Annual report pursuant to Section 13 and 15(d)

Related Party Transactions

Related Party Transactions
12 Months Ended
Dec. 31, 2018
Related Party Transactions [Abstract]  
Related Party Transactions



As disclosed in Note 3 – Acquisitions, the current CEO and CFO of the Company were part of the ownership group from whom Sigal Consulting LLC was acquired in May 2014. The 49% ownership in the Company’s subsidiary, MariMed Advisors Inc., which this ownership group acquired as part of the purchase price, was acquired by the Company from this ownership group in June 2017 in exchange for 75 million shares of the Company’s common stock.


In September 2017, the former CEO of the Company, who is a currently a board member, exercised options to purchase 4.5 million shares of common stock at an exercise price of $0.01 per share. This individual’s aggregate exercise price of $45,000 was paid via the surrender of 90,000 shares of common stock.


In October 2017, the Company acquired certain assets of the Betty’s Eddies™ brand of cannabis-infused products, as disclosed in Note 3 – Acquisitions, from a company that is minority-owned by the Company’s chief operating officer.


In December 2017 and January 2018, options to purchase 400,000 shares of commons stock at an exercise price of $0.025 were forfeited by the CEO and by an independent board member (200,000 shares forfeited by each individual).


In January 2018, the Company granted options to purchase 1.45 million shares of common stock to the Company’s board members at exercise prices ranging from $0.14 to $0.77 and expiring between December 2020 and December 2022. The fair value of these options on grant date of approximately $458,000 was amortized over the six-month vesting period.


The Company’s current corporate offices are leased from a company owned by a related party under a 10-year lease that commenced August 2018 and contains a five-year extension option. Previous to this lease, the Company’s former corporate offices were also leased from a company owned by a related party. For the years ended December 31, 2018 and 2017, expenses incurred under these leases approximated $78,000 and $24,000, respectively.


The outstanding Due To Related Parties balances at December 31, 2018 and 2017 of approximately $276,000 and $401,000, respectively, were comprised of amounts owed of approximately (i) $81,000 and $33,000, respectively, to the Company’s CEO and CFO, (ii) $135,000 and $153,000, respectively, to two companies partially owned by these officers, and (iii) $60,000 and $215,000, respectively, to two shareholders of the Company. Such amounts owed are not subject to repayment schedules and are expected to be repaid during 2019.


The outstanding Due From Related Parties balance at December 31, 2017 of approximately $135,000 (current and long-term balances in the aggregate) was comprised of an advance of approximately $120,000 to a company partially owned by the Company’s CEO and CFO, and an advance to a shareholder. During 2018, the amount owed by the shareholder was repaid, and the $120,000 amount owed by the related company remained outstanding at December 31, 2018.