Litigation

On April 26, 2024, the Company received a notice of a demand for arbitration with the American Arbitration Association from Pivot Holding LLC (“Pivot”), that alleges to be a successor in interest to Sphaera Pharma Pte. Ltd. (“Sphaera”), in connection with the Collaborative Research and Development Agreement dated February 29, 2012, as amended, between the Company and Sphaera (the "Agreement"). Pivot alleges breach of contract by the Company for failure to pay milestone payments and seeks damages of $1.625 million in milestone payments plus interest. The Company believes that Pivot’s claims are without merit and that the Company hasn’t owed and doesn’t owe any milestone payments to Pivot. The Company intends to vigorously dispute Pivot’s claims. The parties have agreed to mediate before arbitrating and a mediation is scheduled for September 6, 2024.

On June 17, 2024, the Company filed an answering statement and counterclaim, in which Inhibikase disputed Pivot’s claims and counterclaimed that Sphaera had breached the Agreement by failing to complete properly the drug development work required by the Agreement, causing the Company over $900,000 in damages.

Lease

On April 18, 2022, the Company entered into an operating lease agreement for office space at its new location in Lexington, Massachusetts (the "Office Lease"). On August 8, 2022, the Company commenced occupancy of the leased space. The lease runs through September 30, 2025. We have an option to extend the lease term for an additional three (3) years thereafter.

The Company accounts for the Office Lease under the provisions of ASC 842. We recorded a right-of-use asset and a corresponding operating lease liability on the Company's condensed consolidated balance sheets upon the accounting commencement date in August 2022. The lease liability was measured at the accounting commencement date utilizing a 12% discount rate. The right-of-use asset had a balance of $163,762 at June 30, 2024. The operating lease obligations totaled $177,830 at June 30, 2024, of which $152,224 is included under current liabilities and $25,606 is included under non-current liabilities. The Company recorded lease expense of $32,296 and $70,591 and other short-term payments of $5,653 and $11,306 for the three and six months ended June 30, 2024, respectively in selling, general and administrative expenses and lease expense relating to the Office Lease of $35,296 and $70,591 and other short-term payments of $5,788 and $11,576 for the three and six months ended June 30, 2023, respectively in selling, general and administrative expenses.

The Office Lease contains escalating payments during the lease period. Upon execution of the Office Lease, the Company prepaid one month of rent and a security deposit, one of which will be held in escrow and credited at the termination of the lease and the other of which will be applied to the first month’s rent.

As of June 30, 2024, a security deposit of approximately $25,000 was included in prepaid expenses and other current assets on the Company’s condensed consolidated balance sheet related to the Office Lease.