Related Party Transactions
|12 Months Ended|
Jan. 31, 2021
|Related Party Transactions|
|4. Related Party Transactions||
The following individuals/entities have been identified as related parties in accordance with the guidelines of ASC 850 – Related Party Disclosures:
Related Party Transactions
On November 1, 2017, the Company entered into a consulting agreement with Alex Mardikian, the Chief Executive Officer at that time. The agreements call for $7,000 per month for a period of one year. The payments may be booked as a note due, which may be converted into shares of the company at a then-current price per share. The Company and consultant may elect to convert into equity of the company. Mr. Mardikian was authorized to purchase 50,000 shares of common stock at par value ($0.0001 per share) through a warrant, which was subsequently exercised, and he was issued a five-year warrant to acquire 250,000 shares of the Company Stock at $1.00. The Company terminated Mr. Mardikian on April 17, 2020 citing several causes for action. The Company currently has $105,000 in outstanding invoices from Mr. Mardikian, which the Company has preserved it rights to dispute.
On November 1, 2017, the Company entered into a consulting agreement with Brandy Craig, the Chief Financial Officer. The agreements call for $3,500 per month for a period of one year. The payments may be booked as a note due, which may be converted into shares of the company at a then-current price per share. The Company and consultant may elect to convert a portion of this into equity of the company. In addition, Mrs. Craig was authorized to purchase 50,000 shares of common stock at par value ($0.0001 per share) through a warrant, which was subsequently exercised, and she was issued a five-year warrant to acquire 250,000 shares of the Company Stock at $1.00 per share. Mrs. Craig resigned her position on December 3, 2019. Mrs. Craig elected to convert her outstanding balance owed of $68,995 into 88,455 common shares of OBITX stock.
On June 14, 2018 the Company entered a Line of Credit with APO Holdings, LLC for up to $100,000 at any one time. The Line of Credit may be cancelled at any time by either party providing 30 days written notice of cancellation. It was given at a 0.6% monthly interest rate (7.2% annualized interest rate) and may be paid at any time with no definitive payoff date. As of January 31, 2021, and January 31, 2020 the outstanding balance owed on the line of credit was $0 and $85,814, respectively. The accrued interest for the years ended January 31, 2021 and 2020 was $4,451 and $8,412, respectively. On December 9, 2020 APO Holdings, LLC converted the outstanding balance owed into 38,962 shares of the Company’s common stock.
On April 17, 2020 the Company terminated the employment of Alex Mardikian as the CEO of the Company. On April 17, 2020 Paul Rosenberg resigned as the CFO of the Company. On April 17, 2020 the Company entered into an agreement with Michael Hawkins as the CEO and CFO of the business and elected him to the Board of Directors. Under terms of the agreement he receives 10% of all revenue generated by the Company for the initial 12-month period. His agreement is at will and may be terminated with 30 days written notice.
On April 17, 2020 the Company, issued 50,000 shares of Series A Preferred Stock to Epic Industry Corp and 100,000 shares of Series A Preferred Stock to Overwatch Partners, Inc for par value ($0.0001) for a total receipt of $15 paid by Epic Industry Corp. The Agreement was originally between the Company and Epic Industry Corp. The 100,000 shares of Series A Preferred was issued to Overwatch Partners at the discretion of Michael Hawkins, the sole owner of Epic Industry Corp. The Company’s CEO is 50% owner of Overwatch Partners. The issuance represents 33% of the Company’s stock on a fully diluted basis and 68% of voting control of the Company. (See Note 5 – Stockholder’s Equity – Preferred Stock). The Company valued the stock under ASC 820 utilizing the Option Pricing Method to value conversion rights, and the Market Approach to value the voting control. The issuance of stock’s recorded value was $40,137,788.
On April 17, 2020 the Company issued 150,000 shares of Series B Preferred Stock to Paul Rosenberg in exchange for 60 cryptocurrency ATM machines, which the Company believes has no retail or book value. The issuance represents 7% of the Company’s stock on a fully diluted basis. (See Note 5 – Stockholder’s Equity – Preferred Stock). The Company valued the stock under ASC 820 utilizing the Option Pricing Method to value conversion rights, and the Market Approach to value the voting control. The issuance of stock’s recorded value was $6,548,188.
During the year ended January 31, 2021, Overwatch Partners paid multiple different expenses on behalf of the Company, which the Company treats as an account payable to related party. The total amount owed by the Company to Overwatch Partners as of January 31, 2021 was $12,862.
On April 22, 2020 the Company converted $104,988 outstanding accounts payable to Paul Rosenberg into 130,128 shares of common stock of the company at $0.75 per share. (See Note 5. Stockholder’s Equity).
On April 29, 2020 the Company converted 5,000,000 shares of common stock owned by BOTS, Inc., into 500,000 shares of Series B Preferred stock. BOTS is restricted from converting the Series B Preferred stock into common stock for a period of 24 months from the conversion. There was no gain or loss on conversion due to conversion terms (see Note 5).
On May 13, 2020 the Company sold its 420 Cloud Software to First Bitcoin Capital, Corp, for the purchase price of $1,900,000. The $1,900,000 was paid through the transfer of $500,000 in BIT cryptocurrency and a $1,400,000 convertible promissory note. The Company is to receive 122,968,776.18 BIT tokens at the price of $0.00406607 per token. The convertible promissory note has a simple interest fee of 9% per year and may be converted into First Bitcoin Capital Corp stock at a 10% discount to market or in additional BIT cryptocurrency tokens. The Note has no expiration date. The convertible note receivable is currently convertible into stock that is thinly traded on an exchange, and since the software assets had a $0 basis, and were sold to a related party, any subsequent conversions would be included in equity. The interest receivable by this note through January 31, 2021 is $90,435.
The Company has reclassified $154,307 of accounts payable – related party as a reserve for settlement – related party. The Company has reclassified this debt as management believes the fees represented by this amount that are due to the former CEO and several employees who worked directly for the former CEO in other projects are not due. Furthermore, if the fees were due, we believe we have offsetting transactions owed the Company by the former CEO. The Company has not proceeded with any legal actions at this time against the former CEO.
The entire disclosure for related party transactions. Examples of related party transactions include transactions between (a) a parent company and its subsidiary; (b) subsidiaries of a common parent; (c) and entity and its principal owners; and (d) affiliates.
Reference 1: http://fasb.org/us-gaap/role/ref/legacyRef