Related Party Transactions |
9 Months Ended |
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Sep. 30, 2023 | |
Related Party Transactions [Abstract] | |
Related Party Transactions | 9. Related Party Transactions
Debt and Guarantees
The Company’s indebtedness includes amounts loaned to us by executive management. In addition, the Company incurs debt that is personally guaranteed by certain executives, officers and directors for which they receive a guarantee fee. There is a guarantee fee agreement in place that details the amount of the fee as well as payment terms. The amount of the fee is capped at 2% of the amount of the outstanding note regardless of how many guarantors there are on the loan unless otherwise determined by the Company’s Board of Directors. The fee is paid 1% at the time of executing the agreement and 1% when the loan is paid off.
We owe (1) Richard Morris, our General Counsel, (i) for a loan in the amount of $344,969 including principal and; interest (ii) past due rent for robots of approximately $162,155 including interest; (2) James Walesa, our Chief Executive Officer, approximately $143,141 in loan guaranty fees, and approximately $47,065 for advances he made to the Company; (3) B.J. Parrish, our Chief Operating Officer $69,532 in loan guaranty fees; (4) Steve Persons, our shareholder $63,193 in loan guaranty fees; (5) Christen Hemmens, our V.P and Director of Education approximately $120,300 in unsecured short term non-interest-bearing debt and $14,000 for loan guaranty fees. (6) Kelly Rio, a shareholder and former employee $ for a loan that she made to the Company
Cibolo Creek Partners, LLC (“Cibolo Creek”) and its affiliate Round Rock Development Partners, LP (“RRDP”) prior to December 31, 2018, made loans to us under revolving credit notes that bear interest at the then applicable federal rate and are payable on demand or other date specified by such lender. In December 2018, AIU acquired businesses affiliated with Cibolo Creek. As of September 30, 2023, AIU Sixth Street, Cibolo Creek and Round Rock were owed $0, $408,223 and $500,000 respectively, by the Company. As of December 31, 2022, AIU Sixth Street, Cibolo Creek and Round Rock were owed $49,493, $517,678 and $500,000 respectively, by the Company. These amounts are included in Note 6 – Indebtedness.
During the first two quarters of 2023 we used the services of Galleros Robinson, LLP, a CPA and advisory firm, for certain accounting services. Richard Levychin is a partner of this firm and member of our audit committee. We had accounts payable in the amount of $27,500 and $10,500 at September 30, 2023 and December 31, 2022. respectively. We made no payments to this firm during the nine months ended September 30, 2023, and paid this firm approximately $37,500 during 2022.
Thinktiv
Clearday has engaged Thinktiv, Inc. to provide services under the terms of a previously reported Services Agreement dated as of March 6, 2019, by and between Thinktiv, Inc. and Clearday Operations, Inc. During the third quarter of 2023 we incurred approximately $937,500 of fees to this related party and expect to incur the same amount in the fourth quarter of 2023. Approximately 25% of these fees are accrued as intangibles as described in Note 4.
Stockdale Financing.
On May 22, 2023, Stockdale Associates, Ltd. (“Stockdale”), a wholly owned subsidiary of Clearday, Inc. entered into a sales transaction with James Walesa, the Chief Executive Officer of the Company, for land of approximately 1.5 acres owned by Stockdale located in the city of Stockdale, Texas (the “Stockdale Property”). The aggregate purchase price for the Stockdale Property was approximately $155,925. Mr. Walesa used the Stockdale Property to obtain mortgage financing from a third party (the “Stockdale Mortgage Loan”). Stockdale may repurchase the Stockdale Property at any time upon payment to Mr. Walesa of $175,000, plus interest on such an amount at a rate of 10.9% annually based on a 360-day year, less $19,075. Stockdale is required to pay Mr. Walesa the approximate sum of $1,590 per month commencing July 1, 2024, and pay all other amounts required under the Stockdale Mortgage Loan and all amounts including property taxes, required for the ownership of the property. The Stockdale Mortgage Loan matures, and the Stockdale’s repurchase right terminates, on September 1, 2028. A $5,925 gain on the sale of the Stockdale property was recognized and included in Gain/loss on disposal of assets on our condensed consolidated financial statements.
Viveon Merger
We have agreed to invest approximately 48% of the net proceeds from advances of the issuance of our Bridge Notes with Viveon. As of September 30, 2023, we have invested $1,042,260 of such net proceeds in Viveon under the terms of a promissory note issued by Viveon (the “Viveon Note”). We have subsequently invested $732,762 as of December 8, 2023, for a total investment of $1,775,023. We made this investment in Viveon to pay a portion of Viveon’s working capital expenses incurred in anticipation of the Viveon Merger. Because the indebtedness under this Viveon Note will be eliminated in the Viveon Merger or likely uncollectible in the event the Viveon Merger is not closed because we do not have the right to any of Viveon’s assets in their trust account, which is their only asset, we have recorded reserve against the full amount of such investment. We have also amended the terms of the Viveon Merger Agreement to, among other matters, increase the number of shares of Viveon common stock that will be issued in the Merger to increase the valuation of Clearday to $500 million based on, among other factors, the demonstrated benefits of Clearday’s Longevity Tech Platform.
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