12. COMMITMENTS AND CONTINGENCIES
|12 Months Ended|
Mar. 31, 2019
|Commitments and Contingencies Disclosure [Abstract]|
|COMMITMENTS AND CONTINGENCIES||
12. COMMITMENTS AND CONTINGENCIES
CONTRACTUAL OBLIGATIONS AND COMMITMENTS
We have had the following material changes to our contractual obligations and commitments outside the ordinary course of business during the fiscal year ended March 31, 2019:
On December 10, 2018, we entered into a Separation and Consulting Agreement with James A. Joyce, our former CEO. Under this agreement, we have a contractual obligation to pay Mr. Joyce a total of $385,000 and to cover his medical insurance costs over a twelve month period that began on January 10, 2019. We also paid Mr. Joyce accrued vacation of $32,083 in December 2018. In addition, we entered into a twelve month consulting arrangement with Mr. Joyce with agreed compensation of $5,000 per month over calendar 2019. Mr. Joyce’s existing RSU’s will continue vesting over the term of the consulting arrangement.
The total expense accrued at December 31, 2018, the month of the separations, relating to the separation agreements with Mr. Joyce and our former President, Rodney Kenley, was $505,609 (see Note 7 and Note 8). Following cash expenditures related to the separation agreements subsequent to the creation of the accrual, the balance at March 31, 2019 was $355,189 (see Note 7).
In December 2018, we entered into employment agreements with Timothy C. Rodell, M.D., our current interim Chief Executive Officer (“CEO”) and James B. Frakes, our Chief Financial Officer. Those agreements will be in effect until the CEO or CFO retire or cease to be employed by us. Under the terms of the agreement, if the CEO or CFO are terminated they may become eligible to receive a salary continuation payment in the amount of at least twelve months’ base salary, which were $390,000 and $260,000, respectively.
We currently lease approximately 2,600 square feet of executive office space at 9635 Granite Ridge Drive, Suite 100, San Diego, California 92123 under a 39-month gross plus utilities lease that commenced on December 1, 2014 and was extended in May 2018. The initial rental rate under the lease extension is $7,986 per month. Such lease expires in on August 31, 2021. We believe this leased facility will be satisfactory for our office needs over the term of the lease.
We also rent approximately 1,700 square feet of laboratory space at 11585 Sorrento Valley Road, Suite 109, San Diego, California 92121 at the rate of $4,700 per month on a one-year lease that expires on November 30, 2019. Our current plans are to renew the lease prior to expiration or to secure alternative lab space in the San Diego area.
Rent expense, which is included in general and administrative expenses, approximated $169,000 and $136,000 for the fiscal years ended March 31, 2019 and 2018, respectively.
As of March 31, 2019, our commitments under the lease agreements are as follows:
From time to time, claims are made against us in the ordinary course of business, which could result in litigation. Claims and associated litigation are subject to inherent uncertainties and unfavorable outcomes could occur, such as monetary damages, fines, penalties or injunctions prohibiting us from selling one or more products or engaging in other activities.
The occurrence of an unfavorable outcome in any specific period could have a material adverse effect on our results of operations for that period or future periods. We are not presently a party to any pending or threatened legal proceedings.
The entire disclosure for commitments and contingencies.
Reference 1: http://fasb.org/us-gaap/role/ref/legacyRef