7. ACCRUED PUBLIC INFORMATION FEE

In accordance with certain securities purchase agreements, the Company is required to be compliant with Rule 144(c)(1) of the SEC, as defined, so as to enable investors to sell their holdings of Company shares in accordance with the securities purchase agreements. In the event of the Company’s noncompliance with Rule 144(c)(1) at any time after the six-month anniversary of the offering, the investors are entitled to receive a fee of 1% of the aggregate subscription amount of the purchaser’s securities, plus an additional 1% for every pro rata 30-day period that the Company is not in compliance (payable in cash or in kind). As of December 31, 2016, the Company had accrued $3,005,277 as a result of periods of noncompliance with Rule 144(c)(1). On May 9, 2017, the Company issued 30,235 shares of Series C Convertible Preferred Stock in satisfaction of this liability. As of December 31, 2017, the Company was in compliance with Rule 144(c)(1).

See Note 11 – Stockholders’ Deficiency for additional details.