8. COMMITMENTS AND CONTINGENCIES

Property Lease Obligations

Rental expense, resulting from property lease agreements was $115,110 and $125,777 for the three months ending March 31, 2017 and March 31, 2016, respectively.

Following is a schedule by years of future minimum payments required under leases obligations with initial or remaining non-cancelable lease terms in excess of one year as of March 31, 2017:

Accrued Litigation Expense

Legal Matters - The Company is involved in litigation claims arising in the ordinary course of business. Legal fees and other costs associated with such actions are expensed as incurred. In addition, the Company assesses, in conjunction with its legal counsel, the need to record a liability for litigation and contingencies. The Company reserves for costs relating to these matters when a loss is probable and the amount can be reasonably estimated. There have been no material developments in any legal proceedings since the disclosures contained in the Company’s Form 10-K for the year ended December 31, 2016.

Related Party Advances

Through March 31, 2017, the Chief Executive Officer (CEO) provided cash advances witnessed by an interest bearing note, these advances totaled 310,159 as of March 31, 2017 and December 31, 2016, and are included as part of notes payable-related party. In addition, from time to time, advances for the Company’s benefit on credit cards for which the CEO is personally liable for, aggregating $533,856. The Company entered into several secured equipment financing arrangements with total obligations of approximately $265,000 as of March 31, 2017 that required the guaranty of a Company officer, which was provided by the CEO.

The Chief Financial Officer personally guaranteed several secured equipment financing arrangements with total obligations of approximately $298,000 as of March 31, 2017. Additionally, the Chief Financial Officer provided $150,000 cash, which is included as part of due to related parties as of March 31, 2017. and a personal credit card account for the purchase of goods and services by FTE. While these credit card balances are reflected in the Company’s books and records, the CFO is personally liable for the payment of the entire amount of the open credit obligation, which was approximately $57,525 as of March 31, 2017.