Related Party Transactions

6 Months Ended

Jun. 30, 2015

Note 6 – Related Party Transactions

For the three and six months ended June 30, 2015, the Company incurred rent expense of $11,534 and $23,068, respectively compared to $14,359 and $35,281 for the three and six months ended June 30, 2014, respectively, on behalf of St. Luke’s Emergency Associates (“SLEA”). Dr. Paul Bulat, the Company’s founder and Chairman is the President of SLEA. In consideration of $52,924 (recorded as deferred rent on the balance sheets herein) received on December 19, 2014, the Company entered into a Lease Assignment with SLEA, whereas the Company has agreed to accept assignment of the lease on behalf of SLEA. The Company is amortizing $2,036 of the deferred rent monthly through March 2017, the remaining life of the lease.

For the three and six months ended June 30, 2015, the Company recorded interest expense, stockholder of $1,471 and $3,285, respectively, compared to $521 and $2,551 for the three and six months ended June 30, 2014, respectively. As of December 31, 2014 and June 30, 2015, accrued interest of $10,574 and $13,860, respectively, is owed to the stockholder and is included in accounts payable and accrued expenses, related party.

Effective on November 1, 2013 (the “Effective date”), the Company appointed Mr. Hollander as the Chief Financial Officer of the Company, and agreed to issue Mr. Hollander or his assigns 520,754 additional shares of common stock of the Company, and increased the monthly compensation to $8,000. Pursuant to this appointment, Mr. Hollander earned 50% of the additional shares on the nine month anniversary of the Effective Date and earned 50% on the one year anniversary of the Effective Date. Accordingly, the 520,754 shares of common stock, with a value of $260,377 were initially recorded as deferred equity compensation. The Company valued the common stock at $0.50 per share, the same value as the then most recent sales of common stock. The Company amortized the deferred equity compensation over the twelve month term, and has included $65,094 and $130,188, respectively, in stock compensation expense for the three and six months ended June 30, 2014, respectively.

The Board also agreed to enter into an employment agreement with Mr. Bulat (Chief Innovations Officer) for an annual salary up to $300,000 effective January 1, 2014. The Company and Mr. Bulat agreed to accrue $10,000 per month for the year ended December 31, 2014 and agreed to increase the annual compensation to the full amount at a later date. Included in salaries and management fees for the three and six months ended June 30, 2015 and 2014 is $30,000 and $60,000, respectively. As of June 30, 2015 ($180,000) and December 31, 2014, ($120,000) is included in accounts payable and accrued expenses related party.

On October 27, 2014, Mr. Brian Lane (“Lane”) resigned as CEO of the Company. Mr. Lane remains a member of the Board of Directors of the Company. On October 29, 2014, the Company and Mr. Lane entered into a Resignation and Separation Agreement (the “RSA”). Pursuant to the RSA, the Company has agreed to provide consideration to Mr. Lane of $58,856 in fourteen bi-weekly payments of approximately $4,204. The consideration included wages accrued and unpaid as of October 24, 2014. Mr. Lane’s resignation was not due to any disagreement with the Company, the Board or the Company’s management. As of December 31, 2014 and June 30, 2015, the balance owed Mr. Lane was $37,837 and $0 for unpaid salary and severance.

For the six months ended June 30, 2015 and the year ended December 31, 2014, the Company’s Chairman, Dr. Bulat, loaned the Company various amounts for Company expenses, included in accrued liabilities, related. The notes mature on the third anniversary of their issuance (the “Maturity Date”) and carry a per annum interest rate of 5%. The Notes automatically convert on the nine month anniversary following the effectiveness of the Company becoming a public company (the “Conversion Date”) at a conversion price equal to the average closing bid price over the five consecutive days immediately preceding the Conversion Date. Interest expense of $1,471 and $3,285 was recorded for the three and six months ended June 30, 2015. The activity for the six months ended June 30, 2015 is as follows:

	June 30,
	2015
Beginning balance	$	119,055
Loans		5,000
Payments		(5,000	)
Ending Balance	$	119,055

As of June 30, 2015 and December 31, 2014 the Company owes its Chief Technology Officer $144,000 and $108,000, respectively, for accrued and unpaid fees and is included in accounts payable and accrued expenses, related parties.

- Definition

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.

+ References + Details

AMERICAN DOCTORS ONLINE, INC. 10-Q