~~to ~~significant~~seven ~~intercompany~~years. ~~transactions~~Provisions ~~and~~for ~~balances~~depreciation ~~have~~are ~~been~~made ~~eliminated~~using inthe ~~consolidation~~straight-line method.

~~Cash~~Major additions and ~~Cash~~improvements are ~~Equivalents~~capitalized, while expenditures for maintenance and repairs are charged to expense as incurred. Upon sale or retirement, the cost of the property and equipment and the related accumulated depreciation are removed from the respective accounts, and any resulting gains or losses are credited or charged to other general and administrative expenses.

~~The~~Fair ~~Company~~Value ~~considers all liquid investments with a maturity~~ of 90Financial ~~days or less to be cash equivalents.~~Instruments

~~Other~~The ~~Assets~~carrying value of trade accounts receivable, accounts payable, and accrued and other liabilities approximate fair value due to the short maturity of these items. The estimated fair value of the notes payable and subordinated debt approximates the carrying amounts as they bear market interest rates.

At September 30, 2015, other assets were $13,333 ($40,000 in total origination fees paid offset by $26,667 in accumulated amortization of those fees) for the senior unsecured promissory note discussed in Note 9. The fees are to be amortized over the life of the promissory note. At December 31, 2014, other assets were $23,333 ($40,000 in total origination fees offset by $16,667 in accumulated amortization) for the senior unsecured promissory note.8

~~Property,~~The ~~Equipment~~Company considers the warrants related to its subordinated debt to be derivatives, and ~~Software~~the Company records the fair value of the derivative liabilities in the consolidated balance sheets. Changes in fair value of the derivative liabilities are included in gain (loss) on change in fair value of derivative in the consolidated statements of operations. The Company’s derivative liability has been classified as a Level III valuation according to Accounting Standards Codification (“ASC”) 820.

~~Property,~~Internally ~~equipment,~~Developed ~~and software~~Software are stated at cost. Depreciation is provided in amounts sufficient to relate the cost of the depreciable assets to operations over their estimated service lives, ranging from three to seven years. Provisions for depreciation are made using the straight-line method.

~~Major~~Internally ~~additions~~developed legacy application software consisting of database, customer relations management, process management and ~~improvements~~internal reporting modules are ~~capitalized,~~used ~~while~~in ~~expenditures~~each of the Company’s subsidiaries. The Company accounts for ~~maintenance~~computer software used in the business in accordance with ASC 350 “Intangibles-Goodwill and ~~repairs~~Other”. ~~are~~ASC 350 requires computer software costs associated with internal use software to be charged to ~~expense~~operations as incurred. ~~Upon~~until ~~sale~~certain orcapitalization ~~retirement,~~criteria are met. Costs incurred during the preliminary ~~cost~~project ofstage and the post-implementation stages are expensed as incurred. Certain qualifying costs incurred during the application development stage are capitalized as property, equipment and ~~equipment~~software. These costs generally consist of internal labor during configuration, coding, and testing activities. Capitalization begins when (i) the ~~related~~preliminary ~~accumulated~~project ~~depreciation~~stage ~~are~~is ~~removed~~complete, ~~from~~(ii) management with the ~~respective~~relevant ~~accounts~~authority authorizes and commits to the funding of the software project, and ~~any~~(iii) ~~resulting~~it is probable ~~gains~~both orthat ~~losses~~the ~~are~~project ~~credited~~will orbe ~~charged~~completed and that the software will be used to ~~other~~perform ~~general~~the function intended. Management has determined that a significant portion of costs incurred for internally developed software came from the preliminary project and ~~administrative~~post-implementation stages; ~~expenses~~as such, no costs for internally developed software were capitalized.

9Long-Lived Assets

~~Fair~~Long-lived ~~Value~~assets are reviewed on an annual basis or whenever events or changes in circumstance indicate that the carrying amount of ~~Financial~~an ~~Instruments~~asset may not be recoverable. Recoverability of assets held and used is generally measured by a comparison of the carrying amount of an asset to undiscounted future net cash flows expected to be generated by that asset. If it is determined that the carrying amount of an asset may not be recoverable, an impairment loss is recognized for the amount by which the carrying amount of the asset exceeds the fair value of the asset. Fair value is the estimated value at which the asset could be bought or sold in a transaction between willing parties. There were no impairment charges for the three months ended March 31, 2016 and 2015.

~~The~~Income ~~carrying~~Taxes value of trade accounts receivable, accounts payable, and accrued and other liabilities approximate fair value due to the short maturity of these items. The estimated fair value of the notes payable and subordinated debt approximates the carrying amounts as they bear market interest rates.

The Company ~~considers~~accounts for ~~the~~income ~~warrants~~taxes ~~related~~in toaccordance ~~its~~with ~~subordinated~~ASC ~~debt~~740 to“Income beTaxes”. ~~derivatives,~~ASC ~~and~~740 requires the ~~Company~~use ~~records~~of the ~~fair~~asset ~~value~~and ofliability ~~the~~method whereby ~~derivative~~deferred ~~liabilities in~~tax ~~the~~assets ~~consolidated~~and ~~balance~~liability ~~sheets.~~account ~~Changes~~balances inare ~~fair~~determined ~~value~~based on differences between financial reporting and tax bases of ~~the~~assets ~~derivative~~and liabilities and are ~~included~~measured inusing ~~gain~~the ~~(loss)~~enacted ontax ~~change~~rates ~~in fair~~and ~~value~~laws ofthat ~~derivative~~will be in effect when the ~~consolidated~~differences are ~~statements~~expected ofto ~~operations~~reverse. ~~The~~These ~~Company’s~~differences ~~derivative~~result ~~liability~~in ~~has~~deferred ~~been~~tax ~~classified as~~assets aand ~~Level~~liabilities, ~~III~~which ~~valuation~~are ~~according~~included toin ~~Accounting~~the ~~Standards~~Company’s consolidated ~~Codification~~balance ~~(“ASC”) 820~~sheets.

~~Internally~~The ~~Developed~~Company ~~Software~~then assesses the likelihood of realizing benefits related to such assets by considering factors such as historical taxable income and the Company’s ability to generate sufficient taxable income of the appropriate character within the relevant jurisdictions in future years. Based on the aforementioned factors, if the realization of these assets is not likely a valuation allowance is established against the deferred tax assets.

~~Internally developed~~The ~~legacy~~Company ~~application~~accounts ~~software consisting of database, customer relations management, process management and internal reporting~~for ~~modules~~its ~~are~~position ~~used~~ in ~~each~~tax ofuncertainties ~~the~~under ~~Company’s~~ASC ~~subsidiaries~~740-10. ~~The~~ASC ~~Company~~740-10 ~~accounts~~establishes standards for ~~computer~~accounting ~~software~~for ~~used~~uncertainty in ~~the~~income ~~business in~~taxes. ~~accordance~~ASC ~~with~~740-10 ~~ASC~~provides ~~350~~several ~~“Intangibles-Goodwill~~clarifications ~~and~~related ~~Other”.~~to ~~ASC~~uncertain ~~350~~tax ~~requires~~positions. ~~computer~~Most ~~software~~notably, ~~costs~~a ~~associated~~“more ~~with~~likely-than-not” ~~internal~~standard ~~use~~for ~~software~~initial torecognition beof ~~charged~~tax topositions, ~~operations~~a aspresumption ~~incurred~~of ~~until~~audit ~~certain~~detection ~~capitalization~~and ~~criteria~~a ~~are~~measurement ~~met.~~of ~~Costs~~recognized ~~incurred~~tax ~~during~~benefits ~~the~~based ~~preliminary~~on ~~project stage and~~ the ~~post-implementation~~largest ~~stages~~amount ~~are~~that ~~expensed~~has asa ~~incurred.~~greater ~~Certain~~than ~~qualifying~~50 ~~costs~~percent ~~incurred~~likelihood ~~during the~~of ~~application~~realization. ~~development~~ASC ~~stage~~740-10 ~~are~~applies ~~capitalized~~a astwo-step ~~property,~~process to ~~equipment~~determine ~~and~~the ~~software.~~amount ~~These~~of ~~costs~~tax ~~generally~~benefit ~~consist~~to ofbe ~~internal labor~~recognized ~~during~~in ~~configuration,~~the ~~coding,~~financial ~~and testing activities~~statements. ~~Capitalization~~First, ~~begins when (i)~~ the ~~preliminary~~Company ~~project~~must ~~stage~~determine ~~is complete,~~whether ~~(ii)~~any ~~management~~amount ~~with~~of the ~~relevant~~tax ~~authority~~benefit ~~authorizes~~may ~~and~~be ~~commits~~recognized. toSecond, the ~~funding~~Company ofdetermines ~~the~~how ~~software~~much ~~project,~~of ~~and~~the ~~(iii)~~tax itbenefit isshould ~~probable~~be recognized ~~both~~(this ~~that~~would ~~the~~only ~~project~~apply ~~will~~to betax ~~completed~~positions ~~and~~ that ~~the~~qualify ~~software~~for ~~will~~recognition.) beThe ~~used~~Company tohas ~~perform~~not ~~the~~taken ~~function~~a ~~intended.~~tax ~~Management~~position ~~has determined~~ that, aif ~~significant~~challenged, would ~~portion~~have ofa ~~costs~~material ~~incurred~~effect ~~for~~on ~~internally~~the ~~developed~~financial ~~software~~statements ~~came~~or ~~from~~ the ~~preliminary~~effective ~~project~~tax ~~and~~rate ~~post-implementation stages;~~during asthe ~~such,~~three nomonths ~~costs~~ended ~~for~~March ~~internally~~31, ~~developed~~2016 or ~~software were capitalized~~2015. U

~~Long-Lived~~The ~~Assets~~ Company incurred no penalties or interest for taxes for the three months ended March 31, 2016 or 2015. The Company is subject to a three year statute of limitations by major tax jurisdictions for the fiscal years ended December 31, 2012, 2013 and 2014. The Company files income tax returns in the U.S. federal jurisdiction.

~~Long-lived~~Recent ~~assets~~Accounting are reviewed on an annual basis or whenever events or changes in circumstance indicate that the carrying amount of an asset may not be recoverable. Recoverability of assets held and used is generally measured by a comparison of the carrying amount of an asset to undiscounted future net cash flows expected to be generated by that asset. If it is determined that the carrying amount of an asset may not be recoverable, an impairment loss is recognized for the amount by which the carrying amount of the asset exceeds the fair value of the asset. Fair value is the estimated value at which the asset could be bought or sold in a transaction between willing parties. There were no impairment charges for the three and nine months ended September 30, 2015 and 2014.Standards

~~Income~~In ~~Taxes~~ May 2014, the FASB issued Accounting Standards Update No. 2014-09, Revenue from Contracts with Customers (“ASU 2014-09”), which supersedes nearly all existing revenue recognition guidance under GAAP. The core principle of ASU 2014-09 is to recognize revenues when promised goods or services are transferred to customers in an amount that reflects the consideration to which an entity expects to be entitled for those goods or services. ASU 2014-09 defines a five step process to achieve this core principle and, in doing so, more judgment and estimates may be required within the revenue recognition process than are required under existing GAAP.

The Company accounts for income taxes in accordance with ASC 740 “Income Taxes”. ASC 740 requires the use of the asset and liability method whereby deferred tax assets and liability account balances are determined based on differences between financial reporting and tax bases of assets and liabilities and are measured using the enacted tax rates and laws that will be in effect when the differences are expected to reverse. These differences result in deferred tax assets and liabilities, which are included in the Company’s consolidated balance sheets.9

The ~~Company~~standard ~~then~~is ~~assesses~~effective ~~the~~for ~~likelihood~~annual periods beginning after December 15, 2017, and interim periods therein, using either of ~~realizing~~the ~~benefits~~following ~~related~~transition tomethods: (i) ~~such~~a ~~assets~~full byretrospective ~~considering~~approach ~~factors~~reflecting ~~such~~the asapplication ~~historical~~of ~~taxable~~the ~~income~~standard ~~and~~in each prior reporting period with the ~~Company’s ability~~option to elect ~~generate~~certain ~~sufficient~~practical ~~taxable~~expedients, ~~income~~or of(ii) a retrospective approach with the ~~appropriate~~cumulative effect ~~character~~of ~~within~~initially adopting ASU 2014-09 recognized at the ~~relevant~~date ~~jurisdictions~~of inadoption ~~future~~(which ~~years~~includes additional footnote disclosures). ~~Based~~We onare currently evaluating the ~~aforementioned~~impact ~~factors,~~of ifour ~~the~~pending ~~realization~~adoption of ~~these~~ASU ~~assets~~2014-09 ison our consolidated financial statements and have not yet ~~likely~~determined athe ~~valuation~~method ~~allowance~~by iswhich ~~established~~we ~~against~~will adopt the ~~deferred~~ ~~tax~~standard ~~assets~~in 2018.

10NOTE 3. CONCENTRATIONS OF CREDIT RISK

The Company ~~accounts~~maintains ~~for~~aggregate ~~its~~cash ~~position~~balances, inat tax uncertainties under ASC 740-10. ASC 740-10 establishes standards for accounting for uncertainty in income taxes. ASC 740-10 provides several clarifications related to uncertain tax positions. Most notablytimes, awith ~~“more~~financial ~~likely-than-not” standard for initial recognition of tax positions~~institutions, awhich ~~presumption~~are ofin ~~audit~~excess ~~detection and a measurement~~ of ~~recognized~~amounts ~~tax~~insured ~~benefits based~~by on the ~~largest~~Federal ~~amount~~Deposit ~~that~~Insurance ~~has a greater than 50 percent likelihood of realization~~Corporation (“FDIC”). ~~ASC~~During ~~740-10 applies a two-step process to determine~~ the ~~amount~~three ofmonths ~~tax~~ended ~~benefit~~March ~~to be recognized in the financial statements. First~~31, ~~the Company must determine whether any amount of the tax benefit may be recognized. Second~~2016, the ~~Company~~FDIC ~~determines~~insured ~~how~~deposit ~~much~~accounts ofup ~~the tax benefit should be recognized (this would only apply~~ to ~~tax positions that qualify for recognition~~$250,000.) ~~The~~At ~~Company has not taken a tax position that~~March 31, ~~if challenged~~2016, ~~would~~ ~~have~~the aCompany’s ~~material~~cash ~~effect~~accounts onwere ~~the~~all ~~financial~~less ~~statements~~than or the ~~effective~~$250,000 ~~tax~~FDIC ~~rate~~insured ~~during~~amount ~~the three~~ and ~~nine~~as ~~months~~such ~~ended~~were ~~September 30,~~insured ~~2015~~in ~~or 2014~~full.

~~The~~Financial ~~Company~~instruments ~~incurred no~~that ~~penalties~~potentially orsubject ~~interest for taxes for~~ the ~~three and nine months ended September 30, 2015 or 2014. The~~ Company ~~is subject~~ to aconcentrations ~~three year statute~~ of ~~limitations~~credit byrisk ~~major~~consist ~~tax~~primarily ~~jurisdictions~~of ~~for~~accounts ~~the fiscal years ended December 31, 2012, 2013 and 2014~~receivable. ~~The Company files income tax returns in the U.S. federal jurisdiction.~~

~~Recent~~In the normal course of ~~Accounting~~business, ~~Standards~~the Company extends unsecured credit to its customers. Because of the credit risk involved, management has provided an allowance for doubtful accounts which reflects its estimate of amounts which will eventually become uncollectible. In the event of complete non-performance by the Company’s customers, the maximum exposure to the Company is the outstanding accounts receivable balance at the date of non-performance.

~~In May~~NOTE ~~2014, the FASB issued Accounting Standards Update No~~4. ~~2014-09,~~OPERATING Revenue from Contracts with Customers (“ASU 2014-09”), which supersedes nearly all existing revenue recognition guidance under GAAP. The core principle of ASU 2014-09 is to recognize revenues when promised goods or services are transferred to customers in an amount that reflects the consideration to which an entity expects to be entitled for those goods or services. ASU 2014-09 defines a five step process to achieve this core principle and, in doing so, more judgment and estimates may be required within the revenue recognition process than are required under existing GAAP.SEGMENTS

The Company ~~standard~~has isseveral ~~effective~~operating ~~for~~segments ~~annual~~as ~~periods~~listed ~~beginning~~below ~~after December 15, 2017,~~ and ~~interim~~as ~~periods~~defined ~~therein, using either of the following transition methods: (i) a full retrospective approach reflecting the application of the standard~~ in ~~each~~Note ~~prior~~1. ~~reporting~~The ~~period with~~results ~~the~~for ~~option~~these tooperating ~~elect~~segments ~~certain~~are ~~practical~~based ~~expedients, or (ii) a retrospective approach with the cumulative effect of initially~~on ~~adopting~~our ~~ASU~~internal ~~2014-09~~management ~~recognized~~structure atand ~~the~~review ~~date of adoption (which includes additional footnote disclosures)~~process. We ~~are~~define ~~currently evaluating the impact of~~ our ~~pending~~operating ~~adoption~~segments ofby ~~ASU~~service ~~2014-09~~industry. onIf ~~our~~the ~~consolidated~~management ~~financial statements~~ structure and/or ~~have~~allocation ~~not~~process ~~yet~~changes, ~~determined~~allocations ~~the~~may ~~method by~~change. ~~which~~See wethe ~~will~~following ~~adopt~~summary ~~the~~of ~~standard~~operating insegment ~~2018.~~reporting;

NOTE 3. CONCENTRATIONS OF CREDIT RISK

Operating Segments	For the Three Months Ended March 31,
	2016			2015
Revenue
Halo Asset Management	$	30,328		$	240,899
Halo Portfolio Advisors		41,028			1,178,868
Halo Group, Inc.		115,000			73,750
Net Revenue	$	186,356		$	1,493,517

Operating income (loss):
Halo Asset Management	$	29,534		$	119,426
Halo Portfolio Advisors		32,936			473,338
Other		–			–
Less: Corporate expenses (a)		(230,932	)		(1,060,190	)
Operating income (loss):	$	(168,462	)	$	(467,426	)

~~The~~a. ~~Company~~Corporate ~~maintains~~expenses ~~aggregate cash~~include ~~balances~~salaries, atbenefits ~~times~~and other expenses, ~~with~~including ~~financial~~rent ~~institutions,~~and ~~which~~general ~~are~~and inadministrative ~~excess~~expenses, ofrelated ~~amounts~~to ~~insured~~corporate byoffice ~~the~~overhead ~~Federal~~and ~~Deposit~~functions ~~Insurance~~that ~~Corporation (“FDIC”)~~benefit all operating segments. ~~During~~Corporate ~~the~~expenses ~~three~~also ~~and~~include ~~nine~~interest ~~months~~expense. ~~ended~~Corporate ~~September~~expenses ~~30,~~are ~~2015,~~expenses that the ~~FDIC~~Company ~~insured~~does ~~deposit~~not ~~accounts~~directly upallocate to ~~$250,000~~any segment above. At ~~September~~Allocating ~~30,~~these ~~2015,~~indirect ~~the~~expenses ~~Company’s~~to ~~cash~~operating ~~accounts~~segments ~~were~~would ~~all~~require ~~less~~an ~~than~~imprecise ~~the~~allocation ~~$250~~methodology. Further,~~000~~ ~~FDIC~~there ~~insured~~are ~~amount~~no ~~and~~material asamounts ~~such~~that ~~were~~are ~~insured in~~the ~~full~~elimination or reversal of transactions between the above reportable operating segments.

~~Financial~~The ~~instruments~~assets ~~that~~of ~~potentially~~the ~~subject~~Company consist primarily of cash, trade accounts receivable, and property, equipment and software. Cash is managed at the corporate level of the Company toand ~~concentrations~~not ofat ~~credit~~the ~~risk~~segment ~~consist~~level. ~~primarily~~Each of ~~accounts~~the ~~receivable~~remaining primary assets has been discussed in detail, including the applicable operating segment for which the assets and liabilities reside, in the consolidated notes to the financial statements. As such, the duplication is not warranted in this footnote.

In the normal course of business, the Company extends unsecured credit to its customers. Because of the credit risk involved, management has provided an allowance for doubtful accounts which reflects its estimate of amounts which will eventually become uncollectible. In the event of complete non-performance by the Company’s customers, the maximum exposure to the Company is the outstanding accounts receivable balance at the date of non-performance.10

~~NOTE~~All debt of the 4Company is recorded at the corporate parent companies HCI and HGI. ~~OPERATING~~All ~~SEGMENTS~~interest expense is included in corporate expenses above. Interest expense is discussed in further detail in Notes 8, 9, 10 and 11.

~~The~~For ~~Company~~the ~~has~~three ~~several~~months ~~operating~~ended ~~segments~~March as31, ~~listed~~2016 ~~below~~or ~~and~~2015, asthere ~~defined~~have inbeen ~~Note~~no 1.material ~~The~~transactions ~~results~~between ~~for~~reportable ~~these~~units ~~operating~~that ~~segments~~would ~~are~~materially ~~based on our~~affect ~~internal~~an ~~management structure and review process. We define our~~ operating ~~segments~~segment byprofit ~~service~~or ~~industry~~loss. IfIntercompany ~~the~~transactions ~~management~~are ~~structure and/or~~eliminated ~~allocation~~in ~~process changes, allocations may change. See~~ the ~~following~~consolidated ~~summary~~financial ~~of operating segment reporting;~~statements.

11NOTE 5. GOING CONCERN

Operating Segments	For the Three Months Ended						For the Nine Months Ended
	September 30,						September 30,
	2015			2014			2015			2014
Revenue:
Halo Asset Management	$	425,429		$	219,125		$	942,148		$	1,101,544
Halo Portfolio Advisors		569,531			336,341			1,947,583			874,115
Other		30,000			—			133,894			—
Net revenue	$	1,024,960		$	555,466		$	3,023,625		$	1,975,659
Operating income (loss):
Halo Asset Management	$	366,583		$	70,014		$	682,695		$	502,426
Halo Portfolio Advisors		212,155			43,833			728,450			129,484
Other		—			—			—			—
Less: Corporate expenses (a)		(609,159	)		(522,573	)		(2,714,941	)		(1,592,792	)
Operating income (loss):	$	(30,421	)	$	(408,726	)	$	(1,303,796	)	$	(960,882	)

a.The ~~Corporate~~Company ~~expenses~~is ~~include~~actively seeking ~~salaries,~~growth ~~benefits~~of ~~and~~its ~~other~~asset ~~expenses~~units under management, ~~including~~both ~~rent~~organically and ~~general~~via ~~and~~new ~~administrative~~client ~~expenses~~relationships. Management, ~~related~~in the ordinary course of business, is trying to ~~corporate~~raise ~~office~~additional ~~overhead~~capital ~~and~~through ~~functions~~sales ~~that~~of ~~benefit~~common ~~all~~stock ~~operating~~as ~~segments.~~well ~~Corporate~~as ~~expenses~~seeking ~~also~~financing ~~include~~via ~~interest~~equity or ~~expense.~~debt, ~~Corporate~~or ~~expenses~~both from third parties. There are ~~expenses~~no assurances that additional financing will be available on favorable terms, or at all. If additional financing is not available, the Company ~~does~~will ~~not~~need ~~directly~~to ~~allocate~~reduce, defer or cancel development programs, planned initiatives and overhead expenditures. The failure to ~~any~~adequately ~~segment~~fund ~~above~~its capital requirements could have a material adverse effect on the Company’s business, financial condition and results of operations. ~~Allocating~~Moreover, ~~these~~the ~~indirect~~sale ~~expenses~~of additional equity securities to ~~operating~~raise ~~segments~~financing ~~would~~will ~~require~~result anin ~~imprecise~~additional ~~allocation~~dilution ~~methodology.~~to ~~Further~~the Company’s stockholders, ~~there~~and ~~are~~incurring noadditional ~~material~~indebtedness could ~~amounts~~involve an increased debt service cash obligation, the imposition of covenants that ~~are~~restrict the ~~elimination~~Company operations or ~~reversal~~the Company’s ofability ~~transactions~~to ~~between~~perform on its current debt service requirements. The consolidated financial statements do not include any adjustments that might be necessary if the ~~above~~Company ~~reportable~~is ~~operating~~unable ~~segments~~to continue as a going concern.

