UNITED
STATES

SECURITIES
AND EXCHANGE COMMISSION

WASHINGTON,
D.C. 20549



FORM
10-Q



[X]   Quarterly
Report pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934



For
the quarterly period ended September 30, 2015



[  ]   Transition
Report pursuant to 13 or 15(d) of the Securities Exchange Act of 1934



For
the transition period from __________ to__________



Commission
File Number: 000-55155



Nano
Mobile Healthcare, Inc.

(Exact
name of registrant as specified in its charter)



|Delaware                                                          |  | 93-0659770                          
|----------------------------------------------------------------- |  | ------------------------------------
|(State
    or other jurisdiction ofincorporation or organization) |  | (IRS
    EmployerIdentification No.)



3
Columbus Circle, 15th Floor

New
York, NY 10019

(Address
of principal executive offices)



(713)
973-5738

(Registrant’s
telephone number)








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



Indicate
by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange
Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports),
and (2) has been subject to such filing requirements for the past 90 days.

[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 shorter period that the registrant was required to submit and post such files).[X] Yes [  ] No



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



|[  ]
    Large accelerated filer | [  ]
    Accelerated filer       
|-------------------------------- | ---------------------------------
|[  ]
    Non-accelerated filer   | [X] Smaller reporting
    company



Indicate
by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act).

[  ]
Yes [X] No



Indicate
the number of shares outstanding of each of the issuer’s classes of common stock, as of the latest practicable date: 341,699,478
shares of common stock as of November 10, 2015.






















TABLE
OF CONTENTS



|        |                                                                                           |  | Page
|------- | ----------------------------------------------------------------------------------------- |  | ----
|        |                                                                                           |  |     
|        | PART
                                         I – FINANCIAL INFORMATION                   |  |     
|        |                                                                                           |  |     
|Item 1: | Financial
    Statements                                                                  |  | 3   
|Item 2: | Management’s
    Discussion and Analysis of Financial Condition and Results of Operations |  | 4   
|Item 3: | Quantitative
    and Qualitative Disclosures About Market Risk                            |  | 11  
|Item 4: | Controls
    and Procedures                                                               |  | 11  
|        |                                                                                           |  |     
|        | PART
    II – OTHER INFORMATION                                                           |  |     
|        |                                                                                           |  |     
|Item 1: | Legal
    Proceedings                                                                     |  | 12  
|Item 2: | Unregistered
    Sales of Equity Securities and Use of Proceeds                           |  | 12  
|Item 3: | Defaults
    Upon Senior Securities                                                       |  | 12  
|Item 4: | Mine
    Safety Disclosures                                                               |  | 12  
|Item 5: | Other
    Information                                                                     |  | 12  
|Item 6: | Exhibits                                                                                  |  | 13  





2









PART
I - FINANCIAL INFORMATION



Item
1. Financial Statements



Our
financial statements included in this Form 10-Q are as follows:



|F-1 | Balance
    Sheets as of September 30, 2015 and June 30, 2015 (unaudited);                           |  | 
|--- | ---------------------------------------------------------------------------------------------------- |  | 
|F-2 | Statements
    of Operations for the three months ended September 30, 2015 and 2014 (unaudited);     |  | 
|F-3 | Statements
    of Cash Flows for the three months ended September 30, 2015 and 2014 (unaudited); and |  | 
|F-4 | Notes
    to the unaudited Financial Statements.                                                     |  | 



These
financial statements have been prepared in accordance with accounting principles generally accepted in the United States of America
for interim financial information and the SEC instructions to Form 10-Q. In the opinion of management, all adjustments considered
necessary for a fair presentation have been included. Operating results for the interim period ended September 30, 2015 are not
necessarily indicative of the results that can be expected for the full year.



3













NANO
MOBILE HEALTHCARE, INC.

BALANCE
SHEETS

AS
OF SEPTEMBER 30, 2015

(UNAUDITED)



|                                                                                                                                                                                          |  | September
    30, 2015 |            |   | June
    30, 2015 |  
|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------- |  | ---------------------- | ---------- | - | ----------------- | -
|ASSETS                                                                                                                                                                                    |  |                        |            |   |                   |  
|Current assets                                                                                                                                                                            |  |                        |            |   |                   |  
|Cash
    and cash equivalents                                                                                                                                                             |  | $                      | 60,090     |   |                   | $
|Prepaid
    expenses and other current assets                                                                                                                                             |  |                        | 33,108     |   |                   |  
|Total
    current assets                                                                                                                                                                  |  |                        | 93,198     |   |                   |  
|                                                                                                                                                                                          |  |                        |            |   |                   |  
|Fixed
    Assets                                                                                                                                                                          |  |                        | 10,234     |   |                   |  
|Securities-available
    for sale                                                                                                                                                         |  |                        | 400        |   |                   |  
|                                                                                                                                                                                          |  |                        |            |   |                   |  
|Total
    assets                                                                                                                                                                          |  | $                      | 103,832    |   |                   | $
|                                                                                                                                                                                          |  |                        |            |   |                   |  
|LIABILITIES AND STOCKHOLDERS’
    DEFICIT                                                                                                                                                 |  |                        |            |   |                   |  
|Current liabilities                                                                                                                                                                       |  |                        |            |   |                   |  
|Accounts
    payable and accrued liabilities                                                                                                                                              |  | $                      | 289,972    |   |                   | $
|Convertible
    notes payable                                                                                                                                                             |  |                        | 532,700    |   |                   |  
|loans
    payable                                                                                                                                                                         |  |                        | 7,915      |   |                   |  
|Due
    to related parties                                                                                                                                                                |  |                        | 388,791    |   |                   |  
|Derivative
    liabilities                                                                                                                                                                |  |                        | 1,170,366  |   |                   |  
|Total
    current liabilities                                                                                                                                                             |  |                        | 2,389,744  |   |                   |  
|                                                                                                                                                                                          |  |                        |            |   |                   |  
|Convertible
    debt                                                                                                                                                                      |  |                        | 208,020    |   |                   |  
|                                                                                                                                                                                          |  |                        |            |   |                   |  
|Total
    liabilities                                                                                                                                                                     |  |                        | 2,597,764  |   |                   |  
|                                                                                                                                                                                          |  |                        |            |   |                   |  
|Stockholders’ deficit                                                                                                                                                                     |  |                        |            |   |                   |  
|Preferred stock; $0.001
    par value; 50,000,000 shares authorized; 23,473,368 and 0 shares issued and outstanding as of September 30, 2015 and June
    30, 2015, respectively          |  |                        | 23,473     |   |                   |  
|Common stock; $0.001
    par value; 450,000,000 shares authorized; 184,111,144 and 227,720,396 shares issued and outstanding as of September 30, 2015
    and June 30, 2015, respectively |  |                        | 184,112    |   |                   |  
|Additional
    paid-in capital                                                                                                                                                            |  |                        | 3,865,887  |   |                   |  
|Accumulated
    deficit                                                                                                                                                                   |  |                        | (6,567,404 | ) |                   |  
|Total
    stockholders’ deficit                                                                                                                                                           |  |                        | (2,493,932 | ) |                   |  
|                                                                                                                                                                                          |  |                        |            |   |                   |  
|Total
    liabilities and stockholders’ deficit                                                                                                                                           |  | $                      | 103,832    |   |                   | $



See
accompanying notes to unaudited financial statements



F-1







NANO
MOBILE HEALTHCARE, INC.

STATEMENTS
OF OPERATIONS

FOR
THREE MONTHS ENDED SEPTEMBER 30, 2015 AND 2014

(UNAUDITED)



|                                                  |  | For the three months ended |            
|------------------------------------------------- |  | -------------------------- | -----------
|                                                  |  | September 30, 2015         |            
|                                                  |  |                            |            
|Operating expenses                                |  |                            |            
|Professional fees                                 |  |                            | 43,555     
|General and administrative expenses               |  |                            | 102,253    
|Officer and director compensation                 |  |                            | 36,097     
|Officer and director compensation -other          |  |                            | -          
|Consulting                                        |  |                            | 280,375    
|Royalty expenses                                  |  |                            | -          
|Total operating expenses                          |  |                            | 462,280    
|                                                  |  |                            |            
|Loss from operations                              |  |                            | (462,280   
|                                                  |  |                            |            
|Other income (expense)                            |  |                            |            
|Interest income (expense)                         |  |                            | (557,647   
|Gain (loss) on derivative                         |  |                            | 1,427,189  
|Unrealized loss on investment                     |  |                            | -          
|Total other income (expense)                      |  |                            | 869,542    
|                                                  |  |                            |            
|Net Income                                        |  | $                          | 407,262    
|                                                  |  |                            |            
|Net income per common share: basic and diluted    |  | $                          | 0.00       
|                                                  |  |                            |            
|weighted average common shares outstanding: basic |  |                            | 206,890,967
|Diluted                                           |  |                            | 450,000,000



See
accompanying notes to unaudited financial statements





F-2







NANO
MOBILE HEALTHCARE, INC.

STATEMENTS
OF CASH FLOWS

FOR
THE THREE MONTHS ENDED SEPTEMBER 30, 2015 AND 2014

(UNAUDITED)



|                                                                            |  | For the three months ended |           
|--------------------------------------------------------------------------- |  | -------------------------- | ----------
|                                                                            |  | September 30, 2015         |           
|Cash Flows from Operating Activities                                        |  |                            |           
|Net income (loss)                                                           |  | $                          | 407,262   
|Adjustments to reconcile net loss to net cash used in operating activities: |  |                            |           
|Unrealized loss on investment                                               |  |                            | -         
|Amortization of debt discount                                               |  |                            | 523,994   
|Gain on derivative liability                                                |  |                            | (1,427,189
|Warrants issued for services                                                |  |                            | -         
|Warrants issued for debt                                                    |  |                            | -         
|Depreciation                                                                |  |                            | 436       
|Changes in assets and liabilities                                           |  |                            |           
|Prepaid expense                                                             |  |                            | 35,904    
|Accounts payable and accrued expenses                                       |  |                            | (48,705   
|Net cash used in operating activities                                       |  |                            | (508,298  
|                                                                            |  |                            |           
|Cash Flows from Investing Activities                                        |  |                            |           
|Purchase of fixed assets                                                    |  |                            | -         
|Net cash used in investing activities                                       |  |                            | -         
|                                                                            |  |                            |           
|Cash Flows from Financing Activities                                        |  |                            |           
|Proceeds from related party debt                                            |  |                            | 280,952   
|Payments on related party debt                                              |  |                            | (292,611  
|Proceeds from convertible notes payable                                     |  |                            | 328,010   
|Proceeds on loans payable                                                   |  |                            | 28,501    
|Payments on loans payable                                                   |  |                            | (26,450   
|Net cash from financing activities                                          |  |                            | 318,402   
|                                                                            |  |                            |           
|Net increase (decrease) in cash                                             |  |                            | (189,896  
|                                                                            |  |                            |           
|Cash, beginning of period                                                   |  |                            | 249,986   
|                                                                            |  |                            |           
|Cash, end of period                                                         |  | $                          | 60,090    
|                                                                            |  |                            |           
|Supplemental disclosure of cash flow information                            |  |                            |           
|Cash paid for interest                                                      |  | $                          | 49,125    
|Cash paid for tax                                                           |  | $                          | -         
|                                                                            |  |                            |           
|Non-Cash investing and financing transactions                               |  |                            |           
|Common stock issued to settle convertible
    debt                          |  | $                          | 191,719   
|Recognition of derivative debt discount                                     |  | $                          | 471,288   
|Conversion of derivative liability                                          |  | $                          | 367,970   
|Exchange of common shares to preferred shares                               |  | $                          | 116,617   
|Shares issued for intangible assets                                         |  | $                          | -         



See
accompanying notes to unaudited financial statements.



F-3







NANO
MOBILE HEALTHCARE, INC

NOTES
TO THE FINANCIAL STATEMENTS

September
30, 2015

(UNAUDITED)



NOTE
1 – BASIS OF PRESENTATION AND GOING CONCERN



Basis
of Presentation



The
accompanying unaudited interim financial statements of the Company have been prepared in accordance with accounting principles
generally accepted in the United States of America and the rules of the Securities and Exchange Commission, and should be read
in conjunction with the audited financial statements and notes thereto contained in the Company’s most recent Annual Financial
Statements filed with the SEC on Form 10-K. In the opinion of management, all adjustments, consisting of normal recurring adjustments,
necessary for a fair presentation of financial position and the results of operations for the interim period presented have been
reflected herein. The results of operations for the interim period are not necessarily indicative of the results to be expected
for the full year. Notes to the financial statements which would substantially duplicate the disclosures contained in the audited
financial statements for the most recent fiscal period, as reported in the Form 10-K, have been omitted.



Going
concern



The
accompanying financial statements have been prepared on a going concern basis, which contemplates the realization of assets and
the satisfaction of liabilities in the normal course of business. The Company has incurred cumulative net losses of $6,567,404
since its inception and requires capital for its contemplated operational and marketing activities to take place. The ability
of Nano Mobile Healthcare, Inc to continue as a going concern is dependent on the Company generating cash from the sale of its
common stock and/or obtaining debt financing and attaining future profitable operations. Management’s plans include selling
its equity securities and obtaining debt financing to fund its capital requirement and ongoing operations; however, there can
be no assurance the Company will be successful in these efforts. The ability to successfully resolve these factors raise substantial
doubt about the Company’s ability to continue as a going concern. The financial statements of the Company do not include
any adjustments that may result from the outcome of these aforementioned uncertainties.



