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What changed in Aditxt, Inc.'s 10-K — 2022 vs 2023

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Paragraph-level year-over-year comparison of Aditxt, Inc.'s 2022 and 2023 10-K annual filings, covering the Business, Risk Factors, Legal Proceedings, Cybersecurity, MD&A and Market Risk sections. Every new, removed and edited paragraph is highlighted side-by-side so you can see exactly what management changed in the 2023 report.

+545 added−359 removedSource: 10-K (2024-04-16) vs 10-K (2023-04-17)

Top changes in Aditxt, Inc.'s 2023 10-K

545 paragraphs added · 359 removed · 226 edited across 5 sections

Item 1. Business

Business — how the company describes what it does

113 edited+260 added−68 removed63 unchanged
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On October 7, 2022, the Company fully repaid the $80,000 Promissory Note and $812 of accrued interest to its Chief Executive Officer. The Chief Executive Officer and the Company entered the Promissory Note on July 21, 2022.
On October 7, 2022, the Company fully repaid the $80,000 July 2022 Promissory Note and $812 of accrued interest to its Chief Executive Officer. The Chief Executive Officer and the Company entered the July 2022 Promissory Note on July 21, 2022.
The Certificate of Designation provides that the share of Preferred Stock will have 250,000,000 votes and will vote together with the outstanding shares of the Company’s common stock as a single class exclusively with respect to any proposal to amend the Company’s Restated Certificate of Incorporation to effect a reverse stock split of the Company’s common stock.
The Certificate of Designation provides that the share of Preferred Stock will have 250,000,000 votes and will vote together with the outstanding shares of the Company’s common stock as a single class exclusively with respect to any proposal to amend the Company’s Restated Certificate of Incorporation to effect a reverse stock split of the Company’s common stock.
The Preferred Stock will be voted, without action by the holder, on any such proposal in the same proportion as shares of common stock are voted. The Preferred Stock otherwise has no voting rights except as otherwise required by the General Corporation Law of the State of Delaware.
The Preferred Stock will be voted, without action by the holder, on any such proposal in the same proportion as shares of common stock are voted. The Preferred Stock otherwise has no voting rights except as otherwise required by the General Corporation Law of the State of Delaware.
The Preferred Stock has no rights with respect to any distribution of assets of the Company, including upon a liquidation, bankruptcy, reorganization, merger, acquisition, sale, dissolution or winding up of the Company, whether voluntarily or involuntarily. The holder of the Preferred Stock will not be entitled to receive dividends of any kind.
The Preferred Stock has no rights with respect to any distribution of assets of the Company, including upon a liquidation, bankruptcy, reorganization, merger, acquisition, sale, dissolution or winding up of the Company, whether voluntarily or involuntarily. The holder of the Preferred Stock will not be entitled to receive dividends of any kind.
The outstanding share of Preferred Stock shall be redeemed in whole, but not in part, at any time (i) if such redemption is ordered by the Board of Directors in its sole discretion or (ii) automatically upon the effectiveness of the amendment to the Certificate of Incorporation implementing a reverse stock split.
The outstanding share of Preferred Stock shall be redeemed in whole, but not in part, at any time (i) if such redemption is ordered by the Board of Directors in its sole discretion or (ii) automatically upon the effectiveness of the amendment to the Certificate of Incorporation implementing a reverse stock split.
The Company recognized stock-based compensation expense related to options granted and vesting expense of $791,187 during the year ended December 31, 2022, of which $555,772 is included in general and administrative expenses and $235,415 is included in research and development expenses in the accompanying statements of operations.
The Company recognized stock-based compensation expense related to all options granted and vesting expense of $791,187 during the year ended December 31, 2022, of which $555,772 is included in general and administrative expenses and $235,415 is included in research and development expenses in the accompanying statements of operations.
F-7 ADITXT, INC. NOTES TO FINANCIAL STATEMENTS NOTE 1 – ORGANIZATION AND NATURE OF BUSINESS Company Background Overview We are a biotech innovation company with a mission of prolonging life and enhancing its quality by improving the health of the immune system.
F-7 ADITXT, INC. NOTES TO CONSOLIDATED FINANCIAL STATEMENTS NOTE 1 – ORGANIZATION AND NATURE OF BUSINESS Company Background Overview We are a biotech innovation company with a mission of prolonging life and enhancing its quality by improving the health of the immune system.
(Note 11) On July 19, 2022, the Company entered into a Subscription and Investment Representation Agreement with its Chief Executive Officer (the “Purchaser”), pursuant to which the Company agreed to issue and sell one (1) share of the Company’s Series B Preferred Stock (the “Preferred Stock”), par value $0.001 per share, to the Purchaser for $20,000 in cash.
(Note 11) On July 19, 2022, the Company entered into a Subscription and Investment Representation Agreement with its Chief Executive Officer (the “Purchaser”), pursuant to which the Company agreed to issue and sell one (1) share of the Company’s Series B Preferred Stock (the “Series B Preferred Stock”), par value $0.001 per share, to the Purchaser for $20,000 in cash.
NOTE 11 – STOCKHOLDERS’ EQUITY Common Stock On May 24, 2021, the Company increased the number of authorized shares of the Company’s common stock, par value $0.001 per share, from 27,000,000 to 100,000,000 (the “Authorized Shares Increase”) by filing a Certificate of Amendment (the “Certificate of Amendment”) to its Amended and Restated Certificate of Incorporation with the Secretary of State of the State of Delaware.
NOTE 10 – STOCKHOLDERS’ EQUITY Common Stock On May 24, 2021, the Company increased the number of authorized shares of the Company’s common stock, par value $0.001 per share, from 27,000,000 to 100,000,000 (the “Authorized Shares Increase”) by filing a Certificate of Amendment (the “Certificate of Amendment”) to its Amended and Restated Certificate of Incorporation with the Secretary of State of the State of Delaware.
In determining this rate, which is used to determine the present value of future lease payments, we estimate the rate of interest we would pay on a collateralized basis, with similar payment terms as the lease and in a similar economic environment. F-18 Our corporate headquarters is located in Richmond, Virginia, where we lease approximately 25,000 square feet.
In determining this rate, which is used to determine the present value of future lease payments, we estimate the rate of interest we would pay on a collateralized basis, with similar payment terms as the lease and in a similar economic environment. Our corporate headquarters is located in Richmond, Virginia, where we lease approximately 25,000 square feet.
The total amount of interest and fees payable by the Company to the April Lender under the April Loan (the "April Repayment Amount") will be (i) $1,000,000 if paid prior to April 6, 2023, (ii) $1,219,000 if paid prior to April 10, 2023, or (iii) $1,590,000 if paid after April 10, 2023 and will be repaid in 20 weekly installments of $79,500 commencing on April 10, 2023 and ending on August 21, 2023.
The total amount of interest and fees payable by the Company to the April Lender under the April Loan (the “April Repayment Amount”) will be (i) $1,000,000 if paid prior to April 6, 2023, (ii) $1,219,000 if paid prior to April 10, 2023, or (iii) $1,590,000 if paid after April 10, 2023, and will be repaid in 20 weekly installments of $79,500 commencing on April 10, 2023 and ending on August 21, 2023.
The Shares were offered, issued, and sold at a price to the public of $75.00 per share under a prospectus supplement and accompanying prospectus filed with the SEC pursuant to an effective shelf registration statement filed with the SEC on Form S-3 (File No. 333-257645), which was declared effective by the SEC on July 13, 2021.
The Shares were offered, issued, and sold at a price to the public of $3,000.00 per share under a prospectus supplement and accompanying prospectus filed with the SEC pursuant to an effective shelf registration statement filed with the SEC on Form S-3 (File No. 333-257645), which was declared effective by the SEC on July 13, 2021.
In addition, for receivables due from U.S government agencies, the Company does not believe the receivables represent a credit risk as these are related to healthcare programs funded by the U.S. government and payment is primarily dependent upon submitting the appropriate documentation. Cash and Cash Equivalents Cash and cash equivalents include short-term, liquid investments.
In addition, for receivables due from U.S. government agencies, the Company does not believe the receivables represent a credit risk as these are related to healthcare programs funded by the U.S. government and payment is primarily dependent upon submitting the appropriate documentation. F-11 Cash and Cash Equivalents Cash and cash equivalents include short-term, liquid investments.
The services performed include the analysis of specimens received in the Company’s CLIA laboratory and the generation of results which are then delivered upon completion. F-11 The Company recognizes revenue in the following manner for the following types of customers: Client Payers: Client payers include physicians or other entities for which services are billed based on negotiated fee schedules.
The services performed include the analysis of specimens received in the Company’s CLIA laboratory and the generation of results which are then delivered upon completion. The Company recognizes revenue in the following manner for the following types of customers: Client Payers: Client payers include physicians or other entities for which services are billed based on negotiated fee schedules.
In accordance with the General Corporation Law of the State of Delaware, the Authorized Shares Increase and the Certificate of Amendment were approved by the stockholders of the Company at the Company’s Annual Meeting of Stockholders on May 19, 2021. On September 13, 2022, the Company effectuated a 1 for 50 reverse stock split (the “Reverse Split”).
In accordance with the General Corporation Law of the State of Delaware, the Authorized Shares Increase and the Certificate of Amendment were approved by the stockholders of the Company at the Company’s Annual Meeting of Stockholders on May 19, 2021. On September 13, 2022, the Company effectuated a 1 for 50 reverse stock split (the “2022 Reverse Split”).
Pursuant to the terms of the Promissory Note, it will accrue interest at a rate of four and three-quarters percent (4.75%) per annum, the Prime rate on the date of signing, and is due on the earlier of January 22, 2023, or an event of default.
Pursuant to the terms of the July 2022 Promissory Note, it will accrue interest at a rate of four and three-quarters percent (4.75%) per annum, the Prime rate on the date of signing, and is due on the earlier of January 22, 2023, or an event of default.
Stock-based compensation is recognized as expense over the employee’s requisite vesting period and over the nonemployee’s period of providing goods or services. Patents The Company incurs fees from patent licenses, which is reflected in research and development expenses, and are expensed as incurred.
Stock-based compensation is recognized as expense over the employee’s requisite vesting period and over the nonemployee’s period of providing goods or services. F-13 Patents The Company incurs fees from patent licenses, which are reflected in research and development expenses, and are expensed as incurred.
As of December 31, 2022 and 2021, the Company has recorded no liability for unrecognized tax benefits, interest, or penalties related to federal and state income tax matters and there currently no pending tax examinations. The Company will recognize interest and penalties related to uncertain tax positions in income tax expense.
As of December 31, 2023 and 2022, the Company has recorded no liability for unrecognized tax benefits, interest, or penalties related to federal and state income tax matters and there currently no pending tax examinations. The Company will recognize interest and penalties related to uncertain tax positions in income tax expense.
NOTE 9 – LEASES Our lease agreements generally do not provide an implicit borrowing rate; therefore, an internal incremental borrowing rate is determined based on information available at lease commencement date for purposes of determining the present value of lease payments.
NOTE 8 – LEASES Our lease agreements generally do not provide an implicit borrowing rate; therefore, an internal incremental borrowing rate is determined based on information available at lease commencement date for purposes of determining the present value of lease payments.
F-20 License Agreement with Leland Stanford Junior University On February 3, 2020, we entered into an exclusive license agreement (the “February 2020 License Agreement”) with Stanford regarding a patent concerning a method for detection and measurement of specific cellular responses.
F-22 License Agreement with Leland Stanford Junior University On February 3, 2020, we entered into an exclusive license agreement (the “February 2020 License Agreement”) with Stanford regarding a patent concerning a method for detection and measurement of specific cellular responses.
As of December 31, 2022 and 2021, the Company had state research and development tax credit carryforwards of approximately $0.4 million and $0.2 million, respectively, which may be available to reduce future tax liabilities and can be carried over indefinitely.
As of December 31, 2023 and 2022, the Company had state research and development tax credit carryforwards of approximately $0.4 million and $0.2 million, respectively, which may be available to reduce future tax liabilities and can be carried over indefinitely.
In consideration for the LLU License Agreement, we issued 500 shares of common stock to LLU. Pursuant to the LLU License Agreement, we are required to pay an annual license fee to LLU. Also, we paid LLU $455,000 in July 2020 for outstanding milestone payments and license fees.
In consideration for the LLU License Agreement, we issued 13 shares of common stock to LLU. Pursuant to the LLU License Agreement, we are required to pay an annual license fee to LLU. Also, we paid LLU $455,000 in July 2020 for outstanding milestone payments and license fees.
Upon such redemption, the holder of the Preferred Stock will receive consideration of $20,000 in cash. On September 13, 2022, the share was redeemed. Redemption of Series B Preferred Stock On October 7, 2022, the Company paid $20,000 in consideration for the one share of Preferred Stock which was redeemed on September 13, 2022.
Upon such redemption, the holder of the Preferred Stock will receive consideration of $20,000 in cash. F-27 Redemption of Series B Preferred Stock On October 7, 2022, the Company paid $20,000 in consideration for the one share of Preferred Stock which was redeemed on September 13, 2022.
Accordingly, a full valuation allowance has been established against these net deferred tax assets as of December 31, 2022 and 2021, respectively. The Company reevaluates the positive and negative evidence at each reporting period.
Accordingly, a full valuation allowance has been established against these net deferred tax assets as of December 31, 2023 and 2022, respectively. The Company reevaluates the positive and negative evidence at each reporting period.
On July 19, 2022, the Company filed a certificate of designation (the “Certificate of Designation”) with the Secretary of State of Delaware, effective as of the time of filing, designating the rights, preferences, privileges and restrictions of the share of Preferred Stock.
On July 19, 2022, the Company filed a certificate of designation (the “Certificate of Designation”) with the Secretary of State of Delaware, effective as of the time of filing, designating the rights, preferences, privileges and restrictions of the share of Series B Preferred Stock.
Any limitation may result in expiration of a portion of the net operating loss carryforwards or research and development tax credit carryforwards before utilization. F-28 The Company has not, as of yet, conducted a study of research and development tax credit carryforwards.
Any limitation may result in expiration of a portion of the net operating loss carryforwards or research and development tax credit carryforwards before utilization. The Company has not, as of yet, conducted a study of research and development tax credit carryforwards.
In lieu of the $175,000 milestone payment due on March 31, 2022, the Company paid LLU an extension fee of $100,000. Upon payment of this extension fee, an additional year will be added for the March 31, 2022 milestone.
In lieu of the $175,000 milestone payment due on March 31, 2023, the Company paid LLU an extension fee of $100,000. Upon payment of this extension fee, an additional year will be added for the March 31, 2023 milestone.
The Company has federal net operating losses generated following 2017 of $56.5 million, which do not expire. The federal net operating losses generated prior to 2018 of $0.1 million will expire at various dates through 2037. The CARES Act temporarily allows the Company to carryback net operating losses arising in 2018, 2019 and 2020 to the five prior tax years.
The Company has federal net operating losses generated following 2017 of $75.1 million, which do not expire. The federal net operating losses generated prior to 2018 of $0.1 million will expire at various dates through 2037. The CARES Act temporarily allows the Company to carryback net operating losses arising in 2018, 2019 and 2020 to the five prior tax years.
Concentrations of Credit Risk Financial instruments that potentially subject the Company to concentrations of credit risk consist primarily of cash and cash equivalents and accounts receivable. The Company maintains its cash accounts at financial institutions which are insured by the Federal Deposit Insurance Corporation. At times, the Company may have deposits in excess of federally insured limits.
(See Note 9) Concentrations of Credit Risk Financial instruments that potentially subject the Company to concentrations of credit risk consist primarily of cash and cash equivalents and accounts receivable. The Company maintains its cash accounts at financial institutions which are insured by the Federal Deposit Insurance Corporation. At times, the Company may have deposits in excess of federally insured limits.
We were obligated to pay and paid a fee of $25,000 to Stanford within 60 days of February 3, 2020. We also issued 375 shares of the Company’s common stock to Stanford.
We were obligated to pay and paid a fee of $25,000 to Stanford within 60 days of February 3, 2020. We also issued 10 shares of the Company’s common stock to Stanford.
On February 21, 2023, the Company entered into an agreement for the purchase and sale of future receipts (the “Future Receipts Agreement”) with a commercial funding source pursuant to which the Company agreed to sell to the funder certain future trade receipts in the aggregate amount of $2,160,000 (the “Future Receipts Purchased Amount” for gross proceeds to the Company of $1,500,000, less origination fees of $75,000.
NOTE 7 – NOTES PAYABLE On February 21, 2023, the Company entered into an agreement for the purchase and sale of future receipts (the “Future Receipts Agreement”) with a commercial funding source pursuant to which the Company agreed to sell to the funder certain future trade receipts in the aggregate amount of $2,160,000 (the “Future Receipts Purchased Amount” for gross proceeds to the Company of $1,500,000, less origination fees of $75,000.
