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RELATED-PARTY TRANSACTIONS
12 Months Ended
Dec. 31, 2021
Related Party Transactions [Abstract]  
RELATED-PARTY TRANSACTIONS

NOTE 5 — RELATED-PARTY TRANSACTIONS

 

In 2007, we issued a 10% promissory note to a family member of our president in exchange for $300,000. The note was due on demand after May 2008. There were no repayments made during the periods presented. At December 31, 2021 and 2020, the principal amount owing on the note was $151,833 and $151,833, respectively. No demand for payment has been made.

 

On March 31, 2008, we issued to this same family member, along with two other company shareholders, promissory notes totaling $315,000 ($105,000 each). Under the terms of these three $105,000 notes, we received total proceeds of $300,000 and agreed to repay the amount received plus a 5% borrowing fee. The notes were due April 30, 2008, after which they were due on demand, with interest accruing at 12% per annum. We made no payments towards the outstanding notes during the periods presented. The principal balance owing on the notes as of December 31, 2021 and 2020, was $72,466 and $72,466, respectively. No demand for payment has been made.

 

During the year ended December 31, 2021, we made repayments to related parties of $396,797 and had other noncash reductions of $82,018. During the year ended December 31, 2020, we made repayments to related parties of $467,409 and received $11,500. There were $21,882 and $287,776 of short-term advances due to related parties as of December 31, 2021 and 2020, respectively. The advances are due on demand and included in current liabilities. No demand for payment has been made.

 

 

We have agreed to issue stock options to Iehab Hawatmeh, our president, as compensation for services provided as our chief executive officer. The terms of his employment agreement require us to grant options to purchase 6,000 shares of our stock each year, with an exercise $0.10. We issued options to purchase 6,000 and 6,000 shares of common stock during the years ended December 31, 2021 and 2020, respectively. There were options to purchase 6,000 shares of common stock that expired during each year ended December 31, 2021 and 2020. Mr. Hawatmeh held outstanding options to purchase 30,000 and 30,000 shares of common stock as of December 31, 2021 and 2020, respectively. See Note 13–Stock Options and Warrants.

 

As of December 31, 2021 and 2020, we owed our president a total of $433,379 and $868,528, respectively, in unsecured advances. The advances and short-term bridge loans were approved by our board of directors under a 5% borrowing fee. The borrowing fees were waived by our president on these loans. These amounts are included in our liabilities from discontinued operations.

 

As of December 31, 2021 and 2020, we owed a total of $13,740 and $13,740, respectively, to a related party through trade payables incurred in the normal course of business. These amounts are shown as a separate related-party payable on the balance sheet as of each reporting date.

 

During the year ended December 31, 2021, we had a net decrease in deposits with a related-party inventory supplier totaling $232,291. The related party is an entity controlled by our chief executive officer. All transactions were at a 2% markup over the related-party’s cost paid for inventory in arm’s-length transactions. Total inventory purchases from the related party were $1,186,645 and $643,772 during the years ended December 31, 2021 and 2020, respectively.