It took me a few moments to dig this up. Anyone with free time could continue to connect the dots between Mast, Barbee, Free Harbor, and Capital Access. Indeed, if one were so inclined, one could trace the entire ARTI/ MARTI scheme to UTEK, a company scrutinized at length by the SEC for setting up suspicious stock deals with "technology" gleaned from universities.
At December 31, 2003, we had amounts payable of $198,100 due to Free Harbor LLC for management services. One of our directors is the managing partner of Free Harbor LLC. Expenses incurred under this arrangement totaled $13,800 for each of the quarters ended December 31, 2003 and 2002. As of June 30, 2003, $170,000 of the payable balance due was transferred to a non-interest bearing note payable with payments of $5,000 per month beginning October 1, 2004, and continuing until paid in full. Future management fees are not payable by us until we have reached profitability on a cash basis.
This agreement is made this 1st day of July, 2001 by and between HydroFlo, Inc., a North Carolina, hereinafter known as "HydroFlo", and Free Harbor, LLC., a North Carolina Limited Liability Corporation, herein after known as "FH".
NOW THEREFORE, in consideration for the mutual covenants and agreements contained herein and for other good and valuable consideration, the receipt and sufficiency of which hereby are acknowledged, the parties do mutually agree as follows:
1. FH, upon the request of HydroFlo, does hereby agree to memorialize the formally verbal agreement which assigns Dennis L. Mast, The managing director of FH, hereinafter known as "Mast" as the Chief Executive Officer (CEO) of HydroFlo, subject to all of the benefits and conditions inherent to the position and the covenants contained herein.
2. Upon the appointment and acceptance of the position of CEO of HydroFlo, and for service performed therein, FH shall be entitled to a monthly management fee of Four Thousand Six Hundred Dollars ($4,600.00). This monthly fee shall be subject to annual adjustment at the discretion of the Board of Directors of HydroFlo, but not until after profitability of HydroFlo is achieved. This management fee will be accrued on the books of HydroFlo, but the actual payment of the accrual will not be made to FH until such time as HydroFlo obtains profitability. Profitability will be determined as positive profit being reached after accounting for all expenses of the corporation, including depreciation and amortization
3. In addition to the above mentioned FH shall be entitled to an annual payment of ten percent (10%) of the pre-tax profits of HydroFlo after accounting for all expenses of the corporation, including depreciation and amortization. This payment shall be paid annually aproximately ninety (90) days after HydroFlo fiscal year end.
4. HydroFlo agrees to hold FH and Mast harmless from any action brought against either of them on behalf of HydroFlo, or the duties of CEO performed on behalf of HydroFlo, and agrees to defend any actions, provided that actions of FH and Mast are not intentionally and maliciously performed against the interests of the company.
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5. Mast acknowledges that he has executed freely and knowingly, a document, which prohibits disclosure and circumvention of any proprietary information of HydroFlo, and further agrees that this Non Disclosure/Non Circumvention Agreement is fully incorporated herein by reference.
6. FH and Mast shall be entitled to the reimbursement of all costs and expenses necessary for the performance of duties and work on behalf of the company, and any other compensation as may be appropriate.
Entered into and agreed upon on the date first written above,
HydroFlo, Inc.
Hy dr oFlo, Inc.
BALANCE SHEETS
September 30, 2005 (Unaudited)
June 30, 2005 (Audited)
ASSETS
INVESTMENTS IN AND ADVANCES TO CONTROLLED COMPANIES $ 5,012,125 $ 25,153,200
CURRENT ASSETS:
Cash and Cash equivalents
396,607
2,557
Note Receivable
50,000
50,000
Prepaid Expense
617
855
Property and Equipment, net
24,299
11,482
Deposits
4,490
4,455
TOTAL ASSETS $ 5,488,138 $ 25,222,549
LIABILITIES AND STOCKHOLDERS’ EQUITY
CURRENT LIABILITIES:
Accounts payable and accrued liabilities $ 90,641 $ 27,251
Due to Free Harbor, LLC (related party)
2,102,330
2,102,329
Shareholder Loan
-
25,000
Total current liabilities
2,192,971
2,154,580
COMMITMENTS AND CONTINGENCIES
STOCKHOLDERS’ EQUITY:
Convertible preferred stock, $.001 par value, 5,000,000 shares authorized, no liquidation value, 3,800,000 and 4,000,000 shares issued and outstanding at September 30, 2005 and June 30, 2005 respectively
3,800
4,000
Common stock, $.01 par value, 500,000,000 shares authorized; 46,105,057 and 37,456,763 shares issued and outstanding, at September 30, 2005 and June 30, 2005 respectively.