UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10-Q

(Mark One)

x QUARTERLY REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended ~~September~~March 3031, ~~2016~~2017

¨ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the Transition Period from __________ to ___________

Commission File No.: 1-33110

DEBT RESOLVE, INC.

(Exact name of registrant as specified in its charter)

Delaware		33-0889197
(State or other jurisdiction of incorporation or organization)		(I.R.S. Employer Identification No.)

1133 Westchester Ave., Suite S-223White Plains, New York		10604
1133 Westchester Ave., Suite S-223 White Plains, New York		10604
(Address of principal executive offices)		(Zip Code)

(914) 949-5500

(Issuer'’s 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 registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes ¨ No x

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 No ¨

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, or a smaller reporting company, or an emerging growth company. See ~~the~~ definitions of "“large accelerated filer",” "“accelerated filer",” ~~and "~~“smaller reporting company",” and “emerging growth company” in Rule 12b-2 of the Exchange Act.

Large accelerated filer ¨ Accelerated filer ¨ Non-accelerated filer ¨ Smaller reporting company x Emerging growth company ¨

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ¨

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12 b-2 of the Exchange Act). Yes ¨ No x

APPLICABLE ONLY TO ISSUERS INVOLVED IN BANKRUPTCY

PROCEEDINGS DURING THE PRECEDING FIVE YEARS:

Indicate by check mark whether the registrant has filed all documents and reports required to be filed by Sections 12, 13 or 15(d) of the Securities Exchange Act of 1934 subsequent to the distribution of securities under a plan confirmed by a court. Yes ¨ No ¨

As of ~~November~~May 1815, ~~2016~~2017, ~~115~~125,~~277~~700,~~206~~152 shares of the issuer'’s Common Stock were outstanding.

DEBT RESOLVE, INC.

TABLE OF CONTENTS

		Page
PART I. FINANCIAL INFORMATION
PART I. FINANCIAL INFORMATION
	ITEM 1.	Financial Statements		3
Item 1.	Financial Statements		3
		Condensed consolidated balance sheets as of March 31, 2017 (unaudited) and December 31, 2016		3
	Condensed Consolidated Balance Sheets at September 30, 2016 (unaudited) and December 31, 2015		3
		Condensed consolidated statements of operations for the three months ended March 31, 2017 and 2016 (unaudited)		4
	Condensed Consolidated Statements of Operations for the Three and Nine Months Ended September 30, 2016 and 2015 (unaudited)		4
		Condensed consolidated statement of stockholders’ deficit for the three months ended March 31, 2017 (unaudited)		5
	Condensed Consolidated Statement of Stockholders' Deficiency from January 1, 2016 through September 30, 2016 (unaudited)		5
		Condensed consolidated statements of cash flows for the three months ended March 31, 2017 and 2016 (unaudited)		6
	Condensed Consolidated Statements of Cash Flows for the Nine Months Ended September 30, 2016 and 2015 (unaudited)		6
		Notes to condensed consolidated financial statements (unaudited)		7
	Notes to Condensed Consolidated Financial Statements (unaudited)		7
	ITEM 2.	Management’s Discussion and Analysis of Financial Condition and Results of Operations		20
Item 2.	Management's Discussion and Analysis of Financial Condition and Results of Operations		23
	ITEM 3.	Quantitative and Qualitative Disclosures about Market Risk		25
Item 3.	Quantitative and Qualitative Disclosures about Market Risk		29
	ITEM 4.	Controls and Procedures		25
Item 4.	Controls and Procedures		29
PART II. OTHER INFORMATION
PART II. OTHER INFORMATION
	ITEM 1.	Legal Proceedings		27
Item 1.	Legal Proceedings		30
	ITEM 1A.	Risk Factors		27
Item 1A.	Risk Factors		30
	ITEM 2.	Unregistered Sales of Equity Securities and Use of Proceeds		27
Item 2.	Unregistered Sales of Equity Securities and Use of Proceeds		30
	ITEM 3.	Defaults Upon Senior Securities		27
Item 3.	Defaults Upon Senior Securities		30
	ITEM 4.	Mine Safety Disclosures		28
Item 4.	Mine Safety Disclosures		31
	ITEM 5.	Other Information		28
Item 5.	Other Information		31
	ITEM 6.	Exhibits		29
Item 6.	Exhibits		32
	SIGNATURES			30
Signatures			33
CERTIFICATIONS

PART I – FINANCIAL INFORMATION

ITEM 1. FINANCIAL STATEMENTS

DEBT RESOLVE, INC.
CONDENSED CONSOLIDATED BALANCE SHEETS
	September 30,			December 31,
	March 31,			December 31,
	2016			2015
	2017			2016
	(unaudited)			~~(restated)~~
ASSETS
Current assets:
Cash	$	~~135~~634,~~050~~067		$	30593,~~480~~101
Accounts receivable, net		13,~~383~~748,~~987~~104			~~954~~3,~~588~~913,945
Prepaid expenses		1835,~~811~~356			3633,~~893~~054
Total current assets		14,~~537~~417,~~848~~527			14,~~021~~540,~~961~~100
Long term assets:
Accounts receivable, net		3,~~060~~822,~~190~~147			23,~~508~~060,~~573~~190
Total assets	$	48,~~598~~239,~~038~~674		$	37,~~530~~600,~~534~~290
LIABILITIES AND STOCKHOLDERS' DEFICIENCY
LIABILITIES AND STOCKHOLDERS’ DEFICIENCY
Current liabilities:
Accounts payable and accrued liabilities	$	4,~~079~~447,~~424~~913		$	34,~~480~~178,~~580~~384
Due to shareholders		~~287~~292,~~747~~059			~~242~~303,~~741~~721
Deferred revenue		1,~~131~~755,~~221~~811			1,~~260~~442,~~137~~949
Due to factor		36,~~666~~525,~~931~~004			26,~~442~~162,~~935~~722
Notes payable, current portion		~~699~~672,~~469~~697			~~536~~686,~~132~~083
Notes payable-related party, net of unamortized discount of $1,814 and $6,105 as of September 30, 2016 and December 31, 2015, respectively		783,907			789,616
Notes payable-related party, net of unamortized discount of $40,072 and $47,598 as of March 31, 2017 and December 31, 2016, respectively		835,649			828,123
Convertible Short-term notes, net of deferred debt discount of $76,269 and $23,410 as of September 30, 2016 and December 31, 2015, respectively		1,672,231			2,034,590
Convertible Short-term notes, net of deferred debt discount of $24,184 and $39,667 as of March 31, 2017 and December 31, 2016, respectively		1,426,316			1,433,833
Lines of credit, related parties		~~484~~434,~~336~~338			~~548~~459,~~893~~337
Derivative liability		-			-
Total current liabilities		16,389,787			15,495,152
Total current liabilities		12,805,266			11,335,624
Long term debt:
Notes payable, related party, net of unamortized debt discount of $60,822 and $3,450 as of September 30, 2016 and December 31, 2015, respectively		359,178			136,550
Notes payable, related party, net of unamortized debt discount of $42,123 and $51,370 as of March 31, 2017 and December 31, 2016, respectively		287,877			278,630
Convertible long-term notes, net of deferred debt discount of $195,139 and $73,244 as of September 30, 2016 and December 31, 2015, respectively		856,361			251,756
Convertible long-term notes, net of deferred debt discount of $125,651 and $162,841 as of March 31, 2017 and December 31, 2016, respectively		1,078,849			1,113,659
Total liabilities		1417,~~020~~756,~~805~~513			1116,~~723~~887,~~930~~441
Stockholders' deficiency:
Commitments and contingencies		-			-
Preferred stock, $0.001 par value; 10,000,000 shares authorized
Stockholders’ deficiency:
Series A Convertible Preferred stock, $0.001 par value; 5,000,000 shares designated; -0- shares issued and outstanding as of September 30, 2016 and December 31, 2015		-			-
Preferred stock, $0.001 par value; 10,000,000 shares authorized Series A Convertible Preferred stock, $0.001 par value; 5,000,000 shares designated; -0- shares issued and outstanding as of March 31, 2017 and December 31, 2016		-			-
Common stock, $0.001 par value, 500,000,000 shares authorized; 115,277,206 and 104,612,082 shares issued and outstanding as of September 30, 2016 and December 31, 2015, respectively		115,277			104,612
Common stock, $0.001 par value, 500,000,000 shares authorized; 125,700,152 and 121,264,809 shares issued and outstanding as of March 31, 2017 and December 31, 2016, respectively		125,700			121,265
Additional paid in capital		67,~~571~~864,~~855~~482			6667,~~916~~736,~~656~~961
Accumulated deficit		(76,~~395~~891,~~646~~793	)		(7476,~~807~~585,~~693~~871	)
Stockholders' deficiency attributable to Debt Resolve, Inc.		(8,708,514	)		(7,786,425	)
Stockholders’ deficiency attributable to Debt Resolve, Inc.		(8,901,611	)		(8,727,645	)
Non-controlling interest		(~~714~~615,~~253~~228	)		(~~406~~559,~~971~~506	)
Total stockholders' deficiency		(9,422,767	)		(8,193,396	)
Total stockholders’ deficiency		(9,516,839	)		(9,287,151	)
Total liabilities and stockholders' deficiency	$	4,598,038		$	3,530,534
Total liabilities and stockholders’ deficiency	$	8,239,674		$	7,600,290

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

Table of Contents

DEBT RESOLVE, INC.
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(unaudited)
	Three months ended September 30,						Nine months ended September 30,
	Three months ended March 31,
	2016			2015			2016			2015
	2017			2016
Revenues:	$	12,~~336~~161,~~870~~374		$	2657,~~242,686~~644		$	~~2,342,344~~		$	~~4,152,453~~
Costs and expenses:
Payroll, payroll taxes, penalties and related expenses		~~598~~649,~~941~~131			~~640~~314,~~334~~654			~~1,214,507~~			~~1,462,792~~
Selling and marketing expenses		~~262~~386,~~562~~672			~~636~~124,~~280~~500			~~387,062~~			~~1,562,880~~
General and administrative expenses		~~483~~776,~~783~~017			~~445~~741,~~399~~548			~~1,683,916~~			~~945,161~~
Total costs and expenses		1,~~345~~811,~~286~~820			1,~~722~~180,~~013~~702			~~3,285,485~~			~~3,970,833~~
(Loss) income from operations		(8,416	)		520,673			(943,141	)		181,620
Income (loss) from operations		349,554			(523,058	)
Other income (expense):
(Loss) gain on change in fair value of derivative liabilities		(122,901	)		(1,238,479	)		30,317			(897,648	)
Gain on change in fair value of derivative liabilities		-			(4,240	)
Gain on settlement of debt		-			-			-			650,319
Interest expense		(435,279	)		(251,709	)
Interest expense		(296,582	)		(485,198	)		(745,531	)		(1,133,999	)
Amortization of debt discounts		(69,448	)		(30,239	)
Amortization of debt discounts		(69,545	)		(24,089	)		(152,555	)		(66,065	)
Total other income (expense)		(504,727	)		(286,188	)
Total other income (expense)		(489,028	)		(1,747,766	)		(867,769	)		(1,447,393	)
Net loss before provision for income taxes		(155,173	)		(809,246	)
Net loss before provision for income taxes		(497,444	)		(1,227,093	)		(1,810,910	)		(1,265,773	)
Income tax (benefit)		-			-
Income tax (benefit)		-			-			-			-
Net loss		(155,173	)		(809,246	)
Net loss		(497,444	)		(1,227,093	)		(1,810,910	)		(1,265,773	)
Net (income) loss attributable to non-controlling interest		(150,749	)		185,529
Net income (loss) attributable to non-controlling interest		(61,161	)		(204,610	)		222,957			(52,352	)
NET LOSS ATTRIBUTABLE TO DEBT RESOLVE, INC.	$	(305,922	)	$	(623,717	)
NET LOSS ATTRIBUTABLE TO DEBT RESOLVE, INC.	$	(558,605	)	$	(1,431,703	)	$	(1,587,953	)	$	(1,318,125	)
Net loss per common share -basic and diluted	$	(0.00	)	$	(0.01	)
Net loss per common share -basic and diluted	$	(0.01	)	$	(0.01	)	$	(0.02	)	$	(0.01	)
Weighted average number of common shares outstanding, basic and diluted		123,220,079			104,612,082
Weighted average number of common shares outstanding, basic and diluted		107,553,862			98,187,082			105,599,833			98,187,082

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

Table of Contents

DEBT RESOLVE, INC.
CONDENSED CONSOLIDATED STATEMENT OF STOCKHOLDERS' DEFICIENCY
CONDENSED CONSOLIDATED STATEMENT OF SHAREHOLDERS’ DEFICIENCY
NINE MONTHS ENDED SEPTEMBER 30, 2016
THREE MONTHS ENDED MARCH 31, 2017
					Additional					Non-
	Common stock				Paid In		Accumulated			~~Non-~~controlling
	Shares		Amount		Capital		Deficit			Interest			Total
Balance, December 31, 2015		104,612,082	$	104,612	$	66,916,656	$	(74,807,693	)	$	(406,971	)	$	(8,193,396	)
Balance, December 31, 2016		121,264,809	$	121,265	$	67,736,961	$	(76,585,871	)	$	(559,506	)	$	(9,287,151	)
Common shares issued for services rendered		665,124		665		11,308		-			-			11,973
Common shares issued upon in conversion of notes payable and accrued interest		3,685,343		3,685		106,080		-			-			109,765
Common shares issued as officer compensation		5,000,000		5,000		95,000		-			-			100,000
Common stock issued for services		750,000		750		12,000		-			-			12,750
Common shares issued to non-controlling interest as compensation		5,000,000		5,000		95,000		-			-			100,000
Fair value of vesting options issued to employees for services		-		-		9,441		-			-			9,441
Beneficial conversion feature related to convertible notes		-		-		22,167		-			-			22,167
Capital withdrawal by non-controlling interest		-		-		-		-			(206,471	)		(206,471	)
Fair value of common stock warrants issued for services		-		-		1,860		-			-			1,860
Net loss		-		-		-		(305,922	)		150,749			(155,173	)
Fair value of preferred stock warrants issued for services		-		-		6,346		-			-			6,346
Balance, March 31, 2017 (unaudited)		125,700,152	$	125,700	$	67,864,482	$	(76,891,793	)	$	(615,228	)	$	(9,516,839	)
Fair value of warrant modifications		-				37,447		-			-			37,447
Fair value of vesting options issued to employees for services		-		-		24,021		-			-			24,021
Reclassification of fair value of derivative liability to equity upon debt modification		-		-		327,905		-			-			327,905
Fair value of debt modifications due to loan extensions		-		-		34,145		-			-			34,145
Capital withdrawal by non-controlling interest		-		-		-		-			(84,325	)		(84,325	)
Net loss		-		-		-		(1,587,953	)		(222,957	)		(1,810,910	)
Balance, September 30, 2016 (unaudited)		115,277,206	$	115,277	$	67,571,855	$	(76,395,646	)	$	(714,253	)	$	(9,422,767	)