A reconciliation of income tax expense (benefit) computed at the statutory federal income tax rate to income taxes as reflected in the financial statements is as follows: 2022 2021 Income taxes at U.S. statutory rate 21 % 21 % State income taxes 1.6 6.9 Tax Credits 1.0 0.1 Permanent Differences/Others (10.5 ) (5.0 ) Change in valuation allowance (13.1 ) (23.0 ) Total provision for income taxes 0 % 0 % Deferred taxes are recognized for temporary differences between the basis of assets and liabilities for financial statement and income tax purposes.
A reconciliation of income tax expense (benefit) computed at the statutory federal income tax rate to income taxes as reflected in the financial statements is as follows: 2023 2022 Income taxes at U.S. statutory rate 21 % 21 % State income taxes 0.8 1.6 Tax Credits 0.5 1.0 Permanent Differences/Others (1.9 ) (10.5 ) Change in valuation allowance (20.5 ) (13.1 ) Total provision for income taxes 0 % 0 % Deferred taxes are recognized for temporary differences between the basis of assets and liabilities for financial statement and income tax purposes.
The October 2021 Offering closed on October 20, 2021 for gross proceeds of $4.25 million. The Company utilized a portion of the proceeds, net of underwriting discounts of approximately $3.91 million from the October 2021 Offering to fund certain obligations under the Credit Agreement.
The October 2021 Offering closed on October 20, 2021 for gross proceeds of $4.25 million. The Company utilized a portion of the proceeds, net of underwriting discounts of approximately $3.91 million from the October 2021 Offering to fund certain obligations of the Company.
We used the incremental borrowing rate on December 31, 2022 and December 31, 2021 for all leases that commenced prior to that date.
We used the incremental borrowing rate on December 31, 2023 and 2022 for all leases that commenced prior to that date.
F-16 The Preferred Stock is not convertible into, or exchangeable for, shares of any other class or series of stock or other securities of the Company.
The Preferred Stock is not convertible into, or exchangeable for, shares of any other class or series of stock or other securities of the Company.
F-22 The Preferred Stock is not convertible into, or exchangeable for, shares of any other class or series of stock or other securities of the Company.
The Preferred Stock is not convertible into, or exchangeable for, shares of any other class or series of stock or other securities of the Company.
As of December 31, 2022, the Company had $0.1 million federal tax credit carryforwards available to reduce future tax liabilities which expire at various dates through 2042. As of December 31, 2021, the Company had no federal tax credit carryforwards.
As of December 31, 2023, the Company had $0.1 million federal tax credit carryforwards available to reduce future tax liabilities which expire at various dates through 2042. As of December 31, 2022, the Company had $0.1 federal tax credit carryforwards.
Pursuant to the April Loan Agreement, the Company granted the April Lender a continuing secondary security interest in certain collateral (as defined in the April Loan Agreement).
Pursuant to the July Loan Agreement, the Company granted the July Lender a continuing secondary security interest in certain collateral (as defined in the July Loan Agreement).
As of December 31, 2022 and 2021, the Company also had U.S. state net operating loss carryforwards (post-apportioned) of $26.2 million and $44.8 million, respectively, which may be available to offset future income tax liabilities and expire at various dates through 2042.
As of December 31, 2023 and 2022, the Company also had U.S. state net operating loss carryforwards (post-apportioned) of $28.2 million and $26.2 million, respectively, which may be available to offset future income tax liabilities and expire at various dates through 2042.
On October 18, 2021, the Company entered into an underwriting agreement with Revere Securities LLC, relating to the public offering (the “October 2021 Offering”) of 56,667 shares of the Company’s common stock (the “Shares”) by the Company.
On October 18, 2021, the Company entered into an underwriting agreement with Revere Securities LLC, relating to the public offering (the “October 2021 Offering”) of 1,417 shares of the Company’s common stock (the “Shares”) by the Company.
Additional Milestone Deadlines include: (i) the requirement to have regulatory approval of an IND application to initiate first-in-human clinical trials on or before March 31, 2022, which has been extended to March 31, 2023 due to payment of a $100,000 extension fee paid in March 2022, (ii) the completion of first-in-human (phase I/II) clinical trials by March 31, 2024, (iii) the completion of Phase III clinical trials by March 31, 2026 and (iv) biologic licensing approval by the FDA by March 31, 2027.
Additional Milestone Deadlines include: (i) the requirement to have regulatory approval of an IND application to initiate first-in-human clinical trials on or before March 31, 2023, which will be extended to March 31, 2024 with a payment of a $100,000 extension fee, (ii) the completion of first-in-human (phase I/II) clinical trials by March 31, 2024, (iii) the completion of Phase III clinical trials by March 31, 2026 and (iv) biologic licensing approval by the FDA by March 31, 2027.
On April 4, 2023, the Company entered into a Business Loan and Security Agreement (the "April Loan Agreement") with a commercial funding source (the "April Lender"), pursuant to which the Company obtained a loan from the April Lender in the principal amount of $1,060,000, which includes origination fees of $60,000 (the "April Loan").
F-17 On April 4, 2023, the Company entered into a Business Loan and Security Agreement (the “April Loan Agreement”) with a commercial funding source (the “April Lender”), pursuant to which the Company obtained a loan from the April Lender in the principal amount of $1,060,000, which includes origination fees of $60,000 (the “April Loan”).
Inventory Inventory consists of laboratory materials and supplies used in laboratory analysis. We capitalize inventory when purchased. Inventory is valued at the lower of cost or net realizable value on a first-in, first-out basis. We periodically perform obsolescence assessments and write off any inventory that is no longer usable.
Inventory Inventory consists of laboratory materials and supplies used in laboratory analysis. We capitalize inventory when purchased. Inventory is valued at the lower of cost or net realizable value on a first-in, first-out basis. We periodically perform obsolescence assessments and write off any inventory that is no longer usable. Fixed Assets Fixed assets are stated at cost less accumulated depreciation.
During the years ended December 31, 2022 and 2021, the Company incurred patent licensing fees for the patents of $263,273 and $76,455, respectively. Research and Development We incur research and development costs during the process of researching and developing our technologies and future offerings. We expense these costs as incurred unless such costs qualify for capitalization under applicable guidance.
During the years ended December 31, 2023 and 2022, the Company incurred patent licensing fees of $123,541 and $263,273, respectively. Research and Development We incur research and development costs during the process of researching and developing our technologies and future offerings. We expense these costs as incurred unless such costs qualify for capitalization under applicable guidance.
NOTE 3 – SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES Basis of Presentation The Company’s financial statements have been prepared in accordance with accounting principles generally accepted in the United States of America (“U.S. GAAP”) and the rules and regulations of the Securities and Exchange Commission (“SEC”). F-9 Use of Estimates The preparation of financial statements in conformity with U.S.
F-10 NOTE 3 – SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES Basis of Presentation The Company’s financial statements have been prepared in accordance with accounting principles generally accepted in the United States of America (“U.S. GAAP”) and the rules and regulations of the Securities and Exchange Commission (“SEC”).
In January of 2021, the Company purchased one piece of lab equipment and financed it for a period of twenty-four months with a monthly payment of $9,733, with an interest rate of 8%.
In January of 2021, the Company purchased one piece of lab equipment and financed it for a period of twenty-four months with a monthly payment of $9,733, with an interest rate of 8%. As of December 31, 2023, the Company has one payment in arrears.
(See Note 4) On December 6, 2021, the Company completed a public offering for net proceeds of $16.0 million (the “December 2021 Offering”). As part of the December 2021 Offering, we issued 164,929 units consisting of shares of the Company’s common stock and warrant to purchase shares of the Company’s common stock and 166,572 prefunded warrants.
F-8 On December 6, 2021, the Company completed a public offering for net proceeds of $16.0 million (the “December 2021 Offering”). As part of the December 2021 Offering, we issued 4,123 units consisting of shares of the Company’s common stock and warrant to purchase shares of the Company’s common stock and 4,164 prefunded warrants.
F-24 For the year ended December 31, 2022, the fair value of each warrant granted was estimated using the assumption and/or factors in the Black-Scholes Model as follows: Exercise price $7.50-20.00 Expected dividend yield 0 % Risk free interest rate 2.55%-3.47 % Expected life in years 5.00-5.50 Expected volatility 147%-165 % For the year ended December 31, 2021, the fair value of each warrant issued was estimated using the assumption ranges and/or factors in the Black-Scholes Model as follows: Exercise price $ 200.00 Expected dividend yield 0 % Risk free interest rate 0.17%-0.42 % Expected life in years 3.00-5.00 Expected volatility 154%-159 % The risk-free interest rate assumption for warrants granted is based upon observed interest rates on the United States Government Bond Equivalent Yield appropriate for the expected term of warrants.
Warrants For the year ended December 31, 2023 , the fair value of each warrant granted was estimated using the assumption and/or factors in the Black-Scholes Model as follows: Exercise price $ 300-2,300 Expected dividend yield 0 % Risk free interest rate 1.13%-3.47 % Expected life in years 5-5.50 Expected volatility 147-165 % For the year ended December 31, 2022, the fair value of each warrant granted was estimated using the assumption and/or factors in the Black-Scholes Model as follows: Exercise price $ 7.50-20.00 Expected dividend yield 0 % Risk free interest rate 2.55%-3.47 % Expected life in years 5.00-5.50 Expected volatility 147%-165 % The risk-free interest rate assumption for warrants granted is based upon observed interest rates on the United States Government Bond Equivalent Yield appropriate for the expected term of warrants.
The Company generally does not require collateral to support customer receivables. The Company determines if receivables are past due based on days outstanding, and amounts are written off when determined to be uncollectible by management. As of December 31, 2022 and 2021, there was an allowance for doubtful accounts of $18,634 and zero, respectively.
The Company determines if receivables are past due based on days outstanding, and amounts are written off when determined to be uncollectible by management. As of December 31, 2023 and 2022, there was an allowance for doubtful accounts of zero and $18,634, respectively.
The warrant issued as part of the units had an exercise price of $57.50 and the prefunded warrants had an exercise price of $0.001. On June 15, 2022, the Company entered an agreement with a holder of certain warrants in the December 2021 Offering.
The warrant issued as part of the units had an exercise price of $2,300.00 and the prefunded warrants had an exercise price of $0.04. On June 15, 2022, the Company entered an agreement with a holder of certain warrants in the December 2021 Offering.
In March of 2021, the Company purchased five pieces of lab equipment and financed them for a period of twenty-four months with a monthly payment of $37,171, with an interest rate of 8%.
In March of 2021, the Company purchased five pieces of lab equipment and financed them for a period of twenty-four months with a monthly payment of $37,171, with an interest rate of 8%. As of December 31, 2023, the Company has four payments in arrears.
In addition, the Company issued a warrant to the placement agent to purchase up to 4,584 shares of common stock at an exercise price of $150.00 per share.
In addition, the Company issued a warrant to the placement agent to purchase up to 115 shares of common stock at an exercise price of $6,000.00 per share.
As of December 31, 2022 and 2021, the Company had U.S. federal net operating loss carryforwards of $56.6 million and $38.0 million, respectively, which may be available to offset future income tax liabilities.
F-35 As of December 31, 2023 and 2022, the Company had U.S. federal net operating loss carryforwards of $75.2 million and $56.6 million, respectively, which may be available to offset future income tax liabilities.
The Company also granted 11,644 Restricted Stock Units and, 18,469 Restricted Stock Units vested which resulted in the issuance of shares. As a result, the Company recognized expense of $1,209,906 in stock-based compensation. The stock-based compensation for shares issued or RSU’s granted during the period were valued based on the fair market value on the date of grant.
The Company also granted 292 RSUs, 463 vested and resulted in the issuance of shares. As a result, the Company recognized expense of $1,209,906 in stock-based compensation. The stock-based compensation for shares issued or RSU’s granted during the period were valued based on the fair market value on the date of grant.
F-15 Financed Assets: In October 2020, the Company purchased two pieces of lab equipment and financed them for a period of twenty-four months with a monthly payment of $19,487, with an interest rate of 8%.
Financed Assets: In October 2020, the Company purchased two pieces of lab equipment and financed them for a period of twenty-four months with a monthly payment of $19,487, with an interest rate of 8%. As of December 31, 2023, the Company has one payment in arrears.
(See Note 11) On September 20, 2022, the Company completed a public offering for net proceeds of $17.2 million (the “September 2022 Offering”). As part of the September 2022 Offering, we issued 1,224,333 of shares of the Company’s common stock, pre-funded warrants to purchase 2,109,000 shares of common stock, and warrants to purchase 3,333,333 shares of the Company’s common stock.
(See Note 10) On September 20, 2022, the Company completed a public offering for net proceeds of $17.2 million (the “September 2022 Offering”). As part of the September 2022 Offering, we issued 30,608 of shares of the Company’s common stock, pre-funded warrants to purchase 52,725 shares of common stock, and warrants to purchase 83,333 shares of the Company’s common stock.
A total of 60,000 shares of common stock, par value $0.001 per share, of the Company may be issued pursuant to Awards granted under the 2021 Plan.
The Pearsanta 2023 Plan consists of a total of 15,000,000 shares of Pearsanta common stock, par value $0.001 per share, which may be issued pursuant to Pearsanta Awards granted under the Pearsanta 2023 Plan.
There have been several ASUs to date, including those above, that amend the original text of ASC. Management believes that those issued to date either (i) provide supplemental guidance, (ii) are technical corrections, (iii) are not applicable to us or (iv) are not expected to have a significant impact on our financial statements.
Management believes that those issued to date either (i) provide supplemental guidance, (ii) are technical corrections, (iii) are not applicable to us or (iv) are not expected to have a significant impact on our financial statements.
The Company’s stock began trading at the Reverse Split price effective on the Nasdaq Stock Market on September 14, 2022. There was no change to the number of authorized shares of the Company’s common stock.
The Company’s stock began trading at the 2022 Reverse Split price effective on the Nasdaq Stock Market on September 14, 2022. There was no change to the number of authorized shares of the Company’s common stock. On August 17, 2023, the Company effectuated a 1 for 40 reverse stock split (the “2023 Reverse Split”).
NOTE 2 – GOING CONCERN ANALYSIS Management Plans The Company was incorporated on September 28, 2017 and has not generated significant revenues to date. During the year ended December 31, 2022, the Company had a net loss of $27,649,876 and negative cash flow from operating activities of $22,049,040. As of December 31, 2022, the Company’s cash balance was $2,768,640.
NOTE 2 – GOING CONCERN ANALYSIS Management Plans The Company was incorporated on September 28, 2017 and has not generated significant revenues to date. During the year ended December 31, 2023, the Company had a net loss of $32,390,447 and negative cash flow from operating activities of $18,576,811. As of December 31, 2023, the Company’s cash balance was $97,102.
There were no shares of preferred stock outstanding as of December 31, 2022 and December 31, 2021, respectively.
There were 24,905 and zero shares of preferred stock outstanding as of December 31, 2023 and 2022, respectively.
Pursuant to the Future Receipts Agreement, the Company granted the funder a security interest in all of the Company’s present and future accounts receivable in an amount not to exceed the Future Receipts Purchased Amount. The Purchased Amount shall be repaid by the Company in 28 weekly installments of approximately $28,000 with the final payment due on December 7, 2022.
Pursuant to the October MCA Agreement, the Company granted the Funder a security interest in all of the Company’s present and future accounts receivable in an amount not to exceed the October MCA Purchased Amount. The October MCA Purchased Amount shall be repaid by the Company in 30 weekly installments of $149,000.
F-21 During the year ended December 31, 2022, the Company issued 148,227 shares of common stock and recognized expense of $507,558 in stock-based compensation for consulting services, consisting of capital markets and investor relations. The stock-based compensation for consulting services is calculated by the number shares multiplied by the closing price on the effective date of the contract.
F-25 During the year ended December 31, 2023, the Company issued 74,675 shares of common stock and recognized expense of $484,525 in stock-based compensation for consulting services. The stock-based compensation for consulting services is calculated by the number of shares multiplied by the closing price on the effective date of the contract.
Our immune monitoring technologies are designed to provide a personalized comprehensive profile of the immune system and we plan to utilize them in our upcoming reprogramming clinical trials to monitor subjects’ immune response before, during and after drug administration. Reverse Stock Split On September 13, 2022, the Company effectuated a 1 for 50 reverse stock split (the “Reverse Split”).
Our immune monitoring technologies are designed to provide a personalized comprehensive profile of the immune system and we plan to utilize them in our upcoming reprogramming clinical trials to monitor subjects’ immune response before, during and after drug administration. On January 1, 2023, the Company formed Adimune, Inc., a Delaware wholly owned subsidiary.
None of the Company’s fixed assets serve as collateral against any loans as of December 31, 2022 and December 31, 2021, other than those subject to the financed asset liability. As of December 31, 2022 and 2021, the fixed assets that serve as collateral subject to the financed asset liability have a carrying value of $1,359,091 and $1,690,420, respectively.
