The authorized capitalization of Blackridge consists of 50,000,000 shares of Preferred Stock, $0.001 par value, of which 50,000,000 shares have been designated Series A Preferred Stock and of which 2,356,863 shares are currently outstanding, and 250,000,000 shares of Common Stock, par value $0.001, of which 26,940,527 shares are issued and outstanding.  All issued and outstanding shares of Blackridge are legally issued, fully paid, and nonassessable and not issued in violation of the preemptive or other right of any person.  There are no dividends or other payments or distributions due or payable with respect to any of the shares of capital stock of Blackridge.  It is contemplated that on or prior to the Closing, Blackridge shall (i) issue additional shares of its Series A Preferred Stock at an offering price of not more than $0.60 per share for gross proceeds of not less than $1,798,000; and (ii) issue approximately 31,484,596 shares of its Series A Preferred Stock upon the conversion of promissory notes.  Blackridge also has outstanding (i) common stock purchase warrants to acquire 4,915,304 shares of Blackridge at prices ranging from $0.60 to $1.70 per share; (ii) common stock purchase warrants to acquire 1,541,704 shares of Blackridge Common Stock at a price of $0.66 per share; (iii) warrants and options to purchase common stock held by current and former members of management that are exercisable at prices ranging from $0.63 to $1.70 per share; and (iv) a convertible promissory note to an officer in the principal amount of $4,530,124 that is convertible into shares of Blackridge Series A Preferred Stock at a price of $0.66 per share.