PART II AND III

Parts II and III Preliminary Offering Circular Dated February 5, 2018

AN OFFERING STATEMENT PURSUANT TO REGULATION A RELATING TO THESE SECURITIES HAS BEEN FILED WITH THE SECURITIES AND EXCHANGE COMMISSION (THE “COMMISSION”).  INFORMATION CONTAINED IN THIS PRELIMINARY OFFERING CIRCULAR IS SUBJECT TO COMPLETION OR AMENDMENT. THESE SECURITIES MAY NOT BE SOLD NOR MAY OFFERS TO BUY BE ACCEPTED BEFORE THE OFFERING STATEMENT FILED WITH THE COMMISSION IS QUALIFIED.  THIS PRELIMINARY OFFERING CIRCULAR SHALL NOT CONSTITUTE AN OFFER TO SELL OR THE SOLICITATION OF AN OFFER TO BUY NOR MAY THERE BE ANY SALES OF THESE SECURITIES IN ANY STATE IN WHICH SUCH OFFER, SOLICITATION OR SALE WOULD BE UNLAWFUL BEFORE REGISTRATION OR QUALIFICATION UNDER THE LAWS OF ANY SUCH STATE. WE MAY ELECT TO SATISFY OUR OBLIGATION TO DELIVER A FINAL OFFERING CIRCULAR BY SENDING YOU A NOTICE WITHIN TWO BUSINESS DAYS AFTER THE COMPLETION OF OUR SALE TO YOU THAT CONTAINS THE URL WHERE THE FINAL OFFERING CIRCULAR OR THE OFFERING STATEMENT IN WHICH SUCH FINAL OFFERING CIRCULAR WAS FILED MAY BE OBTAINED.

OFFERING CIRCULAR

VirtualArmour International Inc.

8085 S Chester Street, Suite 108

Centennial, CO 80112

720-398-5873

www.virtualarmour.com

Up to 11,153,889 Shares of Common Stock at

A Maximum Offering Price between $0.20 and $0.71 per Share*

Minimum Investment: __________ Shares ($25,000)

Maximum Offering: $_____,000

Securities Offered by Company	Price Per Share to Public		Total Number of Shares Being Offered		Placement Agent  Commissions (1)		Proceeds to Issuer (2)
Per Share of Common Stock		—			$	0.00	$
Total Minimum					$	0.00	$	300,000
Total Maximum				11,153,889	$	0.00	$	____,000

(1) The Company does not intend to engage a placement agent or underwriter at this time.

(2) Does not include expenses of the Offering , including costs of blue sky compliance, fees to be paid to legal counsel or filing fees. See "Plan of Distribution."

*The Company is relying on Rule 253(b) with respect to the determination of the purchase price in this preliminary Offering .  An Issuer may raise an aggregate of up to $20 million in a 12-month period pursuant to Tier I of Regulation A of the Securities Act of 1933, as amended (the "1933 Act").

The Offering will terminate at the earlier of: (1) the date at which the Maximum Offering amount has been sold, (2) twelve months from the date this Offering Statement is qualified by the Commission, or (3) the date at which the Offering is earlier terminated by the Company in its sole discretion, which may occur at any time. The Offering has a minimum target of raising $300,000.  If the Offering does not meet the Minimum Offering prior to termination of the Offering, the proceeds for the Offering will be promptly returned to subscribers, without deduction and generally without interest.  We have entered into an Escrow Agreement with the Escrow Agent.  The Escrow Agent will receive subscription agreements and funds from subscribers and such funds will remain with the Escrow Agent until a closing or cancellation of the Offering .

THE UNITED STATES SECURITIES AND EXCHANGE COMMISSION DOES NOT PASS UPON THE MERITS OF OR GIVE ITS APPROVAL TO ANY SECURITIES OFFERED OR THE TERMS OF THE OFFERING, NOR DOES IT PASS UPON THE ACCURACY OR COMPLETENESS OF ANY OFFERING CIRCULAR OR OTHER SELLING LITERATURE. THESE SECURITIES ARE OFFERED PURSUANT TO AN EXEMPTION FROM REGISTRATION WITH THE COMMISSION; HOWEVER, THE COMMISSION HAS NOT MADE AN INDEPENDENT DETERMINATION THAT THE SECURITIES OFFERED HEREUNDER ARE EXEMPT FROM REGISTRATION.

THIS OFFERING IS INHERENTLY RISKY. SEE "RISK FACTORS" ON PAGE 6.

Sales of these securities will commence on approximately ______________, 2018 .The Company is following the “Offering Circular” format of disclosure under Regulation A.

This offering (the “Offering”) consists of shares of common stock of the Company.  There is no guarantee that any minimum amount will be sold. There are 11,153,889 shares of common stock being offered at a price of $___ per share (the “Offered Shares”) with a minimum investment of $25,000 and purchase of ____ shares per investor. The maximum aggregate amount of the Offered Shares is $________,000 (the “Maximum Offering”). The minimum aggregate amount of the Offered Shares is $300,000 (the “Minimum Offering”).  Provided that the Minimum Offering (______ shares) is met, there is no further number of Offered Shares that needs to be sold in order for funds to be released to the Company and for this Offering to close, which may mean that the Company does not receive sufficient funds to cover the cost of this Offering. The Offering will terminate at the earlier of (1) the date at which the Maximum Offering amount has been sold, (2) the date that is twelve months from the date of this Offering Statement being qualified by the Commission, or (3) the date at which the Offering is earlier terminated by the Company in its sole discretion, which may happen at any time. The Company anticipates that it will hold its initial closing on some date after the date of qualification and will hold additional closings at various times thereafter in the Company’s discretion.

PART II

TABLE OF CONTENTS

Summary	4
Risk Factors	6
Dilution	14
Plan of Distribution	15
Use of Proceeds to Issuer	17
The Company’s Business	18
Description of Property	22
Management’s Discussion and Analysis of Financial Condition and Results of Operations	23
Directors, Executive Officers and Significant Employees	27
Compensation of Directors and Officers	31
Security Ownership of Management and Certain Securityholders	32
Interest of Management and Others in Certain Transactions	33
Securities Being Offered	34
Financial Statements	36

In this Offering Circular, the term “VirtualArmour,” “Company,” “we” or “us” refers to VirtualArmour International Inc.

THIS OFFERING CIRCULAR MAY CONTAIN FORWARD-LOOKING STATEMENTS AND INFORMATION RELATING TO, AMONG OTHER THINGS, THE COMPANY, ITS BUSINESS PLAN AND STRATEGY, AND ITS INDUSTRY.  THESE FORWARD-LOOKING STATEMENTS ARE BASED ON THE BELIEFS OF, ASSUMPTIONS MADE BY, AND INFORMATION CURRENTLY AVAILABLE TO THE COMPANY’S MANAGEMENT.  WHEN USED IN THE OFFERING MATERIALS, THE WORDS “ESTIMATE,” “PROJECT,” “BELIEVE,” “ANTICIPATE,” “INTEND,” “EXPECT” AND SIMILAR EXPRESSIONS ARE INTENDED TO IDENTIFY FORWARD-LOOKING STATEMENTS, WHICH CONSTITUTE FORWARD LOOKING STATEMENTS. THESE STATEMENTS REFLECT MANAGEMENT’S CURRENT VIEWS WITH RESPECT TO FUTURE EVENTS AND ARE SUBJECT TO RISKS AND UNCERTAINTIES THAT COULD CAUSE THE COMPANY’S ACTUAL RESULTS TO DIFFER MATERIALLY FROM THOSE CONTAINED IN THE FORWARD-LOOKING STATEMENTS.  INVESTORS ARE CAUTIONED NOT TO PLACE UNDUE RELIANCE ON THESE FORWARD-LOOKING STATEMENTS, WHICH SPEAK ONLY AS OF THE DATE ON WHICH THEY ARE MADE.  THE COMPANY DOES NOT UNDERTAKE ANY OBLIGATION TO REVISE OR UPDATE THESE FORWARD-LOOKING STATEMENTS TO REFLECT EVENTS OR CIRCUMSTANCES AFTER SUCH DATE OR TO REFLECT THE OCCURRENCE OF UNANTICIPATED EVENTS.

3

SUMMARY

VirtualArmour International Inc. (“VirtualArmour” or the “Company”) is a Colorado corporation and is an information technology company that delivers solutions to help enterprises build, monitor, maintain and secure their networks from cloud to core.  VirtualArmour is a managed security services provider which focuses on three main facets: managed services, professional services, and hardware/software sales.

The Offering

Securities offered by the Company:	Up to 11,153,889 shares of common stock ($______,000) (the “Offered Shares”)
Offering Price:	$___ per Offered Share
Minimum investment:	____ shares ($25,000)
Minimum offering	____ shares ($300,000)
Common Stock outstanding before the Offering	55,769,447 shares
Common Stock outstanding after the Offering1	66,923,336 shares
Common Stock:	Each Offered Share has one vote.
Use of proceeds:	The net proceeds of this Offering will be used as working capital to build and expand the Company’s business. See “Use of Proceeds.”
Change in Terms:	All Offered Shares will be initially offered at the same U.S. dollar price that is set forth in this Offering Circular; after the initial offering of the Offered Shares, the offering price and other selling terms may be subject to change.

¹ Assumes the sale of 11,153,889 Offered Shares.

The Company’s Business

Overview

VirtualArmour is an international cybersecurity and managed services provider that delivers customized solutions to help businesses build, monitor, maintain and secure their networks.

The Company maintains 24/7 client monitoring and service management with specialist teams located in its US and UK-based security operation centers (“SOC”). Through partnerships with best-in-class technology providers, VirtualArmour delivers leading hardware and software solutions for customers that are both sophisticated and scalable, and is also backed by industry-leading customer service and experience. VirtualArmour’s proprietary CloudCastr client portal and prevention platform provides clients with unparalleled access to real-time reporting on threat levels, breach prevention and overall network security. 

VirtualArmour’s customers include a 13-location data center provider, a Fortune 100 oil and gas company, multiple service providers and large healthcare providers with presences throughout the United States, and household name enterprise organizations located primarily in the western United States.

The Company’s shares trade on the Canadian Securities Exchange (the “CSE”) under the symbol “VAI”.  The Company currently has a ticker symbol “VTLR” on the OTCQB Markets.

4

Technology

The following elements are part of the VirtualArmour technology prevention platform and allow the Company to deliver its suite of services.

PROPRIETARY INCIDENT RESPONSE PROTOCOLS: There is no one solution for every problem or every business. Networks and Security are complicated and because of that, we create clear and detailed playbooks designed specifically for each business.

PERSONAL DASHBOARD: Our proprietary CloudCastr portal provides executive teams with an easily navigable, real-time birds eye view of an organization’s security position. It quickly becomes an organization’s golden source of truth and a key tool for keeping teams and management consistently informed.

All Delivered via our PREVENTION PLATFORM: Prevention is about a unique methodology - VirtualArmour’s unique way of doing business. No security-focused organizations can promise 100% security, 100% of the time, however, through implementing a robust combination of the three pillars outlined above, businesses can rely on a layered approach to protection that is personalized, strategic, built by specialists with market-leading technology and monitored by motivated industry experts.

Key People

Christopher Blisard is the Chairman and a founder of VirtualArmour and brings to this position over 29 years of business development, leadership and operational experience in software development, network security and cybersecurity in both the public and private sectors.  Todd Kannegieter is the CEO and Co-Founder and has served as a manager and as a member of VirtualArmour’s Board of Directors since 2002, bringing over 34 years of management, business development and operational experience to the position.  Other key persons of the Company are listed below in the section entitled Directors, Executive Officers and Significant Employees below .

Selected Risks

Our business is subject to a number of risks and uncertainties, including those highlighted in the section titled “Risk Factors” immediately following this summary. These risks include, but are not limited to, the following:

· The Company is dependent on its management, founders and sponsors to execute the business plan

· The Company has a history of loses and may not achieve or sustain profitability in the future

· The Company operates in a competitive market

· A significant amount of the Company’s current managed services revenue is derived from a few customers

· If we fail to maintain third-party software licenses which are used in our business or costs increase for licenses

· If we fail to manage our technical operations infrastructure, our customers may experience service outages

· We could experience systems breaches and customers could experience interruptions or delays in service from the Company’s data center hosting facilities

· The Company’s growth depends in part on the success of its strategic relationships with third parties

· Changes in the economy could have a detrimental impact

· We could experience regulatory and legal hurdles

· The Company may undertake additional equity or debt financing that may dilute the shares in this Offering

· The Company may not raise the maximum amount being offered

· The Company may not be able to obtain additional financing

· The Company’s indebtedness could adversely affect its business and limit its ability to plan for or respond to changes in its business, and the Company may be unable to generate sufficient cash flow to satisfy significant debt service obligations

· The market price of the shares may be volatile and investors could lose all or part of their investment

· Our management has broad discretion in application of proceeds

· There is no assurance the Company will be able to pay distributions to shareholders

· There is no market in the United States for the Company's shares of Common Stock

5

RISK FACTORS

The purchase of the Company’s Common Stock involves substantial risks. You should carefully consider the following risk factors, in addition to any other risks associated with this investment.  The shares offered by the Company constitute a highly speculative investment and you should be in an economic position to lose your entire investment. The risks listed do not necessarily comprise all those associated with an investment in the shares and are not set out in any particular order of priority.  Additional risks and uncertainties may also have an adverse effect on the Company’s business and your investment in the shares.  An investment in the Company may not be suitable for all recipients of this Offering Circular.  You are advised to consult an independent professional adviser or attorney who specializes in investments of this kind before making any decision to invest. You should consider carefully whether an investment in the Company is suitable in the light of your personal circumstances and the financial resources available to you.

Risks Related to the Company

The market in which the Company participates is intensely competitive, and if the Company does not compete effectively, its operating results could be harmed.

The market for managed security services is fragmented, rapidly evolving and highly competitive.  Many of the Company’s competitors and potential competitors are larger and have greater name recognition, longer operating histories, larger marketing budgets and significantly greater resources than the Company does.  With the introduction of new technologies and market entrants, the Company expects competition to continue to intensify in the future.  If the Company fails to compete effectively, its business will be harmed.  Some of the Company’s principal competitors may offer their products or services at a lower price, which would result in pricing pressures on the Company’s business.  If the Company is unable to achieve its target pricing levels, its operating results would be negatively impacted.  In addition, pricing pressures and increased competition generally could result in reduced sales, lower margins, losses or the failure of the Company’s services to achieve or maintain widespread market acceptance, any of which could harm the Company’s business.

Many of the Company’s competitors are able to devote greater resources to the development, promotion and sale of their products or services.  In addition, many of the Company’s competitors have established marketing relationships and major distribution agreements with channel partners, consultants, system integrators, and resellers.  Furthermore, some potential customers, particularly large enterprises, may elect to develop their own internal solutions.  For these reasons, the Company may not be able to compete successfully against its current and future competitors.

The Company has a history of losses and may not achieve or sustain profitability in the future and as a result, our independent accounting firm has included an explanatory note to the Company’s Canadian financial statements regarding the Company’s ability to continue as a going concern.

The Company had a net loss of $2,298,828 during the year ended December 31, 2016.  In addition, as of December 31, 2016, the Company has a working capital deficiency of $728,392 and an accumulated deficit of $8,443,857. A significant portion of the working capital deficiency was comprised of the third-party line of credit arrangements ($445,000), which was paid in full as of September 29, 2017. A significant portion of the accumulated deficit is comprised of non-cash accounting expenses such as listing expense ($4,166,285) and the change in fair value of warrant derivative liabilities ($140,769). The Company has funded losses with external debt and related party advances, share issuances and working capital.

The Company’s independent accounting firm, without qualifying its opinion, included an explanatory paragraph in the Company’s Canadian financial statements prepared in accordance with international financial reporting standards (the financial statements included with this Offering Circular are unaudited and prepared in accordance with U.S. GAAP) stating that the existence of the matters described above creates a material uncertainty that may cast significant doubt about the Company’s ability to continue as a going concern. The continuation of the Company as a going concern is dependent upon the obtaining of financing necessary to continue operations and, ultimately, on sustaining profitable operations.

6

A significant amount of the Company’s current managed services revenue is derived primarily from less than ten customers. Any failure by the Company to maintain these significant customers would harm the Company’s future operating results.

Historically and currently, the Company has derived a substantial portion of its revenue from a limited number of customers.  Although the Company continues to add new customers, if one or more of its larger customers becomes dissatisfied with the Company’s services, the effectiveness of the Company’s customer support services or the Company’s pricing, or ceases to do business with the Company for any other reason, the operating results of the Company would be negatively and substantially impacted.

The Company cannot accurately predict expansion rates and the impact these rates may have on its future revenue and operating results.

In order for the Company to improve its operating results and continue to grow its business, it is important for the Company to continue to attract new customers and expand the deployment of its solutions with existing customers.  To the extent the Company is successful in increasing its customer base, it could incur increased losses because the costs associated with attracting new customers are generally incurred up front, while revenue is recognized ratably over the term of a contract for services.  Alternatively, to the extent the Company is unsuccessful in increasing its customer base, the Company could also incur increased losses as the costs associated with marketing programs and new products intended to attract new customers would not be offset by incremental revenue and cash flow.  Furthermore, if the Company’s customers do not expand their deployment of its products and services, the Company’s revenue may grow more slowly than the Company expects.  All of these factors could negatively impact the Company’s future revenue and operating results.

The Company’s quarterly results may fluctuate significantly and may not fully reflect the underlying performance of its business.

The Company’s quarterly operating results, including its levels of revenue, gross margin, profitability, cash flow and deferred revenue, may vary significantly in the future, and period-to-period comparisons of its operating results may not be meaningful.  Accordingly, the results of any one quarter should not be relied upon as an indication of future performance.  The Company’s quarterly financial results may fluctuate as  a result of a variety of factors, many of which are outside of the Company’s control and, as a result, may not fully reflect the underlying performance of the Company’s business.  Fluctuations in quarterly results may negatively impact the value of the Company’s securities.  Factors that may cause fluctuations in the Company’s quarterly financial results include, but are not limited to:

· the ability to attract new customers;

· retention rates;

· the timing of recognition of revenue;

· the amount and timing of operating expenses related to the maintenance and expansion of the Company’s business, operations and infrastructure;

· general economic, industry, and market conditions;

· increases or decreases in the number of features in the Company’s services or pricing changes upon any renewals of customer agreements;

· changes in the Company’s pricing policies or those of the Company’s competitors;

· seasonal variations in sales of the Company’s services; and

· the timing and success of new services and service introductions by the Company and its competitors or any other change in the competitive dynamics of the Company’s industry, including consolidation among competitors, customers, or strategic partners.

7

If the Company fails to effectively manage its technical operations infrastructure, its customers may experience service outages and delays in the further deployment of its services, which may adversely affect its business.

The Company is expecting significant growth in the number of customers being added to its managed services solutions.  The Company seeks to maintain sufficient excess capacity in its operations infrastructure to meet the needs of all of its customers.  The Company also seeks to maintain excess capacity to facilitate the rapid provisioning of new customer deployments and the expansion of existing customer deployments.  In addition, the Company needs to properly manage its technological operations infrastructure in order to support version control, changes in hardware and software parameters and the evolution of its services.  Despite the fact that the Company has taken a number of steps to allow its infrastructure to handle significant increases in demand, it may in the future experience website disruptions, outages and other performance problems.  These problems may be caused by a variety of factors, including infrastructure changes, human or software errors, viruses, security attacks, fraud, spikes in customer usage and denial of service issues.  In some instances, the Company may not be able to identify the cause or causes of these performance problems within an acceptable period of time, which may harm the Company’s reputation and operating results.  Furthermore, although the Company has implemented a number of disaster recovery measures, if it does not accurately predict its infrastructure requirements, its existing customers may experience service outages that may subject the Company to financial penalties, financial liabilities and customer losses.  If the Company’s operations infrastructure fails to keep pace with increased sales, customers may experience delays as the Company seeks to obtain additional capacity, which could adversely affect the Company’s reputation and its revenue.

Interruptions or delays in service from the Company’s data center hosting facilities could impair the delivery of the Company’s services and harm its business.

The Company currently stores its customers’ information in facilities located in Englewood and Centennial Colorado.  Despite the fact that the Company has taken a number of disaster recovery and preventive measures, these facilities may be vulnerable to damage or interruption due to floods, fires, power loss, telecommunications failures, and similar events.  They may also be subject to break-ins, sabotage, intentional acts of vandalism and similar misconduct.  Any damage to, or failure of, the Company’s systems generally could result in interruptions in its service.  Interruptions in its service may reduce its revenue, cause the Company to issue credits or pay penalties, cause customers to terminate their contracts and adversely affect the Company’s renewal rate and its ability to attract new customers. The Company’s business will also be harmed if its customers and potential customers believe the Company’s service is unreliable.  Despite precautions taken at these facilities, the occurrence of a natural disaster, an act of terrorism, a decision to close the facilities without adequate notice or other unanticipated problems at these facilities could result in lengthy interruptions in the Company’s services.  Even with the disaster recovery arrangements, the Company’s services could be interrupted.  As the Company continues to add data centers and add capacity in the Company’s existing data centers, the Company may move or transfer its data and its customers’ data.  Despite precautions taken during this process, any unsuccessful data transfers may impair the delivery of the Company’s services.  Further, as the Company continues to grow and scale its business to meet the needs of its customers, additional burdens may be placed on its hosting facilities.  In particular, a rapid expansion of the Company’s business could cause its network or systems to fail.

Customer systems breaches could damage our reputation and adversely affect our revenues and profitability.

Many of the systems we manage for our customers involve managing and protecting confidential and personal information. While we have programs designed to comply with relevant privacy and security laws and restrictions, if a system that we manage were to experience a security breach, whether caused by us, third-party service providers, cybersecurity threats or other events, we may experience loss of revenue, remediation costs or face claims for damages or contract termination. Any such event could cause serious harm to our reputation.

We may not be able to adequately protect our intellectual property rights.

We depend on our ability to protect our proprietary technology.  We rely on trade secret, copyright and trademark laws and confidentiality agreements with employees and third parties, all of which may offer only limited protection.  As such, despite our efforts, the steps we have taken to protect our proprietary rights may not be adequate to prevent misappropriation of our proprietary information or infringement of our intellectual property rights, and our ability to police such misappropriation or infringement is uncertain, particularly in countries outside of the United States.  In addition, we rely on confidentiality or license agreements with third parties in connection with their use of our products and technology.  There is no guarantee that such parties will abide by the terms of such agreements or that we will be able to adequately enforce our rights.

8

Detecting and protecting against the unauthorized use of our products, technology proprietary rights and intellectual property rights is expensive, difficult and, in some cases, impossible.  Litigation may be necessary from time to time to enforce or defend our intellectual property rights, to protect our trade secrets or to determine the validity and scope of the proprietary rights of others. Despite our efforts, we may not be able to prevent third parties from infringing upon or misappropriating our intellectual property, which could result in an adverse effect to our business operations.

Third parties may claim that we are infringing their intellectual property, and we could suffer significant litigation, settlement, or licensing costs and expenses or be prevented from selling certain products.

Third parties may claim that we are infringing on their intellectual property rights.  Such intellectual property infringement claims, whether we ultimately are found to be infringing any third party’s intellectual property rights or not, are time-consuming, costly to defend, and divert resources and management attention away from our operations.  Infringement claims by third parties could also subject us to significant damage awards or fines or require us to pay large amounts to settle such claims.  Additionally, claims of intellectual property infringement might require us to enter into royalty or license agreements.  If we cannot or do not license the infringed technology on acceptable terms or substitute similar technology from other sources, we could be prevented from or restricted in selling our products containing, or manufactured with, the infringed technology.

The Company depends on highly skilled personnel to grow and operate its business, and if the Company is unable to hire, retain and motivate its personnel, the Company may not be able to grow effectively.

The Company’s future success will depend upon its continued ability to identify, hire, develop, motivate and retain highly skilled personnel, including senior management, engineers, designers, product managers, sales representatives, and customer support representatives.  The Company’s ability to execute efficiently is dependent upon contributions from its employees, including its senior management team.  In addition, there may occasionally be changes in the Company’s senior management team that may be disruptive to its business.  If the Company’s senior management team, including any new hires that the Company may make, fails to work together effectively and to execute on its plans and strategies on a timely basis, its business could be harmed.

The Company’s growth strategy also depends on its ability to expand its organization with highly skilled personnel.  Identifying, recruiting, training and integrating qualified individuals will require significant time, expense and attention.  In addition, the Company relies on skilled and experienced technical employees in order to successfully execute its business plan.  Due to the increase in demand for consulting, technology integration and managed services, qualified technical employees often are in great demand and may be unavailable in the time frame required to satisfy our business requirements.  The loss of technical personnel or our inability to hire or retain sufficient technical personnel at competitive rates of compensation could impair our ability to successfully grow our business.

In addition to hiring new employees, the Company must continue to focus on retaining its best employees.  While the Company believes it has implemented a number of incentive programs for both current and potential employees, competition for highly skilled personnel is intense.  The Company may need to invest significant additional amounts of cash and equity to attract and retain new employees, and the Company may never realize returns on these investments.  If the Company is not able to effectively add and retain employees, its ability to achieve its strategic objectives will be adversely impacted, and its business will be harmed.

Failure to adequately expand the Company’s direct sales force will impede its growth.

The Company will need to continue to expand and optimize its sales infrastructure in order to grow its customer base and its business.  The Company plans to continue to expand its direct sales force, both domestically and internationally.  Identifying and recruiting qualified personnel and training them requires significant time, expense and attention.  The Company’s business may be adversely affected if its efforts to expand and train its direct sales force do not generate a corresponding increase in revenue.  If the Company is unable to hire, develop and retain talented sales personnel or if new direct sales personnel are unable to achieve desired productivity levels in a reasonable period of time, the Company may not be able to realize the intended benefits of this investment or increase its revenue.

9

If the Company is unable to maintain and promote its brand, its business and operating results may be harmed.

The Company believes that maintaining and promoting its brand is critical to expanding its customer base.  Maintaining and promoting its brand will depend largely on its ability to continue to provide useful, reliable and innovative services, which the Company may not do successfully.  The Company may introduce new features, products, services or terms of service that its customers do not like, which may negatively affect its brand and reputation.  Maintaining and enhancing the Company’s brand may require it to make substantial investments, and these investments may not achieve the desired goals.  If the Company fails to successfully promote and maintain its brand or if the Company incurs excessive expenses in this effort, its business and operating results could be adversely affected.

The Company’s growth depends in part on the success of its strategic relationships with third parties.

In order to grow its business, the Company anticipates that it will continue to depend on its relationships with third parties, such as alliance partners, distributors, system integrators and developers.  Identifying partners, and negotiating and documenting relationships with them, requires significant time and resources.  The Company’s competitors may be effective in providing incentives to third parties to favor their products or services, or to prevent or reduce subscriptions to its services.  In addition, acquisitions of its partners by its competitors could result in a decrease in the number of current and potential customers, as its partners may no longer facilitate the adoption of the Company’s services by potential customers.

If the Company is unsuccessful in establishing or maintaining its relationships with third parties, its ability to compete in the marketplace or to grow its revenue could be impaired and its operating results may suffer.  Even if the Company is successful, the Company cannot assure investors that these relationships will result in increased customer usage of the Company’s services or increased revenue.  Furthermore, if the Company’s partners fail to perform as expected, the Company’s reputation may be harmed and its business and operating results could be adversely affected.

The Company employs third-party licensed software for use in or with its services, and the inability to maintain these licenses or errors in the software the Company licenses could result in increased costs, or reduced service levels, which would adversely affect the Company’s business.

The Company’s services incorporate certain third-party software obtained under licenses from other companies.  The Company anticipates that it will continue to rely on such third-party software and development tools in the future.  Although the Company believes that there are commercially reasonable alternatives to the third-party software the Company currently licenses, this may not always be the case, or it may be difficult or costly to replace.  In addition, integration of the software used in the Company’s services with new third-party software may require significant work and require substantial investment of the Company’s time and resources.  Also, to the extent that the Company’s services depend upon the successful operation of third-party software in conjunction with its own software, any undetected errors or defects in this third-party software could prevent the deployment or impair the functionality of the Company’s services, delay new services introductions, result in a failure of the Company’s services, and injure the Company’s reputation.  The Company’s use of additional or alternative third-party software would require the Company’s to enter into additional license agreements with third parties.

The Company may require additional capital to support its operations or the growth of its business, and the Company cannot be certain that this capital will be available on reasonable terms when required, or at all.

On occasion, the Company may need additional financing to operate or grow its business.  The Company’s ability to obtain additional financing, if and when required, will depend on investor and lender demand, the Company’s operating performance, the condition of the capital markets and other factors.  The Company cannot guarantee that additional financing will be available on favorable terms when required, or at all.  If the Company raises additional funds through the issuance of equity, equity-linked or debt securities, those securities may have rights, preferences or privileges senior to the rights of its existing security holders, which may also experience dilution.  If the Company is unable to obtain adequate financing or financing on terms satisfactory to it when the Company requires it, its ability to continue to support the operation or growth of its business could be significantly impaired and its operating results may be harmed.

10

Changes in laws and regulations related to the internet or changes in the internet infrastructure itself may diminish the demand for the Company’s services, and could have a negative impact on the Company’s business.

The future success of the Company’s business depends upon the continued use of the internet as a primary medium for commerce, communication and business services.  Domestic or foreign government bodies or agencies have in the past adopted, and may in the future adopt, laws or regulations affecting the use of the internet as a commercial medium.  Changes in these laws or regulations could require the Company to modify its services in order to comply with these changes.  In addition, government agencies or private organizations may begin to impose taxes, fees or other charges for accessing the internet or commerce conducted via the internet.  These laws or charges could limit the growth of internet-related commerce or communications generally, or result in reductions in the demand for internet-based services such as the Company’s.

In addition, the use of the internet and, in particular, the cloud as a business tool could be adversely affected due to delays in the development or adoption of new standards and protocols to handle increased demands of internet activity, security, reliability, cost, ease of use, accessibility, and quality of service.  The performance of the internet and its acceptance as a business tool have been adversely affected by viruses, worms, and similar malicious programs, and the internet has experienced a variety of outages and other delays as a result of damage to portions of its infrastructure.  If the use of the internet is adversely affected by these issues, demand for the Company’s services could suffer.

All of the Company’s assets are pledged as collateral to certain lenders under the terms of the Company’s lines of credit.

The Company has entered into two secured promissory notes with Todd Kannegieter, the CEO and a director of the Company pursuant to which Mr. Kannegieter agreed to provide a revolving line of credit (the "Kannegieter LOC") of an aggregate of up to $290,000 with approximately $265,710 outstanding as of December 31, 2017.  The Kannegieter LOC is secured by a lien on all of the assets of the Company, bears interest at 7% per annum and is due on demand.

On June 1, 2017, the Company also entered into a secured promissory note with Christopher Blisard, Chairman and a director of the Company, pursuant to which Mr. Blisard agreed to provide a loan (the "Blisard LOC" and together with the Kannegieter LOC, the "Director LOCs") in an aggregate amount of up to $90,000 with approximately $93,327 outstanding as of December 31, 2017.  The Blisard LOC is secured by a lien on all of the assets of the Company, bears interest at 7% per annum and is due on demand.

On November 29, 2017, the Company entered into a Secured Subordinated Promissory Note with shareholder Peter-Christian Olivo in the principal amount of $100,000, which is due on March 31, 2018 (the "Olivo Note").  Interest will accrue on the Olivo Note in the amount of $7,500 if paid on or before February 28, 2018 and in the amount of $8,500 if paid on March 31, 2018.  Mr. Olivo is a shareholder of the Company.  The Company entered into a Security Agreement on the same day to secure the Olivo Note by alll of the assets of the Company.

On January 5, 2018, the Company entered into a Business Loan and Security Agreement with On Deck Capital, Inc., in an aggregate amount of $200,000, which is due in nine months and requires weekly payments with an annual interest rate of 58.76% (the "On Deck Loan").  The On Deck Loan is secured by all of the assets of the Company.

If the Company is unable to generate sufficient cash flow or are otherwise unable to obtain the funds required to make principal and interest payments on its indebtedness, the Company could be in default under the terms of the Director LOCs, the Olivo Note or the On Deck Loan.  If an event of default occurs, the lenders may, in their discretion, accelerate the repayment of borrowings.  We may not have sufficient assets to repay the Director LOCs, the Olivo Note or the On Deck Loan, and we could experience a material adverse effect on our financial condition and results of operations, including foreclosure on our assets and forcing us into bankruptcy or liquidation . 

Risks Related to Ownership of the Offered Shares

There is a limited public market in the United States for our common stock and the Offered Shares may trade at prices that are lower or higher than the price paid for.

The Company's common stock is listed on the Canadian Securities Exchange under the symbol "VAI" and is quoted on the OTCQB operated by OTC Markets, which is generally considered to be a less efficient United States market than national exchanges.  Consequently, the liquidity of our securities could be impaired, not only in the number of securities which could be bought and sold, but also through SEC regulations, delays in the timing of transactions, difficulties in obtaining price quotations, reduction in security analysts' and the news media's coverage of us, if any, and lower prices for our securities than might otherwise be attained. This circumstance could have an adverse effect on the ability of an investor to sell any shares of our common stock as well as on the selling price for such shares. As a result, U.S. shareholders may have a difficult time reselling their shares. There can be no assurance that a trading market will ever develop in the U.S. or be sufficiently liquid for an investor to sell his or her shares.  Investors must be prepared to hold such securities for an indefinite period of time .

In addition, the market price of our common stock may be significantly affected by various additional factors, including, but not limited to, our business performance, industry dynamics or changes in general economic conditions.  The Offered Shares may trade at prices that are lower or higher than the price paid for.  Once the Company’s common stock is publicly traded in the U.S., the Company cannot control their price fluctuations and the trading price may be lower than the offering price.

11

That offering price of the Offered Shares is subject to change as a result of market conditions and other factors. The Company may change the terms of the offering, including the price for the Offered Shares after the Minimum Offering is met.  The principal factors considered in determining the offering price of the Offered Shares includes:

· the information in this Offering Circular, including our financial information;

· the history and the prospects for the industry in which we compete;

· the ability of our management;

· the prospects for our future earnings;

· the present state of our development and our current financial condition;

· the general condition of the economy and the securities markets in the United States and Canada at the time of this Offering;

· the market price of our common stock quoted on the OTCQB or the CSE;

· the recent market prices of, and the demand for, publicly-traded securities of generally comparable companies; and

· other factors as are deemed relevant.

The Offered Shares will not be registered under the U.S. Securities Act of 1933, as amended and may be subject to resale restrictions imposed by Canadian laws and regulations.

The Offered Shares will not be registered under the United States Securities Act of 1933, as amended (the “1933 Act”) and will be offered in reliance upon exemptions from registration under the 1933 Act and the regulations promulgated thereunder and applicable state “blue sky” laws. Any resale of Offered Shares issued to investors resident in Canada will be subject to resale restrictions contained in Canadian securities laws and regulations.

The market price of the Offered Shares may be volatile, and investors could lose all or part of their investment.

The market price of the Offered Shares following the Offering may be highly volatile, and could be subject to wide fluctuations in response to various factors, some of which are beyond the Company's control and may not be related to its operating performance.  Fluctuations in the price of the Offered Shares could cause investors to lose all or part of their investment because they may not be able to sell their shares at or above the price they paid. Factors that could cause fluctuations in the market price of the shares include the following :

· Changes in operating performance and stock market valuations of other technology companies generally, those in the Company’s industry in particular, or the Company’s operating results specifically;

· Sales of shares of common stock by the Company’s shareholders, and in particular by Company insiders;

· Any changes in the financial projections that the Company may provide to the public, or the Company’s failure to meet those projections;

· Adverse or positive announcements or news reports by the Company or its competitors of new products or services; and

· Actual or anticipated developments in the Company’s business, its competitors’ businesses or the competitive landscape generally.

In addition, the stock market in recent years has experienced significant price and volume fluctuations. This volatility has had a substantial effect on the market prices of companies, at times for reasons unrelated to their operating performance. These market fluctuations may adversely affect the price of our common stock at a time when our shareholders want to sell their interest in us.

12

There are legal restrictions on the resale of the common shares offered that are penny stocks. These restrictions may adversely affect the ability to resell your stock.

Our common stock may be subject to the penny stock rules under the Securities Exchange Act of 1934, as amended (the “(1934 Act”).  These rules regulate U.S. broker/dealer practices for transactions in “penny stocks.”  Penny stocks are generally equity securities with a price of less than $5.00. The penny stock rules require U.S. broker/dealers to deliver a standardized risk disclosure document that provides information about penny stocks and the nature and level of risks in the penny stock market.  The U.S. broker/dealer must also provide the customer with current bid and offer quotations for the penny stock, the compensation of the U.S. broker/dealer and its salesperson and monthly account statements showing the market value of each penny stock held in the customer’s account.  In addition, the penny stock rules require that prior to a transaction, the U.S. broker and/or dealer must make a special written determination that the penny stock is a suitable investment for the purchaser and receive the purchaser’s written agreement to the transaction.  The transaction costs associated with penny stocks can be high, reducing the number of U.S. broker-dealers who may be willing to engage in the trading of our shares.  These additional penny stock disclosure requirements are burdensome and may reduce the trading activity in the market for our common stock.  If our common stock is subject to the penny stock rules, our shareholders may find it more difficult to sell their shares in the United States.

As an issuer of “penny stock,” the protection provided by the federal securities laws relating to forward-looking statements does not apply to the Company.

 Although U.S. federal securities laws provide a safe harbor for forward-looking statements made by a public company that files reports under the U.S. federal securities laws, this safe harbor is not available to issuers of penny stocks. As a result, we will not have the benefit of this safe harbor protection in the event of any legal action based upon a claim that the material provided by us contained a material misstatement of fact or was misleading in any material respect because of our failure to include any statements necessary to make the statements not misleading. Such an action could hurt our financial condition.

The Company may not raise the minimum required to close the offering.

The minimum raise needed to close the Offering is $300,000, which is ___% of the Offering.  There are no assurances that the Company will meet the minimum.  If the minimum amount is not met, all funds received from such investors will be returned without interest or deduction.  Investors in this Offering face a risk that we will not be able to sell sufficient shares to obtain the funds necessary meet our capital requirements and to pursue the business goals outlined in this Offering Circular .

The Company does not expect to declare any dividends in the foreseeable future.

The Company does not anticipate declaring any cash dividends to holders of its common stock in the foreseeable future.  Consequently, holders of our common stock will not receive any return on their investment unless they sell their securities, and holders may be unable to sell their securities on favorable terms or at all.

Management has broad discretion as to the use of certain of the net proceeds from this Offering.

Management will have broad discretion in the application of the net proceeds, including working capital and other general corporate purposes, and the Company may spend or invest these proceeds in a way with which our shareholders disagree.  The failure by the Company’s management to apply these funds effectively could adversely affect the Company’s business and financial condition.

13

DILUTION

The term “dilution” means the reduction of any one share as a percentage of the aggregate shares outstanding. If all of the Offered Shares are fully subscribed and sold, the Offered Shares offered herein will constitute approximately __% of the total shares of common stock of the Company. The Company anticipates that subsequent to this Offering the Company may require additional capital and such capital may take the form of other stock or securities or debt convertible into stock. Such future fundraising will further dilute the percentage ownership of the Offered Shares.

