Bart Mackay, a Board Director of the Company owns 100% of Roen Ventures, LLC through Mackay Ventures LLC (“Mackay Ventures”), which is solely owned by Bart Mackay, which owns a 99% interest in each of Mai Dun Limited, LLC (“Mai Dun”) and Mercia Holdings, LLC (“Mercia”), and Mr. Mackay owns the remaining 1% in each of Mai Dun and Mercia. Mai Dun and Mercia each own a 50% interest in Roen Ventures, LLC. For the years ended December 31, 2015 and 2014, Mr. Mackay received $1,500 and $500, respectively, in fees paid for services provided to the Company.

As of December 31, 2013, the Company owed Roen Ventures, LLC a total of $6,092,069 under a Promissory Note (Note 11). Under the terms of the note, Roen Ventures, LLC had the option to convert the balance owed, up to $6,000,000 into common shares of the Company at a conversion price of $0.60 per share. In addition, the Company owed Roen $161,583 in accrued interest under the note at December 31, 2013 and paid interest totaling $187,723 in January 2014. The note was converted during 2014 (Note 12).

Michael J. Mona, Jr., the President and Chief Executive Officer of the Company previously held a 50% interest in Roen Ventures, LLC which he subsequently sold to Mr. Mackay during 2013.

For the years ended December 31, 2015 and 2014, the Company recognized sales to the following related parties:

At December 31, 2015, the Company had three notes receivable totaling $617,681, two of which are from sale of inventory to MediJane Holdings and MJNA, and the third note from a litigation settlement with MJNA. At December 31, 2014, the Company had a note receivable from Dixie Botanicals of $335,173, a company 60% owned by MJNA (Note 3).

We recognized litigation revenue of $756,714 for the year ended December 31, 2015 related to the Settlement Agreement. Pursuant to the Settlement Agreement, the MJNA Parties paid the Company the sum of $150,000 and delivered the Settlement Note. In November 2015, MJNA failed to timely pay the fourth payment installment under the Settlement Note and therefore defaulted on the Settlement Note. On December 3, 2015, the Company foreclosed on the Settlement Note collateral consisting of Company common stock. The foreclosure resulted in the Company obtaining rights to receive 624,750 shares of our common stock in full satisfaction of the remaining principal and accrued interest balance of the Settlement Note. At the foreclosure date, the Company took immediate possession of 500,000 shares of our common stock held in escrow. At December 31, 2015, the Company was arranging to obtain the remaining 124,750 shares of our common stock. The Settlement Note balance of $60,351 at December 31, 2015 represents the fair value at the foreclosure date of the remaining 124,750 shares (Note 3).

We also recognized revenue related to the sale of our products to MJNA of $2,002,910 for the year ended December 31, 2015 and received the MJNA Promissory Note in the principal amount $2,002,910 that was to be paid in 12 equal installments beginning on November 3, 2015 in exchange for the product shipped to MJNA. The MJNA Promissory Note is secured by 2,000,000 shares of the Company’s common stock held in escrow. MJNA has failed to make any payments on the MJNA Promissory Note and is in default. The MJNA Promissory Note is likely not collectible, and the probable form of collection is for the Company to foreclose on the 2,000,000 shares of Company common stock. Bad debt expense of $1,522,921 related to the write down of the MJNA Promissory Note was recognized for the year ended December 31, 2015.

During the years ended December 31, 2015 and 2014, the Company paid $3,948,304 and $9,077,025, respectively, to a stockholder of the Company who is a supplier of hemp oil and hemp to the Company.