NOTE

RELATED PARTY TRANSACTIONS

April 1, 2015

the Company issued a promissory note in the amount of

$20,000

to our then Chairman and Chief Technology Officer, Randall G. Smith

(“Mr. Smith”), in exchange for an existing promissory note in the same amount. The promissory note carries an interest rate of

12%

and has a maturity date of

April 1, 2018.

The note was repaid in full on

December 14, 2016.

April 30, 2015,

the Company and Mr. Johnson extended the maturity date of

$25,000

of convertible debentures to our then Chief Operating Officer and President, Stephen E. Johnson, originally issued in

December 2008.

The debentures carry an interest rate of

12%

and have a maturity date of

April 1, 2018.

The expiration date of the warrants associated with the debentures was also extended to

April 1, 2018.

The convertible debentures were repaid in full on

December 14, 2016.

As of

December 31, 2017,

the Company has an aggregate of

$5,770,000

of convertible debentures and

$400,000

of promissory notes to our Executive Chairman and Chairman of the Board, Cornelis F. Wit (“Mr. Wit”), and have issued certain warrants to Mr. Wit, as follows:

●

June 2008,

Mr. Wit invested

$510,000

in convertible notes. On

August 29, 2008,

Mr. Wit converted the

$510,000

and invested an additional

$1,260,000

in a private placement of convertible debentures and warrants to purchase

3,540,000

shares of our common stock. The convertible debentures, which bear interest at

10%

per annum, were due on

August 29, 2010.

The convertible debentures are convertible at any time at the option of the holder into shares of our common stock based upon a conversion rate of

$0.50

per share. On

September 30, 2009,

the Company and Mr. Wit extended the

$1,770,000

of convertible debentures until

August 29, 2013

in accordance with the terms of a Secured Convertible Debenture issued on that date. On

February 22, 2013,

the Company and Mr. Wit extended the maturity date of the

$1,770,000

of convertible debentures to

January 1, 2016.

The expiration date of the warrants associated with the debentures was also extended to

January 1, 2016.

January 31, 2015

the Company and Mr. Wit extended the maturity date of the

$1,770,000

of convertible debentures to

April 1, 2017.

The expiration date of the warrants associated with the debentures was also extended to

April 1, 2017.

June 30, 2016

the Company and Mr. Wit extended the maturity date of the

$1,770,000

of convertible debentures to

April 1, 2020.

The expiration date of the warrants associated with the debentures was also extended to

April 1, 2020.

●

February 2008,

Mr. Wit invested

$150,000

in promissory notes and from

September 2008

December 2008,

Mr. Wit invested

$4,200,000

in convertible notes. On

December 16, 2008,

Mr. Wit converted the

$4,350,000

into a private placement of convertible debentures and warrants to purchase

8,700,000

shares of our common stock. The convertible debentures, which bear interest at

12%

per annum, were due on

December 16, 2010.

The convertible debentures are convertible at any time at the option of the holder into shares of our common stock based upon a conversion rate of

$0.50

per share. On

September 30, 2009,

the Company and Mr. Wit extended the

$4,350,000

of convertible debentures until

December 16, 2013

in accordance with the terms of a Secured Convertible Debenture issued on that date. In a private transaction on

October 16, 2012,

Mr. Wit purchased

$125,000

of the

December 2008

convertible debentures and the related

250,000

warrants from Mr. Ronald Linares, the Company’s former Chief Financial Officer. On

February 22, 2013,

the Company and Mr. Wit extended the maturity date of the

$4,475,000

of convertible debentures to

January 1, 2016.

The expiration date of the warrants associated with the debentures was also extended to

January 1, 2016.

January 31, 2015

the Company and Mr. Wit extended the maturity date of the

$4,475,000

of convertible debentures to

April 1, 2017.

The expiration date of the warrants associated with the debentures was also extended to

April 1, 2017.

November 19, 2015

the Company and Mr. Wit agreed to cancel

$420,000

of the debentures and

1,680,000

of unrelated warrants in exchange for

1,680,000

shares of our common stock

. On

June 30, 2016

the Company and Mr. Wit extended the maturity date of the

$4,055,000

of convertible debentures to

April 1, 2020.

The expiration date of the warrants associated with the debentures was also extended to

April 1, 2020.

August 31, 2017,

the Company repaid

$55,000

to Mr. Wit.

●

February

29,

2016,

the Company issued a promissory note in the principal amount of

$450,000

and warrants to purchase

1,800,000

shares of common stock of the Company at an exercise price of

$0.25

per share with an expiration date of

April 1, 2019

to Mr. Wit in exchange for accrued interest in the amount of

$450,000.

The note carries an interest rate of

12%

per annum and has a maturity date of

April 1, 2019.

August 31, 2017,

the Company repaid

0,000

to Mr. Wit.

March 18, 2013,

the Company entered into a

$2,000,000

revolving Line of Credit with The Northern Trust Company

guaranteed by Mr. Wit. On

December 18, 2013

the Company renewed the Line of Credit and increased the available balance to

$4,000,000.

February 3, 2015

the Company renewed the Line of Credit and increased the available balance to

$5,000,000.

April 7, 2017

the Company renewed the Line of Credit. Mr. Wit receives

2.0%

interest (approximately

$9,500

per month) on the assets pledged for the Line for Credit. The Line of Credit matures on

April 7, 2020

and carries a variable interest rate based on the prime rate. At

December 31, 2017,

$2,650,000

was outstanding on the Line of Credit at an interest rate of

3.5%.

The Company

incurred interest expense payable to related parties of

$947,688

for the year ended

December 31, 2017

and

$918,189

for the year ended

December 31, 2016.