UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10-Q

(Mark One)

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

For the quarterly period ended ~~March~~June 3130, 2016.

[ ] 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: 000-55288

UBIQUITY, INC.

(Exact name of registrant as specified in its charter)

Nevada		99-0371375
(State or other jurisdiction of		(I.R.S. Employer
incorporation or organization)		Identification No.)

9801 Research Drive

Irvine, CA 92618

(Address of principal executive offices) (Zip Code)

(949) 489 - 7600

(Registrant’s telephone number, including area code)

N/A

(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 [X]

Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Web site, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files). Yes [X] No [ ]

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, or a smaller reporting company. 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 smaller reporting company)	Smaller reporting company [X]

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

As of July 1231, ~~2017~~2016 there were 306,261,178 shares of common stock, $0.001 par value issued and outstanding.

UBIQUITY, INC.

TABLE OF CONTENTS

FORM 10-Q REPORT

~~March~~June 3130, 2016

		Page Number
PART I - FINANCIAL INFORMATION
Item 1.	Financial Statements (Unaudited).	3
Item 2.	Management’s Discussion and Analysis of Financial Condition and Results of Operations.	4
Item 3.	Quantitative and Qualitative Disclosures About Market Risk.	1312
Item 4.	Controls and Procedures.	1312
PART II - OTHER INFORMATION
Item 1.	Legal Proceedings.	1413
Item 1A.	Risk Factors.	20
Item 2.	Unregistered Sales of Equity Securities and Use of Proceeds.	20
Item 3.	Defaults Upon Senior Securities.	20
Item 4.	Mine Safety Disclosures.	20
Item 5.	Other Information.	20
Item 6.	Exhibits.	2120
SIGNATURES		2221

USE OF CERTAIN DEFINED TERMS

Except as otherwise indicated by the context, references in this report to “we,” “us,” “our,” “Ubiquity-NV,” “our Company,” or “the Company” are to the business of Ubiquity, Inc. and its wholly-owned subsidiaries.

PART I - FINANCIAL INFORMATION

Item 1. Financial Statements.

UBIQUITY, INC.

CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

~~March~~June 3130, 2016

(UNAUDITED)

CONTENTS

	PAGE
Condensed Consolidated Balance Sheets as of March 31, 2016 (Unaudited) and December 31, 2015	F-1
Condensed Consolidated Condensed Balance Sheets as of June 30, 2016 (Unaudited) and December 31, 2015	F-1
Condensed Consolidated Statements of Operations for the three months ended March 31, 2016 (Unaudited) and 2015	F-2
Condensed Consolidated Statements of Operations for the three and six months ended June 30, 2016 (Unaudited) and 2015	F-2
Condensed Consolidated Statements of Cash Flows for the three months ended March 31, 2016 (Unaudited) and 2015	F-3
Condensed Consolidated Statements of Cash Flows for the six months ended June 30, 2016 (Unaudited) and 2015	F-3
Notes to the Condensed Consolidated Financial Statements (Unaudited)	F-4 - F-34
Notes to the Consolidated Financial Statements (Unaudited)	F-4 - F-32

UBIQUITY, INC.

CONDENSED CONSOLIDATED BALANCE SHEETS

	March 31, 2016			December 31, 2015
	June 30, 2016			December 31, 2015
	(Unaudited)
	(UNAUDITED)
Assets:
Cash and cash equivalents	$	4533,~~050~~467		$	193,839
Accounts receivable, net		2,700			2,700
Prepaid expenses		70,~~202~~201			45,202
Loans receivable - related parties		7,700			-
Total current assets		106,368			241,741
Total current assets		125,652			241,741
Property and equipment, net		362,370			448,327
Property and equipment, net		400,249			448,327
Other assets:
Other assets		203,494			107,364
Intangible assets, net		~~405,252~~-			405,252
Total assets	$	1672,~~134,647~~232		$	1,202,684
Liabilities and Stockholders’ Deficit:
Current liabilities
Accounts payable	$	1,~~539~~466,~~756~~845		$	1,449,973
Accrued expenses		3,~~157~~067,~~654~~485			3,594,682
Accrued legal		7,700,000			7,700,000
Credit cards payable		~~667~~673,~~596~~549			543,915
Loans payable - related parties		~~727~~654,~~969~~310			712,018
Convertible notes, net discounts of $164,557 and $361,944, respectively		3,321,607			3,043,132
Convertible notes, net discounts of $108,412 and $361,944, respectively		3,746,141			3,043,132
Derivative liabilities		810,~~845~~476,~~033~~844			6,785,665
Total current liabilities		2527,~~959~~785,~~615~~174			23,829,385
Total liabilities		27,785,174			23,829,385
Commitments and contingencies
Stockholders’ Deficit:
Preferred stock, par value $0.001, 10,000,000 shares authorized, 2,001,000 and 2,001,000 shares issued and outstanding as of March 31, 2016 and December 31, 2015, respectively		2,001			2,001
Preferred stock, par value $0.001, 10,000,000 shares authorized, 2,001,000 and 2,001,000 shares issued and outstanding as of June 30, 2016 and December 31, 2015, respectively		2,001			2,001
Common stock, par value $0.001, 800,000,000 shares authorized, 238,545,375 and 197,237,138 shares issued and outstanding as of March 31, 2016 and December 31, 2015, respectively		238,545			197,237
Common stock, par value $0.001, 800,000,000 shares authorized, 268,457,165 and 197,237,138 shares issued and outstanding as of June 30, 2016 and December 31, 2015, respectively		268,457			197,237
Additional paid-in capital		~~161~~166,~~675~~789,~~968~~938			159,716,329
Subscription receivable		(118,000	)		(173,000	)
Accumulated deficit		(187,748,482	)		(182,869,268	)
Inter-Company		-			-
Total Ubiquity, Inc. stockholders’ deficit		(25,949,968	)		(23,126,701	)
Accumulated deficit		(195,247,838	)		(182,869,268	)
Non-controlling interest		1,125,000			500,000
Total Ubiquity, Inc. stockholders’ deficit		(28,305,442	)		(23,126,701	)
Total stockholders’ deficit		(24,824,968	)		(22,626,701	)
Non-controlling interest		1,192,500			500,000
Total liabilities and stockholders’ deficit	$	1,134,647		$	1,202,684
Total stockholders’ deficit		(27,112,942	)		(22,626,701	)
Total liabilities and stockholders’ deficit	$	672,232		$	1,202,684

See accompanying notes to the condensed consolidated financial statements.

F-1

UBIQUITY, INC.

CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS

(UNAUDITED)

	Three Months Ended March 31, 2016			Three Months Ended March 31, 2015
	Three Months Ended June 30, 2016			Three Months Ended June 30, 2015			Six Months Ended June 30, 2016			Six Months Ended June 30, 2015
Revenues	$	285,~~085~~850		$	420,~~569~~831		$	33,935		$	25,400
		28,085			4,569
		5,850			20,831			33,935			25,400
Costs of sales		23,~~326~~297			~~6,854~~922			5,623			7,776
Gross profit (loss)		25,759			(2,285	)
Gross profit		2,553			19,909			28,312			17,624
Operating expenses:
Meals and entertainment		159,~~375~~205			214,~~813~~028			24,580			25,841
Marketing		~~132~~274,~~778~~300			1413,~~535~~889			407,078			28,424
Outside services		32100,~~249~~079			~~143~~45,~~439~~103			132,328			188,542
Development expense		-36,028			-			36,028			-
Payroll expense		~~592~~512,~~236~~820			~~683~~534,~~886~~629			1,105,056			1,218,515
Stock-based compensation		~~679~~5,~~862~~267,254			1,~~419~~002,~~378~~936			5,947,116			2,422,314
Office and computer		4659,~~594~~199			~~124~~44,~~617~~097			105,793			168,714
Professional fees		~~459~~386,~~669~~824			~~709~~487,~~228~~313			846,493			1,196,541
Rent		~~164~~160,~~187~~598			~~174~~158,~~809~~697			324,785			333,506
Travel		2434,~~396~~259			1026,~~813~~340			58,655			37,153
Taxes		111,~~133~~997			126,~~171~~181			13,130			18,352
Charitable contributions		1521,~~082~~710			811,~~708~~500			36,792			20,208
Bad debt expense		-			-
Depreciation and amortization		94,025			446,741			339,490			895,940
Depreciation and amortization		245,465			449,199
Other operating expenses		8,468			101,592			136,429			339,686
Other operating expenses		127,961			238,094
Total operating expenses		6,976,766			2,883,046			9,513,753			6,893,736
Total operating expenses		2,536,987			4,010,690
Operating loss		(6,974,213	)		(2,863,137	)		(9,485,441	)		(6,876,112	)
Operating loss		(2,511,228	)		(4,012,975	)
Other income and (expense):
Other income and (expense):
Interest expense		(490,880	)		(1,781,733	)		(799,498	)		(1,942,114	)
Interest expense		(308,618	)		(160,381	)
Loss on impairment of intangible assets		-			(940,000	)		-			(940,000	)
Loss on impairment of intangible assets		-			-
Change in fair market value of derivative liabilities		(1,631,811	)		(1,393,783	)		(3,691,179	)		(1,906,479	)
Change in fair market value of derivative liabilities		(2,059,368	)		(512,696	)
Other income		50			8,441			50			11,339
Loss on forgiveness of note receivable - related party		-			-
Total other income (expense)		(2,122,641	)		(4,107,075	)		(4,490,627	)		(4,777,254	)
Loss on guarantee		-			-
Loss before provision for income taxes		(9,096,854	)		(6,970,212	)		(13,976,068	)		(11,653,366	)
Other income		-			2,898
Provision for income taxes		-			-			-			-
Total other expense		(2,367,986	)		(670,179	)
Net loss	$	(9,096,854	)	$	(6,970,212	)	$	(13,976,068	)	$	(11,653,366	)
Loss before provision for income taxes		(4,879,214	)		(4,683,154	)
Loss attributable to non-controlling interest		1,597,430			-			1,597,430			261,630
Provision for income taxes		-			-
Loss attributable to Ubiquity, Inc.	$	(7,499,424	)	$	(6,970,212	)	$	(12,378,638	)	$	(11,391,736	)
Net loss	$	(4,879,214	)	$	(4,683,154	)
Net loss per share: basic and diluted	$	(0.04	)	$	(0.06	)	$	(0.05	)	$	(0.10	)
Loss attributable to non-controlling interest		-			261,630
Weighted average number of shares outstanding: basic and diluted		252,626,393			116,892,767			236,732,347			111,493,151
Loss attributable to Ubiquity, Inc.	$	(4,879,214	)	$	(4,421,524	)
Net loss per share: basic and diluted	$	(0.02	)	$	(0.04	)
Weighted average number of shares outstanding: basic and diluted		221,367,942			105,972,195

See accompanying notes to the condensed consolidated financial statements.

F-2

UBIQUITY, INC.

~~CONSOLIDATED~~CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

(UNAUDITED)

	For the Three Months Ended March 31, 2016			For the Three Months Ended March 31, 2015
	For the Six Months Ended June 30, 2016			For the Six Months Ended June 30, 2015
CASH FLOWS FROM OPERATING ACTIVITIES:
Net loss	$	(413,~~834~~976,~~703~~068	)	$	(411,~~683~~653,~~154~~366	)
Adjustments to reconcile net loss to net cash used in operating activities:
Depreciation and amortization		4885,~~078~~958			~~449~~895,~~199~~940
Stock-based compensation		~~679~~2,~~862~~947,116			12,~~419~~422,~~378~~314
Fair market value of Sprocket Wearables, Inc. common stock issued to Moveo, Inc.		3,000,000			-
Common stock issued for settlements		456,881			-
Loss on change in fair market value of derivative liabilities		2,059,368			512,696
Additional fair value related to exchange of options for accrued officer salaries		-			41,006
Principle increase due to default on convertible notes payable		136,540			-
Common stock issued for extension of convertible note payable		-			27,413
Amortization of debt discount		197,387			136,949
Loss on media properties settlement		255,260			-
Loss on change in fair market value of derivative liabilities		3,691,179			1,906,479
Principle increase due to default on convertible notes payable		407,064			716,605
(Gain) Loss on extinguishment		-			(8,441	)
Amortization of debt discount		253,532			888,840
Loss on impairment of intangible assets		-			940,000
Changes in operating assets and liabilities:
Accounts receivable		-			(2,600	)
Prepaid expenses		(25,000	)		-
Accounts payable		8916,~~346~~872			4727,~~946~~094
Accrued expenses		(~~311~~303,~~231~~535	)		~~130~~531,~~465~~940
Credit cards payable		~~123~~129,~~681~~633			~~(26~~132,~~466~~994	)
Net cash used in operating activities		(13,~~379~~061,~~791~~108	)		(23,~~012~~133,~~987~~782	)
CASH FLOWS FROM INVESTING ACTIVITIES:
Repayment of (loans to) related parties		(7,700	)		12,630
Repayment from (loans to) related parties		-			(41,421	)
Other assets		(96,130	)		-
Purchase/acquisition of intangible assets		(0150,000	)		(~~149~~157,~~047~~741	)
Net cash used in investing activities		(103,830	)		(136,417	)
Cash from SME		-			-
Net cash used in investing activities		53,870			(199,162	)
CASH FLOWS FROM FINANCING ACTIVITIES:
Proceeds from convertible notes payable		-			12,~~455~~168,~~250~~475
Payments on convertible notes payable		(170,000	)		-(204,000	)
Proceeds from loans payable - related party		7565,~~225~~818			~~207~~302,~~500~~000
Payments on loans payable - related party		(58123,~~837~~526	)		(85119,~~309~~137	)
Proceeds from sale of common stock		1,532,955			517,500
Proceeds from loans payable		-			-
Net cash provided by financing activities		1,379,343			2,094,941
Equity issuance costs		-			-
Change in cash and cash equivalents		(148,789	)		(54,463	)
Proceeds from sale of common stock		3,074,574			1,272,500
Non-controlling interest		-
Net cash provided by financing activities		2,846,866			3,419,838
Change in cash and cash equivalents		(160,372	)		86,894
Cash and cash equivalents, beginning of period		193,839			102,286
Cash and cash equivalents, end of period	$	4533,~~050~~467		$	47189,~~823~~180
Supplemental disclosures of cash flow information:
Cash paid for interest	$	-		$	-
Cash paid for income taxes	$	-		$	-
Non-cash investing and financing activities:
Value of embedded conversion feature for debt discount	$	-		$	~~740~~2,~~750~~051,477
Subscription receivable	$	-		$	30,000
Conversion notes payable, accrued interest, accounts payable and derivative liabilities into common stock	$	-		$	281,292
Conversion notes payable, accrued interest, accounts payable and derivative liabilities into common stock	$	11,249		$	-
Common stock issued with convertible debt	$	456,881		$	125,625
Conversion of accrued wages into stock options	$	-		$	1,118,500
Increase in convertible notes payable due to penalties and accrued interest	$	262,337		$	-

See accompanying notes to condensed consolidated financial statements.

F-3

UBIQUITY, INC.

NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

~~March~~June 3130, ~~2015~~2016

(UNAUDITED)

NOTE 1 - COMPANY OVERVIEW

Ubiquity, Inc. (“Ubiquity” or the “Company”) provides a platform that enables users to connect to internet-based content on any type of device. Ubiquity’s unique technology and robust patent portfolio has led to the development of the Company’s signature product, the Sprocket. The Sprocket can be easily downloaded onto any type of device (such as mobile phone, tablet, laptop, smart TV, VR and AR devices, gaming consoles etc.) and then easily customized to provide the user with access to all web-based content, social media outlets, video-based content, private networks, social networks, personalized files, intelligent search, and virtually all other media. In short, the Sprocket provides easy and expedited access to content in the manner and choices selected by the user. The Sprocket also provides detailed analytics and data on the end-users, delivering tremendous value as a marketing tool to the content providers and advertisers.

Ubiquity expects new markets to be created and existing markets to be disrupted by Virtual Reality (“VR”) , Augmented Reality (“AR”) and Mixed Reality (“MR”) as used in the Sprocket platform. There are many examples of how (“VR”), (“AR”) and (“MR”) can reshape existing forms of entertainment and commerce - from buying a new home, interacting with a doctor, or watching a football game. As the technology advances, we believe that price points will decline, and an entire new marketplace of applications (both business and consumer) will enter the market. Ubiquity believes VR/AR has the potential to spawn a multibillion-dollar industry, and may possibly be as game changing as the advent of the PC. VR (which immerses the user in a virtual world) and AR (immerses the user which overlays digital information onto the physical world) is driving a trend towards the adoption of software and applications delivered via head-mounted-devices (HMDs) as a new computing form factor.

F-4

Ubiquity has adapted its platforms to include the advancement of Virtual, Augmented and Mixed reality. It has excited the public for decades, and is happening now due to the alignment of ecosystem drivers and technology advancements enabling the delivery of products and services via this medium. Currently, mobile technologies are accelerating the adoption of products and services designed to stimulate our human senses with realistic feedback that is truly immersive and that allows intuitive interactions. We believe desktop, video, shopping, entertainment, travel, education and training, fitness, and healthcare applications can be materially enhanced by Virtual, (VR) Augmented (AR) and Mixed reality (MR). Ubiquity aims to capitalize on the evolving use cases, the potential market disruption, and the challenge of moving from science fiction to widespread adoption.

Virtual, Augmented and Mixed reality is essentially an artificial, software-created environment presented to users in such an immersive way that it is accepted by the user as real. By stimulating the senses of sight and sound –and sometimes touch– we can interact with these environments in much the same way as we would the real world.

Immersion enhances everyday experiences, making them more realistic, engaging, and satisfying. VR, AR and MR provide the ultimate level of immersion, creating a sense of physical presence in real or imagined worlds. They bring a new paradigm for how we can interact with the world, offering unprecedented experiences and unlimited possibilities that will enhance our lives in many ways.

Organization of Company

UBIQUITY

On March 5, 2013, we entered into an Agreement and Plan of Merger (the “Merger Agreement”) with Ubiquity Acquisition Corporation, a Nevada corporation and wholly-owned subsidiary of the Company (“Acquisition Sub”), and Ubiquity Broadcasting Corporation, a Delaware corporation (“Ubiquity-DE”).

Pursuant to the terms of the Merger Agreement, Acquisition Sub merged with and into Ubiquity-DE in a statutory reverse triangular merger (the “Merger”), with Ubiquity-DE surviving as a wholly-owned subsidiary of the Company. At the closing of the Merger on September 20, 2013 (the “Closing Date”), we issued Ubiquity-DE shareholders one share of our common stock, par value $0.001 per share for each share of Ubiquity-DE’s common stock, par value $0.001 (the “Share Exchange”). As a result of the Merger, we ceased our prior operations and became a multimedia company focused on the intersection of cloud-based cross platform applications synchronized across all screens for enhancing the digital lifestyle.

The transaction was regarded as a reverse merger whereby Ubiquity-DE was considered to be the accounting acquirer as its management retained control of the Company after the Share Exchange.

SPONSOR ME

On December 31, 2014, the Company entered into a Share Exchange Agreement with Sponsor Me, Inc., and a Nevada corporation (“Sponsor Me”). Sponsor Me is a related party as Brenden Garrison was the CEO of Sponsor Me and is also the CFO of the Company. The Effective Date of the transaction was March 31, 2015 and resulted in the acquisition of Sponsor Me. Pursuant to the terms of the Share Exchange Agreement, Ubiquity acquired all of the outstanding capital stock of Sponsor Me from the Sponsor Me shareholders for an aggregate of 3,878,467 shares, or 3.59% of the Company’s common stock at that time, and Sponsor Me became a wholly-owned subsidiary of the Company.

In addition, in connection with the transaction, the Company forgave notes/accounts receivables due from Sponsor Me and SC Business, Inc., and members of SME management and SME consultants, who are also members of Ubiquity management, forgave approximately $3.2M in accrued salary and related expenses, Christopher Carmichael forgave $1,470,863, Connie Jordan forgave $1,198,565, and Brenden Garrison forgave $257,026 and the Company was relieved of paying payroll liabilities accrued in the amount of $313,136. On the closing date the management of SME relinquished all shares held as follows: Christopher Carmichael cancelled 19,800,000 in Sponsor Me, Inc. Connie Jordan cancelled 19,800,000 shares in Sponsor Me, Inc. and Brenden Garrison cancelled 25,000 shares in Sponsor Me, Inc., owning an aggregate 39,625,000 shares in Sponsor Me, Inc. and did not receive any additional shares in Ubiquity, Inc. or any other compensation in Ubiquity, Inc. as part of the Share Exchange Agreement. The Company recorded the acquisition of the remaining non-controlling interest as an equity transaction in accordance with Accounting Standards Codification (“ASC”) 810.

