| 19. Commitments and Contingencies | (a) On September 14, 2011, CleanGen Power received notice that The Groundworx Co. ("Groundworx") was seeking damages of Cdn$33,678 for repair services provided for a Doppstadt Shredder (the "Shredder"). Management of CleanGen Power asserts that any repair services provided for the Shredder was done without the agreement and the knowledge of CleanGen Power. On October 5, 2012, CleanGen Power filed a Statement of Defense and Counterclaim, seeking damages of Cdn$6,000,000 from Groundworx for the following: (i) trespassing, including physical damage to the gates and structures located on land that CleanGen Power was entitled to possession of; (ii) removal and conversion of the Shredder without permission; (iii) consequential losses arising from, but not limited to, CleanGen Power's inability to perform its obligations under agreements with third parties as a direct result of the loss of the Shredder; (iv) damages arising from the disruption of CleanGen Power's business, causing CleanGen Power to be unable to honour all of its financial obligations to third parties; and (v) administrative time and resources spent by CleanGen Power to locate the Shredder and to deal with the abovementioned acts of Groundworx. On November 16, 2012, CleanGen Power received a Statement of Defense to Counterclaim from Groundworx, who denied all of the allegations in the Counterclaim. There have been no changes to the case since April 30, 2013 when CGPC served its Affidavit of Records. CleanGen Power has until April 30, 2016 to advance the action or it risks automatic dismissal for delay by the Court.
(b) On December 9, 2013, the Company entered into a licensing agreement pursuant to which the Company has been granted a royalty-bearing, exclusive license to certain patented inventions. The Company has agreed to pay the licensor $3,000 and issue shares of common stock equal to a fair value of $30,000 on or before January 8, 2014. The Company will pay royalties to the licensor calculated based on 4% of net sales for licensed products and processes. The minimum royalty payments are to be paid in advance on a quarterly basis as follows: December 3, 2018: - $500; year 2019 - $2,000; year 2020 - $4,000; year 2021 - $6,000; year 2022 - $8,000; and $10,000 for year 2023 and every year thereafter for the life of the agreement. If the first sale of a licensed product occurs before 2019, the first minimum royalty payment will be due on December 31 of the year in which the first sale occurred and the due dates for the subsequent minimum royalty payments will be adjusted accordingly. The Company must provide funding of at least $50,000 by January 6, 2014 for research by the licensor in the area of electrochemical based solar cells with energy storage capacity. In addition, the Company must pay the licensor milestone payments as follows: $5,000 upon completion of a working prototype due on March 31, 2018 and $10,000 upon its first commercial sale due on March 31, 2019. The Company must execute the first commercial sales of products to a retail customer on or before March 31, 2019 or the licensor has the right to terminate the agreement. The term of this license will continue until the latter of the date that no licensed patent remains a pending application or an unforceable patent, or the date on which the licensee's obligation to pay royalties expires.
(c) On January 16, 2014, the Company entered into an agreement with a company controlled by the President of the Company whereby the Company is to pay $10,000 per month, which is to be paid with shares of common stock of the Company until the Company has adequate funding. If the agreement is terminated by the Company without cause or as a result of a change in control, the company controlled by the President of the Company will be entitled to termination pay of $240,000.
(d) On April 15, 2014, the Company entered into a management agreement with a company controlled by the President of WTI whereby the Company is to pay Cdn$10,000 per month for the management services for a term of five years.
(e) On April 24, 2014, the Company entered into a Services and Commission Agreement with Aboriginal Financial Services Corporation ("AFSC"), a company controlled by the President of the Company, pursuant to which AFSC will provide the Company with knowledge regarding various Aboriginal peoples, groups, organizations and First Nations, Metis and Inuit communities ("Aboriginal Stakeholders") and their business practices to assist the Company in identifying utility resource development and associated services to assist the Company with contractual arrangements for the development of resource opportunities on Aboriginal lands. Under the terms of the agreement,
the Company agreed to pay AFSC a one-time retainer of Cdn$3,000 upon execution of the agreement and reimburse AFSC on a monthly
basis for pre-approved out-of-pocket expenses. The Company has also agreed to issue the following shares based on various target
contracts, as more particularly described in the agreement:
i) 500,000 shares of common stock at the then prevailing market rate for any and all target contracts having a total capital investment value of up to Cdn$4,999,999 issuable as of the date of signing of target contracts with Aboriginal Stakeholders.
