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RELATED PARTY TRANSACTIONS
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9 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Sep. 30, 2014
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| Related Party Transactions [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Related Party Transactions Disclosure [Text Block] |
Assets
Accounts receivable – related parties of $215,925 and $365,917 at September 30, 2014 and December 31, 2013, respectively, represents the net realizable value of advances made to related, but independent, entities under common management.
See Note 6 – Investments and Fair Value of Financial Instruments.
Liabilities
The CEO and Chairman of the Company (the “CEO”), loaned the Company $400,000 in April 2011 at a 6% interest rate and since then he has periodically advanced and withdrawn additional amounts. The principal balance due to the CEO as December 31, 2013, is included in a loans payable – related parties and the interest due is included in accrued expenses - related parties in the accompanying condensed consolidated balance sheet as of December 31, 2013. The loan and related interest was paid in full during the first six months of 2014.
Additionally, in 2011 and 2012 the CEO invested a total $800,000 in the Company’s offering of convertible promissory notes on the same terms as other investors, earning a 10% interest rate. The balances due to the CEO related to convertible promissory notes as of December 31, 2013 and are included in accrued expenses - related parties (interest) and convertible debt obligations - related parties (principal) in the accompanying condensed consolidated balance sheets. During the nine months ended September 30, 2014, principal and interest of $373,958 and $207,327 was repaid in cash, and the remaining principal of $426,042 was converted into 231,545 shares of Series A Preferred.
The following table summarizes principal and interest owed to the CEO December 31, 2013. There were no loans payable to the CEO at September 30, 2014.
[1] This note bore interest at 20% because it was denominated in Argentine pesos, which have been subject to significant devaluation in recent years. This note was repaid in full as of September 30, 2014.
The Company’s indebtedness to its CEO represented 17% of total liabilities at December 31, 2013.
Revenues
CAP recorded private equity and venture capital fees of $0 during the three and nine months ended September 30, 2014 and $132,761 and $287,708 during the three and nine months ended September 30, 2013, respectively, arising from private placement transactions on behalf of a related, but independent, entity under common management. For the three and nine months ended September 30, 2013, $90,805 and $196,073, respectively, represent cash fees and $41,956 and $91,635 , respectively, represent fees in the form of warrants, which were recorded at fair market value as of the grant date using the Black-Scholes option pricing model.
Expense Sharing
On April 1, 2010, the Company entered into an agreement with a related, but independent, entity under common management, to share expenses such as office space, support staff and other operating expenses. General and administrative expenses were reduced by $45,927 and $131,523 during the three and nine months ended September 30, 2014 and $21,427 and $76,973 during the three and nine months ended September 30, 2013, respectively.
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