NOTE 5 RELATED PARTY TRANSACTIONS
During August through September 2011, John Preftokis, the Company�s former President and Chief Executive Officer, paid $1,619 in expenses to third parties on behalf of the Company. The amount was paid in full on June 6, 2012.
On May 1, 2012, the Company issued 20,000,000 shares of common stock to John Preftokis, the Company�s former President and Chief Executive Officer, for services rendered valued at $200,000 or $0.01 per share. John Preftokis resigned as sole officer and director of the Company on June 21, 2012.
On May 1, 2012, James Askew, a shareholder and currently the Company�s sole executive officer and director, loaned the Company the sum of $7,200. The Company issued a promissory note in the original principal amount of $7,200. The note bore interest at 10% per annum and was due and payable upon the earlier of (i) June 1, 2012 and (ii) the closing of an equity or equity equivalent financing resulting in gross proceeds of at least $500,000. The outstanding principal due under the note was convertible at any time into shares of Company common stock at a conversion price of $0.01 per share. The Company paid the principal and all accrued interest in full in cash on June 21, 2012.
In May 2012, the Company and Mr. Askew entered into a consulting agreement pursuant to which Mr. Askew would provide the Company�s board of directors advice relating to certain of the Company�s strategic and business development activities (at a high level), including business development financing, and corporate strategy. In consideration for entering into the consulting agreement, Mr. Askew was issued 50 million shares of the Company�s common stock. Mr. Askew�s obligations under the consulting agreement were replaced and superseded as described below.
In May 2012, the Company and John B. Connally III, entered into a consulting agreement pursuant to which Mr. Connally would provide the Company�s board of directors advice relating to certain of the Company�s strategic and business development activities (at a high level), including business development financing, and corporate strategy. In consideration for entering into the consulting agreement, Mr. Connally was issued 50 million shares of the Company�s common stock, and as a result of such issuance, Mr. Connally now holds in excess of 10% of our outstanding shares of common stock. In July 2012, Mr. Connally�s consulting agreement was amended, and in consideration for the significant amount of time Mr. Connally has and will devote to the Company, the Company agreed to pay Mr. Connally a one-time $25,000 cash retainer and a monthly cash consulting fee of $10,000 per month beginning July 1, 2012.
On June 21, 2012, James Askew was appointed as the Company�s President, Chief Executive Officer, Secretary, Treasurer, and as Chairman of the board of directors. In connection with the appointment of Mr. Askew, the Company and Mr. Askew entered into an employment agreement, dated effective June 21, 2012, pursuant to which Mr. Askew has agreed to serve in the capacities set forth above for a period of three (3) years. The agreement may be terminated by the Company without cause upon 90 days written notice. Under the agreement, Mr. Askew will be paid a base salary of $300,000 per year, and will be eligible to receive bonuses at the discretion of the Company�s board of directors. The agreement also entitled Mr. Askew to participate in the Company�s benefit plans. The Company also paid Mr. Askew a one-time cash sign-on bonus of $100,000. The agreement does not provide for any severance payments upon termination of the agreement by the Company, other than provisions for the reimbursement of accrued expenses and unpaid base compensation. The agreement also contains confidentiality provisions consistent with his fiduciary duties owed to the Company. This employment agreement replaced and superseded Mr. Askew�s consulting agreement entered into in May 2012 (see description of the May 2012 consulting agreement above in this Note 5). The 50 million shares issued to Mr. Askew were unaffected by the replacement of the May 2012 consulting agreement with the June 2012 employment agreement.
On June 22, 2012, subsequent to the date of his resignation as an officer and director of the Company, the Company entered into a one-year consulting agreement with John Preftokis. In consideration for entering into the consulting agreement, Mr. Preftokis was issued 5 million shares of Company common stock. This agreement was valued at $50,000, or $0.01 per share. As of September 30, 2012, $13,611 has been expensed with $36,389 recorded as a prepaid expense.
During August and September, the Company�s current Chief Executive Officer paid $31,183 in expenses on behalf of the Company. The $31,183 related party payable was outstanding as of September 30, 2012.