ii) An additional 500,000 shares of common stock at the then prevailing market rate will be deemed earned and issuable as of the date of completion of the target contracts.
iii) A further 500,000 shares of common stock at the prevailing market rate for any and all target contracts having a cumulative total capital investment of Cdn$5,000,000 or more upon completion of the target contracts. Such shares will be deemed earned and issuable upon the target contracts being completed. The Company also agreed to pay AFSC
a commission for any and all third party financing introduced to the Company by AFSC as follows:
i) 10% of the first Cdn$1,000,000, plus;
ii) 8% of the second Cdn$1,000,000, plus;
iii) 6% of the third Cdn$1,000,000, plus;
iv) 4% of the fourth Cdn$1,000,000, plus;
v) 2% of everything above Cdn$4,000,000. The agreement may be terminated
by either party with 90 days written notice. On September 26, 2014, pursuant
to an addendum to the Services and Commission Agreement with AFSC, the Company issued 500,000 shares of common stock to AFSC as
additional consideration for AFSC's performance of services rendered in identifying and introducing other business opportunities
to the Company.
(f) On September 14, 2014, the Company entered into an agreement with a company controlled by a director of the Company whereby the Company is to pay Cdn$5,500 per month, payable in semi-monthly installments, which is to be paid with shares of common stock of the Company until the Company has adequate funding. If the agreement is terminated by the Company without cause or as a result of a change in control, this Company will be entitled to termination pay of $66,000 per year of service rendered
(g) On March 18, 2015, the Company entered into a management agreement with AFSC for services to be rendered as an officer and director of the Company. In consideration for the management services rendered, the Company agrees to pay AFSC the following fees and expenses:
i) Upon execution of this agreement, the Company agrees to issue to AFSC 666,667 unrestricted common voting shares of the Company at the then prevailing market price and stock options as determined by the Board of Directors (refer to Note 16(f));
ii) The Company agrees to pay to AFSC a monthly fee of $12,500, plus applicable taxes, in equal semi-monthly installmentswhich is to be paid with shares of common stock of the Company until the Company has adequate funding;
iii) The Company agrees to pay AFSC for all reasonable and necessary travel and out of pocket expenses incurred in fulfilling its obligations under this agreement upon verification of all related receipts; and
iv) The Company agrees to issue common stock and stock options to AFSC, at its discretion at such times and in such amounts as it determines from time to time. AFSC shall be entitled to participate in other incentive plans or employee incentive stock options. Such stock options are to be exercisable for a minimum period of five years from the date of grant, considered earned and fully vested at the time of issue regardless of whether AFSC exercises its right, and the Company shall have no right to cancel or rescind such stock options granted thereafter.
(h) On April 2, 2015 and amended on December 15, 2015, the Company entered into a technology development and license agreement (the "License Agreement") with a consultant and a company with common directors. Pursuant to the License Agreement, in consideration of the license granted to the Company and the related company for the development of the EESD graphene-based supercapacitor, the Company is to pay a monthly laboratory operations funding fee of $10,000 and issue 3,000,000 shares of common stock to the consultant. The common stock issued were assigned to the related company.
(i) On April 22, 2015, the Company entered into an agreement with a non-related party whereby the Company is to pay Cdn$12,500 per month for services rendered. At the successful conclusion of the probationary period of four months, the Company is to issue a bonus of 500,000 shares of common stock. As at March 31, 2016, the Company had $360,000 in common stock issuable to this consultant. Refer to Note 16(g).
(j) On April 30, 2015, the Company filed a Notice of Claim with the Court of Queen's Bench of Alberta against Albert Klyne, Norma Klyne, 1804164 Alberta Inc., and Margaret Ward (collectively, "Klyne et al"). The Company seeks rescission of the share purchase agreement to acquire 100% of the shares of 1454004 Alberta Ltd. (the "Agreement") or damages in the amount of Cdn$10,000,000 due to fraudulent misrepresentations made by Klyne et al. On July 24, 2015, the Court of Queen's Bench of Alberta issued an order to prevent Klyne et al from transferring, encumbering, pledging or in any way alienating the common shares of the Company received under the Agreement. On September 4, 2015, the Company received a Statement of Defense from Klyne et al. which stated that pursuant to the Agreement, any dispute will be resolved by arbitration and the facts set forth in the Statement of Claim were denied. As the Company did not take the dispute to arbitration, Klyne et al is seeking dismissal of the action due to substantial breaches of the terms of the Agreement by the Company. On September 4, 2015, the Company received a Notice of Counterclaim from Klyne et al. The Company is being sued for not taking the dispute to arbitration in accordance with the Agreement and Klyne et al is seeking the delivery of the common shares to be provided pursuant to the Agreement.
