NOTE 7 – RELATED PARTY TRANSACTIONS

During the year ended December 31, 2017, Sanford Lang, the Company’s former Chairman and CEO, advanced the Company $289,821 to pay for general operating expenses, his and Martin Goldrod’s personal compensation. The advances are uncollateralized, require a monthly interest payment of $2,545 and due on demand.

As of June 30, 2020, the Company owed The Starco Group, (“TSG”) $72,843 for expenses paid by The Starco Group on behalf of the Company for expenses to launch licensed brands. Once royalties exceed $250,000 in the aggregate, and the Company has an adequate cash reserve, TSG will deduct the incurred expenses from the subsequent royalty payments until TSG is paid in full. In addition, the Company owes TSG an additional $47,129 for expenses paid on behalf of the Company or funds advanced to the Company to pay for other operating expenses.

As of June 30, 2020, the Company owes two of its board members $1,769 and $637, respectively, for cash advances to the Company and accrued compensation of $6,850 and $34,800, respectively.

As of June 30, 2020, the Company has total accrued compensation due to its CFO of $46,050.

On January 24, 2020, the Company executed a promissory note for $100,000 with Ross Sklar, CEO. The note bears interest at 4% per annum, compounded monthly, is unsecured and matures in two years. As of June 30, 2020, there is $584 of accrued interest due on this note.

During the three months ended June 30, 2020 and 2019, the Company recognized royalty income of $296,590 on $1,595,622 of gross sales and $117,486 on approximately $783,260 of gross sales, respectively. During the six months ended June 30, 2020 and 2019, the Company recognized royalty income of $352,264 on approximately $2,147,467 of gross sales and $178,749 on approximately $1,392,154 of gross sales, respectively. There is a $260,354 receivable from The Starco Group as of June 30, 2020.