NOTE
2 – SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES



Fair
Value of Financial Instruments



The
carrying amounts reflected in the balance sheets for cash, accounts payable and accrued expenses approximate the respective fair
values due to the short maturities of these items.



As
required by the Fair Value Measurements and Disclosures Topic of the FASB ASC, fair value is measured based on a three-tier fair
value hierarchy, which prioritizes the inputs used in measuring fair value as follows: (Level 1) observable inputs such as quoted
prices in active markets; (Level 2) inputs, other than the quoted prices in active markets, that are observable either directly
or indirectly; and (Level 3) unobservable inputs in which there is little or no market data, which require the reporting entity
to develop its own assumptions.



The
three levels of the fair value hierarchy are described below:



Level
1: Unadjusted quoted prices in active markets that are accessible at the measurement date for identical, unrestricted assets or
liabilities;



Level
2: Quoted prices in markets that are not active, or inputs that are observable, either directly or indirectly, for substantially
the full term of the asset or liability;



Level
3: Prices or valuation techniques that require inputs that are both significant to the fair value measurement and unobservable
(supported by little or no market activity).



A
financial instrument’s categorization within the valuation hierarchy is based upon the lowest level of input that is significant
to the fair value measurement.



F-4





NANO
                                         MOBILE HEALTHCARE, INC

NOTES
TO THE FINANCIAL STATEMENTS

September
30, 2015

(UNAUDITED)



Financial
assets and liabilities measured at fair value on a recurring basis are summarized below for September 30, 2015:



|                                   |  | Level
    1 |     |  | Level
    2 |   |   | Level
    3 |  |   | Total     | 
|---------------------------------- |  | ----------- | --- |  | ----------- | - | - | ----------- |  | - | --------- | 
|Assets                             |  |             |     |  |             |   |   |             |  |   |           | 
|Securities -available for
    sale |  | $           | 400 |  |             | $ | — |             |  | $ | —         | 
|Liabilities                        |  |             |     |  |             |   |   |             |  |   |           | 
|Derivative Financial Instruments   |  | $           | —   |  |             | $ | — |             |  | $ | 1,170,366 | 



Financial
assets and liabilities measured at fair value on a recurring basis are summarized below for June 30, 2015:



|                                   |  | Level
    1 |     |  | Level
    2 |   |   | Level
    3 |  |   | Total     | 
|---------------------------------- |  | ----------- | --- |  | ----------- | - | - | ----------- |  | - | --------- | 
|Assets                             |  |             |     |  |             |   |   |             |  |   |           | 
|Securities -available for
    sale |  | $           | 400 |  |             | $ | — |             |  | $ | —         | 
|Liabilities                        |  |             |     |  |             |   |   |             |  |   |           | 
|Derivative Financial Instruments   |  | $           | —   |  |             | $ | — |             |  | $ | 2,494,236 | 



Investment
Securities



The
Company has elected to account for its investments in securities at fair value under the fair value option provisions of FASB
ASC 825, Financial Instruments (“FASB ASC 825”). The primary reason for electing the fair value option when it first
became available in 2008, was to reduce the burden of monitoring the differences between the cost and the fair value of the Company’s
investments, previously classified as available for sale securities, including the assessment as to whether the declines are temporary
in nature and to further remove an element of management judgment. In addition, the election was made for certain investments
that were previously required to be accounted for under the equity method because their fair value measurements were readily obtainable.



Such
financial assets accounted for at fair value include in general, securities that would otherwise qualify for available for sale
treatment.



The
changes in fair value (realized and unrealized gains and losses) of these instruments for which the Company has elected the fair
value option are recorded in principal transactions and other income in the statements of operations. All of the investments for
which the Company has elected the fair value option are included as a component of securities available for sale, at fair value
in the balance sheets. The Company recognized net losses of $0 and $14,000 related to changes in fair value of investments that
are included as a component of other investments, at fair value during the three months ended September 30, 2015 and 2014, respectively.



Income (Loss) Per Share



Basic income (loss) per share is calculated by dividing the Company’s net loss
applicable to common shareholders by the weighted average number of common shares during the period. Diluted earnings per share
is calculated by dividing the Company’s net income available to common shareholders by the diluted weighted average number
of shares outstanding during the year. The diluted weighted average number of shares outstanding is the basic weighted number
of shares adjusted for any potentially dilutive debt or equity. The following table sets forth the computation of basic and diluted
net loss per share of common stock:







|                                                   |  | September
    30, 2015 |               |  | September
    30, 2014 |  
|-------------------------------------------------- |  | ---------------------- | ------------- |  | ---------------------- | -
|Basic
    net income (loss) per share:             |  |                        |               |  |                        |  
|Numerator:                                         |  |                        |               |  |                        |  
|Income
    (loss) allocated to common shareholders |  | $                      | 407,262       |  |                        | $
|Total                                              |  |                        |               |  |                        |  
|Denominator:                                       |  |                        |               |  |                        |  
|Number of shares
    used in per share computation |  |                        | 206,890,967   |  |                        |  
|Basic
    net income (loss) per share              |  | $                      | 0.00          |  |                        | $
|                                                   |  |                        |               |  |                        |  
|Diluted
    net income (loss) per share:           |  |                        |               |  |                        |  
|Numerator:                                         |  |                        |               |  |                        |  
|Income
    (loss) allocated to common shareholders |  | $                      | 407,262       |  |                        | $
|Add:
    Interest expense avoided                  |  |                        | 32,231        |  |                        |  
|Add:
    Prepaid interest amortization avoided     |  |                        | 20,904        |  |                        |  
|Adjusted
    Income                                |  | $                      | 460,397       |  |                        | $
|                                                   |  |                        |               |  |                        |  
|Denominator:                                       |  |                        |               |  |                        |  
|Weighted-average
    shares                        |  |                        | 206,890,967   |  |                        |  
|Add:                                               |  |                        |               |  |                        |  
|Convertible
    notes payable                      |  |                        | 941,252,500   |  |                        |  
|Warrants                                           |  |                        | 6,281,766     |  |                        |  
|Adjusted weighted
    average shares               |  |                        | 1,154,425,233 |  |                        |  
|Shares
    authorized                              |  |                        | 450,000,000   |  |                        |  
|Diluted
    net loss per share                     |  | $                      | 0.00          |  |                        | $



As of September 30, 2015, the Company only
had 450,000,000 shares authorized. Since the weighted average shares exceed the authorized shares the Company determined the max
authorized shares limit to be used in the diluted earnings per share calculation.



F-5







NANO
MOBILE HEALTHCARE, INC

NOTES
TO THE FINANCIAL STATEMENTS

September
30, 2015

(UNAUDITED)



NOTE
3 – PREPAID EXPENSES



During
the three months ended September 30, 2015, the Company prepaid interest of $27,375 on convertible notes. As of September 30, 2015
and June 30, 2015, the balance that remained capitalized as prepaid expenses was $33,108 and $41,637, respectively.



NOTE
4 – SECURITIES AVAILABLE FOR SALE



On
January 16, 2014, the Company acquired 2,000,000 restricted common shares of a publicly traded company. The investment was acquired
at market value of $0.03 per share, and is held for future trade. The value of the investment will be adjusted quarterly to reflect
the change in market value of the holding. The investment does not represent a controlling interest in the publicly traded company.
The company has elected the fair value option under ASC 825 allowing gains and losses to be recorded in earnings each period.
From receipt of the shares on January 16, 2014 through September 30, 2015 the securities were reduced in value from $60,000 to
$400 due to a change in the publicly traded company’s stock price. These securities are measured under level 1 of ASC 820.



The
Company reported an unrealized loss on investment of $0 and $14,000 during the three months ending September 30, 2015 and 2014,
respectively.



NOTE
5 – RELATED PARTY TRANSACTIONS



During
the three months ended September 30, 2015 and 2014, the Company received cash advances from its majority shareholder in the amount
of $280,952 and 316,287, of which $292,611 and $0 was repaid during the same period. As of September 30, 2015 and 2014, there
was a balance due to the shareholder of $388,791 and $400,450, respectively. All amounts advanced to the Company are unsecured,
non-interest bearing and due upon demand.



NOTE
6 – LOANS PAYABLE



On
July 1, 2015, the Company issued a promissory note in the amount of $22,500 for $15,000 cash. The note was due on July 1, 2016
and bears interest at 15% per annum. During the three month period ended September 30, 2015, the Company has repaid $18,296 of
the note payable and the note is shown net unamortized discount of $4,204.



On
September 1, 2015, the Company issued a promissory note in the amount of $26,233 for $17,500 cash. The note was due on August
31, 2016 and bears interest at 15% per annum. During the three month period ended September 30, 2015, the Company has repaid $8,154
of the note payable and the note is shown net unamortized discount of $14,483.



NOTE
7 – CONVERTIBLE NOTE PAYABLE



On
April 18, 2014, the Company issued a convertible promissory note in which the Company will be taking tranche payments on pre-defined
dates, the total of these payments cannot exceed $650,000. There is an original discount component of 10% per tranche and an additional
expense fee of $5,000. Therefore, the funds available to the Company will be $650,000 and the liability (net of interest) will
be $750,000 when all disbursements have been received by the Company. Each tranche is accounted for separately with each principal
and OID balance becoming due 18 months after receipt. Each tranche bears interest at 8% per annum. The loan is secured by shares
of the Company’s common stock. Each portion of the loan becomes convertible 180 days after date of the note. The loan and
any accrued interest can then be converted into shares of the Company’s common stock at a rate of 50% multiplied by the
market price, which is the lowest quoted price for the common stock during the 20 trading day period ending on the latest complete
trading day prior to the conversion date.



During
the year ended June 30, 2015, the Company received six additional tranche disbursements of $50,000 on July 15, 2014, $100,000
on September 30, 2014, $50,000 on November 3, 2014, $50,000 on December 1, 2014, $50,000 on December 29, 2014, and $50,000 on
February 2, 2015.



On
July 20, 2015, the Company entered into a settlement agreement with the holder of the convertible note. Under the agreement the
note holder agreed not to seek to enforce its rights or remedies under the Note in relation to the notice of conversion issued
to convert a balance of the note amounting to $57,933; to not to exercise its rights of conversion pursuant to the Note, and if
an event of default occurs, the Holder agrees not to sell any shares of common stock of the Company having an aggregate conversion
value of $30,000 or more per week until such time as it has sold all of the Company’s common stock that it owns.



F-6







NANO
MOBILE HEALTHCARE, INC

NOTES
TO THE FINANCIAL STATEMENTS

September
30, 2015

(UNAUDITED)



Under
the agreement the Company agreed to a penalty in relation to the issuance of a note in the amount of $95,000; to release the holder
from its obligation to advance additional funds to the Company; and to pay or refinance the amount due under the note plus accrued
interest in four installment payments due on July 20, 2015, August 10, 2015, September 14, 2015 and October 12, 2015. In accordance
with the agreement, the Company made the payments due on July 20, 2015 and August 10, 2015.



In
respect of prepayment penalties payable to the Holder pursuant to the Note, the Company agreed to issue to the Holder additional
convertible promissory notes with each having the same form, terms, and conditions as the original note. The value of the notes,
which are due by each installment payment date, are equal to 30% of the payment delivered. During the three months ended September
30, 2015, the Company issued two notes related to the prepayment penalties of the installments due on July 20, 2015 and August
10, 2015 of $35,399 and $35,610, respectively.



After
the payment was made on August 10, 2015, the Company and the note holder agreed to forgo the final two payments, cancel the settlements
agreement, and therefore allow the noteholder to convert the notes as agreed to in the original note agreement. During the three
months ended September 30, 2015, the Company converted $5,000 of the penalty note issued on July 20, 2015 into 5,000,000 shares
of common stock.



The
following details the disbursements as of September 30, 2015:



|Tranche
    Date                        |  | Principalwith OID |         |   | AccruedInterest |   |        | Converted
    toStock |  |   | Balance
    -September 30, 2015 | 
|--------------------------------------- |  | ----------------- | ------- | - | --------------- | - | ------ | --------------------- |  | - | ------------------------------- | 
|April 21, 2014                          |  | $                 | 110,776 |   |                 | $ | 6,167  |                       |  | $ | 116,943                         | 
|May 6, 2014                             |  |                   | 55,384  |   |                 |   | 4,443  |                       |  | $ | 59,827                          | 
|June 11, 2014                           |  |                   | 55,384  |   |                 |   | 5,147  |                       |  |   | None                            | 
|July 16, 2014                           |  |                   | 55,384  |   |                 |   | 4,236  |                       |  |   | None                            | 
|September 30, 2014                      |  |                   | 110,768 |   |                 |   | 6,628  |                       |  |   | None                            | 
|November 3, 2014                        |  |                   | 55,384  |   |                 |   | 4,006  |                       |  |   | None                            | 
|December 1, 2014                        |  |                   | 55,384  |   |                 |   | 3,417  |                       |  |   | None                            | 
|December 29, 2014                       |  |                   | 55,384  |   |                 |   | 3,110  |                       |  |   | None                            | 
|February 2, 2015                        |  |                   | 55,384  |   |                 |   | 2,901  |                       |  |   | None                            | 
|July 14, 2015                           |  |                   | 35,610  |   |                 |   | 609    |                       |  |   | None                            | 
|July 20, 2015                           |  |                   | 95,000  |   |                 |   | 1,420  |                       |  |   | 5000                            | 
|August 20, 2015                         |  |                   | 35,399  |   |                 |   | 318    |                       |  |   | None                            | 
|Unamortized Original
    Issue Discount |  |                   | (10,237 | ) |                 |   | -      |                       |  |   |                                 | 
|                                        |  | $                 | 765,004 |   |                 | $ | 42,402 |                       |  |   |                                 | 



During
the quarter ended September 30, 2015 and 2014, $16,683 and $745 of the debt discount related to the outstanding tranches was amortized,
respectively.



