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Related Party Transactions
9 Months Ended
Sep. 30, 2017
Related Party Transactions [Abstract]  
Related Party Transactions

Included in advances – related parties are amounts owed to the Company’s former CFO and Chairman of the Board of $50,000 at September 30, 2017 and December 31, 2016. Also included in advances – related parties are amounts owed to Michaela Ott, stockholder and former CEO of the Company, of 20,000 Euros, ($23,626 as September 30, 2017) and 75,000 Euros ($88,596 as of September 30, 2017) related to two short term bridge loans. The Company has made arrangements to settle these obligations to Ms. Ott evenly over a 24 month period, starting on October 31, 2017. In addition, the Company settled obligations related to accrued salaries, vacation and related expenses totaling $152,000 owed to Michael Ott, stockholder and former COO of the Company and Ms. Ott. The Company made an upfront payment to each Mr. and Ms. Ott of $6,750 and will pay the remaining amount owed over a period of 18 months scheduled to start in October 2017.  The Company is reviewing additional agreements to settle the debt owed from the US entity where the wages were earned versus the German entity. The Company is working with Mr. and Ms. Ott to get these payments paid as of the date of this filing due to the changes requested by Michaela and Michael Ott.  

 

The loans noted above are interest-free loans. The Company paid Mr. and Ms. Ott the agreed upon severance payments however the upfront payment was paid in November 2017. Total severance payments totaled $118,810. Mr. Ott and Ms. Ott remain as Directors of the Company and continue to work with the Company.

 

On June 30, 2017, one secured noteholder, an affiliate of a member of our Board of Directors, converted a $50,000 secured promissory note plus accrued interest of $8,417 into 116,833 shares of common stock. The Company issued 50,000 warrants to purchase shares of common stock at a price of $0.50, with a term of five years. See further discussion related to secured promissory notes in Note 4.

 

On February 12, 2016, one of the Purchasers of a $100,000 secured promissory note and holder of 50,000 (increased to 100,000 warrants as of December 31, 2016) warrants to purchase shares of common stock at the time of his election, was elected to the Board of Directors to serve as Director and Chairman of the Company’s audit committee. Total warrants due to this director related to the above secured promissory notes for original issuance, modifications, default period and the modification period at September 30, 2017 was 260,000 warrants to purchase common stock. On September 27, 2017, the remaining balance of $66,667 was converted into a subordinated convertible note discussed in Note 4 of $68,376 subordinated convertible debt and received 52,597 warrants to purchase shares of common stock at $0.60 a share. The Company issued 48,000 shares of common stock for $24,000 of accrued interest at $0.50. See relative fair value and additional discussion in Note 4.

 

At September 30, 2017 and December 31, 2016, the Company has accrued $70,000 and $55,000, respectively to the above Director and Chairman of the audit committee for services for 2016 as a member of the Board of $35,000 and an additional $20,000 for audit committee services for the year ended December 31, 2016 and $15,000 for the audit committee services for the nine months ended September 30, 2017.

 

Included in accounts payable and accrued expense includes $18,508 due to its current CFO’s company for past services performed as a consultant to the Company at September 30, 2017.

 

The Company has accrued wages and vacation of approximately $1.1 million payable to the former CFO at September 30, 2017 and December 31, 2016. In August 2017, the Company offered a settlement for the legal matter with a settlement term sheet whereby a formal settlement agreement and forbearance agreement must be entered with the court. Pursuant to the settlement proposal, the Company is to issue a combination of stock, warrants and payments over a period of up to three years. See Note 8 for further discussion regarding the legal proceedings with the Company’s former CFO.