2005 Canadian Exclusive License Agreement PowerSki Global

Partnership Offer
between
Powerski International
And
Powerski Global.
Prepared for:
Bob Montgomery
CEO
//
Directors and shareholde.rs
of
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·.r'Prepared
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BY~~
Don Diduck ~
780-910-8639(J'
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1) Current Situation:
Powerski International and Bob Montgomery are the creators of the Igniter 330
Jetboard, and have toiled through the stages of creation and development.
Powerski is now at the point of needing to go to mass production of the product.
The company has reached a financial position where they need an injection of
cash to continue and move to the next level. There are several outstanding
payables that require immediate attention, most importantly are payroll taxes that
are outstanding for the year 2004. It is estimated that, without a production
derived revenue stream, Powerski International adds to its current debt load of
over $3,000,000.00 (includes backorder of boards of approximately 330 units) by
approximately $5,000.00 per day or $150,000.00 per month. This translates to a
nearly insurmountable debt load of over $5,000,000.00 by year-end, if there are
no additional marketing efforts.
In stark contrast to the growing debt problem, assembling even a nominal
amount of boards could reasonably deliver a net profit of $ 8,000.00 to
$10,000.00 per day to the organization. The royalty benefits from this nominal
capacity would be in excess of $1500.00 per day every day or $500,000.00 per
year to the recipient. The perpetuation of lost revenue is a serious issue for the
company since it is its production revenue stream that must ultimately be utilized
to offset the growing level of indebtedness. Currently, the level of debt is
approaching critical proportions that will become unmanageable.
2) Our Offer:
The offer to Powerski is an offer that has more than just an injection of funding.
We will bring our years of experience to the management table of Powerski
International. We have a plan that will see the immediate reduction of
unnecessary expenses until we can emerge profitably with the proceeds of board
sales from the launched product. Our plan would show dividends being returned
to shareholders within a year. Our intention is to take responsibility tor
approximately $3,000,000.00 dollars in existing d~bt to bring the company
current with outstanding and critical financial issues and then take Powerski to
the manufacturing stage. We are ready to manufacture and produce a legitimate
revenue stream as soon as we receive the approval of the Board on this
proposal.
When all of the details around product release and production are near
completion we will call a meeting of distributors and dealers. They will be
introduced to their representation (how we will support them) and how they
order products. On this latter point, a Web-based ordering and tracking
system will be put in place to allow them to order and track their products.
We would also like to introduce a mini re-branding to signify the change to a
production focused organization and give some visual cues to our channel
that we are in business to serve them and deliver boards. In addition, we
would provide dealers and distributors with show room posters and brochures
to start preparation for the sales.
C) The Customer
Our efforts will be to keep the "hype" around the product alive through wellplaced advertising and promotion alerting the world - with a focus on North
America - to the pending release of the Jet board. A teaser type campaign
could be used: "I saw something on the lake last week ... it was fast, yellow
and exciting." "Have you seen it?" Coming to a lake near you soon ...
D) Fiscal Responsibility and Cost Control
Our funding will go towards advancement of the company and achievement of
the goal of delivering a product to market. After the product is entering the
market in sufficient volume, we would then be able to manage controlled
growth, expansion and development.
We will simultaneously payoff outstanding and immediate debts, and exhibit
cost and wagecontrols until we are in production and our financial picture
changes to a positive one. There will be some staff changes in specified
areas to meet our requirements and adjustments to the employee mix to
reflect our business direction.
E) The Future
It is our intention to make Powerski a profitable entity that pays dividends and
"shares" it success with its founders, and shareholders.
Dare to Dream.
5) Debt responsibility, Distribution of funds:
Powerski Global intends on making available approximately $3,000,000.00
dollars to move Powerski manufacturing into the legitimate revenue stream of
board assembly, distribution and sales. Powerski Global will insure the
repayment of the following Powerski International debts.
Payroll Taxes in Arrears
$400,000.00
Accounts Payable
$300,000.00
Operntion, of Powe~k; Glob,IIPSI, "01"P"d"ct;'"'~
tooling and associated start up costs
$300,000.00
Prepaid Jetboard fulfillment~
~O
Total
$2,800,000.00
6) Conditions of Offer
Z
~
---
__
----:::::--",.----
This offer is open for seven calendar days. Given time constraints based on
delivery schedules to the summer market, financial obligations of the vendors,
and financial arrangements that have already been structured for the benefit of
this proposal, this proposal will otherwise expire on Monday, March 21,2005.
Our offer is subject to Powerski meeting the following final conditions:
_-!!
A) Complete specifications of hull to begin manufacturing.
.......
S) EPA approval or proof of completed ~~g
requirements.
C) Corporate structure - Powerski Global and conditions.
7) Summary:
In summary we want to share a quotation with you:
"An idea can tum into dust or magic, depending on the talent that rubs against it. "
William Bembach
Our resources and immediate execution of the above plan will bring great
rewards to all involved. A future of successful dividend sharing awaits our new
venture. We look forward to the opportunity to being an integral part of the
successful future of Powerski, and share in the "magic".