Sprocket HK Limited

On March 3, 2015 Sprocket HK Limited was incorporated in Hong Kong. Ubiquity, Inc. held a 51% non-dilutable stake in Sprocket HK Limited.

On March 13, 2015 Ubiquity, Inc. entered into a Non-Exclusive Commercial Technology License Agreement (the “License Agreement”) with Sprocket HK Limited (“Sprocket”), a Hong Kong limited liability company. Pursuant to the terms of the Agreement, the Company agreed to grant to Sprocket a domestic and international non-exclusive license to make, use, copy and distribute products and services based upon the technology owned by the Company. Sprocket will also negotiate licenses with third parties, subject to the terms and conditions set forth in the License Agreement. The minimum cash flow to Ubiquity, Inc. is expected to be generated from the licensing agreement is $100,000 and carries a revenue share agreement where Sprocket HK will pay Ubiquity, Inc. 60% of all net revenue proceeds of all licensed and sub-licensed technology either directly or indirectly. The cash flow generated from this agreement can be for general expenses and working capital in Ubiquity, Inc. There were no significant operations at this entity for the period ended ~~March~~June 3130, 2016 and March 31, 2016.

Effective June 28, 2016, the Company terminated its license agreement with Sprocket HK due to the material breach for non-payment of its initial minimum cash payment of $100,000.00,, not properly issuing the agreed 51% stake in Sprocket HK, and failure to provide Ubiquity the contractually agreed upon representation on the board of directors The Company sent out a notice to cure the material breach and no remedy was made within the contractual agreement of 30 days.

Although the Company never received its 51% stake of Sprocket HK, nor did Chris Carmichael receive the board seat in Sprocket HK that was a material part of the compensation outlined in the Sprocket HK License agreement, on August 15, 2016, a director of Sprocket HK sent a letter to the Company stating Ubiquity’s shares are cancelled in the Sprocket HK entity, effectively confirming the termination of the arrangement.

Sprocket Wearables, Inc.

On September 18, 2015, the Company entered into a Mobile Applications Development and Services Agreement (“Agreement”) with Appetizer Mobile LLC (“Appetizer”). Under the terms of the Agreement, Appetizer will provide all necessary development services related to mobile applications for the use of the Company’s signature product, the “Sprocket”, in wearable tech devices. Specifically, the first project will be for the integration of the Sprocket into the Apple Watch. Pursuant to the Agreement, the Company formed a new corporation, Sprocket Wearables, Inc. on September 25, 2015 (“Sprocket Wearable’s”). Appetizer will initially own twenty five percent (25%) of the issued shares of Sprocket Wearables. As of ~~March~~June 3130, 2016, the Company owns 6247%, Appetizer Mobile owns 2620%, Moveo, LLC owns 23% and other investors own 1210% through the investment of $1M1,125,000 in cash and services provided. As of ~~March~~June 3130, 2016, investments of $1,125,000 have been received, Asas of July 331, 2017,; an additional $1,982,500 has been received.

On September 25, 2015, Ubiquity, Inc. entered into an exclusive license agreement with Sprocket Wearable’s Inc. The agreement calls for a 15% royalty of the gross sales of all licensed goods and services and an initial license non-refundable entry fee of $1,500,000, which will be used at the corporate level for general working capital purposes. This $1,500,000 in licensing revenue is eliminated in consolidation as it is a consolidated entity.

F-5

Going Concern

The accompanying condensed consolidated financial statements have been prepared assuming that the Company will continue as a going concern. As shown in the accompanying condensed consolidated financial statements, the Company has negative working capital and operating losses, and has not yet produced ~~continuing~~significant revenues from operations. These factors raise substantial doubt about the Company’s ability to continue as a going concern.

The condensed consolidated financial statements do not include any adjustments relating to the recoverability and classification of of recorded assets, or the amounts and classification of liabilities that might be necessary in the event that the Company cannot continue as a going concern. The Company is currently in various negotiations for the licensing of their Sprocket product line, however, no formal terms have been agreed upon. To date revenues from licensing agreements have not been sufficient to fund operations. Thus, until the Company can generate sufficient cash flows to fund operations, the Company is dependent on raising additional capital through debt and/or equity transactions. In addition, the Company may have to renegotiate current convertible debt obligations, reduce certain overhead costs through the deferral of salaries and other means, and settle liabilities through negotiation. Currently, the Company does not have any commitments or assurances for additional capital, other than disclosed above, nor can the Company provide assurance that such financing will be available to it on favorable terms, or at all. If, after utilizing the existing sources of capital available to the Company, further capital needs are identified and the Company is not successful in obtaining the financing, it may be forced to curtail its existing or planned future operations. Subsequent to quarter end, the Company raised $31,~~867~~311,~~788~~658 from the issuance of common stock.

F-6

The Company has not generated any profit from operations since its inception. The Company expects its operating expenses will increase over the next 12 months to continue its development activities. Based on its average monthly expenses and current burn rate, it estimates it will need to raise an additional $10,000,000 to $15,000,000 over the next 24 months. This amount could increase if it encounters difficulties that it cannot anticipate at this time or if it acquires other businesses. The Company expects to raise money through equity financing via the sale of its common stock. Should it be unable to raise the money that it needs in order to continue to operate its business, it will be forced to delay, scale back or eliminate some or all of its proposed operations. Failure to raise additional capital required to run its operations could have a material adverse effect on the Company’s business and its continued operation .

NOTE 2 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

Interim Condensed Consolidated Financial Statements

The accompanying unaudited interim condensed consolidated financial statements have been prepared by the Company pursuant to the rules and regulations of the United States Securities and Exchange Commission. Certain information and disclosures normally ~~included~~ included in annual financial statements prepared in accordance with accounting principles generally accepted in the United States of America have been condensed or omitted pursuant to such rules and regulations. In the opinion of management, all adjustments and disclosures necessary for a fair presentation of these interim condensed consolidated financial statements have been included. Such adjustments consist of normal recurring adjustments. These interim consolidated financial statements should be read in conjunction with the audited consolidated financial statements of the Company for the year ended December 31, 2015. The results of operations for the three months and six months ended ~~March~~June 3130, 2016 are not indicative of the results that may be expected for the full year.

Basis of Presentation

The interim consolidated financial statements of the Company have been prepared in accordance with generally accepted accounting principles in the United States of America and are presented in US dollars.

Principles of Consolidation

The accompanying interim consolidated financial statements include the accounts of the Company and its wholly-owned subsidiaries Ubiquity Broadcasting Corp., ~~Sprocket Wearables, Inc.,~~ and Sponsor Me, Inc. (“SME”) and SWI, its variable interest entity for all periods presented. ~~Prior~~ Prior to March 31, 2015, the Company did not have an equity ownership in SME. However, since SME was primarily owned by officers of of the Company, the Company had the power to make decisions that were most significant to SME and was expected to absorb the losses of SME. The Company determined that as of January 1, 2014, SME should be consolidated in with the Company’s operations. This determination was based upon the fact that the Company was the primary funding source for SME’s operations. Prior to 2014, SME funded operations through the sale of SME common stock. Effective March 31, 2015, the Company acquired SME; see above for additional information. All material inter-company accounts and transactions have been eliminated in consolidation.

F-7

Variable Interest Entity Considerations

Sponsor Me:

U.S GAAP require that if an entity is the primary beneficiary of a variable interest entity (“VIE”), the entity should consolidate the assets, liabilities and results of operations of the VIE in its consolidated financial statements. Ubiquity, Inc. considers itself to be the primary beneficiary of SME, and accordingly, has consolidated these entities beginning in January 2014, with the equity interests of the unaffiliated investors in SME presented as Non-controlling Interests in the accompanying interim consolidated financial statements.

Under ASC 810-10 the Primary Beneficiary is the party that has both of the following:

1. The power to make decisions regarding the activities that most significantly impact the success of the VIE, and

2. The obligation to absorb losses or rights to receive benefits of the entity that could potentially be significant to the VIE.

~~Ubiquity satisfies the second condition because as the primary source of capital beginning in 2014, Ubiquity, Inc. is expected to absorb the losses that will be significant to the VIE.~~ On March 31, 2015, SME was acquired by Ubiquity and thus the VIE was eliminated.

~~Non-Controlling~~Sprocket ~~Interests~~Wearables Inc.

~~Non-controlling~~U.S ~~interest~~GAAP ~~disclosed~~require ~~within~~that ~~the~~if ~~condensed~~an ~~consolidated~~entity ~~statements~~is the primary beneficiary of ~~operations~~a ~~represents~~VIE, the ~~minority~~entity ~~ownership’s 100%~~should ~~share~~consolidate ofthe ~~net~~assets, ~~losses~~liabilities and results of ~~SME~~operations ~~incurred~~of ~~during~~the ~~three~~VIE ~~months~~in ~~ended~~its ~~March~~consolidated 31financial statements. Ubiquity, ~~2015~~Inc. Onconsiders ~~March~~itself 31to be the primary beneficiary of Sprocket Wearables Inc. (SWI), ~~2015~~and accordingly, ~~SME~~has ~~was~~consolidated ~~acquired~~this byentiy ~~Ubiquity and~~beginning ~~thus~~in December 2015, with the ~~non~~equity interests of the unaffiliated investors in SWI presented as Non-controlling ~~interest~~Interests ~~was~~in ~~eliminated~~the onaccompanying ~~that~~interim ~~date~~consolidated financial statements.

~~Ubiquity,~~Under ~~Inc.~~ASC ~~does~~810-10 ~~not own Sprocket HK Limited as of August 2016 due to~~ the ~~breach~~Primary ofBeneficiary ~~the agreement and failure to provide required financial information, which~~ is ~~not consolidated into~~ the ~~accompanying~~party ~~consolidated~~that ~~financial~~has ~~statements.~~both ~~See~~of ~~above~~the ~~for additional information.~~following:

1. The power to make decisions regarding the activities that most significantly impact the success of the VIE, and

2. The obligation to absorb losses or rights to receive benefits of the entity that could potentially be significant to the VIE.

Ubiquity satisfies the second condition because as the primary source of capital beginning in 2016, Ubiquity, Inc. is expected to absorb the losses that will be significant to the VIE.

Sprocket HK:

U.S. GAAP requires that if an entity is the primary beneficiary of a ~~variable~~var ~~interest entity (~~“VIE”), the entity should consolidate the assets, liabilities and results of operations of the VIE in its consolidated financial statements.

F-8

Under ASC 810-10 the Primary Beneficiary is the party that has both of the following:

1. The power to make decisions regarding the activities that most significantly impact the success of the VIE, and

2. The obligation to absorb losses or rights to receive benefits of the entity that could potentially be significant to the VIE.

Ubiquity, Inc. does not consider itself to be the primary beneficiary of Sprocket HK. Based on the above, the accounts of Sprocket HK were not consolidated in the accompanying consolidated financial statements,

When multiple parties make decisions over different activities of the entity, only the party with power to direct the activities that most significantly impacts the entity’s economic performance will have satisfied the first condition. The Company does not have the power to direct the most significant activities of Sprocket HK. Originally the Company was formed with the intent of giving Ubiquity, Inc. a 51% stake in Sprocket HK, as well as a Board of Directors seat of Sprocket HK; however the Company was never given shares nor was a board of director seat granted.

Ubiquity also does not satisfy the second condition either. Ubiquity, Inc. is not expected to absorb any gains or losses that will be significant to the VIE. On June 28, 2016 Ubiquity ceased doing all business altogether due to a material breach of its licensing agreement. Accordingly, the Company accounts for Sprocket HK under the cost method of accounting. The investment balance was $0 at ~~December~~ December 31, 2015 and ~~March~~June 3130, 2016.

Non-Controlling Interests

Non-controlling interest disclosed within the condensed consolidated statements of operations represents the minority ownership’s 100% share of net losses of SME incurred during three months ended March 31, 2015. On March 31, 2015, SME was acquired by Ubiquity and thus the non-controlling interest was eliminated on that date.

Ubiquity, Inc. does not own Sprocket HK Limited as of August 2016 due to the breach of the agreement and failure to provide required financial information, which is not consolidated into the accompanying consolidated financial statements. See above for additional information.

Non-controlling interest disclosed within the condensed consolidated statements of operations represents the minority ownership’s 53% share of net losses of SWI incurred during three and six months months ended June 30, 2016.

Cash and Cash Equivalents

For purposes of the accompanying consolidated financial statements, the Company considers all highly liquid instruments with an initial maturity of three months or less to be cash equivalents.

F-9

Derivative Financial Instruments

The Company does not use derivative financial instruments to hedge exposures to cash-flow risks or market-risks that may affect the fair values of our financial instruments. However, under the provisions ASC 815 – “Derivatives and Hedging” certain financial instruments that have characteristics of a derivative, as defined by ASC 815, such as embedded conversion features on our Convertible Notes, that are potentially settled in the Company’s own common stock, are classified as liabilities when either (a) the holder possesses rights to net-cash settlement or (b) physical or net-share settlement is not within the Company’s control. In such instances, net-cash settlement is assumed for financial accounting and reporting purposes, even when the terms of the underlying contracts do not provide for net-cash settlement. Derivative financial instruments are initially recorded, and continuously carried, at fair value each reporting period.

The value of the embedded conversion feature is determined using the Black-Scholes option pricing model. All future changes in the fair value of the embedded conversion feature will be recognized currently in earnings until the note is converted or redeemed. Determining the fair value of derivative financial instruments involves judgment and the use of certain relevant assumptions including, but not limited to, interest rate risk, credit risk, volatility and other factors. The use of different assumptions could have a material effect on the estimated fair value amounts.

Fair Value of Financial Instruments

The Company follows the guidance of ASC 820: Fair Value Measurement and Disclosure. Fair value is defined as the exit price, or the amount that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants as of the measurement date. The guidance also establishes a hierarchy for inputs used in measuring fair value that maximizes the use of observable inputs and minimizes the use of unobservable inputs by requiring that the most observable inputs be used when available. Observable inputs are inputs market participants would use in valuing the asset or liability and are developed based on market data obtained from sources independent of our Company. Unobservable inputs are inputs that reflect our Company’s assumptions about the factors market participants would use in valuing the asset or liability. The guidance establishes three levels of inputs that may be used to measure fair value:

F-10

Level 1. Observable inputs such as quoted prices in active markets;

Level 2. Inputs, other than the quoted prices in active markets, that are observable either directly or indirectly; and

Level 3. Unobservable inputs in which there is little or no market data, which require the reporting entity to develop its own assumptions.

Revenue Recognition

The Company recognizes revenue when (i) persuasive evidence of an arrangement exists; (ii) delivery has occurred or services have been rendered; (iii) the sales price is fixed or determinable; and (iv) collectability is reasonably assured. Revenue from packaged product sales to distributors and resellers is usually recorded when related products are shipped. However, when the revenue recognition criteria required for distributor and reseller arrangements are not met, revenue is recognized as payments are received. Revenues from the licensing the rights to technology and/or patents are typically recorded when access to the technology and/or patents is provided.

Cost of Revenue

Cost of revenue includes the direct costs to distribute the product and the direct costs to provide online services, production, consulting, product support, licensing opportunities, training and certification of sub-contractors.

Advertising Costs

Advertising costs are expensed as incurred. Advertising costs were $~~450~~496 and $14,535 for the ~~three~~six months ended ~~March~~June 3130, 2016 and 2015, respectively.

Stock-Based Compensation

The Company accounts for employee stock-based compensation in accordance with the guidance of ASC Topic 718: “Compensation - Stock Compensation”, which requires all share-based payments to employees, including grants of employee stock options, to be recognized in the consolidated financial statements based on their fair values. The Company generally estimates the grant date fair value of stock options using the Black-Scholes option-pricing model. The Black-Scholes option-pricing model is affected by the Company’s stock price on the date of grant, the expected stock price volatility over the expected term of the award, the risk-free interest rate for the expected term of the award and expected dividends. The Company recognizes stock-based compensation expense on a straight-line basis over the service period of the award.

The Company follows ASC Topic 505-50, formerly EITF 96-18, “Accounting for Equity Instruments that are Issued to Other than Employees for Acquiring, or in Conjunction with Selling Goods and Services,” for stock options and warrants issued to consultants and other non-employees. In accordance with ASC Topic 505-50, these stock options and warrants issued as compensation for services provided to the Company are accounted for based upon the fair value of the services provided or the estimated fair market value of the option or warrant, whichever can be more clearly determined. The fair value of the equity instrument is charged directly to compensation expense and additional paid-in capital over the period during which services are rendered.

Common stock issued in connection with services whereby the performance is complete and for asset acquisitions are typically valued using the closing market price of the Company’s common stock on the date of the agreement.

In accordance with the guidance, an asset acquired in exchange for issuance of fully vested, non-forfeitable equity instruments should not be presented or classified as an offset to equity on the grantor’s balance sheet once the equity instrument is granted for accounting purposes. Accordingly, the Company has accounted for certain issuances as prepaid assets in the accompanying consolidated balance sheets.

F-11

Concentration of Credit Risks

The Company maintains its cash and cash equivalents in bank deposit accounts, which, at times, may exceed federally insured limits. The Company has not experienced any losses in such accounts; however, amounts in excess of the federally insured limit may be at risk if the bank experiences financial difficulties.

Use of Estimates

Preparing consolidated financial statements requires management to make estimates and assumptions that affect the reported amounts of assets, liabilities, revenue, and expenses. Examples include estimates of loss contingencies and product life cycles, valuation of the Company’s common stock and common stock options, derivative liabilities, and assumptions such as the elements comprising a software arrangement, including the distinction between upgrades/enhancements and new products; when the Company reaches technological feasibility for its products; the potential outcome of the future tax consequences of events that have been recognized in the Company’s consolidated financial statements or tax returns; and determining when investment impairments are other-than-temporary. Actual results and outcomes may differ from these estimates and assumptions.

Recently Issued Accounting Guidance

In May 2014, the FASB issued Accounting Standards Update No. 2014-09, Revenue from Contracts with Customers (Topic 606) (“ASU 2014-09”), which amends the existing accounting standards for revenue recognition. ASU 2014-09 is based on principles that govern the recognition of revenue at an amount an entity expects to be entitled when products are transferred to customers. ASU 2014-09 will be effective for the Company beginning in its first quarter of 2017. Early adoption is not permitted. The new revenue standard may be applied retrospectively to each prior period presented or retrospectively with the cumulative effect recognized as of the date of adoption. The Company’s adoption of this standard did not have a material impact on the Company’s consolidated financial statements.

F-12

In August 2014, the FASB issued guidance that requires management to evaluate whether there are conditions or events that raise substantial doubt about an entity’s ability to continue as a going concern. If such conditions or events exist, disclosures are required that enable users of the financial statements to understand the nature of the conditions or evens, management’s evaluation of the circumstances and management’s plans to mitigate the conditions or events that raise substantial doubt about the entity’s ability to continue as a going concern. The Company will be required to perform an annual assessment of its ability to continue as a going concern when this standard becomes effective on January 1, 2017. The Company’s adoption of this guidance did not have a material impact on the Company’s consolidated financial statements.

In November 2015, the FASB issued ASU 2015-17, Income Taxes (Topic 740): Balance Sheet Classification of Deferred Taxes. The amendments in this update simplify the presentation of deferred taxes by requiring deferred tax assets and liabilities be classified as noncurrent on the balance sheet. These amendments may be applied either prospectively to all deferred tax liabilities and assets or retrospectively to all periods presented. The amendments are effective for financial statements issued for annual periods beginning after December 15, 2016, and interim periods within those annual periods. Earlier application is permitted for all entities as of the beginning of an interim or annual reporting period. The guidance is not expected to have a material impact on the Company’s consolidated financial statements. The Company’s adoption of this guidance did not have a material impact on the Company’s consolidated financial statements.

