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RELATED PARTY TRANSACTIONS
3 Months Ended
Sep. 30, 2013
Related Party Transactions [Abstract]  
RELATED PARTY TRANSACTIONS

NOTE 13 – RELATED PARTY TRANSACTIONS

 

In January of 2013, the Company previously entered into an agreement with an individual who is related to the Company’s CEO to join the Company’s Board of Directors. Under the  agreement, the Director agreed to provide various services to the Company including making recommendations for both the short term and the long term business strategies to be employed by the Company, monitoring and assessing the Company's business and to advise the Company’s Board of Directors with respect to an appropriate business strategy on an ongoing basis, commenting on proposed corporate decisions and identifying and evaluating alternative courses of action, making suggestions to strengthen the Company's operations, identifying and evaluating external threats and opportunities to the Company, evaluating and making ongoing recommendations to the Board with respect for one year and may be terminated by either the Company or the Director by providing written notice to the other party. The agreement also terminates automatically upon the death, resignation or removal of the Director.  Under the terms of the agreement, the Company agreed to pay the Director 4,000,000 restricted shares of its common stock at a future date and to negotiate future compensation on a year-by-year basis. The Company also agreed to reimburse the Director for pre approved expenses.

 

In August of 2013, the Company entered into an agreement with an individual who is related to the Company’s CEO to continue serving as a member of the Company’s Board of Directors. Under the  agreement, the Director agreed to provide various services to the Company including making recommendations for both the short term and the long term business strategies to be employed by the Company, monitoring and assessing the Company's business and to advise the Company’s Board of Directors with respect to an appropriate business strategy on an ongoing basis, commenting on proposed corporate decisions and identifying and evaluating alternative courses of action, making suggestions to strengthen the Company's operations, identifying and evaluating external threats and opportunities to the Company, evaluating and making ongoing recommendations to the Board with respect for one year and may be terminated by either the Company or the Director by providing written notice to the other party. The agreement also terminates automatically upon the death, resignation or removal of the Director.  Under the terms of the agreement, the Company agreed to pay the Director 1,500,000 restricted shares of its common stock at the execution of the agreement and to negotiate future compensation on a year-by-year basis. The Company also agreed to reimburse the Director for pre approved expenses. As of September 30, 2013, the Company had issued the related party Director 1,500,000 shares of its restricted common stock pursuant to the agreement. The 1,500,000 shares are included as an expense in the amount of $26,250 in consulting and contractor fees in the accompanying income statement.

 

In July of 2013, the Company entered into a convertible loan agreement in the amount of $15,000 with an individual who is related to the Company’s CEO. This loan pays interest at a rate of 6% per annum and the principle and accrued interest are due on or before December 19, 2013. The note is not secured and is convertible at the lender’s option into shares of the Company’s common stock at a rate of $0.015 per share.

 

In July of 2013, the Company entered into a convertible loan agreement in the amount of $30,000 with an individual who is related to the Company’s CEO. This loan pays interest at a rate of 6% per annum and the principle and accrued interest are due on or before January 17, 2014. The note is not secured and is convertible at the lender’s option into shares of the Company’s common stock at a rate of $0.01 per share.

 

In July of 2013, the Company entered into a convertible loan agreement in the amount of $10,000 with an individual who is related to the Company’s CEO. This loan pays interest at a rate of 6% per annum and the principle and accrued interest are due on or before January 26, 2014. The note is not secured and is convertible at the lender’s option into shares of the Company’s common stock at a rate of $0.01 per share.

 

In August of 2013, one of the Company’s promissory note holders agreed to assign a total of $5,000 of the remaining principal balance of his note which had an original face value of $20,000 and which was in default due to non-payment of principal and interest, to an investor who is related to the Company’s CEO, pursuant to a wrap around agreements between the note holder and the related party investor. Under the agreements the related party investor agreed to repay the related party note holder a portion of the principal balance which was $5,000. The investor elected to convert the $5,000 principal balance of the note plus accrued interest of $400 into a total of 1,080,000 shares of the Company’s common stock.

