Related Party Transactions
 12 Months Ended
Feb. 28, 2018
Notes to Financial Statements  
Note 6. Related Party Transactions

Advances from majority stockholder

 

Mr. Daniel Solomita, the Company’s majority stockholder and CEO, or companies controlled by him, previously made advances to the Company. The advances were unsecured, non-interest bearing with no formal terms of repayment. During the year ended February 28, 2018, the Company repaid to Mr. Solomita or companies controlled by him, as applicable, an aggregate amount of $278,472. Additionally, accrued compensation due to Mr. Solomita of $360,000 was repaid during the year ended February 28, 2018.

 

Employment Agreement

 

On June 29, 2015, the Company entered into an employment agreement with Mr. Daniel Solomita, the Company’s President and Chief Executive Officer for an indefinite term. For the year ended February 28, 2018, compensation expense for the Company’s CEO amounted to $190 thousand (2017 – $180 thousand).

 

In addition, the Company agreed to issue 4 million performance incentive shares to the CEO of the Company’s common stock, in tranches of one million shares each, if certain milestones were met. The 4 million performance incentive shares of common stock is payable to Mr. Solomita as follows:

 

(i) 1 million shares of common stock shall be issued to Mr. Solomita when the Company’s securities are listed on an exchange or the OTCQX tier of the OTC Markets;
   
(ii) 1 million shares of common stock shall be issued to Mr. Solomita when the Company executes a contract for a minimum quantity of 25,000 M/T of PTA/EG or a PET;
   
(iii) 1 million shares of common stock shall be issued to Mr. Solomita when the Company’s first fill-scale production facility is in commercial operation; and
   
(iv) 1 million shares of common stock shall be issued to Mr. Solomita when the Company’s second full-scale production facility is in commercial operation.

 

In lieu of shares, Mr. Solomita may elect to receive a restricted stock grant with a future vesting date, options or warrants to purchase the same number of shares with no or a nominal exercise price.

 

On February 15, 2016, the Company and Mr. Solomita entered into Amendment No. 1 to Employment Agreement (the “Amendment No. 1”), which amends the Employment Agreement. Amendment No. 1 provides that the Company shall issue Mr. Solomita one share of the Company’s Series A Preferred Stock in exchange for Mr. Solomita agreeing not to terminate his employment with the Company for a period of five years from the date of Amendment No. 1 (note 7).

 

Effective April 10, 2017, the Company qualified to trade on the OTCQX and began trading the same date. Accordingly, 1 million performance incentive shares of common stock with a fair value of $0.8 million were earned and are issuable to Mr. Solomita. This has been reflected as compensation expense in the year ended February 28, 2017 at the grant date fair value.