Immediate dilution

An early-stage company typically sells its shares (or grants options over its shares) to its founders and early employees at a very low cash cost, because they are, in effect, putting their “sweat equity” into the Company. When the Company seeks cash investments from outside investors, like you, the new investors typically pay a much larger sum for their shares than the founders or earlier investors, which means that the cash value of your stake is diluted because all the shares are worth the same amount, and you paid more than earlier investors for your shares. If you invest in the Offered Shares, your interest will be diluted immediately to the extent of the difference between the offering price per share of the Offered Shares and the pro forma net tangible book value per share of our common stock after this Offering.

As of December 31, 2016, the net tangible book value of the Company was -$531,806.  Based on the number of shares of common stock issued and outstanding as of that date (55,769,447 shares) that equates to a net tangible book value of approximately -$0.01 per share of common stock on a pro forma basis. Net tangible book value per share consists of total assets (exclusive of intangible assets) less total  liabilities divided by the total number of shares of common stock outstanding. Without giving effect to any changes in such net tangible book value after December 31, 2016, other than to give effect to the sale of 11,153,889 shares of common stock being offered by the Company in this Offering Circular for the subscription amount of $______,000, the pro forma net tangible book value, assuming full subscription, would be $__________.  Based on the total number of shares of common stock that would be outstanding assuming full subscription 66,923,336 that equates to approximately $______ of tangible net book value per share.

Thus, if the Offering is fully subscribed, the net tangible book value per share of common stock owned by our current shareholders will have immediately increased by approximately $___ without any additional investment on their behalf and the net tangible book value per Offered Share for new investors will be immediately diluted by $______ per share. These calculations do not include the costs of the Offering, and such expenses will cause further dilution.

The following table illustrates this per share dilution:

Offering price per Share *	$
Net Tangible Book Value per Share before Offering (based on ______ shares)	$	(___	)
Increase in Net Tangible Book Value per Share Attributable to Shares Offered in Offering (based on ____ shares)	$
Net Tangible Book Value per Share after Offering (based on _______ shares)	$
Dilution of Net Tangible Book Value per Share to Purchasers in this Offering	$

^*Before deduction of offering expenses

The Offering Shares may be subject to future dilution based on future actions by the Company, including stock offerings (such as an initial public offering, another crowdfunding round, a venture capital round, angel investment), employees exercising stock options, or by conversion of certain instruments (e.g. convertible bonds, preferred shares or warrants) into stock.

If the Company decides to issue more shares, an investor could experience value dilution, with each share being worth less than before, and control dilution, with the total percentage an investor owns being less than before. There may also be earnings dilution, with a reduction in the amount earned per share (though this typically occurs only if the Company offers dividends, and most early stage companies are unlikely to offer dividends, preferring to invest any earnings into the Company).

14

PLAN OF DISTRIBUTION

Plan of Distribution

The offers and sales of our shares of Common Stock will be made by the Company’s officers and directors.  The Company will make its best efforts to sell the Maximum Offering Amount.  Restrictions on sales by the Company include: the per investor minimum of $____,000, Minimum Offering of $300,000 and Maximum Offering amount of $____,000.  None of the Common Stock being sold in this Offering is being sold by present security holders.

We have entered into an Offering Escrow Agreement to engage the services of Burns, Figa & Will, P.C. to act as our escrow agent (the “Escrow Agent”), which has been filed with the SEC as an exhibit to this Offering Circular.  The Escrow Agent will receive subscription agreements and funds from investors, pursuant to the instructions further set forth below.

After the qualification of the Offering as exempt from registration pursuant to Section 3(b)(2) of the Securities Act and Tier I under Regulation A promulgated thereunder by the SEC, the Company will commence the offering of Common Stock for cash to the public in jurisdictions in which the shares of Common Stock are registered or qualified for sale or in which the Offering is otherwise permitted or exempted.  No sale of shares shall be regarded as effective unless and until accepted by us.

The Offering will terminate at the earlier of (1) the date at which the Maximum Offering amount has been sold, (2) the date that is twelve months from the date of this Offering Statement being qualified by the Commission, or (3) the date at which the Offering is earlier terminated by the Company in its sole discretion, which may happen at any time (the “Offering Termination Date”).   If the Offering does not meet the Minimum Offering prior to termination of the Offering, the proceeds for the Offering will be promptly returned to subscribers, without deduction and generally without interest .

Those funds will be deposited by you into a deposit account with the Escrow Agent where they will stay until a closing or cancellation of the Offering. On the closing date for the Offering, the deposited funds, minus applicable expenses, will be delivered to our Company.

You will be required to complete a subscription agreement in order to invest.  All subscribers will be instructed by the Escrow Agent to transfer funds by wire or ACH transfer to the deposit account established for this Offering.

We have engaged Computershare Investor Services Inc. as our SEC registered transfer agent (the “Transfer Agent”) and will be subject to the agreed upon fee schedule.

So long as the Minimum Offering has been met, there are no plans to return funds to subscribers if all of the securities to be offered are not sold. There will be no material delay in the payment of the proceeds of the Offering by Escrow Agent to us.  Funds provided for the purchase of the Shares may not be withdrawn by investors after acceptance of the Subscription Agreement.  We can terminate the Offering at any time in our sole discretion.

Subscription Process

All investors will be required to complete and execute a subscription agreement in the form filed as an exhibit to this Offering Circular.  If an investor decides to subscribe for Shares in this Offering , they will be instructed as follows:

1. Contact the Company, email - IR@virtualarmour.com; and phone - 720-644-0913 for a copy of the subscription agreement;

2. Complete and sign the subscription agreement and deliver the completed subscription agreement to the Company's Escrow Agent at the following address:

Burns Figa & Will PC

Attn: Victoria Bantz

6400 S Fiddlers Green Circle, Suite 1000

Centennial, CO 80111

Email: vbantz@bfwlaw.com

Tel: 303-796-2626

15

3. Deliver funds to the deposit account with the Escrow Agent by ACH or wire transfer, payable as instructed in the subscription agreement.

After you have agreed to the subscription agreement and placed the funds required under the subscription agreement in the specified account, we have the right to review and accept or reject your subscription in whole or in part, for any reason or for no reason. Deposited funds will be returned by ACH or wire transfer for any rejected subscriptions.

Upon our acceptance of a subscription agreement we will issue the Shares subscribed at such closing, provided that the Minimum Offering has been met. Once you submit the subscription agreement and it is accepted, you may not revoke or change your subscription or request your subscription funds. All accepted subscription agreements are irrevocable.

Registrar and Transfer Agent, Book-Entry Only

All Shares will be issued to investors in book-entry only format and will be represented by a stock transfer ledger, maintained by our transfer agent and registrar.

Investors in the Shares will not be entitled to have the stock certificates registered in their names, and will not receive or be entitled to receive physical delivery of the Shares in definitive form. Transfers of investors, common stock will be facilitated through the Transfer Agent. As a result, you will not be entitled to receive a stock certificate representing your interest in the Shares. Your ability to pledge Shares, and to take other actions, may be limited because you will not possess a physical certificate that represents your Shares. Investors will receive written confirmation from the Transfer Agent upon closing of their purchases. Transfers of the Shares will be recorded on the stock transfer ledger maintained by the Transfer Agent. We have no responsibility for any aspect of the actions of the Transfer Agent. In addition, we have no responsibility or liability for any aspect of the records kept by the Transfer Agent relating to, or payments made on account of investors in, the Shares, or for maintaining, supervising or reviewing any records relating to ownership of Shares. We also do not supervise the systems of the Transfer Agent.

16

USE OF PROCEEDS TO ISSUER

The maximum gross proceeds from the sale of the Shares in this Offering are $_________,000.  The net proceeds from the Offering, assuming it is fully subscribed, are expected to be approximately $________ after the payment of offering costs including legal and accounting costs, and other compliance and professional fees. The estimate of the budget for offering costs is an estimate only and the actual offering costs may differ from those expected by management.

· Loan Repayment - $390,000

· Hiring of key personnel including sales and technical staff - $500,000

· Expansion of Investor Relations management and promotion - $200,000

· Market expansion through investment in Brand awareness, partnerships and lead generation services - $200,000

· Establishment of new Security Operations Center within Denver Headquarters - $250,000

· Continued R&D and platform infrastructure development - $775,000

· Increase of Working Capital - $_______,000

· Increase in Technical training and certifications - $100,000

· Estimated offering costs - $79,000

· TOTAL USE OF PROCEEDS - $_____,000

This Offering has a Minimum Offering amount of $300,000.  The Company may not close the Offering upon reaching such amount, which will not be sufficient for all the intended purposes set out above, and may not even cover the expenses of the Offering. In that event it will look to other sources of funds, including debt or equity to fund its operations, although there can be no assurance that such funds will be available.  Repayment of outstanding loan will include the following loans:

· The Blisard LOC was entered into on June 1, 2017, with Christopher Blisard, Chairman and a director of the Company, in an aggregate amount of up to $90,000 with approximately $93,327 outstanding as of December 31, 2017.  The Blisard LOC is secured by a lien on all of the assets of the Company, bears interest at 7% per annum and is due on demand.  The Blisard LOC proceeds were used by the Company for working capital purposes.

· The secured Olivo Note was entered into on November 29, 2017, with shareholder Peter-Christian Olivo in the principal amount of $100,000 and is due March 31, 2018.  Interest will accrue on the Olivo Note in the amount of $7,500 if paid on or before February 28, 2018 and in the amount of $8,500 if paid on March 31, 2018.  The Olivo Note proceeds were used by the Company for working capital purposes.

· On January 5, 2018, the Company entered into the On Deck Loan in an aggregate amount of $200,000, which is due in nine months and requires weekly payments with an annual interest rate of 58.76%.  The On Deck Loan proceeds were used by the Company for working capital purposes.

The Company reserves the right to change the use of proceeds set out herein based on the needs of the ongoing business of the Company and the discretion of the Company's management. The Company may reallocate the estimated use of proceeds among the various categories or for other uses if management deems such a reallocation to be appropriate.

17

THE COMPANY’S BUSINESS

On July 27, 2015, VirtualArmour completed a reverse takeover transaction (the “RTO” or the “Transaction”) with VirtualArmour LLC (“VA LLC” or “VirtualArmour Colorado”). In connection with the closing of the Transaction, VA LLC and VirtualArmour Capital Inc. (“VA Capital”) became wholly-owned subsidiaries of VirtualArmour. Upon completion of the RTO, the shareholders of VA LLC obtained control of the consolidated entity. Under the purchase method of accounting, VA LLC was identified as the acquirer, and accordingly the entity is considered to be a continuation of VA LLC with the net assets of VirtualArmour at the date of the RTO deemed to have been acquired by VA LLC. On October 25, 2016, the Company changed its name from VirtualArmor International Inc. to VirtualArmour International Inc. The Company’s shares trade on the Canadian Securities Exchange (the “CSE”) under the symbol “VAI” and the Company currently has a ticker symbol “VTLR” on the OTCQB Markets.

VA LLC was incorporated on May 4, 2001 in the State of Colorado, United States.  VA LLC adopted an Operating Agreement as of the same date, then amended and restated the Operating Agreement on July 15, 2005.

Partner for Success

The Company maintains it capabilities by only partnering with the best in breed technologies to be managed on the Company’s managed services platform. With enterprises continuously adopting new and up to date cybersecurity solutions into their operations, it is imperative for VirtualArmour to strategically on-board technologies that will increase our addressable market to include premier solutions being used by industry leaders. Many businesses across the U.S. are currently using one or more of these technologies in their network and need a strong managed services company to help them monitor the effectiveness of their security platforms and identify any potential threats to their proprietary data. The Company continues to review and expand beyond the current technologies under our managed services platform to include products in the cybersecurity space that are being used by leading companies. Our managed services business serves as a high margin multi-year agreement platform that will contribute to predictable and recurring cash flows in the years to come. We expect this segment of our business to become a larger percentage of our overall business and ultimately become the main driving force to our bottom line.

Professional Services

The Company’s professional services team uses its expertise to reduce reliability risk and time investment associated with implementing solutions. Professional services engineers are qualified to assist clients in designing, implementing, and optimizing solutions for reliable operations and returns on investment. The Company’s team understands the complexities and subtleties inherent in small or large-scale implementations, and will assist clients by providing customized and integrated solutions. It is available for short- and long-term service contracts and can assist clients in strategic consulting, high-level design, migration, conversion, staff augmentation, testing, and knowledge transfer.

On the whole, the Company’s team of professionals is in a position to provide best-in-class networks and security, system reliability, and cost-effective scaling.

Managed Services

The Company’s managed services provide capabilities to protect its customers’ networks. VirtualArmour’s services run 24 hours per day, 7 days per week, 365 days per year through its primary security operations center (“SOC”) located in Middlesbrough, U.K. and a secondary SOC located in Salt Lake City, Utah.  The Company is able to leverage decades of experience, tightly integrated software tools and streamlined processes to immediately respond to outages, network issues, and security threats. The managed services offerings span from low-to-high end routing, switching, wireless, and a comprehensive set of security services to complement clients’ in-house teams.

The Company’s managed services team operates out of the U.S. and U.K. with “follow-the-sun” shifts to provide live support with experienced certified engineers. VirtualArmour’s helpdesk offers three levels of customer support: Level 1 handles the creation of tickets, basic troubleshooting and notifications; Level 2 involves the more experienced engineers who can handle more complex troubleshooting and issues and small-to-medium sized projects; and Level 3 comprises the senior engineers who handle bug verification, highly technical issues, and the larger sized projects.

The Company’s engineering team generally maintains ownership of a problem until it is closed or clearly transitioned to a responsible third-party and keeps up-to-date with the latest in hardware, software, and best design practices for its customers’ benefits. Dedicated engineering staff engages in weekly reviews, incident reviews, production of custom escalation and alert procedures, new customer integration and customer specific tasks. VirtualArmour’s team operates flexible and agile processes developed in order to integrate with customers, providing an experience often disregarded by larger service providers in the industry.

18

Technology

The Company is focused on a short list of key technology and solutions partners across the networking, cloud, and cybersecurity landscapes. Partners are chosen based on market leadership, solution efficacy, and integration or “fit” within the overall set of VirtualArmour offerings. A key foundational partnership the Company has established is with Juniper, a leader in the area of networks and network security. The partnership allows the Company to provide its clients with Juniper’s knowledge and expertise across its entire set of products and solutions. Over time, the Company has evaluated and added additional strategic partners to enhance the suite of VirtualArmour product and service offerings. Additional key partners and technologies include IBM Security’s Qradar Security Intelligence Platform and XGS Network Protection; Netskope, Inc.’s Cloud Enablement and Security Platform; Palo Alto Networks and Crowdstrike solutions.

This combined set of strategically-selected technologies and partners enables the Company to deliver customers a comprehensive selection of security and connectivity solutions backed by a full complement of services ranging from design and architecture to installation, deployment, and ongoing management and support.

The following elements are part of the VirtualArmour technology prevention platform and allow the Company to deliver its suite of services.

PROPRIETARY INCIDENT RESPONSE PROTOCOLS: There is no one solution for every problem or every business. Networks and Security are complicated and because of that, we create clear and detailed playbooks designed specifically for each business.

PERSONAL DASHBOARD: Our proprietary CloudCastr portal provides executive teams with an easily navigable, real-time birds eye view of an organization’s security position. It quickly becomes an organization’s golden source of truth and a key tool for keeping teams and management consistently informed.

All Delivered via our PREVENTION PLATFORM: Prevention is about a unique methodology - VirtualArmour’s unique way of doing business. No security-focused organizations can promise 100% security, 100% of the time, however, through implementing a robust combination of the four pillars outlined above, businesses can rely on a layered approach to protection that is personalized, strategic, built by specialists with market-leading technology and monitored by motivated industry experts.

Customers

Historically and currently, the Company has derived a substantial portion of its revenue from a limited number of customers.  The Company currently derives a substantial portion of its revenue from less than ten customers.  The Company continues to add new customers.  VirtualArmour’s customers include a 13-location data center provider, a Fortune 100 oil and gas company, multiple service providers with presences throughout the United States, and household name enterprise organizations located primarily in the western United States.

Employees

As of December 31, 2017, the Company had a total of 21 full-time employees in the following locations: Denver, CO: 13, Salt Lake City, UT: 7, San Jose, CA: 1.  Each member of VirtualArmour’s team supports the three main facets of its business: (1) managed services; (2) professional services; and (3) hardware/software sales, by handling the design, configuration and installation of advanced network and cloud architecture solutions.  The Company contracts with 12 independent contractors in the United Kingdom to provide service as well .

19

Material Contracts

The Company has entered into an IBM Application Specific License Software Agreement with IBM, effective December 31, 2014 (the “IBM Agreement”).  The IBM Agreement has an initial term of two years, thereafter the agreement is subject to one year renewals as agreed to by the parties. The IBM Agreement has been renewed by the parties for the 2017 year.  Under the terms of the IBM Agreement, the Company is authorized to integrate certain IBM software and appliances into the Company’s solutions and market and distribute the integrated solutions to end users.

In addition, the Company has entered into a Direct Value Added Reseller Agreement with Juniper Networks (US) Inc. (“Juniper”) effective November 19, 2014, as subsequently amended (the “Juniper DVAR Agreement”).  The Juniper DVAR Agreement has a term of three years.  Under the terms of the Juniper DVAR Agreement, the Company is entitled to discounts on certain Juniper products, is authorized to purchase and re-sell certain Juniper products, and is authorized to provide managed security services and professional services for Juniper products and solutions to customers located in the United States.

Marketing Plan

Expand the Brand

Currently, “VirtualArmour” is viewed as a boutique name in the industry. In order to make the name more well-known, the Company will need to educate existing and potential clients on what its business can offer them. By instituting a structured marketing and public relations effort, the Company’s management anticipates reaching its clients quickly and effectively, thereby driving more viral activity. The Company has been successful in branding itself through its partner manufacturers and intends to continue its efforts in this area.

Grow Sales Team

The Company will continue to focus on its key technology partners Juniper, IBM Security, Palo Alto and Netskope, Inc. with services to support each engagement. Revenue milestones will also be used to determine the appropriate times to bring on additional sales and engineering staff. The Company expects to hire additional sales staff in 2018 to deliver incremental sales growth.

Expand Managed Services Offering

The Company intends to continue to build on its managed services by adding security and management from Juniper and complementary technology manufacturers. Through reviewing and responding to its existing customer demand, the Company anticipates taking on the management of select non-Juniper network appliances such as Cisco and IBM QRadar with add-on products for vulnerability management, risk management and forensics investigation.

The Company currently offers multiple technology partners as a services, hosted, or on-premise solution and is positioned well to add additional products this way. In the industry, a cloud service often comes with an assumption that there is full management and support behind it. Comparatively, the traditional managed service is an add-on that involves an effort to gain acceptance by the client. Management anticipates that the growing familiarity with third-party management of cloud services will lead to faster acceptance and an increase in the Company’s managed services business.

Strengthen Cybersecurity Product Offering

Well-publicized network attacks that have caused website outages, compromised credentials, and exposed credit card information have led to an acceptance that security threats are real and having adequate protection should not be optional. In management’s opinion, clients are or will be looking for complete protection such as that provided by the latest security products. The Company has been strengthening its understanding of the security portfolio including the latest hardware and software appliances.

20

Outlook

The outlook for 2017 is positive as there continues to be growth within the managed services provider and Cybersecurity space.  Margin growth is anticipated from a ramp up in managed services sales and expansions into new markets led by a growing sales, marketing, and service organization. The following strategic goals are designed to increase growth and profitability in both the short term and long term.

1.   Sell VirtualArmour as an Exclusive Managed Services Provider. The Company will continue to maintain a clear focus on promoting and executing on our core competencies: managed services, professional services and hardware/software solutions in cooperation with our premier technology partners. VirtualArmour’s service delivery and client experience in the industry is second to none and will continue to broaden our penetration within the enterprise space.

2.   Deliver and Communicate Value to our Clients. Bringing a coordinated, customized and a personal service that exceeds our customers’ expectations is critical to differentiating ourselves from our competitors and winning new business.  The Company intends to continue to bolster its existing cybersecurity services and product offerings with additional services and technologies that further support and expand the Company’s vision of an end-to-end managed and professional security services company.

3.   Increase Service Efficiency and Client Profitability: The Company will continue to evolve our service delivery practice to increase response time, offer proprietary engagement tools and broaden the volume of technologies that are supported. Additional focus will be on leveraging new technology, staff and processes to decrease per client operating expense.

Competition

The Company has several competitors with respect to different aspects of its business, including the following:

• Trace3, Inc. is a cloud computing business that has 12 offices across the United States and a major presence in the greater Denver area. It has existing relationships with the executive teams from most of the top companies in Denver. A significant difference between Trace3 and VirtualArmor is that Trace3 has a relatively large line card (number of manufacturers it represents). This allows Trace3 to supply a variety of networking, security, storage, and server products. Despite this variety, the Company has had success with Juniper customers taking business away from Trace3 based on the Company’s technical knowledge and services.

• Optiv Security Inc., a company formed following the merger between FishNet Security Inc. & Accuvant, Inc., is a source of enterprise security solutions and provides a comprehensive suite of information security strategy and IT security consulting services, managed security services, and technology resale and integration services. The Company competes with Optiv only in the security space, and specifically for business on IBM’s QRadar SIEM.

Optiv’s competitive advantage is its brand recognition and size. However, Optiv’s size makes it a more expensive service and the Company has won head-to-head client opportunities based on providing comparable service at a lower price.

• Dimension Data plc provides and manages IT infrastructure solutions and services and is a relatively new competitor due to the Company’s expansion into and increased business in the San Francisco Bay Area market. Dimension Data’s global presence and ability to serve global customers is its brand promise. While Dimension Data may have a competitive advantage when it comes to servicing customers outside of the United States, the Company is able to deliver the same level of service as Dimension Data within the United States.

• InterVision Systems Technologies Inc. provides IT solutions, infrastructure and services for the cloud ecosystem. As with Dimension Data, InterVision is a relatively new competitor due to the Company’s recent entry into the San Francisco Bay Area. InterVision has had a presence in the Bay Area market for many years and has a strong brand presence and experience with many of the customers the Company is targeting. Despite this, the Company has had success displacing InterVision on several accounts based on its Juniper knowledge, product, and service offerings.

21

DESCRIPTION OF PROPERTY

The Company maintains its corporate headquarters at 8085 South Chester Street, Suite 108, Centennial, CO 80112 pursuant to an office lease agreement.  The office lease agreement commenced in June of 2015 and has a term of 65 months.  The space is approximately 3,100 square feet.  The Company also operates two security operations centers (“SOC”) 24/7/365.  The primary SOC is located in Middlesbrough, U.K. and a secondary SOC is located in Salt Lake City, Utah.

The SOC in Middlesbrough consists of approximately 809 square feet and is subject to a business property lease that commenced November 1, 2016 and expires October 31, 2018 which is between the Landlord and VirtualArmor UK Limited (which is owned by Andrew Douthwaite and Maria Rovardi-Douthwaite).  The business property lease is guaranteed by Andrew Douthwaite and Maria Rovardi-Douthwaite, each of whom performs services to the Company as independent contractors.  The Company effectively subleases the Middlesbrough location from Virtual Armour UK Limited.

The SOC in Salt Lake City includes two single person offices and one eight person office.  The SOC in Salt Lake City is subject to an Avanti Executive Suites Service Agreement that commenced February 1, 2017 and expires February 1, 2018, subject to automatic renewals for subsequent one year periods.

The Company believes that its current office and SOC space is adequate for the Company’s operations but does intend to expand its operations beyond the current space it leases.

22

MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL

CONDITION AND RESULTS OF OPERATIONS

Cautionary Statement of Forward Looking Information

This Management Discussion and Analysis (the “MD&A”) may include forward-looking statements with respect to business plans, activities, prospects, opportunities and events anticipated or being pursued by the Company and the Company’s future results. These statements relate to future events or our future performance. All statements other than statements of historical fact are forward-looking statements. Statements that include the words “believes,” “expects,” “may,” “will,” “should,” “potential,” “estimates,” “anticipates,” “aim,” “goal” or other comparable terminology and similar statements of a future or forward looking nature identify forward-looking statements.  Although the Company believes the assumptions underlying such statements to be reasonable, any of the assumptions may prove to be incorrect. The anticipated results or events upon which current expectations are based may differ materially from actual results or events. Therefore, undue reliance should not be placed on such forward-looking information. A number of risks and uncertainties could cause our actual results to differ materially from those expressed or implied by the forward-looking statements, including: (1) a downturn in general economic conditions in North America and internationally, (2) the risk that the Company does not execute its business plan, (3) inability to retain key employees, (4) inability to finance operations and growth, and (5) other factors beyond the Company's control.

Forward-looking statements speak only as of the date of this MD&A and actual results could differ materially from those anticipated in the forward-looking statements as a result of a number of factors. Investors should not place undue reliance on forward-looking statements as the plans, intentions or expectations upon which they are based may not occur, and the Company does not undertake to update forward-looking statements except as required by applicable securities laws. The forward-looking statements contained herein are expressly qualified by this cautionary statement.

Overall Performance

During the year ended December 31, 2016, the Company recorded revenues of $8,897,092 compared to revenues from the year ended December 31, 2015 of $7,366,309.

During the six months ended June 30, 2017, the Company recorded revenues of $5,831,292 compared to revenues from the six months ended June 30, 2016 of $4,846,776 .

With the global managed services market experiencing continued growth, VirtualArmour increased its year-over-year revenue by 21%. This was achieved through a combination of signing a host of new recurring revenue contracts as well as increasing its levels of engagement with several existing clients. The Company continued to strengthen its market presence through expanded partnerships with the industry’s leading technology vendors. It also added five new partners to its line card, bringing in additional services, expanding its product offering and allowing the Company to successfully penetrate new markets.

VirtualArmour added 34 new clients during 2016.  Some of these clients became part of the managed services practice, others professional services and almost all procured hardware and software solutions from the Company.  These additions were a direct result of the new sales territories of focus, Bay Area, CA, Pacific Northwest and Texas.

VirtualArmour prides itself on customer retention.  2016 was no different, the Company maintained a customer retention rate of over 96%.  With the dramatic growth in customer acquisition coupled with the high customer retention, VirtualArmour is poised to achieve and exceed its revenue goals.

Operating Results

Year Ended December 31, 2016

Hardware and software sales and product support services revenues during the year ended December 31, 2016 were $6,827,014 (2015 was $5,780,084) while managed services revenues were $1,612,192 (2015 was $1,341,142) and professional services revenues were $438,643 (2015 was $235,823).  The increase in revenue was due to an increase in the number of customers served as well as the size of orders from new and existing customers.  The gross profit as a percentage of revenue was 25.5% in the 2016 period compared to 28.9% in the 2015 period.  The decrease in gross profit margin was due primarily to a significant increase in hardware and software sales and product support services, which has a lower gross profit margin as compared to managed and professional services.

23

The Company recorded a net loss of $2,298,828 ($0.04 per share) for the year ended December 31, 2016 as compared to net loss of $3,403,391 ($0.09 per share) for the year ended December 31, 2015.

The comments below relate to the results of operations:

· The Company earned revenue of $8,897,092 during the 2016 year (2015 was $7,366,309).  The increase was due primarily to an increase in the number of customers served as well as the size of orders from new and existing customers.  The increase reflects an 18% increase in product sales as well as a 30% increase in managed services and professional services.

· Cost of sales was $6,624,066 during the 2016 period (2015 was $5,234,615).  The increase in cost of sales was due to the corresponding increase in revenue.

· General and administrative expenses were $1,507,404 during the 2016 year (2015 was $1,296,891).  The increase was due primarily to an increase in salaries ($375,294 vs. $287,013) as well as due to an increase in miscellaneous general and administrative expenditures ($419,417 vs. $270,409).  The increases were a result of an increase of corporate level activities and the appointment of new employees.

· Research and development expense was $121,242 during 2016 (2015 was $56,305).  The expense is comprised of salaries to relevant employees as well as consulting fees.

· Sales and marketing expense was $1,727,426 during 2016 (2015 was $1,123,889).  The increase in sales and marketing expense was due primarily to the addition of major account sales executives in the San Francisco, the Pacific Northwest and the Texas markets and the addition of a Sales Engineer to support the new major account executives.

· During 2015, a listing expense of $4,166,285 was recorded pursuant to the July 27, 2015 reverse takeover transaction (“RTO”) that resulted in the Company becoming a publicly traded corporation.  The expense represented the fair value of the shares and warrants issued by VA LLC pursuant to the RTO.  Refer to Note 3 of the consolidated 2016 year end financial statements for details.  This was a non-recurring expense that did not represent a cash outlay of the Company.

· During 2016, the Company recorded a gain on debt settlement as a result of settling amounts owing to a former officer of the Company.

· Change in fair value of warrant derivative liabilities represents the change in the value of warrants held by shareholders.  The value of the warrants increases as the share price increases.  On exercise of these warrants, the value is transferred to share capital at its fair value on the date of exercise.  As the share price at December 31, 2016 (and the dates of warrant exercise) was higher than the value at December 31, 2015, the Company recorded a loss on the change in fair value.  The loss does not represent a cash outflow to the Company.

· Non-cash share-based payments expense fluctuates in accordance with the timing of stock option grants and the Company’s share price, among other factors.

24

Operating Results

Six Months Ended June 30, 2017 Compared to Six Months Ended June 30, 2016

Hardware and software sales and product support services revenues during the six months ended June 30, 2017 were $4,777,202 (six months ended June 30, 2016 was $3,912,154) while managed and professional services revenues were $1,054,090 (six months ended June 30, 2016 was $934,622).  The increase in revenue was due to an increase in the number of customers served as well as the size of orders from new and existing customers.  The gross profit as a percentage of revenue was 17.3% in the six months ended June 30, 2017 compared to 25.3% in the six months ended June 30, 2016.  The decrease in gross profit margin was due primarily to a significant increase in hardware and software sales and product support services, which has a lower gross profit margin as compared to managed and professional services.

The Company recorded a net loss of $900,524 ($0.02 per share) for the six months ended December 31, 2016 as compared to net loss of $3,134,345 ($0.06 per share) for the six months ended June 30, 2017.

The comments below relate to the results of operations:

· The Company earned revenue of $5,831,292 during the six months ended June 30, 2017 (six months ended June 30, 2016 was $4,845,776).  The increase was due primarily to an increase in the number of customers served as well as the size of orders from new and existing customers.  The increase reflects an 18% increase in product sales as well as a 11% increase in managed services and professional services.

· Cost of sales was $4,821,402 during the six months ended June 30, 2017 (six months ended June 30, 2016 was $3,618,634).  The increase in cost of sales was due to the corresponding increase in revenue.

· General and administrative expenses were $682,769 during the six months ended June 30, 2017 (six months ended June 30, 2016 was $678,431).  The increase was due primarily to an increase in salaries as well as due to an increase in miscellaneous general and administrative expenditures.  The increases were a result of an increase of corporate level activities and the appointment of new employees.

· Sales and marketing expense was $1,131,812 during the six months ended June 30, 2017 (six months ended June 30, 2016 was $759,321).  The increase in sales and marketing expense was due primarily to the addition of major account sales executives in the San Francisco, the Pacific Northwest and the Texas markets and the addition of a Sales Engineer to support the new major account executives.

· Change in fair value of warrant derivative liabilities represents the change in the value of warrants held by shareholders.  The value of the warrants increases as the share price increases.  On exercise of these warrants, the value is transferred to share capital at its fair value on the date of exercise.  As the share price at June 30, 2017 (and the dates of warrant exercise) was higher than the value at June 30, 2016, the Company recorded a loss on the change in fair value.  The loss does not represent a cash outflow to the Company.

· Non-cash share-based payments expense fluctuates in accordance with the timing of stock option grants and the Company’s share price, among other factors.

Liquidity and Capital Resources

The Company sells advanced networking and cybersecurity products and solutions to large enterprise and service provider markets.  The Company’s ability to meet its obligations, and maintain its current operations is contingent upon successful completion of additional financing arrangements and ultimately generating profitable operations.  There are no assurances that the Company will continue to obtain additional financing and/or achieve profitability or positive cash flows.  The Company's future capital requirements will depend on many factors, including operating costs, competitive environment and global market conditions.

As at December 31, 2016, the Company had cash of $144,530 and a working capital deficiency of $728,392, compared to cash of $250,812 and working capital deficiency of $1,202,767 as at December 31, 2015.

Cash used in operations was $952,258 for the year ended December 31, 2016, as compared to cash provided by operating activities of $280,632 for the year ended December 31, 2015.  The increase in cash used in operating activities during the current year was due primarily to an increase in expenses.

Net cash used in investing activities was $60,070 for the year ended December 31, 2016 as compared to $40,812 provided by investing activities for the year ended December 31, 2015.  The 2015 amount includes cash received from the RTO in the amount of $113,011.

Net cash provided by financing activities was $906,046 for the year ended December 31, 2016, compared to an outflow of $166,610 for the year ended December 31, 2015.  During 2016, the Company received proceeds from the exercise of warrants of $569,666 and $316,607 of gross proceeds from a July 2016 non-brokered private placement.  The Company also received net advances of $130,000 (2015 was $15,000) on its line-of-credit.

Readers are cautioned that a number of factors beyond the control of the Company could result in the Company not being able to sustain its current position. Such factors could include adverse economic conditions, political and regulatory concerns and key individual staffing problems amongst others.

25

As of December 31, 2016, the Company had a working capital deficiency of $728,392 and an accumulated deficit of $8,443,857.  A significant portion of the working capital deficiency was comprised of the third party line of credit arrangements ($445,000).  A significant portion of the accumulated deficit was comprised of non-cash accounting expenses such as listing expense ($4,166,285) and the change in fair value of warrant derivative liabilities ($140,769).  The Company has funded losses with external debt and related party advances, share issuances and working capital.  The existence of these matters creates a material uncertainty that may cast significant doubt about the Company’s ability to continue as a going concern.  The continuation of the Company as a going concern is dependent upon the obtaining of financing necessary to continue operations and, ultimately, on sustaining profitable operations.

On April 20, 2017, the Company entered into an arrangement which will provide the Company with working capital as well as credit and collections support for the related accounts receivables.

As at June 30, 2017, the Company had cash of $126,913 and a working capital deficiency of $1,586,403.

Cash used in operations was $132,913 for the six months ended June 30, 2017, as compared to cash used by operating activities of $191,905 for the six months ended June 30, 2016.  The increase in cash used in operating activities during the six months ended June 30, 2017 was due primarily to an increase in expenses.

Net cash used in investing activities was $36,759 for the six months ended June 30, 2017 as compared to $31,656 used in investing activities for the six months ended June 30, 2016.

Net cash provided by financing activities was $152,055 for the six months ended June 30, 2017, compared to $160,406 for the six months ended June 30, 2016.  During the six months ended June 30, 2017, the Company received nil proceeds from the exercise of warrants for the six months ended June 30, 2017, compared to $356,651 for the six months ended June 30, 2016.

Financing Activities

During the year ended December 31, 2016, the Company received $569,666 (CAD$735,468) from the exercise of share purchase warrants.

On July 11, 2016, the Company closed a non-brokered private placement by issuing 865,500 units at a price of CAD$0.48 per unit for aggregate gross proceeds of $316,607 (CAD$415,440).  Each unit consists of one common share of the Company and one half of one common share purchase warrant.  Each whole warrant entitles the holder to acquire one share at a price of CAD$0.75 per share up to January 11, 2018.  The Company paid a cash finders’ fee of $15,465, incurred issuance costs of $11,257 and issued 42,275 finders’ warrants valued at $5,143.  Each finders’ warrant entitles the holder thereof to acquire one share at a price of CAD$0.75 per share up to January 11, 2018.

Trend information

The Cybersecurity Managed Services sector is growing from $8B in 2015 to $30B in 2020¹. With 554M records stolen in the 1st half of 2016² and increased media coverage of major breaches, VirtualArmour believes it is well positioned to capitalize on this opportunity.

Since starting out in the industry in 2001 we have seen the security landscape change dramatically.  Today it’s not good enough to have all the best product without an overall security strategy which envelopes every aspect of an organization. According to Cybersecurity Ventures (a leading research and publisher covering the global cyber economy) most recent quarterly report, global cybersecurity spending is predicted to exceed $1 trillion cumulatively over the next five years, from 2017 to 2021. In 2004, the global cybersecurity market was worth $3.5 billion. In 2017 spending will reach $120 billion. As the only pure play cybersecurity company on the CSE, we have seen an uptick in inquiries over the last several months, driven by an increased understanding of the market and broad media coverage of the growing threat.

We believe our company is ahead of the game as we have the established infrastructure both in people and technology to service clients as well as scale the business.

¹ Research Firm MarketsandMarkets predicting the market for managed security services to grow to $35.5 billion by 2020, up from around $17.8 billion in 2015. For scale, MarketsandMarkets also predicts that the security industry overall, including all parts, will be $202.4 billion by 2021, up from $112.5 billion in 2016.

²  Gemalto's Breach Level Index.

26

DIRECTORS, EXECUTIVE OFFICERS AND SIGNIFICANT EMPLOYEES

Name	Position	Age		Term of Office	Approx. Hours per Week for Part-Time Employees
Executive Officers:
Todd Kannegieter	Chief Executive Officer and Director		58	From March 4, 2015 to present	(1)
Christopher Blisard	Chairman, Director		51	From March 4, 2015 to present	(2)
John Donaldson	Chief Financial Officer		62	From October 9, 2017 to present	(3)
Directors (other than officers listed above):
James Bart Engstrom	Director		58	From June 19, 2015 to present
Robert Morrison	Director		59	From June 19, 2015 to present
Ryan Wade McKinney	Director		42	From June 19, 2015 to present
Significant Employees:
Andrew Douthwaite (4)	VP of Managed Services		37	From April 2007 to present	Full-time
Russ Armbrust	VP of Sales		40	From January 2, 2017 to present	Full-time
Nick Dinsmoor	VP of Strategy and Marketing		43	From December 1, 2016 to present	Full-time
Chad Schamberger	VP of Engineering		35	From January 10, 2010 to present	Full-time
Kyle Duffy	VP of Customer Experience		34	From March 17, 2017 to present	Full-time

(1) Mr. Kannegieter is an independent contractor with the Company and spends approximately 25 hours per week relating to Company matters.

(2) Mr. Blisard is an independent contractor with the Company and spends approximately 20 hours per week relating to Company matters.

(3) Mr. Donaldson is an independent contractor with the Company and spends approximately 20 hours per week relating to Company matters.

(4) Mr. Douthwaite is an independent contractor with the Company.

Todd Kannegieter

Mr. Kannegieter is Chief Executive Officer and director and has served as a manager and director of VirtualArmour Colorado since 2002, bringing over 30 years of management, business development and operational experience to the position. Mr. Kannegieter’ s experience includes private equity placements, debt issuances, strategic and financial planning, mergers and acquisitions, and management of finance and accounting activities for both domestic and international businesses in the communications and internet services, software development, and network and cybersecurity sectors.