 

In August of 2013, a related party shareholder provided the Company with emergency short term loan proceeds totaling $2,500. The Company repaid the related party shareholder the entire $2,500 balance prior to September 30, 2013. The Company did not pay any interest or fees to the related party shareholder for providing the short term loan.

 

In September of 2013, a convertible note holder who is related to the Company’s CEO elected to convert the note dated March 6, 2013 with a face value of $23,000 plus accrued interest of $690 into a total of 1,579,333 shares of the Company’s common stock.

 

The Company has an ongoing verbal agreement with a limited liability company that is controlled by a person who is related to the Company’s CEO to pay the related party consultant $3,000 per month to provide background research, background checks and investigative information on individuals and companies, and act as an administrative specialist to perform various administrative duties and clerical services. The consultant provides the services under the direction and supervision of the Company’s CEO. During the three month period ended September 30, 2013, the Company paid the related party consultant fees of $9,000. During the three month periods ended September 30, 2013 the Company also paid the consultant a fee of 600,000 shares of its restricted common stock with a market value at the time of issuance of $9,600 in order to more fairly compensate the consultant and show appreciation for the consultant’s services and as an inducement for the consultant to continue to provide services at such rates All fees paid to the related party consultant during the three month period ended September 30, 2013 are included as an expense in consulting and contractor fees in the accompanying income statement for the period.

 

The Company has an ongoing agreement with a limited liability company that is owned and controlled by a person who is related to the Company’s CEO to provide stock transfer agency services. During the three month period ended September 30, 2013, the Company paid the related party transfer agency fees of $4,864. All fees paid to the related party consultant during the three month period ended September 30, 2013 are included as an expense in consulting and contractor fees in the accompanying income statement for the period. At September 30, 2013, the Company owed the related party limited liability company $10,105 for transfer agency services rendered and legal fees relating to a lawsuit against the transfer agent arising from its relationship with the Company. The stock transfer agreement between the related party limited liability company states and the Company states that the Company will pay the legal fees incurred by the stock transfer agency related to lawsuits or legal proceedings against the transfer agency that arise as a result of the services that the transfer agency provides to the Company. In August 2013 the Company entered into a separate debt settlement agreement with the related party vendor to settle a total of $5,730 of outstanding debt related to legal fees incurred by the related party vendor due to a lawsuit against the Company and the transfer of which the related party vendor was also named as a defendant due to its position as the Company’s stock transfer agency. The Company issued 458,462 shares of its common stock to this vendor as satisfaction for the outstanding debt. The agreement between the Company and the vendor stipulated that should the transfer agency realize less than $5,730 from the sale of the stock, then the consultant is entitled to receive up to an additional 400,000 shares of common stock or a cash payment until the balance is paid in full. During the nine month period ended September 30, 2013 the Company has issued the related party limited liability company a total of 1,964,332 shares of its common stock to settle a total of $18,482 of debt related to legal fees incurred by the related party limited liability company as a result of a lawsuit involving the Company where the limited liability was also named as a defendant due to its business relationship with the Company. During the nine month period ended September 30, 2012 the Company issued the related party limited liability company a total of 6,641,583 shares of its common stock to settle a total of $19,261 of debt related to legal fees incurred by the related party limited liability company as a result of a lawsuit involving the Company where the limited liability was also named as a defendant due to its business relationship with the Company.

 

At September 30, 2013 the following promissory notes and shareholder loans were outstanding to related parties:

 

A convertible note payable dated January 9, 2009, due to a person related to the Company’s CEO with a face amount of $10,000. This note bears interest at a rate of 10% per annum with interest payment to be paid monthly and is convertible at the note holder’s option into the Company’s common stock at $0.015 per share.  The convertible note payable was due on or before January 9, 2010 and is secured.  This convertible note payable is currently in default due to non-payment of principal and interest.

