At March 31, 2020, the issuer had
outstanding 230,292,407 shares of common stock, par value $.001 per share.
This Amendment No. 1 on Form 10-K/A (this
“Amendment”) is being filed by MariMed, Inc. (the “Company”) to amend its Annual Report on Form 10-K for
the year ended December 31, 2019 which was filed with the U.S. Securities and Exchange Commission (the “SEC”) on April
1, 2020 (the “Original Filing”). The purpose of this Amendment is to provide the disclosures required by Items 10
through 14 of Part III of Form 10-K, which were omitted from the Original Filing in reliance on General Instruction G(3) to Form
10-K, and were to be incorporated by reference to the Company’s Definitive Proxy Statement to be filed on or before April
29, 2020, with respect to its 2020 annual meeting of stockholders (the “Proxy Statement”). The Company is filing this
Amendment because the Proxy Statement will not be filed by April 29, 2020.
In accordance with Rule 12b-15 under the
Securities Exchange Act of 1934, as amended, new Exhibits 31.1 and 31.2 are filed, and new Exhibits 32.1 and 32.2 are furnished
herewith. This Amendment supplements the Original Filing and does not amend or otherwise update any other information in the Original
Filing. Accordingly, this Amendment should be read in conjunction with the Original Filing.
No changes or updates to the items included
in the Original Filing have been made to reflect subsequent events that may have occurred with respect to such items subsequent
to the filing date of the Original Filing.
PART
III
ITEM
10. DIRECTORS, EXECUTIVE OFFICERS AND CORPORATE GOVERNANCE.
The
following table sets forth the name, age and position of our directors and executive officers. Our directors are elected annually
and serve until the next annual meeting of stockholders.
Name
|
|
Age
|
|
Position
|
Robert
Fireman
|
|
70
|
|
President,
Chief Executive Officer, and Chairman
|
Jon
R. Levine
|
|
54
|
|
Chief
Financial Officer, Treasurer, Secretary, and Director
|
Eva
Selhub, M.D. (4) (5)
|
|
51
|
|
Director
|
David
Allen (1) (5)
|
|
64
|
|
Director
|
Edward
Gildea (2) (3)
|
|
67
|
|
Director
|
(1)
|
Chairman
of the Audit Committee.
|
|
|
(2)
|
Member
of the Audit Committee.
|
|
|
(3)
|
Chairman
of the Compensation Committee and the Nominating and Corporate Governance Committee.
|
|
|
(4)
|
Member
of the Compensation Committee.
|
|
|
(5)
|
Member
of the Nominating and Corporate Governance Committee.
|
Set forth below is a brief description
of the background and business experience of our executive officers and directors:
Robert Fireman has served
as our president and chief executive officer since July 2017. In addition, Mr. Fireman has been a director since our formation,
and is a seasoned executive in the building of technology and consumer driven companies. Mr. Fireman was a founder and director
of Consumer Card Marketing, Inc., a pioneer in the development of retail loyalty marketing programs for the supermarket and drug
store industries. This company was sold to News America Marketing, a division of News Corp. Mr. Fireman has been a practicing
attorney for over 30 years. Mr. Fireman is the CEO of our wholly-owned subsidiary, MariMed Advisors Inc., a director of Worlds
Inc. and a former part owner of Sigal Consulting LLC. He has over ten years of experience in the emerging cannabis industry
across the country. In February 2019, Mr. Fireman was appointed to GenCanna’s board of directors. We believe that Mr.
Fireman’s experience in the emerging cannabis industry and his professional background make him well-qualified to serve
as chairman of the Company’s board of directors (the “Board”).