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

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DEBT RESOLVE, INC.
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(unaudited)
	Nine months ended September 30,
	Three months ended March 31,
	2016			2015
	2017			2016
CASH FLOWS FROM OPERATING ACTIVITIES:
Net loss	$	(1155,~~810,910~~173	)	$	(1809,~~265,773~~246	)
Adjustments to reconcile net loss to net cash provided by(used in) operating activities:
Amortization of debt discounts		~~152~~69,~~555~~448			6630,~~065~~239
Bad debts		~~274~~365,~~085~~210			~~142~~216,~~974~~086
Stock based compensation		~~244~~22,~~200~~191			~~125~~46,~~257~~721
Change in fair value of derivative liability		~~(30,317~~-	)		~~897~~4,~~648~~240
Loss on warrant modifications		37,447			-
Los on debt modification		34,145			-
Gain on settlement of debt		-			(650,319	)
Changes in operating assets and liabilities:
Accounts receivable		(~~126~~961,~~400~~326	)		(1236,~~641,442~~820	)
Prepaid expenses		18(2,~~082~~302	)		~~(13,505~~45	)
Accounts payable and accrued liabilities		~~748~~284,~~843~~292			~~326~~248,~~642~~627
Deferred revenue		~~(128~~312,~~916~~862	)		1(111,~~173,262~~776	)
Net cash used in operating activities		(~~587~~64,~~186~~798	)		(~~839~~138,~~191~~244	)
CASH FLOWS FROM INVESTING ACTIVITIES:		-			-
CASH FLOWS FROM FINANCING ACTIVITIES:
Net proceeds from factor		95,295			-
Net proceeds (repayments) from shareholders		(11,662	)		32,565
Net proceeds (repayments) from shareholders		45,006			(4,921	)
Net proceeds (repayments) to factor		362,282			(109,104	)
Distributed capital to non-controlling interest		(84,325	)		-
Proceeds from convertible notes		-			72,000
Proceeds from short term notes		163,337			100,000
Net repayments from line of credit		(24,999	)		(16,557	)
Proceeds from short term notes, related party		130,443			485,421
Repayments of short term notes		(13,386	)		-
Repayments of short term notes		-			(37,500	)
Proceeds from long term notes		-			143,109
Proceeds from long term notes		342,000			350,000
Distributed capital to non-controlling interest		(206,471	)		-
Proceeds from long term notes, related party		-			70,000
Net cash provided by financing activities		105,764			122,013
Net cash provided by financing activities		691,756			963,000
Net increase (decrease) in cash and cash equivalents		40,966			(16,231	)
Net increase in cash and cash equivalents		104,570			123,809
Cash at beginning of period		593,101			30,480
Cash at beginning of period		30,480			55,605
Cash at end of period	$	634,067		$	14,249
Cash at end of period	$	135,050		$	179,414
Supplemental Disclosures of Cash Flow Information:
Cash paid during period for interest	$	209,~~020~~300		$	216,~~800~~849
Cash paid during period for taxes	$	-		$	-
Non-cash financing and investing transactions:
Beneficial conversion feature on convertible notes	$	~~22,167~~-		$	777,~~458~~124
Convertible notes issued for settlement of accounts payable	$	~~75,000~~-		$	-30,000
Convertible note issued for settlement of compensation	$	75,000		$	-
Reclassification on non-recourse financing agreement to full recourse agreement	$	-		$	1,128,701
Reclassification of derivative liability to equity upon debt modification	$	327,905		$	-
Common stock issued in settlement of convertible notes and accrued interest	$	109,765		$	-
Reclassification on non-recourse financing agreement to full recourse agreement	$	1,128,701		$	-

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

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DEBT RESOLVE, INC.

NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

~~SEPTEMBER~~MARCH 3031, ~~2016~~2017

NOTE 1 – BASIS AND BUSINESS PRESENTATION

Debt Resolve, Inc. (the "“Company"”) was incorporated under the laws of the State of Delaware on April 21, 1997. The Company offers its service as a Software-as-a-Service (SaaS) model, enabling clients to introduce this collection or payment software option with no modifications to their existing collections computer systems. Its products capitalize on using the Internet as a tool for communication, resolution, settlement and payment of delinquent or defaulted consumer debt and as part of a complete accounts receivable management solution for consumer creditors.

In December 2014, the Company, jointly with LSH, LLC, organized Progress Advocates LLC, a Delaware limited liability company for the purpose to provide services in the student loan document preparation industry with ownership interests of 51% and 49% for the Company and LSH, LLC, respectively.

In February 2016, the Company, jointly with Patient Online Services, LLC, organized Payment Resolution Systems LLC, a Delaware limited liability company for the purpose of assisting Medical Groups and Hospitals in the online negotiation and settlement of delinquent accounts, with ownership interests of 51% and 49% for the Company and Patient Online Services, LLC, respectively.

In May 2016, the Company, jointly with Hutton Ventures LLC, organized Student Loan Care LLC, a Delaware limited liability company for the purpose of providing document preparation services for holders of Federal Direct Student Loans, with ownership interests of 51% and 49% for the Company and Hutton Ventures LLC, respectively.

The Company operates Payment Resolution Systems within Debt Resolve, Inc., whereas Progress Advocates LLC and Student Loan Care LLC operate as independent subsidiaries.

Basis of Presentation

These unaudited condensed consolidated financial statements have been prepared in accordance with the instructions to the Form 10-Q and Article 10 of Regulation S-X, and therefore, do not include all the information necessary for a fair presentation of financial position, results of operations and cash flows in conformity with generally accepted accounting principles.

In the opinion of management, all adjustments (consisting of normal recurring accruals) considered necessary for fair presentation have been included. Operating results for the three ~~and nine~~ months ended ~~September~~March 3031, ~~2016~~2017 are not necessarily indicative of the results that may be expected for the fiscal year ended December 31, ~~2016~~2017. The unaudited condensed financial statements should be read in conjunction with the consolidated December 31, ~~2015~~2016 financial statements and footnotes thereto included in the Company's Annual Report on Form 10-K filed with the Securities and Exchange Commission (the "SEC").

The consolidated financial statements include the accounts of the Company and its majority-owned ~~subsidiary~~subsidiaries. All significant inter-company transactions and balances have been eliminated in consolidation. The non-controlling interest represents the minority owners' share of its net operating results.

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DEBT RESOLVE, INC.

NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

~~SEPTEMBER~~MARCH 3031, ~~2016~~2017

NOTE 2 – SIGNIFICANT ACCOUNTING POLICIES

A summary of the significant accounting policies applied in the presentation of the accompanying unaudited condensed consolidated financial statements follows:

Restatement

During the preparation of its financial statements for the quarter ended September 30, 2016, the Company identified errors in the presentation of our Accounts Receivable reported as of December 31, 2015. Based on our reassessment of relevant accounting guidelines, we have corrected the error and characterized a portion of Accounts Receivable, as a long term asset, rather than current asset. The effect of these adjustments is a reclassification of $2,508,573 of reported accounts receivable as a long term asset. There was no change to any other asset or liability accounts. There was no effect on the Statements of Stockholders’ Deficiency, Operations or Cash Flows.

The following tables show the principal financial statement line items originally reported and restatement adjustments as of December 31, 2015:

	As Reported		Adjustments			As Restated
Accounts receivable, current	$	3,463,161	$	(2,508,573	)	$	954,588
Accounts receivable, long term		-		2,508,573			2,508,573

The above accounts receivable is reported, net of an allowance for doubtful accounts of $600,000.

Revenue Recognition

In recognition of the principles expressed in Accounting Standards Codification subtopic 605-10, Revenue should not be recognized until it is realized or realizable and earned, and given the element of doubt associated with collectability of an agreed settlement on past due debt, the Company postpones recognition of all contingent revenue until the client receives payment from the debtor. As is required by SAB 104, revenues are considered to have been earned when the Company has substantially accomplished the agreed-upon deliverables to be entitled to payment by the client. For most current active clients, these deliverables consist of the successful collection of past due debts using the Company'’s system and/or, for clients under a flat fee arrangement, the successful availability of the Company'’s system to its customers.

Revenues for the preparation of student loan documentation are earned when the Company has substantially accomplished the agreed-upon deliverables to be entitled to payment by the client. For most current active clients, these deliverables consist of the completed, delivered and accepted student loan package ~~by the Department of Education and subsequent yearly re-certifications to DoE~~. The Company may sell its products separately or in various bundles that include multiple elements such as initial ~~fees~~application, monitoring, ~~re-certification,~~ and other services.

The Company also earns revenue from collection agencies, healthcare providers and lenders that implemented our online system. The Company'’s current contracts provide for revenue based on a percentage of the amount of debt collected, a fee per settlement or through a flat monthly fee. Although other revenue models have been proposed, most revenue earned to date has been determined using these methods, and such revenue is recognized when the settlement amount of debt is collected by the client or at the beginning of the month for a flat fee. While the percent of debt collected will continue to be a revenue recognition method going forward, other payment models are also being offered to clients. Dependent upon the structure of future contracts, revenue may be derived from a combination of set up fees or flat monthly or annual fees with transaction fees upon debt settlement, fees per account loaded or fees per settlement.

Payment Resolution Systems, the Company’s 51% owned subsidiary, works as an extended business office to medical groups around the U.S. Revenue is earned in this business by the online negotiations and collection of group’s accounts receivable and paid via a service fee.

Revenues for set-up fees, percentage contingent collection fees, fixed settlement fees, monthly fees, etc. are accounted for as Multiple-Element Arrangements under ASC 605-10 which incorporates Accounting Standards Codification subtopic 605-25, Multiple-Element Arrangements (“ASC 605-25”). ASC 605-25 addresses accounting for arrangements that may involve the delivery or performance of multiple products, services and/or rights to use assets.

The Company defers any revenue for which the product or service has not been delivered or is subject to refund until such time that the Company and the customer jointly determine that the product has been delivered or no refund will be required. At March 31, 2017 and December 31, 2016, the Company had deferred revenues of $1,755,811 and $1,442,949, respectively.

Estimates

The preparation of the financial statements in conformity with generally accepted accounting principles requires management to make estimates and assumptions that affect certain reported amounts of assets and liabilities, revenues and expenses and certain disclosures. The most significant estimates are those used in determination of the carrying value of accounts receivable, revenue recognition and stock compensation. Accordingly, actual results could differ from those estimates.

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DEBT RESOLVE, INC.

NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

~~SEPTEMBER~~MARCH 3031, ~~2016~~2017

Payment Resolution Systems, the Company's 51% owned subsidiary, works as an extended business office to medical groups around the U.S. Revenue is earned in this business by the online negotiations and collection of group's accounts receivable and paid via a service fee.

Revenues for set-up fees, percentage contingent collection fees, fixed settlement fees, monthly fees, etc. are accounted for as Multiple-Element Arrangements under ASC 605-10 which incorporates Accounting Standards Codification subtopic 605-25, Multiple-Element Arrangements ("ASC 605-25"). ASC 605-25 addresses accounting for arrangements that may involve the delivery or performance of multiple products, services and/or rights to use assets.

The Company defers any revenue for which the product or service has not been delivered or is subject to refund until such time that the Company and the customer jointly determine that the product has been delivered or no refund will be required. At September 30, 2016 and December 31, 2015, the Company had deferred revenues of $1,131,221 and $1,260,137, respectively

Estimates

The preparation of the financial statements in conformity with generally accepted accounting principles requires management to make estimates and assumptions that affect certain reported amounts of assets and liabilities, revenues and expenses and certain disclosures. The most significant estimates are those used in determination of the carrying value of accounts receivable, revenue recognition, derivative liabilities and stock compensation. Accordingly, actual results could differ from those estimates.

Concentrations and Credit Risk

The Company’s ~~extends~~financial ~~credit~~instruments tothat ~~large,~~are ~~mid-size~~exposed ~~and~~to ~~small~~a ~~companies~~concentration ~~for the use~~ of ~~its~~credit ~~software~~risk ~~solutions~~are ~~along~~cash ~~with customers in the student loan industry. At September 30, 2016~~ and ~~December 31, 2015, the Company did not have an~~ accounts receivable ~~concentration and no sales concentrations for the three and nine months ended September 30, 2016 and 2015~~.

Generally, the Company’s cash and cash equivalents in non-interest-bearing accounts may exceed FDIC insurance limits. The financial stability of these institutions is periodically reviewed by senior management.

The Company extends credit to large, mid-size and small companies for collection services. The Company did not have a concentration in receivables in 2017 or 2016. The Company does not generally require collateral or other security to support customer receivables. Accounts receivable are carried at their estimated collectible amounts. Accounts receivable are periodically evaluated for collectability and the allowance for doubtful accounts is adjusted accordingly. Management determines collectability based on their experience and knowledge of the customers. As of March 31, 2017 and December 31, 2016, allowance for doubtful accounts was $1,689,064 and $1,622,208, respectively.

The Company has no significant off-balance-sheet concentrations of credit risk such as foreign exchange contracts, options contracts or other foreign hedging arrangements.

Net Loss per Common Share, basic and diluted

The Company computes earnings (loss) per share under Accounting Standards Codification subtopic 260-10, Earnings Per Share ("“ASC 260-10"”). Net loss per common share is computed by dividing net loss by the weighted average number of shares of common stock outstanding during the year. Diluted earnings per share, if presented, would include the dilution that would occur upon the exercise or conversion of all potentially dilutive securities into common stock using the "“treasury stock"” and/or "“if converted"” methods as applicable.

The computation of basic and diluted income (loss) per share as of ~~September~~March 3031, 2017 and 2016 excludes potentially dilutive securities when their inclusion would be anti-dilutive, or if their exercise prices were greater than the average market price of the common stock during the period.

Potentially dilutive securities asexcluded offrom ~~September~~the ~~30,~~computation ~~2016~~of basic and ~~2015~~diluted net loss per share are as follows:

	September 30,2016		September 30,2015
	March 31, 2017		March 31, 2016
Convertible notes payable		6358,~~978~~228,077		4245,~~555~~095,000
Preferred stock		-		6,425,000
Options to purchase common stock		17,225,000		17,592,434
Options to purchase common stock		18,742,434		15,342,434
Warrants to purchase common stock		98,375,000		72,400,000
Warrants to purchase common stock		104,575,000		73,738,000
Warrants to purchase Series A preferred stock		25,645,000		25,245,000
Warrants to purchase Series A preferred stock		25,645,000		19,885,000
Totals		199,473,077		160,332,434
Totals		212,940,511		157,945,434

Stock-based compensation

The Company measures the cost of services received in exchange for an award of equity instruments based on the fair value of the award. For employees and directors, the fair value of the award is measured on the grant date and for non-employees, the fair value of the award is generally re-measured on vesting dates and interim financial reporting dates until the service period is complete. The fair value amount is then recognized over the period during which services are required to be provided in exchange for the award, usually the vesting period. Stock-based compensation expense is recorded by the Company in the same expense classifications in the statements of operations, as if such amounts were paid in cash. As of March 31, 2017, there were outstanding stock options to purchase 17,225,000 shares of common stock, 13,991,667 shares of which were vested.

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DEBT RESOLVE, INC.

NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

~~SEPTEMBER~~MARCH 3031, ~~2016~~ 2017

Reclassification

Certain reclassifications have been made to prior period's data to conform to the current period's presentation. These reclassifications had no effect on reported income or losses.

Stock-based compensation

The Company measures the cost of services received in exchange for an award of equity instruments based on the fair value of the award. For employees and directors, the fair value of the award is measured on the grant date and for non-employees, the fair value of the award is generally re-measured on vesting dates and interim financial reporting dates until the service period is complete. The fair value amount is then recognized over the period during which services are required to be provided in exchange for the award, usually the vesting period. Stock-based compensation expense is recorded by the Company in the same expense classifications in the statements of operations, as if such amounts were paid in cash. As of September 30, 2016, there were outstanding stock options to purchase 18,742,434 shares of common stock, 13,592,434 shares of which were vested.

Defined Contribution (401k) Plan

The Company maintains a defined contribution (401k) plan for our employees. The plan provides for a company match in the amount of 100% of the first 3% of pre-tax salary contributed and 50% of the next 3% of pre-tax salary contributed. Due to the severe cash limitations that the Company has experienced, the match was suspended from mid-2008 to the present and will only be re-instated when business conditions warrant.

