StrikeForce Technologies Inc. (Form: 10-Q, Received: 08/16/2018 14:57:21)

UNITED STATES

SECURITIES EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10-Q

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

For the quarterly period ended June 30, 2018

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

For the transition period from _________ to _________

STRIKEFORCE TECHNOLOGIES, INC.

(Exact name of registrant as specified in its Charter)

WYOMING

000-55012

22-3827597

(State or other jurisdiction of

incorporation or organization)

(Commission

file number)

(I.R.S. Employer

Identification No.)

1090 King Georges Post Road, Suite 603

Edison, NJ 08837

(Address of Principal Executive Offices)

(732) 661-9641

(Issuer’s telephone number)

Securities registered pursuant to Section 12(b) of the Exchange Act:

Title of each class		Name of each exchange on which registered
N/A		N/A

Securities registered pursuant to Section 12(g) of the Exchange Act:

Common stock, $0.0001 par value

Title of Class

Indicate by check mark if the registrant is a well-known seasoned issuer, as defined in Rule 405 of the Securities Act. ¨ Yes No x

Indicate by check mark if the registrant is not required to file reports pursuant to Section 13 or Section 15(d) of the Act. ¨ Yes No x

Check whether the issuer (1) filed all reports required to be filed by Section 13 or 15(d) of the Exchange Act during the past 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. x Yes No ¨

Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Web site, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such a 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, smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and “emerging growth company” in Rule 12b–2 of the Exchange Act.

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

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 7(a)(2)(B) of the Securities Act. ¨

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

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

Class		Outstanding at August 16, 2018
Common stock, $0.0001 par value		2,344,191,741

Indicate the number of shares outstanding of each of the issuer’s classes of preferred stock, as of the latest practicable date.

Class		Outstanding at August 16, 2018
Preferred stock, Series A, no par value		3

Class		Outstanding at August 16, 2018
Preferred stock, Series B, $0.10 par value		36,667

Transitional Small Business Disclosure Format Yes ¨ No x

Documents Incorporated By Reference

None

STRIKEFORCE TECHNOLOGIES, INC.

INDEX TO FORM 10-Q FILING

JUNE 30, 2018

TABLE OF CONTENTS

PART I Financial Information		Page Number

Item 1.	Financial Information	3

	Condensed Consolidated Balance Sheets at June 30, 2018 (unaudited) and December 31, 2017	4

	Condensed Consolidated Statements of Operations for the Three and Six months ended June 30, 2018 and 2017 (unaudited)	5

	Condensed Consolidated Statement of Changes in Stockholders’ Deficit for the Six months ended June 30, 2018 (unaudited)	6

	Condensed Consolidated Statements of Cash Flows for the Six months ended June 30, 2018 and 2017 (unaudited)	7

	Notes to the Condensed Consolidated Financial Statements for the Six months ended June 30, 2018 and 2017 (unaudited)	8

Item 2.	Management’s Discussion and Analysis of Financial Condition and Results of Operations	17

Item 3.	Quantitative and Qualitative Disclosures About Market Risk	22

Item 4.	Controls and Procedures	22

PART II Other Information

Item 1.	Legal Proceedings	24

Item 1A.	Risk Factors	24

Item 2.	Unregistered Sales of Equity Securities and Use of Proceeds	24

Item 3.	Defaults Upon Senior Securities	24

Item 4.	Mine Safety Disclosures	24

Item 5.	Other Information	24

Item 6.	Exhibits	25

SIGNATURES		26

EX-31.1 Management Certification

EX-32.1 Sarbanes-Oxley Act

PART I

ITEM 1. CONDENSED CONSOLIDATED FINANCIAL STATEMENTS AND NOTES TO INTERIM CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

General

The accompanying unaudited condensed consolidated interim financial statements have been prepared in accordance with the instructions to Form 10-Q. Therefore, they do not include all information and footnotes necessary for a complete presentation of financial position, results of operations, cash flows, and stockholders’ deficit in conformity with generally accepted accounting principles. Except as disclosed herein, there has been no material change in the information disclosed in the notes to the financial statements included in the Company’s annual report on Form 10-K for the year ended December 31, 2017. In the opinion of management, all adjustments considered necessary for a fair presentation of the results of operations and financial position have been included and all such adjustments are of a normal recurring nature. Operating results for the three and six months ended June 30, 2018 are not necessarily indicative of the results that can be expected for the year ending December 31, 2018.

3

Table of Contents

STRIKEFORCE TECHNOLOGIES, INC.

CONDENSED CONSOLIDATED BALANCE SHEETS

June 30,

2018

December 31,

2017

(Unaudited)

ASSETS

Current Assets:

Cash

$ 392,577

$ 455,484

Accounts receivable, net

31,712

47,454

Prepaid expenses

18,656

9,098

Total current assets

442,945

512,036

Property and equipment, net

7,178

7,676

Other assets

19,458

20,485

Total Assets

$ 469,581

$ 540,197

LIABILITIES AND STOCKHOLDERS' DEFICIT

Current Liabilities:

Accounts payable and accrued expenses

$ 944,119

$ 957,440

Convertible notes payable (net of discount of $296,507 and $0, respectively;

$1,438,100 in default at June 30, 2018 and December 31, 2017 , respectively)

1,506,593

1,438,100

Convertible notes payable - related parties

355,500

355,500

Notes payable (net of discount of $463,769 and $0, respectively;

$1,638,824 in default at June 30, 2018 and December 31, 2017, respectively)

1,840,555

1,713,824

Notes payable - related parties

742,513

742,513

Accrued interest (including $1,205,118 and $1,145,941 due to related parties, respectively)

4,200,574

4,002,811

Contingent payment obligation

1,500,000

1,500,000

Financing obligation

665,500

-

Derivative liabilities

812,673

623,195

Total Current Liabilities

12,568,027

11,333,383

Commitments and contingencies

Stockholders' Deficit

Series A Preferred stock, no par value; 100 shares authorized;

3 shares issued and outstanding

987,000

987,000

Series B Preferred stock par value $0.10: 100,000,000 shares authorized;

36,667 and 70,001 shares issued and outstanding, respectively

3,667

7,000

Preferred stock series not designated par value $0.10: 10,000,000 shares authorized;

none issued or outstanding

-

-

Common stock par value $0.0001: 5,000,000,000 shares authorized;

2,344,191,741 and 2,335,843,241 shares issued and outstanding, respectively

234,419

233,584

Additional paid-in capital

25,880,310

25,522,331

Accumulated deficit

(38,895,964 )

(37,543,101 )

Total StrikeForce Technologies, Inc. stockholders' deficit

(11,790,568 )

(10,793,186 )

Noncontrolling interest in consolidated subsidiary

(307,878 )

-

Total Stockholders' Deficit

(12,098,446 )

(10,793,186 )

Total Liabilities and Stockholders' Deficit

$ 469,581

$ 540,197

See accompanying notes to the condensed consolidated financial statements.

4

Table of Contents

STRIKEFORCE TECHNOLOGIES, INC.

CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS

	For the Three Months Ended						For the Six Months Ended
	June 30, 2018			June 30, 2017			June 30, 2018			June 30, 2017
	(Unaudited)			(Unaudited)			(Unaudited)			(Unaudited)

Revenue	$	170,951		$	58,736		$	235,644		$	142,605

Cost of revenue		2,703			3,754			9,457			6,380

Gross margin		168,248			54,982			226,187			136,225

Operating expenses:
Compensation		155,507			205,529			313,441			353,578
Professional fees		153,460			119,287			343,990			182,481
Selling, general and administrative expenses		420,015			51,654			684,229			893,041
Research and development		123,750			153,751			247,500			278,782

Total operating expenses		852,732			530,221			1,589,160			1,707,882

Loss from operations		(684,484	)		(475,239	)		(1,362,973	)		(1,571,657	)

Other income (expense):
Interest expense		(303,017	)		(95,864	)		(473,527	)		(186,322	)
Private placement costs		(185,233	)		(134,495	)		(379,249	)		(134,495	)
Change in fair value of derivative liabilities		249,761			10,223			554,771			(198,685	)
Forgiveness of debt		-			86,140			-			86,140
Income tax expense		-			(70,866	)		-			(70,866	)
Other income		-			3			237			19

Other income (expense), net		(238,489	)		(204,859	)		(297,768	)		(504,209	)

Net loss		(922,973	)		(680,098	)		(1,660,741	)		(2,075,866	)

Deemed dividend on convertible preferred stock		-			-			-			(17,778	)

Net loss		(922,973	)		(680,098	)		(1,660,741	)		(2,093,644	)
Net loss attributable to noncontrolling interest		189,576			-			307,878			-

Net loss attributable to common shareholders of StrikeForce Technologies, Inc.	$	(733,397	)	$	(680,098	)	$	(1,352,863	)	$	(2,093,644	)

Net loss per share attributable to common shareholders
- Basic and diluted	$	-		$	-		$	-		$	-

Weighted average common shares outstanding
- Basic and diluted		2,337,226,895			2,319,693,886			2,336,540,133			2,319,690,157

See accompanying notes to the condensed consolidated financial statements.

5

Table of Contents

STRIKEFORCE TECHNOLOGIES, INC.

CONDENSED CONSOLIDATED STATEMENT OF CHANGES IN STOCKHOLDERS' DEFICIT

FOR THE SIX MONTHS ENDED JUNE 30, 2018

(Unaudited)

Series A

Preferred stock,

no par value

Series B

Preferred stock,

par value $0.10

Common stock,

par value $0.0001

Additional

Paid-in

Accumulated

Non-

controlling

Total

Stockholders'

Shares

Amount

Shares

Amount

Shares

Amount

Capital

Deficit

Interest

Deficit

Balance at December 31, 2017

3

$ 987,000

70,001

$ 7,000

2,335,843,241

$ 233,584

$ 25,522,331

$ (37,543,101 )

$ -

$ (10,793,186 )

Fair value of common stock issued for services

-

-

-

-

15,000

2

202

-

204

Fair value of vested options

-

-

-

-

-

-

355,277

-

355,277

-

Common stock issued upon conversion of Series B preferred stock

-

-

(33,334 )

(3,333 )

8,333,500

833

2,500

-

-

Net loss

-

-

-

-

-

-

-

(1,352,863 )

(307,878 )

(1,660,741 )

Balance at June 30, 2018 (unaudited)

3

$ 987,000

994,107

$ 3,667

2,344,191,741

$ 234,419

$ 25,880,310

$ (38,895,964 )

$ (307,878 )

$ (12,098,446 )

See accompanying notes to the condensed consolidated financial statements.

6

Table of Contents

STRIKEFORCE TECHNOLOGIES, INC.

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

For the

Six Months

Ended

June 30,

2018

For the

Six Months

Ended

June 30,

2017

(Unaudited)

(Unaudited)

Cash flows from operating activities:

Net loss

$ (1,660,741 )

$ (2,075,866 )

Adjustments to reconcile net loss to net cash used in operating activities:

Depreciation and amortization

3,084

3,351

Amortization of discount on notes payable

270,224

4,000

Fair value of common stock issued for services

204

245

Fair value of vested options

355,277

749,538

Forgiveness of debt

-

(86,140 )

Change in fair value of derivative liabilities

(554,771 )

198,685

Private placement costs

379,249

134,495

Changes in operating assets and liabilities:

Accounts receivable

15,742

106,353

Prepaid expenses

(9,558 )

4,120

Accounts payable and accrued expenses

(13,321 )

(34,290 )

Accrued interest

197,763

107,965

Net cash used in operating activities

(1,016,848 )

(887,544 )

Cash flows from investing activities:

Purchases of property and equipment

(1,559 )

-

Cash flows from financing activities:

Proceeds from convertible note payable

365,000

200,000

Proceeds from notes payable

665,500

-

Proceeds from note payable - related parties

-

-

Repayment of notes payable

(75,000 )

(40,000 )

Proceeds from sale of Series B preferred stock

-

80,000

Repayment of convertible notes payable

-

(9,000 )

Net cash provided by financing activities

955,500

231,000

Net increase (decrease) in cash

(62,907 )

(656,544 )

Cash at beginning of the period

455,484

804,130

Cash at end of the period

$ 392,577

$ 147,586

Supplemental disclosure of cash flow information:

Interest paid

$ 5,000

$ 74,139

Income tax paid

$ -

$ 70,866

Supplemental disclosure of non-cash investing and financing transactions

Fair value of derivative created upon issuance of convertible debt recorded as debt discount

$ 365,000

$ -

Fair value of financing obligation recorded as debt discount

$ 665,500

$ -

Deemed dividend on convertible preferred stock

$ -

$ 17,778

See accompanying notes to the condensed consolidated financial statements.

