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 September 30, 2016 and was $2,250 for the nine months ended September 30, 2016.  The rent expense for the three and nine months ended September 30, 2015 was $11,019 and $41,133 respectively.

Vendors and Debt - The Company has significant liabilities as of September 30, 2016 with limited cash flow generated by the sale of Company assets and revenue.  The Company has $294,348 in accounts payable and accrued expenses from continuing operations.  In addition, the Company has $1,990,194 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.