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6. RELATED PARTY TRANSACTIONS
6 Months Ended
Jul. 31, 2013
Related Party Transactions [Abstract]  
RELATED PARTY TRANSACTIONS

Compensation of Officers and Directors

 

Officers and directors fees totaled $13,500 and $13,500 for the three months ended July 31, 2013 and 2012, respectively. Officers and directors fees totaled $27,000 and $27,000 for the six months ended July 31, 2013 and 2012, respectively. The total compensation of officers and directors was recorded as a component of general and administrative expenses.

 

As of July 31, 2013 and January 31, 2013, the Company owed its officers and directors $83,500 and $70,000, respectively, which were recorded as other accrued liabilities - related party in its consolidated balance sheets.

 

Legal Fees

 

Effective December 1, 2010, the Company entered into a 12-month retainer agreement with a stockholder, pursuant to which the Company shall pay a monthly fee of $5,500 for providing legal services relating to SEC regulatory compliance and reporting requirements. After the agreement expired in November 2011, the stockholder continued to provide these legal services on a month-to-month basis, with the fee subsequently increased to $6,000 per month. For the three and six months ended July 31, 2013, the Company incurred $18,000 and $36,000 in legal fees relating to these services, respectively. For the three and six months ended July 31, 2012, the Company incurred $18,500 and $40,500 in legal fees under this agreement, respectively.

 

The Company also paid legal fees (calculated and billed on an hourly basis) for the preparation and filing of its resale registration statement of the Form S-1 covering the shares of the Company’s common stock underlying the warrants contained in the units sold in the 2010/2011 private placement offering. For the three and six months ended July 31, 2013, the Company incurred $69,234 and $99,816 in legal fees for preparation of its registration statements of the Form S-1, respectively. As of July 31, 2013, the stockholder provided a discount amounting to $57,005 for past legal fees. For the three and six months ended July 31, 2012, the Company incurred $12,337 and $38,777 in fees relating to these services, respectively.

 

The same stockholder also provides the Company with legal services related to general corporate matters, which are billed on an hourly basis. During the three months ended July 31, 2013 and 2012, the Company incurred $5,363 and $10,229, respectively. During the six months ended July 31, 2013 and 2012, the Company incurred $7,901 and $26,369, respectively.

 

For the three months ended July 31, 2013 and 2012, the Company’s professional legal fees to the stockholder above totaled $74,597 and $41,067, respectively. For the six months ended July 31, 2013 and 2012, the Company’s professional legal fees to the stockholder above totaled $107,717 and $105,646, respectively. The legal fees incurred were included as a component of general and administrative expenses. As of July 31, 2013, the stockholder provided a discount amounting to $57,005 for past legal fees related to the preparation of its registration statements of the Form S-1. A total of $64,627 outstanding payable for legal services provided was included in the Company’s consolidated balance sheets as of July 31, 2013, compared to $101,873 outstanding as of January 31, 2013.

  

Consulting and Other Professional Fees

 

In January 2011, the Company entered into an administrative services agreement with Incorporated Communications Services (“ICS”), a California corporation. George Duggan, the Company’s Chief Operations Officer, is the Vice President of ICS. Pursuant to the agreement with ICS, ICS will make available its address in La Canada, California to serve as the Company’s corporate headquarters and communications office, and provide the Company with basic administrative services, including coordinating and routing incoming telephone calls, handling investor inquiries, assisting in the preparation of press releases, developing an informational website, and coordinating with the auditors and financial statement preparers. The Company pays ICS a monthly fee of $6,000 for these services. This agreement with ICS became effective January 1, 2011, ran for 12 months and was extended for an additional 12 months beginning January 1, 2012 and January 1, 2013. The Company incurred $18,000 and $36,000 for the three and six months ended July 31, 2013, and $18,000 and $36,000 for the three and six months ended July 31, 2012, respectively, which were included as a component of general and administrative expenses. Additionally, the Company reimbursed ICS for the expenses related to the services provided of $814 and $2,106 for the three and six months ended July 31, 2013, respectively. The Company reimbursed ICS for the expenses related to the services provided of $3,346 and $9,139 for the three and six months ended July 31, 2012, respectively. As of July 31, 2013 and January 31, 2013, the Company had no outstanding payables to ICS.

 

On June 6, 2011, the Company entered into a consulting agreement with a stockholder of the Company. The Company engaged the stockholder to provide certain consulting services related to the Company’s business for the period through June 5, 2013, for a monthly compensation fee of $6,000. Beginning February 6, 2012, the monthly consulting fee was reduced to $3,000 and then reversed back to $6,000 per month starting June 6, 2012. Additionally, in May 2012, the Company paid back the reduced fees for the months of March 2012 through May 2012 to the stockholder. The Company incurred $18,000 and $36,000 in consulting fees related to this agreement for the three and six months ended July 31, 2013, respectively, which were included as a component of general and administrative expenses. For the three and six months ended July 31, 2012, the Company recorded $24,000 and $36,000, respectively, in consulting fees to this stockholder. As of July 31, 2013 and January 31, 2013, the Company recorded payables to the stockholder in the amount of $2,500.