The ~~assets~~ ofCompany ~~the~~has ~~Company~~incurred an ~~consist~~accumulated ~~primarily~~deficit of ~~cash~~$13,814,315 ~~trade~~as ~~accounts~~of ~~receivable~~March 31, ~~and~~2016. ~~property~~However, ~~equipment~~of ~~and~~the ~~software.~~accumulated ~~Cash~~deficit, is$2,110,748 ~~managed~~of expense was incurred atas ~~the~~stock-based ~~corporate~~compensation, ~~level~~$609,456 ofin ~~the~~depreciation ~~Company~~expense, and ~~not~~$279,241 atin ~~the~~impairment ~~segment~~loss ~~level.~~on ~~Each~~investment ofin ~~the~~portfolio ~~remaining~~assets, all ~~primary~~of ~~assets~~which ~~have~~are ~~been~~noncash ~~discussed~~expenses. ~~in detail~~Further, ~~including~~$906,278 of the ~~applicable~~accumulated ~~operating~~deficit ~~segment~~is ~~for~~related ~~which~~to the ~~assets~~issuance ~~and~~of ~~liabilities~~stock ~~reside~~dividends, also innon ~~the~~cash ~~consolidated~~reductions. ~~notes~~The to$3,905,723 ~~the financial~~total ~~statements.~~of Asthese ~~such,~~non-cash ~~the~~retained ~~duplication~~earnings isreductions ~~not~~represents ~~warranted~~28% inof ~~this~~the ~~footnote.~~total deficit balance.

~~All debt~~NOTE ~~of the Company is recorded at the corporate parent companies HCI and HGI~~6. ~~All interest expense is included in corporate expenses above. Interest expense is discussed in further detail in Notes 8~~PROPERTY, 9,EQUIPMENT ~~10 and 11.~~AND SOFTWARE

~~For the three and nine months ended September 30~~Property, ~~2015 or 2014, there have been no material transactions between reportable units that~~equipment ~~would~~and ~~materially~~software ~~affect~~consist anof ~~operating~~the ~~segment~~following ~~profit~~as orof ~~loss.~~March ~~Intercompany~~31, ~~transactions~~2016 ~~are~~and ~~eliminated~~December in31, ~~the~~2015, ~~consolidated financial statements.~~ respectively:

NOTE 5. GOING CONCERN

Computers and purchased software	$	147,800		$	147,800
Furniture and equipment		203,427			203,427
		351,227			351,227
Less: accumulated depreciation		(309,392	)		(304,055	)
	$	41,835		$	47,172

~~The~~Depreciation ~~accompanying~~totaled ~~consolidated~~$5,337 ~~financial~~and ~~statements~~$6,223 ~~have~~for ~~been prepared assuming that~~ the ~~Company~~three ~~will~~months ~~continue~~ended asMarch ~~a going concern~~31, ~~which~~2016 ~~contemplates the Company will need to manage additional asset units under contract~~ and~~/or~~ ~~additional financing to fully implement its business plan~~2015, ~~including continued growth and establishment of a stronger brand name of HAM’s asset management in the distressed asset sector~~respectively.

~~The~~NOTE ~~Company is actively seeking growth of its asset units under management, both organically and via new client relationships~~7. ~~Management,~~ACCRUED inAND ~~the~~OTHER ordinary course of business, is trying to raise additional capital through sales of common stock as well as seeking financing via equity or debt, or both from third parties. There are no assurances that additional financing will be available on favorable terms, or at all. If additional financing is not available, the Company will need to reduce, defer or cancel development programs, planned initiatives and overhead expenditures. The failure to adequately fund its capital requirements could have a material adverse effect on the Company’s business, financial condition and results of operations. Moreover, the sale of additional equity securities to raise financing will result in additional dilution to the Company’s stockholders, and incurring additional indebtedness could involve an increased debt service cash obligation, the imposition of covenants that restrict the Company operations or the Company’s ability to perform on its current debt service requirements. The consolidated financial statements do not include any adjustments that might be necessary if the Company is unable to continue as a going concern.LIABILITIES

The Company ~~has~~had ~~incurred an accumulated deficit of~~ $131,~~168~~460,~~659~~985 in asaccrued ofliabilities ~~September~~at 30March 31, ~~2015~~2016. ~~However,~~Included ofin ~~the~~this ~~accumulated~~accrual ~~deficit~~is $496,977 in accrued interest ($2251,~~110,748~~082 of ~~expense~~this ~~was~~balance is ~~incurred~~related asto ~~stock-based~~interest ~~compensation,~~on ~~$598,457~~the secured asset promissory note discussed in ~~depreciation~~more ~~expense,~~detail ~~and~~in Note 11). The accrual also includes $~~279~~788,~~241~~ 177 in ~~impairment~~deferred ~~loss~~compensation onto ~~investment~~several senior management personnel. The Company had $1,328,662 in ~~portfolio~~accrued liabilities at December ~~assets~~31, ~~all~~2015. ofIncluded ~~which~~in ~~are~~this ~~noncash~~accrual ~~expenses.~~is ~~Further~~$423,623 in accrued interest ($~~906~~245,~~278~~663 of ~~the~~this ~~accumulated~~balance ~~deficit~~ is related to ~~the~~interest ~~issuance~~on ofthe ~~stock dividends,~~secured ~~also~~asset ~~non~~promissory ~~cash~~note ~~reductions.~~discussed ~~The~~in ~~$3,894,724~~more ~~total~~detail ofin ~~these~~Note ~~non-cash~~11). ~~retained~~The ~~earnings~~accrual ~~reductions~~also ~~represents~~includes ~~30%~~$724,208 ofin ~~the~~deferred ~~total~~compensation ~~deficit~~to several ~~balance~~senior management personnel.

12NOTE 8. NOTES PAYABLE TO RELATED PARTIES

~~NOTE~~During March 2011, the Company entered into one unsecured promissory note with a related party (a previous company director) in the amount of $250,000 (the “2011 Related Party Note”). The 2011 Related Party Note had a fixed interest amount of $50,000 and a maturity date of July 31, 2011. On September 20, 2011, the 2011 Related Party Note was amended to include the 2011 Related Party Note plus $52,426 of accrued interest for a total note balance of $302,426. The 2011 Related Party Note has a 6% interest rate and is a monthly installment note with final balloon payment at maturity in September 2014. ~~PROPERTY~~At the time of the filing of these consolidated financial statements, ~~EQUIPMENT~~the ~~AND~~Company ~~SOFTWARE~~and the related party had not finalized an extended maturity date, and as such the entire $197,636 2011 Related Party Note balance is included in current portion of notes payable to related parties as of March 31, 2016. As of December 31, 2015, the 2011 Related Party Note was $197,636, all of which is included in current portion of notes payable to related parties.

~~Property, equipment and software consist of the following as of September 30, 2015 and December 31, 2014, respectively:~~11

Computers and purchased software	$	147,800		$	158,899
Furniture and equipment		203,427			203,427
		351,227			362,326
Less: accumulated depreciation		(298,394	)		(291,800	)
	$	52,833		$	70,526

On September 1, 2011, several previous related party notes totaling $370,639 were amended and consolidated (“the 2011 Consolidated Related Party Note”). This note bears interest of 6% and has a maturity date of September 15, 2016. As of December 31, 2015, the 2011 Consolidated Related Party Note balance was $267,569, all of which is included in current portion of notes payable to related parties. As of March 31, 2016, the 2011 Consolidated Related Party Note balance was $267,569, all of which is included in current portion of notes payable to related parties.

~~Depreciation~~As ~~totaled~~of $5December 31,~~728~~ 2015, ~~$17,693,~~a ~~$8,899~~Company ~~and~~director had an outstanding advance to the Company of $37960,~~558~~476 for ~~the~~short ~~three~~term ~~and~~capital. ~~nine~~As ~~months~~of ~~ended~~March ~~September~~31, 302016, ~~2015~~the ~~and 2014,~~outstanding ~~respectively.~~advance ~~The~~balance ~~Company~~was ~~retired~~ $11960,~~099~~476 ofand ~~fully~~is ~~depreciated~~due ~~assets~~October ~~during~~1, 2016; as such the ~~nine~~entire ~~months~~balance ~~ended~~is ~~September~~included ~~30,~~in ~~2015,~~current ~~and~~portion asof ~~such~~notes payable ~~there~~to ~~was~~related noparties. ~~financial~~The ~~statement~~debt ~~impact~~accrues ~~from~~interest ~~the~~at ~~retired~~a ~~assets.~~rate of 15%.

~~NOTE~~As of December 31, 2015, 7the Company’s President and Chief Legal Officer had an outstanding advance balance of $345,000 for short term capital. ~~ACCRUED~~As of ~~AND~~March ~~OTHER~~31, ~~LIABILITIES~~2016, the outstanding advance balance was $345,000 and is due December 28, 2016; as such the entire balance is included in current portion of notes payable to related parties. The debt accrues interest at a rate of 15%.

~~The~~As ~~Company~~of ~~had $1,941,950~~December ~~in accrued liabilities at September 30~~31, 2015~~. Included in this accrual is $539~~,~~565 in accrued interest ($240,244~~ ofthe ~~this~~Company’s ~~balance~~CEO isand ~~related~~Director toof ~~interest on~~ the ~~secured~~Board ~~asset~~had ~~promissory~~an ~~note~~outstanding ~~discussed~~advance inbalance ~~more~~of ~~detail~~$515,000 infor ~~Note~~short ~~11)~~term capital. ~~The~~As ~~accrual~~of ~~also~~March ~~includes $659~~31,~~754~~ ~~in deferred compensation and $729~~2016,~~505~~ inthe ~~variable~~outstanding ~~wages~~advance ~~payable~~balance ~~and~~was $13515,~~126~~000 inand ~~other.~~is ~~The~~due ~~Company~~December ~~had $915~~28,~~900~~ in2016; ~~accrued~~as ~~liabilities~~such atthe ~~December~~entire ~~31,~~balance ~~2014. Included in this accrual~~ is ~~$392,756~~ included in ~~accrued~~current ~~interest~~portion ~~($223,987~~ of ~~this~~notes ~~balance~~payable isto related toparties. ~~interest~~The ondebt ~~the~~accrues ~~secured~~interest ~~asset~~at ~~promissory~~a ~~note discussed~~rate inof ~~more detail in Note 12) and $523,144 in deferred compensation to several senior management personnel~~15%.

~~NOTE~~During 8the twelve months ended December 31, 2015, the Company redeemed the remaining outstanding shares of Series X Preferred Stock in exchange for promissory notes due on December 28, 2016. ~~NOTES~~The ~~PAYABLE~~CEO TOwas ~~RELATED~~issued ~~PARTIES~~a promissory note from the Company of $209,000. A Company director was issued a promissory note from the Company of $267,771. A related party was issued a promissory note from the Company of $60,000. As of March 31, 2016 the entire balance of $536,771 is included in the current portion of notes payable to related parties. The debt accrues interest with an interest rate of 8%.

~~During~~As ~~March 2011, the Company entered into one unsecured promissory note with a related party (a previous company director) in the amount~~ of ~~$250,000 (the~~March ~~“2011 Related Party Note”). The 2011 Related Party Note had a fixed interest amount of $50,000 and a maturity date of July~~ 31, ~~2011. On September 20~~2016, ~~2011,~~ the notes ~~2011~~payable ~~Related Party Note was amended~~ to ~~include~~related ~~the~~party ~~2011 Related Party Note plus $52,426 of accrued interest for a total note~~ balance oftotaled $~~302~~2,~~426.~~822,452 ~~The~~all ~~2011 Related Party Note has a 6% interest rate and is a monthly installment note with final balloon payment at maturity in September 2014. At the time~~ of ~~the~~which ~~filing of these consolidated financial statements, the Company and the related party had not finalized an extended maturity date, and as such the entire $194,701 2011 Related Party Note balance~~ is included in current portion of notes payable to related parties asin ofthe ~~September~~consolidated ~~30,~~financial ~~2015~~statements. As of December 31, ~~2014~~2015, the ~~2011~~notes ~~Related~~payable ~~Party~~to ~~Note~~related ~~was~~party balance totaled $~~186~~2,~~154~~822, 452, all of which is included in current portion of notes payable to related parties in the consolidated financial statements.

OnThe ~~September~~Company 1incurred $73,354 and ~~2011~~$32,667 ~~several previous~~of ~~related~~interest ~~party~~expense ~~notes~~to ~~totaling~~directors, ~~$370~~officers,~~639~~ ~~were~~and ~~amended~~other ~~and~~related ~~consolidated~~parties (“during the ~~2011~~three ~~Consolidated~~months ~~Related~~ended ~~Party~~March ~~Note”).~~31, 2016 ~~This~~and ~~note~~2015, ~~bears~~respectively. Accrued interest ofdue 6%to directors and ~~has~~other arelated ~~maturity~~parties ~~date~~totaled ~~of September 15~~$251,313 ~~2016.~~at AsMarch ~~of December~~ 31, ~~2014~~2016, ~~the~~all ~~2011 Consolidated Related Party Note balance was $267,569,~~ of which ~~$88,211~~ is included in ~~current~~accrued ~~portion~~and ofother ~~notes~~current ~~payable to related parties~~liabilities. AsAccrued ofinterest ~~September 30,~~due ~~2015,~~to ~~the~~directors ~~2011~~and ~~Consolidated~~other ~~Related~~related ~~Party~~parties ~~Note~~totaled $177,724 ~~balance~~at ~~was~~December ~~$267~~31,~~569~~ 2015, all of which is included in ~~current~~accrued ~~portion~~and ofother ~~notes~~current ~~payable to related parties~~liabilities.

AsNOTE ~~of December 31, 2014, a Company director had an outstanding advance to the Company of $500,000 for short term capital~~9. AsNOTE ofPAYABLE September 30, 2015, the outstanding advance balance was $500,000. The maturity date for the advance repayment has been extended through September 30, 2016, and as such the entire balance is included in current portion of notes payable to related parties. Through March 31, 2015, the advance accrued interest at a rate of 15%. Effective in April 2015 and through September 30, 2015, the advance began accruing interest at a flat rate of $25,000 per month ($300,000 annualized fixed rate). As part of the extension for repayment of the advance through September 30, 2016, the annualized fixed interest amount will apply.

13In October 2013, the Company entered into a senior unsecured convertible promissory note agreement of $1,500,000. The terms of the note include an interest rate of 15% with a maturity date of October 10, 2016. The Company, although not required, is entitled to capitalize any accrued interest into the outstanding principal balance of the note up until maturity. At the maturity date, all unpaid principal and accrued interest is due. As part of the promissory note, the Company was required to pay origination fees and expenses associated with this note agreement (discussed in Other Assets Note 2), pay the subordinated debt originated in January 2010, pay $375,000 to a related party note held by a director, with the remaining use of proceeds for general corporate purposes including payment of deferred compensation to several management personnel. Additionally, the noteholder has the right, but not the obligation, to convert up to $1,000,000 of the principal balance of the note into common shares of the Company. The $1,000,000 maximum conversion ratio would entitle the noteholder to a maximum total of 10% of the then outstanding common stock of the Company, calculated on a fully diluted basis. Any conversion of the principal amount of this note into common stock would effectively lower the outstanding principal amount of the note. As of March 31, 2016, the note payable balance was $2,179,062, which includes capitalized interest of $679,062. As of December 31, 2015, the note payable balance was $2,099,475, which includes capitalized interest of $599,475.

AsNOTE ~~of December 31, 2014, the Company’s President and Chief Legal Officer had an outstanding advance balance of $70,000 for short term capital~~10. ~~During the~~SUBORDINATED nine months ended September 30, 2015, the Company received advances of $100,000 and made $25,000 in principal advance repayments. As of September 30, 2015, the outstanding advance balance was $145,000. At the time of the filing of these consolidated financial statements, the Company and the President had not finalized a maturity date for the advance repayment, and as such the entire balance is included in current portion of notes payable to related parties. The advance accrued interest at a rate of 15%.DEBT

AsDuring ofJanuary ~~December 31~~2010, ~~2014,~~ the Company’s ~~CEO~~authorized ~~and~~a ~~Director~~$750,000 ofsubordinated ~~the~~debt ~~Board~~offering ~~had~~(“Subordinated anOffering”), ~~outstanding~~which ~~advance~~consisted ~~balance~~of the issuance of ~~$115,000~~notes ~~for~~paying ~~short~~a ~~term~~16% ~~capital.~~coupon Aswith ~~of September~~a ~~30,~~1% ~~2015,~~origination ~~the~~fee ~~outstanding~~at ~~advance~~the ~~balance~~time ~~was~~of ~~$115,000~~closing. AtThe ~~the~~maturity ~~time~~date of the ~~filing~~notes ofwas ~~these~~originally ~~consolidated~~January 31, ~~financial~~2013, ~~statements~~however, the ~~Company~~subordinated ~~and~~debt ~~the~~holders ~~CEO~~agreed ~~had~~to ~~not~~an ~~finalized~~extended a maturity date ~~for~~of ~~the~~December ~~advance repayment~~31, ~~and~~2013. asIn ~~such~~October 2013, the Company ~~entire~~entered ~~balance~~into isa ~~included~~ senior unsecured convertible promissory note (discussed in ~~current~~Note ~~portion~~9) which required the use of ~~notes~~those ~~payable~~financing proceeds to ~~related~~pay ~~parties~~down the subordinated debt. ~~The~~As ~~advance~~such, ~~accrued~~as ~~interest~~of atDecember a31, ~~rate~~2015, ofthe ~~15%~~remaining balance was $0.

As of September 30, 2015, the notes payable to related party balance totaled $1,222,270, all of which is included in current portion of notes payable to related parties in the consolidated financial statements. As of December 31, 2014, the notes payable to related party balance totaled $1,138,723, of which $959,365 is included in current portion of notes payable to related parties in the consolidated financial statements.12

~~The~~As part ~~Company~~of ~~incurred~~the ~~$92~~Subordinated Offering,~~619,~~ the Company granted to investors common stock purchase warrants (the “Warrants”) ~~$215~~to purchase an aggregate of 200,~~875,~~000 shares of common stock of the Company at an exercise price of $290.01 per share. The 200,~~075~~000 shares ~~and~~of common stock contemplated to be issued upon exercise of the Warrants are based on an anticipated cumulative debt raise of $78750,~~085~~000. The investors are granted the Warrants pro rata based on their percentage of ~~interest~~investment ~~expense~~relative to ~~directors,~~the ~~officers~~$750,000 ~~and~~aggregate principal ~~other~~amount ~~related~~of ~~parties~~notes ~~during~~contemplated to be issued in the ~~three~~Subordinated ~~and~~Offering. ~~nine~~The ~~months~~Warrants shall have a term of seven years, ~~ended~~exercisable ~~September~~from 30January 31, 2015 ~~and~~to ~~2014~~January 31, ~~respectively~~2017. ~~Accrued~~The ~~interest~~Company ~~due~~had toa ~~directors~~call ~~and~~option ~~other~~any ~~related~~time ~~parties~~prior ~~totaled~~to ~~$299~~maturity,~~321~~ atso long as the ~~September~~principal ~~30,~~and ~~2015,~~interest ~~all~~on ofthe ~~which~~notes isare ~~included~~fully inpaid, ~~accrued~~to ~~and~~purchase ~~other~~the ~~current~~Warrants ~~liabilities.~~for ~~Accrued~~an ~~interest~~aggregate ~~due~~of to$150,000. ~~directors~~After ~~and~~the ~~other~~date of maturity ~~related~~until ~~parties~~the ~~totaled~~date ~~$166,992~~the atWarrants ~~December~~are 31exercisable, ~~2014~~the Company will have a call option to purchase the Warrants for $200,000. ~~all~~The ofcall option ~~which~~purchase isprice ~~included~~assumed ina ~~accrued~~cumulative ~~and~~debt ~~other~~raise ~~current~~of ~~liabilities~~$750,000.

~~NOTE~~The 9Company follows the provisions of ASC 815, “Derivatives and Hedging”. ~~NOTE~~ASC ~~PAYABLE~~815 requires freestanding contracts that are settled in a company’s own stock to be designated as an equity instrument, assets or liability. Under the provisions of ASC 815, a contract designated as an asset or liability must be initially recorded and carried at fair value until the contract meets the requirements for classification as equity, until the contract is exercised or until the contract expires. Accordingly, the Company determined that the warrants should be accounted for as derivative liabilities and has recorded the initial value as a debt discount which was amortized into interest expense using the effective interest method. As of December 31, 2013, the balance of the debt discount was $0 (fully amortized). Subsequent changes to the marked-to-market value of the derivative liability are recorded in earnings as derivative gains and losses. As of March 31, 2016 and December 31, 2015, there were 112,000 warrants outstanding with a derivative liability of $2,434. The Warrants were valued using the Black-Scholes model, which resulted in the fair value of the warrants at $0.01 per share using the following assumptions:

In October 2013, the Company entered into a senior unsecured convertible promissory note agreement of $1,500,000. The terms of the note include an interest rate of 15% with a maturity date of October 10, 2016. The Company, although not required, is entitled to capitalize any accrued interest into the outstanding principal balance of the note up until maturity. At the maturity date, all unpaid principal and accrued interest is due. As part of the promissory note, the Company was required to pay origination fees and expenses associated with this note agreement (discussed in Other Assets Note 2), pay the subordinated debt originated in January 2010, pay $375,000 to a related party note held by a director, with the remaining use of proceeds for general corporate purposes including payment of deferred compensation to several management personnel. Additionally, the noteholder has the right, but not the obligation, to convert up to $1,000,000 of the principal balance of the note into common shares of the Company. The $1,000,000 maximum conversion ratio would entitle the noteholder to a maximum total of 10% of the then outstanding common stock of the Company, calculated on a fully diluted basis. Any conversion of the principal amount of this note into common stock would effectively lower the outstanding principal amount of the note. As of September 30, 2015, the note payable balance was $2,021,009, which includes capitalized interest of $521,009. As of December 31, 2014, the note payable balance was $1,805,000, which includes capitalized interest of $305,000.

	March 31, 2016
Risk-free rate		0.62	%
Expected volatility		197	%
Expected remaining life (in years)		0.80
Dividend yield		0.00	%

~~NOTE~~During 10October 2014, the Company entered into an additional $100,000 subordinated term note with the current holder of the Company’s subordinated debt. ~~SUBORDINATED~~The ~~DEBT~~note pays an 18% coupon rate with a maturity date of September 30, 2017. There are no warrants associated with this subordinated term note. Repayment terms of the note include interest only payments through March 31, 2015. Thereafter, level monthly payments of principal and interest are made as calculated on a 60 month payment amortization schedule with final balloon payment due at maturity. The rights of the holder of this note is subordinated to any and all liens granted by the Company to a commercial bank or other qualified financial institution in connection with lines of credit or other loans extended to the Company in an amount not to exceed $3,500,000, and liens granted by the Company in connection with the purchase of furniture, fixtures or equipment. As of March 31, 2016, the remaining balance of this note totals $80,000, of which $20,000 is included in current portion of subordinated debt. As of December 31, 2015, the remaining balance of this note totals $85,000, of which $20,000 is included in current portion of subordinated debt.