27

Christopher Blisard

Mr. Blisard is the Chairman and a founder of VirtualArmour Colorado and brings to this position over 26 years of business development, leadership, and operational experience in software development, network security and cybersecurity in both the public and private sectors. Mr. Blisard holds a Bachelor of Science Degree, with a specialization in finance, from Nichols College, Massachusetts, USA. Furthermore, Mr. Blisard serves as the COO of Circadence Corporation (“Circadence”), a position he has held since 1999. By holding responsibility for overall profit and loss and daily operations, development, and sales and marketing, Mr. Blisard directs tactical planning to maximize Circadence’s growth and development.

Throughout his career, Mr. Blisard has created a number of strategic partnerships with prominent industry leaders. His leadership has also been vital to the development of significant business relationships within the defense and security industry including the United States Department of Defense and all branches of the military, Northrop Grumman Corporation, L3 Communications Holdings and others.

John Donaldson

John Donaldson is the Company's Chief Financial Officer.  He is a Colorado CPA with over 35 years experience serving small and large public companies. He has held senior positions, including that of Chief Accounting Officer, within technology companies and comes to the role with considerable expertise in corporate governance, risk management, financial reporting, accounting, processes and internal control.  For the past thirteen years Mr. Donaldson has worked for Donaldson Consulting Services, Inc. and has provided hands-on solutions to CEOs and CFOs in the areas of SEC reporting, technical accounting, financial reporting, process improvement, internal controls, auditing and special projects.  He received his MBA degree in accounting from Michigan State University and his Bachelor of Business Administration degree in accounting from the University of Michigan.

James Bart Engstrom

James Bart Engstrom is currently the Engagement Director for the Denver office of CliftonLarsonAllen LLP. Mr. Engstrom has 31 years of experience in finance and accounting operations. Operationally focused in problem solving and process improvement, Mr. Engstrom started his career with Leprino Foods, worked in Public Accounting at Arthur Andersen, and has 19 years in international business with USWEST International, McDATA Corp, Applied Films and most recently Gates Corporation where he served as the Finance Director of Gates Fluid Power Europe Operations. Working in both international start-ups and in the role of internal audit director, Mr. Engstrom has implemented accounting control processes and administered Sarbanes-Oxley (SOX) compliance efforts. He has successfully developed high performing accounting organizations to support sustainable and scalable growth

Robert George Morrison

For more than 20 years, Robert Morrison has been a dedicated business development executive of technology solutions and services at companies like BF Goodrich, HP, Mentor Graphics, NanoPrint Technologies LLC, IDC, and currently at Hammerhead Industrial Hose. Mr. Morrison has a background in chemical engineering and has leveraged that technical knowledge along with years of sales, marketing, and management experience into developing and implementing solutions and business plans in several markets from software to industrial equipment. Throughout his career, he has exhibited strong business leadership and a genuine passion and ability to assess business needs and opportunities, identify unique and creative solutions, and develop and implement successful long-term business partnerships.

Ryan Wade McKinney

Ryan Wade McKinney has over 16 years of experience in information technology sales and business development. His diverse background of experience includes large enterprise, start-up, turnaround, and high- growth environments. He has a consistent record of driving sales growth via direct-to-consumer sales and partnership building with OEMs, VARs, and system integrators. Mr. McKinney’s multi-industry experience includes both private and public sector knowledge selling complex enterprise hardware, software, and cybersecurity solutions.

28

Mr. McKinney is currently the Director of Sales and Business Development at Shadow Networks Inc., located in Santa Clara, CA, and is responsible for the daily activities around sales, business development, and strategic partnerships for cybersecurity start-ups. Since its initial funding he has focused his efforts on establishing relationships with global organizations, Fortune 50, and U.S. federal government agencies. Mr. McKinney’s experience working with emerging technologies in cybersecurity enables him to penetrate new markets and establish long term strategic relationships with systems integrators, oil and gas, finance, government, and retail organizations. His focus is on expanding Shadow Networks market by working closely with early adopter partners, defining customer support requirements, and planning future growth within the sales organization.

Previously, Mr. McKinney provided sales and business development leadership for other successful organizations, such as: Circadence (2009-2013) where, as Director of Federal Sales, he maintained the largest existing customer relationships and generated new business with organizations such as DARPA, the Department of State, and the National Guard; Global Technology Resources Inc., where he played an integral part in the rapid growth of the organization from less than USD$30 million to over USD$300 million in revenue; Enterasys Networks (acquired by Extreme Networks), a provider of enterprise class networking hardware; and Tech Data, one of the world’s largest distributors of information technology hardware and software.

Mr. McKinney stays on the forefront of cybersecurity emerging technologies by working with his network of contacts in private equity and the venture capital community in Silicon Valley. His work with SDXCENTRAL enables him to keep his finger on the pulse of market trends. He is also a member of the Armed Forces Communications and Electronics Association (AFCEA). He holds a Bachelor of Science degree in marketing from Florida State University. Furthermore, Mr. McKinney also sits on the board of directors and is Vice President of Global Refuge International, a non-profit organization, providing lifesaving aide to displaced populations in some of the most violent places on earth.

Andrew Douthwaite

Mr. Douthwaite is responsible for the end to end customer experience for the company’s managed services offerings. His role also includes running our network/security operations centers in the UK and Salt Lake City, Utah.  Mr. Douthwaite has over 10 years of experience in the industry, including eight years with VirtualArmour in previous positions of Security Engineer and Senior Engineer.  Before joining VirtualArmour he held security centric application and web developer positions at Intex Software and well as roles within the telecommunications industry.  In 2002, Mr. Douthwaite obtained a BSc in Computer Science.

Russ Armbrust

Mr. Armbrust has over 20 years of experience within world-class technology firms and deep experience across multiple industries. He is responsible for driving the business development opportunities for the Company across North America and Europe. Holding senior leadership across several firms, he has become an expert at growing sales teams, exceeding growth objectives, and bringing value to businesses. Concurrent to his business development role, he is additionally responsible for driving value to VirtualArmour clients though proactive account management and consulting.  During the last five years, Mr. Armbrust has held the following positions: VP of Business Development at Axis Technical from October 2015 to January 2017; VP of Business Development at Seeing Machines from March 2013 to October 2015; VP of Operations at Seeing Machines from October 2012 to March 2013.

Nick Dinsmoor

Mr. Dinsmoor leads the VirtualArmour global strategy, marketing, and Investor Relations efforts with over 20 years of marketing, operations and sales experience in the technology, telecommunications and healthcare space. Mr. Dinsmoor has served in a broad range of leadership positions in public and private businesses across markets, with expertise in customer experience and brand management, business development, product management, business transformation and digital marketing. Mr. Dinsmoor holds a Master of Science degree in Technology Management as well as a Bachelor of Arts Degree in Communication.   During the last five years, Mr. Dinsmoor has held the following positions: VP of Marketing and Client Information Services at ProService Hawaii from 2014-2016 (in this position he led the management of brand, digital marketing, creative development (product positioning), agency management, sponsorships, events, PR/media and business referral program); Executive Director at Marketing and TV Services from 2010 to 2014 and was responsible for overall TV service experience, content management and partner relationships, application (SaaS) product management, pricing, packaging, offers/promotions for all consumer products.

29

Chad Schamberger

Chad Schamberger is the VP of Engineering Services of VirtualArmour, and has been employed with the company for almost eight years. Mr. Schamberger manages the pre- and post-sales engineering teams and dedicates 100% of his working time to VirtualArmour. When he joined VirtualArmour, Mr. Schamberger brought over nine years of industry experience to lead VirtualArmour’s sales engineers, network/security engineers, consultants and professional services team. Under his leadership, VirtualArmour’s engineering services business has consistently grown to become an industry leader.

Prior to his current position, Mr. Schamberger served as a sales engineer for Juniper, providing pre-sales support for Juniper’s customers in the Western U.S. Earlier in his career, he served as a sales engineer in telecommunications, providing pre- and post-sales support for large multi-system operators in the Midwest. Mr. Schamberger earned a Bachelor’s degree in electrical engineering from Kansas State University and holds a variety of technical certifications.

Kyle Duffy

Mr. Duffy has over a decade of solution development and customer implementation experience across numerous industries including, mining, manufacturing, energy, transportation, finance and healthcare. He is responsible for expanding the Company’s services and solutions to existing clients as well as developing and implementing action plans to further strengthen customer retention and encourage advocacy of its premier customer experience.  Mr. Duffy received a Bachelor of Science in Electrical Engineering from the University of Wyoming in 2006.  During the last five years, Mr. Duffy has held the following positions: Sr. Analyst; Sr. Director, Product Services; VP, Product Management & Delivery at Axis Technical Group, LLC from March 2014 to March 2017; Executive Director at Whitestar Holdings, LLC from August 2013 to March 2014; Business Intelligence & Analytics Manager at Alacer Gold Corp. from November 2012 to July 2013; Global Solutions Lead at Newmont Mining Corporation from May 2009 - October 2012.

Family Relationships

Except for independent contractors Andrew Douthwaite and Maria Rovardi-Douthwaite, who are married, there are no family relationships between any director, executive officer or any significant employee.

Involvement in Certain Legal Proceedings.

During the past five years our directors and officers have not been convicted in a criminal proceeding, excluding traffic violations or similar misdemeanors, nor has there been a petition under the federal bankruptcy laws or any state insolvency law filed by or against, or a receiver, fiscal agent or similar officer appointed by a court for the business or property of any such director or officer during the past five years, or any partnership in which he or she was general partner at or within two years before the date of this Offering Circular, or any corporation or business association of which he or she was an executive officer at or within two years before the date of this Offering Circular.

30

COMPENSATION OF DIRECTORS AND EXECUTIVE OFFICERS

Executive Compensation

The following represents the aggregate annual compensation of each of the three highest paid persons who were executive officers or directors and the compensation of the directors, as a group, during the Company's last completed fiscal year ended December 31, 2017:

Name	Capacity In Which Compensation Was Received	Cash Compensation ($)		Other Compensation ($)		Total Compensation ($)
Seven persons, as a group	Former President, CEO and Director, other Directors (5 persons)		326,105		3,566		329,671

Employment Agreements

The Company has the following written agreements with the executive officers and directors listed below:

• On May 1, 2015, the Company entered into a consulting agreement with Todd Kannegieter, Chief Executive Officer of the Company.  The consulting agreement has a term of three years. Under the terms of the consulting agreement, the Company has agreed to pay Mr. Kannegieter $8,000 per month and reimburse Mr. Kannegieter for out-of-pocked business expenses.  The consulting agreement also contains standard confidentiality and non-interference provisions.

• On May 1, 2015, the Company entered into a consulting agreement with SilverLeaf Consulting LLC, a company owned and controlled by Christopher Blisard, a director of the Company.  The consulting agreement has a term of three years. Under the terms of the consulting agreement, the Company has agreed to pay SilverLeaf Consulting LLC for the services of Mr. Blisard $8,000 per month and reimburse SilverLeaf Consulting LLC for out-of-pocked business expenses.  The consulting agreement also contains standard confidentiality and non-interference provisions.

• On August 1, 2017, the Company entered into a consulting agreement with VirtualArmour, Ltd., a company principally owned by Andrew Douthwaite, Vice President of Managed Services of the Company.  The consulting agreement had an initial term of one year, subject to automatic renewals for successive one-year periods unless terminated by the Company or VirtualArmour, Ltd..  Under the terms of the consulting Agreement, the Company has agreed to pay VirtualArmour, Ltd.112,500 GBP per year (approximately $146,000 USD as of the date of this Offering Circular) plus a commission of 2.5% of the gross profit related to the managed service revenue.  The consulting agreement also contains standard confidentiality and non-interference provisions.   During the year ended December 31, 2017, the Company paid VirtualArmour, Ltd. $710,361 under this arrangement.

• On September 8, 2017, the Company entered into a consulting agreement with Donaldson Consulting Services, Inc., a company owned and controlled by John Donaldson.  Under the terms of the consulting agreement, the Company has agreed pay Donaldson Consulting Services, Inc. for the services of Mr. Donaldson $150 per hour and reimburse Donaldson Consulting Services, Inc. for out-of-pocked business expenses.  The consulting agreement is terminable upon 60 days prior written notice.  The consulting agreement also contains standard confidentiality and non-solicitation provisions.

Employee Stock Option Plan

The Company has adopted a stock option plan (the “Plan”), which provides that the Company’s Board may from time to time, in its discretion, and in accordance with the CSE requirements, grant to directors, officers, and technical consultants to the Company, non-transferable options to purchase shares in the Company (the “VirtualArmour Shares”), provided that the number of VirtualArmour Shares reserved for issuance will not exceed 10% of the issued and outstanding VirtualArmour Shares. The options will be exercisable for a period of up to 5 years from the date of grant. The number of VirtualArmour Shares reserved for issuance to any individual in any 12-month period under the Plan will not exceed five percent (5%) of the issued and outstanding VirtualArmour Shares and the number of VirtualArmour Shares reserved for issuance to one consultant in any 12-month period under this Plan will not exceed two percent (2%) of the issued and outstanding VirtualArmour Shares.

31

Security Ownership of Management and Certain Securityholders

As of December 31, 2017, the Company had 55,769,447 shares of common stock outstanding.  The following sets forth certain information about the number of common shares owned by (i) each person (including any group) known to us that beneficially owns 10% percent or more of the common shares (the only class of the Company’s voting securities), (ii) each of our directors and named executive officers, and (iii) all named executive officers and directors as a group.  Unless otherwise indicated, the shareholders possess sole voting and investment power with respect to the shares shown and each shareholder has a business address of 8085 S. Chester Street, Suite 108, Centennial, CO 80112 .

Title of class	Name and address of Beneficial owner	Amount and nature of beneficial ownership (1)		Amount and nature of beneficial ownership acquirable (2)			Percent of Class (3)
Common Stock	Christopher Blisard		16,263,026		749,901			30.0	%
Common Stock	Todd Kannegieter		15,286,955		701,517			28.3	%
Common Stock	John Donaldson		--		--			*
Common Stock	James Bart Engstrom		--		32,500			*
Common Stock	Robert Morrison		--		32,500			*
Common Stock	Ryan Wade McKinney		--		32,500			*
Common Stock	Andrew Douthwaite		--		874,500	(4)		1.5	%
Common Stock	Russ Armbrust		--		--			*
Common Stock	Nick Dinsmoor		--		--			*
Common Stock	Chad Schamberger		--		874,500			1.5	%
Common Stock	All directors and executive officers as a group (ten persons)		31,549,981		3,297,918			61.3	%

* Less than 1%.

(1) Under Rule 13d-3 of the 1934 Act, a beneficial owner of a security includes any person who, directly or indirectly, through any contract, arrangement, understanding, relationship, or otherwise has or shares: (i) voting power, which includes the power to vote, or to direct the voting of shares; and (ii) investment power, which includes the power to dispose or direct the disposition of shares.  Certain shares may be deemed to be beneficially owned by more than one person (if, for example, persons share the power to vote or the power to dispose of the shares).

(2) Calculated in accordance with Rule 13d-3(d)(1).  Shares are deemed to be beneficially owned by a person if the person has the right to acquire the shares (for example, upon exercise of an option) within 60 days of the date as of which the information is provided.  Consists of options to purchase common stock and unless otherwise specified, granted pursuant to the Company’s equity incentive plan.

(3) Calculated in accordance with Rule 13d-3.  Percentages are rounded to the nearest one-tenth of one percent.

(4) Mr. Douthwaite’s business address is Boohoo One, Rooms S13 & S13A, Bridge Street West, Middlesbrough, UK.

32

Interest of Management and Others in Certain Transactions

The Company has entered into two secured promissory notes with Todd Kannegieter, the Chief Executive Officer and a director of the Company, pursuant to which Mr. Kannegieter agreed to provide a revolving line of credit (the "Kannegieter LOC") of an aggregate amount of up to $290,000. The amounts are secured by a lien on all of the assets of the Company, bear interest at 7% per annum and are due on demand. As of December 31, 2017, the Company is indebted to the Mr. Kannegieter under the Kannegieter LOC of the Company for $265,710 for advances provided to the Company under this loan and interest accrued on the outstanding balance . 

In addition to the Kannegieter LOC, the Company has amounts owing to Todd Kannegieter, a director and officer of the Company in the amount of $191,000 for compensation. These amounts are included in payroll liabilities. The amounts owing are unsecured, non-interest bearing and due on demand.

On June 15, 2015, VA LLC issued $400,000 of promissory notes to Mark Precious, a former officer of VA LLC. Pursuant to the promissory note agreements, the Company made a payment of $35,000 on June 15, 2015. The remaining principal amount of the note was payable in 36 equal blended instalments beginning July 1, 2015. During the year ended December 31, 2016, the terms of the promissory notes were amended. Effective February 29, 2016, the Company and the former officer agreed that the Company will pay 25% of the remaining principal balance as part of the resolution of a dispute between the parties. The Company recorded a gain on debt settlement of $150,803, net of legal fees of $64,878. The promissory notes were repaid in six equal instalments beginning March 1, 2016 and ending on August 1, 2016. The promissory notes bore interest at 4.5% per annum. As at December 31, 2016, the balance of the promissory notes was $nil (2015 - $304,289).

On June 15, 2015, the Company repurchased 606,961 membership unit warrants from Mark Precious, a former officer of the Company.

During the year ended December 31, 2015, the Company incurred $11,842 (2014 - $10,800) of employee benefits for Mark Precious, a former officer of the Company.

On June 1, 2017, the Company entered into a secured promissory note with Christopher Blisard in the amount of $90,000, which as of December 31, 2017, the outstanding balance of principal and interest was $93,327.

On November 29, 2017, the Company entered into a Secured Subordinated Promissory Note with shareholder Peter-Christian Olivo in the principal amount of $100,000, which is due on March 31, 2018 (the "Olivo Note").  Interest will accrue on the Olivo Note in the amount of $7,500 if paid on or before February 28, 2018 and in the amount of $8,500 if paid on March 31, 2018.   Mr. Olivo is a shareholder of the Company.  The Company entered into a Security Agreement on the same day to secure the Olivo Note by all of the assets of the Company .

 

33

Securities Being Offered

The Company is offering 11,153,889 of its common stock. The Company’s authorized capital consists of 300,000,000 shares of common stock, of which 55,769,447 are issued and outstanding as at the date of this Offering Circular.

Common Stock

Dividend Rights

Holders of Common Stock are entitled to receive dividends, as may be declared from time to time by the board of directors out of legally available funds.  The Company has never declared or paid cash dividends on any of its capital stock and currently does not anticipate paying any cash dividends after this Offering or in the foreseeable future.

Voting Rights

Each holder of Common Stock is entitled to one vote for each share on all matters submitted to a vote of the shareholders, including the election of directors.

Right to Receive Liquidation Distributions

In the event of the Company's liquidation, dissolution, or winding up, subject to the rights of holders of any shares ranking in priority to or on a parity with the Shares, holders of its Common Stock will be entitled to share ratably in the net assets legally available for distribution to shareholders after the payment of all of the Company's debts and other liabilities.

Rights and Preferences

Holders of the Company's Common Stock have no preemptive, conversion, or other rights, and there are no redemptive or sinking fund provisions applicable to the Company's Common Stock.

Transfer Agent

The Company has engaged Computershare Investor Services Inc. to serve as transfer agent to maintain shareholder information on a book-entry basis.

Preferred Stock

The Company has no shares of preferred stock outstanding or authorized.

Options and Warrants

The Company has issued options to purchase its Common Stock.  The table below represents the options outstanding as at December 31, 2017: 

Security	Number		Exercise Price		Expiry date
Stock Options		1,424,000		U.S.$ 0.10	July 27, 2020
Stock Options		2,526,418		U.S.$ 0.10	July 31, 2020
Stock Options		100,000	CAD$ 0.47		April 6, 2021
Stock Options		100,000	CAD$ 0.44		August 19, 2021
Stock Options		1,585,000	CAD$ 0.30		March 23, 2022
Stock Options		625,000	CAD$ 0.41		June 12, 2022
Warrants		475,000	CAD$0.75		January 11, 2018

On January 11, 2018, the warrants to purchase 475,025 shares of the Company's common stock expired.

34

The Board of Directors has adopted a stock option plan (the “Stock Option Plan” or “Plan”) whereby a maximum of 10% of the issued and outstanding Shares, from time to time, may be reserved for issuance pursuant to the exercise of options. Under the terms of the Stock Option Plan, options may be granted only to: (i) employees, officers, directors, and consultants of the Company; (ii) employees, officers, directors, and consultants of an affiliate of the Company; and (iii) any other person deemed suitable by the Board to receive options to purchase common shares.

The exercise price of any option when granted may not be less than the greater of the closing market price of the common shares on: (a) the last trading day immediately preceding the date of grant of the option; and (b) the date of grant of the option; provided however, that if the common shares are not listed on any securities exchange, the exercise price may not be less than the fair market value of the common shares as may be determined by the Board of Directors on the day immediately preceding the date of the grant of such option. The options are settled in shares.

The options are non-assignable and non-transferable. Options granted under the Stock Option Plan have a maximum term of five years and can only be exercised by the optionee as long as the optionee remains an eligible optionee pursuant to the Stock Option Plan or within 90 days (or as otherwise determined by the Board of Directors) after ceasing to be an eligible optionee, or, if the optionee dies, within one year from the date of the optionee’s death.

Escrow shares and shares subject to contractual restrictions on transfer

On July 27, 2015, the Company entered into stock restriction agreements with certain shareholders of the Company (the “Stock Restriction Agreements”).  In addition, on October 8, 2015, the Company entered into an escrow agreement with certain shareholders of the Company (the “Escrow Agreement”). A total of 35,774,990 common shares of the Company were subject to restriction on transfer pursuant to the Stock Restriction Agreements or placed into escrow under the Escrow Agreement.

Under the terms of the Stock Restriction Agreement and the Escrow Agreement, restricted and escrowed shares may not be transferred except in the case of certain permitted transfers.  These restricted shares and escrow shares will be released as follows:

Date of Automatic Timed Release	Amount of Escrow Shares Released
On the date that the Company’s common shares were listed on the CSE, November 24, 2015	1/10 of the escrow shares
6 months after the listing date	1/6 of the remainder of the escrow shares
12 months after the listing date	1/5 of the remainder of the escrow shares
18 months after the listing date	1/4 of the remainder of the escrow shares
24 months after the listing date	1/3 of the remainder of the escrow shares
30 months after the listing date	1/2 of the remainder of the escrow shares
36 months after the listing date	The remainder of the escrow shares

On December 22, 2015, an additional 4,088,716 common shares of the Company were placed into escrow by certain officers of the Company that were to be released in six equal installments.  As of the date of this Offering Circular, all of the shares under the December 22, 2015 escrow agreement have been released.

On March 15, 2016, the Company cancelled 2,998,392 common shares which were being held in escrow for $nil consideration. In conjunction with this transaction, existing shareholders agreed to voluntarily escrow 3,000,000 common shares on March 15, 2016, to be released in five equal blocks on a quarterly basis over the next 18 months.  As of the date of this Offering Circular, all of the shares under the March 15, 2016 escrow agreement have been released.

Further, there were 184,800 other shares that were subject to contractual restrictions on transfer pursuant to a stock restriction agreement (the “Planco Stock Restriction Agreement.”).  Pursuant to the terms of the Planco Stock Restriction Agreement, 10% of the restricted shares were released three months after the date that the common shares were listed on the CSE, 20% of the remainder of the restricted shares were released 6 months after the listing date, 20% of the remainder of the restricted shares were released 12 months after the listing date, and the remainder were released 18 months after the listing date.  As of the date of this Offering Circular, all the shares under the Planco Stock Restriction Agreement have been released.

As of December 31, 2017, 11,059,595 common shares remained in escrow or subject to stock transfer restrictions.

35

UNAUDITED FINANCIAL STATEMENTS

FOR THE YEARS ENDED DECEMBER 31, 2016 AND 2015

CONSOLIDATED STATEMENTS OF FINANCIAL POSITION

	Notes		December 31, 2016 $			December 31, 2015 $
ASSETS
Current
Cash				144,530			250,812
Accounts receivable				1,646,663			1,705,268
Other receivables				271,771			270,806
Prepaid expenses				150,253			55,874
Total Current Assets				2,213,217			2,282,760
Property and equipment		4		277,403			417,679
Intangible assets		5		36,857			46,069
Total Assets				2,527,477			2,746,508
LIABILITIES
Current
Accounts payable and accrued liabilities		6		2,157,864			2,263,556
Deferred revenue				84,000			126,000
Derivative liabilities		7		29,762			504,593
Line-of-credit		8		445,000			315,000
Leases		9		72,777			101,606
Due to related parties		16		152,206			174,772
Total Current Liabilities				2,941,609			3,485,527
Leases		9		80,817			136,937
Due to related parties		16		-			185,615
Total Liabilities				3,022,426			3,808,079
Going concern (Note 1)
Subsequent events (Note 18)
STOCKHOLDERS’ DEFICIT
Share capital				6,284,418			3,650,715
Additional paid-in capital				1,664,490			1,432,743
Deficit				(8,443,857	)		(6,145,029	)
Total Stockholders’ Deficit				(494,949	)		(1,061,571	)
Total Liabilities and Stockholders’ Deficit				2,527,477			2,746,508

36

CONSOLIDATED STATEMENTS OF OPERATIONS AND COMPREHENSIVE LOSS

FOR THE YEARS ENDED DECEMBER 31, 2016 AND 2015

	Notes		2016 $			2015 $
Revenue		14		8,897,092			7,366,309
Cost of sales		15		(6,624,066	)		(5,234,615	)
Gross Profit				2,273,026			2,131,694
Expenses
General and administrative		15		1,507,404			1,296,891
Research and development		15		121,242			56,305
Sales and marketing		15		1,727,426			1,123,889
Total Expenses				3,356,072			2,477,085
Loss from Operations				(1,083,046	)		(345,391	)
Other Income (Expense)
Interest expense		16		(56,065	)		(61,466	)
Listing expense				-			(4,166,285	)
Change in fair value of derivative liabilities		7		(1,310,520	)		1,169,751
Gain on debt settlement, net		16		150,803			-
Net Loss and Comprehensive Loss for the year				(2,298,828	)		(3,403,391	)
Loss per share – basic and diluted				(0.04	)		(0.09	)
Weighted average number of shares outstanding				52,970,099			38,718,147

37

CONSOLIDATED STATEMENTS OF SHAREHOLDERS’ DEFICIT

FOR THE YEARS ENDED DECEMBER 31, 2016 AND 2015

	Common Shares / Membership Units #			Share Capital / Members’ Contributions $			Additional Paid-in Capital $			Deficit $			Total $
Balance, December 31, 2014		2,000,000			905,991			1,444,998			(2,601,868	)		(250,879	)
Fair value of membership unit purchase warrants issued for financing fees		-			-			17,682			-			17,682
Fair value of membership unit purchase warrants issued		-			-			4,987			-			4,987
Reclassification of stock-based compensation liability related to Phantom Plan Units to equity		-			-			1,343			-			1,343
Incremental cost of Phantom Plan Units		-			-			868			-			868
Repurchase of membership units, Phantom Plan units and warrants		(220,000	)		-			(260,230	)		(139,770	)		(400,000	)
Exercise of membership unit purchase warrants		934,905			170,724			(170,724	)		-			-
Share exchange agreement		40,000,000			-			-			-			-
Shares issued for Reverse Takeover Transaction		11,700,000			2,574,000			-			-			2,574,000
Cancellation of original Membership Units		(2,714,905	)		-			-			-			-
Modification of options		-			-			324,596			-			324,596
Stock-based-compensation – vesting of options		-			-			69,223			-			69,223
Net loss		-			-			-			(3,403,391	)		(3,403,391	)
Balance, December 31, 2015		51,700,000			3,650,715			1,432,743			(6,145,029	)		(1,061,571	)
Pursuant to private placement		865,500			316,607			-			-			316,607
Less:
Fair value of warrants issued as part of units		-			(52,649	)		-			-			(52,649	)
Fair value of finders’ warrants		-			(5,143	)		5,143			-			-
Cash finders’ fees		-			(15,465	)		-			-			(15,465	)
Share issuance costs		-			(11,257	)		-			-			(11,257	)
Exercise of share purchase warrants		6,202,339			569,666			-			-			569,666
Share issuance costs		-			(6,056	)		-			-			(6,056	)
Cancellation of shares		(2,998,392	)		-			-			-			-
Transfer value on exercise of share purchase warrants		-			1,838,000			-			-			1,838,000
Stock-based compensation – vesting of options		-			-			226,604			-			226,604
Net loss		-			-			-			(2,298,828	)		(2,298,828	)
Balance, December 31, 2016		55,769,447			6,284,418			1,664,490			(8,443,857	)		(494,949	)

38

CONSOLIDATED STATEMENTS OF CASH FLOWS

FOR THE YEARS ENDED DECEMBER 31, 2016 AND 2015

	2016 $			2015 $
Cash Flows (Used In) Provided By Operating Activities
Net loss for the year		(2,298,828	)		(3,403,391	)
Adjustments to reconcile net loss to net cash provided by (used in) operating activities:
Depreciation and amortization		209,558			161,763
Bad debt expense		9,000			-
Stock-based compensation		226,604			399,674
Stock-based compensation issued for financing fees		-			17,682
Listing expense		-			4,166,285
Change in fair value of stock-based compensation liabilities		-			1,007
Change in fair value of derivative liabilities		1,310,520			(1,169,751	)
Gain on debt settlement, excluding legal fees		(215,681	)		-
Changes in operating assets and liabilities:
Accounts receivable		58,605			(1,162,057	)
Other accounts receivable		(9,965	)		(109,837	)
Prepaid expenses		(94,379	)		(48,161	)
Accounts payable and accrued liabilities		(169,573	)		1,331,814
Deferred revenue		(42,000	)		126,000
		(1,016,139	)		311,028
Interest paid		(63,881	)		(30,396	)
Net Cash (Used In) Provided By Operating Activities		(952,258	)		280,632
Cash Flows (Used In) Provided By Investing Activities
Purchase of office facilities and equipment		(60,070	)		(72,199	)
Cash received from RTO		-			113,011
Net Cash (Used In) Provided By Investing Activities		(60,070	)		40,812
Cash Flows Provided By (Used In) Financing Activities
Proceeds from the exercise of warrants		569,666			-
Proceeds from a private placement of units		316,607			-
Share issuance costs		(32,778	)		-
Advances from line-of-credit arrangements		805,000			275,000
Repayment of line-of-credit arrangements		(675,000	)		(260,000	)
Repayment of leases		(84,949	)		(109,154	)
Due to related parties		7,500			(72,456	)
Net Cash Provided By (Used In) Financing Activities		906,046			(166,610	)
(Decrease) Increase In Cash		(106,282	)		154,834
Cash – Beginning of the Year		250,812			95,978
Cash – End of the Year		144,530			250,812
Non-cash Investing and Financing Activities:
42,275 finders’ warrants issued		5,143			-
Transfer value on exercise of share purchase warrants		1,838,000			-
Property and equipment financed under financing leases		-			214,298
Notes payable issued to repurchased membership units, Phantom Plan units and warrants		-			400,000

39

Notes to Consolidated Financial Statements

1.Organization, Nature of Operations, and Going Concern

VirtualArmour International Inc. (formerly VirtualArmor International Inc.) (“VA Intl” or the “Company”) was incorporated on March 4, 2015 in the State of Colorado. The registered office of the Company is 8085 S. Chester Street, Suite 108, Centennial, Colorado, United States. Effective October 25, 2016, the Company changed its name from VirtualArmor International Inc. to VirtualArmour International Inc. The Company sells advanced networking and cybersecurity products and solutions to large enterprise and service provider markets. The solutions provided by the Company run the full project life cycle from initial design, through professional and managed services. The Company delivers its products and services by working as a Business Partner with well-established and respected technology partners such as: Juniper Networks, IBM Security, Netskope, Palo Alto Networks, and others. The Company’s shares trade on the Canadian Securities Exchange (the "CSE") under the symbol “VAI”.

On July 27, 2015, VA Intl completed a reverse takeover transaction (the “RTO” or the “Transaction”) with VirtualArmor LLC (“VA LLC”). In connection with the closing of the transaction, VA LLC and VirtualArmor Capital Inc. (“VA Capital”) became wholly-owned subsidiaries of VA Intl. Upon completion of the RTO, the shareholders of VA LLC obtained control of the consolidated entity. Under the purchase method of accounting, VA LLC was identified as the acquirer, and accordingly the entity is considered to be a continuation of VA LLC with the net assets of VA Intl at the date of the RTO deemed to have been acquired by VA LLC.

These consolidated financial statements have been prepared on a going concern basis which contemplates that the Company will continue in operation for the foreseeable future and will be able to realize its assets and discharge its liabilities in the normal course of business.  The Company had a net loss of $2,298,828 during the year ended December 31, 2016. As of December 31, 2016, the Company has a working capital deficiency of $728,392 and an accumulated deficit of $8,443,857. A significant portion of the working capital deficiency is comprised of the line of credit arrangements ($445,000). A significant portion of the accumulated deficit is comprised of non-cash accounting expenses such as listing expense ($4,166,285) and the change in fair value of warrant derivative liabilities ($140,769). The Company has funded losses with external debt and related party advances, share issuances and working capital. The existence of these matters creates a material uncertainty that raises substantial doubt about the Company’s ability to continue as a going concern. The continuation of the Company as a going concern is dependent upon the obtaining of financing necessary to continue operations and, ultimately, on sustaining profitable operations. These consolidated financial statements do not include any adjustments relating to the recoverability and classification of recorded asset amounts, the amount and classification of liabilities and the reported revenue and expenses that would be necessary should the Company be unable to continue as a going concern. Such adjustments could be material.

Subsequent to the year ended December 31, 2016, the Company entered into an Invoice Purchase Agreement dated April 20, 2017 (Note 18) which will provide the Company with working capital as well as credit and collections support for the related accounts receivables.

2.Significant Accounting Policies

Basis of presentation and principles of consolidation

These consolidated financial statements of the Company have been prepared in accordance with U.S. generally accepted accounting principles.

These consolidated financial statements include the financial statements of all subsidiaries subject to control by the Company, which include VA LLC and VA Capital and are presented in U.S. dollars. The functional currency of the Company and all of its wholly-owned subsidiaries is the U.S. dollar.

All inter-company transactions and balances are eliminated.

40

2.Significant Accounting Policies (continued)

Use of estimates

The preparation of these consolidated financial statements in conformity with U.S. generally accepted accounting principles requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period. The Company regularly evaluates estimates and assumptions related to allowance for doubtful accounts, the estimated useful lives and recoverability of property and equipment, valuation of intangible assets, stock-based compensation, capitalization of lease obligations, valuation of deferred revenue, and deferred income tax asset valuation allowances. The Company bases its estimates and assumptions on current facts, historical experience and various other factors that it believes to be reasonable under the circumstances, the results of which form the basis for making judgments about the carrying values of assets and liabilities and the accrual of costs and expenses that are not readily apparent from other sources. The actual results experienced by the Company may differ materially and adversely from the Company’s estimates. To the extent there are material differences between the estimates and the actual results, future results of operations will be affected.

Cash and cash equivalents

The Company considers all highly liquid instruments with a maturity of three months or less at the time of acquisition to be cash equivalents. As at December 31, 2016 and 2015, the Company had no cash equivalents.

Accounts receivable

Accounts receivable, net of allowance for doubtful accounts, includes amounts due from customers and amounts owed from vendors. The Company maintains allowances for potential credit losses related to doubtful accounts. Current economic conditions, historical information, reasons for the accounts being past-due and line of business from which the customer accounts receivable arose are all considered when determining whether allowances should be made for past-due accounts; the same factors are considered when determining whether to write off amounts charged to the allowance for doubtful accounts against the customer accounts receivable. The Company establishes an allowance for doubtful accounts based on the age of the receivable and the specific identification of receivables the Company considers at risk. No customer accounts receivable are written off directly to the bad debt expense unless the customers file for bankruptcy or the Company has confirmed that the receivable is uncollectible. The Company reviews the adequacy of its allowance for doubtful accounts on a regular basis.

Property and equipment

Property and equipment consist of computer equipment and office furniture and fixtures, and are measured at cost less accumulated depreciation and impairment losses. Property and equipment are depreciated on a straight-line basis over their expected useful life. The estimated useful lives for the current and comparative periods are as follows:

Computer equipment: 4 years Furniture and fixtures: 5 years

Residual values and useful economic lives are reviewed at least annually, and adjusted if appropriate, at each financial year end. Subsequent expenditures relating to an item of office facilities and equipment are capitalized when it is probable that future economic benefits from the use of the assets will flow to the Company and the costs can be measured reliably. All other subsequent expenditures are recognized as repairs and maintenance expenses during the period in which they are incurred. Assets are derecognized when they are no longer in use. Gains and losses on disposal of property and equipment are determined by comparing the proceeds from disposal with the carrying amount of the asset and are recognized net within other income in the consolidated statement of operations.

41

2.Significant Accounting Policies (continued)

Intangible assets

Intangible assets include software development costs and are measured at cost less accumulated amortization and accumulated impairment losses. Amortization is recognized in the consolidated statement of operations on a straight-line basis over the estimated useful life of 8 years, from the date that they are available for use, since this most closely reflects the expected pattern of consumption of the future economic benefits embodied in the asset. Amortization methods, useful lives, and residual values are reviewed at each financial year end and adjusted if appropriate. If the total of the expected undiscounted future cash flows is less than the carrying amount of the asset, a loss is recognized for the excess of the carrying value over the fair value of the asset.

Impairment of long-lived assets

In accordance with ASC 360, “Property, Plant, and Equipment”, the Company tests long-lived assets or asset groups for recoverability when events or changes in circumstances indicate that their carrying amount may not be recoverable. Circumstances which could trigger a review include, but are not limited to: significant decreases in the market price of the asset; significant adverse changes in the business climate or legal factors; accumulation of costs significantly in excess of the amount originally expected for the acquisition or construction of the asset; current period cash flow or operating losses combined with a history of losses or a forecast of continuing losses associated with the use of the asset; and current expectation that the asset will more likely than not be sold or disposed significantly before the end of its estimated useful life. Recoverability is assessed based on the carrying amount of the asset and its fair value which is generally determined based on the sum of the undiscounted cash flows expected to result from the use and the eventual disposal of the asset, as well as specific appraisal in certain instances. An impairment loss is recognized when the carrying amount is not recoverable and exceeds fair value.

Leases

A lease that transfers substantially all of the benefits and risks of ownership is classified as a capital lease. At the inception of a capital lease, an asset and a payment obligation are recorded at an amount equal to the lesser of the present value of the minimum lease payments and the property’s fair market value. Assets classified as capital leases are amortized using the straight-line method, over their estimated useful lives. All other leases are accounted for as operating leases and rental payments are expensed as incurred.

Stock-based compensation

The Company records stock-based compensation in accordance with ASC 718 “Compensation – Stock Compensation” and ASC 505, “Equity Based Payments to Non-Employees”, using the fair value method. All transactions in which goods or services are the consideration received for the issuance of equity instruments are accounted for based on the fair value of the consideration received or the fair value of the equity instrument issued, whichever is more reliably measurable.

