14. COMMITMENTS AND CONTINGENCIES Lease Commitments On May 1, 2020, the Company entered into a short-term lease assignment with a related party for office space in Gilbert, Arizona through December 31, 2020 at the rate of approximately $800 per month. Through July 31, 2020, the Company charged $2,400 to operations with respect to this lease assignment. Employment Agreement On May 27, 2020, the Company, Rivulet Films, and Paris Film, Inc. and Rob Paris (together, the Employee) entered into an Employment Agreement (the Paris Agreement and together with the Arpaio Agreement, the Agreements), pursuant which Rivulet Films agreed to employ Employee in the position of President of Rivulet Films. The employment of the Employee began on June 1, 2020, for a guaranteed term of six months, following which time the employment relationship may be terminated with or without good cause or for any reason or no reason by either the Employee or Rivulet Films. The Employee will be paid $10,000 per month commencing June 1, 2020 through November 30, 2020, which shall be guaranteed by the Company. Additionally, upon execution of the Paris Agreement, the Company issued stock options to purchase 9,000,000 shares of common stock at an exercise price of $0.10 per share, which was the fair market value of the Companys common stock on such date, of which options for 5,000,000 shares vested on May 27, 2020, options for 2,000,000 shares will vest on June 1, 2021, and the remaining options for 2,000,000 shares will vest on June 1, 2022. The fair value of these stock options, as calculated pursuant to the Black-Scholes option-pricing model, was determined to be $300,227 ($0.03336 per share), of which $166,793 was attributable to the stock options fully-vested on May 27, 2020 and was therefore was charged to operations on that date. The remaining unvested portion of the fair value of the stock options will be charged to operations ratably from May 27, 2020 through June 1, 2022. During the year ended July 31, 2020, the Company recorded a charge to operations of $183,472 with respect to these stock options. The Employee will also have the right to participate in all equity stock option plans and programs established for employees by Rivulet Films in all aspects and benefit to that of any other similarly situated C-suite employee of Rivulet Films, including its Chief Executive Officer. Rivulet Films will also provide the Employee with other benefits, such as bonuses, perk packages, preferred stock positions, box office bonuses, and back-end/contingent compensation made generally available to similarly situated employees, including its Chief Executive Officer. The Employee will be attached as producer, subject to a separate producer agreement to be negotiated, to all projects sourced by Employee during the term of his employment. The Paris Agreement subjects the Employee to certain restrictive covenants and a standard confidentiality provision. In connection with the employment, to the extent controlled by the Employee and so long as the Employee remains attached to each project in perpetuity, the Employee grants to Rivulet Films a right of first refusal to all rights, title, and interest to the film projects known as Please Baby Please and Acolyte, as well as to all other film, story, or other production concepts which the Employee creates, develops, or otherwise originates during the term of employment and not passed on by Rivulet Films. Legal Matters The Company may, from time to time, be involved in legal proceedings, regulatory actions, claims and litigation arising in the ordinary course of business, which are not expected to have a material adverse effect upon the Companys financial statements. As of July 31, 2020, the Company was not a party to any pending or threatened legal proceedings. Impact of COVID-19 on the Company The global outbreak of COVID-19 has led to severe disruptions in general economic activities, as businesses and governments have taken broad actions to mitigate this public health crisis. Although the Company has not experienced any significant disruption to its business to date, these conditions could significantly negatively impact the Companys business in the future. The extent to which the COVID-19 outbreak ultimately impacts the Companys business, future revenues, results of operations and financial condition will depend on future developments, which are highly uncertain and cannot be predicted, including, but not limited to, the duration and spread of the outbreak, its severity and longevity, the actions to curtail the virus and treat its impact (including an effective vaccine), and how quickly and to what extent normal economic and operating conditions can resume. Even after the COVID-19 outbreak has subsided, the Company may be at risk of experiencing a significant impact to its business as a result of the global economic impact, including any economic downturn or recession that has occurred or may occur in the future. Currently, capital markets have been disrupted by the crisis, as a result of which the availability, amount and type of financing available to the Company in the near future is uncertain and cannot be assured and is largely dependent upon evolving market conditions and other factors. The Company intends to continue to monitor the situation and may adjust its current business plans as more information and guidance become available.