~~During~~NOTE January 2010, the Company authorized a $750,000 subordinated debt offering (“Subordinated Offering”), which consisted of the issuance of notes paying a 16% coupon with a 1% origination fee at the time of closing11. ~~The~~SECURED ~~maturity~~ASSET ~~date~~PROMISSORY of the notes was December 31, 2013. In October 2013, the Company entered into a senior unsecured convertible promissory note (discussed in Note 9) which required the use of those financing proceeds to pay down the subordinated debt. As such, as of December 31, 2013, the remaining balance was $0.NOTE

14During December 2010, the Company authorized a debt offering to be secured by real estate assets purchased in connection with Equitas Housing Fund, LLC, (“Equitas Offering”). The Equitas Offering generated $1,200,000 in proceeds. Of the $1,200,000 in proceeds received in December 2010, $300,000 was used to acquire non-performing, residential mortgage notes and the balance was used for mortgage note workout expenses and operational expenses of Halo Asset Management. The Secured Asset Promissory Notes consisted of a 25% coupon. In May 2013, the Secured Asset Promissory Note was paid in full, along with $150,000 of the outstanding accrued interest balance. Halo and the secured asset promissory note holder agreed to include the remaining accrued interest in a promissory note due December 31, 2014. The promissory note will accrue interest at a 10% annual rate, with interest only payments due periodically and final balloon payment due at maturity. At the time of the filing of these consolidated financial statements, the Company and note holder have not finalized an extended maturity date. As such, as of March 31, 2016, the entire accrued interest balance of $251,082 is included in current portion of accrued interest. As of December 31, 2015, the entire accrued interest balance of $245,663 is included in current portion of accrued interest. For the three months ended March 31, 2016 and 2015, the Company incurred $5,419 and $5,419 respectively, in interest expense on the note.

As part of the Subordinated Offering, the Company granted to investors common stock purchase warrants (the “Warrants”) to purchase an aggregate of 200,000 shares of common stock of the Company at an exercise price of $0.01 per share. The 200,000 shares of common stock contemplated to be issued upon exercise of the Warrants are based on an anticipated cumulative debt raise of $750,000. The investors are granted the Warrants pro rata based on their percentage of investment relative to the $750,000 aggregate principal amount of notes contemplated to be issued in the Subordinated Offering. A total of 112,000 warrants were issued. The Warrants shall have a term of seven years, exercisable from January 31, 2015 to January 31, 2017. During 2015, 6,667 of the 112,000 warrants were purchased for $67 and converted to common stock.13

~~The~~NOTE ~~Company follows the provisions of ASC 815, “Derivatives and Hedging”~~12. ~~ASC~~RELATED ~~815~~PARTY ~~requires~~TRANSACTIONS freestanding contracts that are settled in a company’s own stock to be designated as an equity instrument, assets or liability. Under the provisions of ASC 815, a contract designated as an asset or liability must be initially recorded and carried at fair value until the contract meets the requirements for classification as equity, until the contract is exercised or until the contract expires. Accordingly, the Company determined that the warrants should be accounted for as derivative liabilities and has recorded the initial value as a debt discount which was amortized into interest expense using the effective interest method. As of December 31, 2013, the balance of the debt discount was $0 (fully amortized). Subsequent changes to the marked-to-market value of the derivative liability are recorded in earnings as derivative gains and losses. As of September 30, 2015 and December 31, 2014, there were 105,333 and 112,000 warrants outstanding, respectively, with a derivative liability of $2,434. The Warrants were valued using the Black-Scholes model, which resulted in the fair value of the warrants at $0.02 per share using the following assumptions:

	September 30, 2015
Risk-free rate		0.31	%
Expected volatility		625	%
Expected remaining life (in years)		1.33
Dividend yield		0.00	%

For the three months ended March 31, 2016 and 2015, HAM recognized monthly servicing fee revenue totaling $25,226 and $110,217, respectively, from an entity that is an affiliate of the Company. Further, facilities rent expense discussed in Note 14 was paid to the same affiliate.

~~During~~For ~~August 2012,~~ the ~~Company~~ ~~entered~~three ~~into~~months ~~an additional $25,000 subordinated term note with a then current holder of the Company’s subordinated~~ended ~~debt.~~March ~~The note pays an 18% coupon rate with a maturity date of August~~ 31, ~~2015.~~2016 ~~There~~and ~~are no warrants associated with this subordinated term note. Repayment terms of the note included interest only payments through February 28~~2015, ~~2013. Thereafter, level monthly payments of principal and interest are made as calculated on a 60 month payment amortization schedule with final balloon payment due at maturity. The rights of~~ the ~~holder of this note is subordinated to any and all liens granted by the~~ Company toincurred ainterest ~~commercial~~expense ~~bank or other qualified financial institution in connection with lines of credit or other loans extended~~ to ~~the~~related ~~Company~~parties in(See anNote ~~amount not to exceed $2,000,000, and liens granted by the Company in connection with the purchase of furniture, fixtures or equipment~~8). As of September 30, 2015, the remaining balance of this note totals $0 as the balance was paid in full. As of December 31, 2014, the remaining balance of this note totals $16,250, all of which is included in current portion of subordinated debt.

~~During~~For ~~October 2014,~~ the ~~Company~~ ~~entered~~three ~~into~~months ~~an additional $100,000 subordinated term note with the current holder of the Company’s subordinated~~ended debt. The note pays an 18% coupon rate with a maturity date of September 30, 2017. There are no warrants associated with this subordinated term note. Repayment terms of the note include interest only payments through March 31, ~~2015.~~2016 ~~Thereafter, level monthly payments of principal~~ and ~~interest~~2015, ~~are made as calculated on a 60 month payment amortization schedule with final balloon payment due at maturity. The rights of~~ the ~~holder of this note is subordinated to any and all liens granted by the~~ Company toincurred ~~a commercial bank or other qualified financial institution in connection with lines of credit or other loans extended to the Company in an amount not to exceed~~ $~~3,500,000,~~0 and ~~liens granted by the Company in connection with the purchase of furniture, fixtures or equipment. As of September 30, 2015, the remaining balance of this note totals~~ $~~90,000, of which $~~20,000 ~~is included~~ in ~~current~~commission ~~portion~~expense ~~of subordinated~~to ~~debt.~~an Asentity ofthat ~~December 31, 2014, the remaining balance of this note totals $100,000, of which $15,000~~ is ~~included~~an ~~in current~~affiliate ~~portion~~ of ~~subordinated~~the ~~debt~~Company.

15For the three months ended March 31, 2016 and 2015, the Company incurred $10,000 and $5,000 in consulting expense to an entity that is an affiliate of the Company.

NOTE 1113. ~~SECURED~~INCOME ~~ASSET~~TAXES ~~PROMISSORY NOTE~~

~~During~~For ~~December 2010,~~ the ~~Company~~three ~~authorized~~months ~~a debt offering to be secured by real estate assets purchased in connection with Equitas Housing~~ended ~~Fund,~~March ~~LLC~~31, ~~(“Equitas~~2016 ~~Offering”).~~and ~~The Equitas Offering generated $1~~2015,~~200,000~~ ~~in proceeds. Of~~ the ~~$1,200,000~~effective intax ~~proceeds received~~rate ~~in December 2010, $300,000 was used to acquire non-performing, residential mortgage notes and the balance was used for mortgage note workout expenses and operational expenses~~ of ~~Halo Asset Management. The Secured Asset Promissory Notes consisted of a 25~~0% ~~coupon.~~varies Infrom ~~May 2013,~~ the ~~Secured Asset Promissory Note was paid in full, along with $150,000 of the outstanding accrued interest balance~~U.S. ~~Halo~~federal ~~and~~statutory ~~the~~rate ~~secured~~primarily ~~asset~~due ~~promissory note holder agreed~~ to ~~include~~state ~~the remaining accrued interest in a promissory~~income ~~note due December 31~~taxes, ~~2014.~~net ~~The promissory note will accrue interest at a 10% annual rate~~losses, ~~with~~certain ~~interest~~non-deductible ~~only~~expenses ~~payments due periodically~~ and ~~final~~an ~~balloon~~increase ~~payment~~in ~~due at maturity. At~~ the ~~time~~valuation ofallowance ~~the~~associated ~~filing~~with ~~of these consolidated financial statements,~~ the ~~Company~~net ~~and~~operating ~~note~~loss ~~holder~~carryforwards. ~~have~~Our ~~not~~deferred ~~finalized~~tax anassets ~~extended~~related ~~maturity~~to ~~date.~~net Asoperating ~~such,~~loss ascarryforwards ofremain ~~September~~fully ~~30,~~reserved ~~2015,~~due ~~the~~to ~~entire accrued interest balance~~uncertainty of ~~$240,244~~utilization ~~is included in current portion~~ of ~~accrued~~those ~~interest~~assets. As of December 31, 2014, the entire accrued interest balance of $223,987 is included in current portion of accrued interest. For the three and nine months ended September 30, 2015 and 2014, the Company incurred $5,419, $16,257, $5,419 and $16,257, respectively, in interest expense on the note.

~~NOTE~~Deferred 12tax assets and liabilities are computed by applying the effective U.S. ~~RELATED~~federal ~~PARTY~~and ~~TRANSACTIONS~~state income tax rate to the gross amounts of temporary differences and other tax attributes. In assessing the realizability of deferred tax assets, management considers whether it is more likely than not that some portion or all of the deferred tax assets will not be realized. The ultimate realization of deferred tax assets is dependent upon the generation of future taxable income during the periods in which those temporary differences become deductible. Management considers the scheduled reversal of deferred tax liabilities, projected future taxable income, and tax planning strategies in making this assessment. At December 31, 2015 and March 31, 2016, the Company believed it was more likely than not that future tax benefits from net operating loss carry-forwards and other deferred tax assets would not be realizable through generation of future taxable income and are fully reserved.

~~For~~The ~~the~~Company ~~three~~has ~~and~~net operating ~~nine~~loss ~~months~~(“NOL”) ~~ended~~carry-forwards ~~September~~of ~~30,~~approximately ~~2015 and 2014~~$7,700,000 ~~HAM~~available ~~recognized~~for ~~monthly~~federal ~~servicing~~income ~~fee~~tax ~~revenue totaling $104~~purposes,~~153,~~ ~~$334,538,~~which ~~$107,900 and~~expire ~~$326,155, respectively,~~ from 2024 anto ~~entity~~2035. ~~that~~Separately, isbecause ~~an affiliate~~ of the ~~Company.~~changes ~~Further,~~in ~~facilities~~ownership ~~rent~~that ~~expense~~occurred ~~discussed~~on inJune ~~Note 14~~30, ~~was~~2004 ~~expensed~~ and ~~paid~~September to30, ~~the~~2009, ~~same~~prior ~~affiliate.~~to ~~Additionally,~~GVC merging ~~for~~with ~~the~~HCI, ~~three~~ and ~~nine~~based ~~months~~on ~~ended~~the ~~September~~Section ~~30,~~382 ~~2015~~Limitation calculation, the Company ~~incurred~~ ~~$75,000~~will ~~and~~be allowed approximately $~~125~~6,~~000,~~500 ~~respectively,~~per ~~in the write off~~ year of ~~notes~~ ~~receivable~~GVC itVenture ~~invested~~Corp.’s ~~during~~federal ~~the~~NOLs ~~three~~generated ~~and~~prior ~~nine~~to ~~months ended~~June ~~September~~ 30, ~~2015~~2004 inuntil ~~the~~they ~~same~~would ~~affiliate~~otherwise ~~of the Company~~expire. The ~~write~~Company ~~offs~~would also ~~are~~be ~~included~~allowed inapproximately ~~general~~$159,000 ~~and~~per ~~administrative~~year ~~expenses on the consolidated statements~~ of ~~operations~~GVC ~~and~~Venture ~~discussed~~Corp.’s ~~further~~federal inNOLs ~~section~~generated ~~Item~~between 2.June ~~Management’s~~30, ~~Discussion~~2004 and ~~Analysis~~September of30, ~~Financial~~2009 ~~Condition~~until ~~and~~they ~~Results~~would ofotherwise ~~Operations below~~expire.

~~For~~NOTE ~~the~~14. ~~three~~COMMITMENTS ~~and~~AND ~~nine months~~CONTINGENCIES ~~ended September 30, 2015 and 2014, the Company incurred interest expense to related parties (See Note 8).~~

~~For~~The ~~the~~Company ~~three~~leases ~~and nine~~various ~~months~~office ~~ended~~equipment, ~~September~~each ~~30,~~under ~~2015~~a ~~and~~non-cancelable ~~2014~~operating lease providing for minimum monthly rental payments. In relation to its office facilities, the Company ~~incurred~~has ~~$0,~~not ~~$20,000,~~entered $0into ~~and~~any ~~$0,~~additional ~~respectively,~~office inlease ~~commission~~whereby ~~expense~~it tois ancontractually committed. The Company ~~entity~~currently ~~that~~pays isfor anits ~~affiliate~~office ofspace on a month to month basis, and will continue to do so for the ~~Company~~foreseeable future.

~~For~~Future ~~the~~minimum ~~three~~rental ~~and nine~~obligations ~~months~~as ~~ended~~of ~~September~~March 3031, ~~2015~~2016 ~~and~~are ~~2014,~~as ~~the Company incurred $15,000, $35,000, $0 and $0, respectively, in consulting expense to an entity that is an affiliate of the Company.~~follows:

NOTE 13. INCOME TAXES

Years Ending December 31:
2016	$	2,464
Thereafter		–
Total minimum lease commitments	$	2,464

For the three ~~and~~ ~~nine~~ months ended March ~~September 30~~31, ~~2015~~2016 and ~~2014~~2015, the ~~effective~~Company ~~tax~~incurred ~~rates~~facilities ofrent ~~0%,~~expense ~~-2%,~~totaling ~~-1%~~$0 and ~~-3%~~$21, ~~respectively~~780, ~~vary from the U~~respectively.S. federal statutory rate primarily due to state income taxes, net losses, certain non-deductible expenses and an increase in the valuation allowance associated with the net operating loss carryforwards. Our deferred tax assets related to net operating loss carryforwards remain fully reserved due to uncertainty of utilization of those assets.

~~Deferred tax assets and liabilities are computed by applying the effective U.S. federal and state income tax rate to the gross amounts of temporary differences and other tax attributes.~~ In ~~assessing~~ the ~~realizability~~ordinary course of ~~deferred~~conducting ~~tax~~its ~~assets~~business, ~~management~~the ~~considers~~Company ~~whether~~may itbe ~~is more~~subject ~~likely~~to ~~than~~loss ~~not~~contingencies ~~that~~including ~~some~~possible ~~portion~~disputes or ~~all of the deferred tax assets will not be realized~~lawsuits. The ~~ultimate realization of deferred~~Company ~~tax~~notes ~~assets is dependent upon~~ the generation of future taxable income during the periods in which those temporary differences become deductible. Management considers the scheduled reversal of deferred tax liabilities, projected future taxable income, and tax planning strategies in making this assessment. At September 30, 2015, the Company believed it was more likely than not that future tax benefits from net operating loss carry-forwards and other deferred tax assets would not be realizable through generation of future taxable income and are fully reserved.following:

1614

The Company and certain of its affiliates, officers and directors have been named as defendants in an action filed on December 12, 2011 in the 191st District Court of Dallas County, Texas. The Plaintiffs allege that the Company has ~~net~~misappropriated funds in connection with offerings of ~~operating~~securities ~~loss~~during ~~(“NOL”)~~2010 ~~carry-forwards~~and 2011. The complaint further alleges that Defendants engaged in fraudulent inducement, negligent misrepresentation, fraud, breach of ~~approximately~~fiduciary $6duty,~~700~~ negligence,~~000~~ ~~available~~breach of contract, unjust enrichment, conversion, violation of the Texas Securities Act, and civil conspiracy. The Plaintiffs amended their Petition on April 24, 2012 and dropped the conversion and civil conspiracy claims. The action seeks an injunction and a demand for ~~federal~~accounting ~~income~~along ~~tax~~with ~~purposes~~damages in the amount of $4,898,157. ~~which~~The Company ~~expire~~has ~~from~~taken ~~2024~~the position that the Plaintiff’s claims have no merit, and accordingly is defending the matter vigorously. Defendants have filed a general denial of the claims as well as a Motion to ~~2034~~Designate Responsible Third Parties whom Defendants believe are responsible for any damages Plaintiffs may have incurred. ~~Separately~~Defendants have also filed a Motion for Sanctions against the Plaintiffs and their counsel arguing, ~~because~~among other things, that (i) Plaintiffs’ claims are “judicially stopped” from moving forward by virtue of the ~~changes~~fact that the same Plaintiffs previously filed suit against separate entities and parties with dramatically opposed and contradicting views and facts; (ii) Plaintiffs have asserted claims against Defendants without any basis in ~~ownership~~law or fact; and (iii) Plaintiffs have made accusations against Defendants that ~~occurred~~Plaintiffs onknow ~~June~~to 30be false. Additionally, ~~2004~~Defendants have filed a no evidence Motion for Summary Judgment which was scheduled to be heard in October of 2012. The Plaintiffs requested and ~~September~~were 30granted a six month continuance on the hearing of that motion. The Plaintiffs have also filed a Motion to Stay the case pending the outcome of the Company’s lawsuit with the insurance companies which the Company has opposed. Initially the motion to stay was granted and Defendants moved for reconsideration. The parties were alerted that the court had reversed the Stay on appeal. The no evidence Motion for Summary Judgment was heard on August 9, ~~2009~~2013. Prior to the hearing, the Plaintiff’s filed ~~prior~~a to3rd ~~GVC~~Amended ~~merging~~Petition ~~with~~in ~~HCI~~which they dropped any claim of fraud including fraudulent inducement, fraud, conversion and civil ~~based~~conspiracy onand added a new “control person” claim which was not subject to the ~~Section~~no ~~382~~evidence ~~Limitation~~Motion ~~calculation~~for Summary Judgment heard on August 9, 2013. On September 25, 2013, Defendants no evidence Motion for Summary Judgment was granted in its entirety. Defendants subsequently filed a no evidence Motion for Summary Judgment on the ~~Company~~final ~~will~~remaining be“control ~~allowed~~person” claim ~~approximately~~which $6was heard before the court on October 21,~~500~~ 2013. On December 18, 2013 a final Order Granting Defendant’s Second ~~per~~No-Evidence ~~year~~Motion of ~~GVC~~Final ~~Venture~~Summary ~~Corp~~Judgment was signed. The Plaintiff’s ~~federal~~subsequently ~~NOLs~~filed ~~generated~~a ~~prior~~motion tofor ~~June~~new 30trial. Following a hearing, ~~2004~~the ~~until~~Plaintiff’s ~~they~~motion ~~would~~for ~~otherwise~~new ~~expire~~trial was denied by operation of law. The ~~Company~~Plaintiff’s Filed a Notice of Appeal ~~would~~on ~~also~~March be11, ~~allowed~~2014. ~~approximately~~The ~~$159~~Plaintiffs have requested multiple extensions to their time to file their brief on the Appeal. After having multiple extensions granted,~~000~~ ~~per~~the ~~year~~Plaintiff’s requested that the Appeals court stay the Appeal pending the outcome of ~~GVC~~the Company’s ~~Venture~~approved ~~Corp~~settlement agreement with the court appointed Receiver for James G. Temme and Stewardship Fund, LLC, appointed by the Federal Court in the Eastern District of Texas. On September 16, 2014 the Sixth Appellate District Court of Appeals of Texas issued an order abating the Plaintiff’s appeal pending a final determination by the federal ~~NOLs~~courts ~~generated~~of ~~between~~an ~~June~~order 30issued by the federal district court in a separate action directing the Plaintiff’s, ~~2004~~among others, not to further pursue this separate litigation. For administrative purposes, this case is abated and ~~September~~will be treated as closed. Any party may seek reinstatement by promptly filing a motion with the Sixth Appellate District Court of Appeals of Texas showing that the injunction or order of the federal court no longer restricts pursuit of this litigation and specifying what further action, if any, is required from the Court. On October 30, ~~2009~~2015 ~~until~~Plaintiffs/Appellants filed a Motion for Involuntary Dismissal with the Court of Appeals for the Sixth District of Texas at Texarkana, Texas asking that the court dismiss the case on the basis that the United States District Court, Eastern District of Texas, Sherman Division entered an order permanently barring all Stewardship Creditors from continuing and/or asserting or prosecuting any claims or causes of action against Halo. Because Appellants in this action fall within the definition of “Stewardship Creditors” they ~~would~~are ~~otherwise~~barred ~~expire~~from continuing to pursue this appeal thereby divesting the Court of Appeals for the Sixth District of Texas, Sherman Division, of jurisdiction over this appeal. On November 6, 2015, the court granted the above mentioned Involuntary Motion to Dismiss and on January 20, 2016 the final mandate was issued.

~~NOTE~~As 14noted above, the Company, in conjunction with its Directors and Officers insurance carrier, is defending the matter vigorously. ~~COMMITMENTS~~Based ~~AND~~on ~~CONTINGENCIES~~the facts alleged and the proceedings to date, the Company believes that the Plaintiffs’ allegations will prove to be false, and that accordingly, it is not probable or reasonably possible that a negative outcome for the Company or the remaining Defendants will occur. As with any action of this type the timing and degree of any effect upon the Company are uncertain. If the outcome of the action is adverse to the Company, it could have a material adverse effect on our business prospects, financial position, and results of operation.

The Company ~~leases~~and ~~very~~certain ~~limited~~of ~~office~~its ~~equipment~~affiliates, ~~each~~officers ~~under~~and adirectors ~~non-cancelable~~named ~~operating~~as ~~lease~~defendants ~~providing~~in an insurance action filed on April 27, 2012 in the United States District Court for ~~minimum~~the ~~monthly~~Northern ~~rental~~District ~~payments~~of Texas. InThe ~~relation~~ Plaintiffs allege that it had no duty to ~~its~~indemnify ~~office~~the ~~facilities~~Company, its affiliates, officers or directors because the ~~Company~~claims ~~has~~set forth in the lawsuit mentioned herein above were not ~~entered~~covered ~~into~~by ~~any~~the ~~additional~~insurance ~~office~~policy issued ~~lease~~by ~~whereby~~Plaintiff itin isfavor ~~contractually~~of ~~committed~~Defendants. The action sought declaratory judgment that the Plaintiff had no duty to indemnify the Defendants pursuant to the insurance policy that Defendants purchased from Plaintiff. The Company ~~currently~~took ~~pays~~the ~~for~~position ~~its~~that ~~office~~Plaintiff’s claim ~~space~~had onno merit, and defended the matter vigorously. Additionally, Defendants filed a ~~month~~counterclaim toagainst ~~month~~the ~~basis~~insurer alleging breach of contract, violation of the Texas Insurance Code and ~~will~~violation ~~continue~~of the duty of good faith and fair dealing. On March 12, 2013, Plaintiff and Defendants entered into an agreement whereby Plaintiff’s and Defendant’s claims, are to dobe sodismissed without ~~for~~prejudice while the ~~foreseeable~~underlying ~~future~~liability suit in the 191st District Court of Dallas County proceeds. An Agreed Motion to Dismiss Without Prejudice was filed on March 12, 2013, and the parties are awaiting the court’s entry of the Agreed Order of Dismissal Without Prejudice. The Court granted the Agreed Order of Dismissal Without Prejudice.

~~Future minimum rental obligations as of September 30, 2015 are as follows:~~15

Years Ending December 31:
2015	$	1,848
2016		3,696
Total minimum lease commitments	$	5,544

The Company and certain of its affiliates, officers and directors have been named as defendants in an action filed on July 19, 2012 in the United States District Court for the Northern District of Texas. The Plaintiff alleges that it has no duty to defend or indemnify the Company, its affiliates, officers or directors because the claims set forth in the lawsuit mentioned herein above are not covered by the insurance policy written by Plaintiff in favor or Defendants. The action seeks declaratory judgment that the Plaintiff has no duty to defend or indemnify the Defendants pursuant to the insurance policy that Defendants purchased from Plaintiff. Initially, the Company took the position that Plaintiff’s claims had no merit, and defended the matter vigorously. Additionally, Defendants filed a counterclaim against the insurer alleging breach of contract, violation of the Texas Insurance Code and violation of the duty of good faith and fair dealing. Plaintiff has filed a Motion for Summary Judgment seeking a judgment that it owes no duty to defend or indemnify Defendants. After careful consideration, Defendants decided not to oppose the Motion for Summary Judgment and a response in opposition was not filed. The Motion for Summary Judgment was granted.

