NOTE 5 ? COMMITMENTS AND CONTINGENCIES Operating Leases On June 29, 2007, the Company relocated its principal executive offices and sole operations facility to 350 Jim Moran Blvd., Suite 120, Deerfield Beach, Florida 33442, which is located in Broward County. This space consists of 4,000 square rentable feet and was leased on a month to month basis. Capstone Industries entered into a new lease agreement for the same office space as currently located. The new lease agreement dated January 17, 2014 and effective February 1, 2014, has a 3 year lease with a base annual rent of $46,810 paid in equal monthly installments. The company has the one time option to renew the lease for three (3) years subject to a 3% increase per each year of the renewal term. Under the new lease agreement, Additionally, Capstone is responsible for portion of Cam charges and any other utility consumed in the leased premises. Capstone International Hong Kong Ltd. Entered in a two year lease agreement for office space at 303 Hennessy Road, Wanchai, Hong Kong. The agreement is for the period from February 17, 2014 to February 16, 2016. This lease has a base annual rent of $48,000 (HK$ 372,000) paid in equal monthly installments. Rental expense for the period ending June 30, 2014 under above two lease agreements was $51,704 and $27,935 for the periods ending June 30, 2014 for Deerfield Beach, Florida location. The lease obligations under these agreements for the next five years are as follows: Year Ended December, 31, US HK Total 2014 $ 42,909 $ 42,000 $ 84,909 2015 48,083 48,000 96,083 2016 49,520 6,000 55,520 2017 4,137 - 4,137 2018 - - - Total lease obligation $ 144,649 $ 96,000 $ 240,649 Employment Agreements On February 5, 2008, the Company entered into an Employment Agreement with Stewart Wallach, the Company?s Chief Executive Officer and President, whereby Mr. Wallach will be paid $225,000 per annum. As part of the agreement, Mr. Wallach will receive a minimum increase of 5% per year. For 2009, Mr. Wallach was paid $236,250, and for 2010