7.	Commitments and Contingencies

Office Space Rental

The Company leases office and laboratory facilities in Charlottesville, Virginia. Rent expense related to the Company's operating lease for the

three

months ended

June

30,

2018

and

2017

was approximately

$28,000

and

$35,000,

respectively. Rent expense for the

six

months ended

June

30,

2018

and

2017

was approximately

$56,000

and

$52,000,

respectively. The Company will continue to recognize rent expense on a straight-line basis over the lease period and will accrue for rent expense incurred but

not

yet paid. Future minimum rental payments under the Company's non-cancelable operating lease at

June

30,

2018

was as follows:

	Rental Commitments
2018	$	56,519
2019		114,409
2020		116,464
2021		118,519
2022		39,735
Total	$	445,646

Arrangement with Clinical Research Organization

July 5, 2017,

the Company entered into a Master Services Agreement ("MSA") with a contract research organization ("CRO") to provide clinical trial services for individual studies and projects by executing individual work orders. The MSA and associated work orders are designed such that payments are to be made in advance of the work to be performed. The Company recognized research and development expenses related to this MSA of

$0.4

million and

$1.2

million during the

three

and

six

months ended

June 30, 2018.

As of

June 30, 2018,

there was

$0.5

million of prepaid research and development costs that are estimated to be recognized during

2018.

Legal Proceedings

August 7, 2014,

a complaint was filed in the Superior Court of Los Angeles County, California by Paul Feller, the Company’s former Chief Executive Officer under the caption

Paul Feller v. RestorGenex Corporation, Pro Sports & Entertainment, Inc., ProElite, Inc. and Stratus Media Group, GmbH

(Case

No.

BC553996

). The complaint asserts various causes of action, including, among other things, promissory fraud, negligent misrepresentation, breach of contract, breach of employment agreement, breach of the covenant of good faith and fair dealing, violations of the California Labor Code and common counts. The plaintiff is seeking, among other things, compensatory damages in an undetermined amount, punitive damages, accrued interest and an award of attorneys’ fees and costs. On

December 30, 2014,

the Company filed a petition to compel arbitration and a motion to stay the action. On

April 1, 2015,

the plaintiff filed a petition in opposition to the Company’s petition to compel arbitration and a motion to stay the action. After a hearing for the petition and motion on

April 14, 2015,

the Court granted the Company’s petition to compel arbitration and a motion to stay the action. On

January 8, 2016,

the plaintiff filed an arbitration demand with the American Arbitration Association.

arbitration hearing has yet been scheduled. A dismissal hearing is scheduled for

November 19, 2018.

The Company believes this matter is without merit and intends to defend the arbitration vigorously. Because this matter is in an early stage, the Company is unable to predict its outcome and the possible loss or range of loss, if any, associated with its resolution or any potential effect the matter

may

have on the Company’s financial position. Depending on the outcome or resolution of this matter, it could have a material effect on the Company’s financial position.