NOTE 18 – COMMITMENTS

Building Lease

The Company leases a combined research and development and office facility located in Mundelein, Illinois. The facility is approximately 44,000 square feet. On March 14, 2014, the Company extended the lease until May 2015 and the required monthly rental payments increased to $21,361, inclusive of property taxes. Insurance and maintenance are billed when due. If the Company wishes to remain at this facility beyond the lease expiration date, it will need to negotiate a new lease with the landlord, which cannot be assured.

Effective January 1, 2015, the Company and its landlord executed an amendment to the current lease extending the lease until July 14, 2015. Commencing on May 1, 2015, the parties agreed to a monthly base rent of $10,681 plus property taxes. The Company also agreed to pay $71,125 in rental arrears on April 30, 2015 and another $71,125 in rental arrears on July 1, 2015. Finally, the parties agreed that the Company will deliver to the landlord 20,025 shares of its 12.5% convertible preferred stock which shares are convertible to common stock at the landlord’s option at .088 per preferred share. As a result of the preferred stock to be issued, the Company recorded an expense of $48,060 for the three months ended June 30, 2015 with an offset to preferred stock payable. Also, the Company issued a five year warrant to the landlord to purchase 171,454 shares of common stock at $0.64 per share.

On May 1, 2015, the Company and its landlord executed an amendment to the current lease extending the lease until October 14, 2015. The parties agreed that the Company will deliver to the landlord 8,010 shares of its 12.5% convertible preferred stock which shares are convertible to common stock at the landlord’s option at .088 per preferred share. The Company recorded a Preferred stock payable and rent expense of $48,060 for the three months ended June 30, 2015. Also the Company issued a five year warrant to the landlord to purchase 68,566 shares of common stock at $0.64 per share. Finally, the Company upon execution of this amendment, agreed to make the $71,125 payment of rental arrears that was due on April 30, 2015.

As of June 30, 2015, the Company has not paid the $71,125 in rental arrears that was stipulated with the May 1, 2015 amendment to the lease.

The Company recognizes escalating lease expense on a straight line basis in accordance with current accounting standards.

For the six months ended June 30, 2015 and 2014, the Company recognized rent expense of $321,838 and $135,066, respectively. The future minimum annual rental payments and sub-lease income for the years ended December 31 under the lease terms are as follows:

Year Ended	Rentals
2015	$	61,397
2016		-
2017		-
2018		-
2019		-
	$	61,397