7

Table of Contents

StrikeForce Technologies, Inc.

June 30, 2018 and 2017

Notes to the Condensed Consolidated Financial Statements

(Unaudited)

Note 1 - Organization and Summary of Significant Accounting Policies

StrikeForce Technologies, Inc. (the “Company”) is a software development and services company that offers a suite of integrated computer network security products using proprietary technology. The Company’s ongoing strategy is developing and marketing its suite of network security products to the corporate, financial, healthcare, legal, government, technology, insurance, e-commerce and consumer sectors. The Company’s operations are based in Edison, New Jersey.

Basis of Presentation - Unaudited Interim Financial Information

The accompanying unaudited condensed consolidated financial statements have been prepared in accordance with accounting principles generally accepted in the United States of America (“U.S. GAAP”) for interim financial information and with the rules and regulations of the United States Securities and Exchange Commission (the “SEC”) to Form 10-Q and Article 8 of Regulation S-X. Accordingly, they do not include all of the information and footnotes required by U.S. GAAP for complete financial statements. In the opinion of management, all adjustments (consisting of normal recurring accruals) considered necessary for a fair presentation of the financial position, results of operations and cash flows for the interim periods have been included. The results of operations for the six months ended June 30, 2018 are not necessarily indicative of the results of operations to be expected for the full fiscal year ending December 31, 2018. These financial statements should be read in conjunction with the financial statements of the Company for the year ended December 31, 2017 and notes thereto contained in the Annual Report on Form 10-K of the Company as filed with the SEC on March 30, 2018.

Going Concern

The accompanying financial statements have been prepared on a going concern basis, which contemplates the realization of assets and the settlement of liabilities and commitments in the normal course of business. As reflected in the accompanying financial statements, for the six months ended June 30, 2018, the Company incurred a net loss of $1,660,741 and used cash in operating activities of $1,016,848, and at June 30, 2018, the Company had a stockholders’ deficit of $12,098,446. In addition, the Company is in default on notes payable and convertible notes payable in the aggregate amount of $3,076,924. These factors raise substantial doubt about the Company’s ability to continue as a going concern within one year of the date that the financial statements are issued. In addition, the Company’s independent registered public accounting firm, in its report on the Company’s December 31, 2017 financial statements, has expressed substantial doubt about the Company’s ability to continue as a going concern. The condensed consolidated financial statements do not include any adjustments that might be necessary if the Company is unable to continue as a going concern.

At June 30, 2018, the Company had cash on hand in the amount of $392,577. Management estimates that the current funds on hand will be sufficient to continue operations through the next six months. The Company’s ability to continue as a going concern is dependent upon its ability to continue to implement its business plan. Currently, management is attempting to increase revenues by redirecting its sales focus from direct sales to domestic and international sales channels, primarily selling through a channel of distributors, value added resellers, strategic partners and original equipment manufacturers. While the Company believes in the viability of its strategy to increase revenues, there can be no assurances to that effect. The Company’s ability to continue as a going concern is dependent upon its ability to increase its customer base and realize increased revenues. No assurance can be given that any future financing, if needed, will be available or, if available, that it will be on terms that are satisfactory to the Company. Even if the Company is able to obtain additional financing, if needed, it may contain undue restrictions on its operations, in the case of debt financing, or cause substantial dilution for its stock holders, in the case of equity financing.

BlockSafe Technologies, Inc.

In December 2017, the Company formed a subsidiary, BlockSafe Technologies, Inc. (“BlockSafe”). BlockSafe is owned 49% by the Company and 31% by three executive officers of the Company, which combined represents an 80% controlling interest in BlockSafe. BlockSafe plans to focus on providing security solutions to protect blockchain and cryptocurrencies. Additionally, BlockSafe plans to create its own cryptocurrency tokens. During the six months ended June 30, 2018, BlockSafe received $665,500 from the issuance of unsecured notes payable (see Note 4). As of June 30, 2018, BlockSafe had no operating activities and no cryptocurrency tokens have been developed. There is no assurance as to whether, or at what amount, or on what terms, tokens will be available, if ever. Moreover, there can be no assurance how such technology will function, which could expose the Company to legal and regulatory issues. In addition, legal and regulatory developments could render the technology impermissible, which could have a material adverse effect on the Company.

8

Table of Contents

In June 2018, the former CEO of BlockSafe resigned, and the Board of Directors appointed two members of the Company’s management team to serve as BlockSafe’s CEO and Chief Technical Officer, respectively. Additionally, the Company’s CEO was appointed as Chairman and President of BlockSafe.

In June 2018, the Company and BlockSafe amended their management agreement. Pursuant to the terms of the amended agreement, BlockSafe shall remit a management fee of $36,000 per month to the Company, retroactive to January 1, 2018 and for a three-year term. Once BlockSafe reaches a milestone of $1,000,000 in financing, an additional management fee of $5,000,000 shall be owed to the Company by BlockSafe in the form of a monthly payment of $138,889 for a period of three years. Additionally, the Company retains the right to use and market BlockSafe’s patent pending Blockchain Defender™ product, perpetually, for a royalty fee of 15%.

For the six months ended June 30, 2018, the Company has received $216,000 in management fees from BlockSafe.

Principles of Consolidation

The condensed consolidated unaudited financial statements include the accounts of the Company and its controlled subsidiary, BlockSafe. Intercompany balances and transactions have been eliminated in consolidation.

At June 30, 2018, noncontrolling interests represents 51% of BlockSafe that the Company does not directly own.

Estimates

The preparation of financial statements in conformity with generally accepted accounting principles requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period. Significant estimates include those related to accounting for potential liabilities, assumptions used in valuing stock instruments issued for services, assumptions used in valuing derivative liabilities, and the valuation allowance for deferred income taxes. Actual results could differ from those estimates.

Revenue Recognition

Effective January 1, 2018, the Company adopted the guidance of Accounting Standards Codification (“ASC”) 606, Revenue from Contracts . The implementation of ASC 606 did not have a material impact on the Company’s consolidated financial statements. ASC 606 creates a five-step model that requires entities to exercise judgment when considering the terms of contracts, which includes (1) identifying the contracts or agreements with a customer, (2) identifying our performance obligations in the contract or agreement, (3) determining the transaction price, (4) allocating the transaction price to the separate performance obligations, and (5) recognizing revenue as each performance obligation is satisfied. The Company only applies the five-step model to contracts when it is probable that the Company will collect the consideration it is entitled to in exchange for the services it transfers to its clients.

The Company’s revenue consists of revenue from sales and support of our software products.

Revenue primarily consists of sales of software licenses of our ProtectID®, GuardedID® and MobileTrust® products. We recognize revenue from these arrangements ratably over the contractual service period. For service contracts, the Company’s performance obligations are satisfied, and the related revenue is recognized, as services are rendered.

The Company offers no discounts, rebates, rights of return, or other allowances to clients which would result in the establishment of reserves against service revenue. Additionally, to date, the Company has not incurred incremental costs in obtaining a client contract.

Cost of revenue includes direct costs and fees related to the sale of our products.

The following tables present our revenue disaggregated by major product and service lines:

Three Months Ended

June 30,

2018

June 30,

2017

(Unaudited)

(Unaudited)

Software

$ 53,496

$ 39,692

Service

114,752

15,290

Total revenue

$ 168,248

$ 54,982

9

Table of Contents

Six Months Ended

June 30,

2018

June 30,

2017

(Unaudited)

(Unaudited)

Software

$ 110,385

$ 102,472

Service

125,259

40,133

Total revenue

$ 235,644

$ 142,605

Derivative Financial Instruments

The Company evaluates its financial instruments to determine if such instruments are derivatives or contain features that qualify as embedded derivatives. For derivative financial instruments that are accounted for as liabilities, the derivative instrument is initially recorded at its fair value and is then re-valued at each reporting date, with changes in the fair value reported in the statements of operations. The classification of derivative instruments, including whether such instruments should be recorded as liabilities or as equity, is evaluated at the end of each reporting period. Derivative instrument liabilities are classified in the balance sheet as current or non-current based on whether or not net-cash settlement of the derivative instrument could be required within 12 months of the balance sheet date. At each reporting date, the Company reviews its convertible securities to determine that their classification is appropriate.

Fair Value of Financial Instruments

The Company follows the authoritative guidance issued by the Financial Accounting Standards Board (“FASB”) for fair value measurements. Fair value is defined as the price that would be received to sell an asset or paid to transfer a liability in the principal or most advantageous market for the asset or liability in an orderly transaction between market participants at the measurement date. A fair value hierarchy was established, which prioritizes the inputs used in measuring fair value into three broad levels as follows:

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

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

Level 3—Unobservable inputs based on the Company's assumptions.

The Company is required to use of observable market data if such data is available without undue cost and effort.

As of June 30, 2018 and December 31, 2017, the Company’s balance sheets included the fair value of derivative liabilities of $812,673 and $623,195, respectively, which were based on Level 2 measurements.

The recorded amounts for accounts receivable, accounts payable, accrued expenses, convertible notes, and notes payables approximate their fair value due to their short-term nature.

Income (loss) per Share

Basic income (loss) per share is computed by dividing net income (loss) available to common stockholders by the weighted average number of common shares outstanding during the period. Diluted income (loss) per share reflects the potential dilution, using the treasury stock method that could occur if securities or other contracts to issue common stock were exercised or converted into common stock or resulted in the issuance of common stock that then shared in the income (loss) of the Company. In computing diluted income (loss) per share, the treasury stock method assumes that outstanding options, warrants, and convertible preferred stock are exercised and the proceeds are used to purchase common stock at the average market price during the period. Options, warrants, and convertible preferred stock may have a dilutive effect under the treasury stock method only when the average market price of the common stock during the period exceeds the exercise price of the options and warrants.

For the six months ended June 30, 2018 and 2017, the dilutive impact of stock options exercisable into 259,000,001 and 196,000,001 shares of common stock, respectively, convertible Series B Preferred stock that can convert into 3,135,197 and 11,575,282 shares of common stock, respectively, and notes payable that can convert into 41,131,421 and 26,666,692 shares of common stock, respectively, have been excluded because their impact on the loss per share is anti-dilutive.

Concentrations

For the six months ended June 30, 2018, sales to three customers comprised 47%, 33% and 10% of revenues, respectively. For the six months ended June 30, 2017, sales to three customers comprised 52%, 13% and 11% of revenues, respectively. At June 30, 2018, three customers comprised 38%, 26% and 18% of accounts receivable, respectively. At December 31, 2017, four customers comprised 30%, 29%, 19% and 14% of accounts receivable, respectively.

10

Table of Contents

The Company maintains the majority of its cash balances with one financial institution, in the form of demand deposits. At June 30, 2018 and December 31, 2017, the Company had cash deposits that exceeded the federally insured limit of $250,000. The Company believes that no significant concentration of credit risk exists with respect to these cash balances because of its assessment of the creditworthiness and financial viability of the financial institution.