In February 2016, the Financial Accounting Standards Board (“FASB”) issued Accounting Standards Update No. 2016-02 “Leases (Topic 842)” (“ASU 2016-02”), which requires lessees to put most leases on the balance sheet but recognize expense on the income statement in a manner similar to current accounting. For lessors, ASU 2016-02 also modifies the classification criteria and the accounting for sales-type and direct financing leases. The standard requires a modified retrospective approach for leases that exist or are entered into after the beginning of the earliest comparative period in the financial statements and is effective in the first quarter of 2019. Early adoption of ASU 2016-02 is permitted; however the Company plans to adopt the standard in the first quarter of 2019. The Company is evaluating the impact of ASU 2016-02.

The following standards were effective for and adopted by the Company in 2017. The adoption of these standards did not have a material impact on the Company’s consolidated financial position, results of operations or cash flows:

Update 2017-04—Intangibles—Goodwill and Other (Topic 350): Simplifying the Test for Goodwill Impairment

A public business entity that is an SEC filer should adopt the amendments in this Update for its annual or any interim goodwill impairment tests in fiscal years beginning after December 15, 2019.A public business entity that is not an SEC filer should adopt the amendments in this Update for its annual or any interim goodwill impairment tests in fiscal years beginning after December 15, 2020. All other entities, including not-for-profit entities, that are adopting the amendments in this Update should do so Early adoption is permitted for interim or annual goodwill impairment tests performed on testing dates after January 1, 2017. The Company is evaluating the impact of ASU 2017-04.

F-13

Update 2017-09—Compensation—Stock Compensation (Topic 718): Scope of Modification Accounting

Effective for all entities for annual periods, and interim periods within those annual periods, beginning after December 15, 2017. Early adoption is permitted, including adoption in any interim period, for public business entities for reporting periods for which financial statements have not yet been issued. The Company is evaluating the impact of ASU 2017-09.

Update 2017-01—Business Combinations (Topic 805): Clarifying the Definition of a Business

Public business entities should apply the amendments in this Update to annual periods beginning after December 15, 2017, including interim periods within those periods. The Company is evaluating the impact of ASU 2017-14.

Update 2016-17—Consolidation (Topic 810): Interests Held through Related Parties That Are under Common Control

The amendments in this Update are effective for public business entities for fiscal years beginning after December 15, 2016, including interim periods within those fiscal years. Early adoption is permitted, including adoption in an interim period. If an entity early adopts the amendments in an interim period, any adjustments should be reflected as of the beginning of the fiscal year that includes that interim period. The Company’s adoption of this guidance did not have a material impact on the Company’s consolidated financial statements

Update 2016-09—Compensation—Stock Compensation (Topic 718): Improvements to Employee Share-Based Payment Accounting

For public business entities, the amendments are effective for annual periods beginning after December 15, 2016, and interim periods within those annual periods. Early adoption is permitted for any entity in any interim or annual period. If an entity early adopts the amendments in an interim period, any adjustments should be reflected as of the beginning of the fiscal year that includes that interim period. An entity that elects early adoption must adopt all of the amendments in the same period. The Company’s adoption of this guidance did not have a material impact on the Company’s consolidated financial statements.

Update 2016-07—Investments—Equity Method and Joint Ventures (Topic 323): Simplifying the Transition to the Equity Method of Accounting

Effective for all entities for fiscal years, and interim periods within those fiscal years, beginning after December 15, 2016. The amendments should be applied prospectively upon their effective date to increases in the level of ownership interest or degree of influence that result in the adoption of the equity method. Earlier application is permitted. The Company’s adoption of this guidance did not have a material impact on the Company’s consolidated financial statements.

F-14

NOTE 3 - INTANGIBLE ASSETS

The Company’s capitalized costs in relation to developing and acquiring intangible assets, consisted of the following as of ~~March~~June 3130, 2016 and December 31, 2015:

	March 31, 2016		December 31, 2015
	June 30, 2016		December 31, 2015
Patents and trademarks	$	0	$	0
Media projects		~~405,252~~0		405,252
Sprocket Asset Group		0		0
Subtotal, intangible assets		~~405,252~~0		~~402~~405,252
Accumulated amortization		0		0
Intangible assets, net	$	~~405,252~~0	$	~~402~~405,252

Amortization expense for all intangible assets was, $0, ~~and~~$0, $405,406 and $414,163 for the three and six months ended ~~March~~June 3130, 2016 and 2015, respectively. The amortization expense is zero for the period ending March 31, 2016 as the Company impaired its intangible assets at December 31, 2015~~, see below~~.

During the process of preparing the 2015 consolidated financial statements, it became apparent that the recoverability of the Sprocket Asset Group was not reasonably assured, as a result of its foreign entity and partner Sprocket HK and iWebgate (ASX:IWG) dba Netlinkz (ASX:NET) and its arranged licensing agreement terms being breached by the licensee. As a consequence, management is unable to estimate expected cash flows with any certainty. As a result of such subsequent developments, management has concluded that, as of December 31, 2015, the remaining carrying value of the sprocket asset group was fully impaired. Based on the information available at the time of our filings prior to December 31, 2015, management does not feel that such full impairment was appropriate for such prior filings. The loss on impairment for the year ended December 31, 2015 was ($5,422,055).

~~NOTE~~The 4-remaining ~~ACCRUED~~balance ~~EXPENSES~~of the media projects were reduced to zero in the quarter ended June 30, 2016 as part of the Tomberlin legal settlement. (See Note 8 Brett and Mark Tomberlin Lawsuit)

~~Accrued~~NOTE ~~expenses~~4 ~~consisted~~- ofACCRUED ~~the following as of March 31, 2016 and December 31, 2015:~~EXPENSES

	March 31, 2016		December 31, 2015
Salaries and wages - Ubiquity, Inc.	$	734,455	$	564,767
Payroll and other taxes		1,192,943		1,169,197
Accrued consulting fee		341,877		791,877
Accrued interest		493,528		459,068
Accrued rent		96,152		93,575
Stock Px Guarantee		205,700		205,700
Other		93,000		310,499
Total current accrued expenses		3,157,654		3,594,682

Accrued expenses consisted of the following as of June 30, 2016 and December 31, 2015:

The Company’s Chief Executive Officer and Senior Executive Vice President are paid as consultants and thus the required payroll taxes are not withheld and remitted to the appropriate taxing authorities. The Company issues these individuals 1099s which represent amounts paid to them. In connection with this, the Company accrues estimated taxes and penalties due to taxing authorities in which would be potentially due if the taxing authorities were to require the Company’s to pay if the individuals were deemed employees. The Company accrues the taxes at the time in which the amounts payable to the individuals is recorded. See Note 8 for discussion related to compensation either paid and/or accrued for related parties. As of December 31, 2015 and 2014, total amounts accrued related to potential payroll taxes and penalties were $868,075 and $890,623, respectively. The California Employment Development Department has confirmed final balances for the tax years ending 2009 through March 31, 2017 for a total owing $225,555. The Company has a higher accrual for what is actually owed as when the above mentioned Officer and Vice President start receiving payment of their accrued salary it will match with the correct period.

	June 30, 2016		December 31, 2015
Salaries and wages - Ubiquity, Inc.	$	503,515	$	564,767
Payroll and other taxes		1,216,577		1,169,197
Accrued consulting fee		354,377		791,877
Accrued interest		605,587		459,068
Accrued rent		98,729		93,575
Stock Price Guarantee		205,700		205,700
Other		83,000		310,499
Total current accrued expenses		3,067,485		3,594,682

~~F-15~~The Company’s Chief Executive Officer and Senior Executive Vice President were paid as consultants and thus the required payroll taxes were not withheld and remitted to the appropriate taxing authorities. The Company issues these individuals 1099s which represent amounts paid to them. In connection with this, the Company accrued estimated taxes and penalties due to taxing authorities in which would be potentially due if the taxing authorities were to require the Company’s to pay if the individuals were deemed employees. The Company accrued the taxes at the time in which the amounts payable to the individuals is recorded. See Note 8 for discussion related to compensation either paid and/or accrued for related parties. As of June 30, 2016 and December 31, 2015, total amounts accrued related to potential payroll taxes and penalties were $1,216,577 and $1,169,197, respectively.

In February 2015, the Company’s Chief Executive Officer forgave accrued salary and bonuses of $1 million dollars in exchange for options to purchase 2,561,856 shares of common stock with an exercise price of $0.485 per share. The options vest immediately and have a five year life. The Company valued the options at $1,159,506 using the Black Scholes Option Pricing model;, see Note 9 for variables used. In addition, accrued payroll taxes and penalties related to the forgiven salary and bonus of $118,000 were re-classed as the payroll amounts were not paid. The difference between the salary and taxes forgiven and the fair market value of the options of $41,006 was recorded as additional compensation expense.

~~See Note 6 for discussion related to the accrued consulting fee~~ F- ~~BOD Member and the portion of Salaries and wages - Ubiquity due to the Company’s officers.~~14

See Note 8 for discussion related to the stock purchase guarantee.

NOTE 5 - CONVERTIBLE NOTES PAYABLE

Convertible Notes Payable - Variable Conversion Price

At various times to fund operations, the Company issues convertible notes payable in which the conversion features are variable. In addition, some of these convertible notes payable have issuance discounts and other fees withheld. During the ~~three~~six months ended June ~~March 31~~30, 2016, the Company did not issue any convertible notes. The convertible notes payable ~~incur~~incurred interest rates ranging from 1% to 12% per annum with due dates ranging from August 2015 to January 2017. The convertible notes payable are convertible into common stock of the Company at discounts ranging from 55~~-65~~% of either the lowest closing prices in the 20 days before the ~~conversion~~ conversion date, the lowest trading price in the 25 days before the conversion date, or the volume-weighted average price of the three days before the conversion date. Certain of these notes are convertible immediately upon issuance, while others do not become ~~convertible~~ convertible for a period of 180 days after issuance. Derivative accounting applies upon the conversion feature being available to the holder, as it is variable and does not have a floor as to the number of common shares in which could be converted. The Company has recorded, or will record, a derivative liability in connection with the convertible notes payable on the date they become convertible. The combination of the original issue discount (“OID”), fees paid and allocation to the derivative liabilities resulted in discounts to the convertible notes payable. The discounts are being amortized over the term of the convertible notes payable. Subsequent to March 31, 2015, all convertible notes payable are in default due to the Company’s delinquency of its public filings.

As of ~~March~~June 3130, 2016, the Company has $34,~~486~~412,~~163~~496 in principal and accrued interest of convertible notes payable with remaining discounts of $~~164~~108,~~557~~412. These notes also contain various default provisions including increases to the interest rate ranging from 0% to 1624% and increases to the principal balance ranging from 10% to 150%.

During the three and six months ended ~~March~~June 3130, 2016 ~~and 2015~~, ~~$197~~56,~~387~~145, ~~and $136~~253,~~949~~532 of the discount was amortized to interest expense, respectively. As of ~~March~~June 3130, 2016 and 2015, the unamortized debt discount was $~~164~~108,~~557~~412 and $361,944 respectively. The Company is amortizing using the straight line method due to the short term of the notes.

During the six months ended June 30, 2015, principal of $50,000 was converted into 815,867 shares of common stock. In connection with this conversion, the Company determined the fair market value of common stock to be $272,851 based upon the closing market price on the date of conversion. In connection with the conversion, the Company relieved derivative liabilities of $231,292 and recorded a gain on extinguishment of $8,441 which represented the difference between the fair market value of the common stock and the convertible notes and derivative liabilities extinguished.

During the six months ended June 30, 2016 and 2015 $253,532 and $888,840 of the discount was amortized to interest expense, respectively. As of June 30, 2016, the unamortized debt discount was $108,412.

Derivative Liabilities

In connection with convertible notes payable, the Company records derivative liabilities for the conversion feature. The derivative liabilities are valued on the date the convertible note payable become convertible and revalued at each reporting period. During the ~~three~~six months ended ~~March~~June 3130, 2015, the Company recorded initial derivative liabilities of $13,~~027~~267,~~204~~843 based upon the following Black-Scholes option pricing model average assumptions: an exercise price of $0.~~2035~~0853 to $1.00 our stock price on the date of grant ($0.4415 to $0.57), expected dividend yield of 0%, expected volatility of 132% to ~~189~~200%, risk free interest rates ranging from 0.23% to 0.56% and expected terms ranging from one (1) to two (2) years. Upon initial valuation, the derivative liability exceeded the face value certain of the convertible note payables by approximately $~~463~~1,363,000, which was recorded as a day one loss on derivative liabilityDuring ~~liability~~the six months ended June 30, 2016, the Company had recorded derivative liabilities of $10,476,844, resulting in a loss of $1,631,811 and $3,691,179 related to the change in fair value of the derivative liabilities for the three and six months ended June 30, 2016, respectively, based upon the following Black-Scholes option pricing model average assumptions: an exercise price of $0.14 our stock price on the date of grant ($0.40), expected dividend yield of 0%, expected volatility of 183% risk free interest rate of 0.12 % and expected term of one (1) year.

F-1615

On ~~March~~June 3130, 2015, the derivative liabilities were revalued at $13,~~253~~726,~~446~~664 resulting in a loss of $~~226~~1,~~242~~393,783 and $1,906,479 related to the change in fair market value of the derivative liabilities for the three and six months ended June 30, 2015 respectively. The derivative liabilities were revalued using the Black-Scholes option pricing model with the following average assumptions: an exercise price of $0.~~1375~~14 to $0.1715, our stock price on the date of valuation ($0.~~325~~26), expected dividend yield of 0%, expected volatility of ~~154~~143% to ~~197~~188%, risk-free interest rates ranging from 0.23% to 0.56%, and an expected terms ranging from 0.8713 to 1.8583 years.

On ~~March~~June 3130, 2016, the derivative liabilities were revalued at $810,~~845~~476,~~033~~844 resulting in a loss of $23,~~059~~691,~~368~~179 related to the change in fair market value of the derivative liabilities for the six months ended June 30, 2016. The derivative liabilities were revalued using the Black-Scholes option pricing model with the following average assumptions: an exercise price of $0.1214, our stock price on the date of valuation ($0.~~325~~40), expected dividend yield of 0%, expected volatility of ~~154~~183% ~~to 197%~~, risk-free interest rates ~~ranging~~of ~~from~~ 0.12% ~~to 0.56%,~~ and an expected ~~terms~~ ~~ranging~~term ~~from~~of ~~0.87~~one ~~to 1~~year.~~85 years.~~

Future Potential Dilution

Most of the Company’s convertible notes payable contain adjustable conversion terms with significant discounts to market. As of July 320, 2017 the Company’s convertible notes payable are potentially convertible into an aggregate of approximately 90 million shares of common stock. In addition, due to the variable conversion prices on some of the Company’s convertible notes, the number of common shares issuable is dependent upon the traded price of the Company’s common stock.

NOTE 6 - RELATED PARTY TRANSACTIONS

Compensation Related

UBIQUITY, INC.

SC Business, Inc.

SC Business, Inc. (“SC”) is an entity owned by the Company’s CFO, Brenden Garrison. At times SC charges Ubiquity for tax/consulting work. In order to assist the Company in accessing its credit card lines (as provided by the Carmichael family – see “Loans Payable – Related Parties” below), SC Business periodically charges the Company’s credit cards and remits the related funds, net of fees, back to Ubiquity or to SME.

The following is a summary of the transactions between the parties during the three months ended ~~March~~June 3130, 2016 and 2015:

	2016			2015
Receivable from SC Business, beginning of the year	$	1,707,634		$	1,279,681
Amount charged on Ubiquity Credit Cards by SC Business	$	12,~~296~~153,~~319~~925		$	13,~~398~~109,~~162~~132
Amounts remitted back to Ubiquity		(1,256,970	)		(1,127,947	)
Amounts remitted back to Ubiquity or paid on Ubiquity’s behalf		(2,051,968	)		(2,694,247	)
Amounts retained by SC for settlements of Brenden Garrison’s accrued salary (2016) and amounts due SC (2015)		(0	)		(56,614	)
Amounts retained by SC for settlements of Brenden Garrison’s accrued salary and reimbursements(2016) and amounts due SC (2015)		0			(110,202	)
PayPal and other fees incurred by SC Business		(2746,~~657~~661	)		(51112,~~551~~133	)
Receivable from SC Business	$	1,719,327		$	1,441,731	(1)
Receivable from SC Business(1) June 30,	$	1,762,931		$	1,472,331
Amounts remitted to SME	$	1318,200		$	~~152~~182,~~050~~550

(1) The substance of this receivable is that it is due from SME based on the balance being related to amounts remitted from Ubiquity to SME. See Note 2 for related elimination of the related balance upon the acquisition of SME. Accordingly, such amounts are eliminated in the consolidation of SME.

F-17

Max Gan

Max Gan is ana former employee of the Company. Max Gan ~~loans~~loaned the company money periodically and also assists the Company in accessing its credit card lines, Max Gan charged the Company’s credit cards through PayPal. Max Gan, then ~~remits~~ remitted the related amount charged, net of fees, back to Ubiquity. The following is a summary of the transactions between the parties during the ~~three~~six months ended ~~March~~June 3130, 2016 and 2015:

	2016			2015
Receivable from Max Gan, beginning of year	$	0		$	247,461
Amount charged on Ubiquity Credit Cards	$	35,200		$	232,289
Amounts remitted back to Ubiquity		(35,000	)		(246,620	)
PayPal and other fees incurred		(0	)		(8,177	)
Interest Service fees charged	$	0		$	0
Receivable from Max Gan, end of period	$	200		$	224,953

F-16

	*2016*			*2015*
Receivable from Max Gan, beginning of year	$	0		$	247,461
Amount charged on Ubiquity Credit Cards	$	95,763		$	532,204
Amounts remitted back to Ubiquity		(95,763	)		(481,875	)
PayPal and other fees incurred					(18,785	)

Receivable from Max Gan, end of period	$			$	279,004

Nicholas Mitsakos

Nicholas Mitsakos was the Company’s Co-Chairman of the Board. The Company entered into a directors retention agreement with Mitsakos on March 22, 2013 for the issuance of 250,000 shares of common stock as amended in July 2013 for the issuance of an additional 250,000 shares of common stock. Finally, the agreement was amended in December 2013, which calls for monthly payments of $25,000 beginning in January 2014. During the three and six months ended ~~March~~June 3130, 2016 and 2015, the Company recorded expense of $0, $0, $75,000 and $75150,000, respectively, under the contract. As of ~~March~~June 3130, 2016 and December 31, 2015, the cash amounts owed under the contract were $0 and $450,000, respectively. On January 4, 2016 Nicholas Mitsakos converted his outstanding debt of $456,881 to 1,986,439 common shares of stock at the rate $0.23 cents per share.

Carmichael Enterprises

This entity is owned by Al Carmichael, who is the father of our CEO, Chris Carmichael. Al Carmichael is ~~one of~~ the ~~signors~~signor of for the Company’s business credit cards. In exchange for providing the Company with the access to the related credit lines, the Company pays him a monthly fee of $2,500 per month. During the three and six months ended ~~March~~June 3130, 2016 and 2015, the Company expensed $7,500, $15,000, $7,500 and $715,~~500~~000 in consulting fees, ~~of which $0~~ and ~~$0 was due, respectively. In addition, the Company~~ owed him $16,000 and $16,000, in reference to a note payable at ~~December~~June ~~March 31~~30, 2016 and December 31, 2015, respectively. On October 24, 2016, Albert Carmichael filed a UCC-1 financing statement for amounts owed relating to a personal loan to the Company as well as certain credit being secured for the Company listing the Company’s fixed assets as collateral.

Brittany Carmichael

Brittany Carmichael is the daughter of our ~~interim~~ CEO, Chris Carmichael and provided secretarial, administrative, and marketing ~~support~~ support for the Company. The Company expensed approximately $1314,~~406~~338 and $27,745, $5,195 and $10,620, related to her salary, ~~reimbursed~~and personal expenses, ~~and beneficial payments~~ charged against her salary during the three and six months ended ~~March~~June 3130, 2016 and 2015, respectively. Effective ~~November~~ November 30, 2016, Brittany no longer provided services to the Company.

Cameron Carmichael

Cameron Carmichael is the son of our ~~interim~~ CEO, Chris Carmichael, and provided studio related services to the Company. The Company ~~expensed~~ expensed approximately $7,~~231~~691 and $14,921, $3,322 and $6,936 related to his salary, ~~reimbursed expenses,~~ and ~~beneficial~~personal ~~payments~~expenses charged against his salary ~~during~~ during the three and six months ended ~~March~~June 3130, 2016 and 2015, respectively. Effective March 1, 2017, Cameron no longer provided services to the Company.

