NOTE 6 - RELATED PARTY TRANSACTIONS

Loan Agreement

On December 15, 2010, the Company entered into a loan agreement (the “Loan Agreement”) by and between Arnold Klann, the Chief Executive Officer, Chairman of the board of directors and majority shareholder of the Company, as lender (the “Lender”), and the Company, as borrower. Pursuant to the Loan Agreement, the Lender agreed to advance to the Company a principal amount of Two Hundred Thousand United States Dollars ($200,000) (the “Loan”). The Loan Agreement requires the Company to (i) pay to the Lender a one-time amount equal to fifteen percent (15%) of the Loan (the “Fee Amount”) in cash or shares of the Company’s common stock at a value of $0.50 per share, at the Lender’s option; and (ii) issue the Lender warrants allowing the Lender to buy 500,000 common shares of the Company at an exercise price of $0.50 per common share. The Company has promised to pay in full the outstanding principal balance of any and all amounts due under the Loan Agreement within thirty (30) days of the Company’s receipt of investment financing or a commitment from a third party to provide One Million United States Dollars ($1,000,000) to the Company or one of its subsidiaries (the “Due Date”), to be paid in cash. These warrants expired on December 15, 2013.

Related Party Line of Credit

On November 10, 2011, the Company obtained a line of credit in the amount of $40,000 from its Chairman/Chief Executive Officer and, at the time, the majority shareholder to provide additional liquidity to the Company as needed, at his sole discretion. Under the terms of the note, the Company is to repay any principal balance and interest, at 12% per annum, within 30 days of receiving qualified investment financing of $100,000 or more. On April 10, 2014, the line of credit was increased to $55,000. On March 13, 2016, the line of credit was increased to $125,000, and then incrementally increased to $275,000 on August 17, 2017. As of March 31, 2018, the outstanding balance on the line of credit was approximately $256,245 with $18,755 remaining under the line. Although the Company has received over $100,000 in financing since this agreement was put into place, Mr. Klann does not hold the Company in default.

As of March 31, 2018 and December 31, 2017, $77,669 and $68,985 respectively, in accrued interest is owed under this line of credit and included with accrued liabilities.

Accrued Salaries

As of March 31, 2018 and December 31, 2017, accrued salary due to the Chief Executive Officer included within accrued liabilities was $368,474 and $379,950, respectively. In connection with the 3a10 transaction, the CEO assigned $125,145 to Tarpon Bay.

Total accrued and unpaid salary of all employees is $1,625,816 and $1,663,695 as of March 31, 2018, and December 31, 2017, respectively, representing 33 months of accrual at March 31, 2018. Of the total accrued salaries, $792,000 is included in the 3a10 transaction with Tarpon Bay Partners with $48,968 total having been reduced by the 3a10 transaction as of March 31, 2018.