Segments

The Company operates in one segment for the development and distribution of our software products. In accordance with the “Segment Reporting” Topic of the ASC, the Company’s chief operating decision maker has been identified as the Chief Executive Officer and President, who reviews operating results to make decisions about allocating resources and assessing performance for the entire Company. Existing guidance, which is based on a management approach to segment reporting, establishes requirements to report selected segment information quarterly and to report annually entity-wide disclosures about products and services, major customers, and the countries in which the entity holds material assets and reports revenue. All material operating units qualify for aggregation under “Segment Reporting” due to their similar customer base and similarities in: economic characteristics; nature of products and services; and procurement, manufacturing and distribution processes. Since the Company operates in one segment, all financial information required by “Segment Reporting” can be found in the accompanying financial statements.

Recent Accounting Pronouncements

In February 2016, the FASB issued ASU No. 2016-02, Leases. This update will require the recognition of a right-of-use asset and a corresponding lease liability, initially measured at the present value of the lease payments, for all leases with terms longer than 12 months. For operating leases, the asset and liability will be expensed over the lease term on a straight-line basis, with all cash flows included in the operating section of the statement of cash flows. For finance leases, interest on the lease liability will be recognized separately from the amortization of the right-of-use asset in the statement of comprehensive income and the repayment of the principal portion of the lease liability will be classified as a financing activity while the interest component will be included in the operating section of the statement of cash flows. ASU 2016-02 is effective for annual and interim reporting periods beginning after December 15, 2018. Early adoption is permitted. Upon adoption, leases will be recognized and measured at the beginning of the earliest period presented using a modified retrospective approach. The Company is currently evaluating the impact of the adoption of ASU 2016-02 on its financial statements and related disclosures.

In June 2018, the FASB issued ASU 2018-07, “Compensation – Stock Compensation (Topic 718): Improvements to Nonemployee Share-Based Payment Accounting.” The ASU expands the scope of Topic 718 to include share-based payment transactions for acquiring goods and services from nonemployees. The ASU also clarifies that Topic 718 does not apply to share-based payments used to effectively provide (1) financing to the issuer or (2) awards granted in conjunction with selling goods or services to customers as part of a contract accounted for under Revenue from Contracts with Customers (Topic 606). The guidance is effective for fiscal years beginning after December 15, 2018, including interim periods within that fiscal year. Early adoption is permitted. The Company is currently assessing the effect that the ASU will have on our financial position, results of operations, and disclosures.

Other recent accounting pronouncements issued by the FASB, including its Emerging Issues Task Force, the American Institute of Certified Public Accountants, and the Securities and Exchange Commission did not or are not believed by management to have a material impact on the Company's present or future consolidated financial statements.

Note 2 - Convertible Notes Payable

Convertible notes payable consisted of the following:

June 30,

2018

December 31,

2017

Secured

(a) DART, in default

$ 542,588

$ 542,588

Unsecured

(b) Convertible notes with fixed conversion features, in default

895,512

895,512

(c) Convertible notes with adjustable conversion features

365,000

-

Total convertible notes principal outstanding

1,803,100

1,438,100

Debt discount

(296,507 )

-

Convertible notes, net of discount

$ 1,506,593

$ 1,438,100

11

Table of Contents

(a) At June 30, 2018 and December 31, 2017, $542,588 of notes payables are due to DART/Citco Global. The notes are convertible into shares of the Company’s common stock based on adjustable conversion prices, are secured by all of the Company’s assets, were due in 2010, and are currently in default. Beginning in 2009, the note holder agreed to the forbearance of any further interest on the notes payable to DART/Citco Global. The adjustable conversion features of the notes are accounted for as derivative liabilities (see Note 8). DART/Citco Global did not process any conversions of notes into shares of common stock during the six months ended June 30, 2018 or 2017. The Company has been in contact with the note holder who has indicated that it has no present intention of exercising its right to convert the debentures into shares of the Company's common stock. Under the terms of the secured debentures, the Company is restricted in its ability to issue additional securities as long as any portion of the principal or interest on the secured debentures remains outstanding. During the six months ended June 30, 2018, the Company did not obtain DART/Citco Global’s written consent related to any of its financing agreements.

(b) Convertible notes payable with fixed conversion features (“fixed convertible notes”) consisted of 13 unsecured convertible notes convertible at a fixed amount into 13 shares of the Company’s common stock, at fixed conversion prices ranging from $1,950,000 to $9,750,000,000 per share, as defined in the agreements and adjusted for applicable reverse stock splits. The notes bear interest at 8% to 18% per annum, and were due on various dates from March 2008 to July 2015. All of the fixed convertible notes are currently in default and the Company is pursuing settlements with certain of the holders. During the six months ended June 30, 2018, there were no additional notes issued or any repayments of note principal.

At December 31, 2017, the balance of the accrued interest on the fixed convertible notes was $1,004,631. During the six months ended June 30, 2018, interest expense of $37,258 was accrued. At June 30, 2018, the balance of accrued interest on the fixed convertible notes was $1,041,889.

(c) During the six months ended June 30, 2018, the Company issued three convertible notes payable for an aggregate of $365,000, bearing interest at 10% per annum, and maturing through June 2019. During the six months ended June 30, 2018, interest expense of $6,849 was accrued. At the option of the holder, the note is convertible into shares of common stock of the Company at a price per share discount of 58% of the lowest closing market price of the Company’s common stock for the twenty days preceding a conversion notice. As a result, the Company determined that the conversion features of the convertible notes were not considered indexed to the Company’s own stock and characterized the fair value of the conversion features as derivative liabilities upon issuance. The Company determined that upon issuance of the convertible notes in March, April and June 2018, the initial fair value of the embedded conversion feature was a total of $744,249 (see Note 8), of which $365,000 was recorded as debt discount offsetting the face amount of the convertible notes, and the remainder of $379,249 was recorded as private placement costs. During the six months ended June 30, 2018, debt discount amortization of $68,493 was recorded in interest expense and the balance of the unamortized discount at June 30, 2018 was $296,507.

At June 30, 2018 and December 31, 2017, accrued interest due for all convertible notes was $1,048,738 and $1,004,631, respectively, and is included in accrued interest in the accompanying balance sheets. Interest expense for all convertible notes payable for the six months ended June 30, 2018 and 2017 was $44,107 and $39,814, respectively.

Note 3 - Convertible Notes Payable – Related Parties

At June 30, 2018 and December 31, 2017, convertible notes payable - related parties consist of 12 convertible notes payable in the aggregate of $355,500. The notes are unsecured and have extended due dates of December 31, 2018. Six notes totaling $268,000 are due to the Company’s Chief Executive Officer, at a compounded interest rate of 8% per annum; two notes totaling $57,000 are due to the Company’s VP of Technology, interest at prime plus 2% and prime plus 4% per annum; and four notes totaling $30,000 are due to the spouse of the Company’s Chief Technology Officer at a compounded interest rate of 8% per annum. $33,000 of the notes are convertible at a fixed conversion price of $7,312,500 per share and $322,500 of the notes are convertible at a fixed conversion price of $9,750,000,000 per share, as defined in the note agreements and adjusted for applicable reverse stock splits.

At December 31, 2017, accrued interest due for the convertible notes – related parties was $498,077. During the six months ended June 30, 2018, interest expense of $31,367 was accrued. At June 30, 2018, accrued interest due for the convertible notes – related parties was $529,444.

Note 4 - Notes Payable

Notes payable consisted of the following:

June 30,

2018

December 31,

2017

Unsecured

(a) Promissory notes-in default

$ 413,824

$ 413,824

(b) Promissory notes – StrikeForce Investor Group-in default

1,225,000

1,230,000

(c) Promissory note

-

70,000

(d) Promissory notes issued by BlockSafe

665,500

-

Total notes payable principal outstanding

2,304,324

1,713,824

Debt discount

(463,769 )

-

Notes payable, net of discount

$ 1,840,555

$ 1,713,824

12

Table of Contents

(a) Notes payable consists of various unsecured promissory notes with interest from 8% to 14% per annum. The notes were due on various dates from December 2011 to July 2017 and are currently in default, The Company is currently pursuing settlements with certain of the note holders. At June 30, 2018 and December 31, 2017, the balance due under these notes was $413,824.

At December 31, 2017, the balance of the accrued interest on the notes payable-various was $459,898. During the six months ended June 30, 2018, $22,591 of interest expense was accrued. At June 30, 2018, accrued interest on the notes payable was $482,489.

(b) Notes payable to StrikeForce Investor Group (SIG), made up of various investors with unsecured notes, interest at 10% per annum, originally due in 2011, and currently in default. At December 31, 2017, the balance of notes payable-SIG was $1,230,000. During the six months ended June 30, 2018, the Company repaid $5,000 of principal and at June 30, 2018, the balance of notes payable-SIG was $1,225,000. The Company is currently pursuing extensions on the remaining delinquent notes.

At December 31, 2017, the balance of the accrued interest on the notes payable-SIG was $1,392,341. During the six months ended June 30, 2018, $60,749 of interest expense was accrued and $5,000 of accrued interest was paid. At June 30, 2018, accrued interest on the notes payable-SIG was $1,448,090.

(c) In July 2017, the Company executed an exchange agreement with a factor which transferred the amount due to the factor of approximately $209,000 into a promissory note for $210,000, non-interest bearing, and maturing on February 7, 2018. As of December 31, 2017, the balance due on the promissory note was $70,000. The remaining balance was paid off in January 2018, for $20,000, and February 2018, for $50,000.

(d) During the six months ended June 30, 2018, BlockSafe (see Note 1) issued an aggregate of $665,500 of unsecured promissory notes to fifteen unrelated parties, including a former executive of BlockSafe, bearing interest at 8% per annum, and maturing through June 2019. During the six months ended June 30, 2018, interest expense of $16,138 was accrued. Contemporaneously with the issuance of the promissory notes, BlockSafe entered into an obligation to pay the same parties a fixed amount equal to the face amount of the promissory notes in tokens, as defined (see Note 6) as a financing obligation. The value of the financing obligation was determined to be $665,500 and was recorded as a liability and as a discount to the promissory notes. The discount will be amortized over the term of the promissory notes. During the six months ended June 30, 2018, debt discount amortization of $201,731 was recorded as interest expense and the balance of the unamortized discount at June 30, 2018 was $463,769.

At June 30, 2018 and December 31, 2017, accrued interest due for all notes payable above was $1,946,717 and $1,852,239, respectively, and is included in accrued interest in the accompanying balance sheets. Interest expense for notes payable for the six months ended June 30, 2018 and 2017 was $99,478 and $85,004, respectively.

Note 5 - Notes Payable – Related Parties

Notes payable- related parties consisted of the following:

June 30,

2018

December 31,

2017

Unsecured

(a) Promissory notes

$ 742,513

$ 742,513

Notes payable, current maturities

$ 742,513

$ 742,513

(a) Promissory notes represent eighteen unsecured notes payable to the Company’s Chief Executive Officer ranging in interest rates of 0% per annum to 10% per annum. The notes are unsecured and have extended due dates of December 31, 2018. At June 30, 2018 and December 31, 2017, the balance due under these notes was $742,513. At December 31, 2017, accrued interest due for the notes was $647,864. During the six months ended June 30, 2018, interest expense of $27,810 was accrued. At June 30, 2018, accrued interest due for the notes was $675,674.

13

Table of Contents

Note 6 – Financing Obligation

Between January 2018 and June 2018, BlockSafe issued promissory notes payable to fifteen unrelated parties aggregating $665,500 (see Note 4). The notes mature one year from the date of issuance, are unsecured, and bear interest at 8% per annum. As part of each promissory note agreement BlockSafe agreed to pay a financing obligation to the note holders equal to the note principal in cryptocurrency tokens to be issued by BlockSafe. At June 30, 2018 and through the date of filing, BlockSafe has not developed or issued any tokens and there is no assurance as to whether, or at what amount, or on what terms, tokens will be available to be issued, if ever. Nonetheless, management determined an obligation is bundled with the note agreements and determined that 100% of the face amount of the promissory notes, or $665,500, is probable of being settled. Accordingly, the Company recorded a liability for $665,500 as a financing obligation.