(k) On October 21, 2015, the Company entered into an agreement with a consultant for services to be rendered for a term of one year with automatic six months renewal terms unless terminated in writing by either party. In consideration for the services rendered or introductions made to financing sources by the consultant ("Financing Transaction"), the consultant shall be entitled to receive a success fee equal to 10% of the Company's proceeds from the Financing Transaction once the Financing Transaction is closed. Payment of the success fee shall be made concurrently with the first payment on the Financing Transaction and shall be based upon the total proceeds paid directly or indirectly or for the benefit of the Company by or for the financing source as a result of the transaction. If the Company is acquired or a deal is closed by reverse merger, the consultant shall be entitled to receive a success fee equal to 8% of the value of the merger. The Company shall pay the success fee from the proceeds due to it. All monies have to be realized and received by the Company prior to the payment of the success fee.
(l) On November 9, 2015, the Company entered into an agreement with a non-related party whereby the Company is to pay Cdn$10,000 per month for services rendered and issue a signing bonus of 500,000 shares of common stock upon execution. The Company also agreed to pay two months compensation for work previous to the signing of the agreement. Refer to Note 16(b).
(m) On November 20, 2015, the Company received an Amended Notice of Civil Claim from Shaw Production Way Holdings Inc. (formerly known as Shawood Lumber Inc.) ("Shaw"). Shaw asserts that in August 2014, the Company and Shaw entered into an agreement pursuant to which Shaw would transfer its security interest in Stealth Ventures Inc. ("Stealth") secured note (the "Secured Note") to the Company, but would retain possession of the Secured Note until such time as the preferred shares are converted into free trading common shares of the Company at $0.30 per share or Shaw receives cash from Stealth. In September 2015, Shaw tendered to convert the preferred shares of the Company into common shares of the Company, which were not received. Shaw sought relief for damages for the Company's breach of the agreement and an order for the Company to deliver the common shares or damages of approximately $1,000,000 plus interest and costs. On January 29, 2016, the Company has filed an Amended Response to the Civil Claim. Management of the Company asserts that pursuant to a written contract dated August 14, 2014, the Company would authorize the issuance of $900,000 worth of preferred shares, convertible into common stock at $0.30 per share, in exchange for transfer of the Secured Note. The Company, jointly with Shaw, would continue to hold as security a charge on the assets of Stealth until either the conversion of the preferred shares to common shares or redemption of the note on or before July 31, 2015. Management asserts that Shaw did not transfer the debenture to the Company as required under the agreement.
(n) On November 29, 2015 but effective November 25, 2015, the Company entered into a services and commission agreement with a consultant for services to be rendered. In consideration for the services rendered to introduce and assist the Company to enter in agreements with various interested stakeholders for the development of certain business opportunities (the "Target Contracts"), the Company agrees to pay total commission in cash equal to 10% of the amount of the total final Target Contract(s) for the proposed project(s) undertaken by the interested stakeholders. If the full amount of the Target Contract(s) is not paid all at once, pro-rated commissions using a ratio of the amount advanced over the amount of the total contract value shall be paid within three days of the Company receiving the funds for said project(s). The agreement may be terminated by either party with 90 days written notice.
In the event of
circumvention, either directly or indirectly, the Company agrees to pay a monetary penalty equal to the remuneration the
consultant was entitled to under this agreement, plus all legal expenses incurred in the recovery of such remuneration plus
interest equivalent to 1.5% compounded monthly for all outstanding amounts owing. The consultant shall be entitled to its
remuneration regardless of circumvention as if circumvention had not occurred.
(o) On December 10, 2015, the Company received a notice of claim from Russel Matichuk for unpaid services in the amount of Cdn$99,750, damages of Cdn$25,500 for wrongful termination, pre-judgment interest, and costs. The claim is for supposed unpaid and owed salary and severance from the CleanGen group of companies. The Company has filed a response to the claim that there is no record of him being an employee and that if his claim is true, his amounts owing were never disclosed to the Company and will be added to the ongoing litigation against Albert and Norma Klyne for misrepresentation and lack of disclosure during the acquisition of CleanGen Inc. by the Company. |