Jon
R. Levine has served as our chief financial officer, treasurer, and secretary since July 2017 and has been a director since
2016. Mr. Levine has over nine years of experience in the cannabis industry. He brings over 18 years in commercial real estate
development, management and financial services experience. Mr. Levine was a partner at Equity Industrial Partners, a national
commercial real estate management group. He also has past experience in banking at US Trust Bank as an asset based lender
and in the leasing industry with AT&T Financial Services and New Court Financial as a senior credit officer. Mr. Levine also
serves as the CFO of our wholly-owned subsidiary, MariMed Advisors Inc., and in that capacity he has been responsible for the
management and reporting of most of the company’s revenue and financial transactions. Mr. Levine is a former part owner
of Sigal Consulting LLC. We believe that Mr. Levine’s experience in the cannabis industry and his professional background
make him an important part of our management team and make him well-qualified to serve as a member of the Board.
Eva Selhub, M.D. has been a
director since September 2019. Dr. Selhub is a board-certified physician, speaker, scientist, executive leadership and performance
coach, consultant in the field of corporate wellness and resilience, and an author. From August 1997 to November 2016, she served
as an instructor and lecturer of medicine at Harvard Medical School. During this period, Dr. Selhub simultaneously held other
positions at Tufts University, Massachusetts General Hospital, as well as other professional healthcare/medical organizations.
From October 2006 to October 2017, she was a senior physician at Benson Henry Institute for Mind/Body Medicine at Massachusetts
General Hospital. From August 2016 to present, she has been an adjunct scientist of neuroscience at Jean Mayer USDA Human Nutrition
Research Center on Aging at Tufts University, one of six human nutrition research centers supported by the United States Department
of Agriculture. Dr. Selhub received a Bachelor of Arts degree in anthropology from Tufts University in 1989 and her M.D. degree
from Boston University School of Medicine in 1994. Dr. Selhub’s professional experience and background as a physician, scientist
and in mind-body medicine allow her to make valuable contributions to the Board and provide expertise to serve as one
of our directors.
David
Allen has been a director since June 2019. He brings over 22 years of experience as a director, CEO and CFO of public
companies. Presently he serves as Chief Financial Officer of Charlie’s Holdings, Inc. (formerly known as True Drinks Holdings,
Inc.). From September 2018 to May 2019, Mr. Allen served as Chief Financial Officer of Iconic Brands, Inc. Prior to that, from
December 2014 to January 2018, Mr. Allen served as the Chief Financial Officer of WPCS International, Inc. From 2004 to 2017,
Mr. Allen served as Chief Financial Officer of Bailey’s Express, Inc., a privately held trucking corporation, which filed
for Chapter 11 bankruptcy in July 2017. Mr. Allen currently serves as the Chapter 11 Plan Administrator for the bankruptcy case.
From June 2006 to June 2013, Mr. Allen served as the Chief Financial Officer and Executive Vice President of Administration at
Converted Organics, Inc., after serving as audit committee chair of the board of Converted Organics. Mr. Allen is currently an
Assistant Professor of Accounting at Southern Connecticut State University (SCSU), a position he has held since 2017. For the
12 years prior, he was an Adjunct Professor of Accounting at SCSU and Western Connecticut State University. Mr. Allen is a licensed
CPA and holds a bachelor’s degree in Accounting and a master’s degree in Taxation from Bentley College. Mr. Allen’s
background as a director, CEO and CFO of public companies allows him to make valuable contributions to the Board.
Edward
Gildea has been a director since our formation. Since February 2014, Mr. Gildea has been a partner in the law firm Fisher
Broyles LLP. From 2006 to 2013, Mr. Gildea was President, Chief Executive Officer, and Chairman of Converted Organics Inc.,
a publicly held green technology company that manufactured and sold an organic fertilizer, made from recycled food waste. Mr.
Gildea contributes expertise in areas of mergers & acquisitions, strategic planning, funding, business development, and executive
leadership. Mr. Gildea received a B.A. from The College of the Holy Cross and a J.D. from Suffolk University Law School. Mr. Gildea’s
executive business experience was instrumental in his selection as a member of the Board.
Family
Relationships
None
of the directors or executive officers are related by blood, marriage, or adoption.
Legal
Proceedings
None.