Shane Carmichael

Shane Carmichael is the son of our ~~interim~~ CEO, Chris Carmichael, and provided studio related services to the Company. The Company ~~expensed~~ expensed approximately $10 7,~~360~~742 and $18,102, $14,757 and $29,339, related to his salary, ~~reimbursed~~personal expenses, ~~and beneficial payments~~ charged against his salary during the three and six months ended ~~March~~June 3130, 2016 and 2015, respectively. Effective December 31, 2016, Shane no longer provided services to the Company.

F-1817

Christopher Carmichael & Connie Jordan

The following is a summary of compensation paid and amounts payable to Christopher Carmichael and Connie Jordan for the three months ended March 31, 2016 and 2015, and June 30, 2016 and 2015:

	Christopher			Christopher
	Carmichael			Carmichael			Connie Jordan			Connie Jordan
	3/31/2015			3/31/2016			3/31/2015			3/31/2016
Beginning Accrued Balance	$	2,705,365		$	348,746		$	1,199,523		$	62,448
Salary - Ubiquity, Inc. Period Ending March 31st	$	142,151		$	133,050		$	71,914		$	66,100
Salary - Ubiquity, Inc. Period Ended March 31st	$	142,151		$	133,050		$	71,914		$	66,100
Sponsor Me, Inc. Period Ending March 31st	$	50,000		$	0		$	47,500		$	0
Sponsor Me, Inc. Period Ended March 31st	$	50,000		$	0		$	47,500		$	0
Director Fees - Period Ending March 31st	$	-		$	0		$	-		$	0
Bonus	$	10,875		$	870		$	3,263		$	373
Other	$	(1,000,000)-	)	$		{1}	$	-		$
Subtotal	$	1,908,391		$	482,666		$	1,322,199		$	128,921
Payments	$	(237,233	)	$	(232,708)	)	$	(69,803	)	$	(71,143)	)
SME Amounts Forgiven in Share Exchange Agreement	$	(1,470,863	)	$	0		$	(1,198,565	)	$	0
Accrual - Ending March 31	$	200,295		$	249,958		$	53,831		$	57,778
Accrual - Ended March 31	$	200,295		$	249,958		$	53,831		$	57,778

	Christopher Carmichael 6/30/2015		Christopher Carmichael 6/30/2016		Connie Jordan 6/30/2015		Connie Jordan 6/30/2016
Beginning Accrued Balance	$	200,295	$	249,958	$	53,831	$	57,778
Salary - Ubiquity, Inc. Period Ended June 30th		162,289		133,050		87,981		66,100
Bonus		457		207		196		89
Subtotal		363,041		383,215		142,007		123,966
Payments		106,844		310,847		18,500		86,952
Accrual Ended June 30th,		256,197		72,367		123,507		37,015

{1} Salary and bonuses forgiven for the exchange to purchase options, see note 6

* ~~Payments~~ Payments do not include amounts SME paid an aggregate of approximately $1415,~~489~~246 and $29,736, $12,593 and $20,386, in benefits for the three and six months ended ~~March 31~~June 30, 2016 and 2015, respectively.

Annual Salary

On December 20, 2013, effective January 1, 2014, the Board of Directors approved to increase Christopher Carmichael, the Company’s CEO, annual salary from $420,000 to $525,000. Additionally, the CEO receives and accrues a medical allowance of $1,200 per month. In addition, the CEO receives an annual ~~option~~ grant of 300,000 options prior to January 1, 2014 and 600,000 subsequently.

The Company’s CFO receives an annual salary of $225,000 and an annual option grant of 150,000 shares prior to January 1, 2014 and 150,000 subsequently.

The Company’s Senior Executive Vice President, Connie Jordan, received an annual salary of $250,000 during the ~~year~~years ended December 31, ~~2015~~2014 and 2013. Additionally, the Senior Executive Vice President receives and accrues a medical allowance of $1,200 per month and an annual option grant of 200,000 prior to January 1, 2014 and 300,000 subsequently.

Bonus

During the three and months ended ~~March~~June 3130, 2016 and 2015, the CEO earned bonuses of $~~870~~207 and $1,076, $10,875 and $457, respectively, in connection with the bonus provisions of his related employment agreement ~~(see Note 8)~~. During the three and six months ended ~~March 31~~June 30, 2016 and 2015, the Senior Executive Vice President earned bonuses of $~~373~~89 and $461 $3,263, and $457, respectively, in connection with the bonus provisions of her related employment agreement ~~(see Note 8)~~. The Company accounts for the bonuses as payroll expense.

F-19

Accrued Amounts Payable to CEO and Senior Executive Vice President

As of ~~March~~June 3130, 2016 and December 31, 2015, amounts payable to the CEO related to the items discussed above were $~~249~~72,~~958~~367 and $348,746, respectively. See Note 6 for discussion related to $1,000,000 of salary and bonus payable to the CEO exchanged for options to purchase shares of the Company’s common stock. As of ~~March~~June 3130, 2016 and December 31, 2015, amounts payable to the Senior Executive Vice President related to the items discussed above were $5737,~~778~~015 and $62,448, respectively.

~~For~~On June 9, 2016, Christopher Carmichael filed a UCC-1 financing statement for his amounts owed as an officer director and loans to the ~~year~~Company ~~ended~~totaling ~~December~~over 31$2,000,000 ~~2015~~owed at the time, listing the Company’s intellectual property and other fixed assets as collateral. Chris Carmichael had previously loaned ~~Ubiquity~~the Company $114,~~204~~571,~~905~~612 through personal loans and atamounts secured by his family for business expenses for the two years ended December 31, 2015 ~~was~~and ~~owed~~2014 respectively, including $~~609~~8,~~172.~~065,771 ~~The~~for the year ~~loans~~ended ~~are~~December ~~memorialized~~31, by2015 ~~contracts~~and ~~bearing~~$2,596,137 8%for ~~interest~~the ~~annually~~six months ended June 30, 2016.

On June 915, 2016 Sprocket Wearables, ~~Christopher~~Inc. ~~Carmichael~~entered ~~filed~~into a ~~UCC-1~~consulting ~~financing~~agreement ~~statement~~with ~~for~~Moveo ~~his~~Inc., ~~amounts~~a ~~owed~~company asowned anand ~~officer~~controlled ~~director~~by Chris Carmichael and ~~loans~~Connie ~~to the~~Jordan ~~Company~~with ~~totaling~~terms ~~over~~of $225,000~~,000~~ ~~owed~~per atmonth ~~the~~to ~~time,~~be ~~listing~~paid ~~the~~by ~~Company’s~~Sprocket ~~intellectual~~Wearables, ~~property~~Inc. and ~~other~~an ~~fixed~~issuance ~~assets as~~of ~~collateral. Chris Carmichael had previously loaned the Company $14~~3,~~571~~000,~~612~~000 restricted ~~through~~common ~~personal~~shares ~~loans~~of ~~and~~Sprocket ~~amounts~~Wearables ~~secured~~Inc. byThe ~~his family~~agreement ~~for~~has ~~business~~a ~~expenses~~2 ~~for~~year ~~the~~term. ~~two~~During ~~years~~the quarter ended ~~December~~June ~~31,~~2016 ~~2015 and 2014 respectively, including~~ $812,~~065,771 for the year~~500 ~~ended~~was ~~December~~expensed ~~31, 2015~~ and ~~$1,398,444~~accrued ~~for~~relating to the ~~quarter~~Moveo ~~ended March 31, 2016~~Agreement.

On June 15, 2016 Sprocket Wearables, Inc. entered into a consulting agreement with Moveo Inc., a company owned and controlled by Chris Carmichael and Connie Jordan with terms of $25,000 per month to be paid by Sprocket Wearables, Inc. and an issuance of 3,000,000 restricted common shares of Sprocket Wearables Inc. The agreement has a 2 year term.

Board of Director Fees

Effective July 1, 2014, the Company revised its policy for providing compensation to members of the board of directors. Each independent board member receives an annual fee ofoff $25,000 payable annually and additional compensation annually ranging from $5,000 - $10,000 depending on the board members participation in the Company’s various committees. In addition, effective July 1, 2014, the Company officers who also reside on the board of directors do not receive compensation. During the three and six months ended June ~~March 31~~30, 2016 and 2015, the Company accrued, $18,446 and $36,893, $21,250 and $21,250, respectively, in connection with amounts due to non- officer board of director members. As of ~~March~~June 3130, 2016 and December 31, 2015, $~~235~~240,~~946~~560 and $217,500 was included within accrued expenses on the accompanying condensed consolidated balance sheet.

~~Loans~~F-18

The Carmichael Family has personally guaranteed two Company credit cards and has allowed the Company use of their personal credit cards as needed. Total lines of credit personally guaranteed by the Carmichael family are up to $800,000 per month and is memorialized in a formal loan agreement. Of which a total loaned from the use of these guaranteed cards was $12,~~398~~596,~~444~~137 and $6,824,866 during ~~the~~ the periods ended ~~March~~June 3130, 2016 and December 31, 2015, respectively.

The Company had certain notes payable outstanding to related parties as of ~~March~~June 3130, 2016 and December 31, 2015. During the periods ended ~~March~~June 3130, 2016 and December 31, 2015, the Company borrowed $04,679 and $1,204,905 from Chris Carmichael for which payments ~~were~~ were made of $010,000 and $605,172, respectively. As of ~~March~~June 3130, 2016 and December 31, 2015, Christopher Carmichael was owed $~~609~~103,~~172 and~~852 and $609,172, respectively. The amounts were unsecured, incurred interest at 8% per annum and due on demand. During the ~~periods~~period ended ~~March~~June 3130, 2016 ~~and March 31~~, ~~2015,~~ the Company recorded accrued interest of $~~0 as contributed capital as the interest on the notes payable was forgiven~~4,759. The proceeds were used for operations.

Albert Carmichael, a family member of the Company’s CEO, was owed $16,000 and $16,000 as of ~~March~~June 3130, 2016 and December 31, 2015, respectively. The amounts are unsecured, non-interest bearing and due on demand. The proceeds were used for operations. On October 24, 2016, Albert Carmichael filed a UCC-1 financing statement for amounts owed relating to a personal loan to the Company as well as certain credit being secured for the Company listing the Company’s fixed assets as collateral.

Non-officer employees of the Company were owed $783,~~042~~703 and $74,394 as of ~~March~~June 3130, 2016 and December 31, 2015, respectively. The amounts are unsecured, non-interest bearing and due on demand. The proceeds were used for operations.

F-20

NOTE 7 - STOCKHOLDERS’ EQUITY

Preferred Stock

In February 2015, the board of directors approved the designation of 500 shares of preferred stock, par value $0.001 per share, of the Company as Series A Preferred Stock. The Series A Preferred stock receive no dividends or liquidation preferences. Each share is entitled to the equivalent of 1,000,000 votes of common stock.

On March 6, 2015, the Company issued the CEO and the SEVP 250 shares each of Series A Preferred Stock. In connection with this issuance, the Company valued the shares at $295,918. The shares were valued under the provisions ASC 820 Fair Value Measurements taking into account the control premium associated with the voting provisions of the Series A. The Company expensed the value of the Series A upon issuance as there were no additional performance requirements.F-19

On December 31, 2015 the company issued 1,500,000 Series A preferred shares to Christopher Carmichael and 500,000 Series A preferred shares to Connie Jordan at valued at $24,745.

Proceeds from Sales of Common Stock

During the ~~periods~~six months ended ~~March~~June 3130, 2016 and 2015, the Company issued 2549,~~422~~084,~~658~~448 and 213,~~183~~591,~~333~~667 shares of common stock for cash proceeds of $~~907~~2,~~955~~449,575 and $~~517~~1,272,500, respectively. In addition, as of ~~March~~June 3130, 2016 the Company has a subscription receivable of of $118,000.

During the ~~period~~six months ended ~~March~~June 3130, 2016, Sprocket Wearables Inc. issued ~~750~~900,000 shares of common stock for cash proceeds of $~~625~~700,000.

Common Stock Issued for Services and Settlement

During the ~~three~~six months ended ~~March~~June 3130, 2016 and 2015, the Company issued 410,~~636~~886,439 and ~~700~~2,~~000~~145,111 shares of common stock for services. The Company determined the value of such shares to be $13,~~018~~091,~~231~~981 and $~~364~~1,~~000~~165,666 for the ~~three~~six months ended ~~March~~June 3130, ~~2016~~2015 and ~~2015~~2014, respectively. The values were based upon the fair market value of the Company’s common stock on the date of performance, which in most cases is the agreement date. Services performed in connection with these issuances relate to assignment to the board of directors, advisory services related to listing on a national exchange, marketing, broadcasting and production related services.

During the six months ended June 30, 2016 Sprocket Wearables Inc. issued 3,000,000 shares of common stock for services valued at $3,000,000 to a related party (see note 6). The shares were issued for services customary to an Interim President and Chief Designer which were performed during the six months ended June 2016. Accordingly, such were expensed in the accompanying financial statements ended June 30, 2016.

During the six months ended June 30, 2016 Ubiquity, Inc. issued 11,249,140 shares of common stock to extinguish debt of $11,249 shares related to one of the Company’s attorneys.

F-20

Options

During the ~~year~~six months ended ~~December~~June 3130, ~~2015~~2016, the Company granted options to purchase 31,~~007~~125,~~231~~000 shares of common stock to the board of directors and employees, including ~~850~~600,000 to the CEO, ~~and 550~~300,000 to the EVP, ~~for board of director and employment services;~~ 150,000 to the CFO, ~~269,331~~and ~~to the CEO in connection with guarantees made on Company loans/credit cards; 32~~75,~~767~~000 to ~~the~~an ~~CEO~~employee in connection ~~with~~ ~~the~~with ~~Monkey~~their ~~Bars asset acquisition and 684,223 to employees and other board members~~employment. The options were valued at $3118,~~827,938~~512 on the grant date using the Black-Scholes option-pricing model with the following assumptions: exercise prices ~~ranging~~of ~~from~~ $0.~~87 to $2.41~~23; dividend yield of 0%; expected volatility rang of ~~163~~176%; risk-free interest rates of 0.12% and expected life of 60 months. During the six months ended June 30, 2016, the Company recorded $118,512 in compensation expense in connection with the options and from options granted in prior periods.

~~F-21~~The aggregate intrinsic values of the options on the date of grant were $0 as the Company issues options at the then fair market value of common stock. As of June 30, 2016, all options were exercisable at prices above the fair market value of the Company’s common stock.

~~During~~Total ~~the years ended December 31, 2015, the Company granted~~ options ~~to purchase 1~~outstanding,~~125,000~~ ~~shares~~vesting ofremaing ~~common~~at ~~stock~~June ~~to the board of directors and employees~~30, ~~including~~2016 ~~600,000~~were toas ~~the CEO and 300~~follows,~~000~~ tounvested ~~the~~expense ~~EVP, 150,000 to the CFO in connection with their employment; 2,561,856 to the CEO in connection with the forgiveness~~ of $~~1.0 million in accrued salary and 75~~218,~~000~~014 ~~to an employee. The options were valued at $765,927 on the grant date using the Black-Scholes option-pricing model~~ with ~~the~~a ~~following~~remaining ~~assumptions:~~vesting ~~exercise prices ranging~~term ~~from $0.49 to $0.67; dividend yield~~ of ~~0%;~~6 ~~expected~~months ~~volatility of 164.0%; risk-free interest rates of 0.12%~~ and ~~expected~~a ~~life of~~zero 60intrinsic ~~months.~~value ~~During~~at ~~the~~June ~~year ended December 31~~30, 2015, the Company recorded $634,101 in compensation expense in connection with the options. The Company expects to record the remaining unamortized portion of $111,079 during the year ending December 31, 2016.

During the year ended December 31, 2015, the Company granted options to purchase 1,993,057 shares of common stock to the CEO in connection with the Company’s use of the CEO’s personal credit card. Under the terms of the arrangement, the Company issues options which represent 10% of the balance on the credit card at the end of the month. The exercise price represents the closing market price of the Company’s common stock at the close of the month. The options are immediately vested. The options were valued at $522,277 on the grant date using the Black-Scholes option-pricing model with the following assumptions: exercise prices ranging from $0.11 to $0.67; dividend yield of 0%; expected volatility ranging from 162% - 165%; risk-free interest rates of 0.12% and expected life of 60 months. During the year ended December 31, 2015, the Company recorded $522,277 in compensation expense in connection with the options, respectively.

The aggregate intrinsic values of the options on the date of grant were $0 as the Company issues options at the then fair market value of common stock. As of December 31, 2015, all options were exercisable at prices above the fair market value of the Company’s common stock.

During the three months ended March 31, 2016, the Company granted options to purchase 1,125,000 shares of common stock to the board of directors and employees, including 600,000 to the CEO, 400,000 to the EVP, 150,000 to the CFO and 75,000 to an employee in connection with their employment. The options were valued at $118,512 on the grant date using the Black-Scholes option-pricing model with the following assumptions: exercise prices ranging from $0.11 to $0.67; dividend yield of 0%; expected volatility ranging from 162% - 165%; risk-free interest rates of 0.12% and expected life of 60 months. During the quarter ended March 31, 2016, the Company recorded $118,512 in compensation expense in connection with the options.

The aggregate intrinsic values of the options on the date of grant were $0 as the Company issues options at the then fair market value of common stock. As of March 31, 2016, all options were exercisable at prices above the fair market value of the Company’s common stock.

NOTE 8 - COMMITMENTS AND CONTINGENCIES

Employment Agreements

On March 1, 2015, the board modified Christopher Carmichael’s employment agreement to reflect the same base salary of $525,000 annually but a different bonus structure focusing on the revenue performance of the Company. He also is to receive 600,000 options annually. Beginning March 1, 2015, Carmichael receives three and a half percent (3.5%) of gross revenue from any and all corporate activities worldwide and a two and a half percent (2.5%) gross override of the book value derived from all cashless transactions t. Mr. Carmichael is also awarded twenty percent of all gross revenues associated with the project known as “106 Yards”. All cashless transactions are paid out as common stock. Upon termination of the amended agreement, the Company is obligated to pay employee any outstanding liabilities owed to him and amounts owed per the contract to the end of the term. On ~~March~~June 120, ~~2015,~~ ~~the~~2017 ~~board~~Christopher ~~modified~~Carmichael ~~Connie~~became ~~Jordan’s~~interim ~~employment~~CEO ~~agreement to reflect the same base salary~~ of ~~$250,000 annually but a different bonus structure focusing on~~ the ~~revenue~~company ~~performance~~with of the ~~Company.~~same ~~Beginning~~terms ~~March~~as 1,in ~~2015,~~his ~~Jordan~~previous receives one and a half percent (1.5%) of gross revenue from any and all corporate activities worldwide and a three percent (3%) gross override of revenue resulting from the successful patent prosecution, litigation, settlement or actions taken by the Company. Upon termination of the amended agreement~~, the Company is obligated to pay employee any outstanding liabilities owed to her and amounts owed per the contract to the end of the term~~. ~~She also is to receive 300,000 options.~~

~~F-22~~On March 1, 2015, the board modified Connie Jordan’s employment agreement to reflect the same base salary of $250,000 annually but a different bonus structure focusing on the revenue performance of the Company. Beginning March 1, 2015, Jordan receives one and a half percent (1.5%) of gross revenue from any and all corporate activities worldwide and a three percent (3%) gross override of revenue resulting from the successful patent prosecution, litigation, settlement or actions taken by the Company. Upon termination of the amended agreement, the Company is obligated to pay employee any outstanding liabilities owed to her and amounts owed per the contract to the end of the term. She also is to receive 300,000 options.

F-21

On January 1, 2014, Brenden Garrison’s employment contract was amended to reflect an annual base salary of $225,000 with additional compensation of 150,000 options annually.

On January 1, 2012, as amended on August 1, 2013, the Company entered into an employment agreement with Bryan Harpole (the “Harpole Agreement”) to be employed as the Company’s general studio manager on an at will basis. Mr. Harpole received an annual salary of $150,000 and is eligible for certain bonuses including an annual bonus in the form of stock options to purchase 75,000 shares at an exercise price of $4.00. Harpole receives a one percent (1%) gross override for all revenue relating to studio revenues. Effective April, 2016, Mr. Harpole no longer provided services to the Company, and the employment agreement was terminated.