~~Derivative~~Income ~~Liability~~taxes

~~The~~Income ~~Company~~tax ~~accounts~~provisions ~~for~~or ~~derivatives~~benefits infor ~~accordance~~interim ~~with~~periods ~~ASC~~are ~~815,~~computed ~~which~~based ~~establishes~~on ~~accounting~~the ~~and~~Company’s ~~reporting~~estimated ~~standards~~annual ~~for~~effective ~~derivative~~tax ~~instruments~~rate. ~~and~~Based ~~hedging~~on ~~activities,~~the ~~including~~Company’s ~~certain~~historical ~~derivative~~losses ~~instruments~~and ~~embedded~~its inexpectation ~~other~~of ~~financial~~continuation ~~instruments~~of orlosses ~~contracts~~for ~~and~~the ~~requires~~foreseeable ~~recognition~~future, ofthe ~~all~~Company ~~derivatives~~has ondetermined ~~the~~that ~~balance~~it ~~sheet~~is atmore ~~fair~~likely ~~value,~~than ~~regardless~~not ofthat ~~hedging~~deferred ~~relationship~~tax ~~designation.~~assets ~~Accounting~~will ~~for~~not ~~changes~~be inrealized ~~fair~~and, ~~value~~accordingly, ofhas ~~the~~provided ~~derivative~~a ~~instruments~~full ~~depends~~valuation onallowance. ~~whether~~As the ~~derivatives~~Company ~~qualify~~anticipates asor ~~hedge~~anticipated ~~relationships~~that ~~and~~its ~~the~~net ~~types~~deferred oftax ~~relationships~~assets ~~designated~~at ~~are~~December ~~based~~31, on2017 ~~the~~and ~~exposures~~2016 ~~hedged.~~would Atbe ~~September~~fully ~~30,~~offset ~~2016~~by ~~and~~a ~~December~~valuation 31allowance, ~~2015,~~there ~~the~~is ~~Company~~no ~~did~~federal ~~not~~or ~~have~~state ~~any~~income ~~derivative~~tax ~~instruments~~benefit ~~that~~for ~~were~~the ~~designated~~periods asended ~~hedges.~~March ~~See~~31, ~~Note~~2017 10and ~~for~~2016 ~~discussion~~related ofto ~~the~~losses ~~Company's~~incurred ~~derivative~~during ~~liabilities~~such periods.

Fair value

Accounting Standards Codification subtopic 825-10, Financial Instruments (“ASC 825-10”) requires disclosure of the fair value of certain financial instruments. ASC 825-10 defines fair value as the price that would be received from selling an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date. When determining the fair value measurements for assets and liabilities required or permitted to be recorded at fair value, the Company considers the principal or most advantageous market in which it would transact and considers assumptions that market participants would use when pricing the asset or liability, such as inherent risk, transfer restrictions, and risk of nonperformance. ASC 825-10 establishes a fair value hierarchy that requires an entity to maximize the use of observable inputs and minimize the use of unobservable inputs when measuring fair value. ASC 825-10 establishes three levels of inputs that may be used to measure fair value:

	·	Level 1 - Quoted prices in active markets for identical assets or liabilities.

	·	Level 2 - Observable inputs other than Level 1 prices such as quoted prices for similar assets or liabilities; quoted prices in markets with insufficient volume or infrequent transactions (less active markets); or model-derived valuations in which all significant inputs are observable or can be derived principally from or corroborated by observable market data for substantially the full term of the assets or liabilities.

	·	Level 3 - Unobservable inputs to the valuation methodology that are significant to the measurement of fair value of assets or liabilities.

To the extent that valuation is based on models or inputs that are less observable or unobservable in the market, the determination of fair value requires more judgment. In certain cases, the inputs used to measure fair value may fall into different levels of the fair value hierarchy. In such cases, for disclosure purposes, the level in the fair value hierarchy within which the fair value measurement is disclosed and is determined based on the lowest level input that is significant to the fair value measurement.

The carrying value of the Company’s cash, accounts receivable, accounts payable, short-term borrowings (including lines of credit and notes payable), and other current assets and liabilities approximate fair value because of their short-term maturity.

As of March 31, 2017 and December 31, 2016, the Company did not have any items that would be classified as level 1, 2 or 3 disclosures.

Recent accounting pronouncements

There were various updates recently issued, most of which represented technical corrections to the accounting literature or application to specific industries and are not expected to a have a material impact on the Company'’s financial position, results of operations or cash flows.

NOTE 3 – LIQUIDITY

The accompanying unaudited condensed consolidated financial statements have been prepared on a going concern basis, which contemplates the realization of assets and the satisfaction of liabilities in the normal course of business. As shown in the accompanying unaudited condensed consolidated financial statements, the Company incurred a net loss of $1,587,953 for the nine months ended September 30, 2016. Additionally, the Company has negative working capital (total current liabilities exceeded total current assets) of $11,267,418 as of September 30, 2016. These factors among others raise substantial doubt about the Company's ability to continue as a going concern.

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DEBT RESOLVE, INC.

NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

~~SEPTEMBER~~MARCH 3031, ~~2016~~ 2017

NOTE 3 – LIQUIDITY

The accompanying unaudited condensed consolidated financial statements have been prepared on a going concern basis, which contemplates the realization of assets and the satisfaction of liabilities in the normal course of business. As shown in the accompanying unaudited condensed consolidated financial statements, the Company incurred a net loss of $305,922 for the three months ended March 31, 2017. Additionally, the Company has negative working capital (total current liabilities exceeded total current assets) of $11,972,260 as of March 31, 2017. These factors among others raise substantial doubt about the Company’s ability to continue as a going concern.

The Company has undertaken further steps as part of a plan to improve operations with the goal of sustaining our operations for the next twelve months and beyond to address its lack of liquidity by raising additional funds, either in the form of debt or equity or some combination thereof. However, there can be no assurance that the Company can successfully accomplish these steps and or business plans, and it is uncertain that the Company will achieve a profitable level of operations and be able to obtain additional financing.

The Company'’s continued existence is dependent upon management'’s ability to develop profitable operations and resolve its liquidity problems. There can be no assurance that any additional financings will be available to the Company on satisfactory terms and conditions, if at all. In the event that the Company is unable to continue as a going concern, it may elect or be required to seek protection from its creditors by filing a voluntary petition in bankruptcy or may be subject to an involuntary petition in bankruptcy.

The accompanying unaudited condensed consolidated financial statements do not include any adjustments relating to the recoverability and classification of asset carrying amounts or the amount and classification of liabilities that might result should the Company be unable to continue as a going concern.

NOTE 4 – ACCOUNTS RECEIVABLE AND DUE TO FACTOR

Accounts receivable are receivables generated from sales to customers and progress billings on performance type contracts. Amounts included in accounts receivable are deemed to be collectible within the Company'’s operating cycle. Management provides an allowance for doubtful accounts based on the Company'’s historical losses, specific customer circumstances, and general economic conditions. Periodically, management reviews accounts receivable and adjusts the allowance based on current circumstances and charges off uncollectible receivables when all attempts to collect have been exhausted and the prospects for recovery are remote. As of ~~September~~March 3031, ~~2016~~2017 and December 31, ~~2015~~2016, the Company'’s accounts receivable was $47,~~444~~570,~~177~~251 and $36,~~463~~974,~~161~~135, net of allowance for doubtful accounts of $1,~~086~~689,~~473~~064 and $~~600~~1,~~000~~622,208, respectively.

The Company'’s majority owned subsidiaries, Progress Advocates LLC and Student Loan Care, LLC entered into a factoring agreements which had certain provisions that factor advances were based on either a non-recourse and recourse basis. During the first quarter of 2016, the Company agreed to modify the terms of the outstanding factoring agreement whereby the outstanding advances which were originally based upon a non-recourse basis will be reclassified to a full recourse advances. Accordingly, the Company reclassified the outstanding advances of $1,128,701 to a full recourse liability to the factor, increased the carrying value of accounts receivable by $1,128,701, net of an allowance for doubtful accounts of $212,388.

The recourse agreements provide for the Company to receive an advance of between 30% - 96% of any accounts receivable that it factors with 62% - 0% held in reserve. The average amount received from these recourse agreements was 50.9% and the average amount reserved was 42.1%. The factoring agreements also provide for discount fees of 4% - 8% of the face value of any accounts receivable factored, plus additional charges for other transaction fees. The agreements may be terminated by either party at any time and will continue unless either party formally cancels.

The Company's majority owned subsidiary, Student Loan Care LLC, entered into a similar recourse factoring agreement during the second quarter of 2016. This agreement provides for the Company to receive an advance of between 45% - 90% of any accounts receivable that it factors with 45% - 5% held in reserve. The average amount received was 64% and the average amount reserved was 30%. The factoring agreement also provides for discount fees of 3% - 6% of the face value of any accounts receivable factored, plus additional charges for other transaction fees. The agreement may be terminated by either party at any time and will continue unless either party formally cancels. As of September 30, 2016 and December 31, 2015, the Company's outstanding obligation under the factoring agreements were $3,666,931 and $2,442,935, respectively.

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DEBT RESOLVE, INC.

NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

~~SEPTEMBER~~MARCH 3031, ~~2016~~2017

The Progress Advocates’ recourse agreements provide for the Company to receive an advance of between 30% - 96% of any accounts receivable that it factors with 62% - 0% held in reserve. The average amount received from these recourse agreements was 50.9% and the average amount reserved was 42.1%. The factoring agreements also provide for discount fees of 4% - 8% of the face value of any accounts receivable factored, plus additional charges for other transaction fees. The agreements may be terminated by either party at any time and will continue unless either party formally cancels.

The Company’s majority owned subsidiary, Student Loan Care LLC, entered into a similar recourse factoring agreement during the second quarter of 2016. This agreement provides for the Company to receive an advance of between 45% - 90% of any accounts receivable that it factors with 45% - 5% held in reserve. The average amount received was 64% and the average amount reserved was 30%. The factoring agreement also provides for discount fees of 3% - 6% of the face value of any accounts receivable factored, plus additional charges for other transaction fees. The agreement may be terminated by either party at any time and will continue unless either party formally cancels. As of March 31, 2017 and December 31, 2016, the Company’s outstanding obligation under the factoring agreements was $6,525,004 and $6,162,722, respectively.

NOTE 5 – ACCOUNTS PAYABLE AND ACCRUED LIABILITIES

Accounts payable and accrued liabilities as of ~~September~~March 3031, ~~2016~~2017 and December 31, ~~2015~~2016 are comprised of the following:

	September 30,2016		December 31,2015
	March 31, 2017		December 31, 2016
Accounts payable	$	~~742~~813,~~521~~909	$	~~740~~698,~~881~~435
Accrued interest		2,~~293~~536,~~185~~257		12,~~912~~419,~~436~~165
Payroll and related accruals, net of advance to employees		1,~~043~~097,~~718~~747		~~827~~1,~~263~~060,784
Total	$	4,~~079~~447,~~424~~913	$	34,~~480~~178,~~580~~384

On April 19, 2016, the Company entered into a settlement agreement with the former Chief Executive officer whereby the Company issued a convertible note for $75,000 and 2,225,000 warrants to purchase the Company's common stock at $0.10 per share for three years as part settlement of the outstanding salary due of $153,750. The remaining balance is to be paid monthly installments of $2,500 to the extent of available cash flows as determined by the Board of Directors. (See Note 7)

NOTE 6 – NOTES PAYABLE

As of ~~September~~March 3031, ~~2016~~2017 and December 31, ~~2015~~2016, short term notes are as follows:

	September 30,2016		December 31,2015
	March 31, 2017		December 31, 2016
Note payable, dated June 1, 2015		41,667		45,765
Note payable, dated June 1, 2015, in default		41,667		41,667
Note payable, dated July 2, 2015		12,500		12,500
Note payable, dated July 2, 2015, in default		12,500		12,500
Note payable, dated August 28, 2015		32,967		50,000
Note payable, dated August 28, 2015, in default		32,967		32,967
Note payable, dated December 17, 2015		50,000		50,000
Note payable, dated December 17, 2015, in default		50,000		50,000
Note payable, dated January 13, 2016		50,000		-
Note payable, dated January 13, 2016, in default		50,000		50,000
Note payable, dated February 16, 2016		25,000		-
Note payable, dated February 16, 2016, in default		25,000		25,000
Note payable, dated July 14, 2016		47,000		-47,000
Equitable promissory note, dated March 1, 2016		6235,~~468~~696		-49,082
Investor notes payable, 12% per annum		377,867		377,867
Investor notes payable, 12% per annum, in default		377,867		377,867
Total		~~699~~672,~~469~~697		~~536~~686,~~132~~083
Less current portion		~~699~~672,~~469~~697		~~536~~686,~~132~~083
Long term portion	$	-0-	$	-0-

On January 13, 2016, the Company issued an unsecured note payable for $50,000 due January 1, 2017 with interest at 12% per annum, paid monthly beginning May 2016 and principal payments beginning November 2016. The outstanding balance as of September 30, 2016 is $50,000.

On February 16, 2016, the Company issued an unsecured note payable for $25,000 due February 1, 2017 with interest at 12% per annum, paid monthly beginning June 2016 and principal payments beginning December 2016. The outstanding balance as of September 30, 2016 is $25,000.

On March 1, 2016. The Company issued a promissory note payable for $89,240, with interest at 6% per annum, with monthly payments beginning April 15, 2016 in the amount no less than of 5% of the principal balance remaining due until the amount due plus all accrued interest is paid in full. The outstanding balance as of September 30, 2016 is $62,468.

On July 14, 2016. The Company issued a promissory note payable for $47,000, with interest at 12% per annum, with monthly interest payments beginning November 14, 2016 and principal repayments beginning May 14, 2017. The outstanding balance as of September 30, 2016 is $47,000.

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DEBT RESOLVE, INC.

NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

~~SEPTEMBER~~MARCH 3031, ~~2016~~2017

NOTE 7 – NOTES PAYABLE, RELATED PARTIES

As of ~~September~~March 3031, ~~2016~~2017 and December 31, ~~2015~~2016, notes payable, related parties are as follows:

	September 30,2016			December 31,2015
	March 31, 2017			December 31, 2016
Convertible note payable dated July 22, 2010, in default	$	15,000		$	15,000
Note payable dated January 14, 2011, in default		6,000			6,000
Note payable dated April 14, 2011, in default		25,000			25,000
Note payable dated April 15, 2011, in default		25,000			25,000
Note payable dated January 18, 2012, in default		5,000			5,000
Note payable dated January 20, 2012, in default		5,000			5,000
Note payable dated May 21, 2012, in default		15,000			15,000
Note payable dated May 30, 2012, in default		20,000			20,000
Series A Convertible note, in default		20,000			20,000
Convertible notes payable, dated July 6, 2012, in default		30,000			30,000
Convertible note payable, dated July 10, 2012, in default		15,000			15,000
Note payable, dated September 14, 2012, in default		6,000			6,000
Convertible note payable, dated September 7, 2012, in default		43,000			43,000
Convertible note payable, dated October 4, 2012, in default		50,000			50,000
Convertible note payable, dated September 5, 2013, in default		10,000			10,000
Convertible note payable, dated September 16, 2013, in default		3,000			3,000
Note payable dated September 17, 2013, in default		5,221			5,221
Note payable, dated October 24, 2013		30,000			30,000
Note payable, dated October 24, 2013, in default		30,000			30,000
Note payable, dated November 7, 2013		40,000			40,000
Note payable. dated December 6, 2013		5,000			5,000
Note payable. dated December 6, 2013, in default		5,000			5,000
Note payable, dated December 18, 2013		30,000			30,000
Note payable, dated January 9, 2014, in default		25,000			25,000
Convertible note payable, dated February 28, 2014, net of unamortized debt discount of $-0- and $2,064, respectively, in default		200,000			197,936
Convertible note payable, dated February 28, 2014		200,000			200,000
Convertible note payable, dated April 24, 2014, net of unamortized debt discount of $-0- and $775, respectively		25,000			24,225
Convertible note payable, dated April 24, 2014		25,000			25,000
Convertible note payable, dated November 7, 2014, net of unamortized debt discount of $211 and $1,733, respectively		24,789			23,267
Convertible note payable, dated November 7, 2014		25,000			25,000
Convertible notes payable, dated December 4, 2014, net of unamortized debt discount of $294 and $1,532, respectively		49,706			48,468
Convertible notes payable, dated December 4, 2014, in default		50,000			50,000
Note payable, dated January 25, 2015		25,000			25,000
Note payable, dated January 25, 2015, in default		25,000			25,000
Convertible note payable, dated March 3, 2015, net of unamortized debt discount of $972 and $2,701, respectively		49,028			47,299
Convertible note payable, dated March 3, 2015, net of unamortized debt discount of $-0- and $391, respectively, in default		50,000			49,609
Convertible note payable, dated May 12, 2015, net of unamortized debt discount of $337 and $750, respectively		19,663			19,250
Convertible note payable, dated May 12, 2015, net of unamortized debt discount of $63 and $199, respectively		19,937			19,801
Note payable, dated June 18, 2015		25,000			25,000
Note payable, dated June 18, 2015, in default		25,000			25,000
Note payable, dated July 13, 2015		12,500			12,500
Note payable, dated July 13, 2015, in default		12,500			12,500
Note payable, dated August 5, 2015, in default		25,000			25,000
Note payable, dated August 19, 2015, in default		50,000			50,000
Convertible note payable, dated May 15, 2016, net of unamortized debt discount of $60,822		14,178			-
Convertible note payable, dated May 15, 2016, net of unamortized debt discount of $42,123 and $51,370, respectively		32,877			23,630
Note payable, dated June 9, 2016		15,000			-15,000
Note payable, dated June 22, 2016		30,000			-30,000
Note payable, dated June 30, 2016		25,000			-25,000
Note payable, dated September 28, 2016		125,000
Notes payable, dated September 28, 2016, net of unamortized debt discount of $40,009 and $47,008, respectively		84,991			77,992
Total		1,~~143~~123,~~085~~526			~~926~~1,~~166~~106,753
Less current portion		(~~783~~835,~~907~~649	)		(~~789~~828,~~616~~123	)
Long term portion	$	~~359~~287,~~178~~877		$	~~136~~278,~~550~~630

For the three months ended March 31, 2017 and 2016, the Company amortized $16,773 and $4,306 of debt discount to operations as interest expense, respectively.