Code
of Ethics
We
have adopted a code of ethics (the “Code of Ethics”) that applies to our principal chief executive officer,
principal financial officer, principal accounting officer or controller, or persons performing similar functions. A copy of the
Code of Ethics can be found on our website at https://bit.ly/MRMDethics. The Code of Ethics was designed
with the intent to deter wrongdoing, and to promote the following:
|
●
|
Honest
and ethical conduct, including the ethical handling of actual or apparent conflicts of interest between personal and professional
relationships
|
|
|
|
|
●
|
Full,
fair, accurate, timely and understandable disclosure in reports and documents that we file with, or submit to, the Commission
and in other public communications we make
|
|
|
|
|
●
|
Compliance
with applicable governmental laws, rules and regulations
|
|
|
|
|
●
|
The
prompt internal reporting of violations of the code to an appropriate person or persons identified in the code
|
|
|
|
|
●
|
Accountability
for adherence to the code
|
Director
Independence
The
Board has determined that Messrs. Edward Gildea and David Allen, and Dr. Eva Selhub are independent and represent a majority of
its members. In determining director independence, the Board applies the independence standards set by the Nasdaq Stock Market
(“NASDAQ”). In applying these standards, our Board considers all transactions with the independent directors
and the impact of such transactions, if any, on any of the independent directors’ ability to continue to serve on our Board.
Board
Committees
On August 15,
2019, the Company’s common stock began trading on the OTCQX® Best Market tier of the OTC Markets Group. As
such, with the exception of an audit committee, the Board is not required to establish any committees typically required of companies
listed on the NASDAQ or other stock exchanges. On August 14, 2019, the Board established an audit committee (the “Audit
Committee”) and appointed David Allen and Edward Gildea as committee members. Messrs. Allen and Gildea are both independent
directors as such term is defined in section 5605(a)(2) of the NASDAQ rules. Mr. Allen was also appointed as the chairman of the
Audit Committee and qualifies as the “audit committee financial expert” pursuant to Item 407(d)(5) of Regulations
S-K.
In September 2019,
the Board also established a compensation committee (the “Compensation Committee”) and a corporate governance and
nominating committee (the “Corporate Governance and Nominating Committee”), both consisting entirely of independent
directors as such term is defined in section 5605(a)(2) of the NASDAQ rules. The members of the Compensation Committee are Mr.
Gildea and Dr. Selhub, and the members of the Corporate Governance and Nominating Committee are Messrs. Gildea and Allen and Dr.
Selhub. Mr. Gildea is the chairman of both of these committees.
The Audit Committee, the Compensation Committee and the Corporate
Governance and Nominating Committee have, the responsibilities described below.
Audit
Committee.
The
Audit Committee oversees our accounting and financial reporting processes, internal systems of accounting and financial controls,
relationships with auditors and audits of financial statements. Specifically, the Audit Committee’s responsibilities include
the following:
|
●
|
selecting,
hiring and terminating our independent auditors;
|
|
|
|
|
●
|
evaluating
the qualifications, independence and performance of our independent auditors;
|
|
|
|
|
●
|
approving
the audit and non-audit services to be performed by the independent auditors;
|
|
|
|
|
●
|
reviewing
the design, implementation and adequacy and effectiveness of our internal controls and critical policies;
|
|
|
|
|
●
|
overseeing
and monitoring the integrity of our financial statements and our compliance with legal and regulatory requirements as they
relate to our financial statements and other accounting matters;
|
|
|
|
|
●
|
with
management and our independent auditors, reviewing any earnings announcements and other public announcements regarding our
results of operations; and
|
|
|
|
|
●
|
preparing
the report that the SEC requires in our annual proxy statement.
|
A
copy of the Audit Committee charter is available on our website at www.marimedinc.com.
Compensation
Committee.
The Compensation
Committee assists the Board in determining the compensation of our officers and directors. The Compensation Committee is
comprised entirely of directors who satisfy the standards of independence applicable to Compensation Committee members established
under 162(m) of the Code and Section 16(b) of the Securities and Exchange Act of 1934, as amended (the “Exchange Act”).
