8.Related-Party Transactions
In 2020, the Company subleased office space in Torrance, California to Good Dermatology, a professional medical corporation owned by the Founder and former CEO. Under the terms of the sublease, lease expenses incurred by the Company were 100% passed through to Good Dermatology. Total sublease income was $29,174 and $58,348 for the three and six months ended June 30, 2020. The sublease was terminated as of November 30, 2020.
For the three months ended June 30, 2021 and 2020, the Company had revenue of $3,561,794 and $61,325, respectively, and for the six months ended June 30, 2021 and 2020, the Company had revenue of $7,972,026 and $97,519, respectively, and as of June 30, 2021 and December 31, 2020, receivables of $1,700,573 and $6,927,470, respectively, from Pharmaceutical Products Development, LLC, a shareholder who holds a minority interest in the Company. Pharmaceutical Products Development, LLC became a minority shareholder of the Company during the first quarter of 2019.
For the three months ended June 30, 2021 and 2020, the Company had revenue of $218,564 and $83,570, respectively, and for the six months ended June 30, 2021 and 2020, the Company had revenue of $295,544 and $118,563, respectively, and as of June 30, 2021 and December 31, 2020, receivables of $153,091 and $129,857, respectively, from Novartis, who has a 50% ownership in dRX Capital AG, a shareholder who has a minority interest in the Company. In July 2021, dRx Capital AG was dissolved and their interest in the Company was distributed to their owners.
For the three months ended June 30, 2021 and 2020, the Company had revenue of $340,710 and $0, respectively, and for the six months ended June 30, 2021 and 2020, the Company had revenue of $340,710 and $0, respectively, and as of June 30, 2021 and December 31, 2020, receivables of $45,510 and $0, respectively, from Allovir, who is an investee of a minority shareholder of the Company. The minority shareholder became a shareholder of the Company in the third quarter of 2016.
9.Commitments and Contingencies
Legal Proceedings
During 2019 and 2020, the Company was in state court litigation in California. Noah Craft and Belinda Tan, former co-founders and former Chief Executive Officer and Chief Medical Officer, respectively, asserted derivative claims purportedly on behalf of the Company alleging that several of its current and former directors and investors committed various breaches of duty in connection with the termination of Craft and Tan’s employment. Craft and Tan also asserted direct tort claims arising from the same facts against the non-Company defendants. Moreover, Tan asserted a direct claim against the Company and certain current and former directors for gender discrimination. The Company disputed that it was liable, and that none of Craft and Tan’s claims had merit.
On September 30, 2019, the Los Angeles County Superior Court stayed this litigation indefinitely after ruling that a contractual forum selection clause required Craft’s and Tan’s claims to be brought in Delaware. Craft and Tan have partially appealed that ruling to the California Court of Appeal.
On February 26, 2020 agreement was reached on the terms of the pending litigation described above, and on June 30, 2020, the long form agreement was executed by all parties, and was settled in court in November 2020.
The settlement agreement included the following elements:
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1)
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Within five business days after a Final Dismissal occurred:
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a.
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The Director Defendants caused their insurers to pay $100,000 to Science 37.
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b.
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Science 37 paid $3,675,000 to Plaintiffs (“First Payment”).
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2)
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Within five business days of the Plaintiffs’ receipt of the First Payment, the Plaintiffs conveyed all Science 37 shares and any other securities or interest in Science 37 shares. The Plaintiffs held the equivalent on an as converted basis of 5,901,076 common shares.
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