NOTE 2. MANAGEMENT’S PLANS

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 continued to incur losses, although it has taken significant steps to reduce them. For the year ended December 31, 2014, the Company reported a net loss of $1,665,770. The Company has an accumulated deficit of $53,749,748 at December 31, 2014 and used $497,312 of cash in operations for the year ended December 31, 2014. These factors raise substantial doubt about the Company’s ability to continue as a going concern.

In 2013, the Company entered into a partnership agreement with Music City Networks (“MCN”). In accordance with the agreement, as of the effective date, MCN provides client based services directly to the Company’s clients in exchange for a profit participation as defined in the agreement. Going forward, the primary focus of the Company is to expand upon and monetize its intellectual property.

Management has reduced the Company’s losses in the music and entertainment area and focused the Company on its growing patent portfolio. The Company has restructured personnel and partnered with MCN to oversee business functions, such as fulfillment operations, client services, and business development. This changes the business model for engaging in these activities to improve efficiency and reduce costs. The Company will no longer pursue clients in the celebrity service industry due to the costliness of this aspect of the business.

These changes reduced revenues and gross profit in 2014. Management feels that AuctionInc will be a beneficial portion of our business and provide more opportunity for growth. The costs of doing business have been and will be significantly reduced in hopes of eliminating the net loss and providing positive cash flow from operations. In addition, the Company continues to increase its efforts to generate income from its patents.

Although there can be no assurances, the Company believes that the above management plan will be sufficient to meet the Company's working capital requirements through the end of 2015 and will have a positive impact on the Company for 2015 and future years.