As of December 31, 2023 and 2022, the fixed assets that serve as collateral subject to the financed asset liability have a carrying value of $1,316,830 and $1,359,091, respectively.
The remaining value to be expensed is $179,892 with a weighted average vesting term of 0.75 years as of December 31, 2022.
The remaining value to be expensed is zero as of December 31, 2023. The weighted average vesting term is zero years as of December 31, 2023.
The Company’s stock began trading on a split-adjusted basis effective on the Nasdaq Stock Market on September 14, 2022. There was no change to the number of authorized shares of the Company’s common stock. All shares amounts referenced in this report are adjusted to reflect the Reverse Split.
Reverse Stock Split On September 13, 2022, the Company effectuated a 1 for 50 reverse stock split (the “2022 Reverse Split”). The Company’s stock began trading on a split-adjusted basis effective on the Nasdaq Stock Market on September 14, 2022. There was no change to the number of authorized shares of the Company’s common stock.
The significant components of the Company’s deferred tax assets and liabilities as of December 31, 2022 and 2021 are comprised of the following: Years Ended December 31, 2022 2021 Deferred tax assets Net operating loss carryforwards $ 13,499,811 $ 10,896,410 Tax credits carryforwards 430,468 161,943 Stock-based compensation 1,511,849 1,541,936 Lease liability 722,126 1,169,887 Section 174 Capitalization 1,547,343 - Loss on impairment of debt 3,288,363 4,140,318 Other 114,973 23,933 Total deferred tax assets 21,114,933 17,934,427 Valuation allowance (20,217,401 ) (16,670,590 ) Net deferred tax assets 897,533 1,263,837 Deferred tax liabilities Right of use assets (722,127 ) (1,169,887 ) Fixed assets (175,406 ) (93,950 ) Total deferred tax liabilities (897,533 ) (1,263,837 ) Net deferred taxes $ — $ — F-27 The Company has evaluated the positive and negative evidence bearing upon its ability to realize its deferred tax assets, which are comprised primarily of net operating loss carryforwards and tax credits.
The significant components of the Company’s deferred tax assets and liabilities as of December 31, 2023 and 2022 are comprised of the following: Years Ended December 31, 2023 2022 Deferred tax assets Net operating loss carryforwards $ 18,555,428 $ 13,499,811 Tax credits carryforwards 796,320 430,468 Stock-based compensation 1,580,038 1,511,849 Lease liability 486,473 722,126 Section 174 Capitalization 2,207,611 1,547,343 Loss on impairment of debt 3,326,129 3,288,363 Other 92,704 114,973 Total deferred tax assets 27,044,703 21,114,933 Valuation allowance (26,414,533 ) (20,217,400 ) Net deferred tax assets 630,170 897,533 Deferred tax liabilities Right of use assets (486,473 ) (722,127 ) Fixed assets (143,697 ) (175,406 ) Total deferred tax liabilities (630,170 ) (897,533 ) Net deferred taxes $ — $ — The Company has evaluated the positive and negative evidence bearing upon its ability to realize its deferred tax assets, which are comprised primarily of net operating loss carryforwards and tax credits.
Upon such redemption, the holder of the Preferred Stock will receive consideration of $20,000 in cash. On September 13, 2022, the share was redeemed. On July 21, 2022, the Chief Executive Officer loaned $80,000 to the Company. The loan was evidenced by an unsecured promissory note (the “Promissory Note”).
Upon such redemption, the holder of the Series C Preferred Stock will receive consideration of $1,000 in cash. On August 17, 2023, the share was redeemed. On November 30, 2023, Amro Albanna, the Chief Executive Officer of the Company, loaned $10,000 to the Company. The loan was evidenced by an unsecured promissory note (the “November Note”).
Offerings On August 31, 2021, the Company completed a registered direct offering (“August 2021 Offering”). In connection therewith, the Company issued 91,667 shares of common stock, at a purchase price of $120.00 per share, resulting in gross proceeds of approximately $11.0 million. In a concurrent private placement, the Company issued warrants to purchase up to 91,667 shares.
All share amounts referenced in this report are adjusted to reflect the 2023 Reverse Split. Offerings On August 31, 2021, the Company completed a registered direct offering (“August 2021 Offering”). In connection therewith, the Company issued 2,292 shares of common stock, at a purchase price of $4,800.00 per share, resulting in gross proceeds of approximately $11.0 million.
Maturities as follows: 2023 $ 111,512 2024 - 2025 - 2026 - 2027 - Thereafter - Total Payments $ 111,512 NOTE 6 – INTANGIBLE ASSETS The Company’s intangible assets include the following on December 31, 2022: Cost Basis Accumulated Amortization Net Proprietary Technology $ 321,000 $ (214,000 ) $ 107,000 Total Intangible Assets $ 321,000 $ (214,000 ) $ 107,000 The Company’s intangible assets include the following on December 31, 2021: Cost Basis Accumulated Amortization Net Proprietary Technology $ 321,000 $ (107,000 ) $ 214,000 Total Intangible Assets $ 321,000 $ (107,000 ) $ 214,000 Amortization expense was $107,000 and $107,000 for the years ended December 31, 2022 and 2021, respectively.
NOTE 5 – INTANGIBLE ASSETS The Company’s intangible assets include the following on December 31, 2023: Cost Basis Accumulated Amortization Net Proprietary Technology $ 321,000 $ (321,000 ) $ - Intellectual property 10,000 556 9,444 Total Intangible Assets $ 321,000 $ (321,556 ) $ 9,444 The Company’s intangible assets include the following on December 31, 2022: Cost Basis Accumulated Amortization Net Proprietary Technology $ 321,000 $ (214,000 ) $ 107,000 Total Intangible Assets $ 321,000 $ (214,000 ) $ 107,000 Amortization expense was $107,556 and $107,000 for the years ended December 31, 2023 and 2022, respectively.
The lease expires in August 2026, subject to extension. We also lease approximately 5,810 square feet of laboratory and office space in Mountain View, California. The lease expires in August 2024, subject to extension. Additionally, we lease approximately 3,150 square feet of office space in Melville, New York. The lease expires in December 2024, subject to extension.
The lease expires in August 31, 2026, subject to extension. As of December 31, 2023 the Company is 1.75 months in arrears on this lease. We also lease approximately 5,810 square feet of laboratory and office space in Mountain View, California. The lease expires in August 31, 2024, subject to extension.
Pursuant to the Future Receipts Agreement, the Company granted the funder a security interest in all of the Company’s present and future accounts receivable in an amount not to exceed the Future Receipts Purchased Amount. The Purchased Amount shall be repaid by the Company in 28 weekly installments of approximately $77,000 with the final payment due on September 5, 2023.
The Future Receipts Purchased Amount shall be repaid by the Company in 28 weekly installments of approximately $77,000 with the final payment due on September 5, 2023.
STATEMENTS OF STOCKHOLDERS’ EQUITY YEARS ENDED DECEMBER 31, 2022 AND 2021 Preferred Shares Outstanding Preferred Shares Par Preferred B Shares Outstanding Preferred B Shares Par Common Shares Outstanding Common Shares Par Treasury Stock Additional Paid-in Capital Accumulated Deficit Total Stockholders’ Equity Balance December 31, 2021 - $ - - $ - 888,597 $ 899 $ (201,605 ) $ 77,734,288 $ (67,352,809 ) $ 10,180,773 Stock option and warrant compensation - - - - - - - 1,413,904 - 1,413,904 Issuance of restricted stock units for compensation - - - - 18,469 19 - 1,209,887 - 1,209,906 Issuance of shares for services - - - - 148,227 150 - 507,408 - 507,558 Exercise of warrants, modification of warrants, and issuance of warrants - - - - 179,419 180 - 1,203,589 - 1,203,769 Sale of Series B Preferred shares to related party - - 1 - - - - 20,000 - 20,000 Redemption of Series B Preferred shares to related party - - (1 ) - - - - (20,000 ) - (20,000 ) Shares issued as inducement on loans, net of issuance costs - - - - 47,779 48 - 146,474 - 146,522 Warrants issued with loans - - - - - - - 878,622 - 878,622 Reset provision on warrants and modification of warrants - - - - - - - 37,677 (37,677 ) - Issuance of shares for debt issuance costs - - - - 10,477 11 - 96,019 - 96,030 Exercise of warrants - - - - 1,766,917 1,767 - (1,767 ) - - Issuance of shares and warrants for offering, net of issuance costs - - - - 1,224,333 1,224 - 17,232,083 - 17,233,307 Issuance costs related to exercise of warrants, modification of warrants, and issuance of warrants - - - - - - - (94,195 ) - (94,195 ) Issuance of shares for settlement of AP - - - - 9,237 9 - 79,991 - 80,000 Rounding from reverse stock split - - - - 12,015 - - (13 ) - (13 ) Net loss - - - - - - - - (27,649,876 ) (27,649,876 ) Balance December 31, 2022 - $ - - $ - 4,305,470 $ 4,307 $ (201,605 ) $ 100,443,967 $ (95,040,362 ) $ 5,206, 307 See accompanying notes to the financial statements.
CONSOLIDATED STATEMENTS OF STOCKHOLDERS’ EQUITY YEARS ENDED DECEMBER 31, 2023 AND 2022 Preferred Shares Outstanding Preferred Shares Par Preferred A-1 Shares Outstanding Preferred A-1 Shares Par Preferred B Shares Outstanding Preferred B Shares Par Preferred B-2 Shares Outstanding Preferred B-2 Shares Par Preferred C Shares Outstanding Preferred C Shares Par Common Shares Outstanding Common Shares Par Treasury Stock Additional Paid-in Capital Accumulated Deficit Non-Controlling Interest Total Stockholders’ Equity Balance December 31, 2021 - $ - - $ - - $ - - $ - - $ - 22,220 $ 22 $ (201,605 ) $ 77,735,165 $ (67,352,809 ) $ $ 10,180,773 Stock option and warrant compensation - - - - - - - - - - - - - 1,413,904 - - 1,413,904 Issuance of shares for vested restricted stock units - - - - - - - - - - 463 4 - 1,209,902 - - 1,209,906 Issuance of shares for services - - - - - - - - - - 3,707 5 - 507,553 - - 507,558 Exercise of warrants, modification of warrants, and issuance of warrants - - - - - - - - - - 4,486 5 - 1,203,764 - - 1,203,769 Sale of Series B Preferred shares to related party - - - - 1 - - - - - - - - 20,000 - - 20,000 Redemption of Series B Preferred shares to related party - - - - (1 ) - - - - - - - - (20,000 ) - - (20,000 ) Shares issued as inducement on loans, net of issuance costs - - - - - - - - - - 1,195 2 - 146,520 - - 146,522 Warrants issued with loans - - - - - - - - - - - - - 878,622 - - 878,622 Reset provision on warrants and modification of warrants - - - - - - - - - - - - - 37,677 (37,677 ) - - Issuance of shares for debt issuance costs - - - - - - - - - - 262 1 - 96,029 - - 96,030 Exercise of warrants - - - - - - - - - - 44,173 45 - (45 ) - - - Issuance of shares and warrants for offering, net of issuance costs - - - - - - - - - - 30,609 31 - 17,232,276 - - 17,232,307 Issuance costs related to exercise of warrants, modification of warrants, and issuance of warrants - - - - - - - - - - - - - (94,195 ) - - (94,195 ) Issuance of shares for settlement of AP - - - - - - - - - - 231 1 - 79,999 - - 80,000 Rounding from reverse stock split - - - - - - - - - - 301 (8 ) - (5 ) - - (13 ) Net loss - - - - - - - - - - - - - - (27,649,876 ) - (27,649,876 ) Balance December 31, 2022 - $ - - $ - - $ - - $ - - $ - 107,647 $ 108 $ (201,605 ) $ 100,448,166 $ (95,040,362 ) $ - $ 5,206,307 See accompanying notes to the consolidated financial statements.
The remaining value to be expensed is $321,603 with a weighted average vesting term of 0.40 years as of December 31, 2022. During the year ended December 31, 2022, the Company granted a total of 11,644 RSUs. As of December 31, 2022, 18,506 RSUs vested and the Company issued 18,469 shares of common stock for the 18,469 vested RSUs.
The remaining value to be expensed is $0 with a weighted average vesting term of 0 years as of December 31, 2023. During the year ended December 31, 2023, the Company granted a total of zero RSUs.
The following is an analysis of the stock option grant activity under the Plan: Vested and Nonvested Stock Options Number Weighted Average Exercise Price Weighted Average Remaining Life Outstanding December 31, 2021 44,710 $ 170.00 6.74 Granted - - - Exercised - - - Expired or forfeited - - - Outstanding December 31, 2022 44,710 $ 170.00 5.74 Nonvested Stock Options Number Weighted- Average Exercise Price Nonvested on December 31, 2021 9,063 $ 108.50 Granted - - Vested (7,038 ) 112.41 Forfeited - - Nonvested on December 31, 2022 2,025 $ 96.00 As of December 31, 2022 there were 42,685 exercisable options, these options had a weighted average exercise price $173.50.
The following is an analysis of the stock option grant activity under the Plan: Vested and Nonvested Stock Options Number Weighted Average Exercise Price Weighted Average Remaining Life Outstanding December 31, 2022 1,127 $ 6,802.93 5.74 Granted 44,445 5.01 9.86 Exercised - - - Expired or forfeited - - - Outstanding December 31, 2023 45,572 $ 173.12 9.74 Nonvested Stock Options Number Weighted- Average Exercise Price Nonvested on December 31, 2022 55 $ 3,840 Granted 44,445 5.01 Vested (44,500 ) 9.75 Forfeited - - Nonvested on December 31, 2023 - $ - As of December 31, 2023 there were 45,572 exercisable options; these options had a weighted average exercise price $173.12.
The warrants have an exercise price of $126.50 per share and are exercisable for a five-year period commencing six months from the date of issuance. The warrants exercise price was subsequently repriced to $75.00.
In a concurrent private placement, the Company issued warrants to purchase up to 2,292 shares. The warrants have an exercise price of $5,060.00 per share and are exercisable for a five-year period commencing months from the date of issuance. The warrants exercise price was subsequently repriced to $3,000.00.
On April 13, 2023, the Company formed Adivir, Inc. a Delaware, wholly owned subsidiary.
On January 1, 2023, the Company formed Pearsanta, Inc., a Delaware majority owned subsidiary. On April 13, 2023, the Company formed Adivir, Inc., a Delaware wholly owned subsidiary. On August 24, 2023, the Company formed Adivue, Inc., a Delaware wholly owned subsidiary. On October 16, 2023, the Company formed Adicure, Inc., a Delaware wholly owned subsidiary.
STATEMENTS OF CASH FLOWS Year Ended Year Ended December 31, 2022 December 31, 2021 CASH FLOWS FROM OPERATING ACTIVITIES: Net loss $ (27,649,876 ) $ (46,371,364 ) Adjustments to reconcile net loss to net cash used in operating activities Stock-based compensation 3,131,368 4,640,681 Depreciation expense 428,977 369,236 Amortization of intangible assets 107,000 107,000 Amortization of debt discount 1,533,048 1,845,358 Loss on extinguishment of debt - 2,500,970 Impairment on notes receivable 543,938 14,500,000 Disposal of fixed assets 6,976 - Changes in operating assets and liabilities: Accounts receivable (36,767 ) (312,460 ) Prepaid expenses 23,884 (306,954 ) Deposits (438,117 ) (89,844 ) Inventory (455,396 ) (494,697 ) Accounts payable and accrued expenses 412,959 1,333,930 Net cash used in operating activities (22,392,006 ) (22,278,144 ) CASH FLOWS FROM INVESTING ACTIVITIES: Purchase of fixed assets (367,079 ) (1,015,752 ) Tenant improvement allowance receivable 125,161 (287,018 ) Notes receivable and accrued interest - (15,002,521 ) Net cash used in investing activities (241,918 ) (16,305,291 ) CASH FLOWS FROM FINANCING ACTIVITIES: Proceeds from note payable - related party 80,000 - Repayments of note payable - related party (80,000 ) - Proceeds from notes and convertible notes payable, net of offering costs 2,795,000 4,473,540 Repayments of notes and convertible notes payable (3,206,887 ) (315,790 ) Sale of Series B Preferred shares to related party 20,000 - Redemption of Series B Preferred shares to related party (20,000 ) - Common stock and warrants issued for cash, net of issuance costs 17,233,307 29,868,611 Exercise of warrants, net of offering costs 1,109,574 3,727,285 Payments on financing on fixed asset (400,491 ) (598,976 ) Cash paid on extinguishment of note payable - (1,200,000 ) Net cash provided by financing activities 17,530,503 35,954,670 NET DECREASE IN CASH (5,103,421 ) (2,628,765 ) CASH AT BEGINNING OF YEAR 7,872,061 10,500,826 CASH AT END OF YEAR $ 2,768,640 $ 7,872,061 Supplemental cash flow information: Cash paid for income taxes $ - $ - Cash paid for interest expense $ 753,038 $ 15,789 NON-CASH INVESTING AND FINANCING ACTIVITIES: Issuance of shares for the settlement of notes payable $ - $ 5,749,922 Lease liability recognized from right of use asset $ - $ 3,131,388 Issuance of shares for the settlement of accounts payable $ 80,000 $ - Original offering discount on convertible note payable $ - $ 1,000,000 Debt discount from warrants issued with convertible note payable $ 878,622 $ 1,322,840 Debt discount from warrant consideration for convertible debt offering costs $ - $ 231,316 Debt discount from shares issued as inducement for convertible note payable $ 146,522 $ - Liability recognized for financed assets $ - $ 821,862 Reduction in exercise price of warrants $ - $ 102,267 Shares issued for debt offering costs $ 96,030 $ - Warrant modification $ 37,677 $ - Deferred issuance costs $ 50,000 $ - See accompanying notes to the financial statements.
CONSOLIDATED STATEMENTS OF CASH FLOWS Year Ended Year Ended December 31, 2023 December 31, 2022 CASH FLOWS FROM OPERATING ACTIVITIES: Net loss $ (32,390,447 ) $ (27,649,876 ) Adjustments to reconcile net loss to net cash used in operating activities Stock-based compensation 1,402,018 3,131,368 Depreciation expense 435,027 428,977 Amortization of intangible assets 107,556 107,000 Amortization of debt discount 2,821,629 1,533,048 Impairment on notes receivable - 543,938 Disposal of fixed assets - 6,976 Gain on note exchange agreement (51,712 ) - Changes in operating assets and liabilities: Accounts receivable 119,635 (438,117 ) Prepaid expenses 279,479 (36,767 ) Deposits 248,956 23,884 Inventory 204,591 (455,396 ) Accounts payable and accrued expenses 6,646,457 412,959 Settlement liability 1,600,000 - Net cash used in operating activities (18,576,811 ) (22,392,006 ) CASH FLOWS FROM INVESTING ACTIVITIES: Purchase of fixed assets (14,407 ) (367,079 ) Tenant improvement allowance receivable - 125,161 Net cash used in investing activities (14,407 ) (241,918 ) CASH FLOWS FROM FINANCING ACTIVITIES: Proceeds from notes - related party 1,062,523 80,000 Proceeds from notes and convertible notes payable, net of offering costs 7,903,445 2,795,000 Repayments of note payable - related party (687,523 ) (80,000 ) Repayments of note payable (3,152,488 ) (3,206,887 ) Sale of Series B Preferred shares to related party - 20,000 Redemption of Series B Preferred shares to related party - (20,000 ) Common stock and warrants issued for cash, net of issuance costs 11,054,883 17,233,307 Sale of Series C Preferred shares to related party 1,000 - Redemption of Series C Preferred shares to related party (1,000 ) - Exercise of warrants, modification of warrants, and issuance of warrants 1,000 1,109,574 Payments on financing on fixed asset (262,160 ) (400,491 ) Net cash provided by financing activities 15,919,680 17,530,503 NET INCREASE (DECREASE) IN CASH (2,671,538 ) (5,103,421 ) CASH AT BEGINNING OF YEAR 2,768,640 7,872,061 CASH AT END OF YEAR $ 97,102 $ 2,768,640 Supplemental cash flow information: Cash paid for income taxes $ - $ - Cash paid for interest expense $ 2,726,020 $ 753,038 Issuance of shares for the settlement of accounts payable $ - $ 80,000 Debt discount from warrants issued with convertible note payable $ - $ 878,622 Debt discount from shares issued as inducement for note payable $ - $ 146,522 Shares issued for debt offering costs $ 354,838 $ 96,030 Warrant modification $ 319,871 $ 37,677 Deferred issuance costs $ - $ 50,000 Issuance of shares of Pearsanta Common Stock for IP $ 10,000 $ - Assumption of notes payable from Evofem merger agreement $ 11,173,750 $ - Series A-1 Preferred shares issued for exchange agreement $ 22,277,233 $ - Accrued intertest rolled into notes payable $ 701,315 $ - Series B-2 Preferred shares issued in note exchange agreement $ 2,686,306 $ - See accompanying notes to the consolidated financial statements.

