Related Party Transactions and Balances
|3 Months Ended|
Apr. 30, 2017
|Related Party Transactions [Abstract]|
|Related Party Transactions Disclosure [Text Block]||
Related Party Balances
At April 30, 2017, included in advances receivable is $143,364 (January 31, 2017: $Nil) owing from Bendon for expenses incurred by the Company on behalf of the Bendon. The amount due from Bendon is unsecured, non-interest bearing and has no specific repayment terms.
At April 30, 2017, included in promissory notes payable is $153,000 (January 31, 2017: $153,000) owing to a director and officer of the Company (Note 8).
At January 31, 2017, included in accounts payable and accrued liabilities is $129,186 owing to directors and officers of the Company for reimbursable expenses and $53,500 owing to Bendon for expenses incurred on behalf of the Company. These amounts were unsecured, non-interest bearing and had no specific terms of repayment.
Related Party Transactions
During the three months ended April 30, 2017, included in general and administrative expenses is $38,969 (2016: $62,213), in respect of marketing fees, of which $169 (2016: $9,113) was related to third party pass through costs, paid to a firm of which a direct family member of a director and officer of the Company is a principal.
Effective June 10, 2014, the Company entered into an employment agreement with the Chief Executive Officer and director (the “CEO”) of the Company for a term of three years whereby the CEO was entitled to a base salary of $400,000 per year, provided the CEO would forgo the first twelve months of the base salary and only receive minimum wage during that period. At April 30, 2017, an amount of $3,704 (January 31, 2017: $37,037) is included in deferred compensation relating to the amortization of the total base salary compensation due under this employment agreement, which is being amortized on a straight-line basis over the term of the employment agreement to June 10, 2017.
On June 10, 2015, the CEO became eligible to receive her full base salary pursuant to the terms of her employment agreement, however, such base salary was accrued but not paid through February 28, 2017. The CEO had agreed to allow the Company to defer payment of her salary provided such amounts accrued interest at a rate of 3% per annum. On March 13, 2017, the CEO surrendered accrued base salary compensation plus interest accrued to February 28, 2017 in the amount of $654,637, including base salary compensation payable of $638,724 plus accrued interest on such amounts of $15,913. As consideration, the Company granted to the CEO 1,200,000 options to purchase shares of the Company’s common stock at an exercise price of $2.14 per a period of four years from the date of issuance. The surrendered accrued base salary compensation and interest was recorded as a contribution to equity during the three months ended April 30, 2017. In addition, the Company recorded the incremental fair value of the options granted over the amount surrendered of $418,163 as stock based compensation expense during the three months ended April 30, 2017.
In connection with a Joint Factoring Agreement (Note 7), the CEO executed a guaranty (the “Guaranty”) to personally guarantee performance of the Obligations and also agreed to provide her own brokerage account as security for the Obligations (as defined in Note 7)). Accordingly, in connection with her brokerage account the CEO entered into a brokerage account pledge and security agreement (the “Pledge and Security Agreement”) and securities account control agreement (the “Account Control Agreement”) in favor of Wells Fargo Bank, National Association (“Wells Fargo”). Pursuant to the Pledge and Security Agreement, the CEO agreed to pledge, sell, assign, grant a security interest in and transfer to Wells Fargo all of her rights, title and interest in and to her brokerage account.
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://www.xbrl.org/2003/role/presentationRef