RELATED PARTY TRANSACTIONS

12 Months Ended

Jun. 30, 2024

RELATED PARTY TRANSACTIONS

RELATED PARTY TRANSACTIONS

6.  RELATED PARTY TRANSACTIONS

We have one executive officer, Steve Rubakh, who is currently our only full-time employee and sole member of our Board of Directors. The Board of Directors establishes Mr. Rubakh’s annual salary, cash bonuses, and the number of Series B preferred stock to issue Mr. Rubakh as additional compensation.  Effective January 1, 2024, the Board of Directors approved Mr. Rubakh’s annual salary at $250,000, quarterly cash bonus to be $100,000, and canceled the quarterly Preferred B shares issuances.

During the year ended June 30, 2024, Mr. Rubakh’s annual salary was $250,000 ($62,500 quarterly). In addition, $300,000 of bonuses ($100,000 during the six months ended December 31, 2023 and $200,000 during the six months ended June 30, 2024) were approved by the Board of Directors. Last, the Company issued Mr. Rubakh 50,000 shares (during the three months ended September 30, 2023) of Series B convertible preferred stock valued on an “as converted to common” basis at $8,300,000, using the closing market price of the Company’s common stock. Each share of Series B preferred stock is convertible into 100 shares of the Company’s common stock. This non-cash, related party stock-based compensation is included in operating expenses in the accompanying statements of operations.

During the year ended June 30, 2023, Mr. Rubakh’s annual salary was $250,000 ($62,500 quarterly). In addition, $200,000 of bonuses ($50,000 quarterly) were approved by the Board of Directors. Last, the Company issued to Mr. Rubakh 200,000 shares of Series B convertible preferred stock valued on an “as converted to common” basis at $15,247,500, using the closing market price of the Company’s common stock. Each share of Series B preferred stock is convertible into 100 shares of the Company’s common stock. This non-cash, related party stock-based compensation is included in operating expenses in the accompanying statements of operations.

Total compensation expense included in general and administrative expenses was $8,850,000 and $15,697,500 for the years ended June 30, 2024 and 2023, respectively.  Amounts due to related party, consisting of accrued salary to Mr. Rubakh, totaled $46,771 and $297,138 as of June 30, 2024 and June 30, 2023, respectively.

In April 2022, Mr. Rubakh advanced $118,150 to a third-party vendor on behalf of the Company. The advance is due on demand, has no interest rate, and is unsecured. Amounts due to related party, consisting of short-term advances from Mr. Rubakh, totaled $0 and $118,150 as of June 30, 2024 and 2023, respectively.

The total amount due to Mr. Rubakh for accrued salary and short-term advances as of June 30, 2024 and 2023 was $46,771 and $415,288, respectively.

During the year ended June 30, 2024, Mr. Rubakh converted 20,000 shares of Series B preferred stock into 2,000,000 shares of common stock in a transaction recorded at the par value of the shares.  

During the year ended June 30, 2023, Mr. Rubakh converted 1,002,633 shares of Series B preferred stock into 802,106 shares of common stock in a transaction recorded at the par value of the shares.  

On December 15, 2021, the Company and Tioga Holding, LLC, a related party owned 50% by Mr. Rubakh, entered into a Property Lease and Power Purchase Agreement for the use by the Company of facilities located in Tioga, Pennsylvania.  The Company’s sole obligation under the agreement is to pay monthly a contractual rate per kilowatt hour of electricity consumed in the Company’s cryptocurrency mining operations.  The term of the agreement is 36 months.  Mining operations at this facility terminated in September 2023 due to the significant increase in power cost by the local utility. During the year ended June 30, 2024 and 2023, the Company incurred power expense of $96,527 and $429,678 from Tioga Holdings, LLC.