Note 7 – Contingent Payment Obligation

On September 6, 2017, the Company entered into a litigation funding agreement with Therium Inc. and VGL Capital, LLC (collectively the “Funders”). Under the agreement, the Company received $1,500,000 from the Funders to allow the Company to pursue patent enforcement actions against infringements of its patents (see Note 11). In exchange, the Funders are entitled to receive, after the payment of legal fees, the first $1,500,000 from the gross proceeds of any claims awarded, 10% of any additional claim proceeds until the Funders have received an additional $7,500,000, and 2.5% of any claim proceeds thereafter. The Funders shall be paid only in the event that the Company achieves recoveries of claim proceeds. The terms of the litigation funding agreement allow for additional funding of $1,500,000, between February 1, 2018 to January 31, 2019, which would require the Company to repay the funders an additional $5,000,000, plus a percentage of any claim proceeds thereafter. At June 30, 2018 and December 31, 2017, the Company has reflected the $1,500,000 received from the Funders as a contingent payment obligation to be paid only if claim proceeds are recovered. On May 22, 2018, the Company was notified by Therium Inc. of the assignment of the debt to Therium Luxembourg.

Note 8 – Derivative Financial Instruments

At June 30, 2018, the Company had convertible promissory notes outstanding that are convertible into shares of common stock of the Company at the option of the holder at price per share discounts ranging from 20% to 58% of the Company’s common stock market price, as defined in the note agreements. As the ultimate determination of shares to be issued upon conversion of these notes could exceed the current number of available authorized shares, the Company determined that the conversion features of the convertible notes were not considered indexed to the Company’s own stock and characterized the fair value of the conversion features as derivative liabilities. Accordingly, the conversion features of the notes were separated from the host contracts (i.e. the notes) and characterized as derivative liabilities to be re-measured at the end of every reporting period with the change in value reported in the statement of operations.

At December 31, 2017, the balance of the derivative liabilities was $623,195. During the six months ended June 30, 2018, the Company recorded additions of $744,249 related to the conversion features of notes issued during the period (see Note 2) and a decrease in fair value of derivatives of $554,771. At June 30, 2018, the balance of the derivative liabilities was $812,673.

The derivative liability was valued at the following dates using a probability weighted Black-Scholes-Merton model with the following assumptions:

June 30,

2018

March to

June 2018

(dates of

inception)

December 31,

2017

Conversion feature:

Risk-free interest rate

0.23 %

0.23 %

0.18 %

Expected volatility

129 %

132%-138

%

147 %

Expected life (in years)

1 year

1 year

1 year

Expected dividend yield

-

-

-

Fair Value:

Conversion feature

$ 812,673

$ 744,249

$ 623,195

The risk-free interest rate was based on rates established by the Federal Reserve Bank. The expected volatility is based on the historical volatility of the Company’s stock. The expected life of the conversion feature of the notes was based on the remaining terms of the related notes. The expected dividend yield was based on the fact that the Company has not customarily paid dividends to its common stockholders in the past and does not expect to pay dividends to its common stockholders in the future.

14

Table of Contents

Note 9 – Stockholders’ Deficit

Common Stock

During the six months ended June 30, 2018, the Company issued an aggregate of 8,348,500 shares of its common stock as follows:

· The Company issued 15,000 shares of its common stock for services, valued at $204.

· The Company issued 8,333,500 shares of its common stock in exchange for conversion of 33,334 shares of Series B Preferred Stock at a conversion price of $0.004 per share.

Note 10 - Options

In November 2012, the stockholders approved the 2012 Stock Option Plan for our employees, effective January 3, 2013. The number of shares authorized for issuance under the plan was 100,000,000 and was increased to 400,000,000 in November 2017 by unanimous consent of the Board of Directors.

In September 2016 and December 2017, the Company issued options to purchase an aggregate of 259,000,000 shares of its common stock to management and employees with a total fair value of $1,946,000 determined using the Black-Scholes Option Pricing model. The options are exercisable at $0.0057 to $0.00625 per share, vest in 6 months, and expire through December 2027.

During the six months ended June 30, 2018 and 2017, the Company recognized compensation costs of $355,277 and $749,538, respectively, related to the amortization of the fair value of options that vested.

The table below summarizes the Company’s 2012 Stock Incentive Plan activities for the period January 1, 2016 to June 30, 2018:

Number of

Options

Shares

Exercise

Price

Range

Per Share

Weighted Average

Exercise

Price

Balance, January 1, 2018

259,000,001

$
0.0057-2,242,500

$ 0.00625

Granted

-

$ -

$ -

Exercised

-

$ -

$ -

Expired

-

$ -

$ -

Balance outstanding, June 30, 2018

259,000,001

$
0.0057-2,242,500

$ 0.0062

Balance exercisable, June 30, 2018

259,000,001

$
0.0057-2,242,500

$ 0.0062

As of June 30, 2018, options to purchase an aggregate of 259,000,001 shares of common stock were outstanding under the 2012 Stock Incentive Plan and there were 140,999,999 shares remaining available for issuance. At June 30, 2018 and 2017, the intrinsic value of outstanding options was zero.

The following table summarizes information concerning the 2012 Stock Incentive Plan as of June 30, 2018:

Options Outstanding

Options Exercisable

Range of Exercise Prices

Number Outstanding

Average Remaining Contractual Life (in years)

Weighted Average Exercise Price

Number Exercisable

Average Remaining Contractual Life (in years)

Weighted Average Exercise Price

$
975,000,000

1

1.00

$ 975,000,000

1

1.00

$ 975,000,000

$
0.0057

63,000,000

10.00

$ 0.0057

63,000,000

10.00

$ 0.0057

$
0.00625

196,000,000

10.00

$ 0.0062

196,000,000

10.00

$ 0.0062

$
0.00625 - 975,000,000

259,000,001

10.00

$ 0.0062

259,000,001

10.00

$ 0.0062

15

Table of Contents

Note 11 - Commitments and Contingencies

Legal Proceedings

On June 20, 2016, the Company initiated additional patent litigation against three major competitors in the U.S. District Court for the District of New Jersey, for infringement of United States Patent No. 8,484,698. This litigation is ongoing. On March 14, 2017, one of the parties initiated an inter partes review (IPR) (a procedure for challenging the validity of a United States patent before the United States Patent and Trademark Office) against the Company’s second Patent No. 8,484,698.

On March 14, 2017, the Company initiated additional patent litigation against two major competitors in the U.S. District Court for the District of Massachusetts, for infringement of United States Patent Nos. 7,870,599, 8,484,698 and 8,713,701. This litigation is ongoing.

On March 14, 2017, the Company initiated additional patent litigation against two major competitors in the U.S. District Court for the Eastern District of Virginia, for infringement of United States Patent Nos. 7,870,599, 8,484,698 and 8,713,701. This litigation is ongoing. On June 13, 2017, one of the competitors initiated a lawsuit against the Company in the U.S. District Court for the District of New Jersey for patent infringement (which the Company believes is without merit and will defend vigorously). This litigation is ongoing.

On December 1, 2017, The United States District Court for the Central District of California issued an opinion in the StrikeForce Technologies, Inc. v. SecureAuth Corp. case, which invalidated claims of U.S. Patent Nos. 7,870,599, 8,484,698 and 8,713,701 under 35 U.S.C. §101. The Company strongly disagrees with the court’s decision and intends to immediately appeal the ruling to the United States Court of Appeals for the Federal Circuit once the court enters final judgment. The Company has agreed to stay its patent litigations in the District of New Jersey against Centrify Corp. and Duo Security Inc. pending the appeal. The Company believes that the litigations currently pending in the District of Massachusetts should also be stayed pending appeal and is discussing such a motion with the defendants in that case. The appeal has been prepared by the Company’s attorney, and the Company expects the Court will rule on the appeal prior to the end of 2018. However, the Company cannot guarantee that the appeal will be ruled upon in that time frame, or of the outcome of the ruling.

On December 4, 2017, StrikeForce Technologies, Inc. v. Trustwave Holdings, Inc., Civil Action No. 2:16-cv-03573-JMV-MF which was pending in the United States District Court for the District of New Jersey, was settled. Trustwave’s infringing sales were made as an OEM of Duo Security Incorporated. The Company agreed to dismiss its claims against Trustwave because they were essentially duplicative of its claims against Duo Security Incorporated pursuant to StrikeForce Technologies, Inc . v. Duo Security Incorporated , Civil Action No. 2:16-cv-03571.

Asset Sale and Licensing Agreement

On August 24, 2015, the Company entered into an agreement with Cyber Safety, Inc., a New York corporation (“Cyber Safety”) for Cyber Safety to license, and retain an option to purchase, the patents and Intellectual Property related to the GuardedID® and MobileTrust® software. Cyber Safety has the option to buy the Company’s GuardedID® patent for $9,000,000 that expires on September 30, 2020. The Company anticipates Cyber Safety will make the purchase by September 30, 2020. Cyber Safety will also resell the Company’s GuardedID® and MobileTrust® products, for which the Company will receive a royalty, while the Company retains an unlimited license to resell those products. Cyber Safety also licensed the Malware Suite until September 30, 2020 and agreed to pay the Company 15% to 20% of the net amount Cyber Safety receives from this product. During the six months ended June 30, 2018 and 2017, the Company received $162 and $0, respectively, in license payments from Cyber Safety.

Note 12 – Subsequent Events

In July 2018, the Company entered into a consulting agreement with an unrelated party. The initial term of the agreement is for three months for a fee of $6,500 per month which renews for one month increments until terminated by either party. In conjunction with the agreement, the Company issued options to the consultant to purchase 500,001 shares of the Company’s common stock. The options are exercisable at $0.016 per share, vest immediately, and expire in October 2018.

In August 2018, our subsidiary BlockSafe executed one promissory note for an aggregate of $20,000 with one unrelated party, bearing interest at 8% per annum, and maturing in August 2019. Contemporaneously with the promissory note, BlockSafe entered into an obligation to pay the same party a fixed amount equal to the face amount of the promissory notes in tokens, as defined.

16

Table of Contents

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

CAUTIONARY STATEMENT REGARDING FORWARD-LOOKING STATEMENTS

Included in this interim report are "forward-looking" statements, within the meaning of the Private Securities Litigation Reform Act of 1995 ("PSLRA") as well as historical information. Some of our statements under "Business”, "Properties”, "Legal Proceedings”, "Management's Discussion and Analysis of Financial Condition and Results of Operations”," the Notes to Condensed Consolidated Financial Statements” and elsewhere in this report constitute "forward-looking statements" within the meaning of Section 27A of the Securities Act of 1933 and Section 21E of the Securities Exchange Act of 1934. Although we believe that the expectations reflected in these forward-looking statements are reasonable, we cannot assure you that the expectations reflected in these forward-looking statements will prove to be correct. Our actual results could differ materially from those anticipated in forward-looking statements as a result of certain factors, including matters described in the section titled "Risk Factors." Forward-looking statements include those that use forward-looking terminology, such as the words "anticipate," "believe," "estimate," "expect," "intend," "may," "project," "plan," "will," "shall," "should," and similar expressions, including when used in the negative. Although we believe that the expectations reflected in these forward-looking statements are reasonable and achievable, these statements involve risks and uncertainties and we cannot assure you that actual results will be consistent with these forward-looking statements. We claim the protection afforded by the safe harbor for forward-looking statements provided by the PSLRA.

Such risks include, among others, the following: international, national and local general economic and market conditions: our ability to sustain, manage or forecast our growth; material costs and availability; new product development and introduction; existing government regulations and changes in, or the failure to comply with, government regulations; adverse publicity; competition; the loss of significant customers or suppliers; fluctuations and difficulty in forecasting operating results; changes in business strategy or development plans; business disruptions; the ability to attract and retain qualified personnel; rules and regulation related to cryptocurrency, both domestic and foreign; liquidity of cyrptocurrency; the development of the cyrptocurrency market; the ability to protect technology; and other factors referenced in this filing.