The foregoing descriptions of the terms of the Carmichael Agreement, Jordan Agreement, Garrison Agreement, and Harpole Agreement do not purport to be complete and are qualified in their entirety by reference to the provisions of such agreements filed as Exhibits 10.1 10.2, 10.3, and 10.4 to the December 31, 2015 10-K, respectively.

Other Contingencies

At the time of death of the former President of Ubiquity, Gregory Crotty had accrued $93,743 in salary, 22,857 Common Shares of Ubiquity Broadcasting Corporation, and had 200,929 options to purchase Ubiquity Broadcasting Corporation Common Shares at $5.25 per share. He also had 42,857 shares of common stock issued in his name. Ubiquity will have to issue these shares and pay the balance of his accrued salary to the proper beneficiary once established. As of June 2930, ~~2017~~2015, an established beneficiary has yet to be named. All 200,929 options expired as of December 31, 2011 and are not included in total options outstanding.

During the first quarter of 2013, the Employment Development Department of the State of California (the “EDD”) notified the Company that it proposed to categorize our independent contractors as employees and proposed an assessment of additional employment taxes in the amount of $305,885, which represented a contingent liability. The Company filed a formal petition as of April 22, 2013. The Company has recorded a provision for the assessment as an accrued expense even though the Company believes the independent contractors do not meet the definition of an employee. In a letter from the EDD dated July 21, 2015, the EDD issued a final assessment of employment taxes in the amount of $36,128 for the period from October 1, 2009 to September 30, 2012. For the period April 1, 2013 to December 31, 2015, the EDD issued a notice of adjustment with an amount due of $39,427.21, and for the subsequent periods up to March 31, 2017 the amount owed was $150,339. As of ~~December~~June 3130, ~~2015~~2016 and ~~2014~~December 31, 2015, total amounts accrued on the accompanying condensed consolidated financial statements related to potential payroll taxes and penalties were $~~868~~961,~~075~~814 and $~~890~~868,~~623~~075, respectively. ~~The~~ The California Employment Development Department has confirmed final balances for the tax years ended 2009 through March 31, 2017 for a total ~~owing~~obligation of $225,555. The Company has a higher accrual for what is actually owed as when the above mentioned Officer and Vice President start receiving payment for their accrued salary it will match with the correct period.

F-22

Litigation

Think Design Media, Inc. and Related Entities

As previously disclosed in the Company’s Quarterly Report for September 30, 2015 on February 26, 2015, the Company, Think Mobile, Inc., Think Design Media, Inc. and all other parties to the lawsuits submitted to the Superior Court of California, County of Orange a request for dismissal of all actions between the parties, after executing a Confidential Settlement Agreement and Release (the “Agreement”). As part of the Agreement, the lawsuits were settled and the Company obtained a full release from all defendants to such lawsuits.

F-23

Other

Ubiquity v. Castro:

On or about July 2014, Ubiquity filed a demand for arbitration with Judicial Arbitration and Mediation Services (‘JAMS’) against Lawrence E. Castro (“Castro”) for breach of the settlement agreement dated August 19, 2013, which was executed to settle and resolve a dispute between Ubiquity and Castro regarding a prior “Work for Hire” relationship between the parties (the “Castro Settlement”). Under the Castro Settlement, the Company paid Castro monetary compensation in exchange for providing certain agreements and assurances designed to protect certain intellectual property, business plans, road maps, vendors, investor relationships, employee relationships, contractors and work in progress. The arbitration complaint filed by Ubiquity alleges that Castro breached the Castro Settlement and is seeking damages in the amount of $176,763, plus interest, representing the stated damages in the settlement agreement of what Ubiquity has paid to Castro. Ubiquity also seeked injunctive relief, actual losses incurred by Castro’s breach, and damages for unjust enrichment, including expenses and other sundry damages.

Ubiquity was awarded a final amended award on January 6, 2017 for attorney’s fees of $32,919 and costs of $10,219 along with the original award for damages of $176,763. Interest is awarded as allowed on unpaid balances until paid in full. Total award less interest is $219,901.

Kay Strategies v. Ubiquity:

Kay Strategies filed a complaint against the Company and its officers and directors for various violations of federal and state securities law, in the District Court for the Southern District of California. The Company and its officers and directors thereafter moved to dismiss the complaint under FRCP 12(b)(5) and 12(b)(6). Kay Strategies chose instead to amend voluntarily. Kay Strategies then filed a First Amended Complaint, alleging the same federal and state securities violations. The amended pleading essentially alleges that Kay Strategies purchased restricted Ubiquity stock from a third party. Kay Strategies’ personal representatives allegedly advised it that they were orally informed by Ubiquity’s outside securities’ attorney that it would lift the stock restrictions by a certain date, which did not occur, allegedly causing Kay Strategies damages. Kay Strategies contends that it would not have purchased the Ubiquity stock from the third party had it not had this assurance. The Company denies that it ever made such a guarantee or represented same to Kay Strategies’ representative. Ubiquity also contends that if outside counsel made any statements [which the Company denies happening], counsel was never authorized to do so. Prior to the stock purchase, no authorized director, officer or agent of the Company met with or discussed with anyone at Kay Strategies its prospective purchase of the Company’s stock from any third party. Ubiquity recently filed another FRCP 12(b)(6) motion challenging the efficacy of these allegations. The district court dismissed Kay Strategies’ first and second Amended Complaint without prejudice. On July 15, 2016, the court issued an order denying the Motion to Dismiss Claims against the Defendants, and directed Defendants to answer on or before August 15, 2016. On August 12, 2016, Defendants filed their Answer to the Amended Complaint.

On November 18, 2016, an Early Neutral Evaluation Conference and Case Management Conference were held before Magistrate Judge Louisa S. Porter. The case did not settle. A scheduling order issued thereafter on November 21, 2016. A Mandatory Settlement Conference is scheduled for October 2, 2017 at 10:00 a.m.

Kay Strategies is seeking $1,667,893 in compensatory damages and also undisclosed punitive damages and other court related costs. The Company has accrued all amounts due under the agreement.

Typenex v. Ubiquity:

On August 14, 2015, the Company was served with a demand for arbitration by Typenex Co-Investment, LLC (“Typenex”). Typenex was the holder of one of the many convertible notes issued by the Company. Typenex was claiming, among other things, that the Company is in breach of the convertible note issued in its favor (the “Note”), and that it is entitled to an injunction against the Company enjoining it from, among other things, up to and until the Note is paid in full (i) issuing any other convertible debt with a variable interest rate; (ii) paying any cash to the holders of any other convertible notes issued by the Company; and, (iii) issuing any additional shares of stock to the holders of any other variable interest rate convertible notes issued by the Company. The arbitrator issued an interim injunction for the equitable relief described above. Arbitration finally took place on March 22, 2016, and the arbitrator tentatively awarded Typenex damages, attorney fees and costs of $767,960.42, less $150,000, for a total award of $617,960.42. In addition, the arbitrator awarded Typenex costs. Finally, the arbitrator kept in place the prior interim restraining orders. Though Chris Carmichael also was named a defendant, he was dismissed by Typenex prior to the arbitration hearing. On April 19, 2016, Typenex filed a petition in the Third Judicial District Court in and for Salt Lake County, Utah to confirm the award. Ubiquity intends to respond and object to the petition. While the Company admittedly owes the principal on the Note, the Company believes the arbitrator erred in awarding any damages or interest thereon. Error is further ascribed to the arbitrator’s continuance of injunctive relief. The Company and Typenex are currently circulating settlement terms to resolve this matter. The Company has accrued all amounts due under the convertible note agreement.

F-24

Avant Garde v. Ubiquity:

Avant Garde initiated litigation against the Company, for the recovery of the Company’s lease of its office space in Irvine, California, claiming the Company’s failed to timely pay its September 2015 rent, allegedly one day late, under the applicable lease. When Ubiquity failed inadvertently to timely answer the unlawful detainer suit, the Company was defaulted. Instead of moving to to set aside the default, the Company entered into two forbearance agreements, both of which lapsed. The Company then moved the ~~Orange~~ Orange County Superior Court for an order restoring the lease, which motion was denied. The court thereafter stayed the action ~~pending~~ pending the outcome of an appeal challenging the denial filed by Ubiquity. On March 14, 2016, Ubiquity paid an additional $150,000 ~~for~~ for an increased security deposit until the appeal is finalized. The Court of Appeals issued its decision affirming the trial court’s order denying Ubiquity’s Petition for relief from judgment declaring the release forfeited. The Opinion was issued on February 17, 2017 and made final April 21, 2017. On May 17, 2017 Avant Garde entered into a settlement agreement with the Company reinstating the lease with the original terms and conditions of the lease. The lease will be up for renewal January 2020. The Company ~~must~~did not provide a $150,000 letter of credit to its landlord by June 30, 2017 orand itcould ~~risks~~be at risk of a default. onThe Company’s counsel is in the ~~lease~~process of working out other alternatives.

Vista Capital

On March 10, 2016, Vista Capital Investments, LLC (“Vista”) filed suit against the Company for breach of contract, unjust enrichment, declaratory relief, promissory estoppel, fraud, negligent misrepresentation and civil conspiracy in the Superior Court, Central Division, ~~For~~for the County of San Diego, California. The genesis of the suit is Vista’s allegations that the Company breached two Convertible Notes, one for $100,000 and the other for $50,000, by failing to timely repay these notes, when Vista declared the notes all due and payable after the Company failed to make timely filings with the SEC. The Company denies any wrongdoing, and intends to challenge the complaint by demurrer. The Company currently has a settlement offer being circulated to dismiss all claims. The Company has accrued all amounts due under the convertible note agreement.

Keener Litigation

On March 15, 2016, Justin Keener (“Keener”) dba JMJ Financial, sued the Company for breach of contract, arising out of a $300,000 convertible note representing capital infusions by Keener into the Company. Keener alleges the Company has failed to timely repay the note, after Keener demanded payment of the entire principal and interest under the note due to the Company’s default of certain other provisions of the note, which, as alleged, accelerated the note repayments. A Default judgment was entered against Ubiquity on February 9, 2017. Ubiquity is in the process of setting aside the default judgment so that a reduced settlement can be negotiated between the parties. The Company has accrued all amounts due under the convertible note agreement.

Firstfire Global Opportunities Litigation

On March 28, 2016, Firstfire Global Opportunities Fund LLC (“Firstfire”) filed suit against Ubiquity for breach of a securities purchase agreement, dated March 17, 2015, and a $140,250 senior convertible note (issued on March 17, 2015), attorneys’ fees and unjust enrichment in the Supreme Court of New York, New York County. Firstfire contends that Ubiquity breached the note by failing to timely repay “any amount towards the aggregate sum that Firstfire is owed,” the total of which is $304.889.88.

F-25

A Judgment in the total amount of $315,406.24 was issued on August 10, 2016. The Company is currently negotiating the debt and in the process of having the default set aside. The Company has accrued all amounts due under the convertible note agreement and judgment.

Brett and Mark Tomberlin Lawsuit

On April 8, 2016, a lawsuit was filed in the Orange County Superior Court by Brett and Mark Tomberlin, seeking damages for Ubiquity’s failure to timely repay under eight promissory notes totaling $184,450. They also claim that they were misled into believing that the notes would be paid timely. The Company denies the allegations. The ~~company~~Company and the Tomberlin’s settled for the following: (i) Ubiquity sells all rights of Queen Mary to Brett Tomberlin; (ii) Ubiquity transfers to Brett Tomberlin Bill of Sale and Short Form Bill of Sale of the Project; (iii) if the Project is produced and released, Ubiquity will receive 5% of 100% of Net Proceeds arising from the Picture; (iv) If the Picture is produced and released, IDW Productions will accord Connie Jordan Carmichael and Christopher Carmichael an executive producer credit on the screen in the motion picture; (v) Tomberlin shall pay Ubiquity $150,000 for Ubiquity’s actions; (vi) Tomberlin dismisses lawsuit and forgives the promissory notes; (vii) Tomberlin as a part of the mutual release, releases any claims that may arise as a part of the termination of his employment from the ~~company~~Company (viii) Ubiquity will indemnify Tomberlin of all claims, losses, etc. regarding Ubiquity’s warranties ~~and~~ and representations in the Agreement; and (ix) Mutual release of the parties. The case was settled May 27, 2016 and dismissed ~~May~~ May 31, 2016.

R Squared Partners, LLC Litigation

On April 20, 2016, R Squared Partners, LLC (“R Squared”) filed suit in the Supreme Court of New York, County of New York against Ubiquity and its CEO, Chris Carmichael, for breach of contract, breach of the implied covenant, unjust enrichment, specific performance, fraud, negligent misrepresentation, and civil conspiracy. The complaint essentially alleges that Ubiquity entered into a purchase and note transaction with R Squared whereby R Squared loaned the Company $140,250, which was due on September 20, 2015. R Squared alleges that, except for a $20,000 payment, the Company has not timely repaid the principal or interest on the note. R Squared also claims that the Company defaulted under other terms of the purchase agreement, including Ubiquity’s failure to obtain certain insurance policies, reduction of the book – value of certain of its assets, impairing its ability to pay its debts, and failure to honor R Squared’s third party participation rights by entering into third party financing agreements, though R Squared alleges that it has lost “not less than” $500,000. R Squared also seeks sundry injunctive relief, restraining Ubiquity and Carmichael from entering into future third party agreements and stock issuances. Finally, R Squared seeks undefined fraud damages against Ubiquity and its CEO arising out of Ubiquity’s and Carmichael alleged representations, as manifested in the purchase agreement.

On October 27, 2016, the Court entered judgment in favor of R Squared Partners, LLC and against Ubiquity Inc. in the amount of $140,250 plus interest at 15% per annum from September 20, 2015 through entry of judgment. The Court also awarded R Squared Partners, LLC $17,500 in attorneys’ fees, per the terms of the promissory note.

In this order, the Court also ordered that the clerk sever and enter judgment dismissing all claims against Christopher Carmichael, finding that Plaintiff had failed to prove that Carmichael acted in any capacity other than as CEO of Ubiquity or that any basis for individual liability exists.

The Company is currently engaged in settlement discussions to exhaust this debt. The Company has accrued all amounts due under the convertible note agreement and judgment.

North Matter:

On October 10, 2014, the Company was served with a complaint filed on September 13, 2014 by a former consultant against the Company, in the Superior Court of Arizona, Maricopa County. The complaint alleges that the consultant was to receive warrants to purchase 1,142,857 shares of common stock as a commencement fees for services in which commenced on December 15, 2006. On October 28, 2016 North was awarded a $7,700,000 default judgment. The Company still believes the claim is without merit; and also still believes the statute of limitations has passed. The Company recorded a $7.7M loss contingency on the books as of December 31, 2015. The Company filed a motion to vacate the default judgment and dismiss the action on March 30, 2017; the default judgment was vacated on July 10, 2017 and the case in the Northern District of Illinois has been dismissed. The Company is currently assessing the accounting treatment of this dismissal to be reported in its 2017 financial statements.

F-26

Pillar Marketing Group:

On June 17, 2016 Pillar Marketing sent a demand for arbitration stemming from an alleged breach of contract from an agreement, dated April 23, 2015, for $45,000 of services. The company has not recorded a loss or contingency for this amount as it does not feel the balance is owed, and is unable to predict the outcome of the demand. On July 18, 2016, Pillar Marketing Group filed a demand for arbitration with AAA. No arbitration is currently scheduled.

LG Capital Funding, LLC

On June 14, 2016, LG Capital Funding, LLC sued Ubiquity, Inc. claiming that Ubiquity owes LG Capital $238,508.71 under the provisions of the Convertible Promissory Note (due on April 17, 2016), due to default of filing requirements of Section 8 of the note. Ubiquity originally received $100,000 on the disputed note, and is unable to predict the outcome of the suit. The Company has accrued all amounts due under the convertible note agreement.

Justin Sundquist, Henry Kingi, and Eagle Flights Stunts, Inc.

On August 9, 2016, the above filed a fraud and securities fraud action against Ubiquity. Plaintiffs were looking for rescission of their purchases of Ubiquity common stock, and payment to them by Ubiquity of the consideration given for such stock, plus interest at the legal rate. On October 3, 2016, the case filed by Justin Sundquist and Henry Kingi had been dismissed voluntarily, without prejudice. On October 14, 2016 the case filed by Justin Sundquist and Henry Kingi was moved to the San Diego United States District court in accordance with the low number rule. In January 2017, the court granted The Company’s motion to compel arbitration in Delaware. Mr. Kingi and Mr. Sundquist have filed for Arbitration with the American Arbitration Association claiming damages of approximately $1.8 million dollars representing approximately 1,444,000 common shares purchased and issued between May 2013 and November 2014. There are no future hearings on calendar, and the Company is unable to predict the future outcome.

Bryan Harpole

On May 25, 2016, Bryan Harpole filed a lawsuit claiming a breach of the Employment Agreement, dated January 1, 2012 and related Amendment, dated July 25, 2013. His unconfirmed claims include the following payments: unpaid salary (including statutory penalties according to proof pursuant to Labor Code 201 et seq amount undetermined), unpaid commissions ($4,268.25), unpaid bonuses ($55,548.30), unpaid vacation ($12,694) and sick ($1,731) days, medical insurance premiums ($5,100) and failure to deliver common stock (options) ($25,500) in accordance with the agreement Mr. Harpole would have been required to make full payment of the options as defined in the stock option agreement and Company’s demand after 30 days of his employment ceasing in the amount of $551,000.00 for the entirety of his 225,000 options or any portion thereof. As of the date of this filing no payment or payment arrangement has been made by Mr. Harpole, thus rendering the options invalid. Total damages include, but not limited to, $104,841.55 of salary amounts including statutory penalties plus possible court costs. He also sued for workers’ compensation benefits but was denied by the insurance carrier as being a false claim on July 25, 2016. Following rounds of demurrers, Bryan Harpole filed a Second Amended Complaint on March 13, 2017, removing the claims asserted against the officers and directors of the Company. This Complaint asserts a single cause of action for Breach of Contract against Ubiquity, Inc. This complaint claims the same damages as previously filed.

Iconic Holdings, LLC

On June 3, 2016, Iconic Holdings, LLC sued the Company, claiming that Ubiquity owes Iconic $400,000 under the provisions of the Convertible Promissory Note due to default of filing requirements of Section 2.00(e)(vi) of the Note. Ubiquity originally received $97,500 on the disputed note. The Company is currently in settlement discussions, and has accrued all amounts due under the convertible note agreement.

F-27

American States Insurance Company

One June 9, 2016 America States Insurance Company filed a breach of contract against Ubiquity for a total potential amount owed of $44,904.73. The company contends it cancelled the agreements and is unable to determine the outcome of the breach of contract claim.

De Lage Landen Financial Services, Inc.

On January 29, 2016, De Lage Landen claimed the Company breached its leasing agreement dated on or about May 17, 2011 and claim breached damages of $29,396.37. The Company has not accounted for an accrual for this claim as it us unable to determine the outcome at this time. The Company contends it does not owe the balance as the lease was terminated.

William Alessi

William Alessi alleges that Ubiquity hired him to work as a consultant on May 21, 2015 and agreed to pay him 1,160,000 shares of common stock for the service period from May 21, 2015 to May 20, 2016. Alessi contends that the stock was trading at $.36 per share and was worth $417,600. The Company contends it issued such shares in September 2015 in accordance with the contract and does not owe anything further.

F-28

NOTE 9 - SUBSEQUENT EVENTS

Convertible Note

On October 21, 2016, the Company entered into an agreement with a debt holder in which $5,466 in accounts payable was converted to a convertible promissory note in the same amount. Under the terms of the agreement, the note was immediately convertible at $0.001 per share, incurred interest at 10% and due upon demand. The Company accounted for the transaction in the quarter ended December 31, 2016 when a conversion was requested. The Company determined that a beneficial conversion feature of $5,466 will be recorded and immediately expensed as interest expense at the time of the original agreement. Assignees of the holder converted $5,466 of the balance into 5,466,000 shares of common stock, on October 21, 2016.

