Accrued Expenses

On April 1, 2017, the Company executed a Separation Agreement and release effective with the Company’s former Chief Executive Officer (CEO). As part of the agreement, the Company agreed to pay the former CEO $580,000 in severance, payable in equal installment over 24 months. In addition, the Company also agreed to continue paying certain expenses for the CEO for 24 months with an estimated cost of $44,000. As a result, the Company accrued the entire $624,000 as of March 31, 2017 which was also reported as part of operating expenses in the accompanying 2017 consolidated statements of operations. As of June 30, 2018 and December 31, 2017, $377,000 and $390,000, respectively, was due to our former CEO which was reported as part of accrued expenses and accounts payable in the accompanying consolidated balance sheet. The Company began deferring payments under the Separation Agreement in January 2018 and is currently in arrears. The former CEO has made demands for all deferred payments and has proposed an amendment to the Separation Agreement that contained terms and conditions that are unacceptable to the Company, and has threatened litigation to recover the deferred payments, future payments due under the Separation Agreement, and damages. The Company has attempted to settle this matter with the former CEO. This matter has not yet been resolved.

Accrued Expenses and Accounts Payable – Related Parties

Accrued expense – related parties consists of accrued salaries due to officers and fees due to members of the Board of Directors. As of June 30, 2018, and December 31, 2017, accrued expenses and accounts payable to related parties amounted to $43,000 and $31,000, respectively.