Consequently, all the forward-looking statements made in this Form 10-Q are qualified by these cautionary statements and there can be no assurance that the actual results anticipated by management will be realized or, even if substantially realized, that they will have the expected consequences to or effects on our business operations. We undertake no obligation to update or revise these forward-looking statements, whether to reflect events or circumstances after the date initially filed or published, to reflect the occurrence of unanticipated events or otherwise.

Additional information concerning these and other risks and uncertainties is contained in our filings with the Securities and Exchange Commission, including the section entitled “Risk Factors” in our Annual Report on Form 10-K for the year ended December 31, 2017.

Unless otherwise noted, references in this Form 10-Q to “StrikeForce”, “we”, “us”, “our”, “SFT”, “our company”, and the “Company” means StrikeForce Technologies, Inc., a Wyoming corporation.

17

Table of Contents

Background

We are a software development and services company that offers a suite of integrated computer network security products using proprietary technology. Our ongoing strategy is developing and marketing our suite of network security products to the corporate, financial, healthcare, legal, government, technology, insurance, e-commerce and consumer sectors. We plan to continue to grow our business primarily through our globally expanding sales channel and internally generated sales, rather than by acquisitions. We conduct our operations from our corporate office in Edison, New Jersey.

Our executive office is located at 1090 King Georges Post Road, Suite 603, Edison, NJ 08837. Our telephone number is (732) 661-9641. We have 9 employees. Our Company’s website is www.strikeforcetech.com (we are not including the information contained in our website as part of, nor should the information be relied upon or incorporated by reference into, this report on Form 10-Q).

Intellectual Property

We are working with two patent attorney firms to aggressively continue to enforce our patent rights, since we have successfully settled our first major patent lawsuit, in January 2016. Our patent attorneys filed our fourth “Out of Band” continuation patents. We currently have three patents granted to us for Out-of-Band ProtectID® (Patent Nos.: 7,870,599, 8,484,698 and 8,713,701). In March 2013, our patent attorneys submitted a new “Methods and Apparatus for securing user input in a mobile device” Patent, which is now patent pending. Our MobileTrust® product is the invention supporting the patent pending. In September 2014, we filed an International Patent for MobileTrust® (PCT/US20114/029905) which is pending. We cannot provide assurances that the latter patent will be granted in fiscal 2018.

We are also working with two patent attorney firms to plan our strategy to aggressively enforce the patent rights relating to our granted Keystroke Encryption patents that help protect our GuardedID® and MobileTrust® products. We were granted three related keystroke encryption patents for which we received the most recent patent on March 3, 2015 (Patent Nos.: 8,566,608, 8,732,483 and 8,973,107).

We have four trademarks that have been approved and registered: ProtectID®, GuardedID®, MobileTrust® and CryptoColor®. A portion of our software is licensed from third parties and the remainder is developed by our own team of developers while leveraging some external consultant expertise as necessitated. We rely upon confidentiality agreements signed by our employees, consultants and third parties to protect the intellectual property rights.

On September 6, 2017, we entered into a Litigation Funding Agreement with two parties for the purpose of funding the enforcement of certain patents relating to the process of providing dual channel authentication against several infringers. Our management believes, but cannot guarantee, that this Litigation Funding Agreement will allow us to pursue litigation against any infringement on our patents.

BlockSafe Technologies, Inc.

BlockSafe Technologies, Inc. (“BlockSafe”) was formed on December 1, 2017 in the State of Wyoming. BlockSafe is in the business of providing total cyber security solutions and is the licensee from our company of our desktop anti-malware product called “GuardedID ^® ” and a one of a kind mobile application called “MobileTrust®”. BlockSafe is intended to be developed as an enterprise focusing on using our licensed technology in the field of cryptocurrency and its use of blockchains. No revenues have been generated to date as BlockSafe is still in the developmental stage. There can be no assurances on the success of this project or any profitability arising from BlockSafe. At June 30, 2018 and through the date of filing, BlockSafe has not developed or issued any tokens and there is no assurance as to whether, or at what amount, or on what terms, tokens will be available to be issued, if ever. The Securities and Exchange Commission has, in its dissemination of information to the public, expressed that tokens in the United States would be treated as securities pursuant to the Howey Test .

At present, we hold 49% of the issued and outstanding BlockSafe common stock, with Mark L. Kay, Ramarao Pemmaraju, and, George Waller, our Directors, each a member of the BlockSafe Advisory Board and individually holding 10.3% of the issued and outstanding common stock of BlockSafe, each, for a combined total of 31%. Mark L. Kay, our CEO, is currently the sole member of the BlockSafe Board of Directors but does not serve as an officer.

As a result of our 49% ownership and our Directors’ combined 31% ownership of the issued and outstanding BlockSafe common stock, we are effectively able to influence all matters requiring BlockSafe shareholder action, including significant corporate transactions. Therefore, BlockSafe’s financial results have been consolidated with our financial results.

In June 2018, the Chief Executive Officer of BlockSafe resigned and the Board of Directors appointed two members of our management team, George Waller, our Executive Vice President and Ramarao Pemmaraju, our Chief Technical Officer, to serve as the Chief Executive Officer and Chief Technical Officer, respectively, of BlockSafe. Additionally, our Chief Executive Officer, Mark L. Kay, also an appointee to the Board of Directors of BlockSafe, was appointed as Chairman and President of BlockSafe.

18

Table of Contents

Results of Operations

FOR THE THREE MONTHS ENDED JUNE 30, 2018 COMPARED TO THE THREE MONTHS ENDED JUNE 30, 2017

Revenues for the three months ended June 30, 2018 were $170,951 compared to $58,736 for the three months ended June 30, 2017, an increase of $112,215 or 191%. The increase in revenues was primarily due to the 49% of the non-controlling interest of the management fees we charged to our subsidiary, BlockSafe, in the quarter. Revenues are derived from software, keyfobs and services, which include the management fees in 2018.

Cost of revenues for the three months ended June 30, 2018 was $2,703 compared to $3,754 for the three months ended June 30, 2017, a decrease of $1,051, or 28.0%. The decrease resulted from the decrease in fees related to our revenues. Cost of revenues as a percentage of total revenues for the three months ended June 30, 2018 was 1.6% compared to 3.1% for the three months ended June 30, 2017.

Gross profit for the three months ended June 30, 2018 was $168,248 compared to $54,982 for the three months ended June 30, 2017, an increase of $113,266, or 206%. The increase in gross profit was due to the increase in our revenues.

Research and development expenses for the three months ended June 30, 2018 were $123,750 compared to $153,751 for the three months ended June 30, 2017, a decrease of $30,001, or 19.5%. The decrease in research and development expenses was due to a decrease in the purchase of peripherals for testing purposes. The salaries, benefits and overhead costs of personnel conducting research and development of our software products primarily comprises our research and development expenses.

Compensation, professional fees, and selling, general and administrative (collectively, “SGA”) expenses for the three months ended June 30, 2018 were $728,982 compared to $376,470 for the three months ended June 30, 2017, an increase of $325,512 or 93.6%. The increase was due primarily to increased expenses in our subsidiary, BlockSafe, which began operations in December 2017. SG&A expenses consist primarily of salaries, benefits and overhead costs for executive and administrative personnel, insurance, fees for professional services, including consulting, legal, and accounting fees, plus travel costs and non-cash stock compensation expense for the issuance of stock options to employees and other general corporate expenses.

For the three months ended June 30, 2018, other expense was ($238,489) as compared to other expense of ($204,859) for the three months ended June 30, 2017, representing an increase in other expense of $33,630, or 16.4%. The increase was primarily due to increased expenses in our subsidiary, BlockSafe, which began operations in December 2017.

Our net loss for the three months ended June 30, 2018 was $922,973 compared to $680,098 for the three months ended June 30, 2017, an increase of $242,875, or 35.7%. The increase was primarily due to increased expenses in our subsidiary, BlockSafe, which began operations in December 2017.

The net loss attributable to the noncontrolling interest in our subsidiary for the three months ended June 30, 2018 was $189,576. These results are due to the net loss recorded by our subsidiary, BlockSafe, which began operations in December 2017.

FOR THE SIX MONTHS ENDED JUNE 30, 2018 COMPARED TO THE SIX MONTHS ENDED JUNE 30, 2017

Revenues for the six months ended June 30, 2018 were $235,644 compared to $142,605 for the six months ended June 30, 2017, an increase of $93,039 or 65.2%. The increase in revenues was primarily due to the 49% of the non-controlling interest of the management fees we charged to our subsidiary, BlockSafe, in the interim period ended June 30, 2018. Revenues are derived from software, keyfobs and services, which include the management fees in 2018.

Cost of revenues for the six months ended June 30, 2018 was $9,457 compared to $6,380 for the six months ended June 30, 2017, an increase of $3,077, or 48.2%. The increase resulted from the increase in fees related to our revenues. Cost of revenues as a percentage of total revenues for the six months ended June 30, 2018 was 4.0% compared to 3.1% for the six months ended June 30, 2017.

19

Table of Contents

Gross profit for the six months ended June 30, 2018 was $226,187 compared to $136,225 for the six months ended June 30, 2017, an increase of $89,962, or 66.0%. The increase in gross profit was due to the increase in our revenues offset by the increase in our cost of revenues.

Research and development expenses for the six months ended June 30, 2018 were $247,500 compared to $278,782 for the six months ended June 30, 2017, a decrease of $31,282, or 11.2%. The decrease in research and development expenses was due to a decrease in the purchase of peripherals for testing purposes. The salaries, benefits and overhead costs of personnel conducting research and development of our software products primarily comprises our research and development expenses.

Compensation, professional fees, and selling, general and administrative (collectively, “SGA”) expenses for the six months ended June 30, 2018 were $1,341,660 compared to $1,429,100 for the six months ended June 30, 2017, a decrease of $87,440 or 6.1%. The decrease was due primarily to decreased expenses relating to the previous vesting of options in the six months ended June 30, 2017 that were granted to employees in September 2016, offset by increased expenses in our subsidiary, BlockSafe, which began operations in December 2017. SG&A expenses consist primarily of salaries, benefits and overhead costs for executive and administrative personnel, insurance, fees for professional services, including consulting, legal, and accounting fees, plus travel costs and non-cash stock compensation expense for the issuance of stock options to employees and other general corporate expenses.

For the six months ended June 30, 2018, other expense was ($297,768) as compared to other expense and deemed dividend of ($521,987) for the six months ended June 30, 2017, representing a decrease in other expense of $224,219, or 43.0%. The decrease was primarily due to a decrease in the change in the in the fair value of derivative liabilities, offset by an increase in private placement costs, an increase in debt discount amortization expenses and increased expenses from our subsidiary, BlockSafe, which began operations in December 2017.

Our net loss for the six months ended June 30, 2018 was $1,660,741 compared to $2,093,644 for the six months ended June 30, 2017, a decrease of $432,903, or 20.7%. The decrease was primarily due to decreased expenses relating to previous vesting of options granted to employees in September 2016 and the decrease in the change in the in the fair value of derivative liabilities, offset by an increase in private placement costs, an increase in debt discount amortization expenses and increased expenses in our subsidiary, BlockSafe, which began operations in December 2017.

The net loss attributable to the noncontrolling interest in our subsidiary for the six months ended June 30, 2018 was $307,878. These results are due to the net loss recorded by our subsidiary, BlockSafe, which began operations in December 2017.

Liquidity and Capital Resources

Our total current assets at June 30, 2018 were $442,945, which included cash of $392,577, as compared with $512,036 in total current assets at December 31, 2017, which included cash of $455,484. Additionally, we had a total stockholders’ deficit in the amount of $12,098,446 at June 30, 2018 compared to a stockholders’ deficit of $10,793,186 at December 31, 2017. We have historically incurred recurring losses and have financed our operations through loans, principally from affiliated parties such as our directors, and from the proceeds of debt and equity financing.

We financed our operations during the six months ended June 30, 2018 primarily from the issuance of convertible debentures of $365,000 and the issuance of promissory notes of $665,500 by our subsidiary, BlockSafe.

