NOTE 8 – COMMITMENTS AND CONTINGENCIES

The Company acquires assets still in development and enters R&D arrangements with third parties that often require milestone and royalty payments to the third-party contingent upon the occurrence of certain future events linked to the success of the asset in development. Milestone payments may be required, contingent upon the successful achievement of an important point in the development lifecycle of the pharmaceutical product (e.g., approval of the product for marketing by a regulatory agency). If required by the license agreements, the Company may have to make royalty payments based upon a percentage of the sales of the pharmaceutical products if regulatory approval for marketing is obtained.

Office Lease

On December 2, 2020, the Company entered into a lease for its office space in Laguna Hills, California for a six-month term commencing on March 1, 2021, which expired on August 31, 2021.

On May 24, 2021, the Company entered into an additional six-month lease of this office space, commencing on September 1, 2021, which expired on February 28, 2022.

In October 2021, the Company moved the Company’s headquarters from Laguna Hills, California to Las Vegas, Nevada. In doing so, the Company entered into a lease for office space in Las Vegas, Nevada. The term of the lease expired on April 30, 2022.

In January 2022, the Company entered into an additional six-month lease of the Las Vegas, Nevada office space, commencing on May 1, 2022, which expired on October 31, 2022.

In July 2022, the Company entered into an additional six-month lease of the Las Vegas, Nevada office space, commencing on November 1, 2022, which expires on April 30, 2023.

Rent expenses for the offices for the three and nine months ended January 31, 2023, were $1,398 and $3,867, respectively, and for the three and nine months ended January 31, 2022, were $6,103 and $13,995, respectively.

The following table summarizes the Company’s aggregate future minimum lease payments required under the operating lease as of: 

Compensation Agreements

The Company entered into executive compensation agreements with Kenneth L. Waggoner, Gerald W. Crabtree and Carlos A. Trujillo in March 2015, each of which was amended in December 2015 and March 2017. The Company’s compensation agreements with Mr. Waggoner and Mr. Trujillo were amended and restated effective January 1, 2022. The compensation agreements with Dr. Crabtree had a term of two years and the compensation agreements for Mr. Waggoner and Mr. Trujillo had a term of three years, with automatic renewals unless the Company or the officer provides written notice of termination at least ninety days prior to the end of the current term.

Effective October 6, 2022, Mr. Waggoner signed the Separation, Consulting and Release Agreement (“Separation Agreement”), whereby he resigned from all positions with the Company and its subsidiaries. The Separation Agreement contains a consulting services agreement covering a twelve-month period, whereby Mr. Waggoner will serve as an independent contractor for the Company in exchange for a monthly consulting fee of approximately $36,000 for the duration of such period.

Effective October 11, 2022, Dr. Crabtree signed a release agreement with the Company, whereby he resigned from all Company positions, including all positions with the Company’s subsidiaries.

In May 2017, the Company amended the compensation agreements with each of the then-current independent Board members, and the terms of such amended agreements continue in effect until a member is no longer on the Board.

As of January 31, 2023, the Company had five directors. Each director was entitled to receive $12,500 in cash for each calendar quarter of service on the Board.

On August 15, 2022, the Company and the Board: (i) accepted the previously tendered irrevocable resignation of each of Dr. Matthias Löhr, Dr. Raymond C.F. Tong, Thomas Liquard, Dr. Gerald W. Crabtree, and Carlos A. Trujillo, as members of the Board, and (ii) appointed Jonathan L. Schechter, Joshua N. Silverman, Daniel Allen, Daniel S. Farb, and Jack E. Stover as independent members of the Board, effective immediately, each with a term expiring at the Company’s 2022 annual meeting of shareholders or until such person’s earlier death, resignation, disqualification or removal.

On November 1, 2022, Jack E. Stover notified the Company of his decision to resign from the Board effective immediately. On November 14, 2022, in accordance with the recommendation of the Company’s Nominating Committee, Robert Weinstein was appointed to serve as a director of the Board and the Chairperson of the Audit Committee, with a term expiring at the Company’s annual meeting of shareholders or until death, resignation, disqualification or removal.

On November 14, 2022, the Board approved the employment of Mr. Joshua Silverman as the Interim Chief Executive Officer, Interim President and Interim Chairman of the Board on a month-to-month basis. Upon Mr. Silverman accepting employment he was no longer an independent director.

On December 28, 2022, the Company held its annual meeting of stockholders. The stockholders voted to elect the following directors to serve one-year terms expiring in 2023: Joshua N. Silverman, Jonathan L. Schechter, Michael M. Abecassis, Robert Weinstein and Wayne R. Walker.

Service Agreements

The Company has entered into several service agreements with independent and related parties pursuant to which services will be provided over a specified period-of-time related to the IND which the FDA has placed on clinical hold. The services include regulatory affairs strategy, advice and follow up work on the IND and services related to having the clinical hold lifted. The total cost is estimated to be approximately $214,000, of which the related party (SG Austria and its subsidiaries) portion will be approximately $157,000. These amounts take into account some of the cost associated with the work and preclinical studies required to lift the clinical hold.