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Item 1A. Risk Factors

Risk Factors — what could go wrong, per management

64 edited+10 added−22 removed205 unchanged
Biggest changeThe testing, manufacturing, labeling, approval, selling, marketing and distribution of health and life science-related products are subject to extensive regulation, which regulations differ from country to country. 18 Successfully completing our clinical program and obtaining approval of a Biologics License Application (“BLA”) is a complex, lengthy, expensive and uncertain process, and the FDA or other applicable foreign regulator may delay, limit or deny approval of our product candidates for many reasons, including, among others, because: ● we may not be able to demonstrate that our product candidates are safe and effective in treating patients to the satisfaction of the FDA or foreign regulator; ● the results of our clinical trials may not meet the level of statistical or clinical significance required by the FDA or foreign regulator for marketing approval; ● the FDA or foreign regulator may disagree with the number, design, size, conduct or implementation of our clinical trials; ● the FDA or foreign regulator may require that we conduct additional clinical trials; ● the FDA or foreign regulator may not approve the formulation, labeling or specifications of our product candidates; ● the contract research organizations (CROs) and other contractors that we may retain to conduct our clinical trials may take actions outside of our control that materially adversely impact our clinical trials; ● the FDA or foreign regulator may find the data from preclinical studies and clinical trials insufficient to demonstrate that our product candidate(s) are safe and effective for their proposed indications; ● the FDA or foreign regulator may disagree with our interpretation of data from our preclinical studies and clinical trials; ● the FDA or foreign regulator may not accept data generated at our clinical trial sites or may disagree with us over whether to accept efficacy results from clinical trial sites outside the United States or outside the EU, as applicable, where the standard of care is potentially different from that in the United States or in the EU, as applicable; ● if and when our BLAs or foreign equivalents are submitted to the applicable regulatory authorities, such agencies may have difficulties scheduling the necessary review meetings in a timely manner, may recommend against approval of our application or may recommend or require, as a condition of approval, additional preclinical studies or clinical trials, limitations on approved labeling or distribution and use restrictions; ● the FDA or foreign regulator may require development of a Risk Evaluation and Mitigation Strategy (REMS), which would use risk minimization strategies to ensure that the benefits of certain prescription drugs outweigh their risks, as a condition of approval or post-approval; ● the FDA or other applicable foreign regulatory agencies may not approve the manufacturing processes or facilities of third-party manufacturers with which we contract; or ● the FDA or the other applicable foreign regulatory agencies may change their approval policies or adopt new regulations. 19 We may encounter substantial delays in completing our clinical studies which in turn will require additional costs, or we may fail to demonstrate adequate safety and efficacy to the satisfaction of applicable regulatory authorities.
Biggest changeSuccessfully completing our clinical program and obtaining approval of a Biologics License Application (“BLA”) is a complex, lengthy, expensive and uncertain process, and the FDA or other applicable foreign regulator may delay, limit or deny approval of our product candidates for many reasons, including, among others, because: ● we may not be able to demonstrate that our product candidates are safe and effective in treating patients to the satisfaction of the FDA or foreign regulator; ● the results of our clinical trials may not meet the level of statistical or clinical significance required by the FDA or foreign regulator for marketing approval; ● the FDA or foreign regulator may disagree with the number, design, size, conduct or implementation of our clinical trials; ● the FDA or foreign regulator may require that we conduct additional clinical trials; ● the FDA or foreign regulator may not approve the formulation, labeling or specifications of our product candidates; ● the contract research organizations (CROs) and other contractors that we may retain to conduct our clinical trials may take actions outside of our control that materially adversely impact our clinical trials; ● the FDA or foreign regulator may find the data from preclinical studies and clinical trials insufficient to demonstrate that our product candidate(s) are safe and effective for their proposed indications; ● the FDA or foreign regulator may disagree with our interpretation of data from our preclinical studies and clinical trials; ● the FDA or foreign regulator may not accept data generated at our clinical trial sites or may disagree with us over whether to accept efficacy results from clinical trial sites outside the United States or outside the EU, as applicable, where the standard of care is potentially different from that in the United States or in the EU, as applicable; 9 ● if and when our BLAs or foreign equivalents are submitted to the applicable regulatory authorities, such agencies may have difficulties scheduling the necessary review meetings in a timely manner, may recommend against approval of our application or may recommend or require, as a condition of approval, additional preclinical studies or clinical trials, limitations on approved labeling or distribution and use restrictions; ● the FDA or foreign regulator may require development of a Risk Evaluation and Mitigation Strategy (REMS), which would use risk minimization strategies to ensure that the benefits of certain prescription drugs outweigh their risks, as a condition of approval or post-approval; ● the FDA or other applicable foreign regulatory agencies may not approve the manufacturing processes or facilities of third-party manufacturers with which we contract; or ● the FDA or the other applicable foreign regulatory agencies may change their approval policies or adopt new regulations.
The risks and uncertainties that we face with respect to our rights principally include the following: ● pending patent applications we have filed or will file may not result in issued patents or may take longer than we expect to result in issued patents; ● we may be subject to interference proceedings; ● we may be subject to reexamination proceedings; ● we may be subject to post grant review proceedings; ● we may be subject to inter partes review proceedings; ● we may be subject to derivation proceedings; ● we may be subject to opposition proceedings in the U.S. or in foreign countries; ● any patents that are issued to us may not provide meaningful protection; 28 ● we may not be able to develop additional proprietary technologies that are patentable; ● other companies may challenge patents licensed or issued to us; ● other companies may have independently developed and patented (or may in the future independently develop and patent) similar or alternative technologies, or duplicate our technologies; ● other companies may design around technologies we have licensed or developed; ● enforcement of patents is complex, uncertain and very expensive and we may not be able to secure, enforce and defend our patents; and ● in the event that we were to ever seek to enforce our patents in ligation, there is some risk that they could be deemed invalid, not infringed, or unenforceable.
The risks and uncertainties that we face with respect to our rights principally include the following: ● pending patent applications we have filed or will file may not result in issued patents or may take longer than we expect to result in issued patents; ● we may be subject to interference proceedings; ● we may be subject to reexamination proceedings; ● we may be subject to post grant review proceedings; ● we may be subject to inter partes review proceedings; ● we may be subject to derivation proceedings; ● we may be subject to opposition proceedings in the U.S. or in foreign countries; ● any patents that are issued to us may not provide meaningful protection; ● we may not be able to develop additional proprietary technologies that are patentable; ● other companies may challenge patents licensed or issued to us; ● other companies may have independently developed and patented (or may in the future independently develop and patent) similar or alternative technologies, or duplicate our technologies; ● other companies may design around technologies we have licensed or developed; ● enforcement of patents is complex, uncertain and very expensive and we may not be able to secure, enforce and defend our patents; and ● in the event that we were to ever seek to enforce our patents in ligation, there is some risk that they could be deemed invalid, not infringed, or unenforceable.
For example, an acquisition or strategic transaction may entail numerous operational and financial risks, including the risks outlined above and additionally: ● exposure to unknown liabilities; ● disruption of our business and diversion of our management’s time and attention in order to develop acquired products or technologies; ● higher than expected acquisition and integration costs; ● write-downs of assets or goodwill or impairment charges; ● increased amortization expenses; ● difficulty and cost in combining the operations and personnel of any acquired businesses with our operations and personnel; ● impairment of relationships with key suppliers or customers of any acquired businesses due to changes in management and ownership; and ● inability to retain key employees of any acquired businesses.
For example, an acquisition or strategic transaction may entail numerous operational and financial risks, including the risks outlined above and additionally: ● exposure to unknown liabilities; ● disruption of our business and diversion of our management’s time and attention in order to develop acquired products or technologies; ● higher than expected acquisition and integration costs; ● write-downs of assets or goodwill or impairment charges; 25 ● increased amortization expenses; ● difficulty and cost in combining the operations and personnel of any acquired businesses with our operations and personnel; ● impairment of relationships with key suppliers or customers of any acquired businesses due to changes in management and ownership; and ● inability to retain key employees of any acquired businesses.
These risks include the possibility that any of our technologies or future products may: ● be found unsafe; ● be ineffective or less effective than anticipated; ● fail to receive necessary regulatory approvals; ● be difficult to competitively price relative to alternative solutions; ● be harmful to consumers or the environment; ● be difficult to manufacture on an economically viable scale; ● be subject to supply chain constraints for raw materials; ● fail to be developed and accepted by the market prior to the successful marketing of alternative products by competitors; ● be difficult to market because of infringement on the proprietary rights of third parties; or ● be too expensive for commercial use.
These risks include the possibility that any of our technologies or future products may: ● be found unsafe; ● be ineffective or less effective than anticipated; 15 ● fail to receive necessary regulatory approvals; ● be difficult to competitively price relative to alternative solutions; ● be harmful to consumers or the environment; ● be difficult to manufacture on an economically viable scale; ● be subject to supply chain constraints for raw materials; ● fail to be developed and accepted by the market prior to the successful marketing of alternative products by competitors; ● be difficult to market because of infringement on the proprietary rights of third parties; or ● be too expensive for commercial use.
This can be a costly and resource draining activity. What appear to be promising technologies when we license them may not lead to viable technologies or products, or to commercial success. Complying with numerous regulations pertaining to our business is an expensive and time-consuming process, and any failure to comply could result in substantial penalties.
This can be a costly and resource draining activity. What appear to be promising technologies when we license them may not lead to viable technologies or products, or to commercial success. 13 Complying with numerous regulations pertaining to our business is an expensive and time-consuming process, and any failure to comply could result in substantial penalties.
We believe that a significant number of products are currently available, under development, and may become commercially available in the future, for the treatment of indications for which we may try to develop product candidates. 24 More established companies may have a competitive advantage over us due to their greater size, cash flows and institutional experience.
We believe that a significant number of products are currently available, under development, and may become commercially available in the future, for the treatment of indications for which we may try to develop product candidates. More established companies may have a competitive advantage over us due to their greater size, cash flows and institutional experience.
Even if we believe we have sufficient funds for our current or future operating plans, we may seek additional capital if market conditions are favorable or if we have specific strategic considerations. Any additional fundraising efforts may divert our management from their day-to-day activities, which may adversely affect our ability to develop and commercialize our product candidates.
Even if we believe we have sufficient funds for our current or future operating plans, we may seek additional capital if market conditions are favorable or if we have specific strategic considerations. 7 Any additional fundraising efforts may divert our management from their day-to-day activities, which may adversely affect our ability to develop and commercialize our product candidates.
Moreover, these reporting obligations increase our legal and financial compliance costs and make some activities more time-consuming and costly. Failure to develop our internal controls over financial reporting as we grow could have an adverse impact on us. As our Company matures, we will need to develop our current internal control systems and procedures to manage our growth.
Moreover, these reporting obligations increase our legal and financial compliance costs and make some activities more time-consuming and costly. 26 Failure to develop our internal controls over financial reporting as we grow could have an adverse impact on us. As our Company matures, we will need to develop our current internal control systems and procedures to manage our growth.
The Company does not hold any deposits or securities or maintain any accounts at SVB or Signature Bank. Risks Related to Product Development, Regulatory Approval, Manufacturing and Commercialization The regulatory approval process is expensive, time-consuming and uncertain and may prevent us from obtaining approvals for the commercialization of our future product candidates, if any.
The Company does not hold any deposits or securities or maintain any accounts at SVB or Signature Bank. 8 Risks Related to Product Development, Regulatory Approval, Manufacturing and Commercialization The regulatory approval process is expensive, time-consuming and uncertain and may prevent us from obtaining approvals for the commercialization of our future product candidates, if any.
In such an event, our competitors might be able to enter our markets, which could have a material adverse effect on our business. We may be subject to claims by third parties asserting that our employees or we have misappropriated their intellectual property or claiming ownership of what we regard as our own intellectual property.
In such an event, our competitors might be able to enter our markets, which could have a material adverse effect on our business. 21 We may be subject to claims by third parties asserting that our employees or we have misappropriated their intellectual property or claiming ownership of what we regard as our own intellectual property.
There can be no assurance that we will have assets available from which to pay any amounts to our stockholders upon such a liquidation, dissolution or winding-up. In such an event, you would lose all of your investment. 35 Limitation of Liability and Indemnification of Management.
There can be no assurance that we will have assets available from which to pay any amounts to our stockholders upon such a liquidation, dissolution or winding-up. In such an event, you would lose all of your investment. Limitation of Liability and Indemnification of Management.
Even if it were possible for us to bring our laboratory back into compliance, we could incur significant expenses and potentially lose revenue in doing so. 23 Additionally, certain states require laboratory licenses in order to test specimens from patients in those states or received from ordering physicians in those states.
Even if it were possible for us to bring our laboratory back into compliance, we could incur significant expenses and potentially lose revenue in doing so. Additionally, certain states require laboratory licenses in order to test specimens from patients in those states or received from ordering physicians in those states.
Third parties may assert infringement claims against us based on existing intellectual property rights and intellectual property rights that may be granted in the future. 30 If we are found to infringe a third party’s intellectual property rights, we could be required to obtain a license from such third party to continue developing and marketing our products.
Third parties may assert infringement claims against us based on existing intellectual property rights and intellectual property rights that may be granted in the future. If we are found to infringe a third party’s intellectual property rights, we could be required to obtain a license from such third party to continue developing and marketing our products.
A delisting of our common stock from Nasdaq could also adversely affect our ability to obtain financing for our operations and/or result in a loss of confidence by investors, employees and/or business partners. 33 We do not expect to pay dividends in the foreseeable future.
A delisting of our common stock from Nasdaq could also adversely affect our ability to obtain financing for our operations and/or result in a loss of confidence by investors, employees and/or business partners. We do not expect to pay dividends in the foreseeable future.
We may not be able to raise sufficient funds to commercialize the product candidates we intend to develop. 16 If we cannot raise adequate funds to satisfy our capital requirements, we will have to delay, scale back or eliminate our research and development activities, clinical studies or future operations.
We may not be able to raise sufficient funds to commercialize the product candidates we intend to develop. If we cannot raise adequate funds to satisfy our capital requirements, we will have to delay, scale back or eliminate our research and development activities, clinical studies or future operations.
As a result, we cannot accurately predict the volume or timing of any future sales. 25 Customers may not adopt our products quickly, or at all. Customers in the sector in which we operate can be generally cautious in their adoption of new products and technologies.
As a result, we cannot accurately predict the volume or timing of any future sales. Customers may not adopt our products quickly, or at all. Customers in the sector in which we operate can be generally cautious in their adoption of new products and technologies.
Additionally, if we need to enter into agreements for the distribution of our future products with other third parties, there can be no assurance we will be able to do so on favorable terms, if at all. We may rely on third parties for the production of our future products.
Additionally, if we need to enter into agreements for the distribution of our future products with other third parties, there can be no assurance we will be able to do so on favorable terms, if at all. 16 We may rely on third parties for the production of our future products.
Our failure to hire and retain such personnel could impair our ability to develop new products and manage our business effectively. The loss of our management team or other key personnel would have an adverse impact on our future development and impair our ability to succeed.
Our failure to hire and retain such personnel could impair our ability to develop new products and manage our business effectively. 17 The loss of our management team or other key personnel would have an adverse impact on our future development and impair our ability to succeed.
Additional Milestone Deadlines include: (i) the requirement to have regulatory approval of an IND application to initiate first-in-human clinical trials on or before March 31, 2022 (which has been extended to March 31, 2023 due to payment of a $100,000 extension fee in March 2022), (ii) the completion of first-in-human (phase I/II) clinical trials by March 31, 2024, (iii) the completion of Phase III clinical trials by March 31, 2026 and (iv) biologic licensing approval (BLA) by the FDA by March 31, 2027.
Additional Milestone Deadlines include: (i) the requirement to have regulatory approval of an IND application to initiate first-in-human clinical trials on or before March 31, 2023 (which has been extended to March 31, 2024 with a payment of a $100,000 extension fee), (ii) the completion of first-in-human (phase I/II) clinical trials by March 31, 2024, (iii) the completion of Phase III clinical trials by March 31, 2026 and (iv) biologic licensing approval (BLA) by the FDA by March 31, 2027.
Risks Related to the Company and our Business Our technology is subject to licenses from LLU and Stanford, each of which are revocable in certain circumstances, including in the event we do not achieve certain payments and milestone deadlines. Without these licenses, we may not be able to continue to develop our product candidates.
Risks Related to the Company and our Business Certain technologies are subject to licenses from LLU and Stanford, each of which are revocable in certain circumstances, including in the event we do not achieve certain payments and milestone deadlines. Without these licenses, we may not be able to continue to develop our product candidates.
The note receivable to Cellvera Global was deemed impaired and written down to zero as of December 31, 2021. 34 We may engage in future acquisitions or strategic transactions, including the transaction with Cellvera Global, which may require us to seek additional financing or financial commitments, increase our expenses and/or present significant distractions to our management.
The note receivable to Cellvera Global was deemed impaired and written down to zero as of December 31, 2021. We may engage in future acquisitions or strategic transactions, which may require us to seek additional financing or financial commitments, increase our expenses and/or present significant distractions to our management.
If the results of our clinical studies are inconclusive or if there are safety concerns or adverse events associated with our other product candidates, we may: ● be delayed in obtaining marketing approval for our product candidates, if approved at all; ● obtain approval for indications or patient populations that are not as broad as intended or desired; ● obtain approval with labeling that includes significant use or distribution restrictions or safety warnings; ● be required to change the way the product is administered; ● be required to perform additional clinical studies to support approval or be subject to additional post-marketing testing requirements; ● have regulatory authorities withdraw their approval of a product or impose restrictions on its distribution in the form of a modified risk evaluation and mitigation strategy; ● be sued; or ● experience damage to our reputation.
If the results of our clinical studies are inconclusive or if there are safety concerns or adverse events associated with our other product candidates, we may: ● be delayed in obtaining marketing approval for our product candidates, if approved at all; ● obtain approval for indications or patient populations that are not as broad as intended or desired; ● obtain approval with labeling that includes significant use or distribution restrictions or safety warnings; ● be required to change the way the product is administered; ● be required to perform additional clinical studies to support approval or be subject to additional post-marketing testing requirements; ● have regulatory authorities withdraw their approval of a product or impose restrictions on its distribution in the form of a modified risk evaluation and mitigation strategy; ● be sued; or ● experience damage to our reputation. 11 Additionally, our product candidates could potentially cause other adverse events that have not yet been predicted.
On December 28, 2021, we entered into a Share Exchange Agreement with Cellvera Global f/k/a AiPharma Global, pursuant to which we (i) will acquire 9.5% of the issued and outstanding equity interests in Cellvera Global in exchange for the issuance of 96,324 shares of our common stock of Aditxt and a cash payment of $250,000, at an initial closing upon the satisfaction or waiver of certain conditions to closing; and (ii) acquire the remaining 90.5% of the issued and outstanding equity interests in Cellvera Global in exchange for the issuance of 798,560 shares of our common stock and a cash payment of $250,000 at a secondary closing upon the satisfaction or waiver of certain conditions to closing.
On December 28, 2021, we entered into a Share Exchange Agreement with Cellvera Global f/k/a AiPharma Global, pursuant to which we (i) will acquire 9.5% of the issued and outstanding equity interests in Cellvera Global in exchange for the issuance of 61 shares of our common stock of Aditxt and a cash payment of $250,000, at an initial closing upon the satisfaction or waiver of certain conditions to closing; and (ii) acquire the remaining 90.5% of the issued and outstanding equity interests in Cellvera Global in exchange for the issuance of 500 shares of our common stock and a cash payment of $250,000 at a secondary closing upon the satisfaction or waiver of certain conditions to closing.
Any of these limitations on approval or marketing could restrict the commercial promotion, distribution, prescription or dispensing of our product candidates. Moreover, product approvals may be withdrawn for non-compliance with regulatory standards or if problems occur following the initial marketing of the product.
Any of these limitations on approval or marketing could restrict the commercial promotion, distribution, prescription or dispensing of our product candidates. Moreover, product approvals may be withdrawn for non-compliance with regulatory standards or if problems occur following the initial marketing of the product. Any of the foregoing scenarios could materially harm the commercial success of our product candidates.
The degree of market acceptance for any of our product candidates will depend on a number of factors, including: ● demonstration of clinical safety and efficacy; ● relative convenience, dosing burden and ease of administration; ● the prevalence and severity of any adverse effects; ● the willingness of physicians to prescribe our product candidates, and the target patient population to try new therapies; 21 ● efficacy of our product candidates compared to competing products; ● the introduction of any new products that may in the future become available targeting indications for which our product candidates may be approved; ● new procedures or therapies that may reduce the incidences of any of the indications in which our product candidates may show utility; ● pricing and cost-effectiveness; ● the inclusion or omission of our product candidates in applicable therapeutic and vaccine guidelines; ● the effectiveness of our own or any future collaborators’ sales and marketing strategies; ● limitations or warnings contained in approved labeling from regulatory authorities; ● our ability to obtain and maintain sufficient third-party coverage or reimbursement from government health care programs, including Medicare and Medicaid, private health insurers and other third-party payors or to receive the necessary pricing approvals from government bodies regulating the pricing and usage of therapeutics; and ● the willingness of patients to pay out-of-pocket in the absence of third-party coverage or reimbursement or government pricing approvals.
The degree of market acceptance for any of our product candidates will depend on a number of factors, including: ● demonstration of clinical safety and efficacy; ● relative convenience, dosing burden and ease of administration; ● the prevalence and severity of any adverse effects; ● the willingness of physicians to prescribe our product candidates, and the target patient population to try new therapies; ● efficacy of our product candidates compared to competing products; ● the introduction of any new products that may in the future become available targeting indications for which our product candidates may be approved; ● new procedures or therapies that may reduce the incidences of any of the indications in which our product candidates may show utility; ● pricing and cost-effectiveness; ● the inclusion or omission of our product candidates in applicable therapeutic and vaccine guidelines; ● the effectiveness of our own or any future collaborators’ sales and marketing strategies; ● limitations or warnings contained in approved labeling from regulatory authorities; ● our ability to obtain and maintain sufficient third-party coverage or reimbursement from government health care programs, including Medicare and Medicaid, private health insurers and other third-party payors or to receive the necessary pricing approvals from government bodies regulating the pricing and usage of therapeutics; and ● the willingness of patients to pay out-of-pocket in the absence of third-party coverage or reimbursement or government pricing approvals. 12 If any of our product candidates are approved, but do not achieve an adequate level of acceptance by physicians, health care payors, and patients, we may not generate sufficient revenues and we may not be able to achieve or sustain profitability.
