Quarterly report pursuant to Section 13 or 15(d)

Related Party Transactions

Related Party Transactions
9 Months Ended
Sep. 30, 2019
Related Party Transactions  
Related Party Transactions

9.    Related Party Transactions

Until March 11, 2019, the Company leased office space, on a month-to-month basis, in a building owned by Union News of New Haven, Inc., an entity that is controlled and 20%-owned by Jeffrey C. Villano, the Company’s co-CEO. Rent and other facility related charges paid by the Company to Union News for the nine- and three-month periods ended September 30, 2019 were $4,500 and $-0-, respectively, and for the nine- and three-month periods ended June 30, 2018 were $9,000 and $4,500, respectively. In March 2019, the Company moved to its operations to a new Company-owned building.  Accordingly, rental payments are no longer due to JJV.

Prior to the Exchange, from time to time, SCP would lend funds to JJV (the “JJV Loans”), which JJV would then use to acquire troubled assets from third parties who were not existing SCP borrowers. Those properties are then mortgaged to secure the JJV Loans. As part of the Exchange, the Company acquired the notes evidencing these loans from SCP. The principal balance of the JJV Loans at September 30, 2019 was $-0-, compared to $879,457 at December 31, 2018. During the quarter ended September 30, 2019, both of the JJV Loans were assigned to the Company so that the underlying borrower is directly liable to the Company.  Interest earned on these mortgage loans for the three and nine months ended September 30, 2019 was $5,812 and $40,686, respectively. For the three- and nine-month periods ended September 30, 2018 interest payments on the JJV Loans were $26,384 and $85,388, respectively.

In 2018 the Company sold two notes, having an aggregate original principal amount of $1,717,000, to a shareholder at par. In the first quarter of 2019, the Company sold a third note, having an aggregate original principal amount of $500,000, to the same shareholder at par. All three notes are secured by commercial properties. The Company continued to service the notes on behalf of the purchaser until paid. In December 2018, the Company reacquired one of the notes, having an original principal amount of $1,200,000, and in 2019 reacquired the other two notes, having an aggregate principal amount, $1,017,000. The balance owed to the purchaser for the notes, $1,200,000 at December 31, 2018, is characterized as due to shareholder on the Company’s balance sheets for the relevant periods. On July 26, 2019 all principal and interest due to the shareholder were paid in full.

At September 30, 2019 and December 31, 2018, amounts owed by JJV to the Company were $22,794 and $22,977, respectively, and is reflected as other receivables on the Company’s balance sheet.

For the nine months ended September 30, 2019 and 2018, the wife of one of our executive officers was paid $75,000 and $56,250, respectively, for accounting and financial reporting services provided to the Company.