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Related Party Transactions
 12 Months Ended
Dec. 31, 2025
Related Party Transactions [Abstract]  
RELATED PARTY TRANSACTIONS

NOTE 13 – RELATED PARTY TRANSACTIONS

 

On January 16, 2024, the Company issued 39,211 shares of common stock to Mr. Smith. The shares were issued for bonus compensation of $300,000 that was accrued as of December 31, 2023 (see Note 13). 

 

On January 16, 2024, the Company issued 78,421 shares of common stock to Mr. Yakov. The shares were issued for bonus compensation of $600,000 that was accrued as of December 31, 2023 (see Note 13).

 

On January 24, 2024, Mr. Yakov exercised options to purchase a total of 118,792 shares of common stock for $4,079. 

 

On January 24, 2024, Mr. Smith exercised options to purchase a total of 38,107 shares of common stock for $2,761.

 

During the years ended December 31, 2025 and 2024, the Company accrued $30,630 and $124,903, respectively, for dividends on the Series A preferred stock held by Mr. Yakov. On June 2, 2025, Mr. Yakov converted $529,000 of the accrual into 529,000 shares of common stock and forgave the remaining $45,139, which was credited to additional paid in capital. As of December 31, 2025 and 2024, total accrued dividends on the Series A preferred stock due to Mr. Yakov is $0 and $543,509, respectively.

On April 8, 2024, the Company entered into Amendment No. 1 (the “Amendment”) to the Employment Agreement with Mr. Yakov (the “Yakov Agreement”). The Amendment corrected a ministerial error in the terms relating to the exercise price of stock options awarded and automobile allowance for Mr. Yakov. The Amendment affirmed that the exercise price of stock options issued under the Agreement (the “Stock Options”) shall have a per share exercise price equal to One Cent ($0.01) and expire ten years after the date of grant. Each Stock Option granted shall become exercisable as follows: 50% upon the grant date, then 25% upon each of the second and third anniversary of the date on which it is granted. In addition, the notices provision of the Yakov Agreement was amended to the reflect the current business address of the Company.

 

On August 12, 2024, the Company entered into an agreement with Yakov Holdings, LLC, an entity controlled by Mr. Yakov whereby Yakov Holdings, LLC committed to loan to the Company up to Five Million Dollars ($5,000,000) (the “Yakov Holdings, LLC Loan”). The Yakov Holdings, LLC Loan is revolving in nature, allowing the Company to borrow, repay, and re-borrow amounts under the terms and conditions set forth herein, provided that the total outstanding amount shall not exceed Five Million Dollars ($5,000,000). The interest rate of the Yakov Holdings, LLC Loan is 12% and it matures on August 12, 2025. On August 12, 2025, Yakov Holdings, LLC agreed to extend the note to mature on August 12, 2026.  In addition, the Yakov Holdings, LLC Loan is secured by a first priority security interest for the benefit of Yakov Holdings, LLC over all of the assets of the Company. As of December 31, 2025 and 2024, the amount due to Yakov Holdings, LLC is $167,315 and $1,203,960, respectively.

 

On April 21, 2025 the Company agreed to convert the certain obligations owed to Ronny Yakov, Yakov Holdings, LLC and Patrick Smith at $1.00 per share. The common stock price was $1.04 per share. As a result, the Company recorded a loss on conversion of $175,763 during the year ended December 31, 2025. The following is a summary of the obligations subject to conversion:

 

Yakov Holdings, LLC Loan   $ 1,492,152  
Yakov accrued compensation     1,062,500  
Yakov accrued bonus     300,000  
Accrued interest     280,377  
      3,135,029  
         
Smith loan     19,000  
Smith accrued compensation     510,417  
Smith accrued bonus     150,000  
Smith accrued interest     50,642  
      730,059  
         
Total obligation converted   $ 3,865,088  
         
Shares issued     3,865,088  
Conversion price   $ 1.04  
    $ 4,040,851  
         
Loss on modification   $ 175,763  

 

On the grant date of April 22, 2025, the share price was set at $1.04 per share. The conversion price was set at $1.00 per share. The excess of the fair value of the shares to be issued over the stated amount of the obligation was recorded as a loss on conversion of $175,763. 

 

Refer to Note 8 for options to purchase shares of common stock issued to related parties.

 

On June 2, 2025, Mr. Yakov converted the 1,021 shares of Series A held into 1,021,000 shares of common stock and the accrued dividends of $529,000 into 529,000 shares of common stock. The excess of the accrued dividend of $574,139 over the accrued dividend converted of $529,000 was forgiven and reflected as a contribution to equity of $45,139.

 

On June 2, 2025, Mr. Yakov converted $1,772,529 of principal and interest into 1,772,529 shares of common stock. As of December 31, 2025 and 2024, the amount due to Yakov Holdings, LLC is $167,315 and $1,203,960, respectively.

During the years ending December 2025 and 2024, Mr. Yakov made payments on behalf of the Company in the amount of $495,429 and $1,191,282, respectively.

 

On June 2, 2025, Mr. Smith converted $69,642 of principal and interest into 69,642 shares of common stock.

 

On June 2, 2025, Mr. Smith converted $510,417 and $150,000 of accrued salary and bonus, respectively, into 660,417 shares of common stock.

 

On June 2, 2025, Mr. Yakov converted $1,062,500 and $300,000 of accrued salary and bonus, respectively, into 1,362,500 shares of common stock.

 

During the year ending December 31, 2025, the Company issued 35,000 shares of common stock to its CFO for services. The shares were valued at $2.02, the closing stock price on the date of grant, for total non-cash expense of $70,700.

 

During the year ending December 31, 2025, the Company issued an additional 50,000 shares of common stock to its CFO for services. The shares were valued at $1.26, the closing stock price on the date of grant, for total non-cash expense of $63,000.

 

During the year ended December 31, 2025, the Company issued 32,000 shares of common stock to its directors for services. The shares were valued at $2.02, the closing stock price on the date of grant, for total non-cash expense of $64,640.

 

On October 14, 2025, the Company’s Board of Directors approved, and on November 14, 2025 the Company entered into, an amended and restated employment agreement (the “Employment Agreement”) with its Chairman, President and Chief Executive Officer, Ronny Yakov (the “Executive”). The Employment Agreement supersedes the prior agreement dated January 3, 2022 and has an initial term through December 31, 2030, with automatic one-year renewals thereafter unless terminated in accordance with its terms.

 

Pursuant to the Employment Agreement, the Executive is entitled to an annual base salary of $800,000, subject to annual increases of 3% beginning January 1, 2026. The Executive is also eligible to receive an annual performance-based bonus with a target amount of $400,000, which is likewise subject to annual increases of 3%. In addition, the Executive is eligible to receive transaction-based compensation, including (i) an acquisition bonus equal to 2% of the purchase price of certain qualifying acquisitions and (ii) milestone bonuses generally equal to 1% of the value of specified corporate transactions or events, as defined in the Employment Agreement.

 

The Employment Agreement provides for annual equity awards consisting of stock options to purchase not less than 200,000 shares of the Company’s common stock, with an exercise price of $0.01 per share, subject to vesting conditions. All unvested equity awards will accelerate upon a change in control of the Company.

 

The Executive is also entitled to participate in the Company’s benefit plans, receive a monthly automobile allowance of $3,500, and be reimbursed for reasonable business expenses.