Quarterly report pursuant to Section 13 or 15(d)

RELATED PARTY TRANSACTIONS

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RELATED PARTY TRANSACTIONS
9 Months Ended
Jun. 30, 2017
Related Party Transactions [Abstract]  
RELATED PARTY TRANSACTIONS

NOTE 4 – RELATED PARTY TRANSACTIONS

 

During April through September 2013, the Company entered into convertible promissory notes whereby it borrowed a total of $6,500,000 from John Seitz, its current chief executive officer. The notes are due on demand, bear interest at the rate of 5% per annum, and are convertible into shares of common stock at a conversion price equal to $0.12 per share of common stock (the then offering price of shares of common stock to unaffiliated investors). In May 2013, John Seitz converted $1,200,000 of the aforementioned debt into 10,000,000 shares of common stock, which shares were issued in July 2013. Between June of 2014 and December 2015, the Company entered into promissory notes whereby it borrowed a total of $2,410,000 from Mr. Seitz. The notes are not convertible, due on demand and bear interest at a rate of 5% per annum. During January through September 2016, the Company entered into promissory notes whereby it borrowed a total of $363,000 from Mr. Seitz. The notes are due on demand, bear interest at the rate of 5% per annum, and the outstanding principal and interest is convertible at the option of the holder into securities issued by the Company in a future offering, at the same price and terms received by unaffiliated investors. Additionally, during the nine months ended June 30, 2017, the Company entered into promissory notes with John Seitz whereby it borrowed a total of $442,500. The notes are due on demand, bear interest at the rate of 5% per annum, and the outstanding principal and interest is convertible at the option of the holder into securities issued by the Company in a future offering, at the same price and terms received by unaffiliated investors. As of June 30, 2017 the total amount owed to John Seitz, our CEO, is $8,515,500. There was a total of $1,092,388 of unpaid interest associated with these loans included in accrued interest payable within our balance sheet as of June 30, 2017.

 

From August 2015 through February 2016 the Company entered into promissory notes whereby it borrowed a total of $267,000 from Dr. Ronald Bain, its current president and chief operating officer, and his affiliate ConRon Consulting, Inc. These notes are not convertible, due on demand and bear interest at the rate of 5% per annum. As of June 30, 2017, the total amount owed to Dr. Bain and his affiliate was $267,000. There was a total of $24,759.17 of accrued interest associated with these loans and the Company has recorded interest expense for the same amount. During the fiscal year ended September 30, 2016, Dr. Ronald Bain also entered into a $92,000 convertible promissory note with associated warrants (“Bridge Financing”) under the same terms received by other investors (see Note 5). 

 

Domenica Seitz, CPA, a related party, has provided accounting consulting services to the Company. During the three and nine month period ended June 30, 2017, services provided were $5,915 and $26,710, respectively. The Company has accrued these amounts, and they are reflected in the June 30, 2017 condensed financial statements.

 

On November 15, 2016, a family member of the CEO, a related party, entered into a $50,000 convertible promissory note with associated warrants (“Bridge Financing”) under the same terms received by other investors (see Note 5).

 

John Seitz has not received a salary since May 31, 2013, the date he commenced serving as our chief executive officer and accordingly, no amount has been accrued on our financial statements.

 

Kevin Bain, son of Dr. Bain, is a geoscientist, employee of the Company.  

 

All employees of the Company (including executive management), who are all shareholders of the Company, have been paid a reduced salary plus benefits beginning on January 1, 2016.

 

On January 1, 2017, 1.25 million restricted shares, which had vested in September 2016, were issued to an employee.

 

On January 1, 2017, 33.5 million stock options were granted to six employees and two directors of the Company. The CEO was not included in the award. The stock options vested 50% on January 1, 2017 and the remaining 50% will vest on January 1, 2018, provided that the option holder continues to serve as an employee or director on the vesting date. The stock options are exercisable for seven years from the original grant date of January 1, 2017, until January 1, 2024.