Revenue recognition

The Company derives revenue from the sale of hardware and software, managed security services, product support services, and other consulting services. In accordance with ASC 605, “Revenue Recognition”, revenue is recognized when persuasive evidence of an arrangement exists, delivery has occurred or services have been rendered, the amount is fixed and determinable, and collectability is reasonably assured.

Management assesses the business environment, customers’ financial condition, historical collection experience, accounts receivable aging, and customer disputes to determine whether collectability is reasonably assured. If collectability is not considered reasonably assured at the time of sale, the Company does not recognize revenue until collection occurs.

42

2.Significant Accounting Policies (continued)

Foreign currency translation

The Company’s entities' functional and reporting currency is the U.S. dollar. Management has adopted ASC 830, “Foreign Currency Matters”. Monetary assets and liabilities denominated in foreign currencies are translated using the exchange rate prevailing at the balance sheet date. Revenues and expenses in currencies other than the functional currency are translated into the functional currency using the exchange rates prevailing at the dates of the transaction. Gains and losses arising on translation of foreign currency denominated transactions or balances are included in the consolidated statement of operations.

Financial instruments and fair value measures

ASC 820, “Fair Value Measurements and Disclosures” requires an entity to maximize the use of observable inputs and minimize the use of unobservable inputs when measuring fair value. ASC 820 establishes a fair value hierarchy based on the level of independent, objective evidence surrounding the inputs used to measure fair value. A financial instrument’s categorization within the fair value hierarchy is based upon the lowest level of input that is significant to the fair value measurement. ASC 820 prioritizes the inputs into three levels that may be used to measure fair value:

Level 1

Level 1 applies to assets or liabilities for which there are quoted prices in active markets for identical assets or liabilities.

Level 2

Level 2 applies to assets or liabilities for which there are inputs other than quoted prices that are observable for the asset or liability such as quoted prices for similar assets or liabilities in active markets; quoted prices for identical assets or liabilities in markets with insufficient volume or infrequent transactions (less active markets); or model-derived valuations in which significant inputs are observable or can be derived principally from, or corroborated by, observable market data.

Level 3

Level 3 applies to assets or liabilities for which there are unobservable inputs to the valuation methodology that are significant to the measurement of the fair value of the assets or liabilities.

The Company’s financial instruments consist principally of cash, accounts receivable, other receivables, accounts payable and accrued liabilities, derivative liabilities, line-of-credit arrangements, leases, and amounts due to related parties. Pursuant to ASC 820, the fair values of cash are determined based on “Level 1” inputs and derivative liabilities are based on “Level 3” inputs. The recorded values of all other financial instruments approximate their current fair values because of their nature and respective maturity dates or durations. The Company operates in the U.S. and its cash is held in U.S. dollars and Canadian dollars. As December 31, 2016, the Company had Cdn$10,935 of cash and Cdn$80,790 of accounts payable accrued liabilities. Accordingly, the Company believes there is no significant exposure to foreign currency fluctuations.

Income taxes

The Company accounts for income taxes using the asset and liability method in accordance with ASC 740, “Income Taxes”. The asset and liability method provides that deferred income tax assets and liabilities are recognized for the expected future tax consequences of temporary differences between the financial reporting and tax bases of assets and liabilities, and for operating loss and tax credit carryforwards. Deferred income tax assets and liabilities are measured using the currently enacted tax rates and laws that will be in effect when the differences are expected to reverse. The Company records a valuation allowance to reduce deferred income tax assets to the amount that is believed more likely than not to be realized.

43

2.Significant Accounting Policies (continued)

Earnings (loss) per share

The Company computes earnings (loss) per share in accordance with ASC 260, “Earnings per Share”. ASC 260 requires presentation of both basic and diluted earnings per share (“EPS”) on the face of the income statement. Basic EPS is computed by dividing earnings (loss) available to common shareholders (numerator) by the weighted average number of shares outstanding (denominator) during the period. Diluted EPS gives effect to all dilutive potential common shares outstanding during the period using the treasury stock method and convertible preferred stock using the if-converted method. In computing diluted EPS, the average stock price for the period is used in determining the number of shares assumed to be purchased from the exercise of stock options or warrants. Diluted EPS excludes all dilutive potential shares if their effect is anti-dilutive. As at December 31, 2016, the Company has 6,882,443 (2015 – 15,548,043) potentially dilutive shares outstanding.

Comprehensive income (loss)

ASC 220, “Comprehensive Income” establishes standards for the reporting and display of comprehensive income and its components in the financial statements. For the years ended December 31, 2016, and 2015, the Company had no items impacting comprehensive income (loss).

Recent accounting pronouncements

In May 2014, FASB issued ASU 2014-09, Revenue from Contracts with Customers (Topic 606), which updated the guidance in ASC Topic 606, Revenue Recognition. The core principle of the guidance is that an entity should recognize revenue to depict the transfer of promised goods or services to customers in an amount that reflects the consideration to which the entity expects to be entitled in exchange for those goods or services. To achieve that core principle, an entity should identify the contract(s) with a customer, identify the performance obligations in the contract, determine the transaction price, allocate the transaction price to the performance obligations in the contract and recognize revenue when (or as) the entity satisfies a performance obligation. In August 2015, the FASB issued ASU 2015-14, Revenue from Contracts with Customers (Topic 606): Deferral of the Effective Date. The amendments in this update deferred the effective date for implementation of ASU 2014-09 by one year and is now effective for annual reporting periods beginning after December 15, 2017. Early application is permitted only as of annual reporting periods beginning after December 15, 2016, including interim reporting periods within that period. In April 2016, FASB issued ASU 2016-10, Revenue from Contracts with Customers (Topic 606): Identifying Performance Obligations and Licensing, and in May 2016, ASU 2016-12, Revenues from Contracts with Customers (Topic 606): Narrow-Scope Improvements and Practical Expedients both of which provide supplemental adoption guidance and clarification to ASU 2014-09. ASU 2016-10 and ASU 2016-12 must be adopted concurrently with the adoption of ASU 2014-09.

The Company has implemented all new accounting pronouncements that are in effect and that may impact its consolidated financial statements and does not believe that there are any other new accounting pronouncements that have been issued that might have a material impact on its financial position or results of operations.

44

3.Reverse Takeover Transaction

On March 4, 2015, Blueprint Corporate Services Inc. (“Planco”), VA Intl, VA Capital and VA LLC entered into an Arrangement Agreement, whereby all parties agreed to consummate the purchase of VA Intl by VA LLC by way of a share exchange, with VA LLC and VA Capital becoming wholly-owned subsidiaries of VA Intl. Pursuant to the Transaction the following transactions took place:

• VA Capital acquired from Planco 10,000 common shares of VA Intl, representing 100% of the outstanding shares of VA Intl (the “Purchased Shares”), for consideration of Cdn$10,000.

• The holders of the issued and outstanding VA Capital common shares received one VA Intl common share for each one VA Capital common share. As a result, VA Intl issued 11,400,000 common shares and 11,400,000 common share purchase warrants in exchange for all the outstanding common shares and share purchase warrants of VA Capital.  The terms of the VA Intl warrants are the same as the original terms of the VA Capital warrants.  This exchange has been accounted for as a recapitalization of VA Intl.

• VA Intl issued 300,000 of its common shares (the “Distribution Shares”) to Planco in exchange for 1,000 common shares of Planco (the “Exchange Shares”).

• The Distribution Shares were distributed to the shareholders of Planco on a one-to-one basis according to their shareholdings.

• The 10,000 Purchased Shares were cancelled.

• VA Intl issued 40,000,000 common shares to acquire 2,714,905 membership units of VA LLC, representing 100% of the outstanding membership units of VA LLC. In addition, VA Intl granted 3,587,418 stock options in exchange for the existing 1,781,418 membership unit purchase warrants of VA LLC. VA LLC also cancelled 1,214,357 existing membership unit purchase warrants for no consideration.

Upon completion of the Transaction on July 27, 2015, the consolidated entity continued to carry on the business of VA LLC and became a reporting issuer in Alberta and British Columbia.

As a result of the Transaction, the former members of VA LLC, for accounting purposes, were considered to have acquired control of VA Intl and VA Capital. Accordingly, the Transaction was accounted for as a reverse takeover that was not a business combination and effectively was a capital transaction of VA LLC. VA LLC, as a result of having obtained control of VA Intl and VA Capital, has been treated as the accounting parent company (legal subsidiary) and VA Intl and VA Capital have been treated as the accounting subsidiaries (legal parent) in these consolidated financial statements. As VA LLC was deemed to be the acquirer for accounting purposes, its assets, liabilities and operations since incorporation are included in these consolidated financial statements at their historical carrying values.  VA Intl and VA Capital’s results of operations have been included from July 27, 2015, the date of the Transaction.

For purposes of the Transaction, the consideration received was the fair value of the net assets of VA Intl and VA Capital, which on July 27, 2015 was $82,059. This amount was calculated as follows:

	$
Fair value of 11,700,000 shares issued at $0.22 per share		2,574,000
Fair value of 11,400,000 warrants issued		1,674,344
Aggregate fair value of consideration paid		4,248,344
Cash		113,011
Prepaids		7,713
Accounts payable and accrued liabilities		(38,665	)
Net assets acquired		82,059
Listing expense		4,166,285

The fair value of the shares issued was based on management’s assessment of the fair value per share.

The fair value of 11,400,000 warrants was estimated using the Black-Scholes option pricing model with the following assumptions: stock price - $0.22; exercise price - $0.08; risk-free interest rate – 0.85%; expected life – 0.7 years; expected volatility – 100%; and expected dividends - $nil.

45

4.Office Facilities and Equipment

	Computer equipment			Furniture and fixtures		Total
Cost		$			$		$
Balance at December 31, 2014		640,999			27,564		668,563
Additions		283,475			3,022		286,497
Dispositions		(111,654	)		-		(111,654	)
Balance at December 31, 2015		812,820			30,586		843,406
Additions		60,070			-		60,070
Balance at December 31, 2016		872,890			30,586		903,476
Accumulated Depreciation
Balance at December 31, 2014		358,065			26,767		384,832
Depreciation		151,672			877		152,549
Dispositions		(111,654	)		-		(111,654	)
Balance at December 31, 2015		398,083			27,644		425,727
Depreciation		197,404			2,942		200,346
Balance at December 31, 2016		595,487			30,586		626,073
Carrying Amounts
Balance at December 31, 2015		414,737			2,942		417,679
Balance at December 31, 2016		277,403			-		277,403

The depreciation expense recognized by the Company in each period presented is included in general and administrative expenses.

5.Intangible Assets

	Software development costs
Cost		$
Balance at December 31, 2014, 2015, and 2016		73,711
Accumulated Amortization
Balance at December 31, 2014		18,428
Amortization		9,214
Balance at December 31, 2015		27,642
Amortization		9,212
Balance at December 31, 2016		36,854
Carrying Amounts
Balance at December 31, 2015		46,069
Balance at December 31, 2016		36,857

The amortization expense recognized by the Company in each year presented is included in general and administrative expenses.

46

6.Accounts Payable and Accrued Liabilities

	December 31, 2016		December 31, 2015
		$		$
Trade payables and accrued liabilities		1,841,145		1,968,239
Payroll liabilities		303,735		264,804
Interest payable		-		7,816
Sales tax payable		12,984		22,697
Total accounts payable and accrued liabilities		2,157,864		2,263,556

7.Derivative Liabilities

The Company has share purchase warrants exercisable into common shares at an exercise price denominated in Canadian dollars while the Company’s functional currency is the U.S. dollar. As a variable amount of U.S. dollars are exercisable into a fixed number of common shares, the share purchase warrants are classified as derivative liabilities.

	$
Balance – December 31, 2014	-
11,400,000 warrants issued pursuant to the reverse takeover	1,674,344
Change in fair value of warrant derivative liabilities	(1,169,751	)
Balance – December 31, 2015	504,593
Transfer on exercise of share purchase warrants	(1,838,000	)
432,750 warrants issued pursuant to a private placement of units (Note 12b)	52,649
Change in fair value of warrant derivative liabilities	1,310,520
Balance – December 31, 2016	29,762

As at December 31, 2016 and 2015, the fair value of warrant derivative liabilities was estimated using the Black-Scholes option pricing model with the following assumptions:

	2016			2015
Risk-free interest rate		0.73	%		0.85	%
Expected life	1.03 years			0.6 years
Expected volatility		126	%		100	%
Expected dividends	$nil			$nil

8.Line-of-Credit

On February 13, 2014, the Company entered into a line-of-credit arrangement for $450,000 which was due on February 13, 2015 (the “LOC”). The due date has been extended on multiple occasions, with the current due date being May 25, 2017. The LOC bears interest at a variable interest rate equal to the Wall Street Journal Prime Rate plus 1% per annum. The LOC is secured by all assets of the Company and is guaranteed by two members of the Board of Directors.

47

9.Leases

The Company has equipment leases secured by specific computer equipment. The terms and the outstanding balances as at December 31, 2016 and 2015 are as follows:

	December 31, 2016		December 31, 2015
		$		$
Contrail Cloud, equipment lease repayable in monthly instalments of $2,517 including interest at 4.47% per annum, due in April 2018.		35,506		64,386
Western Equipment Finance, equipment lease repayable in monthly instalments of $1,985 including interest at 4.38% per annum, due in November 2020		76,526		96,064
De Lage Landen Financial Services, Inc., equipment lease payable in monthly instalments of $1,551 including interest at 2.07% per annum, due in June 2017.		8,765		26,295
SHI International, equipment lease repayable in monthly instalments of $802 including interest at 4.63% per annum, due in January 2018.		9,159		17,614
SHI International, equipment lease repayable in monthly instalments of $359 including interest at 4.63% per annum, due in March 2018.		4,730		8,515
Western Equipment Finance, equipment lease repayable in monthly instalments of $600 including interest at 4.58% per annum, due in September 2019		18,908		-
Western Equipment Finance, equipment lease repayable in monthly instalments of $1,305 including interest at 9.08%, due in June 2016.		-		6,154
Western Equipment Finance, equipment lease repayable in monthly instalments of $1,951 including interest at 6.67%, due in December 2016.		-		19,515
		153,594		238,543
Less: current portion		72,777		101,606
Long-term portion		80,817		136,937

Future minimum lease payments related to capital lease obligations are as follows:

	$
Not later than one year	84,471
Later than one year and not later than five years	95,514
Subtotal	179,985
Less: imputed interest	26,391
Subtotal	153,594
Less: current portion	72,777
Long-term portion	80,817

48

10.    Membership Units

VA LLC was authorized to issue 10,000,000 Class A and 2,000,000 Class B Membership units without par value.

As at December 31, 2014, VA LLC had 2,000,000 Class A Membership Units issued and outstanding. On June 15, 2015, 220,000 Cass A Membership Units were purchased from a related party (Note 16) and cancelled. On July 27, 2015, 1,195,791 membership unit purchase warrants were exercised and VA LLC issued 934,905 Class A Membership Units to the warrant holders. On July 27, 2015, in connection with the RTO (Note 3), VA Intl issued 40,000,000 common shares VA LLC’s members in exchange for all 2,714,905 issued and outstanding Class A Membership Units of VA LLC. The Company has no outstanding Class A Membership Units.

As at December 31, 2014, VA LLC had 40,000 Class B Membership Units issued and outstanding. On June 15, 2015, the 40,000 Cass B Membership Units were purchased from a related party and cancelled. The Company has no outstanding Class B Membership Units.

11.    Membership Unit Purchase Warrants

During the year ended December 31, 2014, VA LLC issued 269,760 membership unit purchase warrants (“MUW”s) to two officers to purchase 269,760 Class A membership units of the Company. In addition, VA LLC issued 517,940 MUWs to settle accrued compensation of $192,000 owed to two officers of the Company. The MUWs entitled the holders to purchase, in aggregate, 517,940 Class A membership units of VA LLC.

On June 15, 2015, 706,961 MUWs were purchased from a related party (Note 16) and cancelled.

On July 27, 2015, 1,195,791 MUWs were exercised and VA LLC issued 934,905 Class A Membership Units to the warrant holders.

On July 27, 2015, on completion of the RTO (Note 3), the Company granted 2,136,000 stock options in exchange for the cancellation of 330,000 MUWs exercisable at $0.60 per Class A Membership Unit. The Company recorded modification of an award expense of $324,596 as the fair value of the stock options was higher than the MUWs.

On July 31, 2015, the Company issued 1,451,418 stock options in exchange for the cancellation of 1,451,418 MUWs exercisable at $0.60 per Class A Membership Unit. The Company did not record modification of an award expense as the fair value of the stock options was lower than the MUWs.

On July 31, 2015, the Company cancelled 1,214,357 MUWs for no consideration.

The following table summarizes information about the MUWs at December 31, 2016 and 2015, and the changes for the years then ended:

	Number of warrants #			Weighted average exercise price $
Membership Unit Warrants outstanding – December 31, 2014		4,898,527			0.67
Cancelled		(1,921,318	)		0.71
Exercised		(1,195,791	)		0.71
Cancelled and exchanged for stock options		(1,781,418	)		0.60
Membership Unit Warrants outstanding – December 31, 2015 and 2016		-			-

49

12.    Share Capital

a)    Authorized:

 300,000,000 common shares without par value

b)   Financings:

On July 11, 2016, the Company closed a non-brokered private placement by issuing 865,500 units at a price of Cdn$0.48 per unit for aggregate gross proceeds of $316,607 (Cdn$415,440). Each unit consisted of one common share of the Company and one half of one common share purchase warrant. Each whole warrant entitles the holder to acquire one share at a price of Cdn$0.75 per share up to January 11, 2018. The fair value of the warrants embedded in the units was calculated as $52,649 and allocated to warrant derivative liabilities (Note 7). The Company paid a cash finder’s fee of $15,465 (Cdn$20,292), incurred issuance costs of $11,257 and issued 42,275 finders’ warrants with a fair value of $5,143. Each finders’ warrant entitles the holder thereof to acquire one share at a price of Cdn0.75 per share up to January 11, 2018. The fair value of the finders’ warrants was estimated using the Black-Scholes option pricing model with the following assumptions: stock price – Cdn$0.47; exercise price – Cdn$0.75; risk-free interest rate – 0.85%; expected life – 1.5 years; expected volatility – 100%; and expected dividends - $nil.

c)Options:

The Board of Directors has adopted a stock option plan (the “Stock Option Plan” or “Plan”) whereby a maximum of 10% of the issued and outstanding Shares, from time to time, may be reserved for issuance pursuant to the exercise of options. Under the terms of the Stock Option Plan, options may be granted only to: (i) employees, officers, directors, and consultants of the Company; (ii) employees, officers, directors, and consultants of an affiliate of the Company; and (iii) any other person deemed suitable by the Board to receive options to purchase common shares.

The exercise price of any option when granted may not be less than the greater of the closing market price of the common shares on: (a) the last trading day immediately preceding the date of grant of the option; and (b) the date of grant of the option; provided however, that if the common shares are not listed on any securities exchange, the exercise price may not be less than the fair market value of the common shares as may be determined by the Board of Directors on the day immediately preceding the date of the grant of such option.  The options are settled in shares.

The options are non-assignable and non-transferable. Options granted under the Stock Option Plan have a maximum term of five years and can only be exercised by the optionee as long as the optionee remains an eligible optionee pursuant to the Stock Option Plan or within 90 days (or as otherwise determined by the Board of Directors) after ceasing to be an eligible optionee, or, if the optionee dies, within one year from the date of the optionee’s death.

A summary of the status of the Company’s stock options outstanding as at December 31, 2016 and 2015 and the changes during the years then ended is presented below:

	Number of options outside the Plan #		Number of options within the Plan #			Weighted average exercise price $		Weighted average life (Years)
Stock options outstanding – December 31, 2014		-		-			-		-
Granted		-		4,962,418			0.10
Forfeited		-		(25,000	)		0.10
Stock options outstanding – December 31, 2015		-		4,937,418			0.10		4.58
Granted		1,085,474		384,526			0.32
Balance outstanding – December 31, 2016		1,085,474		5,321,944			0.15		3.81
Balance exercisable – December 31, 2016		-		4,148,043			0.10		3.58

50

12.    Share Capital (continued)

c)Options:

At December 31, 2016, stock options outstanding that entitled the holder thereof to acquire one share for each option held are as follows:

Expiry Date	Exercise Price $		Number of Options #
July 27, 2020	$	U.S.0.10			(1)2,136,000
July 31, 2020	$	U.S.0.10			(2)2,801,418
March 13, 2021	Cdn$0.46				(3)150,000
April 6, 2021	Cdn$0.47				(3)100,000
August 19, 2021	Cdn$0.44				(4)200,000
September 7, 2021	Cdn$0.40				(4)1,020,000
				6,407,418

⁽¹⁾ These stock options vested on the date of grant.

⁽²⁾ 1,451,418 of these stock options vested on the date of grant.  1,350,000 of these stock options vest as follows: 30% twelve months after July 31, 2015 and 8.75% every three months thereafter.

⁽³⁾ These stock options vest 12.5% every four months after the date of grant.

⁽⁴⁾ These stock options vest as follows: 30% twelve months after the date of grant and 8.75% every three months thereafter.

During the year ended December 31, 2016, the Company recorded stock-based compensation expense of $226,604 (2015 - $69,223) based on the vesting of stock options. The weighted average fair value of stock options granted during the year ended December 31, 2016 of $0.24 per option (2015 - $0.184) was estimated using the Black-Scholes option pricing model with the following weighted average assumptions:

	2016			2015
risk-free interest rate		1.38	%		1.50	%
Expected life	5 years			5 years
Expected volatility		100	%		100	%
Expected dividends	$nil			$nil

d)Warrants:

A summary of share purchase warrants outstanding as of December 31, 2016 and 2015 and the changes during the period then ended is presented below:

	Number of warrants #			Weighted average exercise price Cdn$		Weighted Average Life (Years)
Share purchase warrants outstanding – December 31, 2014		-			-		-
Issued pursuant to the reverse takeover		11,400,000			0.11
Share purchase warrants outstanding – December 31, 2015		11,400,000			0.11		0.56
Issued		475,025			0.75
Exercised		(6,202,339	)		0.12
Expired		(5,197,661	)		0.11
Share purchase warrants outstanding – December 31, 2016		475,025			0.75		1.03

51

d)Warrants (continued):

As at December 31, 2016, the Company had 475,025 share purchase warrants outstanding at an exercise price of Cdn$0.75 per share up to January 11, 2018. Of the share purchase warrants outstanding, 42,275 were allocated to equity (Note 12b) and 432,750 were allocated to derivative liabilities (Note 7).

e)Escrow Shares:

On October 8, 2015, the Company entered into an escrow agreement with certain shareholders of the Company.  35,774,990 common shares of the Company were placed into escrow. On December 22, 2015, an additional 4,088,716 common shares of the Company were placed into escrow. These escrow shares will be released as follows:

Date of Automatic Timed Release	Amount of Escrow Shares Released
On the date that the Company’s common shares were listed on the CSE, November 24, 2015	1/10 of the escrow shares
6 months after the listing date	1/6 of the remainder of the escrow shares
12 months after the listing date	1/5 of the remainder of the escrow shares
18 months after the listing date	1/4 of the remainder of the escrow shares
24 months after the listing date	1/3 of the remainder of the escrow shares
30 months after the listing date	1/2 of the remainder of the escrow shares
36 months after the listing date	The remainder of the escrow shares

In addition, there are 184,800 other shares that are in escrow that will be released as to 10% of the escrowed shares three months after the date that the common shares were listed on the CSE, 20% of the remainder of the escrowed shares 6 months after the listing date, 20% of the remainder of the escrowed shares 12 months after the listing date, and the remainder 18 months after the listing date.

On March 15, 2016, the Company cancelled 2,998,392 common shares which were being held in escrow for $nil consideration.  In conjunction with this transaction, existing shareholders agreed to voluntarily escrow 3,000,000 common shares on March 15, 2016, to be released in five equal blocks on a quarterly basis over the next 18 months.

As at December 31, 2016, 24,011,588 (2015 – 36,062,135) common shares remained in escrow.

13.Income Taxes

A reconciliation between the Company's income tax provision computed at the effective blended statutory tax rate of 38.01% (2015 - 38.12%) to the reported income tax provision is as follows:

	Years ended December 31,
	2016 $			2015 $
Expected tax expense recovery at statutory rate		(858,000	)		(1,305,000	)
Basis difference on LLC tax conversion		-			38,000
Items not deductible for tax purposes		511,000			1,142,000
Non taxable portion of capital loss		-			(1,000	)
Change in estimate		(22,000	)		(1,000	)
Change in valuation allowance		369,000			127,000
Provision for income taxes		-			-

52

13.Income Taxes (continued)

The significant components of the Company's net deferred tax assets and liabilities as at December 31, 2016 and 2015 are as follows:

	2016			2015
		$			$
Deferred tax assets
Allowance for doubtful accounts		3,000			16,000
Share-based payments		236,000			150,000
Non capital loss carry forward		268,000			43,000
Accelerated depreciation deduction carry forward		87,000			-
		594,000			209,000
Offset against deferred tax liabilities		(85,000	)		(70,000	)
Valuation allowance		(509,000	)		(139,000	)
Deferred tax assets					-
Deferred tax liabilities
Equipment		(85,000	)		(70,000	)
Offset with deferred tax assets		85,000			70,000
Deferred tax liabilities		-			-
Net deferred tax balance		-			-

As at December 31, 2016, the Company has estimated non capital loss for US Federal income tax purposes that may be carried forward to reduce taxable income derived in future years. Their expiry dates are as follows:

	$
2035	91,000
2036	522,000
	613,000

As at December 31, 2016, the Company has estimated non capital loss for Canadian income tax purposes that may be carried forward to reduce taxable income derived in future years. Their expiry dates are as follows:

	Cdn$
2033		57,000
2034		85,000
2035		35,000
2036		8,000
		185,000

53

14.Revenue

A breakdown of the revenue is presented below:

	Years ended December 31,
	2016 $		2015 $
Hardware and software sales and product support services		6,827,014		5,780,084
Managed services		1,612,192		1,341,142
Professional services		438,643		235,823
Other revenue		19,243		9,260
		8,897,092		7,366,309

15.Cost of Sales and Operating Expenses

A breakdown of the cost of sales is presented below:

	Years ended December 31,
	2016 $		2015 $
Cost of sales – hardware and software sales		5,397,993		4,281,846
Cost of sales – managed and professional services:
Salaries and consulting fees		1,055,032		770,667
Other		171,041		182,102
		6,624,066		5,234,615

A breakdown of the general and administrative expense is presented below:

	Years ended December 31,
	2016 $		2015 $
Bad debt expense		9,000		-
Depreciation and amortization		209,558		161,763
General and administrative		419,417		270,409
Professional fees		167,642		159,003
Salaries		375,294		287,013
Share-based payments (Note 12(c))		226,604		399,674
Shareholder communications		99,889		19,029
		1,507,404		1,296,891

A breakdown of the research and development expense is presented below:

	Years ended December 31,
	2016 $		2015 $
Consulting fees		38,033		-
Salaries		83,209		56,305
		121,242		56,305

54

15.Cost of Sales and Operating Expenses (continued)

A breakdown of the sale and marketing expense is presented below:

	Years ended December 31,
	2016 $		2015 $
Salaries and commissions		1,433,105		978,709
Travel		156,819		94,884
Other		137,502		50,296
		1,727,426		1,123,889

16.Related Party Transactions

The Company previously entered into two secured promissory notes with a Director of the Company pursuant to which the Director agreed to provide a revolving line of credit (the “LOC”) of an aggregate of up to $290,000. The amounts are secured by a subordinated, second priority lien on all of the assets of the Company, bear interest at 7% per annum and are due on demand.  As at December 31, 2016, the Company is indebted to the Director of the Company for $152,206 (2015 - $56,098) for advances provided to the Company under this loan and interest accrued on the outstanding balance.  During the year ended December 31, 2016, the Company recorded interest of $8,574 (2015 - $9,068).

On June 15, 2015, VA LLC issued $400,000 of promissory notes to a former officer of VA LLC in order to repurchase 706,961 MUWs (Note 11) and 220,000 Class A Units (Note 10). Pursuant to the promissory note agreements, the Company made a payment of $35,000 on June 15, 2015. The remaining principal amount of the note was payable in 36 equal blended instalments beginning July 1, 2015. During the year ended December 31, 2016, the terms of the promissory notes were amended. Effective February 29, 2016, the Company and the former officer agreed that the Company will pay 25% of the remaining principal balance as part of the resolution of a dispute between the parties.  The Company recorded a gain on debt settlement of $150,803, net of legal fees of $64,878. The promissory notes were repaid in six equal instalments beginning March 1, 2016 and ending on August 1, 2016. The promissory notes bore interest at 4.5% per annum. As at December 31, 2016, the balance of the promissory notes was $nil (2015 - $304,289).

Key management includes the Chief Executive Officer, the Chairman of the Board, the President, the Vice President of Managed Services and the former Chief Technology Officer as well as the directors of the Company. Compensation paid or payable to key management for services during the years ended December 31, 2016 and 2015 is as follows.

	Years ended December 31,
	2016 $		2015 $
Short-term benefits		700,631		648,041
Share-based payments		115,034		25,927
		815,665		673,968

17.Concentration Risk

The Company performs ongoing credit evaluations, does not require collateral, and establishes an allowance for doubtful accounts based on the age of the receivable and the specific identification of receivables the Company considers at risk. Most sales' payment terms are set in accordance with industry practice.

As at December 31, 2016, the Company had 62% of its accounts receivable owing from eight customers (2015 – 85% from eight customers).

During the year ended December 31, 2016, the Company had 50% of its revenue is from six customers (2015 – 57% from six customers).

55

18.Subsequent Events

The following transactions occurred subsequent to December 31, 2016:

Stock Option Grant

On March 23, 2017, the Company granted stock options to directors, officers, employees, and consultants of the Company which allow for the purchase of 1,585,000 common shares of the Company at a price of Cdn$0.30 per share for a period of five years. The options vest as to 30% one year after the date of grant and 8.75% every three months thereafter.

Invoice Purchase Agreement

On April 20, 2017, the Company entered into an Invoice Purchase Agreement which will provide the Company with working capital as well as credit and collections support for the related accounts receivables.

56

UNAUDITED FINANCIAL STATEMENTS

CONSOLIDATED STATEMENTS OF FINANCIAL POSITION

FOR THE SIX MONTHS ENDED JUNE 30, 2017 AND DECEMBER 31, 2016

	Notes		June 30, 2017 $			December 31, 2016 $
ASSETS
Current Assets
Cash				126,913			144,530
Accounts receivable		3		1,317,151			1,646,663
Other receivables				114,661			271,771
Prepaid expenses				165,695			150,253
Total Current Assets				1,724,420			2,213,217
Office facilities and equipment		4		250,308			277,403
Intangible assets		5		32,242			36,857
Total Assets				2,006,970			2,527,477
LIABILITIES
Current Liabilities
Accounts payable and accrued liabilities		6		2,315,102			2,157,864
Deferred revenue				159,625			84,000
Warrant derivative liabilities		7		12,136			29,762
Line-of-credit arrangements		8		450,000			445,000
Leases		9		55,833			72,777
Due to related parties		13		348,127			152,206
Total Current Liabilities				3,340,823			2,941,609
Leases		9		55,441			80,817
Total Liabilities				3,396,264			3,022,426
Going concern (Note 1) Subsequent events (Note 14)
STOCKHOLDERS’ DEFICIT
Share capital				6,284,418			6,284,418
Additional paid-in capital				1,670,669			1,664,490
Deficit				(9,344,381	)		(8,443,85	)
Total Stockholders’ Deficit				(1,389,294	)		(494,94	)
Total Liabilities and Stockholders’ Deficit				2,006,970			2,527,477

57

CONSOLIDATED STATEMENTS OF OPERATIONS AND COMPREHENSIVE LOSS

FOR THE THREE AND SIX MONTHS ENDED JUNE 30, 2017 AND 2016

			Three months ended June 30,						Six months ended June 30,
	Notes		2017 $			2016 $			2017 $			2016 $
Revenue		11		2,673,310			3,169,284			5,831,292			4,846,776
Cost of sales		12		(2,202,249	)		(2,401,741	)		(4,821,402	)		(3,618,634	)
Gross Profit				471,061			767,543			1,009,890			1,228,142
Expenses
General and administrative		12		253,968			360,142			682,769			678,431
Research and development		12		26,316			53,117			58,336			68,984
Sales and marketing		12		547,169			383,035			1,131,812			759,321
Total Expenses				827,453			796,294			1,872,917			1,506,736
Loss from Operations				(356,392	)		(28,751	)		(863,027	)		(278,594	)
Other Income (Expense)
Interest expense		13		(43,257	)		(14,451	)		(55,123	)		(32,594	)
Change in fair value of warrant derivative liabilities		7		(11,045	)		(458,527	)		17,626			(2,990,532	)
Gain on debt settlement, net				-			-			-			167,375
Net and Comprehensive Loss for the Period				(410,694	)		(501,729	)		(900,524	)		(3,134,345	)
Loss per share – basic and diluted				(0.01	)		(0.01	)		(0.02	)		(0.06	)
Weighted average number of shares outstanding				55,769,447			49,301,608			55,769,447			50,988,368

58

CONSOLIDATED STATEMENTS OF CASH FLOWS

FOR THE SIX MONTHS ENDED JUNE 30, 2017 AND 2016

	Six months ended June 30, 2017 $			Six months ended June 30, 2016 $
Cash Flows Used In Operating Activities
Net loss for the period		(900,524	)		(3,134,345	)
Adjustments to reconcile net loss to net cash used in operating activities:
Depreciation and amortization		68,469			111,106
Stock-based compensation		6,179			93,209
Change in fair value of warrant derivative liabilities		(17,626	)		2,990,532
Gain on debt settlement, net		-			(215,681	)
Changes in operating assets and liabilities:
Accounts receivable		329,512			(42,100	)
Other receivables		157,110			(86,338	)
Prepaid expenses		(15,442	)		(25,418	)
Accounts payable and accrued liabilities		211,189			166,424
Deferred revenue		75,625			(21,000	)
		(85,508	)		(163,611	)
Interest paid		(47,405	)		(28,294	)
Net Cash Used In Operating Activities		(132,913	)		(191,905	)
Cash Flows Used In Investing Activities
Purchase of office facilities and equipment		(36,759	)		(31,656	)
Net Cash Used In Investing Activities		(36,759	)		(31,656	)
Cash Flows Provided By Financing Activities
Proceeds from the exercise of warrants		-			356,651
Advances from line-of-credit arrangements		5,000			245,000
Repayment of line-of-credit arrangements		-			(295,000	)
Repayment of leases		(42,320	)		(54,633	)
Due to related parties		189,375			(91,612	)
Net Cash Provided By Financing Activities		152,055			160,406
Decrease In Cash		(17,617	)		(63,155	)
Cash – Beginning of the Period		144,530			250,812
Cash – End of the Period		126,913			187,657
Non-cash Investing and Financing Activities		-			-

59

Notes to Consolidated Financial Statements

1. Organization, Nature of Operations and Going Concern

VirtualArmour International Inc. (“VA Intl” or the “Company”) was incorporated on March 4, 2015 in the State of Colorado. The registered office of the Company is 8085 S. Chester Street, Suite 108, Centennial, Colorado, United States. Effective October 25, 2016, the Company changed its name from VirtualArmor International Inc. to VirtualArmour International Inc. The Company sells advanced networking and cybersecurity products and solutions to large enterprise and service provider markets. The solutions provided by the Company run the full project life cycle from initial design, through professional and managed services.  The Company delivers its products and services by working as a Business Partner with well-established and respected technology partners such as: Juniper Networks, IBM Security, Netskope, Palo Alto Networks and others. The Company’s shares trade on the Canadian Securities Exchange (the "CSE") under the symbol “VAI”.

The accompanying condensed consolidated financial statements of the Company should be read in conjunction with the consolidated financial statements and accompanying notes for the year ended December 31, 2016. In the opinion of management, the accompanying condensed interim consolidated financial statements reflect all adjustments of a recurring nature considered necessary to present fairly the Company’s financial position and the results of its operations and its cash flows for the periods shown.

These condensed interim consolidated financial statements have been prepared on a going concern basis which contemplates that the Company will continue in operation for the foreseeable future and will be able to realize its assets and discharge its liabilities in the normal course of business.  The Company had a net loss of $900,524 during the six months ended June 30, 2017.  As of June 30, 2017, the Company has a working capital deficiency of $1,616,403 and an accumulated deficit of $9,344,381.  A significant portion of the accumulated deficit is comprised of non-cash accounting expenses such as listing expense ($4,166,285).  The Company has funded losses with external debt and related party advances, share issuances and working capital.  The existence of these matters creates a material uncertainty that raises significant doubt about the Company’s ability to continue as a going concern.  The continuation of the Company as a going concern is dependent upon the obtaining of financing necessary to continue operations and, ultimately, on sustaining profitable operations.  These condensed interim consolidated financial statements do not include any adjustments relating to the recoverability and classification of recorded asset amounts, the amount and classification of liabilities and the reported revenue and expenses that would be necessary should the Company be unable to continue as a going concern.  Such adjustments could be material.

2. Significant Accounting Policies

Basis of presentation and principles of consolidation

These consolidated financial statements of the Company have been prepared in accordance with U.S. generally accepted accounting principles.

These consolidated financial statements include the financial statements of all subsidiaries subject to control by the Company, which include VA LLC and VA Capital and are presented in U.S. dollars. The functional currency of the Company and all of its wholly-owned subsidiaries is the U.S. dollar.

All inter-company transactions and balances are eliminated.

Recent accounting pronouncements

The Company has implemented all new accounting pronouncements that are in effect and that may impact its consolidated financial statements and does not believe that there are any other new accounting pronouncements that have been issued that might have a material impact on its financial position or results of operations.

60

3. Accounts Receivable

	June 30, 2017 $			December 31, 2016 $
Trade receivables		1,750,477			1,646,663
Less: amounts transferred to third party		(433,326	)		-
Total accounts receivables		1,317,151			1,646,663

On April 20, 2017, the Company entered into an Invoice Purchase Agreement with a third party (the “Purchaser”) which provides the Company with working capital as well as credit and collections support for accounts receivable. The Purchaser is paid fees and interest as compensation for providing advances of up to 85% of the value of trade receivables.  During the six months ended June 30, 2017, the Company incurred fees and interest of $17,962. As at June 30, 2017, the Company had $433,326 outstanding as advances from the Purchaser.

4. Office Facilities and Equipment

	Computer equipment		Furniture and Fixtures		Total
Cost:		$		$		$
Balance at December 31, 2016		872,890		30,586		903,476
Additions		22,690		14,069		36,759
Balance at June 30, 2017		895,580		44,655		940,235
Accumulated Depreciation:
Balance at December 31, 2016		595,487		30,586		626,073
Depreciation for the period		63,767		87		63,854
Balance at June 30, 2017		659,254		30,673		689,927
Carrying Amounts:
Balance at December 31, 2016		277,403		-		277,403
Balance at June 30, 2017		236,326		13,982		250,308

The depreciation expense recognized by the Company in each period presented is included in general and administrative expenses.

