Note 5 – Related Party Transactions

The Company’s CEO earned $10,000 per month. The following compensation was recorded within general and administrative expenses – related parties on the statements of operations: $60,000 and $60,000 for the six months ended June 30, 2017 and 2016, respectively. As of June 30, 2017, $306,659 of compensation was unpaid and was included in accounts payable – related parties on the balance sheet.

For the six months ended June 30, 2017 and 2016, the Company expensed $0 and $30,000, respectively, for rent and office services which are included in general and administrative expenses related party to Balance Holdings LLC, an entity controlled by the Company’s CEO. As of June 30, 2017, $5,000 was owed.

On September 30, 2016, the CEO loaned $120,000 as a convertible note payable to the Company at an interest rate of 10%, due on October 1, 2017. In addition, the Company issued 600,000 warrants at an execution price of $1.00 which expire on October 1, 2019. (See Note 7). $9,025 in interest has been accrued as of June 30, 2017.

On December 5, 2016, the CEO loaned $5,000 to the company and an additional $40,000 on December 9, 2016. Both notes were at an interest rate of 8% and are due on October 1, 2017. For the six months ended June 30, 2017, the company accrued interest of $1,800. The $5,000 loan is in default as of June 30, 2017.

On May 4, 2016, the company began compensating its board member Aviv Hillo, $2,500 per month for his consulting and advisory services. The expense for the six months ended June 30, 2017 was $15,000 compared to $15,000 for 2016. In addition, Mr. Hillo was paid $4,000 for legal services related to the purchase of Pimi Agro in 2016.

During the six months ended June 30, 2017, the company’s CEO and entities controlled by the Company’s CEO made loans to the company in the amount of $154,630 of which $25,000 was repaid. The loans have rate of interest of 8% and mature in one year from the date of the loan. $4,405 has been accrued as of June 30, 2017.

During the six months ended June 30, 2017 a company controlled by the company’s CEO made loans to the company in the amount of $20,000. The loans have a rate of interest of 8% and mature on December 31, 2017. $627 has been accrued in interest as of June 30, 2017.

The company on July 27, 2016 signed a sublease with an entity partially owned by a related party to sub-lease approximately 2,200 square feet 1691 Michigan Ave, Miami Beach, Fl. 33139, beginning August 1, 2016 and ending December 31, 2018 at a monthly base rental of $7,741 per month until July 31, 2017, $7,973 per month from August 1, 2017 to July 31, 2018, and $8,212 from August 1, 2018 to the sublease termination date. In addition to base rent, the company will have to pay 50% of the CAM charges as additional rent. On or about January 15, 2017, The Company was made aware that the master lease for the office space was in default. Consequently, the Company ceased payments. On or about March, 31, 2017, The Company was served with an eviction notice as the Master Lease was still in default. The Company owes two months’ rent to the master lease holder which has been accrued. The Company has used its security deposit to partially pay its delinquent rent. On Friday, May 12, 2017 the Company moved its headquarters to 350 Lincoln Road, 2nd Floor, Miami Beach, FL 33139. The Company pays $1,532 per month rent and is committed to pay rent until October 31, 2017. Beginning November 1, 2017, the Company will occupy the space on a month to month basis. In addition, the company had to pay a security deposit of $7,138. The company is currently looking for permanent office space to relocate.