10.    Commitments and Contingencies

Litigation

The Company is subject, from time to time, to claims by third parties under various legal disputes. The defense of such claims, or any adverse outcome relating to any such claims, could have a material adverse effect on the Company’s liquidity, financial condition and cash flows.

On August 26, 2021, Torreya Capital LLC (“Torreya”) filed a demand for arbitration with the American Arbitration Association in New York, New York in connection with a claim by Torreya that it is entitled to a transaction fee of $1,035,000 in connection with the Company’s IPO, plus the costs of arbitration, based on services Torreya alleges it provided for the Company as a financial advisor to the Company prior to the IPO.  On December 20, 2021, in order to avoid the risk, inconvenience and expense of a continued dispute, the Company entered into a release and settlement agreement with Torreya, whereby the Company agreed

to pay Torreya $325,000 for the release and discharge of any and all claims, liabilities and costs related to the arbitration. The Company paid the obligation prior to December 31, 2021, the cost of which is included in other expense in the accompanying statements of operations.

Employment Agreement and Deferred Compensation Plan

The Company has employment agreements with its CEO, SVP of Operations, and SVP of Finance (the “Executives”), as well as its CMO and Director of Clinical Operations (the “Director”). Per the terms of the agreements, each Executive, the CMO and the Director are entitled to receive a cash bonus with a target amount of no less than 50% for the CEO, 35% for the CMO and 20% for the SVP of Operations, the SVP of Finance, and the Director, of the then-current base salary. The bonuses are subject to achievement of annual bonus metrics set by the Board. The employment agreements will continue in effect until terminated by either party pursuant to its terms. Upon termination of the agreement by the Company for any reason other than for cause, death or disability or by one of the Executives, CMO or Director for good reason, the Company shall pay to an Executive a “Severance Payment” equal to the aggregate of the Executive’s then-current annual base salary plus an amount equal to a prorated portion of the Executive’s cash bonus for the year in which the termination occurs.  The Severance Payment to an Executive is payable in cash over a period of one year. The Company shall pay to the CMO a Severance Payment equal to 25% of the then-current annual base salary plus a prorated portion of the CMO’s cash bonus for the year in which the termination occurs over a period of three months and health benefits for a period of 12 months unless the CMO becomes eligible for health benefits under another employer. If the termination of the agreement is related to a change of control, the Company shall pay to the Executives and the CMO a “Change of Control Termination Payment” equal to the aggregate of 1.0 times the then-current annual base salary plus an amount equal to 1.0 times the Executives’ and CMO’s cash bonus for year in which the termination occurs. The Change of Control Termination Payment for the Director is equal to the aggregate of 0.5 times the then-current annual base salary plus and amount equal to 0.5 times the Director’s cash bonus for the year in which the termination occurs. The Change of Control Termination Payments are payable in a single cash lump sum no later than 45 days after the triggering event.

In July 2020, the Company entered into an agreement with Dr. William L. Pridgen, former Chief Executive Officer of the Company, for the payment and satisfaction of salary accrued and owed to Dr. Pridgen in the amount of $549,046 in a combination of equity and cash. Prior to the pricing of the Company’s IPO, the split between the equity portion and the cash portion was determined and the Company issued members interest for repayment of $336,880 of accrued salary. The remaining balance to be paid in cash of $212,166, less a salary advance of $100,000 previously paid to Dr. Pridgen, outstanding at December 31, 2020 was paid in January 2021. There were no amounts outstanding as of December 31, 2021.

In August 2020, the Company amended the President’s executive employment agreement to provide for an equity bonus in the form of non-qualified stock options upon the completion of an IPO, in lieu of cash and in-kind bonuses that were provided for in the original agreement. In addition to the equity bonus, the President was to participate in the Company’s executive bonus program alongside and to the same extent the other executives were awarded and paid such bonuses at a target rate of 50% of his base salary. A previously paid bonus advance of $150,000 offset the equity bonus options granted. The Company also owed the President accrued salary in the amount of $466,667. The President was issued members interest for repayment of $200,000 of accrued salary just prior to the pricing of the IPO on December 16, 2020. The remaining balance of $266,667 to be paid in cash outstanding at December 31, 2020 was paid in January 2021. There were no amounts outstanding as of December 31, 2021. Upon the pricing of the Company’s IPO, the President resigned and was appointed to the Company’s Board.