(A) LEASE COMMITMENTS

On November 15, 2013 the Company signed a two-year lease agreement with AAMD, LLC for approximately 3,060 square feet of office space located in Winter Garden, Florida in which the Company has its headquarters.  The lease provides for a one-year renewal term at the option of the Company.  Five year lease obligations for the office space are as follows:

Total rent expense for the year ended June 30, 2014 was approximately $33,000.

(B) EMPLOYMENT AGREEMENTS WITH NAMED EXECUTIVE OFFICERS

On July 1, 2013, Robert McDermott entered into an Employment Agreement (the "McDermott Agreement") with the Company. Pursuant to the terms of the McDermott Agreement; Mr. McDermott was appointed by the Board of Directors as the Chief Executive Officer of the Company.  The McDermott Agreement is a two-year Employment Agreement wherein Mr. McDermott is to receive an annual base salary of $200,000 plus an annual bonus up to 100% of his base salary, which bonus is to be determined by the Board. At June 30, 2014, the Company has accrued $200,000 for amounts due to Mr. McDermott under his employment agreement which is included in Employee/contractor payables on the accompanying consolidated balance sheets.  In addition, Mr. McDermott was awarded an option to acquire 100,000,000 shares of the Company’s Common Stock.  Twenty percent of the option award (20,000,000 options) was vested on July 1, 2013.  The remaining options are to be vested at the rate of 20,000,000 each on the subsequent anniversary dates of the date of the McDermott Agreement.. The Common Stock option has an exercise price equal to the average of the  ten (10) trading day closing price of the Common Stock prior to the Effective Date (the effective date being June 1, 2013) and contains a provision for "cashless exercise" at the discretion of Mr. McDermott. Further, Mr. McDermott was awarded 5 shares of the Company’s Series B preferred stock.  One share of the Series B stock was vested on July 1, 2013, with the remaining McDermott Series B shares to be vested at the rate of one each on each of the subsequent anniversary dates of July 1, 2013.  In the event of termination of employment due to change in control, as defined, Mr. McDermott will continue to receive his base salary and annual bonus computed at 100% of base salary for 24 months following the date of termination.  In addition, the stock options will become fully vested as of the date of termination and the restrictions on the Series B preferred stock will be lifted as of the date of termination.  In the event of termination during the initial two year term of the agreement without cause, Mr. McDermott will receive his base salary for the 18 month period after date of termination. In the event of termination of employment due to death or disability, Mr. McDermott or his estate will continue to receive the base salary Mr. McDermott was receiving for six months following the date of termination and the stock options will become fully vested as of the date of termination and the restrictions on the Series B preferred stock will be lifted as of the date of termination.

On January 1, 2014, Donald Douglas (the “Douglas Agreement”) entered into an Employment Agreement with the Company.  Pursuant to the terms of the Agreement, Mr. Douglas was appointed by the Board of Directors as the Chief Operating Officer of the Company.  The Douglas Agreement is a two-year Employment Agreement wherein Mr. Douglas is to receive an annual base salary of $120,000 and is eligible to receive annual incentive bonus compensation pursuant, which bonus is to be determined by the Board.  The Board awarded Mr. Douglas a $25,000 bonus which is accrued on the June 30, 2014 Balance Sheet under Employee/Contractor Payable.

In addition, Mr. Douglas was awarded an option to acquire 50,000,000 shares of the Company’s Common Stock.  Twenty-five percent of the option award (12,500,000 options) which vested January 1, 2014.  The remaining options are to vest at the rate of 12,500,000 shares on the subsequent anniversary dates of the date of the Douglas Agreement. The Common Stock option has an exercise price equal to the average of the ten (10) trading day closing price of the Common Stock prior to the Effective Date (the effective date being January 1, 2014).

In the event of termination of employment due to change in control, as defined, Mr. Douglas will continue to receive his base salary and annual bonus computed at 100% of base salary for 24 months following the date of termination.  In addition, the stock options will become fully vested as of the date of termination.  In the event of termination during the initial two year term of the agreement without cause, Mr. Douglas will receive his base salary for the 18 month period after date of termination. In the event of termination of employment due to death or disability, Mr. Douglas or his estate will continue to receive the base salary Mr. Douglas was receiving for six months following the date of termination and the stock options will become fully vested as of the date of termination.

On January 1, 2014, Srini Parthasarathy (the “Parthasarathy Agreement”) entered into an Employment Agreement with the Company.  Pursuant to the terms of the Agreement, Mr. Parthasarathy was appointed by the Board of Directors as the Chief Technology Officer of the Company.  The Parthasarathy Agreement is a two-year Employment Agreement wherein Mr. Parthasarathy is to receive an annual base salary of $120,000 and is eligible to receive annual incentive bonus compensation pursuant, which bonus is to be determined by the Board.

