Related Party Transactions

12 Months Ended

Dec. 31, 2021

Related Party Transactions

Related Party Transactions

13. Related Party Transactions:

The Company’s primary preferred shareholder is LIC which is primarily owned and managed by Andrew S. Love and Laurence A. Schiffer.  Messrs. Love and Schiffer serve as the executive officers and directors of the Company.  

In May 2008, LIC purchased $703,000 in principal amount of the Company’s convertible debentures from the previous debenture holder.  The balance of the outstanding convertible debentures in the amount of $797,000, were held by Love-1989.  The debentures held by Love-1989 and LIC were secured by a second mortgage behind PGIP on the 366 acres retained by the Company and a security interest behind that held by PGIP in the restricted proceeds escrow.  The total debentures balance of $1,500,000 carried a maturity date of July 8, 1997 and were in default as of December 31, 2015.  In 2016 the 366 acres were sold and the primary lender obligation to PGIP was respectively paid, in addition to the convertible debentures principal of $1,500,000 and a portion of the accrued interest.  Interest on the debentures accrued at the rate of fourteen percent compounded quarterly until the principal was paid in 2016. 

During the years ended December 31, 2021 and 2020 the Company paid $50,000 and $125,000, respectively, of accrued interest for the related party collateralized convertible debentures.  

The remaining accrued interest is $52,740,000 and $52,790,000 as of December 31, 2021 and 2020.

PGIP is owned and managed by Hallmark Investment Corporation (“HIC”).  Messrs. Love and Schiffer are directors and executive officers of HIC and own 90% of all the issued and outstanding voting stock of HIC.

The Company maintains its administration and accounting offices with Love Real Estate Company (“LREC”).  LREC, which is owned by LIC, is paid a monthly fee for the following:

1.	Maintain books of original entry;
2.	Prepare quarterly and annual SEC filings;
3.	Coordinate the quarterly reviews;
4.	Assemble information for tax filing, review reports as prepared by tax accountants and file same;
5.	Track shareholder records through transfer agent;
6.	Maintain policies of insurance against property and liability exposure;
7.	Handle day-to-day accounting requirements

In addition, the Company receives office space, telephone service and computer service from LREC. A fee of $2,000 per month was accrued in 2021 and $2,800 in 2020.  The Company made payments of $24,000 and $33,600 to LREC in 2021 and 2020, respectively, for service fees.  The decrease in services in 2021 is due to the Company not being reviewed by a PCAOB registered public accounting firm effective with the March 31, 2020 periodic filing with the SEC. There were no accrued accounting service fees as of December 31, 2021 and 2020.  

The Company has a Management Consulting Agreement with LREC.  As a consultant to the Company and in addition to the above services, LREC provides other services including, but not limited to, strategic planning, marketing and financing as requested by the Company.  In consideration for these consulting services, the Company pays LREC a quarterly consulting fee of one-tenth of one percent of the carrying value of the Company’s assets, plus reasonable out-of-pocket expenses.  As of December 31, 2021 and 2020, the carrying value of the Company’s assets was approximately $68,000 and $95,000 respectively.  Consulting fees were $300 and $1,000 in 2021 and 2020, respectively.  

In 1985 a corporation owned by the former Chairman of the Board and his family made an uncollateralized loan to the Company, which at December 31, 2021 and 2020 had an outstanding principal balance of $176,000 plus accrued interest of $496,000 and $486,000, totaling an outstanding balance of $672,000 and $663,000, respectively.  Interest accrued on this loan was $9,000 and $10,000 in 2021 and 2020, respectively.