Quarterly report pursuant to Section 13 or 15(d)

Related Party Transactions

v2.4.0.6
Related Party Transactions
6 Months Ended
Jun. 30, 2012
Related Party Transactions [Abstract]  
Related Party Transactions Disclosure [Text Block]

6. Related Party Transactions

 

Prior to June 30, 2006, the Company’s founding stockholder and Chief Executive Officer, Dr. John Kovach, had periodically made advances to the Company to meet operating expenses. Such advances are non-interest-bearing and are due on demand. At June 30, 2012 and December 31, 2011, stockholder advances totaled $92,717.

 

The Company’s office facilities have been provided without charge by Dr. Kovach. Such costs were not material to the financial statements and, accordingly, have not been reflected therein.

 

In view of the Company’s development stage status and limited resources, Dr. Kovach did not receive any compensation from the Company prior to 2011. However, on February 18, 2011, the Company’s Board of Directors approved a salary to Dr. Kovach of $5,000 per month beginning March 15, 2011.  In connection therewith, Dr. Kovach was paid a salary of $15,000 and $15,000 for the three months ended June 30, 2012 and 2011, $30,000 and $17,500 for the six months ended June 30, 2012 and 2011, respectively, and $77,500 for the period from August 9, 2005 (inception) to June 30, 2012 (cumulative).

 

Dr. Kovach is not involved in other business activities but could, in the future, become involved in other business opportunities that become available. Accordingly, he may face a conflict in selecting between the Company and his other business interests. The Company has not yet formulated a policy for the resolution of such potential conflicts.

 

On April 7, 2010, the Company entered into an agreement with Dr. Mel Sorensen, a member of the Company’s Board of Directors, for consultation and advice regarding the preparation and strategy for obtaining FDA allowance of a clinical trial of the lead compound of the LB-100 series. The initial term of the agreement was for one year and provided for an annual fee of $25,000, payable in two installments of $12,500 on April 15, 2010 and October 15, 2010. On February 18, 2011, the Company’s Board of Directors approved a one-year extension of the agreement for an additional annual fee of $25,000, payable in two installments of $12,500 on April 15, 2011 and October 15, 2011. On May 21, 2012, the Company entered into a new agreement with Dr. Mel Sorensen for continuing consultation and advice. The term of the new agreement was for the period May 21, 2012 to May 31, 2013 and provided for a fee of $25,000, payable in two installments of $12,500 on May 21, 2012 and December 1, 2012. All installments have been paid as due. Consulting and advisory fees paid pursuant to these agreements were $3,125 and $6,250 for the three months ended June 30, 2012 and 2011, respectively, $9,375 and $12,500 for the six months ended June 30, 2012 and 2011, respectively, and $52,083 for the period from August 9, 2005 (inception) to June 30, 2012 (cumulative), and are included in research and development costs in the Company's condensed consolidated statements of operations.

 

On March 17, 2010, the Company engaged Theradex Systems, Inc. to assist the Company in bringing LB-100 through the FDA approval process and to provide other services. Total fees for services paid to Theradex were $73,743 and $-0- for the three months ended June 30, 2012 and 2011, respectively, $127,930 and $-0- for the six months ended June 30, 2012 and 2011, respectively, and $143,855 for the period from August 9, 2005 (inception) to June 30, 2012 (cumulative), and are included in research and development costs in the Company's condensed consolidated statements of operations. Dr. Robert B. Royds, the founder, Chairman of the Board and Medical Director of Theradex Systems, Inc., was appointed to the Company’s Board of Directors on May 2, 2011.

 

Share-based compensation involving members of the Company’s Board of Directors are described at Note 7.