In addition, Mr. Parthasarathy was awarded an option to acquire 50,000,000 shares of the Company’s Common Stock.  Twenty-five percent of the option award (12,500,000 options) vested on January 1, 2014.  The remaining options vest at the rate of 12,500,000 shares each on the subsequent anniversary dates of the date of the Parthasarathy Agreement. The Common Stock option has an exercise price equal to the average of the ten (10) trading day closing price of the common stock prior to the Effective Date (the effective date being January 1, 2014).

In the event of termination of employment due to change in control, as defined, Mr. Parthasarathy will continue to receive his base salary and annual bonus computed at 100% of base salary for 24 months following the date of termination.  In addition, the stock options will become fully vested as of the date of termination.  In the event of termination during the initial two year term of the agreement without cause, Mr. Parthasarathy will receive his base salary for the 18 month period after date of termination. In the event of termination of employment due to death or disability, Mr. Parthasarathy or his estate will continue to receive the base salary Mr. Parthasarathy was receiving for six months following the date of termination and the stock options will become fully vested as of the date of termination.

On June 1, 2013, Fred Zolla (the Zolla Agreement) entered into an Employment Agreement with the Company.  Pursuant to the terms of the Agreement, Mr. Zolla was appointed by the Board of Directors as the Executive Chairman of the Board of Directors  of the Company.  The Zolla Agreement is a two-year Employment Agreement wherein Mr. Zolla is to receive an annual base salary of $200,000 and is eligible to receive annual incentive bonus compensation pursuant, which bonus is to be determined by the Board.

In addition, Mr. Zolla was awarded an option to acquire 100,000,000 shares of the Company’s common stock at $0.017 per share and five shares of the Company’s preferred B stock at $125,000 per share.  One-third of the option award was vested on June 1, 2013.  The remaining shares were vested at the rate of one-third of both the common and preferred shares each on the subsequent anniversary dates of the date of the Zolla Agreement.

On November 18, 2013 a Termination Agreement was entered into by Mr. Zolla and the Company.  This agreement terminated, effective November 18, 2013, Mr. Zolla’s aforementioned Employment Agreement.  In the Termination Agreement, Mr. Zolla resigned his position as a Director and as Executive Chairman of the Board of Directors of the Company.

Simultaneous with the Termination Agreement, a Consulting Agreement between the Company and Mr. Zolla was executed wherein Mr. Zolla was to act as a consultant to the Company for a period of eighteen months commencing November 19, 2013.  Compensation for such services was to be approximately $13,333 per month.  In addition, all share-based awards granted by the Company to Zolla which had not fully vested as of the date of the Agreement shall not be forfeited and shall instead vest on such date, or dates that such award or awards would have vested if Zolla’s employment by the Company had not terminated and Zolla had not resigned as the Executive Chairman of the Board of Directors.

The Termination and Consulting Agreements also contained a restrictive covenant whereby, for a period of three years after November 18, 2013, Zolla shall not, in any geographical location in which there is at that time business conducted by the Company which was conducted by the Company on or at any time during the five years prior to November 18, 2013, directly or indirectly, own, manage, operate, control, be employed by, participate in, consult with, render services for or in any manner engage in, or be connected with the ownership, management, operation or control of any business competitive with or substantially similar to such business conducted by the Company without the written consent of the Company.

(C) LITIGATION

From time to time, the Company may become involved in various lawsuits and legal proceedings that arise in the ordinary course of business.  Litigation is, however, subjective to inherent uncertainties and an adverse result in these or other matters may harm the Company’s business.  The Company is not aware of any legal proceedings or claims that it believes would or could have, individually or in the aggregate, a material adverse effect on its operations or financial position.

In March 2014, former Chief Executive Officers, Mr. Zolla, brought an arbitration proceeding against the Company for fees he believed were due under the terms of his consulting agreement.  On July 1, 2015, a settlement was reached between the parties.  The agreement provides for payment of $200,000 to Mr. Zolla over time.  $75,000 was paid on execution of the agreement along with  $20,833 for six months from July through December 2015.  As of November 17, 2015, the Company has paid the $75,000, and four of the six monthly payments.  In addition, Mr. Zolla retains all stock and warrants with vesting schedules as described in his Employment Agreement dated June 1, 2013.

The amount of $200,000 has been accrued for this settlement and is shown on the June 30, 2014 Consolidated Balance Sheet as Accrued Settlement.