RELATED PARTY TRANSACTIONS |
12 Months Ended | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Jul. 31, 2024 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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| RELATED PARTY TRANSACTIONS | 5. RELATED PARTY TRANSACTIONS
ADVANCES FROM RELATED PARTIES
Our Former Chief Executive Officer and shareholder previously agreed to advance funds to the Company from time to time to support the ongoing operations of the Company. Advances are due within ten days of demand and bear interest at 0%.
Advances from related parties consist of the following as of July 31, 2024:
On November 1, 2017, we entered into an employment agreement with Brandon Romanek, our former Chief Executive Officer. In accordance with this agreement, Mr. Romanek provides services to the Company in exchange for $78,000 per year plus vacation and bonuses as approved annually by the board of directors, as well as reimbursement of expenses incurred. On February 1, 2019, we amended the employment agreement with Brandon Romanek, our Chief Executive Officer. In accordance with this agreement, Mr. Romanek provides services to the Company in exchange for $178,000 per year plus vacation and bonuses as approved annually by the board of directors, as well as reimbursement of expenses incurred.
During the year ended July 31, 2024 and 2023, the Company accrued $29,666 and $187,748, respectively due to Mr. Romanek related to this agreement. As of July 31, 2024, Mr. Romanek has allowed the Company to defer a total of $891,535 in compensation earned to date related to his employment agreements.
CONVERTIBLE NOTES PAYABLE RELATED PARTY
On May 1, 2019, we entered into a convertible promissory note pursuant to which we borrowed $200,000 from Harvey Romanek, the father of the Company’s Chief Executive Officer, Brandon Romanek. Interest under the convertible promissory note is 10% per annum, and the principal and all accrued but unpaid interest is due on May 1, 2021. The note is convertible six months after the issuance date at the noteholder’s option into shares of our common stock at a Variable Conversion Price of 65% multiplied by the lowest Trading Price for the Common Stock during the ten (10) Trading Day period ending on the last complete Trading Day prior to the Conversion Date.
The Company recorded a debt discount in the amount of $200,000 in connection with the original issuance discount, offering costs and initial valuation of the derivative liability related to the embedded conversion option of the Note to be amortized utilizing the effective interest method of accretion over the term of the Note.
Further, the Company recognized a derivative liability of $387,232 and an initial loss of $187,232 based on the Black-Scholes pricing model. As of July 31, 2024, the balance of the note was $130,761 and accrued interest was $109,466. |
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