~~For the~~NOTE ~~three and nine months ended September 30, 2015 and 2014, the Company incurred facilities rent expense totaling $21,780, $65,339, $29,751 and $89,244, respectively~~15. STOCK OPTIONS

InThe Company granted stock options to certain employees under the ~~ordinary~~HGI ~~course~~2007 Stock Plan, as amended (the “Plan”). The Company was authorized to issue 2,950,000 shares subject to options, or stock purchase rights under the Plan. These options (i) vest over a period no greater than two years, (ii) are contingently exercisable upon the occurrence of ~~conducting~~a ~~its~~specified ~~business~~event as defined by the option agreements, and (iii) expire three months following termination of employment or five years from the date of grant depending on whether or not the options were granted as incentive options or non-qualified options. At September 30, 2009, pursuant to the terms of the merger, all options granted prior to the merger were assumed by the Company ~~may~~and beany options available for issuance under the Plan but unissued, have been forfeited and consequently the Company has no additional shares subject to ~~loss~~options ~~contingencies~~or ~~including~~stock ~~possible~~purchase ~~disputes~~rights oravailable ~~lawsuits~~for issuance under the Plan. As of March 31, 2016, 438,300 option shares have been exercised. Total stock options outstanding as of March 31, 2016 total 170,000. The ~~Company~~weighted ~~notes~~average remaining contractual life of the ~~following:~~outstanding options at March 31, 2016 is approximately 1.5 years.

17A summary of stock option activity in the Plan is as follows:

The Company and certain of its affiliates, officers and directors have been named as defendants in an action filed on December 12, 2011 in the 191st District Court of Dallas County, Texas. The Plaintiffs allege that the Company has misappropriated funds in connection with offerings of securities during 2010 and 2011. The complaint further alleges that Defendants engaged in fraudulent inducement, negligent misrepresentation, fraud, breach of fiduciary duty, negligence, breach of contract, unjust enrichment, conversion, violation of the Texas Securities Act, and civil conspiracy. The Plaintiffs amended their Petition on April 24, 2012 and dropped the conversion and civil conspiracy claims. The action seeks an injunction and a demand for accounting along with damages in the amount of $4,898,157. The Company has taken the position that the Plaintiff’s claims have no merit, and accordingly is defending the matter vigorously. Defendants have filed a general denial of the claims as well as a Motion to Designate Responsible Third Parties whom Defendants believe are responsible for any damages Plaintiffs may have incurred. Defendants have also filed a Motion for Sanctions against the Plaintiffs and their counsel arguing, among other things, that (i) Plaintiffs’ claims are “judicially stopped” from moving forward by virtue of the fact that the same Plaintiffs previously filed suit against separate entities and parties with dramatically opposed and contradicting views and facts; (ii) Plaintiffs have asserted claims against Defendants without any basis in law or fact; and (iii) Plaintiffs have made accusations against Defendants that Plaintiffs know to be false. Additionally, Defendants have filed a no evidence Motion for Summary Judgment which was scheduled to be heard in October of 2012. The Plaintiffs requested and were granted a six month continuance on the hearing of that motion. The Plaintiffs have also filed a Motion to Stay the case pending the outcome of the Company’s lawsuit with the insurance companies which the Company has opposed. Initially the motion to stay was granted and Defendants moved for reconsideration. The parties were alerted that the court had reversed the Stay on appeal. The no evidence Motion for Summary Judgment was heard on August 9, 2013. Prior to the hearing, the Plaintiff’s filed a 3rd Amended Petition in which they dropped any claim of fraud including fraudulent inducement, fraud, conversion and civil conspiracy and added a new “control person” claim which was not subject to the no evidence Motion for Summary Judgment heard on August 9, 2013. On September 25, 2013, Defendants no evidence Motion for Summary Judgment was granted in its entirety. Defendants subsequently filed a no evidence Motion for Summary Judgment on the final remaining “control person” claim which was heard before the court on October 21, 2013. On December 18, 2013 a final Order Granting Defendant’s Second No-Evidence Motion of Final Summary Judgment was signed. The Plaintiff’s subsequently filed a motion for new trial. Following a hearing, the Plaintiff’s motion for new trial was denied by operation of law. The Plaintiff’s Filed a Notice of Appeal on March 11, 2014. The Plaintiffs have requested multiple extensions to their time to file their brief on the Appeal. After having multiple extensions granted, the Plaintiff’s requested that the Appeals court stay the Appeal pending the outcome of the Company’s approved settlement agreement with the court appointed Receiver for James G. Temme and Stewardship Fund, LLC, appointed by the Federal Court in the Eastern District of Texas. On September 16, 2014 the Sixth Appellate District Court of Appeals of Texas issued an order abating the Plaintiff’s appeal pending a final determination by the federal courts of an order issued by the federal district court in a separate action directing the Plaintiff’s, among others, not to further pursue this separate litigation. For administrative purposes, this case is abated and will be treated as closed. Any party may seek reinstatement by promptly filing a motion with the Sixth Appellate District Court of Appeals of Texas showing that the injunction or order of the federal court no longer restricts pursuit of this litigation and specifying what further action, if any, is required from the Court. As of the date of this filing, Plaintiffs/Appellants have filed a Motion for Involuntary Dismissal with the Court of Appeals for the Sixth District of Texas at Texarkana, Texas asking that the court dismiss the case on the basis that the United States District Court, Eastern District of Texas, Sherman Division entered an order permanently barring all Stewardship Creditors from continuing and/or asserting or prosecuting any claims or causes of action against Halo. Because Appellants in this action fall within the definition of “Stewardship Creditors” they are barred from continuing to pursue this appeal thereby divesting the Court of Appeals for the Sixth District of Texas, Sherman Division, of jurisdiction over this appeal. On November 6, 2015, the court granted the above mentioned Involuntary Motion to Dismiss.

Weighted

Exercise

Average

Number of

Price

Exercise

Options

Per Option

Price

Outstanding at December 31, 2014

170,000

0.01

Granted

–

Exercised

–

Canceled

–

Outstanding at December 31, 2015

170,000

0.01

Granted

–

Exercised

–

Canceled

–

Outstanding at March 31, 2016

170,000

0.01

18All stock options granted under the Plan and as of March 31, 2016 became exercisable upon the occurrence of the merger that occurred on September 30, 2009. As such, equity-based compensation for the options was recognized in earnings from issuance date of the options over the vesting period of the options effective December 31, 2009. Total compensation cost expensed over the vesting period of stock options was $2,103,948, all of which was expensed as of September 30, 2011.

AsOn ~~noted~~July ~~above~~19, ~~the Company~~2010, inthe ~~conjunction~~board of ~~with~~directors ~~its~~approved ~~Directors~~the ~~and~~Company’s ~~Officers~~2010 ~~insurance~~Incentive ~~carrier,~~Stock isPlan ~~defending~~(“2010 ~~the~~Stock ~~matter vigorously~~Plan”). ~~Based~~The on2010 ~~the~~Stock ~~facts~~Plan ~~alleged~~allows for ~~and~~ the ~~proceedings~~reservation toof ~~date~~7,000,000 shares of the Company’s ~~believes that~~common stock for issuance under the ~~Plaintiffs’~~plan. ~~allegations~~The ~~will~~2010 ~~prove~~Stock toPlan bebecame effective ~~false~~July 19, 2010 and ~~that~~terminates ~~accordingly~~July 18, it2020. isAs ~~not~~of ~~probable~~March or31, ~~reasonably~~2016, ~~possible that~~20,000 ashares ~~negative~~had ~~outcome~~previously ~~for~~been ~~the~~granted ~~Company~~(all orgranted in the ~~remaining~~year ~~Defendants~~ended ~~will~~December ~~occur.~~31, As2012) under the 2010 Stock Plan with ~~any~~an ~~action~~exercise price of ~~this~~$0.34 ~~type~~per option. These are the ~~timing~~only ~~and~~shares ~~degree~~that ofhave ~~any~~been ~~effect~~issued ~~upon~~under the 2010 Stock Plan. The shares granted vested immediately and can become exercisable for so long as the Company ~~are~~remains ~~uncertain~~a reporting company under the Securities Exchange Act of 1934. IfTotal compensation cost expensed over the ~~outcome~~vesting period of the ~~action~~stock isoptions ~~adverse~~was to$6,800, all of which was expensed in the ~~Company~~year ended December 31, it2012. ~~could~~As ~~have~~of aMarch ~~material~~31, 2016 none ~~adverse~~of ~~effect~~the onshares ~~our~~issued ~~business~~under ~~prospects,~~the ~~financial~~2010 ~~position,~~Stock ~~and~~Plan ~~results~~have ofbeen ~~operation~~exercised.

The Company and certain of its affiliates, officers and directors named as defendants in an insurance action filed on April 27, 2012 in the United States District Court for the Northern District of Texas. The Plaintiffs allege that it had no duty to indemnify the Company, its affiliates, officers or directors because the claims set forth in the lawsuit mentioned herein above were not covered by the insurance policy issued by Plaintiff in favor of Defendants. The action sought declaratory judgment that the Plaintiff had no duty to indemnify the Defendants pursuant to the insurance policy that Defendants purchased from Plaintiff. The Company took the position that Plaintiff’s claim had no merit, and defended the matter vigorously. Additionally, Defendants filed a counterclaim against the insurer alleging breach of contract, violation of the Texas Insurance Code and violation of the duty of good faith and fair dealing. On March 12, 2013, Plaintiff and Defendants entered into an agreement whereby Plaintiff’s and Defendant’s claims, are to be dismissed without prejudice while the underlying liability suit in the 191st District Court of Dallas County proceeds. An Agreed Motion to Dismiss Without Prejudice was filed on March 12, 2013, and the parties are awaiting the court’s entry of the Agreed Order of Dismissal Without Prejudice. 16

~~As noted~~NOTE ~~above, the Company has defended this matter vigorously~~16. ~~Based~~SHAREHOLDERS’ on(DEFICIT) ~~the status of the litigation, it is not probable or reasonably~~EQUITY possible that a negative outcome for the Company or the remaining Defendants will occur. As with any action of this type the timing and degree of any effect upon the Company are uncertain. If the outcome of the action is adverse to the Company, it could have a material adverse effect on our financial position.

~~The Company~~Common and certain of its affiliates, officers and directors have been named as defendants in an action filed on July 19, 2012 in the United States District Court for the Northern District of Texas. The Plaintiff alleges that it has no duty to defend or indemnify the Company, its affiliates, officers or directors because the claims set forth in the lawsuit mentioned herein above are not covered by the insurance policy written by Plaintiff in favor or Defendants. The action seeks declaratory judgment that the Plaintiff has no duty to defend or indemnify the Defendants pursuant to the insurance policy that Defendants purchased from Plaintiff. Initially, the Company took the position that Plaintiff’s claims had no merit, and defended the matter vigorously. Additionally, Defendants filed a counterclaim against the insurer alleging breach of contract, violation of the Texas Insurance Code and violation of the duty of good faith and fair dealing. Plaintiff has filed a Motion for Summary Judgment seeking a judgment that it owes no duty to defend or indemnify Defendants. After careful consideration, Defendants decided not to oppose the Motion for Summary Judgment and a response in opposition was not filed. The Motion for Summary Judgment was granted in part and the remaining matter remains pending before the court. Stock

~~Based~~On onDecember ~~the~~13, ~~current~~2010 ~~status of~~ (“the ~~litigation~~ Closing”), the Company ~~believes~~was itparty isto ~~not~~an ~~probable~~Assignment orand ~~reasonably~~Contribution ~~possible~~Agreement ~~that~~(the a“Agreement”). ~~negative~~Pursuant ~~outcome for~~to the terms ~~Company~~of orAgreement, the ~~remaining~~members ~~Defendants~~of ~~will~~Equitas ~~occur.~~Asset AsManagement, ~~with~~LLC, ~~any~~(“EAM”), ~~action~~a ofnon ~~this~~Halo ~~type~~entity, ~~the~~which ~~timing~~owned ~~and~~100% ~~degree~~of the interests of ~~any~~Equitas ~~effect~~Housing ~~upon the~~Fund, ~~Company~~LLC ~~are~~(“EHF”), ~~uncertain.~~assigned Ifand ~~the~~contributed ~~outcome~~100% of the ~~action~~interests isof ~~adverse~~EAM to HAM (a Halo subsidiary) in exchange for shares of 21,200,000 shares of the Company’s Common Stock, it$0.001 ~~could~~par ~~have~~value, aof ~~material~~the ~~adverse~~Company. The ~~effect~~Agreement ondid ~~our financial~~not ~~position~~constitute a business combination.

~~NOTE~~The Company issued 7,500,000 15shares of Halo common stock in exchange for $3,000,000 in debt or equity capital. ~~STOCK~~The ~~OPTIONS~~aggregate of 7,500,000 shares of Halo common stock will be subject to clawback (and cancellation) by Halo in the event that EAM does not generate at least three million dollars ($3,000,000) in new capital to Halo within twelve months following the closing. Halo shall have the right to claw back 2.5 shares of Halo common stock for every dollar not raised within the twelve months. Any cash generated by EAM will need to be designated for use in Halo’s general operations and not that of the EHF business to release the clawback rights.

The Company ~~granted~~issued ~~stock options to certain employees under the HGI 2007 Stock Plan~~13, ~~as amended (the “Plan”). The Company was authorized to issue 2~~700,~~950,~~000 shares ~~subject~~of toHalo ~~options,~~common or stock ~~purchase~~for ~~rights under~~ the ~~Plan.~~purchase ~~These~~of ~~options~~intangible ~~(i)~~assets ~~vest~~owned ~~over~~by aEAM ~~period~~which noincluded ~~greater than~~trade ~~two~~secrets ~~years,~~and ~~(ii)~~business ~~are~~processes used ~~contingently~~in ~~exercisable upon~~ the ~~occurrence~~EHF ofbusiness. aThe ~~specified~~aggregate ~~event as defined by the option agreements~~13, ~~and~~700,000 ~~(iii)~~shares ~~expire three months following termination~~ of ~~employment~~Halo orcommon ~~five~~stock ~~years~~shall ~~from~~be ~~the~~subject ~~date~~to ofclawback ~~grant~~(and ~~depending~~cancellation) by onHalo ~~whether~~in ~~or not~~ the ~~options~~event ~~were~~that ~~granted~~EAM asfails ~~incentive~~to ~~options~~generate orat ~~non-qualified~~least ~~options. At September 30~~$10, ~~2009~~000,000 ~~pursuant to the terms~~ of ~~the merger,~~net ~~all~~operating ~~options~~cash ~~granted~~flows ~~prior~~from to the ~~merger~~EHF ~~were~~business ~~assumed~~within bytwenty-four months ~~the~~following ~~Company and any options available for issuance under~~ the ~~Plan but~~closing. ~~unissued,~~Halo shall have ~~been forfeited and consequently~~ the ~~Company~~right ~~has no additional shares subject~~ to ~~options~~claw orback ~~stock purchase rights available for issuance under the Plan~~1.37 Asshares of ~~September~~Halo ~~30,~~common ~~2015,~~for ~~438,300~~every ~~option~~dollar ~~shares~~not ~~have~~generated from ~~been~~the ~~exercised.~~net ~~Total~~operating ~~stock~~cash ~~options outstanding~~flows as of ~~September~~the ~~30,~~EHF ~~2015~~business. ~~total~~Once ~~170~~the $10,000.,000 ~~The~~in ~~weighted~~net ~~average~~operating ~~remaining~~cash ~~contractual~~flows ~~life~~from of the ~~outstanding~~EHF ~~options at~~business ~~September 30~~is generated, ~~2015~~the isclawback ~~approximately~~rights 2will ~~years~~be released.

19In applying the guidance of ASC 505 “Equity” to the above transactions, the clawback provisions create a performance commitment that has not been met. As such, although the transaction did provide for a grant date at which time the equity shares are issued and outstanding, the equity shares have not met the measurement date requirements required by ASC 505. Accordingly, the par value of the shares issued and outstanding have been recorded at the grant date and as the clawback rights are released and the measurement dates established, the fair value of the transactions will be determined and recorded. The pro-rata fair value of equity issued in connection with fund raising efforts at each measurement date will be recorded as debt issuance costs or a reduction in the equity proceeds raised by the counter party. The pro-rata fair value of equity issued in connection with the purchase of intangible assets at the measurement date will be recorded as amortization expense because the amortization period of the underlining asset purchase and the clawback release rights are commensurate.

AAs ~~summary~~mentioned above, the Agreement provides for “clawback” provisions, pursuant to which all of ~~stock~~the ~~option~~shares ~~activity~~of Halo Common Stock issued to the member of EAM are subject to forfeiture in the ~~Plan~~event certain financial metrics are not timely achieved. The financial metrics call isfor assignificant ~~follows:~~cash generation by EHF within the first 12 months, and within the first 24 months following the closing date. We refer you to Section 2(b)(i) and (ii) of the Agreement, for the specifics of the clawback provisions. As of December 31, 2012, no cash was generated by EHF. The times to meet both the 12 month and 24 month financial metrics have lapsed and the metrics have not been met. Based upon the events that have transpired, and the lack of progress toward the financial metrics, the Company demanded that the recipients of the shares of Halo Common Stock give effect to both clawback provisions and immediately forfeit back all of the Halo shares issued to such recipients – an aggregate of 21,200,000 shares. Additionally, the Company has instructed the Company’s transfer agent to cancel all of the shares of Company Common Stock issued pursuant to the Agreement. As of December 31, 2014, the Company’s transfer agent had refused to cancel the shares without either (i) presentation of the physical certificates to the transfer agent, or (ii) a court order requiring the transfer agent to cancel.

						Weighted
				Exercise		Average
	Number of			Price		Exercise
	Options			Per Option		Price
Outstanding at December 31, 2013		681,700		$	0.01 – 1.59	$	1.00
Granted		—			—		—
Exercised		—			—		—
Canceled		(511,700	)		0.94 – 1.59		1.06
Outstanding at December 31, 2014		170,000		$	0.01	$	0.01
Granted		—			—		—
Exercised		—			—		—
Canceled		—			—		—
Outstanding at September 30, 2015		170,000		$	0.01	$	0.01

During March 2015, the Company entered into a $250,000 compromise and settlement agreement with the court appointed receivership holding 17,808,000 shares of the Company’s 21,200,000 common stock noted above. The physical stock certificate was sent to the Company’s transfer agent to immediately cancel those respective outstanding shares of that Agreement. Upon receipt by the transfer agent of the stock certificates noted above, the transfer agent did cancel the respective 21,200,000 shares of common stock. An additional 1,272,000 shares of the company’s common stock, all subject to the clawback provisions of the Agreement have also been sent to the Company’s transfer agent to immediately cancel those respective common shares of that Agreement but as of the time of this filing those shares have not yet been canceled. Some of the shares were returned to the Company by the Transfer Agent requiring a medallion guarantee. The Company expects to have these shares cancelled sometime in 2016. Secondarily, the Company is actively pursuing the procurement of an additional physical certificate from a respective individual still in possession of the common stock certificate. As of the time of these consolidated financials 3,392,000 of the 21,200,000 shares issued as part of the Agreement remain outstanding.

~~All~~The ~~stock~~Company’s ~~options granted~~total ~~under~~common ~~the~~shares ~~Plan~~outstanding ~~became~~totaled ~~exercisable upon the occurrence of the merger that occurred on September 30~~48, ~~2009. As such~~562,750 ~~equity-based~~at ~~compensation~~March ~~for the options was recognized in earnings from issuance date of the options over the vesting period of the options effective December~~ 31, ~~2009~~2016.

On July 19, 2010, the board of directors approved the Company’s 2010 Incentive Stock Plan (“2010 Stock Plan”). The 2010 Stock Plan allows for the reservation of 7,000,000 shares of the Company’s common stock for issuance under the plan. The 2010 Stock Plan became effective July 19, 2010 and terminates July 18, 2020. As of September 30, 2015, 20,000 shares had previously been granted (all granted in the year ended December 31, 2012) under the 2010 Stock Plan with an exercise price of $0.34 per option. These are the only shares that have been issued under the 2010 Stock Plan. The shares granted vested immediately and can become exercisable for so long as the Company remains a reporting company under the Securities Exchange Act of 1934. As of September 30, 2015, none of the shares issued under the 2010 Stock Plan have been exercised.17

~~NOTE~~Preferred ~~16. SHAREHOLDERS’ (DEFICIT) EQUITY~~Stock

~~Common~~In connection with the merger, the Company authorized 1,000,000 shares of Series Z Convertible Preferred Stock with a par value of $0.01 per share (the “Series Z Convertible Preferred”). The number of shares of Series Z Preferred Stock may be decreased by resolution of the Board; provided, however, that no decrease shall reduce the number of Series Z Preferred Shares to less than the number of shares then issued and outstanding. In the event any Series Z Preferred Shares shall be converted, (i) the Series Z Preferred Shares so converted shall be retired and cancelled and shall not be reissued and (ii) the authorized number of Series Z Preferred Shares set forth in this section shall be automatically reduced by the number of Series Z Preferred Shares so converted and the number of shares of the Corporation’s undesignated Preferred Stock shall be deemed increased by such number. The Series Z Convertible Preferred is convertible into common shares at the rate of 45 shares of common per one share of Series Z Convertible Preferred. The Series Z Convertible Preferred has liquidation and other rights in preference to all other equity instruments. Simultaneously upon conversion of the remaining Series A Preferred, Series B Preferred, and Series C Preferred and exercise of any outstanding stock options issued under the HGI 2007 Stock Plan into Series Z Convertible Preferred, they will automatically, without any action on the part of the holders, be converted into common shares of the Company. Since the merger, in connection with the exercise of stock options into common stock and converted Series A Preferred, Series B Preferred and Series C Preferred as noted above, 82,508 shares of Series Z Convertible Preferred were automatically authorized and converted into shares of the Company’s common stock leaving 917,492 shares of authorized undesignated Preferred Stock in the Company in accordance with the Series Z Convertible Preferred certificate of designation. As of March 31, 2016, there were 82,508 shares of Series Z Preferred authorized with zero shares issued and outstanding.

