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Related Party Transactions
12 Months Ended
Dec. 31, 2017
Related Party Transactions [Abstract]  
Related Party Transactions

NOTE 10 – RELATED PARTY TRANSACTIONS

 

Technology Agreement with Arkenol, Inc.

 

On March 1, 2006, the Company entered into a Technology License agreement with Arkenol, Inc. (“Arkenol”), in which the Company’s Chairman/Chief Executive Officer and other family members hold an interest. Arkenol has its own management and board separate and apart from the Company. According to the terms of the agreement, the Company was granted an exclusive, non-transferable, North American license to use and to sub-license the Arkenol technology. The Arkenol Technology, converts cellulose and waste materials into Ethanol and other high value chemicals. As consideration for the grant of the license, the Company shall make a onetime payment of $1,000,000 at first project construction funding and for each plant make the following payments: (1) royalty payment of 4% of the gross sales price for sales by the Company or its sub licensees of all products produced from the use of the Arkenol Technology (2) and a one-time license fee of $40 per 1,000 gallons of production capacity per plant. There are no amounts currently due under this agreement.

 

Asset Transfer Agreement with ARK Energy, Inc.

 

On March 1, 2006, the Company entered into an Asset Transfer and Acquisition Agreement with ARK Energy, Inc. (“ARK Energy”), which is owned (50%) by the Company’s CEO. ARK Energy has its own management and board separate and apart from the Company. Based upon the terms of the agreement, ARK Energy transferred certain rights, assets, work-product, intellectual property and other know-how on project opportunities that may be used to deploy the Arkenol technology (as described in the above paragraph). In consideration, the Company has agreed to pay a performance bonus of up to $16,000,000 when certain milestones are met. These milestones include transferee’s project implementation which would be demonstrated by start of the construction of a facility or completion of financial closing whichever is earlier. The payment is based on ARK Energy’s cost to acquire and develop 19 sites which are currently at different stages of development. As of December 31, 2017 and 2016, the Company had not incurred any liabilities related to the agreement.

 

Related Party Lines of Credit

 

On November 10, 2011, the Company obtained a line of credit in the amount of $40,000 from its Chairman/Chief Executive Officer and, at the time, the majority shareholder to provide additional liquidity to the Company as needed, at his sole discretion. Under the terms of the note, the Company is to repay any principal balance and interest, at 12% per annum, within 30 days of receiving qualified investment financing of $100,000 or more. On April 10, 2014, the line of credit was increased to $55,000. On March 13, 2016, the line of credit was increased to $125,000, and then incrementally increased to $275,000 on August 17, 2017. As of December 31, 2017, the outstanding balance on the line of credit was approximately $256,245 with $18,755 remaining under the line. Although the Company has received over $100,000 in financing since this agreement was put into place, Mr. Klann does not hold the Company in default.

 

As of December 31, 2017 and 2016, $68,985 and $31,709 respectively, in accrued interest is owed under this line of credit and included with accrued liabilities.

 

Loan Agreement

 

On December 15, 2010, the Company entered into a loan agreement (the “Loan Agreement”) by and between Arnold Klann, the Chief Executive Officer, Chairman of the board of directors and, at the time, the majority shareholder of the Company, as lender (the “Lender”), and the Company, as borrower. Pursuant to the Loan Agreement, the Lender agreed to advance to the Company a principal amount of Two Hundred Thousand United States Dollars ($200,000) (the “Loan”). The Loan Agreement requires the Company to (i) pay to the Lender a one-time amount equal to fifteen percent (15%) of the Loan (the “Fee Amount”) in cash or shares of the Company’s common stock at a value of $0.50 per share, at the Lender’s option; and (ii) issue the Lender warrants allowing the Lender to buy 500,000 common shares of the Company at an exercise price of $0.50 per common share, such warrants expired on December 15, 2013. The Company has promised to pay in full the outstanding principal balance of any and all amounts due under the Loan Agreement within thirty (30) days of the Company’s receipt of investment financing or a commitment from a third party to provide One Million United States Dollars ($1,000,000) to the Company or one of its subsidiaries (the “Due Date”), to be paid in cash or shares of the Company’s common stock, at the Lender’s option. As of December 31, 2016 and 2015, $200,000 remained outstanding on this loan.

 

Accrued Salaries of Company Officers

 

As of December 31, 2017 and 2016, accrued salary due to the Chief Executive Officer included within accrued liabilities was $379,950 and $339,000, respectively. In connection with the 3a10 transaction, the CEO assigned $125,145 to Tarpon Bay.

 

Total accrued and unpaid salary of all employees is $1,663,695 and $1,330,777 as of December 31, 2017, and December 31, 2016, respectively, representing 30 months of accrual at December 31, 2017. Of the total accrued salaries, $831,000 is included in the 3a10 transaction with Tarpon Bay Partners with $10,189 having been reduced by the 3a10 transaction during the year ended December 31, 2017.