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12. Commitments
 3 Months Ended
Mar. 31, 2015
Commitments and Contingencies Disclosure [Abstract]  
12. Commitments

Note 12 Commitments

 

(A) Operating Lease

 

In January 2014, the Company executed a 39 month lease for a corporate headquarters. The Company paid a security deposit of $27,020.

 

In October, 2014, the Company executed a 53 month lease for a new corporate headquarters with a base rent of $97,266 escalating annually through 2019. The Company paid a security deposit of $1,914.

 

In October, 2014, the Company entered into a sublease agreement to sublease its previous office space through March, 2017.  In connection with the sublease, the Company collected $34,981 as a security deposit.

 

The minimum rent obligations are approximately as follows:

  

Year  Minimum Obligation  Sublease Rentals  Net Obligation
                  
 2015   $74,765   $63,176   $11,588 
 2016    109,720    86,688    23,032 
 2017    46,568    22,263    24,305 
 2018    25,154    —      25,154 
 2019    8,615    —      8,615 
                  
 Total   $264,822   $172,127   $92,695 

 

(B) Employment Agreement – Chief Executive Officer

 

In November 2014, the Company entered into an employment agreement with its new Chief Executive Officer. In addition to salary, the agreement provided for the issuance of 750,000 restricted shares to him, vesting as follows: 250,000 after the first 6 months of employment and 500,000 additional shares at December 31, 2015. Under terms of the agreement the executive would receive additional compensation in the form of stock options to purchase shares of Company stock equal to one half of one percent (.005) of quarterly net income. The strike price of the options will be established at the time of the grant. The options will vest in twelve months and expire after sixty months. In addition to the stock options compensation, the executive has performance incentives tied to revenue and profits. As there were no revenues or profit for years ending December 31, 2014 or 2013, no additional options were issued or profit sharing compensation was provided to the Chief Executive Officer.

 

The company cancelled a 2013 agreement with previous CEO in November 2014. That agreement was cancelled upon the Company executing a Mutual Release and Waiver agreement (Termination Agreement) with the CEO dated November, 2014. The Termination Agreement allowed for immediate vesting of 750,000 shares of the original 1,250,000 unvested shares previously granted to the CEO. In addition the company agreed to pay the executive .5% (.005) of sales associated with one selected customer occurring for up to 36 months.

 

(C) Consulting Agreement

 

The Company has a 3 year consulting agreement with a Non-Executive Director which expires in November 2016 which carries an annual payment of $150,000 cash, stock or 5 year options equal to .5% of Company’s annual net sales.