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Commitments and Contingencies | 12 Months Ended
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Dec. 31, 2023
Commitments and Contingencies [Abstract] |
Commitments and Contingencies |
13) | Commitments and Contingencies
The Company is involved in litigation and arbitrations from time to time in the ordinary course of business. Legal fees and other costs associated with such actions are expensed as incurred. In addition, the Company assesses the need to record a liability for litigation and contingencies. The Company reserves for costs relating to these matters when a loss is probable, and the amount can be reasonably estimated. Novellus, Inc. v. Sowyrda et al., C.A. No. 2184CV02436-BLS2 On October 25, 2021 Novellus, Inc. filed a complaint in the Superior Court of Massachusetts, Suffolk County, against former Novellus, Inc. employees Paul Sowyrda and John Westman and certain other former investors in Novellus LLC (Novellus, Inc.’s former parent company prior to the Company’s acquisition of Novellus, Inc.), alleging breach of fiduciary duty, breach of contract and civil conspiracy. The Company acquired Novellus, Inc. on July 16, 2021. On May 27, 2022, Novellus, Inc. amended the complaint to withdraw all claims against all defendants except Messrs. Sowyrda and Westman. On July 1, 2022, Mr. Westman filed a motion to compel arbitration or in the alternative, to stay the litigation pending the disposition of certain litigation in the Court of Chancery for the State of Delaware filed by Mr. Sowyrda against Novellus LLC, Dr. Christopher Rohde, Dr. Matthew Angel, Leonard Mazur and Factor Bioscience, Inc. captioned Zelickson et al., v. Angel et al., C.A. 2021-1014-JRS and by Mr. Westman against Novellus LLC captioned Westman v. Novellus LLC, C.A. No. 2021-0882-NAC (together, the “Delaware Actions”). On July 1, 2022, Mr. Sowyrda answered the complaint and asserted counterclaims against Novellus, Inc, and third-party defendants Dr. Angel and Dr. Rohde alleging violations of the Massachusetts Wage Act, Massachusetts Minimum Fair Wage Law, the Fair Labor Standards Act, breach of contract, unjust enrichment and quantum meruit. Mr. Sowyrda also joined in Mr. Westman’s motion to stay the case pending the Delaware Actions. Novellus, Inc.’s claims and Mr. Sowyrda’s counterclaims relate to alleged conduct that took place before the Company acquired Novellus, Inc. On November 15, 2022, prior to a decision on Messrs. Westman’s and Sowyrda’s motion to compel or stay, the parties agreed to voluntarily dismiss and consolidate the Delaware Actions with this action. On December 15, 2022, Mr. Sowyrda filed an Amended Answer to the Amended Complaint, asserted affirmative defenses and filed Amended Counterclaims against Dr. Angel, Dr. Rohde, Novellus LLC, Novellus Inc., Factor Bioscience Inc., and the Company (collectively, the “Counterclaim Defendants”) alleging against various Counterclaim Defendants breach of contract, breaches of the implied duty of good faith and fair dealing, breaches of fiduciary duty, breaches of the operating agreement, aiding and abetting breaches of fiduciary duty, tortious interference with contract, equitable accounting, violations of the Massachusetts Wage Act, Massachusetts Minimum Fair Wage Law, the Fair Labor Standards Act, unjust enrichment, and quantum meruit. Also on December 15, 2022, Mr. Westman filed an answer to the Amended Complaint and asserted similar counterclaims against the same Counterclaim Defendants. Messrs. Westman and Sowyrda each asserted claims for indemnification and/or advancement against Novellus, Inc. On January 11, 2023, Messrs. Westman and Sowyrda served a joint motion to enforce their advancement and/or indemnification rights against Novellus Inc. Novellus Inc. vigorously opposes this motion and served its opposition on January 27, 2023. On February 8, 2023, Messrs. Westman and Sowyrda served a reply in support of their motion to enforce indemnification/advancement rights, and submitted the motion to the Court. Novellus Inc. answered Messrs. Westman and Sowyrda’s counterclaims on January 27, 2023, denying liability. The remaining Counterclaim Defendants served a motion to dismiss most of the remaining counterclaims on January 27, 2023. The Court entered an order granting the Counterclaim Defendants’ motion to dismiss and denying Messrs. Sowyrda and Westman’s motion to enforce on June 15, 2023. The Court’s order dismissed all of Mr. Westman’s claims against Counterclaim Defendants except his claim for indemnification, and all of Mr. Sowyrda’s claims except his claim for indemnification and his employment-related claims, which Counterclaim Defendants did not move to dismiss. On July 6, 2023, Messrs. Westman and Sowyrda filed a petition for interlocutory review with a single justice of the Massachusetts Appeals Court, seeking to overturn the judge’s decision granting the Counterclaim Defendants’ motion to dismiss most of the remaining counterclaims, but not the decision denying Messrs. Westman and Sowyrda’s motion to enforce advancement rights. On July 25, 2023, the parties to the appeal filed a joint motion to the single justice in the appellate court to stay the appeal to allow for amended counterclaims to be filed by Counterclaim Plaintiffs and a motion to dismiss to be filed by Counterclaim Defendants. Counterclaim Plaintiffs filed an initial set of amended counterclaims on August 15, 2023. Counterclaim Plaintiffs amended and refiled their amended counterclaims on September 29, 2023. Counterclaim Defendants served their motion to dismiss all of the amended counterclaims, except for Mr. Sowyrda’s employment-related claims, on October 13, 2023. Under applicable Delaware law and Novellus Inc.’s organizational documents, the Company may be required to advance or reimburse certain legal expenses incurred by former officers and directors of Novellus, Inc. in connection with the foregoing matters. However, a future advance or reimbursement is not currently probable nor can it be reasonably estimated. eTheRNA