UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, DC 20549

FORM 10-Q

(Mark One)

☒ QUARTERLY REPORT PURSUANT TO 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 Number: ~~000~~ 001-~~27841~~32134

Agritech Worldwide, Inc.

(Exact name of registrant as specified in its charter)

Nevada		36-4197173
(State or other jurisdiction of incorporation or organization)		(I.R.S. Employer Identification No.)
1011 Campus Drive, Mundelein, Illinois		60060
(Address of principal executive offices)		(Zip Code)

1120 Avenue of the Americas, Suite 1514, New York, NY		10036
(Address of principal executive offices)		(Zip Code)

(847) 549-6002

(Registrant’s telephone number, including area code)

1011 Campus Drive, Mundelein, Illinois 60060

(Former name, former address and former fiscal year, if changed since last report)

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 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 ☐

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 ☒ 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. See the definitions of “large accelerated filer,” “accelerated filer” and “smaller reporting company” in Rule 12b-2 of the Exchange Act.

Large accelerated filer ☐ Accelerated filer ☐ Non-accelerated filer ☐ (Do not check if a smaller reporting company) Smaller reporting company ☒ Emerging growth company ☐

~~Indicate~~If an emerging growth company indicate by check mark ~~whether~~if the registrant ishas aelected ~~shell~~not ~~company~~to ~~(as~~use ~~defined~~the inextended ~~Rule~~transition ~~12b-2~~period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act). ~~Yes~~ ☐ ~~No ☒~~

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

Indicate the number of shares outstanding of each of the registrant’s classes of common stock, as of the latest practicable date:

Class		Outstanding at ~~November~~May ~~14th~~16, ~~2016~~2017
Common Stock, $0.00005 par value		~~101~~154,~~878~~976,~~858~~459

AGRITECH WORLDWIDE, INC.

FORM 10-Q QUARTERLY REPORT

Table of Contents

Item		Page
PART I	FINANCIAL INFORMATION
Item l.	Financial Statements	31
	Balance Sheets as of September 30, 2016 (unaudited) and December 31, 2015	3
	Balance Sheets as of March 31, 2017 (unaudited) and December 31, 2016	1
	Statements of Operations for the three and nine months ended September 30, 2016 and 2015 (unaudited)	4
	Statements of Operations for the three months ended March 31, 2017 and 2016 (unaudited)	2
	Statements of Cash Flows for the nine months ended September 30, 2016 and 2015 (unaudited)	5
	Statements of Cash Flows for the three months ended March 31, 2017and 2016 (unaudited)	3
	Notes to Financial Statements (unaudited)	64
Item 2.	Management'’s Discussion and Analysis of Financial ~~Condition~~Information and Results of Operations	2831
Item 3.	Quantitative and Qualitative Disclosures about Market Risk	3635
Item 4.	Controls and Procedures	3635
PART II	OTHER INFORMATION
Item 1.	Legal Proceedings	37
Item 1A.	Risk Factors	37
Item 2.	Unregistered Sales of Equity Securities and Use of Proceeds	3837
Item 3.	Defaults Upon Senior Securities	3837
Item 4.	Mine Safety Disclosures	3837
Item 5.	Other Information	3837
Item 6.	Exhibits	3938
SIGNATURES		4039

PART I – FINANCIAL INFORMATION

Item 1.

Financial Statements.

AGRITECH WORLDWIDE, INC. (FORMERLY Z TRIM HOLDINGS, INC.)

BALANCE SHEETS (Unaudited)

	Unaudited
	3/31/2017			12/31/2016
	9/30/2016			12/31/2015
ASSETS
Current Assets
Cash and cash equivalents	$	~~116~~15,~~408~~856		$	~~309~~20,~~851~~773
Accounts receivable		~~127~~213,~~168~~469			~~248~~32,~~348~~613
Inventory		~~163~~86,~~455~~299			~~238~~91,~~264~~085
Prepaid expenses and other assets		15,~~000~~361			559,~~558~~986
Total current assets		~~408~~320,~~031~~985			~~852~~154,~~021~~457
Long Term Assets
Property and equipment, net of depreciation		~~392~~372,~~600~~269			~~471~~366,~~233~~865
Other assets		1788,~~626~~000			3127,~~193~~886
Total long term assets		~~410~~460,~~226~~269			~~502~~394,~~426~~751
TOTAL ASSETS	$	~~818~~781,~~257~~254		$	1549,~~354,447~~208
LIABILITIES & STOCKHOLDERS' EQUITY (DEFICIT)
LIABILITIES & STOCKHOLDERS’ EQUITY (DEFICIT)
Current Liabilities
Accounts payable	$	1912,~~281,374~~341		$	1833,~~141,478~~453
Short-term notes payable to unrelated parties, net of discount		1,722,096			750,000
Preferred dividends payable		715,500			628,012
Short-term non-convertible notes payable to related parties, net of discount		1,247,338			457,000
Short-term notes payable to unrelated parties		1,850,000			1,850,000
Short-term non-convertible notes payable to related parties		1,257,000			1,257,000
Short-term convertible notes payable to related parties		624,866			624,866
Accrued expenses and other		~~762~~966,~~149~~252			~~684~~940,~~596~~040
Accrued liquidated damages		36,178			36,178
Capital lease payable, short term		~~405,077~~-			~~216~~389,~~721~~268
Derivative liabilities		~~376~~371,~~890~~421			~~742~~131,~~833~~043
Total Current Liabilities		6,455,968			4,653,672
Related parties line of credit		180,202			79,230
Long Term Portion of Capital Lease Payable		-			264,980
Senior secured notes payable		996,000			-
Total Liabilities		6,455,968			4,918,652
Total Current Liabilities		7,909,760			6,769,090
Stockholders' Equity (Deficit)
Total Liabilities		7,909,760			6,769,090
Common Stock, $0.00005; authorized 500,000,000; shares issued and outstanding is 101,878,858 and 93,797,504 at September 30, 2016 and December 31, 2015, respectively		5,094			4,690
Stockholders’ Equity (Deficit)
Convertible preferred stock, Series B, $0.01 par value authorized 3,000,000 shares; issued and outstanding 709,625 at both September 30 and December 31, 2015.		7,096			7,096
Common Stock, $0.00005; authorized 500,000,000; shares issued and outstanding is 154,976,459 at March 31, 2017 and December 31, 2016		7,770			7,770
Additional paid-in capital		152,791,693			152,853,639
Convertible preferred stock, Series B, $0.01 par value authorized 3,000,000 shares; issued and outstanding 709,625 at both March 31, 2017 and December 31, 2016		7,096			7,096
Accumulated deficit		(158,441,594	)		(156,429,630	)
Common Stock Payable		4,573			4,573
Total Stockholders' Equity (Deficit)		(5,637,711	)		(3,564,205	)
Additional paid-in capital		153,281,347			153,345,670
TOTAL LIABILITIES & STOCKHOLDERS' EQUITY (DEFICIT)	$	818,257		$	1,354,447
Accumulated deficit		(160,429,292	)		(159,584,991	)
Total Stockholders’ Equity (Deficit)		(7,128,506	)		(6,219,882	)
TOTAL LIABILITIES & STOCKHOLDERS’ EQUITY (DEFICIT)	$	781,254		$	549,208

The accompanying notes are an integral part of the financial statements.

AGRITECH WORLDWIDE, INC. (FORMERLY Z TRIM HOLDINGS, INC.)

STATEMENTS OF OPERATIONS (Unaudited)

	Three Months Ended						~~Nine Months Ended~~
	September 30th,						September 30th,
	March 31,
	2016			2015			2016			2015
	2017			2016
REVENUES:
Products	$	~~371~~402,~~085~~962		$	~~218~~269,~~732~~018		$	~~923,513~~		$	~~834,563~~
Total revenues		~~371~~402,~~085~~962			~~218~~269,~~732~~018			~~923,513~~			~~834,563~~
COST OF REVENUES:
Products		~~509~~487,~~767~~565			~~445~~499,~~936~~694			~~1,295,444~~			~~1,420,476~~
Total cost of revenues		~~509~~487,~~767~~565			~~445~~499,~~936~~694			~~1,295,444~~			~~1,420,476~~
GROSS MARGIN (LOSS)		(~~138~~84,~~682~~603	)		(~~227~~230,~~204~~676	)		~~(371,931~~	)		~~(585,913~~	)
OPERATING EXPENSES:
Selling, general and administrative		~~529~~372,~~287~~604			~~772~~435,~~957~~026			~~1,657,371~~			~~6,881,428~~
Total operating expenses		~~529~~372,~~287~~604			~~772~~435,~~957~~026			~~1,657,371~~			~~6,881,428~~
OPERATING LOSS		(~~667~~457,~~969~~207	)		(1665,~~000,161~~702	)		~~(2,029,302~~	)		~~(7,467,341~~	)
OTHER INCOME (EXPENSES):
Interest expense - other		-			(21,518	)		-			(26,194	)
Miscellaneous income		17,529			-
Interest expense - debt		(~~155~~164,~~889~~245	)		(3593,~~743~~311	)		~~(371,062~~	)		~~(128,006~~	)
Change in fair value - derivatives		~~127~~(240,~~857~~378	)		66102,~~561~~776			~~388,400~~			~~(1,355,747~~	)
Loss on sale and leaseback transaction		-			(574,331	)		-			(574,331	)
Total other income (expenses)		(387,094	)		9,465
Loss on settlement with vendor		-			-			-			(13,990	)
NET LOSS	$	(844,301	)	$	(656,237	)
Loss on debt conversion		-			-			-			(351,314	)
Less preferred dividends		87,488			88,983
Loss on exchange of warrants		-			-			-			(12,959,654	)
NET LOSS ATTRIBUTABLE TO COMMON STOCKHOLDERS	$	(931,789	)	$	(745,220	)
Total other income (expenses)		(28,032	)		(565,031	)		17,338			(15,409,236	)
NET LOSS PER SHARE - BASIC AND DILUTED	$	(0.01	)	$	(0.01	)
NET LOSS	$	(696,001	)	$	(1,565,192	)	$	(2,011,964	)	$	(22,876,577	)
Weighted Average Number of Shares Basic and Diluted		154,976,459			93,797,504
Less Preferred Dividends		92,475			67,462			275,416			194,302
NET LOSS ATTRIBUTABLE TO COMMON STOCKHOLDERS	$	(788,476	)	$	(1,632,654	)	$	(2,287,380	)	$	(23,070,879	)
NET LOSS PER SHARE - BASIC AND DILUTED	$	(0.01	)	$	(0.03	)	$	(0.02	)	$	(0.48	)
Weighted Average Number of Shares Basic and Diluted		101,878,858			47,517,640			97,838,181			47,313,497

The accompanying notes are an integral part of the financial statements.

AGRITECH WORLDWIDE, INC. (FORMERLY Z TRIM HOLDINGS, INC.)

STATEMENTS OF CASH FLOWS (Unaudited)

FOR THE NINE MONTHS ENDED SEPTEMBER 30TH	2016			2015
FOR THE THREE MONTHS ENDED MARCH 31	2017			2016
CASH FLOWS FROM OPERATING ACTIVITIES
Net loss	$	(2844,~~011,964~~301	)	$	(22656,~~876,577~~237	)
Adjustments to reconcile loss from continuing operations to net cash used in operating activities:
Stock based compensation - stock options and warrants vested		317,955			4,534,849
Stock based compensation -common shares, stock options and warrants vested		23,165			52,612
Common shares issued for director fees		-			150,000
Amortization of debt discount		-			678
Amortization of debt discount		3,660			-
Depreciation		25,736			27,162
Shares & warrants issued for services		-			104,000
Change in fair value of derivative liability		240,378			(102,776	)
Preferred stock payable for services		-			258,731
Preferred stock to be issued for services		-			-
Warrants issued expense		-			259,662
Depreciation		75,184			154,250
Change in fair value of derivative liability		(365,943	)		1,355,747
Loss on exchange of warrants		-			12,959,654
Loss on debt conversion		-			351,314
Loss on sale and leaseback transaction		-			574,331
Loss on settlement with vendor		-			13,990
Changes in operating assets and liabilities:
Accounts receivable		~~121,~~(180,856	)		~~(150~~91,~~265~~920	)
Inventory		744,~~809~~786			~~306~~7,~~611~~221
Prepaid expenses and other assets		68(55,~~125~~490	)		~~(19~~23,~~564~~742	)
Accounts payable and accrued expenses		(199,824	)		228,421
Account payable, related party		-			47,998
CASH USED IN OPERATING ACTIVITIES		(1,916,818	)		(1,794,846	)
Accounts payable and accrued expenses		105,101			(125,385	)
CASH USED IN OPERATING ACTIVITIES		(681,481	)		(633,065	)
CASH FLOWS FROM INVESTING ACTIVITIES
Net cash received from the sale of fixed assets		-			172,911
Capital expenditures		(31,140	)		-
CASH PROVIDED BY INVESTING ACTIVITIES		-			172,911
CASH USED IN INVESTING ACTIVITIES		(31,140	)		-
CASH FLOWS FROM FINANCING ACTIVITIES
Principal payments on capital lease		(76389,~~624~~268	)		-
Proceeds for the purchase of convertible preferred stock		-			880,000
Borrowing on short term debt to unrelated parties		-			200,000
Borrowing on short term debt to unrelated parties		1,600,000			400,000
Borrowing on short term debt to related parties		-			150,000
Borrowing on short term debt to related parties		200,000			187,000
Related parties line of credit advances, net		100,972
Borrowing on short term non-convertible notes payable to related parties		-			-
Borrowing on senior secured notes		996,000			-
Principal payments on debt		-			~~(588,211~~-	)
CASH PROVIDED BY FINANCING ACTIVITIES		1707,~~723,376~~704			~~878~~350,~~789~~000
NET DECREASE IN CASH		(~~193~~4,~~443~~917	)		(~~743~~283,~~146~~065	)
CASH AT BEGINNING OF PERIOD		~~309~~20,~~851~~773			1309,~~027,713~~851
CASH AT THE PERIOD ENDED SEPTEMBER 30TH	$	116,408		$	284,567
CASH AT THE END OF THE PERIOD ENDED MARCH 31	$	15,856		$	26,786
Supplemental Disclosures of Cash Flow Information:
Cash paid during the period for interest	$	8039,~~259~~496		$	~~53,596~~-
Discount on debt due to derivitives	$	37,566		$	-
Discount on debt due to derivatives	$	-		$	11,898
Preferred dividends payable declared	$	~~275~~87,~~416~~488		$	~~194~~88,~~302~~983
Preferred stock issued for preferred stock payable	$	-		$	1,010,000
Conversion of debt and interest into preferred stock	$	-		$	386,375
Reclassification of notes from unrelated to related	$	600,000		$	-
Warrants to be exchanged for common stock	$	-		$	542,944

The accompanying notes are an integral part of the financial statements.

AGRITECH WORLDWIDE, INC.

Notes to Financial Statements

~~September~~March 3031, ~~2016~~2017

(Unaudited)

NOTE 1 – NATURE OF BUSINESS

~~Agritech~~On April 5, 2017, Agritech Worldwide, Inc., formerly known as Z Trim Holdings, Inc. (the “Company”), isand anGKS ~~agricultural~~Funding LLC, ~~technology~~as ~~company~~administrative ~~that owns~~agent ~~and~~under ~~develops~~the ~~products~~Loan ~~and~~Agreement ~~processes~~(as ~~for~~defined ~~use~~below) in(“GKS ~~the~~Funding”) ~~food~~entered ~~and~~into ~~industrial~~a ~~markets. The~~Cooperation Agreement ~~Company~~(the ~~currently~~“Cooperation ~~sells~~Agreement”) ain ~~line~~connection ~~of products~~with toa loan (the ~~food~~“Loan”) ~~industry~~made ~~that~~to ~~can~~the ~~help~~Company ~~food~~pursuant to ~~manufacturers~~that ~~reduce~~certain ~~their~~Loan ~~costs~~ and ~~help~~Security ~~them~~Agreement, ~~solve~~dated ~~many~~as ~~production~~of ~~problems. The~~February ~~Company’s~~1, ~~technology~~2017 ~~provides~~(as ~~value-added~~amended ~~ingredients~~and ~~across~~in ~~virtually~~effect ~~all~~from ~~food~~time ~~industry~~to ~~categories.~~time, ~~The~~the ~~Company’s~~“Loan ~~all-natural products~~Agreement”), ~~among~~between ~~other~~the ~~things~~Company, ~~help~~the toLenders ~~reduce~~party ~~fat~~thereto and ~~calories,~~GKS ~~add~~Funding. ~~fiber,~~On ~~provide~~March ~~shelf-stability~~31, ~~prevent~~2017, ~~oil~~the ~~migration, and~~Company ~~add~~received ~~binding~~a ~~capacity~~notice of –default ~~all~~from ~~without~~GKS ~~degrading~~Funding ~~the~~stating ~~taste~~that ~~and~~it ~~texture~~was in default of the ~~final~~Loan ~~food~~for ~~products.~~failure ~~Perhaps~~to ~~most~~make ~~significantly, the~~a ~~Company’s~~scheduled ~~products~~interest ~~can~~payment ~~help~~on ~~extend~~ the Loan ~~shelf~~that ~~life~~was ofdue ~~finished~~on ~~products~~March 31, ~~and~~2017. ~~thereby~~If ~~potentially~~such ~~increasing~~failure ~~customers’ gross~~described ~~margins.~~above ~~The~~was ~~Company’s~~not ~~industrial~~cured ~~division,~~within ~~opened~~the in15-day ~~2012~~cure period, ~~plans~~which towas ~~sell~~April 15, ~~eco-friendly~~2017, ~~ingredients~~the toLenders ~~oil~~(through ~~drilling, hydraulic~~GKS ~~fracturing~~Funding, ~~petroleum~~as ~~coke,~~administrative ~~steel/aluminum,~~agent ~~paper~~under ~~and~~the ~~other~~Loan ~~industries. The~~Agreement) ~~Company’s~~intended ~~industrial~~to ~~ingredients~~exercise all rights ~~are~~and ~~highly~~remedies ~~functional~~available into ~~applications~~them ~~for~~under ~~adhesives,~~the ~~binders~~Loan Agreement, ~~viscofiers~~related note and ~~emulsifiers~~applicable law, which included foreclosing on the collateral under the Loan Agreement.

~~The~~As ~~Company~~of ~~was originally incorporated in~~ the ~~State~~date of ~~Illinois on May 5, 1994 under~~ the ~~name~~Cooperation ~~Circle Group Entertainment Ltd. On June 21~~Agreement, ~~2006,~~ the ~~Company~~outstanding ~~filed~~balance ~~a certificate~~ of ~~amendment to~~ our ~~certificate~~obligations ofunder ~~incorporation and changed its name to Z Trim Holdings Inc. On March 23, 2016,~~ the ~~Company~~Loan ~~changed~~Agreement ~~its~~was ~~state of incorporation by engaging in a merger (the “Reincorporation”)~~approximately ~~with and into its newly formed wholly owned subsidiary~~$1, ~~Agritech Worldwide~~011, ~~Inc.~~800, aplus ~~Nevada~~accrued ~~corporation, pursuant to the terms~~ and ~~conditions~~accruing oflegal anfees ~~Agreement~~ and ~~Plan~~expenses. ofOver ~~Merger entered into by Z Trim and Agritech on March 18, 2016 (~~the ~~“Merger~~past ~~Agreement”). The~~several ~~Reincorporation was consummated on March 23~~months, ~~2016 and was effectuated by~~ the ~~filing~~Company ofhas ~~(i)~~experienced ~~articles of merger with the Secretary~~significant ofoperating ~~State~~losses ~~of the State of Nevada,~~ and ~~(ii)~~has ~~articles~~been ofunable ~~merger~~to ~~with~~raise ~~the~~additional ~~Secretary~~capital ~~of State of the State of Illinois. The Reincorporation effected a change~~ in ~~the~~order ~~Company’s legal domicile from Illinois~~ to ~~Nevada.~~pay ~~Upon~~ the ~~effectiveness~~expenses ofnecessary ~~the~~to ~~Reincorporation the~~continue ~~Company’s affairs ceased~~ to ~~be governed by (i) Illinois corporation laws, (ii) Illinois Articles of Incorporation, and~~operate ~~(iii) Illinois Bylaws, and~~ its ~~affairs became subject to (a) Nevada corporation laws, (b) Agritech’s Articles of Incorporation of and (c) Agritech’s Bylaws~~business. ~~The~~For ~~resulting Nevada corporation (i) is deemed to be~~ the same ~~entity~~reason, as the ~~Illinois~~Company ~~corporation for~~was ~~all~~unable ~~purposes under the laws of Nevada, (ii) continues~~ to ~~have~~pay ~~all~~interest ofon the ~~rights,~~Loan ~~privileges~~on ~~and~~March ~~powers of the Illinois corporation~~31, ~~(iii)~~ ~~continues~~2017 ~~to possess all properties of the Illinois corporation, and~~ (~~iv) continues to have all of~~ the ~~debts,~~“Existing ~~liabilities and obligations of the Illinois corporation~~Default”).

As a result of the foregoing, and after considering all options, the Board of Directors determined that the Company would not have sufficient funds to cure the Existing Default on or before April 15, 2017. In addition, given the Company’s inability to raise additional capital to fund ongoing operations, it also determined that it would be unable to continue to operate as a going concern. Thus, the Company determined that it was in the best interests of all constituents that it cooperate with GKS Funding and its exercise of remedies.

Pursuant to the Cooperation Agreement, the Company and GKS Funding agreed as follows: (i) the Company waived the 15-day cure period with respect to the Existing Default immediately upon execution of the Cooperation Letter and GKS Funding has the right to exercise its remedies under the Loan Agreement and applicable law with respect to such event of default, including, without limitation, by scheduling and conducting a sale of all of the collateral under the Loan Agreement on or about April 17, 2017 (the “UCC Sale”); (ii) GKS Funding agreed to fund loans to the Company up to the date of the UCC Sale to permit it to pay the Budgeted Expenses (as defined in the Cooperation Agreement) as and when due with this new loan, which is (a) secured by a first priority security interest in all of the Company’s real and personal assets, property, fixtures, rights and interests, (b) shall have priority in payment over the Loan made pursuant to the Loan Agreement; and (c) shall be repaid, before any other payments are made by the Company, out of the first cash proceeds of the collateral received by it; and (iii) the Company consented to fully cooperate with GKS Funding in connection with the UCC Sale, as well as the exercise by GKS Funding of any of its other right and remedies in connection therewith.

In light of the foregoing, the Company is no longer engaged in the agricultural technology business. At this point, the Board is reevaluating its business plan and strategy and has not made any determination as to whether or not it will seek to engage in a new line of business.

During the past year and current quarter, the Company’s sole operations were as an agricultural technology company. The products and processes that it owned and were foreclosed upon by GKS Funding convert generally available agricultural by-products into multi-functional all-natural ingredients that can be used in food manufacturing and other industries. The Company’s primary focus and the source of substantially all of its revenue during the past several years has been from the sale of its all-natural products, Z Trim^®, to the food industry. Its business involved the sale of a line of all-natural products to the food industry designed to help manufacturers reduce their costs, improve the quality of finished goods, and solve many production problems.

During the quarter ended March 31, 2017, the Company’s core product portfolio was comprised of multifunctional food ingredients that included Corn Z Trim^® (both GMO and non-GMO) and Oat Z Trim^®. The superior water-holding capacity and amorphous structure of Z Trim ingredients are key to the exclusive multifunctional attributes they contribute to food product design, including moisture management, oil deflection, texture and appearance quality, fat and calorie reduction. These attributes allow manufacturers using such products to reduce costs of finished products by replacing more expensive ingredients with our fiber and water. Z Trim^® is now being used by food manufacturers world-wide, across a multitude of food categories, such as meats, sauces, soups, dressings, baked goods, fillings, toppings, prepared meals, dairy products, frozen handheld snacks, and pizza dough. Food formulators are seeking greater functionality and product performance than they can get from starches, gums, fats, and other fibers – for both standard and lower fat content foods - and Z Trim^® multifunctional ingredients can help to satisfy their consumers with finished products that we believe have enhanced eating quality, outstanding product performance, and frequently, improved nutritional profiles.

The Company was originally incorporated in the State of Illinois on May 5, 1994 under the name Circle Group Entertainment Ltd. On June 21, 2006, the Company filed a certificate of amendment to our certificate of incorporation and changed its name to Z Trim Holdings Inc. On March 23, 2016, the Company changed its state of incorporation by engaging in a merger (the “Reincorporation”) with and into its newly formed wholly owned subsidiary, Agritech Worldwide, Inc., a Nevada corporation, pursuant to the terms and conditions of an Agreement and Plan of Merger entered into by Z Trim and Agritech on March 18, 2016 (the “Merger Agreement”). The Reincorporation was consummated on March 23, 2016 and was effectuated by the filing of (i) articles of merger with the Secretary of State of the State of Nevada, and (ii) articles of merger with the Secretary of State of the State of Illinois. The Reincorporation effected a change in the Company’s legal domicile from Illinois to Nevada. Upon the effectiveness of the Reincorporation the Company’s affairs of ceased to be governed by (i) Illinois corporation laws, (ii) Illinois Articles of Incorporation, and (iii) Illinois Bylaws, and its affairs became subject to (a) Nevada corporation laws, (b) Agritech’s Articles of Incorporation of and (c) Agritech’s Bylaws. The resulting Nevada corporation (i) is deemed to be the same entity as the Illinois corporation for all purposes under the laws of Nevada, (ii) continues to have all of the rights, privileges and powers of the Illinois corporation, (iii) continues to possess all properties of the Illinois corporation, and (iv) continues to have all of the debts, liabilities and obligations of the Illinois corporation.

NOTE 2 – GOING CONCERN

~~These~~The ~~financial~~Company ~~statements~~incurred ~~have~~a ~~been~~net ~~prepared~~loss of $844,301 onfor athe ~~going~~three ~~concern~~months ~~basis~~ended March 31, ~~which~~2017, ~~implies~~and ~~the~~had an accumulated deficit of $160,429,292. As of March 31, 2017, the Company ~~will~~had ~~continue~~cash toin ~~realize~~the ~~its~~amount ~~assets~~of $15,686 and ~~discharge~~total ~~its~~ liabilities in the ~~normal course~~amount of ~~business~~$7,909,760. ~~The~~We ~~Company~~also ~~has~~had ana ~~accumulated~~working capital deficit of ~~equal to~~ $~~158~~7,~~441~~588,~~594~~775 as of ~~September~~March 3031, ~~2016~~2017. ~~This~~Over ~~factor~~the ~~raises doubt~~last ~~regarding~~several years, its operations have been funded primarily through the ~~ability~~sale of both equity and debt securities. Inasmuch as the Company is still evaluating its future strategy and has no source of revenue, it is difficult to ~~continue~~assess asthe aCompany’s ~~going~~future ~~concern~~operating needs. As ~~The~~of ~~continuation~~the date of the Company’s asmost arecent audit, ~~going~~for ~~concern~~the fiscal year ended December 31, 2016, it had not generated sufficient revenues to meet its cash flow needs. The Company’s current cash on hand is ~~dependent~~insufficient ~~upon~~for ~~the~~it ~~continued~~to ~~financial~~be ~~support~~able ~~from~~to ~~its~~maintain ~~shareholders~~any operations, including the ~~ability~~expenses of remaining a public company. At the ~~Company~~current tolevel ~~obtain~~beyond ~~necessary~~May ~~debt~~2017 and ~~equity~~ ~~financings,~~due ~~and~~to the ~~ability~~outstanding ofdebt owed, the Company does not anticipate that it will have the assets from which to ~~improve~~pay ~~operating~~such ~~margins~~expenses. ~~These~~As ~~financial~~a ~~statements~~result, dothe ~~not~~Company’s ~~include~~auditors ~~any~~have expressed substantial ~~adjustments~~doubt about the Company’s ability to continue as a going concern. Although the ~~recoverability~~Company ~~and~~has ~~classification~~generated ofrevenue during ~~recorded~~the ~~asset~~quarter ~~amounts~~ended ~~and~~March ~~classification~~31, 2017 that was generated in its former line of ~~liabilities~~business, ~~that~~and ~~might~~it ~~be necessary~~still ~~should~~operated ~~the~~at a net loss. The Company becurrently ~~unable~~has no operations from which to obtain revenue. If it cannot continue as a going concern, and cannot successfully revise its business plan it will need to cease operations, which will reduce or completely eliminate the value of your investment.

NOTE 3 – SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

Presentation of Interim Information

The financial information at ~~September~~March 3031, ~~2016~~2017 is unaudited, but includes all adjustments (consisting only of normal recurring adjustments) that the Company considers necessary for a fair presentation of the financial information set forth herein, in accordance with accounting principles generally accepted in the United States (“U.S. GAAP”) for interim financial information. Accordingly, such information does not include all of the information and footnotes required by U.S. GAAP for annual financial statements. For further information, refer to the financial statements and footnotes thereto included in the Company’s Annual Report on Form 10-K for the year ended December 31, ~~2015~~2016.

The results for the three ~~or nine~~ months ended ~~September~~March 3031, ~~2016~~2017 may not be indicative of results for the year ending December 31, ~~2016~~ 2017 or any future periods.

Use of Estimates

The preparation of the accompanying financial statements in conformity with U.S. GAAP requires management to make certain estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period. Actual results could differ from those estimates.

Revenue Recognition

The Company generally recognizes product revenue when persuasive evidence of an arrangement exists, delivery has occurred, the fee is fixed or determinable, and collectability is probable. In instances where the final acceptance of the product is specified by the customer, revenue is deferred until all acceptance criteria have been met. No provisions were established for estimated product returns and allowances based on the Company’s historical experience.

Accounting for Derivative Instruments

All derivatives have been recorded on the balance sheet at fair value based on the lattice model calculation. These derivatives, including embedded derivatives in the Company’s warrants and convertible preferred stock which have reset provisions to the exercise price and conversion price if the Company issues equity or other derivatives at a price less than the exercise price set forth in such warrants and convertible preferred stock, are separately valued and accounted for on the Company’s balance sheet. Fair values for exchange traded securities and derivatives are based on quoted market prices. Where market prices are not readily available, fair values are determined using market based pricing models incorporating readily observable market data and requiring judgment and estimates.

Lattice Valuation Model

The Company valued the warrants and the conversion features in its formerly outstanding convertible notes and preferred stock using a lattice valuation model, with the assistance of a valuation consultant. The lattice model values these instruments based on a probability weighted discounted cash flow model. The Company uses the model to develop a set of potential scenarios. Probabilities of each scenario occurring during the remaining term of the instruments are determined based on management'’s projections and the expert’s calculations. These probabilities are used to create a cash flow projection over the term of the instruments and determine the probability that the projected cash flow will be achieved. A discounted weighted average cash flow for each scenario is then calculated and compared to the discounted cash flow of the instruments without the compound embedded derivative in order to determine a value for the compound embedded derivative.

