Commitments

9 Months Ended

Sep. 30, 2019

Commitments [Text Block]

19. Commitments

a) Effective January 1, 2017, new consulting agreements were finalized for the services of the President and for the CEO. The consulting agreements are for a period of three years, commencing January 1, 2017. For each of these two executive officers, the monthly fees are as follows: $3,776 ($5,000 CAD) for 2017 and $11,327 ($15,000 CAD) for 2018 and 2019. The future minimum commitment under these consulting agreements, is as follows:

For the three-month period ending December 31, 2019 $ 33,980

The CFO is currently consulting on a month to month basis at $4,531 ($6,000 CAD) per month, on the same terms and conditions as his consulting agreement, which expired March 31, 2019.

Refer also to subsequent events, note 21(g).

b)  Effective January 1, 2017, the Company entered into a new three-year premises lease agreement with Haute at a monthly amount of $3,020 ($4,000 CAD) for 2017, $ 3,776 ($5,000 CAD) for 2018 and $4,531 ($6,000 CAD) for 2019. The Company is also responsible for all expenses and outlays in connection with its occupancy of the leased premises, including, but not limited to utilities, realty taxes and maintenance. The future minimum commitment under this premises lease agreement is as follows:

For the three-month period ending December 31, 2019 $ 13,592

c)

The Company was assigned the land lease on the purchase of certain assets of Astoria. The land lease, which comprises 13.88 acres in Roslin, Ontario, Canada, has a term expiring March 31, 2034. The basic monthly rent on the net lease is $2,265 ($3,000 CAD) and is subject to adjustment based on the consumer price index as published by Statistics Canada ("CPI"). No adjustment for CPI had been charged by the previous landlord. The Company is also responsible for any property taxes, maintenance, insurance and utilities. In addition, the Company has the right to extend the lease for five further terms of five years each and one further term of five years less one day. Effective January 1, 2019, this right-of-use operating lease has been reported as an operating lease right-of-use asset and an operating lease liability on the interim condensed consolidated balance sheets as at March 31, 2019 and 2018. Subsequently, effective May 24, 2019, the Company acquired the shares of 1684567, the company that owned the land upon which the right-of-use asset was situated. As a result, the Company is currently both the tenant and the landlord and as such, no longer recognizes an operating right-of-use asset and related operating lease liability.

In addition, the Company was informed that, through a special provision of the site plan agreement with the City of Belleville (the "City"), Ontario, the Company is required to fund certain road maintenance required by the City for the years 2017 through to 2025 at an annual rate of $7,551 ($10,000 CAD). The first year of the special provision was 2016, approximately one year before the Company acquired certain assets of Astoria. This special provision was not addressed in the APA and as a result, the Company may be liable for both the 2016 and 2017 assessments.

 

The payments are due each September 30th. The Company's estimates that its portion for the year ended September 30, 2017, would be equal to the 15 days the Company owned the organic composting facility, after it was acquired on September 15, 2017. The amounts for 2016 and 2017 have not been paid and unless this can be resolved with the operator for the period prior to September 15, 2017, the Company may be liable for both these years. The Company paid the amount due on September 30, 2018, in the amount of $7,551 ($10,000 CAD) and has recorded an accrual for the balance owing from October 1, 2018 to September 30, 2019.

d)

PACE has provided the Company a letter of credit in favor of the Ministry of the Environment, Conservation and Parks (the "MOECP"), (formerly the Ministry of the Environment and Climate Change) in the amount of $209,035 ($276,831 CAD) and, as security, has registered a charge of lease over the premises, located at 704 Phillipston Road, Roslin, Ontario, Canada. The Company is required to provide for environmental remediation and clean-up costs for its organic composting facility. The letter of credit is a requirement of the MOECP and is in connection with the financial assurance provided by the Company for it to be in compliance with the MOECPs environmental objectives. The MOECP regularly evaluates the Company's organic composting facility to ensure compliance is adhered to and the letter of credit is subject to change by the MOECP. Since the fair value of the environmental remediation costs cannot be determined at this time, no estimate of such costs has been recorded in the accounts. As of September 30, 2019, the MOECC has not drawn on the letter of credit. The Company renewed the letter of credit to December 31, 2019. Refer also to going concern, note 2 and subsequent events, note 21(f).