Events that may prevent successful or timely completion of clinical development include: ● delays in reaching, or failing to reach, a consensus with regulatory agencies on study design; ● delays in reaching, or failing to reach, agreement on acceptable terms with a sufficient number of prospective contract research organizations (“CROs”) and clinical study sites, the terms of which can be subject to extensive negotiation and may vary significantly among different CROs and trial sites; ● delays in obtaining required Institutional Review Board (“IRB”) or Ethics Committee (“EC”) approval at each clinical study site; ● delays in recruiting a sufficient number of suitable patients to participate in our clinical studies; ● imposition of a clinical hold by regulatory agencies, after an inspection of our clinical study operations or study sites; ● failure by our CROs, other third parties or us to adhere to the clinical study, regulatory or legal requirements; ● failure to perform in accordance with the FDA’s good clinical practices (“GCP”) or applicable regulatory guidelines in other countries; ● delays in the testing, validation, manufacturing and delivery of sufficient quantities of our product candidates to the clinical sites; ● delays in having patients’ complete participation in a study or return for post-treatment follow-up; ● clinical study sites or patients dropping out of a study; ● delay or failure to address any patient safety concerns that arise during the course of a trial; ● unanticipated costs or increases in costs of clinical trials of our product candidates; ● occurrence of serious adverse events associated with the product candidates that are viewed to outweigh their potential benefits; or ● changes in regulatory requirements and guidance that require amending or submitting new clinical protocols.
Events that may prevent successful or timely completion of clinical development include: ● delays in reaching, or failing to reach, a consensus with regulatory agencies on study design; ● delays in reaching, or failing to reach, agreement on acceptable terms with a sufficient number of prospective contract research organizations (“CROs”) and clinical study sites, the terms of which can be subject to extensive negotiation and may vary significantly among different CROs and trial sites; ● delays in obtaining required Institutional Review Board (“IRB”) or Ethics Committee (“EC”) approval at each clinical study site; ● delays in recruiting a sufficient number of suitable patients to participate in our clinical studies; ● imposition of a clinical hold by regulatory agencies, after an inspection of our clinical study operations or study sites; ● failure by our CROs, other third parties or us to adhere to the clinical study, regulatory or legal requirements; ● failure to perform in accordance with the FDA’s good clinical practices (“GCP”) or applicable regulatory guidelines in other countries; ● delays in the testing, validation, manufacturing and delivery of sufficient quantities of our product candidates to the clinical sites; ● delays in having patients’ complete participation in a study or return for post-treatment follow-up; ● clinical study sites or patients dropping out of a study; ● delay or failure to address any patient safety concerns that arise during the course of a trial; ● unanticipated costs or increases in costs of clinical trials of our product candidates; ● occurrence of serious adverse events associated with the product candidates that are viewed to outweigh their potential benefits; or ● changes in regulatory requirements and guidance that require amending or submitting new clinical protocols. 10 We could also encounter delays if a clinical trial is suspended or terminated by us, by the IRBs or ECs of the institutions in which such trials are being conducted, by an independent Safety Review Board (“SRB”) for such trial or by the FDA, European Medicines Agency (“EMA”), or other regulatory authorities.
Our financial situation creates doubt whether we will continue as a going concern. The Company was incorporated on September 28, 2017 and through the date of this report has generated no significant revenues. For the years ended December 31, 2022 and 2021, the Company had a net loss of $27,649,876 and $46,371,364, respectively.
Our financial situation creates doubt whether we will continue as a going concern. The Company was incorporated on September 28, 2017 and through the date of this report has generated no significant revenues. For the years ended December 31, 2023 and 2022, the Company had a net loss of $32,390,447 and $27,649,876, respectively.
If we fail to obtain the capital necessary to fund our operations, we will be unable to continue or complete our product development and you will likely lose your entire investment.
If we are unable to achieve profitability, we may be unable to continue our operations. 6 If we fail to obtain the capital necessary to fund our operations, we will be unable to continue or complete our product development and you will likely lose your entire investment.
If we are unable to obtain funding on a timely basis, we may be required to significantly curtail, delay or discontinue one or more of our research or development programs or the commercialization of any product candidate or be unable to expand our operations or otherwise capitalize on our business opportunities, as desired, which could materially affect our business, financial condition and results of operations. 17 Even if we can raise additional funding, we may be required to do so on terms that are dilutive to you.
If we are unable to obtain funding on a timely basis, we may be required to significantly curtail, delay or discontinue one or more of our research or development programs or the commercialization of any product candidate or be unable to expand our operations or otherwise capitalize on our business opportunities, as desired, which could materially affect our business, financial condition and results of operations.
Furthermore, there can be no assurance that if such products are approved, they will be successfully commercialized, and the extent of our future losses and the timing of our profitability are highly uncertain. If we are unable to achieve profitability, we may be unable to continue our operations.
Furthermore, there can be no assurance that if such products are approved, they will be successfully commercialized, and the extent of our future losses and the timing of our profitability are highly uncertain.
The costs of remediation or products liability could materially adversely affect our results, financial condition and operations. 27 We may be held liable for, or incur costs to settle, liability and remediation claims if any products we develop, or any products that use or incorporate any of our technologies, cause injury or are found unsuitable during product testing, manufacturing, marketing, sale or use.
We may be held liable for, or incur costs to settle, liability and remediation claims if any products we develop, or any products that use or incorporate any of our technologies, cause injury or are found unsuitable during product testing, manufacturing, marketing, sale or use.
Clinical testing is expensive, time-consuming and uncertain as to outcome. We cannot guarantee that any clinical studies will be conducted as planned or completed on schedule, if at all. A failure of one or more clinical studies can occur at any stage of testing.
We cannot guarantee that any clinical studies will be conducted as planned or completed on schedule, if at all. A failure of one or more clinical studies can occur at any stage of testing.
Any of the foregoing scenarios could materially harm the commercial success of our product candidates. 22 Adverse events involving our products may lead the FDA or applicable foreign regulatory agency to delay or deny clearance for our products or result in product recalls that could harm our reputation, business and financial results.
Adverse events involving our products may lead the FDA or applicable foreign regulatory agency to delay or deny clearance for our products or result in product recalls that could harm our reputation, business and financial results.
In addition, advanced notice is required prior to stockholder proposals, which might further delay a change of control. 36 Our Amended and Restated Certificate of Incorporation provides that the Court of Chancery of the State of Delaware will be the sole and exclusive forum for substantially all disputes between the Company and its stockholders, which could limit stockholders’ ability to obtain a favorable judicial forum for disputes with the Company or its directors, officers or employees.
Our Amended and Restated Certificate of Incorporation provides that the Court of Chancery of the State of Delaware will be the sole and exclusive forum for substantially all disputes between the Company and its stockholders, which could limit stockholders’ ability to obtain a favorable judicial forum for disputes with the Company or its directors, officers or employees.
Our net loss for the years ended December 31, 2022 and 2021 was $27,549,876 and $46,371,364, respectively, and our accumulated deficit as of December 31, 2022 was $95,040,362. There can be no assurance that the products under development by us will be approved for sale in the U.S. or elsewhere.
Our net loss for the years ended December 31, 2023 and 2022 was $32,390,447 and $27,549,876, respectively, and our accumulated deficit as of December 31, 2023 was $127,635,389. There can be no assurance that the products under development by us will be approved for sale in the U.S. or elsewhere.
These choice of forum provisions may limit a stockholder’s ability to bring a claim in a judicial forum that it finds favorable for disputes with the Company or its directors, officers or other employees, which may discourage such lawsuits against us and our directors, officers and other employees.
There may be uncertainty, however, as to whether courts of other jurisdictions would enforce such a provision, if applicable. 27 These choice of forum provisions may limit a stockholder’s ability to bring a claim in a judicial forum that it finds favorable for disputes with the Company or its directors, officers or other employees, which may discourage such lawsuits against us and our directors, officers and other employees.
If some investors find our common stock less attractive as a result, there may be a less active trading market for our common stock and our stock price may be more volatile.
We cannot predict if investors will find our common stock less attractive because we may rely on these exemptions. If some investors find our common stock less attractive as a result, there may be a less active trading market for our common stock and our stock price may be more volatile.
Even if we are successful in prosecuting or defending against such claims, litigation could result in substantial costs and adverse results, and be a distraction to management. 31 Some intellectual property which we own or have licensed may have been discovered through government funded programs such as, for example, the government funded programs referenced in intellectual property licensed under the LLU License Agreement, and thus may be subject to federal regulations such as “march-in” rights, certain reporting requirements, and a preference for United States industry.
Some intellectual property which we own or have licensed may have been discovered through government funded programs such as, for example, the government funded programs referenced in intellectual property licensed under the LLU License Agreement, and thus may be subject to federal regulations such as “march-in” rights, certain reporting requirements, and a preference for United States industry.
The February 2020 License Agreement with Stanford may be terminated by Stanford if we (i) are delinquent on any report or payments; (ii) are not diligently developing and commercializing Licensed Product (as defined in the February 2020 License Agreement); (iii) miss a milestone described in the agreement; (iv) are in breach of any other provision of the agreement; or (v) if we provide a false report to Stanford.
If the LLU License Agreement were to be terminated by LLU, we would lose our most significant asset and may no longer be able to develop our product candidates, which would have a material adverse effect on our operations. 14 The February 2020 License Agreement with Stanford may be terminated by Stanford if we (i) are delinquent on any report or payments; (ii) are not diligently developing and commercializing Licensed Product (as defined in the February 2020 License Agreement); (iii) miss a milestone described in the agreement; (iv) are in breach of any other provision of the agreement; or (v) if we provide a false report to Stanford.
Risks Relating to Our Intellectual Property Rights The failure to obtain or maintain patents, licensing agreements and other intellectual property could materially impact our ability to compete effectively.
Failure of our control systems to prevent error or fraud could materially adversely affect our business. 18 Risks Relating to Our Intellectual Property Rights The failure to obtain or maintain patents, licensing agreements and other intellectual property could materially impact our ability to compete effectively.
Any claims we assert against perceived infringers could provoke these parties to assert counterclaims against us alleging that we infringe their intellectual property or that our intellectual property is invalid or unenforceable.
To counter infringement or unauthorized use, we may be required to file infringement claims, which can be expensive and time-consuming. Any claims we assert against perceived infringers could provoke these parties to assert counterclaims against us alleging that we infringe their intellectual property or that our intellectual property is invalid or unenforceable.
Some of our competitors may be able to sustain the costs of such litigation or proceedings more effectively than we can because of their greater financial resources. Uncertainties resulting from the initiation and continuation of patent litigation or other proceedings could compromise our ability to compete in the marketplace.
Some of our competitors may be able to sustain the costs of such litigation or proceedings more effectively than we can because of their greater financial resources.
If we are unable to obtain and maintain patent protection for our products, or if the scope of the patent protection obtained is not sufficiently broad, competitors could develop and commercialize products similar or identical to ours, and our ability to successfully commercialize our products could be impaired.
As to those patents that we have licensed, our rights depend on maintaining our obligations to the licensor under the applicable license agreement, and we may be unable to do so. 19 If we are unable to obtain and maintain patent protection for our products, or if the scope of the patent protection obtained is not sufficiently broad, competitors could develop and commercialize products similar or identical to ours, and our ability to successfully commercialize our products could be impaired.
Because of the inherent limitations in all control systems, no evaluation of controls can provide absolute assurance that all control issues and instances of fraud, if any, have been detected. Failure of our control systems to prevent error or fraud could materially adversely affect our business. COVID-19 may impact our operations.
Because of the inherent limitations in all control systems, no evaluation of controls can provide absolute assurance that all control issues and instances of fraud, if any, have been detected.
We may spend considerable resources developing and maintaining patents, licensing agreements and other intellectual property that may later be abandoned or may otherwise never result in products brought to market.
Uncertainties resulting from the initiation and continuation of patent litigation or other proceedings could compromise our ability to compete in the marketplace. 22 We may spend considerable resources developing and maintaining patents, licensing agreements and other intellectual property that may later be abandoned or may otherwise never result in products brought to market.
If we need to enter into agreements for the manufacturing of our future products, there can be no assurance we will be able to do so on favorable terms, if at all. 26 If we are unable to establish successful relations with third-party market partners or distributors, or these market partners or distributors do not focus adequate resources on selling our products or are otherwise unsuccessful in selling them, sales of our products may not develop.
If we are unable to establish successful relations with third-party market partners or distributors, or these market partners or distributors do not focus adequate resources on selling our products or are otherwise unsuccessful in selling them, sales of our products may not develop.
It is difficult to predict if or when any of our product candidates, will prove safe or effective in humans or will receive regulatory approval. Before obtaining marketing approval from regulatory authorities for the sale of our product candidates, we must conduct extensive clinical studies to demonstrate the safety and efficacy of the product candidates in humans.
Before obtaining marketing approval from regulatory authorities for the sale of our product candidates, we must conduct extensive clinical studies to demonstrate the safety and efficacy of the product candidates in humans. Clinical testing is expensive, time-consuming and uncertain as to outcome.
In addition, many of the factors that cause, or lead to, a delay in the commencement or completion of clinical trials may also ultimately lead to the denial of regulatory approval of our product candidates. 20 The outcome of preclinical studies and early clinical trials may not be predictive of the success of later clinical trials, and interim results of a clinical trial do not necessarily predict final results.
In addition, many of the factors that cause, or lead to, a delay in the commencement or completion of clinical trials may also ultimately lead to the denial of regulatory approval of our product candidates.
For example, our products may be improperly combined with other chemicals or, even when properly combined, our products may be blamed for damage caused by those other chemicals.
For example, our products may be improperly combined with other chemicals or, even when properly combined, our products may be blamed for damage caused by those other chemicals. The costs of remediation or products liability could materially adversely affect our results, financial condition and operations.
However, the Leahy-Smith Act and its implementation could increase the uncertainties and costs surrounding the prosecution of our patent applications and the enforcement or defense of our issued patents, all of which could have a material adverse effect on our business and financial condition. 29 Moreover, we may be subject to a third-party pre-issuance submission of prior art to the USPTO, or become involved in opposition, derivation, reexamination, inter partes review, post-grant review or interference proceedings challenging our patent rights (whether licensed or otherwise held) or the patent rights of others.
Moreover, we may be subject to a third-party pre-issuance submission of prior art to the USPTO, or become involved in opposition, derivation, reexamination, inter partes review, post-grant review or interference proceedings challenging our patent rights (whether licensed or otherwise held) or the patent rights of others.
If we fail in prosecuting or defending any such claims, in addition to paying monetary damages, we may lose valuable intellectual property rights or personnel.
If we fail in prosecuting or defending any such claims, in addition to paying monetary damages, we may lose valuable intellectual property rights or personnel. Even if we are successful in prosecuting or defending against such claims, litigation could result in substantial costs and adverse results, and be a distraction to management.
As described above, any of these events could prevent us from achieving or maintaining market acceptance of our product candidates and impair our ability to commercialize our products.
The inclusion of ill patients in our clinical studies may result in deaths or other adverse medical events due to other therapies or medications that such patients may be using. As described above, any of these events could prevent us from achieving or maintaining market acceptance of our product candidates and impair our ability to commercialize our products.
Given the amount of time required for the development, testing and regulatory review of new life science product candidates, patents protecting such candidates might expire before or shortly after such candidates are commercialized. As a result, our intellectual property rights portfolio may not provide us with sufficient rights to exclude others from commercializing products similar or identical to ours.
Given the amount of time required for the development, testing and regulatory review of new life science product candidates, patents protecting such candidates might expire before or shortly after such candidates are commercialized.
The capital markets have been unpredictable in the past for unprofitable companies such as ours. In addition, it is generally difficult for development stage companies to raise capital under current market conditions. The amount of capital that a company such as ours is able to raise often depends on variables that are beyond our control.
Even if we can raise additional funding, we may be required to do so on terms that are dilutive to you. The capital markets have been unpredictable in the past for unprofitable companies such as ours. In addition, it is generally difficult for development stage companies to raise capital under current market conditions.
Any failure on our part to pay royalties owed or meet milestones could lead to us losing rights under our licenses and could thereby adversely affect our business.
The LLU License Agreement and February 2020 License Agreement with Stanford each require us to remit royalty payments and meet certain performance milestones related to in-licensed intellectual property. Any failure on our part to pay royalties owed or meet milestones could lead to us losing rights under our licenses and could thereby adversely affect our business.
If adequate funds are not available on acceptable terms, or at all, our business, including our results of operations, financial condition and our continued viability will be materially adversely affected. Unstable market and economic conditions and adverse developments with respect to financial institutions and associated liquidity risk may have serious adverse consequences on our business, financial condition, and stock price.
Unstable market and economic conditions and adverse developments with respect to financial institutions and associated liquidity risk may have serious adverse consequences on our business, financial condition, and stock price.
As a result, we may not be able to secure financing on terms attractive to us, or at all. If we are able to consummate a financing arrangement, the amount raised may not be sufficient to meet our future needs.
If we are able to consummate a financing arrangement, the amount raised may not be sufficient to meet our future needs. If adequate funds are not available on acceptable terms, or at all, our business, including our results of operations, financial condition and our continued viability will be materially adversely affected.
We can provide no assurance that the conditions to the initial closing will be satisfied.
The initial closing under the Share Exchange Agreement was expected to occur on or before January 31, 2022. We can provide no assurance that the conditions to the initial closing will be satisfied.
In other words, an “emerging growth company” can delay the adoption of certain accounting standards until those standards would otherwise apply to private companies.
In other words, an “emerging growth company” can delay the adoption of certain accounting standards until those standards would otherwise apply to private companies. As a result, our financial statements may not be comparable to those of companies that comply with public company effective dates for complying with new or revised accounting standards.
There is no assurance that we will not experience these service interruptions or cyber-attacks in the future. 32 Risks Related to Our Common Stock We received a written notice from Nasdaq that we have failed to comply with certain listing requirements of the Nasdaq Stock Market, which could result in our Common Stock being delisted from the Nasdaq Stock Market.
Risks Related to Our Common Stock We are under a panel monitor from Nasdaq as we have historically failed to comply with certain listing requirements of the Nasdaq Stock Market, which could result in our Common Stock being delisted from the Nasdaq Stock Market.
We may become involved in lawsuits to protect or enforce our intellectual property rights, which could be expensive, time-consuming and ultimately unsuccessful. Competitors may infringe our intellectual property. To counter infringement or unauthorized use, we may be required to file infringement claims, which can be expensive and time-consuming.
As a result, our intellectual property rights portfolio may not provide us with sufficient rights to exclude others from commercializing products similar or identical to ours. 20 We may become involved in lawsuits to protect or enforce our intellectual property rights, which could be expensive, time-consuming and ultimately unsuccessful. Competitors may infringe our intellectual property.
Additionally, we may elect to raise additional capital due to market conditions or strategic considerations. If additional shares are issued in connection with the proposed acquisition transaction or additional capital is raised through the sale of equity or convertible debt securities, the issuance of those securities could result in further dilution to our stockholders.
If additional shares are issued in connection with the proposed acquisition transaction or additional capital is raised through the sale of equity or convertible debt securities, the issuance of those securities could result in further dilution to our stockholders. 24 While we have entered into a Share Exchange Agreement with Cellvera Global, we cannot assure you that the transactions contemplated by the Share Exchange Agreement will be consummated or, that if such transactions are consummated, they will be accretive to stockholder value.
Since the end of the monitoring period, the Company has failed to maintain compliance with the minimum bid price of $1.00 per share for 12 consecutive trading days between March 29, 2023 and April 14, 2023. If we are delisted from Nasdaq, our common stock may be eligible for trading on an over-the-counter market.
On December 29, 2023, the Company received written notice from Nasdaq that it had regained compliance with the Stockholders’ Equity Rule, but will be subject to a Mandatory Panel Monitor for a period of one year. 23 If we are delisted from Nasdaq, our common stock may be eligible for trading on an over-the-counter market.
Our results of operations will be affected by the level of royalty and milestone payments that we are required to pay to third parties. The LLU License Agreement and February 2020 License Agreement with Stanford each require us to remit royalty payments and meet certain performance milestones related to in-licensed intellectual property.
The Company is current with its obligations and have submitted a year end report as well as provided additional milestone plans for research and development as well as commercialization. Our results of operations will be affected by the level of royalty and milestone payments that we are required to pay to third parties.
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We could also encounter delays if a clinical trial is suspended or terminated by us, by the IRBs or ECs of the institutions in which such trials are being conducted, by an independent Safety Review Board (“SRB”) for such trial or by the FDA, European Medicines Agency (“EMA”), or other regulatory authorities.
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The amount of capital that a company such as ours is able to raise often depends on variables that are beyond our control. As a result, we may not be able to secure financing on terms attractive to us, or at all.
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Additionally, our product candidates could potentially cause other adverse events that have not yet been predicted. The inclusion of ill patients in our clinical studies may result in deaths or other adverse medical events due to other therapies or medications that such patients may be using.
Added
The testing, manufacturing, labeling, approval, selling, marketing and distribution of health and life science-related products are subject to extensive regulation, which regulations differ from country to country.
Removed
If any of our product candidates are approved, but do not achieve an adequate level of acceptance by physicians, health care payors, and patients, we may not generate sufficient revenues and we may not be able to achieve or sustain profitability.
Added
We may encounter substantial delays in completing our clinical studies which in turn will require additional costs, or we may fail to demonstrate adequate safety and efficacy to the satisfaction of applicable regulatory authorities. It is difficult to predict if or when any of our product candidates, will prove safe or effective in humans or will receive regulatory approval.
Removed
If the LLU License Agreement were to be terminated by LLU, we would lose our most significant asset and may no longer be able to develop our product candidates, which would have a material adverse effect on our operations.
Added
The outcome of preclinical studies and early clinical trials may not be predictive of the success of later clinical trials, and interim results of a clinical trial do not necessarily predict final results.
Removed
On January 30, 2020, the World Health Organization declared the COVID-19 coronavirus outbreak a “Public Health Emergency of International Concern” and on March 10, 2020, declared it to be a pandemic.
Added
If we need to enter into agreements for the manufacturing of our future products, there can be no assurance we will be able to do so on favorable terms, if at all.
Removed
Actions taken around the world to help mitigate the spread of the coronavirus include restrictions on travel, and quarantines in certain areas, and forced closures for certain types of public places and businesses.
Added
However, the Leahy-Smith Act and its implementation could increase the uncertainties and costs surrounding the prosecution of our patent applications and the enforcement or defense of our issued patents, all of which could have a material adverse effect on our business and financial condition.
Removed
The COVID-19 coronavirus and actions taken to mitigate it have had and are expected to continue to have an adverse impact on the economies and financial markets of many countries, including the geographical area in which the Company operates.
Added
There is no assurance that we will not experience these service interruptions or cyber-attacks in the future.
Removed
While it is unknown how long these conditions will last and what the complete financial effect will be to the Company, capital raise efforts and additional development of our technologies may be negatively affected.
Added
On November 21, 2023, the Company received written notice from Nasdaq that it had regained compliance with the Public Float Rule.