The
Notes are shown net of an unamortized original issue discount of $10,237 as of September 30, 2015.



The
Company analyzed the conversion options embedded in the Convertible Promissory Notes for derivative accounting consideration under
ASC 815, Derivatives and Hedging, and determined that seven tranches received on November 3, 2014, December 1, 2014, December
29, 2014, February 2, 2015, July 14, 2015, July 20, 2015, and August 20, 2015 were convertible during the quarter ended September
30, 2015.



F-7





NANO
                                         MOBILE HEALTHCARE, INC

NOTES
TO THE FINANCIAL STATEMENTS

September
30, 2015

(UNAUDITED)



In
accordance with the terms of the Note, the holder fully converted the tranche issued on April 21, 2014 during the year ended June
30, 2015 for 3,711,969 shares of common stock for principal and accrued interest of $116,943. The Company recorded a debt discount
in the amount of $110,776 in connection with the initial valuation of the derivative liability of the note to be amortized utilizing
the effective interest method of accretion over the term of the note. Further, the Company recognized a derivative liability of
$192,038 and an initial loss of $81,262 based on the Black Scholes Merton pricing model.



On
October 21, 2014, the Note issued on May 6, 2014 became convertible at the option of the holder. On this date the Company recorded
a debt discount in the amount of $55,384 in connection with the initial valuation of the derivative liability of the note to be
amortized utilizing the effective interest method of accretion over the term of the note. Further, the Company recognized a derivative
liability of $95,215 and an initial loss of $39,831 based on the Black Scholes Merton pricing model.



In
accordance with the terms of the Note, the holder fully converted the tranche during the year ended June 30, 2015 for 4,943,581
shares of common stock for principal and interest of $59,827.



On
December 8, 2014, the Note issued on June 11, 2014 became convertible at the option of the holder. On this date the Company recorded
a debt discount in the amount of $55,384 in connection with the initial valuation of the derivative liability of the note to be
amortized utilizing the effective interest method of accretion over the term of the note. Further, the Company recognized a derivative
liability of $90,678 and initial loss on derivative liability of $35,294 based on the Black Scholes Merton pricing model.



During
the quarter ended September 30, 2015, the note was assigned to another lender. As of September 30, 2015, $55,384 of the debt discount
has been amortized. The fair value of the derivative liability at September 30, 2015 and June 30, 2015 was $0 and $91,995, respectively
resulting in a gain on the change in fair value of the derivative of $91,995 during the quarter ended September 30, 2015.



On
January 12, 2015, the Note issued on July 16, 2014 became convertible at the option of the holder. On this date the Company recorded
a debt discount in the amount of $55,384 in connection with the initial valuation of the derivative liability of the note to be
amortized utilizing the effective interest method of accretion over the term of the note. Further, the Company recognized a derivative
liability of $91,094 and initial loss on derivative liability of $35,710 based on the Black Scholes Merton pricing model.



During
the quarter ended September 30, 2015, the note was assigned to another lender. As of September 30, 2015, $55,384 of the debt discount
has been amortized. The fair value of the derivative liability at September 30, 2015 and June 30, 2015 was $0 and $96,644 resulting
in a gain on the change in fair value of the derivative of $96,644.



On
March 29, 2015, the Note issued on September 30, 2014 became convertible at the option of the holder. On this date the Company
recorded a debt discount in the amount of $110,768 in connection with the initial valuation of the derivative liability of the
note to be amortized utilizing the effective interest method of accretion over the term of the note. Further, the Company recognized
a derivative liability of $182,755 and initial loss on derivative liability of $71,987 based on the Black Scholes Merton pricing
model.



As
of September 30, 2015, $69,757 of the debt discount has been amortized. The fair value of the derivative liability at September
30, 2015 and June 30, 2015 is $155,764 and $213,077 resulting in a gain on the change in fair value of the derivative of $57,313.
The Note is shown net of a derivative debt discount of $54,931 at September 30, 2015.



On
May 2, 2015, the Note issued on November 3, 2014 became convertible at the option of the holder. On this date the Company recorded
a debt discount in the amount of $55,384 in connection with the initial valuation of the derivative liability of the note to be
amortized utilizing the effective interest method of accretion over the term of the note. Further, the Company recognized a derivative
liability of $94,120 and initial loss on derivative liability of $38,736 based on the Black Scholes Merton pricing model.



F-8





NANO
                                         MOBILE HEALTHCARE, INC

NOTES
TO THE FINANCIAL STATEMENTS

September
30, 2015

(UNAUDITED)



As
of September 30, 2015, $28,028 of the debt discount has been amortized. The fair value of the derivative liability at September
30, 2015 and June 30, 2015 was $78,863 and $109,960, respectively resulting in a gain on the change in fair value of the derivative
of $31,097. The Note is shown net of a derivative debt discount of $27,368 at September 30, 2015.



On
May 30, 2015, the Note issued on December 1, 2014 became convertible at the option of the holder. On this date the Company recorded
a debt discount in the amount of $55,384 in connection with the initial valuation of the derivative liability of the note to be
amortized utilizing the effective interest method of accretion over the term of the note. Further, the Company recognized a derivative
liability of $95,257 and initial loss on derivative liability of $39,873 based on the Black Scholes Merton pricing model.



As
of September 30, 2015, $18,512 of the debt discount has been amortized. The fair value of the derivative liability at September
30, 2015 and June 30, 2015 was $79,241 and $115,438 resulting in a gain on the change in fair value of the derivative of $36,197
during the three months ended September 30, 2015. The Note is shown net of a derivative debt discount of $36,872 at September
30, 2015.



On
June 29, 2015, the Note issued on December 29, 2014 became convertible at the option of the holder. On this date the Company recorded
a debt discount in the amount of $55,384 in connection with the initial valuation of the derivative liability of the note to be
amortized utilizing the effective interest method of accretion over the term of the note. Further, the Company recognized a derivative
liability of $102,520 and initial loss on derivative liability of $47,136 based on the Black Scholes Merton pricing model.



As
of September 30, 2015, $14,298 of the debt discount has been amortized. The fair value of the derivative liability at September
30, 2015 and June 30, 2015 was $81,351 and $116,072, respectively resulting in a gain on the change in fair value of the derivative
of $34,721 during the three months ended September 30, 2015. The Note is shown net of a derivative debt discount of $41,086 at
September 30, 2015.



On
August 1, 2015, the Note issued on February 2, 2015 became convertible at the option of the holder. On this date the Company recorded
a debt discount in the amount of $55,384 in connection with the initial valuation of the derivative liability of the note to be
amortized utilizing the effective interest method of accretion over the term of the note. Further, the Company recognized a derivative
liability of $93,642 and initial loss on derivative liability of $38,258 based on the Black Scholes Merton pricing model.



As
of September 30, 2015, $9,055 of the debt discount has been amortized. The fair value of the derivative liability at September
30, 2015 and June 30, 2015 was $82,954 and $0, respectively resulting in a gain on the change in fair value of the derivative
of $10,688 during the three months ended September 30, 2015. The Note is shown net of a derivative debt discount of $46,329 at
September 30, 2015.



On
July 20, 2015, the Note issued on July 20, 2015 became convertible at the option of the holder. On this date the Company recorded
a debt discount in the amount of $95,000 in connection with the initial valuation of the derivative liability of the note to be
amortized utilizing the effective interest method of accretion over the term of the note. Further, the Company recognized a derivative
liability of $119,837 and initial loss on derivative liability of $24,837 based on the Black Scholes Merton pricing model.



In
accordance with the terms of the Note, the holder partially converted the note during the quarter ended September 30, 2015 for
5,000,000 shares of common stock for principal of $5,000. The fair value of at the date of conversion of $9,686 was written off
to additional paid in capital.



As
of September 30, 2015, $41,595 of the debt discount has been amortized. The fair value of the derivative liability at September
30, 2015 and June 30, 2015 was $123,082 and $0, respectively resulting in a loss on the change in fair value of the derivative
of $3,245 during the three months ended September 30, 2015. The Note is shown net of a derivative debt discount of $53,405 at
September 30, 2015.



F-9







NANO
                                         MOBILE HEALTHCARE, INC

NOTES
TO THE FINANCIAL STATEMENTS

September
30, 2015

(UNAUDITED)



On
October 1, 2014, the Company issued a short-term convertible promissory note in the amount of $70,000 for $50,000 cash, an original
issue discount of $12,500, and prepaid interest of $7,500. The note was due on March 30, 2015 and bears interest at 15% per annum,
which was prepaid by the Company and is being amortized over the life of the loan. The loan is secured by shares of the Company’s
common stock. The loan becomes convertible 180 days after date of the note. The loan and any accrued interest can then be converted
into shares of the Company’s common stock at a rate of 50% multiplied by the market price, which is the lowest quoted price
for the common stock during the 25 trading day period ending on the latest complete trading day prior to the conversion date.
During the year ended June 30, 2015, $12,500 of the debt discount was been amortized. The note matured on March 30, 2015.



The
Company elected to prepay the entire term’s interest of $7,500. This payment was capitalized as a prepaid asset and has
been amortized over the term of the note. The interest expense related to this loan was $0 for the quarter ending September 30,
2015 and 2014.



On
March 30, 2015, the Note became convertible at the option of the holder. On this date the Company recorded a debt discount in
the amount of $70,000 in connection with the initial valuation of the derivative liability of the note to be amortized utilizing
the effective interest method of accretion over the term of the note. Further, the Company recognized a derivative liability of
$70,014 and initial loss of $14 based on the Black Scholes Merton pricing model.



As
of June 30, 2015, $70,000 of the debt discount has been amortized. The fair value of the derivative liability at June 30, 2015
is $20,632.



As
of September 30, 2015 and June 30, 2015, the holder of the note exercised his right to convert $14,000 and $56,000 of the note
balance into 2,222,222 and 3,188,125 shares of common stock, respectively. The fair value of the derivative liability related
to the converted debt as of September 30, 2015 and June 30, 2015 was $13,784 and $79,464, respectively.



On
November 17, 2014, the Company issued a short-term convertible promissory note in the amount of $70,000, which consisted of cash
proceeds of $50,000, a debt discount of $12,500 and prepaid interest of $7,500. The note is due on November 14, 2015 and bears
interest at 15% per annum, which was prepaid by the Company and is being amortized over the life of the loan. The loan is secured
by shares of the Company’s common stock. The loan becomes convertible 180 days after date of the note. The loan and any
accrued interest can then be converted into shares of the Company’s common stock at a rate of 50% multiplied by the market
price, which is the lowest quoted price for the common stock during the 25 trading day period ending on the latest complete trading
day prior to the conversion date. As of September 30, 2015, $10,946 of the debt discount has been amortized. The Note is shown
net of an unamortized debt discount of $1,554 at September 30, 2015.



The
Company elected to prepay the entire term’s interest of $7,500. This payment was capitalized as a prepaid asset and has
been amortized over the term of the note. The interest expense related to this loan was $1,885 and $0 for the quarter ending September
30, 2015 and 2014. As of September 30, 2015 and June 30, 2015 the remaining prepaid interest balance was $353 and $2,838, respectively.



On
May 16, 2015, the Note became convertible at the option of the holder. On this date the Company recorded a debt discount in the
amount of $70,000 in connection with the initial valuation of the derivative liability of the note to be amortized utilizing the
effective interest method of accretion over the term of the note. Further, the Company recognized a derivative liability of $93,179
and initial loss of $23,179 based on the Black Scholes Merton pricing model.



As
of September 30, 2015 and June 30, 2015, the holder of the note exercised his right to convert $20,000 and $35,000 of the note
balance into 8,695,652 and 4,404,515 shares of common stock. The fair value of the derivative liability related to the converted
debt at September 30, 2015 and June 30, 2015 was $57,121 and $54,324, respectively.



F-10





NANO
                                         MOBILE HEALTHCARE, INC

NOTES
TO THE FINANCIAL STATEMENTS

September
30, 2015

(UNAUDITED)





As
of September 30, 2015, $56,972 of the debt discount has been amortized. The fair value of the derivative liability at September
30, 2015 and June 30, 2015 was $17,845 and $56,108, respectively resulting in a loss on the change in fair value of the derivative
of $18,858. The Note is shown net of a derivative discount of $13,208 at September 30, 2015.



On
December 23, 2014, the Company issued a short-term convertible promissory note in the amount of $70,000, which consisted of cash
proceeds of $50,000, a debt discount of $12,500 and prepaid interest of $7,500. The note is due on December 18, 2015 and bears
interest at 15% per annum, which was prepaid by the Company and is being amortized over the life of the loan. The loan is secured
by shares of the Company’s common stock. The loan becomes convertible 180 days after date of the note. The loan and any
accrued interest can then be converted into shares of the Company’s common stock at a rate of 50% multiplied by the market
price, which is the lowest quoted price for the common stock during the 25 trading day period ending on the latest complete trading
day prior to the conversion date. During the year ended June 30, 2015, $6,562 of the debt discount has been amortized. The Note
is shown net of an unamortized debt discount of $2,743 at September 30, 2015.