Sales of Common Stock

Subsequent to ~~March~~June 3130, 2016, the Company issued approximately 5330,~~768~~107,~~790~~000 shares of common stock for cash proceeds of $31,~~867~~311,~~788~~658. Each sale was made pursuant to a Securities Purchase Agreement the Company has used for previous sales of its common stock and containing terms, conditions, representations, and warranties typically found in similar transactions. Each sale was an exempt private placement with offers and sales made only to “accredited investors” without the use of public ~~advertising~~ advertising and without registration under the Securities Act in reliance on the exemptions provided by Section 4(a)(2) of the ~~Securities~~ Securities Act and/or Regulation D promulgated thereunder and in reliance on similar exemptions under applicable state laws.

Common stock issued for services

Subsequent to ~~March~~June 3130, 2016, the Company issued approximately 153,~~409~~159,712 shares of common stock for services with a value of $670,289.

Licensing

On ~~May~~April 524, ~~2016 (the “Effective Date”) Ubiquity~~2017, ~~Inc. (~~the “Company”) entered into aan ~~Non-Exclusive License~~exclusive ~~Agreement~~license ~~(the~~agreement ~~“License Agreement”)~~ with ~~Dash~~ADGUILD ~~Radio~~Japan, ~~Inc~~L.T.D. ~~(“Dash~~until ~~Radio”)~~December 31, a2021 ~~Delaware~~primarily ~~corporation.~~licensing ~~Pursuant~~its toSprocket, ~~the~~Immersive, ~~terms~~and ofLifestyle ~~the~~Patents ~~License~~in ~~Agreement,~~a ~~the~~predetermined ~~Company~~territory. ~~agreed~~The toLicense ~~grant~~has toa ~~Dash Radio worldwide~~ non-~~exclusive~~refundable entry ~~license~~fee toin ~~use~~the ~~its~~amount ~~patents~~of ~~and~~$3,000,000 ~~trademarks~~(THREE ofMILLION ~~the~~DOLLARS) ~~Sprocket~~to ~~technology.~~be Aspaid ~~consideration~~out ~~for~~over the ~~granting~~term of the ~~non-exclusive~~agreement. ~~license, Dash~~The ~~Radio~~Company ~~shall~~will also ~~pay~~receive royalties toof ~~the Company equal to (1)~~ 5% of the gross sales of ~~the~~all ~~Dash~~licensing ~~Radio~~related ~~App,~~revenue ~~(2)~~with anminimum ~~entry~~sales ~~fee~~requirements ~~equal to~~each ~~one~~year ~~hundred~~as follows, ~~thousand dollars (~~$~~100~~575,000). Infor ~~addition~~2017, ~~Dash~~$1,250,000 ~~Radio~~for ~~shall~~2018, ~~maintain~~$1,500,000 afor ~~minimum~~2019, ~~sales~~$1,750,000 ~~volume~~for of2020, ~~the~~and ~~licensed~~$2,250,000 ~~goods as~~for ~~described below~~2021. IfThrough the ~~Dash~~date ~~Radio~~of ~~fails~~this tofiling ~~reach~~ the ~~minimum~~Company ~~sales~~has ~~volume~~not atreceived any ~~time, then a royalty on the difference between the minimum sales and the actual sales shall be due and payable 10 days after the close~~ of the ~~calendar~~non-refundable ~~year in which the sales took place~~fee.

On April 24, 2017, the Company entered into an exclusive license agreement with ADGUILD Japan, L.T.D. until December 31, 2021 primarily licensing its Sprocket, Immersive, and Lifestyle Patents in a predetermined territory. The License has a non-refundable entry fee in the amount of $3,000,000.00 (THREE MILLION DOLLARS) to be paid out over the term of the agreement. The Company will also receive royalties of 5% of the gross sales of all licensing related revenue with minimum sales requirements each year as follows, $575,000 for 2017, $1,250,000 for 2018, $1,500,000 for 2019, $1,750,000 for 2020, and $2,250,000 for 2021.

Board of Director Activity

On February 1, 2016, the Board of Directors (the “Board”) of Ubiquity, Inc. (the “Company”), appointed Greg Jones, 62, as a new member of the Board. He has held key positions in the development of finance, technology and marketing companies in Asia, U.S., and Australia. Since 2013, Mr. Jones has served as Principal of Kee Capital Group, where he has assisted in raising finances for various infrastructure projects and developed markets in consumer products leasing for SME’s in Asia and developed a leasing organization for major items including aviation products, locomotives and rolling stock. Since 2012, Mr. Jones has also served as the Chairman of Strategic Marketing Services International Limited, located in Hong Kong, where he designed for brand development and marketing of various products for private companies and agencies. He has also currently serves as a Director of the Australian College of Arts International Pty Limited, Ausmusic Limited, and Wallace Wine Company.

F-29

On June 1, 2016, Webb Blessley resigned as a member of the Board of Directors (the “Board”) of Ubiquity, Inc. (the “Company”). Mr. Blessley’s resignation was not related to any disagreement with the Company on any matter relating to the Company’s operations, policies and practices. The Company accepted Mr. Blessley’s resignation and expressed appreciation for the services he performed as a director. Mr. Blessley also resigned from his duties as Secretary and Treasurer.

June 8, 2016 - As a part of the corporate restructuring plan of Ubiquity, Inc. (the “Company”), on June 8, 2016, Nick Mitsakos, who was presently Co-Chairman was appointed as Interim Chief Executive Officer and will remain as Co-Chairman of the Company. Mr. Carmichael who has served the dual roles of CEO and Creative Architect relinquished the role of CEO and remained Co-Chairman and continue to serve as Chief Creative Architect of the Company. Mr. Carmichael’s relinquishing of his role as CEO was not related to any disagreement with the Company on any matter relating to the Company’s operations, policies and practices. The Company expressed appreciation for the services Mr. Carmichael performed as a Chief Executive Officer.

June 10, 2016 - As a part of the corporate restructuring plan of Ubiquity, Inc. (the “Company”), on June 10, 2016, Greg Jones relinquished his role as a board member of Ubiquity, Inc. and rescinded all contracts between himself and Ubiquity, Inc. Mr. Jones departure was not related to any disagreement with the Company on any matter relating to the Company’s operations, policies and practices. The Company expressed appreciation for the services Mr. Jones performed as a Board Member.

June 20, 2016 - As a part of the corporate restructuring and growth plan of Ubiquity, Inc. (the “Company”), on June 20, 2016, Jonathan Kalbfield signed his contract to become Ubiquity, Inc’s. Chief Technology Officer.

August 12, 2016 - Nicholas Mitsakos resigned as the Interim Chief Executive Officer and as the Co-Chairman and member of the Board of Directors of Ubiquity, Inc. effective August 12, 2016. Mr. Mitsakos’ resignation was not related to any disagreement with the Company on any matter relating to the Company’s operations, policies and practices. While serving on the board of directors and as CEO of the company, Mitsakos failed to advise the board of his SEC investigation into a company owned and solely controlled by Mitsakos known as Matrix Capital. Matrix Capital has never had any affiliation with Ubiquity, its Officers, Directors, or Shareholders whatsoever.

On August 15, 2016, the Board of Directors (the “Board”) of Ubiquity, Inc. (the “Company”), appointed Bola Ajere, 68, as a new member of the Board. Bola Ajere is the President & CEO and founder of the AMC Consulting Group, a management and technology consulting company based in Los Angeles, California, specializing in Information Technology, Corporate Governance, Risk Management and Regulatory Compliance Programs. He is also the CEO and founder of the Sierra Madre Group, an Intellectual Property Management and manufacturing company. Recently, he founded the AMC Online Media Services Company, a professional online interactive media company based in Los Angeles, California.

On April 20, 2017, the Board of Directors (the “Board”) of Ubiquity, Inc. (the “Company”) voted to appoint Robert B. Fernander to fill a vacancy on the Company’s Board. The Company entered into a Board of Directors Retention Agreement (the “Retention Agreement”) with Mr. Fernander, pursuant to which the Company agreed to grant 250,000 shares of the Company’s Common Stock for the first year of service under the Retention Agreement, and an additional 250,000 shares of the Company’s Common Stock for each year of service as a director thereafter.

Mr. Fernander has not been appointed to any committees of the Board at this time; however, the Company expects that he will be appointed to one or more Board committees in the future. There are no arrangements or understandings between Mr. Fernander and any other persons pursuant to which Mr. Fernander was appointed a director of the Company.

Potential/Actual Board Resignations

Bola Ajere has resigned from his respective position as an independent board member from the Ubiquity Inc. He will consider rejoining the board if Ubiquity Inc. is able to obtain a D & O insurance with a coverage of $5 million.

F-3028

On May 25, 2017, Mr. Robert Fernander expressed his intentions to resign from the Board of Directors, should Ubiquity be unable to to secure adequate levels of directors and officers Insurance.

Interim CEO Appointment

On June 20, 2017, at the request of the majority of the Company’s shareholders current chairman Christopher Carmichael has agreed to become the Company’s Interim Chief Executive Officer and will remain as Chairman of the Company. Mr. Carmichael who has previously served the dual roles of CEO and Creative Architect will retain the role of interim CEO, Chief Creative Architect, and Chairman until the shareholders meeting.

Suspension of Trading

On March 20, 2017, the Securities and Exchange Commission (“SEC”) announced the temporary suspension of trading in the securities of Ubiquity, Inc., a Nevada corporation (the “Company or “Ubiquity”) (OTC Link: UBIQ), pursuant to Section 12(k) of the Securities Exchange Act of 1934 (“Exchange Act”). The trading suspension commenced at 9:30 a.m. EDT on March 20, 2017, and terminated at 11:59 p.m. EDT on March 31, 2017. The trading suspension may be extended by the SEC for a period of up to thirty (30) calendar days.

The SEC stated the following in its release (Release No. 80275)

The Commission temporarily suspended trading in the securities of Ubiquity due to a lack of current and accurate information about the company because Ubiquity is delinquent in its requisite periodic filings with the Commission pursuant to Section 13(a) of the Exchange Act and Rules 13a-1 and 13a-13 thereunder. This order was entered pursuant to Section 12(k) of the Exchange Act.

Periodic Reports that Have Not Been Filed

Ubiquity has not filed its Annual Report on Form 10K as of, and for the annual period\ ending D December 31, 2016, respectively; or ~~any of~~its ~~the~~ quarterly ~~reports~~report on Form 10Q for the period ended September 30, 2016 required under the Exchange Act for 2016 and the 10Q for the period ended March 31, 2017 for 2017.

Administrative Hearing that May Result in Revocation of Registration Under the Exchange Act

Additionally, on March 20, 2017, Ubiquity was named as a respondent in an Order Instituting Administrative Proceedings and Notice of Hearing Pursuant to Section 12(j) of the Exchange Act, File No. 3-17884 (the “Order”). The SEC stated in the Order,

In view of the allegations made by the Division of Enforcement, the Commission deems it necessary and appropriate for the protection of investors that public administrative proceedings be instituted to determine [among other things]: … B. Whether it is necessary and appropriate for the protection of investors to suspend for a period not exceeding twelve months, or revoke the registration, of each class of securities registered pursuant to Section 12 of the Exchange Act of the Respondent, and any successor under Exchange Act Rules 12b-2 or 12g-3, regardless of corporate name.

A related Administrative Procedures Ruling was issued on March 21 and provides that the administrative hearing will be held on April 17, 2017. A pre-hearing conference will be scheduled as required under this Administrative Procedures Ruling.

If Ubiquity’s registration under Section 12(j) of the Exchange Act is revoked, then Ubiquity’s periodic reporting obligations under the Exchange Act will terminate and the trading of Ubiquity’s securities will cease unless Ubiquity is able to otherwise register its securities.

F-3129

The Company is assessing its best course of action under the current circumstances to preserve the value of the Company for its shareholders, including participation in the administrative hearing. There can be no assurance that Company will be able to prevail at the administrative hearing or that the registration of each class of its securities registered pursuant to Section 12 of the Exchange Act will not be revoked.

Suspension of Trading and Pending Administrative Hearing.

As disclosed on March 20, 2017 in the Form 8-K filed by Ubiquity, Inc., a Nevada corporation (the “Company” or “Ubiquity”) (OTC Link: UBIQ), on March 20, 2017, the Securities and Exchange Commission (“SEC”) announced the temporary suspension of trading in the securities of the Company pursuant to Section 12(k) of the Securities Exchange Act of 1934 (“Exchange Act”). The trading suspension commenced at 9:30 a.m. EDT on March 20, 2017, and would terminate at 11:59 p.m. EDT on March 31, 2017. The trading suspension may be extended by the SEC for a period of up to 30 calendar days. As stated in its release, the SEC temporarily suspended trading in the securities of Ubiquity due to a lack of current and accurate information about the company.

The Company also disclosed that it was named as a respondent in an Order Instituting Administrative Proceedings (the OIP”) and Notice of Hearing Pursuant to Section 12(j) of the Exchange Act, File No. 3-17884 (the “Hearing”). The purpose of the Hearing before an Administrative Law Judge is to determine whether it is necessary and appropriate for the protection of investors to suspend for a period not exceeding twelve months or revoke the registration, of each class of securities of the Company registered pursuant to Section 12 of the Exchange Act. The ~~hearing~~Hearing was originally scheduled for April 17, 2017~~, but the new motion for summary disposition and the SEC’s reply will be due July 10 and July 17, 2017 respectively~~.

On April 7, 2017, the Company, which has been delinquent in its periodic filings following its report for the quarter ended September 30, 2015, filed its Answer to the OIP and advised the SEC and the Administrative Law Judge that it plans to become current by June 30, 2017. On April 11, 2017, the Administrative Law Judge vacated the April 17, 2017 hearing date and issued a scheduling order for the SEC’s intended motion for summary disposition, pursuant to 17 C.F.R. § 201.250(b). The SEC served the Company on June 15, 2017. The Company’s opposition to the SEC’s motion and the SEC’s reply was due on July 10, 2017, and July 17, 2017, respectively. As of July 25, 2017, the SEC and Ubiquity, Inc., have now jointly moved for a stay pursuant to 17 C.F.R. § 201.161(c)(2), stating that Ubiquity has submitted a signed settlement offer, which provides the full relief that the Division seeks in this proceeding and which the Division intends to recommend favorably to the Commission. Accordingly, the proceeding will be stayed, contingent upon compliance with 17 C.F.R. § 201.161(c)(2).

Through its counsel, the Company has been in contact with the SEC regarding the upcoming hearing. In these communications, the Company has informed the SEC of its plan to get current on outstanding Section 12 filings and become fully compliant as soon as is reasonably practicable.

The Restructuring Plan

In addition, the Company is currently indebted in the amount of approximately $3.1 million to certain hedge funds and other investors holding convertible debt securities and warrants of the Company. Substantially all of these obligations are currently in default, either by reason of non-payment or alleged breaches of covenants contained in the various investment agreements.

Since 2015, the Company has been named as a defendant in 16 lawsuits filed by various third parties, primarily consisting of holders of its debt securities, alleging damages in excess of $3.0 million. In addition, due in part to its prior lack of funds to defend certain all claims, in some cases, default judgments aggregating approximately $8.0 million were entered against the Company. The Company has recently retained or is in the process of retaining litigation counsel for all such matters to the extent they are not resolved in the near future. Litigation counsel is in the process of evaluating the Company’s positions in such matters, including the possibility of seeking to vacate the default judgments.

Although the Company believes that under its proposed Restructuring Plan set forth below (the “Restructuring Plan”), most, if not all, of the litigation relating to investors who provided debt or equity financing to the Company can be settled on commercially reasonable terms, there can be no assurance that the Company will be able to settle any of such claims or vacate any default judgments.

As indicated in our March 24, 2017 Form 8-K, Ubiquity was unable to file its Annual Reports on Form 10-K as of, and for the annual periods ending December 31, 2015 and December 31, 2016 or the quarterly reports on Form 10-Q required under the Exchange Act during 2016, for several reasons, including inability to obtain requisite financial information from a Non-U.S. entity. We recently were able to obtain such financial information and commenced all procedures necessary to enable us to prepare such financial statements, including our unaudited financial statements for the three months ended March 31, 2017.

F-3230

The Company intends to undertake a Restructuring Plan described in order to (a) ultimately achieve compliance with its reporting obligation under the Exchange Act, (b) settle all, if not substantially all, of its outstanding litigation, and (c) implement its business plan to commercialize its patent portfolio and provide software as a service (SaaS), mobility as a service (MaaS), virtual and augmented reality products and services.

Such Restructuring Plan contemplates the following actions to be taken by the Company:

Compliance with Exchange Act Reporting Requirements.

The Company is currently working with its securities counsel and its independent auditors to complete and file with the SEC as soon as reasonably practicable, its past due periodic SEC required filings.

In the event that the Company’s registration under Section 12 of the Exchange Act is revoked, or if the Company ultimately elects to voluntarily delist its securities under the Exchange Act, the Company will nevertheless undertake to complete as soon as reasonably practicable its audited and unaudited financial statements for the past due fiscal years and interim periods. The Company will then seek to relist its securities under Section 12 of the Exchange Act, by filing a registration statement under either the Securities Act of 1933, as amended, or the Exchange Act.

However, if the Company’s registration under Section 12 of the Exchange Act is revoked, or if the Company ultimately elects to voluntarily delist its securities under the Exchange Act, even if we comply with our commitments set forth above and in our Restructuring Plan, there can be no assurance that the Company’s will ever be able to relist its securities for trading under Section 12 of the Exchange Act. As of July 25, 2017, the SEC and Ubiquity, Inc., have now jointly moved for a stay pursuant to 17 C.F.R. § 201.161(c)(2), stating that Ubiquity has submitted a signed settlement offer, which provides the full relief that the Division seeks in this proceeding and which the Division intends to recommend favorably to the Commission. Accordingly, the proceeding will be stayed, contingent upon compliance with 17 C.F.R. § 201.161(c)(2).

Equity Financing

Under our proposed Restructuring Plan, the Company will undertake to obtain commitments from strategic investors for a private placement equity financing of between $5.0 million and $10.0 million. In such connection, the management of the Company has sent proposed subscription documents to prospective investors, under which such investors would subscribe to purchase Common Stock at $0.25 per share (subject to certain “make-whole” share adjustments provided therein). All funds provided with subscriptions would be placed into a special escrow account acceptable to such investors, and shall be released to the Company only upon consummation of the Restructuring Plan described herein, including the filing of all SEC Reports and (if applicable) relisting of the Company securities under Section 12 of the Exchange Act. In addition, such subscription agreement provides that each subscribing investor will have the option, exercisable within ten days of receipt of either (a) the Company’s 2016 Form 10-K Annual Report and the Form 10-Q Quarterly Report for the three months ended March 31, 2017, or (b) a registration statement covering Company securities declared effective by the SEC, to rescind his or its investment in Company securities.

There can be no assurance that the Company will be able to obtain subscriptions for the contemplated minimum $5,000,000 of equity financing on the above contemplated terms, if at all.

Settlements with Creditors.

Subject to establishment of an escrow account with a minimum of $5,000,000, the Company will then seek to negotiate settlements with its creditors which would include payment or restructuring of the terms of convertible notes currently in default. There can be no assurance that the Company will be able to effect such settlements on terms acceptable to the Company, if at all.

F-3331

Reverse Stock Split.

Simultaneous with the filing of the SEC Reports under the Exchange Act or in connection with any subsequent registration statement filed with the SEC, the board of directors of the Company is considering filing an amendment to the Articles of Incorporation of the Company to affect a 1:16 to 1:20 reverse stock split of its 800,000,000 authorized shares of Common Stock, and 290,760,132 issued and outstanding shares of Common Stock. Upon conversion of outstanding convertible notes and warrants approximately an additional 60,000,000 shares of Common Stock are also subject to issuance.

If such reverse stock split is implemented, the Company would have authorized 53,333,333 shares of Common Stock and 10,000,000 shares of Preferred Stock authorized under its restated Articles of Incorporation, and approximately 19,384,000 shares of Common Stock and 500 shares of preferred stock issued and outstanding. Each of the 500 shares of such outstanding preferred stock carries with it 1,000,000 votes at any regular or special stockholders meeting or in connection with any consents required by stockholders. All 500 shares of such preferred Stock are owned by Christopher Carmichael, Board of Director and Connie Jordan, the Executive Vice President of the Company.

Stockholders Meeting.

