12.

CERTAIN RELATIONSHIPS AND RELATED PARTY TRANSACTIONS

The Company values shares issued to officers using the fair value of common shares on grant date.

Mr. Krikorian

’s employment agreement was extended for an additional

year term from

July 1, 2009

through

June 30, 2012

with an annual salary of

$225,000

and Mr. Krikorian was granted

1,050,000

shares of restricted common stock which will vest in equal semi-annual installments over the term of his employment agreement.

Mr. Boghossian

’s employment agreement was extended for an additional

year term from

July 1, 2009

through

June 30, 2012

with an annual salary of

$72,000

and Mr. Boghossian was granted

337,500

shares of restricted common stock which will vest in equal semi-annual installments over the term of his employment agreement.

Mr. Dulman

’s employment agreement was extended for an additional

year term from

August 1, 2009

through

July 31, 2012

with an annual salary of

$150,000

and Mr. Dulman was granted

225,000

shares of restricted common stock which will vest in equal semi-annual installments over the term of his employment agreement. Mr. Dulman was also granted stock options to purchase

225,000

shares of common stock of the Company at

$0.14

per share (based on the closing price at his renewal) vesting in equal quarterly installments over the term of his employment agreement.

Effective

July 1, 2012,

the Company entered employment agreement extensions with Ashot Boghossian and Van Krikorian, and effective

August 1, 2012,

with

Jan

Dulman all as recommended by the Company’s Compensation Committee and approved by the Board of Directors on

June 15, 2012.

The agreements are extended for an additional

three

years under the same terms except for Mr. Dulman who will receive an annual salary of

$165,000,

which constitutes a

$15,000

raise per year, and an additional

25,000

restricted shares of the Company’s Common Stock annually in lieu of the option grants in his prior contract beginning

August 1, 2012

when the extension begins for Mr. Dulman. All shares issued under these extensions will vest in equal semi-annual installments over the term of the employment agreements. All shares were issued at fair market value and are amortized over the term of the employment agreements. In

July 2012,

the Company issued

2,437,500

shares of common stock in connection with these extensions.

July 1, 2012

the Company granted performance and retention bonus award

s of restricted shares of the Company’s Common Stock to Van Krikorian (

500,000

shares) and

Jan

Dulman (

250,000

shares) as recommended by the Company’s Compensation Committee and approved by the Board of Directors on

June

15,

2012.

All shares issued under this bonus award will vest in equal semi-annual installments over the

two

years through

June 30, 2014.

All shares were issued at fair market value and are amortized in accordance with the vesting period.

May 16, 2014,

the Company issued as directors

’ fees to each of the

six

directors (Nicholas Aynilian, Drury J. Gallagher, Harry Gilmore, Ian Hague, Lester Caesar and Van Z. Krikorian)

50,000

restricted shares of the Company’s Common Stock at

0.11

per share for a total value of

$33,000.

The shares were issued pursuant to the Board’s

April 16, 2014

decision from which date the shares were valued.

May 16, 2014,

the Company declared a stock bonus to employees in Armenia

260,000

restricted shares of the

Company’s Common Stock at

$0.11

per share for a total value of

$28,600.

The shares were issued pursuant to the Board’s

April 16, 2014

decision from which date the shares were valued.

June 20, 2014,

the Company declared a stock bonus to Dr. W.E.S. Urq

uhart in Chile of

50,000

restricted shares of the Company’s Common Stock at

$0.10

per share for a total value of

$5,000.

All shares issued will vest in equal quarterly installments over

two

years through

June 30, 2016.

June 20, 2014,

the Company

’s Compensation Committee granted retention bonuses to Mr. Krikorian of

$55,000,

Mr. Dulman of

$45,000

and Mr. Boghossian of

$35,000

to be payable upon the receipt of funding from the Chile sale.

June 20, 2014,

the Company

’s independent compensation committee and the board of directors authorized employment amendments and extensions to Messrs. Krikorian, Boghossian, and Dulman under the same terms of their prior

2012

agreements.