Total unpaid accrued interest on the notes payable to related parties as of March 31, 2017 and December 31, 2016 was $364,535 and $337,020, respectively. During the three months ended March 31, 2017 and 2016, the Company recorded interest expense of $27,514 and $23,239, respectively, in connection with the notes payable to related parties.

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DEBT RESOLVE, INC.

NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

~~SEPTEMBER~~MARCH 3031, ~~2016~~2017

On May 15, 2016, the Company issued a $75,000 secured convertible note that matures on May 15, 2018 in settlement of accrued compensation. The note bears interest at a rate of 10% and can be convertible into shares of the Company's common stock, at a conversion rate of $0.02 per share. Interest will also be converted into common stock at the conversion rate of $0.02 per share. In connection with the issuance of the convertible note, the Company issued an aggregate of 2,225,000 warrants to purchase the Company's common stock at $0.10 per share over three years.

The Company has identified the embedded derivatives related to the convertible note dated May 15, 2016 (See Note 10). These embedded derivatives included certain conversion features. The accounting treatment of derivative financial instruments requires that the Company record fair value of the derivatives as of the inception date of the Notes and to fair value as of each subsequent reporting date.

At inception of the May 15, 2016 note, the Company determined the aggregate fair value of $73,697 of embedded derivatives. The fair value of the embedded derivatives was determined using the Black-Scholes Pricing Model based on the following assumptions: (1) dividend yield of 0%; (2) expected volatility of 336.12%, (3) weighted average risk-free interest rate of 0.55%, (4) expected life from 2 years, and (5) estimated fair value of the Company's common stock of $0.02 per share. The determined fair value of the debt derivatives of $73,697 was charged as a debt discount of the note. In addition, the Company recognized the value attributable to the warrants, up to the remaining net proceeds of $1,303 to additional paid in capital and a discount against the notes. The Company valued the warrants in accordance with ASC 470-20 using the Black-Scholes pricing model and the following assumptions: contractual terms of 3 years, a risk free interest rate of 0.91%, a dividend yield of 0%, and volatility of 336.12%. The debt discount attributed to the value of the warrants and conversion feature issued is amortized over the note's maturity period (two years) as interest expense.

On June 9, 2016, a stockholder loaned $15,000 (unsecured) to the Company due June 9, 2017 with interest at 12% per annum, paid monthly beginning October 2016 and principal payments beginning April 2017.

On June 22, 2016, a stockholder and board member loaned $30,000 (unsecured) to the Company due June 22, 2017 with interest at 12% per annum, paid monthly beginning October 2016 and principal payments beginning April 2017.

On June 30, 2016, a stockholder and board member loaned $25,000 (unsecured) to the Company due June 30, 2017 with interest at 12% per annum, paid monthly beginning October 2016 and principal payments beginning April 2017.

On September 28, 2016, a stockholder and board member loaned $200,000 (unsecured) to the Company due September 28, 2018 (of which $75,000 has been repaid) with interest at the lowest permissible interest rate, due at maturity.

For the three and nine months ended September 30, 2016, the Company amortized $11,098 and $21,919 of debt discount to operations as interest expense. For the three and nine months ended September 30, 2015, the Company amortized $5,484 and $15,484 of debt discount to operations as interest expense.

Total unpaid accrued interest on the notes payable to related parties as of September 30, 2016 and December 31, 2015 was $310,957 and $233,856, respectively. During the nine months ended September 30, 2016 and 2015, the Company recorded interest expense of $77,101 and $79,088, respectively, in connection with the notes payable to related parties.

14 Table of Contents

DEBT RESOLVE, INC.

NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

SEPTEMBER 30, 2016

NOTE 8 – LINE OF CREDIT- RELATED PARTY

On January 25, 2015, the Company issued an unsecured promissory note to certain members of the Company'’s board of directors who provided the Company a line of credit up to $400,000 for working capital over a term of four years with an annualized interest rate of 5.25%. The promissory note is due 30 days upon written demand however, the Company is obligated to make monthly payments of principal and interest necessary to meet the minimal monthly principal and interest payments required by the bank on loans the lenders obtained to provide the financing. As of ~~September~~March 3031, ~~2016~~2017 and December 31, ~~2015~~2016, the outstanding balance on this loan was $~~333~~283,~~336~~338 and ~~397~~308,~~893~~337, respectively.

On September 24, 2009, the Company entered into an unsecured short term loan with a stockholder for $150,000 to be used to discharge the bridge loans of another investor. Borrowings under the loan bear interest at 12% per annum, with interest accrued and payable on maturity. The Note was due on November 24, 2009 and is still outstanding. In conjunction with this line of credit, the Company also issued a warrant to purchase 150,000 shares of common stock at an exercise price of $0.15 per share with an expiration date of September 24, 2014. On April 6, 2010, a partial repayment of $25,000 of principal was paid. Also, as a result of the delinquent repayment of the note, a penalty of $69,000 was incurred on April 15, 2010. On August 17, 2010, a partial payment of $50,000 of principal was made on the line of credit. Unpaid accrued interest on this loan as of ~~September~~March 3031, ~~2016~~2017 and December 31, ~~2015~~2016 was $~~132~~141,~~842~~877 and $~~119~~137,~~239~~409, respectively.

As of ~~September~~March 3031, ~~2016~~2017 and December 31, ~~2015~~2016, the outstanding balance on this loan was $151,000. Since the loan matured on November 24, 2009, it is currently in default. During the ~~nine~~three months ended ~~September~~March 3031, ~~2016~~2017 and ~~2015~~2016, the Company recorded $134,~~602~~468 and $134,~~553~~518, respectively, as interest expense.

NOTE 9 – CONVERTIBLE NOTES

Convertible notes of non-related party investors are comprised of the following:

	September 30,2016			September 30,2015
	March 31, 2017			December 31, 2016
Series A Convertible Notes	$	817,000		$	817,000
Series B Convertible Notes		225,000			225,000
Series C Convertible Notes		245,000			245,000
Series D Convertible Notes		21,000			21,000
Bridge 2014 Convertible Notes, net of unamortized debt discount of $1,093 and $23,410, respectively		748,907			726,590
Bridge 2014 Convertible Notes		750,000			750,000
Bridge 2015 Convertible Notes, net of unamortized debt discount of $39,137 and $73,244, respectively		285,863			251,756
Bridge 2015 Convertible Notes, net of unamortized debt discount of $17,283 and $27,685, respectively		257,717			297,315
Bridge 2016 Convertible Notes, net of unamortized debt discount of $10,945		61,055			-
Bridge 2016 Convertible Notes, net of unamortized debt discount of $6,901 and $8,901, respectively		65,099			63,099
Bridge 2 (2016) Convertible Notes, net of unamortized debt discount of $172,767		52,233			-
Bridge 2 (2016) Convertible Notes, net of unamortized debt discount of $125,651 and $153,940, respectively		124,349			96,060
Convertible promissory notes, net of unamortized debt discount of $47,466		72,534			-
Convertible promissory notes, net of unamortized debt discount of $11,982		-			33,018
Total		2,~~528~~505,~~592~~165			2,~~286~~547,~~346~~492
Less: Current portion		(1,~~672~~426,~~231~~316	)		(21,~~034~~433,~~590~~833	)
Long term portion	$	~~856~~1,~~361~~078,849		$	~~251~~1,~~756~~113,659

InDuring ~~2016,~~ the ~~Company~~three ~~issued~~months anended ~~aggregate~~March of31, ~~$72~~2017,~~000~~ ~~in secured convertible notes that mature two years from~~ the ~~date~~Company ofissued ~~issuance~~an ~~(from~~aggregate ~~January 2018 through February 2018). The notes bear interest at a rate~~ of ~~10%~~3,685,343 ~~and can be convertible into~~ shares of ~~the~~its ~~Company's~~ common stock, atin asettlement ~~conversion rate~~ of $~~0.05~~95,000 ~~per share. Interest will also be converted into common stock at the conversion rate~~ of ~~$0.05 per share. In connection with the issuance of the~~ convertible notes, ~~the~~payable ~~Company~~and ~~issued an aggregate of 250~~$14,~~000~~765 ~~warrants~~accrued ~~to purchase the Company's common stock at $0~~interest.~~15 per share over three years.~~

15For ~~Table~~the three months ended March 31, 2017 and 2016, the Company amortized $52,675 and $25,931 of ~~Contents~~debt discount to current period operations as interest expense.

Table of Contents

DEBT RESOLVE, INC.

NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

~~SEPTEMBER~~MARCH 3031, ~~2016~~2017

OnNOTE ~~July 14, 2016, the Company issued a $25,000 a unsecured convertible note that mature two years from the date of issuance. The note bears interest at a rate of~~ 10% ~~and~~– ~~can~~STOCKHOLDERS’ be convertible into shares of the Company's common stock, at a conversion rate of $0.02 per share. Interest will also be converted into common stock at the conversion rate of $0.02 per share. In connection with the issuance of the convertible notes, the Company issued an aggregate of 750,000 warrants to purchase the Company's common stock at $0.10 per share over three years.EQUITY

In 2016, the Company issued an aggregate of $120,000 in unsecured convertible notes that mature one year from the date of issuance (from February 2017 through September 2017) for services rendered. The notes bear interest at a rate of 10% and can be convertible into shares of the Company's common stock, at a rate of $0.02 per share (as amended). Interest will also be converted into common stock at the conversion rate of $0.02 per share. In addition, until amended on August 17, 2016, if the Company issues any of its common stock or any security convertible into its common stock at an exercise or conversion price lower than the stated conversion price, then the stated conversion price is reduced to the lower conversion price.

After February 1, 2016, the Company issued an aggregate of $200,000 in secured convertible notes that mature two years from the date of issuance (from January 2018 through June 2018). The notes bear interest at a rate of 10% and can be convertible into shares of the Company's common stock, at a conversion rate of $0.02 per share. Interest will also be converted into common stock at the conversion rate of $0.02 per share. In connection with the issuance of the convertible notes, the Company issued an aggregate of 6,000,000 warrants to purchase the Company's common stock at $0.10 per share over three years.

Until February 1, 2016 and in accordance with ASC 470-20, the Company recognized the value attributable to the warrants and the conversion feature in the amount of $7,124 to additional paid in capital and a discount against the notes. The Company valued the warrants in accordance with ASC 470-20 using the Black-Scholes pricing model and the following assumptions: contractual terms of 3 years, an average risk free interest rate of 1.25%, a dividend yield of 0%, and volatility of 356.55%. The debt discount attributed to the value of the warrants and conversion feature issued is amortized over the note's maturity period (two years) as interest expense.

After February 1, 2016 to August 17, 2016, the Company has identified the embedded derivatives related to the notes issued after January 31, 2016. These embedded derivatives included certain conversion features. The accounting treatment of derivative financial instruments requires that the Company record fair value of the derivatives as of the inception date of the Notes and to fair value as of each subsequent reporting date.

At inception of the post January 2016 notes through August 17, 2016, the Company determined the aggregate fair value of $358,222 of embedded derivatives. The fair value of the embedded derivatives was determined using the Black-Scholes Pricing Model based on the following assumptions: (1) dividend yield of 0%; (2) expected volatility from 323.14% to 348.27%, (3) weighted average risk-free interest rate from of 0.40% to 0.76%, (4) expected life from 1 to 2 years, and (5) estimated fair value of the Company's common stock of $0.01 to $0.02 per share. The determined fair value of the debt derivatives of $358,222 was charged as a debt discount of the note. In addition, the Company recognized the value attributable to the warrants, up to the remaining net proceeds of $8,854 to additional paid in capital and a discount against the notes. The Company valued the warrants in accordance with ASC 470-20 using the Black-Scholes pricing model and the following assumptions: contractual terms of 3 years, a risk free interest rate of 0.87% to 0.92%, a dividend yield of 0%, and volatility of 330.45% to 348.10%. The debt discount attributed to the value of the warrants and conversion feature issued is amortized over the note's maturity period (two years) as interest expense.

Certain convertible note holders, representing an aggregate of $819,500 of these notes, entered into agreements in in May and June 2016 whereby their obligations were extended from May 2018 through September 2018. The terms of the agreement included extension of previously issued warrants in connection with the debt by two years and reducing the exercise price from $0.10-$0.15 per share to $0.65-$0.10 per share to certain note holders. All other terms (including any amendments or earlier extensions) of the notes remain the same.

16 Table of Contents

DEBT RESOLVE, INC.

NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

SEPTEMBER 30, 2016

The determined change in fair value of the extended and repriced warrants was determined using the Black-Scholes Pricing Model based on the following assumptions: (1) dividend yield of 0%; (2) expected volatility of 322.74% to 348.75%, (3) weighted average risk-free interest rate of 0.43% to 0.62%, (4) expected life from 0.65 to 1.04 years, and (5) estimated fair value of the Company's common stock of $0.014 to 0.032 per share. The determined fair value of the change in warrants of $37,447 and change in conversion rates of $34,145 was charged to current period interest.

For the three and nine months ended September 30, 2016, the Company amortized $58,447 and $130,635 of debt discount to current period operations as interest expense. For the three and nine months ended September 30, 2015, the Company amortized $18,603 and $50,581 of debt discount to current period operations as interest expense.

NOTE 10 – DERIVATIVE LIABILITIES

As described in Note 9, the Company has identified the embedded derivatives related to the notes issued after January 31, 2016 through August 17, 2016. These embedded derivatives included certain conversion features. The accounting treatment of derivative financial instruments requires that the Company record fair value of the derivatives as of the inception date of the Notes and to fair value as of each subsequent reporting date.

The Company recognizes its derivative liabilities as level 3 and values its derivatives using the methods discussed below. While the Company believes that its valuation methods are appropriate and consistent with other market participants, it recognizes that the use of different methodologies or assumptions to determine the fair value of certain financial instruments could result in a different estimate of fair value at the reporting date. The primary assumptions that would significantly affect the fair values using the methods discussed are that of volatility and market price of the underlying common stock of the Company.