61

5. Intangible Assets

	Software Development Cost
Cost:		$
Balance at December 31, 2016 and June 30, 2017		73,711
Accumulated Amortization:
Balance at December 31, 2016		36,854
Amortization for the period		4,615
Balance at June 30, 2017		41,469
Carrying Amounts:
Balance at December 31, 2016		36,857
Balance at June 30, 2017		32,242

The amortization expense recognized by the Company in each period presented is included in general and administrative expenses.

6. Accounts Payable and Accrued Liabilities

	June 30, 2017		December 31,  2016
		$		$
Trade payables and accrued liabilities		2,030,424		1,841,145
Payroll liabilities (Note 13)		226,000		303,735
Sales tax payable		40,716		12,984
Fees and interest payable (Note 3)		17,962		-
Total accounts payable and accrued liabilities		2,315,102		2,157,864

7. Warrant Derivative Liabilities

The Company has share purchase warrants exercisable into common shares at an exercise price denominated in Canadian dollars while the Company’s functional currency is the U.S. dollar.  As a variable amount of U.S. dollars are exercisable into a fixed number of common shares, the share purchase warrants are classified as derivative liabilities.

	$
Warrant derivative liabilities – December 31, 2016	29,762
Change in fair value of warrant derivative liabilities	(17,626	)
Warrant derivative liabilities – June 30, 2017	12,136

62

7. Warrant Derivative Liabilities (continued)

As at June 30, 2017 and December 31, 2016, the fair value of warrant derivative liabilities was estimated using the Black-Scholes option pricing model with the following weighted average assumptions, assuming no expected dividends:

	2017			2016
Risk-free interest rate		0.73	%		0.73	%
Expected life	0.53 years			1.03 years
Expected volatility		71	%		126	%

8. Line-of-Credit Arrangements

On February 13, 2014, the Company entered into a line-of-credit (“LOC”) arrangement for $450,000 that has been renewed and extended on multiple occasions.  On August 25, 2017, the LOC matured and is now due.  The LOC bears interest at a variable interest rate equal to the Wall Street Journal Prime Rate plus 1.00% per annum.  The LOC is secured by all assets of the Company and is guaranteed by two members of the Board of Directors.

9. Leases

The Company has equipment leases secured by specific computer equipment.  The terms and the outstanding balances as at June 30, 2017 and December 31, 2016 are as follows:

	June 30, 2017		December 31, 2016
		$		$
Contrail Cloud, equipment lease repayable in monthly instalments of $2,517 including interest at 4.47% per annum, due in April 2018.		22,191		35,506
Western Equipment Finance, equipment lease repayable in monthly instalments of $1,985 including interest at 4.38% per annum, due in November 2020		66,757		76,526
De Lage Landen Financial Services, Inc., equipment lease payable in monthly instalments of $1,551 including interest at 2.07% per annum, due in June 2017.		-		8,765
SHI International, equipment lease repayable in monthly instalments of $802 including interest at 4.63% per annum, due in January 2018.		5,238		9,159
SHI International, equipment lease repayable in monthly instalments of $359 including interest at 4.63% per annum, due in March 2018.		2,838		4,730
Western Equipment Finance, equipment lease repayable in monthly instalments of $600 including interest at 4.58% per annum, due in September 2019		14,250		18,908
Subtotal		111,274		153,594
Less: current portion		55,833		72,777
Long-term portion		55,441		80,817

63

9. Leases (continued)

Future minimum lease payments related to capital lease obligations are as follows:

	$
Not later than one year	72,795
Later than one year and not later than five years	59,115
Subtotal	131,910
Less: imputed interest	20,636
	111,274
Less: current portion	55,833
Long-term portion	55,441

10. Share Capital

a) Authorized:

300,000,000 common shares without par value.

b) Options:

The Board of Directors has adopted a stock option plan (the “Stock Option Plan” or “Plan”) whereby a maximum of 10% of the issued and outstanding Shares, from time to time, may be reserved for issuance pursuant to the exercise of options. Under the terms of the Stock Option Plan, options may be granted only to: (i) employees, officers, directors, and consultants of the Company; (ii) employees, officers, directors, and consultants of an affiliate of the Company; and (iii) any other person deemed suitable by the Board to receive options to purchase common shares.

The exercise price of any option when granted may not be less than the greater of the closing market price of the common shares on: (a) the last trading day immediately preceding the date of grant of the option; and (b) the date of grant of the option; provided however, that if the common shares are not listed on any securities exchange, the exercise price may not be less than the fair market value of the common shares as may be determined by the Board of Directors on the day immediately preceding the date of the grant of such option. The options are settled in shares.

The options are non-assignable and non-transferable. Options granted under the Stock Option Plan have a maximum term of five years and can only be exercised by the optionee as long as the optionee remains an eligible optionee pursuant to the Stock Option Plan or within 90 days (or as otherwise determined by the Board of Directors) after ceasing to be an eligible optionee, or, if the optionee dies, within one year from the date of the optionee’s death.

64

10.  Share Capital (continued)

A summary of the status of the Company’s stock options outstanding as at June 30, 2017 and the changes during the period then ended is presented below:

	Outside the Plan Number of Options #		Within the Plan Number of Options #			Weighted Average Exercise Price $		Weighted Average Life (Years)
Stock options outstanding – December 31, 2016		1,085,474		5,321,944			0.15		3.81
Granted		2,210,000		-			0.25
Forfeited		-		(145,000	)		0.29
Balance outstanding – June 30, 2017		3,295,474		5,176,944			0.18		3.33
Balance exercisable – June 30, 2017		-		4,430,856			0.11		3.09

At June 30, 2017, the aggregate intrinsic value for outstanding stock options is $1,714,011.

At June 30, 2017, stock options outstanding that entitled the holder thereof to acquire one share for each option held are as follows:

Expiry Date	Exercise Price $	Number of Options
July 27, 2020	$0.10	(1)2,136,000
July 31, 2020	$0.10	(2)2,776,418
March 13, 2021	Cdn$0.46	(3)150,000
April 6, 2021	Cdn$0.47	(3)100,000
August 19, 2021	Cdn$0.44	(4)100,000
September 7, 2021	Cdn$0.40	(4)1,000,000
March 23, 2022	Cdn$0.30	(4)1,585,000
June 12, 2022	Cdn$0.405	(4)625,000
		8,472,418

⁽¹⁾ These stock options vested on the date of grant.

⁽²⁾ 1,451,418 of these stock options vested on the date of grant.  1,350,000 of these stock options vest as follows: 30% twelve months after July 31, 2015 and 8.75% every three months thereafter.

⁽³⁾ These stock options vest 12.5% every four months after the date of grant.

⁽⁴⁾ These stock options vest as follows: 30% twelve months after the date of grant and 8.75% every three months thereafter.

During the six months ended June 30, 2017, the Company recorded stock-based compensation of $6,683 (2016 - $93,209) based on the vesting of stock options.  The weighted average fair value of stock options granted during the six months ended June 30, 2017 of $0.192 (2016 - $0.263) per option was estimated using the Black-Scholes option pricing model with the following weighted average assumptions, assuming no expected dividends:

	2017			2016
Average risk-free interest rate		1.13	%		1.38	%
Expected life	5 years			5 years
Expected volatility		100	%		100	%

65

10.Share Capital (continued)

c) Warrants:

A summary of share purchase warrants outstanding as of June 30, 2017 and the changes during the period then ended is presented below:

	Number of Warrants #		Weighted Average Exercise Price Cdn$		Weighted Average Life (Years)
Share purchase warrants outstanding – December 31, 2016 and June 30, 2017		475,025		0.75		0.78

As at June 30, 2017, the Company had 475,025 share purchase warrants outstanding at an exercise price of Cdn$0.75 per share up to January 11, 2018.  Of the share purchase warrants outstanding, 42,275 were allocated to equity and 432,750 were allocated to warrant derivative liabilities (Note 7).

d) Escrow shares:

On October 8, 2015, the Company entered into an escrow agreement with certain shareholders of the Company.  35,774,990 common shares of the Company were placed into escrow.  On December 22, 2015, an additional 4,088,716 common shares of the Company were placed into escrow.  These escrow shares will be released as follows:

Date of Automatic Timed Release	Amount of Escrow Shares Released
On the date that the Company’s common shares were listed on the CSE, November 24, 2015	1/10 of the escrow shares
6 months after the listing date	1/6 of the remainder of the escrow shares
12 months after the listing date	1/5 of the remainder of the escrow shares
18 months after the listing date	1/4 of the remainder of the escrow shares
24 months after the listing date	1/3 of the remainder of the escrow shares
30 months after the listing date	1/2 of the remainder of the escrow shares
36 months after the listing date	The remainder of the escrow shares

In addition, there are 184,800 other shares that are in escrow that will be released as to 10% of the escrowed shares three months after the date that the common shares were listed on the CSE, 20% of the remainder of the escrowed shares 6 months after the listing date, 20% of the remainder of the escrowed shares 12 months after the listing date, and the remainder 18 months after the listing date.

On March 15, 2016, the Company cancelled 2,998,392 common shares which were being held in escrow for $nil consideration. In conjunction with this transaction, existing shareholders agreed to voluntarily escrow 3,000,000 common shares on March 15, 2016, to be released in five equal blocks on a quarterly basis over the next 18 months.

As at June 30, 2017, 17,189,391 (December 31, 2016 – 24,011,588) common shares remained in escrow.

e) Basic and diluted loss per share:

During the six months ended June 30, 2017, potentially dilutive common shares totaling 8,947,443 (2016 – 12,687,418) were not included in the calculation of diluted loss per share because their effect was anti-dilutive.

66

11. Revenue

A breakdown of the revenue is presented below:

	Three months ended June 30,				Six months ended June 30,
	2017 $		2016 $		2017 $		2016 $
Hardware and software sales, product support services and other revenue		2,024,253		2,650,286		4,777,202		3,912,154
Managed and professional services		649,057		518,998		1,054,090		934,622
		2,673,310		3,169,284		5,831,292		4,846,776

12. Cost of Sales and Operating Expenses

A breakdown of the cost of sales is presented below:

	Three months ended June 30,				Six months ended June 30,
	2017 $		2016 $		2017 $		2016 $
Cost of sales – hardware and software sales		1,826,523		2,044,672		4,070,972		3,007,377
Cost of sales – managed and professional services
Salaries and consulting fees		308,553		324,194		637,429		534,698
Other		67,173		32,875		113,001		76,559
		2,202,249		2,401,741		4,821,402		3,618,634

A breakdown of the general and administrative expense is presented below:

	Three months ended June 30,					Six months ended June 30,
	2017 $			2016 $		2017 $		2016 $
Depreciation and amortization		35,059			56,092		68,469		111,106
General and administrative		92,307			109,033		195,786		176,627
Professional fees		92,748			8,077		156,189		73,848
Salaries		91,315			120,989		211,706		198,323
Stock-based compensation (Note 10(b))		(68,548	)		50,873		6,179		93,209
Shareholder communications		11,087			15,078		44,440		25,318
		253,968			360,142		682,769		678,431

67

12.   Cost of Sales and Operating Expenses (continued)

A breakdown of the research and development expense is presented below:

	Three months ended June 30,				Six months ended  June 30,
	2017 $		2016 $		2017 $		2016 $
Consulting fees		6,327		26,395		11,606		26,395
Salaries		19,989		26,722		46,730		42,589
		26,316		53,117		58,336		68,984

A breakdown of the sale and marketing expense is presented below:

	Three months ended June 30,				Six months ended June 30,
	2017 $		2016 $		2017 $		2016 $
Salaries and commissions		449,947		302,350		889,237		619,288
Travel		57,166		53,545		111,931		82,903
Other		40,056		27,140		130,644		57,130
		547,169		383,035		1,131,812		759,321

13. Related Party Transactions

The Company previously entered into two secured promissory notes with a Director of the Company pursuant to which the Director agreed to provide a revolving line of credit (the “LOC”) of an aggregate of up to $290,000.  The amounts are secured by a subordinated, second priority lien on all of the assets of the Company, bear interest at 7% per annum and are due on demand.  As at June 30, 2017, the Company is indebted to the Director of the Company for $256,447 (December 31, 2016 - $152,206) for advances provided to the Company under this loan and interest accrued on the outstanding balance.  During the six months ended June 30, 2017, the Company recorded interest of $4,866 (2016 - $4,300).

On June 1, 2017, the Company entered into an additional promissory note with a director of the Company.  The promissory note is unsecured, bears interest at 7% per annum and is due on demand.  As at June 30, 2017, the Company is indebted to the Director of the Company for $91,680 for advances provided to the Company under this loan and interest accrued on the outstanding balance.  During the six months ended June 30, 2017, the Company recorded interest of $1,680.

In addition to the LOC and the promissory note, the Company has amounts owing to Directors of the Company of $204,000 (December 31, 2016 - $148,000) for compensation. These amounts are included in payroll liabilities (Note 6). The amounts owing are unsecured, non-interest bearing, and due on demand.

68

13. Related Party Transactions (continued)

Key management includes the Chief Executive Officer, the Chairman of the Board, the former President, the Vice President of Managed Services and the directors of the Company.  Compensation paid or payable to key management for services during the three and six months ended June 30, 2017 and 2016 is as follows.

	Three months ended June 30,					Six months ended June 30,
	2017 $			2016 $		2017 $			2016 $
Short-term benefits		138,490			164,990		307,636			347,292
Share-based payments		(63,678	)		16,157		(17,957	)		31,817
		74,812			181,147		289,679			379,109

14. Subsequent Events

Stock Option Forfeiture

Subsequent to June 30, 2017, a total of 2,112,000 stock options were forfeited unexercised.  962,000 stock options had an exercise price of $0.10 per share, 1,000,000 stock options had an exercise price of Cdn$0.40 and 150,000 stock options had an exercise price of Cdn$0.46.

Line-of-credit Maturity

The LOC (Note 8) matured on August 25, 2017 and is now due.

69

PART III

INDEX TO EXHIBITS

2.1# Articles of Incorporation, as amended through September 28, 2016.

2.2# Bylaws

3.1# Escrow Agreement between VirtualArmor International Inc., Computershare Investor Services Inc., and certain security holders dated October 8, 2015.

3.2# Form of Stock Restriction Agreement between the Company and certain shareholders.

*4.1 Form of Subscription Agreement.

4.2# Form of Canadian Private Placement Memorandum

6.1# Avanti Executive Suites Service Agreement between Avanti Executive Suites and the Company dated July 19, 2017.

6.2# Office Lease between VirtualArmor, LLC and DIG HP1, LLC dated April 15, 2015.

6.3# IBM Application Specific License Software Agreement between VirtualArmor LLC and International Business Machines Corporation dated December 31, 2014, and agreements thereunder. Portions of the IBM Application Specific License Software Agreement have been omitted pursuant to a confidential treatment order.

6.4.1# Direct Value Added Reseller Agreement between Juniper Networks and VirtualArmor LLC dated November 19, 2014. Portions of the Direct Value Added Reseller Agreement have been omitted pursuant to a confidential treatment order.

6.4.2# Amendment Two to Direct Value Added Reseller Agreement dated December 30, 2016.

6.5# Consulting Agreement between the Company and Todd Kannegieter dated May 1, 2015.

6.6# Consulting Agreement between the Company and SilverLeaf Consulting LLC and the Company dated May 1, 2015.

6.7# Consulting Agreement between the Company and VirtualArmour, Ltd. dated August 1, 2017.

6.8# Incentive Stock Option Plan, and form of agreements thereunder.

6.9# Secured Convertible Promissory Note issued by VirtualArmor, LLC to Todd Kannegieter in the principal amount of $250,000 on April 1, 2009.

6.10# Secured Convertible Promissory Note issued by VirtualArmor, LLC to Todd Kannegieter in the principal amount of $40,000 on November 1, 2011.

6.11.1# Secured Convertible Promissory Note issued by VirtualArmour International Inc. to Christopher T. Blisard in the principal amount of $90,000 on June 1, 2017.

6.11.2# Security Agreement between VirtualArmour International Inc. and Christopher T. Blisard dated June 1, 2017.

6.12# Professional Services Agreement between the Company and Donaldson Consulting Services, Inc. dated September 11, 2017.

*6.13 Secured Subordinated Promissory Note issued by VirtualArmour International Inc. to Peter-Christian Olivo in the principal amount of $100,000 on November 29, 2017.

*6.14 Security Agreement between VirtualArmour International Inc. and Peter-Christian Olivo dated November 29, 2017.

*6.15 Business Loan and Security Agreement between VirtualArmour International Inc. and On Deck Capital, Inc. in the principal amount of $200,000 dated January 5, 2018.

7.# Arrangement Agreement between VirtualArmor, LLC, VirtualArmor International Inc., Blueprint Corporate Services Ltd., VirtualArmor Capital, Inc., and Kyle Stevenson dated March 4, 2015.

8.# Form of Escrow Agreement between the Company and Burns, Figa & Will, PC.

*12. Opinion of Burns Figa & Will PC

13.1# Company Summary

13.2# Investor Presentation

# Previously filed.

* Filed herewith.

70

SIGNATURES

Pursuant to the requirements of Regulation A, the issuer certifies that it has reasonable grounds to believe that it meets all of the requirements for filing on Form 1-A and has duly caused this Offering Statement to be signed on its behalf by the undersigned, thereunto duly authorized, in the City of Centennial, State of Colorado, on February 5, 2018 with respect to the issuer's Chief Executive Officer and Chief Financial Officer.

VirtualArmour International Inc.
By:	/s/ Todd Kannegieter
	Todd Kannegieter Chief Executive Officer

By:	/s/ John Donaldson
	John Donaldson Chief Financial Officer

This Offering Statement has been signed by the following persons in the capacities and on the dates indicated.

/s/ Todd Kannegieter	February 5, 2018
Todd Kannegieter, Chief Executive Officer and Director

/s/ Christopher Blisard	February 5, 2018
Christopher Blisard, Director

/s/ James Bart Engstrom	February 5, 2018
James Bart Engstrom, Director

/s/ Robert Morrison	February 5, 2018
Robert Morrison, Director

/s/ Ryan Wade McKinney	February 5, 2018
Ryan Wade McKinney, Director

71

EX1A-4 SUBS AGMT

Exhibit 4.1

THE SECURITIES BEING OFFERED BY VIRTUALARMOUR INTERNATIONAL INC. HEREUNDER HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933 (THE "1933 ACT") OR APPLICABLE STATE BLUE SKY OR SECURITIES LAWS AND ARE OFFERED UNDER AN EXEMPTION FROM THE REGISTRATION PROVISIONS OF SUCH LAWS. ALTHOUGH AN OFFERING CIRCULAR HAS BEEN FILED WITH THE SECURITIES AND EXCHANGE COMMISSION, THAT OFFERING CIRCULAR DOES NOT INCLUDE THE SAME INFORMATION THAT WOULD BE INCLUDED IN A REGISTRATION STATEMENT UNDER THE 1933 ACT. THE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SEC, ANY STATE SECURITIES COMMISSION OR OTHER REGULATORY AUTHORITY, NOR HAVE ANY OF THE FOREGOING AUTHORITIES PASSED UPON THE MERITS OF THIS OFFERING OR THE ADEQUACY OR ACCURACY OF THE SUBSCRIPTION AGREEMENT OR ANY OTHER MATERIALS OR INFORMATION MADE AVAILABLE TO SUBSCRIBER IN CONNECTION WITH THIS OFFERING. ANY REPRESENTATION TO THE CONTRARY IS UNLAWFUL.

THE SECURITIES INVOLVE A VERY HIGH DEGREE OF RISK AND SHOULD BE PURCHASED ONLY BY PERSONS WHO CAN AFFORD THE LOSS OF THEIR ENTIRE INVESTMENT.

INVESTORS ARE REQUIRED TO REPRESENT IN THIS SUBSCRIPTION AGREEMENT THAT THEY MEET CERTAIN QUALIFICATION CRITERIA SET FORTH HEREIN.  IN ADDITION, INVESTORS MAY BE REQUIRED TO FURNISH WRITTEN EVIDENCE OF COMPLIANCE WITH ANY ADDITIONAL OR GREATER SUITABILITY STANDARDS AS MAY BE IMPOSED UNDER APPLICABLE SECURITIES LAWS.

THE ISSUER IS ONLY OFFERING THE SECURITIES IN BRITISH COLUMBIA, ONTARIO AND QUÉBEC, CANADA AND BARBADOS.

VIRTUALARMOUR INTERNATIONAL INC.

SUBSCRIPTION AGREEMENT – COMMON STOCK

Instructions

1. Complete and sign pages 1 and 2 of the Subscription Agreement.

2. Complete and sign the U.S. Accredited Investor Certificate attached as Schedule A to the Subscription Agreement.

3. Complete and sign the Canadian Accredited Investor Certificate attached as Schedule B to the Subscription Agreement (including, if applicable, the Risk Acknowledgement Form for Individual Accredited Investors attached as Appendix I to Schedule B).

4. Deliver a completed and signed copy of this Subscription Agreement and both Schedules to Burns Figa & Will PC, Attn: Victoria Bantz, 6400 S Fiddlers Green Circle, Suite 1000, Centennial, Colorado 80111, Email: vbantz@bfwlaw.com.

5. Remit payment to the Escrow Agent for the Subscription Proceeds by wire transfer price in United States dollars to the following escrow account:

Bank:

Account Name:

Account Number:

Routing Number:

Swift Code:

SUBSCRIPTION AGREEMENT

To: VirtualArmour International Inc. (the “Company”), a Colorado corporation, of 8085 S Chester Street, Suite 108, Centennial, Colorado 80112

The undersigned (the “Subscriber”) irrevocably tenders to the Company this subscription offer which, upon acceptance by the Company, will constitute an agreement of the Subscriber to subscribe for, take up, purchase and pay for and, on the part of the Company, to issue and sell to the Subscriber the number of shares of common stock (the “Shares”) of the Company at a price of US$____ per Share set out below on the terms and subject to the conditions set out in this Subscription Agreement.

Number of Shares:	___________
Total Purchase Price: (Minimum US$25,000)	US$___________

DATED this ____ day of ___, 2018.

__________________________________  (Name of Subscriber – please print)	__________________________________  (Subscriber’s Residential or Head Office Address)
by:  __________________________________      (Official Capacity or Title – please print)	_________________________________
__________________________________ Authorized Signature	__________________________________ (Telephone Number)
__________________________________ Please print name of individual whose signature appears above if different than the name of the Subscriber printed above.)	__________________________________ (E-mail Address)  __________________________________ (Tax ID # or Social Insurance Number)

2

Registration Instructions (if other than in name of Subscriber):	Delivery Instructions (if other than the address above):
__________________________________ Name	__________________________________ Account reference, if applicable
__________________________________ Account reference, if applicable	__________________________________ Contact Name
__________________________________Address	__________________________________ Address
__________________________________	__________________________________
	__________________________________ Telephone Number
	__________________________________ Facsimile Number

Present Ownership of Securities

The Subscriber either [check appropriate box]:

owns directly or indirectly, or exercises control or direction over, no common shares in the capital stock of the Company or securities convertible into common shares in the capital stock of the Company; or

owns directly or indirectly, or exercises control or direction over, __________ common shares in the capital stock of the Company, and convertible securities entitling the Subscriber to acquire an additional __________ common shares in the capital stock of the Company.

Insider Status

The Subscriber either [check appropriate box]:

is an “Insider” of the Company as defined in the Securities Act (British Columbia); or

is not an Insider of the Company.

Registrant Status

The Subscriber is either [check appropriate box]:

is a “Registrant” as defined in the Securities Act (British Columbia); or

is not a Registrant

3

This subscription is accepted by VirutalArmour International Inc. this _____ day of _______________, 2018.

VIRTUALARMOUR INTERNATIONAL INC.

Per: __________________________________Authorized Signatory

NOTE:  The information collected herein will be used by the Company in determining whether the Subscriber meets the requirements for the applicable prospectus and registration exemptions, for making certain filings with applicable regulatory authorities and for meeting its requirements under securities legislation with respect to the mailing of continuous disclosure materials of the Company to the Subscriber.  By signing this agreement, the Subscriber hereby consents to the collection and use of all of the Subscriber’s personal information contained herein by the Company for the above referenced purposes.

4

1. INTERPRETATION

1.1 In this Subscription Agreement, unless the context otherwise requires:

(a) “Applicable Securities Laws” means the securities legislation of the Private Placement Jurisdictions and the regulations, rules, administrative policy statements, instruments, blanket orders, notices, directions and rulings issued or adopted by the Securities Commissions, all as amended;

(b) “Canadian Accredited Investor” means an “accredited investor” within the meaning of NI 45-106;

(c) “Canadian Accredited Investor Certificate” means the certificate attached to this Subscription Agreement as Schedule B;

(d) “Canadian Private Placement Memorandum” means the Company’s Canadian Private Placement Memorandum dated _______, 2018;

(e) “Closing” means the completion of the purchase and sale of the Subscriber’s Shares pursuant to this Subscription Agreement;

(f) “Closing Date” means the date of completion of the sale of Shares under the Private Placement as may be determined by the Company;

(g) “Company” has the meaning set forth on page 1 of this Subscription Agreement;

(h) “Escrow Agent” means Burns Figa & Will PC;

(i) “Minimum Private Placement Size” has the meaning set forth in Section 2.1;

(j) “NI 45-106” means National Instrument 45-106 - Prospectus Exemptions published by the Canadian Securities Administrators;

(k) “Parties” or “Party” means the Subscriber, the Company or both, as the context requires;

(l) “Private Placement” has the meaning set forth in Section 2.1;

(m) “Private Placement Jurisdictions” means British Columbia, Ontario and Québec;

(n) “Regulation D” means Regulation D under the U.S. Securities Act;

(o) “SEC” means the United States Securities and Exchange Commission;

(p) “Securities Commissions” means the SEC and the provincial securities commission in each of the Private Placement Jurisdictions;

(q) “Share” has the meaning set forth on page 1 of this Subscription Agreement;

(r) “Shareholding Confirmation” means the written confirmation Subscribers will receive from the Transfer Agent following Closing;

(s) “Subscriber’s Shares” means those Shares which the Subscriber has agreed to purchase under this Subscription Agreement;

5

(t) “Subscription Agreement” means this subscription agreement to be entered into between the Company and the Subscriber for the purchase of Shares and includes all schedules and appendices attached hereto, in each case as they may be amended or supplemented from time to time;

(u) “Subscription Proceeds” means the gross proceeds from the sale of the Subscriber’s Shares;

(v) “Transfer Agent” means Computershare Investor Services Inc.;

(w) “United States” means the United States of America, its territories and possessions, any State of the United States and the District of Columbia;

(x) “U.S. Accredited Investor” means an “accredited investor” within the meaning of Rule 501(a) of Regulation D;

(y) “U.S. Accredited Investor Certificate” means the certificate attached to this Subscription Agreement as Schedule A;

(z) “U.S. Offering Circular" means the Form 1-A, as amended and supplemented, as filed with the SEC under the U.S. Securities Act;

(aa) “U.S. Securities Act” means the United States Securities Act of 1933, as amended.

1.2   Time is of the essence of this Subscription Agreement and will be calculated in accordance with the provisions of the Interpretation Act (British Columbia).

1.3   This Subscription Agreement is to be read with all changes in gender or number as required by the context.

1.4   The headings in this Subscription Agreement are for convenience of reference only and do not affect the interpretation of this Subscription Agreement.

1.5   Words importing the singular number only shall include the plural and vice versa, words importing the masculine gender shall include the feminine gender and words importing persons shall include firms and corporations and vice versa.

1.6   Unless otherwise indicated, all dollar amounts referred to in this Subscription Agreement are in lawful currency of the United States.

1.7   This Subscription Agreement is made under, shall be construed in accordance with, and shall be governed by the laws of the Colorado, without regard to conflicts of laws principles.

2. THE PRIVATE PLACEMENT

2.1This Subscription Agreement is being entered into pursuant to an offering of Shares at US$_____ per Share (the "Private Placement") pursuant to the terms of the US Offering Circular and, as applicable, the Canadian Private Placement Memorandum. There is a minimum investment of US$25,000 and purchase of ____ shares per investor in the Private Placement.  The maximum aggregate amount of the Private Placement is US$__________. The minimum aggregate amount of the Private Placement is US$300,000 (the "Minimum Private Placement Size").  All funds received in the Private Placement will be deposited with the Escrow Agent until Closing.  If the Issuer does not meet the Minimum Private Placement Size, the Subscription Proceeds will be released by the Escrow Agent to the Subscriber

2.2By executing this Subscription Agreement, the Subscriber offers to purchase from the Company that number of Shares set forth on the first page hereof, subject to the terms and conditions set out herein.  The Subscriber acknowledges that the offer is subject to: (a) the acceptance of this subscription by the Company, (b) delivery by the Subscriber of the documents set out in Section 5.2, (c) receipt of all necessary regulatory approvals, and (d) certain other terms and conditions as set forth herein.  Upon the Company’s acceptance of this subscription, this Subscription Agreement will constitute an agreement for the purchase by the Subscriber from the Company and for the Company to issue and sell to the Subscriber, the number of Shares set forth on the first page hereof on the terms and conditions set forth herein.

6

2.3The Subscriber acknowledges and agrees that the Company reserves the right, in its sole and absolute discretion, to accept or reject this subscription for Shares for any reason or no reason, in whole or in part, at any time prior to acceptance thereof, notwithstanding execution of this Subscription Agreement by or on behalf of the Investor.

2.4The Subscription Proceeds will be deposited with the Escrow Agent and upon the Company’s acceptance of this Subscription Agreement, it will issue the Subscriber’s Shares, provided that the Minimum Private Placement Size has been met.  If the Company does not meet the Minimum Private Placement Size, the Subscription Proceeds will be released by the Escrow Agent to the Subscriber.

2.5The Private Placement is not, and under no circumstance is to be construed as, a public offering of the Shares.  The Private Placement is not being made, and this subscription does not constitute an offer to sell or the solicitation of an offer to buy the Shares in any jurisdiction where, or to any person whom, it is unlawful to make such an offer or solicitation.

3. REPRESENTATIONS, WARRANTIES, COVENANTS AND ACKNOWLEDGEMENTS OF THE SUBSCRIBER

3.1           The Subscriber acknowledges, represents, warrants and covenants to and with the Company that:

(a) the Subscriber has (i) been furnished with, and has carefully read, the US Offering Circular and, as applicable, the Canadian Private Placement Memorandum and this Subscription Agreement, as well as all other documents referenced in the US Offering Circular and, as applicable, the Canadian Private Placement Memorandum concerning the terms and conditions of the offering and other matters pertaining to an investment in the Company and (ii) had the opportunity to obtain any additional information which the Company can acquire without unreasonable effort or expense that is appropriate to evaluate the merits and risks of an investment in the Company.  In considering a subscription for Shares, the Subscriber has not relied upon any representations made by, or other information (whether oral or written) furnished by or on behalf of, the Company or any officer, employee, agent or affiliate thereof pursuant to the US Offering Circular and, as applicable, the Canadian Private Placement Memorandum or otherwise, other than as set forth in this Subscription Agreement.  The Subscriber has carefully considered and has, to the extent it believes such discussion necessary, discussed with legal, tax, accounting and financial advisers the suitability of an investment in the Company in light of its particular tax and financial situation, and has determined that the Shares being subscribed for by it hereunder are a suitable investment for the Subscriber.  The Subscriber's decision to subscribe for the Shares has not been made in reliance upon any representation, warranty or guarantee as to the performance to be achieved by the Company;

(b) the Subscriber (either alone or together with any advisors retained by such person in connection with evaluating the merits and risks of prospective investments) has sufficient knowledge and experience in financial and business matters so as to be capable of evaluating the merits and risks of purchasing the Shares including the risks set forth in the US Offering Circular and, as applicable, the Canadian Private Placement Memorandum, and is able to bear the economic risk of such investment, including a complete loss.  The Subscriber understands that (i) no market for resale of any Share exists or is expected to develop and (ii) the Subscriber may not be able to liquidate its investment in the Company;

(c) the offer and sale of the Shares was made exclusively through the final version of the US Offering Circular and, as applicable, the Canadian Private Placement Memorandum and was not made through an advertisement of the Shares in any printed media of general and regular paid circulation, radio, television or telecommunications, including electronic display, or any other form of advertising in Canada;

(d) the Subscriber has reviewed and acknowledges the terms referred to below under the section entitled “Resale Restrictions”;

(e) the Subscriber is purchasing as principal, or is deemed to be purchasing as principal in accordance with Applicable Securities Laws, for its own account and not as agent for the benefit of another person, and in either case is purchasing the Subscriber’s Shares for investment only and not with a view to the resale or distribution of all or any of the Subscriber’s Shares;

7

(f) the Subscriber certifies that it is resident in the jurisdiction set out under “Subscriber’s Residential or Head Office Address” on page 1 of this Subscription Agreement which address is the residence or principal place of business of the Subscriber, and such address was not obtained or used solely for the purpose of acquiring the Subscriber’s Shares;

(g) the Subscriber understands that the Shares have not been registered under the U.S. Securities Act. The Subscriber also understands that the Shares are being offered and sold pursuant to an exemption from registration contained in the U.S. Securities Act based in part upon the Subscriber’s representations contained in this Subscription agreement;

(h) the Subscriber meets the definition of a U.S. Accredited Investor and has completed and signed the U.S. Accredited Investor Certificate attached as Schedule A hereto;

(i) the Subscriber is entitled under applicable Canadian securities laws to purchase the Shares without the benefit of a prospectus qualified under such securities laws, and without limiting the generality of the foregoing, the Subscriber is a Canadian Accredited Investor and has completed and signed the Canadian Accredited Investor Certificate attached as Schedule B hereto (including if applicable, the Risk Acknowledgement Form for Individual Accredited Investors attached as Appendix I to Schedule B);

(j) the subscription for the Shares by the Subscriber is being made pursuant to exemptions under, and does not contravene any of the, Applicable Securities Laws in the jurisdiction in which the Subscriber resides and does not give rise to any obligation of the Company to prepare and file a prospectus or similar document or to register the Shares or to be registered with or to file any report or notice with any governmental or regulatory authority or to otherwise comply with any continuous disclosure obligations under the Applicable Securities Laws of the jurisdiction in which the Subscriber resides;

(k) the Subscriber was not created or used solely to purchase or hold the Shares in reliance upon an exemption from the prospectus or registration requirements of Applicable Securities Laws. Without limiting the foregoing, if a resident of Canada  the Subscriber is not a person created or used solely to purchase or hold the Shares as a Canadian Accredited Investor as described in paragraph (m) of the definition of “accredited investor” in section 1.1 of NI 45-106;

(l) the Subscriber acknowledges and agrees that there is no ready public market for the Shares and that there is no guarantee that a market for their resale will ever exist. The Subscriber must bear the economic risk of this investment indefinitely and the Company has no obligation to list the securities on any market or take any steps (including registration under the U.S. Securities Act or the Securities Exchange Act of 1934, as amended) with respect to facilitating trading or resale of the Shares. The Subscriber acknowledges that it is able to bear the economic risk of losing subscriber’s entire investment in the Shares. The Subscriber also understands that an investment in the Company involves significant risks and has taken full cognizance of and understands all of the risk factors relating to the purchase of the Shares;

(m) no person has made to the Subscriber any written or oral representations:

(i) that any person will resell or repurchase any of the Shares;

(ii) that any person will refund the purchase price of any of the Shares; or

(iii) as to the future price or value of any of the Shares;

(n) the Subscriber will not become a "control person" (as defined in the Applicable Securities Laws) by virtue of the purchase of the Subscriber’s Shares, and does not intend to act in concert with any other person to form a control group of the Company;

(o) the Subscriber acknowledges that:

(i) no Securities Commission or similar regulatory authority has reviewed, approved or passed on the merits of the Shares;

8

(ii) there is no government or other insurance covering the Shares;

(iii) there are risks associated with the purchase of the Shares;

(iv) there are restrictions on the Subscriber’s ability to resell the Shares and it is the responsibility of the Subscriber to find out what those restrictions are and to comply with them before selling the Shares; and

(v) the Company has advised the Subscriber that the Company is relying on an exemption from the requirement to provide the Subscriber with a prospectus under the Applicable Securities Laws and, as a consequence of acquiring Shares pursuant to this exemption, certain protections, rights and remedies provided by the Applicable Securities Laws, including statutory rights of rescission or damages, will not be available to the Subscriber;

(p) this subscription has not been solicited in any other manner contrary to the Applicable Securities Laws, and the Subscriber acknowledges that the Subscriber will not receive an offering memorandum or other disclosure document in respect of the Company other than the US Offering Circular and, as applicable, the Canadian Private Placement Memorandum;

(q) there are no claims for brokerage commission, finders’ fees or similar compensation in connection with the transactions contemplated by this Subscription Agreement or related documents based on any arrangement or agreement binding upon the Subscriber. The Subscriber will indemnify and hold the Company harmless against any liability, loss or expense (including, without limitation, reasonable attorneys’ fees and out-of-pocket expenses) arising in connection with any such claim;

(r) none of the Subscription Proceeds are, to its knowledge, proceeds obtained or derived, directly or indirectly, as a result of illegal activities and that:

(i) the funds being used to purchase Shares and advanced by or on behalf of the Subscriber to the Escrow Agent do not represent proceeds of crime for the purpose of the Proceeds of Crime (Money Laundering) and Terrorist Financing Act (Canada) (the “PCMLTFA”);

(ii) the Subscriber is not a person or entity with or in respect of whom transactions may be prohibited under Part II.1 of the Criminal Code (Canada) or under the Regulations Implementing the United Nations Resolutions on the Suppression of Terrorism (the “RIUNRST”), the United Nations Al-Qaida and Taliban Regulations (the “UNAQTR”), the United Nations Côte d’Ivoire Regulations (the “Côte d’Ivoire Regulations”), the Regulations Implementing the United Nations Resolution on the Democratic People’s Republic of Korea (the “UNRDPRK”), the United Nations Democratic Republic of the Congo Regulations (the “Congo Regulations”), the Regulations Implementing the United Nations Resolution on Eritrea (the “RIUNRE”), the Regulations Implementing the United Nations Resolution on Iran (the “RIUNRI”), the United Nations Liberia Regulations (the “Liberia Regulations”), the Regulations Implementing the United Nations Resolutions on Somalia (the “RIUNRS”), the United Nations Sudan Regulations (the “Sudan Regulations”), the Regulations Implementing the United Nations Resolutions on Libya (the “Libya Regulations”), the Special Economic Measures (Burma) Regulations (the “Burma Regulations”), the Special Economic Measures (Iran) Regulations (the “Iran Regulations”), the Special Economic Measures (Zimbabwe) Regulations (the “Zimbabwe Regulations”), the Freezing Assets of Corrupt Foreign Officials (Tunisia and Egypt) Regulations (the “FACPA Tunisia and Egypt Regulations”), the Special Economic Measures (Syria) Regulations (the “Syria Regulations”), the Special Economic Measures (DPRK) Regulations (the “DPRK Regulations”), the Special Economic Measures (Russia) Regulations (the “Russia Regulations”), the Freezing Assets of Corrupt Foreign Officials (Ukraine) Regulations (“FACPA Ukraine”), the Special Economic Measures (Ukraine) Regulations (the “Ukraine Regulations”), the Regulations Implementing the United Nations Resolutions on the Central African Republic (the “CAR Regulations”), the Regulations Implementing the United Nations Resolution on Yemen (the “Yemen Regulations”), or the Special Economic Measures (South Sudan) Regulations (the “South Sudan Regulations”);

