DEBT RESOLVE INC

On August 31, 2017, a stockholder loaned $15,000 (unsecured) to the Company due August 31, 2018 with interest at 10% per annum, paid monthly beginning January 2018 and principal payments beginning June 2018.

On September 2, 2017, the Board granted stock options to purchase 1,000,000 shares of common stock of the Company at exercise price of $0.018 with exercise period of seven years to an employee, vesting 1/2 each six month anniversary for one year. The grant was valued using the Black-Scholes option pricing model and had a value of $16,799 and will be charged to operations through the vesting period.

The Black-Scholes option pricing model used the following assumptions: Dividend yield: 0%; Volatility: 310.07% to 335.45%; and Risk Free rate: 1.99% to 2.12%, term: contractual terms.

Amortization of deferred debt discount. Amortization expense of $54,662 and $69,545 was incurred for the three months ended September 30, 2017 and 2016, respectively, for the amortization of the value of the deferred debt discount associated with certain of our notes payable. Amortization expense decreased due to aging of notes issued in earlier periods.

On April 11, 2016, a Decision was entered in the matter of a noteholder’s claim against Debt Resolve Inc., granting the noteholder’s motion for summary judgment in part, and denying it in part, and denying Debt Resolve’s cross motion for summary judgment. A stipulation with respect to damages was entered by the Court on August 29, 2016 providing that the total outstanding principal and interest due the noteholder as of July 31, 2016 is $322,152. The noteholder is seeking an award of his attorneys’ fees from the Court. On April 20, 2017, the Court awarded the plaintiff $115,516 in attorney’s fees and costs. On May 4, 2017, the Company was notified that this claim became property of the Noteholder’s bankruptcy estate which was converted to chapter 7. The Company’s counsel has been in contact with the chapter 7 trustee.

In August 2017, the Company and Student Loan Care LLC, its majority owned subsidiary, received a subpoena requesting documents regarding the operation Of Student Loan Care. We have provided the requested information regarding Student Loan Care and respective vendors’ services. We are confident that our compliance with regulations regarding marketing, sales, advanced payments, and our focus on helping consumers select the best programs for their financial situation supported by on-going people-based customer service, demonstrates our commitment to helping federal student loan holders.