NOTE 10 – COMMITMENTS AND CONTINGENCIES

Legal Proceedings

The Company may become involved in certain legal proceedings and claims which arise in the normal course of business. If an unfavorable ruling were to occur, there exists the possibility of a material adverse impact on the Company’s results of operations, prospects, cash flows, financial position and brand. To the best knowledge of the Company’s management, at September 30, 2017 and 2016, there are no legal proceedings which the Company believes will have a material adverse effect on its business, results of operations, cash flows or financial condition.

Lease Obligation

The Company is currently obligated under an operating lease for office and laboratory space and associated building expenses. The lease expires in December 2017 and the Company will not be renewing the lease. As of September 30, 2017, future minimum payments for all lease obligations are as follows:

Rental expense related to the operating lease has been recorded in the consolidated statements of operations in the amounts of $284,977 and $340,064 for each of the years ended September 30, 2017, and 2016, respectively.

The Company also leases its New York office on a month to month basis.

Contingent Stock Consideration

On May 30, 2014, the Company completed the acquisition of certain assets of SKS Ocular, LLC (“SKS Parent”), and SKS Ocular 1, LLC (“SKS 1” and SKS Parent referred to herein as “SKS”), including licenses, patents and contracts relating to a micro-fabrication polymer based sustained delivery platforms related to ocular therapeutics and a dry age-related macular degeneration animal model, together with biomarkers to support such model.

The purchase price consisted of: (a) Cash in the amount of $3,500,000; (b) 1,194,862 shares of the Company’s common stock (valued at $10,180,224 based on the trading price on May 30, 2014 of the Company’s common stock) and (c) an additional 1,493,577 shares (the “contingent shares”) that will be issued contingent to achievement of certain milestones. This contingent consideration has been recorded as a liability of the Company and is reviewed by management for probability and likelihood of the milestones being achieved at each reporting period. The liability is adjusted according to management’s assessment.

On December 11, 2015 and July 12, 2016, the Board approved the achievement of Milestone 1 and Milestone 2, respectively. Consequently, the Company issued 995,718 shares of its common stock to SKS. Milestone 3 is contingent upon the approval of an Investigational New Drug Application (“IND”) within three years of the closing date of the SKS acquisition. We did not achieve Milestone 3. As such, there is no related contingent stock consideration recorded in association with Milestone 3.

Severance Pay 

On May 12, 2017, pursuant to a separation agreement, the Company agreed to pay a former director severance pay in the amount of $250,000 over a five year period. The non-current portion of the liability is reported as a long-term liability in the consolidated balance sheets.