Cash and cash equivalents

For purposes of the statement of cash flows, the Company considers all highly liquid investments with a maturity of three months or less to be cash equivalents. There was $15,856 in cash at March 31, 2017 and $20,773 at December 31, 2016.

Fair value of financial instruments

The Company’s financial instruments consist of cash and cash equivalents, accounts receivable, inventory, accounts payable and accrued liabilities. The estimated fair value of cash, accounts receivable, accounts payable and accrued liabilities approximate their carrying amounts due to the short-term nature of these instruments. None of these instruments are held for trading purposes.

The Company has utilized various types of financing to fund its business needs, including convertible debt and convertible preferred stock with warrants attached. The Company reviews its warrants and any conversion features of securities issued as to whether they are freestanding or contain an embedded derivative and, if so, whether they are classified as a liability at each reporting period until the amount is settled and reclassified into equity with changes in fair value recognized in current earnings. ~~At September 30, 2016, the Company had warrants to purchase common stock outstanding, the fair values of which are classified as a liability.~~

Inputs used in the valuation to derive fair value are classified based on a fair value hierarchy which distinguishes between assumptions based on market data (observable inputs) and an entity’s own assumptions (unobservable inputs). The hierarchy consists of three levels:

	●	Level one — Quoted market prices in active markets for identical assets or liabilities
	●	Level two — Inputs other than level one inputs that are either directly or indirectly observable; and
	●	Level three — Unobservable inputs developed using estimates and assumptions, which are developed by the reporting entity and reflect those assumptions that a market participant would use

Determining which category an asset or liability falls within the hierarchy requires significant judgment. The Company evaluates its hierarchy disclosures each quarter. The Company’s only asset or liability measured at fair value on a recurring basis is its derivative liability associated with warrants and convertible preferred stock to purchase common stock. The Company classifies the fair value of these warrants under level three. The fair value of the derivative liability at ~~September~~March 3031, ~~2016~~2017 was $~~376~~371,~~890~~421 compared to $~~742~~131,~~833~~ 043 as of December 31, ~~2015~~2016. The ~~decrease~~ increase in fair value for the ~~nine~~three months ended ~~September~~March 3031, ~~2016~~2017 was $~~365~~240,~~943~~378 compared to an increase of $~~812~~102,~~803~~776 for the ~~nine~~three months ended ~~September~~March 3031, ~~2015~~2016. Below is a hierarchy table of the components of the derivative liability:

	Carrying			Fair Value Measurements Using
	Value			Level 1		Level 2		Level 3			Total
Derivative Liabilities 12/31/2015	$	742,833			-		-	$	742,833		$	742,833
Derivative Liabilities 12/31/2016	$	131,043						$	131,043		$	131,043
Change in derivative liabilities due to:
Issuance of warrants		41,226			-		-		41,226		$	41,226
Change in derivative liabilities valuation	$	240,378			-		-		240,378		$	240,378
Settlements		(18,769	)						(18,769	)	$	(18,769	)
		240,378					-		240,378			240,378
Change in derivative liabilities valuation	$	(388,400	)		-		-		(388,400	)	$	(388,400	)
Derivative Liabilities 03/31/2017	$	371,421		$	-			$	371,421		$	371,421
		(365,943	)				-		(365,943	)		(365,943	)
Derivative Liabilities 9/30/2016	$	376,890		$	-		-	$	376,890		$	376,890

Concentrations

Cash and cash equivalents are maintained with several financial institutions. Deposits held with banks may exceed the amount of insurance provided on such deposits. Generally, these deposits may be redeemed upon demand and therefore bear minimal risk.

Inventory

Inventory is stated at the lower of cost or market, using the first-in, first-out method. The Company follows standard costing methods for manufactured products. ~~Management assesses the recoverability and establishes reserves based on the net realizable value of the inventory.~~

Property and Equipment

Property and equipment are stated at cost less accumulated depreciation. Maintenance and repair costs are expensed as incurred. Depreciation is calculated on the accelerated and straight-line methods over the estimated useful lives of the assets. Estimated useful lives of five to ten years are used for machinery and equipment, office equipment and furniture, and automobile. Estimated useful lives of up to five years are used for computer equipment and related software. Depreciation and amortization of leasehold improvements are computed using the term of the lease.

Intangible Assets

Intangible assets were carried at the purchased cost less accumulated amortization. Amortization was computed over the estimated useful lives of the respective assets, generally from fifteen to twenty years.

Impairment of Long-Lived Assets

Long-lived assets and certain identifiable intangible assets to be held and used are reviewed for impairment whenever events or changes in circumstance indicate that the carrying amount of such assets may not be recoverable. Determination of recoverability is based on an estimate of undiscounted future cash flows resulting from the use of the asset and its eventual disposition. Measurement of an impairment loss for long-lived assets and certain identifiable intangible assets that management expects to hold and use is based on the fair value of the asset. Long-lived assets and certain identifiable intangible assets to be disposed of are reported at the lower of carrying amount or fair value less costs to sell. At March 31, 2017, the net book value of long-lived assets was less than the carrying amount of senior debt and no impairment was recorded.

Income Taxes

The amount of current and deferred taxes payable or refundable is recognized as of the date of the financial statements, utilizing currently enacted tax laws and rates. Deferred tax expenses or benefits are recognized in the financial statements for the changes in deferred tax liabilities or assets between years.

Income (Loss) Per Common Share

Basic net income (loss) per share includes no dilution and is computed by dividing net income (loss) available to common stockholders by the weighted average number of common stock outstanding for the period. Diluted earnings per share is computed by dividing net income by the weighted average number of shares outstanding and, when diluted, potential shares from options and warrants to purchase common stock using the treasury stock method.

Cashless Exercise of Warrants/Options

The Company has issued warrants to purchase common stock where the holder is entitled to exercise the warrant via a cashless exercise, when the exercise price is less than the fair value of the common stock. The Company accounts for the issuance of common stock on the cashless exercise of warrants on a net basis.

Stock-Based Compensation

The Company estimates the fair value of share-based payment awards made to employees, directors and related parties, including stock options, restricted stock, employee stock purchases related to employee stock purchase plans and warrants, on the date of grant using an option-pricing model. The value of the portion of the award that is ultimately expected to vest is recognized as an expense ratably over the requisite service periods. The WeCompany ~~estimate~~ estimates the fair value of each share-based award using the Black-Scholes option pricing model. The Black-Scholes model is highly complex and dependent on key estimates by management. The estimates with the greatest degree of subjective judgment are the estimated lives of the stock-based awards and the estimated volatility of the Company’s stock price. The Company recognized pre-tax compensation expense related to stock compensation awards of $~~317~~23,~~955~~165 and $452,~~534,849~~612 for the ~~nine~~three months ended ~~September~~March 3031, ~~2016~~ 2017 and ~~2015~~2016, respectively.

Recent Accounting Pronouncements

In August, 2015, the FASB issued ASU No. 2015-14, Revenue from Contracts with Customers (Topic 606): Deferral of the Effective Date (“ASU 2015-14”). The amendment in this ASU defers the effective date of ASU No. 2014-09 for all entities for one year. Public business entities, certain not-for-profit entities, and certain employee benefit plans should apply the guidance in ASU 2014-09 to annual reporting periods beginning December 15, 2017, including interim reporting periods within that reporting period. Earlier application is permitted only as of annual reporting periods beginning after December 31, 2016, including interim reporting periods with that reporting period. The adoption of ASU 2015-14 is not expected to have a material effect on the Company’s consolidated financial statements.

OnIn ~~February 25~~September, ~~2016~~2015, the FASB issued ~~Topic~~ASU ~~842~~No. 2015-16, ~~its~~Business ~~highly~~Combinations (Topic 805) (“ASU 2015-~~anticipated~~16”). ~~leasing~~Topic ~~standard~~805 ~~for~~requires that ~~both~~an ~~lessees~~acquirer ~~and~~retrospectively ~~lessors.~~adjust ~~Under~~provisional ~~its core~~amounts ~~principle,~~recognized in a ~~lessee~~business ~~will~~combination, ~~recognize~~during ~~lease~~the ~~assets~~measurement ~~and~~period. To ~~liabilities~~simplify onthe accounting for adjustments made to provisional amounts, the ~~balance~~amendments ~~sheet~~in ~~for~~the ~~all~~Update ~~arrangements~~require ~~with~~that ~~terms~~the ~~longer~~acquirer ~~than~~recognize 12adjustments ~~months.~~to ~~Lessor~~provisional ~~accounting~~amounts ~~remains~~that ~~largely~~are ~~consistent~~identified ~~with~~during ~~existing~~the ~~U.S.~~measurement ~~GAAP.~~period ~~The~~in ~~amendments~~the ~~are~~reporting ~~effective~~period ~~for~~in ~~public~~which ~~companies~~the ~~for~~adjustment ~~fiscal~~amount ~~years~~is ~~beginning~~determined. ~~after~~The ~~December~~acquirer ~~15,~~is ~~2018,~~required ~~including~~to ~~interim~~also ~~periods~~record, ~~within~~in ~~those~~the ~~fiscal~~same ~~years.~~period’s Atfinancial ~~inception~~statements, athe ~~lessee~~effect ~~must~~on ~~classify~~earnings ~~all~~of ~~leases~~changes asin ~~either~~depreciation, ~~finance~~amortization, or ~~operating.~~other ~~The~~income ~~Company~~effects, ~~intends~~if toany, ~~adopt~~as ~~Topic~~a ~~842~~result ~~upon extension~~ of the change to ~~current~~the ~~lease~~provisional oramounts, ~~upon~~calculated ~~entering~~as ~~into~~if athe ~~new~~accounting ~~lease~~had ~~agreement~~been ~~for~~completed ~~alternative~~at ~~facilities~~the acquisition date. ~~The~~In ~~Company~~addition an entity is required ~~investigating~~to present separately on the ~~effect~~ face of ~~adoption~~the ofincome ~~Topic~~statement ~~842~~or ondisclose ~~its~~in ~~results~~the ofnotes ~~operations~~to ~~and~~the financial ~~condition.~~statements ~~However,~~the itportion of isthe ~~not~~amount ~~anticipated~~recorded ~~that~~in ~~adoption~~current-period ~~of Topic~~earnings ~~842~~by ~~will~~line item that would have abeen ~~material~~recorded ~~impact~~in onprevious reporting periods if the ~~results~~adjustment to the provisional amounts had been recognized as of ~~operations~~the oracquisition ~~financial~~date. ~~condition~~ASU 2015-16 is effective for fiscal years beginning December 15, 2015. The adoption of ASU 2015-016 is not expected to have a material effect on the Company’s consolidated financial statements.

NOTE 4 – INVENTORY

At ~~September~~March 3031, ~~2016~~2017 and December 31, ~~2015~~2016, inventory consists of the following:

		9/30/2016			12/31/2015
	3/31/2017			12/31/2016
Raw materials	$	3019,~~318~~353		$	1823,~~228~~163
Packaging		95,~~168~~398			45,~~560~~516
Finished goods		~~151~~61,~~025~~548			~~215~~62,~~476~~406
Less: Reserve to estimated net realizable value		(27,055	)
	$	86,299		$	91,085
	$	163,455		$	238,264

NOTE 5 – PROPERTY AND EQUIPMENT, NET

At ~~September~~March 3031, ~~2016~~2017 and December 31, ~~2015~~2016, property and equipment, net consists of the following:

	9/30/2016			12/31/2015
	3/31/2017			12/31/2016
Leasehold Improvements	$	-		$	3,449
Production equipment under capital lease	$	-		$	514,707
Capital Lease Assets		514,707			514,707
Production equipment		545,847			-
		514,707			518,156
		545,847			514,707
Accumulated depreciation		(~~122~~173,~~107~~578	)		(46147,~~923~~842	)
Property and equipment, net	$	~~392~~372,~~600~~269		$	~~471~~366,~~233~~865

Depreciation expense was $7525,~~184~~736 and $~~154~~27,~~250~~162 for the ~~nine~~three months ended ~~September~~March 3031, ~~2016~~2017 and ~~2015~~2016, respectively. During 2017, the Company has not sold any equipment.

On July 17, 2015, the Company entered into an equipment purchase agreement (the “Purchase Agreement”) with Fordham Capital Partners, LLC (“Fordham”) pursuant to which the Company sold all of its right, title and interest in production equipment utilized by the Company to Fordham for a purchase price of $~~514~~500,~~707~~000. From the proceeds of the sale, the Company repaid outstanding borrowings of $200,000 due to Fordham Capital plus accrued interest of $3,112, 2014 franchise taxes of $96,542 and a security deposit of $15,800 related to the equipment lease. The Company recognized a loss on the sale of $574,331. Concurrently with entering into the Purchase Agreement, on July 17, 2015, the Company entered into an equipment lease agreement (the “Equipment Lease Agreement”) with Fordham pursuant to which the Company leased the production equipment from Fordham on terms that included the following: a lease term of 24 months, monthly lease payments by the Company of $15,800 and the option (at the election of the Company) to purchase the equipment on or after July 8, 2016 on the following terms: (i) if the purchase date is between 12- 18 months $425,000; (ii) if the purchase date is between 19- 23 months: $360,000; and (iii) if the purchase date is during the 24th month (but no later than July 8, 2017): $325,000. The Equipment Lease Agreement includes customary events of default, including non- payment by the Company of the monthly lease payments and the payment of penalties upon such late payments. The ~~equipment lease is secured by all of the assets of the~~ Company. ~~The Company~~ received cash proceeds of $172,911 from the Purchase Agreement after paying off the obligations described above. These proceeds were used for general corporate purposes.

On February 1, 2017, the Company exercised its option under the Equipment Lease Agreement that it had entered into with Fordham on July 17, 2015 and paid Fordham $360,000 plus additional expenses for purchase of the Equipment that was subject to the Equipment Lease Agreement. In connection with the payment, the Equipment Lease Agreement was terminated, which was a lease for 24 months with monthly lease payments of $15,800.

NOTE 6 – ACCRUED EXPENSES AND OTHER

At ~~September~~March 3031, ~~2016~~2017 and December 31, ~~2015~~2016 accrued expenses consist of the following:

	9/30/2016		12/31/2015
	3/31/2017		12/31/2016
Accrued payroll and taxes	$	5236,~~709~~347	$	~~166~~59,~~713~~490
Accrued settlements		102,000		102,000
Accrued interest		~~500~~752,~~533~~686		~~216~~627,~~071~~937
Accrued expenses and other		~~106~~75,~~908~~219		~~199~~150,~~812~~613
	$	~~762~~966,~~149~~252	$	~~684~~940,~~596~~040

NOTE 7 – SHORT-TERM BORROWINGS TO UNRELATED PARTIES

~~On July 17, 2015, the Company completed a sale and leaseback transaction with Fordham Capital. In the transaction,~~Note ~~the~~5 ~~Company~~discusses ~~sold~~notes ~~all of its production equipment, furniture and fixtures for $514,707. From the proceeds of the sale, the Company repaid outstanding borrowings of $200,000 due~~ to Fordham ~~Capital~~that ~~plus~~were ~~accrued~~repaid ~~interest~~in ~~of $3,112, franchise taxes of $96,542 and a security deposit of $15,800 related to the equipment lease~~2015.

On September 29, 2015, the Company issued a 14% nonconvertible senior unsecured note to an accredited investor in the principal amount of $250,000. The note ~~initially~~matures ~~matured~~ in six months (March 26, 2016) and bears interest at 14% computed based on a 365- day year. Accrued interest is payable at ~~maturity~~ maturity in cash. On December 23, 2015, the Company executed an amendment whereby the maturity date was extended to July 1, 2016. On June 29, 2016, the ~~Company~~company executed an amendment whereby the maturity date was extended to October 1, 2016. On September 30, 2016, the Company executed an amendment whereby the maturity date was extended to April 3, 2017.

On December 23, 2015, the Company issued a 14% nonconvertible senior unsecured note to ~~Jonathan~~Johnathan Kahn in the principal amount of $500,000. The note matures in twelve months (December 23, 2016) and bears interest at 14% computed based on a 365- day year. Accrued interest is payable at maturity in cash. ~~During the~~This ~~three months ended June 30, 2016 this~~ note was reclassified from aunrelated ~~short-term borrowing~~ to ~~unrelated~~related ~~parties~~in tothe aquarter ~~short-term non-convertible~~ended ~~note~~June to30, ~~related parties~~2016. On ~~May~~December 1715, 2016, ~~Mr.~~the ~~Kahn~~Company ~~became~~executed ~~our~~an ~~Chief~~amendment ~~Executive~~whereby ~~Officer,~~the ~~interim~~maturity ~~Chief~~date ~~Financial Officer~~was ~~and~~extended ato ~~member~~April of3, ~~our Board of Directors~~2017.

On March 2, 2016, the Company issued a 14% senior unsecured note to Jonathan Kahn in the principal amount of $100,000. The Company recognized $3,791 and amortized $438 of discount as of September 30, 2016. The note matures in one year (March 2, 2017) and bears interest at 14% compounded based on a 365-day year. Accrued interest is payable at maturity in cash. In addition, the Company issued a warrant to acquire 400,000 shares of the Company’s common stock, at an exercise price of $0.64 per share to Mr. Kahn. The Warrants expire on the fifth anniversary of their issuance, may be exercised on a cashless basis, are subject to full ratchet price anti- dilution protection and entitled to registration rights. During the three months ended June 30, 2016 this note was reclassified from a short-term borrowing to unrelated parties to a short-term non-convertible note to related parties.

On March 11, 2016, the Company issued a 14% senior unsecured note to an accredited investor in the principal amount of $100,000. The Company recognized $3,189 and amortized $355 of discount as of September 30, 2016. The note matures in one year (March 11, 2017) and bears interest at 14% compounded based on a 365-day year. Accrued interest is payable at maturity in cash. In addition, the Company issued a warrant to acquire 400,000 shares of the Company’s common stock, at an exercise price of $0.64 per share to the accredited investor. The Warrants expire on the fifth anniversary of their issuance, may be exercised on a cashless basis, are subject to full ratchet price anti- dilution protection and entitled to registration rights.

On April 7, 2016, the Company issued 14% senior unsecured notes to two accredited investors in the total principal amount of $100,000. The Company recognized $3,924 and amortized $378 of discount as of September 30, 2016. The notes mature in one year (April 7, 2017) and bear interest at 14% compounded based on a 365-day year. Accrued interest is payable at maturity in cash. In addition, the Company issued warrants to acquire a total of 400,000 shares of the Company’s common stock at an exercise price of $0.64 per share to the two accredited investors. The Warrants expire on the fifth anniversary of their issuance, may be exercised on a cashless basis, are subject to full ratchet price anti- dilution protection and entitled to registration rights.

On April 8, 2016, the Company issued a 14% senior unsecured note to an accredited investor in the principal amount of $500,000. The Company recognized $15,342 and amortized $1,470 of discount as of September 30, 2016. The note matures in one year (April 8, 2017) and bears interest at 14% compounded based on a 365-day year. Accrued interest is payable at maturity in cash. In addition, the Company issued a warrant to acquire 2,000,000 shares of the Common Stock, at an exercise price of $0.64 per share to the accredited investor. The Warrants expire on the fifth anniversary of their issuance, may be exercised on a cashless basis, are subject to full ratchet price anti- dilution protection and entitled to registration rights.

On July 14, 2016, the Company issued a 14% senior unsecured note to an accredited investor in the principal amount of $500,000. The Company recognized $6,383 and amortized $273 of discount as of September 30, 2016. The note matures in one year (July 14, 2017) and bears interest at 14% compounded based on a 365-day year. Accrued interest is payable at maturity in cash. In addition, the Company issued a warrant to acquire 2,000,000 shares of the Company’s common stock, at an exercise price of $0.64 per share to the accredited investor. The Warrants expire on the fifth anniversary of their issuance, may be exercised on a cashless basis, are subject to full ratchet price anti- dilution protection and entitled to registration rights.

On July 21, 2016, the Company issued a 14% senior unsecured note to an accredited investor in the principal amount of $300,000. The Company recognized $2,117 and amortized $82 of discount as of September 30, 2016. The note matures in one year (July 21, 2017) and bears interest at 14% compounded based on a 365-day year. Accrued interest is payable at maturity in cash. In addition, the Company issued a warrant to acquire 600,000 shares of the Company’s common stock, at an exercise price of $0.64 per share to the accredited investor. The Warrants expire on the fifth anniversary of their issuance, may be exercised on a cashless basis, are subject to full ratchet price anti- dilution protection and entitled to registration rights.

11On November 4, 2016, the Company issued a 14% senior unsecured note to an accredited investor in the principal amount of $100,000. The Company recognized $2,117 and amortized $82 of discount as of September 30, 2016. The note matures in one year (November 4, 2017) and bears interest at 14% compounded based on a 365-day year. Accrued interest is payable at maturity in cash. In addition, the Company issued a warrant to acquire 200,000 shares of the Company’s common stock, at an exercise price of $0.64 per share to the accredited investor. The Warrants expire on the fifth anniversary of their issuance, may be exercised on a cashless basis, are subject to full ratchet price anti- dilution protection and entitled to registration rights.

Below is a summary of the principal and interest activity for the period ended ~~September~~March 3031, ~~2016~~2017:

	Principal			Interest
Balance at December 31, 2015	$	750,000		$	10,442
Balance at December 31, 2016	$	1,850,000		$	195,535
Principal advances and accrued interest		~~1,600,000~~-			~~184~~43,~~019~~392
Reclassification of notes to related	$	(600,000	)	$	(60,679	)
Principal payments and interest		-			-
Balance at September 30, 2016	$	1,750,000		$	133,782
Balance at March 31, 2017	$	1,850,000		$	238,927
Less debt discount		(27,904	)
Balance at September 30, 2016	$	1,722,096		$	133,782

NOTE 8 – SHORT-TERM NONCONVERTIBLE NOTES PAYABLE TO RELATED PARTIES

On September 29, 2014, the Company issued a 14% nonconvertible subordinated secured note to Edward B. Smith III in the principal amount of $85,000. The note ~~was~~matures ~~to mature~~ in two months (November 29, 2014) and bears interest at 14% computed based on a 365-day year. Accrued interest is payable at maturity in cash. The note is secured by the assets of the Company, which security interest iswas subordinate to the security interest granted to Fordham in connection with the Equipment ~~Loan~~Lease Agreement and to the ~~Factoring~~Senior ~~Agreement~~Secured Notes.

On October 23, 2014, the Company ~~issued~~ issued a 14% nonconvertible subordinated secured note to Edward B. Smith III in the principal amount of $85,000. The note ~~was to mature in~~matures in two months (December 23, 2014) and bears interest at 14% computed based on a 365-day year. Accrued interest is payable at ~~maturity~~ maturity in cash. The note is secured by the assets of the Company, which security interest iswas subordinate to the security interest ~~granted~~ granted to Fordham in connection with the Equipment ~~Loan~~Lease Agreement and to the ~~Factoring~~Senior ~~Agreement~~Secured Notes.

On October 30, 2014, the Company ~~issued~~ issued a 14% nonconvertible subordinated secured note to Edward B. Smith III in the principal amount of $70,000. The note ~~was to mature~~matures in two months (December 30, 2014) and bears interest at 14% computed based on a 365-day year. Accrued interest is payable at maturity in cash. The note is secured by the assets of the Company, which security interest iswas subordinate to the security interest ~~granted~~ granted to Fordham in connection with the Equipment ~~Loan~~Lease Agreement and to the ~~Factoring~~Senior ~~Agreement~~Secured Notes.

On December 3, 2014, the Company ~~issued~~ issued a 14% nonconvertible subordinated secured note to Edward B. Smith III in the principal amount of $30,000. The note ~~was to mature in~~matures in two months (February 3, 2015) and bears interest at 14% computed based on a 365-day year. Accrued interest is payable at maturity in cash. The note is secured by the assets of the Company, which security interest iswas subordinate to the security interest granted to Fordham in connection with the Equipment ~~Loan~~Lease Agreement and to the ~~Factoring~~Senior ~~Agreement~~Secured Notes.

On May ~~December 19~~29, ~~2014~~2015, the Company executed an amendment number 3 to the 14% nonconvertible subordinated secured notes (dated September 29, 2014, October 23, 2014, October 30, 2014 and December 3, 2014, respectively) whereby the maturity date for each note was extended from May 29, 2015 to ~~April~~December 1531, 2015.

On May 29, 2015, the Company executed an amendment to the 14% nonconvertible subordinated secured notes (dated September 29, 2014, October 23, 2014, October 30, 2014 and December 3, 2014, respectively) whereby the maturity date for each note was extended from May 29, 2015 to December 31, 2015.11

On June 12, 2015, the Company issued a 14% nonconvertible subordinated secured note to Edward B. Smith III in the principal amount of $12,000. The note ~~was~~matures ~~to mature~~ on December 31, 2015 and bears interest at 14% computed based on a 365- day year. Accrued interest is payable at maturity in cash. The note is secured by the assets of the Company, which security interest iswas subordinate to the security interest granted to Fordham in in connection with the Equipment Loan and the Factoring Agreement and to the Senior Secured Notes.

On August 13, 2015, the Company ~~issued~~ issued a 14% nonconvertible subordinated secured note to Edward B. Smith III in the principal amount of $25,000. The note ~~was to mature~~matures on December 31, 2015 and bears interest at 14% computed based on a 365- day year. Accrued interest is payable at maturity in cash. The note is secured by the assets of the Company, which security interest iswas subordinate to the security interest granted to Fordham in connection with the Equipment Lease Agreement and the Factoring Agreement and to the Senior Secured Notes.

On August 21, 2015, the Company issued a 14% nonconvertible subordinated secured note to Edward B. Smith III in the principal amount of $150,000. The note matures on December 31, 2015 and bears interest at 14% computed based on a 365- day year. Accrued interest is payable at maturity in cash. The note is secured by the assets of the Company, which security interest was subordinate to the security interest granted to Fordham in connection with the Equipment Loan and the Factoring Agreement and to the Senior Secured Notes.

On September 29, 2015, the Company issued a 14% nonconvertible senior unsecured note to an accredited investor in the principal amount of $250,000. The note matures in six months (March 26, 2016) and bears interest at 14% computed based on a 365- day year. Accrued interest is payable at maturity in cash.

On December 23, 2015, the Company issued a 14% nonconvertible senior unsecured note to Johnathan Kahn in the principal amount of $500,000. The note matures in twelve months (December 23, 2016) and bears interest at 14% computed based on a 365- day year. Accrued interest is payable at maturity in cash. This note was reclassified from unrelated to related in the quarter ended June 30, 2016.

On December 23, 2015, the Company executed an amendment to the 14% nonconvertible subordinated secured notes (dated September 29, 2014, October 23, 2014, October 30, 2014, December 3, 2014, June 12, 2015, August 13,2015, and August 21, 2015 respectively) whereby the maturity date for each note was extended to July 1, 2016.

On February 26, 2016, the company executed an amendment to the 14% nonconvertible note (dated September 29, 2015) whereby the maturity date was extended to July 1, 2016.

On March 2, 2016, the Company issued a 14% senior unsecured note to Jonathan Kahn in the principal amount of $100,000. The Company recognized $3,791 of discount. The note matures in one year (March 2, 2017) and bears interest at 14% compounded based on a 365-day year. Accrued interest is payable at maturity in cash. In addition, the Company issued a warrant to acquire 400,000 shares of the Company’s common stock, at an exercise price of $0.64 per share to the accredited investor. The Warrants expire on the fifth anniversary of their issuance, may be exercised on a cashless basis, are subject to full ratchet price anti- dilution protection and entitled to registration rights. During the three months ended June 30, 2016 this note was reclassified from a short-term borrowing to unrelated parties to a short-term non-convertible note to related parties.

On March 17, 2016, the Company issued a 14% senior unsecured note to an entity controlled by Morris Garfinkle in the principal amount of $100,000. The Company recognized $3,094 of discount. The note matures in one year (March 17, 2017) and bears interest at 14% compounded based on a 365-day year. Accrued interest is payable at maturity in cash. In addition, the Company issued a warrant to acquire 400,000 shares of the Company’s common stock, at an exercise price of $0.64 per share to the entity controlled by Mr. Garfinkle. The Warrants expire on the fifth anniversary of their issuance, may be exercised on a cashless basis, are subject to full ratchet price anti- dilution protection and entitled to registration rights.

On March 17, 2016, the Company issued a 14% senior unsecured note to an entity controlled by Dan Jeffery in the principal amount of $50,000. The Company recognized $1,824 of discount. The note matures in one year (March 17, 2017) and bears interest at 14% compounded based on a 365-day year. Accrued interest is payable at maturity in cash. In addition, the Company issued a warrant to acquire 200,000 shares of the Company’s common stock, at an exercise price of $0.64 per share to the entity controlled by Dan Jeffery. The Warrants expire on the fifth anniversary of their issuance, may be exercised on a cashless basis, are subject to full ratchet price anti- dilution protection and entitled to registration rights.

On April 28, 2016, the Company issued a 14% senior unsecured note to an entity related to Dan Jeffery in the principal amount of $50,000. The Company recognized $1,562 of discount. The note matures in one year (April 28, 2017) and bears interest at 14% compounded based on a 365-day year. Accrued interest is payable at maturity in cash. In addition, the Company issued a warrant to acquire 150,000 shares of the Common Stock at an exercise price of $0.64 per share to the entity related to Dan Jeffery. The Warrants expire on the fifth anniversary of their issuance, may be exercised on a cashless basis, are subject to full ratchet price anti- dilution protection and entitled to registration rights.

On August 21, 2015, the Company issued a 14% nonconvertible subordinated secured note to Edward B. Smith III in the principal amount of $150,000. The note was to mature on December 31, 2015 and bears interest at 14% computed based on a 365- day year. Accrued interest is payable at maturity in cash. The note is secured by the assets of the Company, which security interest is subordinate to the security interest granted to Fordham in connection with the Equipment Loan and the Factoring Agreement.

On September 29, 2015, the Company issued a 14% nonconvertible senior unsecured note to an accredited investor in the principal amount of $250,000. The note was to mature March 26, 2016 and bears interest at 14% computed based on a 365- day year. Accrued interest is payable at maturity in cash.

On December 23, 2015, the Company executed an amendment to the 14% nonconvertible subordinated secured notes (October 23, 2014, October 30, 2014, December 3, 2014, June 12, 2015, August 13, 2015, and August 21, 2015 respectively) whereby the maturity date for each note was extended to July 1, 2016.