Going Concern

We have yet to establish any history of profitable operations. For the six months ended June 30, 2018, we incurred a loss attributable to common shareholders of $1,352,863 and used cash in operating activities of $1,016,848, and at June 30, 2018, we had a stockholders’ deficit of $12,098,446. In addition, we are in default on notes payable and convertible notes payable in the aggregate amount of $3,076,924. These factors raise substantial doubt about our ability to continue as a going concern within one year after the date the financial statements are issued. In addition, the Company’s independent registered public accounting firm, in its report published on our December 31, 2017 year-end financial statements, raised substantial doubt about the Company’s ability to continue as a going concern. The Company’s financial statements do not include any adjustments that might result from the outcome of this uncertainty should we be unable to continue as a going concern.

Our ability to continue as a going concern is dependent upon our ability to raise additional funds and implement our business plan. Management is currently seeking additional funds, primarily through the issuance of debt and equity securities for cash to operate our business. Management anticipates, but cannot provide assurances, that additional financing will arise from the license granted to BlockSafe once BlockSafe becomes revenue producing, as well as management fees from BlockSafe. Currently, management is attempting to increase revenues and improve gross margins by a revised sales strategy. We are redirecting our sales focus from direct sales to domestic and international sales channel, where we are primarily selling through a channel of Distributors, Value Added Resellers, Strategic Partners and Original Equipment Manufacturers. While we believe in the viability of our strategy to increase revenues and in our ability to raise additional funds, there can be no assurances to that effect. Our ability to continue as a going concern is dependent upon our ability to continually increase our customer base and realize increased revenues from recently signed contracts. No assurance can be given that any future financing will be available or, if available, that it will be on terms that are satisfactory to us. Even if we are able to obtain additional financing, it may contain undue restrictions on our operations, in the case of debt financing or cause substantial dilution for our stock holders, in the case of equity financing.

20

Table of Contents

Off-Balance Sheet Arrangements

We do not have any off-balance sheet arrangements that are reasonably likely to have a current or future effect on our financial condition, revenues, result of operations, liquidity or capital expenditures.

Critical Accounting Policies

Use of Estimates

The preparation of financial statements in conformity with generally accepted accounting principles requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period. Significant estimates include those related to accounting for potential liabilities and the assumptions made in valuing stock instruments issued for services and derivative liabilities. Actual results could differ from those estimates.

Revenue Recognition

In 2014, the FASB issued guidance on revenue recognition (“ASC 606”), with final amendments issued in 2016. The underlying principle of ASC 606 is to recognize revenue to depict the transfer of goods or services to customers at the amount expected to be collected. ASC 606 creates a five-step model that requires entities to exercise judgment when considering the terms of contracts, which includes (1) identifying the contracts or agreements with a customer, (2) identifying the Company’s performance obligations in the contract or agreement, (3) determining the transaction price, (4) allocating the transaction price to the separate performance obligations, and (5) recognizing revenue as each performance obligation is satisfied. The Company only applies the five-step model to contracts when it is probable that the Company will collect the consideration it is entitled to in exchange for the services it transfers to its clients. The Company has concluded that the new guidance did not require any significant change to its revenue recognition processes.

The Company’s revenue consists of revenue from sales and support of our software products.

The Company adopted the guidance of ASC 606 on January 1, 2018, and the implementation of ASC 606 did not have a material impact on the Company’s consolidated financial statements.

Cost of revenue includes direct costs and fees related to the sale of our products.

Stock Compensation

We periodically issue stock options and warrants to employees and non-employees in non-capital raising transactions for services and for financing costs. We account for stock option and warrant grants issued and vesting to employees based on the authoritative guidance provided by the Financial Accounting Standards Board (FASB) whereas the value of the award is measured on the date of grant and recognized as compensation expense on the straight-line basis over the vesting period. We account for stock option and warrant grants issued and vesting to non-employees in accordance with the authoritative guidance of the FASB whereas the value of the stock compensation is based upon the measurement date as determined at either a) the date at which a performance commitment is reached, or b) at the date at which the necessary performance to earn the equity instruments is complete. Options granted to non-employees are revalued each reporting period to determine the amount to be recorded as an expense in the respective period. As the options vest, they are valued on each vesting date and an adjustment is recorded for the difference between the value already recorded and the then current value on the date of vesting. In certain circumstances where there are no future performance requirements by the non-employee, option grants are immediately vested and the total stock-based compensation charge is recorded in the period of the measurement date.

21

Table of Contents

The fair value of our stock option and warrant grants are estimated using the Black-Scholes-Merton Option Pricing model, which uses certain assumptions related to risk-free interest rates, expected volatility, expected life of the stock options or warrants, and future dividends. Compensation expense is recorded based upon the value derived from the Black-Scholes-Merton Option Pricing model, and based on actual experience. The assumptions used in the Black-Scholes-Merton Option Pricing model could materially affect compensation expense recorded in future periods.

Derivative Financial Instruments

We evaluate our financial instruments to determine if such instruments are derivatives or contain features that qualify as embedded derivatives. For derivative financial instruments that are accounted for as liabilities, the derivative instrument is initially recorded at its fair value and is then re-valued at each reporting date, with changes in the fair value reported in the statements of operations. The classification of derivative instruments, including whether such instruments should be recorded as liabilities or as equity, is evaluated at the end of each reporting period. Derivative instrument liabilities are classified in the balance sheet as current or non-current based on whether or not net-cash settlement of the derivative instrument could be required within 12 months of the balance sheet date.

To determine the number of authorized but unissued shares available to satisfy outstanding convertible securities, we use a sequencing method to prioritize its convertible securities as prescribed by ASC 815-40-35. At each reporting date, we review our convertible securities to determine their classification is appropriate.

Recently Issued Accounting Pronouncements

Refer to Note 1 in the accompanying condensed consolidated financial statements.

Additional Information

You are advised to read this Form 10-Q in conjunction with other reports and documents that we file from time to time with the SEC. In particular, please read our Quarterly Reports on Form 10-Q, Annual Reports on Form 10-K, and Current Reports on Form 8-K that we file from time to time. You may obtain copies of these reports directly from us or from the SEC at the SEC’s Public Reference Room at 100 F. Street, N.E. Washington, D.C. 20549, and you may obtain information about obtaining access to the Reference Room by calling the SEC at 1-800-SEC-0330. In addition, the SEC maintains information for electronic filers at its website http://www.sec.gov.

ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

As a smaller reporting company, we are not required to provide the information required by this Item.

ITEM 4. CONTROLS AND PROCEDURES

(a) Evaluation of Disclosure Controls and Procedures.

Regulations under the Securities Exchange Act of 1934 (the “Exchange Act”) require public companies to maintain “disclosure controls and procedures,” which are defined as controls and other procedures that are designed to ensure that information required to be disclosed by the issuer 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's rules and forms. Disclosure controls and procedures include, without limitation, controls and procedures designed to ensure that information required to be disclosed by an issuer in the reports that it files or submits under the Exchange Act is accumulated and communicated to the issuer's management, including its principal executive and principal financial officers, or persons performing similar functions, as appropriate to allow timely decisions regarding required disclosure.

We carried out an evaluation, with the participation of our management, including our Chief Executive Officer (“CEO”) and our Chief Financial Officer (CFO) of the effectiveness our disclosure controls and procedures (as defined under Rule 13a-15(e) under the Exchange Act) as of June 30, 2018. Based upon that evaluation, our CEO and CFO concluded that our disclosure controls and procedures are not effective at the reasonable assurance level due to the following material weaknesses:

22

Table of Contents

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 as of and for the interim period ended June 30, 2018. 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. Our board of directors has no independent director or member with financial expertise which causes ineffective oversight of our external financial reporting and internal control over financial reporting.

3. 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.

To address these material weaknesses, management performed additional analyses and other procedures to ensure that the financial statements included herein fairly present, in all material respects, our financial position, results of operations and cash flows for the periods presented.

Remediation of Material Weaknesses

We intend to remediate the material weaknesses in our disclosure controls and procedures identified above by adding an independent director or member with financial expertise or hiring a full-time CFO with SEC reporting experience in the future when working capital permits and by working with our independent registered public accounting firm to refine our internal procedures.

(b) Changes in Internal Control over Financial Reporting

There were no changes in our internal control over financial reporting, as defined in Rules 13a-15(f) and 15d-15(f) under the Exchange Act, during our most recently completed fiscal quarter that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.

23

Table of Contents

PART II - OTHER INFORMATION

ITEM 1. LEGAL PROCEEDINGS

On June 20, 2016, we initiated additional patent litigation against three major competitors in the U.S. District Court for the District of New Jersey, for infringement of United States Patent No. 8,484,698. This litigation was filed by our patent attorneys, Blank Rome LLP, and is ongoing. On March 14, 2017, one of the parties initiated an inter parties review (IPR) (a procedure for challenging the validity of a United States patent before the United States Patent and Trademark Office) against our second Patent No. 8,484,698.

On March 14, 2017, we initiated additional patent litigation against two major competitors in the U.S. District Court for the District of Massachusetts, for infringement of United States Patent Nos. 7,870,599, 8,484,698 and 8,713,701. This litigation was filed by our patent attorneys, Ropes and Gray LLP, and is ongoing.

On March 14, 2017, we initiated additional patent litigation against two major competitors in the U.S. District Court for the Eastern District of Virginia, for infringement of United States Patent Nos. 7,870,599, 8,484,698 and 8,713,701. This litigation was filed by our patent attorneys, Ropes and Gray LLP, and is ongoing. On June 13, 2017, one of the competitors initiated a lawsuit against us in the U.S. District Court for the District of New Jersey for patent infringement (which we believe is without merit and will defend vigorously). This litigation is ongoing.

On December 1, 2017, The United States District Court for the Central District of California issued an opinion in the StrikeForce Technologies, Inc. v. SecureAuth Corp. case, which invalidated claims of U.S. Patent Nos. 7,870,599, 8,484,698 and 8,713,701 under 35 U.S.C. §101. We strongly disagree with the court’s decision and intend to immediately appeal the ruling to the United States Court of Appeals for the Federal Circuit once the court enters final judgment. We have agreed to stay our patent litigations in the District of New Jersey against Centrify Corp. and Duo Security Inc. pending the appeal. We believe that the litigations currently pending in the District of Massachusetts should also be stayed pending appeal and are discussing such a motion with the defendants in that case. The appeal has been prepared by our attorney, and we expect the Court will rule on our appeal prior to the end of 2018. However, we cannot guarantee that the appeal will be ruled upon in that time frame, or of the outcome of the ruling.

On December 4, 2017, StrikeForce Technologies, Inc. v. Trustwave Holdings, Inc., Civil Action No. 2:16-cv-03573-JMV-MF which was pending in the United States District Court for the District of New Jersey, was settled. Trustwave’s infringing sales were made as an OEM of Duo Security Incorporated. We agreed to dismiss our claims against Trustwave because they were essentially duplicative of our claims against Duo Security Incorporated pursuant to StrikeForce Technologies, Inc. v. Duo Security Incorporated, Civil Action No. 2:16-cv-03571.

ITEM 1A. RISK FACTORS

Not required under Regulation S-K for “smaller reporting companies.”

Information about risk factors for the interim period ended June 30, 2018, does not differ materially from that set forth in Part I, Item 1A of our 2017 Annual Report on Form 10-K.

ITEM 2. RECENT ISSUANCES OF UNREGISTERED SECURITIES

In June 2018, one holder of our Series B Preferred Stock converted 33,334 Series B preferred shares into 8,333,500 shares of our common stock at a conversion price of $0.004 per share.

In June 2018, we issued a total of 7,500 shares of restricted common stock, valued at $122, relating to a December 2009 retainer agreement with our SEC attorney.

