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.  Mr. Rubakh is paid an annual salary established by the Board of Directors, bonuses as determined by the Board of Directors, and is issued shares of Series B preferred stock on a quarterly basis for additional compensation.  The number and timing of Series B preferred shares issued to Mr. Rubakh is at the discretion of the Board of Directors. 

Effective April 1, 2021, the Company entered into a four-year employment contract with Steve Rubakh establishing annual salary at $250,000 with a quarterly bonus of $50,000 or 5,000 shares of Series B preferred stock, as determined by the Board of Directors. Bonuses of $200,000 were approved by the Board of Directors for the year ended June 30, 2022. Annual salary for Mr. Rubakh was $150,000 prior to April 1, 2021.

For the year ended June 30, 2022, the Company issued to Mr. Rubakh 200,000 shares of Series B convertible preferred stock valued on an “as converted to common” basis at $2,438,900, 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 $450,000 and $225,000 for the years ended June 30, 2022 and 2021, respectively.  Amounts due to related party, consisting of accrued salary to Mr. Rubakh, totaled $250,610 and $29,357 as of June 30, 2022 and June 30, 2021, 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 $118,150 as of June 30, 2022.

Total amount due to Mr. Rubakh for accrued salary and short-term advances as of June 30, 2022 and 2021 was $368,760 and $29,357, respectively.

In August 2021, Mr. Rubakh converted 24,737 shares of Series B preferred stock into 2,473,700 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 (“Tioga”), 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.  Full mining operations commenced in April 2022.  During the year ended June 30, 2022, the Company incurred power expense of $96,592 from Tioga.

In December 2021, the Company sold fully depreciated property and equipment to a related party for $135,450 which was recorded in Additional Pain In Capital on the Statements of Stockholders’ Equity (Deficit) due to the related party nature of the transaction. 

During the year ended June 30, 2021, the Company issued to Mr. Rubakh 350,000 shares of Series B convertible preferred stock valued on an “as converted to common” basis at $16,537,500, using the closing market price of the Company’s common stock on that date.  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.

In February 2021, Mr. Rubakh converted 52,630 shares of Series B preferred stock into 5,263,000 shares of common stock in a transaction recorded at the par value of the shares.