Specific responsibilities include the following:
●
approving the compensation and benefits of our executive officers;
●
reviewing the performance objectives and actual performance of our officers; and
●
administering our stock option and other equity and incentive compensation plans.
Nominating
and Corporate Governance Committee.
The Nominating
and Corporate Governance Committee assists the Board by identifying and recommending individuals qualified to become members
of the Board. Specific responsibilities include the following:
|
●
|
evaluating
the composition, size and governance of our Board and its committees and making recommendations regarding future planning
and the appointment of directors to our committees;
|
|
|
|
|
●
|
establishing
a policy for considering stockholder nominees to our Board;
|
|
|
|
|
●
|
reviewing
our corporate governance principles and making recommendations to the Board regarding possible changes; and
|
|
|
|
|
●
|
reviewing
and monitoring compliance with our code of ethics and insider trading policy.
|
Board
Nominations
Prior to the establishment
of the Nominating and Corporate Governance Committee, the entire Board acted as the nominating committee for the purposes of identifying
and recommending director candidates. The Board was responsible for nominating director candidates for the annual meeting of stockholders
each year and considered director candidates recommended by stockholders. These responsibilities have largely been assumed by
the Nominating and Corporate Governance Committee.
In
considering candidates submitted by stockholders, the Nominating and Corporate Governance Committee will take into
consideration the needs of the Board and the qualifications of the candidate. The Nominating and Corporate Governance
Committee may also take into consideration the number of shares held by the recommending stockholder and the length of time
that such shares have been held. To have a candidate considered by the Nominating and Corporate Governance Committee for
recommendation to the Board for nomination as a director candidate, a stockholder must submit the recommendation in writing
and must include the following information: (i) the name of the stockholder and evidence of the person’s ownership of
Company stock, (including the number of shares owned and the length of time of ownership); (ii) the name of the candidate;
(iii) the candidate’s resume or a listing of his or her qualifications to be a director of the Company; and (iv) the
person’s consent to be named as a director if selected and nominated by the Board.
The information
described above must be sent to the Company’s Secretary at 10 Oceana Way, Norwood, Massachusetts 02062, on a timely basis
in order to be considered by the Nominating and Corporate Governance Committee, within the time period prescribed by Rule 14a-8
under the Exchange Act.
Section
16(a) Beneficial Ownership Reporting Compliance
Under
Section 16(a) of the Exchange Act, all executive officers, directors, and each person who is the beneficial owner of more than
10% of the common stock of a company that files reports pursuant to Section 12 of the Exchange Act, are required to report the
ownership of such common stock, options, and stock appreciation rights (other than certain cash-only rights) and any changes in
that ownership with the Commission. Specific due dates for these reports have been established, and we are required to report,
in this Form 10-K, any failure to comply therewith during the fiscal year ended December 31, 2019 or prior fiscal years.
Other
than as set forth in the Delinquent Section 16(a) Reports section below, we believe that all of these filing requirements were
satisfied by the Company’s executive officers, directors and by the beneficial owners of more than 10% of our common stock.
In making this statement, we have relied solely on copies of any reporting forms received by us, and upon any written representations
received from reporting persons that no Form 5 (Annual Statement of Changes in Beneficial Ownership) was required to be filed
under applicable rules of the Commission.
Delinquent Section
16(a) Reports
Edward
Gildea was not timely in the filing of (i) his Initial Statement of Beneficial Ownership of Securities on Form 3 (“Form
3”) during the fiscal year ended December 31, 2014; (ii) one Statement of Changes in Beneficial Ownership on Form 4 (“Form
4”) during the fiscal year ended December 31, 2018, to report option grants; and (iii) two Form 4s during the fiscal
year ended December 31, 2019, to report an option grant and the exercise of options.
Jon
Levine was not timely in the filing of (i) his Form 3 during the fiscal year ended December 31, 2014; (ii) one Form 4 during the
fiscal year ended December 31, 2016, to report an option grant; and (ii) two Form 4s during the fiscal year ended December 31,
2017, to report an option grant and shares issued to him in exchange for his ownership interest in MariMed Advisors Inc.