On December 23, 2015, the Company issued a 14% nonconvertible senior unsecured note to Jonathan Kahn in the principal amount of $500,000. The note matures in twelve months (December 23, 2016) and bears interest at 14% computed based on a 365- day year. Accrued interest is payable at maturity in cash. During the three months ended June 30, 2016 this note was reclassified from a short-term borrowing to unrelated parties to a short-term non-convertible note to related parties.

On March 2, 2016, the Company issued a 14% senior unsecured note to Jonathan Kahn in the principal amount of $100,000. The Company recognized $3,791 and amortized $247 of discount as of September 30, 2016. The note matures in one year (March 2, 2017) and bears interest at 14% compounded based on a 365-day year. Accrued interest is payable at maturity in cash. In addition, the Company issued a warrant to acquire 400,000 shares of the Company’s common stock, at an exercise price of $0.64 per share to the accredited investor. The Warrants expire on the fifth anniversary of their issuance, may be exercised on a cashless basis, are subject to full ratchet price anti- dilution protection and entitled to registration rights. During the three months ended June 30, 2016 this note was reclassified from a short-term borrowing to unrelated parties to a short-term non-convertible note to related parties.

On March 17, 2016, the Company issued a 14% senior unsecured note to an entity controlled by Morris Garfinkle in the principal amount of $100,000. The Company recognized $3,094 and amortized $178 of discount as of September 30, 2016. The note matures in one year (March 17, 2017) and bears interest at 14% compounded based on a 365-day year. Accrued interest is payable at maturity in cash. In addition, the Company issued a warrant to acquire 400,000 shares of the Company’s common stock, at an exercise price of $0.64 per share to the entity controlled by Mr. Garfinkle. The Warrants expire on the fifth anniversary of their issuance, may be exercised on a cashless basis, are subject to full ratchet price anti- dilution protection and entitled to registration rights.

On March 17, 2016, the Company issued a 14% senior unsecured note to an entity controlled by Dan Jeffery in the principal amount of $50,000. The Company recognized $1,824 and amortized $105 of discount as of September 30, 2016. The note matures in one year (March 17, 2017) and bears interest at 14% compounded based on a 365-day year. Accrued interest is payable at maturity in cash. In addition, the Company issued a warrant to acquire 200,000 shares of the Company’s common stock, at an exercise price of $0.64 per share to the entity controlled by Dan Jeffery. The Warrants expire on the fifth anniversary of their issuance, may be exercised on a cashless basis, are subject to full ratchet price anti- dilution protection and entitled to registration rights.

On April 28, 2016, the Company issued a 14% senior unsecured note to an entity related to Dan Jeffery in the principal amount of $50,000. The Company recognized $1,562 and amortized $55 of discount as of September 30, 2016. The note matures in one year (April 28, 2017) and bears interest at 14% compounded based on a 365-day year. Accrued interest is payable at maturity in cash. In addition, the Company issued a warrant to acquire 150,000 shares of the Common Stock at an exercise price of $0.64 per share to the entity related to Dan Jeffery. The Warrants expire on the fifth anniversary of their issuance, may be exercised on a cashless basis, are subject to full ratchet price anti- dilution protection and entitled to registration rights.

On June 29, 2016, the Company executed an amendment to the 14% nonconvertible subordinated secured notes (September 29, 2014, October 23, 2014, October 30, 2014, December 3, 2014, June 12, 2015, August 13, 2015, and August 21, 2015 respectively) whereby the maturity date for each note was extended to October 1, 2016.

On September 30, 2016, the Company executed an amendment to the 14% nonconvertible subordinated secured notes (September 29, 2014, October 23, 2014, October 30, 2014, December 3, 2014, June 12, 2015, August 13, 2015, and August 21, 2015 respectively) whereby the maturity date for each note was extended to April 3, 2017.

~~The~~On December ~~outstanding~~15, ~~gross~~2016, ~~amount~~the ~~(before~~company ~~discount) of~~executed ~~nonconvertible~~an ~~notes~~amendment ~~payable~~ to athe ~~related~~14% ~~party~~nonconvertible ~~was~~subordinated ~~$457,000~~secured atnotes due December 3123, ~~2015 and $1,257,000 at September 30,~~ 2016~~. The~~ ~~amount~~whereby ofthe ~~accrued~~maturity ~~and~~date ~~unpaid interest~~ was ~~$54,935~~extended onto ~~December~~April 313, ~~2015 and $133,782 on September 30, 2016~~2017.

13The outstanding amount of nonconvertible notes payable to related parties was $1,257,000 at March 31, 2017 and at December 31, 2016. The amount of accrued and unpaid interest was $257,417 on March 31, 2017.

NOTE 9 – SHORT-TERM CONVERTIBLE NOTES PAYABLE TO RELATED PARTIES

On February 11, 2014, the Company entered ~~into~~ into an agreement with Edward B. Smith III, a Director and Shareholder of the Company, pursuant to which Mr. Smith agreed to lend ~~the~~ the Company $200,000 in a convertible senior secured note. The note matures in two years (February 11, 2016) and bears interest at at 12.5% computed based on a 365-day year. Accrued interest is payable either at maturity or quarterly at the option of Mr. Smith in shares of the Company’s common stock. At any time on or after the date that is 90 days after the date of issuance of ~~the~~ the note, Mr. Smith may elect to convert the aggregate principal balance and accrued interest into shares of common stock of the Company. The conversion price under the note is $2.25, subject to adjustment as provided in the note. If on the maturity date of the note, the thirty- day trailing average closing price of the Company’s common stock (the “Trailing Average Price”) is is below $2.25, the Conversion Price on the maturity date will be reduced to the Trailing Average Price, but to not less than $1.25. The Conversion Price was greater than the closing stock price on the agreement date; therefore, no beneficial conversion ~~feature~~ feature was recorded on this note. The note is subordinated to the Senior Secured Notes.

On April 25, 2014, the Company entered into an agreement with Edward B. Smith III, a Director and Shareholder of the Company, pursuant to which Mr. Smith agreed to lend the Company $300,000 in a convertible subordinated secured note. The note matures in two years (April 25, 2016) and bears interest at 14% computed based on a 365-day year. Accrued interest is payable at maturity in shares of the Company’s common stock. At any time on or after the date that is 90 days after the date of issuance of the note, Mr. Smith may elect to convert the aggregate principal balance and accrued interest into shares of common stock of the Company. The conversion price under the note is $1.00. The conversion price was greater than the closing stock price on the agreement date; therefore, no beneficial conversion feature was recorded on this note. The note is subordinated to the Senior Secured Notes.

OnNotes ~~April~~for 30$19,000 ~~2014, the Company~~ issued a ~~14% convertible subordinated secured note~~ to each of ~~Morris~~the ~~Garfinkle,~~then ~~Mark~~four ~~Hershhorn~~directors, ~~Brian Israel and Edward B. Smith~~$12,567 ~~Directors~~ of ~~the~~each ~~Company, in the principal amount of~~ $1975,000, ~~for~~note ~~director~~issued ~~fees due and payable~~ to ~~them~~Morris ~~(the~~Garfinkle ~~“Director Notes”). Each Director Note matured in two years (April 30, 2016)~~ and ~~bears~~CKS ~~interest~~Warehouse ~~at 14% computed~~ on aMay ~~365-day~~12, ~~year.~~2014, ~~Accrued~~the ~~interest~~$264,000 isnote ~~payable~~issued atto ~~maturity~~Edward ~~in shares of the Company’s common stock~~B. AtSmith ~~any~~III ~~time~~ on orAugust ~~after~~6, ~~the~~2014 ~~date~~and ~~that is 90 days after~~ the ~~date~~ ~~of issuance of the Director Note~~$21,266 ~~the~~accrued ~~holder~~interest ~~may~~related ~~elect~~ to ~~convert~~these ~~the~~notes ~~aggregate~~as ~~principal~~of ~~balance~~December ~~and~~31, 2014 ~~accrued~~were ~~interest~~converted into ~~shares~~ of96,590 ~~common~~units ~~stock~~in ofconnection ~~the~~with ~~Company.~~January ~~The~~2015 ~~conversion~~private ~~price~~placement ~~under~~offering ~~each~~which ~~Director Note~~ is ~~$1.00.~~described ~~The~~in ~~conversion~~detail ~~price was greater~~in ~~than~~Note ~~the closing stock price on the agreement date; therefore, no beneficial conversion feature was recorded on this note~~#14.

On December ~~May 12~~23, ~~2014~~2015, the ~~Company~~company ~~issued 14%~~executed ~~convertible~~an ~~subordinated~~amendment ~~secured notes~~ to ~~both Morris Garfinkle and CKS Warehouse in~~ the ~~principal amount of $75~~200,000 ~~each~~12. ~~Both~~5% ~~notes~~convertible ~~matured~~subordinated insecured ~~two~~note ~~years~~dated ~~(May~~February 11, 122014, ~~2016)~~the ~~and~~300,000 ~~bear interest at~~ 14% ~~computed~~convertible onsubordinated asecured ~~365-day~~notes ~~year.~~(dated ~~Accrued~~April ~~interest~~25, is2014, ~~payable at~~and ~~maturity in shares of~~ the ~~Company’s~~note ~~common~~issued ~~stock.~~to ~~At any time on or after the date that is 90 days after the date of issuance of each note,~~ Mr. Garfinkle ~~and CKS Warehouse may elect to convert the aggregate principal balance and accrued interest into shares~~dated ofMay ~~common~~12, ~~stock~~2014) ofwhereby the ~~Company.~~maturity ~~The~~date ~~conversion~~for ~~price under~~ each note ~~is $1.00. The conversion price~~ was ~~greater~~extended ~~than~~to ~~the~~July ~~closing stock price on the agreement date; therefore~~1, ~~no beneficial conversion feature was recorded on this note~~2016.

On May ~~July 15~~22, ~~2014,~~2016 the Company ~~entered into~~executed an ~~agreement~~amendment ~~with Edward Smith III, pursuant~~ to ~~which Mr. Smith agreed to lend~~ the ~~Company $64,000 in an unsecured~~ note ~~payable. The~~issued ~~note~~to ~~matured~~CKS inWarehouse 90dated ~~days~~May ~~(October 15~~12, 2014) ~~without~~whereby ~~interest payable on~~ the ~~unpaid~~maturity ~~principal and subject to the terms of the~~date ~~Company’s agreements with its secured creditors. On August 6, 2014, this note~~ was ~~rolled~~extended ~~into~~to ~~the~~October ~~$264~~1,~~000~~ ~~convertible subordinated secured note discussed below~~2016.

On August 6, 2014, the Company issued a 14% convertible subordinated secured note to Edward B. Smith in the principal amount of $264,000. The note matured in two years (August 6, 2016) and bears interest at 14% computed on a 365-day year. Under this note Mr. Smith had provided $200,000 of cash as of August 6, 2014 and the parties agreed to include the unsecured funds in the amount of $64,000 provided by Mr. Smith on July 15, 2014 and include those amounts as part of this subordinated secured transaction. The loan agreement executed by the parties on July 15, 2014 is now null and void. Accrued interest is payable at maturity in shares of the Company’s common stock. At any time on or after the date that is 90 days after the date of issuance of the note, Mr. Smith may elect to convert the aggregate principal balance and accrued interest into shares of common stock of the Company. The conversion price under this note is $1.00. The conversion price was greater than the closing stock price on the agreement date; therefore, no beneficial conversion feature was recorded on this note.

In connection with the private placement offering that was consummated in January 2015, the members of the Company’s Board of Directors agreed to receive an aggregate of 96,590 Units, (representing one (1) Unit for every $4.00 of debt exchanged), 826,806 Initial Warrants and 351,586 Additional Warrants in exchange for previously issued convertible notes (including principal and accrued and unpaid interest) (the “Notes”) held by the directors or affiliated entities as follows: (i) 71,211 Units, 609,566 Initial Warrants and 259,208 Additional Warrants were issued to Edward B. Smith, III, the Company’s Chief Executive Officer at the time of the exchange and a director, in exchange for an aggregate of $284,844 of notes, (ii) 10,084 Units, 86,317 Initial Warrants and 36,705 Additional Warrants were issued to Morris Garfinkle in exchange for $40,335 of notes; (iii) 5,211 Units, 44,606 Initial Warrants and 18,968 Additional Warrants were issued to each of Mark Hershhorn and Brian Israel (directors of the Company at the time of the exchange), in exchange for an aggregate of $20,844 of notes, respectively; and (v) 4,873 Units, 41,712 Initial Warrants and 17,737 Additional Warrants were issued to CKS Warehouse, an entity in which Mr. Hershhorn owns a controlling interest, in exchange for an aggregate of $19,491 of principal and interest on notes.

The fair value of the preferred stock issued with the Units above was calculated using multinomial lattice models that valued the preferred stock based on a probability weighted discounted cash flow model. The assumptions used to determine the fair value included the holder of the preferred stock would convert the preferred stock once the stock price exceeded the exercise price, the historical annual volatility of the Company’s stock price was 119% and the weighted cost of capital for the Company was 16.93%. As a result of the conversion of convertible debt into Units, the Company recorded a loss on debt conversion of $351,314 in the three months ended March 31, 2015.

On December 23, 2015, the Company executed an amendment to the $200,000 12.5% convertible subordinated secured note dated February 11, 2014, the $300,000 14% convertible subordinated secured notes dated April 25, 2014, and the note issued to Mr. Garfinkle dated May 12, 2014 whereby the maturity date for each note was extended to July 1, 2016.

On May 22, 2016, the Company executed an amendment to the note issued to CKS Warehouse dated May 12, 2014 whereby the maturity date was extended to October 1, 2016.

On June 29, 2016, the Company executed an amendment to the $200,000 12.5% convertible subordinated secured note dated February 11, 2014, the $300,000 14% convertible subordinated secured notes dated April 25, 2014, and the note issued to Mr. Garfinkle dated May 12, 2014) whereby the maturity date for each note was extended to October 1, 2016.

On September 30, 2016, the Company executed an amendment to the note issued to CKS Warehouse dated May 12, 2014 whereby the maturity date was extended to April 3, 2017.

On September 30, 2016, the Company executed an amendment to the $200,000 12.5% convertible subordinated secured note dated February 11, 2014, the $300,000 14% convertible subordinated secured notes dated April 25, 2014, and the note issued to Mr. Garfinkle dated May 12, 2014 whereby the maturity date for each note was extended to April 3, 2017.

The outstanding amount of convertible ~~notes~~ notes payable to related parties was $624,866 at ~~September~~March 3031, ~~2016~~2017 and December 31, ~~2015~~2016. The amount of accrued and unpaid interest ~~was~~ was $~~214~~256,~~102~~342 at ~~September~~March 3031, ~~2016~~2017.

~~NOTE 10 – LIQUIDATED DAMAGES~~13

NOTE 10 – SENIOR SECURED NOTES PAYABLE

On February 1, 2017, the Company entered into a loan and security agreement (the “Loan Agreement”) with various lenders, including an entity controlled by its then chief executive officer, Jonathan Kahn, and a director, Morris Garfinkle, and issued a note in connection therewith (the “Note”). The principal amount of the loan is $996,000. The Loan accrues interest at a rate per annum equal to the prime rate plus 18.9%. Interest is payable monthly and the principal is payable on the maturity date of the loan, which is 2.5 years from the issuance date. The loan is secured by all of the assets of the Company. The Loan Agreement contains certain covenants regarding financial reporting, limits on the Company’s incurrence of indebtedness, permitted investments, encumbrances, restricted payments, and mergers and acquisitions.

The Loan Agreement includes customary events of default, including non-payment by the Company of the monthly interest payments and the payment of penalties upon such late payments. The Company used a portion of the proceeds of the loan to exercise its purchase option under its Equipment Lease Agreement with Fordham Capital Partners, LLC (“Fordham”) that it entered into on July 17, 2015 (the “Equipment Lease Agreement”). The Company intends to utilize the proceeds from the loan for working capital purposes.

As a condition to the Loan Agreement, two directors of the Company that held senior secured debt of the Company entered into a subordination agreement with the Company and the administrative agent for the lenders (the “Subordination Agreement”).

NOTE 11 – LIQUIDATED DAMAGES

In connection with certain private placements of the Company’s securities (the “Registrable Securities”) effected in 2008, the Company entered into registration rights agreements (the “RRA”) that required the Company to file a registration statement covering the Registrable Securities with the Securities and Exchange Commission no later than thirty days after the final closing as contemplated in the Private Placement Memorandum for the 2008 offering (the “Filing Deadline”), which the Company did not meet. Under the terms of the RRA, as partial compensation, the Company was required to make pro rata payments to each Investor in an amount equal to 1.5% of the aggregate amount invested by such Investor for each 30-day period or pro rata for any portion thereof following the Filing Deadline for which no registration statement was filed. The Company obtained a release and waiver of the amounts due from almost all of the 2008 investors. Under the terms of the RRA, the Company potentially owes, and have recognized as liquidated damages, $36,178 relating to holders from whom we did not receive waivers.

NOTE 12 11 – DERIVATIVE LIABILITIES

Certain of the Company’s convertible ~~preferred~~ preferred stock and warrants have reset provisions to the exercise price if the Company issues equity or other derivatives at a price less than the exercise price set forth in such ~~convertible preferred stock and~~ warrants. This ratchet provision results in a derivative liability in ~~our~~the Company’s financial statements.

The Company’s derivative liabilities ~~decreased~~ increased to $~~376~~371,~~890~~421 at ~~September~~March 3031, ~~2016~~2017 from $~~742~~131,~~833~~043 at December 31, ~~2015~~2016. The ~~income~~loss recognized during the ~~nine~~three months ended ~~September~~ 30March 31, ~~2016~~2017 was $~~388~~240,~~400~~378 as compared to ana ~~expense~~gain of $1102,~~355,747~~776 for the ~~nine~~three months ended ~~September~~March 3031, ~~2015~~ 2016.

The assumptions used to value the derivative liabilities in the lattice model for the quarter ended March 31, 2017 included the closing stock price of $.0130 per share, and the projected volatility based on a historical value used of 279% and assuming the probability for an event of default occurring 0% of the time and increasing by 0.0% per month.

The following tabular presentation reflects the components of derivative financial instruments on the Company’s balance sheet at March 31, 2017 and December 31, 2016:

Components of derivative financial instruments
	3/31/2017		12/31/2016

Embedded conversion features for convertible debt or preferred shares	$	371,421	$	131,043

Total	$	371,421	$	131,043

Beginning balance	$	131,043	$	742,833
Change in derivative liability valuation		240,378		(567,139	)
Change in derivative liability - settlements		-		(85,877	)
Change in derivative liability - warrant issuance		-		41,226

Total	$	371,421	$	131,043

NOTE 13 – COMMON STOCK

COMMON STOCK ISSUED TO EMPLOYEES

On May 17, 2016, pursuant to the Kahn Employment Agreement, Jonathan Kahn was granted 6,067,931 fully-vested shares of the Company’s common stock. The Company recognized a total expense of $180,824 related to this issuance. These shares were valued based on the closing price on the grant date and were issued pursuant to the Company’s Amended and Restated Incentive Compensation Plan as amended (the “Plan”).

In addition, on each of May 1, 2017 and May 1, 2018, respectively, pursuant to the Kahn Employment Agreement, Mr. Kahn was to receive an additional grant of fully-vested common stock, such additional grants each representing 0.75% of the Company’s shares of common stock on a fully diluted basis as of May 1, 2017 and May 1, 2018, respectively. The Company expensed $23,268 in the year ended December 31, 2016 for the stock compensation grant related to the May 1, 2017 and May 1, 2018 additional grants. The Company will expense a portion of this compensation quarterly until the grants are made at their respective due dates.

COMMON STOCK ISSUED TO DIRECTORS

On February 24, 2015 the Company issued 576,924 shares of common stock to its three non- executive directors at such time (192,308 shares each) to Brian Israel, Morris Garfinkle and Dan Jeffery. The Company recognized a total expense of $150,000 related to these issuances. These shares were valued based on the closing price on the grant date.

On May 17, 2016, each non-executive member of the Board (Morris Garfinkle, Dan Jeffery and Edward B. Smith III) was granted pursuant to the Incentive Compensation Plan an option to purchase an aggregate 1,006,711 shares of common stock (the equivalent of $30,000 based on the common stock’s closing price of $0.0298 on the grant date) for a total of 3,020,134 shares of common stock at an exercise price of $0.0298 per share. These stock options vest 25% on date of grant and 25% every 90, 180 and 270 days subsequent to the grant date and expire ten years after the date of the grant

On June 21, 2016, the Company issued 2,013,423 shares of common stock to its Chairman Morris Garfinkle pursuant to the Incentive Compensation Plan. The Company recognized a total expense of $25,369 related to this issuance. These shares were valued based on the closing price on the grant date.

COMMON STOCK ISSUED FOR SERVICES

There were no shares issued for services during the quarter ended March 31, 2017.

COMMON STOCK ISSUED ON THE EXERCISE OF WARRANTS FOR CASH

During the quarters ended March 31, 2017 and March 31, 2016 there were no warrants exercised for cash.

~~The~~COMMON ~~following~~STOCK ~~tabular~~ISSUED ~~presentation~~ON ~~reflects~~THE ~~the~~CASHLESS ~~components~~EXERCISE ofOF ~~derivative financial instruments on the Company’s balance sheet at September 30, 2016 and December 31, 2015:~~WARRANTS

Components of derivative financial instruments
	9/30/2016			12/31/2015
Common stock warrants	$	67,108		$	130,028
Embedded conversion features for convertible debt or preferred shares		309,782			612,805
Total	$	376,890		$	742,833
Beginning balance	$	742,833		$	20,166
Change in derivative liability valuation		(388,400	)		1,265,611
Change in derivative liability - settlements		(18,769	)		-
Change in derivative liability - warrant issuance		41,226			(542,944	)
Total	$	376,890		$	742,833

On April 29, 2015, the Company sent a proposal to all warrant holders (as of September 30, 2014) to participate in a warrant exchange program whereby each warrant holder will be able to 1) exchange their warrants for common stock, on a cashless basis, at a reduced exercise price of $0.00005 per share, 2) if applicable, receive the right to 17.5% more warrants and a two year extension on all of their warrants in return for waiving their anti- dilution rights on a one- time basis for the exchange, or 3) elect to take advantage of (1) and (2) by (i) exchanging a portion of their Warrants that they so designate for shares of Common Stock in accordance with the applicable terms in (1) and (ii) the remainder of the Warrant not exchanged will be retained and amended pursuant to the applicable provisions of (2). As of April 29, 2015 there were 55,334,490 warrants outstanding that were eligible to participate in the proposal inclusive of 38,888,147 warrants associated with anti- dilution provisions resulting from the January 8, 2015 private placement.

~~NOTE~~The results of this exchange were warrant holders elected to receive 52,110,896 shares of Common Stock under alternative (1), 318,750 additional warrants were issued under alternative (2) and a combination of 974,826 shares of Common Stock and 73,125 warrants were issued from elections made under alternative (3). The Company recorded a loss on exchange of warrants of $12,959,660 –for the ~~COMMON~~twelve ~~STOCK~~months ended December 31, 2015.

Common Stock Issued to Employees

On May 17, 2016, pursuant to the Kahn Employment Agreement, the Company’s Chief Executive Officer Jonathan Kahn was granted 6,067,931 fully-vested shares of the Company’s common stock. The Company recognized a total expense of $180,824 related to this issuance. These shares were valued based on the closing price on the grant date and were issued pursuant to the Company’s Amended and Restated Incentive Compensation Plan as amended (the “Plan”).

In addition, on each of May 1, 2017 and May 1, 2018, respectively, pursuant to the Kahn Employment Agreement, Mr. Kahn will receive an additional grant of fully-vested common stock, such additional grants each representing 0.75% of the Company’s shares of common stock on a fully diluted basis as of May 1, 2017 and May 1, 2018, respectively. The Company expensed $13,879 through Sept 30, 2016 for stock compensation related to the May 1, 2017 and May 1, 2018 additional grants. The Company will expense a portion of this compensation quarterly until the grants are made at their respective due dates.

Common Stock Issued to Directors

On February 24, 2015, the Company issued 576,924 shares of common stock to its three non-executive directors at such time (192,308 shares each) Brian Israel, Morris Garfinkle and Dan Jeffery pursuant to the Plan. The Company recognized a total expense of $150,000 related to these issuances. These shares were valued based on the closing price on the grant date.

On January 2, 2015, the Company issued 285,716 shares of common stock to its four non-executive directors (71,429 shares each) Mark Hershhorn, Brian Israel, Morris Garfinkle and Edward B. Smith III pursuant to the Plan. The Company recognized a total expense of $160,001 related to these issuances. These shares were valued based on the closing price on the grant date.

On June 21, 2016, the Company issued 2,013,423 shares of common stock to its Chairman Morris Garfinkle pursuant to the Plan. The Company recognized a total expense of $160,001 related to this issuance. These shares were valued based on the closing price on the grant date.

Common Stock Issued on the Exercise of Stock Warrants and/or Options for Cash

During the three month and nine month periods ended September 30, 2016 and 2015, respectively, there were no warrants or options exercised for cash.

Common Stock Issued on the Cashless Exercise of Warrants and/or Stock Options

During the three months and nine months ended September 30, 2016, the Company did not issue any shares of common stock on the cashless exercise of warrants or options.

On April 22, 2016, the Company purchased 4,610,179 warrants from their holders for an aggregate price of $122,986.

~~During~~The Company and the ~~three~~holders ~~months~~of all of the Company’s issued and ~~nine~~outstanding ~~months~~warrants ~~ended September~~(the 30“Warrants”) as of December 12, ~~2015~~2016 entered into agreements effective December 12, 2016 (the ~~Company~~“Exchange ~~did~~Agreements”) ~~not~~pursuant ~~issue~~to ~~any~~which they exchanged (the “Exchange”) their Warrants (which were initially exercisable for an aggregate of 52,752,869 shares of the Company’s common stock, onpar value $0.00005 per share (the ~~cashless~~“Common ~~exercise~~Stock”)) for an aggregate of ~~options~~53,097,601 shares of Common Stock (which is the equivalent to the issuance of approximately one share of Common Stock for each Warrant exchanged). The holders of the shares of Common Stock received in exchange for the Warrants are prohibited from selling or otherwise transferring the shares of Common Stock until March 11, 2017. The foregoing description of the Exchange Agreements is qualified in its entirety by reference to the full text of the form of the Exchange Agreement, a copy of which is filed as Exhibit 10.1 to the Form 8-K Filed on December 12, 2016 and is incorporated by reference herein. An expense of $517,018 was recorded with this transaction.

16NOTE 14 – PREFERRED STOCK

On April 29, 2015, the Company sent a proposal to all warrant holders (as of September 30, 2014) to participate in a warrant exchange program whereby each warrant holder will be able to 1) exchange their warrants for common stock, on a cashless basis, at a reduced exercise price of $0.00005 per share, 2) if applicable, receive the right to 17.5% more warrants and a two year extension on all of their warrants in return for waiving their anti-dilution rights on a one-time basis for the exchange, or 3) elect to take advantage of (1) and (2) by (i) exchanging a portion of their Warrants that they so designate for shares of Common Stock in accordance with the applicable terms in (1) and (ii) the remainder of the Warrant not exchanged will be retained and amended pursuant to the applicable provisions of (2). As of April 29, 2015, there were 55,334,490 warrants outstanding that were eligible to participate in the proposal inclusive of 38,888,147 warrants associated with anti-dilution provisions resulting from the January 8, 2015 private placement.

As of September 30, 2015, the results of this exchange were warrant holders elected to receive 52,110,896 shares of Common Stock under alternative (1), 318,750 additional warrants were issued under alternative (2) and a combination of 974,826 shares of Common Stock and 73,125 warrants were issued from elections made under alternative (3). The Company recorded a loss on exchange of warrants of $12,959,654 for the nine months ended September 30, 2015.

Common Stock Issued for Services

On March 1, 2015, the Company entered into a Business Development Agreement with Steeltown Consulting Group, LLC, pursuant to which Steeltown agreed to assist in evaluating various business and financial matters. The Company issued 400,000 restricted shares of common stock as consideration for the services being rendered in this agreement pursuant to the Plan. The common stock was valued at $104,000 based on the closing prices of the stock on the date the agreement was executed. This agreement terminated on March 1, 2016.

There were no shares issued for services during the nine months ended September 30, 2016.

NOTE 13 – PREFERRED STOCK

Preferred Stock Issued to Investors

OnBetween December 29 and 31, 2014, the Company as part of a Private Placement Offering (the Offering) in which the Company offered for sale a maximum of 5,000,000 units (gross proceeds of $20,000,000), received cash deposits of $1,010,000 towards the purchase of the equity securities being offered. On January 8, 2015, the Company entered into agreements to sell an aggregate of 260,000 Units to eight (8) accredited investors at a price per ~~Unit~~unit of $4.00 (the “Units”). Each unit consisted of (i) one (1) share of 12.5% Redeemable Convertible Preferred Stock and (ii) one (1) warrant (the “Initial Warrant”), to acquire 8.64 shares of the company’s common stock, par value $0.00005 per share, at an exercise price of $0.64 per share for aggregate cash proceeds of $1,040,000 pursuant to separate purchase agreements entered into with each investor. As a result 260,000 shares of Preferred Stock and Initial Warrants to acquire 2,225,600 shares of common stock were issued. In addition, the Company ~~issued~~agreed to issue to each of the investors in the ~~initial~~first ~~closing~~round of ~~260,000~~financing ~~Units~~an additional warrant (the “Additional Warrant”) for each Unit acquired. The Additional Warrant entitles the investor in the first round of financing to acquire an additional 3.64 shares of the Company’s common also at the exercise price of $0.64 per share. The Additional Warrants ~~that~~issued ~~are~~in the initial closing of the 260,000 units are exercisable for an aggregate of 946,400 shares of the ~~Company~~company’s common stock. The Warrants ~~warrants~~ expire on the fifth anniversary of their issuance, may be exercised on a cashless basis, are subject to full ratchet price anti-dilution ~~protection~~ and entitled to registration rights. ~~As a result, 260,000 shares of Preferred Stock were issued.~~

In connection with the private placement offering that was consummated in January 2015, the members of the Company’s Board of Directors agreed to receive an aggregate of 96,590 Units (representing one (1) Unit for every $4.00 of debt exchanged), 826,806 Initial Warrants and 351,586 Additional Warrants in exchange for previously issued convertible notes (including principal and accrued and unpaid interest) (the “Notes”) held by the directors or affiliated entities as follows: (i) 71,211 Units, 609,566 Initial Warrants and 259,208 Additional Warrants were issued to Edward B. Smith, III, the Company’s Chief Executive Officer ~~and director~~, in exchange for an aggregate of $284,844 of notes and accrued interest, (ii) 10,084 Units, 86,317 Initial Warrants and 36,705 Additional Warrants were issued to Morris Garfinkle in exchange for $40,335 of notes and accrued interest; (iii) 5,211 Units, 44,606 Initial Warrants and 18,968 Additional Warrants were issued to each of Mark Hershhorn and Brian Israel in exchange for an aggregate of $20,844 of notes and accrued interest, respectively; and (v) 4,873 Units, 41,712 Initial Warrants and 17,737 Additional Warrants were issued to CKS Warehouse, an entity in which Mr. Hershhorn owns a controlling interest, in exchange for an aggregate of $19,~~491of~~491 of principal and interest on notes and accrued interest.

