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Subsequent Events
3 Months Ended
Aug. 31, 2011
Notes to Financial Statements 
Subsequent Events

On June 27, 2011, Mr. Joseph Duryea, our former President, filed a complaint (“the Complaint”) against us in the United States District Court for the District of Nevada (Case No. 2:11-cv-01054-GMN CWH) alleging breach of contract, breach of the covenant of good faith and fair dealing, tortious breach of contract, and fraud (“the Litigation”) in relation to an employment agreement (“the Employment Agreement”) we entered into with him on January 15, 2010.

 

On September 15, 2011, we entered into a settlement agreement (“the Settlement Agreement”) with Mr. Duryea to resolve the above Litigation. Under the terms of the Settlement Agreement, we agreed to pay Mr. Duryea a total of $85,000 (“the Settlement Funds”). Of this total amount, we agreed to pay $45,000 upon execution of the Settlement Agreement and the remaining $40,000 shall be paid in four equal installments, payable on or before October 15, 2011, November 15, 2011, December 15, 2011 and January 15, 2012.

 

Further under the Settlement Agreement, we agreed as follows:

 

- We agreed that any failure on our part to make timely installment payments will make the entire remaining balance of the Settlement Funds immediately due and payable and we consented to the immediate entry of judgment against us for the amount of the remaining balance of the Settlement Funds, subject to pre-judgment interest from the date of the filing of the Complaint forward.

 

- We agreed to make our best effort to correct SEC filings and any other sites to record that Mr. Duryea in fact resigned from his former position with us as President, as opposed to the Company’s previous allegation that he had been “terminated.”

 

The Settlement Agreement provides for a mutual release of claims and a non-disparagement clause. Upon payment of the Settlement Funds, the Litigation will be dismissed. The parties acknowledged, however, that Mr. Duryea’s additional stock rights, as described in his Employment Agreement, as a stockholder of our company will remain intact.

 

On October 4, 2011, the Company announced the execution of a stock buyback program, subject to market conditions, with purchases to be made out of ongoing positive cash flow from operations.

 

Under the program, the Company may acquire approximately 3,000,000 shares at prices of up to $0.10 per share over the next 90 days. The timing and exact number of shares purchased will be at the Company's discretion. The buyback of shares may occur in open market, negotiated or block transactions.

 

The Company does not intend to repurchase any shares from its management team or other insiders. This stock buyback program does not obligate the Company to acquire any specific number of shares and may be suspended or discontinued at any time.

 

Management has evaluated subsequent events through October 7, 2011, the date on which the financial statements were issued, and has determined it does not have any other material subsequent events to disclose.