|
9. Commitments and contingencies
|
9 Months Ended |
|---|---|
|
Sep. 30, 2011
|
|
| Commitments and Contingencies Disclosure [Text Block] |
9. Commitments
and contingencies
Legal
matters
Litigation
Involving Former Executive Officer
As
previously reported, on April 7, 2010, Bruce McKinnon, the
former CEO of the Company, and the Company entered into an
Agreement Re: Collection on Judgment (“Judgment”)
(the “Settlement Agreement”), wherein
McKinnon, among other things, agreed to cease further
collection efforts on the Judgment, and the Company, among
other things, agreed to satisfy the Judgment for, and
McKinnon agreed to accept as full and final satisfaction of
the Judgment, subject to certain payment waivers described
below, a total amount of $360,000, plus interest of ten
percent (10%) per annum from March 15, 2010, on the unpaid
balance until paid, payable as follows: $30,000 on
April 7, 2010; $85,000 on or before April 15, 2010; and,
$15,000 per month commencing on June 1, 2010, until
paid. As of September 30, 2011, all
payments have been made on time and the balance due is
$0. The Settlement Agreement also provides that if
the Company makes all payments thereunder on a timely basis,
McKinnon will waive final payments due him in the amount of
$35,000. On July 15, 2011, the Company made the full and
final payment to Bruce McKinnon and recorded the waived
amount of $35,000 as part of other income in the accompanying
Statements of Operations for the nine months ended September
30, 2011.
Litigation
Involving Jeffery Muller
The
Company concluded its litigation in previous matters
involving the Company’s prior Chairman and Chief
Executive, Jeffrey Muller and all related matters and are of
the current opinion that the Company no longer faces
litigation liability in connection with those cases. The
Company is continuing to ensure it’s obligations are
fully in compliance with a previous injunction order entered
by a Federal District Court over six years ago to timely file
all of the Company’s financial and related
reports. The Company will shortly be petitioning
the Federal District Court to dissolve the compliance
injunction on the basis that for more than a six-year period,
under the Company’s new administrative and executive
leadership, it has been in full compliance with the
Company’s SEC financial and reporting obligations. The
Company can provide no assurance that such action to dissolve
the injunction would be successful.
There
is no other litigation of any significance with the exception
of the matters that have arisen under, and are being handled
in, the normal course of business.
Contingent
issuance of securities
In
July and August 2011, the Company committed to issue 750,000
shares of its restricted common stock and 750,000 warrants to
two consultants for future services. The common stock to be
issued will be non-refundable and is deemed earned upon
issuance while the warrants to be issued will be fully
vested, exercisable at an average price of $0.28 and will
expire in three years.
The
Company will account the fair value of these common stock and
warrants to be issued once it has made a determination that
the consultants have rendered the services which is expected
to be in the fourth quarter of 2011 and first quarter of
2012.
|