 

A convertible note payable dated January 25, 2010, in the principal amount of $6,000 with a person who is related to the Company’s CEO. This loan pays interest at a rate of 6% per annum and the principle and accrued interest are due on or before January 25, 2011. The note is not secured and is convertible at the lender’s option into shares of the Company’s common stock at a rate of $0.005 per share. This loan is currently in default due to non-payment of principal and interest.

 

A note payable dated February 24, 2010, the principal amount of $7,500 with a corporation. The Company’s CEO is a director of the corporation and a former Director of the Company is an officer of the corporation. The loan is not secured and pays interest at a rate of 6% per annum and the principle and accrued interest were due on or before February 24, 2011. This loan is currently in default due to non-payment of principal and interest.

 

A convertible note payable dated January 18, 2012, in the amount of $50,000, with two individuals who are related to the Company’s CEO. This loan pays interest at a rate of 8% per annum and the principle and accrued interest were due on or before July 18, 2012. The note is secured and is convertible at the lender’s option into shares of the Company’s common stock at a rate of $0.004 per share. The note is currently in default due to non-payment of principal and interest.

 

A convertible note payable dated January 7, 2013, due to a person related to the Company’s CEO with a face amount of $7,500. This note bears interest at a rate of 6% per annum with accrued interest to be paid at the time that the principal balance is repaid or the note is converted into shares of the Company’s common stock. The note is convertible at the note holder’s option into the Company’s common stock at $0.004 per share.  The convertible note payable is due on or before June 30, 2013 and is not secured. The note is currently in default due to non-payment of principal and interest as of the date of the filing of this form 10-Q.

 

A convertible note payable dated January 19, 2013, due to a person related to the Company’s CEO with a face amount of $15,000. This note bears interest at a rate of 6% per annum with accrued interest to be paid at the time that the principal balance is repaid or the note is converted into shares of the Company’s common stock. The note is convertible at the note holder’s option into the Company’s common stock at $0.004 per share.  The convertible note payable is due on or before July 30, 2013 and is not secured.  The note is currently in default due to non-payment of principal and interest as of the date of the filing of this form 10-Q.

 

A convertible note payable dated February 7, 2013, due to a person related to the Company’s CEO with a face amount of $10,000. This note bears interest at a rate of 6% per annum with accrued interest to be paid at the time that the principal balance is repaid or the note is converted into shares of the Company’s common stock. The note is convertible at the note holder’s option into the Company’s common stock at $0.005 per share.  The convertible note payable is due on or before August 7, 2013 and is not secured.  The note is currently in default due to non-payment of principal and interest as of the date of the filing of this form 10-Q.

 

A convertible note payable dated July 9, 2013, due to a person related to the Company’s CEO with a face amount of $15,000. This note bears interest at a rate of 6% per annum with accrued interest to be paid at the time that the principal balance is repaid or the note is converted into shares of the Company’s common stock. The note is convertible at the note holder’s option into the Company’s common stock at $0.015 per share.  The convertible note payable is due on or before December 12, 2013 and is not secured.  

 

A convertible note payable dated July 17, 2013, due to a person related to the Company’s CEO with a face amount of $30,000. This note bears interest at a rate of 6% per annum with accrued interest to be paid at the time that the principal balance is repaid or the note is converted into shares of the Company’s common stock. The note is convertible at the note holder’s option into the Company’s common stock at $0.01 per share.  The convertible note payable is due on or before January 17, 2014 and is not secured.  

 

A convertible note payable dated July 26, 2014, due to a person related to the Company’s CEO with a face amount of $10,000. This note bears interest at a rate of 6% per annum with accrued interest to be paid at the time that the principal balance is repaid or the note is converted into shares of the Company’s common stock. The note is convertible at the note holder’s option into the Company’s common stock at $0.01 per share.  The convertible note payable is due on or before January 26, 2014 and is not secured.