Related Party Transactions

6 Months Ended

Jun. 30, 2013

Related Party Transactions

Note 7. Related Party Transactions

On January 12, 2012, Mr. Cacace resigned from the positions of President, Chief Executive Officer, Chief Financial Officer and Director of the Company and Mr. Derek Cooper was appointed to the positions of President, Chief Executive Officer, Chief Financial Officer and Director of the Company. On June 18, 2012, Mr. Derek Cooper resigned as the Company’s President, Chief Executive Officer, Chief Financial Officer and Director.

Effective as of June 19, 2012, Mr. Joseph Sierchio, one of the Company’s directors, was appointed as its Acting Interim President and Chief Executive Officer; and effective as of June 27, 2012, Ms. Janet Bien was appointed as the Company’s Chief Financial Officer.

On June 20, 2013, Mr. Joseph Sierchio, resigned as the Acting Interim President and Chief Executive Officer and remains a director; Ms. Rhonda B. Rosen was appointed to serve as the President and Chief Executive Officer and a member of our Board and entered into an employment agreement for a two year term (the “Rosen Employment Agreement”), subject to the earlier termination provisions contained therein. Pursuant to the terms of the Rosen Employment Agreement, Ms. Rosen is paid an annual salary of $120,000. In addition to Ms. Rosen’s salary, she is eligible to receive a cash bonus to be determined by our Board, in their sole discretion. The Rosen Employment Agreement also provides Ms. Rosen with a monthly stipend of no more than $1,500 to cover medical insurance premiums until such time as the Company can make available an alternative medical insurance plan.

In the event Ms. Rosen’s employment with the Company is terminated other than “For Cause,” as defined in the Rosen Employment Agreement, Ms. Rosen is eligible to receive a severance payment equal to one-half (1/2) of her monthly salary in effect on the date of termination for every one (1) month period that she has been employed by the Company after she has been employed for six (6) months pursuant to the Employment Agreement up to a maximum aggregate payment equal to three (3) monthly payments.

Subject to her entry into a non-statutory stock option agreement with us, Ms. Rosen was issued incentive stock options to purchase up to 350,000 shares of the Company’s common stock at an exercise price of $0.72 per share, the closing price of the Company’s common stock as quoted on the OTC Markets Group Inc. QB tier on June 19, 2013, pursuant to the Incentive Plan. Subject to her continued employment by the Company, 150,000 of the option shares vest in equal installments on the first, second and third anniversary of Ms. Rosen’s employment and the remaining 200,000 option shares vest upon Ms. Rosen meeting certain milestones, as determined by the Board in its sole discretion.

On August 1, 2013, the Board appointed Dr. Kenneth Kirkland to serve as a member of the Board. Prior to this appointment, Dr. Kirkland resigned from Company’s Advisory Board. See “Note 6. Commitments and Contingencies.”

As compensation for their service on the Board, Dr. Kirkland and Mr. Sierchio will receive an annual retainer of $6,000, payable in equal quarterly installments in arrears and prorated for any partial quarters of service. Additionally, subject to their entering into a non-statutory stock option agreement with us, Dr. Kirkland and Mr. Sierchio were each issued incentive stock options to purchase up to 20,000 shares of our common stock at an exercise price of $0.65 per share, the closing price of the Company’s common stock as quoted on the OTC Markets Group Inc. QB tier on July 31, 2013, pursuant to the Incentive Plan. Subject to their continued service as a member of the Board, 10,000 of the option shares vest immediately and 10,000 of the option shares vest on the first anniversary of date of grant.

For the three and six month periods ended June 30, 2013, fees of $10,867 (2012: $7,500) and $18,067 (2012: $16,689), respectively, were paid or are due to officers of the Company. Included in accounts payable - related parties at June 30, 2013 is $6,067 (December 31, 2012: $7,200) for fees due to officers.

For the three and six month periods ended June 30, 2013 and 2012, advisory board fees of $6,000 (2012: $0) and $9,000 (2012: $2,000), respectively, were paid to non-officer directors of the Company. Included in accounts payable – related parties at June 30, 2013 is $2,000 (December 31, 2012: $0) for advisory fees.

For the three and six month periods ended June 30, 2013, legal fees of $45,965 (2012: $32,222) and $84,939 (2012: $44,966) were paid or are due to a company controlled by our director, Mr. Sierchio. Included in accounts payable - related parties at June 30, 2013 is $22,500 (December 31, 2012: $2,438) for legal fees.