The
Company elected to prepay the entire term’s interest of $7,500. This payment was capitalized as a prepaid asset and has
been amortized over the term of the note. The interest expense related to this loan was $1,896 and $0 for the year ending September
30, 205 and 2014. As of September 30, 2015, the remaining prepaid interest balance was $782.



On
June 21, 2015, the Note became convertible at the option of the holder. On this date the Company recorded a debt discount in the
amount of $70,000 in connection with the initial valuation of the derivative liability of the note to be amortized utilizing the
effective interest method of accretion over the term of the note. Further, the Company recognized a derivative liability of $104,711
and initial loss of $34,711 based on the Black Scholes Merton pricing model.



As
of September 30, 2015, $39,278 of the debt discount has been amortized. The fair value of the derivative liability at September
30, 2015 and June 30, 2015 was $94,438 and $116,694 resulting in a loss on the change in fair value of the derivative of $22,256.
The Note is shown net of a derivative discount of $30,722 at September 30, 2015.



F-11





NANO
                                         MOBILE HEALTHCARE, INC

NOTES
TO THE FINANCIAL STATEMENTS

September
30, 2015

(UNAUDITED)



On
January 13, 2015, the Company issued a short-term convertible promissory note in the amount of $74,000. The note is due on October
15, 2015 and bears interest at 8% per annum. The loan is secured by shares of the Company’s common stock. The loan becomes
convertible 180 days after date of the note. The loan and any accrued interest can then be converted into shares of the Company’s
common stock at a rate of 58% multiplied by the market price, which is the average of the lowest three quoted prices for the common
stock during the 10 trading day period ending on the latest complete trading day prior to the conversion date.



On
July 12, 2015, the Note became convertible at the option of the holder. On this date the Company recorded a debt discount in the
amount of $74,000 in connection with the initial valuation of the derivative liability of the note to be amortized utilizing the
effective interest method of accretion over the term of the note. Further, the Company recognized a derivative liability of $59,654
based on the Black Scholes Merton pricing model.



As
of September 30, 2015, the holder of the note exercised his right to convert $76,960 of the note balance and accrued interest
into 15,175,261 shares of common stock. The fair value of the derivative liability related to the converted debt at September
30, 2015 was $124,660.



On
January 26, 2015, the Company issued a convertible promissory note in which the Company will be taking tranche payments based
on amounts determined by the note holder for total payments of not more than $250,000. There is an original discount component
of $25,000. Therefore, the funds available to the Company will be $225,000 and the liability (net of interest) will be $250,000
when all disbursements have been received by the Company. Each tranche is accounted for separately with each principal and OID
balance becoming due 24 months after receipt. Each tranche bears interest at 12% per annum. The loan is secured by shares of the
Company’s common stock. Each portion of the loan becomes convertible immediately upon issuance. The loan and any accrued
interest can then be converted into shares of the Company’s common stock at a rate of the lesser of $0.045 per share or
60% multiplied by the market price per share, which is the lowest quoted price for the common stock during the 25 trading day
period ending on the latest complete trading day prior to the conversion date. During the period ended June 30, 2015, the Company
has received two tranche disbursements of $75,000 on January 26, 2015 and 25,000 on April 28, 2015.



As
of September 30, 2015, $3,068 of the debt discount has been amortized. The Notes are shown net of an unamortized debt discount
of $6,932 at September 30, 2015.



On
January 26, 2015, the first tranche became convertible at the option of the holder. On this date the Company recorded a debt discount
in the amount of $82,500 in connection with the initial valuation of the derivative liability of the note to be amortized utilizing
the effective interest method of accretion over the term of the note. Further, the Company recognized a derivative liability of
$135,740 and initial loss on derivative liabilities of $53,240 based on the Black Scholes Merton pricing model.



As
of September 30, 2015, the holder of the note exercised his right to convert $26,952 of the note balance into 14,700,000 shares
of common stock. The fair value of the derivative liability related to the converted debt at September 30, 2015 was $84,162.



As
of September 30, 2015, $39,504 of the debt discount has been amortized. The fair value of the derivative liability at September
30, 2015 and June 30, 2015 was $6,017 and $152,892 resulting in a gain on the change in fair value of the derivative of $62,713.
The Note is shown net of a derivative discount of $42,996 at September 30, 2015.



F-12





NANO
                                         MOBILE HEALTHCARE, INC

NOTES
TO THE FINANCIAL STATEMENTS

September
30, 2015

(UNAUDITED)



On
April 28, 2015, the second tranche became convertible at the option of the holder. On this date the Company recorded a debt discount
in the amount of $27,500 in connection with the initial valuation of the derivative liability of the note to be amortized utilizing
the effective interest method of accretion over the term of the note. Further, the Company recognized a derivative liability of
$44,209 and initial loss on derivative liabilities of $16,709 based on the Black Scholes Merton pricing model.



As
of September 30, 2015, $5,839 of the debt discount has been amortized. The fair value of the derivative liability at September
30, 2015 and June 30, 2015 was $3,137 and $54,756, respectively resulting in a gain on the change in fair value of the derivative
of $51,619. The Note is shown net of a debt discount of $21,661 at September 30, 2015.



On
April 15, 2015, the Company issued a short-term convertible promissory note in the amount of $70,000 for $50,000 cash, an original
issue discount of $9,500, and prepaid interest of $10,500. The note is due on April 15, 2016 and bears interest at 15% per annum,
which was prepaid by the Company and is being amortized over the life of the loan. The loan is secured by shares of the Company’s
common stock. The loan becomes convertible 180 days after date of the note. The loan and any accrued interest can then be converted
into shares of the Company’s common stock at a rate of 50% multiplied by the market price, which is the lowest quoted price
for the common stock during the 25 trading day period ending on the latest complete trading day prior to the conversion date.
As of the quarter ended September 30, 2015, $4,361 of the debt discount has been amortized and the note is shown net $5,139 in
unamortized debt discount. As of September 30, 2015, the note has not become convertible.



On
May 20, 2015, the Company issued a convertible promissory note in the amount of $43,000 for $43,000 cash. The note is due on February
22, 2016 and bears interest at 8% per annum. The loan becomes convertible 180 days after date of the note. The loan can then be
converted into shares of the Company’s common stock at a rate of 58% multiplied by the market price, which is the average
of the lowest three (3) quoted price for the common stock during the 10 trading day period ending on the latest complete trading
day prior to the conversion date. As of September 30, 2015, the note has not become convertible.



On
June 7, 2015, the Company issued a short-term convertible promissory note in the amount of $70,000 for $50,000 cash, an original
issue discount of $9,500, and prepaid interest of $10,500. The note is due on June 8, 2016 and bears interest at 15% per annum,
which was prepaid by the Company and is being amortized over the life of the loan. The loan is secured by shares of the Company’s
common stock. The loan becomes convertible 180 days after date of the note. The loan and any accrued interest can then be converted
into shares of the Company’s common stock at a rate of 50% multiplied by the market price, which is the lowest quoted price
for the common stock during the 25 trading day period ending on the latest complete trading day prior to the conversion date.
As of September 30, 2015, $2,977 of the debt discount has been amortized and the note is shown net $6,523 in unamortized debt
discount. As of September 30, 2015, the note has not become convertible.



On
June 19, 2015, the Company issued a short-term convertible promissory note in the amount of $37,500 for $25,000 cash, an original
issue discount of $6,875, and prepaid interest of $5,625. The note is due on June 19, 2016 and bears interest at 15% per annum,
which was prepaid by the Company and is being amortized over the life of the loan. The loan is secured by shares of the Company’s
common stock. The loan becomes convertible 180 days after date of the note. The loan and any accrued interest can then be converted
into shares of the Company’s common stock at a rate of 50% multiplied by the market price, which is the lowest quoted price
for the common stock during the 25 trading day period ending on the latest complete trading day prior to the conversion date.
As of September 30, 2015, $1,935 of the debt discount has been amortized and the note is shown net $4,940 in unamortized debt
discount. As of September 30, 2015, the note has not become convertible.



On
June 28, 2015, the Company issued a convertible promissory note in the amount of $150,000 for $100,000 cash, an original issue
discount of $50,000. The note is due on December 28, 2016 and bears interest at 15% per annum. The loan becomes convertible 180
days after date of the note. The loan can then be converted into shares of the Company’s common stock at a rate of 50% multiplied
by the market price, which is the lowest quoted price for the common stock during the 25 trading day period ending on the latest
complete trading day to the conversion date. As of September 30, 2015, $8,561 of the debt discount has been amortized and the
note is shown net $41,439 in unamortized debt discount. As of September 30, 2015, the note has not become convertible.



F-13







NANO
MOBILE HEALTHCARE, INC

NOTES
TO THE FINANCIAL STATEMENTS

September
30, 2015

(UNAUDITED)



On
June 29, 2015, the Company issued a convertible promissory note in which the Company will be taking tranche payments based on
amounts determined by the note holder for total payments of not more than $100,000. There is an original discount component of
$10,000. Therefore, the funds available to the Company will be $90,000 and the liability (net of interest) will be $100,000 when
all disbursements have been received by the Company. Each tranche is accounted for separately with each principal and OID balance
becoming due 24 months after receipt. Each tranche bears interest at 15% per annum. Each portion of the loan becomes convertible
immediately upon issuance. The loan and any accrued interest can then be converted into shares of the Company’s common stock
at a rate of the lesser of $0.02 per share or 50% multiplied by the market price per share, which is the lowest quoted price for
the common stock during the 25 trading days immediately preceding the conversion date. During the period ended June 30, 2015,
the Company has received one tranche disbursements of $30,000 on June 29, 2015.



As
of September 30, 2015, $382 of the debt discount has been amortized. The Note is shown net of an unamortized debt discount of
$2,618 at September 30, 2015.



On
June 29, 2015, the first trance became convertible at the option of the holder. On this date the Company recorded a debt discount
in the amount of $33,000 in connection with the initial valuation of the derivative liability of the note to be amortized utilizing
the effective interest method of accretion over the term of the note. Further, the Company recognized a derivative liability of
$67,818 and initial loss on derivative liabilities of $34,818 based on the Black Scholes Merton pricing model. As of September
30, 2015, $4,193 of the debt discount has been amortized. The fair value of the derivative liability at September 30, 2015 and
June 30, 2015 is $54,834 and $79,497, respectively resulting in a gain on the change in fair value of the derivative of $24,663
The Note is shown net of a derivative debt discount of $28,807 at September 30, 2015.



On
July 7, 2015, the Company issued a convertible promissory note in the amount of $40,000 for $38,000 cash. The note is due on June
30, 2016 and bears interest at 8% per annum. The loan is secured by shares of the Company’s common stock. The loan becomes
convertible as of the date of the note. The loan and any accrued interest can then be converted into shares of the Company’s
common stock at a rate of 60% multiplied by the market price, which is the lowest quoted price for the common stock during the
25 trading day period ending on the latest complete trading day prior to the conversion date. During the three months ended September
30, 2015, $474 of the debt discount has been amortized. The Note is shown net of an unamortized debt discount of $1,526 at September
30, 2015.



On
July 7, 2015, the note became convertible at the option of the holder. On this date the Company recorded a debt discount in the
amount of $40,000 in connection with the initial valuation of the derivative liability of the note to be amortized utilizing the
effective interest method of accretion over the term of the note. Further, the Company recognized a derivative liability of $60,307
and initial loss on derivative liabilities of $20,307 based on the Black Scholes Merton pricing model.



As
of September 30, 2015, $9,471 of the debt discount has been amortized. The fair value of the derivative liability at September
30, 2015, was $47,938 resulting in a gain on the change in fair value of the derivative of $12,369. The Note is shown net of a
derivative discount of $30,529 at September 30, 2015.



On
July 24, 2015, the Company issued a convertible promissory note in the amount of $56,250 for $50,000 cash. The note is due on
April 24, 2016 and bears interest at 10% per annum, which was prepaid by the Company and is being amortized over the life of the
loan. The loan is secured by shares of the Company’s common stock. The loan becomes convertible as of the date of the note.
The loan and any accrued interest can then be converted into shares of the Company’s common stock at a rate of 50% multiplied
by the market price, which is the lowest quoted price for the common stock during the 20 trading day period ending on the latest
complete trading day prior to the conversion date. The Note is shown net of an unamortized debt discount of $4,705at September
30, 2015.



F-14







NANO
MOBILE HEALTHCARE, INC

NOTES
TO THE FINANCIAL STATEMENTS

September
30, 2015

(UNAUDITED)



On
July 24, 2015, the note became convertible at the option of the holder. On this date the Company recorded a debt discount in the
amount of $56,250 in connection with the initial valuation of the derivative liability of the note to be amortized utilizing the
effective interest method of accretion over the term of the note. Further, the Company recognized a derivative liability of $101,339
and initial loss on derivative liabilities of $45,089 based on the Black Scholes Merton pricing model.



As
of September 30, 2015, $13,909 of the debt discount has been amortized. The fair value of the derivative liability at September
30, 2015, was $79,501 resulting in a gain on the change in fair value of the derivative of $21,838. The Note is shown net of a
derivative discount of $42,341 at September 30, 2015.



On
August 3, 2015, the Company issued a convertible promissory note in the amount of $75,000 for $50,000 cash, an original issue
discount of $13,750 and prepaid interest of $11,250. The note is due on January 29, 2016 and bears interest at 15% per annum,
which was prepaid by the Company and is being amortized over the life of the loan. The loan is secured by shares of the Company’s
common stock. The loan becomes convertible 180 days after date of the note. The loan and any accrued interest can then be converted
into shares of the Company’s common stock at a rate of 50% multiplied by the market price, which is the lowest quoted price
for the common stock during the 25 trading day period ending on the latest complete trading day prior to the conversion date.
During the three months ended September 30, 2015, $1,555 of the debt discount has been amortized. The Note is shown net of an
unamortized debt discount of $12,195 at September 30, 2015. As of September 30, 2015, the note has not become convertible.



