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6. RELATED PARTY TRANSACTIONS
12 Months Ended
Jan. 31, 2014
Related Party Transactions [Abstract]  
RELATED PARTY TRANSACTIONS

Compensation of Officers and Directors

 

Officers and director fees totaled $48,744 and $54,000 for the years ended January 31, 2014 and 2013, respectively. The total compensation of officers and directors was recorded as a component of general and administrative expenses.

 

As of January 31, 2014 and January 31, 2013, the Company owed its officers and directors $-0- and $56,500, respectively, which were recorded as other accrued liabilities - related party in its consolidated balance sheets. This amount was settled through the issuance of common stock- see footnote 11.

 

Legal Fees

 

Effective December 1, 2010, the Company entered into a 12 month retainer agreement with Gottbetter & Partners, LLP, a beneficial holder of more than 5% of the Company’s outstanding common stock, pursuant to which the Company paid Gottbetter & Partners, LLP a monthly fee of $5,500 for providing to the Company 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 at $6,000 per month. The Company also paid Gottbetter & Partners, LLP a flat fee of $50,000 upon SEC effectiveness of the Company’s registration statement on Form S-1 for the preparation and filing of the resale registration statement covering the shares of the Company’s common stock contained in the units, and the Company also paid Gottbetter & Partners, LLP a flat fee of $50,000 upon SEC effectiveness of our registration statement on Form S-1 for the preparation and filing of the resale registration statement covering the shares of the Company’s common stock contained in the units and underlying the warrants contained in the units sold in our 2010/2011 private placement and registered herein. 

 

For the years ended January 31, 2014 and 2013, the Company’s total professional legal fees related to Gottbetter & Partners, LLP were $147,593 and $180,343, respectively. The legal fees primarily related to SEC filings and other general corporate matters and were included as a component of general and administrative expenses in the Company’s consolidated statements of expenses. Gottbetter & Partners, LLP continued to provide these legal services at $5,500 per month in the year 2014. As of January 31, 2014, $145,858 was due for legal services.

 

On January 9, 2014, the Company entered into a settlement agreement with Gottbetter & Partners, LLP pursuant to which Gottbetter & Partners, LLP agreed to receive for payment in full of open invoices totaling $79,529.54, 79,739 shares of our post-Reverse Split common stock. As the Reverse Split had not occurred as of the period ended January 31, 2014, the settlement transaction was not accounted for as of January 31, 2014.

 

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, 2013 and January 1, 2014. The Company incurred $48,000 and $72,000 in management fees for the years ended January 31, 2014 and 2013, 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 $907 and $11,817 for the years ended January 31, 2014 and 2013. As of January 31, 2014 and 2013, the outstanding payable to ICS was $-0- and $-0-, respectively.

 

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 $48,000 and $72,000 in consulting fees related to this agreement for the years ended January 31, 2014 and 2013, respectively, which were included as a component of general and administrative expenses. As of January 31, 2014 and January 31, 2013, the Company recorded payables to the stockholder in the amount of $-0- and $2,500, respectively.

 

Securities Purchases and Issuances

 

Baybak Family Partners, Ltd. purchased 8,000,000 units (including Series A Preferred Stock instead of common stock) in the Company’s 2010/2011 Private Placement for an aggregate investment of $200,000. Michael Baybak, the Company’s stockholder, has voting and investment power with respect to the shares owned by Baybak Family Partners, Ltd.

 

GRQ Consultants, Inc. 401K purchased 6,000,000 units (including Series A Preferred Stock instead of common stock) in the Company’s 2010/2011 Private Placement for an aggregate investment of $150,000. Barry Honig, the Company’s stockholder, has voting and investment power with respect to the shares owned by GRQ Consultants, Inc. 401K.

 

Gottbetter & Partners, LLP, the Company’s stockholder, purchased 8,000,000 units (including Series A Preferred Stock instead of common stock) in the Company’s 2010/2011 Private Placement for an aggregate investment of $200,000.

 

In connection with the terms of the 2007 Cromwell merger, and cancellation and reversal of the merger, an officer and director of the Company made advances to, and incurred expenses on behalf of the Company of $31,000. The Company reimbursed this officer by issuing 31,000,000 shares. On December 22, 2010, the Company repurchased and cancelled 13,000,000 of those shares from its officer at a price of $13,000.

 

In January 2011, the Company entered into a consulting agreement with one of the Company’s stockholders, which provided consulting services related to the Company’s business development and corporate finance for a term of 90 days, commencing on January 18, 2011. In February 2011, in consideration of provided services, the Company issued 500,000 shares of its restricted common stock to this stockholder and recorded $-0- and $-0- of stock-based compensation expense for services provided to the Company in the years ended January 31, 2014 and 2013, respectively. The stock-based compensation expense was included as a component of general and administrative expenses in the Company’s consolidated statements of expenses.