9.             COMMITMENTS AND CONTINGENCIES:

Lease Commitments - The Company leases warehouse and office space for the equipment and operations located in Gardena, CA.  The lease term continues through July 2015. August 1, 2015 the Company is no longer under a rental lease agreement for the office and warehouse space in Gardena, CA.  The Company was under a month-to-month agreement through January 2016.

There was no rent expense for the three months ended June 30, 2016 and was $2,250 for the six months ended June 30, 2016. The rent expense for the three and six months ended June 30, 2015 was $15,507 and $30,114 respectively.

Vendors and Debt - The Company has significant liabilities as of June 30, 2016 with limited cash flow generated by the sale of Company assets and revenue.  The Company has $286,778 in accounts payable and accrued expenses from continuing operations.  In addition, the Company has $1,926,872 in debt and accrued interest from continuing operations.  The Company will work with their vendors and lenders to establish payment plans, explore extensions and conversion of debt.