Annual report pursuant to Section 13 and 15(d)

Related Party Transactions

v3.20.1
Related Party Transactions
12 Months Ended
Dec. 31, 2019
Related Party Transactions [Abstract]  
Related Party Transactions

NOTE 7 – RELATED PARTY TRANSACTIONS

 

The Company currently maintains an executive office in Florida, which is leased by an investment firm in which the Company’s President previously served as an officer but never held any equity or voting rights. The Company has no formal agreement for this space and pays no rent.

 

In May 2018, the Company received $12,500 from its Chief Executive Officer and a Director in the Follow-On Bridge Offering (see Note 9).

 

During the years ended December 31, 2019 and 2018, the Company received an additional $549,000 and $151,000 from its equity method investee (see Note 5) for prepaid management fees. As of December 31, 2019 and 2018, $0 and $117,667 of these prepaid management fees remain as contract liabilities. During the years ended December 31, 2019 and 2018, the Company recognized $666,667 and $33,333 as revenues based on the service period which have been presented as revenues – related parties on the consolidated statement of operations.

 

During the year ended December 31, 2019, the Company received $788,500 from EPH under multiple demand notes payable with interest payable at 6% annually. This has been presented as note payable – related party on the consolidated balance sheets. As of December 31, 2019, accrued interest on these notes payable was $15,426 as presented on the consolidated balance sheets.

 

During the year ended December 31, 2019, the Company earned $250,000 in service fees under its management agreement with CECO which have been presented as revenues – related parties on the consolidated statement of operations. Two of the Company’s officers and directors each own minority equity stakes in CECO.

  

During the years ended December 31, 2019 and 2018, the Company incurred approximately $12,00 and $48,000, in legal fees with a law firm in which the Company’s audit committee chair is an employee. As of December 31, 2019 and 2018, accounts payable and accrued expenses include $10,575 and $30,000, respectively, for legal fees due to the law firm for services.

 

In May 2019, the Company signed a worldwide, exclusive license agreement with Agrarian Technologies LLC and its affiliates (“Agrarian”) to sell Agrarian’s proprietary bio-stimulant. The license also provides the Company with the exclusive rights to market soil and mulch products under the Wild Earth® and Mulch Masters® federally registered trademarks. As part of the transaction, the Company hired the principal owner of Agrarian and inventor of its technology to serve as the Company’s vice president of product development (“VP”). The license agreement provides the Company exclusivity for the Agrarian technology for the longer of two years or the term of the VP with the Company plus an additional two years; provided however, if VP is terminated without cause, such exclusivity would concurrently terminate. The license agreement requires quarterly licensing fees based on a percentage of sales and a minimum fee of $30,000 per year paid quarterly. As of December 31, 2019, $15,000 of license fees have been accrued and included in accounts payable and accrued expenses on the consolidated balance sheets.