Quarterly report pursuant to Section 13 or 15(d)

Related Party Transactions

v3.21.2
Related Party Transactions
9 Months Ended
Sep. 30, 2021
Related Party Transactions [Abstract]  
Related Party Transactions

5. Related Party Transactions

 

Related party transactions include transactions with the Company’s officers, directors and affiliates.

 

Gil N Schwartzberg

 

In September 2007, the Company entered into a consulting agreement with Gil N Schwartzberg for Mr. Schwartzberg to provide financial advisory and consulting services to the Company with respect to financing matters, capital structure and strategic development, and to assist management in communications with investors and stockholders. Consideration under this consulting agreement, including amendments, has been paid exclusively in the form of stock options In January 2014 and August 2018, the Company entered into respective amendments to this consulting agreement, which have resulted in the extension of the consulting agreement, as well as stock options for 666,667 shares of common stock exercisable at $3.00 per share, through January 28, 2024. Effective April 9, 2021, Mr. Schwartzberg was appointed to the Company’s Board of Directors. Mr. Schwartzberg is currently a significant stockholder of the Company and continues to be a consultant to the Company.

 

Employment Agreements with Officers

 

The Company entered into an employment agreement with Dr. Kovach dated July 15, 2020, effective October 1, 2020, for Dr. Kovach to continue to act as the Company’s President, Chief Executive Officer and Chief Scientific Officer with an annual salary of $250,000. During the three months and nine months ended September 30, 2020, and for services rendered prior to the above-described employment agreement, the Company paid Dr. Kovach a salary of $15,000 and $45,000, respectively, which amount is included in general and administrative costs in the Company’s consolidated statements of operations.

 

The Company entered into an employment agreement with Dr. James S. Miser, M.D., effective August 1, 2020 to act as the Company’s Chief Medical Officer with an annual salary of $150,000. Effective May 1, 2021, Dr. Miser’s annual salary was increased to $175,000. Dr. Miser is required to devote at least 50% of his business time to the Company’s activities.

 

 

The Company entered into an employment agreement with Eric J. Forman effective July 15, 2020, as amended on August 12, 2020, to act as the Company’s Chief Administrative Officer with an annual salary of $120,000. Eric Forman is the son-in-law of Gil Schwartzberg, a member of the Company’s Board of Directors, and a significant stockholder of and consultant to the Company, and is the son of Dr. Stephen Forman, a member of the Company’s Board of Directors. Julie Forman, the wife of Eric Forman and the daughter of Gil Schwartzberg, is Vice President of Morgan Stanley Wealth Management, at which firm the Company’s cash is on deposit and the Company maintains a continuing banking relationship. Effective May 1, 2021, Mr. Forman’s annual salary was increased to $175,000. During the three months and nine months ended September 30, 2020, and for services rendered prior to his appointment as Chief Administrative Officer, the Company paid legal and consulting fees to the Eric Forman Law Office of $14,000 and $38,000, respectively, which amount is included in general and administrative costs in the Company’s consolidated statements of operations.

 

The Company entered into an employment agreement with Robert N. Weingarten effective August 12, 2020 to act as the Company’s Vice President and Chief Financial Officer with an annual salary of $120,000. Effective May 1, 2021, Mr. Weingarten’s annual salary was increased to $175,000. During the three months and nine months ended September 30, 2020, and for services rendered prior to his appointment as Vice President and Chief Financial Officer, the Company paid Mr. Weingarten a total of $32,620 and $79,995, respectively, for accounting and financial consulting services rendered with respect to the preparation of the Company’s consolidated financial statements and certain other financial and compliance matters.

 

On April 9, 2021, the Board of Directors increased the annual compensation of Eric J. Forman, the Company’s Chief Administrative Officer, Dr. James S. Miser, the Company’s Chief Medical Officer, and Robert N. Weingarten, the Company’s Chief Financial Officer, under the employment agreements such that the total aggregate annual compensation of all officers increased to $775,000, effective May 1, 2021.

 

Compensatory Arrangements for Board of Directors

 

Effective April 9, 2021, the Board of Directors approved a comprehensive cash and equity compensation package for the members of the Board of Directors and committee members.

 

The Board of Directors approved the following cash compensation for non-officer directors, payable quarterly:

 

Base director compensation - $20,000 per year

Chairman of audit committee - additional $10,000 per year

Chairman of any other committees - additional $5,000 per year

Member of audit committee - additional $5,000 per year

Member of any other committees - additional $2,500 per year

 

Stock-based compensation arrangements involving members of the Company’s Board of Directors. officers and affiliates are described at Note 6.

 

A summary of related party costs, including compensation under employment and consulting agreements and fees paid to non-officer directors for their service on the Board of Directors, for the three months and nine months ended September 30, 2021 and 2020 is presented below. This summary includes the above-described payments to Mr. Forman in 2020 prior to his appointment as Chief Administrative Officer and excludes the payments to Mr. Weingarten in 2020 prior to his appointment as Vice President and Chief Financial Officer.

 

    2021     2020     2021     2020  
   

Three Months Ended
September 30,

   

Nine Months Ended
September 30,

 
    2021     2020     2021     2020  
                         
Related party costs:                                
Cash-based   $ 193,750     $ 70,452     $ 536,250     $ 124,452  
Stock-based     347,222       394,031       1,854,058       394,031  
Total   $ 540,972     $ 464,483     $ 2,390,308     $ 518,483