19. RELATED PARTY TRANSACTIONS |
6 Months Ended |
|---|---|
Jun. 30, 2025 | |
| Notes | |
| 19. RELATED PARTY TRANSACTIONS | 19.RELATED PARTY TRANSACTIONS
Related party transactions in these consolidated financial statements are as follows:
On September 16, 2020, the Company issued a promissory note to JPMorgan, in the amount of $450,000. Portions of the note were converted from time to time into Shares until paid in full. JPMorgan is a related party as a significant shareholder holding directly and indirectly, as of June 30, 2025, 2,249,882 common shares (10.17%), and 25,000 common share purchase warrants.
On June 21, 2021, stockholders of the Company unanimously consented to terminate a Stockholders Agreement entered into by all of the stockholders and the Company on September 24, 2020, and approved a governance agreement (the “JPM Agreement”) between the Company and JPMorgan, which grants to JPMorgan the following rights:
·a consent right with respect to certain business transaction matters, including: (a) material changes to the nature of the Company’s business, (b) a grant of certain stock options or restricted stock, (c) the Company’s entry into certain employment or compensation agreements, (d) the incurrence by the Company of more than $500,000 of debt, (e) the Company’s entry into a related party agreement, (f) a sale transaction, (g) a loan by the Company in excess of $500,000, (h) settlement of a lawsuit or other dispute in excess of $500,000 or (i) any investment by the Company in excess of $500,000;
·Board of Director observation rights;
·the right to receive certain quarterly and annual financial statements of the Company; and
·certain inspection rights so long as JPMorgan owns at least 10% of the Company’s outstanding shares of common stock.
For the three and six months ended June 30, 2025, the Company paid sitting and committee fees of $69,000 and $138,000.
During the three and six months ended June 30, 2025, the Company granted shares of its common stock to non-employee directors. These directors are considered related parties under ASC 850 due to their governance positions with the Company. On May 22, 2025, the Company issued an aggregate of 450,000 shares of restricted common stock to its non-employee directors under the 2020 Stock Plan. The shares were granted as part of routine board compensation. The restricted shares are subject to vesting over a twelve-month period, and the fair value was determined based on the market price of the Company's common stock on the date of grant. The aggregate grant-date fair value of the shares awarded to directors was $432,990, which will be recognized over the applicable vesting period, in accordance with ASC 718. As of June 30, 2025, a total of 251,613 unvested restricted shares remain outstanding and are scheduled to vest over ten months. |