Robert
Fireman was not timely in the filing of: (i) two Form 4s during the fiscal year ended December 31, 2014, to report an option grant
and shares issued to him in exchange for his ownership interest in Sigal Consulting LLC; (ii) two Form 4s during the fiscal year
ended December 31, 2015, both to report option grants; (ii) one Form 4 during the fiscal year ended December 31, 2016, to report
an option grant; (iii) two Form 4s during the fiscal year ended December 31, 2017, to report an option grant and shares issued
to him in exchange for his ownership interest in MariMed Advisors Inc.; and (iv) one Form 4 during the fiscal year ended December
31, 2019, to report the exercise of options.
ITEM
11. EXECUTIVE COMPENSATION.
The
following table sets forth the compensation paid by the Company during the fiscal periods ended December 31, 2019 and 2018, to
its chief executive officer and other most highly compensated executive officers whose compensation exceeded $100,000 for
the year ended December 31, 2019.
Summary
Compensation Table (1) (2)
Name
and principal position
|
|
Year
|
|
|
Salary
|
|
|
Bonus
|
|
|
Stock
Awards
|
|
|
Option
Awards (3)
|
|
|
All
Other
Compensation
|
|
|
Total
|
|
Robert
Fireman
|
|
2019
|
|
|
$
|
150,000
|
|
|
$
|
0
|
|
|
$
|
0
|
|
|
$
|
0
|
|
|
$
|
0
|
|
|
$
|
150,000
|
|
President
and CEO (4)
|
|
2018
|
|
|
$
|
0
|
|
|
$
|
10,000
|
|
|
$
|
0
|
|
|
$
|
70,164
|
|
|
$
|
0
|
|
|
$
|
80,164
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Jon
R. Levine
|
|
2018
|
|
|
$
|
150,000
|
|
|
$
|
0
|
|
|
$
|
0
|
|
|
$
|
0
|
|
|
$
|
0
|
|
|
$
|
150,000
|
|
Chief
Financial Officer (5)
|
|
2017
|
|
|
$
|
0
|
|
|
$
|
10,000
|
|
|
$
|
0
|
|
|
$
|
86,355
|
|
|
$
|
0
|
|
|
$
|
96,355
|
|
(1)
|
The
compensation reported on the table does not include other personal benefits, the total value of which do not exceed
$10,000.
|
|
|
(2)
|
Pursuant
to the regulations promulgated by the SEC, the table omits columns reserved for types of compensation not applicable to us.
|
|
|
(3)
|
Amounts
represent the fair value of option awards valued on grant date using the Black-Scholes pricing model and recognized over the
vesting period for financial reporting purposes.
|
|
|
(4)
|
Mr.
Fireman was named President and CEO of the Company in July 2017.
|
|
|
(5)
|
Mr.
Levine was named Chief Financial Officer of the Company in July 2017.
|
Stock
Option Grants
The
following table sets forth information as of December 31, 2019 concerning unexercised options, unvested stock and equity
incentive plan awards for the officers named in the Summary Compensation Table.