On August 17, 2016, the Company modified the previously issued notes eliminating the embedded derivative. The Company determined the aggregate fair value of $327,905 of embedded derivatives at the date of modification. The fair value of the embedded derivatives was determined using the Black-Scholes Pricing Model based on the following assumptions: (1) dividend yield of 0%; (2) expected volatility of 346.44%, (3) weighted average risk-free interest rate from of 0.46% to 0.74%, (4) expected life from 0.46 to 1.91 years, and (5) estimated fair value of the Company's common stock of $0.0175 per share. The Company reclassified the determined fair value of the derivative of $327,905 from liability to equity on August 17, 2016.

At September 30, 2016, the Company did not have any level 3 assets or liabilities.

As of September 30, 2016 and December 31, 2015, the Company did not have any derivative instruments that were designated as hedges.

The following table provides a summary of changes in fair value of the Company's Level 3 financial liabilities as of September 30, 2016:

	DerivativeLiability
Balance, December 31, 2015	$	-
Total (gains) losses
Transfers in of Level 3 upon issuance of convertible notes payable		358,222
Transfers out of Level 3 upon debt modification		(327,905	)
Mark-to-market at September 30, 2016:		(30,317	)
Balance, September 30, 2016	$	-0-
Net Gain for the period included in earnings relating to the liabilities held at September 30, 2016	$	30,317

17 Table of Contents

DEBT RESOLVE, INC.

NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

SEPTEMBER 30, 2016

NOTE 11 – STOCKHOLDERS' EQUITY

Preferred Stock

At ~~September~~March 3031, ~~2016~~2017 and December 31, ~~2015~~2016, the Company has authorized 10,000,000 shares of Series A convertible preferred stock, par value $0.001, of which none are issued and outstanding as of ~~September~~March 3031, ~~2016~~2017 and December 31, ~~2015~~2016. The Series A convertible preferred stock which has rank senior to common and all other preferred stock of the corporation and equal or junior to any preferred stock that may be issued in regard to liquidation; not entitled to dividends and is convertible, at the holders'’ option, at 10 shares of common stock for each share of Series A preferred stock.

Common stock

At ~~September~~March 3031, ~~2016~~2017, and December 31, ~~2015~~2016, the Company has authorized 500,000,000 shares of common stock, par value $0.001, of which ~~115~~125,~~277~~700,~~206~~152 and ~~104~~121,~~612~~264,~~082~~809 are issued and outstanding as of ~~September~~March 3031, ~~2016~~2017 and December 31, ~~2015~~2016, respectively.

During the ~~nine~~three months ended ~~September~~March 3031, ~~2016~~2017, the Company issued ~~an aggregate of 665~~750,~~124~~000 shares of its common stock for services valued at $1112,~~973~~750.

~~During~~NOTE ~~the~~11 ~~nine~~– ~~months~~WARRANTS ~~ended~~AND ~~September 30, 2016, the Company issued 5,000,000 shares of common stock as officer compensation valued at $100,000.~~OPTIONS

During the nine months ended September 30, 2016, the Company issued 5,000,000 shares of common stock as compensation to the non-controlling interest parties of Student Loan Care LLC valued at $100,000

NOTE 12 – WARRANTS AND OPTIONS

Common stock warrants

The following table summarizes warrants outstanding and related prices for the shares of the Company'’s common stock issued to shareholders at ~~September~~March 3031, ~~2016~~2017:

Exercise Price		NumberOutstanding				Warrants OutstandingWeighted AverageRemainingContractualLife (years)				WeightedAverageExercise price				NumberExercisable				WarrantsExercisableWeightedAverageExercise Price
ExercisePrice				NumberOutstanding				Warrants Outstanding Weighted Average Remaining Contractual Life (years)				Weighted AverageExercise price				NumberExercisable				Warrants Exercisable Weighted Average Exercise Price
$0.01 to 0.10			84,150,000				3.87			$	0.08				54,150,000			$	0.10
$	0.01 to 0.10				86,650,000				3.34			$	0.08				56,650,000			$	0.10
~~0.11 to 0.20~~	0.11 to 0.20		~~10,225,000~~		8,225,000		~~1.33~~		0.93		~~0.15~~		0.15		~~10,225,000~~		8,225,000		~~0.15~~		0.15
~~0.21 to 0.30~~	0.21 to 0.30		~~10,200,000~~		3,500,000		~~0.49~~		0.47		~~0.25~~		0.25		~~10,200,000~~		3,500,000		~~0.25~~		0.25
Total			~~104,575,000~~		98,375,000		~~3.29~~		3.04	$	~~0.11~~	$	.09		~~74,575,000~~		68,375,000	$	~~0.13~~	$	0.11

1815 Table of Contents

DEBT RESOLVE, INC.

NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

~~SEPTEMBER~~MARCH 3031, ~~2016~~2017

Transactions involving the Company'’s warrant issuance for the three months ended March 31, 2017 are summarized as follows:

	Number ofShares			WeightedAverage PricePer Share
Outstanding at December 31, 2015		72,385,000			0.15
Outstanding at December 31, 2016		101,825,000			0.10
Issued		~~39,300,000~~-			~~0.06~~-
Exercised		-			-
Expired		(73,~~110~~450,000	)		(0.2524	)
Outstanding at September 30, 2016		104,575,000		$	0.11
Outstanding at March 31, 2017		98,375,000		$	0.09

InTotal ~~conjunction~~stock-based ~~with~~compensation ~~the~~expense ~~issuance~~for ofwarrants ~~convertible~~for ~~notes, during~~ the ~~nine~~three months ended ~~September~~March 3031, ~~2016,~~2017 ~~the~~and ~~Company~~2016 ~~issued~~amounted ~~warrants~~ to ~~purchase 250,000 and 8,975,000 shares of common stock with an exercise price of~~ $-0~~.15~~- and $~~0.10 per share expiring three years from the date of issuance~~1,860, respectively. ~~Please see Note 9.~~

During the nine months ended September 30, 2016, the Company issued 75,000 common stock warrants in connection with services provided. The warrants are exercisable for three years from the date of issuance at an exercise price of $0.15 per common share. The warrants were valued using the Black Sholes option pricing method with the following assumptions: dividend yield $-0-, volatility of 338.33%, risk free rate of 1.11% and expected life of 3.00 years. The determined estimated fair value of $1,860 was charged to operations during the nine months ended September 30 2016.

During the nine months ended September 30, 2016, the Company extended the life of previously issued warrants to purchase 6,250,000 shares of common stock by two years and reduced the exercise price from $0.15 per share to $0.10 per share in connection with the note extensions. Please see Note 9.

In connection with entering into the Student Loan Care LLC joint venture with Hutton Ventures, LLC, the Company issued to Hutton Ventures LLC three five-year warrants to purchase an aggregate of 30,000,000 shares of common stock of the Company at an exercise price of $0.05 per share. The first warrant for 5,000,000 shares of Debt Resolve common stock vests and becomes exercisable upon the achievement by Student Loan Care of specific increasing revenue goals. The second warrant for 20,000,000 shares of Debt Resolve common stock vests and becomes exercisable when Student Loan Care achieves specific cumulative "operating income" goals. The third warrant for 5,000,000 shares of Debt Resolve common stock vests and becomes exercisable upon the achievement by Student Loan Care and affiliates of revenue for the year ending December 31, 2018 equal to or greater than 75% of Debt Resolve's total revenue for the year ending December 31, 2018.

Preferred stock warrants

The following table summarizes warrants outstanding and related prices for the shares of the Company'’s Series A convertible preferred stock issued at ~~September~~March 3031, ~~2016~~2017:

Exercise Price		NumberOutstanding			Warrants OutstandingWeighted AverageRemainingContractualLife (years)			WeightedAverageExercise price			NumberExercisable			WarrantsExercisableWeightedAverageExercise Price
ExercisePrice			NumberOutstanding			Warrants Outstanding Weighted Average Remaining Contractual Life (years)			WeightedAverage Exerciseprice			NumberExercisable			Warrants Exercisable Weighted Average Exercise Price
$0.50			2,120,000			3.30		$	0.50			1,120,000		$	0.50
$	0.50			2,120,000			2.80		$	0.50			1,120,000		$	0.50
~~1.00~~	1.00		~~71,000~~	71,000		~~0.97~~	0.47		~~1.00~~	1.00		~~71,000~~	71,000		~~1.00~~	1.00
~~1.50~~	1.50		~~373,500~~	373,500		~~1.14~~	0.64		~~1.50~~	1.50		~~373,500~~	373,500		~~1.50~~	1.50
Total			~~2,564,500~~	2,564,500		~~2.92~~	2.42	$	~~0.65~~$	0.66		~~1,564,500~~	1,564,500	$	~~0.76~~$	0.76

19Transactions ~~Table~~involving ofthe ~~Contents~~Company’s preferred warrant issuance for the three months ended March 31, 2017 are summarized as follows:

	Number of Shares		Weighted Average Price Per Share
Outstanding at December 31, 2016		2,564,500		0.66
Issued		-		-
Exercised		-		-
Canceled		-		-
Outstanding at March 31, 2017		2,564,500	$	0.66

Table of Contents

DEBT RESOLVE, INC.

NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

~~SEPTEMBER~~MARCH 3031, ~~2016~~2017

Transactions involving the Company's warrant issuance are summarized as follows:

	Number ofShares		WeightedAverage PricePer Share
Outstanding at December 31, 2015		2,524,500		0.65
Issued		40,000		1.50
Exercised		-		-
Expired
Outstanding at September 30, 2016		2,564,500	$	0.65

During the nine months ended September 30, 2016, the Company issued 40,000 Series A convertible preferred stock warrants in connection with services provided. The warrants are exercisable for three years from the date of issuance at an exercise prices of $1.50 per preferred share. The warrants were valued using the Black Sholes option pricing method with the following assumptions: dividend yield $-0-, volatility of underlying common stock of 343.24%, risk free rate of 0.88% and expected life of 3.00 years. The determined estimated fair value of $6,346 was charged to operations during the nine months ended September 30, 2016.

Options

The following table summarizes options outstanding and related prices for the shares of the Company'’s common stock issued at ~~September~~March 3031, ~~2016~~2017:

Exercise Price		NumberOutstanding			Option Outstanding Options Average Remaining Contractual Life (years)			Weighted AverageExercise price			NumberExercisable			Options Exercisable Weighted AverageExercise price
ExercisePrice			NumberOutstanding			Option Outstanding Options Average Remaining Contractual Life (years)			Weighted Average Exercise price			NumberExercisable			OptionsExercisable Weighted Average Exercise price
$0.015			7,000,000			4.65		$	0.015			2,000,000		$	0.015
$	0.015			7,000,000			3.85		$	0.015			3,916,667		$	0.015
~~0.02~~	0.02		~~400,000~~	400,000		~~6.25~~	5.75		~~0.02~~	0.02		~~250,000~~	250,000		~~0.02~~	0.02
~~0.025~~	0.025		~~250,000~~	250,000		~~5.90~~	5.40		~~0.025~~	0.025		~~250,000~~	250,000		~~0.025~~	0.025
~~0.06~~	0.06		~~3,000,000~~	3,000,000		~~1.67~~	1.17		~~0.06~~	0.06		~~3,000,000~~	3,000,000		~~0.06~~	0.06
~~0.09~~	0.09		~~250,000~~	250,000		~~2.18~~	1.68		~~0.09~~	0.09		~~250,000~~	250,000		~~0.09~~	0.09
~~0.095~~	0.095		~~500,000~~	500,000		~~2.30~~	1.80		~~0.095~~	0.095		~~500,000~~	500,000		~~0.095~~	0.095
~~0.10~~	0.10		~~650,000~~	650,000		~~1.44~~	0.94		~~0.10~~	0.10		~~650,000~~	650,000		~~0.10~~	0.10
~~0.13~~	0.13		~~500,000~~	500,000		~~0.59~~	0.09		~~0.13~~	0.13		~~500,000~~	500,000		~~0.13~~	0.13
~~0.17~~	0.17		~~4,500,000~~	4,500,000		~~0.52~~	0.02		~~0.17~~	0.17		~~4,500,000~~	4,500,000		~~0.17~~	0.17
~~0.22~~	0.22		~~175,000~~	175,000		~~0.50~~	0.01		~~0.22~~	0.22		~~175,000~~	175,000		~~0.22~~	0.22
5.00			1,517,434			0.05			5.00			1,517,434			5.00
Total				17,225,000			2.10		$	0.08			13,991,667		$	0.10
Total			18,742,434			2.65		$	0.50			13,592,434		$	0.65

20Transactions ~~Table~~involving ofthe ~~Contents~~Company’s option issuance for the three months ended March 31, 2017 are summarized as follows:

	Number of Shares		Weighted Average Price Per Share
Outstanding at December 31, 2016		17,225,000		0.08
Issued		-		--
Exercised		--		--
Expired		--		--
Outstanding at March 31, 2017		17,225,000	$	0.08

Total stock-based compensation expense for options for the three months ended March 31, 2017 and 2016 amounted to $9,441 and $4,861, respectively.

NOTE 12 – COMMITMENTS AND CONTINGENCIES

Litigation:

On April 11, 2016, a Decision was entered in the matter of a noteholder's claim (as described in Part 1, Item 3 (under "Lawsuits from Noteholders") against Debt Resolve Inc., granting the noteholder's motion for summary judgment in part, and denying it in part, and denying Debt Resolve's cross motion for summary judgment. A stipulation with respect to damages was entered by the Court on August 29, 2016 providing that the total outstanding principal and interest due the noteholder as of July 31, 2016 is $322,152. The noteholder is seeking an award of his attorneys' fees from the Court. On April 20, 2017, the Court awarded the plaintiff $115,516 in attorney’s fees and costs, therefore the Company has accrued, as of March 31, 2017, the liability which is included as accounts payable and accrued expenses in the accompanying financial statements.

From time to time, the Company is involved in various litigation matters in the ordinary course of business. In the opinion of management, the ultimate disposition of these matters will not have a material adverse effect on the Company’s consolidated financial position or results of operations.

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DEBT RESOLVE, INC.

NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

~~SEPTEMBER~~MARCH 3031, ~~2016~~2017

~~Transactions~~Payroll ~~involving~~and ~~the~~Payroll ~~Company's option issuance are summarized as follows:~~taxes

	Number ofShares			WeightedAverage PricePer Share
Outstanding at December 31, 2015		15,592,434			0.67
Issued		4,150,000			0.02
Exercised		-			-
Expired		(1,000,000	)		0.19
Outstanding at September 30, 2016		18,742,434		$	0.50

Due to a lack of capital, the Company has been unable to pay all of the compensation owed to its employees. In addition, in 2011, 2012 and the first quarter of 2013, the Company did not pay certain federal and state payroll tax obligations due for employees’ compensation, and they have become delinquent. As a result, the Company has included in accrued expenses an amount of approximately $100,000 at March 31, 2017 that represents an estimate that could be expected upon settlement of these payroll taxes with the respective taxing authorities. In April, 2015, an agreement was reached with the IRS that details an agreed upon amount owed and a 17 month payment plan for same. In addition, the Company has contacted the state involved and anticipates settlement discussions in the near future.