OnThe ~~December~~Company 13authorized 175,000 ~~2010~~shares of Series X Convertible Preferred Stock with a par value of $0.01 per share (“the ~~Closing~~ “Series X Preferred”). The number of shares of Series X Preferred may be decreased by resolution of the Board; provided, however, that no decrease shall reduce the ~~Company~~number ~~was~~of ~~party~~Series X Preferred to anless ~~Assignment~~than the number of shares then issued and ~~Contribution~~outstanding. ~~Agreement~~In the event any Series X Preferred Shares shall be redeemed, (i) the ~~“Agreement”~~Series X Preferred so redeemed shall be retired and cancelled and shall not be reissued and (ii)~~. Pursuant~~ the authorized number of Series X Preferred Shares set forth in this section shall be automatically reduced by the number toof Series X Preferred Shares so redeemed and the ~~terms~~number of ~~Agreement,~~shares of the ~~members~~Corporation's undesignated Preferred Stock shall be deemed increased by such number. The Series X Preferred Shares rank senior to the Company’s common stock to the extent of ~~Equitas~~$10.00 per ~~Asset~~Series ~~Management,~~X ~~LLC,~~Preferred ~~(“EAM”),~~Shares and on a ~~non~~parity ~~Halo~~with ~~entity,~~the ~~which~~Company’s ~~owned~~common ~~100%~~stock as to amounts in excess thereof. The holders of ~~the~~Series ~~interests~~X Preferred shall not have voting rights. Holders of ~~Equitas~~the ~~Housing~~Series ~~Fund,~~X ~~LLC~~Preferred ~~(“EHF”)~~shall be entitled to receive, ~~assigned~~when and ~~contributed~~as declared ~~100%~~by the board of directors, dividends at an annual rate of 9% payable in cash when declared by the ~~interests~~board. Holders of ~~EAM~~Series X Preferred have a liquidation preference per share equal to ~~HAM~~$10.00. During March 2015, as part of the $250,000 compromise and (asettlement ~~Halo~~agreement ~~subsidiary)~~with inthe ~~exchange~~court appointed receivership discussed above, the settlement agreement calls for ~~shares~~a relinquishment and abandonment of 21any and all claims against Halo on 90,~~200,~~000 shares of the Company’s ~~Common~~Series ~~Stock,~~X $0Preferred stock belonging to the receivership.~~001~~ ~~par~~The ~~value~~liquidation preference was $536,770 as of March 31, 2015. During December 2015, the Company exercised its redemption right and redeemed the remaining issued and outstanding 53,677 shares in exchange for promissory notes. As such, as ~~The~~of ~~Agreement~~March ~~did~~31, ~~not~~2016, ~~constitute~~there awere ~~business~~no ~~combination~~shares authorized, issued or outstanding.

~~The~~In ~~Company~~April ~~issued~~2012, 7the Company authorized 100,~~500,~~000 shares of ~~Halo~~Series ~~common~~E ~~stock~~Convertible inPreferred ~~exchange~~Stock ~~for~~(the “Series E Preferred”) with a par value of $30.001 per share,~~000,000~~ inat ~~debt~~ten ordollars ~~equity capital~~($10.00) ~~The~~per ~~aggregate~~share with a conversion rate of ~~7,500,000~~fifty (50) shares of ~~Halo~~the Company’s common stock ~~was~~for one ~~subject~~share toof ~~clawback~~Series ~~(and~~E ~~cancellation)~~Preferred. The number of shares of Series E Preferred may be decreased by ~~Halo~~resolution inof the ~~event~~Board; provided, however, that ~~EAM~~no ~~does~~decrease ~~not~~shall ~~generate~~reduce atthe ~~least~~number ~~three~~of ~~million~~Series ~~dollars~~E Preferred to less than the number of shares then issued and outstanding. ~~($3~~In the event any Series E Preferred Shares shall be converted,~~000,000~~ (i) inthe ~~new~~Series ~~capital~~E toPreferred ~~Halo~~so ~~within~~converted ~~twelve~~shall ~~months~~be ~~following~~retired and cancelled and shall not be reissued and (ii) the ~~closing.~~authorized ~~Halo~~number ~~had~~of Series E Preferred Shares set forth shall be automatically reduced by the ~~right~~number toof ~~claw~~Series ~~back~~E ~~2.5~~Preferred Shares so converted and the number of shares of ~~Halo~~the Corporation's undesignated Preferred Stock shall be deemed increased by such number. The Series E Preferred Shares rank senior to the Company’s common stock ~~for~~to ~~every~~the extent ~~dollar~~of ~~not~~$10.00 ~~raised~~per ~~within~~Series E Preferred Shares and on a parity with the ~~twelve~~Company’s ~~months~~common stock as to amounts in excess thereof. The ~~Any~~holders of Series E Preferred shall not have voting rights. Holders of the Series E Preferred shall be entitled to receive, when and as declared by the board of directors, dividends at an annual rate of 9% payable in cash ~~generated~~or common stock when declared by ~~EAM~~the ~~would~~board. Holders of Series E Preferred have ~~needed~~a liquidation preference per share equal to $10.00. The liquidation preference was $700,000 as of March 31, 2015. Each share of Series E Preferred, if not previously converted by the holder, will automatically be ~~designated~~converted into common stock at the then applicable conversion rate after thirty-six months from the date of purchase. As of ~~for~~March ~~use~~31, in2016, ~~Halo’s~~there ~~general~~were ~~operations~~70,000 shares issued and ~~not~~outstanding ~~that~~with total cash consideration of ~~the~~$700,000, ~~EHF~~convertible ~~business~~into to3,500,000 shares ~~release~~of the ~~clawback~~Company’s ~~rights~~common stock.

The ~~Company~~HGI ~~issued~~Series ~~13,700,000~~A Convertible ~~shares~~Preferred Stock (the “Series A Preferred”) has a par value of ~~Halo~~$0.001 ~~common~~per ~~stock~~share ~~for~~and has a liquidation preference of the ~~purchase~~greater of ~~intangible~~(a) ~~assets~~the ~~owned~~consideration bypaid ~~EAM~~to ~~which~~the ~~included~~Company ~~trade~~for ~~secrets~~such ~~and~~shares ~~business~~plus ~~processes~~all accrued but unpaid dividends, if any or (b) the ~~used~~per share amount the holders of the Series A Preferred would be entitled to upon conversion, as defined in the ~~EHF~~Series ~~business~~A Preferred certificate of designation. The ~~aggregate~~liquidation 13preference was $788,~~700~~572,~~000~~ ~~shares~~of which $229,074 is an accrued (but undeclared) dividend as of ~~Halo~~March ~~common~~31, ~~stock~~2016. ~~was~~Holders ~~subject~~of the Series A Preferred are entitled to ~~clawback~~receive, ~~(and~~if ~~cancellation)~~declared by ~~Halo~~the board of directors, dividends at a rate of 8% payable in cash or common stock of the ~~event~~Company. ~~that~~The ~~EAM~~Series ~~fails~~A toPreferred ~~generate~~is convertible into the Company’s common stock at ~~least~~a conversion price of $101.25 per share. The Series A Preferred is convertible,~~000,000~~ either at the option of ~~net~~the ~~operating~~holder or ~~cash~~the ~~flows~~Company, ~~from~~into shares of the ~~EHF~~Company’s ~~business~~Series ~~within~~Z ~~twenty-four~~Convertible Preferred Stock, and immediately, without any action on ~~months~~the ~~following~~part of the ~~closing~~holder, converted into common stock of the Company. ~~Halo~~The ~~had~~Series A Preferred is redeemable at the ~~right~~option toof ~~claw~~the ~~back~~Company at $1.3780 ~~shares~~per share prior to conversion. As of ~~Halo~~March ~~common~~31, ~~for~~2016, ~~every~~there ~~dollar~~have ~~not~~been ~~generated~~127,001 ~~from~~shares ~~the~~of Series A Preferred converted or ~~net~~redeemed. ~~operating~~The ~~cash~~Series ~~flows~~A ofPreferred ~~the~~does ~~EHF~~not ~~business~~have voting rights. ~~Once~~The ~~the~~Series ~~$10,000,000~~A inPreferred ~~net~~ranks ~~operating~~senior ~~cash~~to ~~flows~~the ~~from~~following capital stock of the ~~EHF~~Company: ~~business~~(a) ~~was~~Series ~~generated~~B Preferred, ~~the~~ ~~clawback~~and ~~rights~~(b) ~~would~~Series beC ~~released~~Preferred.

2018

InThe ~~applying~~HGI Series B Convertible Preferred Stock (the “Series B Preferred”) has a par value of $0.001 per share and has a liquidation preference of ~~guidance~~the greater of ~~ASC~~(a) ~~505~~the ~~“Equity”~~consideration paid to the ~~above~~Company ~~transactions~~for such shares plus all accrued but unpaid dividends, if any or (b) the per ~~clawback~~share ~~provisions~~amount ~~create~~the aholders ~~performance~~of ~~commitment~~the ~~that has~~Series ~~not~~B ~~been~~Preferred ~~met~~would be entitled to upon conversion. AsThe ~~such~~liquidation preference was $647,767, of ~~although~~which ~~the~~$187,855 ~~transaction~~is ~~did~~an ~~provide~~accrued ~~for~~(but aundeclared) ~~grant~~dividend ~~date~~as atof ~~which~~March ~~time~~31, 2016. Holders of the ~~equity~~Series ~~shares~~B Preferred are ~~issued and~~entitled ~~outstanding~~to receive, if declared by the ~~equity~~board ~~shares~~of ~~have~~directors, ~~not~~dividends ~~met~~at ~~the~~a ~~measurement~~rate ~~date~~of ~~requirements~~8% ~~required~~payable byin ~~ASC~~cash ~~505~~or common stock of the Company. ~~Accordingly,~~The Series B Preferred is convertible into the ~~par~~Company’s ~~value~~common stock at a conversion price of ~~the~~ ~~shares~~$1.74 ~~issued~~per ~~and~~share. ~~outstanding~~The ~~have~~Series ~~been~~B Preferred ~~recorded~~is convertible, either at the ~~grant~~option ~~date~~of ~~and~~the asholder or the ~~clawback~~Company, ~~rights~~into ~~are~~shares ~~released~~of the Company’s Series Z Convertible Preferred Stock, and immediately, without any action on the ~~measurement dates~~part ~~established~~of the holder, converted into common stock of the ~~fair~~Company. ~~value~~The Series B Preferred is redeemable at the option of the ~~transactions~~Company ~~would~~at $2.30 per share prior to conversion. As of March 31, 2016, there have been ~~determined~~270,044 ~~and~~shares ~~recorded~~of Series B Preferred converted or redeemed. The Series B Preferred does not have voting rights. Series B Preferred ranks senior to the following capital stock of the Company: the Series C Preferred.

AsThe ~~mentioned~~HGI ~~above,~~Series ~~the~~C Convertible ~~Agreement~~Preferred ~~provides~~Stock ~~for~~(the “~~clawback”~~Series ~~provisions,~~C ~~pursuant~~Preferred”) tohas ~~which~~a ~~all~~par value of ~~the~~$0.001 ~~shares~~per ofshare ~~Halo~~and ~~Common~~has ~~Stock~~a ~~issued~~liquidation topreference ~~the~~of ~~member~~the greater of ~~EAM~~(a) ~~are~~the ~~subject~~consideration paid to ~~forfeiture in~~ the ~~event~~Company ~~certain~~for ~~financial~~such ~~metrics~~shares ~~are~~plus ~~not~~all ~~timely~~accrued ~~achieved.~~but ~~The~~unpaid ~~financial~~dividends, ~~metrics~~if ~~call for~~any ~~significant~~or ~~cash~~(b) ~~generation~~the per byshare ~~EHF~~amount ~~within~~ the ~~first~~holders 12of ~~months,~~the ~~and~~Series ~~within~~C ~~the~~Preferred ~~first~~would 24be ~~months~~entitled ~~following~~to ~~the~~upon ~~closing date~~conversion. ~~We refer~~The ~~you~~liquidation topreference ~~Section~~was ~~2(b)(i) and (ii)~~ $436,702, of ~~the~~which ~~Agreement~~$126,702 ~~for~~is ~~the~~an ~~specifics~~accrued of(but ~~the~~undeclared) ~~clawback~~dividend ~~provisions.~~as As of ~~December~~March 31, ~~2012, no cash was generated by EHF~~2016. ~~The~~Holders ~~times~~of ~~to meet both~~ the 12Series ~~month~~C ~~and~~Preferred 24are ~~month~~entitled to ~~financial~~receive, ~~metrics~~if ~~have~~declared ~~lapsed~~by ~~and~~ the ~~metrics~~board ~~have not~~of ~~been~~directors, ~~met.~~dividends ~~Based~~at ~~upon~~a ~~the~~rate ~~events~~of ~~that~~8% ~~have~~payable ~~transpired,~~in ~~and~~cash ~~the~~or ~~lack~~common stock of ~~progress toward~~ the ~~financial metrics, the~~ Company. ~~demanded~~The ~~that~~Series ~~the~~C ~~recipients~~Preferred ofis ~~the~~convertible ~~shares~~into ofthe ~~Halo~~Company’s ~~Common~~common ~~Stock~~stock ~~give~~at ~~effect~~an toinitial ~~both~~conversion ~~clawback~~price ~~provisions~~of ~~and~~$2.27 ~~immediately~~per ~~forfeit~~share. ~~back all~~The ofSeries ~~the~~C ~~Halo~~Preferred ~~shares~~is ~~issued~~convertible, toeither ~~such~~at ~~recipients~~the –option ~~an aggregate~~ of ~~21,200,000~~the ~~shares.~~holder ~~Additionally,~~or the Company, ~~has~~into ~~instructed~~ shares of the Company’s ~~transfer~~Series Z ~~agent~~Convertible toPreferred ~~cancel~~Stock, ~~all~~and ofimmediately, ~~the~~without ~~shares~~any ofaction ~~Company~~on ~~Common Stock issued pursuant to~~ the ~~Agreement.~~part As of ~~December~~ ~~31,~~the ~~2014~~holder, ~~the~~converted ~~Company’s~~into ~~transfer~~common ~~agent~~stock ~~refused~~of ~~to cancel~~ the Company. ~~shares~~The ~~without~~Series ~~either~~C ~~(i)~~Preferred ~~presentation~~is ofredeemable at the ~~physical certificates~~option toof the ~~transfer~~Company ~~agent,~~at or$2.75 ~~(ii)~~per ashare ~~court~~prior ~~order requiring the transfer agent~~ to ~~cancel~~conversion. As of ~~December~~ March 31, ~~2014~~2016, ~~the Company~~there ~~had~~have been ~~unsuccessful~~28,000 inshares ~~its~~of ~~attempts~~Series toC ~~procure~~Preferred ~~the~~converted ~~physical~~or ~~certificates~~redeemed. ~~for~~The ~~presentment~~Series toC ~~the~~Preferred ~~transfer~~does ~~agent,~~not ~~and~~have ~~the~~voting ~~Company~~rights. ~~had~~Series ~~yet~~C toPreferred ~~secure~~ranks asenior ~~court~~to ~~order requiring~~ the ~~transfer~~following ~~agent~~capital tostock ~~cancel~~of the ~~certificates~~Company: None.

~~During~~The ~~March 2015, the~~ Company ~~entered~~had ~~into a $250,000 compromise~~ issued and ~~settlement~~outstanding ~~agreement~~at ~~with~~March ~~the~~31, ~~court appointed receivership holding 17~~2016,~~808,000~~ ~~shares of the Company’s 21~~372,~~200,000~~999 ~~common stock noted above. The physical stock certificate has been sent to the Company’s transfer agent to immediately cancel those respective outstanding~~ shares of ~~that Agreement. An additional~~Series ~~1,272,000~~A ~~shares of the company’s common stock~~Preferred, ~~all subject to the clawback provisions of the Agreement~~229,956 ~~have also been sent to the Company’s transfer agent to immediately cancel those respective common~~ shares of ~~that~~Series ~~Agreement~~B ~~but as of the time of this filing those shares have not yet been canceled. The Company expects that to happen shortly. Secondarily~~Preferred, ~~subject~~ toand ~~the clawback provisions of the Agreement~~124, ~~the Company is actively pursuing the procurement of an additional physical certificate of 2,120,~~000 shares ~~from a respective individual still in possession~~ of ~~the~~Series ~~common~~C ~~stock certificate. As of the time of the filing of these consolidated financials~~Preferred, ~~3,392,000~~all ofwith ~~the~~a ~~21,200,000~~par ~~shares~~value ~~issued as part~~ of ~~the Agreement remain outstanding~~$0.001.

~~The~~NOTE ~~Company’s~~17. ~~total common~~SUBSEQUENT ~~shares~~EVENTS ~~outstanding totaled 48,562,750 at September 30, 2015.~~

~~Preferred~~There ~~Stock~~were no subsequent events to disclose.

In connection with the 2009 merger, the Company authorized 1,000,000 shares of Series Z Convertible Preferred Stock with a par value of $0.01 per share (the “Series Z Convertible Preferred”). The number of shares of Series Z Preferred Stock may be decreased by resolution of the Board; provided, however, that no decrease shall reduce the number of Series Z Preferred Shares to less than the number of shares then issued and outstanding. In the event any Series Z Preferred Shares shall be converted, (i) the Series Z Preferred Shares so converted shall be retired and cancelled and shall not be reissued and (ii) the authorized number of Series Z Preferred Shares set forth in this section shall be automatically reduced by the number of Series Z Preferred Shares so converted and the number of shares of the Corporation’s undesignated Preferred Stock shall be deemed increased by such number. The Series Z Convertible Preferred is convertible into common shares at the rate of 45 shares of common per one share of Series Z Convertible Preferred. The Series Z Convertible Preferred has liquidation and other rights in preference to all other equity instruments. Simultaneously upon conversion of the remaining Series A Preferred, Series B Preferred, and Series C Preferred and exercise of any outstanding stock options issued under the HGI 2007 Stock Plan into Series Z Convertible Preferred, they will automatically, without any action on the part of the holders, be converted into common shares of the Company. Since the merger, in connection with the exercise of stock options into common stock and converted Series A Preferred, Series B Preferred and Series C Preferred as noted above, 82,508 shares of Series Z Convertible Preferred were automatically authorized and converted into shares of the Company’s common stock leaving 917,492 shares of authorized undesignated Preferred Stock in the Company in accordance with the Series Z Convertible Preferred certificate of designation. As of September 30, 2015, there were 82,508 shares of Series Z Preferred authorized with zero shares issued and outstanding.19

21Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations

~~The~~Forward-Looking Company authorized 175,000 shares of Series X Convertible Preferred Stock with a par value of $0.01 per share (the “Series X Preferred”). The number of shares of Series X Preferred may be decreased by resolution of the Board; provided, however, that no decrease shall reduce the number of Series X Preferred to less than the number of shares then issued and outstanding. In the event any Series X Preferred Shares shall be redeemed, (i) the Series X Preferred so redeemed shall be retired and cancelled and shall not be reissued and (ii) the authorized number of Series X Preferred Shares set forth in this section shall be automatically reduced by the number of Series X Preferred Shares so redeemed and the number of shares of the Corporation's undesignated Preferred Stock shall be deemed increased by such number. The Series X Preferred Shares rank senior to the Company’s common stock to the extent of $10.00 per Series X Preferred Shares and on a parity with the Company’s common stock as to amounts in excess thereof. The holders of Series X Preferred shall not have voting rights. Holders of the Series X Preferred shall be entitled to receive, when and as declared by the board of directors, dividends at an annual rate of 9% payable in cash when declared by the board. Holders of Series X Preferred have a liquidation preference per share equal to $10.00. The liquidation preference was $536,770 as of September 30, 2015.Statements

AsCertain statements contained in this Quarterly Report on Form 10-Q that are not statements of ~~December~~historical 31fact constitute “forward-looking statements”. Words such as “expect,” ~~2014~~“estimate,” “project,” ~~there~~“budget,” ~~were~~“forecast,” ~~143~~“anticipate,~~677~~” ~~shares~~“intend,” ~~authorized~~“plan,” “may,” ~~with~~“will,” ~~143~~“could,~~677~~” ~~shares~~“should,” ~~issued~~“believes,” “predicts,” “potential,” “continue,” and ~~outstanding.~~similar ~~During~~expressions ~~March~~are ~~2015,~~intended asto ~~part~~identify such offorward-looking statements but are not the ~~$250,000~~exclusive ~~compromise and~~means ~~settlement~~of ~~agreement~~identifying ~~with~~such statements. Although the ~~court~~Company ~~appointed~~believes that ~~receivership~~the ~~discussed~~current ~~above,~~views ~~the~~and ~~settlement~~expectations ~~agreement~~reflected ~~calls~~in ~~for~~these aforward-looking ~~relinquishment~~statements are reasonable, those views and expectations, and ~~abandonment~~the ofrelated ~~any~~statements, ~~and~~are ~~all~~inherently ~~claims~~subject ~~against~~to ~~Halo~~risks, onuncertainties, 90and other factors,~~000~~ ~~shares~~many of which are not under the Company’s ~~Series~~control. XThose ~~Preferred~~risks, ~~stock~~uncertainties, ~~belonging~~and other factors could cause the actual results to differ materially from those in the ~~receivership~~forward-looking statements. AsThose ~~such~~risks, asuncertainties, and factors (including the risks contained in the section of ~~September~~this ~~30,~~report ~~2015,~~titled ~~there~~“Risk ~~were~~Factors”) ~~53,677~~that ~~shares~~could ~~authorized~~cause the Company’s actual results, ~~issued~~performance or achievements to differ materially from those described or implied in the forward-looking statements and ~~outstanding~~its goals and strategies to not be achieved. ~~The~~You 53are cautioned not to place undue reliance on forward-looking statements,~~677~~ ~~shares~~which speak only as of the date of this Report. The Company expressly disclaims any obligation to release ~~were~~publicly ~~related~~any updates or revisions to ~~the~~these ~~2010~~forward-looking ~~conversion~~statements ~~from~~to ~~notes~~reflect ~~payable~~any ~~due~~change in its views or expectations. The Company can give no assurances that such forward-looking statements will prove to ~~related~~be ~~parties~~correct.

In April 2012, the Company authorized 100,000 shares of Series E Convertible Preferred Stock (the “Series E Preferred”) with a par value of $0.001 per share, at ten dollars ($10.00) per share with a conversion rate of fifty (50) shares of the Company’s common stock for one share of Series E Preferred. The ~~number~~following ~~of shares of Series E Preferred may be decreased by resolution of the Board; provided,~~discussion ~~however, that no decrease shall reduce the number~~ of ~~Series E Preferred to less than~~ the ~~number~~financial ofcondition ~~shares then issued~~ and ~~outstanding. In~~results ~~the event any Series E Preferred Shares shall be converted, (i) the Series E Preferred so converted shall be retired and cancelled and shall not be reissued and (ii) the authorized number~~ of ~~Series~~operation ~~E Preferred Shares set forth shall be automatically reduced by the number~~ of ~~Series E Preferred Shares so converted and~~ the ~~number~~Company ofshould ~~shares of the Corporation's undesignated Preferred Stock shall~~ be ~~deemed~~read ~~increased~~in byconjunction ~~such~~with ~~number. The Series E Preferred Shares rank senior to~~ the ~~Company’s~~consolidated ~~common stock to the~~financial ~~extent~~statements ~~of $10.00 per Series E Preferred Shares~~ and ~~on a parity with~~ the ~~Company’s~~notes ~~common stock as~~ to ~~amounts~~those instatements ~~excess~~included thereof. The holders of Series E Preferred shall not have voting rights. Holders of the Series E Preferred shall be entitled to receive, when and as declared by the board of directors, dividends at an annual rate of 9% payable in ~~cash~~this ~~or common stock when declared by the board~~Report. Holders of Series E Preferred have a liquidation preference per share equal to $10.00. The liquidation preference was $700,000 as of September 30, 2015. Each share of Series E Preferred, if not previously converted by the holder, will automatically be converted into common stock at the then applicable conversion rate after thirty-six months from the date of purchase. As of September 30, 2015, there were 70,000 shares issued and outstanding with total cash consideration of $700,000, convertible into 3,500,000 shares of the Company’s common stock.

