7.	Commitments and Contingencies

Office Space Rental

The Company has a non-cancelable operating lease for office and laboratory space in Charlottesville, Virginia, which began in

April 2017

and, as of

December 31, 2019,

has a remaining lease term of approximately

2.3

years. The Company adopted ASC

842

in the

first

quarter of

2019

and as a result of the adoption, the Company recognized a current operating lease liability of

$0.1

million and a noncurrent operating lease liability of

$0.2

million with a corresponding ROU asset of the combined amounts, which is based on the present value of the minimum rental payments of the lease. The discount rate used to account for the Company's operating lease under ASC

842

is the Company’s estimated incremental borrowing rate of

10%.

The original term of the lease ends in the

second

quarter of

2022

and the Company has an option to extend for another

five

years. This option to extend was

not

recognized as part of the Company's measurement of the ROU asset and operating lease liability as of

March 31, 2020.

Rent expense related to the Company's operating lease was approximately

$30,000

and

$20,000

for the

three

months ended

March

31,

2020

and

2019,

respectively. Future minimum rental payments under the Company's non-cancelable operating lease at was as follows as of

March 31, 2020:

	Rental Commitments
2020 (remaining)	$	87,691
2021		118,519
2022		39,735
Total		245,945
Less: imputed interest		(22,188	)
Current and noncurrent operating lease liability	$	223,757

Research and Development Arrangements

In the course of normal business operations, the Company enters into agreements with universities and contract research organizations, or CROs, to assist in the performance of research and development activities and contract manufacturers to assist with chemistry, manufacturing, and controls related expenses. Expenditures to CROs represent a significant cost in clinical development for the Company. The Company could also enter into additional collaborative research, contract research, manufacturing, and supplier agreements in the future, which

may

require upfront payments and long-term commitments of cash.

Defined Contribution Retirement Plan

The Company has established a

401

(k) defined contribution plan (the

“401

(k) Plan”) that covers all employees who qualify under the terms of the plan. Eligible employees

may

elect to contribute to the

401

(k) Plan up to

90%

of their compensation, limited by the IRS-imposed maximum. The Company provides a safe harbor match with a maximum amount of

of the participant’s compensation. The Company made matching contributions under the

401

(k) Plan of approximately

$17,000

and

$18,000

for the

three

months ended

March 31, 2020

and

2019,

respectively.

Legal Proceedings

August 7, 2014,

a complaint was filed in the Superior Court of Los Angeles County, California by Paul Feller, the Company’s former Chief Executive Officer under the caption

Paul Feller v. RestorGenex Corporation, Pro Sports & Entertainment, Inc., ProElite, Inc. and Stratus Media Group, GmbH

(Case

No.

BC553996

). The complaint asserts various causes of action, including, among other things, promissory fraud, negligent misrepresentation, breach of contract, breach of employment agreement, breach of the covenant of good faith and fair dealing, violations of the California Labor Code and common counts. The plaintiff is seeking, among other things, compensatory damages in an undetermined amount, punitive damages, accrued interest and an award of attorneys’ fees and costs. On

December 30, 2014,

the Company filed a petition to compel arbitration and a motion to stay the action. On

April 1, 2015,

the plaintiff filed a petition in opposition to the Company’s petition to compel arbitration and a motion to stay the action. After a hearing for the petition and motion on

April 14, 2015,

the Court granted the Company’s petition to compel arbitration and a motion to stay the action. On

January 8, 2016,

the plaintiff filed an arbitration demand with the American Arbitration Association. On

November 19, 2018

at an Order to Show Cause Re Dismissal Hearing, the Court found sufficient grounds

not

to dismiss the case, and an arbitration hearing has been scheduled for

November 2020.

The Company believes this matter is without merit and intends to defend the arbitration vigorously. Because this matter is in an early stage, the Company is unable to predict its outcome and the possible loss or range of loss, if any, associated with its resolution or any potential effect the matter

may

have on the Company’s financial position. Depending on the outcome or resolution of this matter, it could have a material effect on the Company’s financial position.