Follows from the Hitec Corp. Statements of Operations
For The Three Month Periods Ended February 29, 2016 and February 28, 2015
The last sentence of paragraph 7 is interesting:
7. Commitments
The Company entered into an agreement with independent consultant, Global Edge
International. The consultant shall advise and assist the Company in the restructuring of the
Company to maximize its probability of obtaining the financing and to maximize the value
of the shares. The Company paid an initial fee of $65,000 to the consultant upon signing the
agreement and shall pay $5,000 per month on an ongoing basis. The Company shall pay a
performance fee of 3% to the consultant upon each infusion of financing. Also, upon the
cumulative proceeds of no less than $27,000,000, the Company shall also grant an option to
the consultant to purchase 5% of the common shares, outstanding on the date of execution of
option, of the Company for $1,000. The option exercise price shall be $90,000 for the
aggregate number of shares subject to option. The term of the engagement shall be 36 consecutive months.
8. Subsequent Events
On March 28, 2016, the board of directors accepted the resignation of the CEO, Jeff
Michele, and appointed Global Edge International and its chosen representative to take over
all the public company external communications and public relations.
The board also authorized signing of two loan agreements due to a related party, Hitec LLC.
The majority shareholders of Hitec LLC are also the majority shareholders of the Company.
The first loan of $938,000, is an equipment loan for equipment acquired and/or fabricated by
Hitec LLC. The Company is in the process of construction of an operating plant and the
equipment is part of the plant. The loan bears an interest rate of 3% per annum. The
equipment is valued at the cost in construction budget. The Company recorded the loan as a
current liability and the value of the equipment as construction in progress on the date of the
agreement.
The second loan is for the working capital expenses advanced by Hitec LLC for the
Company. The loan amount as of the date of financials is $136,143 and shall bear interest at
the rate of 3% per annum, initially. The loan shall be a multi advance loan and the interest
rate shall be adjusted annually to 1% above the long term annual Applicable Federal Rate.
The collateral for both the loans shall be the equipment contributed in exchange for the loan.
Hitec LLC has exclusive right to utilize certain patents for pyrolysis systems. Hitec LLC
shall grant the exclusive rights to the Company to use the technology. In exchange for the
issuance of the licensing agreement, the Company shall issue 20,625,00 shares of common
stock to the owners of Hitec LLC. The Company recorded the fair market value of the shares
as value of the intangible assets acquired.