The above offering was made in reliance upon the exemption from registration under Rule 506 of Regulation D promulgated under the Securities Act of 1933 and/or Section 4(2) of the Securities Act of 1933, based on the following: (a) the investors confirmed to us that they were “accredited investors,” as defined in Rule 501 of Regulation D promulgated under the Securities Act of 1933 and had such background, education and experience in financial and business matters as to be able to evaluate the merits and risks of an investment in the securities; (b) there was no public offering or general solicitation with respect to the offering; (c) the investors were provided with certain disclosure materials and all other information requested with respect to our company; (d) where applicable, the investors acknowledged that all securities being purchased were “restricted securities” for purposes of the Securities Act of 1933, and agreed to transfer such securities only in a transaction registered under the Securities Act of 1933 or exempt from registration under the Securities Act; and (e) where applicable, a legend was placed on the certificates representing each such security stating that it was restricted and could only be transferred if subsequent registered under the Securities Act of 1933 or transferred in a transaction exempt from registration under the Securities Act of 1933.

ITEM 3. DEFAULTS UPON SENIOR SECURITIES.

We have not made various principal and interest payments on many of our debt obligations. We continue to seek work-out arrangements and applicable refinancing with new or revised debt or equity instruments. See Notes 2 and 4 to the condensed consolidated financial statements.

ITEM 4. MINE SAFETY DISCLOSURES

Not applicable.

ITEM 5. OTHER INFORMATION.

None.

24

Table of Contents

ITEM 6. EXHIBITS AND FINANCIAL STATEMENT SCHEDULES.

Exhibit Number		Description
3.1		Amended and Restated Certificate of Incorporation of StrikeForce Technologies, Inc.(1)
3.2		By-laws of StrikeForce Technologies, Inc. (1)
3.3		Amended By-laws of StrikeForce Technologies, Inc. (2)
3.4		Amended By-laws of StrikeForce Technologies, Inc. (19)
3.5		Articles of Amendment of StrikeForce Technologies, Inc. (2)
3.6		Amendments to Articles of Incorporation (6)
3.7		Amendments to Articles of Incorporation (7)
3.8		Registration of Classes of Securities (8)
3.9		Amendments to Articles of Incorporation (9)
3.10		Registration of Classes of Securities (10)
3.11		Amendments to Articles of Incorporation (11)
3.12		Registration of Classes of Securities (12)
3.13		Amendments to Articles of Incorporation (13)
3.14		Amendments to Articles of Incorporation (14)
3.15		Amendments to Articles of Incorporation (15)
3.16		Amendments to Articles of Incorporation (16)
10.1		Employment Agreement dated as of May 20, 2003, by and between StrikeForce Technologies, Inc. and Mark L. Kay. (1)
10.2		Irrevocable Waiver of Conversion Rights of Mark L. Kay (4)
10.3		Irrevocable Waiver of Conversion Rights of Ramarao Pemmaraju (4)
10.4		Irrevocable Waiver of Conversion Rights of George Waller (4)
10.5		CFO Consultant Agreement with Philip E. Blocker (4)
10.6		2012 Stock Option Plan (5)
10.7		Asset Purchase Agreement between StrikeForce Technologies, Inc. and Cyber Safety, Inc., dated August 24, 2015 (17)
10.8		Amendment to the Asset Purchase Agreement and Distributor and Reseller Agreement between StrikeForce Technologies, Inc. and Cyber Safety, Inc. (18)
10.9		Execution of Litigation Funding Agreement (20)
10.10		BlockSafe Technologies, Inc. Intellectual Property License Agreement (3)
10.11		BlockSafe Technologies, Inc. Management Agreement (3)
10.12		BlockSafe Technologies, Inc. Amended Management Agreement (3)
31.1		Certification by Chief Executive Officer, required by Rule 13a-14(a) or Rule 15d-14(a) of the Exchange Act, promulgated pursuant to Section 302 of the Sarbanes-Oxley Act of 2002. (3)
31.2		Certification by Chief Financial Officer, required by Rule 13a-14(a) or Rule 15d-14(a) of the Exchange Act, promulgated pursuant to Section 302 of the Sarbanes-Oxley Act of 2002. (3)
32.1		Certification by Chief Executive Officer, required by Rule 13a-14(b) or Rule 15d-14(b) of the Exchange Act and Section 1350 of Chapter 63 of Title 18 of the United States Code, promulgated pursuant to Section 906 of the Sarbanes-Oxley Act of 2002. (3)
32.2		Certification by Chief Financial Officer, required by Rule 13a-14(b) or Rule 15d-14(b) of the Exchange Act and Section 1350 of Chapter 63 of Title 18 of the United States Code, promulgated pursuant to Section 906 of the Sarbanes-Oxley Act of 2002. (3)

(1) Filed as an exhibit to the Registrant’s Form SB-2 dated as of May 11, 2005 and incorporated herein by reference.

(2) Filed as an exhibit to the Registrant’s Form 8-K dated February 4, 2011 and incorporated herein by reference.

(3) Filed herewith.

(4) Filed as an exhibit to the Registrant’s Form S-1/A dated July 31, 2012 and incorporated herein by reference.

(5) Filed in conjunction with the Registrant’s Form 14A filed October 5, 2012 and incorporated herein by reference.

(6) Filed as an exhibit to the Registrant’s Form 8-K dated February 5, 2013 and incorporated herein by reference.

(7) Filed as an exhibit to the Registrant’s Form 8-K dated May 14, 2013 and incorporated herein by reference.

(8) Filed as an exhibit to the Registrant’s Form 8-A dated July 29, 2013 and incorporated herein by reference.

(9) Filed as an exhibit to the Registrant’s Form 8-K dated August 22, 2013 and incorporated herein by reference.

(10) Filed as an exhibit to the Registrant’s Form 8-A dated October 3, 2013 and incorporated herein by reference.

(11) Filed as an exhibit to the Registrant’s Form 8-K dated October 3, 2013 and incorporated herein by reference.

(12) Filed as an exhibit to the Registrant’s Form 8-A dated December 31, 2013 and incorporated herein by reference.

(13) Filed as an exhibit to the Registrant’s Form 8-K dated December 31, 2013 and incorporated herein by reference.

(14) Filed as an exhibit to the Registrant’s Form 8-K dated March 18, 2014 and incorporated herein by reference.

(15) Filed as an exhibit to the Registrant’s Form 8-K dated December 22, 2014 and incorporated herein by reference.

(16) Filed as an exhibit to the Registrant’s Form 8-K dated February 13, 2015 and incorporated herein by reference.

(17) Filed as an exhibit to the Registrant’s Form 8-K dated August 28, 2015 and incorporated herein by reference.

(18) Filed as an exhibit to the Registrant’s Form 8-K dated February 2, 2016 and incorporated herein by reference.

(19) Filed as an exhibit to the Registrant’s Form 8-K dated May 19, 2017 and incorporated herein by reference.

(20) Filed as an exhibit to the Registrant’s Form 8-K dated September 11, 2017 and incorporated herein by reference.

25

Table of Contents

SIGNATURES

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

	STRIKEFORCE TECHNOLOGIES, INC.

Dated: August 16, 2018	By:	/s/ Mark L. Kay
		Mark L. Kay
		Chief Executive Officer

Dated: August 16, 2018

By:

/s/ Philip E. Blocker

Philip E. Blocker

Chief Financial Officer and

Principal Accounting Officer

EXHIBIT 10.10

EXHIBIT 10.11

EXHIBIT 10.12

EXHIBIT 31.1

CERTIFICATION

CERTIFICATION OF CHIEF EXECUTIVE OFFICER

PURSUANT TO RULES 13A-14 AND 15D-14

OF THE SECURITIES EXCHANGE ACT OF 1934

I, Mark L. Kay, certify that:

1. I have reviewed this quarterly report on Form 10-Q of StrikeForce Technologies, Inc.;

2. Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;

3. Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;

4. The registrant's other certifying officer(s) and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:

a. Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;

b. Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;

c. Evaluated the effectiveness of the registrant's disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and

d. Disclosed in this report any change in the registrant's internal control over financial reporting that occurred during the registrant's most recent fiscal quarter (the registrant's fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant's internal control over financial reporting; and

5. The registrant's other certifying officer(s) and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant's auditors and the audit committee of the registrant's board of directors (or persons performing the equivalent functions):

a. All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant's ability to record, process, summarize and report financial information; and

b. Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant's internal control over financial reporting.

Dated: August 16, 2018
By:
/s/ Mark L. Kay

Mark L. Kay

Chief Executive Officer

EXHIBIT 31.2

CERTIFICATION

CERTIFICATION OF CHIEF FINANCIAL OFFICER

PURSUANT TO RULES 13A-14 AND 15D-14

OF THE SECURITIES EXCHANGE ACT OF 1934

I, Philip E. Blocker, certify that:

Dated: August 16, 2018
By:
/s/ Philip E. Blocker

Philip E. Blocker

Chief Financial Officer

EXHIBIT 32.1

CERTIFICATION PURSUANT TO

18 U.S.C. SECTION 1350,

AS ADOPTED PURSUANT

TO SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002

In connection with the Quarterly Report of StrikeForce Technologies, Inc. (the "Company") on Form 10-Q for the quarter ended June 30, 2018, as filed with the Securities and Exchange Commission on the date hereof (the "Report"), I, Mark L. Kay, Chief Executive Officer of the Company, certify, pursuant to 18 U.S.C. 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2001, that:

The Report fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934; and

The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company.

Dated: August 16, 2018
By:
/s/ Mark L. Kay

Mark L. Kay

Chief Executive Officer

EXHIBIT 32.2

CERTIFICATION PURSUANT TO

18 U.S.C. SECTION 1350,

AS ADOPTED PURSUANT

TO SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002

In connection with the Quarterly Report of StrikeForce Technologies, Inc. (the "Company") on Form 10-Q for the quarter ended June 30, 2018, as filed with the Securities and Exchange Commission on the date hereof (the "Report"), I, Philip E. Blocker, Chief Financial Officer of the Company, certify, pursuant to 18 U.S.C. 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2001, that:

The Report fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934; and

The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company.

Dated: August 16, 2018
By:
/s/ Philip E. Blocker

Philip E. Blocker

Chief Financial Officer

STRIKEFORCE TECHNOLOGIES, INC.
CONDENSED CONSOLIDATED BALANCE SHEETS

	June 30, 2018			December 31, 2017
	(Unaudited)
ASSETS
Current Assets:
Cash	$	392,577		$	455,484
Accounts receivable, net		31,712			47,454
Prepaid expenses		18,656			9,098

Total current assets		442,945			512,036

Property and equipment, net		7,178			7,676
Other assets		19,458			20,485

Total Assets	$	469,581		$	540,197

LIABILITIES AND STOCKHOLDERS' DEFICIT
Current Liabilities:
Accounts payable and accrued expenses	$	944,119		$	957,440
Convertible notes payable (net of discount of $296,507 and $0, respectively;
$1,438,100 in default at June 30, 2018 and December 31, 2017 , respectively)		1,506,593			1,438,100
Convertible notes payable - related parties		355,500			355,500
Notes payable (net of discount of $463,769 and $0, respectively;
$1,638,824 in default at June 30, 2018 and December 31, 2017, respectively)		1,840,555			1,713,824
Notes payable - related parties		742,513			742,513
Accrued interest (including $1,205,118 and $1,145,941 due to related parties, respectively)		4,200,574			4,002,811
Contingent payment obligation		1,500,000			1,500,000
Financing obligation		665,500			-
Derivative liabilities		812,673			623,195

Total Current Liabilities		12,568,027			11,333,383

Commitments and contingencies

Stockholders' Deficit
Series A Preferred stock, no par value; 100 shares authorized;
3 shares issued and outstanding		987,000			987,000
Series B Preferred stock par value $0.10: 100,000,000 shares authorized;
36,667 and 70,001 shares issued and outstanding, respectively		3,667			7,000
Preferred stock series not designated par value $0.10: 10,000,000 shares authorized;
none issued or outstanding		-			-
Common stock par value $0.0001: 5,000,000,000 shares authorized;
2,344,191,741 and 2,335,843,241 shares issued and outstanding, respectively		234,419			233,584
Additional paid-in capital		25,880,310			25,522,331
Accumulated deficit		(38,895,964	)		(37,543,101	)
Total StrikeForce Technologies, Inc. stockholders' deficit		(11,790,568	)		(10,793,186	)
Noncontrolling interest in consolidated subsidiary		(307,878	)		-