The fair value of the ~~Preferred~~preferred ~~Shares~~stock issued with the ~~Units~~units above was calculated using multinomial lattice models that valued the ~~Preferred~~preferred ~~Shares~~stock based on a probability weighted discounted cash flow model. The assumptions used to determine the fair value ~~included~~ included the holder of the preferred stock would convert the preferred stock once the stock price exceeded the exercise price, the historical annual volatility of the Company’s stock price was 119% and the weighted cost of capital for the Company was 16.93%. As a result of the conversion of convertible debt into ~~Units~~units, the Company recorded a loss on debt conversion of $351,314.

On February 9, 2015, the Company closed a second round of its private placement offering with four (4) accredited investors in which it raised gross proceeds of $500,000 and sold 125,000 Units all pursuant to separate Securities Purchase Agreements entered into with each investor. In addition, the Company issued to each of the investors in the first and second rounds of financing an additional warrant for each Unit acquired (the “Additional Warrant” and together with the Initial Warrant, the “Warrants”) to acquire 3.64 shares of the Company’s common stock at an exercise price of $0.64 per share. The Initial Warrants issued in the second closing are exercisable for 1,070,000 shares of the Company’s common stock and the Additional Warrants issued in the second closing are exercisable for an aggregate of 455,000 shares of the Company’s common stock.16

~~The~~On ~~Preferred~~February ~~Shares~~9, ~~are~~2015, ~~nonvoting~~the Company closed a second round of its private placement offering with four (4) accredited investors in which it raised gross proceeds of $500,000 ~~accrue~~and ~~dividends~~sold at125,000 ~~the~~units, ~~rate~~with ~~per~~each ~~annum~~unit ~~equal~~consisting toof (i) one (1) share of 12.5% ofRedeemable Convertible Preferred Stock (the ~~sum~~“Preferred ofShares”) and (iii) ~~the~~one ~~Stated~~(1) ~~Value~~warrant (~~which~~the “Initial Warrant”), ~~initially~~to isacquire $48.~~00)~~56 ~~until~~shares of the ~~Maturity~~Company’s ~~Date~~common asstock, ~~defined~~par invalue, ~~the~~$0.00005 ~~Certificate~~per share (“common stock”), at an exercise price of ~~Designations~~$0.64 ~~and~~per share all pursuant to separate Securities Purchase Agreements entered into with each investor (iithe “Securities Purchase Agreements”). In addition, the ~~amount~~Company issued to each of ~~accrued~~the investors in the first and ~~unpaid~~second ~~dividends~~rounds ~~payable~~of financing an additional warrant for each Unit acquired (the “Additional Warrant” and together with the Initial Warrant, ~~are~~the ~~convertible~~“Warrants”) ~~into~~to acquire 3.64 shares of the Company’s common stock at ~~the~~an ~~option~~exercise price of ~~the~~$0.64 per ~~holder~~share. asThe ~~described~~Initial Warrants issued in the ~~Certificate~~second closing are exercisable for 1,070,000 shares of the Company’s common ~~Designations,~~stock ~~have~~and ~~anti-~~the ~~dilution~~Additional ~~protection,~~Warrants ~~registration~~issued ~~rights,~~in ~~may~~the besecond ~~redeemed~~closing ~~under~~are ~~certain~~exercisable ~~circumstances,~~for ~~liquidation~~an ~~preference, protective~~aggregate ~~provisions~~of ~~and~~455,000 ~~board~~shares ~~rights~~of ~~under~~the ~~certain~~Company’s common ~~circumstances~~stock.

17The Preferred Shares are nonvoting, accrue dividends at the rate per annum equal to 12.5% of the sum of (i) the Stated Value (which initially is $4.00) until the Maturity Date as defined in the Statement of Resolution Establishing Preferred Shares and (ii) the amount of accrued and unpaid dividends payable, are convertible into shares of common stock at the option of the holder as described in the Statement of Resolution Establishing Preferred Shares, have anti- dilution protection, registration rights, may be redeemed under certain circumstances, liquidation preference, protective provisions and board rights under certain circumstances.

On March 18, 2015, the Company received $75,000 from an accredited investor towards the purchase of 18,750 units in a private placement offering. Each unit consists of (i) one (1) share of 12.5% Convertible Preferred Stock and (ii) one (1) warrant, to acquire 8.56 shares of the Company’s common stock, par value, $0.00005 per share, at an exercise price of $0.64 per share all pursuant to a separate ~~securities~~Securities ~~purchase agreement~~Purchase Agreement entered into with the investor.

On June 1, 2015, the Company received $25,000 from an accredited investor towards the purchase of 6,250 ~~Units~~units in a private placement offering. Each unit consists of (i) one (1) share of 12.5% Convertible Preferred Stock and (ii) one (1) warrant, to acquire 8.56 shares of the Company’s common stock, par value, $0.00005 per share, at an exercise price of $0.64 per share all pursuant to a separate ~~securities~~Securities ~~purchase agreement~~Purchase Agreement entered into with the investor.

On August 26, 2015, the Company received $250,000 from accredited investors towards the purchase of 62,500 ~~Units~~units in a private placement offering. Each unit consists of (i) one (1) share of 12.5% Convertible Preferred Stock and (ii) one (1) warrant, to acquire 8.56 shares of the Company’s common stock, par value, $0.00005 per share, at an exercise price of $0.64 per share all pursuant to a separate ~~securities~~Securities ~~purchase agreement~~Purchase Agreements entered into with the ~~investor~~investors.

On October 20, 2015, the Company received $200,000 from an accredited investor towards the purchase of 50,000 ~~Units~~units in a private placement offering. Each unit consists of (i) one (1) share of 12.5% Convertible Preferred Stock and (ii) one (1) warrant, to acquire 8.56 shares of the Company’s common stock, par value, $0.00005 per share, at an exercise price of $0.64 per share all pursuant to a separate Securities Purchase Agreement entered into with the investor.

On November 4, 2015, the Company received $200,000 from an accredited investor towards the purchase of 50,000 ~~Units~~units in a private placement offering. Each unit consists of (i) one (1) share of 12.5% Convertible Preferred Stock and (ii) one (1) warrant, to acquire 8.56 shares of the Company’s common stock, par value, $0.00005 per share, at an exercise price of $0.64 per share all pursuant to a separate Securities Purchase Agreement entered into with the investor.

Preferred Stock Issued to Vendors

Effective January 1, 2015, the Company and its landlord executed an amendment to the ~~current~~ lease extending the lease until July 14, 2015. ~~Commencing~~ Commencing on May 1, 2015, the parties agreed to a monthly base rent of $10,681 plus property taxes. The Company also agreed to pay $71,125 in rental arrears on April 30, 2015 and another $71,125 in rental arrears on July 1, 2015. Finally, the parties agreed that the ~~Company would~~ ~~deliver (which the~~ Company ~~delivered~~will ondeliver ~~April 3, 2015)~~ to the landlord 20,025 shares of its 12.5% Convertible Preferred Stock ~~which shares are convertible to common stock at the landlord’s option at~~ .~~088~~ ~~per~~As ~~preferred share. Also, the Company issued~~ a ~~five-year warrant~~result ~~to the landlord to purchase 171,454 shares~~ of ~~common stock at $0.64 per share. The fair value of~~ the preferred stock ~~issued~~ ~~was~~issued, ~~calculated using multinomial lattice models that valued~~ the ~~preferred~~Company ~~stock~~recorded ~~based~~an onexpense ~~a probability weighted discounted cash flow model. The assumptions used to determine the fair value included the holder~~ of ~~the~~$48,060 ~~preferred~~for ~~stock would convert~~ the ~~preferred stock~~three ~~once~~months ~~the~~ended ~~stock~~June ~~price exceeded the exercise price~~30, ~~the~~2015 ~~historical~~with ~~annual~~an ~~volatility~~offset ofto ~~the~~preferred ~~Company’s~~ stock ~~price was~~ ~~119%~~ and ~~the~~additional ~~weighted~~paid ~~cost~~in of capital ~~for the Company was 16~~.~~93%.~~ ~~As a result~~Also, the Company ~~recorded~~issued ana ~~expense~~five ofyear ~~$149,787~~warrant ~~for~~ to the ~~three~~landlord ~~months~~to ~~ended~~purchase ~~March 31~~171,414 ~~2015~~shares ~~with~~of ancommon stock ~~offset~~at to$0.64 ~~preferred~~per ~~stock payable~~share.

On May 1, 2015, the Company and its landlord executed an amendment to the ~~then~~ current lease extending the lease until October 14, 2015. The parties agreed and the Company delivered to the landlord 8,010 shares of its 12.5% Convertible Preferred ~~Shares~~Stock and agreed to issue 68,566 warrants to acquire the Company’s Common Stock at an exercise price of $0.64 per share. The Company recorded additional rent expense of $48,060.

On May 12, 2015, the Company agreed ~~and~~to ~~issued~~issue 12,500 shares of 12.5% Convertible Preferred Stock and 107,000 warrants to acquire ~~the~~ the Company’s Common Stock at an exercise price of $0.64 per share in satisfaction of outstanding accounts payable due to a a vendor. The outstanding balance due to this vendor was $60,885. The Company recognized a loss of $13,990 as a result of the conversion.

As of September 30, 2016, the Company had accrued dividends payable of $555,953 which are included in accounts payable on the balance sheet. As of December 31, 2015, the Company had accrued dividends payable of $280,675. 17

~~NOTE~~Preferred 14Dividends ~~– STOCK OPTION PLAN AND WARRANTS~~Accrued

~~Incentive~~As ~~Compensation~~of ~~Plan~~March 31, 2017, the Company had accrued dividends of $715,500. As of December 31, 2016, the Company had accrued dividends of $628,012.

~~The~~NOTE ~~Plan~~15 ~~provides~~– ~~for~~STOCK ~~the~~OPTION ~~issuance~~PLAN ofAND ~~qualified options and other equity awards to all employees and non-qualified options and other equity awards to directors, consultants and other service providers.~~WARRANTS

STOCK OPTION PLAN

The Company’s Incentive Compensation Plan (the “Plan”) provides for the issuance of qualified options to all employees and non-qualified options to directors, consultants and other service providers.

A summary of the status of stock options outstanding under the Plan as of March 31, 2017 and December 31, 2016 is as follows:

	3/31/2017					12/31/2016
	Number of Shares			Weighted Average Exercise Price		Number of Shares			Weighted Average Exercise Price
Outstanding at beginning of year		10,111,023		$	0.53		11,103,275		$	0.78
Granted		-		$	-		3,020,134		$	0.03
Exercised		-		$	-		-		$	-
Expired and Cancelled		(1,392,715	)	$	0.66		(4,012,386	)	$	0.88
Outstanding, end of period		8,718,308		$	0.50		10,111,023		$	0.53

Exercisable at end of period		8,718,308		$	0.50		8,600,956		$	0.61

On May 17, 2016, each non-executive member of the Board at that time (Morris Garfinkle, Dan Jeffery and Edward B. Smith III) was granted pursuant to the Plan an option to purchase an aggregate 1,006,711 shares of common stock (the equivalent of $30,000 based on the common stock’s closing price of $0.0298 on the grant date) for a total of 3,020,134 shares of common stock at an exercise price of $0.0298 per share. These stock options vest 25% on date of grant and 25% every 90, 180 and 270 days subsequent to the grant date and expire ten years after the date of the grant. As of March 31, 2017, the unrecognized compensation cost related to all non- vested share- based compensation arrangements granted under the Plan was $0.

During the three months ended March 31, 2017 and March 31, 2016, the Company did not grant any stock options to the employees.

During the three months ended March 31, 2017 and March 31, 2016, there were no stock options exercised either for cash or on a cashless basis.

Stock options outstanding at March 31, 2017 are as follows:

			Weighted
			Average		Weighted
			Remaining		Average
	Options		Contractual		Exercise		Options
Range of Exercise Prices	Outstanding		Life		Price		Exercisable
$0.01 - $1.50		7,221,774		5.3	$	0.26		7,221,774
$1.51 - $3.00		1,496,534		0.8	$	1.67		1,496,534
$3.01 - $5.00				-				-
		8,718,308		4.5	$	0.50		8,718,308

A summary of the status of stock options outstanding under the Plan as of September 30, 2016 and December 31, 2015 is as follows:

	9/30/2016					12/31/2015
				Weighted Average					Weighted Average
	Number of Shares			Exercise Price		Number of Shares			Exercise Price
Outstanding at beginning of year		11,103,275		$	0.78		11,033,675		$	1.05
Granted		3,020,134		$	0.03		6,299,600		$	0.29
Exercised		-					-
Expired and Cancelled		(3,772,386	)	$	0.89		(6,230,000	)	$	0.77
Outstanding, end of period		10,351,023		$	0.53		11,103,275		$	0.78
Exercisable at end of period		8,085,923		$	0.66		10,328,925		$	0.82

During the three and nine months ended September 30, 2016, the Company did not grant any stock options to employees.

On May 17, 2016, each non-executive member of the Board (Morris Garfinkle, Dan Jeffery and Edward B. Smith III) was granted pursuant to the Plan an option to purchase an aggregate 1,006,711 shares of common stock (the equivalent of $30,000 based on the common stock’s closing price of $0.0298 on the grant date) for a total of 3,020,134 shares of common stock at an exercise price of $0.0298 per share. These stock options vest 25% on date of grant and 25% every 90, 180 and 270 days subsequent to the grant date and expire ten years after the date of the grant. As of September 30, 2016, the unrecognized compensation cost related to all non- vested share- based compensation arrangements granted under the Plan was $80,453.

During the nine months ended September 30, 2015, the Company granted 6,299,600 options at an exercise price of $0.29 per share valued at $1,845,892. Stock- based compensation expense for both the three and nine months ended September 30, 2015 was $152,712 and $261,459 respectively. As of September 30, 2015, the unrecognized compensation cost related to all non- vested share- based compensation arrangements granted under the Plan was $388,385. Of this amount, $158,959 was recognized during the fourth quarter of fiscal 2015.

During the nine months ended September 30, 2016 and September 30, 2015, there were no stock options exercised either for cash or on a cashless basis.

The fair value of each stock option granted is estimated on the date of grant using the Black- Scholes option valuation model. This model uses the assumptions listed in the table below for stock options granted in 2015 and 2016. Expected volatilities are based on the historical volatility of the Company’s stock. The risk- free rate for periods within the expected life of the options is based on the U.S. Treasury yield curve in effect at the time of grant.

	5/17/2016			6/30/2015
Weighted average fair value per option granted		0.0298			0.1431 – 0.3606
Risk-free interest rate		1.2	%		1.00% - 1.54	%
Expected dividend yield		0.0	%		0.0	%
Expected lives		2.7			3.0
Expected volatility		201.10	%		86.22% - 120.51	%

Stock options outstanding at September 30, 2016 are as follows:

Range of Exercise Prices	Options Outstanding		Weighted Average Remaining Contractual Life		Weighted Average Exercise Price		Options Exercisable
$0.01 - $1.50		8,854,489		4.8	$	0.33		6,589,389
$1.51 - $3.00		1,496,534		1.3	$	1.67		1,496,534
$3.01 - $5.00		-		-	$	-		-
		10,351,023		2.8	$	0.53		8,085,923

Warrants

AsThe Company and the holders of ~~September~~all 30of the Company’s issued and outstanding warrants (the “Warrants”) as of December 12, 2016 entered into agreements effective December 12, 2016 (the ~~Company~~“Exchange ~~had warrants~~Agreements”) ~~outstanding~~pursuant to ~~purchase~~which they exchanged (the “Exchange”) their Warrants (which were initially exercisable for an aggregate of 52,~~897~~752,~~601~~869 shares of the Company’s common stock, par value $0.00005 per share (the “Common Stock”)) for an aggregate of 53,097,601 atshares ~~prices~~of ~~ranging~~Common ~~from~~Stock (which ~~$0.35~~is the equivalent to ~~$0.64~~the ~~per~~issuance of approximately one share of Common Stock for each Warrant exchanged). ~~These~~The holders of ~~warrants~~the ~~expire~~shares atof ~~various~~Common ~~dates~~Stock ~~through~~received ~~July~~in ~~2021~~exchange for the Warrants are prohibited from selling or otherwise transferring the shares of Common Stock until March 11, 2017. The ~~summary~~foregoing description of the ~~status~~Exchange ofAgreements ~~the~~is ~~warrants~~qualified ~~issued~~in its entirety by reference to the ~~Company~~full astext of ~~September~~the form of the Exchange Agreement, a copy of which is filed as Exhibit 10.1 to the Form 8-K Filed on December 3012, 2016 and ~~December~~is ~~31,~~incorporated ~~2015~~by ~~are~~reference ~~as follows:~~herein.

~~AGRITECH~~As ~~WORLDWIDE~~of March 31, ~~INC.~~2017, ~~(FORMERLY~~the ZCompany ~~TRIM~~had ~~HOLDINGS,~~no ~~INC~~warrants outstanding.) The summary of the status of the warrants issued by the Company as ~~SUMMARY~~of OFMarch ~~WARRANTS~~31, 2017 and December 31, 2016 are as follows:

	9/30/2016					12/31/2015
	Number of Shares of Common Stock Underlying Warrants			Weighted Average Exercise Price		Number of Shares of Common Stock Underlying Warrants			Weighted Average Exercise Price
Outstanding at beginning of year		50,957,780		$	0.52		16,446,351		$	1.44
Granted		6,550,000		$	0.64		87,825,204		$	0.42
Exercised		(4,610,179	)	$	0.43		(53,095,204	)	$	0.66
Cashless Exercises		-		$	-		-			-
Expired and Cancelled		-					(218,571	)	$	0.66
		52,897,601		$	0.50		50,957,780		$	0.52
Outstanding, end of period		52,897,601		$	0.50		50,957,780		$	0.52
Exercisable at end of period		52,897,601		$	0.50		50,957,780		$	0.52

AGRITECH WORLDWIDE, INC. (FORMERLY Z TRIM HOLDINGS,INC.)

~~Effective~~SUMMARY ~~January~~OF 1, 2015, the Company and its landlord executed an amendment to the current lease extending the lease until July 14, 2015. Commencing on May 1, 2015, the parties agreed to a monthly base rent of $10,681 plus property taxes. The Company also agreed to pay $71,125 in rental arrears on April 30, 2015 and another $71,125 in rental arrears on July 1, 2015. Finally, the parties agreed that the Company will deliver to the landlord 20,025 shares of its Preferred Shares which shares are convertible to common stock at the landlord’s option at .088 per preferred share. Also, the Company issued a five-year warrant to the landlord to purchase 171,454 shares of Common Stock at $0.64 per share.WARRANTS

On January 8, 2015, in conjunction with the sale of units consisting of convertible preferred stock, the “Company”), issued warrants (the “Initial Warrant”) to acquire 8.56 shares of the Company’s common stock at an exercise price of $0.64 per share. In addition, the Company agreed to issue to each of the investors in the first round of financing an additional warrant to acquire (the “Additional Warrant” and together with the Initial Warrant, the “Warrants”) to acquire 3.64 shares of the Common Stock at an exercise price of $0.64 per share. The Additional Warrants issued are exercisable for an aggregate of 946,400 shares of the Common Stock. The Warrants expire on the fifth anniversary of their issuance, may be exercised on a cashless basis, are subject to full ratchet price anti-dilution protection and entitled to registration rights as set forth below.

	3/31/2017				12/31/2016
	Number of Warrants		Weighted Average Exercise Price		Number of Warrants			Weighted Average Exercise Price
Outstanding at beginning of year		-	$	-		50,957,780		$	0.52
Granted		-	$	-		6,750,000		$	0.64
Exercised		-	$	-		(57,707,780	)	$	0.53
Cashless Exercises		-	$	-		-			-
Expired and Cancelled		-	$	-		-		$	0.00
Outstanding, end of period		-	$	-		-		$	0.00

Exercisable at end of period		-	$	-		-		$	0.00

Due to the anti-dilution provisions of some of the outstanding warrants before the January 8, 2015 transaction, the exercise price on 15,512,057 warrants has been reduced to $0.35 and the number of shares of common stock into which the warrants are now exercisable has been adjusted such that the warrants are now exercisable into 54,400,204 shares of common stock.

In addition to the foregoing, the members of the Company’s Board of Directors agreed to receive 826,806 Initial Warrants and 351,586 Additional Warrants in exchange for previously issued convertible notes (including principal and accrued and unpaid interest) (the “Notes”) held by the directors or affiliated entities as follows: (i) 71,211 Units, 609,566 Initial Warrants and 259,208 Additional Warrants were issued to Edward B. Smith, III, the Company’s Chief Executive Officer, in exchange for an aggregate of $284,844 of notes, (ii) 10,084 Units, 86,317 Initial Warrants and 36,705 Additional Warrants were issued to Morris Garfinkle in exchange for $40,335 of notes; (iii) 5,211 Units, 44,606 Initial Warrants and 18,968 Additional Warrants were issued to each of Mark Hershhorn and Brian Israel in exchange for an aggregate of $20,844 of notes, respectively; and (v) 4,873 Units, 41,712 Initial Warrants and 17,737 Additional Warrants were issued to CKS Warehouse, an entity in which Mr. Hershhorn owns a controlling interest, in exchange for an aggregate of $19,491of principal and interest on notes.

On February 9, 2015, the Company closed a second round of a private placement offering in which investors received the Initial Warrants to acquire 8.56 shares of the Common Stock at an exercise price of $0.64 per share all pursuant to separate securities purchase agreements entered into with each investor. In addition, the Company issued to each of the investors in the first and second rounds of financing an additional warrant for each Unit acquired (the “Additional Warrant” and together with the Initial Warrant, the “Warrants”) to acquire 3.64 shares of the Common Stock at an exercise price of $0.64 per share. The Initial Warrants issued in the second closing are exercisable for 1,070,000 shares of the Common Stock and the Additional Warrants issued in the second closing are exercisable for an aggregate of 455,000 shares of the Common Stock. The sale was part of a private placement offering (the “Offering”) in which the Company offered for sale a maximum of 5,000,000 units (gross proceeds of $20,000,000). Prior to the second closing, the Company raised gross proceeds of $1,040,000 in the initial closing of the Offering issued Initial Warrants to acquire 2,225,600 shares of common stock and Additional Warrants to acquire 946,400 shares of common stock. The Warrants expire on the fifth anniversary of their issuance, may be exercised on a cashless basis, are subject to full ratchet price anti-dilution protection and entitled to registration rights.

The fair values for the Company’s derivative liabilities related to the Warrants issued is $67,108. The derivative instruments were valued as of September 30, 2016 with the following assumptions:

- The Holder would automatically exercise the warrants at a stock price above the exercise price, with the target exercise price dropping as expiration approaches, - The projected annual volatility was based on the Company’s historical volatility, - An event of default would occur 5% of the time, increasing by 0.10% per month, - Dilutive/Full Reset events projected to occur based on future projected capital needs (capital funds raised were projected in prior quarters – future financings are projected going forward in 2016) resulting in the weighted conversion price dropping from the initial conversion price.

Effective January 1, 2015 the Company entered into a Consulting Agreement with Jeffery Consulting Group, LLC pursuant to which Jeffery Consulting will provide assistance with operational improvements including manufacturing processes, strategic and tactical advice with respect to the Company’s sales and marketing initiatives, and provide customer introductions and strategic sales opportunities. In consideration of services rendered by Jeffery Consulting, the Company issued a warrant to purchase 1,250,000 shares of common stock at $0.35 per share. The warrant vested 500,000 shares upon the mutual execution of this agreement, and 250,000 shares each at the three month, six month, and nine month anniversaries of this agreement. The fair value of the warrants issued is estimated on the date of grant using the Black-Scholes valuation model. The assumptions used in the model included the historical volatility of the Company’s stock of 84.52%, and the risk-free rate for periods within the expected life of the warrant based on the U.S. Treasury yield curve in effect of 1.07%. For the three months ended September 30, 2015 the Company recognized compensation expense of $128,880. The Company also agreed to accrue $5,000 per month which becomes payable to Jeffery Consulting once the Company has raised $3 million in additional capital. The Company terminated the Consulting Agreement as of April 1, 2016.

On February 9, 2015, Edward B. Smith, III and Morris Garfinkle were issued warrants exercisable for 31,000,000 and 5,500,000 shares of common stock, respectively, in consideration of the services to be provided to the Company as Chief Executive Officer of the Company and Chairman of the Board, respectively. The exercise price of these warrants is $0.45 per share. The fair value of the warrants issued is estimated on the date of grant using the Black-Scholes valuation model. The assumptions used in the model included the historical volatility of the Company’s stock of 81.99%, and the risk-free rate for periods within the expected life of the warrant based on the U.S. Treasury yield curve in effect of 0.85%. For the three months ended September 30, 2015 the Company recognized compensation expense of $3,749,259.

On April 29, 2015, the Company sent a proposal to all warrant holders (as of September 30, 2014), which offered to participate in a warrant exchange program whereby each warrant holder was able to 1) exchange their warrants for common stock, on a cashless basis, at a reduced exercise price of $0.00005 per share, 2) if applicable, receive the right to 17.5% more warrants and a two year extension on all of their warrants in return for waiving their anti- dilution rights on a one- time basis for the exchange, or 3) elect to take advantage of (1) and (2) by (i) exchanging a portion of their Warrants that they so designate for shares of Common Stock in accordance with the applicable terms in (1) and (ii) the remainder of the Warrant not exchanged will be retained and amended pursuant to the applicable provisions of (2). As of April 29, 2015, there were 55,334,490 warrants outstanding that were eligible to participate in the proposal inclusive of 38,888,147 warrants associated with anti- dilution provisions resulting from the January 8, 2015 private placement.

The results of this exchange were warrant holders elected to receive 52,110,896 shares of Common Stock under alternative (1). The Company recorded a loss on exchange of warrants in the amount of $12,959,654. Warrant holders elected to receive 318,750 additional warrants under alternative (2). Finally, warrant holders elected to receive a combination of 974,826 shares of Common Stock and 73,125 warrants under alternative (3). The Company recognized a warrant expense of $259,662.

On May 14, 2015, the Company entered into a consulting agreement with E.B. Smith Jr. (father of the Company’s former Chief Executive Officer, director and largest shareholder, Edward B. Smith III) pursuant to which E.B. Smith Jr. agreed to provide advice with respect to the Company’s marketing initiatives, provide customer introductions and investigating strategic transactions. In consideration of services rendered by E.B. Smith Jr., the Company issued warrants to purchase 750,000 shares of common stock at $0.35 per share. The warrants vested 450,000 shares upon the mutual execution of the agreement and then in 150,000 share increments at the three month and six month anniversaries of this agreement. The fair value of the warrants issued is estimated on the date of grant using the Black- Scholes valuation model. The assumptions used in the model included the historical volatility of the Company’s stock of 104.65%, and the risk- free rate for periods within the expected life of the warrant based on the U.S. Treasury yield curve in effect of 1.6%. In 2015 the Company recognized an expense of $117,642. The agreement terminated on May 14, 2016.

On May 14, 2015, the Company entered into a consulting agreement with Terme Bancorp pursuant to which Terme Bancorp agreed to provide advice with respect to the Company’s marketing initiatives, provide customer introductions and investigating strategic transactions. In consideration of services rendered by Terme Bancorp, the Company issued warrants to purchase 1,250,000 shares of Common Stock at $0.35 per share. The warrants vested 750,000 shares upon the mutual execution of this agreement and then in 250,000 share increments at the three month and six month anniversaries of this agreement. The fair value of the warrants issued is estimated on the date of grant using the Black- Scholes valuation model. The assumptions used in the model included the historical volatility of the Company’s stock of 104.65%, and the risk- free rate for periods within the expected life of the warrant based on the U.S. Treasury yield curve in effect of 1.60%. In 2015 the Company recognized an expense of $197,075. The agreement terminated on May 14, 2016.

On October 2, 2015, the Company issued a warrant to acquire 250,000 shares of the Common Stock, at an exercise price of $0.64 per share to an accredited investor in conjunction with their $250,000 note investment. The Warrants expire on the fifth anniversary of their issuance, may be exercised on a cashless basis, are subject to full ratchet price anti- dilution protection and entitled to registration rights.

On December 23, 2015, the Company issued a warrant to acquire 500,000 shares of the Common Stock, at an exercise price of $0.64 per share to Jonathan Kahn in conjunction with his $500,000 note investment. The Warrants expire on the fifth anniversary of their issuance, may be exercised on a cashless basis, are subject to full ratchet price anti- dilution protection and entitled to registration rights.

On March 2 2016, the Company issued a warrant to acquire 400,000 shares of the Common Stock, at an exercise price of $0.64 per share to Jonathan Kahn in conjunction with his $100,000 note investment. The Warrants expire on the fifth anniversary of their issuance, may be exercised on a cashless basis, are subject to full ratchet price anti- dilution protection and entitled to registration rights.

On March 11, 2016, the Company issued a warrant to acquire 400,000 shares of the Common Stock, at an exercise price of $0.64 per share to an accredited investor in conjunction with their $100,000 note investment. The Warrants expire on the fifth anniversary of their issuance, may be exercised on a cashless basis, are subject to full ratchet price anti- dilution protection and entitled to registration rights.

On March 17, 2016, the Company issued a warrant to acquire 400,000 shares of the Common Stock, at an exercise price of $0.64 per share to an entity controlled by Morris Garfinkle in conjunction with its $100,000 note investment. The Warrants expire on the fifth anniversary of their issuance, may be exercised on a cashless basis, are subject to full ratchet price anti- dilution protection and entitled to registration rights.

On March 17, 2016, the Company issued a warrant to acquire 200,000 shares of the Common Stock, at an exercise price of $0.64 per share to an entity controlled by Dan Jeffery in conjunction with its $50,000 note investment. The Warrants expire on the fifth anniversary of their issuance, may be exercised on a cashless basis, are subject to full ratchet price anti- dilution protection and entitled to registration rights.

On April 7, 2016, the Company issued two warrants to acquire a total of 400,000 shares of the Common Stock, at an exercise price of $0.64 per share to two accredited investors in conjunction with their total of $100,000 note investments. The Warrants expire on the fifth anniversary of their issuance, may be exercised on a cashless basis, are subject to full ratchet price anti- dilution protection and entitled to registration rights.

