Quarterly report pursuant to Section 13 or 15(d)

RELATED PARTY TRANSACTIONS

v3.19.2
RELATED PARTY TRANSACTIONS
6 Months Ended
Jun. 30, 2019
Related Party Transactions [Abstract]  
RELATED PARTY TRANSACTIONS

NOTE 9 – RELATED PARTY TRANSACTIONS

 

During the six months ended June 30, 2019, and the year ended December 31, 2018, our CEO (stockholder) paid expenses and accounts payable on behalf of the Company (see Note 6). As of June 30, 2019, and December 31, 2018, the Company owed the CEO $63,642 and $57,526, respectively, which is included in Advances payable, stockholder on the condensed consolidated balance sheets included herein.

 

Pursuant to a Marketing Agreement (cancelled August 5, 2016), the Company provided marketing programs to promote and sell hearing aid instruments and related devices to Moore Family Hearing Company (“MFHC”). MFHC owned and operated retail hearing aid stores. Based on common control of MFHC and the Company, all transactions with MFHC are classified as related party transactions. The Company has offset the accounts receivable owed from MFHC for these services with expenses of the Company that have been paid by MFHC. As a result of these payments, in addition to MFHC’s payments to the Company through December 31, 2016, the balance due to MFHC as of June 30, 2019, and December 31, 2018, was $22,548, which is included in Accounts payable, related party, on the condensed consolidated balance sheets included herein.

 

Effective August 1, 2016, the Company agreed to compensation of $225,000 and $125,000 per year for the Company’s CEO and CFO, respectively. On November 15, 2016, the Company entered into employment agreements with its CEO and CFO, which includes their annual base salaries of $225,000 and $125,000, respectively. For the three and six months ended June 30, 2019, and 2018, the Company recorded expenses to its officers in the following amounts:

 

    Three months ended June 30,   Six months ended June 30,
  Description   2019   2018   2019   2018
  CEO     $ 56,250     $ 56,250     $ 112,500     $ 112,500  
  CFO       31,250       31,251       62,500       61,540  
  Total     $ 87,500     $ 87,501     $ 175,000     $ 174,040  

 

As of June 30, 2019, and December 31, 2018, the Company in the aggregate owes the CEO and CFO $156,201 and $188,942, respectively, for accrued and unpaid wages. These amounts are included in Officer salaries payable on the balance sheets included herein.

 

In September 2016, the officers and directors of the Company formed a California Limited Liability Company (“LLC1”), for the purpose of acquiring commercial real estate and other business activities. On December 24, 2016, LLC1 acquired two retail stores from the buyer of the MFHC stores. On March 1, 2017, the Company entered into a twelve-month Marketing Agreement with each of the stores to provide telemarketing and design and marketing services for $2,500 per month per store, resulting in related party revenues of $15,000 for the three months ended June 30, 2019, and $15,000 and $30,000 for the three and six months ended June 30, 2018, respectively. Additionally, for the three and six months ended June 30, 2018, the Company invoiced LLC1 $8,323 and $50,744, respectively, for the Company’s production, printing and mailing services and $1,275 for the six months ended June 30, 2018, for sale of products. As of June 30, 2019, and December 31, 2018, LLC1 owes the Company $283,064 and $203,325, respectively, for the consulting fees and mailing services as well as expenses of LLC1 paid by the Company.

 

On June 14, 2017, the Company entered into a five-year lease with LLC1 for approximately 6,944 square feet and a monthly rent of $12,000. For the three and six months ended June 30, 2019, and 2018, the Company expensed $36,000 and $72,000, respectively, related to this lease and is included in Rent, on the condensed consolidated statement of operations, included herein. As of June 30, 2019, and December 31, 2018, the Company owed LLC1 $50,300 and $30,500, respectively, for unpaid rent.

  

On May 9, 2017, the Company and LLC1 purchased certain real property from an unaffiliated party. The Company and LLC1 have agreed that the Company purchased and owns 49% of the building and LLC1 purchased and owns 51% of the building. The contracted purchase price for the building was $2,420,000 and the total amount paid at closing was $2,501,783 including, fees, insurance, interest and real estate taxes. The Company paid for their building interest by delivering cash at closing of $209,971 and being a co-borrower on a note in the amount of $2,057,000, of which the Company has agreed with LLC1 to pay $1,007,930 (see Note 10).