At such time as the Company has completed its audited financial statements for the fiscal years ended December 31, 2015 and December 31, 2016 and its unaudited interim financial statements, the Company will call a stockholders meeting to (a) elect a board of directors, which will include, in addition to the current board members, three independent directors; and (b) ratify prior transactions, including the Restructuring Plan. In any event, whether or not the Restructuring Plan has been accomplished, the Company will nonetheless hold its annual stockholders meeting on or about September 5, 2017, or as soon thereafter as is practicable.

There can be no assurance that all or any material portion of the Company’s proposed Restructuring Plan will be accomplished if at all. The failure to achieve all or substantially all of the provisions of such Restructuring Plan would have a material and adverse effect on the Company and put its ability to continue its business operations into substantial doubt; as a result of which current investors in the Company could lose their entire investment.

Suspension of Trading and Pending Administrative Hearing.

As disclosed on March 20, 2017 in the Form 8-K filed by Ubiquity, Inc., a Nevada corporation (the “Company” or “Ubiquity”) (OTC Link: UBIQ), on March 20, 2017, the Securities and Exchange Commission (“SEC”) announced the temporary suspension of trading in the securities of the Company pursuant to Section 12(k) of the Securities Exchange Act of 1934 (“Exchange Act”). As stated in its release, the SEC temporarily suspended trading in the securities of Ubiquity due to a lack of current and accurate information about the Company.

The Company also disclosed that it was named as a respondent in an Order Instituting Administrative Proceedings (the OIP”) and Notice of Hearing Pursuant to Section 12(j) of the Exchange Act, File No. 3-17884 (the “Hearing”). The purpose of the Hearing before an Administrative Law Judge is to determine whether it is necessary and appropriate for the protection of investors to suspend for a period not exceeding twelve months or revoke the registration, of each class of securities of the Company registered pursuant to Section 12 of the Exchange Act. The Hearing was originally scheduled for April 17, 2017.

On April 7, 2017, the Company, which has been delinquent in its periodic filings following its report for the quarter ended September 30, 2015, filed its Answer to the OIP and advised the SEC and the Administrative Law Judge that it plans to become current by June 30, 2017. On April 11, 2017, the Administrative Law Judge vacated the April 17, 2017 hearing date and issued a scheduling order for the SEC’s intended motion for summary disposition, pursuant to 17 C.F.R. § 201.250(b). The SEC served the Company on June 15, 2017. The Company’s opposition to the SEC’s motion and the SEC’s reply ~~will~~was be due on July 10, 2017, and July 17, 2017, respectively. As of July 25, 2017, the SEC and Ubiquity, Inc., have now jointly moved for a stay pursuant to 17 C.F.R. § 201.161(c)(2), stating that Ubiquity has submitted a signed settlement offer, which provides the full relief that the Division seeks in this proceeding and which the Division intends to recommend favorably to the Commission. Accordingly, the proceeding will be stayed, contingent upon compliance with 17 C.F.R. § 201.161(c)(2).

Other

In accordance with ASC 855-10, the Company has analyzed its operations subsequent to ~~March~~June 3130, 2016 through the date these ~~consolidated~~condensed consolidated financial statements were issued and has determined that it does not have any material subsequent events to disclose other than the events described above.

F-3432

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

Cautionary Notice Regarding Forward Looking Statements

The information contained in Item 2 contains forward-looking statements within the meaning of Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended. Actual results may materially differ from those projected in the forward-looking statements as a result of certain risks and uncertainties set forth in this report. Although management believes that the assumptions made and expectations reflected in the forward-looking statements are reasonable, there is no assurance that the underlying assumptions will, in fact, prove to be correct or that actual results will not be different from expectations expressed in this report.

This filing contains a number of forward-looking statements which reflect management’s current views and expectations with respect to our business, strategies, products, future results and events, and financial performance. All statements made in this filing other than statements of historical fact, including statements addressing operating performance, events, or developments which management expects or anticipates will or may occur in the future, including statements related to distributor channels, volume growth, revenues, profitability, new products, adequacy of funds from operations, statements expressing general optimism about future operating results, and non-historical information, are forward looking statements. In particular, the words “believe,” “expect,” “intend,” “anticipate,” “estimate,” “may,” variations of such words, and similar expressions identify forward-looking statements, but are not the exclusive means of identifying such statements, and their absence does not mean that the statement is not forward-looking. These forward-looking statements are subject to certain risks and uncertainties, including those discussed below. Our actual results, performance or achievements could differ materially from historical results as well as those expressed in, anticipated, or implied by these forward-looking statements. We do not undertake any obligation to revise these forward-looking statements to reflect any future events or circumstances.

Readers should not place undue reliance on these forward-looking statements, which are based on management’s current expectations and projections about future events, are not guarantees of future performance, are subject to risks, uncertainties and assumptions (including those described below), and apply only as of the date of this filing. Our actual results, performance or achievements could differ materially from the results expressed in, or implied by, these forward-looking statements. We undertake no obligation to publicly update or revise any forward-looking statements, whether as a result of new information, future events, or otherwise.

Overview

Ubiquity, Inc. (the “Company,” “Ubiquity,”, “We,” or “Us”), was incorporated in the State of Nevada on December 2, 2011. On March 5, 2013, we entered into an Agreement and Plan of Merger (the “Merger Agreement”) with Ubiquity Acquisition Corporation, a Nevada corporation and wholly-owned subsidiary of the Company (“Acquisition Sub”), and Ubiquity Broadcasting Corporation, a Delaware corporation (“Ubiquity-DE”).

The transaction was regarded as a reverse merger whereby Ubiquity-DE was considered to be the accounting acquirer as its management retained control of the Company after the Share Exchange.

Business

Ubiquity expects new markets to be created and existing markets to be disrupted by Virtual Reality (“VR”), Augmented Reality (“AR”) and Mixed Reality (“MR”) as used in the Sprocket platform. There are many examples of how (“VR”), (“AR”) and (“MR”) can reshape existing forms of entertainment and commerce - from buying a new home, interacting with a doctor, or watching a football game. As the technology advances, we believe that price points will decline, and an entire new marketplace of applications (both business and consumer) will enter the market. Ubiquity believes VR/AR has the potential to spawn a multibillion-dollar industry, and may possibly be as game changing as the advent of the PC. VR (which immerses the user in a virtual world) and AR (immerses the user which overlays digital information onto the physical world) is driving a trend towards the adoption of software and applications delivered via head-mounted-devices (HMDs) as a new computing form factor.

Recent Developments

On November 10, 2015, the Company issued a Press Release announcing that the U.S. Patent and Trademark Office (USPTO) issued three key patents covering the Company’s technology for video compression and enhancement and wireless communications for the medical industry. The four patents are:

● U.S. Patent No. 8,983,535 B2: covers Medical Scan Clip-on – a device that scans medical parameters and communications via a cell phone; the cell phone can communicate the parameters to remote locations and/or can analyze them. ● U.S. Patent No. 9,106,925 B2: covers WEAV Video Compression System – a compression system using super compression. ● U.S. Patent No. 8,929,434 B2: covers Video Enhancement Internet Media Experience in Converting High Definition Formats to Video Formats – an image or video from a cell phone is processed to expand the image in a way to display it on a high definition video screen. ● U.S. Patent No. 9,648,114: covers the Social Media Timeline

Board Member and Management

On February 1, 2016, the Board of Directors (the “Board”) of Ubiquity, Inc. appointed Greg Jones, 62, as a new member of the Board. He has held key positions in the development of finance, technology and marketing companies in Asia, U.S., and Australia. Since 2013, Mr. Jones has served as Principal of Kee Capital Group, where he has assisted in raising finances for various infrastructure projects and developed markets in consumer products leasing for SME’s in Asia and developed a leasing organization for major items including aviation products, locomotives and rolling stock. Since 2012, Mr. Jones has also served as the Chairman of Strategic Marketing Services International Limited, located in Hong Kong, where he designed for brand development and marketing of various products for private companies and agencies. He has also currently serves as a Director of the Australian College of Arts International Pty Limited, Ausmusic Limited, and Wallace Wine Company.

June 10, 2016 - As a part of the corporate restructuring plan of Ubiquity, Inc., on June 10, 2016, Greg Jones relinquished his role as a board member of Ubiquity, Inc. and rescinded all contracts between himself and Ubiquity, Inc. Mr. Jones departure was not related to any disagreement with the Company on any matter relating to the Company’s operations, policies and practices. The Company expressed appreciation for the services Mr. Jones performed as a Board Member.

On June 1, 2016, Webb Blessley resigned as a member of the B (the “Board”) of Ubiquity, Inc. Mr. Blessley’s resignation was not related to any disagreement with the Company on any matter relating to the Company’s operations, policies and practices. The Company accepted Mr. Blessley’s resignation and expressed appreciation for the services he performed as a director. Mr. Blessley also resigned from his duties as Secretary and Treasurer.

June 8, 2016 - As a part of the corporate restructuring plan of Ubiquity, Inc. on June 8, 2016, Nick Mitsakos, who was presently Co-Chairman was appointed as Interim Chief Executive Officer and remained as Co-Chairman of the Company. Mr. Carmichael who has served the dual roles of CEO and Creative Architect will relinquish the role of CEO and will remain Co-Chairman and will continue to serve as Chief Creative Architect of the Company. Mr. Carmichael’s relinquishing of his role as CEO was not related to any disagreement with the Company on any matter relating to the Company’s operations, policies and practices. The Company expressed appreciation for the services Mr. Carmichael performed as a Chief Executive Officer.

June 20, 2016 - As a part of the corporate restructuring and growth plan of Ubiquity, Inc. on June 20, 2016, Jonathan Kalbfield signed his contract to become Ubiquity, Inc’s. Chief Technology Officer.

On April 20, 2017, the Board of Ubiquity, Inc. voted to appoint Robert B. Fernander to fill a vacancy on the Company’s Board. The Company entered into a Board of Directors Retention Agreement (the “Retention Agreement”) with Mr. Fernander, pursuant to which the Company agreed to grant 250,000 shares of the Company’s Common Stock for the first year of service under the Retention Agreement, and an additional 250,000 shares of the Company’s Common Stock for each year of service as a director thereafter.

On August 15, 2016, the Board of Ubiquity, Inc. appointed Bola Ajere, 68, as a new member of the Board. Bola Ajere is the President & CEO and founder of the AMC Consulting Group, a management and technology consulting company based in Los Angeles, California, specializing in Information Technology, Corporate Governance, Risk Management and Regulatory Compliance Programs. He is also the CEO and founder of the Sierra Madre Group, an Intellectual Property Management and manufacturing company.

Potential/Actual Board Resignations

On May 25, 2017 Mr. Robert Fernander expressed his intentions to resign from the Board of Directors, should Ubiquity be unable to secure adequate levels of Directors and Officers Insurance.

Interim CEO Appointment

One June 20, 2017, at the request of the majority of the Company’s shareholders current chairman Christopher Carmichael has agreed to become the Company’s Interim Chief Executive Officer and will remain as Chairman of the Company. Mr. Carmichael who has previously served the dual roles of CEO and Creative Architect will retain the role of interim CEO, Chief Creative Architect, and Chairman until the shareholders meeting.

Judgment vacated and case dismissed

On July 10, 2017, the default judgment previously entered on October 28, 2016 in the matter entitled Gerald D.W. North v. Ubiquity, Inc., et al, Case Number 16 C 5698, in the United Stated District Court of the Northern District of Illinois, was vacated, and the case dismissed for lack of personal jurisdiction over the Company. The default judgment for $7.7 million was reflected on the Company’s financial statements and notes thereto for the periods through December 31, 2015, and the financial impact of the dismissal will be reflected on the Company’s quarterly report for the period ended September 30, 2017, and thereafter.

License Agreements

On May 5, 2016 (the “Effective Date”), Ubiquity, Inc. entered into a Non-Exclusive License Agreement (the “License Agreement”) with Dash Radio, Inc. (“Dash Radio”), a Delaware corporation. Pursuant to the terms of the License Agreement, the Company agreed to grant to Dash Radio worldwide non-exclusive license to use its patents and trademarks of the Sprocket technology. As consideration for the granting the non-exclusive license, Dash Radio shall pay royalties to the Company equal to (1) 5% of the gross sales of the Dash Radio App, (2) an entry fee equal to one hundred thousand dollars ($100,000). In addition, Dash Radio shall maintain a minimum sales volume of the licensed goods as described below. If Dash Radio fails to reach the minimum sales volume at any time, then a royalty on the difference between the minimum sales and the actual sales shall be due and payable 10 days after the close of the calendar year in which the sales took place. Dash Radio has failed to reach minimum sales requirements through June 12, 2017.

On April 24, 2017, the Company entered into an exclusive license agreement with ADGUILD Japan, L.T.D. until December 31, 2021 primarily licensing its Sprocket, Immersive, and Lifestyle Patents in a predetermined territory. The License has a non-refundable entry fee in the amount of $3,000,000~~.00~~ (THREE MILLION DOLLARS) to be paid out over the term of the agreement. The Company will ~~also~~ also receive royalties of 5% of the gross sales of all licensing related revenue with minimum sales requirements each year as follows, $575,000 for 2017, $1,250,000 for 2018, $1,500,000 for 2019, $1,750,000 for 2020, and $2,250,000 for 2021. Through the date of this filing the Company has not received any of the non-refundable fee.

Suspension of Trading

On March 20, 2017, the (“SEC”) announced the temporary suspension of trading in the securities of Ubiquity, Inc., (OTC Link: UBIQ), pursuant to Section 12(k) of the Securities Exchange Act of 1934 (“Exchange Act”). The trading suspension commenced at 9:30 a.m. EDT on March 20, 2017, and terminated at 11:59 p.m. EDT on March 31, 2017. The trading suspension may be extended by the SEC for a period of up to thirty (30) calendar days.

On April 7, 2017, the Company, which has been delinquent in its periodic filings following its report for the quarter ended September 30, 2015, filed its Answer to the OIP and advised the SEC and the Administrative Law Judge that it plans to become current by June 30, 2017. On April 11, 2017, the Administrative Law Judge vacated the April 17, 2017 hearing date and issued a scheduling order for the SEC’s intended motion for summary disposition, pursuant to 17 C.F.R. § 201.250(b). The SEC served the Company on June 15, 2017. The Company’s opposition to the SEC’s motion and the SEC’s reply ~~will~~was be due on July 10, 2017, and July 17, 2017, respectively. As of July 25, 2017, the SEC and Ubiquity, Inc., have now jointly moved for a stay pursuant to 17 C.F.R. § 201.161(c)(2), stating that Ubiquity has submitted a signed settlement offer, which provides the full relief that the Division seeks in this proceeding and which the Division intends to recommend favorably to the Commission. Accordingly, the proceeding will be stayed, contingent upon compliance with 17 C.F.R. § 201.161(c)(2).

The SEC stated the following in its release (Release No. 80275)

The Commission temporarily suspended trading in the securities of Ubiquity due to a lack of current and accurate information about the Company because Ubiquity is delinquent in its requisite periodic filings with the Commission pursuant to Section 13(a) of the Exchange Act and Rules 13a-1 and 13a-13 thereunder. This order was entered pursuant to Section 12(k) of the Exchange Act.

Periodic Reports that Have Not Been Filed

Ubiquity has not filed its Annual Report on Form 10K as of, and for the annual period ending December 31, 2016, respectively; or ~~any~~its ~~of the~~ quarterly ~~reports~~ report on Form 10Q for the period ended September 30, 2016 required under the Exchange Act for ~~fiscal~~ 2016 and the 10Q for the period ended March 31, 2017 for 2017.

The Company was previously not able to obtain the requisite financial information from a non-U.S entity that the Company consolidated in order to prepare its 2015 financial statements and other disclosures that are required to be included in these Exchange Act reports. As a result of this significant issue, the Company could not have confidence that such disclosures would be true and correct in all material respects, despite the Company’s diligent efforts to obtain such information from its non-U.S. entity.

Administrative Hearing that May Result in Revocation of Registration Under the Exchange Act

A related Administrative Procedures Ruling was issued on March 21 and provides that the administrative hearing was originally scheduled for April 17, 2017, but the new motion for summary disposition and the SEC’s reply will bewas due July 10 and July 17, 2017 respectively.

On April 7, 2017, the Company, which has been delinquent in its periodic filings following its report for the quarter ended September 30, 2015, filed its Answer to the OIP and advised the SEC and the Administrative Law Judge that it plans to become current by June 30, 2017. On April 11, 2017, the Administrative Law Judge vacated the April 17, 2017 hearing date and issued a scheduling order for the SEC’s intended motion for summary disposition, pursuant to 17 C.F.R. § 201.250(b). The SEC must file its motion by June 15, 2017. The Company’s opposition to the SEC’s motion and the SEC’s reply will be due on July 10, 2017, and July 17, 2017, respectively. As of July 25, 2017, the SEC and Ubiquity, Inc., have now jointly moved for a stay pursuant to 17 C.F.R. § 201.161(c)(2), stating that Ubiquity has submitted a signed settlement offer, which provides the full relief that the Division seeks in this proceeding and which the Division intends to recommend favorably to the Commission. Accordingly, the proceeding will be stayed, contingent upon compliance with 17 C.F.R. § 201.161(c)(2).

Appointment of New Transfer Agent

In March 2017, the Company terminated V Stock Transfer Company as its transfer agent and appointed Transfer Online as its transfer agent. Transfer Online provides free online access for stockholders to retrieve account information, share balance and history of transactions. Stockholders may contact Transfer Online at info@transferonline.com or by calling the Transfer Online help center at 503.227.2950, and asking for the Company’s dedicated account executive, Carolyn Hall.

The Restructuring Plan

As indicated in our March 24, 2017 Form 8-K, Ubiquity was unable to file its Annual Reports on Form 10-K as of, and for the annual periods ended December 31, 2015 and December 31, 2016 or the quarterly reports on Form 10-Q required under the Exchange Act during 2016, for several reasons including its inability to obtain requisite financial information from a Non-U.S. entity. We recently were able to obtain such financial information and have commenced all procedures necessary to enable us to prepare such financial statements, including our unaudited consolidated financial statements for the three months ended March 31, 2017.

Our Restructuring Plan consists of the following actions to be taken by the Company:

Compliance with Exchange Act Reporting Requirements.

The Company as soon as is reasonably practicable, its past due periodic SEC required filings.

In the event that the Company’s registration under Section 12 of the Exchange Act is revoked, or if the Company ultimately elects to voluntarily delist its securities under the Exchange Act, the Company will nevertheless undertake to complete its audited and unaudited financial statements for the past due fiscal years and interim periods. The Company will then seek to relist its securities under Section 12 of the Exchange Act, by filing a registration statement under either the Securities Act of 1933, as amended, or the Exchange Act.

Equity Financing

Under our proposed Restructuring Plan, the Company will undertake to obtain commitments from strategic investors for a private placement equity financing of between $5.0 million and $10.0 million. In such connection, the management of the Company has sent proposed subscription documents to prospective investors, under which such investors would subscribe to purchase Common Stock at $0.25 per share (subject to certain “make-whole” share adjustments provided therein). All funds provided with subscriptions would be placed into a special escrow account acceptable to such investors, and shall be released to the Company only upon consummation of the Restructuring Plan described herein, including the filing of all SEC Reports and (if applicable) relisting of the Company’s securities under Section 12 of the Exchange Act. In addition, such subscription agreement provides that each subscribing investor will have the option, exercisable within ten days of receipt of either (a) the Company’s 2016 Form 10-K Annual Report and the Form 10-Q Quarterly Report for the three months ended March 31, 2017, or (b) a registration statement covering Company securities declared effective by the SEC, to rescind his or its investment in the Company’s securities.

There can be no assurance that the Company will be able to obtain subscriptions for the contemplated minimum $5,000,000 of equity financing on the above contemplated terms, if at all.

Settlements with Creditors.

Stockholders Meeting.

At such time as the Company has completed its audited consolidated financial statements for the fiscal years ended December 31, 2015 and December 31, 2016 and its unaudited interim financial statements, the Company will call a stockholders meeting to (a) elect board of directors, which will include, in addition to the current board members, three independent directors; and (b) ratify prior transactions, including the Restructuring Plan. In any event, whether or not the Restructuring Plan has been accomplished, the Company will nonetheless hold its annual stockholders meeting on or about September 5, 2017, or as soon thereafter as is practicable.

There can be no assurance that all or any material portion of the Company’s proposed Restructuring Plan will be accomplished if at all. The failure to achieve all or substantially all of the provisions of such Restructuring Plan would have a material and adverse effect on the Company and put its ability to continue its business operations into substantial doubt; as a result of which, current investors in the Company could lose their entire investment.