Immunotherapies NV and eTheRNA Inc. v. Eterna Therapeutics Inc. C.A. No. 123CV11732 On July 31, 2023, eTheRNA Immunotherapies NV and eTheRNA Inc. filed a complaint in court against the Company alleging: (1) federal trademark infringement; (2) federal unfair competition; (3) Massachusetts state common law trademark infringement; (4) Massachusetts state unfair competition. Service of process for the complaint was completed on August 1, 2023. The Company’s answer was filed on October 10, 2023. At this stage in the litigation, the Company is not able to predict the probability of a favorable or unfavorable outcome. Dhesh Govender v. Eterna Therapeutics LLC, et al., Index No. 650847/2021 (N.Y. Sup. Ct. N.Y. Cty. 2021) On or about February 5, 2021, Dhesh Govender, a former short-term consultant of Eterna LLC, filed a complaint against Eterna LLC and certain individuals that plaintiff alleged were directors of Eterna LLC. Plaintiff alleged that Eterna LLC and certain of its officers and directors engaged in unlawful and discriminatory conduct based on race, national origin and hostile work environment. Plaintiff also asserted various breach of contract, fraud and quantum meruit claims based on an alleged oral agreement pursuant to which he alleged Eterna LLC agreed to hire him as an executive once the merger involving the Company and NTN Buzztime, Inc. was completed. On December 15, 2022, the parties executed a Confidential Settlement Agreement and Release of All Claims. On January 11, 2023, the parties filed a Stipulation to Discontinue in the Court action. Also on January 11, 2023, plaintiff voluntarily dismissed the arbitration. John Westman v. Novellus, Inc., Christopher Rohde, and Matthew Angel, Civil Action No. 2181CV01949 (Middlesex County (Massachusetts) Superior Court) On or about September 7, 2021, John Westman, a former employee of Novellus, Inc. filed a complaint in Middlesex County (Massachusetts) Superior Court against Novellus, Inc. and Novellus, Inc.’s founders and former executives, Dr. Rohde and Dr. Angel. The case includes allegations that Novellus, Inc. violated the Massachusetts Wage Act. The Company acquired Novellus, Inc. on July 16, 2021. Mr. Westman’s claims relate to alleged conduct that took place before the Company acquired Novellus, Inc. Mr. Westman agreed to dismiss the lawsuit and proceed with his claims in arbitration. Following mediation, the parties settled this dispute in December 2022. The aggregate settlement amount payable by the Company for the Westman and Govender matters discussed above was approximately $0.5 million, both of which were recognized as expense in the consolidated statement of operations for the year ended December 31, 2022 and were fully paid during the year ended December 31, 2023. Emerald Private Equity Fund, LLC Matter By a letter dated July 7, 2021, Emerald Private Equity Fund, LLC (“Emerald”), a stockholder of the Company, made a demand pursuant to 8 Del. C. 220 to inspect certain books and records of the Company. The stated purpose of the demand was to investigate possible wrongdoing by persons responsible for the implementation of the merger involving the Company and NTN Buzztime, Inc. and the issuance of paper stock certificates, including investigating whether: (i) the Company’s stock certificates were issued in accordance with the merger agreement; (ii) certain restrictions on the sale of the Company’s common stock following the merger were proper and applied without favor; (iii) anyone received priority in post-merger issuances of the Company’s stock certificates that allowed them to benefit from an increase in the trading price of the Company’s common stock; and (iv) it should pursue remedial measures and/or report alleged misconduct to the SEC. The Company responded to the demand letter and produced certain information to Emerald in connection with the demand, which is subject to the terms of a confidentiality agreement entered into among the parties, including certain additional stockholders who subsequently joined as parties to such agreement. Following discussions, with no admission of wrongdoing, the Company and Emerald entered into a confidential settlement agreement, pursuant to which the Company paid $1.2 million in 2022 in full settlement of all of the Emerald’s purported claims, including a release by the Emerald in favor of the Company in respect of any and all such claims. Licensing Agreements Factor Limited On November 14, 2023, the Company and Factor Limited entered into the A&R Factor License Agreement, which terminated and superseded the exclusive license agreement between the parties dated February 20, 2023 and the amendment thereto. See Note 11 for additional information regarding the A&R Factor License Agreement. The Company has other license, collaboration and royalty agreements with third parties related to IRX-2, including an agreement entered into with University of South Florida Research Association, Inc. (“USFRF”) in February 2024 to revoke certain license agreements with USFRF related to IRX-2. The Company does not intend to further develop IRX-2 and has provided USFRF with notice that the Company intends to abandon the IRX-2 patents. USFRF has 30 days to provide the Company with its notice to assume control of such patents. As a result of abandoning the IRX-2 patents, the Company will no longer have any obligations under the existing related agreements. existing related agreements. Retirement Savings Plan The Company established a defined contribution plan, organized under Section 401(k) of the Internal Revenue Code, which allows employees to defer up to 90% of their pay on a pre-tax basis. Beginning on January 1, 2023, the Company began matching employees’ contributions at a rate of 100% of the first 3% of the employee’s contribution and 50% of the next 2% of the employee’s contribution, for a maximum Company match of 4%. For the year ended December 31, 2023, the Company matched less than $0.1 million towards employees’ 401k contributions.

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