~~The HGI Series A Convertible Preferred Stock (the “Series A Preferred”) has a par value of $0.001 per share and has a liquidation preference of the greater of (a) the consideration paid to the~~ Company for such shares plus all accrued but unpaid dividends, if any or (b) the per share amount the holders of the Series A Preferred would be entitled to upon conversion, as defined in the Series A Preferred certificate of designation. The liquidation preference was $753,826, of which $194,327 is an accrued (but undeclared) dividend as of September 30, 2015. Holders of the Series A Preferred are entitled to receive, if declared by the board of directors, dividends at a rate of 8% payable in cash or common stock of the Company. The Series A Preferred is convertible into the Company’s common stock at a conversion price of $1.25 per share. The Series A Preferred is convertible, either at the option of the holder or the Company, into shares of the Company’s Series Z Convertible Preferred Stock, and immediately, without any action on the part of the holder, converted into common stock of the Company. The Series A Preferred is redeemable at the option of the Company at $1.80 per share prior to conversion. As of September 30, 2015, there have been 127,001 shares of Series A Preferred converted or redeemed. The Series A Preferred does not have voting rights. The Series A Preferred ranks senior to the following capital stock of the Company: (a) Series B Preferred, and (b) Series C Preferred.Overview

22The Company, through its subsidiaries has historically operated a nationwide distressed asset services company, providing technology-driven asset management, portfolio due diligence, acquisition, repositioning and liquidation strategies for the private investment and mortgage servicing industry. Founded in 2004, Halo began operating in the mortgage origination sector, expanding quickly to an award-winning consumer financial services company. Halo’s years of experience, key leadership and industry knowledge, laid the foundation for its emergence as a premier distressed asset services company.

~~The~~Halo ~~HGI~~has ~~Series~~focused Bits ~~Convertible~~distressed ~~Preferred~~asset ~~Stock~~services, ~~(the~~portfolio ~~“Series~~due Bdiligence, ~~Preferred”) has a par value of $0.001 per share~~ and ~~has~~asset a liquidation ~~preference~~strategies ~~of the~~primarily ~~greater~~on ofsingle ~~(a)~~family ~~the~~residential ~~consideration~~real ~~paid~~estate to across the ~~Company~~United States for ~~such~~its ~~shares~~business ~~plus~~customers ~~all~~(typically ~~accrued~~distressed ~~but~~debt ~~unpaid~~investors ~~dividends, if any~~ or (bdebt servicers) ~~the per share amount the holders of the Series B Preferred would be entitled~~ to ~~upon~~market ~~conversion.~~turnkey ~~The liquidation preference was $621,553,~~solutions offor ~~which~~improved ~~$161,641~~performance isand anmonetization ~~accrued (but undeclared) dividend as~~ of ~~September~~their ~~30, 2015~~portfolios. ~~Holders~~In oftoday’s ~~the~~economy, ~~Series~~lenders ~~B Preferred~~ are ~~entitled to~~experiencing ~~receive,~~an ifoverflow ~~declared by the board~~ of distressed ~~directors, dividends at a rate of 8% payable in cash or common stock of the Company~~assets. ~~The Series~~Many Bmortgage ~~Preferred~~debt isservicers ~~convertible~~are ~~into~~currently ~~the~~overwhelmed ~~Company’s~~with ~~common~~externally ~~stock~~imposed atprograms athat ~~conversion~~are ~~price of $1.74 per share. The Series B~~stretching ~~Preferred is convertible, either at~~ the ~~option~~limits of ~~the~~their ~~holder~~human ~~or the Company~~resources, ~~into~~money ~~shares~~and oftime. ~~the Company~~Halo’s ~~Series~~technology Zsystems ~~Convertible Preferred~~are ~~Stock,~~bundled ~~and~~with ~~immediately~~transparency, ~~without any action on the part of the holder~~accountability, ~~converted into common stock of the Company. The~~ ~~Series~~efficiency, Band ~~Preferred is redeemable at the option of the Company at $2~~flexibility.30 ~~per~~This ~~share~~unique ~~prior~~strategy todirects ~~conversion.~~borrowers Asinto ofan ~~September 30~~intelligent, ~~2015, there~~results-driven ~~have~~process ~~been~~that ~~270~~establishes affordable,~~044~~ ~~shares~~long-term ofmortgages ~~Series~~while Balso ~~Preferred~~achieving ~~converted~~an orimproved ~~redeemed.~~return ~~The~~for ~~Series~~lenders Band ~~Preferred~~investors, ~~does~~when ~~not~~compared ~~have voting rights. Series B Preferred ranks senior~~ to ~~the following capital stock of the Company: the Series C Preferred~~foreclosure.

~~The~~As ~~HGI~~with ~~Series~~any Cindustry, ~~Convertible~~the ~~Preferred~~mortgage ~~Stock~~and ~~(the~~distressed ~~“Series~~residential Cindustry ~~Preferred”)~~is ~~has~~dynamic ~~a par value of $0.001 per share~~ and ~~has~~continues ~~a liquidation preference of the greater of (a) the consideration paid~~ to ~~the~~have ~~Company~~strategy ~~for~~shift ~~such~~creating ~~shares~~both ~~plus~~challenges ~~all~~and ~~accrued but unpaid dividends, if any or (b) the per share amount the holders of the Series C Preferred would be entitled to upon conversion~~opportunities. ~~The liquidation preference was $418,745,~~ ofThere ~~which $108,745~~ is an ~~accrued~~ongoing ~~(but~~consolidation ~~undeclared) dividend as~~ of ~~September~~assets ~~30,~~from ~~2015.~~middle-market ~~Holders~~investors ~~of the Series C Preferred are entitled~~ to ~~receive,~~institutional ifinvestors ~~declared~~causing bymany ~~the board~~ of ~~directors,~~Halo ~~dividends~~clients to atsell atheir ~~rate~~inventory ofand 8%move ~~payable~~to inother ~~cash~~sectors orto ~~common~~deploy ~~stock of the Company~~capital. The ~~Series~~ Cmargin ~~Preferred~~restrictions iscaused ~~convertible~~by ~~into~~this ~~the~~consolidation ~~Company’s common stock at an initial conversion price of $2.27 per share. The~~coupled ~~Series~~with ~~C Preferred is convertible, either at~~ the ~~option~~increased ofregulatory ~~the~~burden ~~holder or the Company, into shares of the Company’s Series Z Convertible Preferred Stock,~~ and ~~immediately,~~operating ~~without~~costs ~~any~~are ~~action~~making onit ~~the~~difficult ~~part~~for ofsmaller ~~the~~investors ~~holder, converted into common stock of the Company. The Series C Preferred is redeemable at the option of the Company at $2.75 per share prior~~ to ~~conversion~~compete. As ofsuch, ~~September~~Halo ~~30,~~is ~~2015,~~seriously ~~there~~evaluating ~~have~~the ~~been~~viability ~~28,000 shares~~ of ~~Series~~its Casset ~~Preferred~~management ~~converted~~and orportfolio ~~redeemed.~~services ~~The~~business ~~Series~~and Chas ~~Preferred~~begun ~~does~~to ~~not~~make ~~have~~moves ~~voting rights. Series C Preferred ranks senior~~ to reposition the ~~following capital stock of the~~ Company~~: None~~.

The Company ~~had~~is ~~issued~~currently exploring potential opportunities with several client relationships that would allow the Company to implement its internally developed and ~~outstanding~~used atasset ~~September~~management 30software platform as an external service for those customers. This is commonly known as Software as a Service (“SaaS”). The Company entered into a consulting and development agreement with a customer during late 2014, and then entered into a SaaS contract with that client who prepaid for a 12 month service plan during the three months ended March 2015,. ~~372,999~~Cash ~~shares~~receipts from customers in advance of revenue recognized are recorded as deferred revenue ~~Series~~and Awill ~~Preferred~~be earned over the entire SaaS contract period. During the three months ended March 31, ~~229~~2016,~~956~~ ~~shares~~the ofCompany ~~Series~~has Bsecured additional ~~Preferred,~~contracts and ~~124,000~~continues ~~shares~~to ofevaluate ~~Series~~both Cproduct ~~Preferred,~~lines ~~all~~and ~~with~~target amarkets ~~par~~to ~~value~~pursue ofin $0the future.~~001.~~

~~NOTE 17. SUBSEQUENT EVENTS~~ 20

OnPlan ~~November~~of ~~6, 2015, Mr. Robbie Hicks, Chief Accounting Officer, tendered his resignation.~~Operations

OnHalo has ~~November~~developed 6a fee for service business model through Halo Asset Management for the monetization of non-performing, ~~2015~~residential mortgage notes (“NPNs”) or foreclosed single family homes (“REO”) (collectively, Mr“Assets”). ~~Robert~~ ~~Boyce,~~Halo ~~Chief~~provides ~~Operating~~investors ~~Officer~~and asset owners a complete suite of asset management and mortgage services including, ~~has~~but ~~agreed~~not limited to no(i) ~~longer~~portfolio ~~serve~~due diligence such as valuation engines, tax research, portfolio bid management, cost allocations and decision support; (ii) acquisition services including portfolio reconciliation, title, and tax reporting, an ~~officer~~investor ~~but~~portal, initial portfolio inspection and servicing transfer assistance; (iii) repositioning services including portfolio restructuring, valuations, document preparation engine, document e-vaulting and proprietary loan underwriting; (iv) asset management and mortgage servicing including portfolio accounting, servicing and loan management functions, escrow administration, payment processing, loss mitigation and default resolution; and (v) liquidation strategies including predictive liquidity waterfalls, portfolio liquidation analysis, market analysis and disposition support. Halo focuses on the monetization and servicing of distressed real estate assets and finding a win-win solution for the asset owner/investor and the consumer. Halo will ~~continue~~board ~~his~~REO ~~employment~~properties ~~with~~as well as sub-performing and non-performing first lien mortgages from banks, financial institutions and mortgage servicers which have been purchased by investors. The majority of the ~~Company~~assets inwill be either modified first lien mortgages or sold via owner finance, as opposed to a fire sale through a real estate network. HAM, through its strategic sub-servicing relationship, will “season” the ~~role~~notes (season is defined as collecting consistent cash flow payments from the borrower). Following several months of ~~Vice~~seller ~~President~~financed payment seasoning, Halo will assist in the disposal of ~~Operations~~the performing Assets in bulk to various bulk performing asset buyers.

~~There~~For the ~~were~~NPN’s, noHalo ~~other~~will attempt to restructure or modify the note for those borrowers who have a desire to stay in the home ~~subsequent~~and ~~events~~have the capacity to ~~disclose~~afford the home. For the borrowers who either lack the desire to stay in the home, or who lack the capacity to afford the home, Halo will obtain a deed-in-lieu of foreclosure from the borrower (which ensures the investor ownership of the underlying asset; not just the purchased note), often times through incentives, and take the home back to an REO.

23For the REO’s, traditional apartment or home renters become buyers after a qualification and screening process because they are given the opportunity to purchase affordable homes with achievable and manageable down payments and subsequent monthly payments. Halo originates land contracts or mortgage notes for the new home owners. A land contract (sometimes known as an “installment contract” or “contract for deed”) is a contract between a seller and buyer on real property in which the seller provides the buyer financing to buy the property for an agreed-upon purchase price, and the buyer repays the loan in installments. Under a land contract, the seller retains the legal title to the property, while permitting the buyer to take possession of it for most purposes other than legal ownership. The sales price is typically paid in periodic installments. As a general rule, the seller is obligated to convey legal title of the property to the buyer when the full purchase price has been paid including any interest. This process creates entry level housing with built-in, fully amortized financing that equates to payments that are equivalent to what the buyers are currently paying in rent, and often as much as 35% less.

~~Item~~When the 2loans are “seasoned,” they are attractive investment vehicles to be either refinanced or sold in bulk. ~~Management’s~~Halo will ~~Discussion~~attempt ~~and~~to ~~Analysis~~refinance the rehabilitated borrowers through an FHA loan providing the Client with an exit at 90-95% of ~~Financial~~par ~~Condition~~value. The ~~and~~notes ~~Results~~of borrowers who did not achieve qualifying levels will be sold in bulk at a discount of ~~Operations~~ par value on the remaining unpaid principle balance of the notes.

~~Forward~~Currently, HAM is under contract to manage and service approximately 750 assets in various stages of their life-~~Looking~~cycle ~~Statements~~including REO, non-performing loans, re-performing note modifications, and performing owner financed contract-for-deeds.

~~Certain statements~~HPA ~~contained~~services ininclude ~~this~~portfolio ~~Quarterly~~strategy ~~Report on Form 10-Q that are not statements of historical fact constitute “forward-looking statements”. Words such as “expect~~consulting,” ~~“estimate,”~~default ~~“project~~management,” ~~“budget,”~~asset/liability ~~“forecast~~management,~~” “anticipate,”~~ ~~“intend,”~~asset ~~“plan,”~~preservation ~~“may~~management,~~” “will,” “could,”~~ ~~“should,”~~debt ~~“believes~~restructuring,” ~~“predicts,”~~portfolio ~~“potential,”~~acquisition ~~“continue,”~~ and ~~similar expressions~~liquidation ~~are intended to identify such forward-looking statements but are not the exclusive means of identifying such statements~~support. ~~Although~~ ~~the~~In ~~Company~~addition, ~~believes~~HPA ~~that~~also ~~the~~focuses ~~current~~its ~~views~~work ~~and~~with ~~expectations~~asset ~~reflected in these forward-looking statements are reasonable~~managers, ~~those~~investors ~~views~~ and ~~expectations,~~servicers ~~and~~to ~~the~~provide ~~related~~a ~~statements~~custom, ~~are~~tailored ~~inherently~~workout ~~subject~~program tothat ~~risks,~~will ~~uncertainties,~~improve ~~and~~the ~~other~~performance ~~factors, many~~ of ~~which~~the ~~are~~assets ~~not~~or ~~under~~notes through ~~the~~a ~~Company’s~~myriad ~~control. Those~~of ~~risks,~~creative ~~uncertainties,~~analytic and ~~other~~retention ~~factors~~strategies. ~~could~~HPA ~~cause~~utilizes ~~the~~Halo’s ~~actual results~~proprietary ~~to differ materially from those~~ in ~~the forward~~-~~looking~~house ~~statements. Those~~technology ~~risks,~~to ~~uncertainties, and factors (including~~provide ~~the~~a ~~risks~~customized ~~contained~~analysis ~~in the section~~ of ~~this~~a ~~report titled “Risk Factors”) that could cause the Company~~Client’s ~~actual results,~~position. ~~performance~~HPA orthen ~~achievements~~custom totailors ~~differ~~a ~~materially~~solution ~~from~~for ~~those~~the ~~described~~Client orwhich ~~implied~~provides in the ~~forward-looking statements and~~Client ~~its~~analytics ~~goals and strategies to not be achieved. You are cautioned not to place undue reliance~~ on ~~forward-looking statements,~~ which ~~speak~~ ~~only~~assets asor ofnotes ~~the date of this Report. The Company expressly disclaims any obligation~~ to ~~release~~monetize ~~publicly~~first ~~any~~and ~~updates~~what oroptions ~~revisions to~~are ~~these~~best ~~forward-looking~~utilized ~~statements~~ to ~~reflect~~monetize ~~any~~each ~~change~~individual inasset ~~its views~~ or ~~expectations~~note. ~~The Company can give no assurances that such forward-looking statements will prove to be correct.~~

~~The~~As ~~following~~mentioned ~~discussion of~~above, the Company ~~financial~~is ~~condition~~pursuing the licensing and ~~results~~support of ~~operation~~its internally developed Financial Technology (“FinTech”) across the special finance industry. Finance is one of the ~~Company~~last ~~should~~industries to be ~~read~~disrupted inby ~~conjunction~~technology, ~~with~~behind ~~the~~industries ~~consolidated~~like ~~financial~~telecom, ~~statements~~music, and retail over a decade ago, and transportation and tourism more recently. Leaving it as a final frontier, ripe for innovation. Over the ~~notes~~last five years, there has been an explosion of tech start-ups rapidly innovating the finance sector. These start-ups are slicing up the financial services industry and creating innovative ways to ~~those~~disrupt ~~statements~~the ~~included~~traditional inbanking ~~this~~industry ~~Report~~by providing financial technology that is faster, better value and fairer. FinTech is on the verge of becoming a mainstream consumer trend.

~~Company~~According ~~Overview~~to a recent survey there are five main market conditions that will create the perfect storm for FinTech adoption.

§ The ~~Company,~~loss ~~through its~~of ~~subsidiaries,~~trust ~~operates~~in ~~a nationwide distressed asset services company, providing technology-driven asset management, portfolio due diligence, acquisition, repositioning and liquidation strategies for~~ the ~~private~~banks ~~investment~~ and ~~mortgage~~financial ~~servicing~~markets ~~industry. Founded~~due into ~~2004, Halo began operating in~~ the ~~mortgage~~global ~~origination sector, expanding quickly to an award-winning consumer~~ financial ~~services~~ ~~company.~~crisis ~~Halo’s years~~ of ~~experience, key leadership and industry knowledge, laid the foundation for its emergence as a premier distressed asset services company.~~2008

~~Halo~~§ ~~focuses~~Expectations its distressed asset services, portfolio due diligence, and asset liquidation strategies primarily on single family residential real estate across the United States for its business customers (typically distressed debt investors or debt servicers) to market turnkey solutions for improved performance and monetization of ~~their~~better portfolios. In today’s economy, lenders are experiencing an overflow of distressed assets. Many mortgage debt servicers are currently overwhelmed with externally imposed programs that are stretching the limits of their human resources, money and time. Halo’s technology systems are bundled with transparency, accountability, efficiency, and flexibility. This unique strategy directs borrowers into an intelligent, results-driven process that establishes affordable, long-term mortgages while also achieving an improved return for lenders and investors, when compared to foreclosure.

~~The~~§ Company is currently exploring potential opportunities with several client relationships that would allow the Company to implement its internally used asset management software platform as an external service for those customers. This is commonly known as Software as a Service (“SaaS”). The ~~Company~~rise entered into a consulting and development agreement with a customer during late 2014, and then entered into a SaaS contract with that client who prepaid for a 12 month service plan during early 2015. Cash receipts from customers in advance of ~~revenue recognized are recorded as deferred revenue and will be earned over~~ the ~~entire SaaS contract period. The Company is still in its research phase of determining if this service line will remain ancillary or become a primary business component of the Company.~~millennials

24§ The rise of the mobile internet

~~Plan~~§ Regulation that truly looks after the rights of ~~Operations~~the consumer

Halo has developed a fee for service business model through Halo Asset Management for the monetization of non-performing, residential mortgage notes (“NPNs”) or foreclosed single family homes (“REO”) (collectively, “Assets”). Halo provides investors and asset owners a complete suite of asset management and mortgage services including, but not limited to (i) portfolio due diligence such as valuation engines, tax research, portfolio bid management, cost allocations and decision support; (ii) acquisition services including portfolio reconciliation, title, and tax reporting, an investor portal, initial portfolio inspection and servicing transfer assistance; (iii) repositioning services including portfolio restructuring, valuations, document preparation engine, document e-vaulting and proprietary loan underwriting; (iv) asset management and mortgage servicing including portfolio accounting, servicing and loan management functions, escrow administration, payment processing, loss mitigation and default resolution; and (v) liquidation strategies including predictive liquidity waterfalls, portfolio liquidation analysis, market analysis and disposition support. Halo focuses on the monetization and servicing of distressed real estate assets and finding a win-win solution for the asset owner/investor and the consumer. Halo will board REO properties as well as sub-performing and non-performing first lien mortgages from banks, financial institutions and mortgage servicers which have been purchased by investors. The majority of the assets will be either modified first lien mortgages or sold via owner finance, as opposed to a fire sale through a real estate network. HAM, through its strategic sub-servicing relationship, will “season” the notes (season is defined as collecting consistent cash flow payments from the borrower). Following several months of seller financed payment seasoning, Halo will assist in the disposal of the performing Assets in bulk to various bulk performing asset buyers. 21

~~For~~These ~~the~~factors ~~NPN’s,~~and ~~Halo~~many ~~will~~others ~~attempt~~have tocreated ~~restructure~~an orenvironment ~~modify~~where ~~the~~businesses ~~note~~and ~~for~~consumers ~~those~~are ~~borrowers~~not ~~who~~only ~~have~~looking, abut ~~desire~~expecting to ~~stay~~find, inbetter ~~the~~solutions to ~~home~~their financial technology needs. Specifically real estate management, mortgage origination, and ~~have~~servicing ~~the~~are ~~capacity~~woefully behind toother ~~afford~~sectors ~~the~~in ~~home~~terms of quality innovation in technology. ~~For~~This is the ~~borrowers~~result ~~who~~of ~~either~~the ~~lack~~fact ~~the~~that ~~desire~~when toreal ~~stay~~estate incycles ~~the~~are ~~home~~hot, companies orare ~~who~~focused ~~lack~~on ~~the~~closing ~~capacity~~transactions toat ~~afford~~all ~~the~~cost ~~home, Halo~~and ~~will~~not ~~obtain~~in developing better technology. When there is a ~~deed~~down-turn in~~-lieu~~ the ofmarket, ~~foreclosure~~it ~~from~~is ~~the~~usually ~~borrower~~steep ~~(which~~and ~~ensures~~deep ~~the~~and ~~investor~~companies ~~ownership~~no oflonger have the ~~underlying~~appetite ~~asset;~~or budget to continue development. Therefore, ~~not~~in ~~just~~almost ~~the~~every ~~purchased~~sector ~~note)~~of real estate, ~~often~~technology ~~times~~is ~~through~~outdated, ~~incentives~~cumbersome, and ~~take~~what ~~the~~makes ~~home~~it ~~back~~even toworse is that it is expensive. As an ~~REO~~alternative, companies often find themselves having to turn to cheap, vanilla tools such as Sales Force, ACT, etc.

~~For~~The ~~the~~Company ~~REO’s,~~has ~~traditional apartment~~core ~~or home renters become buyers after a qualification and screening process because they are given the opportunity to purchase~~technology ~~affordable~~that ~~homes~~is ~~with~~not ~~achievable~~only ~~and~~cutting-edge, ~~manageable~~but ~~down~~also ~~payments~~proven ~~and~~which ~~subsequent~~is ~~monthly~~more ~~payments.~~than ~~Halo~~most ~~originates~~3rd ~~land~~party ~~contracts~~software ~~or mortgage~~development ~~notes~~firms ~~for~~can ~~the new home owners~~say. ~~A land contract (sometimes known as an “installment contract” or “contract~~ ~~for~~This ~~deed”)~~technology iscan amake ~~contract between~~ a ~~seller~~major ~~and~~impact ~~buyer on real property in which the seller provides the buyer financing~~ to ~~buy~~ the ~~property~~real ~~for~~estate aninvestment ~~agreed-upon purchase price,~~ and ~~the~~servicing ~~buyer~~sectors ~~repays the loan in installments. Under a land contract~~immediately, ~~the seller retains the legal title to the property,~~ while ~~permitting~~ the ~~buyer~~Company continues to ~~take~~identify ~~possession of it for most purposes~~ other ~~than~~opportunities ~~legal ownership. The sales price is typically paid in periodic installments. As a general rule, the seller is obligated~~ to ~~convey~~expand ~~legal title~~its ofproduct ~~the property to the buyer when the full purchase price has been paid including any interest~~line. This process creates entry level housing with built-in, fully amortized financing that equates to payments that are equivalent to what the buyers are currently paying in rent, and often as much as 35% less.

~~When~~Significant ~~the~~effort ~~loans are “seasoned,”~~and ~~they are attractive~~ investment ~~vehicles~~capital tohas bebeen ~~either~~incurred ~~refinanced~~by ~~or sold in bulk. Halo will attempt to refinance~~ the ~~rehabilitated borrowers~~Company ~~through~~over ~~an FHA loan providing~~ the ~~Client~~past ~~with~~eleven anyears ~~exit~~in atorder ~~90-95%~~to ofattract ~~par~~and ~~value.~~maintain ~~The~~a ~~notes~~qualified ~~of borrowers who did not achieve~~and ~~qualifying~~capable ~~levels~~staff, ~~will~~develop beproprietary ~~sold~~software inplatforms, ~~bulk~~and atimplement asystems, ~~discount~~procedures, ofand ~~par~~infrastructure ~~value~~to onexecute the ~~remaining~~business plan ~~unpaid~~on ~~principle~~a ~~balance~~large ~~of the notes~~scale.

