NVUS 2018 Annual Report

complaint. On July 6, 2018, the Jackie888 Action was consolidated with the Wu Action. Defendants moved to dismiss the consolidated complaint on August 15, 2018, plaintiffs filed their opposition thereto on September 28, 2018, and defendants filed their reply in support of their motion on October 19, 2018. In addition, Defendants moved to strike the class allegations in the consolidated complaint on August 15, 2018, plaintiffs filed their opposition thereto on September 11, 2018, and defendants filed their reply in support of their motion on September 21, 2018. The court held a hearing on 1RYHPEHU RQ GHIHQGDQWV¶ PRWLRQ WR strike. On 'HFHPEHU WKH FRXUW GHQLHG GHIHQGDQWV¶ PRWLRQ WR VWULNH 7KH FRXUW KHOG D KHDULQJ RQ 'HFHPEHU RQ GHIHQGDQWV¶ motion to dismiss. 2Q -DQXDU\ WKH FRXUW GHQLHG GHIHQGDQWV¶ PRWLRQ WR GLVPLVV 2Q February 6, 2019, the court entered a scheduling order, pursuant to which discovery on merits issues was stayed SHQGLQJ WKH FRXUW¶V UHVROXWLRQ RI FODVV FHUWLILFDWLRQ 'L scovery on class certification and standing issues must be FRPSOHWHG E\ -XO\ 3ODLQWLIIV¶ PRWLRQ IRU FODVV FHUWLILFDWLRQ DQG GHIHQGDQWV PRWLRQ WR GLVPLVV IRU ODFN of standing shall be filed on or by August 22, 2019, oppositions thereto shall be filed on or by September 19, 2019, and replies in support shall be filed on or by October 10, 2019. The court scheduled a hearing for October 23, 2019 on the motions. x Angelos Action. On July 25, 2017, a purported stockholder of Tokai filed a lawsuit in the U.S. District Court for the District of Massachusetts, entitled Peter B. Angelos v. Tokai Pharmaceuticals, Inc., et al., No. 1:17-cv- 11365-MLW. On September 7, 2018, plaintiff filed an amended complaint. Defendants moved to dismiss the DPHQGHG FRPSODLQW RQ 2FWREHU 3ODLQWLII ZLOO RSSRVH GHIHQGDQWV¶ PRWLRQ E\ RU RQ 1RYHPEHU defendants will file any reply in support of their motion by or on December 17, 2018, and plaintiff filed a sur- reply in support of his opposition by or on January 8, 2019. The court set a hearing for February 25, 2019 on GHIHQGDQWV¶ PRWLRQ WR GLVPLVV but later cancelled the hearing. At this time, the hearing has not been rescheduled. Indemnification In the normal course of business, the Company enters into contracts and agreements that contain a variety of UHSUHVHQWDWLRQV DQG ZDUUDQWLHV DQG SURYLGH IRU JHQHUDO LQGHPQLILFDWLRQ 7KH &RPSDQ\¶V H[SRVXUH XQGHU WKHVH DJUHHPHQWV LV unknown because it involves future claims that may be made against the Company but have not yet been made. To date, the Company has not paid any claims or been required to defend any action related to its indemnification obligations. However, the Company may record charges in the future because of these indemnification obligations. No amounts associated with such indemnifications have been recorded to date. Contingencies From time to time, the Company may have certain contingent liabilities that arise in the ordinary course of business activities. The Company accrues a liability for such matters when it is probable that future expenditures will be made and such expenditures can be reasonably estimated. There have been no contingent liabilities requiring accrual at December 31, 2018 and 2017. 3ODQ´ 8QGHU WKH 3ODQ VWRFN RSWLRQV UHVWULFWHG VKDUH XQLWV DQG SHUIRUPDQFH VKDUH DZDUGV PD\ EH JUDQWHG to the &RPSDQ\¶V GLUHFWRUV HPSOR\HHV DQG F onsultants. Options remain outstanding under the 2012 Plan. In connection with the Reverse Merger, all such options converted into options to purchase shares of Tokai common stock, as renamed Novus. Subsequent to the reverse merger, no additional grants will be made from the 2012 Plan. Options granted under the 2012 Plan generally expire ten years from the date of grant. 3ODQ SHUPLWV WKH &RPSDQ\ WR PDNH JUDQWV RI LQFHQWLYH VWRFN options, non-statutory stock options, restricted stock, restricted stock units, stock appreciation rights and other stock-based DZDUGV WR WKH &RPSDQ\¶V HPSO oyees, officers, directors, consultants and advisors; however, incentive stock options may only EH JUDQWHG WR WKH &RPSDQ\¶V HPSOR\HHV 7KH QXPEHU RI VKDUHV LQLWLDOO\ UHVHUYHG IRU LVVXDQFH XQGHU WKH 3ODQ ZDV 1,700,000 shares of common stock and may be increased by the number of shares under the 2007 Plan that expire, terminate or are otherwise surrendered, cancelled, forfeited or repurchased by the Company. The number of shares of common stock that may be issued under the plan is also subject to an annual increase on the first day of each fiscal year equal to the lesser of L VKDUHV RI WKH &RPSDQ\¶V FRPPRQ VWRFN LL RI WKH QXPEHU RI VKDUHV RI WKH &RPSDQ\¶V FRPPRQ VWRFN outstanding on the first day of the applicable fiscal year or (iii) an DPRXQW GHWHUPLQHG E\ WKH &RPSDQ\¶V ERDUG RI GLUHFWRUV Options remain outstanding under both the 2007 and the 2014 Plan. The number of shares subject to and the exercise prices 3ULRU WR WKH 5HYHUVH 0HUJHU 7RNDL KDG WZR VWRFN FRPSHQVDWLRQ SODQV WKH 6WRFN ,QFHQWLYH 3ODQ WKH ³ 3ODQ´ and the 2007 Stock In FHQWLYH 3ODQ WKH ³ 3ODQ´ 7KH Note 7. Stock-Based Compensation Otic had one VWRFN FRPSHQVDWLRQ SODQ SULRU WR WKH 5HYHUVH 0HUJHU WKH *OREDO 6KDUH ,QFHQWLYH 3ODQ WKH ³

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