On March 14, 2012, the Company entered
into a License Purchase Agreement with Kouei International, Inc. The Company acquired the exclusive rights in North America and
Europe to use the Tyrolysis technology owned by Kouei Industries Co., Ltd. of Japan. Kouei International holds these rights
under license from Kouei Industries and, pursuant to the agreement, has assigned them to the Company. The Tyrolysis technology
is a comprehensive closed-loop solution for the management of scrap tires, which allows for all scrap tires to be
either re-manufactured into new tires or reduced, through a carbonization process, into marketable chemical products such as diesel
fuel, carbon black and syn-gas.
Under the terms of the agreement, the Company
is required to pay a total of $525,000 of which $175,000 was due within 90 days of the closing of the agreement (which has been
paid), as well as $175,000 due 90 days after the first payment and $175,000 due 90 days after the second payment has been made.
The balance due on the license fee payable was $350,000 as of July 31, 2012.
Subsequent to September 30, 2012, Kouei
Industries agreed to extend the second payment due date to June 30, 2013 and the third payment due date to September 30, 2013.
All other terms of the agreement remain the same.
In addition, the Company is to pay a royalty
of 3% of all revenues in respect of gross sales for a period of 5 years, and a royalty of $2.50 per remanufactured passenger tire
and a royalty of $3.00 per remanufactured light truck and truck tire at the end of each month for a period of 5 years. There have
been no revenues generated from the license agreement as of July 31, 2012.