Note 9. Related Party Transactions

On September 30, 2014, the Company completed an offering to its preferred stockholders to convert its outstanding preferred stock into common stock, in addition to its accrued and outstanding preferred stock dividends into common shares. As a result of this offering, the holders substantially all of the preferred stock agreed to convert and the Company agreed to issue 381,922 shares of common stock in conjunction with this conversion to related parties. As a result, Banyan Holdings, Coalbrookdale Partners and Paul S. Dennis received 353,434, 10,750 and 58,738 common shares, respectively. Gary O. Marino, the Company’s chairman, is the president of Banyan Holdings. Donald S. Denbo, a director of the company, is a partner of Coalbrookdale Partners. Mr. Dennis is a director of the Company. The shares were issued on November 18, 2014.

On December 29, 2014, the Company agreed to issue 1,807,408 shares of common stock to Banyan Holdings in exchange for cancellation of two (2) notes receivable plus accrued interest in the amount $325,333. Gary O. Marino, the Company’s chairman, is the president of Banyan Holdings and a significant owner of the Company. The shares were issued in January 2015. The Company recorded a discount of $3,922,073 to reflect the difference between the offering price and the quoted market price on the date the offering was subscribed. The discount is recorded as interest expense for the year ended December 31, 2014.

Also on December 29, 2014, the Company agreed to issue 2,777,778 shares to Marino Family Holdings, LLC for $0.18 a share or $500,000 in total. Gary O. Marino, the Company’s chairman, is the manager of Marino Family Holdings, LLC. and a significant owner of the Company. The proceeds from the sale of the shares were used for working capital purposes. The shares were issued in January 2015. The Company recorded a discount of $6,027,778 to reflect the difference between the offering price and the quoted market price on the date the offering was subscribed. The discount is recorded as compensation expense for the year ended December 31, 2014.

On December 29, 2014, the Company agreed to issue 138,889 shares of common stock to Coalbrookdale Partners as part of a private placement of common stock in exchange for the cancellation of advances made to the Company in the amount of $25,000. The proceeds of the money received were used to fund working capital requirements. Donald S. Denbo, a director of the Company, is a partner in Coalbrookdale Partners. The Company recorded a discount of $301,389 to reflect the difference between the offering price and the quoted market price on the date the offering was subscribed. The discount is recorded as compensation expense for the year ended December 31, 2014.

Also on December 29, 2014, the Company agreed to issue 138,889 Shares to Jon Ryan for $0.18 a share, or $25,000 in total. Mr. Ryan is the Company’s chief executive officer, president and chief financial officer of the Company. The shares were issued in January 2015. The Company recorded a discount of $301,389 to reflect the difference between the offering price and the quoted market price on the date the offering was subscribed. The discount is recorded as compensation expense for the year ended December 31, 2014.

During January 2015, the Company issued 138,889 shares of common stock to Coalbrookdale Partners as part of a private placement of common stock in exchange for the cancellation of advances made to the Company in the amount of $25,000. The proceeds of the advances were used to fund working capital requirements. Donald S. Denbo, a director of the Company, is a partner in Coalbrookdale Partners. The Company recorded a discount of $301,389 to reflect the difference between the offering price and the quoted market price on the date the offering was subscribed. The discount is recorded as compensation expense for the year ended December 31, 2014.

On July 7, 2015, the Company issued an aggregate of 896,000 shares of common stock to Donald S. Denbo, Paul S. Dennis, Mark L. Friedman and Gary O. Marino as compensation for services as a director. The Company recorded compensation expense in the amount (included in general and administrative on the Condensed Statement of Operations) of $555,520 for the value of their services as of September 30, 2015.

On June 1, 2015, the Company entered into a month-to-month office lease and administrative support agreement (the “Agreement”) with Boca Equity Partners LLC (“BEP”). The Agreement is effective as of January 1, 2015. The Agreement provides for the Company’s use of a portion of BEP’s offices and certain overhead items at the BEP offices such as space, utilities and other administrative services for $4,750 a month.

Also on June 1, 2015, the Company entered into a support agreement (the “Support Agreement”) with BEP. The Support Agreement is effective as of January 1, 2015 and provides for corporate support services. The Support Agreement is for a month-to-month term and will terminate upon the Company’s payment of a success fee, should the Company acquire more than 50% of the assets or capital stock of any company (an “Acquisition”) during the term of the Support Agreement or within the one year period following the termination of the Support Agreement. Within five days of the closing of any potential Acquisition, Banyan will pay to BEP 2% of the cash purchase price paid by the Company to the seller(s) for the Acquisition.

Gary O. Marino, the Company’s chairman of the board, is the chairman, president, and chief executive officer of BEP. Gary O. Marino and directors Donald S. Denbo and Paul S. Dennis also hold membership interests in BEP.

The Company’s board of directors and officers beneficially own 6,872,375 shares of the Company’s common stock as of December 31, 2015 (66.6% of the outstanding common stock).