NOTE 5 – 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.

During the nine months ended September 30, 2020 and 2019, the Company recognized $524,997 and $672,556 as revenues based on management services provided to the Company’s equity method investee (see Note 4) and, for the 2019 period, also for service fees under its agreement with Community Eco Power (CECO), which have been presented as revenues – related parties on the unaudited condensed consolidated statement of operations. The Company’s CEO and President each own minority interests in CECO.

On April 7, 2020, the Company received $15,000 under multiple demand notes with interest payable at 10% annually from three Directors of the Company. These notes matured on June 30, 2020 and are in default. As of September 30, 2020, the principal amount due of $15,000 has been included on the unaudited condensed consolidated balance sheets as notes payable – related parties.

In the current quarter, the Company received $25,000 and $5,500 under two convertible notes with interest payable at 10% annuals from its President and one of its Directors. These notes are convertible into the security issued in the Company’s next equity raise. As of September 30, 2020, the principal amount due of $30,500 has been presented on the unaudited condensed consolidated balance sheets as convertible notes payable – related parties.

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. During the nine months ended September 30, 2020, the Company received an additional $290,373 from EPH with the same terms. As of September 30, 2020 and December 31, 2019, accrued interest on these notes payable was $57,821 and $15,426 which is presented on the unaudited condensed consolidated balance sheets as accrued interest – related parties. As of September 30, 2020 and December 31, 2019, the balance due on these demand notes payable was $1,078,873 and $788,500, respectively, which has been presented as notes payable – related parties on the condensed consolidated balance sheets. In the fourth quarter of 2020, these notes were settled through the Separation Agreement with EPH (see Note 11).

During the nine months ended September 30, 2020 and 2019, the Company incurred approximately $52,753 and $10,993, in legal fees with a law firm in which the Company’s audit committee chair is an employee. As of September 30, 2020 and December 31, 2019, accounts payable and accrued expenses include $24,808 and $10,993, 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. 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 September 30, 2020 and December 31, 2019, $37,500 and $15,000 of license fees have been accrued and included in accounts payable and accrued expenses on the unaudited condensed consolidated balance sheets. In the fourth quarter of 2020, this license agreement was transferred to EPH, and the related liabilities are expected to be assumed by EPH (see Note 11).