InNOTE ~~February~~13 ~~2016,~~– ~~the~~RELATED ~~Board~~PARTY granted stock options to purchase 2,000,000 shares of common stock of the Company at exercise price of $0.015 with exercise period of seven years to an officer, vesting 1/3 each anniversary for three years. The grant was valued using the Black-Scholes option pricing model and had a value of $40,000 and will be charged to operations through the vesting period.TRANSACTIONS

InDuring ~~April 2016,~~ the ~~Board~~year ~~granted~~ended ~~stock~~December ~~options~~31, ~~to purchase 150~~2016,~~000~~ ~~shares~~certain ofCompany ~~common~~directors ~~stock~~personally ofguarantee the Company’s atnotes ~~exercise~~payable ~~price~~and ofits’ $0bank loan (Note 8).02 ~~with~~Also, ~~exercise~~certain ~~period~~directors ofand ~~seven~~officers ~~years~~made toshort-term anor ~~officer,~~longer ~~vesting~~term ~~1/3~~loans ~~each~~as ~~six~~discussed ~~month~~in ~~anniversary~~Note ~~for~~7 ~~eighteen~~and ~~months~~8. ~~The~~Total ~~grant~~interest ~~was~~expense ~~valued~~in ~~using~~connection ~~the~~with ~~Black-Scholes~~notes ~~option~~payable ~~pricing~~to ~~model~~related parties and ~~had~~related aparty ~~value~~lines of credit amounted $131,~~650~~982 and ~~will~~$27,757 befor ~~charged~~the tothree ~~operations~~months ~~through~~ended ~~the~~March ~~vesting~~31, ~~period~~2017 and 2016, respectively.

InProgress May 2016, the Board granted stock options to purchase 2,000,000 shares of common stock of the Company at exercise price of $0.015 with exercise period of seven years to an officer, vesting 1/3 each anniversary for three years. The grant was valued using the Black-Scholes option pricing model and had a value of $40,000 and will be charged to operations through the vesting period.Advocates

The ~~Black~~Company reimburses the 49% owner (non-~~Scholes~~controlling ~~option~~interest ~~pricing~~party) ~~model~~for ~~used~~payroll, marketing and general expenses incurred by Progress Advocates. For the ~~following~~three ~~assumptions:~~months ~~Dividend~~ended ~~yield:~~March 31, 2017 and 2016, the Company reimbursed approximately $-0%;- ~~Volatility:~~and ~~329.59%~~$289,311 toin ~~348~~incurred costs, respectively.~~27%;~~ Included in accounts payable and ~~Risk~~accrued ~~Free~~liabilities ~~rate:~~at ~~1.55%~~March to31, ~~1.72%~~2017 and December 31, ~~term:~~2016 ~~contractual~~is ~~terms~~$73,807 and $73,807, respectively.

~~Total~~NOTE ~~stock-based~~14 ~~compensation~~– NON ~~expense~~CONTROLLING ~~for options for the nine months ended September 30, 2016 and 2015 amounted to $24,021 and $11,250, respectively.~~ INTEREST

~~NOTE~~In 13December –2014, ~~COMMITMENTS~~the ~~AND~~Company ~~CONTINGENCIES~~organized Progress Advocates, LLC, a Delaware limited liability company for the purpose to provide services in the student loan document preparation industry. At the time of formation, Progress Advocates, LLC did not have any significant assets or liabilities. In connection with entering into the Progress Advocates LLC joint venture with LSH, LLC (minority owner), the Company issued to LSH, LLC two five-year warrants to purchase an aggregate of 1,500,000 shares of series A convertible preferred stock of Debt Resolve at an exercise price of $0.50 per preferred share..

~~Payroll~~In ~~taxes~~February 2016, the Company, jointly with Patient Online Services, LLC, organized Payment Resolution Systems LLC, a Delaware limited liability company for the purpose of assisting Medical Groups and Hospitals in the online negotiation and settlement of delinquent accounts, with ownership interests of 51% and 49% for the Company and Patient Online Services, LLC, respectively.

~~Due~~In toMay ~~a lack of capital~~2016, the Company, ~~has~~jointly ~~been~~with ~~unable~~Hutton toVentures ~~pay all of the compensation owed to its employees. In addition~~LLC, inorganized ~~2011,~~Student ~~2012~~Loan ~~and~~Care ~~the first quarter of 2013~~LLC, ~~the~~a ~~Company~~Delaware ~~did~~limited ~~not~~liability ~~pay~~company ~~certain federal and state payroll tax obligations due~~ for ~~employees' compensation, and they have become delinquent. As a result,~~ the ~~Company~~purpose ~~has included in accrued expenses an amount~~ of ~~approximately~~providing ~~$100,000~~document atpreparation ~~September~~services ~~30,~~for ~~2016~~holders ~~that represents an estimate that could be expected upon settlement~~ of ~~these~~Federal ~~payroll~~Direct ~~taxes~~Student ~~with the respective taxing authorities. In April~~Loans, ~~2015, an agreement was reached~~ with ~~the~~ownership ~~IRS~~interests ~~that~~of ~~details~~51% ~~an agreed upon amount owed~~ and a49% ~~17 month payment plan~~ for ~~same. In addition,~~ the Company ~~has contacted the state involved~~ and ~~anticipates~~Hutton ~~settlement~~Ventures ~~discussions~~LLC, ~~in the near future~~respectively.

~~Compensation~~18 ~~settlement:~~Table of Contents

21 Table of Contents

DEBT RESOLVE, INC.

NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

~~SEPTEMBER~~MARCH 3031, ~~2016~~2017

~~Litigation:~~In connection with entering into the Student Loan Care LLC joint venture with Hutton Ventures, LLC, the Company issued to Hutton Ventures LLC three seven-year warrants to purchase an aggregate of 30,000,000 shares of common stock of the Company at an exercise price of $0.05 per share. The first warrant for 5,000,000 shares of Debt Resolve common stock vests and becomes exercisable upon the achievement by Student Loan Care of specific increasing revenue goals. The second warrant for 20,000,000 shares of Debt Resolve common stock vests and becomes exercisable when Student Loan Care achieves specific cumulative “operating income” goals. The third warrant for 5,000,000 shares of Debt Resolve common stock vests and becomes exercisable upon the achievement by Student Loan Care and affiliates of revenue for the year ending December 31, 2018 equal to or greater than 75% of Debt Resolve’s total revenue for the year ending December 31, 2018.

OnA ~~April~~reconciliation ~~11,~~of ~~2016, a Decision was entered in~~ the ~~matter~~non-controlling ofincome ~~a noteholder's claim~~ (~~as described in Part 1, Item 3 (under "Defaults upon Senior Securities"~~loss) ~~against~~attributable ~~Debt Resolve Inc., granting the noteholder's motion for summary judgment in part, and denying it in part, and denying Debt Resolve's cross motion for summary judgment. A stipulation with respect~~ to ~~damages was entered by~~ the Court on August 29, 2016 providing that the total outstanding principal and interest due the noteholder as of July 31, 2016 is $322,152. The noteholder is seeking an award of his attorneys' fees from the Court. No decision has been rendered by the Court with respect to noteholder's attorneys' fee claim.Company:

~~NOTE~~Net 14loss –attributable ~~RELATED~~to ~~PARTY~~non-controlling ~~TRANSACTIONS~~interest for the three months ended March 31, 2017:

During the nine months ended September 30, 2016 and 2015, certain Company directors personally guarantee the Company's notes payable and its' bank loan (Note 8). Also, certain directors and officers made short-term or longer term loans as discussed in Note 7 and 8. Total interest expense in connection with notes payable to related parties and related party lines of credit amounted $90,703 and $92,641 for the nine months ended September 30, 2016 and 2015, respectively.

							Patient
	Progress			Student Loan			Online
	Advocates, Inc.			Care LLC			Services, LLC
Net income (loss)	$	(161,619	)	$	469,789		$	(518	)
Average Non-controlling interest percentage		49	%		49	%		49	%
Net Income ( loss) attributable to the non-controlling interest	$	(79,193	)	$	230,196		$	(254	)

~~Progress~~Net ~~Advocates~~loss attributable to non-controlling interest for the three months ended March 31, 2016:

The Company reimburses the 49% owner (non-controlling interest party) for payroll, marketing and general expenses incurred by Progress Advocates. For the nine months ended September 30, 2016 and 2015, the Company reimbursed approximately $289,000 and $1,614,000 in incurred costs, respectively. There was no reimbursement made for the quarter ending September 30, 2016.

	Progress Advocates, Inc.
Net loss	$	(378,632	)
Average Non-controlling interest percentage		49	%
Net income (loss) attributable to the non-controlling interest	$	(185,529	)

~~NOTE~~The 15following –table ~~SUBSEQUENT~~summarizes ~~EVENTS~~the changes in non-controlling interest from January 1, 2017 to March 31, 2017:

Line of Credit – Related Parties (reference Note 8).

							Patient
	Progress			Student Loan			Online
	Advocates			Care, LLC			Services, Inc.			Total
Balance, December 31, 2016		(561,325	)		4,692			(2,873	)		(559,506	)
Net capital withdrawal by non-controlling interest		-			(206,471	)		-			(206,471	)
Net income (loss) attributable to the non-controlling interest		(79,193	)		230,196			(254	)		150,749
Balance, March 31, 2017	$	(640,518	)	$	28,417		$	(3,127	)	$	(615,228	)

InNOTE a15 ~~letter~~- ~~dated~~SUBSEQUENT July 28, 2016, the Lenders presented a demand for immediate repayment of the outstanding balance or a securitization of same by the Company. This letter was a result of the suspension of all marketing and sales activities by the Company’s majority owned subsidiary, Progress Advocates LLC, for whom the funds drawn from the Line of Credit were expended. In an agreement dated October 18, 2016, the Company agreed to securitize the Lender’s Line of Credit through a Pledge of the Company’s 51 Class A units of the limited liability membership interests in Progress Advocates LLC.EVENTS

22In ~~Table~~accordance ofwith ~~Contents~~ASC 855-10, Subsequent Events¸ we have analyzed our operations subsequent to March 31, 2017, through the date the financial statements were available to be issued, and have determined that the following is a material subsequent events to disclose in these financial statements:

Litigation

In reference to Note 12 (Litigation), on April 20, 2017, the Court awarded the plaintiff $115,516 in attorney’s fees and costs.

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ITEM 2. MANAGEMENT’S DISCUSSION & ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

Overview

Business Growth Strategy Update

During the quarter ending ~~September~~March 3031, ~~2016~~2017, significant progress was made in the implementation of our new strategies. While individual setbacks were expected and did occur, each was addressed and positive momentum resumed for the respective strategy. The following is a brief review of the important progress achieved in each strategy:

· Student Loan Care LLC was launched in June 2016 and established itself as a financially viable company in the quarter ending September 30, 2016. This new joint venture is a partnership with Hutton Ventures LLC., a California based company with extensive experience in the federal student loan document preparation industry. The business model for Student Loan Care, specifically addresses the issues of high marketing costs and customer churn, two significant issues realized by the Company’s majority owned joint venture, Progress Advocates LLC. From its first month of operation in June 2016, Revenue grew every month from $104,818 in June, to $466,349 in September. Over the same period, operating income turned positive and grew every month from ($170,305) June to $122,678 in September. Gross margins were positive in every month of the quarter, growing sequentially to 26.3% of sales. These margins were over 10% higher than the best monthly margin achieved by Progress Advocates in 2015. These margin improvements are a direct result of Student Loan Care’s new marketing model that reduced the cost of customer acquisition by 40% as compared to the customer acquisition cost at Progress Advocates. · Progress Advocates continues to support its current customers as it evaluates other business options. As previously reported in both the Company's 2015 form 10-K and form 10-Q for the quarter ending March 31,2016, the Company suspended all marketing and sales activities during the first quarter of 2016. After continued discussions with our joint venture partner who was also the operator of Progress Advocates, the Company reached the conclusion that the changes necessary to reach profitability were not going to be made by our partner. By the beginning of 2016, it was evident that high marketing and sales costs, along with a higher than expected default of customer payments, resulted in a business cost structure that was unsupported by current revenues. Progress Advocates will continue to support its current customers and provide to them all contracted services. In September, Progress Advocates initiated discussions to explore the sale of its loan portfolio. Initial response has been positive. However, no offers have been made to indicate the relative market value of this asset. · Enhance the Debt Resolve Solution by integrating it with other services to become a total solution for the medical ARM market. Our majority owned joint venture, Payment Resolution Systems offers a service to Medical Practices and Hospitals looking to give patients with unpaid accounts one last chance to pay. The one last chance will be a negotiated settlement offering using Debt Resolve's patented double blind bidding technology. A pilot of this business was run in March and April of 2016 with a NYC Anesthesiology practice. The results were better than expected and a second pilot was run for an Atlanta GA Anesthesiology Group. This effort confirmed our initial results and demonstrated our ability to negotiate settlements for high and low account balances. A national sales effort has been initiated with significant interest by healthcare providers, however, the sales cycle has been longer than anticipated due to push back from the prospective client’s current ARM vendors.

Student Loan Care LLC was launched in June 2016 and has already established itself as a financially viable company. This new joint venture is a partnership with Hutton Ventures LLC., a California based company with extensive experience in the federal student loan document preparation industry. The business model for Student Loan Care, specifically addresses the issues of high marketing costs and customer churn, both of which were significant negative impacts on the Company’s majority owned joint venture, Progress Advocates LLC. From its first month of operation in June 2016, Revenue grew every month from $104,818 in June, to $1,987,544 in the quarter ending March 31, 2017. Over the same period, operating income turned positive and grew every month from ($170,305) June to $469,789 in the quarter ending March 31, 2017. Operating margins were positive for the last nine months, growing sequentially to 24% of sales. These margins were over 10% higher than the best monthly margin achieved by Progress Advocates in 2015. These margin improvements are a direct result of Student Loan Care’s new marketing model that reduced the cost of customer acquisition by 40% as compared to the customer acquisition cost at Progress Advocates.

To enhance the sales efforts, in November 2016, Student Loan Care contracted with a non-related party to test a relationship as a sales affiliate. In this role, the affiliate will provide an external sales team to function as Student Loan Care salespeople. Each will be remotely integrated into the Student Loan Care sales infrastructure and will generate Student Loan Care sales for which the affiliate will be paid a sales commission. Early tests during the fourth quarter indicate this sales model can generate sales with only a modest 10% increase in customer acquisition cost. During the quarter ending March 31, 2017, contracts were signed with three sales affiliate companies. Training and integration into the Student Loan Care process are scheduled to be completed by the end of the May. As the affiliate’s sales team becomes more familiar with the Student Loan Care sales process, it is anticipated that sales productivity will be the same as Student Loan Care’s internal sales team.

Progress Advocates continues to support its current customers as it evaluates other business options. As previously reported in both the Company’s 2015 Form 10-K and Form 10-Q for the quarter ending March 31, 2016, the Company suspended all marketing and sales activities during February of 2016. After continued discussions with our joint venture partner who was also the operator of Progress Advocates, the Company reached the conclusion that the changes necessary to reach profitability were not going to be made by our partner. By the beginning of 2016, it was evident that high marketing and sales costs, along with a higher than expected default of customer payments, resulted in a business cost structure that was unsupportable by current revenues. Progress Advocates will continue to support its current customers and provide to them all contracted services. In September, Progress Advocates initiated discussions to explore the sale of its loan portfolio. Initial response has been positive. However, no offers have been made to indicate the relative market value of this asset.