On April 8, 2016, the Company issued a warrant to acquire 2,000,000 shares of the Common Stock, at an exercise price of $0.64 per share to an accredited investor in conjunction with their $500,000 note investment. The Warrants expire on the fifth anniversary of their issuance, may be exercised on a cashless basis, are subject to full ratchet price anti- dilution protection and entitled to registration rights.

On April 22, 2016, the Company purchased 4,610,178 warrants from their holders for an aggregate price of $122,805.

On April 28, 2016, the Company issued a warrant to acquire 150,000 shares of the Common Stock, at an exercise price of $0.64 per share to an entity controlled by Dan Jeffery in conjunction with its $50,000 note investment. The Warrants expire on the fifth anniversary of their issuance, may be exercised on a cashless basis, are subject to full ratchet price anti- dilution protection and entitled to registration rights.

On July 14, 2016, the Company issued a warrant to acquire 2,000,000 shares of the Common Stock, at an exercise price of $0.64 per share to an accredited investor in conjunction with their $500,000 note investment. The Warrants expire on the fifth anniversary of their issuance, may be exercised on a cashless basis, are subject to full ratchet price anti- dilution protection and entitled to registration rights.

On July 21, 2016, the Company issued a warrant to acquire 600,000 shares of the Common Stock, at an exercise price of $0.64 per share to an accredited investor in conjunction with their $300,000 note investment. The Warrants expire on the fifth anniversary of their issuance, may be exercised on a cashless basis, are subject to full ratchet price anti- dilution protection and entitled to registration rights.

~~There~~On November ~~were~~4, no2016, ~~warrants~~the ~~exercised~~Company ~~either~~issued ~~for~~a ~~cash~~warrant orto acquire 200,000 shares of the Common Stock, at an exercise price of $0.64 per share to an accredited investor in conjunction with their $100,000 note investment. The Warrants expire on the fifth anniversary of their issuance, may be exercised on a cashless basis., are subject to full ratchet price anti- dilution protection and entitled to registration rights

~~NOTE~~During 15the –quarter ~~MAJOR~~ended ~~CUSTOMERS~~March ~~AND~~31, ~~CREDIT~~2017, ~~CONCENTRATION~~there were no warrants exercised for cash.

~~The Company’s customers are food~~NOTE ~~manufacturers,~~16– ~~school~~MAJOR ~~districts~~CUSTOMERS ~~and~~AND ~~distributors.~~CREDIT There were two significant customers who accounted for 52% and 13% of total sales for the three months ended September 30, 2016. Further, these same two customers accounted for 42% and 29% of the total accounts receivable at September 30, 2016. There were two significant customers who accounted for 38% and 13% of total sales for the nine months ended September 30, 2016.CONCENTRATION

During the quarter ended March 31, 2017, the Company’s customers were food manufacturers. There were three significant customers who accounted for 46%, 9% and 7% of total sales for the three months ended March 31, 2017. Further, two significant customers accounted for 58%, and 9% of the total accounts receivable at March 31, 2017.

The Company maintains cash deposits with major banks, which from time to time may exceed federally insured limits. The Company periodically assesses the financial condition of the institutions and believes that the risk of any loss is minimal.

NOTE 1617 – COMMITMENTS

Building Lease

~~The~~Until the UCC Sale on April 17, 2017, the Company ~~leases~~leased a combined research and development and office facility located in Mundelein, Illinois. The facility is approximately 44,000 square feet.

OnEffective ~~March~~January 141, ~~2014~~2015, the Company ~~extended~~and its landlord executed an amendment to the lease extending the lease until ~~May~~July 14, 2015. ~~and~~Commencing on May 1, 2015, the ~~required~~parties agreed to a monthly ~~rental~~base ~~payments~~rent ~~increased~~of $10,681 plus property taxes. The Company also agreed to pay $2171,~~361~~125 in rental arrears on April 30, ~~inclusive~~2015 and another $71,125 in rental arrears on July 1, 2015. Finally, the Company delivered to the landlord 20,025 shares of ~~property~~its ~~taxes~~12.5% ~~Insurance~~convertible ~~and~~preferred ~~maintenance~~stock which shares are ~~billed~~convertible ~~when~~to ~~due~~common stock at the landlord’s option at . 088 per preferred share. Also the Company issued a five year warrant to the landlord to purchase 171,454 shares of common stock at $0.64 per share.

Effective January 1, 2015, the Company and its landlord executed an amendment to the lease extending the lease until July 14, 2015. Commencing on May 1, 2015, the parties agreed to a monthly base rent of $10,681 plus property taxes. The Company also agreed to pay $71,125 in rental arrears on April 30, 2015 and another $71,125 in rental arrears on July 1, 2015. Finally, the Company delivered to the landlord 20,025 shares of its 12.5% convertible preferred stock which shares are convertible to common stock at the landlord’s option at .088 per preferred share. Also, the Company issued a five-year warrant to the landlord to purchase 171,454 shares of common stock at $0.64 per share.

On May 1, 2015, the Company and its landlord executed an amendment to the then current lease extending the lease until October 14, 2015. The parties agreed and the Company delivered to the landlord 8,010 Preferred Shares and agreed to issue 68,566 warrants to acquire the Company’s Common Stock at an exercise price of $0.64 per share. The Company recorded additional rent expense of $48,060.

On October 14, 2015, the lease converted to a month to month basis. ~~Monthly~~Until the UCC Sale, monthly rental payments ~~are~~were ~~currently~~ $17,972, inclusive of property taxes. ~~We believe we will be successful in negotiating a new lease with the landlord.~~

For ~~nine~~the three months ended ~~September~~March 3031, ~~2016~~2017 and ~~2015~~2016, the Company recognized rent expense of $~~183~~53,~~090~~916 and $~~308~~70,~~756~~168, respectively.

~~NOTE 17 – PENDING LITIGATION/CONTINGENT LIABILITY~~20

Equipment Sale and Leaseback

NOTE 18 – PENDING LITIGATION/CONTINGENT LIABILITY

On July 7, 2007, the Company and Greg Halpern, its former Chief Executive Officer in his individual capacity, were served with a complaint by Joseph Sanfilippo and James Cluck for violation of the Consumer Fraud Act and the plaintiffs are seeking damages in excess of $200,000. The trial court has issued a default order against the Company, and has denied the Company’s Motion to reconsider. Management believes that the trial court’s rulings were erroneous and that it has grounds for appeal, and that the underlying allegations are frivolous and wholly without merit and will vigorously defends the claim. The outcome of this matter is unknown as of the report date. However, the Company has accrued a liability in the amount of $102,000 in respect to this litigation.

NOTE 19 – RELATED PARTY TRANSACTIONS

On February 11, 2014 the Company entered into an agreement with Edward B. Smith III, a Director and Shareholder of the Company, pursuant to which Mr. Smith agreed to lend the Company $200,000 in a convertible senior secured note. The note matures in two years (February 11, 2016) and bears interest at 12.5% computed based on a 365-day year. Accrued interest is payable either at maturity or quarterly at the option of Mr. Smith in shares of the Company’s common stock. At any time on or after the date that is 90 days after the date of issuance of the note, Mr. Smith may elect to convert the aggregate principal balance and accrued interest into shares of common stock of the Company. The conversion price under the note is $2.25, subject to adjustment as provided in the note. If on the maturity date of the note, the thirty day trailing average closing price of the Company’s common stock (the “Trailing Average Price”) is below $2.25, the Conversion Price on the maturity date will be reduced to the Trailing Average Price, but to not less than $1.25. The Conversion Price was greater than the closing stock price on the agreement date; therefore no beneficial conversion feature was recorded on this note.

On April 25, 2014, the Company entered into an agreement with Edward B. Smith III, a Director and Shareholder of the Company, pursuant to which Mr. Smith agreed to lend the Company $300,000 in a convertible subordinated secured note. The note matures in two years (April 25, 2016) and bears interest at 14% computed based on a 365-day year. Accrued interest is payable at maturity in shares of the Company’s common stock. At any time on or after the date that is 90 days after the date of issuance of the note, Mr. Smith may elect to convert the aggregate principal balance and accrued interest into shares of common stock of the Company. The conversion price under the note is $1.00. The conversion price was greater than the closing stock price on the agreement date; therefore no beneficial conversion feature was recorded on this note.

On April 30, 2014, the Company issued a 14% convertible subordinated secured note to each of Morris Garfinkle, Mark Hershhorn, Brian Israel and Edward B. Smith III, Directors of the Company, in the principal amount of $19,000, for director fees due and payable to them (the “Director Notes”). Each Director Note matures in two years (April 30, 2016) and bears interest at 14% computed on a 365-day year. Accrued interest is payable at maturity in shares of the Company’s common stock. At any time on or after the date that is 90 days after the date of issuance of the Director Note, the director may elect to convert the aggregate principal balance and accrued interest into shares of common stock of the Company. The conversion price under each Director Note is $1.00. The conversion price was greater than the closing stock price on the agreement date; therefore no beneficial conversion feature was recorded on this note. Each Director Note is secured by the assets of the Company, which security interest is subordinate to the security interest granted to Fordham in connection with the Equipment Lease Agreement.

On May 12, 2014, the Company issued 14% convertible subordinated secured notes to both Mo Garfinkle and CKS Warehouse in the principal amount of $75,000 each. Both notes mature in two years (May 12, 2016) and bear interest at 14% computed on a 365-day year. Accrued interest is payable at maturity in shares of the Company’s common stock. At any time on or after the date that is 90 days after the date of issuance of each note, Mr. Garfinkle and CKS Warehouse may elect to convert the aggregate principal balance and accrued interest into shares of common stock of the Company. The conversion price under each note is $1.00. The conversion price was greater than the closing stock price on the agreement date; therefore no beneficial conversion feature was recorded on this note. Each note is secured by the assets of the Company, which security interest is subordinate to the security interest granted to Fordham in connection with the Equipment Lease Agreement.

On July 15, 2014, the Company entered into an agreement with Edward B. Smith III, pursuant to which Mr. Smith agreed to lend the Company $64,000 in an unsecured note payable. The note matures in 90 days (October 15, 2014) without interest payable on the unpaid principal and subject to the terms of the Company’s agreements with its secured creditors. On August 6, 2014 this note was rolled into the $264,000 convertible subordinated secured note indicated below.

On August 6, 2014, the Company issued a 14% convertible subordinated secured note to Edward B. Smith III in the principal amount of $264,000. The note matures in two years (August 6, 2016) and bears interest at 14% computed on a 365-day year. Under this note Mr. Smith has provided $200,000 of cash as of August 6, 2014 and the parties agreed to include the unsecured funds in the amount of $64,000 provided by Mr. Smith on July 15, 2014 and include those amounts as part of this subordinated secured transaction. The loan agreement executed by the parties on July 15, 2014 is now null and void. Accrued interest is payable at maturity in shares of the Company’s common stock. At any time on or after the date that is 90 days after the date of issuance of the note, Mr. Smith may elect to convert the aggregate principal balance and accrued interest into shares of common stock of the Company. The conversion price under this note is $1.00. The conversion price was greater than the closing stock price on the agreement date; therefore, no beneficial conversion feature was recorded on this note. The note is secured by the assets of the Company, which security interest is subordinate to the security interest granted to Fordham in connection with the Equipment Loan and the Factoring Agreement.

The April 30, 2014 Notes for $19,000 issued to each of the then four directors, $12,567 of each $75,000 note issued to Morris Garfinkle and CKS Warehouse on May 12, 2014, the $264,000 note issued to Edward B. Smith III on August 6, 2014 and the $21,266 accrued interest related to these notes were converted into 96,590 units in connection with January 2015 private placement which is described in detail in Note #10.

On December 23, 2015, the company executed an amendment to the 200,000 12.5% convertible subordinated secured note dated February 11, 2014, the 300,000 14% convertible subordinated secured notes (dated April 25, 2014, and the note issued to Mr. Garfinkle dated May 12, 2014) whereby the maturity date for each note was extended to July 1, 2016.

In connection with the private placement offering that was consummated in January 2015, the members of the Company’s Board of Directors agreed to receive an aggregate of 96,590 Units (representing one (1) Unit for every $4.00 of debt exchanged), 826,806 Initial Warrants and 351,586 Additional Warrants in exchange for previously issued convertible notes (including principal and accrued and unpaid interest) (the “Notes”) held by the directors or affiliated entities as follows: (i) 71,211 Units, 609,566 Initial Warrants and 259,208 Additional Warrants were issued to Edward B. Smith III, the Company’s Chief Executive Officer, in exchange for an aggregate of $284,844 of notes and accrued interest, (ii) 10,084 Units, 86,317 Initial Warrants and 36,705 Additional Warrants were issued to Morris Garfinkle in exchange for $40,335 of notes and accrued interest; (iii) 5,211 Units, 44,606 Initial Warrants and 18,968 Additional Warrants were issued to each of Mark Hershhorn and Brian Israel in exchange for an aggregate of $20,844 of notes and accrued interest, respectively; and (v) 4,873 Units, 41,712 Initial Warrants and 17,737 Additional Warrants were issued to CKS Warehouse, an entity in which Mr. Hershhorn owns a controlling interest, in exchange for an aggregate of $19,491 of principal and interest on notes and accrued interest.

On January 2, 2014 the Company issued 285,716 shares of common stock to the then four non-executive directors (71,429 shares each) Mark Hershhorn, Brian Israel, Morris Garfinkle and Edward B. Smith III. The Company recognized a total expense of $160,001 related to these issuances. These shares were valued based on the closing price on the grant date.

Effective January 1, 2015 the Company entered into a consulting agreement with Jeffery Consulting Group, LLC pursuant to which Jeffery Consulting will provide assistance with operational improvements including manufacturing processes, strategic and tactical advice with respect to the Company’s sales and marketing initiatives, and provide customer introductions and strategic sales opportunities. In consideration of services rendered by Jeffery Consulting, the Company issued a warrant to purchase 1,250,000 shares of common stock at $0.35 per share. The warrant vested 500,000 shares upon the mutual execution of this agreement, and 250,000 shares each at the three month, six month, and nine month anniversaries of this agreement. The fair value of the warrants issued is estimated on the date of grant using the Black- Scholes valuation model. The assumptions used in the model included the historical volatility of the Company’s stock of 84.52%, and the risk- free rate for periods within the expected life of the warrant based on the U.S. Treasury yield curve in effect of 1.07%. In 2015 the Company recognized compensation expense of $249,635.The Company also agreed to accrue $5,000 per month which becomes payable to Jeffery Consulting once the Company has raised $3 million in additional capital.

On February 9, 2015, Edward B. Smith III and Morris Garfinkle were issued warrants exercisable for 31,000,000 and 5,500,000 shares of common stock, respectively, in consideration of the services to be provided to the Company as Chief Executive Officer of the Company and Chairman of the Board, respectively. The exercise price of these warrants is $0.45 per share. The fair value of the warrants issued is estimated on the date of grant using the Black- Scholes valuation model. The assumptions used in the model included the historical volatility of the Company’s stock of 81.99%, and the risk- free rate for periods within the expected life of the warrant based on the U.S. Treasury yield curve in effect of 0.85%. In 2015 the Company recognized compensation expense of $3,749,259.

On May 14, 2015 the Company entered into a consulting agreement with E.B. Smith Jr. (father of the Company’s CEO and largest shareholder, Edward B. Smith III) pursuant to which E.B. Smith Jr. will provide advice with respect to the Company’s marketing initiatives, provide customer introductions and investigating strategic transactions. In consideration of services rendered by E.B. Smith Jr., the Company issued warrants to purchase 750,000 shares of common stock at $0.35 per share. The warrants vested 450,000 shares upon the mutual execution of this agreement and then in 150,000 share increments at the three month and six month anniversaries of this agreement. The fair value of the warrants issued is estimated on the date of grant using the Black- Scholes valuation model. The assumptions used in the model included the historical volatility of the Company’s stock of 104.65%, and the risk- free rate for periods within the expected life of the warrant based on the U.S. Treasury yield curve in effect of 1.6%. In 2015 the Company recognized an expense of $117,642.

On September 29, 2014, the Company issued a 14% nonconvertible subordinated secured note to Edward B. Smith III in the principal amount of $85,000. The note matures in two months (November 29, 2014) and bears interest at 14% computed based on a 365-day year. Accrued interest is payable at maturity in cash. The note is secured by the assets of the Company, which security interest is subordinate to the security interest granted to Fordham in connection with the Equipment Lease Agreement.

On October 23, 2014, the Company issued a 14% nonconvertible subordinated secured note to Edward B. Smith III in the principal amount of $85,000. The note matures in two months (December 23, 2014) and bears interest at 14% computed based on a 365-day year. Accrued interest is payable at maturity in cash. The note is secured by the assets of the Company, which security interest is subordinate to the security interest granted to Fordham in connection with the Equipment Lease Agreement.

On October 30, 2014, the Company issued a 14% nonconvertible subordinated secured note to Edward B. Smith III in the principal amount of $70,000. The note matures in two months (December 30, 2014) and bears interest at 14% computed based on a 365-day year. Accrued interest is payable at maturity in cash. The note is secured by the assets of the Company, which security interest is subordinate to the security interest granted to Fordham in connection with the Equipment Lease Agreement.

On December 3, 2014, the Company issued a 14% nonconvertible subordinated secured note to Edward B. Smith III in the principal amount of $30,000. The note matures in two months (February 3, 2015) and bears interest at 14% computed based on a 365-day year. Accrued interest is payable at maturity in cash. The note is secured by the assets of the Company, which security interest is subordinate to the security interest granted to Fordham in connection with the Equipment Lease Agreement.

On May 29, 2015, the Company executed an amendment number 3 to the 14% nonconvertible subordinated secured notes (dated September 29, 2014, October 23, 2014, October 30, 2014 and December 3, 2014, respectively) whereby the maturity date for each note was extended from May 29, 2015 to December 31, 2015.

On June 12, 2015, the Company issued a 14% nonconvertible subordinated secured note to Edward B. Smith III in the principal amount of $12,000. The note matures on December 31, 2015 and bears interest at 14% computed based on a 365- day year. Accrued interest is payable at maturity in cash. The note is secured by the assets of the Company, which security interest is subordinate to the security interest granted to Fordham in connection with the Equipment Loan and the Factoring Agreement.

On August 13, 2015, the Company issued a 14% nonconvertible subordinated secured note to Edward B. Smith III in the principal amount of $25,000. The note matures on December 31, 2015 and bears interest at 14% computed based on a 365- day year. Accrued interest is payable at maturity in cash. The note is secured by the assets of the Company, which security interest is subordinate to the security interest granted to Fordham in connection with the Equipment Lease Agreement and the Factoring Agreement.

On August 21, 2015, the Company issued a 14% nonconvertible subordinated secured note to Edward B. Smith III in the principal amount of $150,000. The note matures on December 31, 2015 and bears interest at 14% computed based on a 365- day year. Accrued interest is payable at maturity in cash. The note is secured by the assets of the Company, which security interest is subordinate to the security interest granted to Fordham in connection with the Equipment Loan and the Factoring Agreement.

On November 18, 2015, the Company entered into a consulting agreement (the “Consulting Agreement”) with ACT Financial Services Inc. (“ACT Financial”), pursuant to which ACT Financial will provide to the Company finance, accounting and administrative functions, including acting chief financial officer (and principal financial officer) services to be provided by Donald G. Wittmer. The Company will pay an agreed upon weekly rate for such services and will reimburse ACT Financial for certain travel expenses. The Consulting Agreement will continue for six months and may be extended by mutual agreement of the parties. This agreement terminated upon the resignation of Mr. Wittmer as Chief Financial Officer on May 17, 2017. ACT Financial received $48,040 in the year ended December 31, 2016.

~~NOTE~~On 18December –23, ~~RELATED~~2015, ~~PARTY~~the ~~TRANSACTIONS~~Company issued a 14% nonconvertible senior unsecured note to Jonathan Kahn in the principal amount of $500,000. The note matures in twelve months (December 23, 2016) and bears interest at 14% computed based on a 365- day year. Accrued interest is payable at maturity in cash. During the three months ended September 30, 2016 this note was reclassified from a short-term borrowing to unrelated parties as a short-term non-convertible note to related parties.

~~Effective~~On ~~January~~December 123, 2015, the ~~Company~~company ~~entered~~executed ~~into~~an aamendment ~~Consulting Agreement with Jeffery Consulting Group, LLC pursuant~~ to ~~which~~the ~~Jeffery Consulting~~14% ~~agreed~~nonconvertible tosubordinated ~~provide~~secured ~~assistance~~notes ~~with~~(dated ~~operational~~September ~~improvements including manufacturing processes~~29, ~~strategic and tactical~~ ~~advice~~2014, ~~with~~October ~~respect to the Company’s sales and marketing initiatives~~23, ~~and provide customer introductions and strategic sales opportunities. In consideration of services rendered by Jeffery Consulting~~2014, ~~the~~October ~~Company issued a warrant to purchase 1~~30,~~250,000 shares~~ ~~of Common Stock at $0.35 per share. The warrant vested 500~~2014,~~000~~ ~~shares~~December ~~upon the mutual execution of this agreement~~3, ~~and 250~~2014,~~000~~ ~~shares~~June ~~each at the three month~~12, ~~six month~~2015, ~~and~~August nine month anniversaries of this agreement. The fair value of the warrants issued is estimated on the date of grant using the Black-Scholes valuation model. The assumptions used in the model included the historical volatility of the Company’s stock of 84.52%13,2015, and ~~the~~August ~~risk-free rate for periods within the expected life of the warrant based on the U.S. Treasury yield curve in effect of 1.07%. For the three months ended September 30~~21, 2015 ~~the~~respectively) ~~Company recognized~~whereby ~~compensation~~the ~~expense~~maturity ofdate ~~$128,880.~~for ~~The~~each ~~Company~~note ~~also~~was ~~agreed~~extended to ~~accrue~~July ~~$5,000 per month which becomes payable to Jeffery Consulting once the Company has raised $3 million in additional capital. The Company terminated the Consulting Agreement as of April~~ 1, 2016.

On ~~January~~March 82, ~~2015~~2016, the Company~~, entered~~ ~~into~~issued ~~agreements~~a 14% senior unsecured note to ~~sell~~Jonathan anKahn, ~~aggregate~~the Company’s current Chief Executive Officer, interim Chief Financial Officer and member of ~~260~~the Board of Directors in the principal amount of $100,000. ~~Units~~The toCompany ~~eight~~recognized $3,791and amortized $247 of discount as of September 30, 2016. The note matures in one year (8March 2, 2017) ~~accredited~~and ~~investors~~bears interest at a14% ~~price~~compounded ~~per~~based ~~unit~~on ofa $4365-day year.00 ~~(the~~Accrued ~~“Units”)~~interest is payable at maturity in cash. In addition, the Company issued ~~Additional Warrants exercisable for an~~a ~~aggregate~~warrant ofto ~~946,~~acquire 400,000 shares of the Company’s common stock, at an exercise price of $0.64 per share to the accredited investor. The Warrants expire on the fifth anniversary of their issuance, may be exercised on a cashless basis, are subject to full ratchet price anti- dilution protection and entitled to registration rights. During the three months ended September 30, 2016 this note was reclassified from a short-term borrowing to unrelated parties as a short-term non-convertible note to related parties.

In addition to the foregoing, the members of the Company’s Board of Directors agreed to receive an aggregate of 96,590 Units (representing one (1) Unit for every $4.00 of debt exchanged), 826,806 Initial Warrants and 351,586 Additional Warrants in exchange for previously issued convertible notes (including principal and accrued and unpaid interest) (the “Notes”) held by the directors or affiliated entities as follows: (i) 71,211 Units, 609,566 Initial Warrants and 259,208 Additional Warrants were issued to Edward B. Smith, III, the Company’s Chief Executive Officer, in exchange for an aggregate of $284,844 of notes, (ii) 10,084 Units, 86,317 Initial Warrants and 36,705 Additional Warrants were issued to Morris Garfinkle in exchange for $40,335 of notes; (iii) 5,211 Units, 44,606 Initial Warrants and 18,968 Additional Warrants were issued to each of Mark Hershhorn and Brian Israel in exchange for an aggregate of $20,844 of notes, respectively; and (v) 4,873 Units, 41,712 Initial Warrants and 17,737 Additional Warrants were issued to CKS Warehouse, an entity in which Mr. Hershhorn owns a controlling interest, in exchange for an aggregate of $19,491of principal and interest on notes.

On February 24, 2015, the Company issued 576,924 shares of common stock to its then three non-executive directors (192,308 shares each) Brian Israel, Morris Garfinkle and Dan Jeffery. The Company recognized a total expense of $150,000 related to these issuances. These shares were valued based on the closing price on the grant date.

On December 23, 2015, the Company issued a 14% nonconvertible senior unsecured note to Jonathan Kahn in the principal amount of $500,000. The note matures in twelve months (December 23, 2016) and bears interest at 14% computed based on a 365- day year. Accrued interest is payable at maturity in cash. During the three months ended June 30, 2016 this note was reclassified from a short-term borrowing to unrelated parties as a short-term non-convertible note to related parties.

On March 2, 2016, the Company issued a 14% senior unsecured note to Jonathan Kahn, the Company’s current Chief Executive Officer, interim Chief Financial Officer and member of the Board of Directors in the principal amount of $100,000. The Company recognized $3,791 and amortized $247 of discount as of September 30, 2016. The note matures in one year (March 2, 2017) and bears interest at 14% compounded based on a 365-day year. Accrued interest is payable at maturity in cash. In addition, the Company issued a warrant to acquire 400,000 shares of the Company’s common stock, at an exercise price of $0.64 per share to the accredited investor. The Warrants expire on the fifth anniversary of their issuance, may be exercised on a cashless basis, are subject to full ratchet price anti- dilution protection and entitled to registration rights. During the three months ended June 30, 2016 this note was reclassified from a short-term borrowing to unrelated parties as a short-term non-convertible note to related parties.

On March 17, 2016, the Company issued a 14% senior unsecured note to an entity controlled by Dan Jeffery in the principal amount of $50,000. The Company recognized $1,824 and amortized $105 of discount as of September 30, 2016. The note matures in one year (March 17, 2017) and bears interest at 14% compounded based on a 365-day year. Accrued interest is payable at maturity in cash. In addition, the Company issued a warrant to acquire 200,000 shares of the Company’s common stock at an exercise price of $0.64 per share to the entity controlled by Dan Jeffery. The Warrants expire on the fifth anniversary of their issuance, may be exercised on a cashless basis, are subject to full ratchet price anti- dilution protection and entitled to registration rights.

On May 17, 2016, each non-executive member of the Board (Morris Garfinkle, Dan Jeffery and Edward B. Smith III) was granted pursuant to the Company’s Amended and Restated Incentive Compensation Plan an option to purchase 1,006,711 shares of Common Stock (the equivalent of $30,000 based on the Common Stock’s closing price of $0.0298 on the grant date) for a total of 3,020,133 shares of Common Stock at an exercise price of $0.0298 per share. These stock options vest 25% on date of grant and 25% every 90, 180 and 270 days subsequent to the grant date and expire ten years after the date of the grant.

On May 17, 2016 (the “Effective Date”), the Company” entered into an employment agreement with Jonathan Kahn (the “Kahn Employment Agreement”) in connection with the appointment of Mr. Kahn as the Company’s new Chief Executive Officer. The Kahn Employment Agreement will continue until June 30, 2019 (subject to automatic one year extensions), unless earlier terminated pursuant to its terms. Pursuant to the Kahn Employment Agreement, Mr. Kahn’s annual base salary will be $200,000 per year from the Effective Date through December 31, 2016 and $225,000 beginning January 1, 2017. Mr. Kahn will also be eligible to participate in Company’s annual incentive compensation program (the “Annual Incentive Program”), with a target annual bonus equal to 100% of his annual base salary and a maximum annual bonus each year equal to 200% of his base salary. Mr. Kahn’s annual bonus for the 2016 calendar year will be prorated based on the number of days served during 2016. The actual amount of the annual bonus earned by and payable to Mr. Kahn in any year will be determined upon the satisfaction of goals and objectives established by the Compensation Committee (the “Compensation Committee”) of the Company’s Board of Directors (the “Board”) and will be subject to such other terms and conditions of the Company’s Annual Incentive Program as in effect from time to time.

Pursuant to the Kahn Employment Agreement, Mr. Kahn was granted 6,067,931 fully-vested shares of the Company’s common stock, par value $0.00005 per share (the “Common Stock”), such amount representing 3.5% of the Company’s shares of Common Stock on a fully diluted basis as of the Effective Date. In addition, on each of May 1, 2017 and May 1, 2018, respectively, Mr. Kahn will receive an additional grant of fully-vested Company Common Stock, such additional grants each representing 0.75% of the Company’s shares of Common Stock on a fully diluted basis as of May 1, 2017 and May 1, 2018, respectively (together with the 6,067,931 shares granted on the Effective Date, the “Equity Award”).

Commencing in calendar year 2017, and each year thereafter, Mr. Kahn will be eligible to participate in the Company’s annual equity incentive compensation program, with an annual target equity grant for each year in which Mr. Kahn participates in the equity incentive compensation program having a grant date fair value equal to 100% of Mr. Kahn’s base salary and a maximum annual equity award for each year in which Mr. Kahn participates in the equity incentive compensation program equal to 250% of Mr. Kahn’s base salary. In determining the amount of Mr. Kahn’s equity grant for any year, the Compensation Committee will consider the Company’s performance over the immediately preceding fiscal year.

On each anniversary of the Effective Date and each Equity Issuance Date (as defined below), until such time as Mr. Kahn terminates employment with the Company, Mr. Kahn will receive an additional grant of unrestricted Common Stock (which additional grant will be deemed to be a part of the initial Equity Award), if necessary, so that on each such anniversary and each such Equity Issuance Date, the total number of shares received by Mr. Kahn pursuant to the Equity Award will equal at least 3.5% of the Company’s shares of Common Stock on a fully diluted basis until April 30, 2016, 4.25% until April 30, 2018, and 5.0% thereafter. Under this provision, Mr. Kahn is owed 416,695 shares valued at $4,573, as of December 31, 2016 and included in common stock payable. For purposes of the Kahn Employment Agreement, an “Equity Issuance Date” is any date on which the Company consummates the sale of or issuance of (i) more than 1% of the Company’s shares of Common Stock on a fully diluted basis; or (ii) any instrument that is convertible into more than 1% of the Company’s shares of Common Stock on a fully diluted basis. For the sake of clarity, in calculating the total number of shares held by Mr. Kahn pursuant to the Equity Award, only the initial shares granted and any additional shares granted in accordance with this paragraph will be considered and any shares (A) held by Mr. Kahn on or prior to the Effective Date or (B) granted to or acquired by Mr. Kahn in any other manner following the grant to Mr. Kahn of the Equity Award (including any annual equity award grant or otherwise) will be disregarded.

