8. Subsequent Events

August 2020 Financing

On July 31, 2020, the Company entered into a Securities Purchase Agreement with institutional investors with H.C. Wainwright & Co., LLC acting as the placement agent, pursuant to which the Company sold 56,333,334 common stock units each consisting of one share of common stock and one common stock warrant and 60,333,334 pre-funded units each consisting of one pre-funded warrant and one common stock warrant in a registered public offering. The common units and pre-funded units were sold a price per unit of $0.06 and $0.059, respectively, for gross aggregate proceeds of $6,939,667. The common stock warrants and prefunded warrants have an exercise price of $0.06 and $0.001, respectively, The term of the common stock warrants is five years and the pre-funded warrants are exercisable until all the pre-funded warrants have been exercised in full. The exercise price and number of shares of Common Stock underlying the Warrants are subject to adjustment upon the issuance by the Company of stock dividends, stock splits, and similar proportionately applied changes affecting the Company’s outstanding Common Stock. Holders of the Warrants will be entitled to participate in any dividends or other distribution of the Company’s assets declared or made to holders of the Company’s Common Stock.

In connection with the registered public offering, the Company incurred issuance costs of $825,698, for net proceeds of $6,113,969. Additionally, the Company has issued 8,166,667 common stock warrants to the placement agent, which represent 7% of the total shares of common stock and pre-funded warrants sold in the offering. The placement agent warrants have an exercise price of $0.075 per share and a term of five years. The offering closed on August 4, 2020. The Company intends to use the net proceeds of the offering for general corporate purposes, including working capital.

Management and Board Deferral Agreements

Upon the closing of the August 2020 financing, the Company’s Board of Directors determined that the Company had been sufficiently financed to pay the deferred salaries and fees including the retention bonus to management and the Board in the aggregate amount of $293,078.

Exercise Price Adjustment to Emerald Financing Warrants

Upon entering into the August 2020 Financing, the Company entered into an agreement with a holder of the Emerald Financing Warrants to permanently set the exercise price of such holder’s remaining Emerald Financing warrants to $0.10 and waive such holder’s rights to anti-dilution protection upon subsequent issuances or sales of common stock, stock options, or convertible securities at a price less than the exercise price of $0.10.

Stock Option Grants

In August 2020, 22,750,000 stock options with an exercise price of $0.045 were granted to certain directors, officers, employees and consultants of the Company under the 2014 Plan. The stock options will vest 10% on the grant date and 90% in equal semi-annual installments over the vesting schedules as set forth by the Company’s Board of Directors.

On August 7, 2020, the Board approved an Amendment No. 2 to the 2014 Plan. The amendment removed certain restrictions on the number of shares of common stock and the amount of cash-based awards up to which participants of the 2014 Plan can receive in a calendar year. In connection with the option grants the Company will register an additional 18,486,435 common shares as required under the 2014 Plan.

Separation of Chief Executive Officer, Chief Medical Officer and Member of the Board

On August 7, 2020, the effective date, Company entered into a Separation and Release Agreement (the “Separation Agreement”) with Dr. Brian Murphy, Chief Executive Officer.

Pursuant to the Separation Agreement, Dr. Murphy has agreed to certain ongoing cooperation obligations and to provide certain releases and waivers as contained in the Separation Agreement. As consideration under the Separation Agreement, the Company has agreed to provide Dr. Murphy compensation and benefits as follows: (i) a gross payment of $195,000 in consideration for the restrictive covenants contained in the Separation Agreement, to be paid over six months; and (ii) a continuation of health insurance benefits for a period of six months following the Separation Date.

Appointment of Chief Executive Officer

On August 7, 2020, Punit Dhillon resigned his position as the Chair of the Audit Committee and member of the Compensation, Nomination and Corporate Governance Committees and was appointed as the Chief Executive Officer of the Company. Mr. Dhillon remains as the Chairman of the Board and Chairman of the Finance and Business Development Committee. Mr. Dhillon will be eligible to receive a minimum of 6 months’ severance if he is terminated by the Company without cause and will receive 12-months’ severance if he is employed by the Company for at least 12 months commencing on August 10, 2020, or a 24 months’ severance if he is employed by the Company for at least 24 months commencing on August 10, 2020.