·20 ~~Leverage~~Table ~~our technology and knowledge~~ of consumer debt collection to launch a new internet based product in the consumer to consumer debt resolution and collection space. As resources were diverted to support the launch and development of Student loan Care LLC (see above). The development effort on Settl.it/Pro was postponed to the fourth quarter of 2016. A soft launch of this small business product is scheduled for January 2017. Pending market response, national availability is anticipated in March 2017.Contents

23· ~~Table~~Enhance the Debt Resolve Solution by integrating it with other services to become a total solution for the medical ARM market. Our majority owned joint venture, Payment Resolution Systems offers a service to Medical Practices and Hospitals looking to give patients with unpaid accounts one last chance to pay. The one last chance will be a negotiated settlement offering using Debt Resolve’s patented double blind bidding technology. A pilot of ~~Contents~~this business was run in March and April of 2016 with a NYC Anesthesiology practice. The results were better than expected and a second pilot was run for an Atlanta GA Anesthesiology Group. This effort confirmed our initial results and demonstrated our ability to negotiate settlements for high and low account balances. A national sales effort was initiated with significant interest by healthcare providers, however, push back from the prospective client’s current ARM vendors, led to the cancellation of three sales. Sales efforts have been suspended until an adequate processing and pricing response has been formulated to overcome the vendors’ pushback. · Leverage our technology and knowledge of consumer debt collection to launch a new internet based product in the small business to consumer debt negotiation and collection space. As resources were diverted to support the launch and development of Student loan Care LLC (see above), the development effort on Settl.it/Pro was postponed to the first quarter of 2017. A soft launch of this small business product is scheduled for May 2017. Pending market response, national availability is anticipated in July 2017. · Leverage our public equity financial structure by purchasing equity interests in private companies that will benefit from the experience and skills of our management and consultants as well as from holding our publicly traded equity. During the second quarter of 2016, , Student Loan Care LLC was formed with Hutton Ventures LLC to offer document preparation services for Federal student loan holders wanting to apply for various U.S. Department of Education Student loan payment consolidation and modification programs. The principles of Hutton Ventures are experienced in the federal student loan document preparation industry and in the use of advanced communications techniques to increase productivity and profitability in a traditional people based business environment. To reward their successful participation in Student Loan Care LLC, goals for Student Loan Care revenue growth and net profit attainment have been established. Hutton Venture partners will be granted warrants for Debt Resolve common stock upon the attainment of each of these goals. At this time, Student Loan Care has achieved one Net income goal and was granted a warrant for five million shares of common stock. For additional information on the Company’s product, visit these websites; 1. The Settl.it Family of Products website, www.settl.com, and 2. Payment Resolution Systems, www.paymentresolutionsustems.com. In addition, the Settl.it consumer to consumer product can be utilized at www.settl.it and our Student Loan Care federal student loan document preparation services can be obtained at www.studentloancare.com.

·Results ~~Leverage our public equity financial structure by purchasing equity interests in private companies that will benefit from the experience and skills~~ of ~~our~~Operations ~~management~~for ~~and consultants as well as from holding our publicly traded equity. During~~ the ~~second~~Three ~~quarter~~Months ofEnded ~~2016,~~March 31, ~~Student~~2017 ~~Loan~~Compared ~~Care LLC was formed with Hutton Ventures LLC~~ to offer document preparation services for Federal student loan holders wanting to apply for various U.S. Department of Education Student loan payment modification programs. The principles of Hutton Ventures are experienced in the ~~federal~~Three ~~student~~Months ~~loan~~Ended ~~document~~March preparation industry and in the use of advanced communications techniques to increase productivity and profitability in a traditional people based business environment. To reward their successful participation in Student Loan Care31, goals for Student Loan Care revenue growth and net profit attainment have been established. Hutton Venture partners will be granted warrants for Debt Resolve common stock upon the attainment of each of these goals. For additional information on the Company’s product, visit these websites; 1. The Settl.it Family of Products website, www.settl.com, and 2. Payment Resolution Systems, www.paymentresolutionsustems.com. In addition, the Settl.it consumer to consumer product can be utilized at www.settl.it and our Student Loan Care federal student loan document preparation services can be obtained at www.studentloancare.com.2016

Results of Operations for the Three Months Ended September 30, 2016 Compared to the Three Months Ended September 30, 2015

Revenues

Revenues totaled $12,~~336~~161,~~870~~374 and $2657,~~242,686~~644 for the three months ended ~~September~~March 3031, ~~2016~~2017 and ~~2015~~2016, respectively. We earned revenue during the three months ended ~~September~~March 3031, ~~2016~~2017 and ~~2015~~2016 as a percent of debt collected, on a fee per settlement and on a flat monthly fee basis. In addition, we earn revenue from fees for providing student loan document preparation services. The ~~decreased~~increased revenue mainly resulted from our majority owned subsidiary, ~~Progress~~Student ~~Advocates~~Loan Care, LLC of $~~170~~1,~~201~~987,544 for the three month ending ~~September~~March 3031, ~~2016~~2017 as compared to $~~2,213,059~~-0- for the same period last year. To offset this revenue ~~loss~~gain, our majority owned subsidiary, ~~Student~~Progress ~~Loan~~Advocates ~~Care~~is ~~LLC~~winding ~~started~~down ~~offering services in June, 2016~~ and had revenues of $1161,~~154~~956 and $627,~~074~~721 in the three months ending ~~September~~March 3031, 2017 and 2016, respectively.

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Costs and Expenses

Payroll and related expenses. Payroll and related expenses amounted to $~~598~~649,~~941~~131 for the three months ended ~~September~~March 3031, ~~2016~~2017, as compared to $~~640~~314,~~334~~654 for the three months ended ~~September~~March 3031, ~~2015~~2016, aan ~~decrease~~increase of $41334,~~393~~477. The increase is primarily related to our Student Loan Care subsidiary which started in June 2016, offset by the winding down of our Progress Advocates subsidiary. Stock based compensation was $9022,~~121~~191 and $~~107~~46,~~051~~721 for the three months ended ~~September~~March 3031, ~~2016~~2017 and ~~2015~~2016, respectively.

Selling and marketing expenses. Selling and marketing expenses ~~decreased~~increased from $~~636~~124,~~280~~500 for the three months ended ~~September~~March 3031, ~~2015~~2016 to $~~262~~386,~~562~~672 for the same period in ~~2016~~2017. The significant ~~decrease~~increase is due to the ~~reduced~~increased sales and marketing activities of ~~Progress~~Student ~~Advocates~~Loan Care LLC., our majority owned subsidiary.

General and administrative expenses. General and administrative expenses amounted to $~~483~~776,~~783~~017 for the three months ended ~~September~~March 3031, ~~2016~~2017, as compared to $~~445~~741,~~399~~548 for the three months ended ~~September~~March 3031, ~~2015~~2016, a an increase of $3834,~~384~~469. ~~During~~The ~~the three months ended September 30, 2016, the~~ most significant ~~expense~~ increase was ~~the~~due ~~addition~~to ofincreased costs associated with Student Loan Care, LLC ~~in 2016~~, net with ~~the~~a ~~reduction~~decrease indue to Progressive Advocates, LLC ~~activity~~as compared to 2016.

~~Gain~~Loss on change in fair value of derivative liabilities. In 2016, we issued convertible promissory notes with certain embedded derivatives, as such, any issued convertible instruments issued subsequent require us to fair value the conversion feature as derivatives each reporting period and mark to market as a non-cash adjustment to our current period operations. For the three months ended ~~September~~March 3031, 2016, we incurred a $~~122~~4,~~901~~240 loss on change in fair value of our derivative liabilities. On August 17, 2016, we eliminated the embedded derivatives through note amendments.

~~During~~Interest ~~the~~(expense). ~~three~~We ~~months~~recorded ~~September~~interest ~~30,~~expense ~~2015, we had the possibility~~ of ~~exceeding~~$435,279 ~~common~~for ~~shares authorized when considering~~ the ~~number~~three ofmonths ~~possible~~ended ~~shares~~March ~~that~~31, ~~may~~2017 becompared ~~issuable~~ to ~~satisfy~~interest ~~settlement~~expense ~~provisions~~ of ~~these~~$251,709 ~~agreements~~for ~~after consideration of all existing instruments that could be settled in shares. The accounting treatment of derivative financial instruments requires us to reclassify~~ the ~~derivative from equity to a liability at their fair values as of the date possible issuable shares exceeded the authorized level and at fair value as of each subsequent balance sheet date. For the~~ three months ended ~~September~~March 3031, ~~2015,~~2016. weInterest ~~recorded~~expense aincreased ~~loss~~primarily onfrom ~~change~~our infinancing ~~fair value~~ of ~~these~~accounts ~~derivative~~receivable ~~liabilities~~with ofStudent $1Loan Care,~~238,479~~ LLC.

24Amortization ~~Table~~of deferred debt discount. Amortization expense of ~~Contents~~$69,448 and $30,239 was incurred for the three months ended March 31, 2017 and 2016, respectively, for the amortization of the value of the deferred debt discount associated with certain of our notes payable. Amortization expense increased due to new notes added in latter part of 2016.

Interest (expense). We recorded interest expense of $296,582 for the three months ended September 30, 2016 compared to interest expense of $485,198 for the three months ended September 30, 2015. Interest expense decreased primarily from our reduced financing of accounts receivable with Progressive Advocates.

Amortization of deferred debt discount. Amortization expense of $69,545 and $24,089 was incurred for the three months ended September 30, 2016 and 2015, respectively, for the amortization of the value of the deferred debt discount associated with certain of our notes payable. Amortization expense increased due to new notes added in 2015 and 2016.

Results of Operations for the Nine Months Ended September 30, 2016 Compared to the Nine Months Ended September 30, 2015

Revenues

Revenues totaled $2,342,344 and $4,152,453 for the nine months ended September 30, 2016 and 2015, respectively. We earned revenue during the nine months ended September 30, 2016 and 2015 as a percent of debt collected, on a fee per settlement and on a flat monthly fee basis. In addition, we earn revenue from fees for providing student loan document preparation services. The decreased revenue mainly resulted from our majority owned subsidiary, Progress Advocates LLC of $1,009,434 for the nine month ending September 30, 2016 as compared to $4,066,123 for the same period last year. As noted above, this reduction in revenue was a result of suspending the new sales operations of Progress Advocates in February, 2016. To offset this revenue loss, our majority owned subsidiary, Student Loan Care LLC started offering services in June, 2016 and had revenues of $1,258,892 in the nine months ending September 30, 2016.

Costs and Expenses

Payroll and related expenses. Payroll and related expenses amounted to $1,214,507 for the nine months ended September 30, 2016, as compared to $1,462,792 for the nine months ended September 30, 2015, a decrease of $248,285. Stock based compensation was $244,200 and $125,257 for the nine months ended September 30, 2016 and 2015, respectively. The decrease mainly resulted from our staffing reductions from our majority owned subsidiary, Progress Advocates LLC from $1,113,896 for the nine months ended September 30, 2015 as compared to $192,881 for the same period, current year, offset with an increase in Student Loan Care LLC of $594,984 in the current period.

Selling and marketing expenses. Selling and marketing expenses decreased from $1,562,880 for the nine months ended September 30, 2015 to $387,062 for the same period in 2016. The significant decrease is due to the reduced sales and marketing activities of Progress Advocates LLC., our majority owned subsidiary.

General and administrative expenses. General and administrative expenses amounted to $1,683,916 for the nine months ended September 30, 2016, as compared to $945,161 for the nine months ended September 30, 2015, an increase of $738,755. Of the increase, $243,531 was incurred from our subsidiary, Student Loan Care, LLC, in the current year, as compared to $-0- for the nine months ended September 30, 2015. During the nine months ended September 30, 2016, the most significant expense incurred by Progress Advocates was an increased provision for Accounts Receivables bad debt reserves of $432,506.

25 Table of Contents

Gain on change in fair value of derivative liabilities. In 2016, we issued convertible promissory notes with certain embedded derivatives, as such, any issued convertible instruments issued subsequent require us to fair value the conversion feature as derivatives each reporting period and mark to market as a non-cash adjustment to our current period operations. For the nine months ended September 30, 2016, we incurred a $30,317 gain on change in fair value of our derivative liabilities. On August 17, 2016, eliminated the embedded derivatives through note amendments.

During the nine months September 30, 2015, we had the possibility of exceeding common shares authorized when considering the number of possible shares that may be issuable to satisfy settlement provisions of these agreements after consideration of all existing instruments that could be settled in shares. The accounting treatment of derivative financial instruments requires us to reclassify the derivative from equity to a liability at their fair values as of the date possible issuable shares exceeded the authorized level and at fair value as of each subsequent balance sheet date. For the nine months ended September 30, 2015, we recorded a loss on change in fair value of these derivative liabilities of $897,648.

Interest (expense). We recorded interest expense of $745,531 for the nine months ended September 30, 2016 compared to interest expense of $1,133,999 for the nine months ended September 30, 2015. Interest expense decreased primarily due to our factoring arrangement we have with our majority owned subsidiary, Progress Advocates. In the current period, we incurred $124,515 as compared to $774,848 in 2015.

Amortization of deferred debt discount. Amortization expense of $152,555 and $66,065 was incurred for the nine months ended September 30, 2016 and 2015, respectively, for the amortization of the value of the deferred debt discount associated with certain of our notes payable. Amortization expense increased due to new notes added in 2015 and 2016.

Liquidity and Capital Resources

As of ~~September~~March 3031, ~~2016~~2017, we had a working capital deficiency (total current liabilities exceeded total current assets) in the amount of $11,~~267~~972,~~418~~260 and cash and cash equivalents totaling $~~135~~634,~~050~~067. We reported a net loss of $1305,~~587,953~~922 for the ~~nine~~three months ended ~~September~~March 3031, ~~2016~~2017. Net cash used in operating activities was $~~587~~64,~~186~~798 for the ~~nine~~three months ended ~~September~~March 3031, ~~2016~~2017. Cash flow provided by in financing activities was $~~691~~105,~~756~~764 for the ~~nine~~three months ended ~~September~~March 3031, ~~2016~~2017. As of December 31, ~~2015~~2016, we had a working capital deficiency (total current liabilities exceeded total current assets) in the amount of $10,~~313~~955,~~663~~052 and cash and cash equivalents totaling $30593,~~480~~101.

Our working capital as of the date of this report is negative and is not sufficient to fund our plan of operations for the next year. The aforementioned factors raise substantial doubt about our ability to continue as a going concern.

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We have successfully raised capital for our day-to-day operations since our inception; however, no assurance can be provided that we will continue to be able to do so. There is no assurance that any funds secured will be sufficient to enable us to attain profitable operations or continue as a going concern. To the extent that we are unsuccessful, we may need to curtail our operations and implement a plan to extend payables and reduce overhead until sufficient additional capital is raised to support further operations. At any time until substantial capital is raised or we reach cash flow breakeven, there is also a significant risk of bankruptcy. There can be no assurance that any plan to raise additional funding will be successful. It is quite challenging in the current environment to raise money given our delay in generating meaningful revenue. Unless our revenue grows quickly, it may not be possible to demonstrate the progress investors require to secure additional funding. These consolidated financial statements do not include any adjustments that might result from the outcome of this uncertainty.

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Application of Critical Accounting Policies and Estimates

The preparation of financial statements in conformity with accounting principles generally accepted in the United States requires our management to make estimates and assumptions that affect the amounts reported in the financial statements and the accompanying notes. These estimates and assumptions are based on our management'’s judgment and available information and, consequently, actual results could be different from these estimates. The significant accounting policies that we believe are the most critical to aid in fully understanding and evaluating our reported financial results are as follows:

Revenue Recognition

We earn revenue from collection agencies, collection law firms and lenders that implemented our online system. Our current contracts provide for revenue based on a percentage of the amount of debt collected, a fee per settlement or through a flat monthly fee. Although other revenue models have been proposed, most revenue earned to date has been determined using these methods, and such revenue is recognized when the settlement amount of debt is collected by the client or at the beginning of the month for a flat fee. For the early adopters of our product, we have waived set-up fees and other transactional fees that we anticipate charging in the future. While the percent of debt collected will continue to be a revenue recognition method going forward, other payment models are also being offered to clients and may possibly become our preferred revenue model. Dependent upon the structure of future contracts, revenue may be derived from a combination of set up fees or flat monthly or annual fees with transaction fees upon debt settlement, fees per account loaded or fees per settlement. We are currently marketing our system to three primary markets. The first and second are financial institutions and collection agencies or law firms, our traditional markets. We are also expanding into healthcare, particularly hospitals, which is our third market.

Revenues for the preparation of student loan documentation are earned when the Company has substantially accomplished the agreed-upon deliverables to be entitled to payment by the client. For most current active clients, these deliverables consist of the successful completion and delivery of the student loan modification and consolidation documentation package on behalf of the client to the U.S. Department of Education. The Company may sell its products separately or in various bundles that include multiple elements such as initial ~~fees~~application and consolidation, monitoring, annual renewals and other services.

