Item 5.02 Departure of Directors or Principal Officers;
Election of Directors; Appointment of Principal Officers; Compensatory Arrangements of Certain Officers.
Effective May 25, 2023, the Board of Directors of the Company (the
“Board”) appointed Hitesh Dheri to serve as Chief Financial Officer and Secretary of the Company, succeeding Keith Johnson.
In this capacity, Mr. Dheri will serve as the Company’s principal financial and accounting officer.
In connection with the appointment, the Company entered into an employment
agreement with Mr. Dheri dated May 25, 2023. Under the employment agreement, which is for an indefinite term, Mr. Dheri is entitled to
receive an annual base salary of $300,000 and is eligible to receive an annual cash bonus commencing in 2024 (the “Bonus”),
the target amount of which will be equal to 35% of his base salary. The amount of the actual Bonus payable for each year will be determined
by the Board (or a compensation committee thereof) based on the satisfaction of performance objectives to be determined by the Board (or
a compensation committee thereof). Achievement of performance objectives for each year will be determined by the Board (or compensation
committee thereof) upon the filing of the Company’s Annual Report on Form 10-K for the applicable performance year (the “Vesting
Date”); and the Bonus, if earned, will be paid in a lump sum promptly following such determination, provided that the Employee remains
employed by the Company on such date. The Bonus is payable in a combination of cash and shares of common stock issued out of the Company’s
2021 Equity Incentive Plan (the “Equity Incentive Plan”) valued at the closing price of the Company’s common stock on
the Vesting Date. Unless agreed otherwise, the cash portion of the Bonus will be the minimum amount of income withholding taxes resulting
from payment of the entire Bonus. To the extent that there are not sufficient available shares reserved for issuance under the Equity
Incentive Plan (or successor plans) to support Bonus payments otherwise payable in stock, the Company will pay such Bonus payments in
cash. Mr. Dheri is also eligible to receive additional discretionary bonuses based upon his performance on behalf of the Company and/or
the Company’s performance in such amounts, in such manner and at such times as may be determined by the board of directors or a
committee thereof, and is eligible to participate in the standard benefits which the Company generally provides to its full-time employees
under its applicable plans and policies.
During the first 12 months of his employment term, $200,000 of Mr.
Dheri’s salary will be paid in cash installments in accordance with the Company’s regular payroll practices. In lieu of cash
salary in the amount of the remaining $100,000, the Company granted Mr. Dheri an inducement award of 196,463 shares of restricted stock
(the “Restricted Stock”) upon the commencement of his employment. The Restricted Stock award is subject to transfer and forfeiture
restrictions that are scheduled to lapse in four installments as nearly equal in amount as possible on the three, six, nine and twelve
month anniversaries of the grant date, subject to continued employment. Mr. Dheri may elect to satisfy tax withholding obligations upon
vesting of the award by forfeiting shares having a value equal to the withholding tax amount.
Also upon commencement of his employment, Mr. Dheri was granted (i)
a 500,000 share stock option award (the “Stock Option”), and (ii) a restricted stock unit award (“RSUs”). The
Stock Option has an exercise price equal to $1.00 per share and, subject to continued employment, is scheduled to vest with respect to
125,000 shares on the one-year anniversary of the grant date and, thereafter, is scheduled to vest in 36 monthly installments as nearly
equal in amount as possible (approximately 10,416 shares) commencing on the 13th month anniversary of the grant date and continuing on
each one month anniversary thereafter. The RSUs have a target payout amount equal to $63,575, which represents 35% of Mr. Dheri’s
salary (i.e., $105,000), but prorated for the partial 2023 year during which he will be employed by the Company. The amount of the RSU
award actually payable will be determined by the Board (or a compensation committee thereof) in its discretion based on the satisfaction
of 2023 performance objectives to be determined by the Board (or a compensation committee thereof). Achievement of performance objectives
will be determined by the Board (or compensation committee thereof) upon the filing of the Company’s Annual Report on Form 10-K
for the 2023 fiscal year, and the RSUs, if and to the extent earned, will be paid in a lump sum promptly following such determination,
provided that Mr. Dheri remains employed by the Company. The RSUs will be settled in shares of the Company’s common stock valued
at the most recent closing price of the Company’s common stock on the payment date; provided, however, that Mr. Dheri may elect
to satisfy tax withholding obligations upon vesting of the award by having the Company withhold shares having a value equal to the withholding
tax.
