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Replies to post #20205 on CirTran Corporation (CIRX)
The Company has agreed to issue 2,400,000 options to Mr. Nora as compensation for services provided as a Director of the Company. The terms of the director
agreement require the Company to grant to Mr. Nora options to purchase 2,400,000 shares of the Company’s stock each year, with the exercise price of the options being
the market price of the Company’s common stock as of the grant date. During the three months ended March 31, 2013, the Company accrued for 2,400,000 stock
options relating to the director agreement with Mr. Nora. The fair market value of the options was $4,069, using the following assumptions: 7.0-year term, estimated
volatility of 224.82%, and a discount rate of 0.0% (see also Note 10).
In 2007, the Company issued a 10% promissory note to a family member of the Company President in exchange for $300,000. The note was due on demand after May
2008. During the three months ended March 31, 2013, the Company made no payments towards the outstanding note. At March 31, 2013, the principal amount owing
on the note was $151,833. On March 31, 2008, the Company issued to this same family member, along with four other Company shareholders, promissory notes totaling
$315,000. The family member’s note was for $105,000. Under the terms of all the notes, the Company received total proceeds of $300,000 and agreed to repay the
amount received plus a 5% borrowing fee. The notes were due April 30, 2008, after which they were due on demand, with interest accruing at 12% per annum. During
the three months ended March 31, 2013, the Company made no payments towards the outstanding notes. The principal balance owing on the promissory notes as of
March 31, 2013, totaled $72,465.
On April 2, 2009, the Company President and a Director of the Company borrowed from a third party a total of $890,000 in the form of four short-term promissory
notes. The Company President and the Director of the Company signed personally for the notes. Because the loans were used to pay obligations of the Company, the
Company has assumed full responsibility for the notes. Two of the notes were for a term of 60 days, with a 60-day grace period; a third note was for a term of 90 days;
and a fourth note was for 24 days. Loan fees totaling $103,418 were incurred with the issuance of the notes and are payable upon maturity of the notes. At March 31,
2013, these notes comprise a portion of short-term advances payable of $3,146,911. As of March 31, 2013, all four notes were in default and are accruing interest at the
default rate of 36% per year.
The Company has agreed to issue 6,000,000 options each year to the Company President as compensation for services provided as an officer of the Company. The terms
of the employment agreement require the Company to grant to the Company President options to purchase 6,000,000 shares of the Company’s stock each year, with the
exercise price of the options being the market price of the Company’s common stock as of the grant date. During the three months ended March 31, 2013, the Company
accrued for 6,000,000 stock options relating to the employee agreement with Mr. Hawatmeh. The fair market value of the options was $10,171, using the following
assumptions: estimated 7.0-year term, estimated volatility of 224.82%, and a discount rate of 0.0% (see also Note 10).
As of March 31, 2013, the Company owed the Company President a total of $179,773 in short-term advances payable and 30,000,000 stock options with an aggregated
fair value at time of grant of $154,537. These advances and short-term bridge loans were approved by the Board of Directors under a 5% borrowing fee. The borrowing
fees were waived by the Company’s President on these loans.