Outstanding
Equity Awards at Year Ended December 31, 2019
Name
|
|
Number
of
Securities
Underlying
Unexercised
Options
Exercisable
(#)
|
|
Number
of
Securities
Underlying
Unexercised
Options
Unexercisable
(#)
|
|
Equity
Incentive
Plan Awards:
Number of
Securities
Underlying
Unexercised
Unearned
Options
(#)
|
|
Option
Exercise
Price
($)
|
|
Option
Expiration
Date
|
Robert
Fireman
|
|
|
100,000
|
|
|
-
|
|
|
-
|
|
$
|
0.13
|
|
06/29/20
|
Robert
Fireman
|
|
|
100,000
|
|
|
-
|
|
|
-
|
|
$
|
0.14
|
|
12/31/20
|
Robert
Fireman
|
|
|
100,000
|
|
|
-
|
|
|
-
|
|
$
|
0.63
|
|
12/31/21
|
Jon
R. Levine
|
|
|
250,000
|
|
|
-
|
|
|
-
|
|
$
|
0.14
|
|
12/31/20
|
Jon
R. Levine
|
|
|
100,000
|
|
|
-
|
|
|
-
|
|
$
|
0.14
|
|
12/31/20
|
Jon
R. Levine
|
|
|
100,000
|
|
|
-
|
|
|
-
|
|
$
|
0.63
|
|
12/31/21
|
Compensation
of Directors
In September 2019, the Board adopted a resolution to establish a
compensation package for each of the three non-employee members of the Board. Based on certain publicly available surveys and other
related inquiry, such compensation package is comprised of a grant of stock options to purchase 100,000 shares of the Company’s
common stock with a five-year term and an exercise price of $0.99 per share which equaled the fair value the Company’s common
stock on the grant date, and cash compensation of $6,250 per quarter. Previous to this resolution, the Board had ceased compensation
paid to non-employee directors.
The
following table sets forth information concerning the compensation paid to each of our non-employee directors during 2019
for their services rendered as directors.
Name
|
|
Fees
Earned
or
Paid in
Cash
|
|
|
Stock
Awards
|
|
|
Option
Awards
|
|
|
Total
|
|
Eva
Selhub, M.D. (1)
|
|
$
|
0
|
|
|
$
|
0
|
|
|
$
|
63,543
|
|
|
$
|
63,543
|
|
David
Allen (2)
|
|
$
|
0
|
|
|
$
|
0
|
|
|
$
|
63,543
|
|
|
$
|
63,543
|
|
Edward
Gildea (3)
|
|
$
|
0
|
|
|
$
|
0
|
|
|
$
|
63,543
|
|
|
$
|
63,543
|
|
(1)
Dr. Selhub held 100,000 stock options at December 31, 2019.
(2)
Mr. Allen held 100,000 stock options at December 31, 2019.
(3)
Mr. Gildea held 500,000 stock options at December 31, 2019.
ITEM
12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT AND RELATED STOCKHOLDER MATTERS.
The
following table sets forth as of April , 2019, certain information with respect to the beneficial ownership of common stock
by (i) each of our directors and executive officers; (ii) each person known to us who owns beneficially more than 5%
of the common stock; and (iii) all directors and executive officers as a group.
Name and Address of Beneficial
Owner (1)
|
|
Amount & Nature
of Beneficial
Owner
|
|
|
% of Class (2)
|
|
Robert Fireman
|
|
|
23,755,218
|
(3)
|
|
|
9.94
|
%
|
Jon R. Levine
|
|
|
26,706,517
|
(4)
|
|
|
11.17
|
%
|
Eva Selhub, M.D.
|
|
|
100,000
|
(5)
|
|
|
0.04
|
%
|
David Allen
|
|
|
100,000
|
(5)
|
|
|
0.04
|
%
|
Edward Gildea
|
|
|
629,391
|
(6)
|
|
|
0.26
|
%
|
Gerald McGraw
|
|
|
17,729,932
|
|
|
|
7.42
|
%
|
James Griffin
|
|
|
17,179,932
|
|
|
|
7.19
|
%
|
All directors and executive officers as a group (five persons)
|
|
|
51,291,126
|
(7)
|
|
|
21.45
|
%
|
|
(1)
|
The
business address for each person named is c/o MariMed Inc., 10 Oceana Way, Norwood, MA 02062.
|
|
|
|
|
(2)
|
Calculated
pursuant to Rule 13d-3(d)(1) of the Securities Exchange Act of 1934 whereby shares not outstanding which are subject to options,
warrants, rights or conversion privileges exercisable within 60 days are deemed outstanding for the purpose of calculating
the number and percentage owned by a person, but not deemed outstanding for the purpose of calculating the percentage owned
by each other person listed. We believe that each individual or entity named has sole investment and voting power with respect
to the shares of common stock indicated as beneficially owned by them (subject to community property laws where applicable)
and except where otherwise noted.
