13.

EQUITY BASED COMPENSATION FOR CONSULTING, LEGAL, AND OTHER PROFESSIONAL SERVICES

Equity based compensation including bonuses for consulting, legal, and other professional services is presented on the face of the Statement of Stockholders’ Deficit for the years ended December 31, 2013 and 2012. More information on the significant components of the amounts presented for the years ended December 31, 2013 and 2012 follows:

During the fourth quarter of 2013, the Company engaged a vendor to provide research and development services. As part of the arrangement, the vendor agreed to take $6,810 in shares of the Company’s stock based on the weighted average price of the Company’s stock. The $6,810 is included in shares payable December 31, 2013, for consulting, legal, and other professional services on the Statement of Stockholders’ Deficit.

Pursuant to a consulting agreement for business advisory services, the Company issued for the years ended December 31, 2013, and 2012, 68,032 and 8,588, respectively, for $26,800 and $46,571, respectively, in services. The brother of this consultant performed engineering services under the same terms and conditions of the agreement and the Company issued 47 restricted shares and recorded operating expense of $2,571 for the years ended December 31, 2012. The stock conversion price under the agreement was calculated as a weighted average for the month the services were granted at a 30% discount. Up until the end of the first quarter 2012, operating expense was recorded at invoice value due to nominal trading volume. However, beginning in the second quarter of 2012, operating expense was recorded based on full weighted average share price of the market for the period in which the services were rendered.

On March 27, 2013, the Company entered into a consulting agreement for financial strategic advice for a term of twelve months from the date of the agreement and may be terminated by either party within 30 days written notice and any monies owed are due upon termination. As initial fee, the Company paid the consultant $25,000 in restricted stock, or 37,038 shares, during the years ended December 31, 2013. Further, upon obtaining $5,000,000 new capital into the Company, the consultant will be due $500,000, upon successfully obtaining a second $500,000 commitment of new capital, $50,000 will be due to the consultant, upon successfully obtaining a third $500,000 commitment of new capital, and the same arrangement through eleven additional commitment of new capital. Amounts due shall be paid in cash and any brokerage commissions, private placement fees or other fees in connection with obtaining the new capital shall be reduced from the fees due the consultant on a dollar per dollar basis.

On May 18, 2012, the Company issued restricted shares for business advisory and strategic services. The invoice amount was $3,400 and the number of shares issued, 76, was based on a 30% discount to market weighted average share price for period services were performed. However, the Company recorded operating expense at the full market weighted average share price for the period in which services were rendered, or $4,857.

On February 2, 2012, the Company entered into a consulting agreement for financial and public relations services. The term of the agreement is for twelve (12) months and either party may cancel the agreement with 30 days written notice. Payment was to be monthly beginning in March 2012, in the form of $10,000 cash, or $20,000 worth of common stock based on the weighted average of the Company’s stock for the month at a 30% discount. Payment in cash or stock was at the option of the Company. In addition, upon signing of the agreement, the Company was to issue 1,852 shares for services previously provided during the first quarter of 2012. The Company recognized $29,750 operating expense under this agreement for the first quarter of 2012 and 3,910 shares payable. Due to the guarantee stock value clause in the Agreement, the Company compared the value at the time the stock was granted with the value at the end of the quarter, and determined there was no need for accrual of additional shares payable to achieve the $20,000 market value to guarantee. After March 31, 2012, this agreement and compensation under this agreement ceased. Accordingly, no expense related to this agreement was recorded beyond the first quarter of 2012.

On March, 6 2012, the Company converted $16,200 in design services payable into 445 restricted shares of common stock based on the market value of the stock on the date of conversion.