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Other Arrangements

Ubiquity entered into a Mandate agreement with Strategic Capital Management, Ltd., (“SCM”) on February 3, 2016 (the “SCM Agreement”). The SCM Agreement provided, in part, for the following:

● SCM agreed to acquire certain Convertible Notes in the approximate outstanding balance of $3.5 Million and the notes were to be retired without conversion.

● Manage the commercialization of the Company’s Sprocket products and technology through Sprocket HK Limited and iWebGate dba Netlinkz (ASX:NET) and establish new royalty agreements in order that any revenue generated through the commercialization can be provided to Ubiquity under a royalty percentage.

● Among other things SCM was to provide capital raising, debt restructuring and specific corporate advisory services leading to the commercialization of the Company’s products and services offerings.

In connection with the SCM Agreement, SCM entered in to agreements to purchase convertible promissory notes issued to Ubiquity, Inc. from Vista Capital, First Fire Global, Blue Citi, JDF Capital and Call and Jensen. In connection with these purchases, SCM made small payments against the notes. These purchase agreements did not release the Company from its obligations under the notes, and the assignments of such notes to SCM was not effective until full payment of the note by SCM. Unfortunately, SCM did not complete its purchase of such promissory notes, defaulting on their agreements, and as a result Ubiquity was sued by certain noteholders for performance of its obligations to certain convertible note holders. Vista Capital and Firstfire Global sued the Company for the balance of the note for non-payment (see legal section).

Plan of Operations

The Company manages its business under one operating segment which is based on a number of its products and services offered. The Company has determined that its products, services, and platforms include Sprocket, Video Intelligence, and Digital Content Production. The Company expects the nature and location of its customers in the America’s, Canada, Europe, Japan and Asia Pacific including Australia. The Company is committed to bringing the best user experience to its customers through its innovative products and services. The Company’s business strategy leverages its unique ability to design and develop its own platform, software application, and services to provide its customers new products and solutions with superior ease-of-use, seamless integration, and innovative design.

Results of Operations

Comparison for the three months ended ~~March~~June 3130, 2016 and 2015

Net Revenue

Net revenues were $285,~~085~~850 for the three months ended ~~March~~June 3130, 2016 as compared to $420,~~569~~831 for the three months ended ~~March~~June 3130, 2015, an ~~increase~~a decrease of $2314,~~516~~981 or 28%. This decrease is primarily attributable to the Company having historically experienced inconsistent revenue streams. The decrease primarily relates to the inconsistent bookings of the Ubiquity Studios.

The increase primarily relates to the increased bookings of the Ubiquity Studios.

This inconsistency is related to the event driven nature of its historical revenue. Going forward, management anticipates earning revenue from its studio related services and sprocket technology by way of licensing revenue.

Total Cost of Sales

Cost of sales was $23,~~326~~297 for the three months ended ~~March~~June 3130, 2016 as compared to $~~6,854~~922 for the three months ended ~~March~~June 3130, 2015 a ~~decrease~~an increase of $42,~~528~~375 or 34358%. The ~~decrease~~increase is primarily attributable to a base level of fixed costs regardless of the ~~use~~amount of ~~contracted~~revenues generated. ~~labor~~These ~~versus~~fixed ~~carrying~~costs aincreased ~~full~~during ~~time~~Q2 2016 due to the increase in personnel and has since decrease due to the limited ~~production~~amount ~~staff~~of expenditures required in deriving the revenues recorded.

11Gross Profit

Gross ~~Profit~~profit ~~(Loss)~~was $2,553 for the three months ended June 30, 2016 as compared to gross profit of $19,909 for the three months ended June 30, 2015 a decrease of $17,356 or 780%. The decrease primarily relates to the decreased bookings of the Ubiquity Studios.

Gross profit (loss) was $25,759 for the three months ended March 31, 2016 as compared to gross profit (loss) of ($2,285) for the three months ended March 31, 2015 an increase of $23,474 or 1,127%. The increase primarily relates to the increased bookings of the Ubiquity Studios.9

Operating Expenses

Operating expense were $26,~~536~~976,~~987~~766 for the three months ended ~~March~~June 3130, 2016 as compared to $42,~~010~~883,~~690~~046 for the three months ended ~~March~~ ~~31,~~June 30, 2015 aan ~~decrease~~increase of $14,~~473~~093,~~703~~720or ~~or 63~~241%. For the three months ended ~~March~~June 3130, 2016, operating expense primarily consisted of stock-based compensation of $~~679~~5,~~862~~267,254 compared to $1,002,936 for the same period representing an increase of $4,264,318, which is dependent upon when we grant common stock and options for services and when the services are performed; ~~payroll expense of $592,236 which decreased from~~ the ~~prior~~remaining ~~like~~expenses ~~period~~were ~~due to a decrease~~consistent inwith ~~personnel and salaries for our management team; professional fees of $459,669 which decreased from~~ the prior ~~like period due to reduced costs incurred by us in connection with our recent public filings and legal costs in connection with recent lawsuits filed~~year.

Impairment Loss

During the three months ended June 30, 2015, the Company completed its impairment analysis of its intangible assets resulting in an impairment loss of $940,000.

Comparison for the six months ended June 30, 2016 and 2015

Net Revenue

Net revenues for the six months ended June 30, 2016 were $ 33,935 as compared to $25,400 for the six months ended June 30, 2015, an increase of $8,535 or 25%. This decrease is primarily attributable to the Company having historically experienced inconsistent revenue streams. The increase primarily relates to the increased bookings of the Ubiquity Studios.

Total Cost of Sales

Cost of sales was $5,623 for the six months ended June 30, 2016 as compared to $7,776 for the six months ended June 30, 2015 an increase of $10,688 or 28%. The decrease is primarily attributable to the use of contracted labor versus carrying a full time production staff.

Gross Profit

Gross profit was $17,624 for the six months ended June 30, 2016 as compared to gross profit of $17,624 for the six months ended June 30, 2015 an increase of $10,688 or 62%.

Operating Expenses

Operating expense were $9,513,753 for the six months ended June 30, 2016 as compared to $6,893,736 for the six months ended June 30, 2015 an increase of $2,620,017 or 138%. For the six months ended June 30, 2016, operating expense primarily consisted of stock-based compensation of $5,947,116 compared to $2,422,314 for the same period representing an increase of $3,449524,802, which is dependent upon when we grant common stock and options for services and when the services are performed; the remaining expenses were consistent with the prior year.

Impairment Loss

During the three months ended June 30, 2015, the Company completed its impairment analysis of its intangible assets resulting in an impairment loss of $940,000.

Liquidity and Capital Resources

Cash requirements for, but not limited to, working capital, capital expenditures, and debt repayments have been funded from cash balances on hand, sales of common stock, revolver borrowings including the use of credit cards, loans from officers, and notes payable.

At ~~March~~June 3130, 2016, Ubiquity had cash and cash equivalents of $4533,~~050~~467 as compared to $193,839 as of December 31, 2015, representing a decrease of $~~148~~160,~~789~~372.

The cash flow used in operating activities decreased to $13,~~379~~061,~~791~~108 for the ~~three~~six months ended ~~March~~June 3130, 2016 compared to $23,~~012~~133,~~987~~ 782 for the ~~three~~six months ended ~~March~~June 3130, 2015. Our net loss and the change in fair market value of our derivative liabilities during the ~~three~~six months ended ~~March~~June 3130, ~~2015 and~~ 2016 had the biggest impact on our cash used in operating activities as to date we have not generated sufficient revenues to cover our operating expenditures.

The cash flow ~~used~~provided inby investing activities ~~decreased~~increased to $53,870 net cash used of ~~$103,830~~ for the ~~three~~six months ended ~~March~~June 3130, 2016, as compared to net cash used of $~~136~~199,~~417~~162 for the ~~three~~six months ended ~~March~~June 3130, 2015. WeDuring ~~continue~~2015, towe ~~expend~~were ~~monies~~still indeveloping ~~connection~~our ~~with~~Sprocket ~~the~~platform in which higher development ofcosts ~~our~~were ~~intangible~~incurred. ~~assets~~The ondifference anprimarily asrelates ~~needed~~to ~~basis~~the $150,000 received from a settlement with the Company’s media properties.

The cash flow provided by financing activities decreased to $12,~~379~~846,~~343~~866 net cash provided of for the ~~three~~six months ended ~~March~~June 3130, 2016, as compared to net cash provided of $23,~~094~~419,~~941~~838 for the ~~three~~six months ended ~~March~~June 3130, 2015. Due to the loss from operations, we continue to raise capital through the sale of our common stock and issuance of notes payable in order to fund operations. Capital is raised on an as needed basis.

Going Concern

The accompanying condensed consolidated financial statements have been prepared assuming that the Company will continue as a going concern. As shown in the accompanying condensed consolidated financial statements, the Company has negative working capital, has incurred continuing operating losses ~~since inception~~, and has not yet produced significant continuing revenues from operations. These factors raise substantial doubt about the Company’s ability to continue as a going concern.

The condensed consolidated financial statements do not include any adjustments relating to the recoverability and classification of recorded assets, or the amounts and classification of liabilities that might be necessary in the event that the Company cannot continue as a going concern. Management anticipates that it will be able to raise additional working capital through the issuance of stock and through additional loans from investors.

The ability of the Company to continue as a going concern is dependent upon the Company’s ability to attain a satisfactory level of profitability and obtain suitable and adequate financing. There can be no assurance that management’s plan will be successful.

Recent Accounting Pronouncements

The Company does not expect the adoption of recently issued accounting pronouncements to have a significant impact on the Company’s results of operations, financial position or cash flows.

Critical Accounting Policies

Our significant accounting policies are presented in our notes to financial statements for the period ended ~~March~~June 3130, 2016 and fiscal year ended December 31, 2015, which are contained in the Company’s 2015 Annual Report on Form 10-K. The significant accounting policies that are most critical and aid in fully understanding and evaluating the reported financial results include the following:

The Company prepares its financial statements in conformity with GAAP. These principles require management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period. Management believes that these estimates are reasonable and have been discussed with our board of directors; however, actual results could differ from those estimates.

We issue restricted stock to consultants for various services. Cost for these transactions are measured at the fair value of the consideration received or the fair value of the equity instruments issued, whichever is more reliably measurable. The value of the common stock is measured at the earlier of (i) the date at which a firm commitment for performance by the counterparty to earn the equity instruments is reached or (ii) the date at which the counterparty’s performance is complete.

Off-Balance Sheet Arrangements

We have no off-balance sheet arrangements.

Item 3. Quantitative and Qualitative Disclosures About Market Risk.

We are a Smaller Reporting Company and are not required to provide the information under this item.

Item 4. Controls and Procedures.

As required by Rule 13a-15 or Rule 15d-15(b) of the Securities Exchange Act of 1934, as amended (the “Exchange Act”), our management, including our principal executive officer and principal accounting officer carried out an evaluation of the effectiveness of the design and operation of our disclosure controls and procedures as of the end of the period covered by this report. Based on the foregoing evaluation, we have concluded that our disclosure controls and procedures were not effective and that they do not allow for information required to be disclosed by the Company in the reports that it files or submits under the Exchange Act is recorded, processed, summarized and reported, within the time periods specified in the Securities and Exchange Commission (“SEC”) rules and forms. Disclosure controls and procedures include, without limitation, controls and procedures designed to ensure that information required to be disclosed by the us in the reports that we file or submit under the Exchange Act is accumulated and communicated to the Company’s management, including its Chief Executive and Principal Accounting & Financial Officers as appropriate to allow timely decisions regarding required disclosure.

Disclosure of controls and procedures.

The material weaknesses relate to the following:

1.	We do not have written documentation of our internal control policies and procedures. Written documentation of key internal controls over financial reporting is a requirement of Section 404 of the Sarbanes-Oxley Act which is applicable to us. Management evaluated the impact of our failure to have written documentation of our internal controls and procedures on our assessment of our disclosure controls and procedures and has concluded that the control deficiency that resulted represented a material weakness.

2.	We do not have sufficient segregation of duties within accounting functions, which is a basic internal control. Due to our size and nature, segregation of all conflicting duties may not always be possible and may not be economically feasible. However, to the extent possible, the initiation of transactions, the custody of assets and the recording of transactions should be performed by separate individuals. Management evaluated the impact of our failure to have segregation of duties on our assessment of our disclosure controls and procedures and has concluded that the control deficiency that resulted represented a material weakness.

3.	We do not have adequate review and supervision procedures for financial reporting functions. The review and supervision function of internal control relates to the accuracy of financial information reported. The failure to review and supervise could allow the reporting of inaccurate or incomplete financial information. Due to our size and nature, review and supervision may not always be possible or economically feasible. Management evaluated the impact of the significant number of adjustments as a result of our review and concluded that the resulting control deficiency represented a material weakness.

	To address these material weaknesses, management performed additional analyses and other procedures to ensure that the consolidated financial statements included herein fairly present, in all material respects, our financial position, results of operations and cash flows for the periods presented. We engaged a third party that specializes in technical accounting and financial reporting to assist us in preparation of our quarterly and annual consolidated financial statements and to assist us in documenting our internal controls. However, for the foreseeable future due to our limited accounting personnel we will continue to have limited segregation of duties.

Changes in internal controls over financial reporting.

There were no changes in our internal control over financial reporting that occurred during the period covered by this Quarterly Report on Form 10-Q that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.

PART II - OTHER INFORMATION

Item 1. Legal Proceedings.

Litigation

Think Design Media, Inc. and Related Entities

Other

Ubiquity v. Castro:

1413

Kay Strategies v. Ubiquity:

Kay Strategies is seeking $1,667,893 in compensatory damages and also undisclosed punitive damages and other court related costs. The Company has accrued all amounts due under the agreement.

1514

Typenex v. Ubiquity:

Avant Garde v. Ubiquity:

Avant Garde initiated litigation against the Company, for the recovery of the Company’s lease of its office space in Irvine, California, claiming the Company’s failed to timely pay its September 2015 rent, allegedly one day late, under the applicable lease. When Ubiquity failed inadvertently to timely answer the unlawful detainer suit, the Company was defaulted. Instead of moving to to set aside the default, the Company entered into two forbearance agreements, both of which lapsed. The Company then moved the ~~Orange~~ Orange County Superior Court for an order restoring the lease, which motion was denied. The court thereafter stayed the action ~~pending~~ pending the outcome of an appeal challenging the denial filed by Ubiquity. On March 14, 2016, Ubiquity paid an additional $150,000 ~~for~~ for an increased security deposit until the appeal is finalized. The Court of Appeals issued its decision affirming the trial court’s order denying Ubiquity’s Petition for relief from judgment declaring the release forfeited. The Opinion was issued on February 17, 2017 and made final April 21, 2017. On May 17, 2017 Avant Garde entered into a settlement agreement with the Company reinstating the lease with the original terms and conditions of the lease. The lease will be up for renewal January 2020. ~~The Company must provide a $150,000 letter of credit to its landlord by June 30, 2017 or it risks default on the lease.~~

16The Company did not provided a $150,000 letter of credit to its landlord by June 30, 2017 and could be at risk of a default. The Company’s counsel is in the process of working out other alternatives.

Vista Capital

On March 10, 2016, Vista Capital Investments, LLC (“Vista”) filed suit against the Company for breach of contract, unjust enrichment, declaratory relief, promissory estoppel, fraud, negligent misrepresentation and civil conspiracy in the Superior Court, Central Division, For the County of San Diego, California. The genesis of the suit is Vista’s allegations that the Company breached two Convertible Notes, one for $100,000 and the other for $50,000, by failing to timely repay these notes, when Vista declared the notes all due and payable after the Company failed to make timely filings with the SEC. The Company denies any wrongdoing, and intends to challenge the complaint by demurrer. The Company currently has a settlement offer being circulated to dismiss all claims. The Company has accrued all amounts due under the convertible note agreement.

Keener Litigation

Firstfire Global Opportunities Litigation

Brett and Mark Tomberlin Lawsuit

1716

R Squared Partners, LLC Litigation

The Company is currently engaged in settlement discussions to exhaust this debt. The Company has accrued all amounts due under the convertible note agreement and judgment.

North Matter:

Pillar Marketing Group:

1817

LG Capital Funding, LLC

Justin Sundquist, Henry Kingi, and Eagle Flights Stunts, Inc.

Bryan Harpole

Iconic Holdings, LLC

American States Insurance Company

De Lage Landen Financial Services, Inc.

1918

William Alessi

Item 1A. Risk Factors.

We are a Smaller Reporting Company and are not required to provide the information under this item.

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

2523,~~422~~661,~~658~~ 790 shares were issued in ~~the~~ the quarter ended ~~March~~June 3130, 2016 to approximately 15 accredited investors as defined in Rule 506 of Regulation D promulgated under the Securities Act for a total of $~~907~~1,~~955~~541,620.

The above securities were offered and sold to the investors in a private placement transaction made in reliance upon exemptions from registration pursuant to Section 4(2) under the Securities Act of 1933, as amended (the “Securities Act”) and/or Rule 506 promulgated under the Securities Act. The investors are accredited investors as defined in Rule 501 of Regulation D promulgated under the Securities Act.

The Company issued 46,~~636~~250,~~439~~000 shares of common stock ~~for~~to ~~services~~four ~~and~~people ~~settlement~~for services during the quarter ended ~~March~~June 3130, 2016. ~~The~~ The shares were valued at a total value of $12,~~018~~073,~~231~~750.

The Company issued 11,249,140 shares of common stock during the quarter ended March 31, 2016 for the retirement of a convertible note in the amount of $11,249.14.

The above securities were issued to the individuals identified in connection with a transaction made in reliance upon exemptions from registration pursuant to Section 4(2) under the Securities Act of 1933, as amended (the “Securities Act”) and/or Rule 506 promulgated under the Securities Act. The investors are accredited investors as defined in Rule 501 of Regulation D promulgated under the Securities Act.

The Company received approximately $0 in proceeds from convertible notes payable during the quarter ended March 31, 2016. The convertible notes payable are either convertible upon issuance or six months from such date, incur interest rates ranging from 8-12%, have conversion rates with discounts to market ranging from 35-45% and mature within six to 24 months. The terms of the notes are substantially similar to those disclosed in Note 7. Each financing was an exempt private placement with offers and sales made only to “accredited investors” without the use of public advertising and without registration under the Securities Act in reliance on the exemptions provided by Section 4(a)(2) of the Securities Act and/or Regulation D promulgated thereunder and in reliance on similar exemptions under applicable state laws.

Item 3. Defaults Upon Senior Securities.

~~See Item 1 Legal for default information~~None.

Item 4. Mine Safety Disclosures.

Not applicable.

Item 5. Other Information.

Sale of Company Shares

Beginning on the date of the reverse merger transaction under which the Company became a public company (September 20, 2013 and through the date of this filing), there have no sales of any shares of Company stock owned by or the benefit of any current Officer or Director of the Company.

Item 6. Exhibits.

Exhibit Number		Exhibit Title

31.1		Certification of Principal Executive Officer, pursuant to 18 U.S.C. Section 1350 as adopted pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.

31.2		Certification of Principal Financial Officer, pursuant to 18 U.S.C. Section 1350 as adopted pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.

32.1		Certification of Principal 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 Schema
101.CAL *		XBRL Taxonomy Calculation Linkbase
101.DEF *		XBRL Taxonomy Definition Linkbase
101.LAB *		XBRL Taxonomy Label Linkbase
101.PRE *		XBRL Taxonomy Presentation Linkbase

In accordance with SEC Release 33-8238, Exhibit 32.1 and 32.2 are being furnished and not filed.

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

2120

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.

	Ubiquity Broadcasting Corporation
	Ubiquity, Inc.
	By:	/s/ Christopher Carmichael
		Christopher Carmichael
		Interim Chief Executive Officer
		(Duly Authorized Officer and Principal
		(Duly Authorized Officer and Principal Executive Officer)
		Executive Officer)
	Dated: August 9, 2017
	Dated: July 12, 2017
	By:	/s/ Brenden Garrison
		Brenden Garrison
		Chief Financial Officer
		(Duly Authorized Officer and Principal
		Financial and Accounting Officer)
	Dated: July 12, 2017
	Dated: August 9, 2017

2221

Filing Compare · UBIQUITY, INC.