On
August 5, 2015, the Company issued a convertible promissory note in the amount of $37,500 for $25,000 cash, an original issue
discount of $6,875 and prepaid interest of $5,625. The note is due on January 29, 2017 and bears interest at 15% per annum, which
was prepaid by the Company and is being amortized over the life of the loan. The loan is secured by shares of the Company’s
common stock. The loan becomes convertible 180 days after date of the note. The loan and any accrued interest can then be converted
into shares of the Company’s common stock at a rate of 50% multiplied by the market price, which is the lowest quoted price
for the common stock during the 25 trading day period ending on the latest complete trading day prior to the conversion date.
During the three months ended September 30, 2015, $709 of the debt discount has been amortized. The Note is shown net of an unamortized
debt discount of $6,166 at September 30, 2015. As of September 30, 2015, the note has not become convertible.



On
August 12, 2015, the Company issued a convertible promissory note in the amount of $50,000 for $44,000 cash, an original issue
discount of $6,000. The note is due on February 12, 2016 and bears interest at 12% per annum, which was prepaid by the Company
and is being amortized over the life of the loan. The loan is secured by shares of the Company’s common stock. The loan
becomes convertible as of the date of the note. The loan and any accrued interest can then be converted into shares of the Company’s
common stock at a rate of 50% multiplied by the market price, which is the lesser of lowest quoted price for the common stock
during the previous 20 trading day period ending on the conversion date and the lowest trading price on the 30th trading
day after the funding of the note. During the three months ended September 30, 2015, $1,598 of the debt discount has been amortized.
The Note is shown net of an unamortized debt discount of $4,402 at September 30, 2015.



On
August 12, 2015, the note became convertible at the option of the holder. On this date the Company recorded a debt discount in
the amount of $50,000 in connection with the initial valuation of the derivative liability of the note to be amortized utilizing
the effective interest method of accretion over the term of the note. Further, the Company recognized a derivative liability of
$358,250 and initial loss on derivative liabilities of $308,250 based on the Black Scholes Merton pricing model.



As
of September 30, 2015, $13,315 of the debt discount has been amortized. The fair value of the derivative liability at September
30, 2015, was $69,291 resulting in a gain on the change in fair value of the derivative of $288,959. The Note is shown net of
a derivative discount of $36,685 at September 30, 2015.



F-15





NANO
                                         MOBILE HEALTHCARE, INC

NOTES
TO THE FINANCIAL STATEMENTS

September
30, 2015

(UNAUDITED)



On
August 12, 2015, the Company issued a convertible promissory note in the amount of $115,000 for $115,000 cash. The note is due
on August 12, 2016 and bears interest at 12% per annum, which was prepaid by the Company and is being amortized over the life
of the loan. The loan is secured by shares of the Company’s common stock. The loan becomes convertible as of the date of
the note. The loan and any accrued interest can then be converted into shares of the Company’s common stock at a rate of
50% multiplied by the market price, which is the lesser of lowest quoted price for the common stock during the previous 20 trading
day period ending on the conversion date and the lowest trading price on the 30th trading day after the funding of
the note.



On
August 12, 2015, the note became convertible at the option of the holder. On this date the Company recorded a debt discount in
the amount of $115,000 in connection with the initial valuation of the derivative liability of the note to be amortized utilizing
the effective interest method of accretion over the term of the note. Further, the Company recognized a derivative liability of
$215,932 and initial loss on derivative liabilities of $100,932 based on the Black Scholes Merton pricing model.



As
of September 30, 2015, the holder of the note exercised his right to convert $48,806 of the note balance into 27,214,714 shares
of common stock. The fair value of the derivative liability related to the converted debt at September 30, 2015 was $78,557.



As
of September 30, 2015, $15,438 of the debt discount has been amortized. The fair value of the derivative liability at September
30, 2015, was $99,429 resulting in a gain on the change in fair value of the derivative of $37,946. The Note is shown net of a
derivative discount of $99,562 at September 30, 2015.



On
September 8, 2015, the Company issued a short-term convertible promissory note in the amount of $70,000 for $50,000 cash, an original
issue discount of $9,500, and prepaid interest of $10,500. The note is due on September 9, 2016 and bears interest at 15% per
annum, which was prepaid by the Company and is being amortized over the life of the loan. The loan is secured by shares of the
Company’s common stock. The loan becomes convertible 180 days after date of the note. The loan and any accrued interest
can then be converted into shares of the Company’s common stock at a rate of 50% multiplied by the market price, which is
the lowest quoted price for the common stock during the 25 trading day period ending on the latest complete trading day prior
to the conversion date. During the year ended September 30, 2015, $569 of the debt discount has been amortized and the note is
shown net $8,931 in unamortized debt discount. As of September 30, 2015, the note has not become convertible.



Derivative
liability for these notes were valued under the Black-Scholes model, with the following assumptions:



|Fair
    value assumptions – derivative notes: |  | September
    30, 2015 |           
|---------------------------------------------- |  | ---------------------- | ----------
|Risk free interest rate                        |  |                        | 0.00-0.56 
|Expected term (years)                          |  |                        | 0.45-1.575
|Expected volatility                            |  |                        | 241-444   
|Expected dividends                             |  |                        | 0         



|Fair value assumptions
    – derivative notes: |  | June
    30, 2015 |          
|---------------------------------------------- |  | ----------------- | ---------
|Risk free interest rate                        |  |                   | 0.09-0.64
|Expected term (years)                          |  |                   | 0.45-1.01
|Expected volatility                            |  |                   | 198-288  
|Expected dividends                             |  |                   | 0        



F-16





NANO
                                         MOBILE HEALTHCARE, INC

NOTES
TO THE FINANCIAL STATEMENTS

September
30, 2015

(UNAUDITED)



As
of September 30, 2015, the company had the below commitments related to its outstanding convertible notes payable.



|Commitments:                      |  | Amount |          
|--------------------------------- |  | ------ | ---------
|Within one year                   |  | $      | 1,081,257
|After one year and within 5 years |  |        | 378,548  
|Total                             |  | $      | 1,459,805



NOTE
8 – COMMON STOCK



On
August 24, 2015, the Company filed with the Secretary of State of the State of Delaware a Certificate of Designations of Rights,
Preferences, Privileges and Restrictions of Series A Convertible Preferred Stock.



Under
the terms of the Certificate of Designation, 24,000,000 shares of the Company’s preferred stock will be designated as Series
A Convertible Preferred. Each share of the Series A Convertible Preferred shall be convertible into five (5) shares of Common
Stock without the payment of additional consideration by the holder thereof, subject to certain terms, conditions and adjustments
as described in the Certificate of Designation. The holders of Series A Convertible Preferred shall be entitled to receive any
dividends before the holders of the Common Stock, in an amount at least equal to the product of (x) the dividend payable on each
share of Common Stock and (y) the number of shares of Common Stock issuable upon conversion of a share of Series A Convertible
Preferred, in each case calculated on the record date for determination of holders entitled to receive such dividend. Each holder
of outstanding Series A Convertible Preferred shall be entitled to vote with the holders of the Common Stock, as a single class,
on all matters presented to the holders of Common Stock an as-converted basis calculated as of the record date for such vote.



On
August 25, 2015, the Company entered into an exchange agreement with its majority shareholder, Nanobeak, LLC, pursuant to which
Nanobeak exchanged 117,366,840 shares of the Company’s common stock in exchange for 23,473,368 shares of the Company’s
Series A Convertible Preferred Stock.



During
the three months ended September 30, 2015, the Company issued 73,007,588 shares of common stock valued at $191,719 for the conversion
of notes payable.



NOTE
9 – STOCK WARRANTS



On
December 16, 2013, the Board of Directors of the Company approved the election of William S. Rees, Jr. to serve as a member of
the Board effective December 16, 2014. Mr. Rees has not yet been appointed to serve on any committee of the Board. There are no
arrangements or understandings between Mr. Rees and any other person pursuant to which Mr. Rees was appointed as a director. The
Company entered into an agreement with Mr. Rees pursuant to which it agreed to issue to him, in consideration of his services,
a warrant to purchase up to 2,000,000 shares of the Company’s common stock for a period of five years at an exercise price
of $0.05 per share. The Company determined the fair value of the warrants to be $99,764 using the Black Scholes Valuation Model.
As of June 30, 2014 the warrants were fully vested and the Company recorded $99,764 as stock-based compensation expense.



On
December 31, 2013, we issued to Accent Healthcare Advisors, LLC, a California limited liability company, as compensation for their
past and future advisory services for the next several years in the bio-pharmaceutical and healthcare industries, a warrant to
purchase up to 25,000,000 shares of the Company’s common stock, par value $.01 per share, for a period of seven years at
an exercise price of $0.049 per share. The warrants issued vest immediately. The exercise price was calculated based on the prior
ten days average closing price per share. The holder may not exercise the Warrant such that the number of shares of common stock
beneficially owned by the holder and its affiliates exceeds 4.9% of the total outstanding shares of common stock of the Company.
The fair value of the warrants using the Black Scholes valuation model was determined to be $2,994,407. The exercise price and
number of Warrant Shares are subject to adjustment upon the subdivision or combination of the Company’s common stock. Further,
upon the consolidation, merger or sale of the Company, the holder is entitled to receive, at the Company’s discretion, either
(a) if the Warrant is exercised, the consideration payable with respect to or in exchange for those Warrant Shares that would
have been received if no consolidation, merger or sale had taken place or (b) cash equal to the value of the Warrant as determined
in accordance with the Black-Scholes option pricing formula. As of June 30, 2014 the stock-based compensation expense related
to this issuance was $2,994,407.



F-17







NANO
MOBILE HEALTHCARE, INC

NOTES
TO THE FINANCIAL STATEMENTS

September
30, 2015

(UNAUDITED)



On
November 27, 2013, the Company issued 3,875,000 warrants for the Company’s common stock as stock based compensation for
a three year period, par value $.01 per share, at an exercise price per share equal to $0.05. The warrants issued vest immediately.
The warrants are exercisable any time after November 27, 2013 for a period of five years from date of issuance. The fair value
of the warrants using the Black Scholes Valuation Model was $204,904. As of June 30, 2014 the stock-based compensation expense
related to this issuance was 204,904.



On
December 10, 2013, the Company issued 5,000,000 warrants for the Company’s common stock as stock based compensation for
a three year period, par value $.01 per share, at an exercise price per share equal to the closing price on December 10, 2013
of $0.0478. The warrants are exercisable any time after December 10, 2013 for a period of seven years from date of issuance. The
fair value of the warrants using the Black Scholes Valuation Model was $238,925. As of June 30, 2014 the stock-based compensation
expense related to this issuance was $238,925.



On
July 1, 2014 the Company granted stock warrants for 200,000 shares of common stock for services, which vested immediately. These
warrants had an expiration date of July 1, 2019, and were valued using the Black Scholes Valuation Model, the stock price at the
grant date was $0.29/share, the exercise price is $0.12495/share, the value of the issuance is $58,000.



On
January 15, 2015, the Company granted stock warrants for 8,000,000 shares of common stock for services, which vested immediately.
These warrants had an expiration date of January 15, 2020, and were valued using the Black Scholes Valuation Model, the stock
price at the grant date was $0.0332/share, the exercise price is $0.05/share, the value of the issuance was $263,669.



During
the quarter ended September 30, 2015 and 2014, the Company issued 15,441,176 and 291,494 warrants, respectively for shares of
common stock to lenders in connection with loans received by the Company. The warrants have anti-dilution provisions, including
a provision for adjustments to the exercise price and to the number of warrant shares purchasable if we issue or sell common shares
at a price less than the then current exercise price. We determined that the warrants were not afforded equity classification
because the warrants are not considered to be indexed to our own stock due to the anti-dilution provision. Accordingly, the warrants
are treated as a derivative liability and are carried at fair value. We estimate the fair value of these derivative warrants at
each balance sheet date and the changes in fair value are recognized in earnings in the statement of operations until such time
as the derivative warrants are exercised or expire.



On
April 17, 2014 the Company granted stock warrants for 1,185,192 shares of common stock in association with a long-term loan at
no cost to the lender. These warrants had an expiration date of April 17, 2019, and were valued using the Black Scholes Valuation
Model, the stock price at the grant date was $0.09/share, the exercise price is $0.0701/share, the value of the issuance is $106,426.



On
May 5, 2014 the Company granted stock warrants for 705,229 shares of common stock in association with a long-term loan at no cost
to the lender. These warrants had an expiration date of May 5, 2019, and were valued using the Black Scholes Valuation Model,
the stock price at the grant date was $0.09/share, the exercise price is $0.0589/share, the value of the issuance is $63,468.



On
June 11, 2014 the Company granted stock warrants for 553,840 shares of common stock in association with a long-term loan at no
cost to the lender. These warrants had an expiration date of June 11, 2019, and were valued using the Black Scholes Valuation
Model, the stock price at the grant date was $0.1284/share, the exercise price is $0.0750/share, the value of the issuance is
$71,110.



F-18







NANO
MOBILE HEALTHCARE, INC

NOTES
TO THE FINANCIAL STATEMENTS

September
30, 2015

(UNAUDITED)



On
July 15, 2014 the Company granted stock warrants for 291,494 shares of common stock in association with a long-term loan at no
cost to the lender. These warrants have an expiration date of July 15, 2019, and were valued using the Black Scholes Valuation
Model, the stock price at the grant date was $0.24/share, the exercise price is $0.0143/share, the value of the issuance is $69,956.



