Note 18 - Accrued salary, accrued retirement and related party incentive fee

As of December 31, 2017 and 2016, the Company had an outstanding liability to its Chief Executive Officer ("CEO") as follows:

The Company agreed to advance the CEO $944,000 against the accrued liabilities due him, in January 2014, to exercise additional warrants into shares to be used as collateral for a potential loan to the Company. The warrant exercise was a cashless transaction made solely for the benefit of the Company in its efforts to obtain financing. After the warrants were exercised in 2014, Mr. Billingsley deposited 100% of his shares owned, 5,000,486 shares, in an escrow which was to guarantee the potential loan. The loan turned out to be fraudulent and the shares remained in escrow until March 28, 2016, at which time Mr. Billingsley’s shares were removed from escrow.

In January 2014, the CEO, for the benefit of the Company, allowed two Bhang shareholders to act in his stead as designees and exercise 87,456 of his Series B warrants under the agreement described in Note 5 that was ultimately rescinded. [In exchange for allowing the Bhang shareholders to exercise his lower priced Series B warrants, Mr. Billingsley was named as designee of 87,456 of the higher priced Series D warrants.] Subsequent to year end, the shares of Common Stock held by the Bhang shareholders were returned to and cancelled by Mentor and the warrants from which the shares arose were reinstated, see Note 26. On March 17, 2018, the Board approved reallocation of the reinstated 87,456 Series B warrants back to Mr. Billingsley and his holdings of warrants were concurrently decreased by 87,456 Series D warrants (although Mr. Billingsley may be designated as a Series D warrant designee at any time), see Note 26.

As approved by resolution of the Board of Director in 1998, Mr. Billingsley will be paid an incentive fee and a bonus which are payable in cash upon merger, resignation or termination or in installments at Mr. Billingsley’s option. The incentive fee is 1% of the increase in market capitalization based on the bid price of the Company’s stock beyond the book value at confirmation of the bankruptcy, which was approximately $260,000. The bonus is 0.5% of the increase in market capitalization for each $1.00 increase in stock price up to a maximum of $8 per share (4%) based on the bid price of the stock beyond the book value at confirmation of the bankruptcy. The incentive fee expense was $175,997 and $0 for the years ended December 31, 2017 and 2016, respectively.