May 5, 2015,

the Company executed employment agreement extensio

ns effective

July 1, 2015,

with Ashot Boghossian and Van Krikorian, and effective

August 1, 2015,

with

Jan

Dulman as recommended by the Company’s Compensation Committee and approved by the Board of Directors on

June 20, 2014.

The agreements are extended for an additional

three

years under the same terms. All shares issued under these extensions will vest in equal semi-annual installments over the term of the employment agreements. All shares were issued at fair market value and are amortized over the term of the employment agreements. On

May 8, 2015,

the Company issued

1,687,500

shares of common stock in connection with these extensions.

The following table illustrates the Company's compensation commitments for the next

years as of

June 30, 2017.

Year	Amount

2017 – remaining period	$	195,000
2018		208,750
2019		-
2020		-
2021		-

Restricted Stock Units:

May 8, 2015,

in terms of a restricted stock award,

1,687,500

restricted shares were issued as per the Company

’s executed employment agreement extensions effective

July 1, 2015,

with Ashot Boghossian and Van Krikorian, and effective

August 1, 2015,

with

Jan

Dulman as recommended by the Company’s Compensation Committee and approved by the Board of Directors on

June 20, 2014.

The agreements are extended for an additional

three

years under the same terms.

These shares will be vest to Ashot Boghossian for

each

six

month period, commencing on

July 1, 2015,

he shall become fully vested in

56,250

Shares granted hereunder. Thus, if he complete six, twelve, eighteen,

twenty

four,

thirty

and then

thirty six

months of service as provided hereunder, he shall be vested in

56,250,

112,500,

168,750,

225,000,

281,250,

and then

337,500

of the Shares granted hereunder, respectively.

These shares will be vest to Van Krikorian for the

first

six

month period commencing

July 1, 2015

within which he render the services pro

vided herein, he shall become fully vested in

one

sixth

of the total Shares granted hereunder. For the next

six

month periods thereafter commencing on

January 1, 2016

through

June 30, 2018,

he shall become fully vested in an additional

one

sixth

of the total Shares granted hereunder. Thus, if he complete six, twelve, eighteen,

twenty

four,

thirty

and then

thirty six

months of service as provided hereunder, he shall be vested in

175,000,

350,000,

525,000,

700,000,

875,000,

and then

1,050,000

of the Shares granted hereunder, respectively.

These shares will be vested to

Jan

Dulman for the

first

six

month period commencing

August 1, 2015

within which he render the services provided herein, he shall become fully vested in

one

sixth

of the total Shares granted h

ereunder. For the next

six

month periods thereafter commencing on

February 1, 2016

through

July 31, 2018,

he shall become fully vested in an additional

one

sixth

of the total Shares granted hereunder. Thus, if he complete six, twelve, eighteen,

twenty

four,

thirty

and then

thirty six

months of service as provided hereunder, he shall be vested in

50,000,

100,000,

150,000,

200,000,

250,000,

and then

300,000

of the Shares granted hereunder, respectively.

The restricted stock outstanding and exercisable at

June 30, 2017

is as follows:

		Restricted Stock Outstanding				Restricted Stock Vested
Grant date Price		Number Outstanding		Weighted Average Grant Date Price		Number Vested		Weighted Average Grant Date Price
$	0.01		1,687,500	$	0.01		1,075,000	$	0.01

The Company has recorded an expense of $

2,812

and

$4,062

relating to these restricted stock awards for the

six

months ended

June 30, 2017

and

2016,

respectively. The Company has recorded an expense of

$1,406

and

$2,031

relating to these restricted stock awards for the

three

months ended

June 30, 2017

and

2016,

respectively, relating to the restricted stock award and a further

$5,710

will be expensed over the vesting period of the stock which takes place over the

three

years.

May 8, 2015,

the Company issued as directors

’ fees to each of the

six

directors (Nicholas Aynilian, Drury J. Gallagher, Harry Gilmore, Ian Hague, Lester Caesar and Van Z. Krikorian)

50,000

restricted shares of the Company’s Common Stock at

0.01

per share for a total value of

$3,000.