On
October 1, 2014 the Company granted stock warrants for 320,122 shares of common stock in association with a short-term loan at
no cost to the lender. These warrants have a term of five years, and were valued using the Black Scholes Valuation Model, the
stock price at the grant date was $0.164/share, the exercise price is $0.123/share, the value of the issuance is $52,498.



On
November 17, 2014 the Company granted stock warrants for 807,692 shares of common stock in association with a long-term loan at
no cost to the lender. These warrants have a term of five years, and were valued using the Black Scholes Valuation Model, the
stock price at the grant date was $0.065/share, the exercise price is $0.049/share, the value of the issuance is $52,498.



On
December 23, 2014 the Company granted stock warrants for 1,158,940 shares of common stock in association with a long-term loan
at no cost to the lender. These warrants have a term of five years, and were valued using the Black Scholes Valuation Model, the
stock price at the grant date was $0.045/share, the exercise price is $0.034/share, the value of the issuance is $52,152.



On
April 15, 2015 the Company granted stock warrants for 1,185,102 shares of common stock in association with a short-term loan at
no cost to the lender. These warrants have a term of five years, and were valued using the Black Scholes Valuation Model, the
stock price at the grant date was $0.0443/share, the exercise price is $0.017/share, the value of the issuance is $52,081.



On
June 7, 2015 the Company granted stock warrants for 2,187,500 shares of common stock in association with a short-term loan at
no cost to the lender. These warrants have a term of five years, and were valued using the Black Scholes Valuation Model, the
stock price at the grant date was $0.024/share, the exercise price is $0.009/share, the value of the issuance is $51,935.



On
June 19, 2015 the Company granted stock warrants for 1,125,000 shares of common stock in association with a short-term loan at
no cost to the lender. These warrants have a term of five years, and were valued using the Black Scholes Valuation Model, the
stock price at the grant date was $0.025/share, the exercise price is $0.009/share, the value of the issuance is $27,794.



On
June 28, 2015 the Company granted stock warrants for 5,357,143 shares of common stock in association with a long-term loan at
no cost to the lender. These warrants have a term of five years, and were valued using the Black Scholes Valuation Model, the
stock price at the grant date was $0.021/share, the exercise price is $0.008/share, the value of the issuance is $111,151.



On
September 8, 2015 the Company granted stock warrants for 15,441,176 shares of common stock in association with a short-term loan
at no cost to the lender. These warrants have a term of five years, and were valued using the Black Scholes Valuation Model, the
stock price at the grant date was $0.0034/share, the exercise price is $0.001/share, the value of the issuance is $52,493.



We
issued warrants to purchase 38,874,998 shares of common stock to non-employees during the year ended June 30, 2014, during such
time the warrants were accounted for as equity. During the year end June 30, 2015, the Company issued convertible notes payable
that provide for the issuance of shares of common stock that became convertible. The conversion term for the convertible notes
are variable based on certain factors. As of September 30, 2015, the number of shares to be issued under the notes are indeterminate.
Due to the fact that the number of shares issuable are indeterminate, the equity environment is tainted and the warrants are included
in the value of the derivative. On the date the equity environment became tainted, the Company recorded a reduction to additional
paid in capital in the amount of $6,157,610 in connection with the initial valuation of the derivative liability of the warrants
based on the Black Scholes Merton pricing model. The derivative liability related to these warrants was $54,286 and $913,168 as
of September 30, 2015 and June 30, 2015, respectively. During the three months ended September 30, 2015 and 2014, the Company
recorded a gain of $858,882 and $0, respectively, related to the change in fair value on the warrants.



F-19







NANO
MOBILE HEALTHCARE, INC

NOTES
TO THE FINANCIAL STATEMENTS

September
30, 2015

(UNAUDITED)



In
total the derivative liability related to the warrants as of September 30, 2015 and June 30, 2015 was $96,681 and $1,270,470,
respectively and the Company recorded a gain in the change in fair value due to derivative warrant liability of $1,173,787 and
$237,469 during the three months ended September 30, 2015 and 2014, respectively.



|Fair
    value assumptions – derivative warrants: |  | Grant
    Date |           
|------------------------------------------------- |  | -------------- | ----------
|Risk free interest rate                           |  |                | 1.59%-1.88
|Expected term (years)                             |  |                | 5-7       
|Expected volatility                               |  |                | 206-362   
|Expected dividends                                |  |                | 0         



|Fair
    value assumptions – derivative warrants: |  | June
    30, 2015 |       
|------------------------------------------------- |  | ----------------- | ------
|Risk free interest rate                           |  |                   | 1.63  
|Expected term (years)                             |  |                   | 5-7   
|Expected volatility                               |  |                   | 206.48
|Expected dividends                                |  |                   | 0     



|Fair
    value assumptions – derivative warrants: |  | September
    30, 2015 |       
|------------------------------------------------- |  | ---------------------- | ------
|Risk free interest rate                           |  |                        | 1.37  
|Expected term (years)                             |  |                        | 3-5   
|Expected volatility                               |  |                        | 303.02
|Expected dividends                                |  |                        | 0     



NOTE
10 – COMMITMENTS



On
January 1, 2014, the Company entered into a Sub-License Agreement affiliated with the National Aeronautics and Space Administration
(“NASA”) pursuant to which the Company was granted a royalty-bearing, non-transferable license to certain inventions
and patent rights owned by NASA relating to chemical sensing nanotechnology, for use within the United States and its territories.
The License is effective as of December 31, 2013 and subject to an initial five year term, during which the License will be exclusive
to the Company. Following the initial five-year term, the License shall automatically convert to a non-exclusive license. The
License may be terminated by NASA following a 30 day cure period, among other reasons, upon a breach of the License Agreement
or upon its determination that the Company has failed to adequately develop or commercialize the licensed patents. Specific milestones
and commercialization requirements are set forth in the License Agreement. NASA provides no warranties under the License Agreement
and assumes no responsibility for our use, sale or other disposition of the licensed technology. We agree to indemnify NASA against
all liabilities arising from such use, sale or other disposition. We must pay certain royalties in connection with the License
as set forth in the License Agreement.



During
the three months ended September 30, 2015 and 2014, the Company expensed $280,375 and 286,585.



In
relation to a sub-licensing agreement with NASA, a shareholder has paid royalty fees applicable to 2014 on behalf of the Company.
The $100,000 payment was an additional investment in the Company and is not required to be repaid. During the three months ending
September 30, 2015 and 2014, $0 and $75,000 of the royalties were recognized as an expense.



F-20







NANO
MOBILE HEALTHCARE, INC

NOTES
TO THE FINANCIAL STATEMENTS

September
30, 2015

(UNAUDITED)



NOTE
11 – SUBSEQUENT EVENTS



On
January 26, 2015, the Company issued a convertible promissory note in which the Company will be taking tranche payments based
on amounts determined by the note holder for total payments of not more than $250,000. There is an original discount component
of $25,000. Therefore, the funds available to the Company will be $225,000 and the liability (net of interest) will be $250,000
when all disbursements have been received by the Company. Each tranche is accounted for separately with each principal and OID
balance becoming due 24 months after receipt. Each tranche bears interest at 12% per annum. The loan is secured by shares of the
Company’s common stock. Each portion of the loan becomes convertible immediately upon issuance. The loan and any accrued
interest can then be converted into shares of the Company’s common stock at a rate of the lesser of $0.045 per share or
60% multiplied by the market price per share, which is the lowest quoted price for the common stock during the 25 trading day
period ending on the latest complete trading day prior to the conversion date. During the period ended June 30, 2015, the Company
has received two tranche disbursements of $75,000 on January 26, 2015 and 25,000 on April 28, 2015. Subsequent to quarter end,
the Company issued 24,605,000 shares for the conversion of $17,716 of the note payable.



On
July 20, 2015, the Company entered into a settlement agreement with the holder of the convertible note. Under the agreement the
note holder agreed to not to seek to enforce its rights or remedies under the Note in relation to the notice of conversion issued
to convert a balance of the note amounting to $57,933; to not to exercise its rights of conversion pursuant to the Note, and if
an event of default occurs, the Holder agrees not to sell any shares of common stock of the Company having an aggregate conversion
value of $30,000 or more per week until such time as it has sold all of the Company’s common stock that it owns. Under the
agreement the Company agreed to a penalty in relation to the issuance of a note in the amount of $95,000. Subsequent to quarter
end, the Company issued 9,000,000 shares for the conversion of $9,000 of the note payable.





F-21







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



Forward-Looking
Statements



Certain
statements, other than purely historical information, including estimates, projections, statements relating to our business plans,
objectives, and expected operating results, and the assumptions upon which those statements are based, are “forward-looking
statements.” These forward-looking statements generally are identified by the words “believes,” “project,”
“expects,” “anticipates,” “estimates,” “intends,” “strategy,” “plan,”
“may,” “will,” “would,” “will be,” “will continue,” “will likely
result,” and similar expressions. Forward-looking statements are based on current expectations and assumptions that are
subject to risks and uncertainties which may cause actual results to differ materially from the forward-looking statements. Our
ability to predict results or the actual effect of future plans or strategies is inherently uncertain. Factors which could have
a material adverse affect on our operations and future prospects on a consolidated basis include, but are not limited to: changes
in economic conditions, legislative/regulatory changes, availability of capital, interest rates, competition, and generally accepted
accounting principles. These risks and uncertainties should also be considered in evaluating forward-looking statements and undue
reliance should not be placed on such statements.



Overview



We
were incorporated in the State of Nevada on April 21, 2010. We were initially in the business of becoming a pharmaceutical manufacturer
with the specific intention of bidding on South African government health care contracts and tenders. We abandoned that business
plan when, on November 7, 2013, Nanobeak, LLC, a Delaware limited liability company (formerly Nanobeak, Inc., a California corporation)
(“Nanobeak”) acquired a majority interest in our company through the stock purchase of a controlling interest in our
company from Bayview Terrace Limited.



Since
the change of control, we have implemented a new business plan. On January 1, 2014, Nanobeak entered into a License Agreement
(the “License Agreement”) with the National Aeronautics and Space Administration (“NASA”) pursuant to
which Nanobeak was granted a royalty-bearing, non-transferable license (the “License”) to certain inventions and patent
rights owned by NASA relating to chemical sensing nanotechnology, for use within the United States and its territories.



The
License is effective as of December 31, 2013 and subject to an initial five year term, during which the License will be exclusive
to Nanobeak. Following the initial five-year term, the License shall automatically convert to a non-exclusive license. Under the
License, Nanobeak is required to develop and commercialize the licensed patents. NASA provided no warranties under the License
Agreement and assumed no responsibility for our use, sale or other disposition of the licensed technology. Nanobeak has agreed
to indemnify NASA against all liabilities arising from such use, sale or other disposition.



Pursuant
to Section 3.1.1 of the License Agreement, Nanobeak is permitted to sublicense its rights under the License Agreement to subcontractors.
Effective as of February 20, 2014, Nanobeak has sublicensed such rights to us as set forth in a Sublicense Agreement.



The
Sublicense Agreement grants patent rights to us on the same terms as such rights have been granted to Nanobeak under the License
Agreement; provided, however, that the field of use for the patent rights granted to us is limited to disease detection.



We
must pay to Nanobeak certain royalties in connection with the Sublicense Agreement, which royalties are equivalent to those owed
by Nanobeak to NASA pursuant to the License Agreement. We must further comply with other obligations of Nanobeak under the License
Agreement as though we were a party thereto, including achievement of practical application of the patent rights and certain reporting
obligations.



The
Sublicense Agreement will terminate upon the earlier of (i) termination of the License Agreement or (ii) termination by either
party to the Sublicense Agreement as set forth therein.





4







As
a result of the License Agreement and Sublicense Agreement, we are now a mobile health technology company that is developing personalized
and point-of-care screening using applications based upon chemical sensing methods.



We
have been developing a low cost point-of-care screening device that will detect and analyze common components from human breath
and provide an early indication of chronic diseases such as heart failure and various forms of cancer, as well as contagious diseases
such as strep throat. The principles of operation are driven by technology developed by NASA. The sensor can connect via Bluetooth
to any capable smart device running an iOS or Android operating system. Development efforts on the sensor were concluded and the
device is now in a clinical environment. The final development stage for the healthcare sensor will be formal clinical trials
and ultimately to obtain FDA approval.



