Related party transactions

12 Months Ended

Dec. 31, 2015

Related Party Transactions [Abstract]

Related party transactions

10. Related party transactions

a)       ARP has been advised and managed by Performance Realty Management, LLC (“PRM”), an Arizona limited liability company (the “Manager”). At the formation of ARP, ARP agreed to pay the Manager of ARP quarterly management fees equal to the greater of: (a) $120,000 on an annual basis, or (b) 1% of the total assets of ARP in consideration for the management services to be rendered to or on behalf of ARP by the Manager. During the year ended December 31, 2015, the Company recorded management fees of $120,000 (2014 - $120,000). As at December 31, 2015, ARP is owed $2,455 from the Manager of ARP (December 31, 2014 – ARP is indebted to the Manager of ARP for $54,382), which represents general and administrative expenses ARP paid on behalf of the Manager. On December 21, 2015, ARP amended its operating agreement with PRM wherein it ratified the issuance of 1,000,000 post-split shares of restricted common stock as the sole compensation paid to PRM for serving as manager of ARP. Commencing January 1, 2016, PRM will serve as the Manager of ARP at no cost. On January 20, 2015, ARP also acquired a 46% “Tenant in Common” (TIC) ownership interest in a real property owned by PRM for a total consideration of approximately $208,000. Subsequent to December 31, 2015, ARP sold its ownership interest in the property to PRM for approximately $211,000.

b)       On January 16, 2015, PRM entered into a promissory note agreement on behalf of ARP for $150,000. The loan bore interest at 16% per annum and was payable on July 16, 2015. The loan was collateralized by a deed of trust on a real estate property owned by ARP. The proceeds from the note was used to purchase another real estate property. On May 12, 2015, ARP repaid the $150,000 note.

c)       On May 15, 2015, the Company entered into an Advisory Board Consulting and Compensation Agreement with a director of the Company pursuant to which the Company agreed to issue 1,000,000 post-split shares of common stock to the director. In addition, the Company agreed to pay the director an annual fee equal to $120,000 or 1% of the Company’s assets as reported on its year-end balance sheet, whichever is greater. The Company will also issue an aggregate of 3,000,000 post-split shares of common stock of the Company on the first, second and third anniversary. During the year ended December 31, 2015, the Company recorded management fees of $75,000 (2014 - $nil). As at December 31, 2015, the Company is indebted to the director of the Company for $3,050 which represents management fees and other general and administrative expenses paid on behalf of the Company. The 1,000,000 post-split shares of AHIT were issued on July 6, 2015. On February 25, 2016, the Company amended the Advisory Board Consulting and Compensation Agreement and the director agreed to serve on the Board of Directors at no cost.

d)       On May 15, 2015, the Company entered into a Director Agreement with a director of the Company pursuant to which the Company agreed to issue 25,000 post-split shares of common stock to the director. In addition, the Company agreed to pay the director from time to time for the services provided and may compensate the director with the issuance of shares of common stock of the Company. During the year ended December 31, 2015, the director did not provide any services to the Company and the Company recorded $nil in directors’ fees. The 25,000 post-split shares of the Company were issued on July 6, 2015.

e)       On October 12, 2015, the Company entered into an Executive Agreement with its Chief Executive Officer (the “CEO”) pursuant to which the Company agreed to pay an annual salary of $64,800 between October 12, 2015 and October 12, 2016 (the “Initial Term”). The Executive Agreement has successive one-year renewal periods (a “Renewal Term”). In addition, the Company and its CEO agreed to the following escalators either during the Initial Term or Renewal Term, if applicable: (a) The Company agrees to increase the CEO’s compensation by an additional $25,000 per annum and shall issue an additional issuance of 25,000 post-split shares of common stock to the CEO when the Company achieves the milestone of gross revenue of $1,000,000 per annum; (b) The Company agrees to increase the CEO's compensation by an additional $25,000 per annum when the Company has achieved the milestone of gross revenue of $1,500,000 per annum; and (c) The Company agrees to increase the CEO's compensation by an additional $25,000 per annum, and issue an additional issuance of 25,000 post-split shares of common stock when the Company has achieved the milestone of gross revenue of $2,000,000 per annum. During the year ended December 31, 2015, the Company recorded management fees of $14,164 (2014 - $nil). As at December 31, 2015, the Company is indebted to the CEO of the Company for $14,164 which represents unpaid management fees.

f)        As of December 31, 2015, in the consolidated balance sheets, the Company has outstanding related party receivables of $2,455 for advances to related parties which are netted against $17,350 of amounts due to related parties for expenses paid on behalf of the Company and management fees owed to a director and the CEO of the Company.