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Item 2. Properties

Properties — owned and leased real estate

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Biggest changeItem 2. Properties. We lease property consisting of office and laboratory space located at 2569 Wyandotte, St., Suite 101 Mountain View, CA 94043. The lease expires on August 31, 2024, subject to extension. We lease property consisting of office space located at 532 Broadhollow Road, Suite 118, Melville, NY 11747. The lease expires on December 31, 2024, subject to extension.
Biggest changeItem 2. Properties. We lease property consisting of office and laboratory space located at 2569 Wyandotte, St., Suite 101 Mountain View, CA 94043. The lease expires on August 31, 2024, subject to extension. As of December 31, 2023 the Company is one month in arrears on our Mountain View lease.
We lease property consisting of office and laboratory space located at 737 N. 5 th Street Richmond, Virginia 23219. The lease expires on August 31, 2026, subject to extension.
We lease property consisting of office and laboratory space located at 737 N. 5 th Street Richmond, Virginia 23219. The lease expires on August 31, 2026, subject to extension. As of December 31, 2023 the Company is 1.75 months in arrears on our Richmond lease.
Added
We lease property consisting of office space located at 532 Broadhollow Road, Suite 118, Melville, NY 11747. The lease expires on December 31, 2025, subject to extension. As of December 31, 2023 the Company is one month in arrears on our Melville lease.