The
current Breathalyzer has a small footprint and can easily be operated by anyone with minimal instruction. State-of-the art engineering
design techniques, advanced nanotechnology, and bio-informatics have been combined to create the following three main pieces of
the device that is now being used to collect sample data from test patients for certain key biomarkers in a clinical setting:



| | 1. | Breath
    Capture Device – This component of the device attaches to the sensor module, captures breath from patient’s mouth,
    pre-filters the breath, and sends it to the sensor module at a controlled flow rate. Recent design improvements to the Breath
    Capture Device include the capability to simultaneously monitor respiratory rate, lung function, heart rate, and core body
    temperature. Iterations of the current design, which were optimized, using CAD (computer-aided design) and flow simulation
    tools, will soon be manufactured and tested using rapid prototyping techniques (3D printing).                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                          
| | -- | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| |    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                          
| | 2. | Sensor
    Module – This component of the device contains an array filled with dozens of micro-fabricated nanomaterial-based chemical
    sensors, device hardware, and a battery pack. Each of these individual sensors is coated with specially formulated sensing
    materials that will show high sensitivity and specificity towards detecting biomarkers known by medical experts to be associated
    with particular diseases. Thus, the device will be used to simultaneously quantify levels of critical biomarkers exhaled by
    patients, record other medically relevant patient data (respiratory rate, core body temperature, and heart rate), and document
    experimentally relevant conditions (humidity, temperature, and pressure). Patient data collected by the Sensor Module will
    be sent to an iOS or Android smart device via Bluetooth, where it is collected, further processed, compared to an existing
    data library, and analyzed by our iOS/Android app. Design challenges that previously delayed critical milestones have been
    solved. Sensor Modules have been delivered to clinical researchers and preliminary data is being collected and analyzed. This
    data will be used to calibrate the device and quantify specific VOC’s known to be associated with the disease conditions
    that will be targeted first.
| |    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                          
| | 3. | App/Software
    for the Smart Devices – This essential component of the device communicates with smart devices using a proprietary iOS/Android
    app, is used to interpret and present the results collected by the Sensor Module, and can easily be updated as the medical
    team collects more sample calibration data. It can also be calibrated to detect other diseases when sample data for those
    are collected. Each time a test is run on the breath capture device, data received by the app will be seamlessly pre-processed
    and post-processed through the algorithm and in nearly real-time a conclusive summary result will be provided on the device
    and/or sent/shared with Physicians via phone or Internet connections.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                



The
sensor and related devices will ultimately be used to demonstrate an integrated approach that can be used to collect data from
human breath and evaluate it for early disease screening purposes, effectively linking experts in the field, data scientists,
and decision makers with results generated in real-time.



We
have entered into a Strategic Partnership with Scripps Translational Sciences Institute (STSI) to assist in the development, advancement,
and commercialization of the mobile technology. Scripps will also provide the testing, evaluation, and detection of certain combinations
of Volatile Organic Compounds (VOCs) known as the breath signature and will assist in managing our clinical trials in partnership
with several other research hospitals in the United States. These clinical trials will support the 510K that will be submitted
to the FDA. It is expected that the contemplated clinical trials will take approximately four months with another four months
expected for the 510K process within the FDA. We have not yet started the clinical trials. The clinical trials can cost as much
as $5,000,000. We will first have to raise the money to commence the trials.





5







We
have also entered into a Strategic Partnership with Theranostics Laboratory, a translational research company, with offices in
the USA and New Zealand. Theranostics laboratory was founded at the Cleveland Clinic in 2010 and works on subcontracted research,
in collaboration with the Auckland Bioengineering Institute (ABI), in New Zealand, and with NASA (via NASA Grant NCC 9-58).



The
Auckland Bioengineering Institute is recognized as a world-leader in the field of personalized modeling and is part of the international
Virtual Physiologic Human (VPH) project. The Institute has successfully commercialized numerous mHealth technologies, including
wireless telemetry systems, wearable sensors and a needle-free injectable system into the US market.



The
partnership between the Theranostics laboratory and the Auckland Bioengineering Institute (ABI) is a strategic alliance for us
through which the lab will act as principal investigators for us in the areas of mobile strep detection, mobile virus detection
and other related areas including breath sample conditioning methodologies. The partnership gives us access to world-class expertise
and skill in the field of personalized modeling. It also provides us with cost-efficiencies working across multiple time zones,
as well as insight into the Australasian MedTech market.



We
have decided to work in conjunction with our majority shareholder, Nanobeak and NASA, to develop a mobile app to be used in connection
with our sensor that will enable law enforcement to screen for marijuana use and deliver in-the-moment results to the officer’s
smartphone, tablet or laptop in the field. We will not be distracted from our current efforts and resources in continuing to develop
early lung cancer detection and detection for other diseases. The ability to go-to-market will be much faster than the process
required for obtaining FDA approval for our lung cancer screening technology because the marijuana detection sensor for use by
law enforcement will be exempt from the FDA approval process. With our President’s background and relationships, we believe
we have an advantage when entering the law enforcement market with this product.



Results
of operations for the three months ended September 30, 2015 and 2014



We
have earned no revenues since our inception. We do not expect to earn any revenues until we complete our technology and bring
it to market.



Our
operating expenses decreased to $462,280 for the three months ended September 30, 2015, as compared with operating expenses of
$757,350 for the three months ended September 30, 2014. Our operating expenses for the three months ended September 30, 2015 mainly
consists of consulting expenses of $280,375, general and administrative expenses of $102,253, professional fees in the amount
of $43,555 and compensation to our officers and directors of $36,097. Our operating expenses for the three months ended September
30, 2014 mainly consisted of consulting expenses of $286,585, professional fees of $137,520, stock based compensation of $127,956,
royalty expense of $75,000, office expenses of $60,576, and travel of $42,941.



We
anticipate our operating expenses will increase as we undertake our plan of operations. The increase will be attributable to administrative
and operating costs associated with developing and commercializing our technology and our continued reporting obligations with
the Securities and Exchange Commission.



We
recognized other income of $869,542 for the three months ended September 30, 2015, as compared with other income of $215,516 for
the three months ended September 30, 2014. Our income in 2015 was mainly attributable to a gain in the change in fair value due
to derivative debt and warrant liability of $1,427,189, offset by interest expense of $557,647.



We
incurred net income of $407,262 for the three months ended September 30, 2015, compared with a net loss of $541,834 for the three
months ended September 30, 2014.



We
have not attained profitable operations and are dependent upon obtaining financing to continue with our business plan. For these
reasons, there is substantial doubt that we will be able to continue as a going concern.





6







Liquidity
and Capital Resources



As
of September 30, 2015, we had total current assets of $93,198, consisting of cash and prepaid expenses. We had current liabilities
of $2,389,744 as of September 30, 2015. Accordingly, we had negative working capital of $2,296,546 as of September 30, 2015.



Operating
activities used $508,298 in cash for period ended September 30, 2015, as compared with $589,275 for the period ended September
30, 2014. Our negative operating cash flow for the period ended September 30, 2015 was mainly attributable to a derivative gain,
offset mainly by our net income and the amortization of debt discount.



Investing
activities used $0 in cash for the period ended September 30, 2015, as compared with $12,149 in cash used in investing activities
for the period ended September 30, 2014, associated with the purchase of fixed assets.



Financing
activities for the period ended September 30, 2015 provided $318,402 in cash, as compared with cash flows provided by financing
activities of $466,287 for the period ended September 30, 2014. Our positive cash flow for the period ended September 30, 2015
was mainly the result of proceeds from convertible notes and related party debt offset by payments on related party debt and convertible
notes payable.



On
April 18, 2014, we issued a convertible promissory note in which we will be taking tranche payments on pre-defined dates, the
total of these payments cannot exceed $650,000. There is an original discount component of 10% per tranche and an additional expense
fee of $5,000. Therefore, the funds available to us will be $650,000 and the liability (net of interest) will be $750,000 when
we have received all disbursements. Each tranche is accounted for separately with each principal and OID balance becoming due
18 months after receipt. Each tranche bears interest at 8% per annum. The loan is secured by shares of our common stock. Each
portion of the loan becomes convertible 180 days after date of the note. The loan and any accrued interest can then be converted
into shares of our common stock at a rate of 50% multiplied by the market price, which is the lowest quoted price for the common
stock during the 20 trading day period ending on the latest complete trading day prior to the conversion date.



Through
September 30, 2015, we received nine tranche disbursements: $100,000 on April 21, 2014; $50,000 on May 6, 2014; $50,000 on June
11, 2014; $50,000 on July 16, 2014; $100,000 on September 30, 2014; $50,000 on November 3, 2014, $50,000 on December 1, 2014;
$50,000 on December 29, 2014; and $50,000 on February 2, 2015.



On
July 20, 2015, we entered into a settlement agreement with the holder of the convertible note entered into on April 18, 2014.
Under the agreement the note holder agreed not to seek to enforce its rights or remedies under the Note in relation to the notice
of conversion issued to convert a balance of the note amounting to $57,933; to not to exercise its rights of conversion pursuant
to the Note, and if an event of default occurs, the holder agrees not to sell any shares of our common stock having an aggregate
conversion value of $30,000 or more per week until such time as it has sold all of our common stock that it owns.



Under
the agreement we agreed to a penalty in relation to the note in the amount of $95,000; to release the holder from its obligation
to advance additional funds to us; and to pay or refinance the amount due under the note plus accrued interest in four installment
payments due on July 20, 2015, August 10, 2015, September 14, 2015 and October 12, 2015.



In
respect of prepayment penalties payable to the holder pursuant to the Note, we agreed to issue to the Holder additional convertible
promissory notes with each having the same form, terms, and conditions as the original note. The value of the notes, which are
due by each installment payment date, are equal to 30% of the payment delivered.



After
refinancing the payments due on July 20, 2015 and August 10, 2015, we and the noteholder agreed to allow the note holder to convert
the notes as agreed upon in the original note agreement. As such, in accordance with the agreement we only issued two additional
notes related to the prepayment penalty discussed above. During the three months ended September 30, 2015, we issued two notes
related to the prepayment penalties of the installments due on July 20, 2015 and August 10, 2015 of $35,399 and $35,610, respectively.





7







During
the three months ended September 30, 2015, we converted $5,000 of the penalty note issued on July 20, 2015 into 5,000,000 shares
of common stock. Subsequent to quarter end, we issued 9,000,000 shares for the conversion of $9,000 of the note payable.



During
the quarter ended September 30, 2015, the note issued on June 11, 2014 was settled with cash.



On
October 1, 2014, we issued a short-term convertible promissory note in the amount of $70,000 for $50,000 cash, an original issue
discount of $12,500, and prepaid interest of $7,500. The note bears interest at a rate of 15% per annum. The loan and any accrued
interest can be converted into shares of our common stock at a rate of 50% multiplied by the market price, which is the lowest
quoted price for the common stock during the 25 trading day period ending on the latest complete trading day prior to the conversion
date. The note matured on March 30, 2015.



We
elected to prepay the entire term’s interest of $7,500. Through September 30, 2015, the holder of the note exercised his
right to convert $70,000 of the note balance into 6,011,519 shares of common stock.



On
November 17, 2014, we issued a short-term convertible promissory note in the amount of $70,000. The note bears interest at a rate
of 15% per annum. The loan and any accrued interest can be converted into shares of our common stock at a rate of 50% multiplied
by the market price, which is the lowest quoted price for the common stock during the 25 trading day period ending on the latest
complete trading day prior to the conversion date.



We
elected to prepay the entire term’s interest of $7,500. Through September 30, 2015, the holder of the note exercised his
right to convert $55,000 of the note balance into 13,100,167 shares of common stock.



On
December 23, 2014, we issued a short-term convertible promissory note in the amount of $70,000. The note bears interest at a rate
of 15% per annum. The loan and any accrued interest can be converted into shares of our common stock at a rate of 50% multiplied
by the market price, which is the lowest quoted price for the common stock during the 25 trading day period ending on the latest
complete trading day prior to the conversion date. The note is due on December 18, 2015.



The
Company elected to prepay the entire term’s interest of $7,500. As of September 30, 2015, the note has not been converted
into shares of common stock.



On
January 13, 2015, we issued a short-term convertible promissory note in the amount of $74,000. The note is due on October 15,
2015 and bears interest at 8% per annum. The loan is secured by shares of our common stock. The loan becomes convertible 180 days
after date of the note. The loan and any accrued interest can then be converted into shares of our common stock at a rate of 58%
multiplied by the market price, which is the average of the lowest three trading prices for the common stock during the 10 trading
day period ending on the latest complete trading day prior to the conversion date.



As
of September 30, 2015, the holder of the note exercised his right to convert $76,960 of the note balance and accrued interest
into 15,175,261 shares of common stock.



On
January 26, 2015, we issued a convertible promissory note giving us the option of taking tranche payments based on amounts determined
by the note holder for total payments of not more than $250,000. There is an original discount component of 10% per tranche. Therefore,
the funds available to us will be $225,000 and the liability (net of interest) will be $250,000 when all disbursements have been
received by us. Each tranche is accounted for separately with each principal and OID balance becoming due 24 months after receipt.
Each tranche bears interest at 12% per annum. The loan is secured by shares of our common stock. Each portion of the loan becomes
convertible immediately upon issuance. The loan and any accrued interest can then be converted into shares of our common stock
at a rate of the lesser of $0.045 per share or 60% multiplied by the market price per share, which is the lowest quoted price
for the common stock during the 25 trading day period ending on the latest complete trading day prior to the conversion date.



During
the period ended June 30, 2015, we have received two tranche disbursements of $75,000 on January 26, 2015 and 25,000 on April
28, 2015.





8







As
of September 30, 2015, the holder of the note exercised his right to convert $26,952 of the note balance into 14,700,000 shares
of common stock.



On
April 15, 2015, we issued a short-term convertible promissory note in the amount of $70,000 for $50,000 cash, an original issue
discount of $9,500, and prepaid interest of $10,500. The note is due on April 15, 2016 and bears interest at 15% per annum, which
was prepaid by us and is being amortized over the life of the loan. The loan is secured by shares of our common stock. The loan
becomes convertible 180 days after date of the note. The loan and any accrued interest can then be converted into shares of our
common stock at a rate of 50% multiplied by the market price, which is the lowest quoted price for the common stock during the
25 trading day period ending on the latest complete trading day prior to the conversion date. As of September 30, 2015, the note
has not become convertible.