4/26/2005
1:55 Pf!
FRO"!: Fa" 919 542
4724
PSI Powerski
International
~o":'-1949
369-8553
PAGE: 001 OF 002
The Powerski Jetboard Secures Over
$10 Million in Financing
Production Set to Go for the Igniter 330 ™
(DRAFT COpy ONLY)
4/26/05
The PowerSki Jetboard™ is now ready for mass production. Through a new
partnership with PowerSki Global Ltd., financing facilities and additional
management support for undertaking large-scale production is in place. Over
$10 million US will be advanced to this project based on letters of credit and
secured orders of the PowerSki Jetboard™.
The consumer interest in the PowerSki Jetboard™ is high. Based on projected
Powerski Jetboard™ demand, production is expected to reach 6,000 units within
the next fourteen months and grow steadily for the next several years.
Production facilities at San Clemente, California and a second assembly facility
in Edmonton, Canada could be operational by the end of May. The combined
production plan is to start modestly at 100 PowerSki Jetboards ™ in the first 30
days and could reach 500 units per month by the end of September for a
cumulative total of over 1000 units. About 2500 PowerSki Jetboards ™ could be
assembled before the end of the calendar year.
Final testing of engines, electrical systems and components are being completed
at this time. As part of this process, advanced delivery of four SuperTorque XTTM
Marine Engines were sent Monday, April 25th to the San Clemente facility and
are expected Friday. 12,000 engines have been ordered from Daesung Fine
Tec, Korea to meet the production schedule that has been set for the next 24
months. Purchase orders for nearly all other parts and components have been
issued. Hull manufacturing is in the final stages of production readiness with 100
units being available before the end of May. The hull manufacturing plan is to
have the capacity to meet and, when necessary, exceed the 500 unit per month
target.
The PowerSki Jetboard™ assembly facilities will feature a world-class operation
that will coordinate closely with its vendors in order to meet its production targets.
The assembly facilities in San Clemente and Edmonton will service both
domestic and international markets. Additional assembly facilities are being
contemplated for other jurisdictions in 2006.
More details regarding the upcoming PowerSki Jetboard™ production launch will
be announced in the coming weeks. For more information, please contact our
main offices in San Clemente at 949-369-3920.
NOVATION OF LICENSE AGREEMENT AND GRANT OF SUBLICENSE
AGREEMENT made this __
day of April, 2005, by and between:
ROBERT E. MONTGOMERY, an individual and his heirs
(hereinafter referred to as "Inventor")
- andHYDROFORCE GROUP, a Nevada Limited Liability
Company (hereinafter referred to as "HydroForce")
- andPOWER SKI INTERNATIONAL CORPORATION, a
California corporation (hereinafter referred to as
"PowerSki")
- andESNS Management Group, a Canadian corporation
(hereinafter referred to as "ESNS" and "Sub-Licensee")
- andPOWERSKI GLOBAL, Ltd., a Barbados international
business company (hereinafter referred to as "PSGlobal"
and upon assignment by ESNS, as "Sub-Licensee")
-andBJORN ELVIN, an individual and his heirs (hereinafter
referred to as "Limited Inventor")
A. Inventor is the inventor and owner of proprietary designs and processes, including
those described in certain Patents and patent applications identified in Exhibit A
attached hereto, and made a part hereof by reference. The designs and processes
described in the Patents and patent applications, and all other intellectual property
known to the Inventor and related to the technical details and applications of these
inventions, as well as Improvements as defined herein, are hereinafter referred to
generically as the "Jetboard Technology".
B. HydroForce is the exclusive licensee of the Jetboard Technology throughout the
world. HydroForce acquired these exclusive rights through its predecessor, a
general partnership, by a License Agreement dated October 1, 1994.
Novation of License Agreement and Grant of Sublicense
Page 1 of20
7.7 '[his Agreement supersedes and repLaces the hereinbefore noted agreements of
October 1"', 1994 and April 1$1, 1995 between the Inventor and respc:ctively,
HydroForce and PowerSki, and relates back to the date ofthelr execution, as though
executed on that date.
7.8 Sub-Licensee hereby agrees to fully indemnify and hold harmless Inventor with
respect to any and all claims or liabilities, includir1g, but not limited to, personal
inj u.ry liabilities, arising out of performance under this license and shall procure and
maintain industry standard insurance coverages and amounts, including without
limitation products
and business liabilities.
7.9 This Agreement shall be effective upon the date of of ficia I re-organization
of ESNS
with 'regards to ESNS, and upon the date of official organization of PSGlobaJ with
regardS to PSGlobal, but not later than April 30, 2005.
IN W1TNESS WHEREOF, the parties hereto have caused this Agreement
in du.£nicatelb~ their duly authorized officers or represematives.
to be executed
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HYDROFORCE
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ESNS MANAGEMENT
GROUP
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POWER SKI INTERNATIONAL
CORPORATION
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POWERSKI GLOBAL. LTD.
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and Grant
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Page 20 of 20
of Sublic~nse
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