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Related Party Transactions
9 Months Ended
Sep. 30, 2019
Related Party Transactions [Abstract]  
Related Party Transactions

Note 5. Related Party Transactions

 

As compensation for his service on the Board, Dr. Kirkland receives an annual retainer of $6,000, payable in equal quarterly installments in arrears. Additionally, on May 11, 2017, the Company granted to Dr. Kirkland an incentive stock option to purchase up to 75,000 shares of the Company’s common stock at an exercise price of $4.20 per share. The options vested 50% on the date of grant and 50% one year hence on May 11, 2018. The options may be exercised on a cashless basis. Compensation expense of $0 and $43,163 was recorded with respect to the May 11, 2017 grant during the three and nine months ended September 30, 2018, respectively. No compensation costs were recorded in 2019 due to completion of vesting on May 11, 2018.

 

In connection with the Company’s anticipated FDA and other regulatory filings, the Company engaged StemCell Systems to provide it with prototypes and related documents. Pursuant to these engagements the Company incurred expenses of $100,000 and $14,315 during the three months ended September 30, 2019 and 2018, respectively, and $223,175 and $39,499 during the nine months ended September 30, 2019 and 2018, respectively. Dr. Gerlach, from whom the Company purchased the CellMistTM System technologies, is a principal of StemCell Systems.

 

Dr. Gerlach is entitled to payments for consulting services. During the three months ended September 30, 2019 and 2018, the Company recognized expenses related to Dr. Gerlach services of $0 and $0, respectively, and $0 and $7,020 during the nine months ended September 30, 2019 and 2018, respectively. Accounts payable to Dr. Gerlach amounted to $0 at September 30, 2019 and December 31, 2018. Additionally, during the three months ended September 30, 2019, Jörg Gerlach exercised the remaining 240,000 Series A warrants on a cashless basis resulting in the issuance of 176,842 shares of common stock.

 

On August 1, 2013, the Company entered into a consulting agreement, as amended on May 1, 2016, with Jatinder Bhogal, an individual owning in excess of 5% of our issued and outstanding shares of common stock, to provide consulting services to the Company through his wholly owned company, Vector Asset Management, Inc. (“VAM”). Pursuant to the consulting agreement Vector assisted the Company with identifying subject matter experts in the medical device and biotechnology industries and assisted the Company with the ongoing research, development, patents, and strategic positioning of its technologies. Pursuant to an amendment dated May 1, 2016, the VAM monthly consulting fee was increased from $5,000 to $6,800. On June 22, 2018, the Company and VAM entered into an Executive Consulting Agreement (“ECA”) whereby Mr. Bhogal will serve as the Company’s Chief Operating Officer. The ECA supersedes the prior consulting agreement. Pursuant to the ECA, VAM will receive compensation of $120,000 per year. For consulting services provided by VAM, during the three months ended September 30, 2019 and 2018, the Company recognized expenses of $30,000 and $30,000, respectively, and $90,000 and $73,467 during the nine months ended September 30, 2019 and 2018, respectively.

 

During the year ended December 31, 2018, the Company was offered executive office space located at 9375 E. Shea Blvd., Suite 107-A, Scottsdale, AZ 85260 for consideration of $1 per year. The executive office space is owned indirectly by Harmel S. Rayat, the Company’s majority shareholder and Chairman and CEO.

 

On November 26, 2018, the Company entered into Subscription Agreements with Kalen Capital Corporation (“KCC”) for the purchase and sale of 10,335,000 Units of the Company's equity securities at a price of $1.50 per Unit, pursuant to a private placement offering conducted by the Company for (i) aggregate cash proceeds of $14,407,500 and (ii) conversion of $1,095,000 principal amount of outstanding loan indebtedness. The unpaid interest related to the loan indebtedness totaled $167,497 and was paid in July 2019. Each Unit consisted of: (i) one (1) share of common stock; and (ii) one (1) Series I Stock Purchase Warrant to purchase one (1) share of common stock at a price of $2.00 per share for a period of seven (7) years commencing on the date the Warrants were first issued. The Series I Warrants do not have a cashless exercise provision. KCC does not have any registration rights with respect to the shares comprising a part of the Units or issuable upon exercise of the Series I Warrants.

 

On June 3, 2019, the Company entered into the Grant with the University. During the three and nine months ended September 30, 2019, the Company made payments totaling $0 and $62,500, respectively. At September 30, 2019, the balance remaining under this gift was $187,500. Dr. Gerlach, from whom the Company purchased the SkinGunTM technology, is a professor at the University. See Note 4 above for additional information.