RELATED PARTY TRANSACTIONS

3 Months Ended

Mar. 31, 2023

RELATED PARTY TRANSACTIONS

RELATED PARTY TRANSACTIONS

NOTE 11 - RELATED PARTY TRANSACTIONS

As of March 31, 2023, and December 31, 2022, the Company owed Primus $0 and $5,163 respectively, for routine business transactions, which, in addition to the rent, consisted entirely of storage fees. As of March 31, 2023, and December 31, 2022, Primus Logistics had been paid $155,456 and $25,000 respectively, in advance, for rent. The Company's CEO owns 90% of Primus.

As of September 1, 2022, the salaries of the CEO and the CMO, as defined in their respective employment agreements, were paid through the Company’s payroll service. These payments replace the prior independent contractor payments received by their entities, Strategic Global Partners, Inc. and Cube 17, Inc., respectively. Although employment contracts were dated from January 2022, salaries were paid with effect from September 1, 2022. During the three months ended March 31, 2023 and 2022, the Company incurred expenses of $30,000 and $0, respectively for related to salaries for the CEO and $30,000 and $0, respectively for salaries related to the CMO. During the three months ended March 31, 2023 and 2022, the Company incurred expenses totaling $0 and $30,000, respectively, for consulting fees for the CEO and $0 and $30,000, respectively, for consulting fees for the CMO.

As of March 31, 2023, and December 31, 2022, the Company was owed $29,912 and $0, respectively, and owed $9,091, and $0, respectively, by and, to UST Mexico, Inc. ("UST Mexico"). Amounts payable have been netted against amounts receivable. The Company sells hemp products to UST Mexico and provides manufacturing consulting services. The value of goods and services provided to UST Mexico, which are recorded as revenue, was $6,559 and $0 for the three months ended March 31, 2023, and 2022, respectively. The value of goods and services provided by UST Mexico was $45,000 and $46,780 for the three months ended March 31, 2023 and 2022, respectively. The Company concluded that collection of the receivable balance is not probable. Thus, the three months ended March 31, 2023, the Company wrote off receivables from UST totaling $20,821, which is the net balance of amounts receivable less amounts payable, above, as of March 31, 2023. UST Mexico is a manufacturer of tobacco cigarettes in Mexico and provides consulting services and parts for the Company’s equipment. During the three months ended March 31, 2023, the Company prepaid expenses of $288,000 for services related to Hempacco Paper Company. Subsequent to March 31, 2023, through the date of issuance of this report, the Company made loans totaling $601,888 to UST Mexico for prepayment for services.

As of March 31, 2023, UST Mexico owned 947,200,000 shares of common stock of Green Globe International, Inc.. UST Mexico is a related party by virtue of the CEO’s 25% interest in UST Mexico.

On or about March 1, 2022, the Company entered into a mutual line of credit agreement with its parent company, Green Globe International, Inc. The purpose of the credit agreement is to facilitate short-term borrowing needs on an interest-free basis, with advances being subject to repayment within 90 days with a maximum of $500,000 allowed to be outstanding within any 90-day period. On December 1, 2022, the maximum amount was increased to $1,500,000. During the twelve months ended December 31, 2022, the Company loaned GGII a net amount of $692,119. As of March 31, 2023, the balance owed to the Company by GGII was $1,418,027. The Company recorded a reserve against the entire balance as of March 31, 2023. The Company concluded that collection of the loan balance is not probable. Thus, during the three months ended March 31, 2023, the Company recorded a reserve of $646,000, which is included in expensing of related party advances and loans on the statement of operations. Subsequent to March 31, 2023, the Company made loans of $121,000 to GGII. 

During 2022, the Company made short term cash advances directly to Green Star Labs, Inc., a subsidiary joint venture of the Company’s parent, Green Globe International, Inc. As of March 31, 2023 and December 31, 2022, the balance owed by Green Star Labs, Inc. to the Company was $944,386 and $605,994, respectively. The Company recorded a reserve against the entire balance as of March 31, 2023. The Company concluded that collection of the loan balance is not probable. Thus, the three months ended March 31, 2023, the Company recorded a reserve of $479,000, which is included in expensing of related party advances and loans on the statement of operations. Subsequent to March 31, 2023, the Company made loans of $509,617 to Green Star Labs.