NOTE 12 - SUBSEQUENT EVENTS

The Company’s institutional investor in the Follow-On Bridge Offering has provided an additional $40,000 in funding under that structure since the end of the third quarter.

On November 9, 2018, the Company completed the following transactions:

The Company transferred the Stock Purchase Agreement (the “Purchase Agreement”) for the purchase of all the capital stock of George B. Wittmer Associates Inc. (“GBWA”) and a previously paid deposit thereunder to Earth Property Holdings LLC, a Delaware limited liability company (“Earth Property”), pursuant to a Transfer and Assignment Agreement (the “Transfer Agreement”).

In consideration for the transfer of the Purchase Agreement to Earth Property, the Company was issued 124,999 Class B Units in Earth Property (the “Class B Units”), equal to approximately 19.9% of the voting equity of that limited liability company at closing, and received reimbursement for $109,020 of expenses incurred in connection with the diligence of GBWA and per terms in the Purchase Agreement.

In connection with the Transfer Agreement, the Company also signed an eight-year Management Agreement to oversee and manage all of the daily operations of Earth Property (the “Management Agreement”) and GBWA. The Management Agreement provides a $200,000 per year fee to the Company and can be terminated by Earth Property upon payment of a severance payment equal to one-year of management fees.

Concurrently with the closing of the Transfer Agreement, Earth Property consummated a private offering in the amount of $4,400,000 for 500,000 of its Class A Units (the “Class A Units”) to one institutional investor (the “Class A Unit Offering”), equal at closing to approximately 80.1% of the voting equity of Earth Property. The Company’s CEO also participated in the Class A Unit Offering through the institutional investor. The Class A Units provide an 8% per annum preferred distribution, and liquidation preferences so that the Class A Unit holders will receive their preferred distribution and their capital account balance prior to any distributions to the Class B Unit holder.

The rights and preferences of the Class A Unit and Class B Unit members are set forth in a Limited Liability Company Agreement (the “LLC Agreement”), executed concurrently with the Class A Unit Offering closing. Under the LLC Agreement and as contemplated in the Management Agreement, the Company’s CEO, CFO and President were appointed to serve as President, Treasurer and Secretary, respectively, of Earth Property. Also, the Company’s CEO was appointed to serve on the Board of Directors of Earth Property along with two other appointees of the Class A Unit members.

Immediately subsequent to the closing of the Class A Unit Offering, Earth Property closed the Purchase Agreement with GBWA and assumed control of that company, its assets and operations. Based on a preliminary assessment, the Company will not consolidate the financial statements of Earth Property or GBWA on an ongoing basis, as Earth Property is expected to be classified as an unconsolidated variable interest entity, accounted for as an equity investment on the Company’s balance sheet with a cost basis of $50,000.