~~Currently,~~Results ~~HAM is under contract to manage and service approximately 1,100 assets in various stages~~ of ~~their life-cycle including REO, non-performing loans,~~Operations ~~re-performing note modifications, and performing owner financed contract-~~for~~-deeds.~~ As the ~~Company~~three ~~currently~~months ~~has~~ended ~~the~~March ~~management~~31, ~~infrastructure,~~ ~~and~~2016 ~~physical~~compared ~~work area capacity~~ to ~~scale and support additional assets under contract, it is actively seeking new clients as well as helping existing clients increase their respective asset pool. The Company believes that~~ the ~~country~~three ismonths inended ~~a long-term~~March ~~deleveraging cycle whereby home financing will continue to be difficult to obtain. For this same reason~~31, we2015 believe that investors will continue to be able to purchase assets in bulk from large institutional sellers at deep discounts and Halo’s goal is to establish itself, with the help of its unique technology platform and key servicing and vendor relationships, as the premier asset manager/servicer in the distressed non-performing loan and REO industry.

25To completely understand the Company’s results, the below discussion should be read in conjunction with Note 4 Operating Segments of the consolidated financial statements.

~~HPA~~Revenues services include portfolio strategy consulting, default management, asset/liability management, asset preservation management, debt restructuring, portfolio acquisition and liquidation support. In addition, HPA also focuses its work with asset managers, investors and servicers to provide a custom, tailored workout program that will improve the performance of the assets or notes through a myriad of creative analytic and retention strategies. HPA utilizes Halo’s proprietary in-house technology to provide a customized analysis of a Client’s position. HPA then custom tailors a solution for the Client which provides the Client analytics on which assets or notes to monetize first and what options are best utilized to monetize each individual asset or note.

~~The~~For the ~~current~~three ~~economic~~months ~~environment finds~~ended ~~lenders~~March ~~and~~31, ~~servicers~~2016, ~~drowning~~revenue indecreased an$1,307,161 ~~overflow~~and of88% ~~defaulted~~to ~~assets~~$186,356 ~~and~~from ~~Halo~~$1,493,517 ~~recognizes~~for the ~~cause~~three ~~behind~~months ~~a typical troubled~~ended ~~asset~~March ~~is often not one~~31, ~~but several contributing factors~~2015. ~~HPA’s~~The ~~workout~~variance ~~program~~is ~~allows~~primarily ~~for~~attributable ~~management~~to of a ~~diverse~~(1) ~~portfolio of~~revenue ~~loans.~~decrease ~~HPA’s~~of ~~technology systems are bundled with transparency~~$1, ~~accountability~~137,840 ~~efficiency,~~in ~~speed,~~HPA ~~and~~(2) ~~flexibility.~~revenue ~~This unique~~decrease ~~strategy~~of ~~delivers Clients an intelligent~~$210,571 in ~~results-driven~~HAM ~~process~~and ~~that~~(3) ~~achieves~~revenue anincrease ~~improved~~of ~~return for lenders~~$41,250 ~~investors and~~related ~~servicers.~~to ~~Halo~~the Company’s ~~operational~~SaaS ~~support~~contract ~~services~~which ~~allow~~is ~~endless~~discussed ~~opportunities~~in ~~for~~Company ~~strategic relationships with major distressed~~Overview ~~asset~~section ~~managers and servicers~~above.

~~Our~~The ~~management~~HPA ~~team~~revenue isdecrease ~~well-positioned~~of to$1,137,840 ~~execute~~and ~~its~~97% ~~business~~for ~~plan.~~the Atthree ~~its~~months ~~core~~ended March 31, 2016 compared to the ~~plan~~three ~~seeks~~months ended March 31, 2015 is primarily attributable to ~~execute~~a onone-time ~~delivering~~large ~~asset~~portfolio ~~management~~acquisition support contract that was generated during the three months ended March 31, ~~valued~~2015 ~~analytics~~which directly resulted in an increase in title reports, tax certification, property valuation analysis and ~~consumer~~the ~~financial~~due ~~rehabilitation~~diligence fee toassociated ~~mid-size~~with ~~institutional~~this ~~and~~portfolio ~~private~~acquisition ~~investors~~support.

~~Significant~~As ~~effort~~discussed in Note 2 of the consolidated financial statements, HAM revenues include boarding and initial asset management fees, success fees, and its ~~investment~~monthly ~~capital~~servicing ~~has~~fee. ~~been~~HAM ~~incurred~~revenues bydecreased $210,571 for the ~~Company~~three ~~over~~months ended March 31, 2016 compared to the ~~past~~three ~~eleven~~months ~~years~~ended March in31, ~~order~~2015. Attributable to ~~attract~~the ~~and~~variance, ~~maintain~~the Company saw a ~~qualified~~significant ~~and capable~~reduction ~~staff,~~in ~~develop~~its ~~proprietary~~asset ~~software~~management ~~platforms~~fee, success fees, and ~~implement~~monthly ~~systems,~~servicing ~~procedures~~fee during the three months ended March 31, ~~and~~2016 ~~infrastructure~~compared to ~~execute~~ the ~~business plan~~three onmonths aended ~~large~~March ~~scale~~31, 2015. ~~Given~~This reduction ~~the~~is ~~short~~primarily ~~time~~attributable ~~frame~~to ~~this~~less ~~current~~new ~~market~~boarding ~~opportunity~~volume ~~has~~and ~~existed,~~the weoverall ~~have~~volume aof ~~significant~~assets ~~competitive~~being managed during the three ~~advantage~~months ~~over~~ended ~~others~~March ~~who~~31, ~~may~~2016 ~~try~~compared to ~~execute~~ the ~~same~~three ~~business~~months ~~plan~~ended March 31, 2015.

~~Results~~Overall, oflooking ~~Operations~~forward to ~~for~~the remainder of 2016, the ~~three~~Company ~~and~~will continue to receive residual revenue associated with legacy asset portfolios that the ~~nine~~Company ~~months~~has ~~ended~~been ~~September~~managing. ~~30,~~New ~~2015~~contracts ~~compared~~associated towith the ~~three~~asset management and ~~nine~~portfolio ~~months~~services ~~ended~~channels ~~September~~will 30be limited. However, ~~2014~~the Company is aggressively pursuing software license and SaaS agreements and expects that the majority of any incremental revenue will be technology related.

~~To completely understand the Company’s results, the below discussion should be read in conjunction with Note 4~~ Operating ~~Segments~~Expenses ~~of the consolidated financial statements.~~

~~Revenues~~Sales and marketing expenses include direct sales costs and marketing incurred in HPA for property preservation, tax and title reporting, eviction filing, mobile notary services, asset valuation, credit reports, and all other contract service commissions. Sales and marketing expenses decreased $686,353 and 97% to $21,539 for the three months ended March 31, 2016 from $707,892 for the three months ended March 31, 2015. The decrease is primarily related to the variable expense associated with the above noted decrease in revenues in HPA (for portfolio acquisition support) over the same time period.

~~For the~~General ~~three~~and ~~months~~administrative expenses ~~ended~~decreased ~~September 30~~$134,368 ~~2015,~~and ~~revenue~~58% ~~increased~~to $~~469~~96,~~494~~664 ~~and~~for ~~85%~~the tothree $1months ended March 31,~~024,960~~ 2016 from $~~555~~231,~~466~~032 for the three months ended March ~~September 30~~31, ~~2014~~2015. The variance is primarily attributable to ~~revenue~~a ~~increases~~decrease ofin ~~$206~~consulting fees,~~304~~ intravel ~~HAM~~expense, ~~$233~~rent expense,~~190~~ ~~in HPA~~ and ~~$30,000~~insurance ~~related~~expense (due to ~~the~~less ~~Company’s SaaS contract which is discussed in Company Overview section above~~headcount).

~~As discussed in Note 2 of the consolidated financial statements~~Salaries, ~~HAM~~wages ~~revenues include boarding~~ and ~~initial~~benefits decreased ~~asset management fees~~$829,941 ~~success fees,~~ and ~~its monthly~~92% ~~servicing~~to ~~fee. HAM revenues increased~~ $~~206~~76,~~304~~000 for the three months ended ~~September~~March 3031, ~~2015~~2016 ~~compared~~from to$905,941 for the three months ended ~~September 30~~March 31, ~~2014~~2015. ~~Attributable~~The todecrease ~~the~~is ~~variance,~~primarily ~~the~~attributable ~~Company~~to ~~experienced~~a andecrease ~~increase~~ in ~~its~~variable ~~asset~~wages ~~management~~payable ~~fee due~~ to ~~several~~ ~~new~~HPA ~~multi-unit~~employees ~~asset~~as ~~boardings~~well ~~during the current quarter~~ as ~~compared~~a ~~to the three months ended September 30, 2014. The~~reduction ~~Company also experienced an increase~~ in ~~its~~headcount ~~success~~of ~~fees~~several ~~during~~senior ~~the~~management ~~three~~personnel. ~~months~~Looking ~~ended~~forward ~~September 30, 2015 compared~~ to the ~~three months~~remainder ~~ended~~of ~~September 30~~2016, ~~2014 directly related to several bulk asset trades, of which~~ the Company ~~earns~~will acontinue ~~success~~to ~~fee. Offsetting~~gauge ~~the~~its ~~above~~headcount ~~revenue~~in ~~increases,~~relation ~~the~~to ~~Company~~new ~~experienced~~technology acontracts. ~~slight~~As ~~decrease~~salaries, inwages ~~its~~and ~~monthly~~benefits ~~servicing~~are ~~fees during~~ the ~~three~~most ~~months~~significant ~~ended September~~cost ~~30, 2015 compared~~ to the ~~three months ended September 30~~Company, management ~~2014.~~actively ~~This~~monitors ~~reduction~~this iscost ~~primarily attributable~~ to ~~less~~ensure ~~overall volume~~it ofis ~~assets~~in ~~being~~line ~~managed~~with ~~(see~~our ~~further~~business ~~discussion below) during the three months ended September 30, 2015 compared to the three months ended September 30, 2014~~plan.

The HPA revenue increase of $233,190 for the three months ended September 30, 2015 compared to the three months ended September 30, 2014 is primarily attributable to portfolio acquisition support performed during the current quarter, which directly resulted in an increase in title reports, tax certification, and the due diligence fee associated with this portfolio acquisition support.22

26The Company experienced an overall decrease in its net loss of $298,964 and 64% to a net loss of $168,462 for the three months ended March 31, 2016 from a net loss of $467,426 for the three months ended March 31, 2015, primarily attributable to the reasons noted above.

~~For~~Significant ~~the~~Accounting ~~nine~~Policies months ended September 30, 2015, revenue increased $1,047,966 and 53% to $3,023,625 from $1,975,659 for the nine months ended September 30, 2014. The increase is primarily attributable to the current quarter variance reasons noted above, as well as the $901,229 increase in revenue from the three months ended March 31, 2015 compared to the three months ended March 31, 2014, offset by the $322,757 decrease for the three months ended June 30, 2015 compared to the three months ended June 30, 2014. The $901,229 increase in early 2015 was primarily a result of several portfolio acquisition support (due diligence projects) completed during the first three months of 2015 that did not occur during the three months ended March 31, 2014. The $322,757 decrease in mid 2015 was primarily a result of a decrease in portfolio acquisition support and bulk sales success fees during the three months ended June 30, 2015 compared to the three months ended June 30, 2014.

~~Overall,~~Certain ~~looking~~critical ~~forward~~accounting topolicies affect the ~~remainder~~more ofsignificant ~~2015,~~judgments inand ~~late~~estimates ~~August~~used ~~2015,~~in asthe ~~part~~preparation of ~~its ordinary course of business,~~ the Company’s ~~discontinued~~consolidated ~~its asset management~~financial ~~agreement with a client that had many assets under current management~~statements. AsThese ~~such,~~policies ~~the~~are ~~Company~~contained ~~is expecting to see a decrease~~ in ~~its success~~Note ~~fees~~2 ~~and~~to ~~monthly servicing fees, and possibly its asset management fees during~~ the ~~last~~consolidated ~~quarter~~financial ofstatements ~~2015~~ and ~~moving~~included ~~forward. The~~in ~~Company~~Note ~~continues~~2 to ~~evaluate~~the ~~and~~consolidated financial ~~refine~~statements ~~its~~contained ~~sales~~in ~~and~~our ~~marketing~~Annual ~~strategy~~Report ason ~~well~~Form as10-K ~~manage~~for ~~its~~the ~~expenses,~~year ~~including~~ended ~~corporate, personnel,~~December ~~and vendor relationships~~31, ~~in line with its asset units under management~~2015. ~~The~~There ~~Company~~have isbeen ~~actively~~no ~~seeking~~significant changes ~~growth~~in ofour ~~its asset~~significant ~~units~~accounting ~~under~~policies ~~management~~since ~~with~~the ~~several~~last offiscal ~~its~~year ~~existing~~end ~~clients~~2015.

~~Operating~~Liquidity ~~Expenses~~and Capital Resources

~~Sales~~As ~~and~~of ~~marketing~~March ~~expenses include direct sales costs and marketing incurred in HPA for property preservation~~31, ~~tax and title reporting~~2016, ~~eviction filing, mobile~~the ~~notary~~Company ~~services,~~had ~~asset~~cash ~~valuation, credit reports,~~ and ~~all~~cash ~~other~~equivalents ~~contract~~of ~~service commissions. Sales and marketing expenses increased~~ $6514,~~014~~251. ~~and~~The ~~22%~~decrease toof $~~366~~6,~~006~~293 ~~for~~in ~~the~~cash ~~three~~and ~~months~~cash ~~ended~~equivalents ~~September~~from 30December 31, 2015 ~~from $300,992 for the three months ended September 30,~~was ~~2014.~~due ~~The increase is primarily related~~ to ~~the~~net ~~variable~~cash ~~expense~~used ~~associated with the above noted increase~~ in ~~revenues~~operating inactivities ~~HPA~~of ~~(for portfolio acquisition support) over the same time period. For the nine months ended September 30, 2015, sales and marketing expenses increased~~ $~~477,646 and 62% to $~~1,~~244,843~~293 ~~from $767,197 for the nine months ended September 30, 2014, primarily related to the portfolio acquisition support~~ and ~~due~~by ~~diligence~~net ~~projects~~cash ~~completed~~used ~~during~~in ~~the~~financing ~~first~~activities ~~and third quarters~~ of ~~2015 as noted above offset by the decrease in revenue for the second quarter ended June 30~~$5, ~~2015~~000.

~~General and~~Net ~~administrative~~cash ~~expenses~~used ~~increased~~in ~~$39,983~~operating activities ~~and~~was ~~25% to~~ $~~200~~1,~~067~~293 for the three months ended ~~September~~March 3031, ~~2015 from $160~~2016,~~084~~ ~~for the~~compared ~~three months ended September 30, 2014. The variance is primarily attributable~~ to a $75119,~~000~~347 ~~note~~net ~~receivable~~cash ~~write~~provided ~~off~~by ~~that~~operating ~~occurred~~activities ~~during~~for the three months ended ~~September~~March 3031, 2015 ~~compared to the three months ended September 30, 2014~~. The ~~Company~~net ~~invested in~~cash aused ~~note receivable of $75,000~~ in anoperating ~~affiliated~~activities ~~company~~ for ~~working~~the ~~capital~~three ~~advances.~~months ~~The~~ended ~~proceeds~~March ~~were made as a strategic investment~~31, in2016 ~~the~~was ~~affiliate~~due ~~as that affiliate provides revenue sourcing~~ to ~~the~~net ~~Company.~~loss ~~As there is not a high probability~~ of ~~recollecting those proceeds advanced~~$168,462, ~~the~~adjusted ~~Company~~primarily ~~wrote~~by ~~off~~ the ~~note~~following: ~~receivable~~an ~~prior~~increase toof ~~September 30, 2015. The~~ $75132,~~000~~323 ~~increase is offset by several immaterial variances~~ in ~~other~~accrued ~~general~~ and ~~administrative~~other ~~expenses including employer paid health insurance~~liabilities, ~~depreciation,~~ ~~rent,~~a ~~telecom,~~decrease ~~travel~~of $14,132 ~~and~~in ~~consulting~~accounts ~~during~~payable ~~the~~(specifically ~~three~~related ~~months ended September 30, 2015 compared~~ to ~~the~~cash ~~three~~flows ~~months~~from ~~ended September 30~~operating), ~~2014.~~a ~~General~~decrease ~~and~~of ~~administrative expenses increased~~ $~~106~~39,~~681~~279 ~~and~~in ~~20%~~trade accounts ~~to $642~~receivables,~~429~~ ~~for~~and ~~the nine~~non ~~months~~cash ~~ended~~capitalization ~~September~~of ~~30,~~interest ~~2015~~in ~~from $535,748 for~~ the ~~nine~~note ~~months~~payable ~~ended~~of ~~September 30~~$79,587 ~~2014~~(discussed ~~primarily~~in ~~due~~note to9 of the ~~reasons noted~~consolidated ~~above~~financial asstatements). ~~well~~The asremaining ~~the~~immaterial ~~$50,000~~variance ~~note~~is ~~receivable~~related ~~investment~~to ~~and~~non ~~subsequent~~cash ~~write~~depreciation ~~off~~and ofamortization, ~~that~~and ~~note~~a ~~receivable during the six months~~decrease ~~ended~~in ~~June~~gross ~~30,~~trade ~~2015.~~accounts receivable.

~~Salaries,~~The ~~wages and benefits decreased~~ $78132,~~484~~323 ~~and~~increase ~~20% to $307,619 for the three months ended September 30, 2015 from $386,103 for the three months ended September 30, 2014. The variance is primarily attributable to a reduction~~ in ~~overall employee headcount primarily in HAM. Salaries, wages~~ ~~and~~accrued ~~benefits increased $641,257~~ and ~~49%~~other toliabilities ~~$1,952,782 for the nine months ended September 30, 2015 from $1,311,525 for the nine months ended September 30, 2014. The increase~~ is primarily ~~attributable~~related to anthe increase in ~~variable~~deferred compensation and wages payable. ~~The~~to ~~above increase is offset by~~ a ~~reduction~~portion ~~in overall employee headcount primarily in HAM as noted above. Looking forward to the remainder~~ of ~~2015,~~ the ~~Company will continue to gauge its headcount in the HAM subsidiary in line with its~~ ~~active~~management ~~revenue~~team ~~streams. As salaries, wages~~ and ~~benefits~~an ~~are~~increase ~~the most significant cost to the Company, management actively monitors this cost to ensure it is~~ in ~~line~~accrued ~~with our business plan~~interest.

27On the balance sheet, accounts payable decreased by $14,132 at March 31, 2016 from December 31, 2015. This is the result of a general decrease in accounts payable (specifically related to cash flows from operations) for the three months ended March 31, 2016 and is primarily related to the overall cash flow management of the Company.

~~Interest~~Net ~~expense~~cash ~~is discussed~~provided inby ~~full~~investing activities ~~detail~~remains inunchanged ~~all~~for ~~applicable~~the ~~footnotes~~three ofmonths ~~the~~ended ~~consolidated~~March ~~financial~~31, ~~statements~~2016, ~~and~~as well as ~~such~~for the ~~duplication~~three ~~is not~~months ~~warranted~~ended ~~here~~March 31, 2015.

~~The~~Net ~~Company~~cash ~~experienced an~~used ~~overall improvement~~ in ~~its net loss of $378,305 and 93% to a net loss of $30,421 for the three months ended September 30, 2015~~financing ~~from~~activities awas ~~net loss of~~ $~~408~~5,~~726~~000 for the three months ended ~~September~~March 3031, ~~2014~~2016, ~~primarily~~compared ~~attributable~~ to ~~the~~net ~~reasons~~cash ~~noted~~used ~~above. The Company experienced an overall increase~~ in ~~its~~financing ~~net~~activities ~~loss~~ of $~~342~~26,~~914~~667 ~~and 36% to a net loss of $1,303,796~~ for the ~~nine~~three months ended ~~September~~ 30March 31, 2015. ~~from~~Financing aactivities ~~net loss of $960,882~~ for the ~~nine~~three months ended ~~September~~March 3031, ~~2014~~2016 consisted exclusively of $5,000 ~~primarily~~in ~~attributable~~principal topayments ~~the~~on ~~reasons noted~~subordinated ~~above~~debt.

~~Significant~~As ~~Accounting~~shown ~~Policies~~below, at March 31, 2016, our contractual cash obligations totaled approximately $5,083,978, all of which consisted of operating lease obligations and debt principal and accrued interest repayment.

Certain critical accounting policies affect the more significant judgments and estimates used in the preparation of the Company’s consolidated financial statements. These policies are contained in Note 2 to the consolidated financial statements and included in Note 2 to the consolidated financial statements contained in our Annual Report on Form 10-K for the year ended December 31, 2014. There have been no significant changes in our significant accounting policies since the last fiscal year end 2014.

	Payments due by December 31,
Contractual Obligations	2016		2017-2018		2019-2020		2021 & Thereafter		Total
Debt Obligations	$	5,021,514	$	60,000	$	0	$	0	$	5,081,514

Operating Lease Obligations	$	2,464	$	0	$	0	$	0	$	2,464

Total Contractual Cash Obligations	$	5,023,978	$	60,000	$	0	$	0	$	5,083,978

~~Liquidity and Capital Resources~~ 23

AsThe ofaccompanying ~~September~~consolidated financial ~~30,~~statements ~~2015~~have been prepared assuming that the Company will continue as a going concern, which contemplates the Company will ~~had~~need ~~cash~~to manage additional asset units under contract and/or ~~cash~~additional ~~equivalents~~financing ofto ~~$88~~fully implement its business plan,~~044~~ including continued growth and establishment of a stronger brand name of HAM’s asset management in the distressed asset sector. ~~The~~Management, in ~~increase~~the ordinary course of ~~$15~~business,~~062~~ inis ~~cash~~trying ~~and~~to ~~cash~~raise ~~equivalents~~additional capital through sales of common stock as well as seeking financing via equity or debt, or both from ~~$72~~third parties. There are no assurances that additional financing will be available on favorable terms,~~982~~ or at ~~December 31~~all. If additional financing is not available, ~~2014~~the ~~was~~Company ~~due~~will need to ~~net~~reduce, ~~cash~~defer ~~provided~~or bycancel ~~operating~~development ~~activities~~programs, planned ofinitiatives ~~$91~~and overhead expenditures. The failure to adequately fund its capital requirements could have a material adverse effect on the Company’s business,~~245~~ ~~and~~financial incondition ~~financing~~and ~~activities~~results of ~~$48~~operations. Moreover,~~817,~~ ~~offset~~the bysale ~~net~~of additional equity ~~cash~~securities ~~used~~to raise financing will result in ~~investing~~additional ~~activities~~dilution ofto ~~$125~~the Company’s stockholders,~~000~~ and incurring additional indebtedness could involve an increased debt service cash obligation, the imposition of covenants that restrict the Company operations or the Company’s ability to perform on its current debt service requirements. The consolidated financial statements do not include any adjustments that might be necessary if the Company is unable to continue as a going concern.

~~Net~~Off ~~cash~~Balance ~~provided~~Sheet byTransactions operating activities was $91,245 for the nine months ended September 30, 2015, compared to $560,701 net cash used in operating activities for the nine months ended September 30, 2014. The net cash provided by operating activities for the nine months ended September 30, 2015 was due to net loss of $1,303,796, adjusted primarily by the following: an increase of $1,026,050 in accrued and ~~other~~Related ~~liabilities,~~Matters an increase of $51,700 in deferred revenue, a decrease of $110,639 in accounts payable (specifically related to cash flows from operating and discussed further below), non cash capitalization of interest primarily in the note payable of $224,556 (discussed in note 9 of the consolidated financial statements) as well as a $125,000 notes receivable write off discussed below in investing activities, and $50,565 decrease in gross trade accounts receivable primarily attributable to the timing of revenue cash collections. The remaining immaterial variance is related to non cash depreciation and amortization.

