NOTE 5 – RELATED PARTY TRANSACTIONS

Notes Payable – Related Parties 

On January 30th, 2024, the Company signed an agreement with a major shareholder for a $165,000 note payable. The note accrues interest at a rate of 1.75% compounded annually and has a maturity date of January 30, 2025 (Note 6 – Promissory and Convertible Notes). The note had interest expense of $1,432 for the six months ended June 30, 2025, respectively. As of June 30, 2025, the Company had recorded accrued interest of $4,090 related to the note within accrued interest on the Condensed Consolidated Balance Sheet.

Aibotics Consulting Agreement with the CEO

On November 17, 2021, AiBotics entered into an Executive Consulting Agreement (the “Aibotics Consulting Agreement”), with Benjamin Kaplan (“BK”) to serve as the Company’s CEO for an initial term of 36 months. As of June 30, 2025 and December 31, 2024, the Company had cash compensation outstanding as accrued expense - related party due to the Aibotics Consulting Agreement of $958,000 and $864,000, respectively. During the three and six months ended June 30, 2025 and 2024, the Company recognized stock-based compensation of $0 and $0, respectively, from Warrants issued in connection with the Aibotics Consulting Agreement.  The Company records stock-based compensation on the consolidated income statement as general and administrative expense.

Significant terms of the Aibotics Consulting Agreement are as follows:

Annual Base Consulting Fee

Every calendar month the Company pays the CEO a consulting fee of $24,000, with an annual total fee of $288,000.

Bonus Compensation Milestones

The CEO was granted a Warrant to purchase that number of shares of Aibotics common stock equal to 5% of the issued and outstanding Aibotics common shares, on a fully diluted basis. The Warrant had an exercise price of $0.01 per share and expired on November 16, 2023.

During the year ended December 31, 2024, the Company issued 0 vested Aibotics warrant shares in accordance with the Warrant valued at $0 (see Note 7 – Stockholders’ Equity).

The Company will pay the CEO a bonus in Aibotics restricted stock or restricted stock units based on the following EBITDA milestones. As of June 30, 2025, no EBITDA milestones were met, and no amounts have been recorded for the bonus milestones.

The Company will pay the CEO a bonus in restricted stock or restricted stock units based on the following Aibotics market capitalization by maintaining the below market cap for Aibotics for a period of 22 consecutive trading days:

As of June 30, 2025, no milestones were met, and no amounts have been recorded for the milestones.

Stock Grants – Significant Transactions

Upon the Company closing a Significant Transaction, the CEO shall be granted shares of Aibotics common stock or a new series of Aibotics preferred shares that is convertible into Aibotics common stock equal to 5% of the value of all the consideration, including any stock, cash or debt of such completed transaction. A “Significant Transaction” shall mean a financing of at least $500,000 or the closing of an acquisition with a valuation of at least $1,000,000 for Aibotics. As of June 30, 2025 and December 31, 2024, the Company had not granted any shares in relation to a Significant Transaction.

As of June 30, 2025 and December 31, 2024, there are no amounts accrued related to the bonuses.

Board Compensation

As of June 30, 2025 and December 31, 2024, the Company had accrued expenses from board compensation of $190,000 and $160,000, respectively. Accrued board compensation is included as part of Accounts payable and accrued expenses on the consolidated balance sheets.