On each anniversary of the Effective Date and each Equity Issuance Date (as defined below), until such time as Mr. Kahn terminates employment with the Company, Mr. Kahn will receive an additional grant of unrestricted Common Stock (which additional grant will be deemed to be a part of the initial Equity Award), if necessary, so that on each such anniversary and each such Equity Issuance Date, the total number of shares received by Mr. Kahn pursuant to the Equity Award will equal at least 3.5% of the Company’s shares of Common Stock on a fully diluted basis until April 30, 2016, 4.25% until April 30, 2018, and 5.0% thereafter. For purposes of the Kahn Employment Agreement, an “Equity Issuance Date” is any date on which the Company consummates the sale of or issuance of (i) more than 1% of the Company’s shares of Common Stock on a fully diluted basis; or (ii) any instrument that is convertible into more than 1% of the Company’s shares of Common Stock on a fully diluted basis. For the sake of clarity, in calculating the total number of shares held by Mr. Kahn pursuant to the Equity Award, only the initial shares granted and any additional shares granted in accordance with this paragraph will be considered and any shares (A) held by Mr. Kahn on or prior to the Effective Date or (B) granted to or acquired by Mr. Kahn in any other manner following the grant to Mr. Kahn of the Equity Award (including any annual equity award grant or otherwise) will be disregarded.

If Mr. Kahn’s employment contract is terminated for death or Cause (as such terms are defined in the Kahn Employment Agreement), he (or his estate in the event of death) will receive (i) unpaid salary and expenses as well as his annual bonus for the fiscal year immediately preceding the fiscal year in which the date of termination occurs, if such bonus has not been paid as of the date of termination; (ii) any accrued vacation pay to the extent not theretofore paid; and (iii) any other amounts or benefits required to be paid or provided by law or under any plan, program, policy or practice of the Company.

If Mr. Kahn’s employment is terminated by the Company without Cause or terminated by him for Good Reason, he will receive two times the sum of (1) his base salary at the time of termination (or, in the event of a Termination for Good Reason, the base salary prior to the event constituting Good Reason if such Base Salary is higher than the base salary at the time of termination) plus (2) Target Bonus (as such term is defined in the Kahn Employment Agreement) at the time of termination (the “Severance Payment”). In addition, Mr. Kahn shall receive (i) an annual bonus for the year in which the terminations occurs, determined based on actual performance during such year and prorated for the period during the year in which Executive was employed by the Company, payable at the same time annual bonuses are paid to other senior executives of the Company; (ii) accelerated vesting of all outstanding Company equity awards, and, in the case of stock options, if any, such options shall remain exercisable until the expiration date of such option; and (iii) if Mr. Kahn timely and properly elects health continuation coverage under COBRA, the Company shall reimburse Mr. Kahn for the monthly COBRA premium paid by for himself and his dependents until the earlier of: (x) the 18-month anniversary of the Termination Date; and (y) the date the Executive is no longer eligible to receive COBRA continuation coverage.

If (1) during the two year period following a Change of Control (as defined in the Kahn Employment Agreement), Mr. Kahn’s employment is terminated due to a Termination Without Cause or a Termination for Good Reason or (2) during the 90-day period preceding a Change of Control, his employment is terminated due to a Termination Without Cause in anticipation of a Change of Control transaction that the Board is actively considering and that is ultimately consummated, Mr. Kahn is entitled to receive the benefits set forth in the preceding paragraph, except that (i) in lieu of the Severance Payment, Mr. Kahn will receive two times the sum of (A) his base salary at the time of such termination or Change of Control, whichever base salary level is greater, plus (B) the Maximum Bonus (as such term is defined in the Kahn Employment Agreement) at the time of such termination or Change of Control, whichever Maximum Bonus level is greater (the “CIC Severance Payment”) and (2) Mr. Kahn will be eligible to receive such COBRA premium reimbursement until the earlier of: (x) the 24-month anniversary of the Termination Date; and (y) the date the Executive is no longer eligible to receive COBRA continuation coverage. Under his employment agreement, Mr. Kahn has also agreed to non-competition provisions.

If Mr. Kahn’s employment is terminated due to Disability (as defined in the Kahn Employment Agreement), he will receive an annual bonus for the year in which the termination occurs, determined based on actual performance during such year and prorated for the period during the year in which Mr. Kahn was employed by the Company.

Pursuant to the Kahn Employment Agreement, Mr. Kahn was granted 6,067,931 fully-vested shares of Common Stock pursuant to the Company’s Amended and Restated Incentive Compensation Plan.

The foregoing summary description of the Kahn Employment Agreement does not purport to be complete and is subject to, and qualified in its entirety by reference to the Kahn Employment Agreement, a copy of which is attached as Exhibit 10.1 to the Form 8-K filed on May 17, 2016 and ~~are~~is incorporated herein by reference.

There are no family relationships between Mr. Kahn and any former director, officer or person nominated or chosen by the Company to become director.

On June 21, 2016, the Company issued 2,013,423 shares of common stock to its Chairman Morris Garfinkle pursuant to the Plan. ~~The Company recognized a total expense of $160,001 related to this issuance. These shares were valued based on the closing price on the grant date.~~

~~NOTE~~On 19November –18, ~~GUARANTEES~~2016, November 22, 2016 and December 7, 2016, respectively, Mr. Smith advanced the Company $16,230, $23,000 and $20,000.

~~The~~On ~~Company~~December from time to time enters into certain types of contracts that contingently require the Company to indemnify parties against third party claims. These contracts primarily relate to: (i) divestiture agreements7, ~~under which the Company may provide customary indemnifications to purchasers of the Company’s businesses or assets; (ii) certain real estate leases~~2016, under which the Company may be required to indemnify property owners for environmental and other liabilities, and other claims arising from the Company’s use of the applicable premises; and (iii) certain agreements with the Company's officers, directors and employees, under which the Company may be required to indemnify such persons for liabilities arising out of their employment relationshipMr. ~~The~~Kahn ~~terms of~~advanced ~~such obligations vary. Generally, a maximum obligation is not explicitly stated. Because~~ the ~~obligated amounts of these types of agreements often are not explicitly stated, the overall maximum amount of the obligations cannot be reasonably estimated. Historically, the~~ Company ~~has not been obligated to make significant payments for these obligations~~$20, ~~and no liabilities have been recorded for these obligations on its balance sheet as of September 30, 2016~~000.

InOn ~~general~~December 12, 2016, as part of the Company’s ~~offers~~warrant aexchange, ~~one-year~~Mr. ~~warranty~~Smith exchanged 31,868,774 warrants for ~~most~~31,868,774 ofcommon shares, ~~the~~Mr. ~~products~~Garfinkle itand ~~sells~~entities affiliated with Mr. ToGarfinkle ~~date~~exchanged 6,023,022 ~~the~~warrants ~~Company~~for ~~has~~6,023,022 ~~not~~common ~~incurred~~shares, ~~any material~~Mr. ~~costs~~Jeffrey ~~associated~~and entities affiliated with ~~these~~Mr. ~~warranties~~Jeffery exchanged 1,600,000 warrants for 1,600,000 common shares and Mr. Kahn exchanged 900,000 warrants for 900,000 common shares.

~~NOTE~~In 20January –2017 ~~SUBSEQUENT~~Mr. ~~EVENTS~~Garfinkle advanced the Company $50,000 and Mr. Kahn advanced the Company $80,000.

On February ~~November 4~~1, ~~2016~~2017, the Company ~~issued~~entered into a ~~14%~~loan ~~senior~~and ~~unsecured note~~security toagreement an(the ~~accredited~~“Loan ~~investor~~Agreement”) inwith ~~the~~various ~~principal~~lenders, including ~~amount~~an ofentity ~~$100,000.~~controlled ~~The~~by ~~note~~its ~~matures~~chief inexecutive ~~one~~officer, ~~year~~Jonathan ~~(November~~Kahn, 4and a director, ~~2017)~~Morris Garfinkle, and ~~bears~~issued a note ~~interest~~in atconnection ~~14%~~therewith ~~compounded~~(the ~~based~~“Note”). onThe aprincipal ~~365-day~~amount ~~year.~~of ~~Accrued~~the ~~interest~~loan is ~~payable~~$996,000. The Loan accrues interest at ~~maturity~~a rate inper ~~cash.~~annum Inequal ~~addition,~~to the ~~Company issued~~prime arate ~~warrant~~plus to18.9%. ~~acquire~~Interest ~~200,000~~is ~~shares~~payable ofmonthly and the ~~Company’s~~principal ~~common~~is ~~stock,~~payable aton anthe ~~exercise~~maturity ~~price~~ date of ~~$0.64~~the ~~per~~loan, ~~share~~which tois 2.5 years from the ~~accredited~~ ~~investor~~issuance date. The ~~Warrants~~loan ~~expire~~is onsecured ~~the~~by ~~fifth~~all ~~anniversary~~of the assets of ~~their~~the ~~issuance,~~Company. ~~may~~The beLoan ~~exercised~~Agreement contains oncertain acovenants ~~cashless~~regarding ~~basis~~financial reporting, ~~are subject~~limits toon ~~full~~the ~~ratchet~~Company’s ~~price~~incurrence ~~anti-~~of ~~dilution~~indebtedness, ~~protection~~permitted investments, ~~and~~encumbrances, ~~entitled~~restricted topayments, and ~~registration~~mergers ~~rights~~and acquisitions.

On February 17, 2017, Jonathan Kahn, the Chief Executive Officer of the Company, and Morris Garfinkle, the Chairman of the Board of Directors of the Company (the “Board”), and the Garfinkle Revocable Trust filed a Schedule 13D with the Securities and Exchange Commission, which, among other things, described a term sheet (the “Term Sheet”), which was annexed to the Schedule 13D, that they had presented to the Company’s Special Committee of the Board. The Term Sheet is for a proposed convertible preferred stock financing relating to the potential issuance by the Company of shares of up to $6,000,000 but not less than $4,000,000 of a newly-created series of preferred stock of the Company. As proposed, such newly-created preferred stock would be convertible into up to a maximum of 75% of the Company’s equity (on a fully-diluted basis) and would be entitled, as a class, to designate three of the five directors of the Company.

On March 14, 2017, Messrs. Kahn and Garfinkle and the Garfinkle Revocable Trust determined to terminate discussions with the Company with respect to the Term Sheet and the potential investment contemplated thereby, and the Company was notified of such determination.

Due to the Company’s ongoing liquidity needs, on March 15, 2017, the Company entered into a promissory note with Mr. Kahn and Mr. Garfinkle as the lenders in the original principal amount of $56,000 (the “Promissory Note”). The Promissory Note accrues interest at a rate per annum equal to 5%. Accrued and unpaid interest on the outstanding principal is payable monthly in arrears on the last business day of each month in which any amount remains outstanding under the Promissory Note. The principal amount, together with all accrued and unpaid interest thereon, is required to be repaid to the lenders out of the proceeds received from the accounts receivable of the Company collected after March 15, 2017, immediately upon such receipt. The loan under the Promissory Note is secured by all of the assets of the Company pursuant to a Security Agreement and a Patent Security Agreement. The proceeds of the Promissory Note were used by the Company to primarily fund payroll and to pay employee health insurance premiums and a critical vendor of the Company. As a condition to the making of the loan under the Promissory Note, the lenders under a loan agreement entered into by the Company on February 1, 2017 (which lenders included Mr. Kahn and Mr. Garfinkle through GKS Funding), which is the senior secured debt of the Company, were required to enter into a subordination agreement with the Company and Mr. Kahn and Mr. Garfinkle (the “Subordination Agreement”). The Subordination Agreement made the Promissory Note the senior secured debt of the Company. This loan was repaid to the lenders out of proceeds received from the accounts receivable of the Company during the quarter.

On March 24, 2017, Dan Jeffery provided the Company with notice of his resignation from the Company’s Board of Directors (the “Board”), effective immediately. Mr. Jeffery’s resignation from the Board was not the result of any dispute or disagreement with the Company. Mr. Jeffery has served on the Board since 2015.

Due to the ongoing liquidity needs of the Company, on March 28, 2017, the Company entered into a promissory note with Mr. Garfinkle as the lender in the original principal amount of $35,000 (the “Promissory Note”). The Promissory Note accrues interest at a rate per annum equal to 5%. Accrued and unpaid interest on the outstanding principal is payable monthly in arrears on the last business day of each month in which any amount remains outstanding under the Promissory Note. The principal amount, together with all accrued and unpaid interest thereon, is required to be repaid to the lenders out of the proceeds received from the accounts receivable of the Company collected after March 28, 2017, immediately upon such receipt. The loan under the Promissory Note is secured by all of the assets of the Company pursuant to a Security Agreement and a Patent Security Agreement. The proceeds of the Promissory Note were used by the Company to primarily fund payroll and to pay certain critical vendors of the Company. As a condition to the making of the loan under the Promissory Note, the lenders under a loan agreement entered into by the Company on February 1, 2017 (which lenders included Mr. Kahn and Mr. Garfinkle through GKS Funding), which is the senior secured debt of the Company, were required to enter into a subordination agreement with the Company and Mr. Kahn and Mr. Garfinkle (the “Subordination Agreement”). The Subordination Agreement made the Promissory Note the senior secured debt of the Company. $4,798 of this loan was repaid to the lender out of proceeds received from the accounts receivable of the Company during the quarter.

On March 31, 2017, Jonathan Kahn and Morris Garfinkle provided Agritech Worldwide, Inc. (the “Company”) with notices of their resignation from the Company’s Board of Directors (the “Board”) and Jonathan Kahn’s resignation as the Company’s Chief Executive Officer, effective immediately. Messrs. Garfinkle and Kahn’s resignations were not the result of any dispute or disagreement with the Company.

On March 31, 2017, the Company received a notice of default from GKS Funding LLC, as administrative agent under the Loan Agreement (as defined below) (“GKS Funding”) stating that the Company is in default of a loan (the “Loan”) made pursuant to that certain Loan and Security Agreement by and among the Company, GKS Funding and the lenders named therein, which include Messrs. Garfinkle and Kahn (the “Lenders”), dated as of February 1, 2017 (the “Loan Agreement”), for failure to make a scheduled interest payment on the Loan that was due on March 31, 2017. If such failure described above is not cured within the 15-day cure period, which is April 15, 2017, the Lenders (through GKS Funding, as administrative agent under the Loan Agreement) intend to exercise all rights and remedies available to them under the Loan Agreement, related note and applicable law, which will include foreclosing on the collateral under the Loan Agreement.

On April 5, 2017, the Company and GKS Funding, as administrative agent under the Loan Agreement (as defined above) entered into a Cooperation Agreement (the “Cooperation Agreement”) in connection with a loan (the “Loan”) made to the Company pursuant to that certain Loan and Security Agreement, dated as of February 1, 2017 (as amended and in effect from time to time, the “Loan Agreement”), between the Company, the Lenders party thereto and GKS Funding. As previously reported, on March 31, 2017, the Company received a notice of default from GKS Funding stating that the Company was in default of the Loan for failure to make a scheduled interest payment on the Loan that was due on March 31, 2017. If such failure described above was not cured within the 15-day cure period, which was April 15, 2017, the Lenders (through GKS Funding, as administrative agent under the Loan Agreement) intended to exercise all rights and remedies available to them under the Loan Agreement, related note and applicable law, which included foreclosing on the collateral under the Loan Agreement.

As of the date of the Cooperation Agreement, the outstanding balance of the Company’s obligations under the Loan Agreement was approximately $1,011,800, plus accrued and accruing legal fees and expenses. Over the past several months, the Company has experienced significant operating losses and has been unable to raise additional capital in order to pay the expenses necessary to continue to operate its business. For the same reason, the Company was unable to pay interest on the Loan on March 31, 2017 (the “Existing Default”).

As a result of the foregoing, and after considering all options, the Board of Directors of the Company determined that the Company would not have sufficient funds to cure the Existing Default on or before April 15, 2017. In addition, given the inability to raise additional capital to fund ongoing operations, the Company also determined that it would be unable continue to operate as a going concern. Thus, the Company determined that it was in the best interests of all constituents and the Company to cooperate with GKS Funding and its exercise of remedies.

Pursuant to the Cooperation Agreement, the Company and GKS Funding agreed as follows: (i) the Company waived the 15-day cure period with respect to the Existing Default immediately upon execution of the Cooperation Letter and GKS Funding has the right to exercise its remedies under the Loan Agreement and applicable law with respect to such event of default, including, without limitation, by scheduling and conducting a sale of all of the collateral under the Loan Agreement on or about April 17, 2017 (the “UCC Sale”); (ii) GKS Funding agreed to fund loans to the Company up to the date of the UCC Sale to permit the Company to pay the Budgeted Expenses (as defined in the Cooperation Agreement) as and when due with this new loan, which is (a) secured by a first priority security interest in all of the real and personal assets, property, fixtures, rights and interests of the Company, (b) shall have priority in payment over the Loan made pursuant to the Loan Agreement; and (c) shall be repaid, before any other payments are made by the Company, out of the first cash proceeds of the collateral received by the Company; and (iii) the Company consented to fully cooperate with GKS Funding in connection with the UCC Sale, as well as the exercise by GKS Funding of any of its other right and remedies in connection therewith.

On April 5, 2017, the Company and GKS Funding entered into a letter agreement (the “Letter Agreement”), pursuant to which (i) the Company informed GKS Funding that the Company has determined (1) it will not have sufficient funds to cure the interest payment default that occurred on March 31, 2017, under the Loan Agreement and the Note as previously described in Amendment No. 2 and (2) it cannot continue to operate as a going concern and (ii) the Company and GKS Funding agreed as follows:

(1) The Company waived the cure period with respect to the Existing Default (as defined in the Letter Agreement). As a result, the Company agreed, immediately upon execution of the Letter Agreement, the Existing Default became an Event of Default (as defined in the Loan Agreement) (with, for avoidance of doubt, no further right to cure or grace period), and GKS Funding shall had the right to exercise its remedies under the Loan Agreement and applicable law with respect to such Event of Default, including, without limitation, by scheduling and conducting a UCC sale of all of the Collateral (as defined in the Loan Agreement) on or about April 17, 2017 (the “UCC Sale”).

(2) GKS Funding agreed to fund loans to the Company up to the date of the UCC Sale to permit the Company to pay the Budgeted Expenses (as defined in the Letter Agreement) as and when due and payable in accordance with Exhibit A to the Letter Agreement, pursuant to documentation in form and substance acceptable to GKS Funding and Company (the “New Loans”). The New Loans: (a) were secured by a first priority security interest in all of the real and personal assets, property, fixtures, rights and interests of the Company, whether now existing or owned and hereafter arising or acquired and wherever located; (b) had priority in payment over the Loans (as defined in the Loan Agreement) made by GKS Funding pursuant to the Loan Agreement; and (c) were to be repaid, before any other payments are made by the Company, out of the first cash proceeds of the Collateral received by the Company.

~~Item~~(3) The 2.Company ~~Management’s~~consented ~~Discussion~~to fully cooperate with GKS Funding in connection with, the UCC Sale and ~~Analysis~~the disposition of ~~Financial~~the ~~Condition~~Collateral in ~~and~~connection ~~Results~~therewith, as well as the exercise by GKS Funding of ~~Operations~~any of its other right and remedies in connection therewith.

~~Cautionary~~GKS Funding ~~Statement~~intended ~~Regarding~~to ~~Forward~~try ~~Looking~~to ~~Information~~acquire all of the Collateral at the UCC Sale. GKS Funding also intended to credit bid the amounts due under the Loan Agreement and the Note at the UCC Sale. The effects of the contemplated transaction have not been reflected in the financial statements.

~~This~~The New ~~report~~Loans ~~contains~~will orbe ~~incorporates~~evidenced by ~~reference~~a ~~various~~promissory ~~forward-looking~~note ~~statements concerning~~ (the ~~Company’s~~“New ~~prospects~~Note”). ~~that are~~The ~~based~~New onNote ~~the~~accrued ~~current~~interest ~~expectations~~at ~~and~~a ~~beliefs~~rate ofper ~~management.~~annum ~~Forward-looking statements may contain words such as “anticipate,”~~equal ~~“believe,”~~to ~~“estimate,”~~5%. ~~“expect,”~~Accrued ~~“objective,” “projection”~~ and ~~similar expressions~~unpaid orinterest ~~use~~on ~~of verbs in~~ the ~~future~~outstanding ~~tense,~~principal ~~which~~was ~~are~~payable ~~intended~~monthly toin ~~identify~~arrears ~~forward-looking~~on ~~statements;~~the ~~any~~last ~~discussions~~business day of each ~~periods~~month ~~after~~in ~~the date for~~ which ~~this~~any ~~report~~amount isremains ~~filed~~outstanding ~~are~~under ~~also~~the ~~forward-looking~~New ~~statements~~Note. The ~~forward-looking~~principal ~~statements~~amount, ~~contained herein~~together ~~and~~with ~~such~~all ~~future~~accrued ~~statements~~and ~~involve~~unpaid orinterest thereon, ~~may~~was ~~involve~~required ~~certain~~to ~~assumptions,~~be ~~risks,~~repaid ~~and~~to ~~uncertainties,~~GKS ~~many~~Funding out of ~~which~~the ~~are~~proceeds ~~beyond the~~received ~~Company’s~~from ~~control,~~the ~~which~~accounts ~~could~~receivable ~~cause~~of the Company’s ~~actual results and performance to differ materially from what~~collected isafter ~~expected.~~April 7, ~~Readers~~2017, ~~are~~immediately ~~cautioned~~upon ~~not to place undue reliance on~~ such ~~forward-looking statements~~receipt. The ~~Company~~New ~~undertakes~~Note nowill ~~obligation to~~be ~~publicly~~secured ~~update~~by orall ~~revise~~of ~~any~~the ~~forward-looking~~assets ~~statements, whether as a result~~ of ~~new~~the ~~information,~~Company ~~future events or otherwise.~~pursuant ~~There~~to ~~can~~a beSecurity noAgreement ~~assurance~~and ~~that~~a ~~the~~Patent ~~forward-looking~~Security ~~statements contained in this document will, in fact, transpire or prove to be accurate~~Agreement.

InAs a condition ~~addition~~to the making of the loan under the New Note, GKS Funding required the lenders under the Loan Agreement (which include GKS Funding) to enter into a subordination agreement with the ~~assumptions~~Company and ~~other~~GKS ~~factors~~Funding ~~referenced~~(the ~~specifically~~“New inSubordination ~~connection~~Agreement”). ~~with~~The ~~such~~New Subordination ~~statements~~Agreement will make the New Note the senior secured debt of the Company, ~~factors~~provided that ~~could~~the ~~cause~~balance of the Second orPromissory ~~contribute~~Note, which is less than $300, will be senior to ~~our~~the ~~actual~~New ~~results~~Note ~~differing~~until ~~materially~~paid ~~from~~in ~~those~~full. ~~discussed~~The ~~herein~~form orof ~~for~~the ~~our~~New ~~stock~~Subordination Agreement ~~price~~is attached to bea ~~adversely~~Schedule ~~affected include,~~13D ~~but~~and ~~are~~is ~~not~~incorporated ~~limited~~by ~~to:~~reference herein.

-The ~~our~~foregoing descriptions ~~history~~ of ~~operating~~the ~~losses~~New ~~and~~Note, ~~our inability to achieve or guarantee profitable operations in~~ the ~~future~~Security orAgreement, ~~to continue operations; -~~ the ~~risk~~Patent ~~that~~Security weAgreement ~~will~~and be unable to pay our debt obligations as they become due or that we will be able to find sufficient financing to fund our operations; - risk that there will not be market acceptance of our products; - our plans for commercialization of our products; - possible problems in implementing new relationships or the ~~failure~~New toSubordination ~~achieve~~Agreement ~~the~~are ~~desire benefits from such relationships; - our reliance on a limited number of product offerings; - our product development efforts, including risk that we will not be able to produce our products~~ qualified in atheir ~~cost-effective~~entirety ~~manner; - our substantial dependence on the manufacturing facility owned~~ by ~~our~~reference ~~toll manufacturer; - our ability~~ to secure new customers, maintain our current customer base and deliver product on a timely basis; - our dependence on a small concentration of customers; - possible issuances of common stock subject to options, warrants and other securities that may dilute the ~~interest~~New ~~of stockholders~~Note, and/or future exercise of such options and warrants; - our ability to protect technology through patents; - our ability to protect our proprietary technology and information as trade secrets and through confidentiality agreements or other similar means; - the ~~effects~~Security ~~of the 2015 expiration of the USDA patent we have employed in manufacturing our products; - competition from larger~~Agreement, ~~more established companies with far greater economic and human resources; - fluctuations in~~ the ~~availability~~Patent ofSecurity ~~raw~~Agreement ~~materials~~ and the ~~price~~New for agricultural products; - the effect of changes in the pricing and margins of products; - the potential loss of key personnel or other personnel disruptions; - possible product recalls due to adulteration of products or materialsSubordination Agreement, ~~future~~which ~~regulatory~~are ~~action,~~attached ~~or other concerns; - our ability~~ to ~~comply~~a ~~with~~Schedule ~~all~~13D ~~government regulation~~ and ~~retain~~is ~~favorable~~incorporated regulatory status, such as GRAS status, of our products and ingredients; - risk that we will not be able to remediate identified material weaknesses in our disclosure controls and procedures and internal control over financial reporting; - sufficient voting power by ~~one~~reference large stockholder to make corporate governance decisions that could have significant effect on us and the other stockholders; - our nonpayment of dividends to common stockholders and lack of plans to pay dividends to common stockholders in the future;herein.

All additional New Loans made to the Company by GKS Funding after April 7, 2017, pursuant to the Letter Agreement were made on the same terms and conditions as set forth in the New Note, the Security Agreement, the Patent Security Agreement and the New Subordination Agreement.

The proceeds of the $60,000 New Loans made on April 7, 2017, will be used by the Company to pay critical vendors of the Company and for the Company to fund payroll. $30,000 was contributed by Mr. Kahn from his personal funds to GKS Funding on April 7, 2017, and was used by GKS Funding to fund $60,000 of New Loans on April 7, 2017. Mr. Kahn intends to use personal funds for additional contributions to GKS Funding in the event GKS Funding funds additional New Loans pursuant to the Letter Agreement. $30,000 was contributed by Mr. Garfinkle from his personal funds to GKS Funding on April 7, 2017, and was used by GKS Funding to fund $60,000 of New Loans on April 7, 2017. Mr. Garfinkle intends to use personal funds for additional contributions to GKS Funding in the event GKS Funding funds additional New Loans pursuant to the Letter Agreement.

On April 14, 2017, Edward B. Smith, III was appointed interim Chief Executive Officer and interim Chief Financial Officer.

On April 17, 2017, (i) the UCC Sale was conducted by GKS Funding and (ii) at the UCC Sale, GKS Funding credit bid $996,000 of its claims under the Loan Agreement to purchase all of the collateral. There were no other bids for any of the collateral. Following conclusion of the UCC Sale, GKS Funding assigned its right to acquire the Collateral to AgriFiber Solutions LLC, a Delaware limited liability company (“AgriFiber”). Mr. Kahn and Mr. Garfinkle are (i) control persons of AgriFiber and (ii) along with others, are equity owners of AgriFiber.

NOTE 20 – GUARANTEES

The Company from time to time enters into certain types of contracts that contingently require the Company to indemnify parties against third party claims. These contracts primarily relate to: (i) divestiture agreements, under which the Company may provide customary indemnifications to purchasers of the Company’s businesses or assets; (ii) certain real estate leases, under which the Company may be required to indemnify property owners for environmental and other liabilities, and other claims arising from the Company’s use of the applicable premises; and (iii) certain agreements with the Company’s officers, directors and employees, under which the Company may be required to indemnify such persons for liabilities arising out of their employment relationship. The terms of such obligations vary. Generally, a maximum obligation is not explicitly stated. Because the obligated amounts of these types of agreements often are not explicitly stated, the overall maximum amount of the obligations cannot be reasonably estimated. Historically, the Company has not been obligated to make significant payments for these obligations, and no liabilities have been recorded for these obligations on its balance sheet as of March 31, 2017.

-NOTE 21 ~~our~~– ~~need~~SUBSEQUENT for additional financing; - our ability to successfully defend future litigation, including possible claims related to products liability and infringement of intellectual property, as well as the outcome of regulatory actions and inquiries; - future sale of a substantial number of shares of our common stock that could depress the trading price of our common stock, lower our value and make it more difficult for us to raise capital; - our additional securities available for issuance, which, if issued, could adversely affect the rights of the holders of our common stock; - our stock is classified as a penny stock and subject to additional regulation as such; and - our stock price is likely to be highly volatile due to a number of factors, including a relatively limited public float and potential for short sales of our stock.EVENTS

InOn ~~addition~~April 5, ~~see~~2017, ~~Risk~~the ~~Factors~~Company inand ~~Part~~GKS IFunding, ~~Item~~as 1Aadministrative ofagent under the Loan Agreement (as defined above) entered into a Cooperation Agreement (the “Cooperation Agreement”) in connection with a loan (the “Loan”) made to the Company’s ~~Annual~~pursuant ~~Report~~to onthat ~~Form~~certain ~~10-K~~Loan ~~for~~and Security Agreement, dated as of February 1, 2017 (as amended and in effect from time to time, the ~~fiscal~~“Loan ~~year~~Agreement”), ~~ended~~between ~~December~~the Company, the Lenders party thereto and GKS Funding. As previously reported, on March 31, ~~2015~~2017, ~~for~~the aCompany ~~further~~received ~~discussion~~a notice of ~~some~~default from GKS Funding stating that the Company was in default of the ~~factors~~Loan for failure to make a scheduled interest payment on the Loan that ~~could~~was ~~affect~~due ~~future~~on ~~results~~March 31, 2017. If such failure described above was not cured within the 15-day cure period, which was April 15, 2017, the Lenders (through GKS Funding, as administrative agent under the Loan Agreement) intended to exercise all rights and remedies available to them under the Loan Agreement, related note and applicable law, which included foreclosing on the collateral under the Loan Agreement.

~~The~~As ~~following~~of ~~discussion~~the isdate ~~intended~~of tothe ~~assist~~Cooperation inAgreement, ~~understanding~~the outstanding balance of the ~~financial~~Company’s ~~condition~~obligations under the Loan Agreement was approximately $1,011,800, plus accrued and ~~results~~accruing oflegal ~~operations~~fees ofand ~~Agritech~~expenses. ~~Worldwide~~Over the past several months, the Company has ~~Inc~~experienced significant operating losses and has been unable to raise additional capital in order to pay the expenses necessary to continue to operate its business. ~~You~~For ~~should~~the ~~read~~same reason, the ~~following~~Company ~~discussion~~was ~~along~~unable ~~with~~to ~~our~~pay ~~financial~~interest ~~statements~~on ~~and~~the ~~related~~Loan ~~notes~~on ~~included~~March in31, ~~this~~2017 (the ~~Form~~“Existing ~~10-Q~~Default”).