9

(iii) the Company may in the future be required by law to disclose the Subscriber's name and other information relating to the Subscriber and any purchase of the Shares, on a confidential basis, pursuant to the PCMLTFA, Criminal Code (Canada), RIUNRST, UNAQTR, UNRDPRK, RIUNRE, RIUNRI, RIUNRS, the Côte d'Ivoire Regulations, the Congo Regulations, the Liberia Regulations, the Sudan Regulations, the Libya Regulations, the Burma Regulations, the Iran Regulations, the Zimbabwe Regulations, the FACPA Tunisia and Egypt Regulations, the Syria Regulations, the DPRK Regulations, the Russia Regulations, FACPA Ukraine, the Ukraine Regulations, the CAR Regulations, the Yemen Regulations, the South Sudan Regulations or as otherwise may be required by applicable laws, regulations or rules, and by accepting delivery of the US Offering Circular and, as applicable, the Canadian Private Placement Memorandum, the Subscriber will be deemed to have agreed to the foregoing;

(iv) the funds representing the Subscription Proceeds which will be advanced by the Subscriber to the Issuer hereunder have been directly or indirectly derived from, or related to, any activity that may contravene federal, state, or international laws and regulations, including anti-money laundering laws and regulation including the Uniting and Strengthening America by Providing Appropriate Tools Required to Intercept and Obstruct Terrorism Act of 2001 (USA Patriot Act) and regulations of the U.S. Department of the Treasury’s Office of Foreign Assets Control (OFAC). The Subscriber is not acting directly or indirectly for or on behalf of any person, group, entity, or nation named by any Executive Order of the U.S. as a terrorist, Specially Designated National and Blocked Person (“SDN”) or other banned or blocked person, entity, nation, or transaction pursuant to any law, order, rule, or regulation that is enforced or administered by OFAC.  The Subscriber and its affiliates are not engaged in this transaction, directly or indirectly on behalf of, or instigating or facilitating this transaction, directly or indirectly on behalf of any SDN. To the best of the knowledge of the Subscriber, the Subscriber agrees that (a) none of the Subscription Proceeds (i) have been or will be derived directly or indirectly from or related to any activity that is deemed criminal under the laws of Canada, the United States of America, or any other jurisdiction, or (ii) are being tendered on behalf of a person or entity who has not been identified to the Subscriber and, (b) the Subscriber agrees to promptly notify the Issuer if it discovers that any of such representations cease to be true, and to provide the Issuer with appropriate information in connection therewith

(v) to the best of the Subscriber’s knowledge, none of the Subscription Proceeds are being tendered on behalf of a person or entity who has not been identified to the Subscriber; and

(vi) the Subscriber shall promptly notify the Company if the Subscriber discovers that any of the representations contained in this paragraph (q) cease to be true, and shall provide the Company with appropriate information in connection therewith;

(s) where required by Applicable Securities Laws, regulations or rules, the Subscriber will execute, deliver and file such reports, undertakings and other documents relating to the purchase of the Shares by the investor as may be required by such laws, regulations and rules, or assist the Company in obtaining and filing such reports, undertakings and other documents;

10

(t) the Subscriber acknowledges that it should consult its own legal, financial and tax advisers with respect to the tax consequences of an investment in the Shares in its particular circumstances and with respect to the eligibility of the Shares for investment by such Subscriber under relevant Canadian legislation and regulations, and that such Subscriber has not relied on the Company, any dealer or their authorized agents or the contents of the subscription documents, or any related offering materials authorized and approved by the Company, for distribution to the such Subscriber for any legal, financial or tax advice;

(u) the Subscriber does not have knowledge of a “material fact” or “material change” (as those terms are defined in the Applicable Securities Laws) in the affairs of the Company that has not been generally disclosed to the public, save knowledge of this particular transaction;

(v) the Subscriber's decision to tender this offer and purchase the Subscriber's Shares has not been made as a result of any verbal or written representation as to fact or otherwise made by or on behalf of the Company or any other person and is based entirely upon this Subscription Agreement, US Offering Circular and, as applicable, the Canadian Private Placement Memorandum and currently available public information concerning the Company;

(w) the Company will have the right to accept this subscription offer in whole or in part and the acceptance of this subscription offer will be conditional upon the sale of the Subscriber’s Shares to the Subscriber being exempt from the prospectus and registration requirements under applicable relevant securities legislation;

(x) the Subscriber has the legal capacity and competence to enter into and execute this Subscription Agreement and to take all actions required pursuant hereto and, if an individual is of full age of majority, in the jurisdiction in which the Subscriber is resident, and if the Subscriber is a corporation it is duly incorporated and validly subsisting under the laws of its jurisdiction of incorporation, and all necessary approvals by its directors, shareholders and others have been given to authorize the execution of this Subscription Agreement on behalf of the Subscriber;

(y) the entering into of this Subscription Agreement and the transactions contemplated hereby will not result in the violation of any of the terms and provisions of any law applicable to, or the constating documents of, the Subscriber, if applicable, or of any agreement, written or oral, to which the Subscriber, if applicable, may be a party or by which it is or may be bound;

(z) this Subscription Agreement has been duly executed and delivered by the Subscriber and constitutes a legal, valid and binding obligation of the Subscriber enforceable against the Subscriber;

(aa) the Subscriber has been advised to consult its own legal advisors with respect to tax matters and the applicable hold periods imposed in respect of the Shares by applicable securities legislation and regulatory policies of the Private Placement Jurisdiction in which the Subscriber resides and confirms that no representations by the Company have been made respecting the hold periods applicable to the Shares, and acknowledges that no representation has been made by the Company respecting the applicable hold periods imposed by the Applicable Securities Laws or other resale restrictions applicable to such Shares which restrict the ability of the Subscriber to resell such securities, that the Subscriber is solely responsible to find out what these restrictions are, that the Subscriber is solely responsible (and the Company is not in any way responsible) for compliance with applicable resale restrictions and that the Subscriber is aware that it may not be able to resell such securities except in accordance with limited exemptions under the Applicable Securities Laws;

(bb) the Subscriber is aware of the risks and other characteristics of the Shares and of the fact that the Subscriber may not be able to resell the Shares purchased by it except in accordance with the Applicable Securities Laws and regulatory policies and that the Shares may be subject to resale restrictions and may bear a legend to this effect;

(cc) if required by Applicable Securities Laws, policy or order or by any Securities Commission, stock exchange or other regulatory authority, the Subscriber will execute, deliver, file and otherwise assist the Company in filing, such reports, undertakings and other documents with respect to the issue of the Shares as may be required;

11

(dd) the Subscriber has such knowledge in financial and business affairs as to be capable of evaluating the merits and risks of its investment and is able to bear the economic risk of loss of its investment;

(ee) the Subscriber understands and agrees that there may be material tax consequences to it of an acquisition, holding, exercise or disposition of the Shares.  The Company gives no opinion and makes no representation with respect to the tax consequences to the Subscriber under any tax law of its acquisition, holding or disposition of Shares;

(ff) the Subscriber acknowledges that it is not aware of the payment of any commission or other remuneration to any person in connection with the execution of this transaction or the purchase of the Shares, other than as specifically provided in the US Offering Circular;

(gg) it acknowledges that the Company’s counsel is acting as counsel to the Company and not as counsel to the Subscriber;

(hh) the Subscriber agrees that the Company may be required by law or otherwise to disclose to regulatory authorities the identity of the Subscriber and if applicable the beneficial purchaser for whom the Subscriber may be acting; and

(ii) the Subscriber agrees that the above representations, warranties, covenants and acknowledgements in this subsection will be true and correct both as of the execution of this subscription and as of the day of Closing.

3.2    In addition, each Subscriber who is resident of Ontario represents to the Company that such Subscriber:

(a) has been notified by the Company:

(i) that the Company may be required to provide certain personal information (“personal information”) pertaining to the investor as required to be disclosed in Schedule I of Form 45-106F1 under NI 45-106 (including its name, address, telephone number and the number and value of any Shares purchased), which Form 45-106F1 may be required to be filed by the Company under NI 45-106;

(ii) that such personal information may be delivered to the Ontario Securities Commission (the “OSC”) in accordance with NI 45-106;

(iii) that such personal information is collected indirectly by the OSC under the authority granted to it under the securities legislation of Ontario;

(iv) that such personal information is collected for the purposes of the administration and enforcement of the securities legislation of Ontario; and

(v) that the public official in Ontario who can answer questions about the OSC’s indirect collection of such personal information is the Administrative Support Clerk at the OSC, Suite 1903, Box 55, 20 Queen Street West, Toronto, Ontario M5H 3S8, Telephone: (416) 593-3684; and

(b) has authorized the indirect collection of the personal information by the OSC.

3.3  In addition, each Subscriber who is resident of Barbados represents to the Company that such Subscriber:

(a) has been granted permission from the Exchange Authority of the Central Bank of Barbados, if required under Applicable Securities Laws or other applicable law, with respect to the purchase of Shares and has paid any applicable taxes and fees assessed:

(b) there are no other filing requirements, notices, fees or other permissions that are required with respect to the purchase of the Shares.

12

3.4     Further, the Subscriber acknowledges that its name, address, telephone number and other specified information, including the number of Shares it has purchased and the aggregate purchase price paid by the investor, may be disclosed to other Canadian securities regulatory authorities and may become available to the public in accordance with the requirements of applicable Canadian laws. By purchasing Shares, the investor consents to the disclosure of such information.

3.5     The representations, warranties, covenants and acknowledgements made by the Subscriber contained in this Subscription Agreement or contained in any document or certificate given in order to carry out the transactions contemplated hereby, will survive the Closing of the Private Placement and shall continue in full force and effect for the benefit of the Company, for a period of 24 months following the Closing Date. After such 24monthperiod, the Subscriber shall be released from all obligations and liabilities in respect of the representations, warranties and covenants made by the Subscriber and contained in this Subscription Agreement, except with respect to any claim made by the Company prior to the expiration of such period.

4. INDEMNITY

4.1    The representations, warranties, covenants and acknowledgements contained herein (including those given in any representation letter executed and delivered by the Subscriber pursuant to the provisions hereof) will survive Closing and the issuance of the Subscriber’s Shares and are made by the Subscriber with the intent that they be relied upon by the Company and its counsel in determining the Subscriber’s suitability as a purchaser of Shares, and the Subscriber hereby agrees to indemnify the Company and its affiliates, shareholders, directors, officers, employees, agents (including counsel), advisors and shareholders against all losses, claims, costs, expenses and damages or liabilities which any of them may suffer or incur as a result of reliance thereon.  The Subscriber undertakes to notify the Company immediately of any change in any representation, warranty or other material information relating to the Subscriber set forth in this Subscription Agreement which takes place prior to the Closing Date.

5. CLOSING

5.1   The Closing will take place on such date or dates to be determined by the Company.

5.2   Upon execution of this Subscription Agreement, the Subscriber will deliver to the Company:

(a) this Subscription Agreement, duly executed by the Subscriber;

(b) payment by wire transfer or ACH payment in United States dollars to the Escrow Agent pursuant to the instructions set forth above, for the total Subscription Proceeds;

(c) completed and duly executed Schedules A and B attached hereto;

(d) any further documentation as may be reasonably requested by the Company to confirm eligibility of the Subscriber under applicable securities laws; and

(e) any further documentation as required under securities legislation or by any applicable stock exchange or other regulatory authority and the Subscriber covenants and agrees to do so upon request by the Company.

5.3    At Closing, the Subscriber’s Shares will be issued by the Transfer Agent in book-entry only format and will be represented by a stock transfer ledger, maintained by the Transfer Agent. The Subscriber will receive a Shareholding Confirmation from the Transfer Agent following Closing.

5.4   Upon completion of the Closing, the Company is irrevocably entitled to the Subscription Proceeds, subject to the rights of the Subscriber under this Subscription Agreement and any applicable laws.

6. RESALE RESTRICTIONS

6.1   The Subscriber understands and acknowledges that the Shares will be subject to resale restrictions under Applicable Securities Laws, the terms of which may be endorsed on the Shareholding Confirmation as a printed legend, and the Subscriber agrees to comply with such resale restrictions.  The Subscriber also acknowledges that it has been advised to consult its own independent legal advisor with respect to the applicable resale restrictions and the Subscriber is solely responsible (and the Company is not responsible) for complying with such restrictions and the Company is not responsible for ensuring compliance by the Subscriber with the applicable resale restrictions.

13

6.2   The Subscriber understands and acknowledges that, until such time as the same is no longer required under applicable requirements of Applicable Securities Laws, the Shareholding Confirmation will bear the following legends in addition to any other legends that may be required to be endorsed thereon:

“UNLESS PERMITTED UNDER SECURITIES LEGISLATION, THE HOLDER OF THIS SECURITY MUST NOT TRADE THE SECURITY BEFORE ●”;

in such case with the ● completed to reflect the date that is four months plus one day following the date on which the Shares are issued.

7. MISCELLANEOUS

7.1   All Disputes arising out of or relating to this Subscription Agreement and all actions to enforce this Agreement shall be adjudicated in the state courts of Colorado or the federal courts sitting in the City and County of Denver, Colorado.  The parties hereto irrevocably submit to the jurisdiction of such courts in any suit, action or proceeding relating to any such Dispute.  So far as is permitted under applicable law, this consent to personal jurisdiction shall be self-operative and no further instrument or action, other than service of process or as permitted by law, shall be necessary in order to confer jurisdiction upon the undersigned in any such court. For the purposes of the foregoing, the term “Dispute” means all claims, disputes, or other controversies arising out of, or relating to, this Subscription Agreement, the purchase of the Shares, and any other claims, disputes, or controversies arising out of or relating to the management or operations under this Subscription Agreement or the purchase of the Shares as described herein.

7.2   The Subscriber agrees to make, execute and deliver any and all further assurances or other documents necessary to give full force and effect to the meaning and intent of this Subscription Agreement, including any such documentation that the Company may require to verify eligibility of the Subscriber under applicable securities laws.

7.3   This Subscription Agreement, which includes any interest granted or right arising under this Subscription Agreement, may not be assigned or transferred.

7.4   Except as expressly provided in this Subscription Agreement and in the agreements, instruments and other documents contemplated or provided for herein, this Subscription Agreement contains the entire agreement between the Parties with respect to the Shares and there are no other terms, conditions, representations or warranties whether expressed, implied, oral or written, by statute, by common law, by the Company or by anyone else.

7.5   The parties may amend this Subscription Agreement only in writing.

7.6   This Subscription Agreement enures to the benefit of and is binding upon the Parties and, as the case may be, their respective heirs, executors, administrators and successors.

7.7   A Party will give all notices or other written communications to the other Party concerning this Subscription Agreement by hand or by registered mail addressed to such other Party’s respective address which is noted on page 1 of this Subscription Agreement.

7.8   This Subscription Agreement may be executed in counterparts, each of which when delivered will be deemed to be an original and all of which together will constitute one and the same document and the Company will be entitled to rely on delivery by facsimile machine of an executed copy of this subscription, and acceptance by the Company of such facsimile copy will be equally effective to create a valid and binding agreement between the Subscriber and the Company as if the Company had accepted the subscription originally executed by the Subscriber.

14

7.9   The Subscriber hereby confirms that it has expressly requested that all documents evidencing or relating in any way to the sale of the Shares (including for greater certainty any purchase confirmation or any notice) be drawn up in the English language only.  Chaque investisseur canadien confirme par les présentes qu’il a expressément exigé que tous les documents faisant foi ou se rapportant de quelque manière que ce soit à la vente des valeurs mobilières décrites aux présentes (incluant, pour plus de certitude, toute confirmation d’achat ou tout avis) soient rédigés en anglais seulement.

REMAINDER OF PAGE LEFT INTENTIONALLY BLANK

15

SCHEDULE A

U.S. ACCREDITED INVESTOR CERTIFICATE

The categories listed herein contain certain specifically defined terms. Terms not otherwise defined herein have the meanings attributed to them in the Subscription Agreement and in Applicable Securities Laws. If you are unsure as to the meanings of those terms, or are unsure as to the applicability of any category below, please contact your legal advisor before completing this certificate.

In connection with the purchase by the undersigned Subscriber of the Shares, the Subscriber hereby represents, warrants, covenants and certifies to the Company (and acknowledges that the Company and its legal counsel is relying thereon) that:

(i) the Subscriber is purchasing the Shares as principal for its own account and not for the benefit of any other person;

(ii) the Subscriber is an “accredited investor” within the meaning of Applicable Securities Laws on the basis that the undersigned fits within one of the categories of an “accredited investor” reproduced below, beside which the undersigned has indicated the undersigned belongs to such category;

(iii) the Subscriber was not created or used solely to purchase or hold securities as an accredited investor; and

(iv) upon execution of this Schedule A by the Subscriber, this Schedule A shall be incorporated into and form a part of the Subscription Agreement.

The undersigned understands that the Company is relying on this information in determining to sell securities to the undersigned in a manner exempt from the prospectus requirements of the Applicable Securities Laws (as defined in the attached Subscription Agreement) and that the Company may require additional information or action to be taken by the undersigned to verify the undersigned’s eligibility for this exemption.

PLACE YOUR INITIALS BESIDE EACH CATEGORY BELOW WHICH APPLIES TO YOU.

___	(a)    an employee benefit plan within the meaning of Title I of the Employee Retirement Income Security Act of 1974, if the investment decision is made by a plan fiduciary, as defined in Section 3(21) of such Employee Retirement Income Security Act, which is either a bank, savings and loan association, insurance company or registered investment advisor, or if the employee benefit plan has total assets in excess of US$5,000,000 or, if a self-directed plan, with investment decisions made solely by persons that are otherwise accredited investors;
___	(b)    a private business development company as defined in Section 202(a)(22) of the Investment Advisors Act of 1940;
___	(c)    an organization described in Section 501(c)(3) of the Internal Revenue Code, or a corporation, Massachusetts or similar business trust, or a partnership (in each case not formed for the specific purpose of acquiring the Shares) with total assets in excess of US$5,000,000;

16

___	(d)    a natural person whose net worth, individually or jointly with spouse, exceeds US$1,000,000 at this time (excluding the value of that person’s primary residence and excluding any debt up to (and not exceeding) the value of the residence, but adding back any debt incurred within 60 days of this subscription unless incurred in connection with the purchase of the primary residence);
___	(e)    a natural person who had an individual income in excess of US$200,000 in each of the two most recent calendar years or joint income with spouse in excess of US$300,000 in each of those years and has a reasonable expectation of reaching the same level of income in the current calendar year;
___	(f)     a trust with total assets in excess of US$5,000,000 not formed for the specific purpose of acquiring the Shares, whose purchase is directed by a person who has such knowledge and experience in financial and business matters that he or she is capable of evaluating the merits and risks of an investment in the Shares;
___	(g)    a bank as defined in Section 3(a)(2) of the Act, or a savings and loan association or other institution as defined in Section 3(a)(5)(A) of the Act, whether acting in its individual or fiduciary capacity;
___	(h)    a broker or dealer registered pursuant to Section 15 of the Securities Exchange Act of 1934;
___	(i)     an insurance company as defined in Section 2(13) of the Act;
___	(j)     an investment company registered under the Investment Company Act of 1940 or a business development company as defined in Section 2(a)(48) of the Investment Company Act of 1940;
___	(k)    a Small Business Investment Company licensed by the U.S. Small Business Administration under Section 301(c) or (d) of the Small Business Investment Act of 1958;
___	(l)     a plan established and maintained by a state, its political subdivisions, or any agency or instrumentality of a state or its political subdivisions, for the benefit of its employees, if such plan has total assets in excess of US$5,000,000;
___	(m)   any entity in which all the equity owners are accredited investors (i.e., by virtue of their meeting any of the other tests for an “accredited investor”);
___	(n)    any director or executive officer of the Company;

17

The foregoing representations contained in this U.S. Accredited Investor Certificate are true and accurate as of the date of this Certificate and will be true and accurate as of the time of issuance of the Shares.  If any such representations shall not be true and accurate prior to the time of issuance of the Shares, the undersigned shall give immediate written notice of such fact to the Company and its legal counsel prior to the time of issuance of the Shares.

Dated:  __________________________	Signed:  _________________________________
_________________________________ Witness (If Subscriber is an Individual)	_________________________________________ Print the name of Subscriber
_________________________________ Print Name of Witness	_________________________________________ If Subscriber is a corporation, print name and title of Authorized Signing Officer

18

SCHEDULE B

CANADIAN ACCREDITED INVESTOR CERTIFICATE

The categories listed herein contain certain specifically defined terms. Terms not otherwise defined herein have the meanings attributed to them in the Subscription Agreement and in National Instrument 45-106 – Prospectus Exemptions (“NI 45-106”) promulgated under the Applicable Securities Laws. If you are unsure as to the meanings of those terms, or are unsure as to the applicability of any category below, please contact your legal advisor before completing this certificate.

In connection with the purchase by the undersigned Subscriber of the Shares, the Subscriber hereby represents, warrants, covenants and certifies to the Company (and acknowledges that the Company and its legal counsel is relying thereon) that:

(v) the Subscriber is purchasing the Shares as principal for its own account and not for the benefit of any other person;

(vi) the Subscriber is an “accredited investor” within the meaning of NI 45-106 on the basis that the undersigned fits within one of the categories of an “accredited investor” reproduced below, beside which the undersigned has indicated the undersigned belongs to such category;

(vii) the Subscriber was not created or used solely to purchase or hold securities as an accredited investor as described in paragraph (m) below; and

(viii) upon execution of this Schedule B by the Subscriber, this Schedule B shall be incorporated into and form a part of the Subscription Agreement.

The undersigned understands that the Company is relying on this information in determining to sell securities to the undersigned in a manner exempt from the prospectus requirements of the Applicable Securities Laws (as defined in the attached Subscription Agreement) and that the Company may require additional information or action to be taken by the undersigned to verify the undersigned’s eligibility for this exemption.

Note: Individual subscribers must complete the Risk Acknowledgement Form  included at Appendix I to this Schedule B unless they check item (j.1) below.

PLACE YOUR INITIALS BESIDE EACH CATEGORY BELOW WHICH APPLIES TO YOU.

IN COMPLETING THIS CERTIFICATE, PLEASE REVIEW THE DEFINITIONS WHICH APPEAR AT THE END OF THIS CERTIFICATE, AND THE GUIDANCE WHICH APPEARS IN THE FOOTNOTES TO THIS CERTIFICATE.

____	(a)   a Canadian financial institution (as defined under NI 45-106 or, if in Ontario, as described in paragraph 1, 2 or 3 of subsection 73.1 of the Securities Act (Ontario)), or an authorized foreign bank listed in Schedule III of the Bank Act (Canada);
____	(b)   the Business Development Bank of Canada incorporated under the Business Development Bank of Canada Act (Canada);
____	(c)   a subsidiary of any person referred to in paragraphs (a) or (b), if  the person owns all of the voting securities of the subsidiary, except the voting securities required by law to be owned by directors of that subsidiary;
____	(d)   a person registered under the securities legislation of a jurisdiction of Canada as an adviser or dealer (if in Ontario, except as otherwise prescribed by the regulations);

19

____	(e)   an individual registered under the securities legislation of a jurisdiction of Canada as a representative of a person referred to in paragraph (d);
____	(e.1) an individual formerly registered under the securities legislation of a jurisdiction of Canada, other than an individual formerly registered solely as a representative of a limited market dealer under one or both of the Securities Act (Ontario) or the Securities Act (Newfoundland and Labrador);
____	(f)   the Government of Canada or a jurisdiction of Canada, or any crown corporation, agency or wholly owned entity of the Government of Canada or a jurisdiction of Canada;
____	(g)  a municipality, public board or commission in Canada and a metropolitan community, school board, the Comité de gestion de la taxe scolaire de l’île de Montréal or an intermunicipal management board in Québec;
____	(h)  any national, federal, state, provincial, territorial or municipal government of or in any foreign jurisdiction, or any agency of that government;
____	(i)  a pension fund that is regulated by either the Office of the Superintendent of Financial Institutions (Canada) or a  pension commission or similar regulatory authority of a jurisdiction of Canada;
____	(j)  an individual who, either alone or with a spouse, beneficially owns financial assets having an aggregate realizable value that before taxes, but net of any related liabilities, exceeds CAD$1,000,000; (Note: If you initial next to this category you must also complete and sign the Risk Acknowledgement Form for Individual Accredited Investors below attached as Appendix I to this Schedule B)
____	(j.1) an individual who beneficially owns financial assets having an aggregate realizable value that, before taxes but net of any related liabilities, exceeds CAD$5,000,000;
____	(k)  an individual whose net income before taxes exceeded CAD$200,000 in each of the two most recent calendar years or whose net income before taxes combined with that of a spouse exceeded CAD$300,000 in each of the two most recent calendar years and who, in either case, reasonably expects to exceed that net income level in the current calendar year; (Note: If you initial next to this category you must also complete and sign the Risk Acknowledgement Form for Individual Accredited Investors below attached as Appendix I to this Schedule B)
____	(l) an individual who, either alone or with a spouse, has net assets of at least CAD$5,000,000; (Note: If you initial next to this category you must also complete and sign the Risk Acknowledgement Form for Individual Accredited Investors below attached as Appendix I to this Schedule B)
____	(m) a person, other than an individual or investment fund, that has net assets of at least CAD$5,000,000 as shown on its most recently prepared financial statements and was not created, or is used, solely to purchase or hold securities as an accredited investor;
____	(n) an investment fund that distributes or has distributed its securities only to: (i) a person that is or was an accredited investor at the time of the distribution, (ii) a person that acquires or acquired securities in the circumstances referred to in Sections 2.10 – Minimum Amount Investment and 2.19 – Additional Investment in Investment Funds of NI 45-106, or; (iii) a person described in paragraph (i) or (ii) that acquires or acquired securities under Section 2.18 – Investment Fund Reinvestments of NI 45-106;

20

____	(o) an investment fund that distributes or has distributed securities under a prospectus in a jurisdiction of Canada for which the regulator, or in Québec, the securities regulatory authority, has issued a receipt;
____	(p) a trust company or trust corporation registered or authorized to carry on business under the Trust and Loan Companies Act (Canada) or under comparable legislation in a  jurisdiction of Canada or a foreign jurisdiction, acting on behalf of a  fully managed account managed by the trust company or trust corporation, as the case may be;
____	(q) a person acting on behalf of a fully managed account managed by that person, if that person is registered or authorized to carry on business as an adviser or the equivalent under the securities legislation of a jurisdiction of Canada or a foreign jurisdiction;
____	(r) a registered charity under the Income Tax Act (Canada) that, in regard to the trade, has obtained advice from an eligibility adviser or an adviser registered under the securities legislation of the jurisdiction of the registered charity to give advice on the securities being traded;
____	(s) an entity organized in a foreign jurisdiction that is analogous to any of the entities referred to in paragraphs (a) through (d) or paragraph (i) in form and function; or
____	(t) a person in respect of which all of the owners of interests, direct, indirect,  or beneficial, except the voting securities required by law to be owned by directors, are persons that are Accredited Investors;
____	(u) an investment fund that is advised by a person registered as an adviser or a person that is exempt from registration as an adviser;
____	(v) a person that is recognized or designated by the securities regulatory authority or, except in Québec, the regulator as an accredited investor; or
____	(w) a trust established by an accredited investor for the benefit of the accredited investor’s family members of which a majority of the trustees are accredited investors and all of the beneficiaries are the accredited investor’s spouse, a former souse of the accredited investor or a parent, grandparent, brother, sister, child or grandchild of that accredited investor, of that accredited investor’s spouse or of that accredited investor’s former spouse.

DEFINED TERMS

“bank” means a bank named in Schedule I or II of the Bank Act (Canada).

“Canadian financial institution” means

(a) an association governed by the Cooperative Credit Associations Act (Canada) or a central cooperative credit society for which an order has been made under Section 473(1) of that Act, or

(b) a bank, loan corporation, trust company, trust corporation, insurance company, treasury branch, credit union, caisse populaire, financial services cooperative, or league that, in each case, is authorized by an enactment of Canada or a jurisdiction of Canada to carry on business in Canada or a jurisdiction of Canada.

“control person” means any person that holds or is one of a combination of persons, acting in concert by virtue of an agreement, arrangement, commitment or understanding, that holds

(a) a sufficient number of any of the securities of an issuer so as to affect materially the control of the issuer, or

(b) more than 20% of the outstanding voting securities of an issuer except where there is evidence showing that the holding of those securities does not affect materially the control of the issuer.

21

“director” means

(a) a member of the board of directors of a company or an individual who performs similar functions for a company, and

(b) with respect to a person that is not a company, an individual who performs functions similar to those of a director of a company.

“eligibility adviser” means

(a) a person that is registered as an investment dealer and authorized to give advice with respect to the type of security being distributed, and

(b) in Saskatchewan or Manitoba, also means a lawyer who is a practicing member in good standing with a law society of a jurisdiction of Canada or a public accountant who is a member in good standing of an institute or association of chartered accountants, certified general accountants or certified management accountants in a jurisdiction of Canada provided that the lawyer or public accountant must not

(i) have a professional, business or personal relationship with the issuer, or any of its directors, executive officers, founders, or control persons, and

(ii) have acted for or been retained personally or otherwise as an employee, executive officer, director, associate or partner of a person that has acted for or been retained by the issuer or any of its directors, executive officers, founders or control persons within the previous 12 months.

“executive officer” means, for an issuer, an individual who is

(a) a chair, vice-chair or president,

(b) a vice-president in charge of a principal business unit, division or function including sales, finance or production, or

(c) performing a policy-making function in respect of the issuer;

“financial assets” means

(a) cash,

(b) securities, or

(c) a contract of insurance, a deposit or an evidence of a deposit that is not a security for the purposes of securities legislation.

“founder” means, in respect of an issuer, a person who,

(a) acting alone, in conjunction, or in concert with one or more persons, directly or indirectly, takes the initiative in founding, organizing or substantially reorganizing the business of the issuer, and

(b) at the time of the trade is actively involved in the business of the issuer;

“fully managed account” means an account of a client for which a person makes the investment decisions if that person has full discretion to trade in securities for the account without requiring the client’s express consent to a transaction.

22

“investment fund” means a mutual fund or a non-redeemable investment fund, and, for greater certainty in British Columbia, includes: (i) an employee venture capital corporation that does not have a restricted constitution and is registered under Part 2 of the Employee Investment Act (British Columbia) and whose business objective is making multiple investments, and (ii) a venture capital corporation registered under Part 1 of the Small Business Venture Capital Act (British Columbia) whose business objective is making multiple investments.

“non-redeemable investment fund” means an issuer:

(a) whose primary purpose is to invest money provided by its securityholders;

(b) that does not invest for the purpose of

(i) exercising or seeking to exercise control of an issuer other than an issuer which is a mutual fund or a non-redeemable investment fund, or

(ii) being actively involved in the management of any issuer in which it invests, other than an issuer that is a mutual fund or a non-redeemable investment fund, and

(c) that is not a mutual fund.

“person” includes

(a) an individual,

(b) a corporation,

(c) a partnership, party, trust, fund, and an association, syndicate, or other organized group of persons, whether incorporated or not, and

(d) an individual or other person in that person’scapacity as a trustee, executor, administrator or personal or other legal representative.

“related liabilities” means

(a) liabilities incurred or assumed for the purpose of financing the acquisition or ownership of financial assets, or

(b) liabilities that are secured by financial assets.

“Schedule III bank” means an authorized foreign bank named in Schedule III of the Bank Act (Canada);

“spouse” means an individual who

(a) is married to another individual and is not living separate and apart within the meaning of the Divorce Act (Canada), from the other individual,

(b) is living with another individual in a marriage-like relationship, including a marriage-like relationship between individuals of the same gender, or

(c) in Alberta, is an individual referred to in paragraph (a) or (b), or is an adult interdependent partner within the meaning of the Adult Interdependent Relationships Act (Alberta).

23

“subsidiary” means an issuer that is controlled directly or indirectly by another issuer and includes a subsidiary of that subsidiary.

Affiliates and Control

1. an issuer is considered to be an “affiliate” of another issuer if one of them is the subsidiary of the other, or each of them is controlled by the same person.

2. a person (the “first person”) is considered to “control”another person (the “second person”) if

(a) the first person, directly or indirectly, beneficially owns or exercises control or direction over securities of the second person carrying votes which, if exercised, would entitle the first person to elect a majority of the directors of the second person, unless that first person holds the voting securities only to secure an obligation,

(b) the second person is a partnership, other than a limited partnership, and the first person holds more than 50% of the interests of the partnership, or

(c) the second person is a limited partnership and the general partner of the limited partnership is the first person.

24

The foregoing representations contained in this Canadian Accredited Investor Certificate are true and accurate as of the date of this Certificate and will be true and accurate as of the time of issuance of the Shares.  If any such representations shall not be true and accurate prior to the time of issuance of the Shares, the undersigned shall give immediate written notice of such fact to the Company and its legal counsel prior to the time of issuance of the Shares.

Dated:  __________________________	Signed:  _________________________________
_________________________________ Witness (If Subscriber is an Individual)	_________________________________________ Print the name of Subscriber
_________________________________ Print Name of Witness	_________________________________________ If Subscriber is a corporation, print name and title of Authorized Signing Officer

25

APPENDIX I TO SCHEDULE B

FORM 45-106F9RISK ACKNOWLEDGEMENT FORM ACCREDITED INVESTORS

INDIVIDUAL ACCREDITED INVESTORS ONLY

WARNING! This investment is risky.  Don’t invest unless you can afford to lose all the money you pay for this investment.

SECTION 1 TO BE COMPLETED BY THE ISSUER OR SELLING SECURITY HOLDER
1.  About your investment
Type of securities: Shares of common stock	Company:  VirtualArmour International Inc.
Purchased from: The Company
SECTIONS 2 TO 4 TO BE COMPLETED BY THE PURCHASER
2.  Risk acknowledgement
	Your Initials:
This investment is risky.  Initial that you understand that:
Risk of loss - You could lose your entire investment of US$_________ [Instruction: Insert the total dollar amount of the investment.]
Liquidity risk - You may not be able to sell your investment quickly - or at all.
Lack of information -You may receive little or no information about your investment
Lack of advice - You will not receive advice from the salesperson about whether this investment is suitable for you unless the salesperson is registered.  The salesperson is the person who meets with you, or provides information to, you about making this investment.  To check whether the salesperson is registered, go to www.aretheyregistered.ca.
3.  Accredited investor status
You must meet at least one of the following criteria to be able to make this investment.  Initial the statement that applies to you.  (You may initial more than one statement.)  The person identified in section 6 is responsible for ensuring that you meet the definition of accredited investor.  That person, or the salesperson identified in section 5, can help you if you have questions about whether you meet the criteria:	Your Initials:
·Your net income before taxes was more than CAD$200,000 in each of the 2 most recent calendar years and you expect it to be more than CAD$200,000 in the current calendar year.  [You can find your net income taxes on your personal income tax return].

26

·Your net income before taxes combined with your spouse’s was more than CAD$300,000 in each of the 2 most recent calendar years, and you expect your combined net income before taxes to be more than CAD$300,00 in the current calendar year.
·Either alone or with your spouse, you own more than CAD$1 million in cash and securities, after subtracting any debt related to the cash and securities.
·Either alone or with your spouse, you have net assets of worth more than CAD$5 million. (Your net assets are your total assets (including real estate) minus your total debt).
4.  Your name and signature
By signing this form, you confirm that you have read this form and you understand the risks of making this investment as identified in this form.
First and last name (please print):
Signature:	Date:
SECTION 5 TO BE COMPLETED BY THE SALESPERSON
5.  Salesperson information
[Instruction:  The salesperson is the person who meets with, or provides information to, the purchaser with respect to making this investment.  That could include a representative of the issuer or selling security holder, a registrant or a person who is exempt from the registration requirement.]
First and last name of salesperson (please print):  Nick Dinsmoor
Telephone: 720-644-0913	Email: nick.dinsmoor@virtualarmour.com
Name of firm (if registered): N/A
SECTION 6 TO BE COMPLETED BY THE ISSUER OR SELLING SECURITY HOLDER
6.  For more information about this investment
VirtualArmour International Inc.8085 S Chester Street, Suite 108Centennial, CO 80112 http://www. virtualarmour.com For more information about prospectus exemptions, contact your local securities regulator.  You can find contact information at www.securities-administrators.ca

27

EX1A-6 MAT CTRCT.13

Exhibit 6.13

THIS NOTE IS SUBORDINATED TO THE PRIOR PAYMENT OF THE OBLIGATIONS TO THE HOLDER OF THE SENIOR DEBT.  ANY ASSIGNMENT OF THIS NOTE SHALL BE SUBJECT TO SUCH SUBORDINATION.

SECURED SUBORDINATED PROMISSORY NOTE

$100,000 November 29, 2017 Boulder, CO

For value received VirtualArmor International, Inc., a Colorado corporation (the "Company"), promises to pay to Peter-Christian Olivo, with its principal office at 1615 7^th Street, Boulder, CO 80302,or its assigns ("Holder") the principal sum of One Hundred Thousandand No/Dollars (US$100,000) ("Principal").

1.           Maturity Date; Prepayment.

(a)        Maturity Date.  The maturity date is March 31, 2018 (the "Maturity Date").  The Company shall pay the entire remaining Principal balance plus accrued and unpaid interest on the Maturity Date.

(b)        Prepayment. The Company may prepay this Note, in whole, on February 28, 2018.

2.           Interest.  Interest shall accrue on this Note at the amount of $8,500 (Eight-thousand, Five Hundred Dollars and 00/100) if paid on the Maturity Date and at the amount of $7,500 (Seven-thousand, Five Hundred Dollars and 00/100) if paid on or before February 28, 2018.

3.           Default.  Each of the following events shall be an "Event of Default" hereunder:

(a)        The Company files any petition or action for relief under any bankruptcy, reorganization, insolvency or moratorium law or any other law for the relief of, or relating to, debtors, now or hereafter in effect, or makes any assignment for the benefit of creditors or takes any corporate action in furtherance of any of the foregoing;

(b)        An involuntary petition is filed against the Company (unless such petition is dismissed or discharged within 60 days) under any bankruptcy statute now or hereafter in effect, or a custodian, receiver, trustee, assignee for the benefit of creditors (or other similar official) is appointed to take possession, custody or control of any property of the Company;

(c)        The Company fails to pay, when due, any amount outstanding under this Note, and does not cure such failure within ten days of the date when due; or

(d)        The Company fails to perform any of its covenants or obligations in this Note and does not cure such failure within 30 days of notice thereof.

Upon the occurrence of any Event of Default, all unpaid Principal, accrued interest and other amounts owing hereunder shall automatically be immediately due, payable and collectible by Holder pursuant to applicable law.

