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Year ended December 31, 2014 

## 8. Provisions and contingencies: 

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The liability to the insurance underwriter shown above is partially offset by $434,236 of insuran ce proceeds receivable (Note 5). 

(a) John Bennett indemnity claim: 

John Bennett (“Bennett”), founder and CEO of the Company until early 2004, is charged with conspiracy to defraud and major fraud against the United States between 2001 and mid -2004. The Company and twoformervice presidents (both of whom left the Company in 2004) have pleaded guilty to this same conspir acy against the United States. 

Bennett was extradited to the United States in November 2014 and is expected to be tried in November 2015. The Company has been ordered by the courtsto reimburseBennett for the reasonablelegal costs hehas incurred and will incurin connection with hiscriminal defense. 

The Company has accruedfor Bennett’s legal costs incurred and reimbursable to him as at December 31, 2014. The cost to the Company in respect of his future legal expenses will be recorded when these expenses are known and the amounts reimbursable to him can be reasonably estimated. 

If Bennett is acquitted, the Company’s insurer is responsible for Bennett’s legal costs. If Bennett is found guilty, the Company will be required to reimbur se its insurance underwriter for a ll amounts advanced to Bennett and the Company will beentitled to reimbursement from Bennett. The Company’s ability to obtain reimbursement will depend on its ability to identify and obtain recourse against Bennett’s assets, including, without limitation, the balance of any paymentsstill due to Bennett under the Reward for Tenure Agreement referred to  in note 9. 