We defer any revenue for which the product or service has not been delivered or is subject to refund until such time that the Company and the customer jointly determine that the product has been delivered or no refund will be required.

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Accounts Receivable

As of ~~September~~March 3031, ~~2016~~2017 and December 31, ~~2015~~2016, the Company's accounts receivable was $49,~~444~~259,~~177~~315 and $38,~~463~~596,~~161,~~343 ~~net~~and ofthe allowance for doubtful accounts ofwas $1,~~086~~689,~~473~~064 and $~~600~~1,~~000~~622,208, respectively.

The Company'’s majority owned subsidiaries, Progress Advocates LLC and Student Loan Care LLC entered into a factoring agreements which had certain provisions that factor advances were based on either a non-recourse and recourse basis. During the first quarter of 2016, the Company agreed to modify the terms of the existing factoring agreement whereby the outstanding advances which were originally based upon a non-recourse basis will be reclassified to a full recourse advances. Accordingly, the Company reclassified the outstanding advances of $1,128,701 to a full recourse liability to the factor, increased the carrying value of accounts receivable by $1,128,701, net of an allowance for doubtful accounts of $212,388.

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Stock-based compensation

We follow Accounting Standards Codification subtopic 718-10, Stock-based Compensation ("“ASC 718-10"”). The standards require the measurement of compensation cost at the grant date, based upon the estimated fair value of the award, and requires amortization of the related expense over the employee'’s requisite service period.

Fair Values

Accounting Standards Codification subtopic 825-10, Financial Instruments ("“ASC 825-10"”) requires disclosure of the fair value of certain financial instruments. The carrying value of cash and cash equivalents, accounts payable and accrued liabilities, and short-term borrowings, as reflected in the balance sheets, approximate fair value because of the short-term maturity of these instruments. All other significant financial assets, financial liabilities and equity instruments of the Company are either recognized or disclosed in the financial statements together with other information relevant for making a reasonable assessment of future cash flows, interest rate risk and credit risk. Where practicable the fair values of financial assets and financial liabilities have been determined and disclosed; otherwise only available information pertinent to fair value has been disclosed.

We follow Accounting Standards Codification subtopic 820-10, Fair Value Measurements and Disclosures ("“ASC 820-10"”) and Accounting Standards Codification subtopic 825-10, Financial Instruments ("“ASC 825-10"”), which permits entities to choose to measure many financial instruments and certain other items at fair value. None of these statements had an impact on the Company'’s financial position, results of operations or cash flows.

Derivative Liability

We account for derivatives in accordance with ASC 815, which establishes accounting and reporting standards for derivative instruments and hedging activities, including certain derivative instruments embedded in other financial instruments or contracts and requires recognition of all derivatives on the balance sheet at fair value, regardless of hedging relationship designation. Accounting for changes in fair value of the derivative instruments depends on whether the derivatives qualify as hedge relationships and the types of relationships designated are based on the exposures hedged. At September 30, 2016 and December 31, 2015, we did not have any derivative instruments that were designated as hedges.

Recently-Issued Accounting Pronouncements

See recently adopted and issued accounting standards in "“Note 2—Significant accounting policies"” in Item 1. Financial statements of this report.

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Statement Relating to Forward-Looking Statements

This report contains forward-looking statements that are based on our beliefs as well as assumptions and information currently available to us. When used in this report, the words "“believe,"” "“expect,"” "“anticipate,"” "“estimate,"” "“potential"” and similar expressions are intended to identify forward-looking statements. These statements are subject to risks, uncertainties and assumptions, including, without limitation, the risks and uncertainties concerning our recent research and development activities; the risks and uncertainties concerning acceptance of our services and products, if and when fully developed, by our potential customers; our present financial condition and the risks and uncertainties concerning the availability of additional capital as and when required; the risks and uncertainties concerning the Limited License Agreement with Messrs. Brofman and Burchetta; the risks and uncertainties concerning our dependence on our key executives; the risks and uncertainties concerning technological changes and the competition for our services and products; the risks and uncertainties concerning general economic conditions; and the risks and uncertainties described in our Annual Report on Form 10-K for the year ended December 31, ~~2015~~2016, filed on April 1417, ~~2016~~2017, in the section labeled "“Risk Factors."” Should one or more of these risks or uncertainties materialize, or should underlying assumptions prove incorrect, actual results may vary materially from those anticipated, estimated, or projected. We caution you not to place undue reliance on any forward-looking statements, all of which speak only as of the date of this report.

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ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

Not applicable.

ITEM 4. CONTROLS AND PROCEDURES

Disclosure Controls and Procedures

We evaluated the design and operation of our disclosure controls and procedures to determine whether they are effective in ensuring that we disclose required information in a timely manner and in accordance with the Securities Exchange Act of 1934 (the "“Exchange Act"”) and the rules and regulations promulgated by the SEC. Our Chief Executive Officer has participated in such evaluation. Management concluded, based on such review, that our disclosure controls and procedures, as defined by Exchange Act Rules 13a-15(e) and 15d-15(e), were not effective as of the end of the period covered by this Quarterly Report on Form 10-Q. The ineffectiveness of these disclosure controls is due to the matters described below in "“Internal Control over Financial Reporting."”

Limitations on the Effectiveness of Controls

We believe that a control system, no matter how well designed and operated, cannot provide absolute assurance that the objectives of the control system are met, and no evaluation of controls can provide absolute assurance that all control issues and instances of fraud, if any, within a company have been detected. Our disclosure controls and procedures are designed to provide a reasonable assurance of achieving their objectives and our Chief Executive Officer has concluded that such controls and procedures are not effective at the "“reasonable assurance"” level. The ineffectiveness of these disclosure controls is due to the matters described below in "“Internal Control over Financial Reporting."”

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Internal Control over Financial Reporting

Segregation of duties within our Company is limited due to the small number of employees that are assigned to positions that involve the processing of financial information. Specifically, certain key financial accounting and reporting personnel had an expansive scope of duties that allowed for the creation, review, approval and processing of financial data without independent review and authorization for preparation of consolidation schedules and resulting financial statements and related disclosures. We did not maintain a sufficient depth of personnel with an appropriate level of accounting knowledge, experience and training in the selection and application of Generally Accepted Accounting Principles commensurate with financial reporting requirements.

Accordingly, we place undue reliance on the finance team at corporate headquarters, specifically the executive who is our Chief Executive Officer and outside accounting professionals.

Accordingly, management has determined that this control deficiency constitutes a material weakness. This material weakness could result in material misstatements of significant accounts and disclosures that would result in a material misstatement to our interim or annual consolidated financial statements that would not be prevented or detected. In addition, due to limited staffing, we are not always able to detect minor errors or omissions in reporting.

Going forward, management anticipates that additional staff will be necessary to mitigate these weaknesses, as well as to implement other planned improvements. Additional staff will enable us to document and apply transactional and periodic controls procedures, permit a better review and approval process and improve quality of financial reporting. However, the potential addition of new staff is contingent on obtaining additional financing, and there is no assurance that we will be able to do so.

Management believes that its unaudited condensed consolidated financial statements for the three months ended ~~September~~March 3031, ~~2016~~2017 and ~~2015~~2016 are fairly presented, in all material respects, its financial condition and results of operations. During the three months ended ~~September~~March 3031, ~~2016~~2017, there were no changes to our internal control over financial reporting that has materially affected, or is reasonably likely to materially affect, our internal control over financial reporting.

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PART II – OTHER INFORMATION

ITEM 1. LEGAL PROCEEDINGS

Lawsuits from Noteholders

On ~~July~~April 2011, ~~2015~~2016, ~~the~~a ~~Company~~Decision ~~received~~was aentered ~~complaint~~in ~~concerning~~the matter of a ~~promissory~~noteholder’s ~~note~~claim ~~dated~~against ~~December~~Debt 21Resolve Inc., ~~2007~~granting ~~that~~the ~~matured~~noteholder’s onmotion ~~June~~for 21summary judgment in part, ~~2009~~and denying it in part, and denying Debt Resolve’s cross motion for summary judgment. ~~See~~A stipulation with respect to damages was entered by the Court on August 29, ~~Commitments~~2016 providing that the total outstanding principal and ~~Contingencies~~interest ~~Note~~due 13the ~~(Litigation)~~noteholder as of July 31, 2016 is $322,152. The noteholder is seeking an award of his attorneys’ fees from the Court. On April 20, 2017, the Court awarded the plaintiff $115,516 in attorney’s fees and costs.

Lawsuits from vendors

From time to time, we are involved in various litigation matters in the ordinary course of business. In the opinion of management, the ultimate disposition of these matters will not have a material adverse effect on our financial position or results of operations. There are currently no lawsuits from vendors.

New York State Attorney General Subpoena

In December 2015, the Company and Progress Advocates, its majority owned subsidiary, received a subpoena requesting documents regarding the operations of Progress Advocates. It is our understanding that this request was one of several requests sent to companies operating in the Federal Student Loan document preparation space in New York State. We have provided the requested information that was available, both from Progress Advocates and its vendors. Additional information has been provided subsequent to the Company'’s initial response. We are confident that our compliance with payments aligned to the consumer'’s receipt of benefit and our vendor'’s responsible marketing ~~will~~has bebeen accurately demonstrated in the information provided.

ITEM 1A. RISK FACTORS

As a "“small reporting company"” as defined by Item 10 of Regulation S-K, we are not required to provide information required by this item.

ITEM 2. UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS

None.

ITEM 3. DEFAULTS UPON SENIOR SECURITIES

Investor Note 1:

On December 21, 2007, an unaffiliated investor loaned us $125,000 on an unsecured 18-month note with a maturity date of June 21, 2009. The note has a provision requiring repayment once we raised an aggregate of $500,000 following issuance of this note. As a result, this note is currently in default as it has not been repaid and we reached the $500,000 threshold in September, 2008. The note carries interest at a rate of 12% per annum, with interest accruing and payable at maturity. In conjunction with the note, we granted to the investor a warrant to purchase 37,500 shares of common stock at an exercise price of $1.07 and an expiration date of December 21, 2012. This note is guaranteed by, a shareholder and former Company director. On April 10, 2008, we borrowed an additional $198,000 from this investor. Please see discussion below.

On April 10, 2008, an unaffiliated investor loaned us an additional $198,000 on an amendment of the prior unsecured note with a maturity date of June 21, 2009 for the entire balance of the first note plus the amendment ($323,000 total). The note carries interest at a rate of 12% per annum, with interest accruing and payable at maturity. The outstanding principal and interest may be repaid, in whole or in part, at any time without prepayment penalty. In conjunction with the note, we also issued a warrant to purchase 99,000 shares of common stock at an exercise price of $2.45 and an expiration date of April 10, 2013. This warrant has a "“cashless"” exercise feature. This note is guaranteed by a Director of the Company. The amended note maintains the provision requiring repayment of the note upon raising gross proceeds of $500,000 subsequent the issuance of the note.

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At September 30, 2008, we had raised in excess of $500,000 subsequent to this amended note, and as a result, this note is in default. We also issued 50,000 shares of common stock valued at $122,130 in order to induce the investor to forbear on the note, which was included in expenses.

On February 12, 2010, we converted $74,867 of accrued interest through January 2010 and $65,133 of principal on the note to stock.

On August 27, 2010, the investor was paid $80,000 in principal through partial sale of the note, leaving a remaining balance of $177,867 plus accrued interest due on the note as of ~~September~~March 3031, ~~2016~~2017. As of ~~September~~March 3031, ~~2016~~2017, this note has matured and is still outstanding and is in default at this time.

Convertible Notes:

From June 2009 to March 2010, unaffiliated investors loaned the Company an aggregate of $1,237,459 (including $20,000 related party) on three-year Series A Convertible Notes with an interest rate of 14% with an aggregate of $837,000 (including $20,000 related party) remaining at ~~September~~March 3031, ~~2016~~2017. The interest accrues and is payable at maturity, which range in dates from August 2012 to March 2013. The conversion price is set at $0.15 per share. The Notes carry a first lien security interest in all of the assets of the Company. In 2015 and 2016, the Company extended for 18 months $837,000 of the outstanding debt.

During year ended December 31, 2010, unaffiliated investors loaned the Company an aggregate of $275,000 on three-year Series B Convertible Notes with an interest rate of 14%. During the year ended December 31, 2010, $50,000 was repaid in cash, leaving a balance of $225,000 on these notes at ~~September~~March 3031, ~~2016~~2017. The interest accrues and is payable at maturity. The conversion price is set at $0.15 per share. The Notes carry a first lien security interest in all of the assets of the Company with the Series A notes above. In 2014 and 2015, the Company extended for 18 months $175,000 of the outstanding debt and in 2016 extended $75,000 till May/June 2018.

During the year ended December 31, 2010, unaffiliated investors loaned the Company an aggregate of $260,000 ($15,000 related party) on three-year Series C Convertible Notes with an interest rate of 14%. The interest accrues and is payable at maturity. The conversion price was set at $0.15 per share. The notes carry a first lien security interest with the Series A and B notes above in all of the assets of the Company. In 2014 and 2015, the Company extended for 18 months $155,000 of the outstanding debt and in 2016 extended $90,000 till May 2018.

During the year ended December 31, 2011, the Company issued an aggregate of $25,000 of Series D Convertible Notes with an interest rate of 14% due three years from the date of issuance of which $21,000 remains as of ~~September~~March 3031, ~~2016~~2017. The interest accrues and is payable at maturity. The conversion price is set at $0.12 per share. The investors have a second lien position behind the Series A, B and C notes. In 2014 and 2015, the Company extended for 18 months $15,000 of the outstanding debt and in 2016 extended $5,000 till July 2018.

During the year ended December 31, 2014, the Company issued an aggregate of $1,050,000 of 2014 Bridge Convertible Notes with an interest rate of 10% due two years from the date of issuance of which $1050, 000 remains as of ~~September~~March 3031, ~~2016~~2017. The interest accrues and is payable at maturity. The conversion price is set at $0.05 per share. In 2016, the Company extended $~~600~~775,000 of the outstanding debt till May-~~August~~October 2018. As of ~~September~~March 3031, ~~2016~~2017, $~~150~~25,000 of the notes ~~have~~has matured and ~~are~~is in default at this time.

ITEM 4. MINING SAFETY DISCLOSURES

Not applicable

ITEM 5. OTHER INFORMATION

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ITEM 6. EXHIBITS

31.1		Certification of Chief Executive Officer required by Rule 13(a)-14(a).

32.1		Certifications required by Rule 13(a)-14(b) and 18 U.S.C. Section 1350.

101.INS **		XBRL Instance Document

101.SCH **		XBRL Taxonomy Extension Schema Document

101.CAL **		XBRL Taxonomy Extension Calculation Linkbase Document

101.DEF **		XBRL Taxonomy Extension Definition Linkbase Document

101.LAB **		XBRL Taxonomy Extension Label Linkbase Document

101.PRE **		XBRL Taxonomy Extension Presentation Linkbase Document

~~________~~ _____________

** XBRL (Extensible Business Reporting Language) information is furnished and not filed or a part of a registration statement or prospectus for purposes of Sections 11 or 12 of the Securities Act of 1933, as amended, is deemed not filed for purposes of Section 18 of the Securities Exchange Act of 1934, as amended, and otherwise is not subject to liability under these sections.

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SIGNATURES

In accordance with Section 13 or 15(d) of the Securities Exchange Act of 1934, the Registrant caused this Report to be signed on its behalf by the undersigned, thereunto duly authorized.

	DEBT RESOLVE, INC.
Dated: November 18, 2016	By:	/s/ Bruce E. Bellmare
Dated: May 15, 2017	By:	/s/ Bruce E. Bellmare
		Bruce E. Bellmare
		Chief Executive Officer/Principal Accounting Officer
		Chief Executive Officer/Principal Accounting Officer (Principal executive officer/Principal accounting officer)
		(Principal executive officer/Principal accounting officer)

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