Note 12. Related Party Transactions

Revenue and Accounts Receivable

The Company recognized revenue of $1,042,628 and $619,324 for the years ended December 31, 2022 and 2021 and accounts receivable of $168,170 and $443,282 and contract liability of $14,982 and $63,411 as of December 31, 2022 and 2021, respectively, from contracts entered into by Craig Technical Consulting, Inc, its majority shareholder, and subcontracted to the Company for four customers.

Accounts Payable

As of December 31, 2022, and 2021, the Company owed $566,636 and $588,797 to Craig Technical Consulting, Inc. Advances are unsecured, due on demand and non-bearing-interest.

Note Payable – Related Party

On May 1, 2021, the Company converted $4 million advanced to the Company by Craig Technical Consulting, Inc., our principal shareholder, into a related party Note Payable. The remaining $ 3,473,693, that was advanced to the Company was forgiven and recorded as contributed capital. The principal balance of this note outstanding (together with any accrued, but unpaid interest thereon) shall bear interest at a per annum interest rate equal to the long term applicable federal rate (as such term is defined in Section 1274(d) of the Internal Revenue Code of 1986, as amended), and matures on September 30, 2025, and shall be repaid in the amount of $250,000 every quarter for four (4) years beginning on Oct 1, 2021.

On December 1, 2021, in connection with the assumption of the Decathlon Note, the Company reduced the principal of the Note Payable – related party by recording a reclassification of $1,106,164 from Note Payable – related party to Note payable – non- current (Decathlon note) and recorded forgiveness of note payable of $293,836.

During the years ended December 31, 2022 and 2021, the Company recorded interest expense of $0 and $54,145, respectively, recorded in accounts payable accrued interest – related party.

During the year ended December 31, 2022, the Company repaid $797,505 and the note payable and accrued interest was forgiven by Craig Technical Consulting, Inc. The Company recorded debt forgiveness of note payable and accrued interest of $1,624,755 to additional paid in capital.

As of December 31, 2022, and 2021, the Company had note payable – related party current of $0 and $1,000,000 and non-current of $0 and $1,350,000, respectively.

Cost of Revenue

For the year ended December 31, 2022 and 2021, the Company recorded cost of revenue to Craig Technical Consulting, Inc. of $136,363 and $0, and general and administrative expense of $12,267 and $0, respectively

Professional Service Agreements

A Professional Services Agreement, effective November 15, 2021, was made, between the Company and Craig Technical Consulting, Inc. The period of performance for this Agreement was December 1, 2021, through November 30, 2022. The agreement was amended and the term of agreement was extended to November 30, 2023.

During the year ended December 31, 2022 and 2021, the Company recorded professional services of $160,475 and $7,054, respectively.

Sublease

On August 1, 2021, the Company entered into a Sublease Agreement with its related party Majority Shareholder (“Sublandlord”), whereby the Company shall sublease certain offices, rooms and shared use of common spaces located at 150 Sykes Creek Parkway, Merritt Island, FL. The Lease is a month-to-month lease and may be terminated with 30 day’s notice to the Sublandlord. The monthly rent shall be $4,570 from inception through January 31, 2022, $4,707 from February 1, 2022 to January 31, 2023 and $4,847 from February 1, 2023 to January 31, 2024. During the years ended December 31, 2022 and 2021, the Company recorded $56,349 and $22,850 to lease expenses.