The Company may be involved in legal proceedings, claims and assessments arising in the ordinary course of business. In the opinion of management, such matters are currently not expected to have a material impact on the Company’s consolidated financial statements. The Company records legal costs associated with loss contingencies as incurred and accrues for all probable and estimable settlements.
North Dakota State University Research Foundation License Agreement
Under the terms of the Exclusive License Agreement (the “License Agreement”) signed on June 16, 2016 with North Dakota State University Research Foundation (“NDSU/RF”), the Company was delinquent on payments of $139,789 and unable to meet certain milestones. A dispute arose between the Company and NDSU/RF regarding compensation and deliverables. The License Agreement was renegotiated with NDSU/RF and on June 29, 2018, the Company entered into a settlement agreement and general release (the “Settlement Agreement”) with NDSU/RF to resolve the dispute, pursuant to which the Company and NDSU/RF fully and forever released each other from the License Agreement and mutually released each other of all claims. Accordingly, the Company recognized a gain of $139,789 for the settlement of accounts payable during the three months ended June 30, 2018.
Supply Agreement
On December 13, 2016, the Company entered into a Supply Agreement (the “Supply Agreement”) with Gelest Inc., a Pennsylvania corporation (“Gelest”). This Supply Agreement was for the purchase and sale of Cyclohexasilane (“CHS” or the “Products”) as set forth in the Supply Agreement, pursuant to which the Company agrees to use Gelest as a primary source to manufacture the Products for the duration of three years from the effective date.
Under the terms of the Supply Agreement, Gelest would have scaled-up production of CHS, within their available capacity of 12-18 Kg per year, and further optimize the manufacturing process licensed by the purchaser from NDSU Research Foundation (“NDSU/RF”). The term of this project was 90 days from the receipt of the first installment of YSi6Cl14 salt from the purchaser. The cost for scale-up and manufacturing optimization was $180,000 to be paid by the purchaser in two installments. The initial installment of $18,000 was paid upon finalizing this Supply Agreement. The second installment of $162,000 was to be paid net 30 days from availability for shipment of between 200 – 400 grams of the initial product of the quality stated in the Supply Agreement.
On April 6, 2018, Gelest and the Company mutually agreed to cancel the December 13, 2016 CHS Supply Agreement. The Company is currently negotiating an agreement with Gelest where Gelest will provide CHS storage and handling, website and catalog listings of CHS produced by or for the Company for sale to its customers, and customer service, including trans-fill of customer cylinders.
CRTG lost the agreement with NDSU which also shows they lost the license to optimize the manufacturing process for CHS. All CRTG has is the green teacup again.
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