NOTE 15 – COMMITMENTS AND CONTINGENCIES

Contingent Payments

On December 1, 2016, we acquired substantially all of the operating assets of CCI. As part of the purchase price of the operating assets of CCI, there is a cash payment of $500,000 contingent upon a future offering and earn out payments for all sales of CCI and RGNP products sold via CCI sales channels for the 2017, 2018, 2019 and 2020 calendar years. The estimated fair value of the contingent payments totaled $424,511 and was recognized as a liability in the accompanying consolidated balance sheets as of December 31, 2016. During the years ended December 31, 2018 and 2017, ASK Gold and CCI each earned $11,751 and $41,534, respectively, of earn out payments for a total of $106,570. In addition, the Company paid $95,020 in reimbursement expenses (“Reimbursement Expenses”) that were the responsibility of CCI and will be applied against current and future earn out payments to CCI. The Company applied $11,751 and $41,534 of earn out payments owed to CCI for 2018 and 2017 against the Reimbursement Expenses for a net balance of $41,735 owed by CCI to the Company as of December 31, 2018 that is recorded in estimated fair value of contingent payments, net in the accompanying consolidated balance sheets. In 2018, the Company issued 8,000,000 common shares for settlement of amounts owed to ASK Gold of $139,199, As of December 31, 2018, estimated fair value of contingent payments, net was $137,007.

Operating Leases

The Company has month-to month leases for its headquarters and its sales and marketing, and customer service operations, and its distribution facility. The total rent is approximately $1,955 per month.

The customer service and distribution facility was previously located at 1933 S. Broadway. Los Angeles, California. Through June 2018, the Company leased its customer service and distribution facility on a month-to-month basis for $4,000 per month from a third party.

Rent expense was approximately $40,245 and $99,679 for the years ended December 31, 2018 and 2017, respectively.

Legal

From time to time, various lawsuits and legal proceedings may arise in the ordinary course of business. However, litigation is subject to inherent uncertainties and an adverse result in these or other matters may arise from time to time that may harm our business. We are currently not aware of any legal proceedings or claims that it believes will have a material adverse effect on its business, financial condition or operating results.

Guarantees

The Company’s Convertible Notes Payable are collateralized by substantially all of the Company’s assets and are personally guaranteed by the Company’s CEO and Australian Sapphire Corporation, a shareholder of the Company which is wholly-owned by the Company’s CEO.