The shares were issued pursuant to the Board’s

April 27, 2015

decision from which date the shares were valued.

May 8,

201

the Company declared a stock bonus to employees in Armenia

260,000

restricted shares of the Company’s Common Stock at

$0.01

per share for a total value of

$2,600.

The shares were issued pursuant to the Board’s

April 27, 2015

decision from which date the shares were valued.

April 25, 2016,

the Company authorized as directors

’ fees to each of the

five

directors

50,000

restricted shares (totaling

250,000

restricted shares) of the Company’s Common Stock at

0.02

per share for a total value of

$5,000.

The Company also authorized

320,000

restricted shares of the Company’s Common Stock at

$0.02

per share for a total value of

$6,400

to employees of the Corporations subsidiaries in Armenia. These shares, totaling

570,000

shares, were issued on

December 6, 2016.

Mr. Hague is

not

accepting director compensation for

2016;

those shares will be donated to a charity.

May 31, 2016,

the Company through board action agreed to allow the existing stock options plan to terminate to eliminate all stock options.

Current employees and directors still holding valid stock options will receive restricted shares in the amount of

50%

of the stock for which they had valid options. Pursuant to the option cancellation, the Company authorized the issuance of

1,277,084

restricted shares of the Company’s Common Stock at

$0.01

per share for a total value of

$15,325.

These shares were issued on

December 6, 2016.

April 28, 2017,

the Company authorized as directors

’ fees to each of the

five

directors

50,000

restricted shares (totaling

250,000

restricted shares) of the Company’s Common Stock at

0.019

per share for a total value of

$4,750.

Mr. Hague is

not

accepting director compensation for

2017;

those shares will be donated to a charity designated by directors other than Mr. Hague. The Company also authorizes

280,000

restricted shares of the Company’s Common Stock at

$0.019

per share for a total value of

$5,320

to employees of the Corporation’s subsidiaries in Armenia. These shares, totaling

530,000

shares, have

not

yet been issued.

The amount of total deferred compensation amortized for the

six

months ended

June 30, 2017

and

2016

was

$2,812

and

$4,062,

respectively.

The amount of total deferred compensation amortized for the

three

months ended

June 30, 2017

and

2016

was

$1,406

and

$2,031,

respectively.

January 22, 2014,

the Company received loans from Drury Gallagher and Ian Hague, Directors of the Company, in the amounts of

$373,000

and

$127,000,

respectively, which carry at an annual rate of

As of

June 30, 2017,

these amounts remain unpaid and the Company has accrued interest of

$154,726.

As of

June 30, 2017

and

December 31, 2016,

the Company owed Drury Gallagher, the Company’s Director and Treasurer,

$4,127

for expense reimbursement which bears

interest and which remain unpaid as of the date of this filing.

As of

June 30, 2017

and

December 31, 2016,

one

of the Company's Directors, Drury Gallagher, was owed

$3,205,687

and

$3,021,187,

respectively, from interest free loans which remain unpaid as of the date of this filing.

As of

June 30, 2017

and

December 31, 2016,

one

of the Company's Directors, Nicholas Aynilian, was owed

5,000

from interest free loans which remain unpaid as of the date of this filing.

As of

June 30, 2017

and

December 31, 2016,

the Company owes unpaid wages of approximately

$2,127,000

and

$1,932,000,

respectively, to management including approximately

$1,121,000

and

$1,009,000,

respectively to Mr. Van Krikorian and

$821,000

and

$739,000,

respectively, to Mr.

Jan

Dulman. The Company is accruing interest at an annual rate of

on the net of taxes wages owed to management. As of

June 30, 2017

and

December 31, 2016,

the Company had accrued interest of approximately

$508,000

and

$442,000,

respectively. The Company has also accrued the contingent bonus payable to the management for

270,000

as of

June 30, 2017

and

December 31, 2016.

As of

June 30, 2017

and

December 31, 2016,

the Company had interest free loans due to employees in Armenia of approximately

$113,000

and

$117,000,

respectively.