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Related Party Transactions

3 Months Ended

Dec. 31, 2019

NOTE 6 – RELATED PARTY TRANSACTIONS

Services provided by related parties

From time to time, Craig Marshak, a director of the Company, provides consulting services to the Company. Mr. Craig Marshak is a principal of Triple Eight Markets, Inc. All professional services fee payable to Craig Marshak are paid to Triple Eight Markets, Inc. As compensation for professional services provided, the Company recognized consulting expenses of $0 and $15,000 for the three months ended December 31, 2019 and 2018, respectively, which have been included in general and administrative expense – related party on the accompanying unaudited condensed consolidated statements of operations. As of December 31, 2019 and September 30, 2019, the accrued and unpaid services charge related to Craig Marshak amounted to $0 and $10,000, respectively, which have been included in accrued liabilities – related party on the accompanying condensed consolidated balance sheets.

The Company uses affiliate employees for various services such as the use of accountants to record the books and accounts of the Company at no charge to those affiliates, which are considered immaterial.

Office space from related parties

The Company uses office space of affiliate companies, free of rent, which is considered immaterial.

Revenue from related party and cost of revenue from related party

The Company operates under a GSA with FXDD Malta providing personnel and technical support, marketing, accounting, risk monitoring, documentation processing and customer care and support. The minimum monthly amount received is $1,600,000.

The Company operates under a GSA with FXDIRECT receiving personnel and technical support, marketing, accounting, risk monitoring, documentation processing and customer care and support. The minimum monthly amount payable is $1,575,000.

Both of the above entities are affiliates through common ownership.

During the three months ended December 31, 2019 and 2018, services provided to the related party, which was recorded as revenue - related party on the accompanying unaudited condensed consolidated statements of operations were as follows:

	Three Months Ended		Three Months Ended
	December 31, 2019		December 31, 2018
Service provided to:
FXDD Malta	$	4,800,000	$	4,800,000
	$	4,800,000	$	4,800,000

During the three months ended December 31, 2019 and 2018, services received from the related party, which was recorded as cost of revenue - related party on the accompanying unaudited condensed consolidated statements of operations were as follows:

	Three Months Ended		Three Months Ended
	December 31, 2019		December 31, 2018
Service received from:
FXDIRECT	$	4,725,000	$	4,725,000
	$	4,725,000	$	4,725,000

Due from affiliate

At December 31, 2019 and September 30, 2019, due from related party consisted of the following:

		December 31, 2019				September 30, 2019
NUKK Capital (*)		$	143,776			$	3,880

(*)

An entity controlled by Emil Assentato, the Company’s chief executive officer, chief financial officer and chairman.

The balance of due from related party represents investment – digital currency transferred to NUKK Capital.

Management believes that the related party receivable is fully collectable. Therefore, no allowance for doubtful account is deemed to be required on its due from related party at December 31, 2019 and September 30, 2019. The Company historically has not experienced uncollectible receivable from the related party.

Due to affiliates

At December 31, 2019 and September 30, 2019, due to related parties consisted of the following:

	December 31, 2019		September 30, 2019
Forexware LLC	$	570,271	$	570,271
FXDIRECT		130,323		67,056
CMH		42,000		42,000
FXDD Malta		321,784		320,129
FXDD Trading (*)		471		43,185
FXMarkets (*)		-		346
Total	$	1,064,849	$	1,042,987

(*)

FXDD Trading and FXMarkets are both controlled by Emil Assentato, the Company’s chief executive officer, chief financial officer and chairman.

The balances of due to related parties represent expenses paid by Forexware LLC, FXDIRECT, FXDD Malta, FXDD Trading, and FXMarkets on behalf of the Company and advances from CMH. The balances due to FXDIRECT and FXDD Malta may also include unsettled funds due related to the General Service Agreement. The balances due to FXDD Malta and FXDD Trading also include the value of transferred digital assets.

The related parties’ payables are short-term in nature, non-interest bearing, unsecured and repayable on demand.