RELATED PARTY TRANSACTIONS

6 Months Ended

Jun. 30, 2023

RELATED PARTY TRANSACTIONS

RELATED PARTY TRANSACTIONS

NOTE 11 - RELATED PARTY TRANSACTIONS

As of June 30, 2023, and December 31, 2022, the Company owed Primus $0 and $5,163 respectively, for rent and storage fees. As of June 30, 2023, and December 31, 2022, Primus had been paid $169,780 and $25,000 respectively, in advance, for rent. During the six months ended June 30, 2023 and 2022, the Company expensed $94,266 and $70,094, respectively, for services provided by Primus.  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 and six months ended June 30, 2023, the Company incurred expenses of $60,000 and $120,000, respectively, related to salaries for the CEO and CMO. During the three and six months ended June 30, 2022, the Company incurred expenses of $60,000 and $30,000, respectively, related to consulting fees for the CEO and CMO.  The Company does not believe there is substantial risk that employer taxes with penalties and interest may be due related to payments made to the CEO and CMO as consultants.

As of June 30, 2023, and December 31, 2022, the Company was owed $0 and $0, respectively, and owed $32,108, and $0, respectively, by and, to UST Mexico, Inc. (“UST Mexico”). Amounts payable have been netted against prepaid expenses. 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 $0 and $6,559, respectively, for the three and six months ended June 30, 2023, and $6,000 and $6,000 for the three and six months ended June 30, 2022. UST Mexico is a manufacturer of tobacco cigarettes in Mexico and provides consulting services and parts for the Company’s equipment. The value of goods and services provided by UST Mexico was $103,009 and $148,009, respectively, for the three and six months ended June 30, 2023, and $43,220 and $90,000, respectively, for the three and six months ended June 30, 2022. As of June 30, 2023, the Company prepaid expenses of $790,099 for products and services related to Hempacco Paper Company that are covered by open purchase orders.

As of June 30, 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. (“GGII”). 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 June 30, 2023, the balance owed to the Company by GGII was $1,614,027. The Company recorded a reserve against the entire balance as of June 30, 2023. The Company concluded that collection of the loan balance is not probable. Thus, during the three and six months ended June 30, 2023, the Company recorded a reserve of $ 195,775 and $1,320,775, respectively, which is included in expensing of related party advances and loans on the statement of operations. Subsequent to June 30, 2023, the Company made additional loans of $50,500 to GGII. 

During 2023 and 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 June 30, 2023 and December 31, 2022, the balance owed by Green Star Labs, Inc. to the Company was $1,200,400 and $605,994, respectively. The Company concluded that collection of a portion of the loan balance is not probable. Thus, the three and six months ended June 30, 2023, the Company recorded a reserve of $0 and $479,000, respectively, which is included in expensing of related party advances and loans on the statement of operations. During the six-month period ended June 30, 2023, the Company made payments of approximately $737,397 (net of repayments) as pre-payment against purchase orders for new products primarily related to the Alfalfa Holdings LLC joint venture (“Snoop Dogg”). During the six months ended June 30, 2023, the Company received approximately $170,000 in inventory from Green Star Labs, Inc. On June 1, 2023, the Company issued a purchase order to Green Star Labs in the amount of $604,000, and in the same period Green Star Labs shipped $0 of product to the Company. Management anticipates that the remaining outstanding loan balance will be eliminated by additional product shipments in the third quarter of 2023. Subsequent to June 30, 2023, the Company made loans of $266,000 to Green Star Labs, Inc.