4.           Acceleration; Waiver of Presentment.  If an Event of Default occurs and is continuing, in addition to the rights described below, Holder may declare any and all amounts owing under this Note to be immediately due and payable without requirement of any demand for payment, dishonor, notice of dishonor, protest, notice of protest or other declaration, all of which are expressly waived by the Company.  Holder may waive any Event of Default or acceleration resulting therefrom.

1

5.           Security.  As set forth in that certain Security Agreement between the Company and Holder dated of even date herewith.

6.           Miscellaneous.

(a)        Successors and Assigns.  The terms and conditions of this Note shall inure to the benefit of and be binding upon the respective successors and assigns of the parties.  Notwithstanding the foregoing, the Company may not assign, by operation of law or otherwise, its rights or obligations under this Note without the prior written consent of the Holder.

(b)        Governing Law.  This Note shall be governed by and construed under the laws of the State of Colorado as applied to agreements among Colorado residents, made and to be performed entirely within the State of Colorado, without giving effect to conflicts of laws principles.  The parties agree that any action brought by either party under or in relation to this Note, including without limitation to interpret or enforce any provision of this Note, shall be brought in, and each party agrees to and does hereby submit to the jurisdiction and venue of, any state or federal court located in the County of Denver, Colorado.

(c)        Titles and Subtitles.  The titles and subtitles used in this Note are used for convenience only and are not to be considered in construing or interpreting this Note.

(d)        Expenses.  If action is instituted to collect this Note, the Company promises to pay all costs and expenses, including, without limitation, reasonable attorneys' fees and costs, incurred in connection with such action.

(e)        Notices. All notices required or permitted hereunder shall be in writing and shall be deemed effectively given: (a) upon personal delivery to the party to be notified, (b) when sent by confirmed electronic mail or facsimile if sent during normal business hours of the recipient, if not, then on the next business day, (c) five (5) days after having been sent by registered or certified mail, return receipt requested, postage prepaid, or (d) one (1) day after deposit with a nationally recognized overnight courier, specifying next day delivery, with written verification of receipt.  All communications shall be sent to the Company at VirtualArmor International, Inc, 8085 S. Chester Street, Centennial, CO 80112, Attention: CFO, and to the Holder at the address set forth above.

(f)        Usury. In the event any interest is paid on this Note which is deemed to be in excess of the then legal maximum rate, then that portion of the interest payment representing an amount in excess of the then legal maximum rate shall be deemed a payment of Principal and applied against the Principal of this Note.

(g)        Modification; Waiver.  No modification or waiver of any provision of this Note or consent to departure therefrom shall be effective without the written consent of the Company and the Holder, and then shall be effective only in the specific instance and for the specific purpose for which it was given; provided, however, that no such amendment, waiver or modification shall reduce the principal amount of this Note without the Holder's written consent.

7.           Subordination.  The obligations evidenced by this Note are hereby expressly subordinated in right of payment that the Company owes to owes to LSQ Funding Group, L.C. for their financing of the Debtor's accounts receivables and to On Deck Capital, Inc. for their outstanding business loan to the Debtor.

 [signature page follows]

2

In Witness Whereof, the parties have caused this Secured Subordinated Promissory Note to be issued as of the date first written above.

DEBTOR:

VirtualArmour International, Inc.

By: __________________________

      Todd L. Kannegieter

Title: _________________________

Holder:

Peter-Christian Olivo

Signature: ______________________

3

EX1A-6 MAT CTRCT.13

Exhibit 6.13

SECURITY AGREEMENT

DATE: November 29,2017

PARTY: Peter-Christian Olivo, 1615 7^th Street, Boulder, CO 80302 (the "Secured Party")   VirtualArmour International, Inc, 8085 S. Chester Street, Centennial, CO 80112;  Taxpayer Identification Number: 81-1256856 ("Debtor")

AGREEMENTS:

IN CONSIDERATION of good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, the Party agree as follows:

1.      Grant of Security Interest and Collateral.  In order to secure payment and performance of each and every debt, liability and obligation which Debtor may now or at any time hereafter owe to Secured Party arising under that certain Secured Promissory Note of Debtor made payable to the Secured Party (the "Note") (together with this Security Agreement the "Loan Documents"); whether such debt, liability or obligation now exists or is hereafter created or incurred, whether it arises under or is evidenced by this Security Agreement (all such debts, liabilities and obligations and any amendments, extensions, renewals or replacements thereof are herein collectively referred to as the "Obligations"), Debtor hereby grants Secured Party a security interest (the "Security Interest") in the following property of Debtor (the "Collateral"):

(a)      all Goods, Accounts, Equipment, Inventory, contract rights or rights to payment of money, leases, license agreements, franchise agreements, General Intangibles, Commercial Tort Claims, Documents, Instruments (including any promissory notes), Chattel Paper (whether tangible or electronic), cash, Deposit Accounts, fixtures, Letters of Credit Rights (whether or not the letter of credit is evidenced by a writing), securities, and all other Investment Property, supporting obligations, and financial assets, whether now owned or hereafter acquired, wherever located (as such capitalized terms may be defined in the Uniform Commercial Code as in effect in the state of Colorado from time to time (the "UCC")); and

(b)      all Debtor's Books (as such term may be defined in the UCC) relating to the foregoing, and any and all claims, rights and interests in any of the above and all substitutions for, additions, attachments, accessories, accessions and improvements to and replacements, products, proceeds and insurance proceeds of any or all of the foregoing.

2.      Representations, Warranties and Agreements.  Debtor represents, warrants and agrees that:

(a)      Debtor is a corporation duly organized, validly existing and in good standing under the laws of the State of Colorado.  This Security Agreement has been duly and validly authorized by all necessary corporate action.  Debtor has the requisite corporate power and authority to execute this Security Agreement, to perform Debtor's obligations hereunder and to subject the Collateral to the Security Interest.  Debtor's organizational identification and taxpayer identification numbers are shown at the beginning of this Security Agreement.  Debtor will give at least 10 days' advance written notice to Secured Party of any change in Debtor's name.

1

(b)      Debtor's chief place of business is located at the address shown at the beginning of this Security Agreement, and Debtor's records concerning the Collateral are kept at such address.  The Collateral is located at the address shown at the beginning of this Security Agreement and at the addresses set forth on Exhibit A attached hereto.  Debtor will give at least 10 days' advance written notice to Secured Party of any change in Debtor's jurisdiction of organization or chief place of business and any change in or addition of any location of the Collateral.

(c)      Except for Permitted Liens (as defined below) and the Security Interest, Debtor has (or will have at the time Debtor acquires rights in Collateral hereafter arising) and will maintain absolute title to each item of Collateral free and clear of all security interests, liens and encumbrances and will defend the Collateral against all claims or demands of all persons other than Secured Party and the holders of Permitted Liens.  For purposes of this Security Agreement, the term "Permitted Liens" shall mean:

(i)      liens arising under this Agreement or the other Loan Documents and any liens existing on the date of this Security Agreement and set forth on Exhibit A attached hereto;

(ii)     liens for taxes, fees, assessments or other governmental charges or levies, either not delinquent or being contested in good faith by appropriate proceedings, and so long as Debtor's title to its property is not materially adversely affected and its use of such property in the ordinary course of business is not materially interfered with;

(iii)    purchase money liens and capital leases (A) on equipment acquired or held by Debtor and incurred for financing the acquisition of the equipment, or (B) existing on equipment when acquired, if the lien is confined to the property and improvements and the proceeds of the equipment;

(iv)    leases or subleases and non-exclusive licenses or sublicenses granted in the ordinary course of Debtor's business, if the leases, subleases, licenses and sublicenses permit granting the Security Interest; and

(v)     liens incurred in the extension, renewal or refinancing of the indebtedness secured by liens described in (i) through (iv), but any extension, renewal or replacement lien must be limited to the property encumbered by the existing lien and the principal amount of the indebtedness may not increase.

2

(d)      Except for sales, transfers and other dispositions in the ordinary course of Debtor's business consistent with past practices, Debtor will not sell or otherwise transfer or dispose of the Collateral or any interest therein.

(e)      Debtor will keep all tangible Collateral in good repair, working order and condition, normal depreciation excepted, and will, from time to time, replace any worn, broken or defective parts thereof.

(f)      Debtor will promptly pay all taxes and other governmental charges levied or assessed upon or against any Collateral (provided that the foregoing items need not be paid if they are being contested in good faith by appropriate proceedings, and so long as Debtor's title to its property is not materially adversely affected, its use of such property in the ordinary course of business is not materially interfered with and adequate reserves with respect thereto have been set aside on its books in accordance with generally accepted accounting principles).

(g)      Debtor will at all times keep all tangible Collateral insured against risks of fire, theft, and such other risks as is customary for Debtor's business and with such coverage amounts as is customary for Debtor's business.

(h)      Debtor hereby authorizes the filing of such financing statements as Secured Party may deem necessary or advisable in order to perfect the Security Interest and, if any Collateral is covered by a certificate of title, Debtor will from time to time execute such documents as may be required to have the Security Interest properly noted on a certificate of title.

(i)      Debtor will pay when due or reimburse each Secured Party on demand for all reasonable out-of-pocket costs of collection of any of the Obligations and all other reasonable out-of-pocket expenses (including in each case all reasonable attorneys' fees) incurred by any Secured Party in connection with the creation, perfection, satisfaction or enforcement of the Security Interest or the execution or creation, continuance or enforcement of this Security Agreement or any or all of the Obligations.

(j)      Debtor will take all such actions as Secured Party may reasonably request to permit the Secured Party to establish and perfect the Security Interest in all jurisdictions any Secured Party deems necessary.  Without in any way limiting the generality of the foregoing, Debtor will execute, deliver or endorse any and all instruments, documents, assignments, security agreements and other agreements and writings which Secured Party may at any time reasonably request in order to secure, protect, perfect or enforce the Security Interest and Secured Party's rights under this Security Agreement.

(k)      Debtor will not use or keep any Collateral, or permit it to be used or kept, for any unlawful purpose or in violation of any federal, state or local law, statute or ordinance.     

If Debtor at any time fails to perform or observe any of the foregoing agreements, immediately upon the occurrence of such failure, without notice or lapse of time, Secured Party may (but need not) perform or observe such agreement on behalf and in the name, place and stead of Debtor (or, at Secured Party's option, in Secured Party's own name) and may (but need not) take any and all other actions which Secured Party may reasonably deem necessary to cure or correct such failure (including, without limitation, the payment of taxes, the satisfaction of security interests, liens, or encumbrances, the performance of obligations under contracts or agreements with account debtors or other obligors, the procurement and maintenance of insurance, the execution of financing statements, the endorsement of instruments, and the procurement of repairs and transportation); and, except to the extent that the effect of such payment would be to render any loan or forbearance of money usurious or otherwise illegal under any applicable law, Debtor shall thereupon pay Secured Party on demand the amount of all moneys expended and all reasonable out-of-pocket costs and expenses (including reasonable attorneys' fees) incurred by Secured Party in connection with or as a result of Secured Party's performing or observing such agreements or taking such actions, together with interest thereon from the date expended or incurred by Secured Party at the highest rate then applicable to any of the Obligations.  To facilitate the performance or observance by Secured Party of such agreements of Debtor, Debtor hereby irrevocably appoints (which appointment is coupled with an interest) Secured Party, or their delegate, as the attorney-in-fact of Debtor with the right (but not the duty) from time to time to create, prepare, complete, execute, deliver, endorse or file, in the name and on behalf of Debtor, any and all instruments, documents, financing statements, applications for insurance and other agreements and writings required to be obtained, executed, delivered or endorsed by Debtor under this Section 2.

3

3.Subordination.  The Security Interest and the rights and remedies granted to the Secured Party hereunder shall be subordinated to the rights and obligations that the Debtor owes to LSQ Funding Group, L.C. for their financing of the Debtor's accounts receivables and to On Deck Capital, Inc. for their outstanding business loan to the Debtor.

4.Right to Offset.  Nothing in this Security Agreement shall be deemed a waiver or prohibition of Secured Party's right of offset or counterclaim.

5.Events of Default.  The occurrence of any "Event of Default" (as such term is defined in the Note) shall constitute an Event of Default hereunder.

6.Remedies Upon Event of Default.  Upon the occurrence of an Event of Default and at any time thereafter until such Event of Default is cured, Secured Party may exercise any one or more of the rights or remedies set forth in the Notes or any other remedies available to Secured Party under applicable law, subject to Section 8 below and to the terms of the Subordination Agreement. All rights and remedies of Secured Party shall be cumulative and may be exercised singularly or concurrently, at Secured Party's option, and the exercise or enforcement of any one such right or remedy shall neither be a condition to nor bar the exercise or enforcement of any other.

7.Other Personal Property.  If at the time Secured Party takes possession of any tangible Collateral and any goods, papers or other properties of Debtor, not affixed to or constituting a part of such Collateral, are located or found upon or within such Collateral, Debtor shall notify Secured Party in writing of that fact, describing the property so located or found, within seven calendar days after the date on which Secured Party took possession. Unless and until Secured Party receive such notice from Debtor, Secured Party shall not be responsible or liable to Debtor for any action taken or omitted by or on behalf of Secured Party with respect to such property without actual knowledge of the existence of any such property or without actual knowledge of the fact that it was located or to be found upon such Collateral.

8.Actions by the Secured Party.  All actions, omissions and decisions of the Secured Party hereunder or any amendment of the Loan Documents (each called herein "Act of the Secured Party"), shall be determined by the written consent of the Secured Party.

4

9.Amendment; Waivers.  This Security Agreement can be waived, modified, amended, terminated or discharged, and the Security Interest can be released, only explicitly in a writing signed by both (a) the Secured Party and (b) Debtor.  A waiver shall be effective only in the specific instance and for the specific purpose given.  Mere delay or failure to act shall not preclude the exercise or enforcement of any of Secured Party rights or remedies and shall not operate as a waiver thereof.

10.Notices.  All notices required or permitted hereunder shall be in writing and shall be deemed effectively given: (a) upon personal delivery to the party to be notified, (b) when sent by confirmed electronic mail or facsimile if sent during normal business hours of the recipient, if not, then on the next business day, (c) five (5) days after having been sent by registered or certified mail, return receipt requested, postage prepaid, or (d) one (1) day after deposit with a nationally recognized overnight courier, specifying next day delivery, with written verification of receipt.

11.Miscellaneous.  Secured Party's duty of care with respect to Collateral in their possession (as imposed by law) shall be deemed fulfilled if Secured Party exercise reasonable care in physically safekeeping such Collateral or, in the case of Collateral in the custody or possession of a bailee or other third person, exercise reasonable care in the selection of the bailee or other third person, and Secured Party need not otherwise preserve, protect, insure or care for any Collateral.  Secured Party shall not be obligated to preserve any rights Debtor may have against prior Party, to realize on the Collateral at all or in any particular manner or order, or to apply any cash proceeds of Collateral in any particular order of application.  This Security Agreement shall be binding upon and inure to the benefit of Debtor and Secured Party and their respective representatives, successors and assigns and shall take effect when signed by Debtor and delivered to Secured Party.  In all respects, including all matters of construction, validity and performance, this Security Agreement and the Obligations arising hereunder shall be governed by, and construed and enforced in accordance with, the laws of the State of Colorado applicable to contracts made and performed in such state, without regard to the principles thereof regarding conflict of laws, except to the extent that the UCC provides for the application of the law of Debtor's jurisdiction of formation.  This Security Agreement shall terminate without the consent of Secured Party upon payment and performance in full of the Obligations, including, but not limited to, upon the conversion of all outstanding balances due under the Notes. Notwithstanding anything to the contrary contained herein or in any other Loan Document, upon the conversion of all outstanding balances under a Note or payment in full of the outstanding balance of a Note: (a) this Security Agreement is terminated with respect to the Secured Party holding such Note ("Noteholder"), (b) all security interests in the Collateral held by the Noteholder are automatically terminated and released, (c) the Debtor is hereby authorized to file such UCC financing statement amendments as Debtor deems necessary to delete Noteholder as a secured party on, or to terminate, any UCC-1 financing statements or initial UCC financing statements naming the Debtor as debtor and the Noteholder as secured party, and (d) the Noteholder will execute all release documents as Debtor may reasonably request.

[Signature pages follow.]

5

IN WITNESS WHEREOF, the Party have caused this Security Agreement to be duly executed by its officers thereunto duly authorized as of the first date written above.

DEBTOR:

VirtualArmour International, Inc.

By: /s/ Todd L. Kannegieter          

      Todd L. Kannegieter

Title:       CEO                             

STATE OF COLORADO	)
	)
COUNTY OF BOULDER	)

The foregoing instrument was acknowledged before me this ___ day of November 2017, by Todd L. Kannegieter (who is known to me personally or who produced a driver's license as identification), the President of VirtualArmour International, Inc., a Colorado corporation, on behalf of such company.

____________________________________

Notary Public

(Notary Seal)

Secured Party

Peter-Christian Olivo

Signature:  /s/ Peter-Christian Olivo

6

Exhibit A

Permitted Liens

The security interests granted pursuant to:

- The Invoice Purchase Agreement, dated April 20, 2017, made between VirtualArmour International Inc. ("VAI") and LSQ Funding Group for the purchase and financing of VAI's outstanding accounts receivable.

- The Business Loan, dated January 5, 2018, made between VirtualArmour International Inc. ("VAI") and On Deck Capital, Inc. to provide VAI with working capital.

7

EX1A-6 MAT CTRCT

Exhibit 6.15

ondeck BUSINESS LOAN AND SECURITY AGREEMENT SUPPLEMENT

This Business Loan and Security Agreement Supplement is part of (and incorporated by reference into) the Business Loan and Security Agreement .Borrower should keep this important legal document for Borrower's records.

YOUR LOAN DETAILS

Borrower:	VirtualArmour International Inc.
Lender:	On Deck Capital, Inc.
Loan Amount:	$200,000.00
Origination  Fee: (Deducted at time of disbursement)	$5,000.00
Disbursement  Amount:  (Loan Amount less Origination Fee) Note that the Disbursement Amount may not be the amount deposited to your Designated Checking Account. The amount that will be deposited to your Designated Checking Account will be reduced by any amounts owed to Lender from a prior loan or used to pay off an amount owed to a third party lender.	$195,000.00
Weekly Payment Amount: (Business days only) Number of Weekly Payments: (Business days only) Payment Schedule: "Business day" means any Monday through Friday except for Federal Reserve holidays.	$6,210.26 39 39 payments of $6,210.26 due each Business day (in the case of loans with a Daily Payment Amount) or each Wednesday (in the case of loans with a Weekly Payment Amount) in each case immediately following the date the Disbursement Amount is disbursed by Lender.
Total Interest Expense:  (Does not include any Fees)	$42,200.14
Total Repayment Amount: (Loan Amount plus Total Interest Expense)	$242,200.14

PREPAYMENT,RENEWAL, AND OTHER FEES

Prepayment: (See Section 10 of the Business Loan and Security Agreement for specific details)	A "Prepayment Interest Reduction Percentage" of 100% (with respect to unpaid interest remaining on this Loan) will be applied to the extent that the Borrower prepays this Loan in whole in accordance with, and subject to,Section 10 of the Business Loan and Security Agreement. Note that 0% of remaining unpaid interest will still be due upon Prepayment in whole. You should keep in mind that partial prepayments will not reduce the Total Interest Expense.
Renewals:	Remaining unpaid interest on this Loan will be eligible to be forgiven by Lender if: (i) Borrower is current on its scheduled payments with respect to this Loan and, (ii) while this Loan is outstanding, Borrower enters into a business loan and security agreement for a new qualifying term loan with Lender, a portion of the proceeds of which is used to repay this Loan in whole.
Other Fees:	Returned Payment Fee: $25.00 Late Fee: $10.00 (maximum $50 within any 20 day period)

If you have any questions, please call us at 1.888.828.5717 (we have support available Monday -Friday 8am - 8pm EST and Saturdays 8:30am - 5:30pm EST) or email support@ondeck.com.

Loan Pricing Disclosure

Lender uses a system of risk-based pricing to determine interest charges and fees. Risk-based pricing is a system that evaluates the risk factors of your application and adjusts the interest rate up or down based on this risk evaluation. Although Lender believes that its loan process provides expedited turnaround time and efficient access to capital, this loan may be a higher cost loan than loans that may be available through other lenders.

Loan For Specific Purposes Only

The proceeds of the requested Loan may solely be used for the specific purposes as set forth in the Use of Proceeds Certification of the Business Loan and Security Agreement. IN ADDITION, THE LOAN WILL NOT BE USED FOR PERSONAL, FAMILY OR  HOUSEHOLD PURPOSES.  Borrower understands that Borrower's agreement not to use the Loan proceeds for personal, family or household purposes means that certain important duties imposed upon entities making loans for consumer/personal purposes, and certain important rights conferred upon consumers , pursuant to federal or state law will not apply to this transaction.

ondeck BUSINESS LOAN AND SECURITY AGREEMENT SUPPLEMENT

1. INTRODUCTION. This Business Loan and Security Agreement (together with the accompanying Business Loan and Security Agreement Supplement and the accompanying Authorization Agreement for Direct Deposit (ACH Credit) and Direct Payments (ACH Debits), this "Agreement") governs your business loan ("Loan") from On Deck Capital, Inc. Please read it and keep it for your reference. In this Agreement, the words "you," "your" and "Borrower" mean the Borrower identified on the signature page of this Business Loan and Security Agreement. Each Guarantor identified on the signature page of this Business Loan and Security Agreement shall be referred  to individually as "Guarantor" and collectively as "Guarantors" in this Agreement. The words "Lender", "we", "us", and "our" mean On Deck .Capital, Inc. or its successor(s) and assign(s).

2. EFFECTIVE DATE. This Agreement begins on the date we accept this Agreement in Virginia. Borrower understands and agrees that Lender may postpone, without penalty, the disbursement of amounts to Borrower until all required security interests have been perfected and Lender has received all required personal guarantees or other documentation.

3. AUTHORIZATION. Borrower agrees that the Loan made by Lender to Borrower shall be conclusively deemed to have been authorized by Borrower and to have been made pursuant to a duly authorized request on its behalf.

4. LOAN FOR SPECIFIC PURPOSES ONLY. The proceeds of the requested Loan may solely be used for the specific purposes  as set forth  in the  Use of Proceeds Certification contained in Section 50 below, and not for any other purposes. In addition, the Loan will not be used for personal, family or household purposes, and Borrower and Guarantors are forever estopped from taking the position  that  such Loan (including Advances)  are or were  used for such personal, family or household  purposes. Borrower understands that Borrower's agreement not to use the Loan proceeds for . personal, family or household purposes means that certain important duties imposed upon entities  making loans for personal, family or household  purposes, and certain important rights conferred upon such persons, pursuant to federal or state law will not apply to the Loan or the Agreement. Borrower also understands that Lender will be unable to confirm whether the use of the Loan conforms to this section. Borrower agrees that a breach by Borrower of the provisions of this section will not affect Lender's right to (i) enforce Borrower's promise to pay for all amounts owed under this Agreement, regardless of the purpose for which the Loan is in fact obtained or (ii) use any remedy legally available to Lender, even if that remedy would not have been available had .the Loan been made for personal, family or household purposes.

5. DISBURSEMENT OF LOAN PROCEEDS AND MAINTENANCE OF BORROWER'S BANK ACCOUNT. If Borrower applied and was approved for a Loan, Borrower's Loan will be disbursed upon approval as provided in the accompanying Authorization Agreement for Direct Deposit (ACH Credit) and Direct Payments (ACH Debits) . Borrower agrees to maintain Direct Payments (ACH Debits) in its operating account which is the account that was reviewed in conjunction with underwriting and approval of this Loan (including keeping such account open until the Total Repayment Amount had been completely repaid).

6. PROMISE TO PAY. Borrower agrees to pay Lender the Total Repayment Amount shown in the accompanying Business Loan and Security Agreement Supplement in accordance with the Payment Schedule shown in the accompanying Business Loan and Security Agreement Supplement. Borrower agrees to enroll in Lender's Automatic Payment Plan and authorizes Lender to collect required payments as provided in the accompanying Authorization Agreement for Direct Deposit (ACH Credit) and Direct Payments (ACH Debits). If required by Lender, Borrower further agrees and authorizes Lender or its servicer to collect required payments from a transfer account established pursuant to certain Transfer Account Loan Documentation that will be provided by Lender in connection with this Business Loan and Security Agreement if applicable.

7. ALTERNATIVE PAYMENT METHODS. If Borrower knows that for any reason Lender will be unaple to process a payment under Lender's Automatic Payment Plan, then Borrower must either restore sufficient funds such that the missed payment can be collected as provided in the accompanying Authorization Agreement for Direct Deposit (ACH Credit) and Direct Payments (ACH Debits), or promptly mail or deliver a check to Lender in the amount of the missed payment or, if offered, make the missed payment by any pay-by-phone or on-line service that Lender may make available from time to time. If Borrower elects to send payments on Borrower's Account by postal mail, then Borrower agrees to send such payments to On Deck Capital, 901 N Stuart Street, Suite 700, Arlington, VA 22203, Attn: Director of Operations. All alternative payments must be made in good funds by check, money order, wire transfer, automatic transfer from an account at an institution offering such service, or other instrument in U.S. Dollars. Borrower understands and agrees that payments made at any other address than as specified  by Lender may result in a delay in processing and/or crediting. If Borrower makes an alternative payment on Borrower's Loan by mail or by any pay-by-phone or on-line service that

ondeck BUSINESS LOAN AND SECURITY AGREEMENT SUPPLEMENT

Lender makes available while Borrower is enrolled in the Automatic Payment Plan, Lender may treat such payment as an additional payment and continue to process Borrower's scheduled Automatic Payment Plan payments or may reduce any scheduled Automatic Payment Plan payment by the amount of any such additional payment received.

8. APPLICATION OF PAYMENTS. Subject to applicable law, Lender reserves the right to allocate and apply payments received on Borrower's Loan between principal, interest and fees in any manner Lender chooses in Lender's sole discretion it being understood and agreed that any fees and interest will generally be paid during the earlier portion of the term.

9. POSTDATED CHECKS, RESTRICTED ENDORSEMENT CHECKS AND OTHER DISPUTED OR QUALIFIED PAYMENTS. Lender can accept late, postdated or partial payments without losing any of Lender's rights under this Agreement (a postdated check is a check dated later than the day it was actually presented for payment). Lender is under no obligation to hold a postdated check and Lender reserves the right to process every item presented as if dated the same date received by Lender or Lender's check processor unless Borrower gives Lender adequate notice and a reasonable opportunity to act on it. Except where such notice and opportunity is given , Borrower may not hold Lender liable for depositing any postdated check. Borrower agrees not to send Lender partial payments marked "paid in full," "without recourse," or similar language.  If Borrower sends such a payment, Lender may accept it without losing any of Lender's rights under this Agreement. All notices and written communications concerning postdated checks, restricted endorsement checks (including any check or other payment instrument that indicates that the payment constitutes "payment in full" of the amount owed or that is tendered with other conditions or limitations or as full satisfaction of a disputed amount) or any other disputed, nonconforming or qualified payments, must be mailed or delivered to On Deck Capital, Client Service, 901 N Stuart Street, Suite 700, Arlington, VA 22203, Attn: Director of Operations.

10. PREPAYMENT. Borrower may prepay Borrower's Loan in whole on any Business day by paying Lender the sum total of the Total Repayment Amount, any Returned Payment Fees, and any Late Fees, in each case as described in the accompanying Business Loan and Security Agreement Supplement less (i) the amount of any Loan payments made prior to such prepayment and (ii) the product of (x) the percentage identified as the applicable Prepayment Interest Reduction Percentage in the accompanying Business Loan and Security Agreement Supplement; and (y) the aggregate amount of unpaid interest remaining on the Borrower's Loan as of such date as determined by Lender's records in accordance with Section 8. Borrower may prepay Borrower's loan in part on any Business day and such payment shall be applied against the Total Repayment Amount, any Returned Payment Fees,and any Late Fees,in each case as described in the accompanying Business Loan and Security Agreement Supplement.

11. SECURITY INTEREST. Borrower hereby grants to Lender, the secured party hereunder , a continuing security interest in and to any and all "Collateral" as described below to secure payment and performance of all debts, liabilities and obligations of Borrower to Lender hereunder and also any and all other debts, liabilities and obligations of Borrower to Lender of every kind and description, direct or indirect, absolute or contingent, primary or secondary, due or to become due, now existing or hereafter arising, related to the Loan described in this Agreement, whether or not contemplated by the parties at the time of the granting of this security interest, regardless of how they arise or by what agreement or instrument they may be evidenced or whether evidenced by any agreement or instrument, and includes obligations to perform acts and refrain from taking action as well as obligations to pay money including, without limitation, all interest, other fees and expenses (all hereinafter called "Obligations"). The Collateral includes the following property that Borrower (or Guarantor, if applicable, pursuant to Section 12) now owns or shall acquire or create immediately upon the acquisition or creation thereof: (i) any and all amounts owing to Borrower now or in the future from any merchant processor(s) processing charges made by customers of Borrower via credit card or debit card transactions; and (ii) all other tangible and intangible personal property , including, but not limited to (a) cash and cash equivalents, (b) inventory,  (c) equipment, (d) investment property, including certificated and uncertificated securities, securities accounts ,security entitlements, commodity contracts and commodity accounts, (e) instruments ,including promissory notes (f) chattel paper, including tangible chattel paper and electronic chattel paper, (g) documents ,(h) letter of credit rights, (i) accounts ,including health-care insurance receivables, U) deposit accounts, (k) commercial tort claims, (I) general intangibles ,  including payment intangibles and software and (m) as-extracted collateral as such terms may from time to time be defined in the Uniform Commercial Code.The security interest Borrower (or Guarantor ,if applicable, pursuant to Section 12) grants includes all accessions ,attachments, accessories, parts, supplies and replacements for the Collateral, all products, proceeds and collections thereof and all records and data relating thereto. Lender disclaims any security interest in household goods in which  Lender is forbidden by law from taking a security interest.

ondeck BUSINESS LOAN AND SECURITY AGREEMENT SUPPLEMENT

12. PROTECTING THE SECURITY INTEREST. Borrower agrees that Lender and/or Lender's Representative may file any financing statement, lien entry form m other document Lender and/or Lender's Representative requires in order to perfect, amend or continue Lender's security interest in the Collateral and Borrower agrees to cooperate  with Lender and Lender's Representative as may be necessary to accomplish said filing and to do whatever Lender and Lender's Representative deems necessary to protect Lender's security interest in the Collateral. Borrower and Guarantor each agree that , if any Guarantor is a corporate entity, then Lender or Lender's Representative may file any financing statement , lien entry form or other document against such Guarantor or its property that Lender and/or Lender's Representative requires in order to perfect, amend or continue Lender's security interest in the Collateral. Any such Guarantor agrees to cooperate with Lender and Lender's Representative as may be necessary to accomplish said filing and to do whatever Lender or Lender's Representative deems necessary to protect Lender's · security interest in the  Collateral. In this Agreement, "Lender's Representative" means any entity or individual that is designated by Lender to serve in such capacity.

13. LOCATION OF COLLATERAL; TRANSACTIONS INVOLVING COLLATERAL. Unless Lender has agreed otherwise in writing, Borrower agrees and warrants that (i) all Collateral (or records of the Collateral in the case of accounts, chattel paper and general intangibles) shall be located at Borrower's address as shown in the application, (ii) except for inventory sold or accounts collected in the ordinary course of Borrower's business, Borrower shall not sell, offer to sell, or otherwise transfer or dispose of the Collateral, (iii) no one else has any interest in or claim against the Collateral that Borrower has not already told Lender about, (iv) Borrower shall not pledge, mortgage, encumber or otherwise permit the Collateral to be subject to any lien, security interest, encumbrance or charge, other than the security interest provided for in this Agreement and (v) Borrower shall not sell, offer to sell, or otherwise transfer or dispos·e of the Collateral for less than the  fair market value thereof. Borrower shall defend Lender's rights in the Collateral against the claims and demands of all other persons. All proceeds from any unauthorized disposition of the Collateral shall be held in trust for Lender, shall not be co-mingled with any other funds and shall immediately be delivered to Lender. This requirement, however, does not constitute consent by Lender to any such disposition.

14. TAXES, ASSESSMENTS AND LIENS. Borrower will complete and file all necessary federal, state and local tax returns and will pay when due all taxes, assessments, levies and liens upon the Collateral and provide evidence of such payments to Lender upon request.

15. INSURANCE . Borrower shall procure and maintain such insurance as Lender may require with respect to the Collateral, in form , amounts and coverage reasonably acceptable to Lender and issued by a company reasonably acceptable to Lender naming Lender as loss payee. If Borrower at any time fails to obtain or maintain  any insurance as required  under this Agreement, Lender may obtain such insurance as Lender deems appropriate at Borrower's sole cost and expense. Borrower shall promptly notify Lender of any loss of or damage to the Collateral.

16. REPAIRS AND MAINTENANCE. Borrower agrees to keep and maintain, and to cause others to keep and maintain, the Collateral in good order, repair and condition at all times while this Agreement remains in effect. Borrower further agrees to pay when due all claims for work done on,  or services rendered or material furnished in connection with the Collateral so that no lien or encumbrance may ever attach to or be filed against the Collateral.

17. INSPECTION OF COLLATERAL AND PLACE OF BUSINESS; USE OF PHOTOGRAPHS AND TESTIMONIALS. Lender and Lender's designated representatives and agents shall have the right during Borrower's normal business hours and at any other reasonable time to examine the Collateral wherever located and the interior and exterior of any Borrower place of business. During an examination of any Borrower place of business, Lender may examine, among other things , whether Borrower (i) has a place of business  that is separate from any personal residence, (ii) is open for business, (iii) has sufficient inventory to conduct Borrower's business and (iv) has one or more credit card terminals if Borrower processes credit card transactions. When performing an examination, Lender may photograph the interior and exterior of any Borrower place of business, including any signage, and may photograph any individual who has signed the Agreement ("Signatory") unless the Signatory previously has notified Lender that he or she does not authorize Lender to photograph the Signatory . Lender may obtain testimonials from any Signatory, including testimonials on why Borrower needed the Loan and how the Loan has helped Borrower. Any photograph and testimonial will become and remain the sole  property of Lender. Borrower and each Signatory grant Lender the irrevocable and permanent right to display and share any photograph and testimonial in all forms and media, including composite and modified representations , for all purposes, including but not limited to any trade or commercial purpose, with any Lender employees and agents and with the general public. Lender may, but is not required to, use the name of any Borrower and Signatory as a credit in connection with any photograph and testimonial. Borrower and each Signatory waive the right to inspect or approve versions of any photograph or testimonial or the written copy or other media

ondeck BUSINESS LOAN AND SECURITY AGREEMENT SUPPLEMENT

that may be used in connection with same. Borrower and each Signatory release Lender from any  claims that may arise regarding the use of any photograp.h or testimonial, including any claims of defamation, invasion of privacy or infringement of moral rights, rights of publicity or copyright.

18. LENDER'S EXPENDITURES. If any action or proceeding is commenced that would materially affect Lender's interest in the Collateral or if Borrower fails to comply with any provision of this Agreement or any related documents, including but not limited to Borrower's failure to discharge or pay when due any amounts Borrower is required to discharge or pay under this .Agreement or any related documents, Lender on Borrower's behalf may (but shall not be obligated to) take any action that Lender deems appropriate, including but not limited to discharging or paying all taxes, liens, security interests, encumbrances and other claims, at any time levied or placed on the Collateral and paying all costs for insuring, maintaining and preserving the Collateral. To the extent permitted by applicable law, all such expenses will become a part of the Obligat!ons and, at Lender's option, will: (i) be payable on demand; (ii) be added to the balance of the Loan and be apportioned among and be payable with any installment payments to become due during the remaining term of the Loan; or (iii) be treated as a balloon payment that will be due and payable at the Loan's maturity. Such right shall be in addition to all other rights and remedies to which Lender may be entitled upon an Event of Default.

19. BORROWER'S REPRESENTATIONS AND WARRANTIES. Borrower represents and warrants that: (i) Borrower will comply with all laws, statutes, regulations and ordinances pertaining to the conduct of Borrower's business and promises to hold Lender harmless from any damages, liabilities, costs, expenses (including attorneys' fees) or other harm arising out of any violation thereof; (ii) Borrower's principal executive office and the office where Borrower keeps its records concerning its accounts, contract rights and other property, is that shown in the application; (iii) Borrower is duly organized, licensed, validly existing and in good standing under the laws of its state of formation and shall hereafter remain in good standing in that state, and is duly qualified, licensed and in good standing in every other state in which it is doing business, and shall hereafter remain duly qualified, licensed and in good standing in every other state in which it is doing business, and shall hereafter remain duly qualified, licensed and in good standing in every other state in which the failure to qualify or become licensed could have a material adverse effect on the financial condition, business or operations of Borrower; (iv) the true and correct legal name of the Borrower is set forth in the application; (v) the aggregate ownership percentage of the Signatories  is greater than or equal to fifty percent (50%) of the Borrower's business; (vi) the execution, delivery and performance of this Agreement , and any other document executed in connection herewith, are within Borrower's powers, have been duly authorized, are not in contravention of law or the terms of Borrower's charter, by- laws  or other constating documents, or of  any indenture, agreement or undertaking to which Borrower is a party; (vii) all constating  documents  and  all  amendments  thereto  of Borrower have been duly filed and are in proper order and any capital stock issued by Borrower and outstanding was and is properly issued and all books and records of Borrower are accurate and up to date and will be so maintained; (viii) Borrower (a) is subject to no charter, corporate or other legal restriction,orany  judgment,award,decree,order, governmental rule or regulation or contractual restriction that could have a material adverse effect on its financial condition, business or prospects, and (b) is in compliance with its charter, by-laws and other constating documents, all contractual requirements by which it may be bound and all applicable laws, rules and regulations other than laws, rules or regulations the validity or applicability of which it is contesting in good faith or provisions of any of the foregoing the failure to comply with which cannot reasonably be expected to materially adversely affect its financial condition , business or prospects or the value of the Collateral; and (ix) there is no action, suit, proceeding or investigation pending or, to Borrower's knowledge, threatened against or affecting it or any of its assets before or by any court or other governmental authority which, if determined adversely to it, would have a material adverse effect on its financial condition, business or prospects or the value of the Collateral.

20. INTEREST AND FEES. Borrower agrees to pay in full the interest set forth in the accompanying Business Loan and Security Agreement Supplement. In addition to any other fees described in the Agreement, Borrower agrees to pay the following fees :

A. Origination Fee: A one-time Origination Fee in the amount set forth in the accompanying Business Loan and Security Agreement Supplement. Borrower agrees that this fee will be immediately deducted from the proceeds of Borrower's Loan.

B. Returned Payment Fee: A Returned Payment Fee in the amount set forth in the accompanying Business Loan and Security Agreement Supplement if any electronic payment processed on Borrower's Loan is returned unpaid or dishonored for any reason.

C. Late Fee: A Late Fee in the amount set forth in the accompanying Business Loan and Security Agreement Supplement if a scheduled payment is not received by Lender as provided in the payment schedule set forth in the accompanying Business Loan and Security Agreement Supplement.

Payments made by Borrower hereunder will be applied and allocated between Loan principal, interest and fees in the manner set forth in Section 8.