On
May 20, 2015, we issued a convertible promissory note in the amount of $43,000 for $43,000 cash. The note is due on February 22,
2016 and bears interest at 8% per annum. The loan becomes convertible 180 days after date of the note. The loan can then be converted
into shares of our common stock at a rate of 58% multiplied by the market price, which is the average of the lowest three (3)
quoted price for the common stock during the 10 trading day period ending on the latest complete trading day prior to the conversion
date. As of September 30, 2015, the note has not become convertible.



On
June 7, 2015, we issued a short-term convertible promissory note in the amount of $70,000 for $50,000 cash, an original issue
discount of $9,500, and prepaid interest of $10,500. The note is due on June 8, 2016 and bears interest at 15% per annum, which
was prepaid by us and is being amortized over the life of the loan. The loan is secured by shares of our common stock. The loan
becomes convertible 180 days after date of the note. The loan and any accrued interest can then be converted into shares of our
common stock at a rate of 50% multiplied by the market price, which is the lowest quoted price for the common stock during the
25 trading day period ending on the latest complete trading day prior to the conversion date. As of September 30, 2015, the note
has not become convertible.



On
June 19, 2015, we issued a short-term convertible promissory note in the amount of $37,500 for $25,000 cash, an original issue
discount of $6,875, and prepaid interest of $5,625. The note is due on June 19, 2016 and bears interest at 15% per annum, which
was prepaid by us and is being amortized over the life of the loan. The loan is secured by shares of our common stock. The loan
becomes convertible 180 days after date of the note. The loan and any accrued interest can then be converted into shares of our
common stock at a rate of 50% multiplied by the market price, which is the lowest quoted price for the common stock during the
25 trading day period ending on the latest complete trading day prior to the conversion date. As of September 30, 2015, the note
has not become convertible.



On
June 28, 2015, we issued a convertible promissory note in the amount of $150,000 for $100,000 cash, an original issue discount
of $50,000. The note is due on December 28, 2016 and bears interest at 15% per annum. The loan becomes convertible 180 days after
date of the note. The loan can then be converted into shares of our common stock at a rate of 50% multiplied by the market price,
which is the lowest quoted price for the common stock during the 25 trading day period ending on the latest complete trading day
to the conversion date. As of September 30, 2015, the note has not become convertible.



On
June 29, 2015, we issued a convertible promissory note in which we will be taking tranche payments based on amounts determined
by the note holder for total payments of not more than $100,000. There is an original discount component of $10,000. Therefore,
the funds available to us will be $90,000 and the liability (net of interest) will be $100,000 when all disbursements have been
received by us. Each tranche is accounted for separately with each principal and OID balance becoming due 24 months after receipt.
Each tranche bears interest at 15% per annum. Each portion of the loan becomes convertible immediately upon issuance. The loan
and any accrued interest can then be converted into shares of our common stock at a rate of the lesser of $0.02 per share or 50%
multiplied by the market price per share, which is the lowest quoted price for the common stock during the 25 trading days immediately
preceding the conversion date. The Company has received one tranche disbursements of $30,000 on June 29, 2015.



On
June 29, 2015, the first tranche became convertible at the option of the holder.





9







On
July 1, 2015, we issued a promissory note in the amount of $22,500 for $15,000 cash. The note is due on July 1, 2016 and bears
interest at 15% per annum. During the three month period ended September 30, 2015, we have repaid $18,296 of the note payable.



On
July 7, 2015, we issued a convertible promissory note in the amount of $40,000 for $38,000 cash. The note is due on June 30, 2016
and bears interest at 8% per annum. The loan is secured by shares of our common stock. The loan becomes convertible as of the
date of the note. The loan and any accrued interest can then be converted into shares of our stock at a rate of 60% multiplied
by the market price, which is the lowest quoted price for the common stock during the 25 trading day period ending on the latest
complete trading day prior to the conversion date.



On
July 24, 2015, we issued a convertible promissory note in the amount of $56,250 for $56,250 cash. The note is due on April 24,
2016 and bears interest at 10% per annum, which was prepaid by us and is being amortized over the life of the loan. The loan is
secured by shares of our common stock. The loan becomes convertible as of the date of the note. The loan and any accrued interest
can then be converted into shares of our common stock at a rate of 50% multiplied by the market price, which is the lowest quoted
price for the common stock during the 20 trading day period ending on the latest complete trading day prior to the conversion
date.



On
August 3, 2015, we issued a convertible promissory note in the amount of $75,000, in which we received $50,000 cash. The note
is due on January 29, 2016 and bears interest at 15% per annum, which was prepaid by us and is being amortized over the life of
the loan. The loan is secured by shares of our common stock. The loan becomes convertible 180 days after date of the note. The
loan and any accrued interest can then be converted into shares of our common stock at a rate of 50% multiplied by the market
price, which is the lowest quoted price for the common stock during the 25 trading day period ending on the latest complete trading
day prior to the conversion date. As of September 30, 2015, the note has not become convertible.



On
August 12, 2015, we issued a convertible promissory note in the amount of $115,000, in which we received $115,000 cash. The note
is due on August 12, 2016 and bears interest at 12% per annum. The loan is secured by shares of our common stock. The loan becomes
convertible immediately upon issuance. The loan and any accrued interest can then be converted into shares of our common stock
at a rate of the lower of 50% multiplied by the market price, which is the lowest quoted price for the common stock during the
20 trading day period ending on the latest complete trading day prior to the conversion date or 50% to the lowest trading price
on the 30th day after the funding of the note.



As
of September 30, 2015, the holder of the note exercised his right to convert $48,806 of the note balance into 27,214,714 shares
of common stock.



On
September 1, 2015, we issued a promissory note in the amount of $26,233 for $13,999 cash. The note is due on August 31, 2016 and
bears interest at 15% per annum. During the three month period ended September 30, 2015, we have repaid $8,154 of the note payable.



On
September 8, 2015, we issued a short-term convertible promissory note in the amount of $70,000 for $50,000 cash, an original issue
discount of $9,500, and prepaid interest of $10,500. The note is due on September 9, 2016 and bears interest at 15% per annum,
which we prepaid and is being amortized over the life of the loan. The loan is secured by shares of the Company’s common
stock. The loan becomes convertible 180 days after date of the note. The loan and any accrued interest can then be converted into
shares of the Company’s common stock at a rate of 50% multiplied by the market price, which is the lowest quoted price for
the common stock during the 25 trading day period ending on the latest complete trading day prior to the conversion date. During
the period ended September 30, 2015, $569 of the debt discount has been amortized and the note is shown net $8,931 in unamortized
debt discount. As of September 30, 2015, the note has not become convertible.



As
of September 30, 2015, we had $60,090 in cash. Until we are able to sustain our ongoing operations through sales revenue, we intend
to fund operations through debt and/or equity financing arrangements, which may be insufficient to fund our capital expenditures,
working capital, or other cash requirements. We do not have any formal commitments or arrangements for the sales of stock or the
advancement or loan of funds at this time. There can be no assurance that such additional financing will be available to us on
acceptable terms, or at all.





10







Off
Balance Sheet Arrangements



As
of September 30, 2015, there were no off balance sheet arrangements.



Going
Concern



We
have incurred cumulative net losses of $6,567,404 since our inception and require capital for our contemplated operational and
marketing activities to take place. Our ability to continue as a going concern is dependent on us generating cash from the sale
of our common stock and/or obtaining debt financing and attaining future profitable operations. Management’s plans include
selling our equity securities and obtaining debt financing to fund our capital requirement and ongoing operations; however, there
can be no assurance we will be successful in these efforts. The ability to successfully resolve these factors raise substantial
doubt about our ability to continue as a going concern.



Item
3. Quantitative and Qualitative Disclosures about Market Risk



A
smaller reporting company is not required to provide the information required by this Item.



Item
4. Controls and Procedures



Disclosure
Controls and Procedures



As
required by Rule 13a-15 of the Securities Exchange Act of 1934, our principal executive officer and principal financial officer
evaluated our company’s disclosure controls and procedures (as defined in Rules 13a-15(e) of the Securities Exchange Act
of 1934) as of the end of the period covered by this report. Based on this evaluation, our principal executive officer and principal
financial officer concluded that as of the end of the period covered by this report, these disclosure controls and procedures
were not effective to ensure that the information required to be disclosed by our company in reports it files or submits under
the Securities Exchange Act of 1934 is recorded, processed, summarized and reported within the time periods specified in the rules
and forms of the Securities Exchange Commission and to ensure that such information is accumulated and communicated to our company’s
management, including our principal executive officer and principal financial officer, to allow timely decisions regarding required
disclosure. The conclusion that our disclosure controls and procedures were not effective was due to the presence of the following
material weaknesses in internal control over financial reporting which are indicative of many small companies with small staff:
(i) inadequate segregation of duties and effective risk assessment; and (ii) insufficient written policies and procedures for
accounting and financial reporting with respect to the requirements and application of both United States generally accepted accounting
principles and Securities and Exchange Commission guidelines. Management anticipates that such disclosure controls and procedures
will not be effective until the material weaknesses are remediated.



We
plan to take steps to enhance and improve the design of our internal controls over financial reporting. During the period covered
by this quarterly report on Form 10-Q, we have not been able to remediate the material weaknesses identified above. To remediate
such weaknesses, we plan to implement the following changes during our fiscal year ending June 30, 2016, subject to obtaining
additional financing: (i) appoint additional qualified personnel to address inadequate segregation of duties and ineffective risk
management; and (ii) adopt sufficient written policies and procedures for accounting and financial reporting. The remediation
efforts set out above are largely dependent upon our securing additional financing to cover the costs of implementing the changes
required. If we are unsuccessful in securing such funds, remediation efforts may be adversely affected in a material manner.



Because
of the inherent limitations in all control systems, no evaluation of controls can provide absolute assurance that all control
issues, if any, within our company have been detected. These inherent limitations include the realities that judgments in decision-making
can be faulty and that breakdowns can occur because of simple error or mistake.



Changes
in Internal Control over Financial Reporting



There
were no changes in our internal control over financial reporting during the quarter ended September 30, 2015 that have materially
affected or are reasonably likely to materially affect, our internal control over financial reporting.





11







PART
II – OTHER INFORMATION



Item
1. Legal Proceedings



We
are not a party to any pending legal proceeding. We are not aware of any pending legal proceeding to which any of our officers,
directors, or any beneficial holders of 5% or more of our voting securities are adverse to us or have a material interest adverse
to us.



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



Aside
from that provided below, there have been no issuances of securities without registration under the Securities Act of 1933 during
the reporting period which were not previously included in a Quarterly Report on Form 10-Q or Current Report on Form 8-K.



During
the three months ended September 30, 2015 and subsequent thereto, we issued 2,222,222 shares of common stock in conversion of
an October 1, 2014 convertible note.



During
the three months ended September 30, 2015 and subsequent thereto, we issued 8,695,652 shares of common stock in conversion of
a November 17, 2014 convertible note.



During
the three months ended September 30, 2015 and subsequent thereto, we issued 15,175,261 shares of common stock in conversion of
a January 13, 2015 convertible note.



During
the three months ended September 30, 2015 and subsequent thereto, we issued 41,305,000 shares of common stock in conversion of
a January 26, 2015 convertible note.



During
the three months ended September 30, 2015 and subsequent thereto, we issued 27,214,714 shares of common stock in conversion of
an August 12, 2015 convertible note.



During
the three months ended September 30, 2015 and subsequent thereto, we issued 14,000,000 shares of common stock in conversion of
a note refinanced on July 20, 2015.



On
August 25, 2015, we entered into an exchange agreement with our majority shareholder, Nanobeak, LLC, pursuant to which Nanobeak
exchanged 117,366,840 shares of our common stock in exchange for 23,473,368 shares of our Series A Convertible Preferred Stock.



On
September 8, 2015, we granted stock warrants for 15,441,176 shares of common stock in association with a short-term loan at no
cost to the lender. These warrants have a term of five years and the exercise price is $0.001/share.



The
above securities were issued in reliance upon the exemption from registration contained in Section 4(2) of the Securities Act
of 1933, as amended, and Regulation D promulgated thereunder.



Item
3. Defaults upon Senior Securities



None.



Item
4. Mine Safety Disclosures



Not
applicable.



Item
5. Other Information



None.



12







Item
6. Exhibits



|Exhibit
    Number |  | Description
    of Exhibit                                                                                                                                                            
|------------------ |  | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|                   |  |                                                                                                                                                                                       
|31.1               |  | Certification
    of Chief Executive Officer pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 302 of the Sarbanes-Oxley Act
    of 2002.                            
|                   |  |                                                                                                                                                                                       
|31.2               |  | Certification
    of Chief Financial Officer pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 302 of the Sarbanes-Oxley Act
    of 2002.                            
|                   |  |                                                                                                                                                                                       
|32.1               |  | Certification
    of Chief Executive Officer and Chief Financial Officer pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section
    906 of the Sarbanes-Oxley Act of 2002.
|                   |  |                                                                                                                                                                                       
|101**              |  | The
    following materials from the Company’s Quarterly Report on Form 10-Q for the quarter ended September 30, 2015 formatted
    in Extensible Business Reporting Language (XBRL). 



**Provided
herewith





13









SIGNATURES



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



|       | Nano
    Mobile Healthcare, Inc. | 
|------ | -------------------------------- | 
|       |                                  | 
|Date:  | November 16, 2015                | 
|       |                                  | 
|By:    | /s/
    Joseph C. Peters         | 
|       | Joseph C. Peters                 | 
|Title: | Chief Executive
    Officer      | 





14