Total Stockholders' Deficit		(12,098,446	)		(10,793,186	)

Total Liabilities and Stockholders' Deficit	$	469,581		$	540,197

STRIKEFORCE TECHNOLOGIES, INC.
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS

STRIKEFORCE TECHNOLOGIES, INC.
CONDENSED CONSOLIDATED STATEMENT OF CHANGES IN STOCKHOLDERS' DEFICIT
FOR THE SIX MONTHS ENDED JUNE 30, 2018
(Unaudited)

	Series A Preferred stock, no par value				Series B Preferred stock, par value $0.10						Common stock, par value $0.0001				Additional Paid-in		Accumulated			Non- controlling			Total Stockholders'
	Shares		Amount		Shares			Amount			Shares		Amount		Capital		Deficit			Interest			Deficit
Balance at December 31, 2017		3	$	987,000		70,001		$	7,000			2,335,843,241	$	233,584	$	25,522,331	$	(37,543,101	)	$	-		$	(10,793,186	)

Fair value of common stock issued for services		-		-		-			-			15,000		2		202		-						204

Fair value of vested options		-		-		-			-			-		-		355,277		-						355,277
																								-
Common stock issued upon conversion of Series B preferred stock		-		-		(33,334	)		(3,333	)		8,333,500		833		2,500		-						-

Net loss		-		-		-			-			-		-		-		(1,352,863	)		(307,878	)		(1,660,741	)

Balance at June 30, 2018 (unaudited)		3	$	987,000		994,107		$	3,667			2,344,191,741	$	234,419	$	25,880,310	$	(38,895,964	)	$	(307,878	)	$	(12,098,446	)

STRIKEFORCE TECHNOLOGIES, INC.
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

	Three Months Ended
	June 30, 2018		June 30, 2017
	(Unaudited)		(Unaudited)
Software	$	53,496	$	39,692
Service		114,752		15,290
Total revenue	$	168,248	$	54,982

	Six Months Ended
	June 30, 2018		June 30, 2017
	(Unaudited)		(Unaudited)
Software	$	110,385	$	102,472
Service		125,259		40,133
Total revenue	$	235,644	$	142,605

	June 30, 2018			December 31, 2017
Secured
(a) DART, in default	$	542,588		$	542,588

Unsecured
(b) Convertible notes with fixed conversion features, in default		895,512			895,512
(c) Convertible notes with adjustable conversion features		365,000			-
Total convertible notes principal outstanding		1,803,100			1,438,100
Debt discount		(296,507	)		-
Convertible notes, net of discount	$	1,506,593		$	1,438,100

(b)	Convertible notes payable with fixed conversion features (“fixed convertible notes”) consisted of 13 unsecured convertible notes convertible at a fixed amount into 13 shares of the Company’s common stock, at fixed conversion prices ranging from $1,950,000 to $9,750,000,000 per share, as defined in the agreements and adjusted for applicable reverse stock splits. The notes bear interest at 8% to 18% per annum, and were due on various dates from March 2008 to July 2015. All of the fixed convertible notes are currently in default and the Company is pursuing settlements with certain of the holders. During the six months ended June 30, 2018, there were no additional notes issued or any repayments of note principal.

	At December 31, 2017, the balance of the accrued interest on the fixed convertible notes was $1,004,631. During the six months ended June 30, 2018, interest expense of $37,258 was accrued. At June 30, 2018, the balance of accrued interest on the fixed convertible notes was $1,041,889.

(c)	During the six months ended June 30, 2018, the Company issued three convertible notes payable for an aggregate of $365,000, bearing interest at 10% per annum, and maturing through June 2019. During the six months ended June 30, 2018, interest expense of $6,849 was accrued. At the option of the holder, the note is convertible into shares of common stock of the Company at a price per share discount of 58% of the lowest closing market price of the Company’s common stock for the twenty days preceding a conversion notice. As a result, the Company determined that the conversion features of the convertible notes were not considered indexed to the Company’s own stock and characterized the fair value of the conversion features as derivative liabilities upon issuance. The Company determined that upon issuance of the convertible notes in March, April and June 2018, the initial fair value of the embedded conversion feature was a total of $744,249 (see Note 8), of which $365,000 was recorded as debt discount offsetting the face amount of the convertible notes, and the remainder of $379,249 was recorded as private placement costs. During the six months ended June 30, 2018, debt discount amortization of $68,493 was recorded in interest expense and the balance of the unamortized discount at June 30, 2018 was $296,507.

(a)	Notes payable consists of various unsecured promissory notes with interest from 8% to 14% per annum. The notes were due on various dates from December 2011 to July 2017 and are currently in default, The Company is currently pursuing settlements with certain of the note holders. At June 30, 2018 and December 31, 2017, the balance due under these notes was $413,824.

	At December 31, 2017, the balance of the accrued interest on the notes payable-various was $459,898. During the six months ended June 30, 2018, $22,591 of interest expense was accrued. At June 30, 2018, accrued interest on the notes payable was $482,489.

(b)	Notes payable to StrikeForce Investor Group (SIG), made up of various investors with unsecured notes, interest at 10% per annum, originally due in 2011, and currently in default. At December 31, 2017, the balance of notes payable-SIG was $1,230,000. During the six months ended June 30, 2018, the Company repaid $5,000 of principal and at June 30, 2018, the balance of notes payable-SIG was $1,225,000. The Company is currently pursuing extensions on the remaining delinquent notes.

	At December 31, 2017, the balance of the accrued interest on the notes payable-SIG was $1,392,341. During the six months ended June 30, 2018, $60,749 of interest expense was accrued and $5,000 of accrued interest was paid. At June 30, 2018, accrued interest on the notes payable-SIG was $1,448,090.

(c)	In July 2017, the Company executed an exchange agreement with a factor which transferred the amount due to the factor of approximately $209,000 into a promissory note for $210,000, non-interest bearing, and maturing on February 7, 2018. As of December 31, 2017, the balance due on the promissory note was $70,000. The remaining balance was paid off in January 2018, for $20,000, and February 2018, for $50,000.

(d)	During the six months ended June 30, 2018, BlockSafe (see Note 1) issued an aggregate of $665,500 of unsecured promissory notes to fifteen unrelated parties, including a former executive of BlockSafe, bearing interest at 8% per annum, and maturing through June 2019. During the six months ended June 30, 2018, interest expense of $16,138 was accrued. Contemporaneously with the issuance of the promissory notes, BlockSafe entered into an obligation to pay the same parties a fixed amount equal to the face amount of the promissory notes in tokens, as defined (see Note 6) as a financing obligation. The value of the financing obligation was determined to be $665,500 and was recorded as a liability and as a discount to the promissory notes. The discount will be amortized over the term of the promissory notes. During the six months ended June 30, 2018, debt discount amortization of $201,731 was recorded as interest expense and the balance of the unamortized discount at June 30, 2018 was $463,769.

	June 30, 2018			March to June 2018 (dates of inception)			December 31, 2017
Conversion feature:
Risk-free interest rate		0.23	%		0.23	%		0.18	%
Expected volatility		129	%	132%-138		%		147	%
Expected life (in years)	1 year			1 year			1 year
Expected dividend yield		-			-			-

Fair Value:
Conversion feature	$	812,673		$	744,249		$	623,195

	·	The Company issued 15,000 shares of its common stock for services, valued at $204.

	·	The Company issued 8,333,500 shares of its common stock in exchange for conversion of 33,334 shares of Series B Preferred Stock at a conversion price of $0.004 per share.

	Number of Options Shares		Exercise Price Range Per Share		Weighted Average Exercise Price
Balance, January 1, 2018		259,000,001	$	0.0057-2,242,500	$	0.00625

Granted		-	$	-	$	-

Exercised		-	$	-	$	-

Expired		-	$	-	$	-

Balance outstanding, June 30, 2018		259,000,001	$	0.0057-2,242,500	$	0.0062

Balance exercisable, June 30, 2018		259,000,001	$	0.0057-2,242,500	$	0.0062

		Options Outstanding						Options Exercisable
Range of Exercise Prices		Number Outstanding		Average Remaining Contractual Life (in years)		Weighted Average Exercise Price		Number Exercisable		Average Remaining Contractual Life (in years)		Weighted Average Exercise Price

$	975,000,000		1		1.00	$	975,000,000		1		1.00	$	975,000,000

$	0.0057		63,000,000		10.00	$	0.0057		63,000,000		10.00	$	0.0057

$	0.00625		196,000,000		10.00	$	0.0062		196,000,000		10.00	$	0.0062

$	0.00625 - 975,000,000		259,000,001		10.00	$	0.0062		259,000,001		10.00	$	0.0062

(1)	Filed as an exhibit to the Registrant’s Form SB-2 dated as of May 11, 2005 and incorporated herein by reference.
(2)	Filed as an exhibit to the Registrant’s Form 8-K dated February 4, 2011 and incorporated herein by reference.
(3)	Filed herewith.
(4)	Filed as an exhibit to the Registrant’s Form S-1/A dated July 31, 2012 and incorporated herein by reference.
(5)	Filed in conjunction with the Registrant’s Form 14A filed October 5, 2012 and incorporated herein by reference.
(6)	Filed as an exhibit to the Registrant’s Form 8-K dated February 5, 2013 and incorporated herein by reference.
(7)	Filed as an exhibit to the Registrant’s Form 8-K dated May 14, 2013 and incorporated herein by reference.
(8)	Filed as an exhibit to the Registrant’s Form 8-A dated July 29, 2013 and incorporated herein by reference.
(9)	Filed as an exhibit to the Registrant’s Form 8-K dated August 22, 2013 and incorporated herein by reference.
(10)	Filed as an exhibit to the Registrant’s Form 8-A dated October 3, 2013 and incorporated herein by reference.
(11)	Filed as an exhibit to the Registrant’s Form 8-K dated October 3, 2013 and incorporated herein by reference.
(12)	Filed as an exhibit to the Registrant’s Form 8-A dated December 31, 2013 and incorporated herein by reference.
(13)	Filed as an exhibit to the Registrant’s Form 8-K dated December 31, 2013 and incorporated herein by reference.
(14)	Filed as an exhibit to the Registrant’s Form 8-K dated March 18, 2014 and incorporated herein by reference.
(15)	Filed as an exhibit to the Registrant’s Form 8-K dated December 22, 2014 and incorporated herein by reference.
(16)	Filed as an exhibit to the Registrant’s Form 8-K dated February 13, 2015 and incorporated herein by reference.
(17)	Filed as an exhibit to the Registrant’s Form 8-K dated August 28, 2015 and incorporated herein by reference.
(18)	Filed as an exhibit to the Registrant’s Form 8-K dated February 2, 2016 and incorporated herein by reference.
(19)	Filed as an exhibit to the Registrant’s Form 8-K dated May 19, 2017 and incorporated herein by reference.
(20)	Filed as an exhibit to the Registrant’s Form 8-K dated September 11, 2017 and incorporated herein by reference.

1.	I have reviewed this quarterly report on Form 10-Q of StrikeForce Technologies, Inc.;

2.	Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;

3.	Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;

4.	The registrant's other certifying officer(s) and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:

	a.	Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;

	b.	Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;

	c.	Evaluated the effectiveness of the registrant's disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and

	d.	Disclosed in this report any change in the registrant's internal control over financial reporting that occurred during the registrant's most recent fiscal quarter (the registrant's fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant's internal control over financial reporting; and

	a.	All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant's ability to record, process, summarize and report financial information; and

	b.	Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant's internal control over financial reporting.