~~Unless the~~As ~~context~~a ~~requires~~result ~~otherwise~~of the foregoing, inand after ~~this~~considering ~~report~~all options, the “Board of Directors of the Company,” ~~“Agritech~~determined that the Company would not have sufficient funds to cure the Existing Default on or before April 15,” ~~“Agritech~~2017. ~~Worldwide~~In addition,” given the inability to raise additional capital to fund ~~“we~~ongoing operations,” ~~“us”~~the ~~and~~Company ~~“our”~~also ~~refer~~determined that it would be unable continue to ~~Agritech~~operate ~~Worldwide~~as a going concern. Thus, ~~Inc~~the Company determined that it was in the best interests of all constituents and the Company to cooperate with GKS Funding and its exercise of remedies.

Pursuant to the Cooperation Agreement, the Company and GKS Funding agreed as follows: (i) the Company waived the 15-day cure period with respect to the Existing Default immediately upon execution of the Cooperation Letter and GKS Funding has the right to exercise its remedies under the Loan Agreement and applicable law with respect to such event of default, including, without limitation, by scheduling and conducting a sale of all of the collateral under the Loan Agreement on or about April 17, 2017 (the “UCC Sale”); (ii) GKS Funding agreed to fund loans to the Company up to the date of the UCC Sale to permit the Company to pay the Budgeted Expenses (as defined in the Cooperation Agreement) as and when due with this new loan, which is (a) secured by a first priority security interest in all of the real and personal assets, property, fixtures, rights and interests of the Company, (b) shall have priority in payment over the Loan made pursuant to the Loan Agreement; and (c) shall be repaid, before any other payments are made by the Company, out of the first cash proceeds of the collateral received by the Company; and (iii) the Company consented to fully cooperate with GKS Funding in connection with the UCC Sale, as well as the exercise by GKS Funding of any of its other right and remedies in connection therewith.

(1) The Company waived the cure period with respect to the Existing Default (as defined in the Letter Agreement). As a result, the Company agreed, immediately upon execution of the Letter Agreement, the Existing Default became an Event of Default (as defined in the Loan Agreement) (with, for avoidance of doubt, no further right to cure or grace period), and GKS Funding had the right to exercise its remedies under the Loan Agreement and applicable law with respect to such Event of Default, including, without limitation, by scheduling and conducting a UCC sale of all of the Collateral (as defined in the Loan Agreement) on or about April 17, 2017 (the “UCC Sale”).

(3) The Company consented to fully cooperate with GKS Funding in connection with, the UCC Sale and the disposition of the Collateral in connection therewith, as well as the exercise by GKS Funding of any of its other right and remedies in connection therewith.

The New Loans were evidenced by a promissory note (the “New Note”). The New Note accrued interest at a rate per annum equal to 5%. Accrued and unpaid interest on the outstanding principal was payable monthly in arrears on the last business day of each month in which any amount remains outstanding under the New Note. The principal amount, together with all accrued and unpaid interest thereon, was required to be repaid to GKS Funding out of the proceeds received from the accounts receivable of the Company collected after April 7, 2017, immediately upon such receipt. The New Note was secured by all of the assets of the Company pursuant to a Security Agreement and a Patent Security Agreement.

The proceeds of the $60,000 New Loans that were be made on April 7, 2017, were used by the Company to pay critical vendors of the Company and for the Company to fund payroll.

As a condition to the making of the loan under the New Note, GKS Funding required the lenders under the Loan Agreement (which include GKS Funding) to enter into a subordination agreement with the Company and GKS Funding (the “New Subordination Agreement”). The New Subordination Agreement will make the New Note the senior secured debt of the Company, provided that the balance of the Second Promissory Note, which is less than $300, will be senior to the New Note until paid in full. The form of the New Subordination Agreement is attached to a Schedule 13D and is incorporated by reference herein.

The foregoing descriptions of the New Note, the Security Agreement, the Patent Security Agreement and the New Subordination Agreement are qualified in their entirety by reference to the New Note, the Security Agreement, the Patent Security Agreement and the New Subordination Agreement, which are attached to a Schedule 13D and is incorporated by reference herein.

On April 14, 2017, Edward B. Smith, III was appointed interim Chief Executive Officer and interim Chief Financial Officer.

As of April 18, 2017, the Company had total net assets of $0 and total liabilities of $6.6 million.

Item 2.

Management’s Discussion and Analysis of Financial Information and Results of Operations

Cautionary Statement Regarding Forward Looking Information

This Quarterly Report on Form 10-Q (this “Quarterly Report”) contains forward-looking statements within the meaning of Section 21E of the Securities Exchange Act of 1934, as amended (the “Exchange Act”), that involve substantial risks and uncertainties. The forward-looking statements are contained principally in Part I, Item 1, Note 1. “Nature of Business,” and Part I, Item 2. “Management’s Discussion and Analysis of Financial Condition and Results of Operations,” but are also contained elsewhere in this Quarterly Report. In some cases you can identify forward-looking statements by terminology such as “may,” “should,” “potential,” “continue,” “expects,” “anticipates,” “intends,” “plans,” “believes,” “estimates,” and similar expressions.

These statements are based on our current beliefs, expectations, and assumptions and are subject to a number of risks and uncertainties, many of which are difficult to predict and generally beyond our control, that could cause actual results to differ materially from those expressed, projected or implied in or by the forward-looking statements. We cannot assure you that the forward-looking statements in this Quarterly Report will prove to be accurate. Furthermore, if our forward-looking statements prove to be inaccurate, the inaccuracy may be material. In light of the significant uncertainties in these forward-looking statements, you should not regard these statements as a representation or warranty by us or any other person that we will achieve our objectives and plans in any specified time frame, or at all. We do not undertake any obligation to update any forward-looking statements.

Unless the context requires otherwise, references to “we,” “us,” “our,” and “Agritech” refer to Agritech Worldwide, Inc. We currently have no operating subsidiaries.

Overview

~~Agritech Worldwide,~~On ~~Inc.~~April ~~(formerly Z Trim Holdings~~17, ~~Inc.) is an agricultural technology company that owns existing~~2017, ~~and~~GKS ~~seeks to develop~~Funding ~~new,~~acquired ~~products and processes that convert generally available agricultural by-products into multi-functional~~ all~~-natural~~ ~~ingredients that can be used in food manufacturing and other industries. Our primary focus and the source~~ of ~~substantially all of~~ our ~~revenue is~~assets ~~from~~in ~~the sale of our all-natural products, Z Trim®, to the food industry. We currently sell~~ a ~~line~~UCC ofSale ~~all-natural~~conducted ~~products to~~by ~~the~~GKS ~~food~~Funding ~~industry~~when ~~designed~~credit tobid ~~help manufacturers reduce their costs~~$996,000 ~~improve the quality~~ of ~~finished~~its ~~goods,~~claims ~~and~~under ~~solve~~that ~~many production~~certain ~~problems. Our innovative technology can provide value-added all-natural ingredients across virtually all food industry~~Loan ~~categories.~~and ~~These~~Security ~~products~~Agreement, ~~offer~~dated aas ~~range~~ of ~~functional~~February ~~attributes~~1, ~~including~~2017 ~~helping~~(as toamended ~~reduce fat~~ and ~~calories,~~in ~~adding~~effect ~~fiber, improving~~from ~~shelf-stability,~~time ~~preventing~~to ~~oil migration~~time, ~~and enhancing binding capacity – all without degrading~~ the ~~taste~~“Loan ~~and~~Agreement”), ~~texture~~between ofus, the ~~final~~Lenders ~~food~~party ~~products.~~thereto ~~Perhaps~~and ~~most~~GKS ~~significantly,~~Funding ~~our~~and ~~ingredients~~foreclosed ~~can~~on ~~help extend~~ the ~~life of finished products, potentially increasing our customers’ gross margins~~collateral.

WeApril ~~have~~5, ~~developed~~2017, ~~products~~we ~~that~~and ~~manage~~GKS ~~moisture~~Funding toLLC, ~~help~~as ~~reduce~~administrative ~~production~~agent ~~costs~~under ~~and~~the ~~improve~~Loan ~~nutritional~~Agreement ~~value~~(as indefined ~~finished~~below) ~~foods,~~(“GKS Funding”) ~~while~~entered ~~maintaining~~into ~~the~~a ~~essential~~Cooperation ~~taste~~Agreement ~~and~~(the ~~mouth-feel~~“Cooperation ~~associated~~Agreement”) in connection with ~~full-fat~~a ~~products~~loan (the “Loan”) made to us pursuant to the Loan Agreement. ~~The~~As ~~potential~~of ~~global~~the ~~market~~date ~~for~~of ~~our~~the ~~line~~ Cooperation Agreement, the outstanding balance of ~~products~~our ~~spans~~obligations under the ~~entire~~Loan ~~food~~Agreement was approximately $1,011,800, plus accrued and ~~nutritional~~accruing ~~beverage~~legal ~~industry,~~fees ~~including~~and ~~fat-free,~~expenses. ~~low-fat~~Over the past several months, ~~reduced-fat~~we have experienced significant operating losses and ~~full-fat,~~have ~~across~~been unable to raise additional capital in order to pay the ~~meats~~expenses necessary to continue to operate its business. For the same reason, ~~baked~~we ~~goods~~were unable to pay interest on the Loan on March 31, ~~dairy~~2017 (the “Existing Default”). As a result of the foregoing, and ~~non-dairy~~after ~~products~~considering all options, ~~snacks~~our Board of Directors determined that we would not have sufficient funds to cure the Existing Default on or before April 15, ~~beverages~~2017. In addition, ~~dressings~~given our inability to raise additional capital to fund ongoing operations, ~~sauces~~we also determined that we would be unable to continue to operate as a going concern. Thus, we determined that it was in the best interests of all constituents that we cooperate with GKS Funding and ~~dips~~its exercise of remedies.

~~In July~~Pursuant ~~2012~~to the Cooperation Agreement, we and GKS Funding agreed as follows: (i) we ~~opened~~waived anthe ~~industrial~~15-day ~~products~~cure ~~division~~period ~~focusing~~with onrespect to the ~~manufacture,~~Existing ~~marketing~~Default ~~and~~immediately ~~sales~~upon execution of ~~products~~the ~~designed~~Cooperation ~~specifically~~Letter and GKS Funding has the right to exercise its remedies under the Loan Agreement and applicable ~~for~~law ~~industrial~~with ~~applications,~~respect ~~including~~to ~~oil~~such ~~drilling~~event ~~fluids~~of default, ~~petroleum coke~~including, ~~charcoal~~without ~~briquettes~~limitation, ~~hydraulic~~by ~~fracturing,~~scheduling and ~~paper~~conducting a sale of all of the collateral ~~and~~under ~~wood~~the ~~adhesives.~~Loan ~~When~~Agreement ~~used~~on inor ~~industrial~~about ~~operations~~April 17, we2017 ~~believe~~(the ~~that~~“UCC ~~our~~Sale”); ~~products~~(ii) ~~can~~GKS ~~reduce~~Funding ~~costs,~~agreed ~~enhance~~to ~~supply-chain~~fund ~~reliability,~~loans to us ~~limit~~up ~~environmental~~to ~~impact,~~the ~~and~~date ~~improve~~of ~~finished~~the ~~product~~UCC ~~quality~~Sale ~~compared~~to permit us to ~~current~~pay ~~products~~the ~~such~~Budgeted Expenses (as ~~guar~~defined ~~gum~~in the Cooperation Agreement) as and when due with this new loan, ~~xanthan~~which ~~gum~~was (a) secured by a first priority security interest in all of our real and personal assets, ~~CMC~~property, ~~lignosulfonates~~fixtures, rights and ~~starches~~interests, ~~used~~(b) ashad ~~binders~~priority in payment over the Loan made pursuant to the Loan Agreement; and (c) was to be repaid, ~~adhesives~~before any other payments are made by us, ~~viscofiers~~out orof ~~emulsifiers~~the first cash proceeds of the collateral received by us; and (iii) we consented to fully cooperate with GKS Funding in connection with the UCC Sale, as well as the exercise by GKS Funding of any of its other right and remedies in connection therewith.

In light of the foregoing, we are no longer engaged in the agricultural technology business. At this point, the Board is reevaluating its business plan and strategy and has not made any determination as to whether or not it will seek to engage in a new line of business.

During the past year and current quarter, our sole operations were as an agricultural technology company. The products and processes that we owned and were foreclosed upon by GKS Funding convert generally available agricultural by-products into multi-functional all-natural ingredients that can be used in food manufacturing and other industries. Our primary focus and the source of substantially all of our revenue during the past several years has been from the sale of our all-natural products, Z Trim^®, to the food industry. Our business involved the sale of a line of all-natural products to the food industry designed to help manufacturers reduce their costs, improve the quality of finished goods, and solve many production problems.

During the quarter ended March 31, 2017, our core product portfolio was comprised of multifunctional food ingredients that included Corn Z Trim^® (both GMO and non-GMO) and Oat Z Trim^®.

Going Concern

~~For the nine months ended September 30, 2016, we incurred a net loss of $2,011,964 and had an accumulated deficit of $158,441,594.~~ We incurred a net loss of $23844,~~976,431 for~~301 for the ~~twelve~~three months ended ~~December~~March 31, ~~2015~~2017, and had an accumulated deficit of $~~156~~160,429,~~630~~292. As of ~~September~~March ~~30, 2016, we had cash and cash equivalents in the amount of $116,408 and total liabilities of $6,455,968. As of December~~ 31, ~~2015~~2017, we had cash ~~and cash equivalents~~ in the amount of $~~309~~15,~~851~~856 and total liabilities in the amount of $47,~~918~~909,~~652~~760. We also had a working capital deficit of of $67,~~047~~632,~~937~~971 ~~and $3,801,651~~ as of ~~September~~March ~~30, 2016 and December~~ 31, ~~2015, respectively~~2017. Over the last several years, our operations have been funded primarily through the sale of both equity and debt securities. ~~However,~~Inasmuch as we are still ~~require~~evaluating ~~additional~~our ~~financing to~~future ~~fully~~strategy, ~~implement~~it ~~our~~is ~~business~~difficult ~~plan~~ for ~~the~~us ~~next~~to ~~twelve~~estimate ~~months~~our ~~and~~future operating ~~beyond~~needs. As of the date of ~~this~~our ~~quarterly~~most ~~report~~recent audit, for the fiscal year ended December 31, 2016, we had not generated sufficient revenues to meet our cash flow needs. Asor ofto ~~November~~service ~~14,~~sour ~~2016,~~outstanding ~~our~~debt. We ~~current~~currently ~~cash~~are onnot engaged ~~hand~~in isany ~~not~~operations ~~sufficient for~~and ushave tono besource ~~able~~of torevenue. ~~maintain~~Our ~~our~~current ~~operations~~cash atbalance ~~the~~is ~~current~~insufficient ~~level~~to ~~through~~satisfy ~~December~~our ~~31,~~existing ~~2016~~debt obligations ~~and~~or ~~not~~to ~~enough~~allow us to ~~fund~~continue ~~our~~to ~~operations for~~incur the ~~next~~expenses 12associated ~~months~~with remaining a public company.. As a result, ~~there~~our isauditors have expressed substantial doubt about our ability to continue as a going concern. We ~~Although~~cannot ~~we have~~assure ~~generated~~you ~~revenue,~~that we ~~are~~will be ~~still~~able ~~operating at a net loss, and may continue~~ to ~~incur~~establish ~~losses~~new ~~for~~business aoperations ~~period of time. We cannot assure you~~ that we will begenerate ~~able to obtain~~ sufficient funds ~~from~~to support our ~~operating~~continued oroperations ~~financing~~as ~~activities~~a topublic company ~~support~~especially since our continued operations ~~past~~have ~~December 31, 2016.~~not yet been determined. If we cannot continue as a going concern, and wecannot ~~will~~successfully ~~need to substantially~~ revise our business plan orwe will need to cease operations, which will reduce or completely eliminate the value of your investment.

Reincorporation

WeThe Company ~~were~~was originally incorporated in the State of Illinois on May 5, 1994 under the name Circle Group Entertainment Ltd. On June 21, 2006, wethe Company filed a certificate of amendment to our certificate of incorporation and changed ~~our~~its name to Z Trim Holdings Inc. On March 23, 2016, wethe Company changed ~~our~~its state of incorporation by engaging in a merger (the “Reincorporation”) with and into ~~our~~its newly formed wholly owned subsidiary, Agritech Worldwide, Inc., a Nevada corporation, pursuant to the terms and conditions of an Agreement and Plan of Merger entered into by Z Trim and Agritech on March 18, 2016 (the “Merger Agreement”). The Reincorporation was consummated on March 23, 2016 and was effectuated by the filing of (i) articles of merger with the Secretary of State of the State of Nevada, and (ii) articles of merger with the Secretary of State of the State of Illinois. The Reincorporation effected a change in ~~our~~the Company’s legal domicile from Illinois to Nevada. Upon the effectiveness of the Reincorporation the ~~our~~Company’s affairs of ceased to be governed by (i) Illinois corporation laws, (ii) ~~our~~ Illinois Articles of Incorporation, and (iii) ~~our~~ Illinois Bylaws, and ~~our~~its affairs became subject to (a) Nevada corporation laws, (b) Agritech’s Articles of Incorporation of and (c) Agritech’s Bylaws. The resulting Nevada corporation is (i) be is deemed to be the same entity as the Illinois corporation for all purposes under the laws of Nevada, (ii) ~~continue~~continues to have all of the rights, privileges and powers of the Illinois corporation, (iii) ~~continue~~continues to possess all properties of the Illinois corporation, and (iv) continues to have all of the debts, liabilities and obligations of the Illinois corporation.

Current Trends and Recent Developments Affecting the Company

During the three months ended March 31, 2017, our revenue was derived from the sale of products and processes that convert generally available agricultural by-products into multi-functional all-natural ingredients that can be used in food manufacturing and other industries. As of April 17, 2017, we are no longer in the same line of business. The results of operations set forth below will not be meaningful in evaluating our company’s future operations since we will not remain in our current line of business after the foreclosure.

Sales and Manufacturing

Revenues for the ~~third~~first quarter of ~~2016~~ 2017 increased approximately 7050% as compared to revenues for the ~~third~~first quarter of ~~2015~~2016 due toprice ~~increased demand for our product~~ increases and ~~catch-up orders~~a ~~from~~change ~~customers who did not order product~~ in the ~~second~~ordering ~~quarter~~pattern ~~due to a price increase. This price increase was implemented after a review~~ of ~~production~~several ~~costs~~customers ~~and product benefits and functionality. The determination by management was~~ that ~~our~~shifted ~~products and~~orders ~~price~~from ~~points were not commensurate with our benefits and value propositions available to~~ the ~~Company’s~~first ~~customers. In its history, the Company had experimented with outside toll manufacturing arrangements. These efforts were not successful. This year, the Company returned its focus~~ to ~~its facility in Mundelein, IL as its primary manufacturing facility. This return resulted in greater production control but with~~ the ~~result of experiencing very limited manufacturing output. In the~~ second quarter, meaningful capacity increases were achieved yielding approximately 30% greater production. Gross margins, while still at a loss improved 67%. The comprehensive process engineering and structural review of ~~company operations and its current manufacturing facility commenced~~ last ~~quarter is continuing~~year. An outside process and structural engineering firm has been hired to help the Company develop a path forward to find significantly more capacity at our Mundelein, IL facility. With greater product availability management expects current customers will order greater quantities and our new customer acquisition efforts will be supported as well.

Funding Initiatives

On January 8, 2015, the Company entered into agreements to sell an aggregate of 260,000 units to eight (8) accredited investors at a price per unit of $4.00 (the “Units”) with each Unit consisting of (i) one (1) share of 12.5% Redeemable Convertible Preferred Stock (the “Preferred Shares”) and (ii) one (1) warrant (the “Initial Warrant”), representing the right to acquire 8.56 shares of our common stock at an exercise price of $0.64 per share, for aggregate cash proceeds of $1,040,000 pursuant to separate purchase agreements entered into with each investor (the “Securities Purchase Agreements”). On February 9, 2015, we closed a second round of our private placement offering with four (4) accredited investors in which we raised gross proceeds of $500,000 and sold 125,000 Units. In addition, we issued to each of the investors in the first and second round of financing an additional warrant for each Unit acquired (the “Additional Warrant” and together with the Initial Warrant, the “Warrants”) to acquire 3.64 shares of our common stock at an exercise price of $0.64 per share. The Additional Warrants issued in the initial closing of 260,000 Units are exercisable for an aggregate of 946,400 shares of our common stock. The Initial Warrants issued in the second closing are exercisable for 1,070,000 shares of our common stock and the Additional Warrants issued in the second closing are exercisable for an aggregate of 455,000 shares of our common stock. The Warrants expire on the fifth anniversary of their issuance, may be exercised on a cashless basis, are subject to full ratchet price anti-dilution protection and entitled to registration rights as set forth below. Subsequent to February 9, 2015, we sold an additional 187,500 units, each unit consists of (i) one Preferred Share and (ii) one (1) warrant to acquire 8.56 shares of our common stock at an exercise price of $0.64 per share for aggregate cash proceeds of $750,000.

We used the net proceeds of the above-described offering (the “Offering”) for working capital and general corporate purposes, including without limitation, to repay certain loans. The Offering is part of a private placement offering in which the Company offered for sale on a “best efforts–all or none” basis up to 250,000 units (gross proceeds of $1,000,000, including the principal amount of bridge notes exchanged for Units, and on a “best efforts” basis the remaining 4,750,000 Units for a maximum of 5,000,000 Units (gross proceeds of $20,000,000).

As of January 8th, 2015, due to the anti-dilution provisions of some of the outstanding warrants, the exercise price on 15,512,057 warrants was reduced to $0.35 and the number of shares of common stock into which the warrants were then exercisable was adjusted such that the warrants became exercisable into 50,957,780 shares of common stock.

In addition to the foregoing, the members of our Board of Directors agreed to receive an aggregate of 96,589 Units (representing one (1) Unit for every $4.00 of debt exchanged), 826,806 Initial Warrants and 351,586 Additional Warrants in exchange for previously issued convertible notes (including principal and accrued and unpaid interest) (the “Notes”) held by the directors or affiliated entities as follows: (i) 71,211 Units, 609,566 Initial Warrants and 259,208 Additional Warrants were issued to Edward B. Smith III, our Chief Executive Officer, in exchange for an aggregate of $284,844 of notes and accrued interest, (ii) 10,084 Units, 86,317 Initial Warrants and 36,705 Additional Warrants were issued to Morris Garfinkle in exchange for $40,335 of notes and accrued interest; (iii) 5,211 Units, 44,606 Initial Warrants and 18,968 Additional Warrants were issued to each of Mark Hershhorn and Brian Israel in exchange for an aggregate of $20,844 of notes and accrued interest, respectively; and (v) 4,873 Units, 41,712 Initial Warrants and 17,737 Additional Warrants were issued to CKS Warehouse, an entity in which Mr. Hershhorn owns a controlling interest, in exchange for an aggregate of $19,491 of principal and interest on notes and accrued interest.

After the Reincorporation, each outstanding Preferred Share continued to be an outstanding share of the Nevada corporation’s preferred stock. The following is a summary of material provisions of the Preferred Shares as set forth in the Certificate of Designations:

The Preferred Shares are nonvoting, accrue dividends at the rate per annum equal to 12.5% of the sum of (i) the Stated Value (which initially is $4.00) until the Maturity Date as defined in the Statement of Resolution Establishing Preferred Shares and (ii) the amount of accrued and unpaid dividends payable, are convertible into shares of common stock at the option of the holder as described in the Statement of Resolution Establishing Preferred Shares, have anti- dilution protection, registration rights, may be redeemed under certain circumstances, liquidation preference, protective provisions and board rights under certain circumstances.

Results of Operations

Three Months Ended ~~September 30~~March 31, ~~2016~~2017 Compared with Three Months Ended ~~September~~March 3031, ~~2015~~2016

Revenues

Revenue for the three months ended ~~September~~March 3031, ~~2016~~2017 was $~~371~~402,~~085~~962, as compared to revenue of $~~218~~269,~~732~~018 for the three months ended ~~September~~March 31, 302016, ~~2015,~~ an increase of 7050%. Our revenue for the three months ended ~~September~~March 3031, ~~2016~~2017 and ~~2015~~2016 was entirely attributable to ~~product~~ product sales. We The ~~attribute the~~ increase in sales in the current year’s period was due to ~~increased~~price ~~demand~~increases and ~~catch-up orders from~~ customers that ~~initially~~shifted orders ~~balked~~from ~~at a product price increase initiated in~~ the second ~~quarter. Our ability~~ to ~~generate increased revenue in future reporting periods will be dependent on continued increased demand for our products from existing and new customers, and~~ the ~~completion~~first ofquarter ~~changes~~last ~~in our production process to further improve our capacity and reduce costs, all of which cannot be assured~~year.

Cost of Revenues

Cost of revenues for products sold for the three months ended ~~September~~March 3031, ~~2016~~2017 and ~~2015~~2016 was $~~509~~487,~~767~~565 and $~~445~~499,~~936~~694, respectively, ana ~~increase~~ decrease of ~~$63,831 or 14~~2.34%. The ~~increase~~ decrease in costs of goods sold in the current year’s period was attributable to ~~increased~~ production. ~~However, margins improved by 67% as cost of revenues to revenues as a percentage decreased from 204% for the three months ended September 30, 2015 to 137% for the three months ended September 30, 2016~~efficiencies. We believe that increases in sales and monthly production volume will enable us to allocate our fixed costs over a greater number of finished goods and reduce the cost of goods sold in the future to improve margins.

Gross Margin (Loss)

Gross loss for the three months ended ~~September 30~~March 31, ~~2016~~ 2017 was $~~138~~84,~~682~~603, compared to a gross loss of $~~227~~230,~~204~~676, for the three months ended ~~September 30~~March 31, ~~2015~~2016. Gross loss reflects a number of factors that can vary from period to period, including those described above.

Selling, General and Administrative Expenses

Operating expenses for the three months ended ~~September~~March 3031, ~~2016~~2017 were $~~529~~372,~~287~~604 a decrease of $~~243~~62,~~670~~422 over the comparable period ended ~~September 30~~March 31, ~~2015~~2016 of $~~772~~435,~~957~~026. The decrease was primarily due to a decrease in salaries and stock based compensation~~, salary expenses and consulting fees~~.

The components of selling, general and administrative expenses for the quarters ended September 30, 2016 and 2015 respectively are as follows:

	Three Months Ended September 30,
	2016		2015
Stock based compensation expenses	$	9,388	$	208,991
Salary expenses		99,947		271,710
Professional fees		51,444		96,146
Directors fees		22,802		-
Consultant fees		135,765		106,640
Other		210,241		116,469
	$	529,287	$	772,957

The decrease in salary and employee benefits to $99,947 for the three months ended September 30, 2016 from $271,710 for the three months ended September 30, 2016 is attributable to fewer employees. Stock based compensation decreased by $199,603 in 2016 as compared to 2015. Consultant fees increased by $29,125.

Operating Loss

The operating loss for the three months ended September 30, 2016 decreased to $667,969 compared to a loss of $1,000,161 for the three months ended September 30, 2015 due to the reasons described above.

Other Income (Expenses)

Other expense for the three months ended September 30, 2016 was $28,032 as compared to other expense of $565,031 for the three months ended September 30, 2016. The change was primarily due to the large expense, in 2015, related to the loss on sale and leaseback transaction. Interest expense in the three months ended September 30, 2016 was $155,889 compared to $57,261 for the prior year.

Net Loss

As a result of the above, for the three months ended September 30, 2016, we reported a net loss of $696,001 as compared to a net loss of $1,562,192 for the three months ended September 30, 2015.

~~Basic~~The components of selling, general and ~~Diluted~~administrative ~~Net~~expenses ~~Loss~~for ~~per~~the ~~Share~~quarters ended March 31, 2017 and 2016 respectively are as follows:

The basic and diluted net loss per share for the three months ended September 30, 2016 was $0.01 as compared to the basic and diluted net loss per share of $0.03 for the three months ended September 30, 2015. The per share results were impacted by the decrease in the Operating Loss and Other Expenses as discussed above and the significant increase in the average number of shares outstanding in 2016 compared to 2015.

	3/31/2017		3/31/2016
Stock based compensation expenses	$	23,165	$	52,612
Salary expenses		82,488		154,381
Professional fees		84,000		108,754
Directors fees		-		-
Consultant Fees		-		-
Other		182,951		119,279

	$	372,604	$	435,026

~~Nine~~The decrease in salary and employee benefits to $82,488 for the three months ~~Ended~~ended ~~September~~March 3031, ~~2016~~2017 ~~Compared~~from ~~with~~$154,381 ~~Nine~~for the three months ended ~~Ended~~March ~~September~~31, 302016 is attributable to fewer employees. Stock based compensation decreased by $29,447 ~~2015~~in 2017 as compared to 2016 because there were no additional grants and smaller accruals.

Revenues

Revenue for the nine months ended September 30, 2016 was $923,513, as compared to revenue of $834,563 for the nine months ended September 30, 2015, an increase of 11%. Our revenue for the nine months ended September 30, 2016 and 2015 was entirely attributable to product sales. We attribute the increase in sales in the current year’s period due to increased customer demand. Our ability to generate increased revenue in future reporting periods will be dependent on continued increased demand for our products from existing and new customers, and the completion of changes in our production process to further improve our capacity and reduce costs, all of which cannot be assured.

Cost of Revenues

Cost of revenues for products sold for the nine months ended September 30, 2016 and 2015 was $1,295,444 and $1,420,476, respectively, a decrease of $125,032 or 9%. The decrease in costs of goods sold in the current year’s period was attributable to improved production efficiency. Margins improved by 30% as cost of revenues to revenues as a percentage decreased from 170% for the nine months ended September 30, 2015 to 140% for the nine months ended September 30, 2016. We believe that increases in sales and monthly production volume will enable us to allocate our fixed costs over a greater number of finished goods and reduce the cost of goods sold in the future to improve margins.

Gross Margin (Loss)

Gross loss for the nine months ended September 30, 2016 was $371,931, compared to a gross loss of $585,913 for the nine months ended September 30, 2015. Gross loss reflects a number of factors that can vary from period to period, including those described above.

Selling, General and Administrative Expenses

Operating expenses for the nine months ended September 30, 2016 were $1,657,371 a decrease of $5,224,057 over the comparable period ended September 30, 2015 of $6,881,428. The decrease was primarily due to a decrease in stock based compensation and to a lesser extent a decrease in salary expense and consulting fees.