|
|
|
|
|
(3)
|
Includes
300,000 currently exercisable stock options.
|
|
|
|
|
(4)
|
Includes
450,000 currently exercisable stock options.
|
|
|
|
|
(5)
|
Includes
100,000 currently exercisable stock options.
|
|
|
|
|
(6)
|
Includes
500,000 currently exercisable stock options.
|
|
|
|
|
(7)
|
Includes
1,450,000 currently exercisable stock options
|
ITEM
13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS, AND DIRECTOR INDEPENDENCE.
In 2019, options to purchase
200,000 and 132,499 shares of common stock were exercised by the Company’s CEO and an independent board member,
respectively, at weighted average exercise prices of $0.11 and $0.08 per share, respectively. The independent board
member’s options were exercised on a cashless basis with the exercise prices paid via the surrender of 3,108 shares of
common stock. In 2018, options to purchase 400,000 shares of common stock were exercised by an independent board member at
exercise prices of $0.08 to $0.63 per share on a cashless basis with the exercise prices paid via the surrender of 98,000
shares of common stock.
In 2019 and 2018, options to purchase
117,501 and 200,000 shares of common stock, respectively, were forfeited by board members.
The Company’s current corporate
offices are leased from a company partially owned by the Company’s CFO 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 partially owned by the Company’s CEO and CFO. For the year ended December 31, 2019 and 2018, expenses incurred
under these leases approximated $156,000 and $78,000, respectively.
As described in Note 11 to the financial
statements, the Company’s two mortgages with Bank of New England are personally guaranteed by the Company’s CEO and
CFO.
At December 31, 2019 and 2018, the
Company owed (i) $420,000 and $81,000, respectively, to the Company’s CEO and CFO, (ii) $975,000 and $135,000, respectively,
to two companies partially owned by these officers, and (iii) $60,000 in both periods to two stockholders of the Company. Such
amounts owed are not subject to repayment schedules.
At December 31, 2018, the Company was
owed $120,000 from an entity partially owned by the Company’s CEO and CFO. This amount was entirely offset by payments made
to the Company from the related entity. At December 31, 2019, there were no amounts due from related parties.
ITEM
14. PRINCIPAL ACCOUNTANT FEES AND SERVICES.
Fees
Billed for Audit and Non-Audit Services
The
following table represents the aggregate fees billed for professional audit services rendered by the independent registered public
audit firm of M&K CPAs PLLC for the audit of the annual financial statements for the years ended December
31, 2019 and 2018.
|
|
Year Ended December
31,
|
|
|
|
2019
|
|
|
2018
|
|
Audit fees (1)
|
|
$
|
97,345
|
|
|
$
|
63,400
|
|
Audit-related fees
(2)
|
|
|
-
|
|
|
|
-
|
|
Tax fees (3)
|
|
|
-
|
|
|
|
-
|
|
All other fees (4)
|
|
|
-
|
|
|
|
-
|
|
Total accounting fees and services
|
|
$
|
97,345
|
|
|
$
|
63,400
|
|
(1)
|
Fees
for professional services for the audit of the Company’s annual financial
statements, and for the review of the financial statements included in the Company’s
filings on Form 10-Q, and for services that are normally provided in connection with
statutory and regulatory filings or engagements.
|
|
|
(2)
|
Fees
for assurance and related services in connection with the performance of the audit or
the review of the Company’s financial statements.
|
|
|
(3)
|
Fees for professional services with respect to tax compliance, tax advice, and tax planning.
|
|
|
(4)
|
Fees for permissible work that does not fall within any of the
aforementioned categories of audit fees, audit-related fees, or tax fees.
|
Pre-Approval
Policy for Audit and Non-Audit Services
The
audit committee pre-approves all audit and non-audit services
before an accountant is engaged. All of the services rendered to the Company by its independent registered public
auditors were pre-approved by the audit committee, and prior to the establishment of the audit committee, by the full board.