| Related Party Transactions |
| 10. |
Related Party Transactions |
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The Company received cash from Mr. Folkson, the Company’s Chief Executive Officer and related party, $1,000 and $15,000 in 2016 and 2015, respectively, to supplement the Company’s working capital. These short term advances have all been repaid. The Company reimbursed Mr. Folkson $5,000 for advances made previously during 2016. The company owes Mr. Folkson another $1,458 for expenses incurred on behalf of the company through June 30, 2016. |
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On May 27, 2015, Mr. Folkson converted the outstanding note payable of $134,517 into 538,068 shares of the Company’s $0.001 par value common stock. |
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The amounts previously included in short term borrowings – related party of $0 and $0 in 2016 and 2015, respectively had represented a Note Payable which was to be repayable upon Mr. Folkson providing the borrower with written notice of demand, according to certain terms. However Mr. Folkson was not permitted to demand repayment of the Note until the Company was profitable, and in a positive cash flow position. At that time, Mr. Folkson would have been allowed to demand repayment. The Company had agreed to make payments equal to 10% of the monthly positive cash flow of the Company until balance would have been paid in full. Subsequently, on May 27, 2015, Mr. Folkson converted his note into shares of the Company’s stock. |
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During the third quarter 2015, Mr. Folkson began accruing a consulting fee of $6,000 per month which the aggregate of $72,000 and $36,000 is reflected in professional fees and presented in the accrued expenses – related party for 2016 and 2015 respectively. |
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The consulting agreement for Mr. Folkson had a term of one year, and then converted into a month to month effective January 1, 2016. This agreement can be terminated after the initial term, with thirty (30) days notice by either party. |
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Imputed interest expense accrued on the converted note payable to Mr. Folkson totaled $0 and $9,894 for the years ended June 30, 2016 and 2015, respectively. |
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On February 10, 2016, shareholder Dror Tepper loaned the company $4,000. Mr. Tepper through his On April 8, 2016, Mr. Tepper loaned the company an additional $9,000, $4,000 of which was a cash loan made directly to the company, and $5,000 of which was paid directly to a vendor for services received. There was no compensation paid to Mr. Tepper for making these
advances. These
advances were secured by a promissory note from the company to Mr. Tepper, whereby the company has until November 4, 2016 to repay the $13,000. Should the company not be able to repay the note, Mr. Tepper is entitled to receive 150,000 shares of Company stock as repayment of the note. |
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On March 4, 2016, shareholder Richard Faraci loaned the company $10,000. As compensation for making this loan, Mr. Faraci received 20,000 shares of Company common stock. This advance was secured by a promissory note from the company to Mr. Faraci, whereby the company has until September 1, 2016 to repay the $10,000. Should the company not be able to repay the note, Mr. Faraci is entitled to receive 100,000 shares of Company stock as repayment of the note. After the end of the fiscal year, this note was extended by both parties, see Note 14, Subsequenst Events. |
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