The components of selling, general and administrative expenses for the nine months ended September 30, 2016 and 2015 respectively are as follows:

	Nine months Ended September 30,
	2016		2015
Stock based compensation expenses	$	247,315	$	4,326,659
Salary expenses		372,424		863,175
Professional fees		188,610		206,812
Directors fees		70,640		150,000
Consultant fees		141,015		657,963
Other		637,367		676,819
	$	1,657,371	$	6,881,428

The decrease in salary and employee benefits to $372,424 for the nine months ended September 30, 2016 from $863,175 for the nine months ended September 30, 2016 is attributable to fewer employees. Stock based compensation decreased by $4,079,344 in 2016 as compared to 2015. All other expenses in total decreased by $653,962, as a result of lower consultant fees and directors’ fees.

Operating Loss

The operating loss for the ~~nine~~three months ended ~~September~~ 30March 31, ~~2016~~2017 decreased to $2457,~~029,302~~207 compared to a loss of $7665,~~467,341~~702 for the ~~nine~~three months ended ~~September~~March 3031, ~~2015~~2016 due to the reasons described above.

Other Income (Expenses)

Other ~~income~~ expenses for the ~~nine~~three months ended ~~September~~March 3031, ~~2016~~2017 was $17387,~~388~~094 as compared to other ~~expense~~income of $159,~~409,236~~465 for the ~~nine~~three months ended ~~September~~March 3031, 2016. The change was primarily due to ~~the~~increased ~~large~~interest ~~expense,~~expenses inand ~~2015,~~a charge related to the ~~loss~~change ~~on warrant exchanges. Interest expense~~ in ~~the~~fair ~~nine~~value ~~months~~of ~~ended September 30, 2016 was $371,062 compared to $154,200 for the prior year~~derivatives.

Net Loss

As a result of the above, for the three ~~nine~~ months ended ~~September~~March 3031, ~~2016~~2017, we reported a net loss of 2$844,~~011,964~~301 as compared to a net loss of $22656,~~876,577~~237 for the ~~nine~~three months ~~ended~~ ~~September~~ended 30March 31, ~~2015~~2016.

Basic and Diluted Net Loss per Share

The basic and diluted net loss per share for the ~~nine~~three months ended ~~September~~March 3031, ~~2016~~2017 was $0.0201 as compared to the basic and diluted net loss per share of $0.4801 for the ~~nine~~three months ended ~~September~~March 3031, ~~2015~~2016. The per share results were impacted by the decrease in the Operating Loss and Other Expenses as discussed above ~~and the significant increase in the average number of shares outstanding in 2016 compared to 2015~~.

Liquidity and Capital Resources

As of ~~September~~March 3031, ~~2016~~2017, we had a ~~cash and~~ cash ~~equivalents~~ balance of $~~116~~15,~~408~~856, a decrease from a balance of $~~309~~20,~~851~~773 at December 31, ~~2015~~2016. At ~~September~~March 3031, ~~2016~~2017, we had working capital deficit of $67,~~047~~588,~~937~~775 as compared to working capital deficit of $36,~~801~~614,~~651~~632 as of December 31, ~~2015~~2016. The decrease in working capital primarily resulted from the decreases in cash, and increased ~~short-term~~ borrowings. ~~Subsequent to September 30, 2016 we raised an aggregate $100,000 from debt financing.~~ As of ~~November~~May 1016, ~~2016~~2017, we had a cash balance of $~~22,982~~0.

Over the last several years, our operations have been funded primarily through the sale of both equity and debt securities. We continue to explore additional equity and debt funding however, there can be no assurance that we will be successful in raising all of the additional funding that it is seeking or that such amount will be sufficient for our needs. As of the date of our most recent audit, for the fiscal year ended December 31, 2015, we had not generated sufficient revenues to meet our cash flow needs. Our current cash on hand as of November 10, 2016 is insufficient for us to be able to maintain our operations at the current level beyond December 31, 2016. As a result, there is doubt about our ability to continue as a going concern. Although we have generated revenue, we are still operating at a net loss, and may continue to incur losses for a period of time. We cannot assure you that we will be able to obtain sufficient funds from our operating or financing activities to support our continued operations past December 31, 2016. If we cannot continue as a going concern, we will need to substantially revise our business plan or cease operations, which will reduce or completely eliminate the value of our security holders’ investment.33

~~Certain~~Over the oflast ~~our~~several ~~Preferred~~years, ~~Shares~~our ~~and~~operations ~~warrants~~ have ~~reset~~been ~~provisions~~funded toprimarily through the ~~exercise~~sale ~~price~~of both equity and ~~conversion~~debt ~~price~~securities. ifWe continue ~~the~~to ~~Company~~explore ~~issues~~new lines of business and additional equity orand ~~other~~debt ~~derivatives~~funding atto asupport ~~price~~any such new lines of ~~less~~business; ~~than~~however, ~~the~~there ~~exercise~~can ~~price~~be ~~set~~no ~~forth~~assurance that we will be successful in finding a new line of business or raising all of the additional funding that we require ot successfully operate such ~~preferred~~new ~~stock~~line ~~and~~of ~~warrants~~business or that such amount will be sufficient for our needs. As ~~These~~of ~~reset~~the ~~provisions~~date ~~result~~of inour amost ~~derivative~~recent ~~liability~~audit, for the fiscal year ended December 31, 2016, we had innot generated sufficient revenues to meet our ~~financial~~cash ~~statements.~~flow needs or to service our outstanding debt. Our ~~derivative~~current ~~liabilities~~cash ~~decreased~~on hand is insufficient for us to ~~$376,890~~be atable ~~September~~to ~~30,~~maintain ~~2016~~our ~~from~~operations ~~$742,833~~as a public company at ~~December~~the current level beyond May 2017. 31As a result, ~~2015~~our auditors have expressed substantial doubt about our ability to continue as a going concern. Although we ~~Fair~~have ~~values~~generated ~~for~~revenue, ~~exchange~~we ~~traded~~are ~~securities~~still operating at a net loss, and ~~derivatives~~currently ~~are~~have ~~based~~no onoperations ~~quoted~~from ~~market~~which ~~prices~~to generate revenue. We ~~Where~~cannot ~~market~~assure ~~prices~~you ~~are~~that we will be able to find an alternative business to operate or obtain sufficient ~~not~~funds ~~readily~~to ~~available,~~support ~~fair~~any ~~values~~new ~~are~~business ~~determined~~that ~~using~~we ~~market~~enter ~~based~~into. If ~~pricing~~we ~~models~~cannot ~~incorporating~~continue ~~readily~~as ~~observable~~a ~~market~~going ~~data~~concern, the value of our ~~and~~security ~~requiring~~holders’ ~~judgment~~investment ~~and~~will ~~estimates~~be eliminated.

34Certain of our Preferred Shares and warrants have reset provisions to the exercise price and conversion price if the Company issues equity or other derivatives at a price less than the exercise price set forth in such preferred stock and warrants. These reset provisions result in a derivative liability in our financial statements. Our derivative liabilities decreased to $371,421 at March 31, 2017 from $651,955 at March 31, 2016. Fair values for exchange traded securities and derivatives are based on quoted market prices. Where market prices are not readily available, fair values are determined using market based pricing models incorporating readily observable market data and requiring judgment and estimates.

The following discussion focuses on information in more detail on the main elements of the $~~193~~4,~~443~~917 net decrease in cash during the three ~~nine~~ months ended ~~September~~March 3031, ~~2016~~2017 included in the accompanying Statements of Cash Flows. The table below sets forth a summary of the sources and uses of cash for the ~~nine~~ three month periods ended ~~September~~March 3031:

	2016			2015
	3/31/2017			3/31/2016
Cash used in operating activities	$	(1681,~~916,818~~481	)	$	(1633,~~794,846~~065	)
Cash provided by investing activities		-			172,911
Cash used in investing activities		(31,140	)		-
Cash provided by financing activities		1707,~~723,376~~704			~~878~~350,~~789~~000
Decrease in cash	$	(~~193~~4,~~443~~917	)	$	(~~743~~283,~~146~~065	)

Cash used in operating activities was $1681,~~916,818~~ 481 during the ~~nine-~~three month period ended ~~September~~March 3031, ~~2016~~2017, compared to $1633,~~794,846~~065 in the ~~nine-~~three month period ended ~~September~~March 3031, ~~2015.~~ 2016. Net losses of $2844,~~011,964~~301 and $22656,~~876,577~~237 for the ~~nine~~three months ended ~~September~~March 3031, ~~2016~~2017 and ~~2015~~2016, respectively, were the primary reasons for our negative operating cash flow in both periods. During the nine months ended September 30, 2015 our negative operating cash flow was significantly offset by the effects of non-cash charges to income including stock-based compensation, shares issued for directors’ fees and depreciation.

NoCash ~~cash was provided by or~~ used in investing activities inwas $31,140 during the ~~nine-~~three month period ended ~~September~~March 3031, ~~2016~~2017. ~~Cash~~No cash was provided by ~~investing activities~~or ~~was~~used ~~$172,911~~ in investing activities during the ~~nine-~~three month period ended ~~September~~March 3031, ~~2015 due to the sale leaseback transaction~~2016.

Cash provided by financing activities was $1707,~~723,376~~704 in the ~~nine-~~three month period ended ~~September~~March 3031, ~~2016~~2017, compared to $~~878~~350,~~789~~000 during the three ~~nine-~~month period ended ~~September~~March 3031, ~~2015~~2016. Over the last several years, our operations have been funded primarily through the sale of both equity and debt securities and the cash conversion of warrants into equity. During the ~~nine~~three months ended ~~September~~March 3031, ~~2016,~~2017 we raised $1100,~~800,000~~972 from ~~the~~net ~~issuance~~advances ~~of short term non-convertible notes~~ and ~~paid down~~ $76996,~~624~~000 infrom ~~capital~~senior ~~lease~~secured ~~obligations resulting in cash provided by financing activities of $1,723,376~~notes. During the ~~first~~three ~~nine~~ months ofended ~~2015~~March 31, 2016, we raised $~~880~~350,000 from ~~the~~ ~~sale of Units consisting of Preferred Shares and warrants and $587,000 from~~ the ~~sale~~issuance of short- term non-convertible notes ~~mostly offset by the payoff of short term borrowings from Fordham Capital~~. On March 24, 2015, we made a final payment of principal and interest in the amount of $570,449 to Fordham Capital Partners in satisfaction of the Amended and Restated Equipment Revolving Note dated July 16, 2014.

Commitments/Contingencies:

As previously stated, we were unable to pay the interest under the Loan Agreement and GKS Funding has exercised its remedies under the Loan Agreement and applicable law and acquired all of ~~September~~the 30collateral under the Loan Agreement on or about April 17, ~~2016~~2017. On April 17, we2017, ~~had~~(i) ~~outstanding~~the ~~non-convertible~~UCC ~~notes~~Sale inwas conducted by GKS Funding and (ii) at the ~~aggregate~~UCC ~~principal~~Sale, ~~amount~~GKS ofFunding credit bid $1996,~~257,~~000 ~~due~~of its claims under the Loan Agreement to ~~related~~purchase all of the collateral. There were no other bids for any of the collateral. Following ~~parties~~conclusion ~~that~~of ~~mature~~the ~~within~~UCC ~~one~~Sale, ~~year~~GKS Funding assigned its right to acquire the Collateral to AgriFiber Solutions LLC, a Delaware limited liability company (“AgriFiber”). Mr. Kahn and Mr. Garfinkle are (i) control persons of AgriFiber and (ii) along with others, are equity owners of AgriFiber.

WeAs ~~also~~of ~~have~~March 31, 2017, we had outstanding non-convertible notes in the aggregate principal amount of $1,~~750~~257,000 ~~payable~~due to ~~unrelated~~related parties that mature within one year and no revenue source from which to make payments.

InWe ~~addition,~~also we have ~~outstanding~~ non-convertible notes ~~payable to related parties~~ in the aggregate principal amount of $~~624~~1,~~866~~850,000 atpayable ~~September~~to ~~30,~~unrelated parties that mature within ~~2016~~one year and no revenue source from which to make payments.

~~The~~In ~~amount~~addition, ofwe ~~accrued~~have ~~and~~outstanding ~~unpaid~~convertible ~~interest~~notes ~~was~~payable to related parties in the principal amount of $~~500~~624,~~533~~866 onat ~~the~~March ~~same~~31, ~~date~~2017.

~~Capital Expenditures. At September 30, 2016, we have no material commitments for capital expenditures.~~34

~~Lease commitments.~~The Weamount ~~lease~~of aaccrued ~~combined manufacturing, research~~ and ~~development and office facility located in Mundelein, Illinois.~~unpaid ~~The~~interest ~~lease~~was ~~is on a month to month basis. Monthly rental payments are~~ $17752,~~972,~~686 ~~inclusive~~on ofthe ~~property~~same ~~taxes~~date. ~~We believe we will be successful in negotiating a new lease with the landlord.~~

OnCapital ~~July~~Expenditures. ~~17,~~At ~~2015,~~March the Company entered into an equipment lease agreement (the “Equipment Lease Agreement”) with Fordham pursuant to which the Company leased the production equipment from Fordham on terms that included the following: a lease term of 24 months31, ~~monthly lease payments by the Company of $15~~2017,~~800~~ ~~and~~we ~~the~~have option (at the election of the Company) to purchase the equipment on or after July 8, 2016 on the following terms: (i) if the purchase date is between 12- 18 months $425,000; (ii) if the purchase date is between 19- 23 months: $360,000; and (iii) if the purchase date is during the 24th month (but no ~~later~~material ~~than July~~commitments 8,for ~~2017):~~capital ~~$325,000~~expenditures. The Equipment Lease Agreement includes customary events of default, including non- payment by the Company of the monthly lease payments and the payment of penalties upon such late payments. The equipment lease is secured by all of the assets of the Company.

~~Litigation.~~Lease ~~In July 2007, we and Greg Halpern, its former Chief Executive Officer in his individual capacity, were sued in the 20th Judicial Circuit Court, St~~commitments. ~~Clair~~Until ~~County, Illinois by Joseph Sanfilippo and James Cluck for violation of~~ the ~~Consumer~~UCC ~~Fraud Act and damages in excess of $200~~sale,~~000.~~ ~~The~~we ~~trial~~leased ~~court has issued~~ a ~~default~~combined ~~order against us~~manufacturing, ~~and~~research ~~has denied our motion to reconsider. Management believes that the trial court’s rulings were erroneous~~ and ~~that~~development ~~it has grounds for appeal,~~ and ~~that~~office ~~the~~facility ~~underlying allegations~~located ~~are~~in ~~frivolous~~Mundelein, ~~and wholly without merit and the Company will vigorously defend the claim~~Illinois. The ~~outcome~~lease ofwas ~~this~~on ~~matter~~a ismonth ~~unknown as~~to ofmonth ~~the date of this report~~basis. Monthly ~~However,~~rental ~~the~~payments ~~Company~~were ~~has allocated a reserve of~~ $~~102~~17,~~000~~972, toinclusive ~~satisfy any liability it may incur~~of asproperty ~~a result of this matter~~taxes.

Off-Balance Sheet Arrangements

WeAs of March 31, 2017, we have no off-balance sheet arrangements.

Critical Accounting Policies

~~Our~~The ~~financial~~Financial ~~statements~~Statements ~~have~~and ~~been~~related ~~prepared~~notes contain information that is pertinent to management’s discussion and analysis. The preparation of financial statements in conformity with ~~GAAP.~~accounting ~~For~~principles agenerally ~~full~~accepted ~~discussion~~in the United States of ~~our~~America requires ~~accounting~~management ~~policies~~to asmake ~~required~~estimates and assumptions that affect the reported amounts of assets and liabilities, the disclosure byof ~~GAAP~~contingent assets and liabilities at the date of the financial statements, ~~refer~~and tothe ~~our~~reported ~~Annual~~amounts ~~Report~~of revenues and expenses during the reporting period. These estimates are generally based on ~~Form~~historical ~~10-K~~experience, current conditions and on various other assumptions that are believed to be reasonable under the circumstances, the results of which form the basis for making judgments about the ~~year~~carrying ~~ended~~values ~~December~~of 31assets and liabilities that are not readily available from other sources, ~~2015~~as well as identifying and assessing our accounting treatment with respect to commitments and contingencies. Actual results could differ from those estimates. We consider certain accounting policies to be critical to an understanding of our condensed consolidated financial statements because their application requires significant judgment and reliance on estimations of matters that are inherently uncertain. The specific risks related to these critical accounting policies are unchanged at the date of this report and are described in detail in our Annual Report on Form 10-K.

Item 3.

Quantitative and Qualitative Disclosure About Market Risks

Not Applicable.

Item 4.

Controls and Procedures.

Evaluation of Disclosure Controls and Procedures.

The Company’s management, with the participation of the Company’s interim Chief Executive Officer, who also serves as the Company’s ~~interim~~ interim Chief Financial Officer, ~~has~~ evaluated the effectiveness of the Company’s disclosure controls and procedures (as such term is defined in Rules 13a-15(e) and 15d-15(e) under the Securities Exchange Act of 1934, as amended (the “Exchange Act”)) as of the end of the period covered by this report. Based on such evaluation, the Company’s interim Chief Executive Officer who ~~and~~is also the interim Chief Financial Officer concluded that, as of ~~September~~March 3031, ~~2016~~2017, the Company’s disclosure controls and procedures were not effective (1) to ensure that information required to be disclosed by us in reports that we file or submit under the Exchange Act is recorded, processed, summarized and reported, within the time periods specified in the SEC’s rules and forms and (2) to ensure that information required to be disclosed by us in the reports that we file or submit under the Exchange Act is accumulated and communicated to us, including our interim Chief Executive Officer and interim Chief Financial Officer, as appropriate to allow timely decisions regarding required disclosure. This conclusion is based primarily on the material weaknesses in internal control over financial reporting that were ~~disclosed~~identified inand ~~our~~disclosed ~~Annual Report on Form 10-K for the year ended December 31~~previously, ~~2015,~~ where management identified material weaknesses consisting of ineffective controls over (i) the control environment, (ii) financial statement disclosure; and (iii) financial reporting, and our failure to complete the process of remediating these weaknesses by the end of the period covered by this Quarterly Report.

Changes in Internal Control Over Financial Reporting

~~There~~Other than ~~have~~the ~~been~~resignation of our Principal Executive Officer who also served as our Principal Financial Officer, no ~~changes~~change in ~~the~~our ~~Company’s~~ internal control over financial reporting (as defined in Rules 13a-15(f) and 15d-15(f) of the Exchange Act) occurred during the quarter ended ~~September~~March 3031, ~~2016,~~2017 that has materially affected, or ~~are~~is reasonably likely to materially affect, ~~the~~our ~~Company’s~~ internal control over financial reporting. ~~The Company continues to develop internal processes and segregations to mitigate the internal control deficiencies but that is still a work in process.~~

Limitations on the Effectiveness of Controls

Our Principal Executive Officer ~~and~~who is also our Principal Financial Officer dodoes not expect that our disclosure controls or internal controls will prevent all error and all fraud. Although our disclosure controls and procedures were designed to provide reasonable ~~assurance~~ assurance of achieving their objectives, a control system, no matter how well conceived and operated, can provide only reasonable, not absolute assurance that the objectives of the system are met. Further, the design of a control system must reflect the fact that there are resource constraints, and the benefits of controls must be considered relative to their costs. Because of the inherent ~~limitations~~ limitations in all control systems, no evaluation of controls can provide absolute assurance that all control issues and instances of fraud, if any, within the Company have been detected. These inherent limitations include the realities that judgments in decision-making can be faulty, and that breakdowns can occur because of a simple error or mistake. Additionally, controls can be circumvented if there exists in an individual a desire to do so. There can be no assurance that any design will succeed in achieving its stated goals under all potential future conditions.

Furthermore, smaller reporting companies face additional limitations. Smaller reporting companies employ fewer individuals and find it difficult to properly segregate duties. Often, one or two individuals control every aspect of the Company’s operation and are in a position to override any system of internal control. Additionally, smaller reporting companies tend to utilize general accounting software packages that lack a rigorous set of software controls.

Remediation of Material Weaknesses

As discussed above, as of ~~December~~March 31, ~~2015~~ 2017, we identified material weaknesses in our internal control over financial reporting primarily due to us not having developed accounting policies and procedures and effectively communicating the same to our employees. Management plans to address these weaknesses by ~~looking~~based toon ~~hire~~future abusiness ~~part~~plans ~~time~~if ~~accountant~~it ~~for~~is ~~monthly~~able orto ~~quarterly~~generate ~~work~~revenue ~~and~~to ~~providing~~retain ~~future~~additional ~~investments in the continuing education of our accounting and financial professionals~~employees.

If the remedial measures described above are insufficient to address any of the identified material weaknesses or are not implemented effectively, or if additional deficiencies arise in the future, material misstatements in our interim or annual financial statements may occur in the future. Among other things, any unremediated material weaknesses could result in material post-closing adjustments in future financial statements.

PART II – OTHER INFORMATION

Item 1.

Legal Proceedings

~~None~~In July 2007, we were sued in the 20th Judicial Circuit Court, St. Clair County, Illinois by Joseph Sanfilippo and James Cluck for violation of the Consumer Fraud Act and they are seeking damages in excess of $200,000. The trial court has issued a default order against us, and has denied our motion to reconsider. Management believes that the trial court’s rulings were erroneous and that it has grounds for appeal, and that the underlying allegations are frivolous and wholly without merit. We intend to vigorously defend the claim. The outcome of this matter is unknown as of the report date. However, we have conservatively allocated a reserve of $102,000 to satisfy any liability it may incur as a result of this proceeding. The status at December 31, 2016 has remained the same.

Although there can be no assurances, based on the information currently available, management believes that it is probable that the ultimate outcome of this action will not have a material adverse effect on our financial statements. However, an adverse outcome could have a material adverse effect on our financial results in the period in which it is recorded.

Item 1A.

Risk Factors

~~The~~Not ~~following~~required information and updates should be read in conjunction with the information disclosed in Part 1, Item 1A, “Risk Factors,” contained in our Annual Report on Form 10-K for the year ended December 31, 2015 (the “2015 Annual Report”). Except as ~~disclosed~~we ~~below,~~are ~~there~~a ~~have~~smaller ~~been~~reporting ~~no material changes from the risk factors and uncertainties disclosed in our 2015 Annual Report~~company.

We have a history of operating losses and cannot guarantee profitable operations in the future. Failure on our part to achieve profitability may cause us to reduce or eventually cease operations.

We incurred a net loss of $2,011,964 for the nine months ended September 30, 2016, and had an accumulated deficit of $158,441,594. We incurred a net loss of $23,976,431 for the twelve months ended December 31, 2015, and had an accumulated deficit of $156,429,630.

If we continue to incur significant losses, we may not be able to continue operations. Even if we can continue operations, our cash reserves may be depleted earlier than currently anticipated, and we may be required to limit its future growth objectives to levels corresponding with its then available cash reserves.

If we do not obtain additional financing, we will be required to discontinue operations.

As September 30, 2016, we had cash in the amount of $116,408 and total liabilities in the amount of $6,455,968. We also had a working capital deficit of $6,047,937 as of September 30, 2016. As of December 31, 2015, we had cash in the amount of $309,851 and total liabilities in the amount of $4,918,652. We also had a working capital deficit of $3,801,651 as of December 31, 2015. Over the last several years, our operations have been funded primarily through the sale of both equity and debt securities. However, we still require additional financing to fully implement our business plan for the next twelve months and beyond. Our current cash on hand is insufficient for us to be able to maintain its operations at the current level through December 31, 2016. In order to continue to pursue our business plan, we will require additional funding. If we are not able to secure additional funding, the implementation of our business plan will be delayed and its ability to maintain or expand operations will be impaired. We intend to secure additional funding through debt or equity financing arrangements, increased sales generated by operations and reduced expenses.

Our ability to repay our loans is predicated on future sales growth and generating positive cash flow from the business or securing other financing.

As of September 30, 2016, we had total liabilities of $6,455,968, which includes $3,594,300 of short term notes. As of December 31, 2015, we had total liabilities of $4,918,652, which includes $1,831,866 of short term notes. The amount of revenues generated by the business has been insufficient to support ongoing daily operations. Previously, we had to rely on new equity or debt financing in order to satisfy other financings incurred by us. Our current cash balance as of November 14, 2016 of $22,982 will not be sufficient to repay the loans and support our continuing operations as planned. There are no assurances that we will secure additional debt or equity financing in order to pay off the loans and support our continuing operations as planned.

Item 2.

Unregistered Sales of Equity Securities and Use of Proceeds

On July 14, 2016, the Company issued a 14% senior unsecured note to an accredited investor in the principal amount of $500,000. The note matures in one year (July 14, 2017) and bears interest at 14% compounded based on a 365-day year. Accrued interest is payable at maturity in cash. In addition, the Company issued a warrant to acquire 2,000,000 shares of the Company’s common stock, at an exercise price of $0.64 per share to the accredited investor. The Warrants expire on the fifth anniversary of their issuance, may be exercised on a cashless basis, are subject to full ratchet price anti- dilution protection and entitled to registration rights.

On July 21, 2016, the Company issued a 14% senior unsecured note to an accredited investor in the principal amount of $300,000. The note matures in one year (July 21, 2017) and bears interest at 14% compounded based on a 365-day year. Accrued interest is payable at maturity in cash. In addition, the Company issued a warrant to acquire 600,000 shares of the Company’s common stock, par value, $0.00005 per share, at an exercise price of $0.64 per share to the accredited investor. The Warrants expire on the fifth anniversary of their issuance, may be exercised on a cashless basis, are subject to full ratchet price anti- dilution protection and entitled to registration rights.

On November 4th, 2016, the Company issued a 14% senior unsecured note to an accredited investor in the principal amount of $100,000. The note matures in one year (November 4th, 2017) and bears interest at 14% compounded based on a 365-day year. Accrued interest is payable at maturity in cash. In addition, the Company issued a warrant to acquire 200,000 shares of the Company’s common stock, par value, $0.00005 per share, at an exercise price of $0.64 per share to the accredited investor. The Warrants expire on the fifth anniversary of their issuance, may be exercised on a cashless basis, are subject to full ratchet price anti- dilution protection and entitled to registration rights.

None of the issuances of the securities described above were registered under the Securities Act of 1933, as amended (the “Securities Act”), or the securities laws of any state, and were offered and sold in reliance on the exemption from registration afforded by Section 4(a) (2) under the Securities Act and corresponding provisions of state securities laws, which exempt transactions by an issuer not involving any public offering. The investors represented their intention to acquire the securities for investment only and not with a view towards distribution. The investors were given adequate information about us to make an informed investment decision. We did not engage in any general solicitation or advertising.

Item 3. Defaults upon Senior Securities

None.

Item 3.

Defaults upon Senior Securities

As a result of the foregoing, and after considering all options, the Board of Directors of the Company determined that the Company will not have sufficient funds to cure the Existing Default on or before April 15, 2017. In addition, given the inability to raise additional capital to fund ongoing operations, the Company also determined that it would be unable continue to operate as a going concern. Thus, the Company determined that it was in the best interests of all constituents and the Company to cooperate with GKS Funding and its exercise of remedies.

Pursuant to the Cooperation Agreement, the Company and GKS Funding agreed as follows: (i) the Company waived the 15-day cure period with respect to the Existing Default immediately upon execution of the Cooperation Letter and GKS Funding has the right to exercise its remedies under the Loan Agreement and applicable law with respect to such event of default, including, without limitation, by scheduling and conducting a sale of all of the collateral under the Loan Agreement on or about April 17, 2017 (the “UCC Sale”); (ii) GKS Funding agreed to fund loans to the Company up to the date of the UCC Sale to permit the Company to pay the Budgeted Expenses (as defined in the Cooperation Agreement) as and when due with this new loan, which was (a) secured by a first priority security interest in all of the real and personal assets, property, fixtures, rights and interests of the Company, (b) had priority in payment over the Loan made pursuant to the Loan Agreement; and (c) was to be repaid, before any other payments are made by the Company, out of the first cash proceeds of the collateral received by the Company; and (iii) the Company consented to fully cooperate with GKS Funding in connection with the UCC Sale, as well as the exercise by GKS Funding of any of its other right and remedies in connection therewith.

Item 4.

Mine Safety Disclosures

Not Applicable

Item 5.

Other Information

None.

3837

Item 6.

Exhibits

EXHIBIT INDEX

Exhibit Number		Description
31.1		Certification of Chief Executive Officer and Principal Financial Officer pursuant to Rule 13a-14(a) under the Securities Exchange Act of 1934, as amended.*
32.1		Certification of Chief Executive Officer and Principal Financial Officer Pursuant to 18 U.S.C. Section 1350, as Adopted Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.*
101.INS		XBRL Instance Document*
101.SCH		XBRL Taxonomy Extension Schema Document*
101.CAL		XBRL Taxonomy Extension Calculation Link base Document*
1.01 LAB		XBRL Extension Labels Link base Document*
101.PRE		XBRL Taxonomy Extension Presentation Link base Document*
101.DEF		XBRL Taxonomy Extension Definition Link base Document*

AGRITECH WORLDWIDE, INC.

Form 10-Q for Quarter Ended March 31, 2017

Exhibit Number		Description

31.1		Certification of Chief Executive Officer pursuant to Rule 13a-14(a) under the Securities Exchange Act of 1934, as amended.*

31.2		Certification of Principal Financial Officer pursuant to Rule 13a-14(a) under the Securities Exchange Act of 1934, as amended.*

32.1		Certification of Chief Executive Officer Pursuant to 18 U.S.C. Section 1350, as Adopted Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.*

32.2		Certification of Principal Financial Officer Pursuant to 18 U.S.C. Section 1350, as Adopted Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.*

101.INS		XBRL Instance Document*

101.SCH		XBRL Taxonomy Extension Schema Document*

101.CAL		XBRL Taxonomy Extension Calculation Link base Document*

1.01 LAB		XBRL Extension Labels Link base Document*

101.PRE		XBRL Taxonomy Extension Presentation Link base Document*

101.DEF		XBRL Taxonomy Extension Definition Link base Document*

* Filed herewith.

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SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.

	AGRITECH WORLWIDE, INC.
	(Registrant)
Date: November 14, 2016	/s/ Jonathan Kahn
Date: May 22, 2017	/s/ Edward B. Smith, III
	Jonathan Kahn
	Edward B. Smith, III
	Chief Executive Officer (Principal Executive Officer) and Interim Chief Financial Officer (Principal Financial Officer and Principal Accounting Officer)
	Chief Executive Officer and Chief Financial Officer (Principal Executive Officer, Principal Financial Officer and Principal Accounting Officer)

4039

Filing Compare · Agritech Worldwide, Inc.