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Related Party Transactions
 3 Months Ended
Mar. 31, 2012
Related Party Transactions

9.   Related Party Transactions

 

The Company entered into an Investment Banking Advisory Services agreement in November 2007 with MDB Capital Group, LLC (“MDB”), and the parties extended this agreement indefinitely in April 2009.  The agreement may be terminated by either party upon 30-days written notice. The Company has not paid, nor is it currently obligated to pay, any fees to MDB pursuant to this agreement.

 

The Company has a securities investment account with MDB, consisting of (a) available-for-sale investments totaling $2,306,651, that include short-term federal securities of $15,457 and certificates of deposit and corporate bonds totaling $2,291,194, at March 31, 2012, and (b) available-for-sale investments totaling $2,491,773, that included short-term federal securities of $15,154 and certificates of deposit and corporate bonds totaling $2,476,209, at December 31, 2011.

 

Mr. Christopher Marlett, the Chief Executive Officer and director of the Company, is also the Chief Executive Officer and a director of MDB. Mr. Gary Schuman, who is the Chief Financial Officer of the Company, is also the Chief Financial Officer and Chief Compliance Officer of MDB.  The Company reimburses MDB for Mr. Schuman’s services in the amount of $3,000 per month, totaling $9,000 for the three months ended March 31, 2012 and 2011.  Mr. Robert Levande, who is an officer and director of the Company, is also a senior managing director of MDB.

 

MDB acted as placement agent in connection with the ClearSign Offering discussed in Note 5, and in consideration for its services was issued 109,091 shares of ClearSign’s common stock (in lieu of a cash fee of 10% of the gross proceeds of the ClearSign Offering) and a 5-year warrant to purchase 109,091 shares of ClearSign’s common stock at an exercise price of $2.75 per share.  As described above, Messrs. Marlett and Levande, each an officer, director and stockholder of the Company, are also the Chief Executive Officer and Senior Managing Director, respectively, of MDB.

 

In addition, at the close of the offering, MDB received 363,636 shares of ClearSign in consideration of other consulting services provided by MDB unrelated to its role as a placement agent.

 

On November 14, 2011, ClearSign filed a registration statement on Form S-1 (as amended) relating to the initial public offering of its common stock, which registration statement had not been declared effective as of March 31, 2012. MDB is the sole underwriter for the initial public offering and is expected to receive compensation in connection with such initial public offering. See Note 11, below.