NOTE 9 – COMMITMENTS AND CONTINGENCIES

The Company is committed to an employment agreement with former CEO of the Company. The five-year agreement is dated August 30, 2012, with a one-year renewal option held by the former CEO. The agreement provides for a base salary of $175,000, which increases 10% on September 1 of each year; a monthly car allowance of $500; an annual bonus based on the level of the Company’s pre-tax income; payment of up to $10,000 in life insurance premiums; options to purchase 4.5 million shares of the Company common stock at an exercise price of $0.01 per share; a death benefit of at least $2 million dollars; and a payment as defined in the agreement in the event of a Company change in control.

The balance owed under this agreement at June 30, 2017 and December 31, 2016 was $968,063 and $657,497, respectively. These amounts are reflected in the Company financial statements under the caption accounts payable and accrued expenses.