Item 5. Market for Registrant's Common Equity

Market for Common Equity — stock, dividends, buybacks

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Biggest changeHolders As of March 29, 2022, there were approximately 164 record holders of our common stock and no holders of our preferred stock.
Biggest changeHolders As of April 12, 2024, there were approximately 168 record holders of our common stock. As of April 12, 2024, there were 5, 13, and 1 holder(s) of Series A-1 Convertible Preferred Stock, Series B-1 Convertible Preferred Stock, and Series B-2 Convertible Preferred Stock, respectively.
Issuer Purchases of Equity Securities We did not purchase any of our registered equity securities during the period covered by this Annual Report. 39 Use of Proceeds from Initial Public Offering On July 2, 2020, we completed our initial public offering (“IPO”).
Issuer Purchases of Equity Securities We did not purchase any of our registered equity securities during the period covered by this Annual Report. 29 Use of Proceeds from Initial Public Offering On July 2, 2020, we completed our initial public offering (“IPO”).
In connection therewith, we issued 24,534 Units (the “IPO Units”), excluding the underwriters’ option to cover overallotments, at an offering price of $450.00 per IPO Unit, resulting in gross proceeds of approximately $11.0 million. The IPO Units issued in the IPO consisted of one share of common stock, one Series A warrant, and one Series B warrant.
In connection therewith, we issued 614 Units (the “IPO Units”), excluding the underwriters’ option to cover overallotments, at an offering price of $18,000.00 per IPO Unit, resulting in gross proceeds of approximately $11.0 million. The IPO Units issued in the IPO consisted of one share of common stock, one Series A warrant, and one Series B warrant.
On August 19, 2020 we modified the exercise price of the Series A Warrants from $450.00 per share to $225.00 per share. The term of the Series A Warrants was not modified. The Series B warrants have an exercise price of $562.50 per share, a term of 5 years and contain a cashless exercise option upon certain criteria being met.
On August 19, 2020 we modified the exercise price of the Series A Warrants from $18,000.00 per share to $9,000.00 per share. The term of the Series A Warrants was not modified. The Series B warrants have an exercise price of $22,500.00 per share, a term of 5 years and contain a cashless exercise option upon certain criteria being met.
The Series A warrants originally had an exercise price of $450.00 and a term of 5 years. In addition, we issued a Unit Purchase Option at an exercise price of $562.50 per unit to the underwriters to purchase up to 1,350 units, with each unit consisting of (i) one share of common stock and (ii) one Series A Warrant.
The Series A warrants originally had an exercise price of $18,000.00 and a term of 5 years. In addition, we issued a Unit Purchase Option at an exercise price of $22,500.00 per unit to the underwriters to purchase up to 34 units, with each unit consisting of (i) one share of common stock and (ii) one Series A Warrant.
The issuances above were made pursuant to Section 4(a)(2) of the Securities Act. Equity Compensation Plans The information required by Item 5 of Form 10-K regarding equity compensation plans is incorporated herein by reference to Item 12 of Part III of this Annual Report on Form 10-K.
Equity Compensation Plans The information required by Item 5 of Form 10-K regarding equity compensation plans is incorporated herein by reference to Item 12 of Part III of this Annual Report on Form 10-K.
Recent Sales of Unregistered Securities On January 31, 2022, the Company issued a consultant 60 shares of common stock for services rendered. On February 28, 2022, the Company issued a consultant 60 shares of common stock for services rendered. On March 31, 2022, the Company issued a consultant 60 shares of common stock for services rendered.
Recent Sales of Unregistered Securities On March 17, 2023, the Company issued a consultant 4,675 shares of common stock for services rendered. On December 19, 2023, the Company issued a consultant 70,000 shares of common stock for services rendered. The issuances above were made pursuant to Section 4(a)(2) of the Securities Act.
Removed
On June 27, 2022, the Company issued a consultant 16,296 shares of common stock for services rendered. On December 7, 2022, the Company issued a consultant 131,151 shares of common stock for services rendered. On December 27, 2022, the Company issued a consultant 9,837 shares of common stock for services rendered.