The grants of the Restricted Stock award, the Stock Option and the
RSUs were made separately from the Company’s 2021 Equity Incentive Plan (the “Equity Incentive Plan”) as inducements
material to Mr. Dheri entering into employment with the Company in accordance with Section 711(a) of the NYSE American LLC Company Guide,
and each was approved by the Company’s independent compensation committee. Although granted separately from the Equity Incentive
Plan, the Restricted Stock grant, the Stock Option and the RSUs are subject to the terms contained in the Equity Incentive Plan, except
as otherwise provided for in the agreements governing such awards (the “Restricted Stock Agreement,” “Stock Option Agreement”
and “RSU Agreement,” respectively).
Under his employment agreement, if Mr. Dheri’s employment is
terminated by the Company for any reason other than Cause (as defined in the employment agreement), or Mr. Dheri resigns as an employee
of the Company for Good Reason (as defined in the employment agreement), so long as he has signed and has not revoked a release agreement,
he will be entitled to receive severance in the form of continued base salary over a period of six months. In addition, upon the occurrence
of a Change in Control (as defined in the employment agreement), the vesting of all outstanding unvested equity-based incentive awards
will accelerate. The employment agreement includes a provision allowing the Company to reduce the payment to which Mr. Dheri would be
entitled upon a Change-in-Control transaction to the extent needed for him to avoid paying an excise tax under Internal Revenue Code Section
280G, unless he would be better off, on an after-tax basis, receiving the full amount of such payments and paying the excise taxes due.
Mr. Dheri’s employment agreement contains customary confidentiality
and intellectual property covenants and a non-solicitation restriction that provides, among other things, that Mr. Dheri will not solicit
our employees, consultants, customers, suppliers or other business relations for a period of one year after termination of employment.
Mr. Dheri, age 49, is a proven executive leading finance teams in complex
fast-growing environments. Prior to joining the Company, Mr. Dheri served as a consultant leading IPO teams for multinational companies
in the biotech industry from 2021 to 2023. From April 2019 until May 2020, Mr. Dheri served as Vice President – Finance of Kadiant,
a private-equity owned company providing Applied Behavior Analysis (ABA) therapy to children diagnosed with autism spectrum disorder.
From November 2015 until February 2019, Mr. Dheri served as Corporate Controller of SunLink Corporation, a private company providing renewable
energy solutions including fixed-tilt and tracker systems for commercial and utility-scale installations. Previously, Mr. Dheri held finance
positions with several companies in the high-tech and healthcare industries including LiveOps Inc., CRC Health Corporation, Globalstar,
Inc. and PricewaterhouseCoopers LLP. Mr. Dheri received a Bachelor of Science from Rutgers University and is a licensed CPA in the state
of New York.
In connection with his appointment as an officer of the Company, the
Company entered into the Company’s standard form indemnification agreement for directors and officers with Mr. Dheri (the “Indemnification
Agreement”). The indemnification agreement clarifies and supplements indemnification provisions already contained in the Company’s
articles of incorporation and bylaws and generally provides that the Company shall indemnify its directors and officers to the fullest
extent permitted by applicable law, subject to certain exceptions, against expenses, judgments, fines and other amounts actually and reasonably
incurred in connection with their service as a director or officer and also provide for rights to advancement of expenses and contribution.
The foregoing summaries of Mr. Dheri’s employment agreement with
the Company, the Restricted Stock Agreement, the Stock Option Agreement and the RSU Agreement are qualified in all respects by the agreement
themselves, copies of which are attached to this report as Exhibits 10.1, 10.2, 10.3 and 10.4, respectively, and incorporated by reference
herein. The foregoing summary of the Indemnification Agreement is qualified in all respects to the form of such agreement, a copy of which
is incorporated by reference as Exhibit 10.12 to the Company’s Annual Report on Form 10-K for the year ended December 31, 2022,
and incorporated by reference herein.