21. INTEREST AND FEES EXCEEDING PERMITTED LIMIT. If the Loan is subject to a law that sets maximum charges, and that law is finally interpreted so that the interest or other fees collected or to be collected in connection with this Agreement exceed the permitted limits, then (i) any such charge will be reduced by the amount necessary to reduce the charge to the permitted limit and (ii) if required by applicable law, any sums already collected from Borrower that exceed  the permitted limits will be refunded or credited to Borrower.

ondeck BUSINESS LOAN AND SECURITY AGREEMENT SUPPLEMENT

22. ONLINE CUSTOMER PORTAL. When Borrower signs in with Borrower's valid username and password at loans.ondeck.com , Borrower can obtain information about the Borrower's Loan, such as the outstanding balance, daily transactions and fees. No additional paper statement will be mailed to Borrower. Borrower agrees not to share Borrower's username and password to loans.ondeck.com with any third party.

23. FINANCIAL INFORMATION AND REEVALUATION OF CREDIT. Borrower and each Guarantor (if any) authorize Lender to obtain business and personal credit bureau reports in Borrower's and any Guarantor's name, respectively, at any time and from time to time for purposes of deciding whether to approve the requested Loan or for any update, renewal, extension of credit or other lawful purpose. Upon Borrower's or any Guarantor's request, Lender will advise Borrower or Guarantor if Lender obtained a credit report and Lender will give Borrower or Guarantor the credit bureau's name and address. Borrower and each Guarantor (if any) agree to submit current financial information, a new credit application, or both, in Borrower's name and in the name of each Guarantor, respectively, at any time promptly upon Lender's request. Borrower authorizes Lender to act as Borrower's agent for purposes of accessing and retrieving transaction history information regarding Borrower from Borrower's designated merchant processor(s) . Lender may report Lender's credit experiences with Borrower and any Guarantor of Borrower's Loan to third parties as permitted by law, including with respect to any Guarantor to consumer credit reporting agencies . Borrower also agrees that Lender may release information to comply with governmental reporting or legal process that Lender believes may be required, whether or not such is in fact required, or when necessary or helpful in completing a transaction, or when investigating a loss or potential loss. Borrower and each Guarantor is hereby notified that a negative credit report reflecting on Borrower's and/or any Guarantor's credit record may be submitted to a credit reporting agency (including with respect to any Guarantor to consumer credit reporting agencies) if Borrower or such Guarantor fails to fulfill the terms of their respective credit obligations hereunder. Guarantor acknowledges that any credit reporting on the Loan shall be at the sole discretion of Lender (subject tci applicable law) and that Lender has the right to report the Loan to Guarantor's personal credit file should Guarantor not pay any Obligation pursuant to the guaranty set  forth in this Agreement.

24. ATTORNEYS' FEES AND COLLECTION COSTS. To the extent not prohibited by applicable law, Borrower shall pay to Lender on demand any and all expenses, including, but not limited to, collection costs, all attorneys' fees and expenses, and all other expenses of like or unlike nature which may be expended by Lender to obtain or enforce payment of Obligations either as against Borrower .or any guarantor or surety of Borrower or in the prosecution or defense of any action or concerning any matter arising out of or connected with the subject matter of this Agreement, the Obligations or the Collateral or any of Lender's rights or interests therein or thereto, including, without limiting the generality of the foregoing, any counsel fees or expenses incurred in any bankruptcy or insolvency proceedings and all costs and expenses (including search fees) incurred or paid by Lender in connection with the administration, supervision, protection or realization on any security held by Lender for the debt secured hereby, whether such security was granted by Borrower or by any other person primarily or secondarily liable (with or without recourse) with respect to such debt, and all costs and expenses incurred by Lender in connection with the defense, settlement or satisfaction of any action, claim or demand asserted against Lender in connection therewith, which amounts shall be considered advances to protect Lender's security, and shall be secured hereby. To the extent permitted by applicable law, all such expenses will become a part of the Obligations and, at Lender's option, will: (i) be payable on demand; (ii) be added to the balance of the Loan and be apportioned among and be payable with any installment payments to become due during the remaining term of the Loan; or (iii) be treated as a balloon payment that will be due and payable at the Loan's maturity. Such right shall be in addition to all other rights and remedies to which Lender may be entitled upon an Event of Default.'

25. BORROWER'S REPORTS. Promptly upon Lender's written request, Borrower and each Guarantor agrees to provide Lender with such information about the financial condition and operations of Borrower or any Guarantor, as Lender may, from time to time, reasonably request. Borrower also agrees promptly upon becoming aware of any Event- of Default, or the occurrence or existence of an event which, with the passage of time or the giving of notice or both, would constitute an Event of Default hereunder, to promptly provide notice thereof to Lender in writing.

26. TELEPHONE COMMUNICATIONS. Borrower and Guarantors hereby expressly consents to receiving calls and messages, including auto-dialed and pre-recorded message calls and SMS messages (including text messages) from Lender, its affiliates, marketing partners, agents and others

ondeck BUSINESS LOAN AND SECURITY AGREEMENT SUPPLEMENT

calling at Lender's request or on its behalf, at any telephone numbers that Borrower and/or Guarantors have provided or may provide in the future or otherwise in Lender's possession (including any cellular or mobile telephone numbers). Borrower and  Guarantor agree  that such communications may be initiated using an automated telephone dialing system.

27. INDEMNIFICATION. Except for Lender's gross negligence or willful misconduct, Borrower will indemnify and save Lender harmless from all losses, costs, damage, liabilities or expenses (including, without limitation, court costs and reasonable attorneys' fees) that Lender may sustain or incur by reason of defending or protecting Lender's security interest or the priority thereof or enforcing the Obligations, or in the prosecution or defense of any action or proceeding concerning any matter arising out of or in connection with this Agreement and/or any other documents now or hereafter executed in connection with this Agreement and/or the Obligations and/or the Collateral. This indemnity shall survive the repayment of the Obligations and the termination of this Agreement.

28. MERGERS, CONSOLIDATIONS OR SALES. Borrower represents and agrees that Borrower will not (i) merge or consolidate with or into any other business entity or (ii) enter into any joint venture or partnership with any person, firm or corporation.

29. CHANGE IN LEGAL STATUS. Without Lender's consent, Borrower represents and agrees that Borrower will not (i) change its name, its place of business or, if more than one, chief executive office, its mailing address, or organizational identification number  if it has one, or (ii) change its type of organization , jurisdiction of organization or other legal structure. If Borrower does not have an organizational identification number and later obtains one, Borrower shall promptly notify Lender of such taxpayer identification number.

30. DEFAULT. The occurrence of any one or more of the following events (herein, "Events of Default") shall constitute, without notice or demand, a default under this Agreement and all other agreements between Lender and Borrower and instruments and papers given Lender by Borrower, whether such agreements, instruments, cir .papers now exist or hereafter arise: (i) Lender is unable to collect any Automatic Payment Plan payment on two consecutive dates due and/or, Borrower fails to pay any Obligations on two consecutive dates due; (ii) Borrower fails to comply with, promptly, punctually and faithfully perform or observe any term, condition or promise within this Agreement; (iii) the determination by Lender that any representation or warranty heretofore, now or hereafter made by Borrower to Lender, in any documents, instrument, agreement, or paper was not true or accurate when given; (iv) the occurrence of any event such that any indebtedness of Borrower from any lender other than   Lender could be accelerated, notwithstanding that such acceleration has not taken place; (v) the occurrence of any event that would cause a lien creditor, as that term is defined in Section 9-102 of the Uniform Commercial Code, (other than Lender) to take priority over the Loan made by Lender; (vi) a filing against or relating to Borrower (unless consented to in writing by Lender) of (a) a federal tax lien in favor of the United States of America or any political subdivision of the United States of America, or (b) a state tax lien in favor of any state of the United States of America or any political subdivision of any such state; (vii) the occurrence of any event of default under any other agreement between Lender and Borrower or instrument or paper given Lender by Borrower, whether such agreement, instrument , or paper  now exists or hereafter arises (notwithstanding that Lender may not have exercised its rights upon default under any such other agreement, instru.ment or paper); (viii) any act by, against, or relating to Borrower, or its property or assets, which act constitutes the application for, consent to, or sufferance of the appointment of a receiver, trustee or other person, pursuant to court action or otherwise, over all, or any part of Borrower's property; (ix) the granting of any trust mortgage or execution of an assignment for the benefit of the creditors of Borrower, or the occurrence of any other voluntary or involuntary liquidation or extension of debt agreement for Borrower; (x) the failure by Borrower to generally pay the debts of Borrower as they mature; (xi) adjudication of bankruptcy or insolvency relative to Borrower; (xii) the entry of an order for relief or similar order with respect to Borrower in any proceeding pursuant to Title  11 of the United States Code entitled "Bankruptcy" (the "Bankruptcy Code") or any other federal bankruptcy law; (xiii) the filing of any complaint, application or petition by or against  Borrower initiating any matter in which Borrower is or may be granted any relief from the debts of Borrower pursuant to the Bankruptcy Code or any other insolvency statute or procedure; (xiv) the calling or sufferance of a meeting of creditors of Borrower;  (xv) the meeting by Borrower with a formal or informal creditor's committee; (xvi) the offering by or entering into by Borrower of any composition, extension or any other arrangement seeking relief or extension for the debts of Borrower, or the initiation of any other judicial or non-judicial proceeding or agreement by, against or including Borrower that seeks or intends to accomplish a reorganization or arrangement with creditors; (xvii) the entry of any judgment against Borrower, which judgment is not satisfied or appealed from (with execution or similar process stayed) within 15 days of its entry; (xviii) the occurrence of any event or circumstance with respect to Borrower such that Lender shall believe in good faith that the prospect of payment of all or any part of the Obligations or the performance by Borrower under this Agreement or any other agreement between Lender and Borrower is impaired or there shall occur any material adverse change in the business or financial condition of Borrower (such event  specifically includes, but is not limited to, taking additional financing from a credit card advance, cash advance company or an additional

ondeck BUSINESS LOAN AND SECURITY AGREEMENT SUPPLEMENT

working capital loan without the prior written consent of Lender); (xix) the entry of any court order that enjoins, restrains or in any way prevents Borrower from conducting all or any part of its business affairs in the ordinary course of business; (xx) the occurrence of any uninsured loss, theft, damage or destruction to any material asset(s) of Borrower; (xxi) any act by or against, or relating to Borrower or its assets pursuant to which any creditor of Borrower seeks to reclaim or repossess or reclaims or repossesses all or a portion of Borrower's assets; (xxii) the termination of existence, dissolution or liquidation of Borrower or the ceasing to carry on actively any substantial part of  Borrower's current business; (xxiii) this Agreement shall, at any time after its execution and delivery and for any reason, cease to be in full force and effect or shall be declared null and void, or the validity or enforceability hereof shall be contested by Borrower or any guarantor of Borrower denies it has any further liability or obligation hereunder; (xxiv) any guarantor or person signing a support agreement in favor of Lender shall repudiate, purport to revoke or fail to perform his or her obligations under his guaranty or support agreement in favor of Lender or any corporate guarantor shall cease to exist; (xxv) any material change occurs in Borrower's ownership or organizational structure (acknowledging that any change in ownership will be deemed material when ownership is closely held); (xxvi) if Borrower is a sole proprietorship, the owner dies; if Borrower is a trust, a trustor dies; if Borrower is a partnership, any general or managing partner dies; if Borrower is a corporation, any principal officer or 10% or greater shareholder dies; if Borrower is a limited liability company, any managing member dies; if Borrower is any other form of business entity, any person(s) directly or indirectly controlling 10% or more of the ownership interests of such entity dies.

31. RIGHTS AND REMEDIES UPON DEFAULT. Subject to applicable law, if an Event of Default occurs under this Agreement, at any time thereafter, Lender may exercise any one or more of the following rights and remedies:

A. Refrain from Disbursing Loan Proceeds: Lender may refrain from disbursing Borrower's Loan  proceeds to Borrower's Designated Checking Account.

B. Debit Amounts Due From Borrower's Accounts: Lender may debit from Borrower's Designated Checking Account all Automatic Payment Plan payments that Lender was unable to collect and/or the amount of any other Obligations that Borrower failed to pay.

C. Accelerate Indebtedness: Lender may declare the entire Obligations immediately due and payable, without notice of any kind to Borrower.

D. Assemble Collateral: Lender may require Borrower and/or Guarantor to deliver to Lender all or any portion of the Collateral and any and all certificates of title and other documents relating to the Collateral. Lender may require Borrower and/or Guarantor to assemble the Collateral and make it available to Lender at a place to be designated by Lender. Lender also shall have full power to enter, provided Lender does so without a breach of the peace or a trespass, upon the property of Borrower and/or Guarantor to take possession of and remove the Collateral. If the Collateral  contains other goods not covered by this Agreement at the  time of repossession, Borrower and/or Guarantor agrees Lender may take such other goods, provided that Lender makes reasonable efforts to return  them to Borrower and/or Guarantor after repossession.

E. Sell the Collateral: Lender shall have full power to sell, lease, transfer, or otherwise deal with the Collateral or proceeds thereof in Lender's own name or that of Borrower and/or Guarantor. Lender may sell the Collateral at public auction or private sale. Unless the Collateral threatens to decline speedily in value or is of a type customarily sold on a recognized market, Lender will give Borrower, Guarantor and other persons as required by law, reasonable notice of the time and place of any public sale, or the time after which any private sale or any other disposition of the Collateral is to be made. However, no notice need be provided to any person who, after an Event of Default occurs, enters into and authenticates an agreement waiving that person's right to notification of sale. The requirements of reasonable notice shall be met if such notice is given at least 10 days before the time of the  sale or disposition . All expenses relating to the disposition of the Collateral, including without limitation the expenses of retaking, holding, insuring, preparing for sale and selling the Collateral, shall become a part of the Obligations secured by this Agreement. To the extent permitted by applicable law, all such expenses will become a part of the Obligations and, at Lender's option, will: (i) be payable on demand; (ii) be added to the balance of the Loan and be apportioned among and be payable with any installment payments to become due during either (a) the term of any applicable insurance policy or (b) the remaining term of the Loan; or (iii) be treated as a balloon payment that will be due and payable at the Loan's maturity.

F. Appoint Receiver: Lender shall have the right to have a receiver appointed to take possession of all or any part of the Collateral, with the power to protect and preserve the Collateral, to operate the Collateral  preceding foreclosure or sale, and to collect the rents from the Collateral and apply the proceeds, over and above the cost of the receivership, against the Obligations. The receiver may serve without bond if permitted by law. Lender's right to the appointment of a receiver shall exist whether or not the apparent value of the Collateral exceeds the Obligations by a substantial amount.

ondeck BUSINESS LOAN AND SECURITY AGREEMENT SUPPLEMENT

Employment by Lender shall not disqualify a person from seNing as a receiver.

G. Collect Revenues. Apply Accounts: Lender, either itself or through a receiver, may collect the payments, rents, income, and revenues from the Collateral. Lender may at any time in Lender's discretion transfer any Collateral · into Lender's own name or that of Lender's nominee and receive the payments, rents, income and revenues therefrom  and   hold the   same  as security for the . Obligations or apply it to payment of the Obligations in such order of preference as Lender may determine. Insofar as the Collateral consists of accounts, general intangibles,  insurance  policies,  instruments, chattel paper, choses in action, or similar property, Lender may, demand, collect, receipt for, settle, compromise, adjust, sue for , foreclose or realize on the Collateral as Lender may determine, whether or not any amount included within the Obligations is then due. For these purposes, Lender may, on behalf of and in the name of Borrower and/or Guarantor, receive, open and dispose of mail addressed to Borrower; change any address to which mail and payments are to be sent; and endorse notes, checks, drafts, money orders, documents of title , instruments .and items pertaining to payment, shipment or storage of any Collateral. To facilitate collections, Lender may notify account debtors and obligors on any Collateral to make payments directly to Lender.

H. Obtain Deficiency: If Lender chooses to sell any or all of the Collateral, Lender may obtain a judgment against Borrower and/or Guarantor for any 'deficiency remaining on the Obligations due to Lender after application of all amounts received from the exercise of the rights provided in this Agreement. Borrower and/or Guarantor shall be liable for a deficiency even if the transaction described in this subsection is a sale of accounts or chattel paper.

I. Other Rights and Remedies: Lender shall have all the rights and remedies of a secured creditor under the provisions of the Uniform Commercial Code, as may be amended from time to time. In addition, Lender shall have and may exercise any or all other rights and remedies it may have available at law, in equity or otherwise.

J. Election of Remedies: Except as may be prohibited by applicable law, all of Lender's rights . and remedies, whether evidenced by this Agreement , any related documents, or by any other writing, shall be cumulative and may be exercised singularly or concurrently. Election by Lender to pursue any remedy shall not exclude pursuit of any other remedy , and an election to make expenditures or to take action to perform an obligation of Borrower under the Agreement , after Borrower's failure to perform, shall not affect Lender's right to declare a default and exercise its remedies.

32. CONSENT TO JURISDICTION AND VENUE. Subject to Section 33 below,  Borrower, Guarantors and Lender agree that any action or proceeding to enforce or arising out of this Agreement may be brought in any court of the Commonwealth of Virginia or in the United States District Court for the Eastern District of Virginia, and Borrower and Guarantors waive personal seNice of process. Borrower, Guarantors and Lender agree that venue is proper in such courts.

33. ARBITRATION. To the extent that a claim or dispute arises out of, or in relation to this Agreement, including without limitation, the terms , construction , interpretation, performance, termination ,  breach, or enforceability of this Agreement, the parties (Borrower, Guarantors and Lender) hereby agree that the claim or dispute shall be, at the election of any party, resolved by mandatory binding arbitration in Virginia within a reasonable time period not to exceed ninety (90) days. The parties agree  that the arbitration shall be administered by JAMS and the arbitration shall be conducted in accordance with the Exped ited Procedures of the JAMS Comprehensive Arbitration Rules and Procedures except as otherwise agreed in this Agreement. The arbitrator shall be chosen in accordance with the procedures of JAMS , and shall base the award on applicable Virginia law. The parties agree that the arbitration shall be conducted by a single arbitrator. Judgment on the award may be entered in any court having jurisdiction, subject to Section 32 above. The parties further agree that the costs of the arbitration shall be divided equally between them, except that Lender will consider in good faith a request by Borrower to pay the costs of arbitration. Each party may pursue arbitration solely in an individual capacity, and not as a representative or class member in any purported class or representative proceeding. The arbitrator may not consolidate more than one person's or entity's claims, and may not otherwise preside  over  any  form of a representative or class proceeding. This arbitration section is governed by the  Federal Arbitration Act , 9 U.S.C. §§ 1-16.

34. NO WAIVER BY LENDER. No delay or omission on the part of Lender in exercising any rights under this Agreement , any related guaranty or applicable law shall operate as a waiver of such right or any other right. Waiver on any one occasion shall not be construed as a bar to or waiver of any right or remedy on any future occasion. All Lender's rights and remedies, whether evidenced hereby or by any other agreement, instrument or paper, shall ·be cumulative and may be exercised singularly or concurrently .

35. ASSIGNMENT. This Agreement shall bind and inure to the benefit of the respective successors and assigns of each of the parties hereto; provided, however, that Borrower may not assign this Agreement or any rights or duties

ondeck BUSINESS LOAN AND SECURITY AGREEMENT SUPPLEMENT

hereunder without Lender's prior written consent and any prohibited assignment shall be absolutely null and void. No consent to an assignment by Lender shall release Borrower from its Obligations.   Lender may assign this Agreement and its rights and duties hereunder and no consent or approval by Borrower is required in connection with any such assignment.  Lender reserves the right to sell, assign , transfer, negotiate or grant participations in all or any part of, or any interest in Lender's rights and benefits hereunder. In connection with any assignment or participation,  Lender may disclose all documents and information that Lender now  or  hereafter  may  have  relating  to  Borrower  or Borrower's business. To the extent that Lender assigns its rights and obligations hereunder to another party, Lender thereafter shall be released from such assigned obligations to Borrower and such assignment shall affect a novation between Borrower and such other party. On Deck Capital, Inc. (in its capacity as Servicer) or a svccessor servicer (if any) shall, acting solely for this purpose as a non-fiduciary agent of Borrower, maintain at one of its offices in the United States a copy of each assignment agreement delivered to it with respect to this Loan and a register for the recordation of the name of each assignee of this Loan, and principal and interest amount of this   Loan owing to, such assignee pursuant to the terms hereof. The entries in such register shall be conclusive, and Borrower, Lender and each such assignee may treat each person whose name is recorded therein  pursuant  to  the  terms  hereof  as  a  "Lender" hereunderforallpurposesofthisAgreement , notwithstanding   notice  to  the  contrary.   The  register maintained for this Loan shall be available for inspection by Borrower and any such assignee of this Loan, at any reasonable time  upon reasonable prior notice to On Deck Capital, Inc. (in its capacity as Servicer) or the applicable successor  servicer  (if any).  This  Section  35  shall  be construed so that this Loan is at all times maintained in "registered form" within the meaning of Sections 163(f), 871(h)(2) and 881(c)(2) of the Internal Revenue Code and any related Treasury regulations (or any other relevant or successor provisions of the Internal Revenue Code or of such Treasury regulations).

36. INTERPRETATION. Paragraph and section headings used in this Agreement are for convenience only, and shall not affect the construction of this Agreement. Neither this Agreement nor any uncertainty or ambiguity herein shall be construed or resolved against Lender or Borrower, whether under any rule of construction or otherwise. On the contrary, this Agreement has been reviewed by all parties and shall be construed and interpreted according to the ordinary meaning of the words used so as to fairly accomplish the purposes and intentions of all parties hereto.

37. SEVERABILITY. If one or more provisions of this Agreement (or the application thereof) is determined invalid, illegal or unenforceable in any respect in any jurisdiction, the same shall not invalidate or render illegal or unenforceable such provision (or its application) in any other jurisdiction or any other provision of this Agreement (or its application).

38. NOTICES. Except as otherwise provided in this Agreement, notice under this Agreement must be in writing. Notices will be deemed given when deposited in the U.S. mail, postage prepaid, first ·class mail; when delivered in person; when sent by registered mail; by certified mail; or by nationally recognized overnight courier; or when sent by electronic mail. Notice to Borrower will be  sent to Borrower's last known address or electronic mail address in Lender's records for this Loan. Notice to Lender may be sent to: On Deck Capital, 901 N Stuart Street, Suite 700, Arlington, VA 22203, Attn: Director of Operations .

39. RECORDKEEPING AND AUDIT REQUIREMENTS. Lender shall have no obligation to maintain any electronic records or any documents, schedules, invoices or any other paper delivered to Lender by Borrower in connection with this Agreement or any other agreement other than as required by law. Borrower will at all times keep accurate and complete records of Borrower's accounts and Collateral. At Lender's  request, Borrower shall deliver to Lender: (i) schedules of accounts and general intangibles; and (ii) such other information regarding  the Collateral as Lender shall request. Lender, or any of its agents, shall have the right to call any telephone numbers that Borrower has provided or may provide in the future or otherwise in the Lender's possession (including any cellular or mobile telephone numbers),at intervals to be determined by Lender, and without hindrance or delay, to inspect, audit, check, and make extracts from any copies of the books, records, journals , orders, receipts, correspondence that relate to Borrower's accounts and Collateral or other transactions between the parties thereto and the general financial condition of Borrower and Lender may remove any of such records temporarily for the purpose of having copies made thereof. If Borrower was referred to Lender for this Loan by a third party (the "Referring Party"), then Borrower consents to Lender sharing certain reasonable information about Borrower with the Referring Party for purposes of the Referring Party verifying and/or auditing loans made through such Referring Party's referrals.

40. GOVERNING LAW. Subject to Section 33 above, our relationship including this Agreement and any claim, dispute or controversy (whether in contract, tort, or otherwise) at any time arising from or relating to this Agreement is governed by, and this Agreement will be construed in accordance with, applicable federal law and (to the extent not preempted by federal law) Virginia law without regard to internal principles of conflict of laws. The legality, enforceability and interpretation of this Agreem ent and the amounts contracted for, charged and reserved under this

ondeck BUSINESS LOAN AND SECURITY AGREEMENT SUPPLEMENT

Agreement will be governed by such laws. Borrower understands and agrees that (i) Lender is located in Virginia, (ii) Lender makes all credit decisions from Lender's office in Virginia, (iii) the Loan is made in Virginia (that is, no binding contract will be formed until Lender receives and accepts Borrower's signed Agreement in Virginia) and (iv) Borrower's payments are not accepted until received by Lender in Virginia.

41. WAIVER OF NOTICES AND OTHER TERMS. Except for any notices provided for in this Agreement , Borrower and any person who has obligations pursuant to this Agreement ( e.g., a Guarantor), to the extent not prohibited by applicable law hereby, waives demand, notice of nonpayment, notice of intention to accelerate, notice of acceleration, presentment, protest, notice of dishonor and notice of protest. To the extent permitted by applicable law, Borrower and any person who has obligations pursuant to this Agreement also agrees: Lender is not required to file suit, show diligence in collection against Borrower  or any person who has obligations pursuant to this Agreement , or proceed against any Collateral; Lender may, but will not be obligated to, substitute , exchange or release any Collateral; Lender may release any Collateral, or fail to realize upon or perfect Lender's security interest in any Collateral; Lender may, but will not be obligated to, sue one or more persons without joining or suing others; and Lender may modify, renew, or extend this Agreement (repeatedly and for any length of time) without notice to or approval by any person who has obligations pursuant to this Agreement (other than the party with whom the modification, renewal or extension is made).

42. MONITORING, RECORDING AND ELECTRONIC COMMUNICATIONS. In order to ensure a high quality of service for Lender's customers , Lender may monitor and/or record telephone calls between Borrower and Lender's employees or agents. Borrower acknowledges that Lender may do so and agrees in advance to any such monitoring or recording of telephone calls. Borrower also agrees that Lender may communicate with Borrower electronically by e- mail.

43. JURY TRIAL WAIVER AND CLASS ACTION WAIVER. To the extent not prohibited by applicable law, Borrower, Guarantors and Lender waive their right to a trial by jury of any claim or cause of action based upon, arising out of or related to the Agreement and all other documentation evidencing the Obligations, in any legal action or proceeding. Subject to Section 33 above, any such claim or cause of action shall be tried by court sitting without a jury.

THE PARTIES HERETO (LENDER , BORROWER AND GUARANTORS) WAIVE ANY RIGHT TO ASSERT ANY CLAIMS AGAINST  ANY OTHER PARTY AS A REPRESENTATIVE  OR MEMBER IN ANY CLASS OR

BUSINESS LOAN AND SECURITY AGREEMENT REPRESENTATIVE ACTION , EXCEPT WHERE SUCH WAIVER IS PROHIBITED BY LAW OR AGAINST PUBLIC POLICY. TO THE EXTENT ANY PARTY IS PERMITTED BY LAW OR COURT OF LAW TO PROCEED WITH A CLASS OR REPRESENTATIVE ACTION AGAINST ANY OTHER, THE PARTIES HEREBY AGREE THAT: (1) THE PREVAILING PARTY SHALL NOT BE ENTITLED TO RECOVER ATTORNEYS' FEES OR COSTS ASSOCIATED WITH PURSUING THE CLASS OR REPRESENTATIVE ACTION (NOT WITHSTANDING ANY OTHER PROVISION IN THIS AGREEMENT); AND (2) THE PARTY WHO INITIATES OR PARTICIPATES AS A MEMBER OF THE CLASS WILL NOT SUBMIT A CLAIM OR OTHERWISE PARTICIPATE IN ANY RECOVERY SECURED THROUGH THE CLASS OR REPRESENTATIVE ACTION.

44. CONFIDENTIALITY. Borrower shall not make, publish or otherwise disseminate in any manner a copy of this Agreement or any public statement or description of the terms of this Agreement , except to its employees , advisors and similar persons who have a legitimate need to know its contents.

45. ENTIRE AGREEMENT. Any application Borrower signi;;d or otherwise submitted in connection with the Loan, the accompanying Business Loan and Security Agreement Supplement and the Authorization Agreement for Direct Deposit (ACH Credit) and Direct Payments (ACH Debits) and any other documents required by Lender now or in the future in connection with this Agreement and Borrower's Loan are hereby incorporated into and made a part of this Agreement. This Agreement is the entire agreement of the parties with respect to the subject matter hereof and supersedes any prior written or verbal communications or instruments relating thereto.

46. COUNTERPARTS; ELECTRONIC SIGNATURES. This Agreement may be executed in one or more counterparts , each of which counterparts shall be deemed to be an original, and all such counterparts shall constitute one and the same instrument. For purposes of the execution of this Agreement, signatures delivered by electronic or fax transmission shall be treated in all respects as original signatures.

47. CUSTOMER SERVICE CONTACT INFORMATION. If you have questions or comments about your Loan, you may contact us by (i) e-mail at support@ondeck.com, (ii) telephone at (888) 269-4246 or (iii) mail at 901 N Stuart Street, Suite 700, Arlington, VA 22203,Attn: Director of Operations.

ondeck BUSINESS LOAN AND SECURITY AGREEMENT SUPPLEMENT

48. GRANT OF LICENSE TO USE THE ON DECK PLATFORM. Subject to Borrower's compliance with this Agreement and the Terms of Use for the On Deck Platform, Lender grants Borrower a nonexclusive, revocable, non- transferable, non-sublicenseable , limited right and royalty- free license to use the On Deck Platform, effective solely during the term of the Loan and so long as an Event of Default has not occurred. The license granted to Borrower is personal, and no rights hereunder may be transferred by Borrower without the express written approval of Lender. Lender may terminate the license granted hereunder without notice at any time after an Event of Default has occurred.

49. PERSONAL GUARANTY. Each Guarantor, jointly and severally (if more than one), absolutely and unconditionally guarantee the prompt payment to Lender, including its successors and assignees , of any and all Obligations incurred by the Borrower pursuant to the Agreement (this "Personal Guaranty"). Each Guarantor furiher agrees to repay the Obligations on demand, without requiring Lender first to enforce payment against Borrower. This is a guarantee of payment and not of collection.This is an absolute, unconditional, primary, and continuing obligation and will remain in full force and effect until the first to occur of the following:(a) all of the Obligations have been indefeasibly paid in full, and Lender has terminated this Personal Guaranty, or (b) 30 days after the date on which written notice of revocation is actually received and accepted by Lender. No revocation will affect: (i) the then existing liabilities of the revoking Guarantor under this Personal Guaranty; (ii) · Obligations created, contracted , assumed, acquired or incurred prior to the effective date of suchrevocation; (iii) Obligationscreated,contracted, assumed, acquired or incurred after the effective date of such revocation pursuant to any agreement entered into or commitment obtained prior to the effective date of such revocation; or (iv) any Obligations then or thereafter arising under the agreements or instruments then in effect and then evidencing the Obligations . Each Guarantor represents and warrants that it is a legal resident of the United States of America. Each Guarantor waives all notices to which the Guarantor might otherwise be entitled by law, and also waives all defenses, legal or equitable, otherwise available to the Guarantor.This Personal Guaranty shall be construedinaccordancewiththelawsofthe Commonwealth of Virginia , and shall inure to the benefit of Lender, its successors and assigns. To the extent not prohibited by applicable law, each of the undersigned Guarantors waives its right to a trial by jury of any claim or cause of action based upon, arising out of or related to this guaranty, the Agreement and all other documentation evidencing  the  Obligations, in any legal action  or proceeding . Subject to Section 33 above, any such claim or cause of action shall be tried by court sitting without a jury.

50. CERTIFICATION AND SIGNATURES. By executing this Agreement or authorizing the person signing or affirming below to execute on its behalf, Borrower certifies that Borrower has received a copy of this Agreement and that Borrower has read, understood and agreed to be bound by its terms. Each person signing or affirming below certifies that each person is signing on behalf of the Borrower and/or in the capacity indicated below the signer's name (and if Borrower is a sole proprietorship , in the capacity of the owner of such sole proprietorship) and that such signer is authorized to execute this Agreement on behalf of or the in stated relation to Borrower.

Use of Proceeds Certification

As referred to in Section 4, by signing or affirming below, the Borrower certifies, acknowledges and understands that the proceeds from the requested Loan will be used solely for purchasing or acquiring specific products or services , for the following purposes only:

- specified merchandise

- insurance (but not self insurance programs)

- services or equipment

- inventory or other specified goods

- improvements I construction of facilities (but not purchase of real estate)

- loans to finance specified sales transactions

- public works projects or educational services (e.g., training)

ondeck BUSINESS LOAN AND SECURITY AGREEMENT SUPPLEMENT

Signature Page

I hereby, as a duly authorized agent of Borrower, and in my individual and personal capacity as Guarantor, affirm that I have read and understand the terms and conditions of, consent to, and agree to be bound by, the Business Loan and Security Agreement (inclusive of the Guaranty therein), the accompanying  Business Loan and Security Agreement Supplement, and the accompanying Authorization Agreement for Direct Deposit (ACH Credits) and Direct Payments (ACH Debits).

Guarantor #1:	/s/ Chris Blisard	Borrower:	/s/ Chris Blisard
	(Signature)		(Signature)
Name:	Chris Blisard	Name:	Chris Blisard
Date:	1/5/18	Date:	1/5/18

Guarantor #2:	/s/ Todd Kannegieter	Borrower:	/s/ Todd Kannegieter
	(Signature)		(Signature)
Name:	Todd Kannegieter	Name:	Todd Kannegieter
Date:	1/5/18	Date:	1/5/18

Guarantor #3:		Borrower:
	(Signature)		(Signature)
Name:		Name:
Date:		Date:

For Lender 's Use Only: This Agreement has been received and accepted by Lender in Virginia  after being signed by Borrower and any Guarantor(s) . By:
Date:
	(Signature)
	(Name)

ondeck AUTHORIZATION AGREEMENT FOR DIRECT DEPOSIT (ACH CREDIT) AND DIRECT PAYMENTS (ACH DEBITS)

This Authorization Agreement for Direct Deposit (ACH Credit) and Direct Payments (ACH Debits) is part of (and incorporated by reference into) the Business Loan and Security Agreement. Borrower should keep this important legal document for Borrower's records.

DISBURSMENT OF LOAN PROCEEDS. By executing this Authorization Agreement for Direct Deposit (ACH Credit) and Direct Payments (ACH Debits), Borrower authorizes Lender to disburse the Loan proceeds less the amount of any applicable fees upon Loan approval  by initiating an ACH credit, wire transfer or similar means to the checking account indicated herein (or a substitute checking account Borrower later identifies and is acceptable to Lender) (hereinafter referred to as the "Designated Checking Account") in the disbursal amount set forth in the accompanying Business Loan and Security Agreement Supplement. This authorization is to remain in full force and effect until Lender has received written notification from Borrower of its termination in such time and in such manner as to afford Lender and Borrower's depository bank a reasonable opportunity to act on it.

AUTOMATIC PAYMENT PLAN. Enrollment in Lender's Automatic Payment Plan is required for Loan approval. By executing this Authorization Agreement for Direct Deposit (ACH Credit) and Direct Payments (ACH Debits), Borrower agrees to, and hereby, enrolls in the Automatic Payment Plan and authorizes Lender to collect payments required under the terms of Borrower's Business Loan and Security Agreement by initiating ACH debit entries to the Designated Checking Account in the amounts and on the dates provided in the payment schedule set forth in the accompanying Business Loan and Security Agreement Supplement. Borrower authorizes Lender to increase the amount of any scheduled ACH debit entry or assess multiple ACH debits for the amount of any previously scheduled payment(s) that was not paid as provided in the payment schedule and any unpaid Fees. This authorization is to remain in full force and effect until Lender has received written notification from Borrower of its termination in such time and in such manner as to afford Lender and Borrower's depository bank a reasonable opportunity to act on it. Lender may suspend or terminate Borrower's enrollment in the Automatic Payment Plan immediately if Borrower fails to keep Borrower's designated checking account in good standing or if there are insufficient funds in Borrower's checking account to process any payment (or if Lender is otherwise unable to collect any amounts by ACH debit owed to Lender under the Loan or under any other loan or extension of credit by Lender to Borrower) . If Borrower revokes the authorization or Lender suspends or terminates Borrower's enrollment in the Automatic Payment Plan, Borrower still will be responsible for making timely payments pursuant to the alternative payment methods described in the Business Loan and Security Agreement.

BUSINESS PURPOSE ACCOUNT. By executing this Authorization Agreement for Direct Deposit (ACH Credit) and Direct Payments (ACH Debits), Borrower attests that the Designated Checking Account was established for business purposes and not primarily for personal, family or household purposes.

ACCOUNT CHANGES. Borrower agrees to promptly notify Lender in writing if there are any changes to the account and routing numbers of the Designated Checking Account.

MISCELLANEOUS. Lender is not responsible for any fees charged by Borrower's bank as the result of credits or debits initiated under this agreement. The origination of ACH transactions to Borrower's account must comply with the provisions of U.S. law.

Routing Number:	XXXXXXXXXX	Account Number:	XXXXXXXXXXXX
Tax ID:	811256856
By:	/s/ Chris Blisard
	(Signature)
Name:	Chris Blisard
Date:	1/5/18

EX1A-12 OPN CNSL.15

Exhibit 12

February 5, 2018

The Board of Directors

VirtualArmour International Inc.

8085 S Chester Street, Suite 108

Centennial, CO 80112

Re:Offering Statement on Form 1-A

Ladies and Gentlemen:

We have acted as securities counsel to VirtualArmour International Inc. (the "Company"), in connection with the preparation and filing of an offering statement on Form 1-A (as amended or supplemented, the "Offering Statement", SEC File No. 024-10752) filed with the Securities and Exchange Commission under the Securities Act of 1933, as amended (the "Act"), related to the offering of an aggregate of 11,153,889 shares of Company common stock no par value (the "Common Stock").  The Offering Statement contemplates the sale by the Company of 11,153,889 shares of Common Stock (the "Offering Stock").  This opinion is being delivered in connection with the Offering Statement, to which this opinion appears as an exhibit.

We have examined the Offering Statement and, for the purposes of this opinion, we have also examined the originals, or duplicate, certified, conformed, or electronic copies, of such corporate records, agreements, documents and other instruments and have made such other investigations as we have considered necessary or relevant for the purposes of this opinion.

Based and relying upon the foregoing, and subject to the qualifications, assumptions and limitations stated herein, we are of the opinion that the Offering Stock has been duly authorized and, upon issuance, delivery and payment therefor in accordance with the terms of the Offering Statement and any relevant agreements thereunder, will be legally and validly issued, fully paid and non-assessable.

No opinion is being rendered hereby with respect to the truth and accuracy, or completeness of the Offering Statement or any portion thereof.  We express no opinion other than as to the federal laws of the United States of America and the Colorado Business Corporation Act (including the statutory provisions, the applicable provisions of the Colorado Constitution and reported judicial decisions interpreting the foregoing).

We further consent to the use of this opinion as an exhibit to the Offering Statement.  In giving such consent, we do not admit that we are in the category of persons whose consent is required under Section 7 of the Act.

Sincerely,

/s/ Burns, Figa & Will, P.C.

BURNS, FIGA & WILL, P.C.