8. COMMITMENTS AND CONTINGENCIES

3 Months Ended

Mar. 31, 2014

Commitments and Contingencies Disclosure [Abstract]

COMMITMENTS AND CONTINGENCIES

Operating Leases and Long term Contracts

The Company rents office space for its corporate needs. The Company entered into a month-to-month lease agreement in July 2013 to lease 2,000 square feet for an annual rate of $12,000, paid monthly. This lease was terminated effective April 1, 2014.  The Company entered into a three-year lease agreement effective April 4, 2014 for our corporate offices.  The facility leased is 3,000 square feet with total payments due of $82,600 through March 31, 2017.  We paid $3,000 for the lease of our corporate offices for the quarter ended March 31, 2014.  Additionally, the Company has a second mortgage on its Pueblo property with an outstanding balance at March 31, 2014 of $169,957, with an interest rate of 8 ½% and a 15-year amortization.  The remaining balance on the note is due and payable on December 31, 2018.  The outstanding balances of the second mortgage note can be converted to common stock shares at a conversion rate of $5 per share on or prior to the due date.

See note 7 for detailed description of long-term financing commitment to the Company.

Legal

To the best of the Company’s knowledge and belief, no legal proceedings are currently pending or threatened.