Latitude Solutions, Inc. - FORM 10-Q - XML - IDEA: XBRL DOCUMENT - November 21, 2011

Employment Agreement

On January 1, 2011, the Company entered into a five year employment agreement to hire a Vice-President of Marketing to further develop the business interests of the Company. After the initial five year term, the employment shall automatically be extended on the same terms and conditions for successive one-year renewal periods, unless terminated by either party with ninety days prior notice.

The marketing executive’s minimum compensation in year one shall not be less than $96,000 per year. Annual salary reviews are required and compensation shall be increased annually by a percentage at least equal to the increase in the Consumer Price Index. The executive’s compensation includes the issuance of 300,000 shares of the Company’s common stock which were issued throughout the nine months ended September 30, 2011 for an aggregate value of $160,500.

Consulting Agreements

On January 12, 2011, the Company entered into a Sales/Marketing Agreement with a consultant whereby said individual will serve as a non-exclusive sales agent to sell and market water purification plants, systems, or other water cleaning technology services. The consultant shall have the exclusive right to sell and market to specific prospective customers designated and approved by the Company for a period of one year.

The consultant shall be paid 20% for all sales and 10% of any royalties during the term of the agreement. The Company shall pay the consultant $5,000 monthly commencing January 15, 2011 and thereafter for the duration of the agreement and shall issue to the consultant 300,000 shares of the Company’s common stock as follows: (a) 150,000 shares upon execution of the agreement (b) 75,000 shares ninety days from the agreement date and (c) 75,000 shares one-hundred eighty days from the agreement date.

The consultant was issued 150,000 shares valued at $0.20 per share on January 27, 2011 and 75,000 shares valued at $1.50 per share on April 19, 2011. The Company recorded consulting fees of $142,500 for the shares issued.

On April 1, 2011, the Company entered into a financial services agreement for services including, but not limited to, investor relations, corporate record keeping, accounting and preparation of the Company’s regulatory filings. The term of the agreement is for a minimum of thirty-six months and shall renew automatically on a month to month basis thereafter unless either party terminates the agreement within ninety days of the automatic renewal period. The Company shall pay the financial services consultant $3,000 per month commencing May 1, 2011.

On April 1, 2011, the Company entered into a one year consulting agreement for the purpose of obtaining professional services in the areas of corporate structure, strategic planning, and capital and business development and implementation. The agreement was amended on June 24, 2011. The amended agreement obligates the Company to issue 1,575,000 common shares and 1,575,000 warrants which entitles the consultant to purchase common shares for a five year at $1.25 per share. On June 20, 2011, the Company issued 1,440,000 shares at $1.50 per share, and recorded consulting fees expense of $2,160,000. On August 17, 2011 the Company issued the remaining 135,000 shares to the consultant at $2.02 per share, and recorded consulting expense of $272,700.

On June 16, 2010, the Company entered into a one year agreement to obtain advisory and consulting services pertaining to business development, financing, and strategic planning matters. On May 2, 2011, the compensation portion of the agreement was amended. In accordance with the amended agreement, on July 19, 2011 the Company issued 900,000 shares to the consultant valued at $1,215,000.

Lease Agreements

On February 9, 2011, the Company entered into a five year office and laboratory lease agreement in Colorado commencing June 1, 2011 through May 31, 2016 for aggregate rent of $102,226. The amount is to be paid monthly over the term of the lease term.

Future minimum lease payments for this office space are as follows:

In August, 2011, the Company entered into an office lease covering its new Boca Raton, Florida headquarters. The lease term is for three years commencing on September 1, 2011 and contains a three year renewal option. The estimated monthly rent including sales tax, but subject to change for the Company’s allocated portion of the building’s annual operating expense factor is as follows: (a) Year 1 - $10,163 (b) Year 2 – $10,995 (c) Year 3 – $11,550.

License Agreement

On February 15, 2011, the Company entered into a license agreement with Separatech Canada, Inc. for a term of five years. The license provides the Company with access to exclusive usage of specified patents to use, test, develop, package, promote, sell and provide license products exclusively in North America. The License provides for the Company to construct a testing plant for development of the licensed products. The Company paid license fees of $60,000 through March 31, 2011 and commencing in April 2011 and for the duration of the term of the agreement, the Company is obligated to pay $30,000 per month.

Future minimum license fees are as follows:

Intellectual Property Agreements

The Company entered into a Patented Technology and Services Purchase Agreement on January 1, 2010 for the acquisition of certain proprietary intellectual properties concerning the treatment of water by the use of electro-precipitation. The Company is obligated to pay a five percent royalty on the first $6,000,000 of gross revenues earned from sales, use or other transfers of equipment based upon the patented technology transferred to the Company pursuant to the agreement.