NOTE 5 - RELATED PARTY TRANSACTIONS

9 Months Ended

Sep. 30, 2024

Notes

NOTE 5 - RELATED PARTY TRANSACTIONS

NOTE 5 – RELATED PARTY TRANSACTIONS

Notes Payable – Related Parties 

On January 30th, 2024, the Company signed an agreement with a major shareholder for a $165,000 note payable. The note accrues interest at a rate of 1.75% compounded annually and has a maturity date of January 30, 2025 (Note 6 – Promissory and Convertible Notes). The note had interest expense of $728 and $1,930 for the three and nine months ended as of September 30, 2024, respectively. As of September 30, 2024, the Company had recorded accrued interest of $1,930 related to the note within accrued interest on the Condensed Consolidated Balance Sheet.

Mycotopia Consulting Agreement with the CEO

On November 17, 2021, Mycotopia entered into an Executive Consulting Agreement (the “Mycotopia Consulting Agreement”), with Benjamin Kaplan (“BK”) to serve as the Company’s CEO for an initial term of 36 months. As of September 30, 2024 and December 31, 2023, the Company had cash compensation outstanding as accrued expense - related party due to the Mycotopia Consulting Agreement of $792,000 and $576,000, respectively. During the nine months ended September 30, 2024 and 2023, the Company recognized stock-based compensation of $0 and $635, respectively, from Warrants issued in connection with the Mycotopia Consulting Agreement. During the three months ended September 30, 2024 and 2023, the Company recognized stock-based compensation of $0 and $635, respectively, from Warrants issued in connection with the Mycotopia Consulting Agreement.  The Company records stock-based compensation on the consolidated income statement as general and administrative expense.

Significant terms of the Mycotopia Consulting Agreement are as follows:

Annual Base Consulting Fee

Every calendar month the Company pays the CEO a consulting fee of $24,000, with an annual total fee of $288,000.

Bonus Compensation Milestones

The CEO was granted a Warrant to purchase that number of shares of Mycotopia common stock equal to 5% of the issued and outstanding Mycotopia common shares, on a fully diluted basis. The Warrant had an exercise price of $0.01 per share and expired on November 16, 2023.

During the year ended December 31, 2023, the Company issued 1,922 vested Mycotopia warrant shares in accordance with the Warrant valued at $635 (see Note 7 – Stockholders’ Equity).

The Company will pay the CEO a bonus in Mycotopia restricted stock or restricted stock units based on the following EBITDA milestones. As of September 30, 2024, no EBITDA milestones were met, and no amounts have been recorded for the bonus milestones.

Bonus		EBITDA Milestones
$	100,000	1st $1,000,000
$	100,000	2nd $1,000,000
$	100,000	3rd $1,000,000
$	100,000	4th $1,000,000
$	100,000	5th $1,000,000

The Company will pay the CEO a bonus in restricted stock or restricted stock units based on the following Mycotopia market capitalization by maintaining the below market cap for Mycotopia for a period of 22 consecutive trading days:

Bonus (Shares)	Market Capitalization Milestone
250,000	$	30,000,000
250,000	$	40,000,000
250,000	$	60,000,000
250,000	$	80,000,000
250,000	$	100,000,000

Stock Grants – Significant Transactions

Upon the Company closing a Significant Transaction, the CEO shall be granted shares of Mycotopia common stock or a new series of Mycotopia preferred shares that is convertible into Mycotopia common stock equal to 5% of the value of all the consideration, including any stock, cash or debt of such completed transaction. A “Significant Transaction” shall mean a financing of at least $500,000 or the closing of an acquisition with a valuation of at least $1,000,000 for Mycotopia. As of September 30, 2024 and December 31, 2023, the Company had not granted any shares in relation to a Significant Transaction.

As of September 30, 2024 and December 31, 2023, there are no amounts accrued related to the bonuses.

Board Compensation

As of September 30, 2024 and December 31, 2023, the Company had accrued expenses from board compensation of $325,000 and $250,000, respectively. Accrued board compensation is included as part of Accounts payable and accrued expenses on the consolidated balance sheets.