~~The~~Other ~~$1,026,050~~than ~~increase~~operating leases discussed in ~~accrued~~Note ~~and~~14 ~~other liabilities is primarily related~~ to the ~~increase~~consolidated infinancial ~~deferred~~statements, ~~compensation~~there ~~and~~are ~~wages~~no ~~payable~~off-balance tosheet atransactions, ~~portion~~arrangements, ofobligations ~~the~~(including ~~management~~contingent ~~team~~obligations), ~~and~~or another ~~increase~~relationships inwith ~~accrued~~unconsolidated ~~interest.~~entities ~~The~~or ~~$51,700~~other ~~increase~~persons inthat ~~deferred~~have, ~~revenue~~or ismay have, a ~~short~~material ~~term~~effect ~~timing~~on ~~difference between~~financial ~~cash~~condition, ~~receipts~~changes ~~and~~in ~~the~~financial ~~Company’s~~condition, ~~revenue~~revenues ~~recognition~~or ~~for~~expenses, ~~its~~results ~~SaaS~~of ~~contract~~operations, ~~(as~~liquidity, capital ~~discussed~~expenditures inor ~~the~~capital ~~Company~~resources ~~Overview~~of ~~above)~~the Company.

On the balance sheet, accounts payable increased by $139,361 at September 30, 2015 from December 31, 2014. This is the result of the $250,000 increase in accounts payable directly related the receivership settlement discussed in Note 1 to the consolidated financial statements and included on the consolidated statements of cash flows as non cash supplemental information. The $250,000 receivership settlement is offset by a $110,639 decrease in accounts payable (specifically related to cash flows from operating) for the nine months ended September 30, 2015 and is primarily related to the overall cash flow management of the Company.

Net cash used in investing activities was $125,000 for the nine months ended September 30, 2015, compared to $700 net cash used in investing activities during the nine months ended September 30, 2014. The Company invested in notes receivable of $125,000 (investment was done in a $50,000 and $75,000 advance) in an affiliated company for working capital advances. The payments were made as a strategic investment in the affiliate as that affiliate provides revenue sourcing to the Company. As there is not a high probability of recollecting those proceeds advanced, the Company wrote off the notes receivable prior to September 30, 2015.

Net cash provided by financing activities was $48,817 for the nine months ended September 30, 2015, compared to net cash provided by financing activities of $469,716 for the nine months ended September 30, 2014. Financing activities for the nine months ended September 30, 2015 consisted primarily of $100,000 in proceeds from notes payable to related parties, offset by the $25,000 and $26,250 in principal payments on notes payable to related parties and subordinated debt, respectively.

As shown below, at September 30, 2015, our contractual cash obligations totaled approximately $3,878,387, all of which consisted of operating lease obligations and debt principal and accrued interest repayment.

	Payments due by December 31,
Contractual Obligations	2015		2016-2017		2018-2019		2020 & Thereafter		Total
Debt Obligations	$	1,525,382	$	2,347,461	$	0	$	0		$	3,872,843
Operating Lease Obligations	$	1,848	$	3,696	$	0	$	0		$	5,544
Total Contractual Cash Obligations	$	1,527,230	$	2,351,157	$	0	$	0		$	3,878,387

The accompanying consolidated financial statements have been prepared assuming that the Company will continue as a going concern, which contemplates the Company will need to manage additional asset units under contract and/or additional financing to fully implement its business plan, including continued growth and establishment of a stronger brand name of HAM’s asset management in the distressed asset sector. Management, in the ordinary course of business, is trying to raise additional capital through sales of common stock as well as seeking financing via equity or debt, or both from third parties. There are no assurances that additional financing will be available on favorable terms, or at all. If additional financing is not available, the Company will need to reduce, defer or cancel development programs, planned initiatives and overhead expenditures. The failure to adequately fund its capital requirements could have a material adverse effect on the Company’s business, financial condition and results of operations. Moreover, the sale of additional equity securities to raise financing will result in additional dilution to the Company’s stockholders, and incurring additional indebtedness could involve an increased debt service cash obligation, the imposition of covenants that restrict the Company operations or the Company’s ability to perform on its current debt service requirements. The consolidated financial statements do not include any adjustments that might be necessary if the Company is unable to continue as a going concern.

Off Balance Sheet Transactions and Related Matters

Other than operating leases discussed in Note 14 to the consolidated financial statements, there are no off-balance sheet transactions, arrangements, obligations (including contingent obligations), or other relationships with unconsolidated entities or other persons that have, or may have, a material effect on financial condition, changes in financial condition, revenues or expenses, results of operations, liquidity, capital expenditures or capital resources of the Company.

Item 3. Quantitative and Qualitative Disclosures About Market Risk.

Interest Rate Risk. Our business is highly leveraged and, accordingly, is sensitive to fluctuations in interest rates. Any significant increase in interest rates could have a material adverse effect on our financial condition and ability to continue as a going concern.

Item 4T. Controls and Procedures.

As of the end of the period covered by this report, our principal executive officer and principal financial officer, evaluated the effectiveness of our “disclosure controls and procedures,” as defined in Rule 13a-15(e) and 15d-15(e) under the Securities Exchange Act of 1934. Based on that evaluation, we concluded that, as of the date of the evaluation, our disclosure controls and procedures were effective to provide reasonable assurance that information required to be disclosed in our periodic filings under the Securities Exchange Act of 1934 is accumulated and communicated to management, including the officers, to allow timely decisions regarding required disclosures. It should be noted that a control system, no matter how well designed and operated, can provide only reasonable, not absolute, assurance that it will detect or uncover failures within the Company to disclose material information otherwise required to be set forth in the Company’s periodic reports.

During the period covered by this report, there were no changes in our internal control over financial reporting that have materially affected, or are reasonably likely to materially affect, the Company’s internal control over financial reporting.

Part II - Other Information

Item 1. Legal Proceedings

The Company and certain of its affiliates, officers and directors have been named as defendants in an action filed on December 12, 2011 in the 191st District Court of Dallas County, Texas. The Plaintiffs allege that the Company has misappropriated funds in connection with offerings of securities during 2010 and 2011. The complaint further alleges that Defendants engaged in fraudulent inducement, negligent misrepresentation, fraud, breach of fiduciary duty, negligence, breach of contract, unjust enrichment, conversion, violation of the Texas Securities Act, and civil conspiracy. The Plaintiffs amended their Petition on April 24, 2012 and dropped the conversion and civil conspiracy claims. The action seeks an injunction and a demand for accounting along with damages in the amount of $4,898,157. The Company has taken the position that the Plaintiff’s claims have no merit, and accordingly isdefended ~~defending~~ the matter vigorously. Defendants ~~have~~ filed a general denial of the claims as well as a Motion to Designate Responsible Third Parties whom Defendants ~~believe~~ believe are responsible for any damages Plaintiffs may have incurred. Defendants have also filed a Motion for Sanctions against the Plaintiffs and their counsel arguing, among other things, that (i) Plaintiffs’ claims are “judicially stopped” from moving forward by virtue of the fact that the same Plaintiffs previously filed suit against separate entities and parties with dramatically opposed and contradicting views and facts; (ii) Plaintiffs have asserted claims against Defendants without any basis in law or fact; and (iii) Plaintiffs have made accusations against Defendants that Plaintiffs know to be false. Additionally, ~~Defendants~~ Defendants have filed a no evidence Motion for Summary Judgment which was scheduled to be heard in October of 2012. The Plaintiffs ~~requested~~ requested and were granted a six month continuance on the hearing of that motion. The Plaintiffs have also filed a Motion to Stay the case pending the outcome of the Company’s lawsuit with the insurance companies which the Company has opposed. Initially the motion to stay was granted and Defendants moved for reconsideration. The parties were alerted that the court had reversed the Stay on appeal. The no evidence Motion for Summary Judgment was heard on August 9, 2013. Prior to the hearing, the Plaintiff’s ~~filed~~ filed a 3rd Amended Petition in which they dropped any claim of fraud including fraudulent inducement, fraud, conversion ~~and~~ and civil conspiracy and added a new “control person” claim which was not subject to the no evidence Motion for Summary Judgment heard on August 9, 2013. On September 25, 2013, Defendants no evidence Motion for Summary Judgment was granted in its entirety. Defendants subsequently filed a no evidence Motion for Summary Judgment on the final remaining “control person” claim which was heard before the court on October 21, 2013. On December 18, 2013 a final Order Granting Defendant’s Second No-Evidence Motion of Final Summary Judgment was signed. The Plaintiff’s subsequently filed a motion for new trial. Following a hearing, the Plaintiff’s motion for new trial was denied by operation of law. The Plaintiff’s Filed a Notice of ~~Appeal~~ Appeal on March 11, 2014. The Plaintiffs have requested multiple extensions to their time to file their brief on the Appeal. After ~~having~~ having multiple extensions granted, the Plaintiff’s requested that the Appeals court stay the Appeal pending the outcome of the Company’s approved settlement agreement with the court appointed Receiver for James G. Temme and Stewardship Fund, LLC, appointed by the Federal Court in the Eastern District of Texas. On September 16, 2014 the Sixth Appellate District Court of Appeals of Texas issued an order abating the Plaintiff’s appeal pending a final determination by the federal courts of an order issued by the federal district court in a separate action directing the Plaintiff’s, among others, not to further pursue this separate litigation. For administrative purposes, this case is abated and will be treated as closed. Any party may seek reinstatement by promptly filing a motion with the Sixth Appellate District Court of Appeals of Texas showing that the injunction or order of the federal court no longer restricts pursuit of this litigation and specifying what further action, if any, is required from the Court. On AsOctober ~~of the date of this filing~~30, 2015 Plaintiffs/Appellants ~~have~~ filed a Motion for Involuntary Dismissal with the Court of Appeals for the Sixth District of Texas at Texarkana, Texas asking that the court dismiss the case on the basis that the United States District Court, Eastern District of Texas, Sherman Division entered an order permanently barring all Stewardship Creditors from continuing and/or asserting or prosecuting any claims or causes of action against Halo. Because Appellants in this action fall within the definition of “Stewardship Creditors” they are barred from continuing to pursue this appeal thereby divesting the Court of Appeals for the Sixth District of Texas, Sherman Division, of jurisdiction over this appeal. On November 6, 2015, the court granted the above mentioned Involuntary Motion to Dismiss and on January 20, 2016 the final mandate was issued.

30The Company and certain of its affiliates, officers and directors were named as defendants in an insurance action filed on April 27, 2012 in the United States District Court for the Northern District of Texas. The Plaintiffs allege that it had no duty to indemnify the Company, its affiliates, officers or directors because the claims set forth in the lawsuit mentioned herein above were not covered by the insurance policy issued by Plaintiff in favor of Defendants. The action sought declaratory judgment that the Plaintiff had no duty to indemnify the Defendants pursuant to the insurance policy that Defendants purchased from Plaintiff. The Company took the position that Plaintiff’s claim had no merit, and defended the matter vigorously. Additionally, Defendants filed a counterclaim against the insurer alleging breach of contract, violation of the Texas Insurance Code and violation of the duty of good faith and fair dealing. On March 12, 2013, Plaintiff and Defendants entered into an agreement whereby Plaintiff’s and Defendant’s claims, are to be dismissed without prejudice while the underlying liability suit in the 191st District Court of Dallas County proceeds. An Agreed Motion to Dismiss Without Prejudice was filed on March 12, 2013, and the parties are awaiting the court’s entry of the Agreed Order of Dismissal Without Prejudice. The court has granted the Agreed Order of Dismissal Without Prejudice.

See Note 14 to the consolidated financial statements for more information.

Item 1A. Risk Factors

We will need additional financing to implement our business plan. The Company will need additional financing to fully implement its business plan in a manner that not only continues to expand an already established direct-to-consumer approach, but also allows the Company to establish a stronger brand name in all the areas in which it operates, including mortgage servicing and distressed asset sectors. In particular, the Company will need substantial financing to:

further develop its product and service lines and expand them into new markets;

expand its facilities, human resources, and infrastructure;

increase its marketing efforts and lead generation; and

expand its business into purchasing and servicing distressed asset portfolios.

There are no assurances that additional financing will be available on favorable terms, or at all. If additional financing is not available, the Company will need to reduce, defer or cancel development programs, planned initiatives and overhead expenditures. The failure to adequately fund its capital requirements could have a material adverse effect on the Company’s business, financial condition and results of operations. Moreover, the sale of additional equity securities to raise financing will result in additional dilution to the Company’s stockholders, and incurring additional indebtedness could involve the imposition of covenants that restrict the Company’s operations.

31Our products and services are subject to changes in applicable laws and government regulations. In the United States, we are regulated pursuant to laws applicable to businesses in general. And in some areas of our business, we are subject to specific laws regulating the availability of certain material related to, or to the obtaining of, personal information. Adverse developments in the legal or regulatory environment relating to the debt collection, mortgage servicing and mortgage origination industries in the United States could have a material adverse effect on our business, financial condition and operating results.

Our products and services are subject to changes in applicable laws and government regulations. In the United States, we are regulated pursuant to laws applicable to businesses in general. And in some areas of our business, we are subject to specific laws regulating the availability of certain material related to, or to the obtaining of, personal information. Adverse developments in the legal or regulatory environment relating to the debt collection, mortgage servicing and mortgage origination industries in the United States could have a material adverse effect on our business, financial condition and operating results. A number of legislative and regulatory proposals from the federal government and various state governments in the areas of debt collection, mortgage servicing, mortgage origination, consumer protection, advertising, and privacy, among others, have been adopted or are now under consideration. We are unable at this time to predict which, if any, of the proposals under consideration may be adopted and, with respect to proposals that have been or will be adopted, whether they will have a beneficial or an adverse effect on our business, financial condition and operating results.

For the mortgage origination and mortgage servicing industries in particular, legislation in the United States has been pervasive and is under constant review for amendment or expansion. Pursuant to such legislation, numerous federal, state and local departments and agencies have issued extensive rules and regulations, some of which carry substantial penalties for failure to comply. These laws and regulations increase the cost of doing business and, consequently, affect profitability. Since new legislation affecting the mortgage origination and mortgage servicing industries is commonplace and existing laws and regulations are frequently amended or reinterpreted, the company is unable to predict the future cost or impact of complying with these laws and regulations. However, the Company considers the cost of regulatory compliance a necessary and manageable part of its business. Further, the Company has been able to plan for and comply with new regulatory initiatives without materially altering its operating strategies.

Specific laws which affect HAM and HPA in particular are the following: The Secure and Fair Enforcement for Mortgage Licensing Act of 2008 (“S.A.F.E. Act”), the Fair Debt Collection Practices Act (“FDCPA”), and the Real Estate Settlement Procedures Act (“Regulation X” or “RESPA”). Currently, the Company believes it is fully compliant with each of these laws. The Company believes that these laws, as currently enacted, provide barriers to entry for potential competitors, by virtue of their respective bonding and licensing requirements, and the overall cost of compliance. The Company believes that HAM and HPA maintain a competitive advantage in the marketplace because of these barriers to entry.

In addition to the referenced federal laws and regulations, state mortgage origination and mortgage servicing laws and regulations also affect the HAM and HPA businesses, by providing further barriers to entry as well as additional compliance and enforcement procedures for our unlicensed, noncompliant competition. The Company believes it is currently compliant with all relevant state laws and regulations in the states in which the Company does business, however, if the relevant laws and regulations were to change in the states where the Company has its highest concentration of business, such change could have an adverse impact on the Company’s operating strategy and overall revenues.

We rely on key executive officers, and their knowledge of our business and technical expertise would be difficult to replace. We are highly dependent on our executive officers. If one or more of the Company’s senior executives or other key personnel are unable or unwilling to continue in their present positions, the Company may not be able to replace them easily or at all, and the Company’s business may be disrupted. Such failure could have a material adverse effect on the Company’s business, financial condition and results of operations.

We may never pay dividends to our common stockholders. The Company currently intends to retain its future earnings to support operations and to finance expansion and therefore the Company does not anticipate paying any cash dividends in the foreseeable future other than to holders of Halo Group preferred stock.

The declaration, payment and amount of any future dividends on common stock will be at the discretion of the Company’s Board of Directors, and will depend upon, among other things, earnings, financial condition, capital requirement, level of indebtedness and other considerations the Board of Directors considers relevant. There is no assurance that future dividends will be paid on common stock or, if dividends are paid, the amount thereof.

32Our common stock is quoted through the OTCPink, which may have an unfavorable impact on our stock price and liquidity. The Company’s common stock is quoted on the OTCPink marketplace, which is a significantly more limited market than the New York Stock Exchange or NASDAQ. The trading volume may be limited by the fact that many major institutional investment funds, including mutual funds, follow a policy of not investing in Over the Counter stocks and certain major brokerage firms restrict their brokers from recommending Over the Counter stock because they are considered speculative and volatile.

~~Our~~The ~~common~~trading ~~stock is~~volume ~~quoted~~of ~~through~~ the ~~OTCPink, which may have an unfavorable impact on our stock price and liquidity. The~~ Company’s common stock ishas ~~quoted~~been onand ~~the~~may ~~OTCPink~~continue ~~marketplace,~~to ~~which~~be islimited aand ~~significantly~~sporadic. ~~more~~As ~~limited~~a ~~market~~result, ~~than~~ the ~~New~~quoted ~~York~~price ~~Stock~~for ~~Exchange~~the ~~or NASDAQ.~~Company’s ~~The~~common ~~trading~~stock ~~volume~~on ~~may be limited by~~ the ~~fact~~OTCPink ~~that~~may ~~many~~not ~~major~~necessarily ~~institutional~~be ~~investment~~a ~~funds,~~reliable ~~including~~indicator ~~mutual funds, follow a policy~~ of ~~not~~its ~~investing~~fair inmarket ~~Bulletin Board stocks and certain major brokerage firms restrict their brokers from recommending Over the Counter stock because they are considered speculative and volatile~~value.

The trading volume of the Company’s common stock has been and may continue to be limited and sporadic. As a result, the quoted price for the Company’s common stock on the OTC Bulletin Board may not necessarily be a reliable indicator of its fair market value.26

Additionally, the securities of small capitalization companies may trade less frequently and in more limited volume than those of more established companies. The market for small capitalization companies is generally volatile, with wide price fluctuations not necessarily related to the operating performance of such companies.

Our common stock is subject to price volatility unrelated to our operations. The market price of the Company’s common stock could fluctuate substantially due to a variety of factors, including market perception of the Company’s ability to achieve its planned growth, operating results of it and other companies in the same industry, trading volume of the Company’s common stock, changes in general conditions in the economy and the financial markets or other developments affecting the Company or its competitors.

Our common stock is classified as a “penny stock.” Rule 3a51-1 of the Securities Exchange Act of 1934 establishes the definition of a “penny stock,” for purposes relevant to us, as any equity security that has a minimum bid price of less than $5.00 per share or with an exercise price of less than $5.00 per share, subject to a limited number of exceptions which are not available to us. It is likely that the Company’s common stock will be considered a penny stock for the immediately foreseeable future.

For any transactions involving a penny stock, unless exempt, the penny stock rules require that a broker or dealer approve a person’s account for transactions in penny stocks and the broker or dealer receive from the investor a written agreement to the transaction setting forth the identity and quantity of the penny stock to be purchased. In order to approve a person’s account for transactions in penny stocks, the broker or dealer must obtain financial information and investment experience and objectives of the person and make a reasonable determination that the transactions in penny stocks are suitable for that person and that person has sufficient knowledge and experience in financial matters to be capable of evaluating the risks of transactions in penny stocks.

The broker or dealer must also provide disclosures to its customers, prior to executing trades, about the risks of investing in penny stocks in both public offerings and in secondary trading in commissions payable to both the broker-dealer and the registered representative, and the rights and remedies available to an investor in cases of fraud in penny stock transactions.

Because of these regulations, broker-dealers may not wish to furnish the necessary paperwork and disclosures and/or may encounter difficulties in their attempt to buy or sell shares of the Company’s common stock, which may in turn affect the ability of Company stockholders to sell their shares.

Accordingly, this classification severely and adversely affects any market liquidity for the Company’s common stock, and subjects the shares to certain risks associated with trading in penny stocks. These risks include difficulty for investors in purchasing or disposing of shares, difficulty in obtaining accurate bid and ask quotations, difficulty in establishing the market value of the shares, and a lack of securities analyst coverage.

We may continue to encounter substantial competition in our business. The Company believes that existing and new competitors will continue to improve their products and services, as well as introduce new products and services with competitive price and performance characteristics. The Company expects that it must continue to innovate, and to invest in product development and productivity improvements, to compete effectively in the several markets in which the Company participates. Halo’s competitors could develop a more efficient product or service or undertake more aggressive and costly marketing campaigns than those implemented by the Company, which could adversely affect the Company’s marketing strategies and could have a material adverse effect on the Company’s business, financial condition and results of operations.

Important factors affecting the Company’s current ability to compete successfully include:

lead generation and marketing costs;

service delivery protocols;

branded name advertising; and

product and service pricing.

In periods of reduced demand for the Company’s products and services, the Company can either choose to maintain market share by reducing product service pricing to meet the competition or maintain its product and service pricing, which would likely sacrifice market share. Sales and overall profitability would be reduced in either case. In addition, there can be no assurance that additional competitors will not enter the Company’s existing markets, or that the Company will be able to continue to compete successfully against its competition.

We may not successfully manage our growth. Our success will depend upon the expansion of our operations and the effective management of our growth, which will place significant strain on our management and our administrative, operational and financial resources. To manage this growth, we may need to expand our facilities, augment our operational, financial and management systems and hire and train additional qualified personnel. If we are unable to manage our growth effectively, our business would be harmed.

Item 2. Unregistered Sales of Equity Securities and Use of Proceeds

None

Item 3. Defaults Upon Senior Securities

None

Item 4. Mine Safety Disclosures

None

Item 5. Other Information

~~Mr. Robbie Hicks, Chief Accounting Officer and Principal Financial Officer, tendered his resignation effective November 6, 2015.~~None

On November 6, 2015, Mr. Robert Boyce, Chief Operating Officer, resigned his position as an officer but will continue his employment with the Company in the role of Vice President of Operations.

Item 6. Exhibits

31.1 Rule 13a-14(a) Certification of the Principal Executive Officer.

31.1	Rule 13a-14(a) Certification of the Principal Executive Officer.

31.2	Rule 13a-14(a) Certification of the Principal Financial Officer.

32	Section 1350 Certifications.

101.INS	XBRL Instance Document

101.SCH	XBRL Schema Document

101.CAL	XBRL Calculation Linkbase Document

101.DEF	XBRL Definition Linkbase Document

101.LAB	XBRL Label Linkbase Document

101.PRE	XBRL Presentation Linkbase Document

~~31.2 Rule 13a-14(a) Certification of the Principal Financial Officer.~~28

32 Section 1350 Certifications.

SIGNATURES

In accordance with the requirements of the Securities Exchange Act of 1934, the Registrant caused this report to be signed on its behalf by the undersigned thereunto duly authorized.

Date: November 6, 2015	By:	/s/ Brandon Cade Thompson
Date: May 16, 2016	By:	/s/ Brandon Cade Thompson
	Brandon Cade Thompson
	Chief Executive Officer
	(Principal Executive Officer)
Date: November 6, 2015	By:	/s/ Robbie Hicks
Date: May 16, 2016	By:	/s/ Paul Williams
	Robbie Hicks
	Paul Williams
	Chief Accounting Officer
	Chief Financial Officer
	(Principal Financial Officer)

3529

Filing Compare · Halo Companies, Inc.