Related Party Transactions

9 Months Ended

Sep. 30, 2011

Related Party Transactions

Note 12. Related Party Transactions

In September 2009, the Company entered into two 5-year employment agreements and one month-to-month consulting agreement with individuals who are shareholders and/or officers of the Company.  The aggregate expense under these agreements was $110,000 and $318,000 for the three and nine months ended September 30, 2011 and $104,000 and $312,000 for the three and nine months ended September 30, 2010, respectively.

The Company leases office space and receives office services from Patriot Rail Corp., a company related by certain common management and ownership.  In July 2011 the lease cost increased from $5,000 per month to $6,000 per month to include additional support services.  These costs are included in General and Administrative expenses in the statement of operations. The costs for the nine months ended September 30, 2011 and 2010 are each $47,000 and $45,000, respectively.

Our directors, chief executive officer and president are currently not receiving cash compensation for their services, and no amounts have been recorded in the Company’s financial statements for the cash value of their services.

The Company’s board of directors, officers, and officers of its subsidiary directly or beneficially own 26,850 shares of the Company’s preferred stock and 1,266,407 shares of common stock as of September 30, 2011 or 2,312,888 shares, if the preferred is converted.

During the three months ended September 30, 2011, the Company sold approximately $98,000 of relay ties to a related party for use in its track maintenance.  The Company believes the terms of the sale of these ties was at arms-length.