Certain Relationships and Related Transactions |
12 Months Ended |
|---|---|
Dec. 31, 2025 | |
| Certain Relationships and Related Transactions | |
| Certain Relationships and Related Transactions | Note 13: Certain Relationships and Related Transactions
The following is a summary of transactions to which the Company and certain officers and directors of the Company are a party or have a financial interest. The Board of Directors of the Company has adopted a policy that all transactions between the Company and its officers, directors, principal shareholders and other affiliates must be approved by a majority of the Company’s disinterested directors and be conducted on terms no less favorable to the Company than could be obtained from unaffiliated third parties.
Of the 48 Units sold in the private placement which began in October 2016, three Units were purchased by Paul W. Mobley, Executive Chairman, and four Units were purchased by Marcel Herbst, Director. Each Unit consists of a Note in the principal amount of $50,000 and a Warrant to purchase 50,000 shares of the Company’s Common Stock. These transactions were all completed on the same terms and conditions as all of the unrelated investors who purchased the other 41 Units. The Notes, at the time of issue, were to mature three years after issue date. In late 2018, the Company offered each remaining Note holder to extend the maturity of the Notes to January 31, 2023. Holders of $775,000 in principal amount of the Notes accepted that offer of extension including Paul W. Mobley and Herbst Capital Management, LLC with respect to their Notes. In conjunction with the refinancing of the Company in February 2020, Notes held by Paul Mobley were included in the $1,275,000 in principal amount of Notes that were repaid out of the proceeds of the new financing. In September 2022, Paul Mobley bought a Note in principal amount of $200,000 from Marcel Herbst which is included in the balance sheet as a portion of the outstanding convertible notes payable along with the attached warrants. In 2024, Paul W. Mobley received the 10% interest in the amount of $20,000 from the Company at the same time and same rate as all other subordinated debt holders, which was included in interest expense. After December 31, 2024, Paul Mobley agreed to pay the Company $50,000 for credit card back-up records that could not be located for charges paid by the Company during 2024 based on the use of his personal credit card. That was established as a receivable at December 31, 2024 and that receivable was repaid immediately after established on May 12, 2025. As of December 31, 2025, Paul W. Mobley, Executive Chairman and Chief Financial Officer, beneficially owned subordinated convertible notes with an aggregate principal balance of $300,000 that were acquired from purchases from existing note holders.
During 2025, the Company paid approximately $27,500 of interest to Mr. Mobley related to his holdings of subordinated convertible notes. Such interest was paid on the same terms and at the same contractual rate as interest paid to all other holders of subordinated convertible notes.
During 2025, Mr. Mobley acquired from an existing note holder a subordinated convertible note with a principal balance of $100,000 and the related warrants. The transaction was between Mr. Mobley and the selling note holder and did not involve the issuance of additional securities by the Company. |