RELATED PARTY TRANSACTIONS | NOTE 14 RELATED PARTY TRANSACTIONS Effective May 2, 2014, the Company entered into an asset purchase agreement with Kae Park (the Seller), who became a related party upon the closing of the acquisition, which occurred on June 23, 2014. Under this agreement, the Company agreed to acquire approximately 7,500 cannabis related Internet domain names, in exchange for which, the Company: (a) Issued to the Seller on the closing date 78.5 million shares of the Companys restricted common stock which represented approximately 81% of the Companys issued and outstanding common stock upon the closing; (b) Issued to the Seller a promissory note in the principal amount of $500,000. The note originally bore interest at the rate of 3.25% per annum and was payable as follows: upon the Companys receipt of an aggregate of $1,000,000 in funding (whether debt or equity), $100,000 was to be paid, and the Company was required to pay the remaining balance of $400,000 in thirty-six equal monthly installments, commencing on the fifteenth day following the first month the Company realizes at least $150,000 in gross revenue; and (c) Is obligated to pay a monthly royalty to the Seller equal to the product of (i) six percent (6%) and (ii) the excess of the Companys gross monthly revenue over $150,000 (Royalty Payment). The Royalty Payment is payable for a period of thirty-six months from and after the first month in which the Company has gross revenues in excess of $150,000. On July 25, 2014, the Company amended and restated the promissory note to provide that it would make the first $100,000 installment payment due under the Note on July 25, 2014 (earlier than required), in exchange for which Kae Yong Park agreed to waive all interest due over the term of the note. Thereafter, Kae Yong Park waived the requirement that the Company pay the $100,000 due under the Amended and Restated Note, until August 25, 2014, at which point such $100,000 was paid. In addition, the Seller was required to provide such consulting services as the Company may require during the twelve-month period following the closing of the acquisition. In consideration for these services, the Company was required to pay the Seller $9,500 per month, for a period of twelve months, commencing on the closing date and, on the first of each month thereafter. We are headquartered in Scottsdale, Arizona where we rent space from Kuboo Inc. our former parent company and a significant shareholder. Currently, the Company is renting approximately 6,100 square feet of space on a month-to-month basis. The monthly rent for this facility is $11,500. During the nine months ended September 30, 2016 the company incurred expenses payable to Kuboo, Inc. of $99,900 for rent and allocated rent expenses of $3,600 to the Joint Venture Company. During the nine months ended September 30, 2016, Kae Yong Park, a significant shareholder, and her spouse, Howard Baer, advanced an aggregate of $471,400 to the Company for short-term capital needs. During this period the Company also repaid $63,000 of its secured debt to Park. Additionally, on May 11, 2016, Park assigned $65,000 of debt owed to her by the Company to another investor for which the Company issued the investor a one year note for $65,000. At September 30, 2016, the Company had a note payable to Park for these advances of $1,292,707 which is secured by the assets of the Company. During the nine months ended September 30, 2016, the Company incurred expenses of $135,000 related to its consulting contract with Howard Baer, the spouse of Kae Yong Park, a significant shareholder. During the nine months ended September 30, 2016, the Company received funds related to its joint venture of $85,000 and spent cash on behalf of its joint venture totaling $202,321. During this period, the Companys 60% share of the joint ventures expenses were $92,053. The remaining $25,268 is due from the Joint Venture Company, and is included in advances related party. On April 13, 2016, the Company agreed to amend the promissory note with Kae Yong Park and Howard R. Baer so as to make $564,000 in principal amount due under said Note interest bearing at the rate of 10% per annum, effective January 1, 2016. The remaining principal is non-interest bearing. At September 30, 2016, the Company has accrued interest owed under this agreement of $42,339. |