NOTE 8 - COMMITMENTS AND CONTINGENCIES

OBLIGATIONS UNDER OPERATING LEASES

The Company leases approximately 1,700 square feet for its principal offices in Boca Raton, Florida at a monthly rental of approximately $3,630. The Company excuted a new lease with it current landlord on December 1, 2018 which provides for annual increases of base rent of 4%, expires on November 30, 2021.

The Company rented office space on a month to month basis for its Tampa operations at a cost of $2,000 per month. The lease was terminated on June 1, 2018.

Future lease commitments are as follows for the years ended September 30:

Rent expense incurred during the years ended September 30, 2018 and 2017 was $57,534 and $60,258, respectively.

MAJOR CUSTOMERS

No customer accounted for more than 10% of the Company’s revenues for the year ended September 30, 2018 and 2017. As of September 30, 2018 two customers accounted for approximately 24% of the Company’s total outstanding accounts receivable. As of September 30, 2017 two customers accounted for approximately 24% of the Company’s total outstanding accounts receivable.

MAJOR SUPPLIER AND SOLE MANUFACTURING SOURCE

During 2014, the Company developed a proprietary interoperable communications solution. The Company relies on no major supplier for its products and services. The Company has contracted with a single local manufacturing facility to provide completed circuit boards used in the assembly of its IP gateway devices. Interruption to the manufacturing source presents additional risk to the Company. The Company believes that other commercial facilities exist at competitive rates to match the resources and capabilities of its existing manufacturing source.

EXCLUSIVE LICENSING AGREEMENT

On May 5, 2017, the Company entered into an Exclusive Licensing Agreement with Sublicensing Terms (the “Agreement”) with the University of Southern Florida Research Foundation, Inc. (“USFRF”) relating to an exclusive license of certain patent rights in connection with one of USFRF’s U.S. Patent Applications. Both parties recognize that the research and development work provided by the Company was sufficient for USFRF to enter into the Agreement with the Company.

The Agreement is effective April 25, 2017 and continues until the later of the date that no Licensed Patent remains a pending application or an enforceable patent or the date on which the Licensee’s obligation to pay royalties expires.

The Company paid USFRF a License Issue Fee of $3,000 and $7,253 as reimbursement of expenses associated with the filing of the Licensed Patent. The Company agreed to complete the first commercial sale of products to the retail customer on or before January 31, 2019 or USFRF has the right to terminate the agreement. In addition, the Company agreed that it will have made and tested a prototype by August 31, 2018 or USFRF has the right to terminate the agreement. The company agreed to pay USFRF a royalty of 3% for sales of all Licensed Products and Licensed Processes and agreed to pay USFRF minimum royalty payments as follows:

In the event the Company proposes to sell any Equity Securities, then USFRF will have the right to purchase 5% of the securities issued in such offering on the same terms and conditions as are offered to other purchasers in such financing.

LETTER OF INTENT AND SPIN-OFF

In March 2018, the Company approved a Letter of intent to be issued by its subsidiary VoiceInterop, Inc. to CanniPlus Global, Inc. The Company also approved that the Company spin-off VoiceInterop into a separate company under a Form S-1 registration to be filed with the United States Securities and Exchange Commission.

ASSET PURCHASE AGREEMENT AND SUBSEQUENT CANCELLATION OF AGREEMENT

On April 23, 2018 the company approved an asset purchase agreement whereby VoiceInterop, Inc. would acquire the assets of CanniPlus Global, Inc. On May 31, 2018, the asset purchase agreement was cancelled due to major discrepancies in the schedule of assets to be acquired.

DECLARATION OF STOCK DIVIDEND

On April 23, 2018, the board of Directors declared a stock dividend for certain shareholders of the corporation. That each common shareholder would receive .075 shares of VoiceInterop, Inc. common stock for each one (1) share of Cleartronic stock held by the shareholder, and that each shareholder of Series C and D Preferred stock shall receive .375 shares of VoiceInterop, Inc. common stock fo each one (1) share of Series C or Series D Preferred stock held by the shareholder.

The record date of the dividend distribution shall be defined as the first business day following an effective statement from the SEC regarding a pending S-1 filing. As of January 21, 2019, the pending S-1 filing has not been submitted to the US SEC for approval.