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Related Party Transactions
12 Months Ended
Dec. 31, 2017
Related Party Transactions [Abstract]  
Related Party Transactions

Note 7- Related Party Transactions

 

Acquisition of Recall Studios, Inc.

 

On July 25, 2016, the Company entered into an agreement whereby the Company issued 25,256,250 shares of Series C Preferred Stock and 1,990,000 shares of Series A Preferred stock in exchange for all of the issued and outstanding shares of Recall Studios, Inc. (Recall). Recall is a Nevada corporation that was formed in April 2016 that is in the business of developing and producing Virtual Reality (VR) and Augmented Reality (AR) content and devices.

 

Our Chairman and former CEO, Alex Bafer, was a significant shareholder of Recall at the time of the acquisition. Until October 2015, Mr. Bafer was our controlling shareholder. In October 2015, Mr. Bafer sold controlling interest of the Company and his relationship to the Company was as a debtor through his convertible notes payable. Shortly after the consummation of the acquisition of Recall by Recall Studios f/k/a Carolco, Mr. Bafer regained control of Carolco through of a series of transactions. See note 1 in regards to the Company’s recent name change from Carolco Pictures, Inc. to Recall Studios, Inc.

 

Due to Mr. Bafer’s related party relationship with Recall, and the subsequent control position he took in Recall Studios f/k/a Carolco, the Company has accounted for the transaction with Recall as a combination of entities under common control. As such, the assets and liabilities of Recall have been transferred over at their historical cost basis, and the operations of the two companies have been combined as if the acquisition occurred as of the beginning of the earliest period presented. Accordingly, the shares issued have been recorded at the $117,000 historical cost basis of the net assets acquired, and the $73,000 loss incurred during the period from April 2016 to the acquisition date has been reflected as research and development cost, resulting in a total basis of shares issued of $190,000. See note 1 in regards to the Company recent name change from Carolco Pictures, Inc. to Recall Studio, Inc.

 

Advances from Related Party

 

From time to time, the CEO of the Company and a shareholder/employee advanced funds to the Company for working capital purposes. Those advances are unsecured, non-interest bearing and due on demand. As of December 31, 2017 and December 31, 2016 outstanding advances from related party aggregated to $31,000 and $31,000, respectively.

 

Accrued Payroll

 

During the year ended December 31, 2017, the Company accrued payroll in the aggregate of $255,000 for officers and employees’ salaries. On April 3, 2017, the Company entered into a separation agreement and general release by and between the Company and David Cohen pursuant to which Mr. Cohen agreed to resign from his officer and director positions with the Company. In consideration thereof, Mr. Cohen received 1,000 shares of Company common stock valued at $1,000. In addition he released the Company from its obligation for accrued payroll of $125,000.

 

On June 15, 2017, the Company entered into a Purchase and Sale Agreement with Metropolitan Sound + Vision LLC, a South Carolina limited liability company. Pursuant to the Agreement, the Company agreed to sell to Metro all of the shares of common stock of S&G Holdings, Inc., a Tennessee corporation doing business as High Five Entertainment owned by the Company, The sum of $39,656, which was due and payable to Martin Fischer by S&G was fully and irrevocably settled and resolved by a Settlement and Mutual Release.

 

As of December 31, 2017, accrued payroll amounted to $343,000, of which $310,000 pertains to the accrued salary of one officer Mr. Bafer, Chief Executive Officer.

 

Legal Services

 

On June 29, 2016 Esposito Partners and the Company entered into an agreement, pursuant to which the Company engaged Esposito Partners to provide legal services to the Company. The Letter Agreement also provided that Frank Esposito, who is the Managing Member of Esposito Partners, would serve as the Chief Legal Officer, a member of the Company’s board of directors and as secretary of the Company’s board of directors. Pursuant to the agreement, the Company will pay $5,000 per month for the legal services provided.

 

As of December 31, 2017, accrued legal expenses amounted to $65,000.