|Commitments And Contingencies
NOTE 7 COMMITMENT AND CONTINGENCIES
Somerset Financial Lawsuit
In October 2010, Somerset Financial Group
Pension Trust sued New Bastion Development, Inc. Elliot Bellen, Laurie Bergmann and William Troy for the alleged breach of a promissory
note in the amount of $72,500 plus interest, court costs and attorneys fees. The promissory note is secured by 24
property lots with a recorded value of approximately $240,000 as of December 31, 2010. On March 20, 2012, Somerset received
a Final Judgment of Foreclosure in the amount of $150,853.32 and the 24 Compass lots that are secured by lien are scheduled to
be sold at a public auction on April 19, 2012 to the highest bidder. The Company and Somerset are currently in discussions to resolve
the matter and to avoid the auctioning of the properties.
On February 9, 2011, (employment date or grant
date) NB Regeneration, a wholly-owned subsidiary of the Company entered into a five year employment agreement with Michael Sydow
to serve as NBRs Chief Executive Officer. Upon execution, the Company granted 5,000,000 shares valued, for financial
accounting purposes on the grant date at the contemporaneous private placement price of $0.25 per share for a total $1,250,000.
The shares vest to Mr. Sydow as follows: September 1, 2011, 1,000,000 shares; Upon the occurrence of the execution
of a binding definitive agreement with Panamanian partners relative to the South American fertilizer project, 2,000,000 shares;
500,000 shares annually on the contract anniversary date years 2-5. Under ASC 718 "Compensation - Stock Compensation",
the Company will recognize the $1,250,000 value as follows: $250,000 on the September 1, 2011 vesting date; $500,000 upon satisfaction
of the performance condition; and $500,000 pro rata over the 4 year vesting period. On the employment agreement date, subject to
continued employment, Mr. Sydow was also awarded 2,000,000 common stock options that cliff vest 500,000 per year over four
years with first vesting date on January 13, 2012. The options each have a term of one year from the vesting date and have
exercise prices of $0.50, $1.00, $1.50 and $2.00 for each 500,000 that vest, respectively. However in January 2012, the Company
and Mr. Sydow agreed to delay any vesting of stock and options as delineated in the employment pending an amendment to the employment
agreement or reshaping of their association. The value of these options on the grant date was approximately $490,000 based upon
the following range of Black-Scholes assumptions; Exercise prices from $0.50 to $2.00, volatility from 372% to 448%, expected term
based on simplified method from 1 to 2.5 years and discount rate averaging 0.81% and is to be recognized in years one through four,
respectively, approximately $121,000, $121,000, $123,000 and $125,000.
On May 16, 2011, the Company entered into a
five year employment agreement with Elliot Bellen to serve as the Companys Chief Executive Officer. On the employment
agreement date, subject to continued employment, Mr. Bellen was awarded 2,000,000 common stock options that cliff vest 500,000
per year over four years with first vesting date on January 1, 2012. The options each have a term of one year from the vesting
date and have exercise prices of $0.50, $1.00, $1.50 and $2.00 for each 500,000 that vest, respectively. The value of these
options on the grant date was approximately $486,000 based upon the following range of Black-Scholes assumptions; Exercise prices
from $0.50 to $2.00, volatility from 353% to 430% expected term based on simplified method from 1 to 2.5 years and discount rate
averaging 0.81% and is to be recognized $119,000, $121,000, $122,000 and $124,000 approximately in years one through four, respectively.
In May 2011 the Company
filed a claim with the Gulf Coast Claim Facility (GCCF) for profits lost that resulted from the BP/Deep Horizon oil
spill that occurred on April 23, 2010. In its claim the Company alleges that it suffered significant economic losses as a
direct result of the oil spill. The GCCF has conditionally denied the Companys claim pending the submission, by the
Company, of further documentation. In August 2011 pursuant to GCCFs request, the Company provided the requested documentation.
Subsequent to providing additional documentation, the Companys claim was denied. BP is currently negotiating a settlement
with a class of most private economic damage and medical claims plaintiffs estimated to be approximately $7.8 billion. The Company,
and is currently waiting for that process to be completed prior to determining the best course of action to pursue its claims.
Memorandum of Understanding
In May 2011, NB Regeneration entered into a
Memorandum of Understanding with United Advisory, a Panamanian corporation that was formed to own and construct an ammonia and
urea facility in the Republic of Panama, in the Free trade Zone. Under the terms of the agreement certain financial partners
will subscribe to United Advisory and contribute sufficient funds to complete construction of the Outer Battery Limits (OBL) which
are estimated to cost between $300-$500 Million, and NB Regeneration has undertaken to arrange debt financing for the facility,
supervise the development of construction, contract for feedstock and raw materials, market and sell the products from the operation
of the facility, and to manage the facility's day to day operation upon completion. NBR shall receive a 51% interest in United
Advisory and its financial partners shall receive a 49% interest. Both parties to the MOU are currently waiting for the Panamanian
government to legally recognize the Pan American Economic Industrial Free-Trade Zone (PEIZ) to finalize and formalize
its transaction. As there can be no assurances that such action shall ever occur, the Company has decided to explore the pursuit
of an alternative location of the facility in the Colon, Free Trade Zone (CFTZ) in the Republic of Panama.