Item 7. Management's Discussion & Analysis

Management's Discussion & Analysis (MD&A) — revenue / margin commentary

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Biggest changeAdditional Milestone Deadlines include: (i) the requirement to have regulatory approval of an IND application to initiate first-in-human clinical trials on or before March 31, 2022, which has been extended to March 31, 2023 due to payment of a $100,000 extension fee paid in March 2022, (ii) the completion of first-in-human (phase I/II) clinical trials by March 31, 2024, (iii) the completion of Phase III clinical trials by March 31, 2026 and (iv) biologic licensing approval by the FDA by March 31, 2027. 43 License Agreement with Leland Stanford Junior University (“Stanford”) On February 3, 2020, we entered into an exclusive license agreement (the “February 2020 License Agreement”) with Stanford regarding a patent concerning a method for detection and measurement of specific cellular responses.
Biggest changeLicense Agreement with Leland Stanford Junior University (“Stanford”) On February 3, 2020, we entered into an exclusive license agreement (the “February 2020 License Agreement”) with Stanford with regard to a patent concerning a method for detection and measurement of specific cellular responses.
However, Stanford agreed to not grant further licenses under the Licensed Patents in the Licensed Field of Use in the Licensed Territory.
However, Stanford agreed not to grant further licenses under the Licensed Patents in the Licensed Field of Use in the Licensed Territory.
Pursuant to the LLU License Agreement, we obtained the exclusive royalty-bearing worldwide license in and to all intellectual property, including patents, technical information, trade secrets, proprietary rights, technology, know-how, data, formulas, drawings, and specifications, owned or controlled by LLU and/or any of its affiliates (the “LLU Patent and Technology Rights”) and related to therapy for immune-mediated inflammatory diseases (the ADI™ technology).
Pursuant to the LLU License Agreement, we obtained the exclusive royalty-bearing worldwide license to all intellectual property, including patents, technical information, trade secrets, proprietary rights, technology, know-how, data, formulas, drawings, and specifications, owned or controlled by LLU and/or any of its affiliates (the “LLU Patent and Technology Rights”) and related to therapy for immune-mediated inflammatory diseases (the ADI™ technology).
While immune suppression requires continuous administration to prevent rejection of a transplanted organ, induction of tolerance has the potential to retrain the immune system to accept the organ for longer periods of time. Thus, ADI™ may allow patients to live with transplanted organs with significantly reduced immune suppression.
While immune suppression requires continuous administration to prevent rejection of a transplanted organ, induction of tolerance has the potential to retrain the immune system to accept the organ for longer periods of time. ADI may allow patients to live with transplanted organs with significantly reduced immune suppression.
The preparation of our financial statements and related disclosures requires us to make estimates, assumptions and judgments that affect the reported amount of assets, liabilities, revenue, costs and expenses, and related disclosures.
The preparation of our consolidated financial statements and related disclosures requires us to make estimates, assumptions and judgments that affect the reported amount of assets, liabilities, revenue, costs and expenses, and related disclosures.
While the use of these drugs has been justifiable because they prevent or delay organ rejection, their use for treatment of autoimmune diseases and allergies may not be acceptable because of the aforementioned side effects. Furthermore, transplanted organs often ultimately fail despite the use of immune suppression, and about 40% of transplanted organs survive no more than 5 years.
While the use of these drugs has been justifiable because they prevent or delay organ rejection, their use for treatment of autoimmune diseases and allergies may not be acceptable because of the aforementioned side effects. Furthermore, often transplanted organs ultimately fail despite the use of immune suppression, and about 40% of transplanted organs survive no more than five years.
We believe that the remaining funds on hand will not be sufficient to fund our operations for the next 12 months and such creates substantial doubt about our ability to continue as a going concern beyond one year. 44 Financial Results We have a limited operating history.
We believe our remaining funds on hand will not be sufficient to fund our operations for the next 12 months and such creates substantial doubt about our ability to continue as a going concern beyond one year. Financial Results We have a limited operating history.
We may need to raise significant additional capital to continue to fund our operations and the clinical trials for our product candidates. We may seek to sell common stock, preferred stock or convertible debt securities, enter into a credit facility or another form of third-party funding or seek other debt financing.
We will need significant additional capital to continue to fund our operations and the clinical trials for our product candidates. We may seek to sell common stock, preferred stock or convertible debt securities, enter into a credit facility or another form of third-party funding or seek other debt financing.
On December 29, 2021, we entered into an amendment to the February 2020 License Agreement which extended our exclusive right to license the technology deployed in AditxtScore TM and securing worldwide exclusivity in all fields of use of the licensed technology.
On December 29, 2021, we entered into an amendment to the February 2020 License Agreement which extended our exclusive right to license the technology deployed in AditxtScore TM and securing worldwide exclusivity in all fields of use of the licensed technology. ADIVIR, INC.
Under the exclusivity agreement, we acknowledged that Stanford had already granted a non-exclusive license in the Nonexclusive Field of Use, under the Licensed Patents in the Licensed Field of Use in the Licensed Territory (as those terms are defined in the February 2020 License Agreement”).
Under the exclusivity agreement, we acknowledged that Stanford had already granted a non-exclusive license in the Nonexclusive Field of Use, under the Licensed Patents in the Licensed Field of Use in the Licensed Territory (as those terms are defined in the “February 2020 License Agreement”).
Pursuant to the February 2020 License Agreement, we received an exclusive worldwide license to Stanford’s patent regarding use, import, offer, and sale of Licensed Products (as defined in the agreement). The license to the patented technology is exclusive, including the right to sublicense, beginning on the effective date of the agreement, and ending when the patent expires.
Pursuant to the February 2020 License Agreement, we received an exclusive worldwide license to Stanford’s patent with regard to use, import, offer, and sale of Licensed Products (as defined in the agreement). The license to the patented technology is exclusive, including the right to sublicense, beginning on the effective date of the agreement, and ending when the patent expires.
The Convertible Note had a term of 24 months, was originally convertible at a price of $200.00 per share and was issued at an original issuance discount of $1,000,000.
The Convertible Note had a term of 24 months, was originally convertible at a price of $8,000.00 per share and was issued at an original issuance discount of $1,000,000.
The following involve the most judgment and complexity: ● Research and development ● Stock-based compensation expense Accordingly, we believe the policies set forth above are critical to fully understanding and evaluating our financial condition and results of operations.
The following involve the most judgment and complexity: ● Research and development ● Stock-based compensation expense ● Preferred Stock ● Investments 37 Accordingly, we believe the policies set forth above are critical to fully understanding and evaluating our financial condition and results of operations.
Recently Issued and Adopted Accounting Pronouncements See Note 3 - Summary of Significant Accounting Policies to the accompanying financial statements for a description of other accounting policies and recently issued accounting pronouncements. 47 Recent Developments See Note 12 – Subsequent Event to the accompanying financial statements for a description of material recent developments.
Recently Issued and Adopted Accounting Pronouncements See Note 3 - Summary of Significant Accounting Policies to the accompanying consolidated financial statements for a description of other accounting policies and recently issued accounting pronouncements. Recent Developments See Note 12 – Subsequent Event to the accompanying consolidated financial statements for a description of material recent developments. 38
Its advantages include the ability to provide a simple, rapid, accurate, high throughput assays that can be multiplexed to determine the immune status with respect to several factors simultaneously, in 3-16 hours. In addition, it can determine and differentiate between various types of cellular and humoral immune responses (T and B cells and other cell types).
Its advantages include the ability to provide simple, rapid, accurate, high throughput assays that can be multiplexed to determine the immune status with respect to several factors simultaneously, in approximately 3-16 hours. In addition, it can determine and differentiate between distinct types of cellular and humoral immune responses (e.g., T and B cells and other cell types).
Therefore, there is limited historical financial information upon which to base an evaluation of our performance. Our prospects must be considered in light of the uncertainties, risks, expenses, and difficulties frequently encountered by companies in their early stages of operations. Our financial statements as of December 31, 2022, show a net loss of $27,649,876.
Therefore, there is limited historical financial information upon which to base an evaluation of our performance. Our prospects must be considered in light of the uncertainties, risks, expenses, and difficulties frequently encountered by companies in their early stages of operations. Our financial statements as of December 31, 2023, show a net loss of $32,275,156.
As of December 31, 2022, the outstanding principle of the convertible note had been converted to 96,050 shares of common stock. On August 30, 2021, we completed a registered direct; offering and raised approximately $10.1 million in net proceeds. On October 20, 2021, we completed an offering for net proceeds of $3.8 million.
As of December 31, 2022, the outstanding principle of the convertible note had been converted to 2,401 shares of common stock. On August 30, 2021, the Company completed a registered direct offering and raised approximately $10.1 million in net proceeds. On October 20, 2021, the Company completed a public offering for net proceeds of $3.8 million.
On August 30, 2021, the Company entered into a defeasance and waiver agreement with the Investor, pursuant to which the Investor has agreed in exchange for (a) a cash payment by the Company to the Investor of $1.2 million (the Cash Payment”), (b) a waiver, in part of the conversion price adjustment provision such that the January 2021 Note shall be convertible into 96,050 shares of common stock (without giving effect to the conversion notice received by the Company from the Investor prior to the date hereof totaling (20,115 shares), and (c) a voluntary and permanent reduction by the Company of the exercise price of the warrant to purchase 16,000 shares of the common stock of the Company (the “January 2021 Warrant”) to $126.50 per share.
On August 30, 2021, the Company entered into a defeasance and waiver agreement with the Investor, pursuant to which the Noteholder has agreed in exchange for (a) a cash payment by the Company to the Investor of $1.2 million (the Cash Payment”), (b) a waiver, in part of the conversion price adjustment provision such that the January 2021 Note shall be convertible into 2,401 shares of common stock (without giving effect to the conversion notice received by the company form the Noteholder prior to the date hereof totaling (503 shares) (the “Shares”), and (c) a voluntary and permanent reduction by the Company of the exercise price of the warrant to purchase 400 shares of the common stock of the Company (the “January 2021 Warrant”) to $5,060 per share.
The $7,268,084 in research and development is mainly comprised of $2,145,382 in consulting expenses, and $3,375,757 in compensation offset by a one-time adjustment to research and development purchases. During the year, the Company transitioned from purchasing certain inventory items to internally manufacturing these items. During the year ended December 31, 2021, we incurred a loss from operations of $41,934,928.
The $7,268,084 in research and development is mainly comprised of $2,145,382 in consulting expenses, and $3,375,757 in compensation offset by a one-time adjustment to research and development purchases. During the year, the Company transitioned from purchasing certain inventory items to internally manufacturing these items.
Our Team We have assembled a team of experts from a variety of scientific fields and commercial backgrounds, with many years of collective experience that ranges from founding startup biotech companies, to developing and marketing biopharmaceutical products, to designing clinical trials, and to management of private and public companies.
Our Team We have assembled a team of experts from a variety of scientific fields and commercial backgrounds, with many years of collective experience that ranges from founding startup biotech companies, to developing and marketing biopharmaceutical products, to designing clinical trials, and to management of private and public companies. 34 Going Concern We were incorporated on September 28, 2017 and have not generated significant revenues to date.
Liquidity and Capital Resources We have incurred substantial operating losses since inception and expect to continue to incur significant operating losses for the foreseeable future and may never become profitable. As of December 31, 2022, we had an accumulated deficit of $95,040,362 We had working capital of $1,099,839 as of December 31, 2022.
Liquidity and Capital Resources We have incurred substantial operating losses since inception and expect to continue to incur significant operating losses for the foreseeable future and may never become profitable. As of December 31, 2023, we had an accumulated deficit of $127,635,389. We had working capital of $(18,976,866) as of December 31, 2023.
Contractual Obligations The following table shows our contractual obligations as of December 31, 2022: Payment Due by Year Total 2023 2024 2025 2026 Lease $ 3,269,311 $ 1,129,853 $ 1,004,982 $ 710,546 $ 423,930 Financed asset 409,983 409,983 - - - Total contractual obligations $ 3,679,294 $ 1,539,836 $ 1,004,982 $ 710,546 $ 423,930 46 Critical Accounting Polices and Estimates Our financial statements are prepared in accordance with generally accepted accounting principles in the United States.
Contractual Obligations The following table shows our contractual obligations as of December 31, 2023: Payment Due by Year Total 2024 2025 2026 Lease $ 2,139,458 $ 1,004,982 $ 710,546 $ 423,930 Critical Accounting Polices and Estimates Our consolidated financial statements are prepared in accordance with generally accepted accounting principles in the United States.
If actual results or events differ materially from the estimates, judgments and assumptions used by us in applying these policies, our reported financial condition and results of operations could be materially affected. Off-Balance Sheet Arrangements From time to time the Company enters short term research and development contracts.
If actual results or events differ materially from the estimates, judgments and assumptions used by us in applying these policies, our reported financial condition and results of operations could be materially affected.
Results of Operations Results of operations for the years ended December 31, 2022 and 2021 We generated revenue of $933,715 and $105,034 for the years ended December 31, 2022 and 2021, respectively. Cost of sales for the years ended December 31, 2022 and 2021 was $766,779 and $77,979, respectively.
Results of Operations Results of operations for the years ended December 31, 2023 and 2022 We generated revenue of $645,176 and $933,715 for the years ended December 31, 2023 and 2022, respectively. Cost of sales for the years ended December 31, 2023 and 2022 was $756,836 and $766,779, respectively.
We have an exclusive worldwide license for commercializing Apoptotic DNA Immunotherapy™ (ADI™), a nucleic acid-based technology (which is currently at the pre-clinical stage), from LLU. ADI™ utilizes a novel approach that mimics the way the body naturally induces tolerance to our own tissues (“therapeutically induced immune tolerance”).
Through Aditxt, Adimune has the right of use to the exclusive worldwide license for commercializing ADI nucleic acid-based technology (which is currently at the pre-clinical stage) from Loma Linda University. ADI uses a novel approach that mimics the way the body naturally induces tolerance to our own tissues (“therapeutically induced immune tolerance”).
We have funded our operations from proceeds from the sale of equity and debt securities. On July 2, 2020, we completed our IPO and raised approximately $9.5 million in net proceeds. At the time of the IPO, we believed that these funds would be sufficient to fund our operations for the foreseeable future.
We have funded our operations from proceeds from the sale of equity and debt securities. On July 2, 2020, we completed our IPO and raised approximately $9.5 million in net proceeds.
Some of the information contained in this discussion and analysis or set forth elsewhere in this report, including information with respect to our plans and strategy for our business, includes forward-looking statements that involve risks and uncertainties. See “Cautionary Note Regarding Forward-Looking Statements.” Overview We are an innovation company with a mission of Making Promising Innovations Possible, Together.
Some of the information contained in this discussion and analysis or set forth elsewhere in this report, including information with respect to our plans and strategy for our business, includes forward-looking statements that involve risks and uncertainties.
To obtain regulatory approval to use AditxtScore™ as a clinical assay, we have conducted validation studies to evaluate its performance in detection of antibodies and plan to continue conducting additional validation studies for new applications in autoimmune diseases and transplantation. 42 License Agreement with Loma Linda University On March 8, 2018, we entered into an Assignment Agreement (the “Assignment Agreement”) with Sekris Biomedical, Inc.
To obtain regulatory approval to use AditxtScore as a clinical assay, we have conducted validation studies to evaluate its performance in detection of antibodies and plan to continue conducting additional validation studies for new applications in autoimmune diseases.
As part of the September 2022 Offering, we issued 1,224,333 of shares of the Company’s common stock, pre-funded warrants to purchase 2,109,000 shares of the Company’s common stock and warrants to purchase 3,333,333 shares of the Company’s common stock. The warrants had an exercise price of $6.00 and the pre-funded warrants had an exercise price of $0.001.
As part of this offering, we issued 4,123 units consisting of shares of the Company’s common stock and warrant to purchase shares of the Company’s common stock and 4,164 pre-funded warrants. The warrant issued as part of the units had an exercise price of $2,300.00 and the prefunded warrants had an exercise price of $0.001.
In connection therewith, we issued 48,000 units, or Follow-On Units, excluding the underwriters’ option to cover overallotments, at an offering price of $200.00 per Follow-On Unit, resulting in gross proceeds of approximately $9.6 million. 45 On January 25, 2021, we entered into a securities purchase agreement with an institutional accredited investor (the “Investor”) for the sale of a $6,000,000 senior secured convertible note (the “Convertible Note”).
In connection therewith, we issued 1,200 units, or Follow-On Units, excluding the underwriters’ option to cover overallotments, at an offering price of $8,000.00 per Follow-On Unit, resulting in gross proceeds of approximately $9.6 million.
During year ended December 31, 2022, we purchased $367,079 in fixed assets. These fixed assets were purchased to continue the buildout of our operations. Approximately $300,000 of purchased fixed assets were lab equipment, $62,000 were computers, and $5,000 were office furniture. Our financial statements have been prepared assuming that we will continue as a going concern.
During the year ended December 31, 2023, we purchased $14,407 in fixed assets, for which we made cash payments of $14,407. Of the $14,407, $12,356 of these purchased fixed assets were lab equipment and $2,051 was for computers. Our consolidated financial statements have been prepared assuming that we will continue as a going concern.
As part of this offering, we issued 56,667 shares of the Company’s common stock. On December 6, 2021, we completed an offering for net proceeds of $16.0 million. As part of this offering, we issued 164,929 units consisting of shares of the Company’s common stock and warrant to purchase shares of the Company’s common stock and 166,572 prefunded warrants.
As part of this offering, we issued 1,417 shares of the Company’s common stock On December 6, 2021, the Company completed a public offering for net proceeds of $16.0 million.
However, immune suppression leads to significant undesirable side effects, such as increased susceptibility to life-threatening infections and cancers, because it indiscriminately and broadly suppresses immune function throughout the body.
Background The discovery of immunosuppressive (anti-rejection and monoclonal) drugs over 40 years ago has made possible life-saving organ transplantation procedures and blocking of unwanted immune responses in autoimmune diseases. However, immune suppression leads to significant undesirable side effects, such as increased susceptibility to life-threatening infections and cancers, because it indiscriminately and broadly suppresses immune function throughout the body.
During the years ended December 31, 2022, we incurred a loss from operations of $25,480,098.
Sales and marketing expenses were $269,284, which includes $6,787 in stock-based compensation. During the year ended December 31, 2022, we incurred a loss from operations of $25,480,098.
The decrease in expenses during the year ended December 31, 2022 compared to the year ended December 31, 2021 was due to the impairment on note receivable during the year ended December 31, 2021.
The decrease in expenses during the year ended December 31, 2023 compared to the year ended December 31, 2022 was due to decreased research and development spend and the termination of a sales and marketing vendor.
AditxtScore™ is intended to be informative for individual immune responses to viruses, bacteria, peptides, drugs, supplements, bone marrow and solid organ transplants and cancer. It has broad applicability to many other agents of clinical interest impacting the immune system, including those not yet identified such as emerging infectious agents.
It has broad applicability to many other agents of clinical interest impacting the immune system, including those not yet identified such as emerging infectious agents. AditxtScore is being designed to enable individuals and their healthcare providers to understand, manage and monitor their immune profiles and to stay informed about attacks on or by their immune system.
The warrant issued as part of the units had an exercise price of $57.50 and the prefunded warrants had an exercise price of $0.001. On September 20, 2022, we completed a public offering for net proceeds of $17.2 million (the “September 2022 Offering”).
On September 20, 2022, the Company completed a public offering for net proceeds of $18.1 million (the “September 2022 Offering”). As part of the September 2022 Offering, we issued 30,608 of shares of the Company’s common stock, pre-funded warrants to purchase 52,725 shares of the Company’s common stock and warrants to purchase 83,333 shares of the Company’s common stock.
The Company will require significant additional capital to operate in the normal course of business and fund clinical studies in the long-term.
During the year ended and as of December 31, 2023, we had a net loss of $32,390,447 and cash of $97,102. We are currently over 90 days past due on a significant number of vendor obligations. The Company will require significant additional capital to operate in the normal course of business and fund clinical studies in the long-term.
We are also evaluating plans to obtain regulatory approval for AditxtScore™’s use as a clinical assay and seeking to secure manufacturing, marketing and distribution partnerships for application in the various markets.
It also provides for simultaneous monitoring of cell activation and levels of cytokine release (i.e., cytokine storms). 32 We are actively involved in the regulatory approval process for AditxtScore assays for clinical use and securing manufacturing, marketing, and distribution partnerships for application in the various markets.
AditxtScore™ is being designed to allow individuals to understand, manage and monitor their immune profiles in order to be informed about attacks on or by their immune system. We believe AditxtScore™ can also assist the medical community in anticipating possible immune responses and reactions to viruses, bacteria, allergens and foreign tissues such as transplanted organs.
We believe AditxtScore can also assist the medical community and individuals by being able to anticipate the immune system’s potential response to viruses, bacteria, allergens, and foreign tissues such as transplanted organs. This technology may be able to serve as a warning signal, thereby allowing for more time to respond appropriately.
Removed
We develop, build, and grow innovations with a focus on monitoring and modulating the immune system. We take a socialized approach to innovation by engaging stakeholders into all aspects of the process.
Added
See “Cautionary Note Regarding Forward-Looking Statements.” Overview and Mission We believe the world needs—and deserves—a new approach to innovating that harnesses the power of large groups of stakeholders who work together to ensure that the most promising innovations make it into the hands of people who need them most.
Removed
Our innovation portfolio includes the following programs: - Adimune™ - Immune modulation technologies which are currently at the pre-clinical stage and are designed to retrain the immune system to induce tolerance with an objective of addressing rejection of transplanted organs, autoimmune diseases, and allergies. - AditxtScore™ - Immune monitoring technologies designed to provide a personalized comprehensive profile of the immune system. 40 ADI™ (Immune Modulation Program) Background The discovery of immunosuppressive (anti-rejection and monoclonal) drugs over 40 years ago has made possible life-saving organ transplantation procedures and blocking of unwanted immune responses in autoimmune diseases.
Added
We were incorporated in the State of Delaware on September 28, 2017, and our headquarters are in Richmond, Virginia. The company was founded with a mission of bringing stakeholders together, to transform promising innovations into products and services that could address some of the most challenging needs.
Removed
New, focused therapeutic approaches are needed that modulate only the immune cells involved in rejection of the transplanted organ, as this approach can be safer for patients than indiscriminate immune suppression. Such approaches are referred to as immune tolerance, and when therapeutically induced, may be safer for patients and potentially allow longer-term survival of transplanted tissues and organs.
Added
The socialization of innovation through engaging stakeholders in every aspect of it, is key to transforming more innovations, more rapidly, and more efficiently. At inception, the first innovation we took on was an immune modulation technology titled ADI/Adimune with a focus on prolonging life and enhancing life quality of patients that have undergone organ transplants.
Removed
In the late 1990s, academic research on these approaches was conducted at the Transplant Center in Loma Linda University (“LLU”) in connection with a project that secured initial grant funding from the U.S. Department of Defense. The focus of that project was induction of tolerance for skin allografting for burn victims.
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Since then, we expanded our portfolio of innovations, and we continue to evaluate a variety of promising health innovations. 30 ADIMUNE, INC. Formed in January 2023, Adimune™, Inc. (“Adimune”) is focused on leading our immune modulation therapeutic programs.
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Twenty years of research at LLU and an affiliated incubator led to a series of discoveries that have been translated into a large patent portfolio of therapeutic approaches that may be applied to the modulation of the immune system to induce tolerance to self and transplanted organs.
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Adimune’s proprietary immune modulation product candidate, ADI-100™, based on the Apoptotic DNA Immunotherapy™ platform technology, utilizes a novel approach that mimics the way our bodies naturally induce tolerance to our own tissues. It includes two DNA molecules designed to deliver signals to induce tolerance.
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ADI™ is a technology platform which we believe can be engineered to address a wide variety of indications. 41 We are developing ADI™ products for organ transplantation including skin allografting, autoimmune diseases, and allergies, with the initial focus on psoriasis, type 1 diabetes and skin allografting, indications for which we have compelling preclinical data.
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ADI-100 has been successfully tested in several preclinical models (e.g., skin grafting, psoriasis, type 1 diabetes, multiple sclerosis). In May 2023, Adimune entered into a clinical trial agreement with Mayo Clinic to advance clinical studies targeting autoimmune diseases of the central nervous system (“CNS”) with the initial focus on the rare, but debilitating, autoimmune disease Stiff Person Syndrome (“SPS”).
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To submit a Biologics License Application (“BLA”) for a biopharmaceutical product, clinical safety and efficacy must be demonstrated in clinical studies conducted with human subjects. For products in our class of drugs, the first-in-human trials will be a combination of Phase I (safety/tolerability) and Phase II (efficacy) in affected subjects.
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According to the National Organization of Rare Diseases, the exact incidence and prevalence of SPS is unknown; however, one estimate places the incidence at approximately one in one million individuals in the general population. Pending approval by the International Review Board and U.S.
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To obtain approval to initiate the Phase I/IIa studies, an Investigational New Drug or Clinical Trial Application will be submitted that will include a compilation of non-clinical efficacy data as well as manufacturing and pre-clinical safety/toxicology data.
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Food and Drug Administration, a human trial for SPS is expected get underway in the first half of 2024 with enrollment of up to 20 patients, some of whom may also have type 1 diabetes. ADI-100 will initially be tested for safety and efficacy.
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To date, we have conducted non-clinical studies in a stringent model of skin transplantation using genetically mismatched donor and recipient animals demonstrating a 3-fold increase in the survival of the skin allograft in animals that were tolerized with ADI™ compared to animals that receive immune suppression alone.
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ADI-100 is designed to tolerize against an antigen known as glutamic acid decarboxylase (“GAD”), which is implicated in type-1 diabetes, psoriasis, stiff person syndrome, and in many autoimmune diseases of the CNS.
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Prolongation of graft life was observed despite discontinuation of immune suppression after the first 5 weeks. In a non-obese diabetic mouse model of type 1 diabetes, we showed reversal of hyperglycemia with 80% of the animals showing durable glycemic control for the 40-week study period.
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IND-enabling work is also near completion in support of a Clinical Trial Application submission to the Paul Ehrlich Institute, the regulatory agency in Germany, to initiate clinical trials in psoriasis and type 1 diabetes.
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Additionally, in an induced non-clinical model for psoriasis, ADI™ treatment resulted in a 69% reduction in skin thickness and a 38% decrease in skin flaking (two clinical parameters for assessment of psoriasis skin lesions). The Phase I/IIa studies in psoriasis will evaluate the safety/tolerability of ADI™ in patients diagnosed with psoriasis.
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ADI is a technology platform which we believe can be engineered to address a wide variety of indications. Advantages ADI™ is a nucleic acid-based technology ( e.g. , DNA-based), which we believe selectively suppresses only those immune cells involved in attacking or rejecting self and transplanted tissues and organs.
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Since the drug will be administered in subjects diagnosed with psoriasis, effectiveness of the drug to improve psoriatic lesions will also be evaluated. In the type 1 diabetes clinical studies, newly diagnosed subjects will receive ADI™ treatment to evaluate safety and efficacy.
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It does so by tapping into the body’s natural process of cell turnover (i.e., apoptosis) to retrain the immune system to stop unwanted attacks on self or transplanted tissues. Apoptosis is a natural process used by the body to clear dying cells and to allow recognition and tolerance to self-tissues.
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In another Phase I/IIa study, patients requiring skin allografts will receive weekly intra-dermal injections of ADI™ in combination with standard immune suppression to assess safety/tolerability and possibility of reducing levels of immunosuppressive drugs as well as prolongation of graft life.
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ADI triggers this process by enabling the cells of the immune system to recognize the targeted tissues as “self.” Conceptually, it is designed to retrain the immune system to accept the tissues, similar to how natural apoptosis reminds our immune system to be tolerant to our own “self” tissues.
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AditxtScore™ (Immune Monitoring Program) Background We believe that understanding the status of an individual’s immune system is key to understanding health by the numbers and for developing therapeutics that result in better outcomes for more individuals. We have secured an exclusive worldwide license for commercializing a technology platform named AditxtScore™, which provides a personalized comprehensive profile of the immune system.
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While various groups have promoted tolerance through cell therapies and ex vivo manipulation of patient cells (i.e., takes place outside the body), to our knowledge, we will be unique in our approach of using in-body induction of apoptosis to promote tolerance to specific tissues.
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This capability may be possible by having the ability to determine the body’s potential response and for developing a plan to deal with an undesirable reaction by the immune system.
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In addition, ADI treatment itself will not require additional hospitalization but only an injection of minute amounts of the therapeutic drug into the skin.
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It also provides for simultaneous monitoring of cell activation and levels of cytokine release (i.e., cytokine storms). We plan to utilize AditxtScore™ in our upcoming pre-clinical and clinical studies to monitor subjects’ immune response before, during and after ADI™ drug administration.
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Moreover, preclinical studies have demonstrated that ADI treatment significantly and substantially prolongs graft survival, in addition to successfully “reversing” other established immune-mediated inflammatory processes. 31 License Agreement with Loma Linda University (“LLU”) On March 15, 2018, we entered into a License Agreement with LLU, which was subsequently amended on July 1, 2020.
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(“Sekris”). Sekris was a party to a license agreement with LLU, entered and made effective on May 25, 2011, and amended on June 24, 2011, July 16, 2012 and December 27, 2012 (the “Original Agreement,” and together with the Assignment Agreement, the “Sekris Agreements”).
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In consideration for the LLU License Agreement, we issued 13 shares of common stock to LLU. PEARSANTA, INC. Formed in January 2023, our subsidiary Pearsanta™, Inc.
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Pursuant to the Assignment Agreement, Sekris transferred and assigned all of its rights, obligations and liabilities under the Original Agreement, of whatever kind or nature, to us. In exchange, on March 8, 2018, we issued a warrant to Sekris to purchase up to 10,000 shares of our common stock (the “Sekris Warrant”).
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(“Pearsanta”) seeks to take personalized medicine to a whole new level by delivering “Health by the Numbers.” Since its founding, Pearsanta has been building the platform for enabling our vision of lab quality testing, anytime, anywhere. Our plan for Pearsanta’s platform is for it to be the transactional backbone for sample collection, sample processing (on- and off-site), and reporting.
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The warrant was immediately exercisable and has an exercise price of $200.00 per share. The expiration date of the warrant is March 8, 2023. On March 15, 2018, as amended on July 1, 2020, we entered into a LLU License Agreement directly with Loma Linda University, which amends and restates the Sekris Agreements.
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This will require the development and convergence of multiple components developed by Pearsanta, or through transactions with third parties, including collection devices, “lab-on-a-chip” technologies, Lab Developed Test (LDT) assays, a data-driven analysis engine, and telemedicine. According to a comprehensive research report by Market Research Future, the clinical and consumer diagnostic market is estimated to hit $429.3 billion by 2030.
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In consideration for the LLU License Agreement, we issued 500 shares of common stock to LLU. Pursuant to the LLU License Agreement, we are required to pay an annual license fee to LLU. Also, we paid LLU $455,000 in July 2020 for outstanding milestone payments and license fees.
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We believe that timely and personalized testing enables far more informed treatment decisions. Pearsanta’s platform is being developed as a seamless digital healthcare solution. This platform will integrate at-location sample collection, Point-of-Care (“POC”) and LDT assays, and an analytical reporting engine, with telemedicine-enabled visits with licensed physicians to review test results and, if necessary, order a prescription.

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