Annual report pursuant to Section 13 and 15(d)

Related party transactions

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Related party transactions
9 Months Ended 12 Months Ended
Sep. 30, 2017
Dec. 31, 2017
Related Party Transactions [Abstract]    
Related party transactions

Note 10 - Related party transactions

During the period ended September 30, June 30, and March 31, 2017, the Company engaged an engineering company in Bangalore, India to perform engineering services, product development and manufacturing services for the Company in the aggregate amount of $0, $0 and $358,512, respectively. The Director and the CEO of 5BARz India Private Limited owns a 30% interest in that engineering firm, and the Executive Director of the engineering company is the spouse of the Director and the CEO of 5BARz India Private Limited. The amount due to Aseema Softnet Technologies Inc. at September 30, June 30, and March 31, 2017, was $1,624,941, $1,734,941 and $1,734,941, respectively. During the period ended September 30, June 30, and March 31, 2017, there were $0, $0 and $358,512 in billings and $110,000, $0 and $30,000 in payments to Aseema Softnet Technologies Inc. resulting in an amount due of $1,624,941, $1,734,941 and $1,734,941 at September 30, June 30, and March 31, 2017, respectively. Subsequent to March 31, 2017 there have been no further billings.

Note 11 - Related party transactions

During the year ended December 31, 2017 and 2016, the Company engaged an engineering company in Bangalore, India to perform engineering services, product development and manufacturing services for the Company in the aggregate amount of $358,512 and $1,329,126, respectively. The Director and the CEO of 5BARz India Private Limited owns a 30% interest in that engineering firm, and the Executive Director of the engineering company is the spouse of the Director and the CEO of 5BARz India Private Limited. The amount due to Aseema Softnet Technologies Inc. at December 31, 2017 and 2016 was $1,574,019 and $1,406,429 respectively. During the year ended December 31, 2017 and 2016 there were $358,512 and $1,329,126 in billings and $190,922 and $528,000 in payments to Aseema Softnet Technologies Inc., resulting in an amount due of $1,574,019 and $1,406,429 at December 31, 2017 and 2016, respectively. Subsequent to December 31, 2017, there have been no further billings and the Company has negotiated a write down of amounts due in the aggregate amount of $1,285,633. Subsequent payments aggregate to $219,000, resulting in a balance of $69,385.

 

On June 14, 2016, the Board of Directors approved the issuance of warrants to acquire 8,000,000 shares to each of the CEO and Chairman of the Board, at a price of $0.09 per share. The warrants have a term of five (5) years and vest as to 50% immediately and 50% on June 14, 2017. In addition, the Directors approved the issuance of 10,000,000 stock options, issued to the CEO of 5BARz India Private Limited, to acquire common stock of the Company at a price of $0.09 per share. The options have a 5-year term, and vest as to 10% immediately, 40% upon the closing of a minimum of $13 million USD financing of 5BARz India Private Limited at a $100 million valuation and 50% one year from the closing of said financing. The fair value of those warrants when vested are charged to expense as follows - $715,232 and $175,203 at June 30, 2016 and June 14, 2017, respectively.  The fair value of the 10,000,000 options was $80,679 with respect to the 1,000,000 options that vested immediately, June 14, 2016 and $726,109 as to the options that were to vest based upon the performance criteria discussed above.  The performance criteria were not achieved.

 

On December 31, 2017, the Company settled certain unpaid liabilities comprised of unpaid consulting fees and expenses for each of the CEO of 5BARz International, Inc. of $350,000, the Chairman of 5BARz International Inc. of $350,000 and the CEO of 5BARz India Private Limited of $304,524.  The amounts were settled by the issuance of convertible notes, which bear interest at a rate of 8% per annum and are convertible on demand at a price of $0.03 per share. Each convertible note is provided along with a warrant to acquire an equal number of the conversion shares at a price of $0.20 per share and a similar issue of warrants at $0.10 per share.  Accordingly warrants to acquire an aggregate of 33,484,134 at a strike price of $0.20 and warrants were issued to acquire the same number of shares at a strike price of $0.10 (see warrants Note 10).  The warrants have a term of 2 years. The convertible notes of $1,004,524 remain a part of due to related parties at the balance sheet date, December 31, 2017.

 

On April 3, 2013, the Company entered into a Trust Agreement with a US corporation controlled by Mr. Daniel Bland, the CEO, CFO and Director of the Company.  From time to time trust funds are paid by direct deposit by the Company or investors of the Company to the trust account. The trust agent shall hold the trust deposits in the account of the trustee, and such account is not utilized for any purposes other than the business of the Company. In June 2018 the trust account was closed.  

 

As December 31, 2017, 2016 and 2015 the amount due to related parties is as follows:

Name of Related Party   Relationship   Description   2017   2016   2015
Aseema Softnet Technology   Managing Director spouse of CEO and Director of subsidiary   Engineering
Services
  $ 1,574,019     $ 1,406,429     $ 605,302  
Daniel Bland   CEO, CFO, Director   Unpaid fees and expenses     353,611       194,724       103,590  
Gil Amelio   Chairman of the Board   Unpaid fees and expenses     796,645       534,030       343,716  
Samartha Nagabhushanam   CEO & Director of subsidiary   Unpaid fees and expenses     460,708       125,950       3,232  
Garnel Bland   Spouse of the CEO   Loan     12,000       —         —    
Total           $ 3,196,983     $ 2,261,133     $ 1,055,840  

 

Amount due to related party include both accounts payable and the convertible notes payable addressed above.

In each of fiscal year 2017, 2016 and 2015 the Company paid $30,000 to the daughter of the CEO, CFO and Director of the Company, Mr. Daniel Bland, for administrative services.